Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
|IN THE CASE OF|
|DATE: May 01, 2006|
- v -
The Inspector General.
| Docket No.C-05-556
Decision No. CR1442
By letter dated June 30, 2005, the Inspector General (I.G.), notified Henrik Sardariani (Petitioner) that he would be excluded from participation in the Medicare, Medicaid, and all federal health care programs as defined in section 1128B(f) of the Social Security Act (Act), for a period of five years. The I.G. informed Petitioner that his exclusion was imposed pursuant to section 1128(a)(1) of the Act, due to his conviction in the Superior Court of California, Los Angeles County, of a criminal offense related to the delivery of an item or service under the Medicare or state Medicaid program, Medi-Cal. As explained below, I grant the I.G.'s motion for summary judgment and sustain the I.G.'s determination to exclude Petitioner from participating in Medicare, Medicaid, and all federal health care programs for a period of five years.
I. Procedural Background
After Petitioner's timely request for hearing dated August 5, 2005, I conducted a telephone conference on November 3, 2005. The I.G. indicated during the telephone conference that the I.G. planned to file a motion for summary affirmance. I reserved judgment on whether the case could be decided on the I.G.'s motion until I had reviewed the briefing. Thereafter, on December 1, 2005, the I.G. submitted its initial brief (I.G. Br.) and four proposed exhibits. (I.G. Exs. 1-4). On January 17, 2006, Petitioner filed his responsive brief (P. Br.) and one proposed exhibit (P. Ex. 1). On February 1, 2006, the I.G. requested leave to file a reply brief. I found the I.G. had shown good cause for the reply and accordingly on February 15, 2006, the I.G. filed its reply brief (I.G. Reply Br.). The I.G.'s reply brief was accompanied by three additional proposed exhibits. Petitioner was given until March 1, 2006, to file a sur-reply. Petitioner filed no response to the I.G.'s reply and I closed the record on March 1, 2006.
Petitioner objected to the admission of three of the I.G.'s proposed exhibits. P. Br. at 6. Petitioner argued that the documents did not meet the minimum requirements of Rule 56 of the Federal Rules of Civil Procedure. Id. In particular, Petitioner objected that proposed I.G. Ex. 1 is an unsigned felony complaint for an arrest warrant; that proposed I.G. Ex. 2 is an unsigned declaration in support of issuance of the arrest warrant; and that proposed I.G. Ex. 3 is an unauthenticated docket for a Los Angeles Superior Court case. Id. at 7. After arguing in its reply brief that the Federal Rules of Civil Procedure are not binding in this proceeding and that based on the regulations an Administrative Law Judge (ALJ) need only exclude evidence that is unreliable, irrelevant, or immaterial (42 C.F.R. § 1005.17), the I.G. supplemented the record with proposed I.G. Exs. 5 and 6 constituting a signed felony complaint for an arrest warrant and a signed declaration in support of the arrest warrant. I.G. Reply Br., at 2-3. I find that the I.G. has cured the evidentiary problems with respect to I.G. Exs. 1 and 2. With respect to I.G. Ex. 3, I find the data sheets purported to be from the Superior Court of California, County of Los Angeles, have sufficient indicia of authenticity with the seal on each page and the certification on page 10 to be reliable and thus admissible. I admit into the record only I.G. Exs. 3, 4, 5, 6 and 7. I admit Petitioner's proposed exhibit without objection.
Based on all the evidence in the record, it is my decision to sustain the determination of the I.G. to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for a period of five years. I base my decision on the documentary evidence, the applicable law and regulations, and the arguments of the parties. It is my finding that the mandatory exclusion provisions of section 1128 (a)(1) of the Act do apply in this case because the Petitioner was convicted of a program-related crime.
The issues in this case are whether summary judgment, without further proceedings, is appropriate and whether the I.G. had a basis upon which to exclude Petitioner from participation in the Medicare, Medicaid, and all other federal health care programs under section 1128(a)(1) of the Act. Because the period of exclusion in this case is five years, the minimum mandatory period, there is no issue before me concerning the reasonableness of the exclusion's length.
Petitioner's right to a hearing by an ALJ and judicial review of the final action of the Secretary of the United States Department of Health and Human Services (Secretary) is provided by section 1128(f) of the Act (42 U.S.C. § 1230a-7(f)). Petitioner's request for a hearing was timely filed and I do have jurisdiction. However, the Secretary has by regulation limited my scope of review to two issues: (1) whether there is a basis for the imposition of the sanction; and, (2) whether the length of the exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(1). The standard of proof is a preponderance of the evidence and there may be no collateral attack of the conviction that is the basis for the exclusion. 42 C.F.R. § 1001.2007(c) and (d). Petitioner bears the burden of proof and persuasion on any affirmative defenses or mitigating factors and the I.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(b) and (c).
Section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)) requires the Secretary to exclude from participation in any federal health care program (as defined in section 1128B(f) of the Act), any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under a federal or state health care program.
An exclusion under section 1128(a) of the Act must be for a minimum period of five years. Act, section 1128(c)(3)(B). Aggravating factors can serve as a basis for lengthening the period of exclusion. 42 C.F.R. § 1001.102(b). If aggravating factors justify an exclusion longer than five years, mitigating factors may be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).
Section 1128(i) of the Act (42 U.S.C. § 1230a-7(i)) defines the term "convicted" as used in section 1128(a) as follows:
Pursuant to 42 C.F.R. § 1001.2007, a person excluded under section 1128(a)(1) of the Act may file a request for hearing before an ALJ.
The I.G. argues that Petitioner was convicted of a criminal offense related to the delivery of an item or service under a federal or state health care program. Therefore, according to the I.G., Petitioner is subject to the statutory minimum mandatory period of exclusion of five years. Act, section 1128(c)(B).
Petitioner argues that he merely pled nolo contendere to a misdemeanor charge and that this misdemeanor has already been dismissed from the records. P. Br., at 1. Petitioner also argues that "his now-vacated misdemeanor violation of California Penal Code § 32 is not a criminal offense related to the delivery of an item or service under the Medicare or Medi-Cal program(s) . . . ." Id. at 8. Further, Petitioner contends that a five-year exclusion is unreasonably punitive given that he has made restitution and has assisted with California's criminal prosecutorial efforts. Id. at 1.
Summary judgment (or affirmance) is appropriate when there is no genuine dispute as to any material fact, and the moving party is entitled to judgment as a matter of law. Lebanon Nursing and Rehabilitation Center, DAB No. 1918 (2004). The party moving for summary judgment bears the initial burden of showing the basis for its motion and identifying the portions of the record that it believes demonstrate the absence of a genuine factual dispute. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If a moving party carries its initial burden, the non-moving party must "come forward with specific facts showing that there is a genuine issue for trial." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56e). That is, the non-moving party must act affirmatively by tendering evidence of specific facts showing that a dispute exists. Denials and assertions in pleadings or briefs are not sufficient to overcome a well-supported motion. In this case, the I.G. carried its initial burden of showing that Petitioner was convicted of a criminal offense that related to the delivery of an item or service under Medicare or Medi-Cal.
Although Petitioner denied the authenticity of several of the I.G.'s proposed exhibits (I.G. Exs. 1, 2, and 3), Petitioner in his brief did not deny the facts alleged therein and did not provide any evidence in contradiction. After the I.G. submitted signed and properly authenticated versions of its proposed exhibits (I.G. Exs. 5, 6), Petitioner did not submit any denial of the alleged facts even though he was given an opportunity to do so. To prevent summary judgment, a party must provide facts and evidence not merely unsupported allegations and denials.
Moreover, once the I.G. has shown that Petitioner was convicted within the meaning of section 1128(I) of the Act, the fact finder cannot look behind the conviction. It is well established that section 1128(a) of the Act is triggered by a conviction and neither the ALJ nor the Departmental Appeals Board (DAB) can consider a collateral attack of the underlying conviction or re-litigate the validity of the conviction. 42 C.F.R. § 1001.2007 (d); Travers v.Shalala, 20 F.3rd 993, at 998 (9th Cir. 1994). Thus, the I.G. exhibits to which Petitioner objected are relevant only for showing the context of Petitioner's conviction; i.e., whether his conviction was for an offense that was related to the delivery of an item or service under Medicare or Medi-Cal. Petitioner proffered no facts nor submitted exhibits with his brief to suggest that the I.G.'s allegations and evidence of a relationship between his conviction and a federal or state health care program are erroneous. The ALJ is not required to convene a full evidentiary hearing in order to consider all the issues an excluded individual may have raised under 42 C.F.R. § 1001.2007(a.)(1), as long as the material facts are clear from the parties' pleadings. Maria Thachenkery, M.D., DAB CR 731 (2001). I conclude that summary affirmance in this case is appropriate.
1. According to I.G. Ex. 6, Petitioner was a partner of Compinternational Medical Management (CMM), which operated a medical clinic in Hollywood, California, to provide medical services to patients for a stipend. CMM was responsible for providing the medical clinic with office space, management services, medical equipment, staffing, and billing for services rendered. A physician referred to as Dr. Yang worked for CMM from either May or June of 1999 until October 2, 1999. I.G. Ex. 6.
2. CMM agreed to receive payment from revenues generated from billings based on services provided by Dr. Yang to patients, including patients covered by Medicare and Medi-Cal. Dr. Yang had authorized CMM to prepare and submit billing statements on his behalf for patients he treated at the facility. I.G. Ex. 6.
3. Pursuant to agreement, CMM and Dr. Yang opened a joint checking account into which Medicare and other checks were deposited (Bank of America, account #03393-02929). I.G. Ex. 6.
4. After Dr. Yang resigned from CMM, he began working as a physician at a different clinic, named Burbank Medical Clinic, at a different location. I.G. Ex. 6.
5. The Medicare and Medi-Cal programs sent to CMM's address, reimbursement checks made payable to Dr. Yang, for services he rendered at the Burbank Medical Clinic after Dr. Yang had resigned from CMM. I.G. Ex. 6.
6. Soon after Dr. Yang's departure from CMM, Petitioner opened another checking account (Wells Fargo, account #0766-316368) listing himself and Dr. Yang as signatories on the account. Dr. Yang was unaware of this bank account. Petitioner listed a Mail Boxes, Etc. address as his address for purposes of the account. The account was open for only two weeks from November 8, 1999 until November 22, 1999. Before the account was closed, however, several Medicare checks and one Medi-Cal check that had been written to Dr. Yang, and were purportedly endorsed by Dr. Yang, were deposited in Petitioner's second bank account (Wells Fargo, account #0766-316368). Dr. Yang denied receiving, endorsing, or depositing these Medicare and Medi-Cal checks. The deposited funds were removed from the second bank account using checks and withdrawal slips signed by Petitioner or directly transferred into a third bank account under Petitioner's control. I.G. Ex. 6.
7. A 19-count complaint was filed against Petitioner on October 29, 2002, charging Petitioner with grand theft and forgery. I.G. Ex. 3, at 10.
8. On March 26, 2004, the 19-count felony complaint against Petitioner was dismissed. A 20th misdemeanor count, a violation of California Penal Code § 32, was added. After Petitioner pleaded nolo contendere to a misdemeanor violation of California Penal Code § 32, the Court accepted Petitioner's plea. I.G. Ex. 4-6. Petitioner was convicted of the offense. P. Ex. 1, at 7.
9. Section 32 of the California Penal Code provides that:
10. On August 6, 2004, Petitioner's plea was certified and he was sentenced. I.G. Ex. 3, at 8-9. Petitioner was sentenced to probation for 36 months. In addition to 200 hours of community service, the Court ordered Petitioner to pay restitution of $50,000 with $20,787.38 to cover the costs of the investigation and $29,212.72 to be paid directly to Medi-Cal. I.G. Ex. 3, at 9; I.G. Ex. 7. The amount of $29,212.72 is the same amount as the Medi-Cal check sent to Dr. Yang on November 4, 1999, after Dr. Yang had resigned from CMM, and which Petitioner was alleged to have negotiated. I.G. Ex. 6, at 6.
11. On or about August 2, 2005, after Petitioner had fulfilled the conditions of his probation, Petitioner's plea of guilty was set aside and the action was dismissed by the Court. P. Ex. 1, at 7.
As quoted above, conviction is precisely described in the Act. Included in the language of the Act is that an individual or entity is considered to have been "convicted" for purposes of exclusion "when a plea of guilty or nolo contendere by the individual as been accepted by a Federal, State or local court . . . ." Section 1128(i)(3) of the Act (42 U.S.C. § 1230a-7(i)(3)). Petitioner pleaded nolo contendere to a criminal offense and his plea was accepted by the Superior Court of Los Angeles County, State of California. I.G. Ex. 3, at 5-6. Petitioner argues that his finding of guilt was set aside and the action was dismissed. Pursuant to the plain language of the Act, however, even if a conviction has been expunged it still constitutes a conviction under the Act. An individual or entity is considered to have been convicted ". . . when a judgment of conviction has been entered against the individual or entity by a Federal, State, or local court, regardless of whether there is an appeal pending or whether the judgment of conviction or other record relating to criminal conduct has been expunged. . . ." Section 1128(i)(1) of the Act (42 U.S.C. § 1230a-7(i)(1)). Petitioner's argument regarding his expunged record is unavailing for purposes of exclusion.
Section 1128(a)(1) of the Act requires the exclusion of any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under Medicare or any state health care program. Section 1128(a)(1) of the Act; 42 U.S.C. § 1320a-7(a)(1). There is ample evidence in the record that Petitioner's criminal offense was related to the delivery of an item or service under Medicare or Medical. First, even though 19 counts of the complaint against him which specifically referred to Medicare and Medi-Cal checks allegedly falsely endorsed by Petitioner were dismissed, the accessory count to which he pleaded was appended to the original complaint as Count 20. I.G. Ex. 3, at 5-6. I can infer that the accessory charge was part of the original complaint referring to Medicare and Medi-Cal. Second, as part of his sentence, Petitioner was required to pay restitution to Medi-Cal of $29,212.72, the exact amount of a check he was alleged in the 19-count complaint to have falsely endorsed. I.G. Ex. 3, at 9; I.G. Ex. 7. Third, the I.G. submitted a signed statement from Steven David Smith, California Deputy Attorney General, who participated in the case against Petitioner and who declared that Petitioner's plea was for an offense related to a payment by Medi-Cal. Id.
The DAB has previously reviewed cases requiring an analysis of whether a conviction is related to the delivery of an item or service under Medicare in situations where the conviction is for a crime the title of which has nothing to do with Medicare. See, e.g., DeWayne Franzen, DAB No. 1165 (1990). The DAB has said there is no "general rule" that all crimes involving financial misconduct directed at Medicare or Medicaid are, by their very nature, related to the delivery of items or services under such programs within the meaning of section 1128(a)(1) of the Act. Berton Siegal, D.O., DAB No. 1467 (1994). Rather, the phrase related to the delivery of an item or service under Medicare requires a common sense nexus between the conviction and the delivery of items under Medicare. Lyle Kai, R.Ph., DAB No.1979 (2005). Following the DAB, an ALJ in Tanya A. Chuoke, R.N., DAB CR633 (1999) states:
Tanya A. Chuoke, R.N., supra, at 4.
Petitioner has nowhere in the record even denied that the criminal offense of which he was convicted derived from Dr. Yang's delivery of medical services to Medi-Cal patients and for which Medi-Cal attempted to pay Dr. Yang. Certainly, Petitioner has proffered no evidence to the contrary. Given the I.G.'s submitted Exs. 5-7, I find that the delivery of a Medicaid service was an element in the chain of events giving rise to the criminal offense of which Petitioner was convicted. Facts upon which the conviction was predicated can be used to determine whether a common sense link exists. Kai, DAB No. 1979 (2005). The excluded individual need not be the person who actually delivered the Medicaid service. Napolean S. Maminta, DAB No.1135 (1990). A common sense nexus exists between Petitioner's criminal conviction and the delivery of an item or service under Medicare or Medicaid.
The application of a mandatory exclusion under section 1128(a)(1) of the Act does not turn on whether the criminal offense was a felony or a misdemeanor. Rather the application of Section 1128(a)(1) of the Act depends on whether the individual or entity was convicted of a criminal offense related to the delivery of an item or service under a Medicare or a state health care program. The permissive exclusions under section 1128(b) of the Act apply only for a misdemeanor criminal offense related to the delivery of a health care item or service under a health care program other than Medicare or a Medicaid program. 42 C.F.R. § 1001.201 (a)(1) and (2).
Exclusion under section 1128(a)(1) of the Act must be for a minimum mandatory period of five years. Section 1128(c)(3)(B) of the Act. When the I.G. imposes an exclusion for the mandatory five-year period, the reasonableness of the length of the exclusion is not an issue. 42 C.F.R. § 1001.2007(a)(2). Petitioner submitted several letters from a Senior Special Investigator from the California State Controller's Special Investigations Bureau. The letters detail Petitioner's voluntary and valuable cooperation with the Special Investigations Bureau in the investigation of fraud, forgery, and false billings against the Medi-Cal program. P. Ex. 1, at 4-5. Mitigating factors, such as cooperation with other investigations however, cannot be considered in reducing a mandatory exclusion unless aggravating factors have been used to increase the length of exclusion beyond the minimum five-year mandatory period. 42 C.F.R. § 1001.102(c).
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate that Petitioner be excluded from Medicare, Medicaid, and all other federal health care programs for a period of at least five years because of his conviction of a criminal offense related to the delivery of an item or service under a federal or state health care program. The five-year exclusion is therefore sustained.
Anne E. Blair
Administrative Law Judge