United States v. Sidhu ( 1997 )

REVISED
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 96-50736
Summary Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
SAMARJEET S. SIDHU; LOREN ARDEN GIFFORD,
Medical Doctor,
Defendants-Appellants.
Appeals from the United States District Court
for the Western District of Texas
December 3, 1997
Before DeMOSS and DENNIS, Circuit Judges, and LEE,* District Judge.
DeMoss, Circuit Judge:
Appellants Dr. Loring Gifford1 and his employee Samarjeet
Sidhu were each convicted of conspiracy to commit mail fraud and
other criminal conduct relating to their practice of submitting
false claims for medical services to various private insurers and
*
Chief Judge of the Southern District of Mississippi,
sitting by designation.
1
Dr. Gifford is variously referred to in the record as Dr.
Loren Gifford or Dr. Loring Gifford. This opinion will use Dr.
Gifford’s name as specified in his appellate brief.
government programs. Sidhu appeals both his convictions and his
sentence. Gifford appeals only the district court’s determination
of his sentence. We affirm.
BACKGROUND
Appellant Loring Gifford is a psychiatrist. Prior to his
conviction in this case, Gifford operated a profitable practice in
El Paso, Texas. Gifford advertised as a specialist in the area of
addiction and pain management, and frequently prescribed morphine.
Indeed, Gifford prescribed a significant portion of the morphine
prescribed in the State of Texas. Many of Gifford’s patients came
in daily to receive injections of morphine, alone or in combination
with other pain-killing injections. Some of Gifford’s patients
became addicted to morphine as a result of his treatments, and
required further treatment to withdraw from the medications Gifford
provided.
Gifford systematically defrauded government programs, such as
Medicare, Medicaid, and CHAMPUS, and private insurers.
Specifically, government programs and private insurers were billed
for services that were either (1) not performed, (2) not performed
as billed, or (3) performed by non-physicians, for whose services
Gifford was not entitled to be reimbursed. In but one example,
Gifford routinely billed sixty-minute psychotherapy sessions to
patients who came to the office for injections. Gifford billed
these sessions using a code that contemplates face-to-face
psychotherapy. Nonetheless, patients were billed without regard to
whether the patient was seen by Dr. Gifford. In several cases,
2
patients were billed for psychotherapy sessions notwithstanding the
fact that Gifford was out of town, or even out of the country.
Eventually, patients were billed without regard to whether the
patients came to the office. In one case, Gifford billed
psychotherapy to a patient who was no longer living.
Gifford also billed far more psychotherapy than could have
reasonably been performed. For example, Gifford personally billed
more than 5,800 hours as patient visits for the year 1993. Gifford
routinely billed between forty and sixty psychotherapy appointments
in a single day, all supposedly lasting between thirty and sixty
minutes per session. Gifford does not dispute that he engaged in
these fraudulent billing practices.
Appellant Samarjeet Sidhu worked for Gifford. Sidhu, who was
trained as a physician in Mexico but failed the Texas medical
exams, performed biofeedback services on Gifford’s patients. Sidhu
billed for biofeedback using a code that contemplates the
measurement and regulation of body temperature, which is generally
accomplished with the aid of a biofeedback machine. Several
patients testified that they never saw Sidhu’s biofeedback machine,
and that Sidhu generally just talked to the patient, performing
more of a counseling role.
Sidhu ran the office in Gifford’s absence. Gifford’s staff
were instructed to call Sidhu “Dr. Sidhu.” Patients were referred
to Sidhu in Gifford’s absence, and Sidhu was assigned the task of
judging whether the patients needed medication, counseling,
biofeedback or all three. Many of the services performed by Sidhu
3
in Gifford’s absence were billed as psychotherapy sessions with
Gifford. Sidhu received computer print-outs detailing Gifford’s
billings, and assisted Gifford’s efforts to collect on the
fraudulent billings by meeting and corresponding with patients and
insurers. Office staff testified that Sidhu was involved in
collecting the fraudulent billings on a daily basis. Sidhu does
not dispute that insurers were systematically defrauded by billings
produced in Gifford’s practice.
Gifford and Sidhu were tried before a jury and convicted on
multiple counts relating to the fraud.2 Gifford was convicted of
conspiracy to commit mail fraud, aiding and abetting mail fraud,
mail fraud, obstruction of justice, and engaging in a monetary
structuring transaction. On appeal, Gifford does not challenge the
facts establishing his guilt. Rather, Gifford attacks almost all
of the fact findings used by the district court to determine his
sentence.
Sidhu was convicted of conspiracy to commit mail fraud, aiding
and abetting mail fraud, and making false statements to the FBI.
On appeal, Sidhu challenges both his conviction and his sentence,
arguing: (1) that the evidence was insufficient to support his
conviction; (2) that his trial counsel was constitutionally
deficient; and (3) that the district court incorrectly calculated
the monetary loss attributable to Sidhu’s crimes, thus arriving at
an erroneous base offense level.
2
Gifford’s wife, who worked as a chiropractor in his
office, was also indicted but the charges against her were
dismissed. Gifford’s remaining office staff were not indicted.
4
Gifford’s and Sidhu’s appeals will be addressed separately.
SIDHU’S APPEAL
I. Sufficiency of the Evidence to Support Sidhu’s Conviction
Sidhu’s convictions must be affirmed if a rational trier of
fact could have found the essential elements of each offense beyond
a reasonable doubt. See United States v. Brown, 29 F.3d 953, 958
(5th Cir. 1994). All inferences and credibility determinations
must be resolved in favor of the jury’s verdict of guilty. United
States v. McCord, 33 F.3d 1434, 1439 (5th Cir. 1994).
A. Conspiracy to Commit Mail Fraud
Sidhu’s conviction for conspiracy to commit mail fraud in
violation of 18 U.S.C. § 371 must be supported with sufficient
evidence that Sidhu and Gifford agreed to commit mail fraud, and
that either Gifford or Sidhu committed an overt act in furtherance
of the agreement. United States v. Gray, 96 F.3d 769, 772-73 (5th
Cir. 1996), cert. denied, 117 S. Ct. 1275 (1997); United States v.
Pettigrew, 77 F.3d 1500, 1519 (5th Cir. 1996); United States v.
Mackay, 33 F.3d 489 (5th Cir. 1994).
Sidhu admits that he knew Gifford was systematically
defrauding insurers by submitting fraudulent claims. Sidhu
acknowledges that he performed acts that furthered Gifford’s fraud.
Therefore, the second element of the conspiracy offense is not
challenged. Rather, Sidhu claims that the government failed in its
5
burden to demonstrate an agreement between he and Gifford to commit
mail fraud.
The agreement forming the basis of a conspiracy is rarely
expressed, and may be inferred from circumstantial evidence. E.g.,
Pettigrew, 77 F.3d at 1519. The key issue is whether Sidhu
knowingly and voluntarily joined Gifford’s course of action. Id.;
see also Gray, 96 F.3d at 772-73.
The jury’s inference that Sidhu and Gifford agreed to commit
mail fraud is supported by ample evidence. Gifford entrusted his
practice to Sidhu’s care when Gifford was out of the office. Sidhu
checked to see how payment would be made before seeing patients.
Sidhu instructed the staff to bill for injections using a
particular code. Patients testified that Sidhu’s methods were
highly irregular and the jury heard evidence that strongly supports
the proposition that Sidhu was not performing biofeedback at all.
For example, Sidhu billed for biofeedback that was performed
without the benefit of his biofeedback machine. One patient
testified that Sidhu slept during a purported biofeedback session
while the patient listened to music. Another patient testified
that she was only with Sidhu for a brief time period, and that she
was forced to flee when he began touching her inappropriately.
Other patients saw Sidhu after taking injections of morphine, which
induced prolonged sleep and would have rendered the patient unable
to actively participate in biofeedback. Although the jury heard
conflicting testimony on the issue of proper biofeedback technique,
6
there is sufficient evidence in the record to establish that at
least some of Sidhu’s billings for biofeedback were fraudulent.
Sidhu also performed a variety of services for patients in
Gifford’s absence, including filling out and dispensing pre-signed
prescription forms, determining whether a patient needed prescribed
medication, and counseling patients. Many of Sidhu’s services were
subsequently billed by Gifford as face-to-face psychotherapy
sessions. Sidhu obtained knowledge of these fraudulent billings
because Sidhu was provided with computer print-outs of Gifford’s
billings, which Sidhu was periodically held responsible for
collecting. Sidhu does not dispute that he knew the billings to be
fraudulent. Thus, Sidhu performed an important role in furthering
the conspiracy by fraudulently billing for biofeedback services
that were improperly or incompletely performed, by performing
services that could be billed as though provided by a physician,
and by assuming a role of responsibility for the practice from
Gifford.
Of equal importance, Sidhu inquired into the status of
collections on a daily basis. Sidhu actively collected on debt he
knew to be fraudulent by meeting and corresponding with insurance
companies and patients. Sidhu met with insurance adjustors. Sidhu
was also involved in collecting funds from patients. One patient
testified that Sidhu presented her with a $10,000 bill from Gifford
but offered to excuse the debt, provided that the patient would
sign a release exonerating Gifford of liability for misdiagnosing
the patient with a terminal illness. Thus, Sidhu performed an
7
important role in completing the fraudulent transactions by
actively pursuing collection of the fraudulent bills.
Sidhu maintains that he cannot be held liable because he did
not personally create any fraudulent billings. Sidhu is correct
that Gifford generally circled, or at least approved, the codes
that would be billed to a particular patient or insurer. That does
not, however, end the inquiry. The record contains sufficient
evidence to support an inference that at least some of Sidhu’s
billings for biofeedback were fraudulent. Moreover, Sidhu may be
held liable for the reasonably foreseeable conduct of his co-
conspirator, Gifford. See, e.g., United States v. Sanchez, 961
F.2d 1169 (5th Cir. 1992).
In a related argument, Sidhu suggests that his conduct was not
voluntary because, having failed his medical exams, he needed his
job. Sidhu’s contention that he needed a job, or that he acted at
Gifford’s direction, establishes only Gifford’s superior role in
the conspiracy. Such an allegation is insufficient to establish a
necessity defense that would excuse Sidhu’s criminal conduct. See
United States v. Willis, 38 F.3d 170, 175 (5th Cir. 1994) (duress
defense requires, inter alia, that the defendant reasonably believe
there is a threat of death or serious bodily injury that leaves the
defendant no reasonable alternative to violating the law), cert.
denied, 115 S. Ct. 2585 (1995).
Sidhu performed work knowing that the services would be
fraudulently billed. Sidhu assisted the fraudulent scheme by
collecting on those fraudulent billings. There is sufficient
8
evidence in the record to support the jury’s inference that Sidhu
and Gifford agreed to commit mail fraud. Accordingly, Sidhu’s
conviction for conspiracy to commit mail fraud will be affirmed.
B. Aiding and Abetting Mail Fraud
Sidhu’s conviction for aiding and abetting mail fraud in
violation of 18 U.S.C. § 1341 must be supported with sufficient
evidence that Sidhu: (1) voluntarily associated with the criminal
enterprise; (2) voluntarily participated in the venture; and (3)
sought by independent action to make the venture succeed. United
States v. Casilla, 20 F.3d 600, 603 (5th Cir. 1994).
Evidence sufficient to support a conspiracy conviction is
typically sufficient to support an aiding and abetting charge.
Id.; United States v. Mergerson, 4 F.3d 337, 342 (5th Cir. 1993).
To the extent Sidhu’s independent action comprises a separate
element of the aiding and abetting offense, that element is
satisfied with evidence that Sidhu independently used the mail to
collect on what he knew to be fraudulent billings. There is,
therefore, ample evidence to support the jury’s verdict with
respect to Sidhu’s conviction for aiding and abetting mail fraud,
and that conviction will be affirmed.
C. Making False Statements to the FBI
During the course of the FBI’s investigation into Gifford’s
billing practices, Sidhu was interviewed by the FBI. In that
interview, Sidhu falsely stated that his only role in Gifford’s
9
practice was to perform biofeedback. Specifically, Sidhu claimed
that he did not do any counseling, that he had no knowledge of the
procedures used when Gifford was out of the office, and that he had
no role in dispensing prescriptions. Sidhu was prosecuted and
convicted for making these false statements to the FBI, in
violation of 18 U.S.C. § 1001.
Sidhu admits he made the statements. Sidhu concedes, as he
must, that there is evidence in the record to support the
conclusion that statements were false, at least as they were
understood by the FBI. Sidhu’s primary position is that
exculpatory statements denying his role in the offense should not
be punishable by 18 U.S.C. § 1001. As Sidhu recognizes, however,
we decided that issue in United States v. Rodriguez-Rios, 14 F.3d
1040 (5th Cir. 1994) (en banc), which eliminated the “exculpatory
no” exception to § 1001 liability. Even assuming we were
sympathetic to Sidhu’s position, a panel of the Court is without
authority to reconsider the decision of the en banc Court in
Rodriguez-Rios.
Sidhu also contends that his misleading statements were not
material. Statements are material within the meaning of § 1001
when they have the natural tendency or capacity to deceive, affect,
or influence the federal agency. Kungys v. United States, 108 S.
Ct. 1537, 1546 (1988); United States v. Swaim, 757 F.2d 1530, 1534
(5th Cir. 1985); United States v. McIntosh, 655 F.2d 80, 82 (5th
Cir. 1981). The issue of materiality was properly presented to the
jury, which found that Sidhu’s false statements to the FBI in the
10
course of an active investigation were material to that
investigation. Having reviewed the record, we find no error in
that determination. Sidhu’s conviction for making false statements
to the FBI in violation of 18 U.S.C. § 1001 will be affirmed.
II. Effective Assistance of Counsel
Sidhu next contends that his convictions cannot stand because
he received constitutionally defective assistance of counsel.
Specifically, Sidhu complains that his counsel should have (1)
moved to sever Sidhu’s case from Gifford’s and (2) objected to the
district court’s calculation of the loss attributable to Sidhu’s
offenses.
Sidhu’s claim of ineffective assistance is not ripe for
appellate review. Generally, a claim for ineffective assistance of
counsel is not reviewed on direct appeal when, as here, there has
been no development of the issue in the district court. United
States v. Riunard, 956 F.2d 85, 87 (5th Cir. 1991); United States
v. Lewis, 902 F.2d 1176, 1180 (5th Cir. 1990).
Even if the Court were to review the issue, Sidhu could not
demonstrate either constitutionally deficient performance or the
type of prejudice required to establish an ineffectiveness claim.
Sidhu’s counsel moved for a judgment of acquittal notwithstanding
the verdict. In that pleading, counsel raised both the sufficiency
issues raised by Sidhu on appeal and the prejudice to Sidhu as a
result of the joint trial. United States v. Capote-Capote, 946
F.2d 1100, 1104 (5th Cir. 1991) (counsel’s failure to file a motion
11
to sever is not error unless the defendant can demonstrate specific
compelling prejudice against which the district court was unable to
afford protection). Sidhu’s counsel also made arguments concerning
the amount of loss attributable to Sidhu in Sidhu’s objections to
the PSR and at sentencing. As a result, Sidhu’s relatively less
culpable role was developed and accounted for, both at trial and in
sentencing. Sidhu’s generalized assertions of prejudice are
insufficient to meet the rigorous standards governing claims that
trial counsel provided ineffective assistance.
III. Loss Calculation used in Sentencing
Sidhu objects to the amount of monetary loss attributed to his
offenses for purposes of determining his base offense level. The
district court’s loss calculation is reviewed for clear error.
United States v. Krenning, 93 F.3d 1257, 1269 (5th Cir. 1996). The
“loss need not be determined with precision. The court need only
make a reasonable estimate of the loss, given available
information.” U.S.S.G. § 2F1.1, comment. (n. 8).
Sidhu argues that the loss attributed to him should have been
lower because he was the less culpable co-conspirator.
Specifically, Sidhu claims he should be sentenced only for harm
that he directly caused or intended.
We disagree. Gifford’s conduct was reasonably foreseeable to
Sidhu, and in furtherance of their jointly-undertaken criminal
activity. U.S.S.G. § 1B1.3(a)(1); United States v. Carreon, 11
F.3d 1225, 1232-34 (5th Cir. 1994). Therefore, Sidhu may properly
12
be sentenced for Gifford’s conduct in furtherance of the
conspiracy. Moreover, the district court properly accounted for
Sidhu’s relative culpability by: (1) limiting Sidhu’s loss
calculation to the period during which he was employed by Gifford,
and (2) treating Sidhu as a “minor participant.” As a result,
Sidhu was sentenced to 37 months using an offense level of 21 and
criminal history category of I. Gifford was sentenced to 120
months using an offense level of 30 and a criminal history category
of II. Sidhu was ordered to pay a fine in the amount of $2,000.
Gifford’s fine was waived, but he was ordered to pay restitution in
the amount of $150,899.27.
Sidhu’s objection to his sentence is general. He believes he
should have received an across-the-board discount based upon his
position in the conspiracy. Sidhu does not, however, make any
specific arguments about which amounts cannot be fairly attributed
to him. Likewise, Sidhu failed to offer specific evidence
rebutting the PSR in the district court. The district court’s
reliance on the PSR, as adjusted to accommodate certain of Sidhu’s
objections in the district court, was reasonable. See United
States v. Ayala, 47 F.3d 688, 690 (5th Cir. 1995); United States v.
Angulo, 927 F.2d 202, 204 (5th Cir. 1991). Sidhu has not
demonstrated that the district court’s allocation of loss, and
ultimate determination of a base defense level, is clearly
erroneous. Sidhu’s sentence will be affirmed.
GIFFORD’S APPEAL
13
Gifford challenges only his sentence. Gifford’s convictions
were grouped into three offense groups, pursuant to the grouping
rules of sentencing guidelines 3D1.2 and 3D1.3. Gifford was then
sentenced using the following PSR recommendations:
CONSPIRACY TO COMMIT MAIL FRAUD AND MAIL FRAUD COUNTS
Base offense level 2F1.1(a) 6
Amount of loss 2F1.1(b)(1) 12
More than minimal planning 2F1.1(b)(2) 2
Aggravating role 3B1.1(a) 4
Vulnerable victim 3A1.1(b) 2
Abuse of position of trust 3B1.3 2
Obstruction of justice 3C1.1 2
Adjusted offense level 30
OBSTRUCTION OF JUSTICE COUNTS
Base offense level 2J1.2(a) 12
Threat of injury 2J1.2(b)(1) 8
Aggravating role 3B1.1(a) 4
Vulnerable victim 3A1.1(b) 2
Abuse of position of trust 3B1.3 2
Adjusted offense level 28
FINANCIAL TRANSACTIONS COUNTS
Base offense level 2S1.2(a) 17
Specified activity 2S1.2(b)(1)(B) 2
Aggravating role 3B1.1(a) 4
Vulnerable victim 3A1.1(b) 2
Abuse of position of trust 3B1.3 2
Obstruction of justice 3C1.1 2
Adjusted offense level 29
Gifford’s ultimate term of imprisonment was determined using
the highest offense level, pursuant to the grouping rules of
14
guideline 3D1.4. Thus, Gifford was sentenced using a base offense
level of 30. Gifford articulates six issues for review. Taken
together, these issues effectively challenge most of the adjust-
ments made to determine Gifford’s base offense level.
I. Adjustments to the Obstruction of Justice and Financial
Transaction Offense Groups
Gifford’s first two issues raise arguments that relate solely
to the district court’s determination of the base offense level
applicable to his convictions for obstruction of justice and
engaging in an unlawful financial transactions. Specifically,
Gifford challenges the district court’s findings that (1) Gifford’s
obstruction of justice count involved a threat of physical injury,
and (2) that the financial transaction offenses involved an
obstruction of justice. See U.S.S.G. § 2J1.2(b)(1) (allowing
eight-level adjustment if offense involved threat of physical
injury); § 2S1.2(b)(1)(B) (allowing two-level adjustment if
defendant knew funds were proceeds of unlawful activity). After
reviewing the record and the arguments of the parties with respect
to each of these issues, the Court finds no basis for holding that
the district court’s fact findings are clearly erroneous. Although
we find no error with respect to the adjustment of the obstruction
of justice offense group for threat of physical injury or the
financial transaction offense group for obstruction of justice, we
note that any such error would also be harmless. Granting Gifford
relief with respect to these issues would change only the guideline
range applicable to the obstruction of justice and financial
15
transaction offense groups. Granting relief would not, however,
have any effect with respect to the controlling guideline range.
Guideline 3D1.2 provides rules for grouping certain
convictions into offense groups. Gifford’s convictions in this
case were grouped into three offense groups: the mail fraud offense
group; the obstruction of justice offense group; and the financial
transaction offense group. Gifford does not challenge these
groupings. Guideline 3D1.4 provides for determination of a
“combined offense level.” A combined offense level is determined
by taking the highest of the base offense levels applicable to the
various offense groups, and adding points to that level based upon
the base offense levels of the other offense groups.
The district court made fact findings which yielded a base
offense level of 30 with respect to the mail fraud offense group.
As developed more fully below, we affirm the district court’s
determination of that base offense level. The district court was
then required, pursuant to guideline 3D1.4 to add points to that
base offense level to account for the obstruction of justice and
financial transaction offense groups.
In this case, however, any addition to the base offense level
of 30, the level applicable to the mail fraud offense group, would
result in a guideline range that was higher than the highest of the
statutory maximum sentences allowed by law.3 For that reason, the
3
The maximum statutory sentence that could be imposed was
120 months, which applied to Gifford’s convictions for violation of
18 U.S.C. § 1512 and 18 U.S.C. § 1957. Gifford has not challenged
the validity of those convictions on appeal. Gifford’s guideline
range using a base offense level of 30 and a criminal history
16
combined offense level was effectively limited to 30 by the
statutory maximum sentence that could be imposed, and the base
offense levels for the obstruction of justice and financial
transaction offense groups played no role in determining Gifford’s
guideline range. Gifford’s arguments that relate solely to the
obstruction of justice and financial transaction offense groups
present no error. Moreover, assuming the Court were to find error
with respect to those adjustments, the error is without effect as
to the application of the sentencing guidelines in Gifford’s case.
Accordingly, the district court’s adjustment to the obstruction of
justice offense group for threat of physical injury and the
district court’s adjustment to the financial transaction offense
group for obstruction of justice will be affirmed.
II. Calculation of the Loss Attributable to Gifford’s Fraud
Gifford’s third issue challenges the district court’s
calculation of the loss attributable to his fraud. The base
offense level for fraud and deceit is six. U.S.S.G. § 2F1.1(a).
The district court added twelve points to the base offense level
applicable to the mail fraud offense group because the loss
exceeded $1.5 million. See U.S.S.G. § 2F1.1(b)(1)(M). The loss
calculation was initially prepared by the FBI and later
category of II was 108 - 135 months. The guideline range
applicable to a base offense level of 31 and a criminal history
category of II is 121 - 151 months, a period in excess of the
statutory maximum of 120 months.
17
incorporated into the PSR. The district court adopted the
calculations in the PSR, finding that Gifford intended the
insurance carriers to suffer a loss exceeding $2,020,419.79.
Testimony at trial established that the FBI calculated the
loss attributable to Gifford by extracting numbers from Gifford’s
own computer. The FBI properly limited its analysis to billings
made between January 1993 and August 1994, the time period defined
in the indictment for the conspiracy. The PSR reports that the FBI
also limited its analysis to those billing codes that required Dr.
Gifford to perform or be present for the procedure. Finally, the
FBI limited its analysis to billings actually submitted to an
insurance carrier.
The FBI calculated that seventy-four percent of Gifford’s 1993
billings and sixty-eight percent of Gifford’s billings between
January and August 1994 were fraudulent. To reach that conclusion,
the FBI relied upon witness interviews and other evidence to
estimate that Gifford was generally available for work an average
of fifty hours per week. Allowing Gifford fifty hours per week,
the FBI calculated that Gifford could have worked 2,600 hours per
year. From this figure, the FBI subtracted time that Gifford was
known to be out of the office, based upon travel receipts and other
evidence. Using this method, the FBI estimated that Gifford was
available for work 2,017 hours in 1993 and 1,236 hours between
January and August 1994. The FBI then compared the amount of time
that Gifford was determined to be available for work with Gifford’s
18
actual billings. Time-sensitive billing or other procedures that
were in excess of the time that Gifford could have been available
for work were determined to be fraudulent.
Gifford does not seriously quarrel with the government’s
methodology. Rather, Gifford argues (1) that he never intended to
recover the face amount of the fraudulent claims, and (2) that the
loss should be reduced to reflect that the services performed by
non-physician employees had some value.
A. Gifford’s Intent to Collect on the Fraudulent Claims
The private insurers billed by Gifford generally paid only
eighty percent, while some government programs paid as low as fifty
percent of the amounts billed for Gifford’s services. Gifford
claims that he never intended to collect fraudulently billed
amounts that were not covered by the insurers. Thus, Gifford
argues that the overall amount of loss attributed to his fraud
should be reduced by between twenty and fifty percent.4
4
Gifford attempts to support this argument with commentary
note 7 to sentencing guideline 2F1.1, which states that the court
may substitute “intended loss” when it is greater than the “actual
loss.” U.S.S.G. § 2F1.1 comment. (n. 7). The commentary cited by
Gifford permits the district court to increase the amount of loss
attributable to an offense by including losses that the defendant
intended to inflict. Whatever more subtle meaning the commentary
may be trying to convey, we seriously doubt that the provision can
be read to require that the district court define an intended loss
in fraud cases, and then substitute that intended loss for more
reliable and less subjective estimates of loss, such as the face
amount of fraudulent claims. See United States v. Lghodaro, 967
F.2d 1028, 1031 (5th Cir. 1992) (total amount of fraudulent claims,
rather than amount paid by the insurer, established loss); see also
United States v. Sowels, 998 F.2d 249, 252 (5th Cir. 1993)
(combined credit limit of stolen credit cards represented intended
loss regardless of the actual charges made).
19
We disagree. The record contains testimony establishing that
Gifford accepted cash payments from patients that were intended to
supplement the amounts paid by insurance companies. One of
Gifford’s patients testified that cash payments of $100 per week
were made to cover the gap between Gifford’s billings and available
insurance coverage. Sidhu was involved in collecting money
directly from patients for Gifford’s bills. Finally, Gifford
secured credit card numbers from patients for the purposes of
billing directly when the insurance companies did not pay. Thus,
the record establishes that Gifford did intend, and did in fact
accept payment from patients that was in addition to the amounts
billed to insurance companies. Therefore, the district court’s
reliance on the PSR, which used the face amount of the fraudulent
billings as the measure of loss, was not clearly erroneous.
Of equal importance, Gifford has not provided the Court with
a record or an argument on appeal that is specific enough to
support relief on this ground. Gifford did not specify in the
district court and has not specified on appeal which billings are
subject to reduction or by what percentage those billings should be
reduced. There is, therefore, no basis for finding that the
district court’s reliance upon the PSR in this complicated
insurance fraud case was clearly erroneous. United States v.
Ayala, 47 F.3d 688, 690 (5th Cir. 1995); United States v. Angulo,
20
927 F.2d 202 (5th Cir. 1991) (“in the absence of rebuttal evidence,
the sentencing court may properly rely upon the PSR and adopt it”).
Gifford’s premise that he never intended to collect
fraudulently billed claims that were not paid by the insurers is
contradicted by the record. Moreover, Gifford has not presented
any specific evidence or argument that would allow relief on this
ground. For each of these reasons, the district court’s reliance
on the PSR, which determined loss according to the face value of
fraudulently submitted claims, will be affirmed.
B. Accounting for the Value of Services Rendered by Non-
Physicians
With respect to Gifford’s fraudulent billings for services
that were provided by another non-physician employee, Gifford
argues that the loss calculation should be reduced by the value of
the services actually rendered by the non-physician. Gifford
failed to develop this argument in the district court.
Specifically, there is no evidence that would enable the Court to
distinguish between fraudulent billings for services that were not
performed, fraudulent billings for services that were improperly or
incompletely performed, and fraudulent billings for services
performed by non-physician employees. Moreover, there is no
evidence concerning the value, if any, of services performed by
non-physicians, and no evidence to establish that Gifford could
have relied upon the codes billed to seek reimbursement in any
amount for the services provided by non-physician employees.
21
Gifford recognizes that the record is inadequate, but requests
that the Court vacate his sentence and remand for determination of
those issues. Gifford had ample opportunity to develop his rather
specific challenges to the district court’s allocation of loss in
the district court. See United States v. Bachynsky, 949 F.2d 722,
732-33 (5th Cir. 1991). Gifford bore the burden of producing
specific rebuttal evidence to support his argument that some
discrete portion of the fraudulent billings was not in fact
fraudulent because valuable services that could have been
reimbursed were rendered by non-physician employees. United States
v. Ayala, 47 F.3d 688, 690 (5th Cir. 1995); United States v.
Angulo, 927 F.2d 202 (5th Cir. 1991) (“in the absence of rebuttal
evidence, the sentencing court may properly rely upon the PSR and
adopt it”). Gifford failed in this burden.
We are a court of error. We will therefore decline Gifford’s
invitation to remand for development of an argument that should
have been developed in the district court. Based upon the existing
record, the district court’s calculation of the loss attributable
to Gifford’s fraud was not clearly erroneous and will be affirmed.
III. Adjustment Based Upon Gifford’s Aggravating Role
Gifford’s fourth issue challenges the district court’s finding
that Gifford played an aggravating role in the offenses, which
resulted in the addition of four points to his base offense level.
Guideline section 3B1.1 allows adjustment of the base offense level
when the criminal defendant is found to be “an organizer or leader
22
of a criminal activity that involved five or more participants or
was otherwise extensive.” An aggravating role determination is
reviewed for clear error. See United States v. Allibhai, 939 F.2d
244, 252 (5th Cir. 1991).
No one contends that there were more than five participants in
the criminal activity. Rather, the government argues that
Gifford’s scheme to defraud was “otherwise extensive” because it
required the “unknowing services” of multiple outsiders. See
Allibhai, 939 F.2d at 253 (unknowing services of bank employees, as
well as the scope and duration of the conspiracy made money
laundering scheme “otherwise extensive”); U.S.S.G. § 3B1.1,
comment. (n. 3) (“a fraud that involved only three participants but
used the unknowing services of many outsiders could be considered
extensive”).
Gifford created and managed an extensive scheme that generated
more than $2 million dollars in fraudulent billings in the
nineteen-month period between January 1993 and August 1994. Cf.
Allibhai, 939 F.2d at 253 (finding that money laundering scheme
that yielded only $1 million dollars in laundered money over a
three-year period was otherwise extensive). Gifford recruited
numerous office employees to provide billing and collection support
for his fraudulent practices. Of equal importance, Gifford’s far-
reaching fraud could not have succeeded without the unwitting
participation of his vulnerable patients and the unknowing
assistance of employees in the many insurance companies that
received Gifford’s fraudulent billings. The district court’s
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finding that Gifford played an aggravating role in an extensive
conspiracy to defraud health insurance companies and government
programs is not clearly erroneous and will be affirmed.
IV. Adjustment Because Gifford’s Crimes Impacted Vulnerable
Victims
Gifford fifth issue challenges the district court’s finding
that Gifford’s offenses impacted vulnerable victims, which resulted
in the addition of two points to his base offense level. See
U.S.S.G. § 3A1.1(b). The district court’s imposition of the two-
level increase was based upon its judgment that Gifford’s patients
were unusually vulnerable to criminal activity.
Gifford argues that the increase was inappropriate because his
patients were not the victims of his offense. Rather, Gifford
maintains that the primary victims of his criminal conduct were the
fraudulently billed insurers and government programs. We have
previously recognized that a physician’s patients can be victimized
by a fraudulent billing scheme directed at insurers or other health
care providers. See United States v. Bachynsky, 949 F.2d 722 (5th
Cir. 1991). In Bachynsky we recognized that “the deep pockets”
paying phony insurance claims are not the only victims when a
doctor’s unwitting patients are made the instrumentalities of a
fraudulent billing scheme. Id. at 735; see also United States v.
Kuban, 94 F.3d 971, 974 (5th Cir. 1996) (discussing who can be a
victim for purposes of guideline 3A1.1), cert. denied, 117 S. Ct.
24
716 (1997). The rationale applicable in Bachynsky is equally
applicable here.
Gifford’s patients were often debilitated by pain or
depression, and easily became addicted to the treatment proffered
by Gifford to support his fraud. The record supports the
conclusion that Gifford preyed upon vulnerable patients by
addicting them to morphine in order to support his fraudulent
billing scheme. Gifford’s patients were therefore victims of that
scheme and the district court’s imposition of a two-level
adjustment was not clearly erroneous.
V. Adjustment Based Upon Gifford’s Abuse of Position of Trust or
Special Skill
Gifford’s final issue challenges the district court’s finding
that Gifford abused a position of trust, which resulted in the
addition of two points to his base offense level. See U.S.S.G. §
3B1.3. Gifford correctly argues that the adjustment must stand or
fall on the issue of whether he abused a position of trust.
Guideline 3B1.3 does not allow both an adjustment for an
aggravating role in the offense, which we have already affirmed,
and an adjustment based “solely on the use of a special skill.”
U.S.S.G. § 3B1.3. The district court did not, however, base
Gifford’s adjustment “solely on the use of a special skill.” To
the contrary, the PSR justified the adjustment with evidence that
Gifford abused his position of trust with his patients. In the
sentencing hearing, the government further defended the adjustment
by arguing that Gifford abused his position of trust with the
25
insurers and government programs that provided reimbursement with
respect to the fraudulent billings. Having reviewed the record, we
are convinced that compromising his patients’ trust was a necessary
component of Gifford’s lucrative scheme to maximize his earnings.
Gifford’s abuse of his patients’ trust “significantly facilitated
the commission” of the offense. U.S.S.G. § 3B1.3. The district
court’s two-level adjustment under § 3B1.3 is not clearly erroneous
and will be affirmed.
CONCLUSION
Sidhu’s conviction is supported by adequate evidence with
respect to all counts. Sidhu’s claim for ineffective assistance of
counsel was not developed in the district court, and is therefore
inappropriate for appellate review at this time. Sidhu’s
relatively less culpable role in the fraudulent scheme was
developed at trial and accounted for by the district court in the
sentencing hearing. The district court reduced Sidhu’s sentence to
account for his relatively less culpable role. For that reason,
the district court did not err by attributing the total amount of
reasonably foreseeable loss to Sidhu. Accordingly Sidhu’s
convictions and sentence are AFFIRMED.
Gifford’s multiple arguments challenging the findings used by
the district court to determine his base offense level do not
present clear error. Accordingly, Gifford’s sentence is AFFIRMED.
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