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Department of Health and Human Services
Civil Remedies Division


Elliot Heller, M.D.,


DATE: December 30, 2003
             - v -


The Inspector General


Docket No.C-03-559
Decision No. CR1126


I modify the exclusion of Petitioner, Elliot Heller, M.D., from participating in Medicare and other federally funded health care programs to a period of at least five years.

I. Background

Petitioner is a physician who trained in facial plastic and reconstructive surgery. He headed a practice in Edison, New Jersey.

On April 30, 2003, the Inspector General (I.G.) notified Petitioner that he was being excluded from participating in Medicare and other federally funded health care programs for a period of at least 13 years. Petitioner requested a hearing and the case was assigned to me for a hearing and a decision.

I held a pre-hearing conference. At that time it appeared to me that an in-person hearing would not be necessary to decide this case because it seemed that all relevant evidence would be presented in the parties' exhibits. Accordingly, I ordered that the case be submitted in writing. Each side has submitted briefs and proposed exhibits. The I.G. submitted nine proposed exhibits (I.G. Ex. 1 - I.G. Ex. 9). Petitioner submitted 22 proposed exhibits (P. Ex. 1 - P. Ex. 22). Neither party objected to my receiving these proposed exhibits into evidence and, consequently, I receive all of them into evidence.

I note that Petitioner now argues that an in-person hearing might be necessary to air fully the issues in this case. However, Petitioner has not provided me with a proffer of any testimony that provides evidence which is in addition to that which Petitioner has offered by way of exhibit. For that reason, I conclude that an in-person hearing is not necessary. Moreover, I conclude that an in-person hearing is unnecessary inasmuch as I am modifying the exclusion to the five-year minimum period. It would not be possible for Petitioner to have his exclusion reduced below the five-year period regardless of the evidence he might offer at a hearing.

II. Issues, findings of fact, and conclusions of law

A. Issue

The only issue in this case is whether the length of Petitioner's exclusion is unreasonable.

The I.G. excluded Petitioner pursuant to the provisions of section 1128(a)(3) of the Social Security Act (Act). This section mandates the exclusion of any individual who is convicted under either federal or State law:

in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program . . . operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

The minimum period of exclusion that the I.G. must impose for an exclusion that is mandated by section 1128(a)(3) is five years. Act, section 1128(c)(3)(B). However, in the appropriate case, the I.G. may exclude an individual for more than five years. 42 C.F.R. 1001.102.

The I.G. based the determination to exclude Petitioner on his September 26, 2002 conviction in the Superior Court of New Jersey, Middlesex County, of a single count of theft by deception and on aggravating factors that relate to Petitioner's crime. I.G. Ex. 3, at 1. That conviction was the result of Petitioner's guilty plea to Count Two of an indictment in which he was charged with obtaining or attempting to obtain property of another in excess of $75,000 by deception. I.G. Ex. 2, at 3. Specifically, Petitioner was charged with, and pled guilty to, defrauding private health care insurance companies by submitting false claims for sinus surgical procedures.

Petitioner does not dispute the facts of his plea and conviction. Petitioner does not disagree that his exclusion for a period of at least five years is mandated by sections 1128(a)(3) and 1128(c)(3)(B) of the Act. Furthermore, Petitioner concedes that aggravating factors, as alleged by the I.G., are present. However, Petitioner asserts that the 13-year exclusion imposed by the I.G. is unreasonable. Petitioner asserts that, in determining to exclude him, the I.G. failed to take into consideration a mitigating factor that serves to countervail the aggravating factors cited by the I.G. in her determination.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding as a separate heading. I discuss each Finding in detail.

1. The I.G.'s exclusion determination fails to take into consideration the presence of a mitigating factor.

The purpose of an exclusion imposed pursuant to section 1128 of the Act is remedial and not punitive. Section 1128 is intended to protect federally funded health care programs and their beneficiaries and recipients from individuals and entities whose conduct establishes them to be untrustworthy. Patel v. Thompson, 319 F.3d 1317 (11th Cir. 2003); Mannocchio v. Kusserow, 961 F.2d 1539, 1543 (11th Cir. 1992). The measure of whether any exclusion imposed pursuant to the Act is reasonable is whether that exclusion serves the Act's remedial purpose. An exclusion becomes excessive and unreasonable when it is for a period that is longer than is necessary to fulfill the statutory purpose of protecting federally funded programs, beneficiaries and recipients from untrustworthy individuals.

Regulations published by the Secretary at 42 C.F.R. Part 1001 establish criteria for deciding whether an individual is untrustworthy. The criteria for measuring the reasonableness of an exclusion imposed pursuant to section 1128(a)(3) of the Act are at 42 C.F.R. 1001.102 (these criteria apply as well to the other subparts of section 1128(a)). The criteria are stated as aggravating or mitigating factors. 42 C.F.R. 1001.102(b), (c). The presence of evidence relating to one or more aggravating factors may justify increasing an exclusion imposed pursuant to section 1128(a)(3) of the Act beyond the five-year minimum mandatory period. The presence of evidence relating to a mitigating factor or factors may offset evidence that relates to an aggravating factor or factors. Id.

In her exclusion notice the I.G. cited the presence of four aggravating factors as justification for Petitioner's 13-year exclusion. I.G. Ex. 1, at 1. These factors, the presence of which Petitioner does not deny (Petitioner's brief at 12 - 13), are as follows:

Petitioner's crime caused various entities to incur losses in excess of $5,000. 42 C.F.R. 1001.102(b)(1).

Petitioner committed his crime over a period that exceeded one year in length. 42 C.F.R. 1001.102(b)(2).

Petitioner was sentenced to a term of incarceration for his crime. 42 C.F.R.  1001.102(b)(5).

Petitioner's crime led to adverse action by New Jersey State licensing authorities against his license to practice medicine in New Jersey. 42 C.F.R.  1001.102(b)(9).

I.G. Ex. 1, at 1.

The notice did not mention the presence of any mitigating factors that might offset the four aggravating factors. See I.G. Ex. 1. However, the record of Petitioner's criminal case establishes the presence of a mitigating factor. That is the factor that is described at 42 C.F.R. 1001.102(c)(2):

The record in the criminal proceeding, including sentencing documents, demonstrates that the [sentencing] court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual's culpability.

The strategy employed by Petitioner's counsel in his criminal case in order to secure for Petitioner a reduced punishment for his crime included arguing forcefully that Petitioner suffered from a psychiatric condition that reduced his culpability. Counsel submitted a sentencing memorandum on Petitioner's behalf which featured a discussion of Petitioner's psychiatric condition. P. Ex. 1, at 8 - 15. In this memorandum counsel argued that Petitioner's psychiatric problems directly influenced Petitioner's thinking and caused him to commit his crimes. Id. at 15 - 18. Petitioner submitted reports from his treating psychiatrist and several other physicians to support these assertions. P. Ex. 2 - P. Ex. 8.

I infer from the transcript of Petitioner's sentencing hearing that the sentencing judge acknowledged Petitioner's psychiatric disorder and took it into account when he imposed a sentence on Petitioner. P. Ex. 15, at 27. The judge did not specifically refer to Petitioner's psychiatric problems. However, the judge's remarks show he determined Petitioner had a psychiatric condition during the commission of the crime that reduced his culpability and that caused the judge to conclude that Petitioner was unlikely to engage in future criminal acts. Id.; see Joseph M. Ruske, M.D., DAB No. 1851(2002). (1) That is made evident from Petitioner's presentation to the court, which focused on his mental condition, and the judge's reference to "circumstances unlikely to recur." P. Ex. 15, at 27.

In her reply brief the I.G. concedes that the evidence offered by Petitioner could be the basis for me to find the presence of a mitigating factor. I.G.'s reply brief at 11 - 12. In fact, the I.G. does not dispute Petitioner's assertions about the relationship between his psychiatric disorder or his assertions that the judge properly concluded his psychiatric disorder reduced his culpability for his criminal behavior and he was not likely to engage in future criminal behavior. Id. at 12.

The I.G. does suggest that Petitioner's presentation of such evidence is untimely because Petitioner did not present the evidence to the I.G. prior to the I.G. making her exclusion determination. Id. However, the failure of Petitioner to present mitigating evidence at an earlier date is no bar to his right to present it now. My authority to hear and decide this case is de novo and I accept evidence independently from the I.G. Petitioner offered proof of mitigation in compliance with the pre-hearing order that I issued in this case.

2. Evidence of Petitioner's untrustworthiness is offset in this case by evidence showing that his crime resulted from his psychiatric impairment.

Although 42 C.F.R. 1001.102 establishes what evidence may and may not be considered in deciding on the length of an exclusion, it says nothing about what weight must be assigned to evidence that is relevant. All that the regulation does is to identify categories of potentially relevant evidence. Assigning weight to relevant evidence is left to the fact finder. Thus, the regulation operates as rules of evidence which establish parameters of relevance but not of evidentiary weight.

Consequently, the reasonable length of an exclusion in a particular case is not a matter of applying the regulatory factors as a formula. The number of aggravating factors present in a case is not necessarily a significant indicator of what may be a reasonable exclusion. Nor is the mere presence of a mitigating factor or factors necessarily a reason to reduce the length of an exclusion. It is conceivable that evidence relating to a single aggravating factor in a case will show an individual to be so untrustworthy as to merit a very lengthy exclusion. It is also conceivable that evidence relating to multiple aggravating factors will not establish a high degree of untrustworthiness, or that evidence relating to several aggravating factors will be counterbalanced by evidence relating to a single mitigating factor. Dr. Darren James, D.P.M., DAB No. 1828 (2002).

In determining what weight to accord a given factor, I consider the circumstances surrounding that factor. Keith Michael Everyman, DAB No. 1880, at 10 (2003). Further, "[f]acts that do not constitute mitigating facts are potentially relevant if, but only if, they are connected with a listed mitigating or aggravating factor in a manner bearing on the appropriate weight to be given that factor." Id.

The evidence offered by the I.G. as to aggravation when considered in isolation is strong evidence that Petitioner is highly untrustworthy. It shows, first, that Petitioner's crime caused health care insurers to sustain very substantial financial losses. The extent of the damage caused by Petitioner is reflected in his plea agreement in which Petitioner promised to pay restitution of more than $321,000. I.G. Ex. 4. In fact, the restitution that Petitioner agreed to pay is less than half the amount of restitution that Petitioner ultimately paid. P. Ex. 15, at 8. Second, Petitioner committed his crime over a period of two years, a lengthy period of time. Third, he was sentenced to a term of three years' incarceration for his crime, an indicator of how serious it was (although, in fact, Petitioner only served a term of imprisonment of 30 days). Finally, Petitioner's license to practice medicine in New Jersey was suspended.

However, as serious as Petitioner's crime may have been, the evidence relating to it and to the aggravating factors that I have just described loses force as predictive evidence of Petitioner's untrustworthiness when his culpability for the crime is considered in the context of his psychiatric condition. The evidence presented to the judge about Petitioner's psychiatric condition established a basis for the judge to conclude that Petitioner suffered from a severe disinhibiting mental impairment, caused by overdosing on the medication Zoloft, which had been prescribed for his panic disorder. This impairment affected his ethical judgment and led him to commit the crime of which he was convicted. The evidence establishes also that Petitioner is highly unlikely to engage in criminal conduct in the future. That is made clear by: expert medical opinion that was submitted on Petitioner's behalf; his plea agreement; the pre-sentencing report that was prepared in his case; and from the sentencing judge's on-the-record remarks made at Petitioner's sentencing hearing.

The evidence presented at the sentencing hearing established that Petitioner suffers from a panic disorder which began to manifest itself at a relatively early age. P. Ex. 2, at 1. Over the years Petitioner experienced repeated episodes which caused him to have severe palpitations, to experience difficulty in eating and swallowing, and to become fearful of situations where easy exit is difficult, such as flying, driving on expressways, or being in tunnels. Id. Petitioner sought treatment from several physicians without much success at first. Eventually, psychiatric care beginning in 1995 helped to alleviate his problems. With proper medication, Zoloft, and guidance, Petitioner slowly recovered. Id.

In late 1995 Petitioner discontinued his psychiatric care and began to medicate himself with Zoloft. Id. at 2. He continued to do so throughout 1996 and 1997, the time frame during which Petitioner committed his crime. Zoloft alleviated Petitioner's state of anxiety. However, it also gave rise to a mentally disinhibited state where Petitioner's ethical judgment became impaired. Id. In Petitioner's case, his continued self-medication with large doses of Zoloft induced a hypomanic state, causing him to experience euphoria and to engage in illegal and/or self-destructive activities, including the crime of which he was convicted. Id.; P. Ex. 3.

The particulars of Petitioner's crime, characterized by one expert as being "bizarre," support the judge's conclusion that his crime was the product of a psychiatric disorder rather than the consequence of a rational attempt to profit personally by defrauding health care insurers. See P. Ex. 9, at 2. Petitioner was a highly successful physician whose annual income from his legitimate practice approached $1,000,000. He maintained a modest lifestyle and was not in debt. P. Ex. 1, at 17 - 18. He had no financial need to defraud health care insurers. However, the evidence shows that in 1996 and 1997, Petitioner retained physician associates who he promptly promoted to partners in his practice and who he attempted to compensate at amounts commensurate with his own income. P. Ex. 1, at 43; P. Ex. 2, at 2. For irrational reasons related to his psychiatric disorder, Petitioner attempted to compensate these two physicians at levels far above what they might be expected to earn given their experience and their patient base. Petitioner committed his crime in order to secure funds to pay these physician partners irrationally high amounts.

Given that Petitioner's crime was the consequence of a psychiatric disorder and not motivated by a desire for unlawful personal gain, the question becomes: what likelihood is there that Petitioner will engage in criminal activity at some future date? If, in fact, Petitioner remains at risk for engaging in criminal activity, then the evidence of diminished culpability is not a basis for finding him to be less untrustworthy. But if, on the other hand, the evidence leads to the conclusion that Petitioner is unlikely to repeat his crime, then there is a reason to conclude that he is more trustworthy than would be indicated solely by the evidence relating to aggravation.

Petitioner is not a high risk to repeat his criminal activity. The weight of the evidence is that Petitioner's crime was the product of a psychiatric disorder and a medication overdose and not that of a person who stole for personal financial gain. This finding was made by the judge who sentenced Petitioner. He observed that:

[Petitioner's] conduct really did result from circumstances unlikely to recur. Whether or not one accepts all of the mitigating circumstances that have been so eloquently pointed out by Counsel for . . . [Petitioner], the fact is that, in light of the consequences of this behavior, in light of the nature in which the conduct took place, it's highly unlikely.

The Court finds it almost inconceivable that this type of conduct will recur with respect to [Petitioner]. . . . [T]he fact is, one, in this Court's findings, that [Petitioner] is not likely . . . to engage in any further criminality.

P. Ex. 15, at 27.

3. An exclusion of 13 years is unreasonable in light of evidence relating to a mitigating factor. An exclusion of five years is reasonable.

I give considerable deference to the I.G.'s expertise in determining the length of an exclusion. I will sustain an exclusion even if I disagree with the precise length that is determined by the I.G. so long as the evidence shows that the exclusion falls within a reasonable range.

Here, however, the I.G. did not take into consideration evidence relating to a mitigating factor. And, as I discuss above, at Finding 2, this evidence shows Petitioner to have suffered from a mental condition that reduced his culpability for this crime and therefore to be significantly less untrustworthy than is suggested by the evidence which relates only to aggravating factors. Given that, I find that an exclusion of 13 years falls outside of a reasonable range of exclusions.

I conclude that an exclusion of five years - the statutory minimum period - is reasonable in light of the evidence in this case. The evidence shows Petitioner to have been a trustworthy individual who became untrustworthy and committed a serious crime while suffering from a mental disorder. Moreover, five years is ample time to determine whether Petitioner is likely ever to repeat his criminal conduct. (2)

The I.G. now suggests that she might have reduced the length of Petitioner's exclusion by two or three years had Petitioner presented to her the evidence of mitigation that Petitioner introduced in this case. I.G.'s reply brief at 12. I take that as acknowledgment by the I.G. that the 13-year exclusion that the I.G. imposed indeed is unreasonable given the evidence of mitigation that Petitioner offered. But, the I.G. has offered no explanation as to how an exclusion of 10 years, as opposed to a lesser number of years, is related to the remedial goal of protecting health care programs from Petitioner. The facts of this case establish that an exclusion of 10 or 11 years, as now suggested by the I.G., would serve no remedial purpose and falls outside of a reasonable range of exclusions. That is made apparent by the sentencing judge's conclusion that Petitioner is highly unlikely to again engage in criminal activity. The evidence in this case proves that five years certainly is long enough to decide whether that conclusion is accurate.


Steven T. Kessel

Administrative Law Judge


1. As the appellate panel in Ruske wrote ". . . it was not necessary for the record in the criminal proceedings to contain 'specific findings' that Petitioner had a substance abuse condition at the time of the offense and that the condition reduced his culpability. The I.G. acknowledged in her appeal that an ALJ might be able to reasonably infer from a court record that the judge had made the determinations required by the regulation, even if the judge did not make a finding using the precise terms of the federal regulation ." Ruske, at 6.

2. 2 Reinstatement is not automatic; an individual must apply for reinstatement. The I.G. has set forth a range of factors she will review to determine whether "there are reasonable assurances that the type of actions that formed the basis for the exclusion have not recurred and will not recur." 42 C.F.R. 1001.3002(a)(1)(ii). At the end of the five-year exclusion in this case, a period of more than 11 years will have elapsed from the dates when Petitioner committed his crime in 1997. That should provide more than enough time for the I.G. to make a reasoned judgment as to whether Petitioner is sufficiently trustworthy to be reinstated.