By letter dated April 30, 1999, the Inspector General (I.G.), United States Department of Health and Human Services, notified Andrew H. Lewis (Petitioner), that he would be excluded for a period of 10 years from participation in Medicare, Medicaid, and all federal health care programs.⁽¹⁾ The I.G. imposed this exclusion pursuant to section 1128(a)(1) of the Social Security Act (Act), based on Petitioner's conviction in the Superior Court of the State of California of a criminal offense related to the delivery of an item or service under the Medicaid program.

Petitioner filed a request for hearing. The I.G. moved for summary disposition. Because I have determined that there are no material and relevant factual issues in dispute (the only matter to be decided is the legal significance of the undisputed facts), I have decided the case on the basis of the parties' written submissions in lieu of an in-person hearing. Petitioner submitted a brief. The I.G. submitted a brief in response, accompanied by five proposed exhibits (I.G. Exs. 1-5). Petitioner did not object to my receiving into evidence the I.G.'s proposed exhibits, and I receive into evidence I.G. Exs. 1-5.

I affirm the I.G.'s determination to exclude Petitioner from participating in Medicare and Medicaid.

Under section 1128(a)(1) of the Act, the Secretary may exclude from participation in the Medicare and Medicaid programs any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under title XVIII or under any State health care program. Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a)(1) of the Act shall be for a period of five years, unless specified aggravating or mitigating factors are present which form the basis for lengthening or shortening the period of exclusion. See also, 42 C.F.R. § 1001.102(a),(b), and (c). Only if the aggravating factors justify an exclusion of longer than five years, may mitigating factors be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c). Evidence which does not relate to an aggravating factor or a mitigating factor, as defined by the regulations, is irrelevant to determining the length of an exclusion.

The regulation at 42 C.F.R. § 1001.102(b) provides that the following factors may be considered to be aggravating and a basis for lengthening the period of exclusion:

Petitioner contends that the length of his exclusion is not reasonable. He asserts that the I.G. has not considered mitigating factors in his case which serve to shorten the exclusion period. Petitioner asserts that he was under considerable stress and anxiety during the period of his criminal misconduct which served to diminish his culpability. These factors include his mother's illness and his father's extreme reaction to his mother's illness, along with financial difficulties due to a poor investment. As a result of these factors, Petitioner asserts that his judgment was impaired.

As a further mitigating factor, Petitioner asserts that he cooperated with authorities investigating the criminal scheme in which he had been involved with others. He maintains that his cooperation was helpful in prosecuting others.

Petitioner also asserts that it is unfair for the I.G. to have waited over two years from the date of his criminal conviction to institute the present exclusion action. Instead, Petitioner maintains that such action should be retroactive to the time of his criminal conviction.

Finally, Petitioner asserts that he should be permitted to obtain employment in the capacity of a supervisor of therapists at a non-profit facility. He maintains that such employment is not within the scope of the exclusion and to find otherwise would impermissibly preclude him from obtaining employment in his profession.

1. During the period of time relevant to this case, Petitioner was licensed to practice as a marriage and family counselor in the State of California. I.G. Exs. 4 and 5.

2. On September 16, 1997, a Felony Complaint was filed against Petitioner for one count of "Grand Theft", in that he wilfully and unlawfully took money and personal property of a value exceeding four hundred dollars, in violation of California Penal Code Section 484/487(a), and six counts of "Medicaid Fraud", in that he wilfully, unlawfully and with the intent to defraud, presented to the State of California, for allowance and payment, false and fraudulent Medi-Cal claims, in violation of California Welfare and Institutions Code Section 14107. I.G. Ex. 3.

3. The acts leading to the "Grand Theft" Felony Complaint being filed against Petitioner commenced on or about November 1, 1994 and ended on or about August 31, 1996. I.G. Exs. 3 and 4.

4. In the report provided to the Superior Court of the State of California of the "Grand Theft" charge, it was alleged that Petitioner was billing for Medi-Cal services (psychological testings and evaluations) that were, in fact, never rendered. In addition, Petitioner billed for services, allegedly provided to patient/beneficiaries, that were never seen by him. I.G. Ex. 4.

5. On January 15, 1998, Petitioner pled nolo contendere to count one of the indictment, "Grand Theft." I.G. Ex. 4.

6. As a result of Petitioner's plea, he was ordered to pay restitution in the amount of $56,000 to the State Health Care Deposit Fund and sentenced to two days in the county jail, three years formal probation, and 120 days on an electronic monitoring program. I.G. Ex. 4.

7. On April 30, 1999, Petitioner was notified by the I.G. that he was being excluded from participation in the Medicare and Medicaid programs for a period of 10 years pursuant to sections 1128(a)(1) and 1128(c)(3)(B) of the Act.

8. Under section 1128(a)(1) of the Act, the I.G. is authorized to exclude any individual or entity that has been convicted of a criminal offense related to the delivery of a health care item or service under Medicare or Medicaid.

9. Where the I.G. determines to exclude an individual pursuant to section 1128(a)(1) of the Act, the term of exclusion will be for a minimum period of five years, in the absence of aggravating or offsetting mitigating factors that would support an exclusion of no less than five years.

10. Petitioner's criminal conviction constitutes a conviction within the scope of section 1128(i) of the Act.

11. Petitioner's conviction for "Grand Theft" is related to the delivery of an item or service under the Medicaid program within the meaning of section 1128(a)(1) of the Act.

12. The I.G. is authorized to exclude Petitioner pursuant to section 1128(a)(1) of the Act.

13. The I.G. proved the presence of an aggravating factor, in that the acts resulting in Petitioner's conviction, or similar acts, caused financial loss of $1,500 or more to a government program or to one or more other entities. 42 C.F.R. § 1001.102(b)(1).

14. The I.G. proved the presence of an aggravating factor, in that Petitioner was overpaid a total of $1500 or more by Medicare, Medicaid or other third-party payers, as a result of improper billings. 42 C.F.R. § 1001.102(b)(7).

15. The I.G. proved the presence of an aggravating factor, in that the acts that resulted in Petitioner's conviction, or similar acts, were committed by Petitioner over a period of one year or more. 42 C.F.R. § 1001.102(b)(2).

16. The I.G. proved the presence of an aggravating factor, in that the sentence imposed on Petitioner for his crimes included a period of incarceration. 42 C.F.R. § 1001.102(b)(5).

17. Petitioner did not prove the presence of any mitigating factors.

18. The aggravating factors established by the I.G. prove Petitioner to be untrustworthy to the extent that a 10-year exclusion is reasonably necessary to protect the integrity of federally financed health care programs, and to protect program beneficiaries and recipients.

19. A 10-year exclusion of Petitioner is not unreasonable. FFCL 1-18.

Petitioner does not challenge that he is subject to exclusion under section 1128(a)(1) of the Act and I so find. His conviction, which was based on a plea of nolo contendere and the court's acceptance of that plea, constitutes a conviction under section 1128(i) of the Act. Next, it is required under section 1128(a)(1) of the Act that the crime at issue be related to the delivery of an item or service under the Medicare or Medicaid program. The record reflects that Petitioner, by being found guilty of "Grand Theft," was found to have filed or caused to be filed fraudulent claims for medical services with Medi-Cal for services that were never rendered and for services provided to patient/beneficiaries that were never seen by him. I.G. Ex. 4. The filing of fraudulent Medicaid claims has been held to constitute clear program-related misconduct. Alan J. Chernick, D.D.S., DAB CR434 (1996).

Petitioner has argued in his brief that his 10-year exclusion should be reduced due to the presence of mitigating factors. In his favor, he maintains that he was under great emotional stress at the time he was involved in the fraudulent scheme and that he cooperated with authorities in their investigation of others who were implicated in the same criminal undertaking. It is Petitioner's burden to prove the existence of mitigating factors. James H. Holmes, DAB CR270 (1993). Petitioner has not established any of the mitigating factors listed at 42 C.F.R.

§ 1001.102(c). His claim that he was under stress is not relevant under 42 C.F.R. § 1001.102(c)(2). That section clearly requires that "[t]he record in the criminal proceedings . . . demonstrates that the court determined that the individual had a mental, emotional or physical condition . . . that reduced the individual's culpability." Petitioner has offered no evidence that the court determined that such factors were present in his case. Petitioner also claims that he fully cooperated with the government. Petitioner, however, has not demonstrated the further requirements stated in 42 C.F.R. § 1001.102(c)(3)(i), (ii), or (iii) that his cooperation led to the conviction or investigation of others or the imposition of a money penalty or assessment against others. Therefore, I find Petitioner's arguments to be without merit. As Petitioner has the burden concerning mitigating factors, I find that he has not met such burden and conclude that Petitioner has not proved the existence of any mitigating factors.

In determining whether the length of an exclusion is unreasonable, it is the responsibility of an administrative law judge (ALJ) to consider and evaluate all of the relevant evidence brought to bear in a case. The regulation at 42 C.F.R. § 1001.102(b) sets forth the aggravating factors which may be considered in determining the length of an exclusion. I find that the I.G. proved the presence of four aggravating factors. The four aggravating factors consist of the following:

• The acts resulting in Petitioner's conviction, or similar acts, caused financial loss of $1500 or more to a government program. 42 C.F.R. § 1001.102(b)(1). Petitioner's fraud caused substantial losses to be incurred by Medi-Cal. The record reflects that Petitioner was ordered to pay restitution in the amount of $56,000 to the State Health Care Deposit Fund. I.G. Ex. 4.

• The individual or entity has at any time been overpaid a total of $1,500 or more by Medicare or Medicaid and all other Federal health care programs, or other third-party payers, as a result of improper billings. 42 C.F.R. § 1001.102(b)(7). The Declaration submitted by the California Attorney General's Office in the criminal matter states that Petitioner improperly billed $110,000 and that he received $88,000 of that amount. I.G. Ex. 5.

• The acts that resulted in Petitioner's conviction, or similar acts, were committed by Petitioner over a period of one year or more. 42 C.F.R. § 1001.102(b)(2). The indictment in Petitioner's case reflects that the acts occurred from November 1994 to August 1996, a period substantially longer than one year. I.G. Ex. 3.

• The sentence imposed on Petitioner for his crimes included a period of incarceration. 42 C.F.R. § 1001.102(b)(5). Petitioner was sentenced to two days in prison. I.G. Ex. 4.

Considering Petitioner's failure to meet his burden to prove any mitigating factors and the I.G.'s evidence of aggravating factors, I find that it is not unreasonable for the I.G. to have excluded Petitioner for 10 years. I note that in evaluating these factors, it is not the mere presence of a greater number of aggravating factors which forms the basis for my decision here. As an appellate panel of the Departmental Appeals Board (DAB) has previously held in Barry D. Garfinkel, M.D., DAB No. 1572 (1996), it is the quality of the factors, whether aggravating or mitigating, which is to be dispositive in analyzing evidence of these factors. Garfinkel, at 31.

In this case, the aggravating factors established by the I.G. prove Petitioner to be an untrustworthy individual to the extent that a 10-year exclusion is reasonably necessary to protect the integrity of federally financed health care programs and to protect program beneficiaries and recipients. Petitioner's lack of trustworthiness is established by his involvement, of at least 22 months, in a scheme to defraud Medi-Cal. His fraud was persistent and deliberate, not random or impulsive. The extent to which Petitioner persisted in defrauding Medi-Cal is established by the large losses he caused the Medi-Cal program to incur. Therefore, I find that the 10-year exclusion is not unreasonable.

Petitioner also raises other challenges to the exclusion in his case. He asserts that he should be allowed to supervise other therapists at a non-profit agency, but the regulations provide that an ALJ does not have the authority to determine the scope or effect of an exclusion. 42 C.F.R. § 1005.4(c)(5). Petitioner also contends that such exclusion deprives him of the right to practice his profession, but such argument has been previously rejected in other cases. See Arlene Elizabeth Hunter, DAB CR505 (1997).

Finally, Petitioner contends that the I.G. waited almost two years after his guilty plea to commence an exclusion action. He contends that such action should be retroactive to the date of his conviction. I find no merit in this claim. Exclusions are remedial in nature and not punitive. Manocchio v. Kusserow, 961 F.2d 1539 (11th Cir. 1992). The I.G. has the discretion to determine when to impose an exclusion. Lawrence Wynn, M.D., DAB CR344 (1994), and neither the statute nor the regulations set a specific deadline for the I.G. to act. See Chander Kachoria, DAB No. 1380 (1993). It is clear that an exclusion must take effect 20 days from the date of the I.G.'s notice of exclusion. Section 1128(c)(1); 42 C.F.R. § 1001.2002. This means that the exclusion must take effect 20 days after the April 30, 1999 exclusion letter and not 20 days after Petitioner's conviction. Although Petitioner implies that his exclusion should be retroactive, an ALJ is without authority to change the effective date of an exclusion. Stanley Karpo, D.P.M., DAB CR356 (1995); Chander Kachoria, supra; Lawrence Wynn, supra.

I conclude that the I.G. was authorized to exclude Petitioner, pursuant to section 1128(a)(1) of the Act. I find that the 10-year exclusion is not unreasonable and I sustain it.

Joseph K. Riotto,
Administrative Law Judge

⁽¹⁾ In this decision, I use the term "Medicare" to refer to all of the federal health care programs from which Petitioner was excluded. I use the term "Medicaid" to refer to all the State health care programs from which Petitioner was excluded.