In United States v. Kuhlman, the 11th Circuit Court of Appeals held that a probated sentence for a white collar defendant was substantively unreasonable and remanded the case for reconsideration by the district court.
Dr. Rick Kuhlman, a chiropractor with offices in Atlanta and Nashville, executed a fraudulent billing scheme from 2005 to 2010 where he falsely billed various health insurance companies for services not rendered to his patients. It was alleged that over the five-year period, Kuhlman collected almost three million dollars in fraudulent billings.
In 2011, Kuhlman pleaded guilty to one count of health care fraud in the United States District Court for the Northern District of Georgia. As stated in the Presentence Report, the federal sentencing guidelines provided for a sentence range of 57 to 71 months of incarceration. As part of the plea agreement, the government recommended a sentence of 36 months imprisonment.
In the days leading up to the sentencing hearing, Kuhlman made complete restitution to the insurance companies. The judge then decided to postpone the hearing for six months, citing both the rising costs of incarceration and the benefit of giving Kuhlman time to pay off his fines and take care of his family. While waiting for his sentencing hearing, Kuhlman completed 391 hours of community service, which included giving presentations on health care insurance fraud to members of the medical community and donating chiropractic services to homeless shelters. At the sentencing hearing six months later, the district court praised Kuhlman’s efforts and sentenced him to probation—an extreme downward departure from the sentencing guideline range. As a result, the Government appealed.
On appeal, the 11th Circuit reviewed the reasonableness of Kuhlman’s sentence under an abuse of discretion standard. The Court found that the district court had not committed any procedural errors when sentencing Kuhlman. The district court properly calculated the guideline range for Kuhlman’s sentence and explained its deviation from that range during the sentencing hearing. However, the Court did find Kuhlman’s sentence substantively unreasonable—meaning that it was too light compared to the gravity of his offense. The Court focused on the methodical nature of the scheme as well as the large dollar amount of the fraud. The Circuit Court also pointed out that in sentencing Kuhlman to probation, the district court failed to achieve one of the main purposes of sentencing which is deterrence.
As a result, the Court remanded the case so that a “reasonable sentence” could be imposed. It will be interesting to see what the district court does the second time around. I would assume that if Dr. Kuhlman’s sentence does not include at least a year in prison, the Government will appeal once again.
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