Wilbert James Veasey, DAB CR5158 (2018)

DECISION

In this case, we again consider what constitutes a reasonable period of exclusion for an individual who actively participated in a massive scheme to defraud the Medicare and Medicaid programs of millions of dollars.

Petitioner, Wilbert James Veasey, owned a home health agency in Dallas, Texas. Following a jury trial, he was convicted on one count of conspiracy to commit health care fraud and three counts of aiding and abetting health care fraud, all felonies. Based on these convictions, the Inspector General (IG) has excluded him for 50 years from participating in Medicare, Medicaid, and all federal health care programs, as authorized by section 1128(a)(1) of the Social Security Act (Act). Petitioner appeals the exclusion. For the reasons discussed below, I find that the IG properly excluded Petitioner and that, given the enormity of his crimes, the 50-year exclusion falls within a reasonable range.

Background

In a letter dated December 29, 2017, the IG notified Petitioner that he was excluded from participating in Medicare, Medicaid, and all federal health care programs for a period of

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50 years because he had been convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program. The letter explained that section 1128(a)(1) of the Act authorizes the exclusion. IG Exhibit (Ex.) 1.

Petitioner timely requested review.

Following a prehearing conference, held March 20, 2018, I ordered the parties to submit their briefs and documentary evidence and set filing dates of April 19, 2018 (IG) and May 30, 2018 (Petitioner). Order and Schedule for Filing Briefs and Documentary Evidence at 3 (March 26, 2018).

The IG timely submitted his brief (IG Br.) and five exhibits (IG Exs. 1-5). In the absence of any objections, I admit into evidence IG Exhibits 1-5.

In a motion dated April 23, 2018, which we received on April 30, Petitioner asked to stay these proceedings pending the conclusion of his criminal appeal. I denied his motion on May 3, 2018. Thereafter, Petitioner did not submit a brief or exhibits. On June 11, 2018, I issued an order to show cause why this case should not be dismissed for abandonment and directed Petitioner to respond no later than June 24, 2018. Petitioner responded with a short letter identifying the April 23 motion as his submission. Letter dated June 24, 2018 (received July 5, 2018). I therefore closed the record.

I asked the parties to indicate whether an in-person hearing is necessary in order to resolve this case, and neither indicated that it would be. IG Br. at 8; see Order and Schedule for Filing Briefs and Documentary Evidence at 4 (¶ 7).

Discussion

1. Petitioner must be excluded from program participation for a minimum of five years because he was convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program. Act § 1128(a)(1).1

Under section 1128(a)(1) of the Act, the Secretary of Health and Human Services must exclude an individual or entity that has been convicted under federal or state law of a criminal offense related to the delivery of an item or service under Medicare or a state health care program. See also 42 C.F.R. § 1001.101(a).

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Petitioner Veasey was the co-owner of a home health agency in Dallas, Texas. IG Ex. 4 at 7. With others, he conspired to defraud the Medicare and Medicaid programs and, in fact, defrauded those programs. Among other actions, he recruited Medicare beneficiaries so that his home health agency could bill the program for unnecessary services. IG Ex. 4 at 11 (¶ 32). He employed nurses who wrote visit notes in the beneficiary charts, making it appear that they had provided skilled nursing services, when, in fact, they had not. IG Ex. 4 at 12 (¶ 37). Petitioner also entered into fraudulent and secret financial agreements with physician Jacques Roy to ensure a steady stream of Medicare beneficiaries for whom to bill, with Dr. Roy or his colleagues certifying (falsely) that the beneficiaries needed home health services. IG Ex. 4 at 16 (¶¶ 51-54).

On September 6, 2012, a federal grand jury indicted Petitioner on one felony count of conspiracy to commit health care fraud (18 U.S.C. § 1349) and three felony counts of health care fraud (18 U.S.C. § 1347). IG Ex. 4. On April 13, 2016, a jury found him guilty on all counts. IG Ex. 2 at 4. The court entered judgment against him on June 13, 2017, and sentenced him to 210 months in prison, followed by two years of supervised release. The court also ordered him to pay a whopping $23,630,777.26 in restitution to the Medicare and Medicaid programs. IG Ex. 3.

Petitioner notes that his conviction is on appeal to the Fifth Circuit and argues that requiring him to present his case in this forum, while his appeal is pending, violates his Fifth Amendment rights against self-incrimination. Under any circumstances, the argument is weak but, inasmuch as Petitioner has already been criminally convicted, it has no merit. The Act mandates his exclusion when a conviction has been entered against him "regardless of whether there is an appeal pending . . . ." Act § 1128(i)(1). I am bound by the statute and regulations and may not disregard them based on a constitutional claim. Zahid Imran, M.D., DAB No. 2680 at 9 (2016), and cases cited therein; see Woodland Oaks Healthcare Facility, DAB No. 2355 at 8 (2010) (holding that, in a civil action, an administrative law judge may reasonably draw adverse inferences against a party who invokes his Fifth Amendment right against self-incrimination and refuses to testify).

Further, any challenge to the federal court's findings are precluded by federal regulations:

When the exclusion is based on the existence of a criminal conviction ... by Federal, State, or local court . . . where the facts were adjudicated and a final decision was made, the basis for the underlying conviction ... is not reviewable and the individual or entity may not collaterally attack it either on substantive or procedural grounds in this appeal.

42 C.F.R. § 1001.2007(d); Marvin L. Gibbs, Jr., M.D., DAB No. 2279 at 8-10 (2009); Roy Cosby Stark, DAB No. 1746 (2000).

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Petitioner Veasey conspired to defraud the Medicare program and, in fact, defrauded the Medicare program. His crimes fall squarely within the parameters of section 1128(a)(1), and he must therefore be excluded.

2. Based on the aggravating factors and no mitigating factor, a 50-year exclusion falls within a reasonable range.

An exclusion brought under section 1128(a)(1) must be for a minimum period of five years. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). I now consider whether the length of the exclusion, beyond five years, falls within a reasonable range.

Among the factors that may serve as a basis for lengthening the period of exclusion are the four that the IG relies on in this case: 1) the acts resulting in the conviction, or similar acts, caused a government program or another entity financial losses of $50,000 or more; 2) the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; 3) the sentence imposed by the court included incarceration; and 4) the convicted individual has been the subject of any other adverse action by any federal, state, or local government agency or board, if the adverse action is based on the same set of circumstances that serves as a basis for the exclusion. 42 C.F.R. § 1001.102(b). The presence of an aggravating factor or factors, not offset by any mitigating factor or factors, justifies lengthening the mandatory period of exclusion.

Program financial loss (42 C.F.R. § 1001.102(b)(1)): The sentencing court ordered Petitioner Veasey and his cohort to pay a total of $23,630,777.26 in restitution to the Medicare ($23,123,897.18) and Medicaid ($506,880.08) programs. Restitution has long been considered a reasonable measure of program losses. See Juan de Leon, Jr., DAB No. 2533 at 5 (2013); Jason Hollady, M.D., DAB No. 1855 (2002).

At a minimum, then, Petitioner's crimes cost Medicare staggering financial losses - many times greater than the $50,000 threshold for aggravation.2 The Departmental Appeals Board (Board) has characterized amounts substantially greater than the statutory standard as an "exceptionally aggravating factor" that is entitled to significant weight. Jeremy Robinson, DAB No. 1905 (2004); Donald A. Burstein, Ph.D., DAB No. 1865 (2003). I agree. If even a small percentage of program participants were capable of this level of fraud, the Medicare program could not long survive. I therefore consider the enormity of the program's financial losses here an exceptionally aggravating factor that compels a period of exclusion many times longer than the five-year minimum.

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Length of criminal conduct (42 C.F.R. § 1001.102(b)(2)). For more than 5½ years, from January 1, 2006 through July 31, 2011, Petitioner and his home health agency actively submitted fraudulent claims to the Medicare program. IG Ex. 4 at 7 (¶ 21). The criminal conspiracy lasted even longer, from November 2004 through February 2012. IG Ex. 4 at 10 (¶ 29). Thus, the acts that resulted in Petitioner's conviction and similar acts were committed over a period of more than seven years or seven times longer than necessary to constitute an aggravating factor.

Incarceration (42 C.F.R. § 1001.102(b)(5)). The sentence imposed by the criminal court included incarceration. The district court sentenced Petitioner Veasey to 17½ years (210 months) in prison. IG Ex. 3 at 2. While any period of incarceration justifies increasing the period of exclusion, the Board has repeatedly held that longer periods of incarceration are relevant in determining whether a period of exclusion is reasonable. Eugene Goldman, M.D.,DAB No. 2635 at 6 (2015). Generally, the longer the jail time, the longer the exclusion, because a lengthy sentence evidences a more serious offense. See Robinson, DAB No. 1905 (characterizing a nine-month incarceration as "relatively substantial."). Hollady, M.D., DAB No. 1855 at 12; Stacy Ann Battle, D.D.S., and Stacy Ann Battle, D.D.S., P.C., DAB No. 1843 (2002) (finding that four months in a halfway house, followed by four months home confinement justifies lengthening the period of exclusion); Brenda Mills, M.D., DAB CR1461 (2006), aff'd, DAB No. 2061 (2007) (finding that six months home confinement justifies increase in length of exclusion). That the court sentenced Petitioner to such a significant period of incarceration underscores the seriousness of his crimes.

Other adverse actions (42 C.F.R. § 1001.102(b)(9)). Because of his conviction, the Texas Health and Human Services Commission excluded him from participating in the Texas Medicaid and other federally funded health care programs (e.g., Maternal and Child Health Services, Block Grants for Social Services). IG Ex. 5.

No mitigating factors. The regulations consider mitigating just three factors: 1) a petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to the program was less than $5,000; 2) the record in the criminal proceedings demonstrates that a petitioner had a mental, physical, or emotional condition that reduced his culpability; and 3) a petitioner's cooperation with federal or state officials resulted in others being convicted or excluded, or additional cases being investigated, or a civil money penalty being imposed. 42 C.F.R. § 1001.102(c). Characterizing the mitigating factor as "in the nature of an affirmative defense," the Board has ruled that a petitioner has the burden of proving any mitigating factor by a preponderance of the evidence. Barry D. Garfinkel, M.D., DAB No. 1572 at 8 (1996).

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Obviously, because Petitioner's felony convictions involved program financial losses thousands of times greater than $5,000, the first factor does not apply here. Nor does Petitioner claim any mental, physical, or emotional condition that reduced his culpability. He did not cooperate with law enforcement.

Thus, no mitigating factor offsets the significant aggravating factors present in this case.

Based on the aggravating factors and the absence of mitigating factors, then, I must determine whether the exclusion period imposed by the IG falls within a reasonable range. So long as that period falls within a reasonable range, my role is not to second-guess the IG's judgment. Robinson, DAB No. 1905 at 5 (administrative law judge review must reflect the deference accorded to the IG by the Secretary). A "'reasonable range' refers to a range of exclusion periods that is more limited than the full range authorized by the statute [i.e. from a minimum of five years to a maximum of permanent] and that is tied to the circumstances of the individual case." Joseph M. Rukse, Jr., R.Ph., DAB No. 1851 at 11 (2002), citing Gary Alan Katz, R.Ph., DAB No. 1842 at 8 n.4 (2002).

Given the nature of the aggravating factors here, a permanent exclusion would not have been out of line. Petitioner caused enormous financial losses to the Medicare program; his criminal conduct lasted many times longer than the threshold for aggravation; he was sentenced to more than seventeen years in prison; and was subject to an adverse action by the Texas state agency.

Moreover, the IG may reasonably determine that longer periods of exclusion are necessary, not only to protect federal funds, but "to stanch an increasing amount of health care fraud." Robinson, DAB No. 1905 at 6 n.8. As I have noted elsewhere, the statistics on Medicare fraud are sobering:

The National Health Care Anti-Fraud Association, an organization composed of both public and private health insurers and regulators, conservatively estimates that 3% of all health care spending in the United States is lost due to fraud. If such an estimate is accurate, health care fraud cost our economy a staggering $68 billion in 2007, the most recent year for which figures are available.

Christopher George Collins, DAB CR2515 at 6 (2012). Lengthy periods of exclusion are an appropriate means by which the IG can attempt to protect the integrity of the Medicare program from the worst offenders, and the evidence here establishes that Petitioner Veasey is among the worst offenders.

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Conclusion

I recognize that 50 years is a substantial period of exclusion and should be imposed only on those posing a grave threat to program integrity. Petitioner Veasey poses such a threat. He was a cunning and successful fraudster who cost the Medicare program massive amounts of money over a long period of time. Based on all of the circumstances discussed above, I find that a 50-year exclusion falls within a reasonable range.

• 1. My findings of fact/conclusions of law are set forth, in italics and bold, in the discussion captions of this decision.
• 2. Until February 13, 2017, a $5,000 program loss was considered an aggravating factor, but this amount has been increased. 82 Fed. Reg. 4100, 4103, 4112 (January 12, 2017). I apply the amount in effect at the time the IG imposed Petitioner’s exclusion (December 29, 2017).