MVRA Restitution in “Fraudulent Clinic” No-Fault Schemes: Full Reimbursement as Loss, Joint-and-Several Liability, and Defendant-Borne Offset Proof

1. Introduction

United States v. Israilov (2d Cir. Apr. 20, 2026) is a Second Circuit summary order affirming a $46 million restitution award under the Mandatory Victims Restitution Act (“MVRA”), imposed jointly and severally on a defendant convicted of conspiracy to commit healthcare fraud and aggravated identity theft.

The case arises from a New York automobile “no-fault” healthcare fraud scheme. The government alleged that Roman Israilov and co-conspirators secretly owned and controlled clinics that, by law, had to be owned by licensed physicians. They allegedly (i) bribed 911 operators and hospital workers to obtain confidential accident-victim information, (ii) steered victims to the clinics through deceptive outreach, and (iii) billed insurers for unnecessary, unprovided, or exaggerated treatment. The district court ordered restitution of the full amount insurers paid to the clinics.

On appeal, Israilov raised four principal issues: (1) whether restitution could be ordered without his presence, (2) whether restitution had to be reduced by the value of any medically necessary services, (3) whether joint and several liability for the full loss was permissible given his asserted lesser culpability and personal gain, and (4) whether restitution should be offset by amounts insurers allegedly recovered through civil settlements.

Note: The panel’s disposition is a summary order and expressly “do[es] not have precedential effect,” though it reflects the court’s application of existing MVRA principles to a common fact pattern in no-fault fraud prosecutions.

2. Summary of the Opinion

The Second Circuit affirmed the restitution order in full. It held:

  • Any possible Rule 43 error in entering restitution in Israilov’s absence was not “plain”, because the MVRA permits post-sentencing restitution determinations and the governing provisions do not clearly require the defendant’s presence.
  • Restitution properly equaled the full amount insurers paid, because under New York law fraudulently incorporated clinics are not entitled to no-fault reimbursement even for appropriate care; thus, but for the fraud, insurers would have paid nothing.
  • The district court acted within its discretion under 18 U.S.C. § 3664(h) in imposing joint and several liability for the full loss, notwithstanding Israilov’s claim he personally received only about $5 million.
  • The district court properly declined to reduce restitution for civil settlement recoveries because the burden to prove entitlement to an offset (including amounts paid by “other persons”) rested on Israilov, who supplied insufficient evidence.

3. Analysis

A. Precedents Cited

The panel’s reasoning is anchored in established Second Circuit MVRA standards and related doctrines:

1) Standard of review and error frameworks

  • United States v. Sullivan, 118 F.4th 170, 227 (2d Cir. 2024): Cited for the abuse-of-discretion standard applied to MVRA restitution orders.
  • United States v. Boccagna, 450 F.3d 107, 113 (2d Cir. 2006): Supplies the definition of “abuse of discretion,” emphasizing legal error, clearly erroneous factfinding, or a decision outside the permissible range.
  • United States v. Zangari, 677 F.3d 86, 91 (2d Cir. 2012): Used twice—first for the proposition that unpreserved restitution objections are reviewed for plain error, and second for the key principle that restitution is measured by the victim’s loss, not the defendant’s gain.
  • United States v. Leroux, 36 F.4th 115, 121 (2d Cir. 2022) and Fed. R. Crim. P. 52(b): Cited for the plain-error framework applicable to unpreserved claims.
  • United States v. Fishman, 157 F.4th 143, 161 (2d Cir. 2025): Articulates the four-part plain-error test the panel applied to the “absence at restitution” claim.
  • United States v. Cooke, 143 F.4th 164, 167 n.1 (2d Cir. 2025) and Davis v. United States, 589 U.S. 345, 347 (2020): The court discusses, but declines to apply, a “relaxed plain error” approach sometimes used in sentencing contexts, noting Supreme Court skepticism toward exempting categories of error from ordinary plain-error review.

2) Presence at sentencing vs. post-sentencing restitution mechanics

  • Ellingburg v. United States, 146 S. Ct. 564, 567 (2026): Cited for the general proposition that restitution is typically imposed at sentencing as part of the criminal sentence.
  • 18 U.S.C. § 3664(d)(5): Relied upon to confirm that restitution amounts may be determined after sentencing under the MVRA’s procedures.
  • United States v. Wyatt, 9 F.4th 440, 454 (7th Cir. 2021): Cited as persuasive authority that a district court may enter a restitution order without the defendant present.
  • United States v. Whab, 355 F.3d 155, 158 (2d Cir. 2004): Supports the conclusion that any error was not “plain” absent binding precedent and with inter-circuit disagreement (or at least the lack of a settled rule).

3) Measuring loss in fraud and the “medically necessary care” argument

  • United States v. Razzouk, 984 F.3d 181, 188 (2d Cir. 2020): Reinforces MVRA’s purpose—making victims whole for their actual losses (amounts they would not have paid but for the crime).
  • State Farm Mut. Auto. Ins. Co. v. Mallela, 4 N.Y.3d 313, 320 (2005): Crucial substantive-law predicate: under New York no-fault rules, fraudulently incorporated medical corporations are not entitled to reimbursement even for legitimate care. This enabled the court to treat the entire payout to the clinics as the insurers’ “but-for” loss.

4) Joint and several liability and apportionment discretion

  • 18 U.S.C. § 3664(h): Statutory basis for either joint-and-several liability or apportionment among multiple defendants.
  • United States v. Yalincak, 30 F.4th 115, 130 n.5 (2d Cir. 2022): Cited for the district court’s “considerable discretion” in structuring restitution among co-defendants.
  • United States v. Zangari, 677 F.3d 86, 91 (2d Cir. 2012) (again): Rejects tying restitution to defendant’s personal proceeds rather than victim loss.

5) Settlement offsets and burden of proof

  • United States v. Smathers, 879 F.3d 453, 460-61 (2d Cir. 2018): Central to the offset issue: the district court may place the burden on the defendant to prove that restitution should be reduced by payments made to the victim, whether by the defendant or “other persons.”
  • United States v. Israilov, No. 22-CR-20 (PGG), 2024 WL 3888773, at *10 (S.D.N.Y. Aug. 20, 2024): The underlying district court decision is cited for the conclusion that Israilov failed to provide adequate settlement information to justify a reduction.

Taken together, these authorities show the panel treating this appeal less as a vehicle for doctrinal innovation and more as an application of settled MVRA principles—loss causation (“but for the fraud”), broad discretion in co-defendant allocation, and defendant-borne proof for offsets—to a high-dollar no-fault fraud record.

B. Legal Reasoning

1) Restitution entered in the defendant’s absence

Israilov relied on Federal Rule of Criminal Procedure 43 (presence at sentencing) to argue that restitution required an in-court pronouncement. The panel did not definitively decide whether Rule 43 was violated; instead, it resolved the issue on plain-error grounds because Israilov failed to object below.

The key move was statutory: the panel emphasized that the MVRA permits post-sentencing completion of restitution determinations under 18 U.S.C. § 3664(d)(5), and that 18 U.S.C. § 3664(c) specifies which procedural rules apply—without clearly importing a presence requirement for a post-sentencing loss determination. With no Second Circuit precedent directly requiring presence at such a proceeding, and with supportive persuasive authority from United States v. Wyatt, any potential error was not “plain.”

2) No reduction for “medically necessary” services

Israilov’s attempted reduction hinged on the idea that insurers received something of value (medically necessary procedures) and thus were not truly out the full amount paid. The court reframed the inquiry: under the MVRA, “actual loss” is what the victim would not have paid but for the fraud.

The dispositive fact was not clinical necessity but legal entitlement. By invoking State Farm Mut. Auto. Ins. Co. v. Mallela, the panel treated the clinics as categorically ineligible for no-fault reimbursement due to fraudulent incorporation. If the insurers would have paid zero absent the fraud, then every dollar paid is a dollar lost—even if some services might have been appropriate in the abstract.

3) Joint and several liability for the full $46 million

Israilov argued his relative culpability and asserted personal gain (~$5 million) should cap his restitution. The panel pointed to the statute’s explicit grant of choice: under 18 U.S.C. § 3664(h), courts may impose either full liability or apportion. With United States v. Yalincak underscoring broad discretion, the panel affirmed joint and several liability, reasoning that restitution tracks victim loss, not individual profit (Zangari).

The court also treated group-causation as sufficient: as a “third-ranking member” who “contributed jointly” to the loss, Israilov fell within the category of participants for whom full loss liability is permissible.

4) No settlement offset without proof

Israilov sought to reduce restitution by pointing to civil settlements involving insurers. The panel applied United States v. Smathers to hold that the district court could place the burden on the defendant to show both entitlement to, and the amount of, any offset—including payments made by “other persons.”

Because Israilov produced no concrete evidence of the settlement proceeds attributable to the losses covered by the restitution order, the district court did not abuse its discretion in refusing to reduce the award or to require insurers to supply offset evidence.

C. Impact

Although nonprecedential, the summary order is likely to be cited (as permitted) for several practical points in MVRA litigation, especially in New York no-fault fraud cases:

  • “But-for payment” framing can eliminate value credits: Where substantive state law (here, Mallela) makes a provider ineligible for reimbursement due to ownership/formation fraud, the “loss” may equal the full amount paid even if some treatment was arguably legitimate.
  • Post-sentencing restitution determinations face a high bar on plain-error review: Defendants who do not timely object to procedure (including presence/hearing requests) may find appellate relief difficult, especially where § 3664’s text and existing circuit law do not clearly require the demanded step.
  • Joint-and-several exposure remains substantial: The order underscores that courts may impose full-loss liability on a conspirator even when personal proceeds are far smaller, so long as the defendant’s conduct contributed to the overall loss and the court elects not to apportion.
  • Offsets require evidence: Defendants seeking credit for civil recoveries should expect to shoulder the burden to document settlement amounts and their relationship to the same loss addressed by MVRA restitution.

In the broader healthcare-fraud enforcement landscape, the reasoning reinforces a prosecutorial-friendly restitution baseline in “illegal provider” cases: once ineligibility for reimbursement is established, disputes over medical necessity may become largely irrelevant to MVRA loss calculations.

4. Complex Concepts Simplified

MVRA (Mandatory Victims Restitution Act)
A federal statute requiring courts to order restitution to identifiable victims for certain crimes (including many fraud offenses). The aim is to compensate victims for their actual, provable losses.
Restitution vs. defendant’s gain
Restitution focuses on what the victim lost, not what the defendant made. A defendant can be ordered to pay more (or less) than personal profits depending on the victim’s losses.
“But-for” loss
The idea that the loss is the amount the victim would not have paid if the fraud had not occurred. Here, because state law barred reimbursement to fraudulently incorporated clinics, the court treated the “but-for” payment as zero.
Joint and several liability
A rule allowing the victim to collect the full restitution amount from any one of multiple responsible defendants, leaving defendants to sort out contribution among themselves (if available).
Apportionment
An alternative to joint and several liability, where the court allocates different restitution amounts to different defendants based on their roles or financial circumstances. The MVRA permits—but does not require—this.
Plain error review
A strict appellate standard applied when an argument was not preserved in the trial court. The defendant must show an obvious error that affected substantial rights and seriously affected the fairness or integrity of the proceedings.
Settlement offset
A reduction in restitution to prevent a victim from being paid twice for the same loss. Courts often require the defendant to prove the amount and applicability of any offset.

5. Conclusion

United States v. Israilov affirms a sweeping MVRA restitution award in a no-fault healthcare fraud scheme by applying three core ideas: (1) where the provider is legally ineligible for reimbursement, the insurers’ “actual loss” may be the full amount paid, regardless of whether some services were medically necessary; (2) district courts retain broad discretion to impose joint and several liability for the full loss under § 3664(h); and (3) defendants bear the burden to prove and quantify any settlement-based offsets.

Even as a nonprecedential summary order, the decision offers a clear roadmap for how federal courts in the Second Circuit are likely to analyze restitution in “fraudulent clinic” cases: eligibility for payment under state insurance law can be outcome-determinative, and evidentiary burdens—especially for offsets—fall heavily on the defendant.