Abuse of Trust Sentencing Enhancement for Physician in Medicare Fraud

Federal Criminal Defense Attorney Hope Lefeber Discusses Recent Third Circuit Case Affirming Abuse of Trust Sentencing Enhancement for Physician in Medicare Fraud

In U.S. v. Babaria, 2014 WL 7399043, the Third Circuit held that a physician who paid kickbacks to physicians for referring patients for diagnostic testing occupied a position of trust.

The Third Circuit Court of Appeals decided an issue of first impression: whether a Medicare provider convicted of fraud abused a “position of trust,” justifying a two-level adjustment under § 3B1.3 of theSentencing Guidelines. Federal criminal defense lawyer, Hope Lefeber, discusses the case.

The defendant, Dr. Babaria pleaded guilty to paying physicians under the table for referring patients to his clinic for diagnostic testing, which he then billed Medicare and Medicaid for, amounting to over $2 million. While Dr. Babaria never compromised patient care, the kickbacks nevertheless violated 42 U.S.C. § 1320a-7b(b)(2)(A).

Dr. Babaria objected to the two-level sentencing enhancement for defendants who abuses a position of trust, claiming he neither occupied nor abused such a position of trust. Both the District Court and the Court of Appeals disagreed.

In relying heavily on U.S. v. Sherman, 160 F.3d 967 (3d Cir. 1998), Ms. Lefeber explains that the Third Circuit considered three factors: (1) whether the position allowed the defendant to commit a difficult-to-detect wrong; (2) the degree of authority which the position vested; and (3) whether victims relied on the integrity of the defendant.

In siding with the Fourth and Eleventh Circuits, the Third Circuit ruled that Dr. Babaria occupied and abused such a position since “he certified compliance with the anti-kickback statute; but nevertheless utilized his position as [the clinic’s] medical director and manager to supervise and conceal the payment of kickbacks, a difficult-to-detect offense.”

Ms. Lefeber explains that this case is consistent with the Third Circuit’s previous rulings and basically guarantees an automatic enhancement for abuse of a position of trust for any defendant convicted under this statute.

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