United States v. Zehrung , 714 F.3d 628 ( 2013 )

United States Court of Appeals
For the First Circuit
No. 11-1974
UNITED STATES,
Appellee,
v.
DAWN ZEHRUNG,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. John A. Woodcock, Jr., U.S. District Judge]
Before
Howard, Stahl, and Thompson,
Circuit Judges.
Alexandra Deal, with whom Stern, Shapiro, Weissberg & Garin,
LLP, was on brief, for appellant.
Renée M. Bunker, Assistant United States Attorney, with whom
Thomas E. Delahanty II, United States Attorney, was on brief, for
appellee.
April 18, 2013
THOMPSON, Circuit Judge. Dawn Zehrung appeals her 37-
month sentence after pleading guilty to violating the federal
healthcare-fraud statute, 18 U.S.C. § 1347. She raises one issue:
Should the district judge have enhanced her sentence under U.S.S.G.
§ 3B1.3 for abusing a position of trust?1 In what follows, we
explain why a remand for supplemental fact finding is required.
Because there was no trial, we draw the facts primarily
from the presentence report and from the sentencing-hearing
transcript and submissions. See, e.g., United States v. Anonymous
Defendant, 629 F.3d 68, 71 (1st Cir. 2010). Zehrung worked in a
doctor's office in Maine, first as a billing clerk and then as a
billing manager (these are descriptive labels rather than formal
titles, apparently). Her former boss, Robert Grover, D.O., and
former colleague, Renee Harding, R.N., sketched out the office's
billing procedure this way: After a patient's visit, either Dr.
Grover or a nurse would take a document called a "super bill" and
circle an alphanumeric code to indicate the service provided.
Zehrung would get the super bill, enter the code into a software
program, and, with a click of the button, generate a bill that she
would then send to payers like MaineCare, Medicare, and Anthem.
1
The judge sentenced her in August 2011, so we, like the
judge, use the 2010 version of the sentencing guidelines. See
United States v. Rodriguez, 630 F.3d 39, 42 (1st Cir. 2010)
(explaining which version of the guidelines customarily controls
and why).
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Entering the codes was pretty easy. "[I]t's a fairly simple
system," Nurse Harding said.
When Zehrung first came on board, an office manager
watched what she did, comparing what she had inputted into the
system with what was on the super bill, for example. Eventually,
though, the office manager left and was not replaced, so Zehrung
got to run the billing process on her own. Not only that,
according to Dr. Grover, she got unsupervised control over the
practice's checkbook and accounts payable, too. She also had
access to the office's "cashbox," which contained the copayments
from patients. "[S]he was the financial person," Dr. Grover
stressed, which freed him up to care for his 14,000 patients.
Everything seemed to be going swimmingly with Zehrung at
the financial helm. Monthly revenues shot up a whopping 33%. An
obviously ecstatic Dr. Grover asked her what was going on, and she
said she had been "going through the old accounts, working the
accounts." For a while, that explanation worked, though Dr. Grover
also knew that part of the reason why revenues had jumped was
because his office had started doing some aesthetics procedures,
like laser hair removal.
Of course appearances can be deceiving, and that was the
case here. You see, Zehrung had been carrying out an "upcode" scam
on the sly – i.e., bilking money out of MaineCare and the other
payers by changing the codes to overstate what services had been
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provided and thus fetch higher payments. And she profited from the
con, because she got paid bonuses based on the practice's increased
revenues. Bad enough, but she also had been submitting bills for
services not rendered and destroying super bills to cover her
tracks. Also, she ended up with other bonuses that were not
"authorize[d]."2
Zehrung's crooked scheme began to unravel when a nurse
spotted the billing "problem" and went straight to Dr. Grover.
"Dawn, how do you explain this?" he asked Zehrung. Hoping to talk
her way out of a trip to the police station, Zehrung floated two
theories: first, that a computer glitch had caused the upcoding;
and second, that she had been billing "what should have been done"
– whatever that means. Dr. Grover bought none of it, and all of
this led to Zehrung's arrest and guilty-plea conviction for
healthcare fraud.
Which brings us to sentencing. There the parties sparred
over whether Zehrung should get a § 3B1.3 adjustment – one that is
appropriate if she used a position of trust in such a way that made
the crime easier to carry out or cover up. They did, however,
agree that the government had the burden of proving the enhancement
by the preponderance of the evidence, see United States v. Sicher,
576 F.3d 64, 70 (1st Cir. 2009), which is a more-likely-than-not
2
Just how she got these bonuses – whether she paid them to
herself with checks from the practice's account, for example – is
unclear on this record.
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standard, see United States v. Morgan, 384 F.3d 1, 5 (1st Cir.
2004).
Consistent with this guideline, we ask sentencing judges
faced with this type of issue to follow a two-step process. First
they must see if the defendant held a position of trust. And, if
the answer is yes, then (and only then) they must see if the
defendant used that position in some significant way to facilitate
or conceal the offense. See United States v. Parrilla Román, 485
F.3d 185, 191 (1st Cir. 2007) (emphasizing that "[t]he two steps
are separate" and that "care must be taken not to conflate them").
Trust positions are ones of "professional or managerial
discretion," a phrase that means "substantial discretionary
judgment that is ordinarily given considerable deference."
U.S.S.G. § 3B1.3 cmt. n.1. Not surprisingly, then, people holding
trust positions are usually "subject to significantly less
supervision" than those holding positions with "non-discretionary"
responsibilities. Id. Examples of trust-position abusers include
attorneys serving as guardians who fleece their clients, bank
executives who perpetrate fraudulent-loan schemes, and doctors who
sexually abuse patients during exams. Id. But not ordinary bank
tellers who embezzle – sure, they have access to all kinds of
valuable things, yet nothing they typically do (adding and taking
cash from a till, for example) involves the type of complicated,
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case-specific judgment calls that are given special deference, with
little (if any) supervision. See id.
Figuring out where a particular position falls on this
spectrum can be tricky, and the cases present an array of
circumstances.3 Turning back to our case, the distinguished judge
found the evidence "more than sufficient" to support the abuse-of-
3
Compare Sicher, 576 F.3d at 65, 72-73 (sole employee of a
doctor's charitable organization stole money by forging checks: in
addition to her authority over "incoming donations, the payments of
grants to researchers . . ., and maintenance of the accounting
logs," her autonomy over hosting and facilitating fundraisers made
her "the de facto manager and director" of the charity and thus her
position one of trust), United States v. Chanthaseng, 274 F.3d 586,
587-90 (1st Cir. 2001) (mid-level bank manager stole from the bank
through a scheme of making false "rapid deposit tickets" for
fictional large cash deposits: her supervisor had given her the
authority (against bank policy) to countersign her own deposit
tickets and did not review her tickets, which basically made "her
the branch's sole decision-maker for those transactions" – meaning
that her employment with the bank amounted to a position of trust),
and United States v. O'Connell, 252 F.3d 524, 526, 528-29 (1st Cir.
2001) (office manager stole company money by forging the name of
one of the owners on checks: access to the company's checkbook and
accounting software did not suggest that he had substantial
discretionary authority within the meaning of § 3B1.3 – but his
authority to transfer funds from the company's line of credit to
its checking account and his close personal relationship with the
owners certainly did), with Parrilla Román, 485 F.3d at 188, 190-92(airline baggage handlers conspired with others to smuggle
contraband: even though they held security clearances giving them
"ready access to restricted areas of the airport," because they had
no discretion and, moreover, performed the types "of tasks that
almost invariably require oversight," their positions fell outside
the scope of the § 3B1.3 enhancement), and United States v. Reccko,
151 F.3d 29, 30, 32-33 (1st Cir. 1998) (switchboard operator at
police headquarters tipped off a suspect about an upcoming raid:
even though her job gave her access to important information, it
"involved no significant discretionary authority" and so was "on a
par with the bank teller" post that we know is a "non-trust
position[]").
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trust enhancement. "As I understand it," the judge said, Dr.
Grover picked codes "on a super bill, and [Zehrung], when she
received those codes, deliberately and consciously upcoded them to
bill for services" that no one had "actually performed." She did
the billing with "no supervision," the judge added – "[t]here was
no direct oversight, no review," he repeated again – and "she
assumed complete financial control within the office." And, the
judge suggested, her position made it significantly easier for her
to commit the crime charged.
Our standard of review is familiar. We assess a judge's
guidelines interpretation de novo. E.g., United States v. Cannon,
589 F.3d 514, 516-17 (1st Cir. 2009). We check his fact findings
for clear error. Id. at 517. And we review his application of the
guidelines to a particular case on a "sliding scale," with the
intensity increasing the "more law-oriented" – as opposed to "fact-
driven" – the judge's conclusion is. See Sicher, 576 F.3d at 70 &
n.6; accord United States v. Gerhard, 615 F.3d 7, 32 (1st Cir.
2010). The parties bicker about where on the scale our judge's
decision falls. But we need not referee their dispute, because
regardless of who is right, we are not quite sure what to make of
the judge's decision.
For starters, the judge did not say what discretionary
authority Dr. Grover had entrusted Zehrung with. True, the judge
did mention her role in the billing process. But the discretion
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evidence there points in a couple of directions. The doctor's
testimony about picking codes for Zehrung to enter into the
computer seemingly suggests that her position was more like a
typical bank teller, who has access needed to commit the crime
charged but has little (if any) professional or managerial
discretion in performing her tasks. Cf. Parrilla Román, 485 F.3d
at 191 (stressing that "'[o]pportunity and access' do not equate
with substantial discretionary judgment" (quoting United States v.
Edwards, 325 F.3d 1184, 1187 (10th Cir. 2003))). Yet the
presentence report whispers hints that Zehrung may have had
discretion to change codes – that is one way (though not the only
way) to interpret her comment to Dr. Grover, made after he had
heard about the billing mess, that she was billing for "what should
have been done" – which might put her in the category of
discretionary decisionmakers covered by § 3B1.3. On this we are
left to speculate, however.
The same is true about the judge's "she assumed complete
financial control within the office" statement. Dr. Grover did say
that Zehrung had "control" of "the checkbook" and "accounts
payable." But he did not elaborate. So was the judge inferring
that the doctor had charged her with exercising her own judgment
over these areas4 (which might suggest she held a trust position)?
4
And perhaps over accounts receivable – recall how she
explained the uptick in revenues by saying that she had been
"working" "old accounts."
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And if yes, on what did the judge base this inference? If only the
presentence report could straighten this all out. See Fed. R.
Crim. P. 32(i)(3)(A) (noting that judges at sentencing "may accept
any undisputed portion of the presentence report as a finding of
fact"). Alas, the report is no help, because it based its
enhancement recommendation exclusively on her "coding and billing"
duties.
Do not get us wrong – we know that sentencing judges need
not explain their reasoning in exquisite detail, especially when
the reasons are "evident from the record." United States v.
Stella, 591 F.3d 23, 28 (1st Cir. 2009) (citing, among other cases,
Sicher, 576 F.3d at 71). Obviously, they must say in "open court"
why they picked a "particular sentence," 18 U.S.C. § 3553(c),
though they need not "be precise to the point of pedantry," United
States v. Fernández-Cabrera, 625 F.3d 48, 53 (1st Cir. 2010). And
sure, they "must – for any disputed portion of the presentence
report or other controverted matter – rule on the dispute," Fed. R.
Crim. P. 32(i)(3)(B), though "we have found that [they] implicitly
resolved the facts when [their] statements and the sentence imposed
showed that the facts were decided in a particular way," United
States v. Van, 87 F.3d 1, 3 (1st Cir. 1996). But – and it is a big
"but" – in the end we must be able to figure out what they "found
and the basis for the findings to the extent necessary to permit
effective appellate review." Id. (emphasis added); see also Rita
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v. United States, 551 U.S. 338, 358 (2007) (stressing, among other
things, that "[b]y articulating reasons, even if brief, the
sentencing judge . . . assures reviewing courts (and the public)
that the sentencing process is a reasoned process"). And that,
unfortunately, we cannot do here, given how an abuse-of-trust
enhancement is not inevitable on this record. Needing more help,
we see no choice but to vacate Zehrung's sentence and remand to the
same judge for further findings about whether she should be
punished for abusing a position of trust. See, e.g., United States
v. Montero-Montero, 370 F.3d 121, 123-24 (1st Cir. 2004); United
States v. Medina, 167 F.3d 77, 80-81 (1st Cir. 1999); Van, 87 F.3d
at 3-4.
Sentence vacated and case remanded with instructions.
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