Health Law Daily 72-month sentence upheld in $15M home health fraud scheme
Thursday, January 18, 2018

72-month sentence upheld in $15M home health fraud scheme

By Victoria Moran, J.D., M.H.A.

The sentence of an employee who ran a home health care company in Illinois was affirmed by the Seventh Circuit after she was convicted of health care fraud and making false statements, with an estimated financial loss to Medicare of $15.6 million. The employee was sentenced to 72 months in prison and 24 months of supervised release, with an additional 18 conditions of supervision. The court found the employee’s arguments related to the calculation of financial loss and unreasonableness of her prison term meritless, and her third argument was waived because the employee failed to object to the proposed term and conditions of her supervised release in writing prior to sentencing as instructed (U.S. v. Gumila, January 16, 2018, Sykes, D.).

Background. The head of clinical operations for Suburban Home Physicians, LLC, (a provider of home medical services to the elderly in the Chicago area) was convicted of (1) overbilling Medicare for medical home visits; (2) billing Medicare for unwarranted skilled-nursing services; and (3) billing Medicare for care-plan oversight services that were not provided. Before sentencing, the government proposed figures for three categories of financial loss, and the probation officer substantiated those figures in the presentence report (PSR) with a total estimated loss to Medicare of $15.6 million. The probation officer recommended a below-guidelines sentence of 84 months in prison, 24 months of supervised release, and 18 conditions of supervision. The employee objected arguing the financial loss should be limited to Medicare payments for the eight patients referenced in the indictment (a $14,449 loss) and a prison sentence of 12 to 18 months.

Sentencing. The sentencing judge determined the evidence established an "overwhelming and massive scheme" to defraud Medicare and rejected the employee’s arguments. He sentenced the employee to 72 months in prison and 24 months of supervised release. He also imposed the 18 conditions of supervision that were recommended by the PSR. Finally, the employee was ordered to pay $15.6 million in restitution.

Appeal. On appeal, the employee raised three issues: (1) the judge miscalculated the financial loss; (2) the 72-month prison term was substantively unreasonable; and (3) the judge committed a procedural error by failing to explain the term and conditions of supervised release.

In order to succeed on her argument that the judge miscalculated the financial loss, the employee had to show the calculation "was not only inaccurate but outside the realm of permissible computations." The employee challenged each category of financial loss and made the general argument that the loss should be limited to the eight patients in the indictment. The Seventh Circuit reviewed the judge’s calculations and found no errors in his approach, noting that the estimates were even on the conservative side and that the judge was not required to limit the loss calculation to the eight patients when the "evidence established a far more sweeping overall fraudulent scheme."

With regard to her argument that the prison term is substantively unreasonable, the court concluded the sentence was less than half the low end of the guidelines range (151 to 188 months) and that the employee gave the court no good reason to overturn the sentence.

Finally, the employee waived her argument that the judge committed procedural error because she failed to object to the conditions or term of the supervised release in her written objections prior to the sentencing hearing. While the employee’s written response to the PSR challenged other factors, she did not object to the term or conditions of the supervised release.

The case is No. 16-3111.

Attorneys: Stephen Chahn Lee, Office of the U.S. Attorney, for the United States. James G. Vanzant (Blaine & Vanzant LLP) for Diana J. Gumila.

Companies: Suburban Home Physicians, LLC

MainStory: TopStory CaseDecisions CMSNews FraudNews HomeNews ProgramIntegrityNews ProviderNews IllinoisNews IndianaNews WisconsinNews

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