UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
BRIEF FOR APPELLANT
UNITED STATES OF AMERICA, Plaintiff-Appellee,
xxxxxxxxx xxxxxxxx, Defendant-Appellant.
The district court had jurisdiction over this case pursuant to 18 U.S.C. § 3231. The notice of appeal having been filed within the ten-day period of Fed. R. App. P. 4(b), this Court has jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a)(4).
ISSUES PRESENTED FOR REVIEW
I. Whether the district court should have enhanced Ms. xxxxxx sentence for being an "organizer, leader, manager, or supervisor" where the government's evidence suggested only that Ms. xxxxxxx worked with one other person, and not in a managerial role, in submitting false bills to Medicaid and Medicare.
II. Whether the district court improperly enhanced Ms. xxxxxxx's sentence when it used the same conduct to enhance her sentence for both "more than minimal planning" and being a "manager or supervisor."
III. Whether the district court erred in setting restitution at $100,506 where it merely set the restitution amount at the government's loss and did not consider Ms. xxxxxxx's ability to pay as required by statute.
STATUTES AND REGULATIONS
Pertinent statutes and regulations are contained in the addendum to this brief.
STATEMENT OF THE CASE
A. Nature of the Case, Course of Proceedings, and Disposition in the Court Below
On November 28, 1995, federal agents executed a search warrant on the offices of Urgent Home Health Care, Inc. ("Urgent Home Health") in Washington, D.C., seizing patient care records and Medicare and Medicaid billing records. The owners and directors of Urgent Home Health, Pauline Ngo xxxxxxx and Pierre L. Yopa, were subsequently arrested on charges of making false claims against the United States. (App. 16-17).1
On March 28, 1996, a grand jury returned an eighteen-count indictment against Pauline Ngo xxxxxxx and xxxxxxx charging: (Count 1) conspiracy to defraud the government in violation of 18 U.S.C. § 286; (Counts 2-7) making false claims against Medicare in violation of 18 U.S.C. §§ 287 and 2; (Counts 8-13) making false claims against Medicaid in violation of 18 U.S.C. §§ 287 and 2; and (Counts 14-18) mail fraud in violation of 18 U.S.C. §§ 1341 and 2.2 (App. 18-34). After a six-day jury trial, the jury returned verdicts of guilty on each of the seventeen counts against Ms. xxxxxxx and Mr. Yopa. (9/16/96 Tr. 1027-35).
A Presentence Investigation Report was ordered and prepared. (PSR 1-13). At a December 9, 1997, sentencing hearing, Judge James Robertson sentenced Ms. xxxxxxx and Mr. Yopa to 27 months' imprisonment and three years' supervised release for each of the seventeen counts, the sentences to run concurrently. (App. 36-37; 12/9/96 Tr. 21). The court ordered $100 special assessment for each count ($1,700 total) and restitution in the total amount of
$100,506 ($35,636 to Medicare and $64,870 to Medicaid). (App. 38; 12/9/96 Tr. 21-22).
B. Statement of Facts
Urgent Home Health is a home health care agency started in September 1994 and owned and operated by Pauline Ngo xxxxxxx and Pierre Yopa. (9/12/96 Tr. 863-64). The company employs nurses and home health aids to evaluate home-bound patients and provide medical and physical care services according to a "plan of care" authorized by the patient's doctor. Fees for these services are paid by Medicaid and Medicare for qualifying individuals. (9/9/96 Tr. 143-46, 150; 9/10/96 374-77; 9/11/96 Tr. 12-15).
For each home visit, the nurse making the visit would complete a visit and payroll record. (9/9/96 Tr. 151-53; 9/10/96 Tr. 319-21). The record contained patient information, such as patient name, date and time of visit, and vital statistics. The payroll portion of the record listed the time of the visit and was used as a time sheet for nurse payroll. (9/10/96 Tr. 319-21; 358-61). These records would then be used by Urgent Home Health as the basis for billing Medicaid and Medicare for home visits. (9/10/96 Tr. 362).
1. The Government's Case
As its principal evidence, the government introduced records of billings to Medicare and Medicaid by Urgent Home Health for nursing visits that were not supported by the requisite nursing notes. (9/11/96 Tr. 639-53, 656-67).
The government also put on testimony by two nurses who had worked for Urgent Home Health stating that Ms. xxxxxxx had directed nurses not to visit patients as often as called for in the patient plans of care and then to falsify nursing records for visits not made. (9/10/96 Tr. 322-26, 411-13).
At sentencing, the district court increased Ms. xxxxxxx's offense level two points for "more than minimal planning" pursuant to U.S.S.G. § 2F1.1(b)(2). (12/9/96 Tr. 20). The court further enhanced her offense level by two points pursuant to U.S.S.G. § 3B1.1(c) for her role as a manager or supervisor. In ruling on this enhancement, the court found:
Well, she clearly was, at the very least, a manager or supervisor. There was at least more than one participant other than Ms. xxxxxxx herself. The testimony is that she was, in fact, a manager of the enterprise that was found guilty of defrauding Medicare.
(12/9/96 Tr. 17-18).
The court further imposed a restitution order in the amount of $100,506, although noting that Ms. xxxxxxx's financial status would necessitate that she "secure employment upon release to begin paying [her] restitution payments . . . ." (12/9/96 Tr. 22).
SUMMARY OF ARGUMENT
The district court relied on the wrong factors in finding that Ms. xxxxxxx was a "manager or supervisor" under the Sentencing Guidelines and enhancing her sentence on that basis. The Guidelines require that a person manage or supervise at least one other and that the other person be criminally culpable for the offense. Here, the government's evidence suggests that Ms. xxxxxxx worked with her co-defendant, Pierre Yopa, in submitting false Medicare and Medicaid claims. However, there is no indication that either of them "managed or supervised" the other. There were no others that could be held criminally culpable for this offense.
The district court's sentencing enhancements for "more than minimal planning" and for Ms. xxxxxxx's "manager or supervisor" role double count the same conduct. If this Court upholds the "manager or supervisor" enhancement, it should instruct the district court not to apply the enhancement for "more than minimal planning."
The district court further erred in setting a restitution amount for Ms. xxxxxxx based solely on the amount of the government's loss and not considering Ms. xxxxxxx's financial condition. The restitution statute requires that the court consider a defendant's financial resources and needs before setting an amount. There is nothing in the record below to indicate the district court followed these requirements.
I. THE DISTRICT COURT ERRED IN ENHANCING MS. xxxxxxx'S OFFENSE LEVEL FOR BEING AN "ORGANIZER, LEADER, MANAGER OR SUPERVISOR" UNDER THE SENTENCING GUIDELINES BECAUSE MS. xxxxxxx DID NOT MANAGE ANOTHER CRIMINALLY CULPABLE PERSON
A. Standard of Review
Whether the district court applied the correct legal
standard in determining whether an upward adjustment was warranted for a defendant's role as an "organizer, leader, manager or supervisor" under U.S.S.G. § 3B1.1(c) is a legal question reviewed de novo by this Court. See United States v. Kim, 23 F.3d 513, 516-17 (D.C. Cir. 1994).
Where the proper legal standard was used, this Court gives "due deference to the district court's application of the sentencing guidelines to the facts, and [this Court] accept[s] the district court's findings of fact unless they are clearly erroneous." United States v. Spriggs, 102 F.3d 1245 (D.C. Cir. 1996).
B. The 3B1.1 Enhancement is Not Proper Where Ms. xxxxxxx did Not Supervise Any Other Culpable Person
The Sentencing Guidelines allow for an enhancement of the offense level based on a defendant's role in the offense. Specifically:
(a) If the defendant was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive, increase by 4 levels.
(b) If the defendant was a manager or supervisor (but not an organizer or leader) and the criminal activity involved five or more participants or was otherwise extensive, increase by 3 levels.
(c) If the defendant was an organizer, leader, manager, or supervisor in any criminal activity other than described in (a) or (b), increase by 2 levels.
U.S.S.G. § 3B1.1. The Commentary notes that a defendant must have been an organizer, leader, manager, or supervisor of at least one or more other participants in order to qualify for this enhancement. U.S.S.G. § 3B1.1, commentary n.2. Neither the Guidelines nor the Commentary defines "organizer, leader, manager or supervisor."
Case law in this and other circuits clarifies that § 3B1.1(c) applies only to a person who exercises control over another who is criminally culpable. See United States v. Kelly, 36 F.3d 1118, 1129 n.6 (D.C. Cir. 1994) (citing United States v. DeCicco, 899 F.2d 1531, 1535 (7th Cir. 1990)); United States v. Helmy, 951 F.2d 988, 997 (9th Cir. 1991). Where a defendant exercises control over only unwitting participants or government agents, the enhancement does not apply. See Helmy, 951 F.2d at 997 (remanding to district court where it appeared that defendant managed only unwitting munitions suppliers, shippers, and storage companies); U.S.S.G. § 3B1.1, commentary n.1.
Here, the district court made no findings of fact as to the person Ms. xxxxxxx managed or whether they were criminally culpable. It merely stated that she managed "more than one participant" and that she was "a manager of the enterprise that was found guilty of defrauding Medicare." (12/9/96 Tr. 18). Neither finding shows that the court applied the correct legal standard -- that she managed at least one other criminally culpable person. In fact, the latter finding is not even factually correct as only Ms. xxxxxxx and Mr. Yopa were found guilty of fraud, not the "enterprise," Urgent Home Health.
Nor can the evidence introduced at trial support the district court's abbreviated factual findings and its decision to apply § 3B1.1. Testimony and documentary evidence implicate Pierre Yopa, Ms. xxxxxxx's partner, in the false billings but give no indication that either one managed or supervised the other.3 (9/10/96 Tr. 410; 9/11/96 Tr. 516-19). Other evidence, if credited, shows that Ms. xxxxxxx supervised the director of nursing and, indirectly, the nursing staff. Two nurses testified that Ms. xxxxxxx told them not to visit patients as often as directed by the patient plan of care and then to falsify nursing notes showing that visits had been made. However, the nurses were not involved in any way in billing Medicaid or Medicare. Only Ms. xxxxxxx and Mr. Yopa did the billing. The allegedly false nursing notes were used to update the files for an inspection by the District of Columbia Department of Consumer and Regulatory Affairs, the regulating agency for Medicaid providers. There was no evidence that they were used for false billings. The nurses, therefore, could not be found criminally culpable of the charges here.
The aggravating role enhancement under § 3B1.1(c) should not apply to Ms. xxxxxxx's case where only two equally liable and equally responsible parties were charged with the offense. The background notations to § 3B1.1 explain that this enhancement was intended to address concerns about relative responsibility in criminal enterprises. Because leaders and managers tend to profit more, present a greater danger to the public and are more likely to recidivate, their punishment should be enhanced. U.S.S.G. § 3B1.1, background note. These concerns are not present in Ms. xxxxxxx's case.
II. THE DISTRICT COURT IMPERMISSIBLY DOUBLE COUNTED MS. xxxxxxx'S CONDUCT WHEN IT ADDED SENTENCING POINTS BOTH FOR "MORE THAN MINIMAL PLANNING" AND FOR HER ROLE AS "MANAGER OR SUPERVISOR" IN THE OFFENSE
In the alternative, the enhancement for "more than minimal planning" under U.S.S.G. § 2F1.1(b)(2) should not apply because the enhancement double counts conduct already used to increase Ms. xxxxxxx's sentence for her role in the offense. The district court increased Ms. xxxxxxx's sentence by two levels under the specific offense section of § 2F1.1(b)(2) after finding that the offense involved "more than minimal planning." (PSR 7; 12/9/96 Tr. 20); see U.S.S.G. § 2F1.1(b)(2). The conduct relied on for the specific offense increase -- that Ms. xxxxxxx had submitted multiple fraudulent claims (PSR 7) -- was also necessary for the district court to find that she was a manager or supervisor in that something more than minimal planning (i.e., multiple claims) is involved if one uses others to help in a scheme to submit false claims. Ms. xxxxxxx should not be penalized twice for the same conduct.
The Sixth Circuit has ruled on precisely this issue, finding improper separate enhancements for more than minimal planning under § 2F1.1(b)(2) and for an aggravated role in the offense under § 3B1.1(c). United States v. Chichy, 1 F.3d 1501, 1506-07 (6th Cir. 1993); see United States v. Romano, 970 F.2d 164, 167 (6th Cir. 1992) (holding improper separate enhancements under § 3B1.1(a) and § 2F1.1(b)(2)). In Chichy, the defendants submitted multiple false loan applications in order to obtain FHA insured mortgage loans. The court reasoned that an enhancement for being a manager or supervisor "necessarily requires that the defendant be engaged in more than minimal planning." Chichy, 1 F.3d at 1506. Thus, defendants' conduct in submitting loan applications was used both to enhance their sentences for "more than minimal planning" and as a necessary factor to enhance their sentences for their roles as managers or supervisors. The court found this impermissible as "'[n]othing in the Guidelines or its commentary indicates the Sentencing Commission intended cumulative punishment' for the same conduct." Id. at 1506 (citing Romano, 970 F.2d at 167 (citing United States v. Werlinger, 894 F.2d 1015 (8th Cir. 1990))).4
This Court in a related case has suggested agreement with the holdings in Chichy, Romano, and Werlinger. United States v. Gottfried, 58 F.3d 648, 653 (D.C. Cir. 1995). "The law of this circuit is that when two enhancement provisions of the Guidelines involve separate elements, a defendant's base offense level may be increased by both if the government proves the elements by a preponderance of the evidence." Id. (citing United States v. Hunt, 25 F.3d 1092, 1098 (D.C. Cir. 1994)) (emphasis added). In Gottfried, this Court found that the enhancement for "abuse of trust" and the enhancement for "more than minimal planning" involved separate elements of the offense and, therefore, affirmed the enhancements.
If this Court upholds the sentencing enhancement for Ms. xxxxxxx's role as "manager or supervisor," it should, in order to avoid double counting, remand with instructions not to apply the enhancement for "more than minimal planning."
III. THE DISTRICT COURT ERRED WHEN IT, WITHOUT EXPLANATION, SET THE RESTITUTION AMOUNT AT THE LOSS TO THE GOVERNMENT AND DID NOT CONSIDER MS. xxxxxxx'S ABILITY TO PAY
A. Standard of Review
Discretionary orders of restitution pursuant to 18 U.S.C. § 3663(a)(1)(1995) (amended by Pub. L. No. 104-132 (1996)), are reviewed on appeal for abuse of discretion. United States v. Remillong, 55 F.3d 572, 574 (11th Cir. 1995); cf. United States v. Mastropierro, 931 F.2d 905, 906 (D.C. Cir. 1991) (reviewing for abuse of discretion a fine imposed by district court).
Failure by a defendant to object below to a district court's restitution order does not preclude review. Imposition of a restitution order in violation of the statutory requirements to consider a defendant's financial resources is an illegal sentence amounting to plain error. United States v. Thompson, 113 F.3d 13, 15 (2d Cir. 1997).
B. The District Court is Required by Statute to Consider Ms. xxxxxxx's Ability to Pay Before Setting a Restitution Amount
Pursuant to 18 U.S.C. § 3664(a), a court in determining the amount of restitution must consider (1) the financial resources of defendant, (2) the financial needs and earning ability of defendant, and (3) whether defendant has any dependents. 18 U.S.C. § 3664(a) (1995) (amended by Pub. L. No. 104-132 (1996));5 see U.S.S.G. § 5E1.1, background. Although a district court need not make detailed findings on the record, there must be sufficient indication to assure an appellate court that the district court considered these factors. See Thompson, 113 F.3d at 15 (holding that statement by district court that it had read PSR was not sufficient to support finding that court had considered statutory factors); United States v. Sanders, 95 F.3d 449, 456 (6th Cir. 1996) (remanding to district court for consideration of statutory factors where court had indicated on record only that it was "required" to order restitution); United States v. Remillong, 55 F.3d 572, 576 (11th Cir. 1995) (remanding for new restitution proceedings where record did not support finding that defendant had ability to pay restitution). This court should "not uphold the district court's exercise of discretion if the record is devoid of any evidence that the defendant is able to satisfy the restitution order." Remillong, 55 F.3d at 574 (quoting United States v. Patty, 992 F.2d 1045, 1052 (10th Cir. 1993)).
Here, the district court adopted the restitution amount recommended in the Presentence Report with only a fleeting reference to Ms. xxxxxxx's financial abilities. The court appeared to allow Ms. xxxxxxx to delay making restitution payments until she secured employment upon her release and declined to impose an alternative sanction due to her "financial status." (12/9/96 Tr. 22). The court gave no indication that it had considered Ms. xxxxxxx's financial status in setting the amount of the restitution. Rather, because the court made no mention of how it determined the amount of restitution, it appears that the district court believed it had no discretion to set the restitution at any amount other than the loss to the government.
The evidence before the district court clearly shows that Ms. xxxxxxx could not realistically comply with a $100,506 restitution order. The Presentence Report states that Ms. xxxxxxx is a single mother of four children. Her children live in Cameroon with Ms. xxxxxxx's parents, and she has in the past provided financial support to the family. (PSR 8). Ms. xxxxxxx testified that her parents are older, and her father's health is deteriorating (12/9/96 Tr. 16). Ms. xxxxxxx has no assets (Urgent Home Health's assets were seized by the government), and she has debts totaling approximately $318,000. (PSR 11). Furthermore, she is subject to deportation back to Cameroon, where, presumably, her earning potential will be significantly decreased. (PSR 8-9). Based on these factors, the Presentence Report noted that she does not have the ability to pay "a fine, the costs o[f] incarceration and/or supervision, in addition to her restitution obligation, if ordered by the court." (PSR 11).
Given the abundant evidence of Ms. xxxxxxx's inability to meet a $100,506 restitution order, and given the absence of any statement by the district court on this matter, this Court should remand the case for reconsideration of restitution in compliance with the statutory requirements to consider Ms. xxxxxxx's financial resources and family circumstances.
For the foregoing reasons, Appellant Pauline Ngo xxxxxxx respectfully requests that this Court remand her case to the district court for resentencing with instructions not to enhance her sentence pursuant to U.S.S.G. § 3B1.1 or,in the alternative, not to increase her offense level for "more than minimal planning" pursuant to § 2F1.1(b)(2). Appellant also respectfully requests
his Court to direct the district court to consider her financial resources on reconsideration of its restitution order.
FEDERAL PUBLIC DEFENDER
EVELINA J. NORWINSKI
Assistant Federal Public Defender
625 Indiana Avenue, N.W., Suite 550
Washington, D.C. 20004
Counsel for Appellant Pauline Ngo xxxxxxx
CERTIFICATE OF LENGTH
I HEREBY CERTIFY that the foregoing Brief for Appellant does not exceed the number of words permitted by D. C. Circuit Rule 28(d).
EVELINA J. NORWINSKI
Assistant Federal Public Defender
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on July 28, 1997, two copies of the foregoing Brief for Appellant and one copy of the accompanying Appendix were served by hand on John R. Fisher, Chief, Appellate Section, Criminal Division, United States Attorney's Office, 555 4th Street, N.W., Washington, D.C. 20001.
EVELINA J. NORWINSKI
Assistant Federal Public Defender