USA v. Brenda Miller

Filing 511109488

Case: 09-40438

Document: 00511109488

Page: 1

Date Filed: 05/12/2010

IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
May 12, 2010 N o . 09-40438 Lyle W. Cayce Clerk

U N I T E D STATES OF AMERICA, P la in t iff ­ Appellee v. B R E N D A DAVIS MILLER, also known as Brenda Graham Davis, D e f e n d a n t ­ Appellant

A p p e a l from the United States District Court fo r the Southern District of Texas

B e fo r e GARWOOD, SMITH, and CLEMENT, Circuit Judges. E D I T H BROWN CLEMENT, Circuit Judge: B r e n d a Davis Miller pled guilty to one count of conspiracy to commit h e a lt h care fraud, 18 U.S.C. §§ 1347, 1349, and one count of conducting a fin a n c ia l transaction with criminally derived property valued at over $10,000, id . § 1957. After applying sentencing enhancements for, inter alia, abuse of a p o s i t io n of trust and obstruction of justice, the district court sentenced Miller to n in e t y - s e v e n months' imprisonment. We affirm the enhancement for abuse of a position of trust, vacate the enhancement for obstruction of justice, and r e m a n d for resentencing.

Case: 09-40438

Document: 00511109488

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Date Filed: 05/12/2010

No. 09-40438 F A C T S AND PROCEEDINGS M ille r was the owner of AA Better Medical Supply in Houston, Texas. She o b ta in e d licenses from Medicare and Medicaid to operate as a durable medical e q u ip m e n t (DME) provider, which, upon certification of medical necessity (CMN) b y a licensed physician, may provide certain supplies and equipment to b e n e f ic ia r ie s of those programs. The DME provider may then submit a

r e im b u r s e m e n t claim to Medicare or Medicaid for the provided equipment. Miller admitted to submitting false and fraudulent claims to Medicare and M e d ic a id for power wheelchairs and power scooters that were either never s u p p l ie d or more costly than the equipment actually supplied to beneficiaries. H e r scheme was assisted by a physician, Dr. Walter Long, who provided prea u t h o r iz e d CMNs that lacked patient information. Miller or her employees w o u ld complete the CMNs with names and information from Medicare and M e d ic a id patients, none of whom had an actual certified need for a wheelchair o r scooter. Miller also admitted to fraudulently billing Medicaid for

p s y c h o t h e r a p y counseling services, despite the fact that she was not a licensed c o u n s e lo r . Miller was charged by a thirty-count indictment and pled guilty to two c o u n t s : conspiracy to commit health care fraud, and conducting a financial t r a n s a c tio n with criminally derived property valued at over $10,000. In a plea a g r e e m e n t, she and the government stipulated to a loss amount of $1.283 m illio n . In preparing the presentence report (PSR), the probation officer grouped t h e two offenses pursuant to U.S.S.G. § 3D1.2, and after considering the in te n d e d loss amount, calculated a base offense level of twenty-two. The

p r o b a t io n officer also recommended the following enhancements: (1) a four-level in c r e a s e under U.S.S.G. § 3B1.1(a) based on Miller's role as an organizer or lea d e r of criminal activity; (2) a two-level increase under § 3B1.3 for abuse of a 2

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No. 09-40438 p o sition of trust in a manner that significantly facilitated the offense; and (3) a t w o -le v e l increase under § 3C1.1 for obstruction of justice. The probation officer a ls o recommended denying a reduction for acceptance of responsibility. Miller o b je c te d to each of the PSR's recommendations. Over Miller's objection, the district court applied all three enhancements, b u t granted a two-level downward adjustment for acceptance of responsibility. T h e total offense level of twenty-eight, in light of Miller's criminal history c a t e g o r y of III, resulted in an advisory guidelines sentencing range of ninetys e v e n to 121 months. The district court sentenced Miller to ninety-seven

m o n th s ' imprisonment and ordered restitution in the amount of $1.18 million.1 I t imposed no fine. Miller timely appealed the sentencing enhancements for a b u s e of a position of trust and obstruction of justice. S T A N D A R D OF REVIEW " T h is court reviews de novo the district court's guidelines interpretations a n d reviews for clear error the district court's findings of fact." United States v. L e , 512 F.3d 128, 134 (5th Cir. 2007). "The district court's application of section 3 B 1 .3 is a sophisticated factual determination that we review for clear error." U n i te d States v. Burke, 431 F.3d 883, 889 (5th Cir. 2005); see also United States v . Dial, 542 F.3d 1059, 1060 (5th Cir. 2008) (per curiam) (resolving an intrac ir c u it split over the proper standard of review for § 3B1.3 enhancements). For a n obstruction of justice enhancement, we likewise review the district court's fa c tu a l findings for clear error. United States v. Mann, 493 F.3d 484, 498 (5th C ir . 2007). "A ruling that those findings permit an obstruction-of-justice

e n h a n c e m e n t is a question of law, reviewed de novo." United States v. Brown, 4 7 0 F.3d 1091, 1094 (5th Cir. 2006). "Under the clearly erroneous standard, we w ill uphold a finding so long as it is plausible in light of the record as a whole."
The court utilized the stipulated restitution amount, less a credit for pending payments.
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No. 09-40438 U n ite d States v. Ekanem, 555 F.3d 172, 175 (5th Cir. 2009) (quotation omitted). " H o w e v e r , a finding will be deemed clearly erroneous if, based on the record as a whole, we are left with the definite and firm conviction that a mistake has b e e n committed." Id. (quotation omitted). DISCUSSION M ille r challenges the district court's application of the enhancements for a b u s e of a position of trust and obstruction of justice. We take her arguments in turn. I. A b u s e of a Position of Trust S e c t io n 3B1.3 may be applied to increase a defendant's offense level by two " [i]f the defendant abused a position of public or private trust, or used a special s k ill, in a manner that significantly facilitated the commission or concealment o f the offense." U.S.S.G. § 3B1.3. This court applies a two-part test to determine w h e t h e r there has been an abuse of trust: "(1) whether the defendant occupies a position of trust and (2) whether the defendant abused her position in a m a n n e r that significantly facilitated the commission or concealment of the o f fe n s e . " United States v. Kay, 513 F.3d 432, 459 (5th Cir. 2007) (quotation o m itt e d ). A. P o s it io n of Trust A p p lic a tio n note 1 to § 3B1.3 states that a position of trust is "c h a r a c te r iz e d by professional or managerial discretion," and that individuals in such positions "are subject to significantly less supervision than employees w h o s e responsibilities are primarily non-discretionary in nature." U.S.S.G. § 3B1.3 cmt. n.1.2 The ability to exercise such professional or managerial

Commentary contained in U.S.S.G. application notes is "authoritative unless it violates the Constitution or a federal statute, or is inconsistent with, or a plainly erroneous reading of, that guideline." United States v. Johnston, 559 F.3d 292, 295 n.4 (5th Cir. 2009) (quoting Stinson v. United States, 508 U.S. 36, 38 (1993)) (internal quotation marks omitted).

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No. 09-40438 d is c r e t io n is the "signature characteristic" of one who holds a position of trust. U n i te d States v. Ollison, 555 F.3d 152, 166 n.9 (5th Cir. 2009). Miller argues t h a t she did not occupy a position of trust because she was merely an ordinary v e n d o r in an arm's length commercial relationship with the government. She c o n te n d s that under the structure of the Medicare and Medicaid programs, the g o v e r n m e n t 's trust is placed in physicians who provide CMNs and not in DME p r o v id e r s . The government counters that Medicare and Medicaid place

s u b st a n tia l trust in DME providers, as evinced by witness testimony at the s e n t e n c in g hearing. It further argues that circuit precedent applying § 3B1.3 to M e d i c a r e service providers compels affirmance. A § 3B1.3 enhancement was upheld in United States v. Iloani against a c h ir o p r a c t o r who had conspired with his patients to submit fraudulent claims to p r iv a te insurance companies for treatments that were never rendered. 143 F.3d 9 2 1 , 922-23 (5th Cir. 1998). We reasoned that "insurance companies usually rely o n the honesty and integrity of physicians in their medical findings, diagnoses, a n d prescriptions for treatment or medication," and that "insurance companies m u s t rely on physicians' representations that the treatments for which the c o m p a n ie s are billed were in fact performed." Id. at 923. In United States v. G ie g e r , the defendants, operators of a Medicare-licensed ambulance company, d e f ra u d e d the government by billing for the transport of patients who were im p r o p e r ly claimed to be bed-confined. 190 F.3d 661, 663 (5th Cir. 1999). This c o u r t held that Iloani barred the defendants' attempt to overcome a § 3B1.3 e n h a n c e m e n t , reasoning that "the defendants carried out their fraud by abusing a similar position of trust [to Iloani's] with medical insurers." Id. at 665. Miller seeks to distinguish herself from the ambulance operators in Gieger b y arguing that the latter enjoyed considerable discretion, without physician o v e r s ig h t , to determine whether patients were ambulatory, whereas she, as a D M E provider, could not provide any equipment without a CMN. We reject her 5

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No. 09-40438 a r g u m e n t, for two reasons. First, Miller effectively exercised the discretion that t h e Medicare and Medicaid programs entrust to physicians by knowingly c o m p le t in g CMNs for patients who had no need for the equipment provided. T h e r e was evidence that Miller obtained a set of pre-authorized, blank CMNs fr o m Dr. Long and simply filled in patient names as they became known to her. U n d e r the scheme she devised, Miller assumed the position of the certifying p h y s ic ia n , and, like the Gieger defendants, she made the key decision whether a particular patient had a medical need for a wheelchair or scooter. Second, as the owner of AA Better Medical Supply, Miller exercised s u b s t a n t ia l managerial discretion, which the guidelines recognize as an in d e p e n d e n t basis for occupying a position of trust. See U.S.S.G. § 3B1.3 cmt. n .1 . The PSR indicated that Miller directed and oversaw the business operations a t both her company and a related company.3 She specifically instructed an e m p lo y e e to complete pre-authorized CMNs with patient information, and she p r o v id e d cash or gifts to individuals in exchange for patient referrals from those in d iv i d u a ls . At the sentencing hearing, a Texas official charged with

a d m in is te r in g the Medicaid program for the State testified that the program t r u s t e d providers "to be honest in their billings" because the State lacks the r e s o u r c e s necessary to monitor all submitted claims. The official further

te s tifie d that, from the government's perspective, a physician's word on a claim s u b m is s io n is no more valuable than a DME provider's word. Meanwhile, Miller h e r s e lf testified that she knew that both Medicare and Medicaid would assume t h e truthfulness of information contained in her claim submissions. It is clear fr o m this testimony that in providing medical benefits, Medicare and Medicaid

As our opinion filed today in United States v. Hawkins, No. 09-40427, describes, the criminal scheme involved Miller and her company, as well as Miller's sister, Dorothy Ann Hawkins, and the company owned by Hawkins, Genesis Medical Supply.

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No. 09-40438 r e ly not only on the truthfulness of physicians but also on the truthfulness of o th e r vendors, including DME providers such as Miller. Miller's position and authority as owner of a licensed DME provider " `in v o lv e [d ] the type of complex, situation-specific decisionmaking that is given c o n s id e r a b le deference precisely because it cannot be dictated entirely by, or m o n it o r e d against, established protocol.'" Ollison, 555 F.3d at 167 (quoting U n ite d States v. Tiojanco, 286 F.3d 1019, 1021 (7th Cir. 2002)). Here, the e s t a b lis h e d protocol of the government insurance programs depended upon the h o n e s t y and forthrightness of the DME provider in its claim submissions. By g ra n tin g Miller a license to provide durable medical equipment, the government e n t r u s t e d her to provide good faith, accurate information in seeking r e im b u rs e m e n t from Medicare and Medicaid. Miller's success in exploiting the la ck of government monitoring vividly demonstrates that her position "provide[d] t h e freedom to commit a difficult-to-detect wrong," which is the "primary trait" o f one who holds a position of trust. United States v. Brown, 7 F.3d 1155, 1161 (5 th Cir. 1993) (quoting United States v. Hill, 915 F.2d 502, 506 (9th Cir. 1990) (in te rn a l quotation marks omitted).4

Miller's citation of cases from our sister circuits is not availing. She cites, for example, United States v. Hayes, in which the Eighth Circuit reversed the enhancement of a defendant who submitted false Medicaid claims on behalf of a home care provider. 574 F.3d 460, 481 (8th Cir. 2009). The Hayes court recognized that the Fifth Circuit, along with "the majority of our sister circuits that have addressed the question have held that health care providers who defraud Medicaid or Medicare may be subject to the abuse-of-trust enhancement." Id. at 480 (citing Gieger, 190 F.3d at 663, 665). It pointed out the Eleventh Circuit's outlier position holding that, "as a matter of law, a Medicaid-funded health care provider does not occupy a position of trust vis-à-vis Medicaid." Id.; see United States v. Williams, 527 F.3d 1235, 1251 (11th Cir. 2008) ("It could not have been intended that § 3B1.3 apply in every case where the defendant receives pecuniary gain by lying to the government."). But the Eighth Circuit explicitly rejected that position, and instead held that "an employee of a Medicaid-funded . . . provider . . . may occupy a position of trust." Hayes, 574 F.3d at 481.

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No. 09-40438 B. F a c i li t a t io n of the Offense A s for the second element of the enhancement, we ask "whether the d e f e n d a n t occupied a superior position, relative to all people in a position to c o m m it the offense, as a result of her job." Kay, 513 F.3d at 459 (quotation o m it t e d ). Miller offers no argument that her position did not facilitate the c o m m is s io n of the offense; nor could she, since it was her position as the owner o f a DME provider that enabled her to defraud the government insurance p r o g r a m s with such ease. The district court's application of the § 3B1.3

e n h a n c e m e n t for abuse of a position of trust is affirmed. II. O b s t r u c t io n of Justice D u r in g the presentence investigation, Miller omitted two pieces of in f o r m a t io n from her personal financial statement. Specifically, Miller failed to d is c lo s e that she had previously filed for bankruptcy and that during 2005 and 2 0 0 6 she earned between $4,500 and $5,500 per month as a hairstylist. Based o n these omissions, the district court applied a two-level sentencing e n h a n c e m e n t for obstruction of justice under U.S.S.G. § 3C1.1. Section 3C1.1 p r o v id e s : I f (A) the defendant willfully obstructed or impeded, or a t te m p t e d to obstruct or impede, the administration of ju s tic e with respect to the investigation, prosecution, or s e n t e n c in g of the instant offense of conviction, and (B) t h e obstructive conduct related to (i) the defendant's o ffe n se of conviction and any relevant conduct; or (ii) a c l o s e ly related offense, increase the offense level by 2 le v e ls . M iller argues that the enhancement was erroneously applied because the district c o u r t made no finding of willful obstruction, and because the omitted in f o r m a tio n was not material to sentencing.

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No. 09-40438 W e can reject Miller's latter argument because, for § 3C1.1 purposes, " m a te r ia l" information is that which "if believed, would tend to influence or affect th e issue under determination." U.S.S.G. § 3C1.1 cmt. n.6 (emphasis added). A lt h o u g h the omitted financial data may not have had any actual effect on M ille r 's fine or restitution amounts, it is certainly the kind of information which w o u ld "tend to influence" those determinations. See, e.g., United States v. Dupre, 1 1 7 F.3d 810, 825 (5th Cir. 1997) ("A statement to a probation officer concerning o n e 's financial resources will obviously affect the officer's determination of a b i lit y to pay." (quotation omitted)). There is no basis to deem the omitted in fo r m a t io n not material when it did not have, but was the kind of information w h ic h could have had, an influence on the relevant sentencing determinations. S e e United States v. Juarez-Duarte, 513 F.3d 204, 210-11 (5th Cir. 2008) (re co g n izin g the applicability of the obstruction enhancement in either scenario). M ille r also contends that her errors were the result of confusion and m is ta k e , and did not amount to a willful obstruction of justice. She argues that t h e district court, which expressly acknowledged her confusion, applied the e n h a n c e m e n t for statements that were merely incorrect, without making the r e q u is it e mens rea finding. To support the enhancement, the court stated: T h e r e was some confusion that has been mentioned t h r o u g h testimony about Ms. Miller's understanding of w h a t she thought she was supposed to do, compared to w h a t Probation was going to do in listing some of this in fo r m a tio n . But I think that there is sufficient e v id e n c e here, confirmed by testimony, that the o b s t r u c t io n should apply. There was no doubt some in c o r re c t information provided. The bankruptcy o m i s s io n , the other job. I find those items to be m a t e r ia l and relevant to the amount of fine or r e s t it u t io n that could be paid. So I think that the o b s t ru c tio n of justice is correct--the obstruction of ju s tic e enhancement is correct.

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No. 09-40438 A p p lic a tio n note 2 to § 3C1.1 states that "the court should be cognizant t h a t inaccurate testimony or statements sometimes may result from confusion, m is t a k e , or faulty memory and, thus, not all inaccurate testimony or statements n e c e s s a r ily reflect a willful attempt to obstruct justice." U.S.S.G. § 3C1.1 cmt. n .2 . We have counseled district courts to "carefully consider whether the

d e f e n d a n t has engaged in [obstructive] behavior in a conscious and deliberate a t t e m p t to obstruct or impede the administration of justice." United States v. G r e er , 158 F.3d 228, 239 (5th Cir. 1998). W e also find instructive the Supreme Court's decision in United States v. D u n n ig a n . In that case, the Court addressed an obstruction enhancement in a r e la te d context--when the defendant has allegedly perjured herself through trial t e s t im o n y . 507 U.S. 87 (1993). It stated: [I ]f a defendant objects to a sentence enhancement r e s u lt in g from her trial testimony, a district court must r e v ie w the evidence and make independent findings n e c e s s a r y to establish a willful impediment to or o b s t r u c t io n of justice, or an attempt to do the same, u n d e r the perjury definition we have set out. When d o i n g so, it is preferable for a district court to address e a c h element of the alleged perjury in a separate and c le a r finding. The district court's determination that e n h a n c e m e n t is required is sufficient, however, if, as w a s the case here, the court makes a finding of an o b s t r u c tio n of, or impediment to, justice that e n c o m p a s s e s all of the factual predicates for a finding o f perjury. I d . at 95 (citations omitted); id. at 94 (defining perjury as "false testimony c o n c e r n i n g a material matter with the willful intent to provide false testimony, r a th e r than as a result of confusion, mistake, or faulty memory" (emphasis a d d e d )). Although Dunnigan addressed trial testimony, rather than statements g i v e n during a presentence investigation, the principle it sets forth--that a

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No. 09-40438 d is t r ic t court should make "independent findings" to establish a willful o b s tr u c tio n -- is relevant. The district court's findings in this case do not include an explicit finding o f willfulnessSSand they need not. See, e.g., id. at 95; see also United States v. C o m o , 53 F.3d 87, 89 (5th Cir. 1995) (affirming an obstruction-of-justice e n h a n cem e n t where the district judge expressed a belief that the defendant "was [n o t ] totally candid and truthful"). But neither do they appear to encompass the fa c tu a l predicates of a willful false statement. The only finding arguably

r e le v a n t to willfulness is that there was "some incorrect information provided." T h a t some information was "incorrect" does not mean that Miller knew the c o r r e c t information and intentionally withheld it in an attempt to frustrate the in v es tig a tio n . F u r t h e r m o r e , the court here made an affirmative finding of "some c o n f u s i o n " on Miller's part, which is precisely the situation that application note 2 warns against. U.S.S.G. § 3C1.1 cmt. n.2 ("[T]he court should be cognizant th a t inaccurate . . . statements sometimes may result from confusion . . . ."). T h a t the district court found Miller to have been confused about "what she was s u p p o s e d to do" renders us unable to discern whether it affirmatively found her t o have acted willfully. Lacking certainty on the present record that the district c o u r t actually found Miller to have willfully omitted information, we must vacate t h e enhancement and remand the case for resentencing. In its discretion, the d is t r ic t court may opt to further develop the record on remand. C O N C L U S IO N F o r the foregoing reasons, the enhancement for abuse of a position of trust is AFFIRMED, the enhancement for obstruction of justice is VACATED, and the c a s e is REMANDED for resentencing.

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No. 09-40438 G a r w o o d , specially concurring.

I concur in the result. I join in that portion of the opinion dealing with o b s t ru c tio n of justice. I also join in most of the opinion respecting abuse of p o s it io n of trust. The undisputed evidence shows as a matter of law that Miller fr a u d u le n t ly represented that the medical certificates of necessity were genuine, w h e n in fact they were fraudulent as she well knew and were fraudulently p r o v id e d to Miller by the doctor signing them. I believe this is sufficiently a n a lo g o u s to the situations described in application note 3 to § 3B1.3 U.S.S.G. t o warrant application of this enhancement. I would not go beyond that.*****

The evidence shows that due to the volume of claims Texas Medicaid m a k e s no investigation or specific reliance with respect to any of these claims, b u t simply pays them if they are facially in order. That is essentially all that the M e d i c a i d representative's testimony shows. But the Medicaid system does r e q u ir e that there be a physician's certificate of medical need. No such judgment b y the provider is called for. USA v. Gieger, 190 F.3d 661 (5th Cir. 1999), is not i n point. It involved a situation where the regulations did not call for a c e r t ific a te by a physician, and the ambulance company had its paramedics and e m e r g e n c y medical technicians certify (fraudulently) that the patients were not a m b u la to ry . 12

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