Matthew J. Girardy, DMD, DAB No. 2987 (2020)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Petitioner Matthew J. Girardy, DMD, appeals the October 16, 2019 decision of an administrative law judge (ALJ). Matthew J. Girardy, DMD, DAB CR5446 (ALJ Decision). The ALJ concluded that the Inspector General (I.G.) had a lawful basis to exclude Petitioner from participating in Medicare, Medicaid, and all federal health care programs under section 1128(a)(1) of Social Security Act (Act) based on his conviction, under state law, of a criminal offense related to the delivery of a health care item or service under a state health care program, and that the seven-year exclusion period was not unreasonable.1 We affirm the ALJ Decision.

Legal background

Section 1128(a)(1) of the Act requires the I.G. to exclude an individual from participating in any "Federal health care program" (as defined in section 1128B(f) of the Act)2 if that individual "has been convicted of a criminal offense related to the delivery of an item or service under title XVIII [of the Act, Medicare,] or under any State health care program." Accord 42 C.F.R. § 1001.101(a). For purposes of section 1128(a), a person "is considered to have been 'convicted' of a criminal offense" when (among other circumstances) "a plea of guilty or nolo contendere by the individual . . . has been accepted by a Federal, State, or local court[.]" Act § 1128(i)(3).

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A "mandatory" exclusion imposed under section 1128(a) must be for a minimum of five years. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). This period may be extended based on the application of the aggravating factors in 42 C.F.R. § 1001.102(b). If the I.G. extends the mandatory minimum exclusion period by applying any aggravating factor, then any mitigating factor in 42 C.F.R. § 1001.102(c) may be considered to reduce the exclusion period to no less than five years.

An individual excluded under section 1128 may request a hearing before an ALJ, but only on: (1) whether a "basis for" the exclusion exists; and (2) whether the exclusion period is unreasonable based on any proven aggravating and mitigating factors. 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a). A party dissatisfied with an ALJ's decision may appeal it to the Departmental Appeals Board (Board). Id. § 1005.21(a).

Case background

On February 7, 2013, a grand jury indicted Petitioner and others in the Superior Court of New Jersey, Monmouth County. I.G. Ex. 2. Count 21 of the Indictment, charging Petitioner with Theft by Deception in the second degree, alleged that, from on or about June 12, 2006, to on or about August 1, 2009, 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." Id. at 31 (citing N.J.S.A.  §§ 2C:20-4, 2C:2-6). On February 2, 2018, Petitioner pleaded guilty to Count 21 (as amended), Theft by Deception, for a violation of N.J.S.A. § 2C:20-4, but which apparently involved a lower dollar amount of theft and a change from a second to a third degree offense, and the court accepted the plea. Compare I.G. Ex. 3, at 1, and I.G. Ex. 2, at 31. On October 19, 2018, the court sentenced Petitioner to five years of probation on the conditions that he perform 300 hours of community service and obtain and maintain full-time verifiable employment, and ordered him to pay $318,301 in restitution to the State of New Jersey. I.G. Ex. 3, at 1, 2, 4.

By letter dated April 30, 2019, the I.G. notified Petitioner that he was excluded from participation in all federal health care programs under section 1128(a)(1) of the Act, based on his state criminal conviction 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. I.G. Ex. 1, at 1. The I.G. explained that the mandatory five-year exclusion period was being extended to seven years because (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. Id. at 2.

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Petitioner appealed the I.G.'s determination.3 Before the ALJ, Petitioner did not dispute that he was convicted of theft by deception, but argued that the offense of which he was convicted was not related to the delivery of a health care item or service because the "proffer for his guilty plea" to the charge of theft by deception was that "staff in the office for which [he] worked . . . creat[ed] false impressions as to billing on behalf of Medicaid beneficiaries and us[ed] those impressions to submit false claims to Medicaid for reimbursement." ALJ Decision at 4 (quoting P. Br. at 2). The ALJ noted that, although Petitioner pleaded guilty to theft by deception, he was charged with obtaining approximately $385,467 from the New Jersey Medicaid program "by creating and reinforcing a false impression that dental services were provided to Medicaid beneficiaries and that Petitioner was entitled to" Medicaid payment for those services. Id. at 4-5 (citing I.G. Ex. 2, at 31). There is, the ALJ said, "an obvious nexus" between the conviction and the delivery of an item or service under Medicaid because submitting false Medicaid claims is "clearly 'related to' the delivery of an item or service under a state health care program." Id. at 5 (citing cases). The ALJ also noted that the indictment indicated that the New Jersey Medicaid program incurred loss as a result of Petitioner's criminal conduct and that the court ordered Petitioner to pay restitution to the state. Id. Accordingly, the ALJ concluded that the offense for which Petitioner was convicted was indeed related to the delivery of a health care item or service under a state health care program and the I.G. therefore had a basis to exclude him under section 1128(a)(1) of the Act for at least five years. Id. (citing Act § 1128(c)(3)(B)).

Addressing the aggravating factors, the ALJ found that the I.G. established two such factors that support the I.G.'s determination to extend the mandatory minimum exclusion period: first, the acts resulting in Petitioner's 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. ALJ Decision at 5 (citing I.G. Ex. 1, at 2; 42 C.F.R. § 1001.102(b)(1), (2)). The ALJ found that the court's ordering Petitioner to pay the state $318,301 in restitution for submitting false claims to Medicaid, which resulted in approximately $385,467 in fraudulently obtained payments from the New Jersey

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Medicaid program,4 established the first aggravating factor, as "an amount ordered as restitution constitutes proof of the amount of financial loss to a government program." Id. at 6 (citing I.G. Exs. 2, at 31, and 3, at 2; and cases), 8. The ALJ also found the fact that the criminal conduct began on or about June 12, 2006, and continued until about August 1, 2009 – a period of over three years – established the second aggravating factor. Id. at 6 (citing I.G. Ex. 2, at 31), 8. The ALJ further noted that Petitioner did not argue that any mitigating factor in 42 C.F.R. § 1001.102(c) exists and, accordingly, Petitioner did not meet his burden to prove that any such factor could be the basis for reducing the exclusion period to no less than five years. Id. at 6-7. The ALJ determined that the "two proven aggravating factors are entitled to significant weight" and that the seven-year exclusion period is not unreasonable in light of criminal conduct that "had a substantial financial impact on" the New Jersey Medicaid program. Id. at 8. He wrote, "Based on the record before me, Petitioner is not trustworthy to participate in federal health care programs . . . ." Id.

Petitioner asserted that he is entitled to a waiver from exclusion. ALJ Decision at 2; P. Br. at 4 (asserting that he is the "sole source of essential specialized services" serving the "elderly/disabled" in the "Ocean County community"). The ALJ determined that he had no jurisdiction to determine whether the exclusion should be waived, because only the administrator of a federal or state health care program may request a waiver from the I.G.5 ALJ Decision at 2-3. The ALJ stated that "[e]xcluded individuals cannot request waiver directly." Id. at 3 (citing Act § 1128(c)(3)(B), (d)(3)(B)(i); 42 C.F.R. § 1001.1801).

Standard of review

The Board reviews an ALJ's decision to determine whether it is supported by substantial evidence and is free of legal error.  42 C.F.R. § 1005.21(h).

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Analysis

Petitioner argues that the ALJ erred in finding a nexus between the crime of which he was convicted and the Medicaid program. He asks the Board to order a waiver from exclusion or reduce the exclusion period. Notice of appeal (NA). We reject the arguments and uphold the ALJ Decision.

1. There is a common-sense nexus between Petitioner's conviction and the delivery of health care services to New Jersey Medicaid beneficiaries.

Petitioner asserts that his crime is not "necessarily and logically" "related to theft of Medicaid services." NA at 1. He states that he did not plead guilty to committing "insurance fraud." Id.

"The Board has repeatedly held that the phrase 'related to' within the context of section 1128(a)(1) requires only that a common-sense nexus exists between the offense and the delivery of a health care item or service under the state healthcare program." Summit S. Shah, M.D., DAB No. 2836, at 6 (2017) (citing cases); see also Scott D. Augustine, DAB No. 2043, at 5-6 (2006) (Based on the plain meaning of the word "related," an offense is considered "related to" an item or service under a covered program if there is a common-sense connection between the offense and the delivery of an item or service under the program.) (and cited cases). As the ALJ noted, although Petitioner pleaded guilty to theft by deception, he was charged with obtaining approximately $385,467 from the New Jersey Medicaid program by creating or reinforcing the false impression that dental services were provided to Medicaid beneficiaries and that he was entitled to Medicaid reimbursement. ALJ Decision at 4-5 (citing I.G. Ex. 2, at 31). The ALJ wrote, "Submitting a false claim to Medicaid is clearly 'related to' the delivery of an item or service under a state health care program." Id. at 5 (citing cases). We agree with the ALJ that there is an "obvious nexus" between the offense for which Petitioner was convicted and the delivery of an item or service under the New Jersey Medicaid program. Id. at 5.

Petitioner also states that he currently has a dentistry license and is practicing dentistry. NA at 1. This is simply not relevant to the question of whether a common-sense nexus between the criminal offense and the delivery of an item or service under the Medicaid program exists, or the ultimate issue of whether a legal basis to exclude Petitioner under section 1128(a)(1) exists.

Petitioner reports that he "has been paying restitution faithfully." NA at 1. That an excluded individual may be complying with the sentencing court's orders itself is not directly relevant to the nexus issue or the issue of whether a legal basis for the I.G.'s exclusion exists. However, here, the sentencing court's ordering Petitioner to pay restitution to the state of New Jersey, the entity that incurred a loss of Medicaid program resources as a result of Petitioner's criminal actions, is relevant to the question of nexus

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and thus the ultimate issue of the basis for the I.G.'s exclusion. On this point, we agree with the ALJ. See ALJ Decision at 5.

2. The ALJ correctly determined that he had no authority to waive the exclusion; neither does the Board.

Petitioner requests a waiver from exclusion because he has "unique talent in the regional area in which he practices involving the dental needs of the elderly." NA at 1.

The Secretary, after consulting with the I.G., may waive an exclusion imposed under section 1128(a)(1). Act § 1128(c)(3)(B). The Secretary's decision whether to waive the exclusion is not reviewable. Id.; 42 C.F.R. § 1001.1801(f). A waiver request "must be in writing and from an individual directly responsible for administering the Federal health care program," and must meet certain criteria applicable to an exclusion under section 1128(a)(1). See 42 C.F.R. § 1001.1801(a), (b)(1), (b)(2). The ALJ correctly determined that he had no authority to determine whether Petitioner's exclusion should be waived because the authority to request a waiver of an exclusion lies with the program administrator. ALJ Decision at 2-3. For the same reason, the Board cannot order a waiver. See Delores L. Knight, DAB No. 2945, at 12-13 (2019), recon. denied, DAB Ruling No. 2019-4 (Aug. 8, 2019).

3. We do not disturb the ALJ's determination on the duration of the seven-year exclusion period.

Petitioner asserts that "the term of the exclusion should be significantly shortened as it is adversely affecting [his] ability to practice dentistry." NA at 2. He again states that his license to practice dentistry has not been suspended or revoked. Id.

The ALJ and the Board must follow the applicable exclusion authorities. See 42 C.F.R. § 1005.4(c)(1), (c)(4); Ethan Edwin Bickelhaupt, M.D., DAB No. 2480, at 3 (2012), aff'd, Bickelhaupt v. Sebelius, No. 12 C 9598 (N.D. Ill. May 29, 2014). Those authorities require that an exclusion imposed under section 1128(a)(1) of the Act, as in this case, be in effect for a minimum of five years. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). And, if the I.G. lengthens the required minimum exclusion period by applying any of the regulatory aggravating factor(s), as the I.G. has done here with the factors in 42 C.F.R. § 1001.102(b)(1) and (b)(2), then the question is whether any mitigating factor in 42 C.F.R. § 1001.102(c) exists. If so, the issue is whether the lengthened exclusion period may be reduced to no less than the required minimum period based on any such mitigating factor(s). Only the factors set out in the regulations may be considered. 42 C.F.R. § 1001.102(c) ("Only the following factors may be considered mitigating . . . .").

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The ALJ determined that Petitioner did not prove the existence of any of the mitigating factors in 42 C.F.R. § 1001.102(c) (none of which concerns the status of state licensure), much less argue that any such mitigating factor exists. Petitioner does not dispute that determination. He does not raise any argument about the ALJ's determination that the duration of the seven-year exclusion period is not unreasonable. To the extent Petitioner's request for reduction of the exclusion period may be construed as a request for equitable relief, the Board is bound to follow the exclusion authorities and cannot sit in equity. See Rita Patel, DAB No. 2884, at 7 (2018) (The Board "does not have the power to decline to apply a regulation based on equity alone."), appeal docketed, Patel v. Sec'y U.S. Dep't of Health & Human Servs., No. 18-3227 (3d Cir. Oct. 5, 2018), transferred to No. 2:19-cv-08295(D.N.J. Mar. 27, 2019).

Conclusion

The Board affirms the ALJ Decision.

1. The current version of the Act can be found at http://www.socialsecurity.gov/OP_Home/ssact/ssact-toc.htm. Each section of the Act on that website contains a reference to the corresponding United States Code chapter and section. Cross-reference tables for the Act and the United States Code can be found at http://uscode.house.gov/table3/1935_531.htm and https://www.ssa.gov/OP_Home/comp2/G-APP-H.html.
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2. Section 1128B(f) of the Act defines "Federal health care program" to mean "(1) any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government" (other than federal employee health insurance); or "(2) any State health care program, as defined in section 1128(h)" of the Act. Section 1128(h) of the Act defines "State health care program" to include "a State plan approved under title XIX [Medicaid]."
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3. Petitioner requested a hearing, indicating that he wanted to testify and to call Dr. J.H. to testify, but did not comply with the ALJ's instructions to submit admissible written direct testimony of those witnesses who would then be subject to cross-examination at hearing. ALJ Decision at 3; ALJ's June 17, 2019 Order ¶¶ 7, 10, 11. The I.G. did not offer the written direct testimony of any witness who would be subject to cross-examination at hearing. The ALJ therefore determined he need not convene a hearing. ALJ Decision at 3. Neither party now raises any argument about the ALJ's determination to issue a decision based on the written record.
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4. The ALJ noted that the record did not clearly show why the court ordered restitution for an amount less than the amount of government loss as stated in the Indictment. ALJ Decision at 6 n.1 (citing I.G. Exs. 2, at 31, and 3, at 2). Nevertheless, the ALJ also noted, the restitution amount is substantially higher than the minimum amount of loss ("6.3 times over") required to trigger the aggravating factor in 42 C.F.R. § 1001.102(b)(1). Id. at 6 n.1, 8.Moreover, noting that Petitioner and others were charged with theft by deception (id. at 3), the ALJ stated that, regardless of whether the restitution order was joint and several among Petitioner and his co-conspirators, the court's sentence of Petitioner established that he was responsible for the total restitution amount. Id. at 6.
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5. The ALJ therefore excluded the single exhibit Petitioner submitted (Dr. J.H.'s letter in support of a waiver) as irrelevant to the issues before the ALJ, i.e., whether a basis for exclusion exists and, if so, whether the exclusion period is within a reasonable range. ALJ Decision at 2 (citing 42 C.F.R. §§ 1001.2007(a)(1), 1005.17(c)). The ALJ also determined that any testimony of Dr. J.H. concerning the waiver would be irrelevant and inadmissible. Id. at 3.
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