Hailu Kabtimer, M.D., DAB CR5213 (2018)

DECISION

The Inspector General of the United States Department of Health and Human Services (the IG) excluded Petitioner, Hailu Kabtimer, from participation in Medicare, Medicaid, and all other federal health care programs for five years based on his conviction for a criminal offense related to the delivery of an item or service under the Medicare or a state health care program.  Petitioner sought review of the exclusion.  For the reasons stated below, I affirm the IG’s exclusion determination.

I. Procedural History

By letter dated March 30, 2018, the IG notified Petitioner he was being excluded, effective 20 days from the date of the letter, from participation in Medicare, Medicaid, and all federal health programs under section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)) for the minimum statutory period of five years.  The IG explained he took this action based on Petitioner’s conviction in the U.S. District Court for the Middle District of Tennessee (District Court) for a criminal offense related to the delivery of an item or service under the Medicare or a state health care program,

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including the performance of management or administrative services relating to the delivery of such items or services.  IG Ex. 1 at 1.1

Petitioner timely requested a hearing before an administrative law judge.  I held a pre-hearing telephone conference on June 27, 2018, the substance of which is summarized in my July 3, 2018 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order).  See 42 C.F.R. § 1005.6.  Among other things, I directed the parties to file pre-hearing briefs articulating their respective arguments as well as identifying witnesses and exhibits in support thereof.  Summary Order at 3.

The IG filed a brief (IG Br.) and five exhibits (IG Exs. 1-5), while Petitioner filed a brief (P. Br.) with one exhibit (P. Ex. 1).  The IG subsequently filed a reply brief (IG Reply).

II. A Decision on the Record is Appropriate.

The IG does not believe an in-person hearing is necessary to decide this case.  IG Br. at 7.  Petitioner concedes an evidentiary hearing is unnecessary, but requests the opportunity to present oral argument.  P. Br. at 2.  Petitioner’s request is denied.  The parties have been given the opportunity to present their legal arguments in writing, and Petitioner’s counsel has presumably marshaled his most convincing arguments and already articulated them in Petitioner’s brief.  Oral argument would serve no purpose beyond that already met by the parties’ briefs.  Because neither party has sought to present witnesses that could be subject to cross-examination, a hearing is unnecessary and the matter may be decided on the written record.  See Civ. Remedies Div. Pro. § 19(d).

III. Request to Stay.

In the event I affirm the IG’s exclusion determination, Petitioner requests that I stay the exclusion action against him.  P. Br. at 1.  While I laud Petitioner’s efforts to comply with his terms of probation and provide care in a medically underserved area, I am unaware of, and Petitioner fails to cite, any authority that permits me to stay an exclusion action taken by the IG that I have otherwise found to be lawful.

Instead, as the Departmental Appeals Board has observed, the governing statute and regulations do not permit me to modify the effective date of exclusion.  See Thomas Edward Musial, DAB No. 1991 (2005), citing Douglas Schram, R.PH., DAB No. 1372 at 11 (1992) (“[n]either the ALJ nor this Board may change the beginning date of Petitioner’s Exclusion.”); David D. DeFries, DAB No. 1317 at 6 (1992) (“The ALJ cannot . . . decide when [the exclusion] is to begin.”); Richard D. Phillips, DAB No. 1279 (1991) (“An ALJ does not have ‘discretion . . . to adjust the effective date of an

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exclusion, which is set by regulation.’”); Samuel W. Chang, M.D., DAB No. 1198 at 10 (1990) (“The ALJ has no power to change . . . [an exclusion’s] beginning date.”); see also 42 C.F.R. § 1001.2002(b) (“The exclusion will be effective 20 days from the date of the notice.”).

I am not empowered to provide Petitioner the relief he seeks.  His request for a stay is denied.

IV. Exhibits.

The IG’s submissions fail to comport with the clear and customary instructions found in my Summary Order that require the parties’ submitted exhibits to be marked with the docket number of this case, the party identifier, and the page number.  Summary Order at 2.  Petitioner similarly failed to comply with the labeling requirements in his sole exhibit.

Because the parties’ exhibits are few in number, relatively short, and bear pagination, there is little chance of confusion in citing to them.  Accordingly, I will not reject the parties’ exhibits.  However, counsel for both parties should make the minimal effort to read and comply with my orders in future appearances.

The IG did not object to P. Ex. 1, and it is therefore admitted into the record.  Petitioner did not object to IG Exs. 1, 3, 4, and 5; they are therefore admitted.  Petitioner does object to IG Ex. 2, the original indictment filed against him by the U.S. Department of Justice.  P. Br. at 2.  Petitioner asserts the original indictment filed against him is irrelevant because he pleaded not guilty to that charge, and subsequently pleaded guilty to an altogether different superseding indictment.  Id.

The IG made no effort to respond to this objection.  Nevertheless, I overrule Petitioner’s objection.  In order to assess whether a basis exists for Petitioner’s exclusion, I am required to consider all relevant facts surrounding the conviction on which that exclusion is based.  It is hardly controversial to observe that the original charging instrument which initiated the criminal action, ultimately resolved by Petitioner’s plea to a superseding charge, is relevant to the nature and circumstances of his conviction.  Petitioner may be correct that the original indictment cannot prove up the specific elements of the charge to which he pleaded, but his argument goes merely to the probative value of the original indictment, not to its relevance and therefore its admissibility.  IG Ex. 2 is admitted into the record.

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III. Issue

Whether the IG had a basis to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for five years under 42 U.S.C. § 1320a-7(a)(1).  See 42 C.F.R. § 1001.2007(a)(1).

IV. Applicable Law

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

The Secretary must exclude from participation in federal health care programs “[a]ny individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under subchapter XVIII of this chapter or under any State health care program.”  42 U.S.C. § 1320a-7(a)(1); see also 42 C.F.R. § 1001.101(a).

An individual is convicted of a criminal offense when:  (1) a judgment of conviction has been entered against him or her in a federal, state, or local court whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no contest is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.  42 U.S.C. § 1320a-7(i).  The statute does not distinguish between misdemeanor and felony convictions.  There may be no collateral attack of the conviction that provides the basis of the exclusion.  42 C.F.R. § 1001.2007(d).

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

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

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

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

A. Petitioner’s request for hearing was timely, and I have jurisdiction.

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

B. There is a basis for Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act.

Exclusion from participation in Medicare, Medicaid, and all federal health care programs is mandated by section 1128(a)(1) of the Act where an individual has been convicted, under Federal or State law, of a criminal offense related to the delivery of an item or service under Medicare or any state health care program.  42 U.S.C. § 1320a-7(a)(1); 42 C.F.R. § 1001.101(a).  The IG has established these elements by a preponderance of the evidence.

1. Petitioner was convicted of a criminal offense within the meaning of section 1128(a)(1) of the Act.

Petitioner, a physician, referred patients covered by Medicare and TennCare, Tennessee’s Medicaid program, to a durable medical equipment (DME) supplier that provided DME to those patients.  IG Ex. 2 at 1-3.  He was ultimately charged with soliciting kickbacks, or bribe payments, from that DME supplier in exchange for referral of his patients.  IG Ex. 3 at 1.  On April 13, 2017, by written agreement, Petitioner pleaded guilty to that offense.  IG Ex. 4.  On December 20, 2017, the District Court imposed judgment on Petitioner and found him guilty of one count of Making or Causing False Statements or Representations in Claims Under a Federal Health Care Program.  IG Ex. 5.

Petitioner does not contest the fact of his criminal conviction, nor does he explicitly assert that he was not convicted of a criminal offense within the meaning of the Act.  The Act provides an entity is considered “convicted” when a judgment of conviction has been entered by a federal, state, or local court, or a plea of guilty or no contest has been accepted in a federal, state, or local court.  42 U.S.C. § 1320a-7(i)(1), (3).  Here, the superseding indictment, the plea agreement, and the entry of judgment by the District Court all make readily apparent that Petitioner was in fact convicted of such an offense.  IG Exs. 3, 4, 5.  I therefore conclude the IG has met his burden of showing Petitioner was convicted of a criminal offense within the meaning of section 1128(a)(1) of the Act.

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2. Petitioner’s criminal offense is related to the delivery of an item or service under Medicare or a state health care program within the meaning of section 1128(a)(1) of the Act.

The Act requires Petitioner be excluded from participation in federal programs if he was convicted of an offense relating to the delivery of an item or service under Medicare or a state health care program.  See 42 U.S.C. § 1320a-7(a)(1).  The term “related to” simply means that there must be a nexus or common sense connection.  See Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase “related to” in another part of section 1320a-7 as “deliberately expansive words,” “the ordinary meaning of [which] is a broad one,” and one that is not subject to “crabbed and formalistic interpretation”) (internal quotation marks omitted); see also Quayum v. U.S. Dep’t of Health and Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998).

Petitioner’s argument here is difficult to parse.  He contends that while he was initially charged with participating in a kickback scheme, see IG Ex. 2, he ultimately pleaded to a misdemeanor offense that only involved his aiding in the filing of a false report, not causing or willfully making a false statement as required by the Anti-Kickback statute, 42 U.S.C. § 1320a-7b(a)(1).2  P. Br. at 3-5; P. Ex. 1.

This argument is without merit.  In determining whether his offense of conviction is related to the delivery of an item or service, I am not bound to the label of the charged offense, but instead must consider the actual relevant offense conduct.  Berton Siegel, D.O., DAB No. 1467 (1994).  Here, it is evident that whatever the label on the charge, Petitioner’s offense conduct, as described in the Superseding Information and his plea agreement with the government, clearly reflects he committed a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  IG Exs. 3, 4

Specifically, Petitioner admitted that he “received from a Nashville-based [DME] Supplier ‘kickback’ or bribe payments in exchange for his referral of patients to the DME Supplier.”  IG Ex. 4 at 5.  His conduct caused the DME Supplier to treat those referred patients and submit claims on their behalf to federal health care programs.  Id.  The plea

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agreement in fact identifies eight instances where Petitioner accepted kickback payments for his patient referrals, all resulting in the submission of claims to federal health care programs.  Id.

It is irrelevant to which criminal statute Petitioner ultimately pleaded guilty.  His actual offense conduct described in his plea agreement still describes criminal conduct that clearly relates to delivery of an item or service under Medicare or a state health care program.  IG Ex. 4.  Had Petitioner not referred patients to the DME Supplier in exchange for kickbacks, the DME Supplier would not have submitted claims regarding those patients for reimbursement from a federal health care program.  An obvious “common sense” connection exists between Petitioner’s admitted criminal conduct, resulting in his conviction, and the delivery of an item or service under Medicare or a state health care program.

Petitioner also appears to argue that his actual offense of conviction, Making or Causing False Statements or Representations in Claims Under a Federal Health Care Program, did not relate to the delivery of an item or service under the Medicare program because no item or service was actually delivered; instead, according to Petitioner, he transacted with an undercover agent, who Petitioner presumes did not actually file a false claim as a result of Petitioner’s criminal conduct.3  P. Br. at 3-4; see also P. Ex. 1 at 3.

In fact, neither the superseding information against him nor the plea agreement he made with the government make any reference to an attempt by Petitioner to make a false claim through an undercover agent that was never received by a federal health care program.  IG Exs. 3, 4.  But even accepting Petitioner’s characterization of his offense conduct as accurate, which it is not, his argument has already been explicitly rejected by the Board, which observed, “. . . section 1128(a)(1) covers offenses “related to” the delivery of an item or service under a covered program and does not require that an offense result in the actual delivery of an item or service.”  Gregory Salko, M.D., DAB No. 2437 at 3 (2012) (citations omitted).

In any event, the conduct to which Petitioner admitted, and which forms the factual basis of his criminal conviction, is clearly related to the delivery of an item or service as contemplated by section 1128(a)(1) of the Act.  His plea agreement describes eight specific instances where Petitioner accepted cash kickbacks for referring his patients,

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resulting in actual claims submitted by the DME Supplier to federal health care programs, and reimbursed by those programs.  IG Ex. 4 at 5.  The Board has found that “. . . receipt of the remuneration was directly related to the program that paid for the equipment which was the subject of the remuneration.”  Boris Lipovsky, M.D., DAB No. 1363 (1992), citing Niranjana B. Parikh, M.D., et. al.,DAB No. 1334 (1992).  I therefore conclude that Petitioner was convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program as contemplated by 42 U.S.C. § 1320a-7(a)(1).

C. The IG was required to exclude Petitioner under the Act’s mandatory exclusion authority.

Petitioner argues that the IG should have treated his case as one that fell under the IG’s permissive exclusion authority.  P. Br. at 5-6.  This argument is without merit.  Where a criminal conviction ostensibly falls within the bounds of both the permissive and the mandatory exclusion authorities, the IG has no discretion to determine which exclusion authority to apply; instead, the IG must exclude an individual who is convicted of a crime subject to the mandatory exclusion authority.  See Salko, M.D., DAB No. 2437 at 4, quoting Timothy Wayne Hensley, DAB No. 2044 (2006).

D. Petitioner must be excluded for a minimum of five years; the period of exclusion is therefore reasonable as a matter of law.

Because I have concluded that a basis exists to exclude Petitioner under 42 U.S.C. § 1320a-7(a)(3), Petitioner must be excluded for a minimum period of five years.  42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).  The IG has no discretion to impose a lesser period of exclusion, and I may not reduce the period of exclusion below five years.

VI. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for five years pursuant to section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)), effective April 19, 2018.

• 1. Document No. 9 in the official case file maintained in the DAB E-File system; for clarity and simplicity, whenever possible I will cite to the exhibits attached to the parties’ respective briefs by the exhibit numbers therein, not the document numbers assigned by the E-file system.
• 2. There is an obvious disconnect between the actual misdemeanor charge, Making or Causing False Statements or Representations in Claims Under a Federal Health Care Program, and the offense conduct contained in both the Superseding Information and the plea agreement, which clearly describe offense conduct that violates the Anti-Kickback statute. IG Exs. 3, 4. Neither document alleges the claims submitted by the DME Supplier were in any way false. Id. However, it is not my role to question the charging decisions of the U.S. government, the plea agreement endorsed by Petitioner and his defense attorney, or the judgment entered by the District Court. It is clear that Petitioner benefited from this change in the charge against him, as it allowed him to plead to a misdemeanor offense. To the extent Petitioner relies on this dissonance, I note that he may not collaterally attack his underlying conviction before me. 42 C.F.R. § 1001.2007(d). In any event, as I explain herein, his actual offense conduct, under any label, warrants exclusion.
• 3. Petitioner claims “[t]he superseding indictment alleged that he caused the undercover informant – in other words, the federal government – to file a claim with Medicare that was false.” P. Br. at 5. I have carefully reviewed both the Superseding Information and the plea agreement, and there is no evidence of these facts. It is possible that Petitioner’s counsel is referring to an altogether different case, or perhaps to another superseding charging document that is not before me (which would perhaps explain why he refers to an indictment rather than information). In any event, the actual offense conduct to which Petitioner admitted, resulting in his conviction, is clearly set forth and provides the factual basis for my determination. IG Exs. 3, 4.