United States v. Benjamin Martinez , 921 F.3d 452 ( 2019 )

Case: 17-20063 Document: 00514917762 Page: 1 Date Filed: 04/16/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 17-20063
FILED
April 16, 2019
Lyle W. Cayce
UNITED STATES OF AMERICA, Clerk
Plaintiff - Appellee
v.
BENJAMIN MARTINEZ; GIAM NGUYEN; ANNA BAGOUMIAN;
DONOVAN SIMMONS,
Defendants - Appellants
Appeals from the United States District Court
for the Southern District of Texas
Before DENNIS, OWEN, and SOUTHWICK, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
All the defendants were convicted of conspiracy to commit health care
fraud and several substantive counts of health care fraud. Individual
defendants were convicted of different additional offenses. Defendants appeal,
challenging the sufficiency of the evidence, the jury instructions, the exclusion
of certain evidence, and one of the sentences. We AFFIRM.
FACTUAL AND PROCEDURAL BACKGROUND
This case involves a scheme to defraud Medicare orchestrated by two
men: Zaven “Mike” Pogosyan and Edvard Shakhbazyan. From 2008 to 2010,
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Pogosyan opened three purported medical clinics in the Houston, Texas area:
the Jefferson Clinic, the Pease Clinic, and the Silver Star Clinic. 1 Pogosyan
hired defendants Dr. Nguyen, Dr. Martinez, and Dr. Simmons to serve as
“Medical Directors” for these clinics. The hiring of a physician for each clinic
was essential to the scheme because a clinic cannot become a Medicare
provider without an application submitted by a physician or a non-physician
practitioner. See 42 C.F.R. § 424.510. Medicare will only issue the requisite
provider number and remit funds to a bank account in the same name as that
physician. Id.The Jefferson clinic opened first. In September 2008, Pogosyan placed
an advertisement on Craigslist for a Medical Director position. Dr. Nguyen
answered the listing and was hired at a salary of $10,000 per month. At the
direction of Pogosyan, Dr. Nguyen signed a Medicare enrollment application
and opened a checking account in his own name for the receipt of Medicare
payments. Dr. Nguyen then provided Pogosyan with signed blank checks,
functionally giving Pogosyan control over the account.
Shakhbazyan and Pogosyan hired and trained Seryan Mirzakhanyan to
administer diagnostic tests. 2 Defendant Anna Bagoumian was hired in April
2009 to work as a receptionist and to perform these same tests. None of these
people were licensed medical professionals or had any medical training. After
Bagoumian was hired, Mirzakhanyan became responsible for billing Medicare,
a task that was previously handled by Pogosyan.
Shakhbazyan and Pogosyan used marketers to locate and recruit
“patients” with the promise of cash payments. One of these marketers was
1 This clinic was also sometimes referred to as the Southwest clinic due to its location
on Houston’s Southwest Freeway.
2 Mirzakhanyan was also charged in the indictment, pled guilty, and testified at trial
for the government. He testified that his training for a wide array of medical procedures took
only a “couple of days.”
2
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Frank “Bones” Montgomery. 3 Montgomery coached patients on what
symptoms to describe to the doctor. Montgomery was paid $150 in cash by
Pogosyan, Mirzakhanyan, or Bagoumian for each patient he delivered to the
clinic. The marketers would generally keep $50 and give $100 to the patient.
These kickback exchanges were often concealed. Montgomery, for
example, would typically retrieve an envelope with the cash from behind the
medicine cabinet in a bathroom next to Dr. Nguyen’s office. On occasion,
Pogosyan or Bagoumian handed him the envelope directly. Patients were
instructed to not mention the payments to the doctor, and Montgomery always
drove to a secondary location before paying them.
At the Jefferson clinic, Dr. Nguyen saw patients — most of whom had
been brought to the clinic by marketers — and typically ordered an extensive
battery of diagnostic tests. For a significant number of patients, the clinic
submitted claims to Medicare for one or more of the following procedures:
anorectal manometry, anal electromyography (“anal EMG”), and rectal
sensation tests (collectively, “rectal tests”). 4
These three procedures are highly specialized and in most clinics are
rarely performed. 5 All three tests are used for assessing a patient that is
suffering from either incontinence or constipation. For obvious reasons, these
tests tend to be both uncomfortable and presumably memorable for the patient.
3 Montgomery was charged in the indictment, pled guilty, and also testified at trial.
4 Based on the evidence admitted at trial, the Jefferson clinic submitted $2,650,260 in
claims, for which these three procedures account for $994,346 (38%) of the total.
5 These correspond to procedure (billing) codes 91122, 51784, and 91120. Anal EMGs
involve the insertion of a plug or probe to measure the electrical conductivity of the nerves
and muscles in the anus. Anorectal manometry is a measurement of the pressure inside the
anus or lower rectum that is generally taken by inserting a probe approximately six inches
and inflating a balloon on the end of it. The rectal sensation test is typically performed in
conjunction with the anal manometry test and involves the inflation of the balloon to gauge
sensation, though it can also be accomplished by inserting needles around the anus.
3
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Despite the frequency of the billing to Medicare, no rectal tests were ever
performed on a patient. The Jefferson clinic possessed medical equipment
associated with these tests, but it was seemingly only used by Pogosyan or
Bagoumian to fabricate test results that were placed in patient files.
After the clinic submitted claims to Medicare, payment would be
remitted to the account opened by Dr. Nguyen. Pogosyan created a
“management company” called Uni Office Manage, Incorporated, and
instructed Mirzakhanyan to open bank accounts in its name. After Medicare
paid claims, Pogosyan used the blank checks provided by Dr. Nguyen to
transfer most of the money into the Uni Office accounts. 6
Pogosyan and Shakhbazyan also instructed Mirzakhanyan to withdraw
cash from the Uni Office account twice per week in amounts between $5,000-
$9,000. 7 Bagoumian would also occasionally cash checks and return the money
to Pogosyan and Shakhbazyan. The cash was used for the kickback scheme
and for Shakhbazyan and Pogosyan’s regular trips to Las Vegas.
The Jefferson clinic abruptly closed in June 2009. Pogosyan,
Shakhbazyan, Mirzakhanyan, and Bagoumian shredded the entirety of the
Jefferson clinic’s records in a single afternoon. Pogosyan then immediately
opened a new clinic on Pease Street in Houston. Dr. Nguyen and Bagoumian
moved to this new clinic, but Mirzakhanyan did not.
Dr. Nguyen continued to see patients at the Pease clinic, but did not
enroll with Medicare as the provider. Instead, Pogosyan placed another
advertisement on Craigslist, which led to the hiring of Dr. Martinez in July
2009. At the time, Dr. Martinez lived in Dallas and was finishing the second
6 From here, the money would generally be withdrawn as cash or transferred to the
accounts of different companies owned by the wives of Pogosyan and Shakhbazyan.
7 Mirzakhanyan was told to ensure all cash withdrawals were always less than
$10,000, presumably to structure the transactions to avoid the filing of a Currency
Transaction report. See 31 C.F.R. § 1010.311; 31 U.S.C. § 5324.
4
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year of his residency. After interviewing, he agreed to travel to Houston once
per month to review patient files in exchange for a monthly salary of $7,000.
Like Dr. Nguyen, Dr. Martinez signed a Medicare enrollment form, opened a
bank account, and turned over the checkbook to Pogosyan.
In November 2009, Pogosyan posted a second job listing for a “Medical
Director” to review patient files once a month. This time Dr. Simmons
responded to the posting on Craigslist. For a salary of $8,000 per month, he
performed the same role as Martinez, periodically reviewing patient files from
the Pease clinic. Like Dr. Nguyen and Dr. Martinez, he signed a Medicare
enrollment form, opened a bank account, and signed blank checks for
Pogosyan’s use.
Other than the addition of Dr. Martinez and Dr. Simmons as “reviewing”
doctors, the Pease clinic largely operated in the same manner as the Jefferson
clinic. Bagoumian and Pogosyan employed marketers to pay patients to visit
the clinic. Dr. Nguyen saw patients and claims were submitted for, among
other things, rectal tests that were not actually performed. 8 Checks were
written from Dr. Martinez’s and Dr. Simmons’ accounts to transfer most of the
Medicare payments to the accounts of supposed “management companies”
controlled by Pogosyan. 9
The Pease clinic closed in March 2010, but Pogosyan had already opened
a third clinic with Dr. Nguyen in January 2010. This time, Dr. Nguyen and
Pogosyan applied for a provider number in the name of Silver Star Medical
8 Of the $1,892,283 in claims the Pease clinic submitted under Dr. Martinez’s provider
number, $489,183 (26%) were for rectal test claims. Of the $304,272 in claims submitted
under Dr. Simmons’ provider number, however, only $1,281 (0.4%) were for rectal tests.
9 The “management company” for Dr. Martinez was called Gold Star Office Manage,
Inc. Gold Star was owned by Mirzakhanyan’s father, but Pogosyan had apparently opened
an account for it by forging his signature. The payments to Dr. Simmons were transferred
to Southwest Administrative Services, Inc. From these accounts, money would again be sent
to companies owned by Shakhbazyan’s and Pogosyan’s wives or withdrawn as cash.
5
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Group, a professional association they had created. For the second time, Dr.
Nguyen signed a Medicare enrollment application, opened a bank account, and
provided the checkbook to Pogosyan.
At Silver Star, Dr. Nguyen saw patients, including some patients he had
previously seen at Pease. As before, patients were paid and claims were
submitted to Medicare that included rectal tests that were never performed. 10
The scheme ended in April 2010 after the FBI executed search warrants
on the Pease and Silver Star clinics. Overall, the evidence at trial showed that
39,608 claims totaling $7,638,245 had been submitted to Medicare for services
from Dr. Nguyen, Dr. Martinez, and Dr. Simmons, for which it paid
$3,349,851. 11
A grand jury returned a 52-count indictment against the defendants. All
four defendants were charged with conspiracy to commit health care fraud in
violation of 18 U.S.C. § 1349. Bagoumian was also charged with conspiracy to
pay kickbacks in violation of 18 U.S.C. § 371.
The indictment also charged 42 substantive counts of health care fraud.
On each substantive count, the defendants were charged and convicted under
both 18 U.S.C. Section 1347 and 18 U.S.C. Section 2, as principals and as
aiders and abettors. 12 However, not every count applied to every defendant.
Dr. Nguyen and Bagoumian were both initially charged with all 42 counts, but
the government ultimately dismissed nine counts with respect to Bagoumian. 13
Dr. Martinez and Dr. Simmons were only charged with those substantive
10 Of the $2,791,430 in claims submitted under the Silver Star provider number,
$275,670 (10%) were for rectal tests.
11 Rectal tests account for approximately one fourth of these amounts.
12 “Aiding and abetting is not a separate offense, but it is an alternative charge in
every indictment, whether explicit or implicit.” United States v. Neal, 951 F.2d 630, 633 (5th
Cir. 1992).
13 The government dismissed Counts 2-6, 9-11, and 15 for Bagoumian.
6
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counts for claims submitted under their respective provider numbers. 14
Finally, the doctors were each charged with multiple counts of engaging in
monetary transactions of property derived from specified unlawful activity, in
violation of 18 U.S.C. § 1957. 15
The defendants were convicted as charged following a nine-day jury trial.
The district court sentenced them as follows:
• Bagoumian — 51 months imprisonment, 3 years of supervised
release, $2,675,628.06 in restitution, $3,500.00 in special
assessments;
• Dr. Nguyen — 87 months imprisonment, 3 years of supervised
release, $3,357,752.62 in restitution, $4,700.00 in special
assessments;
• Dr. Martinez — 28 months imprisonment, 3 years of supervised
release, $1,109,203.31 in restitution, $1,600.00 in special
assessments;
• Dr. Simmons — 15 months imprisonment, 3 years of supervised
release, $171,833.82 in restitution, $1,200.00 in special
assessments.
The defendants timely appealed.
DISCUSSION
The defendants challenge the sufficiency of the evidence for their
convictions, the jury instructions, and the exclusion of certain “reverse 404(b)”
evidence. Bagoumian raises additional challenges to her sentence. We discuss
the challenges in that order.
14 Dr. Martinez was charged with Counts 16-28. Dr. Simmons was charged with
Counts 29-37.
15 Dr. Nguyen was charged with Counts 45-48, Dr. Martinez with Counts 49-50, and
Dr. Simmons with Counts 51-52.
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I. Sufficiency of the Evidence
We review the denial of a motion for judgment as a matter of law de novo.
United States v. Ganji, 880 F.3d 760, 767 (5th Cir. 2018). To evaluate whether
the evidence is sufficient to support a jury conviction, we “examine[] whether
a rational jury, viewing the evidence in the light most favorable to the
prosecution, could have found the essential elements of the offense to be
satisfied beyond a reasonable doubt.” Armstrong, 550 F.3d at 388. “We do not
evaluate whether the jury’s verdict was correct, but rather, whether the jury’s
decision was rational.” United States v. Miles, 360 F.3d 472, 477 (5th Cir.
2004). The “verdict may not rest on mere suspicion, speculation, or conjecture,
or on an overly attenuated piling of inference on inference.” United States v.
Pettigrew, 77 F.3d 1500, 1521 (5th Cir. 1996).
Though the government cannot obtain a conviction by piling “inference
upon inference,” the defendants cannot obtain an acquittal simply by ignoring
inferences that can logically be drawn from the totality of the evidence. Id. at
1521, 1519. When evaluating the sufficiency of the evidence “[n]either the jury
nor this [c]ourt is obligated to examine each circumstance in isolation.” United
States v. Duncan, 919 F.2d 981, 990 (5th Cir. 1990).
Below, we discuss each count as relevant to each defendant and review
the evidence. We begin with the count for conspiracy to violate the Anti-
Kickback statute, which is unique to Bagoumian. We then proceed to the
counts for conspiracy to commit health care fraud and health care fraud, which
apply to all the defendants. Finally, we address the counts against the doctors
for engaging in monetary transactions of property derived from specified
unlawful activity.
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18 U.S.C. § 371 — Anti-Kickback Conspiracy
Bagoumian was convicted of conspiracy to violate the Anti-Kickback
Statute, 42 U.S.C. § 1320a-7b(b). That Act “criminalizes the payment of any
funds or benefits designed to encourage an individual to refer another party to
a Medicare provider for services to be paid for by the Medicare program.”
Miles, 360 F.3d at 479. A conspiracy requires “(1) an agreement between two
or more persons to pursue an unlawful objective; (2) the defendant’s knowledge
of the unlawful objective and voluntary agreement to join the conspiracy; and
(3) an overt act by one or more of the members of the conspiracy in furtherance
of the objective of the conspiracy.” United States v. Njoku, 737 F.3d 55, 64 (5th
Cir. 2013) (quoting United States v. Mauskar, 557 F.3d 219, 229 (5th Cir.
2009)). As to mens rea, a defendant must have had the “specific intent to do
something the law forbids.” Id. (citation omitted).
Bagoumian alleges the evidence does not support that she had the
specific intent to do anything unlawful. The evidence from which jurors could
make findings includes that 15 of the 19 patients who testified stated they were
paid to visit the clinics, and 12 of them testified the only reason they visited
the clinics was to get paid. Bagoumian lived with three of the co-conspirators
who pled guilty: Mirzakhanyan, Shakhbazyan and Pogosyan. Frank “Bones”
Montgomery, the marketer recruiting “patients,” testified that Bagoumian
paid him cash for patients directly, indirectly by placing cash behind the
bathroom cabinet, and she was often present when Montgomery was paid by
Pogosyan.
Bagoumian contends there was no evidence that she knew the payments
were illegal or that Montgomery used the money to pay patients. To the
contrary, the testimony about her use of the bathroom cabinet to place cash
payments was relevant evidence Bagoumian knew of their illegality because
the “unusualness of this transaction supports a reasonable inference of a
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design to conceal.” United States v. Willey, 57 F.3d 1374, 1387 (5th Cir. 1995).
The jury could have easily credited Montgomery’s testimony that, on at least
one occasion, Bagoumian directed him to recruit additional patients because
she was “running short.”
Weighing the circumstantial evidence that she lived with the organizers
of the conspiracy, that she placed cash in a bathroom to pay recruiters, and
that the recruiter Montgomery admitted to being paid for each patient he
procured through Bagoumian’s secreted envelopes of cash, and that witnesses
who had been the ostensible patients testified they were paid to go to the
clinics, jurors could properly find that Bagoumian knowingly participated in
the kickback conspiracy. See Gibson, 875 F.3d at 188-89.
18 U.S.C. § 1349 — Conspiracy to Commit Health Care Fraud
All four defendants were convicted of conspiracy to commit health care
fraud. Proof of such a conspiracy requires evidence “that (1) two or more
persons made an agreement to commit health care fraud; (2) that the
defendant knew the unlawful purpose of the agreement; and (3) that the
defendant joined in the agreement willfully, that is, with the intent to further
the unlawful purpose.” United States v. Grant, 683 F.3d 639, 643 (5th Cir.
2012). No formality to the agreement needs to exist, and it can even be
unspoken. Id. On the other hand, any “‘similarity of conduct among various
persons and the fact that they have associated with or are related to each other’
is insufficient to prove an agreement.” Ganji, 880 F.3d at 767-68 (quoting
United States v. White, 569 F.2d 263, 268 (5th Cir. 1978)). Nonetheless, an
“agreement may be inferred from concert of action, voluntary participation
may be inferred from a collection of circumstances, and knowledge may be
inferred from surrounding circumstances.” Grant, 683 F.3d at 643 (quoting
United States v. Stephens, 571 F.3d 401, 404 (5th Cir. 2009)).
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The evidence in this case bears a striking resemblance to the evidence
we considered in a 2016 decision in which we affirmed convictions for health
fraud committed by a doctor and others in Houston. See United States v.
Barson, 845 F.3d 159 (5th Cir. 2016). While sufficiency challenges are
inherently case-specific, Barson nonetheless provides a useful benchmark for
our analysis. For that reason, we first review our reasoning in that case. We
held there was “ample circumstantial evidence to establish . . . knowledge of
the ongoing health care fraud” because it showed that Doctor Barson
signed documents in blank allowing the clinic to bill under his
Medicare identification number and opened a bank account in his
name to receive Medicare reimbursements[,] . . . signed a number
of blank checks to permit [Edgar] Shakbazyan to draw on the
account[,] . . . allowed the bank statements to be sent to the clinic
and never reviewed them[,] . . . received a significant sum, $7,000
per month, for reviewing patients’ charts every other
Saturday[,] . . . [and] admitted to an FBI investigator that despite
his suspicions and bad feelings about the clinic, he reported his
suspicions to no one.
Id. at 164.
There also was sufficient evidence to convict the co-defendant, who
held himself out as a “doctor” at the clinic and falsely claimed . . .
that he was a physician’s assistant, the clinic’s on-site medical staff
member[,] . . . saw almost all of the patients and turned a blind eye
to the fact that most of the so-called patients had no need for
medical care and that many received no medical care[,] . . . saw
large numbers of patients lining up outside the clinic daily after
being delivered to the clinic by the same white van[,] . . . had access
to the clinic’s mail including the bank statements and Medicare
remittances[,] . . . was paid $20,000 for his work, a large sum for
an unlicensed individual to pose as a physician’s assistant[,] . . .
[and] lied to investigators about the payments he received.
Id. at 164-65.
This present appeal, though, does present some issues absent from
Barson that we will discuss where needed. We now review the evidence.
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1. Evidence as to Dr. Nguyen
Since Dr. Nguyen does not dispute that many of the claims submitted to
Medicare were fraudulent, he challenges only the knowledge element of his
conspiracy conviction. Like the doctor-defendant in Barson, Dr. Nguyen
“signed documents in blank allowing the clinic to bill under his Medicare
identification number[,] . . . opened a bank account in his name to receive
Medicare reimbursements[,] . . . [and] signed a number of blank checks to
permit” Pogosyan “to draw on the account.” Id. at 164.
An expert, Dr. Michael Snyder, testified about the three rectal test
procedures: anorectal manometry, anal electromyography, and rectal
sensation tests. Dr. Snyder indicated that these tests are relatively
uncommon, and that it would be “somewhat inappropriate” for a family
practice clinic to perform the tests rather than a specialist. Dr. Snyder
reviewed 277 patient files containing rectal test orders, most of which were
signed by Dr. Nguyen, and testified that he concluded none were actually
performed. Hundreds of actual patient files with rectal test orders signed by
Dr. Nguyen were introduced into evidence.
Like the physician-assistant defendant in Barson, Dr. Nguyen worked
on a daily basis at the clinic, where he “saw almost all of the patients and
turned a blind eye to the fact that most of the so-called patients had no need
for medical care and that many received no medical care.” Id. Many patients
Dr. Nguyen ostensibly evaluated testified at trial that they never saw a doctor.
Mirzakhanyan testified that Dr. Nguyen was only at the Jefferson clinic for
approximately three hours each day, yet Dr. Nguyen supposedly “treated” up
to 10-15 patients daily, and the Jefferson clinic submitted 11,276 claims to
Medicare for 683 beneficiaries in just seven months, an average of 16.5 claims
per patient.
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When Dr. Nguyen actually saw patients, there was video evidence that
he spent just a few minutes with them before billing Medicare for 45-minute
examinations and dozens of “tests” that he had ordered. This was undisputed
by Dr. Nguyen’s own testimony. Some patients were treated by Dr. Nguyen at
multiple clinics in a short period of time and Medicare was billed for identical
procedures.
Finally, an inference of knowledge was supported by Dr. Nguyen’s
“proximity to the fraudulent activities” at all three clinics, which gave him a
unique vantage point for observing the suspicious nature of the operation.
United States v. Willett, 751 F.3d 335, 340 (5th Cir. 2014).
There was ample circumstantial evidence of Dr. Nguyen’s knowing
participation in the conspiracy.
2. Evidence as to Dr. Martinez
Dr. Martinez also challenges the sufficiency of the government’s evidence
for the knowledge element of his conspiracy conviction. Like Dr. Nguyen, Dr.
Martinez signed Medicare enrollment forms, opened a bank account, and
turned over control to Pogosyan. 16 He agreed to travel to Houston once per
month to review patient files for a payment of $7,000 monthly. For the first
three months that Dr. Martinez drew a salary, the Pease clinic did not see any
patients and there were no patient files for him to review. An FBI agent
testified that Dr. Martinez travelled to Houston only seven times and spent at
most 20 total hours reviewing files, for which he was paid $64,575. As with
Dr. Nguyen, the government introduced expert testimony and patient files that
implicated Dr. Martinez in the rectal test orders.
16Dr. Martinez argues there was no evidence he signed blank checks or even opened
the account. There is no dispute, though, that Dr. Martinez was paid out of the account, with
checks that bore his name and ostensible signature. The jury was free to draw its own
conclusions.
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Also relevant to Dr. Martinez is that he closed his “practice” shortly after
Medicare sent a letter to the Pease clinic notifying him that all claims
submitted under his provider number would be subject to “prepayment review”
and require documentation before payment would be remitted. In Barson, we
found it to be relevant evidence that the doctor-defendant closed the bank
account one week after a Medicare investigator tried unsuccessfully to contact
him by phone. Barson, 845 F.3d at 163. The Medicare prepayment letter here
was dated March 2, 2010. The search of the Pease clinic recovered a letter on
Dr. Martinez’s letterhead notifying patients that he was closing his practice,
effective March 31, 2010.
The jury could have determined that Dr. Martinez closed the clinic in
response to the prepayment letter out of concern that the additional scrutiny
would lead to the discovery of the conspiracy. Such “efforts to assist in the
concealment of a conspiracy may help support an inference that an alleged
conspirator had joined the conspiracy while it was still in operation.” United
States v. Robertson, 659 F.2d 652, 657 (5th Cir. Unit A 1981).
Dr. Martinez insists there is no evidence he received the prepayment
letter, and that his wife’s testimony showed he closed the clinic because she
had returned to work. The jury, though, was free to disbelieve his wife’s
testimony, particularly since Martinez had the opportunity to see the
prepayment letter when he traveled to Houston on March 29.
Dr. Martinez also emphasizes there was no evidence he reviewed any of
the rectal test orders related to the false claims charged in the substantive
counts. This takes too narrow a view of the evidence because “where a
conspiracy is charged, acts that are not alleged in the indictment may be
admissible as part of the Government’s proof.” United States v. Powers, 168
F.3d 741, 749 (5th Cir. 1999). In addition to the patient files for the substantive
counts, the government introduced dozens of additional patient files containing
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orders and results for rectal tests initialed by Dr. Martinez. For example, one
file contained orders signed by Dr. Martinez for an anal EMG and an anorectal
manometry on six dates from January 13 to 30 of 2010. The earliest date Dr.
Martinez could have seen this file was January 26, when there had already
been ten rectal tests “ordered” for the same patient in just two weeks.
We conclude that here too, there was sufficient circumstantial evidence
of Dr. Martinez’s knowledge of the conspiracy.
3. Evidence as to Dr. Simmons
The evidence supporting Dr. Simmons’ conspiracy conviction follows
along the same lines. Dr. Simmons signed Medicare enrollment forms, opened
a bank account, and turned over blank checks to Pogosyan. Dr. Simmons was
paid a salary of $8,000 per month for a total of $40,000, but he told the FBI
that he only went to Houston twice and spent at most two hours reviewing files
each time.
Dr. Simmons also closed the bank account he had opened two days after
a search warrant was executed on the Pease clinic. As with Dr. Martinez’s
actions shortly after the prepayment letter, the jury could have viewed this as
evidence of knowledge. A possible distinction between Dr. Simmons’ conduct
and that of Dr. Martinez is the absence of evidence that Dr. Simmons was
aware of the search warrant, and that even if he were, there is nothing
inherently suspicious about closing the account in response. An FBI agent who
testified for the government at trial seemingly supported that closing this
account would not be an effective means of concealing illegal activity.
Even if closing the account was the “smart thing” for an innocent person
who was “unwitting[ly] . . . working in a ‘climate of activity that reeks of
something foul,’ as he purports to have been, he presumably would have no
reason to lie” to the FBI about it. United States v. Fuchs, 467 F.3d 889, 909
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(5th Cir. 2006). Dr. Simmons told the FBI he closed the account because he
was told the clinic “no longer had a physician there.” He also told the FBI in
his initial interview that he traveled to Houston to review files on three
occasions, only later to admit he only went twice. The jury was entitled to
consider not only the account closure itself, but also Dr. Simmons’ statements
surrounding the account closure. “Both inconsistent statements and
implausible explanations have been recognized as evidence of guilty
knowledge.” United States v. Villarreal, 324 F.3d 319, 325 (5th Cir. 2003).
It is true that Dr. Simmons’ provider number was only used to submit
claims for a handful of rectal tests, 17 and the order forms for those tests do not
contain his signature. Nonetheless, his signature does appear on at least five
orders for rectal tests that were not submitted to Medicare.
Whether a claim was actually submitted to Medicare for these tests is
irrelevant, as it is “settled law that conspiring to commit a crime is an offense
wholly separate from the crime which is the object of the conspiracy” and “a
conspiracy charge need not include the elements of the substantive offense the
defendant may have conspired to commit.” United States v. Threadgill, 172
F.3d 357, 367 (5th Cir. 1999).
Dr. Simmons told the FBI that he never saw rectal tests in the files he
reviewed, and that he “never challenged a chart” because he never saw
anything “significantly abnormal.” In his view, once we set the rectal tests
aside, the remaining tests “are not simple, commonly-known procedures . . .
such as taking one’s temperature . . . that a jury could be expected to
understand without explanation.”
17 Of the $304,272 in claims submitted under Dr. Simmons’ provider number, only
$1,281 (0.4%) were for rectal tests.
16
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We look at some of the evidence to see if this argument holds up. The
physical examination approved by Dr. Simmons for patient S.F. reported a
temperature of 94.6 degrees but listed her general condition as “healthy.”
Patient O.O. reported suffering from chills, which makes sense given that his
temperature was similarly recorded as 94.8 degrees in the physical
examination signed by Dr. Simmons. Dr. Simmons also signed off on a chart
that ordered, among other things, an allergy test for a patient that reported a
93.7 degree temperature. In fact, only one of the 21 patient files signed by Dr.
Simmons recorded a temperature above 98 degrees. The jury did not require
any medical training to disagree with Dr. Simmons and find that “significantly
abnormal” temperatures were recorded in the patients’ charts.
There was sufficient circumstantial evidence of Dr. Simmons’ knowledge
that he was participating in a conspiracy to commit health care fraud.
4. Evidence as to Bagoumian
Bagoumian’s conviction on the health care fraud conspiracy does not
inevitably follow from her conviction on the Anti-Kickback Statute conspiracy.
This is because “[i]llegal remuneration does not require fraud or falsity”
whereas “[h]ealth care fraud . . . requires fraud or falsity but does not require
payment in return for a referral.” United States v. Ogba, 526 F.3d 214, 234
(5th Cir. 2008).
Evidence of the kickback scheme is relevant to the conspiracy to commit
health care fraud because paying patients is clearly a possible indicator of
health care fraud. See United States v. Sanjar, 876 F.3d 725, 745-46 (5th Cir.
2017). Here, though, there was also substantial other evidence against
Bagoumian. Like Dr. Nguyen, Bagoumian’s “proximity to the fraudulent
activities” at all three clinics helps support an inference of knowledge. Willett,
751 F.3d at 340.
17
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No. 17-20063
Especially inculpatory of Bagoumian was the video that showed her
acting as an unlicensed medical technician and apparently “performing” a
fraudulent rectal test procedure. The video was surreptitiously recorded by a
patient cooperating with investigators, and it showed Bagoumian placing a
device on a patient’s buttocks without inserting it as required for the use of the
device. The government’s expert was somewhat baffled by the scene depicted
in this video.
Bagoumian’s only response to this video on appeal is that she “was just
a worker . . . who did not make big decisions and did as told.” This assertion
is not even exculpatory. The evidence was sufficient for the jury to conclude
she knowingly entered into a conspiracy to commit health care fraud.
18 U.S.C. § 1347 — Health Care Fraud (Counts 2-43)
“To prove health care fraud in violation of 18 U.S.C. § 1347(a), the
Government was required to show that [the defendants] either (1) knowingly
and willfully executed, or attempted to execute, a scheme or artifice to defraud
a health care benefit program, or (2) knowingly and willfully executed, or
attempted to execute, a scheme or artifice to obtain, by means of false or
fraudulent pretenses, money under the control of a health care benefit
program.” United States v. Mahmood, 820 F.3d 177, 185-86 (5th Cir. 2016).
It is enough for criminal liability if a defendant “associates with the
criminal activity, participates in it, and acts to help it succeed.” United States
v. Delagarza-Villarreal, 141 F.3d 133, 140 (5th Cir.1997) (citation omitted).
Nonetheless, the “Government must first ‘prove that someone committed the
underlying substantive offense.’” United States v. Rufai, 732 F.3d 1175, 1190
(10th Cir. 2013) (quoting United States v. Self, 2 F.3d 1071, 1088-89 (10th Cir.
1993)). Otherwise “there was no crime . . . to have abetted.” Armstrong, 550
F.3d at 394.
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Such proof is also a prerequisite to the application of the principle that
“a defendant can be found liable for the substantive crime of a coconspirator
provided the crime was reasonably foreseeable and committed in furtherance
of the conspiracy.” United States v. Armstrong, 619 F.3d 380, 387 (5th Cir.
2010) (quoting United States v. Gonzalez, 570 F.3d 16, 26 n.8 (1st Cir. 2009)).
In other words, each substantive count requires the government prove
the submission or attempted submission of a separate fraudulent claim, since
“the health care fraud statute, § 1347, punishes executions or attempted
executions of schemes to defraud, and not simply acts in furtherance of the
scheme.” United States v. Hickman, 331 F.3d 439, 446 (5th Cir. 2003). The
proof of actual fraud is as follows.
Each of the 42 substantive counts in the indictment “was based on a
separate request for Medicare reimbursements that . . . were not for medical
services needed or provided.” Barson, 845 F.3d at 165. If there is no dispute
that a co-conspirator “actually submitted or caused to be submitted the
fraudulent claim forms for Medicare reimbursement,” then “the jury was
entitled to convict them on the substantive counts as well.” Id. at 165. Since
we have concluded there was sufficient evidence for the conspiracy convictions,
there was also sufficient evidence of knowledge for the substantive counts. Id.
The defendants, though, also argue that for the substantive counts based
on non-rectal test claims, there was insufficient evidence the services were
either not provided or not medically necessary. That would mean there was no
crime to which liability could attach. The defendants focus on the absence of
patient and expert testimony relevant to some of the specific substantive
counts. For 19 counts, the claims at issue did not include rectal tests, and
therefore no expert testimony was presented about the billed procedures. For
10 of these counts, the evidence included both the patient file and the patient’s
testimony. Four of the counts were supported by patient testimony but not a
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patient file. For the remaining five counts, there was a patient file but no
patient testimony.
The government responds that there was sufficient evidence from which
“the jury could reasonably infer that all the claims were fraudulent.” The
government urges “an inference of fraud across the board” because the claims
were (1) “based on falsified Medicare applications, which failed to disclose who
was really running the clinics” or Dr. Nguyen’s role at the Pease clinic, (2) the
claims were submitted by clinics where recruiters of patients were clearly used,
and (3) the clinics engaged in a pattern of ordering the “same sets of tests
for . . . many patients.” Across-the-board inferences, though, must not
undermine the obligation that we ensure “individual consideration of every
count in an indictment by the jury.” Armstrong, 550 F.3d at 394 (quoting
United States v. Cuong, 18 F.3d 1132, 1142 (4th Cir. 1994)).
In one case, we held that each claim to an insurer represented a separate
“execution” for purposes of Section 1347 because the defendants “submitted
each claim separately” and “each claim was individually considered and
approved” by Medicare and others. Hickman, 331 F.3d at 446-47. Separate
claims constitute separate executions precisely “because they [are]
‘chronologically and substantively independent, none depend[s] on the others
for its existence, and each ha[s] its own functions and purpose.’” United States
v. Longfellow, 43 F.3d 318, 323 (7th Cir. 1994) (brackets omitted) (quoting
United States v. Molinaro, 11 F.3d 853, 860 (9th Cir. 1993)).
This need for individual consideration of substantive counts is especially
the case here, as neither the indictment nor the jury instructions contemplated
a fraud premised on omissions in the enrollment forms. A government witness
also testified that if test results were in a patient file, then a claim for the test
was only fraudulent if it was not medically necessary. “[T]he definition of an
execution is inextricably intertwined with the way the fraudulent scheme is
20
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defined.” Hickman, 331 F.3d at 446. Here, it was defined to be the submission
of claims for services not performed or not medically necessary.
While evidence of a pattern may certainly be relevant, it should not be
mistaken for a rebuttable presumption that each count was fraudulent. The
government argues that it has evidence for each count not based on rectal test
claims: either dispositive patient testimony or a patient file identifying a “chief
complaint[] of orthopedic pain” that did not align with the submitted claims, 18
or both.
The patient files contain some but limited evidence. There is a form for
a physical examination that identified a “chief complaint” that was most often
back pain. The files also included a form for patients to check off their
symptoms and presumably provide a medical basis for testing. 19 The mismatch
between the chief complaints and the treatments allegedly provided are part
of a pattern supporting fraud. The mismatches are insufficient by themselves,
as what a patient identifies as the medical problem might not be what a doctor
later determines to be the causes that need treatment.
To be clear, this circuit has avoided imposing strict evidentiary
requirements for proving health care fraud. It is not necessary to present live-
witness testimony from the patients for whom the fraudulent claims were
submitted. See United States v. Mekjian, 505 F.2d 1320, 1329 (5th Cir. 1975).
18 This reflects a pattern in the patient files identified at trial by Special Agent Caddel,
who testified that “out of the 1229 files [he] reviewed, 730 of the chief complaints were for
back pain.”
19 For example, the file for patient C.G. listed her “chief complaint” as “generalized
pain.” C.G. testified to checking on one of the intake forms symptoms that included: chest
pain, high blood pressure, irregular heartbeat, swelling of ankles, bronchitis, abdominal pain,
urine leakage, arthritis, muscle pain, back pain, numbness, tingling, and muscle weakness.
C.G. even testified to actually suffering from the symptoms. Count 25, the sole count of the
indictment related to C.G., concerned a claim for services related to an abdominal ultrasound,
a urea breath test, echocardiography, duplex scans of the lower extremity arteries and veins,
and “bronchodilation responsiveness.”
21
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No. 17-20063
We have also held there is no “basis for a categorical rule that expert testimony
is required for a jury finding of medical necessity.” Sanjar, 876 F.3d at 745.
There, the supposed medical conditions were “common ailments suffered and
understood by millions” and therefore the “patients’ perceptions of their
conditions, along with the other strong indicia of fraud involving failure to
evaluate patients, paying patients, and falsifying medical charts” supported
the guilty verdict. Id. at 745-46.
We have also affirmed convictions without either type of evidence. Cases
that do not require patient or expert testimony typically involve a close
inference, such as treating “patients on specific dates and at specific times on
which [the doctor] could not possibly have rendered services.” United States v.
Akpan, 407 F.3d 360, 365 (5th Cir. 2005). For example, no expert testimony
was needed in a case in which the defendant was charged with billing for
motorized wheelchairs but instead delivered less expensive motorized scooters.
United States v. Ekanem, 555 F.3d 172, 174-75 (5th Cir. 2009). In that case,
we held that jurors could infer that the defendant did not provide the motorized
wheelchair that was billed from the evidence that a scooter was delivered but
not billed to Medicare. Id.We recently addressed the issue of medical necessity evidence in a
sufficiency challenge to convictions for distributing a controlled substance.
United States v. Evans, 892 F.3d 692, 703 (5th Cir. 2018). Our review of the
“main evidence on the three convictions — the three patient files themselves
— le[d] us to conclude that the jury could rationally find that [the three]
prescriptions were written without a legitimate medical purpose and outside
the usual course of professional practice,” as they all had “the troubling
features [the expert] isolated as symptomatic of illegitimate prescribing
practices.” Id.22
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In Evans, the defendant relied on a Fourth Circuit decision to argue that
the government was required to present either patient or expert testimony
specific to the prescriptions that were the basis for the charges. Id. (citing
Cuong, 18 F.3d at 1132). We explained that, while not endorsing it, we had
interpreted that court’s reasoning “as focusing on the evidence’s connection to
the particular patient, not the precise type of evidence.” Id. at 705. The
government had met even this standard since it had introduced the relevant
files, they were reviewed by the expert, and the expert testified that all the
files he reviewed contained inadequate documentation. Id. at 705.
Our cases leave a simple but significant rule: so long as the jury was not
forced to rely on disconnected generalizations to conclude tests were not
medically necessary, and instead had some evidence to support the impropriety
of each claim, there will be sufficient evidence for the convictions.
Applying these principles to the substantive counts in this indictment,
we start with the 23 counts involving rectal tests. Dr. Nguyen himself
indicated at trial that all the rectal test claims were fraudulent, testifying that
he would never order such tests because there was “no reason to do that,” that
he “didn’t know that [the clinics had] that equipment in the office,” and that
the various tests were “not normally done in the primary care physician office.”
For 17 of these counts, there was also patient testimony that the rectal
tests were never performed. 20 For three of the remaining counts, the relevant
patient file was part of the review by Dr. Snyder, the government’s expert
witness, who testified that the files were “very concerning” due to improper
documentation, inappropriate methodologies, and results that were “not . . .
20 For two of the counts based on claims for the same patient, the testimony was
provided by the patient’s wife, who was herself a patient of the clinic. The fact this testimony
was not from the patient himself did not render it insufficiently particular to support a
conviction. See Akpan, 407 F.3d at 371 (5th Cir. 2005).
23
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physiologically possible,” which led him “to the conclusion that the test wasn’t
ever done.”
Left are three counts based on rectal test claims from Pease and Silver
Star for a single patient and for which there was neither patient testimony nor
were the associated patient files reviewed by Dr. Snyder. This hardly matters,
though, given that (1) these counts were based on claims submitted to
Medicare for rectal tests, and (2) the previously mentioned testimony by Dr.
Nguyen indicating that all the rectal test claims were necessarily fraudulent.
Finally, while Dr. Snyder may not have reviewed the two patient files
associated with these three counts, both files were admitted at trial. Jurors
could have reviewed them and reasonably inferred they each had the
“troubling features [the government’s expert] isolated as symptomatic of
illegitimate” testing. Evans, 892 F.3d at 703. The files showed that over the
span of just three months, the two clinics “ordered” one dozen rectal tests —
six anal EMG and six anorectal manometry procedures — often just days apart
and always with multiple procedures in a single day. The jury could also have
concluded that the results for these tests were physiologically impossible
because the rectal pressures were far below the minimum threshold (20
mmHg) described by Dr. Snyder.
We now summarize the evidence regarding the 19 counts involving
claims for procedures other than rectal exams. The patients for four counts all
testified that they did not see a doctor. The patient for two other counts
testified that she did not see a doctor, and that she had not even been to the
clinics for which the claims were submitted.
Conviction on other counts was supported by such evidence as patients’
testimony that they did not have the symptoms for which tests were conducted,
or that claims seeking payment for lengthy physician examinations were
spurious because the patients testified that a defendant doctor spent a
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No. 17-20063
dramatically shorter time. One patient testified that she did not actually
suffer from any of the symptoms she checked on the intake form, which the
jury could have further relied on to find any services were not medically
necessary.
For those counts growing out of claims submitted from the Jefferson
clinic, there were no patient files because they had been destroyed.
Nonetheless, patients on those counts were among those that testified they had
no medical symptoms or did not see a doctor. Further, the destruction of the
patient files “reflects flight and concealment, both of which are evidence of the
consciousness of guilt and therefore evidence of guilt itself.” United States v.
Sutherland, 463 F.2d 641, 646 (5th Cir. 1972). Even though spoliation “alone
is insufficient to support a guilty verdict, it is relevant and admissible, and the
jury could take into account” the destruction of the files in determining
whether claims for those patients were fraudulent. United States v. Lopez, 979
F.2d 1024, 1030 (5th Cir. 1992).
There were a few counts based on claims for one patient who testified
she actually saw a doctor, that the doctor “asked . . . questions” and
“listened . . . like a normal doctor”; that she took a “breathing test”; and that
“they put some kind of thing . . . rubbed on [her] leg or stuck it on [her] leg.”
Even that patient testified she did not suffer from the symptoms documented
in her file, and that the tests in the claims for that count were never performed.
The jury did not require expert testimony to conclude that claims for a “urea
breath test,” “bronchodilation responsiveness, spirometry,” and “nerve
conduction, amplitude and latency/velocity studies” were not medically
necessary for a patient suffering from muscle pain, a “common ailment[]
suffered and understood by millions.” Sanjar, 876 F.3d at 746.
We now review five remaining counts for which the primary evidence
was the patient file. Those files generally included “test results” for all the
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procedures in the claims. The patients for four of those counts did not testify,
while the fifth did but testified she was not paid kickbacks. That fifth patient
suffered from genuine health problems, and she likely filled out the symptoms
form. She also testified she “saw someone, but [did not] know who he was,”
and that she generally had no memory of the relevant events.
For these counts, then, the government relies primarily on the
disconnect between the services billed to Medicare and the “chief complaint” of
back pain listed in the physical examination form as its evidence that the tests
were not medically necessary. The physical examination forms for all five
patient files identified a chief complaint of back pain, but they also categorized
the patients’ general condition as “healthy.” This is even harder than back
pain to square with the aggressive and exotic “testing” that ensued. On the
dates of service for these claims, the clinic ordered from 9 to 17 different tests
for ostensibly healthy patients reporting a chief complaint of orthopedic pain.
For all the substantive counts, the government provided sufficient
evidence for jurors to conclude that fraud had in fact been committed.
18 U.S.C. § 1957 — Monetary Transactions (Counts 45-52)
For the convictions for engaging in monetary transactions in property
derived from specified unlawful activity, the government must have proven
three elements: “(1) property valued at more than $10,000 that was derived
from a specified unlawful activity, (2) the defendant’s engagement in a
financial transaction with the property, and (3) the defendant’s knowledge that
the property was derived from unlawful activity.” Fuchs, 467 F.3d at 907. The
specified unlawful activity identified in the indictment was health care fraud
in violation of 18 U.S.C. § 1347.
These convictions largely turn on the same considerations as the
convictions for health care fraud. Dr. Simmons and Dr. Nguyen raise no
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No. 17-20063
additional issues with respect to these convictions. Dr. Martinez did brief
additional arguments specific to his convictions on Counts 49 and 50. He first
insists that because there was insufficient evidence to prove the non-rectal
claims were either not provided or not medically necessary, the government
was required to prove that that transactions involved money derived from the
claims for rectal tests, as opposed to non-rectal claims. Dr. Martinez
essentially argues that the insufficiency of the evidence for non-rectal claims
creates a commingling problem that required the government to show that the
withdrawals exceeded the amount of “clean” funds available. See, e.g., Evans,
892 F.3d at 708-09.
This argument fails since we have already held the evidence sufficient
for the jury to find that the non-rectal test claims were also fraudulent. The
“clean-funds-out-first rule” is simply not applicable because the account was
used exclusively for Medicare payments. The jury could conclude there were
no “legitimate” deposits to exclude. Even if it was limited to rectal test claims,
the government was permitted to “show aggregate withdrawals in excess of
$10,000 above the amount of clean funds in the account to validate [the]
money-laundering conviction[s].” Evans, 892 F.3d at 709. The evidence here
established that $287,099.16 was deposited as payment for rectal test claims,
which was fourteen times the amount necessary under the aggregation rule.
Dr. Martinez also argues there was insufficient evidence that it was he,
as opposed to someone else, who moved the money from his Medicare account
to the account controlled by Pogosyan because the signatures on the two checks
identified in the indictment were “so different as to raise a reasonable doubt
as to who participated in these financial transactions by signing those checks.”
A jury, though, is “entitled to draw its own conclusion as to the genuineness of
signatures by making a comparison with an authentic signature.” United
States v. Ismoila, 100 F.3d 380, 388 (5th Cir. 1996). The jury was free to
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No. 17-20063
compare the signatures to the “salary” checks he wrote and deposited for
himself, as well as to the signature on the enrollment form.
The evidence on the counts involving monetary transactions was
sufficient.
II. Jury Instructions
Defendants argue that instructions given on circumstantial evidence and
the refusal to instruct on good faith require reversal. For preserved errors, we
review “jury instructions under an abuse of discretion standard and ask
whether the court’s charge, as a whole, is a correct statement of the law and
whether it clearly instructs jurors as to the principles of the law applicable to
the factual issues confronting them.” United States v. Kay, 513 F.3d 432, 446
(5th Cir. 2007) (internal quotation marks and citation omitted).
Deliberate Ignorance
All the defendants take issue with the district court’s specially-crafted
instruction on deliberate ignorance. At the charging conference, the
government requested this pattern instruction on that subject:
You may find that a defendant had knowledge of a fact if you
find that the defendant deliberately closed his eyes to what would
otherwise have been obvious to him. While knowledge on the part
of the defendant cannot be established merely by demonstrating
that the defendant was negligent, careless, or foolish, knowledge
can be inferred if the defendant deliberately blinded himself to the
existence of a fact.
FIFTH CIRCUIT PATTERN JURY INSTRUCTIONS (CRIMINAL CASES) § 1.37A (2015).
A deliberate ignorance instruction may be given “when a defendant
claims a lack of guilty knowledge and the proof at trial supports an inference
of deliberate indifference.” Barson, 845 F.3d at 166 (quoting United States v.
Vasquez, 677 F.3d 685, 696 (5th Cir. 2012)). The required evidentiary basis for
the instruction is: “(1) the defendant was subjectively aware of a high
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No. 17-20063
probability of the existence of the illegal conduct; and (2) the defendant
purposely contrived to avoid learning of the illegal conduct.” United States v.
Delgado, 668 F.3d 219, 227 (5th Cir. 2012) (quoting United States v. Lara-
Velasquez, 919 F.2d 946, 951 (5th Cir. 1990). Fraud and conspiracy cases are
particularly suitable for the instruction. Gibson, 875 F.3d at 197. Often, as
here, the question is whether defendants “turned a blind eye to the fact that
Medicare was being billed large sums for services not performed.” Barson, 845
F.3d at 165-66.
The district court would not have abused its discretion by giving our
pattern instruction on deliberate ignorance. The district court charted a
different course. Instead of granting the government’s request, the district
court gave this instruction that is written in terms of circumstantial evidence:
The defendants must be found to have acted knowingly and
willfully. “Knowingly” means that an act was done intentionally
and not because of mistake, accident, or another innocent reason.
“Willfully” means an act was done with a conscious purpose to
violate the law.
....
Circumstantial facts tend to be the only kind available for
subjective facts, something about which the jury lacks direct access
to the defendant’s mind. For instance, the jury may infer
knowledge and intent from conduct or context.
Attempts to eliminate or minimize evidence of knowledge
may justify an inference of it. Knowledge does not require
certainty. The law permits inferred, expected judgments to count
as knowledge. These inferences must be beyond a reasonable
doubt.
The doctors treat this as a flawed deliberate ignorance instruction that
allowed the jury to infer knowledge based on a defendant’s negligence.
Bagoumian makes a similar argument and characterizes the instruction as a
legally incorrect statement of the knowledge element that “essentially directed
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No. 17-20063
guilty verdicts” against the defendants or “cause[d] the jury to use a lower
negligence standard.” 21 Bagoumian also argues that if it was a deliberate
ignorance instruction, it was improperly given as to her because there was no
evidence of her “purposeful avoidance.” The defendants preserved their
objections to this instruction. 22
Bagoumian’s assertion that there was no evidence of her purposeful
contrivance is unconvincing. “The sheer intensity and repetition in the pattern
of suspicious activity coupled with the . . . consistent failure to conduct further
inquiry create[d] a reasonable inference of purposeful contrivance.” United
States v. Nguyen, 493 F.3d 613, 622 (5th Cir. 2007). Indeed, a “repeated failure
to inquire is sufficient basis for an inference that they suspected or actually
knew, but avoided further knowledge” of the criminal activity involved. Id.Thus there was evidence as to all four defendants to support the
standard deliberate ignorance instruction. The district court explained well
its reason for deviating. The inspiration was a dissent by Justice Anthony
Kennedy that rejected the application of the willful blindness doctrine in a
patent case. See Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 774
(2011) (Kennedy, J., dissenting). This passage generated the instruction:
Facts that support willful blindness are often probative of
actual knowledge. Circumstantial facts like these tend to be the
only available evidence in any event, for the jury lacks direct access
21 As we stated already, the standard of review for a preserved challenge to a jury
instruction is abuse of discretion. Bagoumian contends that she is entitled to de novo review
because a statutory element of the crime is involved. “Although we typically review jury
instructions for abuse of discretion, when the objection is based on statutory interpretation,
review is de novo.” United States v. Stanford, 823 F.3d 814, 828 (5th Cir. 2016). This
challenge, though, is not to an instruction on the elements of the crime. The thrust of
Bagoumian’s argument is the same as the doctors’ challenge: the instruction lowered the
burden of proof for the knowledge element.
22 The district court ruled at the beginning of trial that an objection by counsel for one
defendant would “apply to all” of them. At the charge conference, Dr. Martinez objected to it
as a deliberate ignorance instruction and Dr. Nguyen objected that it “lessen[ed] the
government’s burden of proof.”
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No. 17-20063
to the defendant’s mind. The jury must often infer knowledge from
conduct, and attempts to eliminate evidence of knowledge may
justify such inference, as where an accused inducer avoids further
confirming what he already believes with good reason to be true.
The majority’s decision to expand the statute’s scope appears to
depend on the unstated premise that knowledge requires
certainty, but the law often permits probabilistic judgments to
count as knowledge.
Id. The word “expected” was substituted in the instruction given at this trial
for Justice Kennedy’s word “probabilistic,” which means “based on
probabilities.” OXFORD ENGLISH DICTIONARY (OED) (3d ed. 2007).
Walking through the instruction, we see that it starts with the
requirement that the defendants have acted knowingly. It then observes that
circumstances generally will be the only evidence of a defendant’s state of
mind. Jurors are allowed to “infer knowledge and intent from conduct or
context,” i.e., jurors can use circumstantial evidence.
The final part of the instruction focuses jurors on the task at hand. A
defendant’s efforts “to eliminate or minimize evidence of knowledge may justify
an inference of it.” Here, as in the earlier use of “infer,” it is the jurors who are
the ones who may be justified in making an inference of knowledge. The next
sentence explains that when jurors are deciding whether to infer that a
defendant knew of the fraud, they are not required to find the person was
certain of the fraud. Reading minds is difficult enough, but jurors did not have
to find that a defendant was without any doubt about the criminal nature of
the enterprise, only that he or she had a level of knowledge that replaced
mistake, accident or other innocent reasons.
The next sentence is the most difficult in the instruction: “The law
permits inferred, expected judgments to count as knowledge.” Justice Kennedy
has used the word “probabilistic,” but the charge conference led to the use of
the word “expected.” One definition of the substituted word is “[a]nticipated,
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regarded as probable or likely; predicted.” OED (3d ed. 2015). We believe the
most natural interpretation of this sentence is that if the circumstances of the
actions of a defendant caused jurors to expect or infer that he or she would
have known of the fraudulent nature of the clinic’s work, that satisfies the
requirement to find that a defendant acted knowingly. The instruction closed
with the provision that such “inferences must be beyond a reasonable doubt.”
We must start with the observation that this is a difficult instruction to
understand. It would have been better left as a conceptual and unsubmitted
disagreement with the pattern deliberate ignorance instruction. The concern
is whether the instruction lowered the standard of proof as to knowledge.
Error will exist if the instruction can reasonably be read to mean that if people
would be expected to infer something, the defendant is guilty even if he or she
negligently failed to make the inference.
We do not see such a reading by jurors as a likely one. We say that
because, in summary, the instruction informed jurors they would be justified
in finding a defendant knew of the fraud if he or she took steps “to eliminate
or minimize evidence of knowledge.” The “knowledge” that needed to exist did
“not require certainty,” which reasonably would mean that a defendant who
attempted to avoid creating evidence of knowledge did not need to be absolutely
certain of the fraud to be criminally knowledgeable. Jurors were also told in
this context that they could not rely on “mistake, accident, or another innocent
reason” to support guilt. The challenged language about expectations and
inferences was followed immediately by requiring the inferences to “be beyond
a reasonable doubt.”
Less than sparkling clarity or a problematic phrase does not invalidate
an instruction and certainly does not necessarily create reversible error. An
instruction is examined in the context of the universe of guidance. Dupuy v.
Cain, 201 F.3d 582, 587 (5th Cir. 2000). Though we see no clear lowering of
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the standard of proof as to knowledge, we do see the possibility of confusion.
Potentially creating more uncertainty for jurors, the district court recited the
reasonable doubt standard in its preliminary instructions and general
instructions, but in the special instructions it recited the reasonable doubt
standard for every count except the health care fraud conspiracy.
For these reasons, uncertainty persists about whether jurors would have
understood from this instruction in isolation that they must find beyond a
reasonable doubt that each defendant actually knew about the fraud based on
evidence of a defendant’s attempts to avoid learning of it. They were not
instructed on deliberate ignorance of the fraud. We conclude that it was error
to give this instruction, not because it gave a lower standard of proof to jurors
but because it gave such a muddled standard.
Whether we can review potential confusion arising from an instruction
for harmless error depends on whether the defect constitutes a “structural
error,” which is “limited to a narrow class of cases that ‘infect the entire trial
process,’ necessarily rendering ‘a trial fundamentally unfair.’” United States
v. Stanford, 823 F.3d 814, 830 (5th Cir. 2016) (quoting Neder v. United States,
527 U.S. 1, 8 (1999)). We divide instruction errors on the standard of proof into
those stating no standard, which can be reviewed for harmlessness, and those
that state an incorrect standard — which cannot. Id. at 831. The error here
was the creation of a potential for confusion. That form of error is essentially
an omission of an intelligible standard of proof in a discrete part of the
instructions while the correct standard was stated elsewhere. We conclude
that our review is properly for harmlessness.
Error in an instruction will be considered harmless if the court, “after a
thorough examination of the record, is able to conclude beyond a reasonable
doubt that the jury verdict would have been the same absent the error.” United
States v. Cessa, 785 F.3d 165, 186 (5th Cir. 2015) (quotation marks omitted)
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(quoting United States v. Skilling, 638 F.3d 480, 482 (5th Cir. 2011)). Here, a
finding of knowledge beyond a reasonable doubt was inherent in the jury’s
verdict given the special instruction that required it to find a defendant
“willfully became a member” of the conspiracy. See Stanford, 823 F.3d at 830-
34. The district court’s general instructions recited the reasonable doubt
standard and defined willfully as a requirement that means “an act was done
with a conscious purpose to violate the law.” Regardless of some opaqueness
in the challenged instruction, we do see as clear that jurors still knew they
must decide beyond a reasonable doubt if a defendant would have reached the
judgment that the enterprise was criminal.
We conclude that a more clearly instructed jury would have reached the
same verdict as did this one. The error was harmless.
Good Faith
The doctor defendants also argue that the district court abused its
discretion by denying their request for a good faith instruction, and that this
compounded the harm of the improper instruction on deliberate ignorance.
“Failure to instruct on good faith is not fatal when the jury is given a detailed
instruction on specific intent and the defendant has the opportunity to argue
good faith to the jury.” Sanjar, 876 F.3d at 742.
Both conditions are satisfied here. The district court instructed the jury
that the defendants must have acted “with a conscious purpose to violate the
law,” and all the defendants argued good faith in their closings.
III. Reverse 404(b) Evidence
The defendants argue that the district court erred in excluding evidence
that Pogosyan and Shakbazyan, two of the conspirators who pled guilty before
trial, were previously indicted in Arizona for a similar Medicare fraud scheme,
and that the investigators there had viewed those doctors as unwitting dupes
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rather than co-conspirators. The Arizona charges were dismissed. The doctors
sought testimony from the associated doctor and an investigator in the case.
The district court concluded that even if the Arizona doctor was tricked,
“[p]roving there are other people who didn’t know the speed limit sign was
there doesn’t prove you didn’t know.”
A trial judge’s evidentiary rulings are reviewed “for abuse of discretion,
subject to harmless error review.” United States v. Alaniz, 726 F.3d 586, 606
(5th Cir. 2013) (quoting United States v. Jackson, 636 F.3d 687, 692 (5th Cir.
2011)). The trial court has broad discretion in determining the relevance or
prejudicial effect of evidence. Id.Whatever the probative value, the sought-after evidence here was
convoluted. The defendants sought to call non-party witnesses to testify to a
lack of knowledge, of a different scheme, in a different state, that was operated
by two of the same individuals as this scheme, to support an inference that the
more recent defendants had a lack of knowledge of this scheme.
Since Shakhbazyan and Pogosyan pled guilty, the defendants could have
simply called them to testify about the defendants’ actual level of involvement
in the actual scheme at issue in their trial. Dr. Martinez and Dr. Simmons ask
us to take judicial notice of Pogosyan’s statements when he pled guilty two
months before trial.
DEFENDANT POGOSYAN: Doctor – excuse me. Dr.
Benjamin Martinez and Donovan Simmons, they didn’t actually
know anything about the whole – what do you call it, conspiracy.
They were –
THE COURT: You didn’t tell them, is that what you’re
telling me?
DEFENDANT POGOSYAN: Yes. Yes, Your Honor.
THE COURT: So you don’t know what they knew. You just
know what you – you didn't have any contact with them in which
you disclosed –
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DEFENDANT POGOSYAN: Yes, Your Honor.
THE COURT: – what was going on? Did you have any
contact with them?
DEFENDANT POGOSYAN: No, Your Honor.
THE COURT: Okay. And so all you can testify to,
technically, is that you are not aware of whether they knew
anything about it. Is that what you're telling me?
DEFENDANT POGOSYAN: Yes, Your Honor.
We see no reason for judicial notice. There is no claim here that
Pogosyan was prevented by the court from testifying. Both principals in the
conspiracy were subpoenaed to appear at trial but neither was called to testify.
In their brief, the doctors claim that Pogosyan invoked his Fifth Amendment
right, but at sentencing counsel admitted to the district court that “[t]here was
a tactical decision made by counsel not to call them.”
The district court did not abuse its discretion by excluding attenuated
and collateral evidence of the Arizona scheme.
IV. Bagoumian Sentencing Challenges
Bagoumian’s Guidelines range was 51 to 63 months. The district court
sentenced her at the low end of the Guidelines range at 51 months. She
nonetheless argues that the district court (A) prejudicially relied on her
national origin, (B) erred in refusing to grant a downward adjustment, and (C)
imposed a substantively unreasonable sentence.
A. National Origin
Bagoumian first argues that her sentence must be vacated and
remanded because the district court improperly relied on her Armenian
national origin at sentencing. See United States v. Winters, 174 F.3d 478, 482
(5th Cir. 1999). At sentencing, the district court asked Bagoumian, “Ma’am,
are you related to anybody else in this case? There are so many people, I
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forgot.” To be clear, the issue here is based solely on this question. Yes, some
of the other defendants were Armenian. Inquiring about her relationship to
her co-defendants, in a case where some of the conspirators’ family members
were involved, 23 does not support an argument that the district court relied
upon her national origin in sentencing.
B. Mitigating Role Adjustment
In her sentencing memorandum, Bagoumian requested a two-level
minor role adjustment under U.S.S.G. § 3B1.2. A minor participant is one who
“is less culpable than most other participants . . . but whose role could not be
described as minimal.” § 3B1.2 cmt. n.5. Based on a totality of circumstances,
courts consider “the degree to which the defendant understood the scope . . . of
the criminal activity,” the defendant’s participation in planning, the
defendant’s exercise of decision-making authority, “the nature and extent of
the defendant’s participation,” and “the degree . . . the defendant stood to
benefit.” § 3B1.2 cmt. n.3(c). How the court weighs the factors is a matter of
discretion. United States v. Torres-Hernandez, 843 F.3d 203, 210 (5th Cir.
2016). Whether a defendant was a minor participant is “a factual
determination that we review for clear error.” Id. at 207 (quoting United States
v. Gomez-Valle, 828 F.3d 324, 327 (5th Cir. 2016)).
Bagoumian argued that her actions were comparable to other office
workers who were not indicted. Among her reasons is that she had no role in
the billing process and was only paid a salary. The district court implicitly
overruled her request, noting that she was “frequently the on-site manager” at
the clinic who had conducted phony medical tests. She “knew how many people
were coming through” the clinics, “knew the operation was running off of tests
23For example, Pogosyan and Shakhbazyan transferred most of the money to
companies owned or controlled by their wives.
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not performed,” and “was an essential element in the structure of the
conspiracy.” Bagoumian fails to identify any error in these reasons for the
district court’s determination.
C. Substantive Reasonableness
Bagoumian also argues her sentence is substantively unreasonable. Her
within-Guidelines sentence is presumptively reasonable and rebuttable “only
if the appellant demonstrates that the sentence does not account for a [18
U.S.C. § 3553(a)] factor that should receive significant weight, gives significant
weight to an irrelevant or improper factor, or represents a clear error of
judgment in balancing the sentencing factors.” United States v. Hernandez,
876 F.3d 161, 166 (5th Cir. 2017). “We review an appellant’s claim that her
sentence [was] substantively unreasonable for abuse of discretion.” Id.Bagoumian argues that the district court “overreli[ed] on the loss
amount” because Section 2B1.1(b)(1) of the Sentencing Guidelines resulted in
“excessive and disproportionate” increases to her offense level. Bagoumian
does not suggest the district court improperly calculated the loss amount or
misapplied Section 2B1.1(b)(1), but rather seems to be suggesting that the
district court’s correct application Section 2B1.1(b)(1) resulted in a Guidelines
range that overstated the seriousness of the offense. While Bagoumian cites
to some out-of-circuit cases discussing Section 2B1.1(b)(1) and the potential for
large increases to an offense level, she fails to provide any argument or
authority as to how the district court’s consideration of the Guidelines range
here constituted an erroneous “overreliance on the loss amount” under the
Section 3553(a) factors. She has therefore abandoned this argument. See L &
A Contracting Co. v. S. Concrete Servs., 17 F.3d 106, 113 (5th Cir. 1994).
Bagoumian further argues that the sentence was greater than necessary
under Section 3553(a) because of her lack of a criminal history, her education,
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family ties, low risk for recidivism, and current age. We have previously held
that defendants relying on such factors essentially ask us to “reweigh the
sentencing factors,” which is contrary to the presumption that within-
Guidelines sentences are reasonable. Hernandez, 876 F.3d at 166-67.
Finally, Bagoumian argues that her sentence disregards Section
3553(a)(6) by creating a sentencing disparity between her sentence (51 months)
and that of Martinez (28 months) and Simmons (15 months). She argues that
the doctors were more essential to the conspiracy and yet received shorter
sentences. The government counters that Martinez and Simmons were
respectively associated with only a single clinic while Bagoumian worked at all
three clinics, paid cash to the marketers, physically conducted phony medical
tests, and was convicted of more than double the substantive counts of health
care fraud. Bagoumian fails to address these distinctions, and she has failed
to show that the district court clearly erred in its weighing of the Section
3553(a) factors.
AFFIRMED.
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