Virendra Gaidhane, DAB CR6675 (2025)

DECISION

Petitioner, Virendra Gaidhane, owned and operated pharmacies in Michigan. Through his pharmacies, he participated in a felonious criminal conspiracy to distribute controlled substances. He was indicted and pleaded guilty to one felony count of conspiracy to possess with the intent to distribute and to distribute controlled substances. Based on this conviction, the Inspector General (IG) has excluded him for nine years from participating in Medicare, Medicaid, and all federal health care programs, as provided for in section 1128(a)(4) of the Social Security Act (Act).

Petitioner appeals.

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

Background

By letter dated October 31, 2024, the IG notified Petitioner Gaidhane that he was excluded from participating in Medicare, Medicaid, and all federal health care programs for a period of nine years, because he had been convicted of a felony related to the

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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 Exhibit (Ex.) 1.

Petitioner appealed.

The IG submitted a written brief (IG Br.) with seven exhibits (IG Exs. 1-7). Petitioner submitted a written brief (P. Br.), a memorandum (P. Memo), a letter from the Detroit Public Schools (E-file # 8), which I identify as P. Ex. 1, and a purchase agreement (E-file # 11), which I identify as P. Ex. 2.

In the absence of any objections, I admit into evidence IG Exs. 1-7 and P. Exs. 1-2.

The parties agree that an in-person hearing is not necessary. IG Br. at 12; P. Br. at 3.

Issues

The issues before me are:

• Is the IG authorized to exclude Petitioner from program participation; and
• If so, is the length of the exclusion (nine years) reasonable?

42 C.F.R. § 1001.2007.

Discussion

Section 1128(a)(4) mandates that the Secretary exclude from program participation any individual or entity convicted of a felony “relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.” See 42 C.F.R. § 1001.101(d).

1. Petitioner must be excluded from program participation for a minimum of five years because he was convicted of a felony relating to the unlawful distribution, prescription, or dispensing of a controlled substance.1 

Petitioner Gaidhane was a licensed physical therapist, who also owned and operated three pharmacies. IG Ex. 4 at 4-5; see IG Ex. 7 at 1; P. Br. at 2. He conspired with physicians, pharmacists, and others to acquire and distribute prescription drugs, which were

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ultimately sold on the illegal drugs street market. He employed pharmacists and pharmacy technicians. In exchange for cash from co-conspirators, and knowing that the prescriptions should not have been filled, they filled prescriptions, written by other co-conspirators, for medically unnecessary Schedule II controlled substances, including Oxycodone, Oxymorphone, Percocet, Hydrocodone, and Promethazine with Codeine cough syrup. IG Ex. 3 at 6-7; IG Ex. 4 at 4-5. Petitioner’s pharmacies dispensed more than 58,725 dosage units of the illicit drugs. IG Ex. 3 at 3.

In indictments dated June 10, 2020, and May 12, 2021, Petitioner and his co-conspirators were charged with the unlawful distribution of controlled substances (21 U.S.C. § 841(a)(1)) and conspiracy to possess with intent to distribute and to distribute controlled substances (21 U.S.C. § 846). IG Exs. 2, 3. He pleaded guilty to one felony count of conspiracy to possess with intent to distribute and to distribute controlled substances. On May 8, 2024, the Federal District Court accepted his plea and entered judgment against him. IG Exs. 4, 5. The court sentenced Petitioner Gaidhane to 12 months and a day in prison, followed by three years of supervised release, and ordered him to pay a $10,000 fine plus a $100 assessment. IG Ex. 5 at 2, 3, 6.

Petitioner was thus convicted of a felony relating to the unlawful distribution, prescription, or dispensing of a controlled substance and is subject to exclusion under section 1128(a)(4).

Petitioner, however, points out that his Medicare exclusion affects his ability to practice as a physical therapist and that his criminal conviction was not related to his physical therapy practice. P. Br. at 2; P. Memo at 1. In Petitioner’s view, this lack of connection should preclude his exclusion. But an exclusion under section 1128(a)(4) does not require a connection between the criminal conduct and an individual’s participation in Medicare or any other healthcare program. In mandating the exclusion of individuals convicted of felony offenses related to illicit drug dealing, Congress recognized that those who engage in such conduct are inherently untrustworthy and, if allowed to participate, would threaten federal healthcare programs.

Petitioner also attacks the validity of his criminal conviction, arguing that: he did not knowingly engage in illegal activity; he did not intend to participate in drug distribution; and that he was entrapped. P. Memo at 1. Petitioner, however, may not use this forum to argue that he did not, in fact, commit the crimes for which he was convicted. The regulations preclude such a collateral attack on an underlying conviction:

When the exclusion is based on the existence of a criminal conviction . . . or any other prior determination where the facts were adjudicated and a final decision was made, the basis for the underlying conviction . . . is not reviewable, and

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the individual or entity may not collaterally attack it, either on substantive or procedural grounds, in this appeal.

42 C.F.R. § 1001.2007(d); Janice Cassandra Wrenn, DAB No. 3118 at 8-11 (2023); Yolanda Hamilton, M.D., DAB No. 3061 at 9-10 (2022); Funmilola Mary Taiwo, DAB No. 2995 at 8 (2020); Delores L. Knight, DAB No. 2945 at 9 (2019); Marvin L. Gibbs, Jr., M.D., DAB No. 2279 at 8-10 (2009); Roy Cosby Stark, DAB No. 1746 (2000).

2. Based on three aggravating factors and no mitigating factors, the nine-year exclusion is reasonable.

An exclusion 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), 1001.2007(a)(2). I now consider whether the length of the exclusion, beyond five years, falls within a reasonable range.

Federal regulations set forth criteria for lengthening exclusions beyond the five-year minimum. 42 C.F.R. § 1001.102(b). Evidence that does not pertain to one of the aggravating or mitigating factors (42 C.F.R. § 1001.102(c)) listed in the regulations may not be used to decide whether an exclusion of a particular length is reasonable.

Among the factors that may serve as bases 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 convicted individual has been the subject of any other adverse action by any federal, state, or local government or board, if the adverse action is based on the same set of circumstances that serves as the basis for the exclusion. 42 C.F.R. § 1001.102(b). The presence of an aggravating factor or factors, not offset by any mitigating factor or factors, justifies lengthening the mandatory period of exclusion.

Length of criminal conduct (42 C.F.R. § 1001.102(b)(2)). We consider the length of Petitioner’s participation in a 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. “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.” Donald A. Burstein, Ph.D., DAB No. 1865 at 8 (2003).

In his plea agreement, Petitioner admitted that the scheme in which he participated began in about September 2017 and continued through June 2020. IG Ex. 3 at 2; IG Ex. 4 at 3, 5; IG Ex. 5 at 1. His criminal conduct thus lasted for about two years and nine months, a significant length of time. 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

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short-lived lapse in integrity”), aff’d, Leyva v. Price, 2017 WL 2880125 (M.D. Fla. Apr. 24, 2017).

Petitioner disputes the IG’s determination. He submits a copy of his purchase agreement for one of his three pharmacies (Detroit New Hope Pharmacy) and asserts that he was not the owner in 2017, suggesting that his criminal conduct could not have started that early. P. Ex. 2; P. Br. at 3. There are significant problems with this argument:

1. Petitioner admitted, in his plea agreement, that his criminal conduct began in September 2017; his conviction was for conduct beginning in September 2017. IG Ex. 3 at 2; IG Ex. 4 at 3, 5. He may not now collaterally attack that determination. 42 C.F.R. § 1001.2007(d).
2. Detroit New Hope was one of three pharmacies owned by Petitioner. IG Ex. 4 at 4-5. That he acquired it a few months later does not establish that he wasn’t engaged in the drug scheme involving his other pharmacies beginning in September 2017.
3. According to the sales agreement, Petitioner acquired Detroit New Hope in April 2018. P. Ex. 2 at 22-23, 31. Even assuming that his illegal conduct did not begin until then, it still would have lasted for more than two years – more than double the length of time required to establish an aggravating factor.2 

In increasing the length of his exclusion, the IG appropriately applied this aggravating factor.

Incarceration (42 C.F.R. § 1001.102(b)(5)). The criminal court sentenced Petitioner to a year and a day in prison, which is a substantial period of incarceration. IG Ex. 5 at 2. While any period of incarceration justifies increasing the period of exclusion, the Board has repeatedly 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

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Jeremy Robinson, DAB No. 1905 at 6 (2004) (characterizing a nine-month incarceration as “relatively substantial”). Jason Hollady, M.D., DAB No. 1855 at 12 (2002); Stacy Ann Battle, DDS., 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, aff’d, DAB No. 2061 (2007) (finding that six months home confinement justifies increasing the length of exclusion).

Petitioner claims that he was released from prison after four months and 10 days, although he provides no underlying evidence to support the assertion. Petitioner does not claim – and nothing in the record suggests – that he was released early because the court reduced his sentence.3 Thus, nothing negates the IG’s position that the court imposed the sentence nor prevents the IG from applying it as an aggravating factor. See Hamilton, DAB No. 3061 at 15-16 (finding that, even though the sentencing judge delayed Petitioner’s date to report for incarceration until her pending appeal was resolved, so long as “the sentence imposed by the court included incarceration,” the IG established it as an aggravating factor).

Because Petitioner was sentenced to a year and a day in prison, the IG appropriately determined that this significant prison sentence justifies increasing the period of his exclusion.

Other adverse actions (42 C.F.R. § 1001.102(b)(9)). Petitioner was a physical therapist, licensed in the State of Michigan. Michigan law directs the Michigan Department of Licensing and Regulatory Affairs to “summarily suspend” the license of an individual who has been convicted of a felony (or a misdemeanor involving the illegal delivery, possession, or use of a controlled substance). MCL § 333.16233(5); IG Ex. 7 at 1. Citing Petitioner’s felony conviction (thus, based on the same set of circumstances), the Michigan Board of Physical Therapy, a section of the Department, summarily suspended Petitioner’s license to practice physical therapy. IG Exs. 6, 7.

No 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 $1,500; 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). The Petitioner bears the burden of proving any mitigating factor by a preponderance of the

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evidence. 42 C.F.R. § 1005.15(b)(1); Barry D. Garfinkel, M.D., DAB No. 1572 at 8 (1996).

Petitioner claims that he cooperated with the FBI. P. Br. at 2. He provides no evidence to support this claim. Nor does he claim, much less provide evidence, that his purported cooperation resulted in others being convicted or excluded or led to additional investigations or civil money penalties.

Petitioner also submits a letter from the Detroit Public Schools that describes the obstacles the schools face in recruiting qualified individuals to provide support services, including physical therapy services. P. Ex. 1. He argues that he should not be excluded because of the “critical shortage” of physical therapists in the Detroit area. P. Br. at 4. This is not a mitigating factor.

If certain criteria are met, the statute and regulations allow waiver of an exclusion that imposes hardship on a medically-underserved community. Act § 1128(c)(3)(B). The IG may grant a state health care program’s request to waive an exclusion if “[t]he individual or entity is the sole community physician or the sole source of essential specialized services in a community” and “[t]he exclusion would impose a hardship on beneficiaries (as defined in section 1128A(i)(5) of the Act) of that program.” 42 C.F.R. § 1001.1801(b)(1)-(2). 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.” 42 C.F.R. § 1001.1801(f); Act § 1128(c)(3)(B). Thus, any such request for waiver must be made directly to the IG by the state health care program, not by Petitioner, and the IG’s determination with respect to any waiver is not reviewable in this or any other forum.

Thus, Petitioner has not met his burden of establishing a mitigating factor.

Assessing the factors. My role here is to “review the length of an exclusion de novo to determine whether it falls within a reasonable range, given the aggravating and mitigating factors and the circumstances underlying them.” Shaun Thaxter, DAB No. 3053 at 26 (2021) (quoting Rosa Velia Serrano, DAB No. 2923 at 8 (2019) and Sushil Aniruddh Sheth, DAB No. 2491 at 5 (2012)). Such an evaluation does not rest on the specific number of aggravating or mitigating factors or any rigid formula for weighing those factors; I make a case-specific determination of the weight to be accorded each factor based on a qualitative assessment of the circumstances surrounding the relevant factors. Yolanda Hamilton, DAB No. 3061 at 12; Thaxter at 26; Kimberly Jones, DAB No. 3033 at 7 (2021); Sheth at 5. So long as that period of exclusion 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).

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

Petitioner was convicted of a serious felony. His criminal conduct lasted longer than two years (closer to three) and warranted a significant prison sentence. He lost his license to practice as a physical therapist. These factors demonstrate that he is untrustworthy and justify the nine-year exclusion.

Finally, Petitioner asks that the effective date for his exclusion be changed to the date of his indictment in 2020. He does not explain how he arrived at that date. P. Br. at 3. I have no authority to change the effective date of an exclusion. As a matter of law, an exclusion becomes effective 20 days from the date of the IG’s notice. 42 C.F.R. § 1001.2002(b). An administrative law judge may not review the timing of the IG’s determination to impose an exclusion nor alter retroactively its effective date. Sheth, DAB No. 2491 at 18-19; Kailash C. Singhvi, M.D., DAB No. 2138 at 4-5 (2007); Tanya A. Chuoke, R.N., DAB No. 1721 (2000); Samuel W. Chang, M.D., DAB No. 1198 (1990).

Conclusion

The IG properly excluded Petitioner Gaidhane from participating in Medicare, Medicaid and other federal health care programs. I find that the nine-year exclusion falls within a reasonable range.