Eduard Noykhovich, DAB No. 3215 (2025)

FINAL DECISION ON REVIEW OF 
ADMINISTRATIVE LAW JUDGE DECISION

Eduard Noykhovich (Petitioner) appeals the decision of an Administrative Law Judge (ALJ), Eduard Noykhovich, DAB CR6728 (2025) (ALJ Decision), affirming the determination of the Inspector General (I.G.) to exclude Petitioner from participation in all federal healthcare programs under section 1128(a)(1) of the Social Security Act (Act).  The ALJ found that the I.G. had a lawful basis to exclude Petitioner based on his felony convictions for healthcare fraud, tax fraud, and money laundering.  However, the ALJ determined the 24-year exclusion imposed by the I.G. was unreasonable based on mitigating and aggravating factors and reduced the exclusion to 21 years.  We affirm the ALJ Decision because it is supported by substantial evidence and not legally erroneous.

Legal Background

Section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)) requires the Secretary of the Department of Health and Human Services (Secretary) to exclude from participation in all federal health care programs any individual who has been “convicted of a criminal offense related to the delivery of an item or service under [Medicare] or under any State health care program.”  As the Act permits, the Secretary delegated the exclusion authority to the I.G., who implemented the exclusion authority in regulations at 42 C.F.R. Part 1001.  Act § 1128A(j)(2); 53 Fed. Reg. 12,993 (Apr. 20, 1988); 48 Fed. Reg. 21,662 (May 13, 1983); see 42 C.F.R. § 1001.1, 1001.101(a) (implementing the exclusion authority at Act § 1128(a)(1)).  Those regulations apply to and bind the I.G. in imposing exclusions, and they also apply to and bind ALJs and the Departmental Appeals Board (Board) in reviewing exclusions the I.G. imposes.  42 C.F.R. § 1001.1(b).

Exclusions imposed under section 1128(a) are referred to as “mandatory” exclusions.  The mandatory minimum period of exclusion imposed under section 1128(a) is five years.  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).  The I.G. may consider certain factors “to be aggravating and a basis for lengthening the period of exclusion” beyond the statutory minimum, including, as relevant here:

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(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.  (The entire amount of financial loss to such government agencies or programs or to other entities, including any amounts resulting from similar acts not adjudicated, will be considered regardless of whether full or partial restitution has been made);

(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)(1), (2).

If any aggravating factor applies to lengthen the five-year exclusion period, then the three mitigating factors in 42 C.F.R. § 1001.102(c) — and only those mitigating factors — may be applied as a basis for reducing the exclusion period to no less than five years.  The only mitigating factor relevant here is that “[t]he individual’s … cooperation with Federal or State officials resulted in … [o]thers being convicted or excluded from Medicare, Medicaid and all other Federal health care programs, [or] [a]dditional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses.”  Id. § 1001.102(c)(3)(i)-(ii).

If the I.G. determines exclusion is warranted, the I.G. will send written notice to the excluded individual or entity identifying, among other things, the basis for the exclusion, the length of the exclusion, and the factors, if any, that the I.G. considered in determining the length of the exclusion period.  Id. § 1001.2002(a), (c).  An excluded individual may request a hearing before an ALJ, but only on the issues of: (i) whether the I.G. had a basis for the exclusion; and (ii) whether an exclusion longer than the required minimum period is “unreasonable.”  Id. §§ 1001.2007(a)(1), 1005.2(a).  The ALJ issues an “initial decision” based on the record developed before the ALJ.  Id. § 1005.20(a).  When an exclusion is based on a criminal conviction, the basis for the underlying conviction is not reviewable or subject to collateral attack in the administrative appeal.  Id. § 1001.2007(d).  A party dissatisfied with an ALJ decision may appeal the decision to the Board.  Id. § 1005.21(a).  The Board “will not consider any issue not raised in the parties’ briefs, nor any issue in the briefs that could have been raised before the ALJ but was not.”  Id. § 1005.21(e).  The Board may, among other actions, affirm, reverse, or remand any exclusion determined by the ALJ.  Id. § 1005.21(g).

Case Background

Petitioner was a licensed physical therapist who incorporated Ideal Health in September 2009, serving as its President from September 2009 until January 2015.  I.G. Ex. 3, at 3-4, ALJ Decision at 4.  Petitioner also worked as a licensed physical therapist at 

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Bensonhurst Mega Medical Care PC and Prime Care on the Bay, LLC (“Pikus Clinics”) from September 2010 until January 2014.  Petitioner (P.) Ex. 1, at 2; ALJ Decision at 3.

Petitioner was charged by Information in the Eastern District of New York with two counts of Conspiracy to Commit Healthcare Fraud in violation of 18 U.S.C. § 1349 (one count for the Pikus Clinics and one for Ideal Health); one count of Money Laundering Conspiracy in violation of 18 U.S.C. § 1956(h); and one count of Subscribing to False and Fraudulent Tax Returns in violation of 26 U.S.C. § 7206(1).  I.G. Ex. 3; ALJ Decision at 3.  The charges stemmed from submission of false and fraudulent claims to Medicare and Medicaid by Petitioner and the clinics.  Id.  On April 24, 2015, Petitioner pled guilty to all four counts and entered into a cooperation agreement.  I.G. Ex. 4; ALJ Decision at 4.  On July 19, 2024, the District Court accepted Petitioner’s guilty plea and sentenced him to one year probation on each count, to run concurrently, and ordered him to pay $7,667,682.97 to the Centers for Medicare & Medicaid Services and $503,591 to the IRS in restitution.  I.G. Ex. 2, at 6; ALJ Decision at 4.

By letter dated November 29, 2024, the I.G. notified Petitioner that he was being excluded from participation in all Federal health care programs for a minimum period of 24 years.  I.G. Ex. 1, at 1; ALJ Decision at 1-2.  The I.G. extended the exclusion period due to two aggravating factors: financial loss to a government agency of greater than $50,000 (“The court ordered [Petitioner] to pay approximately $8,171,200 [in] restitution,”); and acts resulting in the conviction having been committed over a period of one year or more (“The acts occurred from about September 2009 to about January 2015”).  I.G. Ex. 1, at 1.  The I.G. also considered one mitigating factor, Petitioner’s “cooperation with Federal or State officials resulted in others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs . . . under 42 C.F.R. part 1003.”  Id.

ALJ Proceedings and Decision

Petitioner timely requested ALJ review of the I.G. exclusion determination.  Request for Hearing (RFH), ALJ Decision at 2.  The parties timely filed briefs.  Id.  Neither party objected to the other’s evidence, and the ALJ admitted all offered evidence into the record.  Id.

Petitioner did not dispute before the ALJ that he “was convicted of a criminal offense which is subject to an exclusion,” but argued that “the duration of the exclusion is unreasonable” given the “mitigating factors in this case.”  P. ALJ Br. at 1.  Petitioner contended “the length of the exclusion of twenty-four years is unreasonable under the circumstances” and either “no period” or a “period of five years is warranted.”  Id. at 8.

The I.G. argued that it had a basis for excluding Petitioner on his July 19, 2024 conviction of a “criminal offense related to the delivery of an item or service under” 42 

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U.S.C. § 1320a-7(a)(1).  I.G. ALJ Br. at 2, 5-6.  The I.G. argued that an exclusion beyond the mandatory five-year minimum was warranted because the District Court ordered restitution in excess of $50,000 and because Petitioner engaged in the conduct leading to the conviction for more than one year.  Id. at 8-9.  The I.G. also applied one mitigating factor, Petitioner’s cooperation with authorities that led to a conviction of one co-conspirator on April 17, 2024.  Id. at 9-10.

The ALJ found that the I.G. had a legal basis to exclude Petitioner because Petitioner pled guilty to and “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.”  ALJ Decision at 5-7.  The ALJ found that “Petitioner’s arguments to the contrary amount to a collateral attack on his convictions, which is not permitted in this forum.”  Id. at 7. (citing 42 C.F.R. § 1001.2007(d)).  The ALJ also found the I.G. proved two aggravating factors:  that “Petitioner admitted to knowingly and willingly conspiring to execute a scheme to defraud Medicare and Medicaid . . . for over six years” and “[t]he amount of fraud and the length of the fraudulent scheme are significant aggravating factors which justify an exclusion substantially longer than the mandatory minimum.”  Id. at 9-10.

The ALJ found one mitigating factor in Petitioner’s cooperation with authorities but that “the I.G. has not shown proper consideration of Petitioner’s cooperation as a mitigating factor.”  Id. at 11.  The ALJ noted the “evidence shows that Petitioner’s cooperation was ‘critical’ in allowing the government to ‘bring charges’ against three separate people.  However, the I.G. only focused on Petitioner’s affidavit and the conviction of one co-conspirator.”  Id.  The ALJ found “that a three-year reduction is warranted and that a 21-year exclusion is not unreasonable.”  Id.

Petitioner timely requested review of the ALJ Decision.

Board Proceedings

Before the Board, Petitioner again “do[es] not dispute that there must be a period of exclusion given [his] conviction,” but alleges that the ALJ failed to properly weigh the aggravating and mitigating factors and requests an exclusion no longer than the five-year minimum.  Notice of Appeal at 1 (NA).  Petitioner alleges the ALJ’s reduction of the period of exclusion from 24 years to 21 years is insufficient, amounting to “effectively no difference.”  Id. at 2.  Petitioner claims that even the 21-year exclusion the ALJ upheld  “will serve as an obstacle to [Petitioner’s]’s ability to practice and provide for his family.”  Id. at 2.  Petitioner argues that the ALJ “incorrectly placed undue weigh on . . . (1) [t]he unjust enrichment amount; (2) Ideal Health; and (3) [t]he alleged length of conduct.”  Id.  Petitioner also argues that the ALJ failed to adequately consider Petitioner’s assistance in the conviction of his co-conspirators.  Id.

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As to the “unjust enrichment amount,” Petitioner argues that the amount of restitution the District Court ordered “encompasses the total amount [] billed to Medicare for the underlying claims at issue, not what was actually realized or paid by Medicare to [Petitioner],” noting that Medicare often pays a lower amount than what is billed based on its own fee schedule.  Id.  Moreover, Petitioner argues that “it cannot be determined, based on the facts at hand, that Petitioner’s acts caused a financial loss to the government of more than $50,000,” because authorities asked Petitioner to continue billing and submitting claims during their investigation.  Id. at 2-3.  Petitioner also argues that his involvement with Ideal Health was limited to incorporating it and serving as its President and that he was unaware that “the Pikus Defendants[] wrongfully controlled Ideal Health . . . to perpetrate their fraudulent activities.”  Id. at 3.  As to the alleged length of conduct, Petitioner argues it should be limited to six months, as he resigned within six months after discovering the wrongful conduct in 2015 and that it is “unfair to conflate the length of conduct by the Pikus defendants and [Petitioner].”  Id. at 4.  

Concerning the sole mitigating factor, Petitioner argues that the ALJ failed to consider the “importance and substance of [Petitioner]’s cooperation as related to the length of the alleged conduct,” and that it led to “essential material information in two cases . . . [and] the prosecution and conviction of [the Pikus defendants].”  Id. at 4-5.

The I.G. argues in response that the ALJ Decision to reduce the exclusion period from 24 to 21 years is supported by substantial evidence and not legally erroneous.  I.G Response (Resp.) at 1.  The I.G. notes that the Board “has held that restitution is a reasonable measure of financial loss.”  Id. at 8 (citing cases).  The I.G. asserts that Petitioner misconstrues 42 C.F.R. § 1001.102(b)(1) by arguing that financial loss should be the amount he was “unjustly enriched.”  Id.  The I.G. also notes that Petitioner’s guilty plea and “the criminal record establishes [Petitioner’s] acts lasted for more than a year and lasted for over six years.”  Id. at 9.  The I.G. argues that Petitioner’s assertions regarding both the amount of the loss to a government program and the extent of his involvement in Ideal Health amount to impermissible collateral attacks on Petitioner’s conviction.  Id. at 8, 10.  The I.G. disagrees with Petitioner’s argument that, “due to his cooperation, the minimum period of exclusion should apply,” positing that “decreasing the exclusion period to the mandatory minimum would completely negate the consideration of the two substantial aggravating factors.”  Id. at 13.  The I.G. argues that the ALJ correctly weighed the aggravating and mitigating factors in determining the length of the exclusion period.  Id.

Standard of Review

The Board reviews a disputed issue of fact as to whether the ALJ’s decision is “supported by substantial evidence on the whole record.”  42 C.F.R. § 1005.21(h).  The Board reviews a disputed issue of law as to whether the ALJ’s decision is “erroneous.”  Id.

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Analysis

I. The ALJ properly found that Petitioner was convicted of a criminal offense related to the delivery of an item or service under Medicare and is subject to a minimum five-year mandatory exclusion from all federal health care programs.

An individual or entity is considered to have been convicted of a criminal offense under the Act when “a plea of guilty or nolo contendere . . . 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”).  Petitioner acknowledges that he pled guilty to the Counts alleged in the Information, and the ALJ noted that it was “undisputed that the District Court accepted Petitioner’s guilty plea and adjudicated him guilty on July 19, 2024.”  NA at 3; ALJ Decision at 5.  “Therefore,” the ALJ correctly determined, “the evidence proves that the IG has a legal basis to impose an exclusion against Petitioner” under section 1128(a)(1) of the Act, and “[e]xclusions imposed under section 1128(a)(1) carry a five-year mandatory minimum exclusion period.”  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).

II. The ALJ properly found aggravating and mitigating factors.

A. The ALJ properly found financial loss to a government program of more than $50,000.

On appeal, Petitioner does not dispute that the District Court ordered restitution in the amount of $8,171,273.97 to the Center for Medicare & Medicaid Services and the IRS but argues that the ALJ should have instead considered the amount actually fraudulently billed to or paid by Medicare.  NA at 2.  Alternatively, Petitioner argues that “it is extremely likely that a portion of the loss amount may also” have included claims filed during the time Petitioner was cooperating with authorities, although he provided no evidence to support this claim.  NA at 3.

An amount ordered in restitution is a reasonable measure of the loss to a government program.  Yolanda Hamilton, M.D., DAB No. 3061 at 13 (2022), Laura Leyva, DAB No. 2704 at 9-10 (2016) (“The amount of restitution is considered a reasonable valuation of financial losses of the program.”).  While Petitioner argues that a different amount should apply, Petitioner provided no evidence before the ALJ or the Board to support that claim absent Petitioner’s own Affirmation in the ALJ proceedings stating that he had “seen documents listing” restitution amounts to various state and federal agencies including $2,051,736.39; $930,949.49; $1,129,004.50; and $503,591 to the IRS.  Pet. Ex. 1 at 4.  Petitioner’s argument that “it is common practice for healthcare practitioners to bill a certain amount to Medicare for services rendered with the knowledge that Medicare may reduce the amount of the claim and pay it according to its own fee schedule,” absent 

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further evidence, is unpersuasive.  Id., see also NA at 2-3.  Even if we were to accept any of Petitioner’s alternative amounts as to the appropriate amount of restitution, all are well above the $50,000 threshold to establish an aggravating factor.  Thus, the ALJ properly found that Petitioner’s acts resulting in his conviction caused a financial loss to a government agency or program of more than $50,000 and establish the aggravating factor.

B. The ALJ properly found that Petitioner’s conduct took place over the course of more than one year.

Petitioner argues on appeal that the ALJ “placed undue weight on the alleged six years length of conduct,” and “the length of conduct alleged, specifically six years, is misleading and reflects the time attributable to the wrongdoing [of the Pikus defendants], and not [Petitioner].”  NA at 3, 4.  Petitioner asserts on appeal that the length of conduct the ALJ should have considered is the six months between when Petitioner learned of the fraudulent conduct and his resignation.  Id. at 4.

The ALJ considered Petitioner’s argument that the length of the considered conduct should be six months, not six years, but found that Petitioner provided “no corroborating evidence to support his claims” and that “the I.G. has proven the existence of a second aggravating factor which is significant and supports an enhancement to the mandatory minimum five-year exclusion.”  ALJ Decision at 8.

We see no error in the ALJ’s analysis.  It is undisputed that Petitioner pled guilty to Counts One and Two of the Information indicating conduct that took place over six years, through about January 2015.  Petitioner argues on appeal that he was employed by the Pikus clinics for a period of time after 2015 under his cooperation with authorities and that he should not be liable for the conduct during his time of cooperation.  However, the I.G. exclusion letter makes clear that the exclusion is based on conduct from “about September 2009 to about January 2015,” the time period for which Petitioner pled guilty and was convicted.  I.G. Ex. 1, at 1.  Petitioner provides no evidence that the exclusion was based on any subsequent period of time during his cooperation with authorities, and the ALJ explicitly considered the period 2008 through 2015.  ALJ Decision at 8.

The ALJ correctly noted that “the 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 pled guilty to charges spanning over six years of conduct.  Therefore, the ALJ properly found the length of conduct to be a substantial aggravating factor.

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C. The ALJ properly found a mitigating factor in Petitioner’s cooperation with authorities.

The ALJ properly found that Petitioner’s cooperation with authorities is a mitigating factor under 42 C.F.R. 1001.102(c)(3) (If any aggravating factors exist that justify an exclusion longer than five years, a mitigating factor may include “[t]he individual’s or entity’s cooperation with Federal or State officials result[ing] in--  (1) Others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs, (ii) Additional cases being investigated.”).  It is undisputed that Petitioner’s cooperation with authorities resulted in the prosecution and conviction of at least one defendant (Aleksandr Pikus), as the I.G. acknowledges.  Resp. at 12.  Therefore, the ALJ properly found cooperation with authorities resulting in a conviction as a mitigating factor.

III. The ALJ’s analysis of the aggravating and mitigating factors and reduction of the exclusion from 24 to 21 years is supported by substantial evidence and not legally erroneous.

When analyzing the duration of an exclusion longer than the five-year statutory minimum, the ALJ’s role 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.”  Rosa Velia Serrano, DAB No. 2923, at 8 (2019) (quoting Sushil Aniruddh Sheth, M.D., 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, but rather on a case-specific determination of the weight to be accorded each factor based on a qualitative assessment of the circumstances surrounding the factors in that case.’”  Kimberly Jones, DAB No. 3033, at 7 (2021) (quoting Sheth at 5).  The I.G. has “broad discretion” in determining an exclusion length, based on the I.G.’s “vast experience” in implementing exclusions. Janice Cassandra Wrenn, DAB No. 3118, at 14 (2023) (citing 57 Fed. Reg. 3,298, 3,321 (Jan. 29, 1992)).  An ALJ, or the Board, “may not substitute [its] judgment for that of the I.G. or determine a ‘better’ exclusion period.”  Jones at 8 (quoting Sheth at 5).

Here, the ALJ fully analyzed the aggravating and mitigating factors and determined that a 24-year exclusion was unreasonable.  ALJ Decision at 9-11.  Taking into consideration both the aggravating and mitigating factors, the ALJ noted that while Petitioner consistently focused on the Pikus defendants and their behavior, “Petitioner was also convicted for the same fraudulent activity involving Ideal Health, a company that Petitioner incorporated and for which he served as President,” and for which he “admitted to knowingly and willingly conspiring to execute a scheme to defraud Medicare and Medicaid.”  Id. at 9.  The ALJ also noted the “significant amount of fraud,” and acknowledged Petitioner’s argument “that the amount of restitution is in dispute,” but noted that Petitioner provided no evidence to support his assertion that a lower restitution 

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amount is appropriate.  Id. at 10.  We find that the ALJ fully considered Petitioner’s arguments and evidence related to the mitigating factor of his cooperation with authorities in finding that Petitioner’s evidence showed his cooperation was instrumental “in allowing the government to ‘bring charges’ against three separate people,” whereas “the I.G. only focused on Petitioner’s affidavit and the conviction of one co-conspirator.”  Id. at 11.  The ALJ found that the I.G.’s exclusion was unreasonable in light of the mitigating factor and reduced the exclusion by three years.  Id.

Before the Board, Petitioner largely repeats his arguments before the ALJ that the length of conduct and amount of restitution the ALJ found are incorrect and posits that the ALJ failed to attribute sufficient weight to his cooperation with authorities, but we disagree.  In finding the aggravating factors in this case, the ALJ appropriately relied on Petitioner’s criminal conviction in the District Court of acts to which he admitted and pled guilty and the resulting award of restitution.  Moreover, the ALJ gave significant weight to Petitioner’s cooperation with authorities as a mitigating factor in reducing the period of exclusion.  To the extent Petitioner argues that a 21-year exclusion negatively affects his livelihood, NA at 2, “[t]he practical consequences to the excluded individual or entity are not mitigating factors for consideration,” Jeremy Robinson, DAB No. 1905, at 5 (2004).  Therefore, we cannot conclude that the ALJ erred in determining to reduce the 24-year exclusion by three years and upholding an exclusion period of 21 years.  We conclude that the ALJ Decision is supported by substantial evidence and free of legal error.

Conclusion

We affirm the ALJ Decision.