SUBJECT: Donald A. Burstein, Ph.D.,

Petitioner,

Inspector General

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

The Inspector General (I.G.) appealed a September 16, 2002 decision by Administrative Law Judge (ALJ) Anne E. Blair, Donald A. Burstein, Ph.D., DAB CR952 (2002) (ALJ Decision). The ALJ granted summary judgment for the I.G. and sustained the I.G.'s basic determination that Donald A. Burstein, Ph.D. (Petitioner/Dr. Burstein), should be excluded from participation in Medicare, Medicaid and all other federal health care programs pursuant to section 1128(a)(1) of the Social Security Act (Act). ⁽¹⁾

However, the ALJ also determined that the I.G. had proven only one of the two aggravating factors upon which the I.G. had based the proposed 15-year exclusion of Dr. Burstein. The ALJ modified Dr. Burstein's exclusion to five years and six months based on both that determination and the fact that the I.G. conceded the existence of a mitigating factor.

The I.G. appealed, asserting that the ALJ's conclusions of law on the presence of a second aggravating factor and the appropriate length of Dr. Burstein's exclusion were not supported by substantial evidence in the record and were erroneous as a matter of law.

As explained in the analysis below, we find that the ALJ erred in determining that the I.G. had not proved the existence of the aggravating factor in question. However, we conclude that, notwithstanding the existence of two aggravating factors, the 15-year exclusion proposed by the I.G. is not within a reasonable range in light of the existence of a mitigating factor. Accordingly, we revise the term of Dr. Burstein's exclusion to 10 years.

Background

The ALJ Decision contained the following Findings of Fact and Conclusions of Law:

FINDINGS OF FACT

The following findings of fact are based upon the uncontested and undisputed assertions of fact in the parties' pleadings and the exhibits admitted:

1. Petitioner was the assistant director and a practicing psychologist at the Northwest Center (subsequently, Northwestern Human Services, Inc.) which provided outpatient and partial hospitalization services to Medicaid beneficiaries in Pennsylvania. I.G. Ex. 1.

2. A two-count Information was filed against Petitioner on March 29, 2001. The Information contained allegations that Petitioner had committed one count of mail fraud in violation of 18 U.S.C. � 1341 and one count of Medicaid fraud in violation of 42 U.S.C. � 1320a-7b(a)(2). I.G. Ex. 1.

3. On August 1, 2001, the United States District Court, Eastern District of Pennsylvania, entered judgment against Petitioner, pursuant to Petitioner's guilty plea, to one count of the Information - Mail Fraud. I.G. Ex. 2.

4. Count One of the Information specifically charged Petitioner with causing to be delivered to The Northwest Center, a check in the amount of $4,377.50 and payable to the Northwest Center from the Commonwealth of Pennsylvania, Department of Public Welfare, and which represented Medicaid payments for mental health services rendered by the Northwest Center on behalf of certain patients. I.G. Ex. 1.

5. Petitioner was sentenced to five years' probation and ordered to pay restitution of $1,749,453 to Pennsylvania's Director of Bureau Program Integrity. The restitution was ordered on a joint and several basis among Petitioner and his employing companies. I.G. Ex. 2.

6. By letter dated November 30, 2001, the I.G. notified Petitioner that he was excluded for a period of 15 years from Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(1) of the Act.

7. The I.G. found two aggravating factors that justified an extended period of exclusion in this case: (a) the acts for which Petitioner was convicted resulted in financial loss to a government program of $1,500 or more; and (b) the acts for which Petitioner was convicted occurred over a period of one year or more, from March 1996 to May 1997.

CONCLUSIONS OF LAW

1. Summary judgment is appropriate in this case because there are no material facts in dispute.

2. Petitioner was convicted, within the meaning of the Act, of a criminal offense related to the delivery of an item or service under the Medicare program. Act, section 1128(a)(1); (42 U.S.C. � 1320a-7(a)(1)).

3. Due to his conviction, Petitioner must be excluded from participation in any federal health care program for a minimum period of five years, pursuant to section 1128(c)(3)(B) of the Act; (42 U.S.C. � 1320a-7(c)(3)(B)).

4. The I.G. may increase the term of exclusion based on a finding of any of the aggravating factors specified at 42 C.F.R. � 1001.102(b).

5. If the I.G. finds that any of the aggravating factors specified at 42 C.F.R. � 1001.102(b) justify a term of exclusion greater than the statutory minimum exclusion of five years, then the I.G. may consider the mitigating factors specified at 42 C.F.R. � 1001.102(c) to reduce the period of exclusion to no less than five years.

6. The range of exclusionary periods contemplated by the Act and the Secretary's regulations extend from a minimum of five years to permanent exclusion in the case of a mandatory exclusion under section 1128(a). See Act, sections 1128(c)(3)(B) and (G); (42 U.S.C. � 1230a-7(c)(3)(B) and (G)); 42 C.F.R. � 1001.102(a) and (d).

7. One aggravating factor has been established by the I.G. by a preponderance of the evidence: the acts for which Petitioner was convicted resulted in financial loss to a government program of $1,500 or more.

8. The I.G. did not establish the other aggravating factor that the I.G. alleged: that the offense for which Petitioner pled guilty occurred over a period of more than one year.

9. Petitioner did establish by a preponderance of the evidence the mitigating factor he alleged to exist under 42 C.F.R. � 1001.103(c)(3).

10. A five year and six-month exclusion (five years mandatory and six months extension) is within a reasonable range and is not unreasonable.

ALJ Decision at 4-5. ⁽²⁾

Neither the I.G. nor Dr. Burstein disputed the ALJ's numbered Findings of Fact. Accordingly, we affirm and adopt Findings of Fact 1-7 without further comment. The I.G. limited her exceptions to Conclusions of Law 8 and 10. Dr. Burstein did not specifically except to any of the ALJ's findings or conclusions, but responded to the I.G.'s arguments. Accordingly, we affirm and adopt Conclusions of Law 1-7 and 9 without further comment.

Below, we discuss each of the I.G.'s two exceptions in turn, setting out the rationale in the ALJ Decision, the I.G.'s arguments on appeal and our analysis.

Discussion ⁽³⁾

Our standard of review on a disputed conclusion of law is whether the ALJ decision is erroneous. Our standard of review on a disputed finding of fact is whether the ALJ decision is supported by substantial evidence on the record as a whole. 42 C.F.R. � 1005.21(h). Where a decision is based on summary disposition, we examine whether there is a genuine dispute of material fact that requires a hearing.

Whether the ALJ erred in concluding that the I.G. did not prove the aggravating factor at 42 C.F.R. � 1001.102(b)(2)

The aggravating factor which the ALJ concluded the I.G. had failed to prove is established by regulation at 42 C.F.R. � 1001.102(b)(2). That section permits the I.G. to consider a factor to be aggravating and a basis for lengthening the period of exclusion if:

The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more . . . . .

In her analysis, the ALJ discussed the well-established principle in this area of law that Dr. Burstein's underlying conviction could not be collaterally attacked in an appeal of the I.G.'s proposed exclusion. 42 C.F.R. � 1001.2007(3)(d); Travers v. Shalala, 20 F.3^rd 993 (9^th Cir. 1994). The ALJ continued, stating:

The rules against collaterally attacking the conviction do not mean, however, that the I.G. does not have to proffer any evidence in support of an aggravating factor if that factor is not clear from the conviction itself.

ALJ Decision at 9.

The ALJ noted that Dr. Burstein had been convicted only of mail fraud, describing that conviction as "a one-time act of delivering a check to the PHP [Northwest Center] from Medicaid when the PHP had not been properly certified to receive the check." ALJ Decision at 9. The ALJ recognized that the Information to which Dr. Burstein pled guilty referred to a time period of "from March 1996, through . . . May, 1997" during which Dr. Burstein "knowingly and willfully devised and intended to devise a scheme and artifice to defraud the Medicaid program and to obtain money and property by means of false and fraudulent pretenses, representations, and promises." ALJ Decision at 10, citing I.G. Ex. 1. According to the ALJ, Dr. Burstein's employer did not have the staff-to-patient ratio necessary to retain its Medicaid certification to provide mental health services as a PHP. Dr. Burstein admitted that he prepared, signed and submitted staff rosters that overstated the number of qualified clinical staff and also orchestrated other employees to pose as clinical staff during an annual on-site inspection in March 1996. However, the ALJ reasoned, Dr. Burstein had not pled guilty to Count II of the Information which charged him with a false representation to obtain a payment under Medicaid. ALJ Decision at 10.

The ALJ recounted that Dr. Burstein had, from "his first responsive brief dated June 6, 2002," argued that the actions for which he was convicted did not occur over a period of more than one year. Id. Yet, the ALJ determined, although on notice that she needed to prove this aggravating factor, the I.G. provided no more evidence than the "bald statement in the information" that the acts were committed over a period of more than one year. Id. The ALJ recognized that Dr. Burstein admitted performing the acts, ordered by his employer, aimed at deceiving Medicaid authorities, as well as the act of mail fraud. However, the ALJ viewed these events each as a one-time act, lasting no more than a few days. The ALJ also noted that Dr. Burstein denied any involvement with Northwest Center's staffing, budgeting, or billing. The ALJ reasoned:

If the I.G. is arguing that Petitioner's acts lasted from the time of the on-site visit to the end of the year during which the PHP received Medicaid payments under false pretenses, the I.G. should have provided some evidence concerning the date of the payment for which Petitioner pleaded guilty and/or Petitioner's further involvement in the scheme past the on-site visit.

ALJ Decision at 10.

The ALJ concluded that the only probative evidence before her regarding the duration of Dr. Burstein's misconduct was "his guilty plea, which reflects a judicial finding that Petitioner's offense was a one-time act, and Petitioner's admission (not judicial finding) that he was involved in the PHP's on-site visit by Pennsylvania Medicaid authorities." Id. Thus, the ALJ concluded, the I.G. had failed to meet her burden of proof with respect to the existence of this aggravating factor.

On appeal, the I.G. argued that the ALJ had failed to consider all the evidence in the record before reaching Conclusion of Law 8. I.G. Br. at 2. The I.G. argued that the ALJ erred by limiting her focus to the March survey and the November check delivery as the sole measure of Dr. Burstein's participation in the scheme. The I.G. contended that the ALJ mischaracterized the essence of Dr. Burstein's offense as the "one-time act" of delivering a Medicaid check to Northwest Center. The I.G. asserted that Dr. Burstein's offense did not occur in a vacuum. Rather, the mail fraud was part of an "ongoing scheme" to defraud the Pennsylvania Medicaid program. The I.G. asserted that Dr. Burstein's guilty plea implicitly included all the allegations within Information Count I. Since Count I included conduct which occurred from March 1996 through May 1997, the I.G. reasoned, the record supported the I.G.'s position that Dr. Burstein engaged in conduct which occurred over a period of one year or more. Id. at 10-11.

We agree with the I.G. Section 1001.102(b)(2) does not focus on when the offense of which a petitioner was convicted occurred, but focuses on when the "acts resulting in the conviction" or "similar acts" were committed. The elements of the specific offense of mail fraud include causing the delivery through the mail of a fraudulently obtained payment (and the Information states that the delivery occurred in November 1996). ⁽⁴⁾ Contrary to what the ALJ's analysis implies, however, the I.G. was not required to prove that acts of such mail delivery occurred over a period of a year or more, but merely that the acts resulting in the conviction or similar acts were committed over that period. The purpose of the aggravating factor is to distinguish between petitioners whose lapse in integrity is short-lived from those who evidence a lack of such integrity over a longer period of time. Participation in, or even knowing but silent acquiescence in, a continuing fraudulent scheme that could be expected to cause repeated misrepresentations and repeated harm over a period of time evidences a continuing lack of integrity.

Under Count I, the Information states that "[f]rom in or about March 1996, through in or about May, 1997 . . . [Dr. Burstein] knowingly and willfully devised and intended to devise a scheme and artifice to defraud the Medicaid program and to obtain money and property by means of false and fraudulent pretenses, representations, and promises" and that "[b]etween May 1996 and May 1997, the PHPs at 27 E. Mt. Airy and Germantown Avenue received approximately $1,749,453 in Medicaid payments for mental health services." I.G. Ex. 1, at 2-3. ⁽⁵⁾ These statements are properly treated as admissions by Dr. Burstein. This is not a situation in which the guilty plea was simply to one count of mail fraud and limited only to the essential elements of that offense. Instead, Dr. Burstein pled guilty to "Count One of the Information." See I.G. Ex. 4, at 1. Thus, Dr. Burstein was in effect admitting the allegations in the Information under Count I. Clearly, the purpose of putting the dates in the statements in the Information was to establish that he knowingly participated in the fraudulent scheme for over a year. Yet, Dr. Burstein's plea took no exception to any of the facts alleged in the Information under Count I. I.G. Ex. 4, at 1.

Moreover, knowingly devising and intending a fraudulent scheme is an element of the offense under the plain wording of the mail fraud statute. See 18 U.S.C. 1341, cited in I.G. Ex. 1. By focusing on the act of delivery (which in any event was not an affirmative act of Dr. Burstein's), the ALJ Decision misses the significance of the scheme. This scheme involved not only fraudulently obtaining the PHP certifications in March 1996, but also obtaining Medicaid payments by misrepresenting the services as the services of a properly certified PHP. Both Dr. Burstein's initial activities in March 1996, and the facilities' acts of submitting claims for PHP services caused the delivery of a Medicaid payment through the mail in November 1996 and resulted in the conviction. These acts, and the later acts of submitting claims for and receiving other payments for PHP services as late as May 1997, are all similarly fraudulent and similarly attributable to Dr. Burstein.

Thus, contrary to what the ALJ said, the I.G. did present evidence of Dr. Burstein's continued involvement in the scheme from March 1996 through May 1997. Dr. Burstein's assertions that he was not involved in staff, budgeting, or billing during this period are irrelevant. The facilities' acts of fraudulently obtaining Medicaid payments during this period continued and are attributable to him since he pled guilty to knowingly devising the scheme throughout this period.

Dr. Burstein's admissions about the events in March 1996 further indicate that he was aware that the purpose of falsifying staff ratios and rosters was to allow Northwest Center's two facilities to qualify for Medicaid by being certified as PHPs through the annual survey process. Thus, the fraudulent submission of claims and the receipt of Medicaid PHP payments over a period until the next annual survey was a foreseeable result of Dr. Burstein's actions in March 1996. He can reasonably be charged with knowledge that the scheme would result in further acts of fraud on the program, particularly given his position as Assistant Director of Northwest Center. Knowing of the scheme and its purpose but omitting to take any steps to stop the repeated acts by the facilities in claiming and obtaining payments under false pretenses as late as May 1997 reflects a continued lack of integrity and a blatant disregard for the consequences to the Medicaid program and to the recipients of the services.

Based on the analysis above, we vacate the ALJ's original Conclusion of Law 8 and replace it with a new Conclusion of Law 8 reading:

8. The I.G. established a second aggravating factor by a preponderance of the evidence: that the acts resulting in Petitioner's conviction, or similar acts, were committed over a period of one year or more.

Whether the ALJ erred in concluding that a five year and six-month exclusion (five years mandatory and six months extension) is within a reasonable range and is not unreasonable

The ALJ's rationale in reaching Conclusion of Law 10 was that the I.G. had proven one aggravating factor and conceded the existence of a mitigating factor. The ALJ recognized that the regulations do not prescribe the weight to be given to individual aggravating and mitigating factors. However, the ALJ reasoned:

There is an overall statutory purpose to which the regulations must adhere. An exclusion is not intended to be punishment. The purpose of any exclusion that is imposed under section 1128 of the Act is to protect federally funded health care programs and beneficiaries and recipients of those programs from an individual who has been shown not to be trustworthy. Therefore, in deciding the length of an exclusion that is imposed pursuant to section 1128, the question that must be considered is: what is reasonably necessary to protect the programs and their beneficiaries and recipients from an untrustworthy individual?

I find the circumstances surrounding the amount of the loss to the program do not strongly suggest, as opposed to the argument of the I.G., that the "enormous amount" of the loss should be necessarily rested on the shoulders of the Petitioner. Yes, he was jointly and severally charged with the restitution of the "enormous amount." But he was not an owner of the company or likely to profit from the "enormous amount" in any way other than to keep his job and salary. While I agree that restitution is a reasonable measure of the loss to the Medicaid program, I must give some thought to the circumstances of Petitioner's participation in creating the loss for purposes of weighing this aggravating factor against the mitigating factor also present. When I consider the circumstances of Petitioner's extensive cooperation with investigating agencies and the Petitioner's limited benefits from the fraudulent scheme, I find the mitigating factor almost outweighs the aggravating factor.

ALJ Decision at 11.

The I.G. argued generally that she had proved two aggravating factors and that, even considering the mitigating factor present in this case, extending the exclusion by a mere six months over the five-year mandatory minimum was erroneous as a matter of law.

The I.G. contended that the ALJ erred by not focusing on the substantial loss incurred by Medicaid. Citing Frank A. DeLia, D.O., DAB No. 1620 (1997), the I.G. asserted that the ALJ erred by failing to give appropriate weight "to the exceptional aggravating factor" (the $1.7 million loss) which Dr. Burstein imposed upon Medicaid. The I.G. noted that Dr. Burstein stipulated specifically that the loss caused by the offense to which he pled was more than $1.7 million. Based on the DeLia rationale, the I.G. argued that the disproportionate loss caused by Dr. Burstein, more than 1,000 times the regulatory minimum for an aggravating factor, justified a 10-year extension of the mandatory minimum exclusion. The I.G. asserted that the ALJ erred in focusing on the specific $4,377.50 Medicaid check issued to Northwest Center as the sole measure of the loss Dr. Burstein caused Medicaid. The I.G. assailed as unsupported the ALJ's rationale that since Dr. Burstein was not an owner of Northwest Center, he was unlikely to reap a financial benefit from his fraudulent activities. The I.G. noted that although the record was unclear as to what "other benefits" Dr. Burstein may have received from his actions, at a minimum he retained his position with Northwest Center. Citing 42 C.F.R. � 1001.102(b)(1) and Barry D. Garfinkel, M.D., DAB No. 1572 (1996), the I.G. argued that, in any event, whether Dr. Burstein did receive, or could have received, any financial benefit as the result of his actions was irrelevant for purposes of evaluating the weight to be given to an aggravating factor established by 42 C.F.R. � 1001.102(b)(1). I.G. Br. at 14-18.

The I.G. also argued that the ALJ gave too much weight to the mitigating factor. Although conceding that Dr. Burstein's cooperation with authorities for four years in fact constituted a mitigating factor under 42 C.F.R. � 1001.102(b)(2), the I.G. asserted that the ALJ erred by relying upon Dr. Burstein's unsupported statements regarding the breadth of his cooperation with the investigation of Northwest Center. Moreover, the I.G. pointed out that Dr. Burstein did not voluntarily report the fraud to federal authorities and did not begin to cooperate until approached by investigators in October 1997. I.G. Br. at 12-13.

We agree with the I.G. that a period of only five years and six months is not reasonable. First, as we noted in our analysis of Conclusion of Law 8 above, the I.G. did prove the existence of a second aggravating factor. In determining the weight to be given this factor, however, we note that the acts or similar acts were committed over a period only slightly more than a year (March 1996 through May 1997), the threshold for the factor to apply.

Second, as the Board held in Garfinkel, the plain language of the aggravating factor at 42 C.F.R. � 1001.102(b)(1) focuses on the financial loss to the program, not on the benefit to the petitioner. Garfinkel, at 36. Moreover, the regulation refers to the "financial loss" caused by the "acts resulting in the conviction or similar acts." The ALJ Decision, however, evaluated the aggravating factor only in terms of the benefit to Dr. Burstein and the amount of the payments covered by the mail fraud count. We therefore agree with the I.G. that the ALJ Decision failed to give sufficient weight to the factor. Dr. Burstein's admissions, and the amount of the restitution ordered, establish that the loss to the program from his offense was over $1.7 million. This is over 1,000 times the minimum required in order for the aggravating factor to apply, and clearly warrants significantly more weight than the ALJ gave it. The presence of two aggravating factors, including this exceptional aggravating factor, warrants lengthening the period of Dr. Burstein's exclusion beyond the five-year, six-month period prescribed by the ALJ. However, as discussed below, we conclude that the 15-year exclusion proposed by the I.G. is not within a reasonable range.

While it is true that Dr. Burstein did not document the extent of his cooperation, Dr. Burstein, a pro se litigant, placed his cooperation in issue from the outset of his appeal to the ALJ. See Petitioner's Request for Hearing (December 21, 2001) and Petitioner's Response to Inspector General's Brief Submitted [to the ALJ] 5/8/02. Yet, knowing what Dr. Burstein's assertions were regarding the mitigating factor, the I.G. moved for summary disposition, arguing that there were no disputes of material fact and never specifically disputing Dr. Burstein's assertions about the nature and extent of his cooperation or proffering any evidence to rebut them. Indeed, the I.G's. own exhibits show that Dr. Burstein started cooperating before the Plea Agreement and continued for four years, and thus corroborate some of the assertions. Therefore, the ALJ could reasonably accept the assertions as undisputed.

It is well-established that section 1128 exclusions are remedial in nature, rather than punitive, and are intended to protect federally-funded health care programs from untrustworthy individuals. Patel v. Thompson, 2003 WL 203468 (11^th Cir. 2003); Mannocchio v. Kusserow, 961 F.2d 1539, 1543 (11^th Cir. 1992). The undisputed facts support a determination that Dr. Burstein's cooperation with investigating authorities was extensive and that he engaged in some cooperative acts in which he put himself at risk. While we agree with the I.G. that this mitigating factor does not deserve as much weight as it would have warranted if Dr. Burstein had come forward voluntarily before the investigation began, the nature and extent of his cooperation has a bearing on Dr. Burstein's general trustworthiness and thus on the length of the exclusion necessary to achieve the Act's remedial purpose.

In evaluating what exclusion period is reasonable, we reject Dr. Burstein's arguments that we should take into account the fact that a lengthy exclusion will effectively bar him from ever practicing medicine again, given his age, and other factors, such as his lack of any prior convictions. The mitigating factors, allowed to be considered once a section 1001.102(b) aggravating factor is established, are set found at 42 C.F.R. � 1001.102(c). The facts Dr. Burstein described are not identified as mitigating factors, nor can they reasonably be considered as circumstances relevant in determining what weight to give any of the aggravating or mitigating factors that do exist.

Based on the undisputed facts, and according weight to the aggravating factors and the mitigating factor consistent with our discussion above, we have determined that an exclusion of 10 years is reasonable.

Accordingly, we vacate the ALJ's Conclusion of Law 10 and substitute the following Conclusion of Law:

10. A 15-year exclusion is not within a reasonable range, but a 10-year exclusion (five years mandatory and five year extension) is reasonable.

Conclusion

Based on the preceding analysis, we:

1. affirm and adopt in their entirety the ALJ's Findings of Fact 1 through 7;

2. affirm and adopt in their entirety the ALJ's Conclusions of Law 1 through 7 and Conclusions of Law 9; and

3. vacate the ALJ's Conclusions of Law 8 and 10, substituting in their place the following new Conclusions of Law 8 and 10:

8. The I.G. established a second aggravating factor by a preponderance of the evidence: that the acts resulting in Petitioner's conviction, or similar acts, were committed over a period of one year or more.

10. A 15-year exclusion is not within a reasonable range, but a 10-year exclusion (five years mandatory and five year extension) is reasonable.

Donald F. Garrett

Marc R. Hillson

Judith A. Ballard
Presiding Panel Member

1. Hereafter, "Medicaid."

2. We note that although the ALJ said she was reaching summary judgment based on undisputed facts, she also admitted the I.G.'s exhibits into the record and, for some purposes, treated them as admissions by Dr. Burstein.

3. Although particular issues may not be discussed in detail in this decision, we have nevertheless considered all of the points in the parties' briefs in reaching the conclusions set forth here.

4. Thus, contrary to what the ALJ said, the I.G. did present evidence of when the delivery occurred.

5. In his Plea Agreement, Dr. Burstein also stipulated that "the loss caused by the offense to which the defendant is pleading guilty is approximately $1,749,453." I.G. Ex. 4 at 7, Para b.