United States v. Bailey

• Decision Date: 01 September 2020
• Docket Number: Nos. 18-5607/5901/5903,s. 18-5607/5901/5903
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Bryan BAILEY (18-5607); Calvin Bailey (18-5901); Sandra Bailey (18-5903), Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

973 F.3d 548

UNITED STATES of America, Plaintiff-Appellee,

v.Bryan BAILEY (18-5607); Calvin Bailey (18-5901); Sandra Bailey (18-5903), Defendants-Appellants.

Nos. 18-5607/5901/5903

United States Court of Appeals, Sixth Circuit.

Argued: January 29, 2020

Decided and Filed: September 1, 2020

ARGUED: Charles H. Barnett, IV, SPRAGINS, BARNETT & COBB, PLC, Jackson, Tennessee, for Appellant in 18-5607. Kenneth P. Tableman, KENNETH P. TABLEMAN, P.C., Grand Rapids, Michigan, for Appellant in 18-5901. Kevin M. Schad, OFFICE OF THE FEDERAL PUBLIC DEFENDER, Cincinnati, Ohio, for Appellant in 18-5903. Matthew Wilson, UNITED STATES ATTORNEY'S OFFICE, Jackson, Tennessee, for Appellee. ON BRIEF: Daniel J. Taylor, Jackson, Tennessee, for Appellant in 18-5607. Kenneth P. Tableman, KENNETH P. TABLEMAN, P.C., Grand Rapids, Michigan, for Appellant in 18-5901. Kevin M. Schad, OFFICE OF THE FEDERAL PUBLIC DEFENDER, Cincinnati, Ohio, for Appellant in 18-5903. Matthew Wilson, UNITED STATES ATTORNEY'S OFFICE, Jackson, Tennessee, Naya Bedini, UNITED STATES ATTORNEY'S OFFICE, Memphis, Tennessee, for Appellee.

Before: SILER, GIBBONS, and READLER, Circuit Judges.

JULIA SMITH GIBBONS, Circuit Judge.

A jury convicted Sandra Bailey, Calvin Bailey, and their son Bryan Bailey of conspiring to commit healthcare fraud and other related crimes.¹ The district court sentenced Sandra to 120 months’ imprisonment, Calvin to forty-five months’ imprisonment, and Bryan to eighty-four months’ imprisonment. Sandra, Calvin, and Bryan bring a number of challenges to their convictions, and Sandra and Calvin also challenge their sentences. Most of those challenges lack merit. We agree with Sandra, however, that the district court miscalculated her Guidelines-range sentence when it erroneously imposed a two-level increase in her offense level for using "mass marketing" in her scheme. We also agree with Calvin that the district court incorrectly calculated the loss amount for which he was responsible—and by extension, his Guidelines-range sentence—by holding him responsible for losses beyond those he agreed to jointly undertake. Accordingly, we affirm the convictions of Sandra, Calvin, and Bryan. We vacate Sandra's and Calvin's sentences, however, and remand to the district court for resentencing.

I.

Medicare and Medicaid, two federally funded healthcare benefit programs, cover eighty percent of the cost of power wheelchairs and back braces

when the devices are medically necessary. A wheelchair is medically necessary when the patient is unable to perform activities of daily life even with the aid of a cane, walker, manual wheelchair, or scooter. Wheelchairs must be prescribed by a medical professional who has performed a face-to-face examination of the patient.

A.

In fall 2009, Sandra, Calvin, and Bryan Bailey began working for Jaspan Medical Systems, a company that sold durable medical equipment ("DME") like back braces, knee braces, and power wheelchairs in western Tennessee. Sandra was Jaspan's primary sales representative and received a $750 commission for each sale of a power wheelchair. Calvin was also listed as a sales representative, but he was rarely seen by other Jaspan employees. Bryan was initially hired as an office manager but was soon asked to run the company—including overseeing, among other things, personnel decisions, the awarding of sales commissions, and compliance with Medicare rules and regulations.

Sandra achieved impressive sales numbers by convincing individuals insured by Medicare to purchase a power wheelchair for which they had no need. Among those to whom Sandra sold power wheelchairs were individuals who could walk and drive, individuals who could not use the power wheelchair as intended, and individuals who had contacted Jaspan to purchase different assistive devices. Sandra even sold power wheelchairs to a couple so unburdened by mobility issues that they operated a daycare. These power wheelchairs largely went unused.

Sandra often lied to close these sales. In 2009, she told one prospective customer that "in 2010 ... Medicare would not be able to buy [power wheelchairs]." DE 314, Trial Tr., Page ID 2239. And she told another couple that they needed to order the power wheelchairs then—despite having no need for them—because they might need them later in life and that, if then-President Barack Obama was reelected, power wheelchairs would no longer be available through Medicare.

To find additional customers for power wheelchairs, Sandra paid previous customers to provide her lists of names of individuals to contact to sell power wheelchairs or to arrange a gathering of individuals where Sandra could sell power wheelchairs in person. Sandra paid these referrers through cash, gift cards, and other gifts like dresses or turkeys.

Sandra coached referrers on how to identify patients insured by Medicare. She also suggested that they gather ten to twelve individuals before having her attend a gathering. And she instructed them not to tell others that she was paying them for their referrals. She specifically told one referrer that she was being investigated by the FBI and that, should the FBI speak with the referrer, the referrer should not tell the agency anything, including anything about the money Sandra paid the referrer.

Through these referrers, Sandra developed a network of contacts throughout western Tennessee, including contacts in Trezevant, Humboldt, Martin, Atwood, and Henning, Tennessee. One referrer alone gave Sandra eighty-four names of individuals to whom Sandra could sell power wheelchairs.

Meanwhile, Sandra relied on Cindy Mallard, an assistant to Nurse Practitioner Mechelle Perry, to help circumvent the medical necessity requirement. Sandra asked Perry to prescribe DMEs to patients discharged from a local hospital and told Perry that she was allowed to prescribe DMEs without a face-to-face visit. Mallard assured Perry that Sandra's claim that Perry could prescribe DMEs without face-to-face visits was true.

Perry agreed to prescribe DMEs based on the paperwork alone, but, because she was not performing face-to-face evaluations, would not complete the "review of systems" section. Yet, this section was completed for many patients for whom Perry prescribed power wheelchairs. And many of the customers for whom Perry is listed as the prescriber do not recall meeting her. Perry testified that she recognized Mallard's handwriting in the review of systems portion of the form. While Mallard was employed by Perry, Sandra withdrew over $9,000 in cash on dates close to, and in increments matching or similar to, deposits made by Mallard.

Calvin was also on the Jaspan payroll and received sales commissions, but he was rarely seen in the office. Some customers whose paperwork stated that Calvin had sold them a power wheelchair reported that they never met Calvin, only Sandra. Bryan testified that Calvin assisted at Jaspan through "people contacting him as far as needing, family members needing chairs," and that "[Calvin] and [Sandra] worked together doing power wheelchairs." DE 322, Trial Tr., Page ID 3678–79.

While Sandra and Calvin were out selling power wheelchairs, Bryan was running Jaspan. Lisa Vega, a Jaspan employee, testified that Bryan reviewed all paperwork related to power wheelchairs as part of his duty to ensure Medicare compliance. Vega testified that, when she identified paperwork missing patient or physician signatures for Bryan, he often turned around completed paperwork in a short time, sometimes a matter of minutes, despite the absence of the signing physicians. Vega further testified that she witnessed Bryan forging paperwork for a wheelchair order. Vega also witnessed Bryan shred a portion of a patient's file that was unfavorable to a Medicare claim for a power wheelchair. And Vega testified that she was asked to falsify information on the co-payment form to ensure patients did not have to pay the twenty percent costs not covered by Medicare. Bryan signed the forms containing customers’ financial and insurance information, but many customers testified that they never provided Bryan with such information or even spoke with him.

Because he was tasked with running Jaspan, Bryan oversaw his parents’ work. He certified that Sandra and Calvin had received Medicare compliance training. When Vega raised her suspicions about prescriptions for power wheelchairs from Perry, she noticed that her responsibilities in the office decreased. And when a doctor's office accused Sandra of forgery, Bryan instructed Jaspan employees not to talk to the office's manager. Finally, Bryan occasionally assisted Sandra with visits to customers and received some of Sandra's commissions.

In 2011, Sandra and Calvin left Jaspan for other DME suppliers. DuraTech Medical ("DuraTech") hired Sandra as a subcontractor. Calvin was hired both by Apple Independence Mobility ("Apple") and Orthopaedic Specialties of Lexington, Inc. ("Orthopaedic Specialties"). Neither Apple nor Orthopaedic Specialties was aware that Calvin remained employed as a middle-school principal. Bryan remained Jaspan's office manager. Despite working at different companies, the Baileys’ scheme was largely unchanged.

Sandra returned to many of her power wheelchair customers when she began selling back braces

for DuraTech. For example, in 2012, Sandra returned to the residence of a former power wheelchair customer to sell him and his parents back braces, even though none of the three needed a back brace or were examined by a doctor before receiving one. Sandra also used previous customers as referrers for back brace customers. One former customer testified that she, at Sandra's request, gathered several people at her house to meet with Sandra and that Sandra gave those gathered back braces. That same customer testified that Sandra said that "she wanted to compensate [her]" and gave her a bag containing $200. DE 318, Trial Tr., Page ID 2593–95.

At DuraTech, Sandra relied on Dr. Matthew Presson to...