Elizabeth A. Holmes, DAB No. 3222 (2026)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Elizabeth A. Holmes (Petitioner) appeals an April 25, 2025 Administrative Law Judge (ALJ) decision captioned Elizabeth A. Holmes, DAB CR6674 (2025) (ALJ Decision).  The ALJ Decision upheld the determination of the Inspector General (I.G.) to exclude Petitioner from participation in Medicare, Medicaid, and all federal health care programs for 90 years under section 1128(a)(3) of the Social Security Act (Act).1  We affirm the ALJ Decision for the reasons stated below.

Legal Background

Section 1128(a) of the Act requires the Secretary of the Department of Health and Human Services (Secretary) to exclude certain categories of individuals from participation in all federal health care programs.  As relevant here, section 1128(a)(3) of the Act mandates the exclusion of any individual convicted under federal or state law "of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct" if the offense was "in connection with the delivery of a health care item or service."  Act § 1128(a)(3); see also 42 C.F.R. § 1001.101(c) (implementing section 1128(a)(3)).  The offense also must have occurred after August 21, 1996, the date of the enactment of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public Law 104-191.  Act § 1128(a)(3); 42 C.F.R. § 1001.101(c).

The Secretary has delegated enforcement of section 1128 of the Act to the I.G., which has implemented section 1128(a)(3) through a regulation stating the I.G. "will exclude any individual" who:

(c)     Has been convicted, under Federal or State law, of a felony that occurred after August 21, 1996, relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct—

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(1)  In connection with the delivery of a health care item or service, including the performance of management or administrative services relating to the delivery of such items or services[.]

42 C.F.R. § 1001.101(c)(1).

The minimum exclusion period under section 1128(a)(3) of the Act "shall be not less than five years," and the exclusion period may exceed five years if any regulation-specified aggravating factor is present.  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a)-(b).  If the I.G. determines that one or more aggravating factors justify exclusion for more than five years, the I.G. may consider reducing the exclusion period based on only three specified mitigating factors, and may not reduce it to less than five years.  42 C.F.R. § 1001.102(c).

An excluded individual may request a hearing before an ALJ on only two issues:  whether the I.G. had a basis for imposing the exclusion and whether "the length of exclusion is unreasonable."  42 C.F.R. §§ 1005.2(a), 1001.2007(a)(1).  A party dissatisfied with the ALJ's decision may appeal it to the Board.  Id. § 1005.21(a).

Case Background2

I.    Petitioner and Theranos, Inc.

In 2003, Petitioner founded a company based in California called Theranos, Inc., and she worked there as chief executive officer (CEO) through 2018.  ALJ Decision at 4; I.G. Ex. 2, at 2; P. Ex. 1, at 224; P. Ex. 32, at 2.  The company's primary goal was to improve and lower the cost of medical laboratory testing through innovations in drawing, testing, and interpreting blood samples.  ALJ Decision at 4; I.G. Ex. 2, at 3.  From 2009 through 2016 Petitioner employed Ramesh "Sunny" Balwani in senior corporate positions including President and Chief Operating Officer.  ALJ Decision at 4; I.G. Ex. 2, at 2; P. Ex. 4, at 165; P. Ex. 44, at 2.  Petitioner and Balwani had an "on and off" romantic relationship and lived together from 2005 to 2016.  P. Ex. 5, at 121.

In 2010, Theranos entered into Master Purchase Agreements with two large retailers:  Walgreen Co. (Walgreens), a national pharmacy chain, and Safeway, Inc. (Safeway), a supermarket chain operational in many states.  P. Exs. 24, 27; P. Ex. 32, at 2; I.G. Ex. 11, at 165.  A primary objective of the agreements was to introduce a "blood testing service" in Walgreens and Safeway stores "nationwide."  P. Ex. 24, at 3; P. Ex. 27, at 4.  In 2013, Theranos, in partnership with Walgreens, opened "Wellness Centers" in Walgreens retail

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locations in Palo Alto, California, and Phoenix and Scottsdale, Arizona, where the public could receive blood testing.  ALJ Decision at 4; I.G. Ex. 2, at 4-5; P. Ex. 32, at 1-2.  At the time, Walgreens was "the nation's largest drugstore chain with fiscal 2013 sales of $72 billion" and "8,131 drugstores in all 50 states."  P. Ex. 32, at 3.

II.    Petitioner's Indictment and Criminal Trial

In June 2018, in the United States District Court for the Northern District of California (District Court), a grand jury indicted Petitioner and Balwani under 18 U.S.C. §§ 1343 and 1349 for wire fraud and conspiracy to commit wire fraud.  ALJ Decision at 5; P. Ex. 42.  On July 28, 2020, the grand jury returned a twelve-count Third Superseding Indictment (TSI) against Petitioner and Balwani.  ALJ Decision at 5; I.G. Ex. 2.  Two counts charged Petitioner and Balwani under section 1349 with conspiracy to commit wire fraud involving investors in Theranos (Count 1) and physician referrals (Count 2).  ALJ Decision at 5; I.G. Ex. 2, at 9.  Ten counts charged Petitioner and Balwani under section 1343 with wire fraud involving Theranos investors (Counts 3 through 8) and patients and physicians (Counts 9 through 12).  ALJ Decision at 5; I.G. Ex. 2, at 10-11.  The District Court severed Balwani's and Petitioner's criminal trials.  ALJ Decision at 6; I.G. Ex. 6, at 2; P. Exs. 44-45.

Petitioner's jury trial lasted over three months, addressed evidence consisting of over 900 exhibits and testimony from 32 witnesses, and resulted in her conviction.  ALJ Decision at 6; I.G. Ex. 5, at 1; P. Ex. 47, at 1; I.G. Ex. 9, at 20.  On January 3, 2022, the jury found her guilty on four Counts (1, 6, 7, and 8) of the TSI, found her not guilty on four Counts (2, 10, 11, and 12), and rendered no verdict on the remaining four Counts (3, 4, 5, and 9).  ALJ Decision at 6-7; I.G. Ex. 3.  After a sentencing hearing in November 2022, the District Court in January 2023 sentenced Petitioner to 135 months of imprisonment, with three years of supervised release, and entered judgment against her.  ALJ Decision at 7; I.G. Ex. 4; I.G. Ex. 5, at 2; I.G. Ex. 10, at 1, 22; P. Ex. 48, at 133.  After a restitution hearing, the District Court on May 16, 2023, ordered that Petitioner and Balwani (who was separately convicted of all 12 counts in the TSI and sentenced to 155 months of imprisonment) were jointly and severally liable to pay specified investor victims $452,047,268 in restitution.  ALJ Decision at 7; I.G. Ex. 6, at 1-2, 17-18.

On May 30, 2023, the District Court entered an amended judgment, which:  confirmed Petitioner was adjudicated guilty of Counts 1, 6, 7, and 8 of the TSI but not guilty of Counts 2, 10, 11 and 12; dismissed Counts 3, 4, 5, and 9;3 and ordered $452,047,268 in

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restitution.  ALJ Decision at 7; I.G. Ex. 5, at 1, 5-6.  Petitioner appealed to the United States Court of Appeals for the Ninth Circuit.  ALJ Decision at 7; P. Exs. 12-14, 49.

III.    The I.G.'s Exclusion of Petitioner

On October 26, 2023, the I.G. informed Petitioner by letter of the I.G.'s intent to exclude her under section 1128(a) of the Act from participation in all federal health care programs based on her criminal conviction in the District Court.  I.G. Ex. 7; ALJ Decision at 2.  Petitioner filed a response, which the I.G. acknowledged before imposing the exclusion.  I.G. Ex. 8; ALJ Decision at 2.

On December 29, 2023, the I.G. informed Petitioner of her exclusion "under section 1128(a)(3) of the Act," due to her felony conviction "of a criminal offense related to fraud . . . in connection with the delivery of a health care item or service."  I.G. Ex. 1, at 1; see ALJ Decision at 2.  The I.G. extended the exclusion beyond the five-year minimum, to 90 years, based on evidence of four aggravating factors.  I.G. Ex. 1, at 1; ALJ Decision at 2.

IV.    The ALJ Proceedings

Petitioner requested an ALJ hearing.  ALJ Decision at 3.  The I.G. filed briefing and 13 proposed exhibits.  ALJ Decision at 3.  Petitioner filed briefing and 49 proposed exhibits.  Id.  The ALJ admitted all proposed exhibits into the record, without objection.  Id.  Petitioner argued that (i) her crime was unrelated to the delivery of health care items or services, and (ii) the aggravating factors the I.G. applied did not support a 90-year exclusion.  Id. at 1-2.  Petitioner also asserted "two mitigating factors:  1) a mental or emotional condition that reduced her culpability; and 2) cooperation with law enforcement authorities."  Id. at 22.

On February 24, 2025, while the case was pending before the ALJ, the Ninth Circuit affirmed Petitioner's conviction, sentence, and restitution obligation.  ALJ Decision at 7-8; United States v. Holmes, 129 F.4th 636 (9th Cir. 2025), amended and superseded on denial of reh'g, 2025 WL 3763250 (9th Cir. Dec. 22, 2025).4  The I.G. submitted the original Ninth Circuit opinion (129 F.4th 636) to the ALJ, who admitted it into evidence.  ALJ Decision at 3.

On April 25, 2025, the ALJ issued a decision based on the written record, as neither party had offered witnesses or considered an evidentiary hearing to be necessary.  ALJ Decision at 3.  The ALJ affirmed the I.G.'s determination to exclude Petitioner and upheld the 90-year exclusion length.  Id. at 2.

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The ALJ Decision distills the evidentiary record into six sets of factual findings.  First, in 2003 Petitioner founded Theranos to improve the results and reduce the costs of laboratory blood tests, in 2009 Balwani began holding high positions in Theranos, and by 2013 Theranos publicly stated it had developed proprietary equipment that could accomplish most blood tests using only drops of blood.  ALJ Decision at 4.  Second, a federal grand jury charged Petitioner and Balwani with two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.  Id. at 5.  Third, a jury found Petitioner guilty of one count of conspiracy to commit wire fraud and three counts of wire fraud involving Theranos investors, and the District Court entered a judgment of conviction against her.  Id. at 6.  Fourth, the District Court sentenced her to 135 months of incarceration.  Id. at 7.  Fifth, the District Court ordered her to pay restitution totaling $452,047,268 to 12 Theranos investors.  Id.  Sixth, the Ninth Circuit affirmed Petitioner's conviction, sentence, and restitution obligation.  Id.

Based on those findings, the ALJ reached six primary legal conclusions.  First, Petitioner is subject to exclusion under section 1128(a)(3) of the Act "because she was convicted of a felony offense related to fraud in connection with the delivery of a health care item or service."  ALJ Decision at 8.  Second, Petitioner "must be excluded from participation in all federal health care programs for a minimum of five years."  Id. at 18.  Third, the I.G. "has proven the existence of four aggravating factors," in 42 C.F.R. § 1001.102(b)(1)-(3) and (5), which "justify a length of exclusion beyond the minimum five-year requirement."  Id. at 18-22.  Fourth, Petitioner "did not prove the existence of any mitigating factors to reduce the length of exclusion."  Id. at 22.  Fifth, Petitioner's 90-year exclusion "is not prohibited by the applicable statute and is permitted under the Secretary's regulations."  Id. at 25.  Sixth, the 90-year exclusion "is not unreasonable based on a qualitative analysis of the aggravating factors in this case."  Id. at 27.

V.    Board Proceedings

After seeking and receiving an extension of time, Petitioner filed with the Board a Notice of Appeal (NA) from the ALJ Decision.  The I.G. filed a brief in opposition (I.G. Br.).  Issues arose concerning service of filings on Petitioner due to her incarceration in a federal prison camp and lack of access to electronic filing through the Board's electronic filing system.  After the I.G. filed its brief, Petitioner filed a reply (labeled a "Sur-reply") that raised substantive arguments but also requested the I.G.'s "complete filing," including "any Exhibit list, enclosures, or Certificate of Service."  P. Reply at 2.

The I.G. requested a status conference "to clarify the record" as to "whether service has actually been effective" on Petitioner and establishing "requirements for future service."  I.G.'s Mot. to Set Status Conference at 1-2.  The requested conference took place by telephone on October 23, 2025, with both parties present.  The next day, the Presiding Board Member issued an order confirming the mutually agreed arrangements among the parties and the Board for effecting service to and from Petitioner.  Order Summarizing

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Status Conference at 2-4.  The order also permitted Petitioner to file a supplemental reply brief, including "any request for the Board to consider new evidence," within 21 days of receipt of the I.G.'s re-served brief.  Id. at 3.  Petitioner's Correctional Counselor at Bryan FPC confirmed by email dated October 28, 2025, that Petitioner had received the I.G.'s response brief and attachments.  See DAB E-File Docket Entry No. 25.  Therefore, any supplemental reply by Petitioner, including any request to submit new evidence, was due no later than November 18, 2025.  The Board received no such filing and on December 11, 2025, notified the parties that the record was closed.

On December 22, 2025, the Ninth Circuit issued an amended opinion after denial of rehearing, which reaffirmed Petitioner's conviction, sentence, and restitution obligation.  See 2025 WL 3763250, at **7-20 (rejecting Petitioner's and Balwani's conviction challenges); id. at *21 ("[W]e affirm Defendants' sentences."); id. at *24 (affirming District Court's "restitution order in its entirety").

On January 12, 2026, the Board received by United States mail a letter from Petitioner bearing a date of December 15, 2026, and postmarked December 17, 2026.  Petitioner's letter claims she has "been repeatedly denied the ability to speak with" her criminal-case counsel "to compile the content and new evidence for the sur-reply" and asks that the Board "not send further correspondence electronically through this prison" due to alleged problems with obtaining "copies of the emails."  DAB E-File Docket Entry No. 29, at 1-2.

However, Petitioner's letter does not request additional time to file a supplemental reply, and even if the letter contained such a request, Petitioner has not shown good cause for granting it or further delaying issuance of this Decision.  The Board "may," not must, "permit the parties to file reply briefs," and the Board already has permitted Petitioner to file a reply brief dated October 1, 2025.  See 42 C.F.R. § 1005.21(c); see also id. § 1005.21(i) (referencing "reply briefs, if permitted").  If Petitioner wished to file a supplemental reply brief, she was on notice that she must do so within 21 days of receipt of the I.G.'s re-served brief.  Petitioner has never denied receiving that brief, has never claimed receipt of it on any date other than October 28, 2025, and has never submitted a timely request for further time before her 21-day window for filing a supplemental reply brief closed on November 18, 2025.  The Board therefore has proceeded to issue its Decision "[w]ithin 60 days after the time for submission of briefs and reply briefs, if permitted, has expired."  42 C.F.R. § 1005.21(i).

Standard of Review

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

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Analysis

Petitioner argues that "[t]he legality of this exclusion rises and falls on the Agency's interpretation of the 'in connection with the delivery of health care services' language" in section 1128(a)(3) of the Act.  NA at 2.  Petitioner further asserts:  that "[e]very case upholding Agency interpretation of the statute rests on Chevron deference"; that "Congress did not intend HHS reach findings that diverge from juries['] verdicts in federal court"; that "[i]mposition of a lifetime bar is unlawful"; and that "[t]he exclusion should be overturned."  NA at 3, 7, 8, 10 (referencing Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, reh'g denied, 468 U.S. 1227 (1984)).

Petitioner has preserved no other issues for review, despite claiming that she "preserves the other arguments made in her appeal before the ALJ, and the due process arguments raised" in that proceeding.  NA at 10.  Any such arguments not specifically briefed before the Board are not preserved.  42 C.F.R. § 1005.21(c), (e) ("A notice of appeal will be accompanied by a written brief specifying exceptions to the initial decision and reasons supporting the exceptions," and the Board "will not consider any issue not raised in the parties' briefs."); see also Guidelines – Appellate Review of Decisions of Administrative Law Judges in Cases to Which Procedures in 42 C.F.R. Part 1005 Apply, "Additional Rules Applicable to Both Electronic and Non-Electronic Filing," ¶ (c) (last visited Jan. 13, 2026), https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/procedures/index.html?language=en ("A submission (including the notice of appeal) may not incorporate by reference a brief or parts of a brief previously submitted to the ALJ.").

The I.G. asks the Board to affirm the ALJ Decision because it "is supported by substantial evidence on the whole record and free of legal error."  I.G. Br. at 1.  The I.G. argues that Petitioner's assertions that exclusion was not required "are unsupported by the law or the facts."  Id. at 4.  The I.G. states that the "90-year exclusion period is reasonable as it is based upon an appropriate analysis and weighing of the aggravating factors as applied to [Petitioner's] particular case" and is consistent with "the statutory purpose of protecting Federal health care programs and their beneficiaries."  Id. at 9.

1. The ALJ did not err in upholding Petitioner's exclusion under section 1128(a)(3) of the Act because Petitioner was convicted of felony wire fraud and conspiracy to commit wire fraud "in connection with the delivery of a health care item or service."

For Petitioner's exclusion to be lawful, her conviction must have been for an offense which:  "occurred after August 21, 1996," was "in connection with the delivery of a health care item or service," and consisted "of a felony relating to fraud . . . or other financial misconduct."  Act § 1128(a)(3); see also 42 C.F.R. § 1001.101(c)(1).

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Petitioner does not dispute before the Board that, as the Act requires and as the ALJ determined, her felony conviction for wire fraud and conspiracy to commit wire fraud occurred after August 21, 1996, and related to fraud.  See ALJ Decision at 8-10.  We therefore uphold those determinations by the ALJ without further discussion.

Petitioner denies that her conviction was for any offense "in connection with the delivery of healthcare services" and that section 1128(a)(3) of the Act focuses on "fraud in the delivery of healthcare services."  NA at 2.  For reasons explained below, Petitioner's position is incorrect.

1. Substantial evidence supports the ALJ's determination that the I.G. had a legitimate basis for excluding Petitioner under section 1128(a)(3).

Petitioner raises several arguments as to why her conviction was not in connection with the delivery of a health care item or service.  Petitioner asserts that "the indictment explicitly distinguished the delivery of healthcare services" from "investment into" developing Theranos's "business and intellectual property," and the jury acquitted her "on every count associated with the delivery of healthcare services."  NA at 7; see also P. Reply at 2.  She claims that "[t]he mixed verdict in this case demonstrates the jury explicitly deliberated on the distinction between investor fraud and fraud in connection with the delivery of a healthcare service," and "unanimously found no fraud in connection with the delivery of a healthcare service."  NA at 8.  She contends that "statements to venture capital investors investing in the development of novel intellectual property is distinct from the delivery of healthcare services."  P. Reply at 2.

We reject Petitioner's arguments because an offense is "in connection with the delivery of a health care item or service" under section 1128(a)(3) of the Act if there is a "common sense connection or nexus" between the offense and the delivery of a health care item or service.  Kevin J. Bowers, DAB No. 2143, at 4 (2008), aff'd, No. 1:08-CV-159, 2008 WL 5378338 (S.D. Ohio Dec. 19, 2008); see also Charice D. Curtis, DAB No. 2430, at 5 (2011) ("[T]he statute does not limit exclusions under section 1128(a)(3) to offenses involving the actual delivery of healthcare but broadly covers offenses 'in connection with the delivery of a health care item or service.'") (underlining replaced with italics).  "Reading the statute's language to require a rational link between the facts or circumstances underlying the crime and the delivery of health care items or services is consistent with the ordinary meaning of the phrase 'in connection with,'" which usually has a wide and pliable scope.  W. Scott Harkonen, M.D., DAB No. 2485, at 7 (2012), aff'd, No. C 13–0071, 2013 WL 5734918 (N.D. Cal. Oct. 22, 2013).  Moreover, "[s]ection 1128(a)(3) does not require that the felony conviction be for an offense specified as 'health care fraud' under federal or state law."  Curtis at 4.

Substantial evidence in the record supports the ALJ's determination that Petitioner's felony "was committed in connection with the delivery of a health care item or service."

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ALJ Decision at 11.  "Although [Petitioner's] crime was that of wire fraud involving investors," the ALJ explained, "the facts surrounding that fraud have a strong nexus to the delivery of a health care item or service," id., and the ALJ supported that determination with citations to substantial evidence.  Investors in Theranos "were investing in a company that makes health care technology to conduct tests on patients," so "a basic nexus is apparent."  Id. (citing P. Exs. 12, 25, and 38).  Theranos's business model "included providing blood testing services directly or indirectly to patients," including "at patient service centers" in Walgreens stores.5  Id. at 11-13 (citing P. Exs. 12, 24, 25, 35, and 38).  The 2010 Master Purchase Agreement between Theranos and Walgreens "shows that delivering health care items and services (blood collecting and analyzing devices) was a major aspect of Theranos's business model," as the ALJ demonstrated by extensively quoting from that Agreement.  Id. at 12 (quoting P. Ex. 12).  Even when amended in 2012, the Agreement still stated Theranos would provide a "training and certification program" for Walgreens technicians, who would "provide laboratory patient services, as directed by Theranos."  Id. at 13 (quoting P. Ex. 35, at 10); see also P. Ex. 35, at 4, 10 (committing Walgreens to "collect blood samples" and Theranos to perform "laboratory testing" offsite and deliver "sample tubes, lancets/blood collecting devices (finger stick devices), bandages and all other necessary supplies to Walgreens locations on an as needed basis").  While Theranos had "not yet developed fully functional blood analyzers," nevertheless, "as charged in the TSI," Petitioner made numerous "false statements to investors to induce them to invest in Theranos."  Id. at 13-15 (citing I.G. Ex. 2, P. Ex. 47, and Holmes, 129 F.4th at 647); see also Holmes, 2025 WL 3763250, at **5-6.  In sum, the evidence shows Petitioner held Theranos out as a provider of health care services and obtained investments in the company by making fraudulent misrepresentations about the blood testing items that constituted the company's chief product.  Thus, the ALJ supportably found a sufficient nexus between Petitioner's criminal conduct and the delivery of a health care item or service.

It is true that Petitioner was not convicted of defrauding patients, but the charges in the TSI on which Petitioner was indicted and convicted include material misrepresentations to investors about the delivery of health care items and services.  The allegations in paragraphs 1 through 13 of the TSI, concerning "The Scheme to Defraud Investors," show a common-sense connection between Petitioner's fraud and the provision of a health care item or service, and Petitioner was convicted on four Counts that expressly incorporated those paragraphs.  See I.G. Ex. 2, at 9 (stating that Count 1 "realleged and reincorporated" paragraphs 1-18); id. at 10 (stating Counts 6 through 8 "realleged and reincorporated" paragraphs 1-22); I.G. Ex. 3 (showing jury verdict).  Paragraphs 1

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through 13 of the TSI alleged, among other things, that Petitioner "owned and operated a health care and life sciences company," namely Theranos.  I.G. Ex. 2, at 2-7 (emphasis added); see also id. at 3 ("Theranos was a private health care and life sciences company.").  "Its stated mission was to revolutionize medical laboratory testing through allegedly innovative methods for drawing blood, testing blood, and interpreting the resulting patient data," for purposes including "lowering health care costs."  Id. at 3.  When rolling out Theranos Wellness Centers at Walgreens locations in 2013, Theranos claimed consumers could "now complete any clinician-directed lab test" there, and Theranos "offered tests to the public beginning in late 2013" at Walgreens stores in Arizona and California.  Id. at 4-5.

Of particular relevance is paragraph 12 of the TSI, which contained several allegations that illustrate the common-sense connection between Petitioner's criminal conduct and the delivery of a health care item or service:

12.  Beginning in approximately 2010, [PETITIONER] and BALWANI made materially false and misleading statements to investors and failed to disclose material facts, using, among other things:  (1) false and misleading written and verbal communications; (2) marketing materials containing false and misleading statements; (3) false and misleading financial statements, models, and other information; and (4) false and misleading statements to the media.  [PETITIONER] and BALWANI:

(A) represented to investors that, at the time the statement was made, Theranos's proprietary analyzer—the TSPU, Edison, or miniLab—was presently capable of accomplishing certain tasks, such as performing the full range of clinical tests using small blood samples drawn from a finger stick and producing results that were more accurate and reliable than those yielded by conventional methods—all at a faster speed than previously possible; when, in truth, [PETITIONER] and BALWANI knew that Theranos's proprietary analyzer had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and could not compete with larger, conventional machines in high-throughput, or the simultaneous testing of blood from many patients, applications;

*    *    *    *

(C) deceived investors through misleading technology demonstrations intended to cause potential investors to believe that blood tests were being conducted on Theranos's proprietary analyzer; when, in truth, [PETITIONER] and BALWANI knew that

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Theranos's proprietary analyzer was running a "null protocol" during the demonstration to make the analyzer appear to be operating, but was not testing the potential investor's blood, and yet failed to disclose that fact;

(D) represented to investors that Theranos presently had an expanding partnership with Walgreens . . . when, in truth, [PETITIONER] and BALWANI knew, by late 2014, that Theranos's retail Walgreens rollout had stalled because of several issues, including that Walgreens's executives had concerns with Theranos's performance;

(E) represented to investors that Theranos presently had a profitable and revenue-generating business relationship with the United States Department of Defense, and that Theranos's technology had deployed to the battlefield; when, in truth, [PETITIONER] and BALWANI knew that Theranos had limited revenue from military contracts and its technology was not deployed in the battlefield;

*    *    *    *

(G) represented to investors that Theranos conducted its patients' tests using Theranos manufactured analyzers; when, in truth, [PETITIONER] and BALWANI knew that Theranos purchased and used for patient testing third party, commercially-available analyzers;

(H) represented to investors that Theranos's technology had been examined, used, and validated by several national or multinational pharmaceutical companies and research institutions; when, in truth, [PETITIONER] and BALWANI knew that these pharmaceutical companies and research institutions had not examined, used, or validated Theranos's technology; and

(I) represented to members of the media for publication many of the false and misleading statements described above . . . and shared the resulting articles with potential investors both directly and via the Theranos website, knowing their statements to members of the media were false and misleading.

I.G. Ex. 2, at 5-7.

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The Ninth Circuit's decision is relevant, and when affirming Petitioner's conviction, the appellate court summarized trial evidence that supported the TSI's allegations.  See George John Schulte, DAB No. 2649, at 13 (2015) ("It is well-settled that an ALJ (and the Board) may look to all of the circumstances surrounding a conviction" when determining whether the elements needed to exclude are present, and "an appellate court decision qualifies as a circumstance surrounding the conviction.").  The Ninth Circuit summarized that Petitioner and Balwani "set out in the mid-2000s to revolutionize medical laboratory testing through a biotechnology company called Theranos," but "the vision sold by [them] was nothing more than a mirage."  2025 WL 3763250, at **2-3.  "Theranos's blood-testing device failed to deliver faster and more accurate testing results than conventional technology," and "[p]harmaceutical companies never validated the technology, as [Petitioner] and Balwani had told investors."  Id. at *3.  The court detailed trial evidence that Theranos's device "consistently failed quality control checks and was unable to provide accurate results," that Theranos's concealed "use of third-party devices" to conduct blood testing had "misled" multiple investors, and that Petitioner made "various false representations" to investors about military use of Theranos's device.  Id. at **4-5.  The court also discussed the evidence that Theranos's early partnerships with pharmaceutical companies "quickly soured," yet Petitioner "projected a very different image to investors," including by personally altering reports about Theranos's device.  Id. at *6.

Petitioner's own exhibits presented to the ALJ underscore the existence of the required nexus between the offenses of which she was convicted and the delivery of a health care item or service.  In presentations, Theranos held itself out as a "healthcare technology company."  P. Ex. 25, at 5.  Petitioner testified that she "very much" wanted Theranos investors to know about "the impact it would make in health care."  P. Ex. 8, at 26.  For example, Theranos represented itself to investor M. Family Holdings LLC6 as a "consumer healthcare technology company" that "offers comprehensive laboratory tests from samples as small as a few drops of blood at unprecedented low prices."  P. Ex. 39C2, at 57.  The stated objectives of the Theranos Master Purchase Agreements with Walgreens and Safeway included to "[m]ake blood testing faster" and to "[g]enerate health care cost savings" on "lab tests and visits."  P. Ex. 24 (2010 Theranos-Walgreens agreement), at 3-4; see also P. Ex. 27, at 4 (2010 Theranos-Safeway agreement); P. Ex. 35, at 4 (Theranos-Walgreens agreement).  Petitioner testified that Theranos provided blood testing services to the public and operated a clinical blood testing laboratory from 2011 to 2016.  P. Ex. 1, at 225; P. Ex. 4, at 112.  Theranos claimed its clients included both U.S. "military organizations" and "10 of the top 15 major pharmaceutical companies," and claimed those pharmaceutical companies had "comprehensively validated" the company's systems.  P. Ex. 25, at 5, 9; see also P. Ex. 7, at 48, 50-54, 60-62, 83 (Petitioner's relevant testimony on cross-examination); P. Ex. 36, at 110 (testimony by investor A.E. that Theranos "promised . . . they had all of these contracts

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with major international pharmaceutical companies").  When requesting "a sentence with no to minimal incarceration," Petitioner insisted that Theranos was "a real company" that "provided real services to customers," including "tests to customers in retail stores," and investors' money "went toward the company's mission to make health information more accessible."  P. Ex. 16, at 43, 55, 59, 61.

We reject Petitioner's assertions that her "convictions were about investment in development of a new startup" and "projections" about that development but "not delivery" of a healthcare item or service.  See NA at 7-8.  The company's 2010 Master Purchase Agreements with Walgreens and Safeway stated that "Theranos has developed" devices "that can run any blood test in real-time for less than the traditional cost of central lab tests."  P. Ex. 24, at 3 (emphasis added); P. Ex. 27, at 3 (emphasis added).  In its Master Purchase Agreement with Safeway, Theranos represented "that it is a 'health care provider' and 'covered entity' as defined under HIPAA."  P. Ex. 27, at 16 (emphasis added).  Investor A.E. testified that Petitioner gave him both forward-looking projections and statements about present company activity, and he understood the difference between the two.  P. Ex. 36, at 133.  Petitioner told him "that Theranos's technology was a smaller draw of blood, could do more tests, and could have results back in a much quicker period of time" – not in the future, but "in that moment."  Id. at 134.

Thus, the record contains substantial evidence supporting the existence of the requisite nexus for purposes of section 1128(a)(3) of the Act.  "For a crime to be committed 'in connection with the delivery of a health care item or service,' the conduct underlying the criminal offense does not necessarily have to involve actual delivery (or the interruption of same) of a health care item or service to the patient or beneficiary."  Ellen L. Morand, DAB No. 2436, at 9 (2012).  Indeed, the Board has observed that "financial misconduct generally is not part of the actual delivery of the item or service."  Kenneth M. Behr, DAB No. 1997, at 9 (2005).  Instead, financial misconduct generally "is related, for example, to payment for . . . an item or service that was delivered, that was fraudulently claimed to have been delivered, or that was intended to be delivered."  Id. (emphasis added).  Thus, the Secretary reasonably has interpreted section 1128(a)(3) to include offenses, like this one, which involve an individual's participation in the chain of delivery of health care items or services even if the individual did not personally deliver them.  Id. at 9.  The evidence discussed above establishes that Petitioner's fraud was in connection with the delivery of health care (specifically, blood testing) items and services.  Yet Petitioner's crimes would fall within the ambit of section 1128(a)(3) of the Act even if she had merely claimed that Theranos delivered such services – as, again, she demonstrably did.

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2. The ALJ's determination that the I.G. had a legitimate basis for excluding Petitioner under section 1128(a)(3) is free of legal error.

In addition to challenging the factual grounds for her exclusion, Petitioner raises several legal arguments.  Petitioner asserts that section 1128(a)(3) of the Act is ambiguous and her exclusion "relies on Agency interpretation of the 'in connection with the delivery of a healthcare service' language that is not contemplated by the statute."  NA at 3.  She asserts that the "[s]ole support" for the agency's interpretation, including "every case upholding Agency interpretation of the statute," is "Chevron deference."  Id.  She relies on Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), which overruled Chevron, for the proposition that it is the duty of courts, not the agency, "to interpret statutory provisions."  Id. at 3-4.  She contends that "Congress did not write that" section 1128(a)(3) exclusions can rely on offenses not involving the actual delivery of healthcare "as the ALJ claimed in this case."  Id. at 4 (citing ALJ Decision at 3).  Petitioner declares that "the plain language of the statute and associated statutes explicitly describe actual delivery of healthcare services:  services furnished to the Medicare population, services furnished to the Medicaid population, and their beneficiaries, all involving 'the provision of healthcare.'"  Id. (citing Act § 1128).  The statute "says nothing," she argues, "of investment into the development of novel technologies."  Id. at 7.  She asks the Board "to recognize that agency interpretation of law where a statute is ambiguous or silent is unlawful," and thus the exclusion is "unlawful" and "must be reversed."  Id. at 3, 10.  Finally, because Petitioner "continues to fight for the courts to recognize her innocence" and allegedly "[h]er case now proceeds for review for certiorari at the Supreme Court," Petitioner asks that "the exclusion be overturned."  Id. at 10.

Petitioner's interpretation of section 1128(a)(3) of the Act is incorrect, first, as a matter of plain language, because Petitioner's reading would erase key language from the statute.   Section 1128(a)(3) requires exclusion for conviction of an offense which occurred "in connection with the delivery of a health care item or service," not "in the delivery of a health care item or service."  (Emphasis added.)  If it were necessary for the offense to occur during actual delivery of a health care service, rather than more broadly in "connection with" delivery, then the emphasized language would be inconsequential surplusage.  "It is a fundamental principle of statutory construction, equally applicable to regulatory construction, that every word and every phrase of the text must be given effect so that no word or phrase is rendered superfluous or to have no consequence."  Ridgeview Hosp., DAB No. 2593, at 7 (2014), recons. denied, DAB Ruling No. 2015-1 (Jan. 12, 2015); accord Wills Eye Hosp., DAB No. 2743, at 16 (2016), aff'd sub nom. Tr. under the Will of Wills v. Burwell, 306 F. Supp. 3d 684 (E.D. Pa. 2018), appeal dismissed, No. 18-1594, 2018 WL 11449350 (3d Cir. Nov. 16, 2018); see also John A. Hartman, D.O., DAB No. 2911, at 16 (2018) ("It is a basic canon of construction that interpretations that treat legislative or regulatory language as surplusage are disfavored.").

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We also reject Petitioner's reading of section 1128(a)(3) because it is contrary to congressional intent.  "The exclusion provisions represent a determination by Congress that providers who have been convicted of the kind of offenses specified represent a risk to the programs and/or the patients."  Barry D. Garfinkel, M.D., DAB No. 1572, at 16 (1996), aff'd, No. 3:96-CV-00604 (D. Minn. June 25, 1997).  "Subsection (a)(3) was added to section 1128 in 1996," with the enactment of HIPAA, "to broaden the I.G.'s exclusion authority."  Behr at 7 n.5.  "There is no legislative history for HIPAA indicating that Congress intended the term 'in connection with' to require something more than some nexus between an offense and the delivery of a health care item or service."  Id.  Here, "Petitioner's reading of section 1128(a)(3) would require the
entity being excluded to have actually delivered an item or service as an element of committing the offense," and "[t]his construction would conflict with Congress's intent that the mandatory exclusion authority be used broadly to protect the integrity of covered programs."  Id. at 7.  It is "consistent with congressional intent" for the mandatory exclusion provisions to "be read broadly to effectuate their goal of maintaining the integrity of the programs."  Henry L. Gupton, DAB No. 2058, at 11 (2007) (citing cases), aff'd, 575 F. Supp. 2d 874 (E.D. Tenn. 2008); see also Ariz. Health Care Cost Containment Sys. v. McClellan, 508 F.3d 1243, 1250 (9th Cir. 2007) (stating that construing specific words in a statute requires looking to its design as a whole and with a view toward the overall statutory scheme) (citing authorities).  Thus, Petitioner's narrow reading of section 1128(a)(3) is inconsistent with congressional intent.

Petitioner also misinterprets the applicability and effect of Chevron and Loper Bright with respect to this case.  The Board sits "as part of the administrative adjudication process, not as a federal court," so "[w]hile the various court approaches to reviewing agency action inform our thinking, they do not directly apply to our role."  Orton Motor, DAB No. 2717, at 6 (2016), aff'd, 884 F.3d 1205 (D.C. Cir. 2018); accord Albert Alex Hazzouri Jr., DAB No. 3189, at 20 (2025).  Furthermore, when deciding in Loper Bright to "leave Chevron behind," the Supreme Court was careful to clarify that "[b]y doing so, however, we do not call into question prior cases that relied on the Chevron framework."  Loper Bright, 603 U.S. at 412.  "The holdings of those cases that specific agency actions are lawful," the Court explained, "are still subject to statutory stare decisis despite our change in interpretive methodology," and "[m]ere reliance on Chevron cannot constitute a special justification for overruling such a holding."  Id. (internal quotation marks and citations omitted).  Thus, prior Board decisions interpreting section 1128(a)(3) of the Act and its implementing regulations, and federal court rulings that affirmed those decisions in reliance on Chevron deference prior to Loper Bright, remain lawful.

Other authorities on which Petitioner relies are equally inapplicable.  Petitioner cites largely to federal court decisions from other judicial districts (apart from the District Court, the Ninth Circuit, and the Supreme Court), and to ALJ (rather than Board) decisions, none of which are binding here.  See Kimberly Jones, DAB No. 3033, at 15 n.11 (2021) (stating a case "is not precedential" when "it is from a federal judicial district

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different from where Petitioner's appeal arises"); Zahid Imran, M.D., DAB No. 2680, at 12 (2016) ("It has been long settled that ALJ decisions are not precedential and are not binding authority on the Board or other ALJs.").  We also are unpersuaded that any of Petitioner's cited authorities support her interpretation of section 1128(a)(3).

Petitioner's allegations and arguments concerning ongoing challenges to her criminal conviction are immaterial.  As a factual matter, the Ninth Circuit has affirmed Petitioner's conviction and the record before us contains no evidence of any further appeal.  Even if there were such evidence, it would be inconsequential for several reasons.  "When the exclusion is based on the existence of a criminal conviction," the conviction's basis "is not reviewable and 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); see also Peter J. Edmonson, DAB No. 1330, at 4-5 (1992) ("The law does not permit the Secretary to look behind the conviction," and "[s]o long as there exists a conviction for an offense described in section 1128(a)[3] of the Act, Petitioner must be excluded.").  Also, one is "convicted" for purposes of exclusion even when an appeal is pending.  See Act § 1128(i)(1) (defining "convicted" as "when a judgment of conviction has been entered against the individual or entity by a Federal, State, or local court, regardless of whether there is an appeal pending" or an expungement has occurred); 42 C.F.R. § 1001.2 ("Convicted means that – (a) A judgment of conviction has been entered against an individual or entity by a Federal, State or local court, regardless of whether: (1) There is a post-trial motion or an appeal pending. . . .").  "An exclusion will be withdrawn" retroactively to its effective date when based on "[a] conviction that is reversed or vacated on appeal," 42 C.F.R. § 1001.3005(a)(1), but the Ninth Circuit has affirmed Petitioner's conviction, and speculation on the possible outcome of any further appeal is without effect.  See Christopher Switlyk, DAB No. 2600, at 5 (2014) (rejecting petitioner's contention "that his sentence is likely to be significantly reduced on appeal" as "speculation" that "does not provide a basis for reducing his term of exclusion").

II.    The evidence established four aggravating factors under section 1001.102(b).

Four regulation-specified aggravating factors are relevant here.  The first is the "financial loss" factor that applies if "[t]he acts resulting in the conviction, or similar acts, caused, or were intended to cause, a financial loss to a government agency or program or to one or more other entities of $50,000 or more."  42 C.F.R. § 1001.102(b)(1).  The second is the time period factor that applies if "[t]he acts that resulted in the conviction, or similar acts, were committed over a period of one year or more."  Id. § 1001.102(b)(2).  The third is the adverse impact factor that applies if "[t]he acts that resulted in the conviction, or similar acts, had a significant adverse physical, mental or financial impact on one or more program beneficiaries or other individuals."  Id. § 1001.102(b)(3).  The fourth is the "incarceration" factor, which applies if "[t]he sentence imposed by the court included incarceration."  Id. § 1001.102(b)(5).

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The ALJ held that the I.G. established these four "significant aggravating factors," including "the astounding financial loss" Petitioner caused to investors, and Petitioner has shown no factual or legal error in that determination.  ALJ Decision at 2.  The financial loss factor, 42 C.F.R. § 1001.102(b)(1), is established because the District Court held Petitioner liable to pay restitution in the amount of $397,547,268 to "the twelve investor victims named at sentencing," plus $54,500,000 in restitution to Walgreens and Safeway as additional "victims" of the conspiracy.  See I.G. Ex. 6, at 10-11, 14.  "The restitution amount is one indication of the seriousness of the individual's crime and thus the level of threat the individual poses to program integrity," and these huge losses warrant giving this aggravating factor significant weight.  See Samirkumar Shah, M.D., DAB No. 3111, at 9 (2023).  The crime-duration factor, section 1001.102(b)(2), is established, as the District Court found that Petitioner's "scheme to defraud investors lasted from 2010 through 2015," a period much longer than the one-year threshold for applying this factor. I.G. Ex. 6, at 1; see also I.G. Ex. 2, at 9 (stating in Count 1 that Petitioner conspired to commit wire fraud against Theranos investors from "no later than" approximately 2010 through 2015); I.G. Ex. 4, at 1 (Judgment of guilt on Count 1); I.G. Ex. 5, at 1 (same).  Section 1001.102(b)(3), the factor addressing significant adverse impact on individuals, is established because the District Court's restitution order included an obligation for Petitioner to pay restitution to four named individual investors – whom we identify by their initials A.E., S.E., R.K., and K.R.M. – in amounts ranging from $49,995 to $124,999,997.  ALJ Decision at 21; I.G. Ex. 6, at 18.  The incarceration factor, section 1001.102(b)(5), is established because the District Court sentenced Petitioner to 135 months (that is, 11 years and three months) of imprisonment.  I.G. Ex. 10, at 22.

When disputing the aggravating factors, Petitioner focuses on the adverse impact factor, 42 C.F.R. § 1001.102(b)(3).  Petitioner argues against "the improper metric of assessing risk of harm to federal programs through the amount of venture capital into a new technology company," which is a "non sequit[u]r from healthcare delivery."  NA at 9.  Petitioner asserts that "the District Court Judge explicitly found these multi-billion dollar private equity funds did not experience financial hardship."  Id.  Petitioner argues that "a significant sum of investment is distinct from significant impact to investors," and Theranos's accredited investors entered into shareholder agreements that "explicitly affirmed they would experience no impact from total loss of the investment."  P. Reply at 3 (citing P. Exs. 18 and 21).  Petitioner asserts that prosecutors "did not even ask for a financial hardship enhancement at sentencing, and none was imposed."  NA at 9.

We reject Petitioner's argument that 42 C.F.R. § 1001.102(b)(3) imposes an "improper metric."  To the extent Petitioner is challenging that regulation's validity, the ALJ had, and the Board has, no power to address that argument.  42 C.F.R. § 1005.4(c)(1) ("The ALJ does not have authority to – (1) Find invalid or refuse to follow Federal statutes or regulations. . . ."); Ethan Edwin Bickelhaupt, M.D., DAB No. 2480, at 3 (2012) ("The limitations on the ALJ's authority in section 1005.4(c)(1) . . . also apply to the Board in its review of the ALJ Decision."), aff'd, No. 12-C-9858 (N.D. Ill. May 29, 2014).

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Furthermore, the regulation implements section 1128(a)(3) of the Act, which in pertinent part requires "only that Petitioner's offense be 'in connection with the delivery of a health care item or service," and not "that the offense have any connection with a government program."  Erik D. DeSimone, R.Ph., DAB No. 1932, at 4 (2004).  Where, as in this case, the Act requires no link between a criminal conviction and governmental programs, exclusion still can be "a rational means of protecting federal health care programs and beneficiaries," with "a rational relationship between the exclusion and the government's protective goal."  Bickelhaupt at 4 (discussing exclusion under Act § 1128(a)(4) for conviction of controlled substance felony).

In any event, considerable evidence does show a linkage between Petitioner's crimes and governmental programs.  Petitioner testified that when publicly announcing the Theranos-Walgreens partnership, Theranos wanted to talk "about what that would mean for Medicare and Medicaid specifically."  P. Ex. 3, at 115.  The resulting Wall Street Journal article reported that "Theranos is committing to a half-off discount on Medicare fees."  P. Ex. 39E, at 66.  Theranos publicized in a press release that its tests "are reimbursed by major insurance carriers, Medicare and Medicaid."  P. Ex. 32, at 1.  Theranos commercial presentations included projected cost effects to Medicaid and Medicare at both the state and national levels.  P. Ex. 38, at 22; P. Ex. 39C2, at 79; P. Ex. 39D2.1, at 57-84.  Theranos advised Walgreens of a "Medicaid/Medicare Opportunity" that involved "setting a new reimbursement threshold" that would "contribute to increasing market ownership of Theranos Systems at Walgreens."  P. Ex. 25, at 23.  Theranos repeatedly informed other investors that "Theranos bills Medicare and Medicaid."  P. Ex. 39C2, at 58; see also id. at 73 ("We can bill all major insurance carriers as well as Medicare and Medicaid."); P. Ex. 39D2.1, at 23 (stating Theranos is "[c]ontracted with:  Medicare/Medicaid") (emphasis omitted).

We also reject Petitioner's attempts to replace the regulatory standard of "a significant adverse physical, mental or financial impact on one or more" individuals, 42 C.F.R. § 1001.102(b)(3), with a "financial hardship" standard, NA at 9, and her arguments that her criminal offenses caused no individual any such hardship.  Petitioner was convicted on allegations that "Theranos's investors included individuals," not just "private equity funds" as Petitioner suggests.  Compare TSI at 3 with NA at 9.  Regarding those individuals, Petitioner repeatedly has claimed she was convicted of defrauding only "sophisticated investors."  P. Ex. 15, at 14; P. Ex. 16, at 8, 41, 55.  Yet even sophisticated investors can suffer significant losses, and considerable trial testimony showed that, whatever the personal wealth of some individual investors, they nevertheless cared about the value of their stakes in Theranos and considered them significant.  See, e.g., P. Ex. 3, at 172-73 (Petitioner's testimony that A.E. was a Theranos investor with "a very large amount of questions" about "the valuation of his stock"); P. Ex. 5, at 80 (Petitioner's admission on cross-examination that K.R.M. was a "significant shareholder" of Theranos with more than $100 million invested); P. Ex. 17, at 223, 225 (A.E.'s testimony that he "had a significant amount of net worth involved" in his investment in Theranos at a time

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when he was nearing retirement and his daughter needed liquid funds to buy a house); P. Ex. 36, at 139 (A.E.'s testimony that he "had a significant investment" in Theranos).

The terms of Theranos shareholder agreements also do not render 42 C.F.R. § 1001.102(b)(3) inapplicable.  Theranos shareholder agreements did require representations and warranties that the investor could "bear the economic risk" of suffering even "a complete loss of" the investment.  P. Ex. 18, at 14.  However, the ability to "bear" the total loss of an investment does not make such a loss insignificant to the investor.  The agreements acknowledged the investment risks were "substantial," not insignificant.  Id.; P. Ex. 21, at 7.  Also, as the District Court summarized at sentencing, investors "should take those risks free from lies and misrepresentation."  P. Ex. 48, at 130.  Accordingly, the agreements represented that they contained no "untrue statement of a material fact" or misleading omission of fact by the company.  P. Ex. 18, at 13.

Finally, Petitioner's arguments mischaracterize actions of the District Court that are relevant to 42 C.F.R. § 1001.102(b)(3).  At sentencing, the District Court specifically found that Petitioner's fraud had victimized "at least ten" investors, including individual investors R.K. and K.R.M., and all of them "invested significant sums in reliance on [Petitioner's] misrepresentations."  I.G. Ex. 10, at 6, 12-13, 16 (emphasis added).  The absence of a financial hardship enhancement at sentencing is inconsequential, for as the District Court explained when later ordering restitution, it is "well-established" that "the purposes of sentencing (which is punitive in nature) are different from the purposes behind victim restitution (which is compensatory in nature)."  I.G. Ex. 6, at 6.  The District Court ultimately ordered restitution for individual investors A.E., S.E., R.K., and K.R.M. in amounts ranging from $49,995 to $124,999,997, which are significant amounts by any reasonable measure.  ALJ Decision at 21; I.G. Ex. 6, at 10-11, 18.

Thus, the evidence established four aggravating factors under section 1001.102(b).

III.    The evidence established no cognizable mitigating factor under 42 C.F.R. § 1001.102.

The regulations list three mitigating factors that may apply to reduce an exclusion to no less than five years if any aggravating factor is present.  42 C.F.R. § 1001.102(c).  Before the ALJ, Petitioner asserted the two mitigating factors in section 1001.102(c)(2) and (3).  ALJ Decision at 22.  Section 1001.102(c)(2) is applicable if "[t]he record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual's culpability."  Section 1001.102(c)(3) is applicable if the individual's cooperation with governmental officials resulted in "[o]thers being convicted or excluded," in "[a]dditional cases being investigated or reports being issued by the appropriate law enforcement agency

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identifying program vulnerabilities or weaknesses," or in "imposition against anyone of a civil money penalty or assessment."  The ALJ concluded "that the record does not support the existence of either mitigating factor."  ALJ Decision at 22.

"The Board has long recognized that a petitioner bears the burden of showing the presence of any mitigating factor and the 'responsibility to locate and present evidence to substantiate the existence of any alleged mitigating factor in her case.'"  Juan de Leon, Jr., DAB No. 2533, at 7 (2013) (quoting Stacey R. Gale, DAB No. 1941, at 9 (2004)).  Petitioner has not done so in this case, either before the ALJ or before the Board.

Petitioner has not made the requisite showing for 42 C.F.R. § 1001.102(c)(2) to apply.  Even if an excluded individual demonstrably "suffers from psychological problems," there is no mitigation where, as here, the individual has "failed to show that the court determined these problems reduced [her] culpability for [her] offense, as section 1001.102(c)(2) requires."  See Switlyk at 5.  The ALJ supportably found that Petitioner "did raise the issue of an abusive relationship" with Balwani before the District Court, which nevertheless made no "actual finding that the alleged abuse reduced [Petitioner]'s culpability for her criminal acts."  ALJ Decision at 23.  Petitioner moved for severance of her criminal trial and Balwani's, claiming an "abusive intimate-partner relationship" between them, and gave notice that she might "introduce expert evidence at trial related to a mental condition bearing on guilt."  P. Ex. 45, at 6; P. Ex. 46, at 1.  Yet at trial Petitioner admitted that Balwani did not force her to make the pertinent statements to investors and journalists, or control Petitioner's pertinent interactions with Walgreens and Safeway executives.  P. Ex. 4, at 197-98; see generally P. Ex. 4, at 168-97 (Petitioner's direct examination concerning relationship with Balwani); P. Ex. 5, at 104-24 (Petitioner's cross-examination concerning relationship with Balwani).

The ALJ determined that "[a] review of the sentencing hearing transcript did not reveal a finding that [Petitioner]'s mental or emotional condition had a bearing on her guilt," and our independent review reveals no error in that determination.  See ALJ Decision at 24.  Either the sentencing court must explicitly find that a mental, emotional, or physical condition at the time of the offense reduced the offender's culpability, or evidence from the criminal proceedings must support a clear inference that the sentencing court made that determination, but neither circumstance is present here.  See Yolanda Hamilton, M.D., DAB No. 3061, at 20 (2022); Mohamad Ahmad Bazzi, DAB No. 2917, at 13 (2018).  To the contrary, evidence from the criminal proceedings tends to support Petitioner's full, unreduced culpability for the criminal offense.  See, e.g., P. Ex. 47, at 10 (finding by District Court, as to "the relationship between [Petitioner] and Mr. Balwani," that Petitioner "admitted to having control over decisions at Theranos"); see also Holmes, 2025 WL 3763250, at *3 ("The precise division of responsibilities between [Petitioner] and Balwani was disputed at their respective trials," but Petitioner admitted that "'ultimately all roads' led to her as the CEO.").

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Petitioner also has not made the necessary showing for 42 C.F.R. § 1001.102(c)(3) to apply.  The ALJ determined it was "possible" that Petitioner had cooperated with laboratory surveyors for the Centers for Medicare & Medicaid Services (CMS).  ALJ Decision at 25; see also P. Ex. 4, at 113 (Petitioner's testimony on seeking CMS certification of Theranos to offer clinical blood testing); id. at 160-62 (Petitioner's testimony about interactions with CMS personnel during 2015 inspection); P. Ex. 5, at 162-66 (same); Holmes, 2025 WL 3763250, at *4 (discussing CMS's "unannounced inspection of Theranos in late 2015").  Regardless, the ALJ determined, "this is not the type of cooperation that constitutes a mitigating factor in an exclusion case."  ALJ Decision at 25.  We agree.  "[M]ere claims of general cooperation and granting of file access do not establish the requirements for applying section 1001.102(c)(3)."  Cesar M. Cubano-Martinez, M.D., DAB No. 3142, at 9 (2024).  Moreover, even proven cooperation with authorities is insufficient where, as here, Petitioner has "provided no evidence that [her] cooperation resulted in any of the outcomes identified in" section 1001.102(c)(3), such as the conviction, exclusion, or monetary penalizing of others.  See Switlyk at 6.

IV.    Petitioner's period of exclusion is not unreasonable.

"An ALJ reviews the length of an I.G. exclusion de novo to determine whether it falls within a reasonable range," considering all applicable aggravating and mitigating factors.  Hussein Awada, M.D., DAB No. 2788, at 5 (2017).  By design, the I.G. has "broad discretion" to determine an exclusion's length, and if the I.G. chooses an amount of time "within a reasonable range, based on demonstrated criteria, the ALJ has no authority to change it," given the I.G.'s "vast experience in implementing exclusions."  57 Fed. Reg. 3,298, 3,321 (Jan. 29, 1992).

Petitioner argues the exclusion's 90-year duration is "a lifetime bar" that "runs afoul of" Loper Bright because "Congress explicitly delineated circumstances in which lifetime bars are to be imposed," and "[i]nterpreting Congress' silence on lifetime bars under this statute for exclusion is improper."  NA at 8-9.

Petitioner's exclusion is not a "lifetime bar" and does not depend on interpreting congressional "silence," because Congress has spoken on this point.  See NA at 8.  We recognize that an exclusion period of several decades is lengthy, but the Board previously "has clarified that a period of exclusion for a finite term is not equivalent to a lifetime ban."  Imran at 14; see also Jeremy Robinson, DAB No. 1905, at 7 (2004) ("[A]n exclusion of finite duration is not the equivalent of a permanent exclusion.").  Congress has distinguished lifetime from finite exclusions in the Act by authorizing "permanent" exclusions (under subsection 1128(c)(3)(G)(ii)) as distinct from exclusions for terms of years (specifically, for at least five, three, or 10 years under subsection 1128(c)(3)(B), (c)(3)(D), and (c)(3)(G)(i), respectively).  "The fact that a lengthened exclusion effectively could operate as a 'permanent' exclusion under [a petitioner's] circumstances

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does not mean that a lengthened exclusion period is unlawful or unreasonable."  Shah at 13; accord Cubano-Martinez at 8.  We recognize that these precedents involved exclusion periods shorter than Petitioner's (specifically, exclusions for 48 years in Imran, 27 years in Shah, 20 years in Cubano-Martinez, and 15 years in Robinson).  However, "Petitioner does not cite, and we are unaware of, any authority that imposes an upper limit on the number of years (whether total, in addition to the required minimum, or expressed as multiples of the required minimum period) that the I.G. reasonably may impose on an exclusion under section 1128(a) of the Act."  Shah at 13.  The five-year minimum exclusion period under section 1128(a)(3) of the Act is exactly that:  a minimum, with no cap on its extension.  A 90-year exclusion is permissible when, as in this case, the great weight of the aggravating factors and the absence of any mitigating factors support that duration.

The ALJ appropriately determined that a "qualitative analysis" of the applicable aggravating factors "supports the IG's position that [Petitioner] is insufficiently trustworthy to participate in federal health care programs."  ALJ Decision at 2.  We have affirmed the ALJ's determination that the I.G. "proved the existence of four aggravating factors," namely 42 C.F.R. § 1001.102(b)(1)-(3) and (5).  ALJ Decision at 18-22.  We further hold that the ALJ did not err in weighing the significance of each factor.

As to 42 C.F.R. § 1001.102(b)(1) and (b)(3), which concern (respectively) financial losses of $50,000 or more to "entities" and significant adverse impact to "individuals," the ALJ determined Petitioner caused "staggering" business and individual losses that "definitively support[] a long exclusion to protect federal health care programs."  ALJ Decision at 28.  Substantial evidence and legal precedent support that determination.  I.G. Ex. 6, at 18 (District Court restitution order); Holmes, 2025 WL 3763250, at *24 (affirming restitution order "in its entirety").  Petitioner's total restitution obligation of $322,747,296 to business entities is an amount over 6,454 times the threshold for aggravating financial loss under section 1001.102(b)(1), and Petitioner's total restitution obligation of $129,299,972 to individuals is significant by any reasonable standard.  Under these circumstances, "when program loss amounts are substantially more than the threshold, the aggravating factor is entitled to significant weight."  Shaun Thaxter, DAB No. 3053, at 31 (2021); see, e.g., Laura Leyva, DAB No. 2704, at 9-10 (2016) (holding "it is entirely reasonable to consider a program loss amount substantially larger than the" regulatory threshold, such as a loss "over 40 times the threshold amount," as exceptionally aggravating and "to be accorded significant weight"), aff'd, No. 8:16-CV-1986-JDW-AEP, 2017 WL 2868407 (M.D. Fla. Mar. 29, 2017), report and recommendation adopted, No. 8:16-CV-1986-T-27AEP, 2017 WL 2880125 (M.D. Fla. Apr. 24, 2017); Robinson at 12 (holding that an ordered restitution amount "41 times greater than the amount of the minimum loss required to establish an aggravating factor" was exceptionally aggravating and entitled to significant weight); Donald A. Burstein, Ph.D., DAB No. 1865, at 12 (2003) (holding that restitution ordered in an amount "over

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1,000 times the minimum required in order for the aggravating factor to apply" warranted significant weight and constituted an "exceptional aggravating factor").

Regarding section 1001.102(b)(2), the conduct duration factor, the ALJ found that Petitioner's "criminal acts or similar acts lasted for at least five years, which is five times longer than the minimum one year to make that an aggravating factor" and "weighs in favor of a lengthy exclusion."  ALJ Decision at 28.  Substantial evidence and established legal precedent support that determination also.  P. Ex. 48, at 78 (District Court finding at sentencing hearing that "the conspiracy to commit wire fraud against Theranos investors" had "lasted five years"); Rosa Velia Serrano, DAB No. 2923, at 9 (2019) ("We conclude that the [four-year] duration of Petitioner's misdeeds shows that she is extremely untrustworthy."), recons. denied, DAB Ruling No. 2019-2 (Apr. 25, 2019); Spyros N. Panos, M.D., DAB No. 2709, at 12 (2016) (holding five-year duration of Petitioner's conduct was "substantially longer than the one year threshold for it to become an aggravating factor" and served to distinguish a short lapse from a longer-lasting lack of integrity).  As the prosecution summarized during the sentencing phase of Petitioner's criminal trial, her crimes "were not isolated events" or "the result of poor choices on a single day"; instead, Petitioner "developed a complex scheme, and executed it over the course of many years."  I.G. Ex. 9, at 38-39.  The ALJ appropriately gave that aggravating circumstance significant weight.

Regarding section 1001.102(b)(5), the incarceration factor, the ALJ determined that Petitioner's 135-month (that is, 11.25-year) prison sentence was "15 times longer than the 9 months" the Board has considered to be "a substantial term of incarceration" and supported "a lengthy exclusion."  ALJ Decision at 28 (citing Jason Hollady, M.D., DAB No. 1855, at 12 (2002)).  Both substantial evidence and Board precedent support that determination.  I.G. Ex. 10, at 21-22 (imposing "a sentence of 135 months' imprisonment"); Holmes, 2025 WL 3763250, at *21 (affirming Petitioner's sentence); Serrano at 10 ("Petitioner's 11-year sentence was . . . unquestionably quite a significant period."); Switlyk at 4 (holding that "incarceration reflects a court's evaluation of the seriousness of an offense" and a 108-month sentence demonstrates that petitioner's crime "was very serious" and petitioner "is a highly untrustworthy individual"); de Leon at 6 (stating that petitioner's 10-year prison term constituted "a substantial period of incarceration" that "would, on its own, justify the I.G. in increasing an exclusion significantly in excess of the five-year mandatory minimum").

As the ALJ appropriately recognized, on one prior occasion the Board held an exclusion period of 95 years to be unreasonable and reduced it to 60 years, but that case is distinguishable.  Sushil Aniruddh Sheth, M.D., DAB No. 2491 (2012), appeal dismissed in part & summarily affirmed in part, No. 13-cv-0448, 2014 WL 11813597 (D.D.C. Jan. 10, 2014), appeal dismissed per curiam, No. 14-5179, 2015 WL 3372286 (D.C. Cir. May 7, 2015).  In Sheth, the I.G. excluded a cardiologist for 95 years under section 1128(a)(1) of the Act based on his conviction for health care fraud.  Id. at 1-3.  An ALJ

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upheld the 95-year exclusion period based on "four aggravating factors" and "the absence of any mitigating factors."  Id. at 3.  The aggravating factors were:  (i) "a financial loss of $12,376,310.47"; (ii) "criminal activities that lasted for about six years"; (iii) "court-ordered incarceration of 60 months (five years)"; and (iv) "suspension of Petitioner's medical license by two state licensing boards."  Id.  On review, the Board concluded that excluding the cardiologist "for some period more than 50 years is reasonable," given facts including his "sustained fraud and the very large amount of" the resulting financial loss.  Id. at 12.

We uphold the ALJ's determination that in Sheth "the aggravating factors were not nearly as serious," and "[i]f Sheth supports a 60-year exclusion, then this case supports an exclusion significantly in excess of 60 years."  ALJ Decision at 29.  The duration of Petitioner's fraud was approximately the same as that of the cardiologist in Sheth, and her incarceration sentence is over twice as long as his was.  Petitioner's crime resulted in a total restitution obligation of $452,047,268, see P. Ex. 6, at 1, which is an amount over 35 times the enormous loss at issue in Sheth.  The Board ruled on the particular facts of Sheth that neither the ALJ nor the I.G. had explained why a 95-year exclusion was "within a reasonable range" or "supported by the facts of record" or "serves the remedial purposes of the exclusion statute."  Sheth at 14.  However, in the present case, the ALJ and the I.G. have explained each of those points persuasively.  ALJ Decision at 27-30 (explaining why 90-year exclusion is within reasonable range); id. at 4-18 (discussing supportive record facts); I.G. Br. at 9 (explaining why 90-year exclusion period "is reasonable" and consistent with "the statutory purpose of protecting Federal health care programs and their beneficiaries.").  "Decisions about the reasonableness of exclusion periods must be made on a case-by-case basis," and any comparable "precedent on the length of exclusions is merely informative, not dispositive."  Sheth at 15; see also Eugene Goldman, M.D., DAB No. 2635, at 11 (2015) ("The Board has made it clear that the assessment of aggravating factors (and mitigating factors, if any), is first and foremost case-specific.").  We hold that, to the extent Sheth has any relevance to this unique case, Sheth supports rather than undercuts the premise that a 90-year exclusion here falls within a reasonable range.

In sum, the I.G. and ALJ supportably determined that Petitioner's defrauding of investors out of hundreds of millions of dollars over several years as CEO of a blood testing technology company, and her resulting sentence of incarceration for over 11 years, render her untrustworthy to participate in federal healthcare programs.  See Harkonen at 22 ("A provider who has been convicted of a crime described in section 1128(a) is presumed by Congress to be untrustworthy and a threat to federal health care programs and their beneficiaries and recipients.").  "The purposes of an exclusion are to protect federally-funded programs from untrustworthy individuals and to deter health care fraud."  Robinson at 5; see also Behr at 3 (stating that "the goal of section 1128(a)(3)" of the Act "is to protect federal health care programs, and their beneficiaries and recipients, from individuals who have been shown to be untrustworthy").  The exclusion of Petitioner for

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90 years is not unreasonable given the weight of the aggravating factors in this particular case and is consistent with protecting federal health programs and deterring health care fraud.

Conclusion

We affirm the ALJ Decision.