Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
(O.I. File No. 2-15-40379-9),
The Inspector General,
Department of Health and Human Services.
Docket No. C-18-449
Decision No. CR5133
Petitioner, Michael Troyan, is excluded from participating in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(4) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(4)), effective December 20, 2017. There is a proper basis for exclusion. Petitioner’s exclusion for five years is required by section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)). An additional exclusion of ten years, for a total minimum exclusion of 15 years,1 is not unreasonable based upon the presence of three aggravating factors and one mitigating factor.
The Inspector General (I.G.) of the U.S. Department of Health and Human Services (HHS) notified Petitioner by letter dated November 30, 2017, that he was excluded from participation in Medicare, Medicaid, and all federal health care programs for 15 years. The I.G. advised Petitioner that he was excluded pursuant to section 1128(a)(4) of the
Act, based on his felony conviction in the U.S. District Court for the Eastern District of New York (district court), of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. The I.G. further advised Petitioner that the mandatory 5-year exclusion was extended to 15 years because Petitioner’s acts that resulted in his conviction were committed over a period of more than 1 year, his sentence included incarceration, and he was subject to another adverse action by a state or federal agency or board. I.G. Exhibit (I.G. Ex.) 1.
Petitioner timely requested a hearing on January 4, 2018, by letter dated January 1, 2018 (RFH). The case was assigned to me on January 29, 2018, to hear and decide. I convened a prehearing conference by telephone on February 26, 2018, the substance of which is memorialized in my order issued on February 27, 2018. During the prehearing conference, Petitioner waived an oral hearing and the parties agreed that this matter may be resolved on the parties’ briefs and documentary evidence. On April 12, 2018, the I.G. filed a brief (I.G. Br.) and I.G. Exhibits 1 through 7. On June 1, 2018, my office received Petitioner’s brief (P. Br.) with Petitioner’s Exhibits (P. Exs.) 1 through 12. The I.G. filed a reply brief (I.G. Reply) on June 11, 2018. Petitioner did not object to my consideration of I.G. Exs. 1 through 7. The I.G. did not object to my consideration of P. Exs. 1 through 12. The offered exhibits are admitted as evidence.
A. Applicable Law
Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to an Administrative Law Judge (ALJ) hearing and judicial review of the final action of the Secretary of HHS (Secretary). The right to hearing before an ALJ is set forth in 42 C.F.R. §§ 1001.2007(a) and 1005.2, and the rights of both the sanctioned party and the I.G. to participate in a hearing are specified by 42 C.F.R. § 1005.3. Either or both parties may choose to waive appearance at an oral hearing and to submit only documentary evidence and written argument for my consideration. 42 C.F.R. § 1005.6(b)(5).
Pursuant to section 1128(a)(4) of the Act, the Secretary must exclude from participation in the Medicare and Medicaid programs any individual convicted of an offense that occurred after August 21, 1996, under federal or state law, and the criminal offense was a felony related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. 42 C.F.R. § 1001.101(d). Pursuant to section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)), an individual is convicted of a criminal offense when: (1) a judgment of conviction has been entered against him or her in a federal, state, or local court whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no contest is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.
Exclusion for a minimum period of five years is mandatory for any individual or entity convicted of a criminal offense for which exclusion is required by section 1128(a) of the Act. Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)). Pursuant to 42 C.F.R. § 1001.102(b), an individual’s 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, however, are mitigating factors considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).
The standard of proof is a preponderance of the evidence, and there may be no collateral attack of the conviction that provides the basis of the exclusion. 42 C.F.R. § 1001.2007(c), (d). Petitioner bears the burden of proof and the burden of 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).
The Secretary has by regulation limited my scope of review to two issues:
Whether there is a basis for the imposition of the exclusion; and
Whether the length of the exclusion is unreasonable.
42 C.F.R. § 1001.2007(a)(1).
C. Findings of Fact, Conclusions of Law, and Analysis
My conclusions of law are set forth in bold followed by the pertinent findings of fact and analysis.
1. Petitioner’s request for hearing was timely and I have jurisdiction.
Petitioner requested a hearing on January 4, 2018, fewer than 60 days after the I.G. sent Petitioner the November 30, 2017 notice of exclusion. RFH at 1; I.G. Ex. 1. Therefore, Petitioner’s request for hearing is timely under 42 C.F.R. § 1005.2(c).
I have jurisdiction pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.
2. Petitioner’s exclusion is required by section 1128(a)(4) of the Act.
The I.G. cites section 1128(a)(4) of the Act as the basis for Petitioner’s mandatory exclusion. The statute provides:
(a) MANDATORY EXCLUSION.–The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):
* * * *
(4) FELONY CONVICTION RELATING TO CONTROLLED SUBSTANCE.–Any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.
Act § 1128(a)(4). The statute requires that the Secretary exclude from participation in Medicare or Medicaid any individual or entity: (1) convicted of a felony criminal offense under federal or state law; (2) where the offense occurred after August 21, 1996, the date of enactment of the Health Insurance Portability and Accountability Act of 1996; and (3) the criminal offense relates to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.
On January 20, 2017, the district court entered a judgment finding Petitioner guilty pursuant to his plea of one count of conspiracy to distribute oxycodone. The district court sentenced Petitioner to 60 months confinement followed by 3 years supervised release. I.G. Ex. 4. Petitioner, in this case, was convicted under the Act and regulation when his guilty plea was accepted, there was a finding of guilt, and the judgment of conviction was entered. Act § 1128(i); 42 C.F.R. § 1001.2.
Petitioner did not deny in his request for hearing that he was convicted as alleged by the I.G. but argued that the period of exclusion was unreasonable. Petitioner admitted that he was convicted of a felony related to conspiring to distribute oxycodone. In his brief, Petitioner does not dispute that there is a basis for exclusion pursuant to section 1128(a)(4) of the Act. Rather, he argues that the I.G. failed to consider a mitigating factor that I should consider as a basis for reducing the period of exclusion to the minimum authorized five-year period. P. Br.
There is no dispute that Petitioner was convicted of a felony, committed after August 21, 1996, and the felony is related to the unlawful distribution of a controlled substance. I conclude that the elements that trigger an exclusion pursuant to section 1128(a)(4) of the Act are satisfied and there is a basis for Petitioner’s exclusion.
3. Pursuant to section 1128(c)(3)(B) of the Act, a five-year period of exclusion is mandatory.
I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(4) of the Act. Therefore, the I.G. must exclude Petitioner for a minimum period of five years pursuant to section 1128(c)(3)(B) of the Act. The I.G. has no discretion to impose a lesser period and I may not reduce the period of exclusion below five years.
The remaining issue is whether it is unreasonable to extend Petitioner’s exclusion by an additional ten years. My determination of whether the exclusionary period in this case is unreasonable turns on whether: (1) the I.G. has proven that there are aggravating factors; (2) Petitioner has proven that the I.G. considered an aggravating factor that does not exist or that there are mitigating factors that the I.G. failed to consider; and (3) the period of exclusion is within a reasonable range.
4. Three aggravating factors are present that justify extending the minimum period of exclusion to 15 years.
The I.G. notified Petitioner that three aggravating factors are present in this case that justify an exclusion of more than five years:
(1) Petitioner’s acts that resulted in the conviction were committed over a period one year or more;
(2) The sentence imposed by the court included incarceration; and
(3) Petitioner was subject to an adverse action by a federal, state, or local government agency or board, and the adverse action was based on the same set of circumstances that served as the basis for the imposition of the exclusion.
I.G. Ex. 1 at 2.
It is undisputed that Petitioner’s acts of conspiring to distribute oxycodone lasted for a period of roughly four years from November 2011 to October 2015. I.G. Ex. 2 at 1; I.G. Ex. 4 at 1. It is also undisputed that Petitioner was sentenced to 60 months incarceration. I.G. Ex. 4 at 2; P. Br. Finally, it is undisputed that Petitioner was subject to an adverse state agency action because the Petitioner was excluded from the New York Medicaid program based on his January 20, 2017 conviction. I.G. Exs. 5-7.
I conclude that the aggravating factors that the I.G. cites are established by the evidence before me and are undisputed. The aggravating factors are a basis for the I.G. to extend the period of exclusion beyond the minimum exclusion of five years. 42 C.F.R. § 1001.102(b)(5), (b)(9).
5. The I.G. agrees that Petitioner has proven the existence of the mitigating factor established by 42 C.F.R. § 1001.102(c)(3)(ii) that was not originally considered by the I.G.
If any of the aggravating factors authorized by 42 C.F.R. § 1001.102(b) justify an exclusion of longer than five years, then mitigating factors may be considered as a basis for reducing the period of exclusion to no fewer than five years. 42 C.F.R. § 1001.102(c). The only authorized mitigating factors that I may consider are established by 42 C.F.R. § 1001.102(c):
(1) In the case of an exclusion under § 1001.101(a), whether the individual or entity was convicted of three or fewer misdemeanor offenses and the entire amount of financial loss (both actual loss and intended loss) to Medicare or any other Federal, State, or local governmental health care program due to the acts that resulted in the conviction, and similar acts, is less than $5,000;
(2) The 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) The individual’s or entity’s cooperation with Federal or State officials resulted in—
(i) Others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs,
(ii) Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or
(iii) The imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.
Petitioner has the burden to prove by a preponderance of the evidence that there is a mitigating factor for me to consider. 42 C.F.R. § 1005.15(b)(1). Petitioner’s exclusion is pursuant to section 1128(a)(4) of the Act and 42 C.F.R. § 1001.101(d) and he was convicted of a felony not a misdemeanor. Therefore, the mitigating factor established by 42 C.F.R. § 1001.102(c)(1) does not apply. Petitioner makes no allegation that the district court considered him to be less culpable due to his mental and emotional
impairment, therefore the mitigating factor established by 42 C.F.R. § 1001.102(c)(2) does not apply.
Petitioner argues that the I.G. failed to consider as a mitigating factor that Petitioner told the prosecutor in his case about a doctor Petitioner accused of Medicare fraud. Petitioner asserts that the information he provided the prosecutor resulted in the investigation of another case which triggers the mitigating factor under 42 C.F.R. § 1001.102(c)(3)(ii). Petitioner conceded that he is not aware of any actions taken based on information he provided to the prosecutor other than the initiation of an additional investigation but, Petitioner argues, it is the initiation of the investigation that triggers the mitigating factor. P. Br. at 2. The I.G. agrees that Petitioner provided law enforcement the name of a doctor who he accused of Medicare fraud. The I.G. agrees that Petitioner’s report resulted in opening an investigation of the individual but, the I.G. states that no conviction or exclusion resulted. The I.G. asserts that he has now considered the mitigating factor, but denies any reduction in the period of exclusion is appropriate because Petitioner’s crime was serious and his cooperation had minimal impact. I.G. Reply at 1-3. I consider the existence of the mitigating factor when assessing the reasonableness of the period of exclusion.
Petitioner urges me take into consideration the efforts he has made to rehabilitate himself, the effect upon his family, and other matters as a mitigating factors. While I recognize Petitioner’s efforts, the only factors that I may consider as mitigating are those listed in 42 C.F.R. § 1001.102(c).
6. I have no authority to change the effective date of the running of the period of exclusion.
Petitioner urges me to start his period of exclusion with the date on which he entered his guilty plea, June 17, 2016; rather than starting the period on the date 20 days after the November 30, 2017 I.G. notice of exclusion. RFH at 8; P. Br. at 1. I conclude that I have no authority to change the effective date of the running of a period of exclusion in this case. Section 1128(c)(1) of the Act provides that exclusion under section 1128 of the Act shall be effective at “such time and upon such reasonable notice to the public and to the individual or entity excluded as may be specified in regulations . . . .” The Secretary has required by regulation that the I.G. send written notice of the exclusion to the affected individual or entity. 42 C.F.R. § 1001.2002(a). The Secretary's regulations further provide that the exclusion will be effective 20 days from the date of the I.G. notice. 42 C.F.R. § 1001.2002(b). Both the context and plain language of the regulation are consistent with my conclusion that the notice referred to in 42 C.F.R. § 1001.2002(b) is the written notice required by 42 C.F.R. § 1001.2002(a). The Secretary's regulations do not give me discretion to either review or change the effective date of Petitioner's exclusion and I may not refuse to follow the Secretary’s regulations. 42 C.F.R. § 1005.4(c)(1). The Departmental Appeals Board (the Board) has addressed the issue
and concluded that ALJs and the Board have no authority to change the effective date of the running of the period of exclusion as required by the Secretary. Thomas Edward Musial, DAB No. 1991 at 3 (2005) (and cases cited therein).
Accordingly, Petitioner’s exclusion is effective 20 days from the date of the I.G.’s written notice of exclusion. 42 C.F.R. § 1001.2002(b). The I.G.’s notice to Petitioner is dated November 30, 2017. Accordingly, the effective date of Petitioner’s exclusion is December 20, 2017.
7. Exclusion for 15 years is not unreasonable in this case.
The regulation states that the ALJ must determine whether the length of exclusion imposed is “unreasonable.” 42 C.F.R. § 1001.2007(a)(1). The Board, however, has made clear that the role of the ALJ in exclusion cases is to conduct a de novo review of the facts related to the basis for the exclusion and the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102 and to determine whether the period of exclusion imposed by the I.G. falls within a reasonable range. Juan De Leon, Jr., DAB No. 2533 at 4‑5 (2013); Craig Richard Wilder, DAB No. 2416 at 8 (2011); Joann Fletcher Cash, DAB No. 1725 at 17, n.6 (2000). The Board explained that, in determining whether a period of exclusion is “unreasonable,” the ALJ is to consider whether such period falls “within a reasonable range.” Cash, DAB No. 1725 at 17, n.6. The Board cautions that whether the ALJ thinks the period of exclusion too long or too short is not the issue. The ALJ may not substitute his or her 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 Board 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), the Board 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. Thus, the Board has by these various prior decisions significantly limited my authority under the applicable regulation to judge the reasonableness of the period of exclusion.
Based on my de novo review, I conclude that a basis for exclusion exists and that the undisputed evidence establishes the three aggravating factors that the I.G. relied on to impose the 15-year exclusion. The I.G. concedes that Petitioner has established the mitigating factor under 42 C.F.R. § 1001.102(c)(3)(ii). The I.G. asserts that the 15-year exclusion is reasonable due to the minimal nature of Petitioner’s cooperation and the seriousness of his offense. I conclude for the same reasons articulated by the I.G. that a
period of exclusion of 15 years is in a reasonable range and not unreasonable considering the existence of three aggravating factors and the one mitigating factor. Accordingly, I conclude that no change in the period of exclusion is necessary.
For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all other federal health care programs for a minimum of 15 years, effective December 20, 2017.
Keith W. Sickendick Administrative Law Judge
- 1. Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after the period of exclusion expires. Reinstatement is not automatic upon completion of the minimum period of exclusion.