United States v. Mansour Sanjar , 876 F.3d 725 ( 2017 )

Case: 15-20025 Document: 00514254919 Page: 1 Date Filed: 11/30/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 15-20025 FILED
November 30, 2017
Lyle W. Cayce
UNITED STATES OF AMERICA, Clerk
Plaintiff - Appellee Cross-Appellant
v.
MANSOUR SANJAR; CYRUS SAJADI; CHANDRA NUNN, ADAM MAIN;
SHOKOUFEH HAKIMI,
Defendants - Appellants Cross-Appellees
SHAWN MANNEY,
Defendant - Appellant
Appeals from the United States District Court
for the Southern District of Texas
Before JONES, BARKSDALE, and COSTA, Circuit Judges.
GREGG COSTA, Circuit Judge:
Defendant Main’s petition for panel rehearing is GRANTED IN PART
and DENIED IN PART. Main’s petition for rehearing en banc is DENIED.
IT IS ORDERED that our prior panel decision, United States v. Sanjar,
853 F.3d 190 (5th Cir. 2017), is WITHDRAWN as to Adam Main, and the
following is SUBSTITUTED in its place. The only changes to the prior opinion
are in sections V(B), VII(A), and the conclusion.
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The reason Willie Sutton once gave for robbing banks is true of Medicare
today: that’s where the money is. So it is not surprising that we consider
another case alleging a scheme to defraud the multibillion dollar government
program. A jury convicted the six defendants of that fraud as well as paying
and receiving kickbacks for referrals. Their appeal alleges defects throughout
the investigation and prosecution of the case, beginning with the search of the
medical office, running through the trial, and ending with the financial
obligations imposed as part of their sentence. The government also appeals,
objecting to the district court’s decision to offset the defendants’ restitution
liability with any amounts recovered through forfeiture.
I.
Drs. Mansour Sanjar and Cyrus Sajadi enrolled Spectrum Psychiatric
Services P.A., their recently formed community mental-health center, as a
Medicare provider in 2006. For the following six years, Spectrum held itself
out as providing partial hospitalization program (PHP) care. During that time,
Spectrum billed Medicare over $90 million for PHP services.
PHPs offer intensive treatment to mentally-ill patients, serving as an
alternative to traditional hospitalization. To qualify, a patient must be
suffering a severe onset of his or her illness; a situation the government’s
expert describes as a “crisis.” Qualifying patients are required to undergo
mental-health evaluations within twenty-four hours of admission, see a doctor
daily, and receive twenty hours of treatment weekly. Given the intensive
nature of PHP care, Medicare reimburses it at a higher rate than alternative
treatments.
That financial incentive led Sanjar and Sajadi to submit what the jury
found to be fraudulent bills. The evidence, construed in favor of the
government as the jury’s verdict requires, showed that the bills were
fraudulent in two respects. Patients, although they had a history of mental
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illness, were not suffering from the acute onsets PHP serves. One patient, for
example, testified that at the time she was admitted to Spectrum, she was not
experiencing a severe episode of her chronic depression or any other mental-
health issues. Spectrum’s pattern of PHP care was also at odds with the acute
onset that the program covers. Such episodes should be random, but Spectrum
cycled patients between PHP and the intensive outpatient program (IOP)—a
less intensive treatment with lower reimbursement rates—according to set
timelines: ninety days in PHP, then four to six weeks in IOP, at which time the
cycle would restart.
Apart from whether PHP treatment was medically necessary for the
patients, the clinic was not providing that level of care. Patient after patient
billed as PHP participants testified to never interacting with doctors for more
than ten minutes. Instead, they often spent their time at Spectrum watching
movies, playing games, listening to music, and socializing. So recreational and
diversionary were the services Spectrum provided that one patient described
it as a “Mickey Mouse facility.”
Such a scheme, of course, requires patients. This is where three other
defendants and the kickbacks come into play. Spectrum’s Office
Administrator, Shokoufeh Hakimi, oversaw this effort. Hakimi first used
Charles Roberts to recruit patients. Roberts, who pleaded guilty and testified
at trial, paid group-home operators to send their Medicare-eligible residents to
Spectrum. Among those to whom Roberts gave kickbacks were group-home
owners Chandra Nunn and Shawn Manney. Roberts paid each $100 per
patient every two weeks, which was half of what he earned. Apparently
concerned about detection, Nunn required her payments in cash.
Before long, Nunn’s greed overcame her initial timidity. She cut Roberts
out of the scheme and began dealing directly with Sanjar, Sajadi, and Hakimi.
Her referrals alone spawned $28.5 million in PHP claims for Spectrum. Nunn
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maintained her steady supply of Medicare beneficiaries by paying residents of
her group home to attend Spectrum. She gave payments the way she took
them: in cash. A group-home resident testified that Nunn once gave her
envelopes full of money, labeled with residents’ names, to hand out to other
residents attending Spectrum.
The final defendant, Physician Assistant Adam Main, helped cover up
the fraud. Sanjar and Sajadi had him falsify and backdate medical charts to
make it appear patients were suffering severe onsets of mental illnesses. One
patient’s file, for example, lists that he was suffering from major depressive
disorder, undergoing daily panic attacks, and relapsing on cocaine. But at trial
the patient testified that he was not experiencing any such symptoms when he
met with Main, had never before been diagnosed with major depressive
disorder, and could not afford cocaine.
The doctors similarly instructed Head Social Worker Terry Moore,
another Spectrum employee who pleaded guilty and testified, to print and affix
new dates to prior mental-health evaluations for repeat patients. Sanjar and
Sajadi further signed medical charts even when they did not oversee patient
evaluations.
This operation lasted half a decade. Although Medicare paid out
nowhere close to the more than $90 million Spectrum sought for PHP
reimbursements, it did pay just under $7 million. 1
Federal agents began to focus on Spectrum after arresting Roberts for
his role as a recruiter in a separate health care fraud scheme. Roberts
cooperated and the information he provided about Spectrum launched an
investigation that resulted in an indictment charging:
1 Unexplained in the record is why Spectrum was paid such a small percentage of
what it sought from Medicare for these and other claims.
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• Sanjar, Sajadi, Hakimi, Main, and Nunn with conspiracy to commit
health care fraud, in violation of 18 U.S.C. § 1349 (Count One);
• Four counts of health care fraud under 18 U.S.C. § 1347 tied to some
of the conspirators (Counts Two-Five) 2;
• Sanjar, Sajadi, Hakimi, Nunn, and Manney with conspiracy to
defraud the United States and pay health care kickbacks, in violation
of 18 U.S.C. § 371 (Count Six); and
• Five counts of health care kickbacks under 42 U.S.C. § 1320a-7b(b)(1),
(b)(2) tied to some of the conspirators (Counts Seven-Eleven) 3.
A jury found defendants guilty of all but the kickback charge in Count
Nine that applied to Sanjar and Manney. Based on varying assessments of
each defendant’s role in the offense, the district court sentenced them to terms
of imprisonment ranging from 24 to 148 months. Sanjar, Sajadi, and Main
were further ordered to pay restitution and forfeit illegal proceeds.
II.
Sanjar alleges error in the way the government investigated the case,
contending that the warrant authorizing the search of Spectrum does not
comply with the constitutional requirement that it “particularly describ[e] the
. . . things to be seized.” U.S. CONST. amend. IV.
We interpret that language to require enough detail in the warrant to
allow a reasonable agent to know what items she is permitted to take. United
States v. Aguirre, 664 F.3d 606, 614 (5th Cir. 2011). The concern is that the
magistrate authorizing the warrant, and not the agents executing it, should be
deciding which items may be seized. United States v. Allen, 625 F.3d 830, 834–
35 (5th Cir. 2010) (citing Marron v. United States, 275 U.S. 192, 196 (1927)).
Generic language may satisfy this “particularity” requirement if describing a
2 Count Two charges Sanjar. Count Three charges Sajadi and Main. Count Four
charges Sanjar and Main. Count Five charges Sajadi and Main.
3 Count Seven charges Hakimi. Count Eight charges Sanjar, Sajadi, and Nunn. Count
Nine charges Sanjar and Manney. Count Ten charges Sajadi and Nunn. Count Eleven
charges Sanjar and Nunn.
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more specific item is not possible. Williams v. Kunze, 806 F.2d 594, 598 (5th
Cir. 1986).
The warrant must further not be overbroad, meaning “there must be
probable cause to seize the particular things named in the warrant.” United
States v. SDI Future Health, Inc., 568 F.3d 684, 702 (9th Cir. 2009). This
related but distinct concept flows from the probable cause requirement.
Together, the two aspects of the Fourth Amendment require that (1) a warrant
provide sufficient notice of what the agents may seize and (2) probable cause
exist to justify listing those items as potential evidence subject to seizure.
Kunze, 806 F.2d at 598–99 (treating these as separate questions).
Sanjar’s challenge, which mostly objects to the warrant allowing seizure
of all patient files, seems to be more about the latter. In terms of the notice
the former requires, the warrant authorizes seizure of “documents constituting
. . . patient files” as well as those relating to Medicare claims, the PHP program,
and Spectrum’s finances. That list, even if somewhat generic, provided
sufficient notice of what items the agents could take. Aguirre, 664 F.3d at 614
(rejecting a particularity challenge even when the items seized were only the
“functional equivalent” of those listed in the warrant); Kunze, 806 F.2d at 598
(rejecting particularity challenge to a seizure of 50,000 to 60,000 documents,
over 90% of which were client files, because the warrant “specifically
authorized” the seizure of those documents). The agents did not seize the
patient files because of a judgment call they made when executing the warrant;
they seized the files because the magistrate had expressly authorized them to
do so. Marron, 275 U.S. at 196.
The principal question is thus whether the broad authorization to seize
all patient files (and other listed categories of documents) was supported by
probable cause. The scope of the seizure depends on the scope of the suspected
crime. Kunze, 806 F.2d at 598 (explaining that a warrant authorizing seizure
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of all of a company’s records would be lawful when “probable cause exists to
believe that an entire business was merely a scheme to defraud, or that all
records of a business are likely to constitute evidence”). If the evidence
presented to the magistrate provided probable cause of fraud limited to a
particular patient or group of patients, the resulting warrant authorizing
seizure of all of Spectrum’s patient files would be problematic.
But the magistrate’s authorization to seize all of Spectrum’s patient files
was supported by evidence of pervasive fraud in the PHP program, which was
a major part of the clinic’s business. The affidavit summarized information
from two former Spectrum employees and two patients revealing that (1)
patients ended up in PHP because of fees paid to recruiters and patients, not
because of physician referrals, and (2) the time the patients spent at Spectrum
was spent watching television, playing bingo, and coloring rather than
receiving the PHP treatment being billed to Medicare—billings that exceeded
$90 million. The information presented to the magistrate thus provided
probable cause to conclude that fraud and kickbacks infected the entire PHP
program. That evidence of a wide-ranging conspiracy and scheme justified the
seizure of patient files, at a minimum those of PHP patients used in the
prosecution. Kunze, 806 F.2d at 599 (rejecting argument that authority to seize
all client files of tax consultant was overbroad because probable cause
supported widespread fraud involving offshore tax shelters and even files
relating to onshore transactions that may provide relevant evidence). The
district court did not err in declining to suppress the evidence seized pursuant
to the warrant.
III.
Defendants next claim error in how the grand jury indicted the case. We
review these claims de novo. United States v. Jones, 733 F.3d 574, 584 (5th
Cir. 2013); United States v. Miller, 520 F.3d 504, 512–13 (5th Cir. 2008).
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A.
Sanjar and Nunn contend the two conspiracies listed in the indictment—
the first for defrauding Medicare under the specific health care fraud
conspiracy statute (18 U.S.C. §§ 1347, 1349); the second for defrauding the
government and violating the Anti-Kickback Statute under the general
conspiracy statute (18 U.S.C. § 371)—charge a single crime. Such a problem,
which courts label “multiplicity,” exists when a defendant is punished twice for
the same conduct. United States v. Ogba, 526 F.3d 214, 232–33 (5th Cir. 2008).
As this doctrine is derived from the Double Jeopardy Clause, it looks to the
Blockburger 4 test asking “whether each provision requires proof of a fact which
the other does not.” Albernaz v. United States, 450 U.S. 333, 337 (1981). In
making that determination, we look not just at the elements of the statutes but
also at how the offenses were charged in the indictment and presented at trial.
Ogba, 526 F.3d at 234.
The centerpiece of the health care fraud conspiracy alleged in Count One
was the “submitting [of] false and fraudulent claims to Medicare.” That can
occur independent of any kickbacks paid for referrals. The purpose of the
section 371 conspiracy in Count Six, on the other hand, was the payment and
receipt of kickbacks. That can occur without the submission of any fraudulent
Medicare claims. 5 Section 371 also requires an overt act, which section 1349
does not. We have before held that indictments charging these conspiracies do
not pose a multiplicity problem and the same is true of these allegations.
4 Blockburger v. United States, 284 U.S. 299 (1932).
5 Although Count Six lists not just violation of the Anti-Kickback Statute as an object
of the conspiracy, but also section 371’s general “defraud[ing] the United States,” that portion
of the charge focuses not on financial harm to the government but “impairing . . . through
deceitful and dishonest means, the lawful government functions of the United States
Department of Health and Human Services in its administration and oversight of the
Medicare program.” It therefore does not overlap with the first conspiracy’s focus on financial
harm.
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Jones, 733 F.3d at 584; see also United States v. Njoku, 737 F.3d 55, 68 (5th
Cir. 2013); United States v. Moran, 778 F.3d 942, 964 (11th Cir. 2015).
B.
Sanjar also alleges the opposite problem, duplicity, for Counts Six, Eight,
and Eleven. Duplicity occurs when a single count alleges multiple offenses.
Miller, 520 F.3d at 512. A duplicitous indictment is only cause for reversal if
the defendant was prejudiced by the duplicity. Id. The most common way such
a charge harms a defendant is when it allows a nonunanimous verdict with all
jurors finding the defendant guilty but not necessarily of the same offense. Id.
at 512–13.
The duplicity challenge to Count Six is based on a feature we just
mentioned: it charges defendants with conspiring to both (1) defraud the
government and (2) violate the Anti-Kickback Statute. Although the alleged
conspiracy has two objects, the offense charged is a single conspiracy. As far
back as 1949, it was “well settled that the conspiracy may contemplate several
offenses.” Burton v. United States, 175 F.2d 960, 963 (5th Cir. 1949); see also
United States v. Duvall, 846 F.2d 966, 975 n.8 (5th Cir. 1988) (labeling the
argument Sanjar makes “frivolous”).
Sanjar is, however, correct that Counts Eight and Eleven each charge
separate offenses: (1) paying kickbacks and (2) receiving kickbacks. 42 U.S.C.
§ 1320a-7b(b)(1) (criminalizing receipt of kickbacks); id. § 1320a-7b(b)(2)
(criminalizing payment of kickbacks). But the government’s theory, reflected
in both the indictment and the trial evidence, was that certain defendants paid
kickbacks (Sanjar, Sajadi, and Hakimi), whereas others received them (Nunn
and Manney). As there was no evidence that Sanjar ever received kickbacks,
there is no risk that the jury convicted him of that crime. See United States v.
Vernon, 723 F.3d 1234, 1262 (11th Cir. 2013) (holding that a count charging
both paying and receiving kickbacks was not cause for reversal when the
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indictment and trial evidence left no possibility that the duplicity defects led
the jury to convict the defendant of the unfitting offense).
The indictment does not present any reversible error.
IV.
We now reach the trial, during which the defendants contend the district
court made erroneous evidentiary rulings. We review such rulings for abuse
of discretion, subject to a harmful error analysis. United States v. Delgado, 668
F.3d 219, 226 (5th Cir. 2012); Chapman v. California, 386 U.S. 18, 23 (1967)
(explaining that error is not harmless if “there is a reasonable possibility that
the evidence complained of might have contributed to the conviction”).
A.
The first ruling is the district court’s decision to allow four Spectrum
patients to testify about their mental health. Hakimi says this was improper
lay witness opinion testimony.
Much of the challenged testimony, however, is not opinion. A patient’s
drug history, what a patient told medical personnel, and the diagnosis a
patient has received is factual testimony, subject as all evidence is to being
challenged for its veracity.
Some of the testimony, such as the severity of a patient’s mental
condition, is more in the nature of the opinion testimony that Federal Rule of
Evidence 701 addresses. Examples of this category include a patient’s
recollection that she was not experiencing visual or auditory hallucinations
upon admission to Spectrum and was similarly not suffering acute psychotic
symptoms. Another is a patient’s testimony that he was not feeling badly
enough to label his depression major.
Lay witnesses may offer opinion testimony if it is rationally based on
their perception, helpful to determining a fact in issue, and not based on
specialized knowledge. FED. R. EVID. 701. Even if such testimony requires
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some specialized knowledge, it is admissible so long as the lay witness offers
straightforward conclusions from observations informed by his or her
experience. See United States v. Riddle, 103 F.3d 423, 429 (5th Cir. 1997).
The challenged testimony satisfies these requirements. Each patient
spoke only to his or her condition. The testimony assisted the jury in
determining whether patients required PHP services. And, even if the
statements implicate specialized knowledge, they were informed by the
patient’s experience—they are the ones living with the mental illnesses.
Allowing this testimony was not erroneous.
B.
Next is the claim that the district court should not have limited the
examination of a federal agent who testified about some of Sanjar’s postarrest
statements. Among other things, the agent testified on direct that Sanjar said
he did not care to know: (1) if kickbacks were paid at Spectrum and (2) that
overuse of ambulances was rampant. On cross, defense counsel asked the
agent about other postarrest statements Sanjar made, including the name of
the outreach employee supervisor and that Roberts was fired for paying
kickbacks. The court disallowed the inquiry on hearsay grounds. It also denied
Sanjar’s request to introduce a law enforcement report summarizing his
statements, which the agent had reviewed before testifying.
When offered by the government, a defendant’s out-of-court statements
are those of a party opponent and thus not hearsay. FED. R. EVID. 801(d)(2).
When offered by the defense, however, such statements are hearsay (the
defendant may, of course, reiterate the out-of-court statements on the stand if
he chooses to testify).
Sanjar tries to get around the hearsay problem by invoking the rule of
optional completeness, citing both Federal Rule of Evidence 106 and its
common law counterpart.
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Rule 106 protects against written works being presented out of context.
United States v. Garcia, 530 F.3d 348, 351 (5th Cir. 2008). It states that if a
party offers part of a recorded statement, an adverse party may require the
introduction of any other part that ought to be considered at the same time.
FED. R. EVID. 106. The language of Rule 106 expressly limits it “to situations
in which part of a writing or recorded statement is introduced into evidence.”
Garcia, 530 F.3d at 351 (emphasis added). That said, the Eleventh Circuit has
held that testimony may nonetheless fall within the rule’s ambit if it is
“tantamount” to offering a recorded statement into evidence. Id. at 352 (citing
United States v. Pendas-Martinez, 845 F.2d 938, 943 (11th Cir. 1988)). But we
have held that this standard is not met in the situation here when the agent
neither read from the report nor quoted it. Id. at 353. Rule 106 is thus
inapplicable. Moreover, the Rule would only have required the introduction of
the report; it does not address Sanjar’s primary concern about the scope of cross
examination.
The common law rule of completeness, which is just a corollary of the
principle that relevant evidence is generally admissible, does provide a right
to cross examine. Beech Aircraft Corp. v. Rainey, 488 U.S. 153, 171–72 (1988).
The rule comes into play, however, only when the additional inquiry is needed
to “explain, vary, or contradict” the testimony already given. United States v.
Paquet, 484 F.2d 208, 212 (5th Cir. 1973). The other statements by Sanjar that
defense counsel sought to ask the agent about, many of which are assertions of
innocence, were “not necessary to qualify, explain, or place into context” the
limited statements the agent testified about on direct. United States v. Self,
414 F. App’x 611, 615 (5th Cir. 2011). 6
6 Under Fifth Circuit Rule 47.5.4, our unpublished cases are not precedential. We rely
on this case and the other unpublished decisions cited in this opinion only to the extent they
reflect consistent and well-reasoned analysis of these issues.
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Related to the same agent testimony, Main contends the district court’s
limitation of cross examination violated the Confrontation Clause. United
States v. Skelton, 514 F.3d 433, 439–40 (5th Cir. 2008). He contends the jury
would have formed a substantially different impression of Sanjar’s sincerity
had the agent been allowed to confirm some of Sanjar’s exculpatory
statements. This argument misses the mark. The credibility of the testifying
agent, not Sanjar, is the interest of the Confrontation Clause. Id. The district
court did, moreover, permit some cross examination of the agent’s testimony
concerning Sanjar’s postarrest statements, which in any event were not all that
prejudicial because Sanjar did not admit guilt in those statements. The district
court did not abuse its wide latitude over management of the trial by
sustaining some objections to that line of questioning.
C.
The last disputed evidentiary ruling is the district court’s decision to
allow another agent to testify that a binder, dubbed the Nunn Binder because
it documents referrals from and payments to Nunn, was found in Hakimi’s
office. Hakimi says this testimony was hearsay because the testifying agent
did not actually seize the binder and thus must have been relying on another
agent’s statement to that effect.
The district court did not err in concluding the location of the binder was
within the testifying agent’s personal knowledge. The agent, who supervised
the search, testified that he knew the location based on labels that agents used
to designate different locations at Spectrum. In any event, any error in
admitting this single statement was harmless in light of the other substantial
evidence presented at the month-long trial showing that Hakimi paid
kickbacks and meticulously monitored the referrals.
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V.
Defendants also see error in how the court instructed the jury. 7 We
review the propriety of jury instructions for abuse of discretion, subject again
to a harmless error analysis. United States v. Cessa, 785 F.3d 165, 185 (5th
Cir. 2015). In so doing, we consider whether the charge, as a whole, is a correct
statement of law. Id.
A.
Defendants’ first objection is to the court’s instruction on the Anti-
Kickback Statute’s safe harbor provision, which shields bona fide employees
receiving income for their recruiting services from being found guilty under the
Anti-Kickback Statute. They contend that it is an impermissible mandatory
presumption. Such a presumption tells the jury it must infer a fact if the
government proves certain predicate facts. Id. While a district court should
not give such an instruction, it may instruct on permissive inferences, which
suggest to the jury only a possible conclusion to be drawn if the government
proves predicate facts. Id. In assessing whether an instruction is a mandatory
presumption, we look first to its wording and then consider it in the context of
the whole charge. Id.
The contested charge reads as follows: “If you find that any part of the
payment to a defendant was made to compensate past referrals or to induce
future referrals, that portion of the payment violates the Anti-Kickback
Statute and is not subject to the safe harbor.”
7 Aside from the arguments about the instructions discussed below, Main contends for
the first time on appeal that a factual unanimity instruction was required for the conspiracy
to commit health care fraud because the “manner and means” section of that charge lists
three different ways he helped the conspiracy. He cites no caselaw, nor are we aware of any,
that requires unanimity as to the alleged manner and means, which is not an element of the
conspiracy offense. The crime charged, and thus the issue on which a jury must be
unanimous to convict a defendant under section 1349, is the conspiring to commit health care
fraud.
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The defendants’ concern relates to the legal conclusion the instruction
tells the jury to reach if it determines the payments were made for prohibited
purposes. It does not just define the scope of the safe harbor defense (“is not
subject to the safe harbor”), but can also be read as requiring a conviction so
long as that one fact concerning the purpose of the payments is proven (“that
portion of the payment violates the Anti-Kickback Statute”). As Hakimi notes,
there are elements beyond the existence of a kickback that the government
must prove: that the defendant paid or received the kickback and acted
knowingly and willfully. 42 U.S.C. § 1320a–7b(b).
Even read in isolation, we are not convinced that this safe harbor
instruction fits within the due process cases dealing with mandatory
presumptions. That line of Supreme Court cases involves just that,
presumptions. See, e.g., Rose v. Clark, 478 U.S. 570, 574 (1986) (“All homicides
are presumed to be malicious in the absence of evidence which would rebut the
implied presumption.”); Francis v. Franklin, 471 U.S. 307, 315 (1985) (“The
acts of a person of sound mind and discretion are presumed to be the product
of the person’s will . . . ”); Sandstrom v. Montana, 442 U.S. 510, 513 (1979)
(“[T]he law presumes that a person intends the ordinary consequences of his
voluntary acts.”). Such presumptions ask a jury to assume “that a fact exists
because of the known or proven existence of some other fact.” BLACK’S LAW
DICTIONARY 1375 (10th ed. 2014); see also Cessa, 785 F.3d at 185. We recently
applied this doctrine to an instruction not expressly framed in terms of a
presumption but that required the jury to find certain evidence to be probative
of an element of the crime. Cessa, 785 F.3d at 184 (“[T]he commingling of
illegal proceeds with legitimate business funds is evidence of intent to conceal
or disguise.”).
Unlike those cases, the safe harbor instruction is not telling the jury
what evidence it must find probative or what presumptions it must apply; it
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instead tells the jury the legal consequence of a factual finding it has the
discretion to make. The challenged instruction thus more closely adheres to
the fact/law allocation of power between judge and jury than do the classic
presumptions that intrude on the jury’s exclusive domain to decide the facts.
In informing the jury of the legal consequences of its factfinding, it is akin to
other instructions. Consider the pattern charge for entrapment: “If you should
find beyond a reasonable doubt . . . the defendant was ready and willing to
commit such a crime as charged in the indictment, whenever opportunity was
afforded, and that government officers or their agents did no more than offer
the opportunity, then you should find that the defendant is not a victim of
entrapment.” PATTERN JURY INSTRUCTIONS: FIFTH CIRCUIT (CRIMINAL) § 1.28
(2015).
The problem then is not one of presumptions, but rather that the
instruction erroneously describes the legal consequence of a jury finding that
part of the compensation was for referrals: that this means not just that the
safe harbor defense is not applicable but also that the government has proven
that the Anti-Kickback Statute was violated. 8 But the jury charge as a whole
did not mislead the jury. The challenged safe harbor instruction was given
only after the court had instructed the jury four times in general terms that
the government must prove each defendant guilty beyond a reasonable doubt
and then specifically told the jury that all elements of the kickback offenses
must be proven by that same standard. Only after all this, and when
addressing the safe harbor defense which it explained a defendant had to prove
8The instruction is an accurate statement of the law as it relates to the scope of the
safe harbor defense. United States v. Davis, 132 F.3d 1092, 1094 (5th Cir. 1998) (rejecting
argument that government must prove that a payment was for “no other purpose than
inducing the referral of Medicare patients”) (internal quotation marks omitted). But again,
Hakimi’s primary argument is that a rejection of the safe harbor defense does not mean the
government has met its burden of proving all elements.
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by a preponderance of the evidence, did the court give the challenged
instruction. A jury logically working through the charge thus would have
considered the safe harbor defense only after determining that the government
had proven a violation of the statute. The language and structure of the entire
charge therefore could not have led the jury to believe that this one statement
made in the context of an affirmative defense relieved the government of its
much-emphasized burden to prove each element of the Anti-Kickback statute.
B.
Main objects to the instruction that allowed the jury to conclude he had
knowledge of the Medicare fraud conspiracy if he “deliberately closed his eyes
to what would otherwise have been obvious to him.” This instruction may be
given when a defendant claims a lack of guilty knowledge and the evidence
supports an inference of deliberate indifference. Delgado, 668 F.3d at 227.
The thrust of Main’s defense was that he did not know about the criminal
activity. That defense was rebutted with evidence showing (1) Main was aware
of a high likelihood of illegal conduct because he was instructed to falsify
medical records and knew patients were being cycled between inpatient and
outpatient services at regular intervals which would not correspond to medical
needs, and (2) Main did not follow up with Sanjar or Sajadi after a patient
complained to him about a tardy kickback. This permitted the court to give
the deliberate ignorance instruction. 9 See United States v. Barson, 845 F.3d
159, 166 (5th Cir. 2016).
9Sanjar also raises this issue but makes no argument regarding why the instruction
was improper. In any event, the evidence likewise raises the requisite inferences as to him.
As discussed above, Sanjar told a federal agent that he was not interested in learning about
kickbacks.
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C.
Main next objects to the district court’s refusal to instruct on good faith.
Failure to instruct on good faith is not fatal when the jury is given a detailed
instruction on specific intent and the defendant has the opportunity to argue
good faith to the jury. United States v. Storm, 36 F.3d 1289, 1294–95 (5th Cir.
1994). Both conditions exist here. The court told the jury that the defendants
must have acted “with bad purpose either to disobey or disregard the law.”
And Main argued good faith during closing, asserting he merely performed his
duties as a physician’s assistant and provided treatment to the patients.
D.
The last objection is to the instruction on a conspirator’s liability for a
fellow conspirator’s crimes. See Pinkerton v. United States, 328 U.S. 640
(1946). Sanjar contends that (1) the instruction did not require a finding that
the substantive offense was foreseeable, and (2) Wharton’s Rule prohibits
Pinkerton liability for a substantive violation of the Anti-Kickback Statute
because in his view that crime requires multiple participants (the payor and
payee of the kickback). 10
1.
The district court’s Pinkerton instruction said: “A conspirator is
responsible for offenses committed by other conspirators if the conspirator was
a member of the conspiracy when the offense was committed and if the offense
was committed in furtherance of, or as a foreseeable consequence of, the
conspiracy.”
Sanjar argues the disjunctive language is error as Pinkerton liability
applies only to crimes committed in furtherance of the conspiracy that were
10Main also contends that the indictment had to provide notice of Pinkerton liability.
He cites no support for this argument, and we have held that our case law provides sufficient
notice. United States v. Jimenez, 509 F.3d 682, 692 (5th Cir. 2007).
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reasonably foreseeable. Many of our cases, both recent and old, agree with
Sanjar’s formulation. See, e.g., United States v. Danhach, 815 F.3d 228, 235
(5th Cir. 2016) (“Under Pinkerton, a conspirator can be found guilty of a
substantive offense committed by a co-conspirator and in furtherance of the
conspiracy, so long as the co-conspirator’s acts are reasonably foreseeable.”
(internal quotation marks omitted)); United States v. Heffington, 682 F.2d
1075, 1083 (5th Cir. 1982) (citing Pinkerton to require both in furtherance of
and foreseeability). That is consistent with Pinkerton itself. 328 U.S. at 647–
48 (noting the doctrine would not apply “if the substantive offense committed
by one of the conspirators was not in fact done in furtherance of the conspiracy,
did not fall within the scope of the unlawful project, or was merely a part of the
ramifications of the plan which could not be reasonably foreseen as a necessary
or natural consequence of the unlawful agreement”).
Somewhere along the way, our case law departed from this
understanding and began omitting “foreseeability” as a requirement for
Pinkerton liability; it was enough that the act was committed in furtherance of
the conspiracy. See, e.g., United States v. Thomas, 348 F.3d 78, 84–85 (5th Cir.
2003); United States v. Dean, 59 F.3d 1479, 1490 n.18 (5th Cir. 1995). The
2001 Pattern Jury Instructions thus included the disjunctive instruction given
in this case. PATTERN JURY INSTRUCTIONS: FIFTH CIRCUIT (CRIMINAL) § 2.22
(2001). When that version of the pattern charges was in effect, we upheld that
instruction given its support in some of our caselaw while recognizing that it
departed from the traditional understanding of Pinkerton and created a circuit
split. United States v. Armstrong, 619 F.3d 380, 387 n.4 (5th Cir. 2010) (citing
United States v. Gonzalez, 570 F.3d 16, 26 n.8 (1st Cir. 2009)).
Noting the concerns raised in Armstrong, the current Pattern Jury
Instructions—issued after this case was tried—restore “foreseeability” and “in
furtherance of” as independent requirements. PATTERN JURY INSTRUCTIONS:
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FIFTH CIRCUIT (CRIMINAL) § 2.17 (2015). The better course is for district courts
to follow the updated pattern and instruct the jury in the conjunctive as a
finding of foreseeability mitigates due process concerns that sometimes arise
with Pinkerton’s vicarious liability. See generally United States v. Alvarez, 755
F.2d 830, 849–50 (11th Cir. 1985).
Nonetheless, using the 2001 Pattern Jury Instruction here was not
reversible error. First off, Armstrong rejected a challenge to that very
instruction. 619 F.3d at 387. And importantly, foreseeability is usually not
disputed in a case like this one in which Pinkerton liability is extending only
to the substantive offense that is the object of the conspiracy. United States v.
Wynter, 379 F. App’x 841, 848–49 (11th Cir. 2010) (distinguishing cases “in
which the substantive crime that is the subject of the Pinkerton charge is also
one of the primary goals of the alleged conspiracy” from “cases in which the
substantive crime is not a primary goal of the alleged conspiracy, but directly
facilitates the achievement of one of the primary goals”). In other words, how
could the payment of kickbacks not be foreseeable to a participant in a
kickback conspiracy? Foreseeability is more often an issue when the
substantive offense for which Pinkerton liability is being sought is not an object
of the conspiracy, such as when prosecutors are seeking to hold drug trafficking
conspirators liable for firearms and murder offenses committed by fellow
dealers. See, e.g., United States v. Gonzales, 841 F.3d 339, 351–53 (5th Cir.
2016). Failure to require a foreseeability finding is not reversible error.
2.
Although framed in terms of a challenge to the Pinkerton instruction,
Sanjar’s Wharton’s Rule argument is really about whether conspiracy to
violate the Anti-Kickback Statute and an actual violation of that law can be
punished as separate crimes. The general rule is that “a conspiracy and the
substantive offense that is its immediate end are discrete crimes for which
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separate sanctions may be imposed.” Iannelli v. United States, 420 U.S. 770,
771 (1975). Wharton’s Rule, named after the nineteenth century treatise
writer who summarized the doctrine, is an exception. Id. at 773. It provides
that when the substantive crime requires more than one actor (adultery is the
anachronistic example Wharton cites), conspiracy should not be additional
punishment to a crime that already requires concerted action. 11 Id. at 772–74
(citing 2 F. WHARTON, CRIMINAL LAW § 1604, p. 1862 (12th ed. 1932)). The
narrow rule is implicated “[o]nly when it is impossible under any circumstances
to commit the substantive offense without cooperative action.” United States
v. Payan, 992 F.2d 1387, 1390 (5th Cir. 1993) (citing Gebardi v. United States,
287 U.S. 112, 122 (1932)). That is not the case with the Anti-Kickback Statute.
One can violate it just for soliciting a kickback. 42 U.S.C. § 1320a-7b(b)(1).
Convictions for both conspiracy to violate the Anti-Kickback Statute and
actually violating that law are allowed.
VI.
In response to the instructions it was given, the jury returned guilty
verdicts on all counts except for the kickback charge in Count Nine.
Defendants challenge the sufficiency of the evidence to support these counts.
We must affirm the verdict unless no rational juror could have found guilt
beyond a reasonable doubt. Njoku, 737 F.3d at 62 (instructing that we view
the evidence “in the light most favorable to the government,” draw all
inferences “in support of the jury’s verdict,” and “ask whether a rational trier
of fact could have found the essential elements of the crime beyond a
reasonable doubt”).
11 As is often the case, there is an exception to this exception. Wharton’s Rule is just
a “judicial presumption, to be applied in the absence of legislative intent to the contrary.”
United States v. Payan, 992 F.2d 1387, 1391 (5th Cir. 1993) (quoting Iannelli, 420 U.S. at
782) (holding that Congress intended for conspiracy and aiding and abetting to be separately
punishable).
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A.
The defendants convicted of the health care fraud offenses—all but
Manney, who just faced kickback charges—though separately challenging
their individual convictions raise similar legal issues. To be guilty of health
care fraud, a defendant must have knowingly and willfully executed a scheme
to defraud a government health care program like Medicare. 18 U.S.C. § 1347;
United States v. Willett, 751 F.3d 335, 339 (5th Cir. 2014). Willfully joining
with another to engage in such a scheme, with awareness of the agreement’s
unlawful purpose, is a conspiracy to commit health care fraud. 18 U.S.C. §
1349; Njoku, 737 F.3d at 63.
Echoing their argument concerning the admissibility of patient
testimony about mental conditions, defendants assert that expert testimony
from a doctor who reviewed the patient files is required for a jury to find that
the PHP treatment was not medically necessary. As an initial matter, this
argument focuses on only one of the theories the government advanced for why
the PHP billings were fraudulent. It ignores the extensive evidence showing
that PHP treatment, whether needed or not, was not being provided in the
“Mickey Mouse” facility. That alone supports the findings of health care fraud.
But we also do not see any basis for a categorical rule that expert
testimony is required for a jury finding of medical necessity. Defendants cite
medical malpractice cases for such a requirement. In addition to those being
state law civil cases, medical malpractice focuses on whether a doctor properly
treated a patient’s condition, not on whether the patient actually had the
condition. It makes sense that expert testimony from physicians is needed for
the former. But on the latter question, the patient certainly has something to
offer. Just about any visit to a doctor begins with self-reporting: What are your
symptoms? When did they start? How severe is the pain?
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The importance of self-reporting, especially for mental illnesses for
which there is often little corroborating visual evidence that modern medicine
has for many physical ailments, is evident from the testimony presented by the
doctor called by Sajadi. He did not meet any of the patients in arriving at a
diagnosis; he simply reviewed the files Spectrum maintained. Much of what is
in those files is self-reporting. Take one representative patient as an example.
His file notes that “he has been having panic attacks which cause him to be
unable to breathe” and that “he fear[s] he is dying”. It further states that his
“anxiety [has] increased,” “[h]e has decreased sleep”, and he “is unable to cope
with life stressors.” Finally, the file notes that the patient denies “suicidal or
homicidal ideation,” “hallucinations,” or “delusions.” In finding that the
patient’s description of symptoms was all he needed to know, Sajadi’s own
expert recognizes the crucial role that patient reporting plays in mental health
evaluations.
Notably, defendants point us to no other topics of testimony in which
federal criminal law requires expert testimony to support a conviction. We
decline to impose such a requirement here. Doing so would be at odds with the
jury’s considerable discretion to weigh evidence, both direct and
circumstantial, that may prove or disprove an element of the offense. See
United States v. Patel, 485 F. App’x 702, 709 (5th Cir. 2012) (noting facts other
than expert testimony which are probative of medical necessity). The
government’s failure to call an expert may influence that weighing and is
subject to attack during cross examination and closing argument. Indeed, in
some cases it may even doom its case if the jury wants that expertise. And
perhaps there are more technical medical diagnoses on which expert testimony
would be needed to prove medical necessity. But the supposed conditions for
which Spectrum was billing the government—severe depression and anxiety
disorder, among others—are common ailments suffered and understood by
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millions. The patients’ perceptions of their conditions, along with the other
strong indicia of fraud involving failure to evaluate patients, paying patients,
and falsifying medical charts, supports the jury’s finding of guilt.
The bedrock principles just discussed concerning the jury’s role in
weighing evidence also dispose of defendants’ other challenges to the fraud
convictions. To the extent they identify inconsistencies in the patients’
testimony, that credibility determination is for the jury to make. As for the
alleged absence of evidence showing fraudulent intent, the mindset needed for
fraud and conspiracy can be, and usually is, proven by the circumstances.
The circumstantial evidence of fraudulent intent in this case is similar
to what courts have found sufficient in other health care fraud schemes. Sanjar
and Sajadi had employees falsify patient files to comport with PHP
requirements, feigned participation in patient evaluations, and, as the owners
of Spectrum, reaped substantial profits from the scheme. See Moran, 778 F.3d
at 961 (inferring knowledge from defendant’s managerial control, delegation of
tasks implementing the fraud, and orders to falsify pertinent files); Willet, 751
F.3d at 340; United States v. Tellison, 637 F. App’x 186, 187 (5th Cir. 2016);
United States v. Bajoghli, 785 F.3d 957, 966–67 (4th Cir. 2015). Hakimi
oversaw the operation, tracking hours and authorizing deficient and overly
crowded therapy sessions to meet the weekly twenty-hour PHP billing
condition. See Moran, 778 F.3d at 953, 961 (finding that an office
administrator with like responsibilities had the requisite mindset). Main, for
his part, carried out Sanjar and Sajadi’s commands to falsify medical charts,
misrepresenting the symptoms and complaints made by patients. Njoku, 737
F.3d at 63. He also saw patients being cycled between PHP and IOP services
at regular intervals and did nothing after being confronted by a patient about
a tardy kickback. See United States v. Umawa Oke Imo, 739 F.3d 226, 237 (5th
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Cir. 2014) (inferring knowledge from proximity to unlawful acts and complicity
in the continuation of that illegal activity).
Sufficiency is a closer question for Nunn. The evidence showing her
involvement in the kickback scheme is plentiful. But as discussed, a kickback
violation can occur without any fraudulent billing. That said, Nunn did more
than just pay and receive kickbacks. She graduated her payments to patients
based on whether they were receiving PHP or IOP treatment and spent lots of
time at Spectrum, where she could see the patients and provision of care (or
lack thereof). This evidence, while thinner, is just enough given the deference
we owe the jury. See United States v. Hunter, 628 F. App’x 904, 906 (5th Cir.
2015) (holding that defendant’s sophisticated practice and constant presence
at the health care facility perpetrating the fraud sufficed to show defendant
was aware of the scheme to defraud Medicare).
We uphold both the conspiracy to commit health care fraud and
substantive health care fraud convictions.
B.
The Anti-Kickback Statute is violated when a defendant knowingly and
willfully gives or receives a benefit for referring a party to a health care
provider for services paid for by a federal health care program. Njoku, 737
F.3d at 63; 42 U.S.C. § 1320a–7b(b). A conspiracy to violate that law requires
an agreement to do so, knowing and voluntary participation in the conspiracy,
and an overt act by one member of the conspiracy in furtherance of the
unlawful goal. Id. at 63–64.
Defendants convicted of the kickback offenses—all but Main, who faced
only fraud charges—allege similar deficiencies in the evidence. They first
invoke the safe harbor defense which we previously discussed in terms of the
jury instruction. The statute has a safe harbor for payments to bona fide
employees for their provision of otherwise covered services, like recruiting
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patients. 42 U.S.C. §1320a–7b(b)(3)(B). Factors relevant to determining if an
employment relationship is bona fide include the manner of payment, whether
the work is part of the employer’s regular business, and the employer’s control
over work hours. United States v. Robinson, 505 F. App’x 385, 387 (5th Cir.
2013). Nunn and Manney, while called Spectrum employees by certain
witnesses, were paid per referral, sought referrals on their own, and kept no
regular office hours. From this evidence, a rational juror could have
determined Nunn and Manney were not bona fide employees and thus the safe
harbor did not protect the payments they received.
Defendants next maintain that even if payments were made to
nonemployees, the government again failed to show defendants had the
requisite mindset. The evidence, however, supports the jury’s finding that
defendants acted knowingly and willfully. Sanjar, Sajadi, and Hakimi
meticulously monitored patient referrals, tracking patients, their referrers,
and the billings on their claims. Nunn and Manney received referral fees from
Sanjar, Sajadi, and Hakimi equaling roughly ten percent of the money
generated by their clients. Roberts testified that Manney expressly said he
required payment for referrals and that Nunn cut Roberts out of the scheme
and started dealing directly with Sanjar, Sajadi, and Hakimi. Nunn’s paying
her patients in cash, delivered in envelopes, also shows awareness of the
unlawful nature of the scheme. A rational juror could conclude that each
defendant willfully paid or received kickbacks in violation of the Anti-Kickback
Statute or conspired to do so. See Moran, 778 F.3d at 955–56, 962; United
States v. Turner, 561 F. App’x 312, 318–19 (5th Cir. 2014). As with the fraud
convictions, the evidence supports the convictions on the kickback counts.
VII.
Having affirmed defendants’ convictions, we now consider challenges to
their punishment. None claim error with respect to the custodial sentences
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the district court imposed, but Sanjar, Sajadi, and Main contest the propriety
of the restitution and forfeiture orders. 12 This is also where the government
brought a cross appeal; it maintains the district court lacks the power to offset
forfeited funds against the restitution order.
A.
The court required Sanjar and Sajadi to pay restitution of $8,058,612.39
and Main to pay $4,044,409.70. Most of these losses were to the Medicare Part
A program, with smaller amounts attributable to Medicare Part B and
Medicaid. 13 Defendants argue it was error to include in the restitution amount
Medicare Part A and Medicaid losses given that the indictment only mentions
Medicare Part B.
When the offense of conviction involves a “scheme,” the restitution
statute broadens the definition of victim to include “any person directly
harmed by the defendant’s criminal conduct in the course of the scheme.”
United States v. Maturin, 488 F.3d 657, 661 (5th Cir. 2007) (quoting 18 U.S.C.
§ 3663A(a)(2)). In such a situation, restitution may include losses suffered by
victims not named in the indictment so long as they are victims of the scheme
described therein. United States v. Pepper, 51 F.3d 469, 473 (5th Cir. 1995)
Conspiracy to commit health care fraud requires a scheme. 18 U.S.C. §
1349. The scheme in which Sanjar, Sajadi, and Main participated caused
losses to both Medicare programs as well as Medicaid. Indeed, the same
12 Aside from the issues considered below, Nunn maintains that her cumulative $500
special assessment violates the Double Jeopardy Clause, citing United States v. Kimbrough,
69 F.3d 723, 728–29 (5th Cir. 1995). Kimbrough, however, deals with the issue of
multiplicitous counts; it does not forbid a court from the standard practice of assessing the
mandatory $100 assessment for each conviction as was done here. Id. at 729.
13 Medicaid assists low-income patients of all ages with medical expenses. Medicare,
on the other hand, offers medical insurance to people who are either over the age of 65 or
suffer a disability. Medicare is divided into various parts. Part A covers, among other things,
hospital care, nursing home care, and home health services. Part B covers medical services,
as well as ambulance services and durable medical equipment.
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fraudulent claims resulted in payments from Medicare and Medicaid. It was
not improper to include losses to all the government programs victimized as
part of the scheme. See United States v. Dhafir, 342 F. App’x 702, 706 (2d Cir.
2009) (allowing restitution to Medicaid even though indictment mentioned
only Medicare fraud).
Even if all the programs are victims, defendants argue the district court
erred in including all of Spectrum’s PHP billings to those programs rather than
crediting against the restitution award reimbursements for legitimate
services. They rely on the principle that loss in a health care fraud case cannot
include any amount the government would have paid in the absence of the
crime. 14 United States v. Sharma, 703 F.3d 318, 324 (5th Cir. 2012).
The government presented ample evidence, recited above, showing
Spectrum’s entire PHP practice was fraudulent. Defendants, for their part,
offered little to no concrete evidence to rebut that showing. They relied entirely
on evidence premised on shaky grounds: expert testimony that Spectrum’s
patient records indicate the patients qualified for PHP services. Such
testimony, however, assumes the accuracy of the records (the expert never
talked to the patients), and substantial evidence showed they were, in fact,
falsified. The district court did not err in declining to apply a restitution credit.
In addition to challenging the restitution order, Main also appeals the
forfeiture money judgment issued against him in the same amount: a joint and
several obligation of $4,044,409.70 that represents the gross proceeds the
conspiracy obtained from the Medicare fraud during the time Main worked at
14 Take for example a doctor billing Medicare for medically necessary drugs and drug-
administration services when, in fact, patients self-administer drugs. The fraud, of course,
is billing for administration services that are not provided. The drugs, however, are
necessary and thus reimbursable regardless of the fraud. The restitution award in such a
case can include only the amounts for the administration services not provided. See United
States v. Klein, 543 F.3d 206, 215 (5th Cir. 2008).
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Spectrum. In his original briefing and argument to the panel, Main argued
only that the forfeiture judgment violates the Eighth Amendment because the
money he received from the fraud—just his wages, which totaled about
$120,000—was a small fraction of the more than $4 million in illegal proceeds
he was ordered to repay. At the rehearing stage, Main contended for the first
time that the forfeiture exceeded what is allowed under the governing statute,
18 U.S.C. § 982(a)(7), because it was based on the proceeds obtained by the
entire conspiracy rather than just the proceeds Main received. Main noted
that the Supreme Court had agreed to hear a case addressing this statutory
question, Honeycutt v. United States, 137 S. Ct. 1626 (2017). We delayed ruling
on the rehearing request to see what Honeycutt would say.
The Supreme Court agreed with Main, holding that forfeiture pursuant
to the statute governing drug cases, 21 U.S.C. § 853(a)(1), “is limited to
property the defendant himself actually acquired as the result of the crime.”
Id. at 1635. It rejected the government’s position that the statute allowed joint
and several forfeiture liability for conspirators. 15 See id. at 1632–35. As the
government concedes, the same analysis should apply to the statute
authorizing forfeiture in health care fraud cases, 18 U.S.C. § 982(a)(7). Like
the drug forfeiture statute, the text of the health care fraud forfeiture statute
does not provide for joint and several or co-conspirator liability. Like the
statute Honeycutt considered, section 982(a)(7) allows forfeiture to reach
property “that constitutes or is derived, directly or indirectly, from gross
proceeds traceable to the commission of the offense.” 18 U.S.C. § 982(a)(7); see
21 U.S.C. § 853(a)(1) (authorizing forfeiture of “any property constituting, or
derived from, any proceeds the person obtained, directly or indirectly, as the
15In contrast to the forfeiture statutes, the restitution statute expressly authorizes
joint and several liability. 18 U.S.C. § 3663A(a)(1), 3664(h). Main does not argue that
Honeycutt impacts the restitution award. So we do not disrupt the restitution order.
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result of such violation”). And the forfeiture statute for fraud offenses
incorporates many of the drug law provisions on which Honeycutt relied in
rejecting joint and several liability. 18 U.S.C. § 982(b)(1) (incorporating 21
U.S.C. §§ 853(c), 853(e), and 853(p)); Honeycutt, 137 S. Ct. at 1633–35
(discussing all three of those provisions of the drug statute); cf. United States
v. Gjeli, 867 F.3d 418, 427–28 (3d Cir. 2017) (holding that Honeycutt applies to
the forfeiture statutes governing RICO cases, 18 U.S.C. § 1963, because the
statute was “substantially the same as the one under consideration in
Honeycutt”).
The forfeiture statute thus does not allow Main to be responsible for any
amount beyond the proceeds of the Medicare fraud that he obtained. But is he
able to obtain relief based on this statutory argument given that “[g]enerally
speaking a party may not raise an argument for the first time in a petition for
rehearing”? Browning v. Navarro, 894 F.2d 99, 100 (5th Cir. 1990). There is
an exception to this principle when the new argument relies on an intervening
Supreme Court decision. Lowry v. Bankers Life & Cas. Retirement Plan, 871
F.2d 522, 523 n.1 (5th Cir. 1989). So we will forgive Main’s failure to raise the
statutory argument in his original briefing to this court. But that does not
allow him to escape the demanding requirements of plain error review that
apply to any issue not presented to the district court. FED. R. CRIM. P. 52(b);
United States v. Olano, 507 U.S. 725, 732 (1993) (explaining that to satisfy
Rule 52(b) there must be “error” which is “plain” and “affects substantial
rights,” and that even then the district court has discretion to correct the
forfeited error, “unless the error seriously affects the fairness, integrity or
public reputation of judicial proceedings”).
The nature and substantial impact of this error allow Main to clear those
high hurdles. The first two requirements are satisfied because Honeycutt
renders the joint-and-several award plainly erroneous. See Henderson v.
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United States, 568 U.S. 266 (2013) (holding that error is plain as long as the
error was plain at the time of appellate review). The vast disparity between
the over $4 million dollar forfeiture the district court ordered pre-Honeycutt
and the $120,000 or so the law now allows is a substantial impact on Main’s
rights. The magnitude of that difference, along with the nature of the error
that resulted in an award in excess of what the statute permits, also seriously
undermines the fairness and integrity of the proceeding. United States v.
Austin, 479 F.3d 363, 373 (5th Cir. 2007) (correcting restitution order under
plain error review because the statute does not allow for awards greater than
the loss caused). We therefore exercise our discretion to vacate the forfeiture
order entered against Main and remand for the determination of an award
based on the property that Main obtained as a result of the fraud. 16
B.
The government’s sole issue on appeal concerns the district court’s
decision to offset defendants’ restitution obligations with any amount collected
pursuant to the forfeiture order. The district court thought it proper to do so
because there was no private victim, meaning the government would receive
both the restitution amount and any forfeited proceeds. The government
contends this was error. We agree.
Although we have yet to consider whether a district court may offset
restitution orders with forfeited funds, our decision rejecting a defendant’s
challenge to a district judge who refused to do so is instructive. United States
v. Taylor, 582 F.3d 558, 566 (5th Cir. 2009). Taylor involved a conviction for
fraud in obtaining disaster relief assistance. Id. at 561. At sentencing, the
district court refused to offset Taylor’s restitution obligation with his required
16 We need not address Main’s other challenges to the forfeiture order, including the
constitutional claim we previously addressed, because we are vacating the award under
Honeycutt.
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forfeiture payments. Id. at 566. We rejected Taylor’s argument that requiring
both restitution and forfeiture is impermissible because the government is the
recipient of both sums—the very reason motivating the district court’s decision
here. Id. at 566. We reasoned that although the government was the nominal
recipient of the two, the Federal Emergency Management Agency was the
victim and thus entitled to full restitution whereas the Department of Justice
would seize forfeited funds. Id. We also cited decisions from other circuits that
reject similar challenges. Id. at 567 (citing United States v. Alalade, 204 F.3d
536, 540 (4th Cir. 2000); United States v. Emerson, 128 F.3d 557, 566–67 (7th
Cir. 1997); United States v. Leon–Delfis, 203 F.3d 103, 116 (1st Cir. 2000);
United States v. Bright, 353 F.3d 1114, 1124 (9th Cir. 2004)).
Although those circuits considered appeals in the same posture as Taylor
(challenging a refusal to offset as opposed to a requirement to offset), their
reasoning that a district court is without statutory authority to offset
restitution with amounts forfeited to the government answers the question we
face. Alalade, 204 F.3d at 540 (noting that the plain language of the restitution
statute does not grant the district court discretion to reduce the amount of
restitution by the amount ordered to be forfeited); Emerson, 128 F.3d at 566–
67 (stating that the district court has the statutory authority to impose both
restitution and forfeiture, and there is no legal authority to offset one another).
Like Taylor, those cases rely on the language of the Mandatory Victim
Restitution Act requiring courts to order full restitution without an exception
for amounts forfeited. 582 F.3d at 567; Alalade, 204 F.3d at 540; Emerson, 128
F.3d at 566–67; Bright, 353 F.3d at 1124; Leon–Delfis, 203 F.3d at 116.
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A criminal forfeiture statute also contemplates that it is for the Attorney
General to decide whether to offset. See 21 U.S.C. § 853(i)(1) 17 (granting the
Attorney General the authority to restore forfeited property to victims, which
is the mechanism for using forfeited funds to offset restitution obligations).
And restitution and forfeiture serve distinct purposes. Taylor, 582 F.3d at 566.
Restitution is remedial in nature; its goal is to make the victim whole. Id.
Forfeiture is punitive; it seeks to disgorge any profits or property an offender
obtains from illicit activity. Id.
As suggested by Taylor and stated more directly by other circuits, both
restitution and criminal forfeiture are mandatory features of criminal
sentencing that a district court does not have authority to offset. We have
difficulty seeing why amounts the Department of Justice collects through
forfeiture should not be transferred to the victim agency. And that appears to
be DOJ policy. UNITED STATES DEP’T OF JUSTICE, ASSET FORFEITURE POLICY
MANUAL, § 12E.2 (2016) (explaining that “[w]hen a defendant lacks the
resources to make full restitution, Department of Justice . . . policy is to collect
and marshall assets for the benefit of victims using available means [that
include] turn[ing] over ‘liquid assets’ . . . to the clerk of court to be applied to
restitution” and the restoration process for forfeited assets); id. § 12A.1 (noting
that federal agencies can qualify as a victim under the regulations governing
forfeiture). But Congress left it to the executive branch to decide whether to
follow through on that sensible policy.
17 This statute applies to forfeiture for drug convictions, but its procedures are
incorporated into the general criminal forfeiture statute. 18 U.S.C. § 982(b)(1).
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* * *
We therefore VACATE the forfeiture order entered against defendant
Main and REMAND his case for further proceedings consistent with this
opinion and Honeycutt v. United States, 137 S. Ct. 1626 (2017). As to all the
defendants, we MODIFY the restitution and forfeiture orders to eliminate the
offset. The judgment is AFFIRMED in all other respects.
34