Christopher Blackstone, DAB CR6522 (2024)

DECISION

Petitioner, Christopher Blackstone, is excluded from participation in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)), effective December 20, 2023.  Petitioner’s exclusion for the minimum period of five years is required by section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).  Exclusion for an additional 19 years for a total minimum exclusion for 24 years is not unreasonable based on the existence of four aggravating factors and one mitigating factor.¹

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I. Background

The Inspector General (IG) notified Petitioner by letter dated November 30, 2023, that he² was excluded from participation in Medicare, Medicaid, and all federal health care programs for 29 years.  The IG cited section 1128(a)(3) of the Act as the authority for Petitioner’s exclusion based on his felony conviction in the United Stated District Court, Eastern District of Louisiana (district court) 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.  The IG extended the five-year minimum exclusion to 29 years citing the existence of four aggravating factors and no mitigating factors.  IG Exhibit (Ex.) 1.

Petitioner filed a request for hearing on February 1, 2024 (RFH).  The case was docketed and assigned to me on February 6, 2024.  I convened a prehearing conference by telephone on February 26, 2024, the substance of which is memorialized in my Prehearing Conference Order and Schedule for Filing Briefs and Documentary Evidence dated February 26, 2024 (Prehearing Order).

The IG filed a motion for summary judgment and supporting brief on April 11, 2024, with IG Exs. 1 through 8.  Petitioner filed a response in opposition to the IG’s motion (P. Br.) on May 28, 2024, with P. Exs. 1 through 5.

On June 13, 2024, the IG offered IG Ex. 9.  IG Ex. 9 is an IG letter dated June 4, 2024, notifying Petitioner that his period of exclusion was changed to a minimum period of 24 years because the IG concluded that Petitioner had shown that his cooperation with federal or state officials was a mitigating factor under 42 C.F.R. § 1001.02(c)(3) that should be considered.  IG Ex. 9.  The IG also filed a reply brief on June 13, 2024.

Petitioner has not objected to my consideration of IG Exs. 1 through 9, and they are admitted as evidence.  The IG has not objected to my consideration of P. Exs. 1 through 5 and they are likewise admitted as evidence.

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II. Discussion

A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a hearing by an administrative law judge (ALJ) and judicial review of the final action of the Secretary of Health and Human Services (the Secretary).

Pursuant to section 1128(a)(3) of the Act, the Secretary must exclude from participation in any federal health care program:

Any individual or entity that has been convicted for an offense which occurred after [August 21, 1996], under Federal or State law, 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 (other than those specifically described in [section 1128(a)(1) of the Act]) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Act § 1128(a)(3); 42 C.F.R. § 1001.101(c).

Pursuant to section 1128(i) of the Act, an individual is convicted of a criminal offense when:  (1) a judgment of conviction has been entered by a federal, state, or local court whether or not an appeal is pending or the record has been expunged; (2) there is a finding of guilt in 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 has been withheld.  Act § 1128(i) (42 U.S.C. § 1320a-7(i)); 42 C.F.R. § 1001.2.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act will be for no fewer than five years.  Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)); 42 C.F.R. § 1001.102(a).  The Secretary has published regulations that establish aggravating factors that the IG may consider as a basis to extend the period of exclusion beyond the minimum five-year period, as well as mitigating factors that may be considered only if the IG proposes to impose an exclusion greater than five years.  42 C.F.R. § 1001.102(b), (c).

The standard of proof is a preponderance of the evidence.  42 C.F.R. §§ 1001.2007(c), 1005.15(d).  There may be no collateral attack of the conviction that is the basis for the

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exclusion on either substantive or procedural grounds.  42 C.F.R. § 1001.2007(d).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors, and the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(b), (c); Prehearing Order ¶ 4.

B. Issues

The Secretary has by regulation limited my scope of review to two issues:

Whether the IG has a basis for excluding Petitioner from participation in Medicare, Medicaid, and all federal health care programs; and

Whether the length of the period of 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 undisputed fact and analysis.

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

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

2. Summary judgment is appropriate in this case.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to reasonable notice and an opportunity for a hearing.  The Secretary has provided by regulation that a sanctioned party has the right to a hearing before an ALJ, and both the sanctioned party and the IG have a right to participate in the hearing.  42 C.F.R. §§ 1005.2, -.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).  An ALJ may also resolve a case, in whole or in part, by summary judgment.  42 C.F.R. § 1005.4(b)(12).

Summary judgment is appropriate in an exclusion case when there are no disputed issues of material fact and when the undisputed facts, clear and not subject to conflicting interpretation, demonstrate that one party is entitled to judgment as a matter of law.  Tanya A. Chuoke, R.N., DAB No. 1721 (2000); David A. Barrett, DAB No. 1461 (1994); Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367 (1992); Catherine L. Dodd, R.N., DAB No. 1345 (1992); John W. Foderick, M.D., DAB No.

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1125 (1990).  When the undisputed material facts of a case support summary judgment, there is no need for a full evidentiary hearing, and neither party has the right to one.  Surabhan Ratanasen, M.D., DAB No. 1138 (1990); Foderick, DAB No. 1125.  In opposing a properly supported motion for summary judgment, the nonmovant must set forth specific facts that show there is a genuine dispute of material fact that affects the proponent’s prima facie case or that might establish a defense.  The nonmovant may not rely upon mere allegations or denials to defeat a properly supported motion for summary judgment.  To defeat a properly supported motion for summary judgment and proceed to a trial, the nonmovant must show there is a genuine dispute as to a material fact that requires determination by the fact finder.  On summary judgment, the judge does not weigh the evidence or attempt to determine the truth.  Rather, the judge accepts the nonmovant’s evidence as true and draws all permissible inferences in the nonmovant’s favor.  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-57 (1986).

The IG has moved for summary judgment.  Petitioner opposes.  Petitioner does not dispute that the IG properly excluded him under section 1128(a)(3) of the Act.  P. Br. at 6, 8; RFH at 1.  Rather, Petitioner challenges the reasonableness of the 24-year period of exclusion focusing on the aggravating factors cited by the IG; the IG’s failure to consider a mitigating factor; and the IG’s weighing of the aggravating and mitigating factors in arriving at the period of exclusion.  P. Br. at 9, 14-19; RFH at 1-2, 5-8.  The IG did not list any mitigating factors in its November 30, 2023 exclusion notice.  IG Ex. 1.  But following Petitioner’s production of evidence in this case, the IG reduced Petitioner’s exclusion from 29 years to 24 years based on the existence of a mitigating factor.  IG Ex. 9.  Petitioner’s arguments challenging the existence of the aggravating factors cited by the IG and the IG’s weighing of aggravating and mitigating factors must be resolved against Petitioner as matters of law.  I conclude that summary judgment in favor of the IG is appropriate and that the 24-year exclusion is reasonable as a matter of law.

3. Petitioner’s exclusion from participation in Medicare, Medicaid, and all other federal health care programs is required by section 1128(a)(3) of the Act.

a. Undisputed Facts

The following facts are undisputed.  All factual inferences are drawn in Petitioner’s favor on summary judgment.

1. Petitioner was licensed to practice as a physical therapist in the state of Louisiana. IG Ex. 8 at 2; P. Br. at 2; RFH at 2. 
2. Petitioner owned Prime Pharmacy (Prime), a closed-door pharmacy that produced compounded medication. IG Ex. 5 at 2; P. Br. at 2-3; RFH at 2-3. 

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3. Petitioner was charged by a Bill of Information (information) filed in the district court on December 18, 2020, with one count of conspiracy to commit health care fraud in violation of 18 U.S.C. §§ 1347 and 1349. IG Ex. 2.  Petitioner waived indictment and agreed to proceed on the information.  IG Ex. 3. 
4. On February 24, 2021, Petitioner executed a plea agreement in which he agreed to plead guilty to the one count of conspiracy to commit health care fraud charged in the information, which is a felony offense. IG Exs. 4, 5. 
5. Petitioner agreed as part of his plea agreement that the total amount of restitution owed to TRICARE was $10,689,005. IG Ex. 4 at 2.  
6. On February 23, 2021, Petitioner signed a document titled “Factual Basis” as part of his plea agreement. Petitioner agreed to the following facts: 
   1. Beginning in about March 2014 and continuing through October 2016, Petitioner knowingly and willfully engaged with co-conspirators to execute a scheme to defraud TRICARE (a federal health care program) in violation of 18 USC §§ 1347 and 1349.
   2. Prime was established in about March 2014, to produce compound medications.
   3. Petitioner owned Prime and supervised its operations with the pharmacist in charge.
   4. Petitioner and his co-conspirators experimented with and selected formulas for compounded medications that would maximize reimbursement from federal healthcare programs (i.e., high-yield compounded medications).
   5. The co-conspirators provided physicians with preprinted prescription forms and encouraged them to prescribe the medically unnecessary medications, paid the prescribing physicians a kickback when the claims were reimbursed, and waived copayments for patients when Prime dispensed a prescription for a high-yield compounded medication.
   6. TRICARE and other health benefit programs relied upon the false representations of the co-conspirators and reimbursed Prime approximately $16 million for high yield compound medications, and Petitioner received a percentage of the reimbursement.

IG Ex. 5.

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7. The district court imposed judgment on June 14, 2023, and Petitioner was found guilty pursuant to his guilty plea of one count of conspiracy to commit health care fraud in violation of 18 USC § 1349. IG Ex. 6 at 1. 
8. Petitioner was sentenced on June 14, 2023, to imprisonment for 18 months with two years of supervised release. IG Ex. 6 at 2-3.  
9. Petitioner was also sentenced to pay restitution of $10,689,005 to TRICARE. IG Ex. 6 at 6.  I accept as true for purposes of summary judgment that the loss was $6,627.183.10 as stipulated by Petitioner and the United States in his criminal proceedings.  P. Ex. 3 at 3. 
10. On April 14, 2021, the Louisiana Physical Therapy Board, Department of Hospitals, State of Louisiana (state board) adopted an Interim Consent Agreement and Board Order (Board Order) signed by Petitioner on April 1, 2020. IG Ex. 8 at 1, 4-5. 
    1. The Board Order alleged that Petitioner was charged in the district court on December 18, 2020, with health care fraud and he pleaded guilty to the charge on February 24, 2021. IG Ex. 8 at 2. 
    2. According to the Board Order, Petitioner voluntarily entered the interim consent agreement to avoid Board proceedings until his criminal prosecution was resolved. IG Ex. 8 at 3. 
    3. Pursuant to the Board Order, Petitioner’s Louisiana physical therapist license was indefinitely suspended. IG Ex. 8 at 3. 
    4. The Board Order specifically states that the interim consent agreement was a public record and considered disciplinary action by the Board. IG Ex. 8 at 4. 
11. On June 4, 2024, after Petitioner filed his opposition to the IG motion for summary judgment and his five exhibits, the IG reduced Petitioner’s period of exclusion from a minimum period of 29 years to 24 years because the IG concluded that Petitioner had shown that his cooperation with federal or state officials was a mitigating factor under 42 C.F.R. § 1001.102(c)(3) that should be considered. IG Ex. 9; P. Exs. 4, 5. 

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b. Analysis

The IG cites section 1128(a)(3) of the Act as the basis for Petitioner’s mandatory exclusion.  Petitioner does not dispute that his mandatory exclusion is required by section 1128(a)(3) of the Act.  P. Br. at 6, 8; RFH at 1.  My de novo review confirms that, as Petitioner concedes, there is a basis for his exclusion from Medicare, Medicaid, and all federal healthcare programs under section 1128(a)(3) of the Act based on the undisputed facts.

The statute requires the Secretary to exclude from participation in any federal health care program any individual or entity:

(l)  Convicted of a criminal offense under federal or state law;

(2)  The criminal offense occurred after August 21, 1996 (the date of enactment of the Health Insurance Portability and Accountability Act of 1996);

(3)  The criminal offense was committed

(a)  in connection with the delivery of a health care item or service, or

(b)  with respect to any act or omission in a health care program other than Medicare or Medicaid, that is operated or financed by the federal, state, or a local government;

(4)  The criminal offense was a felony; and

(5)  The criminal offense was related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Act § 1128(a)(3); 42 C.F.R. § 1001.101(c).  When the elements of section 1128(a)(3) of the Act are satisfied, Congress mandates exclusion and the Secretary, the IG, and I have no discretion not to exclude.

Petitioner was convicted of a felony offense under federal law.  Petitioner does not dispute that he pleaded guilty to conspiracy to commit healthcare fraud under 18 U.S.C. §§ 1347 and 1349.  On June 14, 2023, the district court accepted Petitioner’s guilty plea and entered judgment against him.  IG Ex. 6 at 1.  Violation of 18 U.S.C. § 1347 subjects one to imprisonment for 10 years.  18 U.S.C. § 1347(a)(2).  An attempt or conspiracy to violate 18 U.S.C. § 1347 also subjects one to imprisonment for 10 years.  18 U.S.C. § 1349.  Under 18 U.S.C. § 3559(a), an offense is classified as a felony when the maximum term of imprisonment is more than one year.  There is no dispute that Petitioner faced a maximum penalty of 10 years.  IG Ex. 4 at 1.  The information filed in

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the district court also indicates that Petitioner was charged with a felony.  IG Ex. 2 at 1.  I conclude that the district court’s acceptance of Petitioner’s guilty plea to the felony offense, the finding of guilt, and the entry of judgment on June 14, 2023, was a conviction within the meaning of section 1128(i)(1), (2), and (3) of the Act.  I conclude on the same facts that Petitioner was convicted of healthcare fraud.

There is no dispute that Petitioner agreed as part of his plea agreement that the offense of which he was convicted occurred between about March 2014 and April 2016, which is after August 21, 1996.  IG Exs. 4, 5 at 1.

There is no dispute that Petitioner pleaded guilty to conspiracy to commit health care fraud and that the fraud involved Petitioner’s business, Prime, that produced compounded medications.  IG Ex. 2, 5.  I conclude that the undisputed facts show that there is a nexus between Petitioner’s offense and the delivery of a health care item or service.

Accordingly, I conclude that Petitioner was convicted within the meaning of the Act.  I further conclude that all elements of section 1128(a)(3) of the Act are satisfied, and Congress has mandated that he be excluded from participation in Medicare and all federal health care programs.

4. Section 1128(c)(3)(B) of the Act requires a minimum exclusion of five years for any exclusion pursuant to section 1128(a) of the Act.

I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(3) of the Act.  Therefore, the IG must exclude Petitioner for a minimum period of five years pursuant to section 1128(c)(3)(B) of the Act.  There is no review of the reasonableness of the five-year period of exclusion or any discretion to impose a lesser period.  42 C.F.R. § 1001.102(a).

The remaining issue is whether it is unreasonable to extend Petitioner’s exclusion by an additional 19 years for a total minimum exclusion of 24 years.

5. Four aggravating under 42 C.F.R. § 1001.102(b) exist in this case.

6. One mitigating factor under 42 C.F.R. § 1001.102(c) exists in this case

The IG initially considered four aggravating factors for extending Petitioner’s period of exclusion beyond the five-year mandatory minimum according to the November 30, 2023 notice of exclusion.  IG Ex. 1 at 1-2.  Petitioner does not argue that the IG considered an aggravating factor authorized by 42 C.F.R. § 1001.102(b) that does not exist in this case.  RFH; P. Br.  Petitioner argues that there was one mitigating factor authorized by 42 C.F.R. § 1001.102(c) that the IG failed to consider.  P. Br. at 15-17.  But, when

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Petitioner offered evidence of a mitigating factor in this case, the IG issued an amended notice of exclusion that reduced Petitioner’s minimum exclusion to 24 years based on the existence of four aggravating factors and one mitigating factor in this case.  IG Ex. 9.

My review of the undisputed facts with all inferences in favor of Petitioner shows there are four aggravating factors and one mitigating factor as identified by the IG.  The crux of Petitioner’s arguments is that the IG incorrectly weighed the aggravating and mitigating factors in deciding to extend the period of exclusion beyond five years.  Petitioner’s arguments about weighing aggravating and mitigating factors are addressed after I review the existence of the aggravating and mitigating factors.

a. Petitioner’s offense resulted in a loss to a government program of $50,000 or more. 42 C.F.R. § 1001.102(b)(1). 

The IG may consider as an aggravating factor that the acts for which one was convicted caused, or were intended to cause, a financial loss of $50,000 or more to a government agency or program, or to one or more other entities.  42 C.F.R. § 1001.102(b)(1).

Petitioner agreed as part of his plea agreement to pay to TRICARE $10,698,005 as restitution.  IG Ex. 4 at 2.  On June 14, 2023, the district court ordered Petitioner to pay $10,694,005 in restitution.  IG Ex. 6 at 6.

Petitioner argues the IG erred in considering that there was a loss of $10,694,005 because that amount overstates the actual amount of loss.  P. Br. at 10-11; RFH at 6.  Petitioner points out that in the Joint Objection to the Presentence Investigation Report (Joint Objection) filed in Petitioner’s criminal case, Petitioner and the Government agreed that a more accurate amount of the loss was $6,627,183.10.  P. Ex. 3 at 3.  The Joint Objection states that the agreed reduction “would not affect the amount paid in restitution, which was part of the plea agreement entered into between the parties.”  P. Ex. 3 at 3.

I accept $6,627,183.10 is a more accurate measure of financial loss based on the agreement of Petitioner and the prosecution in his criminal case.  But that amount still far exceeds $50,000, the amount that establishes the existence of this aggravating factor.  I therefore conclude that the aggravating factor established by 42 C.F.R. § 1001.102(b)(1) exists in this case.

Petitioner argues he has already paid back much of the loss.  But that is not a mitigating factor that the IG or I may consider under 42 C.F.R. § 1001.102(c).

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b. The acts that resulted in Petitioner’s conviction were committed over a period of one year or more. 42 C.F.R. § 1001.102(b)(2). 

Acts that resulted in the conviction or similar acts that occur over a year or more may be considered by the IG to extend a period of exclusion beyond the five-year minimum.  42 C.F.R. § 1001.102(b)(2).

As part of his plea agreement, Petitioner stipulated that the scheme for which he was convicted began in about March 2014 and continued through about April 2016.  IG Ex. 5 at 1-3.  Petitioner does not deny that the fraudulent scheme underlying his conviction lasted for more than a year.  RFH at 6-7.  Rather, Petitioner argues that he was misled and personally unaware of the fraudulent billing involving his pharmacy until after it occurred.  He argues his acts lasted for less than a year.  P. Br. at 3-4, 12-13; RFH at 2-3.  Petitioner further argues that “Government billing records will reflect [that] Prime started submitting claims to TRICARE in early 2015 and ceased submitting such claims by late summer 2015.”  P. Br. at 12-13; RFH at 7.  Petitioner states that he “ultimately took responsibility for his role at Prime and his culpability in the matter and recognized that, as the owner, he was responsible for the operations of Prime.”  P. Br. at 14.

Petitioner was charged with conspiracy to commit health care fraud during the period beginning in 2014 and continuing to April 2016.  IG Ex. 2 at 4.Petitioner entered a plea agreement in which he agreed to plead guilty to the charge.  IG Ex. 4.  Pursuant to his plea agreement, Petitioner stipulated that the government could prove in his criminal case that the conspiracy for which he was charged began in or around March 2014 and continued through October 2016.  IG Ex. 5 at 1.  Petitioner ultimately pleaded guilty, and his guilty plea was accepted by the district court.  IG Ex. 6.

Petitioner may not collaterally attack his conviction that is the basis for the exclusion on either substantive or procedural grounds.  42 C.F.R. § 1001.2007(d).  Therefore, I conclude Petitioner is bound by his plea agreement in which he admitted to the criminal scheme occurring over a period of more than one year.

Accordingly, I conclude that there is no genuine dispute that the acts resulting in Petitioner’s conviction lasted more than one year and that the aggravating factor established by 42 C.F.R. § 1001.102(b)(2) exists in this case.

c. Petitioner was sentenced to be incarcerated. 42 C.F.R. § 1001.102(b)(5). 

An aggravating factor that may be considered under 42 C.F.R. § 1001.102(b)(5) is that the sentence imposed by the court included incarceration.

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It is undisputed that on June 14, 2023, the district court sentenced Petitioner to 18 months of imprisonment followed by two years of supervised release.  IG Ex. 6 at 2-3.  Petitioner does not dispute that this aggravating factor exists.  But he challenges the weight the IG has given the factor because he feels his sentence to confinement was minimal compared to the maximum that could have been imposed.  P. Br. at 13-14; RFH at 7.

The aggravating factor exists if incarceration is imposed.  42 C.F.R. § 1001.102(b)(5).  Whether a period of incarceration is significant goes to the weight to be assigned to the aggravating factor.  Petitioner’s arguments regarding the IG’s weighing of aggravating and mitigating factors is discussed later in this decision.

I conclude that the aggravating factor established by 42 C.F.R. § 1001.102(b)(5) exists in this case because there is no dispute incarceration was imposed by the district court.

d. Petitioner was subject to an adverse action of a state board that was based on the same set of circumstances that serve as the basis of the imposition of the exclusion. 42 C.F.R. § 1001.102(b)(9). 

If the circumstances that serve as the basis of the exclusion also resulted in an adverse action by any federal, state, or local government, the IG may consider that as an aggravating factor.  42 C.F.R. § 1001.102(b)(9).

It is undisputed that the state board on April 1, 2021, indefinitely suspending Petitioner’s physical therapy license.  IG Ex. 8 at 1.  The Board Order cited the same charge of conspiracy to commit healthcare fraud that ultimately resulted in Petitioner’s conviction and is the basis for Petitioner’s exclusion.  IG Ex. 8 at 2-3.

Petitioner argues that it is unreasonable for the IG to rely on the state board’s suspension action based on the consent agreement because Petitioner voluntarily agreed to the indefinite suspension of his physical therapy license.  Petitioner argues that the Board Order was not a final resolution of the administrative case before the state board and Petitioner is still eligible to proceed to an administrative hearing before the state board.  Petitioner also argues that the Board Order was unrelated to Petitioner’s occupation as a physical therapist.  P. Br. at 14-15; RFH at 5.

It is not disputed that the state board imposed adverse action against Petitioner by suspending his license to practice as a physical therapist.  The suspension, despite the fact it was imposed pursuant to the interim consent agreement that Petitioner voluntarily entered, was clearly related to the alleged criminal conduct for which Petitioner was ultimately convicted pursuant to his guilty plea, and for which his mandatory exclusion is required by section 1128(a)(3) of the Act.  The interim nature of the license suspension

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and the fact Petitioner voluntarily agreed to the indefinite suspension are immaterial to the application of 42 C.F.R. § 1001.102(b)(9).  I conclude that the aggravating factor established by 42 C.F.R. § 1001.102(b)(9) exists in this case.

e. Petitioner cooperated with federal officials, resulting in convictions of others. 42 C.F.R. § 1001.102(c)(3). 

If any of the aggravating factors authorized by 42 C.F.R. § 1001.102(b) are cited by the IG to justify an exclusion of longer than five years, as in this case, 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 listed in 42 C.F.R. § 1001.102(c).

Petitioner submitted evidence in this case showing he assisted the government resulting in “at least two convictions,” and he testified against one of his co-conspirators.  P. Br. at 15-17; P. Ex. 4 at 4-7.  In the government’s motion for a reduction of Petitioner’s sentence, the government noted that Petitioner “provided significant substantial assistance” and that the assistance “resulted in the conviction of three others.”  P. Ex. 4 at 4, 7.

After Petitioner filed the evidence of his cooperation, the IG determined that Petitioner’s cooperation with government attorneys in convicting his co-conspirators qualified as a mitigating factor under 42 C.F.R. § 1001.102(c)(3).  The IG reduced Petitioner’s total period of exclusion from 29 years to 24 years as a result.  IG Ex. 9.

Petitioner does not allege that any other mitigating factors established by 42 C.F.R. § 1001.102(c) exist in this case.  P. Br. at 15-17.

I conclude that the mitigating factor established by 42 C.F.R. § 1001.102(c)(3) exists in this case.

6. A minimum exclusion for 24 years is not unreasonable in this case.

Based on my de novo review, I conclude that a basis for exclusion exists and that the undisputed evidence establishes four aggravating factors and one mitigating factor.  Petitioner argues that the IG did not properly weigh the aggravating and mitigating factors in this case in determining to extend the period of exclusion by 19 years.  P. Br. at 12-15; RFH at 5-8.  But because the IG did not erroneously consider an aggravating factor that was not established by the evidence and the IG did not fail to consider a mitigating factor established by the evidence, I conclude that I have no authority to examine how the IG weighed the factors or to substitute my judgment for that of the IG by reweighing the factors.

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The Secretary requires by regulation that the ALJ determine whether the length of exclusion imposed is “unreasonable” if a period greater than the minimum period is imposed by the IG.  42 C.F.R. § 1001.2007(a)(1).  The Board has interpreted the regulations as significantly limiting the scope of ALJ review.  The regulation states that the ALJ must determine whether the length of exclusion imposed is “unreasonable,” without definition of what is unreasonable or direction for how to determine whether a period of exclusion is unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  The drafters of the regulation explained that the intent of the regulation is to ensure that if the IG’s proposed period of exclusion is “within a reasonable range based on demonstrated criteria, the ALJ has no authority” to change the period of exclusion.  57 Fed. Reg. 3298, 3321 (Jan. 29, 1992).  Again, the drafters provided no explanation of what are “demonstrated criteria.”

The Board has determined 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 established by 42 C.F.R. § 1001.102 and determine whether the period of exclusion imposed by the IG falls within a “reasonable range.”  Edwin L. Fuentes, DAB No. 2988 at 7-10 (2020); Juan de Leon, Jr., DAB No. 2533 at 4-5; Wilder, DAB No. 2416 at 8; 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 imposed by the IG is too long or too short is not the issue.  The ALJ may not substitute their judgment for that of the IG and may only change the period of exclusion in limited circumstances.

In John (Juan) Urquijo, DAB No. 1735 (2000), the Board concluded that if the IG considers an aggravating factor to extend the period of exclusion and that factor is not later shown to exist on appeal, or if the IG fails to consider a mitigating factor that is shown to exist, then the ALJ may decide the appropriate extension of the period of exclusion beyond the minimum.  In Gary Alan Katz, R.Ph., DAB No. 1842 (2002), the Board suggested that when it is found that an aggravating factor considered by the IG is not proved before the ALJ, then some downward adjustment of the period of exclusion should be expected absent some circumstances that indicates no such adjustment is appropriate.  The Board reasoned that when aggravating factors are considered by the IG as a reason to extend a period of exclusion, some part of the extended period of exclusion should be attributable to each aggravating factor considered.  Because in Katz the ALJ found one aggravating factor considered by the IG was not proved before the ALJ, the Board concluded that the period of exclusion imposed by the IG was no longer in the reasonable range and reassessed the period of exclusion.  The Board had the opportunity to define the term “reasonable range” and describe how to weigh aggravating and mitigating factors but did not do so.  The Board engaged in weighing the remaining aggravating factors in Katz but did not explain the weighing process in any detail or cite

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any authority for the process it employed.  Id. at 4-8.  The Board, relying upon a prior Board decision and the preamble to the regulations, stated in a footnote that:

[A] “reasonable range” refers to a range of exclusion periods that is more limited than the full range authorized by the statute [five years to permanent exclusion under section 1128(a) of the Act] and that is tied to the circumstances of the individual case.  If the ALJ determines that the length of the exclusion imposed by the I.G. is within this range under the circumstance as found by the ALJ, he may not change it even if he believes that another exclusion period is more reasonable.

Id. at 5 n.4.  The Board’s decision in Katz reflects its determination that it is the aggravating and mitigating factors that the Board and an ALJ consider in determining whether a period of exclusion is unreasonable.  The Board’s decision also indicates that the facts and circumstances related to the aggravating factors are what are weighed when determining how each aggravating and mitigating factor affects whether a period of exclusion is unreasonable, i.e., outside the reasonable range.  Clearly, determining a reasonable range is not a simple process of counting the aggravating and mitigating factors, and considerable discretion remains for the Board and the ALJ to engage in the weighing process to decide what is unreasonable, although that weighing is significantly limited by the language of 42 C.F.R. § 1001.2007(a)(1)(ii) and the Board’s prior decisions on how the regulation is to be implemented.  The IG’s determination of the weight given aggravating and mitigating factors is clearly entitled to receive some deference due to the regulatory standard for review adopted by notice and comment rulemaking; by regulation, the issue is whether the period of exclusion is unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  No further deference is required by the Act or regulations or recognized by the Board.

In this case, it has not been shown that the IG considered an aggravating factor that did not exist or that the IG failed to consider a mitigating factor that did exist.  Therefore, under current Board decisions, I conclude that I have no discretion to reassess the period of exclusion beyond the minimum by reweighing the aggravating factors and mitigating factor I have found to exist.

My review of the aggravating factors and mitigating factor causes me to conclude that, even if I could reweigh the aggravating and mitigating factors, I would not change the 24‑year period of exclusion imposed by the IG as it falls within a reasonable range and is not unreasonable.

Petitioner’s cooperation with the government resulted in the conviction of others, but each of the four aggravating factors justifies a significant increase in the period of

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exclusion from the five-year minimum required by the Act.  Even though I accept Petitioner’s argument that the amount of the financial loss caused by the fraudulent scheme was approximately $6.6 million rather than the amount of nearly $10.7 million ordered as restitution, the $6.6 million amount is still more than 132 times the threshold that the IG may consider an aggravating factor.  42 C.F.R. § 1001.102(b)(1).  The large amount reflects the seriousness of the threat that Petitioner poses.  The fraudulent scheme also occurred over two years, twice the duration that may be considered aggravating.  42 C.F.R. § 1001.102(b)(2).  I disagree with Petitioner’s argument that his 18-month prison sentence was “minimal.”  P. Br. at 13.  That sentence is a substantial amount of time that reflects his criminality in the eyes of the district court and supports a significant increase from the minimum exclusion of five years.  Jason Hollady, MD, DAB No. 1855 at 9 (2002) (holding that a prison sentence of as little as nine months is “relatively substantial” for exclusion purposes.).  The indefinite suspension of Petitioner’s Louisiana physical therapist license also supports an extended exclusion period.

Petitioner argues that his fraudulent acts are “completely unrelated” to his occupation as a physical therapist, and he therefore poses “minimal to no risk” to federal healthcare programs as a physical therapist.  P. Br. at 14, 18-19.  I disagree.  Although Petitioner argues that his felony conviction was “based on his role as an investor in Prime,” he also recognized that “as the owner, he was responsible for the operations of Prime.”  P. Br. at 14.  Furthermore, when viewed from a broader perspective, Petitioner’s underlying conviction was for conspiring to commit health care fraud and the conspiracy involved submitting false and fraudulent claims.  IG Ex. 5 at 3.  Thus, whether as a physical therapist or the owner of Prime, Petitioner remains an untrustworthy individual from whom federal health care programs and their beneficiaries must be protected.

Petitioner argues that he was convicted of conduct related to Prime and not his physical therapy practice; the long exclusion in this case amounts to a lifetime ban on practicing as a physical therapist; and the exclusion is more punitive than protective.  RFH at 2; P. Br. at 17-19.  While I appreciate Petitioner’s concern, the impact of the exclusion is not an aggravating or mitigating factor that I may consider in evaluating the reasonableness of the period of exclusion.  Petitioner’s argument could be construed to be that his exclusion for 24 years is a cruel and unusual punishment that violates the Constitutional prohibition of such punishment.  U.S. Const. amend. VIII.  Exclusions imposed by the IG are civil sanctions, remedial in nature and not punitive and criminal.  Because exclusions are remedial sanctions, they do not violate the double jeopardy clause or the prohibition against cruel and unusual punishment.  Manocchio v. Kusserow, 961 F.2d 1539 (11th Cir. 1992); Greene v. Sullivan, 731 F. Supp. 838 (E.D. Tenn. 1990); Joann Fletcher Cash, DAB No. 1725 (2000); Douglas Schram, R.Ph., DAB No. 1372 (1992); and Janet

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Wallace, L.P.N., DAB No. 1326 (1992).³  Arguments that the exclusion provisions are anything but remedial have been found to be without merit.  Manocchio, 961 F.2d at 1541-42; Greene, 731 F. Supp. at 839-40.  Many federal courts have also rejected claims that the Secretary’s exclusion procedures amount to a deprivation of due process, finding no constitutionally protected property or liberty interests.  Rodabaugh v. Sullivan, 943 F.2d 855 (8th Cir. 1991); Lavapies v. Bowen, 883 F.2d 465 (6th Cir. 1989); Hillman Rehab. Ctr. v. U.S. Dep’t. of Health & Human Servs., No. 98-3789 (GEB), slip op. at 16, 1999 WL 34813783, at 16 (D.N.J. May 13, 1999); Travers v. Sullivan, 801 F. Supp. 394, 404‑05 (E.D. Wash. 1992), aff’d, Travers v. Shalala, 20 F.3d 993 (9th Cir. 1994).  Accordingly, I conclude that Petitioner’s possible Constitutional argument is without merit.

Petitioner urges my consideration of multiple facts, including:  Petitioner had an exemplary record as a physical therapist; he may not have been aware the conduct involved was criminal until the conduct had occurred; he demonstrated integrity related to compliance, fraud prevention, and self-reporting; he had no history of prior fraudulent conduct; he otherwise lived a productive, fruitful life as a law-abiding citizen; he had no history of complaints or disciplinary actions as a physical therapist; he improved the lives of his patients; he took part in charitable activities; he was an active member of the community; and he was a dedicated husband and father.  RFH at 2-4, 7-8; P. Br. at 2-5.  While all Petitioner’s assertions may be accepted as true for purposes of summary judgment, they do not constitute mitigating factors under 42 C.F.R. § 1001.102(c) that may be considered when determining the period of exclusion.  Petitioner’s arguments may be viewed as requests for equitable relief.  However, I have no authority to grant Petitioner any equitable relief.  Matthew J. Girardy, DMD, DAB No. 2987 at 7 (2020).  Congress required Petitioner’s exclusion pursuant to section 1128(a)(3) of the Act, the regulation establishes the effective date of a mandatory exclusion, and those requirements are binding upon me.  I am bound to follow the Act and the Secretary’s regulations.  42 C.F.R. § 1005.4(c)(1).

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The evidence shows the IG considered and weighed the undisputed aggravating factors and a mitigating factor when imposing a 24-year exclusion.  Substituting my discretion for that of the IG is not permitted based on prior Board decisions.  However, based on my de novo review of the undisputed evidenced and drawing favorable inferences for Petitioner, I conclude that a period of exclusion of 24 years is within a reasonable range and not unreasonable considering the existence of four aggravating factors and one mitigating factor.

Petitioner’s exclusion is effective 20 days from the date of the IG’s original notice of exclusion to Petitioner.  IG Ex. 9 at 1; 42 C.F.R. § 1001.2002(b).

III.   Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for 24 years effective December 20, 2023.

Endnotes

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.  Citations are to the 2023 revision of the Code of Federal Regulations (C.F.R.), unless otherwise stated.

²  The pronouns he, his, and him are used in this decision as Petitioner indicated no other preference.

³  The exclusion remedy serves twin congressional purposes:  the protection of federal funds and program beneficiaries from untrustworthy individuals and the deterrence of health care fraud.  S. Rep. No. 100-109, at 1-2 (1987), reprinted in 1987 U.S.C.C.A.N. 682, 686 (“clear and strong deterrent”); Cash, DAB No. 1725 at 18 (discussing trustworthiness and deterrence).  When Congress added section 1128(a)(3) in 1996, it again focused upon the desired deterrent effect:  “greater deterrence was needed to protect the Medicare program from providers who have been convicted of health care, fraud felonies . . . .”  H.R. Rep. 104-496(I), at 86 (1996), reprinted in 1996 U.S.C.C.A.N. 1865, 1886.