Jason RH Castle, M.D., DAB CR6112 (2022)

DECISION

The Inspector General (IG) of the United States Department of Health and Human Services excluded Jason RH Castle, M.D. (Dr. Castle or Petitioner) from participating in Medicare, Medicaid, and all other federal health care programs for a minimum period of eight years under § 1128(a)(4) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(4)).  Dr. Castle requested a hearing before an administrative law judge (ALJ) to dispute the exclusion.  For the reasons stated below, I affirm the IG's exclusion of Dr. Castle from program participation for eight years.

I.  Background and Procedural History

By letter dated July 30, 2021, the IG notified Petitioner that he was excluded from participating in Medicare, Medicaid, and all federal health care programs under section 1128(a)(4) of the Act for a period of eight years due to his felony conviction for a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  IG Exhibit (Ex.) 1.  The IG relied on two aggravating factors to extend the term of Petitioner's exclusion to eight years.  Id.

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Petitioner timely requested a hearing before an ALJ and Judge Bill Thomas was designated to hear and decide this case.1

Judge Thomas held a pre-hearing telephone conference on January 12, 2022, the substance of which is summarized in the January 12, 2022 Order Summarizing Pre-Hearing Conference and Setting Briefing Schedule (Summary Order)2 .  Among other provisions, the parties were directed to file pre-hearing briefs articulating their respective arguments, as well as identifying witnesses and exhibits in support thereof.  Summary Order at 4-5.

The IG filed a brief (IG Br.) and five proposed exhibits (IG Exs. 1-5) on February 15, 2022.  Petitioner did not file a pre-hearing exchange.  On April 7, 2022, Judge Thomas issued an Order to Show Cause, ordering Petitioner to explain why his case should not be dismissed for failure to comply with the Summary Order.  Petitioner responded that he was unable to timely file because of family obligations and unsuccessful attempts to find an attorney to assist in his appeal.  Judge Thomas found this to be good cause and discharged the Order to Show Cause on April 18, 2022.  Petitioner filed a brief (P. Br.) on April 19, 2022.  The IG then submitted a reply brief (IG Reply).  Because Petitioner had submitted a brief that addressed exclusions under § 1128(b)(4) of the Act, I issued an Order on May 31, 2022 reopening the record for the purpose of allowing him to provide arguments against exclusion under § 1128(a)(4) of the Act.  Petitioner submitted the second Informal Brief (P. Revised Br.) on June 15, 2022.  While Petitioner's response was not filed within the time frame specified in my Order, the IG indicated in the Reply Brief that it had no objection to the late submission.

II.  Admission of Exhibits and Decision on the Record

In the absence of any objection, IG Exs. 1-5 are admitted into evidence.
Neither party indicated a hearing was necessary, nor did they identify any proposed witnesses.  As a result, an in-person hearing would serve no purpose and the matter may be decided on the written record.  See Civ. Remedies Div. P. § 19(d).

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III.  Issues

Whether the IG has a basis to exclude Petitioner from participation in federal health care programs under section 1128(a)(4) of the Act, and if so, whether the length of the exclusion, eight years, is reasonable.  42 C.F.R. § 1001.2007.

IV.  Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to a hearing before an ALJ and judicial review of the final action of the Secretary of Health and Human Services (Secretary).  The right to a hearing before an ALJ is set forth in 42 C.F.R. §§ 1001.2007(a) and 1005.2, while the rights of both the sanctioned party and the IG to participate in a hearing are specified by 42 C.F.R. § 1005.3.

The Secretary must exclude from participation in federal health care programs "[a]ny individual or entity that has been convicted for an offense which occurred after August 21, 1996, under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance."  42 U.S.C. § 1320a-7(a)(4); see also 42 C.F.R. § 1001.101(d).

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.  42 U.S.C. § 1320a-7(i).  There may be no collateral attack of the conviction that provides the basis of the exclusion.  42 C.F.R. § 1001.2007(d).

Section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) provides that an exclusion imposed under section 1128(a) of the Act (42 U.S.C. § 1320a-7(a)) shall be for a minimum period of five years.  The exclusion is effective twenty days from the date of the notice of exclusion.  42 C.F.R. § 1001.2002(b).  The period of exclusion may be extended based on the presence of specified aggravating factors.  42 C.F.R. § 1001.102(b).  Mitigating factors are considered as a basis for reducing the period of exclusion only if aggravating factors justify an exclusion of longer than five years.  42 C.F.R. § 1001.102(c).

The standard of proof is a preponderance of the evidence.  42 C.F.R. § 1001.2007(c).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors; the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(c), Summary Order at 4.

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V.  Jurisdiction

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

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

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

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

Section 1128(a)(4) of the Act mandates that the Secretary exclude from program participation any individual or entity convicted of a felony criminal offense "relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance."  See 42 C.F.R. § 1001.101(d).  As discussed below, the IG has established, by a preponderance of the evidence, the elements necessary to exclude Petitioner.

1. Petitioner was convicted of a criminal offense within the meaning of section 1128(a)(4) of the Act for which exclusion was required.

On January 8, 2021, Petitioner was charged in an Information filed in the United States District Court, Eastern District of Kentucky - Southern Division at Pikeville (District Court) with eight counts of violating 21 U.S.C. §§ 841(a)(1) and (b)(1)(C), consisting of "knowingly and intentionally distribute and dispense, outside the scope of professional practice and not for a legitimate medical purpose, Fentanyl, a Schedule II controlled substance" during the period from August 13, 2020, through October 15, 2020.  IG Ex. 2 at 2.  In a Plea Agreement signed on January 8, 2021, Petitioner pleaded guilty to these charges.  IG Ex. 3.  On March 8, 2021, Petitioner was sentenced to 22 months of prison for Unlawful Distribution of a Controlled Substance (Fentanyl), in violation of 21 U.S.C. § 841(a)(1).  A federal offense is classified as a felony if the maximum term of imprisonment authorized is more than one year.  See 18 U.S.C. § 3559(a).  The above conviction, on its face, constitutes a felony criminal offense "relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance".  Petitioner, in fact, does not dispute this conclusion.  In the Revised Brief, he agreed that he was convicted of a felony occurring after August 21, 1996, and did not disagree that the conviction related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  P. Revised Br. at 1-2.  Given this, I find that Petitioner has been convicted of a felony criminal offense "relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance."

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

Because I have concluded that a basis exists to exclude Petitioner under 42 U.S.C. § 1320a-7(a)(4), Petitioner must be excluded for a minimum period of five years.  42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. §1001.102(a).  The IG has no discretion to impose a lesser period of exclusion, and I may not reduce the period of exclusion below five years.

3. The IG has proven two aggravating factors to 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).  In this case, the IG applied two aggravating factors to impose an eight-year term of exclusion:  (1) the sentence imposed by the court included incarceration, and (2) 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.  IG Ex. 1 at 2; 42 C.F.R. § 1001.102(b)(5),(9).  I must uphold the IG's determination as to the length of exclusion so long as it is not unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  As outlined below, the IG's determination is reasonable.

1. The IG established the sentence imposed against Petitioner included a period of incarceration.

The IG determined the aggravating factor found at 42 C.F.R. § 1001.102(b)(5) is applicable because Petitioner's criminal conviction resulted in a sentence of incarceration.  IG Ex. 1 at 1.  There is no dispute that the District Court sentenced Petitioner to 22 months of incarceration for the conviction upon which the IG's exclusion is based.  IG Ex. 4 at 2.  Petitioner argues, however, that the IG has failed to "include the whole picture" relating to the period of incarceration and points out that, in fact, the judge departed downward from the recommended sentencing guidelines of 37-46 months in sentencing him to the 22 month sentence.  P. Revised Br. at 3.  He notes that he was then released to home confinement after eight months and five days of incarceration and had the remainder of his sentence commuted on March 18, 2022.  Id.  Finally, Petitioner asserts that the definition of incarceration used by the IG, an apparent reference to the definition in 42 C.F.R. § 1001.2, is "purely punitive and does not rise to the burden of further aggravating factors given the totality of my case and behavior in accepting my responsibility."  Id.

While many of the facts cited in Petitioner's arguments, such as the early release and commutation of his remaining sentence are not corroborated by documentary evidence,

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they are accepted at face value for the purpose of evaluating his arguments.  However, even taking those allegations as fact, they are not relevant to the issues before me.

Considering first Petitioner's argument that the regulatory definitions are "punitive", it is not clear whether he is raising some form of a double jeopardy argument with the use of that term.  Assuming for the purpose of fully evaluating his arguments that he is, I note the Board has held that

the I.G.'s authority to increase the length of an exclusion pursuant to section 1128(a)(1) is not so punitive, either in purpose or effect, as to transform a civil remedy into a criminal penalty.  Where a provider has been convicted of a criminal offense relating to the delivery or an item or service under Medicare or Medicaid, Congress considered a minimum exclusion of five years to be required to protect federal programs.  However, Congress authorized the I.G. to determine whether a longer exclusion was necessary. The fact that, under some circumstances, the I.G. determines that a longer period is necessary does not make the exclusion punitive.  Rather, the additional time is determined by the I.G. to be necessary to ensure that the programs are safe from providers where aggravating factors indicate that five years may not be sufficient.  If the length of the exclusion is unreasonable in light of this purpose, it may be modified by the ALJ.  Therefore, the purpose of the exclusion remains remedial.

Joann Fletcher Cash, DAB No. 1725 at 16-17 (2000).

The Board further stated, in affirming a 15-year exclusion, that the mere fact that an exclusion may have a "dramatic impact on . . . future employment opportunities" may indeed be a logical consequence of a lengthy exclusion, but does not itself "undercut a determination about the period of time needed to protect" federal programs and their beneficiaries from potential harm.  Cash, DAB No. 1725 at 19.

Thus, while Petitioner may well feel he is being punished by the exclusion, Board decisions make clear that the purpose of the exclusion statute is the protection of public health care programs.  Moreover, I may not ignore the statute or fail to apply validly promulgated regulations simply because they may result in adverse consequences for Petitioner.

Petitioner asserted that consideration should have been given to the fact that the sentencing judge departed downward from the sentencing guidelines, he was only

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required to serve a little more than eight months, and the remainder of his sentence was commuted.  P. Revised Br. at 3.  However, the regulatory definition does not distinguish between the length or form of incarceration.  It does not indicate that early release for good behavior or a downward departure in sentencing should somehow block the application of the regulation.  Rather, the language is simple and clear.  42 C.F.R. § 1001.102(b)(5) provides that the IG may consider, as an aggravating factor, that "[t]he sentence imposed by the court included incarceration".  (Emphasis added).  The definition of "Incarceration" includes "any type of confinement with or without supervised release, including, but not limited to, community confinement, house arrest and in home detention."  42 C.F.R. § 1001.2.  The fact that Petitioner reportedly received a reduced sentence is not relevant.  What is relevant is that he was incarcerated.3

Moreover, while any period of incarceration, by regulation, justifies increasing the period of exclusion, the Board has repeatedly held that longer periods of incarceration are relevant in determining whether a period of exclusion is reasonable.  Eugene Goldman, M.D. a/k/a Yevgeniy Goldman, M.D., DAB No. 2635 at 6 (2015).  Generally, the longer the jail time, the longer the exclusion, because a lengthy sentence evidences a more serious offense.  See Jeremy Robinson, DAB No. 1905 (2004) (characterizing a nine-month incarceration as "relatively substantial."); Jason Hollady, M.D., a/k/a Jason Lynn Hollady, DAB No. 1855 at 12 (2002) (characterizing a nine-month period of incarceration as "relatively substantial"); Stacy Ann Battle, DDS., DAB No. 1843 (2002) (finding that four months in a halfway house, followed by four months home confinement justifies lengthening the period of exclusion); Brenda Mills, M.D., DAB CR1461, aff'd, DAB No. 2061 (2007) (finding that six months' home confinement justifies an increase in length of exclusion).  Based on the length of the incarceration, I conclude the IG reasonably applied this aggravating factor in determining Petitioner's period of exclusion.

2. Petitioner had been the subject of another adverse action by a Federal, State, or local government agency or board based on the same set of circumstances that served as the basis for the imposition of the exclusion.

The IG applied the provisions of 42 C.F.R. § 1001.102(b)(9), finding that the acceptance of the surrender of Petitioner's license to practice as a medical doctor by the Kentucky Board of Medicine Licensure (Kentucky Board) was an additional aggravating factor.  IG Ex. 1 at 1.  That section of the regulations includes as an aggravating factor the situation in which the individual 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.  Petitioner does not argue that the adverse action by the Kentucky Board was not based on the same

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set of circumstances that served as the basis for the imposition of the exclusion.  Rather, he disputes the IG's application of this factor, arguing that he "immediately surrendered" his license after becoming aware of the specifics of the investigation.  P. Revised Br. at 3.  I consider the use of the term "surrendered" as an argument that this factor should not be applied because he voluntarily gave up his license, rather than the governmental agency taking an adverse action against him.  However, a review of the Agreed Order issued by the Kentucky Board on February 18, 2021, indicates that Petitioner surrendered his license "in lieu of revocation", based upon stipulations of fact that he engaged in conduct which violated the provisions of the Kentucky Revised Statutes (KRS) 311.595(4) and (9), as illustrated by KRS 311.597(4).  IG Ex. 5 at 2,3.  Moreover, in the same Order, the Kentucky Board clearly stated that "[i]mmediately upon the filing of this Agreed Order of Surrender, the licensee shall not engage in any act which would constitute the ‘practice of medicine or osteopathy' as that term is defined by KRS 311.550(10)".  IG Ex. 5 at 3.  The fact that he surrendered his license does not negate the fact that this was "in lieu of revocation" and he is unable to practice medicine in the Commonwealth of Kentucky for a minimum of two years.  Id.  Petitioner has presented no specific argument that the loss of his license to practice medicine was not an adverse action or that it was not based on the same set of circumstances that served as the basis for the imposition of the exclusion.  As a result, I find that the IG reasonably applied this aggravating factor in determining Petitioner's period of exclusion.

4. No mitigating factors exist in this case upon which I may rely to reduce the exclusion period.

The IG considered no mitigating factors in determining the length of Petitioner's exclusion.  IG Ex. 1; IG Reply at 3.  Petitioner argues there are mitigating factors to be considered.  He asserts that he has never before been the focus of any adverse finding or actions in the previous 15 years of medical practice and this was an isolated incident, he was encouraged by the sentencing judge to return to the practice of medicine after completing his sentence, he fully cooperated with the US Attorney's office, and his inability to practice medicine for eight years will adversely impact his ability to provide healthcare to the people in the rural area of Southeastern Kentucky.  P. Revised Br. at 4-5.  However, the applicable regulations identify only three mitigating factors I may consider to reduce a period of exclusion:  (1) a petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to the program was less than $5,000; (2) the record in the criminal proceedings demonstrates that a petitioner had a mental, physical, or emotional condition that reduced his culpability; and (3) a petitioner's cooperation with federal or state officials resulted in others being convicted or excluded, or additional cases being investigated, or a civil money penalty being imposed.  42 C.F.R. § 1001.102(c).  Because Petitioner has not cited, and the record does not establish, any of the regulatory mitigating factors, I am unable to reduce the period of exclusion on that basis.

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5. An eight-year exclusion period is not unreasonable.

I must uphold the IG's determination as to the length of exclusion unless it is unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  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.  I cannot say the IG's decision to impose an eight-year period of exclusion is unreasonable.  Even after he became aware that he was being investigated due to his prescribing of fentanyl, a Schedule II Controlled Substance, between August 13, 2020, and October 15, 2020, Petitioner "knowingly distributed these fentanyl prescriptions by signing and issuing these prescriptions outside the usual course of professional practice.  [Petitioner] knew the prescriptions were not issued for a legitimate medical purpose within the usual course of professional practice, and deliberately ignored that fact."  IG Ex. 3 at 2.  Both the severity and duration of Petitioner's offense lend credence to the IG's judgment that Petitioner lacks the trustworthiness necessary to participate in federal health care programs and should therefore be excluded from doing so for a significant period of time.  The period of exclusion imposed by the IG is not unreasonable.

VII.  Conclusion

For the foregoing reasons, I conclude the IG properly excluded Petitioner from participating in Medicare, Medicaid, and other federal health care programs, and find that the eight-year period of exclusion selected by the IG is not unreasonable.

1. The case was re-assigned to me on May 24, 2022.
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2. Petitioner did not appear at the original pre-hearing conference scheduled in this matter.  Judge Thomas issued an Order to Show Cause for the failure to appear at the pre-hearing conference on November 17, 2021.  Petitioner responded that he had entered the wrong date on his calendar.  Judge Thomas found this to be good cause for the failure to appear and discharged the Order to Show Cause on December 15, 2021.
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3. Petitioner argues that he only received a sentence of 22 months.  However, he does not address the fact that he was actually sentenced to 22 months as to each of the 8 counts but was allowed to serve them concurrently.  IG Ex. 4 at 2.
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