James J. Maccarone, DAB CR6500 (2024)

DECISION

Petitioner, James J. Maccarone, was a doctor of osteopathy, who, until recently, was licensed in the State of Tennessee.  He ran a practice in Clarksville, Tennessee, that was, in fact, a distribution center for opioids and other dangerous and addictive drugs.  He was convicted on one count of conspiracy to unlawfully distribute controlled substances, a felony.  The federal district court sentenced him to 84 months (seven years) in prison, followed by three years probation. 

Based on his conviction, the Inspector General (IG) excluded Petitioner for 14 years from participating in Medicare, Medicaid, and all federal health care programs, as authorized by section 1128(a)(4) of the Social Security Act (Act). 

Petitioner appeals.  He agrees that the IG may exclude him but challenges the length of the exclusion beyond the mandatory five years.  

For the reasons discussed below, I find that the IG properly excluded Petitioner and that the 14-year exclusion falls within a reasonable range. 

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Background

In a letter dated November 30, 2023, the IG notified Petitioner that he was excluded from participating in Medicare, Medicaid, and all federal health care programs for a minimum period of 14 years because he had been convicted of a felony offense “related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”  The letter explained that section 1128(a)(4) of the Act authorizes the exclusion.  IG Ex. 1.  

Petitioner requested review. 

Submissions.  The IG has submitted a written brief (IG Br.), seven exhibits (IG Exs. 1-7), and a Reply brief (IG Reply).  In the absence of any objections, I admit into evidence IG Exs. 1-7. 

Petitioner has submitted his own written brief.  (P. Br.). 

Hearing on the written record.  The parties agree that an in-person hearing is not necessary, and this case may be decided based on the written record.  IG Br. at 6; P. Br. at 3. 

Discussion

1. Petitioner must be excluded from program participation for a minimum of five years because he was convicted of a felony offense relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. Act § 1128(a)(4).¹

Section 1128(a)(4) mandates that the Secretary of Health and Human Services exclude from program participation an individual who has been convicted, under federal or state law, of a felony criminal offense “relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”  See 42 C.F.R. § 1001.101(d). 

Petitioner Maccarone was a physician, licensed to practice osteopathy in the State of Tennessee.  The Drug Enforcement Administration authorized him to prescribe controlled substances.  IG Ex. 4 at 2.  He ran what he called a “pain management clinic,” Gateway Medical Associates, P.C.  In fact, his “clinic” was a “pill mill,” which he “designed, implemented, staffed, and ran, owned, [and] profited from.”  IG Ex. 7 at 58; see IG Ex. 2 at 2-3; IG Ex. 4 at 2. 

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Beginning “in or about” July 2016 and continuing through at least March 2021, Petitioner and his associates at Gateway Medical conspired to “knowingly and intentionally distribute and dispense controlled substances,” including oxycodone, oxymorphone, methadone (Schedule-II controlled substances), and benzodiazepines, including alprazolam (Schedule-IV controlled substances).  He and his cohorts prescribed the drugs; their prescriptions were “not issued for a legitimate medical purpose.”  IG Ex. 4 at 3. 

In an indictment issued on July 22, 2021, Petitioner was charged with one felony count of distributing the Schedule-II and Schedule-IV substances, in violation of 21 U.S.C. § 846.  IG Ex. 4 at 3.  On January 24, 2022, Petitioner Maccarone pleaded guilty to the charge.  IG Ex. 2. 

In a judgment, dated November 10, 2022, the Federal District Court for the Eastern District of Kentucky accepted his plea and entered judgment against him on the felony count.  IG Ex. 3 at 1.  The Court sentenced him to 84 months (seven years) imprisonment, followed by three years of supervised release.  IG Ex. 3 at 2, 3. 

Thus, as Petitioner concedes, he was convicted of the unlawful distribution of a controlled substance, a felony, and is subject to exclusion under section 1128(a)(4).  P. Br. at 2. 

2. Based on the aggravating factors and one mitigating factor, the 14-year exclusion falls within a reasonable range.

An exclusion brought under section 1128(a)(4) must be for a minimum period of five years.  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).  I now consider whether the length of the exclusion, beyond five years, falls within a reasonable range.  See Edwin L. Fuentes, DAB No. 2988 at 8-9 (2020); Hussein Awada, DAB No. 2788 at 5-6 (2017).  In doing so, I must respect a regulation’s explicit directives.  See Kimberly Jones, DAB No. 3033 at 13 (2021) (holding that a regulation creating an aggravating factor “cannot be ignored or minimized”); H. Scott Harkonen, DAB No. 2485 at 22 (2012), aff’d., Harkonen v. Sebelius, No. 13-0071 PJH, 2013 WL 5734918 (N.D. Cal. 2013); Salvacion Lee, M.D., DAB No. 1850 (2002). 

Among the factors that may serve as a basis for lengthening the period of exclusion are the three that the IG relies on in this case:  1) the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; 2) the sentence imposed by the court included incarceration; and 3) the individual 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 imposing the exclusion.  42 C.F.R. § 1001.102(b).  The presence of an aggravating factor 

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or factors, not offset by any mitigating factor or factors, justifies lengthening the mandatory period of exclusion.  

“Simply meeting the threshold for an aggravating factor is a clear indication of untrustworthiness.”  Awada, DAB No. 2788 at 10. 

As the following discussion shows, the IG correctly identified the aggravating factors. 

Duration of criminal conduct (42 C.F.R. § 1001.102(b)(2)).  We consider the length of Petitioner’s participation in the criminal scheme in order to distinguish the individual whose lapse in integrity is short-lived from those who display a lack of integrity over a longer period of time. 

The importance of distinguishing between the two groups of individuals cannot be overstated in light of the remedial purpose of the [IG’s] exclusion authority under section 1128:  to protect federal health care programs and the beneficiaries they serve from untrustworthy individuals. 

Yolanda Hamilton, M.D., DAB No. 3061 at 14-15 (2022) (citations omitted); see also Awada, DAB No. 2788 at 8 (“Participation in, or even knowing but silent acquiescence in, a continuing fraudulent scheme that could be expected to cause repeated misrepresentations and repeated harm over a period of time evidences a continuing lack of integrity.”). 

Petitioner engaged in criminal conduct that began on or around July 2016 and continued through March 2021, which is just four months shy of five years and went well beyond the one-year threshold for aggravation.  IG Ex. 3 at 1 (finding that the unlawful offense ended in March 2021); IG Ex. 4 at 3. 

Four-to five years of felonious conduct is beyond significant.  See, e.g., Laura Leyva, DAB No. 2704 at 10 (2016) (finding that participation in a fraud scheme for over two years “amply demonstrates more than a short-lived lapse in integrity”), aff’d, Leyva v. Price, No. 8:16-CV-1986-T-AEP, 2017 WL 2880125 (M.D. Fla. Apr. 24, 2017).  Petitioner Maccarone did not experience a short-term lapse.  He spent years building and enlarging a “practice” that catered to drug dealers.  IG Ex. 7 at 64.  

That Petitioner actively engaged in his criminal activities for four-to five times the one-year threshold for aggravation underscores that he is not trustworthy and justifies a period of exclusion that is significantly longer than the minimum.  

Incarceration (42 C.F.R. § 1001.102(b)(5)).  The court sentenced Petitioner to a very substantial period of incarceration – seven years.  IG Ex. 3 at 2.  While any period of incarceration justifies increasing the length of the exclusion, the Board has repeatedly 

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held that longer periods of incarceration are relevant in determining whether a period of exclusion is reasonable.  Eugene Goldman, M.D., a/k/a Yevgeniy Goldman, M.D., DAB No. 2635 at 6 (2015).  Generally, the longer the jail time, the longer the exclusion because a lengthy sentence evidences a more serious offense.  See Jeremy Robinson, DAB No. 1905 at 6 (2004) (finding that one-year and a day of incarceration, with other factors, supports “sufficient” weight); Jason Hollady, M.D., DAB No. 1855 at 12 (2002) (characterizing a nine-month incarceration as “relatively substantial”); Stacy Ann Battle, D.D.S., DAB No. 1843 (2002) (finding that four months in a halfway house, followed by four months home confinement justifies lengthening the period of exclusion); Brenda Mills, M.D., DAB CR1461 (2006), aff’d, DAB No. 2061 (2007) (finding that six months home confinement justifies increasing the length of exclusion). 

In imposing this significant sentence, the court emphasized the seriousness of Petitioner’s crime.  

Now the drug dealers are coming to you, filling your parking lot, partying in your parking lot.  They’re businessmen and women, and they’re coming there for a reason, because they’re going to get what they want.  They’re going to pay good money for it, take that product back and sell it and make more money.  They’re culpable, a hundred percent they’re culpable. 

But they couldn’t do what they were doing without you turning the spigot on.  You are the doctor, the trusted professional.  You’re the one the government gives power to open the channel of these substances to people, to patients. . . . 

* * * *

[Y]ou’ve got the greater culpability, and you ought to pay more. 

IG Ex. 7 at 64-65.  The judge emphasized that Petitioner’s conduct was not merely “reckless”; it was intentional.  Id.; see IG Ex. 7 at 68 (“Dr. Maccarone is at the top of the heap.  In terms of responsibility for crime, he’s at the apex.”).  

Petitioner nevertheless asserts, without providing underlying support, that he may be entitled to a sentence reduction based on “Amendment 821, Part B.”  Apparently, that provision alters sentencing guidelines to allow for a greater sentence reduction based on the defendant’s criminal history and the seriousness of his crime.  According to Petitioner, he had a hearing on that issue on May 29, 2024.  P. Br. at 6.  He has not disclosed the outcome of that hearing, which he may not yet know.  

I see no point in speculating on what impact a hypothetical reduction in sentence might have on Petitioner’s exclusion.  Its impact, if any, could turn on the mechanism by which 

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his period of incarceration would be reduced, and what entity would make that determination.  If the sentencing court, or a reviewing court, made the change, that might affect the weight accorded to this factor (although, any reduction would have to be dramatic to justify lowering the length of exclusion).  But Petitioner does not claim – and nothing in the record suggests – that the sentencing court (or reviewing court) would vacate its earlier sentence and impose a shorter one. 

Because Petitioner was sentenced to incarceration, the IG appropriately determined that his significant prison sentence justifies increasing the period of his exclusion.  See Hamilton, DAB No. 3061 at 15-16 (finding that, so long as “the sentence imposed by the court included incarceration,” the IG appropriately established it as an aggravating factor). 

I note also that the judge did not slavishly follow the guidelines that were in place at the time of sentencing.  As he explained, although obligated to consider the guidelines, he is not required to stay within them.  The guidelines influence the result, but they don’t dictate the result.  IG Ex. 7 at 25-26.  Based on the guidelines alone, the sentencing range would have been 135-to 168 months.  IG Ex. 7 at 27.  But considering other factors – including Petitioner’s lack of a criminal history – the judge reduced the range to 74-to 92 months and settled on 84 months, considering both Petitioner’s criminal history (he had none) and the seriousness of his crime (which was very serious).  IG Ex. 7 at 67, 69. 

Other adverse actions (42 C.F.R. § 1001.102(b)(9)).  In a complaint approved by the Tennessee Board of Osteopathic Examination on May 4, 2022, Petitioner “surrendered” his medical license.  “This surrender shall have the same effect as revocation.”  IG Ex. 5 at 4.  The Osteopathic Board explained that the surrender/revocation was based on Petitioner Maccarone’s conviction for conspiring to unlawfully distribute controlled substances.  The Osteopathic Board and Petitioner stipulated that Petitioner had engaged in “[u]nprofessional, dishonorable, or unethical conduct,” which, under Tennessee law, justifies the surrender of his license.  IG Ex. 5 at 3.  

Thus, based on the same set of circumstances that serves as the basis for imposing this exclusion, Petitioner was subject to an additional adverse action by a state board, and the IG appropriately applied this factor to extend the period of his exclusion. 

Mitigating factors.  The regulations consider mitigating just three factors:  1) a petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to the program was less than $5,000; 2) the record in the criminal proceedings demonstrates that a petitioner had a mental, physical, or emotional condition that reduced his culpability; and 3) a petitioner’s cooperation with federal or state officials resulted in others being convicted or excluded, or additional cases being investigated, or a civil money penalty being imposed.  42 C.F.R. § 1001.102(c). 

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Characterizing the mitigating factor as “in the nature of an affirmative defense,” the Board has ruled that Petitioner has the burden of proving any mitigating factor by a preponderance of the evidence.  Stacey R. Gale, DAB No. 1941 (2004) (holding that “it is Petitioner’s responsibility to locate and present evidence to substantiate the existence of any alleged mitigating factor . . . .  [T]he I.G. does not have the responsibility to prove the non-existence of the mitigating factor under the regulation.”); Barry D. Garfinkel, M.D., DAB No. 1572 at 8 (1996). 

Petitioner asserts that his cooperation with law enforcement was “SUBSTANTIAL” and led to the apprehension and incarceration of three drug dealers, as well as Dr. John D. Stanton, M.D., his former colleague at Gateway Medical.  P. Br. at 5 (emphasis in original).  Petitioner does not support those claims, and the actual evidence of his cooperation with law enforcement is thin:  a terse email to the IG from Assistant United States Attorney, Andrew E. Smith, who prosecuted both Petitioner and others from Gateway Medical.  In that email, Prosecutor Smith advised the IG that Petitioner testified at Dr. Stanton’s trial, and Dr. Stanton was convicted.  IG Ex. 6.²  The IG accepted this as evidence of Petitioner’s cooperation and has considered it a mitigating factor, as do I.  IG Br. at 5, 6. 

Weighing the mitigating factor against the aggravating factors.  The evidence thus suggests that Petitioner’s cooperation was limited to his testifying against his former colleague, Dr. Stanton (whom he initially recruited to Gateway Medical).  See IG Ex. 7 at 64.  Significantly, during sentencing, the judge, Petitioner, and the attorneys spoke at some length about aggravating and mitigating factors.  Except for the judge’s ambiguous reference to “the Stanton testimony” (which Petitioner has not explained), no one mentioned that Petitioner cooperated with prosecutors in any way, much less that his cooperation was significant or substantial.  IG Ex. 7.  See Salman Ali, DPT and Roohi Ali, DPT, DAB No. 3048 at 10 (2021) (“As a general matter, the transcript is relevant to Petitioner’s argument concerning the mitigating factor of cooperation with the government.”). 

Based on the three-aggravating factors and one-mitigating factor, I must determine whether the exclusion period imposed by the IG falls within a reasonable range.  A “‘reasonable range’ refers to a range of exclusion periods that is more limited than the full range authorized by the statute [i.e., from a minimum of five years to a maximum of permanent] and that is tied to the circumstances of the individual case.”  Joseph M. Rukse, Jr., R.Ph., DAB No. 1851 at 11 (2002), citing Gary Alan Katz, R.Ph., DAB 

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No.1842 at 8 n.4 (2002).  The goal is to protect federal health care programs and beneficiaries from potential harm.  Joann Fletcher Cash, DAB No. 1725 (2000). 

So long as that period falls within a reasonable range, my role is not to second-guess the IG’s judgment.  Jeremy Robinson, DAB No. 1905 at 5 (ALJ review must reflect the deference accorded to the IG by the Secretary). 

The individual aggravating factors – particularly the length of time Petitioner engaged in his illegal conduct and the substantial period of his incarceration – justify a much longer exclusion than the 14 years imposed here.  For almost five years, Petitioner engaged in felonious conduct, distributing narcotics for no legitimate medical purpose.  He recruited others, including Dr. Stanton, to engage in the illegal practice.  Because his conduct was so serious, the court sentenced him to seven years incarceration, many years longer than the periods that the Board has characterized as “relatively substantial.”  By his actions, Petitioner has shown a lack of integrity and that he poses a threat to health care beneficiaries.  Even if I assumed that his cooperation was substantial (for which there is no significant evidence), it was not so extraordinary as to nullify significantly the compelling aggravating factors. 

I therefore conclude that the 14-year exclusion falls within a reasonable range. 

Factor that is not mitigating.  Finally, notwithstanding his felonious conduct, Petitioner suggests that he is an excellent internist and intends to “pay [his] debt to society” by working for the Veterans Administration.  He points to a “dire need to provide care” to veterans.  P. Br. at 5. 

This is not a mitigating factor that I can consider.  The statute and regulations authorize the IG to grant or deny a request from the administrator of a federal health care program to waive an exclusion “if the individual or entity is the sole community physician or the sole source of essential specialized services in a community,” and the exclusion would impose a hardship on beneficiaries.  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.1801(b).  Significantly, for our purposes, “[t]he decision to grant, deny, or rescind a request for a waiver is not subject to administrative or judicial review.”  Act § 1128(c)(3)(b); 42 C.F.R. § 1001.1801(f).  Thus, any such request for waiver must be made directly to the IG by the administrator of a federal health care program, not by Petitioner, and the IG’s determination to grant or deny any waiver request is not reviewable in this or any other forum.  Thus, I have no authority to consider the issue, and any argument regarding the need for Petitioner’s services is irrelevant. 

Conclusion

The IG properly excluded Petitioner from participating in Medicare, Medicaid, and other federal health care programs.  So long as the period of exclusion is within a reasonable 

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range, based on demonstrated criteria, I have no authority to change it.  Cash, DAB No. 1725 at 7, citing 57 Fed. Reg. 3298, 3321 (1992). 

For the reasons discussed above, I find that the 14-year exclusion falls within a reasonable range.  

Endnotes

¹  My findings of fact/conclusions of law are set forth, in italics and bold, in the discussion captions of this decision.  

²  Although it is not the IG’s burden, the IG apparently attempted to determine Petitioner’s level of cooperation.  Neither the Department of Justice nor the Drug Enforcement Administration corroborated Petitioner’s claims of additional cooperation.  See IG Reply at 3 n.1.