Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | |
Mark A. Maher, |
DATE: June 23, 2000 |
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The
Inspector General
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Docket No.C-00-139 Decision No. CR678 |
DECISION | |
I sustain the determination of the Inspector
General (I.G.) to exclude Petitioner, Mark A. Maher, pursuant to section
1128(a)(1) of the Social Security Act (Act), based on Petitioner's conviction
of a criminal offense relating to the delivery of items or services under
the Massachusetts State Medicaid program (Medicaid). However, I find that
the 20-year exclusion that the I.G. determined to impose against Petitioner
is unreasonable. I modify the length of the exclusion to a term of 10 years. I. Background On September 30, 1999, the I.G. notified Petitioner that
he was being excluded pursuant to section 1128(a)(1) of the Act for a
period of 20 years. Petitioner requested a hearing and the case was assigned
to me for a hearing and a decision. I held a prehearing conference in
which the parties agreed that the case could be heard and decided based
on their written submissions. I established a schedule for the parties
to file briefs and supporting exhibits. The parties complied with that
schedule. The I.G. submitted five exhibits (I.G. Ex. 1 - I. G. Ex.
5) with her brief. Petitioner submitted one exhibit as an attachment to
his brief. Petitioner did not identify his exhibit. I am identifying it
as P. Ex. 1. I admit into evidence I.G. Ex. 1 - I.G. Ex. 5 and P. Ex.
1. II. Issues, findings of fact and conclusions of
law
The issues in this case are:
I make findings of fact and conclusions of law (Findings)
to support my decision in this case. I set forth each Finding below as
a separate heading. I discuss each Finding in detail.
Petitioner was charged with, and pled guilty to, two criminal
offenses relating to delivery of items or services under the Massachusetts
State Medicaid program. I.G. Ex. 3; I.G. Ex. 5. These offenses consisted
of theft from the Massachusetts Division of Medical Assistance and knowingly
and willfully making false statements in cost reports that were submitted
to the Massachusetts Division of Health Care Policy for the purpose of
obtaining payment for services. I.G. Ex. 3 at 2, 4. The undisputed facts of this case are that Petitioner
made fraudulent reimbursement claims to the Massachusetts State Medicaid
program. Between 1989 and 1997, Petitioner served as treasurer and chief
financial officer of two nursing facilities, the Arborway Manor Convalescent
Home of Jamaica Plain, Massachusetts, and the Emery Retirement and Convalescent
Home of West Medford, Massachusetts. I.G. Ex. 2 at 1. During this period,
Petitioner, acting in his official capacity, submitted cost reports which
fraudulently sought reimbursement from the Massachusetts State Medicaid
program for personal expenses that he incurred.
Id. These fraudulent expense claims included claims for landscaping
and carpentry that was done on Petitioner's home, for personal American
Express charges, for cellular phone billings, for liquor purchases, and
for purchases of floral arrangements. Id. Additionally, Petitioner
cashed thousands of dollars of checks that he made payable to "cash" and
included the amounts of these checks as bogus expenses on cost reporting
forms. Id. at 1 - 2. As a matter of law, the making of false claims against
a State Medicaid program is a criminal offense within the meaning of section
1128(a)(1) of the Act that is related to the delivery of items or services
under that program. Greene v. Sullivan, 731 F. Supp. 835, 838 (E.D.
Tenn. 1990). Therefore, Petitioner's crimes consisted of criminal offenses
that were related to the delivery of items or services under the Massachusetts
State Medicaid program.
Section 1128(a)(1) of the Act mandates the I.G. to exclude
any individual who is convicted of a criminal offense that is related
to the delivery of an item or service under Medicare or a State Medicaid
program. The minimum term of a mandatory exclusion is five years. Act,
section 1128(c)(3)(B). Here, Petitioner was convicted of criminal offenses that
are related to the delivery of items or services under the Massachusetts
State Medicaid program. Finding 1. The I.G. was, therefore, required to
exclude Petitioner pursuant to section 1128(a)(1) of the Act for a term
of at least five years.
The Secretary has published regulations which govern the
length of exclusions that are imposed pursuant to section 1128 of the
Act. 42 C.F.R. Part 1001. The regulation which establishes criteria to
govern the length of exclusions that are imposed pursuant to section 1128(a)(1)
is 42 C.F.R. � 1001.102. This regulation identifies "aggravating" factors
which may be used, if present in a case, as a basis to lengthen an exclusion
beyond the five-year minimum period and "mitigating" factors which may
be used, if present in a case, to offset any aggravating factors that
are established. The regulation makes clear that only those factors
that it identifies as either aggravating or mitigating may be considered
to determine whether an exclusion of more than five years is reasonable
in a case involving section 1128(a)(1) of the Act. The aggravating and
mitigating factors thus operate as rules of evidence in such a case. Evidence
which does not relate to an identified aggravating
or mitigating factor is irrelevant to determining the length of an exclusion
and may not be considered. The regulation does not, however, prescribe the weight
which is to be given to any aggravating or mitigating factor. The regulation
contains no formula prescribing any exclusion length beyond the five-year
minimum period based on the presence of aggravating factors or absence
of mitigating factors. Rather, the regulation merely identifies the factors
which may be used to lengthen an exclusion beyond the minimum period. The factors which are identified in 42 C.F.R. � 1001.102
may not be applied arbitrarily to lengthen an exclusion beyond the five-year
minimum. The regulation establishes the criteria which may be considered
in determining whether or not to lengthen an exclusion. But, in the absence
of any statement in the regulation as to how much weight must be given
to an aggravating or mitigating factor one must look to the purpose of
the Act in order to determine what is a reasonable length of an exclusion
where aggravating or mitigating factors are present. Section 1128 of the Act is a remedial statute. Its purpose
is not to punish the excluded individual but to protect federally funded
health care programs and the beneficiaries and recipients of program funds
from an individual whose conduct establishes him or her not to be trustworthy.
In assessing the length of any exclusion that is imposed under section
1128, the ultimate issue that must be addressed is: how long of an exclusion
is reasonably necessary to protect programs, beneficiaries, and recipients,
from an untrustworthy individual? The I.G. may not arbitrarily exclude an individual for
any period of more than five years simply because aggravating factors
exist in a given case. The I.G. must weigh the evidence that pertains
to aggravating and mitigating factors in order to establish the degree
of untrustworthiness that is manifested by the excluded individual. An
exclusion that is not based on what the evidence which relates to aggravating
and mitigating factors shows about the trustworthiness of the excluded
individual may be arbitrary and unreasonably punitive.
Any individual who is excluded pursuant to section 1128
of the Act has a right to a hearing before an administrative law judge.
Such a hearing is conducted pursuant to section 205(b) of the Act. That
section has been interpreted on numerous occasions to require a de novo
hearing and an independent decision by the administrative law judge. That is not to suggest that the administrative law judge
is free to ignore entirely the determination that is made by the I.G.
The I.G. has expertise in making exclusion determinations and her decisions
deserve to be respected. The I.G.'s exclusion determination should be
sustained as reasonable if that determination falls within a reasonable
range of possible exclusions. However, the administrative law judge must
evaluate independently the evidence relating to the aggravating and mitigating
factors that are set forth in the regulations. If the administrative law
judge concludes, based on his or her independent and de novo evaluation
of the evidence, that the exclusion imposed by the I.G. departs significantly
from that which the administrative law judge decides is reasonable, then
the administrative law judge may modify the length of the exclusion to
assure that the exclusion falls within a reasonable range of exclusions.
The I.G. proved the presence of three aggravating factors
in this case. These are as follows:
The I.G. alleges the presence of a fourth aggravating
factor. According to the I.G., Petitioner has a prior criminal, civil,
or administrative sanction record as is described by 42 C.F.R. � 1001.102(b)(6).
The I.G. relies on a civil settlement agreement that Petitioner and two
other individuals entered into with the Massachusetts Attorney General's
office as proof of this alleged aggravating factor. I.G. Ex. 4. According
to the I.G., the settlement agreement embodies an "administrative sanction"
against Petitioner. The settlement agreement appears to be a comprehensive
agreement between Petitioner and other named individuals and entities
and the Massachusetts Attorney General to resolve civil fraud claims by
the Massachusetts State Medicaid program. The agreement provides for the
payment of a cash settlement. I.G. Ex. 4 at 3. It also contains a disclaimer
in which the non-government parties to the agreement assert that they
are not admitting to violation of any laws, regulations, or rules of the
Massachusetts State Medicaid program. Id. The language in the settlement agreement on which the
I.G. relies as proof of a fourth aggravating factor consists of a statement
in which the non-government parties to the agreement:
I.G. Ex. 4 at 3 - 4. The I.G. argues that this language
memorializes an administrative sanction. I disagree with the I.G.'s argument. The language of 42
C.F.R. � 1001.102(b)(6) is unambiguous. An aggravating factor exists where
there exists a prior record of an administrative sanction being imposed
against an excluded individual. The regulation plainly requires, as a
prerequisite for finding an aggravating factor, that some adverse State
action be taken against that individual. No such action occurred here. The meaning of the settlement
agreement is plain. Petitioner and the other non-government parties to
the agreement voluntarily agreed to withdraw permanently from participation
in the Massachusetts State Medicaid program. Petitioner did not admit
to any liability and was not found liable for any wrongdoing, as an element
of the settlement agreement. No sanction was imposed against Petitioner. I might have ruled differently had the I.G. offered proof
that an administrative sanction proceeding was initiated against Petitioner
by the State of Massachusetts or by an arm of the State and that Petitioner
had settled that action as a means of avoiding an adverse finding. A statutory
basis would exist under sections 1128(b)(4) and (5) of the Act to exclude
individuals who settle State administrative proceedings by surrendering
their licenses to provide health care. In those situations, the settlement
agreements clearly are efforts to resolve sanction proceedings. But, in
this case, the I.G. offered no evidence that a sanction proceeding was
ever implemented against Petitioner. In the absence of evidence showing
that Petitioner signed the settlement agreement in the face of formal
sanction proceedings, Petitioner's agreement not to participate in the
Massachusetts State Medicaid program is simply a voluntary action by Petitioner
and not a sanction. The settlement agreement itself is not evidence of such
an action. It recites only that Petitioner and other non-government parties
entered into the settlement agreement "to resolve the issues identified
in the Attorney General's investigation in a fair and equitable manner
and to avoid the delay, burdens and uncertainty of further proceedings."
I.G. Ex. 4 at 2 - 3. There is no statement in the agreement that State
sanction proceedings had either been initiated against Petitioner or that
their initiation was being contemplated. The phrase "further proceedings"
is so broad as to encompass many types of proceedings, including civil
litigation that is not a sanction proceeding.
Petitioner makes a number of arguments to support his
contention that mitigating factors exist in this case. Petitioner argues
that he should be given credit for having made restitution. Petitioner's
brief at 1. He argues additionally that he did not use the proceeds of
checks that he cashed for his personal benefit. Id. at 2. He asserts
that his criminal conduct was intended to keep the two nursing homes that
he was involved with in business. Id. He asserts that he should
be accorded the same leniency as he argues was accorded by the I.G. to
other parties who committed allegedly similar offense to those of which
Petitioner was convicted. Id. Finally, Petitioner asserts that
he is remorseful for his conduct. Id. None of the arguments made by Petitioner describe mitigating
factors that I may consider. See 42 C.F.R. � 1001.102(c)(1) - (3).
For this reason they are irrelevant to the issue of whether the exclusion
that the I.G. imposed against Petitioner is unreasonable.
I have looked closely at the evidence of aggravation presented
by the I.G. I find that it does not support a 20-year exclusion. An exclusion of the length advocated by the I.G. is tantamount
to a permanent exclusion from participation in federally funded health
care programs. In effect, when an exclusion of 20 years is imposed, the
I.G. is saying that the excluded individual is so untrustworthy that the
individual will never be trusted again to participate in a federally funded
health care program. Given that, it is apparent that an exclusion of 20
years should be reserved for those individuals who manifest the highest
degree of untrustworthiness. Evidence of such a high degree of untrustworthiness is
not present in this case. To begin with, the I.G. failed to establish
one of the aggravating factors which are the basis for the I.G.'s 20-year
exclusion determination. There are three - and not four - aggravating
factors present in this case. Second, the evidence which relates to the aggravating
factors that the I.G. did establish is not persuasive evidence that Petitioner
is so untrustworthy as to merit an exclusion of 20 years. It is true,
as the I.G. asserts, that Petitioner was incarcerated. But, the incarceration
in this case consisted of house arrest. And, the terms of Petitioner's
house arrest enabled Petitioner to be out of his home during working hours.
Petitioner's confinement to his home was limited to the hours of from
7:30 p.m. to 7:00 a.m. each day. I.G. Ex. 5 at 2. During the remaining
hours Petitioner presumably was free to work or to attend to personal
matters. Such a limited term of incarceration does not suggest that the
sentencing court found Petitioner to be highly untrustworthy.
It is also true that Petitioner paid restitution totaling
$100,000. I.G. Ex. 2. I infer from that amount that Petitioner's crimes
caused substantial losses to be sustained by the Massachusetts State Medicaid
program. However, it is unclear from the evidence offered by the I.G.
whether Petitioner's crimes caused actual losses to be sustained by the
program in the amount of $100,000 or whether the restitution amount was
an amount simply agreed on as part of the settlement of Petitioner's criminal
case. The exhibit that the I.G. relies on to support her assertions is
a copy of a news release. I.G. Ex. 2. The court record in Petitioner's
case does not mention that restitution was ordered nor does it contain
any finding by the court as to the amount of loss caused by Petitioner.
See I.G. Ex. 5. Thus, while I am confident in concluding that Petitioner's
crimes caused the Massachusetts Medicaid program to sustain a substantial
loss I cannot find from the evidence offered by the I.G. that the actual
loss sustained by the program was $100,000 or even an amount in the vicinity
of $100,000. I do agree with the I.G. that the evidence establishes
that Petitioner perpetrated his crimes over a period of several years.
In other cases I have found that persistent criminal conduct by an individual
is a substantial aggravating factor and I do so here as well. On balance, I conclude that the exclusion of 20 years
determined by the I.G. in this case does not fall within a reasonable
range of exclusions for the conduct that is at issue. The evidence of
aggravation does not show Petitioner to be so untrustworthy as to necessitate
an exclusion of 20 years. Moreover, the exclusion imposed here does not fall into
a reasonable range of exclusions for the type of conduct that is at issue
in this case. I take notice of the fact that, over the years I have seen
many exclusion cases where the evidence of aggravation is far more impressive
than is the case here. In many of those cases, the length of the exclusion
determined by the I.G. was for a substantially shorter period than the
20-year exclusion that the I.G. determined to impose in this case. For
example, the case of William D. Neese, M.D., DAB CR467 (1997),
also involved an exclusion imposed pursuant to section 1128(a)(1) Act.
In that case, the Petitioner had defrauded a State Medicaid program for
a period of two years. The amount of his fraud approximated $600,000.
He was sentenced to two concurrent terms of imprisonment for a period
of 18 months. In the Neese case, the I.G. determined to impose
an exclusion of 10 years. Plainly, the degree of untrustworthiness manifested
by the petitioner in Neese, based on the aggravating factors established
in that case, was greater than that demonstrated by the Petitioner here.
Yet, the I.G. imposed an exclusion of only one-half the duration of the
exclusion that is imposed in this case.
I conclude that an exclusion of 10 years is reasonable
in light of the evidence in this case. A term of 10 years takes into account
the fact that Petitioner engaged in sustained criminal activity over an
extended period of time. It also takes into account the fact that his
crimes caused the Massachusetts State Medicaid program to sustain a substantial
- albeit indeterminate - loss. Furthermore, the term takes into account
my conclusion that Petitioner's criminal activity is significantly less
egregious than the I.G. depicts it to be. Finally, it is in line with
other exclusions that have been imposed for similar conduct and, therefore,
falls within a reasonable range of exclusions for such conduct. |
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JUDGE | |
Steven T. Kessel Administrative Law Judge |
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