SUBJECT:

Hyacinth O. Uche,

Petitioner,

The Inspector General.

DECISION

Hyacinth O. Uche is excluded from participation in Medicare, Medicaid, and all other federal health care programs pursuant to sections 1128(a)(1) and (3) of the Social Security Act (the Act) (42 U.S.C. § 1320a-7(a)(1) and (3)), effective April 20, 2004, based upon his conviction of criminal offenses related to fraud in connection with the delivery of a health care item or service, as discussed more fully hereafter. There is a proper basis for exclusion. Petitioner's exclusion for five years is mandatory pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)). Further, extension of the minimum period of exclusion by five years, for a total period of ten years, is not unreasonable, given the presence of four aggravating factors and no mitigating factors.

I. PROCEDURAL HISTORY

The Inspector General (I.G.) notified Petitioner by letter dated March 31, 2004, that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of ten years. The I.G. advised Petitioner that he was being excluded pursuant to section 1128(a)(1) of the Act for his conviction of a criminal offense related to the delivery of an item or service under the Maryland Medicaid program. The I.G. also advised Petitioner that he was subject to exclusion pursuant to section 1128(a)(3) of the Act for his conviction of a criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service or any act or omission in a health care program operated or financed, in whole or part, by a governmental agency.

Petitioner requested a hearing by letter dated April 8, 2004. The case was assigned to me for hearing and decision on April 27, 2004. On June 10, 2004, I convened a telephone prehearing conference, the substance of which is memorialized in my order of June 17, 2004. The parties agreed to the submission of this case on the written record without the need for an oral hearing. On July 23, 2004, the I.G. filed a motion for summary affirmance with supporting brief (I.G. Brief) and I.G. exhibits (I.G. Exs.) 1 through 4. Petitioner filed a response on September 2, 2004 (P. Brief), with a one-page extract of a transcript attached that I treat as Petitioner's exhibit (P. Ex.) 1. The I.G. filed a reply brief on September 22, 2004 (I.G. Reply).

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

A. FINDINGS OF FACT

The following findings of fact are based upon the uncontested and undisputed assertions of fact in the pleadings and the exhibits admitted.

1. Petitioner was convicted, pursuant to his pleas, in the Circuit Court for Baltimore City, Maryland, of one count of felony Medicaid fraud and three counts of felony insurance fraud. P. Brief at 3; I.G. Ex. 3, at 2.

2. The felony Medicaid fraud, as alleged in the indictment and to which Petitioner pled guilty, occurred during the period October 1, 2000 through October 1, 2002, and involved Petitioner making claims for payment for dispensing pharmaceuticals to medical assistance recipients when no pharmaceuticals were dispensed. I.G. Ex. 1, at 2.

3. The three counts of insurance fraud, as alleged in the indictment and to which Petitioner pled guilty, involved making false claims to three private insurers for dispensing pharmaceuticals during the period October 1, 2000 through October 1, 2002. I.G. Ex. 1, at 7-9.

4. Petitioner was sentenced to five years confinement on each of the four counts, to be served concurrently, but the confinement was suspended subject to Petitioner completing six months of home detention and three years of supervision. The court also ordered that Petitioner "cannot work in any capacity of the Medicaid field." I.G. Ex. 3, at 2-3.

5. The I.G. notified Petitioner by letter dated March 31, 2004, that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of ten years pursuant to sections 1128 (a)(1) and (3) of the Act for his conviction of a criminal offense related to the delivery of an item or service under the Maryland Medicaid program and for his conviction of a criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service or any act or omission in a health care program operated or financed, in whole or in part, by a governmental agency.

6. Petitioner requested a hearing by letter dated April 8, 2004.

B. CONCLUSIONS OF LAW

1. Petitioner's request for hearing was timely and I have jurisdiction.

2. Petitioner was convicted of a criminal offense related to the delivery of an item or service under Medicaid.

3. Petitioner was convicted under state law of felony criminal offenses that occurred after August 21, 1996, that involved fraud, theft, embezzlement, breach of fiduciary responsibility or other financial misconduct 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 or financed, in whole or in part, by a government entity.

4. Petitioner's exclusion is mandated by sections 1128(a)(1) and (3) of the Act.

5. The mandatory minimum period of exclusion under section 1128(c)(3)(B) of the Act is five years.

6. A preponderance of the evidence establishes the aggravating factor recognized by 42 C.F.R. § 1001.102(b)(1).

7. A preponderance of the evidence establishes the aggravating factor recognized by 42 C.F.R. § 1001.102(b)(2).

8. A preponderance of the evidence establishes the aggravating factor recognized by 42 C.F.R. § 1001.102(b)(5).

9. A preponderance of the evidence establishes the aggravating factor recognized by 42 C.F.R. § 1001.102(b)(9).

10. No mitigating factors have been proven.

11. It is not unreasonable to extend Petitioner's period of exclusion by five years for a total period of exclusion of ten years.

12. The period of exclusion begins to run on April 20, 2004, the twentieth day after the March 31, 2004 I.G. notice of exclusion. 42 C.F.R. § 1001.2002.

III. ANALYSIS

A. ISSUES

The Secretary of the Department of Health and Human Services (Secretary) has by regulation limited my scope of review to two issues:

1. Whether there is a basis for the imposition of the exclusion; 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).

B. LAW APPLICABLE

Petitioner's right to a hearing by an administrative law judge (ALJ) and judicial review of the final action of the Secretary of Health and Human Services (Secretary) is provided by section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)). Petitioner's request for a hearing was timely filed and I do have jurisdiction.

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation in the Medicare and Medicaid programs any individual convicted of a criminal offense related to the delivery of an item or service under Medicare or Medicaid. Pursuant to section 1128(a)(3) of the Act, the Secretary must exclude from participation in Medicare, Medicaid, and all federal health care programs any individual or entity that has been convicted of a felony offense of fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct, 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 governmental agency.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act shall be for a minimum period of five years. Pursuant to 42 C.F.R. § 1001.102(b), the period of exclusion may be extended based on the presence of specified aggravating factors. 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).

C. DISCUSSION

Petitioner's right to a hearing by an ALJ and judicial review of the final action of the Secretary is provided by section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)). Pursuant to section 1128(f) of the Act, an individual or entity subject to exclusion is entitled to notice and hearing to the same extent as provided by section 205(b) of the Act. An oral hearing is contemplated. See section 205(b) of the Act; 42 C.F.R. §§ 1005.2(a), 1005.3(a), 1005.4(a) and (b), 1005.9, 1005.15, and 1005.16. However, an oral hearing is not required where the parties agree to submit the case for my decision on a stipulated record or where both parties waive appearance at an oral hearing and submit the case on documentary evidence and written argument. 42 C.F.R. § 1005.6(b)(4) and (5). The parties agreed during the prehearing conference that no oral hearing is necessary in this case and that it can be decided on the documentary evidence and briefs of the parties.

a. There is a basis for the I.G.'s exclusion of Petitioner.

Petitioner was convicted, pursuant to his pleas, in the Circuit Court for Baltimore City, Maryland, of one count of felony Medicaid fraud and three counts of felony insurance fraud. P. Brief at 3; I.G. Ex. 3, at 2. The felony Medicaid fraud, as alleged in the indictment, and to which Petitioner pled guilty, occurred during the period October 1, 2000 through October 1, 2002. Petitioner, through his pharmacy, filed claims for payment for dispensing pharmaceuticals to medical assistance recipients when no pharmaceuticals were dispensed. I.G. Ex. 1, at 2. The three counts of insurance fraud, as alleged in the indictment, and to which Petitioner pled guilty, also involved false claims for dispensing pharmaceuticals during the period October 1, 2000 through October 1, 2002, except that the claims were made to three different private insurers. I.G. Ex. 1, at 7-9.

Petitioner was sentenced to five years' confinement on each of the four counts, to be served concurrently. The sentence of confinement was suspended subject to Petitioner completing six months of home detention and three years of supervision. The court also ordered that Petitioner "cannot work in any capacity of the Medicaid field." I.G. Ex. 3, at 2-3.

Petitioner does not dispute that he was convicted within the meaning of the Act. Petitioner also does not dispute that, due to his conviction, he is subject to mandatory exclusion from participation in Medicare, Medicaid, and all federal health care programs pursuant to sections 1128(a)(1) and (3). P. Brief at 2. Accordingly, I find that there is a basis for Petitioner's mandatory exclusion.

b. Exclusion for a minimum period of five years is mandated by the Act and extension of the period of exclusion by five years is not unreasonable in this case.

(1) The aggravating and mitigating factors.

Petitioner concedes that the minimum period of exclusion is five years pursuant to section 1128(c)(3)(B) of the Act. The period may be extended if there are aggravating factors, and Petitioner concedes that there are aggravating factors pursuant to 42 C.F.R. § 1001.102(b)(1), (2), (5), and (9). P. Brief at 2. Petitioner argues, however, that there are mitigating factors that warrant reduction of the period of exclusion to the minimum of five years rather than ten years as the I.G. proposes.

Section 1001.102(c) of 42 C.F.R. provides that only if any of the aggravating factors justify a period of exclusion longer than five years may mitigating factors be considered as a basis for reducing the period of the exclusion to no less than five years. The following factors may be considered as mitigating and a basis for reducing the period of exclusion:

(1) the individual or entity being excluded was convicted of three or fewer misdemeanor offenses, and the entire amount of financial loss to Medicare and/or the state health care programs due to the criminal acts is less than $1500;

(2) the record of the criminal proceedings shows that the court determined that the individual to be excluded had a mental, emotional, or physical condition before or during the commission of the offense that reduced the his or her culpability; or

(3) the individual or entity to be excluded cooperated with Federal or State officials with the result that:

(i) others were convicted or excluded from Medicare, Medicaid, or other federal health care programs,

(ii) additional cases were investigated or reports issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or

(iii) a civil money penalty or assessment was imposed under 42 C.F.R. Part 1003.

Evidence which does not relate to an aggravating factor or a mitigating factor is irrelevant to determining the length of an exclusion. The burden is upon Petitioner to show the presence of mitigating factors. 42 C.F.R. § 1005.15; Darren James, D.P.M., DAB No. 1828 (2002).

Petitioner argues that the following are mitigating factors that should be considered in assessing the reasonableness of the period of exclusion:

• Petitioner cooperated with authorities and agreed to pay $25,000 to the Maryland Department of Health and Mental Hygiene, which Petitioner analogizes to the payment of a civil money penalty or assessment;

• Petitioner is 59 years of age, the sole support of his wife and five children, has no previous convictions, and lost his business as a result of his guilty pleas;

• Petitioner agreed to a five-year exclusion from the Maryland Medicaid program as part of his plea agreement, but, had he known that the I.G. would exclude him for ten years, he would have demanded trial and asserted his defenses.

• Petitioner participated in Medicaid, and was excluded from Medicaid. and exclusion from Medicare is inappropriate.

Petitioner suggests that his cooperation and payment of $25,000 to the Maryland Department of Health and Mental Hygiene (I.G. Ex. 4, at 2) should be considered tantamount to the payment of a civil money penalty and considered mitigating under 42 C.F.R. § 1001.102(c)(3)(iii). Petitioner argues that the language of the regulation is that the imposition of a civil money penalty may be against "anyone," which he argues includes Petitioner himself. P. Brief at 3. Petitioner offers no authority to support his strained interpretation of the regulatory provision and it is unnecessary to determine whether such a reading could be supported. A clear requirement of the regulation, not satisfied in this case, is that there must be a civil money penalty or assessment imposed pursuant to 42 C.F.R. Part 1003 as a result of Petitioner's cooperation. Petitioner's voluntary restitution is not a civil money penalty or assessment imposed pursuant to 42 C.F.R. Part 1003 and does not meet the requirement for the mitigating factor.

Petitioner also asserts that he participated in Medicaid, not Medicare, and he had a deal with Maryland Medicaid. P. Brief at 4. I also note, consistent with the logic of Petitioner, that he defrauded Medicaid, not Medicare. Petitioner's point, as I perceive it, is that this is not a federal Medicare issue and it is not fair for the I.G. to treat him more harshly than the Maryland officials did. Of course, this is not a mitigating factor and not relevant. I note, however, that Congress mandates exclusion from participation in Medicare, Medicaid, and all federal health care programs for one convicted of offenses such as Petitioner's. The I.G. has no discretion not to exclude in such cases and the minimum period of exclusion is five years. The only discretion the I.G. has is to extend the period of exclusion when certain aggravating factors are present, as they are in this case, and to consider the impact of certain mitigating factors when they are present. There is no evidence that the I.G. was involved in the investigation or prosecution of Petitioner. Petitioner's was a state not a federal prosecution. It is clear from the documents admitted in evidence (I.G. Ex. 4; P. Ex. 1) that the I.G. had no deal with Petitioner regarding any limitation on the period of exclusion. Petitioner cites no legal authority for the proposition that the I.G. should be bound by Petitioner's agreement with Maryland officials and I am aware of none. Petitioner's Agreement of Settlement and Dismissal actually recites that his reapplication to be a Medicaid Provider after five years is subject to federal law permitting his participation in the program and "the United States Department of Health and Human Services . . . and the Center [sic] for Medicare and Medicaid Services . . .," having notified him that he is eligible for reinstatement. I.G. Ex. 4, Ά 5.b) and f).

Petitioner requests that I consider such factors as his age, loss of his business, and family situation. However, these considerations do not fall within any of the mitigating factors I am permitted by regulation to consider.

(2) Reasonable period of exclusion.

The Departmental Appeals Board (DAB) has made clear that the role of the ALJ in cases such as this is to conduct a "de novo" review as to the facts related to the basis for the exclusion and the facts related to the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102. See Joann Fletcher Cash, DAB No. 1725 (www.hhs.gov/dab/decisions/dab1725.html) (2000), n.6 (n.9 in the original decision and West Law™), and cases cited therein. The regulation specifies that I must determine whether the length of exclusion imposed is "unreasonable" (42 C.F.R. § 1001.2007(a)(1)). The DAB has explained that in determining whether a period of exclusion is "unreasonable," I am to consider whether such period falls "within a reasonable range." Cash, DAB No. 1725, n.6. The DAB cautions that, whether I think the period of exclusion too long or too short is not the issue. I am not to substitute my judgment for that of the I.G. and may only change the period of exclusion in limited circumstances. In John (Juan) Urquijo, DAB No. 1735 (2000), the DAB made clear that if the I.G. considers an aggravating factor to extend the period of exclusion and that factor is not later shown to exist on appeal, or if the I.G. fails to consider a mitigating factor that is shown to exist, then the ALJ may make a decision as to the appropriate extension of the period of exclusion beyond the minimum. In Gary Alan Katz, R.Ph., DAB No. 1842 (2002) an appellate panel of the DAB suggests that, when it is found that an aggravating factor considered by the I.G. is not proved before the ALJ, then some downward adjustment of the period of exclusion should be expected absent some circumstances that indicate no such adjustment is appropriate. The Katz panel did not elaborate upon the weight to be given individual aggravating factors, or how my de novo review and assessment of the weight to be given to proven aggravating factors is related to the weight the I.G. assigned those same factors.

Pursuant to the Act and the regulations, where there is a basis for a mandatory exclusion under section 1128(a) of the Act, there is an automatic exclusion for a minimum period of five years. Act, section 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). Pursuant to 42 C.F.R. § 1001.102(d), one prior conviction for conduct that would cause mandatory exclusion under section 1128(a) of the Act increases the minimum period of exclusion to ten years, and two prior convictions automatically cause permanent exclusion. The five-year and ten-year minimum exclusions may only be extended if one or more of the aggravating factors specified at 42 C.F.R. § 1001.102(b) are present. The regulations do not limit the additional period of exclusion that may be imposed based upon the presence of aggravating factors. The regulations also do not specify how much of an extension is warranted by the existence of an aggravating factor. The DAB has indicated that it is not the number of aggravating factors that is determinative, rather, it is the quality of the circumstances, whether aggravating or mitigating, which is controlling in analyzing these factors. Barry D. Garfinkel, M.D., DAB No. 1572 (1996).

In this case, I have found that there is a basis for mandatory exclusion pursuant to section 1128(a). The minimum period of exclusion is five years. It is undisputed that there exist four aggravating factors:

• Petitioner's criminal acts resulted in financial loss to Maryland Medicaid and private insurers in excess of $5,000, which is consistent with Petitioner's agreement to make $25,000 in voluntary restitution. 42 C.F.R. § 1001.102(b)(1).

• Petitioner's criminal acts occurred over a period of more than one year, from October 2000 to October 2002, roughly two years. 42 C.F.R. § 1001.102(b)(2).

• Petitioner was sentenced to five years' incarceration (five years was imposed for each of the four counts, all to run concurrently), all suspended subject to serving six months' home detention and three years of supervision. 42 C.F.R. § 1001.102(b)(5).

• Petitioner was excluded from participation in Maryland Medicaid due to his criminal conduct. 42 C.F.R. § 1001.102(b)(9).

I have found that no mitigating factors recognized by the regulations have been shown. Given the evidence before me, I do not find that extension of Petitioner's period of exclusion by five years for a total of ten years, is unreasonable.

IV. CONCLUSION

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of ten years, effective April 20, 2004.

KEITH W. SICKENDICK

Administrative Law Judge