United States v. Iloani ( 1998 )

REVISED-JULY 2, 1998
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
___________________________
No. 97-20330
___________________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
DAVID ILOANI,
Defendant-Appellant.
___________________________________________________
Appeal from the United States District Court
For the Southern District of Texas
___________________________________________________
June 11, 1998
Before GARWOOD, DAVIS, and EMILIO M. GARZA, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
Following his conviction for mail fraud under 18 U.S.C.
§ 1341, Dr. David Iloani raises a number of issues on appeal. He
claims that: (1) the Government breached its plea agreement with
him; (2) the district court erred in denying a downward departure
for acceptance of responsibility; (3) the district court erred in
imposing a two-level upward adjustment for abuse of a position of
trust; (4) the district court erred in imposing a four-level
adjustment based on its determination that the loss exceeded
$20,000.00; and (5) the district court erred in denying him a
downward departure for aberrant behavior. After reviewing the
briefs, we find that issue (3) above is the only issue that merits
discussion. We therefore consider the propriety of the district
court’s imposition of an “abuse of trust” sentencing enhancement
pursuant to § 3B1.3 of the United States Sentencing Guidelines.
Dr. Iloani, a chiropractor, conducted a scheme in which he
conspired with patients to submit fraudulent bills to insurance
companies for treatments that were never rendered. One of the
insurance companies discovered that Dr. Iloani had submitted
fraudulent bills for Elizabeth Aboderin’s treatment, and the
insurance company notified the FBI. The FBI conducted an
investigation of Dr. Iloani’s billing practices and gathered
evidence of Dr. Iloani’s illegal conduct through cooperating co-
conspirators and an undercover sting operation. Dr. Iloani
ultimately pled guilty to one count of mail fraud in violation of
18 U.S.C. § 1341. He was sentenced to 27 months of imprisonment,
three years of supervised release, a $15,000.00 fine, and a $50.00
special assessment. We address only Dr. Iloani’s claim that his
sentence was improperly enhanced under § 3B1.3 of the Sentencing
Guidelines for abuse of a position of trust.
The district court assessed a two-point enhancement due to Dr.
Iloani’s abuse of a position of trust pursuant to § 3B1.3 of the
1995 Sentencing Guidelines. Section 3B1.3 states in part:
If the defendant abused a position of public or private
trust . . . in a manner that significantly facilitated
the commission or concealment of the offense, increase by
2 levels.
U.S.S.G. § 3B1.3. An abuse of trust enhancement is appropriate if
2
(1) Dr. Iloani held a position of trust, (2) that he used to
significantly facilitate the commission or concealment of the
crime. Id.; United States v. White, 972 F.2d 590, 600 (5th Cir.
1992). We review the district court’s imposition of an abuse of
trust enhancement for clear error. United States v. Fisher, 7 F.3d
69, 70 (5th Cir. 1993). In this Circuit, it is settled that a
§ 3B1.3 enhancement is appropriate for a physician who abuses the
trust of his patients. See United States v. Sidhu, 130 F.3d 644,
655-56 (5th Cir. 1997) (holding that a physician had abused his
patients’ trust and was subject to a § 3B1.3 enhancement where he
billed for services that were not performed, not performed as
billed, or performed by non-physicians). However, this Circuit has
never considered whether a physician who acts in concert with his
patients to conduct a fraudulent billing scheme may be assessed a
§ 3B1.3 enhancement for abuse of a position of trust on the basis
of the physician’s relationship with an insurance company.
The Government argues that the Appellant held a position of
trust with respect to the insurance companies, because those
companies extend privileges, as well as professional discretion and
deference, to medical professionals. The Appellant argues that
there is no such trust relationship between a chiropractor and an
insurance company and that his position did not obscure the crime.
A position of trust “is characterized by ‘substantial
discretionary judgment that is ordinarily given considerable
deference.’ The position of trust ‘must have contributed in some
substantial way to facilitating the crime and not merely have
3
provided an opportunity that could as easily have been afforded to
other persons.’” United States v. Kay, 83 F.3d 98, 102 (5th Cir.),
cert. denied, 117 S. Ct. 147 (1996) (quoting U.S.S.G. § 3B1.3, at
n.1).
Because this is a matter of first impression in this Circuit,
we look to our sister circuits for guidance. In United States v.
Rutgard, a Ninth Circuit panel concluded that the sentence of the
defendant, an opthamologist, was properly enhanced under § 3B1.3
for abuse of a position of trust where the defendant had submitted
false claims to Medicare. 116 F.3d 1270, 1293 (9th Cir. 1997).
The panel concluded that “the government as insurer depends upon
the honesty of the doctor and is easily taken advantage of if the
doctor is not honest.” Id.
Similarly, in United States v. Adam, a Fourth Circuit panel
concluded that a § 3B1.3 enhancement for abuse of trust was
appropriately applied to an internist who conducted a scheme in
which he received illegal kickbacks in return for referring
patients to a cardiologist. 70 F.3d 776, 778, 782 (4th Cir. 1995).
The care of the referred patients was paid for in part by federal
welfare funds, in violation of 42 U.S.C. § 1320a-7b(b) (1988),
which makes it illegal for any person to knowingly solicit or
receive remuneration in return for patient referrals if payment for
such services is made in part out of federal welfare funds. Id.
at 778. The Fourth Circuit concluded that Adam’s sentence was
appropriately enhanced two levels for abuse of a position of trust
because “[t]he position that Appellant enjoyed as a physician
4
making claims for welfare funds is an example of the kind of
position” contemplated by the abuse of trust provision. Id. at
782. The panel further stated that “welfare fraud is terribly
difficult to detect because physicians exercise enormous
discretion: their judgments with respect to necessary treatments
ordinarily receive great deference and it is difficult to prove
that those judgments were made for reasons other than the patients’
best interests.” Id.
The relationship of Dr. Iloani to the private insurers in this
case is closely analogous to the relationships of the defendants to
the government as insurer in the above cases. We are persuaded by
the reasoning of the Fourth and Ninth Circuits in these cases, and
we therefore conclude that the district court did not err in
concluding that Dr. Iloani abused a position of trust with the
insurance companies in fraudulently billing such companies for
medical care. Dr. Iloani made medical findings and diagnoses of
his patients and then prescribed treatments and medications. Dr.
Iloani also falsely represented to the insurance companies that
specified treatments had been rendered. The district court was
entitled to conclude that insurance companies usually rely on the
honesty and integrity of physicians in their medical findings,
diagnoses, and prescriptions for treatment or medication.
Furthermore, the district court was entitled to conclude that
insurance companies must rely on physicians’ representations that
the treatments for which the companies are billed were in fact
performed. The district court did not err in applying the § 3B1.3
5
enhancement to Dr. Iloani’s sentence.
We find Dr. Iloani’s remaining claims on appeal to be
meritless. We therefore affirm Dr. Iloani’s sentence.
AFFIRMED.
6