Nicholas P. Roussis, DAB CR5245 (2019)

DECISION

Petitioner, Nicholas P. Roussis, is excluded from participating in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(1) and (3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1) and (3)) effective May 20, 2018.  Petitioner’s exclusion for five years is required by section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).  An additional period of exclusion of five years, for a total minimum exclusion of ten years,1 is not unreasonable based upon the existence of three aggravating factors and no mitigating factors in this case.

I. Background

The Inspector General (IG) of the U.S. Department of Health and Human Services notified Petitioner by letter dated April 30, 2018, that he was being excluded from

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participation in Medicare, Medicaid, and all federal health care programs for a minimum period of 10 years.  The IG advised Petitioner that he was being excluded pursuant to section 1128(a)(1) and (3) of the Act based on his conviction in the United States District Court for the District of New Jersey (District Court).  IG Exhibit (Ex.) 1.

Petitioner timely requested a hearing by letter postmarked May 23, 2018 (RFH).  The case was assigned to me on June 13, 2018, to hear and decide.  I convened a prehearing conference by telephone on July 12, 2018, the substance of which is memorialized in my Prehearing Conference Order and Schedule for Filing Briefs and Documentary Evidence dated July 12, 2018 (Prehearing Order).  During the prehearing conference, Petitioner waived an oral hearing and agreed that this matter may be resolved based on the parties’ briefs and documentary evidence.  On September 7, 2018, the IG filed a brief (IG Br.), and IG Exs. 1 through 5.  Petitioner’s brief (P. Br.) was received on November 5, 2018, with Petitioner’s exhibits (P. Exs.) 1 through 5.  The IG filed a reply brief on November 23, 2018, and a corrected reply brief December 10, 2018 (IG Reply).  Petitioner filed a sur-reply on December 7, 2018, which is accepted.  Petitioner did not object to my consideration of IG Exs. 1 through 5 and they are admitted.  The IG objected to my consideration of P. Ex. 1, which are pages from Petitioner’s presentencing report, on grounds it was incomplete because Petitioner offered only 4 non-sequential pages of the approximately 41-page report.  IG Reply at 2.  The IG does not object on grounds that the pages offered are not relevant, not authentic, or not reliable evidence.  The Federal Rules of Evidence (Fed. R. Evid.) are not binding in this proceeding but may be applied where appropriate.  42 C.F.R. § 1005.17(b).  I must exclude irrelevant or immaterial evidence.  42 C.F.R. § 1005.17(c).  Relevant evidence may be excluded if its probative value is outweighed by the danger of unfair prejudice, confusion of the issues, to prevent undue delay or presentation of cumulative evidence, or if the evidence is privileged.  42 C.F.R. § 1005.17(d), (e).  Pursuant to Fed. R. Evid. 106, if a party introduces part of a writing, an adverse party may require the production of the remainder of the document, if fairness requires consideration of the entire document.  The IG has not demanded the production of the entire document by Petitioner or offered the remainder of the document.  The IG objection to my consideration of P. Ex. 1 is overruled.  However, in weighing P. Ex. 1, I am aware that the document is not complete.  P. Exs. 1 through 5 are admitted as evidence.

II. Discussion

A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a hearing by an administrative law judge (ALJ) and judicial review of the final action of the Secretary of Health and Human Services (the Secretary).

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Pursuant to section 1128(a) of the Act, the Secretary must exclude from participation in any federal health care program any individual convicted under federal or state law of, among other things:  a criminal offense related to the delivery of an item or service under Medicare or a state health care program; or a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service, or with respect to any act or omission in a health care program operated by or financed in whole or in part by any federal, state, or local government agency other than Medicare or a state health care program.  Act § 1128(a)(1), (3).  The Secretary has promulgated regulations implementing these provisions of the Act.  42 C.F.R. § 1001.101(a), (c).2

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act will be for a period of not less than five years.  42 C.F.R. § 1001.102(a).  The Secretary has published regulations that establish aggravating factors that the IG may consider to extend the period of exclusion beyond the minimum five-year period, as well as mitigating factors that may be considered only if the minimum five-year period is extended.  42 C.F.R. § 1001.102(b), (c).

The standard of proof is a preponderance of the evidence, and there may be no collateral attack of the conviction that provides the basis for the exclusion.  42 C.F.R. § 1001.2007(c), (d).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors, and the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(c); Prehearing Order ¶ 4.

B. Issues

The Secretary has by regulation limited my scope of review to two issues:

Whether there is a basis for the imposition of the exclusion; and

Whether the length of the exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).

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

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

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

2. Petitioner waived the right to an oral hearing and disposition on the pleadings and documentary evidence is appropriate.

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.  Petitioner waived the right to an oral hearing and disposition on the pleadings and documentary evidence is permissible.  42 C.F.R. § 1005.6(b)(5).

3. Petitioner’s exclusion is required by section 1128(a)(1) and (3) of the Act.

The IG cites section 1128(a)(1) and (3) of the Act as the bases for Petitioner’s mandatory exclusion.  The statute provides in relevant part:

(a)  MANDATORY EXCLUSION. – The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):

(1)  CONVICTION OF PROGRAM-RELATED CRIMES. – Any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under title XVIII or under any State health care program.

* * * *

(3)  FELONY CONVICTION RELATING TO HEALTH CARE FRAUD. – Any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program (other than those specifically described in paragraph (1)) operated by or financed in whole or in part by any

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Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Act § 1128(a)(1), (3).

For an exclusion pursuant to section 1128(a)(1), the plain language of the Act requires that the Secretary exclude from participation in Medicare, Medicaid, and all federal health care programs any individual or entity:  (1) convicted of a criminal offense; (2) where the offense is related to the delivery of an item or service; and (3) the delivery of the item or service was under Medicare or a state health care program.  For an exclusion pursuant to section 1128(a)(3), the plain language of the Act requires that the Secretary exclude an individual or entity:  (1) convicted of an offense under federal or state law; (2) if the offense occurred after August 21, 1996 (the date of enactment of the Health Insurance Portability and Accountability Act of 1996); (3) if the offense was committed in connection with the delivery of a health care item or service, or with respect to any act or omission in a health care program (other than Medicare or a state health care program) operated by or financed in whole or in part by any federal, state, or local government agency; (4) if the criminal offense was a felony; and (5) if the offense was related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Petitioner does not dispute that on about June 21, 2017, he was charged by information with one count of receiving bribes in the amount of approximately $175,000 from Biodiagnostic Laboratory Services, LLC (BLS) for sending patient blood specimens to BLS, and BLS filed claims with Medicare, Tricare, and private insurers in the amount of $250,000.  IG Ex. 3 at 4.  Petitioner does not dispute that on October 16, 2017, judgment was entered finding him guilty pursuant to his guilty plea of one count of accepting bribes between about October 2010 and April 2013.  IG Ex. 2 at 1.  Petitioner was sentenced to 24 months in prison and to pay a fine of $5,000.  IG Ex. 2 at 2, 6.  Petitioner was also ordered to forfeit $175,000, for which he was jointly and severally liable with his brother, with the total of their joint forfeiture not to exceed $175,000.  Petitioner agreed as part of his plea agreement that between October 2010 and April 2013, he accepted bribes in exchange for the referral of blood specimens to BLS.  IG Ex. 4 at 1.  Petitioner also agreed as part of his plea agreement that the forfeiture amount represented the value of proceeds obtained by Petitioner because of the charge of which he was convicted.  IG Exs. 2 at 7; 4; 5.

The elements for exclusion under section 1128(a)(1) and (3) of the Act are satisfied in this case.  Petitioner does not dispute that there is a basis for his exclusion pursuant to section 1128(a)(1) and (3) of the Act.  P. Br.  Petitioner was convicted of a criminal offense.  The offense of which Petitioner was convicted carried a maximum term of

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imprisonment of five years (IG Ex. 4 at 2) and was a felony under 18 U.S.C. § 2559(a)(4).  The offense occurred after August 21, 1996.  The offense was related to the delivery of a health care item or service, specifically blood testing.  The offense also related to the delivery of an item or service under a federal health care program other than Medicare or a state health care program, specifically Tricare.  Petitioner’s offense was bribery and Petitioner does not dispute that bribery is financial misconduct.  Accordingly, I conclude that there is a basis for exclusion and exclusion is mandated by section 1128(a)(1) and (3) of the Act.

4. Pursuant to section 1128(c)(3)(B) of the Act, the minimum period of exclusion under section 1128(a) of the Act is five years.

I have concluded that bases exist to exclude Petitioner pursuant to section 1128(a)(1) and (3) of the Act.  Therefore, the IG must exclude Petitioner for a minimum period of five years pursuant to section 1128(c)(3)(B) of the Act.  The IG has no discretion to impose a lesser period and I may not reduce the period of exclusion below five years. The remaining issue is whether it is unreasonable to extend Petitioner’s exclusion by an additional five years for a total period of exclusion of ten years.

5. Three aggravating factors are present that justify extending the minimum period of exclusion to 10 years.

My determination of whether the period of exclusion in this case is unreasonable turns on whether:  (1) the IG has proven that there are aggravating factors; (2) Petitioner has proven that there are mitigating factors the IG failed to consider or that the IG considered an aggravating factor that does not exist; and (3) the period of exclusion is within a reasonable range.

The IG notified Petitioner that three aggravating factors authorized by 42 C.F.R. § 1001.102(b)(1), (2), and (5) are present in this case and those factors justify extending Petitioner’s exclusion by 5 years to a minimum exclusion of 10 years.  IG Ex. 1 at 2.  I conclude the aggravating factors alleged by the IG are established by a preponderance of the evidence in this case.

The first aggravating factor is that the crime of which Petitioner was convicted, or similar acts, caused, or were intended to cause, a financial loss to a government agency or program of $50,000 or more.  The evidence shows that Petitioner was ordered by the District Court to forfeit $175,000 jointly and severally with his brother.  IG Exs. 2 at 7; 5.  The IG cites the forfeiture amount as evidence of loss to the government.  IG Ex. 1 at 2.  Petitioner admitted by his guilty plea that between October 2010 and April 2013, he received $175,000 in cash payments in exchange for referring patient blood specimens to BLS for testing.  IG Exs. 3 at 4-5; 4 at 1.  Petitioner admitted by his plea, that he and his brother received bribes totaling about $175,000 from BLS and that that amount

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represented the proceeds of Petitioner’s crime.  Petitioner agreed to forfeit $175,000 to the United States, accepting joint and several liability for payment of that amount with his brother.  IG Exs. 2 at 4-5; 4 at 4.  It is well established that an amount ordered as restitution constitutes proof of the amount of financial loss to a government program.  See e.g., Juan de Leon, Jr., DAB No. 2533 at 5 (2013); Craig Richard Wilder, M.D., DAB No. 2416 at 9 (2011) (“restitution has long been considered a reasonable measure of program loss.”).  The Departmental Appeals Board (Board) has also determined in prior cases that a forfeiture amount may also be a reasonable valuation of financial loss to the Medicare program caused by a crime.  Farzana Begum, M.D., DAB No. 2726 at 16 n.8 (2016) (noting that forfeiture amounts are a reasonable measure of program loss and equating forfeiture amounts to restitution).  The forfeiture amount ordered to be paid by Petitioner and his brother in this case is good evidence that their crimes caused or were intended to cause loss to Medicare or another health care program well beyond the regulatory threshold of $50,000.  Petitioner has not rebutted this evidence.

Petitioner asserted in his request for hearing that he did not bill anyone for the referrals to BLS and he did not know BLS was billing the government.  He asserts he may have been deterred had he known the government was being billed.  RFH at 3.  Petitioner asserts that there is “no readily identifiable loss [to Medicare or another health care program] in the case” because it was not determined that the referrals he made were medically unnecessary.  I understand Petitioner’s argument to be that the blood samples he referred to BLS needed to be tested by some laboratory, even if, he had not referred the samples to BLS in order to receive the bribe.  To support his argument, Petitioner cites a statement in his presentence investigation report that he asserts shows that it was not possible to determine the tests ordered were unnecessary.  RFH at 2; P. Br. at 3-4; P. Ex 1.  However, Petitioner does not consider the statement of the probation officer who prepared the report in context.  The presentence report addresses victim impact, in this case the victims being Medicare, Tricare, and private insurance, and states “[b]ribes to physicians are prohibited because, among other things, they substantially and inevitably increase unnecessary medical testing and treatments by corrupting medical judgments.”  P. Ex. 1 at 2.  The presentence investigation report clearly states that whether or not a particular test is required is largely subjective and the probation officer who completed the presentence report advised the court that no attempt was made to determine whether testing ordered by Petitioner was actually necessary or not.  The probation officer did not say the cost of unnecessary testing could not be determined, only that it was not determined.  Therefore, the fact that the probation officer and the District Court did not attempt to determine whether unnecessary testing was ordered by Petitioner is not evidence that supports Petitioner’s argument that there was no loss to the government.  Petitioner’s argument is actually a defense that the medical testing he ordered was necessary despite the bribery and that no loss occurred to Medicare or another health program due to Petitioner’s bribery.  Petitioner bears the burden of persuasion on any defense.  Prehearing Order ¶ 4 (citing 42 C.F.R. § 1005.15(b), (c)).  Petitioner has not met his burden to establish a possible defense to this aggravating factor because he has

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offered no evidence that the laboratory tests he referred to BLS were actually necessary and would have been ordered without the bribery.

Petitioner further argues that the amount he agreed to forfeit, $175,000, was ordered to be paid “joint and several with my brother . . . I am not solely responsible for the entire amount.”  P. Br. at 3.  Regardless of whether the amount ordered to be forfeited is joint and several with Petitioner’s brother, the District Court’s forfeiture order plainly establishes that Petitioner is liable for the total amount, less any forfeiture payments made by his brother.  IG Ex. 5 at 2.  Additionally, the regulation is clear that the entire amount of restitution is what is considered under this aggravating factor.  42 C.F.R. § 1001.102(b)(1) (“the entire amount of financial loss to . . . programs . . . will be considered regardless of whether full or partial restitution has been made.”).  Furthermore, even if I were to split the forfeiture amount between the brothers, half the forfeiture amount is well above the $50,000 regulatory threshold for the aggravating factor.

The second authorized aggravating factor is that Petitioner’s crime occurred over a period of one year or more.  The charge to which Petitioner pleaded guilty and his plea agreement indicate that he accepted bribes for the referral of blood specimens to BLS between October 2010 and April 2013.  IG Ex. 3 at 4; 4 at 1-2.  Petitioner agreed by pleading guilty to the charge that his criminal conduct occurred from between about October 2010 through April 2013.  IG Exs. 2 at 1; 4 at 1.  Petitioner does not dispute the IG’s characterization of facts under this aggravating factor.  RFH, P. Br., P. Reply.  Therefore, the IG met its burden of proving that the acts of which Petitioner was convicted occurred over a period of one year or more.

The third authorized aggravating factor cited by the IG is that the sentence imposed by the court included 24 months of incarceration.  IG Ex. 2 at 2.  The record shows that the District Court sentenced Petitioner to 24 months of incarceration.  IG Ex. 3 at 2.  Petitioner has not disputed the fact he was sentenced to 24 months.  RFH, P. Br., P. Reply.  Therefore, the IG has met its burden of proving that Petitioner was sentenced to 24 months of incarceration based on his criminal conduct.

I conclude that the IG established three aggravating factors.  The IG was authorized by the Secretary to rely upon these factors as grounds for extending Petitioner’s exclusion by 5 years for a total exclusion of 10 years.

 6. Petitioner has not proven by a preponderance of the evidence any mitigating factors established by regulation.

If any of the aggravating factors authorized by 42 C.F.R. § 1001.102(b) justify an exclusion of longer than five years, as they do in this case, then mitigating factors may be considered as a basis for reducing the period of exclusion to no less than five years.

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42 C.F.R. § 1001.102(c).  The only authorized mitigating factors that I may consider are listed in 42 C.F.R. § 1001.102(c):

(1)  In the case of an exclusion under § 1001.101(a), whether the individual or entity was convicted of three or fewer misdemeanor offenses and the entire amount of financial loss (both actual loss and intended loss) to Medicare or any other Federal, State or local governmental health care program due to the acts that resulted in the conviction, and similar acts, is less than $5,000;

(2)  The record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual’s culpability; or

(3)  The individual’s or entity’s cooperation with Federal or State officials resulted in –

(i)  Others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs,

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

(iii)  The imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.

Petitioner has the burden to prove by a preponderance of the evidence that there is a mitigating factor for me to consider.  42 C.F.R. § 1005.15(c); Prehearing Order ¶ 4.  Petitioner asserts that there are many mitigating factors, including that:  there was no loss to the government as evidenced by the fact that no restitution to the government was ordered by the District Court; he has accepted responsibility for his crime; he has no prior convictions or malpractice judgments; he has been proactive in his rehabilitation including speaking to physicians regarding his criminal conviction to help deter others; he has kept up with the latest developments in medicine; no harm was done to any patient; he will be eligible for reinstatement of his license to practice after only three years; the forfeiture amount of $175,000 was the total amount of kickbacks to both Petitioner and his brother and has been paid; and his past service to underprivileged

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communities.  RFH; P. Br. at 8-10.  None of the factors Petitioner urges me to consider as mitigating are authorized by 42 C.F.R. § 1001.102(c).

Petitioner asserts the period of exclusion imposed by the IG is not reasonable given the fact he was only sentenced to 24 months in prison.  Petitioner also cites decisions by the IG in prior cases imposing shorter exclusions on facts, Petitioner suggests, are more egregious than in his case.  RFH; P. Br at 5-7.  Petitioner’s arguments, while well presented, are not factors that I may consider as mitigating under 42 C.F.R. § 1001.102(c).

Petitioner asserts that the effective date of his exclusion should be made retroactive to the date of his conviction citing 42 C.F.R. § 424.535 as authority.  However, 42 C.F.R. § 424.535, which governs in the case of revocation of a provider or supplier’s participation in the Medicare program by the Centers for Medicare and Medicaid Services, has no application in this case.  The effective date of an exclusion must be determined under the applicable regulation.  The applicable regulation specifies that the effective date of exclusion is 20 days after the date of the IG’s notice of exclusion, and the IG, the Board, and I have no discretion to change the effective date.  42 C.F.R. § 1001.2002(b).

Based on my review of the entire record, I conclude that Petitioner has failed to establish any mitigating factor that I am permitted to consider under 42 C.F.R. § 1001.102(c) to reduce the period of his exclusion.

7.  Exclusion for 10 years is not unreasonable in this case.

The regulation states that the ALJ must determine whether the length of exclusion imposed is “unreasonable.”  42 C.F.R. § 1001.2007(a)(1).  The Board, however, has made clear that the role of the ALJ in exclusion cases is to conduct a de novo review of the facts related to the basis for the exclusion and the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102 and to determine whether the period of exclusion imposed by the IG falls within a reasonable range.  Juan De Leon, Jr., DAB No. 2533 at 3; Craig Richard Wilder, MD, DAB No. 2416 at 8; Joann Fletcher Cash, DAB No. 1725 at 17 n.6 (2000).  The Board explained that, in determining whether a period of exclusion is “unreasonable,” the ALJ is to consider whether such period falls “within a reasonable range.”  Cash, DAB No. 1725 at 17 n.6.  The Board cautions that whether the ALJ thinks the period of exclusion too long or too short is not the issue.  The ALJ may not substitute his or her judgment for that of the IG and may only change the period of exclusion in limited circumstances.  In John (Juan) Urquijo, DAB No. 1735 (2000), the Board made clear that, if the IG considers an aggravating factor to extend the period of exclusion and that factor is not later shown to exist on appeal, or if the IG fails to consider a mitigating factor that is shown to exist, then the ALJ may make a decision as to the appropriate extension of the period of exclusion beyond the minimum.  In Gary

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Alan Katz, R.Ph., DAB No. 1842 (2002), the Board suggests that when it is found that an aggravating factor considered by the IG is not proved before the ALJ, then some downward adjustment of the period of exclusion should be expected absent some circumstances that indicate no such adjustment is appropriate.  Thus, the Board has by these various prior decisions significantly limited my authority under the applicable regulation to judge the reasonableness of the period of exclusion.

Based on my de novo review, I conclude that bases for exclusion exist under section 1128(a)(1) and (3) of the Act.  The undisputed evidence establishes the three aggravating factors the IG relied on to impose the 10-year exclusion.  IG Ex. 1 at 2.  Petitioner has not established by a preponderance of the evidence that there was an authorized mitigating factor that the IG failed to consider.  I conclude that a period of exclusion of 10 years is in a reasonable range and not unreasonable considering the existence of three aggravating factors and the absence of any mitigating factors.  Petitioner’s arguments that his period of exclusion is disproportionate to the period of exclusion imposed in other cases is not an authorized basis for me to reassess his exclusion under decisions of the Board interpreting the regulations.

Exclusion is effective 20 days from the date of the IG’s notice of exclusion to the affected individual or entity.  42 C.F.R. § 1001.2002(b).

III. Conclusion

For all of the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all other federal health care programs for a minimum period of 10 years, effective May 20, 2018.

• 1. Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after the period of exclusion expires. Reinstatement is not automatic upon completion of the minimum period of exclusion.
• 2. Citations are to the 2017 revision of the Code of Federal Regulations (C.F.R.), unless otherwise stated.