Chaudary Kahan, DAB CR5810 (2021)

DECISION

Respondent, the Inspector General for the United States Department of Health and Human Services (the IG), excluded Petitioner, Chaudary Khan, from participation in Medicare, Medicaid, and all other federal health care programs for five years based on his conviction for a criminal offense related to the delivery of an item or service under the Medicare or a state health care program.  Petitioner sought review of the exclusion.  For the reasons stated below, I affirm the IG's exclusion determination.

I.  Procedural History

By letter dated July 31, 2020, the IG notified Petitioner he was being excluded, effective 20 days from the date of the letter, from participation in Medicare, Medicaid, and all federal health programs under section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)) for the minimum statutory period of five years.  IG Exhibit (Ex.)

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1.1   A reviewing official in the IG's Health Care Program Exclusions office explained the IG took this action based on Petitioner's conviction in a New York state court (state court) of a criminal offense related to the delivery of an item or service under the Medicare or a state health care program, including the performance of management or administrative services relating to the delivery of items or services, under any such program.  Id. at 1.

Petitioner timely sought hearing before an administrative law judge in the Civil Remedies Division, and I was designated to hear and decide this case.  I held a pre-hearing telephone conference on September 16, 2020, the substance of which is summarized in my September 17, 2020 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order).  See 42 C.F.R. § 1005.6.  Among other things, I directed the parties to file pre-hearing briefs articulating their respective arguments as well as identifying witnesses and exhibits in support thereof.  Summary Order at 3-4.

Petitioner filed his informal brief (P. Br.) with two unlabeled and unpaginated attachments, which I take to be his proposed exhibits (P. Exs. 1-2).  The IG filed a brief (IG Br.) and four exhibits (IG Exs. 1-4).  Because Petitioner filed prematurely, I informed him he was entitled to respond to the IG's brief and gave him an opportunity to do so.  Petitioner declined to file a response, and the IG subsequently filed a statement declining the opportunity to file a reply.

II.  Admission of Exhibits and Decision on the Record

Neither party objected to the opposing party's proposed exhibits.  I therefore enter IG Exs. 1 through 4 and P. Exs. 1 through 2 into the record.  Similarly, neither party requested a hearing or offered witnesses.  IG Br. at 8; P. Br. at 2-3.  Accordingly, I decide this case on the briefs submitted and the exhibits of record.  Civ. Remedies Div. P. § 19(d).

III.  Issue

Whether the IG had a basis to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for five years under 42 U.S.C. § 1320a-7(a)(1).  See 42 C.F.R. § 1001.2007(a)(1).

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IV.  Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to an administrative hearing and judicial review of the final action of the Secretary of Health and Human Services (Secretary).  The right to a hearing before an ALJ is set forth in 42 C.F.R. §§ 1001.2007(a) and 1005.2, and the rights of both the sanctioned party and the IG to participate in a hearing are specified by 42 C.F.R. § 1005.3.

The Secretary must exclude from participation in federal health care programs "[a]ny individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under subchapter XVIII or under any State health care program."  42 U.S.C. § 1320a-7(a)(1); see also 42 C.F.R. § 1001.101(a).

An individual is convicted of a criminal offense within the meaning of the Act when:  (1) a judgment of conviction has been entered against him or her in a federal, state, or local court whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no contest is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.  Section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)).  The Act does not distinguish between misdemeanor and felony convictions.  There may be no collateral attack of the conviction that provides the basis of the exclusion.  42 C.F.R. § 1001.2007(d).

Section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) provides that an exclusion imposed under section 1128(a) of the Act (42 U.S.C. § 1320a-7(a)) shall be for a minimum period of five years.  The exclusion is effective 20 days from the date of the notice of exclusion.  42 C.F.R. § 1001.2002(b).  The period of exclusion may be extended based on the presence of specified aggravating factors.  42 C.F.R. § 1001.102(b).  Mitigating factors are considered as a basis for reducing the period of exclusion only if aggravating factors justify an exclusion of longer than five years.  42 C.F.R. § 1001.102(c).

The standard of proof is a preponderance of the evidence.  42 C.F.R. § 1001.2007(c).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors, while the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(b).

V.  Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold and followed by pertinent findings of fact and analysis.

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A. Petitioner's request for hearing was timely, and I have jurisdiction.

Petitioner timely filed his request for hearing.  I have jurisdiction to hear and decide this case.  See 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also 42 U.S.C. § 1320a‑7(f)(1).

B. There is a basis for Petitioner's exclusion pursuant to section 1128(a)(1) of the Act.

Exclusion from participation in Medicare, Medicaid, and all federal health care programs is mandated by section 1128(a)(1) of the Act where an individual has been convicted, under Federal or State law, of a criminal offense related to the delivery of an item or service under Medicare or any state health care program.  42 U.S.C. § 1320a-7(a)(1); 42 C.F.R. § 1001.101(a).  The IG has established these elements by a preponderance of the evidence.

1. Petitioner was convicted of a criminal offense within the meaning of the Act.

On May 22, 2018, an investigator for the New York State Workers' Compensation Fraud Inspector General's Office filed a complaint in the Chesterfield, N.Y. Town Court accusing Petitioner of felony offenses related to ownership and operation of a taxi service which provided transportation services to New York's Medicaid program.  IG Ex. 2.  The complaint specified Petitioner's business was not in compliance with New York Workers' Compensation laws and was therefore not entitled to payment.  Id. at 2.  As a result, the investigator asserted Petitioner had committed three felonies:  Effect of Failure to Secure Compensation, in violation of Section 52(1)(a) of New York's Workers' Compensation Law; Second-degree Grand Larceny for stealing in excess of $50,000 from New York State Department of Health, in violation of Section 155.40(1) of New York's Penal Law; and First-degree Falsifying Business Records for submitting documentation falsely certifying compliance with state and federal requirements with the intent to defraud the New York State Department of Health, in violation of New York Penal Law Section 175.10.  Id. at 1-3.

On November 25, 2019, Petitioner pleaded guilty to one count of Disorderly Conduct in order to resolve the criminal charges against him.  IG Ex. 3.  In exchange, the state agreed to discharge his case if he met several conditions, including repayment of $30,000 in restitution to New York State.  Id.  The state court accepted Petitioner's plea and issued a Certificate of Disposition on December 3, 2019.  IG Ex. 4.

Petitioner now claims he was not convicted of a criminal offense, though he concedes he "was convicted [of] 1 count of Disorderly conduct . . . ."  P. Br. at 1-2.  I take Petitioner to mean he was never convicted as his acceptance of guilt for a reduced charge

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subsequently resulted in the discharge of his case.  The IG responds that the state court's action, reflected in the Certificate of Disposition which resolved the criminal case against Petitioner, is in fact a "conviction" within the meaning of the Act.  IG Br. at 5-6.  The IG is correct.  Petitioner might reasonably believe he was not "convicted" as that term is commonly used, but I must determine whether he was "convicted" of a crime for purposes of exclusion within the meaning of the Act.  See Ellen L. Morand, DAB No. 2436 at 5 (2012), quoting Carolyn Westin, DAB No. 1381 at 6 (1993), aff'd, Westin v. Shalala, 845 F.Supp. 1446 (D. Kan. 1994) ("Congress has defined for the ALJ and this Board what 'convicted' means for purposes of section 1128 and that definition is binding on us.").

The resolution of Petitioner's criminal case meets the definition of a conviction within the meaning of the Act on two grounds.  First, the Act provides an individual is considered "convicted" when a judgment of conviction has been entered by a federal, state, or local court, or a plea of guilty or no contest has been accepted in a federal, state, or local court.  42 U.S.C. § 1320a-7(i)(1), (3).  Here, Petitioner entered a plea of guilty as part of the bargain he struck to avoid prosecution.  IG Ex. 3.  That counts as a "conviction" within the meaning of the Act.

Second, the Act provides an individual has been "convicted" of a criminal offense "when the individual . . . has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld."  42 U.S.C. § 1320a-7(i)(4) (emphasis added).  The IG contends the resolution of Petitioner's case bears the characteristics of a deferred adjudication and meets this statutory definition.  IG Br. at 5.  The IG is again correct.  New York permits a sentencing court to impose conditional discharge, meaning a sentence following conviction is withheld, and if a stated period has elapsed without further offense, will be removed from the offender's record.  N.Y. Penal Law § 65.05.  The state court's order resolving the criminal charge against Petitioner describes his entry into a "program where judgment of conviction has been withheld."  42 U.S.C. § 1320a-7(i)(4); see also Esohe Agbonkpolor, DAB No. 3002 at 5 (2020) (finding resolution of charges by conditional discharge in New York amounted to "conviction" within the meaning of the Act).  I must therefore conclude Petitioner was convicted of a criminal offense as contemplated by 42 U.S.C. § 1320a-7(a)(1).

2. Petitioner's criminal offense is 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.

The Act requires Petitioner be excluded from participation in federal programs if he was convicted of an offense relating to the delivery of an item or service under Medicare or a state health care program.  See 42 U.S.C. § 1320a-7(a)(1).  The term "related to" simply means that there must be a nexus or common sense connection.  See Friedman v.

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Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase "related to" in another part of section 1320a-7 as "deliberately expansive words," "the ordinary meaning of [which] is a broad one," and one that is not subject to "crabbed and formalistic interpretation") (internal quotation marks omitted); see also Quayum v. U.S. Dep't of Health and Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998).

Petitioner argues his conviction did not require exclusion because the charges against him stemmed from a "mistake" he made during his initial four months in business, which he has since corrected.  P. Br. at 2.  He also points out that New York's Office of Medicaid Inspector General has since reinstated him and his company.  Id.  Petitioner's arguments are unavailing.  Neither his claim he acted by mistake nor the fact that New York's Medicaid program saw fit to reinstate him address the issue I must consider:  whether his offense of conviction related to the delivery of an item or service under Medicare or a state health care program.  It is clear that it does.

Petitioner pleaded guilty to one count of Disorderly Conduct to resolve the initial charges against him.  P. Ex. 3.  In determining the relatedness of an offense, I am not bound to the elements of the charged offense.  Berton Siegel, D.O., DAB No. 1467 at 4 (1994) ("[i]t is not the labeling of the offense under the state statute which determines whether the offense is program-related").  Instead, I assess the nature of the offense, which properly includes considering "facts upon which the conviction was predicated."  Id.

The charges initially levied against Petitioner demonstrate a clear nexus between the criminal offense Petitioner resolved by plea and conditional discharge and the delivery of an item or service under a state health care program.  First, Petitioner certified his company had paid into New York's workers' compensation program for its employees, a certification necessary to submit claims to the New York Medicaid program.  Petitioner's certification of his compliance with state and federal law permitted him to submit improper claims to the New York Medicaid program.  IG Ex. 2 at 2-4.  Submitting a false claim to Medicaid as a provider is, by definition, related to the delivery of an item or service under a state health care program.  See Travers v. Shalala, 20 F.3d 993, 998 (9th Cir. 1994) (affirming conviction for filing claims with the Medicaid program is "a program‑related offense" and "such financial misconduct is exactly what Congress sought to discourage" through imposing exclusions).

Court-ordered restitution to a State Medicaid program further establishes a nexus between the offense and the delivery of items or services under that Medicaid program.  Berton Siegel, D.O., DAB No. 1467 at 6-7 (1994).  Here, the state court ordered Petitioner to pay $30,000 in restitution to New York.  IG Ex. 3.  That amount must derive from the improper claims Petitioner made to the New York State Department of Health

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described in the initial charges against him.  IG Ex. 2 at 2.2   The conduct which forms the factual basis of the charge to which Petitioner ultimately agreed to plead in order to resolve the case against him is clearly related to the delivery of an item or service, as contemplated by section 1128(a)(1) of the Act.  I therefore conclude that Petitioner was convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program, as contemplated by 42 U.S.C. § 1320a‑7(a)(1).

C. Petitioner must be excluded for a minimum of five years; the period of exclusion is therefore reasonable as a matter of law.

Because I have concluded that a basis exists to exclude Petitioner under 42 U.S.C. § 1320a-7(a)(1), Petitioner must be excluded for a minimum period of five years.  42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).  The IG has no discretion to impose a lesser period of exclusion, and I may not reduce the period of exclusion below five years.

VI.  Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for five years pursuant to section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)), effective August 20, 2020.

• 1. Document No. 14 in the official case file maintained in the DAB E-File system; for clarity and simplicity, whenever possible I will cite to the exhibits attached to the parties' respective briefs by the exhibit numbers therein, not the document numbers assigned by the E-File system.
• 2. The initial complaint actually describes theft in excess of $50,000 from New York's Department of Health resulting from improper claims for Medicaid Transportation Provider payments.  IG Ex. 2 at 2.  However, it is not uncommon for charged amounts to be adjusted based on revised loss amounts provided by the victim, or as is likely here, to allow for a lower offense to be charged.  See IG Ex. 3 at 1 (reflecting reduction of theft charge from Second-degree Grand Larceny to Petit Larceny).