Decision
No. CR643 Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | |||
SUBJECT: Parvin D. Syal, M. D., Petitioner, |
DATE: Feb. 7, 2000 | ||
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The Inspector General. | Docket No. C-99-424 | ||
DECISION | |||
I find that the Inspector General (I.G.) established a basis to exclude Petitioner, Parvin D. Syal, M.D., from participating in Medicare and other federally funded health care programs. The I.G. proved that Petitioner was convicted of a criminal offense relating to the delivery of an item or service under a federally funded health care program. However, I find that the exclusion the I.G. determined to impose against Petitioner, 15 years, is excessive and unreasonable in light of the evidence in this case. I find a 10-year exclusion to be reasonable.
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ISSUES, FINDINGS OF FACT AND CONCLUSIONS OF LAW | |||
Background Petitioner is a physician in Northridge, California. On March 31, 1999, the I.G. notified Petitioner that he was being excluded from participation in Medicare and other federally funded health care programs. The I.G. advised Petitioner that he was being excluded pursuant to section 1128(a)(1) of the Social Security Act (Act). This section of the Act mandates an exclusion of any individual who is convicted of a criminal offense related to the delivery of an item or service under Medicare or a State health care program. The I.G. averred that Petitioner had been convicted of a criminal offense related to the delivery of an item or service under California's Medicaid program (Medi-Cal). The minimum exclusion which must be imposed pursuant to section 1128(a)(1) of the Act is five years. The I.G. determined to exclude Petitioner for a period of 15 years. The I.G. asserted that there existed aggravating factors in Petitioner's case which justified the 15-year period of exclusion. Petitioner requested a hearing
and the case was assigned to me for a hearing and a decision. I held a
prehearing conference at which the parties advised me that the case could
be heard and decided based on their written submissions. The I.G. submitted
a brief, a reply brief, and eight proposed exhibits (I.G. Ex. 1 - I.G.
Ex. 8). Petitioner submitted a brief and three proposed exhibits (P. Ex.
1 - P. Ex. 3). The parties have not objected to my receiving into evidence
any of the proposed exhibits. I receive into evidence I.G. Ex. 1 - I.G.
Ex. 8 and P. Ex. 1 - P. Ex. 3. Petitioner was given the opportunity to
submit a reply brief. At the conclusion of the briefing schedule, my office
contacted Petitioner's counsel because I had not received a reply brief
from Petitioner and I wanted to determine whether one had been submitted.
Petitioner's counsel asserted that he believed that he had submitted a
reply brief on Petitioner's behalf. As Petitioner's counsel asserted that
he had submitted a reply brief, I gave him the opportunity to submit the
brief again. Petitioner's counsel has not done so. Thus, I am deciding
this case on the evidence and argument of record. Material Facts The material facts that I recite in this part are drawn from the exhibits that I have received into evidence in this case. A one-count misdemeanor charge was filed against Petitioner (and his sister, who will not be otherwise mentioned in this decision) on December 11, 1997. I.G. Ex. 5 at 3. It alleged that from September 1, 1993 to on or about December 31, 1995, Petitioner willfully, unlawfully and knowingly presented and caused to be presented a false and fraudulent claim for the payment of money for health care benefits. Id. The charge against Petitioner was made in connection with a broader felony indictment against two other individuals. The felony indictment alleges that the other individuals filed false and fraudulent claims for the payment of money for health care benefits and took unlawfully from the State of California funds of a value exceeding $150,000. Id. at 1 - 2. The indictment against the other individuals, and the misdemeanor charge against Petitioner, were the product of an investigation that was conducted by the California Attorney General's Bureau of Medi-Cal Fraud. I.G. Ex. 4. That investigation concluded that Petitioner and the other indicted individuals engaged in a scheme to submit false and fraudulent claims to the California Medi-Cal program. Id. at 1 - 2. I take notice that Medi-Cal is the State of California's Medicaid program and is a federally funded health care program. Beginning in November, 1992, Petitioner was employed as the medical director of an entity known as Medcentrex. I.G. Ex. 4 at 7. Medcentrex was owned and operated by the two other individuals who were indicted in connection with the criminal charge that was filed against Petitioner. Medcentrex operated a clinic in the Los Angeles, California area. Petitioner agreed to allow Medcentrex to use his Medi-Cal provider numbers to bill Medicare and Medi-Cal. Id. at 8. Claims were submitted from Medcentrex using Petitioner's Medi-Cal provider numbers. In 1994, Medcentrex or Petitioner were paid $1,066,093.68 based on such claims. Through August 7, 1995, Medcentrex or Petitioner were paid $1,331,100.98 based on such claims. Id. at 4. As part of the investigation, Petitioner's Medi-Cal claims were reviewed by independent physicians. The reviewers concluded that it was highly unlikely or impossible that an individual physician could have generated the volume and amount of claims made by or on behalf of Petitioner. I.G. Ex. 4 at 6 - 7. Petitioner's claims were described as being grossly unusual and the reviewers concluded that they probably indicated fraudulent billing by or on behalf of Petitioner. Id. An analysis was done of a sample of the claims that were submitted for services in excess of $750 that were attributed to Petitioner's Medi-Cal provider numbers in 1994 and 1995 in order to ascertain the validity of the claims. I.G. Ex. 4 at 8 - 11. The sample was drawn from residents of two California counties, Kern and Tulare. Id. at 9. Approximately 10% of the members of the sample group were interviewed. Id. at 9 - 10. None of the individuals interviewed had been in the Los Angeles area on the dates for which services were claimed on their behalf. Id. at 10. It was determined that none of the services that had been billed were actually provided. Id. The investigation established that, between January 23, 1993 and April 15, 1996, Petitioner was paid approximately $196,597.88 by Medcentrex. I.G. Ex. 4 at 10. Initially, Petitioner had agreed to accept a payment of $1,500 monthly from Medcentrex. Id. at 8. However, he renegotiated his compensation to three percent of the entity's gross income when he discovered that other employees of Medcentrex were driving expensive new cars. Id. On March 31, 1998, Petitioner pled guilty to the misdemeanor charge that had been filed against him. I.G. Ex. 3; I.G. Ex. 6. Petitioner's sentence included an order to pay restitution. I.G. Ex. 6. However, the sentencing order does not make it clear what the restitution amount is. On the sentencing order next to a box that is labeled "Other" is a handwritten notation which reads: 100 REST FINE> DRR $227/ PROB COSTS Id. Neither the I.G. nor Petitioner have offered any evidence to explain this statement. Additionally, Petitioner agreed to forfeit or waive reimbursement for Medi-Cal or Medicare claims. I.G. Ex. 3. The amount of the forfeiture or waiver is $181,963.72. I.G. Ex. 7. Petitioner agreed to provide testimony against the other individuals who were indicted. I.G. Ex. 3. Petitioner's cooperation with the California Bureau of Medi-Cal Fraud benefitted significantly that office in the prosecution of other individuals. I.G. Ex. 8. |
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Issues The issues in this
case are whether:
Findings of fact
and conclusions of law I make findings of
fact and conclusions of law (Findings) to support my decision in this
case. I set forth each Finding below as a separately numbered heading.
I discuss each Finding in detail. 1.
The I.G. is mandated to exclude Petitioner Section 1128(a)(1)
of the Act mandates the I.G. to exclude any individual who is convicted
of a criminal offense relating to the delivery of an item or service under
Medicare or under another federally funded health care program such as
Medi-Cal. This section of the Act affords no discretion to the I.G. The facts of this
case establish Petitioner to have been convicted of a program-related
offense within the meaning of section 1128(a)(1). Petitioner pled guilty
to a misdemeanor charge of defrauding Medi-Cal. A criminal offense that
consists of theft or fraud against a federally funded health care program
is, as a matter of law, a program-related crime within the meaning of
section 1128(a)(1) of the Act. Greene v. Sullivan, 731 F. Supp.
835, 837 (E.D. Tenn. 1990). In establishing an offense to be program-related
it is not necessary to prove that a specific item or service was involved
or that care was actually delivered to a beneficiary. It will suffice
to show that a federally funded health care program was a direct target
of the offense. Id. Petitioner appears
to argue that, in fact, the I.G. had discretion to exclude him pursuant
to section 1128(b)(1)(A)(i) of the Act. That section gives the I.G., acting
as the delegate of the Secretary of this Department, the discretion to
exclude an individual who is convicted of a criminal offense consisting
of a misdemeanor relating to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct in connection with the delivery
of a health care item or service. Petitioner suggests that the I.G. should
have considered Petitioner's case under this section, inasmuch as he was
convicted of a misdemeanor relating to fraud in connection with the delivery
of a health care item or service. Petitioner's argument
is without merit. A similar argument was made by the excluded provider
in Greene v. Sullivan and was rejected there. The identical argument
has been made by excluded providers in many other cases and has been rejected
many times. The Greene v. Sullivan case involved a somewhat different
version of section 1128(b)(1) than is involved here (the Act was subsequently
revised and amended). However, the principle which was the basis for the
decision in that case continues to be valid. Section 1128(a)(1) of the
Act specifically encompasses cases which relate to federally funded health
care programs. The specific language of that section, which mandates exclusion
of any individual who is convicted of such an offense, takes precedence
over the more general language of section 1128(b)(1)(A)(i) of the Act.
When the two sections of the Act are read in pari materia it is evident
that section 1128(b)(1)(A)(i) applies only to misdemeanor cases of fraud
or other financial crimes that relate to health care items or services
that are not delivered in connection with federally funded health care
programs. Furthermore, I note
that section 1128(b)(1)(A)(i) in any event applies only to a conviction
for an offense which occurred after the date of enactment of the revisions
and amendments to the Act (August 21, 1996). The offense of which Petitioner
was convicted occurred prior to August 21, 1996. It occurred between September
1, 1993 to on or about December 31, 1995. 2.
The I.G. must exclude Petitioner for a period of at least five years.
The Act imposes a
minimum exclusion period of at least five years for any individual who
is excluded pursuant to the mandatory exclusion provision of section 1128(a).
Act, section 1128(c)(3)(B). Thus, the minimum exclusion period that must
be imposed against Petitioner is five years.
3. The I.G. is authorized to impose an exclusion for more than five The Secretary has
published regulations which govern the length of exclusions that are imposed
pursuant to section 1128 of the Act. 42 C.F.R. Part 1001. The regulation
which establishes criteria to govern the length of exclusions that are
imposed pursuant to section 1128(a)(1) is 42 C.F.R. � 1001.102. This regulation
identifies "aggravating" factors which may be used, if present in a case,
as a basis to lengthen an exclusion beyond the five year minimum period
and "mitigating" factors which may be used, if present in a case, to offset
any aggravating factors that are established. The regulation makes
clear that only those factors that it identifies as either aggravating
or mitigating may be considered to determine whether an exclusion of more
than five years is reasonable in a case involving section 1128(a)(1) of
the Act. The aggravating and mitigating factors thus operate as rules
of evidence in such a case. Evidence which does not relate to an identified
aggravating or mitigating factor is irrelevant to determining the length
of an exclusion and may not be considered. The regulation does
not, however, prescribe the weight which is to be given to any aggravating
or mitigating factor. The regulation contains no formula prescribing any
exclusion length beyond the five-year minimum period based on the presence
of aggravating factors or the absence of mitigating factors. Rather, the
regulation merely identifies the factors which may be used to lengthen
an exclusion beyond the minimum period. The factors which
are identified in 42 C.F.R. � 1001.102 may not be applied arbitrarily
to lengthen an exclusion beyond the five-year minimum. The regulation
establishes the criteria which may be considered in determining whether
or not to lengthen an exclusion. But, in the absence of any statement
in the regulation as to how much weight must be given to an aggravating
or mitigating factor, one must look to the purpose of the Act in order
to determine what is the reasonable length of an exclusion where aggravating
or mitigating factors are present. Section 1128 of the
Act is a remedial statute. Its purpose is not to punish the excluded individual
but to protect federally funded health care programs and the beneficiaries
and recipients of program funds from an individual whose conduct establishes
him or her not to be trustworthy. In assessing the length of any exclusion
that is imposed under section 1128, the ultimate issue that must be addressed
is: how long of an exclusion is reasonably necessary to protect programs,
beneficiaries, and recipients, from an untrustworthy individual? The I.G. may not arbitrarily
exclude an individual for any period of more than five years simply because
aggravating factors exist in a given case. The I.G. must weigh the evidence
that pertains to aggravating and mitigating factors in order to establish
the degree of untrustworthiness that is manifested by the excluded individual.
An exclusion that is not based on what the evidence which relates to aggravating
and mitigating factors shows about the trustworthiness of the excluded
individual may be arbitrary and unreasonably punitive. 4.
An excluded individual has a right to a de novo hearing.
Any individual who
is excluded pursuant to section 1128 of the Act has a right to a hearing
before an administrative law judge. Such a hearing is conducted pursuant
to section 205(b) of the Act. That section has been interpreted on numerous
occasions to require a de novo hearing and an independent decision by
an administrative law judge. That is not to suggest
that an administrative law judge is free to ignore entirely the determination
that is made by the I.G. The I.G. has expertise in making exclusion determinations
and her determinations deserve to be respected. The I.G.'s exclusion determination
should be sustained as reasonable if that determination falls within a
reasonable range of possible exclusions. However, the administrative law
judge must evaluate independently the evidence relating to the aggravating
and mitigating factors that are set forth in the regulations. If the administrative
law judge concludes, based on his or her independent and de novo evaluation
of the evidence, that the exclusion imposed by the I.G. departs significantly
from that which the administrative law judge decides is reasonable, then
the administrative law judge may modify the length of the exclusion to
assure that the exclusion falls within a reasonable range of exclusions.
5.
The I.G. established the presence of three aggravating factors.
The I.G. proved the presence of three aggravating factors in this case. These are as follows:
6.
Petitioner proved the presence of a mitigating factor. In the notice of exclusion
which the I.G. sent to Petitioner, the I.G. advised Petitioner that it
had taken into account "the following mitigating factor" in determining
the length of Petitioner's exclusion. The
individual's or entity's cooperation with Federal or State officials resulted
I.G. Ex. 1 at 2. The
I.G.'s determination did not explain how the I.G. used this apparent mitigating
factor in weighing the length of the exclusion that the I.G. determined
to impose. See Id. However, the I.G.,
citing 42 C.F.R. � 1001.102(c)(3), now asserts that Petitioner's cooperation
does not establish the presence of a mitigating factor. According to the
I.G., Petitioner's cooperation is not mitigating because it did not result
in either: 1) others being convicted or excluded from program participation;
or 2) additional cases being investigated. I.G.'s Brief in Support of
Exclusion at 12. The I.G. avers also that Petitioner's cooperation was
not voluntary, but was instead part of a negotiated plea agreement. Id.
The mitigating factor which is at issue here is set forth at 42 C.F.R. � 1001.102(c)(3). The regulation states that a mitigating factor is present under the following circumstances:
The evidence concerning
Petitioner's agreement to cooperate and the extent of his cooperation
is contained in his plea agreement and in a letter from an attorney who
is a Supervising Attorney General in the California Bureau of Medi-Cal
Fraud (California Attorney General). I.G. Ex. 3; I.G. Ex. 8. The plea
agreement recites that Petitioner will cooperate fully in the criminal
prosecutions of two of the other individuals who were indicted in the
case which led to a misdemeanor charge being filed against Petitioner.
I.G. Ex. 3. It recites further that Petitioner understands that he must
provide honest testimony against the other defendants and that false testimony
may result in sanctions and additional criminal charges being imposed
against Petitioner. Id. The letter from the California Attorney
General recites that charges against Petitioner were filed at the misdemeanor
level in view of Petitioner's minor role in the criminal scheme and in
light of his cooperation "in a significant way" with the investigation.
The letter adds that Petitioner's cooperation "benefitted this office
in the prosecution of others." Petitioner's cooperation
meets the criteria for a mitigating factor that are set forth at 42 C.F.R.
� 1001.102(c)(3)(ii). The evidence is not vitiated by the fact that Petitioner
gave his cooperation in consideration for acceptance of his plea. The letter from the
California Attorney General establishes that Petitioner's cooperation
resulted in additional cases being investigated within the meaning of
42 C.F.R. � 1001.102(c)(3)(ii). As is plain from the letter, Petitioner's
cooperation benefitted the California Attorney General in the prosecution
of other individuals. I.G. Ex. 8. It seems that the
I.G. may be advocating a narrow reading of the language of 42 C.F.R. �
1001.102(c)(3)(ii). The I.G. appears to be arguing that a mitigating factor
can exist under this section only in the instance where an individual's
cooperation results in investigation of a case involving an individual
or individuals who are not named in the indictment in which the cooperating
individual is charged or in a case which involves different facts from
those which are the basis for the indictment in which the cooperating
individual is charged. If that is the I.G.'s interpretation, I find it
to be an unreasonably narrow reading of the regulation. Read literally,
the regulation allows for a mitigating factor in any instance where an
excluded individual cooperates in a case other than his or her own case.
The regulation would not preclude giving credit to an individual who cooperates
in an investigation of other individuals named in the same criminal complaint
as is the excluded individual. Nor would the regulation preclude giving
credit to an individual who cooperates in an investigation of another
individual which involves the same facts or criminal scheme of which the
excluded individual was charged and convicted. There is nothing in
42 C.F.R. � 1001.102(c)(3) which states or suggests that, in order to
qualify as a mitigating factor, an individual's cooperation must be unrelated
to or not tied to a plea agreement. The regulation plainly allows for
a mitigating factor even where cooperation is an express condition of
a plea. 7.
An exclusion of 15 years is unreasonable in light of I find to be unreasonable
the 15-year exclusion that the I.G. imposed against Petitioner. It is
unreasonably harsh in light of what the evidence pertaining to aggravating
factors says about Petitioner's involvement in the criminal scheme that
resulted in his conviction. Moreover, it gives Petitioner no credit for
the cooperation that he provided to the California Attorney General. At the outset of this
discussion, I note that the exclusion in this case is among the longer
exclusions that I have seen in the more than 11 years that I have heard
and decided cases concerning exclusions imposed by the I.G. That is not
to suggest that a 15-year exclusion may not be merited by the evidence.
But, an exclusion of 15 years suggests that the excluded individual is
far more untrustworthy than are most of the individuals who have been
excluded by the I.G. Here, the evidence
pertaining to Petitioner's lack of trustworthiness does not establish
Petitioner to be so exceptionally untrustworthy as to merit an exclusion
of the extreme length that the I.G. determined to impose. The evidence
does not establish that Petitioner was a major player in a massive scheme
to defraud Medi-Cal. The I.G. failed to meet her burden to prove by a
preponderance of the evidence that Petitioner was as culpable as the I.G.
determined Petitioner to be. Indeed, the equivocal nature of the evidence
against Petitioner is underscored by the fact that Petitioner was convicted
only of a single misdemeanor offense. The California Attorney General
has characterized Petitioner's involvement in the scheme for which he
was convicted as being "minor." I.G. Ex. 8. What is apparent from
the evidence pertaining to aggravating factors is that Petitioner certainly
allowed the other indicted individuals to make free use of his Medi-Cal
provider numbers to commit extensive fraud against Medi-Cal. Millions
of dollars of fraudulent claims were made using Petitioner's Medi-Cal
provider numbers. At the very least, Petitioner willingly looked the other
way while this fraud was being committed. And, Petitioner profited from
the fraud for a period of more than two years. But, it is unclear
from the evidence which relates to the aggravating factors the extent
to which Petitioner personally planned, executed, or participated in the
fraud. The evidence lends itself to inferences which include: 1) that
Petitioner knowingly participated in and abetted the scheme; and 2) that
Petitioner simply was indifferent to how others misused his Medi-Cal provider
numbers and accepted some of the fruits of that misuse. The I.G. essentially
alleges that the first inference is correct. The I.G. attributes to Petitioner
all of the fraud committed at the Medcentrex clinic during the
period when Petitioner was employed as the Medcentrex medical director.
However, although
there are various possible explanations of the extent of Petitioner's
involvement, the preponderance of the evidence does not support the I.G.'s
conclusion. The evidence shows that: Petitioner allowed others to file
claims using his Medi-Cal provider numbers; and, Petitioner profited by
receiving a percentage of the revenues earned based on these claims. It
does not explain, however, whether Petitioner personally directed the
filing of false claims or whether Petitioner was even aware of the extent
of the fraud that was being committed in his name. The most that can be
said about Petitioner's involvement was that he was recklessly indifferent
to fraud at the Medcentrex clinic. The I.G. has offered
no evidence which establishes that Petitioner was actively involved in
the criminal activities at Medcentrex. There is, for example, no evidence
that Petitioner personally generated false claims or false documentation
of claims. Nor is there evidence to show that he helped to plan and to
execute the scheme to defraud Medi-Cal. The I.G. has not produced any
evidence to show that Petitioner was aware of the extent of the false
claims that were being made in his name. That is not to minimize
the extent of Petitioner's culpability. Petitioner was a participant for
more than two years in a criminal scheme. He allowed his Medi-Cal provider
numbers to be misused to generate wholesale false claims. And, he profited
from this criminal activity. But, there is a difference between reckless
indifference to what was going on and active involvement in a criminal
scheme. For this reason, I conclude that the evidence as to aggravating
factors shows Petitioner to be untrustworthy, but not so untrustworthy
as the I.G. asserts Petitioner to be. Moreover, the I.G.
has not given Petitioner credit for his cooperation with the California
Attorney General. This cooperation plainly has been valuable. I.G. Ex.
8. 8.
An exclusion of 10 years is reasonable. The weight of the
evidence establishes that Petitioner is not so untrustworthy as the I.G.
asserts him to be. For that reason I find that a 15-year exclusion is
unreasonable. It exceeds the reasonable range of exclusions that might
be imposed against Petitioner given what the evidence establishes about
his conduct. The weight of the
evidence does show Petitioner to be untrustworthy. He may not have been
an active participant in the scheme perpetrated against Medi-Cal by the
other indicted individuals. However, he certainly was indifferent for
a period of more than two years to the consequences of his allowing his
Medi-Cal provider numbers to be misused by others. Petitioner had to have
some awareness of the volume of claims being generated based on his provider
numbers. He negotiated an agreement to be paid three percent of the income
of Medcentrex for his role as clinic director. Petitioner easily could
have extrapolated from his pay, had he desired to do so, and learned the
amount of the fraud that was being committed in his name. Moreover, Petitioner
had to be aware during the period of his employment at Medcentrex that
the pay he was receiving was grossly disproportionate to the actual business
that the clinic was doing. For these reasons I find Petitioner to be highly untrustworthy, although not so untrustworthy as the I.G. alleges him to be. I find that an exclusion of 10 years is reasonable in light of the level of untrustworthiness that is manifested by Petitioner.
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JUDGE | |||
Steven T. Kessel
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