$05:Exclusion Case
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Paul G. Klein, D.P.M., Petitioner,
- v. -
The Inspector General.
DATE: May 19, 1994
Docket No. C-93-072
Decision No. CR317
DECISION
By letter dated March 17, 1993 (Exclusion Notice), the Inspector
General (I.G.) of the United States Department of Health and Human
Services (DHHS) notified Paul G. Klein, D.P.M. (Petitioner) that he
was being excluded from participation in the Medicare program and
from certain federally assisted State health care programs for a
period of ten years. 1/ The I.G. advised Petitioner that he was
being excluded pursuant to section 1128(a)(1) of the Social
Security Act (Act), based on his conviction of a criminal offense
related to the delivery of an item or service under the Medicaid
program.
The I.G. advised Petitioner further that, in cases of exclusions
imposed pursuant to section 1128(a)(1) of the Act, section
1128(c)(3)(B) of the Act requires a minimum exclusion of five
years. However, the I.G. determined to exclude Petitioner for ten
years after taking into consideration circumstances which were
unique to his case. The unique circumstances recited in the
Exclusion Notice included the length of time in which Petitioner
engaged in the program-related crimes and the financial loss to the
Medicaid program resulting from Petitioner's criminal activity.
Petitioner requested a hearing and the case was assigned to me. I
convened a prehearing conference by telephone on June 3, 1993.
During that conference, Petitioner indicated that he did not
dispute that he was convicted of a criminal offense related to the
delivery of an item or service under the Medicaid program within
the meaning of section 1128(a)(1) of the Act. The I.G. moved for
summary disposition on the issue of whether it is reasonable to
exclude Petitioner for a period of ten years. The I.G. filed a
brief in support of her motion for summary disposition which was
accompanied by proposed findings of fact and conclusions of law and
20 exhibits. Petitioner filed a brief in opposition to the I.G.'s
motion for summary disposition which was accompanied by proposed
findings of fact and conclusions of law and three exhibits. The
I.G. filed a reply brief accompanied by two additional exhibits.
I convened another telephone conference on November 9, 1993.
During that conference, I marked the 22 exhibits submitted by the
I.G. as I.G. Ex. 1 - 22 and I admitted them into evidence. I
marked the three exhibits submitted by Petitioner as P. Ex. 1 - 3
and I admitted P. Ex. 1 - 2 into evidence. I rejected P. Ex. 3
because it is a duplicate of the exhibit I had already admitted as
I.G. Ex. 18. During the November 9 conference, I denied the I.G.'s
motion for summary disposition and scheduled an in-person hearing
to take place on December 8, 1993.
By letter dated November 29, 1993, Petitioner offered an additional
exhibit. On December 8, 1993, I conducted an in-person hearing in
New York City, New York. During that hearing, Petitioner withdrew
the exhibit he had offered on November 29, 1993 because it was
duplicative of evidence already in the record. Hearing Transcript
(Tr.) at 5 - 6. Subsequent to the hearing, the I.G. filed a
posthearing brief accompanied by proposed findings of fact and
conclusions of law. Petitioner filed a posthearing submission
consisting solely of proposed findings of fact and conclusions of
law. He did not submit a posthearing brief. The I.G. submitted a
posthearing reply brief.
I have considered the evidence of record, the parties' arguments,
and the applicable law and regulations. I conclude that the
ten-year exclusion which the I.G. imposed against Petitioner is
reasonable.
ADMISSIONS
Petitioner admits that he was "convicted" of a criminal offense
"related to" the delivery of an item or service under the Medicaid
program, within the meaning of section 1128(a)(1) of the Act.
Petitioner admits also that he is subject to a five-year minimum
mandatory exclusion pursuant to sections 1128(a)(1) and
1128(c)(3)(B) of the Act. November 18, 1993 Order and Notice of
Hearing at 2; Tr. at 4.
In addition, Petitioner admits that the following three aggravating
factors are present in this case, pursuant to 42 C.F.R.
1001.102: (1) the acts resulting in Petitioner's conviction
resulted in a financial loss to Medicaid of $1500 or more (42
C.F.R. 1001.102(b)(1)); (2) the acts resulting in Petitioner's
conviction were committed over a period of one year or more (42
C.F.R. 1001.102(b)(2)); and (3) the sentence which a court
imposed as a result of Petitioner's conviction included a period of
incarceration (42 C.F.R. 1001.102(b)(4)). Id.
ISSUE
The issue in this case is whether the ten year exclusion directed
and imposed against Petitioner by the I.G. is reasonable.
FINDINGS OF FACT AND CONCLUSIONS OF LAW (FFCLs)
Having considered the entire record, the arguments, and the
submissions of the parties, and being advised fully, I make the
following Findings of Fact and Conclusions of Law:
1. At all relevant times, Petitioner was a doctor of podiatric
medicine. Tr. at 9; I.G. Ex. 13 at 46.
2. In 1989, the Office of the New York State Deputy Attorney
General for Medicaid Fraud Control (State Attorney General) filed
an Information in the Supreme Court of the State of New York,
County of Westchester. The Information charged Petitioner with
five counts of grand larceny in the second degree and 20 counts of
offering a false instrument for filing in the first degree. I.G.
Ex. 2.
3. In a second Information filed by the State Attorney General,
Petitioner was charged with one count of offering a false
instrument for filing in the first degree. I.G. Ex. 3.
4. The State Attorney General also brought a civil action against
Petitioner and others based on the damage caused to the New York
State Medicaid program. I.G. Ex. 7.
5. On January 5, 1990, Petitioner, of his own free will and with
the assistance of counsel, entered into a plea agreement, including
a civil settlement, with the State Attorney General. I.G. Ex. 6,
7.
6. Pursuant to the plea agreement, the two Informations against
him were consolidated and the single count charged in the second
Information became count 26 of the consolidated Information. I.G.
Ex. 6 at 5 - 6; I.G. Ex. 7.
7. In full satisfaction of the consolidated Information,
Petitioner, pursuant to the plea agreement, pled guilty to two
felony counts: (1) grand larceny in the second degree, and (2)
offering a false instrument for filing in the first degree. I.G.
Ex. 6, 7.
8. In pleading guilty to the grand larceny charge, Petitioner
admitted that during the period from 1983 to 1986, acting in
concert with others, he submitted and caused to be submitted
numerous Medicaid reimbursement claims which falsely stated that
Medicaid recipients had been provided with expensive orthotic
devices and foot appliances when, in fact, less expensive stock
appliances and devices had been supplied. I.G. Ex. 6, 7.
9. In pleading guilty to the grand larceny charge, Petitioner
admitted that as a result of his false claims, he intentionally
caused the New York State Medicaid program to pay to various
entities in which he had a financial interest $1,084,708 to which
these entities were not entitled. I.G. Ex. 6, 7.
10. In pleading guilty to offering a false instrument for filing,
Petitioner admitted that, on or about November 17, 1993, he
intentionally sought to defraud the New York State Medicaid program
by falsely stating that an orthotic lab had furnished a specified
orthopedic appliance to a Medicaid patient when he knew that the
appliance had not been provided as claimed. I.G. Ex. 6, 7.
11. The court accepted Petitioner's guilty pleas and sentenced him
to incarceration for a total of 365 days. The court sentenced
Petitioner to two periods of incarceration consisting of 45 weeks
of four-day weekends on the first charge and 45 weeks of four-day
weekends and one five-day weekend on the second charge. I.G. Ex.
7 at 1; I.G. Ex. 21.
12. After Petitioner served a number of his weekends in jail, the
court modified the remainder of his jail sentence to house arrest.
Tr. at 23, 34.
13. Pursuant to the plea agreement, Petitioner agreed to pay
restitution to the New York State Medicaid program with monies and
properties worth approximately $400,000. I.G. Ex. 7, 8.
14. Petitioner was convicted of a criminal offense related to the
delivery of an item or service under the Medicaid program, within
the meaning of section 1128(a)(1) of the Act. FFCLs 2 - 13;
November 18, 1993 Order and Notice of Hearing at 2.
15. The Secretary of DHHS (Secretary) has delegated to the I.G.
the authority to determine, impose, and direct exclusions pursuant
to section 1128 of the Act. 48 Fed. Reg. 21,662 (1983).
16. By letter dated March 17, 1993, the I.G. excluded Petitioner
pursuant to sections 1128(a)(1) and 1128(c)(3)(B) of the Act for a
period of ten years.
17. The I.G. had authority to impose and direct an exclusion
against Petitioner pursuant to sections 1128(a)(1) and
1128(c)(3)(B) of the Act. FFCLs 1 - 16.
18. The regulations published on January 29, 1992 include criteria
to be employed by the I.G. in determining to impose and direct
exclusions pursuant to sections 1128(a)(1) and 1128(c)(3)(B) of the
Act. 42 C.F.R. 1001.101, 1001.102.
19. On January 22, 1993, the Secretary published a regulation
which directs that the criteria to be employed by the I.G. in
determining to impose and direct exclusions pursuant to section
1128 of the Act are binding also upon administrative law judges,
appellate panels of the Departmental Appeals Board, and federal
courts in reviewing the imposition of exclusions by the I.G. 42
C.F.R. 1001.1(b); 58 Fed. Reg. 5617, 5618 (1993).
20. My adjudication of the length of the exclusion in this case is
governed by the criteria contained in 42 C.F.R. 1001.101 and
1001.102. FFCLs 18, 19.
21. An exclusion imposed pursuant to section 1128(a)(1) of the Act
must be for a period of at least five years. Act, sections
1128(a)(1), 1128(c)(3)(B); 42 C.F.R. 1001.102(a).
22. An exclusion imposed pursuant to section 1128(a)(1) of the Act
may be for a period in excess of five years if there exist
aggravating factors which are not offset by mitigating factors. 42
C.F.R. 1001.102(b), (c).
23. Aggravating factors which may form a basis for imposing an
exclusion in excess of five years against a party pursuant to
section 1128(a)(1) of the Act may consist of any of the following:
a. The acts resulting in a party's conviction, or similar
acts, resulted in financial loss to Medicare and Medicaid of $1500
or more.
b. The acts that resulted in a party's conviction, or similar
acts, were committed over a period of one year or more.
c. The acts that resulted in a party's conviction, or similar
acts, had a significant adverse physical, mental, or financial
impact on one or more program beneficiaries or other individuals.
d. The sentence which a court imposed on a party for the
above-mentioned conviction included incarceration.
e. The convicted party has a prior criminal, civil, or
administrative sanction record.
f. The convicted party was overpaid a total of $1500 or more
by Medicare or Medicaid as a result of improper billings.
42 C.F.R. 1001.102(b)(1) - (6) (paraphrase).
24. Mitigating factors which may offset the presence of
aggravating factors may consist of only the following:
a. A party has been convicted of three or fewer misdemeanor
offenses, and the entire amount of financial loss to Medicare and
Medicaid due to the acts which resulted in the party's conviction
and similar acts, is less than $1500.
b. The record in the criminal proceedings, including
sentencing documents, demonstrates that the court determined that,
before or during the commission of the offense, the party had a
mental, emotional, or physical condition that reduced that party's
culpability.
c. The party's cooperation with federal or State officials
resulted in others being convicted of crimes, or in others being
excluded from Medicare or Medicaid, or in others having imposed
against them a civil money penalty or assessment.
42 C.F.R. 1001.102(c)(1) - (3) (paraphrase).
25. In evaluating the reasonableness of the ten year exclusion, it
is necessary to weigh the evidence relevant to the aggravating and
mitigating factors enumerated in the regulations in a manner that
is consistent with the goals of the Act. Act, section 1102(a).
26. A remedial purpose of section 1128 of the Act is to protect
the integrity of federally-funded health care programs and the
welfare of beneficiaries and recipients of such programs from
individuals and entities who have been shown to be untrustworthy.
27. Petitioner was convicted of joining with other podiatrists in
executing a scheme which resulted in the theft of $1,084,708 from
the New York State Medicaid program. FFCLs 8, 9.
28. That crimes for which Petitioner was convicted resulted in
financial loss to the Maryland Medicaid program in excess of $1500
is an aggravating factor that may justify excluding Petitioner for
more than five years. FFCL 27; 42 C.F.R. 1001.102(b)(1).
29. The crimes which Petitioner perpetrated against the New York
State Medicaid program were committed over a period of
approximately three years. FFCL 8.
30. That the crimes for which Petitioner was convicted were
committed over a period exceeding one year is an aggravating factor
that may justify excluding Petitioner for more than five years.
FFCL 29; 42 C.F.R. 1001.102(b)(2).
31. The sentence imposed against Petitioner for his crimes against
the New York State Medicaid program included a period of
incarceration. FFCL 11.
32. That the sentence imposed against Petitioner for his crimes
against the New York State Medicaid program included a period of
incarceration is an aggravating factor that may justify excluding
Petitioner for more than five years. FFCL 31; 42 C.F.R.
1001.102(b)(4).
33. The aggravating factors present in this case establish that
Petitioner committed serious criminal offenses which damaged the
integrity of federally financed health care programs. FFCLs 27 -
32.
34. The aggravating factors present in this case establish
Petitioner to be a threat to the integrity of federally financed
health care programs. FFCL 33.
35. In the absence of any offsetting mitigating factor, the
aggravating factors present in this case would justify excluding
Petitioner for more than five years. FFCLs 25 - 34; 42 C.F.R.
1001.102(b)(1) - (6).
36. Petitioner's wife suffered a serious and debilitating illness
over a protracted period of time, beginning shortly after her
marriage to Petitioner in 1979, and worsening over time. Tr. at 11
- 15.
37. Petitioner was under considerable stress because of his wife's
illness. Tr. at 15 - 17, 25 - 28.
38. The sentencing judge was aware of the medical condition of
Petitioner's wife. Tr. at 22 - 23, 34; I.G. Ex. 22.
39. The sentencing judge structured the sentence to provide for
weekend incarceration. FFCL 11.
40. The sentencing judge provided for weekend incarceration so
that Petitioner would be available to care for his ill wife. I.G.
Ex. 22 at 5 - 6, 16, 18.
41. The sentencing judge modified Petitioner's sentence to house
arrest to allow Petitioner to be available to care for his ill
wife. FFCL 12; Tr. at 23, 34.
42. There is no evidence that, as 42 C.F.R. 1001.102(c)(2)
requires, the criminal court made a finding on the record, that
before or during the commission of his crimes, Petitioner suffered
from a mental, emotional, or physical condition that reduced his
culpability.
43. The mitigating factor identified at 42 C.F.R.
1001.102(c)(2) is not present in this case. FFCL 42.
44. Petitioner did not prove the presence of any mitigating
factors which may be used as a basis for offsetting aggravating
factors. 42 C.F.R. 1001.102(c)(1) - (3).
45. The aggravating factors in this case establish that a ten-year
exclusion is reasonable to satisfy the remedial purposes of the
Act. FFCL 22 - 34.
DISCUSSION
Petitioner does not dispute that he was convicted of a criminal
offense related to the delivery of an item or service under
Medicaid, within the meaning of section 1128(a)(1) of the Act. In
addition, Petitioner does not dispute that the Act requires that he
be excluded for a minimum of five years, based on his conviction of
a program-related offense. What is at issue here is whether it is
reasonable to exclude Petitioner for a period of ten years.
I. In evaluating the reasonableness of the ten-year exclusion, I
must weigh the evidence relevant to the aggravating and mitigating
factors enumerated in the regulations in light of the goals of the
Act.
My adjudication of the reasonableness of the length of the
exclusion in this case is governed by the criteria contained in the
Secretary's implementing regulations that were initially published
on January 29, 1992 and subsequently clarified on January 22, 1993.
42 C.F.R. Part 1001; 42 C.F.R. 1001.1(b). The I.G. contends
that a ten-year exclusion is reasonable pursuant to the criteria
for determining the length of exclusions contained in the
regulations. Petitioner contends that the ten-year exclusion
imposed by the I.G. is excessive under the applicable regulations.
In resolving this issue, it is instructive to discuss the criteria
for adjudicating the reasonableness of the length of exclusions
contained in the regulations.
The controlling regulations for exclusions imposed pursuant to
section 1128(a)(1) of the Act are contained in 42 C.F.R.
1001.101 and 1001.102. The standard for adjudication contained in
the regulations mandates that, in cases of exclusions imposed
pursuant to section 1128(a)(1), the minimum exclusion imposed must
be for no less than five years. This incorporates into the
regulations the minimum exclusion period mandated by section
1128(c)(3)(B) of the Act for exclusions imposed pursuant to section
1128(a)(1). In addition, the regulations provide that, in
appropriate cases, exclusions imposed pursuant to section
1128(a)(1) may be for more than five years. Such exclusions may be
appropriate where there exist aggravating factors (identified by 42
C.F.R. 1001.102(b)) that support a lengthening of the exclusion
while taking into consideration any mitigating factors which might
be present (identified by 42 C.F.R. 1001.102(c)).
The regulations specifically identify those factors which may be
classified as aggravating and those factors which may classified as
mitigating. Under the regulatory scheme, evidence which relates to
factors which are not among those specified as aggravating and
mitigating is not relevant to adjudicating the length of an
exclusion and cannot be considered. 2/
The regulation governing exclusions imposed pursuant to section
1128(a)(1) contains no formula for assigning weight to aggravating
and mitigating factors once such factors are established by the
parties. In the preamble to the regulations, the comments include
the following:
We do not intend for the aggravating and mitigating factors to
have specific values; rather, these factors must be evaluated based
on the circumstances of a particular case.
* * * *
The weight accorded to each mitigating and aggravating factor
cannot be established according to a rigid formula, but must be
determined in the context of the particular case at issue.
57 Fed. Reg. 3314, 3315.
Thus, in evaluating the reasonableness of an exclusion, I am
required to explore in detail, and assign appropriate weight to,
those regulatory factors which are aggravating and mitigating.
While the regulations limit the specific factors which I may
consider in evaluating the reasonableness of an exclusion, I am
still guided by the goals of the Act in assigning weight to the
factors which are specified in the regulations. The regulations
promulgated by the Secretary cannot do more than interpret and
implement the Act itself. Section 1102(a) of the Act authorizes
the Secretary to publish only those rules and regulations "not
inconsistent with this Act, as may be necessary to the efficient
administration of the functions with which [she] is charged under
this Act." Thus, the regulations should be applied to produce a
result which is consistent with that required by the underlying
statute. In evaluating the reasonableness of an exclusion, I must
weigh those factors which the regulations direct me to consider in
a manner that is consistent with the purposes of the Act.
Section 1128 of the Act is a civil statute and Congress intended it
to be remedial in application. The remedial purpose of the
exclusion law is to protect the integrity of federally financed
health care programs and the welfare of the programs' beneficiaries
and recipients. The exclusion law is intended to protect program
funds and beneficiaries and recipients from providers who have
demonstrated by their conduct that they pose a threat to the
integrity of such funds, or to the well-being and safety of
beneficiaries and recipients. See S. Rep. No. 109, 100th Cong.,
1st Sess. 1 (1987), reprinted in 1987 U.S.C.C.A.N. 682. In view of
the fact that the regulations' intent is to implement the Act's
remedial purpose, I must decide, using the regulatory factors,
whether an exclusion is reasonably necessary to protect the
integrity of federally-financed health care programs and the
welfare of the programs beneficiaries and recipients. William F.
Middleton, DAB CR297, at 8 (1993), declined review, Feb. 7, 1993.
My authority in hearing and deciding cases pursuant to section 1128
of the Act remains de novo. See section 205(b) of the Act as
incorporated by section 1128(f) of the Act; 42 C.F.R. 1005.20.
I am not charged with an appellate review of the I.G.'s actions,
nor am I directed to conduct an inquiry as to whether the I.G.'s
agent has discharged his or her duty competently in a particular
case. The purpose of my inquiry is not to determine how accurately
the I.G. applied the law to the evidence which was before the I.G.
Instead, the purpose of my inquiry is to evaluate the
reasonableness of the exclusion de novo.
A de novo evaluation does not mean that I have unbridled discretion
to modify an exclusion. I must sustain the exclusion if, based on
an independent review, I conclude it comports with the regulations'
criteria and the remedial purpose of the Act. I must modify the
exclusion if, based on an independent review, I conclude that it
does not comport with the criteria contained in the regulations and
with the remedial purpose of the Act. Once either the I.G. or
Petitioner proves the existence of an aggravating or mitigating
factor, I must evaluate fully the significance of that factor as it
relates to the reasonableness of the Petitioner's exclusion.
II. The aggravating factors present in this case are a basis for
lengthening the period of exclusion beyond the minimum period of
five years.
In the present case, the I.G. contends that the following three
aggravating factors are present in this case: (1) petitioner was
convicted of a program-related offense involving a financial loss
to the Medicaid program in an amount greater than or equal to $1500
pursuant to 42 C.F.R. 1001.102(b)(1); (2) the crimes engaged in
by Petitioner were perpetrated by him over a period of one year or
more pursuant to 42 C.F.R. 1001.102(b)(2); and (3) Petitioner's
sentence included a period of incarceration pursuant to 42 C.F.R.
1001.102(b)(4). 3/ Petitioner does not dispute the existence of
any of these aggravating factors.
Since it is undisputed that these three aggravating factors are
present in this case, it is possible to lengthen the period of
exclusion beyond the minimum five-year period. While the presence
of these factors makes it possible for the I.G. or me to increase
the period of
exclusion beyond the minimum five-year period, it does not require
the I.G. or me to do so. The regulation uses the word "may" to
indicate the permissive, discretionary use of these aggravating
factors as a basis for lengthening the exclusion period. 42 C.F.R.
1001.102(b). The regulations do not mandate an increase in the
exclusion period solely on the basis of the presence of one or more
aggravating factors. Rather, what controls the exclusion period is
the relative weight of the material evidence of such factors in the
context of the total record.
The presence of aggravating factors in a given case means that an
exclusion of more than five years may be reasonable. However, any
exclusion imposed for more than five years under section 1128(a)(1)
of the Act and 42 C.F.R. 1001.102(b) and (c) must still comport
with the remedial purpose of providing protection against
untrustworthy providers. Thus, the aggravating factors established
in a given case must be weighed carefully to decide whether they
support a conclusion that a party is sufficiently untrustworthy as
to merit an exclusion of a particular length.
In this case, the evidence offered by the I.G. which pertains to
aggravating factors identified in the regulations leads to the
conclusion that Petitioner is a highly untrustworthy individual.
Evidence adduced by the I.G. shows that the State Attorney General
charged Petitioner with committing crimes directed against the New
York States Medicaid program. Petitioner was charged with five
counts of grand larceny and 21 counts of offering a false
instrument for filing. FFCLs 2, 3.
On January 5, 1990, Petitioner, of his own free will and with the
assistance of counsel, entered into a plea agreement with the State
Attorney General. FFCL 5. Pursuant to the plea agreement,
Petitioner pled guilty to two felony counts: one count of grand
larceny and one count of offering a false instrument for filing, in
full satisfaction of all the criminal charges against him. FFCL 7.
In pleading guilty to the grand larceny charge, Petitioner admitted
that during the period from 1983 to 1986, acting in concert with
others, he submitted and caused to be submitted numerous Medicaid
reimbursement claims which falsely stated that Medicaid recipients
had been provided with expensive orthotic devices and foot
appliances when, in fact, less expensive stock appliances and
devices had been supplied. FFCL 8. Petitioner admitted that as
a result of these false claims, he intentionally caused the New
York State Medicaid program to pay to various entities in which he
had a financial interest $1,084,708 to which these entities were
not entitled. FFCL 9. In pleading guilty to offering a false
instrument for filing, Petitioner admitted that he intentionally
sought to defraud the New York State Medicaid program by falsely
stating that an orthotic lab had furnished a specified orthopedic
appliance to a Medicaid patient when he knew that the appliance had
not been provided as claimed. FFCL 10.
Pursuant to the plea agreement, Petitioner agreed to pay
restitution to the New York State Medicaid program with monies and
properties worth approximately $400,000. FFCL 13. In addition,
Petitioner was sentenced to a total of 365 days incarceration.
FFCL 11.
The first aggravating factor cited by the I.G. is that the acts
resulting in the conviction, or similar acts, resulted in financial
loss to Medicare and the State health care programs of $1,500 or
more. 42 C.F.R. 1001.102(b)(1). The uncontroverted evidence of
record shows that the standard for this aggravating factor has been
amply met. Petitioner pleaded guilty to joining with others in
executing a scheme which resulted in the theft of more than a
million dollars to the Medicaid program. Petitioner's criminal
offenses cost the Medicaid program an enormous amount of money. To
underscore the enormity of Petitioner's theft, the State Attorney
General characterized Petitioner's criminal activities as "this
nation's largest Medicaid podiatry fraud" in a press release issued
by that office on January 5, 1990. I.G. Ex. 8 at 1.
Petitioner, noting that he and others paid restitution to the
Medicaid program, contends that the impact of his crimes was less
than that alleged by the I.G. In evaluating the weight to be given
to the financial loss to the New York State Medicaid program in
this case, the regulations specifically require me to consider the
entire amount of financial loss to the Medicaid program,
"regardless of whether full or partial restitution has been made."
42 C.F.R. 1001.102(b)(1). By pleading guilty, Petitioner
admitted that his crimes cost the Medicaid program over a million
dollars. The regulations do not allow me to decrease the weight I
accord this factor based on the fact that Petitioner paid
restitution to the Medicaid program.
Moreover, the uncontroverted evidence of record shows that
Petitioner did not engage in an isolated instance of criminal
misconduct. On the contrary, Petitioner pled guilty to submitting
numerous false claims over a protracted period of time spanning
three years. By his own admission, Petitioner engaged in a
long-term scheme to steal money from the Medicaid program. Thus,
the second aggravating factor cited by the I.G., that the criminal
activity last a year or more, has also been amply satisfied. 42
C.F.R. 1001.102(b)(2).
In addition, the third aggravating factor cited by the I.G., that
the sentence imposed by the court include incarceration, is met in
this case. 42 C.F.R. 1001.102(b)(4). The court which sentenced
Petitioner for his offenses found them to be of such severity as to
merit incarceration for 365 days. The fact that Petitioner was
sentenced to incarceration for 365 days underscores the seriousness
of the crimes to which Petitioner pled guilty and leads to the
conclusion that the sentencing judge considered Petitioner's crimes
to be serious.
Petitioner attempts to minimize his culpability by characterizing
his criminal offenses as merely "technical" violations of the law.
June 17, 1993 Prehearing Order and Schedule for Filing Motion for
Summary Disposition (June 17, 1993 Prehearing Order) at 2 - 3.
Petitioner's assertion is without merit. The uncontested facts
establish that Petitioner was convicted of two felonies based on
his voluntary pleas of guilty. By pleading guilty to these
offenses, Petitioner admitted that he deliberately filed numerous
false Medicaid claims from 1983 to 1986 and that these actions cost
the Medicaid program more than a million dollars. By any standard,
the criminal offenses to which Petitioner pled guilty are serious.
Petitioner's attempt to minimize the gravity of his criminal
misconduct by characterizing his offenses as "technical" violations
is unpersuasive.
The weight of the aggravating factors, singly and together,
establishes Petitioner to be a highly untrustworthy individual.
Through his deliberate, larcenous actions in filing numerous false
Medicaid claims over a three-year period, Petitioner cost the
Medicaid program over a million dollars. As a result, Petitioner
was sentenced to incarceration for 365 days. The existence of
these aggravating factors leads to the conclusion that Petitioner
has been and is capable of engaging in criminal misconduct that
causes great damage to the financial integrity of the Medicaid
program. As I have stated before, the purpose of the exclusion law
is to protect public health funds from unscrupulous providers. In
view of the foregoing, I conclude that absent any mitigating
evidence, the minimum five-year exclusion is not sufficient to
protect the federally-financed health care programs in this case.
The aggravating factors present in this case justify an exclusion
substantially longer than five years.
III. There are no mitigating factors present in this case.
The regulatory scheme which governs this case provides that only if
there are aggravating factors which justify an exclusion longer
than five years, may mitigating factors be considered as a basis
for reducing the period of exclusion to no less than five years.
Only the mitigating factors identified by the regulations may be
considered to reduce the period of exclusion. 42 C.F.R.
1001.102(c). Since the aggravating factors in this case justify an
exclusion substantially longer than five years, the specified
mitigating factors, if present, may be considered.
Petitioner's central argument is that the ten-year exclusion is
unreasonable because the mitigating factor set forth at 42 C.F.R.
1001.102(c)(2) is present in this case. Tr. at 6 - 8. That
regulation provides that it is a mitigating factor when:
[t]he record in the criminal proceedings, including sentencing
documents, demonstrates that the court determined that the
individual had a mental, emotional or physical condition before or
during the commission of the offense that reduced the individual's
culpability . . . 4/
Petitioner contends that the sentencing judge in the underlying
criminal proceeding "took into account the stress Petitioner was
under due to his wife's illness in reaching his sentencing
determination." Petitioner's posthearing submission at 4.
Petitioner argues that this conforms with the requirements of the
mitigating factor enunciated at 42 C.F.R. 1001.102(c)(2).
Evidence adduced by Petitioner shows that his wife has indeed
suffered from a serious illness over a period of years. Petitioner
testified at the in-person hearing that shortly after his marriage
in 1979, his wife was diagnosed as having ulcerative colitis. In
the beginning, this condition was "mild" and it "gradually
progressed" over the next seven years. In order to treat this
condition, Petitioner's wife was put on high dosages of cortisone.
The cortisone affected her adrenal gland, and she developed a
condition called adrenal insufficiency. Tr. at 11.
Petitioner's wife's medical condition deteriorated, and in 1987,
she underwent the first of three surgeries performed at Mt. Sinai
Hospital in New York. Tr. at 12. The three surgeries were not
successful and Petitioner's wife continued to have a decrease in
the quality of life. Petitioner's wife was then treated at the
Mayo Clinic in Minnesota on approximately six occasions. In
addition, the adrenal insufficiency was worsening, and Petitioner's
wife was hospitalized on several occasions for shock. Tr. at 12
- 15.
Petitioner monitored his wife's condition and administered
medication. Tr. at 32, 35 - 37. Petitioner testified that he was
"basically really destroyed" and "worn down" by his wife's
problems. Tr. at 16, 25. The offenses of which Petitioner was
convicted occurred during the period from 1983 - 1986. Petitioner
testified that during this period, he was running himself "ragged"
because he was working 104 hours a week and trying to take care of
his wife. Tr. at 25. He stated that it was a "constant battle" to
try to get her disease under control before it got worse.
Petitioner testified that his wife's condition nevertheless
worsened, and that he continued to be under considerable stress due
to her illness. Petitioner stated that, even during his criminal
prosecution, his primary concern was his wife's medical care. Tr.
at 15 - 17, 25 - 28. As part of his plea agreement, the State
Attorney General agreed to set aside some of the monies Petitioner
paid in restitution in a special medical account to pay for his
wife's medical expenses during the period that he was incarcerated.
Tr. at 20.
The sentencing judge was aware of Petitioner's wife's medical
condition. FFCL 38. The plea agreement was made part of the
record in the court, and the sentencing judge acknowledged that he
had read the plea agreement. Tr. at 22. In addition, while
Petitioner was sentenced to incarceration for a period of 365 days,
he was not required to serve this sentence on 365 consecutive days.
Instead, the judge sentenced him to serve it on 90 four-day
weekends to be followed by one five-day weekend. FFCLs 11, 39.
The sentencing judge provided for weekend incarceration so that
Petitioner would be available to take care of his ill wife. FFCL
40. On three separate occasions, the sentencing judge modified the
sentence to allow Petitioner to be available to take care of his
wife, even on a weekend. Tr. at 23, 34. In addition, after
Petitioner had been incarcerated for a number of weekends, his
wife's condition worsened. The sentencing judge responded by
modifying the remainder of Petitioner's sentence to house arrest so
that Petitioner could be available to care for his wife. FFCLs 12,
41.
I have evaluated the evidence of record, and I conclude that the
mitigating factor identified at 42 C.F.R. 1001.102(c)(2) is not
present in this case. Petitioner's wife suffered a serious and
debilitating illness over a protracted period of time. At the
hearing, both Petitioner and his wife testified about the effect
Petitioner's wife's illness had on him. This testimony reveals
that Petitioner was under considerable stress because of his wife's
ill health. While there is evidence that Petitioner was under a
great deal of stress due to his wife's illness, this alone is not
sufficient to establish the mitigating factor described at 42
C.F.R. 1001.102(c)(2).
The regulation provides that a party's mental condition can be
considered as a mitigating factor only if:
[t]he record in the criminal proceedings, including sentencing
documents, demonstrates that the court determined that the
individual had a mental, emotional or physical condition before or
during the commission of the offense that reduced the individual's
culpability . . .
42 C.F.R. 1001.102(c)(2). The requirement that the threshold
condition identified by the regulation be met first is critical.
As Judge Kessel stated in the case of John M. Thomas, Jr., M.D., et
al., DAB CR281 (1993), an administrative law judge "may not
consider as 'mitigating,' evidence concerning a party's mental
state and culpability unless this threshold condition is first
proved by an excluded party." Thomas, DAB CR281 at 18 n. 9.
In this case, the threshold condition identified by the regulation
has not been met. While there is evidence that Petitioner was
under stress at the time that he committed his criminal offenses
due to his wife's illness, neither Petitioner nor his wife
testified that Petitioner's stress was responsible for or
contributed to his criminal misconduct. The record is devoid of
persuasive evidence showing that the stress Petitioner was under at
the time he engaged in his criminal misconduct lessened his
culpability.
More importantly, even if Petitioner had provided persuasive
evidence that his stress reduced his culpability, which he has not,
he would still have to show that the record of the criminal
proceedings demonstrates that the criminal court determined that
his stress reduced his culpability. Petitioner has not pointed to
anything in the record of the criminal proceedings (including the
sentencing documents) demonstrating that the court determined that
the stress he was under due to his wife's illness reduced his
criminal culpability. The minutes of the plea and sentencing
proceedings as well as the plea agreement are devoid of any
evidence showing that the court determined that Petitioner had a
mental, emotional or physical condition before or during the
commission of his criminal offenses that reduced his culpability.
I.G. Ex. 6, 7, 21, and 22.
There is no dispute that the sentencing judge in the criminal
proceeding was aware that Petitioner's wife was ill. The record
shows that the reason Petitioner's sentence was structured to
provide for weekend incarceration was to enable Petitioner to be
available to care for his ill wife. It was Petitioner's wife's
serious medical condition at the time of Petitioner's plea and
sentence and not any condition Petitioner had before or during the
commission of the offenses that resulted in Petitioner's sentence
of weekend incarceration. I.G. Ex. 22 at 5 - 6, 18. There is
nothing in the record which leads to the conclusion that Petitioner
was sentenced to weekend incarceration due to a finding by the
court that Petitioner was afflicted with a condition that reduced
his culpability. Instead, the evidence of record leads to the
conclusion that Petitioner was sentenced to weekend incarceration
based on a humanitarian concern for Petitioner's wife's medical
condition.
Further, after Petitioner had served a number of weekends in jail,
the sentencing judge reduced his sentence to house arrest. Again,
there is nothing to indicate that the sentencing judge modified the
sentence to house arrest due to a determination that Petitioner had
reduced culpability. Rather, Petitioner's wife's condition had
worsened, and the court again acted humanely to allow Petitioner to
be available to care for his wife. Tr. at 23, 34.
There is no evidence that, as 42 C.F.R. 1001.102(c)(2) requires,
the criminal court made a finding on the record that before or at
the time of the commission of his crimes, Petitioner suffered from
a condition that reduced his culpability. Indeed, the prosecutor
present at the plea and sentence attests that the sentencing judge
made no such findings. I.G. Ex. 9 at 2. Therefore, the mitigating
factor at 42 C.F.R. 1001.102(c)(2) does not apply to this case.
Petitioner has pointed to various other factors which he contends
should be viewed as mitigating. Petitioner argues that the
illnesses afflicting his wife as well as his child should be
considered as mitigating. June 17, 1993 Prehearing Order at 2.
While these illnesses have understandably caused Petitioner and his
family much suffering, they do not fall within the parameters of
any of the three mitigating factors set forth in the regulations.
Petitioner asserts that his exclusion, coupled with the restitution
he paid to the New York Medicaid program and the demands caused by
his wife's illness, make it difficult for him to provide for his
family. June 17, 1993 Prehearing Order at 2; Tr. at 15, 38. The
economic problems Petitioner may be experiencing are extraneous to
the issues in this proceeding. Economic hardship does not fall
within the parameters of any of the three mitigating factors listed
in the regulations.
Petitioner also testified about the effects of a childhood
fireworks injury which resulted in the loss of his left thumb and
required extensive reconstructive surgery. Tr. at 24. Petitioner
implied that this condition may be mitigating. However, the record
in the criminal proceeding is devoid of any reference whatsoever to
this injury. Therefore, there is no basis to find that this injury
is a mitigating factor contemplated by the regulations.
In view of the foregoing, the evidence of record fails to show that
there is even one mitigating factor present in this case.
IV. A ten-year exclusion is reasonable.
The severe, multiple aggravating factors present in this case
establish that Petitioner was and is a threat to the integrity of
federally-financed health care programs. Petitioner's crimes were
committed as part of a long-term scheme to defraud Medicaid, and
the crimes resulted in over a million dollars being fraudulently
obtained from Medicaid. Petitioner was convicted of two felonies
which resulted in a sentence of incarceration. Petitioner has
failed to show that there is even one mitigating factor present in
this case. In the absence of any offsetting mitigating factors,
the aggravating factors in this case establish that a ten-year
exclusion is reasonable to satisfy the remedial purposes of the
Act. The ten-year exclusion imposed and directed against
Petitioner by the I.G. must stand.
CONCLUSION
Based on the law and evidence, I conclude that Petitioner's
ten-year exclusion is reasonable and must stand.
It is so Ordered.
Charles E. Stratton
Administrative Law Judge
1. The State health care programs from which Petitioner was
excluded are defined in section 1128(h) of the Social Security Act
and include the Medicaid program under Title XIX of the Social
Security Act. Unless the context indicates otherwise, I use the
term "Medicaid" here to refer to all State health care programs
listed in section 1128(h).
2. I describe the permissible aggravating factors in FFCL 23.
I describe the permissible mitigating factors in FFCL 24.
3. The Exclusion Notice mentioned only two of these aggravating
factors. The Exclusion Notice referred to the financial impact of
Petitioner's crimes and the duration of his criminal activity, but
it did not mention that Petitioner's sentence included
incarceration. I have accepted evidence concerning Petitioner's
incarceration, even though it was not mentioned in the Exclusion
Notice because the hearing before me is de novo and because the
I.G. provided Petitioner adequate notice of her intent to assert
this additional factor as an aggravating factor in the first
prehearing conference held in this case. The I.G. argued that this
aggravating factor is applicable to this case in her motion for
summary disposition and Petitioner was given ample opportunity to
rebut the evidence and arguments which the I.G. made pertaining to
this factor.
4. The regulations identify two additional mitigating factors.
One of the additional mitigating factors is present when the
excluded provider is convicted of three or fewer misdemeanor
offenses and the entire loss to the programs is less than $1,500.
42 C.F.R. 1001.102(c)(1). Petitioner does not contend that this
mitigating factor is present in this case and the evidence shows
that it does not apply. The other mitigating factor exists when
the excluded provider's cooperation with authorities resulted in
others being convicted or excluded or the imposition against anyone
of a civil money penalty or assessment. While Petitioner asserted
in the initial prehearing conference that his cooperation with
authorities presumably resulted in actions taken against others
involved in this criminal activity, he did not develop this
argument in his written briefs or at the hearing. The record is
devoid of evidence establishing the existence of this mitigating
factor. Quite the contrary, the record contains affidavits from
two attorneys from the State Attorney General's office which
unequivocally state that any cooperation provided by Petitioner in
the course of the investigation and prosecution of the underlying
criminal proceeding did not result in others being convicted or
excluded. I.G. Ex. 9 at 3; I.G. Ex. 12 at 3.