United States v. Sriram, Krishnaswami ( 2007 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 05-2752, 05-2802
UNITED STATES OF AMERICA,
Plaintiff-Appellant/
Cross-Appellee,
v.
KRISHNASWAMI SRIRAM,
Defendant-Appellee/
Cross-Appellant.
____________
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 00 CR 894—John W. Darrah, Judge.
____________
ARGUED NOVEMBER 7, 2006—DECIDED APRIL 9, 2007
____________
Before EASTERBROOK, Chief Judge, and POSNER and
WOOD, Circuit Judges.
POSNER, Circuit Judge. The defendant, a cardiologist
who had billed Medicare some $17 million over a five-year
period, pleaded guilty to health care fraud and tax fraud.
He admitted having received “substantial payments” for
fraudulent claims (estimated in the presentence investiga-
tion report to be between $5 and $10 million) submitted
to health insurers and having defrauded the government
of more than $550,000 in income tax. After a 13-day
2 Nos. 05-2752, 05-2802
sentencing hearing, the district judge threw up his hands
and imposed an absurdly light sentence of five years’
probation for both the health fraud and the tax fraud (the
sentences to run concurrently) plus restitution of $1,258.
The government appeals, but the defendant cross-
appeals, contending that the government fell so far short of
obtaining the relief it sought (an 18-year sentence), and
engaged in such “vexatious” conduct (mainly inducing
the defendant to hire a good and therefore expensive
lawyer by threatening the defendant with a heavy punish-
ment!) that he rather than the government should be
regarded as the prevailing party within the meaning of
Pub. L. 105-119, Title VI, § 617, Nov. 26, 1997, 111 Stat. 2519(which appears as a statutory note to 18 U.S.C. § 3006A and
which the cases refer to as the “Hyde Amendment”), and
should therefore be awarded his attorneys’ fees.
The cross-appeal is frivolous. The Hyde Amendment
authorizes the court in a criminal case to award a reason-
able attorney’s fee to “a prevailing party, other than the
United States,” if the court finds that the government’s
position was “vexatious, frivolous, or in bad faith.” So even
if the government’s position is vexatious, etc., the defen-
dant cannot be awarded fees unless he is the prevailing
party. A defendant who is convicted and sentenced is
not the prevailing party even if the sentence is light; the
government is the prevailing party. For the general princi-
ple, see Farrar v. Hobby, 506 U.S. 103, 111-14 (1992) (“the
prevailing party inquiry does not turn on the magnitude of
the relief obtained,” id. at 114), and Buckhannon Board &
Care Home, Inc. v. West Virginia Dept. of Health & Human
Resources, 532 U.S. 598 (2001), and for its application to the
Hyde Amendment see United States v. Campbell, 291 F.3d
1169, 1171-72 (9th Cir. 2002), and United States v. Beeks, 266
F.3d 880, 883 (8th Cir. 2001) (per curiam).
Nos. 05-2752, 05-2802 3
So we turn to the appeal of the government, which
argues that the district judge committed two fatal sen-
tencing errors. He miscalculated the loss caused by the
defendant’s fraud, underestimating it by at least a factor
of a thousand, and he imposed a sentence that would have
been unreasonable even if his calculation of the loss had
been defensible.
The judge ruled that the only loss the government had
proved was the face amount of two checks that the defen-
dant admitted having received for medical services he
hadn’t performed. Yet the defendant had admitted in his
plea agreement that he had knowingly: created fraudulent
records, billed insurers for tests and other medical proce-
dures that were not performed, and received insurance
payments for services to patients who had died before
the services allegedly had been rendered, for services
allegedly rendered when he was not in the United States,
for services on a single day that he could not have per-
formed in fewer than 25 hours, and for still other services
that he had not performed. He did not admit in the plea
agreement to a specific amount of loss that his frauds had
inflicted on the insurers, but it is inconceivable that the
amount was as slight as the district judge thought.
As the length of the sentencing hearing suggests, the
government presented extensive evidence in an effort to
estimate the amount of money that the defendant had
obtained by fraud. A number of patients for whose treat-
ment he had billed insurers testified that he hadn’t treated
them at all or had treated them much less frequently than
the bills claimed. He was shown to have billed for more
than 24 hours of work a day on 401 days. On a day when
Chicago was paralyzed by a snowstorm he billed for 28
home visits. Visas stamped on his passport confirmed his
4 Nos. 05-2752, 05-2802
admission to having billed almost $50,000 for work suppos-
edly performed on days when in fact he was out of the
country. His own expert, after adjusting for innocent
double billing (see next paragraph), determined that in
order to have performed the services for which the defen-
dant billed he would have had to treat an average of more
than 18.38 patients a day, seven days a week, for 5.3
consecutive years—not a physical impossibility (though
this depends on the breakdown between house calls and
office visits), yet highly improbable for a cardiologist,
especially since he admitted he worked only six days a
week, which would have required him to treat more than
20 patients a day.
The government’s expert witness, who tried to add up
the fraudulent payments that the defendant had re-
ceived, did commit errors. In some instances he classified
a bill as fraudulent simply because it was the second one
the defendant had submitted for the same procedure,
though he had submitted it only because the first bill
hadn’t been paid. And with respect to a few of the dead
patients, he may have treated the patient’s spouse and
mistakenly transposed the names.
Because of the errors committed by the government’s
expert, the judge found himself unable to calculate the
exact amount of fraudulent payments that the defendant
had received. The inability was genuine, but did not justify
the judge’s loss calculation. Suppose the evidence pre-
sented at a sentencing hearing shows that the loss inflicted
by the defendant’s crimes was no less than $1 million or
more than $5 million but it is impossible to be more
specific. Then for sentencing purposes the estimate of loss
should not be zero, which is the implication of the district
judge’s approach in this case; it should be, at the very
Nos. 05-2752, 05-2802 5
least, $1 million. United States v. Radtke, 415 F.3d 826, 842-43
(8th Cir. 2005); United States v. Chichy, 1 F.3d 1501, 1509-10
(6th Cir. 1993). For then the defendant cannot complain
that his sentence is based on a loss estimate that the
government failed to prove. He wouldn’t even be heard to
complain if as in the Radtke case the judge had split the
difference between the bottom and the top of the range of
possible loss; for when precision in calculating the loss
inflicted by a crime is unattainable, a reasonable estimate
is all that the law requires. United States v. Spano, 421 F.3d
599, 608 (7th Cir. 2005); United States v. Freitag, 230 F.3d
1019, 1025 (7th Cir. 2000). When guilt beyond a reasonable
doubt is duly determined, picking a sentence within the
statutory range to punish the defendant for his crime does
not require as much precision as the initial determina-
tion that he in fact committed the crime.
In defending the judge’s estimate, the defendant’s
counsel reminded us that several of the patients who
testified were unsure just how many house calls the
defendant had made on them. One of the patients, who
testified on direct examination that the defendant hadn’t
treated her in her apartment, acknowledged on cross-
examination that he may have treated her once. But her
insurer was billed for 12 visits; and the resulting uncer-
tainty as to whether the defendant had billed for 11 or
for 12 fictitious visits made it impossible to quantify his
overbilling. But while such evidence could not support a
point estimate of the loss inflicted by the defendant’s
frauds, it could support a minimum estimate.
The defendant testified that his record-keeping was
sloppy; and sloppy records could generate unintentional
false billing. If he made three house calls on a patient but
he or his secretary inadvertently put a “1” in front of the
6 Nos. 05-2752, 05-2802
“3” on the record of the visit, the result would be a false
bill but not a knowingly false one. But the extensive
admissions that the defendant made in connection with his
plea of guilty to the charge of fraud made his false claims
prima facie evidence of the amount of loss that the fraud
inflicted, and placed on him the burden of producing
evidence on how many of the false claims were innocent.
E.g., United States v. Grant, 431 F.3d 760, 765 (11th Cir.
2005); United States v. Khorozian, 333 F.3d 498, 509 (3d Cir.
2003). It was not enough for him to point to his sloppy
record-keeping. United States v. Pesaturo, 476 F.3d 60, 73
(1st Cir. 2007); United States v. Caldwell, 820 F.2d 1395, 1404-
05 (5th Cir. 1987). To accept such a showing would create
a perverse incentive.
Although the evidence presented at the sentencing
hearing would have supported a finding that the defendant
had caused a total loss of at least $5 million, and al-
though the judge’s finding that the proven loss was only
$1,258 was not just clearly erroneous but incompre-
hensible except as a consequence of confusing a point
with a range, the government is willing to concede that
the judge could have found that the loss was as little as
$1.4 million. But a finding of any smaller loss would be
clearly erroneous, and so on remand $1.4 million must be
the floor for the judge’s reconsideration of the amount of
loss.
Even if we were to assume that the judge’s loss estimate,
and therefore the amount of restitution that he ordered,
had been correct and that he hadn’t further erred in rul-
ing that one of the victims of the fraud was not a health
insurer, which it clearly was, probation was too light a
sentence. For on those assumptions the sentencing guide-
lines applicable when the defendant was sentenced would
Nos. 05-2752, 05-2802 7
have specified a sentencing range of 24 to 30 months in
prison. U.S.S.G. § 2F1.1 (2000). Had the judge assessed a
$1.4 million loss and corrected his error about the health
insurer as well, the range would have shot up to 78 to 97
months. See § 2F1.1(b)(1). Under the current guidelines, the
range would have been higher still—121 to 151 months,
§ 2B1.1(a), (b) (2006)—and although if a case is remanded
for resentencing the district court “shall apply the guide-
lines . . . that were in effect on the date of the previous
sentencing of the defendant prior to the appeal,” 18 U.S.C.
§ 3742(g); United States v. Andrews, 447 F.3d 806, 812 n. 2
(10th Cir. 2006), current guidelines can be used to help
guide a judge who is minded to sentence the defendant
outside the applicable guidelines range. United States v.
Johnson, 427 F.3d 423, 427 (7th Cir. 2005).
The judge dipped far below even his erroneously calcu-
lated guidelines range to take account of what he con-
sidered to be the following mitigating factors: the defen-
dant was “chronically inept as a businessman”; the prose-
cution had been protracted; the government had violated
the doctrine of Brady v. Maryland, 373 U.S. 83 (1963), by
failing to turn over records of the defendant’s medical
training; the defendant had spent a great deal of money
on his legal defense; and the prosecution had stigmatized
him and might cause him to lose his medical license (it has
in fact been suspended). Only the last two of these factors
(stigma and effect on professional opportunities) are
admissible in determining a sentence, and perhaps only
the last one.
A judge’s sentencing discretion is constrained by 18
U.S.C. § 3553(a), which lists the factors to be considered in
deciding on a sentence. That a conviction for fraud im-
poses a “stigma cost” on a “respectable” professional
8 Nos. 05-2752, 05-2802
person, such as a doctor, and may even lead to his expul-
sion from the profession, adds to the punishment inflicted
by a prison term or fine. United States v. Dreske, 536 F.2d
188, 196 (7th Cir. 1976); Jeffrey S. Parker & Raymond A.
Atkins, “Did the Corporate Criminal Sentencing Guidelines
Matter? Some Preliminary Empirical Observations,” 42 J.
Law & Econ. 423, 426-27 (1999). And so it may justify a
limited (but we stress “limited”—see United States v.
Repking, 467 F.3d 1091, 1096 (7th Cir. 2006) (per curiam))
reduction in the term or the fine, because the consequences
of a sentence for the defendant’s well-being are relevant
to the deterrent, incapacitative, and retributive goals of
sentencing, all recognized in section 3353(a).
But that a defendant spends heavily on lawyers is not a
mitigating factor. It would not only encourage overspend-
ing; it would be double counting, since the pricier the
lawyer that a defendant hires, the less likely he is to be
convicted and given a long sentence. And as for govern-
mental misconduct, nothing in section 3553(a) suggests
that punishing the government is a proper goal of sen-
tencing; two wrongs don’t make a right.
The Brady claim hovers on the border of cloud-
cuckooland. The defendant’s lawyer himself describes the
Brady materials as merely revealing that the defendant’s
“cardiology professor had evaluated him as lacking even
basic aptitudes in areas central to this case” and as being
“generally incompetent in most phases of cardiology and
cardiac catherization.” The defendant knew all that, so
disclosure would have been redundant. United States v.
Dawson, 425 F.3d 389, 393 (7th Cir. 2005). And because
Brady does not require disclosure of impeachment material
before trial, United States v. Higgins, 75 F.3d 332, 335 (7th
Cir. 1996), a plea of guilty (remember that Sriram pleaded
Nos. 05-2752, 05-2802 9
guilty) is not spoiled by a lack of access to materials that,
if the defendant went to trial, would have to be revealed
to him then. United States v. Ruiz, 536 U.S. 622, 629-30
(2002).
In demoting the federal sentencing guidelines from
mandatory to advisory status, the Booker decision did not
authorize sentencing judges to pick any sentence within
the applicable statutory sentencing range that strikes their
fancy. Federal sentencing remains cabined by the duty
first to determine the guidelines range and then to pick a
sentence, whether inside or outside that range, that is
consistent with the sentencing factors that 18 U.S.C.
§ 3553(a) lists as proper considerations in sentencing. E.g.,
United States v. Roberson, 474 F.3d 432, 435-36 (7th Cir.
2007); United States v. Parker, 462 F.3d 273, 276 (3d Cir.
2006). The district judge stumbled at both steps, as well as
in finding that one of the victims of the defendant’s fraud
was not a health insurer.
The judgment is reversed and the case remanded for
resentencing. For guidance on remand we repeat that any
loss estimate lower than $1.4 million would be clear error
inviting summary reversal and that most of the mitigat-
ing factors that persuaded the district judge to sentence
below the applicable guidelines range were irrelevant and
must not influence the sentence that he imposes on re-
mand. The defendant committed fraud on a large scale
and should be punished accordingly.
REVERSED AND REMANDED.
10 Nos. 05-2752, 05-2802
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-9-07