SUBJECT:

Jerome Rosenberg, D.D.S., and Harold Maloff, D.M.D.,

Petitioner,

The Inspector General

By letter dated May 31, 2000, the I.G. notified Petitioners that they were being excluded from participation in the Medicare, Medicaid, and all federal health care programs for a minimum period of 10 years. The I.G. advised Petitioners that she was authorized to exclude them pursuant to section 1128(a)(1) of the Act because of their convictions in the Supreme Court of New York, County of Kings, for criminal offenses related to the delivery of an item or service under the Medicaid program. Petitioners filed a request for hearing on July 27, 2000. A prehearing telephone conference was conducted on August 23, 2000. The parties appeared through counsel and agreed that this case could be decided based upon written submissions only. Also during the conference call, Petitioners requested consolidation of the two matters which were originally docketed as C-00-725 and C-00-726. The I.G. did not object to Petitioners' request for consolidation. I therefore consolidated the two cases under Docket No. C-00-725 and dismissed Docket No. C-00-726. A briefing schedule was established for the parties' submission of their respective briefs.

The I.G. submitted her brief in support of summary affirmance on October 6, 2000, which included 10 proposed exhibits (I.G. Exs. 1-10). Petitioners did not object to the admission of I.G. Exs. 1-10. Petitioners submitted their response brief on November 27, 2000, which included one proposed exhibit (P. Ex. 1). The I.G. did not object to the admission of P. Ex. 1. Therefore, I receive into evidence I.G. Exs. 1-10 and P. Ex. 1. On December 15, 2000, the I.G. filed her reply brief. I base my decision in this case on the law, the evidence, and the parties' arguments.

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 not less than five years. See also, 42 C.F.R. § 1001.102(a).

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: "(1) [t]he acts resulting in the conviction, or similar acts, resulted in financial loss to a government program or to one or more entities of $1500 or more. (The entire amount of financial loss to such programs or entities, including any amounts resulting from similar acts not adjudicated, will be considered regardless of whether full or partial restitution has been made); (2) [t]he acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; (3) [t]he acts that resulted in the conviction, or similar acts, had a significant adverse physical, mental or financial impact on one or more program beneficiaries or other individuals; (4) [i]n convictions involving patient abuse or neglect, the action that resulted in the conviction was premeditated, was part of a continuing pattern of behavior, or consisted of non-consensual sex acts; (5) [t]he sentence imposed by the court included incarceration; (6) [t]he convicted individual or entity has a prior criminal, civil or administrative sanction record; (7) [t]he individual or entity has at any time been overpaid a total of $1,500 or more by Medicare, Medicaid and all other Federal health care programs as a result of intentional (original emphasis) improper billings; (8) [t]he individual or entity has been previously convicted of a criminal offense involving the same or similar circumstances; or (9) [w]hether the individual or entity was convicted of other offenses besides those which formed the basis for the exclusion, or has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for the exclusion."⁽¹⁾

42 C.F.R. § 1001.102(c) provides that only in the event that any of the aforementioned aggravating factors justifies the exclusion for a period longer than five years, may any of the following factors be considered as mitigating and a basis for reducing the period of exclusion to not less than five years: "(1) [t]he individual or entity was convicted of 3 or fewer misdemeanor offenses, and the entire amount of financial loss to Medicare and the State health care programs due to the acts that resulted in the conviction, and similar acts, is less than $1,500; (2) [t]he record in the criminal proceedings, including sentencing documents, demonstrates that the 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; or (3) [t]he individual's or entity's cooperation with Federal or State officials resulted in -- (i) [o]thers being convicted or excluded from Medicare, Medicaid, and all other Federal health care programs, (ii) [a]dditional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or (iii) [t]he imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter."

1. At all times relevant to this case, Petitioners were licensed to practice dentistry in the State of New York. I.G. Ex. 3 at 1.

2. On June 10, 1999, Petitioners were indicted on criminal charges, in the Supreme Court of the State of New York, County of Kings, which included one count of Grand Larceny in the Fourth Degree, 23 counts of Offering a False Instrument for Filing in the First Degree, and 13 counts of Falsifying Business Records in the First Degree. I.G. Ex. 4.

3. On June 29, 1999, Petitioners each pled guilty to one count of Offering a False Instrument for Filing in the Second Degree, a class A misdemeanor. Id. at 3.

4. On July 29, 1999, Petitioners were notified by the New York State Department of Health of their exclusion from the Medicaid program. I.G. Exs. 9, 10.

5. As a result of their convictions, Petitioners were each sentenced to one year of conditional discharge and were ordered to each pay restitution in the amount of $66,000. I.G. Exs. 7, 8.

6. On May 31, 2000, Petitioners were notified by the I.G. that they were being excluded from participation in the Medicare and Medicaid programs for a minimum period of 10 years pursuant to sections 1128(a)(1) and 1128(c)(3)(B) of the Act. I.G. Ex. 1.

7. 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. Act, section 1128(c)(3)(B).

8. 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.

9. A finding of aggravating factors may support an exclusion of more than five years. 42 C.F.R. § 1001.102(b).

10. A finding of mitigating factors may result in a reduction of the exclusion period, but in any case, no less than the minimum period of five years. 42 C.F.R. § 1001.102(c).

11. Petitioners' criminal convictions constitute convictions within the scope of sections 1128(a)(1) and (3) of the Act.

12. The acts that resulted in the conviction spanned the period from January 15, 1992 to May 6, 1997, a period greater than one year.

13. Petitioners' convictions for a class A misdemeanor are related to the delivery of a health care item or service under the Medicare and Medicaid programs within the meaning of section 1128(a)(1) of the Act.

14. Petitioners did not prove the presence of any mitigating factors.

15. The I.G. established the existence of aggravating factors under 42 C.F.R. §§ 1001.102(b)(1), (2), and (9).

16. The aggravating factors established by the I.G. proved Petitioners to be untrustworthy.

17. I conclude that the I.G. was authorized to exclude Petitioners pursuant to section 1128(a)(1) of the Act.

18. A 10-year exclusion of Petitioners is reasonable and appropriate.

The thrust of Petitioners' case is their challenge as to whether the period of exclusion is reasonable. Petitioners contend that the length of the exclusion is excessive and a five-year exclusion period is more appropriate. Petitioner's Response Brief (P. Br.) at 2. An exclusion period of more than five years may be imposed where aggravating factors, as identified in the regulations, are present in a case. 42 C.F.R. § 1001.102(b). Only where aggravating factors have been proven to support the extended period of exclusion may mitigating factors be considered as a basis for reducing the period of exclusion (but not less than five years). 42 C.F.R. § 1001.102(c).

The factual record reflects that both Petitioners were dentists licensed to practice in the State of New York; specifically, Petitioners practiced in Brooklyn, New York. I.G. Ex. 3. In the course of their ongoing practice, among other things, Petitioners falsely submitted claims for payment to the State Medicaid program for services they knowingly had not provided. I.G. Ex. 5 at 12, 13. On June 10, 1999, Petitioners were indicted on one count of Grand Larceny in the Fourth Degree, 23 counts of Offering a False Instrument for Filing in the First Degree, and 13 counts of Falsifying Business Records in the First Degree, in violation of the New York Penal Law. I.G. Ex. 4. Petitioners ultimately pled guilty, on June 29, 1999, to one count each of Offering a False Instrument for Filing in the Second Degree. I.G. Exs. 5, 7, and 8.

As the basis for her determination to exclude Petitioners from Medicare and Medicaid participation for a minimum period of 10 years, the I.G. relied on three aggravating factors in justification of the additional five years over the minimum five-year exclusion period:

1. The acts that resulted in the convictions spanned the period from January 15, 1992 to May 6, 1997, a period greater than one year;

2. Petitioners were ordered by the court to pay $66,000 each in restitution; and

3. Petitioners were also excluded from participation under the New York State Medicaid program.

I.G.'s Motion for Summary Affirmance (I.G. Br.) at 8-10.

The I.G. has effectively argued that a 10-year period is within a reasonable range considering the facts and the aggravating factors. It is well settled that the presence of aggravating factors, such as those advanced by the I.G., substantiates a determination for an extended period of exclusion. Ruth Ferguson, DAB CR725 (2000); Tarvinder Singh, D.D.S., DAB CR697 (2000); Dale F. Lowe, DAB CR655 (2000); Steven Alonzo Henry, M.D., DAB CR638 (2000); JoAnn Fletcher Cash, DAB CR624 (2000).

The I.G. contends that the acts for which Petitioners were convicted occurred over a period of one year or more. I.G. Br. at 9. The record reflects that Petitioners' criminal acts spanned a period of more than seven years. I.G. Ex. 4. The decision in Thomas P. Whitfield, D.P.M., DAB CR539 (1999) sets forth that evidence in support of the contention that the criminal acts occurred over a period of more than one year may be considered a aggravating factor. The Indictment charged Petitioners with criminal acts which spanned a period from January 15, 1992 to May 6, 1997. 42 C.F.R. § 1001.102(b)(2) specifies "acts resulting in conviction" or "similar acts." The regulation does not require that a person be convicted for the similar acts. Although Petitioners ultimately pled guilty to a one-count charge, which occurred on a specific date, the Indictment explicitly delineated repeated instances of Petitioners' misconduct which covered a period in excess of seven years. I.G. Ex. 4. From the evidence presented in Whitfield, the Administrative Law Judge (ALJ) was able to conclude that:

From the high degree of specificity in the Indictment, I find that I am able to glean reliable specifics of "similar acts" within the scope of 42 C.F.R. § 1001.102(b)(2) to substantiate the allegation that Petitioner's pattern of repeated similar acts occurred over a period of one year or more.

DAB CR539 at 6.

Second, the I.G. asserts that Petitioners' acts for which they were convicted resulted in a financial loss of more than $1,500 to the State health care program. I.G. Br. at 8-9. The record reflects that each Petitioner was ordered to pay Medicaid $66,000 in restitution as a condition of their respective plea agreements. I.G. Exs. 5 at 4, 16; I.G. Ex. 6 at 4-5. In Steven Alonzo Henry, M.D., DAB CR638 (2000), the ALJ determined that the amount of ordered restitution is "a fair estimate of the quantum of damages" caused by Petitioners' criminal acts. See also Gilbert Ross, DAB CR478 (1997). At sentencing, the court ordered that each Petitioner would pay $35,217 as civil restitution to Medicaid, with the balance of $30,783 to be paid by each Petitioner as "restitution relating to the fruits of the criminal offense." I.G. Ex. 5 at 3. Thus, it is quite clear that Petitioners' criminal acts resulted in a substantial financial loss to the Medicaid program.

Finally, the I.G. argues that the fact that Petitioners were also excluded from the New York State Medicaid program is another aggravating factor specifically listed in the regulations. I.G. Br. at 10. Petitioners were excluded from Medicaid participation by the New York State Department of Health on August 3, 1999. I.G. Exs. 9, 10. The basis for exclusion from participation was Petitioners' convictions for filing false Medicaid claims. Id.; I.G. Ex. 1 at 1. I find that Petitioners' exclusion from the New York State Medicaid program constitutes an aggravating factor under 42 C.F.R. § 1001.102(b)(9).

Petitioners offer no mitigating circumstances to abrogate the I.G.'s demonstration of aggravating factors. Rather, they argue that the pleas entered were to a one-count misdemeanor which does not require "specific intent." Petitioners, however, do not contend that the entire amount of financial loss to Medicare and the State health care programs, due to the acts that resulted in their respective convictions, is less than $1,500. Further, they assert that the alleged false claims filed were, in fact, merely billing errors. P. Br. at 4-5. Petitioners also argue that they did not plead to the Indictment in its totality and, therefore, the facts identified in the Indictment should not be used to establish the time period relied on by the I.G. as an aggravating factor. Id. at 5-7. On the issue of the reasonableness of the 10-year exclusion, as authority, Petitioners rely on the decision in Narendra M. Patel, M.D., DAB CR631 (1999). Petitioners argue that Patel stands for the proposition that ". . . the weight that is assigned to any evidence depends on what that evidence shows about the trustworthiness of an excluded individual to provide care or claim reimbursement from a federally funded health care program." P. Br. at 3. In their response brief, Petitioners go on to address the aggravating factors considered by the I.G., but for the most part do not present any legal authority to counter those factors. Petitioners, instead, decide to focus their argument on the issue of "trustworthiness." According to Petitioners, the "Board" in Patel determined that adverse actions beyond the criminal convictions are not independently determinative of a party's untrustworthiness. P. Br. at 7. Furthermore, additional State action, in and of itself, does not support a 10-year exclusion "derived" from Petitioner's conviction. Id.

Apparently, Petitioners have mistakenly concluded that the Patel decision upon which they rely is a decision of an appellate panel of the Departmental Appeals Board (DAB). This is an incorrect conclusion. The decision cited by Petitioners was a decision of an ALJ. In her reply, the I.G. correctly points out that the case law relied upon by Petitioners was in fact rejected by the DAB in Narendra M. Patel, M.D., DAB No. 1736 (2000). The appellate panel Board determined that 42 C.F.R. § 1001.102(b)(9) clearly "contemplated that the fact of additional adverse action beyond the criminal conviction could be considered as additional evidence of the seriousness of the underlying conduct." DAB 1736 at 17.

Petitioners' assertions are not convincing. The I.G. established the existence of three aggravating factors: (1) that the fraud involved well over the sum of $1,500, as evidenced by the restitution order of the State court. 42 C.F.R. § 1001.102(b)(1); (2) that the fraud in this case occurred over a period greater than one year. 42 C.F.R. § 1001.102(b)(2); and (3) that Petitioners were excluded from participation in the New York State Medicaid program. 42 C.F.R. § 1001.102(b)(9).

Based on the foregoing, I conclude that the I.G. was authorized to exclude Petitioners, pursuant to section 1128(a)(1) of the Act. I also find that, based on the existence of aggravating factors, the 10-year period of exclusion is reasonable.

Alfonso J. Montano

Administrative Law Judge

1. Effective October 1, 2000, Title 42 of the Code of Federal Regulations was revised. In this matter, the controlling regulatory provisions are those in effect prior to October 2000, i.e., the version in effect at the time of the I.G.'s notice of exclusion dated May 31, 2000. See Robert Alan Spriggs, R.P.T., DAB CR718 (2000).