United States v. Sidhu

REVISED
UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 96-50736
Summary Calendar

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

SAMARJEET S. SIDHU; LOREN ARDEN GIFFORD,
Medical Doctor,

Defendants-Appellants.

Appeals from the United States District Court
for the Western District of Texas
December 3, 1997

Before DeMOSS and DENNIS, Circuit Judges, and LEE,* District Judge.

DeMoss, Circuit Judge:

Appellants Dr. Loring Gifford1 and his employee Samarjeet

Sidhu were each convicted of conspiracy to commit mail fraud and

other criminal conduct relating to their practice of submitting

false claims for medical services to various private insurers and

*
Chief Judge of the Southern District of Mississippi,
sitting by designation.
1
Dr. Gifford is variously referred to in the record as Dr.
Loren Gifford or Dr. Loring Gifford. This opinion will use Dr.
Gifford’s name as specified in his appellate brief.
government programs. Sidhu appeals both his convictions and his

sentence. Gifford appeals only the district court’s determination

of his sentence. We affirm.

BACKGROUND

Appellant Loring Gifford is a psychiatrist. Prior to his

conviction in this case, Gifford operated a profitable practice in

El Paso, Texas. Gifford advertised as a specialist in the area of

addiction and pain management, and frequently prescribed morphine.

Indeed, Gifford prescribed a significant portion of the morphine

prescribed in the State of Texas. Many of Gifford’s patients came

in daily to receive injections of morphine, alone or in combination

with other pain-killing injections. Some of Gifford’s patients

became addicted to morphine as a result of his treatments, and

required further treatment to withdraw from the medications Gifford

provided.

Gifford systematically defrauded government programs, such as

Medicare, Medicaid, and CHAMPUS, and private insurers.

Specifically, government programs and private insurers were billed

for services that were either (1) not performed, (2) not performed

as billed, or (3) performed by non-physicians, for whose services

Gifford was not entitled to be reimbursed. In but one example,

Gifford routinely billed sixty-minute psychotherapy sessions to

patients who came to the office for injections. Gifford billed

these sessions using a code that contemplates face-to-face

psychotherapy. Nonetheless, patients were billed without regard to

whether the patient was seen by Dr. Gifford. In several cases,

2
patients were billed for psychotherapy sessions notwithstanding the

fact that Gifford was out of town, or even out of the country.

Eventually, patients were billed without regard to whether the

patients came to the office. In one case, Gifford billed

psychotherapy to a patient who was no longer living.

Gifford also billed far more psychotherapy than could have

reasonably been performed. For example, Gifford personally billed

more than 5,800 hours as patient visits for the year 1993. Gifford

routinely billed between forty and sixty psychotherapy appointments

in a single day, all supposedly lasting between thirty and sixty

minutes per session. Gifford does not dispute that he engaged in

these fraudulent billing practices.

Appellant Samarjeet Sidhu worked for Gifford. Sidhu, who was

trained as a physician in Mexico but failed the Texas medical

exams, performed biofeedback services on Gifford’s patients. Sidhu

billed for biofeedback using a code that contemplates the

measurement and regulation of body temperature, which is generally

accomplished with the aid of a biofeedback machine. Several

patients testified that they never saw Sidhu’s biofeedback machine,

and that Sidhu generally just talked to the patient, performing

more of a counseling role.

Sidhu ran the office in Gifford’s absence. Gifford’s staff

were instructed to call Sidhu “Dr. Sidhu.” Patients were referred

to Sidhu in Gifford’s absence, and Sidhu was assigned the task of

judging whether the patients needed medication, counseling,

biofeedback or all three. Many of the services performed by Sidhu

3
in Gifford’s absence were billed as psychotherapy sessions with

Gifford. Sidhu received computer print-outs detailing Gifford’s

billings, and assisted Gifford’s efforts to collect on the

fraudulent billings by meeting and corresponding with patients and

insurers. Office staff testified that Sidhu was involved in

collecting the fraudulent billings on a daily basis. Sidhu does

not dispute that insurers were systematically defrauded by billings

produced in Gifford’s practice.

Gifford and Sidhu were tried before a jury and convicted on

multiple counts relating to the fraud.2 Gifford was convicted of

conspiracy to commit mail fraud, aiding and abetting mail fraud,

mail fraud, obstruction of justice, and engaging in a monetary

structuring transaction. On appeal, Gifford does not challenge the

facts establishing his guilt. Rather, Gifford attacks almost all

of the fact findings used by the district court to determine his

sentence.

Sidhu was convicted of conspiracy to commit mail fraud, aiding

and abetting mail fraud, and making false statements to the FBI.

On appeal, Sidhu challenges both his conviction and his sentence,

arguing: (1) that the evidence was insufficient to support his

conviction; (2) that his trial counsel was constitutionally

deficient; and (3) that the district court incorrectly calculated

the monetary loss attributable to Sidhu’s crimes, thus arriving at

an erroneous base offense level.

2
Gifford’s wife, who worked as a chiropractor in his
office, was also indicted but the charges against her were
dismissed. Gifford’s remaining office staff were not indicted.

4
 Gifford’s and Sidhu’s appeals will be addressed separately.

SIDHU’S APPEAL

I. Sufficiency of the Evidence to Support Sidhu’s Conviction

Sidhu’s convictions must be affirmed if a rational trier of

fact could have found the essential elements of each offense beyond

a reasonable doubt. See United States v. Brown, 29 F.3d 953, 958

(5th Cir. 1994). All inferences and credibility determinations

must be resolved in favor of the jury’s verdict of guilty. United

States v. McCord, 33 F.3d 1434, 1439 (5th Cir. 1994).

A. Conspiracy to Commit Mail Fraud

Sidhu’s conviction for conspiracy to commit mail fraud in

violation of 18 U.S.C. § 371 must be supported with sufficient

evidence that Sidhu and Gifford agreed to commit mail fraud, and

that either Gifford or Sidhu committed an overt act in furtherance

of the agreement. United States v. Gray, 96 F.3d 769, 772-73 (5th

Cir. 1996), cert. denied, 117 S. Ct. 1275 (1997); United States v.

Pettigrew, 77 F.3d 1500, 1519 (5th Cir. 1996); United States v.

Mackay, 33 F.3d 489 (5th Cir. 1994).

Sidhu admits that he knew Gifford was systematically

defrauding insurers by submitting fraudulent claims. Sidhu

acknowledges that he performed acts that furthered Gifford’s fraud.

Therefore, the second element of the conspiracy offense is not

challenged. Rather, Sidhu claims that the government failed in its

5
burden to demonstrate an agreement between he and Gifford to commit

mail fraud.

The agreement forming the basis of a conspiracy is rarely

expressed, and may be inferred from circumstantial evidence. E.g.,

Pettigrew, 77 F.3d at 1519. The key issue is whether Sidhu

knowingly and voluntarily joined Gifford’s course of action. Id.;

see also Gray, 96 F.3d at 772-73.

The jury’s inference that Sidhu and Gifford agreed to commit

mail fraud is supported by ample evidence. Gifford entrusted his

practice to Sidhu’s care when Gifford was out of the office. Sidhu

checked to see how payment would be made before seeing patients.

Sidhu instructed the staff to bill for injections using a

particular code. Patients testified that Sidhu’s methods were

highly irregular and the jury heard evidence that strongly supports

the proposition that Sidhu was not performing biofeedback at all.

For example, Sidhu billed for biofeedback that was performed

without the benefit of his biofeedback machine. One patient

testified that Sidhu slept during a purported biofeedback session

while the patient listened to music. Another patient testified

that she was only with Sidhu for a brief time period, and that she

was forced to flee when he began touching her inappropriately.

Other patients saw Sidhu after taking injections of morphine, which

induced prolonged sleep and would have rendered the patient unable

to actively participate in biofeedback. Although the jury heard

conflicting testimony on the issue of proper biofeedback technique,

6
there is sufficient evidence in the record to establish that at

least some of Sidhu’s billings for biofeedback were fraudulent.

Sidhu also performed a variety of services for patients in

Gifford’s absence, including filling out and dispensing pre-signed

prescription forms, determining whether a patient needed prescribed

medication, and counseling patients. Many of Sidhu’s services were

subsequently billed by Gifford as face-to-face psychotherapy

sessions. Sidhu obtained knowledge of these fraudulent billings

because Sidhu was provided with computer print-outs of Gifford’s

billings, which Sidhu was periodically held responsible for

collecting. Sidhu does not dispute that he knew the billings to be

fraudulent. Thus, Sidhu performed an important role in furthering

the conspiracy by fraudulently billing for biofeedback services

that were improperly or incompletely performed, by performing

services that could be billed as though provided by a physician,

and by assuming a role of responsibility for the practice from

Gifford.

Of equal importance, Sidhu inquired into the status of

collections on a daily basis. Sidhu actively collected on debt he

knew to be fraudulent by meeting and corresponding with insurance

companies and patients. Sidhu met with insurance adjustors. Sidhu

was also involved in collecting funds from patients. One patient

testified that Sidhu presented her with a $10,000 bill from Gifford

but offered to excuse the debt, provided that the patient would

sign a release exonerating Gifford of liability for misdiagnosing

the patient with a terminal illness. Thus, Sidhu performed an

7
important role in completing the fraudulent transactions by

actively pursuing collection of the fraudulent bills.

Sidhu maintains that he cannot be held liable because he did

not personally create any fraudulent billings. Sidhu is correct

that Gifford generally circled, or at least approved, the codes

that would be billed to a particular patient or insurer. That does

not, however, end the inquiry. The record contains sufficient

evidence to support an inference that at least some of Sidhu’s

billings for biofeedback were fraudulent. Moreover, Sidhu may be

held liable for the reasonably foreseeable conduct of his co-

conspirator, Gifford. See, e.g., United States v. Sanchez, 961

F.2d 1169 (5th Cir. 1992).

In a related argument, Sidhu suggests that his conduct was not

voluntary because, having failed his medical exams, he needed his

job. Sidhu’s contention that he needed a job, or that he acted at

Gifford’s direction, establishes only Gifford’s superior role in

the conspiracy. Such an allegation is insufficient to establish a

necessity defense that would excuse Sidhu’s criminal conduct. See

United States v. Willis, 38 F.3d 170, 175 (5th Cir. 1994) (duress

defense requires, inter alia, that the defendant reasonably believe

there is a threat of death or serious bodily injury that leaves the

defendant no reasonable alternative to violating the law), cert.

denied, 115 S. Ct. 2585 (1995).

Sidhu performed work knowing that the services would be

fraudulently billed. Sidhu assisted the fraudulent scheme by

collecting on those fraudulent billings. There is sufficient

8
evidence in the record to support the jury’s inference that Sidhu

and Gifford agreed to commit mail fraud. Accordingly, Sidhu’s

conviction for conspiracy to commit mail fraud will be affirmed.

B. Aiding and Abetting Mail Fraud

Sidhu’s conviction for aiding and abetting mail fraud in

violation of 18 U.S.C. § 1341 must be supported with sufficient

evidence that Sidhu: (1) voluntarily associated with the criminal

enterprise; (2) voluntarily participated in the venture; and (3)

sought by independent action to make the venture succeed. United

States v. Casilla, 20 F.3d 600, 603 (5th Cir. 1994).

Evidence sufficient to support a conspiracy conviction is

typically sufficient to support an aiding and abetting charge.

Id.; United States v. Mergerson, 4 F.3d 337, 342 (5th Cir. 1993).

To the extent Sidhu’s independent action comprises a separate

element of the aiding and abetting offense, that element is

satisfied with evidence that Sidhu independently used the mail to

collect on what he knew to be fraudulent billings. There is,

therefore, ample evidence to support the jury’s verdict with

respect to Sidhu’s conviction for aiding and abetting mail fraud,

and that conviction will be affirmed.

C. Making False Statements to the FBI

During the course of the FBI’s investigation into Gifford’s

billing practices, Sidhu was interviewed by the FBI. In that

interview, Sidhu falsely stated that his only role in Gifford’s

9
practice was to perform biofeedback. Specifically, Sidhu claimed

that he did not do any counseling, that he had no knowledge of the

procedures used when Gifford was out of the office, and that he had

no role in dispensing prescriptions. Sidhu was prosecuted and

convicted for making these false statements to the FBI, in

violation of 18 U.S.C. § 1001.

Sidhu admits he made the statements. Sidhu concedes, as he

must, that there is evidence in the record to support the

conclusion that statements were false, at least as they were

understood by the FBI. Sidhu’s primary position is that

exculpatory statements denying his role in the offense should not

be punishable by 18 U.S.C. § 1001. As Sidhu recognizes, however,

we decided that issue in United States v. Rodriguez-Rios, 14 F.3d

1040 (5th Cir. 1994) (en banc), which eliminated the “exculpatory

no” exception to § 1001 liability. Even assuming we were

sympathetic to Sidhu’s position, a panel of the Court is without

authority to reconsider the decision of the en banc Court in

Rodriguez-Rios.

Sidhu also contends that his misleading statements were not

material. Statements are material within the meaning of § 1001

when they have the natural tendency or capacity to deceive, affect,

or influence the federal agency. Kungys v. United States, 108 S.

Ct. 1537, 1546 (1988); United States v. Swaim, 757 F.2d 1530, 1534

(5th Cir. 1985); United States v. McIntosh, 655 F.2d 80, 82 (5th

Cir. 1981). The issue of materiality was properly presented to the

jury, which found that Sidhu’s false statements to the FBI in the

10
course of an active investigation were material to that

investigation. Having reviewed the record, we find no error in

that determination. Sidhu’s conviction for making false statements

to the FBI in violation of 18 U.S.C. § 1001 will be affirmed.

II. Effective Assistance of Counsel

Sidhu next contends that his convictions cannot stand because

he received constitutionally defective assistance of counsel.

Specifically, Sidhu complains that his counsel should have (1)

moved to sever Sidhu’s case from Gifford’s and (2) objected to the

district court’s calculation of the loss attributable to Sidhu’s

offenses.

Sidhu’s claim of ineffective assistance is not ripe for

appellate review. Generally, a claim for ineffective assistance of

counsel is not reviewed on direct appeal when, as here, there has

been no development of the issue in the district court. United

States v. Riunard, 956 F.2d 85, 87 (5th Cir. 1991); United States

v. Lewis, 902 F.2d 1176, 1180 (5th Cir. 1990).

Even if the Court were to review the issue, Sidhu could not

demonstrate either constitutionally deficient performance or the

type of prejudice required to establish an ineffectiveness claim.

Sidhu’s counsel moved for a judgment of acquittal notwithstanding

the verdict. In that pleading, counsel raised both the sufficiency

issues raised by Sidhu on appeal and the prejudice to Sidhu as a

result of the joint trial. United States v. Capote-Capote, 946

F.2d 1100, 1104 (5th Cir. 1991) (counsel’s failure to file a motion

11
to sever is not error unless the defendant can demonstrate specific

compelling prejudice against which the district court was unable to

afford protection). Sidhu’s counsel also made arguments concerning

the amount of loss attributable to Sidhu in Sidhu’s objections to

the PSR and at sentencing. As a result, Sidhu’s relatively less

culpable role was developed and accounted for, both at trial and in

sentencing. Sidhu’s generalized assertions of prejudice are

insufficient to meet the rigorous standards governing claims that

trial counsel provided ineffective assistance.

III. Loss Calculation used in Sentencing

Sidhu objects to the amount of monetary loss attributed to his

offenses for purposes of determining his base offense level. The

district court’s loss calculation is reviewed for clear error.

United States v. Krenning, 93 F.3d 1257, 1269 (5th Cir. 1996). The

“loss need not be determined with precision. The court need only

make a reasonable estimate of the loss, given available

information.” U.S.S.G. § 2F1.1, comment. (n. 8).

Sidhu argues that the loss attributed to him should have been

lower because he was the less culpable co-conspirator.

Specifically, Sidhu claims he should be sentenced only for harm

that he directly caused or intended.

We disagree. Gifford’s conduct was reasonably foreseeable to

Sidhu, and in furtherance of their jointly-undertaken criminal

activity. U.S.S.G. § 1B1.3(a)(1); United States v. Carreon, 11

F.3d 1225, 1232-34 (5th Cir. 1994). Therefore, Sidhu may properly

12
be sentenced for Gifford’s conduct in furtherance of the

conspiracy. Moreover, the district court properly accounted for

Sidhu’s relative culpability by: (1) limiting Sidhu’s loss

calculation to the period during which he was employed by Gifford,

and (2) treating Sidhu as a “minor participant.” As a result,

Sidhu was sentenced to 37 months using an offense level of 21 and

criminal history category of I. Gifford was sentenced to 120

months using an offense level of 30 and a criminal history category

of II. Sidhu was ordered to pay a fine in the amount of $2,000.

Gifford’s fine was waived, but he was ordered to pay restitution in

the amount of $150,899.27.

Sidhu’s objection to his sentence is general. He believes he

should have received an across-the-board discount based upon his

position in the conspiracy. Sidhu does not, however, make any

specific arguments about which amounts cannot be fairly attributed

to him. Likewise, Sidhu failed to offer specific evidence

rebutting the PSR in the district court. The district court’s

reliance on the PSR, as adjusted to accommodate certain of Sidhu’s

objections in the district court, was reasonable. See United

States v. Ayala, 47 F.3d 688, 690 (5th Cir. 1995); United States v.

Angulo, 927 F.2d 202, 204 (5th Cir. 1991). Sidhu has not

demonstrated that the district court’s allocation of loss, and

ultimate determination of a base defense level, is clearly

erroneous. Sidhu’s sentence will be affirmed.

GIFFORD’S APPEAL

13
 Gifford challenges only his sentence. Gifford’s convictions

were grouped into three offense groups, pursuant to the grouping

rules of sentencing guidelines 3D1.2 and 3D1.3. Gifford was then

sentenced using the following PSR recommendations:

CONSPIRACY TO COMMIT MAIL FRAUD AND MAIL FRAUD COUNTS

Base offense level 2F1.1(a) 6
Amount of loss 2F1.1(b)(1) 12
More than minimal planning 2F1.1(b)(2) 2
Aggravating role 3B1.1(a) 4
Vulnerable victim 3A1.1(b) 2
Abuse of position of trust 3B1.3 2
Obstruction of justice 3C1.1 2

Adjusted offense level 30

OBSTRUCTION OF JUSTICE COUNTS

Base offense level 2J1.2(a) 12
Threat of injury 2J1.2(b)(1) 8
Aggravating role 3B1.1(a) 4
Vulnerable victim 3A1.1(b) 2
Abuse of position of trust 3B1.3 2

Adjusted offense level 28

FINANCIAL TRANSACTIONS COUNTS

Base offense level 2S1.2(a) 17
Specified activity 2S1.2(b)(1)(B) 2
Aggravating role 3B1.1(a) 4
Vulnerable victim 3A1.1(b) 2
Abuse of position of trust 3B1.3 2
Obstruction of justice 3C1.1 2

Adjusted offense level 29

Gifford’s ultimate term of imprisonment was determined using

the highest offense level, pursuant to the grouping rules of

14
guideline 3D1.4. Thus, Gifford was sentenced using a base offense

level of 30. Gifford articulates six issues for review. Taken

together, these issues effectively challenge most of the adjust-

ments made to determine Gifford’s base offense level.

I. Adjustments to the Obstruction of Justice and Financial
Transaction Offense Groups

Gifford’s first two issues raise arguments that relate solely

to the district court’s determination of the base offense level

applicable to his convictions for obstruction of justice and

engaging in an unlawful financial transactions. Specifically,

Gifford challenges the district court’s findings that (1) Gifford’s

obstruction of justice count involved a threat of physical injury,

and (2) that the financial transaction offenses involved an

obstruction of justice. See U.S.S.G. § 2J1.2(b)(1) (allowing

eight-level adjustment if offense involved threat of physical

injury); § 2S1.2(b)(1)(B) (allowing two-level adjustment if

defendant knew funds were proceeds of unlawful activity). After

reviewing the record and the arguments of the parties with respect

to each of these issues, the Court finds no basis for holding that

the district court’s fact findings are clearly erroneous. Although

we find no error with respect to the adjustment of the obstruction

of justice offense group for threat of physical injury or the

financial transaction offense group for obstruction of justice, we

note that any such error would also be harmless. Granting Gifford

relief with respect to these issues would change only the guideline

range applicable to the obstruction of justice and financial

15
transaction offense groups. Granting relief would not, however,

have any effect with respect to the controlling guideline range.

Guideline 3D1.2 provides rules for grouping certain

convictions into offense groups. Gifford’s convictions in this

case were grouped into three offense groups: the mail fraud offense

group; the obstruction of justice offense group; and the financial

transaction offense group. Gifford does not challenge these

groupings. Guideline 3D1.4 provides for determination of a

“combined offense level.” A combined offense level is determined

by taking the highest of the base offense levels applicable to the

various offense groups, and adding points to that level based upon

the base offense levels of the other offense groups.

The district court made fact findings which yielded a base

offense level of 30 with respect to the mail fraud offense group.

As developed more fully below, we affirm the district court’s

determination of that base offense level. The district court was

then required, pursuant to guideline 3D1.4 to add points to that

base offense level to account for the obstruction of justice and

financial transaction offense groups.

In this case, however, any addition to the base offense level

of 30, the level applicable to the mail fraud offense group, would

result in a guideline range that was higher than the highest of the

statutory maximum sentences allowed by law.3 For that reason, the

3
The maximum statutory sentence that could be imposed was
120 months, which applied to Gifford’s convictions for violation of
18 U.S.C. § 1512 and 18 U.S.C. § 1957. Gifford has not challenged
the validity of those convictions on appeal. Gifford’s guideline
range using a base offense level of 30 and a criminal history

16
combined offense level was effectively limited to 30 by the

statutory maximum sentence that could be imposed, and the base

offense levels for the obstruction of justice and financial

transaction offense groups played no role in determining Gifford’s

guideline range. Gifford’s arguments that relate solely to the

obstruction of justice and financial transaction offense groups

present no error. Moreover, assuming the Court were to find error

with respect to those adjustments, the error is without effect as

to the application of the sentencing guidelines in Gifford’s case.

Accordingly, the district court’s adjustment to the obstruction of

justice offense group for threat of physical injury and the

district court’s adjustment to the financial transaction offense

group for obstruction of justice will be affirmed.

II. Calculation of the Loss Attributable to Gifford’s Fraud

Gifford’s third issue challenges the district court’s

calculation of the loss attributable to his fraud. The base

offense level for fraud and deceit is six. U.S.S.G. § 2F1.1(a).

The district court added twelve points to the base offense level

applicable to the mail fraud offense group because the loss

exceeded $1.5 million. See U.S.S.G. § 2F1.1(b)(1)(M). The loss

calculation was initially prepared by the FBI and later

category of II was 108 - 135 months. The guideline range
applicable to a base offense level of 31 and a criminal history
category of II is 121 - 151 months, a period in excess of the
statutory maximum of 120 months.

17
incorporated into the PSR. The district court adopted the

calculations in the PSR, finding that Gifford intended the

insurance carriers to suffer a loss exceeding $2,020,419.79.

Testimony at trial established that the FBI calculated the

loss attributable to Gifford by extracting numbers from Gifford’s

own computer. The FBI properly limited its analysis to billings

made between January 1993 and August 1994, the time period defined

in the indictment for the conspiracy. The PSR reports that the FBI

also limited its analysis to those billing codes that required Dr.

Gifford to perform or be present for the procedure. Finally, the

FBI limited its analysis to billings actually submitted to an

insurance carrier.

The FBI calculated that seventy-four percent of Gifford’s 1993

billings and sixty-eight percent of Gifford’s billings between

January and August 1994 were fraudulent. To reach that conclusion,

the FBI relied upon witness interviews and other evidence to

estimate that Gifford was generally available for work an average

of fifty hours per week. Allowing Gifford fifty hours per week,

the FBI calculated that Gifford could have worked 2,600 hours per

year. From this figure, the FBI subtracted time that Gifford was

known to be out of the office, based upon travel receipts and other

evidence. Using this method, the FBI estimated that Gifford was

available for work 2,017 hours in 1993 and 1,236 hours between

January and August 1994. The FBI then compared the amount of time

that Gifford was determined to be available for work with Gifford’s

18
actual billings. Time-sensitive billing or other procedures that

were in excess of the time that Gifford could have been available

for work were determined to be fraudulent.

Gifford does not seriously quarrel with the government’s

methodology. Rather, Gifford argues (1) that he never intended to

recover the face amount of the fraudulent claims, and (2) that the

loss should be reduced to reflect that the services performed by

non-physician employees had some value.

A. Gifford’s Intent to Collect on the Fraudulent Claims

The private insurers billed by Gifford generally paid only

eighty percent, while some government programs paid as low as fifty

percent of the amounts billed for Gifford’s services. Gifford

claims that he never intended to collect fraudulently billed

amounts that were not covered by the insurers. Thus, Gifford

argues that the overall amount of loss attributed to his fraud

should be reduced by between twenty and fifty percent.4

4
Gifford attempts to support this argument with commentary
note 7 to sentencing guideline 2F1.1, which states that the court
may substitute “intended loss” when it is greater than the “actual
loss.” U.S.S.G. § 2F1.1 comment. (n. 7). The commentary cited by
Gifford permits the district court to increase the amount of loss
attributable to an offense by including losses that the defendant
intended to inflict. Whatever more subtle meaning the commentary
may be trying to convey, we seriously doubt that the provision can
be read to require that the district court define an intended loss
in fraud cases, and then substitute that intended loss for more
reliable and less subjective estimates of loss, such as the face
amount of fraudulent claims. See United States v. Lghodaro, 967
F.2d 1028, 1031 (5th Cir. 1992) (total amount of fraudulent claims,
rather than amount paid by the insurer, established loss); see also
United States v. Sowels, 998 F.2d 249, 252 (5th Cir. 1993)
(combined credit limit of stolen credit cards represented intended
loss regardless of the actual charges made).

19
 We disagree. The record contains testimony establishing that

Gifford accepted cash payments from patients that were intended to

supplement the amounts paid by insurance companies. One of

Gifford’s patients testified that cash payments of $100 per week

were made to cover the gap between Gifford’s billings and available

insurance coverage. Sidhu was involved in collecting money

directly from patients for Gifford’s bills. Finally, Gifford

secured credit card numbers from patients for the purposes of

billing directly when the insurance companies did not pay. Thus,

the record establishes that Gifford did intend, and did in fact

accept payment from patients that was in addition to the amounts

billed to insurance companies. Therefore, the district court’s

reliance on the PSR, which used the face amount of the fraudulent

billings as the measure of loss, was not clearly erroneous.

Of equal importance, Gifford has not provided the Court with

a record or an argument on appeal that is specific enough to

support relief on this ground. Gifford did not specify in the

district court and has not specified on appeal which billings are

subject to reduction or by what percentage those billings should be

reduced. There is, therefore, no basis for finding that the

district court’s reliance upon the PSR in this complicated

insurance fraud case was clearly erroneous. United States v.

Ayala, 47 F.3d 688, 690 (5th Cir. 1995); United States v. Angulo,

20
927 F.2d 202 (5th Cir. 1991) (“in the absence of rebuttal evidence,

the sentencing court may properly rely upon the PSR and adopt it”).

Gifford’s premise that he never intended to collect

fraudulently billed claims that were not paid by the insurers is

contradicted by the record. Moreover, Gifford has not presented

any specific evidence or argument that would allow relief on this

ground. For each of these reasons, the district court’s reliance

on the PSR, which determined loss according to the face value of

fraudulently submitted claims, will be affirmed.

B. Accounting for the Value of Services Rendered by Non-

Physicians

With respect to Gifford’s fraudulent billings for services

that were provided by another non-physician employee, Gifford

argues that the loss calculation should be reduced by the value of

the services actually rendered by the non-physician. Gifford

failed to develop this argument in the district court.

Specifically, there is no evidence that would enable the Court to

distinguish between fraudulent billings for services that were not

performed, fraudulent billings for services that were improperly or

incompletely performed, and fraudulent billings for services

performed by non-physician employees. Moreover, there is no

evidence concerning the value, if any, of services performed by

non-physicians, and no evidence to establish that Gifford could

have relied upon the codes billed to seek reimbursement in any

amount for the services provided by non-physician employees.

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 Gifford recognizes that the record is inadequate, but requests

that the Court vacate his sentence and remand for determination of

those issues. Gifford had ample opportunity to develop his rather

specific challenges to the district court’s allocation of loss in

the district court. See United States v. Bachynsky, 949 F.2d 722,

732-33 (5th Cir. 1991). Gifford bore the burden of producing

specific rebuttal evidence to support his argument that some

discrete portion of the fraudulent billings was not in fact

fraudulent because valuable services that could have been

reimbursed were rendered by non-physician employees. United States

v. Ayala, 47 F.3d 688, 690 (5th Cir. 1995); United States v.

Angulo, 927 F.2d 202 (5th Cir. 1991) (“in the absence of rebuttal

evidence, the sentencing court may properly rely upon the PSR and

adopt it”). Gifford failed in this burden.

We are a court of error. We will therefore decline Gifford’s

invitation to remand for development of an argument that should

have been developed in the district court. Based upon the existing

record, the district court’s calculation of the loss attributable

to Gifford’s fraud was not clearly erroneous and will be affirmed.

III. Adjustment Based Upon Gifford’s Aggravating Role

Gifford’s fourth issue challenges the district court’s finding

that Gifford played an aggravating role in the offenses, which

resulted in the addition of four points to his base offense level.

Guideline section 3B1.1 allows adjustment of the base offense level

when the criminal defendant is found to be “an organizer or leader

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of a criminal activity that involved five or more participants or

was otherwise extensive.” An aggravating role determination is

reviewed for clear error. See United States v. Allibhai, 939 F.2d

244, 252 (5th Cir. 1991).

No one contends that there were more than five participants in

the criminal activity. Rather, the government argues that

Gifford’s scheme to defraud was “otherwise extensive” because it

required the “unknowing services” of multiple outsiders. See

Allibhai, 939 F.2d at 253 (unknowing services of bank employees, as

well as the scope and duration of the conspiracy made money

laundering scheme “otherwise extensive”); U.S.S.G. § 3B1.1,

comment. (n. 3) (“a fraud that involved only three participants but

used the unknowing services of many outsiders could be considered

extensive”).

Gifford created and managed an extensive scheme that generated

more than $2 million dollars in fraudulent billings in the

nineteen-month period between January 1993 and August 1994. Cf.

Allibhai, 939 F.2d at 253 (finding that money laundering scheme

that yielded only $1 million dollars in laundered money over a

three-year period was otherwise extensive). Gifford recruited

numerous office employees to provide billing and collection support

for his fraudulent practices. Of equal importance, Gifford’s far-

reaching fraud could not have succeeded without the unwitting

participation of his vulnerable patients and the unknowing

assistance of employees in the many insurance companies that

received Gifford’s fraudulent billings. The district court’s

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finding that Gifford played an aggravating role in an extensive

conspiracy to defraud health insurance companies and government

programs is not clearly erroneous and will be affirmed.

IV. Adjustment Because Gifford’s Crimes Impacted Vulnerable
Victims

Gifford fifth issue challenges the district court’s finding

that Gifford’s offenses impacted vulnerable victims, which resulted

in the addition of two points to his base offense level. See

U.S.S.G. § 3A1.1(b). The district court’s imposition of the two-

level increase was based upon its judgment that Gifford’s patients

were unusually vulnerable to criminal activity.

Gifford argues that the increase was inappropriate because his

patients were not the victims of his offense. Rather, Gifford

maintains that the primary victims of his criminal conduct were the

fraudulently billed insurers and government programs. We have

previously recognized that a physician’s patients can be victimized

by a fraudulent billing scheme directed at insurers or other health

care providers. See United States v. Bachynsky, 949 F.2d 722 (5th

Cir. 1991). In Bachynsky we recognized that “the deep pockets”

paying phony insurance claims are not the only victims when a

doctor’s unwitting patients are made the instrumentalities of a

fraudulent billing scheme. Id. at 735; see also United States v.

Kuban, 94 F.3d 971, 974 (5th Cir. 1996) (discussing who can be a

victim for purposes of guideline 3A1.1), cert. denied, 117 S. Ct.

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716 (1997). The rationale applicable in Bachynsky is equally

applicable here.

Gifford’s patients were often debilitated by pain or

depression, and easily became addicted to the treatment proffered

by Gifford to support his fraud. The record supports the

conclusion that Gifford preyed upon vulnerable patients by

addicting them to morphine in order to support his fraudulent

billing scheme. Gifford’s patients were therefore victims of that

scheme and the district court’s imposition of a two-level

adjustment was not clearly erroneous.

V. Adjustment Based Upon Gifford’s Abuse of Position of Trust or
Special Skill

Gifford’s final issue challenges the district court’s finding

that Gifford abused a position of trust, which resulted in the

addition of two points to his base offense level. See U.S.S.G. §

3B1.3. Gifford correctly argues that the adjustment must stand or

fall on the issue of whether he abused a position of trust.

Guideline 3B1.3 does not allow both an adjustment for an

aggravating role in the offense, which we have already affirmed,

and an adjustment based “solely on the use of a special skill.”

U.S.S.G. § 3B1.3. The district court did not, however, base

Gifford’s adjustment “solely on the use of a special skill.” To

the contrary, the PSR justified the adjustment with evidence that

Gifford abused his position of trust with his patients. In the

sentencing hearing, the government further defended the adjustment

by arguing that Gifford abused his position of trust with the

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insurers and government programs that provided reimbursement with

respect to the fraudulent billings. Having reviewed the record, we

are convinced that compromising his patients’ trust was a necessary

component of Gifford’s lucrative scheme to maximize his earnings.

Gifford’s abuse of his patients’ trust “significantly facilitated

the commission” of the offense. U.S.S.G. § 3B1.3. The district

court’s two-level adjustment under § 3B1.3 is not clearly erroneous

and will be affirmed.

CONCLUSION

Sidhu’s conviction is supported by adequate evidence with

respect to all counts. Sidhu’s claim for ineffective assistance of

counsel was not developed in the district court, and is therefore

inappropriate for appellate review at this time. Sidhu’s

relatively less culpable role in the fraudulent scheme was

developed at trial and accounted for by the district court in the

sentencing hearing. The district court reduced Sidhu’s sentence to

account for his relatively less culpable role. For that reason,

the district court did not err by attributing the total amount of

reasonably foreseeable loss to Sidhu. Accordingly Sidhu’s

convictions and sentence are AFFIRMED.

Gifford’s multiple arguments challenging the findings used by

the district court to determine his base offense level do not

present clear error. Accordingly, Gifford’s sentence is AFFIRMED.

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