United States v. Ashokkumar Babaria

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 14-2694
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UNITED STATES OF AMERICA
v.
ASHOKKUMAR BABARIA,
Appellant
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Crim. No. 2-12-cr-00646-001)
District Judge: Honorable Claire C. Cecchi
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Argued: November 18, 2014
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Before: SMITH, HARDIMAN and BARRY, Circuit Judges
(Opinion Filed: December 31, 2014)
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Joseph D. Mancano, Esq. (Argued)
Cedrone & Mancano
123 South Broad Street
Suite 810
Philadelphia, PA 19109
Counsel for Appellant
Mark E. Coyne, Esq.
Office of United States Attorney
970 Broad Street
Room 700
Newark, NJ 07102
Glenn J. Moramarco, Esq. (Argued)
Office of United States Attorney
Camden Federal Building & Courthouse
401 Market Street
Camden, NJ 08101
Counsel for Appellee
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OPINION OF THE COURT
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BARRY, Circuit Judge
In this appeal, we are asked to consider whether the
medical director and manager of a Medicare and Medicaid
provider who supervised the payment of kickbacks occupied
a position of trust for purposes of U.S. Sentencing Guidelines
Manual § 3B1.3 (2013), which provides for a two-level
upward adjustment in offense level for abuse of a position of
trust. We hold that on the facts of this case, the District Court
properly applied the adjustment, and that neither of the two
remaining issues raised by Appellant has merit. We,
therefore, will affirm the judgment of sentence.
I.
Dr. Ashokkumar R. Babaria was a licensed radiologist
and the medical director and manager of Orange Community
MRI, LLC (“Orange”), an authorized Medicare and Medicaid
provider1 offering diagnostic testing, including Magnetic
1
The record is unclear as to whether Orange is properly
categorized as a “supplier” or a “provider” in the context of
Medicare and Medicaid. The distinction, however, is not
relevant for purposes of this appeal and we refer, as did the
parties and the District Court, to Orange as a “provider” under
both government programs.
2
Resonance Imaging (MRI), Computed Tomography (CT)
scans, and ultrasounds. In 2012, Dr. Babaria pleaded guilty
to one count of making illegal payments—kickbacks—in
violation of 42 U.S.C. § 1320a-7b(b)(2)(A) (the “anti-
kickback statute”). He acknowledged that, from 2008
through 2011, he paid physicians to refer their patients to
Orange for diagnostic testing, and that he billed Medicare and
Medicaid for diagnostic testing that was tainted by these
corrupt referrals. As a result, Orange received $2,014,600.85
in payments from Medicare and Medicaid that were directly
traceable to the kickback scheme. There is no evidence,
however, that Dr. Babaria falsified patient records, billed
Medicare or Medicaid for testing that was not medically
necessary, or otherwise compromised patient care.
At sentencing, Dr. Babaria objected to the Pre-
Sentence Investigation Report (“PSR”), which recommended
that he receive a two-level adjustment for abuse of a position
of trust pursuant to § 3B1.3, and a four-level adjustment for
aggravating role pursuant to § 3B1.1(a), resulting in a
recommended Guidelines range of 70-87 months’
imprisonment. Ultimately, the Guidelines range as calculated
in the PSR was 60 months, capped as it was by the statutory
maximum for Dr. Babaria’s count of conviction. He argued,
however, that the sentencing adjustments were unwarranted
and that the correct range was 37 to 46 months. Following
oral argument on these and other issues, at sentencing the
District Court applied both adjustments but granted a
downward variance and sentenced Dr. Babaria to 46 months’
imprisonment, a fine of $25,000, and a three-year term of
supervised release. The Court also ordered him to forfeit the
$2,014,600.85 he conceded had been paid by Medicare and
Medicaid.
II.
Dr. Babaria argues that the District Court erred in
applying the two-level adjustment under § 3B1.3 because he
neither occupied nor abused a position of public or private
trust. That Court had jurisdiction pursuant to 18 U.S.C. §
3231, and we have jurisdiction pursuant to 28 U.S.C. § 1291
and 18 U.S.C. § 3742(a). We “review de novo the legal
3
question of whether a position is one of trust under § 3B1.3 of
the Guidelines, and we review for clear error whether a
defendant abused that position.” United States v. Sherman,
160 F.3d 967, 969 (3d Cir. 1998). While the standard by
which a court must analyze whether a defendant’s conduct
fits within the § 3B1.3 adjustment is well settled in our Court,
whether the adjustment was properly applied under the
factual circumstances of this case presents an issue of first
impression.
Section 3B1.3 provides for a two-level upward
adjustment in offense level where a defendant “abused a
position of public or private trust . . . in a manner that
significantly facilitated the commission or concealment of the
offense.” Application note one defines “public or private
trust” as follows:
“Public or private trust” refers to a position
of public or private trust characterized by
professional or managerial 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 non-discretionary in nature. For
this adjustment to apply, the position of
public or private trust must have contributed
in some significant way to facilitating the
commission or concealment of the offense
(e.g., by making the detection of the offense
or the defendant’s responsibility for the
offense more difficult).
U.S. Sentencing Guidelines Manual § 3B1.3 cmt. n.1 (2013).
We have held that “[t]he inquiry into whether a defendant
was appropriately subject to a § 3B1.3 enhancement is two-
fold.” Sherman, 160 F.3d at 969. First, the court “must
determine whether a defendant was placed in a position of
trust,” and, if he was, it must then determine “whether he
abused that position in a way that significantly facilitated his
4
crime.” Id. (quoting United States v. Craddock, 993 F.2d
338, 340 (3d Cir. 1993)) (internal quotation marks omitted).
In determining whether a position of trust exists, we
consider three factors: “(1) whether the position allows the
defendant to commit a difficult-to-detect wrong; (2) the
degree of authority to which the position vests in defendant
vis-à-vis the object of the wrongful act; and (3) whether there
has been reliance on the integrity of the person occupying the
position.” Id. (quoting United States v. Pardo, 25 F.3d 1187,
1192 (3d Cir. 1994)). These factors should be considered “in
light of the guiding rationale of the section – to punish
‘insiders’ who abuse their positions rather than those who
take advantage of an available opportunity.” Pardo, 25 F.3d
at 1192.
While our Court has not yet addressed application of
this adjustment in the context of a Medicare or Medicaid
kickback scheme, the Fourth and Eleventh Circuits, in United
States v. Adam, 70 F.3d 776 (4th Cir. 1995), and United
States v. Liss, 265 F.3d 1220 (11th Cir. 2001), have done so,
and have upheld application of the adjustment. But see
United States v. Anderson, 85 F. Supp. 2d 1084 (D. Kan.
1999) (rejecting application of the adjustment). In Adam, the
Fourth Circuit held that the adjustment was properly applied
to a physician who received kickbacks in exchange for
referrals. 70 F.3d at 778, 782. Citing a House Ways and
Means Committee Report, the court observed that Medicare
and Medicaid 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.”
Id. at 782. Accordingly, the court concluded that “[t]he
position that Appellant enjoyed as a physician making claims
for welfare funds” fit within § 3B1.3’s definition of a
“position of trust.” Id.
Citing Adam and “adopt[ing] its analysis and holding,”
the Eleventh Circuit in Liss likewise upheld application of the
adjustment where a physician had received illegal kickbacks
in return for patient referrals. 265 F.3d at 1229-30. The court
5
held that the physician occupied a position of trust, vis-à-vis
Medicare, and abused that position of trust by receiving
kickbacks, even where “the referrals were medically
necessary,” and, as here, the physician “[did] not falsify
patient records or submit fraudulent claims.” Id. at 1229.
We hold that Dr. Babaria occupied a position of trust
vis-à-vis Medicare and Medicaid as the medical director and
manager of Orange, an authorized provider. On behalf of
Orange, he certified compliance with the anti-kickback
statute2, but nevertheless utilized his position as Orange’s
medical director and manager to supervise and conceal the
payment of kickbacks, a difficult-to-detect offense. Our
decision is consistent not only with Adam and Liss, but also
with our precedent in United States v. Nathan, 188 F.3d 190
(3d Cir. 1999), in which we held that the §3B1.3 adjustment
was properly applied to the president of a defense contracting
company who made false certifications to the government and
utilized his position as company president to supervise and
conceal fraudulent activity. In Nathan, we held that the
defendant occupied a position of trust because, “as president
of the company, [he] was in a unique position to make
decisions for the company and to decide how [it] would fill
the government contracts,” and, because there was no one
supervising his acts, “he held a position that allowed him to
commit wrongs, and that permitted him to make those wrongs
harder to detect” by directing subordinates to cover up the
offense. Id. at 207. So too here, there was no one supervising
Dr. Babaria’s position as the medical director and manager of
Orange and no dispute that, in those positions, he was in a
unique position to decide to pay illegal referral fees,
payments he made and concealed over a period of several
years.
In summary, unlike a lower-level employee of a
Medicare or Medicaid provider, Dr. Babaria was the
2
The record contains examples of Dr. Babaria’s certifications
to Medicare, but not Medicaid. At sentencing, however, Dr.
Babaria did not take issue with the District Court’s finding
that he had made certifications to both Medicare and
Medicaid.
6
authorizing official who certified Orange’s compliance with
the anti-kickback statute, and was not subject to any
supervision over his actions with respect to the business and
its relationship with the government programs. He was,
without question, an “insider[]” who “abuse[d] [his]
position[],” not merely an individual who took advantage of
an available opportunity. See Pardo, 25 F.3d at 1192.
Indeed, Dr. Babaria’s position contributed in a “significant
way to facilitating the commission or concealment of the
offense,” see § 3B1.3 cmt. n.1, because his level of authority
and the lack of supervision over his actions enabled him to
commit the offense and evade detection.
One final note on the § 3B1.3 adjustment. At all times
over the several years during which this offense was
committed, Dr. Babaria was a licensed radiologist in addition
to serving as medical director and manager of Orange. We
have acknowledged that the mere possession of a medical
license “does not mandate a § 3B1.3 enhancement.” See
Sherman, 160 F.3d at 970-71. We have held, however, that
“where a defendant obtains his minimally-supervised position
by virtue of his professional training and license and then
takes advantage of the discretion granted to him in a way
which significantly facilitates the fraud, we can rightly say
that he has abused a position of trust.” Id. at 971. While Dr.
Babaria need not have been a licensed radiologist in order for
Orange to have become an authorized Medicare and Medicaid
provider, or in order for him to hold the position of medical
director and manager, we cannot ignore the likelihood that his
professional training and license contributed in a significant
way to his ability to obtain his position and to supervise
Orange’s activities vis-à-vis Medicare and Medicaid. In
certifying to Medicare, e.g., that Orange agreed to comply
with the anti-kickback statute, Dr. Babaria specifically
indicated his status as a medical doctor. (See Supp. App. at
30-31.) For these reasons, it was not erroneous for the
District Court to consider that status when applying the
adjustment.
We are mindful of the fact that, as we have observed,
“a court should hesitate before defining the concept [of a
position of trust] too broadly, as there is a component of
7
misplaced trust inherent in the concept of fraud.” See United
States v. Iannone, 184 F.3d 214, 222 (3d Cir. 1999) (internal
quotation marks and citation omitted). That having been said,
however, we have no difficulty in affirming the well reasoned
decision of the District Court applying the adjustment on the
facts of this case.
III.
Dr. Babaria also argues that the District Court erred in
applying a four-level upward adjustment in offense level for
aggravating role, and by failing to give meaningful
consideration, as it was required to do under 18 U.S.C.
§ 3553(a), to certain of his sentencing arguments. We have
carefully reviewed these arguments and find them to be
without merit.3 The Court did not err in concluding that Dr.
Babaria acted as an organizer or leader in connection with the
offense, in light of his admitted conduct in supervising the
payment of referral fees to numerous physicians, as well as
the Court’s own familiarity with the criminal culpability of
the many related participants in the scheme who had already
pled guilty before it. We likewise conclude, having
thoroughly reviewed the 128-page transcript of Dr. Babaria’s
sentencing, that “the record as a whole reflects rational and
meaningful consideration of the factors enumerated in 18
U.S.C. § 3553(a).” United States v. Grier, 475 F.3d 556, 571
(3d Cir. 2007) (en banc).
IV.
We will affirm the judgment of sentence.
3
We review the District Court’s determination with respect to
the aggravating role adjustment for clear error, see United
States v. Hart, 273 F.3d 363, 378 (3d Cir. 2001), and we
review for abuse of discretion whether the Court gave
“meaningful consideration” to Dr. Babaria’s sentencing
arguments. See United States v. Flores-Mejia, 759 F.3d 253,
258 n.7, 259 (3d Cir. 2014) (en banc).
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