U.S. v. Feldman

• Citation: 647 F.3d 450
• Decision Date: 01 August 2011
• Docket Number: 10–2276–cr (con).,Docket Nos. 10–2275–cr (L)
• Parties: UNITED STATES of America, Appellee,v.Jerome H. FELDMAN, Defendant–Appellant.
• Court: U.S. Court of Appeals — Second Circuit

647 F.3d 450

UNITED STATES of America, Appellee,

v.Jerome H. FELDMAN, Defendant–Appellant.

Docket Nos. 10–2275–cr (L)

10–2276–cr (con).

United States Court of Appeals, Second Circuit.

Submitted: May 25, 2011.Decided: Aug. 1, 2011.

Vijay Shanker, Attorney (Lanny A. Breuer, Assistant Attorney General, Greg D. Andres, Acting Deputy Assistant Attorney General, on the brief), U.S. Department of Justice, Washington, DC, for Richard S. Hartunian, United States Attorney (Brenda K. Sannes, Appellate Chief, on the brief), Northern District of New York, Albany, NY, for Appellee.James F. Greenwald, Assistant Federal Public Defender (James P. Egan, on the brief), for Alexander Bunin, Federal Public Defender, Syracuse, NY, for Appellant.Before: McLAUGHLIN, POOLER, and SACK, Circuit Judges.POOLER, Circuit Judge:

Jerome H. Feldman, once a practicing psychiatrist, defrauded Medicare by receiving funds he was not entitled to receive and then fled the country to live as a fugitive in the Philippines. There, Feldman created the website www. liver 4 you. org, fraudulently promising to provide critically ill patients liver or kidney transplants for $65,000 to $130,000. After Feldman was located in the Philippines and deported to the United States, Feldman was prosecuted for such conduct. Feldman pleaded guilty to one count of health care fraud, see 18 U.S.C. § 1347, and five counts of wire fraud, see 18 U.S.C. § 1343, and was sentenced to 188 months in prison and three years of supervised release. Feldman appealed, arguing that the district court committed four procedural errors in calculating Feldman's offense level and imposed a substantively unreasonable sentence.

This case raises two novel issues. First, the Government argues that we should not consider the four procedural errors claimed by Feldman because at sentencing the district court stated it would impose “the same sentence” even without some of the alleged errors. We reject this contention for the reasons expressed herein and we emphasize that such predictions are only rarely appropriate. Second, Feldman argues that his liver4you.org website was not mass-marketing pursuant to U.S.S.G. § 2B1.1(b)(2)(A)(ii) because he did not initiate contact with his victims; they found his website—publicly available online—and emailed him at an address listed on the website. We reject Feldman's distinction. Feldman committed fraud by using the internet to solicit a large number of persons to buy his organ transplant services. The enhancement applies even if Feldman did not use the most active marketing method possible.

I.

The facts relevant to this appeal are largely taken from the presentence report (“PSR”) prepared by Feldman's supervising probation officer. Because all but one of the PSR's factual findings were adopted by the district court for purposes of sentencing, and such findings are necessary to our review, the PSR is hereby unsealed to the extent this opinion describes the information within it.

A.

From 1995 to 1997, Feldman, a practicing psychiatrist, owned and operated the Jerome Feldman Community Mental Health Center (“JFC Center”) in two locations in Florida. Feldman applied for federal certification of the JFC Center as a community mental health center. With such certification, the JFC Center would be eligible for Medicare reimbursement of the reasonable costs of providing partial hospitalization services to Medicare patients. See 42 U.S.C. § 1395x(ff) (1994) (defining, inter alia, “partial hospitalization services” and “community mental health center”); see also id. § 1395 l(a)(2) (specifying amount of reimbursement). In his application, Feldman vouched that the JFC Center provided all psychiatric services that Medicare required community mental health centers to provide. See id. § 300x–2(c)(1) (listing Medicare-required services that community mental health centers must provide to patients). In March 1995, the JFC Center received a Medicare provider number, allowing it to file Medicare claims and be reimbursed for services provided at the Center. Feldman also retained his personal Medicare and Medicaid provider numbers he had received in 1986.

By June 1997, after operating the JFC Center for two years, Feldman had filed claims for, and had received, over a million dollars of Medicare and Medicaid funds. That month, state and federal officials began investigating whether the JFC Center submitted fraudulent claims for reimbursement. Investigators interviewed JFC Center employees, who admitted numerous violations of Medicare rules. One employee, hired by Feldman in 1995, told investigators that Feldman, among other things, instructed employees to falsify patient progress notes for Medicare reimbursement and charged Medicare for group therapy services that he did not personally provide.

The medical records supported these admissions. Investigators asked to review medical records for a sample of 20 Medicare patients who Feldman claimed received partial hospitalization services at the JFC Center. Four of the 20 records could not be located and the remaining 16 records all lacked the required physician orders for partial hospitalization services and did not otherwise qualify for Medicare reimbursement.

The physical premises also concerned the investigators. Believing that the JFC Center's building was “in extreme disrepair, unsafe, and unsanitary,” investigators immediately contacted the Orange County Health Department. The very same day, state officials condemned the building after discovering, among other violations, that the building lacked running water and fire safety equipment.

Because the JFC Center building had been condemned and Feldman was suspected of filing fraudulent claims, Feldman's and the JFC Center's Medicare provider numbers were terminated in June 1997. A few months later, in September 1997, Feldman's Medicaid provider number was suspended. All Medicare and Medicaid payments to the JFC Center were suspended. From August 1996 to June 1997, Feldman's false and fraudulent claims caused a total Medicare and Medicaid loss of $1,131,771.

B.

During an overlapping time period—from 1996 to 1999—Feldman owned and operated three HIV clinics in Florida called “Second Chance in Life.” Because Feldman was suspended from the Medicare program and his Medicare provider number had been terminated, Feldman was prohibited from receiving Medicare funds until he rebutted his suspension or applied for reinstatement of his provider number. Despite this requirement, Feldman instead hired doctors with their own provider numbers and then billed Medicare under those doctors' provider numbers, receiving over $207,000 in Medicare payments from one doctor and over $378,000 from another.

C.

On August 23, 1999, Feldman entered into a plea agreement with the United States, admitting that he was guilty of committing health care fraud through his operation of the JFC Center. Thereafter, Feldman failed to appear for an initial conference in the District Court for the Middle District of Florida on October 5, 1999. As a result, the United States filed a criminal complaint against Feldman; the district court issued an arrest warrant for Feldman; and on November 10, 1999 Feldman became a fugitive from justice. Although not known by law enforcement officials at the time, Feldman had fled the United States to live in the Philippines as a fugitive.

D.

After fleeing U.S. authorities, and with an arrest warrant outstanding, Feldman hoped to capitalize on a Philippine policy (rescinded in 2008) allowing foreign visitors to obtain organ transplants from unrelated Filipino living donors. In November 2000, Feldman registered the website www. liver 4 you. org using the alias “Alberto Gomez.” By May 2001, the website was publicly available and offered live kidney transplants and live or cadaver liver transplants allegedly to be performed by qualified surgeons in a Philippine hospital. The website claimed that the transplant program was run by the Philippines Ministry of Health, and listed the following prices:

kidney transplant: $65,000–$95,000

liver transplant: $130,000

The website listed several email addresses, including fastertran splant@ yahoo. com, at which persons interested in obtaining an organ transplant could request further information. “Dr. Mitchel Michaelson” and his associate “Alberto Gomez”—both aliases of Feldman's—promised to arrange a patient's transplant surgery.

In addition to the website, Feldman used various aliases to open bank accounts and UPS mailboxes in the United States. Feldman opened one bank account in DeWitt, New York and a mailbox in Fayetteville, New York, both near his wife's residence in Baldwinsville, New York.

During the course of his liver4you.org scheme, Feldman attracted at least five patients. As described below, each patient (or caretaker) learned from the liver4you.org website of Feldman's offer to secure an organ transplant; initiated contact with Feldman using an email address listed on the liver4you.org website; paid money to Feldman to receive an organ transplant; and learned, after traveling to the Philippines, that Feldman lacked the power, outside of the normal workings of the Philippine medical system, to guarantee an organ transplant. In total, the five patients or their caretakers lost over $300,000.

1.

In March 2006, the first patient's son emailed Feldman at fastertran splant @ yahoo. com, the email address listed on Feldman's liver4you.org website. The son told Feldman that his father was in dire need of a kidney and was desperately seeking a transplant. Feldman, using the alias Dr. Mitch Michaelson, promised the son that he would arrange a transplant, in a legal manner, for $85,000. On May 8, 2006, the patient wired a $30,000 initial payment to Feldman's DeWitt bank account and shortly thereafter flew to Manila, Philippines. When Feldman met the patient in the Philippines, he demanded that the patient pay more money before the...