United States v. Simon Hong
938 F.3d 1040
| 9th Cir. | 2019Background
- Simon Hong owned three acupuncture/massage clinics and provided clinic space, staff, and Medicare patient identification information to outpatient physical-therapy companies (RSG, RDI) that had Medicare provider numbers.
- Physical therapists billed Medicare for extensive physical-therapy units that were largely not provided; Medicare paid about $2.9 million and Hong received roughly $1.6 million (≈56% of payments).
- Co-schemers and cooperating witnesses testified Hong solicited back-billing, instructed therapists to overbill, coached others to lie to investigators, and admitted on a recording he knew Medicare could not be billed for massages/acupuncture.
- A jury convicted Hong of health care fraud (18 U.S.C. § 1347), illegal remunerations/kickbacks (42 U.S.C. § 1320a‑7b(b)(1)(A)), and two counts of aggravated identity theft (18 U.S.C. § 1028A(a)(1)).
- The district court applied a two-level obstruction enhancement (§3C1.1) and a four-level leader/organizer enhancement (§3B1.1(a)); Hong received 97 months for fraud/kickbacks plus consecutive mandatory 24 months for each identity‑theft count (total 121 months).
- On appeal the Ninth Circuit affirmed fraud and kickback convictions, reversed the aggravated-identity-theft convictions, and remanded for resentencing (affirming the sentencing enhancements as applied).
Issues
| Issue | Plaintiff's Argument (Gov't) | Defendant's Argument (Hong) | Held |
|---|---|---|---|
| 1. Deliberate-ignorance jury instruction on knowledge for health-care fraud | Instruction was proper because willful-blindness was a rational theory alongside actual knowledge | Instruction was erroneous and prejudicial | No plain error; evidence of actual knowledge was overwhelming, so instruction did not affect substantial rights |
| 2. Sufficiency / jury instruction for anti‑kickback convictions (were payments "for referrals" or for clinic expenses; must services be actually furnished?) | Payments were remuneration to induce referral/use of patients and need not be for services actually furnished under the statute | Payments were clinic overhead or not for referrals; some arguments waived | Convictions upheld: evidence supported that referrals of patient IDs occurred and anti‑kickback liability covers payments even when services were not actually provided; omission of "furnishing" language harmless |
| 3. Aggravated identity theft (§1028A): whether Hong "used" patient IDs and whether use was "without lawful authority" | Hong used patient identities by submitting Medicare claims using patient identifying information in furtherance of the fraud | Patients voluntarily provided information; submitting claims with names/IDs is not a qualifying "use" under §1028A | Reversed: permission to use IDs in an unlawful scheme is not lawful authority (Osuna‑Alvarez), but Hong did not "use" the identities in the statutory sense (no impersonation or attempt to act on patients' behalf) |
| 4. Sentencing enhancements: obstruction (§3C1.1) and leader/organizer (§3B1.1(a)) | Obstruction applies for counseling co-schemers to lie; role enhancement fits given recruitment, direction, and largest share of proceeds | Statements were denials, not obstruction; Hong was not an organizer/leader | Both enhancements affirmed: recorded coaching to "make a story" supported obstruction; role enhancement affirmed on facts (district court findings not clearly erroneous and Hong conceded five participants) |
Key Cases Cited
- United States v. Marcus, 560 U.S. 258 (2010) (plain-error four‑part framework for unpreserved instructional errors)
- United States v. Heredia, 483 F.3d 913 (9th Cir. 2007) (guidance on when a willful‑blindness/deliberate‑ignorance instruction is appropriate)
- United States v. Kats, 871 F.2d 105 (9th Cir. 1989) (anti‑kickback requires only that one purpose of payment be to induce referrals)
- United States v. Greber, 760 F.2d 68 (3d Cir. 1985) (anti‑kickback covers payments for which no actual service was performed)
- United States v. Osuna‑Alvarez, 788 F.3d 1183 (9th Cir. 2015) (consent to use identity in an unlawful scheme is not "lawful authority" under §1028A)
- United States v. Medlock, 792 F.3d 700 (6th Cir. 2015) (narrow reading of "use" in §1028A where defendants lied about reimbursement but did not impersonate beneficiaries)
- United States v. Berroa, 856 F.3d 141 (1st Cir. 2017) (similar narrow interpretation of "use" under §1028A; requires attempt to act on another's behalf)
- Musacchio v. United States, 136 S. Ct. 709 (2016) (sufficiency review must be measured against actual elements, not an erroneously heightened jury instruction)