Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
In the Case of:
Yvon Nazon, M.D.,
Petitioner,
- v. -
The Inspector General.
DATE: December 21, 1992
Docket No. C-92-126
Decision No. 1376
FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE
DECISION ON
REMAND
Yvon Nazon, M.D. (Petitioner) appealed a decision on remand dated July
8,
1992 by Administrative Law Judge Edward D. Steinman (ALJ), modifying
his
initial decision dated December 20, 1991. See Yvon Nazon, M.D.,
DAB
CR214 (1992) (ALJ Remand Decision). The initial ALJ decision
sustained
a determination by the Inspector General (I.G.) to exclude
Petitioner
from the Medicare and State health care programs for seven
years
pursuant to section 1128(a)(1) of the Social Security Act (Act).
See
Yvon Nazon, M.D., DAB CR169 (1991) (ALJ Initial Decision). On
remand,
the ALJ considered whether a reduction in the amount of
restitution
which Petitioner was required to pay in the underlying criminal
case,
which took place after his Initial Decision was issued, altered
his
conclusions on the reasonableness of the length of the exclusion
imposed
on Petitioner. He modified his findings to reflect the fact of
the
reduction in restitution but concluded that a seven-year exclusion
was
still reasonable. ALJ Remand Decision. 1/
Section 1128(a)(1) of the Act requires the Secretary of the Department
of
Health and Human Services to exclude any individual who is determined
to have
been "convicted of a criminal offense related to the delivery of
an item or
service" under Medicare or any State health care program. 2/
An exclusion
under this section must be for "not less than five years,
except that, upon
the request of a State, the Secretary may waive the
exclusion" under certain
circumstances. Section 1128(c)(3)(B) of the
Act.
Petitioner appealed the ALJ Initial Decision to us on the grounds that
the
ALJ based his decision on improper evidence, erred in denying a
waiver of
Petitioner's exclusion, and was biased against Petitioner.
Petitioner's
Appeal of Initial Decision (Petitioner's Initial Appeal) at
8-9. During
that appeal, Petitioner notified us that the amount of
restitution included
as part of his sentence in the underlying criminal
case had been reduced by
stipulation from $84,110.35 to $4,979 and
sought remand for the ALJ to assess
whether the reduction altered his
decision. Petitioner's Brief in Reply
to Respondent's Brief
(Petitioner's Initial Reply Br.) at 6-7. In this
appeal, the Petitioner
challenged the ALJ's determination on remand not to
alter his
conclusions as to the reasonableness of the length of the
exclusion
(while modifying his findings to reflect the new facts
concerning
restitution). Petitioner argued that the ALJ erred in
treating the
reduction as unrelated to any showing of lesser culpability and
that the
ALJ showed personal animus against Petitioner throughout the ALJ
Remand
Decision. Petitioner also continued to press the issues raised
in his
initial appeal. Petitioner's Appeal from the Decision on
Remand
(Petitioner's Appeal from Remand) at 8. Petitioner did not
identify
specific FFCLs to which he excepted, but sought to have both
ALJ
decisions vacated and the matter remanded for a hearing before
a
different ALJ.
In this decision, we address all of Petitioner's arguments and
determine
that the ALJ's findings (as modified on remand) were clearly
supported
by substantial evidence and were legally correct. Indeed,
none of
Petitioner's arguments represents a serious challenge to the
ALJ
decision. We therefore sustain his decision, as modified on remand,
and
affirm and adopt each and every one of his FFCLs, as modified.
Background 3/
Petitioner admitted that he was convicted of a criminal offense covered
by
section 1128(a)(1) of the Act, so the issues before the ALJ were
limited to
whether the seven-year exclusion period was reasonable under
the
circumstances and whether the ALJ had authority to grant a waiver.
ALJ
Initial Decision at 3.
Petitioner is a Board-certified physician in obstetrics and gynecology
who
was indicted in the United States District Court for the Northern
District of
Indiana on October 13, 1989 on 17 counts of presenting false
claims.
Id. at 4. The claims arose out of two practices in which the
ALJ found
that Petitioner engaged over a period of more than a year.
First, Petitioner
improperly billed Medicaid for laboratory services
performed by an
independent laboratory. Second, Petitioner altered
reports of
operations in order to submit bills for assistant surgeon
services which were
never provided or were provided by residents paid by
the hospital.
Id.
Petitioner was found guilty on all counts after trial and was sentenced
to
a fine, probation, work release, community service, and restitution
of
$84,110.35. The conviction was affirmed on appeal. United States
v.
Nazon, 940 F.2d 255 (7th Cir. 1991). Petitioner was
permanently
excluded from the State Medicaid program on June 28, 1990, and
was
sanctioned by the State Medical Licensing Board. The ALJ found that
the
serious nature of Petitioner's offenses was reflected in the
criminal
sentence and the State and professional sanctions. ALJ Initial
Decision
at 5-6.
The ALJ found that Petitioner's testimony that his practices resulted
from
poor advice, negligence, or confusion about Medicaid requirements
was not
credible. The ALJ found, instead, that Petitioner acted
deliberately
and repeatedly initiated schemes to defraud Medicaid, that
he continued to
excuse and rationalize his deceptive billing, and that
his misstatement of
the facts evidenced untrustworthiness. Id. at 6.
The ALJ concluded that
an exclusion of seven years was appropriate to
protect the federally-funded
programs. Id. at 7.
The ALJ also concluded that he had no authority to grant a waiver and
that
evidence of Petitioner's competence as a physician or of community
need for
his services did not prove his trustworthiness to handle
federal funds.
Id. at 6-7.
On April 7, 1992, the trial court entered an agreed order reducing
the
amount of restitution ordered from $84,110.35 to $4,979. ALJ
Remand
Decision at 3-4. The ALJ found on remand that the basis for
the
reduction was that case law did not permit an order of restitution
for
more than the damages alleged in the indictment. Id. The ALJ
found
that this change did not alter his assessment of
Petitioner's
trustworthiness and that the length of the exclusion was
still
reasonable. Id. at 5-6.
Analysis
We first consider whether the ALJ erred in sustaining the
seven-year
exclusion after the trial court reduced the restitution
ordered,
examining (A) the significance of the amount of restitution in
relation
to the length of exclusion and (B) the evidence before the ALJ as to
the
amount of damages caused by Petitioner's conduct. We next
consider
Petitioner's arguments that the ALJ Decisions were based on improper
or
incompetent evidence or were not supported by substantial
evidence.
Specifically, Petitioner (A) challenged as unreliable hearsay
the
investigators' reports and testimony regarding statements of
witnesses
that did not appear at the hearing, (B) argued that the testimony
of the
investigators at the criminal trial was inconsistent with
their
testimony at the hearing, and (C) contended that the Seventh
Circuit
decision upholding Petitioner's conviction was improperly admitted
into
the record without reopening the hearing. We then consider
Petitioner's
allegations of bias and personal animus by the ALJ in (A)
finding no
remorse by Petitioner and (B) declining to reduce the exclusion
on
remand. Finally, we consider whether the ALJ erred in determining
that
he lacked authority to consider Petitioner's waiver request.
1. Petitioner's arguments on the reduction of restitution
A. The Significance of the Amount of Restitution
Although Petitioner focussed intensely on the ALJ's findings on the
amount
of damages, it is important to note that the amount of damages
caused by
Petitioner was only one of the aggravating factors which led
the ALJ to find
an exclusion of two additional years (beyond the
statutory minimum of five
years) to be reasonable in this case. The ALJ
correctly evaluated "the
totality of the circumstances" in determining
the length of exclusion
necessary to protect the federally-funded
programs from an untrustworthy
provider. See ALJ Initial Decision at
13.
In this evaluation, the ALJ found that Petitioner "engaged in a pattern
of
serious criminal activity over a period of several years." Id.
He
reviewed the nature of Petitioner's improper billing for
laboratory
tests at inflated rates and alteration of medical reports to
document
false billing for assistant surgeon services. Id. at
13-16. He
characterized this conduct as "a systematic fraud of the
Medicaid
program resulting in the unlawful appropriation of thousands of
dollars
of trust fund monies." Id. at 17. He considered
Petitioner's
conviction, the total criminal sentence, Petitioner's
permanent
exclusion from the State Medicaid program, and the imposition
of
sanctions by the State licensing board. Id. He further
evaluated
Petitioner's testimony and found that his explanations were not
credible
and amounted to a denial of responsibility for actions which
he
initiated. Id. at 17-21. (We discuss the last factor in more
detail in
relation to the charges of bias made against the ALJ.) The
ALJ also
considered Petitioner's rationalizations for making these
improper
charges as evidence of his lack of respect for the need to comply
with
Medicaid regulations in the future. Id. at 21. These factors
would
suffice to support a seven-year exclusion based on even the amount
of
damages which Petitioner conceded as proven at the criminal
trial
($4,979), even without considering the larger total which the ALJ
found
to be supported by the evidence before him. 4/
B. Evidence Regarding the Amount of Damages
In any event, however, we find that the ALJ's finding that the
damages
amounted to $84,000 was supported by substantial evidence. See
ALJ
Initial Decision at 5, FFCL 16. Initially, the trial court imposed
a
sentence which included restitution of the total amount of damages
about
which testimony had been received. However, the court reduced
the
amount of restitution to $4,979, which corresponded to the claims
named
in the indictment. Petitioner argued that this reduction resulted
from
the failure to prove the additional amount of damages at
trial.
However, the pleadings state that the agreement to reduce
the
restitution was based on case law which restricted restitution to
those
damages resulting from claims for which a defendant was indicted.
5/ We
have no basis for concluding, as Petitioner would have us do,
that the
prosecutors must necessarily have indicted on all claims which
could
have been or were in fact proved. Cf. Petitioner's Remand Reply
Br. at
6-7. Prosecutors may choose to limit the number of counts in a
criminal
trial for many strategic reasons.
Even if the additional damages had not been proved during the
criminal
trial, the ALJ could properly make findings about the total effect
of
Petitioner's conduct on the federally-funded programs.
Petitioner
conceded that the ALJ could properly make independent findings of
fact
concerning Petitioner's conduct in weighing the reasonableness of
the
length of exclusion. Petitioner's Remand Reply Br. at 7. Even
if a
provider were charged with and convicted of only one act, the ALJ
could
properly receive evidence about and consider the entire scheme of
which
that act was only a part for purpose of evaluating the
provider's
trustworthiness. Thus, the conviction was necessary for the
ALJ's
applying an exclusion under section 1128(a)(1), but the facts which
the
ALJ considered in the de novo hearing in regard to the
appropriate
length of exclusion were not limited to those proven at the
criminal
trial. See section 205(b)(1) of the Act; ALJ Initial Decision
at 12.
The ALJ had substantial evidence in the record before him on which to
base
the calculation of approximately $84,000 in damages. See FFCL 16,
ALJ
Initial Decision at 5. The investigators described the process by
which
they calculated an initial amount based on Petitioner's paid
claims (known as
provider detail reports or PDRs) from 1985 through 1988
for laboratory
fees. They later obtained updated PDRs. They totalled
these,
omitting any claims relating to urinalysis (which Petitioner
could have
performed himself) and to handling fees (to which Petitioner
was entitled),
with a resulting figure of about $71,000. The remaining
$14,000
resulted from the false billing of assistant surgeon fees and
from PDRs
relating to an additional provider number under which
Petitioner was found to
have submitted claims. Transcript of Hearing
Before ALJ, held May 21,
1991 (Tr.) at 23-35, 37-47. From this
testimony and the additional
evidence referred to below, the ALJ could
reasonably accept the figure which
the investigators calculated as
representative of the damages.
Therefore, we find no error in the ALJ's
decision that the length of the
exclusion was reasonable, even
considering the reduction of the amount of
restitution.
2. Petitioner's attacks on the evidence considered by the ALJ
A. Hearsay
Petitioner acknowledged that hearsay statements were admissible in
the
administrative proceedings before the ALJ. Petitioner's Initial
Reply
Br. at 2-3; 42 C.F.R. . 498.61; cf. 57 Fed. Reg. at 3,353, to
be
codified at 42 C.F.R. . 1005.17(b). However, Petitioner contended
that
the testimony of the investigators about the declarants' statements
was
not reliable or "competent" because some of the testimony was
not
reflected in the investigators' reports and because the declarants
whose
statements were related by the investigators were not produced at
the
hearing. Petitioner's Initial Reply Br. at 2-4; Petitioner's
Initial
Appeal at 6-7.
Petitioner gave only one example of testimony by the
investigator
reporting statements allegedly different from those contained in
the
investigators' reports. At the hearing, Investigator John
Peters
identified Mariom Bernice Miller as a "billing clerk for Dr. Nazon
at
the time of the interview," and stated that Ms. Miller had reported
to
him that Petitioner "ordered her to bill for individual lab tests
and
the total would relate to probably between ninety and a hundred
and
sixty dollars." Petitioner's Initial Reply Br. at 3 (quoting Tr.
at
24-26).
Petitioner argued that the investigative report of Ms. Miller's
interview
on November 6, 1987 showed her employment with him from July
21, 1979 to July
31, 1987. Petitioner's Initial Reply Br. at 3; I.G.
Exhibit (Ex.) 3, at
13. We do not find that the inconsistency in the
description of Ms.
Miller's employment status obliges the ALJ to
disregard either the
investigators' testimony or the reports as
unreliable. The investigator
was testifying from memory at the hearing
three and one-half years after the
interview. The more contemporaneous
report was already in the record
and was available to Petitioner, yet he
chose not to question the
investigator regarding the discrepancy on
cross-examination.
Furthermore, Petitioner was likely to have had the
best evidence of when he
employed Ms. Miller, if he considered that
issue significant.
Petitioner did not explain why the difference in Ms.
Miller's employment
status would have been material to the resolution of
issues before the
ALJ. We find that it was not material.
Petitioner also asserted that the statement attributed to Ms. Miller
about
laboratory billing orders did not appear in the investigative
report.
In the interview, Ms. Miller is reported as stating that --
[apart from two particular tests] on all the other tests,
NAZON
billed Medicaid directly. . . . [T]he lab charged one fee
and
NAZON would bill his fee to Medicaid. NAZON would check the
lab
book to see what the individual tests were and he would
then
double or triple the amount when he billed Medicaid. NAZON
told
staff he was not going to let the lab bill Medicaid; he
would
bill Medicaid directly.
I.G. Ex. 3, at 13-14. The investigator's testimony does not
conflict
with this description of Ms. Miller's experience with
Petitioner's
instructions to staff about billing for individual lab
tests. It is
true that specific amounts referred to in the
investigator's testimony
($90-160) do not appear in the interview with Ms.
Miller. However, the
hearing testimony does not make clear whether
Investigator Peters was
attributing those amounts to Ms. Miller or was
stating his own estimate
of the amount relating to laboratory bills based on
his total
investigation. Again, we find no inconsistency that would
require the
ALJ to disregard the investigators' testimony or reports as
unreliable.
Petitioner's argument that he was denied an opportunity to
cross-examine
the declarants must also fail. He was informed before the
hearing of
the identity of the declarants whose statements would be used but
who
would not be called by the I.G. at the hearing. 6/ Petitioner was
free
to subpoena them, yet never sought to do so. 42 C.F.R. .
498.58.
Petitioner did not raise objections before the ALJ to the admission
of
the reports. As a result, the ALJ ruled that Petitioner had waived
any
hearsay objection to the investigators' testifying about reports
that
had already been accepted into evidence without objection. Tr. at
24.
Thus, it is far too late for Petitioner to complain of the lack
of
opportunity to cross-examine these declarants, since he did not
seek
such an opportunity when it was available to him.
Case law provides that hearsay statements are admissible in
administrative
proceedings so long as they are relevant and material.
Keller v. Sullivan,
928 F.2d 227, 230 (7th Cir. 1991) (reports of
insurance investigators in
disability hearing); Myers v. Sec'y of Health
and Human Services, 893 F.2d
840, 846 (6th Cir. 1990) (testimony of
investigator regarding interviews with
customers in exclusion hearing).
7/ The ALJ here pointed to several
sources of corroboration of
statements in the investigative reports. He
noted that one of the
investigators testified that his review of the original
hospital records
corroborated statements by Petitioner's medical assistant
that the staff
had altered those records to document improper charges for
assistant
surgeon fees. ALJ Initial Decision at 15-16. The ALJ
also noted that
statements of an office manager and a physician, both
formerly employed
by Petitioner, also corroborated Petitioner's false billing
practices.
Id. at 16. The ALJ concluded that the internal consistency
among the
statements was sufficient evidence of their reliability. Id.
at 19.
The ALJ further concluded that Petitioner's failure to subpoena
the
declarants himself or to offer any contrary evidence other than his
own
"version of the events to rebut these clearly incriminating
reports"
constituted additional evidence of the reliability of the
reports. Id.
We also note that it is further corroboration that
improper activities
described in the witness statements are consistent with
the conduct for
which Petitioner was convicted, that the authors of the
investigative
reports were present at the hearing available for questioning
on their
accuracy, and that the reports identify the source for each
statement
and set forth the personal knowledge which each witness
asserted.
We conclude that the investigators' reports and testimony were
properly
admitted, since their content was clearly relevant and material,
and
that the ALJ did not err in relying on them in reaching his
decision.
We also reject Petitioner's claim that he was denied due process in
the
hearing because of the admission of hearsay, since we have found that
it
was properly admissible, or because of the denial of an opportunity
to
cross-examine witnesses, since we have found that Petitioner failed
to
use his opportunity to subpoena the declarants.
B. Inconsistent Statements at Trial
On appeal from remand, Petitioner argued that the testimony of
the
investigators at the administrative hearing was
"substantially
different" from their testimony at the criminal proceedings,
and
therefore the ALJ erred in considering their testimony before him.
We
find no merit in Petitioner's argument. Petitioner was free to use
this
material in cross-examination at the hearing, where the ALJ could
have
considered whether any prior inconsistent statements affected the
weight
which he would give to the investigators' testimony before
him.
Petitioner offered no evidence that the testimony from the
criminal
proceeding would not have been available to him at the time of
the
administrative hearing, and in fact produced other portions of
the
sentencing transcript as Petitioner's Exs. 2 and 5; yet he did
not
produce the portions which contained the allegedly
inconsistent
statements to the ALJ below. We generally will not
consider matters
which could have been presented to the ALJ but were
not. See Practice
Manual, Departmental Appeals Board, Appendix B,
section 3(c); 57 Fed.
Reg. at 3,354, to be codified at 42 C.F.R. .
1005.21(e). Even if the
material had been presented at the hearing, it would
have gone to the
weight to be given to conflicting evidence, but would not
have required
the ALJ to exclude the investigators' evidence as
"incompetent," as
Petitioner asserted here. Such issues relating to the
credibility and
weight of witnesses' testimony are most appropriately
resolved by the
finder of fact who has the opportunity to observe the
witnesses.
Furthermore, the allegedly inconsistent statements do not
substantially
contradict the hearing testimony. All of the references
cited by
Petitioner are to discussions in the sentencing hearing regarding
the
calculation of the amount of damages caused by Petitioner.
Petitioner
asserted that, at the sentencing hearing, Investigator Peters
testified
that the improper reimbursement received by Petitioner from
Medicaid was
$5,081.69 in laboratory fees and $2,330 in assistant surgeon
fees (a
total of $7,411.69), but that Investigator Peters testified at
the
administrative hearing that $84,119.35 was representative of
his
calculation of the damages. Petitioner's Remand Reply Br. at
5.
However, the sentencing transcript, when read in context, indicates
that
the figures represented additional claims beyond those about
which
testimony had already been received and were based on
additional
exhibits which were then offered into evidence. United
States v. Nazon,
Crim. No. HCR89-96, transcript of hearing on imposition of
sentence, at
586-589 (N.D. Ind., 1990) (Sentencing Hearing).
Immediately afterward,
the prosecutor represents to the Court that the
"simple addition of all
the amounts that have been submitted to the Courts
comes to a total of
$84,119.35," based on the "PDR's in evidence," including
$71,944.51
about which evidence had already been received (see id. at 577),
an
additional PDR from 1986 for $4,762.15, the "additional
assistant
surgeon's fees which Mr. Peters just addressed, of $2,330," and
the
"total indictment in 404(b) evidence which was $5,081.69." Id.
at
589-590; see also Tr. at 41.
Petitioner asserted that Investigator Anthony Meyer "admitted that he
had
not given Dr. Nazon credit" for certain fees which would "ultimately
and
substantially reduce" the damages, but that at the administrative
hearing
Investigator Meyer gave the same figure ($71,000) as a net total
after all
deductions. Petitioner's Remand Reply Br. at 5-6. The
sentencing
hearing transcript shows that Investigator Meyer reported
having credited
Petitioner with a $3 handling fee for laboratory tests,
but not for either an
additional venipuncture fee or for his payments to
the independent laboratory
to which Petitioner claimed to be entitled.
Sentencing Hearing at
577-78. Investigator Meyer indicates that he is
unclear about whether
Petitioner could have billed separately for
venipuncture, but that in any
case he never did so in the claims which
were reviewed. Id. at
580-83. The prosecutor disputed that Petitioner
was entitled to any
offset for his payments to the laboratory, because
he was not permitted to
claim any costs for independent laboratory
tests. Id. at 598-600.
At the administrative hearing, Investigator
Meyer testified that the $71,000
figure was net of the handling fees ($3
each) and of claims for urinalysis
(for which Petitioner had in-house
capacity), but did not credit Petitioner
for his payments to the
laboratory, because Petitioner could not properly
claim any portion of
those payments under Medicaid. Tr. at 39-47.
While the transcript of the sentencing hearing is not entirely clear
at
all points (and does demonstrate that Petitioner disputed, there
as
before us, whether he was entitled to credit for certain amounts
which
would reduce the total calculated damages), we conclude that
Petitioner
did not demonstrate that the investigators made
substantially
inconsistent representations as to their calculation of the
damages.
C. Seventh Circuit Opinion
After the close of post-hearing briefing before the ALJ, the
I.G.
submitted a published appellate court opinion affirming
Petitioner's
criminal conviction. See United States v. Nazon, 940 F.2d
255 (7th Cir.
1991). The ALJ afforded Petitioner an opportunity to
respond to the
submission, and Petitioner objected to its inclusion in the
record.
However, the ALJ ruled that the opinion was "highly relevant," since
the
basis for the exclusion would have been undermined had the
court
overturned the conviction, and that the I.G. had good cause for the
late
submission, since the opinion was not published until after the
briefing
period. ALJ Initial Decision at 2. Accordingly, the ALJ
included the
opinion in the record "solely for the purpose of providing
additional
support for the trial court's decision." Id. He found
no prejudice to
Petitioner, since Petitioner had had full opportunity to
rebut the trial
court findings at the hearing.
On appeal, Petitioner argued that inclusion of the appellate court
opinion
in the administrative record was "wholly inappropriate," because
the ALJ did
not allow Petitioner "to file written comments" on it and
did not reopen the
hearing to receive it under 42 C.F.R. . 498.60(b)(2)
(1991).
Petitioner's Initial reply Br. at 5-6. Further, Petitioner
contended
that he was prejudiced, contrary to the ALJ's statements,
because the
administrative hearing afforded him no opportunity to
contest the trial court
decision, but rather was directed only at
possible mitigating
circumstances. We find no merit in Petitioner's
arguments.
First, although Petitioner asserted that the ALJ failed to afford him
an
opportunity to comment, the record contains a ruling by the ALJ,
dated
November 5, 1991 granting Petitioner until November 20, 1991 "to
file
supplemental comments on this decision." On November 18,
1991,
Petitioner filed an objection and motion to strike in response to
the
I.G.'s submission of the Seventh Circuit decision. Therefore, we
find
no merit to Petitioner's claim that he was denied an opportunity
to
comment.
Second, the regulation cited by Petitioner allows the ALJ to reopen
the
hearing to receive additional evidence. Nothing in the
regulation
requires the ALJ to reconvene an in-person hearing as the only
means of
supplementing the record. The I.G.'s submission here addressed
a matter
about which additional testimony was neither proffered nor
required,
since the decision speaks for itself. Furthermore, Petitioner
did not
request that the ALJ reopen the hearing. See Petitioner's
Objection to
I.G.'s Supplemental Letter and Opinion and Motion to Strike,
dated
November 18, 1991. Therefore, it was appropriate for the ALJ to
receive
this material through written comments by the parties as part of
the
post-hearing briefing process, since the I.G. had shown good cause
for
making the submission after the closing of the briefing period.
Third, Petitioner was not prejudiced by the late admission of the
Seventh
Circuit opinion. While it is true that Petitioner could
not
collaterally attack the validity of his conviction before the ALJ,
the
admission of the appellate decision upholding the trial court
decision
did not alter Petitioner's ability to present any mitigating facts
which
would support reducing the period of exclusion. Finally, we agree
with
the ALJ that the decision was unquestionably relevant.
Petitioner
presumably would have objected if the ALJ had ignored an
appellate
decision reversing his conviction.
Therefore, we find no error in the ALJ's inclusion of the Seventh
Circuit
affirmance of Petitioner's conviction in the record before him.
3. Petitioner's allegations of bias and personal animus
A. ALJ's Findings on Lack of Remorse
Petitioner charged that his language difficulty as a
Haitian-born
physician was partially responsible both for his conduct and for
the
inadequacy of his expressions of remorse, and that the ALJ could
not
fairly "require that Petitioner express remorse in language
acceptable
to the ALJ." Petitioner's Initial Appeal at 7.
Petitioner did not
point to any evidence in the record that he made efforts
to express
remorse which were misunderstood because of language
difficulty. The
ALJ cited numerous statements of Petitioner as support
for his
conclusion that Petitioner persisted in rationalizing his
conduct. ALJ
Initial Decision at 20-21, and record citations
therein. For example,
Petitioner claimed that inflating his bills for
laboratory services was
not fraudulent because the services were
rendered. Tr. at 57.
Similarly, Petitioner justified the deliberate
alteration of surgical
reports as his office manager's suggestion to recover
costs while
waiting for a Medicaid provider number for his assistant.
Tr. at 64-65.
Such actions can hardly be characterized as technical
violations of
standards too complex for a non-native speaker of English to
understand.
The role of the ALJ includes assessing the credibility of witnesses
and
drawing inferences from the evidence. The ALJ explained in detail
in
both of his decisions the bases in the record for his conclusions
on
credibility and for the inferences which he drew which were
unfavorable
to Petitioner. A review of the record as a whole provides
no reason to
disturb the ALJ's unfavorable assessment of Petitioner's
credibility and
inferences as to his lack of personal responsibility for his
conduct.
There is no evidence that the ALJ's assessment, or Petitioner's
conduct,
was attributable in any significant measure to language differences,
or
to any bias on the part of the ALJ. In the present case, we
conclude
that the ALJ did not err in determining that a lengthy period
of
exclusion was reasonable in light of all the circumstances.
B. ALJ's Findings on Remand
Petitioner also argued that the ALJ's refusal to draw inferences
favorable
to Petitioner from the reduction in the amount of restitution
evidenced
personal animus against Petitioner. Petitioner's Remand Reply
Br. at
7-8. Petitioner cited the ALJ's conclusion that, because
the
restitution was reduced to only a portion of the damages which the
ALJ
found that Petitioner caused the program, "Petitioner was able to
avoid
paying back the money he caused the program to lose." Id. at
8-9
(quoting ALJ Remand Decision at 5-6) (emphasis in brief). Again, it
is
not evidence of bias that the ALJ drew inferences unfavorable
to
Petitioner, where those inferences are reasonably supported by
the
record. As discussed above, the evidence in the record supports
the
conclusion that the reduction of restitution was due to
legal
limitations, not to evidence that the damages from Petitioner's
conduct
were less than initially thought. 8/
Having reached that conclusion, the ALJ did not demonstrate bias
by
concluding that reduction of restitution did not affect his findings
as
to damages. ALJ Remand Decision at 5. He noted that the amount
of
restitution was, in any case, a "relatively insignificant factor" in
his
evaluation of the reasonableness of the length of the exclusion.
Id.
Petitioner's further suggestion that the ALJ acted to
"enhance"
Petitioner's exclusion to express dissatisfaction with the
lower
restitution amount makes no sense when the ALJ did not increase
the
exclusion period on remand, but simply concluded that the same period
of
exclusion remained reasonable.
While the ALJ's decisions demonstrate that he reached an
unfavorable
opinion of Petitioner's motives and actions during the course of
the
proceedings before him, such an opinion could not serve to
disqualify
the ALJ. Forming such an opinion based on evidence presented
to him
during a proceeding is precisely in accord with the role of the ALJ
in
assessing credibility. We have pointed out in prior decisions that
bias
must arise from an extrajudicial source in order to be
disqualifying,
and no outside source is alleged here. See Sheldon
Stein, M.D., DAB
1301, at 13 (1992) (and cases cited therein).
We find nothing in the hearing transcript or the administrative record
as
a whole that substantiates any claim of personal animus against
Petitioner.
9/ Rather, the ALJ had more than sufficient grounds on
remand to
continue to find that Petitioner was untrustworthy and that
the length of the
exclusion imposed was reasonable under all the
circumstances.
4. Petitioner's claim for a waiver of exclusion
Finally, Petitioner argued that the ALJ erroneously refused to
consider
whether Petitioner's exclusion should have been waived or
modified.
Petitioner asserted that the right to a de novo review under
section
205(b)(1) of the Act would be "meaningless" if the ALJ lacked
authority
to consider or recommend waiver or modification. Petitioner's
Initial
Appeal at 5.
Petitioner sought a waiver before the ALJ based on section
1128(c)(3)(B)
of the Act, which permits the Secretary, "upon request of a
State," to
waive the imposition of an exclusion under section 1128(a)(1)
(the
section applicable to Petitioner) in the case of a "sole
community
physician or sole source of essential specialized services in
a
community." Such a decision by the Secretary is not
reviewable.
Section 1128(c)(3)(B) of the Act. The ALJ ruled that he
lacked
authority to decide requests for waivers under this provision.
ALJ
Initial Decision at 9-10. 10/ Those ALJs who have addressed this
issue
have consistently reached the same conclusion. See, e.g., Michael
I.
Sabbagh, M.D., DAB CR20, at 17-18 (1989).
The ALJ could have such authority only by delegation from the Secretary
in
whom the statute vests it. The only source for such a delegation
to
which the Petitioner pointed was the regulation providing that a
person
subject to exclusion may request a hearing before an ALJ on the
issues
of whether a conviction exists, whether it is of the kind required
by
statute, and whether the length of the exclusion is reasonable.
42
C.F.R. . 1001.128(a) (1991). This limited and specific list of
issues
which an ALJ may hear can in no way be read to include eligibility for
a
waiver. Moreover, the decisions of ALJs under this regulation
are
expressly made reviewable, while the Secretary's decisions on
waiver
requests are made unreviewable by statute. Compare 42 C.F.R.
.
1001.128(c) with section 1128(c)(3)(B) of the Act. We conclude that
the
regulation cited by Petitioner does not grant authority to the ALJ
to
consider waiver requests.
Petitioner argued alternatively on appeal that the ALJ should also
have
considered modifying the term of his exclusion under section
1128(g)(2)
of the Act. Petitioner offered no explanation as to why this
argument
was never presented to the ALJ, so we need not reach it here.
In any
event, the argument is without merit.
The provision cited by Petitioner provides no authority to the ALJ,
but
rather permits the Secretary to provide in regulations a procedure
for
applying to him for termination of an exclusion under circumstances
to
be prescribed in the regulations. The Secretary has specified
the
manner of applying for termination of exclusions under this provision
in
reinstatement regulations. 42 C.F.R. . 1001.130 -- 1001.136 (1991);
57
Fed. Reg. at 3,342, to be codified at 42 C.F.R. . 1001.3001
--
1001.3005. These regulations relate only to reinstatement after
the
conclusion of a period of exclusion, so no such application
could
properly be entertained at this time or in this forum.
In sum, we conclude that the ALJ correctly ruled that his only
authority,
in a case under section 1128(a)(1) in which Petitioner
conceded that he was
subject to a conviction as described in the Act, is
to consider the
reasonableness of the length of the period of exclusion
imposed beyond the
statutory minimum of five years. Cf. Janet Wallace,
L.P.N., DAB 1326,
at 14 (1992) (ALJ has no authority to reduce or waive
five-year mandatory
exclusion.); accord Richard G. Philips, D.P.M., DAB
1279, at 3-4 (1991).
Conclusion
For the reasons explained above, we uphold Petitioner's
seven-year
exclusion and affirm and adopt all FFCLs, as modified on
remand.
___________________________
Judith
A.
Ballard
___________________________
Cecilia
Sparks
Ford
___________________________
Donald
F.
Garrett
Presiding
Board
Member
1. The Remand Decision added two new findings of fact and
conclusions
of law (FFCLs), modified one FFCL, and renumbered the existing
FFCLs.
The ALJ stated that the FFCLs from the Initial Decision "[i]n all
other
respects . . . remain unchanged." ALJ Remand Decision at 4.
2. "State health care program" is defined in section 1128(h) of the
Act
and includes the Medicaid program under Title XIX of the Act.
Unless
the context indicates otherwise, we use the term "Medicaid" here
to
refer to all programs listed in section 1128(h).
3. This summary of the facts is not intended as a substitute for
the
more detailed factual findings in the ALJ Initial and Remand
Decisions.
4. We note that, while we do not rely on them here, the new
exclusion
regulations explicitly provide that damages of any amount over
$1,500,
even if the acts were not adjudicated in the underlying criminal
case
and even if some restitution were made, are an aggravating factor.
57
Fed. Reg. 3,298, 3,331 (January 29, 1992), to be codified at 42 C.F.R.
.
1001.102(b)(1).
5. The Agreed Stipulation submitted by Petitioner states that
a
"culling of United States Supreme Court law . . . and Seventh
Circuit
law compels the conclusion that the restitution . . . cannot exceed
that
which the indictment alleged ($4,979.00)." No reference is made to
any
other basis for reducing the amount of restitution, and no reduction
is
recorded in the fine or other penalties imposed.
6. Petitioner also alleged that the I.G.'s exhibits were not
made
available to him "through discovery or otherwise." Petitioner's
Initial
Appeal at 5-6. However, the Order and Notice of Hearing issued
by the
ALJ on February 26, 1991 required both parties to exchange exhibits
in
advance of the hearing. The I.G.'s Final List of Proposed Witnesses
and
Final List of Proposed Exhibits dated April 23, 1991 (almost a
month
before the hearing) lists the investigative and interview reports
as
I.G. Ex. 3, and discloses that the interviewees are not
proposed
witnesses. The cover letter represents that a copy was sent
to
Petitioner's counsel by certified mail on the same date. At
the
hearing, Petitioner did not object to the admission of any of the
I.G.'s
exhibits, including the investigative reports. Tr. at 13.
Petitioner
did not assert before the ALJ, either at the hearing or in
post-hearing
submissions, that he had not received adequate notice of the
exhibits.
Furthermore, the ALJ specifically stated that these exhibits were
made
available to Petitioner. ALJ Initial Decision at 19. We
therefore
reject Petitioner's unsubstantiated assertion that he lacked
adequate
access to the investigative reports.
7. Further, hearsay statements alone may constitute
substantial
evidence in support of an administrative decision if they
satisfy
certain standards of reliability. See Richardson v. Perales,
402 U.S.
389, 402 (1971) (medical reports alone substantial evidence, even
when
the only live testimony was opposing, where claimant failed to
subpoena
declarants for cross-examination and other indicia of reliability
are
present); see also Keller, 928 F.2d at 230; Leitman v. McAusland,
934
F.2d 46, 51 (4th Cir. 1991) (investigators testifying to accuracy
of
their notes, subject to cross-examination). In the present
case,
despite Petitioner's claims to the contrary, the hearsay testimony
alone
need not suffice as substantial evidence, since the record
also
contained other evidence, including the investigators' direct
testimony
about their review of altered hospital records and false Medicaid
claims
and the documentation of Petitioner's conviction and state
and
professional sanctions. See Tr. 21-47, I.G. Exs. 1, 2, 8-14;
Myers,
893 F.2d at 846 (hearsay testimony combined with convictions
sufficient
to support exclusion).
8. Petitioner was offered an opportunity to present any evidence
that
the reduction was caused by some factor other than the legal
reasons
discussed above in supplemental briefing before the ALJ on remand
and
declined to submit any additional briefing. See ALJ Remand Decision
at
2.
9. Since we find no evidence of bias, we need not address the
question
raised by the I.G. as to whether the remedy sought by Petitioner,
i.e.,
vacating the ALJ's decision and remanding for assignment to a new
ALJ,
is available in these proceedings. Compare Petitioner's Remand
Appeal
at 8 with I.G.'s Remand Br. at 4.
10. We agree with the ALJ, however, that this record raises
"serious
questions" about whether Petitioner would qualify for such a waiver
in
terms of documenting either a "request by a State" to the Secretary
or
his status as a "sole source" of essential services to a
community..
See ALJ Initial Decision at 8-10, n.4. His services to the
Gary Board
of Health prenatal clinic, while undoubtedly valuable to them,
were
provided by him without charge in compliance with his sentence
to
community service and need not be affected by the exclusion. Id. at
10,
n.4, and 22. Nevertheless, we do not preclude Petitioner from
making a
waiver request to the Secretary, if one has not yet been
filed,
following the procedures in the regulations. 57 Fed. Reg. 3,340
to be
codified at 42 C.F.R. .