Matthew J. Girardy, DMD, DAB CR5446 (2019)

DECISION

The Inspector General (IG) of the Department of Health and Human Services excluded Matthew J. Girardy (Dr. Girardy or Petitioner) from participating in Medicare, Medicaid, and all other federal health care programs for a minimum period of seven years under 42 U.S.C. § 1320a 7(a)(1). Petitioner requested a hearing before an administrative law judge (ALJ) to dispute the exclusion. For the reasons explained below, I conclude that the IG has a basis for excluding Petitioner and that the seven-year exclusion period is not unreasonable in light of the two aggravating factors present in this case.

I. Case Background and Procedural History

In a letter dated April 30, 2019, the IG notified Petitioner that, under 42 U.S.C. § 1320a 7(a)(1), he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of seven years effective May 20, 2019. IG Exhibit (Ex.) 1. The IG based the exclusion on Petitioner’s conviction of a criminal offense in the Monmouth County Superior Court for the State of New Jersey related to the delivery of an item or service under Medicare or a state health care program, including the performance of management or administrative services relating to the delivery of items or services, under any such program. The IG cited two aggravating factors as a basis for increasing the exclusion period from the minimum period of

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five years to seven years: 1) Petitioner’s criminal conduct caused a loss to a government program of $50,000 or more; and 2) the acts resulting in Petitioner’s conviction were committed over a period of one year or more. IG Ex. 1 at 2.

Petitioner, through counsel, filed a request for hearing with the Civil Remedies Division to dispute the exclusion. This case was assigned to me for hearing and decision. On June 17, 2019, the Civil Remedies Division issued an Acknowledgment Letter along with my Standing Prehearing Order (Prehearing Order), which provided notice of a prehearing conference and the procedures that govern this case. On July 1, 2019, I convened a prehearing conference by telephone, the substance of which is summarized in my July 2, 2019 Order Following Prehearing Conference and Setting Schedule for Prehearing Submissions (Prehearing Conference Order). At the conference, Petitioner’s counsel stated that Petitioner was contesting both the basis for an exclusion and the length of the exclusion. The issue of Petitioner’s request for waiver of the exclusion was discussed and IG counsel confirmed that a component of the IG’s office decides those requests. Prehearing Conference Order at 1. Finally, I established a prehearing submission schedule. Prehearing Conference Order at 2.

In conformance with the Prehearing Conference Order, the IG filed a brief (IG Br.) and three exhibits (IG Exs. 1-3). Petitioner then submitted a brief (P. Br.) and one exhibit (P. Ex. 1). The IG filed a reply brief (IG Reply).

II. Issues

1. Whether the IG has a basis for excluding Petitioner from participating in Medicare, Medicaid, and all other federal health care programs under 42 U.S.C. § 1320a-7(a)(1).
2. If there is a basis for exclusion, whether a seven-year exclusion period is unreasonable.

III. Decision on the Record

Petitioner did not object to the IG’s proposed exhibits. Therefore, I admit IG Exs. 1 3 into the record. Prehearing Order ¶ 12; Civil Remedies Division Procedures (CRDP) § 14(e); see also 42 C.F.R. § 1005.8(c). Petitioner submitted one exhibit, a letter in support of his argument that his exclusion should be waived because he is a sole source provider in his area. I exclude P. Ex. 1 because it is not relevant to this case. 42 C.F.R. § 1005.17(c). I do not have jurisdiction to decide whether Petitioner’s exclusion should be waived based on allegedly being a sole source provider in his area. See 42 C.F.R. § 1001.2007(a)(1). Petitioner must persuade a federal or state health care program that his exclusion should be waived because only the administrator of such a program can

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request waiver from the IG. Excluded individuals cannot request waiver directly. 42 U.S.C. § 1320a 7(c)(3)(B), (d)(3)(B)(i); 42 C.F.R. § 1001.1801.

The IG has no witnesses to present in this case and indicated that a hearing is unnecessary. IG Br. at 7 8. Petitioner indicated that a hearing is necessary and listed two witnesses: himself and Dr. Joseph Hannah, the author of P. Ex. 1. P. Br. at 3. However, Petitioner failed to comply with the Prehearing Order and submit written direct testimony for himself and his witness. Prehearing Order ¶ 10; 42 C.F.R. § 1005.16(b); CRDP §§ 16(b), 19(b). Further, Petitioner indicated that Dr. Hannah’s expected testimony would involve matters related to Petitioner’s waiver of exclusion request. P. Br. at 3; P. Ex 1. As indicated above, I have no authority to waive an exclusion; therefore, Dr. Hannah’s testimony would be irrelevant and inadmissible in this case. 42 C.F.R. § 1005.17(c). Because these is no need to hold a hearing, I decide this case based on the written record. Prehearing Order ¶¶ 11, 16; CRDP § 19(d).

IV. Jurisdiction

I have jurisdiction to adjudicate this case. 42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. §§ 1001.2007, 1005.2.

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

My findings of fact and conclusions of law are set forth in italics and bold font.

1. On February 2, 2018, Petitioner pleaded guilty to the crime of Theft by Deception $500-$74,999 in the third degree and on October 19, 2018, the Superior Court of New Jersey, Monmouth County, sentenced Petitioner to five years of probation and ordered restitution of $318,301 be paid to the State of New Jersey.

On February 7, 2013, a Grand Jury indicted Petitioner and several others in the Superior Court of New Jersey for Monmouth County (Superior Court).  IG Ex. 2.  Count 21 of the Indictment charged Petitioner with one count of Theft by Deception, in the second degree, in violation of New Jersey Criminal Code Section 2C:20-4.  IG Ex. 2 at 31.  The indictment alleged that Petitioner “did purposely obtain approximately $385,467.00 from the New Jersey Medical Assistance and Health Services Program (“Medicaid”) by creating or reinforcing the false impression that dental services were provided to Medicaid beneficiaries as or to the extent claimed and that [he] was entitled to payment or reimbursement for same.”  IG Ex. 2 at 31.  Petitioner allegedly performed these acts from about June 12, 2006 to August 1, 2009.  IG Ex. 2 at 31. 

Petitioner pleaded guilty on February 2, 2018, to Amended Count 21, Theft by Deception, in the third degree, and the Superior Court accepted his plea.  IG Ex. 3 at 1.

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The Amended Count 21 involved the same criminal statute but appears to have involved a reduction in the value of the theft and a change from a second to a third degree felony. IG Ex 3 at 1. On October 19, 2018, the Superior Court sentenced Petitioner to five years of probation and 300 hours of community service. IG Ex. 3 at 1. Further, the Superior Court ordered Petitioner to pay $318,301.00 as restitution to the "State of New Jersey." IG Ex. 3 at 2, 4.

2. Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under a state health care program; therefore, exclusion is required under 42 U.S.C. § 1320a 7(a)(1).

The IG must exclude an individual from participation in any federal health care program if that individual was convicted under federal or state law of a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  42 U.S.C. § 1320a‑7(a)(1).  For purposes of exclusion, individuals are deemed “convicted” of an offense “when a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court.”  42 U.S.C. § 1320a‑7(i)(3).   The term “related to” simply means that there must be a nexus or common sense connection.  See Quayum v. U.S. Dep’t of Health & Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998); see also Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase “relating 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).

Petitioner does not dispute that he was convicted of a criminal offense.  P. Br. at 1.  Instead, he argues that his offense was not related to the delivery of a health care item or service.  P. Br. at 2.  Petitioner asserts that:

[t]he offense for which [he] was convicted was theft by deception.  The proffer for his guilty plea was that the staff in the office for which [he] worked was creating false impressions as to billing on behalf of Medicaid beneficiaries and using those impressions to submit false claims to Medicaid for reimbursement.

P. Br. at 2.

While Petitioner pleaded guilty to theft by deception, Count 21 of the indictment specifically charged Petitioner with obtaining approximately $385,467 from the New Jersey Medical Assistance and Health Service Program (Medicaid) by creating and reinforcing a false impression that dental services were provided to Medicaid beneficiaries and that Petitioner was entitled to payment or reimbursement.  IG Ex. 2.

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at 31.  I conclude that that there is an obvious nexus between Petitioner’s conviction and the delivery of an item or service under Medicaid.  Submitting a false claim to Medicaid is clearly “related to” the delivery of an item or service under a state health care program.  See Travers v. Shalala, 20 F.3d 993, 998 (9th Cir. 1994) (conviction for filing claims with the Medicaid program is “a program‑related offense” and “such financial misconduct is exactly what Congress sought to discourage” through imposing exclusions.); Kahn v. Inspector Gen. of the U.S. Dep’t of Health and Human Servs., 848 F. Supp. 432, 434, 436 (S.D.N.Y. 1994) (concluding that a podiatrist’s conviction for attempted grand larceny was program related for purposes of an exclusion because it was related to the filing of false Medicaid claims); Greene v. Sullivan, 731 F. Supp. 835, 838 (E.D. Tenn. 1990) (“There is no question that Mr. Greene’s crime [of filing false claims] resulted in a Medicaid overpayment and was a program-related crime triggering the mandatory exclusion under Section 1320a‑7(a).”).  Further, the Superior Court ordered Petitioner to pay restitution to the State of New Jersey and the indictment makes it clear that the New Jersey Medicaid program is the specific entity that incurred the loss.  Accordingly, I conclude that the criminal conduct for which Petitioner was convicted was related to the delivery of a health care item or service under a state health care program.  See 42 U.S.C. § 1320a‑7(a)(1).  Therefore, the record fully supports Petitioner’s mandatory exclusion.  IG Exs. 2‑3.

3. Petitioner must be excluded for a minimum of five years.

Because I have concluded that a basis exists to exclude Petitioner pursuant to 42 U.S.C. § 1320a‑7(a)(1), Petitioner must be excluded for a minimum of five years.  42 U.S.C. § 1320a‑7(c)(3)(B).

4. The IG has established two aggravating factors in this case that support an exclusion period beyond the five‑year statutory minimum.

The regulations establish aggravating factors that the IG may consider to lengthen the period of exclusion beyond the five‑year minimum for a mandatory exclusion.  42 C.F.R. § 1001.102(b).  Only if an aggravating factor justifies an exclusion longer than five years may mitigating factors be considered as a basis for reducing the period of exclusion to no less than five years.  42 C.F.R. § 1001.102(c).

In this case, the IG advised Petitioner in the April 30, 2019 exclusion notice that there were two aggravating factors that justified excluding him for more than five years:  first, the acts resulting in his conviction, or similar acts, caused, or were intended to cause, a financial loss to a government agency or program or to one or more entities of $50,000 or more; and second, the acts resulting in the conviction occurred over a period of one year or more.  IG Ex. 1 at 2; 42 C.F.R. § 1001.102(b)(1), (2).  The IG cited the three-year period that the acts took place over and the Superior Court’s order to pay approximately $318,300 in restitution.  IG Ex. 1 at 2.

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a. The IG has established the aggravating factor stated in 42 C.F.R. § 1001.102(b)(1) – financial loss to a government program of $50,000 or more.

The IG has provided evidence that demonstrates the acts resulting in Petitioner’s criminal conviction caused a financial loss to a government program of $50,000 or more.  See 42 C.F.R. § 1001.102(b)(1).  Petitioner pleaded guilty to theft by deception for submitting false claims to Medicaid, which resulted in approximately $385,467 in fraudulently obtained payments from the New Jersey Medicaid program.  IG Ex. 2 at 31.  In addition, the record shows that the Superior Court sentenced Petitioner to pay restitution totaling $318,301 to the State of New Jersey.1 IG Ex. 3 at 2.  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); Jason Hollady, M.D. a/k/a Jason Lynn Hollady, DAB No. 1855 (2002).  Regardless of whether the restitution order is joint and several among Petitioner and his co‑conspirators — although there is no evidence that it is — the Superior Court’s sentence of Petitioner plainly establishes that he is responsible for the total restitution amount.  IG Ex. 3 at 2, 4.  In addition, the regulations provide that the entire amount of financial loss is what provides a basis for an aggravating factor.  See 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.”).  Therefore, the IG has sustained its burden of proving financial loss to a government program of $50,000 or more.

b. The IG has established the aggravating factor stated in 42 C.F.R. § 1001.102(b)(2) – the criminal acts resulting in Petitioner’s conviction lasted a period of one year or more.

The IG offered the Indictment that charged Petitioner with Theft by Deception as evidence that his criminal acts lasted one year or more.  IG Ex. 2.  The Indictment states that Petitioner’s criminal conduct began on or about June 12, 2006, and continued until about August 1, 2009.  Id. at 31.  Thus, the evidence before me establishes that the acts resulting in Petitioner’s conviction occurred over a period of one year or more.

c. There are no mitigating factors in this case.

Because I found that aggravating factors are present in this case, I next consider whether there are any mitigating factors under 42 C.F.R. § 1001.102(c) to offset the aggravating

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factors.  The regulations specifically outline what factors may be considered mitigating and none of Petitioner’s arguments relate to any of those mitigating factors.  See 42 C.F.R. § 1001.102(c).  Petitioner has not argued that any mitigating factors exist.  P. Br. at 3.  Accordingly, I find that Petitioner has not met his burden to establish that any mitigating factors would justify reducing the period of exclusion.

d. A seven-year exclusion period is not unreasonable.

I must uphold the IG’s determination as to the length of the exclusion if it is not unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  This means that:  “[s]o long as the amount of time chosen by the []IG is within a reasonable range, based on demonstrated criteria, the ALJ has no authority to change it under this rule.  We believe that the deference § 1001.2007(a)[] grants to the []IG is appropriate, given the []IG’s vast experience in implementing exclusions under these authorities.”  57 Fed. Reg. 3271, 3321 (Jan. 29, 1992).  It is important to note that it is the quality of the aggravating (or mitigating) factors that is most important when considering the length of exclusion and not the sheer number of aggravating factors that are present in a given case.  As the Secretary of Health and Human Services stated in the preamble to the final rule establishing the exclusion regulations:

We do not intend for the aggravating and mitigating factors to have specific values; rather, these factors must be evaluated based on the circumstances of a particular case.  For example, in one case many aggravating factors may exist, but the subject’s cooperation with the []IG may be so significant that it is appropriate to give that one mitigating factor more weight than all of the aggravating.  Similarly, many mitigating factors may exist in a case, but the acts could have had such a significant physical impact on program beneficiaries that the existence of that one aggravating factor must be given more weight than all of the mitigating.  The weight accorded to each mitigating and aggravating factor cannot be established according to a rigid formula, but must be determined in the context of the particular case at issue.

57 Fed. Reg. at 3314-15.

So long as that period falls within a reasonable range, my role is not to second-guess the IG's judgment. Jeremy Robinson, DAB No. 1905 at 5 (2004) (administrative law judge review must reflect the deference accorded to the IG by the Secretary). A “‘reasonable range’ refers to a range of exclusion periods that is more limited than the full range authorized by the statute [i.e. from a minimum of five years to a maximum of permanent] and that is tied to the circumstances of the individual case.” Joseph M. Rukse, Jr., R.Ph.,

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DAB No. 1851 at 11 (2002) (citing Gary Alan Katz, R.Ph., DAB No. 1842 at 8 n.4 (2002)).

Based on the Superior Court’s acceptance of Petitioner’s guilty plea, Petitioner was part of a scheme to submit false claims that ultimately resulted in an over $300,000 loss to New Jersey’s Medicaid program. IG Ex. 2 at 3. The amount of loss is six times the $50,000 threshold for the loss to be considered an aggravating factor. 42 C.F.R. § 1001.102(b)(1). The acts underlying Petitioner’s conviction took place over a three year period. The IG could, thus, reasonably believe that Petitioner’s conduct made him a threat to program integrity.

I conclude that the two proven aggravating factors are entitled to significant weight. Petitioner’s crime had a substantial financial impact on the State of New Jersey Medicaid program. Based on the record before me, Petitioner is not trustworthy to participate in federal health care programs and, therefore, the length of the exclusion imposed by the IG is not unreasonable.

VI. Conclusion

For the foregoing reasons, I affirm the IG’s determination to exclude Petitioner for seven years from participating in Medicare, Medicaid, and all federal health care programs pursuant to 42 U.S.C. § 1320a 7(a)(1).

• 1. Nothing in the record clearly explains why the Superior Court’s restitution order is less than the amount of government loss cited in the Indictment. Compare IG Ex. 2 at 31 with IG Ex. 3 at 2. Nevertheless, the restitution amount is substantially over the minimum amount of loss (6.3 times over) required to trigger the aggravating factor.