Mitchell Townsend, DAB CR6667 (2025)

DECISION

The Inspector General of the United States Department of Health and Human Services (IG) excluded Petitioner, Mitchell Townsend, from participation in Medicare, Medicaid, and all other federal health care programs for 12 years pursuant to section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)).  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)).  For the reasons stated below, I conclude that the IG had a basis for Petitioner’s exclusion and that the 12-year exclusion period is not unreasonable under the current legal framework.  I affirm the IG’s exclusion determination.

I.      Procedural History

The IG issued a notice to Petitioner dated April 30, 2024, informing him that he was excluded from participation in Medicare, Medicaid, and all federal health care programs for 12 years.  IG Exhibit (Ex.) 1 at 1.  The IG cited section 1128(a)(1) of the Act as the basis for Petitioner’s exclusion.  The IG stated the exclusion was based on Petitioner’s conviction in the United States District Court for the Northern District of Ohio of a criminal offense related to the delivery of an item or service under Medicare or a state

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health care program, including the performance of management or administrative services relating to the delivery of items or services under any such program.  The IG extended the mandatory five-year exclusion to 12 years because:  1) the acts resulting in the conviction, or similar acts, caused, or were intended to cause, a financial loss to a government agency or program or to one or more other entities of $50,000 or more (42 C.F.R. § 1001.102(b)(1)); 2) the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more (42 C.F.R. § 1001.102(b)(2)); and 3) the sentence imposed by the court included incarceration (42 C.F.R. § 1001.102(b)(5)).  IG Ex. 1 at 1.

Petitioner requested an administrative law judge (ALJ) hearing, and I was designated to hear and decide this case.  The Civil Remedies Division issued an Acknowledgment Notice and my Standing Prehearing Order (Prehearing Order).

I conducted a prehearing telephone conference on August 27, 2024, the substance of which I memorialized in my August 29, 2024 Order, including a schedule for submission of arguments and evidence by the parties.  The IG submitted a brief (IG Br.) and four exhibits (IG Exs. 1-4), while Petitioner submitted a brief (P. Br.), a supplement to his brief (P. Br. Supp.), and seven exhibits (P. Exs. 1-7).  The IG also submitted a reply brief (IG Reply), and Petitioner also submitted a surreply (P. Surreply).

I held a second prehearing telephone conference on February 19, 2025, to address Petitioner’s request to supplement the record to include documents that Petitioner argues support his claim that he was physically assaulted by his attorney in his underlying criminal case.  See February 21, 2025 Order.  I denied Petitioner’s request, and I explained to Petitioner that I do not have the authority to overturn or disregard his underlying criminal conviction.  See 42 C.F.R. § 1001.2007(a)(1).  Even accepting Petitioner’s ineffective assistance of counsel and due process arguments as true, those arguments have no bearing on my review of the IG’s exclusion, because the applicable regulations specifically prohibit me from considering these types of “collateral” attacks of the underlying conviction.  42 C.F.R. § 1001.2007(d).  Petitioner may raise these arguments on appeal from his criminal proceedings in the United States District Court for the Northern District of Ohio, but not here.

II.      Exhibits and Decision on the Record

Neither Party objected to the other Party’s proposed exhibits.  Therefore, I admit IG Exhibits 1 through 4 and Petitioner’s Exhibits 1 through 7 into evidence.

Also, because neither Petitioner nor the IG has proposed any witnesses, an in-person hearing would serve no purpose.  See Prehearing Order at § 6.  Therefore, I will decide this matter based on the written record before me.  See Civ. Remedies Div. P. § 19(d).

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III.    Issues

The Secretary of Health and Human Services (the Secretary) has by regulation limited my scope of review to two issues:  (1) whether the IG has a basis for excluding Petitioner from participating in Medicare, Medicaid, and all other federal health care programs; and, if so, (2) whether the length of the exclusion the IG imposed is unreasonable.  See 42 C.F.R. § 1001.2007(a)(1).

IV.   Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s right to an ALJ hearing and judicial review of the final action of the Secretary.  The right to an ALJ hearing is set forth in 42 C.F.R. §§ 1001.2007(a) and 1005.2, while the rights of both the sanctioned party and the IG to participate in a hearing are specified at 42 C.F.R. § 1005.3.

The Secretary must exclude from participation in any federal health care program any individual convicted under federal or state law of a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  Act § 1128(a)(1).  A state health care program includes a state Medicaid program.  Act § 1128(h)(1) (42 U.S.C. § 1320a-7(h)(1)).  Pursuant to section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)), an individual is convicted of a criminal offense when, among other things, a court finds the individual guilty or when a plea of guilty or no contest is accepted by a court.  Act § 1128(i)(2)-(3).  The Secretary has promulgated regulations implementing these provisions of the Act.  42 C.F.R. §§ 1001.2, 1001.101(a).  There may be no collateral attack of the conviction that is the basis for the exclusion.  42 C.F.R. § 1001.2007(d).

Exclusion for a minimum period of five years is mandatory for any individual or entity convicted of a criminal offense for which exclusion is required by section 1128(a) of the Act.  Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)).  Pursuant to 42 C.F.R. § 1001.102(b), an individual’s period of exclusion may be extended based on the presence of specified aggravating factors.  Only if the aggravating factors justify an exclusion exceeding five years are mitigating factors considered as a basis for reducing the period of exclusion to no less than five years.  42 C.F.R. § 1001.102(c).

In this proceeding, the standard of proof is a preponderance of the evidence.  42 C.F.R. § 1001.2007(c).  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(c); Prehearing Order § 5.

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V.    Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold and followed by pertinent findings of fact and analysis.

1. I have jurisdiction to hear this case.

Petitioner requested a hearing.  I therefore have jurisdiction to hear and decide this case.  See 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also 42 U.S.C. § 1320a-7(f)(1).

2. Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under the Medicaid program, requiring exclusion under 42 U.S.C. § 1320a-7(a)(1).

The IG must exclude an individual from participation in federal health care programs if the individual was convicted of a criminal offense related to the delivery of a health care item or service under Medicare or a state health care program.  42 U.S.C. § 1320a-7(a)(1).  Here, the facts pertaining to Petitioner’s conviction clearly establish Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under the Medicaid program requiring exclusion under 42 U.S.C. § 1320a-7(a)(1).  Petitioner does not appear to contest the statutory basis for his exclusion, but rather the duration.  See generally P. Br.; P. Br. Supp.; and P. Surreply.  Nevertheless, because the nature and circumstances of his conviction are relevant to the outcome here, I note them below.

Petitioner was employed by Eye for Change Youth and Family Services, Inc. (“Eye for Change”) as a Qualified Mental Health Specialist from approximately September 11, 2017 to June 19, 2020.  IG Ex. 3 at 7.  In his role, he provided counseling services to Medicaid beneficiaries.  Id.  During his employment with Eye for Change, Petitioner submitted claims to Ohio Medicaid for mental health counseling services using HCPCS Code H0036 that (a) were not performed or not performed for the duration indicated in the claims submissions or (b) Petitioner falsely documented, and caused to be falsely billed, for service dates and hours that he did not render.  Id. at 9-11.

On May 27, 2021, Petitioner was indicted on one count of Conspiracy to Commit Health Care Fraud (18 U.S.C. § 1349), among other charges.  IG Ex. 4 at 12-13.  On June 23, 2023, Petitioner pled guilty to one count of Conspiracy to Commit Health Care Fraud, and the Court accepted Petitioner’s guilty plea on June 29, 2023.  IG Ex. 3.  On October 19, 2023, the Court sentenced Petitioner to one year and one day of incarceration followed by three years of supervised release, and he was ordered to pay $437,850.51 in restitution to Ohio Medicaid.  IG Ex. 2 at 2, 3, 6.  Accordingly, Petitioner was “convicted” of a criminal offense as defined in subsections 1128(i)(2) and (3) of the Act (an individual is “convicted” where there has been a finding of guilt against the

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individual, or where a court has accepted an individual’s guilty plea) related to the delivery of a health care item or service under Ohio Medicaid.

3. Petitioner must be excluded for at least 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 at least the statutorily required minimum of five years.  42 U.S.C. § 1320a-7(c)(3)(B).

Petitioner has requested that I consider applying an alternative remedy in lieu of exclusion – such as enhanced monitoring and oversight – which he argues would be a more proportional response to the underlying conduct given the particular facts and circumstances of his case.  P. Surreply.  I do not have the authority, however, to grant an alternative remedy:  if there is a proper basis for a mandatory exclusion, then I am required by statute to affirm the IG’s exclusion.

4. The IG has established three aggravating factors which together permit the IG to lengthen the exclusion beyond the five-year statutory minimum.

In relevant part, the following factors may be considered to be aggravating and a basis for lengthening the period of a mandatory exclusion under section 1128(a)(1): 

(1)  The acts resulting in the conviction, or similar acts, caused, or were intended to cause, a financial loss to a government agency or program or to one or more other entities of $50,000 or more[;]

* * * *

(2)  The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; 

* * * *

(5)  The sentence imposed by the court included incarceration[.]

42 C.F.R. § 1001.102(b)(1), (2), (5).

The IG bears the burden of establishing aggravating factors.  42 C.F.R. § 1005.15(c); Prehearing Order at § 6.  The IG has met her burden with respect to the three aggravating

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factors, which together permit the IG to lengthen the exclusion beyond the five-year statutory minimum, as discussed below.

1. The IG established that the acts resulting in Petitioner’s conviction caused a financial loss to a government program of $50,000 or more under 42 C.F.R. § 1001.102(b)(1).

The IG may extend the length of an exclusion if the “acts resulting in the conviction, or similar acts, caused, or were intended to cause, a financial loss to a government agency or program or to one or more other entities of $50,000 or more . . . .”  42 C.F.R. § 1001.102(b)(1).  Pursuant to Petitioner’s plea agreement, the District Court ordered Petitioner to pay $437,850.51 in restitution to Ohio Medicaid.  IG Ex. 2 at 6; IG Ex. 3 at 12; Craig Richard Wilder, DAB No. 2416 at 9 (2011) (“[R]estitution has long been considered a reasonable measure of program loss . . . .”).

Petitioner does not contest the restitution amount, but rather argues that the IG should not apply this aggravating factor to extend his exclusionary period since Petitioner has satisfied his restitution obligation, which I address below.  P. Br.; P. Br. Supp.; P. Surreply at 1.; P. Ex. 7.  The IG has established the existence of the aggravating factor set forth at 42 C.F.R. § 1001.102(b)(1).

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

Under 42 C.F.R. § 1001.102(b)(2), the IG may extend the length of an exclusion if the “acts that resulted in the conviction, or similar acts, were committed over a period of one year or more.”  “[T]he purpose of this aggravating factor ‘is to distinguish between petitioners whose lapse in integrity is short-lived from those who evidence a lack of such integrity over a longer period.’”  Vinod Chandrashekhar Patwardhan, M.D., DAB No. 2454 at 7 (2012) (quoting Donald A. Burstein, Ph.D., DAB No. 1865 at 8 (2003)).

Petitioner pleaded that the underlying fraudulent billing conduct occurred from September 2017 through June 2020 – a nearly three-year period.  IG Exs. 3-4.  Petitioner does not contest the basis for application of this aggravating factor.  See generally P. Br.; P. Br. Supp.; P. Surreply.  The IG has established the existence of this aggravating factor.

3. The IG established that the sentence imposed by the court included incarceration under 42 C.F.R. § 1001.102(b)(5).

The IG may extend the length of an exclusion if the “sentence imposed by the court included incarceration.”  42 C.F.R. § 1001.102(b)(5).  Petitioner was sentenced to twelve months and one day of incarceration.  IG Ex. 2 at 2.  Petitioner does not contest the basis

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for application of this aggravating factor.  See generally P. Br.; P. Br. Supp; P. Surreply.  The IG has established the existence of this aggravating factor.

4. There are no mitigating factors applicable in this case.

If any of the aggravating factors authorized by 42 C.F.R. § 1001.102(b) apply, then mitigating factors may be considered as a basis for reducing the period of exclusion to no less than five years.  42 C.F.R. § 1001.102(c).  The only mitigating factors that I may consider under the law, however, are listed in 42 C.F.R. § 1001.102(c):

1)  In the case of an exclusion under § 1001.101(a), whether the individual or entity was convicted of three or fewer misdemeanor offenses and the entire amount of financial loss (both actual loss and intended loss) to Medicare or any other Federal, State, or local governmental health care program due to the acts that resulted in the conviction, and similar acts, is less than $5,000;

(2)  The record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual’s culpability; or

(3)  The individual’s or entity’s cooperation with Federal or State officials resulted in –

(i)  Others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs,

(ii)  Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or

(iii)  The imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.

Petitioner has the burden to prove by a preponderance of the evidence that there is a mitigating factor for me to consider.  42 C.F.R. § 1005.15(c); Prehearing Order § 5.

Petitioner argues that he should not be excluded or that the duration of his exclusion should be reduced, because he fully satisfied his restitution obligation.  He also asserts

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that he previously had a proven track record of excellence in healthcare, including providing high-quality care to patients.  He adds that he has made positive changes in his life since his incarceration, including contributions to his community and helping others, and he asserts that he was unable to mount a proper defense in the underlying criminal proceedings due to his attorney’s alleged misconduct.  P. Br. Supp; P. Surreply.

The IG contests that none of the enumerated mitigating factors in the applicable regulations apply (IG Br. at 7-8), and Petitioner does not refute the IG’s contention in his briefing.  P. Br. Supp; P. Surreply.

As noted above, I am constrained by the applicable regulations to only consider the three above-enumerated factors as mitigating factors for purposes of reducing the duration of an exclusion, and none of the factors Petitioner articulated fall within the approved categories.  An ALJ does not have authority to consider any factors as mitigating other than those specified at 42 C.F.R. § 1001.102(c).  Waleed Khan, DAB No. 3083 at 9 (2023); Shaun Thaxter, DAB No. 3053 at 35 (2021) (“The mitigating factors that ALJs and the Board may consider are limited to those listed in the regulation . . . .”); Anthony Joseph Moschetto, D.O., DAB No. 3030 at 14 (2021) (emphasizing that “only the mitigating factors in section 1001.102(c) may be considered for possible reduction of an exclusion period longer than the mandatory minimum period.”); Hussein Awada, M.D., DAB No. 2788 at 8 (2017) (“Only the mitigating factors identified in section 1001.102(c) may be considered and applied to reduce a period of exclusion.”).

Petitioner has failed to meet his burden to show the existence of any regulatorily permissible mitigating factor.

5. Given the specific facts pertaining to the applicable aggravating factors, a 12-year exclusion period is not unreasonable.

The role of the ALJ in exclusion cases is to conduct a de novo review of the facts related to the basis for the exclusion and the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102 and to determine whether the exclusion period imposed by the IG falls within a reasonable range.  42 C.F.R. § 1001.2007(a)(1)(ii); Wilder, DAB No. 2416 at 8; Joann Fletcher Cash, DAB No. 1725 at 17 n.6 (2000).

While the IG is not compelled to extend the exclusion length for any period beyond five years in the presence of aggravating factors, she may choose to exercise her discretion to do so.  42 C.F.R. § 1001.102(b) (“Any of the following factors may be considered to be aggravating and a basis for lengthening the period of exclusion.”).  An ALJ must uphold the IG’s determination as to the length of exclusion unless it is unreasonable, and an ALJ has no authority to change the amount of time chosen by the IG if it is within a reasonable range.  42 C.F.R. § 1001.2007(a)(1)(ii); 57 Fed. Reg. 3298, 3321 (Jan. 29, 1992).

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“[T]he assessment of aggravating and mitigating factors is qualitative, focusing on the circumstances of the case at hand, rather than quantitative or a matter of mathematical formulas . . . .”  Sushil Aniruddh Sheth, M.D., DAB No. 2491 at 8 (2012).  The ALJ’s evaluation does not rest on the number of aggravating or mitigating factors or any rigid formula for weighing them, but on a case-specific determination of the weight to be accorded to each factor based on a qualitative assessment of the circumstances surrounding the factors in the case.  Mrugeshkumar Shah, M.D., DAB No. 3079 at 9-10 (2022) (citing Sheth, DAB No. 2491 at 5). 

Petitioner argues the 12-year exclusion is unreasonable and overly punitive in light of the facts that he served his period of incarceration, and he has fully satisfied his court-ordered restitution obligation.  P. Br.; P. Br. Supp.; P. Surreply.  As addressed above, I am prevented under the law from considering such facts as mitigating circumstances, so I must limit my review of the reasonableness of the 12-year exclusionary period to a qualitative assessment of the applicable aggravating factors, and I find the period not unreasonable.

Here, the IG has established three aggravating factors— none of which Petitioner disputes— and Petitioner has established no mitigating factors.  Petitioner pleaded guilty to one count of conspiracy to commit healthcare fraud, agreeing that he participated in the illegal conduct for 33 months (IG Exs. 3-4); he was ordered to pay $437,850.51 in restitution to Ohio Medicaid (IG Ex. 2 at 6); and he was sentenced to 12 months and one day of incarceration (IG Ex. 2).

Petitioner’s conduct resulted in program losses nearly nine times the threshold for aggravation, warranting a significant increase in Petitioner’s period of exclusion.  Thaxter, DAB No. 3053 at 31-32; Juan de Leon, Jr., DAB No. 2533 at 5 (2013).  In instances where the program loss is substantially larger than the regulation’s threshold amount, this factor may be considered “an ‘exceptional aggravating factor’ to be accorded significant weight.”  Samirkumar Shah, M.D., DAB No. 3111 at 9 (2023) (quoting Laura Leyva, DAB No. 2704 at 10 (2016)).  The restitution amount is one indication of the seriousness of Petitioner’s crime, and the threat Petitioner poses to program integrity.  Awada, DAB No. 2788 at 7.  While Petitioner has satisfied his restitution payment obligation, the regulations expressly allow the IG the discretion to apply this aggravating factor to extend the period of exclusion “regardless of whether full or partial restitution has been made.”  42 C.F.R. § 1001.102(b)(1).  Accordingly, the IG may apply this factor, and the restitution amount alone justifies extending the exclusion period by a significant amount.

Petitioner’s participation in the underlying fraudulent scheme for nearly three years is almost three times longer than the one-year threshold required for aggravation.  The purpose of this aggravating factor “is to distinguish . . . petitioners whose lapse in

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integrity is short-lived from those who evidence a lack of such integrity over a longer period of time.”  Burstein, DAB No. 1865 at 8.  The amount of time over which Petitioner perpetrated his acts resulting in his conviction demonstrate that his lack of integrity was not “short-lived” and further supports an enhancement to the mandatory minimum five-year period of exclusion.  See Raymond Lamont Shoemaker, DAB No. 2560 (2014) (upholding a 10-year exclusion based on conduct lasting approximately 19 months and a 55-month prison sentence); Jeremy Robinson, DAB No. 1905 (2004) (upholding a 15-year exclusion based on conduct occurring over approximately three years and four months, incarceration of one year and one day, and an order of $205,000 in restitution).  Therefore, this factor also weighs in favor of a longer exclusion period.

The IG further increased the length of Petitioner’s exclusion, because the fraud scheme resulted in his sentence of twelve months and one day of incarceration.  IG Ex. 2.  Any period of confinement, no matter how short, triggers the application of this aggravating factor and justifies increasing the period of exclusion.  A longer period of incarceration generally justifies an even greater increase in the period of exclusion, because it evidences a more serious underlying criminal offense.  The Board has found that a prison sentence of as little as nine months is relatively substantial.  See Jason Hollady, M.D., DAB No. 1855 at 12 (2002); see also Robinson, DAB No. 1905 (finding that incarceration for one year and one day “merits weight sufficient, with remaining factors,” to support a fifteen-year exclusion).

Considering the three aggravating factors, particularly the duration of Petitioner’s conduct and the significant program losses resulting therefrom, and the absence of regulatory mitigating factors, I conclude that the IG’s assessment of a 12-year exclusionary period is not unreasonable.

VI.     Conclusion

I affirm the IG’s determination to exclude Petitioner for 12 years from participating in Medicare, Medicaid, and all other federal health care programs pursuant to 42 U.S.C. § 1320a-7(a)(1), and I find that the length of the exclusion the IG imposed is not unreasonable.