SUBJECT:

Gregory D. Wells, M.D.,

Petitioner,

The Inspector General

I. Background

Petitioner is a physician. On May 31, 2000, the I.G. notified Petitioner that he was being excluded pursuant to section 1128(a)(1) of the Social Security Act (Act). The I.G. told Petitioner that he was being excluded for a minimum of 15 years. The I.G. made note of the fact that Petitioner had previously been excluded for a period of seven years pursuant to section 1128(b)(3) of the Act. The I.G. told Petitioner that the 15-year exclusion that she was now imposing would run concurrently with the previously imposed seven-year exclusion.

Petitioner requested a hearing and the case was assigned to me for a hearing and a decision. I held a prehearing conference at which the parties advised me that they agreed that the case could be heard and decided based on their written submissions. The I.G. submitted a brief and a reply brief along with seven proposed exhibits (I.G. Ex. 1 - I.G. Ex. 7). Petitioner submitted a brief. Petitioner did not submit a reply brief nor did Petitioner submit any proposed exhibits. Petitioner did not object to my receiving into evidence any of the I.G.'s proposed exhibits. Therefore, I receive into evidence I.G. Ex. 1 - I.G. Ex. 7.

II. Issues, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

1. A basis exists to exclude Petitioner pursuant to section 1128(a)(1) of the Act; and,

2. A 15-year exclusion is unreasonable.

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 below as a separately numbered heading. I discuss each Finding in detail.

1. Petitioner was convicted of a criminal offense related to the delivery of items or services under the Kentucky Medicaid program, thereby establishing a basis for excluding Petitioner pursuant to section 1128(a)(1) of the Act.

Section 1128(a)(1) of the Act mandates the exclusion of any individual who is convicted of a criminal offense related to the delivery of an item or service under a federally-funded health care program. As a matter of law, the crime of defrauding a State Medicaid program via the filing of a false claim for a fictitious service is a program-related crime within the meaning of section 1128(a)(1) of the Act. Greene v. Sullivan, 731 F. Supp. 835 (E.D. Tenn. 1990); Alan J. Chernick, D.D.S., DAB CR434 at 5 (1996).

The evidence in this case unequivocally establishes that Petitioner was convicted of defrauding the Kentucky Medicaid program. On December 10, 1997, a Kentucky grand jury indicted Petitioner under State law for devising a scheme or planning a scheme or artifice to obtain benefits with a value of $10,000 or more from the Kentucky Medical Assistance Program (the Kentucky Medicaid program) by means of false or fraudulent representations. I.G. Ex. 1 at 1. Petitioner was charged additionally with intentionally engaging in conduct which advanced his criminal scheme or artifice. Id. This conduct consisted of charging for services to Medicaid recipients while knowing that the services either were not reimbursable by the Kentucky Medicaid program or that the services had not been provided. Id. On October 4, 1999, Petitioner agreed to plead guilty to the charge and, on November 9, 1999, Petitioner was found guilty. I.G. Ex. 2 at 1 - 3; I.G. Ex. 3 at 1 - 4.

2. The I.G. is mandated to exclude Petitioner for a period of at least five years.

Section 1128(a)(1) of the Act mandates the I.G. to exclude any individual who is convicted of a criminal offense that is related to the delivery of an item or service under Medicare or a State Medicaid program. The minimum term of a mandatory exclusion is five years. Act, section 1128(c)(3)(B).

Here, Petitioner was convicted of criminal offenses related to the delivery of items or services under the Kentucky Medicaid program. See Finding 1. The I.G. is, therefore, required to exclude Petitioner for a term of at least five years.

3. The I.G. is authorized to impose an exclusion for more than five years, pursuant to section 1128(a)(1) of the Act, in a case where there are aggravating factors that are not offset by mitigating factors.

Section 1128 of the Act is remedial. Its purpose is to protect federally funded health care programs and the beneficiaries and recipients of those programs from individuals who are untrustworthy. An exclusion that is imposed pursuant to section 1128 is reasonable if it comports with the Act's remedial purpose.

The Secretary has published regulations which govern the length of exclusions that are imposed pursuant to section 1128 of the Act. 42 C.F.R. Part 1001. The regulation which establishes criteria to govern the length of exclusions that are imposed pursuant to section 1128(a)(1) is 42 C.F.R. § 1001.102. This regulation identifies "aggravating" factors which may be used, if present in a case, as a basis to lengthen an exclusion beyond the five-year minimum period and "mitigating" factors which may be used, if present in a case, to offset any aggravating factors that are established.

The regulation makes it clear that only those factors that it identifies as either aggravating or mitigating may be considered to determine whether an exclusion of more than five years is reasonable in a case involving section 1128(a)(1) of the Act. The aggravating and mitigating factors thus operate as rules of evidence in such a case. Evidence which does not relate to an identified aggravating or mitigating factor is irrelevant to determining the length of an exclusion and may not be considered.

4. An excluded individual has a right to a de novo hearing.

Any individual who is excluded pursuant to section 1128 of the Act has a right to a hearing before an administrative law judge. Such a hearing is conducted pursuant to section 205(b) of the Act. That section has been interpreted on numerous occasions to require a de novo hearing and an independent decision by the administrative law judge.

That is not to suggest that the administrative law judge is free to ignore entirely the determination that is made by the I.G. The I.G. has expertise in making exclusion determinations and her determinations deserve to be respected. The I.G.'s determination should be sustained as reasonable if that determination falls within a reasonable range of possible exclusions. However, the administrative law judge must evaluate independently the evidence relating to the aggravating and mitigating factors that are set forth in the regulations. If the administrative law judge concludes, based on his or her independent and de novo evaluation of the evidence, that the exclusion imposed by the I.G. departs significantly from that which the I.G. decides is reasonable, then the administrative law judge may modify the length of the exclusion to assure that the exclusion falls within a reasonable range of exclusions.

5. The I.G. proved the presence of three aggravating factors.

The I.G. established the following three aggravating factors to be present in this case:

a. The acts resulting in Petitioner's conviction resulted in a financial loss of more than $1,500 to a government program. (42 C.F.R. § 1001.102(b)(1)).

Petitioner pled guilty to engaging in a criminal scheme to defraud the Kentucky Medicaid program, a government health care program, of more than $10,000. In agreeing to plead guilty Petitioner admitted that the total loss to the Kentucky Medicaid program from his scheme exceeded $10,000. I.G. Ex. 2 at 1.

b. Petitioner committed the acts that resulted in his conviction over a period of more than one year. (42 C.F.R. § 1001.102(b)(2)).

Petitioner was charged with, and pled guilty to, engaging in a criminal scheme that transpired over a period which began on January 1, 1992, and which ran through June 30, 1997. I.G. Ex. 1 at 1; I.G. Ex. 2 at 1. This is a period which spans five and one-half years.

c. Petitioner has a prior criminal and administrative sanction record. (42 C.F.R. § 1001.102(b)(6)).

On July 14, 1998, Petitioner pled guilty to ten criminal offenses in the United States District Court for the Eastern District of Kentucky. I.G. Ex. 5 at 1. He was found guilty to offenses involving the following crimes: conspiring to acquire and obtain controlled substances by fraud, misrepresentation, deception, and subterfuge; intentionally acquiring and obtaining controlled substances by misrepresentation, fraud, deception, and subterfuge; and distributing, dispensing, or possessing with intent to distribute or dispense, a controlled substance. On April 30, 1999, on the basis of these convictions, the I.G. excluded Petitioner from participating in Medicare, Medicaid, and other federally-funded health care programs for a period of seven years. I.G. Ex. 6. Additionally, effective September 28, 1998, Petitioner agreed to surrender his license to practice medicine in Kentucky. I.G. Ex. 7. Petitioner's agreement to surrender his license emanated from his conviction in United States District Court of controlled substance-related crimes. I.G. Ex. 5, Ex. 7 at 1 - 2.

Petitioner's criminal conviction in United States District Court, his exclusion based on that conviction, and his surrender of his license to practice medicine comprise criminal or administrative sanctions. All of these actions predate his conviction under Kentucky law for defrauding the Kentucky Medicaid program.

6. Petitioner did not allege or prove the presence of any mitigating factors.

Petitioner did not allege or prove the presence of any of the mitigating factors that are identified at 42 C.F.R. § 1001.102(c). Petitioner offered several arguments to challenge the I.G.'s exclusion determination. However, none of these arguments relate to any of the possible mitigating factors that are identified in the regulation. I will discuss Petitioner's arguments below at Finding 7.

7. An exclusion of 15 years is not unreasonable.

I find that an exclusion of 15 years is not unreasonable in this case. An exclusion of 15 years is reasonably related to the statutory purpose of protecting federally-funded health care programs and their beneficiaries and recipients from untrustworthy individuals.

Petitioner is a highly untrustworthy individual. He perpetrated multiple crimes. Petitioner engaged in protracted fraud against the Kentucky Medicaid program over a lengthy period of time (five and one-half years). He succeeded in defrauding that program of substantial funds (more than $10,000). The duration and extent of Petitioner's crimes against the Kentucky Medicaid program show that his criminal conduct was not isolated or random episodes. Rather, it comprised a pattern of unlawful activity.

Moreover, Petitioner's crimes against the Kentucky Medicaid program were but a part of a broader scheme of criminal activity by Petitioner. At the same time that Petitioner was defrauding the Kentucky Medicaid program, he was also committing multiple crimes involving unlawful possession or distribution of controlled substances.

Petitioner argues that an exclusion of only five years in this case is reasonable in that it is symmetrical with the actions that were taken against him as a consequence of his conviction of federal crimes in United States District Court. According to Petitioner, the State criminal charges to which he pled guilty and which are the basis for the exclusion that is at issue in this case grew out of identical facts which led to his conviction in United States District Court. Petitioner asserts that he was excluded only for a period of five years as a consequence of the federal conviction. Petitioner argues that it is reasonable to exclude him here only for five years in that there is no evidence of criminal conduct by Petitioner in this case which is distinguishable from the criminal conduct that resulted in his previous exclusion.

I do not find this argument to be persuasive. To begin with, it is not factually accurate. Petitioner is incorrect in asserting that he was excluded only for a period of five years as a consequence of his conviction for controlled substance-related crimes. Petitioner was excluded for a period of seven years. More importantly, Petitioner is incorrect in arguing that the criminal conduct which is the basis for the exclusion that is at issue here - fraud against the Kentucky Medicaid program - is the identical conduct which was the basis for his previous exclusion. It is possible that Petitioner may have engaged in a pattern of conduct which simultaneously included unlawful trafficking in controlled substances and fraud against the Kentucky Medicaid program. However, the factual elements of Petitioner's fraud are not identical to the factual elements of Petitioner's controlled substance-related crimes. That is made evident by the State indictment that was filed against Petitioner and by his conviction in United States District Court. I.G. Ex. 1; I.G. Ex. 5.

The fact that Petitioner's crimes may have been, in some way, related does not make Petitioner more trustworthy. The magnitude and seriousness of Petitioner's crimes are made more evident when the federal and State charges and convictions are read together. The full extent of Petitioner's criminal activity becomes evident when Petitioner's controlled substance-related crimes and his fraud are seen in context. That the I.G. originally excluded Petitioner for seven years based on his controlled substance-related convictions does not suggest that a lengthier exclusion is unreasonable in light of Petitioner's subsequent conviction for fraud against the Kentucky Medicaid program. The conviction for fraud, when considered with Petitioner's previous controlled substance-related conviction, demonstrates Petitioner's overall pattern of crimes to be more serious and shows him to be more untrustworthy than if Petitioner's controlled substance-related conviction is viewed in isolation. Examining only a subset of Petitioner's crimes may lead to the inaccurate conclusion that Petitioner is more trustworthy than is apparent when all of Petitioner's crimes are considered.

Petitioner argues also that an exclusion for 15 years is unreasonably punitive because it will deprive Petitioner of the ability to practice his profession and will deprive patients of needed medical care in an area of the United States (Appalachia) where physicians are in short supply. I do not find either branch of this argument to be persuasive. First, the possibility that an exclusion may adversely impact on Petitioner's ability to practice his profession is irrelevant if, in fact, the exclusion is justified on remedial grounds. As I have discussed above, an exclusion of 15 years is remedial in this case. Second, the adverse impact that an exclusion may have on the access to medical care of the residents of Appalachia is not an issue that I may consider in deciding whether an exclusion is reasonable. Potential adverse impact of an exclusion on a local population is not a mitigating factor that I may consider under 42 C.F.R. § 1001.102(c).

I note that the I.G. is authorized in the appropriate circumstance to grant a request from a State health care program, such as the Kentucky Medicaid program, to waive an exclusion. 42 C.F.R. § 1001.1801. However, I have no authority to order the I.G. to consider or to grant such a waiver. I also note that Petitioner has presented no evidence to support his claim that residents of Appalachia will be affected adversely by his exclusion.

Steven T. Kessel

Administrative Law Judge