749


AMENDMENT 749

Amendment: Section 2B1.1(b) is amended by redesignating subdivisions (8) through (17) as subdivisions (9) through (18); and by inserting after subdivision (7) the following:

"(8) If (A) the defendant was convicted of a Federal health care offense involving a Government health care program; and (B) the loss under subsection (b)(1) to the Government health care program was (i) more than $1,000,000, increase by 2 levels; (ii) more than $7,000,000, increase by 3 levels; or (iii) more than $20,000,000, increase by 4 levels.".

Section 2B1.1(b) is amended in subdivision (15), as redesignated by this amendment, by striking "(14)" and inserting "(15)".

The Commentary to §2B1.1 captioned "Application Notes" is amended in Note 1 by inserting after the paragraph that begins "‘Equity securities’" the following:

"‘Federal health care offense’ has the meaning given that term in 18 U.S.C. § 24.";

and by inserting after the paragraph that begins "‘Foreign instrumentality’" the following:

"‘Government health care program’ means any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by federal or state government. Examples of such programs are the Medicare program, the Medicaid program, and the CHIP program.".

The Commentary to §2B1.1 captioned "Application Notes" is amended in Note 3(F) by adding at the end the following:

"(viii) Federal Health Care Offenses Involving Government Health Care Programs.—In a case in which the defendant is convicted of a Federal health care offense involving a Government health care program, the aggregate dollar amount of fraudulent bills submitted to the Government health care program shall constitute prima facie evidence of the amount of the intended loss, i.e., is evidence sufficient to establish the amount of the intended loss, if not rebutted.".

The Commentary to §2B1.1 captioned "Application Notes" is amended in Note 7 by striking "(8)" and inserting "(9)" each place it appears;

in Note 8 by striking "(9)" and inserting "(10)" each place it appears;

in Note 9 by striking "(10)" and inserting "(11)" each place it appears;

in Note 10 by striking "(12)" and inserting "(13)" in both places;

in Note 11 and Note 12 by striking "(14)" and inserting "(15)" each place it appears;

in Note 13 by striking "(16)" and inserting "(17)" each place it appears and by striking "(14)" and inserting "(15)" in both places;

in Note 14 by striking "(b)(17)" and inserting "(b)(18)" each place it appears;

in Note 19 by striking "(16)" and inserting "(17)" and by striking "(11)" and inserting "(12)".

The Commentary to §2B1.1 captioned "Background" is amended by inserting after the paragraph that begins "Subsection (b)(6)" the following:

"Subsection (b)(8) implements the directive to the Commission in section 10606 of Public Law 111–148.".

The Commentary to §2B1.1 captioned "Background" is amended in the paragraph that begins "Subsection (b)(8)(D)" by striking "(8)" and inserting "(9)";

in the paragraph that begins "Subsection (b)(9)" by striking "(9)" and inserting "(10)";

in the paragraph that begins "Subsections (b)(10)(A)(i)" by striking "(10)" and inserting "(11)";

in the paragraph that begins "Subsection (b)(10)(C)" by striking "(10)" and inserting "(11)";

in the paragraph that begins "Subsection (b)(11)" by striking "(11)" and inserting "(12)";

in the paragraph that begins "Subsection (b)(13)(B)" by striking "(13)" and inserting "(14)";

in the paragraph that begins "Subsection (b)(14)(A)" by striking "(14)" and inserting "(15)";

in the paragraph that begins "Subsection (b)(14)(B)(i)" by striking "(14)" and inserting "(15)";

in the paragraph that begins "Subsection (b)(15)" by striking "(15)" and inserting "(16)"; and

in the paragraph that begins "Subsection (b)(16)" by striking "(16)" and inserting "(17)" in both places.

The Commentary to §3B1.2 captioned "Application Notes" is amended in Note 3(A) by adding at the end the following:

"Likewise, a defendant who is accountable under §1B1.3 for a loss amount under §2B1.1 (Theft, Property Destruction, and Fraud) that greatly exceeds the defendant's personal gain from a fraud offense and who had limited knowledge of the scope of the scheme is not precluded from consideration for an adjustment under this guideline. For example, a defendant in a health care fraud scheme, whose role in the scheme was limited to serving as a nominee owner and who received little personal gain relative to the loss amount, is not precluded from consideration for an adjustment under this guideline.".

Appendix A (Statutory Index) is amended by inserting after the line referenced to 12 U.S.C. § 4641 the following:

"12 U.S.C. § 5382                          2H3.1";

by inserting after the in the line referenced to 15 U.S.C. § 78u(c) the following:

"15 U.S.C. § 78jjj(c)(1),(2)              2B1.1

15 U.S.C. § 78jjj(d)                         2B1.1";

in the line referenced to 29 U.S.C. § 1131 by inserting "(a)" after "1131"; and

by inserting after the line referenced to 29 U.S.C. § 1141 the following:

"29 U.S.C. § 1149                          2B1.1".

Reason for Amendment: This amendment responds to the directive in section 10606(a)(2) of the Patient Protection and Affordable Care Act of 2010, Pub. L. 111–148 (the "Patient Protection Act"), and addresses certain new offenses created by the Patient Protection Act and by the Dodd-Frank Wall Street and Consumer Protection Act, Pub. L. 111–203 (the "Dodd-Frank Act").

Response to Directive

Section 10606(a)(2)(B) of the Patient Protection Act directed the Commission to—

amend the Federal Sentencing Guidelines and policy statements applicable to persons convicted of Federal health care offenses involving Government health care programs to provide that the aggregate dollar amount of fraudulent bills submitted to the Government health care program shall constitute prima facie evidence of the amount of the intended loss by the defendant[.]

Section 10606(a)(2)(C) directed the Commission to amend the guidelines to provide—

(i) a 2-level increase in the offense level for any defendant convicted of a Federal health care offense relating to a Government health care program which involves a loss of not less than $1,000,000 and less than $7,000,000;

(ii) a 3-level increase in the offense level for any defendant convicted of a Federal health care offense relating to a Government health care program which involves a loss of not less than $7,000,000 and less than $20,000,000;

(iii) a 4-level increase in the offense level for any defendant convicted of a Federal health care offense relating to a Government health care program which involves a loss of not less than $20,000,000; and

(iv) if appropriate, otherwise amend the Federal Sentencing Guidelines and policy statements applicable to persons convicted of Federal health care offenses involving Government health care programs.

Section 10606(a)(3) required the Commission, in carrying out the directive, to "ensure reasonable consistency with other relevant directives and with other guidelines" and to "account for any aggravating or mitigating circumstances that might justify exceptions," among other requirements.

The amendment implements the directive by adding two provisions to §2B1.1 (Theft, Property Destruction, and Fraud), both of which apply to cases in which "the defendant was convicted of a Federal health care offense involving a Government health care program".

The first provision is a new tiered enhancement at subsection (b)(8) that applies in such cases (i.e., Federal health care offenses involving a Government health care program) if the loss is more than $1,000,000. The enhancement is 2 levels if the loss is more than $1,000,000, 3 levels if the loss is more than $7,000,000, and 4 levels if the loss is more than $20,000,000. The tiers of the enhancement apply to loss amounts "more than" the specified dollar amounts rather than to loss amounts "not less than" the specified dollar amounts to "ensure reasonable consistency" as required by the directive. The consistent practice in the Guidelines Manual is to apply enhancements to loss amounts "more than" specified dollar amounts.

The second provision is a new special rule in Application Note 3(F) for determining intended loss in a case in which the defendant is convicted of a Federal health care offense involving a Government health care program. The special rule provides that, in such a case, "the aggregate dollar amount of fraudulent bills submitted to the Government health care program shall constitute prima facie evidence of the amount of the intended loss, i.e., is evidence sufficient to establish the amount of the intended loss, if not rebutted". The special rule includes language making clear that the government's proof of intended loss may be rebutted by the defendant.

The amendment also adds definitions to the commentary in §2B1.1 for the terms "Federal health care offense" and "Government health care program". "Federal health care offense" is defined to have the meaning given that term in 18 U.S.C. § 24, as required by section 10606(a)(1) of the Patient Protection Act. "Government health care program" is defined to mean "any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by federal or state government." The amendment lists the Medicare program, the Medicaid program, and the CHIP program as examples of such programs. The Commission adopted this definition because health care fraud involving federally funded programs and health care fraud involving state-funded programs are similar offenses, committed in similar ways and posing similar harms to the taxpaying public. In addition, defining "Government health care program" in this manner avoids application difficulties likely to arise from a narrower definition that would require the disaggregation of losses program by program in cases in which the defendant defrauded both federal and state health care programs. Finally, the statutory language in the directive indicates congressional concern with health care fraud that adversely affects the public fisc beyond health care programs funded solely with federal funds.

Finally, the amendment amends Application Note 3(A) to §3B1.2 (Mitigating Role) to make clear that a defendant who is accountable under §1B1.3 (Relevant Conduct) for a loss amount under §2B1.1 that greatly exceeds the defendant's personal gain from a fraud offense, and who had limited knowledge of the scope of the scheme, is not precluded from consideration for a mitigating role adjustment. The amended commentary provides as an example "a defendant in a health care fraud scheme, whose role in the scheme was limited to serving as a nominee owner and who received little personal gain relative to the loss amount". This part of the amendment is consistent with the directive in section 10606(a)(3)(D) of the Patient Protection Act that the Commission should "account for any aggravating or mitigating circumstances that might justify exceptions" to the new tiered enhancement.

New Offenses

In addition to responding to the directives, the amendment amends Appendix A (Statutory Index) to include offenses created by both the Patient Protection Act and the Dodd-Frank Act.

The Patient Protection Act created a new offense at 29 U.S.C. § 1149 that prohibits making a false statement in connection with the marketing or sale of a multiple employer welfare arrangement under the Employee Retirement Income Security Act. Pursuant to 29 U.S.C. § 1131(b), a person who commits this new offense is subject to a term of imprisonment of not more than 10 years. The amendment references the new offense at 29 U.S.C. § 1149 to §2B1.1 because the offense has fraud or misrepresentation as a element of the offense. As a clerical change, the amendment also amends Appendix A (Statutory Index) to make clear that 29 U.S.C. § 1131(a), not the new § 1131(b), is referenced to §2E5.3 (False Statements and Concealment of Facts in Relation to Documents Required by the Employee Retirement Income Security Act; Failure to Maintain and Falsification of Records Required by the Labor Management Reporting and Disclosure Act; Destruction and Failure to Maintain Corporate Audit Records).

The Dodd-Frank Act created two new offenses, 12 U.S.C. § 5382 and 15 U.S.C. § 78jjj(d). With regard to 12 U.S.C. § 5382, under authority granted by sections 202-203 of the Dodd-Frank Act, the Secretary of the Treasury may make a "systemic risk determination" concerning a financial company and, if the company fails the determination, may commence the orderly liquidation of the company by appointing the Federal Deposit Insurance Corporation as receiver. Before making the appointment, the Secretary must either obtain the consent of the company or petition under seal for approval by a federal district court. The Dodd-Frank Act makes it a crime, codified at 12 U.S.C. § 5382, to recklessly disclose a systemic risk determination or the pendency of court proceedings on such a petition. A person who violates 12 U.S.C. § 5382 is subject to imprisonment for not more than five years. The amendment references 12 U.S.C. § 5382 to §2H3.1 (Interception of Communications; Eavesdropping; Disclosure of Certain Private or Protected Information). Section 2H3.1 covers several criminal statutes with similar elements and the same maximum term of imprisonment.

The second new offense, 15 U.S.C. § 78jjj(d), makes it a crime for a person to falsely represent that he or she is a member of the Security Investor Protection Corporation or that any person or account is protected or eligible for protection under the Security Investor Protection Act. See Dodd-Frank Act, Pub. L. 111–203, § 929V. Section 78jjj also contains two other offenses, at subsections (c)(1) and (c)(2), that are not referenced in Appendix A (Statutory Index). All three subsections are subject to the same maximum term of imprisonment of five years. In addition, all three concern fraud and deceit: the newly created 15 U.S.C. § 78jjj(d) involves false representation; 15 U.S.C. § 78jjj(c)(1) involves fraud in connection with or in contemplation of a liquidation proceeding; and 15 U.S.C. § 78jjj(c)(2) involves fraudulent conversion of assets of the Security Investor Protection Corporation. The amendment references these offenses to §2B1.1 because the elements of the offenses involve fraud and deceit.

Effective Date: The effective date of this amendment is November 1, 2011.