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                              Ronald Grusd, M.D., DAB CR5800 (2021)
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Ronald Grusd, M.D., DAB CR5800 (2021)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Civil Remedies Division





Ronald Grusd, M.D.
(OI File No. H-19-40659-9),
Petitioner,

v.

The Inspector General.
Docket No. C-19-1133Decision No. CR5800January 29, 2021

        
              
    

      DECISION

The Inspector General (IG) of the United States Department of Health and Human Services excluded Petitioner, Ronald Grusd, M.D., for 20 years from participation in all federal health care programs based on his conviction for a variety of offenses involving fraud.  Based on a reduction in Petitioner’s term of incarceration after a partially successful appeal in his criminal case, the IG concluded that a 14-year length of exclusion was more appropriate.  Petitioner sought a five-year length of exclusion.  For the reasons explained below, I affirm the exclusion imposed on Petitioner and reduce the 20-year exclusion to 14 years in length.

I.  Background

In a July 31, 2019 notice, the IG informed Petitioner that he was being excluded from participation in all federal health care programs under section 1128(a)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)), for a period of 20 years, due to his felony conviction in the United States District Court for the Southern District of California (District Court) of a criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service, including the performance of management or administrative

**Page 2**

services relating to the delivery of items or services, or with respect to any act or omission in a health care program (other than Medicare and a State health care program) operated by, or financed in whole or in part, by any Federal, State or local Government agency.  IG Exhibit (Ex.) 1 at 1.  The IG informed Petitioner that the length of exclusion is greater than five years because the following aggravating circumstances exist:

1.  The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more.  The acts occurred from about December 2012 to about September 2015.

2.  The sentence imposed by the court included incarceration.  The court sentenced you to 9 years and 364 days of incarceration.

3.  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.  Your license to practice as a medical doctor was suspended by the Medical Board of California.

IG Ex. 1 at 2.

Petitioner requested a hearing to dispute the exclusion.  On October 23, 2019, I held a telephonic prehearing conference, which is summarized in my October 24, 2019 Order Following Prehearing Conference and Setting Schedule for Prehearing Submissions.  At the conference, Petitioner stated that the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) had remanded his case to the District Court for resentencing, thus affecting one of the aggravating factors that the IG used to support the length of exclusion.  I established prehearing submission dates for the parties.

The IG timely submitted her prehearing exchange, which was composed of a brief (IG Br.) and five proposed exhibits (IG Exs. 1-5).  Because Petitioner was incarcerated and needed to be transferred to another facility so that he could be present for resentencing before the District Court, I extended the due date for Petitioner’s exchange.  Ultimately, I granted multiple extensions for Petitioner’s due date because the District Court rescheduled the resentencing hearing multiple times due to the COVID-19 pandemic.  During this time, Petitioner contracted COVID-19 and was released to home confinement.  Once the District Court completed resentencing, Petitioner filed his brief (P. Br.) and seven proposed exhibits (P. Exs. 1-7).  Those exhibits included evidence that the District Court reduced Petitioner’s sentence of incarceration from nearly ten years to four years.  The IG filed a reply brief (IG Reply) along with a document she marked as IG Exhibit 6.  That document indicates the IG was amending her exclusion notice in this case and reducing the length of exclusion imposed on Petitioner to 14 years.

**Page 3**

II.  Issues

1)  Whether the IG properly excluded Petitioner under 42 U.S.C. § 1320a-7(a)(3).

2)  If so, whether the length of exclusion imposed is unreasonable and, if not, what length of exclusion is appropriate.

III.  Jurisdiction

I have jurisdiction to adjudicate this case.  42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. §§ 1001.2007, 1005.2.

IV. Decision on the Record

I admit all of the proposed exhibits into the record without objection.  Standing Prehearing Order ¶ 12; *see*42 C.F.R. § 1005.8(c).

Neither party offered any witnesses, and both parties indicated that an evidentiary hearing is unnecessary in this case.  IG Br. at 10; P. Br. at 6.  Therefore, I decide this case based on the written record.  Standing Prehearing Order ¶¶ 11, 16.

V.  Findings of Fact

1.  The Medical Board of California (Medical Board) licensed Petitioner to practice medicine in the state of California on November 16, 1987.  IG Ex. 2 at 1; IG Ex. 5 at 1.

2.  On July 11, 2017, a grand jury empaneled by the District Court issued a 45-count Superseding Indictment that listed Petitioner as one of several defendants.  IG Ex. 2.

3.  The Superseding Indictment alleged that Petitioner was essentially the only officer of California Imaging Network Medical Group and Willows Consulting Company, both of which were indicted along with Petitioner.  IG Ex. 2 at 2-3.

4. The Superseding Indictment alleged Honest Services Mail Fraud, Honest Services Wire Fraud, Health Care Fraud, Travel Act violations, and a conspiracy to commit those crimes among the indicted defendants.  IG Ex. 2.

5.  The Superseding Indictment asserted that Honest Services Mail Fraud is an intentional scheme to defraud and deprive patients of the intangible right to their physician’s honest services, and to do so using mail sent via the United States Postal Service.  IG Ex. 2 at 6.

**Page 4**

6.  The Superseding Indictment asserted that Honest Services Wire Fraud is essentially the same as Honest Services Mail Fraud described above but using interstate wire rather than the mail to commit the crime.  IG Ex. 2 at 7.

7.  The Superseding Indictment asserted that Mail Fraud is an intentional scheme to defraud and obtain money or property by false representations, pretenses, or concealment of facts, and the scheme is executed by mail sent via the United States Postal Service.  IG Ex. 2 at 7.

8.  The Superseding Indictment asserted that Health Care Fraud is an intentional scheme to defraud a health care benefit program, and to obtain money and property owned by, and under the custody and control of, a health-care benefit program, by means of false and fraudulent pretenses and promises.  IG Ex. 2 at 7‐8.

9.  The Superseding Indictment alleged that the fraudulent purpose in this case was to obtain money from health care benefit programs by seeking payment for medical goods and services that were secured through a pattern of bribes and kickbacks to physicians.  IG Ex. 2 at 8.

10. The Superseding Indictment described a conspiracy where various health care providers would recruit patients on workers’ compensation benefits and refer them to entities, such as those operated by Petitioner, in exchange for Petitioner and others paying referral fees.  Petitioner used bank accounts with the entities he operated as part of this scheme and disguised referral fee payments as payments for “professional services.”  These payments were concealed from the patients and from insurance providers because such referral fees would have rendered the claims unpayable.  Petitioner and other co-conspirators submitted claims in excess of $20.3 million.  IG Ex. 2 at 8-12.

11. The Superseding Indictment alleged specific facts in support of the charges starting in or about 2010 and continuing into 2015.  IG Ex. 2 at 12-27.

12. Following a trial, on December 12, 2017, a jury found Petitioner guilty of the following criminal offenses (IG Ex. 3; IG Ex. 4 at 1):

Conspiracy to Commit Honest Services Mail Fraud, Mail Fraud, Honest Services Wire Fraud, Wire Fraud, and Health Care Fraud in violation of 18 U.S.C. § 1349 (Count 1);
	Honest Services Mail Fraud in violation of 18 U.S.C. §§ 2, 1341, 1346 (Counts 2-16);**Page 5**

Honest Services Wire Fraud in violation of 18 U.S.C. §§ 2, 1343, 1346 (Counts 18-20);
	Health Care Fraud in violation of 18 U.S.C. §§ 2 and 1347 (Counts 23-36); and
	Travel Act in violation of 18 U.S.C. §§ 2 and 1952(a)(1), (a)(2) (Counts 37‐42).13. The Government requested restitution in the amount of $1,307,622.27.  P. Ex. 3 at 4.  During a Post-Trial Hearing on August 8, 2018, the District Court indicated that there should not be restitution for medical tests that were “necessary, professional, competently performed.”  P. Ex. 3 at 6.  However, the District Court also thought that there was proof that “there was enormous pressure to prescribe tests that weren’t necessary and that there are tests that were done that weren’t necessary, but how I say out of this 1.3 million which tests were necessary and which weren’t and which ones the insurance companies legitimately got what they paid for and which ones they didn’t, I don’t know how I’d do that.”  P. Ex. 3 at 27.

14. On August 22, 2018, the District Court issued an Amended Judgment in a Criminal Case that confirmed Petitioner was found guilty as determined by the jury.  It also indicated that the District Court had sentenced Petitioner to a total term of incarceration of nine years and 364 days, three years of supervised release, and payment of a $250,000 fine.  IG Ex. 4 at 1-3, 5.

15. On December 10, 2018, the Medical Board commenced an action to revoke or suspend Petitioner’s medical license in California based on his conviction in the District Court as well as the underlying misconduct that Petitioner engaged in that served as the factual basis for the conviction.  IG Ex. 5 at 4-11.

16. On December 21, 2018, the Medical Board issued a Notice of Automatic Suspension of License.  That notice indicated Petitioner’s medical license was suspended based on the conviction before the District Court as well as his incarceration.  IG Ex. 5 at 1-3.

17. Petitioner appealed the District Court’s conviction and sentence to the Ninth Circuit.  On September 11, 2019, the Ninth Circuit upheld Petitioner’s conviction but remanded the case for resentencing so that the District Court could recalculate the total loss amount suffered by the California Workers’ Compensation Program based on the criminal conduct.  Departmental Appeals Board (DAB) E-File document # 22a.

18. The Ninth Circuit concluded that “[t]he great weight of the evidence introduced at trial demonstrated that [Petitioner] made payments only for referral of patients”

**Page 6**

and “[t]he testimony of [Petitioner’s] co-conspirators at trial sufficed to support the jury’s determination that [Petitioner] made payments for referral of workers’ compensation patients in violation of federal and state law.”  DAB E-File document # 22a at 3-4.

19. On October 27, 2020, the District Court held a sentencing hearing after remand.  P. Ex. 1.  The District Court sentenced Petitioner to 48-months of incarceration, which was double the maximum length of incarceration called for under sentencing guidelines. P. Ex. 1 at 41-42.

VI. Conclusions of Law and Analysis

The Secretary of Health and Human Services (Secretary) must exclude an individual from participation in all federally funded health care programs when that individual:

has been convicted for an offense which occurred after August 21, 1996, under Federal or State law, in connection with the delivery of a health care item or service . . . of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

42 U.S.C. § 1320a-7(a)(3).

Therefore, for the purposes of this case, the three essential elements to support a mandatory exclusion are:  (1) the excluded individual must have been convicted of a felony offense for conduct that occurred after August 21, 1996; (2) the felony offense must be in connection with the delivery of a health care item or service; and (3) the felony conviction must have been related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.  42 C.F.R. § 1001.101(c)(1).

If an individual has been convicted of a crime that requires mandatory exclusion, then the Secretary must exclude the individual for at least five years.  42 U.S.C. § 1320a‐7(c)(3)(B).  To implement this provision, the Secretary established, by regulation, a list of aggravating and mitigating factors that must be considered when determining whether the length of a mandatory exclusion should exceed five years.  *See* 42 C.F.R. § 1001.102.

The record supports the IG’s mandatory exclusion in this case and the existence of the three aggravating factors identified by the IG in her exclusion notice.  As discussed below, those factors support a 14-year length of exclusion.

**Page 7**

***1.  For purposes of******42 U.S.C. § 1320a-7(a)(3), Petitioner was convicted of multiple felony offenses that occurred between 2012 and 2015.***

For exclusion purposes, the word “convicted” means that a judgment of conviction has been entered against an individual by a federal, state or local court, or a federal, state or local court has made a finding of guilt against the individual.  42 U.S.C. § 1320a-7(i)(1), (2).  The record reflects that a jury found Petitioner guilty of numerous offenses and the District Court entered a judgment of conviction against Petitioner.  IG Exs. 3-4.  Therefore, Petitioner was “convicted” for purposes of this case.

Petitioner was convicted of multiple offenses, each of which are felonies.  Federal law classifies offenses as felonies and misdemeanors based on the maximum potential term of imprisonment for the offense.  Therefore, Petitioner’s offenses under 18 U.S.C. §§ 1341, 1343, and 1347, as well as conspiracy to commit those offenses under 18 U.S.C. § 1349, are Class C felonies because they have 20-year maximum terms of imprisonment.  *See* 18 U.S.C. § 3559(a)(3).  Petitioner’s offenses under 18 U.S.C. § 1952(a)(1) and (2) are Class D felonies because they have five-year maximum terms of imprisonment.  *See* 18 U.S.C. § 3559(a)(4).

Finally, Petitioner’s criminal conduct occurred after August 21, 1996.  Petitioner was charged and convicted of a conspiracy that commenced no later than December 2012 and lasted through at least September 2015.  IG Ex. 2 at 6; IG Ex. 3 at 1.  The jury also found Petitioner guilty of specific offenses that occurred from November 7, 2014 through July 8, 2015.  IG Ex. 3 at 2-20.  Therefore, Petitioner was convicted of offenses that were committed after August 21, 1996.

Petitioner concedes that he was convicted of a felony committed after August 21, 1996.  P. Br. at 1-2.  Therefore, I conclude that Petitioner was convicted of felony offenses committed after August 21, 1996.

***2.  Petitioner’s felony convictions were related to a conspiracy in which he paid money for the referral of patients so that he and his business entities could bill insurers and the California Workers’ Compensation Program for those services.  Therefore, for purposes of 42 U.S.C. § 1320a-7(a)(3), Petitioner’s felony offenses were in connection with the delivery of a health care item or service.***

For the IG to exclude Petitioner under 42 U.S.C. § 1320a-7(a)(3), Petitioner’s felony offense must have been for conduct in connection with the delivery of a health care item or service.  To be “in connection with” the delivery of a health care item or service, there only needs to be a nexus or common-sense connection to the delivery of a health care item or service.  *Charice D. Curtis*, DAB No. 2430 at 5 (2011).

**Page 8**

In the present case, the Superseding Indictment charged Petitioner and his co-conspirators with a scheme to:

fraudulently obtain money from health care benefit programs by seeking payment for medical goods and services that were secured through a pattern of bribes and kickbacks to physicians and to those acting on their behalf, in exchange for the referral of patients to certain health care providers owned or operated by co-conspirators.

IG Ex. 2 at 8.  Petitioner admits that he provided health care services as part of the scheme:  “I was convicted strictly for paying improper referral fees.  I provided all of the medical services my practice billed to insurers and those services were all medically necessary.”  P. Br. at 6.  Therefore, Petitioner’s conviction was in connection with the delivery of health care items or services.

***3.  Petitioner was convicted of paying for patient referrals as part of a conspiracy that resulted in his conviction of multiple counts of Honest Services Mail Fraud, Mail Fraud, Honest Services Wire Fraud, Wire Fraud, and Health Care Fraud.  Therefore, for purposes of 42 U.S.C. § 1320a‐7(a)(3), Petitioner’s felony offenses are related to fraud.***

For a conviction to qualify as one mandating exclusion under 42 U.S.C. § 1320a-7(a)(3), it must be a felony relating to****fraud, theft, embezzlement, or breach of fiduciary responsibility.

Petitioner concedes this element for exclusion:  “I do not disagree that I was convicted of a felony relating to fraud.”  P. Br. at 2.  However, Petitioner appears to argue that he “was simply convicted for paying improper referral fees (and not for obtaining money or property owned by or under the custody and control of a health care benefit program.)”  P. Br. at 2.  Petitioner also asserts that his criminal conduct resulted in no loss to patients or insurance companies.  Finally, Petitioner disagrees with the District Court’s interpretation of California law.  P. Br. at 3-4.

The question as to whether Petitioner’s felony offenses require exclusion turns on whether those offenses are ones that are “relating to” fraud.  The terms “related to” and “relating to” under 42 U.S.C. § 1320a-7 simply mean that there must be a nexus or common-sense connection.  *See James Randall Benham*, DAB No. 2042 at 5-6 (2006) (internal citations omitted); *see also* *Friedman v. Sebelius*, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase “related to” in another part of section 1320a-7 as “deliberately expansive words,” “the ordinary meaning of [which] is a broad one,” and one that is not subject to “crabbed and formalistic interpretation”) (internal quotation marks omitted).  Further,

**Page 9**

in determining whether the requisite nexus exists, the “labeling of the offense under the state statute” is not determinative.  *Berton Siegel, D.O.*, DAB No. 1467, at 7 (1994) (emphasis omitted).  We consider, as appropriate, “evidence as to the nature of an offense,” such as the “facts upon which a conviction was predicated.”  DAB No. 1467, at 6-7.  Thus, how an offense is labeled or classified under state law may very well be a relevant consideration, but it does not, alone, inform the [DAB]’s determination of whether or not the requisite nexus exists.  The [DAB] also looks to the factual allegations underpinning the offense with which a petitioner was charged and which form the basis for the requisite conviction.  It would follow, then, that the fact that Petitioner pled guilty only to PHL § 12-b(2), an unclassified misdemeanor, does not mean that we may not or do not examine the record of the criminal proceeding below, of which the Misdemeanor Information is a part, to determine whether there is indeed a nexus between the offense and patient neglect or abuse.

*Robert C. Hartnett*, DAB No. 2740 at 7 (2016) (footnote omitted).

It is clear that Petitioner was convicted of multiple counts of several types of fraud, including health care fraud.  IG Exs. 2-3.  Reviewing “the factual allegations underpinning” Petitioner’s offenses also show that his convictions were related to fraud.

At the August 8, 2018 Post-Trial Hearing, the District Court made it clear that Petitioner had engaged in a fraudulent scheme.  The court stated:

Similarly, to the extent there’s an argument that [Petitioner] had no fraudulent intent until the March 4, 2015, meeting when Dr. Rigler told him he was paying Alex, I reject that argument.  It seems to me that was just simply the first time that [Petitioner] was caught on tape discussing the fraudulent scheme, and it was clear from the trial that this had been going on for a long time.  It is also clear to me that the insurance companies would not have paid [Petitioner] or any of his companies any amount if [Petitioner] had been truthful about his financial kickback arrangements.  In part their payment was based on his fraudulent representation that he had complied with the California law.  Whether these procedures were medically necessary or not I think is

**Page 10**

irrelevant to the forfeiture.  [Petitioner] wouldn’t have gotten the payments, so they’re illegally gotten gains.  And so I do think that forfeiture in the amount of $1,307,622.27 is appropriate based on this schedule.

P. Ex. 3 at 28-29.

I agree with the District Court.  In its most general legal sense, the term “fraud” means:  “A knowing misrepresentation or knowing concealment of a material fact made to induce another to act to his or her detriment.”  FRAUD, Black’s Law Dictionary (11th ed. 2019).  Findings of Fact 9 and 10 above provide ample factual support from the record that the conspiracy Petitioner was convicted of engaging in involved misleading and concealing from patients and health insurers that he was paying for patient referrals.  Had insurers known that fact, they would not have paid Petitioner’s claims because those referral payments violated the law.  Further, patients may not have accepted services from Petitioner had they known they were only referred to him because Petitioner was paying for the referral.

Finally, Petitioner’s concerns and criticisms of the District Court’s understanding and application of California law is an impermissible collateral attack on Petitioner’s criminal conviction.  42 C.F.R. § 1001.2007(d).

***4.  Petitioner must be excluded for a minimum of five years under 42 U.S.C. § 1320a-7(a)(3).***

I conclude that Petitioner’s conviction meets the three elements for a mandatory exclusion under 42 U.S.C. § 1320a-7(a)(3).  Therefore, Petitioner must be excluded for at least five years.  42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. § 1001.102(a).

***5.  The 20-year length of exclusion imposed on Petitioner is unreasonable; however, a 14-year length of exclusion is appropriate given the three aggravating factors in this case and the absence of mitigating factors.***

******As indicated earlier, the length of exclusion of a mandatory exclusion may be longer than five years.  If the IG imposes a length of exclusion that is longer than five years, then that length must be determined by looking to the specified aggravating and mitigating factors in the regulations.  42 C.F.R. § 1001.102.

The regulations provide a deferential standard when reviewing the IG’s determination of the length of exclusion.  An administrative law judge may only determine whether that length is “unreasonable.”  42 C.F.R. § 1001.2007(a)(1)(ii).  In the present case, as required by the regulations, the IG indicated in its exclusion notice that there were three aggravating factors supporting a 20-year length of exclusion.  IG Ex. 1; 42 C.F.R.

**Page 11**

§ 1001.2002(c)(2).  However, following the submission of both parties’ prehearing exchanges, the IG issued an amended exclusion notice changing the length of exclusion to 14 years based on Petitioner’s evidence that the length of his incarceration had been significantly reduced.  IG Ex. 6.

The IG’s attempt to amend the length of exclusion is not effective.  The IG may only amend the length of exclusion “[n]o later than 15 days prior to the final exhibit exchanges required under [42 C.F.R.] § 1005.8.”  42 C.F.R. § 1001.2002(e).  Because the parties had already complied with my orders for the exchange of evidence, as authorized under § 1005.8, before the IG issued its amendment to the exclusion notice, that amendment is untimely.

However, I accept the IG’s attempt to amend the exclusion notice as a request for a reduced length of exclusion.  *See* 42 C.F.R. § 1005.20(b).  Petitioner argues in his brief that I should reduce the length of exclusion to the minimum five-year length.  P. Br. at 4.  Based on the analysis below of the three aggravating factors in this case, I reduce the length of exclusion to 14 years.

***6.  Petitioner’s acts that resulted in conviction, or similar acts, were committed for more than one year, i.e., from December 2012 until at least September 2015.***

The IG asserted that the aggravating factor found at 42 C.F.R. § 1001.102(b)(2) (i.e., the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more) was present in this case.

The Superseding Indictment charged Petitioner as part of a conspiracy that commenced no later than December 2012 and lasted through at least September 2015.  IG Ex. 2 at 6.  The jury convicted Petitioner related to that charge.  IG Ex. 3 at 1.  Therefore, the record supports the existence of this aggravating factor.

Petitioner attempts to soften this factor by asserting that he did not cause any loss to insurance companies because he provided the services for which he billed.  P. Br. at 4.  However, the District Court expressly stated that she did not believe there was no loss, but that she merely could not calculate the loss.  P. Ex. 1 at 41-42.  In any event, as discussed below, the amount of loss is related to a different aggravating factor in the regulations.

In regard to this factor, Petitioner was part of a long-term conspiracy related to fraud, including health care fraud.  I consider the District Court’s assessment as to his potential for continuing to commit fraud in the future important when considering the length of his previous criminal conduct.  In denying Petitioner’s request to be released while his appeal was pending before the Ninth Circuit, the District Court accused Petitioner of perjury,

**Page 12**

assessed Petitioner as a flight risk, and considered Petitioner capable of continuing to commit fraud.  The District Court stated:

I’m considering the fact that I find he didn't have any compunction about perjuring himself at trial.  I am convinced that he thinks he’s smart enough to get away with criminal conduct, and I think the ultimate sentence was a surprise to him.  Therefore, I do think it’s highly likely that he’ll flee if released on bond pending appeal, and I’m not convinced he wouldn’t fund his flight with additional fraudulent or illegal conduct.  So I believe he continues to pose a financial risk to the community.

P. Ex. 3 at 37-38.  I give great weight to the District Court’s assessment of Petitioner based on his past history and her interaction with Petitioner during criminal proceedings.  I find that this aggravating factor supports a significant length of exclusion.

***7.  The District Court sentenced Petitioner to 48 months of incarceration.***

The District Court originally sentenced Petitioner to nearly 10 years in prison; however, following remand, the District Court sentenced Petitioner to 48 months of incarceration.  Therefore, the IG proved that the aggravating factor at 42 C.F.R. § 1001.102(b)(5) is present in this case.

Petitioner argues that the District Court improperly varied his length of incarceration upward to 48 months from the sentencing guideline recommendation.  However, Petitioner states that he chose not to appeal for strategic and financial reasons.  P. Br. at 5.

The length of Petitioner’s prison sentence weighs heavily in favor of a lengthy exclusion.  A prison sentence of as little as nine months is considered to be relatively substantial for exclusion purposes.  *Jason Hollady, M.D.*, DAB No. 1855 at 12 (2002).  Petitioner’s 48‐month sentence is more than five times longer than that and represents a substantial period of time, which indicates the seriousness of Petitioner’s offense.

In addition, I take the District Court’s reasoning for the length of incarceration into account.  On October 27, 2020, the District Court held a sentencing hearing after remand.  P. Ex. 1.  After discussing the factors established in the sentencing guidelines, the District Court gave the following analysis to support an upward variance to a 48-month sentence of incarceration:

I don't think that’s the end of my analysis, however.  I think I have two additional things I have to calculate in.  First of all, I

**Page 13**

adopt my previous findings and analysis of the 3553(a) factors the last time around.  Many of those are still valid, and I am still taking all of those into consideration, and I think that perhaps something I did not necessarily stress when I sentenced [Petitioner] the last time around, but I did stress it in other cases that were related to this case, is that this is a really important safety net.  Workers’ Compensation is a very important safety net.  And there are people who always would like to dismantle safety nets in part because they argue that there’s this exact misuse of the system.  And when a fraud like this is committed, it jeopardizes the entire system.  It makes people say things like, see, social service programs are corrupt, they shouldn’t continue, and [Petitioner’s] conduct in this case places the whole system at jeopardy, and I think that’s really an important factor for me to take into consideration . . . . So I do think an upward departure from the 18 to 24-month guideline is appropriate.  I just don’t think that that sufficiently encompasses what [Petitioner] did in this particular case.  And as I’ve said before, even though I found there was zero loss in this case because of the fact that the government wants me to assume that 100 percent of the services performed were valid, I think the evidence was pretty clear that 100 percent of the services performed were not valid, and so that’s something even though I find zero loss, I think that’s also something I can take into consideration.  I do think that given [Petitioner’s] COVID and the fact that I found the loss is different, that the original ten-year sentence was too high.  And so I do find an upward departure to 48 months in custody, which is twice the high end of the guideline, is sufficient but not greater than necessary considering all of the 3553(a) factors.

P. Ex. 1 at 41-42.  Again, I give weight to the concerns of the District Court.  The District Court decided, on her own authority, to double the maximum length of incarceration recommended by sentencing guidelines.  The District Court was particularly concerned with the negative effect that Petitioner’s conduct had on a government program.  This concern applies to federal health care programs.

Forty-eight months is a lengthy term of incarceration.  But it is significantly less than the original nearly ten-year term.  However, it does support a long length of exclusion.

**Page 14**

***8.  The Medical Board suspended Petitioner’s medical license based on the criminal conduct for which he was convicted.***

The IG asserted that Petitioner was subject to an adverse action by a state government agency or board that was based on the same set of circumstances that serves as the basis for the imposition of the exclusion.  The IG has shown that the Medical Board suspended Petitioner’s medical license based on his criminal conviction and the conduct underlying that conviction.  IG Ex. 5.  Therefore, the aggravating factor of 42 C.F.R. § 1001.102(b)(9) is present in this case.

Petitioner argues in his brief the following:

I wish to point out that I have only ever been subject to any adverse action based on this case alone, i.e., the **identical** facts and conduct underlying the criminal case, not the “same set of circumstances that serves as the basis for the imposition of the exclusion”, i.e., similarly paying improper referral fees in a different case, for which could not have been Congress’ intent to subject a petitioner to a double form of punishment based on the same set of facts.  Such an interpretation would render 42 C.F.R. 1001.102(b)(9) meaningless, as it would automatically apply to any petitioner convicted of a crime or wrongdoing, and hence alw[a]ys exclude the mandatory minimum to something greater than 5 years.

P. Br. at 6.

Although Petitioner disagrees that the suspension of his license should be considered an aggravating factor, I must comply with the regulations and consider it to be one.  *See* 42 C.F.R. § 1005.4(c)(1).  I find that this aggravating factor supports a length of exclusion in excess of five years.

***9.  Petitioner did not prove the existence of any mitigating factors that would justify a reduction in the length of exclusion imposed by the IG.***

Petitioner has not asserted that any mitigating factor listed in 42 C.F.R. § 1001.102(c) is present in this case.  As mentioned above, Petitioner argues that his criminal conduct did not result in loss to any of the insurance companies that he billed for services he provided based on the conspiracy.  P. Br. at 4-5.  However, the IG did not base the length of exclusion on the aggravating factor at 42 C.F.R. § 1001.102(b)(1) (i.e., loss to a government program or another entity of $50,000 or more), and the absence of an aggravating factor is not the equivalent of proving that a mitigating factor exists to reduce the length of exclusion.

**Page 15**

***10.  The 20-year length of Petitioner’s exclusion is unreasonable based on the significant reduction Petitioner received in the length of his incarceration, but a 14-year length of exclusion is warranted based on the aggravating factors in this case.***

As indicated above, I accept the IG’s concession that its originally imposed 20-year length of exclusion is now unreasonable given that Petitioner received a significantly reduced length of incarceration.

When considering the length of exclusion, “[t]he 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*.”  *Farzana Begum, M.D.*, DAB No. 2726 at 2 (2016) (emphasis added).  Above, I performed that qualitative assessment of the aggravating factors present in this case and concluded that a lengthy exclusion is necessary.  A reduction of the original length of exclusion by six years to 14 years, as proposed by the IG, is appropriate.

VII.  Conclusion

I affirm the IG’s determination to exclude Petitioner from participating in all federal health care programs under 42 U.S.C. § 1320a-7(a)(3) but reduce the length of exclusion from 20 years to 14 years.
  
          /s/
        Scott Anderson

                      Administrative Law Judge Back to top
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