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United States v. Kalu

United States Court of Appeals, Fifth Circuit

August 30, 2019

UNITED STATES OF AMERICA, Plaintiff - Appellee
v.
ELEKWACHI KALU, Defendant-Appellant

          Appeal from the United States District Court for the Southern District of Texas

          Before KING, ELROD, and ENGELHARDT, Circuit Judges.

          KURT D. ENGELHARDT, CIRCUIT JUDGE.

         Elekwachi Kalu pleaded guilty, without the benefit of a plea agreement, to conspiracy to commit healthcare fraud. The district court sentenced Kalu at the bottom of the guideline range to 70 months of imprisonment and three years of supervised release. Kalu appeals his sentence, contending that the district court procedurally erred in imposing two sentencing enhancements. We AFFIRM.

         I.

         Elekwachi Kalu pleaded guilty, without the benefit of a plea agreement, to conspiracy to commit healthcare fraud, in violation of 18 U.S.C. § 1349. In sum, Kalu, his wife, and other coconspirators recruited Medicare beneficiaries, paid doctors to certify them as needing home healthcare, and submitted fraudulent Medicare claims for those beneficiaries through Kalu's company, Rhythmic Home Health Care Services, Inc. (Rhythmic).[1] The beneficiaries did not qualify for such services, and in some cases, received cash payments from Kalu for their participation. Between August 2012 and January 2017, Rhythmic billed Medicare approximately $3, 191, 997.04 for purported home health care services that were either medically unnecessary or that were not performed. Medicare paid Rhythmic approximately $2, 878, 120.59 on those claims.

         As calculated in the presentence report (PSR), [2] Kalu's total offense level of 27 combined with a category I criminal history yielded a guideline range of 70-87 months of imprisonment. Overruling Kalu's objections to the sentencing enhancements, the district court sentenced Kalu at the bottom of the guideline range to 70 months of imprisonment and three years of supervised release. At sentencing, the trial judge explicitly stated that a sentence within the guidelines was appropriate. Additionally, Kalu was ordered to pay restitution to Medicare in the amount of $2, 878, 120.59. Kalu timely appealed his sentence.

         On appeal, Kalu challenges the district court's application of two sentencing enhancements. First, he disputes the two-level sentencing enhancement under U.S.S.G. § 2B1.1(b)(11)(C)(i), contending that his offense did not involve the use of a means of identification to produce another means of identification. Second, Kalu challenges the increase of his offense level by two under U.S.S.G. § 2B1.1(b)(2)(A)(i) because he argues the offense did not involve 10 or more victims, asserting that Medicare was the only victim of the offense.

         II.

         For issues preserved in district court, we review the district court's application of the Guidelines de novo and its factual findings for clear error. United States v. Suchowolski, 838 F.3d 530, 532 (5th Cir. 2016). If erroneous, we must then determine if the procedural error was harmless. United States v. Halverson, 897 F.3d 645, 652 (5th Cir. 2018). "[I]ssues not raised in district court are reviewed only for plain error." Suchowolski, 838 F.3d at 532.

         Kalu filed written objections to both offense-level enhancements in district court. However, Kalu's arguments on appeal with regard to the § 2B1.1(b)(11)(C)(i) enhancement extend beyond the legal basis for his objection in district court, which succinctly stated: "The Medicare number is used in the claim reimbursement process and no other means of identification is thereafter produced." See United States v. Chikere, 751 Fed.Appx. 456, 463 (5th Cir. 2018) (citing United States v. Chavez-Hernandez, 671 F.3d 494, 497 (5th Cir. 2012)). Despite the government's failure to assert plain-error review, "[i]t is well-established that our court, not the parties, determines the appropriate standard of review." Suchowolski, 838 F.3d at 532 (citing United States v. Vontsteen, 950 F.2d 1086, 1091 (5th Cir. 1992) (en banc)). Nevertheless, we need not determine the standard of review because, assuming arguendo they were sufficiently preserved, his claims still fail. See id.

         III.

         Kalu challenges the district court's application of § 2B1.1(b)(11)(C)(i), maintaining that his Medicare fraud did not involve the use of a means of identification to produce another means of identification. Kalu does not dispute that Medicare information is a means of identification. Kalu contends, however, that the enhancement is inapplicable because he used the beneficiaries' Medicare information only to obtain payment for falsely claimed medical services-and he did not intend to produce a Medicare claim number or to produce or obtain any other means of identification. The fact that the Medicare system administratively creates a claim number as a result of his false billing submissions, he asserts, does not justify the enhancement because a second means of identification was not produced or obtained. Furthermore, Kalu argues that his offense did not involve the type of identification breeding that the Guideline was implemented to punish.

         Additionally, Kalu contends that the Medicare claim numbers are not "means of identification" under the Guideline. He argues that the assertion that the claim numbers are "unique is irrelevant," stating that there is no use for the claim numbers outside of the Medicare system, and, again, emphasizing that his only intent in using the beneficiaries' information was to obtain money. Finally, analogizing to the use of a stolen credit card, Kalu contends that Medicare claim ...


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