Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
DATE: December 1, 1997
Civil Remedies CR484
App. Div. Docket No. A-97-151
Decision No. 1637
In the Case of:
Gerald A. Snider, M.D.,
Petitioner,
- v. -
The Inspector General
The Inspector General (I.G.) appealed the August 1, 1997 decision of Administrative Law Judge (ALJ) Stephen Jon Ahlgren in Gerald A. Snider, M.D., DAB CR484 (1997) (ALJ Decision). The ALJ found that the I.G.'s determination regarding the length of time that Petitioner should be excluded from Medicare and State health care programs pursuant to section 1128(a)(1) of the Social Security Act was not wholly reasonable. The I.G. had imposed an exclusion of ten years, five years more than the five-year minimum period of exclusion mandated by section 1128(c)(3)(B) of the Act, based on the presence of three aggravating factors. The ALJ reduced the length of the exclusion to eight years, finding that reduced weight should be assigned to these aggravating factors. The ALJ also found that a fourth aggravating factor of which the I.G. was unaware when she imposed the ten-year exclusion was entitled to no additional weight.
On appeal, the I.G. objected to the ALJ's reduction of the length of the exclusion to eight years. The I.G. argued that the ALJ failed to consider whether a ten-year exclusion was within a reasonable range of possible exclusion periods under the circumstances. Instead, the I.G. argued, the ALJ impermissibly determined that a different exclusion period was proper based on his own weighing of the aggravating factors.
For the reasons discussed below, we find that the ALJ erred in making his own determination as to the proper length of the exclusion instead of considering whether the exclusion imposed by the I.G. was within a reasonable range of possible exclusion periods under the circumstances. We further find that the record supports the conclusion that the ten-year exclusion imposed by the I.G. was within a reasonable range where there were four fully established aggravating factors and no mitigating factors. We therefore reverse the ALJ Decision and reinstate the exclusion period that the I.G. originally imposed.
Background
Section 1128(a) of the Act mandates the exclusion of certain individuals from participation in Medicare and State health care programs. Petitioner's exclusion is based on section 1128(a)(1), which provides for the exclusion of "[a]ny individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under Title XVIII or under any State health care program." Section 1128(c)(3)(B) provides that a section 1128(a)(1) exclusion must be for a minimum of five years. See, also, 42 C.F.R. . 1001.102(a). Section 1001.102(b) of 42 C.F.R. lists six factors which "may be considered to be aggravating and a basis for lengthening the period of exclusion." Section 1001.102(c) lists three factors which may be considered mitigating and a basis for reducing the period of exclusion to no less than five years if any of the aggravating factors would otherwise justify an exclusion longer than five years.
The following summary of the facts of this case is based on that part of the ALJ's findings of fact and conclusions of law (FFCLs) and the ALJ's discussion of those FFCLs to which neither party excepted, and provides a background for analysis. This summary is provided for the convenience of the reader and is not intended to modify or reverse any FFCLs.
At all times relevant here, Petitioner was a medical doctor licensed by the State of Oklahoma to provide medical services to patients. On January 23, 1991, Petitioner entered into an agreement with two psychologists whereby Petitioner would refer patients to them, and in return the psychologists would perform services, bill Medicare for these services, and then reimburse 12 percent of the Medicare allowable fee to Petitioner as a consulting fee. From January 1991 through August 1992, Petitioner referred for psychological testing approximately 70 of his patients, all of whom were Medicare beneficiaries residing in nursing homes of which Petitioner was medical director. In 1995, Petitioner was indicted and convicted of Conspiracy to Commit Medicare Fraud by knowingly and willfully soliciting and receiving remuneration, including kickbacks and bribes, in exchange for the referral of patients for services paid by Medicare (a felony under federal law). On May 22, 1996, the Court entered judgment, ordering that Petitioner be imprisoned for a term of twelve months and one day and that Petitioner make restitution of $190,000 to the Health Care Financing Administration of the Department of Health and Human Services. The Court later amended the judgment to correct a clerical error, and ordered Petitioner to make restitution in the amount of $119,532. This was the amount paid by Medicare for psychological testing billed by one of the psychologists to whom Petitioner referred the patients in question. The total paid by Medicare for all services billed by this psychologist for these patients (including psychological therapy as well as testing) was $241,952. At least some of the services billed were not in fact performed.
In his decision, the ALJ found that the I.G. proved the existence of four of the six aggravating factors listed in section 1001.102(b):
The ALJ also found that Petitioner did not prove the existence of any mitigating factors. However, the ALJ further found that Petitioner proved by a preponderance of the evidence that reduced weight should be assigned to the first three aggravating factors when considering the length of the exclusion, and that the fourth aggravating factor was entitled to no additional weight. The ALJ concluded that the evidence relevant to the aggravating factors established that an eight-year exclusion was reasonable and consequently that a ten-year exclusion was unreasonable.
The I.G.'s Exceptions
The I.G. specifically took exception to the following three FFCLs in the ALJ Decision:
14. Although the I.G. has proven the existence of four aggravating factors, Petitioner has proven by a preponderance of the evidence that reduced weight should be assigned to those factors when considering the length of exclusion.
16. The 10-year exclusion imposed and directed against Petitioner by the I.G. does not comport with the remedial purposes of the Act, is excessive, and consequently is not reasonable.
17. An eight-year exclusion is supported by the facts. An eight-year exclusion comports with the remedial purposes of the Act and is reasonable given the totality of the evidence.
In addition, although the I.G. did not specifically cite FFCLs 12 and 15, it is clear from the I.G.'s arguments that she took exception to these FFCLs as well:
12. The I.G. proved four aggravating factors, three of which may be considered in this case as a basis for lengthening the period of exclusion beyond the mandatory five years. [citations omitted]
15. The evidence relevant to the aggravating factors proves Petitioner to be untrustworthy to the extent that an eight-year exclusion is reasonably necessary to protect the integrity of federally financed health care programs and to protect program beneficiaries and recipients.
Analysis
The issue before us is whether the ALJ could properly conclude on the record before him that the ten-year exclusion imposed by the I.G. fell outside of a reasonable range of possible exclusion periods under the circumstances of this case. Frank A. DeLia, D.O., DAB 1620 (1997); Barry D. Garfinkel, M.D., DAB 1572 (1996). As mentioned above, section 1128 of the Act mandates a minimum period of exclusion of five years in cases involving a federal criminal conviction related to the delivery of an item or service under Medicare. Under the regulation at 42 C.F.R. . 1001.102, however, certain aggravating factors may form a basis for lengthening that period to the extent they are not offset by mitigating factors.
The ALJ described his analysis of this case by stating that he would discuss--
the evidence relating to the establishment of the aggravating factors alleged by the I.G. in this case and the weight I have assigned to each of those factors in reaching my decision as to the length of time Petitioner should be excluded from participation in the Medicare and Medicaid programs.
ALJ Decision at 6. The import of this statement is that the ALJ viewed himself as making a de novo decision, based on the evidence relating to the aggravating factors, as to whether the exclusion period was reasonable. In DeLia and Garfinkel, however, the Board rejected a similar standard, stating:
The preamble to . . . 42 C.F.R. Part 1001 indicates that the regulation contemplates broad discretion for the I.G. in setting the length of an exclusion in a particular case, in light of the I.G.'s "vast experience in implementing exclusions under these authorities." 57 Fed. Reg. 3298, at 3321. Consequently, "[s]o long as the amount of the time chosen by the [I.G.] is within a reasonable range, based on demonstrated criteria," the ALJ, and hence the Board in reviewing the ALJ's action, is without authority to alter it. Id.
DeLia at 6-7; Garfinkel at 7. The Board concluded that the regulations vest discretion in the I.G. to determine the length of an exclusion as long as it is within a reasonable range of possible exclusion periods.
Accordingly, as in DeLia and Garfinkel, we conclude that the ALJ here misstated what his role was in evaluating the reasonableness of the length of an exclusion. Specifically, the ALJ erred in viewing the question before him as what period of exclusion would be better as opposed to whether the period of exclusion imposed by the I.G. was within a reasonable range.
Petitioner's response to the I.G.'s exceptions appears to recognize that the question before the ALJ was whether the ten-year exclusion imposed by the I.G. fell within a reasonable range of exclusion periods. See Petitioner's 11/7/97 response, at 3, 4. Petitioner argued, however, that the fact that the ALJ indicated the length of time he would exclude Petitioner based on each of the aggravating factors did not mean that the ALJ did not address the proper question. Instead, according to Petitioner, the ALJ was "merely providing guidance as to his thought processes in reaching the ultimate issue at hand. . . ." Id. at 3. We disagree. The time periods assigned by the ALJ to each of the aggravating factors add up to precisely the eight years that the ALJ concluded Petitioner should be excluded. There is nothing in the ALJ Decision which indicates that the ALJ considered whether the ten-year exclusion imposed by the I.G. was within a reasonable range of exclusion periods. Accordingly, the ALJ's approach to this case was fundamentally flawed.
Moreover, as discussed in detail below, we conclude that the ALJ misapplied the regulations relating to the three original aggravating factors in determining that they should have reduced weight. The ALJ determined that the first aggravating factor, that Petitioner's acts caused losses of more than $1,500, warranted an exclusion of one additional year over the five years mandated by the Act (were it the only aggravating factor). The ALJ stated that he assigned this weight "taking into consideration the fact that although the Medicare program sustained a substantial loss due to Petitioner's act, he himself benefitted hardly at all." ALJ Decision at 10. (Petitioner's response to the I.G.'s exceptions also noted that, according to the Presentence Report, "almost all of the proceeds of the offense" were received by Petitioner's alleged co-conspirator. Petitioner's 11/7/97 response at 5.) The ALJ noted earlier that Petitioner received only $5,697.92 of the $241,952 reimbursed by Medicare. Id. at 9. However, the focus of this factor as described in the regulation is the financial loss to Medicare and the State health care programs caused by Petitioner's offense, not the extent to which Petitioner benefitted from his offense. As the I.G. pointed out, the loss found by the ALJ--$241,952--is more than 160 times the threshold amount in the regulation. Since the ALJ relied on the financial gain to Petitioner rather than the substantial financial loss to the programs, he improperly determined that this factor should have reduced weight.
The ALJ determined that the second aggravating factor, that the acts resulting in the conviction occurred over a period of more than one year, warranted an exclusion of an additional one and one-half years over the five years mandated by the Act (were it the only aggravating factor). The ALJ found that Petitioner's referral of patients for psychological testing lasted for a period of 20 months. The ALJ further found that fact "disturbing," since Petitioner "should have been aware, after talking to patients, that there was reason to question whether all of the tests . . . were actually being performed." ALJ Decision at 11. The ALJ continued:
Petitioner's failure to take an interest in his patients, after referring them to Moore [the psychologist], and continuing this process for a period of 20 months, enabled Moore to significantly expand his opportunity to make fraudulent claims to the government. The purpose of the exclusion provision is remedial, not punishment. Here, remedial action is clearly necessary. Directors and administrators of nursing homes have a high degree of responsibility to their patients. Petitioner . . . breached both the public and private trust placed in him, and it must be emphasized that such conduct cannot be tolerated.
Id. at 12. There is nothing in the ALJ's discussion which indicates any basis for giving reduced weight to this aggravating factor. To the contrary, the ALJ found that the duration of the referrals was indicative of a lack of trustworthiness because the referrals would not have continued if Petitioner had had any interest in how his patients were treated following his referrals. Moreover, 20 months is significantly longer than the one-year threshold for this aggravating factor. Accordingly, the ALJ improperly determined that this factor should have reduced weight.
The ALJ determined that the third aggravating factor, that the sentence imposed by the court included incarceration, warranted an exclusion of an additional half year over the mandatory five-year exclusion period (were it the only aggravating factor). There was no dispute that Petitioner was sentenced to one year and one day of incarceration. The ALJ observed that "[t]he fact that the Court chose to incarcerate Petitioner reflects its view of the gravamen of the offense." ALJ Decision at 12. The ALJ noted, however, that the maximum sentence which could have been imposed for this offense was five years and stated that the court's decision to impose only the minimum sentence with one day added to make Petitioner eligible for early release "significantly diminishes the weight I assign to this factor." Id. at 13. As the ALJ himself observed, however, the focus of this aggravating factor as described in the regulation is the fact that the sentence included incarceration. Unlike the two previously described aggravating factors, there is no threshold figure below which this aggravating factor would not exist. Moreover, while one year was the minimum sentence of incarceration for the offense of which Petitioner was convicted, it was still a substantial sentence of incarceration. The fact that the court imposed the minimum sentence for this crime is not an indication that the court did not view the crime as serious. Accordingly, the ALJ improperly determined that this factor should have reduced weight.
Finally, the ALJ erred in determining that the fourth aggravating factor which he found to exist, that Petitioner had a prior administrative sanction record, nevertheless was entitled to no additional weight. The ALJ found that Petitioner's reprimand by the Oklahoma State Board of Medical Licensure and Supervision for excessive prescribing of controlled substances without documentation of medical need constituted an aggravating factor. Before the ALJ, the I.G. took the position that this aggravating factor justified an increase in the ten-year exclusion which the I.G. imposed based on the three aggravating factors she originally identified. Inspector General's Reply Brief at 16. The ALJ nevertheless wholly discounted this factor on the grounds that the Oklahoma State Board did not restrict Petitioner's ability to write prescriptions and that Petitioner was only reprimanded although more serious sanctions were available. (Petitioner's response to the I.G.'s exceptions cited these and other reasons in arguing that the ALJ properly assigned no weight to this factor.) This was error. The list of aggravating factors in the regulations is prefaced by the following language:
Any of the following factors may be considered to be aggravating and a basis for lengthening the period of exclusion.
42 C.F.R. . 1001.102(b). This gives the I.G. the authority to increase the period of exclusion beyond the five-year minimum based on any of the aggravating factors which are established. Moreover, the preamble to the regulations states that "[a]n aggravating factor is one that does not automatically exist in every case, but when it does exist, justifies a longer period of exclusion." 57 Fed. Reg. 3298, 3313. Thus, having determined that Petitioner's prior administrative sanction qualified as an aggravating factor under the regulations, the ALJ could not properly determine that it did not provide any further support for the ten-year exclusion imposed by the I.G., even if it did not justify increasing the exclusion period beyond ten years.
Petitioner nevertheless argued that the ALJ's decision that the ten-year exclusion imposed by the I.G. was excessive was supported by substantial evidence. In addition to the evidence noted above, Petitioner pointed to testimony at the trial to the effect that Petitioner entered into the illegal kickback agreement out of concern for his patients and on the advice of counsel. However, the ALJ specifically found that, under 42 C.F.R. . 1001.2007(d), he could not properly consider arguments based on this evidence, since they constituted a collateral attack on the underlying determination. See ALJ Decision at 17. Petitioner also pointed to testimony at the trial as well as information in the Presentence Report to the effect that Petitioner lacked knowledge that Medicare was being billed for services not provided. The ALJ Decision noted that the government did not charge Petitioner with such knowledge; however, the ALJ suggested that Petitioner bore some responsibility for the fraudulent claims because Petitioner would have ascertained that services were not being provided had he taken an interest in his patients. See ALJ Decision at 11-12. Accordingly, Petitioner did not provide any basis for finding that a ten-year exclusion was not within a reasonable range of exclusion periods.
In summary, we find that the ALJ erred in making his own determination as to the proper length of the exclusion instead of considering whether the ten-year exclusion imposed by the I.G. was within a reasonable range of psosible exclusion periods under the circumstances. We further find that the ALJ improperly reduced the exclusion to eight years based on his erroneous findings that the first three aggravating factors should be given reduced weight and that the fourth aggravating factor should be given no additional weight. Moreover, in view of the four fully established aggravating factors proven in this case and the absence of any mitigating factors, we conclude that the exclusion imposed by the I.G. was within a reasonable range of possible exclusion periods. Accordingly, we reinstate the ten-year exclusion.
Conclusion
For the reasons discussed above, we affirm those FFCLs to which no exceptions were made, but we delete FFCLs 14, 15 and 17 and modify FFCLs 12 and 16 to read as follows:
12. The I.G. proved the existence of four aggravating factors which may be considered in this case as a basis for lengthening the period of exclusion beyond the mandatory five years.
16. The ten-year exclusion period imposed by the I.G. is within the range of reasonable exclusion periods under the circumstances of this case and is affirmed.
__________________________
Cecilia Sparks Ford
__________________________
M. Terry Johnson
__________________________
Donald F. Garrett
Presiding Board
Member