United States v. Conner

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-4604
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
BRIAN CONNER,
Defendant - Appellant,
and
CONVALESCENT TRANSPORTS, INCORPORATED,
Defendant.
Appeal from the United States District Court for the Eastern
District of North Carolina, at New Bern. Louise W. Flanagan, Chief
District Judge. (4:04-cr-00027-FL-ALL)
Argued: December 7, 2007 Decided: January 25, 2008
Before MICHAEL and TRAXLER, Circuit Judges, and James P. JONES,
Chief United States District Judge for the Western District of
Virginia, sitting by designation.
Affirmed by unpublished opinion. Judge Jones wrote the opinion, in
which Judge Michael and Judge Traxler joined.
ARGUED: Joseph Blount Cheshire, V, CHESHIRE, PARKER, SCHNEIDER,
BRYAN & VITALE, Raleigh, North Carolina, for Appellant. Banumathi
Rangarajan, Assistant United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Raleigh, North Carolina, for Appellee. ON BRIEF:
John Keating Wiles, CHESHIRE, PARKER, SCHNEIDER, BRYAN & VITALE,
Raleigh, North Carolina, for Appellant. George E. B. Holding,
United States Attorney, Anne M. Hayes, Assistant United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North
Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
JONES, Chief District Judge:
Appellant Brian Conner was convicted by a jury in the court
below after a thirteen-day trial of multiple counts of health care
fraud, 18 U.S.C.A § 1347 (West 2000), conspiracy to commit health
care fraud, and obstruction of the criminal investigation of health
care offenses, 18 U.S.C.A § 1518 (West 2000). He was sentenced on
May 3, 2006, to a total term of imprisonment of 151 months. In his
appeal, Conner seeks re-sentencing on the ground that the district
court erred in properly calculating his guideline range under the
advisory sentencing guidelines.
In particular, Conner argues that the district court (1)
should not have increased his offense level for abuse of a position
of trust pursuant to U.S. Sentencing Guidelines Manual (“USSG”) §
3B1.3 (2005), and (2) erred in relying on the government’s
statistical evidence in calculating the amount of loss under USSG
§ 2B1.1(b). After a careful consideration of the record and the
appellant’s arguments, we find that his sentence must be affirmed.
I.
As part of the federal sentencing process, a district court
must first correctly calculate the applicable guideline range
established by the now-advisory sentencing guidelines. Gall v.
United States, 128 S. Ct. 586, 596 (2007). When contested by the
defendant, the government has the burden of proving by a
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preponderance of the evidence the facts supporting an abuse of
trust enhancement, see United States v. Hill, 322 F.3d 301, 307
(4th Cir. 2003), as well as the amount of loss, see United States
v. Miller, 316 F.3d 495, 503 (4th Cir. 2003). The district court’s
factual determinations in calculating the guideline range are
reviewed on appeal for clear error. Elliott v. United States, 332
F.3d 753, 761 (4th Cir. 2003).
In Conner’s case, the district court conducted a two-day
evidentiary hearing on the sentencing issues. Considering the
evidence in the light most favorable to the government, the facts
upon which the district court determined the guideline sentencing
range are as follows.
In 1990 Conner, a certified emergency medical technician,
became the owner and operator of Convalescent Transports, Inc.
(“CTI”), a business providing ambulance and wheelchair
transportation services to patients. The business was
headquartered in Kinston, North Carolina, with offices in other
North Carolina locations. In 1991 CTI became an authorized
provider of reimbursed Medicare and Medicaid ambulance services.1
1
Medicare is a federal health care program principally for
older Americans, administered by the U.S. Department of Health and
Human Services, largely through delegation to private insurance
companies. Medicaid is a federal health care program for those
with insufficient financial resources, administered by state
governments.
4
The Medicare and Medicaid programs both require a showing of
medical necessity before they will reimburse providers for
ambulance services. A provider is required to complete an
“Ambulance Call Report” that states the clinical conditions
rendering the patient bed confined or otherwise justifying the
patient’s non-emergency transport by ambulance. Beginning in 1999,
Medicare required a physician’s certificate stating the patient’s
condition and the reasons why the patient could not be transported
by means other than ambulance, such as a less expensive wheelchair
van.2
Most of the patients transported by CTI were nursing home
residents. CTI had as many as 300 employees and transported
patients from at least fifty nursing homes. It was Medicare’s
highest paid private ambulance service in North Carolina. In the
five-year period between 1997 and 2002, CTI received $19,446,572
from Medicare and Medicaid for ambulance transports.
Conner led the conspiracy to defraud Medicare and Medicaid.
He and others under his supervision instructed CTI employees to
falsify Ambulance Call Reports and other billing records to show
medical necessity when none existed and provided training to CTI
2
The evidence showed that the average round-trip cost of a
wheelchair van trip was $35, as opposed to the average cost of an
ambulance trip of $437.48. (J.A. II-538.) In addition, for many
nursing home residents, the nursing home itself is required by
Medicaid to provide wheelchair van service and is paid for that
service.
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employees on the methods to be used in falsifying the records.
Employees were instructed to transport all dialysis patients by
ambulance regardless of their medical condition. After 1999, CTI
falsified physicians’ certifications by various means, including
whiting out the dates of prior certifications and inserting
different dates.
In the presentence investigation report (“PSR”), the authoring
probation officer recommended that Conner receive a two-level
increase in his offense level under USSG § 3B1.3 for abuse of a
position of trust. In addition, the probation officer found that
the loss arising from Conner’s criminal conduct was more than
$2,500,000 but not more than $7,000,000, thus resulting in an
increase of eighteen levels under USSG § 2B1.1(b)(1)(J).3
Conner filed timely objections to both the abuse of trust
enhancement and the amount of loss and these issues, along with
others not raised in this appeal, were the subject of the
sentencing hearing. The district court agreed that Conner was
subject to the abuse of trust enhancement and found that the proper
loss was within the range suggested in the PSR.
3
With these recommendations, Conner had a Total Offense Level
of thirty-two, which, with his Criminal History Category of I,
resulted in a guideline range of 121 to 151 months imprisonment.
See USSG ch. 5, pt. A. The sentence imposed was at the high end of
this range. Aside from his attacks on the district court’s
guidelines determinations, Conner does not contend that his
sentence of 151 months was unreasonable.
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II.
Conner’s first contention is that the district court was
incorrect in applying the abuse of trust enhancement. Conner’s
argument is that the relationship between CTI and the victims of
his offenses—the federal health care programs—was contractual and
not fiduciary, and because he held no other position of trust, such
as a physician or other professional person might, he is not
subject to the enhancement.
Guideline 3B1.3 provides that “[i]f 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 [the offense level] by 2 levels.” USSG §
3B1.3. The commentary by the Sentencing Commission gives as
examples of the appropriate application of this enhancement, “an
embezzlement of a client’s funds by an attorney serving as
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.” USSG § 3B1.3 cmt. n.1.
While Conner’s victims were not the patients transported
(indeed, they received the presumed benefit of ambulance rides) and
thus the relationship is not analogous to those described in the
Sentencing Commission’s examples, we believe that under the facts
of the case the district court did not err in applying the
enhancement.
7
Reimbursed medical providers have been held subject to the
abuse of trust enhancement by other circuits. See United States v.
Erhart, 415 F.3d 965, 972-73 (8th Cir. 2005) (enhancement properly
applied to chiropractor who submitted fraudulent bills to insurance
companies); United States v. Hodge, 259 F.3d 549, 556 (6th Cir.
2001)(enhancement properly applied to manager and treating
therapist who falsely billed insurance companies); United States v.
Hoogenboom, 209 F.3d 665, 666, 671 (7th Cir. 2000) (enhancement
properly applied to psychologist who falsely billed Medicare);
United States v. Gieger, 190 F.3d 661, 663, 665 (5th Cir. 1999)
(enhancement properly applied to ambulance transportation service
provider who made fraudulent claims to Medicare); United States v.
Iloani, 143 F.3d 921, 922-23 (5th Cir. 1998) (enhancement properly
applied to chiropractor who submitted fraudulent claims to
insurance companies). Indeed, we have upheld the abuse of trust
enhancement applied to a nursing home operator who perpetrated a
fraud scheme against Medicaid. United States v. Bolden, 325 F.3d
471, 504-05 (4th Cir. 2003).
Conner seeks to distinguish our Bolden decision from his case
because in Bolden the nursing home operator received prospective
payments from Medicaid, subject to later cost reporting by the
operator. Id. at 480-81. We relied on that entrustment as
evidence of the underlying trust relationship. Id. at 504-05.
Nevertheless, we also pointed out that “[b]ecause of the discretion
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Medicaid confers upon care providers . . . such providers owe a
fiduciary duty to Medicaid. Indeed, we see it as paramount that
Medicaid be able to ‘trust’ its service providers.” Id. at 505
n.41 (citation omitted and emphasis added).
The facts of the present case are not significantly different.
Conner was trusted (through his control of CTI) to properly report
the medical necessity justifying ambulance service for Medicare and
Medicaid patients. Because of the nature of these vast government
programs, it is essential to their functioning that trust be
imposed on the service provider to capably and honestly determine
in the first instance which patient transactions are entitled to
reimbursement. Otherwise, the added delay and expense might
jeopardize the very existence of the programs.
We find that the district court did not err in applying the
two-level enhancement.
III.
Conner also contends that the district court erred in relying
on the government’s statistical evidence in determining the amount
of loss.
The sentencing guidelines provide that in determining the
amount of loss for the purpose of calculating the offense level in
fraud cases, “[t]he court need only make a reasonable estimate of
the loss. The sentencing judge is in a unique position to assess
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the evidence and estimate the loss based upon that evidence. For
this reason, the court’s loss determination is entitled to
appropriate deference.” USSG § 2B1.1 cmt. n.3(C).
Much of the sentencing hearing below was devoted to the
government’s evidence as to the amount of loss. In its
presentation, the government relied solely on CTI’s Medicare
reimbursement for non-emergency ambulance transportation of
patients to obtain dialysis, for which CTI was paid $6,822,690.54
on 35,328 separate claims.
A random sample of 230 claims from the total population of
such claims was examined by a medical fraud investigator, who
determined that in all but fourteen of the claims there was no
medical necessity for ambulance transport. A statistician, Suzanne
Moody, Ph.D., testified that the extrapolation of these findings to
the total number of claims produced a loss of $6,330,298, at a
ninety percent confidence level.
The district court, after lengthy testimony by Dr. Moody,
accepted the reliability of the sampling process, although the
court did substantially reduce the loss figure urged by the
government. The medical fraud investigator had fully disqualified
sixty-five of the sample claims on the ground that no medical
documentation existed. Because the district court found that the
government had failed to show that the medical documentation had
not been lost after the seizure of CTI’s records, it treated those
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sixty-five samples as legitimate, rather than disqualified. The
final loss figure determined by the district court was $3,613,165.4
Conner’s principal argument on appeal is that the samples used
to extrapolate to the total loss figure were not examined for
fraud, but only for medical necessity, and thus the government’s
evidence was unreliable. However, the evidence at trial adequately
supported the finding that this loss was occasioned by the
defendant’s criminal conduct. The pervasive nature of the
fraudulent scheme, as well as the methods used by Conner, justified
the district court’s attribution of fraud to all of the sample
claims.
Extrapolation is an acceptable method to use in making a
reasonable estimate of the amount of loss under the sentencing
guidelines. See United States v. Pierce, 409 F.3d 228, 234 (4th
Cir. 2005) (upholding calculation of fraud loss by extrapolating
from the monthly averages for one period of years to another).
Conner had an opportunity to present any contrary analysis of the
claims sampled, but he did not do so. The district court did not
err in its factual determination of the amount of loss.5
4
The district court also slightly reduced the loss figure to
account for dialysis trips made to and from hospitals, rather than
nursing homes.
5
Conner also argues that the sampling process was not shown to
be random, but we find adequate support for the process in the
expert’s testimony concerning the computer program used to generate
the sample claims.
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IV.
For the reasons stated, the judgment below is
AFFIRMED.
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