Case: 09-40438 Document: 00511109488 Page: 1 Date Filed: 05/12/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 12, 2010
No. 09-40438 Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff – Appellee
v.
BRENDA DAVIS MILLER, also known as Brenda Graham Davis,
Defendant – Appellant
Appeal from the United States District Court
for the Southern District of Texas
Before GARWOOD, SMITH, and CLEMENT, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:
Brenda Davis Miller pled guilty to one count of conspiracy to commit
health care fraud, 18 U.S.C. §§ 1347, 1349, and one count of conducting a
financial transaction with criminally derived property valued at over $10,000,
id. § 1957. After applying sentencing enhancements for, inter alia, abuse of a
position of trust and obstruction of justice, the district court sentenced Miller to
ninety-seven months’ imprisonment. We affirm the enhancement for abuse of
a position of trust, vacate the enhancement for obstruction of justice, and
remand for resentencing.
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No. 09-40438
FACTS AND PROCEEDINGS
Miller was the owner of AA Better Medical Supply in Houston, Texas. She
obtained licenses from Medicare and Medicaid to operate as a durable medical
equipment (DME) provider, which, upon certification of medical necessity (CMN)
by a licensed physician, may provide certain supplies and equipment to
beneficiaries of those programs. The DME provider may then submit a
reimbursement claim to Medicare or Medicaid for the provided equipment.
Miller admitted to submitting false and fraudulent claims to Medicare and
Medicaid for power wheelchairs and power scooters that were either never
supplied or more costly than the equipment actually supplied to beneficiaries.
Her scheme was assisted by a physician, Dr. Walter Long, who provided pre-
authorized CMNs that lacked patient information. Miller or her employees
would complete the CMNs with names and information from Medicare and
Medicaid patients, none of whom had an actual certified need for a wheelchair
or scooter. Miller also admitted to fraudulently billing Medicaid for
psychotherapy counseling services, despite the fact that she was not a licensed
counselor.
Miller was charged by a thirty-count indictment and pled guilty to two
counts: conspiracy to commit health care fraud, and conducting a financial
transaction with criminally derived property valued at over $10,000. In a plea
agreement, she and the government stipulated to a loss amount of $1.283
million.
In preparing the presentence report (PSR), the probation officer grouped
the two offenses pursuant to U.S.S.G. § 3D1.2, and after considering the
intended loss amount, calculated a base offense level of twenty-two. The
probation officer also recommended the following enhancements: (1) a four-level
increase under U.S.S.G. § 3B1.1(a) based on Miller’s role as an organizer or
leader of criminal activity; (2) a two-level increase under § 3B1.3 for abuse of a
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position of trust in a manner that significantly facilitated the offense; and (3) a
two-level increase under § 3C1.1 for obstruction of justice. The probation officer
also recommended denying a reduction for acceptance of responsibility. Miller
objected to each of the PSR’s recommendations.
Over Miller’s objection, the district court applied all three enhancements,
but granted a two-level downward adjustment for acceptance of responsibility.
The total offense level of twenty-eight, in light of Miller’s criminal history
category of III, resulted in an advisory guidelines sentencing range of ninety-
seven to 121 months. The district court sentenced Miller to ninety-seven
months’ imprisonment and ordered restitution in the amount of $1.18 million.1
It imposed no fine. Miller timely appealed the sentencing enhancements for
abuse of a position of trust and obstruction of justice.
STANDARD OF REVIEW
“This court reviews de novo the district court’s guidelines interpretations
and reviews for clear error the district court’s findings of fact.” United States v.
Le, 512 F.3d 128, 134 (5th Cir. 2007). “The district court’s application of section
3B1.3 is a sophisticated factual determination that we review for clear error.”
United States v. Burke, 431 F.3d 883, 889 (5th Cir. 2005); see also United States
v. Dial, 542 F.3d 1059, 1060 (5th Cir. 2008) (per curiam) (resolving an intra-
circuit split over the proper standard of review for § 3B1.3 enhancements). For
an obstruction of justice enhancement, we likewise review the district court’s
factual findings for clear error. United States v. Mann, 493 F.3d 484, 498 (5th
Cir. 2007). “A ruling that those findings permit an obstruction-of-justice
enhancement is a question of law, reviewed de novo.” United States v. Brown,
470 F.3d 1091, 1094 (5th Cir. 2006). “Under the clearly erroneous standard, we
will uphold a finding so long as it is plausible in light of the record as a whole.”
1
The court utilized the stipulated restitution amount, less a credit for pending
payments.
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United States v. Ekanem, 555 F.3d 172, 175 (5th Cir. 2009) (quotation omitted).
“However, a finding will be deemed clearly erroneous if, based on the record as
a whole, we are left with the definite and firm conviction that a mistake has
been committed.” Id. (quotation omitted).
DISCUSSION
Miller challenges the district court’s application of the enhancements for
abuse of a position of trust and obstruction of justice. We take her arguments
in turn.
I. Abuse of a Position of Trust
Section 3B1.3 may be applied to increase a defendant’s offense level by two
“[i]f the defendant abused a position of public or private trust, or used a special
skill, in a manner that significantly facilitated the commission or concealment
of the offense.” U.S.S.G. § 3B1.3. This court applies a two-part test to determine
whether there has been an abuse of trust: “(1) whether the defendant occupies
a position of trust and (2) whether the defendant abused her position in a
manner that significantly facilitated the commission or concealment of the
offense.” United States v. Kay, 513 F.3d 432, 459 (5th Cir. 2007) (quotation
omitted).
A. Position of Trust
Application note 1 to § 3B1.3 states that a position of trust is
“characterized by professional or managerial discretion,” and that individuals
in such positions “are subject to significantly less supervision than employees
whose responsibilities are primarily non-discretionary in nature.” U.S.S.G.
§ 3B1.3 cmt. n.1.2 The ability to exercise such professional or managerial
2
Commentary contained in U.S.S.G. application notes is “authoritative unless it
violates the Constitution or a federal statute, or is inconsistent with, or a plainly erroneous
reading of, that guideline.” United States v. Johnston, 559 F.3d 292, 295 n.4 (5th Cir. 2009)
(quoting Stinson v. United States, 508 U.S. 36, 38 (1993)) (internal quotation marks omitted).
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discretion is the “signature characteristic” of one who holds a position of trust.
United States v. Ollison, 555 F.3d 152, 166 n.9 (5th Cir. 2009). Miller argues
that she did not occupy a position of trust because she was merely an ordinary
vendor in an arm’s length commercial relationship with the government. She
contends that under the structure of the Medicare and Medicaid programs, the
government’s trust is placed in physicians who provide CMNs and not in DME
providers. The government counters that Medicare and Medicaid place
substantial trust in DME providers, as evinced by witness testimony at the
sentencing hearing. It further argues that circuit precedent applying § 3B1.3 to
Medicare service providers compels affirmance.
A § 3B1.3 enhancement was upheld in United States v. Iloani against a
chiropractor who had conspired with his patients to submit fraudulent claims to
private insurance companies for treatments that were never rendered. 143 F.3d
921, 922-23 (5th Cir. 1998). We reasoned that “insurance companies usually rely
on the honesty and integrity of physicians in their medical findings, diagnoses,
and prescriptions for treatment or medication,” and that “insurance companies
must rely on physicians’ representations that the treatments for which the
companies are billed were in fact performed.” Id. at 923. In United States v.
Gieger, the defendants, operators of a Medicare-licensed ambulance company,
defrauded the government by billing for the transport of patients who were
improperly claimed to be bed-confined. 190 F.3d 661, 663 (5th Cir. 1999). This
court held that Iloani barred the defendants’ attempt to overcome a § 3B1.3
enhancement, reasoning that “the defendants carried out their fraud by abusing
a similar position of trust [to Iloani’s] with medical insurers.” Id. at 665.
Miller seeks to distinguish herself from the ambulance operators in Gieger
by arguing that the latter enjoyed considerable discretion, without physician
oversight, to determine whether patients were ambulatory, whereas she, as a
DME provider, could not provide any equipment without a CMN. We reject her
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argument, for two reasons. First, Miller effectively exercised the discretion that
the Medicare and Medicaid programs entrust to physicians by knowingly
completing CMNs for patients who had no need for the equipment provided.
There was evidence that Miller obtained a set of pre-authorized, blank CMNs
from Dr. Long and simply filled in patient names as they became known to her.
Under the scheme she devised, Miller assumed the position of the certifying
physician, and, like the Gieger defendants, she made the key decision whether
a particular patient had a medical need for a wheelchair or scooter.
Second, as the owner of AA Better Medical Supply, Miller exercised
substantial managerial discretion, which the guidelines recognize as an
independent basis for occupying a position of trust. See U.S.S.G. § 3B1.3 cmt.
n.1. The PSR indicated that Miller directed and oversaw the business operations
at both her company and a related company.3 She specifically instructed an
employee to complete pre-authorized CMNs with patient information, and she
provided cash or gifts to individuals in exchange for patient referrals from those
individuals. At the sentencing hearing, a Texas official charged with
administering the Medicaid program for the State testified that the program
trusted providers “to be honest in their billings” because the State lacks the
resources necessary to monitor all submitted claims. The official further
testified that, from the government’s perspective, a physician’s word on a claim
submission is no more valuable than a DME provider’s word. Meanwhile, Miller
herself testified that she knew that both Medicare and Medicaid would assume
the truthfulness of information contained in her claim submissions. It is clear
from this testimony that in providing medical benefits, Medicare and Medicaid
3
As our opinion filed today in United States v. Hawkins, No. 09-40427, describes, the
criminal scheme involved Miller and her company, as well as Miller’s sister, Dorothy Ann
Hawkins, and the company owned by Hawkins, Genesis Medical Supply.
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rely not only on the truthfulness of physicians but also on the truthfulness of
other vendors, including DME providers such as Miller.
Miller’s position and authority as owner of a licensed DME provider
“‘involve[d] the type of complex, situation-specific decisionmaking that is given
considerable deference precisely because it cannot be dictated entirely by, or
monitored against, established protocol.’” Ollison, 555 F.3d at 167 (quoting
United States v. Tiojanco, 286 F.3d 1019, 1021 (7th Cir. 2002)). Here, the
established protocol of the government insurance programs depended upon the
honesty and forthrightness of the DME provider in its claim submissions. By
granting Miller a license to provide durable medical equipment, the government
entrusted her to provide good faith, accurate information in seeking
reimbursement from Medicare and Medicaid. Miller’s success in exploiting the
lack of government monitoring vividly demonstrates that her position “provide[d]
the freedom to commit a difficult-to-detect wrong,” which is the “primary trait”
of one who holds a position of trust. United States v. Brown, 7 F.3d 1155, 1161
(5th Cir. 1993) (quoting United States v. Hill, 915 F.2d 502, 506 (9th Cir. 1990)
(internal quotation marks omitted).4
4
Miller’s citation of cases from our sister circuits is not availing. She cites, for example,
United States v. Hayes, in which the Eighth Circuit reversed the enhancement of a defendant
who submitted false Medicaid claims on behalf of a home care provider. 574 F.3d 460, 481 (8th
Cir. 2009). The Hayes court recognized that the Fifth Circuit, along with “the majority of our
sister circuits that have addressed the question have held that health care providers who
defraud Medicaid or Medicare may be subject to the abuse-of-trust enhancement.” Id. at 480
(citing Gieger, 190 F.3d at 663, 665). It pointed out the Eleventh Circuit’s outlier position
holding that, “as a matter of law, a Medicaid-funded health care provider does not occupy a
position of trust vis-à-vis Medicaid.” Id.; see United States v. Williams, 527 F.3d 1235, 1251
(11th Cir. 2008) (“It could not have been intended that § 3B1.3 apply in every case where the
defendant receives pecuniary gain by lying to the government.”). But the Eighth Circuit
explicitly rejected that position, and instead held that “an employee of a
Medicaid-funded . . . provider . . . may occupy a position of trust.” Hayes, 574 F.3d at 481.
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B. Facilitation of the Offense
As for the second element of the enhancement, we ask “whether the
defendant occupied a superior position, relative to all people in a position to
commit the offense, as a result of her job.” Kay, 513 F.3d at 459 (quotation
omitted). Miller offers no argument that her position did not facilitate the
commission of the offense; nor could she, since it was her position as the owner
of a DME provider that enabled her to defraud the government insurance
programs with such ease. The district court’s application of the § 3B1.3
enhancement for abuse of a position of trust is affirmed.
II. Obstruction of Justice
During the presentence investigation, Miller omitted two pieces of
information from her personal financial statement. Specifically, Miller failed to
disclose that she had previously filed for bankruptcy and that during 2005 and
2006 she earned between $4,500 and $5,500 per month as a hairstylist. Based
on these omissions, the district court applied a two-level sentencing
enhancement for obstruction of justice under U.S.S.G. § 3C1.1. Section 3C1.1
provides:
If (A) the defendant willfully obstructed or impeded, or
attempted to obstruct or impede, the administration of
justice with respect to the investigation, prosecution, or
sentencing of the instant offense of conviction, and (B)
the obstructive conduct related to (i) the defendant’s
offense of conviction and any relevant conduct; or (ii) a
closely related offense, increase the offense level by 2
levels.
Miller argues that the enhancement was erroneously applied because the district
court made no finding of willful obstruction, and because the omitted
information was not material to sentencing.
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We can reject Miller’s latter argument because, for § 3C1.1 purposes,
“material” information is that which “if believed, would tend to influence or affect
the issue under determination.” U.S.S.G. § 3C1.1 cmt. n.6 (emphasis added).
Although the omitted financial data may not have had any actual effect on
Miller’s fine or restitution amounts, it is certainly the kind of information which
would “tend to influence” those determinations. See, e.g., United States v. Dupre,
117 F.3d 810, 825 (5th Cir. 1997) (“A statement to a probation officer concerning
one's financial resources will obviously affect the officer’s determination of
ability to pay.” (quotation omitted)). There is no basis to deem the omitted
information not material when it did not have, but was the kind of information
which could have had, an influence on the relevant sentencing determinations.
See United States v. Juarez-Duarte, 513 F.3d 204, 210-11 (5th Cir. 2008)
(recognizing the applicability of the obstruction enhancement in either scenario).
Miller also contends that her errors were the result of confusion and
mistake, and did not amount to a willful obstruction of justice. She argues that
the district court, which expressly acknowledged her confusion, applied the
enhancement for statements that were merely incorrect, without making the
requisite mens rea finding. To support the enhancement, the court stated:
There was some confusion that has been mentioned
through testimony about Ms. Miller’s understanding of
what she thought she was supposed to do, compared to
what Probation was going to do in listing some of this
information. But I think that there is sufficient
evidence here, confirmed by testimony, that the
obstruction should apply. There was no doubt some
incorrect information provided. The bankruptcy
omission, the other job. I find those items to be
material and relevant to the amount of fine or
restitution that could be paid. So I think that the
obstruction of justice is correct—the obstruction of
justice enhancement is correct.
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Application note 2 to § 3C1.1 states that “the court should be cognizant
that inaccurate testimony or statements sometimes may result from confusion,
mistake, or faulty memory and, thus, not all inaccurate testimony or statements
necessarily reflect a willful attempt to obstruct justice.” U.S.S.G. § 3C1.1 cmt.
n.2. We have counseled district courts to “carefully consider whether the
defendant has engaged in [obstructive] behavior in a conscious and deliberate
attempt to obstruct or impede the administration of justice.” United States v.
Greer, 158 F.3d 228, 239 (5th Cir. 1998).
We also find instructive the Supreme Court’s decision in United States v.
Dunnigan. In that case, the Court addressed an obstruction enhancement in a
related context—when the defendant has allegedly perjured herself through trial
testimony. 507 U.S. 87 (1993). It stated:
[I]f a defendant objects to a sentence enhancement
resulting from her trial testimony, a district court must
review the evidence and make independent findings
necessary to establish a willful impediment to or
obstruction of justice, or an attempt to do the same,
under the perjury definition we have set out. When
doing so, it is preferable for a district court to address
each element of the alleged perjury in a separate and
clear finding. The district court’s determination that
enhancement is required is sufficient, however, if, as
was the case here, the court makes a finding of an
obstruction of, or impediment to, justice that
encompasses all of the factual predicates for a finding
of perjury.
Id. at 95 (citations omitted); id. at 94 (defining perjury as “false testimony
concerning a material matter with the willful intent to provide false testimony,
rather than as a result of confusion, mistake, or faulty memory” (emphasis
added)). Although Dunnigan addressed trial testimony, rather than statements
given during a presentence investigation, the principle it sets forth—that a
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district court should make “independent findings” to establish a willful
obstruction—is relevant.
The district court’s findings in this case do not include an explicit finding
of willfulnessSSand they need not. See, e.g., id. at 95; see also United States v.
Como, 53 F.3d 87, 89 (5th Cir. 1995) (affirming an obstruction-of-justice
enhancement where the district judge expressed a belief that the defendant “was
[not] totally candid and truthful”). But neither do they appear to encompass the
factual predicates of a willful false statement. The only finding arguably
relevant to willfulness is that there was “some incorrect information provided.”
That some information was “incorrect” does not mean that Miller knew the
correct information and intentionally withheld it in an attempt to frustrate the
investigation.
Furthermore, the court here made an affirmative finding of “some
confusion” on Miller’s part, which is precisely the situation that application note
2 warns against. U.S.S.G. § 3C1.1 cmt. n.2 (“[T]he court should be cognizant
that inaccurate . . . statements sometimes may result from confusion . . . .”).
That the district court found Miller to have been confused about “what she was
supposed to do” renders us unable to discern whether it affirmatively found her
to have acted willfully. Lacking certainty on the present record that the district
court actually found Miller to have willfully omitted information, we must vacate
the enhancement and remand the case for resentencing. In its discretion, the
district court may opt to further develop the record on remand.
CONCLUSION
For the foregoing reasons, the enhancement for abuse of a position of trust
is AFFIRMED, the enhancement for obstruction of justice is VACATED, and the
case is REMANDED for resentencing.
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Garwood, specially concurring.
I concur in the result. I join in that portion of the opinion dealing with
obstruction of justice. I also join in most of the opinion respecting abuse of
position of trust. The undisputed evidence shows as a matter of law that Miller
fraudulently represented that the medical certificates of necessity were genuine,
when in fact they were fraudulent as she well knew and were fraudulently
provided to Miller by the doctor signing them. I believe this is sufficiently
analogous to the situations described in application note 3 to § 3B1.3 U.S.S.G.
to warrant application of this enhancement. I would not go beyond that.*****
*****
The evidence shows that due to the volume of claims Texas Medicaid
makes no investigation or specific reliance with respect to any of these claims,
but simply pays them if they are facially in order. That is essentially all that the
Medicaid representative’s testimony shows. But the Medicaid system does
require that there be a physician’s certificate of medical need. No such judgment
by the provider is called for. USA v. Gieger, 190 F.3d 661 (5th Cir. 1999), is not
in point. It involved a situation where the regulations did not call for a
certificate by a physician, and the ambulance company had its paramedics and
emergency medical technicians certify (fraudulently) that the patients were not
ambulatory.
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