United States v. Newton

76 F.4th 662

UNITED STATES of America, Plaintiff-Appellee, v. Angelita NEWTON, Defendant-Appellant.

No. 21-3270

United States Court of Appeals, Seventh Circuit

Argued September 12, 2022

Decided August 7, 2023

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:17-cr-00455-3 — Virginia M. Kendall, Judge.

Jeremy Raymond Sanders, Attorney, Department of Justice, Criminal Division, Fraud Section, Washington, DC, William Connor Winn, Attorney, Department of Justice, Criminal Division, Washington, DC, for Plaintiff-Appellee.

James G. Vanzant, Attorney, Andrew D. Finke, Attorney, Blaine & Vanzant LLP, Evanston, IL, for Defendant-Appellant.

Before Easterbrook, Kirsch, and Jackson-Akiwumi, Circuit Judges.

Jackson-Akiwumi, Circuit Judge.

Angelita Newton challenges the conviction and sentence she received for her involvement in a scheme to defraud Medicare. First, she argues that she was denied a fair trial because she could not question a witness who invoked the Fifth Amendment's protections against self-incrimination. But we reject the argument and affirm Newton's conviction because the district court rightly concluded that the witness's invocation of the Fifth Amendment was proper and the government's refusal to issue immunity to that witness did not distort the fact-finding process. Second, Newton argues that her sentence is procedurally flawed and substantively unreasonable. Because we agree that the district court's calculation of Medicare's loss attributable to Newton was unreasonable, we vacate Newton's sentence and remand for resentencing.

I

From 2011 to 2017, Care Specialists, Inc., owned by husband-and-wife team Ferdinand and Ma Luisa Echavia, operated as a provider of health care to homebound beneficiaries of Medicare.¹ At least part of its operation, however, was a ruse to collect Medicare reimbursements fraudulently. Care Specialists would submit Medicare claims for health services, including skilled nursing services, provided to patients that the company represented as confined to their homes. But many of these patients did not qualify for Medicare reimbursement because they were not actually homebound or in need of skilled care. The company doctored service notes to either overcharge for services or bill for services not provided. The company also, by altering dates, resubmitted claims that had been rejected by Medicare because the patient was already admitted to an in-patient facility on the date Care Specialists purportedly provided care.

Ferdinand, in addition to being the owner, provided nursing services to some of Care Specialists' patients. But in 2014, he was excluded from participating in Medicare due to a prior conviction for providing kickbacks to patients at another home health agency. Ferdinand brought this practice with him to Care Specialists as a way to recruit and retain patients. And, despite his exclusion, Ferdinand continued to provide patients with nursing services for which the company sought reimbursement. He concealed his involvement in patient care from Medicare by accompanying one of the other nurses, Reginald Onate, as Onate visited patients.

Newton got caught up in the scheme. She was hired as a quality assurance specialist and Ferdinand's personal secretary. In her role as a quality assurance specialist, Newton should have been limited to reviewing nurses' treatment notes for completeness before the company submitted a Medicare claim for billing. If notes were incomplete, quality assurance specialists like Newton were supposed to inform the treating nurse who would fix the omission. But employees testified that Newton instead would personally draft Ferdinand's notes submitted in support of claims. Ferdinand would leave scrap paper noting each patient's vital signs. Newton would then fill in the proverbial blanks by writing a "full head-to-toe assessment" including descriptions of skilled nursing interventions. Newton would also fudge the dates on treatment notes to ensure that Medicare would accept the associated reimbursement claim. Despite playing this role in the fraud, Newton earned an average annual salary of $54,080, which did not additionally compensate her for her involvement in the conspiracy.

The conspiracy came crumbling down when a former employee of Care Specialists, Norma Bolender, filed a whistle-blower letter describing the scheme that Care Specialists had concocted. Bolender met with federal investigators multiple times. At those meetings, Bolender directly implicated Newton as a key figure in the conspiracy. A grand jury issued indictments charging the Echavias, Newton, and Onate for their roles in the Medicare fraud. The Echavias and Onate agreed to plead guilty to their involvement. Newton was the only charged defendant to proceed to trial.

The jury found Newton guilty of conspiracy to commit both health care fraud and wire fraud after hearing testimony from multiple Care Specialists employees. This did not include Bolender who avoided testifying by invoking her rights against self-incrimination under the Fifth Amendment. After the guilty verdict, Newton filed a motion for a new trial under Rule 33 of the Federal Rules of Criminal Procedure, challenging for the first time Bolender's invocation of the Fifth Amendment. Newton argued that the court wrongly accepted the invocation and the government's refusal to grant Bolender immunity violated her due process rights.

The court denied the motion, explaining that prosecutors hold significant discretion over granting or withholding immunity, and they abuse that discretion only if they withhold immunity intending to "distort the judicial fact-finding process." United States v. Chapman, 765 F.3d 720, 731 (7th Cir. 2014) (cleaned). The court concluded that the government did not distort the fact-finding process at Newton's trial because Bolender's testimony was just as likely, if not more likely, to inculpate Newton as it was to exculpate her. The court further concluded that Bolender's invocation of her rights under the Fifth Amendment had been proper because she potentially would have opened herself up to prosecution if she had testified.

At sentencing, the judge concluded that Newton's offense level should be enhanced 18 levels for a loss amount to Medicare of $6.3 million, which represented a 10% reduction from the roughly $7 million paid to Care Specialists by Medicare during the period of the fraud. Based on this, and other adjustments, the judge found Newton's guidelines range to be 70 to 87 months in prison. The judge then sentenced Newton to a below-guidelines term of 56 months in prison and ordered her jointly and severally liable for $6.3 million in restitution.

Newton now appeals, raising constitutional challenges to her conviction, which we turn to first, and procedural and substantive challenges to her sentence.

II

Newton argues that her conviction violated her right to a fair trial because Bolender was permitted to invoke the Fifth Amendment, depriving Newton of exculpatory testimony. Her argument proceeds in two parts. First, Newton claims that her Fifth Amendment right to due process was violated when the government refused to immunize Bolender from prosecution. Second, Newton contends that the district court should have required Bolender to testify in any event because she was protected from prosecution by the applicable statute of limitations. Though not framed as such, we read this second challenge as an argument that the district court deprived Newton of her right to compulsory process under the Sixth Amendment. See Chapman, 765 F.3d at 730 (noting a witness's invocation of the Fifth Amendment creates a conflict between his right against self-incrimination and the defendant's Sixth Amendment right to compulsory process).

To set the stage, we begin by detailing Bolender's involvement at Newton's trial. The government initially planned to call Bolender to testify, but it backtracked and decided not to do so. On the eve of trial, the government informed the court and Newton that it would not call Bolender as a witness because of potential Fifth Amendment concerns. The government agreed to keep Bolender under subpoena at Newton's request.

Newton attempted to call Bolender as a witness at trial; she believed Bolender would provide exculpatory testimony. But Bolender seemed implicated in the conspiracy, so the court appointed an attorney to advise Bolender on her Fifth Amendment rights before Newton proceeded with questioning. The attorney identified a statute of limitations defense that might shield Bolender from prosecution, paving the way for Bolender to testify without fear of opening herself up to prosecution. The relevant statute of limitations was five years, and Bolender left Care Specialists in January 2015, more than five years before Newton's trial in February 2020. But, it was not until October 2015 that Bolender sent the whistle blower letter to authorities, a date that would place Bolender's conduct within the five-year statute of limitations. Bolender's attorney advised her and the court that he was not sure when, between January and October 2015, the limitations period had begun to run.

With the trial on pause, and before Bolender decided whether to invoke the Fifth Amendment, Newton's counsel complained to the court that the defense only learned for the first time at the final pretrial conference, two weeks before trial, that Bolender "may have potential Fifth Amendment issues." The court asked: "Well, did you know about [the Fifth Amendment issues] based upon the [interview] reports?" Newton's counsel responded:

I don't think she has Fifth Amendment issues, your Honor. I just wanted to clarify the timeline. She was subpoenaed by the government originally, but she is our witness. So that's how that whole thing went down.

Bolender ultimately invoked her rights under the Fifth Amendment and did not testify. At no point did Newton clarify...