United States v. Michael Mirando ( 2019 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS APR 9 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 17-50386
Plaintiff-Appellee, D.C. No. 2:16-cr-00215-PA-1
v.
MEMORANDUM*
MICHAEL MIRANDO, AKA Michael John
Mirando,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
Percy Anderson, District Judge, Presiding
Argued and Submitted February 8, 2019
Pasadena, California
Before: GOULD and NGUYEN, Circuit Judges, and MARBLEY,** District
Judge.
Defendant-Appellant Michael Mirando was convicted in 2017 of fifteen
counts of health care fraud in violation of 18 U.S.C. §1347. At trial, through an
FBI Special Agent, the government presented evidence to indicate that Mirando
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Algenon L. Marbley, United States District Judge for
the Southern District of Ohio, sitting by designation.
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had billed $8.4 million fraudulently. In total, the insurance companies paid
approximately $3 million on these fraudulent claims. The Probation Office
recommended a 97-month sentence, which the district court imposed. This appeal
timely followed.
1. We review de novo a district court’s construction and interpretation of the
Sentencing Guidelines, and we review for abuse of discretion a district court’s
application of the Guidelines to the facts. United States v. Popov, 742 F.3d 911,
914 (9th Cir. 2014) (citing United States v. Gomez-Leon, 545 F.3d 777, 782 (9th
Cir. 2008)). A district court’s determination of the loss amount, like other factual
determinations, is reviewed for clear error. United States v. Tulaner, 512 F.3d 576,
578 (9th Cir. 2008).
As part of its calculation of Mirando’s sentence in accordance with the
Sentencing Guidelines, the district court made a finding of the intended “loss
amount” from the fraud. Mirando argues that this was calculated incorrectly. We
agree.
In cases of health care fraud, courts must determine the loss amount, which
is “a specific offense characteristic that increases the defendant’s offense level
pursuant to the Guidelines.” Popov, 742 F.3d at 914. To calculate the loss amount,
Popov established that the “amount billed to the insurer” is “prima facie evidence
of an intended loss for sentencing purposes,” but this a rebuttable presumption. Id.
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at 916. Parties may introduce additional evidence to support arguments that the
amount billed overestimates or understates the defendant’s intent. Id.
We have held that where sentencing enhancements are based on uncharged
conduct and “ha[ve] an extremely disproportionate effect on the sentence relative
to the offense of conviction,” “due process may require clear and convincing
evidence of that conduct.” United States v. Hymas, 780 F.3d 1285, 1289 (9th Cir.
2015) (internal quotation marks omitted). That is the case here: the intended loss
enhancements increased Guidelines offense level from six to thirty.
The district court abused its discretion when it concluded that the
government’s evidence met this “clear and convincing” standard. The government
offered the prima facie evidence, but at sentencing Mirando, per Popov, tried to
rebut the presumption. He testified that he knew he would never receive a full
reimbursement of the amount billed.
First, although the district court characterized Mirando’s testimony as
inconsistent with the jury’s conclusions, the jury made a conclusion about the
amount billed, not about Mirando’s intended loss. The latter question is a question
for the court. Second, though the district court characterized Mirando’s testimony
as inconsistent with defenses presented at trial, Mirando did not testify at trial, and
defense counsel presented no affirmative case and put on no witnesses.
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Third, Mirando’s admission that he would have kept the money if Medicare
reimbursed him for more than what he expected – a fact on which the dissent relies
– does not demonstrate that Mirando’s intended loss was the full amount that he
billed. Neither the district court below, nor the government on appeal, nor the
dissent has explained why Mirando is not credible when he testifies as to
reimbursement rates but is credible when, shortly thereafter, he says he would have
kept any overpayment offered.
The dissent ignores that the government here had a burden of proving the
loss amount by clear and convincing evidence, as explained herein. The
prosecution did not show by clear and convincing evidence that Mirando intended
a loss in the full amounts billed, and indeed his uncontradicted testimony was to
the contrary.
Thus, the district court erred when it concluded that by clear and convincing
evidence the amount Mirando billed represented his intended loss.
2. Mirando also argues that his sentence was impermissibly enhanced because
the district court found that Mirando perpetrated his fraud through “sophisticated
means.” We review applications of the Sentencing Guidelines to the facts for abuse
of discretion. United States v. Gomez-Leon, 545 F.3d 777, 782 (9th Cir. 2008). We
conclude that the district court did not abuse its discretion by applying the
sophisticated means enhancement.
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The Sentencing Guidelines provide for a two-level enhancement where “the
offense otherwise involved sophisticated means and the defendant intentionally
engaged in or caused the conduct constituting sophisticated means.” U.S.S.G.
§ 2B1.1(b)(10)(C). To qualify as “sophisticated,” the offense must be “especially
complex or especially intricate . . . conduct pertaining to the execution or
concealment of an offense.” U.S.S.G. § 2B1.1 cmt. n.9(B). The Commentary also
notes that “[c]onduct such as hiding assets or transactions, or both, through the use
of fictitious entities, corporate shells, or offshore financial accounts also ordinarily
indicates sophisticated means.” Id.
It would be reasonable to conclude that creating MMS as a fictitious entity
and sending some of the funds from the fraud to an MMS bank account in
Mirando’s name constitutes sophisticated means because it adds a layer of fraud
and apparent deception to the enterprise. See generally, United States v. Horob,
735 F.3d 866 (9th Cir. 2013). But it would also be reasonable to conclude that
MMS did not add to the sophistication of Mirando’s scheme, either because it was
beyond the scope of the scheme or because an account in Mirando’s name was not
an especially sophisticated maneuver. Because either of these conclusions would
be reasonable, it was not an abuse of discretion for the district court to apply the
two-level enhancement for use of sophisticated means, and we AFFIRM
application of that enhancement.
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3. Mirando argues that trial counsel was impermissibly restricted from cross-
examining Stanton Crowley, Mirando’s former business partner and the
government’s cooperating witness. A district court’s ruling limiting the scope of
cross-examination is reviewed for abuse of discretion. United States v. Larson, 495
F.3d 1094, 1101 (9th Cir. 2007).
The district court has “wide latitude . . . to impose reasonable limits on
cross-examination.” Id. But a defendant “has the right to present his own witnesses
to establish a defense. This right is a fundamental element of due process of law.”
United States v. Stever, 603 F.3d 747, 755 (9th Cir. 2010) (citation omitted). The
touchstone is that “the Constitution guarantees criminal defendants a meaningful
opportunity to present a complete defense.” Id. (internal quotations omitted).
It was not an abuse of discretion for the district court to limit cross-
examination in this way. Mirando was permitted to impeach Crowley sufficiently
to mount a “meaningful defense.” Through cross-examination, Mirando elicited
sufficient testimony to alert the jury to Crowley’s cooperation with law
enforcement and to prior issues with his tax filings. Mirando also challenged
Crowley’s credibility on other grounds, including his falling out with Mirando,
prior allegations of trade secrets theft, and the absence of any charges against him.
Because Mirando had the opportunity to mount a meaningful defense and
because the district court excluded discrete questions and not entire scopes of
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inquiry, it was not an abuse of discretion for the court to limit the cross-
examination in the way it did.
4. Mirando argues that the “intent to defraud” jury instruction, see Ninth
Circuit Model Instruction 8.121, should have been written in the disjunctive (“or”)
rather than the conjunctive (“and”). Where there has been no objection to a jury
instruction at trial, we review for plain error. Fed. R. Crim. P. 52(b); United States
v. Conti, 804 F.3d 977, 981 (9th Cir. 2015).
Any error here was not plain. In United States v. Shaw, we recently upheld a
conviction under 18 U.S.C. § 1344, which includes substantially the same language
as § 1347, under which Mirando was convicted. 885 F.3d 1217, 1218-19 (9th Cir.
2019). The defendant in Shaw also received a jury instruction phrased in the
disjunctive, and the panel concluded this was harmless error. Id.
Any error here did not affect Mirando’s substantial rights or affect the
fairness of the proceeding. There was ample evidence at trial to sustain Mirando’s
conviction, and no indication that the jury verdict would have been different if “or”
were swapped for “and” in the instruction in question.
Mirando’s conviction is AFFIRMED. Mirando’s sentence is VACATED
AND REMANDED for resentencing consistent with this disposition.
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FILED
APR 9 2019
United States v. Mirando, 17-50386
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
NGUYEN, Circuit Judge, dissenting:
The majority ignores both the standard of review and the governing law.
“Clear error review is significantly deferential . . . .” United States v. Popov, 742
F.3d 911, 914 (9th Cir. 2014) (quoting Leavitt v. Arave, 646 F.3d 605, 608 (9th
Cir. 2011)). “Where testimony is taken, we give special deference to the district
court’s credibility determinations,” United States v. Craighead, 539 F.3d 1073,
1082 (9th Cir. 2008), because “the various cues that ‘bear so heavily on the
listener’s understanding of and belief in what is said’ are lost on an appellate court
later sifting through a paper record.” Cooper v. Harris, 137 S. Ct. 1455, 1474
(2017) (quoting Anderson v. Bessemer City, 470 U.S. 564, 575 (1985)); see also
United States v. Lang, 149 F.3d 1044, 1046 (9th Cir. 1998) (recognizing the
district court’s “superior position ‘to . . . make credibility determinations in cases
in which live testimony is presented’” (quoting United States v. McConney, 728
F.2d 1195, 1201 (9th Cir. 1984) (en banc))).
The majority errs at the outset by misstating the burden of proof. “In health
care fraud cases, the amount billed to an insurer shall constitute prima facie
evidence of intended loss for sentencing purposes. If not rebutted, this evidence
shall constitute sufficient evidence to establish the intended loss . . . .” Popov, 742
1
F.3d at 916 (emphasis added).1 The majority acknowledges that “[t]he government
offered the prima facie evidence” of intended loss and that “Mirando, per Popov,
tried to rebut the presumption,” Maj. Op. at 3, but incongruously states that “the
government here had a burden of proving the loss amount.” Maj. Op. at 4. To the
contrary, it was Mirando who had the burden of disproving the government’s
prima facie showing of intended loss. The majority abandons Popov’s burden-
shifting framework.
Here, the district court was well within bounds in discrediting Mirando’s
last-minute testimony about what he expected in terms of the insurers’ loss based
on his vacillating knowledge of the industry. At sentencing, Mirando testified that
“the industry standard” was to reimburse “about 25 to 30 percent” of the amount
billed. But as the district court pointed out, Mirando had “argue[d] defenses at
trial” that were “inconsistent” with his being knowledgeable about Medicare
billing practices. 2 The Sixth Circuit upheld an intended loss calculation for
1
Although there is no need to decide the requisite degree of proof—the
preponderance standard applied in Popov or the “clear and convincing” standard
applied by the majority—there is ample evidence in the record to support the
district court’s finding that the government met either standard.
2
The majority states that the district court “characterized Mirando’s
testimony as inconsistent with the jury’s conclusions.” Maj. Op. at 3. Not so.
Defense counsel argued to the jury that Mirando was only “doing what [he was]
taught,” and “if the insurance company didn’t think the [billing] codes were
inappropriate, why should anybody else”? The prosecutor accurately summarized
the defense argument as: “an expert was required to understand how all this
2
precisely this reason. See United States v. Bertram, 900 F.3d 743, 752 (6th Cir.
2018) (“[T]he defendants claimed that they never read or understood the
[insurance] contract. That makes it implausible to maintain that they were
subjectively aware that the contract would reimburse them only for a portion of the
billed amount.”), cert. denied, No. 18-708 (U.S. Jan. 7, 2019).
The majority faults the district court for accepting Mirando’s testimony as to
the amount of insurance payments he would have kept but not as to the prevailing
reimbursement rates. See Maj. Op. at 4. But Mirando was obviously competent to
opine on how he would react in a hypothetical situation, whereas he was not
obviously competent to discuss actual medical billing standards, and his testimony
laid no foundation for such knowledge. It is an “ancient fallacy” that
“uncontradicted testimony must be accepted by a court finding the facts,
particularly where, as here, the testimony is given by interested parties.” Wood v.
Comm’r, 338 F.2d 602, 605 (9th Cir. 1964).
Even taking Mirando’s testimony regarding industry reimbursement
practices at face value, the majority conflates “intended” with “expected” loss.
works.” Therefore, the majority’s assertion that “defense counsel presented no
affirmative case,” id., is simply incorrect. See, e.g., Defense, Black’s Law
Dictionary (10th ed. 2014) (defining a defense as “[a] defendant’s method and
strategy in opposing . . . the prosecution”); United States v. Garrison, 888 F.3d
1057, 1061 (9th Cir. 2018) (“Garrison did not call any witnesses of his own in his
defense. Garrison’s main line of defensive argument was that he was not aware of
the conspiracy and that he did not knowingly participate in the conspiracy.”).
3
The sentencing guidelines define “intended loss” as “the pecuniary harm that the
defendant purposely sought to inflict; and . . . includes intended pecuniary harm
that would have been impossible or unlikely to occur.” U.S.S.G. § 2B1.1, cmt.
3(A)(ii) (emphasis added). As an example, the application note cites “an insurance
fraud in which the claim exceeded the insured value.”
Mirando testified that if an insurer paid more than he expected, he probably
would have “kept the money.” “The fact that [the insurers’] prudent business
practices . . . thwarted [his] effort to realize more from his fraud is not relevant to
determining the amount of loss he intended to inflict.” United States v. Tulaner,
512 F.3d 576, 579 (9th Cir. 2008). Under similar circumstances, the Fifth Circuit
affirmed an intended loss calculation based on the billed amounts rather than the
reimbursed amounts. See United States v. Umawa Oke Imo, 739 F.3d 226, 240–41
(5th Cir. 2014) (“The district court found that even assuming [the defendant] knew
that he would not be fully reimbursed, he sent Medicare and Medicaid bills with
the intention that he would be paid.”); cf. United States v. Al-Shahin, 474 F.3d 941,
950 (7th Cir. 2007) (affirming intended loss calculation based on the amount
demanded of insurance company where defendants ultimately settled for a third of
that amount but “‘wanted more money’ than they received”).
I would affirm the district court’s judgment in its entirety. Because the
majority inappropriately substitutes its own factual findings for those of the district
4
court, disregards the sentencing guidelines, and thereby reaches a result at odds
with other circuits, I dissent.
5