Edwin L. Fuentes, DAB No. 2988 (2020)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Edwin L. Fuentes (Appellant here, Petitioner below) appeals the September 18, 2019 decision of an Administrative Law Judge (ALJ) upholding his exclusion for 15 years from participation in Medicare, Medicaid and all federal health care programs, Edwin L. Fuentes, DAB CR5424 (2019) (ALJ Decision).  The Inspector General (I.G.) of the Department of Health and Human Services (Department) imposed the exclusion based on sections 1128(a)(1) (program-related crimes) and (a)(3) (health care fraud felonies) of the Social Security Act (Act) based on Appellant’s conviction for the federal crime of Health Care Fraud under 18 U.S.C. § 1347. 

The ALJ concluded that Appellant’s exclusion was authorized by law.  The minimum period for such an exclusion is five years.  The ALJ held that the I.G.’s determination to impose a longer 15-year exclusion was not unreasonable under the circumstances of this case, in light of the presence of three aggravating factors recognized by regulation and the absence of any mitigating factors.

For the reasons explained below, we affirm the ALJ Decision and sustain the exclusion as imposed. 

Applicable legal authorities

Section 1128(a) of the Act, codified at 42 U.S.C. § 1320a–7, provides for mandatory exclusions for various convictions, including the following relevant in this case:

Mandatory Exclusion.—The Secretary shall exclude the following individuals and entities from participation in any Federal health care program . . . :
(1) Conviction of program-related crimes.—Any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under [Medicare] or under any State health care program.

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(3) Felony conviction relating to health care fraud.—Any individual or entity that has been convicted for an offense which occurred after [August 21, 1996], under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program (other than those specifically described in paragraph (1)) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a–7(c)(3)(B)) requires that exclusions based on those provisions be for a minimum of five years.

Regulations implementing the mandatory exclusion provisions appear at 42 C.F.R. part 1001, subpart B.  The regulations specify the factors that may be considered in extending a mandatory exclusion beyond the five-year minimum, with the following ones relevant to this case:

(1) The acts resulting in the conviction, or similar acts, caused, or were intended to cause, a financial loss to a government agency or program or to one or more other entities of $50,000 or more.  (The entire amount of financial loss to such government agencies or programs or to other entities, including any amounts resulting from similar acts not adjudicated, will be considered regardless of whether full or partial restitution has been made);
(2) The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more;

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

42 C.F.R. § 1001.102(b).  If, but only if, any of the aggravating factors resulted in an exclusion longer than five years, the regulations lists three mitigating factors that may be considered to reduce the additional exclusion period but not to below five years.  Id. § 1001.102(c). 

An excluded party may request a hearing before an ALJ “only on the issues” of whether the “basis for the imposition of the sanction exists,” and whether the “length of exclusion is unreasonable” if the exclusion period exceed the mandatory minimum. 

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Id. § 1001.2007(a).  The underlying conviction is not reviewable or subject to collateral attack on substantive or procedural grounds in the appeal proceedings.  Id. § 1001.2007(d).

A party dissatisfied with an ALJ decision may appeal it to the Departmental Appeals Board (Board).  42 C.F.R. § 1005.21.  A notice of appeal must be accompanied by a brief specifying exceptions to the ALJ decision and reasons supporting the exceptions.  Id. § 1005.21(c).  The Board “will not consider any issue not raised in the parties’ briefs, nor any issue in the briefs that could have been raised before the ALJ but was not.”  Id. § 1005.21(e).

Relevant case background1

1. Appellant’s convictions

Appellant was an osteopathic physician in Virginia who was charged on July 18, 2017, with two criminal counts – engaging in a scheme to defraud health care insurance plans under 18 U.S.C § 1347 and income tax evasion under 26 U.S.C. § 7201.  I.G. Exs. 6, at 1; and 2.  On January 9, 2018, Appellant pled guilty to both counts in the United States District Court for the Western District of Virginia.  I.G. Ex. 5.  The proffer of facts underlying his guilty plea indicated that the scheme involved willful and knowing fraudulent billing, repeatedly misleading auditors, and doctoring records over a period from at least January 2012 through December 2014.  I.G. Ex. 6, at 1.  This scheme resulted in overpayments of nearly $1 million to Appellant for services never provided to patients.  Id. at 2.  The income tax evasion count involved Appellant’s diversion of the overpayment proceeds to conceal them causing tax deficiencies over four years totaling over $700,000.  Id.

2. I.G. Exclusion

On April 30, 2018, the I.G. notified Appellant of his exclusion from participation in Medicare, Medicaid, and all federal health care programs under sections 1128(a)(l) and (3) of the Act.  I.G. Ex. 1, at 1.  The exclusion was for 15 years, more than the minimum mandatory five-year period.  Id.  The I.G. explained that its records evidenced circumstances supporting three aggravating factors:  (1) the court ordered restitution of $1,859,900, which demonstrated loss to government agencies or other entities in excess of $50,000; (2) the acts resulting in conviction (or related acts) occurred from about May 2012 to December 2014, which was more than one year; and (3) the court sentence

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included 24 months of incarceration.  Id. at 2.  Based on the evidence about those factors, and the absence of evidence supporting any mitigating factor, the I.G. determined the additional ten years beyond the mandatory period was appropriate.  Id.

3. ALJ Decision

After preliminary proceedings (discussed briefly in the ALJ Decision at page 2 and footnote 2), the ALJ issued summary judgment in favor of the I.G. and upheld the 15-year exclusion period.  The ALJ observed that Petitioner did not dispute that a basis existed for excluding him under section 1128(a)(1) and concluded that it was therefore not necessary to resolve disputes as to whether Petitioner was also properly excluded under section 1128(a)(3).  ALJ Decision at 5, 8. 

Having found it undisputed that Petitioner was subject to exclusion and that the mandatory minimum period was five years, the ALJ turned to whether the I.G.’s imposition of a 15-year exclusion period was supported.  Id. at 8.  The ALJ observed that being excluded for two reasons, rather than just one, would not be a permissible aggravating factor under the regulations, so this issue did not require him to determine whether section 1128(a)(3) applied.  Id. at 6.  Petitioner did not challenge the application of two aggravating factors, i.e., “that he was sentenced to incarceration or that his criminal conduct occurred over a period of one year or more.”  Id.  In addition, the ALJ stated that Petitioner conceded “he was ordered to pay $243,451.27 to Medicare.”  Id. at 9.  Considering only that amount, the ALJ found that the third aggravating factor of losses greater than $50,000 applied, and that he need not resolve Petitioner’s legal claim to disregard the other losses.  Id. at 9-10.  After discussing the evidence relating to each factor, the ALJ concluded that all three aggravating factors could properly be considered in extending the period of exclusion.  Id.  In addition, the ALJ found that Petitioner had not offered evidence for any of the mitigating factors authorized in the regulation.  Id. at 10-11.

The ALJ then determined that the 15-year exclusion period was within a reasonable range.  Id. at 11.  The ALJ rejected Petitioner’s contention that the ALJ had to take evidence about and determine how the I.G. reached the specific length of the exclusion.  Id.  The ALJ explained that his review of the bases for aggravating and mitigating factors was de novo, but that the regulation provided for the ALJ to review the length of the period only for unreasonableness.  Id. at 11-12 (citing 42 C.F.R. § 1001.2007(a)(l)-(2)).  He recognized, thus, that if his de novo findings as to the relevant factors were consistent with those on which the I.G. acted, his role was not to select a term of exclusion himself but rather to assess whether the term selected by the I.G. fell within the range of reasonable periods under those circumstances.  Id. at 11-13.  He also recognized that nothing in the Act or regulations called for him to make that assessment by evaluating the length of exclusions imposed on other individuals.  Id. at 13.  Based on his analysis of the undisputed facts on the record before him, he concluded that the 15-year exclusion period

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was not unreasonable.  Id.  He therefore granted summary judgment in favor of the I.G.  Id. at 6. 

4. Board appeal

Appellant sought and was granted a two-week extension to appeal the ALJ Decision, and filed his appeal within the time granted.  See Extension of Time for Appeal (Oct. 18, 2019); Appellant Brief in Support of Appeal (App. Br.).  The I.G. requested a two-week extension to file a response brief, which the Board also granted.  See Extension of Time (Nov. 27, 2019).  Appellant objected to the extension, sought reconsideration, and moved to strike the brief.  See Denial of Mot. for Recon. of Extension (Dec. 3. 2019).  The Board declined to reconsider or to strike the I.G.’s brief and advised Appellant that, if any of the material in his voluminous filings related to the I.G. brief had any continuing relevance to the issues before the Board, he should make those arguments in briefing.  Id. at 4.  Appellant chose not to file a reply brief thereafter.  We therefore do not address in this decision any of the discussion in those filings.

Standard of review

The standard of review by the Board “on a disputed issue of law is whether the initial decision is erroneous.”  42 C.F.R. § 1005.21(h).  “Whether summary judgment is appropriate is a legal issue the Board addresses de novo.”  Kimbrell Colburn, DAB No. 2683, at 4 (quoting W. Tex. LTC Partners, Inc., DAB No. 2652, at 5 (2015), aff’d, W. Tex. LTC Partners, Inc. v. United States Dep’t of Health & Human Servs., 843 F.3d 1043 (5th Cir. 2016)).  “Summary judgment is appropriate when the record shows there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law.”  Id. (quoting W. Tex. at 5).  The applicable “substantive law will identify which facts are material,” and “[o]nly disputes over facts that might affect the outcome of the [case] under the governing law will properly preclude the entry of summary judgment.”  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

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Analysis

1. Summary judgment was appropriate

Appellant contends that summary judgment was improper because genuine disputes existed as to whether the I.G. had a basis to exclude him under section 1128(a)(3) and whether program losses of $1,859,900 were established.2  App. Br. at 2-3.  Appellant also mistakenly asserts that the ALJ “acknowledged” that the I.G. “failed to establish” the second basis for exclusion or the total amount of losses.  Id.  In fact, the ALJ made no finding of any failure of proof by the I.G.  As to section 1128(a)(3), the ALJ simply declined to reach the alternative basis for exclusion because Appellant had conceded the exclusion was authorized under section 1128(a)(1), and that basis made exclusion mandatory.  ALJ Decision at 5, 8.  As to the losses, the ALJ stated that “[t]he evidence shows that the [I.G.] [wa]s correct as the District Court, in fact, ordered Petitioner to pay restitution of $1,859,963.40.”  Id. at 10 (citing I.G. Ex. 5, at 6).  Appellant presented legal theories for disregarding the additional losses reflected in the total restitution ordered, which the ALJ concluded need not be resolved because the admitted loss to Medicare alone exceeded the $50,000 threshold to apply the aggravating factor at 42 C.F.R. § 1001.102(b)(1), and sufficed with the other factors, to justify the 15-year exclusion.  Id. at 9.

A. The I.G. was mandated to exclude Appellant as a matter of law.

Disputes of fact preclude summary judgment only when they are material to the outcome of the matter.  Fed. R. Civ. P. 56(a).3  “A fact is material if it ‘might affect the outcome of the suit under the governing law.’”  Baker v. City of Trenton, 936 F.3d 523, at 529 (6th Cir. 2019) (quoting Anderson, 477 U.S. at 248).  Thus, it is not sufficient for Appellant to identify disputed facts that have some relevance to his exclusion if deciding those factual disputes in Appellant’s favor could not alter the legal outcome of the case. 

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Applying that principle here requires upholding the ALJ’s conclusion that Appellant was subject to mandatory exclusion.  Having conceded the facts establishing that he was subject to exclusion under section 1128(a)(1), Appellant could offer nothing in a hearing that would alter the statutory requirement that the I.G. exclude Appellant for at least five years.

Appellant nevertheless argues that his contentions about whether section 1128(a)(3) also applied were necessarily material.  App. Br. at 3.  According to Appellant, the existence of this basis cannot have been “irrelevant” or “the [I.G.] would not have relied upon this basis in imposing the 15-year exclusion.”  Id.  Here, and elsewhere, the Appellant conflates materiality with mere relevance.  The facts concerning section 1128(a)(3) were relevant to the alternative basis for Appellant’s exclusion, but the exclusion was mandatory as a matter of law if either basis were shown to be present.  Once the basis for exclusion under section 1128(a)(1) was demonstrated to be present by undisputed facts, any facts relating to section 1128(a)(3) which Appellant might dispute could not be material to the exclusion as a matter of law, because even were they resolved in Appellant’s favor, the outcome would not change.  The I.G. is authorized, indeed required, as a matter of law to exclude Appellant.

We turn next to whether any genuine dispute of material fact precluded the ALJ’s issuance of summary judgment in favor of the I.G. as to whether the 15-year exclusion period was unreasonable. 

B. Summary judgment was appropriate on the length of the exclusion in this case on the record before the ALJ.

i. The ALJ applied the correct standard for de novo review based on the record developed before him as to the regulatory aggravating factors.

Appellant contends that the ALJ should have reviewed the I.G.’s decision-making process to determine how the I.G. weighed the aggravating factors and decided to impose a 15-year exclusion, but that the ALJ instead acted under the “erroneous belief that his review is de novo.”  App. Br. at 12 (citing ALJ Decision at 11).  According to Appellant, the ALJ’s review cannot be de novo because the regulatory history includes the expectation that the ALJ’s review will involve some deference to the I.G.’s discretion in setting the length of the exclusion.  Id. at 13.  In support, Appellant quotes part of a statement from the preamble to the final rule implementing statutory amendments to the I.G.’s exclusion and civil money penalty authorities.  Id.  In the quoted section, the Secretary of the Department responds to comments questioning the regulatory language limiting the issues subject to appeal to an ALJ to (1) whether the statutory basis for imposing the exclusion exists and (2) the length of the sanction is unreasonable: 

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We have deliberately limited the issues that may be appealed under § 1001.2007, in keeping with the authority under section 1128 of the Act delegated to the OIG.  Under section 1128(a), Congress mandated that the Secretary exclude individuals and entities convicted by States of program related crimes, or of crimes involving patient abuse. . . .

In section 1128(b) of the Act, Congress authorized the Secretary to impose exclusions at its discretion under the various circumstances described in that section.  As the Secretary’s delegatee under section 1128, the OIG has been vested with that discretionary authority.  Because the decision whether to exclude an individual or entity under section 1128(b) is the OIG’s alone, the ALJ does not have authority to review the exercise of discretion by the OIG to exclude someone under section 1128(b), or to determine the scope or effect of the exclusion.  In addition, the OIG’s decision to exclude may not be appealed under § 1001.2007.

The OIG’s broad discretion is also reflected in the language of § 1001.2007(a)(2), restricting the ALJ’s authority to review the length of an exclusion imposed by the OIG.  Under that section, the ALJ’s authority is limited to reviewing whether the length is unreasonable.  So 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).

The Board has recently reiterated the nature of the ALJ’s review of the length of an exclusion imposed by the I.G. that exceeds the mandatory minimum based on the regulatory scheme.

An ALJ “reviews the length of an exclusion de novo to determine whether it falls within a reasonable range, given the aggravating and mitigating factors and the circumstances underlying them.”  Sushil Aniruddh Sheth, M.D., DAB No. 2491, at 5 (2012) (citations omitted), appeal dismissed, in part, summarily affirmed, in part, Sheth v. Sebelius, No. 13-cv-0448, 2014 WL 11813597 (D.D.C. Jan. 10, 2014), appeal dismissed, Sheth v. Burwell, No. 14-5179, 2015 WL 3372286 (D.C. Cir. May 7, 2015).  In reviewing whether the length of exclusion is unreasonable, “the ALJ may not substitute his or her judgment for that of the I.G. or determine what period of exclusion would be better.”  Richard E. Bohner, DAB No. 2638, at 2 (2015) (citations and internal quotation marks omitted), aff'd, Bohner v.

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Burwell, No. 15-cv-4088, 2016 WL 8716339 (E.D. Pa. Dec. 2, 2016).  “Instead, the ALJ’s role is limited to considering whether the period of exclusion imposed by the I.G. was within a reasonable range, based on demonstrated criteria.”  Craig Richard Wilder, DAB No. 2416, at 8 (2011); see also 57 Fed. Reg. 3298, 3321 (Jan. 29, 1992) (deference to I.G.’s “broad discretion” in setting the length of an exclusion “is appropriate, given the [I.G.’s] vast experience in implementing exclusions”).

Rosa Velia Serrano, DAB No. 2923, at 8-9 (2019), recon. denied, DAB Ruling No. 2019-2 (Apr. 25, 2019). 

In short, the ALJ is to review the record before him to determine what the evidence establishes as to the “demonstrated criteria,” i.e., the aggravating and mitigating factors, rather than review the record as it was when the I.G. issued the exclusion.  The factual determination is thus de novo, in that the appellant has the opportunity to show that the facts are not as they appeared before the I.G.  Moreover, the ALJ does not conduct an appellate-type inquiry into how the I.G. arrived at the particular length but determines whether the evidence presented before the ALJ by the I.G. and Appellant shows that that length is not unreasonable. 

The ALJ’s de novo review authority is not thus an unconstrained mandate to select any period of exclusion that may appear reasonable to the ALJ.  The regulation provides constraints, as reflected in the preamble language quoted above, that recognize the delegated discretion of the I.G. in the arena of exclusions.  The I.G. comes to the initial selection of an exclusion period with extensive experience reflecting a much wider base of excluded individual and entities and of diverse facts and circumstances than those that could ever come before an ALJ (or the Board) in the appeals process.  Furthermore, the I.G. is charged with protecting the integrity of federal health care programs, and the exclusion mechanism is a remedial tool to this end rather than a punitive action.  See, e.g., Isiwele v. Sebelius, Civ. No. B-13-10, 2013 WL 12399551 (S.D. Tex. Nov. 18, 2013) (citing Patel v. Thompson, 319 F.3d 1317, 1319 (11th Cir. 2003) (I.G. exclusion serves a remedial, rather than punitive, purpose, i.e., to “protect the Federal health care programs from abuse”, cert. denied, 539 U.S. 959 (2003), aff’g Narendra M. Patel, M.D., DAB No. 1736 (2000)).  Thus, the assessment of what period is necessary to achieve that purpose is appropriately assigned to the I.G. in the first instance, with the ALJ review focused on whether the facts as proven show the resulting period to be not unreasonable.  This regulatory division of labor and authority does not mean that the ALJ is not conducting a de novo review of the aggravating and mitigating factors and their application in extending the period of exclusion beyond the mandatory minimum. 

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Appellant’s confusion about whether the ALJ was conducting a de novo review appears to arise from his misapplication of language relating to court reviews of agency action.   For example, Appellant quotes the explanation of “de novo” by one district court to mean “a fresh, independent determination of ‘the matter’ at stake; the court’s inquiry is not limited to or constricted . . . nor is any deference due the agency’s conclusion.”  App. Br. at 12 (quoting Doe v. United States, 821 F.2d 694, 697-698 (D.D.C. 1987)).  Appellant reasons that the ALJ cannot be conducting a de novo review here where his inquiry is constricted by the regulation and he is to give any deference to the I.G.’s determination. 

The administrative appeals process is not the same as court review of final agency action.  In this context, de novo does not necessarily imply unfettered discretion.  An agency adjudicator reviewing an agency action de novo is not bound by the record developed in prior stages and is not tasked to review the process engaged in by prior decision-makers.  Rather, the adjudicator must determine the relevant facts based on the record developed before the adjudicator and then independently evaluate whether the action undertaken by the prior decision-maker comports with applicable legal authorities.  But the agency adjudicator acts within the scope of the authority granted by regulation.

Here, the ALJ’s role (and ours) is defined by regulations cited above.  It is not a freewheeling inquiry into the “matter” of the exclusion but directed to determining, based on a fresh look in a proceeding at which the excluded party may proffer new evidence relevant to disputed material facts, whether (1) the I.G. has a lawful basis to exclude and (2) whether the period of exclusion is unreasonable.  The review is de novo as to the evidence and factual determinations but limited in scope to the extent of the ALJ’s regulatory authority.

In any case, even were we to accept Appellant’s theory that the regulatory limits on the scope of exclusion appeals are incompatible with calling the ALJ’s review of the exclusion period de novo (which we do not), the remedy Appellant proposes for this is unavailable.  Appellant suggests that the “ALJ’s obligation to defer to the [I.G.’s] selection of the length of exclusion requires an examination of the evidence demonstrating how the [I.G.] evaluated the aggravating factors” and that the I.G. incurs a resulting duty to “introduce evidence regarding how the specific exclusion period was selected, what information was considered and relied upon, and how the aggravating factors were weighed and evaluated.”  App. Br. at 13.  This suggestion lacks both logic and merit.  The existence of regulatory limits on the scope of the ALJ’s review of the reasonableness of the exclusion period based on the specified regulatory factors can hardly empower the ALJ to go beyond those limits and intrude on the internal decision-

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making process engaged in by the I.G. in setting the proposed exclusion period.4  Whether or not Appellant wishes to recognize the ALJ’s role in reviewing evidence from both parties and making independent factual findings regarding aggravating or mitigating factors as a de novo review of those factors, the regulation expressly constrains the ALJ’s actions to determining whether the product of the I.G.’s process is unreasonable.  The regulation does not authorize the ALJ to evaluate the process that led to the I.G.’s determination to impose that period.

The same regulatory standards govern our review of the ALJ Decision.  In short, we do not review the thinking process of I.G. officials in setting an exclusion period.  We review whether the outcome of that process (the exclusion period set by the I.G. and affirmed by the ALJ) is unreasonable in light of the facts relating to the factors that the regulation specifies.

ii. We find no error in the ALJ’s conclusion that the undisputed facts sufficed to show that the 15-year exclusion period was within a reasonable range.

In assessing whether summary judgment was appropriate as to the length of the exclusion period, the ALJ properly limited his consideration to the undisputed facts relating to the aggravating factors.  As the ALJ noted, the deference due to the I.G.’s period of exclusion under the regulation is such that the review is to determine whether that period is within the range of reasonable exclusion periods (given the proven aggravating and mitigating factors).  ALJ Decision at 13.  In other words, the ALJ does not select an exclusion period without reference to what the I.G. has selected.  The regulations do not contemplate mathematical precision in weighing the infinite variety of factual scenarios that may arise from evidence as to one or more aggravating (and potentially mitigating) factors.  The Secretary explained in adopting the exclusion regulations the reasons that no numerical weighting or counting of factors can be undertaken:

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 [I.G.] 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

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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 the absence of a mechanical or formulaic system, case-by-case judgments must be thus made based on the individual circumstances shown on the record as to each factor. 

Appellant recognizes this longstanding approach, quoting the Board’s requirement of a “case-specific determination of the weight to be accorded each factor based on a qualitative assessment of the circumstances surrounding the factors in that case.”  App. Br. at 14 (quoting Sheth, DAB No. 2491, at 5).  Similarly, Appellant acknowledges that “[t]he number of aggravating factors does not determine reasonableness” in itself, depending instead on “the quality of the circumstances, whether aggravating or mitigating, which is controlling in analyzing these factors.”  Id. (quoting Wilder, DAB No. 2416, at 8 (citations omitted)).

If the undisputed facts did not suffice to justify the ALJ concluding that the 15-year period lay within the reasonable range of exclusion periods or if resolving any disputed facts could have altered that assessment, then it would be necessary for the ALJ to go forward to hear evidence and resolve any disputed facts.  Therefore, we must consider whether the undisputed facts indeed support the ALJ’s conclusion as to the reasonable range and whether disputes of fact exist on the record that would be material (that is, disputes that could, if resolved favorably to Appellant, demonstrate that the exclusion imposed by the I.G. exceeds the reasonable range given those facts).

Appellant does not dispute that all three aggravating factors cited by the I.G. were present or assert that any mitigating factor was present.  Appellant does not deny that his criminal activity lasted 31 months, considerably longer than the 12-month threshold for the aggravating factor at section 1001.102(b)(2).  See, e.g., App. Br. at 21.  Nor does Appellant deny that he was sentenced to 24 months of incarceration, a substantial term to be considered under section 1001.102(b)(5).  Id.

Appellant nevertheless contends that the 15-year period could not be within a reasonable range based on the undisputed facts because the I.G. originally set that period on the basis of factual findings as to the amount of loss that were more severe than the amount of loss found by the ALJ.  App. Br. at 14-17.  The fallacious reasoning Appellant applies in this argument is illustrated in the following claim:  “If a financial loss 12 times the regulatory threshold ‘alone’ supports the increase in the period of exclusion from 5 to 15 years, then a failure to prove a loss amount 32 times the regulatory threshold requires the Board to

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reduce the exclusion period to 5 years.”5  App. Br. at 16 (referencing Otis Shannon, DAB CR5212, at 8 (2018)).  Appellant is referring to an unrelated decision by another ALJ which upheld a 15-year exclusion where three aggravating factors were present and the financial loss exceeded the threshold set in section 1001.102(b)(1) by about 12 times.  DAB CR5212, at 8.  That ALJ opined that the large financial loss “alone might well justify an exclusion three times the minimum length.”  Id.  While the decision is not precedential and the statement is dicta (since other aggravating factors were present), its logic leads to the reverse conclusion from that propounded by Appellant.  If 12 times the threshold loss would alone support an extension from five to 15 years, then the undisputed loss here of about five times the threshold in itself would certainly demand an exclusion period of significantly more than five years, if not by itself the full 15-year period. 

The financial loss amount originally cited by the I.G. of $1,859,963.40 was the total restitution ordered by the court as part of Appellant’s criminal sentence.  I.G. Ex. 1, at 2; I.G. Memorandum in Support of Motion for Summary Judgment in C-18-1067, at 2 (citing I.G. Exs. 5, at 6 and 6, at 2).  (This loss amount is what Appellant referenced above as roughly 32 times the threshold.)  Court-ordered restitution is one reasonable measure for the extent of financial loss.  Summit S. Shah, M.D., DAB No. 2836, at 8 (2017).  For purposes of summary judgment, however, the ALJ limited his consideration of this factor to the $243,451.27 Appellant conceded was restitution to the Medicare program.6  Our review of the ALJ Decision similarly relies only on the admitted loss to Medicare from Appellant’s criminal activity in weighing this aggravating factor.  We find it deserves some significant weight in extending the mandatory exclusion period given that the regulations reflect that financial losses of even one dollar over $50,000 would justify at least some extension. 

Appellant also notes that the Board has referred to financial loss as an “exceptional aggravating factor,” in particular in certain cases in which the threshold was exceeded more than one hundred times.  App. Br. at 16-17, and cases cited therein.  Appellant argues that the ALJ must have failed to “conduct a qualitative assessment” of the weight to give this important factor because accepting the lower figure conceded by Appellant did not result in a reduction of the exclusion period.  Id. at 17.  Appellant relies on the Board’s decision in Gary Alan Katz, R. Ph., DAB No. 1842 (2002) to argue that a

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“downward adjustment” was required whenever the I.G. “failed to prove the existence of an aggravating factor.”  Id.

In the Katz case, the I.G. sought to impose a ten-year exclusion under section 1128(a)(4) based on three aggravating factors (the acts extended over approximately three years, the sentence included incarceration of at least one year, and Katz’s pharmacy license was suspended for three years).  DAB No. 1842, at 4.  The ALJ, on de novo review of the factual underpinnings, concluded that the I.G. had not carried his burden of proof as to the existence of the first of those aggravating factors, but concluded that the ten-year exclusion was nevertheless within a reasonable range given the two proven aggravating factors with no mitigating factors.  Id. at 4-5.  The Board disagreed, finding it “difficult to reconcile” the removal of one of three aggravating factors with the view that “each aggravating factor provides a basis for lengthening the mandatory five-year period.”  Id. at 7 (referencing 57 Fed. Reg. at 3315).  The Board concluded that, since some part of the added five years must have reflected the unproven aggravating factor, “one would generally expect that the absence of one of the three aggravating factors on which the I.G. relied should result in a downward adjustment in the length of the exclusion.”  Id. at 8.  The Board therefore reduced the exclusion period in Katz from ten years to eight.  Id. at 14. 

It does not follow that a downward adjustment should be expected when, as in this case, the undisputed facts demonstrate before the ALJ the three aggravating factors cited by the I.G. and no mitigating factors, but there is a change in the circumstances associated with one of the factors.  Not every change in the specific facts surrounding an aggravating factor from those initially alleged by the I.G. would necessarily imply that the exclusion period thereby exceeds a reasonable range of appropriate exclusion periods.  It was the responsibility of the ALJ to evaluate what weight to give to the reduced (for purposes of summary judgment) financial loss.  In doing so, the ALJ could reasonably find the admitted losses (being still five times the threshold) sufficient to add significantly to the additional exclusion period called for by the two other proven aggravating factors (each of which was also well above the threshold for application).  As explained earlier, the question is not whether this specific exclusion period was still the best possible choice but whether it was still within the range of reasonable exclusion periods given the facts found by the ALJ.  In other words, the range may shift downward somewhat due to changed facts, and yet the selected exclusion period itself may still fall within that lowered reasonable range.  The ALJ so concluded here, and we agree.  

The purpose of an exclusion, as we have said, is not to punish the wrongdoer but to protect the programs and their beneficiaries from untrustworthy providers.  See, e.g., Patel, 319 F.3d at 1319 (I.G. exclusion “remedial, not punitive”).  Appellant’s criminal activity, laid out in more detail in the ALJ Decision, demonstrates a serious threat to the integrity of federal funds that calls for a commensurately extended time period before considering renewed federal trust.  Fifteen years is not an unreasonable period of

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exclusion considering the full circumstances presented by Appellant’s years of criminal acts, the resulting losses to Medicare alone, and the court’s determination to incarcerate him for more than 2½ years.

Appellant contends, however, that his exclusion must exceed the reasonable range applicable to his circumstances because he has identified a list of 16 cases with circumstances he considers similar to his own in which ten-year exclusions were upheld.  App. Br. at 21.  The Board has repeatedly explained that comparing exclusion periods is not generally helpful in assessing reasonableness, due in part to the varying mix of factors and wide range of relevant circumstances that may need to be considered in individual cases.  See, e.g., Karim Maghareh, Ph.D. and BestCare Laboratory Services, DAB No. 2919, at 28-29 (2018) (such comparisons “not controlling and of limited utility” (quoting Michael D. Dinkel, DAB No. 2445, at 22 (2012), aff’d, Dinkel v. Sec’y, United States Dep’t of Health & Human Servs., No. 6:12-cv-00748 (M.D. Fla. Dec. 13, 2013))), appeal docketed, Maghareh v. Azar, No. 4:19-cv-238 (S.D. Tex. Jan. 22, 2019). 

Appellant’s cherry-picked list of ten-year exclusions demonstrates this general observation.  He fails to recognize that some appellants successfully showed a mitigating factor that was considered to reduce the range of exclusion periods that might otherwise have been reasonable.  He does not identify whether the appellants in the listed cases even challenged the reasonableness of the length of the exclusions imposed and, if they did, what arguments or evidence they offered relating to the factors.  In these and other ways, the facts of the cases Appellant cites as similarly situated do not actually demonstrate much comparability7 (and, as noted, similarities among cases are of limited utility). 

Moreover, we note that, in all the listed cases, the I.G. initially sought the 10-year exclusion period, so the findings that the period sought was within the reasonable range applicable in each case does not establish that a longer period, such as 15 years, would not have been sustainable.  The I.G. is not obliged to impose the longest sustainable period in every case.  Appellant lists only the ALJ decisions in 15 of the 16 cases (although at least one other was reviewed by the Board, Laura Leyva, DAB No. 2704 (2016), appeal dismissed, Leyva v. Burwell, No. 8:16-cv-01986 (M.D. Fla. Apr. 25, 2017)).  Individual ALJ decisions are neither precedential nor binding on the Board or other ALJs, so comparisons based on unreviewed ALJ decisions are even less useful.

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In addition, Appellant points to two other cases in which he contends the Board upheld as “reasonable” five-year mandatory exclusions despite much more egregious circumstances.  App. Br. at 22 (citing Mark Kabins, M.D., DAB No. 2410 (2011), rev’d on other grounds, Kabins v. Sebelius, No. 2:11-cv-1742, 2012 WL 4498295 (D. Nev. Sept. 28, 2012) and Kailash C. Singhvi, M.D., DAB No. 2138 (2007), aff’d, Singhvi v. Inspector Gen. Dep’t of Health & Human Servs., No. 2:08-CV-00659 (E.D.N.Y. Sept. 22, 2009)).  Appellant is incorrect.  The Board did not, in either case, uphold the five-year exclusions as “reasonable,” but rather had no authority to review the length of the exclusions because they were legally mandatory.  As we have already explained, whether the length of an exclusion is unreasonable is only an appealable issue where the period imposed exceeds the mandatory minimum.

We uphold the imposition of a 15-year exclusion in this case.

2. The remaining arguments raised by Appellant are without merit.

A. The Board’s role is to review the issues subject to appeal, not to oversee the operations of the I.G.’s office.

Appellant launches a scattershot attack on the I.G.’s exclusion process as “deeply flawed” and filled with errors.  To substantiate this claim, Appellant proffers, for the first time in these proceedings, a 30-page document which purports to be materials presented at a professional conference by Appellant’s counsel and two other individuals, one of them a lawyer at the I.G.’s office.  App. Br., Attachment (Att.) B.  Based on this presentation, Appellant claims to extrapolate that the I.G. “wrongfully excluded 275 people in FY2017 alone.”  App. Br. at 10.  The I.G. asks that we not consider either this argument nor this evidence on three grounds:  (1) the argument could have been raised before the ALJ but was not, in violation of 42 C.F.R. § 1005.21(e); (2) the presentation was dated April 9, 2019, which was two months before Appellant’s opposition to summary judgment was filed before the ALJ, and Appellant has not shown why he could not have submitted it to the ALJ, so it should be excluded under 42 C.F.R. § 1005.21(f); and (3) the evidence is irrelevant to any issue before the Board.  I.G. Br. at 13-14.  We decline to consider the new argument and evidence on all three grounds, and note that we are not persuaded that the evidence would provide any support for Appellant’s position even had we considered it. 

We also note that Appellant has identified no source of authority for either the ALJ or the Board to undertake a general oversight role over the I.G.’s office and its programs or processes.  The only exclusion we have authority to review in this matter is Appellant’s.  As explained in detail above, Appellant was properly excluded for 15 years based on the statutory and regulatory provisions governing exclusions and appeals.

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B. Appellant’s contentions about discovery before the ALJ have no bearing on the issues before us.

Appellant devotes much of his brief to re-hashing his objections to the ALJ’s handling of discovery requests.  App. Br. at 23-38.  Discovery in administrative exclusion appeals is governed by regulation.  The governing regulation in I.G. appeals provides that a party may request from another party documents “which are relevant and material to the issues before the ALJ.”  42 C.F.R. § 1005.7(a).  Section 1005.7(e)(2) provides that the ALJ may grant a protective order or deny a motion to compel “if the ALJ finds that the discovery sought – (i) Is irrelevant; (ii) Is unduly costly or burdensome, (iii) Will unduly delay the proceedings, or (iv) Seeks privileged information.”

Finally, the regulation specifies that “[t]he burden of showing that discovery should be allowed is on the party seeking discovery.”  Id. § 1005.7(e)(4).  The discovery process is plainly narrower and more streamlined than the discovery customarily available in court proceedings.

On appeal, Appellant asserts that the ALJ should have given him direct access to the electronic filing system (DAB E-file) for “all prior hearing records” in appeals by other parties.  App. Br. at 26.8  As Appellant states, the ALJ denied this request on the grounds that he lacked any authority to order the opening of the electronic records of all unrelated cases and that, in any case, Appellant had not shown that such access would result in anything relevant and material to the issues before the ALJ.  Id. at 23-24; see also ALJ Decision at 2 n.7.  According to Appellant, denying this request violated his constitutional rights and was inconsistent with the Board’s Privacy Act System of Record Notifications (SORN) routine use exceptions (published at 71 Fed. Reg. 11,204 (Mar. 6, 2006)), and Executive Order 13892.  Id. at 24-26, 27-30.

To the extent Appellant’s constitutional arguments aim at attacking the governing regulations, neither the ALJ nor the Board have the authority to ignore or strike down applicable regulations on such grounds.  See, e.g., Michael Scott Edwards, OD, and M. Scott Edwards, OD, PA, DAB No. 2975, at 18 (2019) (“ALJs and the Board are bound by the regulations and may not declare them unconstitutional or decline to follow them.” (quoting Mohammad Nawaz, M.D., & Mohammad Zaim, M.D., PA, DAB No. 2687, at 15 (2016) and Zille Shah, M.D., & Zille Huma Zaim, M.D., PA, DAB No. 2688, at 16 (2016), aff’d, Nawaz v. Price, Nos. 4:16cv386 and 4:16cv387, 2017 WL 2798230 (E.D. Tex. June 28, 2017), aff’d sub nom., Shah v. Azar, 920 F.3d 987 (5th Cir. 2019)), appeal

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docketed, Edwards v. Azar, No. 2:19-cv-00048 (E.D.N.C. Dec. 30, 2019).9  The bulk of his due process contentions seem to assert his entitlement to a fair and open hearing (see, e.g., id. at 25, and cases cited therein), but Appellant’s proceeding has been fair and open and conducted in compliance with statutory and regulatory authority.  Providing unrestricted access to the records of other parties’ proceedings would violate both the SORN and the Privacy Act by circumventing Freedom of Information Act (FOIA) review.  See 5 U.S.C. § 552.  Under the DAB’s10 SORN, the DAB’s case record systems are to be safeguarded and “[a]ccess to and use of records in the system are limited to those persons (including DAB contractors) whose official duties require such access.”  71 Fed. Reg. 11,206.  The Board may disclose materials from those records concerning individuals involved in cases before it without violating the Privacy Act only for specified routine uses.  Id. at 11,205.  The routine use provision addressing public access states:  “To apprise the public of the basis on which the DAB makes its decisions, the DAB may disclose records or parts of records not subject to a [FOIA] exemption to persons who request the records or who attend DAB hearings.”  Id.  In order to determine whether a particular record is subject to a FOIA exemption, the Board requires that public requests for records be submitted in accordance with the Department’s FOIA process at 45 C.F.R. Part 5.  FOIA review is important because case files may include sensitive personal material, including tax and medical records, which must be redacted.  Appellant was advised of this process in the Appellate Division Practice Manual and by the ALJ in multiple rulings responding to Appellant’s discovery requests.11

Appellant bore the burden of showing that his requests were for items that were relevant and material to the issues at hand and failed to make that showing to the ALJ or on appeal.  Nothing in other case files could change the I.G.’s authority to exclude Appellant given that he did not contest the applicability of section 1128(a)(1).  The only other issue before the ALJ (or the Board) was whether the length of his exclusion beyond the five-year minimum fell within a reasonable range.  We have already made clear that information about the length of exclusions imposed in unrelated cases is of little assistance in resolving that issue.  In any case, Appellant clearly had sufficient information available to him from publicly available final ALJ and Board decisions to

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make the argument about where his exclusion fell in relation to others.  We see no reason that Appellant would require a fishing expedition into the briefs and exhibits filed in all other cases for this purpose.

Appellant’s claims that the ALJ somehow had authority to order opening the electronic records of cases that were heard by other ALJs or the Board are also unfounded.  Section 1005.15(e), on which Appellant relies, provides that the hearing before the ALJ shall be “open to the public unless otherwise ordered by the ALJ for good cause shown.”  Appellant was not denied a hearing open to the public.  The regulation says nothing about the ALJ ordering access to the records of proceedings before other adjudicators or undercutting compliance with the Privacy Act and FOIA in the manner of access.  In short, as the Board recently made clear, “[n]othing in the regulations authorizes - much less compels - an ALJ to grant a party access to the entire DAB E-File database.”  Benny R. Bailey, DAB No. 2935, at 18 (2019), appeal docketed, Bailey v. Azar, No. 1:19-cv-01721 (D.D.C. June 13, 2019).

In addition to his efforts to obtain access to all case files in the DAB E-file system, Appellant sought documents related to the I.G.’s internal decision-making process.  See App. Br. at 30.  Appellant objects that the ALJ did not compel production of a “scoresheet, chart, or spreadsheet,” which the I.G. Reviewing Official allegedly employed in selecting the length of the exclusion.  Id.  According to Appellant, such a spreadsheet was produced in discovery in a 2014 case.  Id. (citing Baldwin Ihenacho, DAB CR4002 (2015), affirmed, DAB No. 2667 (2015)).  The ALJ in Ihenacho ruled that the chart had no relevance to his review of the exclusion period because “the specific internal method the IG may have used to determine the length of exclusion in this case is not subject to review.”  DAB CR4002, at 13.12  The ALJ here reached a similar conclusion, granting a protective order and explaining:

This case will be decided based upon application of the law, the Act and regulations, to the facts of this case established by the admissible evidence. Consideration of agency precedent, assuming that refers to prior decisions of the IG, is not provided for under the Act or regulations.  Whether or not the IG misapplied an aggravating factor is also not an issue before me.  The aggravating factors relied upon by the IG are stated in the IG notice letter (IG Ex. 1) and I will consider them de novo on the issue of whether the period of exclusion is unreasonable, consistent with the Board’s prior interpretation of the appropriate approach to assessing unreasonableness.

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Evidence of how the IG applied or weighed the listed aggravating factors, is not relevant or material to my review.  Therefore, the documents Petitioner requests are not relevant or material to an issue before me and not subject to discovery under 42 C.F.R. § 1005.7.

May 14, 2019 ALJ Ruling at 18 (citing Bailey at 15 (“Whether a valid basis exists to exclude Petitioner is a question of law as applied to the facts of Petitioner’s conviction.  It does not turn on the I.G.’s decision-making process, and the documents on which the I.G. relied would not alter the outcome of the ALJ Decision.”)).

In support of his argument about an I.G. Reviewing Official spreadsheet, Appellant proffers another exhibit for the first time at the Board level.  App. Br. at 30-32, Att. C.  According to Appellant, this document disproves the position that no “rigid formula” is employed by the I.G., or the ALJs or the Board, in weighing factors relating to the length of an exclusion period.  Id.  

Attachment C consists of a one-page letter dated September 24, 2018, addressed to David Blank13 and responding to a FOIA request for “scoring and/or evaluation chart(s) and spreadsheet(s) used in [the Reviewing Official’s] evaluation of exclusions produced by the Inspector General in discovery to Baldwin Ihenacho.”  App. Br., Att. C.  The letter states that the I.G. found five responsive pages but that the FOIA request was being referred to the DAB for coordination because the document had been submitted in a Board proceeding.  Id.  As with Attachment B, discussed above, Appellant fails to explain why he did not produce this document before the ALJ since his counsel apparently was in possession of it in 2018.  Certainly, the I.G.’s statement that five pages existed that may be responsive to a request for a spreadsheet produced in another case does not prove that a “rigid formula” is used in setting exclusion periods.  Even if the I.G. developed some internal formula for weighing the regulatory factors in setting the period to impose, that would not make the I.G.’s internal process subject to ALJ review or relevant and material to the ALJ’s determination of whether the resulting period, based on the facts in the ALJ record, was unreasonable.

We find no error in the ALJ’s statement of the scope of the issues before him and agree that Appellant has not shown that internal policies or procedures of the I.G., including a spreadsheet if such exists, would be relevant or material to any of those issues.  For the same reasons, we find no error in the ALJ proceeding to summary judgment without providing Appellant an opportunity to question the I.G. Reviewing Official who decided on the length of his exclusion.  See App. Br. at 32-33.  Such testimony could not affect the ALJ’s review of the issue of whether the length was unreasonable.

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Conclusion

For the reasons stated above, we affirm the ALJ Decision.