United States v. Karen Sarkissian ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS NOV 8 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 16-50347
Plaintiff-Appellee, D.C. No.
2:13-cr-00719-PSG-4
v.
KAREN OGANES SARKISSIAN, AKA MEMORANDUM*
Gary Sarkissian, AKA Karen Oganesovich
Sarkissian, AKA Seal 2,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
Philip S. Gutierrez, District Judge, Presiding
Argued and Submitted August 9, 2018
Pasadena, California
Before: TASHIMA and CHRISTEN, Circuit Judges, and RUFE,** District Judge.
Karen (“Gary”) Sarkissian appeals from the judgment of conviction
sentencing him to 57 months of imprisonment after a jury found him guilty of
conspiracy to commit money laundering, money laundering, and health-care fraud,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Cynthia M. Rufe, United States District Judge for the
Eastern District of Pennsylvania, sitting by designation.
as charged in a multi-defendant indictment.1 We have jurisdiction pursuant to 28
U.S.C. § 1291. Because the trial court did not exercise its gatekeeping function
with regard to the admission of expert testimony and failed to instruct the jury
adequately as to how to assess such testimony, we reverse.2
The government charged that in 2009 and 2010, Sarkissian was the office
manager for Sunset Clinic in Los Angeles, which billed Medicare more than $1.2
million for services in six months. According to the government, Medicare
recipients were recruited to visit Sunset Clinic, where the doctor usually was not
present and tests were billed to Medicare that were unnecessary or not performed.
1
This appeal was consolidated with the appeal in U.S. v. Pogosian, No.
16-50360. As the appeals raise different issues, and we earlier determined that the
decisional process in U.S. v. Pogosian would not be significantly aided by oral
argument, we issue separate decisions in each case.
2
Sarkissian requests [Doc. No. 19] that the Court take judicial notice of
certain documents. First, Sarkissian attaches partial trial transcripts with testimony
from Keith Kuntz from the cases of United States v. Garrison, No. 08-cr-1084
(C.D. Cal.) and United States v. Iruke, No. 09-cr-1008 (C.D. Cal.). Second,
Sarkissian attaches an order from the case of United States v. Anieze-Smith, No.
13-cr-220 (C.D. Cal.), in which the court ruled in part that Jody Whitten was an
expert witness. The government objects to the transcripts as constituting evidence
not before the district court and moves to strike from the record any arguments
based on the transcripts. The government does not oppose taking judicial notice of
the court order. The motion for judicial notice is granted, and the motion to strike
denied, as to the court order and to the partial transcript of the Garrison case,
which was referenced at the trial in this case. As the Iruke case does not appear to
be either briefed or part of the trial record, the motion for judicial notice is denied,
and the motion to strike is granted, as to that transcript.
2
Sarkissian’s defense was that, to his knowledge, Sunset Clinic provided legitimate
medical services with decisions made by a medical professional that Sarkissian, as
office manager, had no basis to question.
The alleged health-care fraud scheme operated in conjunction with a money-
laundering scheme, in which the government charged that Sarkissian and managers
at other clinics wrote checks to five sham corporations established by co-
defendants. The checks sometimes included false notations that they were for
professional or technical services, but instead were transfers of health-care fraud
proceeds. The co-defendants wrote checks from the sham corporations to
individuals, usually in amounts less than $10,000. These individuals then gave the
cash to the co-defendants, who returned the cash to co-conspirators affiliated with
the clinics, less a commission.
Before trial, the government provided potential expert witness notices under
Federal Rule of Criminal Procedure 16 for six witnesses, including Keith Kuntz, a
Special Agent with the United States Department of Health and Human Services,
Office of Inspector General. Kuntz was designated as a “modus operandi expert
witness,” to testify as to how a fraudulent clinic operates to assist the jury in
determining whether Sunset Clinic was a fraudulent clinic. The other witnesses,
Jody Whitten, Lori Webber, Barbara Tallant, Dr. Andres Jimenez, and Dr. T.
Alberto Om, were Medicare contractors, a legal-medical consultant, and two
3
treating physicians of patients who visited Sunset Clinic, respectively. The
government did not consider these other witnesses to be experts under Rule 702,
but instead lay witnesses testifying based on their personal knowledge under
Federal Rule of Evidence 701. The government therefore described the Rule 16
notices as “protective.”
Sarkissian filed a motion before trial to exclude the six witnesses, arguing
that the Rule 16 notices were inadequate and that the proposed testimony was
improper. The motion specifically argued that Kuntz’s anticipated testimony failed
to meet the expert opinion standards of Federal Rule of Evidence 702, and would
be unduly prejudicial under Rule 403. Sarkissian further moved to exclude
improper lay opinion testimony from the other identified witnesses, and
specifically argued that their testimony was properly evaluated under Rule 702, not
Rule 701. The trial court held a hearing, and denied the motion without
explanation.
The day before trial, Sarkissian filed a motion to limit Kuntz’s testimony,
arguing that a recently-produced report showed that the government intended to
add testimony regarding money laundering, as well as additional observations that
had not been part of the Rule 16 disclosure. The trial court denied Sarkissian’s
motion on the record, stating that the Rule 16 notice had been “barely enough,” but
did not state whether Kuntz was qualified to testify as to money laundering.
4
All of the challenged witnesses testified at trial without limitation. No
witness, including Kuntz, was qualified as an expert to testify at trial in the
presence of the jury.
Kuntz testified that he was a special agent with 23 years of experience, and
had taught about health-care fraud schemes. He testified that patients are often
recruited and paid by marketers who transport them to corrupt clinics, which are
barren and located in low economic areas. Instead of a physician, the patients are
more likely to be seen by a physician’s assistant (“PA”), who provides “cookie
cutter” diagnoses with the same tests ordered for numerous patients, which are not
tests that would ordinarily be ordered on a first visit. Kuntz further testified that
office managers “typically orchestrate” the fraud and control the finances. Kuntz
then testified to the nexus between the health-care fraud and the money laundering,
which typically involved the use of corporations held by a straw man, moving the
money to obscure the connection to the original fraud, as well as obtaining cash to
pay kickbacks. Kuntz testified on cross-examination that he had no personal
knowledge of the facts in the case and did not “hold [himself] out as an expert” in
money laundering, but was speaking based on his own experience.
Whitten and Weber were employees of a company that had a contract to
administer Medicare in Southern California, who testified as to whether Medicare
would have paid the Sunset Clinic claims if additional information had been
5
disclosed. They explained the basic relevant features of the Medicare program,
including the provider enrollment and claims submission processes, the general
rules applicable to medical clinics and the prohibition on kickbacks for referrals,
and introduced the relevant documents from Sunset Clinic. Tallant was a
registered nurse who worked as a medical legal consultant and testified as to her
findings from a review of 28 patient files from a clinic other than Sunset Clinic.
Although the trial court instructed the jury not to consider evidence regarding other
clinics against Sarkissian, Tallant also testified as to whether certain billings were
proper and that it would be unusual for 30 patients to happen to have the same
complaints and tests. Jimenez and Om were treating physicians to several
Medicare beneficiaries who went to Sunset Clinic. They testified as to their
personal knowledge of the patients’ medical conditions, but also were asked their
opinion of sending a first-time patient out for numerous tests and whether the
ordered tests were medically appropriate or necessary.
At trial, the testimony of other witnesses also strayed into opinion evidence.
For example, FBI Special Agent Nancy Kevany testified as to charts she prepared
that included the distances patients traveled to visit Sunset Clinic, and noted that
travelling 25-50 miles is outside the local community for medical care, and that
multiple patients driving such a distance is therefore an indicator of fraud. FBI
Special Agent Darrell Twedt was called to testify as to Sarkissian’s dealings with a
6
confidential informant, but he also testified over objection that converting fraud
proceeds into cash is done in health-care fraud schemes to pay for kickbacks or
referrals. Veronica Gomez, a former Medicare fraud investigator, was called to
testify about a medical clinic associated with Cahen, and therefore unrelated to
Sarkissian. However, Gomez also identified red flags such as diagnostic tests on a
single date of service without any additional date of follow-up service. Angelo
Cruz, a Medicare fraud examiner, determined that parts of the claims were paid
inappropriately, and that there was no valid delegation of service agreement at
Sunset Clinic. Cruz also testified that services performed by the PA at Sunset
Clinic should have been paid at a rate of 85%, not 100%, because the physician did
not consult with the patients.
Other witnesses at trial testified solely based on their personal knowledge of
the operation of Sunset Clinic. Maria del Carmen Lopez, a former employee of
Sunset Clinic, testified that an individual named Arturo drove patients to and from
the clinic, that Sarkissian paid Arturo, and that Sarkissian directed her not to talk
with the clinic’s physician, Louis Bascoy. She also testified as to the handling of
patient files and testified that perhaps three allergy tests were conducted at the
clinic each month.
Former employee Sylvia Perez testified that the inside of Sunset Clinic
looked “normal,” that it had rooms for seeing patients, for ultrasound, for testing,
7
and “for where they drew blood, did the EKG and the spirometry.” Perez also
testified that the PA saw patients, not the clinic doctor. The PA saw 10-15 patients
each day, and spent about 15 minutes with each patient. The doctor, Bascoy,
visited Sunset Clinic about once a week, checked charts, and signed them. Perez
saw various tests done at the clinic, including some allergy tests. On cross-
examination, Perez testified that she told agents in 2013 that Bascoy came to the
clinic two or three times a week, would review patient charts, and was the final
approval of whether her day off was approved.
Perez also testified as to the practices used to bring in patients: some
patients walked in, but a driver, Arturo, worked there and brought patients to
Sunset Clinic. According to Perez, Sarkissian described Arturo as a marketer and
Arturo “would tell the patients that he would find on the street that they should go
to the clinic because the clinic was okay and that they were going to treat them
okay.” Perez testified that some of the patients lived far away from Sunset Clinic,
which seemed unusual.
Margarita Dosal, the office manager for Bascoy’s primary clinic, testified
that she, Bascoy, and Bascoy’s attorney visited Sunset Clinic to obtain Bascoy’s
records. Dosal testified that Sunset Clinic lacked medical supplies and therefore
looked more like a massage parlor than a clinic, that the records showed the
patients travelled long distances, and that some of the documents purportedly
8
written or signed by Bascoy (who died in 2014 at age 86), were not in his
handwriting. Another physician, Howard Pfupajena, testified about his
observations that Sarkissian and the PA appeared to be jointly in charge at Sunset
Clinic.
Several former patients also testified. Although these witnesses generally
remembered few if any details about any visits to Sunset Clinic several years
before trial, one witness testified that his sister-in-law told him that certain medical
equipment was offered as an inducement to visit Sunset Clinic, and he received
that equipment.
We review a district court’s decision to admit expert testimony for abuse of
discretion. United States v. Reed, 575 F.3d 900, 918 (9th Cir. 2009). “When the
district court has erroneously admitted . . . prejudicial evidence, we remand for a
new trial. We do so even if the district court errs by failing to answer a threshold
question of admissibility. We have no precedent for treating the erroneous
admission of expert testimony any differently.” Estate of Barabin v.
AstenJohnson, Inc., 740 F.3d 457, 466 (9th Cir. 2014) (en banc) (citations
omitted). Rule 702 allows the admission of “scientific, technical or other
specialized knowledge” if it is both relevant and reliable. Id. The district court
must “perform a gatekeeping function to ensure that the expert’s proffered
9
testimony is both reliable and relevant.” United States v. Christian, 749 F.3d 806,
810 (9th Cir. 2014) (internal quotation marks and citation omitted).
Rule 701 permits a lay witness to testify “in the form of an opinion” if it is
“(a) rationally based on the perception of the witness; (b) helpful to a clear
understanding of the witness’ testimony or the determination of a fact in issue; and
(c) not based on scientific, technical, or other specialized knowledge.” Fed. R.
Evid. 701. “[T]he line between lay and expert opinion depends on the basis of the
opinion, not its subject matter.” United States v. Barragan, 871 F.3d 689, 704 (9th
Cir. 2017). The admissibility of such testimony is committed to the sound
discretion of the trial court and its admission “will be overturned only if it
constitutes a clear abuse of discretion.” United States v. Gadson, 763 F.3d 1189,
1209 (9th Cir. 2014) (internal quotation marks and citation omitted).
The district court made no relevance or reliability findings with regard to
Kuntz’s testimony; indeed the record contains no reasoning as to the basis for
admitting Kuntz’s testimony, in whole or in part, or whether Kuntz was qualified
to offer testimony as to money laundering. Similarly, the record is silent as to
whether the district court admitted the evidence of Whitten, Webber, Tallant,
Jimenez, and Om pursuant to Rule 701 or Rule 702.3 During trial, additional
3
Other courts of appeal have held that it is error to allow a witness to
testify as a fact witness as to his opinions on how Medicare functions and what
Medicare would do in certain circumstances when his knowledge comes from
10
witnesses then gave opinion testimony, similarly without any determination as to
its admissibility.
The trial court acknowledged during the charge conference that “there were
unexpected expert opinions all over the place.” However, the jury instructions
failed to provide guidance to the jury in the assessment of this testimony. The trial
court did instruct the jury that witnesses testified who because of education or
experience were permitted to state opinions and the reasons therefore. This
instruction, although it did not name the witnesses who so testified, correctly stated
the law. However, the district court did not instruct the jury on how to evaluate
witnesses who testified as to both facts and opinions. This failure, which
apparently was not raised at trial, constituted plain error. United States v.
Torralba-Mendia, 784 F.3d 652, 658 (9th Cir. 2015).
Although there were errors at trial, Sarkissian is not entitled to relief unless
he was prejudiced. Id. “The erroneous admission of expert testimony is subject to
working as a Medicare fraud investigation educator. United States v. Willner, 795
F.3d 1297, 1316 (11th Cir. 2015). See also United States v. Vega, 813 F.3d 386,
395 (1st Cir. 2016) (holding that testimony fell “outside the boundaries of lay
expertise” where the witnesses could “form their opinions only by understanding
technical Medicare laws and regulations;” acquiring such knowledge through their
occupations “does not make it ‘personal knowledge’ qualifying as lay expertise
under Rule 701”); United States v. White, 492 F.3d 380,403-04 (6th Cir. 2007)
(testimony was expert, not lay, where witnesses relied “to a significant degree on
specialized knowledge acquired over years of experience as Medicare auditors”).
11
harmless error review, just like all other evidentiary errors.” United States v.
Wells, 879 F.3d 900, 923 (9th Cir. 2018) (citations omitted). Where expert
testimony has been erroneously admitted, “[w]e begin with a presumption of
prejudice.” Id. (citation omitted). The government must show that it is more
probable than not that the jury would have reached the same verdict if the evidence
had not been admitted. Id. at 924. “[A] new trial is warranted when evidence
admitted through an erroneous analysis prejudices the opposing party but the
record is too sparse to conduct a proper admissibility analysis and decide whether
the admission itself was erroneous.” Christian, 749 F.3d at 813.
The record here is too sparse. We cannot determine whether certain
testimony was admitted pursuant to Rule 701 or Rule 702, or whether the
witnesses were qualified. For example, Kuntz himself acknowledged that money
laundering by fraudulent clinics was not his area of expertise, but he gave such
testimony before the jury without limitation. Although the admission of any single
witness’s testimony likely was harmless, numerous witnesses offered opinion
testimony, particularly with regard to the signs of a fraudulent clinic that provided
important context for the jury to evaluate the evidence of the percipient witnesses
as to how Sunset Clinic operated. Because the opinion testimony was not vetted,
and the jury was not instructed as to how it should assess the testimony, there is a
real possibility of jury confusion. United States v. Freeman, 498 F.3d 893, 903–04
12
(9th Cir. 2007). The jury had no basis on which it could determine whether a
witness “relied upon or conveyed hearsay evidence when testifying as a lay
witness or . . . based [his or her] lay testimony on matters not within his personal
knowledge.” Id. at 904. When the cumulative effect of the testimony and its
importance to the government’s case are considered, “[o]ur review of the record
leaves us without a fair assurance that the jury was not substantially swayed by the
error[s]” in convicting Sarkissian. United States v. Lloyd, 807 F.3d 1128, 1168 (9th
Cir. 2015) (internal quotation marks and citation omitted).
Because we reverse and remand for a new trial, we do not reach the
arguments regarding improper rebuttal argument or error at sentencing.
REVERSED.
13
FILED
United States v. Sarkissian, No. 16-50347
NOV 08 2018
CHRISTEN, Circuit Judge, dissenting. MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
Assuming that some of the government’s witnesses offered improper
opinion testimony at trial, my view is that the government’s other evidence easily
overcame the resulting presumption of prejudice. Accordingly, I respectfully
dissent from the court’s decision.
The majority is likely correct that at least some of the six witnesses
Sarkissian moved to exclude in limine wound up giving improper opinion
testimony,1 and the record makes it difficult to discern the district court’s rationale
for admitting their opinions. I agree that we begin with a presumption of prejudice
when expert witness testimony is improperly admitted, but that presumption is
rebuttable. Our case law is clear that it can be overcome “‘by a showing that it is
1
Sarkissian also contends that the district court erred by failing to
provide a so-called “dual role” instruction to explain to the jury how it should
examine the testimony of witnesses who testified as fact witnesses and as experts.
Sarkissian rightly concedes that we review this challenge for plain error, but he
fails to meet that demanding standard because nothing in the record reveals that the
alleged error undermined his substantial rights. First, the district court did explain
the difference between the two types of testimony. Second, many of the witnesses
he claims provided mixed testimony had no basis to testify as fact witnesses and
could not have testified in dual roles. Finally, to the extent some witnesses did
testify in dual roles, Sarkissian does not explain how their mixed testimony
affected the verdict. See United States v. Torralba-Mendia, 784 F.3d 652, 661 (9th
Cir. 2015) (“We remedy a district court’s plain error only when the defendant
shows that the error affected his substantial rights.”).
more probable than not that the jury would have reached the same verdict even if
the evidence had not been admitted.’” Estate of Barabin v. AstenJohnson, Inc.,
740 F.3d 457, 465 (9th Cir. 2014) (quoting Jules Jordan Video, Inc. v. 144942
Canada Inc., 617 F.3d 1146, 1159 (9th Cir. 2010)). The government’s evidence
easily cleared this hurdle.
Sarkissian claims that Tallant improperly offered her opinion as to the
propriety of certain bills; that doctors Jiminez and Om improperly opined on the
legitimacy of Sunset Clinic; and that Whitten and Webber gave improper opinions
regarding the framework of Medicare regulations and “red flags” that are generally
indicative of fraud. With respect to Department of Health and Human Services
Special Agent Keith Kuntz, Sarkissian contends that the district court failed to
properly vet his opinions for reliability and relevance, and that the government
used Kuntz’s testimony to establish “the benchmark for inferring fraud” based on
indicators that Sunset Clinic had in common with many similar clinics. From
there, Kuntz explained that office managers like Sarkissian are typically at the
center of fraudulent schemes at this type of clinic. Finally, Sarkissian argues that
Kuntz improperly testified that fraudulent clinics typically launder illicit profits to
avoid detection, only to later admit that he was not an expert in money laundering.
If Sarkissian had demonstrated that these experts were unqualified to render
2
all of these opinions—and I am not convinced that he did—the government still
presented sufficient evidence to overcome any resulting prejudice. Percipient fact
witnesses told the jury that: (1) Sunset Clinic employed a single elderly doctor who
saw no patients and served in name only for the purpose of billing Medicare; (2)
the clinic was staffed by a single physician’s assistant and had only a single room
for patient exams, but claimed to see up to sixty or more patients per day; (3) a
majority of patients lived more than twenty-five miles from the clinic; and (4) the
lone physician’s assistant repeatedly ordered the very same battery of tests for the
clinic’s patients, even though its patient population was widely diverse. Finally,
the jury heard one witness testify that Sarkissian needed cash to pay patients to
come to Sunset Clinic. This evidence was highly probative of an ongoing
fraudulent operation, it amply supported the jury’s verdict, and it is difficult for me
to imagine that the jury could have reached any other result after hearing the
government’s case against Sarkissian, who acted as the clinic manager.
With regard to the money laundering allegations, the government introduced
a recorded conversation between Sarkissian and a confidential informant in which
Sarkissian offered to convert checks from a healthcare company into cash.
Moreover, the jury heard Special Agent Kuntz expressly disavow any expertise in
money laundering and his statements on that score were, at most, cumulative of the
3
government’s other trial evidence. It did not rise to the level of prejudice
necessary to reverse Sarkissian’s conviction. See United States v. Jennell, 749
F.2d 1302, 1308 (9th Cir. 1984) (observing that “cumulative nature” of
“improperly admitted documents” “rendered their admission harmless”).
Because I conclude that the government introduced more than sufficient
evidence of Sarkissian’s guilt to overcome any prejudice caused by improperly
admitted evidence, I respectfully dissent.
4