United States v. Matthew Kolodesh ( 2015 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 14-2904
_____________
UNITED STATES OF AMERICA
v.
MATTHEW KOLODESH,
a/k/a Matvei Kolodech,
a/k/a Michael Kolodech,
Appellant
_______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-11-cr-00464-001)
District Judge: Hon. Eduardo C. Robreno
_______________
Submitted Under Third Circuit L.A.R. 34.1(a)
April 24, 2015
Before: CHAGARES, JORDAN, and BARRY,
Circuit Judges
(Filed: May 28, 2015)
Gary Green, Esq.
Sidkoff, Pincus & Green
1101 Market Street
Suite 2700
Philadelphia, PA 19107
Jack J. McMahon, Jr., Esq.
1500 Walnut Street
Suite 1100
Philadelphia, PA 19102
Counsel for Appellant
Zane David Memeger, Esq.
Robert A. Zauzmer, Esq.
Emily McKillip, Esq.
Office of the United States Attorney
615 Chestnut Street
Suite 1250
Philadelphia, PA 19106
Counsel for Appellee
_______________
OPINION OF THE COURT
_______________
2
JORDAN, Circuit Judge
Matthew Kolodesh appeals from his conviction and
sentence following a trial in the United States District Court
for the Eastern District of Pennsylvania based on his
involvement in a Medicare fraud scheme. We will affirm.
I. Background1
Kolodesh owned a home-health services company
called Community Home Health, Inc. Around 1999, he
approached one of his employees, Alex Pugman, with the
idea of starting a company to provide home-based hospice
care. Pugman, who had a background in hospice care,
agreed. Kolodesh funded the new company, which they
named Home Care Hospice, Inc., and Pugman managed the
day-to-day operations. Kolodesh’s wife, Malvina
Yakobashvili, and Pugman were listed as owning equal shares
in the company; however, Kolodesh was intimately involved
in forming and overseeing the management of Home Care
Hospice.
As early as 2000 or 2001, Kolodesh, Pugman, and
Pugman’s wife, Svetlana Ganetsky, who was also employed
1
The following general background information is
supplemented by additional facts as they relate to each
argument raised on appeal. Because Kolodesh was convicted
after a jury trial, “we must defer to the jury’s verdict and view
the evidence in the light most favorable to the government.
Therefore, we recount the government’s version of the facts.”
United States v. Serafini, 233 F.3d 758, 763 n.4 (3d Cir.
2000) (citation omitted).
3
by Home Care Hospice, began giving gifts and cash
“kickbacks” to doctors in exchange for patient referrals.
(App. at 979-82.) In addition, at Kolodesh’s suggestion,
Pugman placed some doctors or their employees on the Home
Care Hospice payroll with sham job titles. Those sham
employees were then issued paychecks, in exchange for
patient referrals.
About 90% of the revenue generated by Home Care
Hospice came from Medicare reimbursements. Medicare, as
is well known, is a federal health benefits program providing
financial assistance to senior and disabled citizens to cover
medical costs. Fischer v. United States, 529 U.S. 667, 671
(2000). “Medicare attains its objectives through an elaborate
funding structure,” id. at 673, one aspect of which involves
reimbursement to health care providers for medical treatment
costs incurred in furnishing services to Medicare recipients,
id. at 677, 680. Providers are reimbursed by the Centers for
Medicare and Medicaid Services (“CMS”) through a “fiscal
intermediary,” which is a private entity that contracts with
CMS to help it administer the Medicare program by
determining payment amounts and making payments. 42
U.S.C. §§ 1395h(a), 1395kk-1(a); 42 C.F.R. § 405.902; see
also Fischer, 529 U.S. at 677.
At some point, Home Care Hospice began to submit to
CMS fraudulent claims for reimbursement. Medicare
provides reimbursement only for hospice patients certified as
terminally ill and places time limits on the validity of such
certifications, 42 C.F.R. §§ 418.21-.22, but, at Kolodesh’s
suggestion, Home Care Hospice began submitting
reimbursement claims for patients who did not qualify for
hospice care. Kolodesh and Pugman had the employees of
4
Home Care Hospice falsify patient records to conceal the
fraud. Home Care Hospice employees also falsified records
to show patients as eligible for and receiving continuous care
– a more time-intensive and thus more expensive level of care
– when those patients were neither eligible for nor received
such care.
To surreptitiously extract value from Home Care
Hospice, Kolodesh and Pugman would, among other things,
have contractors, such as Alexy Drobot, the person who
serviced the copy machine for the business, submit fake
invoices that Home Care Hospice would pay, and then the
contractor would give most of the money to Kolodesh and
Pugman, while keeping a portion for himself.
Kolodesh, Pugman, Ganetsky, and a number of others
were charged for their roles in the scheme to defraud
Medicare. Kolodesh in particular was charged with one count
of conspiracy to defraud a health care benefit program, in
violation of 18 U.S.C. § 1349, twenty-one counts of health-
care fraud, in violation of 18 U.S.C. § 1347, two counts of
mail fraud, in violation of 18 U.S.C. § 1341, and eleven
counts of money laundering, in violation of 18 U.S.C. § 1957.
At the conclusion of a five-week trial, in which Pugman and
Ganetsky testified for the government after having pled
guilty, the jury convicted Kolodesh on all counts. Kolodesh
filed a motion for a new trial and, later, a supplemental
motion for a new trial, both of which the District Court
denied. On May 28, 2014, the District Court sentenced him
to a total of 176 months’ imprisonment, with three years of
supervised release. The Court also ordered restitution in the
amount of $16.2 million. Kolodesh filed this timely appeal.
5
II. Discussion2
The arguments on appeal focus on allegations of
prosecutorial misconduct, certain evidentiary issues, and
supposed errors in responding to a request from the jury and
in sentencing.3 We address each in turn.
2
The District Court had original jurisdiction under 18
U.S.C. § 3231; we have appellate jurisdiction pursuant to 28
U.S.C. § 1291.
3
In support of the arguments raised in his opening
brief, Kolodesh raises several new contentions in his reply
brief. Those are waived and we do not address them further.
See United States v. Pelullo, 399 F.3d 197, 222 (3d Cir. 2005)
(“It is well settled that an appellant’s failure to identify or
argue an issue in his opening brief constitutes waiver of that
issue on appeal.”).
6
A. Prosecutorial Misconduct4
Kolodesh argues that the government committed
prosecutorial misconduct in two ways. First, he says the
prosecutor improperly introduced and repeatedly referred to
an inaccurately transcribed, irrelevant, and unduly prejudicial
portion of a recorded conversation between Kolodesh and
Pugman. Second, he says the prosecutor improperly elicited
testimony about Russian stereotypes, which undermined the
fairness of the trial.
1. Transcript of Wiretapped Conversations
At trial, the government relied heavily on transcripts of
conversations that had been recorded through wiretaps that
the FBI placed at Home Care Hospice. One such
4
Kolodesh did not lodge a contemporaneous objection
to the prosecutor’s conduct; rather, he raised the issue for the
first time in his motion for a new trial. We therefore review
the District Court proceedings for plain error insofar as this
argument is concerned. United States v. Brennan, 326 F.3d
176, 188 (3d Cir. 2003). Under that standard, “an appellate
court may, in its discretion, correct an error not raised at trial
only where the appellant demonstrates that (1) there is an
error; (2) the error is clear or obvious, rather than subject to
reasonable dispute; (3) the error affected the appellant’s
substantial rights, which in the ordinary case means it
affected the outcome of the district court proceedings; and (4)
the error seriously affect[s] the fairness, integrity or public
reputation of judicial proceedings.” United States v. Marcus,
560 U.S. 258, 262 (2010) (internal quotation marks omitted)
(alteration in original).
7
conversation between Kolodesh and Pugman related to a
letter that a Medicare fiscal intermediary, Cahaba
Government Benefit Administrators, LLC (“Cahaba”), sent to
Home Care Hospice. The letter requested patient data for the
2006-2007 fiscal year to determine whether Home Care
Hospice’s claims had exceeded the cap for new patients, the
cap being a limit on the total annual amount CMS would
reimburse for each hospice patient. The letter requested the
number of new patients admitted during a defined period, but,
depending on how the letter was interpreted, the period could
be understood to be twelve or thirteen months. Knowing that
they had overbilled Medicare, Kolodesh and Pugman decided
to submit thirteen months of data and to misrepresent several
patients as new when they had been previously discharged but
since readmitted. During the recorded conversation,
Kolodesh said to Pugman, “We have to f*** them over this
time, one more time and be smart about it … .” (App. at
1261.) The government referred to this comment twice in its
opening statement and four times in its closing argument.
Kolodesh did not object to any of those references.5
Calling his remark the “F*** Medicare Statement,”
Kolodesh now argues that the translation and transcription of
it, which was originally in Russian, was inaccurate. (Opening
Br. at 19.) He also says that the government should have told
the jury that the statement did not appear in the original
transcription of the conversation. According to Kolodesh, the
failure to get a good translation and the failure to tell the jury
that his F*** Medicare Statement appeared only in the later
5
Kolodesh did object to questions to Pugman about
what Kolodesh meant, but not to the admissibility of the
statement itself or the government’s use of that statement.
8
transcription constitute prosecutorial misconduct. He seems
to forget, however, that he stipulated at trial to the truth and
accuracy of the transcripts. He thus invited any error and
cannot complain now. United States v. Stewart, 185 F.3d
112, 127 (3d Cir. 1999) (limiting plain-error review to errors
that were not invited); see also United States v. Console, 13
F.3d 641, 660 (3d Cir. 1993) (“A defendant cannot complain
on appeal of alleged errors invited or induced by himself,
particularly where, as here, it is not clear that the defendant
was prejudiced thereby.” (internal quotation marks omitted)).
Kolodesh also argues that the government’s reliance
on the F*** Medicare Statement constitutes misconduct
because it was irrelevant to the crimes charged in the
indictment. On the contrary, though, his crude and concise
comment was directly relevant to the twenty-one counts of
health care fraud. It helped establish the fraudulent nature of
the claims his company submitted and his mental state in
causing those submissions.
The statement was also relevant to the charged
conspiracy. Among the overt acts supporting that charge, the
indictment listed the obstruction of a Medicare audit in early
2007. That 2007 audit was separate from the later inquiry by
Cahaba that prompted the F*** Medicare Statement during
the recorded conversation. In February 2007, Cahaba sent
Home Care Hospice a letter notifying it that Cahaba would
conduct a prepayment audit for twenty to forty claims
covering a portion of the 2005-2006 fiscal year. Kolodesh
directed Pugman to bring one of their field nurses into the
office and pay her specifically to assist in changing patient
records so that they would appear to be compliant. As a
result, the audit led to the denial of only two claims out of
9
twenty. Kolodesh’s statement, “‘We have to f*** them over
this time, one more time and be smart about it …’” (App. at
1261 (emphasis added)), is relevant to establishing the
fraudulent nature of Home Care Hospice’s response to the
2007 audit, as well as being relevant to Kolodesh’s
corresponding mental state and to the existence of an
agreement to defraud Medicare. Thus, the District Court did
not plainly err in permitting Kolodesh’s own words to be
admitted against him and allowing the government to refer to
them freely.6
2. Russian Stereotype Testimony
Kolodesh argues that the government committed
prosecutorial misconduct by repeatedly eliciting testimony
from witnesses that Russians “game the system,” which
6
Kolodesh also makes reference to Rules 403 and
404(a) of the Federal Rules of Evidence. Any argument
based on improper character evidence under Rule 404(a) is
waived due to the cursory nature of the reference to it in the
brief. See United States v. Hoffecker, 530 F.3d 137, 162 (3d
Cir. 2008) (noting parenthetically that “[a]n issue is waived
unless a party raises it in its opening brief, and for those
purposes a passing reference to an issue will not suffice to
bring that issue before this court”); see also Fed. R. App. P.
28(a)(8). Kolodesh’s Rule 403 argument – that the
inflammatory nature of the single instance of profanity
rendered the comment unfairly prejudicial – fails, particularly
in light of its probative value. Cf. United States v. Pirani, 406
F.3d 543, 555 (8th Cir. 2005) (en banc) (concluding that tape
recording where defendant was “swearing expressively” was
not unfairly prejudicial).
10
testimony the government then used to “assert to the jury that
Kolodesh must be guilty because … [he] was born in
Russia.”7 (Opening Br. at 37.) He misstates the record.
First, the prosecutors did not elicit a majority of the
statements of which Kolodesh complains; rather, those
references to Russians were offered by witnesses without any
prompting by the government.8 And statements that arguably
were elicited by the prosecutors are relatively innocuous in
the context of this case. The nurses at Home Care Hospice
7
Kolodesh was originally from the Georgian Soviet
Socialist Republic, but he casts his argument on appeal
broadly to include not only “Russian ethnic stereotypes” but
also stereotypes about “native Russians,” “Russian speakers,”
and, more generically, the “Russian community” in the
United States, with which Kolodesh was identified at trial.
(Opening Br. at 37, 38.)
8
For example, one of the prosecutors engaged in the
following exchange with Pugman:
Q Are you familiar with the concept of a
continuous care schedule?
A Yes.
Q What is that?
A So, if Irina as coordinator on Russian
team would come to me and by that time,
let’s say, in the year 2007-2008,
especially nurses on the Russian team,
they loved continuous care. Continuous
care meant a lot of money, of course,
some work in terms of documenting, but
then getting paid for this.
(App. at 1016-17.)
11
were divided into a “Russian team” and an “English team,”
with each team focusing on patients who spoke those
respective languages. (App. at 956-58.) When asked which
team was involved with most of the fraudulent claims,
Pugman stated matter-of-factly that it was the Russian team,
without elaborating on the reasons. When Ganetsky was
asked whether any nurses refused to participate in the fraud,
she responded, “None of the Russian nurses had a problem
with fabricating charts.” (App. at 2531.) But she
immediately followed with the statement that, “[o]n the
English team, there was a nurse who refused to participate,”
making it clear that participation in the fraudulent scheme did
not break down strictly along ethnic, linguistic, or cultural
lines.9 (Id.; see also id. at 1031-32 (Pugman testifying that “a
couple of nurses” refused to participate, without specifying
which team, and stating by way of illustration that if he
approached a nurse on the English team who refused, he
would simply approach another nurse on the English team
and offer to pay her double to do it).) In another instance
cited by Kolodesh, Pugman stated that Kolodesh told him
“how the marketing is done in [the] Russian community.”
(App. at 963.) When the prosecutor asked for further details,
Pugman recounted Kolodesh’s explanation of how he would
provide doctors cash kickbacks for referrals. Yet that
testimony must be considered in the context of other
evidence, such as Pugman’s testimony that both “Russian”
and “American” doctors received kickbacks for giving
referrals, though the former preferred cash kickbacks while
9
If the fraudulent activity had broken cleanly on such
lines, that would be a matter of fact, not bias. That it did not
do so simply reduces any force in the argument that there was
a risk that the jury would succumb to prejudice.
12
the latter preferred to be placed on the payroll.10 (App. at
1214.)
The government did not invoke Russian stereotypes in
its opening statement or closing argument to the jury. The
only references to ethnicity or language groups came in
closing argument and involved a reference to how each group
of doctors – Russian speakers and English-only speakers –
preferred to receive kickbacks and a reference to a statement
by Ganetsky that she believed the co-conspirators would be
suspected of fraud because they were Russians. The
prosecutor used the latter statement not to prove that Russians
were predisposed toward fraudulent activity, but to suggest
that Ganetsky, Pugman, and Kolodesh believed that Home
Care Hospice was about to come under closer scrutiny, and
that their subsequent efforts to discharge large numbers of
inappropriate patients indicated knowledge of the fraudulent
nature of their actions. Thus, the government did not, as
Kolodesh alleges, “broadcast” Russian stereotypes to the jury.
(Opening Br. at 40.) Viewed in the context of the evidence
presented at trial, the prosecutors’ questions and statements
do not constitute misconduct, nor was it plain error for the
District Court to permit them.11
10
The final statement Kolodesh cites that was actually
elicited by the prosecutors was Kolodesh’s own comment that
he is “savvy … like all Russians.” (App. at 1121.) But the
context of Kolodesh’s statement indicates that he was
referring to why he prefers the cash-basis accounting method
to the accrual-basis method; he was not referring to fraudulent
activity.
11
Kolodesh further argues that testimony concerning
Russians was inappropriate because none of the witnesses
13
B. Evidentiary Issues12
Next, Kolodesh alleges a series of evidentiary errors;
namely, the District Court’s exclusion of allegedly
exculpatory medical evidence, its failure both to exclude
evidence of uncharged wrongful acts and to allow Kolodesh
to rebut that evidence, and its admission of conversations
relating to his attempt to open an overseas bank account.
were qualified “as expert witnesses on the propensity of
Russian people to commit crimes.” (Opening Br. at 39.)
That argument is frivolous. When Ganetsky attempted to
testify as to how business was conducted at “other Russian
agencies,” Kolodesh objected and that objection was
sustained. (App. at 2532.) Otherwise, the testimony
Kolodesh cites all involved witnesses explaining the facts of
this case based on personal knowledge. See Fed. R. Evid. 701
(stating that opinion testimony of a lay witness is permitted if,
among other things, it is “rationally based on the witness’s
perception”). Kolodesh also mentions a litany of other
evidentiary rules that were supposedly violated by admitting
testimony that he says involved Russian stereotypes. Those
arguments are not meaningfully briefed and are thus waived.
Fed. R. App. P. 28(a)(8); Hoffecker, 530 F.3d at 162.
12
“Generally, we review evidentiary rulings for abuse
of discretion, but when no objection is made at trial we
review for plain error only.” United States v. Brink, 39 F.3d
419, 425 (3d Cir. 1994) (citation omitted).
14
1. Exclusion of Evidence of Medical
Condition
Kolodesh argues that the District Court abused its
discretion by preventing him from countering Pugman’s
testimony that Kolodesh met him at the office almost daily.
Kolodesh says he had evidence that he was homebound due
to illness from 2003 to 2005. He contends that, because the
illegal activity began in earnest in 2003, the excluded
evidence would have provided “exculpatory alibi testimony”
showing that he “was physically too ill to be involved in the
operation of [Home Care Hospice]” at that time. (Opening
Br. at 42.) If the Court erred in this respect – and it appears it
did – the error was harmless.
Kolodesh called his wife, Yakobashvili, as a witness
and attempted to have her testify as to his health. The District
Court ruled that Yakobashvili had personal knowledge to
testify as to “whether he got up in the morning and went or
left the house,” but testimony that illness was the reason he
could not go to work would be hearsay. (App. at 4275.)
When Yakobashvili repeatedly ignored the scope of defense
counsel’s questions and testified not only that Kolodesh was
“[n]ot really” going into work at Community Home Health,
but that the reason was that he was “very sick,” the District
Court cut off questioning and ordered defense counsel to
move on. (App. at 4276.)
“Testimony that conveys a witness’s personal
knowledge about a matter is not hearsay.” United States v.
Vosburgh, 602 F.3d 512, 539 n.27 (3d Cir. 2010). The
proffered testimony could be understood to establish that
Yakobashvili had personal knowledge that her husband was
15
ill in some way and that the illness had an effect on his ability
to work. That testimony could certainly have been subjected
to close scrutiny under cross-examination, but her
impressions of her husband’s health and capacity to work
were not hearsay.13 However, even if Kolodesh had been
allowed to pursue that line of questioning, it would not have
affected the outcome of the trial. We are quite sure of that.
See United States v. Zehrbach, 47 F.3d 1252, 1265 (3d Cir.
1995) (en banc) (stating that an error is harmless “when it is
highly probable that the error did not contribute to the
judgment,” which “requires that the court possess a sure
conviction that the error did not prejudice the defendant”
(emphasis and internal quotation marks omitted)).
Kolodesh wanted Yakobashvili to testify as to his
health between 2003 and 2005. The incriminating evidence
that Kolodesh identifies as being undermined by such
testimony, however, refers to Kolodesh’s almost-daily office
visits with Pugman during 2000 and 2006. Elsewhere,
Pugman testified that he and Kolodesh had “always” been in
“communication” on a daily basis, including in 2003 (App. at
1051), and that some of their conversations took place over
the phone. Furthermore, Pugman testified that, starting
sometime in 2004, he and Kolodesh began having meetings
after business hours in Kolodesh’s home, though “rarely” in
Pugman’s home because Kolodesh “was more comfortable”
in his own house. (App. at 967.) While Pugman also testified
that he and Kolodesh “[s]ometimes, [but] not that often,” met
13
Yakobashvili’s attempt to identify the particular
illness that her husband had may be another matter. But the
District Court could have limited that testimony without
excluding all reference to Kolodesh’s health.
16
at Community Home Health during 2004 (App. at 968), that
testimony comports with Yakobashvili’s testimony that in
2004 – in the midst of the period that she testified her
husband was ill – Kolodesh had a meeting with Pugman,
Ganetsky, and Yakobashvili at Community Home Health.14
Because Yakobashvili’s proffered testimony did not
demonstrate that Kolodesh was not involved in the operation
of Home Care Hospice during 2003 to 2005, it failed to
contradict Pugman’s testimony or to materially weaken his
credibility. The decision to exclude Yakobashvili’s testimony
about Kolodesh’s illness was, therefore, harmless.
2. Other-Acts Evidence Regarding
Community Home Health
Kolodesh argues that the District Court erred in not
sua sponte excluding testimony by Pugman and Ganetsky that
employees at Community Home Health engaged in certain
uncharged acts of fraud. Pugman testified that he learned
how to fraudulently alter charts in preparation for an audit
while working at Community Home Health. He said that the
director of nursing would instruct him to “fix[]” the charts,
but if, for example, he refused to come in on the weekend to
do so when he had other plans, he would get a call from
Kolodesh urging him to come in and help. (App. at 1047.)
14
Kolodesh also claims that Pugman testified that
Kolodesh “regularly came to [Home Care Hospice] to review
the books.” (Opening Br. at 41.) But what Pugman actually
said is that Kolodesh came to Home Care Hospice to review
the company’s books “[o]n [an] as-needed basis.” (App. at
978.) Furthermore, Pugman provided no timeframe for that
statement.
17
Similarly, Ganetsky testified that, when she was working at
Community Home Health, Kolodesh instructed her “on
several occasions” to fabricate records for his mother-in-law,
indicating that she received services that were, in fact, never
provided.15 (App. at 2605.) Ganetsky also testified that
Kolodesh told Pugman that he had “several ghost employees”
on the payroll at Community Home Health, and that the same
kind of fraud should be undertaken at Home Care Hospice.
(App. at 2507.)
Evidence of uncharged acts is admissible if the
following requirements are met: “First, the evidence must be
offered for a proper purpose under Rule 404(b)[ of the
Federal Rules of Evidence]; second, the evidence must be
relevant under Rule 402; and third, the probative value of the
evidence must outweigh its potential for unfair prejudice
under Rule 403.” United States v. Ciavarella, 716 F.3d 705,
15
Kolodesh further complains of testimony that, on
behalf of Home Care Hospice, Ganetsky entered into
unlawful kickback arrangements with Community Home
Health staff. That testimony, though, refers to illegal actions
that are part of the crimes charged – the indictment
specifically mentions the kickback scheme as a method of
enrolling inappropriate hospice patients in Home Care
Hospice. Such testimony does not, therefore, relate to
evidence of uncharged wrongs, and, even if it did, it would be
intrinsic to the charged offense. United States v. Gibbs, 190
F.3d 188, 217 (3d Cir. 1999) (“Rule 404(b), which proscribes
the admission of evidence of other crimes when offered to
prove bad character, does not apply to evidence of uncharged
offenses committed by a defendant when those acts are
intrinsic to the proof of the charged offense.”).
18
728 (3d Cir. 2013). The District Court did not plainly err in
admitting the testimony of Pugman’s and Ganetsky’s
experiences at Community Home Health. The testimony was
not offered as evidence of Kolodesh’s character as a
defrauder in order to show that he acted in accordance with
that character at Home Care Hospice. See Fed. R. Evid.
404(b)(1). Rather, it was offered as circumstantial evidence
of Kolodesh’s knowledge of the fraudulent activity at Home
Care Hospice. In his opening statement, defense counsel
asserted that Kolodesh was unaware of the fraudulent
practices at Home Care Hospice, and that the scheme was
concocted and executed by Ganetsky and Pugman. Counsel
asserted that, in contrast, Kolodesh ran Community Home
Health as a legal, legitimate business. In light of the defense
theory of the case, the relevance of the government’s
evidence is clear: Kolodesh knew what fraudulent practices
looked like – indeed, he taught them to Pugman and Ganetsky
– and if Kolodesh was as intimately involved in Home Care
Hospice as Pugman testified, he certainly would have known
of the fraudulent conduct. Given the relevance of the
complained-of evidence, we cannot say it was unfairly
prejudicial, especially when seen through the lens of plain-
error review.
Kolodesh also argues that he should have been allowed
to rebut that evidence by offering testimony about how he
operated Community Home Health after Pugman left that
company in 2001. At trial, Kolodesh sought to call three
witnesses who worked at Community Home Health to
counter the government’s evidence that he had instructed
employees to fabricate records. The District Court allowed
him to call the witnesses but limited their testimony to events
“up to 2001,” when Pugman left to work full time at Home
19
Care Hospice, because the government’s evidence had been
similarly limited. (App. at 4111.) The Court stated, however,
that it would revisit its ruling if Kolodesh could demonstrate
that the government’s evidence relative to Community Home
Health went beyond 2001. Defense counsel responded that
Ganetsky testified about her experience at Community Home
Health up until about 2003 or 2004 , but he agreed to put on
his witnesses and limit their testimony to 2001 and earlier,
and then bring the witnesses back later “if [he felt] it’s that
essential to bring them back.”16 (App. at 4114.) The
witnesses then testified that, during the 1999-2001 time
period, Kolodesh never instructed them to fabricate records.
Defense counsel also followed up with the first of the three
witnesses in a way that extended the testimony beyond 2001:
Q And that was the whole time that you
worked there, right?
A Yes.
Q And you still work there now, right?
A Yes.
(App. at 4141.) The government did not object, though it
objected to a similarly broad question posed to the second
witness.
16
Defense counsel also added, “[I]n reality, I don’t
think it makes a whole lot of difference.” (App. at 4114.)
However, it is unclear whether that statement was a
concession as to the value of additional testimony or a
reference to the logistical matter of whether to put witnesses
on then or after having had an opportunity to review
Pugman’s and Ganetsky’s testimony.
20
The District Court acted well within its discretion by
allowing Kolodesh to rebut the government’s evidence while
partially limiting the temporal scope of the testimony. To
prevent the trial about fraudulent practices at Home Care
Hospice from devolving into a side trial about fraudulent
practices at Community Home Health, the Court’s ruling was
entirely reasonable. But, even if we were to conclude that the
District Court abused its discretion, its ruling was harmless.
Kolodesh’s witnesses testified that he never asked them to
doctor any charts, and one witness testified to that fact well
beyond the 2001 limit. We are fully persuaded that the
admission of additional testimony about Kolodesh’s practices
at Community Home Health after 2001 would not have
affected the outcome of the case. See Zehrbach, 47 F.3d at
1265 (setting forth test for harmless error).
3. Relevance of Conversations Regarding
Overseas Bank Accounts
The final evidentiary challenge Kolodesh advances is
to the relevance and prejudicial effect of extensive recorded
conversations that referred to his opening a Swiss bank
account. Kolodesh argues that evidence of foreign
investments is “generally inadmissible” because of the
negative perception in the public’s mind linking such
accounts to criminal activity. (Opening Br. at 47.) Yet the
case Kolodesh cites for that proposition does not support it.
Rather, the case simply applied the standard rules relating to
relevance and unfair prejudice, with the result being the
approval of admission of evidence of a secret Swiss bank
account. United States v. Friedland, 660 F.2d 919, 929 (3d
Cir. 1981); cf. United States v. Udeozor, 515 F.3d 260, 264-
65 (4th Cir. 2008) (“Rule 403 is a rule of inclusion, generally
21
favoring admissibility … .” (brackets and internal quotation
marks omitted)). Here, Pugman testified that he, Ganetsky,
and Kolodesh discussed the possibility of moving money
overseas “to protect our money … from the government,”
after they had received a letter from Cahaba requiring Home
Care Hospice to repay over $2.6 million in reimbursements
that had exceeded the per-patient cap for the 2006-2007 fiscal
year. (App. at 1280.) Although Cahaba retracted the letter
and at trial the government conceded that the letter was
prompted by “a bookkeeping error” (App. at 4399), which
Home Care Hospice corrected, the government argued – and
the testimony supports – that the letter prompted Kolodesh
and his co-conspirators to discharge several patients and
discuss the possibility of moving money overseas because
they were aware of fraudulent activity that would be detected
if Cahaba continued to scrutinize Home Care Hospice. In one
of the recorded conversations, Kolodesh indicated that he
wanted to put money in a Swiss bank account, but he wanted
to avoid one particular bank because “[it] reports everything
to the American government.” (App. at 1284.)
The recorded conversations were thus relevant as
circumstantial evidence of Kolodesh’s knowledge that his
actions were fraudulent and that he risked losing his money as
a result. They were also relevant as circumstantial evidence
of knowledge regarding the money laundering charges.
Although the discussions about possibly putting money into
Swiss accounts was not part of those charged offenses, the
conversations provided evidence of Kolodesh’s intent to
maintain access to criminally derived property and conceal
such transactions from the government. The mere possibility
of a negative inference regarding Swiss bank accounts did not
22
substantially outweigh the probative value of the recordings.
Thus, the District Court did not plainly err in admitting them.
C. Response to Jury’s Request17
Kolodesh argues that the District Court erred in failing
to provide the jury with transcripts of testimony that the jury
requested and, further, in failing to suspend jury deliberations
until those transcripts could be provided. After the jury began
deliberating, it sent a note asking for a transcript of Pugman’s
testimony, “both direct and cross,” and noting that, “[i]f
possible,” the transcript “may be edited to cover only
testimony regarding continuous care.” (App. at 4611.) The
jury requested the same for Ganetsky’s testimony and a full
transcript for the testimony of Cecilia Wiley, Home Care
Hospice’s office manager. After obtaining the agreement of
counsel, the District Court instructed the jury that it would not
be possible to provide only the portions of the transcript
relating to continuous care. The Court also noted the length
of the full testimony for Pugman and Ganetsky and told the
jury it had two options: it could either rely on its recollection
of the testimony or “request the entire transcript of Ganetsky
and Pugman or either one or both.” (App. at 4622.) The
Court then sent the jury back to decide what it wanted to do.
The record is not entirely clear, but the jury may have sent a
note back requesting the full transcript of Pugman’s and
Wiley’s testimonies, though not Ganetsky’s. (See App. at
17
Because Kolodesh failed to raise a contemporaneous
objection, we review for plain error. United States v.
Salahuddin, 765 F.3d 329, 337 (3d Cir. 2014), petition for
cert. filed, 83 U.S.L.W. 3558 (U.S. Dec. 2, 2014) (No. 14-
654).
23
4623-26 (defense counsel discussing all three witnesses and
indicating that the jury had requested Wiley’s testimony
twice); id. at 4630 (District Court stating when jury returned,
“I have received your request for the transcripts of Alex
Pugman and Cecilia Wiley”).) In any event, after discussing
the matter further with counsel, the District Court instructed
the jury that a transcript of Wiley’s testimony was not
available but that the jury could rely on its recollection or
come back into court and have the audio recording of the
testimony played in its entirety. “As to Alex Pugman’s
transcript,” the Court explained, “that is available and it will
be delivered to you. It may take a little bit of time because it
has to be edited to take the sidebars out of the transcript that
has been developed.” (App. at 4631.) Before sending the
jury back to the jury room, the District Court summarized,
“So if possible, continue your deliberation on these and other
issues as you wish while the Pugman transcript is being
edited, and as far as Wiley is concerned, those are the choices
that you have.” (Id.) Just over two hours later, the jury
returned a verdict.
As the foregoing record indicates, the District Court
did not fail to make the transcript or recordings available to
the jury; it expressly told the jury that it had a choice as to
how to proceed regarding the Wiley testimony, that the
Pugman transcript would be given as soon as it was available,
and that it was free to continue deliberation as it wished.18
18
We reject Kolodesh’s contention that, by failing to
mention Ganetsky’s testimony when the jury returned, the
District Court tacitly rejected the jury’s request for her
testimony. As noted above, the jury appears to have
withdrawn that request. But even if that reading of the record
24
That the jury ultimately chose to rely on its recollection of the
witnesses’ testimonies does not indicate that the Court should
have halted proceedings. The handling of such matters is
within the “broad discretion” of the trial court, United States
v. Bertoli, 40 F.3d 1384, 1400 (3d Cir. 1994) (internal
quotation marks omitted), and how the Court proceeded in
this instance was not in any way an abuse of that discretion,
let alone a problem rising to the level of plain error.
D. Sentencing
Finally, Kolodesh challenges the procedural and
substantive reasonableness of his sentence, including the
District Court’s restitution order.
is inaccurate, we do not believe the jury would have
interpreted the District Court’s comments as a reversal of the
earlier instruction to the jury that it could rely on its own
recollection of Ganetsky’s testimony or request a full
transcript.
25
1. Alleged Procedural Error19
First, Kolodesh argues that the government did not
establish that the health care fraud in this case resulted in a
$16.2 million loss, and, therefore, the twenty-level loss-
enhancement imposed under the U.S. Sentencing Guidelines
was inappropriate. See U.S.S.G. § 2B1.1(b)(1)(K). An agent
who worked on the case testified at sentencing that he
calculated the loss based on Pugman’s and Ganetsky’s
testimony as to the percentage of continuous care claims that
were fraudulent, 90-99.5%, and the percentage of patients
who did not qualify even for non-continuous hospice care,
30-33%. Using the lower estimates, the agent multiplied
those percentages by the respective dollar amounts of claims
submitted between 2003 and 2008, $1.7 million for
19
In United States v. Flores-Mejia, 759 F.3d 253 (3d
Cir. 2014) (en banc), we concluded that a defendant must
object after a sentence is pronounced to preserve a claim
based on “failure to give meaningful consideration” to the
defendant’s objections. Id. at 256. That rule, however, does
not apply to sentences such as Kolodesh’s that were entered
before Flores-Mejia was decided. Id. at 259. Furthermore,
Kolodesh does not challenge the adequacy of the District
Court’s consideration of the objections he raised. He instead
challenges the District Court’s application of the Sentencing
Guidelines, and in particular the Court’s factual findings in
support of the Guidelines calculations it made. Therefore, our
review is for abuse of discretion. United States v. Wise, 515
F.3d 207, 217 (3d Cir. 2008). “[A] district court will be held
to have abused its discretion if its decision was based on a
clearly erroneous factual conclusion or an erroneous legal
conclusion.” Id.
26
continuous care and $48.9 million for non-continuous care,
resulting in a total loss of $16.2 million. Kolodesh argues
that Pugman and Ganetsky were not competent to testify as to
the percentage of fraudulent claims and that the government
provided no foundation for their testimonies. He says that,
based on expert testimony he advanced at the sentencing
hearing, statistical sampling was needed to establish an
accurate estimate of loss in this case.
The District Court did not clearly err in concluding
that the government proved a $16.2 million loss. Pugman and
Ganetsky each testified extensively at trial regarding their
intimate involvement in the management of Home Care
Hospice and, together with Kolodesh, their direction of the
company’s fraudulent activities. It is difficult to imagine who
would have been more competent to testify based on personal
knowledge as to the loss involved in this case. Furthermore,
“[t]here is no rule that a district court must rely upon
statistical analysis in a situation such as this to determine the
amount of loss pursuant to section 2B1.1.” United States v.
Jones, 641 F.3d 706, 712 (6th Cir. 2011) (making that
statement as a general proposition in a health care fraud case,
but reversing because the district court relied solely on a
flawed statistical analysis). And as the application notes to
the Sentencing Guidelines indicate, “[t]he court need only
make a reasonable estimate of the loss.” U.S.S.G. § 2B1.1
app. n.3(C). We find no error in the District Court’s
application of the loss enhancement.
Next, Kolodesh argues that the District Court erred in
applying a four-level enhancement based on his role as an
organizer or leader of the fraudulent activity. See U.S.S.G.
§ 3B1.1(a). He points to evidence adduced at trial indicating
27
that he had no control over the fraud and instead was, at most,
“a passive, silent partner” in Home Care Hospice. (Opening
Br. at 56.) Although he acknowledges the existence of
damning testimony by Pugman and Ganetsky, he argues that
they were “simply not credible.” (Opening Br. at 57.) We
decline Kolodesh’s invitation to reweigh the evidence or
reassess the witnesses’ credibility. Pugman and Ganetsky
repeatedly testified at trial that Kolodesh was intimately
involved in directing the fraudulent scheme. Although the
jury could have chosen to reject Pugman’s and Ganetsky’s
testimony and believe Kolodesh’s version of events, it did
not. The District Court’s finding that Kolodesh was an
organizer or leader of the fraudulent activity is in line with the
jury’s verdict, and Kolodesh has pointed to nothing in the
record that would make the District Court’s finding clearly
erroneous. See United States v. Igbonwa, 120 F.3d 437, 440-
41 (3d Cir. 1997) (stating that under the clearly erroneous
standard, the reviewing court does not “conduct a de novo
review of the evidence” but considers “whether there is
enough evidence in the record to support the factual findings
of the district court,” or, in the context of credibility
determinations, whether “the district court’s decision is based
on testimony that is coherent and plausible, not internally
inconsistent and not contradicted by external evidence”).
Kolodesh’s final procedural challenge relates to the
District Court’s imposition of a two-level sentencing
enhancement for obstruction of justice. See U.S.S.G.
§ 3C1.1. During trial, Alexy Drobot – a witness for the
government who, as noted earlier, had contracted with Home
Care Hospice to service its copy machine – testified that
Kolodesh came to his office shortly before Drobot was
28
scheduled to testify.20 Drobot was not there, but Kolodesh
had Drobot’s secretary call and ask him to meet Kolodesh at
Community Home Health. When Drobot refused, Kolodesh
proposed a meeting at Starbucks. Drobot agreed and they met
over coffee for about fifteen minutes. The only thing they
discussed was Drobot’s upcoming testimony. Kolodesh
mentioned that Drobot would probably get called as a witness
the following week, and Kolodesh said, “don’t bury me.”
(App. at 2977.) Drobot responded that he would not perjure
himself but would “tell the truth and be done with this.”
(App. at 2978.) Drobot acknowledged on cross-examination
that Kolodesh did not threaten him or ask him to lie or to
change his testimony.
Again, Kolodesh is simply rearguing the weight of the
evidence, without pointing to anything that shows the District
Court clearly erred in finding that he willfully attempted to
obstruct or impede the administration of justice. We
conclude, therefore, that the District Court did not commit
procedural error in applying the challenged enhancements.
20
Drobot testified at trial about the agreement he had
with Kolodesh and Pugman to provide them with fake
invoices in return for a portion of the funds used to pay those
invoices.
29
2. Substantive Reasonableness21
Kolodesh challenges the substantive reasonableness of
his sentence by arguing that he “did not orchestrate the fraud
committed by [Home Care Hospice]” and that he “suffers
from several physical and emotional conditions” that will
prevent him from committing further crimes and make him an
inappropriate candidate for a long term of incarceration.
(Opening Br. at 62, 63.) He also says that the imposition of a
large sentence and large restitution amount renders the
sentence doubly harsh. We have already disposed of
Kolodesh’s challenge to his role in the fraudulent scheme.
See supra p. 24. As to Kolodesh’s physical condition, the
District Court concluded that the Bureau of Prisons was “fully
equipped and … well positioned to provide appropriate
medical attention to Mr. Kolodesh’s ailments.” (Supp. App.
at 12.) Kolodesh recites his ailments but does nothing to
challenge the Court’s conclusion or to show why his ailments
are so incapacitating that he could not commit any further
offenses. Finally, the combination of a lengthy imprisonment
term with a large restitution order does not render a sentence
unreasonable. Cf., e.g., United States v. Lewis, 557 F.3d 601,
613-15 (8th Cir. 2009) (upholding the substantive
reasonableness of a sentence of 204 months’ imprisonment in
a case involving a restitution order of $39 million, although
21
We review the substantive reasonableness of a
sentence for abuse of discretion. Wise, 515 F.3d at 218. “[I]f
the district court’s sentence is procedurally sound, we will
affirm it unless no reasonable sentencing court would have
imposed the same sentence on that particular defendant for
the reasons the district court provided.” United States v.
Tomko, 562 F.3d 558, 568 (3d Cir. 2009) (en banc).
30
the defendant there did not argue that the length of
imprisonment and size of restitution combined to render the
sentence unreasonable). Rather, we must “take into account
the totality of the circumstances” as we consider the
reasonableness of the sentence under the facts of each case.
Gall v. United States, 552 U.S. 38, 51 (2007).
Under a common understanding of the term, restitution
is just what its name denotes: a restoring of victims to their
state before the crime, as nearly as possible.22 Viewed that
way, it is akin to compensatory damages in a civil suit rather
than punitive damages. The Supreme Court, however, has
stated that there is a punitive aspect to restitution orders in a
criminal case, see Paroline v. United States, 134 S. Ct. 1710,
1726 (2014) (“The primary goal of restitution is remedial or
compensatory, but it also serves punitive purposes.” (citation
omitted)), and we are bound to follow that. Yet even though
restitution has been deemed to serve “punitive purposes,” its
“primary goal” is still “remedial or compensatory,” id., and
we see no reason why imposing restitution in an amount
22
See Merriam-Webster’s Collegiate Dictionary 996
(10th ed. 2002) (defining “restitution” as “1: an act of
restoring or a condition of being restored: as a: a restoration
of something to its rightful owner b: a making good of or
giving an equivalent for some injury 2: a legal action serving
to cause restoration of a previous state,” defining “restitute”
as “1: to restore to a former state or position 2: GIVE BACK;
esp: REFUND,” and defining “restore” as “1: GIVE BACK,
RETURN 2: to put or bring back into existence or use 3: to
bring back to or put back into a former or original state:
RENEW 4: to put again in possession of something”
(emphases omitted)).
31
equal to the loss actually caused by Kolodesh and his co-
conspirators would, when coupled with a lengthy term of
imprisonment that is otherwise reasonable, render the
sentence substantively unreasonable. Moreover, the District
Court here granted a downward departure,23 imposing a
sentence of 176 months’ imprisonment in the face of a
guidelines range of 188 to 235 months. The justifications
given for the sentence are reasonable.
3. Restitution24
Kolodesh argues that the government did not
adequately prove the amount of loss and that, in any event,
the District Court erred by holding him jointly and severally
liable for the full amount of loss rather than for the portion he
caused. Kolodesh’s first argument is answered by our
already-stated conclusion regarding the District Court’s
factual findings on the loss amount. See supra pp. 22-23. His
second argument is foreclosed by the very language of the
statute authorizing restitution, which explicitly provides for
joint and several liability in the full amount:
If the court finds that more than 1 defendant has
contributed to the loss of a victim, the court
may make each defendant liable for payment of
23
The Court granted the downward departure based on
its conclusion that the lower sentence “will satisfy the factors
under 3553.” (Supp. App. at 12.)
24
“We review the legality of a restitution order de
novo and review specific awards for abuse of discretion.”
United States v. Turner, 718 F.3d 226, 235 (3d Cir. 2013).
32
the full amount of restitution or may apportion
liability among the defendants to reflect the
level of contribution to the victim’s loss and
economic circumstances of each defendant.
18 U.S.C. § 3664(h).
Kolodesh relies on the Supreme Court’s recent
decision in Paroline, but that case cannot serve him in these
circumstances. Paroline interpreted 18 U.S.C. § 2259, a
mandatory restitution statute specific to Chapter 110 of the
United States criminal code, which covers sexual exploitation
and other abuse of children. 134 S. Ct. at 1716. The opinion
was specifically concerned with the application of § 2259 to
the crime of possessing child pornography. Id. The Supreme
Court vacated an en banc decision of the United States Court
of Appeals for the Fifth Circuit that had “held that § 2259 did
not limit restitution to losses proximately caused by the
defendant, and each defendant who possessed the victim’s
images should be made liable for the victim’s entire losses
from the trade in her images, even though other offenders
played a role in causing those losses.” Id. at 1718. While the
Supreme Court held that “a court applying § 2259 should
order restitution in an amount that comports with the
defendant’s relative role in the causal process that underlies
the victim’s general losses,” it explicitly limited that holding
to the “special context” at issue in the case. Id. at 1727.
Regardless of whether the words “special context” refer only
to possession-of-child-pornography offenses or, more
broadly, to any offense which might involve an “atypical
causal process” underlying the victim’s losses, id. at 1722, no
such special context exists here. This case involves
straightforward consideration of moneys obtained by fraud.
33
Paroline does not alter the long-standing availability of joint-
and-several liability in circumstances such as this.25 The
District Court’s restitution order is thoroughly sound.
III. Conclusion
For the foregoing reasons, we will affirm Kolodesh’s
conviction and sentence.
25
Section 2259, the statute at issue in Paroline,
incorporates the enforcement procedures of § 3664. See 18
U.S.C. § 2259(b)(2) (“An order of restitution under this
section shall be issued and enforced in accordance with
section 3664 in the same manner as an order under section
3663A[, which governs mandatory restitution to victims of
certain crimes].”). As noted above, § 3664 grants the district
court discretion to impose joint and several liability or to
apportion liability. Id. § 3664(h). Again, nothing in Paroline
suggests that the Court was foreclosing the statutorily
authorized imposition of joint and several liability in the
typical case.
34