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                              Michael Edward Barri, DAB CR5953 (2021)
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Michael Edward Barri, DAB CR5953 (2021)








  
  
    

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





Michael Edward Barri,
(OI File No. H-18-40228-9),
Petitioner,

v.

The Inspector General
Docket No. C-21-591Decision No. CR5953September 29, 2021

        
              
    

      DECISION

Petitioner, Michael Edward Barri, was a chiropractor, licensed in California, who owned and operated a medical clinic that specialized in treating workers’ compensation patients.  He also owned a medical group management company.  As part of a conspiracy, he referred his patients to Pacific Hospital of Long Beach, in return for substantial kickbacks.  Eventually, he and his co-conspirators were caught.  Petitioner was indicted and pleaded guilty to one felony charge of conspiracy to commit mail fraud and honest services mail fraud and engaging in monetary transactions in property derived from specified unlawful activity.  The court sentenced him to a year and a day in prison.
Based on his conviction, the Inspector General (IG) has excluded Petitioner for ten years from participating in Medicare, Medicaid, and all federal health care programs, as provided for in sections 1128(a)(3) of the Social Security Act (Act).

Petitioner appeals.  He concedes that he is subject to exclusion but challenges its duration beyond the mandatory five-year period.

**Page 2**

For the reasons discussed below, I find that the ten-year exclusion falls within a reasonable range.

Background

In a letter dated February 26, 2021, corrected April 5, 2021, the IG notified Petitioner that he was excluded from participating in Medicare, Medicaid, and all federal health care programs for a period of ten years because he had been convicted 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, or with respect to any act or omission in a health care program (other than Medicare or a state health care program) operated by, or financed, in whole or in part, by any federal, state, or local government agency.”  The letter explained that section 1128(a)(3) of the Act authorizes the exclusion.  IG Exs. 1, 2.1

Petitioner timely requested review.

The IG has submitted a written brief (IG Br.) and nine exhibits (IG Exs. 1-9).  Petitioner has filed his own brief (P. Br.) and two exhibits (P. Exs. 1-2).

In the absence of any objections, I admit into evidence IG Exs. 1-9 and P. Exs. 1-2.

The parties agree that this case can be decided based on the written record.  IG Br. at 16; P. Br. at 8.

Discussion

Under section 1128(a)(3) of the Act, the Secretary must exclude an individual who has been convicted under federal or state law of felony fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service.  42 C.F.R. § 1001.101(c)(1).

**Page 3**

**The scheme**.  Here, Petitioner Barri was a licensed chiropractor who owned and operated Tri-Star Medical Group, a medical clinic that specialized in treating workers’ compensation patients.  He also operated and controlled Jojaso Management Company, a medical group management company.  Michael Drobot owned and operated Pacific Hospital.  IG Ex. 4 at 1-2.

Beginning in 2009, Petitioner Barri conspired with Mr. Drobot and others to refer Petitioner’s workers’ compensation patients to Pacific Hospital for spinal and other types of surgeries and other services, paid for through state and federal insurance programs.  IG Ex. 3 at 11-12; IG Ex. 4 at 4.  To conceal the scheme, Petitioner filtered the kickback money through Jojaso, concocting bogus services contracts to hide the reasons for the payments.  IG Ex. 3 at 12-13.  Between November 2012 and July 2013, Petitioner received $158,555.98 in direct kickbacks.  IG Ex. 3 at 13-14.

Petitioner received additional kickbacks by means of a below-market value sublease of medical office space.  IG Ex. 3 at 14-15.  Between May 2012 and April 2013, those kickbacks totaled $37,950 in rent savings.  IG Ex. 3 at 14-15.

In total, Mr. Drobot, Pacific Hospital, and related entities paid Petitioner approximately $206,505.98 in return for his referrals.  IG Ex. 3 at 15.  Pacific Hospital then billed the insurance carriers approximately $3.9 million for the surgeries and other services performed on the referred patients.  IG Ex. 3 at 15.

This was not Petitioner Barri’s first kickback scheme.  Although not included in the charges filed against him, Petitioner admitted, as part of his plea agreement, that he had earlier received kickbacks for referring his workers’ compensation patients to a different hospital, Tri-City Medical Center, for spinal surgeries and other medical procedures.  He also admitted that he filtered the illegal payments through a similar bogus collection agreement.  IG Ex. 3 at 18.

**The conviction**.  Petitioner was charged with one felony count of conspiracy to commit mail fraud and honest services mail fraud and engaging in monetary transactions in property derived from specified unlawful activity, in violation of 18 U.S.C. § 371.  On January 20, 2016, he pleaded guilty to the charge.  IG Exs. 3, 4.

On May 4, 2018, the Federal District Court for the Central District of California accepted his plea and convicted Petitioner Barri of conspiracy, in violation of 18 U.S.C. § 371.  The Court sentenced Petitioner to twelve months and a day in prison, followed by three years of supervised release.  IG Ex. 5.  The Court also entered against him a personal

**Page 4**

money judgment of forfeiture in the amount of $206,505 and ordered him to pay full restitution to the victims of his offense.  IG Ex. 6 at 2, 3; *see* IG Ex. 3 at 9.2

Thus, as Petitioner concedes, he was convicted of a felony offense related to fraud and breach of his fiduciary responsibility in connection with the delivery of a health care item or service and is subject to exclusion under section 1128(a)(3).  P. Br. at 1-2.

***1.  Based on the aggravating factors and no mitigating factor, the ten-year exclusion falls within a reasonable range.3***

An exclusion brought under section 1128(a)(3) must be for a minimum period of five years.  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).  I now consider whether the length of the exclusion, beyond five years, falls within a reasonable range.  *See Edwin L. Fuentes*, DAB No. 2988 at 8-9 (2020); *Hussein Awada*, DAB No. 2788 at 5-6 (2017).

Among the factors that may serve as a basis for lengthening the period of exclusion are the three that the IG relies on in this case:  1) the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; 2) the sentence imposed by the court included incarceration; and 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 imposing the exclusion.  42 C.F.R. § 1001.102(b).  The presence of an aggravating factor or factors, not offset by any mitigating factor or factors, justifies lengthening the mandatory period of exclusion.

“Simply meeting the threshold for an aggravating factor is a clear indication of untrustworthiness.”  *Hussein Awada, M.D.*, DAB No. 2788 at 10.

**Duration of criminal conduct (42 C.F.R. §** **1001.102(b)(2))**.  The purpose of considering the length of Petitioner’s participation in the criminal scheme is to distinguish between those whose lapse in integrity is short-lived from those who display a lack of integrity over a longer period of time.  “Participation in, or even *knowing but silent acquiescence in, a continuing fraudulent scheme* that could be expected to cause repeated misrepresentations and repeated harm over a period of time evidences a continuing lack of integrity.”  *Donald A.**Burstein*, DAB No. 1865 at 8 (2003) (emphasis added).

**Page 5**

As the above discussion shows, Petitioner’s criminal acts were committed over a period of approximately four years, from April 2009 until October 2013.  IG Ex. 3 at 11.

Petitioner admits that in 2009 he agreed to refer patients in exchange for kickbacks but maintains that he did not, in fact, refer a patient until February 2012.  Petitioner points out that, because he had not yet referred any patients, in June 2011, his co-conspirators renegotiated the referral agreement.  In January 2012, they increased the kickback amounts – at Petitioner’s request.  Petitioner maintains that he “made referrals and received payments from November 2012 through July 2013,” and suggests that his involvement therefore lasted for less than a year.  P. Br. at 4.

Arguably, because Petitioner was convicted of conspiracy, he is accountable for any overt acts committed in furtherance of the illegal scheme.  Under the federal conspiracy statute, the *agreement* between two or more persons is the essence of the crime.  So long as one of the conspirators commits an overt act in furtherance of that agreement, all are accountable.  18 U.S.C. § 371.  The Departmental Appeals Board (and apparently the IG) have not taken this position with respect to the length of a petitioner’s participation in criminal activity.  Rather, in determining the duration of criminal activity in a conspiracy case, the Board has considered the petitioner’s overt acts only and not those of his co-conspirators.  *John (Juan) Urquijo*, DAB No. 1735 (2000).

Here, Petitioner’s overt acts were many and continued for at least four years.  He obviously knew about and, at a minimum, silently acquiesced in the fraudulent scheme.  But, in fact, he did much more than silently acquiesce.  As he admitted, his own acts in furtherance of the conspiracy started at least as early as April 17, 2009.  Specifically:

Effective **April 17, 2009**, Petitioner, on behalf of his company, Jojaso, entered into an “Outsourced Collection Agreement” with Pacific Hospital.  This was not a legitimate contract, as Petitioner well knew.  To conceal the planned kickback payments, Jojaso purported to provide collection services for the hospital.  The hospital paid Jojaso 15% of any amount insurers paid for the spinal surgeries referred by Petitioner.  IG Ex. 3 at 12-13, 16; IG Ex. 4 at 7.As part of the conspiracy, Petitioner referred patients to spinal surgeons, who understood that the referrals were conditioned on the surgeons’ performing the surgeries at Pacific Hospital.  IG Ex. 4 at 4.  By email, sent on **July 13, 2009**, Petitioner asked about obtaining credentials for a surgeon to perform spinal surgeries at Pacific Hospital.  IG Ex. 3 at 16; IG Ex. 4 at 7.On or about **June 14, 2011**, Petitioner, on behalf of Jojaso, entered into another bogus “Outsourced Collection Agreement” with Pacific Hospital under which Jojaso would be paid, within 60 days of surgery, 15% of any money collected or**Page 6**

estimated to be collected on patients Petitioner referred for surgery.  IG Ex. 3 at 16; IG Ex. 4 at 7.  Pacific Hospital *paid Petitioner, through Jojaso, a $10,000 “deposit” for agreeing to refer patients*.  IG Ex. 3 at 13.

On or about **June 16, 2011**, Petitioner sent another email to Mr. Drobot and an attorney (presumably Mr. Drobot’s or Pacific Hospital’s attorney), advising them that a surgery scheduled for June 22, 2011, was the *result of Petitioner’s referral*.  IG Ex. 3 at 16-17; IG Ex. 4 at 7-8.On or about **January 27, 2012**, Petitioner, on behalf of Jojaso, amended the “Outsourced Collection Agreement,” increasing the collection fee paid to Jojaso to 25% of any money collected on the patients Petitioner referred to Pacific Hospital for surgery.  IG Ex. 3 at 17; IG Ex. 4 at 8.On or about **May 1, 2012**, Petitioner, on behalf of Jojaso, entered into a sublease for a medical office.  IG Ex. 3 at 17; IG Ex. 4 at 8.  The reduced-rate subleases were a means by which Petitioner received kickbacks.  IG Ex. 3 at 14-15.On **June 11, 2012**, Petitioner sent an invoice to an attorney (presumably Mr. Drobot’s or Pacific Hospital’s attorney), purportedly for collection services Jojaso performed related to a spinal surgery performed on a patient at Pacific Hospital (which we know was a subterfuge, designed to hide the real reason for the payment – a kickback).  IG Ex. 3 at 17; IG Ex. 4 at 8.On or about **November 28, 2012**, Pacific Hospital sent Jojaso a check for $3,143 related to Petitioner’s referring a patient to Pacific Hospital for spinal surgery.  IG Ex. 3 at 17; IG Ex. 4 at 8.On or about**May 29, 2013**, Pacific Hospital sent Jojaso a check for $26,248.03.  IG Ex. 3 at 17; IG Ex. 4 at 8.On or about **June 14, 2012**, Pacific Hospital sent Jojaso a check for $20,036.89.  IG Ex. 3 at 17; IG Ex. 4 at 8.On or about **July 2, 2013**, Pacific Hospital sent Jojaso a check for $25,613.93.  IG Ex. 3 at 18; IG Ex. 4 at 9.Thus, although the kickback money may not have started flowing freely into Petitioner’s coffers (through his company, Jojaso) until mid-2012, in April 2009, Petitioner laid the groundwork for his receiving it.  He is accountable for that and all of his subsequent overt acts.

**Page 7**

Moreover, even if I accepted Petitioner’s position that he is accountable only for the times he referred patients in return for kickback money (which I do not), by his own admission, such overt activities continued for over a year:

On June 14, 2011 he accepted money ($10,000) in return for participating in the illegal scheme.  IG Ex. 3 at 13.Sometime prior to June 16, 2011, he made his first referral.  IG Ex. 3 at 16-17; IG Ex. 4 at 7-8.On May 1, 2012, he began receiving kickbacks in the form of rent reductions.  IG Ex. 3 at 14-15, 17; IG Ex. 4 at 8.On June 11, 2012, he billed Pacific Hospital for a referral, disguising the transaction as a bill for collection services.  IG Ex. 3 at 17; IG Ex. 4 at 8.Thus, money began changing hands at least as early as June 14, 2011, and Petitioner made his first referral on or before June 16, 2011.  He began receiving kickbacks on May 1, 2012.  He continued receiving kickbacks through July 2, 2013.  So, even if I eliminated his earliest overt acts (which I do not), his criminal acts lasted over a year.4

That Petitioner’s criminal scheme lasted well over the one-year threshold for aggravation justifies a period of exclusion longer than the minimum.  *See* *Hussein Awada, M.D.*, DAB No. 2788 at 8 (quoting*Burstein*, DAB No. 1865 at 8).

**Incarceration (42 C.F.R. §** **1001.102(b)(5))**.  The sentence imposed by the criminal court included incarceration.  The district court sentenced Petitioner to one year and a day in prison.  IG Ex. 5.  Petitioner points out that his prison sentence could have been much longer, which, no doubt, it could have been.  P. Ex. 2.  A longer prison sentence would, in fact, have justified a longer period of exclusion.  *See* *Eugene Goldman, M.D. a/k/a Yevgeniy Goldman, M.D.*, DAB No. 2635 at 6 (2015).

Generally, the longer the jail time, the longer the exclusion, because a lengthy sentence evidences a more serious offense.  However, Petitioner wrongly implies that the length of his incarceration was inconsequential.  Any period of incarceration is consequential and justifies increasing the period of exclusion, and the Board has repeatedly characterized as “substantial” prison sentences that were shorter than that served by Petitioner.  *See*

**Page 8**

*Jeremy Robinson*, DAB No. 1905 (2004) (characterizing a nine-month incarceration as “relatively substantial.”); *Jason Hollady, M.D.*, DAB No. 1855 at 12 (2002) (characterizing a nine-month period of incarceration as “relatively substantial”); *Stacy Ann Battle, DDS.*, DAB No. 1843 (2002) (finding that four months in a halfway house, followed by four months home confinement justifies lengthening the period of exclusion); *Brenda Mills, M.D*., DAB CR1461, *aff’d*, DAB No. 2061 (2007) (finding that six months home confinement justifies an increase in length of exclusion).**Other adverse actions (42 C.F.R. § 1001.102(b)(9))**.  Citing his felony conviction and the facts underlying that conviction, the Executive Officer of the Board of Chiropractic Examiners for the State of California filed an Accusation before the State Board, asking that Petitioner’s chiropractic license be suspended or revoked.  IG Exs. 8, 9.  On May 3, 2019, Petitioner stipulated to the allegations in the Executive Officer’s Accusation and surrendered his license.  IG Ex. 7.

****No mitigating factors**.  The regulations consider mitigating just three factors:  1) a petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to the program was less than $5,000; 2) the record in the criminal proceedings demonstrates that a petitioner had a mental, physical, or emotional condition that reduced his culpability; and 3) a petitioner’s cooperation with federal or state officials resulted in others being convicted or excluded, or additional cases being investigated, or a civil money penalty being imposed.  42 C.F.R. § 1001.102(c).  Characterizing the mitigating factor as “in the nature of an affirmative defense,” the Board has ruled that Petitioner has the burden of proving any mitigating factor by a preponderance of the evidence.  *Barry D. Garfinkel*, *M.D.*, DAB No. 1572 at 8 (1996); 42 C.F.R. § 1005.15(c); *see* Order and Schedule for Filing Briefs and Documentary Evidence at 3 (¶ 4).**

**None of these factors apply here.  Petitioner was convicted of a felony.  He does not claim, and no evidence suggests, that he had a mental, physical, or emotional condition that reduced his culpability.  Although he refers to his cooperation with the government, he concedes that his cooperation does not meet the regulatory requirement for mitigation.  P. Br. at 4 n.1.**

**Thus, no mitigating factor offsets the significant aggravating factors present in this case.**

**Although he concedes that no mitigating factors apply, Petitioner maintains that the ten-year exclusion is excessive and not justified by the facts underlying his conviction.  He points out that he was not charged with referring patients for unnecessary procedures and maintains that no patients were harmed as a result of the referrals.  P. Br. at 3-4.  I find this irrelevant.  Certainly, there are more serious crimes than his fraud, just as there are much, much longer periods of exclusion (including permanent exclusions).  Among the other aggravating factors that the IG did *not* rely on is that the acts that resulted in the**

****Page 9****

**conviction, or similar acts, had a significant adverse physical, mental, or financial impact on program beneficiaries or other individuals. 42 C.F.R. 1001.102(b)(3).  In effect, the IG recognized, as do I, that his criminal acts did not adversely affect individuals.  That determination is reflected in the ten-year exclusion period.**

**Based on the aggravating factors and the absence of mitigating factors, then, I must determine whether the exclusion period imposed by the IG falls within a reasonable range.  So long as that period falls within a reasonable range, my role is not to second-guess the IG’s judgment.  *Jeremy Robinson*, DAB No. 1905 at 5 (2004) (ALJ review must reflect the deference accorded to the IG by the Secretary).  A “‘reasonable range’ refers to a range of exclusion periods that is more limited than the full range authorized by the statute [i.e. from a minimum of five years to a maximum of permanent] and that is tied to the circumstances of the individual case.”  *Joseph M. Rukse, Jr. R. Ph.*, DAB No. 1851 at 11 (2002) (citing*Gary Alan Katz, R.Ph*., DAB No.1842 at 8 n.4 (2002)).  The goal here is to protect federal health care programs and beneficiaries from potential harm.  *Joann Fletcher Cash*, DAB No. 1725 (2000).**

**The underlying facts here more than justify a ten-year exclusion.  Petitioner participated in an elaborate scheme to refer his patients in exchange for his receiving kickbacks, using his companies to conceal the illegal activity.  The conspiracy lasted for years.  And this was not the first time he had engaged in such schemes.  His conduct resulted in both a substantial prison sentence and his losing his chiropractic license.  He has shown a continuing lack of integrity and poses a threat to federal health care programs.  I therefore conclude that the ten-year exclusion falls within a reasonable range.**

**Conclusion**

**The IG properly excluded Petitioner from participating in Medicare, Medicaid, and other federal health care programs.  So long as the period of exclusion is within a reasonable range, based on demonstrated criteria, I have no authority to change it.  *Joann Fletcher Cash*, DAB No. 1725 at 7 (citing 57 Fed. Reg. 3298, 3321 (1992)).**

**I find that the ten-year exclusion falls within a reasonable range.**


          /s/
        Carolyn Cozad Hughes

                      Administrative Law Judge
      1.  The February 26 letter lists an incorrect aggravating factor.  Although it correctly states that the State Board of Chiropractors accepted the voluntary surrender of Petitioner’s practice license, it incorrectly cites this as evidencing a prior sanction record.  The April 5 letter corrected the mistake.  Petitioner, however, suggests that this mistake shows that the IG intended to impose the minimum period of exclusion (since ten years is the minimum for repeat offenders).  Inasmuch as loss of his medical license does not support a finding that he had a prior sanction record, but describes an additional adverse action, I consider this nothing more than a clerical error.  Moreover, because the IG found three aggravating and no mitigating factors, I see no support for Petitioner’s claim that she ever intended to impose the minimum period of exclusion. back to note 1
                      2. Apparently, the Court declined to order restitution, in part because patient-victim restitution would place an “unacceptable burden” on the sentencing process.  For insurer-victims, the data was simply not reliable enough to determine the amount of loss attributable to the conspiracy.  P. Ex. 1. back to note 2
                      3. I make this one finding of fact/conclusion of law. back to note 3
                      4.   Further, the regulation does not limit me to considering the acts for which Petitioner was convicted.  I may also consider “similar acts.”  As Petitioner admitted in his plea agreement, prior to participating in the Pacific Hospital conspiracy, he participated in a similar scheme with Tri-City Medical Center, which also included disguising illegal kickback payments by means of a bogus collection agreement.  IG Ex. 3 at 18. back to note 4 Back to top
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