SUBJECT:

Philip J. Bisig,

Petitioner,

The Inspector General.

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Philip J. Bisig, from participation in Medicare, Medicaid, and all federal health care programs for a period of three years. I find that the I.G. is authorized to exclude Petitioner pursuant to section 1128(b)(2) of the Social Security Act (Act) and that the Act mandates a three-year exclusion.

I. Background

By letter dated August 31, 2004, the I.G. notified Petitioner of his decision to exclude Petitioner from program participation for three years. The letter explained that the exclusion was imposed pursuant to section 1128(b)(2) of the Act, because Petitioner was convicted of a criminal offense in connection with the interference with or obstruction of an investigation into a criminal offense as described in section 1128(a) or 1128(b)(1) of the Act. By letter dated September 16, 2004, Petitioner requested review, and the matter was assigned to me for resolution. I held a telephone pre-hearing conference on November 5, 2004. The parties agreed that an in-person hearing was not necessary, and that the matter could be resolved on the written record.

Both parties submitted briefs, accompanied by documentary evidence. The I.G. submitted his brief (I.G. Brief), accompanied by eight exhibits (I.G. Exs. 1-8). Petitioner filed a response to I.G.'s Brief (P. Brief), with seven exhibits (P. Exs. 1-7). The I.G. submitted a reply to Petitioner's Brief (I.G. Reply). In the absence of objection, I admit I.G. Exs. 1-8 and P. Exs. 1-7.

II. Issues

1. Whether the I.G. had a basis upon which to exclude Petitioner from participation in Medicare, Medicaid, and all other federal health care programs.

2. Whether the three-year period of exclusion imposed by the I.G. is unreasonable.

III. Applicable Law

Section 1128(b)(2) of the Act authorizes the Secretary of Health and Human Services (Secretary) to exclude -

[a]ny individual or entity that has been convicted, under Federal or State law, in connection with the interference with or obstruction of any investigation into any criminal offense described in [section 1128(b)(1) or section 1128(a) of the Act].

Criminal offenses described in section 1128(a) include those related to the delivery of an item or service under the Medicare or State health care programs ⁽¹⁾ and those related to neglect or abuse of patients in connection with the delivery of a health care item or service.

Criminal offenses described in section 1128(b)(1) include those relating 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 with respect to any act or omission in a program operated by or financed in whole or in part by any federal, state, or local government agency.

The exclusion under section 1128(b)(2) shall be for three years unless the Secretary determines, in accordance with published regulations, that a shorter period is appropriate because of mitigating circumstances or that a longer period is appropriate because of aggravating circumstances. Act, section 1128(c)(3)(D); 42 C.F.R. § 1001.301(b).

Section 1128(b) of the Act authorizes the Secretary to exclude individuals from receiving payment for services that would otherwise be reimbursable under Medicare, Medicaid, or other federal health care programs.

Pursuant to 42 C.F.R. § 1001.2007, a person excluded under 1128(b)(2) may file a request for hearing before an Administrative Law Judge (ALJ).

IV. Findings of Fact and Conclusions of Law

1. Petitioner's wife, Peggy Bisig, was the owner of Home Pharm-Assist, Inc. (HPA), a pharmacy and durable medical equipment company, in Louisville, Kentucky. I.G. Ex. 6.

2. Petitioner was an employee of HPA during the time relevant to this case. I.G. Ex. 2.

3. Petitioner's wife was the subject of a federal investigation concerning health care fraud, mail fraud, and illegal kickbacks. I.G. Ex. 6.

4. Petitioner was served with a Temporary Restraining Order (TRO) on January 11, 2001, prohibiting the transfer and dissipation of assets of HPA. I.G. Ex. 5, at 3.

5. On or about August 14, 2002, an indictment was filed in the United States District Court for the Southern District of Indiana against Petitioner's wife for various crimes including health care fraud, mail fraud, and illegal kickbacks. I.G. Ex. 6.

6. The indictment against Petitioner's wife provided notice that the United States intended to seek forfeiture of certain property, including the assets of HPA, should Petitioner's wife be convicted. I.G. Ex. 6, at 19-20.

7. Petitioner and Petitioner's wife created a new corporate entity known as Total Patient Needs, Inc. (TPN), and registered TPN with the Kentucky Secretary of State's Office on or about January 14, 2003. I.G. Ex. 5, at 5.

8. Petitioner's wife's daughter was the sole owner of TPN and was listed as the resident agent. Id.

9. While still under the TRO, in January 2003, Petitioner transferred, and attempted to transfer, the assets of HPA to TPN. Id.

10. On December 18, 2003, an information charged that Petitioner "aided and abetted the creation of a new corporate entity and transferred, and attempted to transfer, the assets of Home Pharm-Assist, Inc. to a new corporate entity, in violation of Title 18, United States Code, Section 1503." I.G. Ex. 8.

11. On December 18, 2003, Petitioner pleaded guilty to one felony count of obstruction of justice in violation of 18 U.S.C. § 1503. I.G. Ex. 3.

12. Petitioner was sentenced to probation for two years and received a fine of $1,000. I.G. Ex. 4.

13. By letter dated August 31, 2004, the I.G. notified Petitioner that he would be excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of three years pursuant to section 1128(b)(2) of the Act. I.G. Ex. 1.

14. Pursuant to section 1128(b)(2) of the Act, the I.G. is authorized to exclude any individual or entity that has been convicted, under federal or state law, in connection with the interference with or obstruction of any investigation into any criminal offense described in section 1128(b)(1) or section 1128(a) of the Act.

15. Where the I.G. determines to exclude an individual pursuant to section 1128(b)(2) of the Act, the term of exclusion will be for three years in the absence of aggravating or mitigating factors that would support an exclusion of more or less than three years. Act, section 1128(c)(3)(D); 42 C.F.R. § 1001.301(b).

16. The I.G. had a basis for excluding Petitioner from participation in Medicare, Medicaid, and all federal health care programs.

17. The I.G.'s determination to exclude Petitioner for a period of three years is reasonable because there are no aggravating or mitigating factors to lengthen or shorten the period of exclusion.

V. Discussion

A. The I.G. had a basis for excluding Petitioner.

The critical facts of this case are not in dispute. Petitioner's wife was the owner of HPA and she was the subject of an investigation concerning health care fraud, mail fraud, and illegal kickbacks. I.G. Ex. 6. Petitioner was an employee of HPA and on January 11, 2001, Petitioner was served with a TRO prohibiting transfer and dissipation of assets of HPA. I.G. Exs. 2 and 6. On or about August 14, 2002, a federal indictment was filed against Petitioner's wife and that indictment provided notice that the United States intended to seek forfeiture of certain property, including the assets of HPA, should Petitioner's wife be convicted. I.G. Ex. 6, at 19-20. Petitioner assisted his wife in creating another corporate entity and Petitioner's wife's daughter was listed as the sole owner and the resident agent. I.G. Ex. 5, at 5. Petitioner then transferred and attempted to transfer the assets of HPA into the newly created corporate entity, TPN, while Petitioner was still subject to the TRO in January 2003. Id. On December 18, 2003, Petitioner pleaded guilty to one felony count of obstruction of justice in violation of 18 U.S.C. § 1503 and was sentenced to probation for two years and a $1,000 fine. I.G. Exs. 8 and 3.

By letter dated August 31, 2004, the I.G. notified Petitioner that pursuant to section 1128(b)(2) of the Act, he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of three years. I.G. Ex. 1.

Petitioner has not disputed the charges brought against him or whether he was convicted. Petitioner's question is "whether the scope of the exclusion would prevent him from performing the duties that he has recently been providing for his current employer, Kentuckiana Diagnostics." P. Brief at 1-2. The issue before me, however, is whether the I.G. had a basis for excluding Petitioner from Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(b)(2) of the Act. Inasmuch as Petitioner was convicted of a criminal offense in connection with the interference with or obstruction of any investigation into any criminal offense described in section 1128(b)(1) or section 1128(a) of the Act, I must find that a basis exists for the I.G.'s exclusion action.

In addressing Petitioner's question regarding the scope of exclusion and whether it will affect his current employment status, I must note that the federal regulations do not give me the authority to address that particular issue. Section 1001.2007(a)(1) of 42 C.F.R. provides that:

Except as provided in section 1001.2003, an individual or entity excluded under this Part may file a request for hearing before an ALJ only on the issues of whether:

(i) The basis for the imposition of the sanction exists, and

(ii) The length of the exclusion is unreasonable.

In view of the foregoing, I conclude that Petitioner was properly excluded by the I.G. from participating in Medicare, Medicaid, and all other federal health care programs.

B. The length of the exclusion is not unreasonable.

I also find the length of the exclusion is not unreasonable inasmuch as Petitioner was excluded for the three-year period prescribed by law, and no mitigating factors are present in this case. 42 C.F.R. § 1001.301(b)(1). Petitioner has the burden of proving mitigating factors, which he has made no attempt to do. The exclusion period complies with the purpose of the Act which is to protect the integrity of federally funded health care programs and their beneficiaries from individuals who have been shown to be untrustworthy.

VI. Conclusion

The I.G. is authorized to exclude Petitioner from Medicare, Medicaid, and all federal health care programs pursuant to section 1128(b)(2) of the Act. The exclusion of Petitioner is reasonable and appropriate for a period of three years.

José A. Anglada

Administrative Law Judge

1. "State health care programs" are defined at section 1128(h) of the Act and include Medicaid.