Adel A. Kallini, MD, DAB No. 3021 (2020)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Adel A. Kallini, MD, (Respondent) timely appeals the April 30, 2020 decision of an Administrative Law Judge (ALJ) on remand, Adel A. Kallini, MD, DAB CR5601 (ALJ Decision II).  In that decision, the ALJ upheld the imposition by the Inspector General (IG) of a civil money penalty (CMP) of $1,727,000.00, an assessment in lieu of damages of $3,263,132.07, and exclusion of Respondent from Medicare, Medicaid, and all other federal health care programs for 20 years.

This case is before the Board for the second time.  Most of the issues in this matter, including the facts that demonstrate the IG had shown an authorized basis to impose sanctions, were resolved in the Board's initial decision.  The Board remanded the case to the ALJ, however, to develop the factual record relating to two remaining issues as to which it found a dispute of material fact precluding summary judgment – namely, whether Respondent could establish the elements of an applicable advice-of-counsel defense, and whether the proposed sanctions were reasonable.  On remand the ALJ conducted an evidentiary hearing, made detailed findings of fact on the issues for which we remanded, and ultimately again upheld the IG's sanctions.

For the reasons explained below, we conclude that substantial evidence supports the ALJ's factual findings, that Respondent failed to establish the elements of an advice-of-counsel defense, and that the sanctions imposed fall within a reasonable range.  We affirm ALJ Decision II.

Applicable legal authority

The Civil Monetary Penalties Law (CMPL), section 1128A of the Social Security Act (Act), authorizes the IG to impose a CMP, assessment, and/or exclusion on any person who –

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(1) knowingly presents or causes to be presented to an officer, employee, or agent of the United States, or any department or agency thereof, or of any State agency . . ., a claim . . . that the Secretary determines –

(A) is for a medical or other item or service that the person knows or should know was not provided as claimed . . . [or]

(B) is for a medical or other item or service and the person knows or should know the claim is false or fraudulent . . . .

Act §§ 1128A(a)(1)(A)-(B) (emphasis added), 1128A(j)(2); see also 42 C.F.R. Part 1003.  "Knowingly" means that "a person, with respect to an act, has actual knowledge of the act, acts in deliberate ignorance of the act, or acts in reckless disregard of the act, and no proof of specific intent to defraud is required."  42 C.F.R. § 1003.110.  "Should know" means that "a person, with respect to information . . . acts in deliberate ignorance of the truth or falsity of the information; or acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required."  Act § 1128A(i)(7); accord 42 C.F.R. § 1003.110.

Applicable sanctions for violations of sections 1128A(a)(1)(A) or (B) include CMPs of "not more than $10,000 for each item or service . . . [and] an assessment of not more than 3 times the amount claimed for each such item or service in lieu of damages sustained by the United States or a State agency because of such claim."  Act § 1128A(a)1; 42 C.F.R. §§ 1003.200(a), 1003.210(a)(1), (b).  In addition, the IG may "exclude the person from participation in the Federal health care programs" and direct exclusion from State health care programs.  Act § 1128A(a); 42 C.F.R. §§ 1003.200(a), 1003.210(a)(1), (b).

In determining the amount of any CMP or assessment and the duration of any exclusion, the IG must consider:  (1) the nature of the claims and the circumstances under which they were presented; (2) the degree of culpability, history of prior offenses, and financial condition of the alleged violator; (3) other wrongful conduct; and (4) such other matters as justice may require.  Act § 1128A(d); see also 42 C.F.R. §§ 1003.140 (specifying factors that the IG "will consider" in determining sanctions), 1003.220.

Any person as to whom the IG seeks to impose any of these sanctions is entitled to request a hearing before an ALJ and, if not satisfied with the ALJ's decision, to seek review by the Departmental Appeals Board.  Act § 1128A(c)(2); 42 C.F.R.

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§ 1003.1500(b).  In CMP hearings, which are governed by 42 C.F.R. Part 1005, the IG bears the burden of persuasion by the preponderance of the evidence on all issues except affirmative defenses and mitigating circumstances as to which the burden lies with the respondent.  42 C.F.R. §§ 1003.1500(b), 1005.15(b), (d).

Case background

The background information and legal conclusions set out in DAB No. 2944 (2019) (Board Decision I) remain accurate and final.  We summarize them, and the later developments, here but do not alter any of our prior conclusions.

In his first decision, the ALJ upheld, on summary judgment, the IG's sanctions against Respondent, including a CMP of $1,727,000, an assessment in lieu of damages of $3,263,132, and a 20-year exclusion.  Adel A. Kallini, MD, DAB CR5192 (2018) (ALJ Decision I).  Unlike in derivative exclusions, based on prior convictions or other adverse actions, Respondent here was sanctioned based on the IG's own factual determination that he had knowingly presented to CMS 1,727 Medicare claims that Respondent either knew or should have known were for services not provided as claimed or were false or fraudulent.2

The claims were for services that Respondent agrees he did not provide.  It was (and remains) undisputed that the claims were for nerve conduction studies performed by an entity called BioScan at a time prior to Respondent's involvement.  See Board Decision I at 4.  BioScan was owned by Leonard Austin and Gregory Sylvestri, to whom Respondent was introduced by Mark McWilliams, an attorney who represented Respondent in tax-related matters.  It has not been disputed that Respondent had a substantial federal civil tax debt when the claims were submitted, and that he has not returned the funds he obtained through the claims at issue because he says he is "severely in debt."  See Board Decision I at 13.  On June 13, 2013, Respondent met with Austin and Sylvestri in McWilliams' office, with McWilliams present for at least part of the meeting.

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BioScan did not have a valid Medicare enrollment provider number, or "NPI," under which to submit its existing claims.  It is undisputed that an arrangement was reached between Respondent and BioScan and its principals to submit the claims using Respondent's Medicare number and for the proceeds to be distributed as agreed.  The exact terms of the arrangement and McWilliams' role in it were not clearly established during the initial ALJ proceeding (because the ALJ determined he did not need to do so based on his legal theory for summary judgment).3

In his first decision, the ALJ rejected Respondent's argument that he was not liable for sanctions because he relied on advice of counsel that the arrangement was legal.  ALJ Decision I at 11-13.  The ALJ concluded that an advice-of-counsel defense could never apply in CMPL cases because no specific intent to defraud or violate the law was required by the applicable law.  For purposes of summary judgment, the ALJ "accept[ed] as true" Respondent's contentions that he "was duped" by McWilliams acting as his lawyer into participating in this "business arrangement."  Id. at 12.

On appeal, the Board determined that the ALJ erred in concluding that advice of counsel was never an available defense in CMPL cases.  Board Decision I at 7-9.  Much of the ALJ's erroneous analysis was based on his understanding of intent in False Claims Act cases and on his misreading of a single case under Medicare kickback law (section 1128B(b)(2)(A) of the Act).  See ALJ Decision I at 11-12 (citing United States v. McClatchey, 217 F.3d 823 (10th Cir. 2000)).  As the Board explained, the ALJ was correct that the CMPL, like the False Claims Act, is couched in terms of "general" intent.  Board Decision I at 7.  As the Board quoted with approval from the IG's brief in the initial appeal, this means that "the knowledge requirement in the False Claims Act," as with the CMPL, "does not require 'specific intent' [to deceive or to violate the law] but instead incorporates the intent standards of 'actual knowledge,' 'deliberate ignorance[]' and 'reckless disregard'" in relation to doing the actions that violate the law.  Id.(quoting IG Br. in A-19-10, at 18 n.2, quoting in turn from UMC Elecs. Co. v. United States, 43 Fed. Cl. 776, 793 n.15 (Fed. Cl. 1999)).  The Board concluded, however, that the analogy to False Claims Act cases governed by similar general intent standards did not support the ALJ's conclusion in granting summary judgment.  Id. at 7-9.  Multiple federal court decisions have established that good faith reliance on advice of counsel, where the factual prerequisites are established, may preclude liability in a general intent False Claims Act case when the advice contradicts the basis for finding that a false claim was submitted knowingly or with deliberate ignorance or reckless

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disregard.  Id. at 8-9 (and cases cited therein).  Because the prerequisites require factual resolution, summary judgment is inappropriate in False Claims Act cases involving advice-of-counsel allegations, and, the Board concluded, the same is true in the CMPL context.  Id.  As to the Medicare kickback case, the ALJ relied on it as a blanket rejection of the availability of an advice-of-counsel defense in Medicare kickback cases, but the court merely found that the particular defendant had not established the basis for the defense in a manner that would preclude the jury from finding the requisite intent.  See id. at 7 n.4.

We concluded that summary judgment was inappropriately granted because material factual issues about the claimed defense remained in dispute.  We also concluded it was premature for the ALJ to uphold the reasonableness of the sanctions given that he stated that the aggravating factors on which the IG relied could not be resolved without a full hearing.  We therefore remanded the case to the ALJ with instructions to make factual findings on the prerequisites of the advice-of-counsel defense (with guidance as to the relevant disputes of fact in this case) and on the reasonableness of the sanction imposed.  Id. at 8-14.

The specific instructions were to determine the following:

• Whether Respondent was in fact "duped" into understanding that claims could lawfully be submitted to Medicare using his NPI even though he had not ordered, supervised, provided or interpreted the tests (a finding the ALJ made only for purposes of summary judgment).  In this regard, for example, McWilliams in his deposition asserts that he understood Austin and Sylvestri to be seeking a doctor to "read" the test results and that he was not familiar with Medicare and did not represent Respondent regarding Medicare issues prior to the investigation that led to these charges.  Respondent, however, continues to assert that he was "deceived into the business venture by McWilliams."
• Whether, even if he understood McWilliams to be providing legal advice that Medicare law permitted the arrangement, Respondent could rely on it "reasonably and in good faith" in light of Respondent's assertion that he believed McWilliams to have Medicare expertise, McWilliams' denial of such expertise, and Respondent's constructive knowledge of Medicare's requirements along with his long experience as a Medicare supplier;
• Whether, as Respondent claims, he willingly disclosed to the government investigator that he did not treat patients at the address the investigator named as the location at which the tests were performed and whether this evidences a lack of awareness that the claims submitted for such tests were inconsistent with his Medicare obligations.

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• What significance to attribute to the inconsistency that both parties observe existed between the explicit terms of the written contract and the actual dealings among the persons involved. . . .
• Whether McWilliams acted as Respondent's counsel in the dealings with Austin and Sylvestri or was a participant in the arrangement himself (including, for example, whether his retention of part of the proceeds from Respondent's share constituted participation or merely payment for services previously rendered to Respondent).
• What the material facts establish as to the two aggravating factors which the ALJ stated would require a trial.

In addition, the ALJ should determine and provide for whatever additional record development may be needed to ensure a sound basis to resolve the material issues.

In short, the ALJ should consider on remand if the credible evidence on the record as a whole indicates that Respondent acted reasonably and in good faith in seeking McWilliams's advice about the lawfulness of all the proposed activities (including whether he reasonably relied on McWilliams's statement as establishing the permissibility under Medicare law of submitting these claims with his NPI) and that he actually relied on such advice (particularly given that the written contract prepared by McWilliams does not appear to correspond to the way the arrangements were actually conducted). . . .

Id. at 10-11 (all internal citations omitted).

On remand, the ALJ conducted a full hearing, developed the record, and made detailed factual findings on the matters laid out by the Board.4  As to each of the bullet points, the ALJ compiled the relevant evidence, explained his assessments of its weight and credibility, and reached evaluations adverse to Respondent as to the factual disputes the Board identified as relevant to the asserted advice-of-counsel defense.  ALJ Decision II at 13-36.  With respect to the Respondent's claim that he relied on legal advice about

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the propriety of BioScan submitting claims with his NPI for services that he did not perform or supervise, the ALJ found:

Based on the credible testimony of McWilliams, I find that McWilliams rendered no legal opinion that the deal among Respondent, Sylvestri, and Austin was legal.  McWilliams was adamant that he rendered no such opinion.  The fact that McWilliams knew he knew little or nothing about Medicare; the fact that no written opinion by McWilliams was issued or placed in evidence; the fact that Respondent knew he retained McWilliams for tax issues and McWilliams did not practice in the area of Medicare; the fact that Respondent went directly to Austin with his concern about the Medicare beneficiary who contacted him in October 2013 and threatened to report him to Medicare (Tr. 152); the fact Respondent called Austin when the investigator showed-up at his office on November 14, 2013 (Tr. 155); the fact that Respondent called Austin directly when payments were received; and the fact that Respondent did not immediately report what was going on to Medicare when the beneficiary called to complain in October 2013 or when an investigator first appeared at his office in November 2013, are all consistent with my finding that Respondent knew that allowing Austin and Sylvestri to use his NPI for filing BioScan claims violated the Medicare regulations because allowing another to use an NPI in this manner is clearly prohibited.  Further, Respondent knew that allowing the use of his NPI on the claims rendered them false as Respondent knew he did not deliver or supervise the services for which claims were filed and he had no valid right of reassignment.  No later than the meeting with Austin and Sylvestri in June 2013, the evidence related to Respondent's conduct shows it was more likely than not that he knew permitting the filing of the BioScan claims with his NPI violated the Medicare regulations and would render the claims false because he did not deliver or supervise the services for which claims were filed and he had no valid right of reassignment.  Respondent had been enrolled in Medicare since 1971, and the limitations on assignments and reassignments and the use of the NPI are fundamental in the system.  Therefore, Respondent's assertions that he knew nothing about Medicare after nearly 42 years in the Medicare program and his suggestion he knew nothing about the use of the NPI or assignments and reassignments is simply not credible.  Respondent testified and he is clearly very intelligent and dedicated to the practice of medicine, and he ran his own practice.  However, the evidence is also clear that he had a large tax debt that was more likely than not placing pressure on him, his practice, and his family, and he needed to resolve that debt.  Respondent's testimony shows that he concluded that services reflected by the BioScan claims had been delivered in the past and he saw no harm in helping

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Austin and Sylvestri get paid by Medicare for those services.  Respondent rationalized that there was no fraud, but he agrees that he did not deliver or supervise the services and he had no valid reassignment, and he cannot rationalize that the claims submitted with his NPI were not false because the services were not delivered as claimed.  Whether or not Respondent determined in June 2013 that using McWilliams as a shield was a possible way to avoid responsibility for his conduct need not be decided.  Clearly by the time of Respondent's acquittal, he saw the merit of laying blame at McWilliams' doorstep.  In any case, Respondent knew that permitting the use of his NPI on the BioScan claims violated the regulations and rendered the claims false, and Respondent decided to lay the blame on McWilliams in an effort to negate his knowledge.  Because Respondent knew that permitting the use of his NPI on the BioScan claims violated Medicare regulations and rendered the claims false, whether or not McWilliams said anything that could be construed to be a legal opinion is irrelevant.  In fact, as already noted, I find as fact that McWilliams rendered no such opinion.^[5^]

Id. at 31-32.  The ALJ then responded as follows to the specific elements of the affirmative defense as set out by the Board:

(1) Respondent did not act reasonably and in good faith in seeking legal advice about whether his conduct was lawful.  Respondent knew McWilliams was retained to help resolve his tax issues.  Respondent had no reason to believe that McWilliams was competent to handle Medicare related issues.  McWilliams should have informed Respondent that he was not competent to render opinions regarding Medicare issues.  However, there is no evidence Respondent ever asked or clarified with McWilliams whether their engagement extended to coverage of non-tax issues.  Furthermore, I am convinced Respondent knew permitting the use of his NPI to file the BioScan claims violated the regulations and would render all the claims false because he did not deliver or supervise the services and had no valid reassignment.  Therefore, if Respondent's assertion that he requested and received a legal opinion from McWilliams is accepted, the evidence shows it is more likely than not Respondent

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intended to attempt to legitimize his activity and potentially use McWilliams as a shield against any allegation of submitting false claims.

(2) Respondent did not make full disclosure to his lawyer of all relevant facts.  It is important to note that Respondent has never asserted that McWilliams told him that the BioScan claims could be lawfully submitted using Respondent's NPI even though the claims were for services not provided or supervised by Respondent and Respondent had no valid reassignment of the claims.  Respondent has only generally asserted that McWilliams told him the deal with Austin and Sylvestri was legal, an assertion I conclude is not credible for reasons already discussed.  Even if McWilliams did orally express the opinion that the deal was legal, McWilliams' testimony is credible that he understood that, under the terms of the agreement, which all agree was not followed, Respondent was going to be reviewing charts for Austin and Sylvestri.  The fact Respondent was going to review charts for BioScan claims may have caused McWilliams to think, given his lack of understanding of Medicare, that Respondent's review was sufficient to permit Respondent to submit the claims under his billing number and seek full reimbursement for the claims from Medicare.  The fact that the agreement was not followed and Respondent reviewed no files should certainly render McWilliams' ill-considered legal opinion (assuming, as I do not, that one was given) invalid and no defense for Respondent.

(3)  Respondent did not rely reasonably and in good faith on advice of his lawyer.  The evidence shows that Respondent did not rely on any advice by McWilliams reasonably and in good faith.  If it is accepted that McWilliams orally told Respondent the deal with Austin and Sylvestri was legal and he drafted the contract (IG Ex. 13), Respondent did not follow the terms of the contract or insist that Austin and Sylvestri do so.

(4)  McWilliams arguably conspired in or aided and abetted the criminal scheme that was formed on about June 13, 2013, because he brought Austin, Sylvestri, and Respondent together and he and his firm received a cut of the ill-gotten Medicare payments.  Respondent was fully aware of his lawyer's participation in the criminal scheme and his receipt of a cut of the Medicare payments.  Therefore, Respondent's reliance on the advice of McWilliams was not reasonable.

Id. at 33-34.  Respondent timely appealed ALJ Decision II to the Board.

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Standard of review

The standard of review on a disputed issue of fact is whether the ALJ Decision is supported by substantial evidence in the record as a whole.  42 C.F.R. § 1005.21(h).  The standard of review on a disputed issue of law is whether the ALJ Decision is erroneous.  Id.

Analysis

On appeal, Respondent raises three issues.  The first is whether the ALJ erred in reiterating his view that good-faith reliance upon advice of counsel was not available to Respondent as a defense.  Brief of Appellant in A-20-81 (App. Br.) at 3, 12-13.  The availability of the affirmative defense was settled in DAB Decision I, and any comments by the ALJ on the matter are, as we have already said, dicta and irrelevant at this stage.  We therefore do not need to further address Respondent's arguments on this issue.  Respondent also suggests, however, that the ALJ's intransigence on this legal point resulted in bias against Respondent in evaluating the facts.  App. Br. at 13-14.  We discuss this contention in relation to the second issue, which is whether the ALJ properly "evaluated and weighed" the evidence which Respondent characterizes as overwhelmingly supporting his assertion of the defense.  This is the key issue before us.  The third issue Respondent raises on appeal is whether the ALJ erred in upholding the reasonableness of the proposed sanctions.

The regulations specify that the IG bears the burden of proof on the basis for the exclusion, while Respondent bears the burden of proof as to any affirmative defense or mitigating circumstances.  42 C.F.R. § 1005.15(b)(1) and (2).  Whether the burden is met is judged by a preponderance of the evidence standard.  Id. § 1005.15(d).

As we noted in our first decision, Respondent did not then (and still does not) disagree with any of the facts accepted by the ALJ in his first decision which establish the basis for the proposed sanctions.  Board Decision I at 4-5.  It is thus settled that he is subject to a CMP, assessment, and exclusion unless he proves a viable affirmative defense applies.  His dispute which formed the reason for our remand concerned the availability of the advice-of-counsel defense and its factual premises and the existence of mitigating circumstances showing the proposed sanctions to be outside a reasonable range.  Our decision now addresses whether on remand Respondent carried his burden to establish the affirmative defense and mitigating circumstances by a preponderance of the evidence.

We conclude, for the reasons explained in the following discussion, that he did not.

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1. The evidence adduced before the ALJ amply demonstrates that Respondent failed to prove good faith reliance on advice of counsel.

a.  We defer to the ALJ's determinations of credibility and weight of evidence.

Our posture in reviewing findings of fact by an ALJ after a hearing with a full record developed differs greatly from our role in reviewing a summary judgment decision.  In reviewing summary judgment rulings, as we did in Board Decision I, the Board reviews the grant of summary judgment de novo, applying the same standard as the ALJ.  Shiloh First Health Care, DAB No. 2974, at 4 (2019); Patrick Brueggeman, D.P.M., DAB No. 2725, at 6 (2016).  We therefore view the record in the light most favorable to the non-moving party, which means we accept that party's evidence as true and give that party the benefit of all reasonable inferences that may be drawn from the evidence, but does not mean we must accept unreasonable or speculative inferences or the non-moving party's legal conclusions.  See, e.g., Ramarao Kaza, M.D. and Ramarao Kaza, M.D., P.C., DAB No. 2924, at 8 (2019); Golden Living Ctr. – Trussville, DAB No. 2937, at 8 (2019) (and cases cited therein).

By contrast, on appellate review of ALJ factual findings based on a fully developed record, the Board will not disturb findings that are supported by substantial evidence.  The Board will also defer to the ALJ's determinations of the credibility accorded to witness testimony and of the weight given to evidence, absent a compelling reason to do otherwise.  See, e.g., National Seating & Mobility, Inc., DAB No. 2984, at 5 (2020) (citing Putnam Ctr., DAB No. 2850, at 23 (2018) (Board "does not disturb an ALJ's credibility determinations absent a compelling reason for doing so"), aff'd, Putnam Ctr. v. U.S. Dep't of Health & Human Servs., 770 Fed. App'x 630 (4th Cir. 2019); Rosewood Care Ctr. of Swansea, DAB No. 2721, at 7 (2016) (Board "defers to an ALJ's determinations of credibility and weighing of the evidence absent a compelling reason to do otherwise"), aff'd, Rosewood Care Ctr. of Swansea v. Price, 868 F.3d 605 (7th Cir. 2017)); see also Nancy L. Clark, DAB No. 2989, at 7 (2020) ("It is well settled that the Board defers to ALJ findings on credibility and the weight of testimony absent a compelling reason for rejecting them." (citations omitted)).  Since the ALJ has now held a hearing and evaluated the evidence, we apply this deferential review to his findings as to credibility and weight with the exception of any instance in which Respondent might show a compelling reason to reject them.

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b.  Respondent has failed to show a compelling reason to reject the ALJ's determinations on the credibility of the witnesses.

i.  McWilliams' testimony

On appeal, Respondent proposes several points of error in the ALJ's evaluation of the evidence on the factual findings.  First, Respondent argues that the ALJ should not have accepted any of the testimony by McWilliams "because his testimony was replete with hostility, inconsistencies, and illogical statements."  App. Br. at 15 (bolding removed).  The ALJ provided a summary of McWilliams' testimony and an extensive explanation of how he assessed it.  Among the points that the ALJ noted from that testimony (put here in summary form) were the following:

• His practice focused on wills, trusts, taxes and probate, and he had no Medicare experience or expertise.  ALJ Decision II at 23, 25.
• He represented Respondent, as well as Austin and Sylvestri, in regard to their tax problems.  Id. at 23.
• He brought them together when the latter two asked about finding a new doctor with Medicare credentials to read charts of tests performed on patients and when Respondent expressed interest in doing so.  Id. at 23-24.
• He was present for at least some of the meeting in June 2013 where this arrangement was discussed and at some point reviewed and modified a contract arising from the meeting (referred to at times as the "first contract").  Id. at 23-24.
• His "understanding" was Respondent received money from Austin and Sylvestri because "they were collecting his receivables and he was working for them reading charts and Austin and Sylvestri were billing Medicare for the records Respondent read using his Medicare number (NPI)."  Id. at 25.
• He denied that Respondent ever asked him if the business arrangement was legal.  Id. at 24.
• He asserted that he provided legal opinions only in writing and that he offered no legal opinion on the "first contract" (and never saw what has been referred to as the "second contract").  Id. at 26.

The ALJ gave a number of reasons why he accepted these essential points and found that "McWilliams' testimony was credible."  Id.  He found the testimony "generally consistent with his February 10, 2016 interview with the IG and Department of Justice."  Id. (citing R. Ex. 22; footnote omitted).  He did not believe McWilliams was motivated to testify falsely to avoid future prosecution because he considered such prosecution unlikely and the civil litigation between him and Respondent already settled.  Id. (record citations omitted).  The ALJ found McWilliams' testimony "unequivocal that he had no knowledge of Medicare law and issues, he gave no legal opinion, and if he

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had it would have been in writing," and considered that consistent with the normal practice of even the least competent attorney.  Id.  The ALJ also noted that one counsel for Respondent, at his criminal trial as well as before the ALJ, stated on the record to the judge at that trial that the defense's theory was that "Sylvestri 'duped Mark McWilliams, and duped [Respondent], and [Respondent] thought this [deal] was legal.'"  Id. at 26-27 (citing IG Ex. 3, at 198).  This and other positions taken at the criminal trial appear inconsistent with Respondent's current theory that McWilliams was the one who duped him.

The ALJ found one inconsistency in McWilliams' testimony.  McWilliams said during his February 10, 2016 interview that he received a letter from Austin and Sylvestri purporting to justify the use of Respondent's NPI, but that he did no "legal analysis" of that letter.  ALJ Decision II at 27 (citing R. Ex. 22, at 6-7).  However, the ALJ pointed out, McWilliams "agreed that he added paragraphs 17 and 18 to IG Ex. 13, the contract in question," and the fact that McWilliams "made any modification to the contract could be misinterpreted by Respondent to have been a tacit approval by McWilliams."  Id.

The ALJ evaluated whether this admitted modification to the first contract by McWilliams demonstrated that Respondent could have relied in good faith on this involvement as evidencing McWilliams' "legal advice" in pursuing his activities with Austin and Sylvestri, but concluded that it did not demonstrate such reliance.  For one thing, the ALJ highlighted that the "terms of the contract were not actually followed."  ALJ Decision II at 27.  Indeed, it is undisputed that the parties did not carry out or abide by the terms of either contract they signed, as the ALJ explained:

The [first] contract stated that Respondent will "help process and submit" all BioScan claims electronically or by paper.[]  IG Ex. 13 at 1, 2.  The contract provided that Respondent was to receive 36 percent of the gross amount collected for all claims "as a result of the billing services performed and the use of its [Respondent's] Medicare number.["]  IG Ex. 1 at 1.  There is no evidence that Respondent's practice ever did any billing on behalf of BioScan.  The second contract provided for BioScan to provide services for Respondent's practice.  IG Ex. 23 at 2.  Respondent's attorney, McWilliams, told investigators that he believed that the second contract was intended to cover Respondent reading charts for Austin and Sylvestri.  R. Ex. 22 at 3.  There is no evidence Respondent ever read charts for Austin and Sylvestri.  R. Ex. 22 at 5.

Id. at 15 n.8.  In essence, both of these contracts portray Respondent as providing some service or consideration in exchange for the money he was to receive other than what he actually did for the money, i.e. provide Austin and Sylvestri with his NPI to use to claim Medicare payments for services that were provided before Respondent's

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involvement in the scheme.  Evaluating McWilliams' testimony together with Respondent's testimony and actions, the ALJ found it more likely that "the contract was understood by Respondent and probably Austin and Sylvestri to be nothing more than a guise to cover their unlawful scheme to bilk money from Medicare."  Id. at 27.

In response to the ALJ's finding that McWilliams had not been motivated to testify falsely to avoid criminal prosecution, Respondent argues that the ALJ should not have assumed McWilliams would not be prosecuted merely because he "has not yet been charged."  App. Br. at 16.  Respondent points out that the letter sent to McWilliams by the prosecutors prior to meeting with him, to which the ALJ cited, does not guarantee immunity and that McWilliams could be disbarred or at least have his reputation impaired if he admitted to advising Respondent that the arrangement was legal.  Id. at 16-17 (citing R. Ex. 21).  Respondent objects to the ALJ's characterization of McWilliams' testimony as consistent with earlier statements made to the IG and federal prosecutors because McWilliams did not remember what Respondent considers his "single most critical statement," i.e. that parties to the June 2013 meeting were aware that Respondent's number would be used to bill for services which he had not provided.  Id. (citing R. Ex. 22; Tr. at 419–21).  We do not find these objections to be compelling reasons not to defer to the ALJ's evaluation of McWilliams' credibility nor do they fairly represent the bases for that evaluation.  The ALJ did not state that McWilliams would have freely admitted to giving false legal advice because he was guaranteed freedom from all consequences, but only that, in the ALJ's view, further criminal or civil litigation was not very likely so any incentive to testify falsely for fear of such was reduced to that degree.  The ALJ did not find that the testimony and prior statements were identical; on the contrary, he merely said they were "generally consistent," and he dealt squarely with the one "inconsistency" that he found could favor Respondent, i.e., the fact that McWilliams modified the content of the first contract.  ALJ Decision II at 26-27.  The "critical statement" emphasized by McWilliams may also be read as McWilliams understanding that the actual nerve conduction studies had already been done and not by Respondent, but does not rule out his believing that Respondent would provide added value by reading or interpreting the output.

Respondent complains that it was "inexplicable" for the ALJ to conclude that revising and reviewing the contract with Respondent did not establish that McWilliams advised Respondent that the agreement was legal.  App. Br. at 19.  We find that conclusion was clearly explained by the ALJ, particularly given that any advice about the legality of the contract would have been irrelevant since it is undisputed that the actual arrangements did not conform to the contract terms in material ways.

Finally, Respondent characterizes McWilliams as "evasive" in answering specific questions on cross-examination.  App. Br. at 17-18.  The ALJ was in the best position to observe the witness's demeanor and did not find him evasive.  We will not disturb his assessment merely because Respondent disagrees.

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ii. Respondent's testimony

Respondent also contends that the ALJ erred in not giving credence to much of Respondent's testimony in support of his advice-of-counsel defense.  App. Br. at 19.  The ALJ summarized the key points of Respondent's testimony (reviewing both his testimony at the hearing and his statements under oath in a deposition in his civil case) as including these points:

• At the June 2013 meeting, McWilliams told him that Austin and Sylvestri wanted to use his NPI to bill for services provided in the past.
• He "asked McWilliams if that was legal and McWilliams responded that it was." 
• McWilliams prepared the contract that he signed, and he believed that McWilliams was his attorney during the transaction. 
• He never read the contract. 

ALJ Decision II at 21 (citing IG Ex. 5).  The ALJ discussed Respondent's accounts of agreeing to share 10% of his payouts on the deal with McWilliams, of arranging for his staff to distinguish payments for his actual patients from those actually treated by BioScan, of becoming suspicious first of whether there were real patients tested, then when his office received complaints from BioScan patients, and finally when investigators arrived, and of how he reacted to his own suspicions and then to the investigations.  Id. at 21-23.

The ALJ explained the factors that he found undercut reliance on Respondent's testimony as follows.  He found that Respondent's testimony about his growing suspicions demonstrated that "he knew that the whole scheme was questionable from the beginning, but he did not report anything to Medicare."  Id. at 22.  As the investigation made evident that fraud had occurred, the ALJ observed that "Respondent did not act like an innocent" and that he "used McWilliams as his shield to avoid making statements to investigators."  Id. at 23.

Overall, the ALJ opined as follows about Respondent's credibility:

Respondent presented as being extremely intelligent with an excellent command of the English language.  His alleged ignorance of Medicare participation requirements after more than 40 years of participation is not credible.  He clearly hoped to use McWilliams to shield him from liability, and while that worked in the criminal prosecution, it does not in this proceeding.  Respondent knew he did not see or supervise the treatment of the BioScan patients.  He knew he did not have an office in Hialeah.  Respondent had the opportunity to explain to investigators that he received bad advice from McWilliams and that's how he got involved, but he did not.  Rather, Respondent allowed the investigators to form an

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incorrect impression based on his failure to disclose information about the BioScan deal, that he had no office in Hialeah, and that he never saw any of the Medicare beneficiaries for the BioScan claims, and never performed nerve conduction studies.

Id. at 20.

Respondent complains that the ALJ thought him untrustworthy before he ever testified (App. Br. at 19 (citing ALJ Decision I at 19)), and that now, "[a]fter having the opportunity to hear and observe Dr. Kallini during hours of detailed and truthful testimony, [the ALJ] again erroneously concluded that Dr. Kallini 'has shown that he is not trustworthy'" (id., quoting ALJ Decision II at 45).  According to Respondent, the ALJ erred in weighing his credibility because he failed to give Respondent the "benefit of the doubt on a single issue or inference."  Id.

To the extent that Respondent is suggesting bias based on the ALJ's original conclusion of lack of trustworthiness, we address all of Respondent's bias arguments in a later section.  We note here that the ALJ in both decisions addressed Respondent's trustworthiness in the context of determining whether the sanctions imposed were within a reasonable range in light of the alleged aggravating and mitigating factors.  The question was what the evidence established about how trustworthy Respondent was to treat Medicare beneficiaries and to claim and receive federal funds.  See, e.g., Valentine Okonkwo, DAB No. 2832, at 5 (2017) ("[E]xclusion is not a punitive but rather a remedial measure to 'protect federal health care programs and their beneficiaries from individuals who have been shown to be untrustworthy'" (quoting W. Scott Harkonen, M.D., DAB No. 2485, at 22 (2012), aff'd, Harkonen v. Sebelius, No. 4:13-CV-00071, 2013 WL 5734918 (N.D. Cal. Oct. 22, 2013), and citing other cases).  The ALJ did conclude that Respondent was not trustworthy in both decisions, but in both, he did so in the course of determining whether the extent of the sanctions imposed was reasonable in light of the facts found.6  ALJ Decision I at 19; ALJ Decision II at 45.  The Board determined that additional facts needed to be resolved about the proffered defense, and therefore reversed the summary judgment decision, but the ALJ's addressing trustworthiness in the course of evaluating the sanctions in ALJ Decision I did not imply that the ALJ had prejudged Respondent's personal credibility before he testified.  In summary judgment, credibility is not at issue because, for summary judgment to be appropriate, no material facts can be in dispute.  As explained above, Respondent has not disputed the facts that establish the IG's authority to impose sanctions under the applicable law but rather raised a potential affirmative defense.  We conclude that the ALJ's statements in both decisions that Respondent's lack of

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trustworthiness justified the sanctions imposed do not present any compelling reason for us to reject the ALJ's assessment of Respondent's credibility in ALJ Decision II.

As far as giving Respondent "the benefit of the doubt," the ALJ had no obligation to resolve doubt (assuming he found any) in Respondent's favor.  This administrative proceeding is not a criminal case in which guilt must be proven beyond a reasonable doubt.  On the issue of good faith reliance on advice of counsel, Respondent bore the burden of proving his defense by a preponderance of the evidence.  Unlike where the ALJ proceeded by summary judgment, the ALJ, in resolving the case on the record after hearing, was not required to draw inferences in Respondent's favor.  Therefore, the claim that the ALJ did not give Respondent the benefit of the doubt, if any existed, cannot be a compelling reason to overturn the ALJ's credibility assessment.

c.  Respondent did not demonstrate that the ALJ was "biased" or "unduly prejudiced" against him.

Respondent suggests that we should discount all the ALJ's adverse findings on the ground that he demonstrated bias against Respondent.  RR at 13-14.  According to Respondent, the ALJ's "lengthy, extraneous, and legally deficient analysis" of whether advice-of-counsel is an available defense despite the conclusive ruling on that by the Board "supports a conclusion" that the ALJ "was going to 'get the last word in,' so to speak [and] . . . attempt to insulate his Decision from reversal by ruling against Dr. Kallini on every element of his good faith reliance upon advice of counsel defense."  Id.at 13.

The ALJ plainly felt strongly that his legal position was correct despite recognizing that the decision of the Board to the contrary was binding on him.  As we have stated, his reasoning for his belief that no such defense ever applies in these cases is erroneous and effectively dicta without legal effect.  Ultimately, however, the ALJ complied with the Board's instructions, fully developed the record on remand, and made the required findings in regard to the disputed facts concerning Respondent's claims of good faith reliance on advice of counsel.

The Board has long held that charges of bias or prejudice on the part of an ALJ require more than disagreement with the ALJ's legal reasoning or factual findings.  As early as 1992, the Board applied the guidance set out by the Supreme Court in United States v. Grinnell Corp., 384 U.S. 563, 583 (1966), that "alleged bias and prejudice, to be disqualifying, must stem from an extrajudicial source and result in an opinion on the merits on some other basis than what the judge learned from his participation in the case . . . ."  Edward J. Petrus, Jr., M.D., and The Eye Center of Austin, DAB No. 1264, at 23-26 (1991), aff'd, Petrus v. Inspector General, 966 F.2d 675 (5th Cir. 1992).  Moreover, it is no evidence of bias that the ALJ formed a view of the case based on the proceedings before him.  Laurelwood Care Ctr., DAB No. 2229, at 22-23 (2009);

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Meadow Wood Nursing Home, DAB No. 1841, at 10 (2002), aff'd, Meadow Wood Nursing Home v. HHS, 364 F.3d 786 (6th Cir. 2004) ("[W]eighing of testimony and evidence in the record is the essential task of an ALJ and can hardly be viewed as a demonstration of bias toward the party that does not prevail on the merits, however disappointed."); see also Zahid Imran, M.D., DAB No. 2680, at 13 (2016).

Respondent here strongly states that the ALJ did not show "an explicit extrajudicial dislike of Dr. Kallini" and indeed was "by all measures . . . exceedingly professional towards Dr. Kallini and undersigned counsel during the hearing," such that the assertions of bias rest solely on the inclusion by the ALJ in his decision of "lengthy, erroneous, and legally flawed arguments."   Reply Br. at 5, 7.  Applying the same reasoning here as in prior cases, we conclude that Respondent has identified nothing that shows any bias or prejudice on the part of the ALJ, however unwelcome Respondent found the ALJ's opinions on the law or evaluation of the relevant evidence on the merits.

d. We conclude that the record does not support Respondent's claim of good faith reliance on advice of counsel as an affirmative defense for his submissions of false claims.

We set out in background the ALJ's discussion of what the record showed as to the requisite elements of the defense.  The essential points are that:  (1) although McWilliams did not specifically tell Respondent that he did not know Medicare law, Respondent, as an experienced Medicare provider, knew or should have known that allowing use of his NPI to seek payment for claims for services he never provided (in any way) violated his commitments to Medicare; (2) Respondent did not seek clarity from McWilliams about whether he was advising that doing so was legal under Medicare law; (3) to the extent Respondent asked for any legal opinion (which the ALJ did not believe he did), it was simply for purposes of using McWilliams as a shield (and therefore not for good faith purposes); (4) Respondent never presented McWilliams with all the relevant facts, so any oral opinion that the arrangements were legal based on the June 13 discussion or the subsequent contracts would not have applied to the actual conduct; (5) Respondent did not in fact rely on any such supposed opinion because he admittedly did not follow the arrangements set out in either contract; and (6) given that McWilliams brought the participants in the scheme together and received a "cut" of the proceeds, it would not be reasonable to rely on any opinion of its legality from McWilliams (even had one been offered) because Respondent understood McWilliams was himself a participant and therefore not acting as his independent lawyer in the transaction.  ALJ Decision II at 33-34.

Respondent argues that any reasonable person whose attorney set up a business meeting in the attorney's office and who was not told otherwise would assume the attorney was representing him.  App. Br. at 20-22.  He points to the ALJ's agreement with his

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position7 that McWilliams should have informed Respondent he was not competent in Medicare law given that he was present at the initial meeting and actively modified the contract.  Id. at 22.  Respondent objects, however, to the ALJ commenting that Respondent himself should have clarified if the scope of McWilliams' representation extended to "non-tax" matters because that onus should not be on a client in such circumstances.  Id.  But this argument ignores the finding that Respondent claimed in testimony that McWilliams explicitly advised Respondent that he knew Medicare, that he set the terms based on a "going rate" of 25%, and that he expressly approved the legality of the arrangement discussed.  ALJ Decision II at 17, 20 (citing Hearing Tr. at 250-51).  The ALJ found that Respondent was not credible in these claims.  Now, Respondent essentially asks us to infer instead that McWilliams indirectly blessed the scheme by not disclosing his lack of expertise while organizing and attending the June 2013 meeting.  We decline this invitation because the advice-of-counsel defense, as described above and in DAB Decision I, requires actual advice, not merely failure to warn of lack of expertise.

Respondent next asserts that the ALJ unfairly rejected Respondent's claims of good faith reliance based on an overbroad application of constructive knowledge of Medicare law requirements.  App. Br. at 22-23.  According to Respondent, it is unfair to attribute knowledge of Medicare law to him, despite his many years as a Medicare supplier, because "the laws, rules, and regulations regarding Medicare are incredibly expansive, complicated, and ever-changing, which is why there is an entire field of legal practice dedicated solely to interpreting those laws, rules, and regulations and advising clients on same."  Id. at 23.

It is certainly true that Medicare laws, regulations and policies can be complex and do undergo change.  The requirements at issue here, however, are far from obscure or complex or novel.  It has always been fundamental that the submission of a claim by a physician must be based on the physician having furnished a service eligible for Medicare reimbursement.  See, e.g., 42 C.F.R. § 424.80(a) ("Basic prohibition.  Except as specified in paragraph (b) of this section, Medicare does not pay amounts that are due a supplier under an assignment to any other person under reassignment, power of attorney, or any other direct arrangement."); "Medicare Program; Conditions for Medicare Payment," 53 Fed. Reg. 6629, 6631 (Mar. 2, 1988) ("The basic rule (established by section 1842(b)(6) of the Act) is that Medicare Part B payments may be made only to the beneficiary or to the physician or other supplier that furnished the service.").  The very limited exceptions to this fundamental principle are for

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reassignments of billing privileges in specific situations, such as to the physician's employer or billing agent.  42 C.F.R. § 424.80(b).  As the ALJ noted, this requirement is not the only one plainly violated by the admitted arrangement between Respondent and the BioScan principals.  ALJ Decision II at 10 (citing 42 C.F.R. §§ 424.550 and 424.535(a)(7)).  For example, section 424.550(a) of CMS's Medicare enrollment regulations prohibits any provider or supplier from selling or allowing another individual to use its NPI, and doing so may subject the provider or supplier to revocation of Medicare billing privileges under section 424.535(a)(7).  Moreover, Medicare providers and suppliers are, and have long been held to be, always responsible for the accuracy of claims submitted under their NPI even when an agent submits the claim on their behalf.  Louis J. Gaefke, D.P.M., DAB No. 2554, at 5 (2013).

As the ALJ pointed out, Medicare providers undertake that they know and will comply with Medicare requirements.  ALJ Decision II at 31 (citing 42 C.F.R. § 424.510(d)(3)).  We cannot imagine that an experienced Medicare provider could have failed to be conscious of the crucial responsibility to ensure that his NPI was used only to submit claims for services which he provided and not sold or given to others to use for their billing.  These are, to be clear, not mere technicalities which might have escaped notice or understanding but so core to the role of a physician in Medicare that it is hard to see how any physician oblivious to them or who disregards them, taking Medicare money when he knew he did not provide any services at all,8 could be trusted to participate in the program.

We find no error in the ALJ's conclusion that Respondent failed to prove good faith reliance on any legal advice that McWilliams allegedly provided concerning the legality of BioScan submitting its nerve conduction claims using Respondent's NPI.

Respondent next challenges the ALJ's treatment of the question whether Respondent fully disclosed all relevant facts to the attorney from whom he purportedly obtained a legal opinion that the scheme was lawful.  App. Br. at 22-24.  The ALJ found that two scenarios for McWilliams' asserted involvement were possible on the record.  Either McWilliams was set up as a shield by the schemers (assisting with a contract that concealed what they actually planned to do), or he was a willing participant in the illegal scheme to obtain funds from Medicare along with Respondent and BioScan.  ALJ Decision II at 35-36.  Neither the ALJ nor the Board needs to conclusively resolve McWilliams' responsibility because his liability under section 1128A(a)(1) is not

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before us.  What the ALJ did conclusively resolve is that Respondent himself was a willing participant in the plan to submit false claims in his name without providing any services (not even reading results from tests already performed) and that he did not in good faith seek out or obtain legal advice that this plan was lawful under Medicare requirements.

Respondent denies both scenarios.  As to whether McWilliams was unaware of the actual plans to submit claims with Respondent's NPI without Respondent providing even reviews of test results, Respondent asserts that "when Dr. Kallini repeatedly asked McWilliams whether the proposed business arrangement was legal, McWilliams knew exactly what Dr. Kallini meant, and he assured Dr. Kallini that the arrangement was legal."  App. Br. at 24 (emphasis added).  Respondent admits that McWilliams "did not break down each individual portion of the proposed business arrangement and specifically advise whether each was legal."  Id.  However, as mentioned briefly earlier, Respondent highlights a statement in an investigator's report of an interview of McWilliams in February 2016 to show he knew what was intended.  Id. (citing R. Ex. 22).  The investigator's notes state:

McWilliams explained that by the conclusion of this meeting [on June 13, 2013], Kallini, as well as everyone else present, were well aware that the services agreed to be billed by Austin and Sylvestri through Kallini's Medicare number, were for services already completed on patients that were not Kallini's, services Kallini did not perform, but were to be billed as if he had.  In other words, it was clear at the meeting that Kallini's Medicare number was going to be used to bill for services he did not do.  At the time, McWilliams relied upon Kallini as to whether or not it was proper for him to enter into this sort of arrangement.  When asked this by McWilliams, Kallini stated it was okay for Austin and Sylvestri to bill under his name as if he completed services that he did not, as long as the services were actually done by someone.

R. Ex. 22, at 2-3.  The notes thus indicate that, at the time of the interview, McWilliams felt that those at the meeting were clear about billing for services not performed by Respondent, although McWilliams also recounted that he understood two other aspects of the arrangements would be for Respondent to read charts for BioScan and BioScan to assist Respondent with his own receivables.  Id. at 2.  If McWilliams' own involvement were our focus, these notes would have significance in assessing his knowledge of the scheme and whether he understood that Respondent not only did not perform the nerve conduction studies but would not have any involvement in reading the results either.  The statement as a whole, however, certainly does not support the claim that Respondent sought McWilliams' advice about the key question of lending his NPI to submit bills for services done by someone else to which Respondent would make no contribution even after the scans were performed.

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Respondent argues that, if McWilliams was a knowing participant in the scheme, the ALJ was wrong to conclude that Respondent knew it.  App. Br. at 26.  The ALJ found that "McWilliams arguably conspired in or aided and abetted the criminal scheme . . . because he brought Austin, Sylvestri, and Respondent together and he and his firm received a cut of the ill-gotten Medicare payments."  ALJ Decision II at 34.  Even if that were so, according to the ALJ, Respondent must have been "fully aware of his lawyer's participation in the criminal scheme and his receipt of a cut of the Medicare payments."  Id.  Respondent's basis for contesting this is that he "believed his conduct and all other parties' conduct was legal, so his knowledge of McWilliams' participation and receipt of a portion of the Medicare payments means absolutely nothing."  App. Br. at 26.  We have already upheld the ALJ's findings as to Respondent's credibility generally and claims of ignorance of the illegality of the misuse of his NPI specifically.

Therefore, this argument does not establish any error by the ALJ in concluding that Respondent did not disclose all relevant facts to his attorney as a basis for obtaining a legal opinion.

Respondent disputes the ALJ's point that, even if he had accepted that McWilliams drafted the contract and orally advised that it was legal9 (which the ALJ did not accept), Respondent failed to abide by the terms of the contract and could therefore not benefit from the purported advice.  App. Br. at 25 (citing ALJ Decision II at 34).  The ALJ also found that Respondent reportedly not reading the contract was "more likely" because it was "merely created as a guise to cover what the real arrangement was."  Id.at 19 (citing ALJ Decision II at 27).  Respondent counters that he did not read the contract terms because he "relied on his understanding of the proposed business arrangement based upon the June 2013 meeting and McWilliams' explanation of the contract," and that he, in fact, "fully executed his portion of the proposed business arrangement."  Id.at 25.  He says he did this by providing "Austin and Sylvestri with his NPI and permitt[ing] them to bill their backlog of outstanding claims through same" and by collecting the proceeds and passing them on.  Id.

Respondent's answer is disingenuous in the extreme.  The aspects of the contract signed in June 2013 which were not implemented, as he well knows, include that BioScan (called the "Contractor") would provide clinical laboratory services that Respondent (called the "Practice") wanted provided and that the Practice would compensate the Contractor for those services.  IG Ex. 23, at 2.  The first contract nowhere states that the

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Practice would provide the Contractor with the Practice's NPI for the Contractor's use or that the use would be to bill for a backlog of outstanding claims.  Nor does the second contract contain such provisions.  Respondent did carry out the scheme agreed to in the meeting but did not execute the contractual agreements.  The ALJ's conclusion that the contract(s) reflect a mere guise to cover up the real transactions is supported by substantial evidence.  We find reasonable the inference drawn by the ALJ that Respondent did not read it because he knew it was not a real agreement.  It is not plausible that Respondent asked McWilliams over and over if the deal was legal but then was not concerned enough to read a 3½-page contract.

e.  Conclusion on advice-of-counsel defense

Respondent simply continues to press a narrative in which he was an innocent pawn who blindly stumbled into a mistake due to the nefarious influence of his lawyer who told him that it was legal for him to provide his NPI to be used to claim payment for services already provided by others to unknown patients.  The facts found by the ALJ paint a very different picture.  Respondent badly needed money due to his unpaid tax debts when he was introduced to two men who offered him a cut of the payments on claims to be submitted to Medicare if he would provide them his Medicare provider number so they could be presented as his claims.  He did not seek out such advice even as events transpired that should have triggered mounting concern in any innocent person.  For example, twice in 2013, Medicare alerted Respondent that someone was attempting to make changes to his Medicare enrollment.  ALJ Decision II at 16.  Respondent suspected Austin and Sylvestri, and yet took no steps to alert Medicare or law enforcement and does not appear to have sought help from McWilliams on whom he supposedly placed such reliance.  Id.  The ALJ aptly noted that Respondent's stipulation to these facts is "inconsistent with Respondent's claims of innocence but consistent with him wanting to avoid drawing attention to his illicit relationship with Austin and Sylvestri."  Id. (citing Jt. Stip. ¶ 44).  Also, when Respondent was contacted by Medicare investigators, he did not simply recount what he had been doing or say that his lawyer had told him this was permissible, but instead misled them.  Id.at 20 ("Respondent had the opportunity to explain to investigators that he received bad advice from McWilliams and that's how he got involved, but he did not.  Rather, Respondent allowed the investigators to form an incorrect impression based on his failure to disclose information about the BioScan deal, that he had no office in Hialeah, and that he never saw any of the Medicare beneficiaries for the BioScan claims, and never performed nerve conduction studies.").

We conclude that Respondent failed to prove the elements of an advice-of-counsel defense and therefore the IG is authorized to impose sanctions on Respondent for his admitted submission of false claims.  We find no error in the ALJ's conclusions to this effect (ALJ Decision II at 36) as they are legally correct and supported by substantial

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evidence.  We turn next to whether the sanctions sought are within a reasonable range based on the relevant factors.

2.  The ALJ did not err in upholding the reasonableness of the proposed sanctions.

As stated earlier, the IG notified Respondent of the following proposed sanctions:  (1) a CMP of $1,727,000; (2) an assessment in lieu of damages of $3,263,132.07; and (3) a 20-year exclusion.  The ALJ correctly laid out the legal framework governing review of IG sanctions, and we summarize it briefly here.  ALJ Decision II at 36-38.

Section 1128A(a) of the Act authorizes a CMP of $10,000 for each claim presented to CMS (or other specified federal or state department or agency) in violation of that section, an assessment in lieu of damages of no more than three times the amount so claimed, and an exclusion from all federal health care programs.  The Secretary has delegated authority to the IG to impose these sanctions against any person who has violated one or more provisions of section 1128A of the Act or 42 C.F.R. Part 1003.  42 C.F.R. § 1003.150.  The following factors must be considered in setting the amount of the CMP or assessment and the duration of an exclusion:

(1) the nature of the claims and the circumstances under which they were presented;
(2) the degree of culpability, history of prior offenses, and financial condition of the person presenting the claims; and
(3) such other matters as justice may require.

Act § 1128A(d).  Consistent with the statute, the relevant regulations provide for consideration of the following in determining the amount or duration of a section 1128A sanction:

(1) The nature and circumstances of the violation;
(2) The degree of culpability of the person against whom a [sanction] is proposed. . . .;
(3) History of prior offenses. . . .;
(4) Other wrongful conduct. . . .;
(5) Such other matters as justice may require. . . .

42 C.F.R. § 1003.140(a).  Regulations also provide for considering certain mitigating or aggravating circumstances.  Id. § 1003.140(c)(2)-(4).  Those factors are supplemented by ones specifically related to false or fraudulent claims and similar misconduct.  Id. § 1003.220.  It may be considered mitigating if all claims for items or services or violations were of the same type and occurred within a short period; there were few items or services and violations; and the total amount claimed was less than $5,000.  Id. § 1003.220(a).  Potential aggravating circumstances include—

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(1) The violations were of several types or occurred over a lengthy period of time;
(2) There were many such items or services or violations (or the nature and circumstances indicate a pattern of claims or requests for payment for such items or services or a pattern of violations);
(3) The amount claimed or requested for such items or services, or the amount of the overpayment was $50,000 or more;
(4) The violation resulted, or could have resulted, in patient harm, premature discharge, or a need for additional services or subsequent hospital admission; or
(5) The amount or type of financial, ownership, or control interest or the degree of responsibility a person has in an entity was substantial with respect to an action brought under § 1003.200(b)(3).

Id. § 1003.220(b).

The regulations set as parameters that, absent extraordinary mitigating circumstances, the aggregate amount of the CMP and assessment should not be less than double the approximate damages and costs sustained by the United States or any state (id.§ 1003.140(c)(3)), and "[t]he amount imposed must not be less than the approximate amount required to fully compensate the United States, or any State, for its damages and costs, tangible and intangible, including, but not limited to, the costs attributable to the investigation, prosecution, and administrative review of the case" (id.§ 1003.140(d)(2)).  Furthermore, "[i]f there are substantial or several aggravating circumstances, the aggregate amount of the penalty and assessment should be set at an amount sufficiently close to or at the maximum permitted . . . to reflect that fact" (id. § 1003.140(c)(2)), and "[t]he presence of any single aggravating circumstance may justify imposing a penalty and assessment at or close to the maximum even if one or more mitigating factors is present" (id. § 1003.140(c)(4)).

The ALJ noted that the CMP imposed here was based on $1,000 per false claim, much lower than the potential CMP exposure.  ALJ Decision II at 38.  The assessment was for three times $1,087,710.69 paid by Medicare for the false claims (above the minimum of double the damage amount).  Id. at 38-39.

The IG explained in its notice to Respondent the aggravating and other factors considered in setting the sanctions:

• The false claims totaled $3,133,700, and the amount paid by Medicare on the false claims totaled $1,087,710.69;
• Respondent was culpable because he had actual knowledge that the claims submitted using his provider number were not rendered or supervised by him,

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• and because he attempted to conceal his conduct from investigators and used the proceeds of the scheme to pay his federal tax debt; and
• Respondent engaged in other wrongful conduct because the contractual arrangement amounted to an unlawful kickback agreement in violation of section 1128B(b)(1) of the Act (42 U.S.C. § 1320a-7b(b)(1)), and the money received by Respondent was an overpayment that he did not return to Medicare.

IG Ex. 1, at 3-4.

The ALJ discussed in detail the parties' contentions about the aggravating factors considered by the IG and mitigating factors that Respondent argued should have been considered.  ALJ Decision II at 39-45.  The ALJ found that part of one aggravating factor cited by the IG was not established on the record, specifically the claim that the contract showed an unlawful kickback agreement amounting to "other wrongful conduct."  Id. at 42-43.  The ALJ did not find support for any of the allegedly mitigating circumstances.  ALJ concluded, even reassessing without the kickback component of the "other misconduct" factor, that the CMP, assessment, and 20-year exclusion were reasonable sanctions.  Id. at 45.  As to the exclusion, the ALJ stated that he would consider a permanent exclusion warranted in light of "Respondent's conduct, his culpability, the loss to the Medicare program, the fact he had several opportunities to report to Medicare and its investigators when he saw the scheme was in jeopardy, his attempt to lay the blame at the feet of McWilliams, and his persistent attempt to avoid responsibility," but ultimately concluded that the 20-year exclusion chosen by the IG was not unreasonable.  Id.  As to the CMP, the ALJ concluded that the amount was much lower than the maximum permissible and not unreasonable under the relevant circumstances.  Id.  The ALJ reiterated that the assessment was three, rather than two, times the government loss, but concluded that amount was reasonable in light of the aggravating factors, and even accounting for the erroneous consideration of kickbacks under "other misconduct."  Id.

On appeal, Respondent contends that the ALJ erred in treating all the required considerations from the statute and regulations as aggravating instead of mitigating.  App. Br. at 26-27.  Respondent mischaracterizes the process for the ALJ to analyze the reasonableness of the sanctions.  The specified considerations are simply the subjects which must be considered first in setting any sanction (as distinct from the lists of permissible aggravating and mitigating factors that may then be considered to modify the sanctions proposed).  We construe Respondent's arguments to mean that the ALJ should have evaluated the circumstances relevant to those subjects differently.

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Regarding the "nature and circumstances of the violations" (42 C.F.R. § 1003.140(a)), Respondent argues that the IG, and the ALJ, failed to consider these points:

(1) Dr. Kallini has actively participated in Medicare for over four decades without ever being accused of fraud,
(2) all of the alleged violations were of the same type,
(3) all of the alleged violations occurred within a short period of time,
(4) Dr. Kallini was duped into engaging in the alleged conduct by two unscrupulous fraudsters and his unwitting (or equally unscrupulous) attorney, and
(5) since discovering his error in trusting McWilliams, Sylvestri, and Austin, Dr. Kallini has not had any further allegations made against him.

App. Br. at 27 (footnote omitted).  The ALJ did address all of these claims.  The ALJ opined on the first point that he accepted that "this is the first proven violation of Medicare regulations by Respondent during his 40 years of participation in Medicare," but that this circumstance "does little to minimize the magnitude of the misconduct" and his long participation means "Respondent should have known better, which certainly does not minimize his culpability."  ALJ Decision II at 40.  The ALJ also agreed that the violations were of the same type and occurred within a short period of time, but determined that the mitigating factor set out at section 1003.220(a) also required that there be few such violations and that the amount claimed be less than $5,000.  Id.  Therefore, he found the mitigating factor inapplicable.  Id.  On appeal, Respondent argues that he had no control over the amount involved (App Br. at 30), but it is undisputed that the participants knew from the outset that BioScan had about one to 1.5 million dollars in unfiled claims.  IG Ex. 5, at 77.  While BioScan did the actual claiming, it is uncontested that Respondent tracked the resulting funds and transferred them to McWilliams for distribution.  Respondent gives no reason why he could not have stopped the arrangement at any point.  The argument that Respondent was duped into the violations, reiterated by him on appeal to us, was roundly rejected as a factual premise by the ALJ based on substantial evidence as we have already found.  The ALJ considered him instead "a willing participant in June 2013 in order to obtain money to pay his IRS and other debts."  ALJ Decision II at 40.  We do not consider Respondent's claim that he has not had new allegations made against him since the scheme came to light relevant to the nature and circumstances of the violations for which he has now been found responsible.

Turning to the degree of culpability, Respondent argues that the reasons the ALJ gives for finding a high degree of culpability "do not comport with the evidence in this case" which he has argued "ad nauseam."  App Br. at 29.  He asserts that, "[a]t worst, he was a passive participant in a scheme that he mistakenly believed, because of his attorney's representations, was legal" and that he "did not at any point attempt to conceal Austin and Sylvestri's fraudulent scheme."  Id. at 30.  He claims that his responses to

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investigators, "which in hindsight may be construed as cagey,' . . . at the time[ ] may have been entirely reasonable and legitimate based on the phrasing and context of the question," especially because McWilliams did not correct them on the spot.  Id. at 30-31.  Respondent may have indeed pressed these arguments "ad nauseam," but despite ample opportunity with a full hearing on remand, he has not succeeded in making them persuasive.

Finally, Respondent quarrels with the ALJ's discussion of "other wrongful conduct" as an aggravating factor.  App. Br. at 31-32.  According to Respondent, "no weight should
have been given to Dr. Kallini's 'other wrongful conduct' because no 'other wrongful conduct' exists.  As such, the proposed sanctions are unreasonable because [the ALJ] erroneously concluded that the [IG] properly considered alleged improper 'other wrongful conduct' as an aggravating [factor] in fashioning the proposed sanctions."  Id. at 32.  Respondent's argument, in essence, is that, having correctly concluded that the IG should not have considered asserted kickbacks as "other wrongful conduct," the ALJ erred by nevertheless considering as aggravating his failure to report or return the wrongly received Medicare funding.  The ALJ viewed the IG's request that he consider the retention of $1,084,710.69 in federal funds contrary to requirements to return them as in itself another instance of wrongful conduct, not as dependent on the kickback finding.  ALJ Decision II at 44.  He rejected the argument that the failure to report and return the funds should not be considered as "other conduct" because it allegedly arose from the same facts as the underlying violation.  He explained the applicable statutory and regulatory provisions, including Section 1128J(d) of the Act, requiring that "one who received an overpayment from Medicare, i.e., a payment to which they are not entitled (42 C.F.R. § 1003.110), must report the overpayment occurred and why and return the overpayment within 60 days."  Id.  He summarized the relevant evidence as follows:

Factually there is no dispute that Respondent received the payments totaling $1,084,710.69 from Medicare.  Respondent does not deny that he received money from this scheme, money from Medicare to which he was not entitled.  Respondent does not deny that he did not return any of the money that he received through the scheme or report the overpayment.  I conclude that he was not entitled to the payments and even though he split the money among many, he remains responsible for the entire amount as he received the payments as the enrolled supplier.  I find on the evidence of record that Respondent failed to report or repay the money.

Id.  The facts showing that Respondent knowingly retained these funds (even after the fraudulent scheme was exposed) are not the same facts from which Respondent's liability arises, i.e., permitting Austin and Sylvestri to use his NPI to file claims for nerve conduction studies he never performed in order to obtain the funds improperly in the first place.  Id. at 45.

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Respondent offered no other argument on appeal for why the length of exclusion is unreasonable and, as the ALJ noted (id. at 38 n.16), Respondent provided no evidence of inability to pay the CMP and assessment despite numerous opportunities to do so.  The amount of the CMP is large because the false claims submitted were so numerous, but it is far lower than the maximum that could have been imposed on a per-claim basis.  The assessment is larger than the minimum permissible amount.  However, given the ALJ's finding that several substantial aggravating circumstances were proven, it is reasonable that the assessment should exceed the minimum.

We are guided in this determination, as was the ALJ, by the regulations providing that –

(2) If there are substantial or several aggravating circumstances, the aggregate amount of the penalty and assessment should be set at an amount sufficiently close to or at the maximum permitted by this part to reflect that fact.

(3) Unless there are extraordinary mitigating circumstances, the aggregate amount of the penalty and assessment should not be less than double the approximate amount of damages and costs (as defined by paragraph (e)(2) of this section) sustained by the United States, or any State, as a result of the violation.

(4) The presence of any single aggravating circumstance may justify imposing a penalty and assessment at or close to the maximum even when one or more mitigating factors is present.

42 C.F.R. § 1003.140(c)(2)-(4); see also ALJ Decision II at 45.  Applying this framework, we find no reason to disturb the ALJ's conclusion that the sanctions imposed were authorized and fell within a reasonable range.

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Conclusion

For the reasons explained above, we sustain the ALJ's conclusions that the IG had authority to sanction Respondent and that the sanctions imposed are within a reasonable range of available sanctions under the circumstances established by the evidence.