Government Failed to Meet Its Burden of Proof With Respect to Loss Amount in Health Fraud Case

United States v. Jones, No. 05-30942 (5th Cir. Jan. 16, 2007) (Jones, Smith, Stewart)

Jones and Clark were convicted of health care fraud (18 U.S.C. § 1347) for failing to notify a fiscal intermediary that two Medicare providers with which they were involved were "related" for purposes of Medicare reimbursement regulations. The appeal dealt with the district court's findings on loss amounts for purposes of guideline enhancements and restitution. The defendants won:

We vacate the loss enhancement determined by the district court because the government failed to meet its burden of proof to establish the amount of loss suffered by Medicare as a result of Jones’s and Clark’s criminal behavior. The government presented no evidence on the following requisite facts: the profit factor, if any, Jones and Clark gained by failing to disclose the relation between Riverbend and Health One; whether Jones and Clark provided services to Riverbend; and a comparable facility to determine the reasonableness of management and consulting fees paid to Health One, Jones, and Clark. Accordingly, the district court may not apply any loss enhancement on re-sentencing. For these reasons, we VACATE the sentence and restitution orders of Jones and Clark, and REMAND this case to the district court for re-sentencing not inconsistent with this opinion.

The opinion is pretty fact-specific, but if nothing else it serves as a reminder that the Government has a burden of proof when it comes to guideline calculations, and a court can't simply rely on conclusory statements in a PSR that do little more than parrot the unsworn allegations of the prosecutor when it comes time to make findings on disputed guideline application issues.

You might also want to take note of footnote 5 in the opinion, which seems to hold that Booker did not do away with the Ex Post Facto prohibition on applying guidelines that are more serious than those in effect at the time of the offense:

Section 2F1.1 has been replaced by § 2B1.1; however, the probation officer properly applied the more favorable 1997 guidelines. See United States v. Harms, 442 F.3d 367, 379 n.7 (5th Cir. 2006).