United States v. Tsolak Gevorgyan , 886 F.3d 450 ( 2018 )

Case: 16-20730 Document: 00514403160 Page: 1 Date Filed: 03/27/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-20730 FILED
March 27, 2018
UNITED STATES OF AMERICA, Lyle W. Cayce
Clerk
Plaintiff – Appellee
v.
TSOLAK GEVORGYAN, also known as Mike,
Defendant – Appellant
Appeal from the United States District Court
for the Southern District of Texas
Before HIGGINBOTHAM, PRADO, and HIGGINSON, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Tsolak Gevorgyan was convicted of healthcare fraud and violating the
Anti-Kickback Statute, including conspiracy and substantive counts. We
AFFIRM these convictions.
I.
In 2006, Leonard Kibert, a physician, established the New Life Sleeping
and Allergy Disorder Center (“the Clinic”) in Houston, Texas. Gevorgyan was
employed by the Clinic as an “office manager” and “operations person,” where
he cut a ubiquitous figure. There were no formal job titles at the Clinic, but
Gevorgyan was described as “kind of r[unning] the [C]linic” on a day-to-day
basis. In particular, Gevorgyan paid rent, faxed documents, met with patients,
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conducted sleep and allergy tests, and occasionally participated in job
interviews with prospective employees.
That the Clinic’s practice was sustained in part by illegal activity is not
at issue in this appeal. Of relevance here, two distinct sets of practices befouled
the Clinic. First, the Clinic engaged in the payment of “marketers” who
themselves paid patients to attend the Clinic. Second, the Clinic routinely
sought and received reimbursement for medical tests it never conducted.
Gevorgyan was involved in each of these schemes. With respect to the
payment of kickbacks for patients, Gevorgyan personally paid a marketer
named Leon, who then distributed the money to the other marketers who
succeeded in bringing patients to the Clinic. At some point during the Clinic’s
lifecycle, one of Gevorgyan’s erstwhile codefendants, Robert Manning, replaced
Leon in his role as middleman. As before, Manning paid the marketers, who
themselves provided money to prospective patients; at the end of the week,
Gevorgyan reconciled a ledger with the number of patients who had visited the
Clinic to the number that Manning had recorded based on his own interactions
with marketers. Gevorgyan then paid Manning based on the number of
patients brought in. The Clinic’s patient base was unique; the Clinic only
served Medicare beneficiaries, and it also apparently never charged copays.
Gevorgyan gave checks to Manning, payable to a company named GGM
Inc., which Manning had created for the purpose of holding the money he
received from the Clinic. Similarly, the checks provided by Gevorgyan did not
draw upon the accounts of Gevorgyan or the Clinic; they were drawn from the
account of a corporation called Gohev Services, which by corporate filings
Gevorgyan served as an owner, officer, and director. These checks were signed
by Arsen Gevorgyan, Gevorgyan’s older brother. Gohev Services was also
“intertwined” in the Clinic’s general activities, financing many of the day-to-
day costs incurred by the business.
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With respect to the healthcare fraud, in addition to “kind of r[unning]
the [C]linic” in the ways described above, Gevorgyan was also involved in the
intake of new patients and had apparently trained the Clinic’s receptionist on
how to register them.
In August 2009, Kibert closed the Clinic. Several years later, the Texas
government began investigating and interviewing actors associated with it on
the basis of tips from marketers, which led to the indictment of Gevorgyan
alongside Kibert, Manning, and two other codefendants. The indictment
charged all of the defendants with conspiracy to commit healthcare fraud and
various individual counts of healthcare fraud; it charged Gevorgyan and
Manning with conspiracy to violate the Anti-Kickback Statute and five counts
of unlawfully making kickback payments. Manning pleaded guilty to his
charges and provided testimony against his codefendants. Following a 14-day
trial, Kibert and Gevorgyan were convicted while the other two remaining
codefendants were acquitted. 1 On January 11, 2017, Gevorgyan was sentenced
to 58 months of imprisonment followed by three years of supervised release.
Gevorgyan appealed, challenging both the sufficiency of the evidence
supporting his convictions and the district court’s failure to sever him from the
trial.
II.
In review of the sufficiency of evidence underlying criminal convictions,
we ask whether “a rational jury could have found each essential element of the
offense beyond a reasonable doubt.” 2 All evidence must be taken in the light
1One codefendant, Christopher O’Brien, was acquitted by the jury, while the other,
Gregorious Brown, filed a motion for judgment of acquittal twelve days into the trial. Kibert,
for his part, is currently a fugitive, having failed to turn himself over to prison authorities by
the required date.
2 United States v. Delgado, 672 F.3d 320, 330 (5th Cir. 2012) (internal quotations
omitted).
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“most favorable to the verdict and drawing all reasonable inferences from the
evidence to support the verdict.” 3 Gevorgyan challenges both sets of his
convictions on the basis of insufficient evidence: first, he challenges his
convictions for conspiracy to violate, and substantive violation of, the Anti-
Kickback Statute; second, he challenges his convictions for conspiracy to
commit, and substantive commission of, healthcare fraud. We take these two
categories of challenges in turn.
A.
Gevorgyan challenges the sufficiency of the evidence underlying his
Anti-Kickback Statute convictions. The Anti-Kickback Statute in effect during
the relevant time period proscribed “knowingly and willfully offer[ing] or
pay[ing] any remuneration . . . directly or indirectly, overtly or covertly, in cash
or in kind to any person to induce such person to refer an individual to a person
for the furnishing or arranging for the furnishing of any item or service for
which payment may be made in whole or in part under a Federal health care
program.” 4 A conspiracy to violate the Anti-Kickback Statute under 18 U.S.C.
§ 371 requires “an agreement to do so, knowing and voluntary participation in
the conspiracy, and an overt act by one member in furtherance of the unlawful
goal.” 5 Gevorgyan focuses only on the mens rea components of these offenses,
arguing that he did not “knowing[ly] and willing[ly]” violate the statute or
participate in any conspiracy.
3 United States v. Jimenez-Elvirez, 862 F.3d 527, 533 (5th Cir. 2017) (internal
quotations omitted).
4 42 U.S.C. § 1320a-7b(b)(2)(A) (2006). The statute has since been amended to state
that actual knowledge of the statute or specific intent to commit a violation is not required.
42 U.S.C. § 1320a-7b(h) (2015).
5 United States v. Sanjar, 876 F.3d 725, 746 (5th Cir. 2017), petition for cert. filed,
(U.S. Feb. 28, 2018) (No. 17-8107).
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The government claims that Gevorgyan’s challenge to the Anti-Kickback
Statute convictions was not properly preserved, asserting that, at the close of
evidence, Gevorgyan only reurged his challenge to the evidence presented in
support of healthcare fraud, not the Anti-Kickback Statute counts. If
Gevorgyan abandoned his challenge to the evidence underlying the Anti-
Kickback Statute counts, we would review the imposition of the convictions
with greater deference to the district court; we would ask whether the
convictions impose a “manifest miscarriage of justice,” which requires
Gevorgyan to demonstrate that “the record is devoid of evidence pointing to
guilt” or that “the evidence on a key element of the offense is so tenuous that a
conviction would be shocking.” 6
This we need not do, for even if we decided that the objections were fully
preserved, we would uphold Gevorgyan’s convictions. On this record, and
drawing all reasonable inferences in support of the verdict, we must conclude
that the jury could have found that Gevorgyan was aware of the nature and
purpose of the kickback payments he made to Manning.
Gevorgyan understandably attacks the testimony of Manning, his
former coconspirator—he argues that Manning was an inherently unreliable
witness given his own role in the scheme, and points out that there are
alternative explanations for the payments, including that they were simply for
“crowd control” or “keep[ing] some semblance of order at the clinic.” Perhaps
this is so, but the fact remains that there is sufficient evidence to support the
jury’s conclusion that Gevorgyan knew the payments were kickbacks.
Manning’s testimony aside, evidence indicates that Gevorgyan instructed the
Clinic’s receptionist to keep a ledger tallying the number of incoming patients.
6 United States v. Davis, 690 F.3d 330, 336–37 (5th Cir. 2012) (internal quotations
omitted).
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This patient ledger contained total figures written by Gevorgyan that directly
mirrored the figures on the payments that Gevorgyan delivered to Manning.
And Gevorgyan served as one of the owners of the corporation that acted as the
source of those payments.
This said, there is no reason for us to discount Manning’s testimony.
Manning directly testified about his conversations with Gevorgyan, explaining
that Gevorgyan assigned his particular role in the scheme and opining that
Gevorgyan knew that the purpose of the payments was for marketers to bring
patients in. Manning openly testified that he had entered into a plea
agreement and hoped to receive a reduced sentence in light of his cooperation
with the government, and the district court appropriately instructed the jury
that the testimony of Manning should be “received with caution and weighed
with great care.” Weighing Manning’s credibility in determining Gevorgyan’s
knowledge of the kickbacks was the appropriate task of the jury. 7
Gevorgyan’s sufficiency of the evidence challenge to his conspiracy and
substantive convictions for violation of the Anti-Kickback Statute must fail.
B.
Gevorgyan also challenges the sufficiency of evidence underlying his
healthcare fraud convictions. To be guilty of healthcare fraud under 18 U.S.C.
§ 1347, a defendant must have “knowingly and willfully executed a scheme to
defraud a government health care program like Medicare.” 8 Further, under 18
U.S.C. § 1349, “[w]illfully joining with another to engage in such a scheme,
with awareness of the agreement’s unlawful purpose, is a conspiracy to commit
7 See, e.g., United States v. Chapman, 851 F.3d 363, 378 (5th Cir. 2017) (explaining
that in sufficiency challenges, the jury’s credibility determinations are generally accepted,
and even “the uncorroborated testimony of an accomplice or of someone making a plea
bargain with the government can support a conviction” (internal quotations omitted)).
8 Sanjar, 876 F.3d at 745.
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healthcare fraud.” 9 As with his challenge to the Anti-Kickback Statute
violations, Gevorgyan takes aim only at the mens rea requirements in these
offenses, namely that he knew of the Clinic’s ongoing healthcare fraud; he
claims that the government failed to show that he “knowingly and willfully”
committed healthcare fraud and, with respect to any conspiracy to do so, that
he was not “aware[] of the agreement’s purpose.”
Gevorgyan points to his relative youth and inexperience in the medical
field, arguing that these features rendered any knowledge of the Clinic’s
healthcare fraud unlikely. He also pushes back against the evidence produced
at trial characterizing him as a manager of the Clinic—instead, he argues that
he was only a low-level worker and unwitting participant in the Clinic’s fraud.
His arguments here have more purchase than with respect to the Anti-
Kickback Statute violations, but they nonetheless fail. There was sufficient
evidence to support the jury’s determination that Gevorgyan knew of the
Clinic’s healthcare fraud. First, the jury heard testimony that Gevorgyan
trained and supervised others in performing patient intake, which suggests
that he directly knew of the Clinic’s practice of only accepting Medicare
patients and of not accepting copayments. These are “unusual practice[s]” that
are probative of intent to defraud. 10 Second, Gevorgyan’s central involvement
in the kickback scheme alongside Manning supported the related inference
that he knew about the healthcare fraud; the marketers receiving kickbacks,
after all, recruited patients with no regard for their actual need for medical
9 Id.
10 See United States v. Iruke, 544 F. App’x 663, 667 (9th Cir. 2013) (holding that the
defendant’s company “engaged in ‘highly unusual practice[s],’ including not collecting the
required Medicare co-pays”); see also United States v. Bergman, 852 F.3d 1046, 1066 (11th
Cir. 2017) (relying on the fact that defendant “targeted only patients who were Medicare
beneficiaries” to sustain conviction for healthcare fraud).
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services. 11 Third, Gevorgyan was an owner, director, and officer of Gohev
Services. Evidence indicates that Gohev Services served as the repository of
the fruits of the Clinic’s healthcare fraud, including eventually distributing
approximately $119,000 of the funds to Gevorgyan over several years. 12 He
claims that because he never signed the underlying corporate filings or
personally opened any bank account for the firm, the jury could have decided
that he was unaware of these roles. But taken in the light most favorable to
the verdict, we cannot conclude that it erred in inferring that he was aware of
his position and the profit to which it entitled him. Finally, the jury heard
ample evidence that Gevorgyan did serve in a management role at the Clinic,
despite Gevorgyan’s continued protestations otherwise. 13
All of the foregoing facts taken together support the jury’s determination
that Gevorgyan knew of the Clinic’s healthcare fraud. We decline to vacate
Gevorgyan’s convictions for commission of, or conspiracy to commit, healthcare
fraud.
III.
Gevorgyan argues that the district court erred in failing to sever him
from his codefendants at trial. Ordinarily, a district court’s failure to sever a
defendant from a trial is reviewed for abuse of discretion. 14 However, when a
defendant fails to timely assert the grounds upon which he seeks severance,
plain error applies. 15
11 See United States v. Moran, 778 F.3d 942, 961 (11th Cir. 2015) (holding that
“steer[ing] patients” not eligible for treatment to a clinic is evidence of intent to commit
healthcare fraud).
12 See Sanjar, 876 F.3d at 746 (explaining that the fact that owners “reaped
substantial profits from the [fraud] scheme” serves as evidence of intent).
13 See United States v. Willett, 751 F.3d 335, 340 (5th Cir. 2014) (“[T]he district court
could infer that [defendant] knew about the upcoding because he held himself out as an owner
of and had a position of authority.”).
14 Chapman, 851 F.3d at 379.
15 See, e.g., United States v. Mann, 161 F.3d 840, 862 (5th Cir. 1998).
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In this case, Gevorgyan’s severance argument rests on two different
theories: first, he claims that a disparity of evidence existed between him and
his codefendants; second, he claims that he suffered anti-Armenian bias stoked
by one codefendant during trial. Gevorgyan only moved for severance from his
codefendants on the basis of the two theories he now pursues after his trial
concluded, and this in the context of a motion for a new trial. 16 For this reason,
and as Gevorgyan conceded during oral argument, the plain error framework
here guides our review. 17 That framework requires that the district court’s
decision not to sever Gevorgyan from his codefendants be a result of “a clear or
obvious error, which affected [Gevorgyan’s] substantial rights, and which
would seriously affect the fairness, integrity or public reputation of judicial
proceedings if allowed to stand” before we can overturn it. 18
No plain error exists in this case. There is little reason to believe that
the district court’s failure to sever Gevorgyan affected his “substantial rights,”
much less satisfied the other plain error requirements. As a substantive
matter, “this [C]ourt has been reluctant to vacate a conviction because the
district court refused to sever a trial.” 19 In order to justify vacating a conviction,
therefore, “the defendant must show specific and compelling prejudice
resulting from the joint trial,” by both “isolat[ing] events occurring in the
course of the trial” and “demonstrat[ing] that such events caused substantial
prejudice.” 20
16 During the trial, Gevorgyan raised the possibility of severance, but solely on
antagonistic defense grounds. Before trial, Kibert had also moved for severance on this basis,
but Gevorgyan did not join his motion. Even in responding to Kibert’s earlier, pre-trial
motion, the district court concluded that it was “very late to be asking for severance.”
17 See, e.g., United States v. Bernard, 299 F.3d 467, 475 (5th Cir. 2002) (“[The
defendant] concedes that this issue must be reviewed for plain error, since he did not object
to [the] evidence and failed to renew an unsuccessful pretrial motion for severance.”).
18 Mann, 161 F.3d at 862.
19 Chapman, 851 F.3d at 379 (internal quotations omitted).
20 Id.
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Gevorgyan’s first theory—that a disparity of evidence existed between
him and his codefendants, unfairly prejudicing him before the jury—rests on a
faulty reading of the record. Ample evidence exists tying Gevorgyan to his
charged offenses, as we have outlined above. Further, we have previously held
that provision of appropriate jury instructions cuts against any spillover
prejudice from failure to sever, 21 and we have also held that a jury’s decision
to acquit other codefendants provides evidence of its ability to make
evaluations on an appropriately individualized basis. 22 Both factors are
present here: the district court provided clear instructions dictating that the
jury consider all defendants individually, and the jury indeed acquitted one of
Gevorgyan’s codefendants of all charges. In light of these facts, we cannot agree
that a disparity of evidence affected Gevorgyan’s substantial rights.
Gevorgyan’s second theory of plain error must also fail. He recounts
various references made during the trial to “Armenians”—mostly elicited by
Kibert—that he claims, in the aggregate, biased the jury against him by
stoking anti-Armenian prejudice. He points to two trial components as
particularly problematic: first, an IRS agent testified about Kibert’s prior
statements to law enforcement, which Gevorgyan claims included “prejudicial
statements” about Armenians; and second, Kibert purportedly made a defense
strategy of blaming “an Armenian or Russian criminal enterprise” for the
Clinic’s legal woes.
Gevorgyan simply overreads both the record and the significance of the
utterances he points to. The IRS agent’s testimony recounted Kibert’s earlier,
generalized statements explaining his interactions with a group of Armenians,
21 United States v. Reagan, 725 F.3d 471, 491 (5th Cir. 2013).
22 United States v. Neal, 27 F.3d 1035, 1045 (5th Cir. 1994) (“[T]he jury’s ‘not guilty’
verdicts as to some defendants demonstrate that the jurors followed the district court’s
instructions and considered the evidence separately as to each defendant.”).
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but these statements are flatly descriptive and are not reasonably read as
ethnically inflammatory. Additionally, the district court instructed the jury not
to consider them with respect to Gevorgyan for other evidentiary purposes, and
there is no reason to believe that the jury did not obey this instruction. 23
Gevorgyan attempts to cast other statements made by Kibert as parts of
an overarching anti-Armenian defense. This characterization lacks support. In
fact, the record reveals that the district court was attuned to the possibility of
anti-Armenian prejudice, and it worked to avoid any chance that ethnic
innuendo could taint the proceedings. The references to Armenians that did
enter the record were, once more, essentially flat descriptions of actors
purportedly involved in the Clinic. They certainly did not suggest any latent
criminality on the part of Armenians in general. Indeed, all of the inculpatory
evidence tying Gevorgyan to the Clinic’s unlawful schemes had nothing to do
with his identity as an Armenian and everything to do with his substantive
involvement at the Clinic. The district court’s decision not to sever Gevorgyan
on the basis of his identity as an Armenian did not affect his substantial rights,
and the district court therefore did not commit plain error. 24
IV.
For the foregoing reasons, we AFFIRM Gevorgyan’s convictions and the
district court’s rulings below.
23 See Richardson v. Marsh, 481 U.S. 200, 206 (1987) (describing “the almost
invariable assumption of the law that jurors follow their instructions . . . applied in many
varying contexts”).
24 Cf. United States v. Alviar, 573 F.3d 526, 539–40 (7th Cir. 2009) (rejecting claim
that district court abused discretion by failing to sever codefendants who used racial slurs in
front of the jury because “there was ample evidence against [the defendant] and the jury was
properly instructed to distinguish between co-defendants”).
11