United States v. Sharon Iglehart , 687 F. App'x 333 ( 2017 )

Case: 16-20261 Document: 00513957632 Page: 1 Date Filed: 04/18/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 16-20261
Fifth Circuit
FILED
April 18, 2017
UNITED STATES OF AMERICA, Lyle W. Cayce
Clerk
Plaintiff - Appellee
v.
SHARON IGLEHART, M.D.,
Defendant - Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:13-CR-746-1
Before BARKSDALE, GRAVES, and HIGGINSON, Circuit Judges.
PER CURIAM:*
In challenging her conviction and sentence for Medicare and Medicaid
fraud, Sharon Iglehart contests the district court’s: admitting evidence of
Iglehart’s prior disciplinary investigation; and ruling concerning the “intended
loss” under the advisory Sentencing Guidelines. AFFIRMED.
* Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5th Cir.
R. 47.5.4.
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I.
Iglehart was a psychiatrist in Houston, Texas, associated with Riverside
General Hospital (Riverside). In addition to its inpatient hospital, Riverside
offered “partial hospitalization programs” (PHPs) at off-site facilities. Medicare
defines PHPs as providing psychotherapeutic and pharmacologic treatment to
patients at least four days per week, for a minimum total of 20 hours per week. It
was through her billing practices at two Riverside-owned PHPs―Riverside
Southeast Mental Health Program in Houston (Southeast) and Riverside
Dallas―that Iglehart was later convicted for, inter alia, defrauding Medicare and
Medicaid.
Medicare reimburses PHPs for their services, subject to several
requirements. Among these requirements, PHPs must comply with federal
record-keeping standards; in addition, a licensed physician must personally
oversee and document the PHP’s treatment programs.
Iglehart worked as medical director and sole psychiatrist at Southeast from
2005 until 2009; Riverside Dallas, from 2011 until 2012. In this role, she was
responsible for admitting patients, supervising treatment, and billing Medicare.
Throughout this entire time period, Iglehart also worked as an attending
physician at Riverside’s inpatient psychiatric facility.
Over the course of an investigation into Riverside’s facilities, the
Government discovered evidence of numerous billing irregularities committed by
Iglehart. For example, she frequently used her admitting and referral authority
to pass patients between Riverside’s inpatient program and the PHPs, despite the
patients’ not being qualified for PHP treatment under Medicare. Moreover, she
often backdated signatures and billed Medicare for face-to-face consultations at
Riverside Dallas, despite billing for patients in Houston on the same day. Of
particular relevance to the evidentiary issue at hand, Iglehart also billed Medicare
for patient treatments in Houston, despite her being at a recordkeeping course in
San Diego, California, pursuant to a Texas Medical Board (TMB) order, following
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an investigation in 2004 into Iglehart’s billing practices. As a result of these, and
other, billing practices, Riverside fraudulently billed Medicare and Medicaid over
$22.7 million; Medicare and Medicaid reimbursed Riverside approximately $6.4
million.
Iglehart was indicted on five criminal counts: conspiracy to commit health-
care fraud, in violation of 18 U.S.C. § 1349; health-care fraud, in violation of 18
U.S.C. §§ 2, 1347; and three counts of false statements related to a health-care-
benefit program, in violation of 18 U.S.C. §§ 2, 1035. At trial, the Government
presented voluminous evidence regarding her Medicare billing practices and the
conspiracy to pass patients between Riverside and the two PHPs. Iglehart elected
to testify at trial, and claimed her errant billing was the result of poor
recordkeeping, rather than criminal conduct.
Iglehart was convicted on all five counts. Based in part on the presentence
investigation report (PSR), the court sentenced Iglehart to 144 months in prison,
applying enhancements pursuant to, inter alia, Guidelines §§ 2B1.1(b)(1)(K) and
2B1.1(b)(7)(B)(ii), and granting a downward variance from the advisory
Guidelines sentencing range.
II.
Iglehart claims: the court’s permitting the admission of evidence of the
TMB investigation violated Federal Rule of Evidence 404(b) as inadmissible
character evidence; and, the court did not use the proper methodology in
calculating her intended loss. (She also asserts the court erred in applying a
sentencing enhancement for “abuse of trust”. U.S.S.G. § 3B1.3. But, she
acknowledges this issue is foreclosed by United States v. Valdez, 726 F.3d 684, 694
(5th Cir. 2013), and raises it only to preserve it for possible further review.)
A.
In contending the court erred in admitting evidence regarding the TMB
investigation, Iglehart maintains Robert Blech’s testimony—which explained
Iglehart and TMB, following an investigation, entered into an order requiring,
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inter alia, her to attend the above-referenced recordkeeping course in San Diego—
was inadmissible evidence of bad character under Federal Rule of Evidence
404(b). (She does not, however, challenge evidence regarding her presence in San
Diego or the content of the recordkeeping training.)
“Evidence of a crime, wrong, or other act is not admissible to prove a
person’s character in order to show that on a particular occasion the person acted
in accordance with the character.” Fed. R. Evid. 404(b)(1). But, although such
evidence is generally inadmissible, it is “admissible for another purpose, such as
proving motive, opportunity, intent, preparation, plan, knowledge, identity,
absence of mistake, or lack of accident”. Fed. R. Evid. 404(b)(2).
1.
It goes without saying that our court must determine its own standard of
review. E.g., United States v. Rosenthal, 805 F.3d 523, 528 (5th Cir. 2015). As is
also equally well-established: although, generally, evidentiary rulings are
reviewed for abuse of discretion, plain-error review applies when a party does not
object in district court. E.g., United States v. Ramos-Rodriguez, 809 F.3d 817, 821
(5th Cir. 2016); United States v. Broussard, 669 F.3d 537, 546 (5th Cir. 2012).
Federal Rule of Evidence 103(b) states: “Once the court rules definitively
on the record ― either before or at trial ― a party need not renew an objection or
offer of proof to preserve a claim of error for appeal”. Regarding the rule’s
requiring the court to rule “definitively”, persuasive authorities have emphasized
the importance of that condition. See United States v. McElmurry, 776 F.3d 1061,
1067 (9th Cir. 2015); United States v. Whittemore, 776 F.3d 1074, 1082 (9th Cir.
2015); United States v. Big Eagle, 702 F.3d 1125, 1130 (8th Cir. 2013); United
States v. Nixon, 694 F.3d 623, 628 (6th Cir. 2012).
As noted above, the Government provided evidence of Iglehart’s billing
Medicare for treatment administered in Houston while she was in San Diego for
recordkeeping training. Her participation in the training was required by the
above-described TMB order, following investigation into her recordkeeping
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practices. Along that line, the Government provided notice of its intent to
introduce the TMB order, the facts that led to the order, and evidence regarding
Iglehart’s conduct after the order. In response, she moved in limine to exclude
this evidence, asserting it would be inadmissible character evidence, in violation
of Rules 404(b) and 403.
During trial, a hearing was held on the motion. In ruling, the court stated:
Well, I -- I think on balance that it’s not unfairly
prejudicial within the meaning of 403. It is conduct
which, in the context of the case as it has unfolded to this
point and based upon the -- certainly the defense theory
of the case, has a high degree of relevance in achieving
the objectives of 404(b) which, among other things, is to
show absence of mistake or lack of accident when a
demonstration is made that this person has had rather
strong therapy or teaching or mentoring on how
accurately to keep records.
I’ll deny the motion in limine. I’ll let you make your
objection depending upon the nature of the offer made. I
don’t think that it’s -- behooves the government to extend
or prolong or -- I could change my mind on this if there’s
some kind of effort to hang your case on that particular
record. I see it as a factor that’s, I think, a problem.
(Emphasis added.)
Immediately after the ruling, Iglehart’s counsel asked whether “[t]he
different findings or just the [TMB] order” would be admissible. The court
responded: “Well, this is -- this is what I’m not sure of. I’m not sure what the
extent of the [Government’s] offer is”.
In reply, the Government explained it would offer, inter alia: a witness to
explain the TMB order, which followed as a result of the investigation (Blech’s
testimony at trial, discussed infra); the order itself (which was never introduced
at trial); a witness from the training program to confirm Iglehart’s attendance;
and some slides from the program’s presentation.
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The Government’s offer having been clarified, the court stated: “All right.
Well, we’ll take up the objections as the offer comes. It does appear that it fits
within 404(b) in order to demonstrate absence of mistake or lack of accident on
the way this -- the records were kept”.
Iglehart, however, made no subsequent objection to Blech’s testimony, nor
did she request a limiting instruction regarding TMB’s investigation. Moreover,
on direct examination, Iglehart discussed TMB’s investigation, stating she “felt a
lot of shame” about the sanctions and reprimand. And, with no objection from
Iglehart, the Government, during its closing, reminded the jury of TMB’s
investigation and the resulting “recordkeeping training” in San Diego.
For the challenged testimony, Iglehart urges an abuse-of-discretion
standard of review, asserting her motion in limine was sufficient to preserve the
issue for appeal. Relying upon Rule 103(b)’s not requiring a contemporaneous
objection to evidence “[o]nce the court definitively rules on the record”, Iglehart
maintains the court ruled “definitively” by stating, “I’ll deny the motion”. The
Government contends plain-error review applies because, despite the court’s
ruling “we’ll take up the objections as the offer” was made, Iglehart did not do so.
In the light of the above-quoted colloquy, the court did not rule “definitively”
on whether the TMB investigation was admissible evidence. Rather, the court
continued to discuss the admissibility of the evidence with counsel for both sides,
clarified what would be offered, and finally affirmed it would reconsider the
objection at the time of the offer. Based on this record, Iglehart was required to
object during trial in order to preserve the issue for appeal.
And, because Iglehart failed to do so, review is only for plain error. E.g.,
Broussard, 669 F.3d at 546. Under that standard, Iglehart must show a forfeited
plain (clear or obvious) error that affected her substantial rights. Puckett v.
United States, 556 U.S. 129, 135 (2009). If she makes that showing, we have the
discretion to correct the reversible plain error, but should do so only if it “seriously
affect[s] the fairness, integrity or public reputation of judicial proceedings”. Id.6
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2.
Our court applies a two-prong test for admissibility under Rule 404(b): (1)
the evidence must be “relevant to an issue other than the defendant’s character”;
and (2) the evidence’s probative value must not be substantially outweighed by its
prejudicial effect. United States v. Beechum, 582 F.2d 898, 911 (5th Cir. 1978) (en
banc). As noted above, Iglehart contends Blech’s testimony explaining the TMB
investigation fails the Beechum test as unfairly prejudicial character evidence. As
also noted, she does not challenge the evidence of the San Diego trip or related
recordkeeping training, objecting only to the underlying TMB investigation, which
gave rise to the San Diego training. The Government responds, inter alia, that
the testimony is: admissible to prove lack of mistake; and probative in order to
disprove Iglehart’s poor-recordkeeping defense.
At trial, the testimony by Blech, TMB’s assistant general counsel, was very
brief:
Q: And has Sharon Iglehart been investigated by [TMB]?
A: Yes, she has.
Q: And when was that investigation concluded?
A: The investigation was concluded on July 25th, 2008,
and the case was referred to the legal department at the
TMB.
Q: And as a result of that investigation, was Dr. Iglehart
required to attend a training course for physicians?
A: Yes. She entered into an agreed order, the terms of
which required her to attend a PACE medical
recordkeeping course.
Q: I’m sorry. PACE medical record --
A: Yes. The -- the PACE is a University of San Diego
physician program, and they have a recordkeeping
course.
There was no cross-examination.
In its closing, the Government also reminded the jury about the TMB
investigation: “Well, the evidence is that [Iglehart] also was subject to an
investigation. Because of that, she had to go to medical recordkeeping training
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which -- and you’ll remember the San Diego trip. . . . But she billed for seeing
patients when she was at that mandatory recordkeeping . . . class”.
Assuming, arguendo, Blech’s testimony about the investigation constituted
character evidence offered “to show that on a particular occasion [Iglehart] acted
in accordance with the character”, Rule 404(b)(1), it does not rise to the level of
reversible plain error. Applying Beechum’s two-prong test, any error was not
“clear or obvious”: it was not clear or obvious that Blech’s testimony was not
relevant to an issue other than Iglehart’s character (namely, an issue concerning
her recordkeeping practices and training); and it was not clear or obvious that the
undue prejudice substantially outweighed the probative value. Beechum, 582
F.2d at 911. This is especially true given Iglehart’s defense theory of poor
recordkeeping and her comments, on direct examination, about the TMB
sanctions.
Moreover, even assuming, arguendo, a plain (clear or obvious) error, given
the voluminous evidence of Iglehart’s fraudulent-billing practices presented at
trial, any such error did not affect her substantial rights. Over the course of a
seven-day trial, Iglehart only points to two instances in which the Government
mentioned the TMB investigation in a claimed inadmissible manner. In neither
instance did the Government explain the underlying basis for the investigation or
otherwise imply it was an indicator of guilt in the current prosecution; rather, the
Government used the testimony to explain why Iglehart was in San Diego for
recordkeeping training, despite billing for patients in Houston (evidence to which
she does not object).
B.
Iglehart’s second issue concerns whether the court used the proper burden-
shifting methodology to calculate “intended loss” under Guidelines §§ 2B1.1(b)(1)
and (b)(7). These two Guidelines provide offense-level enhancements based on
defendant’s intended loss to the Government. See U.S.S.G. §§ 2B1.1(b)(1), (b)(7).
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1.
The parties dispute whether this issue was properly preserved for appeal.
The Government contends plain-error review applies because Iglehart objected
only generally to the enhancements, rather than specifically to the calculation
methodology. Iglehart maintains her written objections to the PSR were sufficient
to preserve the issue because she cited Valdez and Isiwele, which explain the
proper burden-shifting methodology. See Valdez, 726 F.3d at 696; United States
v. Isiwele, 635 F.3d 196, 203 (5th Cir. 2011). Therefore, she asserts the court’s
methodology is reviewed de novo; factual findings, for clear error.
Arguably, the issue was not preserved. In any event, we need not resolve
the question of issue-preservation because Iglehart’s contentions fail under either
standard. For the purpose of this analysis, therefore, the court’s methodology is
reviewed de novo, and its factual findings for clear error. See Valdez, 726 F.3d at
696. Along that line, a factual finding is not clearly erroneous if it is “plausible in
light of the record as a whole”. Id. at 692 (quoting United States v. Cisneros-
Gutierrez, 517 F.3d 751, 764 (5th Cir. 2008)).
2.
Turning to the substantive issue, Guideline § 2B1.1 provides tiered
sentencing enhancements based on the amount of intended loss. In addition to
providing tiered enhancements applicable to all theft offenses, the Guideline also
provides additional enhancements for health-care-fraud offenses. U.S.S.G.
§§ 2B1.1(b)(1) (generic-theft offenses), (b)(7) (health-care-fraud offenses). To
calculate loss and determine any appropriate enhancement, “the aggregate dollar
amount of fraudulent bills submitted to the Government health care program
shall constitute prima facie evidence of the amount of the individual loss, i.e., is
evidence sufficient to establish the amount of the intended loss, if not rebutted”.
U.S.S.G. § 2B1.1 cmt. 3(F)(viii).
Our court has held that, although the amount billed fraudulently to
Medicare is prima facie evidence, it “does not constitute conclusive evidence of
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intended loss; the parties may introduce additional evidence to suggest that the
amount billed either exaggerates or understates the billing party’s intent”.
Isiwele, 635 F.3d at 203 (internal quotation marks omitted) (quoting United States
v. Miller, 316 F.3d 495, 504 (4th Cir. 2003)). Accordingly, our court employs a
burden-shifting framework for calculating the intended loss in health-care fraud
cases. See id.; Valdez, 726 F.3d at 696. Nonetheless, courts have “wide latitude
to determine amount of loss”. United States v. Jones, 475 F.3d 701, 705 (5th Cir.
2007).
Using the $22.7 million billed throughout Riverside and Iglehart’s
conspiracy as prima facie evidence, the PSR recommended, inter alia, two
enhancements based on Iglehart’s intended loss: a 20-level enhancement for a
generic-theft offense, with an intended loss between $9.5 and $25 million,
pursuant to Guideline § 2B1.1(b)(1)(K); and a four-level enhancement for health-
care fraud, with an intended loss in excess of $20 million, pursuant to Guideline
§ 2B1.1(b)(7)(B)(iii). As noted, Iglehart’s written objection to the PSR’s calculated
loss cited the above-referenced Isiwele and Valdez decisions.
In considering Iglehart’s objection regarding the generic-theft
enhancement, Guideline § 2B1.1(b)(1)(K), the court recognized the prima facie
evidence likely overstated Iglehart’s intended recovery from Medicare and
Medicaid, but overruled the objection nonetheless:
And I am satisfied to accept that, perhaps, [Iglehart] had
enough knowledge that she worked through these years
of defrauding Medicare to know that she was not going
to get the full amount, but she did not have enough
knowledge to fine-tune it, certainly, to anything less
than 9.5. And I find abundant evidence to support that
intended loss amount within that range of 9.5 million to
25 million, and, therefore, I deny the objection . . . .
In finding the PSR’s recommended 20-level generic-theft enhancement applicable,
the court made a factual finding that Iglehart intended loss between $9.5 and $25
million. U.S.S.G. § 2B1.1(b)(1)(K).
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The court next turned to Iglehart’s objection regarding the recommended
four-level health-care-fraud enhancement for loss in excess of $20 million.
U.S.S.G. § 2B1.1(b)(7)(B)(iii). The court sustained this objection:
I find that it is reasonable to conclude that she would
have assumed and believed and intended that loss to be
not greater than $20 million . . . . The next level down is
between 7 million to 20 million. The adjustment is for
three levels. That is what I find is correct in this
instance, giving the appropriate measure of credence to
her claim of knowing that not everything gets paid by
Medicare and, at the same time, recognizing that at least
9.5 million, somewhere less than 20 million, would have
been the intended loss.
Accordingly, the court applied a three-level health-care-fraud
enhancement, which applies for intended loss between $7 and $20 million.
U.S.S.G. § 2B1.1(b)(7)(B)(ii). Taken together with the 20-level generic-theft
enhancement, the court found Iglehart intended loss of at least $9.5 million (based
on the generic-theft enhancement), but less than $20 million (based on the health-
care-fraud enhancement). As there were no relevant Guidelines thresholds within
that range, the court did not further specify its calculation.
As stated, Iglehart maintains the court did not follow the burden-shifting
methodology for calculating intended loss. See U.S.S.G. § 2B1.1 cmt. 3(F)(viii);
Valdez, 726 F.3d at 696; Isiwele, 635 F.3d at 203. She asserts the prima facie
evidence was rebutted by showing Medicare only paid $6.4 million of the $22.7
million billed; accordingly, she contends the court should have then required the
Government to produce evidence of her subjective intent to cause loss in excess of
$6.4 million.
The Government counters that the court followed the proper methodology
articulated in Isiwele and Valdez by acknowledging that the prima facie evidence
(i.e., the billed amount) overstated Iglehart’s intent. The Government further
maintains the court did not err by considering Iglehart’s knowledge and subjective
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expectations regarding the Medicare billing process in order to conclude she
intended loss in excess of $9.5 million.
Although the court did not articulate a step-by-step methodology (which it’s
not required to do), it explained its reasoning for the applicability of each
enhancement: it rejected the prima facie evidence; considered evidence of
Iglehart’s subjective knowledge; and made a factual finding for the range of her
intended loss. Especially given the “wide latitude” courts are afforded in
calculating loss, the conclusion that Iglehart’s intended loss was between $9.5 and
$20 million was “plausible in light of the record as a whole”. Jones, 475 F.3d at
705; Valdez, 726 F.3d at 692. Accordingly, the court did not err in applying the
enhancements under Guidelines §§ 2B1.1(b)(1)(K) and (b)(7)(B)(ii).
III.
For the foregoing reasons, the judgement is AFFIRMED.
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