James Josiah, DAB CR5514 (2020)

DECISION

The Inspector General of the United States Department of Health and Human Services (the IG) excluded Petitioner, James Josiah, from participation in Medicare, Medicaid, and all other federal health care programs for ten years based on his felony conviction for an offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  Petitioner sought review of the exclusion.  During the pendency of this case, Petitioner submitted evidence of cooperation as a mitigating factor, and the IG issued an amended notice reducing Petitioner’s period of exclusion from ten years to seven years.  For the reasons stated below, I affirm the IG’s amended exclusion determination.

I. Background and Procedural History

By letter dated December 31, 2018, the IG notified Petitioner that he was excluded from participating in Medicare, Medicaid, and all other federal health care programs under section 1128(a)(4) of the Social Security Act (Act) for a period of ten years due to his

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conviction for a felony offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  IG Ex. 1.  The IG relied on three aggravating factors to extend the term of Petitioner’s exclusion to ten years.  Id. at 2.  Petitioner timely requested a hearing before an administrative law judge (ALJ), and I was designated to hear and decide this case.

I held a pre-hearing telephone conference on May 30, 2019, the substance of which is summarized in my June 4, 2019 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order).  Among other things, I directed the parties to file pre-hearing briefs articulating their respective arguments as well as identifying witnesses and exhibits in support thereof.  Order at 6-7. 

The IG filed a brief (IG Br.) and four exhibits (IG Exs. 1-4), while Petitioner filed a brief (P. Br.) and three exhibits (P. Exs. 1-3).  The IG then submitted a reply brief (IG Reply) conceding Petitioner had presented evidence of cooperation in his pre-hearing exchange; as a result, on October 28, 2019, the IG amended Petitioner’s notice of exclusion to account for this mitigating factor by reducing Petitioner’s period of exclusion from ten to seven years.  IG Reply.  The IG attached the amended notice to her reply as IG Ex. 5. 

Because the IG amended Petitioner’s notice of exclusion while this matter was pending before me, I permitted Petitioner to file a sur-reply (P. Sur-reply), which he filed on November 18, 2019 along with another proposed exhibit, P. Ex. 4.  

II. Petitioner has not shown good cause to redact his submissions.  

On September 30, 2019, Petitioner asked to file his pre-hearing exchange under seal.  I denied that request on October 3, 2019.  I noted that the DAB E-file system is not accessible to the public and that Petitioner had failed to articulate a particularized need for sealing beyond characterizing his submissions as “highly sensitive.”  Because the applicable regulations permit parties to file redacted documents, I gave Petitioner leave to do so.  I required Petitioner to provide unredacted courtesy copies to me and IG counsel, with the understanding that the IG could object to such redaction if it was unnecessary or inappropriate. 

Petitioner filed a brief and supporting documents, all of which were heavily redacted.  While I gave the IG opportunity to object, she did not do so.  Having fully reviewed these documents, Petitioner has not established the need to redact all mention of his cooperation with federal authorities, as he has done.  While I am sympathetic to his concerns as an incarcerated individual wishing to avoid broadcasting the details of his cooperation, it is simply impossible to omit all mention of a mitigating circumstance or evidence supporting it from my decision.  Redaction would serve no purpose; my decision will ultimately be made available to the public, and should either party seek appeal, the record would be impossible to review in redacted form.  Accordingly, I find

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no good cause to redact the record under 42 C.F.R. § 1005.18(d) and order unredacted copies of all Petitioner’s pleadings and exhibits be uploaded into DAB E-file with the issuance of this decision.

III. Admission of Exhibits and Decision on the Record

Concerning the exhibits proposed by the parties in their pre-hearing exchanges, neither party has lodged objections.  Accordingly, I admit into evidence IG Exs. 1-5 and P. Exs. 1-4. 

In his pre-hearing brief, Petitioner requested leave to supplement the record with character letters and other materials proffered to the District Court for his sentencing.  P. Br. at 5.  The IG objected to this request, noting such materials cannot properly be considered for purposes of mitigation and are therefore irrelevant.  IG Reply at 4.  I sustain the IG’s objection and decline to permit Petitioner to supplement the record with irrelevant evidence. 

Neither party indicated a hearing was necessary or requested cross-examination of the opposing party’s witnesses.  IG Br. at 12; P. Br. at 5.  An in-person hearing would therefore serve no purpose and I will decide this matter on the written record.  See Civ. Remedies Div. P. § 19(d). 

IV. Issues

Whether the IG has a basis to exclude Petitioner from participation in federal health care programs under section 1128(a)(4) of the Act, and if so, whether the minimum length of the exclusion, seven years, is reasonable.  42 C.F.R. § 1001.2007.

V. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to a hearing before an ALJ and judicial review of the final action of the Secretary of Health and Human Services (Secretary).  The right to a hearing before an ALJ is set forth in 42 C.F.R. §§ 1001.2007(a) and 1005.2, while the rights of both the sanctioned party and the IG to participate in a hearing are specified by 42 C.F.R. § 1005.3.

The Secretary must exclude from participation in federal health care programs “[a]ny individual or entity that has been convicted for an offense which occurred after August 21, 1996, under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”  42 U.S.C. § 1320a-7(a)(4); see also 42 C.F.R. § 1001.101(d).

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An individual is convicted of a criminal offense when:  (1) a judgment of conviction has been entered against him or her in a federal, state, or local court, whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no contest is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.  42 U.S.C. § 1320a-7(i).  There may be no collateral attack of the conviction that provides the basis of the exclusion.  42 C.F.R. § 1001.2007(d).

Section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) provides that an exclusion imposed under section 1128(a) of the Act (42 U.S.C. § 1320a-7(a)) shall be for a minimum period of five years.  The exclusion is effective twenty days from the date of the notice of exclusion.  42 C.F.R. § 1001.2002(b).  The period of exclusion may be extended based on the presence of specified aggravating factors.  42 C.F.R. § 1001.102(b).  Mitigating factors are considered as a basis for reducing the period of exclusion only if aggravating factors justify an exclusion of longer than five years.  42 C.F.R. § 1001.102(c).

The standard of proof is a preponderance of the evidence.  42 C.F.R. § 1001.2007(c).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors; the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(b).

VI. Jurisdiction

Because Petitioner timely requested a hearing, I have jurisdiction to hear and decide this case.  See 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also 42 U.S.C. § 1320a‑7(f)(1).

VII. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold and followed by pertinent findings of fact and analysis.

A. There is a basis for Petitioner’s exclusion pursuant to section 1128(a)(4) of the Act.

Section 1128(a)(4) mandates that the Secretary exclude from program participation any individual or entity convicted of a felony criminal offense occurring after August 21, 1996 “relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”  See also 42 C.F.R. § 1001.101(d). 

Petitioner concedes he was convicted of a felony committed after August 21, 1996.  P. Br. at 2.  He further concedes his conviction was related to the unlawful manufacture,

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distribution, prescription, or dispensing of a controlled substance, and that his exclusion is thus required.  Id.  I therefore need not devote any great deal of time to articulating how the IG met her burden as to these elements.

I find it sufficient to note that Petitioner was charged with conspiring to knowingly and intentionally distribute oxycodone.  IG Ex. 2 at 1-2.  He was ultimately convicted of one count of conspiracy to distribute oxycodone in violation of 21 U.S.C. § 846 and 21 U.S.C. § 841(a)(1), (b)(1)(C).  IG Ex. 3.  His December 12, 2017 conviction clearly meets the elements necessary for the IG to demonstrate exclusion is necessary.  I therefore have no difficulty concluding that Petitioner was convicted of a felony offense that occurred after August 21, 1996 which related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, as contemplated by 42 U.S.C. § 1320a-7(a)(4).

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

Because I have concluded that a basis exists to exclude Petitioner under 42 U.S.C. § 1320a-7(a)(4), Petitioner must be excluded for a minimum period of five years.  42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. § 1001.102(a).  The IG has no discretion to impose a lesser period of exclusion, and I may not reduce the period of exclusion below five years.

C. The IG has established three aggravating factors that support an exclusion period beyond the five-year statutory minimum.

The regulations establish aggravating factors that the IG may consider to lengthen the period of exclusion beyond the five-year minimum for a mandatory exclusion.  42 C.F.R. § 1001.102(b).  In this case, the IG applied three aggravating factors to impose a ten-year term of exclusion:  (1) the acts resulting in Petitioner’s conviction were committed over a period of one year or more; (2) the sentence imposed by the court included incarceration; and (3) Petitioner was subject to an adverse action by another federal, state, or local agency based on the same set of circumstances resulting in his exclusion.  IG Ex. 2 at 1-2; IG Ex. 3 at 2; IG Ex. 4 at 2-4; 42 C.F.R. § 1001.102(b)(2), (5), (9). 

Petitioner does not argue the IG improperly identified these aggravating factors.  P. Br. at 2.  Based on this concession and my own review of the evidence submitted by the IG, I find the IG has established three aggravating factors to support a period of exclusion greater than the five-year statutory minimum.

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D. Petitioner has established a mitigating factor exists in this case that justifies a reduction in the initial exclusion period.

The IG considered no mitigating factors when she initially determined the length of Petitioner’s exclusion.  IG Ex. 1.  However, after Petitioner submitted evidence in his pre-hearing exchange reflecting his cooperation with the government that resulted in the prosecution of other individuals, see P. Exs. 2 and 3, the IG amended her notice to Petitioner excluding him and cited the evidence of cooperation proffered by Petitioner as the basis to reduce Petitioner’s period of exclusion from ten to seven years.  IG Ex. 5. 

Because there is no dispute between the parties that Petitioner’s cooperation with the government described in P. Ex. 2 met the regulatory definition of the mitigating circumstance found at 42 C.F.R. § 1001.102(c)(3), I find Petitioner has established a mitigating factor exists in this case that justified a reduction in his exclusion period. 

Petitioner also asks that I ignore the regulations and consider a broader range of potentially mitigating evidence than that permitted at 42 C.F.R. § 1001.102(c).  P. Br. at 5.  I decline Petitioner’s request to ignore the law. 

E. A seven-year exclusion period is not unreasonable.

Petitioner submitted evidence of an applicable mitigating factor as part of his pre-hearing exchange.  P. Ex. 4.  As a result, the IG amended the notice of exclusion to Petitioner and reduced his period of exclusion from ten years to seven years.  IG Ex. 5.  The IG has established three aggravating factors, while Petitioner has established one mitigating factor.  The limited issue before me is therefore whether the seven-year period of exclusion selected by the IG is unreasonable. 

I must uphold the IG’s determination as to the length of exclusion unless it is unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  It is important to note that it is the quality of the aggravating (or mitigating) factors that is most important when considering the length of exclusion, and not the sheer number of aggravating factors that are present in a given case.  As the Secretary stated in the preamble to the final rule establishing the exclusion regulations: 

We do not intend for the aggravating and mitigating factors to have specific values; rather, these factors must be evaluated based on the circumstances of a particular case.  For example, in one case many aggravating factors may exist, but the subject’s cooperation with the OIG may be so significant that it is appropriate to give that one mitigating factor more weight than all of the aggravating.  Similarly, many mitigating factors may exist in a case, but the acts could have had such a

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significant physical impact on program beneficiaries that the existence of that one aggravating factor must be given more weight than all of the mitigating.  The weight accorded to each mitigating and aggravating factor cannot be established according to a rigid formula, but must be determined in the context of the particular case at issue.

57 Fed. Reg. 3298, 3314-15 (Jan. 29, 1992).

Here, Petitioner participated in a conspiracy to knowingly fill fake prescriptions submitted by drug dealers in order to dispense medications containing oxycodone, a controlled substance.  IG Ex. 2 at 1-2.  The IG has established aggravating factors that emphasize the serious nature of Petitioner’s criminal acts and highlight his untrustworthiness to participate in federal or state health care programs. 

First, the federal court confronted with Petitioner’s criminal conduct sentenced him to 36 months’ incarceration, even after considering various mitigating circumstances.  IG Ex. 3 at 2.  This significant period of incarceration demonstrates the severity of Petitioner’s offense, as well as his level of untrustworthiness.  Eugene Goldman, M.D., DAB No. 2635 at 5 (2015). 

Second, I have considered the fact that Petitioner used his pharmacy license to fill fake prescriptions for drug dealers for a period of five years.  It is likely Petitioner’s conduct contributed to profound addiction and harsh outcomes for an untold number of needy and desperate people in his area.  The extended duration of Petitioner’s criminal acts maximized the harm he caused, and thus underscores the serious nature of his conduct. 

Third, the IG has shown that the Pennsylvania Board of Pharmacy revoked Petitioner’s license to practice as a pharmacist because of his criminal conduct.  IG Ex. 4.  It is worth noting that Petitioner could not have committed his offenses of conviction without the unique level of access he possessed as a pharmacist, which allowed him to illegally dispense controlled substances to drug dealers for broader distribution.  Petitioner’s abuse of his license for criminal gain with no thought for the wellbeing of the population at large is difficult to ignore.

Finally, Petitioner has established the presence of a mitigating factor by demonstrating his cooperation with federal authorities, resulting in a recommendation by the government that the sentencing court give him a lower sentence.  P. Exs. 2, 3.  The sentencing court observed that Petitioner cooperated early in the investigation against him, and provided detailed information on other corrupt pharmacists and the drug dealers they served.  P. Ex. 3 at 1.  The court described Petitioner’s cooperation as “significant” because it allowed the government to charge two other pharmacists and ultimately take

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down a corrupt network of individuals distributing massive quantities of controlled substances.  Id. at 2. 

The record before me confirms Petitioner’s cooperation was significant and meaningful.  Taking it into account, the IG reduced Petitioner’s period of exclusion from ten years to seven years.  IG Ex. 5.  Petitioner contends that the IG did not go far enough, and believes a five-year exclusion would be more reasonable.  P. Sur-reply at 2.  However, in reviewing the IG’s determination, I do not have the authority to substitute my own judgment or impose a period of exclusion that seems more reasonable to me.  Juan de Leon, Jr., DAB No. 2533 at 5 (2013); Craig Richard Wilder, M.D., DAB No. 2416 at 8 (2011).  I can only reduce the period of exclusion selected by the IG if I find it to be unreasonable.

Here, Petitioner’s cooperation was significant and merited a reduction in the exclusion period.  But contrary to Petitioner’s assertion that a five-year exclusion is appropriate, I must also consider the three aggravating factors established by the IG.  In doing so, I conclude the seven-year period of exclusion selected by the IG is not unreasonable; it takes into account the seriousness of Petitioner’s offense while reducing his period of exclusion by nearly a third to reflect his cooperation with federal authorities as a mitigating circumstance.

VIII. Conclusion

The IG properly excluded Petitioner from participating in Medicare, Medicaid, and other federal health care programs.  The IG established three aggravating factors, while Petitioner established one mitigating factor.  Because the IG’s selection of a seven-year period of exclusion is not unreasonable, I affirm it.