United States v. Elena Polukhin

United States Court of Appeals
For the Eighth Circuit
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No. 17-1084
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United States of America,
lllllllllllllllllllllPlaintiff - Appellee,
v.
Elena Lev Polukhin,
lllllllllllllllllllllDefendant - Appellant.
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Appeal from United States District Court
for the District of Minnesota - St. Paul
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Submitted: October 19, 2017
Filed: July 19, 2018
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Before LOKEN, BEAM, and COLLOTON, Circuit Judges.
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COLLOTON, Circuit Judge.
Elena Polukhin, a physician, pleaded guilty to one count of aiding and abetting
the solicitation and receipt of kickbacks in return for referring patients to a pharmacy.
See 42 U.S.C. § 1320a-7b(b)(1)(A); 18 U.S.C. § 2. The district court1 sentenced
1
The Honorable Ann D. Montgomery, United States District Judge for the
District of Minnesota.
Polukhin to eighteen months’ imprisonment, and ordered her to make restitution in
the amount of $421,329.19. Polukhin appeals only the restitution order. The offense
of conviction did not authorize the amount of restitution ordered, but Polukhin’s plea
agreement allowed the court to consider other criminal conduct that would justify
restitution. We conclude that the district court did not clearly err in finding that
Polukhin conspired with others to defraud the United States of an amount that
justified the award. We therefore affirm the judgment.
I.
Polukhin was a physician in Minnesota. In pleading guilty to the kickback
charge, Polukhin admitted that in March 2014, she knowingly received $660 in
remuneration in exchange for referring patients to Best Aid Pharmacy in St. Louis
Park, Minnesota. Polukhin wrote prescriptions for a pain-relief cream, and the
pharmacy filled the prescriptions and sought reimbursement from the federally-
funded Medicare and Medicaid programs. In a plea agreement, the government
agreed to dismiss twenty-eight other counts charged by the grand jury: one count of
conspiring to execute a scheme to defraud a health care benefit program between
February 2011 and December 2014, nineteen more counts of aiding and abetting
soliciting and receiving kickbacks between June 2012 and February 2014, three
substantive counts of health care fraud, three counts of aggravated identity theft, and
two counts of unlawful distribution and dispensing of controlled substances.
At sentencing, much of the dispute concerned whether Polukhin participated
only in the solicitation and receipt of kickbacks from Best Aid Pharmacy, or whether
she also conspired more broadly with two men at the pharmacy to defraud the
government. Boris Rabichev, part owner and managing partner of Best Aid, and
Richard Custer, a pharmacist at Best Aid, pleaded guilty to a conspiracy to defraud
the United States. Their agreement involved a scheme to bill Medicare and Medicaid
inflated amounts for the pain-relief creams that Polukhin prescribed.
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Best Aid was involved in “compounding” certain medications, meaning that
the pharmacy prepared them by mixing individual ingredients according to a
prescription. There were two methods to produce the pain-relief creams: one used
bulk powders; the other involved use of at least one individual capsule that contained
powder. Custer discovered that Medicare and Medicaid reimbursed at a higher rate
if the pharmacy used individual dosage units. But the manufacturing process with
dosage units was more time-consuming and laborious because it required opening
individual capsules to obtain the powder.
The fraud occurred when Rabichev and Custer decided to use bulk powder to
create the pain-relief cream, but to represent falsely to Medicare and Medicaid that
they used individual dosage units. This approach allowed Best Aid to receive
reimbursements of $463,052.33 from the government when accurate submissions
would have generated $41,723.14.
At Polukhin’s sentencing hearing, the principal dispute concerned the scope
of her relevant conduct under the advisory sentencing guidelines. Polukhin
acknowledged that she was responsible for conduct that encompassed a total of
twenty kickback payments from Best Aid, but denied that she was a knowing
participant in the pharmacy’s larger fraud scheme. The government urged that
Polukhin did participate in the fraud scheme with Rabichev and Custer, and that she
should be accountable under the guidelines for the full amount of loss to the
government caused by that scheme.
The district court found that Polukhin was involved in the fraud scheme with
Rabichev and Custer, and rejected Polukhin’s position that her culpability was limited
to soliciting and receiving kickbacks. The court found that there was “a relationship
between Rabichev and Polukhin which made this scheme come into fruition,” and
emphasized that Polukhin was “the feeder for the prescriptions which set up the
healthcare fraud to happen,” and that “part of that scheme was the kickbacks that
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came back.” The court cited evidence that Polukhin had a strong interest in the
compounding business and that she considered starting her own business. After
quoting an e-mail from Polukhin stating that preparing pain-relief creams from her
recipes would be “a huge business,” the court found that Polukhin’s statements
“belie[d] any evidence of not knowing or understanding what would be happening
with regard to reimbursement.”
The district court ultimately adopted most of the presentence report prepared
by the probation office. The adopted report included a finding that “Boris Rabichev
used his experience as part owner and managing partner of Best Aid Pharmacy to
conspire with Elena Polukhin, Richard Custer, and others to defraud the United
States.” The court held Polukhin accountable under the guidelines for a loss amount
of $421,329.19—the difference between the amount that Medicare and Medicaid paid
to Best Aid and the amount that the government would have paid if Best Aid had
made truthful submissions.
There was no separate debate at sentencing concerning the amount of
restitution owed. In her written submissions on restitution, however, Polukhin
incorporated her arguments on loss amount, and claimed “no role” in the billing fraud
perpetrated by Rabichev and Custer. The district court, having rejected Polukhin’s
position on the loss amount under the guidelines, simply ordered Polukhin to make
restitution in the same amount, $421,329.19, without further discussion.
On appeal, Polukhin disputes only the restitution order; she does not challenge
the district court’s calculation of her loss amount or offense level under the
guidelines. The government responds that Polukhin waived any challenge to the
restitution and that her arguments are without merit in any event.
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II.
A district court may order restitution only when authorized by statute. United
States v. Yielding, 657 F.3d 688, 718 (8th Cir. 2011). In this case, no statute
authorizes the amount of restitution ordered based on a single conviction for aiding
and abetting the solicitation or receipt of a kickback of $660. The Victim and
Witness Protection Act, however, provides that the court may order, if agreed to by
the parties in a plea agreement, restitution to persons other than the victim of the
offense. 18 U.S.C. § 3663(a)(1)(A). The parties dispute whether Polukhin’s plea
agreement provided authority for the award at issue here.2
The plea agreement included the following paragraph on restitution:
Restitution. The defendant understands and agrees that the defendant
may be ordered to make restitution to the victims of her crime. The
defendant understands and agrees that the Court may order her to make
restitution for amounts above and beyond those directly caused by the
offense of conviction. The United States maintains that the amount of
restitution is $421,329.19. The defendant reserves the right to contest
this restitution amount. The defendant understands and agrees that the
Court will determine the amount of restitution and may order the
defendant to make restitution for amounts beyond those directly caused
by the offense of conviction if the Court determines at sentencing that
2
The government mistakenly argues that the Mandatory Victim Restitution Act,
18 U.S.C. § 3663A, also provides for an award based on Polukhin’s participation in
the fraud conspiracy with Rabichev and Custer. That statute says that in the case of
a plea agreement that does not result in a conviction for one of the offenses
enumerated in the statute, restitution may be ordered “only if the plea specifically
states that an offense” listed in the statute “gave rise to the plea agreement.” Id.
§ 3663A(c)(2). Polukhin’s kickback offense is not among the enumerated offenses,
see Yielding, 657 F.3d at 718-19, and the plea agreement does not identify an
enumerated offense as giving rise to the agreement.
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the United States has established such amounts as compensable under
the applicable restitution statutes.
The government argues that we need not address whether the court was
authorized to order restitution, because Polukhin waived her right to appeal the
restitution order. The plea agreement, however, did not include a provision stating
that Polukhin waived her right to appeal. Cf. United States v. Andis, 333 F.3d 886,
890 (8th Cir. 2003) (en banc). The government cites United States v. Lester, 200 F.3d
1179, 1179 (8th Cir. 2000), where this court held that an agreement “to pay any
restitution ordered by the District Court” barred an appeal of a restitution order, and
United States v. Bartsch, 985 F.2d 930, 933 (8th Cir. 1993), where we affirmed a
restitution order after a defendant specifically agreed that the court could enter
restitution up to a certain dollar amount. In this case, by contrast, Polukhin did not
agree to pay whatever the district court ordered. She expressed understanding that
she “may be ordered to make restitution,” but also “reserve[d] the right to contest” the
government’s proposed restitution amount, and did not waive her right to appeal the
district court’s decision. Lester and Bartsch are not controlling.
The government also contends that Polukhin waived her right to appeal by
arguing that her willingness to pay restitution from an escrow account supported a
reduced term of imprisonment. But a willingness to pay whatever restitution is
lawfully ordered is not inconsistent with reserving a right to appeal the lawfulness of
a restitution order. Polukhin’s argument at sentencing was not a waiver of the right
to appeal. The government similarly asserts that Polukhin’s payment of most of the
restitution amount into the registry of the district court waived her right to appeal.
The payment, however, simply complied with the district court’s judgment that most
of the restitution was due “immediately.” Compliance did not waive Polukhin’s right
to appeal the order and seek return of the funds if she were to prevail.
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Although Polukhin apparently did not ask the district court to retain the funds
in its registry pending appeal, the clerk’s disbursal of funds to victims does not moot
the appeal. A portion of the restitution was not due until Polukhin completed her
prison term, and we have not been notified that Polukhin paid this amount to the
district court or that the court disbursed such funds to victims. There is a live
controversy over restitution because Polukhin may ask the district court to order a
refund if the restitution order is vacated on direct appeal, see Nelson v. Colorado, 137
S. Ct. 1249, 1252 (2017); United States v. Beckner, 16 F. Supp. 2d 677, 679 (M.D.
La. 1998), or perhaps seek an order for the return of funds from those to whom the
clerk disbursed the money. Cf. Life Inv’rs Ins. Co. of Am. v. Fed. City Region, Inc.,
687 F.3d 1117, 1121 (8th Cir. 2012); Corley v. Rosewood Care Ctr., Inc. of Peoria,
142 F.3d 1041, 1058 (7th Cir. 1998); Cramer v. Phx. Mut. Life Ins. Co., 91 F.2d 141,
145-46 (8th Cir. 1937).
In her appeal of the restitution order, Polukhin argues that the plea agreement
allowed the district court to order restitution for kickbacks that were not encompassed
by her offense of conviction, but did not authorize the court to include an amount
based on the broader conspiracy to defraud the United States. The pertinent language
in the agreement states that the court “may order the defendant to make restitution for
amounts beyond those directly caused by the offense of conviction if the Court
determines at sentencing that the United States has established such amounts as
compensable under the applicable restitution statutes.” Nothing in this statement
limits the court to restitution for kickbacks. The agreement states without limitation
that the court may order restitution if such amounts “are compensable under the
applicable restitution statutes.” If Polukhin conspired to defraud the United States,
then restitution is authorized for that offense under 18 U.S.C. § 3663(a)(1)(A).
Ordinarily, the government would be required to establish a conviction for conspiracy
to defraud, but Polukhin’s plea agreement allowed the court to order amounts
“beyond those directly caused by the offense of conviction.” That language is
sufficient to authorize restitution for a conspiracy to defraud the United States under
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the restitution statute if there was a proper finding that Polukhin committed the
offense.
The district court, by adopting the presentence report, found that Polukhin
conspired with Rabichev and Custer to defraud the United States. The evidence of
Polukhin’s involvement in the conspiracy was largely circumstantial, but the district
court’s finding was not clearly erroneous. Polukhin had approached Custer and
Rabichev about filling prescriptions for her pain-relief creams. She knew that the
pharmacy could claim reimbursement from Medicare and Medicaid. There was
evidence that Polukhin repeatedly considered entering the compounding pharmacy
business herself between 2012 and 2014, stating in November 2012 that it was “a
HUGE business.” Polukhin was in a romantic relationship with Rabichev, and sought
in April 2012 for him to control their joint finances. She knew, of course, that
Rabichev valued her prescriptions enough to pay kickbacks for her referral of patients
over a two-year period. The district court reasonably inferred that Polukhin, as the
“feeder for the prescriptions,” knew about the fraudulent reimbursement scheme that
relied on the prescriptions, and that she voluntarily joined a conspiracy that would
benefit her financially through her relationship with Rabichev. Because the
conspiracy to defraud directly and proximately caused Medicare and Medicaid to lose
$421,329.19, the district court was authorized to order Polukhin to make restitution
in that amount.
The judgment of the district court is affirmed.
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