Mohamad Ahmad Bazzi, DAB CR5128 (2018)

DECISION

Petitioner, Mohamad Ahmad Bazzi, a pharmacist and owner of a pharmacy that was a Medicare supplier, pled guilty to one count of health care fraud and one count of money laundering. Petitioner was sentenced to 32 months in prison and ordered to pay $3,493,088.28 in restitution. Based on these convictions, the Inspector General (I.G.) excluded Petitioner for eighteen years from participating in Medicare, Medicaid, and all federal health care programs, as authorized by section 1128(a)(1) of the Social Security Act (Act).1 Petitioner appeals the exclusion. For the reasons discussed below, I find that the I.G. properly excluded Petitioner and that the eighteen-year exclusion is not unreasonable.

I. Background

Petitioner was a licensed pharmacist who owned and operated a pharmacy in Oak Park, Michigan that did business as Advanced Pharmacy Services (Advanced). I.G. Exhibit

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(Ex.) 2 at 1; see also I.G. Ex. 3 at 3. Beginning in or around January 2008, and continuing through approximately December 2013, Petitioner bribed Medicare beneficiaries with cash and controlled substances to induce them to present fraudulent prescriptions to Advanced. I.G. Ex. 2 at 1-2; I.G. Ex. 3 at 3-4. Advanced then billed Medicare for the prescriptions, even though the beneficiaries often did not collect the prescribed medications. I.G. Ex. 3 at 4. Petitioner sent the funds Medicare paid Advanced to the overseas bank account of a non-profit organization he controlled. Id. The value of the fraudulent claims Petitioner submitted to Medicare was approximately $3,493,088.28. Id. Based on this conduct, Petitioner was charged with violating 18 U.S.C. §§ 1347 and 1956 (health care fraud and money laundering, respectively) and was subjected to criminal forfeiture pursuant to 18 U.S.C. § 982. I.G. Ex. 2. Petitioner pled guilty to health care fraud (Count 1) and money laundering (Count 2). I.G. Ex. 3 at 1-2; see also I.G. Ex. 4. The U.S. District Court for the Eastern District of Michigan (federal district court) adjudicated Petitioner guilty and sentenced him to 32 months’ imprisonment and to pay restitution to the Medicare Trust Fund in the amount of $3,493,088.28, among other penalties. I.G. Ex. 4 at 1, 2, 6.

In a letter dated August 31, 2017, the I.G. notified Petitioner that he was excluded from participating in Medicare, Medicaid, and all federal health care programs for a period of eighteen years because he had been convicted of a criminal offense 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. The letter explained that section 1128(a)(1) of the Act authorizes the exclusion. Id. Petitioner timely requested review. I convened a telephone prehearing conference and issued an Order and Schedule for Filing Briefs and Documentary Evidence (Briefing Order).

Pursuant to my Briefing Order, the I.G. submitted a written argument (I.G. Br.) and five proposed exhibits (I.G. Exs. 1-5). Petitioner filed his responses to the questions posed in the Informal Brief (provided by my office with the Briefing Order), along with a separate document he styled “Petitioner’s Brief in Support of Pending Exclusion.” I refer to these documents collectively as Petitioner’s brief (P. Br.). In his brief, Petitioner requested an in‑person hearing at which he would testify. P. Br. at 4.2  Petitioner did not object to the I.G.’s proposed exhibits. Therefore, in the absence of objection, I admit into evidence I.G. Exs. 1-5.

Initially, Petitioner did not offer any exhibits, nor did he file any written direct testimony as required by paragraph 7(c) of my Briefing Order. At my direction, an attorney

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assisting me with this matter sent a letter to Petitioner (By Direction Letter) instructing him to file any exhibits upon which he intended to rely and that he was required to file the written direct testimony of any proposed witness in the form of an affidavit or declaration. By Direction Letter. In a submission postmarked April 6, 2018, Petitioner responded to the By Direction Letter (P. Response (Resp.)) (item 11 in DAB E-File)).3  Petitioner’s Response lists three proposed exhibits, but states that Petitioner does not have access to the documents due to his incarceration and is, thus, unable to provide them to me. P. Resp. at 1. Petitioner lists four witnesses, including himself, that he wishes to call. Id. Petitioner filed his own declaration, which he identified as P. Ex. W-1. Id. Petitioner additionally asked me to “issue an order compelling the [three other] witnesses to provide such declarations.” Id. Petitioner provided no description of the testimony the three witnesses might offer or its relevance to the proceedings.

The I.G. filed a reply to Petitioner’s Response (I.G. Reply). In the Reply, the I.G. requests that I decide the matter on the written briefs and exhibits currently filed. I.G. Reply at 6. Specifically, the I.G. argues that Petitioner’s declaration impermissibly attempts to collaterally attack his conviction both through witness testimony and through the proposed exhibits. Id.

As the I.G. correctly argues, the regulations provide that, when appealing an exclusion, an excluded party may not collaterally attack the conviction or civil judgment underlying the exclusion:

When the exclusion is based on the existence of a criminal conviction or a civil judgment imposing liability by Federal, State or local court, a determination by another Government agency, or any other prior determination where the facts were adjudicated and a final decision was made, the basis for the underlying conviction, civil judgment or determination is not reviewable and the individual or entity may not collaterally attack it either on substantive or procedural grounds in this appeal.

42 C.F.R. § 1001.2007(d). See also Peter J. Edmonson, DAB No. 1330 at 4 (1992). Petitioner’s declaration avers facts that tend to contradict the factual basis recited in his plea agreement. Compare P. Ex. W-1 with I.G. Ex. 3 at 3-4. This proffered testimony amounts to a contention that Petitioner did not commit the acts for which he was convicted. Notwithstanding Petitioner’s representations to the contrary, he signed the plea agreement, including the factual basis, stipulating that he understood its contents and

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had been fully advised by his attorney. I.G. Ex. 3 at 17. Based on the plea agreement, Petitioner was convicted of health care fraud. Petitioner’s conviction for health care fraud is a “prior determination where the facts were adjudicated and a final decision was made” within the meaning of 42 C.F.R. § 1001.2007(d). Therefore, Petitioner may not collaterally attack his conviction in this forum.

Petitioner’s testimony appears intended to show that Petitioner did not participate fully in the scheme for which he was convicted. P. Ex. W-1. Additionally, my reading of Petitioner’s declaration, which describes the roles of the other proposed witnesses, leads me to conclude that Petitioner would offer their testimony to corroborate Petitioner’s version of the events that led to his conviction. Similarly, the documents which Petitioner seeks to offer also appear intended to support Petitioner’s narrative.4  Therefore, Petitioner’s own testimony, the testimony he seeks from other witnesses, and the documents he would offer relate entirely to issues that the regulations declare to be irrelevant as a matter of law. Accordingly, I will not convene a hearing to take the proffered testimony, nor will I delay issuing my decision to permit Petitioner to gather the documents he identifies.

II. Discussion

1. A. Petitioner is subject to mandatory exclusion from program participation for a minimum period of five years because he was convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program, within the meaning of section 1128(a)(1) of the Act.5

Under section 1128(a)(1) of the Act, the Secretary of Health and Human Services must exclude an individual or entity that has been 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. See also 42 C.F.R. § 1001.101(a).

Petitioner concedes that he was convicted of a criminal offense. P. Br. at 1. On September 3, 2015, the United States Attorney for the Eastern District of Michigan filed a criminal information in which she charged Petitioner with one count of health care fraud

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under 18 U.S.C. § 1347 and one count of money laundering under 18 U.S.C. § 1956(a)(1)(B). I.G. Ex. 2 at 4‑8. Petitioner pled guilty to both charges and the federal district court adjudicated him guilty. I.G. Exs. 3, 4. Accordingly, Petitioner was “convicted” as defined in section 1128(i)(2) and (3) of the Act.

The I.G. argues that Petitioner’s convictions for health care fraud and money laundering relate to the delivery of items or services under Medicare or a state health care program within the meaning of section 1128(a) of the Act. I.G. Br. at 4. Petitioner concedes that his conviction for health care fraud is one for which exclusion is required. P. Br. at 2. It is clear from the record that Petitioner’s convictions are program‑related.

Petitioner was convicted of one count of health care fraud and one count of money laundering for his participation in a fraudulent scheme to bill Medicare for prescriptions that were never dispensed to Medicare beneficiaries. I.G. Exs. 2, 4. The scheme continued from around January 2008 until December 2013, and Petitioner realized millions of dollars in Medicare payments from this scheme. I.G. Ex. 3 at 3-4. Petitioner then attempted to hide the fraudulently-procured funds through off-shore transactions. Id. at 4.

The Board has long recognized that the submission of false claims under Medicare or Medicaid falls within the ambit of section 1128(a)(1). See, e.g., Emannuel Adebayo Ayodele, DAB No. 2602 at 3-4 (2014); Juan De Leon, Jr., DAB No. 2533 (2013); Jack W. Greene, DAB No. 1078 (1989), aff’d, Greene v. Sullivan, 731 F. Supp. 835 (E.D. Tenn. 1990). Therefore, I conclude that Petitioner’s conviction for health care fraud under 18 U.S.C. § 1347 is related to the delivery of an item or service under Medicare and that the I.G. was required to exclude Petitioner from participation in the Medicare program for a minimum period of five years. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). Because Petitioner’s exclusion is clearly required based on his conviction for health care fraud in violation of 18 U.S.C. § 1347, it is unnecessary for me to decide whether Petitioner’s conviction for money laundering under 18 U.S.C. § 1956(a)(1)(B) would also subject him to mandatory exclusion.6

Because Petitioner’s conviction for health care fraud is related to the delivery of items or services under Medicare, he must be excluded for at least five years. Act

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§ 1128(c)(3)(B). However, the I.G. may exclude an individual for a period of longer than five years if certain aggravating factors are present. 42 C.F.R. § 1001.102(b). If the I.G. imposes an exclusion longer than five years based on the presence of aggravating factors, I may consider whether certain mitigating factors exist that may justify shortening the exclusion to not less than five years. 42 C.F.R. § 1001.102(c). In the following sections of this decision, I consider whether, in light of any aggravating or mitigating factors, the length of Petitioner’s exclusion falls within a reasonable range.

2. B. The eighteen-year exclusion imposed by the I.G. falls within a reasonable range.

If the I.G. imposes an exclusion longer than five years based on the presence of aggravating factors, I may consider whether certain mitigating factors exist that may justify shortening the exclusion to not less than five years. 42 C.F.R. § 1001.102(c). Evidence that does not pertain to one of the aggravating or mitigating factors listed in the regulations may not be used to decide whether an exclusion of a particular length is reasonable.

The I.G. argues that an exclusion of eighteen years is reasonable based on the presence of three aggravating factors:

I.G. Br. at 7; 42 C.F.R. § 1001.102(b)(1), (2), (5). Petitioner argues that I should not consider the aggravating factors identified by the I.G. P. Br. at 6-9. I find that the I.G. has proved that the aggravating factors are present.

Program Losses in Excess of $50,000. The I.G. argues that the restitution Petitioner was ordered to pay to the Medicare Trust Fund, a total of $3,493,088.28, establishes that the aggravating factor is present. I.G. Br. at 7; see also I.G. Ex. 4 at 6. Restitution has long been considered a reasonable measure of program losses. Jason Hollady, M.D., DAB No. 1855 (2002). Thus, as measured by the restitution for which he was held responsible, Petitioner’s actions resulted in program losses over 60 times greater than the $50,000 threshold for aggravation.

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Petitioner argues that “when taken with the actual facts of the case, [this factor] should be nullified as a factor by the board” because the restitution amount was a joint amount owed by Petitioner and a co-defendant. P. Br. at 7. Further, he argues, the I.G. is unable “to attribute any portion of the restitution figure to the Petitioner.” Id. Petitioner’s arguments are without merit. Petitioner stipulated, as part of his plea agreement, that the “false and fraudulent claims submitted to Medicare . . . by [Petitioner’s] pharmacy total approximately $3,493,088.28.” I.G. Ex. 3 at 4. And, the federal district court ordered Petitioner to pay $3,493,088.28 in restitution. I.G. Ex. 4 at 6. Neither the plea agreement nor the court’s restitution order makes mention of any co-defendant’s responsibility for any portion of the restitution.7  Moreover, as part of the plea agreement, Petitioner was required to forfeit $676,492.95 from two bank accounts in partial repayment of his restitution obligation. I.G. Ex. 3 at 11‑12. The forfeiture amount alone is well over the $50,000 threshold necessary to establish an aggravating factor under the regulations. In essence, Petitioner’s arguments represent another attempt to disavow the conduct for which he was convicted. For the reasons discussed above, such collateral attacks are prohibited in this proceeding. Therefore, I find that the I.G. has established the aggravating factor relating to program losses.

Duration of Criminal Acts. Petitioner admitted in his guilty plea that he engaged in the scheme to defraud the Medicare program from approximately January 2008 through December 2013. I.G. Ex. 3 at 3. The I.G. considers this aggravating factor if the criminal acts continued for one year or more. Here, Petitioner’s acts occurred for almost six years, significantly longer than the minimum requirement.

Petitioner argues that he was not a participant in the most recent years of the scheme but rather that he participated several years before and that this time period is “outside the statute of limitations.” P. Br. at 7-8. Even this statement represents an admission that Petitioner participated in the fraudulent scheme for more than one year. Further, the fact that a statute of limitations might presently bar Petitioner’s criminal prosecution for the acts at issue has no bearing on whether the aggravating factor is present here. Petitioner has already been prosecuted and convicted for his role in submitting fraudulent claims to Medicare. Petitioner’s conviction conclusively establishes the time period during which the criminal acts occurred. For this reason, I reject Petitioner’s argument and I find that the I.G. has established, as an aggravating factor, that Petitioner’s criminal conduct occurred over a period of one year or more.

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Sentence Included Incarceration. The federal district court sentenced Petitioner to a significant period of incarceration – specifically, 32 months in federal prison. I.G. Ex. 4 at 2. This period of incarceration underscores the seriousness of Petitioner’s crimes. Petitioner argues that the I.G. must prove the period of incarceration is attributable to the health care fraud charge rather than the money laundering charge. P. Br. at 8. Again, Petitioner is mistaken. The federal district court sentenced Petitioner to serve “32 months on each count to run concurrently.” I.G. Ex. 4 at 2. Thus, the full 32-month sentence is applicable to either count of the information. In any event, the I.G. is only required to consider whether Petitioner was sentenced to incarceration of any kind. See 42 C.F.R. § 1001.102(b)(5). The regulations do not require the I.G. to parse the court’s rationale for the length of the sentence as Petitioner seems to suggest.

Accordingly, I find that the I.G. has established the presence of three aggravating factors that justify imposing an exclusion significantly above the five-year threshold. I next consider whether there are any mitigating factors that may serve to justify a shorter period of exclusion.

The regulations enumerate the only mitigating factors I may consider when the period of exclusion is more than five years. 42 C.F.R. § 1001.102(c); see also Hussein Awada, M.D., DAB No. 2788 at 6 (2017). The burden is on the petitioner to prove that any mitigating factors exist. 42 C.F.R. § 1005.15(b)(1). Petitioner argues that there are two mitigating factors that I should consider to set a shorter period of exclusion: his alcohol dependency and his cooperation with federal officials. P. Br. at 8-9.

Mental, Emotional, or Physical Condition that Reduces Culpability. The regulations provide that certain mental, emotional, or physical conditions may be a mitigating factor where:

The record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual’s culpability.

42 C.F.R. § 1001.102(c)(2). Thus, if Petitioner produces evidence to demonstrate that the federal district court determined that he had a condition that reduced his culpability, I may consider that factor in deciding whether the length of Petitioner’s exclusion is reasonable.

In his brief, Petitioner argues that he was alcohol dependent at the time of the alleged criminal activity and has been attending the “500 hour Residential Drug Abuse . . . program as indicated by the Court.” P. Br. at 9. He cites to the “Judgment in a Criminal

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case” as evidence. Id. Petitioner further argues that this alleged mitigating factor “was not known to the I.G.” and therefore not considered in determining the length of his exclusion. Id.

I observe that the judgment entered by the federal district court includes the following statement: “The Court recommends placement at a facility with the Residential Drug Abuse Program and specifically, FCI McKean.” I.G. Ex. 4 at 2. The fact that the federal district court recommended that Petitioner be placed in a correctional facility with a drug abuse program supports a conclusion that Petitioner had a substance abuse problem at the time of his sentencing. However, this is not sufficient to establish the mitigating factor. For Petitioner to invoke the factor, the court must have additionally found that Petitioner had the substance abuse problem during the commission of his offenses and that the substance abuse problem reduced his culpability. There is no evidence that the court made any finding regarding when Petitioner experienced substance abuse or that any such substance abuse reduced his culpability. As discussed above, the burden is on Petitioner to prove this, or any, mitigating factor. 42 C.F.R. § 1005.15(b)(1); Stacey R. Gale, DAB No. 1941 at 6 (2004) (“[I]t is Petitioner’s responsibility to locate and present evidence to substantiate the existence of any alleged mitigating factor in [Petitioner’s] case.”). The placement recommendation of the federal district court, standing alone, is insufficient to satisfy Petitioner’s burden of proof. Therefore, Petitioner has not established the presence of this mitigating factor.

Cooperation with Federal Officials. The regulations also provide that cooperation with government officials may be a mitigating factor under the following circumstances:

42 C.F.R. § 1001.102(c)(3). Therefore, if Petitioner produces evidence that his assistance to government officials resulted in additional convictions, investigations, or civil penalties, I may consider that factor in deciding whether the exclusion length is reasonable.

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Petitioner argues that he cooperated with federal officials, resulting in three additional co‑conspirators being prosecuted. P. Br. at 8. Specifically, he states that the extent of his cooperation was “significant,” leading to the recovery of over $12 million and securing sentences “in excess of 116 months.” Id. The I.G. does not dispute that the mitigating factor of cooperation is present in this case. To the contrary, the I.G. specifically acknowledges that he “considered that Petitioner cooperated with Federal or State officials as a mitigating factor” when considering the length of the exclusion. I.G. Br. at 7, 8. Thus, I find Petitioner has met his burden and I may consider this mitigating factor.

3. 3. Based on the presence of three aggravating factors and one mitigating factor, the eighteen-year exclusion imposed by the I.G. falls within a reasonable range.

The I.G. has broad discretion in determining the length of an exclusion. See, e.g., Awada, DAB No. 2788 at 5. So long as the period of exclusion imposed by the I.G. is within a reasonable range, based on demonstrated criteria, I have no authority to change it. Joann Fletcher Cash, DAB No. 1725 at 16‑17 (2000) (citing 75 Fed. Reg. 3298, 3321 (1992)); see also Jeremy Robinson, DAB No. 1905 at 5 (2004).

Exclusion imposed pursuant to section 1128 and its implementing regulations serves to protect the integrity of federal health care programs from untrustworthy individuals. See, e.g., Awada, DAB No. 2788 at 5. The conduct for which Petitioner was convicted and the restitution and incarceration to which he was sentenced demonstrate that he presents significant risks to the integrity of health care programs, justifying a lengthy exclusion. See Cash, DAB No. 1725; see also Awada, DAB No. 2788. Petitioner’s crimes resulted in financial losses to Medicare more than 60 times that of the minimum required to establish the aggravating factor. Additionally, his conduct persisted for nearly six years, which similarly is significantly greater than the one‑year period required to establish the aggravating factor. Finally, Petitioner was sentenced to 32 months of incarceration. These aggravating factors demonstrate that Petitioner manifests a high degree of untrustworthiness.

Petitioner argues that the mitigating factor of his cooperation with authorities in bringing others to justice for their involvement in the scheme should offset these aggravating factors. P. Br. at 8‑9. I disagree. I accept, for purposes of this decision, that Petitioner cooperated extensively with federal officials; however, this does not counterbalance the great weight of the aggravating factors. The aggravating factors, absent any mitigating factors, could easily justify an exclusion significantly longer than eighteen years. For example, an exclusion of twenty-five years would be only five times greater than the minimum exclusion, whereas each of the aggravating factors exceeds the minimum threshold in the regulations by far more than five times. As previously discussed, the I.G. stated that he considered Petitioner’s cooperation in determining that an eighteen‑year

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exclusion is appropriate. If, hypothetically, the I.G. reduced a possible twenty-five-year exclusion to eighteen years, based on Petitioner’s cooperation, I could not conclude that this determination would be unreasonable.

Based on the record before me, I cannot find that the eighteen‑year exclusion is unreasonable, given the high degree of Petitioner’s untrustworthiness, as evidenced by his convictions. The three aggravating factors far exceed the thresholds set forth in the regulations. Even taking into account Petitioner’s cooperation with government officials, I cannot conclude that the exclusion imposed by the I.G. is excessive. I therefore find that the eighteen‑year exclusion falls within a reasonable range.

III. Conclusion

For the reasons explained above, I conclude that the I.G. properly excluded Petitioner from participation in Medicare, Medicaid, and all federal health care programs, and I sustain the eighteen‑year period of exclusion.

1. The current version of the Social Security Act can be found at https://www.ssa.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.
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2. Petitioner filed by mail paper copies of the two documents that comprise his brief. Civil Remedies Division office staff uploaded the documents to DAB E-File as a single docket entry (item 9 in DAB E-File). I refer to the .pdf page numbers that appear when the combined document is opened in DAB E-File.
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3. Item 11 in DAB E-File consists of Petitioner’s Response and his declaration, which Petitioner filed by mail. The items were uploaded by Civil Remedies Division office staff as a single docket entry.
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4. Petitioner describes his proposed exhibits as records of the pharmacy involved in the Medicare fraud scheme. P. Resp. at 1. I infer the documents would show which pharmacist filled particular prescriptions and, perhaps, the hours during which Petitioner was present at the pharmacy.
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5. My findings of fact/conclusions of law appear as numbered headings in bold italic type.
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6. Although this conclusion is not necessary to my decision, there can be little doubt that Petitioner’s conviction for attempting to hide the proceeds of his fraud, which consisted of Medicare reimbursements to his pharmacy, with a purpose to conceal the fraudulent scheme, is related to the delivery of items or services under Medicare within the meaning of section 1128(a)(1).
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7. I note that the information charged that Medicare disbursed approximately $7,434,924.24 to Petitioner based on his fraudulent billing. I.G. Ex. 2 at 2. The amount of restitution for which Petitioner agreed he was responsible ($3,493,088.28) is less than half that amount. While the record does not reveal the reason for the reduction, one possible inference is that the reduction in the amount of restitution ordered accounted for the possible responsibility of any co-defendant(s).
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