U.S. v. Sriram

• Decision Date: 09 April 2007
• Docket Number: No. 05-2802.,No. 05-2752.,05-2752.,05-2802.
• Citation: 482 F.3d 956
• Parties: UNITED STATES of America, Plaintiff-Appellant/Cross-Appellee, v. Krishnaswami SRIRAM, Defendant-Appellee/Cross-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

482 F.3d 956

UNITED STATES of America, Plaintiff-Appellant/Cross-Appellee, v. Krishnaswami SRIRAM, Defendant-Appellee/Cross-Appellant.

No. 05-2752.

No. 05-2802.

United States Court of Appeals, Seventh Circuit.

Argued November 7, 2006.

Decided April 9, 2007.

M. David Weisman (argued), Office of the United States Attorney, Chicago, IL, for Plaintiff-Appellant/Cross-Appellee.

Bradley J. Bolerjack, Steven A. Miller (argued), Sachnoff & Weaver, Chicago, IL, for Defendant-Appellee/Cross-Appellant.

Before EASTERBROOK, Chief Judge, and POSNER and WOOD, Circuit Judges.

POSNER, Circuit Judge.

The defendant, a cardiologist who had billed Medicare some $17 million over a five-year period, pleaded guilty to health care fraud and tax fraud. He admitted having received "substantial payments" for fraudulent claims (estimated in the presentence investigation report to be between $5 and $10 million) submitted to health insurers and having defrauded the government of more than $550,000 in income tax. After a 13-day sentencing hearing, the district judge threw up his hands and imposed an absurdly light sentence of five years' probation for both the health fraud and the tax fraud (the sentences to run concurrently) plus restitution of $1,258.

The government appeals, but the defendant cross-appeals, contending that the government fell so far short of obtaining the relief it sought (an 18-year sentence), and engaged in such "vexatious" conduct (mainly inducing the defendant to hire a good and therefore expensive lawyer by threatening the defendant with a heavy punishment!), that he rather than the government should be regarded as the prevailing party within the meaning of Pub.L. 105-119, Title VI, § 617, Nov. 26, 1997, 111 Stat. 2519 (which appears as a statutory note to 18 U.S.C. § 3006A and which the cases refer to as the "Hyde Amendment"), and should therefore be awarded his attorneys' fees.

The cross-appeal is frivolous. The Hyde Amendment authorizes the court in a criminal case to award a reasonable attorney's fee to "a prevailing party, other than the United States," if the court finds that the government's position was "vexatious, frivolous, or in bad faith." So even if the government's position is vexatious, etc., the defendant cannot be awarded fees unless he is the prevailing party. A defendant who is convicted and sentenced is not the prevailing party even if the sentence is light; the government is the prevailing party. For the general principle, see Farrar v. Hobby, 506 U.S. 103, 111-14, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992) ("the prevailing party inquiry does not turn on the magnitude of the relief obtained," id. at 114, 113 S.Ct. 566), and Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health & Human Resources, 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001), and for its application to the Hyde Amendment see United States v. Campbell, 291 F.3d 1169, 1171-72 (9th Cir.2002), and United States v. Beeks, 266 F.3d 880, 883 (8th Cir.2001) (per curiam).

So we turn to the appeal of the government, which argues that the district judge committed two fatal sentencing errors. He miscalculated the loss caused by the defendant's fraud, underestimating it by at least a factor of a thousand, and he imposed a sentence that would have been unreasonable even if his calculation of the loss had been defensible.

The judge ruled that the only loss the government had proved was the face amount of two checks that the defendant admitted having received for medical services he hadn't performed. Yet the defendant had admitted in his plea agreement that he had knowingly: created fraudulent records, billed insurers for tests and other medical procedures that were not performed, and received insurance payments for services to patients who had died before the services allegedly had been rendered, for services allegedly rendered when he was not in the United States, for services on a single day that he could not have performed in fewer than 25 hours, and for still other services that he had not performed. He did not admit in the plea agreement to a specific amount of loss that his frauds had inflicted on the insurers, but it is inconceivable that the amount was as slight as the district judge thought.

As the length of the sentencing hearing suggests, the government presented extensive evidence in an effort to estimate the amount of money that the defendant had obtained by fraud. A number of patients for whose treatment he had billed insurers testified that he hadn't treated them at all or had treated them much less frequently than the bills claimed. He was shown to have billed for more than 24 hours of work a day on 401 days. On a day when Chicago was paralyzed by a snowstorm he billed for 28 home visits. Visas stamped on his passport confirmed his admission to having billed almost $50,000 for work supposedly performed on days when in fact he was out of the country. His own expert, after adjusting for innocent double billing (see next paragraph), determined that in order to have performed the services for which the defendant billed he would have had to treat an average of more than 18.38 patients a day, seven days a week, for 5.3 consecutive years—not a physical impossibility (though this depends on the breakdown between house calls and office visits), yet highly improbable for a cardiologist, especially since he admitted he worked only six days a week, which would have required him to treat more than 20 patients a day.

The government's expert witness, who tried to add up the fraudulent payments that the defendant had received, did commit errors. In some instances he classified a bill as fraudulent simply because it was the second one the defendant had submitted for the same procedure, though he had submitted it only because the first bill hadn't been paid. And with respect to a few of the dead patients, he may have treated the patient's spouse and mistakenly transposed the names.

Because of the errors committed by the government's expert, the judge found himself unable to calculate the exact amount of fraudulent payments that the defendant had received. The inability was genuine, but did not justify the judge's loss calculation. Suppose the evidence presented at a sentencing hearing shows that the loss inflicted by the defendant's crimes was no less than $1 million or more than $5 million but it is impossible to be more specific. Then for sentencing purposes the estimate of loss should not be zero, which is the implication of the district judge's approach in this case; it should be, at the very least, $1 million. United States v. Radtke, 415 F.3d 826, 842-43 (8th Cir. 2005); United States v. Chichy, 1 F.3d 1501, 1509-10 (6th Cir.1993). For then the defendant cannot complain that his sentence is based on a loss estimate that the government failed to prove. He wouldn't even be heard to complain if as in the Radtke case the judge had split the difference between the bottom and the top of the range of possible loss; for when precision in calculating the loss inflicted by a crime is unattainable, a reasonable estimate is all that the law requires. United States v. Spano, 421 F.3d 599, 608 (7th Cir.2005); United States v. Freitag, 230 F.3d 1019, 1025 (7th Cir.2000). When guilt beyond a reasonable doubt is duly determined, picking a sentence within the statutory range to punish the defendant for his crime does not require as much precision as the initial determination that he in fact committed the crime.

In defending the judge's estimate, the defendant's counsel reminded us that several of the patients who testified were unsure just how many house calls the defendant had made on them. One of the patients, who testified on direct examination that the defendant hadn't treated her in her apartment, acknowledged on cross-examination that he may have treated her once. But her insurer was billed for 12 visits; and the resulting uncertainty as to whether the defendant had billed for 11 or for 12 fictitious visits made it impossible to quantify his overbilling. But while such evidence could not support a point estimate of the loss inflicted by the defendant's frauds, it could support a minimum estimate.

The defendant testified that his record-keeping was sloppy; and sloppy records could generate unintentional false billing. If he made three house calls on a patient but he or his secretary inadvertently put a "1" in front of the "3" on the record of the visit, the result would be a false bill but not a knowingly false one. But the extensive admissions that the defendant made in connection with his plea of guilty to the charge of fraud made his false claims prima facie evidence of the amount of loss that the fraud inflicted, and...