United States v. King

93 F.4th 845

UNITED STATES of America, Plaintiff—Appellee, v. Lindell KING; Ynedra Diggs, Defendants—Appellants.

No. 22-20620

United States Court of Appeals, Fifth Circuit

FILED February 21, 2024

Appeal from the United States District Court for the Southern District of Texas, USDC No. 4:18-CR-345-3, Lee H. Rosenthal, U.S. District Judge

William Connor Winn, U.S. Department of Justice, Criminal Division, Appellate Section, Jeremy Raymond Sanders, Trial Attorney, U.S. Department of Justice, Criminal Division Fraud Section, Washington, DC, Carmen Castillo Mitchell, Assistant U.S. Attorney, U.S. Attorney's Office, Southern District of Texas, Houston, TX, for Plaintiff-Appellee.

Gregory Charles Gladden, Law Office of Greg Gladden, Houston, TX, for Defendant-Appellant Lindell King.

Amy R. Blalock, Blalock Law Firm, Tyler, TX, for Defendant-Appellant Ynedra Diggs.

Before Jones, Haynes, and Douglas, Circuit Judges.

Edith H. Jones, Circuit Judge:

Defendants convicted of healthcare fraud and receiving Medicare kickbacks challenge the district court's admission of recordings involving them and other co-conspirators, the district court's calculation of the improper benefit received for the purposes of their sentence, and the restitution award. Finding no error, we AFFIRM.

I. BACKGROUND

Five individuals, including Lindell King and Ynedra Diggs, were charged in an eight-count superseding indictment with conspiracy to defraud the United States and to pay and receive healthcare kickbacks and violations of the anti-kickback statute.¹ Dr. Paulo Bettega, who was named in the superseding indictment, was a Medicare provider who paid bribes and kickbacks to individuals, including King and Diggs, for referring Medicare beneficiaries to him for treatment that was unnecessary or not even provided. King and Diggs were married and owned and operated group homes for vulnerable individuals who could not care for themselves. Over a period of seven years, King and Diggs received $70,000 in known bribes from checks and additional, unknown amounts of cash. As a result, Bettega's clinic received $537,992.55 from Medicare associated with patients that were residents of the defendants' group homes.

Medicare covers partial hospitalization programs ("PHPs") connected with the treatment of mental illness. These programs are designed to serve patients in lieu of inpatient hospitalization when a patient suffers a flare-up of a preexisting chronic mental health condition and requires services at the intensity and frequency available to patients receiving inpatient psychiatric treatment. PHPs do not serve patients at their mental-health baseline or provide care for long-term conditions like dementia.

At his clinic, Bettega often admitted patients in large groups after providing only a short physical exam for non-psychiatric patients. Often, these patients had no psychiatric conditions and were not suffering from an acute mental-health crisis. Some of them spoke no English. Yet the clinic prescribed a homogenous regime of four group therapy sessions a day in its PHP program, which patients often skipped or could not understand or participate in.

Following a four-day jury trial, King and Diggs were convicted of conspiracy as well as individual counts for soliciting or receiving kickbacks. As part of the evidence, the Government introduced recordings made by Ray Garcia, a confidential informant who was paid more than $13,000 for his cooperation with the government. The district court denied the defendants' pre-trial motion to exclude the recordings, reasoning that they did not contain testimonial statements and Bettega was a coconspirator acting in furtherance of the conspiracy. At trial, King and Diggs did not specifically renew the prior objection, but they asked for and received limiting instructions to the jury in accordance with the district court's ruling on the motion in limine.

The district court sentenced King to 60 months in prison and Diggs to 70 months. King and Diggs's sentences were based on a finding of $537,992.55 of improper benefit, which yielded a 12-level adjustment under the Sentencing Guidelines for each defendant. U.S.S.G. § 2B1.1(b)(1) (loss attributable was more than $250,000 but less than $550,000). Their objections to the improper benefit amount reflected in the Pre-Sentencing Reports ("PSRs") and at sentencing were overruled. The court also held King and Diggs jointly and severally liable for $537,992.55 in restitution. Both defendants have appealed.

II. DISCUSSION

This court reviews preserved Confrontation Clause claims de novo, subject to a harmless error analysis. United States v. Noria, 945 F.3d 847, 853 (5th Cir. 2019). Evidentiary rulings preserved at trial are reviewed for abuse of discretion, subject to harmless error. United States v. Sanjar, 876 F.3d 725, 738 (5th Cir. 2017).

For sentencing, this court reviews the district court's loss calculations for clear error and the district court's methodology de novo. United States v. Harris, 821 F.3d 589, 601 (5th Cir. 2016). Restitution orders are reviewed de novo for legality, and the amounts for abuse of discretion. United States v. Villalobos, 879 F.3d 169, 171 (5th Cir. 2018).

The Mandatory Victims Restitution Act ("MVRA") states that "[t]he burden of demonstrating the amount of the loss sustained by a victim as a result of the offense shall be on the attorney for the Government" and that "[t]he burden of demonstrating such other matters as the court deems appropriate shall be upon the party designated by the court as justice requires." 18 U.S.C. § 3664(e). This court "has interpreted these two statutory sentences to establish a burden-shifting framework for loss-amount calculations. The Government first must carry its burden of demonstrating the actual loss to one or more victims by a preponderance of the evidence. Then the defendant can rebut the Government's evidence." United States v. Williams, 993 F.3d 976, 980-81 (5th Cir. 2021). When the exact amount of actual loss is not clear, the district court is permitted to make reasonable estimates supported by the record. See, e.g., United States v. Mazkouri, 945 F.3d 293, 304 (5th Cir. 2019); United States v. Comstock, 974 F.3d 551, 559 (5th Cir. 2020). Actual loss for restitution purposes is offset by the amount of the legitimate services provided to the patients in healthcare fraud cases. See United States v. Sharma, 703 F.3d 318, 324 (5th Cir. 2012); United States v. Ricard, 922 F.3d 639, 658 (5th Cir. 2019).

We address in turn the defendants' arguments surrounding (a) evidence submitted in recordings, (b) the sentencing calculations of improper loss, and (c) the restitution awards.

A. The recordings

The Confrontation Clause bars the admission of "testimonial statements of a witness who did not appear at trial unless he was unavailable to testify, and the defendant had had a prior opportunity for cross-examination." Crawford v. Washington, 541 U.S. 36, 53-54, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004). A statement is "testimonial" if its "primary purpose . . . is to establish or prove past events potentially relevant to later criminal prosecution." United States v. Duron-Caldera, 737 F.3d 988, 992-93 (5th Cir. 2013) (internal quotation marks and citation omitted).

We reject the defendants' Confrontation Clause arguments. First, any confrontations between Garcia (the informant who worked at the clinic) and Dr. Bettega involved statements of co-conspirators—making them non-testimonial and thus not prohibited by the Confrontation Clause. United States v. Ayelotan, 917 F.3d 394, 403 (5th Cir. 2019). Second, the conversations between Garcia and King or Diggs are also not testimonial. In United States v. Cheramie, 51 F.3d 538, 540-41 (5th Cir. 1995), statements by an unavailable witness on a recording and a transcript of a conversation between the unavailable witness and the defendant did not violate the Confrontation Clause because the witness's statements were not offered to prove the truth of the matter asserted therein, but to provide context to the defendant's recorded statements. Cheramie held that the evidence did not violate the Confrontation Clause because they were part of a reciprocal and integrated conversation with the defendant and the Government sufficiently proved the reliability of the recording. Id. This case is indistinguishable from Cheramie. King and Diggs do not dispute that statements of Garcia and Bettega on the recordings were part of integrated and reciprocal conversations with them. Accordingly, they provided context to King's and Diggs's statements, were not admitted to prove the truth of the matters asserted, and did not violate the Confrontation Clause. Id. at 541.

Nor did the district court erroneously admit the recordings as impermissible hearsay. Hearsay is a statement that "(1) the declarant does not make while testifying at the current trial or hearing; and (2) a party offers in evidence to prove the truth of the matter asserted in the statement." Fed. R. Evid. 801(c). Federal Rule of Evidence 802 provides that hearsay generally is not admissible at trial. However, a defendant's out-of-court statements, when offered by the Government, "are those of a party opponent and thus not hearsay." Sanjar, 876 F.3d at 739; see Fed. R. Evid. 801(d)(2). This court has recognized that some statements made during recorded conversations are admissible as "reciprocal and integrated utterance(s)" between a defendant and another party, for the purpose of creating context and making them "intelligible to the jury and recognizable as admissions." United States v. Gutierrez-Chavez, 842 F.2d 77, 81 (5th Cir. 1988) (internal quotation marks and citations omitted); see also United States v. Jones, 873 F.3d 482, 496 (5th Cir. 2017). Thus, Rule 801(d)(2) applies to the recorded statements of both Garcia and Bettega.

We also reject King's assertion that the recorded conversations between Garcia and Bettega cannot be admitted...