United States v. Popov

• Citation: 742 F.3d 911
• Decision Date: 11 February 2014
• Docket Number: 12–10553.,Nos. 12–10045,s. 12–10045
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Alexander POPOV, Defendant–Appellant. United States of America, Plaintiff–Appellee, v. Ramanathan Prakash, Defendant–Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

742 F.3d 911

UNITED STATES of America, Plaintiff–Appellee,

v.Alexander POPOV, Defendant–Appellant.

United States of America, Plaintiff–Appellee,

v.Ramanathan Prakash, Defendant–Appellant.

Nos. 12–10045, 12–10553.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 5, 2013.

Filed Feb. 11, 2014.

Karen L. Landau, Oakland, CA, for Defendant–Appellant Alexander Popov. James W. Spertus, Spertus, Landes & Umhofer, LLP, Los Angeles, CA, for Defendant–Appellant Ramanathan Prakash.

Philip A. Ferrari and Jean M. Hobler, Assistant United States Attorneys, Office of the United States Attorney for the Eastern District of California, Sacramento, CA, for Plaintiff–Appellee United States of America.

Appeal from the United States District Court for the Eastern District of California, Morrison C. England, Jr., Chief District Judge, Presiding. D.C. Nos. 2:08–cr–00427–MCE–6, 2:08–cr–00427–MCE–7.

Before: STEPHEN REINHARDT and PAUL J. WATFORD, Circuit Judges, and ROBERT S. LASNIK, District Judge.^*

OPINION

LASNIK, District Judge:

Defendants–Appellants Ramanathan Prakash and Alexander Popov were convicted of one count of conspiracy to commit health care fraud in violation of 18 U.S.C. §§ 1347 and 1349, and three counts of health care fraud in violation of 18 U.S.C. § 1347, following a jury trial. On appeal, Appellants challenge their sentences, arguing that the district court erred in calculating the amount of loss for sentencing purposes.¹ We have jurisdiction pursuant to 28 U.S.C. § 1291. We reverse the district court's findings regarding the amount of loss and remand for resentencing.

BACKGROUND

On May 20, 2010, Popov and Prakash were indicted, along with nine co-defendants, on one count of conspiracy to commit health care fraud and several counts of health care fraud. The Superseding Indictment alleged that Appellants' co-defendant, Vardges Egiazarian, owned and operated three medical clinics in Northern California that submitted fraudulent bills to Medicare for more than $5 million.

A. Medicare

Medicare is a federally funded program that provides limited health insurance to persons over the age of 65 and disabled people who meet its qualifications. 42 U.S.C. § 1395( o). Medicare Part A covers inpatient hospital and nursing facility care, id. § 1395c, while Part B covers outpatient services and equipment, id. § 1395k. Medicare coverage is limited to services that are medically “reasonable and necessary.” Id. § 1395y(a)(1)(A). Participating providers are required to ensure that any services rendered to Medicare recipients are supported by sufficient evidence of medical necessity. Id. § 1320c–5(a)(1).

Before a provider may submit a claim for reimbursement, he or she must apply for and obtain a Medicare provider number for a particular clinic or hospital. Id. § 1320d–2(b); 45 C.F.R. § 162.410. Once enrolled, a Medicare service provider may submit claims for reimbursement for covered services. 42 C.F.R. § 424.505. Medicare may pay the claim in whole or in part, or deny the claim in whole or in part. Medicare assigns an allowed amount to each of its covered services pursuant to a fixed fee schedule and pays the provider approximately eighty percent of the allowed amount. 42 U.S.C. § 1395(a)(1); 42 C.F.R. §§ 405.501, 410.152(b). The provider may pursue recovery of the remaining twenty percent of the allowed amount from the patient directly. 42 U.S.C. § 1395/(a)( l ). Regardless of the amount the provider bills Medicare, the total amount a provider may recover is the allowed amount set by the fixed fee schedule.

A provider may appeal the initial determination of coverage and the allowed amount by requesting a redetermination by the fiscal intermediary. 42 C.F.R. § 405.904. Generally, a provider attaches additional patient records to the request for redetermination to support the claim.

B. The Scheme

During the three week trial, the government presented evidence that Egiazarian owned all or part of the three health care clinics. The clinics paid “cappers” to recruit patients and drive them to the clinics. Patients arrived in groups consisting primarily of non-English speaking, elderly or disabled individuals and they stayed less than two hours. During those two hours, each new patient had an electrocardiogram and all patients underwent ultrasounds and had blood drawn.

At the Sacramento clinic, co-defendant Sol Teitelbaum, a physician who was not a certified Medicare provider, examined some of the patients, but he did not see all of them. Regardless of which patients Teitelbaum actually examined, Sofia Tosunyan, the office manager for the Sacramento clinic, updated all of the patient charts and Teitelbaum signed them. In the event that clinic employees were unable to perform the requisite tests on the patients, they drew blood and performed the tests on each other and placed the results in patient files. After clinic employees updated the charts with diagnoses, test results, and notes, they sent the charts to Southern California to be signed by Medicare providers.

Appellants' involvement was limited to the operations of the Sacramento clinic. They applied for and received Medicare provider identification numbers for the clinic and opened bank accounts in their own names to receive Medicare payments. Even though neither Popov nor Prakash ever examined or met a patient, they visited Egiazarian's office in Los Angeles, California, on a near weekly basis to sign patient charts, Medicare claim forms, and blank Medicare Redetermination Request forms. They received approximately twenty percent of the total amount reimbursed by Medicare under their provider numbers.

The Sacramento clinic sought reimbursement from Medicare for the total amount of $2,236,332.88. The amount allowed by Medicare was $747,961.31 and the amount paid was $586,430.72. The clinic submitted claims under Popov's provider number in the amount of $1,079,862.22. The allowed amount for these claims was $361,994.25, of which Medicare paid $283,660.26, slightly less than eighty percent of the allowed amount. The total amount billed to Medicare under Prakash's provider number was $1,156,470.66. The allowed amount was $385,967.06 and the amount paid was $302,770.46, also slightly less than eighty percent of the allowed amount. On July 8, 2011, the jury found Popov and Prakash guilty of all counts against them.

On January 12, 2012, the district court sentenced Popov to 97 months of imprisonment, the low end of the applicable advisory guideline range, followed by three years of supervised release. The court also ordered Popov to pay $607,456.80 in restitution. The court adopted the offense level calculations, criminal history category, and guideline range set forth in the presentence report. In doing so, the court rejected Popov's objections to the presentence report's intended loss calculation and applied a sixteen-level enhancement based on its finding that the intended loss was $2,236,332.88, the total amount billed to Medicare by Popov and Prakash for the Sacramento clinic.

The district court also applied a sixteen-level enhancement to Prakash based on an intended loss amount of $2,236,332.88. Despite Prakash's argument that the intended loss should be eighty percent of the allowed amount for claims under his number only, the district court adopted the facts, offense level calculations, and applicable advisory guideline range set forth in the amended presentence report. Based on those findings and a criminal history category of I, the district court imposed the statutory maximum prison sentence of 120 months followed by three years of supervised release.² The court also ordered Prakash to pay $607,456.80 in restitution.

STANDARD OF REVIEW

We review a district court's construction and interpretation of the United States Sentencing Guidelines Manual (“Guidelines”) de novo and its application of the Guidelines to the facts for abuse of discretion. United States v. Gomez–Leon, 545 F.3d 777, 782 (9th Cir.2008).

A district court's factual determinations, including the amount of loss in cases of fraud, are reviewed for clear error. United States v. Tulaner, 512 F.3d 576, 578 (9th Cir.2008). “Clear error review is significantly deferential and requires us to accept the district court's findings absent a definite and firm conviction that a mistake has been committed.” Leavitt v. Arave, 646 F.3d 605, 608 (9th Cir.2011) (internal quotation marks and citation omitted). “[A]ll that is required is that the government prove the loss by a preponderance of the evidence.” United States v. Torlai, 728 F.3d 932, 946 n. 13 (9th Cir.2013).

DISCUSSION

A. Intended Loss

The amount of loss resulting from health care fraud is a specific offense characteristic that increases the defendant's offense level pursuant to the Guidelines. See U.S. Sentencing Guidelines Manual (“U.S.S.G.”) § 2B1.1. ³ Although the Guidelines are not mandatory, a district court must begin sentencing proceedings by calculating the applicable Guidelines range. Gall v. United States, 552 U.S. 38, 49, 128 S.Ct. 586, 169 L.Ed.2d 445 (2007). “[C]ommentary in the Guidelines Manual that interprets or explains a guideline is authoritative unless it violates the Constitution or a federal statute, or is inconsistent with, or a plainly erroneous reading of, that guideline.” Stinson v. United States, 508 U.S. 36, 38, 113 S.Ct. 1913, 123 L.Ed.2d 598 (1993).

Section 2B1.1 of the Guidelines provides that the applicable loss is the greater of the actual loss or the intended loss. U.S.S.G. § 2B1.1 cmt. n.3(A). “Actual loss” means “the reasonably foreseeable pecuniary harm that resulted from the offense,” while “intended loss” means “the pecuniary harm that was intended to result from the offense.” Id.§ 2B1.1 cmt. n.3(A)(I)—(ii). Notably, intended loss includes “intended pecuniary harm that would have been impossible or unlikely to occur (e.g., as in a government sting operation, or an insurance fraud in which the claim...