United States v. Davis

PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________________
No. 94-5112
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D.C. Docket No. 93-367-CR-UU-B
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
PERLA MARTIN DAVIS, MARTA MORFA,
EMILIO VALDES, ELVA R. LAMAS,
Defendants-Appellants.
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Appeals from the United States District Court
for the Southern District of Florida
_________________________________________________________________
(July 2, 1997)
Before HATCHETT, Chief Judge, COX, Circuit Judge, and MESKILL*,
Senior Circuit Judge.
HATCHETT, Chief Judge:
Appellants Perla Martin Davis, Elva Lamas, Marta Morfa and
Emilio Valdes, M.D., were convicted in a complex Medicare fraud
_______________________________
*
Honorable Thomas J. Meskill, Senior U.S. Circuit Judge for the
Second Circuit, sitting by designation.
scheme. On appeal, appellants challenge their convictions and
sentences on a number of grounds, including insufficient
evidence, erroneous jury instructions, failure to charge the jury
on an element of the offense, admission of uncharged criminal
conduct evidence, exclusion of expert psychological testimony,
prejudicial prosecutorial comments, failure to grant sentencing
departures, and improper assessment of restitution. We affirm
the restitution orders assessed against appellants Davis, Lamas
and Morfa, and the judgments and sentences that the district
court entered in all other respects.
BACKGROUND
In August of 1993, a grand jury returned a 23-count Medicare
fraud indictment against the appellants and eight other
defendants. The indictment charged each of the twelve with
conspiring, in violation of 18 U.S.C. § 371, to (a) “defraud the
United States by impeding, impairing and obstructing the function
of the Department of Health and Human Services in administering
the Medicare Program,” and (b) commit offenses against the United
States, including violations of the False Claims Statute, 18
U.S.C. § 287, and the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b
(Count 1). Counts 2-16 of the indictment charged various
defendants, including appellants, with substantive violations of
the False Claims Act.1 Counts 17-23 included indictments for
violations of 42 U.S.C. § 1320a-7b. The grand jury charged both
1
The indictment charged Davis in Counts 2, 3, 8 and 9;
Morfa in Counts 10 and 14; Lamas in Count 16; and Valdes in
Counts 4, 7, 8 and 10.
2
Davis and Morfa with violating the Anti-Kickback Statute: Davis
in Count 19 and Morfa in Counts 21-23. The eight codefendants,
including Frank Morfa, Perla Morfa, Celia Morfa Martin, Mario
Fonesca, Ana Conde, Luis Mateus, Sandra Mayorga and Nora Vega,
subsequently pleaded guilty, leaving appellants to proceed to
trial.
The government alleged that the appellants and their co-
defendants executed the Medicare fraud scheme through the
operation of sixteen related companies (the Morfa companies).
Certain members of the Morfa extended family, including
appellants Davis, Lamas and Morfa, owned, operated and worked for
the businesses at different times during the course of the
conspiracy. Over a period of several years, the Morfa companies
submitted false claims and billed Medicare for medically
unnecessary nutritional supplements and feeding supply kits,
ostensibly for the purpose of parenteral and enteral nutritional
(PEN) therapy, the majority of which the intended patients never
received. Participants in the scheme included (1) recruiters,
who solicited patients through whom Medicare could be billed
fraudulently without their knowledge; (2) physicians, such as
Valdes, who signed blank Certificates of Medical Necessity (CMNs)
which authorized the issuance of PEN therapy medical supplements
and supply kits for the recruited patients, regardless of their
medical necessity and the patients' eligibility to receive such
products; and (3) managers, who paid the recruiters to locate
Medicare-eligible participants, paid the physicians for signing
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false CMNs, and ran the actual Medicare billing operation --
completing the fraudulent CMNs, preparing falsified Medicare
claim forms and monthly summaries, and filing the documents with
Medicare seeking reimbursement.
On July 20, 1994, the United States District Court for the
Southern District of Florida granted judgments of acquittal on
the false claims count against Lamas (Count 16), and one false
claims count against Morfa (Count 14). On August 1, 1994, the
jury returned guilty verdicts on most of the offenses charged in
the indictment. Each appellant received a guilty verdict on
Count 1, the multiple-object conspiracy. In addition to the
conviction on Count 1, Davis received guilty verdicts on Counts
2, 3, 8 and 9, and an acquittal on Count 19; the jury declared
Morfa guilty on Counts 10, 21, 22 and 23; and Valdes was found
guilty on Counts 4, 7, 8 and 10.2 In October of 1994, the
district court sentenced Davis to forty-one months, Lamas to
forty-six months and Morfa to forty-six months of imprisonment.
Pursuant to the information and recommendations found in the
appellants’ Presentence Investigation Reports (PSR), the court
ordered them to pay restitution jointly and severally to the
United States Department of Health and Human Resources (HHR) in
installments as the Bureau of Prisons instructed. The district
court imposed the following restitution amounts: $9,182,271.40
for Davis, $8,119,445.40 for Lamas and $8,119,445.00 for Morfa.
2
Lamas only received the guilty verdict on the conspiracy
count following the district court’s dismissal of the substantive
false claims charge.
4
Valdes received a sentence of thirty months imprisonment; the
court also ordered Valdes to pay $261,896.73 in restitution.
ISSUE
The issue is whether the district court committed plain
error in ordering appellants Davis, Lamas and Morfa to pay
restitution jointly and severally, without making the proper
factual findings regarding the amount of loss and appellants’
respective abilities to pay.3
CONTENTIONS
The appellants argue that the district court (1) plainly
erred in imposing restitution on them for amounts greater than
their specific contributions to the conspiracy; and (2) plainly
erred in failing to make the requisite factual findings regarding
each appellant's ability to pay.
The government counters that the district court may
attribute the total loss associated with the conspiracy to a
particular conspirator when imposing restitution. A defendant is
liable for the foreseeable acts of co-conspirators. While
indigence is a consideration, it is, nonetheless, one of many
factors and does not itself bar an order of restitution. Because
the appellants did not dispute the relevant facts at trial, the
government contends that the district court was not required to
make explicit factual findings on the restitution issue.
3
We do not find appellants' arguments persuasive regarding
the remaining issues raised in this appeal, and, deciding that
the district court did not commit reversible error, we dispose of
them without additional comment. See Eleventh Circuit Rule 36-1.
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DISCUSSION
In this appeal, appellants challenge the restitution order
on two grounds: the district court erred in determining the
amount of loss attributable to each appellant for restitution
purposes; and the district court failed to make findings as to
each appellant’s ability to pay the restitution amount. The
Victim and Witness Protection Act of 1982 (VWPA), 18 U.S.C. §§
3663-64, empowers the district court to award restitution to
victims. The VWPA enumerates those factors which a district
court must consider before imposing a restitution order. Section
3664(a) provides:
The court, in determining whether to order restitution
under section 3663 of this title and the amount of such
restitution, shall consider the amount of the loss
sustained by any victim as a result of the offense, the
financial resources of the defendant, the financial
needs and earning ability of the defendant and the
defendant's dependents, and such other factors as the
court deems appropriate.
18 U.S.C. § 3664(a) (1994).4 The court must award restitution
“in accordance with sections 3663 and 3664.” United States v.
Twitty, 107 F.3d 1482, 1493 (11th Cir. 1997) (quoting 18 U.S.C. §
3556).
4
We acknowledge that Congress substantially amended
sections 3663 and 3664 in 1996. See Antiterrorism and Effective
Death Penalty Act of 1996, Pub. L. No. 104-132, Title II, §§
205(a), 206(a), 110 Stat. 1214, 1229-31, 1232-36 (Apr. 24, 1996),
codified at 18 U.S.C.A. §§ 3663, 3664 (West Supp. 1997). We need
not apply the amended versions to these facts, however, because
the amendments are only effective “for sentencing proceedings in
cases in which the defendant is convicted on or after Apr. 24,
1996.” 18 U.S.C.A. §§ 3663, 3664 note (West Supp. 1997). All
future references to the VWPA within this opinion are to its pre-
1996 amendment version.
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This court ordinarily reviews a district court's restitution
order for abuse of discretion. United States v. Remillong, 55
F.3d 572, 574 (11th Cir. 1995). The court reviews the legality
of the restitution order de novo. United States v. Cobbs, 967
F.2d 1555, 1556 (11th Cir. 1992). The appellants admit, however,
that they did not dispute the restitution order at sentencing.
Moreover, the appellants did not state any objections to their
PSRs on the issue of restitution. A defendant’s failure to
challenge a restitution order at sentencing constitutes a waiver
of the objection. United States v. Stinson, 97 F.3d 466, 468 n.1
(11th Cir. 1996), cert. denied, 117 S. Ct. 1007 (1997). The
appellants were obligated to preserve this issue for appeal, and
their silence in the face of that duty precludes us from
addressing the merits of their contentions absent a showing of
manifest injustice. Effective appellate review is hindered when
the asserted error has not been brought to the district court’s
attention. Under these facts, therefore, we will review the
restitution orders for plain error. See United States v.
Obasohan, 73 F.3d 309, 310-11 (11th Cir. 1996) (absent manifest
injustice, this court will not entertain an appeal of a
restitution order if the defendant failed to raise an objection
to the district court); see also Cobbs, 967 F.2d at 1557-58 (if
plain error exists, this court may review the claim).
1. The Amount of Loss
The appellants fail to show any error in the district
court’s measure of restitution assessed on behalf of HHR. The
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appellants contend that the district court did not properly
tailor the amount of restitution to each appellant’s specific
conduct within the conspiracy. In Obasohan, this court held that
a district court may order a defendant to pay restitution for
losses "which result from acts done in furtherance of the
conspiracy of which the defendant is convicted." 73 F.3d at 311.
After careful review of the record, we conclude that the district
court did not commit error, plain or otherwise, in calculating
the amount of loss attributable to the appellants.
A conspiracy is an ongoing criminal activity for which a
participant remains culpable until the conspiracy ends or the
participant withdraws. Hyde v. United States, 225 U.S. 347, 369
(1912). “Congress intended restitution to be tied to the loss
caused by the offense of conviction.” Hughey v. United States,
495 U.S. 411, 418 (1990). Where the defendant is convicted of
conspiracy to defraud, the district court has “the authority to
order restitution for the losses caused by the entire fraud
scheme, not merely for the losses caused by the specific acts of
fraud proved by the government at trial.” United States v.
Brothers, 955 F.2d 493, 497 (7th Cir.), cert. denied, 506 U.S.
847 (1992).
Each appellant herein had a sufficiently substantial
involvement in the fraud scheme to warrant the restitution amount
that the district court ordered. See United States v. Barnette,
10 F.3d 1553, 1556 (11th Cir.), cert. denied, 513 U.S. 816(1994)(granting restitution to the extent justice requires). Our
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conclusion follows the general proposition that a defendant is
liable for reasonably foreseeable acts of others committed in
furtherance of the conspiracy of which the defendant has been
convicted. See, e.g., United States v. Ismond, 993 F.2d 1498,
1499 (11th Cir. 1993). The appellants herein were thoroughly
involved in this scheme to defraud the Medicare system.
Accordingly, the district court properly relied on the
information contained in the PSRs to render the appellants
jointly and severally liable for the losses resulting from the
enterprise. The court did not plainly err in imposing
restitution on each appellant based on the acts of all those
involved in the scheme for the period that the appellant was
involved. See United States v. Plumley, 993 F.2d 1140, 1142 (4th
Cir.), cert. denied, 510 U.S. 903 (1993).
2. Ability to Pay
The appellants also do not demonstrate that the district
court failed to consider the appellants’ financial resources,
such that the restitution order can be deemed manifestly unjust.
The statute requires that the district court “consider” the
factors listed above prior to imposing restitution. 18 U.S.C. §
3664(a). This court has held that the district court must
“evaluate the defendant’s financial condition and ability to pay
before determining the restitution amount . . . .” Remillong, 55
F.3d at 574 (citations omitted) (emphasis added).
Neither the statute nor this court requires the district
court to make specific factual findings. Twitty, 107 F.3d at
9
1493 (“District courts are not obligated to make explicit factual
findings of a defendant’s ability to pay restitution if the
record provides an adequate basis for review.”); see also United
States v. Hairston, 888 F.2d 1349, 1352-53 (11th Cir. 1989). In
order to warrant a reversal of the restitution order, the
challenging party must show that the “record is devoid of any
evidence that the defendant is able to satisfy the restitution
order.” Remillong, 55 F.3d at 574 (internal quotation marks
omitted). The appellant’s burden is particularly acute under the
plain error standard of review.
Under these facts, the record shows that the district court
considered each appellant’s ability to pay prior to imposing
restitution. The sentencing transcripts reveal that the district
court noted its reliance upon the information contained in each
appellant’s PSR. The PSRs assessed the appellants’ financial
resources and capacities for future earnings. Each PSR
recommended that the appellant would be able to make monthly
payments toward restitution. “A defendant who disputes his
ability to pay restitution bears the burden of demonstrating his
financial resources by a preponderance of the evidence.” Twitty,
107 F.3d at 1494 n.14; see also 18 U.S.C. § 3664(d) (1994). A
defendant’s failure to present contrary evidence authorizes the
district court to rely on the information provided in the PSR.
Twitty, 107 F.3d at 1494 n.14.
Our prior decision in United States v. Page, 69 F.3d 482(11th Cir. 1995), does not compel resentencing under the facts at
10
issue. In Page, this court found plain error where the district
court did not provide the defendants with an opportunity to
object to its findings of fact or conclusions of law as required
under United States v. Jones, 899 F.2d 1097, 1102 (11th Cir.),
cert. denied, 498 U.S. 906 (1990), overruled on other grounds,
984 F.2d 1136 (11th Cir. 1993) (en banc). Page, 69 F.3d at 492-
93. Moreover, although the district court had adopted wholesale
the recommendations in the PSR, this was deemed insufficient
because the district court neglected to consider the defendants’
objections. Page, 69 F.3d at 494. Furthermore, the record
demonstrated that the district court recognized one defendant’s
inability to pay the restitution imposed. Page, 69 F.3d at 494.
Our opinion in Page, therefore, stands only for the proposition
that “the wholesale adoption of the PSR at the commencement of
the sentencing hearing, without more, does not suffice to meet
the court’s obligation under 18 U.S.C. § 3664(a) and under
Remillong to consider a defendant’s financial resources before
imposing restitution.” Page, 69 F.3d at 493-94.
The facts herein demonstrate that the district court sought
input from the appellants. As in Page, the district court
acknowledged the information in the PSR and adopted its factual
findings regarding the appellants’ abilities to pay restitution.
Unlike Page, however, the court reviewed the appellants’
objections to the PSRs. The court then specifically asked each
appellant and counsel whether they objected to the court’s
findings of fact or the sentence imposed. No appellant took
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exception to the restitution order. Where the PSR provides a
detailed account of the “amount of the loss sustained by the
victim, the defendant’s financial resources, and other factors
enumerated in Sections 3663-3664 as appropriate for the court to
consider when imposing restitution[,] . . . the record provides
an adequate basis for review of the restitution order[].”
Twitty, 107 F.3d at 1493-94. We cannot find plain error where
the district court adopts a PSR supporting its restitution order,
provides the defendant with the chance to object, and considers
any objections raised. While the district court must explain its
decision to reject any challenges to the restitution order, we
can impose no such burden where the defendant fails to avail
himself of the opportunity to object.
Upon review of the record, we conclude that the district
court did not plainly err in determining appellants' restitution
amounts. Even though the district court did not make any
explicit factual findings as to appellants' abilities to pay
restitution, the record does reveal that the district court
considered appellants' abilities to pay as a factor. The
district court gave each appellant an opportunity to object to
the restitution amount and encountered silence. The district
court has only the duty to consider the defendant's ability to
pay; it does not have a duty to make a specific factual finding.
Twitty, 107 F.3d at 1493. Under these circumstances, the
appellants have not shown that the district court failed to honor
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that obligation. Accordingly, we affirm the district court’s
restitution orders.
AFFIRMED
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