U.S. v. Canova

• Decision Date: 08 May 2007
• Docket Number: Docket No. 05-6439-CR.
• Citation: 485 F.3d 674
• Parties: UNITED STATES of America, Appellant, v. John CANOVA, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

485 F.3d 674

UNITED STATES of America, Appellant, v. John CANOVA, Defendant-Appellee.

Docket No. 05-6439-CR.

United States Court of Appeals, Second Circuit.

Heard: February 5, 2007.

Decided: May 8, 2007.

Eric J. Glover, Asst. U.S. Atty., New Haven, CT (John H. Durham, Acting U.S. Atty., William J. Nardini, Asst. U.S. Atty., New Haven, CT, on the brief), for Appellant.

Paul Shechtman, New York, N.Y. (Michael J. Grudberg, Stillman, Friedman & Shectman, P.C., New York, N.Y., on the brief), for Defendant-Appellee.

Before: MESKILL, NEWMAN, and SACK, Circuit Judges.

JON O. NEWMAN, Circuit Judge.

This sentencing appeal primarily concerns the reasonableness of a downward departure from a Sentencing Guidelines calculation and the reasonableness of the resulting sentence. The Government appeals from the November 17, 2005, judgment by the District Court for the District of Connecticut (Alfred V. Covello, District Judge) resentencing the Defendant, John Canova, after a remand from this Court, to one year's probation and a $1,000 fine. The Government contends that the District Court's 15-level downward departure was unreasonable and that we should remand with instructions to impose a sentence of not less than 12 months. We agree that a remand for resentencing is required, but decline to specify a minimum sentence.

Background

The facts are set out in detail in the opinion on the prior appeal. See United States v. Canova, 412 F.3d 331 (2d Cir. 2005). We repeat only those pertinent to the issues on this appeal, as recounted at 412 F.3d at 336-40.

Canova's conduct. At all relevant times, Canova was Vice-President for Operations at Raytel Cardiac Services, Inc. ("Raytel"). Raytel performed transtelephonic pacemaker monitoring for Medicare patients. Transtelephonic monitoring involves a remote technician's testing the operation of a pacemaker by having the patient use a device to transmit telephonic signals that can be converted into an electrocardiogram ("ECG") report for review by a cardiologist.

The Medicare Coverage Issues Manual required monitoring of pacemakers over the course of three thirty-second phases and recording the results of each phase on magnetic tape.¹ Raytel was required to produce magnetic tape records of all three phases to receive Medicare compensation. However, after computerized testing was introduced in 1995, some Raytel technicians began to record an abbreviated strip of magnetic tape for the last phase or to omit it altogether. Canova knew of this practice, and the performance quotas he imposed contributed to it. Sometime in 1999, Canova suggested to a subordinate that the Medicare Manual could be construed not to require production of a strip for the last phase if the telephonic signals were recorded in audio format. His subordinate called Medicare, and the persons with whom he spoke could not answer his questions about the Manual.

At some point, Medicare's Connecticut carrier received an anonymous complaint that Raytel was not complying with Medicare's requirements. In 1999, the carrier informed Raytel that it refused to pay, or was seeking reimbursement for having paid, Medicare claims for noncompliant monitoring. In response, Canova falsely wrote that Raytel had complied with all relevant regulations and was producing thirty-second strips for all three phases.

After receiving Canova's letter, Medicare decided to conduct an audit of Raytel's Connecticut facility. The day before the visit, Canova instructed his managers to tell the auditors that Raytel had complied with the Medicare Manual even though he knew this was false. Following the audit, Canova falsely asserted in a letter that Raytel's "standard operating procedure [was] to obtain the full 90 seconds of ECG." Id. at 339 (alteration in original). He also represented that Raytel would send the auditors certain records they had requested.

In March 2000, when Raytel had failed to produce the requested records, Medicare gave Raytel thirty days in which to correct deficiencies in its archive system and to certify that all data in its records complied with the Medicare requirements. Canova instructed his managers to "clean up" the requested records to make it look as if they had been printed directly from the computer archives, although the "cleaned up" records were never transmitted to Medicare. See id. at 339 & n. 6. Even after learning that the requested records were noncompliant, Canova reported to Medicare that "the company had established a `new archive system . . . populated with tests starting with December 6th, 1999,' and that he was certifying Raytel's compliance with Medicare's regulations for tests conducted after that date." Id. at 340 (omission in original).

The conviction. After indictment and a jury trial, Canova was convicted of one count of conspiracy to defraud the United States by making false statements to Medicare agents in violation of 18 U.S.C. § 1001 and to obstruct a Medicare audit in violation of 18 U.S.C. § 1516, see 18 U.S.C. § 371; two counts of making false statements in violation of 18 U.S.C. § 1001; and one count of obstructing a federal audit by directing his employees to make false representations to auditors, see id. § 1516.

The first sentencing. Applying the 1998 Sentencing Guidelines,² the Probation Department recommended in its Presentence Report ("PSR") a total offense level of 25. Starting with a base offense level of 6 under section 2F1.1(a), which governed fraud offenses, the PSR added a 13-level enhancement for a $5 million loss, see U.S.S.G. § 2F1.1 (b)(1)(N); a 2-level enhancement for more than minimal planning, see id. § 2F1.1 (b)(2)(A); a 2-level enhancement for Canova's leadership role, see id. § 3B1.1(c); and a 2-level enhancement for obstruction of justice based on Canova's trial testimony, see id. § 3C1.1. The total offense level of 25 and a criminal history category ("CHC") of I yielded a Guidelines sentencing range of 57 to 71 months.

At the sentencing hearing, the District Judge concluded that the evidence did not support a loss calculation of $5 million. The Judge found that Raytel's noncompliance did not cause Medicare any harm at all. Finding no monetary loss, the Judge calculated the Guidelines range using an "alternative method." Relying on section 2J1.2, governing obstruction of justice offenses, he started with a base offense level of 12. He then applied a 2-level enhancement for Canova's leadership role. However, he rejected the Government's request for a 2-level enhancement for obstruction of justice, observing that he could not conclude that Canova perjured himself with the specific intent to obstruct justice.

From the adjusted offense level of 14 the District Judge granted Canova a 6-level downward departure based on "his extraordinary record of civil and public service," which included service in the U.S. Marine Corps, courageous service as a volunteer firefighter, and several "Good Samaritan" acts. The final offense level of 8, combined with a CHC of I, yielded a Guidelines sentencing range of 0 to 6 months' incarceration. The District Judge sentenced Canova to one year's probation and a fine of $1,000.

The first appeal. Canova unsuccessfully appealed from the denial of his motion for a new trial, but the Government's cross-appeal, challenging the sentence, was partially successful. The Government challenged the District Court's loss calculation, its denial of an obstruction-of-justice enhancement, and its charitable service downward departure.

We first noted that, after United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005)) a district court's sentencing decision is reviewed for reasonableness and that "a Guidelines error that appreciably influences this decision could render the final sentence unreasonable." Canova, 412 F.3d at 350, 351 (internal quotation marks and alterations omitted). Applying this standard, we concluded that it was necessary to remand for resentencing because the District Court had erred in declining to make a Guidelines loss calculation.

We first distinguished between actual loss and intended loss and focused most of our attention on the District Court's error in disregarding "intended" loss.³ See U.S.S.G. § 2F1.1, cmt. n. 8.⁴ We noted that Canova had been convicted not only of offenses involving a completed fraud—furnishing test results known to be noncompliant—but also of an offense involving intended fraud—making false statements to prevent Medicare from recouping payments made to Raytel for the noncompliant tests. See Canova, 412 F.3d at 354. The Government was entitled to recoup full payment for all noncompliant tests, see 42 U.S.C. § 1395gg; 42 C.F.R. §§ 405.371(a), 405.373, and the evidence showed that Canova knew of the Government's right to recoup, thereby providing a basis for inferring that his false statements interfered with the recoupment, see Canova, 412 F.3d at 354-55 & n. 24. Because Medicare payments to Raytel during the period covered by the audit were approximately $10 million and evidence supported the Government's "conservative" conclusion that 50 percent of Raytel's tests were noncompliant, we calculated the intended loss from Canova's actions to be $5 million. See id. at 355. We also advised the District Judge that he could rely on the intended loss in determining the appropriate loss enhancement for this case, rather than make the more difficult determination of actual loss. See id. at 355 n. 25; see also U.S.S.G. § 2F1.1, cmt. n. 8 ("[I]f an intended loss that the defendant was attempting to inflict can be determined, this figure will be used if it is greater than the actual loss.").

We declined to express an opinion on whether it would be appropriate to depart from the Guidelines range on the ground that the monetary loss overstated the seriousness of the offense, see U.S.S.G. § 2F1.1, cmt. n. 11. Canova, 412 F.3d at 351 n. 21. We also concluded that the District Court's error could...