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United States v. Polukhin

United States Court of Appeals, Eighth Circuit

July 19, 2018

United States of America, Plaintiff- Appellee,
Elena Lev Polukhin, Defendant-Appellant.

          Submitted: October 19, 2017

          Appeal from United States District Court for the District of Minnesota - St. Paul

          Before LOKEN, BEAM, and COLLOTON, Circuit Judges.


         Elena Polukhin, a physician, pleaded guilty to one count of aiding and abetting the solicitation and receipt of kickbacks in return for referring patients to a pharmacy. See 42 U.S.C. § 1320a-7b(b)(1)(A); 18 U.S.C. § 2. The district court[1] sentenced Polukhin to eighteen months' imprisonment, and ordered her to make restitution in the amount of $421, 329.19. Polukhin appeals only the restitution order. The offense of conviction did not authorize the amount of restitution ordered, but Polukhin's plea agreement allowed the court to consider other criminal conduct that would justify restitution. We conclude that the district court did not clearly err in finding that Polukhin conspired with others to defraud the United States of an amount that justified the award. We therefore affirm the judgment.


         Polukhin was a physician in Minnesota. In pleading guilty to the kickback charge, Polukhin admitted that in March 2014, she knowingly received $660 in remuneration in exchange for referring patients to Best Aid Pharmacy in St. Louis Park, Minnesota. Polukhin wrote prescriptions for a pain-relief cream, and the pharmacy filled the prescriptions and sought reimbursement from the federally-funded Medicare and Medicaid programs. In a plea agreement, the government agreed to dismiss twenty-eight other counts charged by the grand jury: one count of conspiring to execute a scheme to defraud a health care benefit program between February 2011 and December 2014, nineteen more counts of aiding and abetting soliciting and receiving kickbacks between June 2012 and February 2014, three substantive counts of health care fraud, three counts of aggravated identity theft, and two counts of unlawful distribution and dispensing of controlled substances.

         At sentencing, much of the dispute concerned whether Polukhin participated only in the solicitation and receipt of kickbacks from Best Aid Pharmacy, or whether she also conspired more broadly with two men at the pharmacy to defraud the government. Boris Rabichev, part owner and managing partner of Best Aid, and Richard Custer, a pharmacist at Best Aid, pleaded guilty to a conspiracy to defraud the United States. Their agreement involved a scheme to bill Medicare and Medicaid inflated amounts for the pain-relief creams that Polukhin prescribed.

         Best Aid was involved in "compounding" certain medications, meaning that the pharmacy prepared them by mixing individual ingredients according to a prescription. There were two methods to produce the pain-relief creams: one used bulk powders; the other involved use of at least one individual capsule that contained powder. Custer discovered that Medicare and Medicaid reimbursed at a higher rate if the pharmacy used individual dosage units. But the manufacturing process with dosage units was more time-consuming and laborious because it required opening individual capsules to obtain the powder.

         The fraud occurred when Rabichev and Custer decided to use bulk powder to create the pain-relief cream, but to represent falsely to Medicare and Medicaid that they used individual dosage units. This approach allowed Best Aid to receive reimbursements of $463, 052.33 from the government when accurate submissions would have generated $41, 723.14.

         At Polukhin's sentencing hearing, the principal dispute concerned the scope of her relevant conduct under the advisory sentencing guidelines. Polukhin acknowledged that she was responsible for conduct that encompassed a total of twenty kickback payments from Best Aid, but denied that she was a knowing participant in the pharmacy's larger fraud scheme. The government urged that Polukhin did participate in the fraud scheme with Rabichev and Custer, and that she should be accountable under the guidelines for the full amount of loss to the government caused by that scheme.

         The district court found that Polukhin was involved in the fraud scheme with Rabichev and Custer, and rejected Polukhin's position that her culpability was limited to soliciting and receiving kickbacks. The court found that there was "a relationship between Rabichev and Polukhin which made this scheme come into fruition," and emphasized that Polukhin was "the feeder for the prescriptions which set up the healthcare fraud to happen," and that "part of that scheme was the kickbacks that came back." The court cited evidence that Polukhin had a strong interest in the compounding business and that she considered starting her own business. After quoting an e-mail from Polukhin stating that preparing pain-relief creams from her recipes would be "a huge business," the court found that Polukhin's statements "belie[d] any evidence of not knowing or understanding what would be happening with regard to reimbursement."

         The district court ultimately adopted most of the presentence report prepared by the probation office. The adopted report included a finding that "Boris Rabichev used his experience as part owner and managing partner of Best Aid Pharmacy to conspire with Elena Polukhin, Richard Custer, and others to defraud the United States." The court held Polukhin accountable under the guidelines for a loss amount of $421, 329.19-the difference between the amount that Medicare and Medicaid paid to Best Aid and the amount that the government would have paid if Best Aid had made truthful submissions.

         There was no separate debate at sentencing concerning the amount of restitution owed. In her written submissions on restitution, however, Polukhin incorporated her arguments on loss amount, and claimed "no role" in the billing fraud perpetrated by Rabichev and Custer. The district court, having rejected Polukhin's position on the loss amount under the guidelines, simply ...

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