Third Circuit Recently Affirms an Upward Adjustment in the Criminal Sentence of Physician Based on His Abuse of a Position of Trust

In a case of first impression, the Third Circuit recently affirmed an upward adjustment in the criminal sentence of physician based on his abuse of a position of trust. The defendant in United States v. Barbaria, No. 14-2694 (3d Cir. Dec. 31, 2014), was a licensed radiologist and the manager of a diagnostic testing company. He pleaded guilty to one count of paying illegal kickbacks to physicians in exchange for patient referrals in violation of the federal anti-kickback statute, 42 U.S.C. §1320a-7b. At sentencing, the district court applied a two-level adjustment for abuse of position of trust pursuant to U.S.S.G. § 3B1.3 and imposed a sentence of 46 months imprisonment. The defendant appealed and argued that the upward adjustment was improper because he neither occupied nor abused a position of public or private trust.

The Third Circuit disagreed and sided with the Fourth and Eleventh Circuits in holding that application of the adjustment in the context of a Medicare kickback scheme was appropriate. Specifically, the Barbaria Court found that the doctor occupied a position of trust vis-à-vis Medicare because he served as medical director and manager of the test facility, he certified compliance with the anti-kickback statute in seeking payment from Medicare and he used his position both to pay the illegal referral fees and to conceal those payments. Since he “was not subject to any supervision over his actions with respect to the business and its relationship with the government programs,” the defendant doctor was, “without question, an insider who abused his position” and therefore eligible for the upward adjustment. The fact that the defendant held a medical license was relevant but not dispositive to the analysis. The Third Circuit explained: “[W]here a defendant obtains his minimally-supervised position by virtue of his professional training and license and then takes advantage of the discretion granted to him in a way which significantly facilitates the fraud, we can rightly say that he has abused a position of trust.”

Barbaria is the first case in which the Third Circuit applied the abuse of position of trust adjustment in the context of health care fraud. The case will likely be cited broadly as the basis for seeking increased punishment from physicians and health care professionals implicated in alleged health care fraud.

The members of Myers, Brier & Kelly, LLP’s white collar defense team, including Daniel T. Brier, Patrick A. Casey and Donna A. Walsh, routinely represent individuals who are under investigation for or charged with alleged health care fraud. Myers, Brier & Kelly, LLP’s health care defense team, which is led by Frank J. Brier, regularly counsels health care providers with respect to developing anti-kickback and other compliance programs.

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