Samuel Kim, DAB CR5261 (2019)

DECISION

The Inspector General (IG) of the U.S. Department of Health and Human Services excluded Petitioner, Samuel Kim, from participation in Medicare, Medicaid, and all other federal health care programs for ten years pursuant to Section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)).  Petitioner challenges the exclusion.  For the reasons stated below, I conclude that the IG had a basis for excluding him from program participation, and that the 10-year exclusion period is not unreasonable.  I affirm the IG’s exclusion determination.

I. Case Background and Procedural History

The IG issued notice to Petitioner on June 29, 2018,1 that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for ten years.

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IG Ex. 1 at 1.2  The IG cited section 1128(a)(1) of the Act, which mandates exclusion when an individual is convicted of a criminal offense related to the delivery of an item or service under Medicare or a State health care program.  Id.  Petitioner timely requested a hearing, and I was designated to hear and decide this case.

I conducted a pre-hearing telephone conference on August 29, 2018, the substance of which I memorialized in my August 31, 2018 Order (Summary Order), and set forth a schedule for submission of arguments and evidence by the parties.  The IG submitted a brief (IG Br.) and six exhibits (IG Exs. 1-6), while Petitioner submitted his brief (P. Br.) with no exhibits.  The IG then submitted a reply brief (IG Reply).

Petitioner did not object to any of the IG’s proposed exhibits.  I therefore admit IG Exs. 1-6 into evidence.

II.  A Decision on the Record is Appropriate.

Neither party indicated a hearing was necessary in this matter.  I therefore find it appropriate to proceed to a decision based on the record before me.

III.  Issues

The issues in this case are limited to determining if the IG has a basis for excluding Petitioner from participating in Medicare, Medicaid, and all other federal health care programs and, if so, whether the ten-year exclusion imposed by the IG is unreasonable.  See 42 C.F.R. § 1001.2007(a)(1).

IV. Jurisdiction

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

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V. Findings of Fact, Conclusions of Law, and Analysis3

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

The IG must exclude an individual from participation in federal health care programs if the individual was convicted of a criminal offense related to the delivery of a health care item or service under the Medicare program.  42 U.S.C. § 1320a-7(a)(1).  Here, there is plainly evidence to support the determination that Petitioner was convicted of such an offense.

In order to be “related to” the delivery of an item or service under Medicare, only a nexus or common sense connection is required.  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).Convictions for receiving healthcare kickbacks, for conspiracy or otherwise, are sufficient to satisfy this nexus.  See, e.g., Farzana Begum, M.D., DAB No. 2726 (2016); Niranjana B. Parikh, M.D., DAB No. 1334 (1992).

The records submitted by the IG demonstrate Petitioner was convicted of a criminal offense within the meaning of the Act.  On September 26, 2016, he pleaded guilty to one count of Conspiracy to Commit Health Care Fraud in the U.S. District Court for the Eastern District of Louisiana (District Court).  IG Exs. 2, 3.  In order to plead guilty to this offense, Petitioner agreed with the government to certain facts which formed the basis of his criminal conduct.  Specifically, he admitted he conspired with others to facilitate the fraudulent billing of the Medicare program by misleading patients and their physicians to allow the co-conspirators to bill Medicare for much more expensive “talking” glucose monitors.  IG Ex. 4.  As a result of his conviction for this offense, Petitioner was ordered to pay restitution to the Medicare program.  IG Ex. 3 at 6.

Submitting false claims to the Medicare program is the precise sort of criminal activity related to the delivery of health care items or services that Congress sought to discourage.  Travers v. Shalala, 20 F.3d 993, 998 (9th Cir. 1994).  And the District Court’s imposition of restitution by Petitioner to the Medicare program highlights the close nexus between his offense of conviction and the delivery of health care items or services under the Medicare program.

Petitioner now asserts that he was not actually involved “in the delivery of items, services, or billing…”  P. Br. at 2.  But Petitioner may not collaterally attack his conviction before me.  42 C.F.R. § 1001.2007(d).  Moreover, Petitioner was convicted of conspiracy to commit health care fraud.  In a criminal conspiracy, each co-conspirator is

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held equally liable regardless of which particular acts they took in furtherance of the conspiracy.  See Smith v. United States, 133 S. Ct. 714, 719 (2013) (“. . . a defendant who has joined a conspiracy . . . becomes responsible for the acts of his co-conspirators in pursuit of their common plot . . .”) (citations omitted).

Petitioner is therefore equally liable for the acts of his co-conspirators, not only for his individual conduct.  Accordingly, I conclude that Petitioner’s conduct was related to the delivery of an item or service under Medicare and that the record supports the IG’s determination that Petitioner’s exclusion was required pursuant to 42 U.S.C. § 1320a-7(a)(1).

2. 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).

3. The IG has established three aggravating factors which together justify exclusion beyond the five-year statutory minimum.

a. The IG established financial loss to a government program of $50,000 or more, as required by 42 C.F.R. § 1001.102(b)(1).

Petitioner admitted that he was responsible for $988,592.81 of loss as a result of his criminal conduct.  IG Ex. 4 at 9.  The District Court ordered him to pay restitution in this amount to the Medicare program as part of his sentence.  IG Ex. 3 at 6.  The Departmental Appeals Board (the Board) has recognized that restitution may be used to demonstrate program loss.  See Summit S. Shah, M.D., DAB No. 2836 at 8 (2017) (citations omitted).  I therefore conclude the IG has sufficiently established that Petitioner was responsible for more than $50,000 in loss to the Medicare program.

b. The IG established that Petitioner’s conviction arose from acts that lasted for a period of one year or more, as required by 42 C.F.R. § 1001.102(b)(2).

Petitioner baldly asserts his role in the criminal conspiracy lasted less than one year.  P. Br. at 2.  The record before me does not support his contention.  Instead, Petitioner stipulated that from at least approximately June 2012 through October 2013, he acted as Chief Operating Officer for Care Concepts, the company through which he and his co-conspirators fraudulently billed the Medicare program.4 IG Ex. 4 at 2. He also pleaded

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guilty to participating in a conspiracy that took place from approximately December 2007 to March 2015.  IG Ex. 3 at 1-2; IG Ex. 5 at 9.

It is difficult for me to surmise how Petitioner would have been uninvolved in the scheme at any time during his tenure as Chief Operating Officer, given he was nominally running the company through which fraudulent claims to Medicare were funneled.  Moreover, it is clear that Petitioner participated in the conspiracy well before he attained his chief operating role.  He exchanged e-mails with a co-conspirator as early as February 2012 discussing how to bill claims for higher-priced glucose monitors.  IG Ex. 4 at 5.  He also conceded the government could prove he participated in creating phone scripts for sales personnel to use to facilitate these claims, and that one of these scripts was found in his office dated from December 2011.  Id. at 6.  I therefore have no difficulty concluding the record supports the IG’s determination that Petitioner’s criminal conduct occurred for over one year.

c. The IG established, and Petitioner does not dispute, that he was incarcerated as part of his sentence as required by 42 C.F.R. § 1001.102(b)(5).

d. The IG properly applied no mitigating factors.

While the IG bears the burden of proving any aggravating factors, Petitioner has the burden of proving mitigating factors.  42 C.F.R. § 1005.15(c).  Petitioner summarily asserts that he cooperated with the government, P. Br. at 2, but he makes no effort to document his cooperation or demonstrate how it resulted in the outcomes favorable to the government necessary to trigger consideration of it as a mitigating factor.5  I therefore find that the IG properly applied no mitigating factors in determining the period of exclusion.

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4. A ten-year exclusion period is not unreasonable.

I must uphold the IG’s determination as to the length of 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 OIG 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)(2) grants to the OIG is appropriate, given the OIG’s vast experience in implementing exclusions under these authorities.

57 Fed. Reg. 3298, 3321 (Jan. 29, 1992).

In making my determination, the quality of the aggravating (or mitigating) factors is of greater significance than the mere number of the factors 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 OIG 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.

In assessing the reasonableness of the exclusion period selected by the IG, I must consider both mitigating and aggravating factors.  Here, the IG appropriately applied the three aggravating factors and found none that served to mitigate the seriousness of Petitioner’s offense.  Petitioner’s criminal conduct resulted in a staggering loss to the

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Medicare program – over $988,000.  The Board has previously observed that it is “entirely reasonable” to give significant weight to loss amounts substantially larger than the minimum regulatory threshold.  Laura Leyva, DAB No. 2704 at 9-10 (2016) (citations omitted).  Here, Petitioner’s criminal conduct resulted in a loss to the Medicare program, over 19 times the regulatory minimum of $50,000 for program loss to be considered an aggravating factor.  42 C.F.R. § 1001.102(b)(1).

The seriousness of Petitioner’s offense is also reflected by the District Court’s imposition of a 25-month sentence of incarceration.  IG Ex. 3 at 2; 42 C.F.R. § 1001.102(b)(5).  A sentence of incarceration for such an offense is a “reasonable proxy . . . for untrustworthiness in the context of deciding how much weight to give the aggravating factor for incarceration.”  Eugene Goldman, M.D., DAB No. 2635 at 5 (2015).

Petitioner asserts that consideration should be given to the fact that he was released early from prison, serving only 10.5 months on his 25-month sentence, and to the fact that he entirely repaid the restitution amount.  P. Br. at 2-3.  However, neither of these circumstances are mitigating factors I may consider to reduce the period of exclusion.  42 C.F.R. § 1001.102(c).

His early release is not relevant, as it is the sentence of incarceration actually imposed that acts as a trigger for aggravation, not the actual time served.  42 C.F.R. § 1001.102(b)(5).  The repayment of the fruits of his criminal conduct is similarly irrelevant and does not lessen the seriousness of Petitioner’s offense.  Hussein Awada, M.D., DAB No. 2788 at 8 (2017) (providing that 42 C.F.R. § 1001.102(b) requires consideration of the whole financial loss, and that repayment is not a mitigating factor).  In any event, the fact that Petitioner has returned almost a million dollars he fraudulently obtained from the Medicare program does not in any way suggest he is trustworthy.

Instead, as the Board has noted, “simply meeting the threshold for an aggravating factor is a clear indication of untrustworthiness.”  Awada, DAB No. 2788at 10.  Here, Petitioner has met the threshold for three aggravating factors, which taken together demonstrate the severity of his untrustworthiness.  I cannot say the ten-year period of exclusion selected by the IG is unreasonable.

For these reasons, I conclude that the IG has established the existence and the significant weight of the aggravating factors, and demonstrated he adequately considered those factors in selecting a ten-year period of exclusion.  Petitioner’s crime had a substantial financial impact on the Medicare program, occurred over a period of time that exceeded one year, and resulted in his incarceration.  The length of exclusion imposed by the IG is not unreasonable.

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VI. Conclusion

I affirm the IG’s determination to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for a period of ten years.

• 1. The IG issued an amended notice on October 12, 2018 correcting a typographical error in the aggravating factor concerning the period of time over which the acts resulting in Petitioner’s conviction occurred.  IG Ex. 6.  The amended notice indicated these acts occurred from about June 2012 to about October 2013. Id.
• 2. Document 5b in the official case file maintained in the Departmental Appeals Board E-file system; for clarity and simplicity, I will cite to the exhibits attached by the parties to their respective briefs by the exhibit numbers indicated by the parties, not the document numbers assigned by E-file.
• 3. My findings of fact and conclusions of law appear as numbered headings in bold italic type.
• 4. The IG cited this period of time in the amended version of his exclusion notice, but failed to explain how it reflected the duration of Petitioner’s involvement in the criminal conspiracy which resulted in his conviction and subsequent exclusion.  IG Ex. 6.  IG counsel failed to shed any light on the subject in her brief.  Some effort – any effort – from the IG to articulate his decision-making process would have aided my review.  U.S. v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) (“Judges are not like pigs, hunting for truffles buried in briefs.”).  Nevertheless, both the factual basis and the indictment demonstrate that Petitioner’s role in this offense lasted much longer than this limited period, which appears to reflect the period of employment of a cooperating witness who would testify Petitioner acted as Chief Operating Officer during the time she worked at Care Concepts.  IG Ex. 4 at 2; IG Ex. 5 at 6.
• 5. The regulations permit cooperation to mitigate a period of exclusion only where “cooperation with Federal or State officials resulted in—(i) Others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs, [or] (ii) Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses….” 42 C.F.R. § 1001.102(c)(3).