Azizulah Kamali, M.D., DAB CR6655 (2025)

DECISION

The Inspector General (IG) of the U.S. Department of Health and Human Services demanded that Petitioner, Azizulah Kamali, M.D., pay stipulated penalties in the amount of $22,000 for alleged noncompliance with a corporate integrity agreement (IA).  Petitioner timely invoked the appeal provisions of the IA and requested a hearing before an administrative law judge (ALJ).  For the reasons stated below, after considering the parties’ filings, the evidence in the record, and the terms of the IA, I conclude that Petitioner failed to timely and fully comply with the IA’s annual reporting requirements.  Therefore, I uphold the IG’s demand for stipulated penalties and order Petitioner to come into full compliance with the IA.

I.     Background and Procedural History

Petitioner is a physician and the owner of Aziz Kamali, M.D., Inc., a California medical corporation.  Inspector General Exhibit (IG Ex.) 3 at 1.  On August 5, 2022, Petitioner entered into a False Claims Act settlement agreement with the United States and agreed to pay $1,963,953.59 to resolve allegations that Petitioner and his business submitted, or caused to be submitted, false claims to Medicare.  Id.  Petitioner also entered into a three-year IA with the IG, which took effect on August 12, 2022.  See IG Ex. 2 (IA) at 12.  In

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consideration of the settlement agreement and the IA, the IG agreed not to pursue certain administrative actions against Petitioner and his business.  IG Ex. 3 at 5-6.

The IA imposes various obligations on Petitioner, including the requirement to prepare and submit an annual report to the IG for each year the IA is in effect.  IA § V.B.  The IA authorizes the IG to demand stipulated penalties of up to $1,000 for each day Petitioner fails to comply with the annual reporting requirement.  IA § X.A.10.  If the IG demands stipulated penalties, Petitioner has certain appeal rights under the IA, including the right to request a hearing before an ALJ.  IA §§ X.C.2, X.E.  The IA limits a hearing involving stipulated penalties to two issues: (1) whether Petitioner complied with the IA, and if not, (2) the length of the period of noncompliance.  IA § X.E.2.  The IA’s hearing provisions also place the burden on Petitioner to prove his full and timely compliance with the IA.  Id.

On April 24, 2024, the IG issued a demand letter to Petitioner, seeking stipulated penalties in the amount of $22,000 based on Petitioner’s alleged failure to fully and timely submit his first Annual Report.  IG Ex. 17.  In response to the demand, Petitioner, through counsel, timely requested this ALJ hearing.  Civil Remedies Division (CRD) Docket (Dkt.) Entry No. 1.  The request for hearing was initially assigned to ALJ Karen Robinson for adjudication.  See CRD Dkt. Entry No. 3.1

On July 24, 2024, Judge Robinson held a pre-hearing conference, the substance of which is summarized in a July 26, 2024 Order.  CRD Dkt. Entry No. 7.  At the conference, Judge Robinson went over the IA’s hearing provisions and explained that pursuant to the IA, this proceeding is governed by 42 C.F.R. 1005.2-1005.21 and the Civil Remedies Division Procedures (CRDP), with the exception that no discovery is available.  Id. ¶ 3.  Judge Robinson also established deadlines for submitting prehearing exchanges and explained that either party could move for summary judgment as part of its written exchange.  Id. ¶¶ 5, 10.  Finally, Judge Robinson tentatively scheduled an in-person hearing for January 22, 2025, but stated no hearing would be conducted unless a party filed written direct testimony and the opposing party asked to cross-examine one or more witnesses.  Id. ¶¶ 8, 13.

Both parties timely filed prehearing exchanges.  Petitioner’s exchange consisted of a brief (P. Br.) and four proposed exhibits (P. Exs. 1-4), with no proposed witnesses or written direct testimony.  CRD Dkt. Entry Nos. 12, 12a-12d.  The IG’s exchange consisted of a motion for summary judgment and 17 proposed exhibits (IG Exs. 1-17), also with no proposed witnesses or written direct testimony.  CRD Dkt. Entry Nos. 14, 14a-14r.  In addition, the IG filed a motion to strike Petitioner’s proposed exhibits 2 and 3.  CRD Dkt. Entry No. 15, 15a-15b.  Petitioner did not file a response to the IG’s motion for summary judgment or to the IG’s motion to strike.

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On January 8, 2024, I issued an Order cancelling the tentative hearing.  CRD Dkt. Entry No. 16.  I explained that because neither party identified proposed witnesses or filed written direct testimony, there was no need for a hearing and this case would be decided based on the written record.  Id. at 2.  I also set a final briefing deadline of February 7, 2025, and a response deadline of February 21, 2025.  Id.  I explained that the administrative record would close once the response deadline expired.  Id.

Neither party elected to file a final brief or a response.  Therefore, the administrative record closed on February 21, 2025 and this case is ready for a decision.

II.     Preliminary Rulings

A. Evidentiary Objections and Rulings

Petitioner does not object to any of the IG’s proposed exhibits.  Moreover, the IG does not object to Petitioner’s proposed exhibits 1 and 4.  Therefore, I admit IG Exs. 1-17 and P. Exs. 1 and 4 into the administrative record.  See CRD Dkt. Entry No. 7 ¶ 8; CRDP § 14(e); 42 CFR § 1005.8(c).

The IG moves to strike Petitioner’s proposed exhibits 2 and 3.  CRD Dkt. Entry Nos. 15, 15a-15b.  Both proposed exhibits contain copies of financial disclosure forms Petitioner previously submitted to the IG.  See CRD Dkt. Entry Nos. 12b, 12c.  Petitioner ostensibly filed the proposed exhibits to support his argument that he is unable to pay the stipulated penalties.  See P. Br. at 2.

In its motion to strike, which Petitioner did not oppose, the IG contends both proposed exhibits are irrelevant and should be stricken from the record.  CRD Dkt. Entry No. 15.  I agree.  Petitioner’s right to a hearing is contractual and the IA expressly limits the reviewable issues to the occurrence and length of any noncompliance.  See IA § X.E.2.  Nothing in the IA authorizes me to consider Petitioner’s financial situation or waive stipulated penalties based on Petitioner’s ability to pay.  Because the financial disclosure forms have no tendency to prove or disprove any issue before me, I find that they are not relevant or material.  See 42 CFR § 1005.8(c).  Therefore, the IG’s objections are sustained and the motion to strike Petitioner’s proposed exhibits 2 and 3 is GRANTED.

B. IG’s Motion for Summary Judgment

While the IG’s motion for summary judgment is persuasive, I find it unnecessary to resolve this matter on summary judgment.  Instead, because both parties have had the opportunity to present evidence, participate in a hearing, and fully brief their positions,

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this case is ripe for a decision on the merits.  Therefore, the IG’s motion for summary judgment is DENIED as moot. 

III.     Issues and Burden of Proof

The IA only authorizes me to decide the following issues:

(1) Whether Petitioner was in full and timely compliance with the obligations of this IA for which OIG demands payment; and, if not,

(2) The period of noncompliance.

IA § X.E.2.

In resolving these issues, Petitioner “shall have the burden of proving its full and timely compliance” with the IA.  Id.

IV.     Findings of Fact

A. Relevant Provisions of the IA

Petitioner voluntarily entered into the IA as part of a broader agreement to avoid certain administrative penalties for allegedly submitting false Medicare claims.  See IG Ex. 3 at 5-6.  The IA has a three-year term and took effect on August 12, 2022.  See IA at 1, 19.

The IA imposes various obligations and requirements on Petitioner.  Relevant here, in section III.B, Petitioner agreed that he, his employees, and other covered associates would complete certain training and education requirements within the first year of the agreement.  See IA § III.B.  Petitioner also agreed to engage an Independent Review Organization (IRO) to conduct annual reviews of his Medicare claims and prepare an annual report (IRO report) identifying any estimated overpayments Petitioner received in the preceding year.  See IA § III.C, Appx. A.  Petitioner further agreed to repay any estimated overpayments identified by the IRO to the Centers for Medicare and Medicaid Services (CMS) within 60 days of receiving each IRO report.  See IA, Appx. B § A.4.

To ensure compliance with its provisions, the IA requires Petitioner to submit an Annual Report to the IG within 60 days of the end of each Reporting Period.  See IA § V.B.  The IA defines “Reporting Period” as “each one-year period during the term of this IA, beginning with the one-year period following the Effective Date.”  IA § I.C.6.  Each Annual Report must include the documents and information listed in section V.B of the IA.  IA § V.B.  If Petitioner fails to timely submit a complete Annual Report, the IA authorizes the IG to assess stipulated penalties of up to $1,000 for each day of noncompliance.  IA § X.A.10.

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The IA authorizes Petitioner to request an extension of time to comply with any requirement in the agreement, subject to the IG’s discretion and approval.  IA § X.B.  If the IG grants a requested extension, any stipulated penalties begin to accrue one day after Petitioner fails to meet the extended deadline.  Id.  If the IG denies the request, any stipulated penalties begin to accrue three business days after Petitioner receives the written denial or the original due date, whichever is later.  Id.

B. Petitioner’s First Annual Report

Petitioner’s first Annual Report was originally due to the IG within 60 days of the end of the first Reporting Period.  IA § I.C.6.  The first Reporting Period ended on August 12, 2023.  IA at 1, 9, 12, 19.  Therefore, Petitioner’s first Annual Report was originally due by October 11, 2023.  IA at 12.

As part of the first Annual Report, Petitioner was required to submit, among other items, information showing Petitioner complied with the first-year training requirements in section III.B.  IA § V.B.2.  In addition, Petitioner was required to submit a copy of the IRO report and documentation showing he refunded any estimated overpayments identified by the IRO to CMS.  Id.

On September 28, 2023, Petitioner requested a 60-day extension of the first Annual Report deadline.  IG Ex. 5.  In a follow-up email, Petitioner stated the 60-day extension was necessary for the IRO to complete the IRO report due to “difficulties retrieving electronic information.”  IG Ex. 6.

On October 10, 2023, the IG denied Petitioner’s request for a 60-day extension but granted Petitioner a 30-day extension to produce the IRO report.  IG Ex. 7.  The IG also gave Petitioner a two-day extension to submit all other items required with the first Annual Report.  Id.  The IG specifically advised Petitioner that all items required with the first Annual Report, other than the materials pertaining to the IRO report, were due by October 13, 2023.  Id.

Petitioner did not submit his first Annual Report by the October 13, 2023 deadline.  IG Ex.8.  Accordingly, on October 18, 2023, the IG emailed Petitioner a reminder that his first Annual Report was past due.  Id.

On November 13, 2023, Petitioner timely submitted a copy of the IRO report, which was dated November 4, 2023.  IG Ex. 9, at 1, 3.  Petitioner, however, did not provide any other items required with the first Annual Report.  Id.  The IRO report calculated Petitioner’s estimated overpayment for the first Reporting Period to be $66,444.60.  Id. at 14, 21.  Pursuant to the terms of the IA, Petitioner was required to refund the estimated

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overpayment to CMS within 60 days of receiving the IRO Report.  See IA § V.B.2, Appx. B § A.4.

On November 27, 2023, the IG sent Petitioner a letter acknowledging receipt of the IRO Report, and again informed Petitioner that the other items due with the first Annual Report were past due.  IG Ex. 10.  The IG’s letter listed the specific items Petitioner was required to submit, including the first-year training information and the documentation showing Petitioner refunded the estimated overpayment to CMS.  Id.  The IG’s letter also reminded Petitioner about the IA’s stipulated penalties provisions.  Id.

On January 3, 2024, the IG sent Petitioner a demand for stipulated penalties in the amount of $22,000 based on Petitioner’s continued failure to timely submit his first Annual Report.  IG Ex. 1.  The next day, Petitioner emailed the first Annual Report to the IG.  IG Ex. 12.  The submitted report did not contain the first-year training information or documentation showing Petitioner refunded the estimated overpayment to CMS.  See id.

On January 11, 2024, Petitioner, through counsel, contacted the IG and requested an ALJ hearing in response to the IG’s demand for stipulated penalties.  IG Ex. 13.  Around the same time, Petitioner also called the IG and left a voicemail stating he was unable to pay the stipulated penalties.  See IG Ex. 14.  Based on Petitioner’s statements, the IG offered to engage in discussions with Petitioner’s counsel regarding Petitioner’s ability to pay the $22,000 stipulated penalties.  Id.

After some back and forth with Petitioner’s counsel, the IG determined that Petitioner had failed to demonstrate an inability to pay the stipulated penalties.  See IG Exs. 15-17.  Accordingly, on April 25, 2024, the IG reissued its demand for $22,000 in stipulated penalties.  IG Ex. 17.  Petitioner’s request for hearing followed.  CRD Dkt. Entry No. 1.

V.     Conclusions of Law and Analysis

A. Petitioner failed to fully and timely comply with the IA’s annual reporting requirements.

The record demonstrates that Petitioner failed to timely and fully comply with the IA’s annual reporting requirements.  Indeed, Petitioner’s first Annual Report was due by October 13, 2023, but was not submitted until January 4, 2024, despite numerous reminders from the IG.  See IA at 12; IG Exs. 7, 8, 10, 12.  In addition, Petitioner’s belated submission is missing at least two required items: (1) the first-year training information; and (2) documentation showing Petitioner refunded the estimated overpayment to CMS.  See IG Ex 12; IA § V.B.2.

Petitioner does not attempt to challenge or dispute these findings, but instead claims to have a “justifiable reason” for his noncompliance.  CRD Dkt. Entry No. 1.  Specifically,

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Petitioner states he was confused about the IA’s requirements and sought assistance from counsel “[a]fter realizing that he was late in filing the report.”  P. Br. at 1.  Petitioner claims he was finally able to compile and submit the first Annual Report with help from his counsel, but at that point the IG had already “fined” him.  Id.2

While I empathize with Petitioner, I do not find his position compelling or even relevant to the issues before me.  As an initial matter, Petitioner agreed to be bound by the IA, including the annual reporting requirements and the stipulated penalties provisions.  Petitioner also had more than a year to prepare for the first Annual Report, during which time he could have familiarized himself with the IA’s requirements and sought help or advice to address any confusion.  Petitioner offers no reason for waiting until after the report was past due before seeking assistance.  Thus, from a factual standpoint, I find no merit in Petitioner’s claim that his noncompliance was “justifiable.”

More importantly, the IA only authorizes me to address whether Petitioner complied with the IA—not whether Petitioner’s noncompliance was “justifiable”—and the burden is on Petitioner to prove his full and timely compliance.  IA § X.E.2.  Because Petitioner’s own statements confirm he did not comply with the IA’s annual reporting requirements, I have no choice but to conclude Petitioner failed to meet the requisite burden.

In sum, the evidence shows, and Petitioner does not dispute, that Petitioner: (a) failed to timely submit the first Annual Report, and (b) failed to include all required items when he finally submitted the first Annual Report.  Therefore, I conclude that Petitioner failed to fully and timely comply with the annual reporting requirements.

B. Petitioner was noncompliant for at least 82 days.

The record demonstrates that Petitioner was noncompliant with the IA’s annual reporting requirements for at least 82 days, from October 14, 2023 to January 4, 2024.  See IA at 12; IG Exs. 7, 12.  Petitioner does not challenge or dispute the period of noncompliance.  Further, to the extent Petitioner has not yet provided the missing training and repayment documentation discussed above, Petitioner remains out of compliance.  See IA § V.B.2.

The IA states that the IG may assess stipulated penalties of up to $1,000 for each day Petitioner fails to comply with the annual reporting provisions.  IA § X.A.10.  Given that Petitioner was noncompliant for at least 82 days, the stipulated penalties demanded by the

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IG are permissible and well within the bounds of the agreement.  Therefore, I conclude that Petitioner is liable for the $22,000 demanded by the IG.

VI.     Order

For the reasons stated above, I uphold the IG’s assessment of stipulated penalties against Petitioner.  Pursuant to section X.E.2 of the IA, Petitioner is hereby ORDERED to:  (a) come into full compliance with all requirements in the IA pertaining to the first Annual Report; and (b) pay the IG $22,000 in stipulated penalties within 20 days of the date of this decision, unless Petitioner timely appeals this decision to the Departmental Appeals Board.