Stop the Over Emphasis of Loss Amount in White Collar and Health Care Fraud Cases.

In a recent case, the Probation Sentence Report recommended a guideline range of 292 to 360 months for a defendant who pleaded guilty to health care fraud. The offense level was almost entirely driven by the loss amount. Compared to other offenses, we can see that this recommendation, based on the loss amount, is extraordinary. The average sentence imposed for child pornography is 102 months, kidnapping 195 months, murder 255 months, robbery 105 months, and sexual abuse 201 months, for fiscal year 2020. The average sentence for economic based crimes: bribery/corruption 15 months, drug trafficking 76 months, extortion/racketeering 23 months, fraud/theft/embezzlement 19 months, and money laundering 58 months. (U.S. Sentencing Commission, 2020 Datafile, USSCFY20.) Of the 4,298 offenders sentenced under §2B1.1, the Larceny, Embezzlement, and Other Forms Of Theft section of the United States Sentencing Commission Guidelines Manual, less than fifty offenders had loss amounts of greater than $25 million with the vast majority, 940 with a loss amount of less than $6,500. The rarity of this category of loss amount shows that deterrence is not a necessary factor.

The government frequently cites to the case of United States v. Brown for the proposition that white-collar criminals “‘act rationally, calculating and comparing the risks and the rewards before deciding whether to engage in criminal activity.’” Brown actually agreed with this cost/benefit analysis, but a defendant should not.

There is no empirical evidence to support the proposition that individual defendants run a cost benefit analysis before engaging in health care fraud or any white-collar fraud. While I may agree, also without any empirical evidence, that a corporation may run a cost benefit analysis in assessing its risk of False Claims Act liability, increased profit versus risk of liability and damages, there is no evidence that individuals run that type of analysis. But sentencing based on general deterrence resulting in a long sentence are contradicted by empirical evidence. According to the National Institute of Justice, “prison sentences (particularly long sentences) are unlikely to deter future crime.” National Institute of Justice, https://www.ojp.gov/pdffiles1/nij/247350.pdf. Research generally indicates that increases in the certainty of punishment, as opposed to the severity, are more likely to produce deterrent benefits. https://www.sentencingproject.org/wp-content/uploads/2016/01/Deterrence-in-Criminal-Justice.pdf.

As we can see here, white collar defendants should not be unfairly sentenced based on the loss amount or sentenced more severely based on a faulty belief that white-collar criminals act rationally and conduct a cost-benefits analysis before engaging in criminal conduct.

If you are facing an allegation of fraud and are looking for thoughtful and professional representation contact Mr. Rosenblat. Mr. Rosenblat worked at the Illinois Attorney General’s Medicaid Fraud Unit, has spoken at several local bar associations regarding the Illinois False Claims Act, and contributed as an author for the 2022 edition of Employment Termination: Procedures, Grounds, And Challenges. Illinois Institute of Continuing Legal Education.