Javad Aghaloo, DAB CR6707 (2025)

DECISION

Respondent, the Acting Inspector General (IG) for the U.S. Department of Health and Human Services, excluded Petitioner, Javad Aghaloo, from participation in Medicare, Medicaid, and all other federal health care programs for 25 years pursuant to section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)).  Petitioner challenges his exclusion before me.  For the reasons stated below, I affirm the IG’s exclusion action and find the 25-year exclusion period selected by the IG not unreasonable.

I.     Case Background and Procedural History

On September 30, 2024, the IG notified Petitioner of his exclusion, effective in 20 days, from participation in Medicare, Medicaid, and all federal health programs under section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)) for at least 25 years.  IG Ex. 1 at 1.  The IG explained she took this action based on Petitioner’s conviction in the U.S. District Court for the Southern District of California (District Court) for a criminal offense related to the delivery of an item or service under Medicare or a state health care program, including the performance of management or administrative services relating to the delivery of such items or services.  Id.

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The IG cited three aggravating factors to justify extending Petitioner’s exclusion period beyond the minimum period of five years:

(1) The acts that resulted in the conviction, or similar acts, caused or were intended to cause, a financial loss 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; and

(3) The sentence imposed included incarceration.

Id.

Petitioner timely sought review by an administrative law judge (ALJ) in the Civil Remedies Division, resulting in my designation to hear and decide this case.  I held a pre-hearing conference by telephone with the parties on December 17, 2024, the substance of which is summarized in my Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order), issued on December 18, 2024.

Among other things, I directed the parties to file pre-hearing briefs and identify witnesses and exhibits in support of their arguments.  Summary Order at 4-6.  The IG filed a brief (IG Br.) and four proposed exhibits (IG Exs. 1-4), while Petitioner filed a brief (P. Br.) and one proposed exhibit (P. Ex. 1).  The IG subsequently filed a reply brief (IG Reply).

II.     Admission of Exhibits and Decision on the Record

Neither party objected to the opposing party’s proposed exhibits.  I therefore enter IG Exhibits 1 through 4 and P. Exhibit 1 into the record.  Neither party believed an in-person hearing to be necessary.  IG Br. at 9; P. Br. at 3.  Accordingly, I decide this case on the parties’ briefs and the exhibits of record.  Civ. Remedies Div. P. § 19(d).

III.     Issues

Whether the IG had a basis to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs and if so, whether the 25-year exclusion period selected by the IG is unreasonable.  See 42 C.F.R. § 1001.2007(a)(1).

IV.     Jurisdiction

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

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V.     Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to an administrative hearing and judicial review of the final action by the Secretary of Health and Human Services (Secretary).  The right to a hearing before an ALJ is set forth at 42 C.F.R. §§ 1001.2007(a) and 1005.2.  The rights of both the sanctioned party and the IG to participate in a hearing are set forth at 42 C.F.R. § 1005.3.

The Act requires the Secretary to exclude from participation in federal health care programs “[a]ny individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under subchapter XVIII of this chapter or under any State health care program.”  Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)); see also 42 C.F.R. § 1001.101(a).

The Act defines an individual to be convicted of a criminal offense when:  (1) a judgment of conviction has been entered against him or her in a federal, state, or local court whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or nolo contendere is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.  Act § 1128(i) (42 U.S.C. § 1320a-7(i)); 42 C.F.R. § 1001.2.  Exclusion under this provision of the Act is mandatory and does not distinguish between misdemeanor and felony convictions.  Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)).  Excluded parties seeking to challenge their exclusion may not collaterally attack the conviction that provides the basis for exclusion.  42 C.F.R. § 1001.2007(d).

Section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) mandates a minimum five-year period of exclusion if imposed under section 1128(a) of the Act.  Exclusion is effective 20 days from the date the IG issues the notice of exclusion.  42 C.F.R. § 1001.2002(b).  The IG may elect to extend the period of exclusion based on the presence of certain aggravating factors.  42 C.F.R. § 1001.102(b).  The IG must consider the mitigating factors identified by the regulations as a basis for reducing the period of exclusion, and then only if she has applied aggravating factors to increase the exclusion period beyond five years.  42 C.F.R. § 1001.102(c).  The IG’s determination of the length of exclusion enjoys deference only if it is not unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).

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; the IG bears the burden on all other issues.  Summary Order at 3; 42 C.F.R. § 1005.15(c).

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VI.     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. The IG has established a basis for Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act.

Section 1128(a)(1) of the Act mandates exclusion from participation in Medicare, Medicaid, and all federal health care programs where an individual has been convicted, under federal or State law, of a criminal offense related to the delivery of an item or service under Medicare or any state health care program.  42 U.S.C. § 1320a-7(a)(1); 42 C.F.R. § 1001.101(a).  Petitioner does not challenge the propriety of his exclusion but disputes its length as unreasonable.  P. Br. at 2-3.  Nevertheless, to provide necessary context for my analysis, I address the factual bases for exclusion the IG has established by a preponderance of the evidence.

1. Relevant Facts

On April 5, 2023, a federal grand jury seated in the Southern District of California charged Petitioner with numerous offenses, among them one count of Conspiracy to Commit Health Care Fraud in violation of 18 U.S.C. §§ 371 and 1347.  IG Ex. 2 at 6-11, 16.  On September 6, 2023, Petitioner executed a written agreement with the government pleading guilty to that charge, filed with the District Court on October 3, 2023.  IG Ex. 3 at 1-2, 15.

Petitioner stipulated to certain facts as part of his plea agreement.  He admitted that between March 1, 2016 and October 18, 2018, he conspired with the office manager of his dental practice to bill the Medicare program for procedures that were not covered, not performed, or otherwise unnecessary.  Id. at 3-4, 5.  Petitioner and his co-conspirator provided services to Medicare beneficiaries that were not covered by the program, typically tooth extractions, and submitted claims for dental work that were covered but not actually performed, like bone grafts.  Id. at 4.  Petitioner admitted that he billed the Medicare program $18,951,143 in fraudulent claims and received a total of $8,476,466.23, which he agreed to repay to the Medicare program as restitution.  Id. at 5.

The District Court accepted Petitioner’s guilty plea and on January 26, 2024, entered judgment against him.  IG Ex. 4 at 1.  The District Court sentenced Petitioner to 37 months’ incarceration and ordered him to pay $8,476,466.23 in restitution to the Medicare program.  Id. at 2, 6.

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2. Petitioner was convicted of a criminal offense within the meaning of section 1128(a)(1) of the Act.

Petitioner concedes he has been convicted of a criminal offense within the meaning of the Act.  P. Br. at 1.  The evidence of record confirms this concession.  Petitioner executed a plea agreement with the United States to resolve the criminal charges against him.  IG Exs. 2, 3.  The District Court accepted Petitioner’s guilty plea and entered judgment against him.  IG Ex. 4.  The IG has established Petitioner was convicted of a criminal offense within the meaning of the Act.  Act § 1128(i)(1) (42 U.S.C. § 1320a-7(i)(1)); 42 C.F.R. § 1001.2.

3. Petitioner’s criminal offense is related to the delivery of an item or service under Medicare or a state health care program within the meaning of section 1128(a)(1) of the Act.

Petitioner concedes his conviction related to the delivery of an item or service under the Medicare program.  P. Br. at 2.  The record confirms doing otherwise would be futile.  Petitioner, a dentist, pleaded guilty to one count of Conspiracy to Commit Health Care Fraud in violation of 18 U.S.C. §§ 371 and 1347.  IG Ex. 2 at 6-11; IG Ex. 3 at 3-5.  On its face, his conviction for conspiring to commit health care fraud against the Medicare program conclusively establishes the nexus between Petitioner’s criminal conduct and a covered healthcare program necessary to warrant exclusion.

Petitioner’s actual offense conduct reinforces that connection; in his plea agreement, Petitioner admitted he “knowingly, willfully, and intentionally” agreed to execute a scheme with the intent to defraud the Medicare program.  IG Ex. 3 at 2.  He did so by providing services to Medicare beneficiaries that the program did not cover and submitting claims on behalf of those beneficiaries he never performed but which were covered by the program.  Id. at 4.  Petitioner’s offense of conviction and the stipulations he made to resolve the criminal case against him make clear his criminal conduct occurred in connection with the delivery of an item or service to the Medicare program.

That connection is confirmed by the fact that the District Court ordered him to pay restitution to the Medicare program.  IG Ex. 4 at 6.  Payment of restitution to a covered healthcare program for losses incurred as a result of criminal conduct demonstrates the nexus between the offense of conviction and the delivery of an item or service to that program.  Summit S. Shah, M.D., DAB No. 2836 at 8-9 (2017) (quoting Berton Siegel, D.O., DAB No. 1467 at 6-7 (1994) (“[A] criminal offense resulting in financial loss to a State Medicaid program is ‘related to’ the delivery of items or services under that Medicaid program because it results ‘in less funds being available to pay for covered services’ delivered to Medicaid patients.”)).  These facts establish the requisite “common sense” connection between Petitioner’s offense of conviction and the delivery of services to the Medicare program.

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2. Petitioner must be excluded for a minimum of five years.

Because I have concluded a basis exists to exclude Petitioner pursuant to section 1128(a)(1) of the Act, he must be excluded for a minimum of five years.  Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)); 42 C.F.R. § 1001.102(a). 

3. The IG has established three aggravating factors which justify Petitioner’s exclusion beyond the five-year statutory minimum.

Petitioner concedes the IG has correctly identified and applied three aggravating factors to extend his period of exclusion.  P. Br. at 2.  I have nevertheless scrutinized the application of these aggravating factors as the IG bears the burden of establishing their application to be warranted.  42 C.F.R. § 1005.15(c).

1. The IG established financial loss to a government program of $50,000 or more, as required by 42 C.F.R. § 1001.102(b)(1).

In the plea agreement he executed to resolve the criminal action against him, Petitioner admitted he received $8,476,466.23 for the false and fraudulent claims he made to the Medicare program.  IG Ex. 3 at 5.  The District Court ordered him to pay restitution in this amount to the Medicare program.  IG Ex. 4 at 6.  Restitution is an appropriate measure to demonstrate program loss.  See Summit S. Shah, M.D., DAB No. 2836 at 8 (2017) (citations omitted).  The IG has established Petitioner was responsible for considerably more than $50,000 in loss to the Medicare program.

2. The IG established that Petitioner’s conviction arose from acts that lasted for a period of one year or more, as required by 42 C.F.R. § 1001.102(b)(2).

In his plea agreement with the government, Petitioner conceded the criminal conspiracy in which he participated, and which resulted in his conviction that forms the basis for the IG’s exclusion action against him, lasted from March 1, 2016 to October 18, 2018.  IG Ex. 3 at 5.  The IG has established Petitioner’s criminal conduct occurred for over one year. 

3. The IG established Petitioner was incarcerated as part of his sentence as required by 42 C.F.R. § 1001.102(b)(5).

The District Court imposed a sentence of 37 months’ incarceration for Petitioner’s admitted criminal conduct.  IG Ex. 4 at 2.  The IG has established Petitioner’s sentence included a period of incarceration.

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4. Petitioner has not demonstrated the existence of a mitigating factor recognized by the Secretary’s regulations.

Petitioner argues the IG should have considered his diagnosis for Attention-deficit Hyperactivity Disorder (ADHD) as a mitigating factor.  P. Br. at 3.  He also claims the IG should have considered the physical limitations which will likely restrict his ability to resume the practice of dentistry at the age of 77, when his 25-year exclusion period ends.  Id. at 4.

In his hearing request, Petitioner also pointed out his longstanding commitment to providing dental services to veterans, the homeless, and undocumented immigrants, going so far as to start a not-for-profit entity in 2014.  P. Req. for Hearing at 2.  Petitioner asserts he continued providing free dental work to the needy and underprivileged and did so exclusively after his practice shut down, providing over $1,000,000 in free treatment in 2019 alone.  Id.  Petitioner emphasizes his desire to continue providing care to underprivileged patients.  Id.

I acknowledge Petitioner’s long history of providing dental care to those who could not otherwise afford it and applaud his desire to continue doing so.  However, I am not empowered to disregard the regulations that govern these proceedings.  They specify only three circumstances the IG must consider as mitigating factors:  (1) where the exclusion is premised on three or fewer misdemeanor offenses and the financial loss is less than $5,000; (2) where records from the underlying criminal proceeding establish a mental, emotional, or physical condition that a court determined reduced an individual’s culpability; or (3) where the record reflects cooperation with federal or state officials that results in others being convicted or excluded, other cases being investigated or reports being issued to identify program vulnerabilities, or others being subject to a civil money penalty or assessment.  42 C.F.R. § 1001.102(c).

Petitioner does claim to have a mental condition, ADHD, that the IG should have considered as a mitigating factor.  P. Br. at 3, citing P. Ex. 1.  However, as the regulation makes clear, it is not enough to demonstrate the existence of a mental condition; Petitioner must show that condition existed before or during the commission of his offense and that the District Court took it into account to reduce his culpability.  42 C.F.R. § 1001.102(c)(2).  Petitioner has not done so.

His claim that the IG should have considered his likely physical condition after 25 years fails for the same reason.  See P. Br. at 4; Samirkumar Shah, M.D., DAB No. 3111 at 17 (2023) (rejecting Petitioner Shah’s argument that his age at the end of his exclusion period demonstrated the exclusion period’s unreasonableness as assessment of the exclusion period “does not consider the excluded individual’s age when the exclusion was imposed and how old that individual would be after an augmented exclusion period ends, because neither is a mitigating factor recognized in 42 C.F.R. § 1001.102(c).”).

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The remainder of Petitioner’s arguments for mitigation are laudable but are not recognized by the IG’s regulations.  Petitioner has not met his burden to establish mitigating factors the IG was obliged to consider in determining his period of exclusion.

5. A 25-year exclusion period is not unreasonable.

I must uphold the IG’s determination as to the length of exclusion if it is not unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  This means that:

[s]o long as the amount of time chosen by the OIG is within a reasonable range, based on demonstrated criteria, the ALJ has no authority to change it under this rule.  We believe that the deference § 1001.2007(a)(2) grants to the OIG is appropriate, given the OIG’s vast experience in implementing exclusions under these authorities.

57 Fed. Reg. 3298, 3321 (Jan. 29, 1992).

In determining whether the period of exclusion selected by the IG is not unreasonable, I may not substitute my own judgment for that of the IG.  Richard E. Bohner, DAB No. 2638 at 2 (2015) (citations omitted), aff’d, Bohner v. Burwell, No. 15-cv-4088, 2016 WL 8716339 (E.D. Pa. Dec. 2, 2016).  Instead, I look to see “whether the period of exclusion imposed by the I.G. was within a reasonable range, based on demonstrated criteria.”  Craig Richard Wilder, DAB No. 2416 at 8 (2011).

To do so, I must consider both aggravating and mitigating factors, if any.  42 C.F.R. § 1001.102(b), (c).  The quality of the aggravating (or mitigating) factors is of greater significance than the mere number of the factors present in a given case.  The preamble to the final rule publishing the exclusion regulations provides:

We do not intend for the aggravating and mitigating factors to have specific values; rather, these factors must be evaluated based on the circumstances of a particular case.  For example, in one case many aggravating factors may exist, but the subject’s cooperation with the OIG may be so significant that it is appropriate to give that one mitigating factor more weight than all of the aggravating.  Similarly, many mitigating factors may exist in a case, but the acts could have had such a significant physical impact on program beneficiaries that the existence of that one aggravating factor must be given more weight than all of the mitigating.  The

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weight accorded to each mitigating and aggravating factor cannot be established according to a rigid formula, but must be determined in the context of the particular case at issue.

57 Fed. Reg. at 3314-15.

In considering the quality of the three aggravating factors established and applied by the IG here, I conclude the 25-year period of exclusion selected by the IG is not unreasonable.

Petitioner’s criminal conduct resulted in an astounding loss to the Medicare program – over $8,000,000.  IG Ex. 3 at 5.  The Board has observed it “entirely reasonable” to give significant weight to loss amounts substantially larger than the minimum regulatory threshold.  Laura Leyva, DAB No. 2704 at 9-10 (2016) (citations omitted).  Petitioner’s criminal conduct here resulted in a loss to the Medicare program amounting to approximately 160 times the regulatory minimum of $50,000 for program loss to be considered an aggravating factor.  42 C.F.R. § 1001.102(b)(1).  Petitioner’s willingness to participate in a conspiracy intended to bilk the Medicare program to this extent reflects a profound level of untrustworthiness to participate as a biller to that program.  Hussein Awada, M.D., DAB No. 2788 at 7 (2017) (“[t]he millions of dollars in losses that Petitioner’s actions caused . . . merits a substantial increase in the length of his exclusion beyond the minimum period”).

The duration of Petitioner’s criminal offense conduct supports the 25-year exclusion period selected by the IG.  Petitioner engaged in a scheme to intentionally defraud the Medicare program for over two years.  IG Ex. 3 at 5.  The persistence of his conduct reflects a sustained lack of integrity, not a momentary lapse of judgment.  Donald A. Burstein, Ph.D., DAB No. 1865 at 8 (2003) (“The purpose of the aggravating factor is to distinguish . . . petitioners whose lapse in integrity is short-lived from those who evidence a lack of such integrity over a longer period . . . .”).  The IG properly gave this aggravating factor significant weight in determining Petitioner’s period of exclusion.

The seriousness of Petitioner’s offense is reflected by the District Court’s determination to subject Petitioner, a health care provider who pleaded guilty to a non-violent offense, to 37 months of incarceration.  IG Ex. 4 at 2; 42 C.F.R. § 1001.102(b)(5).  A sentence of incarceration is a “reasonable proxy . . . for untrustworthiness in the context of deciding how much weight to give the aggravating factor for incarceration.”  Eugene Goldman, M.D., DAB No. 2635 at 5 (2015).  The IG appropriately determined the sentence of incarceration imposed here reflected a level of untrustworthiness that demanded a significant period of exclusion.

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In sum, Petitioner conspired to submit false and fraudulent bills to this nation’s safety net program for the elderly and disabled and caused over $8,000,000 in loss to that program.  He did so for over two years.  He did not stop because of a change in heart; he stopped because he was caught.  Under these circumstances, I cannot say excluding Petitioner from participation in Medicare, Medicaid, and all other federal health care programs for 25 years is unreasonable.

VI.     Conclusion

I affirm the IG’s determination to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for a period of 25 years.