Roji Esha, DAB No. 3076 (2022)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

The Inspector General (I.G.) appeals the May 23, 2022 decision by an Administrative Law Judge (ALJ).  Roji Esha, DAB CR6083 (2022) (ALJ Decision).  The ALJ affirmed the I.G.’s determination to exclude Esha (Petitioner) from participation in all federal health care programs pursuant to section 1128(a)(1) of the Social Security Act (Act), which mandates exclusion of “[a]ny individual . . . [who] has been convicted of a criminal offense related to the delivery of an item or service under title XVIII [Medicare] or under any State health care program.”  The ALJ also found that the I.G. had established the presence of two aggravating factors in 42 C.F.R. § 1001.102(b)(5) and (b)(9) upon which the I.G. had authority to lengthen the minimum five-year exclusion period that must be imposed, as in Petitioner’s case, for a section 1128(a)(1) exclusion, but that Petitioner had not established any mitigating factor in 42 C.F.R. § 1001.102(c) to support a reduction or offsetting of the effect of the lengthened exclusion period.  Despite concluding that the I.G. had established two aggravating factors, and that Petitioner had not established any recognized mitigating factors, the ALJ determined that excluding Petitioner for seven years would be unreasonable, and reduced that period to five years and six months. 

For the reasons discussed below, we affirm the ALJ’s decision in part and reverse in part.  We affirm that part of the ALJ’s decision which concluded that the I.G. had a lawful basis to exclude Petitioner under section 1128(a)(1) of the Act as legally sound, though we make one correction to the ALJ’s conclusion that “Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under the Medicare program requiring exclusion under” section 1128(a)(1) of the Act.  ALJ Decision at 4 (ALJ’s bolding removed) (our italics).  Petitioner was convicted of two offenses under separate counts in violation of state law, and both offenses were related to the delivery of a health care item or service under the California Medicaid program.  Because either offense (both of which resulted in a conviction) would support exclusion under section 1128(a)(1), we agree with that part of the ALJ’s conclusion which stated that Petitioner was convicted of a criminal offense.  However, we modify the remainder of that conclusion to make clear that the conviction was related to the delivery of a health

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care item or service under Medicaid, a state health care program, not the Medicare program.   

We also affirm the ALJ’s conclusion that the I.G. established the two aggravating factors in 42 C.F.R. § 1001.102(b)(5) and (b)(9), with no cognizable mitigating factors, and that the I.G. had a basis to lengthen the mandatory minimum exclusion period.  However, we reverse that part of the ALJ’s analysis concerning the aggravating factor in 42 C.F.R. § 1001.102(b)(9) and the ALJ’s determination to reduce the length of Petitioner’s exclusion period to five years and six months.  The ALJ’s analysis of the aggravating factor in section 1001.102(b)(9) is legally erroneous, and that error was the foundation for the ALJ reducing the seven-year exclusion period.  We determine that a seven-year exclusion period is reasonable and reinstate that period as imposed by the I.G.

Legal Background

Section 1128(a) of the Act mandates the exclusion of individuals or entities who have been convicted of certain types of criminal offenses from participating in Medicare, Medicaid, and other federal health programs.  An individual is “convicted” within the meaning of the statute when, among other things, “a judgment of conviction has been entered against the individual . . . by a Federal, State, or local court,” or “when a plea of guilty . . . by the individual . . . has been accepted by a Federal, State, or local court.”  Act § 1128(i)(1), (3).  Relevant here is section 1128(a)(1), which requires the I.G. to exclude any individual who the I.G. determines “has been convicted of a criminal offense related to the delivery of an item or service” under Medicare or under any state health care program.  Accord 42 C.F.R. § 1001.101(a).¹  “State health care program” is defined by section 1128(h)(1) of the Act to include “a State plan approved under title XIX,” that is, a state’s federally-approved Medicaid program.

The mandatory minimum period of an exclusion imposed under section 1128(a) is five years.  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a) (“No exclusion imposed in accordance with § 1001.101 will be for less than 5 years.”).  “Although a mandatory exclusion is based on a criminal conviction, the exclusion’s purpose is ‘not to punish the wrongdoer,’” but rather to “protect federal health care programs and program beneficiaries from ‘untrustworthy providers.’”  Kimberly Jones, DAB No. 3033, at 2 (2021) (quoting Edwin L. Fuentes, DAB No. 2988, at 14 (2020), aff’d, No. 4:20-cv-00026, 2021 WL 4341115 (W.D. Va. Sept. 23, 2021)).

The I.G. may extend the exclusion period beyond the statutory minimum if one or more aggravating factors, as enumerated in the regulations, are present.  See 42 C.F.R.

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§ 1001.102(b) (“Any of the following factors may be considered to be aggravating and a basis for lengthening the period of exclusion . . . .”).  Two such factors are relevant here: 

• “The sentence imposed by the court included incarceration[;]” and

• “The individual or entity 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 the basis for the imposition of the exclusion.”

42 C.F.R. § 1001.102(b)(5), (b)(9).  With respect to paragraph (b)(5), the regulation broadly defines “[i]ncarceration” to include not just “imprisonment” but also “any type of confinement with or without supervised release, including, but not limited to, community confinement, house arrest and home detention.”  Id. § 1001.2.

If, and only if, one or more aggravating factors are present, thus justifying an exclusion period longer than the minimum five years, certain specified mitigating factors may be considered as a basis for reducing the exclusion period to no less than five years.  42 C.F.R. § 1001.102(c); accord Fuentes at 2.  Only the three mitigating factors enumerated in this regulation may be applied to reduce the length of the exclusion period.  42 C.F.R. § 1001.102(c).  If the I.G. determines exclusion is warranted, the I.G. will send written notice to the excluded individual or entity identifying, among other things, the basis for the exclusion, the length of the exclusion, and the factors, if any, that the I.G. considered in determining the length of the exclusion period.  Id. § 1001.2002(a), (c).

An excluded individual may request a hearing before an ALJ, but only on the issues of: (i) whether the I.G. had a basis for the exclusion; and (ii) whether an exclusion longer than the required minimum period is “unreasonable” in light of any applicable aggravating and mitigating factors.  42 C.F.R. §§ 1001.2007(a)(1), 1005.2(a); see Gracia L. Mayard, DAB No. 2767, at 8 (2017).  In analyzing an exclusion period that is longer than the statutory minimum, the ALJ’s role is to review the length of the exclusion “de novo to determine whether it falls within a reasonable range, given the aggravating and mitigating factors and the circumstances underlying them.”  Sushil Aniruddh Sheth, M.D., DAB No. 2491, at 5 (2012) (citations omitted), appeal dismissed in part, affirmed in part, Sheth v. Sebelius, No. 13-cv-0448, 2014 WL 11813597 (D.D.C. Jan. 10, 2014), dismissed, Sheth v. Burwell, No. 14-5179, 2015 WL 3372286 (D.C. Cir. May 7, 2015), rehearing en banc denied, 2015 WL 3372286, D.C. Cir. May 07, 2015); accord Craig Richard Wilder, M.D., DAB No. 2416, at 8 (2011); Jeremy Robinson, D.C., DAB No. 1905, at 11 (2004) (When assessing whether an I.G.’s imposed exclusion period “falls within a reasonable range, the ALJ must weigh the aggravating and [any] mitigating factors” and “must evaluate the quality of the circumstances surrounding these factors.”) (citation omitted).  “The I.G. has ‘broad discretion’ in setting the length of an exclusion in a particular case, based on [the I.G.’s] ‘vast experience’ implementing exclusions.”

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Sheth at 5 (citing 57 Fed. Reg. 3298, 3321 (Jan. 29, 1992) (preamble to 42 C.F.R. Part 1001 explaining that constraints on the ALJ’s authority to review the length of an exclusion “is appropriate given [the I.G.’s] vast experience in implementing exclusions under these authorities”)).  Accordingly, as part of this de novo review, “[a]n ALJ may not substitute his or her judgment for that of the I.G. or determine a ‘better’ exclusion period.”  Sheth at 5 (citation omitted); see also Wilder at 8 (citations omitted).

The ALJ issues an “initial decision” based on the record developed before the ALJ.  42 C.F.R. § 1005.20(a).  A party dissatisfied with the ALJ’s “initial decision” may appeal that decision to the Board.  Id. § 1005.21(a).  The Board “will not consider any issue not raised in the parties’ briefs, nor any issue in the briefs that could have been raised before the ALJ but was not.”  Id. § 1005.21(e).  The Board’s standard of review on a disputed issue of fact is “whether the initial decision is supported by substantial evidence on the whole record.”  The standard of review on a disputed issue of law is “whether the initial decision is erroneous.”  Id. § 1005.21(h).

Case Background

Petitioner is a dietitian who, at the time of the events giving rise to this appeal, was enrolled as an In-Home Support Services (IHSS) Provider in Medi-Cal, California’s Medicaid program.  See I.G. Exhibit (Ex.) 7, at 1; Pet. Ex. 7 (Decl. of Roji Esha), ¶ 7.

On February 27, 2019, in a Felony Complaint filed in the Superior Court of the State of California, County of Sacramento (court), Petitioner was charged with committing crimes set forth in five counts.  I.G. Ex. 2 (Complaint), at 1-3; ALJ Decision at 4.  As pertinent here, Count 1, titled “Grand Theft,” alleged that Petitioner, from April 2015 to March 2016, “unlawfully took from the State of California property of . . . $18,193.46,” in violation of a provision of the California Penal Code.  I.G. Ex. 2, at 1.  Count 2, titled “Presenting false Medi-Cal IHSS claims,” alleged that over the same period Petitioner, “with intent to defraud, presented and caused to be presented for allowance and payment false and fraudulent claims for furnishing services under the Medi-Cal Act, to wit, time sheets for [IHSS] allegedly provided to [a named individual],”² also in violation of state law.  Id. at 2.

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On October 21, 2020, Petitioner entered a plea of guilty to misdemeanors of Counts 1 and 2 of the Complaint.  I.G. Ex. 3; ALJ Decision at 4.  On October 21, 2020, the court found that Petitioner had voluntarily pleaded guilty, and entered a judgment of guilty on both counts.  I.G. Ex. 3.  The court sentenced Petitioner to 90 days in jail, with “no objection to a Work Release Program;” imposed a three-year period of probation; and ordered Petitioner to pay restitution in the amount of $16,671.71.  I.G. Exs. 4 and 5; ALJ Decision at 5.³  Petitioner eventually served her sentence in the form of an electronic monitoring program, from which she was released after 46 days.  I.G. Ex. 9 (“Electronic Monitoring Program Status”).

By letter dated February 18, 2021, the California Department of Health Care Services (DHCS) suspended Petitioner from participating in and receiving reimbursement from Medi-Cal.  I.G. Ex. 7.  The letter stated that the suspension was effective October 22, 2020, “for an indefinite period of time,” and the basis for the suspension was Petitioner’s misdemeanor conviction for presenting false Medi-Cal claims (Count 2 of the Complaint).  Id. at 1.  The letter explained that DHCS had “determined [Petitioner’s] conviction to be substantially related to the qualifications, functions, or duties of a provider of service.”  Id.   

By letter dated August 31, 2021, the I.G. informed Petitioner that, effective September 20, 2021, she was being excluded from participation in Medicare, Medicaid, and all federal health care programs for seven years, pursuant to section 1128(a)(1) of the Act, based on her 2020 conviction “of a criminal offense related to the delivery of an item or service under Medicare or a State health care program . . . .”  I.G. Ex. 1, at 1.  The I.G. stated that Petitioner was being excluded for an additional two years based on the presence of two aggravating factors, which the notice specified as follows: 

1. The sentence imposed by the court included incarceration.  The court sentenced you to 90 days of incarceration.

2. The individual or entity 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 the basis for the imposition of the exclusion.  The State of California, Department of Health Care Service[s] suspended you from participating in the Medi-Cal program.

Id.

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ALJ Proceedings and Decision

In her request for a hearing before an ALJ (RFH), Petitioner acknowledged and did not dispute that there was a legal basis to exclude her from participation in federal health care programs, arguing only that the seven-year exclusion period be reduced.  RFH at 4-5. 

Following the scheduled prehearing conference, the parties submitted briefs and accompanying exhibits.⁴  In her brief, Petitioner again did not dispute the basis for her exclusion and acknowledged that the two aggravating factors identified by the I.G. in its exclusion notice “apply to Petitioner.”  P. Br. at 2.  Petitioner argued, however, that the seven-year exclusion should be reduced to five years, based on what she asserted were mitigating factors, i.e., lack of any criminal history, being unaware of the rules governing her Medi-Cal provider agreement, which she attributed to “English language limitations,” and her claim that her payment of “complete restitution” rendered the “loss” to Medi-Cal “less than $5,000,” thus making the mitigating factor in section 1001.102(c)(1)⁵ applicable.  Id. at 2-3. 

The ALJ admitted all exhibits submitted by the parties, and noted that although Petitioner had requested an oral hearing, she had not “proposed any witnesses.”  ALJ Decision at 2.⁶

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The ALJ determined that an in-person hearing “would serve no purpose in this matter given the current record and is therefore unnecessary,” and elected to decide the case based on the written record.  Id. 

Noting Petitioner’s acknowledgment that the I.G. had authority to exclude her based on her conviction, the ALJ concluded that the record “clearly establish[es] that Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under the Medicare program” pursuant to section 1128(a)(1), and, therefore, “must be excluded for a minimum of five years.”  ALJ Decision at 4, 5 (citation omitted).  The only issue for the ALJ to resolve was whether the seven-year period of exclusion imposed by the I.G. was reasonable.  Id. at 2 (citing 42 C.F.R. § 1001.2007).

The ALJ also concluded that the I.G. had “established two aggravating factors which together permit the IG to lengthen the exclusion beyond the five-year statutory minimum.”  ALJ Decision at 5 (Part V.D), 6.  Section 1001.102(b)(5) states:  “The sentence imposed by the court included incarceration.”  The ALJ concluded that “the IG has established Petitioner’s sentence included a period of incarceration” because the state court had “sentenced Petitioner to 90 days in the county jail . . . .”  ALJ Decision at 6.  The ALJ noted that Petitioner “ultimately served a total of 46 days in a remote electronic monitoring program.”  Id. (citation omitted).  She also stated that “the regulations define incarceration to include ‘any type of confinement with or without supervised release, including, but not limited to, community confinement, house arrest and home detention.’”  Id. (quoting 42 C.F.R. § 1001.2). 

With respect to the aggravating factor at section 1001.102(b)(9), the ALJ found that the record established that DHCS suspended Petitioner from Medi-Cal based on her conviction for making fraudulent IHSS claims (Count 2), which DHCS determined was “‘substantially related to the qualifications, functions, or duties of a provider of service.’”  ALJ Decision at 6 (quoting I.G. Ex. 7).  Echoing the regulation’s language, the ALJ concluded that the I.G. “established that Petitioner has been the subject of an adverse action by a State government agency . . . based on the same set of circumstances that serves as the basis for the imposition of the IG’s exclusion.”  Id.

The ALJ next concluded that Petitioner failed to meet her burden to prove the existence of any of the mitigating factors specified in section 1001.102(c), which permit the I.G. to shorten the exclusion period to no less than five years.  ALJ Decision at 6-8.  She noted that the I.G. had not identified, and thus did not consider, any mitigating factors, and that the factors Petitioner asserted were mitigating factors were not among those enumerated in the regulation.  Id. (citing 42 C.F.R. § 1001.102(c)).  Specifically, the ALJ rejected Petitioner’s argument that, by paying over $16,000 in “complete restitution,” Petitioner thus established the mitigating factor at paragraph (c)(1).  ALJ Decision at 7 n.2 (“Although Petitioner has been convicted of only two misdemeanor offenses, the loss to

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Medicare and the Medi-Cal program totaled $18,193.46, which is in excess of the $5,000 threshold allowed to apply this mitigating factor.”).

Despite having concluded there was a basis for exclusion and that the I.G. had established two aggravating factors which “together” permitted it to extend the exclusion period, the ALJ concluded that the I.G.’s extending of the exclusion period to seven years was unreasonable, and she reduced the exclusion period to five years and six months.  Id. at 8 (Part V.E).  She stated that, “in quality, the aggravating factors have little to no weight in demonstrating the further untrustworthiness of the Petitioner beyond that which can be assessed from the facts forming the basis of the exclusion itself.”  Id. at 9-10.

The ALJ’s conclusion that the seven-year period was unreasonable consisted of two subordinate conclusions concerning the two aggravating factors:

(1) Section 1001.102(b)(5) – “The length of incarceration imposed in the sentence was minimal and therefore it would be unreasonable for the period of exclusion to be lengthened by more than six months on these facts.” 

(2) Section 1001.102(b)(9) – “The I.G. failed to demonstrate that Petitioner’s suspension from Medi-Cal further evidences Petitioner’s lack of trustworthiness such that an increase in the length of exclusion would be reasonable.”

ALJ Decision at 10 (Parts V.E.1 and V.E.2).

In weighing the aggravating factor at section 1001.102(b)(5), the ALJ reiterated that Petitioner was sentenced to 90 days of incarceration, and that she “ultimately served only 46 days of remote electronic monitoring in lieu of custodial incarceration . . . .”  ALJ Decision at 10 (citations omitted).  She concluded that, “[g]iven the short period of incarceration in the sentence and an even shorter time served only via remote electronic monitoring, it would be unreasonable for the length of exclusion to be extended more than six months, and the IG could certainly have reasonably concluded to extend the exclusionary period for less than six months or not at all.”  Id. (citation omitted).

With respect to the aggravating factor at section 1001.102(b)(9), the ALJ concluded that Petitioner’s suspension from Medi-Cal was “an adverse action that does not further evidence that Petitioner is less trustworthy than had Medi-Cal not suspended Petitioner and only Petitioner’s conviction remained.”  ALJ Decision at 12.  Following from this, she concluded that extending Petitioner’s exclusion by any amount based on this factor would be unreasonable.  See id. (“[T]he IG has failed to demonstrate that any lengthening of Petitioner’s exclusion due to this aggravating factor would be reasonable.”). 

To support her conclusion regarding section 1001.102(b)(9), the ALJ began her analysis

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by reviewing a portion of the preamble from the 1998 rule that first promulgated the regulation.  ALJ Decision at 10-11.  In its original iteration, this aggravating factor was set out in section 1001.102(b)(8) – part of a compound aggravating factor (the other part addressing “other offenses”).  See Final Rule, 63 Fed. Reg. 46,676, 46,686 (Sept. 2, 1998).  As originally written, the regulation was set out in section 1001.102(b)(8) and read as follows:

“[w]hether the individual or entity was convicted of other offenses besides those which formed the basis for the exclusion, or 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 the basis for imposition of the exclusion.”

Id. at 46,686 (our emphasis).

The ALJ noted that in 2017, the I.G. promulgated another rule that amended the regulation and bifurcated these discrete aggravating factors, thus creating the two aggravating factors currently found at sections 1001.102(b)(8) (“other offenses”) and (b)(9) (“other adverse action,” as cited above), otherwise unchanged from the 1998 regulations.  ALJ Decision at 10 n.4 (citing 82 Fed. Reg. 4100, 4101, 4112 (Jan. 12, 2017)).  The ALJ examined the following extract of the preamble to the 1998 rule, from which she inferred an original intent by the I.G. that an “other adverse action,” to serve as evidence of additional untrustworthiness of the excluded individual under the regulations, must be based on a conviction or adverse action different from that which formed the basis for the I.G.’s exclusion:

While the language set forth in these sections is permissive, it is specifically designed to address the issue of an individual’s or entity’s trustworthiness.

*    *    *

The intent of the revised language is to allow the OIG to increase the length of exclusion if an individual or entity was convicted of other offenses at the same time as he or she was convicted of the offense that served as the basis for the exclusion.  Inclusion of this aggravating factor will permit the OIG to increase a length of exclusion when an individual is convicted of Medicare fraud and any other offense, such as drug distribution or income tax evasion.  The aggravating factor will take into consideration separate and different types of convictions that occurred concurrently; we do not intend to use the basis of the OIG exclusion more than once as a factor in lengthening an exclusion.

ALJ Decision at 10-11 (quoting 63 Fed. Reg. at 46,680-81) (ALJ’s emphases).

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Next, inserting a phrase “convictions or adverse actions” that is not present in the above passage, the ALJ concluded from the above preamble passage that “the intent behind the [adverse action] aggravating factor is thus to allow the IG to lengthen the period of exclusion from five years if the facts forming the basis of the exclusion are such that they also result in multiple separate and different convictions or adverse actions in addition to the one forming the basis of the OIG’s exclusion, e.g., Medicare fraud and income tax evasion.”  Id. at 11 (ALJ’s emphasis).  The ALJ continued: 

Ostensibly, the idea being that if one is subject to separate and different convictions or adverse actions based on the same set of facts – but different from the conviction or adverse action forming the basis of the IG’s exclusion – the individual or entity may be more untrustworthy than if the circumstances underlying the basis of exclusion only resulted in a single conviction or adverse event.  And conversely, if a separate adverse event occurs but is based on the same conviction as the one that is the basis for the IG’s exclusion, then its occurrence has no additional bearing on an individual or entity’s trustworthiness – as it is already accounted for in the IG exclusion.

Id. (ALJ’s emphasis).

The ALJ reiterated that “there is no doubt that Petitioner’s Medi-Cal suspension is an adverse action that arises from the same circumstances as the basis of exclusion,” i.e., the requirements strictly mandated by section 1001.102(b)(9), but concluded that the I.G. nonetheless “failed to demonstrate that [the Medi-Cal suspension] is cause to assess Petitioner more untrustworthy than from solely the conviction forming the OIG’s basis for exclusion.”  Id.  She added that in contrast to “the preamble discussion excerpted above, Medi-Cal’s suspension of Petitioner is in fact based on the same conviction as the IG’s basis of exclusion and, in essence, is not separate and different from the IG’s exclusion.”  Id. (ALJ’s emphasis).  The ALJ also noted that because California law required “Petitioner’s suspension from Medi-Cal based on the same conviction that forms the basis of the IG’s exclusion” (id. at 12 n.5), and because that law was California’s response to a requirement in an HHS regulation (see 42 C.F.R. § 1002.210),⁷ the Medi- Cal suspension was thus not only based on the same conviction as was the I.G.’s

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exclusion, but “is essentially regulatorily subsumed within the IG’s mandatory bases of exclusion.”  ALJ Decision at 12.  She further stated that the suspension was “factually subsumed within the IG’s exclusion,” because whereas Medi-Cal would permit Petitioner to seek reinstatement after one year, the I.G.’s exclusion required her to “wait four and [a] half more years to seek reinstatement from the IG’s exclusion . . . .”  Id.

Following from the above analysis, the ALJ concluded that the I.G. “failed to demonstrate that any lengthening of Petitioner’s exclusion due to [the section 1001.102(b)(9)] aggravating factor would be reasonable,” and therefore reduced the length of her exclusion period from seven years to five years and six months.  ALJ Decision at 12.  

Board Proceedings and the Parties’ Arguments to the Board

The I.G. timely appealed the ALJ’s decision.  In its brief in support of its notice of appeal (I.G. Br.), the I.G. asks the Board to “set aside” the ALJ’s decision to reduce the length of Petitioner’s exclusion to five years and six months, and to affirm the I.G.’s seven-year exclusion period on the ground that it was “within a reasonable range” based on the two identified aggravating factors and in the absence of mitigating factors.  I.G. Br. at 15. 

The I.G. argues that the ALJ erred in her analysis of section 1001.102(b)(9) because her interpretation of the 1998 preamble was legally incorrect and that her decision to assign no weight to that factor based on her error (and thus no lengthening of the exclusion period based on that factor) was “not in accordance with the law.”  Id. at 9, 1-2.  The I.G. also discusses several Board decisions which, the I.G. says, do not support the ALJ’s reading of the preamble language, and clarify that a finding of an adverse action based on the same set of circumstances, such as the same conviction, does provide additional evidence of the excluded individual’s untrustworthiness and a basis to lengthen the required minimum exclusion period.  Id. at 11-14; see id. at 13 (stating that the “ALJ’s erroneous analysis of the relevant preamble language in the 1998 final rule and her erroneous application of it to the weighing of [section] 1001.102(b)(9) in assessing . . . untrustworthiness . . . would result in no weight ever being given to this aggravating factor when the ‘adverse action’ is based on the same conviction that is the basis for the exclusion”).

As for the aggravating factor at section 1001.102(b)(5), the I.G. “disagrees with the ALJ’s conclusion that [Petitioner’s] sentence to 90 days of incarceration and her serving of that sentence through 46 days of remote electronic monitoring was minimal and warrants only a six-month lengthening of her exclusion period . . . .”  I.G. Br. at 8.  Nevertheless, the I.G. does not directly challenge this aspect of the ALJ’s decision on appeal, stating that her “weighing of this factor is consistent with prior DAB precedent,” and, accordingly, the I.G. “does not assert that her decision as to this factor is erroneous.”  Id. (citation omitted).

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Petitioner filed a response brief in opposition (P. Resp.), in which she urges the Board to affirm the ALJ’s decision.  P. Resp. at 1, 7.  Petitioner’s principal argument is that the I.G., by relying (in part) on the Board’s decision in Fereydoon Abir, M.D., DAB No. 1764 (2001), discussed infra, wrongly focused on “dictum” and “gratuitous discourse” from that decision that had “no precedential value.”  P. Resp. at 1, 4-5.  She further argues that even if the ALJ’s analysis of section 1001.102(b)(9) was erroneous, the error was “harmless,” as the ALJ “could have assigned no weight” to that factor.  Id. at 5-6 (Petitioner’s emphasis (underlining replaced by italics)).  Petitioner posits, without citation to supporting authority, that when an ALJ determines an aggravating factor has been established, the ALJ is not required to assign any weight to that factor.  Id. at 6.

Standard of Review

The Board reviews a disputed issue of fact as to whether the ALJ “decision is supported by substantial evidence on the whole record.”  42 C.F.R. § 1005.21(h).  The Board reviews a disputed issue of law as to whether the ALJ decision “is erroneous.”  Id.  The term “substantial evidence” means “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”  Richardson v. Perales, 402 U.S. 389, 401 (1971) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).

Analysis

The Board’s role in an exclusion case “is limited to reviewing whether the ALJ’s decision on an issue of fact is ‘supported by substantial evidence on the whole record,’ and whether the ALJ’s decision on an issue of law is ‘erroneous.’”  Shaun Thaxter, DAB No. 3053, at 28 (2022) (quoting 42 C.F.R. § 1005.21(h)).  Having reviewed the ALJ’s decision in accordance with that standard, we conclude that the ALJ correctly determined that the I.G. lawfully excluded Petitioner from all federal health care programs under section 1128(a)(1) of the Act, though we make one correction to the ALJ’s conclusion (“Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under the Medicare program requiring exclusion under [section 1128(a)(1) of the Act].” (ALJ Decision at 4) (ALJ’s bolding removed)), as explained below.  We also conclude that the ALJ correctly determined the I.G. established two aggravating factors, either of which permits the I.G. to extend the required minimum five-year exclusion period.  We also conclude that the ALJ correctly determined Petitioner did not establish any recognized mitigating factor.  We therefore affirm the ALJ’s decision with respect to each of these conclusions. 

However, we also conclude that the ALJ’s decision to reduce Petitioner’s exclusion period to five years and six months as well as her underlying decision that the seven-year exclusion period was “unreasonable” were based on a legally erroneous interpretation and application of section 1001.102(b)(9).  The ALJ’s analysis and conclusion do not comport with the plain language of section 1001.102(b)(9), or the regulation’s history,

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and are not consistent with Board decisions.  Therefore, as discussed below, we reverse that part of the ALJ’s erroneous analysis concerning the aggravating factor in section 1001.102(b)(9) and her decision to reduce the exclusion period from seven years to five years and six months based on that error. 

Our reversing the ALJ’s decision in part for legal error on this issue leaves for resolution the question of whether the seven-year exclusion period imposed by the I.G. based on two proven aggravating factors, in the absence of any cognizable mitigating factor, is unreasonable.  The Board has the authority to address this question and to increase the exclusion period set by the ALJ.  See 42 C.F.R. § 1005.21(g) (stating that the Board may “decline to review the case, or may affirm, increase, reduce, reverse or remand any penalty, assessment or exclusion determined by the ALJ”).  In accordance with that authority and for the reasons explained below, we reinstate the seven-year exclusion period imposed by the I.G. as reasonable.⁸

A.       We affirm the ALJ’s conclusion that the I.G. had a lawful basis for excluding Petitioner under section 1128(a)(1) of the Act, for more than five years, based on the aggravating factors in 42 C.F.R. § 1001.102(b)(5) and 1001.102(b)(9), and in the absence of any mitigating factors in 42 C.F.R. § 1001.102(c), because it is supported by substantial evidence and is free of legal error.

1. Petitioner was convicted of two criminal offenses – grand theft and presentation of false Medicaid claims – both of which are related to the delivery of an item or service under a state health care program.

The record establishes that Petitioner was convicted of two criminal offenses – grand theft (Count 1) and presentation of false Medi-Cal (i.e., California Medicaid) claims (Count 2).⁹  See I.G. Exs. 2 and 3.  Petitioner has at all times conceded the fact and nature

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of her conviction on the two offenses, and before the ALJ she did not dispute the basis for her mandatory exclusion for at least five years.  See RFH at 4-5; P. Br. at 2-3.  Before the Board, Petitioner does not challenge these findings, nor could she. 

The record also establishes that Petitioner’s conviction for presenting false Medi-Cal claims for in-home support services (Count 2) and obtaining of over $18,000 in reimbursement from Medi-Cal (in other words, committing theft for which Petitioner was charged under Count 1) are inextricably “related to” the delivery of items or services under Medi-Cal.  See ALJ Decision at 4-5; I.G. Ex. 2 (Complaint).  This conclusion is well-supported by decisions of the Board that require a common-sense nexus (that is, the “related to” requirement in the statute) between the conviction in question and the delivery of an item or service under a state health care program (or Medicare, if applicable) for purposes of establishing the basis for exclusion under section 1128(a)(1) of the Act.  See, e.g., Summit S. Shah, M.D., DAB No. 2836, at 6 (2017) (“The Board has repeatedly held that the phrase ‘related to’ within the context of section 1128(a)(1) requires only that a common-sense nexus exists between the offense and the delivery of a health care item or service under the state health care program.”) (citations omitted).  The Board also has found the requisite nexus based on the filing of false Medicaid claims.  See, e.g., Olandis Moore, DAB No. 2963, at 5 (2019) (“[F]iling a false claim for payment under Medicaid, or facilitating such a filing, is ‘related to the delivery of an item or service’ under the program because a false claim is a ‘representation’ that the billing health care provider ‘has delivered a covered item or service to a program beneficiary.’”) (citation omitted); Joann Fletcher Cash, DAB No. 1725, at 3 (2000) (“False billing for items or services has been repeatedly held to be an offense related to the delivery of an item or service within the meaning of section 1128(a)(1).”) (citing cases). 

The record thus supports a requisite conviction for purposes of mandatory exclusion under section 1128(a)(1) of the Act.  We therefore affirm that part of the ALJ’s decision which concluded that the I.G. had a lawful basis to exclude Petitioner. 

We note, however, that the ALJ’s conclusion that “Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under the Medicare program requiring exclusion under” section 1128(a)(1) of the Act (ALJ Decision at 4 (ALJ’s bolding removed) and 5 (same language in the text under the bolded conclusion)) is not completely accurate.  As explained, the record evidence supports that Petitioner was convicted of grand theft and presenting false Medi-Cal claims.  Both offenses of which Petitioner was convicted are “related to” the delivery of a health care item or service under Medicaid, a state health care program, not the Medicare program.  Earlier in her decision, the ALJ correctly restated the section 1128(a)(1) language and noted that “[a] state health care program includes a state Medicaid program” (ALJ Decision at 3, citing Act § 1128(h)(1)) to indicate that Medi-Cal is a state health care program, but then omitted references to Medicaid as a state health care program in pages 4 and 5 of her decision.  We modify the ALJ’s conclusion accordingly.

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2. The ALJ correctly concluded that the I.G. was required by law to impose an exclusion period of at least five years.

Given the above threshold conclusions, the ALJ correctly determined that the I.G. was required by statute and regulation to exclude Petitioner for no less than five years, a finding Petitioner does not contest.  ALJ Decision at 5 (Part V.C).  See Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a) (“No exclusion imposed in accordance with § 1001.101 will be for less than 5 years.”).

3. The I.G. established two aggravating factors under 42 C.F.R. § 1001.102(b)(5) and (b)(9).

The ALJ concluded that the I.G. had met its burden of proof and established the presence of two aggravating factors, which, the ALJ concluded, “together permit the IG to extend the exclusion beyond the statutory five-year minimum.”  ALJ Decision at 5 (Part V.D). The two identified factors, as noted above, were:  (1) “The sentence imposed by the court included incarceration[;]” and (2) “The individual or entity 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 the basis for the imposition of the exclusion.”  42 C.F.R. § 1001.102(b)(5), (b)(9).  With respect to both factors, Petitioner conceded during ALJ proceedings that they had been established and therefore “apply to” her.  P. Br. at 2, 3.  Before the Board, Petitioner does not challenge these conclusions by the ALJ.

With respect to section 1001.102(b)(5), the ALJ correctly noted that the record reflected that Petitioner’s sentence included a term of incarceration for 90 days.  ALJ Decision at 6 (citing I.G. Exs. 4 and 5).  Although she noted that Petitioner served the sentence via an “electronic monitoring program,” she correctly recited the regulatory definition of “incarceration,” which encompasses both prison and non-prison forms of “confinement” such as “community confinement, house arrest and home detention,” and renders irrelevant any differences among them for the purpose of determining whether a petitioner was or was not sentenced to “incarceration.”  Id. (citing 42 C.F.R. § 1001.2); accord Jason Hollady, M.D., DAB No. 1855, at 10 (2002) (“[T]he evidence regarding work release does not undercut the ALJ’s finding that the I.G. proved that the aggravating factor of ‘incarceration’ existed.”); Vinod Chandrashekhar Patwardhan, M.D., DAB No. 2454, at 7 (2012).  For that reason, the ALJ correctly determined that the I.G. established that Petitioner’s sentence “included a period of incarceration.”  ALJ Decision at 6. 

With respect to the “other adverse action” aggravating factor in section 1001.102(b)(9), as discussed above, the ALJ concluded the I.G. established the presence of that factor, noting that DHCS suspended Petitioner’s participation in Medi-Cal because Petitioner “unlawfully claimed payment for IHSS claims when [she] did not actually provide such services to the beneficiary.”  ALJ Decision at 6 (citing I.G. Ex. 7 (DHCS’s notice of

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suspension)).  Reciting nearly verbatim the language from section 1001.102(b)(9), the ALJ correctly concluded from the above findings that the I.G. “established that Petitioner has been the subject of an adverse action by a State government agency . . . based on the same set of circumstances that serves as the basis for the imposition of the IG’s exclusion.”  Id.; see also id. at 11 (stating “there is no doubt that Petitioner’s Medi-Cal suspension is an adverse action that arises from the same circumstances as the basis of exclusion . . .”).

We agree with this conclusion.  We note that on appeal Petitioner does not challenge it or disavow her prior concession before the ALJ that this aggravating factor is established.  The language of section 1001.102(b)(9), by its plain meaning, permits the I.G. to extend the duration of the exclusion period if its two elements are satisfied:  (1) the excluded individual or entity “has been the subject of any other adverse action,” and (2) that the “adverse action is based on the same set of circumstances that serves as the basis for the imposition of the exclusion.”  The regulation requires only that these two elements be met, and Board precedent has made clear that the second element serves as additional evidence of the untrustworthiness of the excluded individual, as we discuss in further detail below.  See, e.g., Abir, DAB No. 1764, at 8 (noting that “a determination by a state regulatory body that the conduct in question was not only criminal but was a basis for exclusion from [Medicaid] has a bearing on trustworthiness”).

4. The establishment of two aggravating factors authorize the I.G. to extend the exclusion period to greater than the five-year statutory minimum.

Section 1001.102(a) provides that “[n]o exclusion imposed in accordance with [section] 1001.101 will be for less than 5 years.”  Yet, the I.G. may extend the mandatory minimum period of exclusion if it establishes and applies any of the aggravating factors specified in section 1001.102(b), which states that “[a]ny of the following factors may be considered to be aggravating and a basis for lengthening the period of exclusion[.]”  The ALJ correctly recognized this natural consequence of establishing any aggravating factors, when she reached the conclusion that the two factors “together permit the IG to lengthen the exclusion beyond the five-year statutory minimum.”  ALJ Decision at 5, 1 (recognizing “the IG proved the presence of two aggravating factors and is therefore permitted to extend the minimum exclusion period of five years . . .”).  Here, simply by establishing the two aggravating factors at issue – or either of the two – the I.G. was authorized to lengthen Petitioner’s exclusion period beyond five years.

5. The ALJ correctly determined that no cognizable mitigating factor existed.

Before the ALJ, Petitioner argued only one section 1001.102(c) mitigating factor existed, namely that in paragraph (c)(1), which permits the I.G. to reduce an exclusion period longer than the required minimum to not less than five years if it is established that the individual “was convicted of three or fewer misdemeanor offenses and the entire amount

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of financial loss (both actual loss and intended loss) to Medicare or any other Federal, State, or local governmental health care program due to the acts that resulted in the conviction, and similar acts, is less than $5,000.”  See P. Br. at 2-3.  The ALJ rejected this argument for the reasons stated above, as well as other proffered mitigating factors not recognized in section 1001.102(c).  ALJ Decision at 7-8, n.2.  Petitioner does not reprise these arguments on appeal to the Board¹⁰ and asserts no argument that any recognized mitigating factors are present, thus waiving such arguments.  See 42 C.F.R. § 1005.21(e) (“The [Board] will not consider any issue not raised in the parties’ briefs, nor any issue in the briefs that could have been raised before the ALJ but was not.”).  We conclude that the record supports the ALJ’s conclusion that Petitioner had not established any cognizable section 1001.102(c) mitigating factor.  Accordingly, there was no basis for the I.G. to reduce the lengthened exclusion period to no less than five years.

B.       We reverse the ALJ’s reduction of the period of exclusion imposed by the I.G. from seven years to five years and six months because the ALJ’s conclusion that a seven-year exclusion period was unreasonable was based on a legally erroneous interpretation and application of 42 C.F.R. § 1001.102(b)(9).

The ALJ agreed that Petitioner’s Medi-Cal suspension satisfied the elements of section 1001.102(b)(9) because it was a state-imposed “adverse action” and was “based on the same set of circumstances that serve[d] as the basis for the imposition of the IG’s exclusion.”  ALJ Decision at 6.  She also concluded that by establishing this aggravating factor, together with the aggravating factor at section 1001.102(b)(5), the I.G. was permitted to extend the exclusion period beyond five years.  Id. at 6, 11.  Nevertheless, she apparently concluded that the seven-year period of exclusion was unreasonable and reduced it by 18 months solely because the Medi-Cal suspension that was based on the conviction for false Medi-Cal billing (Count 2) was, as the ALJ stated, an “adverse action by a State government agency – DHCS – based on the same set of circumstances that serves as the basis for the imposition of the IG’s exclusion.”  Id. at 6.  The ALJ reasoned that because the adverse action (Medi-Cal suspension) and the exclusion were not based on “separate and different convictions,” the I.G. had “failed to demonstrate that [the suspension] is cause to assess Petitioner more untrustworthy than from solely the conviction forming the OIG’s basis for exclusion,” and “failed to demonstrate that any lengthening of Petitioner’s exclusion due to this aggravating factor would be reasonable.”  Id. at 11-12 (ALJ’s emphasis).

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The ALJ erred in her conclusion that the aggravating factor at section 1001.102(b)(9) warranted no additional lengthening of the exclusion period, as that conclusion is based on an erroneous interpretation and application of section 1001.102(b)(9) that directly contravenes the regulation’s plain language, its regulatory history, and the Board’s decisions.

Starting with the text of the regulation, section 1001.102(b)(9) does not support the ALJ’s reasoning that to warrant any additional exclusion lengthening, an “adverse action” must be based on a conviction or some other adverse action that is separate and different from the conviction or adverse action on which the exclusion was based.  The regulation states:  “The individual or entity 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 the basis for the imposition of the exclusion.”  The regulation does not require that the “adverse action” be based on anything “separate” or “different” from the conviction on which the I.G. exclusion is based or the circumstances surrounding that conviction.  Indeed, it requires exactly the opposite.  Here, the “same set of circumstances” forming the basis for both the Medi-Cal suspension and the I.G. exclusion was Petitioner’s conviction for grand theft and presenting false Medi-Cal claims.  The ALJ’s reasoning that there must also be evidence that the adverse action in question arose from a “separate and different” conviction from that giving rise to the exclusion thus contravenes the plain language of the regulation, and effectively renders null its requirement that the adverse action be based on the same set of circumstances as the basis for the imposition of the exclusion. 

To be clear, the bare fact of establishing the aggravating factor at section 1001.102(b)(9) permitted the I.G. to extend the exclusion period by some amount, as the ALJ noted.  ALJ Decision at 6; see 42 C.F.R. § 1001.102(b).  As the I.G. stated in the preamble to the regulation first implementing its exclusion authority:  “An aggravating factor is one that does not automatically exist in every case, but when it does exist, justifies a longer period of exclusion.”  57 Fed. Reg. at 3315 (our emphasis).  Yet, the ALJ here assigned no weight to this aggravating factor, and essentially overrode the I.G.’s establishment of this aggravating factor as a basis for lengthening the period of exclusion.  A conclusion such as this is little different from a conclusion that the aggravating factor had not been established at all.¹¹

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Indeed, the ALJ’s approach to the section 1001.102(b)(9) aggravating factor and rationale for according no weight to that established factor could be viewed as establishing a new mitigating factor that the law and regulations do not authorize.  Meaning, by her reasoning and decision to reduce the seven-year exclusion period to five years and six months, assigning no weight to the section 1001.102(b)(9) aggravating factor, the ALJ determined, essentially, that if an adverse action was based on the conviction or arose from the same set of circumstances culminating in the conviction on which the I.G. exclusion is based, that could be grounds for reducing an exclusion period exceeding the mandatory minimum the I.G. had set based on the presence of that factor.  Such an approach and rationale find no support in any exclusion authority which the ALJs and the Board are bound to follow.  The only mitigating factors that could be applied are those set out in the regulations.

Furthermore, as the ALJ recognized, in its original iteration this aggravating factor’s language was materially the same as its current iteration.  See ALJ Decision at 10 n.4.  As noted above, at the time of its promulgation the aggravating factor inhabited section 1001.102(b)(8), conjoined with the “other offenses” aggravating factor (now the sole occupant of section 1001.102(b)(8)).  63 Fed. Reg. at 46,686.  It is apparent from a plain reading of this early iteration that the “adverse action” aggravating factor had identical language and imposed identical requirements as the current section 1001.102(b)(9).  Then, as now, the language stated that the I.G. must show that the “other adverse action” was “based on the same set of circumstances that serves as the basis for imposition of the exclusion.”  It is also clear from the grammatical structure of this early regulation, i.e., the use of a comma followed by the word “or,” that the “other offenses” prong and the “adverse action” prong were completely independent of each other, aside from the fact that they shared the prefatory phrase “[w]hether the individual . . . .”  More important, in our view, the 1998 regulation, as with the current section 1001.102(b)(9), provided no textual basis for an ALJ to then discount the weight of that aggravating factor, once established, if the adverse action was not based on a different conviction from that which gave rise to the I.G. exclusion.

Given the challenges presented by the regulatory language, the ALJ has relied instead on the preamble to the 1998 regulations that created this aggravating factor.  She focused on the excerpted passage quoted above, supra at 9, and discerned from it an intent by the I.G. that adverse actions, to be evidence of additional untrustworthiness and thus warranting additional lengthening, must be based on “convictions or adverse actions” that are “separate and different” from the basis for the I.G. exclusion.  See ALJ Decision at 11 (“Ostensibly, the idea being that if one is subject to separate and different convictions or adverse actions based on the same set of facts – but different from the conviction or adverse action forming the basis of the IG’s exclusion – the individual or entity may be more untrustworthy than if the circumstances underlying the basis of exclusion only resulted in a single conviction or adverse event.”) (ALJ’s emphasis).

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However, this discerned intent is not reflected in the preamble’s actual text.  We restate the ALJ’s block-quoted passage here, to aid the reader:

While the language set forth in these sections is permissive, it is specifically designed to address the issue of an individual’s or entity’s trustworthiness.

*    *    *

The intent of the revised language is to allow the OIG to increase the length of exclusion if an individual or entity was convicted of other offenses at the same time as he or she was convicted of the offense that served as the basis for the exclusion.  Inclusion of this aggravating factor will permit the OIG to increase a length of exclusion when an individual is convicted of Medicare fraud and any other offense, such as drug distribution or income tax evasion.  The aggravating factor will take into consideration separate and different types of convictions that occurred concurrently; we do not intend to use the basis of the OIG exclusion more than once as a factor in lengthening an exclusion.

ALJ Decision at 10-11 (quoting 63 Fed. Reg. at 46,680-81) (ALJ’s emphases).

We first note that this passage was part of the I.G.’s response to the concerns of a number of commenters regarding the “other offenses” aspect of the proposed regulation, in particular, that the I.G. may be able to extend an exclusion period purely based on prosecutors’ strategic decisions to file multiple concurrent charges based on the same operative facts, and thus “charge essentially the same conduct under various offenses . . . .”  63 Fed. Reg. at 46,680.  Thus, it is apparent that the I.G. was addressing those discrete concerns, and made clear its intent that an increase of the length of an exclusion was authorized if the individual was “convicted of other offenses” at the same time as the conviction that was the basis for the exclusion; that “[t]he aggravating factor will take into consideration separate and different types of convictions that occurred concurrently[;]” and that “we do not intend to use the basis of the OIG exclusion more than once as a factor in lengthening the exclusion.”  Id. at 46,680-81 (emphases added). 

In other words, the 1998 preamble response addressed only the first part of section 1001.102(b)(8), which concerned other convictions (“Whether the individual or entity was convicted of other offenses besides those which formed the basis for the exclusion”), but not the language concerning “any other adverse action,” which appeared in the second half of the regulation.  In this regard, the ALJ’s insertion of the new phrase “convictions or adverse actions” appears to conflate the meaning of those two terms, and is not supported by the quoted preamble passage, in which “adverse action” is not even mentioned.  And, given the grammatical structure of the 1998 regulation, there is no

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textual or other basis to suppose that the I.G., in the passage above, might also have been addressing the “adverse action” aggravating factor without explicitly saying so.  Therefore, we find no support in this passage – in particular the ALJ’s highlighted phrases “separate and different” and “we do not intend to use the basis of the OIG exclusion more than once as a factor in lengthening an exclusion” – for the ALJ’s conclusion that the I.G. intended to allow a lengthening of an exclusion period only if the adverse action was based on a conviction different from that which was the basis for the I.G.’s exclusion. 

The ALJ’s interpretation of the meaning and intent behind her quoted preamble passage is rendered even more untenable by other pertinent regulatory history, which makes clear that the I.G. has intended for the two aggravating factors, previously combined as one aggravating factor in section 1001.102(b)(8), to be distinct from each other.  First, we note that absent from the passage quoted by the ALJ (and replaced by asterisks) was the following passage, which does address “other adverse actions” but does not support the ALJ’s reading:  “Thus, we are revising the language throughout part 1001 so that the factor will be relevant to the same conduct and circumstances that serves as the basis for the imposition of the [I.G.] exclusion.  We believe that the revised language is fairer, while allowing the [I.G.] to attain the intended goal of allowing an increased sanction only if the adverse action was related in some way to the original basis for the exclusion.”  63 Fed. Reg. at 46,680-81 (italics added).  This statement was given in response to particular concerns from some commenters that the new regulation, as first proposed, would permit the I.G. to extend an exclusion period based on any adverse action, even those that predated the basis for the I.G. exclusion or may have been imposed by “different agencies” that imposed adverse actions based “on very different policy considerations.”  Id. at 46,680.  We read the preamble language to mean that the I.G., in its response, intended to assuage these concerns and to make clear that any “other adverse action” would be relevant or a basis for lengthening an exclusion period “only if the adverse action was related in some way to the original basis for the exclusion.”  Id. at 46,681.

In addition, preamble language to the 2017 regulation that separated the “other offenses” and “adverse actions” factors further demonstrates that the I.G. had treated the two aggravating factors as distinct.  See Final Rule, 82 Fed. Reg. 4,100, 4101, 4112 (Jan. 12, 2017).  In the preamble, the I.G. stated that it “proposed separating the two concepts in the aggravating factor related to ‘Other Offenses and Adverse Actions’ to clarify that the first portion relates to additional convictions and the second portion relates to adverse actions by government agencies and boards.”  Id. at 4101.  Earlier, in the corresponding Proposed Rule, the I.G. expressed its intent even more clearly, stating that the aggravating factor “at [section] 1001.102(b)(9) . . . involves two separate concepts: Convictions for offenses other than the one resulting in exclusion and adverse actions by governmental entities other than the one resulting in exclusion.  Therefore, we propose

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separating this factor into two separate aggravating factors, renumbering them accordingly . . . .”  79 Fed. Reg. 26,810, 26,813 (May 9, 2014). 

We further note that over 20 years ago, the I.G. proposed, then ultimately withdrew, “a minor technical change” to section 1001.102, to “insert[] the word ‘even’ before the limiting clause ‘if the adverse action is based on the same . . .’” in section 1001.102(b)(9).  Final Rule, 67 Fed. Reg. 11,928, 11,929-930 (March 18, 2002).  A commenter expressed a belief that “the effect of this change would be that the exclusion period could be lengthened based on an adverse action, whether or not the action served as the basis for the imposition of the exclusion.”  Id. at 11,930.  The I.G. responded: “Upon further review, the OIG has decided not to make this change to § 1001.102(b)(9).”  Id.  The commenter raised a valid concern.  It is not clear why the I.G. proposed to insert the word “even,” but the I.G.’s acknowledgment of the commenter’s point and subsequent decision not to make the proposed change suggest that the I.G. intended section 1001.102(b)(9) to continue to permit the I.G. to use an adverse action as an aggravating factor only if it arose from the same circumstances underlying the basis for the I.G. exclusion. 

In short, the I.G.’s preamble statements regarding these aggravating factors make abundantly clear that the I.G. intended for the two factors to be discrete and independent of each other.  Those statements render untenable the ALJ’s view that the preamble passage she quoted, in particular the highlighted phrase “separate and different convictions,” in any way addressed the “adverse actions” aggravating factor. 

In addition, the ALJ apparently has not considered Board decisions that have directly addressed these issues and do not support the ALJ’s interpretation and application of section 1001.102(b)(9).  If the ALJ had considered them but determined those decisions were not applicable to or instructive on the issues that were before her, the ALJ’s decision did not adequately state and explain that determination.  The Board has made clear that section 1001.102(b)(9) only requires a finding of an “adverse action,” and that it be based on the “same set of circumstances.”  The Board has not stated that the adverse action must have been based on a conviction or some other adverse legal action different from the one on which the exclusion is based.  Indeed, we cannot do so precisely because any such statement would be in direct contravention of the regulation and, thus, in effect, amount to a refusal to follow a regulation which we and the ALJ are bound to follow.  See 42 C.F.R. §§ 1005.4(c)(1) (stating that the ALJ has no authority to “[f]ind invalid or refuse to follow Federal statutes or regulations or secretarial delegations of authority”); 1005.4(c)(4) (stating that an ALJ cannot “[e]njoin any act of the Secretary”); Ethan Edwin Bickelhaupt, M.D., DAB No. 2480, at 3 (2012) (“[t]he limitations on the ALJ’s authority in section[s] 1005.4(c)(1) and (4) also apply to the Board in its review of the ALJ [d]ecision”) (citations omitted).

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The Board has specifically rejected the ALJ’s broader point that if, as in Petitioner’s case, the adverse action is based on the same underlying conviction, then an ALJ may give it less weight or determine it lacks evidence of additional “untrustworthiness.”  In Narendra M. Patel, M.D., DAB No. 1736 (2000) aff’d, Patel v. Thompson, 319 F.3d 1317 (11th Cir. 2003), the Board rejected Dr. Patel’s argument that the suspension of his California medical license, even if based on the same underlying conviction as was his later I.G. exclusion, “cannot logically be aggravating,” and added nothing “new and additional,” as it was a natural consequence of his prior conviction and involved no additional agency investigation.  Id. at 13.  The Board explained that the plain meaning of the regulatory text concerning “adverse actions” reflected an underlying agency intent that directly contradicted Dr. Patel’s interpretation:

Dr. Patel’s analysis of what should be considered under this aggravating factor simply ignores the text of the regulation at [section] 1000.102(b)(8).  The regulation expressly provides that the adverse action to be considered as aggravating must be “based on the same set of circumstances” as those on which the exclusion is based.  It was thus contemplated that the fact of additional adverse action beyond the criminal conviction could be considered as additional evidence of the seriousness of the underlying conduct.  We do not find this unreasonable, since adverse actions by professional regulatory bodies, for example, may well be relevant to assessing how serious a risk a practitioner presents to patients or to payors.

Id. at 29.

The Board has since reaffirmed its interpretation of the “adverse action” aggravating factor while making clear that the I.G. specifically determined that the existence of an adverse action based on the same underlying circumstances as the I.G.’s exclusion could serve as additional proof of the excluded individual’s untrustworthiness.  See Abir at 8 (concluding that the 1998 preamble statement “we do not intend to use the basis of the OIG exclusion more than once as a factor in lengthening an exclusion” (quoted by the ALJ here) “in context,” “pertains solely to the first part of section 1001.102(b)(8), involving convictions . . .[;]” while “[i]n contrast, a determination by a state regulatory body that the conduct in question was not only criminal but was a basis for exclusion from [Medicaid] has a bearing on trustworthiness”) (citations omitted).

We disagree with Petitioner’s contention that the Board’s discussion of section 1001.102(b)(9) and its regulatory preamble in that case were “dictum” and “gratuitous discourse,” and thus that the I.G.’s reliance on Abir was misplaced.  See P. Resp. Br. at 3-5.  On the contrary, the Board’s discussion in Abir of the regulation’s preamble was essential to the Board’s broader holding that an “adverse action” under this aggravating factor does not need to be based on a “separate” conviction (as the ALJ has concluded

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here) and does serve as additional evidence of untrustworthiness and a basis for lengthening an exclusion period.  See Abir at 7-8. 

Moreover, Petitioner overlooked the I.G.’s discussion of other Board decisions, as well as the regulation’s text itself, which amply support the I.G.’s arguments to the Board and render indefensible the ALJ’s ultimate conclusion with respect to section 1001.102(b)(9), as we discuss herein.  In Brij Mittal, M.D., DAB No. 1894 (2003), we affirmed the analysis of Abir and “specifically noted . . . that a determination by a state regulatory body that the conduct in question was not only criminal but was a basis for an exclusion from a state Medicaid program could very well have a bearing on that individual’s trustworthiness to participate in federal health care programs.”  Id. at 5.  And, in Mayard, DAB No. 2767, a case involving an adverse action based on the same conviction as the conviction from which the exclusion arose, we affirmed Abir and Patel and stated that “adverse actions taken against Petitioner by the New York medical licensing board and the New York Medicaid program are additional evidence of Petitioner’s untrustworthiness and the seriousness of his criminal offense.”  Id. at 9.

Relatedly, we reject the ALJ’s broader point that in this case, Petitioner’s “adverse action” (Medi-Cal suspension) carries no weight beyond the mere fact of the conviction on which the suspension and the I.G.’s exclusion were based, and in essence amounted to a double-counting of that conviction, because the suspension was mandated by a state law that had been a response to a federal regulatory directive, and was thus “essentially regulatorily subsumed within the IG’s mandatory bases of exclusion.”  ALJ Decision at 12.  The Board has rejected this line of reasoning in cases where the petitioner challenged adverse actions that, they argued, were mere pro forma regulatory outgrowths of the conviction itself.  See, e.g., Gary Alan Katz, R.Ph., DAB No. 1842, at 12 & n.7 (2002) (stating that “[g]enerally we consider it reasonable to infer that a licensing body will base its decisionmaking on appropriate factors and make a considered judgment about what sanction to impose based on the facts of the particular case[,]” and stating that the aggravating factor regulation reflects a determination that the aggravating factor is “not present in every case and that, where [it is] present, [it is] a basis for increasing the mandatory exclusion period”); Jones, DAB No. 3033, at 13 (rejecting argument that the ALJ “assigned too much weight” to the section 1001.102(b)(9) factor because the fact of the conviction and consequent incarceration “basically guaranteed that the Appellant was going to face disciplinary action by the state pharmacy board,” and clarifying that “[t]he aggravating factor at section 1001.102(b)(9) . . . cannot be ignored or minimized simply because the ‘other adverse action’ (e.g., suspension of a professional license) was a natural result of the individual’s conviction and incarceration”). 

Here, DHCS’s decision, consistent with a state legislative mandate, to suspend Petitioner from Medi-Cal “for an indefinite period of time” still reflects that agency’s independent judgment that Petitioner’s conviction for defrauding Medi-Cal was sufficiently serious and “substantially related to the qualifications, functions, or duties of a provider of

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service” (I.G. Ex. 7, at 1), a decision which, as we have stated above, provides additional evidence of Petitioner’s untrustworthiness and thus grounds for the I.G. to lengthen the exclusion period.  Such a determination is not to be minimized just because such an agency decision was authorized by pre-existing state law and applied to Petitioner’s conduct. 

We note the ALJ stated that the Medi-Cal suspension was “factually subsumed within the IG’s exclusion” because Medi-Cal would permit Petitioner to seek reinstatement after one year, whereas the I.G.’s exclusion would require Petitioner to “wait four and [a] half more years to seek reinstatement from the IG’s exclusion . . . .”  ALJ Decision at 12.  The ALJ determined, and we agree, that the Medi-Cal suspension was based on Petitioner’s presenting false Medi-Cal claims (along with grand theft) for which Petitioner was convicted.  The I.G. then excluded Petitioner under section 1128(a)(1) based on that conviction.  However, to the extent the ALJ’s statement suggests that the timeframes for possible reinstatement into health care programs, to be authorized by a state body, such as DHCS, or the I.G., or that any differences between a state body’s and the I.G.’s reinstatement timeframes or rules, have any bearing on the assessment of the reasonableness of an I.G. exclusion period longer than the required minimum based on the aggravating factor in section 1001.102(b)(9), we reject that suggestion.  We know of no authority that would support such a proposition, and the ALJ cited no authority.           

In sum, we find no support for the ALJ’s conclusion that for this aggravating factor to serve as evidence of any additional untrustworthiness, the Medi-Cal suspension must have been based on a conviction separate or different from that which formed the basis for her exclusion.  The plain language of the regulation that sets out this aggravating factor (in its current and original forms), its regulatory history, and Board decisions reaffirm that the I.G. determined that a state adverse action that is based on “the same set of circumstances that serves as the basis” for the I.G. exclusion is, in and of itself, sufficient evidence of untrustworthiness and a valid basis for the I.G. to lengthen an exclusion period. 

The ALJ’s interpretation of section 1001.102(b)(9) and her application of it to Petitioner’s case is legally erroneous.  We therefore reverse that part of the ALJ’s decision discussing section 1001.102(b)(9) and her determination to reduce the I.G.’s exclusion period to five years and six months based on that error.  We explain below our rationale for reinstating the seven-year exclusion period imposed by the I.G.

C.       We reinstate the seven-year exclusion period imposed by the I.G. as it is within a reasonable range.

In conducting our analysis we evaluate and weigh both aggravating factors together.  The I.G. states that she does not contest the portion of the ALJ’s decision that weighed Petitioner’s sentence of incarceration pursuant to section 1001.102(b)(5), in which the

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ALJ allotted six months to that factor alone.  I.G. Br. at 10.  We are mindful that Petitioner, who submitted her brief after the I.G., confined her arguments to the ALJ’s analysis of section 1001.102(b)(9).  Yet, to properly assess the reasonableness of an exclusion period lasting longer than the mandatory minimum, we must perform a qualitative analysis, evaluating and weighing all established aggravating factors (and any cognizable mitigating factors, none of which are present here).  This approach does not permit us to simply disregard the aggravating factor in section 1001.102(b)(5) because the I.G. stated she was not contesting the ALJ’s analysis of it. 

1. Standard of review

To review the I.G.’s lengthening of Petitioner’s exclusion period by two years, we first must revisit the appropriate standard of review that applies to an ALJ’s – and in this case the Board’s – evaluation of an I.G.’s determination to lengthen an exclusion period beyond the five-year statutory minimum. 

As the Board has explained, the ALJ’s role is to “‘review[] the length of an exclusion de novo to determine whether it falls within a reasonable range, given the aggravating and mitigating factors and the circumstances underlying them.’”  Rosa Velia Serrano, DAB No. 2923, at 8 (2019) (quoting Sheth, DAB No. 2491, at 5), recon. denied, Ruling 2019-2 (April 25, 2019).  “Such an evaluation ‘does not rest on the specific number of aggravating or mitigating factors or any rigid formula for weighing those factors, but rather on a case-specific determination of the weight to be accorded each factor based on a qualitative assessment of the circumstances surrounding the factors in that case.’”  Jones, DAB No. 3033, at 7 (quoting Sheth at 5).  Importantly, despite this de novo posture, “[a]n ALJ may not substitute his or her judgment for that of the I.G. or determine a ‘better’ exclusion period.”  Jones at 8 (quoting Sheth at 5).  Rather, the ALJ’s “‘role is limited to considering whether the period of exclusion imposed by the I.G. was within a reasonable range, based on demonstrated criteria.’”  Thaxter, DAB No. 3053, at 26 (quoting Wilder, DAB No. 2416, at 8) (citation omitted).  Indeed, other than the question of whether there was a valid basis for the decision to exclude, the ALJ’s review of exclusion appeals is limited to deciding whether the exclusion period imposed by the I.G. beyond the five-year minimum is “unreasonable,” not what the ALJ decides is reasonable, or more reasonable, based on its own evaluation of the particular circumstances.  See 42 C.F.R. § 1001.2007(a)(1) (An excluded individual may request a hearing before an ALJ, but “only on the issues of: (i) whether the I.G. had a basis for the exclusion; and (ii) whether the length of the exclusion is unreasonable.”). 

Deference to the I.G.’s determination is thus built into the ALJ’s de novo assessment of whether the lengthened exclusion period imposed by the I.G. was “not within a reasonable range,” a rationale that was expressed in the preamble to the rule that first created the I.G.’s exclusion authority.  See 57 Fed. Reg. 3298, 3321 (Jan. 29, 1992) (stating that ALJ deference to I.G.’s “broad discretion” in setting the length of an

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exclusion “is appropriate, given the [I.G.’s] vast experience in implementing exclusions”).  The Board best summarized this deferential standard of review, and the regulatory rationale behind it, in Fuentes, DAB No. 2988, which we quote here:

[T]he ALJ is to review the record before [her] to determine what the evidence establishes as to the “demonstrated criteria,” i.e., the aggravating and mitigating factors, rather than review the record as it was when the I.G. issued the exclusion.  The factual determination is thus de novo, in that the appellant has the opportunity to show that the facts are not as they appeared before the I.G.  Moreover, the ALJ does not conduct an appellate-type inquiry into how the I.G. arrived at the particular length but determines whether the evidence presented before the ALJ by the I.G. and Appellant shows that that length is not unreasonable.

The ALJ’s de novo review authority is not thus an unconstrained mandate to select any period of exclusion that may appear reasonable to the ALJ.  The regulation [42 C.F.R. § 1001.2007(a)] provides constraints, as reflected in the preamble language quoted above [57 Fed. Reg. at 3321], that recognize the delegated discretion of the I.G. in the arena of exclusions.  The I.G. comes to the initial selection of an exclusion period with extensive experience reflecting a much wider base of excluded individual[s] and entities and of diverse facts and circumstances than those that could ever come before an ALJ (or the Board) in the appeals process.  Furthermore, the I.G. is charged with protecting the integrity of federal health care programs, and the exclusion mechanism is a remedial tool to this end rather than a punitive action.  . . .  Thus, the assessment of what period is necessary to achieve that purpose is appropriately assigned to the I.G. in the first instance, with the ALJ review focused on whether the facts as proven show the resulting period to be not unreasonable.

Fuentes at 9 (citations omitted); accord Thaxter at 26-27.  Likewise, the same standards govern our review of an I.G.’s lengthening of an exclusion period.  

In this case, we evaluate the I.G.’s modest two-year lengthening of Petitioner’s exclusion period to a total of seven years, by weighing the two aggravating factors identified by the I.G. as support for its decision (and which the ALJ concluded applied here).  We will make a case-specific evaluation of the present aggravating factors, and the absence of mitigating factors, to assess not what we determine is reasonable or preferable, but whether, based on the proven facts and circumstances, the exclusion period imposed by the I.G. was outside of a reasonable range.  Our analysis of whether the exclusion period is unreasonable will also incorporate, and be constrained by, the appropriate measure of deference to the experience and discretion of the I.G. in setting the exclusion length.

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Applying this standard in view of the deference appropriately accorded to the I.G.’s authority as discussed above, we conclude the seven-year exclusion period imposed by the I.G. is not unreasonable.  Given the undisputed facts establishing the two aggravating factors in sections 1001.102(b)(5) and 1001.102(b)(9), and in absence of any mitigating factors, the seven-year exclusion period represents a modest increase of two years above the mandatory minimum that is justified by the facts and circumstances of Petitioner’s case and lies within a reasonable range.

2. Petitioner’s suspension from Medi-Cal based on her state court conviction weighs in favor of the I.G.’s seven-year exclusion.

Regarding the aggravating factor at section 1001.102(b)(9), we have already affirmed the ALJ’s determination that this aggravating factor was established, and the record amply confirms that DHCS imposed an “other adverse action” against Petitioner (suspending Petitioner from Medi-Cal “for an indefinite period of time”), based on the “same set of circumstances that served as the basis for the imposition of the exclusion” (Petitioner’s state court conviction of two offenses, grand theft and presenting false Medi-Cal claims).  ALJ Decision at 6; I.G. Ex. 7.  Petitioner does not dispute these underlying facts, nor that this aggravating factor was established and applies to her.  P. Br. at 2-3.  

The Board has made clear that, on the whole, the “aggravating and mitigating factors reflect the degree or level of the . . . untrustworthiness” of the excluded individual or entity.  Robinson, DAB No. 1905, at 11 (citing Cash, DAB No. 1725, at 18); see Sheth at 16 (stating that “[t]he aggravating and mitigating factors . . . were designed to evaluate” the “threat [a p]etitioner poses to the Medicare program and its beneficiaries”).  As we explained in detail above, no legal authority supports the ALJ’s conclusion that this aggravating factor merits additional weight, and thus lengthening of an exclusion, only if the adverse action is based on a “separate and different” conviction from the one that was the basis for the exclusion.  In fact, by its design and language, this aggravating factor reflects the I.G.’s determination that an adverse action that is based on the same set of circumstances is an independent measure of the excluded individual’s untrustworthiness beyond the fact of the conviction, and thus merits substantial weight.  See Patel at 29 (noting that the aggravating factor at [then section 1001.102(b)(8)] contemplates that an “additional adverse action beyond the criminal conviction” may be “additional evidence of the seriousness” of the criminal offense supporting the exclusion); Abir at 8 (stating “a determination by a state regulatory body that the conduct in question was not only criminal but was a basis for exclusion from [Medicaid] has a bearing on trustworthiness”). 

Here, too, DHCS evaluated Petitioner’s conviction for defrauding the Medi-Cal program, and determined that this criminal conduct was “substantially related to the qualifications, functions, or duties of a provider of service” under the applicable state statute and therefore grounds to suspend her indefinitely from Medi-Cal.  I.G. Ex. 7.  Given the

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seriousness of the conduct for which Petitioner was convicted, and the rationale underlying the enactment of this aggravating factor, we agree that Petitioner’s Medi-Cal suspension is additional evidence of her untrustworthiness and weighs in support of the I.G.’s increase of her exclusion period from five to seven years.  As we also explained above, it is legally irrelevant that DHCS’s decision to suspend Petitioner from Medi-Cal was made possible by pre-existing state law.

3. Petitioner’s sentence to 90 days of incarceration further supports lengthening the exclusion period by two years.

With respect to the aggravating factor at section 1001.102(b)(5) – that Petitioner’s sentence included incarceration – the ALJ correctly concluded this factor was established based on the undisputed fact that Petitioner’s sentence in state court included a term of 90 days in jail.  We have affirmed this part of the ALJ’s decision, including that establishing this aggravating factor permitted the I.G. to lengthen the period of exclusion.  See 42 C.F.R. § 1001.102(b) (“Any of the following factors may be considered to be aggravating and a basis for lengthening the period of exclusion . . . .”).  Here, while the term of incarceration in Petitioner’s sentence was relatively short, the fact that her sentence included a term of incarceration alone serves as evidence of additional untrustworthiness, consistent with the regulatory mandate and the serious nature of Petitioner’s underlying conduct, and, together with the aggravating factor at section 1001.102(b)(9), supports the modest lengthening of two years imposed by the I.G.¹²

We note that Petitioner’s sentence of incarceration was on the shorter end of the scale.  Nevertheless, “section 1001.102(b)(5) states only that ‘[t]he sentence imposed by the court included incarceration’; it says nothing about the minimum duration of incarceration . . . .”  Leyva at 11.  It is the fact that the sentence included incarceration that demonstrates the excluded individual’s underlying conduct was deemed sufficiently serious that it merited this form of punishment.  See Gerald A. Snider, M.D., DAB No.

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1637, at 8 (1997) (stating “the focus of this aggravating factor . . . is the fact that the sentence included incarceration”); Jones at 8 (“Section 1001.102(b)(5) does not require proof of facts or circumstance other than that the sentence imposed by the court for a covered offense ‘included incarceration.’”); Cash at 16 (“[I]ncarceration reflects the court’s evaluation of the seriousness of the offense.”).  This principle is borne out by our decisions in which we have affirmed the lengthening of exclusion periods based in part on sentences that included incarceration terms of only a period of months.  See, e.g., Thaxter at 32 (affirming 10-year exclusion period and crediting ALJ’s determination that “a six-month sentence is not insignificant” and “[a]ny period of incarceration justifies increasing the period of exclusion”); Stacy Ann Battle, D.D.S., DAB No. 1843, at 7 (2002) (finding four months in a halfway house, followed by four months of home confinement, justified lengthening the exclusion period); Farzana Begum, M.D., DAB No. 2726, at 16 (2016) (noting that Petitioner’s sentence of incarceration, “even reduced to nine and a half months . . . , was relatively substantial”) (citation omitted), aff’d, No. 16-cv-9624, 2017 WL 5624388 (N.D. Ill. Nov. 21, 2017).¹³

We also consider that Petitioner served her term of incarceration in the form of “remote electronic monitoring” in lieu of a prison sentence.  As stated above, this fact is irrelevant to establishing this aggravating factor, as the governing regulation specifically includes “community confinement, house arrest, and home detention” among the types of confinement that qualify as “incarceration.”  42 C.F.R. § 1001.2; accord Hollady at 10 (“[T]he evidence regarding work release does not undercut the ALJ’s finding that the I.G. proved that the aggravating factor of ‘incarceration’ existed.”); Patwardhan at 7.  

We note that some Board decisions have supported placing less weight on this factor if the sentence involved a type of confinement other than imprisonment.  See, e.g., Juan Urquijo, DAB No. 1735, at 8 (2000) (“When the underlying issue is the trustworthiness of an individual . . . , it is reasonable to give less weight to the fact that . . . the court imposed primarily home detention . . . rather than imprisonment.”) (footnote omitted); Battle at 4 (regarding confinement in halfway house, noting that “less weight might be given to the aggravating factor . . . than would be the case if she had been imprisoned . . .”) (citation omitted).  However, the judge in this case did not require a sentence of remote monitoring – the sentence was in fact for 90 days in county jail – but rather checked a box on the sentencing form by the pre-typed phrase “Court has no objection to a Work Release Program” (I.G. Ex. 5), a program of undefined nature into which

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Petitioner eventually enrolled although when and how that determination was made is unclear from the record.  Therefore, we are unable to determine the extent to which Petitioner’s having served her sentence via “remote electronic monitoring” reflected the sentencing judge’s evaluation of the seriousness of her conduct or her trustworthiness, or instead was informed by separate factors altogether.  Accord Robert S.B. Lee, DAB No. 2614, at 7 (2015) (noting the court’s statement on sentencing form that the court “will not object to immediate administrative home confinement if deemed appropriate by the department of corrections,” and concluding non-prison sentence “would have a bearing on the weight of this aggravating factor only if home detention were the sentence imposed by the court”) (citation omitted).

In sum, we reiterate that it was not the sentence of incarceration alone, but that factor considered together with the adverse action under section 1001.102(b)(9), that support this modest exclusion lengthening as “within a reasonable range.”

Conclusion

We affirm the ALJ’s conclusion that the I.G. had a legal basis to exclude Petitioner under section 1128(a)(1) of the Act and that Petitioner must be excluded for at least five years.  We also affirm the ALJ’s conclusion that the I.G. established the presence of the two aggravating factors and that Petitioner did not establish any cognizable mitigating factor.  We reverse the ALJ’s conclusion that the seven-year exclusion period imposed by the I.G. was unreasonable.  We determine that the seven-year exclusion period imposed by the I.G. is reasonable.

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Endnotes

¹ We apply the regulations that were in effect when the I.G. issued her determination to exclude Petitioner.  See Anthony Joseph Moschetto, DAB No. 3030, at 2 n.1 (2021) (citation omitted).

² The record reflects that Petitioner was apparently providing in-home support services to her mother while her mother was living at home, yet continued to provide in-home support services, and seek reimbursement from Medi-Cal, even after her mother had moved into a nursing facility.  ALJ Decision at 4-5 (citing P. Ex. 7 (Esha Declaration), ¶¶ 8-9).  Petitioner thus improperly continued to claim Medicaid reimbursement for in-home support services after her mother had moved out of her home and into a nursing facility.

³ The record reflects that Petitioner paid this restitution amount in full, pursuant to her plea agreement.  See I.G. Ex. 4, at 2; I.G. Ex. 6 (Superior Court Minute Order).

⁴ Petitioner initially submitted six documents, labeled Petitioner’s Exhibits A-F, with her November 3, 2021 request for hearing.  Later, with her prehearing exchange filed after the I.G. filed her prehearing exchange, Petitioner submitted seven documents.  Petitioner did not simply resubmit the same six documents she had submitted with her request for hearing, plus one more.  Instead, some of the documents submitted with her prehearing exchange were different from those submitted with her request for hearing, and the seventh one was her March 14, 2022 declaration.  Upon Petitioner’s submission of her prehearing exchange, by email on March 15, 2021, a Civil Remedies Division attorney assisting the ALJ informed Petitioner’s counsel that Petitioner had not labeled her exhibits or submitted a list of proposed exhibits in accordance with the ALJ’s instructions in her standing order.  March 15, 2021 Email to Petitioner’s Counsel.  The email stated that the ALJ was “willing to accept [Petitioner’s] exhibits as is[,]” but instructed Petitioner to submit a proposed exhibit list that “should have a caption, title, and description of each exhibit, A-F, and include petitioner’s declaration (i.e., P. Ex. G).”  Id.  Petitioner then submitted a Proposed Exhibit List describing the seven exhibits and identifying each one by number (“P. Ex. 1,” etc.) alongside the labels “Exhibit A” through “Exhibit G.”  See P. Proposed Exhibit List.  Petitioner identified her own declaration as both “Exhibit G” and “P. Ex. 7.”  Id.  The ALJ admitted into the evidentiary record the seven numbered exhibits submitted with Petitioner’s prehearing exchange, and not the six mislabeled exhibits submitted with the request for hearing.  The ALJ cited to Petitioner’s exhibits by the numbers listed in her Proposed Exhibit List, and we have done the same here.

⁵ Section 1001.102(c)(1) authorizes the I.G. to reduce a section 1128(a) exclusion longer than the mandatory minimum to no less than the mandatory minimum if “the individual . . . was convicted of three or fewer misdemeanor offenses and the entire amount of financial loss (both actual loss and intended loss) to Medicare or any other Federal, State, or local governmental health care program due to the acts that resulted in the conviction, and similar acts, is less than $5,000[.]”

⁶ Section 6 of the ALJ’s Standing Prehearing Order states, in part, “A party must also submit prior written statements of witnesses for whom direct testimony will be solicited . . . .”  As noted earlier, Petitioner submitted her declaration as an exhibit, but she did not explicitly state anywhere in her submissions to the ALJ whether she was submitting her declaration as her written direct testimony, which would then be subject to cross-examination by the I.G. should the I.G. elect to do so.  In any event, the I.G. did not raise any argument or objection concerning Petitioner’s declaration or seek to cross-examine Petitioner on anything in her declaration.

⁷ Section 1002.210 provides, in pertinent part, that a state agency administering Medicaid “must have administrative procedures in place that enable it to exclude an individual or entity for any reason for which the Secretary [of Health and Human Services] could exclude such individual or entity under parts 1001 or 1003 of this chapter.”  The California law to which the ALJ referred, and which DHCS cited as the legal basis for suspending Petitioner from Medi-Cal, is Welfare and Institutions Code, section 14123(a), which states, in pertinent part, that the agency “shall suspend” from Medi-Cal “a provider of service for conviction of any felony or any misdemeanor involving fraud, abuse of the Medi-Cal program or any patient, or otherwise substantially related to the qualifications, functions, or duties of a provider of service.”  Id. § 14123(a)(1).

⁸ We have determined that we need not remand this case to the ALJ to reassess the issue of the reasonableness of the exclusion period.  No material facts related to the legal issues concerning the legal basis for exclusion or the aggravating and mitigating factors as relevant and material to determining a reasonable exclusion period longer than the mandatory minimum period are in dispute.  Both parties have had an opportunity to brief the Board on the remaining contested issue of reasonableness of the exclusion period where, as here, the ALJ reduced the seven-year exclusion period imposed by the I.G. to five years and six months.  We note, moreover, that neither party has asked us to remand this case to the ALJ to reassess this issue.  Accord Jason Hollady, M.D.,DAB No. 1855, at 10-12, n.1 (2002) (declining to remand appeal to ALJ and instead reducing exclusion length to eight years, concluding the ALJ’s affirmance of 10-year exclusion was unreasonable given the ALJ found one of the aggravating factors was not established); Raymond L. Shoemaker, DAB No. 2560, at 6-7 (2014) (declining to remand appeal and instead modifying ALJ’s extending of exclusion period to 12 years and affirming original 10-year term imposed by I.G., as it was within a “reasonable range”).

⁹ We read the ALJ’s decision as a whole to mean the ALJ found that a conviction was established based on a plea of guilty to two separate offenses.  See ALJ Decision at 4 (discussing separate charges brought under Counts 1 and 2, Petitioner’s plea of guilty to both counts, and the court’s acceptance of her guilty plea as to both counts), 7 n.2 (referring to “two misdemeanor offenses”).  As we have explained, the record evidence supports the conviction based on two offenses.

¹⁰ Before the ALJ, Petitioner cited no authorities as support for her proposition that program “loss,” as measured by court-ordered restitution, may be considered to have been reduced below the $5,000 threshold for purposes of this mitigating factor if, as in her case, the restitution was paid in full.  This argument is foreclosed by 42 C.F.R. § 1001.102(b)(1), which provides that “[t]he entire amount of financial loss to such government agencies or programs or to other entities . . . will be considered regardless of whether full or partial restitution has been made[.]”  See Paul W. Williams, Jr. & Grand Coteau Prescription, DAB No. 1785, at 3 (2001) (citing the quoted regulatory language in rejecting argument that the magnitude of the theft is irrelevant if the government succeeds in recovering the loss).

¹¹ To illustrate:  If one were to assume that the only aggravating factor at issue in this case were section 1001.102(b)(9), under such circumstances, the ALJ presumably would reduce any lengthened exclusion period imposed by the I.G. based on that single aggravating factor to the mandatory minimum five years, resulting in a decision for which there would be no adverse consequence to Petitioner in terms of the exclusion’s duration, despite the I.G.’s establishment of and reliance on the aggravating factor.  Such a determination would not comport with section 1001.102(b), which authorizes the I.G. to augment a mandatory minimum exclusion period based upon “[a]ny” aggravating factor enumerated under section 1001.102(b), effectively overriding the I.G.’s authority to set exclusion periods in accordance with the regulations.

¹² The ALJ did not explain her rationale for allotting a specific length of time – and acceptable reasonable range of zero to six months – to the aggravating factor in section 1001.102(b)(5) alone, a methodology of evaluation that does not align with the Secretary’s mandate that all established aggravating factors (and any mitigating factors) be evaluated together, to determine whether the I.G.’s total imposed exclusion length is “unreasonable” or is outside a reasonable range.  See Sheth at 5 (holding that a proper evaluation of the reasonableness of the total length of exclusion “does not rest on the specific number of aggravating or mitigating factors or any rigid formula for weighing those factors, but rather on a case-specific determination of the weight to be accorded each factor based on a qualitative assessment of the circumstances surrounding the factors in that case”).  Moreover, we reject the ALJ’s proposition that the I.G., if it wanted to, “could certainly have reasonably concluded to extend the exclusion period for less than six months or not at all” based on that aggravating factor despite having established it.  ALJ Decision at 10.  The ALJ provided no support for the idea that the I.G. could elect not to extend an exclusion period at all, despite establishing an aggravating factor that permits exactly that.  The I.G. has stated:  “An aggravating factor is one that does not automatically exist in every case, but when it does exist, justifies a longer period of exclusion.”  57 Fed. Reg. at 3315; see also Fuentes at 11-12 (quoting 57 Fed. Reg. at 3314-15).

¹³ We have rejected the proposition that the length of sentence eventually served, in contrast to the sentence first imposed, is relevant to establishing this aggravating factor or assessing its weight.  See Hollady at 6 (“. . . [T]hat Petitioner may not . . . have served the full nine-month period of incarceration . . . is irrelevant in determining whether the aggravating factor existed.  Under the regulation, the aggravating factor exists if the ‘sentence imposed by the court included incarceration.’”) (quoting 42 C.F.R. § 1001.102(b)(5)).  As we stated above, it is the fact that the sentence included incarceration that goes to the core question of the seriousness of the underlying conduct and, for I.G. exclusion purposes, provides a measure of the individual’s untrustworthiness.