United States v. Anieze-Smith

923 F.3d 565

UNITED STATES of America, Plaintiff-Appellee,

v.Queen ANIEZE-SMITH, Defendant-Appellant.

No. 16-50208

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 4, 2019 Pasadena, California

Filed May 2, 2019

Kathryn Ann Young (argued), Deputy Federal Public Defender; Hilary Potashner, Federal Public Defender; Office of the Federal Public Defender, Los Angeles, California; Richard Wayne Raynor (argued), Law Office of Richard W. Raynor, Redondo Beach, California; for Defendants-Appellants.

Joseph D. Axelrad (argued) and Cathy J. Ostiller, Assistant United States Attorneys; Lawrence S. Middleton, Chief, Criminal Division; Nicola T. Hanna, United States Attorney; United States Attorney’s Office, Los Angeles, California; for Plaintiff-Appellee.

Before: Ronald M. Gould and Jacqueline H. Nguyen, Circuit Judges, and Roger T. Benitez,^* District Judge.

GOULD, Circuit Judge:

Defendant-Appellant Queen Anieze-Smith was tried and convicted on five counts of health care fraud in violation of 18 U.S.C. § 1347. The district court sentenced Anieze-Smith to five years’ probation and ordered her to pay in restitution $ 814,445.95, the full amount of Medicare’s losses from the fraudulent healthcare scheme. Anieze-Smith appeals, claiming, among other things, that the restitution order unlawfully includes losses resulting from conduct occurring outside the statute of limitations. We affirm.¹

I

Anieze-Smith and her co-defendant, Abdul King Garba, owned and operated International Trade & Consulting, LLC ("ITC"), a durable medical equipment ("DME") supply company located in Van Nuys, California. ITC was a registered Medicare provider, which allowed the company to provide durable medical equipment to Medicare beneficiaries and submit claims to Medicare for reimbursement. Between 2006 and 2009, Anieze-Smith and Garba submitted $ 1,890,433.82 in reimbursement claims to Medicare, and Medicare paid $ 897,726.91 on the claims. The claims submitted to Medicare were almost exclusively for power wheelchairs.

On April 5, 2013, a federal grand jury returned an indictment charging Anieze-Smith and Garba with seven counts of health care fraud. The gravamen of the indictment alleged that Anieze-Smith and Garba fraudulently billed Medicare for medically unnecessary power wheelchairs. DME suppliers may only submit claims for equipment that a physician has certified to be medically necessary and for which requisite paperwork is on file documenting the necessity. A power wheelchair is not medically necessary unless the patient cannot complete activities of daily living without the use of the power wheelchair. If a lesser device, such as a walker or manual wheelchair, will suffice, then the power wheelchair is not medically necessary. This limitation helps to ensure that Medicare’s limited funds are not used absent medical necessity. DME suppliers must also conduct a home assessment before delivering the power wheelchair to the beneficiary to ensure that the power wheelchair can be used effectively within the home. The indictment alleged that, between January 10, 2006, and September 15, 2009, ITC submitted to Medicare fraudulent claims totaling approximately $ 1,890,433 for DME that was not medically necessary, and that was sometimes never provided. Before trial, the government moved to dismiss counts six and seven, and the district court granted the motion.

At trial, the government introduced expert testimony to explain how fraudulent schemes operate. A government expert testified that fraudulent Medicare billing schemes usually originate with "recruiters," who approach vulnerable beneficiaries and convince them to obtain DME, such as power wheelchairs, through Medicare.

The recruiters then bring the beneficiaries to "compromised clinics" where doctors or physician assistants prescribe medically unnecessary equipment. Finally, fraudulent DME suppliers may even obtain the prescription without the beneficiary’s involvement—often by paying cash for the prescription to the clinic or the recruiter. The DME supplier then bills Medicare for a "blue ribbon package" of a power wheelchair and accessories to maximize reimbursement. Fraudulent DME suppliers may bill Medicare before delivery of the power wheelchair or deliver the power wheelchair without the proper home assessment.

The special agent who investigated the case testified about the strong indications of fraud in ITC’s operations. He explained that the bulk of ITC’s patient referrals came from compromised clinics, that kickbacks are usually paid in cash, and that ITC’s bank account showed large cash withdrawals that were not attributable to legitimate business expenses. Many of ITC’s patient files were missing prescriptions or other documentation of medical necessity, and many others contained identical physician progress notes accompanying prescriptions for power wheelchairs, including some patient files with the same progress notes written by the same doctor on the same day. Twenty-two of the claims submitted to Medicare for reimbursement represented instances where the same power wheelchair was prescribed to both a husband and a wife, often by the same doctor on the same day.

Of the 229 power wheelchairs ITC billed to Medicare during the course of the scheme, nearly all of them included a full package of accessories. ITC’s patient records showed that two power wheelchairs were billed to Medicare and three were delivered to the beneficiary before the power wheelchair was prescribed. An additional 46 claims were billed before the power wheelchair was delivered to the beneficiary. Moreover, ITC billed Medicare for about 25 more power wheelchairs than it purchased.

Following a ten-day trial, a jury convicted Anieze-Smith and Garba on all five counts charged. Before sentencing, the probation officer prepared a presentence investigation report (the "PSR"). The PSR described the entire fraudulent scheme, from January 2006 to September 2009, and concluded that the total loss to Medicare was $ 897,726.91. The probation officer applied a 16-level sentencing enhancement for intended losses of more than $ 1,500,000 because the defendants billed $ 1,890,433.82 to Medicare. See U.S.S.G. § 2B1.1(b)(1)(I). The probation officer also applied an additional two-level enhancement for an intended loss to a government program greater than $ 1,000,000, see U.S.S.G. § 2B.1(b)(7), for a total offense level of 26. The probation officer recommended that the district court order Anieze-Smith to make restitution for the $ 897,726.91 that Medicare paid.

Anieze-Smith submitted written objections to the PSR. She challenged the loss calculation, arguing that the intended loss amount should be only 80 percent of the amount billed because she knew that Medicare would pay only 80 percent on the bills that she submitted. Anieze-Smith further argued that her intended loss should be an unspecified lower amount because the government did not prove that all of the beneficiaries for which ITC billed Medicare did not need or receive the power wheelchairs. The government filed written responses to each of Anieze-Smith’s written objections. Regarding Anieze-Smith’s contention that the evidence did not support the loss amount, the government listed the evidence presented at trial supporting the conclusion that all of ITC’s power wheelchair claims were fraudulent.

The district court held a sentencing hearing on May 31, 2016. At the hearing, Anieze-Smith argued, for the first time, that the restitution amount should be limited to losses stemming from the counts charged. Anieze-Smith also argued that there was insufficient evidence to support the finding that all of the power wheelchairs billed to Medicare were medically unnecessary.

The district court addressed each of Anieze-Smith’s written objections to the PSR. The district court found that the intended loss amount was 80 percent of Medicare’s allowed amount for a total of $ 1,011,666.96. The district court therefore found Anieze-Smith’s total offense level was 24. See U.S.S.G. § 2B1.1(b)(1)(H), (b)(7) ; § 3B1.3.

Regarding Anieze-Smith’s objection to the sufficiency of the evidence to support the loss calculation figure, the district court held, "For the reasons that were stated in the government’s response to the objections, the court rejects the objection[ ] to [the] presentence report." The district court further stated, "I find that the revised presentence report is accurate and correct except to the extent that it does not reflect the revised intended loss amount figure which affects the total offense level. I, therefore, adopt ... the presentence report in its material aspects except as noted."

The district court sentenced Anieze-Smith to five years’ probation and ordered her to pay restitution in the amount of $ 814,455.95.

II

The district court was required to order restitution in this case under the Mandatory Victims Restitution Act of 1996 (MVRA), 18 U.S.C. § 3663A. The MVRA makes restitution mandatory for certain crimes, including health care fraud. The statute requires courts to "order restitution to each victim in the full amount of each victim’s losses ... and without consideration of the economic circumstances of the defendant." 18 U.S.C. § 3664(f)(1)(A).

"[W]e review de novo the legality of a restitution order," including the district court’s valuation method, "but if the order is within the statutory bounds, we review the amount for abuse of discretion." United States v. Phillips , 367 F.3d 846, 854 (9th Cir. 2004). We review factual findings supporting an order of restitution for clear error. United States v. Stoddard , 150 F.3d 1140, 1147 (9th Cir. 1998).

III

A.

We first address Anieze-Smith’s challenges to the sufficiency of the evidence supporting the district court’s restitution order. She makes two arguments: First, Anieze-Smith argues that the government has not shown that all of the beneficiaries did not need the power wheelchairs that were delivered and...