SUBJECT:

Touradj Farhadi, M.D.,

Petitioner,

The Inspector General

DECISION

I uphold the exclusion of Petitioner, Touradj Farhadi, M.D., from participation in Medicare, Medicaid, and all federal health care programs for five years. I find a basis for the exclusion; and that the five-year exclusion is the mandatory minimum period as a matter of law.

I. Background

Petitioner was excluded by the Inspector General (I.G.) pursuant to section 1128(a)(1) of the Social Security Act (Act), because he was convicted of fraudulently claiming payment for health care service to a beneficiary of Medi-Cal (California's health care program for the poor, elderly and disabled). Section 1128(a)(1) requires the Secretary of Health and Human Services to exclude a person convicted of a criminal offense related to the delivery of an item or service under any State health care program. ⁽¹⁾

Petitioner argues that: (1) the I.G. could have treated his conviction as the basis for a permissive exclusion, as opposed to a mandatory exclusion (i.e., there is no basis for the exclusion imposed); and (2) as a matter of public policy, I should have discretion to determine the length of Petitioner's exclusion because his offense was a minor one. As I discuss below, these arguments are unavailing.

Petitioner's request for a hearing is dated October 24, 2002, and it stems from the I.G.'s notice letter, dated August 20, 2002, which notified Petitioner that he was excluded and informed him of his right to a hearing. I convened a prehearing telephone conference on February 4, 2003, at which the parties agreed that this case may appropriately be decided based on the written record without an oral hearing. Accordingly, I established a briefing schedule. On March 6, 2003 I received The Inspector General's Brief in Support of Motion for Summary Affirmance (I.G. Brief), accompanied by three marked exhibits (I.G. Exs.); I received The Petitioner's Brief in Support of Reversing the Inspector General's Decision to Exclude Petitioner from Participating in the Medicare, Medicaid and All Federal Programs for a Period of Five Years (Petitioner's Brief) on May 15, 2003, accompanied by eight marked exhibits (P. Exs.); and I received The Inspector General's Reply Brief (I.G. Reply Brief) on June 11, 2003. Neither party has objected to the other's exhibits, so I admit I.G. Exs. 1-3 and P. Exs. 1-8.

The essential facts of this case are undisputed. Petitioner owned and operated Panacea Health Care in Long Beach California. I.G. Ex. 3. On June 1, 2001, Petitioner pleaded nolo contendere to one felony count of Presenting a False Medi-Cal Claim in violation of State law. I.G. Ex. 2, at 7-9. Petitioner's conviction was based on events that occurred on or about January 17, 1996. I.G. Ex. 1, at 1. Petitioner's plea was accepted in the Municipal Court of the Long Beach Judicial District - County of Los Angeles. Petitioner's Brief at 4; I.G. Ex. 2, at 9. Pursuant to the California penal code, at the same court session when Petitioner pleaded to the felony count, Petitioner's sentence was modified to a misdemeanor. I.G. Ex. 2, at 10. Petitioner was sentenced to six days incarceration, three years probation, and ordered to pay $60,000 restitution. I.G. Ex. 2, at 9-10.

II. Issues

(1) Whether the I.G. had a basis upon which to exclude Petitioner from participation in the Medicare, Medicaid, and all federal health care programs.

(2) Whether I have the authority to review the length of the period of exclusion.

III. Discussion ⁽²⁾

(1) Petitioner's conviction of fraudulently claiming payment for furnishing health care services to a Medi-Cal beneficiary, is an appropriate basis for his exclusion from Medicare, Medicaid, and all other federal health care programs.

Section 1128(a)(1) of the Act requires the Secretary of Health and Human Services to exclude from participation in any federal health care program, as defined in section 1128B(f) of the Act, any individual convicted of a criminal offense relating to the delivery of a health care item or service. The statute is unambiguous that this is not a discretionary provision-- the exclusion is mandatory.

Petitioner argues, however, that his conviction could be the basis for a permissive exclusion under section 1128(b)(1)(A)(i) of the Act, because, "[f]or all intent purposes, [Petitioner's] plea is in fact a misdemeanor." Petitioner's Brief at 4. Petitioner reasons that his "no contest plea can also be considered under the permissive exclusion section." Petitioner's Brief at 5. Although it is not affirmatively stated in his brief, I construe Petitioner's argument, that his conviction can be treated as the basis for a permissive exclusion, as an argument that the I.G. should have considered imposing a permissive exclusion, and that, on these grounds, I should reverse the exclusion for lacking a proper basis.

Indeed, Section 1128(b) is permissive. The section heading is "PERMISSIVE EXCLUSION," and 1128(b)(1)(A)(i) does apply to certain misdemeanors, so Petitioner is correct that it affords the I.G. discretion whether to enforce an exclusion in certain circumstances. It is apt, therefore, to contrast section 1128(b)(1)(A)(i) and section 1128(a)(1) as, respectively, permissive and mandatory. But, as the I.G. discusses in her Reply Brief, the ambiguity arising from the putative applicability of both provisions to misdemeanor convictions for health care fraud, has been resolved. As I discuss below, convictions, including misdemeanors, that fall under the mandatory exclusion provision of section 1128(a)(1) require the I.G. to enforce an exclusion, whether the conviction also fits the permissive exclusion provisions or not. Moreover, I agree with the I.G. that the permissive exclusion provisions are date restrictive: the crime on which the conviction is based must have occurred after August 21, 1996. Petitioner's crime occurred on or about January 17, 1996.

The I.G. cites Lorna Fay Gardner, DAB No. 1733 (2000), 2000 WL 900615 (H.H.S.), wherein an Appellate Panel of the Departmental Appeals Board (Board) explained that the mandatory exclusion provisions (section 1128(a)(1)) apply to all convictions for defrauding programs under title XVIII of the Act, or State health care programs, including misdemeanor convictions. The mandatory exclusion provisions apply regardless of whether a misdemeanor conviction is accurately described also by the permissive exclusion provisions (section 1128(b)(1)(A)(i)). The Board explained that Congress propounded the mandatory and permissive provisions to distinguish between felony and misdemeanor convictions, only where the fraud is in connection with some health program other than Medicare or any State health care programs. The distinction, as explained by the Board, is not between the degree of fraud against a federal or State health care program, but the difference between defrauding a government program and defrauding another entity's health care program, such as a private health insurance plan. Additionally, the Board further clarified that the I.G. is "bound" to apply the mandatory exclusion to convictions covered by section 1128(a)(1); she cannot exercise discretion between the mandatory and permissive exclusion provisions if a conviction falls under 1128(a)(1).

Moreover, as the I.G. correctly asserts, the permissive exclusion provision does not apply to felony convictions. And, notwithstanding the State court's subsequent reduction of Petitioner's conviction to a misdemeanor, I find highly questionable whether, for purposes of exclusion, Petitioner's conviction can be considered a misdemeanor. The parties do not fully explain why the State court reduced Petitioner's conviction, but it appears to have stemmed from some form of deferred adjudication. I.G. Ex. 2. After the defendant satisfied the court's sentence, his conviction was reduced. I note that under section 1128, Petitioner's initial plea would still constitute his "conviction" notwithstanding the court's subsequent action. See section 1128(i)(4). But I need not decide that issue here. As the Inspector General points out, even if Petitioner's conviction were a misdemeanor of the specific kind falling under the permissive exclusion provisions of 1128(b)(1)(A)(i), that section applies only to convictions based on events that occurred after the enactment date of the Health Insurance Portability and Accountability Act of 1996: August 21, 1996. The Inspector General correctly asserts that Petitioner's conviction was based on events that occurred on or about January 17, 1996. I.G. Reply at 5; I.G. Ex. 1, at 1.

I conclude that, for all of these reasons, Petitioner's argument that his conviction should have been treated under section 1128(b)(1)(A)(i) as a permissive exclusion is unavailing. I find, therefore, that Petitioner's conviction provides a basis for the Secretary of Health and Human Services to exclude him pursuant to section 1128(a)(1) of the Act.

(2) Petitioners' exclusion for a period of 5 years is the mandatory minimum period as a matter of law.

Petitioner also suggests that the mandatory exclusion provision of section 1320a-7(a) of the Act is unjust. Petitioner contends that the law should be "reexamined" and changed so that administrative law judges have the authority to determine the length of an exclusion. Petitioner's Brief at 6. While this position seems to be more of a policy critique than an argument-and therefore perhaps more appropriate for consideration by the Secretary and Congress-insofar as it is an argument for my consideration, it is beyond the scope of my review. In fact, Petitioner's demand for relief, that I be granted authority to determine the length of the exclusion, underscores the fact that I do not have such authority.

An exclusion under section 1128(a)(1) of the Act must be for a minimum mandatory period of five years. As set forth in section 1128(c)(3)(B) of the Act:

Subject to subparagraph (G), in the case of an exclusion under subsection (a), the minimum period of exclusion shall be not less than five years . . . .

Specified aggravating factors can serve as a basis for lengthening the period of exclusion. 42 C.F.R. � 1001.102(b). And, if aggravating factors justify an exclusion longer than five years, specified mitigating factors may be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. � 1001.102(c). But, when the I.G. imposes an exclusion for the mandatory five-year period, the reasonableness of the length of the exclusion is not an issue. 42 C.F.R. � 1001.2007(a)(2).

IV. Conclusion

For the reasons discussed above, I conclude that the I.G. properly excluded Petitioner from participation in Medicare, Medicaid, and all other federal health care programs, and I uphold the five-year exclusion.

Carolyn Cozad Hughes

Administrative Law Judge

1. "State health care program" is defined in section 1128(h) of the Act and includes the Medicaid program (Title XIX).

2. I set forth my findings of fact and conclusions of law as separately numbered headings.