United States v. Awad ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,  No. 06-50578
Plaintiff-Appellee,
v.  D.C. No.
CR-04-00237-JVS-1
AZIZ F. AWAD,
OPINION
Defendant-Appellant.

Appeal from the United States District Court
for the Central District of California
James V. Selna, District Judge, Presiding
Argued and Submitted
November 18, 2008—Pasadena, California
Filed January 12, 2009
Before: Susan P. Graber and Richard R. Clifton,
Circuit Judges, and Edward C. Reed, Jr.,* District Judge.
Opinion by Judge Graber
*The Honorable Edward C. Reed, Jr., Senior United States District
Judge for the District of Nevada, sitting by designation.
357
UNITED STATES v. AWAD 361
COUNSEL
Charles M. Sevilla, San Diego, California, for the defendant-
appellant.
Douglas F. McCormick, Assistant United States Attorney,
Santa Ana, California, for the plaintiff-appellee.
OPINION
GRABER, Circuit Judge:
Defendant Dr. Aziz F. Awad stands convicted of 24 counts
of participating in a scheme to defraud Medicare under 18
U.S.C. § 1347 and four counts of money laundering involving
the proceeds of health care fraud under 18 U.S.C.
§ 1956(a)(1)(A). He alleges four errors that we address here:
(1) omission of the word “willfully” from the portion of the
indictment alleging violations of 18 U.S.C. § 1347; (2) a mul-
tiplicitous indictment; (3) jury instructions stating that the
jury need not find that Defendant knew his conduct was
unlawful; and (4) application of a sentencing enhancement
under U.S.S.G. § 2B1.1(b)(12)(A) (2005) for creating a risk
of serious bodily injury or death.1 For the reasons explained
below, we affirm.
1
Defendant also argues that several of the district court’s other jury
instructions, evidentiary rulings, and expert witness rulings were errone-
ous. On those issues, we agree with the district court’s reasoning and con-
clusions and, therefore, affirm. Tilcock v. Budge, 538 F.3d 1138, 1143 (9th
Cir. 2008), petition for cert. filed, ___ U.S.L.W. ___ (U.S. Oct. 31, 2008)
(No. 08-7077); Hoefler v. Babbitt, 139 F.3d 726, 729 (9th Cir. 1998).
362 UNITED STATES v. AWAD
FACTUAL AND PROCEDURAL HISTORY
A. Medicare Reimbursement
Testimony at trial explained the procedures through which
physicians are reimbursed for services rendered to Medicare-
insured patients. Medicare provides insurance coverage for
persons over age 65 and for certain disabled persons. Physi-
cians must apply to provide services to Medicare beneficia-
ries. In order to be accepted, physicians must follow
Medicare’s rules and regulations, submit accurate claims, and
accept Medicare’s payment for services rendered. The Medi-
care Carriers Manual is a compilation of Medicare’s interpre-
tation of its rules and regulations for payment of claims.
Medicare also sends physicians newsletters that contain bill-
ing information, guidelines, rules, and regulations.
To obtain payment from Medicare for services rendered to
a beneficiary, a provider submits a claim form. The claim
form requires the provider to list a provider number, a proce-
dure code, and a place-of-service (“POS”) code. The physi-
cian must certify on the claim form that “the services shown
on this form were medically indicated and necessary for the
health of the patient and were personally furnished by me or
were furnished incident to my professional service by my
employee under my immediate personal supervision, except
as otherwise expressly permitted by Medicare or [applicable]
regulations.” Each claim form also provides that “[a]ny per-
son who knowingly files a statement of claim containing any
misrepresentation or any false, incomplete or misleading
information may be guilty of a criminal act punishable under
the law and may be subject to civil penalties.”
When someone other than a physician performs the service
for which Medicare is billed, certain supervision requirements
must be satisfied. The requisite level of supervision depends
on the place where the medical visit occurs. If the services are
performed outside the physician’s office setting, non-
UNITED STATES v. AWAD 363
physician’s services are covered as “incident to” the physi-
cian’s service only if there is “direct personal supervision” by
the physician. When services are provided in an institution
such as a convalescent home, the availability of the physician
by telephone, or even the presence of the physician some-
where else in the building, does not constitute direct personal
supervision.
Medicare regulations provide POS codes that show the type
of location where a service is performed. The physician is
responsible for choosing the POS code that is most appropri-
ate. A service provided in the physician’s office is coded
“11,” while a service provided in a “board-and-care facility”
is coded “33.” Medicare does not pay physicians for respira-
tory treatments given in board-and-care facilities—that is, res-
piratory treatments denoted with POS code 33—even if they
are directly supervised by the doctor.
B. The Fraudulent Scheme
Defendant owned Active Care Medical Group and became
a Medicare provider in 1996. In early 2000, Defendant met
with co-defendant Herman Thomas, who owned a billing
company and a respiratory therapy company, to discuss pro-
viding respiratory services to board-and-care facilities.2
Defendant’s medical practice was struggling financially at the
time. Thomas told Defendant that Defendant’s role in the res-
piratory treatment program would be to evaluate patients and
supervise therapists. Thomas, who is not a physician, said that
he would take primary responsibility for providing the thera-
pists and for doing the billing.
Defendant and Thomas hired marketers to find board-and-
care facilities where Defendant could evaluate patients for
respiratory problems. Most of the facilities that participated
2
Thomas and Defendant were tried jointly. Both were convicted of 24
counts of health care fraud and four counts of money laundering.
364 UNITED STATES v. AWAD
housed mentally ill patients who had Medicare or Medi-Cal
insurance. Defendant began seeing Medicare and Medi-Cal
patients at various board-and-care facilities in March 2000.
Defendant performed initial assessments on those patients to
determine whether they needed respiratory treatment. One of
Defendant’s therapists testified that Defendant ordered respi-
ratory therapy for “about 100%” of the patients he saw.
In late 2000, the California Department of Health Services
conducted an audit of Defendant’s Medi-Cal billings. The
audit showed that some services that were billed were not
actually rendered; that the documentation provided did not
establish medical necessity for the services billed; that docu-
mentation on patients was “predetermined and preprinted,”
and therefore not “patient-specific”; and that respiratory treat-
ments were not being rendered in accordance with Medi-Cal
policy. Defendant received a letter cataloguing these deficien-
cies dated July 3, 2001. The letter notified Defendant that he
had been placed on “special claims review,” meaning that he
had to submit billing forms in hard copy so that a claims
examiner could review them personally before any payment
was issued. After receiving that letter, Defendant stopped sub-
mitting claims to Medi-Cal.
Medicare also began an audit of Defendant’s billings after
receiving a patient complaint that services billed had not been
rendered. The investigative report showed that Defendant was
seeing up to 114 patients per date of service, based on the
number of claims submitted. There were numerous occasions
on which 90 or more patients were seen on one day, according
to billing records. In a sample of 35 patient files, Defendant
billed for six patients whom he allegedly treated at board-and-
care facilities, when the patients were hospitalized elsewhere
on the dates claimed. Defendant also consistently used POS
code 11, which is reserved for office visits, for treatments pro-
vided at board-and-care facilities. Defendant’s billing for a
certain respiratory treatment was 14 times the number, and
18,000 times the amount, than that of the next highest biller
UNITED STATES v. AWAD 365
in Southern California for that same type of treatment. For
another treatment, Defendant billed 28 times the number and
42,000 times the amount of the next highest biller. A follow-
up investigation revealed that Defendant billed Medicare for
more than $460,000 for treatments performed by his thera-
pists while he was out of the country.
From 2000 to 2003, Defendant billed Medicare approxi-
mately $7.4 million for respiratory treatments. Medicare
allowed $2,561,819 of those billings and, from January 2000
to September 2003, Medicare paid claims of $2,035,968.
Medi-Cal suffered a loss attributable to Defendant of
$589,754.
As a result of these activities, Defendant was charged with
24 counts of participating in a scheme to defraud Medicare
under 18 U.S.C. § 1347 and with four counts of conducting
monetary transactions involving the proceeds of health care
fraud under 18 U.S.C. § 1956(a)(1)(A). The case proceeded to
trial. At the close of evidence, Defendant moved for a judg-
ment of acquittal, asserting, among other arguments, that the
indictment against him was insufficient because it did not use
the word “willfully” with respect to the health care fraud alle-
gations. The district court took the motion under submission.
The jury found Defendant guilty of all 24 counts of health
care fraud and all four counts of conducting monetary transac-
tions involving the proceeds of health care fraud. After the
verdict, Defendant renewed his motion, and the court denied
it. Defendant was sentenced to 180 months’ imprisonment;
three years’ supervised release; restitution in the amount of
$2,625,722; and a $2,800 special assessment. This timely
appeal followed.
DISCUSSION
Defendant asserts on appeal that the indictment was insuffi-
cient; that the indictment was multiplicitous; that the jury
instructions erroneously stated that the jury need not find that
366 UNITED STATES v. AWAD
Defendant knew his actions were unlawful and that the error
was prejudicial; and that the two-level sentencing enhance-
ment for creating a risk of serious bodily injury or death
should not apply. We address each argument in turn.
A. Sufficiency of the Indictment
[1] We review de novo the sufficiency of an indictment.
United States v. Alber, 56 F.3d 1106, 1111 (9th Cir. 1995).
An indictment must be a “plain, concise, and definite written
statement of the essential facts constituting the offense
charged.” Fed. R. Crim. P. 7(c)(1). An indictment is sufficient
if it contains “the elements of the charged crime in adequate
detail to inform the defendant of the charge and to enable him
to plead double jeopardy.” Alber, 56 F.3d at 1111 (internal
quotation marks omitted). The test for sufficiency of the
indictment is “not whether it could have been framed in a
more satisfactory manner, but whether it conforms to minimal
constitutional standards.” United States v. Hinton, 222 F.3d
664, 672 (9th Cir. 2000).
[2] Section 1347 states in part: “Whoever knowingly and
willfully executes, or attempts to execute, a scheme or artifice
to defraud any health care benefit program . . . shall be fined
under this title or imprisoned not more than 10 years, or
both.” 18 U.S.C. § 1347(1) (emphasis added). The indictment
in this case for counts 1 through 24 alleged that, between Jan-
uary 2000 and September 2003, within the Central District of
California, Defendant and Thomas “knowingly and with the
intent to defraud, devised, executed, and participated in a
scheme to defraud Medicare.” Defendant argues that the
omission of the word “willfully” from the indictment renders
it insufficient and that, as a result, counts 1 through 24 must
be dismissed.3
3
Counts 25 through 28 charge violations of 18 U.S.C. § 1956(a)(1)(A),
which requires only that the person “knowingly,” but not “willfully,” con-
duct transactions using the monetary proceeds of fraud. The indictment for
counts 25 through 28 alleged that Defendant “knowingly and willfully”
conducted monetary transactions involving the proceeds of health care
fraud. This portion of the indictment is not challenged.
UNITED STATES v. AWAD 367
[3] An indictment must be read in its entirety and construed
with “common sense and practicality.” Alber, 56 F.3d at
1111. In Alber, the defendant challenged an indictment that
failed to allege that he acted with the “intent to extort.” Id. at
1112. We held that the indictment had set forth the essential
facts with sufficient specificity to infer intent. Id. The court
reasoned that a threatening letter described in the indictment
amounted to “per se extortion,” and “[c]ommon sense would
tell any reader that the letter was sent with the intent to
extort.” Id.[4] Similarly, here, an inference of willfulness is obvious
because of the facts alleged in the indictment. The United
States Supreme Court has held that, in the criminal context,
a “willful” act is “one undertaken with a ‘bad purpose.’ ”
Bryan v. United States, 524 U.S. 184, 191 (1998). In the pres-
ent case, although the word “willfully” does not appear in the
indictment, sufficient facts were pleaded so that any reader
would infer that Defendant acted with a bad purpose.
[5] The indictment alleged that Defendant directed respira-
tory therapists to create medical records showing that they
had performed respiratory treatments when such treatments
were not actually performed, and that Defendant billed Medi-
care for such treatments even though they did not occur. The
indictment further alleged that, “[i]n carrying out the fraudu-
lent scheme, acting with intent to defraud and deceive,”
Defendant communicated false statements in Medicare bil-
lings. It alleged that Defendant knew that such statements
were false and that the acts described in the indictment were
“fraudulent, unlawful, and deceptive.” The indictment
described seven specific kinds of acts that Defendant alleg-
edly knew were fraudulent.4 Finally, the indictment provided
4
The indictment alleged that Defendant knew the following:
(a) that Defendant was neither providing, nor supervising[,] the
Respiratory Treatments being billed to Medicare; (b) that the
368 UNITED STATES v. AWAD
that, in carrying out the scheme, “acting with intent to defraud
and deceive,” Defendant concealed facts from Medicare about
his “fraudulent business practices regarding the delivery of
and payment for the Respiratory Treatments.”
[6] When construed with “common sense and practicality,”
as Alber requires, the indictment as a whole conveyed that
Defendant acted “with a ‘bad purpose.’ ” Bryan, 524 U.S. at
191. Hinton directs that the question is not whether the indict-
ment could have been framed in a more satisfactory manner,
but whether it meets minimum constitutional standards. 222
F.3d at 672. Omission of the word “willfully” was not fatal,
as the indictment sufficiently informed Defendant of the
charges against him because of the nature and specificity of
the facts alleged.
[7] Defendant responds by citing United States v. Du Bo,
186 F.3d 1177, 1179 (9th Cir. 1999). Du Bo held that if an
indictment completely fails to recite an essential element of a
charged offense and the insufficiency is properly challenged
before trial, the omission is “not a minor or technical flaw
subject to harmless error analysis, but a fatal flaw requiring
dismissal of the indictment.” Id. That case addressed an
indictment that failed to allege the requisite mental state of
“knowingly or willingly.” Id. The indictment alleged only that
the defendant “unlawfully” affected commerce by the
Respiratory Treatments being billed to Medicare were not being
provided in Defendant’s medical office in Anaheim; (c) that
Medicare does not pay for the Respiratory Treatments if such
treatments are performed on patients at residential board and care
facilities; (d) that Medicare does not pay for the Respiratory
Treatments which are not provided and directly supervised by a
physician; (e) that Medicare does not pay for the Respiratory
Treatments if such treatments are provided by unlicensed individ-
uals; (f) that Medicare does not pay for the Respiratory Treat-
ments if such treatments are not provided; and (g) that Medicare
does not pay for the Respiratory Treatments if billing for such
treatments are based upon falsified and forged medical records.
UNITED STATES v. AWAD 369
“ ‘wrongful’ use of force,” an allegation that, standing alone,
was insufficient. Id.[8] Du Bo does not apply here for two reasons. First,
Defendant challenged the indictment during trial, not before
trial as in Du Bo. We cautioned in Du Bo that our holding was
“limited to cases where a defendant’s challenge is timely.” Id.at 1180 n.3. When, as in the present case, a defendant’s chal-
lenge is not brought before trial, the indictment is “liberally
construed” because the defendant had an opportunity to
resolve any ambiguity in the indictment through a pre-trial
motion. See United States v. Chesney, 10 F.3d 641, 642-43
(9th Cir. 1993) (holding that a challenge brought at the close
of the government’s case was untimely and that the indict-
ment would therefore be afforded a liberal construction).
[9] Second, the indictment here did not completely fail to
recite an essential element of the charge. A “liberal” and
“common sense” reading of the indictment signals unmistak-
ably that Defendant acted with a bad purpose, which is the
Supreme Court’s definition of “willfully.” Bryan, 524 U.S. at
191-92. Although the detailed factual allegations may not be
a full substitute for the word “willfully,” the government did
not completely fail to allege that Defendant acted with an
improper purpose. We therefore reject Defendant’s challenge
to the indictment.
B. Multiplicity
Whether an indictment is multiplicitous is generally
reviewed de novo. United States v. Vargas-Castillo, 329 F.3d
715, 718-19 (9th Cir. 2003). Here, however, because Defen-
dant did not raise the argument below, we review only for
plain error. United States v. Olano, 507 U.S. 725, 730 (1993);
Fed. R. Crim. P. 52(b).
Defendant argues that the 24 counts of health care fraud (or
all but one of them) should be dismissed because they are
370 UNITED STATES v. AWAD
multiplicitous. He characterizes the government’s indictment
as charging 24 acts in furtherance of a single scheme, rather
than 24 separate executions of a scheme to defraud Medicare.
[10] An indictment is multiplicitous if it charges a single
offense in more than one count. United States v. Garlick, 240
F.3d 789, 793-94 (9th Cir. 2001). “The test for multiplicity is
whether each count ‘requires proof of a[n additional] fact
which the other does not.’ ” Id. at 794 (quoting Blockburger
v. United States, 284 U.S. 299, 304 (1932) (wording alteration
added by Garlick)).
[11] We find persuasive the reasoning of United States v.
Hickman, 331 F.3d 439, 445-47 (5th Cir. 2003), which held
that each fraudulent claim submitted to Medicare could form
the basis of a separate count. The health care fraud statute
punishes one who “knowingly and willfully executes, or
attempts to execute” a scheme to defraud Medicare. 18 U.S.C.
§ 1347. Hickman reasoned that, because the health care fraud
statute’s text and structure are “almost identical” to the bank
fraud statute’s text and structure,5 and the Fifth Circuit had
interpreted the bank fraud statute as criminalizing each execu-
tion of a scheme to defraud, the health care fraud statute, by
analogy, likewise punishes each execution of a scheme to
defraud. 331 F.3d at 445-46. The Hickman court also con-
cluded that each submission of a fraudulent claim to Medicare
constituted an “execution” of the scheme to defraud because,
with each submission, the defendant owed a “new, indepen-
dent obligation to be truthful to the insurer.” Id. at 447.
[12] We, too, have held in the context of bank fraud that
each execution of the scheme to defraud may be charged as
a separate count. See United States v. Molinaro, 11 F.3d 853,
5
The bank fraud statute reads, in pertinent part: “Whoever knowingly
executes, or attempts to execute, a scheme or artifice . . . to defraud a
financial institution . . . shall be fined . . . or imprisoned . . . .” 18 U.S.C.
§ 1344(1).
UNITED STATES v. AWAD 371
860 (9th Cir. 1993) (each execution of the scheme to defraud
is a separate count of bank fraud). We now extend the same
rule to health care fraud.
[13] Each submission of a fraudulent claim to a health care
benefit program, rather than being simply an act in further-
ance of a larger scheme to defraud, is a separate execution of
the scheme and is itself chargeable as a separate count. Here,
Defendant owed a new and independent obligation to be
truthful each time he submitted one of the 24 fraudulent
claims included in the indictment. Each claim carried a new
form on which Defendant acknowledged his obligation to
convey complete and truthful information. Each claim was
independently paid by Medicare, and each exposed Medicare
to financial loss. Each of the 24 counts required proof of an
additional element that the other counts did not require: that
the information in that specific claim, as distinct from the
other claims, was false. Therefore, the indictment charging 24
counts of health care fraud was not multiplicitous.
C. Jury Instructions Regarding Willfulness
We review de novo whether jury instructions accurately
define the elements of a statutory offense. United States v.
Hicks, 217 F.3d 1038, 1045 (9th Cir. 2000). If a jury instruc-
tion misstates an element of a statutory crime, the error is
harmless if it is “clear beyond a reasonable doubt that a ratio-
nal jury would have found the defendant guilty absent the
error.” Neder v. United States, 527 U.S. 1, 18 (1999); see also
United States v. Henderson, 243 F.3d 1168, 1171 (9th Cir.
2001).
Defendant argues that the jury instructions were erroneous
because they stated that the government did not have to prove
that Defendant knew his conduct was unlawful. Because the
district court’s instructions told the jury exactly the opposite
of the Supreme Court’s definition of “willfully,” the instruc-
372 UNITED STATES v. AWAD
tions were erroneous. For the reasons explained below, how-
ever, the error was harmless beyond a reasonable doubt.
The jury was instructed in part:
Defendants are charged in Counts 1 through 24 of
the Indictment with health care fraud in violation of
Section 1347 of Title 18 of the United States Code.
....
In order for a defendant to be found guilty of
health care fraud based upon a scheme to defraud,
the government must prove four elements beyond a
reasonable doubt:
First, the defendant knowingly and willfully
devised or participated in a scheme to defraud a
health care benefit program;
Second, the statements made or facts omitted as
part of the scheme were material;
Third, the defendant acted with intent to defraud;
and
Fourth, the scheme involved the delivery of or
payment for health care benefits, items or services.
....
For purposes of proving health care fraud, an act
is done knowingly if the defendant is aware of the
act and does not act through ignorance, mistake, or
accident. The government is not required to prove
that the defendant knew that his acts or omissions
were unlawful.
UNITED STATES v. AWAD 373
....
For purposes of health care fraud, a person acts
“willfully,” as that term is used in these instructions,
when that person acts deliberately, voluntarily, and
intentionally.
(Emphasis added.) Defendant argues that the emphasized por-
tion of the instructions is wrong because it contradicts the
statutory requirement that he had to have acted “willfully.”
The Supreme Court has recognized that “willfully” is a
“word of many meanings” whose construction often depends
on the context in which it appears. Bryan, 524 U.S. at 191.
Generally, in the criminal context, a “willful” act is one
undertaken with a “bad purpose.” Id. The Bryan Court went
on to state that, “in order to establish a ‘willful’ violation of
a statute, ‘the Government must prove that the defendant
acted with knowledge that his conduct was unlawful.’ ” Id. at
191-92 (emphasis added) (quoting Ratzlaf v. United States,
510 U.S. 135, 137 (1994)). The Court noted that one part of
the jury instructions given in Bryan, which is identical in
meaning to an instruction given in this case, misstated the
law. In that part of the instructions, the judge had stated that
the government was not “required to prove that [the defen-
dant] had knowledge that he was breaking the law.” Id. at
199. That statement, standing alone, “contained a misstate-
ment of the law,” id., given the rule that in order to establish
a willful act the government must prove that the defendant
knew that his or her conduct was unlawful, id. at 191-92.
[14] Relying on Bryan, we held in Henderson that the dis-
trict court’s failure to give a “general instruction that ‘will-
fully’ means that [a defendant] knew his [or her] conduct was
unlawful” was in error. Henderson, 243 F.3d at 1173 (empha-
sis omitted). In Henderson, the defendant was convicted of
violating a regulation governing the occupancy of public
lands. Id. at 1170. The statute enforcing the regulation pro-
374 UNITED STATES v. AWAD
vided that “[a]ny person who knowingly and willfully” vio-
lates the regulation would be punished. Id. at 1171. The
magistrate judge rejected the defendant’s request to instruct
the jury that willfulness requires “the specific intent to do or
fail to do what [the defendant] knows is unlawful.” Id. at
1170. Instead, the judge instructed the jury only that “[t]he
word ‘willfully’ means that a person knowingly and intention-
ally committed the acts which constitute the offenses
charged.” Id. We held that the instructions were erroneous,
noting that Bryan required the prosecution to establish that the
defendant was aware that the conduct in question was unlaw-
ful. Id. at 1171-73.
But we went on to hold that the error in the judge’s instruc-
tions was harmless beyond a reasonable doubt. Id. at 1173.
The defendant had received a “Notice of Immediate Suspen-
sion” informing him that he was in violation of the regulation
and that he had five days to comply. Id. We held that, once
the defendant received the notice informing him that he was
violating the regulation, he was aware that his conduct was
unlawful. Id. at 1174. Therefore, even if the jury had been
instructed that it had to find that the defendant knew his con-
duct was unlawful, that element undoubtedly would have
been met. Id. In our view, “[n]o reasonable jury could have
found that [the d]efendant lacked knowledge that his conduct
was unlawful after the date he received the written Notice.”
Id. As a result, the magistrate judge’s failure to give the
defendant’s requested instruction was harmless error. Id.[15] We reach the same conclusion here. There was an
error in the district judge’s willfulness instructions. The
instruction that “[t]he government is not required to prove that
the defendant knew that his acts or omissions were unlawful”
was erroneous under Bryan, 524 U.S. at 199.
[16] Nonetheless, the error was harmless beyond a reason-
able doubt for three reasons. First, the certification on each
claim that Defendant submitted to Medicare informed him
UNITED STATES v. AWAD 375
that submitting “any false, incomplete or misleading informa-
tion” could subject him to criminal liability and punishment—
that is, the certifications themselves stated that such submis-
sions were unlawful. It is undisputed that Defendant signed
these certifications, either physically or electronically, when
he submitted each of the fraudulent claims. By submitting
claims for treatments that either were not performed at all or
that ran afoul of Medicare’s supervision requirements, Defen-
dant knew that he was committing an unlawful act that
exposed him to criminal liability. He also received notifica-
tion from Medi-Cal and Medicare, alerting him to problems
with his claims. The fact that he stopped submitting Medi-Cal
claims as soon as he was notified that his claims would be
subject to heightened review, because an audit revealed bill-
ing problems, shows his guilty knowledge.
[17] Second, the instructions on health care fraud informed
the jury that the government was required to prove that
Defendant acted with an “intent to defraud.” An “intent to
defraud” was defined as “an intent to deceive or cheat.” We
must presume that the jury followed those instructions. Rich-
ardson v. Marsh, 481 U.S. 200, 206 (1987). In order to have
found Defendant guilty, the jury necessarily found that Defen-
dant acted with the purpose of deceiving or cheating Medi-
care. No reasonable jury could have found that a physician
intended to deceive or cheat the Federal Government but did
not know that such conduct is unlawful, especially in light of
the warnings on the claim forms.
Other jury instructions also support our conclusion. The
money laundering instruction informed the jury that the “gov-
ernment must prove that the defendant knew that the funds
transferred represented the proceeds of unlawful conduct, vio-
lation of the health care fraud statute.” A guilty verdict on the
money laundering counts means that the jury found that
Defendant knew the actions which produced the money trans-
ferred were unlawful. Moreover, the jury was instructed that
a good faith belief that the acts were lawful was a complete
376 UNITED STATES v. AWAD
defense “because good faith on the part of the defendant is,
simply, inconsistent with a finding of an intent to defraud.”
By finding Defendant guilty, the jury necessarily rejected the
argument that Defendant acted with a good faith belief that
his acts were lawful.
[18] Third, the fraudulent scheme was, for the most part, so
bold and simple that no reasonable person could have thought
it lawful. For example, Defendant billed for services not
rendered—in common parlance, theft. Defendant moved from
financial struggle to more than $2 million in paid claims over
a period of about three years. His billings were wildly out of
line with other physician’s billings: With respect to one treat-
ment, he billed 28 times the number and 42,000 times the
amount of the next highest biller in Southern California. And
he and his co-schemer consciously selected a vulnerable pop-
ulation that was unlikely to alert authorities.
[19] In short, Defendant carried out a brazen scheme to col-
lect millions of dollars under obviously false pretenses, which
no reasonable jury could have found to be lacking in willful-
ness. Therefore, although the district court’s jury instructions
on willfulness contained an error, that error was harmless
beyond a reasonable doubt.
D. Sentencing Enhancement for Risk of Serious Bodily
Injury or Death
Finally, Defendant challenges the two-level sentencing
enhancement that the district court applied for conduct involv-
ing “conscious or reckless risk of death or serious bodily inju-
ry.” U.S.S.G. § 2B1.1(b)(12)(A) (2005). The court found that
Defendant’s failure to supervise treatments posed a risk of
serious bodily injury to the patients. The court reasoned that
“[m]ost if not all of the respiratory therapy administered was
not required. The treatments included inhalation of medica-
tions. Medicare required that a treating provider be present in
the facility where the treatment was given. This fact is indica-
UNITED STATES v. AWAD 377
tive that the treatment carried some risk that the provider’s
immediate attention might be needed. [Defendant] was pres-
ent for none of the treatments, thus placing each patient in
risk.”
The district court’s interpretation and application of the
Sentencing Guidelines are reviewed de novo. United States v.
Blitz, 151 F.3d 1002, 1009 (9th Cir. 1998). But we review for
clear error the court’s factual findings. Id.[20] Defendant argues that the respiratory therapies at issue
were basic, non-invasive procedures that posed no risk of
injury, serious or otherwise, to patients. He notes that no
patients reported adverse side effects from the treatments.
Nonetheless, it is only the “creation of risk, not the infliction
of injury,” that is required for application of this enhance-
ment. United States v. W. Coast Aluminum Heat Treating Co.,
265 F.3d 986, 993 (9th Cir. 2001). The government argues
that Defendant’s failure to supervise the treatments posed a
risk because an adverse reaction to a treatment or medication
could result in death or serious bodily injury. At trial, a thera-
pist who worked with Defendant testified that she believed
Defendant should have been present at all the treatments
because of the risk of adverse side effects.
[21] The sentencing enhancement for creating a risk of seri-
ous bodily injury or death may not be proper in every prose-
cution for health care fraud, which is designed to punish
financial fraud, rather than to enforce standards of medical
care. But, in this case, there was evidence that a consistent
failure to supervise jeopardized patients. In light of our defer-
ential standard of review, we cannot say that the district court
clearly erred in finding that Defendant’s conduct posed a risk
of serious bodily injury or death, even if we would not have
made the same finding. We therefore reject Defendant’s chal-
lenge to the sentencing enhancement.
AFFIRMED.