9/30/24: Lengthy health-care fraud decision

In United States v. Solakyan, --- F.4th ---, No. 22-50023 (9th Cir. 2024), the Court (1) affirmed Sam Sarkis Solakyan’s conviction for (a) conspiracy to commit honest-services mail fraud and health-care fraud and (b) honest-services mail fraud and aiding and abetting; and (2) vacated the district court’s restitution order.  Solakyan was the owner and operator of multiple medical-imaging companies that routed unsuspecting patients from complicit physicians and medical schedulers to his companies for superfluous magnetic resonance imagery (“MRI”) scans and other medical services.

The Court considered a host of challenges to the convictions and restitution order.  Here are some of the key determinations.  

We now hold that under Skilling and Milovanovic, honest-services mail fraud, as proscribed by 18 U.S.C. §§ 1341 and 1346, encompasses bribery and kickback schemes that deprive patients of their intangible right to the honest services of their physicians.

We must [] determine whether § 1346 requires the government to prove in a private-sector case that the victims of the fraudulent scheme suffered some kind of tangible harm as an element of the offense

We [] hold that actual or intended tangible harm is not a necessary element for prosecution under §§ 1341 and 1346. Rather, the same elements required to prove honest-services fraud in a public-sector case, including fraudulent intent and materiality, apply in a private-sector case as well

This brings us to Solakyan’s claim that the court erred in ordering a restitution amount that is distinct from the loss amount calculated for purposes of sentencing. The district court did not err. As we recently stated, “[t]here is no categorical rule that restitution must be equal to or less than the amount of loss found when applying Sentencing Guidelines § 2B1.1(b)(1) or similar loss-based Guidelines sections.” “A discrepancy, standing alone, does not establish legal error.”  Accordingly, a court’s leniency on the loss calculation for sentencing purposes does not hamstring its discretion to impose a larger restitution order in an amount fully borne by a defendant’s victims. 

[T]he district court never explained why it did not deduct from the restitution order the value of medically necessary MRIs. This Court’s actual loss rule requires deducting from the total restitution amount the value of services for which insurers would have paid, absent Solakyan’s fraud. Such deductions include any medically necessary and otherwise lawful MRIs had the patients been insured—an analysis that the Government made and the court accepted for determining the “conservative” loss amount under the Sentencing Guidelines. We hold that the district court’s failure to make specific findings supporting its restitution amount, in particular as to offsets, was an abuse of discretion.

We affirm Solakyan’s conviction but vacate the restitution order and remand to the district court to determine whether the total loss amount should be reduced, at least in part, by the cost of reimbursement for medically necessary MRIs the insurers would have incurred had Solakyan acted lawfully. 

9/12/24: A couple of sentencing decisions

First, in United States v. Brewster, --- F.4th ---, No. 23-329 (9th Cir. 2024), the Court affirmed a sentence imposed following the defendant’s guilty plea to one count of being a felon in possession of a firearm.

The Court rejected a variety of sentencing claims.  The only thing that jumped out at me was the Court's conclusion that data from the Sentencing Commission’s Judiciary Sentencing INformation (JSIN) online tool was sufficiently reliable to consider at sentencing.  I don't recall seeing this in a prior published opinion (but I certainly could be wrong about that).  

In sum, the district court did not err, much less clearly err, in finding that the JSIN data was reliable. Thus, perforce, it bore some minimal indicia of reliability. The JSIN data came from a reliable source designed specifically for judges to use during sentencing to fulfill their obligations under § 3553(a)(6). The JSIN data was also corroborated by other unchallenged evidence. Finally, even though he could have, Brewster offered no evidence to contradict or materially undermine JSIN’s reported average and median sentences. 

Next, in United States v. Avendano-Soto, --- F.4th ---, No. 23-281 (9th Cir. 2024), the Court affirmed the defendant’s conviction and sentence following his guilty plea to assaulting a federal officer resulting in bodily injury.  Again, not much new in this case, but the Court's discussion of the Montoya pronouncement requirement is somewhat noteworthy.  

In the District of Arizona, General Order 17-18 "lists thirteen 'standard' conditions, all based on the thirteen 'standard' conditions recommended for supervised release in § 5D1.3 of the Guidelines."  The Court noted that: 

Under Montoya, “a district court must orally pronounce all discretionary conditions of supervised release in the presence of the defendant.” “[T]his pronouncement requirement is satisfied if the defendant is informed of the proposed discretionary conditions before the sentencing hearing and the district court orally incorporates by reference some or all of those conditions, which gives the defendant an opportunity to object.” 

Because Avendano reviewed and understood the PSR, and the PSR incorporated the conditions in General Order 17-18, Avendano had sufficient notice that he would be subject to the conditions in General Order 17-18.4 Thus, the district court satisfied Montoya’s pronouncement requirement.

9/11/24: Lengthy bribery decision

In United States v. Shen Zhen New World I, LLC, --- F.4th ---, No. 23-972 (9th Cir. 2024), the Court affirmed a real estate development company’s convictions on three counts of honest services mail and wire fraud, in violation of 18 U.S.C. §§ 1341, 1343, 1346; one count of federal-program bribery, in violation of 18 U.S.C. § 666(a)(2); and four counts of interstate and foreign travel in aid of racketeering, in violation of the Travel Act, 18 U.S.C. § 1952(a)(3).

This case revolves around a pay-to-play scheme between a real estate developer and a former LA Councilmember.  The developer remains a fugitive in China, so the case went to trial solely against his company. 

First, the Court rejected the defendant's sufficiency challenge.  It held that, when based on bribery, a conviction for honest-services fraud requires proof of the bribe-giver’s intent to enter a quid pro quo. But the bribery offense does not require an agreement to enter a quid pro quo with the public official when the defendant is the bribe-giver.  A defendant offering a benefit to a public official with the intent to influence any official act in exchange suffices.

Second, the Court rejected the defendant's challenge to the district court's refusal to provide certain jury instructions on quid pro quo and specified official acts. 

Third, the Court affirmed the defendant's Travel Act convictions. The defendant argued that California’s bribery statutes are too broad to serve as federal bribery predicates under the “categorical approach” required under the Travel Act. The Court determined that, as construed by the California courts, bribery under California law is broader than the Travel Act’s generic definition of bribery. But the mismatch between the generic definition of bribery and California bribery statutes do not require vacating Shen Zhen’s convictions because the jury convicted Shen Zhen based on elements that conform to the generic definition of bribery under the Travel Act.  

[Of note, there is something about the Court's application of the categorical approach on this issue that seems off to me, but I need to review the case again to figure out what.  If anyone comes up with the answer, please let me know]. 

Fourth, the Court held that the district court properly admitted evidence of the councilmember's general-pay-to-play scheme.

Finally, the Court held that the district court wrongly excluded as inadmissible hearsay the developer's alleged statements about his state of mind regarding his gift-giving. 

As the parties acknowledge, defense counsel sought to elicit Huang’s out-of-court response to Zheng that Huang thought he and Huizar “were just having fun,” “not doing anything wrong,” and that he “had not asked . . . Huizar for anything.” Had Zheng been able to offer this testimony, it would have been probative not as to the truth of these statements but whether Huang felt culpable in his interactions with Huizar. Although Zheng could not testify as to the factual basis for Huang’s mindset, at least some of the excluded statements were probative of Huang’s “then-existing state of mind” and “mental feeling” about his actions—admissible as an exception to the rule against hearsay.

The Court concluded, however, that the error was harmless.

9/4/24: Helpful decision holding that Cal. PC 245(a)(1) does not qualify as a crime of violence

In United States v. Gomez, --- F.4th ---, No. 23-435 (9th Cir. 2024), the Court vacated a sentence and remanded for resentencing in a case in which the district court applied a career offender enhancement under U.S.S.G. § 4B1.1 on the ground that Gomez’s prior conviction for assault with a deadly weapon under California Penal Code § 245(a)(1) was a “crime of violence.”  The Court held this was error.

Jesus Ramiro Gomez was sentenced to 188 months’ incarceration for one count of distribution of methamphetamine. At sentencing, the district court applied a career offender enhancement, which doubled the recommended range for Gomez’s sentence. To apply the enhancement, the district court found that Gomez’s prior conviction for assault with a deadly weapon under California Penal Code § 245(a)(1) was a crime of violence. We have previously held that California Penal Code § 245(a)(1) constitutes a crime of violence, but our decisions are clearly irreconcilable with the Supreme Court’s ruling in Borden v. United States, 593 U.S. 420 (2021). In light of Borden, we hold that convictions under California Penal Code § 245(a)(1) do not qualify as crimes of violence, and the district court incorrectly applied the career offender enhancement in this case. 

Because we conclude California’s assault statute sweeps in reckless uses of force, as defined in Borden, a conviction under § 245(a)(1) is not a categorical match with the elements clause and does not constitute a crime of violence.

In sum, Borden establishes a bright line rule: if a statute criminalizes uses of force committed only with a conscious disregard of a substantial risk to another person, it is not a crime of violence. Our prior cases do not apply that test, and thus improperly categorize § 245(a)(1) as a crime of violence in violation of Borden. 8 They are not merely in tension with Borden; they are irreconcilable. 

[A]s explained above, § 245(a)(1) does not limit its scope to uses of force with a mens rea greater than recklessness, let alone extreme recklessness. It thus does not constitute aggravated assault under the enumerated offenses clause.  

Beyond these important holdings, the Court also keeps alive its helpful rule that, "[w]hen an appeal presents a pure question of law and the opposing party is not prejudiced by the defendant’s failure to object, we may apply de novo review in our discretion."  The Court explained:  "Under our established precedent, because we do not need a factual record to resolve the purely legal question before us, we exercise our discretion to review the challenge de novo."

9/4/24: A published update to 3/18/24's Interesting Second Amendment decision

Before I get to today's interesting published order -- and the Circuit infighting it reveals -- I wanted to address United States v. Ovsepian, --- F.4th ---, No. 21-55515 (9th Cir. 2024). 

In the habeas appeal, Ovsepian argued that he was factually innocent of aggravated identity theft, a crime for which he was prosecuted and convicted at trial."  The Court agreed:  "In light of Dubin, we excuse Ovsepian’s procedural default and conclude that the jury instructions used in his trial were erroneous because they did not convey that his “possession” of another’s identifying information must have been at the crux of the healthcare fraud to sustain a conviction of aggravated identity theft and, because no jury so instructed could find Ovsepian guilty of that offense on the record before us, we vacate Ovsepian’s conviction for aggravated identity theft."

The opinion has a lot of helpful language for 1028A cases.  It also has a thorough discussion of the actual innocence exception to procedural default. 

Today, in United States v. Perez-Garcia, --- F.4th ---, No. 22-50314 (9th Cir. 2024), the Court issued a published order denying rehearing en banc in this Second Amendment related case.  

My original summary of the panel decision is below.  Today's order is 66 pages because of the concurrence and dissent.  The tension is clear.  For your reading pleasure, here is a bit of the concurrence:

A single judge of our court dissents from the order denying the petition for rehearing en banc. I join my colleagues who have voiced concern about these so-called “dissentals,” which often present a “distorted presentation of the issues in the case, creating the impression of rampant error in the original panel opinion although a majority— often a decisive majority—of the active members of the court . . . perceived no error.”

The dissent in this case, though, is particularly curious. In a case where—everyone agrees—we lack jurisdiction to rehear the merits of the appeals, one judge has taken it upon himself to write a 61-page advisory opinion. Only about 5 of those 61 pages purport to address the relevant question at hand—what exceptional circumstance, if any, renders en banc review appropriate? The rest details Judge VanDyke’s views of the Second Amendment and his disagreements with the three-judge panel decision. As we have long recognized, critiques of this nature are irrelevant because “[w]e do not take cases en banc merely because of disagreement with a panel’s decision, or rather a piece of a decision.” 

I concur in the denial of rehearing en banc, and I write separately to make two brief points. First, this appeal is clearly unworthy of en banc review. Second, the Supreme Court’s recent decision in United States v. Rahimi, 144 S. Ct. 1889 (2024), vindicates the analysis in Perez-Garcia.  

In United States v. Perez-Garcia, --- F.4th ---, No. 22-50314 (9th Cir. 2024), the Court denied Appellants’ motion to dismiss the appeal as moot, and held that the Bail Reform Act of 1984’s firearm condition on pretrial release is constitutional as applied to the appellants. 

This is a case out of the SDCA. 

After their arrests in unrelated cases, two magistrate judges released Fencl and Perez-Garcia pending their trials but subjected them to a condition of pretrial release that temporarily barred them from possessing firearms pending trial.  The magistrate judges concluded that the firearm condition was the least restrictive way to assure the safety of the community and the defendants’ appearances in court. Two district court judges agreed.

In consolidated appeals, Appellants Fencl and Perez-Garcia contended that the pretrial firearm condition violates their Second Amendment rights under New York State Rifle & Pistol Ass’n, Inc. v. Bruen, 597 U.S. 1 (2022). 

The Ninth Circuit affirmed in a brief dispositive order stating: “We affirm the district court’s orders. An opinion explaining this disposition will follow.”

Fencl and Perez-Garcia moved to dismiss their appeals as moot after the Court ruled against them but before the opinion was released. 

Today, the opinion was filed.  As noted, the Court declined to dismiss the appeals.  

Next, the Court held that "the Bail Reform Act’s firearm condition on pretrial release is constitutional as applied to Fencl and Perez-Garcia. Our holding is consistent with how we have long balanced the constitutional rights of pretrial detainees and releasees with legitimate public safety and logistical considerations. And our holding is consistent with our nation’s long history of temporarily disarming criminal defendants facing serious charges and those deemed dangerous or unwilling to follow the law."