Wednesday, July 26, 2006

$5M Medicare Fraud + 3 month sentence = Reversal on Appeal

As some readers (are you out there?) might know, the federal sentencing guidelines were ruled advisory by the U.S. Supreme Court in 2005. Judges still have to calculate what a defendant's sentence would have been under the guidelines, but they are now free to sentence criminals more or less harshly than the guidelines proscribe. Appellate courts, however, have the power to review the sentence for reasonableness. That is, the appellate court can decide whether 20 years for child pornography or 6 months probation for a white collar crime (like in the HealthSouth case) are reasonable.

In this decision, issued on July 26 by the First U.S. Circuit Court of Appeals, the court was asked to review the reasonableness of a 3 month sentence for a man convicted of conspiring to defraud Medicare out of more than $5 million dollars.

Thurston was indicted in 1998 for crimes he allegedly committed in the 80's and 90's when he was an executive at Damon Clinical Laboratories, a company that provide medical diagnostic equipment to hospitals, doctor, etc.

"Thurston was indicted for conspiring with three others to manipulate Damon's service options to encourage physicians to order unnecessary tests for Medicare beneficiaries," the court said. "In particular, the indictment charged Thurston with conspiring to induce physicians to order rarely needed tests for ferritin and apolipoprotein by making them part of a battery of frequently ordered tests and informing physicians, falsely, that the tests did not cost extra."

According to the opinion, Massachusetts federal judge Edward F. Harrington, who handed down Thurston's three month sentence, said he was skeptical of the government's case and would probably only sentence the company's president, who was also implicated, to probation even if the prosecution won a guilty verdict.

"Aware that the judge had more than once granted unappealable acquittals in similar
cases, the government viewed its likelihood of gaining convictions and long sentences as remote. It therefore offered generous plea agreements to each of the defendants," the 1st Circuit said. "In exchange for a plea of nolo contendere to a one-count information, the government offered to dismiss the indictment and not to appeal the sentence imposed (which the judge had indicated would not involve imprisonment)."

The company's president, Joseph Isola, took the deal, but Thurston and another co-defendant did not. Thurston said he rejected the deal because a guilty plea would cause him to be "shunned" by the Mormon Church. Isola ultimately was sentenced to three years of probation.

After trial, Thurston was ultimately convicted. The statutory maximum sentence for his crime was 5 years. Instead, Judge Wolf gave Thurston 3 months in prison, citing the low sentence given to Isola - who the judge considered the "primary architect" of the fraud, and Thurston's "extraordinary contributions and service to society, and especially to his religious obligation."

Both parties appealed and, in a previous decision, the 1st Circuit vacated and remanded the case because Judge Harrington lowered Thurston's sentence on improper grounds. The appellate court ordered Harrington to give Thurston the 5 year sentence. Thurston appealed to the U.S. Supreme Court.

While his case was pending, Judge Harrington recused himself, saying he could not follow the orders given by the appellate court. Chief District Judge Mark Wolf then took over the case. Additionally, the U.S. Supreme Court ruled in U.S. v. Booker that the sentencing guidelines were advisory. The U.S. Supreme Court vacated the 1st Circuit's decision and remanded for consideration under Booker. The 1st Circuit then remanded again, asking for a review to determine if an obstruction of justice sentencing enhancement should apply.

On remand, Judge Wolf sentenced Thurston to three months jail time and 2 years of probation for essentially the same reasons as Judge Harrington. Prosecutors again appealed. The appellate court again rejected sentence, saying Isola's sentence could lower Thurston's sentence by some amount, but not as dramatically as Judge Wolf had done. The appellate court also rejected the idea that the 3-month sentence reflected the seriousness of the crime. Finally, it rejected Wolf's contention that the sentence would adequately deter future frauds because white collar criminals are usually concerned with whether they will go to prison, not with how long they will go to prison.

Thurston's sentence was vacated, but the 1st Circuit was concerned that sending his case back for a third time "without providing further guidance might lead to another contentious district court proceeding and a third appeal. This would benefit no one."

The court added: "Two district judges have concluded that a sentence below the guideline recommendation is warranted in this case. While we think that there are plausible reasons to support a below-guideline sentence, these reasons do not permit the extreme variance that has
been granted."

The court said Wolf could grant a sentence lighter than 60 months it certain circumstances. But based on the law and evidence, the court said a sentence lighter than 3 years "would fail reasonableness review in the present circumstances."

"In setting the minimum sentence that could withstand reasonableness review, we are not endorsing 36 months as the correct sentence for Thurston," the 1st Circuit concluded. "Indeed, given the seriousness of Thurston's offense and his role as an organizer and lead implementer of the fraud, this court would be inclined to impose a sentence at or near the guideline recommendation if it were acting as the sentencing court. But our role here is only to determine
the minimum sentence that could be considered reasonable on the present record. Accordingly, we emphasize that in remanding for resentencing, we are not ordering that a 36-month sentence be imposed. The district court is free to solicit further argument and evidence from the parties, but, absent an extraordinary development, the court must impose a sentence of no less than 36-months' imprisonment."

For more discussion on reasonableness in sentencing, see Professor Doug Berman's blog at Sentencing Law and Policy.

07/28/2006 - Corrected throughout to change trial judge from Mark Wolf to Edward F. Harrington. (Hat tip to anonymous commenter). Wolf was the judge brought in after Harrington recused himself.


Anonymous Anonymous said...

The district judge who originally presided over the Thurston case and recused himself was not Judge Wolf, but Senior Judge Harrington. See 286 F. Supp.2d 70.

You might want to correct the factual background of the post.

8:19 AM  

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