Court Opinion

ID: 9942891
Source: CourtListenerOpinion
Date Created: 2024-02-22 01:00:41.172579+00
Date Added: 2024-06-11T13:44:53.491892
License: Public Domain

Case: 22-20620      Document: 129-1        Page: 1   Date Filed: 02/21/2024

        United States Court of Appeals
             for the Fifth Circuit                                United States Court of Appeals
                                                                           Fifth Circuit
                            ____________
                                                                         FILED
                                                                  February 21, 2024
                             No. 22-20620
                            ____________                            Lyle W. Cayce
                                                                         Clerk
United States of America,

                                                         Plaintiff—Appellee,

                                  versus

Lindell King; Ynedra Diggs,

                                       Defendants—Appellants.
               ______________________________

               Appeal from the United States District Court
                   for the Southern District of Texas
                        USDC No. 4:18-CR-345-3
               ______________________________

Before Jones, Haynes, and Douglas, Circuit Judges.
Edith H. Jones, Circuit Judge:
      Defendants convicted of healthcare fraud and receiving Medicare
kickbacks challenge the district court’s admission of recordings involving
them and other co-conspirators, the district court’s calculation of the
improper benefit received for the purposes of their sentence, and the
restitution award. Finding no error, we AFFIRM.
                            BACKGROUND
      Five individuals, including Lindell King and Ynedra Diggs, were
charged in an eight-count superseding indictment with conspiracy to defraud
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                                    No. 22-20620

the United States and to pay and receive healthcare kickbacks and violations
of the anti-kickback statute.1 Dr. Paulo Bettega, who was named in the su-
perseding indictment, was a Medicare provider who paid bribes and kick-
backs to individuals, including King and Diggs, for referring Medicare bene-
ficiaries to him for treatment that was unnecessary or not even provided.
King and Diggs were married and owned and operated group homes for vul-
nerable individuals who could not care for themselves. Over a period of seven
years, King and Diggs received $70,000 in known bribes from checks and
additional, unknown amounts of cash. As a result, Bettega’s clinic received
$537,992.55 from Medicare associated with patients that were residents of
the defendants’ group homes.
       Medicare covers partial hospitalization programs (“PHPs”) con-
nected with the treatment of mental illness. These programs are designed to
serve patients in lieu of inpatient hospitalization when a patient suffers a
flare-up of a preexisting chronic mental health condition and requires ser-
vices at the intensity and frequency available to patients receiving in-patient
psychiatric treatment. PHPs do not serve patients at their mental-health
baseline or provide care for long-term conditions like dementia.
       At his clinic, Bettega often admitted patients in large groups after
providing only a short physical exam for non-psychiatric patients. Often,
these patients had no psychiatric conditions and were not suffering from an
acute mental-health crisis. Some of them spoke no English. Yet the clinic
prescribed a homogenous regime of four group therapy sessions a day in its

       _____________________
       1
          The indictment charged Dr. Bettega, who remains a fugitive, King, Diggs, and
two other group home operators: Colin Wilson and Timothy Haynes. Garcia, who died
prior to King and Diggs’s trial, was charged in a prior indictment.

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PHP program, which patients often skipped or could not understand or par-
ticipate in.
       Following a four-day jury trial, King and Diggs were convicted of
conspiracy as well as individual counts for soliciting or receiving kickbacks.
As part of the evidence, the Government introduced recordings made by Ray
Garcia, a confidential informant who was paid more than $13,000 for his
cooperation with the government. The district court denied the defendants’
pre-trial motion to exclude the recordings, reasoning that they did not
contain testimonial statements and Bettega was a coconspirator acting in
furtherance of the conspiracy. At trial, King and Diggs did not specifically
renew the prior objection, but they asked for and received limiting
instructions to the jury in accordance with the district court’s ruling on the
motion in limine.
       The district court sentenced King to 60 months in prison and Diggs
to 70 months. King and Diggs’s sentences were based on a finding of
$537,992.55 of improper benefit, which yielded a 12-level adjustment under
the Sentencing Guidelines for each defendant. U.S.S.G. § 2B1.1(b)(1) (loss
attributable was more than $250,000 but less than $550,000).             Their
objections to the improper benefit amount reflected in the Pre-Sentencing
Reports (“PSRs”) and at sentencing were overruled. The court also held
King and Diggs jointly and severally liable for $537,992.55 in restitution.
Both defendants have appealed.
                              II. DISCUSSION
       This court reviews preserved Confrontation Clause claims de novo,
subject to a harmless error analysis. United States v. Noria, 945 F.3d 847, 853
(5th Cir. 2019). Evidentiary rulings preserved at trial are reviewed for abuse
of discretion, subject to harmless error. United States v. Sanjar, 876 F.3d 725,
738 (5th Cir. 2017).

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       For sentencing, this court reviews the district court’s loss calculations
for clear error and the district court’s methodology de novo. United States v.
Harris, 821 F.3d 589, 601 (5th Cir. 2016). Restitution orders are reviewed de
novo for legality, and the amounts for abuse of discretion. United States v.
Villalobos, 879 F.3d 169, 171 (5th Cir. 2018).
       The Mandatory Victims Restitution Act (“MVRA”) states that
“[t]he burden of demonstrating the amount of the loss sustained by a victim
as a result of the offense shall be on the attorney for the Government” and
that “[t]he burden of demonstrating such other matters as the court deems
appropriate shall be upon the party designated by the court as justice
requires.” 18 U.S.C. § 3664(e). This court “has interpreted these two
statutory sentences to establish a burden-shifting framework for loss-amount
calculations. The Government first must carry its burden of demonstrating
the actual loss to one or more victims by a preponderance of the evidence.
Then the defendant can rebut the Government’s evidence.” United States v.
Williams, 993 F.3d 976, 980-81 (5th Cir. 2021). When the exact amount of
actual loss is not clear, the district court is permitted to make reasonable
estimates supported by the record. See, e.g., United States v. Mazkouri,
945 F.3d 293, 304 (5th Cir. 2019); United States v. Comstock, 974 F.3d 551,
559 (5th Cir. 2020). Actual loss for restitution purposes is offset by the
amount of the legitimate services provided to the patients in healthcare fraud
cases. See United States v. Sharma, 703 F.3d 318, 324 (5th Cir. 2012); United
States v. Ricard, 922 F.3d 639, 658 (5th Cir. 2019).
       We address in turn the defendants’ arguments surrounding
(a) evidence submitted in recordings, (b) the sentencing calculations of
improper loss, and (c) the restitution awards.

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       A. The recordings
       The Confrontation Clause bars the admission of “testimonial
statements of a witness who did not appear at trial unless he was unavailable
to testify, and the defendant had had a prior opportunity for cross-
examination.” Crawford v. Washington, 541 U.S. 36, 53-54 (2004). A
statement is “testimonial” if its “primary purpose … is to establish or prove
past events potentially relevant to later criminal prosecution.” United States
v. Duron-Caldera, 737 F.3d 988, 992-93 (5th Cir. 2013) (internal quotation
marks and citation omitted).
       We reject the defendants’ Confrontation Clause arguments. First,
any confrontations between Garcia (the informant who worked at the clinic)
and Dr. Bettega involved statements of co-conspirators—making them non-
testimonial and thus not prohibited by the Confrontation Clause. United
States v. Ayelotan, 917 F.3d 394, 403 (5th Cir. 2019).            Second, the
conversations between Garcia and King or Diggs are also not testimonial. In
United States v. Cheramie, 51 F.3d 538, 540-41 (5th Cir. 1995), statements by
an unavailable witness on a recording and a transcript of a conversation
between the unavailable witness and the defendant did not violate the
Confrontation Clause because the witness’s statements were not offered to
prove the truth of the matter asserted therein, but to provide context to the
defendant’s recorded statements. Cheramie held that the evidence did not
violate the Confrontation Clause because they were part of a reciprocal and
integrated conversation with the defendant and the Government sufficiently
proved the reliability of the recording. Id. This case is indistinguishable from
Cheramie. King and Diggs do not dispute that statements of Garcia and
Bettega on the recordings were part of integrated and reciprocal
conversations with them. Accordingly, they provided context to King’s and
Diggs’s statements, were not admitted to prove the truth of the matters
asserted, and did not violate the Confrontation Clause. Id. at 541.

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       Nor did the district court erroneously admit the recordings as
impermissible hearsay. Hearsay is a statement that “(1) the declarant does
not make while testifying at the current trial or hearing; and (2) a party offers
in evidence to prove the truth of the matter asserted in the statement.” Fed.
R. Evid. 801(c).    Federal Rule of Evidence 802 provides that hearsay
generally is not admissible at trial. However, a defendant’s out-of-court
statements, when offered by the Government, “are those of a party opponent
and thus not hearsay.” Sanjar, 876 F.3d at 739; see Fed. R. Evid. 801(d)(2).
This court has recognized that some statements made during recorded
conversations are admissible as “reciprocal and integrated utterance(s)”
between a defendant and another party, for the purpose of creating context
and making them “intelligible to the jury and recognizable as admissions.”
United States v. Gutierrez-Chavez, 842 F.2d 77, 81 (5th Cir. 1988) (internal
quotation marks and citations omitted); see also United States v. Jones,
873 F.3d 482, 496 (5th Cir. 2017). Thus, Rule 801(d)(2) applies to the
recorded statements of both Garcia and Bettega.
       We also reject King’s assertion that the recorded conversations
between Garcia and Bettega cannot be admitted under the “context” portion
of Rule 801(d)(2). Rule 801(d)(2)’s party-opponent rule includes statements
“made by the party’s coconspirator during and in furtherance of the
conspiracy.” Fed. R. Evid. 801(d)(2)(E). This portion of the Rule applies to
Bettega’s statements as a co-conspirator, and the evidence was sufficient to
establish a conspiracy between King and Bettega.
       Last, we reject the argument that admitting the conversations was
error under Federal Rule of Evidence 403 because the resulting prejudice
outweighed its probative value. “Relevant evidence is inherently prejudicial;
but it is only unfair prejudice, substantially outweighing probative value,
which permits exclusion of relevant matter under Rule 403.” United States
v. Pace, 10 F.3d 1106, 1115-16 (5th Cir. 1993) (citation omitted). As the trial

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court concluded, the recorded conversations’ prejudice did not substantially
outweigh their probative value.
       B. Loss Amount for Sentencing
       Under the Sentencing Guidelines, defendants convicted of healthcare
kickback offenses start with a base offense level of eight, U.S.S.G. § 2B4.1(a),
which is moved upward according to the loss-amount table, U.S.S.G.§ 2B1.1.
Applying the table, the Probation Office increased the defendants’ levels by
12 points for losses it estimated at over $500,000, according to the “benefit”
conferred on Bettega’s clinic and loss to Medicare.
       Generally, the government must show by preponderance of the
evidence the amount of loss attributable to fraudulent conduct. See United
States v. Nelson, 732 F.3d 504, 521 (5th Cir. 2013). “The loss amount ‘need
not be determined with precision,’” United States v. Reasor, 541 F.3d 366,
369 (5th Cir. 2008), nor “absolute certainty,” United States v. Goss, 549 F.3d
1013, 1019 (5th Cir. 2008). A district court may rely upon information in the
PSR in making its loss-amount estimate, so long as that “information bears
some indicia of reliability.” United States v. Simpson, 741 F.3d 539, 557 (5th
Cir. 2014). A defendant who challenges a PSR’s loss estimate “bears the
burden of presenting rebuttable evidence to demonstrate that the information
in the PSR is inaccurate or materially untrue.” United States v. Danach,
815 F.3d 228, 238 (5th Cir. 2016) (quoting Simpson, 741 F.3d at 557).
       The government here proved by preponderance of the evidence that
Dr. Bettega’s entire operation was fraudulent, and that no deference should
be afforded to the clinic’s medical records. The government’s evidence
showed that the pervasive scheme provided no legitimate medical care to
patients residing at King’s and Diggs’s group homes. Reina Gonzalez,
Dr. Bettega’s assistant, testified at trial that the clinic billed Medicare for
mental healthcare for patients with no mental health conditions and routinely

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falsified medical records. See Sanjar, 876 F.3d at 748 (no deference to
restitution testimony that assumed the accuracy of underlying records, even
though “substantial evidence showed they were, in fact, falsified.”). Reina
Gonzalez also described how Dr. Bettega admitted patients to the program
after quick evaluations for non-psychiatric symptoms and admitted large
groups of patients from King’s and Diggs’s group homes at the same time.
       King and Diggs, in contrast, failed to offer rebuttal evidence of any
legitimate medical expenses billed to Medicare that should be set off from the
$537,992.55 paid to Bettega for “treatment” provided to the residents of
their group homes. This distinguishes their case from Ricard, where the
defendant did offer testimony to show patients were receiving legitimate
treatment. 922 F.3d at 659. Moreover, neither defendant offers a specific
dollar amount, or even a rough estimate, of how much of the clinic’s care
may legitimately be offset against the improper benefit calculation.
Therefore, the amount paid by Medicare to the clinic stands as the only
amount available to the district court for assessing improper benefit—a
calculation that need not be determined with “absolute certainty.” Goss,
549 F.3d at 1019.
       King and Diggs cite the medical charts of clinic patients who were also
residents of their group homes. But apart from the charts, no evidence
supports that these patients actually had the medical conditions described in
the records or that their prescriptions—which may have been filled—were
actually medically necessary. The district court was not required to credit
the defendants’ self-serving arguments, which assume that the treatment
reflected in those records was “medically necessary and met the insurer’s
reimbursement standards.” Sharma, 703 F.3d 326.
       Similarly, none of the statements by Major Marlowe, Reina Gonzalez,
or Timothy Haynes discuss specific medical services provided to specific

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patients on specific occasions that qualified as “legitimate” and should be set
off from the amounts paid by Medicare. All of the testimony pointed to by
King and Diggs is qualified, provided at an extremely high level of generality,
and not indicative that any of the patients were actually being provided
legitimate and reasonably necessary medical care. Nor is background noise
in one of the recordings between unnamed individuals discussing medical
tests, medications, or patient treatments sufficient to show that the clinic
legitimately provided medical care to patients from King’s and Diggs’s group
homes.
       Moreover, any error by the district court in calculating the legitimate
care was harmless for the purposes of the improper benefit analysis. Under
Section 2B1.1(b)(1), the district court would have had to apply a 12-point
enhancement to any loss greater than $250,000. To receive relief on this
issue, they would have to show that a majority of the $537,992.85 Medicare
paid Bettega for claims related to the residents of the defendants’ group
homes was legitimate. But none of the isolated instances of allegedly
legitimate medical care provided to the residents could yield an offset that
high given the large number of patients at issue and significant amounts of
PHP treatment that Medicare was billed for. See United States v. Hamilton,
37 F.4th 246, 266 (5th Cir. 2022) (loss-amount error harmless where same
20-level enhancement would have applied).
       C. Restitution award
       The analysis of the restitution award largely tracks that for improper
benefit. The Government introduced evidence that Medicare paid Bettega’s
clinic $537,992.55 for claims related to the residents of the defendants’ group
homes and demonstrated that the medical services were fraudulent. King
and Diggs failed to show that any of the billed medical care was legitimate,

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and thus did not show that the total billed to Medicare was subject to an
offset. Their case is amply distinguishable from Ricard.
       Further, King’s and Diggs’s argument that their maximum restitution
is limited to the $70,000 they received in kickbacks is legally erroneous. King
and Diggs were convicted for conspiring to solicit and receive kickbacks and
to defraud the United States through the Medicare program, in violation of
18 U.S.C. § 371. Thus, their restitution applies to any losses that Medicare
“directly” suffered from their agreement to accept kickbacks and enable
Bettega’s Medicare fraud. See United States v. Mathew, 916 F.3d 510, 516 (5th
Cir. 2019). The out-of-circuit cases cited by King in support of this argument
are inapposite. See United States v. Fennell, 925 F.3d 358, 362 (7th Cir. 2019)
(expressing no opinion about equating kickback amounts with victim’s actual
loss); United States v. Vaghela, 169 F.3d 729, 736 (11th Cir. 1999) (relying on
the kickback amount because the government failed to prove that the relevant
medical services were illegitimate).
       That Bettega, rather than King or Diggs, received the primary benefit
from fraudulent Medicare payments is irrelevant for assessing restitution.
“Under the MVRA, members of a conspiracy may be ‘held jointly and
severally liable for all foreseeable losses within the scope of their conspiracy
regardless of whether a specific loss is attributable to a particular
conspirator.’” United States v. Ochoa, 58 F.4th 556, 561 (1st Cir. 2023)
(quoting United States v. Moeser, 758 F.3d 793, 797 (7th Cir. 2014)). This is
also consistent with the statutory text, under which a district court, on
holding that more than one defendant caused the victim’s loss, “may make
each defendant liable for payment of the full amount of restitution or may
apportion liability among the defendants to reflect the contribution to the
victim’s loss and economic circumstances of each defendant.” 18 U.S.C.
§ 3664(h) (emphasis added). “[T]he MVRA imposes joint liability on all
defendants for loss caused by others participating in the scheme.” United

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States v. Dokich, 614 F.3d 314, 318 (7th Cir. 2010) (emphasis added). See also
United States v. Goodrich, 12 F.4th 219, 228 (2d Cir. 2021) (holding that the
MVRA “does not limit restitution to losses caused by the actions of that
defendant during the conspiracy, but also embraces losses flowing from the
reasonably foreseeable actions of that defendant’s co-conspirators.”)
(citation and quotation marks omitted). Consequently, though this is not
required, “if more than one defendant contributes to the loss of a victim, the
court may make each defendant liable for the payment of the full amount of
restitution.” United States v. Verdeza, 69 F.4th 780, 796 (11th Cir. 2023).
         The district court did not abuse its discretion in imposing restitution
on each defendant jointly and severally for the full amount of the Medicare
fraud.
         For the foregoing, the judgment and sentence of the district court are
AFFIRMED.

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