Fraudulent Podiatrist Puts Foot In Mouth; Trial Court Doesn't Step On Him Hard Enough

UNITED STATES v. BLATSTEIN, USCA-4 No. 06-4210, http://pacer.ca4.uscourts.gov/dailyopinions/opinion.pdf/064210.P.pdf , on appeal from USDC-VAED, before USCJs Michael, King, SrUSCJ Hamilton, opinion by King, filed 12 Apr 2007.

LONG STORY SHORT: Statements of former employees and patients established probable cause to search podiatrist's office for evidence of fraudulent billing, but trial court committed plain error in his favor in sentencing after guilty plea, requiring resentencing. Binding in MD, NC, SC, VA, WV.

FACTS: FBI agents were investigating Defendant for alleged healthcare fraud. A former employee reported that Defendant personally billed patients for surgery supposedly done in a nonexistent facility. Another former employee reported that Defendant listed a mail drop as the address for his fictitious facility, received payments there for surgery not done, and had several patients complain about charges for services they never received. A patient reported filling out paperwork in Defendant's office after having an ingrown toenail removed when his wife noticed an extra carbon copy underneath the form. When she tried to see what was on the extra paper, Defendant and an employee physically tried to take the paper back, but the patient and his wife escaped with it; the name of the fictitious facility was on it. Three other patients reported being billed over $19,000 for treatment in a facility they had never heard of. FBI agents used the foregoing in an affidavit to obtain a search warrant for Defendant's office and home, finding incriminating evidence.

PROCEDURE: The United States indicted Defendant in U.S. District Court for the Eastern District of Virginia on one count of healthcare fraud and seven counts of mail fraud. The day after the indictment, Defendant moved to suppress all evidence on Franks grounds, arguing that the agents did not take into account a Virginia statute that allowed occasional surgery in a doctor's office without hospital licensing. The trial court ruled that the affidavit more than established probable cause and that the Virginia statute had no effect on that. MOTION TO SUPPRESS DENIED. Defendant pleaded guilty to one count of mail fraud, reserving his right to appeal the suppression issue.

The parties agreed to recommend a 24-month sentence, within the advisory guidelines range. Without notifying the parties before the sentencing hearing as Rule 32(h) required, the trial court varied downward based on mitigating information in the presentence report, and sentenced Defendant to a year and a day. The United States objected to the variance but did not take exception to the trial court's not giving advance notice. Defendant appealed the denial of suppression, and the United States cross-appealed the sentence, to the U.S. Court of Appeals for the Fourth Circuit.

DECISION: As to the alleged omission from the search warrant affidavit, Virginia statute had no bearing whatsoever on Defendant's charged offenses. Defendant's own employees and patients provided evidence that he had tricked patients into signing for services they had never received, and that none of them had ever been in the fictitious facility where Defendant claimed to have operated on them. This made probable cause to search Defendant's office and home for evidence of healthcare fraud and mail fraud. No Franks violation could have possibly occurred because Virginia hospital licensing exceptions did not legalize criminal fraud. DENIAL OF SUPPRESSION AFFIRMED.

As to the trial court's not noticing the parties in advance of variance, the Fourth Circuit ruled that this was plain error, and correctable on appeal even though the United States never objected to the lack of notice. Trial courts cannot do this even if there are grounds for variance in the presentence report. Parties cannot prepare their arguments without notice, because courts can vary sentences for many different reasons, and no party can guess accurately which factors the trial court plans to use. The Fourth Circuit had vacated sentences before when courts varied upward without notice to defendants, so long as defendants had good arguments that they would have presented upon notice. Here, the United States had forceful arguments against downward variance, and the substantial right to present them. SENTENCE VACATED and remanded for resentencing.

EDITORIAL: What the hey?? Governments don't have RIGHTS, they have POWERS. People have RIGHTS. Courts exist to limit government powers and enforce peoples' rights, at least up to a point. This case does not reach that point. And here, the U.S. Attorney--that is, the guys and gals who spend all day doing federal criminal litigation and are supposed to know what they're doing--didn't say boo at sentencing about the lack of notice. Isn't it pretty fundamental that if you don't complain about something at trial, you shouldn't get to bother the appeals court about it? Doesn't the Fourth Circuit hammer defendants all the time for not objecting? Why does the U.S. Attorney get to fall down on the job and have the Fourth Circuit set them back up?

Back in the day, governments could not have appealed this sort of decision at all. So now the federal courts are supposed to give the federal government a second or third chance every time the sentence seems a little light? It's looking that way. I like Florida's rule that the State can only appeal an illegal sentence. This sentence is far from illegal--except that the "advisory" Guidelines don't like it, and their "advice" is now more important than centuries of common law experience where we got the rule that governments generally have no appeal from criminal courts. Will the Supremes please take a look at this one.

Oh yeah, I'm also supposed to yell at the crook who committed the crimes in the first place. Well, he shouldn'ta did that, but what kind of chump insurance company doesn't get around to checking the addresses of what are supposed to be hospitals? Since the opinion gave the address of this crook's mail drop, if BC/BS had taken ten seconds to Yahoo/Google it like I did just now, they might have thought it odd that the first page has hits for a motivational speaker, glass contractor, Christian ministry, and dorm rugs at the same address. No hospitals. So why did BC/BS apparently keep on writing this knucklehead big checks for doing nothing? Sure, throw him in prison a couple years, but some bureacrats at the Blues need to take a whipping too.