Elena L. Polukhin, MD, PhD, DAB CR5216 (2018)

DECISION

Petitioner, Elena L. Polukhin, MD, PhD, is excluded from participating in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)), effective July 20, 2017.  There is a proper basis for exclusion.  Petitioner’s exclusion for five years is required by section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).  An additional exclusion of 5 years, for a total minimum exclusion of 10 years,1 is not unreasonable based upon the presence of three aggravating factors and the absence of any mitigating factors.

I. Background

The Inspector General (IG) of the United States Department of Health and Human Services (HHS) notified Petitioner by letter dated June 30, 2017, that she was being

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excluded from participation in Medicare, Medicaid, and all federal health care programs for 10 years.  The IG advised Petitioner that she was being excluded pursuant to section 1128(a)(4) of the Act, based on her conviction in the United States District Court, District of Minnesota (district court) of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance as defined under federal or state law.  The IG further advised Petitioner that the mandatory five-year exclusion was extended to 10 years because Petitioner’s acts that resulted in conviction caused a financial loss to a government agency or program of $5,000 or more, the acts were committed over a period of more than one year, and her sentence included incarceration.  IG Exhibit (IG Ex.) 1.

The IG notified Petitioner by letter dated June 20, 2018, that he amended the June 30, 2017 exclusion notice.  The IG advised Petitioner that he had determined that Petitioner’s conviction was for a criminal offense related to the delivery of an item or service under the Medicare or a state health care program.  The IG further advised Petitioner that while she was still excluded for 10 years, she was being excluded pursuant to section 1128(a)(1) of the Act, rather than section 1128(a)(4) of the Act.  The IG noted that aside from this change, the June 30, 2017 exclusion notice remained in effect.  IG Ex. 2.

Petitioner timely requested a hearing on June 22, 2018 (RFH).  The case was assigned to me on June 26, 2018, to hear and decide.  I convened a prehearing conference by telephone on July 11, 2018, the substance of which is memorialized in my order issued on July 12, 2018.  On August 8, 2018, the IG filed a motion for summary judgment and supporting brief and IG Exs. 1 through 5.  On September 17, 2018, Petitioner filed her brief (P. Br.) and an unmarked document that I treat as Petitioner’s exhibit (P. Ex.) 1.2   The IG filed a reply brief on September 24, 2018.  Petitioner did not object to my consideration of IG Exs. 1 through 5.  The IG did not object to my consideration of P. Ex. 1.  The offered exhibits are admitted as evidence.

II. Discussion

A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to an administrative law judge (ALJ) hearing and judicial review of the final action of the Secretary of HHS (Secretary).  The right to hearing before an ALJ is set forth in 42 C.F.R. §§ 1001.2007(a) and 1005.2, and the rights of both the sanctioned party and the IG to participate in a hearing are specified by 42 C.F.R. § 1005.3.  Either or both parties

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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).

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation in the Medicare and Medicaid programs any individual convicted of a criminal offense related to the delivery of an item or service under the Medicare or a State health care program.  42 C.F.R. § 1001.101(a).  Pursuant to section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)), an individual is convicted of a criminal offense when:  (1) a judgment of conviction has been entered against him or her in a federal, state, or local court whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no contest is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.

Exclusion for a minimum period of five years is mandatory for any individual or entity convicted of a criminal offense for which exclusion is required by section 1128(a) of the Act.  Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)).  Pursuant to 42 C.F.R. § 1001.102(b), an individual’s period of exclusion may be extended based on the presence of specified aggravating factors.  Only if the aggravating factors justify an exclusion of longer than five years, however, are mitigating factors considered as a basis for reducing the period of exclusion to no less than five years.  42 C.F.R. § 1001.102(c).

The standard of proof is a preponderance of the evidence, and there may be no collateral attack of the conviction that provides the basis of the exclusion.  42 C.F.R. § 1001.2007(c), (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).

B. Issues

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

Whether there is a basis for the imposition of the exclusion; and

Whether the length of the 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 undisputed or conceded findings of fact and analysis.

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

Petitioner requested a hearing on June 22, 2018, two days after the IG sent Petitioner the June 20, 2018 amended notice of exclusion. RFH at 1; IG Ex. 2.  Therefore, Petitioner’s request is timely pursuant to 42 C.F.R. § 1005.2(c).

There is no dispute 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 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 nonmoving party must allege facts that show that there are material facts that remain in dispute, and that those facts either affect the proponent’s prima facie case or 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 the fact finder must resolve.  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).

There are no genuine disputes of material fact in this case.  The facts that trigger exclusion under section 1128(a)(1) of the Act are conceded, undisputed, or not subject to dispute.  Petitioner argues that she did not intend to commit a crime, that the charges

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against her were the result of an unscrupulous witness seeking leniency from the government in his own criminal matter, that her criminal defense lawyers scared, blackmailed, and threatened her into pleading guilty, and that her charges are “non‑clinical and unrelated to the practice of medicine.  P. Br. at 2-3.  Based on these arguments, Petitioner requests to be removed from the Medicare exclusion list.  RFH; P. Br.  Petitioner’s arguments must be resolved against her as a matter of law.  Accordingly, summary judgment is appropriate.

3. Petitioner’s exclusion is required by section 1128(a)(1) of the Act.

a. Facts

On September 22, 2015, Petitioner was indicted by a grand jury of 30 felony criminal counts, including conspiracy to commit health care fraud, soliciting and receiving kickbacks, health care fraud, aggravated identity theft, and unlawful distribution and dispensing of controlled substances, all alleged violations of federal law.  The indictment alleged that “[f]rom at least February 2011 through at least December 2014, [Petitioner] participated in a scheme with others to fraudulently bill Medicare and Medicaid for topical pain-relief creams prescribed by [Petitioner].”  IG Ex. 3.

On December 28, 2016, the district court entered judgment.  The judgment reflects that Petitioner pleaded guilty to one felony-count of aiding and abetting soliciting and receiving kickbacks, in violation of 42 U.S.C. § 1320a-7b(b)(1)(A) and 18 U.S.C. § 2.  IG Ex. 4 at 1; IG Ex. 5 at 1.  The remaining counts were dismissed.  IG Ex. 4 at 1; IG Ex. 5 at 1.

As part of her plea agreement, Petitioner agreed that between June 2012 and March 2014, she knowingly sought and received kickback payments totaling $43,8853 from a pharmacy in exchange for writing prescriptions for Medicare and Medicaid beneficiaries to be filled by the pharmacy.  IG Ex. 4 at 2-3.  Petitioner also agreed that she knew that Medicare and Medicaid plans would pay, in whole or in part, for the prescriptions that she wrote and that the pharmacy filled.  IG Ex. 4 at 3.  Petitioner further agreed that during this period, Medicare and Medicaid insurance plans reimbursed the pharmacy $463,052.33 for those prescriptions.  IG Ex. 4 at 3.

The district court accepted Petitioner’s guilty plea, sentenced her to prison for 18 months, one year of supervised release, a $100 assessment, and $421,329.19 in restitution.  IG Ex. 5 at 1, 2, 3, 6.  As discussed hereafter, the United States Court of Appeals for the

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Eighth Circuit determined on appeal from Petitioner’s conviction that the amount of restitution reflects the district court findings of loss to Medicare and Medicaid.  United States v. Polukhin, 896 F.3d 848, 851, 853 (8th Cir. 2018).

b. Analysis

The IG cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory exclusion.  The statute provides:

(a) MANDATORY EXCLUSION.–The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):

(1) CONVICTION OF PROGRAM-RELATED CRIMES.–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.

Act § 1128(a)(1).  The statute requires that the Secretary exclude from participation in Medicare, Medicaid, and all federal health care programs any individual or entity:  (1) convicted a criminal offense; and (2) where the offense is related to the delivery of an item or service under Title XVIII or a State health care program.

There is no genuine dispute that Petitioner was convicted of a criminal offense and that the conviction is related to the delivery of an item or service under the Medicare and Minnesota state Medicaid program.  Petitioner pleaded guilty, her guilty plea was accepted, and a judgment of conviction was entered.  The facts Petitioner admitted as part of her plea agreement establish a nexus between her criminal conduct and the delivery of an item or service under both the Medicare and state Medicaid programs.

Accordingly, I conclude that there is a basis for Petitioner’s exclusion and exclusion is mandated by Congress pursuant to section 1128(a)(1) of the Act.

In her brief, Petitioner details her accomplishments in the medical field and offers, apparently in exchange for removal of her exclusion, to agree to “any punishment, restrictions, supervision” and expresses willingness “to work in underserved areas providing care to poor and indigent people” so she can work rather than “sit on welfare doing nothing.”  P. Br. at 1-2, 3.  Petitioner also attempts to challenge her conviction and the connection between her criminal conduct and her medical practice.  P. Br. at 2-3.  She claims her conduct was entirely legal, denies any intent to commit a crime, and tries to shift blame for her conviction to her criminal defense lawyers and a purportedly

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unreliable witness.  Without offering any evidence, Petitioner claims that the owner of the pharmacy that paid her kickbacks lied to the government about the nature of their joint kickback scheme in exchange for receiving leniency in his own criminal matter.  She accuses her lawyers of scaring, blackmailing, and threatening her into pleading guilty and of lying to her about the consequences of entering the guilty plea.  P. Br. at 2.  She also claims that her “charges are NON-CLINICAL and have nothing to do with the practice of medicine.”  P. Br. at 3.  Because I have found that there is a basis for Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act, her exclusion is mandatory.  Neither the IG nor I have any discretion not to exclude Petitioner in this case.  Petitioner’s arguments are simply irrelevant to whether she must be excluded.  I am bound to follow the federal statutes or regulations.  42 C.F.R. § 1005.4(c)(1).  Furthermore, Petitioner cannot collaterally attack her conviction in this proceeding.  42 C.F.R. § 1001.2007(d).

4. Pursuant to section 1128(c)(3)(B) of the Act, a five-year period of exclusion is mandatory.

I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(1) 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.  The IG has no discretion to impose a lesser period, and I may not reduce the period of exclusion below five years.

The remaining issue is whether it is unreasonable to extend Petitioner’s exclusion by an additional five years.  My determination of whether the period of exclusion in this case is unreasonable turns on whether:  (1) the IG has proven that there are aggravating factors; (2) Petitioner has proven that the IG considered an aggravating factor that does not exist or that there are mitigating factors that the IG failed to consider; and (3) the period of exclusion is within a reasonable range.

5. Petitioner has not presented evidence of any mitigating factors and does not allege the existence of any mitigating factors recognized by 42 C.F.R. § 1001.102(c).

6. Three aggravating factors authorized by 42 C.F.R. § 1001.102(b) are present that justify extending the minimum period of exclusion to 10 years.

The IG notified Petitioner that three aggravating factors are present in this case that justify an exclusion of more than five years:

(1) Petitioner’s acts that resulted in her conviction, or similar acts, caused or were intended to cause financial loss to a government agency or program or one or more entities of $5,000 or more;

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(2) Petitioner’s acts that resulted in her conviction, or similar acts, were committed over a period of one year or more; and

(3) The sentence imposed by the court included incarceration.

IG Ex. 1 at 2.

The IG correctly notes in his brief that the IG exclusion notice erroneously referred to a version of 42 C.F.R. § 1001.102(b)(1) that was no longer in effect.  IG Br. at 9 n.2.  The regulation was amended effective February 13, 2017, to increase the threshold financial loss to a government agency or program or other entity from $5,000 to $50,000.  82 Fed. Reg. 4100, 4100, 4112 (Jan. 12, 2017).  Under the revised regulation, it is an aggravating factor justifying a longer exclusion only if the acts that resulted in the conviction, or similar acts, caused or were intended to cause financial loss to a government agency or program or one or more entities of $50,000 or more.  42 C.F.R. § 1001.102(b)(1).  It is also important to note that the regulation does not limit the loss considered in arriving at the $50,000 to the acts for which one was convicted but also includes similar acts not adjudicated.  42 C.F.R. § 1001.102(b)(1).  The fact that the acts resulting in conviction, or similar acts, were committed over a period of one year or more and a sentence to incarceration remain authorized aggravating factors.  42 C.F.R. § 1001.102(b)(2), (b)(5).

It is undisputed that the district court ordered Petitioner to pay restitution of $421,329.19.  IG Ex. 5 at 6-9; P. Ex. 1 at 2.  Petitioner does not specifically argue before me that she was not responsible for the entire amount of restitution.  She does assert that she only pleaded guilty to receiving $660.  P. Br. at 2.  However, Petitioner also filed with her brief a copy of a brief filed in her appeal to the United States Court of Appeals for the Eighth Circuit challenging the district court’s imposition of restitution of $421,329.19.  P. Ex. 1.  Petitioner argued to the Eighth Circuit that her actions did not cause, either directly or proximately, $421,329 in losses to Medicare and Medicaid.  P. Ex. 1 at 2, 20-42.  Petitioner did not mention in her brief before me, filed on September 17, 2018, that two months earlier on July 19, 2018, the Eighth Circuit rejected Petitioner’s arguments and affirmed the restitution amount.4   Polukhin, 896 F.3d at 851, 853-54.  The Eighth Circuit concluded that the district court based the restitution amount on findings that Petitioner was involved in a larger conspiracy to defraud Medicare and Medicaid, even

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though she was not convicted on those counts of the indictment.  The Eighth Circuit went on to hold that the district court permissibly found Petitioner responsible for the entire amount of restitution.  The Eighth Circuit stated that the conspiracy to defraud directly and proximately cause Medicare and Medicaid to lose $421,329.19 and the district court was authorized to order Petitioner to pay that amount in restitution.  Polukhin, 896 F.3d at 851-853 (8th Cir. 2018).  The Departmental Appeals Board (Board) has previously accepted that an amount ordered as restitution constitutes proof of the amount of financial loss to a government program.  Laura Leyva, DAB No. 2704 at 9 (2016); Juan de Leon, Jr., DAB No. 2533 at 5 (2013); Craig Richard Wilder, DAB No. 2416 at 9 (2011).  The undisputed facts establish the existence of the first aggravating factor considered by the IG in that Petitioner’s acts that resulted in conviction, or similar acts for which she was not convicted but upon which restitution was based by the district court and upheld by the Eighth Circuit, caused a loss to Medicare and Medicaid of far more than $50,000.  42 C.F.R. § 1001.102(b)(1).

The undisputed facts also establish the existence of the second aggravating factor considered by the IG under 42 C.F.R. § 1001.102(b)(2).  In her plea agreement, Petitioner agreed, and she does not now dispute, that the acts resulting in her conviction, and similar acts, lasted for a period of almost two years, from June 2012 to March 2014.  IG Ex. 4 at 3.  Finally, it is undisputed that the district court sentenced Petitioner to prison for 18 months, which establishes the existence of the third aggravating factor considered by the IG under 42 C.F.R. § 1001.102(b)(5).  IG Ex. 5 at 2.

I conclude that the aggravating factors that the IG considered are established by the undisputed facts.  The aggravating factors are a basis for the IG to extend the period of exclusion beyond the minimum exclusion of five years.  42 C.F.R. § 1001.102(b)(1), (b)(2), (b)(5).

Pursuant to 42 C.F.R. § 1001.102(c), if the IG considers aggravating factors to extend the mandatory period of exclusion beyond five years, specified mitigating factors may be considered.  Petitioner’s arguments in her brief (P. Br. at 2-3) described above, do not fit within any of the authorized mitigating factors.  I conclude, as a matter of law that Petitioner has shown no genuine dispute as to the existence of a mitigating factor, even if, I accepted her allegations as true for purposes of summary judgment.

7.  Exclusion for 10 years is not unreasonable in this case.

The regulation states that the ALJ must determine whether the length of exclusion imposed is “unreasonable.”  42 C.F.R. § 1001.2007(a)(1).  The Board, however, has made clear 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 to determine whether the period of exclusion imposed by the IG falls within a reasonable range.  de Leon, DAB No. 2533

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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 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 made clear 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 make a decision as to 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 indicate no such adjustment is appropriate.  Thus, the Board has by these various prior decisions significantly limited my authority under the applicable regulation to judge the reasonableness of the period of exclusion.

Based on my de novo review, I conclude that a basis for exclusion exists and that the undisputed evidence establishes the three aggravating factors that the IG relied on to impose the 10-year exclusion.  Petitioner has not presented any evidence that shows a genuine dispute that the IG failed to consider any mitigating factor or considered an aggravating factor that did not exist.  I conclude that a period of exclusion of 10 years is in a reasonable range and not unreasonable considering the existence of three aggravating factors and the absence of any mitigating factors.  No basis exists for me to reassess the period of exclusion.

III.  Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all other federal health care programs for a minimum of 10 years, effective July 20, 2017.

1. Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after the period of exclusion expires. Reinstatement is not automatic upon completion of the minimum period of exclusion.
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2. Petitioner did not mark the page numbers on the pages of P. Ex. 1. For ease of reference, I cite to the document using the pagination of the Adobe™ file.
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3. The pharmacy paid the kickbacks to a charitable trust that Petitioner controlled. IG Ex. 4 at 2.
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4. Neither party offered this decision on Petitioner’s appeal of her conviction. I make no findings that Petitioner intentionally attempted to mislead by offering her brief without revealing that the adverse decision had issued. Petitioner’s conduct would be sanctionable if Petitioner was an attorney but she is not and the conduct will not be examined further. The IG’s oversight is inexplicable.
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