U.S. v. Mischler, 85-2213

• Decision Date: 27 March 1986
• Docket Number: No. 85-2213,85-2213
• Citation: 787 F.2d 240
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Paul W. MISCHLER, Carol L. Mischler, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 240

787 F.2d 240

UNITED STATES of America, Plaintiff-Appellee, v. Paul W. MISCHLER, Carol L. Mischler, Defendants-Appellants.

No. 85-2213.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 5, 1985.

Decided March 27, 1986.

Robert E. Owens, Cincinnati, Ohio, for defendants-appellants.

Paula E. Lopossa, Asst. U.S. Atty., John Daniel Tinder, U.S. Atty., Indianapolis, Ind., for plaintiff-appellee.

Before CUDAHY and RIPPLE, Circuit Judges, and WILL, Senior District Judge. ^*

RIPPLE, Circuit Judge.

Appellants Paul W. and Carol L. Mischler (the Mischlers) contended, in a pro se action in the district court, ¹ that the imposition of restitution as part of their sentences breached their plea agreement. The district court denied relief. While we see no merit to the contention that the plea agreement was breached, the district court did not properly ascertain the amount of restitution which could be imposed. We also note that Mr. Mischler was sentenced under an inapplicable statute. ² Therefore, we reverse and remand to the district court for resentencing.

I

On June 20, 1984, the Mischlers were indicted on thirteen counts of making false statements to the Department of Health and Human Services (HHS) in violation of 18 U.S.C. Sec. 1001 and one count of conspiring with their corporation, Vincennes Ambulance Service, Inc. (Vincennes), to make false statements to HHS in violation of 18 U.S.C. Sec. 371. These indictments stemmed from the Mischlers' operation of Vincennes and two subsidiary ambulance services in the city of Vincennes, Indiana. These services provided emergency medical transportation to and from medical treatment facilities. The Mischlers arranged for their Medicare patients to assign their reimbursement claims to Vincennes. They then forwarded the claims to Blue Shield of Indiana for reimbursement. Blue Shield was authorized by HHS to administer Part B of the Social Security Act which provides for emergency medical transportation under certain limited conditions.

The Mischlers represented to Blue Shield that the patients they were transporting were stretcher patients who qualified for Medicare reimbursement. Actually, the patients were ambulatory. Transport of wheelchair patients was not a Medicare-covered expense. The indictment also charged that the Mischlers inflated the actual mileage to and from the health care facilities thereby increasing the amounts for which they were reimbursed. In response to complaints by company employees about these practices, an HHS investigation was begun. As a result of the investigation, on June 20, 1984, indictments were issued. At the July 5, 1984 arraignment, the Mischlers entered pleas of not guilty, and an August trial date was set. The trial date was later continued to September 11, 1984. Following a July 17 discovery conference, all documentary evidence against the Mischlers--including the Blue Cross Blue Shield audit--was disclosed to the Mischlers. Over the course of the ensuing weeks, the parties engaged in plea negotiations. Although the issue of restitution was discussed in these negotiations, no agreement was reached.

On September 11, 1984, the Mischlers withdrew their pleas of not guilty and, in accordance with a Memorandum of Plea Negotiations and Plea Agreement entered into by the Mischlers and the government, pleaded guilty to the first count of the indictment. The Memorandum contained no agreement regarding restitution. ³ At this change of plea hearing, the Mischlers stated that they had entered into the agreement voluntarily and that they understood the agreement. Pursuant to the Plea Agreement, the thirteen remaining counts were dismissed.

In support of the Mischlers' pleas of guilty to the first count, the government introduced the 1983 Blue Cross Blue Shield audit. This audit was based on half of the claims filed between 1978 and 1980 and all claims filed in 1981 and 1982. It indicated that the Mischlers had received overpayments of $216,167.32 from the Department of Health and Human Services for Medicare-covered expenses during the years 1978 through 1982. The accuracy of this figure was contested by counsel for the Mischlers. After accepting the changes of pleas, the district judge referred the case to the United States Probation Office for a presentence investigation and report for each defendant. The presentence reports for both Paul and Carol Mischler contained a copy of the Blue Cross Blue Shield audit. The reports suggested jail sentences and fines, but they neither recommended restitution nor recited an actual loss figure.

On October 23, 1984, the district judge sentenced the Mischlers. At the sentencing hearing, the Mischlers again objected to the actual loss figure stated in the Blue Cross Blue Shield audit. Paul Mischler was sentenced to serve a two year executed sentence and to pay $108,083.61 in restitution to Medicare pursuant to the provisions of 18 U.S.C. Sec. 3579. ⁴ Carol Mischler was given a two year sentence. She was ordered to serve an executed sentence of ninety days, which was later modified to twenty-one days, and the balance on probation pursuant to the "split sentencing" provision of 18 U.S.C. Sec. 3651. ⁵ Additionally she was required to make restitution in the amount of $108,083.61 within the period of probation. The Mischlers' objections to the imposition and amount of restitution imposed were raised in their petition for writ of error coram nobis filed on April 10, 1985. The district court's June 28, 1985 denial of that petition is the basis of this appeal.

II

The issues on this appeal ⁶ are whether imposition of restitution was permissible in light of the language of the plea agreement and, if so, whether the amount imposed was permissible under the relevant statutes. We shall consider these questions in order.

A. The Plea Agreement

The Mischlers' first argument is that the plea agreement expressly precluded imposition of restitution. Therefore, according to the Mischlers, imposition of restitution is a breach of the plea agreement and a violation of Fed.R.Crim.P. 11. Rule 11 provides that both the judge and the government are bound by the plea agreement entered into by the parties. Contravention of the terms of the agreement is impermissible. "[W]hen a plea rests in any significant degree on a promise or agreement of the prosecutor, so that it can be said to be part of the inducement or consideration, such promise must be fulfilled." Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 499, 30 L.Ed.2d 427 (1971).

We are not confronted with a situation comparable to Santobello here since there was no breach of the plea agreement. The Mischlers agreed to plead guilty to the first count of the indictment; the remaining thirteen counts would be dismissed. No agreement was made on the matter of restitution. ⁷ A fair reading of the plea agreement establishes that the question of restitution--and indeed all aspects of the sentencing process--were to be decided by the district judge.

B. The Amount of Restitution

The Mischlers' next argument is that, if restitution were a permissible component of the sentence, the amount imposed must be limited to the amount recited in the count to which they each pled guilty.

The district judge ordered the Mischlers each to pay as restitution $108,083.61, half of the $216,167.32 figure recited in the Blue Cross Blue Shield audit as overpayments. However, count one of the indictment, to which the Mischlers pled guilty, recites no dollar amount. Instead, the indictment refers to the numbers of checks sent to the Mischlers as reimbursement for covered Medicare services. The total amount of the checks listed in count one is less than $2000. Moreover, nowhere in the indictment is there a statement of the total amount of loss caused by the Mischlers' fraudulent statements to Medicare.

Imposing restitution as part of a sentence is authorized under two distinct provisions--18 U.S.C. Secs. 3651 and 3579. Section 3651 is the "split sentencing provision;" it authorizes imposition of restitution as a condition of probation. ⁸ Section 3579 is part of the Victim Witness Protection Act (VWPA or the Act). ⁹ The restitution provisions of the Act are effective only with respect to offenses committed after January 1, 1983. The VWPA does not supersede section 3651; rather, it complements the section. ¹⁰ Thus, restitution as a condition of probation still is governed by section 3651 while restitution as part of an executed sentence is available for offenses committed after January 1, 1983 under section 3579. ¹¹ Under either statute, the district judge acts within his authority in assessing restitution in excess of the amount indicated by the count to which the guilty plea was entered. See United States v. Davies, 683 F.2d 1052, 1055 (7th Cir.1982); United States v. Roberts, 619 F.2d 1, 2 (7th Cir.1979). In Davies, we decided that it was permissible to "require restitution of any amount up to the entire illicit gain from such a scheme, even if only some specific incidents are the basis of the guilty plea." 683 F.2d at 1055. This rule recognizes the practicalities of plea negotiation in a complex criminal proceeding and harmonizes those realities with the purpose of restitution--to compensate the victim of the crime for actual loss and the desire to foster meaningful plea negotiations in multi-count indictment cases. Id. However, it has long been recognized that a convicted defendant is entitled to be sentenced "on the basis of accurate information." United States v. Rone, 743 F.2d 1169, 1171 (7th Cir.1984); see United States v. Tucker, 404 U.S. 443, 447, 92 S.Ct. 589, 591, 30 L.Ed.2d 592 (1972); Townsend v. Burke, 334 U.S. 736, 741, 68 S.Ct. 1252, 1255, 92 L.Ed. 1690 (1948); United States v. Harris, 558 F.2d 366, 374 (7th Cir.1977). Therefore, Davies is not without its safeguards:

[A] court acts within the limits of legislatively granted authority when it imposes...