United States v. Brian Conner , 456 F. App'x 300 ( 2011 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-7579
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
BRIAN CONNER,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Greenville. Louise W. Flanagan,
Chief District Judge. (4:04-cr-00027-FL-2; 4:09-cv-00096-FL)
Argued: October 25, 2011 Decided: December 5, 2011
Before TRAXLER, Chief Judge, and WILKINSON and WYNN, Circuit
Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Milton Gordon Widenhouse, Jr., RUDOLF, WIDENHOUSE &
FIALKO, Chapel Hill, North Carolina, for Appellant. Edward D.
Gray, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North
Carolina, for Appellee. ON BRIEF: George E. B. Holding, United
States Attorney, Jennifer P. May-Parker, Assistant United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North
Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Brian Conner appeals a district court order denying his
motion for relief under 28 U.S.C. § 2255 based on his claim that
he received ineffective assistance of counsel at sentencing.
Finding no reversible error, we affirm.
I.
In 1990, Conner, a certified emergency medical technician,
became the owner, operator, and president of Convalescent
Transports, Inc. (“CTI”). The North Carolina corporation was in
the business of providing ambulance and wheelchair
transportation services for, among others, medical patients
covered by Medicare and Medicaid. Both Medicare and Medicaid
have explicit regulations concerning the conditions under which
they will provide reimbursement for ambulance transportation
services. The regulations essentially require a showing of
medical necessity.
Sometime after October 1991, Conner began submitting false
claims to Medicare and Medicaid for ambulance transportation
services that CTI rendered. Employees were told to transport
all dialysis patients by ambulance, and employees were
instructed to falsify the ambulance call reports to make it
appear that transportation by ambulance was medically necessary.
2
On the basis of this conduct, Conner was charged by
superseding indictment with 350 counts of health care fraud,
conspiracy to commit health care fraud, and obstruction of the
criminal investigation of health care fraud. See 18 U.S.C.
§§ 371, 1347, 1518. The district court dismissed four counts on
the government’s motion, and the case proceeded to trial. A
jury found Conner guilty of all remaining counts.
After the convictions, a presentence report (“PSR”) was
prepared. It included a recommendation for a two-level
enhancement for abuse of a position of trust, see U.S.
Sentencing Guidelines Manual § 3B1.3 (2005), and a loss
determination of more than $2,500,000 but not more than
$7,000,000, which would have resulted in an 18-level enhancement
to the applicable base offense level, see U.S.S.G.
§ 2B1.1(b)(1)(J). Conner objected to both of these
enhancements.
At Conner’s sentencing hearing, the government presented
detailed testimony concerning the loss amount. The government
showed that CTI had received $6,822,690.54 between 1997 and 2002
in reimbursements on 35,328 claims for non-emergency dialysis
transports. The government determined how much of these
payments constituted the government’s loss by sampling and
extrapolation. In this regard, “RAT-STATS,” a computer program
developed by the United States Health and Human Services’ Office
3
of Inspector General, was used to perform three different steps:
(1) determining the sample size needed to represent the data;
(2) randomly generating the list of particular claims to review
as part of the sample; and (3) extrapolating from the reviewed
claims. The first two steps produced a sample of 230 of the
claims paid to CTI for transportation of patients in connection
with dialysis. Government agents then attempted to retrieve the
records corresponding to these claims but were only able to find
documentation for 165 of them. These records were, in turn,
reviewed by a medical fraud investigator.
Treating the 65 claims with no documentation (“the missing-
records claims”) as invalid, the investigator testified that of
the 230 claims, only 14 were justified by medical necessity, and
the average overpayment was $188.03 per claim. Multiplying the
per-claim average by the total number of claims (35,328) yielded
a total overpayment of $6,642,582 for the 230 claims. Based on
this amount, the government’s statistics expert, Suzanne Moody,
testified that RAT-STATS indicated that, with a 90% confidence
interval, the range of overpayment was between $6,330,298 and
$6,954.866. Moody also testified alternatively that if the 65
missing-records claims were treated as fully valid, the lower
end of the overpayment range would drop to $3,738,866.
G. Christopher Kelly, who represented Conner at trial and
at sentencing, raised several objections to the government’s
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loss amount, including arguments that the calculations were
partly based on claims that were not part of the scheme and that
the loss amount included all payments made for non-medically-
necessary services rather than only those payments that had been
procured by fraud. Kelly also maintained that the government’s
extrapolation methodology was not reliable and specifically
focused on the missing-records claims. Kelly questioned Moody
regarding how changing the overpayment amounts of only roughly
28% of the claims (65 out of 230) could reduce the estimated
loss amount by about 41%. Kelly later argued to the district
court that Moody had not provided a satisfactory explanation.
Kelly also questioned the government’s witnesses concerning
the government’s inability to locate the documentation regarding
the missing-records claims. Kelly subsequently asserted that
the government had not exercised due diligence in trying to
locate the 65 missing-records claims and that this was an
additional reason that the government’s methodology was flawed.
Kelly added that the government had the opportunity to do more
sampling and make its estimates much more reliable and precise
but had failed to do so. Kelly contended that the appropriate
loss amount would be the amount proven by the evidence presented
at trial, which he claimed would have been less than $30,000.
In the end, the district court accepted the reliability of
the sampling process. However, the court also accepted Kelly’s
5
argument that the government had failed to show that it
exercised sufficient diligence in searching for the
documentation related to the 65 missing-records claims or
alternatively in reviewing substitute claims. In an effort to
ensure that Conner was not penalized by the government’s lack of
diligence, the court calculated the loss based on the assumption
that the 65 missing-records claims were entirely valid. The
district court also agreed with Kelly that trips transporting
patients to and from hospitals were not properly included and
thus counted such claims as valid as well. With those two
assumptions, the court found a loss amount of $3,613,165.00,
nearly $3 million less than the government’s proposed amount.
Unfortunately for Conner, this quite substantial reduction still
left him the same loss range of more than $2.5 million and not
more than $7 million. See U.S.S.G. § 2B1.1(b)(1)(J). Thus, the
associated 18-level enhancement and the two-level abuse-of-
position-of-trust enhancement, which the court also applied over
Kelly’s objection, left Conner with a total offense level of 32.
This level, in conjunction with Conner’s Criminal History
Category of I, yielded a guideline range of 121 to 151 months’
imprisonment. The district court sentenced Conner at the
highest point in that range.
We affirmed Conner’s sentence on appeal, holding, as is
relevant here, that the government’s extrapolation provided
6
adequate support for the district court’s loss determination.
See United States v. Conner, 262 F. App’x 515, 518-19 & n.5 (4th
Cir. 2008). In so doing, we specifically rejected an argument
by Conner that the sampling process was not adequately shown to
be random. See id. at 519 n.5.
Conner subsequently filed a motion to vacate his judgment
or set aside his sentence pursuant to 28 U.S.C. § 2255, alleging
that Kelly was ineffective at trial and at sentencing. As is
relevant here, Conner alleged that Kelly was constitutionally
ineffective at sentencing in failing to offer expert testimony
to challenge the government’s statistical evidence and in
failing to argue for a reduction in his loss amount for the
value received by the government from CTI’s provision of
services.
In support of his motion, Conner offered evidence from two
expert witnesses who challenged the reliability of the
government’s loss calculation methodology on a number of bases.
They contended that the sample size was too small, and that
“deleting” the 65 missing-records claims called into question
the randomness of the sample. J.A. 96. Conner’s experts also
pointed out additional flaws in planning, sample design, conduct
of the actual sample, data analysis, and the presentation of the
final results.
7
Conner also presented an affidavit and testimony from
Joseph B. Cheshire V, an attorney who represented Conner in his
direct appeal. Cheshire opined that Kelly should have hired an
expert to study the government’s theory of how to calculate the
loss and that Kelly should have tried to minimize the loss
amount by identifying benefits that the government received from
CTI’s provision of services.
Additionally, Conner presented an affidavit and testimony
from Keith A. Williams, an attorney who represented one of
Conner’s co-defendants. As is relevant here, Williams opined
that Kelly was constitutionally deficient in not arguing for a
reduction in loss amount based on the value to the government of
services CTI rendered. He also asserted that an expert “could
have provided some assistance in preparing for and presenting”
arguments at sentencing. J.A. 278.
The government also presented an affidavit and testimony
from Kelly. He noted that he “had had civil cases that dealt
with [RAT-STATS] and that type of thing so [he] knew some of the
issues that could occur with those.” J.A. 331. He also stated
that he researched the validity of the use of RAT-STATS in
federal jurisdictions. He admitted, however, that “it would
have been helpful to have had an expert at sentencing.” J.A.
332. He explained that Conner’s inability to pay for an expert
8
figured in to his decision not to seek one, but he conceded that
he did not seek court appointment of an expert.
After considering the evidence before the court, a federal
magistrate judge recommended denying each of Conner’s claims.
Conner subsequently filed objections with the district court,
but the district court overruled the objections, adopted the
magistrate’s findings and analysis, and denied the motion to
vacate. See Conner v. United States, Nos. 4:04-CR-27-FL-2,
4:09-CV-96-FL, 2010 WL 4484397, at *8 (E.D.N.C. Nov. 1, 2010).
The court also granted Conner a certificate of appealability.
See id.II.
Conner first argues that Kelly was ineffective in failing
to offer expert testimony challenging the statistical and random
sampling methodology used by the government at sentencing (“the
expert claim”). We disagree.
In considering the denial of a § 2255 motion, we review a
district court’s factual findings from an evidentiary hearing
for clear error, and we review de novo mixed issues of law and
fact, such as whether established facts demonstrate a deficient
performance by counsel. See United States v. Roane, 378 F.3d
382, 395 (4th Cir. 2004).
9
Claims of ineffective assistance of counsel are reviewed
under the standards of Strickland v. Washington, 466 U.S. 668(1984), and its progeny. To be entitled to relief, Conner must
demonstrate “that counsel’s performance was deficient” and that
“the deficient performance prejudiced the defense.” Id. at 687.
To demonstrate inadequate or deficient performance, Conner “must
show that counsel’s representation fell below an objective
standard of reasonableness” measured by “prevailing professional
norms.” Id. at 688. Our application of this standard “must be
highly deferential,” and we “must indulge a strong presumption
that counsel’s conduct falls within the wide range of reasonable
professional assistance.” Id. at 689. Moreover, counsel’s
performance must not be judged with the benefit of hindsight;
rather, we consider “counsel’s perspective at the time” of the
representation in question. See id. To demonstrate prejudice,
Conner “must show that there is a reasonable probability that,
but for counsel’s unprofessional errors, the result of the
proceeding would have been different.” Id. at 694.
While Strickland applies in both capital and noncapital
sentencing proceedings, see, e.g., Glover v. United States, 531
U.S. 198, 202-04 (2001) (applying Strickland test in noncapital
case), what constitutes deficient performance can differ
depending on the type of proceeding. The ABA’s Criminal Justice
Standards, which can serve as a tool for evaluating the
10
reasonableness of counsel’s representation, see Wiggins v.
Smith, 539 U.S. 510, 524 (2003), indicate that defense counsel
in a noncapital sentencing proceeding should (1) promptly
investigate the circumstances and facts relevant to sentencing,
(2) present the court with any basis that will help achieve an
outcome favorable to the defense, and (3) supplement or
challenge information provided in any presentence report. See
ABA Criminal Justice Standards 4-4.1(a) and 4-8.1(b).
In this case, to fully understand the district court’s
findings, we also must consider the magistrate’s analysis of
Conner’s claims. The magistrate rejected Conner’s assertion
that Kelly’s representation at sentencing was constitutionally
deficient and concluded that, even assuming that Kelly was
deficient in the ways Conner alleged, Conner could not establish
a reasonable probability he would have received a more lenient
sentence had Kelly taken the steps Conner now says he should
have taken. As relates to the expert claim, Conner objected to
the magistrate’s conclusions regarding both Strickland prongs.
Regarding the second prong, Conner maintained that if Kelly had
been able to convince the district court that the government’s
extrapolation was invalid, then the extrapolation “would have
been required to be re-done” and there was “more than a
reasonable likelihood that a different sentence would have”
resulted. J.A. 727.
11
The district court rejected both of these arguments.
Regarding the second prong, the court reasoned that even if
Kelly’s presentation of expert testimony would have convinced
the district court to require the government to take another
sample and redo its extrapolation, Conner made no showing that
he would have ended up with a smaller loss amount than he did
having the court assume that the 65 missing-records claims were
actually completely legitimate. See Conner, 2010 WL 4484397, at
*5.
In his initial brief to us, Conner challenged the district
court’s conclusion that Conner failed to establish that Kelly’s
representation was rendered deficient by his decision not to
present expert testimony challenging the government’s
extrapolation methodology. However, he did not address the
district court’s determination that he could not show a
reasonable probability that redoing the government’s analysis
would have led to a more lenient sentence. Conner addressed
this issue for the first time in his reply brief, claiming he
demonstrated prejudice because an expert could have shown that
the government’s extrapolation was flawed, and thus caused the
district court to reject it and determine the loss amount by
considering only the trial evidence, which would have supported
a loss finding of less than $30,000.
12
This prejudice argument is not properly before us for two
reasons. First, inherent in Conner’s new argument is a
contention that the district court erred in assuming that the
government would have been allowed to “redo” its statistical
analysis if the district court agreed with Kelly’s expert. Not
only did Conner not make this argument to the district court,
he affirmatively argued the opposite — that had Kelly employed
an expert at sentencing, the government would have been required
to redo its statistical analysis. Accordingly, the argument is
waived. See First Va. Banks, Inc. v. BP Exploration & Oil,
Inc., 206 F.3d 404, 407 n.1 (4th Cir. 2000) (“Because neither of
these arguments were raised below, we decline to consider them
on appeal.”). Additionally, even had Conner raised this
argument in the district court, he would have waived it by
failing to raise it in his initial brief. See Cavallo v. Star
Enter., 100 F.3d 1150, 1152 n.2 (4th Cir. 1996) (“[A]n issue
first argued in a reply brief is not properly before a court of
appeals.”).
In any event, even assuming arguendo that Conner properly
preserved a challenge to the district court’s ruling that he
could not establish prejudice from his asserted deficiency, we
agree with the district court that Kelly’s performance was
constitutionally adequate.
13
As the district court noted, Kelly was quite active during
sentencing:
Kelly reviewed the [PSR] with [Conner], going over
potential objections in great detail and discussing
the calculation of loss. Kelly made a number of
objections to the PSR on [Conner’s] behalf, and . . .
he zealously and effectively advocated on [Conner’s]
behalf at sentencing, particularly relating to the
government’s statistical sampling and its proposal to
“deny” for loss purposes sixty-five (65) claims for
which no medical documentation existed.
Conner, 2010 WL 4484397, at *4. As the court explained,
Kelly argued a number of the same points that
[Conner’s] experts bring to the court’s attention.
For example, Kelly argued that the government’s expert
had not adequately explained “how the relatively minor
change of 25 to 28% of the claims could result in an
over 40% difference in the damage calculation.” Kelly
argued that “[t]hat’s not the kind of precision that
makes this study reliable.” He also noted that the
government “had the opportunity to make [the sampling]
more reliable by doing a larger scope” and that they
failed to “explain the differences and irregularities
. . . in the results.”
Id. at *4 n.7 (citations omitted).
Kelly was well aware that extrapolations similar to the
government’s in this case had “been upheld numerous times in the
federal courts.” J.A. 115. In light of that fact, it was his
judgment “that under the facts of this case, and the time and
financial limitations that the family placed on [him], that
calling an expert at sentencing would [not] have been possible
or beneficial.” J.A. 115.
14
Based on all of these facts, we simply cannot conclude that
Conner has rebutted the “strong presumption” that Kelly’s
performance was constitutionally reasonable. Strickland, 466
U.S. at 689. By vigorously exploiting the government’s lack of
diligence in searching for the documentation for the missing-
records claims (and by challenging the relevance of claims
relating to transportation to and from hospitals), Kelly
obtained a loss amount for his client that was millions of
dollars less than the government sought. Although his efforts
did not yield a guideline range lower than the government had
proposed, we conclude that his performance was within prevailing
professional norms.
For similar reasons, we do not believe that Conner was
prejudiced by Kelly’s decision not to call an expert. Even had
Kelly been able to use an expert to persuade the district court
to reject the government’s methodology, it is sheer speculation
to conclude that the ultimate result would have been a loss
determination of less than $2,500,000.
III.
Conner also argues that the district court erred in
rejecting his claim that Kelly was constitutionally ineffective
at sentencing because he did not argue that the loss amount
should be reduced by the value of benefits that the government
15
received by virtue of the provision of CTI’s services (“the
benefits received claim”). See U.S.S.G. § 2B1.1 cmt. n.3(F)(ii)
(“In a case involving government benefits (e.g., grants, loans,
entitlement program payments), loss shall be considered to be
not less than the value of the benefits obtained by unintended
recipients or diverted to unintended uses, as the case may
be.”); United States v. Dawkins, 202 F.3d 711, 715 (4th Cir.
2000) (“[W]e advise the district court to consider loss as the
difference between the amount of benefits [the defendant]
actually received and the amount he would have received had he
truthfully and accurately completed the . . . forms.”). For
example, he maintains that even with regard to claims in which
ambulance transportation was not medically necessary, non-
emergency transport may have been necessary, and Kelly should
have argued that Conner was entitled to a credit for the value
of such transport.
We cannot conclude that counsel’s representation was
constitutionally deficient. As noted, Kelly made numerous
arguments disputing the government’s loss calculation, and he
indeed achieved a significant victory in establishing the
government’s lack of diligence in searching for the missing-
records documentation. As a result of his challenge to the
quality of the government’s investigation, and his arguments as
to how the inclusion of those claims would undercut the
16
reliability of the government’s extrapolation, the loss amount
was based on the assumption that the missing-records claims,
which made up more than a quarter of the entire sample, were
100% valid. One need not be an expert in statistics to
recognize that that change resulted in a significant reduction
of Kelly’s loss amount even if it was not enough to reduce his
guideline range.
Our review of the record makes clear that even if there
were good arguments that Kelly did not make, there were many
good ones that he did make and indeed made effectively. See
Mickens v. Taylor, 240 F.3d 348, 363 (4th Cir. 2001) (en banc)
(“The Sixth Amendment guarantee of counsel does not guarantee an
ideal or perfect representation.”). Given the “highly
deferential” standard by which we judge counsel’s performance,
we cannot conclude that Kelly’s representation at sentencing was
constitutionally deficient. Strickland, 466 U.S. at 689.
IV.
In sum, for the foregoing reasons, we affirm the district
court’s order denying Conner’s § 2255 motion.
AFFIRMED
17