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United States v. Sanjar

United States Court of Appeals, Fifth Circuit

November 30, 2017

UNITED STATES OF AMERICA, Plaintiff - Appellee Cross-Appellant

         Appeals from the United States District Court for the Southern District of Texas

          Before JONES, BARKSDALE, and COSTA, Circuit Judges.


         Defendant Main's petition for panel rehearing is GRANTED IN PART and DENIED IN PART. Main's petition for rehearing en banc is DENIED.

         IT IS ORDERED that our prior panel decision, United States v. Sanjar, 853 F.3d 190 (5th Cir. 2017), is WITHDRAWN as to Adam Main, and the following is SUBSTITUTED in its place. The only changes to the prior opinion are in sections V(B), VII(A), and the conclusion.

         The reason Willie Sutton once gave for robbing banks is true of Medicare today: that's where the money is. So it is not surprising that we consider another case alleging a scheme to defraud the multibillion dollar government program. A jury convicted the six defendants of that fraud as well as paying and receiving kickbacks for referrals. Their appeal alleges defects throughout the investigation and prosecution of the case, beginning with the search of the medical office, running through the trial, and ending with the financial obligations imposed as part of their sentence. The government also appeals, objecting to the district court's decision to offset the defendants' restitution liability with any amounts recovered through forfeiture.


         Drs. Mansour Sanjar and Cyrus Sajadi enrolled Spectrum Psychiatric Services P.A., their recently formed community mental-health center, as a Medicare provider in 2006. For the following six years, Spectrum held itself out as providing partial hospitalization program (PHP) care. During that time, Spectrum billed Medicare over $90 million for PHP services.

         PHPs offer intensive treatment to mentally-ill patients, serving as an alternative to traditional hospitalization. To qualify, a patient must be suffering a severe onset of his or her illness; a situation the government's expert describes as a "crisis." Qualifying patients are required to undergo mental-health evaluations within twenty-four hours of admission, see a doctor daily, and receive twenty hours of treatment weekly. Given the intensive nature of PHP care, Medicare reimburses it at a higher rate than alternative treatments.

         That financial incentive led Sanjar and Sajadi to submit what the jury found to be fraudulent bills. The evidence, construed in favor of the government as the jury's verdict requires, showed that the bills were fraudulent in two respects. Patients, although they had a history of mental illness, were not suffering from the acute onsets PHP serves. One patient, for example, testified that at the time she was admitted to Spectrum, she was not experiencing a severe episode of her chronic depression or any other mental-health issues. Spectrum's pattern of PHP care was also at odds with the acute onset that the program covers. Such episodes should be random, but Spectrum cycled patients between PHP and the intensive outpatient program (IOP)-a less intensive treatment with lower reimbursement rates-according to set timelines: ninety days in PHP, then four to six weeks in IOP, at which time the cycle would restart.

         Apart from whether PHP treatment was medically necessary for the patients, the clinic was not providing that level of care. Patient after patient billed as PHP participants testified to never interacting with doctors for more than ten minutes. Instead, they often spent their time at Spectrum watching movies, playing games, listening to music, and socializing. So recreational and diversionary were the services Spectrum provided that one patient described it as a "Mickey Mouse facility."

         Such a scheme, of course, requires patients. This is where three other defendants and the kickbacks come into play. Spectrum's Office Administrator, Shokoufeh Hakimi, oversaw this effort. Hakimi first used Charles Roberts to recruit patients. Roberts, who pleaded guilty and testified at trial, paid group-home operators to send their Medicare-eligible residents to Spectrum. Among those to whom Roberts gave kickbacks were group-home owners Chandra Nunn and Shawn Manney. Roberts paid each $100 per patient every two weeks, which was half of what he earned. Apparently concerned about detection, Nunn required her payments in cash.

         Before long, Nunn's greed overcame her initial timidity. She cut Roberts out of the scheme and began dealing directly with Sanjar, Sajadi, and Hakimi. Her referrals alone spawned $28.5 million in PHP claims for Spectrum. Nunn maintained her steady supply of Medicare beneficiaries by paying residents of her group home to attend Spectrum. She gave payments the way she took them: in cash. A group-home resident testified that Nunn once gave her envelopes full of money, labeled with residents' names, to hand out to other residents attending Spectrum.

         The final defendant, Physician Assistant Adam Main, helped cover up the fraud. Sanjar and Sajadi had him falsify and backdate medical charts to make it appear patients were suffering severe onsets of mental illnesses. One patient's file, for example, lists that he was suffering from major depressive disorder, undergoing daily panic attacks, and relapsing on cocaine. But at trial the patient testified that he was not experiencing any such symptoms when he met with Main, had never before been diagnosed with major depressive disorder, and could not afford cocaine.

         The doctors similarly instructed Head Social Worker Terry Moore, another Spectrum employee who pleaded guilty and testified, to print and affix new dates to prior mental-health evaluations for repeat patients. Sanjar and Sajadi further signed medical charts even when they did not oversee patient evaluations.

         This operation lasted half a decade. Although Medicare paid out nowhere close to the more than $90 million Spectrum sought for PHP reimbursements, it did pay just under $7 million. [1]

         Federal agents began to focus on Spectrum after arresting Roberts for his role as a recruiter in a separate health care fraud scheme. Roberts cooperated and the information he provided about Spectrum launched an investigation that resulted in an indictment charging:

• Sanjar, Sajadi, Hakimi, Main, and Nunn with conspiracy to commit health care fraud, in violation of 18 U.S.C. § 1349 (Count One);
• Four counts of health care fraud under 18 U.S.C. § 1347 tied to some of the conspirators (Counts Two-Five)[2];
• Sanjar, Sajadi, Hakimi, Nunn, and Manney with conspiracy to defraud the United States and pay health care kickbacks, in violation of 18 U.S.C. § 371 (Count Six); and
• Five counts of health care kickbacks under 42 U.S.C. § 1320a-7b(b)(1), (b)(2) tied to some of the conspirators (Counts Seven-Eleven)[3].

         A jury found defendants guilty of all but the kickback charge in Count Nine that applied to Sanjar and Manney. Based on varying assessments of each defendant's role in the offense, the district court sentenced them to terms of imprisonment ranging from 24 to 148 months. Sanjar, Sajadi, and Main were further ordered to pay restitution and forfeit illegal proceeds.


         Sanjar alleges error in the way the government investigated the case, contending that the warrant authorizing the search of Spectrum does not comply with the constitutional requirement that it "particularly describ[e] the . . . things to be seized." U.S. Const. amend. IV.

         We interpret that language to require enough detail in the warrant to allow a reasonable agent to know what items she is permitted to take. United States v. Aguirre, 664 F.3d 606, 614 (5th Cir. 2011). The concern is that the magistrate authorizing the warrant, and not the agents executing it, should be deciding which items may be seized. United States v. Allen, 625 F.3d 830, 834- 35 (5th Cir. 2010) (citing Marron v. United States, 275 U.S. 192, 196 (1927)). Generic language may satisfy this "particularity" requirement if describing a more specific item is not possible. Williams v. Kunze, 806 F.2d 594, 598 (5th Cir. 1986).

         The warrant must further not be overbroad, meaning "there must be probable cause to seize the particular things named in the warrant." United States v. SDI Future Health, Inc., 568 F.3d 684, 702 (9th Cir. 2009). This related but distinct concept flows from the probable cause requirement. Together, the two aspects of the Fourth Amendment require that (1) a warrant provide sufficient notice of what the agents may seize and (2) probable cause exist to justify listing those items as potential evidence subject to seizure. Kunze, 806 F.2d at 598-99 (treating these as separate questions).

         Sanjar's challenge, which mostly objects to the warrant allowing seizure of all patient files, seems to be more about the latter. In terms of the notice the former requires, the warrant authorizes seizure of "documents constituting . . . patient files" as well as those relating to Medicare claims, the PHP program, and Spectrum's finances. That list, even if somewhat generic, provided sufficient notice of what items the agents could take. Aguirre, 664 F.3d at 614 (rejecting a particularity challenge even when the items seized were only the "functional equivalent" of those listed in the warrant); Kunze, 806 F.2d at 598 (rejecting particularity challenge to a seizure of 50, 000 to 60, 000 documents, over 90% of which were client files, because the warrant "specifically authorized" the seizure of those documents). The agents did not seize the patient files because of a judgment call they made when executing the warrant; they seized the files because the magistrate had expressly authorized them to do so. Marron, 275 U.S. at 196.

         The principal question is thus whether the broad authorization to seize all patient files (and other listed categories of documents) was supported by probable cause. The scope of the seizure depends on the scope of the suspected crime. Kunze, 806 F.2d at 598 (explaining that a warrant authorizing seizure of all of a company's records would be lawful when "probable cause exists to believe that an entire business was merely a scheme to defraud, or that all records of a business are likely to constitute evidence"). If the evidence presented to the magistrate provided probable cause of fraud limited to a particular patient or group of patients, the resulting warrant authorizing seizure of all of Spectrum's patient files would be problematic.

         But the magistrate's authorization to seize all of Spectrum's patient files was supported by evidence of pervasive fraud in the PHP program, which was a major part of the clinic's business. The affidavit summarized information from two former Spectrum employees and two patients revealing that (1) patients ended up in PHP because of fees paid to recruiters and patients, not because of physician referrals, and (2) the time the patients spent at Spectrum was spent watching television, playing bingo, and coloring rather than receiving the PHP treatment being billed to Medicare-billings that exceeded $90 million. The information presented to the magistrate thus provided probable cause to conclude that fraud and kickbacks infected the entire PHP program. That evidence of a wide-ranging conspiracy and scheme justified the seizure of patient files, at a minimum those of PHP patients used in the prosecution. Kunze, 806 F.2d at 599 (rejecting argument that authority to seize all client files of tax consultant was overbroad because probable cause supported widespread fraud involving offshore tax shelters and even files relating to onshore transactions that may provide relevant evidence). The district court did not err in declining to suppress the evidence seized pursuant to the warrant.


         Defendants next claim error in how the grand jury indicted the case. We review these claims de novo. United States v. Jones, 733 F.3d 574, 584 (5th Cir. 2013); United States v. Miller, 520 F.3d 504, 512-13 (5th Cir. 2008).


         Sanjar and Nunn contend the two conspiracies listed in the indictment- the first for defrauding Medicare under the specific health care fraud conspiracy statute (18 U.S.C. §§ 1347, 1349); the second for defrauding the government and violating the Anti-Kickback Statute under the general conspiracy statute (18 U.S.C. § 371)-charge a single crime. Such a problem, which courts label "multiplicity, " exists when a defendant is punished twice for the same conduct. United States v. Ogba, 526 F.3d 214, 232-33 (5th Cir. 2008). As this doctrine is derived from the Double Jeopardy Clause, it looks to the Blockburger[4] test asking "whether each provision requires proof of a fact which the other does not." Albernaz v. United States, 450 U.S. 333, 337 (1981). In making that determination, we look not just at the elements of the statutes but also at how the offenses were charged in the indictment and presented at trial. Ogba, 526 F.3d at 234.

         The centerpiece of the health care fraud conspiracy alleged in Count One was the "submitting [of] false and fraudulent claims to Medicare." That can occur independent of any kickbacks paid for referrals. The purpose of the section 371 conspiracy in Count Six, on the other hand, was the payment and receipt of kickbacks. That can occur without the submission of any fraudulent Medicare claims.[5] Section 371 also requires an overt act, which section 1349 does not. We have before held that indictments charging these conspiracies do not pose a multiplicity problem and the same is true of these allegations. Jones, 733 F.3d at 584; see also United States v. Njoku, 737 F.3d 55, 68 (5th Cir. 2013); United States v. Moran, 778 F.3d 942, 964 (11th Cir. 2015).


         Sanjar also alleges the opposite problem, duplicity, for Counts Six, Eight, and Eleven. Duplicity occurs when a single count alleges multiple offenses. Miller, 520 F.3d at 512. A duplicitous indictment is only cause for reversal if the defendant was prejudiced by the duplicity. Id. The most common way such a charge harms a defendant is when it allows a nonunanimous verdict with all jurors finding the defendant guilty but not necessarily of the same offense. Id. at 512-13.

         The duplicity challenge to Count Six is based on a feature we just mentioned: it charges defendants with conspiring to both (1) defraud the government and (2) violate the Anti-Kickback Statute. Although the alleged conspiracy has two objects, the offense charged is a single conspiracy. As far back as 1949, it was "well settled that the conspiracy may contemplate several offenses." Burton v. United States, 175 F.2d 960, 963 (5th Cir. 1949); see also United States v. Duvall, 846 F.2d 966, 975 n.8 (5th Cir. 1988) (labeling the argument Sanjar makes "frivolous").

         Sanjar is, however, correct that Counts Eight and Eleven each charge separate offenses: (1) paying kickbacks and (2) receiving kickbacks. 42 U.S.C. § 1320a-7b(b)(1) (criminalizing receipt of kickbacks); id. § 1320a-7b(b)(2) (criminalizing payment of kickbacks). But the government's theory, reflected in both the indictment and the trial evidence, was that certain defendants paid kickbacks (Sanjar, Sajadi, and Hakimi), whereas others received them (Nunn and Manney). As there was no evidence that Sanjar ever received kickbacks, there is no risk that the jury convicted him of that crime. See United States v. Vernon, 723 F.3d 1234, 1262 (11th Cir. 2013) (holding that a count charging both paying and receiving kickbacks was not cause for reversal when the indictment and trial evidence left no possibility that the duplicity defects led the jury to convict the defendant of the unfitting offense).

         The indictment does not present ...

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