United States v. Garrison ( 1998 )

PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
No. 95-9361
D. C. Docket No. CR 195-011-01
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JEANETTE G. GARRISON,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Georgia
(January 22, 1998)
Before HATCHETT, Chief Judge, BIRCH, Circuit Judge, and CLARK,
Senior Circuit Judge.
BIRCH, Circuit Judge:
In this Medicare fraud appeal, we determine whether the
owner and chief executive officer of a home healthcare provider
properly was accorded a two-level enhancement in her sentence
under U.S.S.G. § 3B1.3 for abusing a position of public trust by
submitting falsified Medicare claims to a fiscal intermediary. The
district court also imposed a two-level enhancement for an
aggravating role in the offense under U.S.S.G. § 3B1.1(c) and
departed upward in calculating the fine. Because the two-level
enhancement for abuse of a position of public trust was improper,
we vacate the sentence and remand for resentencing.
I. BACKGROUND
From 1976 to 1995, defendant-appellant, Jeanette G.
Garrison, an experienced businesswoman and registered nurse,
was the owner, chief executive officer, and manager of
Healthmaster Home Health Care, Inc. (“Healthmaster”),1 which
1
Although Healthmaster was owned jointly by Jeanette
Garrison and her husband, Dr. Joseph Garrison, Jeanette Garrison
operated the company.
2
provided home nursing care for patients with illnesses and
disabilities. Based in Augusta, Georgia, Healthmaster operated in
five states with twenty-two divisions, 125 separate locations, and
2,500 to 3,000 employees.2 The Medicare program of the United
States Department of Health and Human Services3 reimbursed
ninety to ninety-three percent of Healthmaster’s costs for eligible
individuals; the Medicaid program of the Georgia Department of
Medical Assistance and private insurers reimbursed the balance of
the expenses. To obtain reimbursement from Medicare,
Healthmaster submitted reports documenting its costs to Aetna Life
and Casualty Insurance Company (“Aetna”), which served as the
fiscal intermediary for the Department of Health and Human
2
Garrison began the company with one employee in 1976.
3
The Medicare Act is part of the Social Security Act, 42
U.S.C. §§ 1395-1395cc. Medicare is a health insurance program
that provides medical benefits primarily to persons sixty-five
years of age and older who are eligible for Social Security
retirement benefits and to individuals under sixty-five who have
received Social Security benefits for at least two years. See 42
U.S.C. § 1395c. Medicare beneficiaries are entitled to have
payments made on their behalf for certain inpatient and
outpatient hospital care and related services supplied by a
hospital or “provider.” 42 U.S.C. § 1395d; 42 C.F.R. § 400.202
(1995).
3
Services, Health Care Financing Administration.4 The fiscal
intermediary is charged with the responsibility of ensuring that
Medicare payments are made to healthcare providers only for
covered services and may reject or adjust claims.5 Garrison’s
conduct that supported her plea agreement and guilty plea showed
that she directed the submission of cost reports by Healthmaster for
nonallowable expenses, totaling an intended loss of approximately
$1,200,000.
The first category of nonallowble expenses was political
contributions. Garrison instructed Healthmaster employee and
attorney, Noel Ingram, to contact Healthmaster employees to solicit
contributions for specific political candidates of Garrison’s choice.
4
Healthcare providers participate in the Medicare program by
entering into a “provider agreement” with the Secretary of Health
and Human Services (“Secretary”). See 42 U.S.C. § 1395cc. The
Secretary reimburses healthcare providers through “fiscal
intermediaries,” generally private insurance companies, which are
responsible for determining the total amount of Medicare
reimbursement owed to a provider each year in accordance with
Medicare policy. See 42 U.S.C. § 1395g, 1395(h)(c)(1). Under
contract with the Department of Health and Human Services, a fiscal
intermediary disburses Medicare benefit payments on a cost basis to
providers. 42 C.F.R. § 421.1.
5
A suspension of payments can be made without notice to the
healthcare provider if the fiscal intermediary determines that
the claims for Medicare reimbursement “involve[] fraud or willful
nisrepresentation.” 42 C.F.R. § 405.371(b).
4
Ingram collected the political contributions from Healthmaster
employees and gave them to Garrison, who dispensed the money
to the political candidates. The employees who made political
contributions were reimbursed subsequently through
Healthmaster’s payroll. These payroll expenditures then were
submitted by Healthmaster to Aetna and falsely identified as
employee bonuses to qualify for reimbursement under Medicare.
These reimbursements by Medicare to Healthmaster more than
tripled over a four-year period: $25,200 in 1989, $42,262.92 in
1990, $44,700 in 1991, and $83,864.47 in 1992. The total amount
of improper reimbursements by Medicare for this four-year period
was $195,991.39. In February, 1993, Garrison directed
Healthmaster employee Mike Haddle, the cost report expert, to
make cost report adjustments for the improper amounts claimed.
An adjustment of $66,443 was made on the next cost report for the
improper claims for political contributions. Thus, the actual loss
suffered by Medicare for improper political contributions was
$129,548.77.
5
The second category of impermissible costs that Healthmaster
submitted to Aetna and for which it received Medicare
reimbursement was shared services. On cost reports submitted to
Aetna, Garrison directed that Healthmaster employees, whose
salaries were reimbursed by Medicare, be shown as fulltime
Healthmaster employees, although they performed work for her
other companies, primarily Master Health Plan, Inc. (“Master Health
Plan”), a health maintenance organization, the costs of which were
not reimbursebursable by Medicare.6 Garrison instructed that
Healthmaster bill Medicare for these shared service employees’
salaries without deducting the non-Medicare work that they
performed for her other companies. Additionally, she had cost
reports filed that falsely represented her non-Healthmaster
employees to be Healthmaster employees. As a result of both of
6
In addition to Healthmaster and Master Health Plan,
Garrison also owned Employee Benefit Coordinators, Inc., the
purpose of which was to market Master Health Plan; Healthmaster
Pharmaceutical and Equipment Company, Inc., which sold durable
medical equipment; Healthmaster Homecare of Georgia, Inc. (“HM
Homecare”), an independent, Medicaid-reimbursed company that
provided home visitation services other than skilled nursing; and
Preferred Care, Inc., which was a holding company for Equipment
Company and HM Homecare.
6
both of these misrepresentations, Medicare improperly reimbursed
Healthmaster $770,814.71 between 1989 and 1993. In February,
1993, Garrison instructed Haddle to make a cost report adjustment
of $300,000 to compensate for the employees who spent a portion
of their time working at Garrison’s other companies, where salaries
were not reimbursable by Medicare. The actual loss suffered by
Medicare under Garrison’s shared services scheme was
$470,814.71.
The third category of nonallowable expenses that were
reimbursed by Medicare was miscellaneous personal costs.
Healthmaster received Medicare reimbursement for such
expenditures as golfing trips to Pebble Beach, California, for a
lobbyist and political figures; a trip by Garrison, her daughter, and
Healthmaster employees to the 1992 Democratic Party National
Convention; the partial purchase price of $30,000 for a travel
agency, Morris Travel, bought by Garrison and disguised on cost
reports as employee “training,” complete with supporting sign-in
sheets placed in Healthmaster files to deceive auditors; a
7
honeymoon cruise for a Healthmaster employee; a trip to the 1991
World Series in Minnesota; approximately $19,000 for alcohol
served at Healthmaster Christmas parties between 1989 and 1993;
approximately $22,000 for alcohol and food for Healthmaster’s
Georgia Dome suite between 1992 and 1994; a 1986 Mercedes
Benz owned by Healthmaster that was traded for a 1993 Mercedes
for Garrison’s son; and five pleasure trips to New York City, Las
Vegas, and Nashville taken by Healthmaster employees, for which
brochures, falsely indicating a business purpose for these trips,
were produced and placed in Healthmaster files to deceive
auditors. From 1989 to 1993, Healthmaster submitted to Medicare
as reimbursable expenses various miscellaneous personal costs
that amounted to $225,633.73.
Garrison was charged in a 133-count indictment with five
codefendants: Healthmaster, Master Health Plan, Dennis J. Kelly,
David W. Suba, and Managed Risk Services, Inc.7 Represented by
7
Kelly, a certified public accountant, was the chief
financial officer and vice president of Healthmaster, or second-in-
command under Garrison. He recommended that she hire Suba as an
insurance risk manager. Kelly and Suba formed Managed Risk
Services, Inc., of which Suba was president. These three
8
counsel, Garrison entered into a plea agreement with the
government in which she acknowledged that she willfully had
submitted fraudulent cost reports for Medicare reimbursement.
Under the terms of the plea agreement, Garrison agreed to plead
guilty to the first ten counts of the indictment,8 to sell Healthmaster
to an independent party, to pay $11,500,000 in restitution,9 to forgo
challenging a ten-year exclusion from participation as a healthcare
provider in the Medicare program, and to cooperate with law
enforcement by giving truthful information and testimony in the
investigation and prosecution of unlawful activity.
In exchange, the government agreed to dismiss the remaining
codefendants were tried jointly and convicted.
8
Count 1 charged Garrison with conspiracy to defraud the
United States in violation of 18 U.S.C. § 371. Counts 2 through
10 charged her with false statements to defraud the United States
Medicare program in violation of 18 U.S.C. § 1001.
9
Of the restitution amount, Garrison was to pay $10,000,000
to Medicare and $1,500,000 to Medicaid to reimburse these public
health insurance programs for the losses caused by Garrison,
Healthmaster, Master Health Plan, and related companies and their
officers and employees to these respective programs. Under the
restitution terms of Garrison’s plea agreement, the government
agreed to dismiss the indictment as to Healthmaster and Master
Health Plan provided that full disgorgement was accomplished by
these companies.
9
counts against Garrison,10 to dismiss the indictment as to
Healthmaster and Master Health Plan, to forgo in the Southern
District of Georgia further prosecution of Garrison “or any entity in
which she has majority ownership, directly or through trusts, or
through trusts for her children, for any criminal act or omission
occurring prior to the date of the Indictment that is currently known
to the government,” R1-331-5, to recommend a three-level
reduction in offense level for acceptance of responsibility under
U.S.S.G. § 3E1.1, to take no position on upward adjustments for
aggravating role in the offense under U.S.S.G. § 3B1.1 and for
abuse of a position of trust under U.S.S.G. § 3B1.3, and to forgo
recommending a fine, provided that there was complete restitution
of $11,500,000. Except for seeking a two-level enhancement for
more than minimal planning under U.S.S.G. § 2F1.1(b)(2)(A) and a
loss determination of approximately $1,630,00011 under U.S.S.G. §
10
The remaining indictment counts were: Counts 11-32, false
statements to defraud the United States; Counts 36-78, mail
fraud; Counts 79-105, money laundering; Counts 116-118,
embezzlement from an employee benefit plan; and Count 133,
forfeiture.
11
This loss amount included $129,548.77 for improperly
reimbursed political contributions, $770,814.71 for “ghost
10
2F1.1, the government agreed to make no recommendation
regarding the sentence. While the government agreed to file a
motion for downward departure pursuant to U.S.S.G. § 5K1.1 for
substantial assistance to authorities, provided Garrison fulfilled all
of her obligations under her plea agreement, she understood and
agreed that the decision to depart downward was within the
sentencing court’s discretion. Garrison stated that she entered into
the plea agreement voluntarily without coercion or promises other
than those in the agreement that resulted from negotiations with the
government and her attorneys with her “authorization, knowledge
and consent.” R1-331-13.
At the plea proceeding, Garrison reaffirmed her understanding
of the charges against her, the penalties that she confronted, and
the terms of her plea agreement. She acknowledged that the plea
agreement did not bind the district court and that she could receive
employees’” salaries, and $262,536.76 for pleasure trips and
other improper billings. Although Garrison maintained that the
amount of loss directly attributable to her was less than
$500,000, the $1,630,000 loss calculated by the government was
included in the restitution amount of $11,500,000, which Garrison
agreed to pay under the terms of her plea agreement.
11
the maximum sentence on the counts to which she pled guilty. The
district judge accepted Garrison’s guilty plea after determining that
she “is fully competent, fully aware of everything that is taking place
here,” that there “is an ample factual basis for the plea,” and that “it
is voluntary and made with a full appreciation of its consequences.”
R2-316-27-28.
Because Garrison acknowledged at her October 26, 1995,
sentencing that she had reviewed the presentence report (“PSR”)
with her attorney and that it was factually accurate, the district
judge adopted the account of Garrison’s offenses in the PSR as his
findings of fact. The district judge determined Garrison’s offense
level to be 20.12 Garrison’s criminal history category of I yielded a
sentencing range of thirty-three to forty-one months of
imprisonment and a fine of $7,500 to $75,000.
12
Garrison’s offense level of 20 reflected a base offense
level of 6 under U.S.S.G. § 2F1.1(a) with the following
adjustments: an 11-level increase for a loss of more than
$800,000 but less than $1,500,000, U.S.S.G. 2F1.1(b)(1)(L); a
two-level increase for more than minimal planning, U.S.S.G. §
2F1.1(b)(2)(A); a two-level increase for aggravating role in the
offense, U.S.S.G. § 3B1.1(c); a two-level increase for abuse of a
position of public trust, U.S.S.G. § 3B1.3; and a three-level
reduction for acceptance of responsibility, U.S.S.G. § 3E1.1(a),
(b).
12
The district judge imposed the minimum Guidelines prison
term of thirty-three months, followed by three years of supervised
release, during which time Garrison will be required to perform 200
hours of community service. Garrison also was ordered to pay
restitution of $11,500,00, the amount stated in the plea agreement.
The district court departed upward and imposed the maximum fine
on each count to which Garrison pled guilty for a total fine of
$2,500,000. At the sentencing proceeding, Garrison’s attorney
objected to the enhancements for abuse of a position of public trust
and aggravating role in the offense as well as the upward departure
in the fine.
On appeal, Garrison challenges her sentence enhancements
for abuse of a position of public trust and for an aggravating role in
the offense. She also contends that these enhancements
subjected her to impermissible double counting.13 Finally, she
contests the upward departure of her fine as to notice and amount.
13
Because we conclude that Garrison’s sentence improperly
was enhanced for abuse of a position of public trust and remand
for resentencing without this enhancement, we need not address
her double-counting issue.
13
II. ANALYSIS
A. Enhancement for Abusing a Position of Public Trust
Garrison argues that her two-level enhancement for abuse of
a position of public trust was erroneous since she did not occupy
such a position because of the fiscal intermediary, Aetna, which
directly requested reimbursement from Medicare for Healthmaster’s
healthcare services. She also contends that any false statements
made to Medicare were included in her crime of conviction, which
precludes this enhancement under U.S.S.G. § 3B1.3.14 While the
district court’s factual determination that a defendant abused a
position of public trust is reviewed for clear error, its conclusion that
the defendant’s conduct justifies the abuse-of-trust enhancement
is a question of law that we review de novo. United States v. Terry,
60 F.3d 1541, 1545 (11th Cir. 1995), cert. denied, ___ U.S. ___,
116 S. Ct. 737 (1996).
14
Given Garrison’s sentencing date of October 26, 1995, we
use the applicable United States Sentencing Guidelines Manual
(1994) and statutes and regulations in effect on that date. See
United States v. Camacho, 40 F.3d 349, 354 (11th Cir. 1994) (“The
sentencing court must employ the guidelines in effect at the time
the sentencing hearing is held.”), cert. denied, __ U.S. __, 115
S. Ct. 1810 (1995).
14
The abuse-of-trust enhancement provides:
If the defendant abused a position of public or private
trust, or used a special skill, in a manner that significantly
facilitated the commission or concealment of the offense,
increase by 2 levels. This adjustment may not be
employed if an abuse of trust or skill is included in the
base offense level or specific offense characteristic.
U.S.S.G. § 3B1.3. The determination of whether a defendant
occupied a position of trust that would warrant this enhancement is
made from the perspective of the victim of the crime. See United
States v. Zaragoza, 123 F.3d 472, 481 (7th Cir.), cert. denied, ___
U.S. ___, 118 S. Ct. 317 (1997); United States v. Mackey, 114 F.3d
470, 475 (4th Cir. 1997); United States v. Castagnet, 936 F.2d 57,
62 (2d Cir. 1991); United States v. Hill, 915 F.2d 502, 506 n.3 (9th
Cir. 1990). “For the enhancement to apply, defendant must have
been in a position of trust with respect to the victim of the crime,”
United States v. Ragland, 72 F.3d 500, 502 (6th Cir. 1996)
(emphasis added), and “the position of trust must have contributed
in some significant way to facilitating the commission or
concealment of the offense,” U.S.S.G. § 3B1.3, comment. (n.1);
“[s]uch persons generally are viewed as more culpable,” id.
15
comment. (backg’d.).15 In the fraud context, section 3B1.3 has
been recognized to apply in two situations: (1) “where the
defendant steals from his employer, using his position in the
company to facilitate the offense,” and (2) “where a ‘fiduciary or
personal trust relationship exists’ with other entities, and the
defendant takes advantage of the relationship to perpetrate or
conceal the offense.” United States v. Koehn, 74 F.3d 199, 201
(10th Cir. 1996) (quoting United States v. Brunson, 54 F.3d 673,
677 (10th Cir.), cert. denied, ___ U.S. ___, 116 S. Ct. 397 (1995)).
This case involves the latter category.
Because “there is a component of misplaced trust inherent in
the concept of fraud,” United States v. Mullens, 65 F.3d 1560, 1567
(11th Cir. 1995), cert. denied, ___ U.S. ___, 116 S. Ct. 1337
(1996), a sentencing court must be careful not to be “overly broad”
in imposing the enhancement for abuse of a position of trust or “the
sentence of virtually every defendant who occupied any position of
15
See Stinson v. United States, 508 U.S. 36, 42-43, 113
S. Ct. 1913, 1917-18 (1993) (holding that Sentencing Guidelines
commentary, which is interpretive and instructive to application
of a guideline, is binding on federal courts).
16
trust with anyone, victim or otherwise” would receive a section
3B1.3 enhancement, United States v. Moored, 997 F.2d 139, 145
(6th Cir. 1993).16 See Koehn, 74 F.3d at 201 (“In every successful
fraud the defendant will have created confidence and trust in the
victim, but the sentencing enhancement is not intended to apply in
every case of fraud.”); United States v. Boyle, 10 F.3d 485, 489 (7th
Cir. 1993) (“Whether someone occupies a ‘position of trust’ for
purposes of § 3B1.3 does not turn on simple categories that might
be used to characterize the relationship. . . .Therefore, the
sentencing court must look beyond descriptive labels to the actual
nature of the relationship and the responsibility the defendant is
given.”). In analyzing whether section 3B1.3 applies in a fiduciary
or personal trust situation, sentencing and reviewing courts must
“distinguish between those arms-length commercial relationships
where trust is created by the defendant’s personality or the victim’s
16
As examples, our court has determined that neither a food
service foreman, arrested while attempting to smuggle cocaine
into a federal penitentiary, United States v. Long, 122 F.3d
1360, 1365-66 (11th Cir. 1997), nor a president and sole
shareholder of an investment company that actually was a Ponzi
scheme, Mullens, 65 F.3d at 1566-67, abused a position of trust
making them eligible for a § 3B1.3 enhancement as imposed by the
respective district courts.
17
credulity, and relationships in which the victim’s trust is based on
defendant’s position in the transaction.” Koehn, 74 F.3d at 201;
see Mullens, 65 F.3d at 1567 (“Fraudulently inducing trust in an
investor is not the same as abusing a bona fide relationship of trust
with that investor.”). Since the “primary concern of § 3B1.3 is to
penalize defendants who take advantage of a position that provides
them freedom to commit or conceal a difficult-to-detect wrong,” only
such a defendant whose position enables or significantly facilitates
the offense is eligible for this enhancement.17 Koehn, 74 F.3d at
201 (emphasis added); see Brunson, 54 F.3d at 678 (“The
guideline enhancement requires more than a mere showing that
the victim had confidence in the defendant. Something more akin
to a fiduciary function is required.”).
The application note accompanying section 3B1.3 explains:
“Public or private trust” refers to a position of public or
private trust characterized by professional or managerial
17
The Tenth Circuit further explained: “It follows that not
every misuse of a fiduciary relationship will subject a defendant
to the enhancement; he must either occupy a ‘formal position of
trust’ or create sufficient indicia that he holds such a position
that it is appropriate to hold him so accountable.” Koehn, 74
F.3d at 201-02 (quoting United States v. Queen, 4 F.3d 925, 929
n.3 (10th Cir. 1993)).
18
discretion (i.e., substantial discretionary judgment that is
ordinarily given considerable deference). Persons
holding such positions ordinarily are subject to
significantly less supervision than employees whose
responsibilities are primarily nondiscretionary in nature. .
. . This adjustment, for example, would apply in the case
of an embezzlement of a client’s funds by an attorney
serving as a guardian, a bank executive’s fraudulent loan
scheme, or the criminal sexual abuse of a patient by a
physician under the guise of an examination. This
adjustment would not apply in the case of an
embezzlement or theft by an ordinary bank teller or hotel
clerk because such positions are not characterized by
the above-described factors.
U.S.S.G. § 3B1.3, comment. (n.1). Thus, “the abuse of trust
enhancement applies only where the defendant has abused
discretionary authority entrusted to the defendant by the victim”;
arm’s-length business relationships are not available for the
application of this enhancement.18 United States v. Jolly, 102 F.3d
18
The Sixth Circuit has provided elucidating clarification
regarding the type of trust that must be abused for a § 3B1.3
enhancement to be applicable:
Clearly, then, the notion of “trust” embodied in
the guideline is not the one contemplated by the
ordinary dictionary concept of reliance or confidence
for, in that sense, a bank trusts its tellers not to
steal from the till. Rather, as used in the guideline,
“position of public or private trust” is a term of art,
appropriating some of the aspects of the legal concept
of a trustee or fiduciary. The lesser degree of direct
supervision exercised over fiduciaries or senior
employees as opposed to cashiers, and hence the greater
difficulty in detecting their transgressions, may
19
46, 48 (2d Cir. 1996) (emphasis added); compare United States v.
Brenson, 104 F.3d 1267, 1287-88 (11th Cir.) (concluding that grand
juror who provided ongoing information to individual under grand
jury investigation for drug smuggling and money laundering violated
a position of public trust and warranted § 3B1.3 enhancement),
cert. denied, ___ U.S. ___, 118 S. Ct. 214 (1997); Terry, 60 F.3d at
1545 (determining that deputy sheriff who used his office and patrol
car to prevent police interception of his drug sales to an undercover
agent correctly received an enhancement for abuse of a position of
public trust); United States v. Pedersen, 3 F.3d 1468, 1469-72
(11th Cir. 1993) (upholding a section 3B1.3 enhancement for police
officer who unlawfully used his access to confidential information
explain part, but not all, of the distinction. . . .
Where an individual makes himself particularly
vulnerable by entrusting another with substantial
authority and discretion to act on his behalf and then
relies upon and defers to that person, a decision to
take advantage of that trust and vulnerability is
particularly abhorrent, as it undermines faith in one’s
fellow man in a way that the ordinary pickpocket simply
cannot.
Ragland, 72 F.3d at 502-03 (citations omitted) (vacating district
court’s § 3B1.3 enhancement for bank customer service employee
who executed a fraud scheme by forging bank officers’ signatures
and taking funds left for deposit by bank customers because she
did not occupy a position of public or private trust).
20
stored in various government data bases, including the National
Crime Information Center, the Federal Bureau of Investigation, and
the Social Security Administration to assist a corporation that sold
personal background information to employers, investigators, and
others and which was a customer of his investigation business);
United States v. Claymore, 978 F.2d 421, 423 (8th Cir. 1992)
(holding that police officer who raped a thirteen-year-old girl, whom
he had apprehended for curfew violation, and fathered her child
properly received a section 3B1.3 enhancement for using his
position of trust to detain the victim and his patrol car in which to
rape her) with Mullens, 65 F.3d at 1566-67 (determining that the
district court erroneously applied a section 3B1.3 enhancement in
sentencing president and sole shareholder of an investment
company that was a Ponzi scheme because there was no special
or fiduciary relationship with the investors).
Instructive to our analysis of this case is United States v.
Broderson, 67 F.3d 452 (2d Cir. 1995), which is analogous
because the defendant received a section 3B1.3 enhancement for
21
submitting false information to a government agency. The
defendant in Broderson, a vice president of Grumman Data
Systems Corporation, had negotiated a contract with the National
Aeronautics and Space Administration (“NASA”) to provide
supercomputer hardware, software, and related integration and
maintenance services to the Lyndon B. Johnson Space Center in
Houston, Texas. The contract negotiations were governed by the
Truth in Negotiations Act (“TINA”), 10 U.S.C. § 2306a, and the
implementing regulations for TINA in the Federal Acquisition
Regulations (“FAR”), 48 C.F.R. §§ 15.801-15.804. Both TINA and
FAR required Broderson, who was responsible for preparing and
submitting Grumman’s proposals to NASA, to disclose to NASA all
cost and pricing information until NASA and Grumman reached an
agreement. Broderson arranged to finance Grumman’s purchase
of the supercomputer hardware through a third-party financing
company and lease the equipment to NASA. The financing
company initially offered an interest rate of 13.77 percent, and he
disclosed this rate to NASA. Broderson, however, failed to inform
22
NASA that the financing company subsequently reduced the
interest rate to 10.5 percent. He submitted to NASA two
Certificates of Current Cost or Pricing Data, which falsely stated
that, to the best of his knowledge and belief, Grumman’s cost and
pricing information were accurate and current. The final contract
provided lease payments over fifty-seven months at the 13.77
percent interest rate. Thereafter, Grumann sold the lease
payments to the financing company at the 10.5 percent interest
rate. A jury convicted Broderson of executing a major fraud
scheme by incorrectly pricing a government contract valued at
more than $1,000,000, wire fraud, and making false statements to
the United States. At sentencing, the district court assigned
Broderson a base offense level of six under U.S.S.G. § 2F1.1(a)
and enhanced his sentence two levels under section 3B1.3 for
abuse of a position of public trust.
In determining that the section 3B1.3 enhancement was
erroneous and remanding for resentencing, the Second Circuit
determined that Broderson “did not occupy a position of trust vis-a-
23
vis the government” because “TINA and FAR imposed specific
legal obligations . . . that he failed to fulfill.” Broderson, 67 F.3d at
455. Deriving guidance from the examples in the commentary to
section 3B1.3, “an attorney embezzling a client’s money, a bank
executive executing a fraudulent loan scheme, and a physician
sexually abusing a patient during an examination,” that court
concluded that the position of trust addressed by section 3B1.3
referred to discretion specifically entrusted to the defendant by the
victim. Id. at 456; see U.S.S.G. § 3B1.3, comment. (n.1); see also
United States v. Yount, 960 F.2d 955, 957 (11th Cir. 1992)
(summarily affirming section 3B1.3 enhancement for bank vice-
president and trust officer who misappropriated for his own use
trust accounts of elderly persons, none of whom lived
independently). Rejecting the government’s overbroad definition of
a position of trust, the Second Circuit explained:
The government’s theory seems so far reaching
that it might cause virtually anyone who is commanded
by statute to make an accurate report to the government
to be subject to a Section 3B1.3 enhancement. All
taxpayers who file false tax returns, for example, might
be included. We believe that it is fairly obvious that the
24
Sentencing Commission harbored no intent that the
enhancement be so sweeping.
....
Broderson was a high-ranking executive at
Grumman and therefore had managerial discretion to
negotiate for that company. Had he accepted a bribe
from another party to give that party better terms than
were necessary, that would have abused his position of
trust. In contrast, NASA entrusted Broderson with no
discretion whatsoever and whatever “trust” NASA placed
in Broderson was based strictly on the explicit
commands of TINA and FAR.
Broderson, 67 F.3d at 455, 456; see United States v. Kummer, 89
F.3d 1536, 1546-47 (11th Cir. 1996) (upholding section 3B1.3
enhancement for a financial secretary of a local labor union and a
general representative of the international union for using funds
from the union’s health and welfare plan to purchase stock in a
construction project in exchange for obtaining a personal home
loan).
Garrison similarly argues that abuse of trust in her position as
chief executive of Healthmaster would occur if she had accepted a
bribe from a party negotiating with Healthmaster to Healthmaster’s
detriment. In contrast, she contends that “false statements on the
cost reports submitted to a fiscal intermediary for the Government
25
do not implicate such a trust relationship.” Appellant’s Brief at 26.
Significantly, when an arm’s length relationship existed between
the defendant and the victim such that the discretionary authority
entrusted to the defendant was not directly from the victim, a
section 3B1.3 enhancement was held to be improper. See, e.g.,
Jolly, 102 F.3d at 48-50 (concluding that president of corporation
did not stand in a position of trust relative to creditors of the
corporation); United States v. West, 56 F.3d 216, 221 (D.C. Cir.
1995) (holding that title of president carried “no special weight”
because it was not the position in the company but the exercise of
managerial and professional discretion with respect to the task
hired by a customer to perform that determined eligibility for abuse-
of-trust enhancement); Brunson, 54 F.3d at 675-78 (determining
that no trust relationship exists in a typical arm’s-length commercial
relationship where defendant, who defrauded the Russian Coal
Corporation of over four million dollars and transferred into his
personal bank account sums, which he used personally for luxury
automobiles, purchase of a residence, vacations, jewelry, computer
26
hardware and software, college tuition for his son, furniture, and
home improvements); Moored, 997 F.2d at 144-45 (deciding that a
section 3B1.3 enhancement is improper when defendant abused a
position of trust with a third party; in applying for loans, defendant
falsified an offer to purchase stock as well as falsified a letter of
credit from a bank).
In this case, the PSR, adopted by the district court, states that
“[t]he Medicare program of the United States Department of Health
and Human Services is the primary victim in the instant offense.”
PSR at 5, ¶ 10 (Sept. 25, 1995). As in Broderson, statutory
reporting requirements do not create a position of trust relative to a
victim of the crime. Furthermore, Garrison and Healthmaster did
not report directly to Medicare but to Aetna, the fiscal intermediary
whose specific responsibility was to review requests for Medicare
reimbursement before submitting those requests to Medicare.
Because of this removed relationship to Medicare, plus Aetna’s
review of Healthmaster’s Medicare requests, Garrison and
Healthmaster were not directly in a position of trust in relation to
27
Medicare. While Medicare may have been the victim in this case,
the section 3B1.3 enhancement is unavailable because Garrison
did not occupy a sufficiently proximate position of trust relative to
Medicare. Additionally, Garrison did not hold a position of
discretion concerning her crime of false reporting to Medicare, as
required for application of the abuse-of-trust enhancement. As her
counsel explained at sentencing, Garrison lacked the discretion
and ability to conceal the false cost reports submitted for Medicare
reimbursement and relied on others to accomplish this deception.19
19
At sentencing, Garrison’s counsel explained her lack of
ability to defraud Medicare and her reliance on financial experts
at Healthmaster for filing the false cost reports for Medicare
reimbursement:
[T]he crime here is false statements, that is
filing false reports for Medicare reimbursements.
Far from having specialized knowledge, Mrs.
Garrison had to hire people who had specialized
knowledge to do that. She didn’t do it. She didn’t do
the cost reports.
When she opened up her office by herself in one
room with a straight-back chair and a folding card
table, the next employee she hired– – she was looking
for people to take over the books because she was in
the nursing side of the business.
The more and more she got into her business, the
more she relied on people who had been federal auditors
in the past, who were CPAs, who understood the
intricacies of this process.
She hired Joe Norman. She hired Mike Haddle.
These are the people who had the specialized knowledge,
not Mrs. Garrison. She does not -- -- it does not
apply to her in terms of the enhancement for
specialized knowledge.
28
In contrast to Garrison’s lack of discretion and inability to
. . . .
Mrs. Garrison didn’t deal with the federal
auditors. When the federal auditors came to
Healthmaster, they didn’t go and spend their days with
Mrs. Garrison. They spent their days with Dennis
Kelly. They spent their days, maybe some of those
days, with the cost report expert, Mike Haddle.
But primarily, if not exclusively, Dennis Kelly
was the point person for dealing with the federal
auditors, not Mrs. Garrison. So it [section 3B1.3]
doesn’t apply to her.
. . . .
[T]heir [the government’s] basic position . . . is Mrs.
Garris4n was the CEO of these companies, and we all
need to have correct Medicare reimbursement.
That’s not enough for the enhancement because, in
order to have an enhancement because of level of
authority, that level of authority must have
facilitated -- -- substantially facilitated the
commission of the crime.
Simply because Mrs. Garrison was the CEO of the
company, that does not, therefore, under the case law,
give the Court or this report [PSR] the authority to
enhance her based upon her CEO status. Far from it.
The report discusses that she had direct access to
the cost reports and discusses manipulation of the
reports and document production. Absolutely no, Your
Honor. There are no facts in this report or no facts
before this Court which show that Mrs. Garrison had
anything to do with the federal auditors because that
wasn’t her job.
There are no facts before this Court and no facts
in this report which deal with Mrs. Garrison
manipulating reports and documents which were presented
to the federal auditors. There are no facts in this
report and no facts before the Court about Mrs.
Garrison manipulating any document production. That
wasn’t her job.
There were people in that company that did have
hands-on dealings with those auditors: Dennis Kelly, he
was the point man; the expert, Mike Haddle, he was, I
assume, one of the individuals who would be dealing on
a day-to-day basis with retrievable documents. But not
Mrs. Garrison.
R4-11, 12-14 (emphasis added).
29
produce the fraudulent Medicare reimbursement requests as
section 3B1.3 envisions is a physician who possesses the expertise
to create erroneous medical records and, consequently, fraudulent
Medicare reports that are difficult to detect and to question.20 Cf.
United States v. Rutgard, 108 F.3d 1041, 1064 (9th Cir.) (holding
that the section 3B1.3 enhancement was warranted because the
ophthalmologist convicted for Medicare fraud abused the trust
implicit in a “in a professional medical practice” because of the
essential “trust between patient and physician . . . and because the
government as insurer depends upon the honesty of the doctor and
is easily taken advantage of if the doctor is not honest”), amended
20
Clearly, Garrison did not possess a special skill that
would warrant a § 3B1.3 enhancement by facilitating the
commission or concealment of her crimes. See United States v.
Calderon, 127 F.3d 1314, ___ (11th Cir. 1997) (affirming § 3B1.3,
special skill enhancement for appellants who were convicted for
cocaine importation and who specifically captained a cocaine-
laden,38-foot cabin cruiser from the Bahamas to South Florida at
night with only a chart and a compass and without lights to elude
detection by law enforcement agents); United States v. Carlson,
87 F.3d 440, 446-47 (11th Cir. 1996) (approving § 3B1.3, special
skill enhancement for chemist who pled guilty to the manufacture
and distribution of illegal drugs and who developed laboratories
in Panama and Brazil to produce these drugs for distribution),
cert. denied, ___ U.S. ___, 118 S. Ct. 238 (1997); United States
v. Malgoza, 2 F.3d 1107, 1110-11 (11th Cir. 1993) (per curiam)
(upholding § 3B1.3, special skill enhancement for radio operator
convicted of conspiring to import cocaine for his knowledge of
radio frequencies and his ability to set the necessary equipment
to contact the source of the cocaine in Colombia).
30
on other grounds, 116 F.3d 1270, 1293 (9th Cir. 1997); United
States v. Adam, 70 F.3d 776, 782 (4th Cir. 1995) (upholding
section 3B1.3 enhancement and recognizing that “welfare fraud is
terribly difficult to detect because physicians exercise enormous
discretion: their judgments with respect to necessary treatments
ordinarily receive great deference and it is difficult to prove that
those judgments were made for reasons other than the patients’
best interests.” (emphasis added)). Garrison did not have the
expertise to produce the fraudulent Medicare reports; Kelly, a
certified public accountant, vice president and second in command
at Healthmaster, was tried and convicted for generating the
fraudulent Medicare reports. Kelly and others working under his
supervision, not Garrison, caused the fraudulent Medicare claims to
be difficult for Aetna to detect. Accordingly, we conclude that the
district court’s determination that Garrison occupied a position of
trust with respect to Medicare was clearly erroneous because she
did not produce the fraudulent Medicare claims, and the fiscal
intermediary, Aetna, did not discover the erroneous reports upon
31
reviewing them.21 Garrison’s relationship with Medicare was too
attenuated for her to have received the abuse-of-trust
enhancement because Medicare relied on Aetna to review and to
submit proper claims for Medicare reimbursement.
In addition to arguing that she did not occupy a position of
trust relative to Medicare within the meaning of section 3B1.3,
Garrison also contends that the district judge erred in imposing the
section 3B1.3 enhancement, which does not apply if abuse of trust
was “included in the base offense level or specific offense
characteristic.” U.S.S.G. § 3B1.3. She argues that the offense to
which she pled guilty, perpetrating a fraud on Medicare through
false cost reports, is the same as the basis for the enhancement for
an abuse of a position of public trust. We agree.
In Broderson, the Second Circuit explained that “[t]he conduct
that is the basis of the conviction must be independently criminal . .
21
While medical diagnoses and treatments determined as a
result of a physician’s training and experience may be difficult,
if not impossible, to detect by a fiscal intermediary, the
medical costs for such items as supplies submitted by
Healthmaster for reimbursement by Medicare were ascertainable by
Aetna.
32
. and not itself the abuse of trust.” Broderson, 67 F.3d at 456; see
Jolly, 102 F.3d at 49 (determining that the trust involved in an
arm’s-length, non-fiduciary fraud is the victim’s reliance on
misleading statements, which is “a specific offense characteristic of
fraud, and a Section 3B1.3 enhancement is inappropriate”).
Because Broderson’s fraudulent conduct was signing the certificate
stating that Grumman had complied with the applicable regulations,
“[a]ny abuse of trust was therefore ‘included in the base offense
level’ of six for fraud and deceit.” Broderson, 67 F.3d at 456
(quoting U.S.S.G. § 3B1.3). Similarly, this court in Mullens
determined that Mullens’s control over the investment company’s
accounts facilitated his fraud offense, which was another way of
stating that he controlled an elaborate, well-organized Ponzi
scheme. Because the district judge had enhanced Mullens’s
sentencing guideline range for that conduct, an additional
enhancement for abuse of trust was improper. Mullens, 65 F.3d at
1567; cf. United States v. Clark, 989 F.2d 447, 449 (11th Cir. 1993)
(affirming section 3B1.3 enhancement for police officer who pled
33
guilty to accepting bribes for protecting cocaine transactions during
reverse sting because his base offense level for cocaine
possession “d[id] not include the factor of abuse of a position of
trust”).
Since Garrison’s base fraud crime was the submission of false
statements on cost reports submitted to Aetna for Medicare
reimbursement, she cannot receive an enhancement for abuse of a
position of public trust based on the same conduct under the
specific terms of section 3B1.3. Additionally, Garrison had no
special expertise and was more removed from the criminal conduct
at issue in this case than the defendants in Mullens or Broderson
because she did not create or submit the false Medicare claims to
Aetna for approval; they were produced by Kelly and others at
Healthmaster who had the ability to formulate the reports. Because
Garrison did not hold a direct or fiduciary-type position of public
trust relative to the Medicare program, the victim, and her fraud
crime of conviction encompasses the same false cost reports that
the district judge used as the basis for her abuse-of-public-trust
34
enhancement, the district judge on remand will resentence
Garrison without the section 3B1.3 enhancement.
B. Enhancement for Aggravating Role in the Offense
Garrison argues that the district judge improperly enhanced
her sentence by two levels under U.S.S.G. § 3B1.1(c) for her
aggravating role in the crimes to which she pled guilty. She
contends that there is no evidentiary basis to support a finding that
she was a leader or manager of one or more participants in her
crime of false statements. We review the sentencing court’s
determination of role in the offense for clear error. United States
v. Tapia, 59 F.3d 1137, 1143 (11th Cir.), cert. denied, __ U.S. __,
116 S. Ct. 401, and cert. denied, ___ U.S. ___, 116 S. Ct. 546
(1995).
Under section 3B1.1(c), the district judge is authorized to
increase a sentence by two levels if “the defendant was an
organizer, leader, manager, or supervisor in any criminal activity”
other than extensive criminal conduct involving five or more
participants. U.S.S.G. § 3B1.1(c). To qualify for this
35
enhancement, the defendant must have organized, led, managed
or supervised “one or more other participants.” U.S.S.G. § 3B1.1,
comment. (n.2). “A ‘participant’ is a person who is criminally
responsible for the commission of the offense, but need not have
been convicted.” Id. comment. (n.1). The application notes further
guide the district court “[i]n distinguishing a leadership and
organizational role from one of mere management or supervision”:
Factors the court should consider include the exercise of
decision making authority, the nature of participation in
the commission of the offense, the recruitment of
accomplices, the claimed right to a larger share of the
fruits of the crime, the degree of participation in planning
or organizing the offense, the nature and scope of the
illegal activity, and the degree of control and authority
exercised over others.
Id. comment. (n.4); see United States v. Ramsdale, 61 F.3d 825,
830 (11th Cir. 1995) (using U.S.S.G. § 3B1.1, comment. (n.4) to
determine role in the offense).
Garrison’s direction of Ingram, Healthmaster’s in-house
attorney with Medicare expertise, in the political contributions
scheme, described in the conspiracy count to which Garrison pled
guilty, supports the district judge’s conclusion that Ingram was a
36
participant in Garrison’s political contributions scheme within the
meaning of section 3B1.1, comment. (n.1).22 Moreover, at the
22
The political contributions scheme, including Garrison’s
direction of Ingram, an unindicted coconspirator, is alleged as
follows in the conspiracy count of the indictment to which
Garrison pled guilty:
1. In the fall of 1989, [Garrison] directed
[Ingram] to solicit political contributions from
various HEALTHMASTER, INC. employees for a
gubernatorial candidate.
2. [Ingram] then prepared and submitted for
[Garrison’s] approval a list of potential employees to
be approached for a $200.00 political contribution.
3. At [Garrison’s] direction, [Ingram] then
contacted each of the HEALTHMASTER, INC. employees,
requested the $200.00 political contributions, and told
the employees that they would be reimbursed $400.00 by
HEALTHMASTER, INC. if the contribution was made.
4. At [Garrison’s] behest, [Ingram] then collected
the employees’ personal contribution checks.
5. Soon thereafter, in the fall of 1989, the list
of contributing employees was submitted to
HEALTHMASTER, INC.’s payroll office with instructions
from [Garrison] that each employee who contributed
$200.00 should be reimbursed or given a “bonus” in the
amount of $400.00.
6. HEALTHMASTER, INC. then reimbursed each
contributing employee in the amount of $400.00.
7. On approximately twenty different occasions,
between 1989 and 1992, [Garrison] directed [Ingram] to
solicit political contributions from HEALTHMASTER, INC.
employees for a total of approximately ten different
political candidates selected by [Garrison], in
generally the same manner as described above.
8. Thereafter, from 1990 through 1992,
HEALTHMASTER, INC. submitted annual cost reports to
Medicare claiming reimbursement for its employees’
wages, which included the amounts reimbursed those
employees for political contributions.
37
change of plea proceeding, Garrison admitted to the district judge
that she had “solicited political contributions and reimbursed
employees through compensation on a cost report that was
reimbursed by Medicare.” R2-12. Additionally, Special Agent
Stephen Robertson of the Georgia Bureau of Investigation testified
concerning the reimbursement of political contributions:
Jeanette Garrison had an employee, Noel Ingram,
contact a group of employees and solicit contributions for
specific political candidates. A list of these contributions
was maintained.
The employees would give their contributions to Ms.
Ingram, who would give them to Mrs. Garrison for
presentation to the candidate.
The employees were reimbursed through payroll,
which was, in turn, submitted by cost report to Medicare
for reimbursement.
9. In this manner, between 1989 and 1992,
HEALTHMASTER, INC. fraudulently reimbursed its
employees’ political contributions in the total amount
of approximately $195,991.39. In or about March, 1993,
after a former employee of one of Garrison’s companies,
EBC, filed a lawsuit against EBC which threatened to
publicly disclose the Healthmaster political
contribution scheme, HEALTHMASTER, INC. made just one
cost report adjustment of only approximately $66,443.00
for political contributions in 1992. HEALTHMASTER,
INC. fraudulently obtained reimbursements from Medicare
for the balance of its employees’ political
contributions.
R1-1-14-16.
38
Id. at 14-15.23 Not only did Garrison decline to cross-examine
Robertson, but also she conceded that his account was
“[s]ubstantially correct.” Id. at 17.
At sentencing, Garrison’s attorney acknowledged to the court
that “Mrs. Garrison directed Noel Ingram to solicit political
contributions. Absolutely right. Mrs. Garrison did solicit Noel
Ingram, or direct her, to go out and solicit political contributions.
We have no quarrels with that, and we don’t dispute that.” R4-25.
The attorney for Healthmaster further testified at sentencing that,
after Garrison encountered legal problems with her healthcare
23
At the sentencing hearing, the probation officer
testified as follows regarding Ingram’s participation in the
Medicare fraud and Garrison’s direction of her:
In the role in the offense issue, there is no
question that Mrs. Garrison directed Noel Ingram to
solicit the political contributions from other
employees within the company. As chairman of
Healthmaster, Mrs. Garrison was the only person there
who could tell someone to go out and solicit these
contributions.
The fact that Noel Ingram did not necessarily
submit the cost report is not critical. The element of
the offense in relevant conduct here allows that to be
considered, that she was directed by Mrs. Garrison to
commit that fraud.
The fact that [Ingram] was not charged criminally
is a decision that the Government made. There is no
indication that that was necessarily not a criminal
act.
R4-22.
39
businesses, she instructed Kelly, second in command at
Healthmaster, and Haddle, the cost report expert, to determine “if
there had been improper entries in the cost reports relating to
political contributions and to fix all the cost reports applicable. . . .
The direction was to take whatever steps were necessary to correct
the cost reports and get them right.” Id. at 30, 31. The factual
account of Garrison’s instruction of Ingram concerning political
contributions as stated in the PSR, which the district judge adopted
with no objection from Garrison, supports Ingram’s participant
status as well as Garrison’s aggravating role in the crime under
section 3B1.1(c) and describes how Ingram collected hundreds of
thousands of dollars at Garrison’s direction over a four-year
period.24
24
The following factual account of the political
contributions scheme is stated in the PSR under offense conduct:
In the instant offense, Garrison had employee, Noel
Ingram, contact a group of employees each year in an
effort to solicit political contributions for specific
political candidates. The employees gave their
political contributions to Ingram who then gave them to
Garrison for presentation to the respective political
candidates. Employees were later reimbursed through
Healthmaster, Incorporated’s payroll expenditures.
These payroll expenditures were in turn submitted by
Healthmaster, Incorporated to Aetna as employee bonuses
which qualified for reimbursement through Medicare
40
This record evidence refutes Garrison’s representation that
“[t]he Government failed to prove, and the trial court did not find,
Ingram participated knowingly in some part of the criminal
enterprise,” which precludes her from being a participant under
section 3B1.1(c). Appellant’s Brief at 35. Garrison would not have
trusted an unwitting pawn to play such an important role in her
political contributions scheme. Ingram’s delegated responsibilities
funds. In 1989, Healthmaster, Incorporated submitted
cost reports in the form of bonuses which were, in
fact, reimbursements for political contributions in the
amount of $25,200. In 1990, the false reimbursements
for political contributions totaled $42,262.92. In
1991, the false reimbursements for political
contributions totaled $44,700. In 1992, the
reimbursements for political contributions totaled
$83,864.47. The reimbursements from Medicare for
political contributions for the calendar years 1989
through 1992 totaled $195,991.39. However, in February
1993, Garrison directed employee Mike Haddle to make a
cost adjustment of approximately $66,443 to Aetna for
reimbursement to Medicare for the political
contribution reimbursements. Therefore, Medicare
suffered a direct loss of $129,548.77 as a result of
the political contribution reimbursement scheme.
However, the intended loss to Medicare was $195,
991.39.
PSR at 4, ¶ 6 (emphasis added). With respect to the two-level
enhancement for Garrison’s aggravating role in the offense, the
PSR states: “Pursuant to U.S.S.G. § 3B1.1(c), the offense is
increased two levels. Garrison was the chief executive officer
and owner of Healthmaster, Incorporated. Garrison directed
employee, Noel Ingram, to solicit political contributions from
other employees. The defendant, therefore, is correctly
described as a leader and manager in the instant offense.” Id.
at 6, ¶ 19.
41
in that scheme consisted of deciding which employees to solicit,
serving as Garrison’s liaison to those employees, promising them a
$400 reimbursement for each $200 contribution, collecting a
considerable amount of money from these employees over a four-
year period of time, and delivering to Garrison the funds. Garrison
then distributed the money to candidates of her choice, fraudulently
billed Medicare for it, and recycled the Medicare reimbursements to
the contributing employees with a hundred percent interest on their
contributions. Rather than being a dupe, Ingram was
Healthmaster’s in-house attorney whose expertise was Medicare
regulations, the very law that Garrison’s political contributions
scheme violated.25 Additionally, Garrison not only used Ingram in
this political contributions scheme, but also she directed Kelly and
Haddle to rectify the false Medicare cost reports when the scheme
was about to be exposed.
25
Given the extensive involvement in this Medicare fraud
crime of Noel O’Neal Ingram, a member of the State Bar of
Georgia, the Clerk is directed to provide a copy of this opinion
to the Office of the General Counsel of the State Bar of Georgia
for the purpose of determining whether this unindicted
coconspirator is fit for continued membership in the Georgia Bar.
42
As defined by the application notes for section 3B1.1, Ingram
was a participant in Garrison’s fraud on the Medicare program
through the political contributions scheme, and her conduct was
directed, managed and supervised by Garrison. See U.S.S.G. §
3B1.1, comment. (n.1-2). Furthermore, Garrison instructed Kelly
and Haddle to remedy Healthmaster’s false cost reports to
Medicare to avert detection of the four-year political contributions
scheme. We conclude that the district judge properly imposed a
two-level enhancement in Garrison’s sentence under section
3B1.1(c) for her aggravating role as an organizer and leader in the
political contributions scheme to defraud Medicare because this
determination is supported by a preponderance of the evidence.
See United States v. Stanley, 24 F.3d 1314, 1323 (11th Cir. 1994).
C. Fine
1. Notice
Garrison complains that she did not receive adequate notice
that the district judge would depart upward in imposing her fine in
43
the amount of $2,500,00026 in accordance with Burns v. United
States, 501 U.S. 129, 138-39, 111 S. Ct. 2182, 2187 (1991); United
States v. Paslay, 971 F.2d 667, 673-74 n.11 (11th Cir. 1992).
Under Burns, the district court must give “reasonable notice” that it
is contemplating an upward departure in the sentencing range
established by the Sentencing Guidelines. Burns, 501 U.S. at 138,
111 S.Ct. at 2187. “This notice must specifically identify the ground
on which the district court is contemplating an upward departure.”
Id. at 138-39, 111 S.Ct. at 2187. Our court has held that Burns
requires that the notice “must affirmatively indicate that an upward
departure is appropriate based on a particular ground” and that the
defendant must be provided with notice “setting forth the potential
ground (or grounds) for the upward departure within a ‘reasonable’
amount of time prior to the sentencing hearing.” Paslay, 971 F.2d
at 673-74 n.11.
26
Based on Garrison’s total offense level of 20, which
included the two-level enhancement for abuse of trust that we
have determined to be incorrect, her fine range would have been
$7,500 to $75,000. U.S.S.G. § 5E1.2(c)(3). Our elimination of
the abuse-of-trust enhancement, however, does not affect our
decision to uphold the fine, which is based on independently
justifying reasons.
44
Garrison concedes that her attorney received the revised PSR
containing notice of the possibility of upward departure on October
20, 1995, which was six days before sentencing on October 26,
1995. Appellant’s Brief at 42. This notice advised: “The Court may
consider an upward departure from the stated guideline fine range
because the defendant profited substantially from her involvement
in the offense and the sale of the company.”27 Revised PSR at 16,
¶ 63 (Oct. 19, 1995).28 Garrison acknowledged the notice of a
27
Under her plea agreement, Garrison was to sell
Healthmaster to an independent party and to use the proceeds to
pay $11,500,000 in restitution to Medicare and Medicaid. See
R1-331-5; PSR at 5, ¶ 10. A contract for the sale of Healthmaster
for $54,740,000 was scheduled for closing on November 1, 1995.
After payment of costs, taxes, and creditors, Garrison and her
family were to receive between $14,200,000 and $18,000,000 from
the sale.
28
We note that this revised PSR was not in the record on
appeal, although both parties quote the same recommendation for
upward departure in Garrison’s fine that we quote concerning the
issue of notice. See Appellant’s Brief at 42; Appellee’s Brief at
34. Since adequate notice of upward departure in Garrison’s fine
is an issue on appeal and this revised PSR was the notice, it was
incumbent upon the parties in preparing the record on appeal to
be certain that this revised PSR, essential to our review of the
notice issue with respect to the fine, was part of the appellate
record. Instead, this court had to obtain this revised PSR, which
both parties acknowledge receiving six days prior to the
sentencing hearing, from the probation office. We are
disappointed by the lack of diligence shown by the parties in
this case in preparing the record on appeal. It is the
responsibility of the parties to work with each other and the
clerk’s office to ensure that the record on appeal is complete
for our review of the appellate issues.
45
potential upward departure in her fine and challenged the rationale
that she would profit from the sale of Healthmaster in her
sentencing memorandum:
On Friday morning, October 20, [Garrison’s]
counsel received an amendment by the probation office
to the presentence report. The amendment suggested
the possibility of an upward departure on the fine range
because [Garrison] “profited substantially from . . . the
offense and the sale of the Company.” This is incorrect.
In the sale of the company, the state and federal
governments are receiving $9M more in repayments
than they are owed plus $10M in taxes. Any funds
remaining after the payment of creditors are
serendipitous and will benefit the trusts of the Garrison
children. The incremental benefit to Garrison companies
from political contributions and shared services is being
repaid many times over.
R1-421-25 n.1.29
29
Garrison’s sentencing memorandum, dated October 20, 1995,
also was not part of the record on appeal, although the
government quotes the same footnote in its brief. See Appellee’s
Brief at 35. In the course of our appellate review, the district
court, at our request, obtained Garrison’s sentencing memorandum
and docketed it for the first time as received there on November
24, 1997; our court did not receive Garrison’s sentencing
memorandum until December 5, 1997. Whatever inadvertence caused
Garrison’s sentencing memorandum not to have been docketed
previously in the district court and, consequently, not to be
part of the original record in this case, we know that it was
received by the government, which filed a response, R1-330, prior
to Garrison’s sentencing and that it was reviewed by the district
court because it is referenced in the sentencing transcript, R4-
4. Accordingly, we have considered Garrison’s sentencing
memorandum and the representations therein. We reiterate,
however, that it is the responsibility of the parties to see that
the appellate record is complete and that documents from which
46
At sentencing, Garrison’s counsel confirmed that he had no
objections “as to the factual accuracy” of the PSR but that he did
“dispute some of the conclusions legally.” R4-4. Garrison, who
had filed a statement that she had “read, reviewed and
under[stood] the presentence report,” R1-326-1, agreed with her
counsel’s representations at sentencing, R4-4. After Garrison’s
counsel presented witnesses on her behalf, the district judge asked
Garrison if she wanted to speak, but she declined, and her attorney
announced that they were ready to proceed with the sentencing.
Id. at 91. The district judge asked counsel if there was “any reason
why I should not now proceed with the imposition of sentence?” Id.
at 92. Garrison’s counsel responded: “There is no reason, Your
Honor.” Id.
The district judge then imposed Garrison’s sentence, including
the $2,500,000 fine. Her counsel did not object to the fine when it
was imposed, and the district judge went on to address supervised
they quote on appeal were docketed in the district court and are
part of the record on appeal.
47
release, dismissal of the remaining counts of the indictment,
arrangements for Garrison’s surrender, and her right to appeal.
Thereafter, the district judge asked if Garrison’s counsel had “any
objection to the Court’s finding of fact and conclusions of law or to
the manner in which sentence was pronounced?” R4-97. The
following colloquy ensued between Garrison’s counsel and the
sentencing judge:
COUNSEL: Your Honor, to preserve the record, we do
object on the abuse of trust and role in the offense.
Additionally, although not argued to you today, we
footnoted in our sentencing memorandum our objection
to an upward departure in the fine level which the Court
has imposed here.
THE COURT: Yes.
COUNSEL: And we would state that we respectfully do
not believe that the record reflects that the elements for
such an upward departure exist in this case.
And therefore, we wish to preserve our appellate
issues on that.
THE COURT: Certainly. All right. That is the judgment
of the Court.
Id.
Because Garrison acknowledges that she received notice of
48
the possibility of upward departure in her fine six days prior to her
sentencing in the revised PSR, she objected to an upward
departure in her sentencing memorandum, and she relied on that
objection at sentencing, we conclude that she received reasonable
notice of the potential of upward departure in her fine. She acted
upon this notice in her responsive sentencing memorandum and
was content to rely upon her footnote response in that
memorandum at sentencing, although the district judge gave her
counsel the opportunity to object at sentencing following his
statement of the reasons for the upward departure in the fine.
Since the district judge based his reasons for the upward departure
in Garrison’s fine on facts found in the PSR, which Garrison
asserted to the court that she had reviewed, understood, and
accepted as accurate, she cannot now contrariwise represent that
she was unprepared for or surprised by the reasons upon which the
district judge based the upward departure.30
30
The lack-of-notice cases relied upon by Garrison are
inapposite because either the PSR did not indicate the
possibility of an upward departure or did not specify the reason
for an upward departure. See Burns, 501 U.S. at 131-32, 111
S.Ct. at 2184 (holding that the district court violated Fed. R.
49
Federal Rule of Criminal Procedure 32(c)(1) requires only that
the district judge give counsel “an opportunity to comment on the
probation officer’s determinations and on other matters relating to
the appropriate sentence.” Fed. R. Crim. P. 32(c)(1); see U.S.S.G.
§ 6A1.3(a), p.s. (“When any factor important to the sentencing
determination is reasonably in dispute, the parties shall be given an
adequate opportunity to present information to the court regarding
that factor.”) .31 Moreover, Garrison admits that she “did not object
Crim. P. 32 by departing upward in sentence without notice and
the PSR identified no grounds for departure); United States v.
Valentine, 21 F.3d 395, 397-98 (11th Cir. 1994) (involving
government concession of Burns violation where basis for upward
departure was not mentioned until sentencing); United States v.
Jones, 1 F.3d 1167, 1168 (11th Cir. 1993) (“The PSI did not
suggest that an upward departure would be considered, and before
the hearing the government made no such suggestion.”); Paslay,
971 F.2d at 673 n.11 (“[T]he presentence investigation report did
not put [the defendant] on notice that an upward departure . . .
would be considered.”); United States v. Wright, 968 F.2d 1167,
1173 (11th Cir. 1992) (per curiam) (“[T]he PSI did not recommend
an upward departure; nor did the Government present the court
with a prehearing submission recommending an upward departure.”),
vacated on other grounds, 508 U.S. 902, 113 S. Ct. 2325 (1993).
In contrast, Garrison was notified in the revised PSR, which she
received six days prior to her sentencing, of the potential
upward departure in her fine because of her substantial profits
resulting from her involvement in the crimes to which she pled
guilty and the sale of the company. While the district judge
elaborated on these reasons for the upward departure at
sentencing, they nevertheless were the bases for the upward
departure for which Garrison was prepared by the notice in the
revised PSR.
31
Sentencing Guidelines policy statements are binding on
federal courts as interpretive guides to the meaning of an
applicable guideline. Williams v. United States, 503 U.S. 193,
50
specifically to the lack of notice under Burns at the sentencing
hearing and therefore the standard of review is plain error.”
Appellant’s Brief at 42 n.7 (citing United States v. Jones, 1 F.3d
1167, 1170 (11th Cir. 1993); see Paslay, 971 F.2d at 674 n.13
(stating that, for sentencings after Burns issued, “Burns notice will
be subject to waiver and limited review under the plain error rule
when a defendant fails to make a timely objection predicated on
Burns in district court“). When sentence objections are raised for
the first time on appeal, we consider them “under the plain error
doctrine to avoid manifest injustice.” United States v. Stevenson,
68 F.3d 1292, 1294 (11th Cir. 1995) (per curiam). For our court “to
correct plain error: (1) there must be error; (2) the error must be
plain; and (3) the error must affect substantial rights.” Id.
We conclude that her revised PSR, received six days prior to
her sentencing, was reasonable notice to Garrison of the potential
for upward departure in her fine. The sufficiency of this notice is
evidenced by her responsive sentencing memorandum, which she
200-01, 112 S. Ct. 1112, 1119 (1992); Stinson, 508 U.S. at 42, 113
S.Ct. at 1917.
51
determined to be adequate to preserve her objection at sentencing
after pronouncement of the fine. Furthermore, she should not
have been surprised by the reasons for the upward departure,
which were based on the facts of the PSR. There was no plain
error regarding notice of the upward departure in Garrison’s fine.
2. Upward Departure
Garrison argues that the district judge used improper factors
in upwardly departing in the imposition of her fine from the
Guidelines range of $7,500 to $75,000 , U.S.S.G. § 5E1.2(c)(3).
She contends that her $2,500,000 fine ”is so large and
disproportionate to the offense that it is unreasonable on its face.”
Appellant’s Brief at 49. We review a district court’s departure from
the applicable Sentencing Guidelines for abuse of discretion, and
that decision is entitled to “substantial deference .“ Koon v. United
States, ___ U.S. ___, ___, 116 S. Ct. 2035, 2046 (1996).
The Sentencing Guidelines mandate that “[t]he court shall
impose a fine in all cases, except where the defendant establishes
that he is unable to pay and is not likely to become able to pay any
52
fine.” U.S.S.G. § 5E1.2(a); see United States v. Hairston, 46 F.3d
361, 376 (4th Cir. 1995) (“The defendant bears the burden of
demonstrating his present and prospective inability to pay [a
fine].”), cert. denied, ___ U.S. ___, 116 S. Ct. 124 (1995). After a
sentencing court determines that a fine is appropriate, it then is
required to consider “seven factors in setting the amount of the fine,
including the evidence presented as to the defendant’s ability to
pay.” United States v. Lombardo, 35 F.3d 526, 527 (11th Cir.
1994) (per curiam). Under the Sentencing Guidelines, those
factors that the district court must consider to determine the
amount of a fine are:
(1) the need for the combined sentence to reflect the
seriousness of the offense (including the harm or loss to
the victim and the gain to the defendant), to promote
respect for the law, to provide just punishment and to
afford adequate deterrence;
(2) any evidence presented as to the defendant’s ability
to pay the fine (including the ability to pay over a period
of time) in light of his earning capacity and financial
resources;
(3) the burden that the fine places on the defendant and
his dependents relative to alternative punishments;
53
(4) any restitution or reparation that the defendant has
made or is obligated to make;
(5) any collateral consequences of conviction, including
civil obligations arising from the defendant’s conduct;
(6) whether the defendant previously has been fined for
a similar offense; and
(7) any other pertinent equitable considerations.
U.S.S.G. § 5E1.2(d). Although we have not required that the
district court make specific findings concerning each of these
factors, we need the court’s reasoning or sufficient record evidence
to show consideration of these factors for our review. Lombardo,
35 F.3d at 529-30. We have recognized that the amount of a fine
can be based on a defendant’s role in the criminal conduct, the
likelihood that prior income was derived predominantly from the
criminal activity, “and the district court’s realistic assessment of the
defendant’s personal ability to pay.” United States v. Nelson, 837
F.2d 1519, 1526 n.4 (11th Cir. 1988). Since these factors must be
considered with the imposition of any fine, they comprise the
foundation for the fine determined by the sentencing court from
which the district court in this case additionally departed upward.
54
The Sentencing Guidelines anticipate the potential for upward
departures in fines in particular cases where the Guideline range is
insufficient:
The Commission envisions that for most defendants, the
maximum of the guideline fine range from subsection (c)
will be at least twice the amount of gain or loss resulting
from the offense. Where, however, two times either the
amount of gain to the defendant or the amount of loss
caused by the offense exceeds the maximum of the fine
guideline, an upward departure from the fine guideline
may be warranted.
U.S.S.G. § 5E1.2, comment. (n.4) (emphasis added).
In Koon, the Supreme Court established the analysis for
determining whether a particular Guidelines departure is justified:
1) What features of this case, potentially, take it outside
the Guidelines’ “heartland” and make of it a special, or
unusual, case?
2) Has the Commission forbidden departures based on
those features?
3) If not, has the Commission encouraged departures
based on those features?
4) If not, has the Commission discouraged departures
based on those features?
Koon, ___ U.S. at ___, 116 S.Ct. at 2045 (citation and internal
55
quotation marks omitted).
At sentencing, the district judge explained his reasoning for
imposing Garrison’s sizeable fine:
The Defendant shall pay the United States a fine of
two hundred and fifty thousand dollars on each of Counts
1 through 10, for a total fine of two million, five hundred
thousand dollars.
And that fine has been imposed in a sense as an
upward departure from the fine guideline range. In
deciding to depart upward, I, of course, considered and
had to consider many factors:
First, the Court wants to be sure that the combined
sentence reflects the seriousness of the offense and that
it promotes respect for the law;
In addition, that it provides a just punishment under
all the facts;
And finally, and most importantly, as has been
pointed out by counsel, affords an adequate deterrence.
In addition, I have evaluated the Defendant’s ability
to pay the imposed fine and the possibility that it would
impose a burden on her or her dependents. The
information, however, provided and contained in the
Presentence Report has shown that she does have
significant financial resources to pay the fine and that
she has provided a trust and numerous business
opportunities for her dependents which should provide
them with ample financial security for the balance of their
lives.
I have chosen the fine amount to reflect the intent of
the Sentencing Commission as stated in Section 5E1.2
in the application note number four, which states that if
two times the amount of loss exceeds the maximum of
the fine guideline, an upward departure may be
56
warranted. And the amount of loss in this case, of
course, greatly exceeded that maximum and fully
authorizes the fine that the Court has imposed.
As has been commented repeatedly, this is a very
high profile case. In these times, not only because of
this case, but we hear continually the public’s concern
about the Medicare program and the possibility of losing
medical benefits in old age.
And I think it would be reasonable to assume that
the public sees the Defendant as a person who has
violated the law, and as a result, made very substantial
profits for herself and her family even after restitution and
other civil obligations have been paid.
So to impose a fine less than the maximum allowed
by statute could cause the public to lose respect for the
courts and the judicial process, something that becomes
involved and is involved in the imposition of any
sentence by this Court.
R4-93-95 (emphasis added). We affirm a “district court’s
determination of the facts supporting an upward departure unless
that determination was clearly erroneous.”32 United States v.
Gunby, 112 F.3d 1493, 1503 (11th Cir. 1997).
32
The district court’s factual findings concerning the §
5E1.2(d) factors in determining a fine is reviewed under the
clearly erroneous standard and is to be distinguished from our
abuse-of-discretion review of the district court’s decision to
depart upward. See Long, 122 F.3d at 1366; Lombardo, 35 F.3d at
527; see also United States v. Rowland, 906 F.2d 621, 623 (11th
Cir. 1990) (recognizing that, because a district court’s
determination of the appropriate fine involves factual issues,
“including the defendant’s ability to pay the fine imposed,”the
district court’s calculation of the fine is entitled to deference
and can be reversed on appeal only for clear error).
57
Garrison conceded the factual accuracy of the PSR, which
states that “[t]he minimum amount of intended loss to have been
suffered by Medicare as a result of Garrison’s activity is
$1,192[,]440.21,” PSR at 5, ¶ 9, and that “Medicare suffered a
direct loss of a minimum of $743,397.49 in the instant offense,” id.
at ¶ 10 .33 The application commentary to the fraud guideline,
under which Garrison was sentenced, states that “[c]onsistent with
the provisions of § 2X1.1 (Attempt, Solicitation or Conspiracy), if an
intended loss that the defendant was attempting to inflict can be
determined, this figure will be used if it is greater than the actual
loss.” U.S.S.G. § 2F1.1, comment. (n.7). Garrison pled guilty to
conspiracy in addition to nine false statement counts. A minimum
intended loss of approximately $1,200,000 is almost sixteen times
$75,000, which is the maximum of the Sentencing Guidelines fine
range on each count. Even the direct loss in excess of $743,000
was nearly ten times $75,000.
33
As the PSR recommended, the district judge increased
Garrison’s base offense level by eleven levels under U.S.S.G. §
2F1.1(b)(1)(L), which corresponds to a loss of more than $800,000
but less than $1,500,000. See PSR at 6, ¶ 16.
58
The Sentencing Guidelines provide that “[t]he amount of the
fine should always be sufficient to ensure that the fine, taken
together with other sanctions imposed, is punitive.” U.S.S.G. §
5E1.2(e). Garrison’s net worth, stated in her PSR, which she
agreed at sentencing was accurate, was $46,483,011. PSR at 11.
She was to make an estimated $14,000,000 from the sale of
Healthmaster after all of her obligations to the government and the
company’s creditors were paid. Over ninety percent of
Healthmaster’s business was reimbursed by Medicare, which
Garrison had bilked for years to cover her and her family’s personal
expenses, her employees’ salaries for non-Medicare work, and
even political contributions. Additionally, Garrison agreed and
understood pursuant to her plea agreement that “the question of
fine will ultimately be within the Court’s discretion, in accordance
with the Sentencing Guidelines.” R1-331-4. The record evidences
that these facts that support the district judge’s upward departure
are not clearly erroneous.
In departing upward in Garrison’s fine, the district judge
59
specifically relied on the Sentencing Guidelines application
commentary, providing that “[w]here . . . two times either the
amount of gain to the defendant or the amount of loss caused by
the offense exceeds the maximum of the fine guideline, an upward
departure from the fine guideline may be warranted.” U.S.S.G. §
5E1.2, comment. (n.4)34; see United States v. Leonard, 67 F.3d
460, 461 (2d Cir. 1995) (per curiam) (deciding that the district
court’s “reliance on § 5E1.2 Application Note 4 . . . was adequate to
justify the departure”). Determining that the maximum Sentencing
34
Garrison mistakenly argues that the district court could
not have departed on the stated basis from U.S.S.G. § 5E1.2,
comment. (n.4), because that application note also provides that
“where a sentence within the applicable fine guideline range
would not be sufficient to ensure both the disgorgement of any
gain from the offense that otherwise would not be disgorged
(e.g., by restitution or forfeiture) and an adequate punitive
fine, an upward departure from the fine guideline range may be
warranted.” Id. Garrison contends that she has paid $16,500,000
in restitution and that “there is no factual finding that
$16,500,000.00 was a loss or gain attributable to [her].”
Appellant’s Brief at 52. Whatever Garrison’s agreements are with
the trustee in bankruptcy for Healthmaster and the nature of the
additional $5,000,000 payment that she claims that she has made,
in her plea agreement, Garrison knowingly and voluntarily agreed
to pay $11,500,000 as “full and complete restitution,”
$10,000,000 to Medicare and $1,500,000 to Medicaid, for losses
attributable to her and her companies. R1-331-5. Furthermore,
in the provision in the second paragraph of § 5E1.2,
comment.(n.4), upon which Garrison relies, the Sentencing
Commission “sought to state an additional basis for departure,
not to narrow the terms of the departure authorized in the first
paragraph.” United States v. Leonard, 67 F.3d 460,462 (2d Cir.
1995) (per curiam).
60
Guidelines fine of $75,000 was inadequate and, therefore, an
upward departure was warranted under section 5E1.2, comment.
(n.4), the district judge calculated Garrison’s fine pursuant to her
plea agreement, wherein she agreed that she was subject to a fine
not to exceed $250,000 on each of the ten counts to which she
pled guilty, R1-331-9, 10.35 This calculation complies with 18
U.S.C. § 3571(b)(3).36
Additionally, Garrison selectively quotes out of context from
the district judge’s reasons for the upward departure in her fine to
argue that the judge improperly based the departure on her “socio-
economic status“ and “publicity.” Appellant’s Brief at 50, 51.
When viewed in context of his reasons for the upward departure in
35
Garrison pled guilty to Count One for conspiracy to
defraud the United States in violation of 18 U.S.C. § 371 and
Counts Two through Ten for false statements to Medicare in
violation of 18 U.S.C. § 1001.
36
Under 18 U.S.C. § 3571(b)(3), the maximum to which a
defendant may be sentenced per felony is $250,000. Garrison
incorrectly argues that her $2,500,000 fine violates 18 U.S.C. §
3571(d), which alternatively limits a defendant’s fine based on
pecuniary gain or loss to “not more than the greater of twice the
gross gain or twice the gross loss.” 18 U.S.C. § 3571(d).
Garrison fails to recognize that § 3571(d) is an alternative
method of calculating a defendant’s fine and that it does not
preclude a fine under § 3571(b)(3). See 18 U.S.C. § 3571(b)(2).
61
her fine, it is clear that the district judge was stating on the record
that he had considered the requisite factors of U.S.S.G. § 5E1.2(d)
in determining the fine portion of Garrison’s sentence. See 18
U.S.C. § 3553(a) (listing the factors to be considered in imposing
sentence). Rather than imposing the fine based on Garrison’s
affluence, as she contends,37 the district judge determined the fine
for Garrison’s substantial fraud on the Medicare program, from
which she and her family profited greatly and to which she pled
guilty. Garrison’s greed, reflected in the considerable amount of
her Medicare fraud over a number of years, was the basis for her
fine. The district judge assessed her ability to pay the fine in
37
We reject Garrison’s self-serving arguments attempting to
show that the district judge based her fine on her socio-economic
status as a misrepresentation of the facts and the judge’s
reasoning in imposing her fine:
Simply because a party engages in limited criminal
activity which may result in an illegal gain, it does
not follow that all other income from a business is not
legitimately earned. Clearly, the trial court
impermissibly increased Garrison’s fine based upon the
wealth and socio-economic status she and her family
achieved through 20 years of building a business. This
business legitimately earned, and is entitled to
retain, the vast majority of its profits.
Appellant’s Brief at 51. The record evidence in this case shows
that Healthmaster predominately was funded by Medicare, which was
defrauded at Garrison’s direction of considerable funds.
62
addition to restitution as he is required to do. See U.S.S.G. §
5E1.2(d)(2)-(4) (requiring a sentencing judge to consider ability to
pay, burden placed on dependents, and restitution before
determining a fine amount).
Similarly, Garrison incorrectly attributes the amount of her fine
to publicity or notoriety surrounding her case as being a motivating
factor for the upward departure by the district judge.38
Contrary to her mischaracterization of publicity as a reason for the
upward departure, the judge stated at sentencing that there was
public concern regarding Medicare fraud and its impact on the
Medicare program. From a punitive perspective, the judge also
stated that the public would lose respect for the judicial process if a
criminal who had profited substantially from a federal health
38
Garrison’s publicity argument as it relates to her fine
is as follows:
All defendants should be sentenced fairly and equally
based on their conduct, not on the amount of publicity
that their case has generated. Sentencing decisions
based upon the notoriety of a particular defendant are
inherently unfair and contrary to the purposes of our
justice system. Publicity is an unreasonable basis for
a departure from the sentencing guidelines and should
not be allowed.
Appellant’s Brief at 49-50 (emphasis added).
63
insurance program did not receive a commensurate sentence. In
determining a fine, a sentencing judge is required to consider “the
need for the combined sentence to reflect the seriousness of the
offense (including the harm or loss to the victim and the gain to the
defendant), to promote respect for the law, to provide just
punishment and to afford adequate deterrence.” U.S.S.G. §
5E1.2(d)(1). Given Garrison’s substantial profits over time from her
Medicare fraud, the district judge did not believe that the highest
Sentencing Guidelines applicable fine was sufficient to punish
Garrison’s calculated crime that defrauded Medicare, our federal,
public health insurance program. Where the amount of loss “does
not fully capture the harmfulness and seriousness of the conduct,
an upward departure may be warranted,” such as when “the
offense caused a loss of confidence in an important institution.”
U.S.S.G. § 2F1.1, comment. (n.10)(e); see Gunby, 112 F.3d at
1502 (determining that the district court did not abuse its discretion
in departing upward in sentence after concluding that the
defendant’s fraudulent schemes “significantly disrupted a
64
governmental function”). Thus, sufficient punishment for her
Medicare fraud and deterrence of such conduct were behind the
public concern factor for the district judge’s decision to depart
upward in Garrison’s fine and not publicity.
Applying the Koon analysis to the district judge’s upward
departure in Garrison’s fine, we find that the judge’s explanation
was compliant. The district judge enunciated at sentencing his
evaluation of the factors required under the Sentencing Guidelines
before the imposition of any fine. See U.S.S.G. § 5E1.2(d). He
particularly was impressed by the considerable amount that
Garrison and those at her direction defrauded the Medicare
program over a period of twenty years, and he carefully assessed
Garrison’s ability to pay the fine imposed, which she has not
disputed. For defrauding our federal health insurance program for
her personal gain as well as contributions to political candidates,
the district judge determined that Garrison’s criminal conduct was
especially egregious and warranted an upward departure from the
highest amount under the Guidelines range. Far from forbidding
65
such a departure, the Sentencing Commission specifically provided
for it as U.S.S.G. § 5E1.2, comment. (4) and U.S.S.G. § 2F1.1,
comment. (n.10) clarify. Significantly, the $2,500,000 fine also
was available under 18 U.S.C. § 3571(b) (3), which permits a fine
of $250,000 per felony for a defendant. Furthermore, Garrison’s
argument that her restitution amount precluded her sizeable fine is
unavailing because she agreed in her plea agreement to pay
$11,500,000 in restitution as well as a fine to be determined by the
district judge. Accordingly, we conclude that the district judge did
not abuse his discretion in departing upward in Garrison’s fine.
III. CONCLUSION
In this appeal from her Medicare fraud sentence, Garrison
argues that her sentence should not have been enhanced for
abuse of a position of trust and role in the offense. She also
contends that she did not have sufficient notice concerning the
district court’s upward departure in her fine and that the amount
was unjustified. The district court appropriately enhanced
Garrison’s sentence for her aggravating role in the offense and her
66
fine was not an abuse of discretion. Nevertheless, we VACATE
Garrison’s sentence because the enhancement for abuse of a
position of trust was improper, as we have explained herein.
Accordingly, we REMAND for resentencing with instructions that
the district court eliminate the enhancement for abuse of a position
of public trust.
67