Washington Bryan, II, MD, DAB CR5188 (2018)

DECISION

Petitioner, Washington Bryan, II, MD, is excluded from participation in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(4) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(4)), effective January 18, 2018. Petitioner's exclusion for the minimum period of five years is required by section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)). An additional exclusion of five years, for a total minimum exclusion of ten years1, is not unreasonable based upon the presence of three aggravating factors and no mitigating factor.

I. Background

The Inspector General (IG) notified Petitioner by letter dated December 29, 2017, that he was excluded from participation in Medicare, Medicaid, and all federal health care programs for ten years. The IG cited section 1128(a)(4) of the Act as the basis for

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Petitioner's exclusion based on his conviction in the United States District Court, Central District of California, of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance as defined under federal or state law. The IG further advised Petitioner that the mandatory five-year exclusion was extended to ten years because Petitioner's acts that resulted in conviction were committed over a period of more than one year, his sentence included incarceration, and he was subject to another adverse action by a state or federal agency or board. IG Exhibit (Ex.) 1.

On January 29, 2018, Petitioner timely filed a request for hearing (RFH). This case was docketed and assigned to me on February 14, 2018. A prehearing conference was convened on March 15, 2018. The substance of the conference is memorialized in my Prehearing Conference Order and Schedule for Filing Briefs and Documentary Evidence dated March 20, 2018 (Prehearing Order).

The IG filed a motion for summary judgment and supporting brief (IG Br.) on May 11, 2018, with IG Exs. 1 through 9. Petitioner filed a response in opposition to the IG motion for summary judgment (P. Br.) on June 25, 2018, with no exhibits. The IG filed a reply brief on July 27, 2018 (IG Reply) with IG Exs. 10 and 11. Petitioner did not object to my consideration of IG exhibits 1 through 11 and they 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).

Pursuant to section 1128(a)(4) of the Act, the Secretary must exclude from participation in the Medicare and Medicaid programs any individual convicted of a felony criminal offense under federal or state law, that occurred after August 21, 1996, related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. Pursuant to section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)), an individual is convicted of a criminal offense when: (1) a judgment of conviction has been entered against him or her in a federal, state, or local court, regardless of whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no contest is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld. The Secretary has

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promulgated regulations implementing these provisions of the Act. 42 C.F.R. § 1001.101(a).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 no fewer than five years. 42 C.F.R. § 1001.102(a). The Secretary has published regulations that establish aggravating factors 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 IG proposes to impose an exclusion longer than five years. 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 of 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(b).

B. Issues

The issues in this case are:

Whether summary judgment is appropriate;

Whether there is a basis for exclusion; and

Whether the period of exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).

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. Summary judgment is appropriate.

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There is no dispute that Petitioner's request for hearing was timely and I have jurisdiction pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to reasonable notice and an opportunity for a hearing. The Secretary has provided by regulation that a sanctioned party has the right to hearing before an ALJ and both the sanctioned party and the IG have a right to participate in the hearing. 42 C.F.R. § 1005.2-.3. Either or both parties may choose to waive appearance at an oral hearing and to submit only documentary evidence and written argument for my consideration. 42 C.F.R. § 1005.6(b)(5).

An ALJ may also resolve a case, in whole or in part, by summary judgment. 42 C.F.R. § 1005.4(b)(12). Summary judgment is appropriate and no hearing is required where either: there are no genuine disputes of material fact and the only questions that must be decided involve application of law to the undisputed facts; or the moving party prevails as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made. A party opposing summary judgment must allege facts which, if true, would refute the facts relied upon by the moving party. See, e.g., Fed. R. Civ. P. 56(c); Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No. 1628 at 3 (1997) (holding in-person hearing is required where the non-movant shows there are material facts in dispute that require testimony); Thelma Walley, DAB No. 1367 (1992).

Petitioner does not dispute that he was convicted of 29 counts of structuring cash deposits in domestic financial institutions to avoid federal reporting requirements. However, he argues that his convictions were not related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. P. Br., RFH. The issue raised by Petitioner must be resolved against him as a matter of law and the case can be resolved by applying the law to the undisputed facts. Accordingly, summary judgment is appropriate.

3. There is a basis for Petitioner's exclusion pursuant to section 1128(a)(4) of the Act.

a. Facts

On about May 6, 2016, Petitioner was charged with 29 counts of structuring, assisting with structuring, or attempted structuring or assisting with structuring currency transactions, specifically cash deposits with four banks, in order to evade reporting requirements of 31 U.S.C. § 5313(a). IG Ex. 2. The offenses charged under 31 U.S.C. § 5324(a)(3) were felonies because the maximum term of imprisonment is up to five years. 18 U.S.C. § 3559(a)(5). The charges of which Petitioner was convicted alleged that structuring of financial transactions occurred between about October 17, 2011 and

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January 22, 2013. IG Ex. 2 at 2-5. Thus, there is no dispute that the Petitioner's offenses occurred after August 21, 1996. On November 17, 2016, a jury found Petitioner guilty of all counts. IG Ex. 3. On March 8, 2017, Petitioner was sentenced to pay a special assessment of $2,900, a fine of $7,500, and confinement of 33 months for each count to be served concurrently, and 3 years of supervision for each count also to run concurrently. IG Ex. 4 at 1-2.

The United States Attorney advised the district court in a pleading titled "Government's Sentencing Position and Response to Defendant Washington Bryan II's Objections to PSR [Pre-Sentencing Report]; Exhibits," that the evidence adduced at trial showed that the cash deposits that Petitioner structured were derived from Petitioner's unlawful prescription and dispensing of controlled substances. IG Ex. 9 at 6-7, 10-12, 21-22. Testimony of an expert witness at Petitioner's trial and the expert's report show a connection between the cash deposits Petitioner was convicted for structuring and his prescription and dispensing of controlled substances. IG Ex. 7 at 32-62; IG Ex. 8. The United States Court of Appeals found no abuse of discretion by the trial judge in admitting the testimony of the expert that the structured funds were derived from Petitioner prescribing opioids and other drugs in exchange for cash. The court reasoned that the evidence was relevant to prove why Petitioner intended to structure the cash transactions for which he was charged. IG Ex. 10. In paragraph 8 of the Prehearing Order, the parties were specifically "advised that a fact alleged in briefing and not specifically denied, may be accepted as true for purposes of a motion or cross-motion for summary judgment." The parties were also advised that "[a]ny evidence will be considered admissible and true unless specific objection is made to its admissibility and accuracy." Prehearing Order ¶ 8. Petitioner argues that there was "insufficient evidence or actually no evidence at all was presented during the criminal trial for structuring which was related at all to any illegal or unlawful manufacture, distribution, or dispensing of a controlled substance." P. Br. at 8. Petitioner is in error. The transcript of proceedings in the district court placed in evidence in this case, clearly is some evidence that Petitioner was engaged in unlawful distribution or prescribing, even though he was not convicted of such an offense, and that was the source of the funds for which he was convicted of structuring. Petitioner argues that the evidence presented in the district court was insufficient to show unlawful distribution or prescribing of controlled substances, and he correctly points out that he was convicted of unlawful structuring and not a drug offense. P. Br. at 1-2, 7-9; RFH at 1. However, Petitioner never specifically states in either his request for hearing or his brief that the cash deposits for which he was convicted of structuring were not derived from unlawful distribution or prescribing. Absent a specific denial of the unlawful distribution or prescribing, there is no inference I am required to draw in Petitioner's favor and no requirement to conduct a hearing to take his sworn testimony regarding whether or not his prescribing and distribution of controlled substances was lawful or not. The evidence shows Petitioner was convicted of structuring cash deposits and both the district court and the court of appeals accepted evidence that those cash deposits were derived from unlawful distribution or prescription

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of controlled substances. Petitioner is not entitled to challenge the district and circuit court proceedings and decisions is this forum. 42 C.F.R. § 1001.2007(d). I find that it is undisputed by Petitioner that the cash deposits for which he was convicted of structuring were related to the unlawful distribution, dispensing, or prescribing of controlled substances.

It is not disputed that effective April 5, 2017, Petitioner's license to practice medicine in California was suspended based on his conviction. IG Ex. 6 at 1. It is not disputed that effective April 5, 2017, Petitioner's participation in the California Medicaid program (Medi-Cal) was suspended based on his conviction. IG Ex. 5 at 1.

b. Analysis

Section 1128(a)(4) 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 felony criminal offense under federal or state law;
(2) where the offense occurred after August 21, 1996; and
(3) the criminal offense is related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

Petitioner does not dispute that he was convicted of 29 felony counts of structuring cash deposits in domestic financial institutions to avoid federal reporting requirements. Petitioner does not dispute that the offenses of which he was convicted occurred after August 21, 1996. Petitioner disputes only that his conviction was related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

Appellate panels of the Departmental Appeals Board (the Board) have long held that the statutory terms describing an offense do not control whether that offense is "related to" the delivery of a health care item or service under Medicare or a state health care program for purposes of an exclusion pursuant to section 1128(a) of the Act. E.g., Dewayne Franzen, DAB No. 1165 (1990) (inquiry is whether conviction is related to Medicaid fraud, not whether the petitioner was convicted of Medicaid fraud). Rather, an ALJ must examine whether there is a "common sense connection or nexus between the offense and the delivery of an item or service under the program." Scott D. Augustine, DAB No. 2043 at 5-6 (2006) (citations omitted). To determine whether there is such a nexus or common-sense connection, "evidence as to the nature of an offense may be considered," including "facts upon which a conviction was predicated." Berton Siegel, D.O., DAB No. 1467 at 6-7 (1994). An ALJ may also use extrinsic evidence to "[fill] in the circumstances surrounding the events which formed the basis for the offense of which Petitioner was convicted." Narendra M. Patel, M.D., DAB No. 1736 at 7 (2000). The terms "related to" and "relating to" in 42 U.S.C. § 1320a-7 simply mean that there must be a nexus or common sense connection. Friedman v. Sebelius, 686 F.3d 813, 820 (D.C.

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Cir. 2012) (describing the phrase "relating to" as "deliberately expansive words," "the ordinary meaning of [which] is a broad one," and one that is not subject to "crabbed and formalistic interpretation") (internal quotation marks omitted); See Quayum v. U.S. Dep't of Health and Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998).

The evidence is clear that Petitioner was not convicted of a felony offense of unlawful distribution, prescription, or dispensing of a controlled substance. However, my determination is not based solely upon the language of the statutes Petitioner was convicted of violating. Rather, I look at all the facts related to the conviction to determine whether the required nexus exists between Petitioner's conviction and the unlawful distribution, prescription, or dispensing of a controlled substance. I have found that the cash funds for which Petitioner was convicted of structuring deposits to avoid federal reporting requirements, were derived from the unlawful prescribing, dispensing, or prescription of controlled substances. Accordingly, I conclude that there is a sufficient nexus between the charges of which Petitioner was convicted and the source of the funds he was convicted of structuring to trigger mandatory exclusion pursuant to section 1128(a)(4) of the Act. Accordingly, I conclude that there is a basis for exclusion and Petitioner's exclusion is mandated by section 1128(a)(4) of the Act.

4. Pursuant to section 1128(c)(3)(B) of the Act, a five-year period of exclusion is mandatory.

I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(4) 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. My determination of whether the exclusionary period in this case is unreasonable turns on whether: (1) the IG has proven that there are aggravating factors; (2) Petitioner has proven that the IG considered an aggravating factor that does not exist or that there are mitigating factors that the IG failed to consider; and (3) the period of exclusion is within a reasonable range.

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

The IG notified Petitioner that three aggravating factors are present in this case that justify an exclusion of more than five years:

(1) Petitioner's acts that resulted in the conviction were committed over a period of one year or more;
(2) The sentence imposed by the court included incarceration; and

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(3) Petitioner was subject to an adverse action by a federal, state, or local government agency or board, and the adverse action was based on the same set of circumstances that served as the basis for the imposition of the exclusion.

IG Ex. 1 at 2.

It is undisputed that Petitioner's structuring activity occurred from about October 17, 2011 to about January 22, 2013, over a year. IG Ex. 2 at 2-5. It is also undisputed that Petitioner was sentenced to 33 months incarceration. IG Ex. 4 at 1. Finally, it is undisputed that Petitioner was subject to two adverse state agency actions because the Petitioner was excluded from the California Medicaid program and his license to practice medicine was suspended related to his conviction. IG Exs. 5-6.

I conclude that the aggravating factors that the IG cites are established by the evidence before me and are undisputed. The aggravating factors are a basis for the IG to extend the period of exclusion beyond the minimum exclusion of five years. 42 C.F.R. § 1001.102(b)(2), (b)(5), (b)(9).

6. Exclusion for ten 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)(ii). 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 (2013); Craig Richard Wilder, DAB No. 2416 at 8 (2011); 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 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

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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 a basis for exclusion exists and that the undisputed evidence establishes the three aggravating factors that the IG relied on to impose the ten-year exclusion. Petitioner has not established the existence of any mitigating factor authorized by 42 C.F.R. § 1001.102(c). I conclude that a period of exclusion of ten years is in a reasonable range and not unreasonable considering the existence of three aggravating factors and no mitigating factor. Accordingly, I conclude that no change in the period of exclusion is necessary.

III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for ten years pursuant to section 1128(a)(4) of the Act, effective January 18, 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. References are to the 2017 revision of the Code of Federal Regulations (C.F.R.), unless otherwise stated.