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United States v. Brown

United States Court of Appeals, Seventh Circuit

January 19, 2018

United States of America, Plaintiff-Appellee,
v.
Rick E. Brown & Mary C. Talaga, Defendants-Appellants.

          Argued May 23, 2017

         Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. Nos. l:13-cr-00854-l, l:13-cr-00854-3 Gary Feinerman, Judge.

          Before Bauer, Easterbrook, and Ripple, Circuit Judges.

          RIPPLE, CIRCUIT JUDGE.

         A grand jury indicted Rick E. Brown and Mary C. Talaga with one count of conspiracy to commit health-care fraud, in violation of 18 U.S.C. § 1349, six counts of health-care fraud, in violation of 18 U.S.C. § 1347, and three counts of falsifying a matter or providing false statements, in violation of 18 U.S.C. § 1035(a). A jury convicted them on all counts. The district court sentenced Mr. Brown to eighty-seven months' imprisonment on the health-care fraud counts and terms of sixty months' imprisonment on each of the falsification counts to run concurrently with each other and with the fraud counts. In doing so, the district court explained that a significant sentence was warranted for several reasons, including general deterrence. Ms. Talaga was sentenced to concurrent forty-five-month sentences on all of the ten counts.

         Both defendants now maintain that the district court erred in imposing their respective sentences. Mr. Brown maintains that the district court's assumptions about the need for general deterrence were unfounded and constituted procedural error. Ms. Talaga argues that, when the district court calculated the amount of loss for which she was responsible, it impermissibly included losses that occurred before she joined the conspiracy. The inclusion of these amounts resulted in a higher loss amount, corresponding to a higher offense level and sentence.

         Because the district court did not err in its reasoning or in its sentencing determination, we affirm its judgments.

         I

         BACKGROUND

         A.

         Medicall Physicians Group, Ltd. ("Medicall"), a company that provided home physician visits to patients, employed both Mr. Brown and Ms. Talaga. Mr. Brown served as Medicall's office manager, and Ms. Talaga had responsibility for medical billing. Dr. Roger Lucero, a third defendant, was the owner and medical director of the company. He pleaded guilty to the conspiracy count, cooperated with the Government, and testified against both Mr. Brown and Ms. Talaga.

         Beginning at least as early as January 2007, Mr. Brown and Dr. Lucero began submitting false and fraudulent claims to Medicare. Ms. Talaga, who had been trained as a medical biller, joined Medicall in August 2007. She reported to Mr. Brown and was paid a percentage of Medicall's earnings.

         According to the evidence, the fraud at Medicall took at least three forms. First, Mr. Brown and Ms. Talaga billed Medicare for "prolonged" visits, using the prolonged care code, as a way to pay for employees' travel time. Second, regardless whether the patient qualified for, or received, the billed-for care, every patient was billed for "Care Plan Oversight, " a type of physician supervision for patients requiring complex or multi-disciplinary care. Finally, Mr. Brown and Ms. Talaga billed Medicare for services purportedly provided to deceased patients, as well as services by providers who no longer were associated with Medicall.

         After hearing the evidence, the jury convicted both defendants on all counts of the indictment.

         1. Mr. Brown

         The probation office prepared a presentence report ("PSR") for Mr. Brown. The PSR calculated a base offense level of six under U.S.S.G. § 2B1.1(a)(2), and then applied an eighteen-level increase under § 2Bl.l(b)(1)(J) for an intended loss of approximately $4.3 million. The PSR also applied (1) a two-level increase for a federal health-care offense involving a loss of more than $1 million but less than $7 million; (2) a two-level increase for use of sophisticated means; (3) a four-level increase for being a leader or organizer; and (4) a two-level increase for obstruction of justice because Mr. Brown had testified falsely at trial about his role in the offense. These increases yielded a total offense level of thirty-four that, when combined with Mr. Brown's criminal history category of I, yielded a sentencing range of 151 to 188 months.

         Mr. Brown objected to various aspects of the PSR's calculation. The district court agreed with Mr. Brown that the fraud did not involve sophisticated means. It also gave Mr. Brown the benefit of the loss table in the new Guidelines, which yielded a sixteen-level increase, as opposed to an eighteen-level increase, for amount of loss. When combined with Mr. Brown's criminal history category, the new calculation yielded a guidelines range of 121 to 151 months.

         The district court then considered "the 3553(a) factors one by one."[1] It also observed that "[s]ubsection (a)(2) requires the Court to consider the need for the sentence imposed to accomplish the various purposes of criminal punishment. The first purpose is to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense."[2] The court considered the crimes to be "serious" because they occurred "over an extended period of time" and involved "$4.3 million in false claims."[3] The second purpose articulated in 18 U.S.C. § 3553(a) "is to afford adequate deterrence to criminal conduct."[4] The court considered this purpose "a significant factor" because Medicare fraud unfortunately is widespread "in this country; and those who are in the medical field and who are tempted to engage in fraud must know, they have to know, that the penalties are severe, particularly given the low likelihood of getting caught."[5] The court stated that it agreed with the Government

that people in the healthcare business and in the home healthcare business in particular will know about this sentence, and this sentence has to send a signal. It's not the only consideration, and it's not the most important consideration, but it is a consideration that 3553(a)(2)(B) directs me to consider, and I do have to consider that.[6]

         Finally, the court noted that, with respect to specific deterrence, it was "highly unlikely" that Mr. Brown would commit a crime in the future.[7] The court then sentenced Mr. Brown to eighty-seven months' imprisonment.

         The court reiterated many of these considerations in its oral statement of reasons:

I don't think that anything less than 87 months would be sufficient to fulfill the purposes of 3553(a), and here's why: The duration of the scheme. It went on for several years. This wasn't a momentary slip ... . This was a sustained course of knowing criminal conduct.
The amount actually stolen, over $1.3 million. That's a lot of money.
I'm going to come back to general deterrence. This is a white collar crime, so the sentence imposed here is far more likely to have a deterrent effect on Mr. Brown's cohorts, those also involved in the medical profession, than a sentence in a drug case or an illegal re-entry case.
I do agree ... that people in the healthcare field, people who are business-men and women who are business people, they engage in a cost/benefit analysis. And the benefit is the benefit if you don't get caught, and the cost is the probability of getting caught multiplied by the sanction.
And there's a low probability of getting caught, so the sanction has to be serious. It has to be real, if there's any hope of ensuring that at least when people look at the cost and the benefits, when they're contemplating fraud, that they realize that cost will outweigh the benefits.
And finally, there's Mr. Brown's failure to accept responsibility, and in particular his repetition of the claim ... that he wasn't responsible for the fraud.[8]

         2. Ms. Talaga

         The probation office also prepared a PSR for Ms. Talaga. It set her base offense level at six pursuant to § 2B1.1, and applied an eighteen-level increase for the amount of loss (greater than $2.5 million, but less than $7 million). It also included a two-level increase for use of sophisticated means and a two-level increase for a federal health-care offense. These determinations yielded an offense level of twenty-eight that, when combined with a criminal history category of I, yielded a guidelines range of seventy-eight to ninety-seven months.

         Ms. Talaga objected to various aspects of the PSR. Her primary argument was that the intended loss amount should be reduced. She submitted that her "intended loss could not have been more than the amount that Medicare actually paid because Ms. Talaga knew that Medicall... would not have obtained the full $4M that Medicall ... fraudulently billed."[9]Specifically, she noted that an application note to the fraud guideline states "that the aggregate dollar amount of fraudulent bills 'is evidence sufficient to establish the amount of [the] intended loss, if not rebutted' by the defendant."[10] She claimed that

[u]nlike co-defendants Rick Brown and Dr. Roger Lucero, [she] "was intimately familiar with the billing procedures of the medical practice" as well as with 42 U.S.C. § l395w-4(a)(1), which provides that Medicare can never pay any more than "the amount determined under the Medicare fee schedule." The Government's own investigation establishes that Ms. Talaga successfully completed "Medical Billing/' a course at Triton Junior College, and the "Medical Billing" course syllabus explains than the course is "all about Medicare and medical billing problems, " but that the course covers mostly Medicare issues. Further, Triton College staff and a Triton Medical Billing course professor confirmed that the course "cover[s] in depth" the Medicare regulation that Medicare can never pay any more than the Medicare fee schedule. Even aside from Ms. Talaga's schooling, Ms. Talaga would have had to have understood Medicare's payment practices because her income was based entirely on Medicare payment amounts with respect to her submitted bills to Medicare.[11]

         Consequently, she claimed, she had rebutted the Government's prima facie case.

         Ms. Talaga also argued that the amount of loss should be decreased because she did not recognize that she was com- mitting fraud when she first began at Medicall.[12] Ms. Talaga pointed to the testimony of another biller, Arian Shogren, who testified that Mr. Brown told her that all patients actually were receiving Care Plan Oversight. At first, Shogren stated that she believed Mr. Brown; however, "she recognized the fraud 'at the end' of her time working at Medicall.[13] Ms. Talaga submitted that she, similarly, did not recognize the fraud at the outset.

         The court accepted that, as an experienced biller, she would be familiar with Medicare's reimbursement levels. Therefore, concluded the court, Ms. Talaga should not be responsible for the amount of all the false claims, but only those that fell within the reimbursement schedule set by Medicare. Thus Ms. Talaga's amount of loss was reduced to $3, 262 million.[14] The court also reduced Ms. Talaga's loss amount by $222, 000 for the few months during the conspiracy that she did not work for Medicall. These reductions, however, did not result in a reduction in offense level.

         The court rejected Ms. Talaga's argument that she should not be responsible for fraudulent billings from the beginning of her tenure.[15] The court found by the preponderance of the evidence that a seasoned and trained medical biller would have realized, from the outset, that not every single patient was receiving Care Plan Oversight, that the number of hours being billed for Care Plan Oversight could not be reconciled with the number of actual services that ...


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