Rehabilitation Center at Hollywood Hills, LLC, DAB No. 3001 (2020)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Petitioner Rehabilitation Center at Hollywood Hills, LLC, has appealed the Administrative Law Judge's decision, his second in this case.  Rehab. Ctr. at Hollywood Hills, LLC, DAB CR5469 (Nov. 20, 2019) (ALJ Decision II).  The ALJ's initial decision, issued May 22, 2019 (DAB CR5328) (ALJ Decision I), sustained a determination by the Office of Inspector General (I.G.) to exclude Petitioner from federal health care programs under section 1128(b)(5) of the Social Security Act (Act), based on Petitioner's suspension from participation in the Florida Medicaid program.  The I.G. determined to exclude Petitioner from participation in federal health care programs until it is reinstated to the state Medicaid program.  The Board affirmed the ALJ's initial decision in part, holding that the I.G. lawfully excluded Petitioner under section 1128(b)(5), but remanded the case to the ALJ to reconsider the length of the exclusion.  See Rehab. Ctr. at Hollywood Hills, LLC, DAB No. 2970 (2019).  On remand, the ALJ reaffirmed his decision, holding that Petitioner will remain excluded unless and until it is reinstated to the Florida Medicaid program.  For the reasons set out below, we determine that the I.G.'s determination to exclude Petitioner under section 1128(b)(5) until Petitioner is reinstated to the state Medicaid program is not unreasonable and serves the purpose of the exclusion authorities.

Legal background

Section 1128(b)(5) of the Act, 42 U.S.C. § 1320a-7(b)(5), permits the Secretary of Health and Human Services (Secretary) to exclude, from participation in all federal health care programs,1 "[a]ny individual or entity which has been suspended or excluded from participation, or otherwise sanctioned, under . . . (B) a State health care program, for

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reasons bearing on the individual's or entity's professional competence, professional performance, or financial integrity."  See also 42 C.F.R. § 1001.601(a)(1)(ii) (implementing regulation authorizing the I.G. to exclude an individual or entity "suspended or excluded from participation, or otherwise sanctioned, under . . . [a] State health care program, for reasons bearing on the individual's or entity's professional competence, professional performance or financial integrity").  The Secretary has delegated the exclusion authority to the I.G.

Section 1128(c)(3)(E) of the Act states that the period of an exclusion under section 1128(b)(5) "shall not be less than the period during which the individual's or entity's license to provide health care is revoked, suspended, or surrendered, or the individual or the entity is excluded or suspended from a Federal or State health care program."  See also 42 C.F.R. § 1001.601(b)(1) (exclusion "will not be for a period of time less than the period during which the individual or entity is excluded or suspended from a Federal or State health care program").  The exclusion period may be lengthened based on any of the aggravating factors in 42 C.F.R. § 1001.601(b)(2).  If and only if the exclusion period is lengthened based on the application of one or more of the aggravating factors in paragraph (b)(2), a mitigating factor may be considered as a basis for reducing the exclusion period to a period not less than that set out in paragraph (b)(1).  Id. § 1001.601(b)(3).

An excluded entity's reinstatement in federal health care programs after the exclusion period ends is not automatic; the entity must file, and the I.G. must approve, a request for reinstatement.  Id. §§ 1001.3001-.3004.

An excluded entity may request a hearing before an ALJ only on the issues of whether the "basis for the imposition of the sanction [i.e., the exclusion] exists" and, except for mandatory exclusions of five years or less, whether the "length of exclusion is unreasonable."  Id. § 1001.2007(a)(1).  An ALJ's decision may be appealed to the Board.  Id. § 1005.21(a).

Case background

Until 2017, Petitioner operated a nursing home enrolled in the Florida Medicaid program.  P. Ex. 1, at 1.  That program is administered by the Florida Agency for Health Care Administration (AHCA).  As outlined below, the I.G.'s exclusion determination is predicated on a Medicaid program "suspension" imposed by AHCA.2

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We summarize below the case history before we address the main remaining issue:  whether "[t]he length of exclusion" is "unreasonable."  42 C.F.R. § 1001.2007(a)(1)(ii).

1.     The Medicaid suspension

On September 14, 2017, in response to conditions found at Petitioner's facility in the wake of Hurricane Irma, AHCA issued an "Immediate Suspension Final Order" that suspended Petitioner's participation in the Florida Medicaid program.  DAB No. 2970, at 3.  AHCA issued the order pursuant to the Florida Statutes and Administrative Code, which authorize the suspension of a Medicaid provider's program participation upon receipt of reliable information that the provider's patients have been abused or neglected.  See P. Ex. 1, at 1; Fla. Stat. § 409.913(15)(p), 16(d); Fla. Admin. Code § 59G-9.070(7)(p).

The Florida Administrative Code provides:

• A Medicaid "suspension" is a "one-year preclusion from furnishing, supervising a person who is furnishing, or causing a person to furnish goods or services that result in a claim for payment to the Medicaid program";
• The suspension may be applied to any entity "whether or not enrolled in the Medicaid program";
• To "resume participation [in the Medicaid program] following the suspension period," the suspended entity must request to be "reinstated" and state "whether the violation(s) that brought rise to the suspension have been remedied";
• The suspended entity's "[p]articipation . . . may not resume until" AHCA authorizes it.

Fla. Admin. Code § 59G-.9.070(3)(o), (6)(a).

2.     The I.G.'s exclusion

Based on the state Medicaid suspension, the I.G. notified Petitioner on October 31, 2018 that it was being excluded from participation in any federal health care program in accordance with section 1128(b)(5) of the Act.  I.G. Ex. 2.  The I.G.'s notice of exclusion informed Petitioner that the exclusion will "remain in effect until you have been reinstated to the health care program which originally took action against you" (that is, reinstated to the Florida Medicaid program).  Id. at 1.

3.     The ALJ's initial decision

Petitioner requested an ALJ hearing.  The I.G. contended that the statutory conditions for a section 1128(b)(5)(B) exclusion were met – namely:  (1) Petitioner had been excluded, suspended, or otherwise sanctioned under a State health care program; and (2) the

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exclusion, suspension, or other sanction was for reasons bearing on Petitioner's professional competence, professional performance, or financial integrity.  Informal Br. of I.G. at 2-4.  The I.G. further asserted that Petitioner remained "suspended" from the Florida Medicaid program because it had not yet sought or been granted reinstatement to the program.  Id. at 4.  Because the Medicaid suspension was ongoing (according to the I.G.), and the section 1128(b)(5) exclusion was imposed to run "concurrently with" the underlying suspension, the I.G. submitted that the exclusion's length was "reasonable as a matter of law."  Id. at 5-6.

Petitioner responded that, by "operation of [Florida] law," its suspension from the Florida Medicaid program expired after one year (in September 2018); that no "current suspension" was in effect; and that a state lawsuit and administrative proceeding to contest the validity of the suspension and related sanctions were still pending.  Informal Br. of Pet. at 2, 3-4, 16.  Because the "underlying basis" for the Medicaid suspension was "still in litigation and not final," said Petitioner, the section 1128(b)(5) exclusion was "premature" and "not proper."  Id. at 2, 16.  Petitioner also disagreed with the I.G.'s contention that the exclusion's length was "reasonable as a matter of law" because it was running concurrently with the (allegedly) ongoing suspension.  In fact, said Petitioner, the exclusion and suspension were not concurrent because the suspension had already expired as a matter of Florida law by the time the I.G. imposed the exclusion.  Id. at 6.  Finally, Petitioner asserted that the I.G. had "offer[ed] no other support for its contention that the exclusion period is reasonable."  Id. at 7.

By decision issued May 22, 2019, the ALJ sustained the exclusion.  The ALJ held that the statutory conditions for imposing the section 1128(b)(5) exclusion were satisfied.  ALJ Decision I at 2-3.  The ALJ also found that, because a suspended provider's reinstatement to the Florida Medicaid program is not automatic under Florida law, and because Petitioner had not sought or been granted reinstatement, Petitioner "remained suspended" from that program.  Id. at 3.  The ALJ concluded that, because Petitioner's suspension would continue until Petitioner was reinstated to the Florida Medicaid program, the length of the exclusion – which was imposed to continue unless and until such reinstatement – was "justified as a matter of law."  Id.

4.     The Board's decision on review of the ALJ's initial decision

On appeal, Petitioner objected to the ALJ's conclusion that the length of the exclusion was "justified as a matter of law."  See Request for Review in App. Div. Dkt. No. A-19-107, at 4-5.  Petitioner emphasized that, under state law, the Medicaid suspension expired after one year, and not seeking reinstatement did not change that fact.  Id. at 4-5, 7-8.  Petitioner submitted that the "length of the OIG [exclusion] [is] unreasonable and not supported by any competent or substantial evidence" because the Medicaid suspension "was for only one year and is no longer in effect."  Id. at 4.  Petitioner asked the Board to overturn the exclusion on that basis (and on other grounds).  Id. at 4, 11.

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The Board affirmed the ALJ's decision in part.  DAB No. 2970.  It sustained the ALJ's conclusion (not challenged by Petitioner) that the statutory conditions for imposing a section 1128(b)(5) exclusion were met.  Id. at 6.  The Board also rejected Petitioner's suggestion that a section 1128(b)(5) exclusion may be imposed only when an underlying state sanction is still in effect.  Id. at 7-8.

The Board then addressed the issues raised concerning the length of the exclusion.  Id. at 8-11.  The Board observed that section 1128 and its corresponding regulations "do not limit the duration of a section 1128(b)(5) exclusion only to the duration of the [adverse] state action . . . on which the exclusion is based" but "merely mandate that the exclusion must be in place for at least as long as long as the [underlying sanction] is in effect."  Id. at 9 (italics in original).  The Board further observed that the statute and regulations "do not by their terms preclude the I.G. from imposing an exclusion that continues until the excluded entity is reinstated into the state health care program, as the I.G. did in this case."  Id.  The Board found, however, that the I.G. had not been "clear and consistent" about the exclusion's length – on one hand stating in its notice of exclusion that the exclusion would continue until Petitioner secured reinstatement to the Florida Medicaid program, and on the other hand indicating during the appeal process that the exclusion's length would be no longer than the duration of the underlying Medicaid suspension.  Id.  The Board noted that these alternative formulations are functionally equivalent if Petitioner's Medicaid "suspension" under Florida law remains in effect until Petitioner is reinstated to that program.  Id.  However, the Board said that the ALJ's holding to that effect is inconsistent with the Florida Administrative Code – which defines the term "suspension" as a "one-year preclusion from furnishing, supervising a person who is furnishing, or causing a person to furnish goods or services that result in a claim for payment to the Medicaid program" – and also conflicts with AHCA's representations during a state-court lawsuit filed by Petitioner to contest AHCA's Medicaid sanctions.  Id. at 10.  For those reasons, the Board concluded that the term of Petitioner's Medicaid suspension was one year and that the suspension "d[id] not continue indefinitely until AHCA [reinstated] Petitioner to the state Medicaid program."  Id.  In light of that conclusion and the ambiguity in the I.G.'s delineation of the exclusion's length, the Board remanded the case pursuant to 42 C.F.R. § 1005.21(g) "to further develop the record . . . [in order] to determine the duration of the exclusion that the I.G. imposed, and to then review that period of exclusion as provided in the regulations."  Id. at 11 (citing 42 C.F.R. § 1001.2007(a)(1)(ii)).

5.     The proceedings on remand

The ALJ ordered the parties to submit briefs regarding the length of the exclusion no later than November 8, 2019.  Oct. 3, 2019 Order (CRD Docket No. C-20-1).  The ALJ also allowed "[e]ither party [to] seek an interpretation from the State agency responsible for administering the relevant Florida law," stating that "[i]f a party obtains and offers an official interpretation, I will accept it as dispositive."  Id.  Both parties filed their briefs.

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In its brief, the I.G. asserted that the I.G. could lawfully exclude Petitioner under section 1128(b)(5) for "at least as longas the State [Medicaid] suspension, so [that] even if the suspension had only lasted one year, the I.G. could still reasonably have made the period of exclusion dependent on reinstatement to Florida Medicaid."  I.G. Remand Br. at 5.  The I.G. further asserted that AHCA "interprets its State law to mean that [a] suspension remains in place until Petitioner is reinstated"; in other words, said the I.G., a suspended provider "remains suspended after the one-year term of suspension has run unless and until it is reinstated, as reinstatement is not automatic under Florida law."  Id. at 5, 6 (italics in original).  In support of that assertion, the I.G. submitted the declaration of Kelly Ann Bennett,3 Bureau Chief for Medicaid Program Integrity, a unit of AHCA that "audits and investigates providers suspected of overbilling or defrauding Florida's Medicaid program, recovers overpayments, issues administrative sanctions, and refers cases of suspected fraud for criminal investigations."4  I.G. Ex. 6 (CRD Docket No. 20-1) ¶¶ 3-4.

Finally, the I.G. argued that the exclusion's length is reasonable because it reflects Florida's "administrative process [for] determin[ing] the manner in which suspensions are ended and lifted once the one-year suspension term has run."  I.G. Remand Br. at 8.  The I.G. suggested that the exclusion's length is also reasonable because it serves a "remedial purpose" of the exclusion statute.  Id. at 7-8.  One of the statute's purposes is to protect federal health care programs and their beneficiaries from "untrustworthy" providers.  The I.G. implied that keeping the exclusion in place until reinstatement serves that purpose because it ensures that Petitioner remains ineligible to participate in Medicaid until AHCA verifies, through the reinstatement process, that Petitioner has fixed the resident care problems that led to the suspension and is otherwise capable of operating in compliance with all applicable requirements.  I.G. Remand Br. at 7-8 (citing authorities and stating that "Congress has determined that suspension from a State health care program . . . is evidence of untrustworthiness" and that the "State agency taking disciplinary action . . . is in the best position to determine whether or not the reasons for that disciplinary action have been remediated").

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Petitioner responded that the Board has already determined that the Medicaid suspension was for one year under state law; that this determination is the "law of the case"; and that the law-of-the-case doctrine renders "irrelevant" the "interpretation" of Florida law submitted by the I.G. concerning the duration of the program suspension imposed by AHCA.  Pet. Remand Br. at 2-3, 4-5.  Petitioner further submits that the I.G. now has the "burden" to show that excluding it for more than one year is reasonable, but that the I.G. has not done so.  Id. at 3, 4-5, 7.  According to Petitioner, "the only proof that the IG has put forward to support the reasonableness of the duration of its exclusion is that it is running concurrently with the suspension from the state Medicaid program."  Id. at 4 (italics and emphasis in original).  "Now that the Board has held [in DAB No. 2970] that the state suspension was only for one year," said Petitioner, "the IG has no other evidence to support the length of the exclusion."  Id. at 6.

6.     The ALJ's decision on remand

In his November 20, 2019 Decision on Remand, the ALJ stated that the Board had

remanded the case to me for further development so that I could decide whether the suspension ended after one year – thus limiting the IG's exclusion determination to just one year – or whether the suspension remained in effect, thus allowing the IG to continue to exclude Petitioner until and unless Petitioner's Florida Medicaid license was reinstated by AHCA.

ALJ Decision II at 2.  Relying on what he characterized as Bennett's "dispositive" declaration, the ALJ reaffirmed his holdings that Florida law defines a "minimum" suspension period, and that Petitioner "remains suspended under Florida law" unless and until it is reinstated in the Florida Medicaid program.  Id. at 2-3.  Based on those holdings, the ALJ concluded that, until such reinstatement, the section 1128(b)(5) exclusion "remains in effect" by its own terms and did not end after one year.  Id. at 3.

7.     Appeal of the ALJ's second decision

Petitioner emphasizes that the Board held in its September 26, 2019 decision that the suspension imposed by AHCA on September 14, 2017 lasted one year.  Request for review of ALJ Decision II (RR Post-Remand) at 3.  According to Petitioner, the ALJ improperly disregarded that holding – which Petitioner says is the "law of the case" – and then failed to comply with the Board's instruction to address whether an exclusion "beyond the suspension period" is "reasonable."  Id. at 1, 4, 6-8, 10.  Petitioner submits that the I.G. has the burden to show that a section 1128(b)(5) exclusion whose length exceeds the duration of the predicate state sanction is reasonable, but that the I.G. offered no evidence to that effect.  Id. at 9-10 (asserting that "there is no competent or substantial evidence on the record that the exclusion is reasonable beyond the length of the AHCA

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suspension").  "Instead," says Petitioner, "the I.G. spent its entire time on remand seeking to re-argue an issue that this Board had already decided – namely that the AHCA suspension somehow continues past the one-year limitation placed on it by rule."  Id. at 10.  Petitioner further contends that the ALJ's briefing schedule effectively prevented it "from having any chance to cross-examine" Bennett or otherwise "challenge" her statements, and thus the declaration's admission and use violated Petitioner's right to due process.  Id. at 4, 6-7, 8-9.  For these and other reasons, Petitioner asks the Board to reverse the ALJ's decision and rescind the exclusion.  Id. at 1, 5-6, 9-10.

The I.G. responds that the ALJ "properly sustained the exclusion on the grounds that the [Petitioner] remains suspended" from the Florida Medicaid program.  Response Br. Post-Remand at 2.  According to the I.G., the Board "incorrectly determined in its decision that 'the state suspension does not continue indefinitely until AHCA reinstates Petitioner to the state Medicaid program.'"  Id. at 8 (quoting DAB No. 2970, at 10).  That finding, says the I.G., "is wholly inconsistent with AHCA's position and its administrative process of ending a suspension."  Id.  Citing the Bennett declaration, the I.G. emphasizes that Florida law establishes "an administrative process to determine the manner in which suspensions are ended once the one-year suspension term has run" – a process that requires the suspended provider to apply for reinstatement, and AHCA to authorize reinstatement upon verifying that the provider has corrected past violations and is fully compliant with applicable program requirements.  Id. at 9.  Because Petitioner has not sought reinstatement in the Florida Medicaid program, and because AHCA "has not authorized" Petitioner's "participation," the I.G. submits that Petitioner "remains suspended" from that program.  Id. at 10, 13-14.  The I.G. further contends that imposing the exclusion to remain effective until Petitioner's reinstatement to the Florida Medicaid program is "not unreasonable" because the I.G. "has no discretion [under the regulations] to impose an exclusion that is shorter than the period for which [Petitioner] is excluded or suspended from a Federal or State health care program."  Id. at 12-13.  In addition, the I.G. again suggests that the exclusion's length is reasonable because it serves a "remedial purpose" of the exclusion statute.  Id. at 11-12.

8.     Board's questions to the parties; the parties' responses

We determined that additional input from the parties on whether the duration of the I.G.'s exclusion is unreasonable – the remaining contested issue – would best serve our decision-making.  By order issued March 10, 2020 (March 2020 Order), we directed the parties to answer certain questions on the applicability and role of 42 C.F.R. § 1001.601(a) and (b), including specifically the aggravating and mitigating factors in paragraphs (b)(2) and (b)(3), as relevant to the issue.  We asked the parties to assume, in responding to our questions, that the Florida Medicaid suspension lasted one year such that Petitioner was no longer "suspended" from Medicaid under the Florida rules.

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The parties responded, converging on this point:  section 1128(b)(5) and 42 C.F.R. § 1001.601 do not by their terms preclude the I.G. from excluding an entity for a period longer than a finite period of an underlying state sanction from which the I.G.'s exclusion is derived.  Petitioner acknowledges that the I.G. "certainly has the authority to continue its exclusion beyond the AHCA suspension" (RR Post-Remand at 9) and that section 1001.601(b) "places no limits on the length of the exclusion" (P. Responses to March 2020 Order at 1).

The parties diverge on whether the I.G. must establish any aggravating factor in 42 C.F.R. § 1001.601(b)(2) to impose an exclusion to remain in effect beyond a one-year state suspension.  Petitioner asserts that, in order for the I.G. to continue to exclude Petitioner after the "base exclusionary period" concurrent with the state suspension, the I.G. must establish at least one of the regulatory aggravating factors (and only those factors), and the Petitioner must then have an opportunity to establish mitigation under 42 C.F.R. § 1001.601(b)(3).  Id. at 2-3, 6.  Petitioner asserts that the I.G. has not established any such factor and in any case conceded earlier that none apply.  Id. at 5 (citing Informal Br. of I.G. at 6).  Petitioner says that to now permit the I.G. to assert the existence of "some sort of 'implied' aggravating factor" Petitioner had no notice and opportunity to be heard on would be inconsistent with the exclusion authorities and violate its right to due process.  Id. at 5-6.  Petitioner submits that, had the I.G. advanced an aggravating factor, it could have called "numerous witnesses" to prove "factors in mitigation."  Id. at 6.  Petitioner also submits that it has cooperated with "numerous government agencies" and submitted "reports to the United States Congress," and that its cooperation "led to numerous changes in laws and regulations related to the way state and federal government[s] respond to natural disasters with regards to frail, elderly populations."  Id. at 7.

The I.G., however, maintains that, even assuming the state Medicaid suspension ended after one year, an exclusion that continues for an "indefinite" period, that is, unless and until Petitioner is reinstated to the Florida Medicaid program, is reasonable as a matter of law.  Accordingly, says the I.G., no aggravating factor need be established here.  I.G. Responses to March 2020 Order at 2-3.5  Nevertheless, the I.G. asserts, the record establishes the existence of two aggravating factors.  Id. at 3, 4, 5-6.  And, says the I.G., Petitioner "cannot" assert the existence of the sole mitigating factor recognized by the regulations because mitigation is not "supported on the record."  Id. at 8.

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Analysis

By our initial decision, we settled two issues – the legality of the I.G.'s determination to exclude Petitioner under section 1128(b)(5) based on its suspension from the Florida Medicaid program for reasons bearing on Petitioner's professional competence, professional performance or financial integrity, and the timing of the I.G.'s determination to exclude Petitioner from all health care programs based on the Medicaid suspension.  As we determined in DAB No. 2970, and summarily reaffirm here, the ALJ correctly sustained the I.G.'s determination to exclude Petitioner under section 1128(b)(5).

The remaining issue for resolution is the reasonableness of the length of the exclusion, which, under the I.G.'s exclusion determination, would continue to remain in effect at least until Petitioner is reinstated to the Florida Medicaid program.  Resolution of that question has been complicated by the Florida Administrative Code, which provides that "suspension" is "a one-year preclusion from furnishing, supervising a person who is furnishing, or causing a person to furnish goods or services that result in a claim for payment to the Medicaid program."  Fla. Admin. Code Ann. § 59G-9.070(3)(o).  There is no question that, as Bennett attested, Petitioner cannot resume participation in the Florida Medicaid program unless and until AHCA permits Petitioner to do so should Petitioner decide to seek reinstatement.  But that does not establish that Petitioner remains "suspended" under the Florida rules so as long as it does not seek reinstatement and is not in fact reinstated to the Florida Medicaid program.  Neither party has cited any legal authority that would call into question our previous determination, based on the plain language of the Florida code provisions, that a "suspension" under relevant Florida rules ends after no more than one year.  See DAB No. 2970, at 9-11.

While Petitioner is no longer "suspended" after September 2018 under those provisions, the expiration of the suspension does not preclude our upholding an exclusion remaining in effect beyond the suspension term.  Federal exclusion authorities do not restrict the exclusion period to the duration of the underlying adverse state sanction from which the federal exclusion is derived.  They require only that the exclusion be in effect for at least as long as the state sanction is in effect.  We note, moreover, that the I.G. ultimately has authority, by delegation from the Secretary, to determine whether a section 1128(b)(5) exclusion should end, notwithstanding the status of the excluded entity under state rules ("suspended," not reinstated).  See Act § 1128(g)(2).

The question presented, then, is whether imposing an exclusion to continue beyond the term of the predicate state sanction was reasonable, based on the regulations that permit consideration of any of three factors as "aggravating" and therefore "a basis for lengthening the period of exclusion" (42 C.F.R. § 1001.601(b)(2)).  Having considered the parties' answers to our questions, we explain below our rationale for concluding that the record evidence establishes two aggravating factors that, in light of the overarching purpose of the exclusion authorities (to protect federal health care programs and their

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beneficiaries), justify continuing the exclusion beyond the period of the state Medicaid suspension.  Further, Petitioner's responses to our questions do not persuade us that deferring decision for development would be fruitful in yielding evidence of mitigation that possibly could offset the effect of the aggravating factors.

I.  The evidence on which the ALJ and the Board previously had determined established a lawful basis for excluding Petitioner under section 1128(b)(5) supports two aggravating factors for continuing the exclusion.

Paragraph (b)(2) of section 1001.601 provides:

Any of the following factors may be considered aggravating and a basis for lengthening the period of exclusion –

(i) The acts that resulted in the exclusion, suspension or other sanction under Medicare, Medicaid and all other Federal health care programs had, or could have had, a significant adverse impact on Federal or State health care programs or the beneficiaries of those programs or other individuals;

(ii) Whether the individual or entity has a documented history of criminal, civil or administrative wrongdoing; or

(iii) The individual or entity has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for the imposition of the exclusion.

42 C.F.R. § 1001.601(b)(2).

As noted above, the I.G. asserts that the record evidence supports the first and third aggravating factors (but does not assert the presence of the second, in 42 C.F.R. § 1001.601(b)(2)(ii)).  Petitioner, however, asserts that the I.G. earlier "stated that it had no aggravating factors" (P. Responses to March 2020 Order at 5) when the I.G. answered "Not applicable" to the question about the presence of any aggravating factors in the standard form Informal Brief the ALJ required the I.G. to complete and file.  Id. (citing Informal Br. of I.G. at 6).  We understand Petitioner to be asserting that the I.G. effectively waived any right the I.G. might have had to justify continuing to exclude Petitioner after the suspension based on any alleged aggravating factor.  We take a different view.  Below, the ALJ identified the issue on appeal as whether the I.G. had a basis to exclude Petitioner under section 1128(b)(5) and that, if the ALJ finds the I.G. was authorized to exclude Petitioner, then the ALJ must uphold the I.G.'s determination to exclude Petitioner until it is reinstated to the Florida Medicaid program.  See ALJ's Feb. 12, 2019 Order and Schedule for Filing Briefs and Documentary Evidence at 2.  The

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I.G.'s position was (and is) that Petitioner remained "suspended" from the Medicaid program until it is reinstated to that program and, accordingly, no aggravating factor need be established to support a section 1128(b)(5) exclusion to run concurrently with the state suspension that continued to be in place and that the exclusion's length was thus reasonable as a matter of law.  The I.G.'s "Not applicable" response was consistent with that (mistaken) position; we do not construe the I.G.'s response to have meant that no cognizable aggravating factor existed.  We note, moreover, that specific questions concerning the applicability and role of the aggravating (and mitigating) factors as relevant to the reasonableness issue were directly put to the parties during Petitioner's appeal of ALJ Decision II.  Both parties have since availed themselves of the opportunity to state their position on the issue.  As we explain below, we agree with the I.G. that two aggravating factors are established and that the evidence of such factors, in light of the overarching purpose of the exclusion authorities, supports continuing the exclusion.

As detailed in DAB No. 2970, at 3, it is undisputed that, on September 14, 2017, AHCA suspended Petitioner from participation in the Florida Medicaid program with immediate effect and imposed a moratorium on resident admissions because –

the practices and conditions at [Petitioner's] facility present (1) a threat to the health, safety, or welfare of residents of the facility, (2) a threat to the health[,] safety, or welfare of a client, (3) an immediate serious danger to the public health, safety, or welfare, and (4) an immediate or direct threat to the health, safety, or welfare of the residents.

I.G. Ex. 3, at 1.  AHCA made that determination based on survey findings the prior day that "several" residents had respiratory or cardiac distress that day.  Id. at 6.  Eight residents later died.  Id.  Those events occurred following the failure of the facility's air conditioning system on September 10, 2017 in connection with widespread power outages in the aftermath of Hurricane Irma.  Id.; DAB No. 2970, at 3 (citing P. App. Br. at 1).  AHCA determined, following the survey, that "deficient conduct is widespread and places all future residents at immediate threat to their health, safety and welfare" and that Petitioner "has demonstrated that its physical plant cannot currently provide an environment where residents can be provided care and services in a safe and sanitary manner."  I.G. Ex. 3, at 7.  AHCA moreover determined that "deficient practice exist[s] presently, [has] existed in the past, and more likely than not will continue to exist if [AHCA] does not act promptly."  Id. at 8.  On appeal, Petitioner acknowledged that AHCA suspended it from the Florida Medicaid program "based upon allegations of deficient care in the aftermath of Hurricane Irma" (P. App. Br. at 1) and did not dispute that the reasons for suspension bore on its professional competence or professional performance.  DAB No. 2970, at 6.

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AHCA determined that the practices or conditions at Petitioner's facility following Hurricane Irma at a minimum posed a threat to resident health, safety or welfare and, based on that determination, decided to immediately suspend Petitioner from participation in Medicaid.  There is no question that those very practices or conditions at a minimum posed a risk for significant harm to the residents of Petitioner's facility.  The aggravating factor at 42 C.F.R. § 1001.601(b)(2)(i) is established.

The aggravating factor at 42 C.F.R. § 1001.601(b)(2)(iii), too, is shown based on record evidence that Petitioner has been the subject of additional adverse action taken by AHCA based on the circumstances that led AHCA to suspend Petitioner from the Medicaid program, which in turn was the basis for the I.G.'s exclusion.  On September 20, 2017, AHCA suspended Petitioner's license to operate a nursing home; and, on January 4, 2019, it revoked the operating license and imposed a fine of $37,500, based on the circumstances that led AHCA to suspend Petitioner from the Florida Medicaid program.  I.G. Ex. 4; I.G. Ex. 6 (Bennett Decl.) ¶ 10 (stating that, as of the date of execution of the declaration, October 29, 2019, Petitioner "does not hold a current, active nursing home license").6

II.  Petitioner's responses do not indicate that proof of the only mitigating factor recognized by the applicable regulations exists.

Section 1001.601(b)(3) provides:

Only if any of the aggravating factors listed in paragraph (b)(2) of this section justifies a longer exclusion may a mitigating factor be considered as a basis for reducing the period of exclusion to a period not less than that set forth in paragraph (b)(1) of this section.^[7^]  Only the following factor may be considered mitigating:  The individual's or entity's cooperation with Federal or State officials resulted in –

(i)   The sanctioning of other individuals or entities, or

(ii)   Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses.

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42 C.F.R. § 1001.601(b)(3).

Petitioner states that it could have called "numerous witnesses" to prove "factors in mitigation."  P. Responses to March 2020 Order at 6.  The regulations recognize a single factor that could be applied to mitigate (that is, reduce or offset) the duration of a section 1128(b)(5) exclusion where the I.G. imposes that exclusion to remain in effect beyond the period of the underlying derivative sanction on which the exclusion is based:  cooperation with federal or state officials that resulted in at least one of two outcomes.  Petitioner does not further address who could have testified as to the mitigating factor, to what they could have testified, and how their testimony would have established the mitigating factor.

Petitioner also informs the Board that it has cooperated with "numerous government agencies" and submitted "reports to the United States Congress."  Id. at 7.  It asserts that its contribution "led to numerous changes in laws and regulations related to the way state and federal government[s] respond to natural disasters with regards to frail, elderly populations."  Id.  But Petitioner does not elaborate on how specifically it cooperated and what information or assistance it gave and to whom.  And, any cooperation with the state or federal government must actually result in either sanctioning of other individuals (which Petitioner does not state occurred), or additional cases being investigated or reports being issued by law enforcement (as opposed to the excluded entity submitting some sort of report to a governmental body).  To the extent submitting "reports to the United States Congress" could be understood as "cooperation" for purposes of mitigation, Petitioner does not assert that such action actually "resulted in" additional cases being investigated or reports being issued by any law enforcement agency identifying program vulnerabilities or weaknesses.  Moreover, although Petitioner's words – "numerous changes in laws and regulations related to the way state and federal government[s] respond to natural disasters with regards to frail, elderly populations" – suggest a desirable outcome (even if not in the form of any case being investigated or report being issued), Petitioner does not explain what if any program vulnerabilities or weaknesses as they relate to the alleged changes in laws and regulations were identified.8

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Under 42 C.F.R. § 1005.21(f), "[i]f any party demonstrates to the satisfaction of the [Board] that additional evidence not presented at such hearing is relevant and material and that there were reasonable grounds for the failure to adduce such evidence at such hearing, the [Board] may remand the matter to the ALJ for consideration of such additional evidence."9  Because Petitioner's responses do not suggest the existence of evidence of mitigation for which further development would be appropriate, we have proceeded to decision on the reasonableness issue based on the record before us.10

III.  Imposing a section 1128(b)(5) exclusion from federal health care programs to remain in effect after the predicate state suspension from the Medicaid program ends serves the overarching purpose of the exclusion authorities.

The I.G.'s authority under section 1128 to exclude individuals or entities from participating in federal health care programs (and implementing regulations, including those that set out aggravating and mitigating factors) is grounded in this remedial purpose:  to protect those programs and the beneficiaries those programs serve from untrustworthy individuals.  See, e.g., Hussein Awada, M.D., DAB No. 2788, at 5 (2017)  (and cited cases); Robert Kolbusz, M.D., DAB No. 2759, at 6 (2017); Richard E. Bohner, DAB No. 2638, at 19 (2015), aff'd, Bohner v. Burwell, No. 15-cv-4088, 2016 WL 8716399 (E.D. Pa. Dec. 12, 2016); Donald A. Burstein, Ph.D., DAB No. 1865, at 12 (2003) (citing Patel v. Thompson, 2003 WL 203468 (11th Cir. 2003) and Mannocchio v. Kusserow, 961 F.2d 1539, 1543 (11th Cir. 1992)).  The I.G. made this point in the

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preamble to the final regulations at issue.  The I.G. rejected the suggestion that the I.G.'s exclusion authority is or should be constrained to limit the duration of an exclusion to correspond to the underlying state sanction from which the federal exclusion is derived, because such a constraint would not be consistent with the purpose of exclusion.  The I.G. said:

Comment:  Commenters stated that the regulations provide that the OIG may impose an exclusion for a longer length of time than the penalty imposed by the derivative agency.  One commenter argued that it is inappropriate to allow for an exclusion to be longer than that imposed by the original sanctioning body, especially since a provider cannot collaterally attack the basis for the first action.  [See 42 C.F.R. § 1001.2007(d).]

Response:  We anticipate that in the vast majority of cases, the length of the exclusion imposed by the OIG will parallel the length of time imposed by the original sanctioning body.  However, there may be circumstances where the OIG finds that the derivative body did not adequately consider the potential harm that the individual's or entity's actions could have on Medicare or the State health care programs.  In those cases, the OIG must have the discretion to extend an exclusion so as to adequately protect the programs and their beneficiaries.  Section 1128(c) of the Act, which governs the length of exclusions, does not restrict the exclusions imposed under sections 1128(b)(4) or (b)(5) to the length imposed by the derivative body.

Final Rule, 57 Fed. Reg. 3298, 3305 (Jan. 29, 1992) (eff. Jan. 29, 1992).

AHCA suspended Petitioner from the Medicaid program and later revoked its nursing home operating license because it determined that the conditions at Petitioner's facility were such that they posed a risk of harm to its residents, thus raising a question of professional competence or professional performance related to resident health and safety.  Accordingly, keeping an exclusion in place until a determination that Petitioner has remedied the violations or problems that precipitated the sanction and is otherwise compliant with all applicable requirements to resume operations, made by the state licensing authority that would be in the best position to make such a determination, would serve the exclusion authorities' purpose of protecting the health care programs and their beneficiaries.11

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Lastly, we note that 42 C.F.R. § 1001.601(a)(1) states the I.G. has authority to exclude an entity "suspended . . . or otherwise sanctioned" under any federal program involving the provision of health care, or any state health care program for reasons bearing on the entity's professional competence, professional performance or financial integrity.  The term "or otherwise sanctioned" "is intended to cover all actions that limit the ability of a person to participate in the program at issue regardless of what such an action is called, and includes situations where an individual or entity voluntarily withdraws from a program to avoid a formal sanction."  42 C.F.R. § 1001.601(a)(2); see also 57 Fed. Reg. at 3305 (The I.G. stated that a definition of the term "otherwise sanctioned" was being included in section 1001.601 "to explain that it includes any action[] that limits the ability of a person to participate in the program at issue.").  Consistent with the definition of the term, regardless of Petitioner's status by operation of Florida law, Petitioner cannot resume participation in the Medicaid program unless it applies for reinstatement to the Florida Medicaid program and AHCA permits it to be reinstated.  Accordingly, Petitioner remains "otherwise sanctioned" for purposes of the section 1128(b)(5) exclusion, and keeping the exclusion in place as the I.G. has determined to do here is reasonable in light of the established aggravating factors and the purpose of the exclusion authorities.

Conclusion

We affirm the ALJ's decision to sustain the I.G.'s determination to exclude Petitioner from participation in federal health care programs under section 1128(b)(5) of the Act.  Continuing the exclusion beyond the finite duration of Petitioner's suspension from the Florida Medicaid program is not unreasonable and serves the purpose of the exclusion authorities.

• 1. Section 1128B(f) of the Act defines "Federal health care program" to mean "(1) any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government" (other than federal employee health insurance); or "(2) any State health care program, as defined in section 1128(h)" of the Act.  Section 1128(h) of the Act defines "State health care program" to include "a State plan approved under title XIX [Medicaid]."
• 2. Unless otherwise indicated, exhibit and other record citations in this decision are from the record of Civil Remedies Division Docket Number C-19-294, on which the ALJ issued his initial decision.
• 3. This was the second Bennett declaration filed by the I.G.  The first was submitted in the initial ALJ proceeding as Inspector General Exhibit 5.  The ALJ excluded that exhibit.  ALJ Decision I at 2.
• 4. Bennett described the requirements for reinstatement to the Medicaid program "following the suspension period" as well as the steps normally taken by AHCA to process a request for reinstatement.  I.G. Ex. 6 ¶¶ 5-9.  Those steps include verifying that the deficiencies or violations that led to the suspension have been remedied and that the provider is fully compliant with state and federal law governing the Medicaid program.  Id. ¶¶ 8-9.  According to Bennett, "[p]articipation in the Medicaid program may not resume until written confirmation is issued from [AHCA] indicating that participation has been authorized."  Id. ¶ 6.  Bennett asserted that, as of October 29, 2019, Petitioner "ha[d] not sought reinstatement to the [Florida] Medicaid program" and did not have an "active nursing home license"; that AHCA had "not authorized Petitioner's participation in the Medicaid program"; and that Petitioner therefore "remain[ed] suspended by the Florida Medicaid program."  Id. ¶ 10.
• 5. According to the I.G., aggravating factor(s) would need to be established only if Petitioner had been reinstated to the Florida Medicaid program after the one-year suspension.  I.G. Responses to March 2020 Order at 3, 4.
• 6. Also, as we noted in our initial decision, an ALJ sustained the determination of the Centers for Medicare & Medicaid Services to terminate Petitioner's participation in Medicare and impose civil money penalties in connection with the events underlying AHCA's suspension.  DAB No. 2970, at 5 n.4 (citing Rehab. Ctr. at Hollywood Hills, DAB CR5232 (2019)).  Petitioner's appeal of DAB CR5232 to the Board is currently pending.
• 7. See Proposed Rule, 62 Fed. Reg. 47,182, 47,186 (Sept. 8, 1997) (stating that, with the establishment of a "base exclusion period" under section 1001.601, "mitigating factors may only be considered if aggravating factors exist that would justify a longer exclusion beyond the base period").
• 8. The I.G. has indicated that mitigation based on cooperation contemplates an actual, positive outcome; the act of "cooperating" is not itself sufficient.  A commenter addressing the proposed regulations stated that the value of information given in cooperation may not be determined until later.  The commenter suggested that the I.G. consider crediting excluded individuals and entities for providing information that is not immediately validated by the commencement of a new case or the issuance of a report since preliminary investigations may require a significant amount of time before a case is opened or a report prepared.  In response, the I.G. stated that it expected the mitigating factor to be considered "only in those situations where the law enforcement agency validated the person's information by opening up a case investigation or by issuing a report . . . ."  Final Rule, 63 Fed. Reg. 46,676, 46,681 (Sept. 2, 1998) (eff. Oct. 2, 1998) (promulgating mitigation rules concerning cooperation of the excluded person or entity, set out in various section 1001 regulations, including 42 C.F.R. § 1001.601(b)(3)(ii)).
• 9. The excluded individual or entity bears the burden to prove mitigation before an ALJ.  See 42 C.F.R. § 1005.15(b), (c), (d); see also, e.g., Stacey R. Gale, DAB No. 1941, at 9 (2004) (stating, "it is [p]etitioner's responsibility to locate and present evidence to substantiate the existence of any alleged mitigating factor" in a section 1128(a)(1) exclusion under 42 C.F.R. § 1005.15(b)(1), and "the I.G. does not have the responsibility to prove the non-existence of the mitigating factor"); Baldwin Ihenacho, DAB No. 2667, at 7 (2015) ("[p]etitioner bore the burden of proving the presence of any mitigating factor" potentially applicable to offset the effect of aggravating factors applied in exclusion under sections 1128(a)(3) and (a)(4)); Barry D. Garfinkel, M.D., DAB No. 1572, at 12 (1996) (stating, in a section 1128(b)(1) exclusion case, that "the ALJ properly stated that [p]etitioner had the burden of proving any mitigating factor by a preponderance of the evidence, since the mitigating factor is in the nature of an affirmative defense"), aff'd, Garfinkel v. Shalala, No. 3-96-604 (D. Minn. June 25, 1997); George Iturralde, M.D., DAB No. 1374, at 15 (1992) (stating, in an appeal of section 1128(b)(5) exclusion imposed before the promulgation of the regulations on the mitigation factor at issue in this case, that "the burden was on [p]etitioner to introduce evidence showing rehabilitation if he wished for the ALJ to consider it as a mitigating factor").
• 10. Even were we to assume that the mitigating factor could be proven, that would not necessarily mean that the mitigating factor would negate the effect of the aggravating factors to result in an exclusion to be in effect only as long as the duration of the state suspension.  Here, we need not engage in an extended discussion of the interaction between aggravating and mitigating factors as it affects the issue of reasonableness of an exclusion's length because we have two aggravating factors that support continued exclusion but no evidence of the single cognizable mitigating factor that could offset the effect of the aggravating factors.  We note, however, that numerous Board decisions have considered this issue, explaining that weighing the factors requires a qualitative, case-specific analysis.  See, e.g., Hussein Awada, M.D., DAB No. 2788, at 10 (2017); Eugene Goldman, M.D., a/k/a Yevgeniy Goldman, M.D., DAB No. 2635, at 8, 11 (2015); Sushil Aniruddh Sheth, M.D., DAB No. 2491, at 5 (2012); Jeremy Robinson, DAB No. 1905, at 11 (2004).
• 11. As we acknowledged in DAB No. 2970, at 11, an excluded entity might not seek or gain reinstatement to the program from which it was sanctioned by a state authority for reasons unrelated to professional competence or professional performance.  Nevertheless, keeping an I.G. exclusion in place until the state authority determines the violations or problems that posed a risk of harm to residents have been remedied would help ensure that the purpose of the exclusion authorities is faithfully served should the excluded entity later decide to seek reinstatement.