SUBJECT:

Kenneth Rizzo,

Petitioner,

The Inspector General.

(1) The acts resulting in the conviction, or similar acts, that caused . . . a financial loss to a Government program . . . of $5,000 or more. . . . ; (2) [t]he acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; . . . (5) [t]he sentence imposed by the court included incarceration; . . .(9) . . . [t]he individual . . . has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for imposition of the exclusion.

(3) [t]he individual's or entity's cooperation with Federal or State officials resulted in - (i) [o]thers being convicted or excluded from Medicare, Medicaid, or all other Federal health care programs, (ii) [a]dditional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or (iii) [t]he imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.

1. Summary judgment is appropriate.

Summary judgment (or affirmance) is appropriate when there is no genuine dispute as to any material fact, and the moving party is entitled to judgment as a matter of law. Lebanon Nursing and Rehabilitation Center, DAB No. 1918 (2004). The party moving for summary judgment bears the initial burden of showing the basis for its motion and identifying the portions of the record that it believes demonstrate the absence of a genuine factual dispute. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If a moving party carries its initial burden, the non-moving party must "come forward with 'specific facts showing that there is a genuine issue for trial.'" Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56e). That is, the non-moving party must act affirmatively by tendering evidence of specific facts showing that a dispute exists. Denials and assertions in pleadings or briefs are not sufficient to overcome a well-supported motion. In this case, the I.G. carried his initial burden of showing that Petitioner was convicted of a criminal offense related to the delivery of an item or service under Medicare or Medicaid and of the various aggravating factors alleged. Petitioner has failed to tender evidence of specific facts showing that a dispute exists. Petitioner's denials and assertions are insufficient to overcome the I.G.'s submitted evidence. I conclude that summary affirmance in this case is appropriate.

2. Petitioner was convicted of a criminal offense related to the delivery of an item or service under the Medicaid program.

Petitioner does not dispute that he is subject to the mandatory exclusion provisions contained in the Act. Section 1128 of the Act authorizes the Secretary to exclude individuals and entities from participation in Medicare, Medicaid and other federal health care programs. Section 1128(a)(1) directs the Secretary to exclude:

[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(a)(1) of the Act.

During the time period relevant to this case, Petitioner owned and was the supervising pharmacist of Kris-Tal Corporation d/b/a Option Care, a pharmacy that supplied home infusion medicines and other medical supplies to patients, including Medicaid beneficiaries. I.G. Ex. 3. On October 29, 2004, Petitioner pleaded guilty to a two-count Superior Court Information, charging him with Grand Larceny in the Second Degree in violation of N.Y. Penal Law � 155.40 and Offering a False Instrument for Filing in the First Degree in violation of N.Y. Penal Law � 175.35. I.G. Exs. 3 and 4. An Orange County Superior Court Judge accepted Petitioner's guilty plea to both counts of the Superior Court Information. I.G. Ex. 5. Petitioner was sentenced to pay full restitution in the amount of $1,278,946. He was also sentenced to two concurrent one-year terms of imprisonment in the Orange County Jail. Id.

Under section 1128(i)(3) of the Act, an individual is considered to have been "convicted" when a plea of guilty or nolo contendere by the individual or entity has been accepted by a federal, state, or local court. Under section 1128(i)(1) of the Act, an individual or entity is considered to have been "convicted" when a judgment of conviction has been entered against the individual or entity by a federal, state, or local court. Section 1128(i)(1) of the Act. In this case, the Petitioner pleaded guilty and the judgment of conviction for violations of New York State law was entered against him by a judge of the New York State court.

3. The criminal offense for which Petitioner was convicted was related to the delivery of an item or service under title XVIII or a state health care program.

Count One in the Superior Court Information to which the Petitioner pleaded guilty alleged that, from January 30, 1996 to November 12, 2001, Petitioner submitted claims to the New York Medicaid program for medications allegedly provided to Medicaid beneficiaries which Petitioner knew had not been provided. I.G. Ex. 3. Count Two of the information alleged that from October 17, 2001 to October 22, 2001, Petitioner, acting as a high managerial agent for Kris-Tal Corporation, submitted a claim for payment to the New York Medicaid program which Petitioner knew contained a false statement and false information. Id.

By the express terms of the information counts to which Petitioner pleaded guilty, the criminal offenses were related to the delivery of an item or service under a state health care program because both counts referred to the New York Medicaid program.

4. Petitioner must be excluded for a minimum of five years.

Once it has been shown that an individual was convicted of a criminal offense related to the delivery of an item or service under title XVIII or a state health care program, neither the I.G. nor the ALJ can fail to exclude the individual for the mandatory five-year minimum exclusion.

An exclusion under section 1128(a)(1) of the Act must be for a minimum mandatory period of five years as set forth in section 1128(c)(3)(B) of the Act, which states:

Subject to subparagraph (G), in the case of an exclusion under subsection (a), the minimum period of exclusion shall not be less than five years . . . .

When the I.G. imposes an exclusion for the mandatory five-year period, the issue of the length of such exclusion is not considered. 42 C.F.R. � 1001.2007(a)(2). Aggravating factors which justify extending the exclusion period may be taken into account, but the five-year term will not be shortened.

5. The I.G. proved by a preponderance of the evidence that four aggravating factors exist in this case.

a. Petitioner's criminal acts resulted in a financial loss of more than $5000 to a governmental program, an aggravating factor set forth at 42 C.F.R. �1001.102(b)(1).

b. The acts that resulted in Petitioner's conviction were committed over a period of one year or more.

It is an aggravating factor that the I.G. may use to add to the mandatory five-year exclusion if the acts that resulted in Petitioner's conviction were committed over a period of one year or more. 42 C.F.R. � 1001.102(b)(2).

With respect to Count One of the Superior Court Information, Petitioner pleaded guilty to offenses committed over a five-and-a-half year period, from January 30, 1996 through November 12, 2001. I.G. Exs. 3; 4, at 11. Petitioner openingly and knowingly admitted to the Court that he had committed the acts specified in Count One. I.G. Ex. 3; 4,at 11; 5, at 6 - 7. With his brief, Petitioner submitted documents apparently designed to show that he had problems with respect to a particular employee and with his computer system starting sometime in 2001. P. Ex. 1, at 1 - 7. In this exhibit, Petitioner makes no reference to the time period from January 30, 1996 to November 12, 2001. Petitioner, who has the burden on this issue, has provided no evidence to show that his criminal acts did not last more than one year or even that a material fact is in dispute regarding that issue.

c. Petitioner's conviction resulted in a sentence that included incarceration.

An aggravating factor exists if the conviction which forms the basis for the exclusion resulted in a sentence that includes incarceration. 42 C.F.R. � 1001.102(b)(5). Incarceration is defined as "imprisonment or any type of confinement with our without supervised release, including, but not limited to, community confinement, house arrest and home detention." 42 C.F.R. � 1001.2. In this case, the Court sentenced Petitioner to one year of prison for each count of the information to which he pleaded guilty. The years were to be served concurrently. I.G. Ex. 5, at 12. Thus, Petitioner was sentenced to one year of incarceration. Petitioner's sentence, therefore, constitutes an aggravating factor under 42 C.F.R. � 1001.102(b)(5).

d. Petitioner's criminal acts formed the basis for another adverse administrative action.

An aggravating factor exists if a petitioner has been the subject of any other adverse action by any federal, state, or local government agency or board if the adverse action is based on the same set of circumstances that serves as the basis for imposing the exclusion. 42 C.F.R. � 1001.102(b)(9).

On November 30, 2004, the New York State Department of Health notified Petitioner he was being excluded from its State Medicaid program. I.G. Ex. 7. The Department made this determination because Petitioner was convicted of a crime relating to the furnishing or billing for medical care, services, or supplies, i.e., the acts involving the same set of circumstances that serves as the basis for exclusion at issue herein. Id. Therefore, the I.G. has proved that the aggravating factor under 42 C.F.R. � 1001.102(b)(9) is applicable in this case.

6. Petitioner failed to show that any mitigating factor should be applied in determining the length of his exclusion.

If aggravating factors apply in lengthening an exclusion, mitigating factors can be applied to shorten the exclusion. In this case, the I.G. has shown the existence of four aggravating factors. The regulations establish that one of the mitigating factors is established if the individual's cooperation with federal or state officials resulted in others being convicted or excluded from Medicare, Medicaid, or all other federal health care programs, or additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or the imposition against anyone of a civil money penalty or assessment. 42 C.F.R. � 1001.102(c).

Petitioner argues that this mitigating factors applies. P. Br. at 10 - 11. In particular, he argues that he agreed to cooperate with federal and state officials, particularly the Attorney General's Office in order to assist in any inquiry, criminal or civil, of the Attorney General's Office. Id. According to Petitioner, the failure of the Attorney General's Office to use Petitioner's willingness to cooperate with any of its investigations should not minimize his willingness to cooperate. He cites John (Juan) Urquijo, DAB No. 1735 (2000) in support of his argument. Petitioner's reliance on the Urquijo case on this issue is misplaced. In Urquijo, the appellate panel referred to the fact that the prosecutors had not asked the petitioner to testify, not that he had not been asked to cooperate previously. Petitioner has provided no evidence of cooperation with the Attorney General's Office other than his agreement to do so. The plain language of the regulation is that the mitigating factor applies only if the Petitioner actually does cooperate with federal or state officials, and additionally, such cooperation must result in others being convicted or excluded, additional cases being investigated or reports issued, or civil money penalties imposed on others. 42 C.F.R. � 1001.102(c)(3).

Petitioner argues that his reiteration during plea acceptance and sentencing aided the appropriate agencies to identify certain program vulnerabilities and weaknesses by showing how Medicaid was billed without delivering the paid-for medications. P. Br. at 11. This argument is completely unpersuasive. To explain to Medicaid, after conviction for defrauding the program, how the defrauding took place is not covered within the mitigating factors unless additional cases were investigated or reports were issued. Stacey R. Gale, DAB No. 1941 (2004). Petitioner provided no evidence that cases were investigated or reports were issued. Therefore, Petitioner failed to prove that any of the specified mitigating factors are present in this case.

7. The I.G.'s exclusion for 23 years is reasonable in this case.

The Petitioner argues that even if the I.G. has proved four aggravating factors and no mitigating factors apply, a 23-year exclusion is unreasonable. He contends that in other exclusion cases with a similar number of aggravating factors the exclusions were much lower, e.g., Anderson v. Thompson, 311 F. Supp. 2d, 1121 (15-year exclusion). Petitioner asserts that because he paid full restitution of $1,278,946, was in prison for a year, and made efforts to rectify the over-billing to Medicaid before he was aware of the criminal prosecution against him, his guilty pleas do not indicate that he is an untrustworthy individual. P. Br. at 12.

The Departmental Appeals Board (DAB) has made clear that the role of the ALJ in cases such as this is to conduct a de novo review as to the facts related to the basis for the exclusion and the facts related to the existence of aggravating and mitigating factors identified at 42 C.F.R. � 1001.102. See Joann Fletcher Cash, DAB No. 1725, at 17-18, n.9 (2000), and cases cited therein. The regulation specifies that I must determine whether the length of exclusion imposed is "unreasonable." 42 C.F.R. � 1001.2007(a)(1). The DAB has explained that in determining whether a period of exclusion is "unreasonable," I am to consider whether such period falls "within a reasonable range." Cash, DAB No. 1725, at 17-18, n.9.

As stated above, the five-year minimum exclusion may only be extended if the I.G. can point to evidence that one or more of the aggravating factors specified at 42 C.F.R. � 1001.102(b) are present. The regulations do not limit the additional period of exclusion the I.G. may impose based upon the presence of aggravating factors. The regulations also do not specify how much of an extension is warranted by the existence of an aggravating factor. The DAB has indicated that it is not the number of aggravating factors that is determinative, rather, it is the quality of the circumstances, whether aggravating or mitigating, which is controlling in analyzing these factors. Barry D. Garfinkel, M.D., DAB No. 1572 (1996). The DAB made clear in Urquijo that: if the I.G. considers an aggravating factor to extend the period of exclusion and that factor is later shown not to exist on appeal, or if the I.G. fails to consider a mitigating factor that is shown to exist, then the ALJ may make a decision as to the appropriate extension of the period of exclusion beyond the minimum. Urquijo, DAB No. 1735, at 9 - 11. Thus, my determination of whether or not the exclusionary period in this case is unreasonable hinges on whether the I.G. has shown the existence of the alleged aggravating factors and the quality of the circumstances surrounding the factors. I have found that the I.G. has proved that the four alleged aggravating factors exist in this case.

I next turn to the circumstances surrounding the aggravating factors. Petitioner uses P. Ex.1, at 1 - 7 to attempt to show that the $1.2 million in Medicaid over-billing was the result of a disgruntled billing employee's poor work performance and a malfunctioning computer system. An interoffice memo suggests that Petitioner determined in November 2001 that his company's Medicaid billing was "a mess." Id. at 5. A letter dated December 7, 2001 suggests that Petitioner advised the fiscal intermediary that he had found irregularities in his company's Medicaid billing. Id. at 6. I have previously expressed some sympathy for excluded individuals who were faced with very threatening prosecution efforts and pleaded guilty to lesser charges without fully understanding their risks for exclusion from Medicare, Medicaid and other federal health care programs. Steven Caplan, R.Ph. DAB CR1112 (2003), aff'd Steven Caplan v. Tommy G. Thompson, Civ. No. 04-00251 (D. Hawaii, Dec. 17, 2004). In this case, however, the I.G. has shown that Petitioner was asked several times by the Court during his plea and sentencing if he was truly guilty of the charges against him and Petitioner verified under oath that he was. I.G. Exs. 4, 5. He cannot now say that he did not submit "claims for payment for medications provided to Medicaid recipients which [Petitioner] well knew had not been provided." Similarly, he cannot now claim that he did not share in the $1.2 million in payments made to his company that were based on false pretenses. I.G. Ex. 3, at 2.

Petitioner has failed to show that the circumstances surrounding the aggravating factors in his case do anything but prove his untrustworthiness to participate in the Medicare and Medicaid programs. Based on my de novo review of the aggravating factors in this case, I conclude that the I.G.'s exclusion of Petitioner for 23 years is within a reasonable range.

E. Conclusion

Anne E. Blair

Administrative Law Judge