Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Jose Luis Avila, M.D.,
(OI File No.: M-12-40217-9),
The Inspector General.
Docket No. C-18-133
Decision No. CR5173
The Inspector General (I.G.) of the U.S. Department of Health and Human Services excluded Jose Luis Avila, M.D., Petitioner, from participation in Medicare, Medicaid, and all other federal health care programs for ten years pursuant to Section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. §§ 1320a-7(a)(1)). Dr. Avila now challenges the exclusion. For the reasons stated below, I conclude that the I.G. had a basis for excluding Dr. Avila from program participation and that the ten-year exclusion period is not unreasonable. I therefore affirm the I.G.’s exclusion determination.
I. Case Background and Procedural History
On November 16, 2016, Petitioner pleaded guilty to one count of Conspiracy to Defraud the United States and Receive Healthcare Kickbacks. I.G. Exhibit (Ex.) 2; I.G. Ex. 3. On February 22, 2017, the U.S. District Court for the Southern District of Florida entered judgment against Petitioner and sentenced him to 21 months of incarceration. I.G. Ex. 2 at 1-2. That Court also ordered Petitioner to pay $430,000 in restitution as part of his sentence. Id. at 5.
The I.G. issued notice to Petitioner on August 31, 2017, that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for ten years. I.G. Ex. 1 at 1. The I.G. cited section 1128(a)(1) of the Act, which mandates exclusion when an individual is convicted of a criminal offense related to the delivery of an item or service under Medicare or a State health care program. Id. Petitioner timely requested a hearing, and I was designated to hear and decide this case.
I conducted a pre-hearing telephone conference on January 18, 2018, the substance of which I memorialized in my January 26, 2018 Order (Summary Order), and set forth a schedule for submission of arguments and evidence by the parties. The I.G. submitted a brief (I.G. Br.) and six exhibits (I.G. Exs. 1-6), while Petitioner submitted his brief (P. Br.) and six exhibits (P. Exs. 1-6). The I.G. also submitted a reply brief (I.G. Reply).
The I.G. objected to all of Petitioner’s exhibits but for P. Ex. 6, asserting they were irrelevant to this case. I.G. Reply at 5. I overrule the I.G.’s objections to P. Exs. 1-3, as they relate to the issue of whether Petitioner’s cooperation with federal officials led to subsequent convictions, and are therefore relevant. However, the I.G.’s objections to P. Ex. 4 and 5 are well taken, as the substance of those exhibits concern Petitioner’s character and adequacy as a physician, which are irrelevant to the determination I must make. I therefore admit P. Exs. 1, 2, 3, and 6 into evidence. Petitioner did not object to any of the I.G.’s proposed exhibits. I therefore admit I.G. Exs. 1-6 into evidence.
II. A Decision on the Record is Appropriate.
Petitioner requested an in-person hearing and offered a list of three potential witnesses. P. Br. at 5. But the testimony of these witnesses refers only to the circumstances of Petitioner’s conviction, and Petitioner offers only arguments attacking his underlying conviction, which are impermissible and not relevant to my determination. Id. In the absence of dispute as to any material facts, I find it appropriate to proceed to a decision based on the documentary record before me.
The issues in this case are limited to determining if the I.G. has a basis for excluding Petitioner from participating in Medicare, Medicaid, and all other federal health care programs and, if so, whether the ten-year exclusion imposed by the I.G. is unreasonable. See 42 C.F.R. § 1001.2007(a)(1).
I have jurisdiction to hear and decide this case. 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also 42 U.S.C. § 1320a-7(f)(1).
V. Findings of Fact, Conclusions of Law, and Analysis1
1. Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under the Medicare program; therefore, exclusion is required under 42 U.S.C. § 1320a-7(a)(1).
The I.G. must prove that (1) Petitioner was convicted of a criminal offense, and (2) Petitioner’s offense was related to the delivery of an item or service under Medicare or a State health care program, in order to sustain an exclusion under Section 1128(a)(1) of the Act. 42 U.S.C. § 1320a-7(a)(1).
Petitioner was convicted of a criminal offense within the meaning of the Act, namely Conspiracy to Defraud the United States and Receive Healthcare Kickbacks in the U.S. District Court for the Southern District of Florida. I.G. Ex. 2 at 1. His offense involved receiving payments for steering Medicare patients to home health agencies which defrauded the Medicare program. I.G. Ex. 4 at 7-8. In order to be “related to” a delivery of an item or service under Medicare, only a nexus or common sense connection is required. See Quayum v. U.S. Dep’t of Health and Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998); see also Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012). Convictions for receiving healthcare kickbacks, for conspiracy or otherwise, are sufficient to satisfy this nexus. See, e.g., Farzana Begum, M.D., DAB No. 2726 (2016); Niranjana B. Parikh, M.D., et al., DAB No. 1334 (1992). Accordingly, I conclude that Petitioner’s conduct was related to the delivery of an item or service under Medicare and that the record supports the I.G.’s basis for mandatory exclusion under 42 U.S.C. § 1320a-7(a)(1).
Moreover, Petitioner does not dispute that he was convicted of a criminal offense related to the delivery of an item or service under Medicare or a State Medicaid program.2 P. Br. at 2. There is ample evidence to conclude he was convicted of a criminal offense requiring exclusion under 42 U.S.C. § 1320a-7(a)(1).
2. Petitioner must be excluded for a minimum of five years.
Because I have concluded that a basis exists to exclude Petitioner pursuant to 42 U.S.C. § 1320a-7(a)(1), Petitioner must be excluded for a minimum of five years. 42 U.S.C. § 1320a-7(c)(3)(B).
3. The I.G. has established three aggravating factors and considered one mitigating factor, which together justify exclusion beyond the five-year statutory minimum.
a. The I.G. established financial loss to a government program of $50,000 or more, as required by 42 C.F.R. § 1001.102(b)(1).
Petitioner disputes the I.G.’s assertion that he was responsible for over $50,000 in program loss, claiming he only received $7,000 in kickbacks for his role in the offense for which he was convicted. P. Br. at 3. However, Petitioner confuses the gain to him with the loss to his victim. The regulatory factor at issue specifies the I.G. must establish “financial loss to a government agency or program” exceeding $50,000; Petitioner’s financial gain resulting from his participation in the criminal offense at issue is irrelevant. 42 C.F.R. § 1001.102(b)(1) (emphasis added).
Petitioner admitted in his plea agreement that his “participation in the conspiracies resulted in the value of the improper benefit to be conferred (and/or actual or intended loss) related to the schemes to be . . . [$430,000].” I.G. Ex. 4 at 7; see also I.G. Ex. 3 at 2. Furthermore, the District Court ordered him to pay this amount back in restitution as part of his sentence. I.G. Ex. 2 at 5. The Departmental Appeals Board (the Board) has recognized that restitution may be used to demonstrate program loss. See Summit S. Shah, M.D., DAB No. 2836 at 8-9 (2017) (citing Berton Siegel, D.O., DAB No. 1467 at 6-7 (1994)). I therefore conclude the I.G. has sufficiently established that Petitioner was responsible for more than $50,000 in loss to the Medicare program.
b. The IG established that Petitioner’s conviction arose from acts that lasted for a period of one year or more, as required by 42 C.F.R. § 1001.102(b)(2).
Petitioner argues that the I.G. misapplied this regulatory factor because his offense did not last for a period of at least one year. P. Br. at 3. Petitioner may believe that his specific conduct does not match the duration or severity of his co-conspirators, but the applicable regulations do not allow him to collaterally attack the factual bases of his underlying plea agreement or conviction in these proceedings. 42 C.F.R. § 1001.2007(d). Here, as part of his guilty plea, Petitioner stipulated that he acted as a referral source for improper claims to the Medicare program for almost six years, from approximately May 2006 to March 2012. I.G. Ex. 3 at 1-2. Therefore, I conclude that the record supports the I.G.’s determination that Petitioner’s criminal conduct occurred for over one year.
c. The I.G. established, and Petitioner does not dispute, that he was incarcerated as part of his sentence as required by 42 C.F.R. § 1001.102(b)(5).
d. The I.G. considered all relevant mitigating factors under 42 C.F.R. § 1001.102(c)(3).
While the I.G. bears the burden of proving any aggravating factors, Petitioner has the burden of proving mitigating factors. 42 C.F.R. § 1005.15(c); Summary Order at ⁋ 4. To support his claim that mitigation factors are present, Petitioner asserts that his cooperation resulted in the prosecution of a co-conspirator. P. Br. at 4. He also argues that his referrals of patients to Home Health Care Services ultimately helped the Medicare program save money that would have otherwise been expended on hospital admissions of the referred patients. Id.
Only the former claim is a cognizable mitigating factor I may consider under the regulations. 42 C.F.R. § 1001.102(c)(3)(i). Here, the I.G. acknowledged Petitioner’s cooperation with the government’s investigation into ongoing health care fraud, and that the prosecutor in Petitioner’s criminal case had characterized Petitioner’s cooperation as “substantial.” I.G. Br. at 6, citing I.G. Ex. 5 at 2. The I.G. explicitly took note of Petitioner’s cooperation with federal officials when establishing the ten-year term of exclusion. I.G. Ex 1 at 2. I therefore find that the I.G. considered this relevant mitigating factor in determining the period of exclusion.
4. A ten-year exclusion period is not unreasonable.
I must uphold the IG’s determination as to the length of exclusion if it is not unreasonable. 42 C.F.R. § 1001.2007(a)(1)(ii). This means that:
[s]o long as the amount of time chosen by the OIG is within a reasonable range, based on demonstrated criteria, the ALJ has no authority to change it under this rule. We believe that the deference § 1001.2007(a)(2) grants to the OIG is appropriate, given the OIG’s vast experience in implementing exclusions under these authorities.
57 Fed. Reg. 3271, 3321 (Jan. 29, 1992).
In making my determination, the quality of the aggravating (or mitigating) factors is of greater significance than the mere number of the factors present in a given case. As the
Secretary of Health and Human Services stated in the preamble to the final rule establishing the exclusion regulations:
We do not intend for the aggravating and mitigating factors to have specific values; rather, these factors must be evaluated based on the circumstances of a particular case. For example, in one case many aggravating factors may exist, but the subject’s cooperation with the OIG may be so significant that it is appropriate to give that one mitigating factor more weight than all of the aggravating. Similarly, many mitigating factors may exist in a case, but the acts could have had such a significant physical impact on program beneficiaries that the existence of that one aggravating factor must be given more weight than all of the mitigating. The weight accorded to each mitigating and aggravating factor cannot be established according to a rigid formula, but must be determined in the context of the particular case at issue.
Id. at 3314-15.
In assessing the reasonableness of the exclusion period selected by the I.G., I must consider both mitigating and aggravating factors. Here, the I.G. properly found the existence of three aggravating factors. Petitioner’s crime had a significant impact on program beneficiaries, since he referred them for services which were often neither medically necessary nor ever provided. I.G. Ex. 3 at 2. Further, such losses directly result in “less funds being available to pay for covered services” for program beneficiaries. Shah, DAB No. 2836 at 8-9. The Board has previously observed that it is “entirely reasonable” to give significant weight to loss amounts substantially larger than the minimum regulatory threshold. Laura Leyva, DAB No. 2704 at 9-10 (2016) (citations omitted). Here, the Petitioner’s criminal conduct resulted in $430,000 in loss to the Medicare program, over eight times the regulatory minimum of $50,000 for program loss to be considered an aggravating factor. 42 C.F.R. § 1001.102(b)(1).
Petitioner also engaged in criminal conduct that lasted for over five times the minimum of one year necessary to be an aggravating factor. 42 C.F.R. § 1001.102(b)(2). Petitioner’s prolonged criminal conduct demonstrates a high level of untrustworthiness and shows his involvement was not merely a “minimal lapse in judgment” but instead a “significant risk to program integrity and risk to program beneficiaries.” Hussein Awada, M.D., DAB No. 2788 at 9 (2017).
The seriousness of Petitioner’s offense is also reflected by the District Court’s imposition of a 21-month sentence of incarceration. I.G. Ex. 2 at 2; 42 C.F.R. § 1001.102(b)(5). A sentence of incarceration for such an offense is a “reasonable proxy . . . for untrustworthiness in the context of deciding how much weight to give the aggravating factor for incarceration.” Eugene Goldman, M.D., a/k/a Yevgeniy Goldman, M.D., DAB No. 2635 at 5 (2015).
In the face of these aggravating factors, I note that Petitioner’s cooperation with federal officials in the cases against his co-conspirators was described by the prosecutor in his case as “substantial.” I.G. Ex. 5 at 2. The record further indicates Petitioner’s co‑conspirators were convicted, and that Petitioner stipulated some facts relevant to their crimes as part of his plea agreement. P. Exs. 1-3; I.G. Ex. 3.
The I.G. specifically took into account Petitioner’s cooperation when deciding to impose a ten-year exclusion period. I.G. Ex. 1 at 2. While my review of the reasonableness of that determination would have been better served had the I.G. articulated the nature and substance of how Petitioner’s mitigating conduct was considered, I must allow that the I.G. has “vast experience” in implementing exclusions, and the record reflects the I.G. explicitly considered this mitigating factor in deciding on a ten-year exclusion period. I.G. Ex. 1 at 2; 57 Fed. Reg. at 3321. Furthermore, I must consider this mitigating conduct in light of the aggravating factors demonstrated above; as the Board has noted, “simply meeting the threshold for an aggravating factor is a clear indication of untrustworthiness.” Awada, DAB No. 2788 at 10. Here, Petitioner has met the threshold for three aggravating factors, which taken together demonstrate the severity of his untrustworthiness. Thus, even taking into account Petitioner’s “substantial” cooperation with federal prosecutors,3 I cannot say the ten-year period of exclusion selected by the I.G. is unreasonable.
For these reasons, I conclude that the I.G. has established the existence and the significant weight of these aggravating and mitigating factors, and demonstrated that he adequately considered those factors in selecting a ten-year period of exclusion. While Petitioner may have cooperated with the government after being caught, his crime had a substantial financial impact on the Medicare program, occurred over a period of several years, and resulted in his incarceration. The length of exclusion imposed by the I.G. is not unreasonable.
I affirm the I.G.’s determination to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for a period of ten years.
Bill Thomas Administrative Law Judge
1. My findings of fact and conclusions of law appear as numbered headings in bold italic type.
- back to note 1 2. In his reply brief, the I.G. erroneously asserts that Petitioner contests this issue. I.G. Reply at 2; but see P. Br. at 2.
- back to note 2 3. I note that the sentencing Court also took into account Petitioner’s cooperation, but nevertheless imposed a sentence of incarceration, despite the economic nature of his crime, and presumably, a lack of criminal history. See Awada, DAB No. 2788 at 12 (observing that a sentencing court’s imposition of a sentence of incarceration even after taking into account mitigating factors, including cooperation, supported extension of the minimum exclusion period).
- back to note 3