Lead Opinion
Ben Bane was convicted after a jury trial of one count of conspiracy to commit health care fraud, in violation of 18 U.S.C. §§ 287, 371, 1001, and 1347; five counts of health care fraud, in violation of 18 U.S.C. §§ 2 and 1347; and four counts of making false claims against the government, in violation of 18 U.S.C. §§ 2 and 287. Bane appeals his sentence, arguing that the district court: (1) improperly calculated his guidelines range; (2) improperly calculated the restitution amount; and (3) imposed a fine that exceeded the statutory maximum. After careful review, and with the benefit of oral argument, we affirm in part, vacate in part, and remand.
I.
This is a Medicare and Medicaid fraud
Before sentencing, a probation officer prepared Bane’s Presentence Investigation Report (PSI), which calculated a base offense level of 6 under the sentencing guidelines.
Bane filed numerous objections to the PSI. As relevant here, he objected to the PSI’s loss and restitution calculations because they included the value of oxygen that was medically necessary and actually provided. He also argued the victim calculation was incorrect for a similar reason — specifically, that patients who received medically necessary oxygen and supplemental insurers that paid co-pays for it were not victims. And he contended that the sophisticated-means enhancement was improper because the offense did not involve sophisticated or complex conduct.
At sentencing, the district court overruled Bane’s objections to the PSI. The court made minor adjustments to the restitution calculation and maximum fine amount, increasing them to $7,031,050.68 and $14,062,101.36, respectively. Despite
Bane asked for a four-year sentence, but the district court opined that would be much too lenient. Instead, the court sentenced Bane to 151 months’ imprisonment, a downward variance of 209 months from his guidelines sentence. It also ordered Bane to pay $7,031,050.68 in restitution and a $3 million fine. This is Bane’s appeal.
II.
Bane first contends that his sentence is procedurally unreasonable because the district court incorrectly calculated his guidelines range. Specifically, he argues the district court erred by: (1) applying a 20-level enhancement for a loss between $7,000,001 and $20,000,000 that improperly included the value of medically necessary oxygen that was actually provided; (2) imposing a 6-level increase for an offense involving more than 250 victims because people who received medically necessary oxygen were not victims; and (3) imposing a 2-level sophisticated-means enhancement because the offense conduct was not sophisticated.
We review the district court’s interpretation and application of the sentencing guidelines de novo and its findings of fact for clear error. United States v. Ellisor,
A.
Bane first challenges his 20-level loss enhancement. Section 2Bl.l(b)(l) of the guidelines increases a defendant’s offense level by 20 for crimes involving a loss between $7,000,001 and $20,000,000. The district court included this 20-level increase in its guidelines calculation, finding the loss caused by Bane’s offenses exceeded $7 million. Bane objected that the loss amount should not include the value of oxygen provided that was in fact medically necessary for patients. On appeal, he argues that the district court erred in rejecting his contention and including the 20-level enhancement.
We are unpersuaded by this argument. Application Note 3(F)(v) provides:
In a case involving a scheme in which ... goods for which regulatory approval by a government agency was required but not obtained, or was obtained by fraud, loss shall include the amount paid for the property, services or goods transferred, rendered, or misrepresented, with no credit provided for the value of those items or services.
U.S.S.G. § 2B1.1, cmt. (n. 3(F)(v)(III)) (emphasis added).
B.
Bane next challenges his 6-level victims enhancement. The application notes to the sentencing guidelines define a victim as “any person who sustained any part of the actual loss,” including “individuals, corporations, companies, associations, firms, partnerships, societies, and joint stock companies.” Id. § 2B1.1, cmt. (n. 1). Bane does not dispute that patients who received portable oxygen equipment they did not need were victims. Rather, he claims that patients and supplemental insurance companies that paid for medically
C.
Bane also contends that the district court erred in imposing the sophisticated-means enhancement in his guidelines calculation. Specifically, Bane contends that his offenses involved only one simple misrepresentation, namely that an independent laboratory had conducted the pulse oximetry testing necessary to qualify patients for Medicare reimbursements for oxygen.
Section 2Bl.l(b)(9)(C) of the guidelines prescribes a two-level enhancement where the offense involves sophisticated means. The commentary to the guidelines defines “sophisticated means” as “especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense.” Id. § 2B1.1, cmt. (n. 8(B)). In evaluating whether a defendant qualifies for the enhancement, the proper focus is on the offense conduct as a whole, not on each individual step. See United States v. Barrington,
The district court determined that the sophisticated-means enhancement was warranted because the offense involved multiple corporations, required BMS employees to “create an intricate daily paper trail to mask the fraud,” involved “repetitive coordinated conduct,” and involved steps to conceal the offense. We cannot say this finding is clearly erroneous. Bane recruited two certified pulse oximetry testing labs to participate in the scheme. He installed pulse oximetry testing software on BMS’s computers and used a false name and address to conceal the fact that the software was registered to BMS. His employees then sent test results conducted using that software to the labs. The labs stamped the tests Bane’s companies conducted to create the illusion that an independent entity had conducted the testing. Bane also falsified some test results to make it appear as if patients needed oxygen even when they did not, falsified certificates of medical necessity that were submitted to Medicare, forged doctors’ signatures on certificates of medical necessi
III.
Bane next challenges the district court’s order of restitution. We review de novo the legality of a restitution order and review for clear error factual findings about the specific restitution amount. United States v. Foley, 508 F.Bd 627, 632 (11th Cir.2007). Under 18 U.S.C. § 3663A(c), a defendant convicted of fraud must pay restitution to victims of the offense. For restitution purposes, a victim is any “person [or entity] directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered.” Id. § 3663A(a)(2). The government bears the burden of proving loss amount by a preponderance of the evidence, and the court must “order restitution to each victim in the full amount of each victim’s losses.” Id. § 3664(f)(1)(A).
Bane argues that the court should not have included the amounts Medicare, patients, and supplemental insurers paid for medically necessary oxygen his companies actually provided in the amount of restitution he was required to pay.
“Restitution is not intended to provide a windfall for crime victims but rather to ensure that victims, to the greatest extent possible, are made whole for their losses.” United States v. Huff,
We have never squarely addressed whether a district court should include the value of medically necessary goods a defendant provided as part of the restitution amount outside of the health-care kickback context. In kickback cases, in which a wrongdoer refers a patient to an author
The government argues that kickback cases are distinguishable. We disagree. The only distinguishing factor between this case and a kickback case is the particular misrepresentation made to Medicare (here, that an independent lab performed a test and, in a kickback case, that no kickbacks were paid). We see no reason why that distinction should dictate that the value of medically necessary goods that were actually provided should be offset in the restitution amount for one kind of case but not the other.
Moreover, failing to offset the amounts paid for those goods from the restitution amount would be inconsistent with the purpose of restitution because it would give a windfall to victims who received goods they actually needed in the form of both the goods and what they paid for them. And Medicare, Medicaid, and supplemental insurers would get back funds they would have expended even absent Bane’s fraud. As our case law makes clear, restitution is intended to put victims in the same position as if the crime had never been committed, not a better one. Huff,
At sentencing, the district court found that 80 to 90 percent of the services Bane provided were medically necessary. The government does not refute this finding nor suggest that the pulse oximetry tests were inaccurate or improperly performed. Because the victims who paid for medically necessary oxygen paid no more than they would have if the tests had been performed by an independent entity, the only purpose behind restitution of those amounts would be to punish Bane, which is not a proper basis for a restitution award. United States v. Bowling,
We therefore hold that the district court erred when it failed to exclude the value of medically necessary goods victims actually received from its restitution calculation. Because the restitution schedule on which the district court relied does not distinguish between medically necessary and unnecessary oxygen, we vacate the district court’s order of restitution and remand for recalculation of the restitution amount. On remand, Bane must offer evidence about what goods or services he provided that were medically necessary and the value of them to receive an offset.
IV.
Bane next argues that the $3 million fíne the district court imposed violated the Supreme Court’s decision in Apprendi v. New Jersey,
Bane does not dispute that the court could have ordered him to pay a $2.5 million fine under § 3571(b), $250,000 for each of his ten felony convictions. The district court, however, calculated the statutory maximum fine under § 3571(d) as $14,062,101.36, reasoning that this figure was equivalent to twice the $7,031,050.68 gross loss the court found resulted from the offense. The district court then imposed a $3 million fine. But the jury did not find the $7,031,050.68 loss amount on which the court’s statutory maximum calculation was based.
Apprendi held that a defendant’s Sixth Amendment jury-trial right requires that, “[o]ther than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt.”
When Bane was sentenced, our sister circuits were split about whether Apprendi applied to criminal fines, and we had not decided the issue. But in June 2012, after Bane’s sentencing, the Supreme Court held that “the rule of Apprendi applies to the imposition of criminal fines.” Southern Union Co. v. United States, — U.S. -,
Because the jury convicted Bane of ten felonies, the maximum fine amount authorized by the facts the jury found was $2,500,000. See 18 U.S.C. § 3571(b). The imposition of a $3 million fine, without a jury finding, was therefore error because, under Apprendi, it violated Bane’s Sixth Amendment jury-trial guarantee. See Southern Union,
Specifically, we may only reverse if the error affects Bane’s substantial rights and seriously affects the fairness, integrity, or public reputation of judicial proceedings. See Johnson,
And we have little trouble concluding that the error seriously affects the fairness, integrity, or public reputation of judicial proceedings. We have previously held that a district court’s improper characterization of a prior conviction as a serious drug offense, so that the statutory maximum penalty for the defendant’s offense increased, satisfies this requirement. See United States v. Sanchez,
V.
For the foregoing reasons, we vacate the district court’s order of restitution, as well as its imposition of a $3 million fíne, and remand for resentencing in a manner consistent with this opinion. In all other respects, we affirm Bane’s sentence.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED.
Notes
. Because the analysis for all relevant issues is the same for Medicare and Medicaid, we refer to both as Medicare for the sake of simplicity.
. All references in this opinion are to the November 2010 version of the guidelines manual because that was the version in effect on the date Bane was sentenced. See United States v. Bailey,
. Bane does not meaningfully argue that, if the value of medically necessary services is properly counted as loss, the district court’s loss figure is otherwise incorrect. We therefore deem abandoned any other challenge to the district court’s loss finding. See Zhu v. U.S. Att'y Gen.,
. We do not accept Bane’s assertion that this application note is inapplicable. He cites
. The dissent contends that Application Note 3(F)(v)(III) applies only to cases in which the good in question cannot be lawfully introduced to the market without prior government approval. We respectfully disagree. Neither the application note’s plain language nor any of our sister circuits have interpreted it in this limited way. See, e.g., United States v. Prosperi,
. Both Bane and the dissent assert that United States v. Medina,
. Bane also contends these patients and supplemental insurers were not victims because they did not specifically condition payment on independent labs performing the pulse oxime-try tests. Accepting this argument would require us to hold that, to be a victim of fraud, an individual or entity is required to explicitly condition payment on the absence of fraud. And it ignores the plain language of Application Note 3(F)(v)(III), which provides that people who pay for goods for which government approval was obtained fraudulently suffer a loss equal to "the amount paid for the goods,” and are therefore victims. U.S.S.G. § 2B1.1, cmt. (nn. 1, 3(F)(v)(III)).
. Bane also argues that the restitution order should have been offset by the amount he agreed to forfeit to the government because otherwise the portion of restitution paid to Medicare and Medicaid would constitute a double-recovery. This argument is foreclosed by circuit precedent. See United States v. Hoffman-Vaile,
. The government argues that the evidence Bane offered at sentencing is insufficient to establish medical necessity and that the district court's restitution order is therefore not erroneous. But the district court ruled that medical necessity was not a basis for reducing the amount of restitution. It did not find one way or the other whether the evidence Bane
. Bane contends that our decision in Huff establishes that the government bears the burden of proving offsets to restitution. But Huff merely states in dicta: "As part of its burden to prove a restitution amount, the government must deduct any value that a defendant’s fraudulent scheme imparted to the victims.”
. Because we hold that it was error for the court to base its statutory maximum fine under § 3571(d) on a judicial factfinding of the loss caused by Bane's crime, we do not consider Bane's alternative argument that the district court erred in including medically necessary oxygen Bane actually provided as part of the loss amount for purposes of calculating the maximum fine.
Concurrence Opinion
concurring in part and dissenting in part:
Except as to the discussion and conclusion about the calculation of loss under the Sentencing Guidelines, I join the majority opinion. With respect to loss, the issue is a close one, but on balance I conclude that the special rule set forth in Application Note 3(F)(v)(III) to U.S.S.G. § 2B1.1 does not apply under the facts presented.
In order to ensure that they have a medical need for portable oxygen, Medicare requires that patients undergo pulse oximetry testing at independent laboratories. Pulse oximetry, “a routine and noninvasive means of testing oxygen levels in the blood,” Doctors Nursing & Rehab. Ctr. v. Sebelius,
Insofar as Mr. Bane billed Medicare $69,814.14 for the pulse oximetry tests themselves, that entire sum was properly counted as loss under the Sentencing Guidelines. After all, Medicare paid for the tests believing that they had been conducted by independent laboratories. See United States v. Curran,
But Mr. Bane was also held responsible under § 2B1.1 for the over $7 million billed to Medicare for the portable oxygen provided to the patients who underwent the pulse oximetry testing, and it is here that I part company with the majority. The district court found at sentencing that for 80-90% of the Medicare patients portable oxygen was medically necessary, see Sentencing Transcript at 211, and in my view the amounts billed for the portable oxygen provided to these patients must be offset (i.e., deducted) when determining loss.
I do not think Application Note 3(F)(v)(III), which constitutes a “Special Rule,” controls with respect to the portable oxygen which the district court found was medically necessary. The portable oxygen provided to the patients did not constitute “goods for which regulatory approval by a government agency was required but not obtained.” Simply put, Medicare did not require any regulatory approval by any government agency before claims could be submitted for portable oxygen. Application Note 3(F)(v)(III) is best seen as governing special cases in which items or goods or services (e.g., drugs or medical devices) are sold or provided or placed on the market without obtaining the required prior approval of a government agency (e.g., the Food and Drug Administration). See, e.g., United States v. Goldberg,
. See generally Allied Orthopedic Appliances, Inc. v. Tyco Health Care Group LP,
. Unlike the majority, I do not read our decision in Medina as merely resting on the district court’s failure to make specific findings as to loss. Although we did ultimately remand for such specific findings, we first ruled that amounts paid for items or services that were medically necessary could not be considered in determining the loss suffered by Medicare: "As to Guerra, the total amount billed to Medicare on the health care fraud claims that we affirm is only $11,820. We find these claims fraudulent not because they were based on illegitimate prescriptions, but because the patients or doctors received kickbacks after Guerra certified to Medicare that she would not pay such remunerations. There was no evidence presented that these claims were not medically necessary. Even though Tanya Moore testified that Medicare would not play a claim if [it] knew that parties were receiving kickbacks, this is not sufficient to establish a loss to Medicare."