U.S. Court of Appeals Considers Expert Witness Michael F Arrigo's Opinions in Fraud Case, Vacates and Remands Lower Court's Ruling

LOS ANGELES, Jan. 5, 2021 /PRNewswire/ -- Medicare fraud damages expert Michael F. Arrigo, of No World Borders, served as an expert in a Medicare fraud case, assisting a Defendant-Appellant attorney in a successful outcome before the U.S. Court of Appeals.   

The U.S. Court of Appeals for the Ninth Circuit published an Opinion regarding a Medicare fraud case.  Alleged fraudulent billing, fraudulent coding, and medically unnecessary care were components of the Government's case. Arrigo was requested to assess the Government's methodology regarding damages calculations. This involved, in part reviewing the Government's Presentence Investigation Report and rebutting the loss amount, then applying the loss to the U.S. Sentencing Guidelines 26 (USSG) §2B1.1 standard.

According to Mr. Arrigo, "No one approves of fraud. Medical billing fraud costs the Federal Government hundreds of millions of dollars annually. On the other hand, if a defendant is accused of fraud, the accuracy in the determination of the existence of fraud, and the monetary amount of fraud is essential." Arrigo added, "Usually, the data, including electronic access to information, and the chain of custody of paper information must all be examined in a coherent methodology to examine a fraud case.  Application of generally accepted Standards are also important."

See UNITED STATES OF AMERICA, Plaintiff-Appellee, v. MICHAEL MIRANDO, Defendant-Appellant:

1. Appellant's Opening Brief, Attorneys for Defendant-Appellant James W. Spertus (CA SBN 159825), file April 4, 2018
2. Opinion of the honorable Circuit Judges Gould, Nguyen and Marbley, filed April 9, 2019, No. 17-50386, D.C. No. 2:16-cr-00215-PA-1 "…VACATED AND REMANDED…"

Summary of Expert Scope and Results

1. Reviewed the Presentence Investigation Report as provided for by the U.S. Sentencing Guidelines 26 (USSG) §2B1.1 standard, using U.S. Sentencing Commission (USSC) methods and my specialized knowledge, training, education, and experience.
   
2. Explain inadequacies in the data sample size statistical model and methodology, including extrapolation and 'intended loss' vs. 'actual loss.'  The Government used the intended loss standard, which resulted in an increase in the level for sentencing guidelines from six to thirty.  As a result, the lower court initially imposed a 97-month sentence, which was appealed. 

The attorney for the Defendant-Appellant, Michael Mirando, made the following arguments, among others, in his brief: 

• "The evidence presented to the jury regarding alleged loss was a tiny fraction of the ultimate loss claimed by the government at sentencing. The jury never found that Mr. Mirando's actions resulted in an $8.4 million loss, and the loss in the charged counts was $10,245, which is approximately .001 percent of the total later claimed by the Government to be intended loss. (ER 1548; CR 1 at 7-8.)"

• "Without any analysis, the probation officer accepted the Government's claims and fixed restitution (what it termed "actual loss") at $3,025,329.47. (PSR 1570, 1579; CR 91 at 9, 18.) The probation officer offered no rationale for the discrepancy between the amount it found as the actual loss ($3 million) and the Government's actual loss claim ($3.5 million). Nor did the probation officer address the fact that the actual loss alleged in the Indictment was $2.3 million, which is less than either of these figures. (ER 1547; CR 1 at 6.)"

• "Counsel objected and offered the report of Michael F. Arrigo [emphasis added], whose unrebutted analysis illustrated the flaws in the Government's methodology. Mr. Arrigo opined that the Government's sample size produced a scientifically invalid result. (ER 218-220; CR 93-1 at 21-23.) Mr. Arrigo pointed out that the Government made no effort to determine what the physicians actually ordered to see if the orders matched the billings. (ER 212; CR 93-1 at 15.) He further found that most of the duplicate dates of service claimed by the Government were not, in fact, duplicate billings. (ER 212-214; CR 93-1 at 15-17.) Mr. Arrigo also found that the Government's claimed restitution amount was wildly inflated on account of the Government's flawed methodology. (ER 201, 217-218; CR 93-1 at 5, 20-21.) Neither the Government nor the probation officer made any effort to challenge Mr. Arrigo's conclusions. Without citation or analysis, the probation officer dismissed the 133-page report as unpersuasive. (PSR 1585; CR 95 at 2.)

• "At the sentencing hearing, the district court merely stated that Mr. Arrigo's report "ignored the evidence that was adduced at trial," without identifying any evidence adduced at trial that was inconsistent with the report. (ER 25; 10/30/2017 RT 17.) The district court merely concluded that the report argued "defenses that were ultimately rejected by the jury and is inconsistent with the defense at trial" and failed to address Mr. Mirando's intent.7 (ER 25; 10/30/2017 RT 17.) The district court then adopted the probation officer's factual findings and Guidelines calculations (ER 47; 10/30/2017 RT 39), and it imposed an eighteen-level enhancement for loss and a two-level enhancement for the number of victims. (ER 36; 10/30/2017 RT 28.) The district court then fixed restitution at $3,025,329.47, the amount claimed by the Government at sentencing. (ER 52; 10/30/2017 RT 44.)"

• "The district court's reliance on the government's erroneous calculations regarding loss, restitution, and the number of victims requires reversal. As this Court has repeatedly held, "in establishing the facts, including approximations, underlying a sentence, the district court [must] utilize only evidence that possesses 'sufficient indicia of reliability to support its probable accuracy.'" United States v. Garcia-Sanchez, 189 F.3d 1143, 1149 (9th Cir. 1999) (quoting the United States v. August, 86 F.3d 151, 154 (9th Cir. 1996)). Trial courts have 'an independent obligation to ensure that the sentence was supported by sufficient, reliable evidence.' Garcia-Sanchez, 189 F.3d at 1149; see also United States v. Waknine, 643 F.3d 546, 557 (9th Cir. 2008) (reversing fraud conviction where the government did not provide "detailed explanations of the losses each victim suffered")."

Excerpts of the U.S. Court of Appeals Opinion: 

• "As part of its calculation of [Defendant-Appellant] Mirando's sentence in accordance with the Sentencing Guidelines, the district court made a finding of the 'intended loss' amount from the fraud.  Mirando argues that this was calculated incorrectly.  We agree."

• "In cases of health care fraud, courts must determine the loss amount, which is 'a specific offense characteristic that increases the defendant's offense level pursuant to the Guidelines." Popov, 742. F3d at 914. To calculate the loss amount, Popov established that the 'amount billed o the insurer" is "prima facie evidence of an intended loss for sentencing purposes," but this is a rebuttable presumption…."

• The Court of Appeals observed that in the original trial, the lower court concluded that "…the intended loss enhancements increase Guidelines offense level from six to thirty."

• "The district court abused its discretion when it concluded that the Government's evidence met this 'clear and convincing' standard.  The Government offered prima facie evidence, but at sentencing Mirando, per Popov, tried to rebut the presumption.  He testified that he knew he would never receive full reimbursement of the amount billed."

• [Defendant-Appellant] "… Mirando's sentence is VACATED AND REMANDED for resentencing ..."

For More information:

Selected Press Coverage and Published Articles – expert witness Michael F Arrigo

• Westlaw: U.S. District Judge affirms expert qualifications of Michael Arrigo, denies motion to exclude
• Kaiser Health News 
• National Public Radio
• Wall Street Journal - WSJ Venture Capital Dispatch / WSJ Healthblog
• Healthcare IT News
• eCommerce Times
• OC Register Venture Capital

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