and Submitted April 12, 2019 Pasadena, California
from the United States District Court for the Central
District of California D.C. No. 2:16-cr-00038-DOC-1 David O.
Carter, District Judge, Presiding
Carlton F. Gunn (argued), Kaye McLane Bednarski & Litt,
Pasadena, California, for Defendant-Appellant.
Creque O'Neill (argued) and Byron McLain, Assistant
United States Attorneys; Lawrence S. Middleton, Chief,
Criminal Division; Nicola T. Hanna, United States Attorney;
United States Attorney's Office, Los Angeles, California;
Before: Richard A. Paez and Richard R. Clifton, Circuit
Judges, and Morrison C. England, Jr., [*] District Judge.
panel reversed convictions for aggravated identity theft (18
U.S.C. § 1028A(a)(1)), affirmed convictions for health
care fraud (18 U.S.C. § 1347) and illegal remunerations
for health care referrals (42 U.S.C. § 1320a-7b(1)(A)),
and remanded for resentencing, in a case in which the
defendant, who owned and operated acupuncture and massage
clinics, engaged in a fraudulent Medicare-billing scheme with
physical therapy companies.
for plain error, the panel wrote that because the evidence of
actual knowledge was overwhelming, it did not need to
determine whether the district court erred by giving a
deliberate-ignorance instruction on the knowledge element of
health care fraud.
panel held that even reviewing de novo, none of the
defendant's arguments regarding the sufficiency of the
evidence to support the illegal-remunerations convictions
warrants reversal. The panel held that there was sufficient
evidence for the jury to conclude (1) that patient referrals
were one purpose for the kickbacks, (2) that the defendant
referred the patients' Medicare information to the
physical therapy companies, and (3) that the defendant
received kickbacks for arranging the furnishing of services
with the physical therapy companies. The panel held that any
error in omitting the "furnishing of services"
language in the jury instruction was harmless.
panel reversed the aggravated identity theft convictions
because the defendant did not "use" the
patients' identities within the meaning of § 1028A,
where neither the defendant nor the physical therapists
attempted to pass themselves off as the patients. The panel
held that United States v. Osuna-Alvarez, 788 F.3d
1183 (9th Cir. 2015), forecloses the defendant's argument
that the "without lawful authority" element of
aggravated identity theft was not satisfied because the
patients voluntarily provided their information.
panel held that the district court did not err in applying
Sentencing Guidelines enhancements for the defendant's
obstruction of justice and aggravating role in the offense.
Hong owned and operated acupuncture and massage clinics. He
provided the Medicare-eligibility information and identities
of his clinics' patients to physical therapy companies.
Those companies would then submit claims to Medicare seeking
payments for physical therapy treatments that had not been
provided. The physical therapy companies paid a majority of
the funds they received to Hong, who the government
successfully prosecuted for health care fraud and related
appeals his jury convictions for health care fraud in
violation of 18 U.S.C. § 1347, illegal remunerations for
health care referrals in violation of 42 U.S.C. §
1320a-7b(b)(1)(A), and aggravated identity theft in violation
of 18 U.S.C. § 1028A(a)(1). He also challenges the
district court's calculation of the United States
Sentencing Guidelines ("U.S.S.G.") advisory range
(i.e., the "advisory sentencing guidelines range").
We have jurisdiction pursuant to 18 U.S.C. § 3742(a) and
28 U.S.C. § 1291. We reverse the convictions for
aggravated identity theft and remand for resentencing. On all
other grounds we affirm.
trial, the government presented witnesses who had
participated in the Medicare billing scheme and been
separately charged as "co-schemers" (Joseff Sales,
Eddieson Legaspi, and Danniel Goyena). The government also
called as witnesses four patients who had received treatment
at Hong's clinics; two federal investigators; a Medicare
claims-processing expert; and a man who had coordinated a
similar scheme with Hong's help (Byong Min). The
government, with these witnesses and documentary evidence,
established the following facts.
owned and operated three massage and acupuncture clinics in
Southern California under the company names CMH Practice
Solution, Hong's Medical Management, and HK Practice and
Solution, Inc. Hong made arrangements with outpatient
physical therapy companies, RSG Rehab Team, Inc.
("RSG") and Rehab Dynamics, Inc. ("RDI"),
wherein he would provide the infrastructure of a clinic and
they would bill Medicare. Unlike Hong and his clinics, as
physical therapy companies, RSG and RDI had Medicare provider
numbers that allowed them to submit claims for payments.
provided the clinic space, a receptionist, massage
therapists, acupuncturists, drivers, and patients who were on
Medicare. The patients received massage and acupuncture
treatments, but essentially no physical therapy. The patients
did not pay for any treatments. They provided their Medicare
identification information to the clinics and believed that
Medicare would pay for the massages. Medicare does not pay
for massages or acupuncture.
RDI physical therapists used the patients' Medicare
information to submit claims to Medicare for physical therapy
services. Hong instructed the therapists to bill Medicare for
four and later five units per patient per date of visit
(where a unit is 15 minutes of service) in order to make more
money. RSG and RDI paid Hong's companies 56% of the
payments they received from Medicare.
relationship with RSG began when he asked RSG to
"back-bill" Medicare for physical therapy
treatments that had not been provided in the past. Sales, a
physical therapist for RSG, testified that when he went to
Hong's clinics he "almost never" provided
physical therapy treatments. Legaspi, a physical therapist
for RDI, testified that he only met with about half of the
patients for whom he prepared claims. Legaspi observed that
"about [one] hundred percent" of the patients
received acupuncture or massages from Hong's employees
"as opposed to any form of physical therapy." When
therapists asked Hong about providing patients with more
physical therapy, Hong told them the patients prefer massages
and might stop coming to the clinics if made to exercise.
similarly testified that they received little to no physical
therapy services. They received "maybe 5 to 10
minutes" of physical therapy compared to approximately
"40 to 50 minutes" of massage treatment each time
they went to the clinic. The patients who testified learned
of the clinics through family or people in their
neighborhoods, not through their doctors. They went to
Hong's clinics because of pain, and they wanted the
massage or acupuncture treatments.
this scheme, thousands of false claims were submitted to
Medicare for physical therapy services between May 2009 and
November 2013. Medicare paid a little over $2.9 million, of
which Hong received just over $1.6 million. Hong received
checks for his share of the Medicare payments at least once a
also taught Min how to operate massage clinics and bill
Medicare for physical therapy. When Min learned he was being
investigated for fraud, he reached out to Hong, and Hong
coached him to lie to investigators. Min testified that Hong
told him to say that after the patients received physical
therapy treatment, he would just provide acupuncture or
massage treatment as an "extra service." Min also
arranged for Hong to reassure the president of Min's
physical therapy clinic, Julian Yniguez, that nothing would
come of the investigation. Cooperating with investigators,
Yniguez recorded his conversation with Hong. Min ultimately
pled guilty to health care fraud and illegal remunerations in
a separate case.
federal investigators also recorded an interview with Hong,
during which Hong said he knew acupuncture and massages could
not be billed to Medicare. Hong agreed with the investigators
that he was at his clinics "every day."
the government rested, Hong moved for acquittal on all counts
pursuant to Federal Rule of Criminal Procedure 29, arguing
insufficient evidence. The district court denied the motion.
Hong did not present any witnesses.
jury returned a guilty verdict on all counts: eight counts of
health care fraud (Counts 1-8) (18 U.S.C. § 1347), nine
counts of illegal remunerations (i.e., kickbacks) (Counts
9-17) (42 U.S.C. § 1320a-7b(b)(1)(A)), and two counts of
aggravated identity theft (Counts 18-19) (18 U.S.C. §
sentencing, the district court calculated an offense level of
30 and a criminal history category I, which meant the
advisory sentencing guidelines range was 97-121 months, in
addition to a mandatory consecutive 24-month sentence for the
aggravated identity theft convictions. See 18 U.S.C.
§ 1028A(a)(1). Relevant here, in reaching that range the
district court applied a four-level role enhancement under
U.S.S.G. § 3B1.1(a) because Hong was an "organizer
or leader" in criminal activity involving five or more
participants. In addition to Hong, the district court found
that Sales, Legaspi, Min, and Goyena were also participants
in the scheme and recognized that there may have been others.
The district court also acknowledged that another person
named as a co-schemer in the indictment, Marlon Songco, had
pled guilty. The district court also applied a two-level