U.S. v. Miller

• Decision Date: 14 January 2003
• Docket Number: No. 02-4078.,02-4078.
• Citation: 316 F.3d 495
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Robert B. MILLER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

316 F.3d 495

UNITED STATES of America, Plaintiff-Appellee, v. Robert B. MILLER, Defendant-Appellant.

No. 02-4078.

United States Court of Appeals, Fourth Circuit.

Argued October 31, 2002.

Decided January 14, 2003.

ARGUED: Michael William Carey, Carey, Scott & Douglas, P.L.L.C., Charleston, West Virginia, for Appellant. Hunter P. Smith, Jr., Assistant United States Attorney, Charleston, West Virginia, for Appellee. ON BRIEF: Kasey Warner, United States Attorney, Charleston, West Virginia, for Appellee.

Before WILKINSON, Chief Judge, and LUTTIG and MOTZ, Circuit Judges.

Affirmed by published opinion. Judge DIANA GRIBBON MOTZ wrote the opinion, in which Chief Judge WILKINSON and Judge LUTTIG joined.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

Dr. Robert Miller pled guilty to mail fraud for over-billing third-party insurers for services rendered in his medical practice. On appeal, Miller argues that, when sentencing him, the district court miscalculated the amount of loss resulting from this fraud. Finding no reversible error in the district court's loss calculation, we affirm.

I.

A grand jury indicted Miller on twenty-two counts of mail fraud in violation of 18 U.S.C.A. § 1341 (West 2000). The indictment charged Miller with submitting false claims to Medicaid, Medicare, West Virginia's Workers' Compensation program, and other health insurance providers. Miller pled guilty to one count of mail fraud. The district court conditionally accepted Miller's plea pending receipt and review of a presentence investigation report (PSR).

In the PSR, the probation officer concluded that Miller defrauded Medicare, Medicaid, Workers' Compensation, and private insurers in four different ways. First, attempting to seek a higher reimbursement rate, Miller billed ordinary new patient visits as more expensive "consultations." Second, Miller routinely "upcoded" services performed during office visits, claiming reimbursement for a higher level of service than he actually provided. Third, Miller engaged in "phantom billing" — submitting claims for office visits, services, and equipment that he never provided. Finally, Miller used false diagnosis codes to claim reimbursement for services not covered by Medicare and Medicaid.

In preparing the PSR, the probation officer reviewed over 200 Medicare and Medicaid reports in an attempt to estimate the total loss resulting from Miller's fraudulent conduct. This review disclosed an error rate of 94% in Miller's Medicare billing and 85% in his Medicaid billing. This review also revealed that Miller's practice of upcoding could result in payment three times or more than legally authorized.

Additionally, the probation officer relied on the results of an investigation by several undercover law enforcement officers who made visits to Miller. In 23 out of the 24 visits made by the officers, Miller submitted fraudulent claims to the Government or private insurers. Finally, the officer noted in the PSR that Miller paid $1.3 million to settle the civil suit filed by the Government, $375,000 of which represented alleged overpayments by Medicare and Medicaid.

In summary, the PSR estimated that total losses to Medicare, Medicaid, Workers' Compensation, and private insurers exceeded $200,000. However, the PSR recommended that the district court adopt the more "conservative estimate" of $150,000 in losses, based only on losses to Medicare and Medicaid for fraudulent consultations. This figure did not include any losses to Workers' Compensation or private insurers, nor did it include losses to Medicare or Medicaid resulting from Miller's fraudulent practices of "upcoding," "phantom billing," or false diagnoses. Pursuant to U.S. Sentencing Guidelines Manual ("U.S.S.G.") § 2F1.1(b)(1)(H) (2000), which establishes an increase of seven offense levels if an offense involves more than $120,000 but less than $200,000, the PSR recommended an increase of seven offense levels based on the estimated loss of $150,000.

Miller filed objections to the PSR, disputing the loss calculation contained in the report. He also moved for a downward departure pursuant to U.S.S.G. § 5K2.0. In his written objection to the PSR, and orally at the sentencing hearing, Miller argued that the proper measure of loss for sentencing purposes was the difference between the amount he actually received from Medicare and Medicaid and the amount to which he was legitimately entitled for the services he rendered. Using this formula, and after comparing his patient records with Medicare and Medicaid billing information, a billing specialist hired by the defense estimated the proper loss amount to be between $22,440 and $38,955. According to Miller's calculations, the offense level based on the estimated loss should therefore have been increased by four levels, rather than the seven recommended in the PSR. See U.S.S.G. § 2F1.1(b)(1)(E).

At the sentencing hearing, the Government conceded that some of Miller's objections to the PSR were reasonable and that the defense expert's loss estimate was based on better data than the PSR. However, the Government argued that the proper formula for calculating loss was the difference between the amount Miller billed (rather than the amount he actually received) and the amount to which he was legitimately entitled. Under this formula, the Government computed losses of approximately $73,000, using Miller's own, most generous estimate of the amount of money to which he was entitled. Pursuant to U.S.S.G. § 2F1.1(b)(1)(G), the Government therefore recommended increasing the offense level by six levels based on estimated loss in the range of $70,000 to $120,000.

Relying on the findings in the PSR and the evidence presented by Miller and the Government at the sentencing hearing, the district court concluded that $100,000 would be a conservative estimate of the loss in this case. However, because the Government conceded at the sentencing hearing that it had only established loss in an amount ranging from $73,000 to $76,000, the court held that the total loss amount was between $73,000 and $76,000 and accordingly increased Miller's offense level by six levels. See U.S.S.G. § 2F1.1(b)(1)(G). The court also denied Miller's motion for a downward departure.

II.

The Sentencing Guidelines direct courts to increase the offense level for defendants convicted of fraud commensurate with the amount of loss involved in the fraud. See U.S.S.G. § 2F1.1(b)(1). Miller challenges the district court's interpretation of "loss" under the Sentencing Guidelines on two grounds. First, he contends that the district court erred in interpreting the term "loss" under the Guidelines to encompass intended, rather than actual, loss. Second, he argues that even if the district court correctly used intended loss in its calculations, the Guidelines limit intended loss to the amount of loss that was likely, or possible, and the loss calculated by the district court was not likely.

We consider each of these arguments in turn, reviewing the district court's interpretation of the term "loss" under the Sentencing Guidelines de novo. See United States v. Dawkins, 202 F.3d 711, 714 (4th Cir.2000); United States v. Parsons, 109 F.3d 1002, 1004 (4th Cir.1997).

A.

Miller argues initially that precedent and the commentary to the Sentencing Guidelines require, in cases like his, that courts use the actual, rather than the intended, amount obtained through fraud to compute loss for sentencing purposes. He maintains that the district court erred, therefore, in using the amount he intended to obtain to compute the loss attributable to his fraud. In support of this proposition, Miller cites language from Dawkins, Parsons, and U.S.S.G. § 2F1.1, application note 8(d). Miller misreads our precedent and note 8(d).

1.

Neither Parsons nor Dawkins addresses the actual rather than intended loss question. Moreover, other circuit precedent makes clear that a court may use intended, rather than just actual, loss in calculating the loss attributable to fraud for sentencing purposes.

Parsons, 109 F.3d at 1003, involved an employee of the United States Postal Service convicted of mail fraud for submitting false travel vouchers for cash advances or reimbursement. The vouchers sought reimbursement for some nonexistent expenses, but also sought reimbursement for some expenses legitimately incurred in the course of business. Id. At sentencing, the district court held that the amount of loss was the total amount claimed on the false vouchers. Id. We vacated that determination because the district court had failed to subtract legitimate expenses from the total amount of loss. Id. We explained that "[l]oss is not the total amount of the benefits the defendant received, because some benefits may be rightfully due; instead, loss is measured by the amount diverted from proper purposes." Id. at 1004.

In Dawkins, 202 F.3d at 712, a jury convicted another postal worker of making false statements to obtain federal employee's compensation benefits. The district court found that the postal worker's false statements had disentitled him to any compensation benefits, and that the loss, therefore, was the entire amount of benefits Dawkins received as a result of his false statements. Id. at 714. We vacated, holding that Parsons dictated that loss be calculated as "the difference between the amount of benefits Dawkins actually received and the amount he would have received had he truthfully and accurately completed the [benefits] forms." Id. at 715 (citing Parsons, 109 F.3d at 1004-05).

In this case, Miller focuses on our use of the phrase "benefits ... actually received" in Dawkins, id., and similar language in Parsons, 109 F.3d at 1004 ("tangible economic loss of the victim"), to argue that the district court erred in using the loss he intended in calculating the fraud loss amount. However, neither Parsons nor Dawkins involved intended, but unrealized, losses. Unlike Miller, both...