Eduard Noykhovich, DAB CR6728 (2025)

DECISION

The Inspector General (IG) of the United States Department of Health and Human Services excluded Eduard Noykhovich (Petitioner) from participation in Medicare, Medicaid, and all other federal health care programs for a minimum period of 24 years pursuant to section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)).  For the reasons discussed below, it is determined that the IG had a basis to exclude Petitioner from program participation, and a mandatory exclusion must be imposed.  Based on the facts and evidence presented in this case, I find that a 24-year exclusion is unreasonable, and that a reduction in exclusion is warranted.  Therefore, Petitioner’s exclusion is reduced by three years and a 21-year exclusion is imposed.

I.     Background and Procedural History

By notice letter dated November 29, 2024, the IG informed Petitioner that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a minimum period of 24 years pursuant to section 1128(a)(1) of the Act.  The exclusion was imposed due to Petitioner’s conviction, in the United States District Court, Eastern District of New York (District Court), “of a criminal offense related to the delivery of an item or service under the Medicare or a State health care program,

Page 2

including the performance of management or administrative services relating to the delivery of items or services, under such programs.”  IG Exhibit (Ex.) 1.  The IG identified two aggravating factors, and one mitigating factor used to extend Petitioner’s exclusion beyond the mandatory five year minimum.

The Civil Remedies Division (CRD) received Petitioner’s request for a hearing on January 27, 2025.  Along with the request for hearing, Petitioner filed two exhibits, the notice of exclusion (DAB E-File Document No. 1a) and several documents including letters of support and information regarding Petitioner’s cooperation with the government (DAB E-File Doc. No. 1b).  These documents are referred to by document number to avoid confusion with the exhibits subsequently filed by Petitioner.

On January 30, 2025, the CRD issued my Standing Pre-Hearing Order (Standing Order) and a letter, at my direction, acknowledging receipt of Petitioner’s hearing request.  The letter notified the parties that a telephone prehearing conference was scheduled for February 20, 2025, at 11:00 a.m. EST.  On the date of the prehearing conference, both parties appeared and agreed to a briefing schedule.  An Order Following Prehearing Conference and Setting Briefing Schedule was issued on February 21, 2025 (February 21, 2025 Order).

On March 28, 2025, the IG filed a brief (IG Br.) along with four exhibits (IG Exs. 1-4).  On May 2, 2025, Petitioner filed a brief (P. Br.), along with two exhibits (P. Exs. 1-2).  The IG filed a reply brief (IG Reply Br.) on May 16, 2025.

II.     Admission of Exhibits and Decision on the Written Record

The IG indicated that an in-person hearing is not necessary to resolve this matter.  IG Br. at 14.  Petitioner requested a hearing.  P. Ex. 1 at 1.

As stated in the February 21, 2025 Order, a hearing will be held only if a party asks to cross-examine a witness for whom the opposing party has provided written direct testimony and the witness’ proposed testimony is found to be relevant and non-cumulative.  February 21, 2025 Order at 4-5; Civil Remedies Division Procedures § 19(d).  Petitioner submitted a written declaration as evidence.  P. Ex. 1.  However, the IG did not request to cross-examine Petitioner.  Therefore, a hearing is not necessary, and this matter will be decided on the written record.

Absent objection, IG Exs. 1-4 and P. Exs. 1-2 and DAB E-File Document Nos. 1a and 1b are admitted into evidence.  All evidence will be given the proper weight and consideration.

Page 3

III.     Issues

The issues to be decided are:

Whether the IG had a basis to exclude Petitioner from participation in Medicare, Medicaid, and all other federal health care programs under section 1128(a)(1) of the Act.  42 C.F.R. § 1001.2007(a)(1)(i).

Whether the 24-year exclusion imposed by the IG is unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).

IV.     Jurisdiction

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

V.     Findings of Fact

1. Petitioner has been a licensed physical therapist since 2003.  P. Ex. 1 at 1; IG Ex. 3 at 4.
2. Bensonhurst Mega Medical Care P.C. (Bensonhurst) was a New York State corporation that purported to provide physical and occupational therapy and diagnostic tests to Medicare and Medicaid beneficiaries.  IG Ex. 3 at 4.  Petitioner worked at Bensonhurst and Prime Care on the Bay, LLC from September 2010 – January 2014.  Bensonhurst and Prime Care on the Bay, LLC are collectively known as the “Pikus Clinics.”  P. Ex. 1 at 2.
3. Petitioner was charged, by Information, with two counts of Conspiracy to Commit Health Care Fraud (Counts One (Prime Care and Bensonhurst) and Two (Ideal Health)) in violation of 18 U.S.C. § 1349; one count of Money Laundering Conspiracy (Count Three) in violation of 18 U.S.C. §§ 1956(h) and 3551; and one count of Subscribing to a False and Fraudulent Tax Return in violation of 18 U.S.C. § 3551 (Count Four).  IG Ex. 3.
4. In relation to the Pikus Clinics, it was alleged that Petitioner, along with his co-conspirators, submitted and caused to be submitted to Medicare and Medicaid false and fraudulent claims for physical and occupational therapy, and diagnostic tests that were not medically necessary or provided.  IG Ex. 3 at 4-5.  Petitioner, and other physical therapists, signed paperwork indicating that they rendered physical and occupational therapy services that were actually provided by unsupervised, unlicensed, and unauthorized aides.  IG Ex. 3 at 6.

Page 4

5. Between February 2008 - February 2011, Prime Care submitted approximately $37.5 million in claims to Medicaid and Medicare, including $900,000 in claims for services allegedly rendered by Petitioner.  IG Ex. 3 at 7.  During the same time period, Bensonhurst submitted approximately $23.6 million in claims to Medicaid and Medicare, approximately $2.2 million of those claims were for services allegedly rendered by Petitioner.  Id.
6. Petitioner incorporated Ideal Health in September 2009 and served as the President from the incorporation until January 2015.  IG Ex. 3 at 3-4.
7. Petitioner, along with others, increased the demand for medical services to Ideal Health by paying cash to Medicare and Medicaid beneficiaries to induce them to subject themselves to unnecessary physical therapy performed by Petitioner.  Petitioner also submitted, and caused to be submitted, Medicare and Medicaid claims that were fraudulently induced by kickbacks and engaged in deceptive acts to mislead and avoid inquiry into the fraudulent scheme.  IG Ex. 3 at 7-8.  Petitioner falsely claimed the payments to the “Kickback Companies” as legitimate business expenses to the Internal Revenue Service (IRS) causing him to underreport taxable income.  IG Ex. 3 at 9.
8. From September 2009 – January 2015, Ideal Health submitted approximately $20.1 million in claims to Medicare and Medicaid.  IG Ex. 3 at 9.
9. On April 24, 2015, Petitioner entered into a Cooperation Agreement and admitted guilt to all four counts of the criminal information.  IG Ex. 4.
10. The District Court accepted Petitioner’s guilty plea and adjudicated him guilty on July 19, 2024.  IG Ex. 2.  Petitioner was sentenced to one year of probation for each conviction, to run concurrently.  IG Ex. 2 at 3.  The District Court ordered Petitioner to pay $8,171,273.97 in restitution, with $7,667,682.97 payable to the Centers for Medicare and Medicaid Services and $503,591.00 payable to the IRS.  IG Ex. 2 at 6.
11. The U.S. Attorney’s Office submitted a 5K1.1 motion1 on behalf of Petitioner, requesting the court to depart downwardly from the applicable sentencing guidelines due to Petitioner’s substantial assistance in the investigation.  DAB E-file Doc. No. 1b at 2.

Page 5

VI.     Legal Authorities

The Secretary of the United States Department of Health and Human Services (Secretary) shall exclude an individual from participation in Medicare, Medicaid, and all other federal health care programs if that individual has been convicted 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).  The Act requires a minimum exclusion period of five years when the exclusion is mandated under section 1320a-7(a).  42 U.S.C. § 1320a-7(c)(3)(B).

In exclusion cases, the IG has the burden of proving the basis for the exclusion and the existence of any aggravating factors.  42 C.F.R. § 1005.15(c); Standing Order ¶ 6.  Petitioner has the burden of proving any affirmative defenses or factors to mitigate the length of the exclusion if aggravating factors have been established.  42 C.F.R. § 1001.102(c); Standing Order ¶ 6.  The standard of proof is a preponderance of the evidence, which means a fact is proven if the evidence shows that it is more likely true than not true.  42 C.F.R. §§ 1001.2007(c), 1005.15(d).  In this case, the IG must prove that Petitioner was convicted of an offense related to the delivery of an item or service under Medicare or a state health care program.

An excluded individual may request a hearing before an administrative law judge (ALJ), but only on the issues of whether the IG had a basis for the exclusion and whether an exclusion longer than the required minimum period is unreasonable in light of any applicable aggravating and mitigating factors.  42 C.F.R. §§ 1001.2007(a), 1005.2(a).

VII.     Analysis and Conclusions of Law

1. Petitioner was convicted of a criminal offense related to the delivery of an item or service under the Medicare program, which subjects him to a mandatory exclusion from all federal health care programs for a minimum of five years.

To prevail, the IG must prove that Petitioner was convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  42 U.S.C. § 1320a-7(a)(1); 42 C.F.R. § 1001.101(a).  Under the Act, an individual is considered to have been convicted of a criminal offense when “a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court.”  Act § 1128(i)(3) (42 U.S.C. § 1320a-7(i)(3)); see also 42 C.F.R. § 1001.2 (paragraphs (a) and (c) under the definition of “Convicted”).  It is undisputed that the District Court accepted Petitioner’s guilty plea and adjudicated him guilty on July 19, 2024.  IG Ex. 2.  Petitioner does not dispute that he was convicted of four felony offenses.

Page 6

Next, to prove that Petitioner’s conviction was related to the delivery of an item or service under Medicare, the IG must show a nexus between the offense and the delivery of an item or service under Medicare.  The Departmental Appeals Board (Board) has repeatedly held that the phrase “related to” within the context of section 1128(a)(1) requires only that a common‑sense nexus exist between the offense and the delivery of an item or service under Medicare.  Summit S. Shah, M.D., DAB No. 2836 at 6 (2017) (citations omitted).  Petitioner argues that there is not a common-sense nexus between his conviction and the delivery of an item or service under Medicare or a state health care program.  P. Br. at 5.  In his affirmation, Petitioner states that he did not fraudulently submit any claims to Medicare and that he never signed patient charts for patients that he did not see.  P. Ex. 1 at 2.  Petitioner also claims that his billing credentials were misused by the Pikus Clinics “to perpetuate their wrongful acts.”  Id. at 3.  However, Petitioner pleaded guilty to two counts of Conspiracy to Commit Health Care Fraud.  Count One states:

In or about and between February 2008 and February 2011, both dates being approximate and inclusive, within the Eastern District of New York and elsewhere, [Petitioner], together with others, did knowingly and intentionally conspire to execute a scheme and artifice to defraud Medicare and Medicaid, and to obtain, by means of materially false and fraudulent pretenses, representations and promises, money and property owned by, and under the custody and control of, Medicare and Medicaid, in connection with the delivery of and payment for health care benefits, items and services, contrary to Title 18, United States Code, Section 1347.  

IG Ex. 3 at 9. 

Similarly Count Two states:

In or about and between September 2009 and January 2015, both dates being approximate and inclusive, within the Eastern District of New York and elsewhere, [Petitioner], together with others, did knowingly and intentionally conspire to execute a scheme and artifice to defraud Medicare and Medicaid, and to obtain, by means of materially false and fraudulent pretenses, representations and promises, money and property owned by, and under the custody and control of, Medicare and Medicaid, in connection with the delivery of and payment for health care benefits, items and services, contrary to Title 18, United States Code, Section 1347.

IG Ex. 3 at 10.

The Board has ruled that “when determining whether a requisite nexus exists, an ALJ may consider evidence as to the nature of the offense, including the facts upon which the

Page 7

conviction was predicated.”  Janice Cassandra Wrenn, DAB No. 3118 at 7 (2023).  The evidence shows that Petitioner was convicted of two counts of conspiring to execute a scheme to defraud Medicare and Medicaid, clearly showing a nexus between the conviction and the delivery of an item or service under Medicare or state healthcare programs.  Petitioner’s arguments to the contrary amount to a collateral attack on his convictions, which is not permitted in this forum.  42 C.F.R. § 1001.2007(d).  Therefore, the evidence proves that the IG has a legal basis to impose an exclusion against Petitioner.

2. The IG identified two aggravating factors that support an exclusion beyond the five-year minimum.

Exclusions imposed under section 1128(a)(1) carry a five-year mandatory minimum exclusion period.  Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)); 42 C.F.R. § 1001.102(a).  The IG may extend the five-year exclusion period based on the application of the aggravating factors listed in 42 C.F.R. § 1001.102(b).  If any of the aggravating factors set forth in 42 C.F.R. § 1001.102(b) justifies an exclusion longer than five years, mitigating factors listed at 42 C.F.R. § 1001.102(c) may be considered as a basis for reducing the period of exclusion to no less than five years.  In this case, the IG has proposed a 24-year exclusion based on two aggravating factors and one mitigating factor.  IG Ex. 1.

The IG identified the following aggravating factors as a basis for imposing a 24-year exclusion against Petitioner:  (1) loss to a government program or other entities as a result of Petitioner’s criminal conduct was greater than $50,000, and (2) the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more.  IG Ex. 1; 42 C.F.R. § 1001.102(b)(1)-(2).  Each factor is discussed below.

1. The acts resulting in the conviction, or similar acts, caused, or were intended to cause, a financial loss to a government program of $50,000 or more.

The District Court ordered Petitioner to pay $8,171,273.97 in restitution to Medicare and Medicaid and the IRS.  IG Ex. 2 at 6.  According to Petitioner, the amount of restitution ordered by the District Court is in dispute.  P. Br. at 5-6.  Petitioner argues that at a hearing, he and his former legal counsel would testify that documents from the criminal proceeding demonstrate a vast difference in the amount of restitution owed.  Id.  However, Petitioner has not provided any proof that the restitution amount ordered by the District Court is different than the amount included on the judgment entry.  It is well established that an amount ordered as restitution constitutes proof of the amount of financial loss to a government program.  Yolanda Hamilton, DAB No. 3061 at 12-14 (2022).  The restitution amount used by the IG is the amount ordered by the District

Page 8

Court.  Thus, the financial loss attributed to Petitioner is over 163 times the $50,000 threshold.  Therefore, the IG has established this aggravating factor.

2. The acts that resulted in Petitioner’s conviction, or similar acts, were committed over a period of one year or more.

The second aggravating factor identified by the IG is 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)).  It is undisputed that the acts that resulted in Petitioner’s conviction under Count One occurred from approximately February 2008 to February 2011 and under Count Two occurred from approximately September 2009 to January 2015.  IG Ex. 3 at 9-10.  Participating in criminal activity for over six years is indicative of deliberate participation and is not merely a temporary lapse in judgment.  Petitioner argues that the relevant period of wrongdoing should be calculated as six months, which was “the time during which [he] discovered the wrongdoing but remained at the Pikus Clinics.”  P. Br. at 7; P. Ex. 1.  However, Petitioner provides no corroborating evidence to support his claims.  Therefore, the IG has proven the existence of a second aggravating factor which is significant and supports an enhancement to the mandatory minimum five-year exclusion. 

3. The IG identified one mitigating factor in determining the length of Petitioner’s exclusion.

The regulations provide three mitigating factors that may be considered to reduce an exclusion to no less than five years if aggravating factors are present:  (1) a petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to the program was less than $5,000; (2) the record in the criminal proceedings demonstrates that the court determined that a petitioner had a mental, physical, or emotional condition before or after the commission of the offense that reduced their culpability; and (3) a petitioner’s cooperation with federal or state officials resulted in others being convicted or excluded, additional cases being investigated, or a civil money penalty being imposed.  42 C.F.R. § 1001.102(c).

Here, the IG identified Petitioner’s cooperation with officials that led to the conviction of a co-conspirator as a mitigating factor.  IG Ex. 1.  Petitioner argues that the IG ignores the importance and substance of Petitioner’s cooperation with authorities.  P. Br. at 8.  However, the IG acknowledges Petitioner’s cooperation with authorities and argues that it was considered when determining the length of the exclusion.  IG Br. at 10.

Page 9

3. Based on the two aggravating factors and one mitigating factor, I find that the 24-year exclusion imposed by the IG is unreasonable.

In determining whether the length of exclusion is unreasonable, I must determine whether the length of the exclusion falls into a “reasonable range” based on the evidence submitted.  The regulations provide that the IG’s proposed exclusion must be upheld as long as the length of exclusion is not unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  It is important to note that it is the quality of the aggravating (or mitigating) factors that is most important when considering the length of exclusion and not the sheer number of aggravating (or mitigating) factors that are present in a given case.  The Secretary stated in the preamble to the final rule establishing the exclusion regulations that:

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 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. 3298, 3314-15 (Jan. 29, 1992).

Petitioner argues that he should only be subject to a five-year exclusion due to his “lack of knowledge and involvement” with the Pikus activities.  P. Br. at 4.  Petitioner argues that he resigned within six months of learning about the wrongdoing at the Pikus Clinics. P. Br. at 8.  However, Petitioner has four criminal convictions related to fraudulent schemes that he participated in for over six years.  Though Petitioner focuses on the misdeeds of the Pikus Clinics and argues that his billing credentials were unlawfully used by the Pikus Clinics, I find it very concerning that Petitioner was also convicted for the same fraudulent activity involving Ideal Health, a company that Petitioner incorporated and for which he served as President.  Petitioner seemingly minimizes the conviction regarding Ideal Health, stating that there was only a “vague allegation” that “‘Ideal Health purported to provide physical therapy services to Medicare and Medicaid Beneficiaries.’”  P. Br. at 3 (quoting IG Ex. 3 at 3, the Information).  However, regarding Ideal Health, Petitioner admitted to knowingly and willingly conspiring to execute a scheme to defraud Medicare and Medicaid.  IG Ex. 3 at 10.  This is a significant fact that

Page 10

cannot be ignored.  Even more concerning is that Petitioner willingly participated in the fraudulent conduct for over six years.  This calls into question Petitioner’s integrity and trustworthiness.  The amount of fraud and the length of the fraudulent scheme are significant aggravating factors which justify an exclusion substantially longer than the mandatory minimum.

In addition, Petitioner engaged in a fraudulent billing scheme, along with his co-conspirators, that resulted in the submission of millions of dollars in false and fraudulent claims to Medicare and Medicaid.  IG Ex. 2 at 6.  This is a significant amount of fraud, particularly for programs designed to provide healthcare to some of this country’s most vulnerable populations.  The Board has held that “it is entirely reasonable to consider a program loss amount substantially larger than” the threshold program loss amount to be “an ‘exceptional aggravating factor’ to be accorded significant weight.”  Laura Leyva, DAB No. 2704 at 9-10 (2016).  Petitioner argues that the amount of restitution is in dispute but has not provided evidence to support his argument.  P. Br. at 6.  Therefore, the restitution imposed by the District Court is the proper amount for purposes of this action.

Lastly, Petitioner argues that the IG did not consider the extent of his cooperation with authorities because his cooperation led to Pikus’ conviction and the prosecution of other key participants.  P. Br. at 8.  The IG argues that Petitioner has the burden of proving the mitigating factor and has only provided his own self-serving affidavit which is insufficient proof of cooperation.  IG Reply Br. at 5.  The IG’s response seemingly ignores the evidence provided along with Petitioner’s request for hearing.  There is a letter from Petitioner’s attorney in the criminal case addressed to the District Court indicating that the government filed a 5K1.1 motion based on Petitioner’s cooperation.  DAB E-File Doc. 1b at 12.  In addition, there is an email from an individual at the U.S. Department of Justice indicating that it expected the DOJ’s description of Petitioner’s cooperation to resemble the following:

“[Petitioner] provided extensive information and engaged in numerous consensual recordings at the request of law enforcement.  He also voluntarily provided law enforcement with his cell phone.  [Petitioner’s] information and evidence was critical in the government being able to bring charges against the defendants in U.S. v. Aleksandr Pikus and U.S. v. Wael Bakry.  Although the government chose not to call him to testify at those trials, he was always ready, willing, and prepared to testify, and the government chose not to call him for strategic reasons.  He also provided information that led to the charges of patient recruiter and ambulette company owner [name redacted], who remains a fugitive.”

DAB E-File Doc. 1b at 37.  As stated, a mitigating factor exists if petitioner’s cooperation led to the investigation of others.  Here, the evidence shows that Petitioner’s cooperation

Page 11

was “critical” in allowing the government to “bring charges” against three separate people.  However, the IG only focused on Petitioner’s affidavit and the conviction of one co-conspirator. IG Reply Br. at 2, 4 (“The I.G. applied one mitigating factor, Petitioner’s cooperation with the government in a case in which one co-conspirator referenced by Petitioner, Aleksandr Pikus, was convicted.”); IG Br. at 9.  I find that the IG has not shown proper consideration of Petitioner’s cooperation as a mitigating factor.  Therefore, a reduction in Petitioner’s 24-year exclusion is warranted.  Based on the evidence before me and the presence of one mitigating factor and two aggravating factors, which include a significant amount of restitution and the lengthy duration of the fraudulent activity, I find that a three-year reduction is warranted and that a 21-year exclusion is not unreasonable.

VIII.     Conclusion

For the foregoing reasons, I find that the IG has proven, by a preponderance of the evidence, that Petitioner was convicted of an offense that requires exclusion under section 1128(a)(1) of the Act.  I also find that a 24-year exclusion from participation in Medicare, Medicaid, and all other federal health care programs, is unreasonable in this case based on the presence of two significant aggravating factors and one mitigating factor.  However, a 21-year exclusion shall be imposed based upon the facts and circumstances of this case.