SUBJECT:

Amable de los Reyes Aguiluz,

Petitioner,

The Inspector General.

DECISION

This matter is before me on the Inspector General's (I.G.'s) Motion for Summary Affirmance of the I.G.'s determination to exclude the Petitioner herein, Amable de los Reyes Aguiluz, Jr., M.D., from participation in Medicare, Medicaid, and all other federal health care programs for a period of five years. The I.G.'s Motion and determination to exclude Petitioner are based on the terms of section 1128(a)(1) of the Social Security Act (Act), 42 U.S.C. � 1320a-7(a)(1). The facts in this case mandate the imposition of a five-year exclusion, and for that reason I grant the I.G.'s Motion for Summary Affirmance.

I. Procedural Background

Amable de los Reyes Aguiluz, Jr., M.D., Petitioner, was licensed to practice medicine in the State of California prior to 2002. On April 15, 2003, Dr. Aguiluz and a co-defendant were named by California's Attorney General in a multi-count felony Complaint in connection with his medical practice in Los Angeles. Count 6 of the Complaint charged a felony-level violation of CAL. BUS. & PROF. CODE �650 (2001), which forbids soliciting and receiving illegal consideration for medical referrals. The criminal acts charged in that Count were alleged to have occurred between January and June 2002.

Petitioner appeared with counsel in the Superior Court of California, County of Los Angeles, on March 16, 2004, and pleaded nolo contendere to Count 6 of the Complaint, which by prosecution motion had been amended to a misdemeanor-level violation of CAL. BUS. & PROF. CODE �650. The court proceeded to sentencing immediately: Petitioner was sentenced to a one-year term of probation, was ordered to make restitution of $15,400.00 and was required to pay other minor costs and fees. The remaining charges outstanding against Petitioner were dismissed. Petitioner sought and was granted early termination of his probation as soon as the ordered payments were made, on or about April 16, 2004.

As required by the terms of section 1128(a) of the Act, 42 U.S.C. � 1320a-7(a), the I.G. began the process of excluding Petitioner from participation in Medicare, Medicaid, and all other federal health care programs. Section 1128(a)(1) of the Act mandates the exclusion, for a period of not less than five years, of "[a]ny individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under . . . any State health care program." On April 29, 2005, the I.G. notified Petitioner that he was to be excluded pursuant to the terms of section 1128(a)(1) of the Act for the mandatory minimum period of five years.

Based on his early termination from probation, Petitioner on July 25, 2005 sought relief under CAL. PENAL CODE � 1203.4 (2005), California's statutory plan that allows some defendants to gain expunction of their conviction records and relief from some of the penalties and disabilities otherwise imposed by California law. On September 16, 2005, the Superior Court set aside Petitioner's plea of nolo contendere and its finding of guilt based on that plea, entered a plea of not guilty in their place, and dismissed the charge.

Acting through counsel, Petitioner timely sought review of the I.G.'s action by letter dated June 27, 2005. I convened a prehearing conference by telephone on August 31, 2005, pursuant to 42 C.F.R. � 1005.6. The I.G. expressed the intention to seek summary disposition on written submissions, and I established a schedule for the filing of documents and briefs. All briefing is now complete, based on my Order of September 7, 2005 and my letter of December 21, 2005.

The evidentiary record on which I decide the issues before me contains twelve exhibits. The I.G. timely proffered seven exhibits marked I.G. Exhibits 1-7 (I.G. Exs. 1-7), and has sought leave to substitute a signed copy of I.G. Ex. 4 in place of the unsigned copy originally proffered. Petitioner timely proffered five exhibits, Petitioner's Exhibits 1-5 (P. Exs. 1-5). Neither party has objected to any of those exhibits, and therefore they are all admitted as designated; I.G. Ex. 4 is admitted in signed form. Petitioner submitted a sixth proposed exhibit (P. Ex. 6) with his Response Brief on January 18, 2006: it is a letter sent from Petitioner's counsel to counsel for the I.G. on December 9, 2005. Its proffer as part of Petitioner's concluding brief is untimely, and its content is not evidence but argument. It is not admitted to the evidentiary record on which I decide the issues, but remains part of the case file for purposes of reference.

II. Issues

The legal issues before me are limited to those enumerated at 42 C.F.R. � 1001.2007(a)(1). In the specific context of this record they are:

1. Whether the I.G. has a basis for excluding Petitioner from participating in Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(a)(1) of the Act; and

2. Whether the proposed five-year period of exclusion is unreasonable.

The controlling authorities require that both issues be resolved in favor of the I.G.'s position. Section 1128(a)(1) of the Act mandates Petitioner's exclusion, for his predicate conviction has been established. A five-year period of exclusion is reasonable as a matter of law, since it is the minimum period established by section 1128(c)(3)(B) of the Act, 42 U.S.C. � 1320a-7(c)(3)(B).

III. Controlling Statutes and Regulations

Section 1128(a)(1) of the Act, 42 U.S.C. � 1320a-7(a)(1), requires the mandatory exclusion from participation in Medicare, Medicaid, and all other federal health care programs of any "individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under Title XVIII or under any State health care program." The terms of section 1128(a)(1) are restated in regulatory language at 42 C.F.R. � 1001.101(a). This statutory provision makes no distinction between felony convictions and misdemeanor convictions as predicates for mandatory exclusion.

The Act defines "convicted" as including those circumstances:

(1) when a judgment of conviction has been entered against the individual . . . by a . . . State . . . court, regardless of whether . . . the judgment of conviction or other record relating to criminal conduct has been expunged;

(2) when there has been a finding of guilt against the individual . . . by a . . . State . . . court;

(3) when a plea of guilty or nolo contendere by the individual . . . has been accepted by a . . . State . . . court; or

(4) when the individual . . . has entered into participation in a . . . deferred adjudication . . . program where judgment of conviction has been withheld.

Act, section 1128(i)(1)-(4), 42 U.S.C. �� 1320a-7(i)(1)-(4). These definitions are repeated at 42 C.F.R. � 1001.2.

An exclusion based in section 1128(a)(1) is mandatory and the I.G. must impose it for a minimum period of five years. Section 1128(c)(3)(B) of the Act, 42 U.S.C. � 1320a-7(c)(3)(B). The regulatory language of 42 C.F.R. � 1001.102(a) affirms the statutory provision. The I.G. has not sought to enhance the five-year mandatory minimum period by offering to prove any of the carefully-defined aggravating factors set out at 42 C.F.R. �1001.102(b). For that reason, I may not inquire into the existence, importance, or effect of any of the specific aggravating or mitigating factors set out at 42 C.F.R. � 1001.102(b) and (c).

In this case Petitioner bears the burden of proof and persuasion on any affirmative defenses or mitigating factors and the I.G. bears the burden on all other issues. 42 C.F.R. �1005.15(b) and (c).

IV. Findings and Conclusions

I find and conclude as follows:

1. On his plea of nolo contendere on March 16, 2004, in the Superior Court of California, County of Los Angeles, Petitioner Amable de los Reyes Aguiluz, Jr., M.D., was found guilty of the misdemeanor offense of soliciting and receiving illegal considerations for medical referrals, in violation of CAL. BUS. & PROF. CODE � 650. I.G. Exs. 5, 6.

2. Judgment of conviction was entered against Petitioner, and sentence was imposed upon him, in the Superior Court on March 16, 2004. I.G. Ex. 6.

3. The plea, finding of guilt, and judgment of conviction described above in Findings 1 and 2 constitute a "conviction" within the meaning of sections 1128(a)(1) and 1128(i)(1), (2), and (3) of the Act, and 42 C.F.R. � 1001.2.

4. For purposes of the exclusion remedy established by section 1128(a) of the Act, 42 U.S.C. � 1320a-7(a), a "conviction" established pursuant to any of the definitions set out at sections 1128(i)(1), (2), and (3) of the Act is unaffected by its subsequent expunction pursuant to the terms of CAL. PENAL CODE � 1203.4.

5. A nexus and a common-sense connection exist between the criminal offense to which Petitioner pleaded guilty, of which Petitioner was found guilty, and of which he was convicted, as noted above in Findings 1 and 2, and the delivery of an item or service under a State health care program. I.G. Exs. 4, 5, and 6; Berton Siegel, D.O., DAB No. 1467 (1994).

6. By reason of Petitioner's conviction, a mandatory basis exists for the I.G.'s exercise of authority, pursuant to section 1128(a)(1) of the Act, 42 U.S.C. � 1320a-7(a)(1), to exclude Petitioner from participation in Medicare, Medicaid, and all other federal health care programs.

7. By reason of his conviction, Petitioner was subject to, and the I.G. was required to impose, the mandatory minimum five-year period of exclusion from Medicare, Medicaid, and all other federal health care programs. Section 1128(c)(3)(B) of the Act; 42 C.F.R. � 1001.102(a).

8. On April 29, 2005 the I.G. notified Petitioner that he was to be excluded from participation in Medicare, Medicaid, and all other federal health care programs for a period of five years, based on the authority set out in section 1128(a)(1) of the Act.

9. On June 27, 2005 Petitioner perfected his appeal from the I.G.'s action by filing a timely hearing request.

10. Because the five-year period of Petitioner's exclusion is the mandatory minimum period provided by law, it is therefore not unreasonable. Section 1128(c)(3)(B) of the Act; 42 C.F.R. ��1001.102(a) and 1001.2007(a)(2).

11. There are no disputed issues of material fact and summary disposition is therefore appropriate in this matter. Tanya A. Chuoke, R.N., DAB No. 1721 (2000); Thelma Walley, DAB No. 1367 (1992).

V. Discussion

The essential elements necessary to support an exclusion based on section 1128(a)(1) of the Act are: (1) the individual to be excluded must have been convicted of a criminal offense; and (2) the criminal offense must have been related to the delivery of an item or service under Title XVIII of the Act (Medicare) or any state health care program. Thelma Walley, DAB No. 1367; Boris Lipovsky, M.D., DAB No. 1363 (1992); Andrew L. Branch, DAB CR1359 (2005); Lyle Kai, R.Ph., DAB CR1262 (2004) rev'd on other grounds, DAB No. 1979 (2005). Those two essential elements are fully established in the record before me.

Petitioner does not deny here any of the material procedural events in the criminal proceedings against him. The underlying facts of those material procedural events are clear and uncontested: I.G. Exs. 5 and 6 show that on March 16, 2004, Petitioner appeared in the Superior Court of California, County of Los Angeles, with counsel. The appearance was the result of plea negotiations in connection with a six-count Complaint filed against Petitioner a year earlier. I.G. Ex. 3. Count 6 of that Complaint charged Petitioner with a felony violation of CAL. BUS. & PROF. CODE � 650, an anti-kickback statute that forbids soliciting and receiving illegal considerations for medical referrals. By prosecution motion, the charge in Count 6 was amended to misdemeanor level. I.G. Ex. 6, at 1. Petitioner tendered a plea of nolo contendere to Count 6; the trial court found that a factual basis existed for the plea, approved the plea, accepted the plea, and found Petitioner guilty. I.G. Ex. 6, at 2. Final judgment of conviction was entered against

Petitioner and sentence was imposed upon him at the same hearing in the Superior Court. I.G. Ex. 6, at 2-3. Those events satisfy the definitions of "conviction" set out at sections 1128(i)(1), 1128(i)(2), and 1128(i)(3) of the Act. The I.G. has proven the first essential element.

Petitioner contests the second element, the relation of the offense for which he was convicted to the delivery of an item or service under the California state health care program called Medi-Cal. Petitioner's Brief (P. Br.), at 9. It is true that the California statute does not specifically refer to the Medi-Cal program, or require that its abuse be proven as an essential element in a violation of CAL. BUS. & PROF. CODE � 650. But the title of the statute or the labeling of the offense which it condemns is irrelevant. Lyle Kai, R.Ph., DAB No. 1979; Salvacion Lee, M.D., DAB No. 1850 (2002); Berton Siegel, D.O., DAB No. 1467; Thelma Walley, DAB No. 1367; Dewayne Franzen, DAB No. 1165 (1990). What matters is whether there is evidence in the record of a connection between the details of Petitioner's violation of CAL. BUS. & PROF. CODE � 650 and the Medi-Cal program. Michael Blake Runyon, D.P.M., DAB No. 1555 (1996).

In this case there is such evidence in a statement given by an agent of California's Bureau of Medi-Cal Fraud and Elder Abuse. I.G. Ex. 4. The statement is part of the official court record of Petitioner's conviction, and thus is part of the material on which I may rely in assessing the factual setting of that conviction. The statement explains the conduct for which Petitioner was convicted and its connection to the Medi-Cal program: stated in its essentials, the conduct involved Petitioner's demanding and accepting kickbacks in return for sending Medi-Cal patients' laboratory specimens to Lab-Serv, a medical testing laboratory, over a six-month period from January through June, 2002. Petitioner established a four-tiered schedule of the kickbacks he demanded, with two of those tiers specifically devoted to Medi-Cal referrals. I.G. Ex. 4, at 7. He reviewed a list of actual referrals and applied a revised three-tiered kickback schedule with two Medi-Cal tiers, and at the same time prepared a customized and more expensive list of laboratory tests to be performed on his Medi-Cal referrals. I.G. Ex. 4, at 11. He received the kickbacks, but expressed some dissatisfaction that their amounts had not been in exact compliance with the schedule he had demanded. I.G. Ex. 4, at 12-13. This evidence is sufficient to establish the requisite nexus and common-sense connection between the conviction and the Medi-Cal program. Andrew Anello, DAB No. 1803 (2001); Neil R. Hirsch, M.D., DAB No. 1550 (1995); Paul R. Scollo, D.P.M., DAB No. 1498 (1994); Berton Siegel, D.O., DAB No. 1467. The I.G. has proven the second essential element.

Petitioner's principal reliance here is on the effect of CAL. PENAL CODE � 1203.4, by which his conviction was expunged on September 16, 2005. P. Ex. 4. He urges that the effect of that expunction, and the policy behind California's statutory plan, bar the application of the definition of "conviction" set out in section 1128(i)(1) of the Act. P. Br., at 5, 14-15; Petitioner's Response Brief (P. Res. Br.), at 1-6. Now, this forum has never denied that such dispositions might well represent rational criminal justice policy, but the operation of such a policy in California's criminal courts does not protect Petitioner here. For purposes of this remedial exclusion sanction, created and authorized by federal statute and intended to protect federally-funded health programs, federal law defines "conviction." Travers v. Shalala, 20 F.3d 993 (9th Cir. 1994); Carolyn Westin, DAB No. 1381 (1993), aff'd sub nom. Westin v. Shalala, 845 F. Supp. 1446 (D. Kan. 1994); Theresa A. Bass, DAB CR1397 (2006); Gerald David Austin, DAB CR1207 (2004).

Three of the federal statutory definitions squarely apply. Petitioner's guilty plea was accepted (I.G. Ex. 6, at 2) in satisfaction of the definition at section 1128(i)(3) of the Act. The court found Petitioner guilty upon his plea (I.G. Ex. 6, at 2) in satisfaction of the definition at section 1128(i)(2) of the Act. A judgment of conviction was entered against Petitioner and later expunged (I.G. Exs. 5, 6; P. Ex. 4) in satisfaction of the definition at section 1128(i)(1) of the Act. The Departmental Appeals Board (Board) has very recently revisited the broad question of state definitions of "conviction" in the context of section 1128(i) of the Act, and has reaffirmed in comprehensive language the fundamental principle that the Act's definitions apply in these circumstances. Marc Schneider, D.M.D., DAB No. 2007 (2005). The Board's analysis represents the latest word in this debate, and it supports the I.G.'s position: Petitioner has been convicted as that term is defined by federal law and is subject to exclusion. ⁽¹⁾

The point is not clearly developed, but Petitioner also appears to find significance in the fact that he pleaded nolo contendere to a misdemeanor-level violation of CAL. BUS. & PROF. CODE �650, and not to the felony-level violation that had originally been charged. P. Br., at 2-4, 10-12. The level of the violation charged in Count 6 was negotiated and amended on the prosecution's motion. I.G. Ex. 6, at 1. The motion, and the court's amendment of the offense to misdemeanor level, were accomplished under CAL. PENAL CODE �17(b)(4), which simply allows the prosecution to stipulate that an offense will be treated as a misdemeanor. The provision does not alter the facts as charged. The factual recitations in Count 6 and I. G. Ex. 4 remain applicable; no variance or failure of proof as to any of them is apparent. Since section 1128(a)(1) of the Act makes no distinction whatsoever between felony convictions and misdemeanor convictions, there is no significance of benefit to Petitioner in the matter. Lorna Fay Gardner, DAB 1733 (2000); Tanya A. Chuoke, R.N., DAB No. 1721.

Petitioner's discussion of the nature of his conviction includes the concession that CAL. BUS. & PROF. CODE �650 can be characterized as an anti-kickback statute. The Board has so characterized it. Michael Blake Runyon, D.P.M., DAB No. 1555. Having made that strategic concession, however, Petitioner goes on to argue that his liability for exclusion should have been assessed under the permissive-exclusion provisions of section 1128(b)(7) of the Act. P. Res. Br., at 7-8. That argument is erroneous, and it is refuted by an extensive body of authority in this forum. Once a conviction is shown to be within the ambit of section 1128(a)(1), the mandatory operation of that section bars any petitioner, including this one, from claiming that other more lenient, more discretionary, or more favorable exclusionary provisions should be applied instead. Even in situations where the underlying conviction could plausibly be argued to fall within both section 1128(a)(1) and one or more of the permissive exclusions or three-year exclusion periods of section 1128(b)(1)-(15), the rule is clear: if section 1128(a)(1) fits, then the mandatory exclusion and mandatory minimum period prescribed by section 1128(a)(1) must be imposed. Neither the I.G. nor an Administrative Law Judge may choose to proceed otherwise. Kenneth M. Behr, DAB No. 1997 (2005); Stacy Ann Battle, D.D.S., et al., DAB No. 1843 (2002); Tarvinder Singh, D.D.S., DAB No. 1752 (2000); Lorna Fay Gardner, DAB No. 1733; Douglas Schram, R.Ph., DAB No. 1372 (1992); Niranjana B. Parikh, M.D., et al., DAB No. 1334 (1992); David S. Muransky, D.C., DAB No. 1227 (1991); Leon Brown, M.D., DAB No. 1208 (1990); Napoleon S. Maminta, M.D., DAB No. 1135 (1990); Charles W. Wheeler, et al., DAB No. 1123 (1990); Jack W. Greene, DAB No. 1078 (1989), aff'd sub nom. Greene v. Sullivan, 731 F.Supp. 835 (E.D. Tenn. 1990).

Petitioner represents that "[n]o Medicare, Medicaid or other federal or state health care funds are involved in these alleged violations of BPC � 650." P. Br., at 4. He does not develop this point beyond the implicit suggestion that the alleged non-inclusion of program funds in the actual kickback payments would keep his conviction outside the reach of section 1128(a)(1). P. Br., at 13. If the argument were made explicit and were factually correct it still would not prevail. The essential elements in an exclusion based on a conviction "related to the delivery of an item or service under . . . any state health care program" are set out above, and they do not include a showing of loss to a protected program, or the direct involvement of program funds in the criminal activity. Boris Lipovsky, M.D., DAB No. 1363; Brij Mittal, M.D., DAB CR1012 (2003); Efstathios Mark Varidin, D.O., DAB CR971 (2002); José Grau, M.D., DAB CR930 (2002).

His briefing and one of Petitioner's exhibits portray him as a respected member of his community who has an otherwise-unblemished history. P. Br., at 2, 15-18; P. Ex. 1. He asserts that the sanction of exclusion is disproportionate to the underlying seriousness of his crime and is therefore unconstitutional. P. Br., at 12. He also urges, while not quite conceding that the conviction should be counted at all, that the date of its expunction should also toll the end of the exclusion, approximately four months after it began. P. Br., at 14-15; P. Resp. Br., at 1-7. For all three reason he believes that the period of his exclusion should be reduced. I have no reason to doubt that Petitioner enjoys a good reputation, but neither have I the authority to weigh the proportionality of Petitioner's crime against the effects of his exclusion on the scale of constitutionality. Kenneth M. Behr, DAB No. 1997. Moreover, unless the I.G. proposes to enhance the period of exclusion beyond the mandatory minimum period, I simply may not consider mitigating factors of any sort in assessing the reasonableness of the five-year period. 42 C.F.R. �1001.102(c). Salmon Daniels, DAB CR1380 (2005); Emma Voloshin, M.D., DAB CR1179 (2004); Diane C. Turner, M.D., DAB CR1176 (2004); Carl Jeffrey Boyette, DAB CR1165 (2004); Karl Eric Swanson, M.D., DAB CR1002 (2003); Diane Amicucci, L.P.N., DAB CR540 (1998); Robert L. Howard, DAB CR459 (1997); Charles Addo Yobo, M.D., DAB CR361 (1995); Doina M. Buzea, M.D., DAB CR310 (1994). The I.G. has not proposed an enhanced period of exclusion here.

The five-year period of exclusion proposed in this case is the irreducible minimum required by section 1128(c)(3)(B) of the Act. As a matter of law it is not unreasonable. 42 C.F.R. �1001.2007(a)(2). Neither the Departmental Appeals Board nor I may reduce it. Mark K. Mileski, DAB No. 1945 (2004); Salvacion Lee, M.D., DAB No. 1850. And since the expunction of Petitioner's conviction is of no consequence in this matter, its effective date has no effect on the exclusion or its length.

Petitioner warns that I should commit procedural error of constitutional dimension if I resolve the merits of this case on the I.G.'s Motion for Summary Affirmance. P. Br., at 6-7. I have no authority to consider the question of constitutionality, but to respond to Petitioner's point I need not do so: it is well-established in this forum that summary disposition 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. Summary disposition is explicitly authorized by the terms of 42 C.F.R. � 1005.4(b)(12), and this forum looks to FED. R. CIV. P. 56 for guidance in applying that regulation. Tanya A. Chuoke, R.N., DAB No. 1721; David A. Barrett, DAB No 1461 (1994); Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367; 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 disposition, there is neither a right to--nor the need of--a full evidentiary hearing. Surabhan Ratanasen, M.D., DAB No. 1138 (1990); John W. Foderick, M.D., DAB No. 1125. The material facts in this case are undisputed, clear, and unambiguous. They support summary disposition as a matter of law, and this Decision issues accordingly.

VI. Conclusion

For the reasons set out above, the I.G.'s Motion for Summary Affirmance should be, and it is, GRANTED. The I.G.'s exclusion of Petitioner Amable de los Reyes Aguiluz, Jr., M.D., from participation in Medicare, Medicaid, and all other federal health care programs for a period of five years, pursuant to the terms of section 1128(a)(1) of the Act, 42 U.S.C. � 1320a-7(a)(1), is thereby sustained.

Richard J. Smith

Administrative Law Judge

1. Although in somewhat different contexts, the Ninth Circuit has repeatedly held that California convictions expunged pursuant to CAL. PENAL CODE � 1203.4 remain cognizable as bases for actions under federal statutes and regulations. Cedano-Viera v. Ashcroft, 324 F.3d 1062 (9th Cir. 2003); Ramirez-Castro v. INS, 287 F.3d 1172 (9th Cir. 2002); Murillo-Espinoza v. INS, 261 F.3d 771 (9th Cir. 2001); Lujan-Armendariz v. INS, 222 F.3d 728 (9th Cir. 2000); Carr v. INS, 86 F.3d 949 (9th Cir. 1996). In United States v. Hayden, 255 F.3d 768 (9th Cir. 2001), that Circuit catalogued many situations in which California courts and administrative bodies have likewise treated such convictions as cognizable for special purposes comparable to the one at issue here.