U.S. v. Krishnaswami Sriram 05-2752.  The defendant, a cardiologist who had billed Medicare some $17 million over a five-year period, pleaded guilty to health care fraud and tax fraud. The defendant admitted having received "substantial payments" for fraudulent claims (estimated in the presentence investigation report to be between $5 and $10 million) submitted to health insurers and having defrauded the government of more than $550,000 in income tax. After a 13-day sentencing hearing, the district judge threw up his hands and imposed an absurdly light sentence of five years’ probation for both the health fraud and the tax fraud (the sentences to run concurrently) plus restitution of $1,258. 

The government appeals arguing that the district judge committed two fatal sentencing errors. He miscalculated the loss caused by the defendant’s fraud, underestimating it by at least a factor of a thousand, and he imposed a sentence that would have been unreasonable even if his calculation of the loss had been defensible. 

The judge ruled that the only loss the government had proved was the face amount of two checks that the defendant admitted having received for medical services he hadn’t performed. He did not admit in the plea agreement to a specific amount of loss that his frauds had inflicted on the insurers, but it is inconceivable that the amount was as slight as the district judge thought. 

The government’s expert witness, who tried to add up the fraudulent payments that the defendant had received, did commit errors.  Because of the errors committed by the government’s expert, the judge found himself unable to calculate the exact amount of fraudulent payments that the defendant had received. The inability was genuine, but did not justify the judge’s loss calculation.

Suppose the evidence presented at a sentencing hearing shows that the loss inflicted by the defendant’s crimes was no less than $1 million or more than $5 million but it is impossible to be more specific. Then for sentencing purposes the estimate of loss should not be zero, which is the implication of the district judge’s approach in this case; it should be, at the very least, $1 million. United States v. Radtke, 415 F.3d 826, 842-43 (8th Cir. 2005); United States v. Chichy, 1 F.3d 1501, 1509-10 (6th Cir. 1993).

Although the evidence presented at the sentencing hearing would have supported a finding that the defendant had caused a total loss of at least $5 million, and although the judge’s finding that the proven loss was only $1,258 was not just clearly erroneous but incomprehensible except as a consequence of confusing a point with a range, the government is willing to concede that the judge could have found that the loss was as little as $1.4 million. But a finding of any smaller loss would be clearly erroneous, and so on remand $1.4 million must be the floor for the judge’s reconsideration of the amount of loss.

The judge dipped far below even his erroneously calculated guidelines range to take account of what he considered to be mitigating factors.  But that a defendant spends heavily on lawyers is not a mitigating factor. It would not only encourage overspending; it would be double counting, since the pricier the lawyer that a defendant hires, the less likely he is to be convicted and given a long sentence.

In conclusion, in demoting the federal sentencing guidelines from mandatory to advisory status, the Booker decision did not authorize sentencing judges to pick any sentence within the applicable statutory sentencing range that strikes their fancy. Federal sentencing remains cabined by the duty first to determine the guidelines range and then to pick a sentence, whether inside or outside that range, that is consistent with the sentencing factors that 18 U.S.C. § 3553(a) lists as proper considerations in sentencing. E.g., United States v. Roberson, 474 F.3d 432, 435-36 (7th Cir. 2007); United States v. Parker, 462 F.3d 273, 276 (3d Cir. 2006).

Here, the district judge stumbled at both steps, as well as in finding that one of the victims of the defendant’s fraud was not a health insurer.  As such, this judgment is reversed and the case remanded for resentencing.

For guidance on remand we repeat that any loss estimate lower than $1.4 million would be clear error inviting summary reversal and that most of the mitigating factors that persuaded the district judge to sentence below the applicable guidelines range were irrelevant and must not influence the sentence that he imposes on remand. The defendant committed fraud on a large scale and should be punished accordingly.

REVERSED AND REMANDED

For the full opinions visit the 7th Circuit Court of Appeals Web Site.

For more about attorney Michael J. Petro, visit www.mjpetro.com .

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