On Friday, the Sixth Circuit in the cases of United States v. Mehmood and United States v. Ahmadani reversed the sentences of two owners of home health care companies. The Sixth Circuit reasoned that the trial judge incorrectly applied the law in calculating the loss figure for sentencing purposes by assigning the loss figure as the gross billings to Medicare.
The Opinion states that “[i]n a case in which the defendant is convicted of a Federal health care offense involving a Government health care program, the aggregate dollar amount of fraudulent bills submitted to the Government health care program shall constitute prima facie evidence of the amount of the intended loss…”
The court noted its agreement with United States v Medina, 485 F.3d 1291, 1304 (11th Cir. 2007) (“Even though [the government’s Medicare witness] testified that Medicare would not pay a claim if they knew parties were receiving kickbacks, this is not sufficient to establish a loss to Medicare.”). Specifically, the court rejected the notion that all claims were illegitimate due to false representations about intent to follow Medicare’s anti-kickback rules.
The Opinion further states that the trial court should have taken into consideration evidence that legitimate services were provided, particularly the testimony of multiple therapists, nurses, and counselors, when calculating loss. The Court specifically concluded that “to calculate loss for sentencing purposes, the value of any legitimate claims, if established, must be offset against the aggregate billings.”
This opinion could have a big impact on health care fraud cases. It could have the effect of narrowing the focus in health fraud prosecutions to the amount of kickbacks paid instead of gross billings. The difference could mean millions in most cases. The narrowed focus will not only reduce sentences, it will reduce restitution and forfeiture amounts.