Stuart Todd Lewis, DO, DAB CR6121 (2022)

Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)), effective January 19, 2022.  Petitioner’s exclusion for the minimum period of five years is required by section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).  Exclusion for an additional three years for a total minimum exclusion of eight years¹ is not unreasonable based on the existence of three aggravating factors and one mitigating factor.

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I.  Background

The Inspector General (IG) notified Petitioner by letter dated December 30, 2021, that he was excluded from participation in Medicare, Medicaid, and all federal health care programs for a minimum of eight years.  The IG cited section 1128(a)(3) of the Act as the authority for Petitioner’s exclusion based on his felony conviction in the United States District Court, Southern District of Florida, Miami Division (district court) of a criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service.  The IG extended the five-year minimum period of exclusion to eight years citing the existence of three aggravating factors and one mitigating factor.  IG Exhibit (Ex.) 1 at 1.

Petitioner requested a hearing pursuant to 42 C.F.R. § 1005.2 on February 7, 2022.  I convened a prehearing conference by telephone on March 3, 2022, the substance of which is memorialized in my Prehearing Conference Order and Schedule for Filing Briefs and Documentary Evidence dated the same day (Prehearing Order).

On April 4 and 5, 2022, Petitioner filed a motion for summary judgment with supporting brief (P. Br.), exhibit list, and Petitioner’s exhibits (P. Exs.) 1 through 4.  The IG filed a cross-motion for summary judgment with supporting brief on May 12, 2022 (IG Br.), and IG Exs. 1 through 10.²  Petitioner filed a reply to the IG's cross-motion for summary judgment on May 26, 2022 (P. Reply).

Petitioner did not object to my consideration of IG Exs. 1 through 10 and they are admitted as evidence.  The IG objects to my consideration of P. Ex. 4 on grounds it is irrelevant to the issues before me and must be excluded pursuant to 42 C.F.R. § 1005.17(c).  IG Br. at 27-28.  Petitioner offers P. Ex. 4, which is a plea agreement involving one of Petitioner’s co-conspirators, to show Petitioner’s limited role in the criminal scheme and how he and his co-conspirator were treated differently under the law.  P. Reply at 3.  The IG’s objection to P. Ex. 4 is sustained.  The co-conspirator’s plea agreement is irrelevant because the treatment of co-conspirators by the court is not one of the mitigating or aggravating factors that is authorized to be considered under 42 C.F.R. § 1001.102(b)-(c), nor may it be considered for any other purpose under the Act or

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regulations.  P. Ex. 4 is not admitted as evidence.  P. Exs. 1 through 3³ are admitted and considered as evidence.

II.  Discussion

A.  Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a hearing by an administrative law judge (ALJ) and judicial review of the final action of the Secretary of Health and Human Services (the Secretary).

Pursuant to section 1128(a)(3) of the Act, the Secretary must exclude from participation in any federal health care program:

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 [section 1128(a)(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.

The Secretary has promulgated regulations implementing those provisions of the Act.  42 C.F.R. § 1001.101(c).⁴

Pursuant to section 1128(i) of the Act, an individual is convicted of a criminal offense when:  (1) a judgment of conviction has been entered by a federal, state, or local court whether or not an appeal is pending or the record has been expunged; (2) there is a finding of guilt in a court; (3) a plea of guilty or no contest is accepted by a court; or

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(4) the individual has entered into any arrangement or program where judgment of conviction has been withheld.  42 U.S.C. § 1320a-7(i)(1)-(4); 42 C.F.R. § 1001.2.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act will be for no fewer than five years.  42 C.F.R. § 1001.102(a).  The Secretary has published regulations that establish aggravating factors that the IG may consider as a basis to extend the period of exclusion beyond the minimum five-year period, as well as mitigating factors that may be considered only if the IG proposes to impose an exclusion greater than five years.  42 C.F.R. § 1001.102(b), (c).

The standard of proof is a preponderance of the evidence.  42 C.F.R. § 1001.2007(c).  There may be no collateral attack of the conviction that is the basis for the exclusion on either substantive or procedural grounds.  42 C.F.R. § 1001.2007(d).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors, and the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(b), (c); Prehearing Order ¶ 4.

B.  Issues

The Secretary has by regulation limited my scope of review to two issues: 

Whether the IG has a basis for excluding Petitioner from participation in Medicare, Medicaid, and all federal health care programs; and

Whether the length of the proposed period of exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).

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

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

1.  Petitioner’s request for hearing was timely and I have jurisdiction.

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

2.  Summary judgment is appropriate in this case.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to reasonable notice and an opportunity for a hearing.  The Secretary has provided by

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regulation that a sanctioned party has the right to a hearing before an ALJ, and both the sanctioned party and the IG have a right to participate in the hearing.  42 C.F.R. § 1005.2‑.3.  Either or both parties may choose to waive appearance at an oral hearing and to submit only documentary evidence and written argument for my consideration.  42 C.F.R. § 1005.6(b)(5).  An ALJ may also resolve a case, in whole or in part, by summary judgment.  42 C.F.R. § 1005.4(b)(12).

Summary judgment is appropriate in an exclusion case when there are no disputed issues of material fact and when the undisputed facts, clear and not subject to conflicting interpretation, demonstrate that one party is entitled to judgment as a matter of law.  Tanya A. Chuoke, R.N., DAB No. 1721 (2000); David A. Barrett, DAB No. 1461 (1994); Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367 (1992); Catherine L. Dodd, R.N., DAB No. 1345 (1992); John W. Foderick, M.D., DAB No. 1125 (1990).  When the undisputed material facts of a case support summary judgment, there is no need for a full evidentiary hearing, and neither party has the right to one.  Surabhan Ratanasen, M.D., DAB No. 1138 (1990); Foderick, DAB No. 1125.  In opposing a properly supported motion for summary judgment, the nonmovant must allege facts that show there is a genuine dispute of material fact that affects the proponent’s prima facie case or that might establish a defense.  The nonmovant may not rely upon mere allegations or denials to defeat a properly supported motion for summary judgment.  To defeat a properly supported motion for summary judgment and proceed to a trial, the nonmovant must show there is a genuine dispute as to a material fact that requires determination by the fact finder.  On summary judgment, the judge does not weigh the evidence or attempt to determine the truth.  Rather, the judge accepts the nonmovant’s evidence as true and draws all permissible inferences in the nonmovant’s favor.  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-57 (1986).

Petitioner and the IG have moved for summary judgment.  There are no genuine disputes of material fact in this case.  All issues must be resolved as matters of law.  Accordingly, I conclude that summary judgment is appropriate.  I further conclude that summary judgment for the IG is appropriate.

3.  Section 1128(a)(3) of the Act requires Petitioner’s exclusion from participation in Medicare, Medicaid, and all other federal health care programs.

a.  Undisputed Facts

The following facts are undisputed.  All factual inferences are drawn in Petitioner’s favor on summary judgment.

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On August 31, 2020, an information was filed in the district court charging Petitioner with one count of conspiracy to commit wire fraud and bank fraud in violation of 18 U.S.C §§ 1343, 1344(1), (2), 1349.  IG Ex. 2.  The information alleges that, from in or around June 2018 and continuing through in or around November 2019, Petitioner:

[K]nowingly and with the intent to defraud, devise and intend to devise a scheme and artifice to defraud and for obtaining money and property by means of materially false and fraudulent pretenses, representations, and promises, knowing that the pretenses, representations, and promises were false and fraudulent when made, and did knowingly transmit and cause to be transmitted, by means of wire, communication in interstate commerce, certain writings, signs, signals, pictures, and sounds, for the purpose of executing the scheme and artifice, in violation of Title 18, United States Code, Section 1343; and

[K]nowingly, and with intent to defraud, execute, and cause the execution of, a scheme and artifice to defraud one or more financial institutions, including Synchrony Bank, which scheme and artifice would employ a material falsehood, and to knowingly execute, and cause the execution of, a scheme and artifice to obtain moneys and funds owned by, and under the custody and control of, one or more financial institutions, by means of false and fraudulent pretenses, representations, and promises relating to a material fact, in violation of Title 18, United States Code, Section 1344 (1) and (2).

IG Ex. 2 at 2-3.

On November 17, 2020, Petitioner executed a plea agreement in which he agreed to plead guilty to the one count of conspiracy to commit wire fraud and bank fraud as alleged in the information in exchange for a reduced sentence.  P. Ex. 2.  Petitioner admitted in his plea agreement that he knowingly and willfully participated in a conspiracy to commit wire fraud in violation of 18 U.S.C. § 1343, and to defraud a financial institution in violation of 18 U.S.C. § 1344.  Petitioner also admitted in his plea agreement that his criminal conduct resulted in an actual or intended loss of more than $550,000 but less than $1,500,000.  P. Ex. 2 at 8.

Petitioner also executed a document titled “Agreed Factual Basis for Guilty Plea” (Factual Basis) as part of his plea agreement.  P. Ex. 2 at 15.  Petitioner admitted in the Factual Basis that beginning in or around June 2018 and through in or around November

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2019, he knowingly and willfully conspired with Dennis Nobbe (Nobbe) to commit wire fraud and bank fraud.  Following is a summary of the facts from the Factual Basis agreed to by Petitioner: 

Petitioner is a Doctor of Osteopathic Medicine.  He is a resident of Palm Beach County, Florida.

Nobbe is a chiropractor and the owner and operator of Dynamic Medical Services, a chiropractic clinic located in south Florida.

Synchrony Bank is a financial institution under 18 U.S.C. § 20.

Synchrony Bank offered the CareCredit network for financing health care expenses.

Health care providers applied to enroll in CareCredit and establish a merchant account.

Consumers of health care services applied for a CareCredit credit card to pay for health care expenses.

About June 2018, Petitioner opened a CareCredit account under his name but with the intention that Nobbe and not Petitioner would be treating patients who were enrolled in CareCredit.  Petitioner applied in his name to enroll in CareCredit.  As part of the application, Petitioner agreed that patients with CareCredit cards would only be charged for costs incurred for services rendered within thirty days of the charge; patients would only be charged for goods or care provided by or supervised by Petitioner; and that Petitioner or a member of his staff would inform patients that CareCredit cards carried a deferred annual interest rate of 26.99%.

Once enrolled in CareCredit, Petitioner allowed Nobbe to use Petitioner’s CareCredit account to sign Nobbe’s patients up for CareCredit cards.  Nobbe then routinely charged to patients’ CareCredit cards $2,000 to $6,000, purportedly for services that would be rendered months in the future, but that were often not provided at all.  Patients regularly complained to CareCredit that they had been charged through Petitioner’s CareCredit account for services not rendered.  Petitioner provided copies of the complaints to Nobbe who drafted responses that Petitioner submitted to CareCredit, with false invoices that misrepresented that patients were treated by Petitioner rather than Nobbe.

When Nobbe charged a patient’s CareCredit card, CareCredit deposited by interstate wire to Petitioner’s bank account the amount charged less a service fee.

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Petitioner retained a portion of each deposit as a kickback payment and wired the remainder to Nobbe.  Between November 2018 and September 2019, CareCredit deposited by interstate wire transfer to Petitioner’s bank account approximately $713,876.  Petitioner retained an approximate total of $22,480 from the CareCredit deposits to his accounts.

IG Ex. 3.

On March 11, 2021, the prosecution in Petitioner’s criminal case moved for a reduction in Petitioner’s sentence based on his substantial assistance.  The motion indicates that Petitioner cooperated in the prosecution of his co-conspirator Nobbe, including providing extensive documents and records and being debriefed by federal agents three times.  The motion states that Nobbe’s charges were based in significant part on information Petitioner provided.  Petitioner’s information also led to the charging of a second individual, Paul Wand.  IG Ex. 5.  Petitioner’s cooperation was also explained by the prosecution to the district court during Petitioner’s sentencing hearing.  P. Ex. 3 at 15, 18-19.

On March 16, 2021, the district court accepted Petitioner’s guilty plea and entered a judgment of guilty of conspiracy to commit wire fraud and bank fraud as alleged in the one-count information.  IG Ex. 6 at 1.  The district court sentenced Petitioner to time-served, six-months home detention, three years of supervised release, a fine of $100, and an amount of restitution to be determined through a restitution hearing.  IG Ex. 6 at 2-3, 5.  On June 14, 2021, the district court issued an amended judgment and ordered Petitioner to pay restitution of $608,781.  IG Ex. 8 at 6.  Petitioner stipulated that he owed restitution of $508,393.21 to 175 individual patients and $100,387.79 to Synchrony Bank, for total restitution owed of $608,781.  IG Ex. 7.

b.  Analysis

The IG cites section 1128(a)(3) of the Act as the basis for Petitioner’s mandatory exclusion.  The statute, as applicable in this case, requires the Secretary to exclude from participation in any federal health care program any individual or entity:

(l)   Convicted of a criminal offense under federal or state law;

(2)  The criminal offense occurred after August 21, 1996 (the date of enactment of the Health Insurance Portability and Accountability Act of 1996);

(3)  The criminal offense was committed

(a) in connection with the delivery of a health care item or service, or

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(b) with respect to any act or omission in a health care program other than Medicare or Medicaid, that is operated or financed by the federal, state, or a local government;

(4)  The criminal offense was a felony; and

(5)  The criminal offense was related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Act § 1128(a)(3); 42 C.F.R. § 1001.101(c).  When the elements of section 1128(a)(3) of the Act are satisfied, Congress mandates exclusion and the Secretary and I have no discretion to not exclude.  I conclude that the elements that trigger mandatory exclusion under section 1128(a)(3) of the Act are satisfied in this case.

Petitioner does not dispute that he was convicted under federal law pursuant to his guilty plea.  He does not dispute that he was convicted of the felony⁵ offense of conspiracy to commit wire fraud and bank fraud.  Petitioner does not dispute that his offense was related to fraud, specifically conspiracy to commit wire fraud and bank fraud as alleged in the one-count information.  He does not dispute the offense of which he was convicted occurred after August 21, 1996.  P. Br.; P. Reply.

However, Petitioner argues that his criminal offense was not committed in connection with the delivery of a health care item or service.⁶  Petitioner argues that his conviction of wire fraud and bank fraud is, therefore, not a basis for exclusion pursuant to section 1128(a)(3) of the Act.  P. Br. at 1, 6-7; P. Reply at 1-2.

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Petitioner’s argument must be resolved against him as a matter of law because the undisputed facts establish the required connection, rational link, or nexus between Petitioner’s criminal offense and the delivery of a health care item or service.  My decision is guided by the decision of the Departmental Appeals Board (Board) in W. Scott Harkonen, M.D., DAB No. 2485 (2012), aff’d, Harkonen v. Sebelius No. C13-0071 PJH, 2013 WL 5734918 (N.D. Cal. Oct. 22, 2013).

In Harkonen, an appellate panel of the Board discussed in detail the elements of section 1128(a)(3) of the Act, which requires that the offense of which one is convicted have been committed in connection with the delivery of a health care item or service.  The Board discussed that in prior cases, it had interpreted the language “in connection with” to require a common-sense connection or nexus, also characterized as a “rational link,” between the criminal offense and the delivery of a health care item or service.  Harkonen, DAB No. 2485 at 7.  The Board noted that in Erik D. DeSimone, R.Ph., DAB No. 1932 (2004), it found the required nexus in a case where a pharmacist, in the guise of performing his professional duties, took controlled substances for his own use.  Harkonen, DAB No. 2485at 7.  In Kenneth M. Behr, DAB No. 1997 (2005), the Board found the nexus where a pharmacist who had access to drugs due to his position attempted to embezzle those drugs, rejecting the argument that the underlying criminal offense must involve actual delivery of a health care item or service.  Harkonen, DAB No. 2485 at 7-8.  In Ellen L. Morand, DAB No. 2436 (2012), the Board concluded that the Petitioner’s theft from the evening deposit of the pharmacy that employed her had the requisite nexus considering that the evening deposit included revenue from the sale of health care items and that the Petitioner diverted those funds to her use.  Harkonen, DAB No. 2485 at 8.  The Board summarized its prior holdings to be that “frauds or thefts that are linked in a rational way to the delivery of a health care item or service do fall within the ambit” of section 1128(a)(3).  Harkonen, DAB No. 2485 at 8.  The Board further noted that its interpretation is consistent with the interpretation of similar language found in section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)).  Harkonen, DAB No. 2485 at 9.  The Board pointed out that its interpretations of the language of section 1128(a) “effectuates the twin purposes of section 1128(a):  (1) to protect federal health care programs and their beneficiaries from individuals who have been shown to be untrustworthy; and (2) to deter health care fraud.”  Harkonen, DAB No. 2485at 9 (citations omitted).  In Harkonen, the Board stated that section 1128(a)(3) does not require proof of an actual impact or effect upon the delivery of a health care item or service, rather the ALJ must consider all the evidence of circumstances underlying the criminal offense, including evidence extrinsic to the criminal proceedings if reliable and credible, to find the rational link between the criminal offense and the delivery of a health care item or service.  Harkonen, DAB No. 2485 at 10.

The rational link or nexus between Petitioner’s felony conviction of conspiracy to commit wire fraud and bank fraud and the delivery of a health care item or service exists in this case.  Petitioner admitted in the Factual Basis for his guilty plea that he was

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involved in a scheme with Nobbe so that Nobbe and his business could participate in the CareCredit network.  Petitioner admitted that he established a CareCredit account so that Nobbe could use the account to receive payment for health care services for his patients who enrolled in the CareCredit card program.  Petitioner admitted that he allowed Nobbe to use Petitioner’s CareCredit account to sign Nobbe’s patients up for CareCredit cards.  When Nobbe charged a patient’s CareCredit card, CareCredit deposited by interstate wire transfer the amount of the charge less a fee into Petitioner’s bank account.  Petitioner admitted that he retained a portion of the proceeds and paid the remainder to Nobbe.  When patients complained to CareCredit that they were being charged for health care services not rendered, Petitioner provided CareCredit responses drafted by Nobbe with false invoices showing that the patients were treated by Petitioner.  Petitioner admitted that between November 2018 and September 2019, Petitioner and Nobbe caused CareCredit to deposit approximately $713,876 into Petitioner’s bank account by interstate wire transfers.  Petitioner admitted that as part of the scheme, he retained $22,480 of the CareCredit deposits as a kickback payment and wired the remaining funds to Nobbe.  IG Ex. 3.  There is no dispute that CareCredit was for financing health care expenses.  There is also no dispute that charges submitted to CareCredit using the CareCredit card under the scheme were purportedly for the delivery of health care items or services to the patient card holder.  I conclude that there is a nexus between Petitioner’s felony conviction and the delivery of a health care item or service.  I further conclude that the undisputed evidence shows that there is a basis for mandatory exclusion pursuant to section 1128(a)(3) of the Act.

Petitioner characterizes his conviction as “[n]o more, no less” than wire fraud and bank fraud, and argues that his conduct was limited in comparison to one co-conspirator who was convicted of heath care fraud under 18 U.S.C. § 1347.  P. Br. at 6-7.  As the Board has made clear, exclusion under section 1128(a)(3) does not require conviction of the offense of health care fraud.  Rather, what must be determined is whether there is a rational link or nexus between Petitioner’s felony conviction of conspiracy to commit wire fraud and bank fraud and the delivery of a health care item or service.  I must consider the circumstances underlying the offense and determine whether the offense of which Petitioner was convicted was committed in connection of the delivery of a health care item or service.  Harkonen, M.D., DAB No. 2485 at 10.  In this case, the nexus between the delivery of a health care item or service and Petitioner’s criminal offense clearly exists.

Petitioner argues that the IG should not have excluded him under the mandatory exclusion provisions of section 1128(a) of the Act.  Petitioner argues that, if there is a basis for exclusion, the IG should have used her permissive exclusion authority under section 1128(b) of the Act.  P. Br. at 7-9.  Petitioner’s argument is contrary to law.  The IG has no discretion to impose a permissive exclusion where an individual’s conviction satisfies the elements of section 1128(a)(3) of the Act.  As the Board has noted, the

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federal “courts have repeatedly held that the I.G. is . . . required to impose a mandatory exclusion even if an individual’s conduct also falls within the scope of a permissive exclusion provision.”  Gregory J. Salko, M.D., DAB No. 2437 at 4 (2012), citing Timothy Wayne Hensley, DAB No. 2044 at 16 (2006) (and cases cited therein); Craig Richard Wilder, DAB No. 2416 at 7 (2011); Lorna Fay Gardner, DAB No. 1733 (2000).  Congress requires Petitioner’s exclusion pursuant to section 1128(a)(3) of the Act and that requirement is binding upon the Secretary, the IG, the Board, and me.

Accordingly, I conclude that the elements necessary to trigger an exclusion pursuant to § 1128(a)(3) of the Act are satisfied by the undisputed facts, and Petitioner’s exclusion is required by the Act.

4.  Section 1128(c)(3)(B) of the Act requires a minimum exclusion of five years for any exclusion pursuant to section 1128(a) of the Act.

I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(3) of the Act.  Therefore, the IG must exclude Petitioner for a minimum period of five years pursuant to section 1128(c)(3)(B) of the Act.  There is no discretion to impose a lesser period.  The remaining issue is whether it is unreasonable to extend Petitioner’s exclusion by an additional three years for a total exclusion period of eight years.

5.  Three aggravating factors established by 42 C.F.R. § 1001.102(b) exist in this case that were considered by the IG as a basis to extend the period of exclusion beyond five years.

6.  One mitigating factor established by 42 C.F.R. § 1001.102(c) exists in this case that was considered by the IG in determining the period of exclusion.

The IG cited the following three aggravating factors and one mitigating factor in extending Petitioner’s period of exclusion from the mandatory minimum five-year exclusion to eight years.  IG Ex. 1 at 1-2; P. Ex. 1 at 2-3.  Petitioner does not argue that the IG considered an aggravating factor authorized by 42 C.F.R. § 1001.102(b) that does not exist or that there was a mitigating factor authorized by 42 C.F.R. § 1001.102(c) that the IG failed to consider.  P. Br. at 9-11.

a.  Petitioner’s offense resulted in a loss to one or more entities of $50,000 or more.  42 C.F.R. § 1001.102(b)(1).

The IG may consider as an aggravating factor that the acts of which one was convicted caused, or were intended to cause, a financial loss of $50,000 or more to a government agency or program, or to one or more other entities.  42 C.F.R. § 1001.102(b)(1).

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Petitioner agreed in a joint stipulation that he owed a total amount of restitution of $608,781 – $100,387.79 to Synchrony Bank and $508,393.21 to 175 individual patients.  IG Ex. 7 at 1.  The district court issued an amended judgment on June 14, 2021, that ordered Petitioner to pay $608,781 in restitution.  IG Ex. 8 at 6.  The Board has previously accepted that an amount ordered as restitution constitutes proof of the amount of financial loss.  Jeremy Robinson, DAB No. 1905 at 11 (2004); Craig Richard Wilder, DAB No. 2416 at 9 (2011); Juan de Leon, Jr., DAB No. 2533 at 5 (2013); Laura Leyva, DAB No. 2704 at 9 (2016).

Petitioner’s stipulation and the court order to make restitution are undisputed evidence that Petitioner’s offense caused the loss of more than $50,000 by one or more entities other than a government agency or program.

Petitioner also admitted in his plea agreement that his criminal conduct resulted in an actual or intended loss of more than $550,000 but less than $1,500,000.  P. Ex. 2 at 8.

Petitioner argues that the offense of which he was convicted was not intended to and did not cause a financial loss of $50,000 or more by a government program or agency.  P. Br. at 9-10.  Petitioner’s assertion is correct based on the evidence and drawing the favorable inference for Petitioner.  However, Petitioner overlooks that the aggravating factor established by 42 C.F.R. § 1001.102(b)(1) also exists if one or more entities other than a government agency or program suffers a financial loss of $50,000 or more.  Petitioner recognizes that Synchrony Bank suffered a financial loss of more than $50,000 (P. Br. at 10; CMS Ex. 7).  Petitioner cites no authority for the proposition that Synchrony is not an “other entity” within the meaning of 42 C.F.R. § 1001.102(b)(1).  Therefore, this issue must be resolved against Petitioner as a matter of law.

I conclude that this aggravating factor established by 42 C.F.R. § 1001.102(b)(1) exists in this case.

b.  The acts that resulted in Petitioner’s conviction were committed over a period of one year or more.  42 C.F.R. § 1001.102(b)(2).

Acts that resulted in the conviction or similar acts that occur over a year or more may be considered by the IG to extend a period of exclusion beyond the five-year minimum.  42 C.F.R. § 1001.102(b)(2).

Petitioner admitted in the Factual Basis that the scheme for which he was convicted began about June 2018 and continued through about November 2019.  IG Ex. 3.  Petitioner does not deny that the course of conduct underlying his conviction lasted for

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more than a year.  Accordingly, I conclude that the aggravating factor established by 42 C.F.R. § 1001.102(b)(2) exists in this case.

c.  Petitioner was sentenced to be incarcerated.  42 C.F.R. § 1001.102(b)(5).

An aggravating factor that may be considered under 42 C.F.R. § 1001.102(b)(5), is that the sentence imposed by the court included incarceration.

It is undisputed that on March 16, 2021, the district court sentenced Petitioner to time served, three years of supervised release, and participation in the home detention program for six months.  IG Ex. 6 at 4, 6; IG Ex. 8 at 2.

Petitioner argues that a sentence to six months of home detention is not a sentence to incarceration because Petitioner was not imprisoned in a jail or penitentiary.  Petitioner notes that the sentencing judge found that “a sentence without incarceration [was] warranted.”  P. Br. at 18.  Petitioner is correct that his sentence did not require that he be confined in a penal institution.  However, Petitioner’s overlooks that the controlling regulations specifically define incarceration as including home detention.  Pursuant to 42 C.F.R. § 1001.2 “[i]ncarceration means imprisonment or any type of confinement with or without supervised release, including, but not limited to, community confinement, house arrest and home detention.”  Petitioner’s argument must be resolved against him as a matter of law.

Accordingly, I conclude that the aggravating factor established by 42 C.F.R. § 1001.102(b)(5) exists in this case.

d.  The mitigating factor established by 42 C.F.R. § 1001.102(c)(3) exists in this case.

If any of the aggravating factors authorized by 42 C.F.R. § 1001.102(b) are cited by the IG to justify an exclusion of longer than five years, as in this case, then mitigating factors may be considered as a basis for reducing the period of exclusion to no fewer than five years.  42 C.F.R. § 1001.102(c).  The only authorized mitigating factors that I may consider are listed in 42 C.F.R. § 1001.102(c).

The IG determined that Petitioner’s cooperation with government attorneys in convicting his co-conspirators qualified as a mitigating factor under 42 C.F.R. § 1001.102(c)(3).  IG Ex. 1 at 2; P. Ex. 1at 3.  The existence of this mitigating factor is not disputed by Petitioner.  Petitioner’s argument that it should have been weighed more heavily by the IG is addressed hereafter.

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Petitioner does not allege that any other mitigating factors established by 42 C.F.R. § 1001.102(c) exist in this case.  P. Br.; P. Reply.

7.  Exclusion for eight years is not unreasonable in this case.

The Secretary requires by regulation that the ALJ determine whether the length of exclusion imposed is “unreasonable,” if a period greater than the minimum period is imposed by the IG.  42 C.F.R. § 1001.2007(a)(1)-(2).  The Board has interpreted the regulations as significantly limiting the scope of ALJ review.  The regulation states that the ALJ must determine whether the length of exclusion imposed is “unreasonable,” without definition of what is unreasonable or direction for how to determine whether a period of exclusion is unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  The drafters of the regulation explained that the intent of the regulation is to ensure that if the IG’s proposed period of exclusion is “within a reasonable range based on demonstrated criteria, the ALJ has no authority” to change the period of exclusion.  57 Fed. Reg. 3298, 3321 (Jan. 29, 1992).  Again, the drafters provided no explanation of what are “demonstrated criteria.”

The Board has determined that the role of the ALJ in exclusion cases is to conduct a de novo review of the facts related to the basis for the exclusion and the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102 and determine whether the period of exclusion imposed by the IG falls within a “reasonable range.”  Edwin L. Fuentes, DAB No. 2988 at 7-10 (2020); Juan de Leon, Jr., DAB No. 2533 at 4-5; Wilder, DAB No. 2416 at 8; Joann Fletcher Cash, DAB No. 1725 at 17 n.6 (2000).  The Board explained that, in determining whether a period of exclusion is “unreasonable,” the ALJ is to consider whether such period falls “within a reasonable range.”  Cash, DAB No. 1725 at 17 n.6.  The Board cautions that whether the ALJ thinks the period of exclusion is too long or too short is not the issue.  The ALJ may not substitute his or her judgment for that of the IG and may only change the period of exclusion in limited circumstances.  In John (Juan) Urquijo, DAB No. 1735 (2000), the Board concluded that if the IG considers an aggravating factor to extend the period of exclusion and that factor is not later shown to exist on appeal, or if the IG fails to consider a mitigating factor that is shown to exist, then the ALJ may decide the appropriate extension of the period of exclusion beyond the minimum.  In Gary Alan Katz, R.Ph., DAB No. 1842 (2002), the Board suggested that when it is found that an aggravating factor considered by the IG is not proved before the ALJ, then some downward adjustment of the period of exclusion should be expected absent some circumstances that indicates no such adjustment is appropriate.  The Board reasoned that when aggravating factors are considered by the IG as a reason to extend a period of exclusion, some part of the extended period of exclusion should be attributable to each aggravating factor considered.  Because in Katz, the ALJ found one aggravating factor considered by the IG was not proved before the ALJ, the Board concluded that the period of exclusion imposed by the IG was no longer in the reasonable range and reassessed the

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period of exclusion imposed by the IG was no longer in the reasonable range and reassessed the period of exclusion.  The Board had the opportunity to define the term “reasonable range” and describe how to weigh aggravating and mitigating factors but did not do so.  The Board engaged in weighing the remaining aggravating factors in Katz but did not explain the weighing process in any detail or cite any authority for the process it employed.  Id. at 4-8.  The Board, relying upon a prior Board decision and the preamble to the regulations, stated in a footnote that:  

[A] “reasonable range” refers to a range of exclusion periods that is more limited than the full range authorized by the statute [five years to permanent exclusion under section 1128(a) of the Act] and that is tied to the circumstances of the individual case.  If the ALJ determines that the length of the exclusion imposed by the I.G. is within this range under the circumstance as found by the ALJ, he may not change it even if he believes that another exclusion period is more reasonable.

Id. at 5 n.4.  The Board’s decision in Katz reflects its determination that it is the aggravating and mitigating factors that the Board and an ALJ consider in determining whether a period of exclusion is unreasonable.  The Board’s decision also indicates that the facts and circumstances related to the aggravating factors are what are weighed when determining how each aggravating and mitigating factor affects whether a period of exclusion is unreasonable, i.e., outside the reasonable range.  Clearly, determining a reasonable range is not a simple process of counting the aggravating and mitigating factors, and considerable discretion remains for the Board and the ALJ to engage in the weighing process to decide what is unreasonable, although that weighing is significantly limited by the language of 42 C.F.R. § 1001.2007(a)(1)(ii) and the Board’s prior decisions on how the regulation is to be implemented.  The IG determination of the weight given aggravating and mitigating factors is clearly entitled to receive some deference due to the regulatory standard for review adopted by notice and comment rulemaking; by regulation, the issue is whether the period of exclusion is unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  No further deference is required by the Act or regulations or recognized by the Board.  In this case, however, it has not been shown that the IG considered an aggravating factor that did not exist or failed to consider a mitigating factor that did exist.  Therefore, I have no discretion to reassess the period of exclusion under current Board decisions.

Based on my de novo review, I conclude that a basis for exclusion exists and that the undisputed evidence establishes three aggravating factors and one mitigating factor.  The IG in selecting an eight-year exclusion, did not consider an aggravating factor that did not exist or fail to consider a mitigating factor that did exist based on the undisputed evidence.  IG Ex. 1.  Petitioner argues that the IG did not properly weigh the aggravating

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and mitigating factors in this case in determining to extend the period of exclusion by three years.  P. Reply at 2.  However, no basis exists for me to reassess the period of exclusion in this case.  I conclude that a period of exclusion of eight years is within a reasonable range and not unreasonable considering the existence of three aggravating factors and one mitigating factor.

Exclusion is effective 20 days from the date of the IG’s notice of exclusion to Petitioner.  42 C.F.R. § 1001.2002(b).

III.  Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for eight years effective January 19, 2022.

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Endnotes