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CASE | DECISION | JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
IN THE CASE OF  

SUBJECT:

John (Juan) Urquijo,

Petitioner,

DATE: July 13, 2000

             - v -

 

The Inspector General

 

Civil Remedies CR662
App. Div. Docket No. A-2000-70
Decision No. 1735
DECISION
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FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

The Office of the Inspector General (I.G.) appealed an April 7, 2000 decision by Administrative Law Judge (ALJ) Marc R. Hillson. John (Juan) Urquijo, DAB No. CR662 (2000) (ALJ Decision). The ALJ found that a 15-year exclusion from participation in all federal health care programs imposed by the I.G. on John Urquijo (Petitioner) was excessive and unreasonable. The I.G. had increased the mandatory five-year period of Petitioner's exclusion to 15 years based on the aggravating factors found by the I.G. relating to Petitioner's conviction of a program-related crime. After a hearing, the ALJ made findings about the presence of aggravating and mitigating factors. Based on these factors, the ALJ determined that the 15-year exclusion period set by the I.G. was not within a reasonable range and reduced the period to seven years.

On appeal, the I.G. asserted that the ALJ Decision was erroneous as a matter of law and not supported by substantial evidence in the record as a whole. For the reasons explained below, we find the ALJ's conclusions were not erroneous, and that his findings were supported by substantial evidence. We therefore sustain the ALJ Decision in its entirety and affirm and adopt each of the ALJ's findings of fact and conclusions of law.

Applicable Law

Petitioner was excluded from participation in federal health care programs under section 1128(a)(1) of the Social Security Act (Act). Section 1128(a)(1) mandates exclusion of any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under title XVIII (Medicare) or under any State health care program. Section 1128(c)(3)(B) of the Act provides generally that the minimum period of an exclusion under section 1128(a) shall be not less than five years. The regulations governing mandatory exclusions also provide that no such exclusion will be for less than five years. 42 C.F.R. § 1001.102(a). The regulations further provide that specified factors may be considered in lengthening the period of an exclusion beyond the five-year minimum for a mandatory exclusion. 42 C.F.R. § 1001.102(b). These aggravating factors include, as relevant to this case, whether the acts that resulted in the conviction, or similar acts, caused a financial loss to a government program in excess of $1,500 or were committed over a period of one year or more, and whether the sentence imposed by the court included incarceration. Only if any of the aggravating factors justifies an exclusion longer than five years may mitigating factors be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c). As relevant to this appeal, the mitigating factors include whether --

The individual's or entity's cooperation with Federal or State officials resulted in --

(i) Others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs,

(ii) Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or

(iii) The imposition against anyone of a civil monetary penalty or assessment under part 1003 of this chapter.

42 C.F.R. § 1001.102(c)(3) (emphasis added).

The ALJ Decision

Petitioner appealed the I.G.'s determination to exclude him from participation in federal health programs for 15 years based on Petitioner's conviction of one count of Conspiracy to Commit Offenses Against the United States, including Medicare fraud. The notification of exclusion stated that Petitioner's exclusion period was being extended beyond the five-year minimum period of exclusion due to the existence of three aggravating factors: the fraud caused a financial loss to the Medicare program in excess of $1,500; the criminal acts were committed over a period longer than a year; and Petitioner's sentence included incarceration. I.G. Exhibit (Ex.) 8.

Before the ALJ, the parties stipulated that Petitioner was convicted of an offense related to the delivery of an item or service under Medicare and that a mandatory exclusion pursuant to section 1128(a)(1) of the Act was applicable to the facts of the case. As such, the only issue before the ALJ was the length of Petitioner's exclusion. The ALJ held a hearing solely on the presence of aggravating and mitigating factors in the case. Tr. at 6.

The ALJ, citing 42 C.F.R. § 1005.15(b)(2), concluded that the burden of proving aggravating factors is on the I.G. In reducing Petitioner's period of exclusion from 15 to seven years, the ALJ made 18 findings of fact and conclusions of law (FFCLs), including findings that:

  • The I.G. proved that the financial loss to the government from Petitioner's criminal activities exceeded $1,500.
  • The I.G. proved that Petitioner's sentence imposed by the court included incarceration.
  • The I.G. failed to prove that the acts of Petitioner lasted over one year.
  • Petitioner's cooperation with federal officials resulted in additional cases being investigated, so that Petitioner qualified for a mitigating factor.

In evaluating these factors, the ALJ noted that the I.G. has no formally established policy as to how much weight is to be given, in terms of increasing or reducing the duration of the exclusion, to such factors as the length and type of incarceration or the degree of cooperation. The ALJ stated that the I.G. in her proposed exclusion of Petitioner never considered Petitioner's cooperation with authorities as a mitigating factor and that the I.G.'s failure to do so was incorrect as a matter of law. ALJ Decision at 8. The ALJ noted that his review of the length of an exclusion imposed by the I.G. is limited to whether that exclusion falls within a reasonable range. The ALJ then concluded that a 15-year exclusion of Petitioner fell outside a reasonable range and was excessive. The ALJ found that seven years was a reasonable exclusion, "taking into consideration the amount of untrustworthiness manifested by Petitioner." Id.

Discussion

In an appeal of an ALJ decision, our standard of review on a disputed issue of law is whether the decision is erroneous; for a disputed issue of fact, the standard is whether the ALJ decision is supported by substantial evidence in the whole record. 42 C.F.R. § 1005.21(h). Under the substantial evidence standard, the reviewer must examine the record as a whole and take into account whatever in the record fairly detracts from the weight of the decision below. The reviewer does not, however, reweigh the evidence nor substitute his or her judgment for that of the initial decision-maker. When the Board reviews an ALJ decision under the substantial evidence standard, it generally accords considerable deference to the ALJ's assessments of witness credibility because the ALJ has the best opportunity to observe the witnesses and weigh the evidence. St. Anthony Hospital, DAB No. 1728, at 8 (2000).

In appealing the ALJ Decision, the I.G. argued that the ALJ failed to limit his discretion, as delineated in prior decisions of this Board, in ascertaining whether the proposed exclusion of 15 years fell within a reasonable range. In asserting that the ALJ's conclusion that the I.G.'s exclusion was excessive was not supported by the record, the I.G. took specific exception to the following FFCLs:

15. The IG did not prove that the acts of Petitioner which resulted in his conviction lasted over one year, so that the aggravating factor described in 42 C.F.R.§ 1001.102(b)(2) is not present.

18. Factoring together the aggravating and mitigating circumstances involving the acts that resulted in Petitioner's conviction, the exclusion of 15 years imposed by the I.G. is unreasonable and excessive. I conclude that the exclusion period should be reduced to seven years.

The I.G. did not dispute the ALJ's finding that Petitioner's cooperation met the criteria for qualifying as a mitigating factor, nor the ALJ's analysis that the I.G.'s arguments to the contrary failed to account for the language of the applicable regulation. See ALJ Decision at 7 - 8.

We address the I.G.'s exceptions to FFCLs 15 and 18 in turn below. Since the remaining FFCLs were not excepted to by either party, we affirm and adopt them without discussion.

I. The ALJ's finding on the duration of Petitioner's criminal activity is supported by substantial evidence.

The I.G. asserted that the ALJ, in arriving at FFCL 15, disregarded evidence presented by the I.G. The I.G. argued that the exhibits she introduced before the ALJ demonstrated that Petitioner's involvement in conspiracy to commit Medicare fraud extended over a period that was more than a year. The I.G. referred to her Exhibits 1 and 2, memoranda of interviews of Petitioner conducted at the U.S. Attorney's Office, which the I.G. claimed showed that Petitioner continued to participate in the conspiracy (which began in 1993) in 1994 until as late as March 1996. The I.G. also referred to other exhibits such as the indictment and plea agreement, which, the I.G. asserted, substantiated Petitioner's involvement in the conspiracy for more than one year. The I.G. maintained the ALJ relied solely on the testimony of Petitioner that the duration of his participation in the conspiracy was less than one year -- testimony that the I.G. stated was questionable due to Petitioner's admission (Tr. at 111) that he was not "good with dates." The I.G. argued that, based on the testimony of the Assistant U.S. Attorney and the exhibits cited by the I.G., it was "reasonable to conclude that Petitioner's conduct may have extended past October 15, 1993." I.G. Brief at 7 (emphasis added).

The I.G. is correct in asserting that the indictment of Petitioner and his co-defendants sets forth the dates of the conspiracy to commit Medicare fraud as January 25, 1993 through February 6, 1996. I.G. Ex. 3, at 6. In reviewing the ALJ Decision, however, we note that the ALJ did not say that there was no evidence that Petitioner's criminal activity occurred over more than one year, but rather that the evidence was "equivocal." ALJ Decision at 5. The ALJ noted that neither of the witnesses the I.G. presented at the hearing, one of whom was the Assistant U.S. Attorney present during Petitioner's interviews, was able to state definitively that Petitioner's involvement lasted as long as a year. The Assistant U.S. Attorney agreed that the last overt act of the conspiracy involving Dade Care Health Center, Petitioner's clinic, is listed in the indictment as occurring on October 25, 1993. Tr. at 34; I.G. Ex. 3, at 13.

The ALJ relied on the testimony of the I.G.'s own witnesses, as well as the testimony of Petitioner, and that testimony constitutes substantial evidence in support of his decision, even when considered with the documentary evidence cited by the I.G. That documentary evidence is not as clear-cut as the I.G. suggested. I.G. Exhibits 1 and 2 were prepared by a postal inspector engaged in the Medicare fraud investigation. As proof that Petitioner's involvement in the conspiracy lasted for a period longer than one year, the I.G. pointed to parts of the interviews in which Petitioner discussed meetings he had with his attorney (not the attorney that represented Petitioner before the ALJ) in November or December 1994 and March 1996. A close reading of these documents does not unequivocally establish that Petitioner was still engaged in the conspiracy for which he was convicted at those times. There is no indication that Petitioner or his attorney ever reviewed these documents to certify that the postal inspector's summary of the interviews was accurate, and they are not fully consistent with the testimony at the ALJ hearing. Contrary to what the I.G. argued, the mere fact that the Petitioner indicated that he could not recall exact dates does not mean that the ALJ could not find him credible in asserting that he was involved in the conspiracy for less than a year.

Similarly, the other exhibits offered by the I.G. are contrary to the testimony and do not on their face definitively establish that Petitioner's acts committed in furtherance of the conspiracy lasted more than one year. The indictment, which sets forth the dates of the conspiracy, is an indictment of all the participants in the conspiracy. I.G. Ex. 3. The indictment does allege an overt act by Petitioner in or about June 1995 (specifically, that he solicited the services of an unnamed individual to act as president of one of the other clinics for which false claims were filed). I.G. Ex 3, at 17. The I.G. did not specifically rely on this allegation here, however. Nor did the I.G. take the position that a guilty plea to a conspiracy count constitutes an admission of all of the overt acts alleged. The plea agreement does not specifically admit all of those acts. I.G. Ex. 4.

We note that the ALJ in effect interpreted the aggravating factor at 42 C.F.R. § 1001.102(b)(2) to apply only to acts by the Petitioner (rather than to any act in furtherance of the conspiracy). This appears to be a reasonable interpretation in light of the purpose of the provision, and the I.G. did not dispute it.

We therefore find that there is substantial evidence in the record to uphold the ALJ's finding that the I.G. failed to meet her burden of proving that Petitioner's acts were committed over a period of one year or more.

II. The ALJ did not err in finding that the I.G.'s imposition of a 15-year exclusion was not within a reasonable range.

The I.G. maintained that the Board has upheld the principle that the I.G. is vested with considerable discretion in determining the length of an exclusion in a particular case. See JoAnn Fletcher Cash, DAB No. 1725 (2000); Barry D. Garfinkel, M.D., DAB No. 1572 (1996). The I.G. asserted that the proper standard to be applied is whether the 15-year exclusion imposed on Petitioner falls within a reasonable range of possible exclusion periods under the circumstances of this case.

In contesting the ALJ's determination in FFCL 18 that Petitioner's 15-year exclusion did not fall within a reasonable range, the I.G. asserted that: 1) the acts resulting in Petitioner's conviction were committed over one year; 2) Petitioner was responsible for a financial loss to the Medicare program substantially in excess of $1,500; 3) Petitioner's sentence included incarceration; and 4) Petitioner's alleged cooperation with federal officials was not so extensive as to reduce the length of Petitioner's exclusion period. The I.G. contended that, given that the substantial nature of the aggravating factors outweighed the limited nature of the one potential mitigating factor, the ALJ erred in finding that a 15-year exclusion was not within a reasonable range of what was required to protect federal health programs from Petitioner.

We proceed to examine each of the I.G.'s assertions.

We have already determined above that the ALJ correctly found that the I.G. failed to prove the aggravating factor that Petitioner's criminal acts were committed over a period of one year or more. Therefore, the ALJ properly eliminated that alleged aggravating factor from consideration of whether the period set by the I.G. fell within a reasonable range.

Next, as to the issue of the amount of loss to the Medicare program, the I.G. asserted that the ALJ disregarded the significance of the aggravating factor that Petitioner's criminal conduct resulted in a loss to the government of approximately $660,000. The I.G. argued that the magnitude of that loss, evidencing significant untrustworthiness on the part of Petitioner and standing apart from any other aggravating factors, justified a lengthening of the mandatory exclusionary period beyond the two additional years the ALJ found reasonable.

In FFCL 13 the ALJ found that "Petitioner's criminal conduct resulted in a loss to the federal government of approximately $660,000 of which he was directed, as part of his sentence, to make restitution jointly and severally with his co-conspirators, of $360,000."(1) While stating that he believed that Petitioner was remorseful for his conduct, the ALJ nevertheless cited this large amount of financial damage to the government over a short period of time and Petitioner's inability to account for all these funds as evidence of significant untrustworthiness. ALJ Decision at 6. The I.G.'s assertion that the ALJ disregarded this aggravating factor in determining the reasonableness of the exclusion period, or did not give it the weight he said he would, fails to take into account that the ALJ weighed this factor, together with the other aggravating factor he found, against the mitigating factor he found.

The I.G. also argued that the ALJ failed to give significant weight to the fact that Petitioner's sentence included incarceration. The I.G. asserted that the ALJ appeared to have disregarded the fact that, in addition to one month of imprisonment, Petitioner also received 11 months of home detention.

The ALJ Decision indicates, however, that the ALJ did take Petitioner's full incarceration into account, but made a distinction between the 30-day period of imprisonment and the remaining period of incarceration, 11 months of "house arrest." ALJ Decision at 6. The I.G. is correct that the definition of "incarceration" in the regulations includes "community confinement, house arrest, and home detention." 42 C.F.R. § 1001.2. But the fact that the regulatory definition of "incarceration" includes more than imprisonment does not mean that no distinction should be made based on the type of confinement a judge imposes upon a defendant. When the underlying issue is the trustworthiness of an individual to resume participation in federal health programs, it is reasonable to give less weight to the fact that the sentence imposed by the court included incarceration if the court imposed primarily home detention, which could include permission to work outside the home, rather than imprisonment.(2)

As to the mitigating factor the ALJ found, the I.G. argued that Petitioner's cooperation with federal authorities was "extremely limited" and did not result in other individuals being convicted or excluded from federal health care programs. I.G. Br. at 13. The I.G. contended that Petitioner's cooperation only prompted additional investigations which were later abandoned and that Petitioner was never called on to testify concerning the crimes of other individuals in the conspiracy. The I.G. put forth the opinion that Petitioner's cooperation was not so extensive as to entitle him to a significant reduction of his exclusion period.

The I.G.'s position on this question lacks merit. First, the I.G. failed to even consider this mitigating factor when she imposed a 15-year exclusion on Petitioner, despite the fact that Petitioner's cooperation with federal authorities was on the record in Petitioner's plea agreement (I.G. Ex. 4) and in his sentencing agreement (I.G. Ex. 6, at 24). Second, the I.G.'s emphasis on the failure of Petitioner's cooperation to result in additional convictions overlooks the plain language of 42 C.F.R. § 1001.102(c)(3)(ii) that cooperation that results in "[a]dditional cases being investigated" is sufficient to qualify as a mitigating factor. The fact that federal authorities later decided to abandon investigations begun on the basis of information supplied by Petitioner does not necessarily and automatically reduce the weight to be given to the cooperation, especially where, as here, the record indicates the reason for abandoning part of the investigation was the death of one of the targets of the investigation. I.G. Ex. 6, at 24. Third, the I.G.'s characterization of Petitioner's cooperation as "extremely limited" is flatly contradicted by the testimony of the Assistant U.S. Attorney at the hearing. See Tr. at 42 - 43, 59. The only reason Petitioner did not testify against other individuals in the conspiracy was that the Assistant U.S. Attorney made the tactical decision that Petitioner's testimony would be cumulative. Tr. at 42. The Assistant U.S. Attorney agreed that Petitioner cooperated "fully and totally." Tr. at 59. The I.G.'s efforts to downplay the extent to which Petitioner cooperated with federal authorities because additional convictions did not ensue are simply unsupported by the record.

Concerning what constitutes a "reasonable range" under the circumstances of this case, we conclude that the ALJ was aware of this standard and properly applied it. Surely, the I.G. should expect closer scrutiny from ALJs in determining whether the exclusion period set by the I.G. falls within a reasonable range where, as here, the I.G. has failed to prove an aggravating factor she applied and, misapplying her own regulations, failed to consider a mitigating factor which the record clearly showed.

It is clear from his decision that the ALJ assigned considerable weight to the amount of money that Petitioner illegally obtained, with lesser weight assigned to the length and type of incarceration given to Petitioner. It is also clear that the ALJ gave considerable weight to the high degree of cooperation Petitioner gave to prosecuting authorities based on the testimony of an Assistant U.S. Attorney. Given that the ALJ had the opportunity to observe Petitioner at the hearing and to evaluate his credibility, we find that deference should be given to the ALJ's conclusion that an exclusion period of seven years was reasonable.

Conclusion

For the reasons discussed above, we sustain the ALJ Decision. We affirm and adopt each of the FFCLs in that decision.

 

JUDGE
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Donald F. Garrett

M. Terry Johnson

Judith A. Ballard
Presiding Board Member

FOOTNOTES
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1. The transcript of the sentencing hearing indicates that, while the Medicare loss through Dade Care was $660,000, there was evidence that Petitioner's brother had received over $300,000 of that amount (and made restitution for it) and that another co-conspirator had received some of the proceeds. I.G. Ex. 6, at 11 - 16.

2. In evaluating the weight to give to this factor, the ALJ noted that the U.S. District Court Judge who sentenced Petitioner noted on the record that she was convinced that Petitioner was a good person who had made a mistake. ALJ Decision at 6.

CASE | DECISION | JUDGE | FOOTNOTES