In United States v. Abovyan, No. 19-10676 (Feb. 22, 2021) (William Pryor, Hull, Marcus), the Court affirmed defendant's convictions and sentences for conspiring to commit healthcare fraud, conspiring to possess with intent to dispense controlled substances, and seven counts of unlawfully dispensing a controlled substance.
The alleged healthcare fraud scheme here involved substance abuse treatment centers, whose patients often consisted of individuals from sober homes and halfway houses. Defendant, a physician, was hired on as the medical director of these treatment centers.
Defendant first challenged the sufficiency of the evidence supporting his conviction for conspiracy to commit healthcare fraud. He accepted that a healthcare fraud conspiracy existed, but that the government's evidence was insufficient to prove his knowledge of, and participation in, it. At most, he argued, the government only showed negligent medical practices on his part, and not willful participation in a criminal conspiracy. The Court rejected this argument, reiterating that for a defendant to be found guilty of conspiracy, the evidence need only demonstrate that he was aware of the conspiracy's essential nature, not that he knew all of its details, nor that he was a major player, nor that he had direct contact with other alleged co-conspirators. Additionally, the government's evidence may be circumstantial. Here, the Court found that the government introduced ample evidence to support the defendant's conviction, though said evidence was largely circumstantial.
Second, Defendant challenged the sufficiency of the evidence as to the Controlled Substances Act counts. These counts related to defendant's prescribing of buprenorphine, a Schedule III narcotic that requires a special license and X Number issued by the DEA when being prescribed for addiction treatment. No special license or X Number is needed when prescribing buprenorphine for other things, like pain. Here, Defendant argued that the government failed to prove his buprenorphine prescriptions were not for a legitimate medical purpose or were outside the scope of professional practice. The Court disagreed. It found that while prescribing buprenorphine without an X Number was not a per se violation of the Act, defendant prescribed it to patients for pain/withdrawal when those patients were not experiencing pain/withdrawal, and he provided no medical addiction treatment with the prescription so that his prescriptions did not serve a legitimate medical purpose.
Third, defendant challenged, for the first time, the district court's failure to instruct the jury on the elements of substantive healthcare fraud, which was the object of the healthcare fraud conspiracy charged in Count One. The Court rejected this argument, reasoning that an instruction that omits an element of the offense does not necessarily render a criminal trial fundamentally unfair or unreliable. While such an error has been found to be plain in other cases, it was not so here because the court's instruction referred to the superseding indictment, which itself incorporated the statutory elements of healthcare fraud into the conspiracy charge. Additionally, any omission did not affect the defendant's substantial rights since his theory of defense acknowledged that there was a healthcare fraud scheme.
Fourth, defendant argued that, as to the Controlled Substances Act offenses, the court abused its discretion by declining to give his requested instruction on the difference between criminal and civil liability. The Court found no abuse of discretion because defendant's proposed instruction was not a correct statement of the law.
Fifth, Defendant challenged the court's instructions as they related to the X Number. He argued that the instruction given created strict Section 841(a) liability for the violation of Section 823(g), which contains the licensing requirement for an X Number. The Court disagreed, and found the instruction to be a correct statement of the law.
Sixth, with regard to sentencing, defendant argued that the district court erred in calculating his advisory guidelines range based on intended loss, instead of actual loss. He argued doing so was erroneous because his codefendants' sentences were based on actual loss, thereby creating an unwarranted sentencing disparity by using the higher intended loss when calculating his guidelines range. The Court found no error, since U.S.S.G. 2B1.1 suggests using the greater of actual or intended loss. Additionally, the Court found no unwarranted sentencing disparities because codefendants cooperated and pleaded; they were not similarly situated to defendant.
Seventh, defendant argued that the district court erred in determining the amount of the intended loss because it was not supported by a preponderance of the evidence. He argued that the court failed to make underlying findings as to the scope of the criminal activity that defendant agreed to undertake and the reasonable foreseeability of the loss amount attributed to him. The Court rejected this argument as waived. And, in any event, though the district court did not make individualized findings when determining reasonable foreseeability, an appellate court may affirm if the record otherwise supports the court's determination. The record did so here.
Finally, defendant argued that his Count Two sentence exceeded the statutory maximum penalty. Count Two alleged that defendant conspired to distribute controlled substances spanning Schedules II, III, and IV, each of which carries a different statutory maximum penalty. The jury reached a general verdict for Count Two and did not specify which substance was involved. Defendant argued that therefore, he should have received the most lenient statutory maximum penalty. Because defendant did not raise this issue before the district court, the Court reviewed for plain error. The Court found the error to be plain, but found that it did not affect defendant's substantial rights.
