SUBJECT:

Jeremy Robinson,

Petitioner,

The Inspector General

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

The Inspector General (I.G.) appealed the August 13, 2003, decision of Administrative Law Judge (ALJ) Steven T. Kessel in Jeremy Robinson, DAB CR1078 (2003) (ALJ Decision). The ALJ found that the I.G.'s determination regarding the length of time that Petitioner should be excluded from participation in Federal health care programs, pursuant to section 1128(a)(3) of the Social Security Act (Act), was not within a reasonable range of possible exclusions. Based on the presence of three aggravating factors, the I.G. had imposed an exclusion of 15 years, 10 years more than the five-year minimum period of exclusion mandated by section 1128(c)(3)(B) of the Act. The ALJ reduced the length of the exclusion to 10 years.

On appeal, the I.G. argued that the 15-year exclusion fell within a reasonable range, considering the three aggravating factors proven. The I.G. further argued that the ALJ failed to consider other decisions by this Board and other ALJs, in which 15-year exclusions had been upheld. Petitioner filed no opposition or response to the I.G.'s appeal.

For the reasons discussed below, we find that the ALJ erred in reducing the 15-year exclusion. We find instead that the evidence of record supports the conclusion that the 15-year exclusion was within a reasonable range, where there were three fully established and significant aggravating factors and no mitigating factors. We therefore reverse the ALJ Decision with respect to the length of the exclusion and reinstate the original 15-year exclusion. ⁽¹⁾

Background

Factual Background ⁽²⁾

On January 2, 2002, Petitioner pled guilty to one count of felony health care fraud, pursuant to 18 U.S.C. �� 1347 and 2. ⁽³⁾ I.G. Ex. 1, at 1. The court sentenced Petitioner to imprisonment for one year and one day at the Pensacola Federal Prison Camp in Pensacola, Florida, followed by two years' supervised release. Id. at 2-3. The court ordered Petitioner to pay total restitution in the amount of $205,000 to two private insurance companies, HIP and GHI. Id. at 5.

Petitioner's guilty plea arose out of his ownership and operation of a drug and alcohol treatment program, known as "the Robinson Institute for Addictions" (Institute) located in New York City. I.G. Ex. 2, at 2. Count One of the criminal information charges, in pertinent part, that Petitioner knowingly caused the Institute to submit false and fraudulent claims to private insurers for group therapy sessions that patients had not attended and had not been scheduled to attend. Id. at 3. The information further states that Petitioner "[o]n many occasions . . . submitted these false and fraudulent claims in order to compensate himself for writing a letter on behalf of a patient confirming the patient was receiving treatment." Id. These claims were submitted to HIP and GHI over approximately three years, from 1995 through April 1998. Id.

Legal Background

Our standard of review on a disputed issue of law is whether the decision is erroneous. Our standard of review on a disputed issue of fact is whether the decision is supported by substantial evidence on the record as a whole. 42 C.F.R. � 1005.21(h).

Section 1128(a)(3) of the Act requires, in relevant part, that the Secretary of the Department of Health and Human Services (Secretary) exclude from participation in any Federal health care program any individual who is convicted of a felony offense involving fraud, theft, embezzlement, or other financial misconduct "in connection with the delivery of a health care item or service." Id. "[T]he minimum period of [this] exclusion shall not be less than five years . . . ." Section 1128(c)(3)(B) of the Act.

The exclusion remedy serves twin congressional purposes: the protection of federal funds and program beneficiaries from untrustworthy individuals and the deterrence of health care fraud. S. Rep. No. 109, 100^th Cong., 1^st Sess. (1987), reprinted in 1987 U.S.C.C.A.N. 682, 686 ("clear and strong deterrent"); Joann Fletcher Cash, DAB No. 1725, at 18, 15 (2000) (discussing trustworthiness and deterrence). When Congress added section 1128(a)(3) in 1996, it again focused upon the desired deterrent effect: "greater deterrence was needed to protect the Medicare program from providers who have been convicted of health care fraud felonies . . . ." H.R. Rep. 496(I), 104^th Cong., 2^nd Sess. (1996), reprinted in 1996 U.S.C.C.A.N. 1865, 1886. ⁽⁴⁾

The I.G. may lengthen the exclusion period beyond five years if specific aggravating factors are present. 42 C.F.R. � 1001.102(b). Once an aggravating factor has been established, certain mitigating factors may then be considered to reduce the lengthened exclusion to a period not less than five years. 42 C.F.R. � 1001.102(c). The regulatory framework also provides for two other mandatory exclusion periods: a 10-year minimum period when the individual or entity has a prior conviction for which an exclusion could be imposed under section 1128(a) and permanent exclusion when there are two such convictions. 42 C.F.R. � 1001.102(d).

An individual or entity may appeal an exclusion to an ALJ on two issues: whether a basis exists for the exclusion and whether "[t]he length of the exclusion is unreasonable." 42 C.F.R.

� 1001.2007(a)(1)(ii). The ALJ conducts the hearing de novo pursuant to section 205(b) of the Act (see section 1128(f)(1) of the Act), weighing the evidentiary bases relating to aggravating and mitigating factors. See, e.g., Barry D. Garfinkel, M.D., DAB No. 1572, at 31 (1996)(ALJ error in assigning minimal or no weight to aggravating factors); Robert Matesic, R.Ph., DAB No. 1327, at 8 (1992)(evidence weighed to determine trustworthiness).

"[T]he circumstances of a particular case" drive the weight that a decisionmaker can give the aggravating and mitigating factors. 57 Fed. Reg. 3298, 3314 (January 29, 1992). In some cases, for example, the evidence supporting only one mitigating factor may be so significant that it could outweigh multiple aggravating factors. Id. As the Secretary has stated, "[t]he 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." Id. at 3315. We have previously noted the weighing process as follows:

While the regulations direct what factors can be used in lengthening or shortening the period of exclusion, the regulations do not set forth the evidentiary value of the factors. The decision-maker is free to consider the circumstances of each factor and weigh the value of each. It is the quality of the circumstances whether aggravating or mitigating that should be dispositive in analyzing these factors.

Keith Michael Everman, D.C., DAB No. 1880, at 10 (2003), citing Barry D. Garfinkel, M.D.; see also Joseph M. Rukse, Jr., R.Ph., DAB No. 1851, at 11 (2002); Dr. Frank R. Pennington, M.D., DAB No. 1786, at 7 (2001).

The ALJ's review, however, must also reflect the deference accorded to the I.G. by the Secretary. The preamble to the final rule provides, first, that the I.G. has "broad discretion" in establishing the length of an exclusion and, second, that the ALJ's scope of review 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." Joann Fletcher Cash at 20, citing 57 Fed. Reg. 3298, 3321 (1992).

A "reasonable range" means "a range of exclusion periods that is more limited than the full range authorized by the statute and that is tied to the circumstances of the individual case." Joseph M. Rukse at 11 (citation omitted). As the Secretary previously explained, "reasonable" means "not extreme or excessive." Bernard Lerner, M.D., DAB CR60, at 9 (1989)(Kessel, J.), citing 48 Fed. Reg. 3744 (Jan. 27, 1983).

The ALJ Decision

The ALJ made two numbered findings of fact and conclusions of law, as follows:

1. The I.G. established the presence of three aggravating factors. Petitioner failed to establish the presence of any mitigating factors.

2. Evidence that relates to aggravating factors does not establish that a 15-year exclusion is reasonable. The evidence establishes that a 10-year exclusion is reasonable.

ALJ Decision at 2, 4. The I.G. took exception to FFCL 2.

The ALJ found that the I.G. had established, and that Petitioner did not contest, three aggravating factors:

• The acts resulting in Petitioner's conviction, or similar acts, caused a financial loss to a government program or to one or more entities of $5,000 or more. 42 C.F.R. � 1001.102(b)(1);
• The acts that resulted in Petitioner's conviction, or similar acts, were committed over a period of more than one year. 42 C.F.R. � 1001.102(b)(2); and
• Petitioner's sentence for his conviction included a period of incarceration. 42 C.F.R. � 1001.102(b)(5).

ALJ Decision at 3. He also determined that "Petitioner did not establish the presence of any mitigating factors." Id.

The ALJ concluded that the aggravating factors on which the I.G. relied did not warrant a 15-year exclusion. ALJ Decision at 5. He noted that it was not his function to substitute his judgment for that of the I.G., despite the de novo nature of his review of the facts. However, he also pointed out that "[w]here an exclusion that is imposed by the I.G. falls outside of a reasonable range of exclusions that might be imposed, given the evidence that relates to aggravating or mitigating factors, then I must modify the exclusion to put that exclusion within a reasonable range." ALJ Decision at 4-5.

The ALJ began his analysis with the premise that a 15-year exclusion was "very lengthy" and that there was "not much practical difference between an exclusion of that length and a permanent exclusion . . . ." ALJ Decision at 5. He then concluded that "[a]n exclusion of 15 years should, therefore, be imposed only in the case of an individual who is irredeemably untrustworthy." Id. After reviewing the evidence underlying the three aggravating factors, the ALJ did "not find that Petitioner's conduct is so egregious, and his level of untrustworthiness so high, that it merits an exclusion which is tantamount to a permanent exclusion." Id.

The ALJ then compared the instant case to William D. Neese, M.D., DAB CR467 (1997)(Kessel, J.), in which he upheld the I.G.'s imposition of a 10-year exclusion. ALJ Decision at 6. The ALJ noted that in Neese, the I.G. had imposed a 10-year exclusion for an individual who "defrauded Medicare of $600,000 over a period of about two years [and] was sentenced to serve 18 months' incarceration for his crimes." Id. The ALJ concluded that he could not "reconcile the exclusion that was imposed in Neese with the much lengthier exclusion that the I.G. imposed here given the substantially greater aggravation present in Neese than is present in this case." Id. He noted that the reasonableness of an exclusion was fact-specific and should "be based on the trustworthiness of the individual." Id.

1. The ALJ erred in determining that a 15-year exclusion was not within a reasonable range on the ground that it was tantamount to a permanent exclusion.

As indicated above, the ALJ's decision to reduce the length of the exclusion was premised, in part, on his view that a 15-year exclusion was tantamount to a permanent exclusion. We find to the contrary, that an exclusion of finite duration is not the equivalent of a permanent exclusion.

Congress recognized permanent exclusion as one possible length when it mandated that period for those convicted of a crime with two prior convictions. Section 1128(c)(3)(G)(ii); see also 42 C.F.R. � 1001.102(d)(2). Congress also mandated finite minimum durations of ten and five years for those convicted of a crime for which exclusion could be imposed with one prior conviction and with no prior convictions, respectively. Sections 1128(c)(3)(G)(i) and 1128(c)(3)(B). Thus, it is clear that Congress did not view permanent exclusion as the functional equivalent of an exclusion of finite duration, including the 15-year exclusion at issue.

The ALJ Decision also implies that a 15-year exclusion is nevertheless tantamount to a permanent exclusion because of presumed harsh consequences to the excluded individual or entity. While the practical effect of a 15-year exclusion (or indeed an exclusion of any length) in any particular case might be to prevent a provider from ever participating in federally funded programs again, the Board has repeatedly declined to consider an individual's age or financial or employment prospects in determining whether an exclusion period was reasonable. For example, in Donald A. Burstein, DAB No. 1865, at 13 (2003), we stated:

In evaluating what exclusion period is reasonable, we reject Dr. Burstein's arguments that we should take into account the fact that a lengthy exclusion will effectively bar him from ever practicing medicine again, given his age . . . . [These facts] are not identified as mitigating factors, nor can they reasonably be considered as circumstances relevant in determining what weight to give any of the aggravating or mitigating factors that do exist.

Id., see also Joann Fletcher Cash at 23 (15-year exclusion affirmed, despite potential "dramatic impact" on employment opportunities); Bernard Lerner, M.D. at 12 ("I am not persuaded by Petitioner's assertion that, in light of his age (46), a 15-year exclusion is unreasonable.").

The purposes of an exclusion are to protect federally-funded programs from untrustworthy individuals and to deter health care fraud. The practical consequences to the excluded individual or entity are not mitigating factors for consideration. We accordingly conclude that the ALJ erred in determining that a 15-year exclusion was not within a reasonable range on the ground that it was tantamount to a permanent exclusion.

2. The ALJ erred in determining that a 15-year exclusion was not within a reasonable range based on comparison to Neese.

The ALJ correctly recognized that the central issue before him was whether the 15-year exclusion fell within a reasonable range of exclusion periods available to the I.G., after considering the evidentiary underpinnings of the aggravating factors. ALJ Decision at 5. He then stated that the exclusion period "in this case is significantly greater than that which the I.G. imposed in other cases where evidence relating to aggravating factors was substantially more serious than that which is at issue here." Id. at 6. In support, he cited William D. Neese, M.D.. ⁽⁵⁾

A reduction of the 15-year exclusion based solely on comparison ⁽⁶⁾ to Neese fails to account for other cases, in which both the Board and other ALJs affirmed the I.G.'s selection of a 15-year exclusion. For example, in Thomas D. Harris, DAB No. 1881 (2003), the Board reversed the ALJ and reinstated a 15-year exclusion, based upon the existence of two aggravating factors (restitution of $141,607, wrongdoing over two and a half years). Similarly, in Ferrydoon Abir, DAB No. 1764 (2001), the Board affirmed a 15-year exclusion, based upon the existence of three aggravating factors (restitution of $30,000, wrongdoing over four years, prior administrative sanction). In Joann Fletcher Cash, the Board also affirmed a 15-year exclusion, based upon the existence of three aggravating factors (incarceration, restitution of $149,315, wrongdoing in excess of a year). ALJs have also sustained 15-year exclusions based upon criminal convictions with analogous factors. See, e.g., John D. Strom, D.C., DAB CR1056 (2003)(Board declined review July 31, 2003); Natawadee Steinhouse, M.D., DAB CR859 (2002); Ruth Ferguson, DAB CR725 (2000); Gregory D. Wells, M.D., DAB CR723 (2000). ⁽⁷⁾

We thus conclude that it was error for the ALJ to rely solely upon Neese in determining that the 15-year exclusion in this case is not within a reasonable range. We find that the exclusion period in this case cannot be reduced as "unreasonable" simply because the I.G. selected a longer exclusion period than in Neese.

It is true that in some cases, the Board has reduced exclusion lengths from 15 years to lesser periods. However, we concluded in those cases that the evidence either did not support the aggravating factors relied upon by the I.G. or did support mitigating factors that the I.G. had not considered.

For example, in Donald A. Burstein, Ph.D., the ALJ reduced a 15-year exclusion to five years and six months, concluding that the I.G. had proven only one of the two aggravating factors upon which it relied and had conceded the presence of a mitigating factor. Id. at 2. However, the Board found, contrary to the ALJ's conclusion, that the evidence supported the existence of the second aggravating factor. We nonetheless concluded that the 15-year exclusion did not fall within a reasonable range, since the evidence on the record as a whole also demonstrated the presence of the mitigating factor. Id. We stated that "[b]ased on the undisputed facts, and according weight to the aggravating factors and the mitigating factor consistent with our discussion above, we have determined that an exclusion of 10 years is reasonable." Id. at 13.

Consistent with Burstein, in Jason Hollady, M.D., DAB No. 1855 (2002), we reduced a 10-year exclusion to eight, finding that the ALJ failed properly to weigh the remaining evidence after "the I.G. failed to prove an aggravating factor" upon which it had relied. Id. at 11. Similarly, in Gary Alan Katz, R.Ph., DAB No. 1842 (2002), we reduced a 15-year exclusion to eight, as the "I.G. did not establish [an] aggravating factor . . . ." Id. at 13. In John (Juan) Urquijo, DAB No. 1735 (2000), we also reduced a 15-year exclusion to seven, as the I.G. "failed to prove an aggravating factor she applied and . . . failed to consider a mitigating factor which the record clearly showed." Id. at 10.

In short, in these instances, the Board reduced an exclusionary period based on some form of evidentiary deficiency underlying the aggravating factors upon which the I.G. had relied or based upon the presence of evidence establishing a mitigating factor that was not considered. Where, as here, it is undisputed that all of the aggravating factors on which the I.G. relied were present and that there were no mitigating factors, a holding that the exclusion period chosen by the I.G. was unreasonable must be based on an analysis of those factors, considering the particular circumstances and according them appropriate weight. ⁽⁸⁾

3. The ALJ erred in failing to weigh the evidence supporting aggravating factors established by the I.G. in determining whether the I.G.'s exclusion period was within a reasonable range.

The ALJ concluded that a 15-year exclusion should be "imposed only in the case of an individual who is irredeemably untrustworthy." ALJ Decision at 5. After recounting the aggravating factors present in this case, the ALJ stated that he did "not find that Petitioner's conduct is so egregious, and his level of untrustworthiness so high, that it merits an exclusion which is tantamount to a permanent exclusion." Id. We concluded above that the ALJ erred in finding that a 15-year exclusion was tantamount to a permanent exclusion and was thus reserved for the most untrustworthy individuals. We further conclude that while the ALJ was correct that any extension of the mandatory exclusion period must reflect the level of Petitioner's untrustworthiness, the ALJ did not properly assess that untrustworthiness here.

In addition to deterrence, the purpose of section 1128(A)(3) is to protect health care "programs, beneficiaries, and recipients from future misconduct by a provider who has proved himself untrustworthy." John N. Crawford, Jr., M.D., DAB No. 1324, at 7-8 (1992), citing Manocchio v. Sullivan, 768 F. Supp. 814, 817 (S.D. Fla. 1991), aff'd, Manocchio v. Sullivan, 961 F.2d 1539 (11^th Cir. 1992). The aggravating and mitigating factors specified in the regulations reflect the degree or level of the provider's untrustworthiness. As we noted in Joann Fletcher Cash:

In adopting standards for determining the duration of an exclusion, the I.G. was faced with the difficult task of developing standards for predicting future human behavior, i.e., when a person who had shown herself to be untrustworthy would become trustworthy. The I.G. chose to rely on predominately quantifiable standards [aggravating and mitigating factors] . . . .

Id. at 18.

The Secretary thus opted in favor of less subjectivity in determining trustworthiness and a more deliberate assessment of the evidence. Accordingly, to determine whether the exclusion falls within a reasonable range, the ALJ must weigh the aggravating and mitigating factors. As part of this weighing process, the ALJ must evaluate the quality of the circumstances surrounding these factors. Keith Michael Everman, D.C. at 10, citing Barry D. Garfinkel, M.D..

Here, the ALJ merely recited the factors relied upon by the I.G. and did not engage in any such weighing process. ALJ Decision at 5. We conclude that the ALJ here erred in not engaging in any weighing of the circumstances surrounding the aggravating factors existing in this case. We therefore proceed to do so and find that the uncontroverted aggravating factors support that the 15-year exclusion is within a reasonable range of periods available to the I.G.

First, the period of felonious conduct in this case lasted from 1995 - April 1998, approximately three times the one-year minimum period established by regulation. We have in the past accorded weight sufficient to sustain a 15-year exclusion to the fact that wrongful acts were committed for "slightly more" than the one-year minimum standard. Donald A. Burstein, Ph.D., at 12. ⁽⁹⁾ In this case, the period of wrongdoing is three times that in Burstein and thus merits weight sufficient, with the remaining factors, to support the exclusion imposed.

Second, Petitioner was ordered to pay restitution of $205,000, 41 times greater than the amount of the minimum loss required to establish an aggravating factor. We have previously determined that restitution in an amount that is very substantially greater than the statutory standard is entitled to "significantly more weight," characterizing it as an "exceptional aggravating factor." Id. We find that the amount of restitution in this case merits weight sufficient, with the remaining factors, to support the exclusion imposed.

Finally, Petitioner was sentenced to incarceration in a federal penitentiary for a year and one day, after which he was to be on supervised probation for two years. In Jason Hollady, M.D., at 12, we determined that a nine-month incarceration with work release was "relatively substantial" and more than "token" incarceration. We thus find that in this case, the sentence merits weight sufficient, with the remaining factors, to support the exclusion imposed.

In sum, given the presence of these undisputed aggravating factors, and the absence of any mitigating factors, we disagree that a 15-year exclusion is too excessive or extreme to fall within a reasonable range of potential exclusion lengths available to the I.G.

Conclusion

For the reasons discussed above, we reverse the ALJ Decision as to the length of the exclusion and reinstate the 15-year exclusion period. We vacate FFCL 2 and substitute the following:

FFCL 2. Evidence that relates to aggravating factors establishes that a 15-year exclusion is within a reasonable range.

We also affirm and adopt FFCL 1.

Judith A. Ballard

Cecilia Sparks Ford

Donald F. Garrett
Presiding Board Member

1. To expedite the resolution of this case, we are reaching the question of reasonableness rather than remanding the case to the ALJ. The Board has the option under 42 C.F.R. � 1005.21(g) of issuing a decision or remanding a case to the ALJ.

2. The following background information is drawn from the ALJ Decision and the record before him and is not intended to be a substitute for his findings.

3. Section 1347 of Title 18 provides, in relevant part:

Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice - (1) to defraud any health care benefit program; or (2) to obtain by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned not more than 10 years, or both.

Section 2 of Title 18 provides for punishment as a principal of one who commits or willfully causes others to commit offenses against the United States.

4. Federal courts and this Board "have repeatedly held that a section 1128 exclusion is civil and remedial rather than criminal and punitive." Joann Fletcher Cash at 12 (citations omitted). The deterrent goal of the exclusion does not transform this civil remedy into a criminal or punitive sanction. Id. at 11.

5. The ALJ decision in Neese was not appealed to this Board.

6. While direct case comparisons are not dispositive, they can inform whether an exclusion falls within a reasonable range, considering the evidence supporting the aggravating and mitigating factors.

7. One ALJ rejected the argument that an exclusion should be decreased since lesser exclusions had been imposed on more egregious facts in other cases, stating: "Petitioners cannot allege . . . that there are no [Board] or ALJ decisions where there are only three aggravating factors found with a 15-year exclusion ordered." Donald R. Hamlin, DAB CR870, at 11 (2002) (Sickendick, J.).

8. Even if the 15-year exclusion period imposed here were longer than the exclusion period imposed on similar facts in prior cases (and it is not), the longer length may nevertheless accord with congressional intent. Congress recognized a "greater need" for deterrence of health care fraud when it added section 1128(a)(3) in 1996. The I.G. could thus reasonably determine that increasingly longer periods of exclusion may have been needed after the enactment of section 1128(a)(3) not only to protect federal funds, but also to stanch an increasing amount of health care fraud. The I.G. could reasonably determine that a 15-year exclusion in this case could provide such a deterrent effect.

9. As mentioned, in Burstein, however, we reduced the exclusion imposed from fifteen years to ten, based on the presence of an unacknowledged mitigating factor.