Saadite A. Green, DAB CR5223 (2018)

DECISION

Petitioner, Saadite A. Green, owned a company called “We Are Family” that contracted with the California Department of Developmental Services to provide in-home care and services to people with developmental disabilities.  In that capacity, he made false claims for payment and was charged in state court with one felony count of Medicaid fraud and one felony count of insurance fraud.  He pled guilty to insurance fraud.  Based on this conviction, the Inspector General (IG) has excluded him for ten years from participating in Medicare, Medicaid, and all federal health care programs, as provided for in 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 the ten-year exclusion falls within a reasonable range.

Background

By letter dated April 30, 2018, the IG notified Petitioner Green that he was excluded from participating in Medicare, Medicaid, and all federal health care programs for a period of ten 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.

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Petitioner timely requested review.

Each party has submitted a written brief (IG Br.; P. Br.). The IG also submitted five exhibits (IG Exs. 1-5), a written declaration from California Deputy Attorney General Vincent Bonotto, and a reply brief (IG Reply). Petitioner submitted two exhibits (P. Exs. 1-2).

Petitioner objects to two specific portions of the IG’s submissions:

• Deputy Attorney General Bonotto’s statement that Petitioner overbilled the regional center with which his company contracted (South Central Los Angeles Regional Center) for services to Medi-Cal (California Medicaid) beneficiaries.  P. Br. at 4, citing Bonotto Declaration at 2 (¶ 7f).  Petitioner argues that Deputy Attorney General Bonotto’s assertion lacks foundation.  “How,” Petitioner asks, “would Mr. Bonotto know whether the services provided to consumers by [Petitioner’s company] were to Medi-Cal beneficiaries when the declaration in support of the arrest warrant does not indicate whether any specific consumer subject to the overbilling was a Medi-Cal beneficiary?”  P. Br. at 4.

• A sentence from the Declaration in Support of Arrest Warrant that, in describing the state’s system for reimbursing vendors who provide certain home and community-based services, says:  “Once the invoice is approved by the regional center, the claim is paid with Medi-Cal funds.”  P. Br. at 4-5, citing IG Ex. 4 at 3.  According to Petitioner, the statement is “misleading, conclusory[,] and lacks foundation.”  P. Br. at 4-5.

I will generally admit evidence that is relevant and material, so long as it is not privileged or unduly prejudicial.  42 C.F.R. § 1005.17(c), (d), and (e).  I am not bound by the rules of evidence, although I may apply them in order to exclude unreliable evidence.  42 C.F.R. § 1005.17(b).  Both of the challenged statements are relevant and material; they directly address the question of whether Petitioner’s crime was program-related.  In both cases, the IG laid a proper foundation to establish their reliability.

Deputy Attorney General Bonotto, who works in the Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse, prosecuted Petitioner Green.  He filed the felony complaint and declaration in support of the arrest warrant.  Bonotto Decl. at 1 (¶¶ 1, 3, 4).  He would know whether Petitioner’s company provided services to Medi-Cal beneficiaries because, in drafting the complaint – which also alleged that Petitioner submitted false claims to the Medi-Cal program – he would have seen the results of the state audits, as well as Petitioner’s underlying billing statements and other documents.  See, e.g., IG Ex. 4 at 5-8 (describing the Bureau’s search warrant and witness interviews).

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Moreover, contrary to Petitioner’s assertion, the declaration in support of the arrest warrant includes, in some detail, the links between Petitioner’s billing and the Medi-Cal program, concluding with the second statement that Petitioner objects to – “[o]nce the invoice is approved by the regional center, the claim is paid with Medi-Cal funds.”  IG Ex. 4 at 3.  That statement was prepared by Ernesto Z. Cambrone, Jr., an investigative auditor with the Bureau of Medi-Cal Fraud & Elder Abuse.  IG Ex. 4 at 2.  He explains the process by which a vendor, such as Petitioner Green, provides services that are reimbursed by the Medi-Cal program.  He is also well-qualified to address that process, and would be expected to know whether the Medi-Cal program was billed for specific services.

The statements are therefore admissible.  Petitioner might have attacked their veracity by cross-examining Deputy Attorney General Bonotto or Auditor Cambrone, but he opted not to do so (see discussion below).  Nor did he provide testimony of his own to refute their declarations.

I therefore admit into evidence IG Exs. 1-5 and P. Exs. 1-2.

I instructed the parties to indicate in their briefs whether an in-person hearing would be necessary and, if so, to explain why, identify any proposed witness, and “submit witness testimony in the form of an affidavit or a written sworn declaration.”  Order and Schedule for Filing Briefs and Documentary Evidence at 3-4 (¶ 7); see attached Informal Brief of Petitioner at 4 (¶ IV) (which Petitioner did not complete).  The IG indicates that an in-person hearing is not necessary.  IG Br. at 7.  Petitioner lists no witnesses, offers no witness testimony, and does not suggest that an in-person hearing is necessary.

Issues

The issues before me are:  whether the IG is authorized to exclude Petitioner from program participation; and whether the length of the exclusion (ten years) is reasonable.  42 C.F.R. § 1001.2007.

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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 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).

Petitioner Green owned a company that contracted with the California Department of Developmental Services to provide in-home care and services to people with developmental disabilities.  Bonotto Decl. at 2 (¶ 7); IG Ex. 4 at 3.  Through this company, Petitioner billed the California Medicaid program, referred to as Medi-Cal, for services he did not provide.  On June 29, 2016, he was indicted on two felony counts:  one count of presenting false Medi-Cal claims; and one count of insurance fraud.  IG Ex. 2.  On November 10, 2016, he pled guilty to insurance fraud, specifically, that he “made or caused to be made a false or fraudulent claim for payment of a health care benefit.”  The state court accepted his plea.  IG Ex. 3 at 4; see IG Ex. 2 at 2.  He was therefore convicted within the meaning of the statute.  Act § 1128(i)(3) (providing that a person is “convicted” when, “a plea of guilty . . . has been accepted by a . . . court.”).

Petitioner points out that the felony count of Medicaid fraud was dismissed, and he asserts that the services he provided “are not necessarily paid for by a state or federal health care program.”  From this, he argues that his crime was not related to the delivery of a health care item or service under a state health care program.  P. Br. at 7.

The Departmental Appeals Board has long rejected efforts to limit section 1128 review to the bare elements of the offense on which the individual was convicted.  See Narendra M. Patel, M.D., DAB No. 1736 at 7 (2000), aff’d Patel v. Thompson, 319 F.3d 1317 (11th Cir. 2003) (“We thus see nothing in section 1128(a)(2) that requires that the necessary element of the criminal offense must mirror the elements of the exclusion authority, nor that all statutory elements required for an exclusion must be contained in the findings or record of the state criminal court.”); Timothy Wayne Hensley, DAB No. 2044 (2006); Scott D. Augustine, DAB No. 2043 (2006); Lyle Kai, R.Ph., DAB No. 1979 at 5 (2005), aff’d, Kai v. Leavitt, No. 05-00514 BMK (D. Haw. July 17, 2006) (holding that an offense is “related to” the delivery of a healthcare item or service, if there is “a nexus or common-sense connection” between the conduct giving rise to the offense and the delivery of a healthcare item or service); Berton Siegel, D.O., DAB No. 1467 at 5 (1994);

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Carolyn Westin, DAB No. 1381 (1993), aff’d sub nom. Westin v. Shalala, 845 F. Supp. 1446 (D. Kan. 1994).

Although the underlying facts here are sparse, the IG has come forward with compelling evidence – which Petitioner did not rebut – that Petitioner’s crime was related to the Medi-Cal program.  The IG explained how companies, such as Petitioner’s – which were not enrolled in the Medicaid program – could nevertheless bill Medicaid for its services.  In 1981, Congress established a waiver program, which allowed states to use Medicaid funding for services and support provided to the disabled in their homes or other community-based settings.  IG Ex. 4 at 2.  California had such a waiver, and its Department of Developmental Services contracted with private, non-profit, and regional centers to secure services from qualified vendors.  Several regional centers contracted with Petitioner’s company.  The company submitted invoices to the regional center, and the claim was paid with Medi-Cal funds.  IG Ex. 4 at 3.  That was the way the program worked.

After receiving a complaint about Petitioner’s billing practices, the Department of Developmental Services audited Petitioner’s billing records and supporting documentation for the period January 1, 2010, until January 31, 2011.  The auditors found unsupported billing of $393,035.26.  IG Ex. 4 at 5.  The Department then expanded its investigation, interviewing witnesses and seizing Petitioner’s bank records, payroll records, consumer sign-in sheets, progress notes, and other documents.  IG Ex. 4 at 5-8.  In a face-to-face meeting on December 22, 2011, representatives from the Department of Developmental Services gave Petitioner Green a copy of their draft audit report, which included the written warning:  “Bill only for services which are actually provided to consumers and which have been authorized by the referring regional center.”  IG Ex. 4 at 9.

Thereafter, Auditor Cambrone, of the Medi-Cal Fraud Unit, used Petitioner’s documents to recreate the earlier audit.  He also obtained the claims Petitioner submitted to the regional centers.  IG Ex. 4 at 8.  He concluded that, for the period January 1, 2010, until January 31, 2011, Petitioner’s company was overpaid more than $393,000 for billed services that were not provided.  IG Ex. 4 at 9.  Auditor Cambrone then extended the period of his audit to determine whether, following the December 22 meeting, Petitioner stopped his unlawful billing.  He found that, besides overbilling, Petitioner had up-coded, i.e., billed at higher rates than authorized for the services provided.  From February 1, 2011, to September 30, 2012, Petitioner was overpaid an additional $62,159.32.  IG Ex. 4 at 10.

Petitioner has rebutted none of this evidence.  He doesn’t suggest that he submitted claims to any insurer other than the Medicaid program, and the record includes no references to any other insurer.

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Petitioner concedes that he “understood that ‘payment of [his] claims will be from federal and/or state funds,’” but argues that this doesn’t mean that the funds “would be paid from a federal or state healthcare program.”  P. Br. at 7 (emphasis in original).  Petitioner forgets that he was convicted of submitting fraudulent claims “for payment of a health care benefit.”  IG Ex. 2 at 2.  Thus, he submitted claims for payment of a health care benefit from federal and/or state funds, which describes his participation in the Medi-Cal program.

I therefore conclude that Petitioner overbilled the Medi-Cal program; his crime was therefore related to the delivery of services under a state health care program; and he is subject to exclusion under section 1128(a)(1).

2. Based on the aggravating factors and no mitigating factor, a ten-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 three 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; and 3) the convicted individual has been the subject of any other adverse action by any federal, state, or local government 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)).  Petitioner concedes that he paid $447,716 in restitution to the California Department of Developmental Services.  P. Br. at 8, 10; IG Ex. 3 at 7.  Petitioner also concedes that restitution has long been considered a reasonable measure of losses.  P. Br. at 8, citing Hussein Awada, M.D., DAB No. 2788 at 7 (2017); Juan de Leon, Jr., DAB No. 2533 at 5 (2013); Craig Richard Wilder, DAB No. 2416 at 9 (2011).  He argues, however, that, because the Department of Developmental Services is not responsible for administering Medicaid funds, “it is improper” to consider financial loss as an aggravating factor.  P. Br. at 10.  Petitioner misreads the regulation, which does not limit financial losses to government programs, but includes losses to “one or more other entities.”

Regardless of which program or entity sustained the losses, Petitioner’s crime caused financial losses almost nine times greater than the $50,000 threshold for aggravation.  The Board has characterized amounts substantially greater than the statutory standard as

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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 and consider the amount of the financial losses here significant enough to justify a period of exclusion considerably longer than the five-year minimum.

Length of criminal conduct (42 C.F.R. § 1001.102(b)(2)).  As the above discussion shows, Petitioner engaged in his criminal activities for well over a year, from January 1, 2010, until September 30, 2012.  Petitioner argues that his up-coding was not really illegal and that his illegal conduct covered just one year – from January 1, 2010, to January 31, 2011.  P. Br. at 9-10.  Putting aside the question of whether up-coding is illegal (it usually is), January 1, 2010, to January 31, 2011, is more than one year, and the IG appropriately applied this aggravating factor when he increased the period of exclusion.

Other adverse actions (42 C.F.R. § 1001.102(b)(9)).  After learning of his criminal conviction, California’s Department of Health Care Services, which administers the Medi-Cal program, determined that his conviction involved fraud and abuse of the Medi-Cal program and was “substantially related” to his qualifications, functions, or duties as a service provider.  Based on this finding, the Department prohibited him from billing or receiving payments from the Medi-Cal program for an indefinite period.  IG Ex. 5.

Mitigating factor.  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).

Petitioner does not cite any of these factors.

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.  Jeremy Robinson, DAB No. 1905 at 5 (2004) (ALJ 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).

Here, Petitioner caused significant financial losses to programs designed to aid the disabled; his criminal conduct lasted more than a year; and, based on that conduct, the

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California Medicaid Agency prohibited him from billing or receiving payment from Medi-Cal.  No mitigating factors offset these aggravating ones.  The IG thus reasonably determined that Petitioner poses a significant threat to program integrity, which justifies the ten-year period of exclusion.

Conclusion

The IG properly excluded Petitioner from participating in Medicare, Medicaid and other federal health care programs.  So long as the period of exclusion is within a reasonable range, based on demonstrated criteria, I have no authority to change it.  Joann Fletcher Cash, DAB No. 1725 at 7, citing 57 Fed. Reg. 3,298, 3,321 (1992).  I find that the ten-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.