SUBJECT:

Stephen Winters,

Petitioner,

The Inspector General.

DECISION

I uphold the exclusion of Petitioner, Stephen Winters, from participation in Medicare, Medicaid, and federally funded health care programs. I conclude that a basis exists to exclude Petitioner pursuant to section 1128(b)(7) of the Social Security Act (Act). As I discussed in detail in my Order Denying Petitioner's Motion for Summary Judgment and Granting the Inspector General's Motion for Summary Judgment as to her Authority to Exclude Petitioner, dated March 26, 2003, in accordance with the principles of issue preclusion, the basis for Petitioner's exclusion is established by the judgment against Petitioner under the False Claims Act in the United States District Court for the Middle District of Tennessee (FCA trial). Petitioner submitted a cost report to Medicare for a home health agency he owned and operated. The cost report included an expense for a contribution to an employee retirement plan that Petitioner knew or should have known was false or fraudulent. In addition, I find that the Inspector General's (IG) proposed ten-year exclusion is unreasonable; a five-year period of exclusion is reasonable.

I. Background

During the relevant period, Petitioner was the owner and operator of several home health agencies located in Tennessee. On September 24, 2001, the IG sent a notice to Petitioner in which he advised Petitioner of his intent to exclude him from participating in Medicare and other federally funded health care programs. In the notice, the IG asserted that he was authorized to exclude Petitioner pursuant to section 1128(b)(7) of the Act. The IG asserted that Petitioner

. . . caused to be presented to an agent of the United States, Blue Cross/Blue Shield of South Carolina, now known as Palmetto Government Benefits Administrators . . . a claim for an item or service that you knew or should have known . . . was false or fraudulent, in violation of section 1128A(a)(1)(A) and (B) of the Act, 42 U.S.C. �� 1320a-7a(a)(1)(A) and (B).

IG's notice letter dated September 24, 2001 (IG's notice letter). The IG further indicated that Petitioner

. . . submitted a Medicare cost report for Trevecca Home Health Services, Inc., that you knew or should have known included claims for employee pension contribution that had not been made in a manner that would support the claim for reimbursement.

Id. The IG alleged that Petitioner submitted in 1995 a cost report for fiscal year 1993 that requested reimbursement of over $600,000 for a pension contribution that Petitioner knew or should have known was false or fraudulent. The IG maintained the claimed contribution was made on behalf of employees who could not have been eligible to participate under Petitioner's pension plan, included employees who did not work for Trevecca Home Health Services, Ins. ('Trevecca' or 'THHS'), and was claimed for a time period when no pension plan was in place for Trevecca. Furthermore, the IG alleged that Petitioner never made a contribution "that would support reimbursement under both the terms of the Plan and the applicable Medicare rules." IG's notice letter at 4.

The IG proposed to exclude Petitioner for a period of ten years. The IG asserted that an exclusion for ten years was appropriate based on consideration of several factors: 1) the nature and circumstances surrounding the action: Petitioner's knowledge that his claim was not reimbursable, his submission of an earlier interim claim (Interim Rate Report (IRR)), his basing a claim on ineligible employees, his basing his claim on a period when there was no plan in effect, and his failing to make a valid contribution in accordance with the Plan terms and Medicare rules; 2) his high degree of culpability: his responsibility as an owner operator, his personal involvement in and supervision of the preparation and filing of the claim, his knowledge of the terms of the pension plan and making false and misleading representations to the fiscal intermediary; and, 3) an adverse action based on the same set of circumstances: the FCA action initiated as a qui tam action in which the Department of Justice intervened.

Petitioner requested a hearing. The case was assigned to me for a hearing and decision. The parties both moved for summary judgment. As indicated above, I ruled on those motions in my Order Denying Petitioner's Motion for Summary Judgment and Granting the Inspector General's Motion for Summary Judgment as to her Authority to Exclude Petitioner, dated March 26, 2003, and reissued as amended April 7, 2003. As indicated in my order, Petitioner could not contest the basis for the proposed exclusion before me because that issue was litigated in the United States District Court in the FCA trial. Accordingly, I scheduled the hearing on the remaining issue - the reasonableness of the ten-year exclusion - to commence November 17, 2003 in Memphis, Tennessee. Subsequently, I rescheduled the hearing at Petitioner's request to commence February 17, 2004. Immediately prior to the rescheduled hearing, Petitioner withdrew his request for an oral hearing and requested that I decide the remaining issue based on the parties' briefs and the written record. See, Consent Motion to Proceed on Written Briefs, dated February 11, 2004.

The parties filed exhibits with their motions and briefs for summary judgment. As explained in my Order Admitting Exhibits, dated November 12, 2003, I have admitted Petitioner Exhibits (P. Exs.) 1-38 and Inspector General Exhibits (IG Exs.) 1-35 into evidence. The IG submitted also proposed IG Exs. 36-38. Without objection, IG Exs. 36-38 are admitted into evidence.

I received The Inspector General's Brief In Support of a Proposed 10-Year Exclusion of Petitioner (IG's brief) on March 19, 2004. I received Petitioner Stephen H. Winters Response to the Inspector General's Brief in Support of a Proposed 10-Year Exclusion (Petitioner's brief) on May 4, 2004. I received The Inspector General's Reply to Petitioner's Response to the Inspector General's Brief in Support of a Proposed 10-year Exclusion of Petitioner (IG's reply) on May 19, 2004. Upon receipt of the IG's reply, I closed the record in this case; however, I granted Petitioner's unopposed request to hear post-briefing oral argument. I informed the parties that the oral argument would be argument on the briefs only, and thus not a transcribed proceeding, and I informed them also that I would extend the time for commencing the 60-day period for issuing a decision until the conclusion of the oral argument. See Order Establishing Schedule for Filing Briefs, dated February 19, 2004.

II. Issues and findings of fact and conclusions of law

A. Issues

The issues in this case are:

1. Whether the I.G. is authorized to exclude Petitioner pursuant to section 1128(b)(7) of the Act; and

2. If so, whether an exclusion of ten years is unreasonable.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below as a separately numbered heading. I discuss each Finding in detail.

1. Petitioner knowingly presented or caused to be presented a Medicare reimbursement claim that Petitioner knew or should have known was false

As indicated above, I ruled previously that Petitioner is precluded from challenging the basis for his exclusion in light of the FCA judgment in the United States District Court for the Middle District of Tennessee. I incorporate in this decision my ruling set forth in my Order Denying Petitioner's Motion for Summary Judgment and Granting the Inspector General's Motion for Summary Judgment as to her Authority to Exclude Petitioner, dated March 26, 2003, and reissued as amended April 7, 2003.

2. Ten years is an unreasonable period of exclusion

The scope of my review is to determine, based on the evidence, whether the ten-year period is within a reasonable range of periods of exclusion. See Barry D. Garfinkel DAB No. 1572 (1996) (citing preamble to 42 C.F.R. � 1001.201 found at 57 Fed. Reg. 3298 at 3304 (January 29, 1992)). I conclude that an exclusion of this length is not within a reasonable range given the facts of this case. I conclude that five years is reasonable; I impose an exclusion of five years.

The facts underlying the FCA litigation concern Petitioner's filing of a cost report on which he accrued (i.e., listed as an expense he wanted Medicare to reimburse to him) a contribution to an employee retirement benefit plan Petitioner had established for employees of companies Petitioner owned. The facts concerning the cost report and benefit plan are intertwined with facts concerning certain aspects of Petitioner's purchase of a home health agency - a transaction that was marred and complicated by the predecessor owner(s)' unwillingness and/or inability to cooperate with the transition. For context, I discuss first the circumstances giving rise to Petitioner's submission of the cost report on October 5, 1995.

THHS was a home health agency that participated in Medicare. THHS was owned by A+ HomeCare, Inc. (A+), from July 30, 1992 through June 2, 1993. IG Ex. 3, at 4. Another entity that also owned THHS in the relevant period prior to Petitioner's ownership was Health Care of America. See IG's brief at 9. On May 27, 1993, A+ entered into a contract to sell THHS to Trevecca Acquisition, Inc., a company formed by Petitioner to purchase THHS. The closing date of the sale between A+ and Trevecca Acquisition was June 2, 1993. IG Ex. 32, at vol. I, 57, 62. On the date that Petitioner purchased THHS, THHS's fiscal year was July 1 through June 30. IG Ex. 32, at vol. I, 57. When Petitioner purchased THHS in June 1993, he owned also Medshares Management Group, Inc. (Medshares). Medshares managed a number of home health agencies that Petitioner owned and operated. IG Ex. 32, at vol. I, 57-58; IG Ex. 4, at 1. Medshares became the management company for THHS in June 1993. IG Ex. 5. Petitioner owned also Centerpoint Corporation, which was a consolidating holding company for four other of Petitioner's home health agencies. IG Ex. 32, at vol. I, 59. Petitioner was the sole member of the Boards of Directors, and was President and CEO of THHS, Medshares, and Centerpoint. IG Ex. 32, at vol. I, 58, 61; IG Ex. 4, at 1.

When Petitioner purchased THHS, Medshares had in place a Deferred Profit Sharing and Stock Bonus Plan (the 'Plan'). ⁽¹⁾ IG Ex. 32, at vol. I, 62, 69, 84-85. The Plan was effective January 1, 1986 and was amended a number of times between 1986 and the relevant period to this case in 1992-1993. IG Ex. 32, at vol. I, 61, 90; IG Ex. 6, at 50. The Plan was implemented at a number of Petitioner's companies. IG Ex. 32, at vol. I, 73. Petitioner signed the Plan and was familiar with its terms. IG Ex. 32, at vol. I, 61, 90-95, 100-03, 138-39; vol. III, 130-32, 168.

The Plan allowed affiliate and subsidiary companies to adopt the Plan and to participate in it with the consent of the "Employer" and "Trustee" (terms defined in the Plan). To adopt the Plan, a company was required by the Plan's terms to execute a document evidencing the company's intent to adopt it. IG Ex. 6, at 110-11. The Plan defined also the terms "Employee," "Eligible Employee," and "Participant." IG Ex. 32, at vol. I, 91-95, 100-105; IG Ex. 6, at 53-54, 61, 73-74. Employees, as defined in the Plan, were only eligible to share in a discretionary contribution for a given year if the Employees were Participants who completed a "Year of Service" (defined also in the Plan) and were actively employed on the last day of the Plan Year. IG Ex. 32, at vol. I, 100-02, 138-39; IG Ex. 6, at 75. The Plan required that each prospective Eligible Employee be provided written notice of eligibility to participate in the Plan prior to the close of the Plan Year (the Plan operated on a calender year, the "Plan Year" is the calendar year). IG Ex. 6, at 72.

The Plan limits the Employer's contribution to the maximum amount allowable as a deduction under Internal Revenue Code Section 404. IG Ex. 6, at 108-09. The Internal Revenue Service allows a maximum deduction of 15% of the compensation paid or accrued during the taxable year to the beneficiaries under the stock bonus or profit sharing plan. Title 26, U.S.C. � 404(a)(3)(A)(i)(I).

Petitioner (through his management company Medshares) filed THHS's Interim Rate Report (IRR) - a report estimating quarterly costs for reimbursement - on August 27, 1993. The IRR was for the fourth quarter of fiscal year 1993. Because Petitioner purchased THHS from A+ in the fourth quarter of fiscal year 1993, his IRR for the fourth quarter included costs for the period prior to his assuming ownership. IG Ex. 32, at vol. I, 69, 107; IG Ex. 10. The IRR was filed with the Medicare fiscal intermediary, Palmetto Government Benefits Administrators (Palmetto), known at the time of the filing as Blue Cross/Blue Shield of South Carolina. IG Ex. 32, at vol. I, 65; IG Ex. 10. The IRR included a pension expense, putatively for a contribution to the Plan for fiscal year 1993, of $527,019. IG Ex. 32, at vol. I, 69; IG Ex. 10.

Petitioner calculated the Plan expense by taking 15% of the total fiscal year 1993 salary figure for THHS employees reflected on a draft IRR provided to Petitioner by Bertha Holloway, a consultant to A+. IG Ex. 32, at vol. I, 69-70; vol. II, 195; vol. III, 168.9

On October 4, 1995, Petitioner signed and certified THHS's cost report for fiscal year 1993. IG Ex. 32, at vol. I, 106; vol. II, 57; IG Ex. 11. On the cost report, Petitioner claimed $620,952 as an expense for making a contribution to the Plan. IG Ex. 32, at vol. I, 107; IG Exs. 6,11. To calculate the $620,952 expense, Petitioner calculated the total 1992 salaries paid to employees of Health Care of America and A+. Petitioner obtained the salary information from unemployment tax returns (SUTA returns) filed by Health Care of America and A+ with the State of Tennessee Employment Department. IG Ex. 32, at vol. I, 119-26, 132; vol. II, 137, 139-44; vol. III, 126-27, 131-32; IG Exs. 12-16. Petitioner added the total payrolls of Health Care of America and A+ for 1992 to the payroll of THHS for the last two quarters of fiscal year 1993. IG Ex. 32, at vol. I, 119-26, 132; vol. II, 137, 139-44; vol. III, 126-27, 131-32; IG Exs. 12-16. The total figure calculated using these sources was approximately $4 million. Petitioner arrived at the pension expense he claimed on the final cost report by calculating 15% of the total salary figure. IG Ex. 15, at 1.

Initially, Petitioner, as he had done for the IRR accrual, sought to calculate the contribution to the Plan using THHS's compensation for fiscal year 1993 (July 1, 1992 to June 30, 1993). Petitioner changed the period for the calculation, however, when in September of 1995, Frank Carney, Petitioner's outside counsel for matters related to the Plan, advised Petitioner to use THHS's compensation for the Plan year, which was calendar year 1992. Calendar year 1992 compensation salary information should be used to calculate the contribution to the Plan, Mr. Carney advised Petitioner, because "the only calender year available in Trevecca's corporate year was the year ending December 31, 1992 . . . [and] this is the same calender year that all of the members of the control group would use for calculation of their contribution to the plan." IG Ex. 32, at vol. III, 243. Mr. Carney advised Petitioner further that contributions to the Plan should be based on an amount not in excess of 15% of gross compensation paid to all employees providing services to THHS during the Plan Year. Id. at vol. III, 219-20.

To accord with Medicare rules, the final cost report was due to be filed not later than 90 days after the close of THHS's 1993 fiscal year. During the period between June 30, 1993 and October 5, 1995, when Petitioner ultimately filed the cost report, Petitioner communicated with Palmetto to indicate why, in Petitioner's view, the cost report was delayed and to confirm various meetings and telephone conversations that Petitioner and his staff claimed to have had with personnel at Palmetto. See P. Exs. 15-23; 28.

After the cost report was filed, Petitioner's claim for reimbursement of the contribution to the Plan was disallowed by Palmetto because it failed to meet time limits for liquidating the contribution - that is, Petitioner had not transferred the funds into the Plan within one year of the close of fiscal year 1993. P. Ex. 24, at 205-11; P. Ex. 30, at 218-20; P. Ex. 35. Petitioner requested an extension of the liquidation and allocation time limit which Palmetto denied. P. Ex. 32. Petitioner disputed Palmetto's interpretation of the Medicare rules providing for extensions, and Petitioner presented a letter with legal analysis concerning those provisions to Palmetto. IG Ex. 38; P. Ex. 31. In requesting the extension, Petitioner took the position that Palmetto should have interpreted the Medicare rules to allow a three-year extension of the time for liquidating and allocating the contribution to the Plan - a three-year extension would have expired on June 30, 1996. Id.

On June 28, 1996, Petitioner transferred shares of stock in his company, Centerpoint Corporation, to the Plan. Petitioner has asserted that this stock transfer satisfied the contribution he claimed for reimbursement on the cost report.

The regulations governing exclusions establish criteria which must be considered to determine the length of any exclusion that is imposed pursuant to section 1128(b)(7) of the Act. These criteria are listed at 42 C.F.R. � 1001.901(b):

(1) The nature and circumstances surrounding the actions that are the basis for liability, including the period of time over which the acts occurred, the number of acts, whether there is evidence of a pattern and the amount claimed;

(2) The degree of culpability;

(3) Whether the individual or entity has a documented history of criminal, civil or administrative wrongdoing (The lack of any prior record is to be considered neutral);

(4) Whether the individual or entity has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for the imposition of the exclusion; or

(5) Other matters as justice may require.

a. The nature and circumstances surrounding the acts that are the basis for excluding Petitioner and Petitioner's culpability for his conduct

I discuss the first two criteria, the nature and circumstances surrounding the actions that are the basis for liability and the degree of Petitioner's culpability, together. The facts bearing on each of these criteria are inseparable because, concerning the second criterion, culpability, the IG alleges Petitioner's high degree of culpability is based on fraud. Petitioner's fraud, the IG alleges, is demonstrated by Petitioner having knowingly committed a number of fraudulent acts over a number of years, from the filing of the IRR to the filing of the cost report, and encompasses also his having made misrepresentations to Palmetto after filing the cost report. If true, this would satisfy all of the factors provided in the 'nature and circumstances' criterion (less the amount claimed which is not disputed, see section II. B.2.a.iv, below).

The IG's position - which I discuss in detail below - is that the evidence shows that Petitioner conducted a long-term scheme to knowingly defraud Medicare. Petitioner's position is, conversely, that his filing of the cost report constituted a minor technical violation of the reimbursement rules, and, due to a number of circumstances not properly considered by the IG, he is almost blameless. I conclude that Petitioner's experience and position required a much greater degree of care and forthrightness than he exhibited in assembling and filing the cost report. But I conclude also that the evidence does not support that Petitioner engaged in a scheme to defraud Medicare. Because of this, I find that Petitioner has a lower degree of culpability than the IG determined he did. I conclude also that the "nature and circumstances" criterion weighs against Petitioner less than the IG concluded it did. Based on my findings, I determine that the period of exclusion the IG proposes is unreasonable.

The IG concluded that the "nature and circumstances surrounding" Petitioner's filing of the false claim (the cost report submitted October 5, 1995) support the ten-year period of exclusion because Petitioner: (i) owned THHS for less than one month of FY 1993; (ii) falsely claimed a pension expense claim on the final IRR submitted to Medicare in the amount of approximately $527,019 for this one month period knowing that the former owner had already claimed a pension expense for its employees for FY 1993; (iii) filed the false IRR knowing that the terms of the Plan had not been followed when claiming the contribution, that the applicable rules for reimbursement had not been followed when claiming the contribution, and that it was impossible to determine which employees even worked for THHS; (iv) filed the false Cost Report almost two years later containing an increased pension expense claim of approximately $620.[sic]952 knowing that none of the terms of the Plan had been followed and with knowledge that none of the applicable rules for reimbursement had been followed; and (v) as late as 1996 continued to conceal the true nature of the pension expense claim from Palmetto with knowledge that the Plan has never been funded and with knowledge that none of any alleged contribution was for the benefit of THHS employees.

IG's brief at 15. The IG determined that Petitioner's culpability was high because Petitioner knew from the beginning of the relevant period (the calculation and submission of the IRR in July 1993) that he was filing a false or fraudulent claim for reimbursement, and that Petitioner's cost report was therefore a knowing presentation of a fraudulent claim. Although in referencing Petitioner's submission of the cost report, the IG echoed the statute by using the alternate 'false or fraudulent' phraseology, the bulk of the IG's arguments leaves no doubt that the IG considers Petitioner to have committed fraud. See, e.g., IG's brief at 11, 20-24 (wherein the IG repeatedly refers to Petitioner's acts as "fraudulent"); IG's reply at 8 (" . . . [Petitioner] intentionally defrauded Medicare"); IG's reply at 10 (Petitioner attempted to hide his true intent to "collect reimbursement for expenses that he know [sic] or should have known were not reimbursable."); IG's reply at 12 (Petitioner gambled that Palmetto would not detect his fraud.).

The IG's determination that Petitioner had a high degree of culpability is based on the IG's conclusion that Petitioner was aware of Medicare reimbursement rules but did not follow them, and that Petitioner was aware he was not following the terms of the Plan in claiming the contribution on the cost report. The IG places particular emphasis on the contention that Petitioner knowingly claimed the contribution for employees who did no work for THHS. See IG's brief at 25-26.

The IG relied on a number of allegations of fact in determining Petitioner's conduct constituted a number of acts, occurring over several years, that show a pattern of fraud (i.e., the "nature and circumstances" less "amount claimed,"as set forth at 42 C.F.R. � 1001.901(b)(1)). The IG asserted that, based on his fraudulent conduct, Petitioner demonstrated a high degree of culpability (the criteria provided at 42 C.F.R. � 1001.901(b)(2)). I discuss my de novo review of the relevant facts below. I conclude that they show Petitioner acted recklessly in that he should have known the cost report he filed was false. I do not find that Petitioner acted fraudulently. As Administrative Law Judge Steven T. Kessel discussed in Roderick Spencer, D.P.M., DAB CR721 (2000)

. . . the distinction between fraudulent and reckless conduct may be significant for purposes of determining the length of an exclusion. A person who engages in deliberate fraud manifests a higher level of culpability than does a person who is reckless. The level of culpability that is involved in a case of deliberate fraud is tantamount to criminal culpability. A person may engage in reckless conduct and not be culpable for a crime.

Congress has recognized that an individual who commits a program related crime is a highly untrustworthy individual. The Act requires that such an individual be excluded for, at minimum, five years. Act, sections 1128(a)(1), 1128(c)(3)(B). Congress has not found that an individual whose conduct is reckless is necessarily as untrustworthy as a person who has committed criminal fraud against Medicare. There is no mandatory minimum exclusion for such an individual under sections 1128(b)(7) or 1128A of the Act.

Id. at 15-16. I find Judge Kessel's discussion of the distinction between reckless and fraudulent conduct instructive when applied to the facts in the instant case. I reviewed the evidence concerning the IG's allegations and the parties' arguments, and I conclude that Petitioner is proved to be untrustworthy because he recklessly submitted a false cost report. I find also that Petitioner took steps to communicate what he should have known was the falsity of his claim to Palmetto. However, those steps were insufficient under the circumstances to demonstrate that Petitioner is trustworthy. Those steps do, however, indicate that Petitioner's degree of untrustworthiness is not nearly as high as it would have been had he attempted to knowingly defraud Medicare.

The specific allegations the IG relied on, and which I reviewed de novo, concern:

i. Petitioner's adherence to the terms of the Plan and the related Medicare reimbursement rules;

ii. The period of time Petitioner used to calculate the amount of the contribution he claimed;

iii. The reliability of the contribution accrual Petitioner claimed on the cost report;

iv. The amount claimed; and

v. Whether Petitioner ever used the amount he claimed on the cost report to fund the Plan.

i. Petitioner's adherence to the terms of the Plan and the related Medicare reimbursement rules

I find that even if Petitioner failed to properly adopt the Plan, this is not an indication that he was engaged in a pattern of fraud or had a high degree of culpability. The allegation that Petitioner failed to follow and consider the terms of the Plan, and the related allegation that he failed to follow Medicare reimbursement rules, do not support the view that Petitioner engaged in a knowing act of fraud.

The IG asserts that Petitioner failed to properly adopt the Plan until October 6, 1995, two days after the cost report was filed. See IG's brief at 7, citing IG Ex. 32, at vol. I, 72-83, 165-70; vol. III, 178-81, 189: IG Exs. 7,8; IG Ex. 9, at 1, 8. This assertion concerns when Petitioner signed corporate minutes to fulfill the Plan's requirement provided in the Plan at Section 10.1. Section 10.1 provides that any corporation or entity - affiliate or subsidiary - can participate in the Plan with the consent of the Employer (Petitioner) and the Trustee " . . . by a properly executed document evidencing said intent and will of such Participating Employer [Petitioner]." P. Ex. 7, at 73. A document titled "THHS minutes of Board of Directors" indicates that THHS adopted the Plan on June 4, 1993. IG Ex. 32, at vol. I, 74; IG Ex. 7. The IG's position is that the evidence shows Petitioner signed the minutes as an afterthought - backdating the document to hide the fact that he never properly adopted the Plan and, knowing this, submitted the cost report fraudulently. Because the Plan was never properly adopted, the IG argued, there was no plan in place for either calender year 1992 or fiscal year 1993; and therefore, no contributions could be claimed for those periods.

The IG's argument is based on a memo sent by David Schwab, Medshares Vice President and counsel, on October 6, 1995, that requested Petitioner sign "adoption agreements" attached to the memo. Mr. Schwab's memo indicates also that the adoption agreement had been sent to Petitioner before October 6, 1995 as well. IG Ex. 9, at 1. The IG concluded that because Mr. Schwab was seeking the signed adoption agreement in October 1995, Petitioner must not have signed such an agreement prior, and Petitioner, therefore, had not adopted the Plan.

Some evidence points, however, to Petitioner having adopted the Plan in writing in fiscal year 1993. Although Petitioner testified at the FCA trial that he did not recall signing the minutes - and the transcript makes it appear he was somewhat evasive under questioning on this point (see IG Ex. 32, at vol. I, 72-74) - the minutes nevertheless bear the date June 4, 1993. P. Ex. 8. Additionally, Frank Carney, Petitioner's legal counsel concerning the Plan, testified at the FCA trial that on July 27, 1993, he proofed and reviewed a summary of THHS's adoption of the Plan. He based his testimony on his time records from that period. IG Ex. 32, at vol. III, 227.

The IG has attempted to bolster his assertion that the Plan terms were in other respects not followed, arguing that Petitioner did not provide written notice of eligibility to participate in the Plan (putatively a requirement of the Plan) to persons included on salary compensation tables from 1992. See IG's brief at 11. The IG points to IG Ex. 19, a THHS document including a sign-in roster indicating that certain THHS employees were briefed by Medshares human resources personnel concerning their prospective participation in the Plan and other benefits. The IG calls attention to this document to show there are far fewer eligible employees reflected on the roster than Petitioner ultimately used to calculate the contribution on the cost report. The document shows that 57 employees were briefed about participation in the Plan. IG Ex. 19; IG Ex. 32, at vol. II, 55-56. Despite the IG's intention to highlight this document to show that the written notice requirement was not followed, it confirms, incidentally, that Medshares' human resource officers were, in July 1993, acting consistent with Petitioner's contention that THHS had adopted the Plan.

I find that the evidence is inconclusive whether Petitioner technically adopted the Plan or not. And it is inconclusive also whether Petitioner backdated the Plan or not. What I find significant is that the evidence establishes that Petitioner and THHS presumed that THHS adopted the Plan in fiscal year 1993 and acted consistently with that understanding throughout the relevant period. The evidence does not show that Petitioner knew he did not have the Plan in effect for THHS and that, therefore, he intended to defraud Medicare by submitting the cost report for a contribution he knew he was not entitled to claim. My finding is formed also by the fact that THHS and Medshares were corporate entities through which Petitioner compartmentalized his businesses for tax and perhaps other administrative purposes. In this context, the Plan allows that THHS (Petitioner's company) may join the Plan (also Petitioner's) by evidencing Petitioner's intent to himself in writing. See P. Ex. 7, at 73. I am persuaded that if Petitioner failed to sign the minutes in fiscal year 1993, it was likely the result of his sloppiness with the formal aspects of the Plan, perhaps due to the facile familiarity between corporate units that he had created. Undoubtedly, there are good reasons why the formality of the written adoption requirement must be followed, not least among them that the Medicare reimbursement rules require following the terms of the Plan, and in this case the Plan requires the adoption to be in writing. But in this case I am determining whether this failure, if it occurred, shows that Petitioner committed fraud. Insofar as the formal adoption of the Plan by THHS is concerned, the evidence does not indicate that Petitioner schemed to defraud Medicare.

The IG alleges also that Petitioner failed to consider the terms of the Plan defining who was eligible to participate in the Plan:

Additionally, the only Employees eligible to share in the discretionary contribution for the year and thus receive an allocation under the Plan are Participants who have completed a "Year of Service" and are actively employed on the last day of the Plan year.

IG's brief at 6-7. The IG asserts that in filing the IRR with the accrual for the contribution to the Plan, Petitioner did not consider whether the employees whose salary figures were used to calculate the amount of the accrual were Eligible Employees or Participants according to the Plan's terms. IG's brief at 9. And, in filing the cost report with the accrual for the contribution to the Plan, Petitioner failed to consider the Plan terms because Petitioner did not determine which, if any, employees used for the calculation were actually employed by THHS, " . . . and thus entitled to a contribution." IG's brief at 11. As I noted above, the IG argues also that the Plan terms require that prospective eligible employees be provided written notice of their eligibility prior to the close of the Plan year. Petitioner knew that there were only 57 employees at THHS at the date of purchase, so, the IG argues, no employee of THHS prior to June 2, 1993 would have received written notice of eligibility, or, for that matter, signed beneficiary designation forms which the IG claims also are required under the terms of the Plan. IG's brief at 11.

The evidence shows, however, that none of these allegations are indices that Petitioner engaged in fraud. At the time Petitioner filed the IRR, he could have relied, reasonably, on the information provided to him by A+. As I noted above, Petitioner calculated the pension expense by taking 15% of the total fiscal year 1993 salary figure for THHS employees reflected on a draft IRR provided to Petitioner by Bertha Holloway, A+'s consultant. IG Ex. 32, at vol. I, 69-70; vol. II, 95; vol. III, 168. While I find that Petitioner should have been more diligent in pursuing whether persons who did no work for THHS were included in the compensation figures used to calculate the contribution amount (see section II. B. 2. a. iii, below), the evidence shows that at the time of the IRR filing, Petitioner's actions were consistent with determining what a valid accrual for the contribution would be. Petitioner may have ultimately calculated the contribution incorrectly, and intervening matters, such as the inability to attain information to properly support the IRR accrual have, in hindsight, made it seem likely the IRR was false. However, at the time Petitioner determined to make the IRR accrual, it was not evident that he might be unable to properly determine participant eligibility for the final accrual on the cost report. Thus, I conclude that such a failure by Petitioner to follow a term of the Plan in claiming the accrual on the IRR is not indicative of a pattern of fraud or of a high degree of culpability. My conclusion in this regard is also that Petitioner's filing of the IRR does not support that Petitioner committed several relevant acts (i.e., filing the IRR and then subsequently the cost report, as opposed to merely one act: the false cost report), or that Petitioner's conduct should be considered to have occurred over an extended period of time.

I agree with the IG, nonetheless, that Petitioner failed to properly consider what employees were actually THHS employees and that this weighs against Petitioner in applying the 42 C.F.R. � 1001.901(b) criteria. I distinguish, however, between failures that would cause a petitioner's claim to be false and failures that show intentional fraud. Petitioner's failure is that he was reckless concerning whether non-THHS employees were included in his calculation for the cost report. But, as I discuss in greater detail below, Petitioner was not engaged in a pattern of fraud or exhibiting a high degree of culpability, because when he communicated to Palmetto that his accrual for the contribution was based on an estimate, he deliberately revealed that there was a defect in the cost report. Thus, if he violated a Plan term by failing to properly consider whether employees were THHS employees, that may have rendered the claim false and thus formed the basis for a period of exclusion, but it does not demonstrate that Petitioner violated the Plan term deliberately, intending to elude the Palmetto auditors. Had Petitioner attempted to elude Palmetto auditors this would show a high degree of culpability which would make reasonable a relatively long period of exclusion.

Concerning whether Petitioner violated a Plan term concerning written notice to prospective Plan participants, the evidence shows that Petitioner did not provide written notice of eligibility to all prospective participants or provide designation of beneficiary forms to all of the employees covered by the contribution allocation. The Plan seems to be written, however, so as not to allow this kind of technical failure to harm a potential employee participant/beneficiary. For instance, Section 3.1 of the Plan provides that an Eligible Employee shall be eligible to participate in the Medshares plan " . . . on the date of his employment with the Employer." It provides also that "[t]he Employer shall give each prospective Eligible Employee written notice of his eligibility to participate in the Plan prior to the close of the Plan Year in which he first becomes an Eligible Employee." P. Ex. 7, at 32. Section 3.2 of the Plan provides that to participate, Eligible Employees apply to the Employer and agree to the Plan terms. It may be the case, however, that these Plan requirements should be perceived, when contrasted with other terms of the Plan, as discretionary in some circumstances. For instance, section 3.2 provides also that if an Eligible Employee accepts any benefits of the Plan, the employee is "automatically" deemed to have made the application and be bound by the terms. This seems to anticipate employees not making the application as required, yet being treated as a Participant or otherwise Eligible Employee. See P Ex. 7, at 32. Moreover, Section 3.4 of the Plan provides that the Administrator (Petitioner) determines the eligibility of each Employee for participation in the Plan based on information furnished by the Employer (Petitioner also). The Administrator's decision is "binding on all persons." The Plan provides also for a process to review the Administrator's eligibility determinations. P. Ex. 7, at 33. The Plan terms provide also that if it is learned that a person is included as a participant in the Plan who should not have been, the Employer (Petitioner)

. . . shall not be entitled to recover the contribution made with respect to the ineligible person regardless of whether or not a deduction is allowable with respect to such contribution . . . and [the contribution for ineligible employees] . . . shall constitute a Forfeiture for the Plan Year in which the discovery is made.

P. Ex. 7, at 34. Thus, the Plan's terms seem to have been drafted to provide some discretion or forgiveness concerning the entrance requirements for eligibility to participate in the Plan. I do not attempt to resolve whether Petitioner's failure to follow one of these Plan terms could be rectified, under Medicare rules or regulations, by utilizing the flexibility in another provision. Nonetheless, the plain language of the terms of the Plan persuades me that these matters are subject to more than one reasonable interpretation. Thus, the evidence does not support that Petitioner's failure to provide written notice to all eligible employees is indicative of his engaging in a pattern of fraud or show that Petitioner is highly culpable.

The IG's assertions that Petitioner failed to follow the relevant Medicare reimbursement rules are similar to those concerning the failure to follow the Plan's terms. The IG argues that there was no written agreement between Medshares and THHS as required by the Plan's terms and Medicare regulations. See IG's brief at 12, citing PRM � 2142.3. And, the IG argues, Petitioner failed to consider terms of the Plan when "establishing the proper contribution amount as required by the Medicare reimbursement rules." See IG's brief at 12, citing PRM �� 2142.3 and 2140.3A. The IG argues also that Petitioner violated Medicare reimbursement rules because he did not use the funds paid to THHS, i.e., the check received from Palmetto for the contribution allocation claimed on the IRR, for the sole benefit of participating employees as required under Medicare rules. In support of this contention the IG notes that the reimbursement funds were placed into Medshares' general account, and thus the funds cannot be traced from Medicare to the Plan. See IG's brief at 13. On a related point, the IG asserts that Petitioner failed to follow Medicare reimbursement rules by not funding the Plan with the contribution amount (i.e., liquidating the contribution amount) within one year of the close of the fiscal year or getting an appropriate extension from Palmetto. The IG argues that because Petitioner had not followed these rules, his cost report was false.

Petitioner argues that the rules in the PRM do not have the force of regulations, and the provisions cited by the IG were not in effect during the period relevant to this case. See Petitioner's brief at 37-39. The IG replied to this argument that Petitioner's "observation is immaterial to the question of whether Petitioner knowingly presented a false or fraudulent claim for reimbursement." IG's reply at 19, n.2. The IG views Petitioner's having allegedly not followed Medicare reimbursement rules as showing that he knew the cost report was false but filed it anyway - to the IG, an indication of his intent to defraud. I disagree. Petitioner's failing to follow Medicare reimbursement rules may have made his claim false and caused Palmetto to disallow it. But when considered in light of Petitioner's disclosures to Palmetto that the claim was an estimate, Petitioner's conduct is not consistent with fraud. Moreover, the record shows that concerning the time limit for liquidating the contribution to the Plan, Petitioner took the position openly with Palmetto that he should be granted an extension. Petitioner also disclosed to Palmetto that he had not liquidated the contribution timely, and he ultimately funded the Plan in conjunction with the appeal to Palmetto for an extension. Petitioner's position may have been wrong, but his analysis was based on a reasonable interpretation of the relevant authorities and not putatively frivolous. See IG Ex. 38; P. Ex. 31. The underlying basis for his request, the recalcitrance of A+ to provide adequate records for documentation, was, as I discuss further below, rational and supportable. Thus, if Petitioner failed to follow Medicare reimbursement rules when presenting his claim, the evidence shows that this was not an indication that Petitioner was engaged in a pattern of fraud or that Petitioner had a high degree of culpability.

ii. The period of time Petitioner used to calculate the amount of the contribution to the Plan

In determining that Petitioner engaged in a pattern of fraud and had a high degree of culpability, the IG attached significance to evidence that, undisputed, gives the appearance that Petitioner's calculation of the contribution allocation was so unreasonable as to be clearly fraud. In reviewing the reasonableness of the proposed period of exclusion, I am not to substitute my judgment for the IG's. See Barry D. Garfinkel, DAB No. 1572 (1996). I do note, however, that to determine if the criteria upon which the IG based the period of exclusion are demonstrated, I must determine if the facts are as the IG alleges they are. The evidence concerning the period of time Petitioner used to calculate the contribution accrual does not support the IG's conclusions.

The IG asserted that Petitioner calculated the allocation for the Plan contribution based on total compensation for THHS calendar year 1992, totaling approximately $4 million, despite information that the proper figure was $91,061. The IG further claims that a contribution had been made on behalf of THHS by A+ when A+ operated THHS for the first 11 months of fiscal year 1993. I disagree with the IG's conclusions. At best the evidence shows that Petitioner, in reasonable reliance on his counsel, Mr. Carney, used the wrong period (calendar year 1992) to calculate the amount of the contribution accrual. The evidence does not show that the appropriate period would have been the last month of fiscal year 1993 when THHS's compensation was $91,061. The evidence establishes that a contribution to a pension or other retirement benefit plan was not made by A+. Thus, the IG's assertions do not support a determination that Petitioner engaged in a pattern of fraud or had a high degree of culpability.

The IG contrasts the $4 million figure relied on by Petitioner with what the IG asserts is information showing THHS's compensation for fiscal year 1993 was $91,061. IG's brief at 10. The exhibits the IG cited for that figure reflect that this was the total salary figure for THHS for the period June 1, 1993 - June 30, 1993. IG Ex. 17, at 1-2. Implicit in this assertion is that Petitioner impermissibly calculated the compensation using the period before he purchased THHS in June 1993. It is undisputed, however, that Petitioner's purchase of THHS was a stock purchase as opposed to an asset purchase, which meant that THHS maintained its corporate identity for all of fiscal year 1993. Thus, THHS did not become a different corporation for the last month of fiscal year 1993 by virtue of Petitioner's purchase. See P. Exs. 5,6. The evidence demonstrates that, notwithstanding other errors in Petitioner's calculation, the Plan could be adopted by the last day of the fiscal year, June 30, 1993, effective the first day of the fiscal year, July 1, 1992. Mr. Carney testified the Plan could be adopted retroactively to the first of the Plan Year (see P. Ex. 10, at 37), and Richard Ellis, the third party administrator for the Plan (referred to by the parties as the Plan Actuary) testified that he too understanding the Plan to operate this way. IG Ex. 32, at vol. III, 107. The evidence in the record supports that Petitioner reasonably believed this was a valid interpretation of the Plan's legal implementation. Based on the evidence in the record, there is no basis to conclude that the Plan, as a matter of tax and/or pension law, cannot be adopted retroactively. Thus, while there were defects in Petitioner's estimate of the accrual amount, the evidence shows that it was not the case that Petitioner substituted a gross compensation figure of approximately $4 million when he knew the appropriate number was closer to $90,000.

Moreover, as I noted above, Ms. Holloway testified in the FCA trial that her draft IRR, used by THHS, included salary and wage information for the entirety of fiscal year 1993. IG Ex. 32, at vol. II, 179. Ms. Holloway determined that THHS's gross salary expense for fiscal year 1993 was $3,513,462. P. Ex. 11, at 2. Whatever the defects in Petitioner's final accrual, the evidence is that it would have been appropriate to use compensation figures for a whole year's time, and that Petitioner's estimate was not as culpably wrong as the difference between $91,061 and $4 million would make it appear to be.

Another consideration when analyzing the period Petitioner used to calculate the accrual amount, is the advice Petitioner received from Mr. Carney. Mr. Carney testified in the FCA trial that at Petitioner's request, he researched how to calculate a contribution to the Plan for fiscal year 1993, and he formed the opinion that to determine the contribution for the fiscal year ending June 30, 1993, THHS's gross compensation for calendar year 1992 should be used because " . . . the only calender year available in Trevecca's corporate year was the year ending December 31, 1992 . . . [and] this is the same calender year that all of the members of the control group would use for calculation of their contribution to the plan." IG Ex. 32, at vol. III, 243. Mr. Carney submitted this advice to Petitioner in a letter in September 1995. P. Ex. 25. I note, however, that Mr. Ellis testified at the FCA trial that it was his opinion that it was not appropriate to file a claim for a contribution for calendar year 1992 if the Plan was adopted in calendar year 1993. IG Ex. 32, at vol. III, 110-11. Nonetheless, Mr. Carney's credentials as counsel competent to give advice concerning the Plan are not challenged in the record. So, I conclude that Petitioner's reliance on Mr. Carney's advice to use calendar year data for his calculation shows that using calendar year 1992 was not part of a scheme to defraud Medicare.

Finally, the IG's assertion that Petitioner knew that a contribution had already been claimed for fiscal year 1993 by A+ would, if true, support Petitioner having a higher degree of culpability because it would indicate that Petitioner knew he did not have a valid basis for claiming a contribution Palmetto had paid. The IG's assertion is based on Ms. Holloway's testimony at the FCA trial that on the draft IRR she prepared in 1993, there was a benefit expense in the amount of $127,000 claimed for an "MOA" plan. IG Ex. 32, at vol. II, 177. Mr. Lorenz, a witness called to present expert testimony on Petitioner's behalf at the FCA trial, and certified by the FCA court as an expert in Medicare reimbursement, testified, however, that the MOA plan was a Medicare-certified employee welfare benefit plan. The purpose of an MOA plan is to provide death, disability, and life insurance benefits to employees, not to provide a retirement or pension benefit. IG Ex. 32, at vol. IV, 78. Ms. Holloway did not testify about the MOA plan in detail, nor is there any other evidence that the MOA plan provided a deferred compensation benefit for employees. Thus, the weight of the evidence does not support the position that Petitioner knowingly attempted to claim a contribution that had been claimed previously. And, therefore, I do not factor this into the analysis of Petitioner's culpability or otherwise consider that it supports that Petitioner committed fraud.

iii. The reliability of the contribution accrual Petitioner claimed on the cost report

Although I conclude that the IG improperly considered some facts in applying the criteria to the exclusion determination, I am persuaded there was a reasonable basis for Petitioner's claim to have been found false by the FCA jury. I find the evidence shows that Petitioner was reckless and sloppy concerning the reliability of the cost report and the precision of his estimate of the contribution amount. Petitioner did, however, communicate sufficiently with Palmetto to ensure that his claim could not reasonably be perceived to be an attempt, as the IG argues, to "game" Medicare, hoping the claim would evade Palmetto's auditors. I conclude that Petitioner's disclosures should be applied to the degree of Petitioner's culpability and the nature and circumstances surrounding his false claim. I find that Petitioner's communication was inadequate, however, to provide Palmetto enough information to allow me to determine that Petitioner's action was minor and/or merely technical in nature.

The IG's assertion that Petitioner failed to determine whether any of the employees included in the calculations were "even employed by THHS" (see IG's brief at 9) overstates the matter. Ms. Holloway testified at the FCA trial that there were 397 or close to 400 employees at THHS between July or August of 1992 and March of 1993. IG Ex 32, at vol. II, 187. It was reasonable for Petitioner to used this estimate, reflected on the draft IRR Ms. Holloway prepared, to conclude that there were approximately this number of employees employed by THHS. Petitioner was, however, privy to information that should have caused him to determine whether persons who never worked for THHS during the relevant period were included in his accrual. Petitioner's failure in this regard leads me to conclude he acted recklessly regarding the accuracy of the cost report. Petitioner should have known that the possible inclusion of persons who did not work for THHS would likely have rendered the entire accrual non-reimbursable - Petitioner should have disclosed this in detail to Palmetto.

The information came from two sources. Ms. Holloway testified at the FCA trial that there were employees appearing in the records used by Petitioner to calculate the contribution accrual who were not employed by THHS during the period reflected in those records. IG Ex. 32, at vol. II, 188-89. Reviewing a schedule of employees used by Petitioner to calculate the accrual, Ms. Holloway recognized two employees by name who she testified were not THHS employees. Id. at vol. II, 189. Ms. Holloway knew that those employees worked in home health agencies that served a different geographical area than THHS. Id. at vol. II, 189-90. And there were three other employees in the schedule that Ms. Holloway testified she knew by name who were not employed by THHS. Id. at vol. II, 193. Ms. Holloway testified that she met with Petitioner in the spring of 1993 in anticipation of Petitioner's purchase of THHS to " . . . make sure that Mr. Winters understood the number of branches that were part of Trevecca at the time that he was contemplating purchasing Trevecca." Ms. Holloway testified further that she explained to Petitioner that several of the branches that had belonged to THHS were transferred to another entity at some point in April or March 1993. The effect of that transfer of branches, Ms. Holloway testified, was to reduce the number of employees "reporting under" THHS and that it would reduce the number of visits for THHS. Id. at vol. II, 170-71. Ms. Holloway's testimony is not disputed by Petitioner.

Moreover, Bruce Hayden, Senior Vice President of Internal Audit/Internal Systems for THHS and the employee who prepared the calculation for the allocation on the cost report, told Petitioner that he could not differentiate between A+, Health Care of America and THHS employees on the SUTA data he was using to calculate the contribution allocation. IG Ex. 32, at vol. III, 133-34.

Both Mr. Hayden and Petitioner testified that they learned from Dean Alverson, an officer of Health Care of America, that although the SUTA forms they used reflected that the employees were employed by Health Care of America, employees listed on Health Care of America's SUTA tax forms had performed services for THHS. IG Ex. 32, at vol. I, 129; vol. III, 145-50. There is no evidence to dispute that Mr. Alverson was an officer of Health Care of America and that he informed Petitioner that all the employees on the relevant SUTA forms had provided services to THHS. And it is also true that taken together, the total compensation Mr. Hayden calculated as the basis for the contribution accrual, $4,139,682 (compensation for calender year 1992), was not putatively unreasonable given Ms. Holloway's estimate on the IRR for fiscal year 1993 of $3,513,462. Nonetheless, while Petitioner relied on Ms. Holloway's estimate for the IRR, the evidence suggests he ignored the information she had given him concerning THHS losing employees in a corporate restructuring. For Petitioner to have accepted the favorable to Petitioner and unsupported information provided by Mr. Alverson and to have not considered equally the unfavorable information and to have failed to disclose this to Palmetto in detail, was reckless.

The evidence does not resolve whether employees not properly considered THHS employees were included in the cost report accrual calculation or not. The IG asserts that Petitioner's own testimony betrayed that he knew there were non-THHS employees included in the contribution calculation. IG's brief at 17-18. Petitioner testified that Mr. Alverson could not tell who the THHS employees were. IG Ex. 32, at vol. I, 129-30. Mr. Carney's advice to Petitioner, however, was that all employees who provided services to THHS could be considered for the contribution (provided they met other requirements). Id. at vol. III, 219-20. Thus, it is not clear whether, in this context, identifying THHS employees meant identifying employees who provided no services to THHS or identifying employees who provided services to THHS but were reported on the tax returns of Health Care of America or A+. Nonetheless, there is no evidence that Petitioner informed his counsel, Frank Carney, or Mr. Ellis, of the potential problem, nor sought other assistance to understand the consequences of not being able to tell if there were employees who did not work for THHS included in his accrual calculation. Moreover, there is no evidence that Petitioner informed Palmetto of the possible inclusion of employees who did not work for THHS in the calculation of the accrual. This is significant because the inclusion of persons who did not work for THHS would likely have rendered the entire contribution non reimbursable.

Furthermore, Petitioner's estimate to Palmetto was, under the circumstances, reckless. As James J. Peebles, Manager of Palmetto's Medicare Audit and Reimbursement office, explained in his testimony at the FCA trial, cost reports are not supposed to be estimates. Estimates, he said, are not proper for Medicare reimbursements; they get disallowed. IG Ex. 32, at vol. II, 256. Petitioner knew this. This is significant because it leads me to conclude that Petitioner made an unacceptably incautious estimate.

For an employee to be eligible to receive an allocation of the contribution, the Plan required that the employee have completed a year of service (section 1.52 of the Plan defines "Year of Service" as working at least 1000 hours (P. Ex. 7, at 22)) and be employed on the last day of the Plan year. See IG Ex. 32, at vol. III, 94-96, 97. At the time Mr. Hayden was calculating the amount of the contribution to accrue on the cost report, he explained to Petitioner that he could not tell from the SUTA data whether the 1000 hour requirement of the Plan and end of year requirement had been met. IG Ex. 32, at vol. III, 130-34. The evidence shows that Petitioner recklessly ignored this information. If Petitioner, Mr. Hayden, or other of the Medshares staff could not improve the "estimate," Mr. Ellis seems to have made short work of it. As indicated in the letter from Mr. Ellis to Medshares dated May 31, 1996, Mr. Ellis narrowed the estimate to conform with the year of service requirement in the Plan using the available data. In testifying about this calculation at the FCA trial, Mr. Ellis explained that he calculated a gross salary for THHS of $2,168,950.64. His approach, Mr. Ellis explained, was to assume persons who had very low earnings recorded for the year - for example, a person who earned less than $8,000 (and there were obvious examples in the data Mr. Ellis reviewed, for instance the person who had earned only $15 for the year) - could not have performed 1,000 hours of service. IG Ex. 32, at vol. III, 94-97. Based on the information Mr. Ellis reviewed, he calculated the appropriate contribution to the Plan should have been $466,438. Id. at vol. III, 103. Petitioner's failure to do, or have done by someone qualified, even this basic vetting of the accrual calculation before submitting it was inexplicably sloppy and contributes to the impression he was reckless in submitting the cost report.

Despite these faults in Petitioner's claim, I find Petitioner's disclosures to Palmetto were at least minimally effective. I have considered also that the extenuating circumstance of Petitioner's predecessor being unwilling and/or unable to provide the information necessary to support the cost report substantiates Petitioner's dilemma. I conclude that these factors weigh in Petitioner's favor because they show he was not engaged in fraud.

The evidence that Petitioner disclosed to Palmetto that he was trying unsuccessfully to get supporting information for the fiscal year 1993 cost report is substantial and persuasive. As I noted above, under Medicare rules, the cost report for fiscal year 1993 was due to be filed within 90 days of the close of the fiscal year. THHS's fiscal year 1993 closed on June 30, 1993; thus, the cost report was due by September 30, 1993.

In a letter dated October 20, 1993, from Allen Ruffin, Medshares' Chief Financial Officer, to Palmetto, stamped "received" on October 27, 1993 by Palmetto's Medicare Audit and Reimbursement, Mr. Ruffin conveyed that Medshares did not have the information it needed to file the June 30, 1993 cost report. Mr. Ruffin's letter indicated that Medshares would promptly forward the cost report once the information was obtained. P. Ex. 15.

Another letter dated November 1, 1993 from Mr. Schwab addressed to Lisa Hutchinson, Palmetto's Reimbursement Supervisor for Medicare Audit and Reimbursement, notes several problems THHS was having securing information, and it references also a request for an extension. Mr. Schwab indicated Medshares would make every effort to keep Palmetto informed of developments concerning THHS's cost report (this letter does not have a stamp noting that it was received). P. Ex. 16.

Mr. Schwab sent next a letter dated February 15, 1994, addressed also to Ms. Hutchinson, bearing Palmetto's receipt stamp, dated February 16, 1994. That letter references a discussion purported to have occurred on February 15, 1994 between Ms. Hutchinson and Mr. Winters. The letter seeks to confirm to Palmetto that THHS has resorted to litigation against A+ to obtain information to support the June 30, 1993 cost report. The letter discusses details of the steps taken through litigation to obtain court-ordered cooperation from A+. The letter indicates that at that point the efforts had been unsuccessful. P. Ex. 17.

Another letter from Mr. Ruffin to Ms. Hutchinson was apparently sent via fax on February 4, 1994 (this letter does not bear a receipt stamp). In this letter, Mr. Ruffin also discusses the litigation by THHS against A+ to get documentation for supporting the cost report. This letter is specific that the information sought by THHS from A+ is final financial statements, the revised general ledger, revised trial balances, and numerous other items necessary for THHS to complete the cost report. Mr. Ruffin's letter concludes " . . . and soon as we obtain the information, we will promptly complete and submit to you the cost report for fiscal year ending June 30, 1993." P. Ex. 18.

In a letter dated July 11, 1995, apparently faxed by Elizabeth McNeill, Medshares assistant corporate counsel, to Ms. Hutchinson (there is no stamp indicating receipt), Ms. McNeill seeks to confirm the subject of discussions purportedly held between Ms. McNeill, Mr. Winters, Mr. Hayden, and Ms. Hutchinson on June 30, 1995. Ms. McNeill seeks to confirm in her letter that Palmetto gave THHS until September 30, 1995, to file the cost report for fiscal year 1993. In the letter Ms. McNeill wrote "[a]s further discussed, because of the providers inability to obtain adequate records from the prior owners of the agency, the provider may have to use a combination of actual costs and estimated or comparable costs." P. Ex. 20 (Emphasis added).

Next, in a letter dated October 4, 1995 (this letter does not bear a receipt stamp) from Mr. Winters and addressed to Michelle Murphy, Palmetto Medicare Audit and Lien, Petitioner indicated that the cost report is being filed based on "best available information." P. Ex. 21. Petitioner requested also an extended payment plan to pay the net amount due to the program, to give time for THHS to seek indemnification from the previous owners. Petitioner also discussed his efforts to obtain the information he was lacking to precisely support the cost report. He indicated to Ms. Murphy that after a number of attempts to obtain the information, the previous owner of THHS claimed at a meeting that the information was lost or destroyed in a computer crash. Id.

In a separate letter from Petitioner to Palmetto's Audit and Reimbursement, also dated October 4, 1995 and bearing a receipt stamp from Palmetto, Petitioner enclosed the cost report. The letter is unambiguous that the cost report was based upon the best available information, and the letter indicates that the records available were substantially limited due to THHS's change of ownership. The letter does not detail specifically that the accrual for the Plan is what may be unreliable, nor does it detail the reasons the accrual for the Plan may be unreliable. P. Ex. 22.

In yet another separate letter dated October 4, 1995 from Petitioner to Palmetto's Audrey Stiles, in Settlement and Reporting and cc'd to Ms. Hutchinson (stamped received October 5, 1995), Petitioner sought to explain that the provider cost report reimbursement questionnaire was only completed for the month of June 1993. P. Ex. 23. Petitioner cited the problems occurring from THHS's changes of ownership and management between July 1, 1992, and May 31, 1993. Petitioner essentially claimed that because he did not control THHS and did not manage it during that period, he had "very little information" about that period. Id.

Mr. Hayden sent a letter dated October 4 1995 to Mr. Peebles, Manager of Palmetto's Medicare Audit and Reimbursement office (the letter bears Palmetto's receipt stamp dated October 5, 1995). P. Ex. 28. In the letter, Mr. Hayden seeks to confirm a conversation he purportedly had with Mr. Peebles during which Mr. Hayden explained that the cost report includes an accrual for a pension expense calculated based on best available information. Mr. Hayden wrote that THHS was trying to get further information from the State of Tennessee and there was some problem with legibility of some of the documentation. Mr. Hayden expressed his understanding that once the necessary records were acquired, a recalculation could be done and the cost report amended if necessary. Id.

Finally, Petitioner enclosed with the cost report a statement on the Cost Report Questionnaire (P. Ex. 29) concerning the "Liquidation of Pension Plan Liability." The statement explains that the contribution to the Plan was not liquidated in accordance with Medicare requirements, but that this was due to the "extenuating circumstances" discussed in the correspondence, and the statement indicates that Petitioner believes it should qualify for an extension of the liquidation requirement. Id.

Petitioner characterized the disclosures in the above referenced correspondence as follows:

. . . the undisputed evidence shows that from the time the IRR was filed (June 1993) to the time the Cost Report was filed (October 1995), Winters and his staff at MMGI [Medshares] engaged in a constant attempt to get the records necessary to prepare and file the Cost Report from A+HomeCare, openly and repeatedly informed Palmetto of these efforts, and only filed the Cost Report upon being ordered by Palmetto.

Petitioner's brief at 23. The IG argues that the information that Petitioner sought through litigation and otherwise from A+ had nothing to do with the pension contribution allocation on the cost report because, the IG asserts, the evidence is that the information Petitioner was seeking dealt with fiscal year 1993, not calender year 1992. I disagree. The evidence shows that in September 1995, Petitioner received the opinion letter from Mr. Carney advising Petitioner for the first time to calculate the plan accrual using calendar year 1992 data. P. Ex. 25. According to Petitioner's correspondence with Palmetto, in June 1995, Petitioner and/or his staff discussed filing the cost report by September 30, 1995. So in the intervening period, between September 30, 1993 when the cost report was due and September 1995 when they were advised to use calender year 1992 information, Petitioner having sought information concerning fiscal year 1993 from A+ is consistent.

Additionally, there is an abundance of unchallenged evidence that Petitioner's attempt to gain supporting documentation from his predecessor was not a ruse to deceive Palmetto. For instance, a work summary memo by Scott Crawford, of Medshares accounting staff, sets forth a bullet point summary of the efforts to obtain information from A+ to support the cost report. P. Ex. 13. And, on August 31, 1993 (very near the time the fiscal year 1993 cost report was due to be submitted to Palmetto), Mr. Ruffin wrote a letter addressed to Ms. Holloway that indicated Petitioner was seeking information that would have been relevant to the cost report. P. Ex. 12.

Moreover, Ms. Holloway testified at the FCA trial that she had been cooperative in assisting A+ employees put together registers and vendor invoices for Medshares to backup the general ledger. She testified that she was not sure if THHS asked for information to back up the IRR, but she said "I think around - starting around July of 1992 [1993] . . . there were requests going back and forth asking for certain things, asking about certain agencies, when, what branches were part of what companies. IG Ex. 32, at vol. II, 184-85. And, Ms. Holloway testified, she with Mr. Ruffin, Medshares' attorney, and A+'s attorney met in December 1994 in Nashville (several other people were present also she recalled), and THHS made a request for documents at that meeting, which documents, Ms. Holloway testified, she assumed had to do with the June 30, 1993 cost report. Id. at vol. II, 185.

This evidence establishes that Petitioner sought information to support the cost report from A+, and it is undisputed that A+ was as uncooperative as Petitioner has asserted. Thus, if it were the case that Petitioner sought to hide his attempt to defraud Medicare by manipulating his own employees, and pursuing bogus litigation to compel information he did not need for the cost report, over a period of years, Petitioner's conspiracy would have been so intricate and expensive that I am further persuaded of its unlikeliness.

The IG alleges also that Petitioner's disclosures show that he engaged in fraud because he continued to mislead Palmetto after the filing of the cost report. The IG asserts that a statement in the letter in which Petitioner sought an extension to liquidate the contribution (IG Ex. 38) undermines Petitioner's claim that he dealt openly and honestly with Palmetto. Petitioner's previous disclosures to Palmetto had indicated, consistently, that Petitioner did not have sufficient information to support the cost report and that this was due to his inability to obtain the information from A+. The letter to Palmetto seeking the extension, dated June 4, 1996, indicates that between February 1995 and the date of the letter, Petitioner came into possession of data from A+, some of the information in a form that required Petitioner to decipher it and supplement it with other sources. The letter indicates further that Petitioner now had sufficient information to liquidate and allocate the contribution without running afoul of IRS requirements. None of Petitioner's previous correspondence had indicated that Petitioner possessed information sufficient to certify that he had information in greater detail and reliability than what he called "best available" on the cost report. Petitioner has not explained whether his statement in the June 4, 1996 letter means that he had a greater degree of confidence in the support for the cost report than he had when he filed it. Or, whether his statement indicates that he believed, at the time of the June 4, 1996 letter, that his estimate has been subjected to sufficient analysis, by Mr. Ellis for instance, so that it is satisfactory for IRS requirements although for Medicare purposes still as he represented in the letters surrounding the filing of the cost report. Petitioner's failure to explain this does not prove he was misleading Palmetto when he requested the extension, but his failure to explain fully opens Petitioner to further negative inferences about his conduct. Even, however, were I to find that Petitioner indicated to Palmetto that he had obtained all the information he needed to fully support the contribution, when he had not, this would not change the fact, established by the weight of the evidence, that Petitioner disclosed on the cost report and prior to filing the cost report that the accrual for the contribution was an estimate.

The IG argues also that Petitioner's correspondence with Palmetto does not demonstrate that Palmetto agreed with what Petitioner and his staff sought to confirm, e.g., that Petitioner was ordered to file the cost report using "best available information" (see Petitioner's brief at 23, 25), or that Palmetto can be inferred to have granted Petitioner an extension due to unusual circumstances simply because Mr. Peebles testified at the FCA trial that extensions can only be granted under unusual circumstances. See, IG Ex. 32, at vol. II, 27; see also Petitioner's brief at 12, citing Mr. Peebles' testimony. I agree with the IG to the extent the correspondence does not establish that Petitioner was granted an extension of time to file the cost report (although the evidence is consistent with this possibility), nor does the correspondence establish that Palmetto assented to Petitioner's filing a cost report using an estimate or "best available information." I have no reason, however, to doubt that the correspondence from Petitioner to Palmetto is authentic and was received by Palmetto, even for those exhibits that do not bear Palmetto's received stamp. The FCA trial involved the deposing of and testimony of Palmetto employees, including the recipients of the letters, but despite ample opportunity for the receipt of these letters or the content of these letters to be challenged, there is no evidence in the record that undermines their reliability.

Moreover, Mr. Peebles testified that based on the October 5, 1995 letter to Palmetto from Mr. Hayden, which Mr. Peebles testified was unusual, Palmetto would have conducted an audit of the Plan, including a review of the Plan, verification of the employees that worked for the company during that time period, what the employees' salaries were, how the allocation was calculated, whether the allocation has been paid, whether the allocation was still an accrual, and whether the allocation amount had been placed in the Plan. And, Mr. Peebles testified, because of the letter, Palmetto knew the pension expense was based on best available information. IG Ex. 32, at vol. II, 33-34.

The IG asserted also that Petitioner's disclosures do not demonstrate that Petitioner's conduct was not fraudulent nor that he had a lower degree of culpability because Petitioner was gaming Palmetto. The IG cites the case of United States v. Calhoon, 97 F.3d 518 (11^th Cir. 1996) to illustrate the IG's contention that Petitioner's disclaimers to Palmetto were disingenuous. The court in Calhoon noted, as the IG quoted in its reply brief,

[w]hile it is true that a provider may submit claims for costs it knows to be presumptively nonreimburseable, it must do so openly and honestly, describing them accurately while challenging the presumption and seeking reimbursement. Nothing less is required if the Medicare reimbursement system is not to be turned into a cat and mouse game in which clever providers could, with impunity, practice fraud on the government.

Calhoon, 97 F.3d at 529. (Emphasis added). The court faulted Mr. Calhoon for filing cost reports that were presumptively non-reimbursable while disguising their true nature because, the court determined, this was a deliberate gamble, given Medicare's limited resources to audit cost reports, on the odds the cost reports would not be questioned. The IG claims that, like Calhoon, Petitioner gambled that the defects in his cost report would not be detected by Palmetto's auditors. The IG notes that " . . . for the period of almost two years after the IRR was filed, and Petitioner was reimbursed for the pension expense claim, Petitioner took no steps to gather the necessary information he claimed was necessary to claim the expense." IG's reply at 10.

As I explained above, I find the evidence does demonstrate that Petitioner took steps between the filing of the IRR and the filing of the cost report to substantiate the expense including, for instance, suing A+. Nonetheless, the Calhoon court's analysis does contribute to my analysis of the nature and circumstances of Petitioner's claim and his degree of culpability. And I conclude, similarly to the IG, that the passage quoted from the Calhoon court is instructive in examining Petitioner's disclosures, for I find that Petitioner fell short of describing his claim "accurately while challenging the presumption and seeking reimbursement." I conclude also, however, that the Calhoon decision is an apt illustration of why Petitioner's culpability is much lower than the IG found it to be.

Petitioner's disclosures to Palmetto did not explain, as they should have, that some information indicated that in the contribution may have been factored persons who did not work for THHS. When Petitioner informed Palmetto that he had made estimates and used the "best available information," Palmetto may have interpreted that to mean that the amount of the contribution was supportable (for instance, as a percentage of gross compensation), but that the allocation could be adjusted when a greater level of detail was obtained from A+. Palmetto may have taken a different view of the quality of the estimate if it believed Petitioner could not determine whether employees who could not be the basis for Medicare reimbursement were included. Petitioner should have presumed these details were significant, and failing to disclose them is not "describing them accurately while challenging the presumption and seeking reimbursement."

Petitioner's failing in this regard should not end the comparison with Mr. Calhoon, however. What the Calhoon court was considering when it noted that the reimbursement system must not be turned into a "cat and mouse game" was significantly different from what Petitioner did. The court found that Mr. Calhoon had attempted to be reimbursed for costs associated with "outreach." Mr. Calhoon was caught deliberately disguising advertising costs which he knew to be non-reimbursable as "outreach" in an attempt to fool the fiscal intermediary. In fact there was testimony from a subordinate of Mr. Calhoun that Mr. Calhoun had invented the "outreach" category specifically to elude Medicare auditors. Calhoon, 97 F.3d at 528-29. Moreover, unlike Petitioner in the instant case, Mr. Calhoon did not ensure an audit by drawing attention to the unreliability of his claim. Thus, while Calhoon certainly highlights how Petitioner failed to adhere to the rigorous requirements for disclosing to Palmetto, it also distinguishes Petitioner's actions from Mr. Calhoon's actions which were truly fraudulent and highly culpable.

iv. The amount claimed

Petitioner argues that the "Medicare program was not damaged in the slightest as a result of the accrual." Petitioner's brief at 21. The regulation concerning the reasonableness of the period of exclusion (42 C.F.R. � 1001.901(b)), however, refers to the 'amount claimed,' and the sum claimed by Petitioner was significant: $620,952. Moreover, Petitioner agreed that he had the benefit of monies paid to THHS ($314,585) by Medicare based on the IRR. Petitioner's brief at 11. Thus, the evidence supports that Petitioner's false claim had significant financial consequences to Medicare.

v. Whether Petitioner ever used the amount he claimed on the cost report to fund the Plan

The IG claims that it is an indication also of the nature and circumstances showing Petitioner's fraud, and his culpability, that Petitioner did not use the amount of the accrual to fund the Plan. The IG argues that Petitioner deposited the funds received from the IRR reimbursement to the general fund - a failure to use the monies for the sole benefit of the employees, in abrogation, the IG argues, of Medicare rules.

The IG also asserts that Petitioner's deposit of Centerpoint stock with the Plan on July 1, 1996, did not constitute a legitimate contribution. IG's brief at 13-14. The IG argues alternatively that the value of the stock was zero, or that based on Mr. Ellis' valuation, the value was $217,191.96 or $193,059.52. IG's brief at 14, n. 9. Furthermore, the IG argues, evidence that Petitioner's contribution was a sham is that the transfer was not booked as an expense on THHS's, Medshares' or Centerpoint's books. IG's brief at 14.

I cannot determine from the evidence the precise dollar value of the stock Petitioner transferred to the Plan. I do find, however, that the stock likely had a value of between $193,059.52 and approximately $466,000, and I find also that the evidence that Petitioner did not track the funds reimbursed to THHS for the accrual is not an indication that he engaged in fraud.

There is no dispute that the Plan allowed Petitioner to transfer stock from his own closely held corporation to satisfy his liability to the Plan. For Medicare reimbursement purposes, as Mr. Peebles confirmed in his testimony at the FCA trial, it was acceptable to use stock to pay into the Plan. IG Ex. 32, at vol II, 45-48. It is undisputed also that on June 28, 1996, just before the deadline of June 30, 1996, when the maximum period of extension, if it had been granted by Palmetto, would elapse, Petitioner transferred shares he asserts were worth approximately $466,000 into the Plan.

A valuation report for Centerpoint produced pursuant to a Cooper and Lybrand audit prepared as of May 7, 1996, supports that the shares were worth approximately $0.3866 per share on December 31, 1994. IG. Ex 24. The report indicated also that revenues had risen from approximately $6 million in 1990 to approximately $13 million at year's end 1994. The report noted that the book value was not indicative of fair market value because the company was still considered to be in the start up and acquisition phase. Id. at 16. The valuations of the stock favored by the IG are based on the testimony of Mr. Ellis at deposition before the FCA trial. IG Ex. 30. The IG's alternative position that the stock had a value of zero was based on the testimony of David G. Franks, a representative of National Bank of Commerce, which was the trustee for Medshares during the relevant period. IG Ex. 32, at vol. III, 44.

The evidence clearly demonstrates that the stock was not worth zero. The testimony of Mr. Franks shows the zero designation was the result of how the trustee made the administrative record in the absence of valuation. Id. at vol. III, 49. The report Petitioner relies on presents the stock value as of December 31, 1994, so it does not apparently present the value of the stock on the date of the transfer; it is, however, detailed and persuasive. Mr. Ellis' opinion is credible, but his analysis on this point is not contained in the record in detail. Thus, the evidence is that the transfer had a value - arguably the correct amount as estimated by Mr. Ellis, but arguably less this amount depending on the appropriate way to value the stock at the time of transfer. There is no basis, however, to extrapolate from this limited information that Petitioner engaged in fraud or was otherwise highly culpable. What is established is that Petitioner liquidated the liability for the accrual.

Moreover, there is no evidence to support the IG's position that depositing the funds in the general operating account of Medshares demonstrates Petitioner attempted to defraud Medicare by failing to use the funds solely for the benefit of the Plan beneficiaries. The IG cites the court's reasoning in United States of America ex rel. Augustine v. Century Health Services, 136 F. Supp. 2d 876 (M.D. Tenn. 2000), aff'd, 289 F.3d 409 (6^th Cir. 2002), as an exemplar of how to understand Petitioner's conduct in the instant matter. The IG discusses Century in the context of the IG's assertion that Petitioner did not use the funds reimbursed for the contribution for the sole benefit of the Plan beneficiaries, and that this failure is in contravention of the Medicare rules and regulations for reimbursement. The IG further maintains that the failure to follow the relevant Medicare reimbursement rules, as the court found was true of the defendants in Century, makes Petitioner's claim false or fraudulent.

Applying this concept generally, it may be correct that a failure to timely liquidate funds received as reimbursement for a pension contribution, as Petitioner failed to do, without receiving an extension for making the liquidation, as Petitioner also failed to do, is a breach of the reimbursement rules and makes the claim false. The IG has in this case asserted not merely that Petitioner's claim was false, but that it was deliberately fraudulent. Key facts, however, distinguish Century from the instant matter and highlight why Petitioner's claim does not indicate fraud. In Century, the court found that the defendants, operators of a health agency that participated in Medicare, liquidated the funds reimbursed to them by Medicare by depositing those monies into their agency's benefit plan. The defendants deposited three checks on three separate occasions. Century, 136 F. Supp. 2d at 884-86. Two of the checks were approximately $1 million each and the other check was approximately $660,000. After each deposit, on the day following the deposit, the defendants withdrew all of the funds they had received from Medicare and deposited on the previous day and placed with the benefit plan a promise to refund the contribution with company stock at a later date. The funds withdrawn were placed into the general operating account of the defendant's holding company. Subsequently, during an audit, the defendants represented to the government auditor that they had liquidated the contribution to the benefit plan (i.e., put the Medicare cash into the benefit plan account). The defendants did not, however, tell the auditor that they had withdrawn the monies and not replaced them with cash or stock, or any other asset.

I find the Century scenario a useful one to compare a fraudulent false claim with a claim which is false because it was filed recklessly. In the instant matter, Petitioner may have falsely claimed the contribution to the Plan by failing to liquidate the funds to the Plan in the time prescribed by Medicare. Unlike the defendants in Century, however, Petitioner did not proceed with his business as if he had properly liquidated the contribution to the Plan, rather, he disclosed to Palmetto that he could not liquidate the contribution when he filed the cost report, and he disclosed the obstacles he faced in obtaining sufficient information to support the contribution, which was also the same information needed to determine with specificity how much to fund the Plan. In contrast with the defendants in Century who misled the government to believe that the plan was funded while the monies had been removed, Petitioner disclosed to Palmetto that he had not funded the Plan in time and why, and he sought also an extension based on his interpretation of the relevant Medicare rules. Thus, contrasted with the Century defendants, Petitioner's culpability is less because the evidence establishes that Petitioner's conduct does not demonstrate fraud.

Moreover, as I indicated, Mr. Peebles testified that stock could be used to satisfy the Plan liability. The fact that closely held stock is usable but Medicare reimburses in cash suggests that it is appropriate for Petitioner to have deposited the check and then transferred the stock. I do not conclude that the transfer conformed in all respects with requirements under Medicare. However, based on the principle that money is fungible but using stock is allowed, absent convincing evidence that Petitioner did not transfer stock of approximately the correct value as required, I conclude it is not an indication of fraud or a measure of his culpability to effect the transfer of funds and stock as he did.

b. Petitioner's disciplinary record

The IG did not indicate that it considered Petitioner to have a disciplinary record that should be considered pursuant to 42 C.F.R. � 1001.901(b)(3). Petitioner noted that the FCA judgment is the only incident of false or improper billing in his 25 years of participation in Medicare. Petitioner's brief at 25. Petitioner argues I should consider this as "another matter as justice may require," as provided in section 901(b)(5). I conclude that Petitioner's track record is more properly relevant to the disciplinary record criterion. The regulation is clear that the lack of any prior disciplinary record is to be considered neutral. I conclude, therefore, that Petitioner's disciplinary record is not a factor bearing on the reasonableness of the period of his exclusion.

c. Evidence as to other adverse actions that arise from the same circumstances that are the basis for excluding Petitioner

The FCA judgment against Petitioner that forms the basis for his exclusion satisfies this criteria pursuant to 42 C.F.R. � 1001.901(b )(4). And I have considered it in determining the reasonable period of his exclusion.

d. Other matters as justice may require

There is no indication at 42 C.F.R. � 1001.901(b)(5) what constitutes other matters I may consider as justice may require. Petitioner reports that his exclusion from Medicare has begun de facto because he has been considered by the federal bankruptcy court to be excluded, and because he has voluntarily ceased to participate in Medicare during the pendency of the instant matter. See Petitioner's brief at 50-51. Petitioner argues that I should consider this period in determining whether ten years is a reasonable period of exclusion. I conclude that Petitioner's hiatus from Medicare should not be factored to reduce the reasonable period of exclusion further. A five-year period is consistent with the remedial purpose of the Act: to protect Medicare beneficiaries from untrustworthy individuals. A five-year period is appropriate due to the degree of Petitioner's culpability and in consideration of the other factors. I conclude that Petitioner's hiatus from participation whether in conjunction with the bankruptcy proceeding he mentions or as a result of his voluntary agreement with the IG is the foreseeable consequence of his actions. I find, therefore, that there is no indicia of injustice that requires reducing the period of exclusion further.

III. Conclusion

In view of the foregoing, and in consideration of the factors set forth in 42 C.F.R. � 1001.901(b), I conclude that Petitioner recklessly filed a false claim for Medicare reimbursement. The evidence demonstrates that Petitioner is culpable and untrustworthy, yet the application of the regulatory criteria to Petitioner's actions shows that a ten-year period of exclusion is unreasonable. Five years is a reasonable period of exclusion. Accordingly, Petitioner is excluded from Medicare, Medicaid, and all federal health care programs for five years.

Alfonso J. Montano

Administrative Law Judge

1. The Plan is not a "pension" plan; it is a stock bonus plan, but the record reflects that the parties and witnesses at the FCA trial made repeated references to the Plan as a "pension plan," and also to the contribution Petitioner claimed as a "pension contribution." The Plan itself is part of the record; it is called Medshares Management Group, Inc. Deferred Profit Sharing & Stock Bonus Plan. P. Ex. 7.