123 F.4th 270
5th Cir.2024Background
- Sekhar Rao, a physician, was involved in a scheme to defraud TRICARE, a federal health benefit plan, through medically unnecessary toxicology and DNA tests submitted by a shell company (ADAR Group).
- Rao was contracted by the scheme’s organizer, Bugen, to authorize and sign (both personally and via a signature stamp) large volumes of test orders, which were then billed to TRICARE.
- Rao was tried and acquitted of conspiracy to commit health care fraud but convicted on two substantive counts related to specific fraudulent claims for a single patient (J.J.).
- Evidence at trial showed Rao had no patient contact, reviewed no medical history, and was paid per test authorized.
- Rao challenged his conviction and sentence on appeal, arguing insufficient evidence, improper exclusion of testimony, and erroneous Sentencing Guidelines loss calculation.
- The Fifth Circuit affirmed Rao’s convictions and sentence, finding sufficient evidence and no reversible error.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of evidence for conviction | Jury had sufficient circumstantial and documentary evidence to link Rao to the fraudulent claims. | No direct evidence tied Rao to specific claims; lack of actual requisition forms; Rao unaware of stamp use. | Evidence (circumstantial and documentary) was sufficient to support conviction. |
| Exclusion of alleged "good-faith" testimony (Bugen's attorney statement) | Excluding the testimony was proper as the "advice of counsel" defense was unsupported and not relevant. | Testimony should have been allowed to show lack of intent or good faith based on Bugen’s assurances. | Exclusion was not clear/legal error under plain error review; relevance was questionable. |
| Sentencing Guidelines – Intended loss calculation | Amount billed to TRICARE was appropriate measure of intended loss under guidelines. | Loss should be based on actual payments, not billed amounts; guidelines commentary should not control. | District court properly relied on billed amount as intended loss; no error under circuit precedent. |
| Use of signature stamp in fraud | Rao knew of and authorized the stamp for test orders. | Rao did not know his signature was used for fraudulent test orders. | Sufficient evidence that Rao was aware and acquiesced to the use of his stamp. |
Key Cases Cited
- Stinson v. United States, 508 U.S. 36 (1993) (Sentencing Guidelines commentary is authoritative unless it contradicts the guidelines)
- Terry v. Hooper, 85 F.4th 750 (5th Cir. 2023) (appellate standard on sufficiency of the evidence)
- United States v. Hickman, 331 F.3d 439 (5th Cir. 2003) (scope of health care fraud statutes)
- United States v. Willett, 751 F.3d 335 (5th Cir. 2014) (need not personally submit fraudulent claims to be liable)
- United States v. Isiwele, 635 F.3d 196 (5th Cir. 2011) (intended loss calculation in health care fraud)