X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Howard Douglas Austin and his wife owned and operated home health agencies (HHAs) in Lafayette and Baton Rouge, La. Through the HHAs, they provided services to Medicare beneficiaries. Medicare paid the HHAs’ costs each year on an estimated basis, using historical and periodically updated data. At the end of each year, the HHAs reported their actual costs. If those costs exceeded the amount already paid, the HHAs would be reimbursed. But if the HHAs were overpaid, Medicare sought reimbursement. Howard filed cost reports on behalf of the HHAs in 1997 and 1998 that included improper expenses and misrepresented actual costs. For example, in 1997 a cost report reflected employee bonuses of $322,910 which had not been paid, and pension plan benefits of $667,939 which had not been funded. However, the HHAs funded pension plan benefits in the amount of $643,388 within six to 12 weeks after the 1997 deadline for reimbursable expenditures. Howard requested an extension to pay costs claimed on the 1998 report, but Medicare denied the request. The HHAs received a Notice of Medicare Program Reimbursement, which stated that Medicare was seeking reimbursement of more than $1.7 million. Medicare sent the notice in January 2000. A few months later, in May 2000, Medicare discovered Howard’s fraud. In February 2000, before Medicare discovered the fraud but after Howard received the reimbursement notice, Howard directed the HHAs to initiate Chapter 11 bankruptcy proceedings. The purpose of the bankruptcy proceedings was to propose a plan to repay Medicare. More than a year later, to obtain approval of the reorganization plan, Howard offered to pledge personal assets of more than $2.8 million. Authorities accepted his offer and confirmed the plan for reorganization in July 2001. The plan included repaying Medicare 100 percent of all overpayments. In 2004, Howard pleaded guilty to committing health-care fraud in violation of 18 U.S.C. �1347. By May 2005, when Howard was sentenced, more than $1.5 million had been repaid to Medicare through Medicare’s withholding of cost reimbursements to the HHAs for services performed on an ongoing basis. Moreover, assets worth more than the amount owed secured the remainder of the balance still outstanding. At sentencing, Howard asked the court to reduce his sentence based on the repayments and assets pledged. Howard argued that regardless of whether the court applied the 2004 U.S. Sentencing Guidelines or the 1998 guidelines, the pledged assets and repayments reduced the amount of loss. Howard also argued that under either version of the guidelines, the $643,388 in pension plan benefits funded before detection of the offense should also decrease his liability. The district court rejected Howard’s arguments, concluding that the pledged assets and repayments did not reduce the loss under either the 2004 or 1998 guidelines. The district court determined the loss based on the improper and untimely costs reported, which totaled $2,020,653.60. The district court used the 1998 guidelines and calculated an advisory sentencing range of 24 to 30 months based on a total offense level of 17. The district court sentenced Howard to 27 months imprisonment, restitution of $2,020,653.60 “with credit for any payments previously made,” a fine of $50,000, and an assessment of $100. Howard appealed. HOLDING:Affirmed in part, vacated and remanded in part. Howard, the court stated, is not entitled to a credit against his required restitution for his pledge of assets to pay the remaining debt, because Howard did not pledge assets before Medicare discovered the offense. Howard argued that under the guidelines, he should get a lighter sentence, because he caused the HHAs to initiate bankruptcy proceedings for the purpose of proposing a plan to repay Medicare. But the court found his actions insufficient, representing at most a good-faith intent or promise to repay Medicare. Thus, the court held that the district court properly concluded that under the 2004 Guidelines, the post-detection repayments and pledge of assets did not reduce the loss. The district court found Medicare’s loss to be $2,020,653.60 as a result of Howard’s fraud. Howard contends that the court erred in failing to give him credit for $643,388 of pension plan benefits the HHAs funded in August and October of 1998. The failure to recognize this credit during the sentencing proceedings resulted in a total offense level of 17 rather than 16 and restitution in the amount of $2,020,653.60 rather than $1,377,265.6. Howard funded the $643,388 long before the government detected his fraud, and the government concedes that these pre-detection payments would have reduced the loss if Howard timely objected to the miscalculation. The court concluded that even if Howard failed to preserve the error, reversal is required. When a defendant is ordered to pay restitution in an amount greater than the loss caused, the error affects substantial rights as well as the fairness and integrity of the judicial proceeding, the court stated in vacating the order of restitution and remanding for resentencing. OPINION:Owen, J.; Garza, Prado and Owen, J.J.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.