Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Caretenders Visiting Services of Columbus, LLC,
(CCN: 36-8136),

Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-10-213
Decision No. CR2311

Date: January 19, 2011

DECISION

Through a convoluted — but ultimately unsuccessful — series of maneuvers, Petitioner’s
parent company, Almost Family, Inc. (AFAM), tried to establish Petitioner, Caretenders
Visiting Services of Columbus, LLC (Petitioner or Caretenders), as a Medicare-certified
home health agency (HHA) in Columbus, Ohio. To achieve its goal, AFAM purchased
an already-certified HHA that served the Cleveland area (Broadview Heights). AFAM
then fired Broadview Heights’ entire staff and discharged all its patients. Five months
later, AFAM opened Caretenders of Columbus and, relying on Broadview Heights’
provider agreement and billing number, began admitting Medicare patients. CMS
subsequently terminated Caretenders’ program participation. Petitioner here challenges
its termination.

The parties agree that this case can be decided based on the written record. Order
Following Prehearing Conference (June 14, 2010); CMS Cl. Br. at 4; P. Cl. Br. at 1.
They have filed opening briefs (CMS Br.; P. Br.) and closing briefs (CMS Cl. Br.; P. Cl.
Br.). CMS submitted 18 exhibits (CMS Exs. 1-18), and Petitioner submitted two exhibits
(P. Exs. 1-2).

For the reasons set forth below, I find that CMS properly terminated Caretenders’
Medicare participation.

I. Discussion

A. CMS properly terminated Caretenders’ Medicare
participation because Caretenders failed to meet the
statutory definition of an HHA after it fired its staff and
discharged all its patients."

An HHA is a public agency or private organization that “is primarily engaged in
providing skilled nursing services and other therapeutic services” to patients in their
homes. Social Security Act (Act) § 1861(0). It may participate in the Medicare program
as a provider of services if it meets the statutory definition and complies with certain
requirements, called conditions of participation. Act §§ 1861(0), 1891; 42 C.F.R. Part
484; 42 C.F.R. § 488.3. CMS (acting on behalf of the Secretary of Health and Human
Services) may terminate a provider agreement, based on the provider’s failure to comply
with the provisions of section 1861 or the regulations governing its program
participation. Act § 1866(b)(2); 42 C.F.R. § 489.53(a)(1).

To assure an HHA’s compliance with statutory and regulatory requirements, CMS
contracts with state agencies to conduct periodic surveys. Act § 1864(a); 42 C.F.R.

§§ 488.10, 488.11, 488.20. The regulations generally require that each provider be
surveyed once every twelve months, and more often, if necessary, to ensure that
identified deficiencies are corrected. Act § 1819(g)(2)(A); 42 C.F.R. § 488.20. In lieu of
an annual state survey, however, an HHA may be “deemed” to meet Medicare
requirements based on its accreditation by an approved national accreditation program
(such as The Joint Commission). Act § 1865; 42 C.F.R. § 488.6.

With limited exceptions not applicable here, a prospective Medicare provider must be
surveyed and meet all conditions of participation before the effective date of its provider
agreement. 42 C.F.R. § 489.13.

In this case, AFAM owned and operated a business that provided unskilled, in-home
personal care services in Columbus, Ohio. CMS Ex. 11 at 1; P. Ex. 1 at 2 (Lyles Decl. §
3). It sought to expand this business to include a Medicare-certified HHA. Accordingly,
on April 20, 2007, it applied for Medicare certification, but it never completed the

' My findings of fact/conclusions of law are set forth, in italics and bold, in the
discussion captions of this decision.
application process. CMS Exs. 4, 5; P. Ex. 2 at 1-2 (Hawkins Decl. 4 2, 3); P. Ex. 1 at 2
(Lyles Decl. § 7).”

Instead, on or about October 13, 2007, AFAM purchased, from Alliance Care, an
already-certified HHA, which was based in Broadview Heights, Ohio and operated in and
around Cleveland. CMS Ex. 6. But AFAM already owned a Medicare-certified HHA in
Cleveland (Caretenders of Cleveland, LLC), and it neither needed nor wanted a second
one in that service area. P. Ex. 1 at 2 (Lyles Decl. § 3); CMS Ex. 11. Almost
immediately after it acquired Broadview Heights, AFAM fired all of the staff and
discharged all of the patients, readmitting them “as necessary” to Caretenders of
Cleveland. CMS Ex. 11 at 3; P. Ex. 2 at 3 (Hawkins Decl. fj 10, 11, 12). At the same
time, AFAM “began the process” of hiring staff for Caretenders at Columbus. According
to Rachel Hawkins, AFAM’s Director of Clinical Affairs, the Columbus operation was
finally adequately staffed in March 2008, at which time it admitted its first Medicare
patients. P. Ex. 2 at 3 (Hawkins Decl. § 12).

Medicare regulations require that parties to a change of ownership (CHOW) submit new
enrollment applications (CMS Form 855A). 42 C.F.R. §§ 424.550(b), 489.18(b).
Petitioner submitted to its fiscal intermediary (Palmetto GBA) the required CMS Form
855A, signed by Director Hawkins and AFAM’s Compliance Officer, Senior Vice
President Patrick Todd Lyles. CMS Ex. 7. I agree with CMS that the information
Petitioner provided in this document does not accurately reflect the transaction.
According to the form, Petitioner had acquired a “parent” HHA located in Columbus,
Ohio, with a service area that included counties in and around Columbus. CMS Ex. 7 at
9, 12. In fact, Petitioner acquired a Cleveland-based HHA with a service area that
included counties in and around Cleveland. CMS Ex. 6 at 1. Nor did Petitioner disclose
that it would stop providing services in Cleveland. The form directs the provider to
specify those areas to which it would no longer provide services, and Petitioner left that
section blank. CMS Ex. 7 at 13.

Although it took some time for CMS to catch up with all these events, it ultimately

lenied the request for a CHOW. Ina letter dated April 30, 2009, CMS told Petitioner
that it could not reassign the provider agreement and certification number to an entity that
served different patients in a different geographic location from that served by the
original owner. CMS Ex. 10. In August 2009, CMS advised Alliance Care — the original
owner — that its provider agreement was terminated because it no longer primarily
engaged in providing services. CMS Exs. 12, 13. Alliance Care was understandably
isturbed (apparently not wanting on its record an involuntary termination for an entity it
hought it had long since sold). CMS Ex. 18 at 6 (Potjeau Decl. § 45). Following

ct

2 As CMS points out, the Columbus operation did not then qualify for certification. By
its own admission, the operation did not reach adequate staffing levels for an HHA prior
to March 2008. CMS Cl. Br. at 7-8; P. Ex. 2 at 3 (Hawkins Decl. ¥ 12).
negotiations among Petitioner, Alliance Care, and CMS, Petitioner eventually filed an
amended CMS Form 855A, acceptable to CMS, acknowledging that it acquired an HHA
operating in what had been Broadview Heights’ service area at the time of the transaction
— Cleveland and environs. CMS Ex. 14. CMS then approved the CHOW, but again
terminated the provider agreement because the Cleveland facility had stopped providing
services. CMS Exs. 15, 16.

Without regard to rules governing CHOWs or relocation (which I discuss below), these
facts establish that, in October 2007, the Medicare-certified HHA (Broadview
Heights/Caretenders) stopped treating patients. It was therefore no longer “primarily
engaged” in providing skilled nursing, therapeutic, or any other services, and no longer
met the statutory definition of an HHA. CMS therefore properly terminated its program
participation. Act § 1866(b)(2), 42 C.F.R. § 489.53(a)(1); United Med. Home Care, Inc.,
DAB No. 2194 (2008) (holding that CMS properly terminated the Medicare participation
of an HHA that treated no patients between February 9 and August 23, 2005); see
Cornerstone Family Healthcare, DAB No. 2319 (2010) (affirming Medicare termination
of a rural health clinic that was no longer providing services); Arizona Surgical Hosp.,
LLC, DAB No. 1890 (2003) (upholding Medicare termination of a hospital that did not
provide in-patient services for 39 days and therefore did not meet the provisions of
section 1861(e) of the Act).

B. Aside from its billing number (which cannot be sold),
Caretenders of Columbus bore no resemblance to
Broadview Heights, and CMS may appropriately require it
to demonstrate that it meets the statutory definition of an
HHA and complies with all Medicare conditions of
participation before certifying it to participate in the
Medicare program.

Petitioner claims that it merely took a five-month hiatus and had resumed providing
services by the time CMS terminated its program participation. Whether a provider can
ultimately avoid termination by resuming services after a significant period of inactivity
is questionable. | am aware of no situation (and Petitioner cites none) in which the
Departmental Appeals Board (Board) has reversed a termination based on the provider’s
claim that it resumed services. In fact, the Board has repeatedly rejected such arguments.
United Med. Home Care, Inc., DAB No. 2194 at 12; Cornerstone, DAB No. 2319 at 6.

On the other hand, I cannot conclude that the issue has been resolved for all situations,
since the cases in which the Board has rejected the argument were narrowly decided. In
United Medical Home Care, Inc., the HHA argued that it had resumed services because it
admitted a couple of patients following a six-month break in service. The Board found
this insufficient and sustained the termination. United Medical Home Care, Inc., DAB
No. 2194 at 12. In Cornerstone, the Board rejected Petitioner’s argument that CMS was
precluded from terminating a rural health clinic’s provider agreement because services
resumed after a change of ownership. However, in that case, the Board also pointed out
that regulations governing rural health clinics allow — but do not require — termination
based on a CHOW, so it is not clear whether the provider’s status as a rural health clinic
made a difference. DAB No. 2319 at 6 (citing 42 C.F.R. § 405.2404(b)(1)(iii)).

I need not decide this question here, however, because the Medicare-certified HHA that
stopped providing services in October 2007 never resumed providing those services. The
entity that reopened in March 2008 as Caretenders of Columbus was not the Medicare-
certified entity that AFAM purchased in October 2007. The HHA staff were all different;
the patients were different; the practice location was different; the service area was
different. The HHA was apparently no longer accredited either; the Joint Commission
withdrew its accreditation effective October 13, 2007, the date of the CHOW. CMS Ex.
17. All that remained the same was the provider billing number, which, by regulation,
could not legally have been sold. 42 C.F.R. § 424.550(a); see 42 C.F.R. §§ 424.535(a)(7)
and 424.535(b) (providing that CMS may revoke a Medicare provider’s billing privileges
and terminate its provider agreement if the provider sells or otherwise allows misuse of
its billing number).

I reject Petitioner’s suggestion that it did not change service areas because Broadview
Heights’ service area was the entire State of Ohio. When the HHA was initially certified
in 2006, CMS designated its service area as Lorain County, Ohio, which is part of the
metropolitan area surrounding Cleveland. CMS Ex. | at 3. Ina letter dated August 7,
2006, Alliance Care announced that it was relocating the HHA to Broadview Heights.
CMS Ex. 2 at 4, 13. Alliance Care filed the requisite CMS Form 855A, in which it
described the HHA’s service area as the State of Ohio. CMS Ex. 2 at 16. I see no
evidence that it ever actually served the entire state. Moreover, at the time of the CHOW,
its service area was unquestionably limited to the Cleveland area. As explained by
Michael Potjeau, Regional Health Insurance Specialist for CMS, “[t]o claim a geographic
area, the HHA must be able to provide supervision, administration and services
throughout that service area on a daily basis.” CMS Ex. 18 at 2 (Potjeau Decl. 11.)
AFAM’s Compliance Officer Lyles concedes that Broadview Heights was not providing
services in Columbus, stating that, at the time AFAM purchased the Cleveland-based
HHA, he was “not aware of any Medicare-certified home health agencies that were
already serving the Columbus, Ohio service area and that were also available for
purchase.” P. Ex. 1 at 3 (Lyles Decl. ¥ 11). Finally, in describing the HHA’s service
area, the purchase agreement between Alliance Care and AFAM does not include
Franklin County (where Columbus is located) or any of its surrounding counties. CMS
Ex. 6 at 1.

Thus, without regard to the CHOW, CMS could not have allowed this entirely new
operation to participate in the Medicare program without undergoing the certification
process. When a CHOW occurs, the Medicare provider agreement is automatically
assigned to the new owner, and the assigned provider agreement is then subject to “all
applicable statutes and regulations and to the terms and conditions under which it was
originally issued...” 42 C.F.R. § 489.18(c), (d).? However, a CHOW does not entitle
the new owner to rights greater than those the old owner had to convey, and where, as
here, a purported “relocation” is “far removed from the ordinary approved site,” and
involves different employees and patients, the relocation may constitute “a cessation of
business at the provider’s old location and a voluntary termination on the part of the
provider.” State Operations Manual (SOM) § 2702B.

A separate provision of the SOM specifically addresses situations involving a CHOW
and relocation and achieves the same result as section 2702B. Section 3210.1B5 of the
SOM mandates that, where, concurrent with the CHOW, a new owner relocates “to a site
in a different geographic area serving different clients than previously served and
employing different personnel to serve those clients,” the provider “must be treated as a
new applicant to the Medicare program.” SOM § 3210.1B5.

I find these provisions of the SOM completely reasonable and wholly consistent with the
spirit and the letter of the Act and regulations. They ensure that what is effectively a
completely new entity is surveyed and demonstrates its substantial compliance with all
Medicare requirements before it participates in the program. See 42 C.F.R. § 489.13.

C. Petitioner’s purported reliance on misinformation from
a state employee does not estop CMS from enforcing valid
program requirements.

Vice President/Compliance Officer Lyles testifies that, notwithstanding his significant
experience with CHOWs, he had “never experienced a situation that would entail an
acquisition followed by a relocation of the agency to a new service area.” P. Ex. 1 at3
(Lyles Decl. § 14). He asserts that he therefore instructed staff to contact the state survey
agency “to inquire as to the permissibility of a CHOW and concurrent relocation of the
agency to a new service area.” P. Ex. 1 at 3 (Lyles Decl. § 15). The task fell to Director

> Petitioner makes much of the “automatic” nature of the CHOW, arguing that the
automatic assignment provisions of 42 C.F.R. § 489.18(c) are “controlling authority in
the event of a CHOW and concurrent relocation.” P. Cl. Br. at 2. But Petitioner
overlooks other regulatory requirements for effectuating a CHOW. The buyer and seller
must notify CMS and must submit new enrollment applications “before completion of the
change of ownership.” 42 C.F.R. § 424.550(b); 42 C.F.R. § 489.18(b). CMS may
sanction or penalize the “current owner” for failing to submit an appropriate application
“even after the date of ownership change.” If the “prospective owner” fails to submit a
complete enrollment application or its application contains “material omissions,” CMS
may deactivate the Medicare billing number. 42 C.F.R. § 424.550(b).
Hawkins, who says that she spoke to someone she knew at the state agency named Karen
Cook who:

gave me the impression that the CHOW and relocation would
be permissible and was a matter of filing certain information
with [the state agency] and the Medicare fiscal intermediary .
... At no time during the call did she inform me that a
Medicare State Operations Manual provision existed that
impeded such an action.

P. Ex. 2 at 2 (Hawkins Decl. § 8). Petitioner does not disclose Ms. Cook’s exact status,
simply describing her as “an [Ohio Department of Health] representative with whom
[Director Hawkins] had worked in the past.” P. Ex. 2 at 2 (Hawkins Decl. § 7).
Incredibly, according to both Mr. Lyles and Ms. Hawkins, based on this one conversation
with a state employee, whose exact status Petitioner does not disclose, AFAM purchased
Alliance Care’s HHA. P. Ex. 1 at 3 (Lyles Decl. § 17); P. Ex. 2 at 3 (Hawkins Decl.

410).

Whether the government can ever be estopped from enforcing valid regulations based on
the misrepresentations of government employees or their agents is highly questionable.
See Heckler v. Cmty. Health Servs. of Crawford County, 467 U.S. 51, 63 (1984);
Schweiker v. Hansen, 450 U.S. 785 (1981). The Supreme Court has deliberately stopped
short of establishing a flat rule to preclude estoppel against the government. It has
nevertheless recognized that the arguments in favor of such a rule are “substantial.”

When the Government is unable to enforce the law because
the conduct of its agents has given rise to an estoppel, the
interest of the citizenry as a whole in obedience to the rule of
law is undermined. It is for this reason that it is well settled
that the Government may not be estopped on the same terms
as any other litigant.

Cmty. Health Servs. of Crawford County, 467 U.S. at 60.

In Cmty. Health Servs. of Crawford County, a Medicare certified HHA asked its fiscal
intermediary whether Medicare would reimburse the salaries of certain employees.
Without first consulting the appropriate office of the Department of Health and Human
Services (which would have been a predecessor to CMS), employees of the fiscal
intermediary repeatedly — and wrongly -- assured the HHA that Medicare covered the
costs. Relying on this erroneous advice, the HHA expanded its services and billed
Medicare. HHS eventually learned of the error and recouped a substantial overpayment.
In upholding the government’s right to recoup, the Court emphasized that Medicare
participants have a duty to familiarize themselves with the legal requirements for cost
reimbursement, and act with “scrupulous regard” for the requirements of the law. They
may not rely on the conduct of government agents that is contrary to that law. 467 U.S.
at 63, 64.

The Court also noted that, by consulting the fiscal intermediary, the provider showed that
it “indisputably knew” that its entitlement was a “doubtful question,” not clearly covered
by existing policy statements. The fiscal intermediary’s erroneous advice was, in itself,
insufficient to raise an estoppel, as was the government’s failure to anticipate the problem
and make a clear resolution available to the respondent. 467 U.S. at 64.

Here, Petitioner’s position is even weaker than that presented in Cmty. Health Servs. of
Crawford County. Notwithstanding AFAM’s considerable experience with the Medicare
program, including CHOWs, Compliance Officer Lyles concedes that he was not aware
of any provider ever having successfully avoided the certification process by acquiring
and relocating an already-certified HHA. P. Ex. | at 3 (Lyles Decl. § 14). From this, any
reasonable person should have recognized that AFAM’s plan was, at best, highly
questionable. And, unlike the situation in Cmty. Health Servs. of Crawford County, the
answer to AFAM’s question was readily available. CMS explicitly articulated its rule in
the SOM, which is easily accessible to anyone with a computer and internet access.
Where a party exercising “reasonable diligence” can acquire program knowledge “so that
it would be negligence . . . to remain ignorant by not using those means,” it cannot claim
to have been misled by relying on an agent’s representation or concealment. Wade
Pediatrics, DAB No. 2153 at 23 (2008) (citing 467 U.S. 51 at 61 n.10).

Further, a provider’s reliance on statements from either the fiscal intermediary or a state
employee — even one who, unlike Ms. Cook, could unquestionably be characterized as a
“responsible government agent” — is simply unreasonable. As the Supreme Court
explained, in administering a program such as Medicare, CMS cannot:

be expected to ensure that every bit of informal advice given
by its agents . . . will be sufficiently reliable to justify
expenditure of sums of money as substantial as those spent
[here]. Nor was the advice given under circumstances that
should have induced respondent’s reliance. As a recipient of
public funds well acquainted with the role of a fiscal
intermediary, respondent knew that [the fiscal intermediary]
only acted as a conduit; it could not resolve policy questions.
The relevant statute, regulations, and Reimbursement Manual,
with which respondent should have been and was acquainted,
made that perfectly clear. Yet respondent made no attempt to
have the question resolved by the Secretary; it was satisfied
with the policy judgment of a mere conduit.
467 U.S. at 64-65; accord, Regency on the Lake, DAB No. 2205 at 5 (2008) (finding a
provider’s reliance on statements of state employees “particularly unreasonable” because
it should have known that neither a state agency nor its employees are empowered to find
a facility eligible to participate in the Medicare program; only the Secretary has the final
authority to make that determination).

Finally, Petitioner’s reliance on oral advice weakens its case even more. The Supreme
Court pointed out how inherently unreasonable such reliance is, and ruled that reliance on
oral advice should not support an estoppel against the government:

It is not merely the possibility of fraud that undermines our
confidence in the reliability of official action that is not
confirmed or evidenced by a written instrument. Written
advice, like a written judicial opinion, requires its author to
reflect about the nature of the advice that is given... and
subjects that advice to the possibility of review, criticism, and
reexamination. The necessity for ensuring that governmental
agents stay within the lawful scope of their authority, and that
those who seek public funds act with scrupulous exactitude,
argues strongly for the conclusion that an estoppel cannot be
erected on the basis of... oral advice. . . especially... when
a complex program such as Medicare is involved, in which
the need for written records is manifest.

467 U.S. at 65 (emphasis added).
II. Conclusion

Because it ceased providing services, Petitioner no longer met the statutory definition of
an HHA, and CMS properly terminated its Medicare participation.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

David W. Laudon, D.C.,
(PTAN: 350003311),

Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-10-857
Decision No. CR2310

Date: January 13, 2011

DECISION

Petitioner, David W. Laudon, D.C., a chiropractor, challenges the Centers for Medicare
and Medicaid Services’ (CMS’s) revocation of his Medicare enrollment and billing
privileges, effective December 30, 2009. Petitioner and CMS have filed cross motions
for summary judgment. I deny both motions. I proceed to decide the case based on the
written record before me. I conclude that CMS had the authority to revoke Petitioner’s
enrollment and billing privileges in the Medicare program for failing to report an adverse
legal action under 42 C.F.R. § 424.535(a)(9).

I. Background

On December 30, 2009, the Minnesota Board of Chiropractic Examiners suspended
Petitioner’s license to provide chiropractic services in the State of Minnesota due to
outstanding child support liability. P. Ex. 5. Petitioner asserts that he or someone on his
behalf reported this action to Wisconsin Physicians Service (WPS), the Medicare
contractor, on December 31, 2009. Hearing Request (HR). Petitioner submitted with his
hearing request a copy of a letter signed by Petitioner, dated December 31, 2009 and
addressed to “insurance companies,” with a “cc” to “Medicare.” P. Ex. 2, at 1. The letter
states that his license was suspended for “unknown duration,” an action “[d]ue to
American Family’s inability to pay Auto Accident Bills.”' Id.

By letter dated March 26, 2010, WPS, the Medicare contractor, notified Petitioner that
his Medicare enrollment and billing privileges were revoked effective December 30,
2009, because he had failed to report the suspension of his chiropractic license as an
adverse action as required. CMS Ex. 1, at 1.

By letter dated April 12, 2010, Petitioner requested contractor reconsideration. P. Ex. 3.
The contractor issued an unfavorable reconsideration decision on July 12, 2010. P. Ex. 7.
The contractor hearing officer found that Petitioner had failed to report his license
suspension as an adverse action within 30 days as required by 42 C.F.R. § 424.535(a)(9).
The hearing officer noted that, along with his reconsideration request, Petitioner included
a copy of his “December 31, 2009, letter that was addressed to ‘Insurance Companies’ as
notification of suspension; however, WPS Medicare Provider Enrollment never received
the appropriate notification on a CMS-855 application.” P. Ex. 7, at 1.

By letter dated July 16, 2010, Petitioner timely requested an Administrative Law Judge
(ALJ) hearing pursuant to the instructions in the reconsideration decision. HR. This case
was assigned to me for hearing and decision pursuant to 42 C.F.R. § 498.44, which
permits designation of a Member of the Departmental Appeals Board (Board) to hear
appeals taken under Part 498.

On July 30, 2010, I issued an Acknowledgement and Pre-Hearing Order (PHO) and
established a briefing schedule. On August 12, 2010, our office received Petitioner’s
undated exchange, including a very brief argument titled “Motion for Summary
Jud[g]ement” (P. MSJ), proposed exhibits 1-7 (labeled in accordance with my PHO
although with an incorrect docket number), and a proposed witness list. Petitioner did
not submit written direct testimony of his proposed witnesses as required by my PHO.*

' The letter further states: “Due to the Action of Some insurance companies not to pay
(2+ years delinquent) Medical bills Dr. Laudon responsibility to make Child Support
payments were not met.” P. Ex. 2, at 1.

> The CMS-855 application refers to the Office of Management and Budget approved
Medicare enrollment application. The approved form for physicians and non-physician
practitioners, such as Petitioner, is the CMS-855I. The same CMS-855 form is used for a
number of purposes including for notifying the contractor of any changes.

> Petitioner mailed a second copy of his exchange which was received by this office on
August 17, 2010.
CMS filed its exchange, including a motion for summary judgment and memorandum in
support thereof (CMS Br.), proposed exhibits 1-3, and written direct testimony for its one
proposed witness. CMS did not submit a formal response to Petitioner’s motion for
summary judgment but addressed Petitioner’s arguments and evidence in its brief. CMS
objected to an unexecuted “affidavit” dated December 31, 2009, signed by Amanda
Greenwaldt, submitted as part of Petitioner’s proposed exhibit 2. CMS Br. at 4. CMS
argued that this document should be excluded as new documentary evidence because
Petitioner failed to show good cause for his failure to submit it to the hearing officer as
required for its admission by 42 C.F.R. § 498.56(e).

On September 2, 2010, Petitioner submitted another document titled “Summary Brief.”
In this filing, Petitioner argued that CMS did not respond to his August 12, 2010 motion
‘or summary judgment and therefore his motion should be granted. Also with this filing,
Petitioner submitted a proposed exhibit 8, and a summary description of an additional
proposed witness. Petitioner did not submit sworn written direct testimony for any of his
witnesses, contrary to the instructions in my PHO. Neither party requested to cross-
examine any of the opposing party’s proposed witnesses.

On September 9, 2010, CMS indicated it would not submit a response to Petitioner’s
September 2, 2010 submission. The staff attorney assigned to this case contacted
Petitioner on September 9 and on September 15, 2010, inquiring as to whether Petitioner
intended to file any further response to CMS’s motion for summary judgment beyond
Petitioner’s September 2, 2010 submission. Petitioner failed to respond and I therefore
issued an Order Closing the Record on September 28, 2010.

II. Applicable legal authority

The regulations at 42 C.F.R. Part 424, subpart P, set out the requirements for enrollment
and reporting of changes to enrollment information. “Providers and suppliers must meet
and maintain these enrollment requirements to bill either the Medicare program or its
beneficiaries for Medicare covered services or supplies.” 42 C.F.R. § 424.500.

Section 424.535 lists the bases on which CMS may revoke a provider’s or supplier’s
Medicare billing privileges and provider or supplier agreement. Subsection
424.535(a)(9) authorizes CMS to revoke billing privileges where a provider or supplier
failed to comply with the reporting requirements including the requirement that

“Tp ]hysicians [and] nonphysician practitioners . . . must report . . . to their Medicare
contractor. . . [w]ithin 30 days . . . [a]ny adverse legal action.” 42 C.F.R. §
424.516(d)(1)(ii). A “[f]inal adverse action” is defined to include “[s]uspension or
revocation of a license to provide health care by any State licensing authority.” 42 C.F.R.
§ 424.502.
Providers or suppliers who have had their billing privileges revoked “are barred from
participating in the Medicare program from the effective date of the revocation until the
end of the re-enrollment bar,” which is “a minimum of | year, but not greater than 3
years depending on the severity of the basis for revocation.” 42 C.F.R. § 424.535(c).

III. Issue

The issue in this case is whether CMS properly revoked Petitioner’s Medicare enrollment
and billing privileges.

IV. Analysis

My findings of fact and conclusions of law are set out in italics as headings with my
supporting rationale in the discussions under each.

A, Neither party is entitled to summary judgment.

Summary judgment is appropriate only when the record shows that there is no genuine
issue as to any material fact, and the moving party is entitled to judgment as a matter of
law. Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010). In determining
whether there are genuine issues of material fact for trial, I must view the evidence in the
light most favorable to the non-moving party, drawing all reasonable inferences in that
party’s favor. Thus, my role in deciding a summary judgment motion is different from
my role in resolving a case on the merits after the record is fully developed. In the
summary judgment phase, I must not assess credibility or evaluate the weight of
conflicting evidence. Holy Cross Vill. at Notre Dame, Inc, DAB No. 2291, at 5 (2009).

In the present case, both parties moved for summary judgment. I evaluate each motion
separately. It is not disputed that, on December 30, 2009, the Minnesota Board of
Chiropractic Examiners suspended Petitioner’s license to provide chiropractic services in
the State of Minnesota due to outstanding child support liability. P. Ex. 5. The
regulation at 42 C.F.R. § 424.502 defines a license suspension, such as Petitioner’s, as an
adverse legal action, and therefore the regulation required Petitioner to report this adverse
action within 30 days. 42 C.F.R. § 424.516(d)(1)(ii). Petitioner does not deny that he
was required to report the suspension. Petitioner’s central argument is that he did timely
notify the Medicare contractor of his suspension on December 31, 2009, and that,
although he did not submit the notice on the required form, he was never notified of a
requirement to use a specific form. HR.

Petitioner’s August 12, 2010 exchange accompanied a motion for summary judgment
which set out as a statement of fact the following assertion:
On December 31, 2009 Medicare did receive a letter notifying them of
adverse sanctions brought on NPI 1922123868 and MN Chiropractic
License Number 4587 of notice of Suspension by Becker County for
Failure to make Child Support.

P. MSJ at i.* As evidence of this assertion, Petitioner submitted the letter described
above, dated December 31, 2009, and showing a “cc” to Medicare. P. Ex. 2, at Dv.
Along with the letter, Petitioner submitted an unsworn form document entitled “affidavit
of service by mail” and signed by Amanda Greenwaldt. Jd. at 2. Ms. Greenwaldt avers
that she mailed a copy of the letter on December 31, 2009 to “Medicare of Minnesota” at
“8120 Penn Ave. South, Suite 200, Bloomington MN 55431” from the “Detroit Lakes
Federal Post[] Offfice].” Jd.

Petitioner’s entire argument consists of the following two contentions:

I. Medicare did indeed receive the December 31", 2009 letter notifying
them of adverse sanctions.

IL. Affidavit of Service signed and mailed by Amanda Greenwaldt, 12-31-
2009.

* Petitioner’s motion also set out a second statement of fact relating to his contention that
testimony relating to the child support case showed that notice was not sent to the correct
address and that, as a result, his suspension was done “falsely and with malice.” P. MSJ
at i. I find this statement irrelevant to any issue before me. Petitioner identifies no
regulatory basis, and I find none, that would allow him to collaterally attack the basis for
the qualifying adverse action. The adverse action, in this case the license suspension, in
and of itself triggers the requirement to report. Since Petitioner does not deny that the
suspension occurred, any defenses he might have had to the imposition of the suspension
or to any underlying child support proceeding are not material to the sole issue before me
of whether he properly and timely reported the suspension. For the same reason, I find
irrelevant and do not discuss further the proposed testimony of three witnesses named in
Petitioner’s witness list regarding proceedings in state court, as to whom I have already
noted that Petitioner failed to provide any written direct testimony in any case.

> Petitioner also attached to his initial exchange: his professional firm registration (P.
Ex. 1); his reconsideration request to WPS (P. Ex. 3); a copy of his hearing request (P.
Ex. 4); orders from the State Board of Chiropractic Examiners suspending and then
reinstating his license to practice (P. Exs. 5 and 6); and the reconsideration decision (P.
Ex. 7). CMS objects only to the “affidavit” included in Petitioner’s Exhibit 2. I discuss
this objection later in the decision and admit the remainder of Petitioner’s Exhibit 2 and
Petitioner’s other exhibits without further discussion. Petitioner did not object to any of
CMS’s exhibits which are therefore also admitted.

P. MSJ at ii. I find that a genuine dispute of fact plainly exists as to Petitioner’s claims
because CMS denies that WPS ever received the December 31, 2009 letter and provides
an affidavit from an employee of WPS that a search of Petitioner’s records at WPS and
survey of all relevant employees did not reveal any indication that such a letter was ever
received. CMS Br. at 8; CMS Ex. 2. This alone requires me to deny Petitioner’s motion
for summary judgment. I discuss the “affidavit” submitted by Petitioner later in this
decision.

CMS also moved for summary judgment. CMS asserted that no genuine issue of fact
existed “concerning whether Petitioner mailed the December 31, 2009 letter to WPS,” on
the grounds that the evidence on that point submitted by Petitioner “is incomplete and
unreliable to the point that it cannot be found to raise a material issue of fact.” CMS Br.
at 8. CMS argues that Petitioner’s own statements should be disregarded as “sel:
interested;” that the letter itself lacked any detail; and that the “affidavit” was produced
belatedly, was “murky” in content and lacked indicia of reliability. /d. at 8-10. Further,
CMS points out that WPS “specifically denied” having any record of receiving the letter.
Id. at 8.

CMS’s arguments go to the weight to be accorded to Petitioner’s evidence and the
credibility to be given to Petitioner’s statements as opposed to those of WPS staff. Such
arguments are appropriately considered as part of evaluating the record. At the summary
judgment stage, however, my job is not to weigh evidence or assess credibility, but rather
to determine whether any reasonable trier of fact could find that Petitioner reported the
adverse action, accepting Petitioner’s evidence as true and drawing all reasonable
inferences in Petitioner’s favor. Under that standard, I must conclude that Petitioner has
raised a genuine issue of fact as to whether he mailed a report of the adverse action
against him to his Medicare contractor.

B. I find that Petitioner did not properly report his suspension as required by
section 424.516(d) and conclude that CMS was authorized to revoke his
enrollment in Medicare.

I. No further proceedings are required.

Having concluded that summary judgment is not appropriate in this case, I do not find a
need for any further proceedings. My initial order instructed the parties that they must
exchange all proposed exhibits, written direct testimony for any proposed witnesses, and
briefs addressing all issues of law and fact at the same time as their motions for summary
judgment (if any). PHO at 2 (July 30, 2010). Petitioner was instructed that he must
affirmatively request in his brief to cross-examine any CMS witness or I would assume
that he did not desire to conduct cross-examination. /d. at 3. Petitioner did not request to
cross-examine CMS’s one witness. Neither party’s brief or motion for summary
judgment suggested that any further record development would be sought if summary
judgment was denied.

Both parties were nevertheless contacted in September 2010 by a staff attorney from my
office to determine if they wished to make further submissions. CMS indicated that it
would not submit any additional response, and Petitioner failed to indicate any intent to
make another submission by the deadline set. The record was therefore closed by my
order dated September 28, 2010.

I will therefore proceed to determine the merits of the appeal based on the record
developed before me.

2. I exclude the new evidence proffered by Petitioner.

CMS argues that the “affidavit” Petitioner submitted as part of Petitioner’s proposed
exhibit 2 constitutes new evidence under 42 C.F.R. § 498.56(e), that Petitioner has not
established that good cause exists, and that the document therefore must be excluded.
CMS Br. at 9. The applicable regulation provides as follows:

(e) Provider and supplier enrollment appeals: Good cause requirement —

(1) Examination of any new documentary evidence. After a hearing
is requested but before it is held, the ALJ will examine any new
documentary evidence submitted to the ALJ by a provider or
supplier to determine whether the provider or supplier has good
cause for submitting the evidence for the first time at the ALJ level.

(2) Determining if good cause exists. —

(i) If good cause exists. If the ALJ finds that there is good cause for
submitting new documentary evidence for the first time at the ALJ
level, the ALJ must include evidence and may consider it in reaching
a decision.

(ii) Zf good cause does not exist. If the ALJ determines that there
was not good cause for submitting the evidence for the first time at
the ALJ level, the ALJ must exclude the evidence from the
proceeding and may not consider it in reaching a decision.

42 C.F.R. § 498.56(e). I explained these requirements in my initial order and instructed
Petitioner to explain in his brief the good cause justifying later submission of any new
evidence. PHO at 3.
Petitioner does not claim that he submitted the Greenwaldt “affidavit of service” to the
hearing officer. P. Ex. 2, at 2. The hearing officer’s reconsideration decision lists only
two documents submitted at that level — the reconsideration request and a copy of a
notification letter of suspended licenses (presumably the documents submitted to me as
Petitioner’s Exhibits 3 and 5). The “affidavit” is dated December 31, 2009, and was
therefore presumably in existence during each prior level of appeal. I conclude that the
exhibit is new documentary evidence within the meaning of section 498.56(e)(1).

Petitioner has not provided any argument as to why I should find that good cause is
established for the submission of this document for the first time at this level of appeal.
Nothing on the face of the document suggests a reason why it was not produced before. I
therefore find no good cause and must exclude the document from the proceeding as a
result.

I note that, even had I accepted the “affidavit” into evidence, I would not have found it
reliable proof that Petitioner mailed notice of adverse action to WPS. The “affidavit”
describes the mailing as “Letter head attached to Medicare and all insurance Companies
Chiropractic Health Consultant * Medicare Letter head Dated 12/31/2009.” P. Ex. 2,

at 2. Petitioner describes Ms. Greenwaldt in his witness list as “stylist” and describes her
as filing “Affidavits of Service to parties.” P. Witness List at 2. Petitioner filed no sworn
written direct testimony for Ms. Greenwaldt as required by my initial order. PHO at 3.
No explanation was offered for the purported creation of this unexecuted document at the
same time as the letter purporting to provide notice of Dr. Laudon’s suspension to “all
insurance companies” and Medicare nor was any explanation offered for the omission of
the notarial subscription called for on the form. The “affidavit” provides an address for
WPS but does not identify any other insurance company to which the letter was
addressed. The appearance raises questions about whether the “affidavit” was created
after-the-fact to cure the absence of any evidence that the notice letter was ever mailed to
WPS. In the absence of any testimony clarifying the cryptic description of what was
mailed or the unclear role of Ms. Greenwaldt, I would not have credited the statement in
the “affidavit.”

3. Petitioner did not demonstrate that he notified Medicare as required.

As noted, the regulation requires that a supplier, such as Petitioner, notify the Medicare
contractor of any adverse legal action. 42 C.F.R. § 424.516(d)(1)(ii). Petitioner does not
deny that the suspension was an adverse action that he was required to report. His
argument is, instead, that he did provide the required notice. I find three problems with
his argument. First, he did not prove that he even mailed to WPS the letter to which he
points as notice. Second, he did not prove that mailing notice is sufficient to meet the
requirement of reporting without any evidence that it was ever received by WPS. Third,
he did not prove that the letter, even if received, would constitute adequate reporting.
On the first point, Petitioner offered no explanation of the circumstances under which the
December 31, 2009 letter was supposedly mailed. The vague language of the letter, and
the absence of any specific name or address of an addressee, further undercuts any
confidence that it was actually sent to the required Medicare contractor. I have already
excluded the unexecuted affidavit of service signed by Petitoner’s “stylist,” and explained
why it would not be credible proof of mailing to WPS’s address even if it were
admissible.

On the second point, I note that the regulations require that a provider or supplier notify
the Medicare contractor. Nothing in the regulations suggests that an attempt to provide
notice by mailing a letter is enough to meet that requirement. See 42 C.F.R.

§ 424.535(a)(9). Petitioner bears the burden of showing that WPS was actually notified.
I note that Petitioner could have used a form of mailing that provided evidence of
tracking or receipt, but chose not to. Petitioner has not provided any evidence that the
contractor received the December 31, 2009 letter. On the contrary, CMS provided sworn
and uncontradicted testimony that the contractor looked for the letter and found no
evidence of its receipt. CMS Ex. 2.

Moreover, the timing of the contractor revocation is further evidence that the contractor
did not receive the notice Petitioner mailed. If the contractor received the notice in
January 2010, I would have expected it to have taken action much sooner to revoke
Petitioner’s enrollment. As the contractor’s reconsideration points out, the loss of the
license to provide chiropractic services meant that Petitioner was not in compliance with
an enrollment requirement and was subject to revocation on that ground. CMS Ex. 1,

at 1. This timing is likewise consistent with the assertion proffered in the CMS affidavit
that CMS or their contractor only learned of the suspension through other means. CMS
Ex. 2.

On the third point, CMS argues that the December 31, 2009 letter would not suffice
because the report must be made on a specific form. CMS Br. at 5-7. CMS has
interpreted the regulatory notice requirement in this way in Chapter 10, § 7.1 of the
Medicare Program Integrity Manual (MPIM) --

Unless otherwise specified in this manual, if an enrolled provider is adding,
deleting, or changing information under its existing tax identification
number, it must report this change using the applicable CMS-855 form.
Letterhead is not permitted.

The provider shall furnish the changed data in the applicable section of the
form and sign and date the certification statement. In accordance with 42
CFR §424.516(d) and (e), the timeframes for providers to report changes in
their CMS-855 information are as follows:
10

A. For physicians . . . [t]he following changes must be reported
within 30 days:

A change of ownership
A final adverse action
A change in practice location... .

MPIM Chapter 10, § 7.1. CMS argues that the use of the CMS-855]I form is not merely a
formality but a necessity for the contractor to obtain all substantive information required
to correctly process the information related to the adverse action. CMS Br. at 6.

I note that the preamble to the final regulation highlights the importance of prompt
reporting, especially in light of the disincentives inherent in reporting an adverse action
that may in itself jeopardize the supplier’s ability to continue to receive Medicare
payments. Thus, the preamble explains as follows:

Comment: One commenter stated that “any adverse legal action” is not
defined; therefore a 30-day reporting requirement is unreasonable as are the
other proposed requirements. The commenter also stated that we should
save our severe penalties for proven fraudulent behavior, not minor clerical
oversights.

Response: We disagree with this commenter that failure to report a final
adverse action is a minor clerical oversight. Since reporting a final adverse
action may affect a physician or NPP's ability to continue to participate in
the Medicare program, we understand why these actions may not be
reported to a Medicare contractor; however, we believe that final adverse
actions, including State licensing suspensions and revocations, should be
reported within 30 days of the reportable event, even if the physician or
NPP plans on appealing the final adverse action. By reporting the final
adverse action within 30 days, the Medicare program will carefully review
any revocation action and exercise its discretion as to whether to impose a
revocation and the length of time of the reenrollment bar.

73 Fed. Reg. 69,726, 69,778 (November 19, 2008) (emphasis added).

CMS could reasonably require sufficient information to ensure that it can review and
evaluate the adverse action. The CMS-855] form specifically identifies which sections a
supplier is required to complete in the event of a final adverse action, including
identifying information and professional license information, and the date of the adverse
action as well as “the Federal or State agency or the court/administrative body that
imposed the action, and the resolution, if any.” CMS Ex. 3, at 6, 7, 14. Furthermore, the
11

reporting supplier is directed to attach a copy of the documentation related to the reported
final adverse action. Jd. at 14.

I need not decide whether a full and timely report submitted on a document other than the
prescribed CMS-855 form could still result in a revocation for failure to report. As I
concluded above, I find no credible evidence that the December 31, 2009 letter was sent
to or received by WPS. On its face, the letter provides less than adequate information for
a careful review of the adverse action, lacking for example, a clear reason for the
suspension, the date the suspension occurred or took effect, or a copy of the suspension
action. At a minimum, had WPS ever received this letter it would have, under its own
policies, required Petitioner to complete a CMS-855] form containing the missing
information required for a full review. CMS Ex. 2, at 2.

V. Conclusion

For the reasons explained above, I conclude that CMS had authority to revoke
Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(9)
based on Petitioner’s failure to report his adverse action as required.

/s/
Leslie A. Sussan
Board Member


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Chukwudi M. Ajumobi

(OI File Number 3-10-40115-9),

Petitioner

Vv.

The Inspector General.
Docket No. C-11-1
Decision No. CR2309

Date: January 10, 2011

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner,
Chukwudi M. Ajumobi, from participating in Medicare and other federally funded health

care programs for a period of at least five years.

I. Background

On July 30, 2010, the I.G. notified Petitioner that he woul

d be excluded for a minimum of

five years from participating in Medicare and other federally funded health care

programs. The I.G. alleged as the basis for the exclusion
convicted of a crime as is described at section 1128(a)(2)
(Act). This section mandates the exclusion of any indivi

that Petitioner had been
of the Social Security Act
ual who is convicted of a

criminal offense relating to abuse or neglect of a patient in connection with the delivery

of a health care item or service.

Petitioner requested a hearing, and the case was assigned to me for a hearing and a

decision. I ordered the parties to exchange briefs and pro,

posed exhibits, and they have

complied with my order. The I.G. filed a brief and three proposed exhibits that are
identified as I.G. Ex. 1 — LG. Ex. 3. Petitioner filed a brief and two proposed exhibits.
Petitioner did not affix exhibit numbers to his proposed exhibits. I identify them as
follows: P. Ex. 1, Memorandum from Robin Lewis, Government of the District of
Columbia Department on Disability Services, July 24, 2008; and P. Ex. 2, National
Children’s Center Serious Reportable Incident Investigation Final Report. I receive into
evidence I.G. Ex. 1 —1.G. Ex. 3 and P. Ex. 1 — P. Ex. 2.

IL. Issues, Findings of Fact, and Conclusions of Law
A. Issues
The issues are whether:

1. Petitioner was convicted of a crime as is described at section 1128(a)(2)
of the Act; and

2. An exclusion of at least five years is reasonable as a matter of law.
B. Findings of Fact and Conclusions of Law

1. Petitioner was convicted of a crime as is described at section
1128(a)(2) of the Act.

The necessary elements of a conviction that is described at section 1128(a)(2) of the Act
are that: (1) the excluded individual must be convicted of a crime in a State or a federal
court; (2) the crime must relate to abuse or neglect; and (3) the abuse or neglect must be
of a patient and in connection with the delivery of a health care item or service. All three
of those elements are met here.

First, it is undisputed that Petitioner was convicted of a crime. Petitioner admits his
conviction. Petitioner was convicted in the Superior Court of the District of Columbia of
the crime of criminal abuse of a vulnerable adult, and a final judgment of conviction was
entered against him on September 17, 2009. LG. Ex. 2 at 1.

Second, Petitioner’s crime related to abuse. The offense of which he was convicted —
criminal abuse of a vulnerable adult — is on its face a crime of abuse. That is also made
evident by the facts that are the basis for Petitioner’s conviction. Petitioner was
convicted of physically abusing an individual on May 20, 2008, by slapping him on the
side of his face with the back of his opened hand. LG. Ex. 3 at 1-2.

Petitioner argues that there was no abuse because the victim of his crime suffered no
physical harm. Petitioner’s argument is, essentially, that he did not actually abuse the
victim of his assault notwithstanding that he was convicted of abuse. That is an argument
that I may not consider because Petitioner’s conviction for abuse assumes that Petitioner
harmed or attempted to harm his victim. I may not now retry Petitioner’s criminal case,
given Petitioner’s intent to commit harm was an element of his crime and given further
that the authority to exclude pursuant to section 1128(a)(2) derives from Petitioner’s
conviction.

Third, the abuse perpetrated by Petitioner was against a patient and was in connection
with the delivery of a health care item or service. It is undisputed that Petitioner was
employed by the National Children’s Center in Washington, D.C. and was assigned as a
caregiver of his victim, a patient at that facility. He struck his patient in the course of
providing care to him. I.G. Ex. 3 at 1, 2.

2, An exclusion of at least five years is reasonable as a matter of law.

The Act mandates an exclusion of at least five years of any individual who is convicted
of a crime as is described at section 1128(a)(2). Act § 1128(c)(3)(B). The five-year
minimum exclusion that the I.G. imposed against Petitioner is thus reasonable as a matter
of law.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Godfrey Eze Uwudia
(O.I. File No. 6-09-41049-9),
Petitioner
Vv.

The Inspector General,
Department of Health and Human Services.

Docket No. C-10-947
Decision No. CR2308

Date: January 10, 2011

DECISION

Petitioner, Godfrey Eze Uwudia, is excluded from participation in Medicare, Medicaid,
and all other federal health care programs pursuant to section 1128(a)(1) of the Social
Security Act (Act) (42 U.S.C. §§ 1320a-7(a)(1)), effective July 20, 2010. Petitioner’s
exclusion for five years is mandatory pursuant to section 1128(c)(3)(B) of the Act (42
U.S.C. § 1320a-7(c)(3)(B)), and an additional period of exclusion of five years, for a total
minimum period of exclusion of ten years,’ is not unreasonable based upon the two
aggravating factors established in this case and the absence of any mitigating factors.

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
I. Background

The Inspector General (I.G.) notified Petitioner by letter dated June 30, 2010, that he was
being excluded from participation in Medicare, Medicaid, and all federal health care
programs for a period of ten years pursuant to sections 1128(a)(1) of the Act based upon
is conviction in the District Court of Oklahoma County, Oklahoma of a criminal offense
related to the delivery of an item or service under Medicare or a state health care
program. The LG. notified Petitioner that his exclusion was extended to ten years based
on the presence of two aggravating factors: (1) there was an actual or intended monetary
loss to a government program of $5,000 or more, evidenced by court ordered restitution
of $163,000; and (2) the criminal acts of which Petitioner was convicted occurred over a
period of one year or more, from about July 2003 to about June 2005.

Petitioner timely requested a hearing through counsel, by letter dated August 30, 2010.
The request for hearing was docketed and assigned to me on September 2, 2010, for
earing and decision. On September 27, 2010, I convened a telephonic prehearing
conference, the substance of which is memorialized in my order dated September 28,
2010. During the prehearing conference, Petitioner waived an oral hearing and agreed to
proceed upon the documentary evidence and the parties’ briefs. On October 25, 2010,
the I.G. filed an opening brief, * with I.G. Exs. 1 through 7. Petitioner filed his brief on
November 29, 2010 (P. Br.), with Petitioner’s exhibits (P. Exs.) 1 through 8. Petitioner
also filed objections to the admissibility of LG. Exs. 6 and 7. The I.G. filed a reply brief
on December 13, 2010, with I.G. Exs. 8, 9, and 10.

No objection has been made to my consideration of I.G. Exs. 1 through 5 and 8 through
10, and they are admitted as evidence. No objection has been made to the admissibility
of P. Exs. | through 8, and they are admitted as evidence. I.G. Ex. 6 appears to be a letter
dated September 29, 2009, on the letterhead of the Office of Attorney General, State of
Oklahoma, with a signature of Don D. Brown, Assistant Attorney General, Patient Abuse
and Medicaid Fraud Control Unit. The letter contains information purportedly related to
the conviction and sentencing of Petitioner and has fourteen pages of documents
attached. Petitioner objects to my consideration of the exhibit on grounds that I.G. Ex. 6
contains testimonial evidence and information that has not been sworn or verified and the
person who made the statement has not been properly identified. However, Petitioner has
not given me cause to question the authenticity of either the letter or the documents
attached to it. There is no evidence that the documents are anything other than what they

> The L.G. titled its pleadings as a motion for summary judgment and brief in support.
However, Petitioner never withdrew the waiver of oral hearing, and it is not necessary to
proceed on summary judgment. The distinction between proceeding on summary
judgment verses proceeding to a decision on the merits after waiver of oral hearing is
significant due to the different standards that must be applied. Accordingly, I treat the
LG. filings as an opening brief in support of exclusion of Petitioner.
purport to be. The documents are also clearly relevant to the extent that they contain
evidence related to Petitioner’s conviction, which is the basis for his exclusion.

Clearly, the documents are hearsay, but hearsay is admissible so long as it is relevant and
authentic. I am presumed to know how to weigh hearsay evidence. Further, Petitioner
waived his right to demand cross-examination of the declarant by waiving an oral
hearing. The analysis regarding the admissibility of I.G. Ex. 7 is essentially the same.
Although the authenticity of I.G. Ex. 7 may not be apparent from the face of the
document, authenticity is established by LG. Ex. 8, the affidavit of the custodian of the
documents who also attests to the authenticity of both I.G. Exs. 6 and 7. Accordingly,
Petitioner’s objections to I.G. Exs. 6 and 7° are overruled, and they are admitted as
evidence.

II. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a
hearing by an Administrative Law Judge (ALJ) and judicial review of the final action of
the Secretary of Health and Human Services (the Secretary). Pursuant to section
1128(a)(1) of the Act, the Secretary must exclude from participation in any federal health
care program any individual convicted under federal or state law of a criminal offense
related to the delivery of an item or service under Medicare or a state health care
program. The Secretary has promulgated regulations implementing this provision of the
Act. 42 C.F.R. § 1001.101(a). Section 1128(c)(3)(B) of the Act provides that an
exclusion imposed under section 1128(a) will be for a period of not less than five years.
The Secretary has published regulations that establish aggravating factors that the I.G.
may consider to extend the period of exclusion beyond the minimum five-year period, as
well as mitigating factors that must be considered if the minimum five-year period is
extended. 42 C.F.R. § 1001.102(b), (c).

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

§ 1001.2007(c), (d). Petitioner bears the burden of proof and the burden of persuasion on
any affirmative defenses or mitigating factors, and the I.G. bears the burden on all other
issues. 42 C.F.R. § 1005.15(b).

> [ do not rely upon these exhibits. Petitioner does not dispute that he was convicted, and
the pertinent details of his conviction and offenses are revealed by other LG. exhibits to
which there was no objection, by Petitioner’s own exhibits, and by Petitioner’s pleadings.
B. Issues
The Secretary has by regulation limited my scope of review to two issues:
Whether there is a basis for exclusion; and
Whether the length of the exclusion imposed is unreasonable.
42 C.F.R. § 1001.2007(a)(1).
C. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold followed by the pertinent findings of fact and
analysis.

1. Petitioner’s request for hearing was timely, and I have jurisdiction.
2. Petitioner’s exclusion is required by section 1128(a)(1) of the Act.

Petitioner does not dispute that the I.G. has a basis to exclude him pursuant to section
1128(a)(1) of the Act. P. Br. at 1. The evidence shows that on September 11, 2009,
Petitioner pled guilty in the District Court of Oklahoma County, State of Oklahoma,
pursuant to a plea agreement, to seven counts, at least six of which alleged Medicaid
fraud, in violation of Oklahoma law. Petitioner admitted to the court as the factual basis
for his guilty pleas that in Oklahoma County, Oklahoma: between August 20, 2004 and
April 30, 2005, July 1, 2003 and April 28, 2005, October 1, 2003 and June 3, 2005,
January 1, 2004 and April 30, 2005, July 30, 2004 and January 17, 2005, and October 1,
2003 and May 1, 2005, he submitted false claims, each exceeding $2,500, to the
Oklahoma Medicaid program; between January 20, 2004 and February 15, 2004, he
submitted false claims, each less than $2,500, to Oklahoma Medicaid. On September 11,
2009, Petitioner was found guilty pursuant to his guilty pleas and sentencing was ordered
deferred to September 10, 2014. I.G. Ex. 2. On September 11, 2009, Petitioner was
ordered to pay a fine of $6,500 and to pay restitution of $163,000 to the Oklahoma
Attorney General. LG. Ex. 3.

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

(a) MANDATORY EXCLUSION. — The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128B(f)):
(1) Conviction of program-related crimes. — Any individual
or entity that has been convicted of a criminal offense related
to the delivery of an item or service under Title XVIII or
under any State health care program.

There is no dispute by Petitioner that he was convicted of criminal offenses. Petitioner
also does not dispute that his offenses related to the delivery of a service under the
Oklahoma Medicaid program. Accordingly, I conclude that there is a basis to exclude
Petitioner pursuant to section 1128(a)(1) of the Act.

3. Pursuant to section 1128(c)(3)(B) of the Act, the minimum period of
exclusion under section 1128(a) is five years.

4. Aggravating factors exist that justify extending the period of
exclusion to ten years.

5. No mitigating factors established by the regulations have been
proven.

6. Exclusion for ten years is not unreasonable in this case.

Petitioner challenges the length of his exclusion as being unreasonable. Request for
Hearing; P. Br. at 2. My determination of whether or not the exclusionary period in this
case is unreasonable depends on whether: (1) the I.G. has proven that there are
aggravating factors; (2) Petitioner has proven that there are mitigating factors the I.G.
failed to consider or that the I.G. considered an aggravating factor that does not exist; and
(3) the period of exclusion is within a reasonable range.

a. Two aggravating factors justify lengthening the period of
exclusion beyond the five-year statutory minimum.

The L.G. alleges that two aggravating factors are present in this case that justify an
exclusion of more than five years: (1) Petitioner’s criminal acts caused or were intended
to cause financial loss to a government program or other entities and the loss was $5,000
or more; and (2) the acts that resulted in Petitioner’s conviction occurred over a period of
one year or more. 42 C.F.R. § 1001.102(b)(1), (2). Lagree that the evidence shows that
both aggravating factors are present in this case.

Petitioner denied in his request for hearing that either aggravating factor existed.
However, the evidence shows that Petitioner was ordered to pay restitution of $163,000
to the State of Oklahoma. I.G. Ex. 3, at 5. Petitioner concedes that at least $90,000 of
the $163,000 was related to the Medicaid fraud counts to which he pled guilty. P. Br. at
2. Thus, the actual or intended loss to the Oklahoma Medicaid program was $5,000 or
more, and the aggravating factor is clearly established. The evidence also shows that
Petitioner admitted as part of his guilty plea that his submission of false claims to the
Oklahoma Medicaid program occurred between July 1, 2003 and June 3, 2005, a period
greater than one year.

Petitioner argues that the I.G. incorrectly states that the loss due to Medicaid fraud was
$163,000, on the theory that one count to which Petitioner pled was not Medicaid fraud
under Oklahoma Law, and $72,938.71 of the court ordered restitution related to that
charge. P. Br. at 2. Even if I accept Petitioner’s assertion as true, more than $90,000 of
the restitution was thus related to the remaining six counts of Medicaid fraud. The
aggravating factor is established so long as the actual or intended loss is $5,000 or more,
and it clearly is in this case.

The Act requires a five-year minimum exclusion for exclusions pursuant to section
1128(a). Act § 1128(c)(3)(B). The Secretary has provided by regulation that the period
of exclusion may be extended based on the presence of specified aggravating factors.

42 C.F.R. § 1001.102(b). The list of aggravating factors authorized includes: actual or
intended financial loss to a government program or private insurers of $5,000 or more;
and criminal acts that occurred over a period of one year or more. 42 C.F.R.

§ 1001.102(b)(1), (2). In this case, both aggravating factors are present, and the I.G. was
authorized by the Secretary to rely upon these factors as a basis for extending Petitioner’s
exclusion by five years.

b. No mitigating factors justify reducing the period of exclusion.

If any of the aggravating factors authorized by 42 C.F.R. § 1001.102(b) justify an
exclusion of longer than five years, then mitigating factors may be considered as a basis
for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).
The only authorized mitigating factors that I may consider are listed in 42 C.F.R.

§ 1001.102(c):

(1) The individual or entity was convicted of 3 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 $1,500;

(2) The record in the criminal proceedings, including
sentencing documents, demonstrates that the court determined
that the individual had a mental, emotional or physical
condition before or during the commission of the offense that
reduced the individual’s culpability; or
(3) The individual’s or entity’s cooperation with Federal or
State officials resulted in —

(i) Others being convicted or excluded from Medicare,
Medicaid and all other Federal health care programs,

(ii) Additional cases being investigated or reports being
issued by the appropriate law enforcement agency identifying
program vulnerabilities or weaknesses, or

(iii) The imposition against anyone of a civil money
penalty or assessment under part 1003 of this chapter.

Petitioner has the burden to prove that there is a mitigating factor for me to consider.
42 CFR. § 1005.15(b)(1).

Petitioner argues that the ten-year exclusion is unreasonable because he complied with a
subpoena issued by the Oklahoma Attorney General and produced eleven boxes of
documents that could have been used to prosecute numerous individuals for Medicaid
raud. Petitioner asserts that the I.G. and the Oklahoma Attorney General have not
advised him whether or not the documents produced resulted in convictions, exclusions,
or investigations of others. He further asserts that he did all he could by producing the
documents and that he could not force the state or federal government to prosecute or
exclude others. He asks that his production of the documents be considered a mitigating
actor. P. Br. at 1-2.

The production of documents is not a mitigating factor under the regulations. Petitioner
bears the burden to show that his cooperation actually led to the conviction or exclusion
of others, the investigation of additional cases that identified program vulnerabilities or
weakness, or resulted in the imposition of a civil money penalty or assessment. 42 C.F.R.
§ 1001.102(c); Stacey R. Gale, DAB No. 1941 (2004). Thus, Petitioner has not met his
burden of persuasion. The I.G. also submitted, as rebuttal, the affidavit of the
investigator that executed the subpoena, and he attests that the documents produced by
Petitioner did not lead to a separate investigation or prosecution. I.G. Ex. 10.

Petitioner also argues that he had no choice but to plead guilty to the charges to avoid
imprisonment. P. Br. at 3-5; Request for Hearing. It is not necessary to discuss
Petitioner’s theory in detail. Petitioner pled guilty and was convicted by the Oklahoma
court. Petitioner is prohibited from collaterally attacking his conviction in this forum,
and I am prohibited from reviewing the underlying conviction. 42 C.F.R. §
1001.2007(d).

I conclude that there is no mitigating factor upon which I may rely to shorten Petitioner’s
period of exclusion. Appellate panels of the Departmental Appeals Board (the Board)
have made clear that the role of the ALJ in cases such as this is to conduct a “de novo”
review as to the facts related to the basis for the exclusion and the facts related to the
existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102, and to
determine whether the period of exclusion imposed by the I.G. falls within a reasonable
range. Joann Fletcher Cash, DAB No. 1725, n.6 (2000).* The regulation specifies that I
must determine whether the length of exclusion imposed is “unreasonable” (42 C.F.R.

§ 1001.2007(a)(1)). The Board has explained that, in determining whether a period of
exclusion is “unreasonable,” I am to consider whether such period falls “within a
reasonable range.” Cash, DAB No. 1725, n.6. The Board cautions that whether I think
the period of exclusion too long or too short is not the issue. I am not to substitute my
judgment for that of the I.G. and may only change the period of exclusion in limited
circumstances.

In John (Juan) Urquijo, DAB No. 1735 (2000), the Board made clear that, if the I.G.
considers an aggravating factor to extend the period of exclusion and that factor is not
later shown to exist on appeal, or if the I.G. fails to consider a mitigating factor that is
shown to exist, then the ALJ may make a decision as to the appropriate extension of the
period of exclusion beyond the minimum. In Gary Alan Katz, R.Ph., DAB No. 1842
(2002), the Board suggests that, when it is found that an aggravating factor considered by
the I.G. is not proved before the ALJ, then some downward adjustment of the period of
exclusion should be expected absent some circumstances that indicate no such adjustment
is appropriate.

In this case, upon de novo review, I have concluded that a basis for exclusion exists and
that the evidence establishes the two aggravating factors relied upon by the I.G. when
imposing the twenty-year exclusion. Petitioner has not established that there is any
mitigating factor not considered by the LG. I conclude that a period of exclusion of ten
years is in a reasonable range and, therefore, not unreasonable. Accordingly, there is no
basis upon which I might reassess the period of exclusion.

II. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all other federal health care programs for a period of ten years, effective
July 20, 2010.

/s/
Keith W. Sickendick
Administrative Law Judge

* The citation is to the version of the decision of the Board available at
http://www.hhs.gov/dab/decisions/dab1725.html. In the original decision released by the
Board and the copy available on Westlaw™ it is footnote 9 rather than footnote 6.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Verlon Lane Pierce
(OI File Number 4-06-40545-9),

Petitioner
Vv.

The Inspector General
Department of Health and Human Services.

Docket No. C-10-844
Decision No. CR2307
Date: January 10, 2011
DECISION

Petitioner, Verlon Lane Pierce, is excluded from participation in Medicare, Medicaid, and
all other federal health care programs pursuant to sections 1128(a)(1) and (3) of the
Social Security Act (Act) (42 U.S.C. §§ 1320a-7(a)(1) and (3)), effective June 17, 2010.
Petitioner’s exclusion for the minimum period of five years is mandatory pursuant to
section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)). An additional period of
exclusion of seven years, for a total minimum period of exclusion of twelve years,' is not
unreasonable based upon the three aggravating factors established in this case and the
presence of one mitigating factor.

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
I. Background

The Inspector General (I.G.) notified Petitioner by letter dated May 28, 2010, that he was
being excluded from participation in Medicare, Medicaid, and all federal health care
programs for a period of twelve years pursuant to sections 1128(a)(1) and (3) of the Act
based upon his conviction in the United States District Court for the Western District of
Kentucky. The LG. notified Petitioner that his period of exclusion was extended to
twelve years based on the presence of three aggravating factors and one mitigating factor.
1G. Exhibit (I.G. Ex.) 1.

Petitioner timely requested a hearing by letter dated July 12, 2010. The request for
hearing was docketed and assigned to me for hearing and decision on July 27, 2010. On
August 12, 2010, I convened a prehearing conference by telephone, the substance of
which is memorialized in my order dated August 13, 2010. The I.G. filed a motion for
summary judgment and a supporting brief (I.G. Brief) on September 27, 2010, with LG.
Exs. | through 5. On October 31, 2010, Petitioner filed his brief in opposition to the
1.G.’s motion for summary judgment (P. Brief) with Petitioner’s exhibits (P. Exs.) 1
through 4. On December 10, 2010, the I.G. filed a reply brief (I.G. Reply). No
objections have been made to any of the offered exhibits. I.G. exhibits 1 through 5 and
Petitioner’s exhibits | through 4 are admitted as evidence.

II. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner’s rights to a
hearing before an administrative law judge (ALJ) and judicial review of the final action
of the Secretary of the Department of Health and Human Services (the Secretary).

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation
in any federal health care program any individual convicted under federal or state law of
a criminal offense relating to the delivery of an item or service under Medicare or a state
health care program. Section 1128(a)(3) requires the Secretary to exclude an individual
convicted of a felony “relating to 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(a), (c).

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) will be for a period of not less than five years. The Secretary has published
regulations that establish aggravating factors that the I.G. may consider to extend the
period of exclusion beyond the minimum five-year period and mitigating factors that
must be considered if the minimum five-year period is extended. 42 C.F.R.

§ 1001.102(b), (c).
The standard of proof is a preponderance of the evidence, and there may be no collateral
attack of the conviction that is the basis of the exclusion. 42 C.F.R. § 1001.2007(c), (d).
Petitioner bears the burden of proof and the burden of persuasion on any affirmative
defenses or mitigating factors, and the I.G. bears the burden on all other issues. 42
C.F.R. § 1005.15(b).

B. Issue:

The Secretary has by regulation limited my scope of review to two issues:
Whether there is a basis for the imposition of the exclusion; and
Whether the length of the exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).

C. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold followed by the pertinent findings of fact and
analysis.

1. Petitioner’s request for hearing was timely, and I have jurisdiction.
2. Summary judgment is appropriate in this case.

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction.
Pursuant to section 1128(f) of the Act, a person excluded has a right to reasonable notice
and an opportunity for a hearing. The regulations recognize an excluded party’s right to
hearing before an ALJ and the rights of both the excluded party and the I.G. to participate
inahearing. 42 C.F.R. §§ 105.2, 1005.3. Either party may chose to waive appearance at
an oral hearing and to submit only documentary evidence and written argument for my
consideration. 42 C.F.R. § 1005.6(b)(5). Neither party has waived an oral hearing. An
ALJ may also resolve a case, in whole or in part, by summary judgment. 42 C.F.R. §
1005.4(b)(12). Summary judgment is appropriate, and no hearing is required where
either: no disputed issues of material fact exist and the only questions that must be
decided involve application of law to the undisputed facts; or the moving party prevails
as a matter of law, even if all disputed facts are resolved in favor of the party against
whom the motion is made. A party opposing summary judgment must allege facts that, if
true, would refute the facts relied upon by the moving party. See FED. R. CIV. P. 56(c);
Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. and Med. Ctr., DAB
No. 1628, at 3 (1997) (holding in-person hearing required where non-movant shows
material facts are in dispute that require testimony); Thelma Walley, DAB No. 1367

(1992); see also New Millennium CMHC, DAB CR672 (2000); New Life Plus Ctr., DAB
CR700 (2000). The I.G. moved for summary judgment, and I conclude that summary
judgment is appropriate and no oral hearing is necessary.

Petitioner does not dispute the facts that show he was convicted pursuant to his guilty
pleas of criminal offenses that provide a basis for his exclusion pursuant to sections
1128(a)(1) and (3) of the Act. Petitioner does not deny the facts upon which the I.G.
found three aggravating factors and one mitigating factor. Petitioner requests that, if 1
find his exclusion mandatory, I reduce his period of exclusion to five years and declare
that the exclusion began running on June 1, 2009. As discussed hereafter, Petitioner’s
exclusion for five years is mandatory and I have no discretion to either reduce his period
of exclusion as he requests or to declare that the period of exclusion began June 1, 2009.
Accordingly, Petitioner’s arguments must be resolved against him as a matter of law and
summary judgment is appropriate.

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

Petitioner concedes that on April 6, 2009, he was convicted pursuant to his guilty pleas,
by the United States District Court for the Western District of Kentucky, of one count of
health care fraud in violation of 18 U.S.C. § 1347; and one count of Selling, Purchasing,
and Trading Prescription Drug Samples in violation of 21 U.S.C. §§ 331(t), 353(c)(1),
and 333(b)(1)(B). Petitioner does not dispute that he was sentenced to home confinement
with electronic monitoring for a period for six months and that he agreed to forfeit
$850,000 to the United States. I.G. Ex. 5, at 1, 2; P. Brief at 2; Request for Hearing.

The gist of the charges to which Petitioner pled guilty is set forth in his plea agreement.
Petitioner agreed in his plea agreement that beginning in 2001 and continuing through
December 2004, he obtained prescription drug samples from physicians and another
pharmacist; he removed the samples from their original packaging; he sold the drugs
through his pharmacy as if the sample drugs had been properly obtained and dispensed;
and he and others submitted claims for the sample drugs to Medicaid and private insurers.
Petitioner admitted that he engaged in a scheme to defraud Medicaid and private health
insurance companies. I.G. Ex. 3, at 2-3.

The IL.G. cites sections 1128(a)(1) and (3) of the Act as the basis for Petitioner’s
mandatory exclusion. The statute provides:

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

(1) Conviction of program-related crimes. — Any individual
or entity that has been convicted of a criminal offense related
to the delivery of an item or service under Title XVIII or
under any State health care program.

ROR

(3) FELONY CONVICTION RELATING TO HEALTH
CARE FRAUD. — Any individual or entity that has been
convicted of 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 or with respect to any
act or omission in a health care program (other than those
specifically described in [section 1128(a)(1)]) operated by or
financed in whole or in part by any Federal, State, or local
government agency, of a criminal offense consisting of a
felony relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct.

The evidence shows that both provisions are triggered in this case. A federal court
convicted Petitioner of felonies that were committed after August 21, 1996, and the
criminal conduct involved fraud related to the delivery of items to Medicaid eligible
beneficiaries. Accordingly, I conclude that Petitioner’s exclusion is required by sections
1128(a)(1) and (3) of the Act.

5. Pursuant to section 1128(c)(3)(B) of the Act, the minimum period of
exclusion under section 1128(a) is five years.

6. Aggravating factors exist that justify extending the period of
exclusion.

7. The I.G. identified and considered one mitigating factor.
8. Exclusion for twelve years is not unreasonable in this case.

Petitioner argues that the length of his exclusion is unreasonable and he asks that I reduce
the period to five years, with an effective date of June 1, 2009. Request for Hearing at 2;
P. Brief at 1-2. My determination of whether or not the period of exclusion is
unreasonable depends on whether: (1) the LG. has proven that there are aggravating
factors; (2) Petitioner has proven there is a mitigating factor the I.G. failed to consider;
and (3) the period of exclusion is within a reasonable range.
6

a. Three aggravating factors justify lengthening the period of
exclusion beyond the five-year statutory minimum.

The statute mandates a five-year minimum exclusion. Act § 1128(c)(3)(B). The LG.
alleges that three aggravating factors are present in this case that justify an exclusion of
more than five years: (1) Petitioner’s criminal acts caused or were intended to cause
financial loss of $5,000 or more to a government program or one or more entities; (2)
Petitioner’s criminal acts occurred over a period of one year or more; and (3) Petitioner
was sentenced to a period of incarceration. I.G. Ex. 1, at 2. I agree that the evidence
shows that all three aggravating factors are present in this case.

The evidence shows that Petitioner admitted to committing criminal acts that resulted in
financial losses either to state Medicaid or private insurers and he agreed to forfeit his ill-
gotten gain of $850,000. LG. Ex. 3, at 4, 12; LG. Ex. 4; Request for Hearing; and P.
Brief at 2. Petitioner argues that there was no loss to anyone. He argues that the
government and insurers received the medication for which they paid. Petitioner’s logic
is faulty. Petitioner obtained and sold samples and filed claims for the sample
medication. Had the samples of medication been provided to the same beneficiaries at no
charge, Medicaid and the private insurers would have paid nothing for the same
medications. Petitioner also argues that the value of the sample medication was actually
$100,000 not $850,000. I consider Petitioner bound by his plea agreement (I.G. Ex. 3)
and the agreed money judgment and final order of forfeiture (1.G. Ex. 4) to which he
agreed. Thus, the credible loss to the government and private insurers is the forfeiture
amount of $850,000. Furthermore, Petitioner may not collaterally attack and I may not
review his criminal conviction. 42 C.F.R. § 1005.2007(d).

Petitioner does not dispute the other two factors. Petitioner admitted as part of his plea
that his criminal conduct occurred from 2001 through 2004 (I.G. Ex. 3, at 2), more than
one year. Petitioner does not deny that he was sentenced to home confinement with
electronic monitoring for a period of six months (LG. Ex. 5, at 4), which is incarceration
under the regulations. 42 C.F.R. § 1001.2.

Accordingly, I conclude that the I.G. has established three aggravating factors, which
may be considered as grounds for extending the duration of Petitioner’s exclusion.

b. The LG. identified and considered one mitigating factor.

If any of the aggravating factors justify an exclusion of longer than five years, then
mitigating factors may be considered as a basis for reducing the period of exclusion to no
less than five years. 42 C.F.R. § 1001.102(c). The only authorized mitigating factors
that I may consider are listed in 42 C.F.R. § 1001.102(c):
(1) The individual or entity was convicted of 3 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 $1,500;

(2) The record in the criminal proceedings, including
sentencing documents, demonstrates that the court determined
that the individual had a mental, emotional or physical
condition before or during the commission of the offense that
reduced the individual’s culpability; or

(3) The individual’s or entity’s cooperation with Federal or
State officials resulted in—

(i) Others being convicted or excluded from Medicare,
Medicaid and all other Federal health care programs,

(ii) Additional cases being investigated or reports being
issued by the appropriate law enforcement agency identifying
program vulnerabilities or weaknesses, or

(iii) The imposition against anyone of a civil money
penalty or assessment under part 1003 of this chapter.

Petitioner has the burden to prove that a mitigating factor exists for me to consider that
was not considered by the I.G. 42 C.F.R. § 1005.15(b)(1).

The I.G. considered as a mitigating factor that Petitioner cooperated with law
enforcement. I.G. Ex. 1, at 2. Petitioner does not dispute the existence of the mitigating
actor or that it was properly considered by the LG.

Petitioner argues in his request for hearing and brief, that: other pharmacies and other
pharmacists that have committed similar misconduct have been treated less harshly; his
actions harmed no individual and no government agency lost any money; individuals
received the prescriptions ordered for them; those who paid for the items he provided
paid just what they would if they acquired the medication or item from another
pharmacy; he has paid out most of the money he accumulated in thirty years in business;
and he would like to work as a pharmacist, at least part-time, in his retirement. None of
these arguments are mitigating factors recognized by the regulations and they may not be
considered as a basis for reducing the period of exclusion.

I conclude that there is no mitigating factor not considered by the I.G. that I may consider
to reduce the period of Petitioner’s exclusion. Appellate panels of the Departmental
Appeals Board (the Board) have made clear that the role of the ALJ in cases such as this
is to conduct a “de novo” review as to the facts related to the basis for the exclusion and
the facts related to the existence of aggravating and mitigating factors identified at 42
C.F.R. § 1001.102, and to determine whether the period of exclusion imposed by the I.G.
falls within a reasonable range. Joann Fletcher Cash, DAB No. 1725, n.6 (2000).? The
regulation specifies that I must determine whether the length of exclusion imposed is
“unreasonable” (42 C.F.R. § 1001.2007(a)(1)). The Board has explained that, in
determining whether a period of exclusion is “unreasonable,” I am to consider whether
such period falls “within a reasonable range.” Cash, DAB No. 1725, n.6. The Board
cautions that whether I think the period of exclusion too long or too short is not the issue.
lam not to substitute my judgment for that of the I.G. and may only change the period of
exclusion in limited circumstances. In John (Juan) Urquijo, DAB No. 1735 (2000), the
Board made clear that if the I.G. considers an aggravating factor to extend the period of
exclusion and that factor is not later shown to exist on appeal, or if the I.G. fails to
consider a mitigating factor that is shown to exist, then the ALJ may make a decision as
to the appropriate extension of the period of exclusion beyond the minimum. In Gary
Alan Katz, R.Ph., DAB No. 1842 (2002), the Board suggests that, when it is found that an
aggravating factor considered by the LG. is not proved before the ALJ, then some
downward adjustment of the period of exclusion should be expected absent some
circumstances that indicate no such adjustment is appropriate.

In this case, upon de novo review, I have concluded that a basis for exclusion exists, and
that the evidence establishes the three aggravating factors and one mitigating factor that
the I.G. relied on when imposing the twelve-year exclusion. I conclude that a period of
exclusion of twelve years is within the reasonable range. Accordingly, no basis exists
upon which I might reassess the period of exclusion. Even if I had authority to simply
reassess the period of exclusion in this case, I would be inclined to increase the period
rather than reduce it. The exclusion remedy serves twin congressional purposes: the
protection of federal funds and program beneficiaries from untrustworthy individuals and
the deterrence of health care fraud. S. Rep. No. 109, 100th Cong., 1st Sess. 1-2 (1987),
reprinted in 1987 U.S.C.C.A.N. 682, 686 (‘clear and strong deterrent’); Joann Fletcher
Cash, DAB No. 1725, at 18 (discussing trustworthiness and deterrence). When Congress
added section 1128(a)(3) in 1996, it again focused upon the desired deterrent effect:
“greater deterrence was needed to protect the Medicare program from providers who have
been convicted of health care fraud felonies ....’ H.R. Rep. 496(I), 104th Cong., 2nd
Sess. (1996), reprinted in 1996 U.S.C.C.A.N. 1865, 1886. Petitioner’s arguments before
me clearly show that he does not accept the criminal nature of the conduct for which he
was convicted or that it amounted to fraud. Therefore, a longer period of exclusion may
be necessary to protect the Medicare program and its beneficiaries, to deter Petitioner

> The citation is to the version of the decision of the Board available at
ttp://www.hhs.gov/dab/decisions/dab1725.html. In the original decision released by the
Board and the copy available on Westlaw,™ it is footnote 9 rather than footnote 6.

from future misconduct, and to permit him to demonstrate that he can be a trustworthy
program participant.

Petitioner’s request that the effective date of his exclusion be changed to June 1, 2009,
must be denied as a matter of law. The regulations are specific that exclusions are
effective twenty days from the date of the I.G.’s notice of exclusion. 42 C.F.R.

§ 1001.2002(b). I am bound by the regulations and have no authority to change the
effective date of Petitioner’s exclusion.

Il. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all other federal health care programs for a period of twelve years,
effective June 17, 2010.

/s/
Keith W. Sickendick
Administrative Law Judge