Court Opinion

ID: 2968958
Source: CourtListenerOpinion
Date Created: 2015-09-22 08:46:20.933641+00
Date Added: 2024-06-11T15:29:09.210886
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                              No. 14-1296

In Re:   THE BANKRUPTCY ESTATE OF AGS, INC.,

                Petitioner.

                 On Petition for Writ of Mandamus.
                     (1:12-cr-00113-IMK-JSK-1)

Submitted:   April 2, 2014                  Decided:   April 4, 2014

Before TRAXLER, Chief Judge, and WILKINSON and MOTZ, Circuit
Judges.

Petition denied by unpublished per curiam opinion.

Patrick S. Cassidy, CASSIDY, MYERS, COGAN & VOEGELIN, LC,
Wheeling, West Virginia; Martin Patrick Sheehan, SHEEHAN &
NUGENT, PLLC, Wheeling, West Virginia, for Petitioner.    Robert
G. McCoid, MCCAMIC, SACCO, PIZZUTI & MCCOID, PLLC, Wheeling,
West Virginia; Andrew R. Cogar, Assistant United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Clarksburg, West
Virginia, for Respondents.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

      The bankruptcy estate of AGS, Inc. has petitioned for a

writ of mandamus pursuant to 18 U.S.C. § 3771(d). It seeks to

require defendant Allen G. Saoud to pay it restitution following

his conviction on multiple counts of health care fraud and other

associated charges. See United States v. Saoud, Criminal Case

No. 1:12-CR-113 (pending N.D. W. Va.) (Keely, J.). Petitioner

contends    that   it   was       a    victim          under     the    Mandatory      Victims’

Restitution     Act,    18    U.S.C.          § 3663A,          and     is    entitled    to    a

restitution award of more than $1 million. For the reasons that

follow, we deny the petition. *

                                                  I.

      Allen G. Saoud was convicted after a June 2013 jury trial

of   thirteen   counts       of       health          care   fraud      and    several    other

offenses.   According        to       the    evidence          presented      at   trial,      the

defendant, who is a dermatologist, was excluded in 2005 from

participating      in   Medicare            and       Medicaid    for    a    period     of    ten

years. He then hatched a plan to maintain ownership and control

of his dermatology practice, AGS Inc. (“AGS”) in violation of

the exclusion. To execute this fraudulent scheme, he founded a

new dermatology practice, to which he transferred all of his

      *
       We grant petitioner’s motion to proceed on the original
record with an abbreviated appendix.

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patients. He then fraudulently sold this practice to Dr. Fred

Scott for $1.8 million. He then sold AGS, which had lost its

value,   for    $1     million         to    nurse      practitioner       Georgia      Daniel.

After these sales, he continued to control and profit from both

entities,       partly           by     collecting              Medicare        and     Medicaid

reimbursement funds. The defendant never told his staff of his

exclusion from Medicare and Medicaid during this time.

      After     the    defendant            was    convicted,       petitioner        sought    a

restitution award of more than $1 million to cover bankruptcy

claims by Highmark West Virginia, Inc. (“Highmark”), the West

Virginia       State       Tax        Department,          as     well     as     petitioner’s

attorneys’ fees. The validity of these bankruptcy claims was not

discussed      in    the    government’s            case    against      the     defendant     at

trial. Highmark alleges that multiple AGS doctors had overbilled

it from 2000 to early 2006. The state of West Virginia claims

that AGS owed it tax payments from the tax years 2000 to 2004.

The   district       court       declined         to    award    petitioner       its   desired

restitution, and this petition followed.

                                                  II.

                                                  A.

      Typically        writs      of    mandamus         are     subject    to    a   stringent

standard of review, requiring that “a petitioner must show that

he has a clear and indisputable right to the relief sought and

there    are    no    other      adequate          means    to    attain    the       relief   he

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desires.” In re U.S. for an Order Pursuant to 18 U.S.C. Section

2703(D), 707 F.3d 283, 289 (4th Cir. 2013) (internal quotation

marks omitted). Our sister circuits have disagreed about whether

this   demanding       standard         applies   to    mandamus    petitions   filed

under § 3771 or if instead traditional appeal standards apply.

Compare, e.g., United States v. Fast, 709 F.3d 712, 718 (8th

Cir. 2013) and In re Antrobus, 519 F.3d 1123, 1124-25 (10th Cir.

2008) (applying the mandamus standard of review) with Kenna v.

U.S. Dist. Court for C.D.Cal., 435 F.3d 1011, 1017 (9th Cir.

2006) and In re W.R. Huff Asset Mgmt. Co., LLC, 409 F.3d 555,

563    (2d    Cir.     2005)       (applying      the   standards      applicable   to

ordinary appeal). We have left the issue open. See In re Brock,

262 F. App'x 510, 512 (4th Cir. 2008). We need not decide this

question here. It is sufficient simply to note that to issue a

writ of mandamus to a district court is not something to be

undertaken lightly.

                                            B.

       The petitioner claims that it is due restitution under the

Mandatory Victims’ Restitution Act (“MVRA”), 18 U.S.C. § 3663A.

The    statute    defines         a    “victim”   as:    “a   person    directly    and

proximately harmed as a result of the commission of an offense

for which restitution may be ordered including . . . any person

directly     harmed        by    the   defendant's      criminal    conduct   in    the

course       of      [a]        scheme,     conspiracy,       or    pattern.”       Id.

                                             4
§ 3663A(a)(2).       We    have    noted    that     under     the    MVRA,     “alleged

victims    must    be     the   victims    of     the   offense       of   conviction.”

United States v. Freeman, 741 F.3d 426, 435 (4th Cir. 2014)

(emphasis in original). In order to determine whether there is

an adequate connection between the alleged victim’s losses and

the defendant’s specific conduct, “we look to the elements of

the offense of conviction and the specific conduct underlying

these elements.” Id. at 437. An examination of the trial record

makes clear that petitioner does not qualify as a victim for

purposes of the MVRA.

     The    elements       of    health    care    fraud      require      a   person   to

knowingly and willfully execute or attempt to execute a scheme

to   (a)    defraud        a    health     care     benefit      program;        or     (b)

fraudulently obtain property or money owned or under the custody

or control of any health care benefit program. See 18 U.S.C.

§ 1347.     The     second        superseding        indictment         (“indictment”)

specifically alleged in counts one through five -- all five of

which     the    defendant       was     convicted      --     that     the    defendant

knowingly       devised    a    scheme    intended      to    defraud      Medicare     and

Medicaid    and    to     fraudulently      obtain      the    programs’       money    and

property. See J.A. at 28. And elsewhere in the indictment, the

government alleged that the defendant used AGS as an instrument

in his scheme to illegally obtain Medicare and Medicaid funds.

See id. at 29-30. It is clear that the scheme was aimed at

                                            5
defrauding     these    federal       programs.           AGS    was    one    of    the     means

through which the defendant perpetrated the fraud upon them. We

decline to also hold that AGS was one of the scheme’s victims.

      Meanwhile,       the   damage       suffered         by     AGS’s       creditors      from

defendant’s     fraudulent         activity         can    at    best     be    described      as

tangential to the scheme to defraud Medicare and Medicaid that

is the basis for restitution. As noted above, the statute and

our   precedents       require       direct         or     proximate       harm       from    the

offenses of conviction. To the extent that AGS’s creditors are

harmed because they must expend funds in an attempt to prevail

in the bankruptcy proceedings, that damage cannot be said to be

adequately     related       to    the    defendant’s            health       care    fraud    to

qualify under the MVRA. See United States v. Abdelbary, 13-4083,

2014 WL 929422 at *7 (4th Cir. Mar. 11, 2014) (noting that,

generally,     legal    fees       paid   to       recover       lost   property       are    not

direct   and      proximate        losses      that       can     be    recovered       through

restitution).       Instead,         this          harm     is     tangential          to      the

substantive       counts      of     health         care        fraud    from        which    the

restitution flows.

      In addition, the vast majority of the loss claimed by the

creditors    is    antecedent        to     the      fraud       charged       in    the     case.

Highmark’s claims for alleged overbilling by AGS doctors date

from 2000 to early 2006, while the state tax claims date from

the tax years 2000 to 2004.               The health care fraud for which the

                                               6
defendant was charged and convicted, meanwhile, began in 2005.

Thus,    if     in    fact   the    petitioner’s            claims    regarding      false

billings and underpayment of taxes are valid, they stem almost

exclusively from AGS’s conduct before defendant engaged in his

fraudulent       behavior.     Finally,          it    is     not     clear   that     the

defendant’s      conduct      was    detrimental        to     AGS;    the    government

posits that the fraud may in fact have provided AGS more assets

with    which    to   pay    its    bills.       See   Freeman,      741   F.3d   at   438

(requiring for restitution a showing that absent the fraud, the

same harm would not have befallen the victims).

                                        III.

       For the foregoing reasons, we find that the district court

did not err in denying restitution to the bankruptcy estate of

AGS and we deny the petition for a writ of mandamus.

                                                                       PETITION DENIED

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