Sentencing for Federal Health Care Fraud Offenses: Court of Appeals Nixes Probation Even Though Doctor Paid Full Restitution and Performed Almost 400 Hours Community Service

A decision from an Atlanta case that was issued last Friday once again demonstrates that sentencing hearings in federal criminal cases are amazingly complex, and can lead to surprises. In the case from last week, US v. Kuhlman, the Sentencing Guidelines called for a range of 57-71 months in custody. Prosecutors asked for 36 months. The Defendant paid almost $3 million in full restitution. The Judge continue the case for 6 more months, during which time the Defendant performed almost 400 hours of community service. At the next sentencing hearing, the Judge decided it made no sense to put the Defendant in prison, so he imposed a “time served” sentence. The prosecutors appealed, and the Court of Appeals agreed with them, reversing the probationary sentence and remanding for another sentencing hearing.

The Defendant was a local Atlanta area chiropractor who owned and operated a series of clinics. Beginning in January 2005, he began a five-year scheme, falsely billing health insurance companies for services he knew were not rendered to his patients. The Defendant was charged in a criminal information with one count of health care fraud in violation of 18 U.S.C. §§ 1347 and 2. He pleaded guilty pursuant to a plea agreement. At the plea hearing, the chiropractor admitted that he did not steal out of need-he was not in financial trouble and he did not have creditors breathing down his neck asking for money. Instead, he conceded that he simply pushed the envelope of billing practices.

A few days before sentencing, the doctor paid $2,944,883 in full restitution. The Judge was obviously impressed and remarked that the chiropractor was the first Defendant that the Judge could recall who made such a large restitution payment prior to sentencing.

The very experienced Judge proceeded to discuss the rising costs of incarceration, citing a recent Georgia state commission formed to explore alternatives to prison for nonviolent criminals. The Judge alluded to the fact that the chiropractor would need time to pay off his fine and support his family. The Judge also hinted that if given extra time before sentencing, perhaps the doctor should perform public service. The Judge continued to express concerns over the rising costs of prison and suggested that a continuance would save “the court . . . at least $10,000 by not incarcerating the Defendant during this period.” The Judge, who has been on the bench since the early 1980’s, also noted that he had ordered a similar sentencing continuance for a “budding rock star,” which had yielded positive results. The Judge explained that when given the extra six months, the “budding rock star” made “hundreds of visits to young people” and had a positive impact on the community.

Over the following six months, the doctor made good on the opportunity given to him by the Judge. The Defendant performed 391 hours of community service. He visited various medical, nursing, and chiropractic schools and gave presentations on health care insurance fraud. He also provided 18 days of free chiropractic services at homeless shelters across Atlanta and painted a gym at an elementary school. At the second sentencing hearing, the Judge commended the doctor’s work during his six-month continuance. In light of the full restitution payment, the community service, and the rising costs of incarceration, the Judge sentenced the chiropractor to probation for the “time served” while awaiting his sentence.

The Court of Appeals decided that the sentence was simply too lenient. The opinion goes on for pages railing against the idea that “white collar” criminals somehow get a break by paying full restitution.

This case is highly disappointing. As kids we are taught that a person stealing something should pay back that which was taken. Then, when showing remorse, we are told that the person should say they are sorry, and demonstrate to others the wrongfulness of their conduct. Here, the three judges felt they knew better than the highly experienced Senior District Judge. These judges believed that it’s better to put a productive man in prison and spend tens of thousands of taxpayer dollars, even though the chiropractor paid back every penny. We sincerely hope this case does not show a trend of appellate judges reversing what they perceive to be unduly “lenient” sentences.