$05:Exclusion Case
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Shahid M. Siddiqui, M.D.,
Petitioner,
- v. -
The Inspector General.
DATE: May 26, 1995
Docket No. C-94-310
Decision No. CR377
DECISION
By letter (Notice) dated December 13, 1993, the Inspector General
(I.G.) notified Petitioner that he was being excluded from
participation in the Medicare, Medicaid, Maternal and Child Health
Services Block Grant and Block Grants to States for Social Services
programs for a period of 15 years. 1/ The I.G. informed Petitioner
that he was being excluded due to his conviction in the New York
State Supreme Court of a criminal offense related to the delivery
of an item or service under the Medicaid program. The I.G. further
advised Petitioner that an exclusion after such a conviction is
mandated by section 1128(a)(1) of the Social Security Act (Act),
and that section 1128(c)(3)(B) of the Act provides that the minimum
period of exclusion for such an offense is five years.
In support of the 15-year exclusion, the Notice indicated that the
I.G. was relying on the following aggravating factors: (1) the acts
giving rise to Petitioner's conviction resulted in a financial loss
to the Medicaid program of more than $1500; (2) the acts that
resulted in Petitioner's conviction were committed over a two-year
period; and (3) Petitioner was sentenced to incarceration. Prior
to the hearing, the I.G. alleged additionally that Petitioner had
been excluded from the New York Medicaid program since December
1984. In a letter dated March 14, 1994, Petitioner challenged his
exclusion and requested a hearing.
The I.G. moved to dismiss Petitioner's hearing request on the
grounds that it was untimely. In a ruling dated September 16,
1994, I denied the I.G.'s motion to dismiss and scheduled a
prehearing conference. At Petitioner's request, I continued the
prehearing conference until
November 21, 1994. At the prehearing conference I scheduled an
in-person hearing and set a schedule for the parties to exchange
lists of witnesses and proposed exhibits prior to the hearing.
I conducted an in-person hearing in this case on February 17, 1995,
in New York. At the beginning of the hearing, Petitioner was
represented by an attorney. However, during the initial course of
the proceeding, Petitioner dismissed his attorney, the attorney
withdrew, and Petitioner stated that he desired to proceed pro
se. Both parties presented documentary evidence and testimony of
witnesses. At the close of the hearing, I set a schedule for the
parties to file posthearing briefs and replies. The parties filed
their briefs in accordance with the schedule I established at the
hearing.
Tr. 237-40. 2/
I have considered the evidence of record, the parties' arguments,
and the applicable law and regulations. I find that, pursuant to
sections 1128(a)(1) and 1128(c)(3)(B) of the Act, the I.G. has the
authority to exclude Petitioner and that the 15-year exclusion is
reasonable. Therefore, I sustain the 15-year exclusion imposed and
directed against Petitioner.
ISSUES
The issues in this case are:
1. Whether Petitioner 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.
2. Whether the 15-year exclusion imposed and directed against
Petitioner by the I.G. is reasonable.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. During the period of time relevant to this case, Petitioner was
a cardiologist practicing in Brooklyn, New York. Tr. 185, 190.
2. Petitioner was president and secretary of M.M. Management
Services, Inc. (M.M. Management) as of November 22, 1988. I.G. Ex.
30.
3. M.M. Management operated a group medical practice, consisting
of two medical clinics in Brooklyn, New York. Tr. 185, 191.
4. M.M. Management had its own Medicaid provider number from
sometime in 1988. Tr. 233.
5. On September 27, 1991, Petitioner and M.M. Management were
indicted in the Supreme Court of the State of New York, County of
Kings, on the following charges:
a. one count of grand larceny in the first degree, in that,
individually and as a high managerial agent of M.M. Management,
from about October 1988 to about November 1990, Petitioner
wrongfully took, obtained, and withheld property valued in excess
of one million dollars by submitting or causing to be submitted
numerous claims to the New York Medicaid Fiscal Agent for services
that were not provided at all or were not provided by the
physicians designated on the claim forms; and
b. twenty-seven counts of offering a false instrument for
filing in the first degree, in that, individually and as a high
managerial agent of M.M. Management, Petitioner submitted or caused
to be submitted false claims for services supposedly rendered to
Medicaid recipients on specified dates from February 6, 1989
through August 10, 1990.
I.G. Ex. 15 at 2-28.
6. The same indictment also charged Petitioner, individually, with
the following:
a. three counts of unlawful sale of a prescription for a
controlled substance;
b. three counts of unauthorized practice of medicine; and
c. one count of falsifying business records.
I.G. Ex. 15 at 29-33.
7. On or about February 1, 1993, Petitioner entered into a plea
agreement with the New York State Attorney General's office, in
which Petitioner agreed to plead guilty to one count of grand
larceny in the second degree. I.G. Ex. 1.
8. In signing the plea agreement, Petitioner admitted that he
shared responsibility for wrongfully taking property from the New
York Medicaid program between October 1988 and November 1990. I.G.
Ex. 1 at 18-21.
9. On August 9, 1993, Petitioner was sentenced to a prison term of
15 to 45 months. I.G. Ex. 16 at 8.
10. Petitioner admitted, and I find, that his guilty plea, and the
actions taken by the court indicating acceptance of his plea,
constitute a "conviction" of a criminal offense, within the meaning
of section 1128(i)(3) of the Act. Tr. 12.
11. Petitioner stipulated during the November 21, 1994, prehearing
conference that his conviction was related to his delivery of
services under the New York Medicaid program, thereby subjecting
him to the mandatory minimum exclusion of five years under section
1128(a)(1) and section 1128(c)(3)(B) of the Act; Petitioner
withdrew that stipulation at the hearing. Order and Notice of
Hearing, dated December 14, 1994; Tr. 11-12.
12. 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. Findings 6-11.
13. The Secretary of the Department of Health and Human Services
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).
14. The I.G. had authority to impose and direct an exclusion
pursuant to section 1128(a)(1) of the Act based upon Petitioner's
conviction of an offense related to his delivery of services under
the Medicaid program.
15. The I.G. was required to impose and direct an exclusion for at
least five years, pursuant to section 1128(c)(3)(B) of the Act.
16. Regulations published on January 29, 1992 establish criteria
to be employed by the I.G. in determining to impose and direct
exclusions pursuant to sections 1128(a) and (b) of the Act. 42
C.F.R. Part 1001 (1992).
17. 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 section 1128(a)(1) of the Act. 42 C.F.R.
1001.101 and 1001.102.
18. 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 sections
1128(a) and (b) 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. 5617-18 (1993).
19. The Administrative Law Judge's adjudication of the length of
exclusion in this case is governed by the criteria set out in
section 1128(a)(1) of the Act, section 1128(c)(3)(B) of the Act,
and 42 C.F.R. 1001.102. Findings 14-18.
20. By letter dated December 8, 1993, the I.G. excluded Petitioner
pursuant to section 1128(a)(1) of the Act for a period of 15 years.
I.G. Ex. 4.
21. An exclusion imposed pursuant to section 1128(a)(1) of the Act
may be in excess of the five-year mandatory minimum period if any
of the six aggravating factors set out in 42 C.F.R. 1001.102(b)
are found to be present.
22. 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, orsimilar
acts, resulted in financial loss to Medicareor Medicaid of $1500 or
more.
b. The acts that resulted in a party's conviction,or similar
acts, were committed over a period of oneyear 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 programbeneficiaries or other individuals.
d. The sentence which a court imposed on a partyfor the
above-mentioned conviction included a periodof 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 ofimproper billings.
42 C.F.R. 1001.102(b)(1)-(6) (paraphrase).
23. The I.G. has the burden of proving that aggravating factors
specified in the regulations are present in this case. 42 C.F.R.
1005.15(c).
24. If any of the six factors in 42 C.F.R. 1001.102(b) are
found to be present, thereby justifying an exclusion longer than
five years, the three factors (and only those three factors)
specified in 42 C.F.R. 1001.102(c) may be considered mitigating,
and a basis for reducing the portion of the exclusion that is in
excess of the mandatory five years.
25. 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 fewermisdemeanor
offenses, and the entire amount offinancial loss to Medicare and
Medicaid due to theacts which resulted in the party's conviction
andsimilar acts, is less than $1500.
b. The record in the criminal proceedings,including
sentencing documents, demonstrates thatthe court determined that,
before or during thecommission of the offense, the party had a
mental,emotional, or physical condition that reduced thatparty's
culpability.
c. The party's cooperation with federal or Stateofficials
resulted in others being convicted ofcrimes, or in others being
excluded from Medicare orMedicaid, or in others having imposed
against them acivil money penalty or assessment.
42 C.F.R. 1001.102(c)(1)-(3) (paraphrase).
26. Petitioner has the burden of proving that mitigating factors
exist which justify reducing his exclusion. 42 C.F.R.
1001.102(c)(1)-(3); 42 C.F.R. 1005.15(c).
27. Petitioner admitted that the acts for which he was convicted
resulted in losses to the Medicaid program of at least $200,000,
and that he himself had received about $68,000 from the scheme.
I.G. Ex. 1 at 32-33.
28. The I.G. proved that the acts for which Petitioner was
convicted caused losses to the Medicaid program in the amount of
$1.4 million. Tr. 116, 163-66; see also I.G. Ex. 25; P. Ex. 8.
29. The I.G. proved that an aggravating factor is present in that
the acts that resulted in Petitioner's conviction resulted in
losses to the New York Medicaid program in excess of $1500.
Finding 28.
30. The I.G. proved that an aggravating factor is present in that
the acts resulting in Petitioner's conviction were committed over
a period in excess of one year. Finding 8.
31. The I.G. proved that an aggravating factor is present in that
Petitioner was sentenced to incarceration. Finding 9.
32. Petitioner has been excluded from the New York State Medicaid
program continuously since December 5, 1984. I.G. Ex. 29.
33. The I.G. proved that an aggravating factor is present in that
Petitioner has a prior administrative sanction record. Finding 32.
34. The aggravating factors specified at 42 C.F.R.
1001.102(b)(1), 1001.102(b)(2), 1001.102(b)(4), and 1001.102(b)(5)
are present in Petitioner's case, and warrant imposition of a
period of exclusion of 15 years.
35. Petitioner acknowledges that, during the period of time
relevant to this case, October 1988 to November 1990, he was not
permitted to bill Medicaid for services using his own provider
number. Tr. 190.
36. Petitioner was the President and Secretary of M.M. Management,
and after March 1989, the sole shareholder. I.G. Ex. 30; Tr. 196.
37. Petitioner owned the buildings and equipment in which the
medical clinics were located. Tr. 216.
38. Petitioner controlled the money paid to M.M. Management by the
Medicaid program. Tr. 216.
39. Petitioner paid the physicians employed by M.M. Management 30
percent of the reimbursements generated by their billings; the
corporation, which he controlled, retained 70 percent. Tr. 234-35.
40. An auditor employed by the New York Medicaid Special
Prosecutor's office traced Medicaid reimbursements from M.M.
Management to Petitioner's personal bank accounts. I.G. Ex. 25 at
4.
41. The auditor traced transfers amounting to $950,000 from
Petitioner's personal bank accounts to Swiss bank accounts. I.G.
Ex. 25 at 4-5.
42. Petitioner appears to have used M.M. Management as an
instrumentality to obtain funds from the Medicaid program at a time
when he was not personally permitted to participate in the program.
Findings 35-41.
43. As part of his plea bargain, Petitioner agreed to a $1.3
million civil settlement with the State. I.G. Ex. 1 at 4-10.
44. Petitioner repudiated the monetary settlement he had agreed to
with the State and filed for bankruptcy protection. I.G. Ex. 28 at
3.
45. At his plea allocution, Petitioner sought to minimize his
responsibility for the criminal conduct to which he pled guilty,
admitting only that he knew of the improper billing and shared
responsibility for it. I.G. Ex. 1 at 20, 22.
46. While testifying under oath before me, Petitioner stated that
there were no improper billings and that those who had testified
against him had fabricated evidence or offered perjured testimony.
Tr. 184, 197, 202-05, 209, 211; P. Br. at 12-13.
47. Petitioner has never fully acknowledged his responsibility for
the criminal conduct for which he was convicted. Tr. 184-236;
Findings 45-46.
48. Rather than accepting responsibility for his own unlawful
conduct or showing any remorse, Petitioner has repeatedly attempted
to blame others for such conduct and minimize the extent of his
personal monetary gain from the fraudulent Medicaid billing
practices. Findings 45-47.
49. The apparent purpose of the unlawful billing practices to
which Petitioner pled guilty, was to enable Petitioner to receive
reimbursement from Medicaid while evading his prior exclusion from
Medicaid. Findings 35-42.
50. Petitioner has failed to show any remorse for his conduct and
is an untrustworthy provider who may, if given another opportunity,
attempt to defraud Medicaid again for his own personal gain.
Findings 35-49.
51. Petitioner has offered nothing sufficient to rebut the
overwhelming and persuasive evidence in this case which
demonstrates that Petitioner remains a threat to the Medicare and
State health care programs. Findings 35-50.
52. Petitioner has not proved the presence of any mitigating
factors which may be used as a basis for offsetting any aggravating
factors. 42 C.F.R. 1001.102(c)(1)-(3).
53. The remedial purpose of section 1128 of the Act is to protect
federally funded health care programs and their beneficiaries and
recipients from providers who have demonstrated by their conduct
that they cannot be trusted to handle program funds or to treat
beneficiaries and recipients.
54. A lengthy exclusion is needed in this case to satisfy the
remedial purposes of the Act and to protect the Medicare and
Medicaid programs and their beneficiaries and recipients from
future misconduct by Petitioner.
55. The multiple and significant aggravating factors present in
this case, with no offsetting mitigating factors present, justify
excluding Petitioner for 15 years. 42 C.F.R. 1001.102(b).
56. The 15-year exclusion imposed and directed against Petitioner
by the I.G. is not extreme or excessive. Findings 1-55.
57. The 15-year exclusion imposed and directed against Petitioner
by the I.G. is reasonable. Findings 1 - 56.
RATIONALE
I. Petitioner was "convicted" within the meaning of section
1128(i) of the Act of a criminal offense related to the delivery of
an item or service under Medicaid and is subject to a minimum
mandatory exclusion of five years pursuant to sections 1128(a)(1)
and 1128(c)(3)(B) of the Act.
Petitioner admits that he was convicted of a criminal offense, in
that he pled guilty to one count of grand larceny in the second
degree. Petitioner argues that his conviction was not related to
the delivery of an item or service under Medicaid. P. Br. at 7,
11-12. Instead, Petitioner contends he was convicted of an offense
related to fraud within the meaning of section 1128(b)(1). I
reject Petitioner's argument.
In pleading guilty under the indictment, Petitioner admitted that
he obtained reimbursement from the New York Medicaid program by
submitting claims for services that either were not provided, or
were not provided by the physician identified in the claim. The
indictment on its face establishes that Petitioner's conviction was
related to the Medicaid program. The federal courts, as well as
appellate panels and administrative law judges of the Departmental
Appeals Board (DAB) have repeatedly held that financial crimes
which deprive the Medicaid program of funds are related to the
delivery of items or services under Medicaid. Jack W. Greene, DAB
1078 (1989), aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835
and 838 (E.D. Tenn. 1990); Napoleon S. Maminta, DAB 1135, at 14
(1990).
Moreover, it is well settled that the I.G. has no discretion to
impose a permissive exclusion for conduct that is program-related
and falls within the ambit of the mandatory exclusion provision of
section 1128(a), even if the conduct also can be fairly
characterized under either the permissive or mandatory exclusion
provisions. Greene, DAB 1078, at 9-11 (1989); Maminta at 14;
Charles K. Wheeler and Joan K. Todd, DAB 1123, at 6-7 (1990);
Domingos R. Freitas, DAB CR272, at 33-34 (1993). Consequently,
there is no basis for Petitioner's argument (P. Br. at 7, 11-12)
that a "permissive" rather than "mandatory" exclusion is
appropriate in this case.
II. The aggravating factors present in this case are a basis for
lengthening the period of exclusion beyond the minimum period of
five years.
The I.G. excluded Petitioner from participating in the Medicare and
Medicaid programs for 15 years. Petitioner argues that "[t]he
reasonable length of exclusion should be five years." P. Br. at 2,
3. The issue in this case is whether the I.G. is justified in
excluding Petitioner for 15 years.
Regulations published on January 29, 1992 establish criteria to be
employed by the I.G. in determining to impose and direct exclusions
pursuant to sections 1128(a) and (b) of the Act. 42 C.F.R. Part
1001 (1992). Finding 16. These regulations include criteria to be
employed by the I.G. in determining to impose and direct exclusions
pursuant to section 1128(a)(1) of the Act. 42 C.F.R. 1001.101
and 1001.102; Finding 17.
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 sections 1128(a) and
(b) of the Act are binding also upon Administrative Law Judges,
appellate panels of the DAB, and federal courts in reviewing the
imposition of exclusions by the I.G. 42 C.F.R. 1001.1(b); 58
Fed. Reg. 5617-18 (1993); Finding 18. This regulation was made
applicable to cases which were pending on or after January 22,
1993, the clarification's publication date. It is undisputed that
the present case was pending after January 22, 1993 because the
I.G.'s notice to Peititioner informing him that he had been
excluded for fifteen years is dated December 14, 1993. I must now
apply to this case the criteria for determining the length of
exclusions set forth in sections 1128(a)(1) and 1128(c)(3)(B) of
the Act and 42 C.F.R. 1001.102. Finding 19.
The standard for adjudication contained in 42 C.F.R. 1001.102
provides that, in appropriate cases, an exclusion imposed pursuant
to section 1128(a)(1) of the Act may be in excess of the five-year
mandatory minimum period if any of the six aggravating factors set
out in 42 C.F.R. 1001.102(b) are found to be present. Finding
21.
The six factors mentioned at 42 C.F.R. 1001.102(b)(1) -(6) are
the only ones classified by the regulations as aggravating factors.
3/ The I.G. has the burden of proving that aggravating factors
exist which justify increasing an exclusion imposed pursuant to
section 1128(a)(1) beyond the minimum mandatory five-year period.
Finding 23. In this case, the I.G. contends that the aggravating
factors identified at 42 C.F.R. 1001.102(b)(1),
1001.102(b)(2), 1001.102(b)(4), and 1001.102(b)(6) are present.
A. The evidence establishes that the aggravating factor
identified at 42 C.F.R. 1001.102(b)(1) is present.
Under the regulations, it is an aggravating factor if an excluded
individual's acts caused the loss of more than $1500 to the
Medicare or Medicaid programs. The I.G. has alleged that
Petitioner's acts resulted in losses of $1.4 million to the New
York Medicaid program. Petitioner argues that the Medicaid program
lost far less than that amount. P. Br. at 12-13. However, even
accepting Petitioner's version of the amounts in question, there is
no dispute that the losses exceeded $1500. Findings 27-29. Thus,
the aggravating factor is present.
At his plea allocution, Petitioner admitted that M.M. Management
received between $200,000 and $300,000 from the New York Medicaid
program as a result of submitting claims for services that were not
provided as claimed. I.G. Ex. 1 at 20. He admitted that he,
personally, received approximately $68,000 of the proceeds. I.G.
Ex. 1 at 32-33; Tr. 8-9; P. Br. at 13. These admissions by
Petitioner establish that his acts resulted in financial losses to
Medicaid far in excess of the regulatory threshold, even without
the additional amounts alleged by the I.G.
However, the I.G. has offered evidence which demonstrates that
Petitioner and M.M. Management caused the Medicaid program to lose
over $1 million. Cecilia Leong, an auditor employed by the New
York Special Prosecutor for Medicaid Fraud Control, testified that
from February 1988 to November 1990, the Medicaid program paid M.M.
Management over $2.5 million, of which at least $1.4 million was
paid based on improper billings. Tr. 116-17, 163-66; see also I.G.
Ex. 25; P. Ex. 8.
Petitioner argues that Ms. Leong's calculation of the amount of
loss to the Medicaid program was fabricated. P. Br. at 13. He
argues also that the assumptions on which she based her
calculations were unfounded. For example, Petitioner alleges that
a physician perjured herself when she testified before the grand
jury that M.M. Management billed Medicaid improperly for her
services because she was not qualified to perform or interpret
certain tests. Id. Petitioner's attempts to discredit Ms. Leong's
testimony are unavailing, however. Petitioner's suggestion that
Ms. Leong "concocted" the figures is completely unsupported by the
record and is not credible. Additionally, Petitioner's suggestion
that certain incriminating testimony against him was perjured
amounts to a collateral attack on his conviction -- that is, an
attempt to argue that he was not guilty of the offense to which he
pled guilty. Petitioner is not permitted to collaterally attack
his conviction in these proceedings.
I find credible the I.G.'s allegation that Petitioner's conduct
caused losses of approximately $1.4 million. In addition to Ms.
Leong's testimony, the $1.4 million figure is further corroborated
by the fact that, as part of his plea agreement, Petitioner
negotiated a civil settlement with the State of New York in which
he agreed to pay approximately $1.3 million. I.G. Ex. 1 at 4-11.
4/
I therefore conclude that the acts which resulted in Petitioner's
conviction caused losses of approximately $1.4 million to the New
York Medicaid program. The aggravating factor identified at 42
C.F.R. 1001.102(b)(1) is thus present in Petitioner's case.
B. The evidence establishes that the aggravating factor
identified at 42 C.F.R. 1001.102(b)(2) is present.
Section 1001.102(b)(2) of the regulations provides that it is an
aggravating factor if the acts that resulted in an individual's
conviction, or similar acts, were committed over a period of one
year or more. In the present case, Petitioner pled guilty to count
one of the indictment, which charged that Petitioner and M.M.
Management had obtained money based on false claims submitted to
the Medicaid program between October 1988 and November 1990. By
pleading guilty, Petitioner admitted that he had engaged in the
conduct charged. In his brief, however, Petitioner asserts that he
only admitted to engaging in criminal acts during a period of a few
months in 1989. P. Br. at 14. The minutes of Petitioner's plea
allocution show that Petitioner at first tried to minimize his
involvement with M.M. Management, but after an off-the-record
discussion with his attorney, Petitioner admitted his
responsibility in the scheme, as charged in the indictment. I.G.
Ex. 1 at 20. Thus, the aggravating factor identified in 42 C.F.R.
1001.102(b)(2) is present in this case.
C. The evidence establishes that the aggravating factor
identified at 42 C.F.R. 1001.102(b)(4) is present.
It is an aggravating factor under the regulations if the sentence
imposed on an excluded individual as a result of a program-related
conviction included incarceration. 42 C.F.R. 1001.102(b)(4).
In the present case, Petitioner was sentenced to State prison for
an indeterminate period of between 15 and 45 months. I.G. Ex. 16
at 8. While Petitioner asserts that the court treated him unfairly
in imposing a jail sentence, he does not deny that he was sentenced
to incarceration. P. Br. at 14. Thus, the aggravating factor is
present in this case.
D. The evidence establishes that the aggravating factor
identified at 42 C.F.R. 1001.102(b)(5) is present.
The regulations provide that it is an aggravating factor if the
excluded individual has a prior civil, criminal, or administrative
sanction record. 42 C.F.R. 1001.102(b)(5). The I.G. proved
that Petitioner was excluded from the New York Medicaid program in
December 1984 and has remained excluded since that time. I.G. Ex.
29. Petitioner admits that he was subject to a Medicaid
"suspencion [sic]" in August 1984 and permanent disqualification in
November 1989. P. Br. at 14. Thus, the aggravating factor is
present in this case.
III. There are no mitigating factors present in this case.
Petitioner has not offered any credible evidence to rebut the
I.G.'s showing as to the presence of aggravating factors. Nor has
Petitioner offered evidence to prove that any of the mitigating
factors enumerated in the regulations are present in this case.
Petitioner offered P. Ex. 3 in an attempt to show that the length
of his exclusion should be decreased. The exhibit is a certificate
of relief from civil disabilities issued by the justice who
sentenced Petitioner. Administrative Law Judges of the DAB have
held that such certificates apply only to State forfeitures and
cannot bind federal officials who seek to impose federal remedies.
Janet Wallace, L.P.N., DAB CR155 (1991), aff'd DAB 1326 (1992).
Thus, the certificate of relief from civil disabilities cannot be
considered to be a mitigating factor regarding Petitioner's
exclusion under federal law.
Additionally, Petitioner argues that his exclusion should be for a
period less than 15 years because he was entrapped to commit the
acts for which he was convicted. P. Br. at 15. As was the case
with his unsupported assertion that incriminating testimony was
perjured, Petitioner's entrapment argument is no more than a thinly
disguised attempt to argue that he is not in fact guilty of the
crime to which he pled guilty.
IV. A 15-year exclusion is reasonable.
The multiple aggravating factors present in Petitioner's case lead
to the conclusion that Petitioner has been and remains a highly
untrustworthy individual. Petitioner has offered nothing to rebut
the aggravating factors. He has not proved the existence of even
one mitigating factor under the regulations. Petitioner has
engaged in conduct which caused such immense financial harm to the
Medicaid program in the past. Therefore, the risk that he might
again engage in such conduct warrants a lengthy exclusion to
protect the programs. Moreover, the conduct which led to
Petitioner's conviction demonstrates a high degree of culpability
on Petitioner's part, and his continuing failure to accept
responsibility for that conduct indicates that he is likely to
continue to pose a threat to federally funded programs in the
future.
I have already concluded, above, that an aggravating factor is
present in this case because Petitioner, through his corporation,
M.M. Management, defrauded the New York Medicaid program of
approximately $1.4 million. This factor alone warrants an
exclusion well beyond the mandatory minimum of five years. This
amount is indicative of the enormous harm caused to the Medicaid
program by Petitioner. Petitioner's conviction demonstrates that
he is an individual who is capable of engaging in fraud on a grand
scale.
Additional evidence of Petitioner's propensity to cause harm to the
Medicaid program is found in his actions with respect to his
restitution agreement with New York State. As I noted above, as
part of his plea agreement, Petitioner stipulated to a civil
settlement with New York State in the amount of approximately $1.3
million. Petitioner agreed to that settlement on the record before
a judge and then repudiated the agreement and filed for bankruptcy
protection. The State then sued him for over $5 million in
restitution and civil penalties. Before the bankruptcy judge, the
State successfully argued that the amounts it sought were
nondischargeable. I find that Petitioner's repudiation of his
agreement to repay $1.3 million of the money he fraudulently
obtained from the Medicaid program indicates that he continues to
pose a threat to federally funded health care programs.
In addition to the harm caused to Medicaid, another aggravating
factor under the regulations is that the conduct to which
Petitioner pled guilty did not involve an isolated incident, but a
continuous and intentional course of conduct over a two-year
period. The duration of the conduct is relevant to the length of
an exclusion because, it may be indicative of increased
culpability. I conclude that, in this case, the duration of
Petitioner's unlawful conduct is indicative of increased
culpability. Moreover, Petitioner had controlling authority in
M.M. Management and received a substantial portion of the fruits of
that illegal conduct. Findings 35-43. Therefore, Petitioner's
culpability in M.M. Management's improper billing scheme was
substantial.
Throughout his testimony before me, Petitioner sought to minimize
his responsibility for and involvement with M.M. Management and the
false billings to which he pled guilty. Petitioner repeatedly
testified that he had no management or ownership interest in M.M.
Management prior to March 1989. E.g., Tr. 195, 215. However, on
cross-examination, Petitioner retreated from that position,
initially stating that he became the treasurer of M.M. Management
prior to March. Petitioner asserted that his role was merely to
act as the corporation's bank, simply holding funds, but not
exercising any policy role. Tr. 215. The I.G. then introduced
I.G. Ex. 30, a corporate resolution of M.M. Management, dated
October 22, 1988, signed by Petitioner as President and Secretary
of the corporation. Petitioner acknowledged that the signatures on
I.G. Ex. 30 were his. Tr. 222. I conclude that Petitioner's
testimony about his responsibilities in M.M. Management was
contradictory, evasive, and contrary to the wealth of evidence
demonstrating that he was the principal individual who devised,
implemented, and benefited from unlawful conduct.
Further, Petitioner acknowledged that, after March 10, 1989, he was
the sole shareholder, President, and Secretary of M.M. Management.
Tr. 196. But, even as to the period of time when he admitted he
controlled the corporation, he stated that no improper billings
occurred (Tr. 202-03, 209), or attempted to place the blame for the
improper billing practices on other physicians (Tr. 197, 205-06).
Obviously, to contend that no improper billing occurred flies in
the face of Petitioner's guilty plea, in which he admitted engaging
in the conduct charged in the indictment. Nor do I find credible
Petitioner's assertion that, in essence, he fell victim to the
illegal practices of others.
Instead, the evidence suggests to me that Petitioner may have
created M.M. Management specifically to permit him to continue to
benefit from Medicaid billings at a time when he was excluded from
the New York Medicaid program. Petitioner acknowledged that, as of
August 1984, he was not permitted personally to bill the Medicaid
program for his services. Tr. 190. Yet, as the President and
Secretary of M.M. Management, at least since November 22, 1988,
Petitioner benefitted financially from the Medicaid billings
submitted by M.M. Management. Petitioner admitted that he
personally received at least $68,000 as a result of the scheme. It
is more likely, however, that the amount of money Petitioner
received was much greater. Petitioner admitted, in response to my
question, that he retained 70 percent of the money Medicaid paid to
M.M. Management. Tr. 235. Ms. Leong, the Medicaid auditor, traced
Medicaid payments to Petitioner's personal bank accounts, and then
traced transfers of $950,000 from those accounts to Swiss bank
accounts. I.G. Ex. 25 at 4-5. This evidence demonstrates a high
degree of culpability on Petitioner's part, both as to the large
amount of Medicaid funds he diverted and as to his attempts to
place the proceeds of his scheme out of the reach of enforcement
authorities.
The high degree of Petitioner's culpability in the scheme involving
M.M. Management is further evidenced by the fact that the New York
State Supreme Court sentenced him to a significant period of
incarceration. As discussed above, a sentence including
incarceration is an aggravating factor under the regulations.
The final aggravating factor which I have found to be present in
this case is that Petitioner was subject to a prior administrative
sanction, specifically, exclusion from the New York Medicaid
program. This factor may indicate an individual's
untrustworthiness by showing that an individual has engaged in some
improper conduct in the past. The basis for Petitioner's prior
Medicaid exclusion is not disclosed in the record. However, I find
evidence of Petitioner's untrustworthiness, not only in the fact of
his prior exclusion, but in his testimony about that exclusion
before me. Petitioner first testified that he was audited by
Medicaid in 1984, but was not excluded until November 1989. Tr.
185-86. Petitioner later testified that after August 1984 he was
appealing his exclusion and a final decision was issued in October
1989. Tr. 229-30. The I.G. introduced a document which indicates
that Petitioner has been continuously excluded from Medicaid since
1984. Petitioner's contradictory statements regarding his previous
sanction record are further evidence that he is not trustworthy to
be a provider of services under Medicare or Medicaid.
The multiple aggravating factors present in this case demonstrate
that Petitioner has, in the past, engaged in conduct which has
caused serious harm to the Medicaid program. Moreover, the
evidence before me convinces me that Petitioner continues to be a
threat to the Medicare and State health care programs and that he
is likely to remain so for a lengthy period of time. Petitioner
has attempted to minimize the overall impact of his conduct and has
failed to accept any more than the most ephemeral of responsibility
for his actions. Therefore, I cannot be assured that the conduct
for which Petitioner was convicted will not recur in the future.
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.
I find that the presence in this case of the aggravating factors
specified at 42 C.F.R. 1001.102(b)(1), 1001.102(b)(2),
1001.102(b)(4), and 1001.102(b)(5) warrant imposition of a 15-year
exclusion of Petitioner from Medicare and State health care
programs. 5/ The Medicare and Medicaid programs are vulnerable to
unscrupulous providers. The remedial purpose of section 1128 of
the Act is to protect the integrity of federally funded health care
programs and their beneficiaries and recipients from providers who
have demonstrated by their conduct that they cannot be trusted to
handle program funds or to treat beneficiaries and recipients.
Petitioner's unlawful conduct is the type of misconduct Congress
sought to prevent when it enacted section 1128 of the Act. There
is nothing in the record to suggest that Petitioner has recognized
the nature of the harm he caused the Medicaid program. He has
demonstrated a lack of understanding of the significance of the
unlawfulness of his conduct. I find that a lengthy exclusion is
needed in this case to satisfy the remedial purposes of the Act and
to protect the Medicare and Medicaid programs and its beneficiaries
and recipients from future misconduct by Petitioner.
By any standard, the criminal conduct for which Petitioner was
convicted is serious. That conduct demonstrates that Petitioner
bore a high degree of culpability for acts which caused immense
harm to the Medicaid program over a lengthy period of time. The
multiple and significant aggravating factors present in this case,
with no offsetting mitigating factors present, justify excluding
Petitioner for 15 years. I conclude that the 15-year exclusion
imposed and directed against Petitioner by the I.G. is not extreme
or excessive, and therefore, must stand.
CONCLUSION
Based on the law and the evidence, I conclude that the 15-year
exclusion imposed and directed against Petitioner by the I.G. is
reasonable and must stand.
________________________
Edward D. Steinman
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 Act.
Unless the context indicates otherwise, I use the term "Medicaid"
hereafter to refer to all State health care programs listed in
section 1128(h).
2. The parties' exhibits and posthearing briefs, the transcript
of the hearing, and my findings of fact and conclusions of law will
be cited as follows:
Petitioner's Brief P. Br. at (page)
I.G.'s Brief I.G. Br. at (page)
Petitioner's Exhibit P. Ex. (number at page)
I.G.'s Exhibit I.G. Ex. (number at page)
Transcript of Hearing Tr. (page)
My Findings of Fact and
Conclusions of Law Findings (number)
3. In the Notice sent to Petitioner informing him of his
exclusion, the I.G. stated that the following circumstances were
taken into consideration in arriving at Petitioner's period of
exclusion: (1) the statutory fines and penalties imposed by the
court amounted to more than $500,000; (2) the commission of the
crime evinced planning and premeditation; and (3) Petitioner agreed
to be excluded from the Medicaid program for 10 years. Subsequent
to the Notice, but prior to the hearing, the I.G., in her exchange
of proposed exhibits dated January 19, 1995, provided notice to
Petitioner that he was previously administratively sanctioned by
New York State Medicaid. See, I.G. Ex. 29. Despite this
disclosure, Petitioner argues that he had no advance knowledge that
the I.G. would be recommending a 15-year exclusion against him in
these proceedings based in part on Petitioner's prior
administrative sanction. Petitioner contends that his due process
rights were abridged when the I.G. failed to specifically inform
him in the Notice that his prior administrative sanction would be
used as an aggravating factor in these proceedings. P. Br. at 14.
I disagree. Approximately one month prior to the hearing, in the
exchange of exhibits, the I.G. provided a copy of I.G. Ex. 29 to
Petitioner. This exhibit clearly raised the issue of the presence
of a prior administrative sanction and the potentiality that it
would be relied upon by the I.G. in establishing the presence of
the aggravating factor at 1001.102(b)(5). I.G. Ex. 29.
Furthermore, the factual circumstances of this prior administrative
sanction were addressed by the parties at the hearing.
4. Petitioner agreed to surrender over $800,000 in cash and
property and additionally to execute a confession of judgment in
the amount of $500,000. Petitioner later repudiated this agreement
and filed for bankruptcy protection. I.G. Ex. 28 at 2-3; Tr. 9.
5. Petitioner argues that imposition of the 15-year exclusion
violates his constitutional rights. P. Br. at 15. My delegation
of authority to hear and decide exclusion cases brought pursuant to
section 1128 does not include the authority to rule on the
constitutionality of either federal statutes or the I.G.'s actions.
42 C.F.R. 1005.4(c)(1), (4). However, there are several
compelling reasons why Petitioner's argument is without merit. The
double jeopardy protection of the Fifth Amendment of the
Constitution does not apply here because the civil sanctions
imposed by the I.G. can be lawfully imposed against Petitioner
despite his criminal conviction and the application of collateral
civil remedies for Medicaid fraud. United States v. Halper, 490
U.S. 435 (1989); Abbate v. United States, 359 U.S. 187 (1959).
Under Halper, in order for the remedy to be punitive, it must bear
no reasonable relationship to either the costs sustained by the
Department or to the remedial purpose of the Act. Wesley Hal
Livingston, et al, DAB CR240, at 67-68, (1992). Halper
specifically related to the punitive nature of a civil monetary
penalty. However, the Supreme Court's admonition as to determining
when a remedy is punitive could arguably apply where the exclusion
is not reasonably related to the remedial purposes of the Act.
Wesley Hal Livingston, et al, DAB CR240, at 67-68, (1992). My
Decision makes clear that the remedial purposes of the Act require
that Petitioner be excluded for 15 years.
Petitioner's due process rights have been protected throughout this
hearing. This hearing was granted over the objections of the I.G.
who had sought a dismissal. Rather than being cruel and unusual
punishment, the exclusion has been found to be reasonable and
necessary to protect future program participants from Petitioner's
threat of repeated unlawful conduct. Accordingly, there is no
basis for Petitioner's assertions that the 15-year exclusion
violates the Fifth, Eighth, and Fourteenth Amendments of the
Constitution.