UNITED STATES of America, Plaintiff-Appellee, v. Danik Shiv KUMAR, Defendant-Appellant.
No. 13-3970.
United States Court of Appeals, Sixth Circuit.
April 22, 2014.
Rehearing En Banc Denied June 19, 2014.
750 F.3d 563
McKEAGUE, Circuit Judge.
Aside from the irony of hurting many people the majority purports to help (surely some of the 400 retirees in this case would prefer fully funded HRAs), I cannot resist remarking on an irony in the majority‘s straitjacket view of what does, and does not, amount to reasonably equivalent healthcare coverage. In deciding that healthcare benefits could “vest,” our case law has long relied heavily on an analogy between pensions and healthcare benefits. Reese v. CNH America LLC (Reese I), 574 F.3d 315, 324 (6th Cir. 2009). We now have a company that has taken us at our word. It has taken its prior healthcare packages for retirees, determined what they are worth, committed to provide that money directly to retirees, and allowed them to purchase healthcare coverage (with assistance from the company‘s consultant) on their own. If one were to design a vested healthcare pension program, this is exactly what it would look like—so long as it is fully funded into the future. Yet in the absence of a record as to how this plan would work in later years, in the absence of any factfinding about its impact (pro or con) on retirees, indeed in the absence of any plan at all for 2014 and beyond, the majority purports to hold as a matter of law that no such plans may ever satisfy our “vesting” case law. So what would always work for pensions will never work for healthcare. Perhaps, as this case shows, the analogy was not such a good idea in the first place. If an analogy to pensions does not support this decision, what does? Surely not the contract. Nothing in this contract, or any of the relevant contracts in our cases, dictates the method of providing retiree healthcare coverage in the future.
Instead of issuing an advisory opinion about Health Reimbursement Accounts not before us, I would take a different path. I would hold that the company undertook a commitment to provide lifetime healthcare coverage, and it breached that commitment by not committing to provide care beyond 2013. I would then remand the case to the district court to determine whether the company is willing to fund the Health Retirement Accounts beyond 2013 and, if so, at what amounts. With this evidence in hand, I would ask the district court to determine how any such plans would affect the 400 or so retirees, for better or worse, and determine on that record whether the company‘s method of providing healthcare coverage amounted to a reasonable equivalent of what the company has provided before.
Before: ROGERS, McKEAGUE, and WHITE, Circuit Judges.
McKEAGUE, J., delivered the opinion of the court, in which ROGERS, J., joined, and WHITE, J., joined in part. WHITE, J. (pp. 570-72), delivered a separate opinion concurring in part and dissenting in part.
OPINION
McKEAGUE, Circuit Judge.
After pleading guilty to making a false report of a boat in distress, in violation of
I
Defendant Danik Kumar was nineteen years old in March 2012 and was enrolled in his first year in the Aviation Technology Program at Bowling Green State University in northwestern Ohio. A licensed pilot, Kumar was given the assignment of flying alone at night from Wood County Airport near Bowling Green to Burke Lakefront Airport in Cleveland, and then back again, after 10:00 p.m. on March 14, 2012. The flight plan required him to fly over a portion of Lake Erie. The first leg of the flight was uneventful. On the return trip, Kumar observed what he believed to be a flare rising from a boat on the lake below. When he reported this sighting to Cleveland Hopkins International Airport, he was instructed to fly lower for a closer look. As he did so, Kumar could not see a boat. Yet, fearful of sounding stupid and hurting his chances of one day becoming a Coast Guard pilot, he reported that he saw additional flares going up. He described a 25-foot fishing vessel with four people aboard wearing life jackets with strobe lights activated.
Kumar‘s detailed report of four mariners in distress prompted a massive search and rescue mission by the United States Coast Guard, with help from the Canadian Armed Forces. During the next twenty-one hours, four vessels and two aircraft participated in the search, including the Thunder Bay, a 140-foot Coast Guard cutter with a crew of about twenty; three smaller rescue boats, each with a crew of four; a 65-foot search and rescue helicopter with a crew of four; and the Canadian CC130 Hercules airplane with a crew of seven. Over a month later, on April 25, Kumar admitted to a Coast Guard investigator that his report of a boat in distress had been false.
Kumar was indicted on the charge of making a false distress call, a class D felony per
II
Whether imposition of restitution is permissible under the circumstances is reviewed de novo, but the amount of restitution is reviewed for abuse of discretion. United States v. Boring, 557 F.3d 707, 713 (6th Cir. 2009). An abuse of discretion occurs when a ruling is based on an error of law or a clearly erroneous finding of fact, or when the reviewing court is otherwise left with the definite and firm conviction that the district court committed a clear error of judgment. United States v. Clay, 667 F.3d 689, 693 (6th Cir. 2012); United States v. Batti, 631 F.3d 371, 379 (6th Cir. 2011).
A. “All Costs Incurred as a Result”
Prior to imposing sentence, the district court received briefing from the parties on the restitution issues and conducted two hearings. At the first hearing, each side presented the testimony of a financial expert. The government called Commander Kevin Mohr, Chief of Financial Analysis for the Coast Guard. Commander Mohr testified about the Coast Guard‘s reimbursable standard rates, adopted pursuant to Office of Management and Budget Circular No. A-25 (“OMB A-25“) and generally applicable to all Coast Guard units across the nation.
OMB A-25 establishes federal policy regarding fees assessed for government resources. The objective of the policy, consistent with
Commander Mohr testified that the standard reimbursable rates are used for budget formulation and for obtaining reimbursement from federal and non-federal agencies and from responsible parties—for use of or damage to Coast Guard assets. Mohr said the standard rates are also used in seeking restitution in cases like this. The standard rates represent determinations of the hourly costs of using various Coast Guard assets and personnel. The rates are comprised of various components, including direct costs (e.g., labor, employee benefits, fuel, maintenance); support costs (e.g., support activities received from area commands, districts, groups); general and administrative costs (e.g., legal services, payroll processing);
Mohr explained that the costs Kumar is liable for are determined by multiplying the respective hourly rates by the number of hours the Coast Guard assets and personnel involved in this 21-hour search and rescue operation were deployed. This sum, $277,257.70, Mohr testified, represents the “full cost” sustained by the Coast Guard as a result of Kumar‘s false report. In Mohr‘s opinion, this “full cost,” as defined in OMB A-25 and implemented by Commandant Instruction 7310.1M, represents “all costs” Kumar is liable for under
Kumar contends this approach places too much emphasis on “all costs” while ignoring the “as a result” limitation. He argues that
At the sentencing hearing, the district court confirmed that neither side objected to the other‘s mathematics. Nor did Kumar challenge any particular items of indirect costs claimed by the Coast Guard. The dispute, then and now, is essentially a legal one, revolving around interpretation of
There appears to be little published case law directly on point. The government argues that its position here mirrors the approach uniformly taken in courts across the country in enforcing
Kumar cites other case law showing that, traditionally, restitution has been employed not to punish the wrongdoer, but to restore the victim, whose recovery is therefore limited to actual losses proximately caused by the wrongdoing. See Hughey v. United States, 495 U.S. 411, 416 (1990); United States v. Gamble, 709 F.3d 541, 546 (6th Cir. 2013);
There is no dispute that Kumar‘s false report proximately caused the mobilization of one Coast Guard aircraft and four vessels, together with their crews and related onshore personnel during a 21-hour period. Nor is there any dispute about the full cost of these resources to the Coast Guard, as measured in hourly reimbursable rates in accordance with accounting standards adopted by the Federal Accounting Standard Advisory Board. Nor is there any dispute that these accounting standards define “full cost” as the total amount of resources used to produce the product or service, including direct and indirect costs. R. 28-5, Statement of Federal Financial Accounting Standards 4, ¶ 89, Page ID # 452. This definition is consistent with the policy established by
Commander Mohr conceded on cross-examination that Kumar‘s false report did not result in increased indirect costs to the Coast Guard, but recovery under
B. Authority to Order Restitution to Canadian Armed Forces
The judgment of sentence also orders Kumar to pay restitution in the amount of $211,750 to the Receiver General for Canada for the Canadian Armed Forces’ contribution to the search and rescue mission. In making this order, the district court recognized that
“One of the most basic canons of statutory interpretation is that a more specific provision takes precedence over a
Here, there is neither conflict nor ambiguity in the language of these statutes.
Clearly, the Canadian Armed Forces is a victim of Kumar‘s offense, and Kumar does not challenge the “appropriateness” of the district court‘s exercise of discretion to order restitution under the above paraphrased language. Rather, Kumar‘s challenge is limited to the notion that the district court‘s broad discretionary authority under
C. Amount of Restitution
Finally, Kumar contends that even if the district court had authority to order him to pay restitution, the court abused its discretion by doing so based on an inadequate record. He contends the written communications from the Canadian Armed Forces presented by the government lack sufficient indicia of reliability to support the order of restitution. Indeed, no witness testified to the Canadian Armed Forces’ losses at the sentencing hearing. While there is no dispute that the Canadian Armed Forces contributed a CC130 Hercules aircraft with seven-man crew to the search and rescue mission for some 12 hours, the record of its losses is less than ideal. It consists of several letters and copies of e-mail messages.
In the first of these, a letter dated December 7, 2012, Major Marty Zimmer claimed the cost associated with operating the CC130 aircraft in this particular search and rescue mission was $211,750. R. 25-11, Page ID # 349. Subsequent communi-
It thus appears that the Canadian Armed Forces, like the U.S. Coast Guard, classifies reimbursable rates variously, as either “direct operating costs” or “full cost.” Faced with these two figures submitted in support of the Canadian claim, $211,750 and $372,583, the district court ordered Kumar to pay the lesser amount, finding the government had not carried its burden of proving the Canadian Armed Forces’ entitlement to the larger amount, full cost, by a preponderance of the evidence.
Kumar contends this order is not supported by sufficient reliable evidence. He acknowledges that a district court may consider hearsay evidence in sentencing, see Elson, 577 F.3d at 732, but he argues he was denied fair opportunity to refute it inasmuch as no witness was presented by the government. Also, he argues that the wide discrepancy between the estimates offered indicates the evidence lacks the “minimal indicia of reliability” required to meet due process. Id.
The district court found the discrepancy between the two figures submitted by Major Zimmer adequately explained. We agree. That is, the discrepancy does not undermine the reliability of the information presented. Properly understood, the Canadian cost-calculating methodology is similar to the methodology employed by the Coast Guard. Kumar did not challenge the Coast Guard‘s methodology. It is thus not readily apparent how the lack of a live witness to explain the Canadian methodology materially prejudiced Kumar‘s opportunity to refute it. Kumar‘s challenge to the Coast Guard‘s claimed costs went strictly to the legal question of whether all costs were recoverable or only those costs directly attributable to his false report. Under
III
Accordingly, defendant Kumar‘s claims of error are denied and the district court‘s judgment of sentence is AFFIRMED.
HELENE N. WHITE, Circuit Judge, concurring in part, dissenting in part.
I concur in the majority‘s determinations that the district court had authority to order restitution in favor of the Canadian Armed Forces and that the amount is
The question is whether
As noted by the majority, OMB A-25 directs that user charges include “an appropriate share of” both direct and indirect costs, including items such as management and supervisory costs, consulting, an annual rate of return, costs of establishing standards, any required environmental impact statements, physical overhead, utilities, depreciation of buildings, costs of supplies, insurance, and unfunded retirement costs. In short, OMB A-25 requires an agency such as the Coast Guard to compute for the open market the “full cost” of its services, which includes all the direct and indirect costs that go into running, maintaining, housing, improving and managing the Coast Guard.
Indirect costs and overhead are appropriately included in calculating the “full cost” of a benefit or service for the purpose of calculating a figure that approximates what that benefit or service might cost on the open market, which is the purpose of
Further, I find little guidance in the cases cited by the majority. United States v. Sanders, 511 Fed.Appx. 463, 465 (6th Cir. 2013), an unpublished opinion, simply states that the defendant was ordered to pay $53,306 in restitution to the Coast Guard. The amount assessed was not a subject of the appeal, and the opinion includes no discussion of how that amount was calculated. Nor does the district court record in that case support the majority‘s position. The $53,306 figure is found in a spreadsheet attachment to the sentencing transcript as Exhibit B. This spreadsheet lists the personnel involved in the search, the number of hours they were involved, their pay grade, and the hourly rate. It also provides an hourly rate for equipment. There is no information regarding the source of the hourly rates.
United States v. Emil, 56 F.3d 65, No. 94-1871, 1995 WL 322455, at *1 (6th Cir. May 26, 1995), too, is an unpublished opinion that simply states the amount of restitution ordered by the district court, $5,177.28, without any discussion. United States v. Crockett, No. 3:09-cr-345 (N.D. Ohio Jan. 19, 2010), is a district court
United States v. James, 986 F.2d 441 (11th Cir. 1993), does address the amount of restitution ordered. But the issue there was whether the district court properly included costs associated with locating James’ boat after the Coast Guard realized that his distress reports were a hoax. James argued that the additional amounts were not properly assessed because
United States v. Haun, No. 5:06-cr-18-001/RS (N.D. Fla. Aug. 16, 2006), a northern district of Florida case, did involve user charges established pursuant to