U.S. v. Gupta

• Decision Date: 23 June 2009
• Docket Number: No. 08-12248.,08-12248.
• Citation: 572 F.3d 878
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Mahendra Pratap GUPTA, Cardinal Care, Inc., Marshal Medical Services, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

572 F.3d 878

UNITED STATES of America, Plaintiff-Appellant, v. Mahendra Pratap GUPTA, Cardinal Care, Inc., Marshal Medical Services, Inc., Defendants-Appellees.

No. 08-12248.

United States Court of Appeals, Eleventh Circuit.

June 23, 2009.

Leif M. Johnson, Billings, MT, Anne R. Schultz, Asst. U.S. Atty., Miami, FL, for U.S.

Neal R. Sonnett, Miami, FL, for Defendants-Appellees.

Appeals from the United States District Court for the Southern District of Florida.

Before BARKETT and PRYOR, Circuit Judges, and EDENFIELD,^* District Judge.

PRYOR, Circuit Judge:

This third appeal by the United States, see United States v. Gupta (Gupta II), 463 F.3d 1182, 1188 (11th Cir.2006); United States v. Gupta (Gupta I), 363 F.3d 1169, 1170 (11th Cir.2004), involves fundamental errors about the resentencing of Mahendra Gupta, who was convicted a decade ago of Medicare fraud involving millions of dollars, and an overarching issue about whether to reassign the case to a different district judge to conduct a fourth sentencing hearing. The United States argues that the district court erred in applying the Sentencing Guidelines abused its discretion when it declined to order restitution, and imposed an unreasonable sentence, and the United States, for the second time, see Gupta I, 363 F.3d at 1177, urges us to reassign the case to preserve the appearance of impartiality. Because we agree with the United States about the procedural errors in applying the Guidelines, the statutory mandate of restitution, and the need for reassignment, we need not evaluate the substantive reasonableness of Gupta's sentence. We vacate Gupta's sentence and remand for resentencing with an instruction that the case be reassigned to a different district judge.

I. BACKGROUND

In September 1997, a federal grand jury in the District of Montana indicted Gupta, three other persons, Allegheny Management Company, and ten home healthcare agencies on 16 counts stemming from Medicare fraud. Gupta I, 363 F.3d at 1170-71. The indictment charged that the defendants violated the related-party regulation, 42 C.F.R. § 413.17, which required home healthcare agencies to report services provided by related companies and provided that, subject to cost caps, Medicare would reimburse the agency for only the cost, not the profits, to the related company.

Gupta's fraud was complicated and extensive. By using "false claims, straw owners, and other deceptive actions to conceal the close relationship between the various persons[,]" Gupta I, 363 F.3d at 1170-71, Gupta positioned himself on both sides of consulting contracts between Allegheny and the home healthcare agencies, charged the agencies a higher price for the contracts and services he provided through Allegheny, and obtained reimbursement of that profit from Medicare. See Gupta II, 463 F.3d at 1188.

Edward Quinlan, one of the other individual defendants, was the putative owner of Allegheny, but Gupta created, funded, and profited from the management company. Id. Through Allegheny, "Gupta was able to charge Medicare between $50 and $150 per hour for the employees' services as opposed to approximately $17 per hour. In the first six months of Allegheny's business operations, it billed Gupta-owned health care agencies more than $1 million for consulting." Id. at 1188 n. 4. Between 1991 and 1997, the home healthcare agencies claimed reimbursement for Gupta's and Allegheny's consulting fees without disclosing the relationships between the parties. Id. at 1190. "From 1991 to 1997, Medicare reimbursed Corporate Defendants and [one of the dismissed corporate defendants] more than $15 million in Allegheny's fees." Id. Some of Gupta's straw owners were family members, including Gupta's father, Chandra Shekhar; his brother, Vijay Gupta; and his brother's in-laws, Dev Raj and Shanno Devi, who may have supported Gupta in exchange for immigration assistance. See id.

In July 1998, the case was transferred to the Southern District of Florida. Gupta I, 363 F.3d at 1171. The district court severed the trial of one individual defendant and the three home healthcare agencies he owned, and the government later dismissed the charges against those four defendants. Id. at 1171 & n. 3. The district court also dismissed all charges against two other home healthcare agencies.

Gupta, Quinlan, Kuldeep K. Hajela, Allegheny, and five home healthcare agencies proceeded to trial. The district court dismissed 13 counts of the indictment, which left only one count of conspiracy to defraud Medicare, 18 U.S.C. § 286, and two counts of mail fraud, id. §§ 1341, 1342, for trial. Gupta I, 363 F.3d at 1171. Before trial, the government submitted an expert report prepared by federal auditor Gary Young, who opined that Allegheny received approximately six million dollars in profits over a six-year period from consulting fees paid by related agencies. Trial commenced in October 1999. At the close of the government's case, all nine defendants moved for a judgment of acquittal. The district court granted Hajela's motion and reserved ruling on the motions of the other defendants. Id.

On November 5, 1999, the jury acquitted Quinlan and convicted Gupta, Allegheny, and the five home healthcare agencies. Id. Gupta, Allegheny, and the home healthcare agencies requested an extension of "at least three weeks" to file post-verdict motions, and the district court granted their request. Id. On November 29, 1999, Allegheny again moved for a judgment of acquittal, and on December 3, 1999, Gupta and the home healthcare agencies moved for a judgment of acquittal or, in the alternative, for a new trial. Id. at 1172. On January 27, 2000, the district court denied all pending post-trial motions. Id.

The presentence investigation reports also were disclosed in late January 2000, but sentencing was continued several times. Id. Gupta's report assigned a base offense level of six, with an additional 14 levels because the loss, according to the Young report, was more than five million dollars but not more than ten million dollars, United States Sentencing Guidelines § 2F1.1(b)(1)(O) (Nov.1999), two levels because the offense involved more than minimal planning, id. § 2F1.1(b)(2)(A), and four levels because Gupta was "an organizer or leader in a criminal activity that involved five or more participants or was otherwise extensive[,]" id. § 3B1.1(a), for a total offense level of 26. The report stated that the guideline range was 63 to 78 months of imprisonment with two to three years of supervised release and that Gupta could afford to pay a fine and restitution. Because Allegheny and the home healthcare agencies had repaid Medicare 1.2 million dollars, the report deducted that amount from the loss to Medicare calculated by Young and stated that "[r]estitution is owed to Medicare in the amount of $4,987,173." Gupta was 54 years old when the report was disclosed and disclaimed any history of mental or emotional problems, although he complained of anxiety and nausea.

Gupta objected to the calculation of the loss that formed the basis for the 14-level enhancement and the enhancements for more than minimal planning and a leading role in a criminal activity that involved five or more participants or was otherwise extensive. Gupta submitted an expert report prepared by Stanley Foodman, a certified public accountant, to substantiate his objection to the loss amount. Foodman opined that Medicare was not owed restitution because it did not reimburse the home healthcare agencies for any Allegheny profits. Gupta also objected to the lack of a downward adjustment for acceptance of responsibility and argued that "a downward departure ... is warranted" because "a level 26 ... `severely over-represents' the seriousness of the offense[,]" "the loss calculations vastly overstate the seriousness of the offense, the offense in which [he] was convicted is no longer a crime[,]" and he offered "extraordinary service to others[.]"

On January 25, 2001, Gupta and the five home healthcare agencies asked the district court to reconsider its denial of their 1999 motions for judgment of acquittal or a new trial. The government responded that the motion was untimely. The district court did not rule on that motion until more than a year and a half later.

On January 26, 2001, the district court held its first sentencing hearing. The district court stated that it would not allow the four-level enhancement for a leading role in a criminal activity that involved five or more participants or was otherwise extensive because "[the fraud] may have extended across the country but it was a very simple thing with regard to whether you check off the, whether it is a related company." The district court did not impose any sentence and took the motions for judgment of acquittal under advisement. The government submitted a sentencing memorandum and moved the court to appoint an independent auditing expert. The district court did not appoint the expert and continued sentencing again, until September 2002, and then again, until the next month.

On October 16, 2002, almost three years after the original post-verdict motions were filed, the district court entered judgments of acquittal for Gupta and the five home healthcare agencies. For reasons that remain unclear, the district court also entered a judgment of acquittal for Allegheny even though Allegheny had never asked the district court to reconsider the earlier denial of its motion. Gupta I, 363 F.3d at 1172. The government appealed and argued that the district court lacked jurisdiction to entertain the motions because they were untimely under Federal Rules of Civil Procedure 29 and 33. Id. The government also requested a reassignment to a different district judge. Id. at 1177.

In March 2004, we ruled that the district court lacked jurisdiction to consider the late motions, vacated the judgments of acquittal, reinstated the jury verdicts, and remanded the case for...