May 23, 2017
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.
Bauer, Easterbrook, and Ripple, Circuit Judges.
RIPPLE, CIRCUIT JUDGE.
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.
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.
the district court did not err in its reasoning or in its
sentencing determination, we affirm its judgments.
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.
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.
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
hearing the evidence, the jury convicted both defendants on
all counts of the indictment.
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.
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
district court then considered "the 3553(a) factors one
by one." 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." 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." The second purpose articulated in 18
U.S.C. § 3553(a) "is to afford adequate deterrence
to criminal conduct." 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." The court stated that it agreed with the
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
the court noted that, with respect to specific deterrence, it
was "highly unlikely" that Mr. Brown would commit a
crime in the future. The court then sentenced Mr. Brown to
eighty-seven months' imprisonment.
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
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
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."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." She claimed
[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
she claimed, she had rebutted the Government's prima
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. 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. Ms. Talaga submitted that she,
similarly, did not recognize the fraud at the outset.
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. 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
court rejected Ms. Talaga's argument that she should not
be responsible for fraudulent billings from the beginning of
her tenure. 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 ...