Otis Shannon, DAB CR5212 (2018)

DECISION

Petitioner, Otis Shannon, was convicted on one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States stemming from his participation in a scheme to defraud the Georgia Medicaid program. Based on these convictions, the Inspector General (IG) excluded him for fifteen 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 now challenges the exclusion. For the reasons discussed below, I find that the IG properly excluded Petitioner and that the fifteen-year exclusion falls within a reasonable range.

Page 2

I. Background

At the time of the conduct that led to his conviction, Petitioner was employed by the Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD). IG Exhibit (Ex.) 3 at 1-2. DBHDD is responsible for approving entities that seek to provide mental health and substance abuse treatment to Georgia Medicaid recipients. Id. at 2. Beginning in or around February 2014 and continuing until in or about May 2015, Petitioner and his co-conspirators engaged in a fraudulent scheme to obtain money from Georgia Medicaid under false pretenses. Id. at 3. Using his position at DBHDD, Petitioner helped his co-conspirators to obtain a Georgia Medicaid provider number for Jode Counseling Treatment and Training Services (Jode) based on false information and false documents. Id. at 4-5. Petitioner received at least $13,500 from a co-conspirator in exchange for falsifying documents and shepherding Jode's application through the DBHDD approval process. Id. at 5. During the period of the conspiracy, Jode billed over $1 million in Medicaid claims and received approximately $487,000 in reimbursements. Id.

On or about June 21, 2016, in the United States District Court for the Northern District of Georgia (federal district court), Petitioner was indicted on two counts of conspiracy to commit health care fraud in violation of 18 U.S.C. § 1349 (counts one and three) and one count of conspiracy to defraud the United States in violation of 18 U.S.C. § 371 (count two). IG Ex. 3 at 1-10; see also IG Ex. 2 at 1. Petitioner pled guilty to counts one and two of the indictment. IG Ex. 2 at 1. On or about June 16, 2017, the federal district court adjudicated Petitioner guilty and sentenced him to thirty months' imprisonment and to pay $619,105.48 in restitution, among other things. IG Ex. 2 at 1, 2, 6.

In a letter dated September 29, 2017, the IG notified Petitioner that he was excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of fifteen 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. IG Ex. 1. The letter explained that section 1128(a)(1) of the Act authorized the exclusion. Id. Petitioner requested review, and the matter was assigned to me.

I convened a telephone conference with Petitioner and counsel for the IG on January 8, 2018, the substance of which is summarized in my Order and Schedule for Filing Briefs and Documentary Evidence, dated January 10, 2018 (Briefing Order). The Briefing Order instructed Petitioner to inform me, in writing, whether or not he intended to engage an attorney to represent him. The deadline to do so was February 16, 2018. Briefing Order ¶ 8.a. Petitioner did not provide the required response. In accordance with the Briefing Order, counsel for the IG timely filed the IG's brief and three proposed exhibits (IG Exs. 1-3). In a letter dated March 27, 2018, and received by my office on April 4, 2018 (Docket Entry 8 in DAB E-File), Petitioner requested that I stay further proceedings

Page 3

until the federal district court ruled on his motion for post conviction relief. I denied this motion in an order dated April 20, 2018.

In lieu of a stay, I extended Petitioner's deadline to file his brief and supporting documents until June 11, 2018. Petitioner did not file his brief and exhibits as directed. Instead, in a letter dated June 7, 2018, and received in my office on June 14, 2018 (Docket Entry 10 in DAB E-File), Petitioner requested that he be provided copies of the cases cited by the IG in the IG's brief. In response to Petitioner's request, I issued an order directing the IG to mail to Petitioner photocopies of the decisions cited in the IG's brief. I again extended the deadline for Petitioner to file his brief and exhibits, until August 6, 2018. I warned Petitioner that I would not grant a further extension of the deadline absent a showing of new circumstances warranting such an extension. Again, Petitioner did not file his brief by the deadline.

Instead, Petitioner filed yet another letter, dated July 26, 2018 (Docket Entry 15 in DAB E-File), in which he described a number of purported obstacles he faced in obtaining documents he deems necessary to support his arguments before me. I addressed Petitioner's arguments in an Order to Show Cause, which I issued August 17, 2018 (Show Cause Order). In my Show Cause Order, I explained why I did not accept Petitioner's contention that he is unable to obtain needed documents. I therefore ordered Petitioner, at a minimum, to file the Informal Brief of Petitioner and, if he were unable to obtain documents in support, to describe the documents, what he believes the documents would show, and why he is unable to obtain the documents. I warned Petitioner that, if he failed to comply with the Show Cause Order, I might dismiss the case or sanction Petitioner by closing the record and deciding the case based on the IG's submissions. The deadline for Petitioner to respond to the Show Cause Order was September 6, 2018.

Once again, Petitioner did not file his brief as directed. In a letter dated September 4, 2018, and received September 12, 2018 (Docket Entry 19 in DAB E-File), Petitioner again described difficulties he purportedly encountered with obtaining access to documents. He did not explain why this alleged circumstance prevented him from complying with the portion of my order that directed him to file his Informal Brief and describe the documents he sought, if he was unable to obtain them. I therefore conclude that Petitioner failed to comply with the Show Cause Order and that his repeated failures to comply with my orders in this case constitute "misconduct that interferes with the speedy, orderly or fair conduct of the hearing" in this matter, within the meaning of 42 C.F.R. § 1005.14(a). I am authorized to impose sanctions based on Petitioner's conduct in delaying the disposition of this case. Accordingly, I impose the sanction of closing the record and deciding this case without further input from Petitioner.

As I explained in my Briefing Order, I will hold a hearing only if a party offers witness testimony that is relevant and non-cumulative and the opposing party requests cross‑examination. Briefing Order ¶ 9. The IG's brief indicates that an in-person hearing

Page 4

is not necessary and the IG submitted no declarations from proposed witnesses. IG Br. at 8-9. As I have described, Petitioner did not file his Informal Brief; further, in none of his letters to my office did Petitioner request to present witness testimony. Therefore, I conclude that an in-person hearing is not necessary and I decline to convene such a hearing. In addition, Petitioner has not objected to any of the exhibits proposed by the IG. I therefore admit IG Exs. 1-3 into the record. Finally, as explained more fully below, I accept certain of the IG's arguments as uncontested, based on Petitioner's failure to respond to my Show Cause Order.

II. Issues

The issues before me are:

Whether Petitioner 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, such that he must be excluded from program participation and, if so;

Whether a fifteen-year exclusion is reasonable.

42 C.F.R. § 1001.2007(a)(1).

III. Discussion

A. Petitioner must be excluded from program participation 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.2

Section 1128(a)(1) of the Act requires the Secretary of Health and Human Services (Secretary) to exclude an individual who 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. Act § 1128(a)(1). The Secretary has delegated this authority to the IG. 42 C.F.R. § 1001.101(a).

Petitioner was convicted of a criminal offense. Petitioner pled guilty in federal district court to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States. IG Ex. 2 at 1. The court entered judgment and adjudicated Petitioner guilty. Id. Thus, Petitioner was convicted within the meaning of subsections

Page 5

1128(i)(1), (2), and (3) of the Act (an individual is "convicted" where a court has entered a judgment of conviction, where there has been a finding of guilt against the individual, or where a court has accepted an individual's guilty plea).

The IG argues that Petitioner's convictions for conspiracy to commit health care fraud and conspiracy to defraud the United States are related to the delivery of items or services under a state health care program (i.e., Medicaid) within the meaning of section 1128(a)(1) of the Act. IG Br. at 3-4. Because Petitioner failed to file his Informal Brief, the IG's argument is unrebutted on the present record. In any event, even had Petitioner argued that his convictions were not program-related, I would conclude otherwise.

Petitioner was convicted of conspiring to commit fraud by assisting Jode to obtain authorization to submit claims to the Georgia Medicaid program for substance abuse treatment and counseling services based on false and fraudulent documentation. See IG Exs. 2, 3. Convictions for conspiracy to defraud a protected program, as well as those for defrauding such a program by submitting false claims, are related to the delivery of items or services under the programs. See, e.g., Douglas Schram, R.Ph., DAB No. 1372 (1992); see also Clemenceau Theophilus Acquaye, DAB No. 2745 at 4-5 (2016).

For the reasons stated, Petitioner was convicted of criminal offenses related to the delivery of items or services under Medicare or a state health care program, within the meaning of section 1128(a)(1) of the Act. Therefore, the IG was required to exclude him from program participation for a minimum period of five years. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). In the following sections of this decision, I consider whether, in light of the aggravating and mitigating factors (if any) that may be present, the fifteen‑year exclusion imposed by the IG falls within a reasonable range.

B. A fifteen-year period of exclusion is reasonable.

The IG may exclude an individual for a period longer than five years if certain aggravating factors are present. 42 C.F.R. § 1001.102(b). If the IG imposes an exclusion longer than five years, 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.

1. The IG has established three aggravating factors.

As noted, the presence of an aggravating factor or factors not offset by any mitigating factor or factors justifies lengthening the mandatory period of exclusion. The IG argues that three aggravating factors are present in this case:

Page 6

(1) The acts resulting in the conviction, or similar acts, resulted in a financial loss to Medicare or a state health care program of $50,000 or more;

(2) The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; and

(3) The sentence imposed by the court included incarceration.

42 C.F.R. § 1001.102(b)(1), (2), (5); see IG Br. at 5-6; see also IG Ex. 2; IG Ex. 3 at 3. I agree that these aggravating factors are established on the record before me. Moreover, I conclude that Petitioner has waived any arguments he may have had disputing the existence of any aggravating factor, based on his failure to respond to my Show Cause Order.

As to the first aggravating factor, the federal district court sentenced Petitioner to make restitution to the Georgia Medicaid program in the amount of $619,105.48. IG Ex. 2 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 approximately twelve times greater than the $50,000 threshold for aggravation. Because the financial losses were so far in excess of the threshold amount for aggravation, the IG may justify a significant increase in Petitioner's period of exclusion. See, e.g., Juan de Leon, Jr., DAB No. 2533 at 5 (2013), (citing Sushil Aniruddh Sheth, M.D., DAB No. 2491 at 7 (2012); Jeremy Robinson, DAB No. 1905 at 12 (2004); and Donald A. Burstein, Ph.D., DAB No. 1865 at 12 (2003)).

Regarding the second aggravating factor, the criminal acts for which Petitioner was convicted began in or around February 2014 and continued until in or about May 2015. See IG Ex. 3 at 3. Thus, Petitioner's acts continued for at least fifteen months. It is an aggravating factor if the criminal acts continued for one year or more. Therefore, the aggravating factor is established.

Finally, regarding the third aggravating factor, the federal court sentenced Petitioner to a substantial period of incarceration – 30 months. IG Ex. 2 at 2. The lengthy period of Petitioner's incarceration underscores the seriousness of his crimes.

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

Page 7

2. Petitioner has not established any mitigating factors.

The regulations provide that the only mitigating factors I may consider are the following:

(1) [W]hether the individual or entity was convicted of three or fewer misdemeanor offenses and the entire amount of financial loss (both actual loss and intended loss) to Medicare or any other Federal, State, or local governmental health care program due to the acts that resulted in the conviction, and similar acts, is less than $5,000;

(2) 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; or

(3) The individual's or entity's cooperation with Federal or State officials resulted in—

(i) Others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs,

(ii) Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or

(iii) The imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.

42 C.F.R. § 1001.102(c). As I stated in my Briefing Order, Petitioner has the burden to prove any affirmative defenses he may raise. Briefing Order ¶ 6.c; see 42 C.F.R. § 1005.15(c). The alleged existence of any mitigating factor is such an affirmative defense. Thus, if Petitioner produced evidence that any of the circumstances described in 42 C.F.R. § 1001.102(c) were present in his case, I could consider whether there is a basis to reduce the length of Petitioner's exclusion below fifteen years (but not below the minimum mandatory exclusion period of five years).

Petitioner has never explicitly argued that a mitigating factor recognized under the regulations is present in his case. At most, Petitioner has implied that certain documents to which he allegedly lacks access may "contain information about cooperation with the government . . . ." See Docket Entry 15 at 1. Based on this statement, I assume that Petitioner intended to argue that the mitigating factor described at 42 C.F.R. § 1001.102(c)(3) is present in his case. However, because Petitioner failed to comply with my Show Cause Order, that argument is foreclosed.

When I issued the Show Cause Order, I warned Petitioner that, if he failed to respond, I would dismiss this case for abandonment. Alternatively, I warned him that if he

Page 8

responded, but did not file his exchange by the deadline I set, I would close the record and issue my decision based on the IG's evidence and argument. In spite of these clear warnings and instructions, Petitioner did not submit his Informal Brief, nor did he produce any evidence or testimony supporting his suggestion that he may have cooperated with government officials. Nor did he take even the minimal step of describing the documents he wished to offer or explain what he contends such documents would show. For all these reasons, I conclude that Petitioner has failed to meet his burden to prove that a mitigating factor exists in this case.

3. Based on the presence of three aggravating factors and the absence of any mitigating factors, the fifteen-year exclusion imposed in this case falls within a reasonable range.

So long as the period of exclusion imposed by the IG is within a reasonable range, based on demonstrated criteria, I have limited authority to change it. Joann Fletcher Cash, DAB No. 1725 at 7 (2000) (citing 57 Fed. Reg. 3298, 3321 (1992)). In this case, Petitioner's convictions demonstrate that he presents significant risks to the integrity of health care programs. He assisted a provider of Medicaid services to obtain reimbursement to which it was not entitled. His criminal conduct resulted in financial losses to the Georgia Medicaid program that greatly exceed the minimum amount required for aggravation. His illegal conduct persisted for more one year. He was sentenced to a lengthy period of incarceration. These aggravating factors demonstrate that Petitioner manifests a high degree of untrustworthiness, justifying a lengthy exclusion. No mitigating factors offset these aggravating factors. The IG excluded Petitioner for fifteen years, which is three times longer than the minimum exclusion required by law. One of the three established aggravating factors exceeds the threshold for aggravation by roughly twelve times. Therefore, that factor alone might well justify an exclusion three times the minimum length. However, given two additional aggravating factors, there is even stronger reason to conclude that the fifteen-year exclusion imposed by the IG falls within a reasonable range.

IV. Conclusion

For the reasons explained above, I conclude that the IG properly excluded Petitioner from participation in Medicare, Medicaid, and all federal health care programs, and I sustain as reasonable the fifteen-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. Also, a cross-reference table for the Act and the United States Code can be found at 42 U.S.C.A. Ch. 7, Disp. Table.
• back to note 1
2. My conclusions of law appear as headings in bold italic type. My findings of fact appear in the supporting text.
• back to note 2