United States v. Farid Fata

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 16a0283n.06
No. 15-1935
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
May 25, 2016
UNITED STATES OF AMERICA, ) DEBORAH S. HUNT, Clerk
)
Plaintiff-Appellee, )
)
v. ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR THE
FARID FATA, ) EASTERN DISTRICT OF MICHIGAN
)
Defendant-Appellant. )
BEFORE: BOGGS and KETHLEDGE, Circuit Judges; STAFFORD, DistrictJudge.*
STAFFORD, District Judge. The defendant, Farid Fata, was a physician who
intentionally mis-diagnosed no fewer than 553 of his patients with cancer and other maladies they
did not have, then administered debilitating treatments, noxious chemicals, and invasive
tests—including chemotherapy, intravenous iron, and PET scans—they did not need. For this
reprehensible conduct, Fata received no less than $17 million in ill-gotten payments from
Medicare and other insurers. The district court accurately described Fata’s conduct as “a huge,
horrific, series of criminal acts.”
Fata pleaded guilty to sixteen counts—thirteen counts of health-care fraud, one count of
conspiracy to pay and receive kickbacks, and two counts of promotional money laundering. He
*
The Honorable William H. Stafford, Jr., Senior United States District Judge for the Northern
District of Florida, sitting by designation.
No. 15-1935
United States v. Fata
did not have a Rule 11 plea agreement. After a five-day hearing, the district court sentenced Fata
to 45 years in prison, a sentence within his guideline range of 360 months to life. Fata thereafter
filed this timely appeal, arguing that the district court (1) erred in its application of “Role in the
Offense” enhancements under sections 3B1.3 and 3B1.1 of the United States Sentencing
Guidelines (“USSG”); (2) erred in allowing victim impact statements from patients whose status
as actual “victims” had not been determined; and (3) lacked a sufficient factual basis to accept his
guilty plea to the money laundering counts. Because Fata’s arguments on appeal are without
merit, we affirm.
I.
Fata first contends that the trial court erred in enhancing his sentence under USSG
§§ 3B1.3 and 3B1.1. “In reviewing the district court's application of the sentencing guidelines,
this court reviews the district court's legal conclusions de novo and its factual findings for clear
error.” United States v. McCloud, 730 F.3d 600, 605 (6th Cir. 2013).
Under § 3B1.3, a defendant’s guideline range is increased by two levels if he “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.” USSG § 3B1.3. Where this two-level
enhancement is “based solely on the use of a special skill, it may not be employed in addition to an
adjustment under § 3B1.1” for aggravating role. Id. (emphasis added). On the other hand, “[i]f this
adjustment is based upon an abuse of a position of trust, it may be employed in addition to an
adjustment under § 3B1.1.” Id.
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United States v. Fata
The offense-level calculations in Fata’s Presentence Investigation Report (“PSR”)
included a two-level upward adjustment under § 3B1.3 based on Fata’s abuse of a special skill.
The PSR’s calculations did not include an aggravating-role enhancement under § 3B1.1. The
government objected to the calculations, arguing that the calculations should reflect both Fata’s
abuse of trust under § 3B1.3 and his aggravating role under § 3B1.1. While not disputing that
Fata utilized special skills to commit his offenses, the government argued that Fata’s “most
significant abuse” under § 3B1.3 was his abuse of the trust position he held with respect to his
patients and the organizations he billed for fraudulent services. Given the applicability of an
abuse-of-trust adjustment under § 3B1.3, the government urged the district court to add a two-level
adjustment under § 3B1.1 for Fata’s leadership role in the kickback conspiracy. Fata responded
to the government’s argument by arguing that a special-skill enhancement was more appropriate
because “[e]verything in this case stems from [Fata’s] special skill.” Fata accordingly urged the
district court to adopt the calculations as presented by the probation officer. Persuaded by the
government’s arguments, the district court applied a two-level upward adjustment for abuse of
trust under § 3B1.3 and then added another two-level upward adjustment under § 3B1.1(c) for
aggravating role.1
The record amply supports the district court’s two-level enhancement for abuse of trust.
Prior to sentencing, Fata admitted that his offenses involved an abuse of trust. Indeed, after he
1
The government argued for a four-level enhancement for aggravating role under § 3B1.1(a).
That section applies “[i]f the defendant was an organizer or leader of a criminal activity that
involved five or more participants or was otherwise extensive.” The district court instead added
two levels under § 3B1.1(c), which applies “[i]f the defendant was an organizer, leader, manager,
or supervisor in any criminal activity other than [one that involved five or more participants or was
otherwise extensive.]”
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United States v. Fata
pleaded guilty, Fata entered into a stipulation with the government as follows: “The parties agree
that the government could prove, by a preponderance of the evidence, that Fata’s offense involved
the abuse of a position of trust [under] Section 3B1.3.” At sentencing, Fata spoke to the judge,
saying that he “violated the medical oath . . . and caused anguish, hardship and pain to my patients
and their families.” Fata then added that he “grossly abused the trust that my patients placed in
me. They came to me seeking compassion and care. I failed them.” Fata’s counsel similarly
advised the judge at sentencing that Fata “admitted to [his probation officer] the first day we saw
her . . . that he had betrayed the trust of his patients and took advantage of them in their most
vulnerable state.”
Per the Guidelines, a position of trust is “characterized by professional or managerial
discretion (i.e., substantial discretionary judgment that is ordinarily given considerable
deference),” and subjects persons holding such positions “to significantly less supervision than
employees whose responsibilities are primarily non-discretionary in nature.” USSG § 3B1.3,
Application Note 1; see also United States v. Gilliam, 315 F.3d 614, 618 (6th Cir. 2003)
(explaining that a “position of trust arises almost as if by implication when a person or
organization intentionally makes himself or itself vulnerable to someone in a particular position,
ceding to the other’s presumed better judgment some control over their affairs” (internal quotation
marks omitted)). That a doctor works with little supervision and exercises “substantial
discretionary judgment that is ordinarily given considerable deference” is axiomatic. See United
States v. Kaminski, 501 F.3d 655, 667 (6th Cir. 2007) (referring to the “mantle of trust” accorded to
medical doctors). The Guidelines recognize as much, offering—as one example of a proper
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United States v. Fata
abuse-of-trust enhancement—the “sexual abuse of a patient by a physician under the guise of an
examination.” § 3B1.3, Application Note 1.
Clearly, Fata occupied a position of trust vis-à-vis his patients within the meaning of
§ 3B1.3. With little supervision and a great deal of discretion, Fata was able to make false
diagnoses and administer potentially deadly, yet unnecessary, courses of treatment for hundreds of
patients who relied on his presumed integrity and accepted his presumed professional
judgments—all to their detriment and to Fata’s financial gain. Like the physician in the
Guidelines example who sexually abuses a patient under the guise of an examination, Fata
occupied a position of trust when he abused his patients by treating non-existent maladies with
life-threatening chemicals.
Fata also occupied a position of trust vis- à-vis the insurers—both public and private—that
he billed for fraudulent services. In United States v. Hodge, 259 F.3d 549 (6th Cir. 2001), this
court held, “in accord with the other circuits,” that:
[C]ertain health care providers, or persons who hold themselves out as providers of
care, occupy a position of trust with respect to both public and private insurance
companies if they exercise professional or managerial discretion in treating patients
and in billing for those treatments, which discretion is given deference by the
insurers and helps to facilitate [a] crime. Our determination that health care
providers may be subject to the § 3B1.3 adjustment is in harmony with our circuit's
case law on this adjustment. Our precedents make clear that the touchstone for a
finding that the defendant occupies a position of trust is not necessarily the amount
of supervision the person receives, although that is an important factor to consider,
but rather the amount of discretion the person has in his or her position of
employment. Insurance companies must, for the most part, assume that health
care providers are billing for services that they have actually performed. Because
the methods available to insurance companies for assessing whether care providers
have been honest . . . are limited, billing fraud is hard to detect, and insurance
companies must ultimately defer to the health care providers’ representations that
service was performed.
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United States v. Fata
Id. at 556 (citations omitted).
Not only did Fata occupy a position of trust, but that position also facilitated in a significant
way his crimes of health-care fraud and conspiracy to pay and receive kickbacks. The discretion,
the lack of supervision, and the deference granted to Fata by virtue of his being a physician not
only placed him in the position to commit his offenses but also allowed him to victimize so many
for so long for so much. As his criminal conduct illustrates, Fata took advantage of the trust of his
patients and their insurers in a particularly heinous manner. For Fata, an enhancement for abuse of
trust was appropriate. See United States v. Goldman, 607 F. App’x 171, 176 (3d Cir. 2015)
(finding that a physician’s position of trust significantly facilitated the offense of receiving
kickbacks for medical referrals); United States v. Hoogenboom, 209 F.3d 665, 671 (7th Cir. 2000)
(upholding abuse-of-trust enhancement for psychologist who billed Medicare for services that had
not been performed or services not performed as billed); United States v. Sidhu, 130 F.3d 644,
655–56 (5th Cir. 1997) (finding that a physician’s abuse of his patients’ trust significantly
facilitated the physician’s offense of defrauding various government programs and insurance
companies by billing for services that were not performed or were not performed appropriately);
United States v. Adam, 70 F.3d 776, 782 (4th Cir. 1995) (upholding abuse-of-trust enhancement
for an internist who took illegal kickbacks from a cardiologist in exchange for patient referrals).
While not denying that Fata abused a position of trust with both his insurers and his
patients, Fata contends (1) that the sine qua non of the offense behavior in this case was his use of
special skills; and (2) that, of the two alternatives to enhancement set forth disjunctively in
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United States v. Fata
§ 3B1.3, the district court should have selected the special-skill alternative as the more
appropriate—and only—basis for the § 3B1.3 upward adjustment. Had the trial judge done so,
the additional enhancement for aggravating role under § 3B1.1 would have been precluded.2 Fata
thus maintains that he is entitled to resentencing without the two-level enhancement for
aggravating role.3
Fata’s argument is not persuasive. As the first sentence of § 3B1.3 provides, a two-level
increase in the Guidelines calculation is applicable if a defendant abused a position of trust or used
a special skill to facilitate or conceal an offense. From that first sentence, it is reasonable to
conclude that § 3B1.3 authorizes only a single two-level increase in the sentencing calculus. It
does not allow for two-level increases for both abuse of trust and special use. However, as the
word “solely” in the third sentence of § 3B1.3 implies, the two applications are not otherwise
mutually exclusive. The third sentence of § 3B1.3 provides that a two-level aggravating-role
enhancement under § 3B1.1 may not be applied if the § 3B1.3 adjustment “is based solely on the
use of a special skill.” That third sentence thus implies that a district court may add two-level
adjustments under both § 3B1.3 and § 3B1.1 when the § 3B1.3 adjustment is based on either
(1) abuse of trust alone, or (2) both abuse of trust and use of a special skill. If it were otherwise,
the word “solely” in § 3B1.3 would be superfluous. See United States v. Porcelli, 440 F. App’x
2
Without the § 3B1.1 two-level enhancement for aggravating role, Fata’s sentencing range would
have been 292–365 months, and the 45-year sentence that was imposed would have represented an
upward variance.
3
Fata does not contend that there are no facts to support the aggravating role enhancement. He
limits his argument to the district court’s purported error in attributing the § 3B1.3 enhancement to
abuse of trust rather than solely to the use of a special skill.
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United States v. Fata
870, 877 (11th Cir. 2011) (recognizing that a court may apply enhancements under both § 3B1.1
and § 3B1.3 “if the latter is based at least in part on an abuse of trust”).
Here, the district court properly added two levels to Fata’s Guidelines calculation
based—at least in part—on Fata’s abuse of a position of trust under § 3B1.3. Because Fata’s
§ 3B1.3 adjustment was based at least in part on abuse of trust, the district court did not err in also
adding two levels for aggravating role under § 3B1.1.
II.
Fata next contends that the district court erred by allowing victim impact statements, both
written and oral, from patients whose status as actual “victims” was not confirmed. Even
assuming that the district court considered statements from non-victim patients, Fata’s claim of
error is without merit.
It is well established that a district court may consider a wide variety of information at
sentencing that could not otherwise be considered at trial. See 18 U.S.C. § 3661 (providing that
“[n]o limitation shall be placed on the information concerning the background, character, and
conduct of a person convicted of an offense which a court of the United States may receive and
consider for the purpose of imposing an appropriate sentence”); Pepper v. United States, 562 U.S.
476, 489 (2011) (noting that sentencing courts may appropriately “conduct an inquiry broad in
scope, largely unlimited as to the kind of information they may consider, or the source from which
it may come”) (internal quotation marks and alteration omitted). The Sentencing Commission
has incorporated the “no limitation” principle in the Guidelines by providing as follows: “In
determining the sentence to impose within the guideline range, or whether a departure from the
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United States v. Fata
guidelines is warranted, the court may consider, without limitation, any information concerning
the background, character and conduct of the defendant, unless otherwise prohibited by law.”
USSG § 1B1.4 (emphasis added); see also United States v. Case, 434 F. App’x 522, 523 (6th Cir.
2011) (noting that the district court “could freely consider” statements from the defendant’s
sister-in-law and mother-in-law, “regardless of whether the in-laws were properly characterized as
‘victims’”). The law thus makes clear that the district court in this case was permitted to consider
oral and written statements from Fata’s patients, whether or not those patients were confirmed as
“victims.”
In any event, the district court decided not to rely on the patients’ statements in determining
Fata’s sentence. The district court expressly explained that it was unnecessary to rely on them
because the expert testimony and Fata’s pleas “provide[d] a basis for the sentencing.” To the
extent, if any, that the district court considered patient statements, Fata’s sentence was not
rendered unreasonable.
III.
Finally, Fata claims for the first time on appeal that his guilty pleas to promotional money
laundering (Counts 22 and 23) were not supported by a sufficient factual basis. This claim is
reviewed for plain error. Under the plain-error standard, Fata must show “(1) error (2) that was
obvious or clear, (3) that affected [his] substantial rights and (4) that affected the fairness,
integrity, or public reputation of the judicial proceedings.” United States v. Vonner, 516 F.3d
382, 386 (6th Cir. 2008) (en banc) (internal quotation marks omitted).
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A district court must determine that there is a “factual basis” for a guilty plea “[b]efore
entering judgment” on that plea. Fed. R. Crim. P. 11(b)(3). Because a sufficient factual basis
need be present only by the time of judgment, it is not necessary that the factual basis be
established at the plea hearing. Judges may draw factual bases from many sources, including such
post-plea sources as the defendant’s PSR and testimony proffered at sentencing. United States v.
Byrd, 220 F. App’x 421, 425 (6th Cir. 2007); United States v. Bennett, 291 F.3d 888, 896–97 (6th
Cir. 2002).
The elements of promotional money laundering, prohibited by 18 U.S.C.
§ 1956(a)(1)(A)(i), are that the defendant “(1) conducted a financial transaction that involved the
proceeds of unlawful activity; (2) knew the property involved was the proceeds of unlawful
activity; and (3) intended to promote that unlawful activity.” United States v. Prince, 618 F.3d
551, 554 (6th Cir. 2010) (internal quotation marks omitted). Fata challenges only the third
element: intent to promote the unlawful activity.
Fata focuses on the plea colloquy only. At the plea hearing, Fata was asked to recite the
facts supporting the two promotional money laundering counts. He testified as follows:
THE DEFENDANT: As I previously stated in other counts, I submitted claims to
various insurance companies and Medicare for unnecessary services and infusions
through my company, Michigan Hematology Oncology [MHO]. In 2013 I
incorporated a new company, United Diagnostics, that would perform tests such as
PET scan[s]. . . . United Diagnostics was funded in part using funds that I had
earned through my submission of claims for unnecessary services. . . . I deposited
or caused the deposit of two checks from MHO to United Diagnostics –
THE COURT: From who?
THE DEFENDANT: Michigan Hematology Oncology to United Diagnostics on
May 3rd, 2013 . . . and July 2nd, 2013.
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United States v. Fata
THE COURT: Okay.
THE DEFENDANT: Each written in the amount of $100,000.
THE COURT: Okay.
THE DEFENDANT: After United Diagnostics became operational, I submitted
false claims . . . for certain patients for unnecessary PET scans through United
Diagnostics.
According to Fata, this plea colloquy “wholly fails to establish that he engaged in the financial
transactions funding United Diagnostics with the specific intent to promote the submission of false
medical claims.”
Even assuming the plea colloquy was insufficient by itself to establish a factual basis for
the third element of the money-laundering counts, the record as a whole supports the district
court’s finding that Fata deposited checks from MHO with the intent to promote health- care fraud
at United Diagnostics. Before judgment was entered, the district court was able to consider the
PSR,4 the parties’ pre-sentence stipulation,5 and the sentencing documents proffered by the
prosecutor, including the record of interviews taken of medical assistants who worked for Fata at
MHO. From those interviews and the record as a whole, the district court had the following
information: (1) United Diagnostics was originally scheduled to open in April 2013; (2) There was
a huge increase in the number of PET-scan orders signed by Fata beginning in February 2013, all
to be done when United Diagnostics opened its doors, supposedly in April; (3) When the opening
4
Fata filed no objections to the paragraphs in the PSR that related to the money laundering counts.
5
After Fata entered his plea but before he was sentenced, the parties stipulated that “consistent
with his guilty plea, Fata’s offense involved money laundering under 18 U.S.C. Section 1956.”
Sealed Stip., Doc. 147–2, Ex. A in the record of the district court in this case (Case No.
2:13cr20600–PDB–DRG).
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No. 15-1935
United States v. Fata
of United Diagnostics was delayed until July, Fata instructed his staff to reschedule the PET- scan
appointments, delaying them to July and August when scans could be done at United Diagnostics;
(4) Fata made clear to his staff that he did not want his patients referred to other facilities for scans;
(5) When patients questioned the delays and asked for referrals to other PET scan facilities, Fata
instructed his staff to lie to the patients rather than referring them elsewhere; (6) Fata deposited
$100,000 into the bank account of United Diagnostics on May 3, 2013, and again on July 2, 2013,
during the very time period when scans were being rescheduled at United Diagnostics and referrals
were being refused; and (7) The $100,000 checks came from MHO’s bank account. This
information—combined with Fata’s admission that he was guilty of laundering money in violation
of 18 U.S.C. § 1956(a)(1)(A)(i)—was more than enough to provide a sufficient factual basis to
determine that Fata transferred MHO funds to United Diagnostics with the specific intent to
promote the submission of false medical claims at United Diagnostics. The district court did not
err, much less commit plain error, when it accepted Fata’s guilty plea to the money-laundering
counts.
IV.
For the foregoing reasons, we AFFIRM the judgment of the district court.
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