United States v. Viju Mathew

Case: 17-10863 Document: 00514843839 Page: 1 Date Filed: 02/21/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 17-10863 United States Court of Appeals
Fifth Circuit
FILED
February 21, 2019
Lyle W. Cayce
UNITED STATES OF AMERICA, Clerk
Plaintiff–Appellee,
versus
VIJU MATHEW,
Defendant–Appellant.
On Appeal from the United States District Court
for the Northern District of Texas
Before SMITH, DUNCAN, and ENGELHARDT, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Viju Mathew pleaded guilty of knowingly possessing, with the intent to
use unlawfully or transfer unlawfully, five or more authentication features
(health insurance claim numbers) issued by or under the authority of the
United States, in violation of 18 U.S.C. § 1028(a)(3), (b)(2)(B), and (c)(1). The
district court sentenced Mathew to thirty months’ imprisonment and
$277,957.89 in restitution payable to Medicare. He appeals the sentence,
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challenging the assessment of restitution and the calculation of the loss
amount. We vacate and remand for resentencing.
I.
Mathew worked at Parkland Health and Hospital System (“Parkland”)
as a registration specialist, where his duties required him to access confidential
patient information. He also owned a business called Dallas Home Health
Care, Inc. (“DHH”). Mathew stole confidential patient information from Park-
land and gave it to DHH employees to call the individuals and solicit them as
patients. Mathew did not make the calls himself but instructed three of his
employees to use the information to solicit prospective patients for DHH.
Based on information from a former DHH employee, authorities obtained
a search warrant for DHH’s office and determined DHH to be in the possession
of approximately 1,300 Parkland patients’ identifying information, including
their health insurance claim numbers (“HICNs”). The government charged
Mathew with “[o]n or about September 23, 2011,” “knowingly possess[ing] with
intent to use unlawfully or transfer unlawfully five or more authentication fea-
tures, to wit, [HICNs], and the authentication features were or appeared to
have been issued by or under the authority of the United States.” See 18 U.S.C.
§ 1028(a)(3), (b)(2)(B), (c)(1) (2012).
Mathew pleaded guilty per a factual resume, without a plea agreement,
and admitted that “he knowingly removed from Parkland confidential informa-
tion, and intended to use the information to gain an economic benefit by con-
tacting prospective patients by telephone that might need home health ser-
vices.” The government did not sign the factual resume because it disagreed
with Mathew’s contention that the phone calls did not successfully solicit any
patients for DHH.
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The following exchange occurred at rearraignment:
THE COURT: I’ll call upon the Assistant United States
Attorney to state the potential penalties
for and consequences of pleading guilty.
MR. PORTUGAL: Your Honor, the maximum penalties the
Court can impose include: . . . [r]estitution
to victims or to the community which may
be mandatory under the law and which
Mr. Mathew agrees may include restitu-
tion arising from all relevant conduct, not
limited to that arising from the offense of
conviction alone.
THE COURT: Mr. Mathew, do you understand that if
you plead guilty to Count One, you are
subject to all those consequences and pen-
alties just explained to you, sir?
MATHEW: Yes, ma’am.
THE COURT: Do you have any questions about anything
at all we’ve covered up to this point?
MATHEW: No, not at this time.
Mathew then pleaded guilty.
In preparing the presentence investigation report (“PSR”), investigators
determined that of the approximately 1300 Parkland patients whose informa-
tion DHH possessed illegally, sixteen received home health services from DHH,
and “Medicare paid DHH a total of $311,445.57 relative to” the sixteen
patients. The probation officer determined that the $311,445.57 was the
“actual loss” and used that amount to enhance Mathew’s offense level under
U.S.S.G. § 2B1.1(b)(1)(G) and to assess restitution under 18 U.S.C. § 3663A
and U.S.S.G. § 5E1.1.
Mathew objected to the PSR’s calculation of the loss amount, claiming
that “the loss amount was zero.” He also asserted that there were no victims
of his conduct because “all patients were properly referred by Parkland
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Hospital,” “the stolen list of patients from Parkland was . . . never used,” and
DHH never secured any patients “from the use of the Parkland Hospital list.”
In response, the government contended that “anything that [DHH] billed to
Medicare . . . for beneficiaries whose identifiers Mathew stole is counted as
loss.” Because Mathew had admitted to stealing Parkland patient information
to gain an economic benefit through his business DHH, the amounts that DHH
“billed for those beneficiaries is tainted by that criminality and is properly
included as loss.” Furthermore, there were victims of Mathew’s crime because
Mathew unlawfully transferred the patients’ information to DHH.
The probation officer rejected Mathew’s objections and accepted the gov-
ernment’s positions. She adopted the government’s theory of loss, affirming
the $311,445.57 loss amount, and determined that sixteen of the 1300 Park-
land patients whose information DHH possessed were properly classified as
victims because Mathew used their information “without permission to solicit
and recruit [them] to receive home health care from his company and he billed
Medicare for these services.”
Mathew filed supplemental objections to the PSR, asserting that he
“must be credited with the fair market value of legitimate services provided in
calculating the loss amount.” First, he stated that the prosecution had main-
tained that only five of the sixteen identified victims did not qualify for home
health services, but had not extended that contention to the other eleven vic-
tims. Second, those eleven victims “undisputedly qualified for home healthcare
services,” DHH provided “legitimate services” to them, and Medicare “would
have paid for those services absent Mathew’s compromising their identities.”
Consequently, Mathew was entitled to credit for the fair market value of those
services in both the loss and restitution calculations. He also contended that
the total actual loss amount was $105,369.86, or the amount paid by Medicare
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for the five patients the government asserted were not qualified for home
health services.
The government responded, asserting that Mathew had failed to meet
his burden of establishing that he was entitled to a credit against the
$311,445.57 loss because he failed to show that DHH provided legitimate ser-
vices to the sixteen victims and that Medicare would have paid for the services
provided but for Mathew’s fraud. The government continued to claim that
because any services DHH provided “to the victims of his identity theft were
tainted by his criminal conduct from day-one, the entire amounts associated
with those [sixteen victims] should be included in the loss amount.”
The probation officer again rejected Mathew’s supplemental objections
and did not alter the loss amount. She determined that Mathew was not enti-
tled to a credit against the loss because “the services provided by DHH [to]
patients were not legitimate” and “the patients were not homebound and did
not require skilled nursing services.”
II.
The district court held a four-day sentencing hearing. The parties pre-
sented evidence focusing on the sixteen DHH patients whose Medicare bills
the government asserted should be used to calculate actual loss for purposes of
sentencing and restitution. Mathew asserted that those patients had qualified
for home health care and received legitimate services, so he was entitled to a
credit against the $311,445.57. Conversely, the prosecution claimed that
Mathew’s identity theft caused the entirety of Medicare’s loss because Medi-
care would not have paid any of the sixteen patients’ claims had it known that
Mathew had compromised their identities. Furthermore, fifteen of the sixteen
did not qualify for Medicare-covered home health care or did not receive
Medicare-reimbursable services.
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The district court determined that Mathew’s taking of the sixteen
patients’ information from Parkland “wrongfully constitut[ed] identity theft”
and that Mathew had failed to satisfy his burden to establish that he was
entitled to a credit for legitimate services that Medicare would have paid for
but for his fraud. To determine the total restitution, the court reduced the
$311,445.57 loss amount by $33,487.68, the sum Medicare had paid for two
patients’ care, because the government had inadvertently produced their rec-
ords to Mathew late. Thus, the court found that the net amount of loss was
$277,957.89; the court used that amount to apply a twelve-level enhancement
to the base offense level per U.S.S.G. § 2B1.1(b)(1)(G); it calculated Mathew’s
guideline range to be 30−37 months and sentenced him to 30 months’
imprisonment.
The court also ordered Mathew to pay $277,957.89 in restitution to Medi-
care for all the care DHH had rendered to fourteen of the sixteen Parkland
patients. Mathew objected to the imposition of restitution because his offense
“did not include a scheme to defraud,” so “any restitution award would exceed
the scope of the conviction.”
On appeal, Mathew challenges the district court’s assessment of restitu-
tion and its calculation of the loss amount. First, he contends, the court im-
properly assessed restitution because the award included amounts for conduct
beyond the offense of conviction and for conduct that occurred before the tem-
poral scope of the indictment. Second, the court improperly calculated the loss
amount because Mathew introduced evidence that Medicare received value for
the services DHH provided to the sixteen patients, and, thus, he was entitled
to a credit, and because “[t]he district court’s finding that fraud was endemic
as to the [sixteen] patients at issue and resulted from Mr. Mathew’s possession
of the authentication features was based on insufficient evidence.”
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III.
“We review a restitution order’s legality de novo and its amount for abuse
of discretion.” United States v. Villalobos, 879 F.3d 169, 171 (5th Cir. 2018).
“[W]e review the district court’s application of the guidelines de novo and its
findings of fact at sentencing for clear error.” United States v. Klein, 543 F.3d
206, 213 (5th Cir. 2008). The finding regarding the amount of loss is a factual
finding that we review for clear error. Id. at 214. “There is no clear error if
the district court’s finding is plausible in light of the record as a whole.” United
States v. Harris, 597 F.3d 242, 250 (5th Cir. 2010) (citation omitted). We
review “de novo how the court calculated the loss, because that is an applica-
tion of the guidelines, which is a question of law.” Klein, 543 F.3d at 214.
IV.
Mathew asserts that the restitution order was unlawful because it in-
cluded amounts for Medicare payments that preceded the temporal scope of
his offense of conviction. We agree.
The Mandatory Victim Restitution Act (“MVRA”), 18 U.S.C. § 3663A,
“limits restitution to the actual loss directly and proximately caused by the
defendant’s offense of conviction. An award of restitution cannot compensate
a victim for losses caused by conduct not charged in the indictment or specified
in a guilty plea.” United States v. Sharma, 703 F.3d 318, 323 (5th Cir. 2012).
Therefore, “when the subject offense involves a scheme, conspiracy, or pattern
of criminal activity,” United States v. Hughey, 147 F.3d 423, 437 (5th Cir.
1998), that is, “where [the] fraudulent scheme is an element of the conviction,”
United States v. Maturin, 488 F.3d 657, 661 (5th Cir. 2007) (emphasis and
citation omitted), “restitution may be awarded to any person who is directly
harmed by the defendant’s course of criminal conduct,” Hughey, 147 F.3d
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at 437. 1 But “[w]hen the count of conviction does not require proof of a scheme,
conspiracy, or pattern, . . . the defendant is only responsible to pay restitution
for the conduct underlying the offense for which he has been convicted.”
Maturin, 488 F.3d at 661 (citation and internal quotation marks omitted). In
that event, restitution cannot include “losses caused by conduct that falls
outside the temporal scope of the acts of conviction.” Sharma, 703 F.3d at 323.
The district court must support “every dollar” of a restitution order with record
evidence. Id.
Mathew’s offense does not involve a scheme, conspiracy, or pattern. The
indictment charged him with violating 18 U.S.C. § 1028(a)(3), (b)(2)(B), and
(c)(1), which make it a crime “knowingly [to] possess[] with intent to use un-
lawfully or transfer unlawfully five or more . . . authentication features
. . . issued by or under the authority of the United States.” The statute does
not include a fraudulent scheme as an element of the offense, either in its plain
language or as a judicial interpretation. Moreover, the charge in Mathew’s
indictment, his factual resume’s description of the elements of the offense, and
the government’s description of the elements of the offense at his rearraign-
ment proceeding all mirror the language of the statute and thus do not state
that Mathew’s offense of conviction included a fraudulent scheme as an
element of his offense.
Mathew also did not agree to enlarge the scope of restitution beyond the
offense of conviction to include relevant conduct. Though “when a defendant
pleads guilty to fraud, the scope of the requisite scheme to defraud, for resti-
tution purposes, is defined by the mutual understanding of the parties rather
1Though the Hughey court was interpreting the Victim and Witness Protection Act,
18 U.S.C. § 3663, Hughey’s reasoning “also applies to cases arising under the MVRA.”
Maturin, 488 F.3d at 661 n.2.
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than the strict letter of the charging document,” United States v. Adams,
363 F.3d 363, 364 (5th Cir. 2004), there was no mutual understanding between
Mathew and the prosecution. There is no plea agreement broadening the crim-
inal offense to encompass conduct not stated in the indictment. In the factual
resume that accompanied his guilty plea, Mathew admitted only that he
(1) “used his position to obtain confidential patient information, including
[HICNs] that were issued by and under the authority of the United States,”
(2) “intended to use the information to gain an economic benefit by contacting
prospective patients by telephone that might need home health services,” and
(3) knowingly possessed the HICNs “on or about September 23, 2011,” with the
intent to use them unlawfully.
Neither does Mathew’s rearraignment evince an agreement between him
and the government to enlarge the scope of restitution. During the rearraign-
ment, the prosecutors explained that the maximum penalties included restitu-
tion, which “may include restitution arising from all relevant conduct, not lim-
ited to that arising from the offense of conviction alone.” Mathew stated that
he understood that he was subject to that penalty if he pleaded guilty, and then
proceeded to plead guilty. That “relevant conduct,” however, was never defined
by a mutual understanding between Mathew and the prosecution, and we will
not speculate as to what it could have been. 2 Thus, Mathew’s statements at
rearraignment cannot serve as the justification for broadening restitution to
include conduct not contained in the indictment or factual resume.
2 See United States v. Shelton, 694 F. App’x 220, 224–25 (5th Cir. 2017) (per curiam)
(explaining that “[a]bsent evidence of a mutual understanding as to the scope of the con-
spiracy,” we will not look beyond the charging document); United States v. Ashford,
337 F. App’x 404, 405 (5th Cir. 2009) (per curiam) (“Because there is no written plea agree-
ment in this case and no plea terms are contained in the record, we must look to the actions
alleged in the charging document, rather than speculating upon the mutual understanding
of the parties, to determine the scope of [the defendant’s] fraudulent scheme.”); Adams,
363 F.3d at 366–68.
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Accordingly, because Mathew’s offense of conviction does not involve a
scheme, conspiracy, or pattern of criminal activity, and because he did not
agree to enlarge the scope of restitution to include conduct not included in his
indictment and factual resume, the MVRA required the district court to limit
restitution to the actual loss directly and proximately caused by Mathew’s
offense of conviction. The restitution order, therefore, is lawful under the
MVRA only if Medicare’s losses were directly and proximately caused by
Mathew’s knowing possession of the HICNs, on or about September 23, 2011,
with the intent to use them unlawfully or transfer them unlawfully.
Two cases are instructive: United States v. Hayes, 32 F.3d 171 (5th Cir.
1994), and United States v. Mancillas, 172 F.3d 341 (5th Cir. 1999) (per cur-
iam). In Hayes, the defendant pleaded guilty of possession of stolen mail,
namely, three credit cards, on or about a certain date. The district court
ordered him to pay restitution to the credit card companies for charges he had
made in the months preceding that date. We vacated, explaining that the
defendant “pleaded guilty to an indictment charging him with mere possession
on one day, not with conduct or a scheme that resulted in losses to any victims.”
Hayes, 32 F.3d at 172. The companies’ losses arose from the unauthorized
charges made using the cards, “which [the defendant] was not charged with
and not convicted of.” Id. at 172−73. Thus, because “restitution under the
[MVRA] is limited to losses caused by the specific conduct that is the basis of
the offense of conviction,” and because “[t]he credit card companies’ losses were
not caused by the conduct for which [the defendant] was convicted[,] . . . the
restitution . . . [was] not authorized under [the MVRA].” Id.In Mancillas, the defendant pleaded guilty of “knowingly possessing
counterfeited securities” and “knowingly possessing implements designed to
make counterfeited securities with the intent that they be so used.” Mancillas,
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172 F.3d at 341. The district court ordered the defendant to pay restitution to
five different check-cashing entities to whom he had passed fraudulent checks.
Id. at 341–42. We vacated the restitution, determining that the defendant’s
“possession of the implements with the intent to use them in the future can in
no way be said to directly and proximately have caused a previous harm, speci-
fically, the harm to the check-cashing companies.” Id. at 343. The restitution
was therefore unlawful under the MVRA because it included losses not result-
ing from the conduct underlying the offense for which the defendant was con-
victed. Passing a fraudulent check before the date alleged in the indictment
could not form the basis for the restitution award. Id.Hayes and Mancillas thus counsel that, because the MVRA limits resti-
tution to the actual loss directly and proximately caused by the offense of con-
viction, absent a mutual understanding between the parties to enlarge the
scope of the relevant conduct, losses that occurred before the conduct contained
within the offense of conviction cannot lawfully be included in a restitution
order. The restitution component of Mathew’s sentence included amounts for
Medicare payments for claims DHH submitted both before and after Septem-
ber 23, 2011, the date specified in the indictment for when Mathew knowingly
possessed, with the intent to use unlawfully or transfer unlawfully, the HICNs.
Therefore, the restitution order included amounts for losses that were not dir-
ectly or proximately caused by the conduct of which Mathew was convicted,
namely, knowingly possessing, on September 23, 2011, HICNs with the intent
to unlawfully use or unlawfully transfer them. It follows that under the
MVRA, the court erred in including Medicare’s losses incurred before then.
V.
Mathew contends that the restitution order was unlawful because it
exceeded the losses directly and proximately caused by the conduct underlying
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the offense of conviction. Conversely, the government maintains that the con-
duct underlying the offense of conviction both directly and proximately caused
Medicare’s losses. It directly caused Medicare’s losses because “[b]ut-for
Mathew’s possession of the stolen names and Medicare numbers, none of the
16 individuals would have become patients of [DHH] and Medicare would not
have paid any of the claims submitted on their behalves.” Furthermore, it
proximately caused Medicare’s losses because “[t]here can be no more reasona-
bly foreseeable consequence of possessing stolen identities with the intent to
gain an economic advantage than actually gaining an economic advantage by
improperly using those identities as Mathew did.”
The government reaches the correct result: The conduct underlying
Mathew’s offense of conviction directly and proximately caused Medicare’s
losses. Thus, restitution was lawful under the MVRA.
Before analyzing direct and proximate causation between Mathew’s
offense of conviction and Medicare’s losses, we precisely define to what each
term refers. Mathew was convicted of, on or about September 23, 2011, know-
ingly possessing with the intent to use unlawfully or transfer unlawfully five
or more HICNs that were issued by or under the authority of the United States.
Medicare’s losses consisted of the amounts it paid for claims DHH submitted
on or after September 23, 2011, for care rendered to the sixteen Parkland
patients whose information Mathew stole from Parkland.
First, Mathew’s offense of conviction directly caused Medicare’s losses.
“A person is directly harmed by the commission of a[n] . . . offense where that
offense is a but-for cause of the harm.” In re Fisher, 640 F.3d 645, 648 (5th Cir.
2011). Without Mathew’s knowingly possessing with the intent to use un-
lawfully or transfer unlawfully the sixteen patients’ HICNs, DHH would not
have been able to submit payment claims, and Medicare would not have
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suffered losses related to those patients’ care. 3 Thus, but-for Mathew’s offense
of conviction, Medicare would not have suffered losses.
Second, the offense of conviction proximately caused Medicare’s losses.
“A person is proximately harmed when the harm is a reasonably foreseeable
consequence of the criminal conduct.” Id. Mathew knowingly possessed the
sixteen patients’ HICNs with the intent to use them unlawfully or transfer
them unlawfully. He further admitted, in the factual resume accompanying
his guilty plea, that he “intended to use the information to gain an economic
benefit.” It is reasonably foreseeable that Medicare would suffer losses in the
form of paying claims for the sixteen Parkland patients as a result of Mathew’s
knowingly possessing their HICNs with the intent to use those HICNs unlaw-
fully (to gain an economic benefit). After all, the very purpose of a health
insurance claim number is to identify an individual as a Medicare beneficiary,
so it is unsurprising that Mathew would fraudulently use them for that pur-
pose. Therefore, because Medicare’s losses were a reasonably foreseeable
consequence of Mathew’s offense of conviction, that offense of conviction proxi-
mately caused those losses.
This court has addressed direct and proximate causation in the context
of a restitution order. In United States v. Espinoza, 677 F.3d 730 (5th Cir.
2012), the defendant pleaded guilty of being a felon in possession of a firearm.
Id. at 731. The district court ordered the defendant to pay restitution to a
pawn shop to which he had sold stolen firearms that he unlawfully possessed.
3If Mathew lawfully possessed the patients’ information on September 23, 2011, then
any legitimate claims submitted by him using that information would have been lawful and
would not have caused Medicare loss. The district court, however, determined that the six-
teen Parkland patients became DHH patients “only because of the theft o[f] their identities
from Parkland.” Therefore, Mathew’s possession of the patients’ information was tainted
from the time he stole it from Parkland, and the fact that those patients became DHH
patients did not make Mathew’s possession lawful.
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Id. We vacated the sentence, in part because the defendant’s possession of the
firearms, without more, was not a but-for cause of the pawn shop’s harm. Id.at 733–34. There was nothing inherent in the unlawful possession that would
make one foresee the financial harm to the pawn shop. Id.Espinoza is distinguishable because the defendant was convicted of mere
possession with no additional element of an intent to use or transfer. Con-
versely, Mathew was convicted of knowing possession of the patients’ HICNs
with the intent unlawfully to use or transfer them. Thus, Espinoza’s holding
regarding mere possession does not foreclose the conclusion that Mathew’s
knowingly possessing with the intent unlawfully to use or transfer the HICNs
directly and proximately caused Medicare’s losses. It follows that the restitu-
tion component of Mathew’s sentence was lawful under the MVRA. 4
VI.
Mathew asserts that the government failed to meet its burden of estab-
lishing Medicare’s loss amount because the prosecution’s evidence was insuffi-
cient. The government points to its witness at sentencing, who showed that
Medicare would not have paid the claims DHH submitted for the sixteen
Parkland patients had it known that Mathew had compromised their identi-
ties. Mathew’s claim is unavailing. The government satisfied its burden to
establish Medicare’s loss amount by proffering evidence demonstrating that
Medicare paid claims DHH submitted for the sixteen Parkland patients and
would not have done so had it known that Mathew had compromised their
identities. The government established an actual loss to Medicare.
Under U.S.S.G. § 2B1.1(b)(1), “[t]he amount of loss resulting from [a]
4 Though imposition of restitution was lawful, as explained in part IV, the district
court on remand must limit the restitution amount to Medicare’s actual losses incurred on or
after September 23, 2011.
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fraud offense is a specific offense characteristic that increases the base offense
level.” United States v. Isiwele, 635 F.3d 196, 202 (5th Cir. 2011). “Generally,
it is the government’s burden to show by a preponderance of the evidence the
amount of loss attributable to fraudulent conduct.” United States v. Nelson,
732 F.3d 504, 521 (5th Cir. 2013). The district court “need only make a rea-
sonable estimate of the loss,” U.S.S.G. § 2B1.1 cmt. 3(C), based on available
information, United States v. Jones, 475 F.3d 701, 705 (5th Cir. 2007). Fur-
thermore, given the district court’s “unique position to assess the evidence and
estimate the loss” amount, its “loss determination is entitled to appropriate
deference.” U.S.S.G. § 2B1.1 cmt. 3(C); see also United States v. Hebron,
684 F.3d 554, 560 (5th Cir. 2012).
The loss resulting from an offense is “the greater of actual loss or
intended loss.” U.S.S.G. § 2B1.1 cmt. 3(A). An “actual loss” is “the reasonably
foreseeable pecuniary harm that resulted from the offense.” Id. § 2B1.1 cmt.
3(A)(i). “Reasonably foreseeable pecuniary harm,” in turn, is “pecuniary harm
that the defendant knew or, under the circumstances, reasonably should have
known, was a potential result of the offense.” Id. § 2B1.1 cmt. 3(A)(iv). An
“intended loss” is “the pecuniary harm that the defendant purposely sought to
inflict.” Id. § 2B1.1 cmt. 3(A)(ii). Whether the loss is actual or intended, the
court must reduce that loss by “the fair market value of the property returned
and the services rendered . . . to the victim before the offense was detected.”
Id. § 2B1.1 cmt. 3(E)(i).
The government sought to establish that Medicare suffered an actual
loss. Therefore, to have met its burden to demonstrate that actual loss, the
prosecution must have shown that Medicare suffered pecuniary harm 5 that
5Pecuniary harm is “harm that is monetary or that otherwise is readily measurable
in money.” U.S.S.G. § 2B1.1 cmt. 3(A)(iii).
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Mathew knew or, under the circumstances, reasonably should have known was
a potential result of his knowingly possessing with the intent to use unlawfully
or transfer unlawfully the sixteen Parkland patients’ HICNs. The government
satisfied that burden.
First, the government established that Medicare suffered pecuniary
harm. It proffered evidence that Medicare paid claims that DHH submitted
for the sixteen patients, thereby suffering a monetary loss.
Second, the government proved that Mathew knew, or under the circum-
stances reasonably should have known, that Medicare’s pecuniary harm was a
potential result of his knowingly possessing with the intent to use unlawfully
or transfer unlawfully the sixteen patients’ HICNs. The government proffered
evidence that Medicare would not have paid the claims of the sixteen patients
had it known that Mathew had compromised their identities. That evidence
showed that Medicare’s loss was a potential result of Mathew’s offense of con-
viction. Mathew’s knowingly possessing with the intent to use unlawfully or
transfer unlawfully the patients’ HICNs meant that their identities were com-
promised, and, therefore, that Medicare would not have paid for claims DHH
submitted to Medicare for those patients if Medicare had known of the
compromise.
The evidence also showed that Mathew reasonably should have known,
under the circumstances, that Medicare’s harm was a potential result of his
offense of conviction. Again, Medicare would not have paid for the sixteen
patients’ claims had it known that Mathew had compromised their identities,
and Mathew reasonably should have known that his intent to use unlawfully
or transfer unlawfully the patients’ HICNs could cause Medicare to pay for
claims it otherwise would not have. Mathew reasonably should have known
that his unlawfully knowingly possessing with the intent to use unlawfully or
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transfer unlawfully the HICNs, whose purpose is to identify an individual as
a legitimate Medicare beneficiary, could cause pecuniary harm to Medicare,
the issuer of those HICNs.
The government therefore established an actual loss to Medicare. It pre-
sented evidence to demonstrate each facet of an actual loss, so restitution in
that amount (less the actual losses incurred before September 23, 2011) is
appropriate under the MVRA.
VII.
Mathew claims that the district court’s findings regarding Medicare’s
actual loss amount were erroneous because he was entitled to an offset for pro-
viding legitimate services. He asserts that he presented evidence establishing
that DHH provided legitimate services to the sixteen Parkland patients and
that Medicare received value for those services. Conversely, the government
maintains that Mathew was not entitled to an offset because he failed to dem-
onstrate both that DHH “provided legitimate services to the 16 patients at
issue” and “that Medicare would have paid for those services ‘but for’ Mathew’s
fraud.” Mathew’s contention is unpersuasive. Because the district court’s find-
ing is plausible in light of the record as a whole, it did not clearly err in denying
Mathew an offset against the actual loss amount for providing legitimate
services.
In the context of health care fraud, a defendant, to be entitled to an offset
against an actual loss amount for purposes of restitution, must establish
(1) “that the services [he provided to Medicare beneficiaries] were legitimate”
and (2) “that Medicare would have paid for those services but for his fraud.”
United States v. Mahmood, 820 F.3d 177, 194 (5th Cir. 2016). The defendant
has the burden of proof to establish each of these factors. Id. If he satisfies
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that burden, the government can rebut with additional evidence. See id. Con-
sequently, to have satisfied the Mahmood two-factor test, Mathew must have
presented unrebutted evidence demonstrating (1) that DHH provided legiti-
mate services to the sixteen Parkland patients and (2) that Medicare would
have paid for those services but for Mathew’s fraud. Mathew fails at the first
factor.
Mathew presented medical documents, patient interviews, and witness
testimony to establish that DHH provided services to the sixteen patients, that
doctors had referred them for home health care, and that the patients were
homebound. For example, the transcript of one patient interview stated that
DHH provided “home health services.” Other documents showed that some
patients, at some point, had received home health care referrals from physi-
cians who were not under suspicion for health care fraud.
The government presented evidence that discredited Mathew’s claims
and significantly weakened his attempt to satisfy his burden of proving that
DHH had provided legitimate services to the sixteen patients. The government
explained that the claims DHH submitted for fifteen of the sixteen were fraud-
ulent as a result of a combination of (1) those patients’ not being eligible for
Medicare-covered home health care, (2) their not receiving Medicare-covered
services as billed, (3) home health care’s not being initiated by a physician,
and/or (4) DHH’s exaggerating the patient’s health problems to increase the
amount that Medicare would pay for that patient’s care. For example, for one
patient, DHH did not provide her skilled nursing services covered by Medicare
but merely checked her vital signs. Another patient rode the bus to some of
her doctor appointments, strongly indicating that she was not homebound. For
each of Mathew’s points regarding legitimate services, the prosecution method-
ically proffered evidence for each of the fifteen patients at issue that undercuts
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Mathew’s contentions and supports the opposite.
With both Mathew’s and the government’s evidence before it, the district
court found that Mathew had not met his burden to demonstrate that DHH
provided legitimate services to the sixteen Parkland patients, and, therefore,
that he was not entitled to an offset against the actual loss amount for purposes
of restitution. Mathew could not satisfy the first factor of Mahmood. Because
the court’s finding is plausible in light of the record as a whole, especially con-
sidering the detailed evidence the government presented regarding the ille-
gitimacy of the services DHH rendered to the sixteen patients, the court did
not clearly err in denying an offset against the actual loss amount for restitu-
tion purposes.
The judgment of sentence is VACATED and REMANDED for resentenc-
ing. We make no suggestion as to what decisions the district court should make
on remand.
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