Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Srinivas Suram Reddy,
(OI File No. 5-11-40063-9),

Petitioner,
v.
The Inspector General.
Docket No. C-15-3838
Decision No. CR4652

Date: June 29, 2016

DECISION

The Inspector General (IG) of the Department of Health and Human Services excluded
Srinivas Suram Reddy (Petitioner) from participating in Medicare, Medicaid, and all
other federal health care programs for a minimum period of 20 years. Petitioner
requested a hearing to dispute the exclusion. For the reasons explained below, I conclude
that the IG has a basis for excluding Petitioner and that the 20-year exclusion period is
not unreasonable in light of three aggravating factors present in this case.

I. Case Background and Procedural History

In a letter dated May 29, 2015, the IG notified Petitioner that, pursuant to 42 U.S.C.

§ 1320a-7(a)(1), he was being excluded from participation in Medicare, Medicaid, and all
federal health care programs for a period of 20 years effective June 18,2015. IG Exhibit
(Ex.) 1. The IG based the exclusion on Petitioner’s conviction of a criminal offense in
the United States District Court for the Eastern District of Michigan (District Court)
related to the delivery of an item or service under Medicare or a state health care
program, including the performance of management or administrative services relating to
the delivery of items or services, under any such program. The IG cited three
aggravating factors as a basis for increasing the exclusion period from five to 20 years:
(1) Petitioner’s criminal conduct caused a loss to a government program of $5,000 or
more; (2) the acts resulting in Petitioner’s conviction were committed over a period of
one year or more; and (3) the District Court’s sentence of Petitioner included a term of
incarceration. IG Ex. | at 1-2.

Petitioner requested a hearing with the Civil Remedies Division (CRD) to dispute the
exclusion. Petitioner argued that the exclusion was improper because he never had or
applied for a Medicare Provider Number and never ordered, treated, or billed anything to
Medicare and was unaware of any illegal activity. Further, Petitioner argues that he is
appealing his conviction.

The CRD Director administratively assigned this case to me for hearing and decision. On
October 21, 2015, I convened a prehearing conference by telephone, the substance of
which is summarized in my October 21, 2015 Order and Schedule for Filing Briefs and
Documentary Evidence (Order). Pursuant to the Order, the IG electronically filed a brief
(IG Br.) on December 2, 2015, with IG Exs. 1 through 10. After twice granting
Petitioner extensions of time, Petitioner filed a brief (P. Br.) on May 12, 2016, with no
exhibits attached. The IG filed a reply brief (IG Reply) on May 25, 2016.

II. Issues
This case presents the following issues:

1. Whether the IG was authorized to exclude Petitioner from Medicare, Medicaid,
and other Federal Health Care Programs pursuant to 42 U.S.C. § 1320a-7(a)(1)
based on a conviction of a criminal offense related to the delivery of an item or
service; and

2. If there is a basis for the exclusion, whether a 20-year exclusion period is
unreasonable.

III. Decision on the Record

Petitioner did not object to any of the IG’s ten proposed exhibits. Therefore, I admit all
of the IG’s proposed exhibits into the record. Order § 5; Civil Remedies Division
Procedures § 14(e).

Neither party has expressly requested an in-person (video) hearing, listed any witnesses,
nor explained why an in-person hearing would be necessary. Order § 4; Civil Remedies
Division Procedures §§ 16(b), 19(b). Accordingly, because there is no need for any in-
person hearing, I issue this decision based on the written record. Order § 4; Civil
Remedies Division Procedures § 19(d).
IV. Jurisdiction

I have jurisdiction to hear and decide this case. 42 C.F.R. §§ 1001.2007(a)(1)-(2),
1005.2(a); see also 42 U.S.C. § 1320a-7(f)(1).

V. Findings of Fact, Conclusions of Law, and Analysis!

1. Ajury found Petitioner guilty of engaging in a conspiracy to commit health
care fraud from February 2010 to September 2011 as well as three
substantive counts of health care fraud, and the District Court sentenced
Petitioner to 42 months of incarceration and three years of probation
following his release, and ordered him to pay $1,652,132.37 in joint and
several restitution .

On August 25, 2011, a grand jury indicted Petitioner and 13 co-conspirators on one count
of conspiracy to commit health care fraud (18 U.S.C. § 1349). IG Ex. 2. The grand jury
returned a First Superseding Indictment on April 26, 2012, charging Petitioner with the
same offense. IG Ex. 3. On February 6, 2014, an 11-count Second Superseding
Indictment charged Petitioner with one count of conspiracy to commit health care fraud
(18 U.S.C. § 1349) and three substantive counts of health care fraud (18 U.S.C. §§ 1347
and 2). IG Ex. 4. According to the record, Petitioner directly participated in a home
health care fraud scheme from February 2010 until September 2011. IG Ex. 6 at 10;

IG Ex. 7 at 7; IG Ex. 8 at 25-26, 28. The scheme involved Petitioner and various co-
conspirators providing Medicare beneficiaries with cash and narcotic prescriptions as an
inducement to sign documents making it appear as though they had received certain
treatments when, in fact, those treatments were medically unnecessary and not provided.
See IG Ex. 4; IG Ex. 6 at 6-8; IG Ex. 8 at 17-18. Petitioner, who is not a licensed
physician, held himself out as a “doctor” to Medicare beneficiaries for the purpose of
evaluating the Medicare beneficiaries for home health services. IG Ex. 4 at 9, 13-14; IG
Ex. 7 at 5; IG Ex. 8 at 9-10.

Petitioner would visit Medicare beneficiaries in their homes or the houses of patient
recruiters whose job it was to round up people willing to sell their Medicare information
for access to cash and drugs. IG Ex. 7 at 14; IG Ex. 8 at 14, 50-51; see also IG Ex. 6 at
5-6, 10. Petitioner made these visits on behalf of two licensed physicians who would not
take the time to see the patients and complete the necessary paperwork, but who billed for
the visits under their names and then referred the patients to home health agencies in
exchange for kickbacks. See IG Ex. 6 at 4-7; IG Ex. 7 at 4-5. Petitioner would fill out
progress notes, face-to-face encounter forms and other documents used to falsely certify
the patient’s homebound status for purposes of receiving physical therapy and other home
health services. IG Ex. 6 at 6-7; IG Ex. 7 at 5; IG Ex. 8 at 9-10, 17, 20-23, 50-51.

' My findings of fact and conclusions of law appear in bold and italics.
The evidence at trial showed that Petitioner knew these patients had walked, driven or
biked to the recruiter’s homes and were not homebound. See IG Ex. 6 at 7; IG Ex. 7 at 5.
Petitioner issued prescriptions for Viocin, Oxycontin, Soma, Xanax, codeine cough
syrup, and other controlled substances that had been pre-signed by the licensed
physicians. IG Ex. 6 at 6; IG Ex. 7 at 4; IG Ex. 8 at 39, 52-53. Based on Petitioner’s
actions, patients would be referred for medically unnecessary home health care under the
names of licensed physicians and the services were billed to Medicare. IG Ex. 6 at 6-7.
Petitioner also assisted his co-conspirators in creating authentic looking fake physical
therapy records. IG Ex. 6 at 8; IG Ex. 7 at 5; IG Ex, 8 at 26.

On January 15, 2015, following a trial, a jury found Petitioner guilty of conspiracy to
commit health care fraud and three substantive counts of health care fraud. IG Ex. 7 at 1;
IG Ex. 9 at 1. The District Court sentenced Petitioner to 42 months of incarceration on
each of the four counts to be served concurrently; three years of probation; an assessment
of $400; and payment of $1,652,132.37 in restitution jointly and severally with
Petitioner’s co-defendants to the United States Department of Health and Human
Services. IG Ex. 8 at 57-58; IG Ex. 9 at 3-9. A forfeiture money judgment in the same
amount was filed against Petitioner on January 27, 2015, and the District Court entered a
final judgment of conviction on February 11,2015. IG Exs. 9-10.

2. Petitioner was convicted of a criminal offense related to the delivery of a
health care item or service under the Medicare program, therefore, exclusion
is required under 42 U.S.C. § 1320a-7(a)(1).

The IG must exclude an individual from participation in any federal health care program
if that individual was 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.

42 USC. § 1320a-7(a)(1). Petitioner does not dispute that a jury convicted him of
conspiracy to commit health care fraud and three substantive counts of health care fraud.
Instead, he argues that he is innocent of the criminal offenses, and his conviction is
currently under appeal and may have a successful outcome. P. Br. at 1,3. He requests a
stay of exclusion proceedings pending the outcome of the appeal of his conviction. P. Br.
at 1.

For purposes of exclusion, individuals are deemed “convicted” of an offense “when a
judgment of conviction has been entered against the individual or entity by a Federal,
State, or local court, regardless of whether there is an appeal pending... .” 42 U.S.C.
§ 1320a-7(i)(1). In the present matter, a jury found Petitioner guilty of conspiracy to
commit health care fraud and three substantive counts of health care fraud. IG Ex. 7 at 1;
IG Ex. 9 at 1. The District Court issued a judgment of conviction and sentenced
Petitioner pursuant to that conviction. IG Ex. 8 at 57-58; IG Ex. 9. Therefore, Petitioner
was convicted of a criminal offense.”

Further, Petitioner’s conviction was for an offense “related to” the delivery of an item or
service under Medicare. The term “related to” simply means that there must be a nexus
or common sense connection. See Quayum v. U.S. Dep’t of Health and Human Servs.,
34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998); see also Friedman v. Sebelius, 686 F.3d 813,
820 (D.C. Cir. 2012) (describing the phrase “related to” in another part of section 1320a-
7 as “deliberately expansive words,” “the ordinary meaning of [which] is a broad one,”
and one that is not subject to “crabbed and formalistic interpretation”) (internal quotes
omitted).

The jury specifically found Petitioner guilty of conspiracy to commit health care fraud in
violation of 18 U.S.C. § 1349 and three counts of health care fraud in violation of

18 U.S.C. §§ 1347 and 2. By finding Petitioner guilty of conspiracy to commit health
care fraud, the jury concluded beyond a reasonable doubt that he conspired to commit
criminal conduct “in connection with the delivery of or payment for health care benefits,
items, or services ....” 18 U.S.C. § 1347(a). Submitting a false claim to Medicare is
“related to” the delivery of an item or service under the Medicare program. See Travers
v. Shalala, 20 F.3d 993, 998 (9th Cir. 1994) (conviction for filing claims with the
Medicaid program is “a program-related offense” and “such financial misconduct is
exactly what Congress sought to discourage” through imposing exclusions.); Greene v.
Sullivan, 731 F. Supp. 835, 838 (E.D. Tenn. 1990) (“There is no question that Mr.
Greene’s crime [of filing false claims] resulted in a Medicaid overpayment and was a
program-related crime triggering the mandatory exclusion under Section 1320a-7(a).”);
see also Manocchio v. Kusserow, 961 F.2d 1539 (11th Cir. 1992) (Upholding a
mandatory exclusion involving a conviction for Medicare fraud). It follows that
conspiring to submit a false claim to Medicare is also “related to” the delivery of an item
or service under the Medicare program. Cf. Anderson v. Thompson, 311 F. Supp. 2d
1121, 1126-27, 1131 (D. Kan. 2004) (affirming mandatory exclusion based on a
conviction for conspiracy to violate the anti-kickback statute). Further, the fact that the
District Court ordered Petitioner to pay restitution to the Department of Health and
Human Services (i.e., the federal department responsible for administering Medicare) is
an additional reason to conclude that Petitioner’s criminal conviction is related to the
delivery of items or services in the Medicare program. Blessing Okuji, DAB CR2343, at
5 (2011); Alexander Nepomuceno Jamias, DAB CR1480 (2006). The District Court
summarized the evidence in Petitioner’s criminal case in its order denying judgment of

> Tt should be noted that for the purposes of section 1320a-7, the mere fact that a jury
convicted Petitioner is sufficient to conclude that he was “convicted” without regard to a
pending appeal. 42 U.S.C. § 1320a-7(i)(3).
acquittal and concluded that a rational jury could find Petitioner guilty. IG Ex. 7 at 4-5,
10-14. The District Court stated during sentencing that Petitioner completed forms that
were the type a licensed physician needed to provide and that another physician signed
the forms. IG Ex. 8 at 50-52. Accordingly, I conclude that the criminal conduct for
which Petitioner was convicted was related to the delivery of a health care item or service
under the Medicare program. See 42 U.S.C. § 1320a-7(a)(1). Therefore, the record fully
supports Petitioner’s mandatory exclusion. IG Exs. 4-8.

Petitioner asserts that he was not responsible for billing Medicare, which was done by
other employees of the home health agency who were primarily responsible for the
criminal conduct in this matter. Petitioner states his role in this matter was limited to an
18-month period (February 2010 — August 2011) where he took patient histories and
occasionally certified some patients were home bound. Petitioner states that he never
certified patients for physical therapy. Petitioner asserts the home health agency took the
information about patients he collected and committed the fraud. P. Br. at 2; Hearing
Request at 1; IG Ex. 8 at 40, 43, 45,47. Petitioner’s assertions as to his innocence of
criminal conduct are impermissible collateral attacks on his conviction, which the
regulations prohibit me from considering. 42 C.F.R. § 1001.2007(d).

Petitioner’s argument that the IG exclusion proceedings should be stayed until the
outcome of the appeal of his conviction is unavailing. P. Br. at 1. The statute in which
Congress required the exclusion of individuals from the Medicare program expressly
states that an individual is convicted of an offense “regardless of whether there is an
appeal pending or whether the judgment of conviction or other record relating to criminal
conduct has been expunged.” 42 U.S.C. § 1320a-7(i)(1). Thus, for purposes of the
exclusion statute, Petitioner has been “convicted” even though his direct appeal is still
pending. Also, I do not have the authority to stay the exclusion while Petitioner’s appeal
is pending. See 42 C.F.R. § 1005.4(c)(4). The regulations establish the effective date of
exclusion and I am bound to follow the regulations. 42 C.F.R. §§ 1001.2002(b);
1005.4(c)(1). If Petitioner is successful in his appeal, he may seek reinstatement from the
IG. 42 CFR. § 1001.3005(a)(1).

3. Petitioner must be excluded for a minimum of five years.

Because I have concluded that a basis exists to exclude Petitioner pursuant to 42 U.S.C.
§ 1320a-7(a)(1), Petitioner must be excluded for a minimum of five years. 42 U.S.C.
§ 1320a-7(c)(3)(B).

4. The IG has established three aggravating factors in this case that support an
exclusion period beyond the five-year statutory minimum.

The regulations establish aggravating factors that the IG may consider to lengthen the
period of exclusion beyond the five-year minimum for a mandatory exclusion. 42 C.F.R.
§ 1001.102(b). If an aggravating factor justifies a length of exclusion longer than five
years, then I may consider mitigating factors as a basis for reducing the period of
exclusion to no less than five years. 42 C.F.R. § 1001.102(c).

In this case, the IG advised Petitioner in the May 29, 2015 exclusion notice that there
were three aggravating factors that justified excluding him for more than five years: first,
the acts resulting in his convictions, or similar acts, caused, or were intended to cause, a
financial loss to a government program of $5,000 or more; second, the acts resulting in
the conviction occurred over a period of one year or more; and third, the sentence
imposed by the court included incarceration. IG Ex. 1; 42 C.F.R. § 1001.102(b)(1), (2),
(5). The IG cited as the factual basis for the existence of the three aggravating factors
that the conspiracy to commit health care fraud lasted from July 2008 through September
2011 and Petitioner’s direct participation in the conspiracy lasted from February 2010
through September 2011, the District Court’s joint and several restitution order of
$1,652,132.37 against Petitioner and his co-conspirators, and Petitioner’s 42-month
prison sentence. IG Ex. | at 1-2.

a. The IG established the aggravating factor stated in 42 C.F .R.
§ 1001.102(b)(1) — financial loss to a government program of $5,000
or more.

The IG provided evidence that demonstrates the acts resulting in Petitioner’s criminal
conviction caused a financial loss to a government program of $5,000 or more. See

42 CFR. § 1001.102(b)(1). A jury found Petitioner guilty of a conspiracy to submit
false claims to Medicare and three substantive counts of health care fraud. In addition,
the record shows that the District Court ordered Petitioner to pay joint and several
restitution totaling $1,652,132.37 to the Department of Health and Human Services, the
department that administers the Medicare program. IG Ex. 8 at 58, 1G Ex. 9 at 6-9; IG
Ex. 10. It is well-established that an amount ordered as restitution constitutes proof of
the amount of financial loss to a government program. See e.g., Juan de Leon, Jr., DAB
No. 2533, at 5 (2013). Regardless of whether the restitution order is joint and several
among Petitioner and his co-conspirators, the District Court’s sentence of Petitioner
plainly establishes that he is responsible for the total restitution amount. IG Ex. 8 at 57-
58; IG Ex. 9 at 4, 6-9; see also United States v. Ingles, 445 F.3d 830, 839 (Sth Cir. 2006)
(affirming joint and several restitution order where one co-defendant was ultimately
responsible for more restitution than other co-defendant). In addition, the regulations
provide that the entire amount of financial loss is what provides a basis for an
aggravating factor. See 42 C.F.R. § 1001.102(b)(1) (“the entire amount of financial loss
to... programs . . . will be considered regardless of whether full or partial restitution has
been made.”). Therefore, the IG has sustained its burden of proving financial loss to a
government program of $5,000 or more.

b. The IG established the aggravating factor stated in 42 C.F .R.
§ 1001.102(b)(2) — the criminal acts resulting in Petitioner’s
conviction lasted a period of one year or more.

The IG offered the Indictment that charged Petitioner with conspiracy to commit health
care fraud as well as his conviction of that offense as evidence that his criminal acts
lasted one year or more. See IG Ex. 4 at 10. The jury convicted Petitioner of that
offense. Moreover, the record indicates Petitioner’s direct participation in criminal acts
occurred for more than a year. IG Ex. 6 at 10; IG Ex. 7 at 7; IG Ex. 8 at 25-26, 28.
Petitioner admits that he worked for 18 months for the provider with whom he carried out
his conspiracy. P. Br. at 2. Therefore, the evidence before me establishes that the acts
resulting in Petitioner’s conviction occurred over a period of one year or more.

c. The IG established the aggravating factor stated in 42 C.F .R.
§ 1001.102(b)(5) — the sentence imposed against Petitioner included a
period of incarceration.

The record demonstrates, and Petitioner does not dispute, that the District Court
sentenced Petitioner to 42 months of imprisonment. IG Ex. 8 at 57; IG Ex. 9 at 3. I
conclude, therefore, that the IG has proven this aggravating factor. See 42 C.F.R.

§ 1001.102(b)(5).

d. There are no mitigating factors in this case.

Because I found that aggravating factors are present in this case, I next consider whether
there are any mitigating factors under 42 C.F.R. § 1001.102(c) to offset the aggravating
factors. The regulations specifically outline what factors may be considered mitigating
and none of Petitioner’s arguments relate to any of those mitigating factors. See

42 CFR. § 1001.102(c).

Petitioner argues that he should not be excluded for more than five years and that his
exclusion should be reduced from 20 years. Petitioner asserts mitigating factors exist: he
is a United States Citizen; went to college in the United States; went to medical school in
India; while awaiting a residency in the United States, Petitioner worked as an assistant
under a licensed physician to take patient histories from patients of an home health
agency; Petitioner was sent out to examine patients, took vitals and filled out papers, and
the provider’s billers were responsible for all billing. P. Br. at 2-3. However, none of
these factors qualify as relevant mitigating factors under the regulations.’ Accordingly,

> The sentencing transcript shows that Petitioner possibly cooperated with law
enforcement authorities (IG Ex. 8 at 55-56) in another criminal case. However, Petitioner
has not argued this should mitigate the length of exclusion and the record is insufficient
to show mitigation is warranted under 42 C.F.R. § 1001.102(c)(3).
I find that Petitioner has not met his burden to establish that any mitigating factors would
justify reducing the period of exclusion.

5. A 20-year exclusion period is not unreasonable.

I must uphold the IG’s determination as to the length of exclusion if it is not
unreasonable. 42 C.F.R. § 1001.2007(a)(1)(ii). This means that: “So long as the amount
of time chosen by the IG is within a reasonable range, based on demonstrated criteria, the
ALJ has no authority to change it under this rule. We believe that the deference

§ 1001.2007(a) grants to the IG is appropriate, given the IG’s vast experience in
implementing exclusions under these authorities.” 57 Fed. Reg. 3327, 3321 (Jan. 29,
1992). It is important to note that it is the quality of the aggravating (or mitigating)
factors that is most important when considering the length of exclusion and not the sheer
number of aggravating factors that are present in a given case. As the Secretary of Health
and Human Services stated in the preamble to the final rule establishing the exclusion
regulations:

We do not intend for the aggravating and mitigating factors to
have specific values; rather, these factors must be evaluated
based on the circumstances of a particular case. For example,
in one case many aggravating factors may exist, but the
subject’s cooperation with the OIG may be so significant that
it is appropriate to give that one mitigating factor more
weight than all of the aggravating. Similarly, many
mitigating factors may exist in a case, but the acts could have
had such a_ significant physical impact on program
beneficiaries that the existence of that one aggravating factor
must be given more weight than all of the mitigating. The
weight accorded to each mitigating and aggravating factor
cannot be established according to a rigid formula, but must
be determined in the context of the particular case at issue.

57 Fed. Reg. at 3314-15.

The conspiracy of which Petitioner was a part ultimately resulted in a $1,652,132.37 loss
to Medicare. Furthermore, the District Court ordered Petitioner to pay joint and several
restitution of $1,652,132.37. IG Ex. 8 at 31-33, 57-58; IG Ex. 9 at 6-9. The amount of
loss represents more than 330 times the $5,000 threshold for the loss to be considered
aggravating. See 42 C.F.R. § 1001.102(b)(1). Restitution in an amount so substantially
greater than the regulatory standard is sufficient to support a significantly increased
length of exclusion. See Anderson, 311 F. Supp. 2d at 1130 (considering a “program-
related loss [that] was more than forty times the amount of loss necessary to find an
aggravating factor” as helping to justify a 15-year exclusion). While Petitioner does not
10

appear to have directly submitted the fraudulent claims to Medicare, he was part of the
conspiracy that facilitated those false claims. See IG Ex. 4. The District Court’s
restitution order against Petitioner demonstrates that his role in the conspiracy was a
significant factor in a scheme that resulted in a very substantial amount of loss.

In addition, the conspiracy Petitioner participated in lasted for more than a year. There
were many false claims being produced and submitted to Medicare over this time. The
prolonged criminal conduct demonstrates Petitioner’s high level of untrustworthiness
because it shows that his involvement was not simply a mistake or that he was
temporarily involved in the scheme.

Petitioner’s sentence of 42 months of incarceration for his crime constitutes the final
piece of aggravating evidence. IG Ex. 8 at 57; IG Ex. 9 at 3. Petitioner’s sentence
represents a substantial period of time, which indicates the seriousness of his offense.

I conclude that the three proven aggravating factors are entitled to significant weight, and
that the amount of program loss and Petitioner’s length of incarceration are particularly
aggravating. Petitioner’s crime had a substantial financial impact on the Medicare
program. Based on the record before me, Petitioner is not trustworthy to participate in
federal health care programs and, therefore, the length of exclusion imposed by the IG is
not unreasonable.

VI. Conclusion

1 affirm the IG’s determination to exclude Petitioner for 20 years from participating in
Medicare, Medicaid, and all federal health care programs pursuant to 42 U.S.C. § 1320a-
T(ay(1).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Anna Zaichik,
(OI File No. 2-08-4-05 13-9),
Petitioner,
v.

The Inspector General.

Docket No. C-16-378

Decision No. CR4649

Date: June 28, 2016
DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Anna
Zaichik, from participating in Medicare, state Medicaid, and all federally funded health
care programs for a minimum period of five years.
I. Background
Petitioner requested a hearing to challenge the I.G.’s exclusion determination. The LG.
filed a brief and a reply brief in support of his determination along with six proposed
exhibits that are identified as I.G. Ex. 1-I1.G. Ex. 6. Petitioner filed a brief along with four
proposed exhibits that are identified as P. Ex. 1-P. Ex. 4. I receive the parties’ exhibits
into the record.
II. Issue, Findings of Fact and Conclusions of Law

A. Issue

The issue is whether the I.G. was mandated to exclude Petitioner for at least five years
pursuant to section 1128(a)(1) of the Social Security Act (Act).
B. Findings of Fact and Conclusions of Law

Section 1128(a)(1) of the Act mandates the exclusion of any individual who is convicted
of a criminal offense related to the delivery of an item or service under Medicare or a
state health care program. The evidence unequivocally establishes that Petitioner was
convicted of a crime that falls within the reach of section 1128(a)(1).

On June 13, 2013, Petitioner pled guilty to and was convicted of a count of racketeering
conspiracy. I.G. Ex. 3-I.G. Ex. 5. The conspiracy was aimed directly at the Medicare
program. It involved defrauding the program by stealing the identities of doctors, setting
up fake medical clinics in their names, stealing the names of patients, and billing
Medicare for millions of dollars of fictitious medical treatments. I1.G. Ex. 2 at 8.
Petitioner’s role in the conspiracy was to open bank accounts associated with the fake
medical clinics thereby allowing the fake clinics to register with Medicare and receive
reimbursement from that program for fictitious medical treatments. I.G. Ex. 2 at 8; LG.
Ex. 6 at 4-5. Petitioner’s role was therefore a small but instrumental part of a scheme to
defraud the Medicare program. Her crime was related to Medicare items or services
precisely because it was a necessary element in a scheme to defraud the Medicare
program.

Petitioner argues that her crime does not fall within the reach of section 1128(a)(1)
because her conduct had “nothing to do with medical billing.” Petitioner’s brief at 2.

She asserts that all she did was to assist a friend in opening some bank accounts and she
claims that she was not aware of the accounts’ intended purpose until six or seven months
after she opened them. Id. In some respects Petitioner’s argument appears to be an
assertion that she is not really guilty of the crime of which she was convicted. That is an
impermissible collateral attack on the substance of her conviction. 42 C.F.R.

§ 1001.2007. Moreover, her argument — even if true — does not take her conviction out of
the reach of section 1128(a)(1). Section 1128(a)(1) does not require evidence of a
specific intent to defraud the Medicare program nor does it require that an individual be
convicted of filing false claims. Here the statutory nexus is satisfied by Petitioner’s
participation in a scheme to defraud Medicare. Her participation in that scheme is
sufficient to bring her conviction within the reach of section 1128(a)(1) even if she did
not directly claim reimbursement from Medicare for fictitious medical services.

Petitioner also makes a variety of equitable arguments concerning her rehabilitation and
service to her community. While these efforts may be laudable they are not relevant to
the issues in this case. She may not avoid the statute’s mandate on equitable grounds.

The I.G. excluded Petitioner for a period of at least five years. That is the minimum that
is required by law for an exclusion imposed pursuant to section 1128(a)(1) of the Act.

Act § 1128(c)(3)(B). I may not reduce the exclusion below the five-year minimum
period.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Joseph M. Asprec, M.D.,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-266
Decision No. CR4648

Date: June 27, 2016

DECISION

The Centers for Medicare & Medicaid Services (CMS), through an administrative
contractor, revoked the Medicare enrollment and billing privileges of Joseph M. Asprec,
M_D. (Dr. Asprec or Petitioner) based on Dr. Asprec’s termination from California’s
Medicaid program (Medi-Cal). Petitioner requested a hearing before an Administrative
Law Judge (ALJ) to dispute the revocation arguing that his termination from the Medi-
Cal program has been lifted and that he is in the process of re-enrolling in the Medi-Cal
program. I affirm CMS’s revocation of Petitioner’s Medicare enrollment and billing
privileges because Petitioner was terminated from California’s Medicaid program at the
time that CMS imposed its revocation.

I. Background and Procedural History

In 1985, the Medical Board of California (Medical Board) licensed Dr. Asprec to practice
medicine in California. Petitioner Exhibit (P. Ex.) 4 at 63. In 2010, the Medical Board
initiated a disciplinary case against Petitioner. P. Ex. 4 at 63. In June 2010, Petitioner
signed a Stipulated Settlement and Disciplinary Order to dispose of the disciplinary case
that the Medical Board initiated. P. Ex. 4 at 62-71. In the stipulated settlement,
Petitioner agreed that the Medical Board could issue a disciplinary order in which it
revokes his medical license, but then stays the revocation and places Petitioner on
probation for three years during which Petitioner will comply with various requirements,
including completion of the Physician Assessment and Clinical Education Program
(PACE). P. Ex. 4 at 65-67. Petitioner stipulated that if he failed to comply with the
terms of his probation, the Medical Board could reinstate the revocation of his medical
license. P. Ex. 4 at 69. In September 2010, the Medical Board adopted the Stipulated
Settlement and Disciplinary Order as its decision in Petitioner’s disciplinary case. P. Ex.
4 at 60-61.

In October 2013, the Medical Board sought to revoke Petitioner’s probation because
Petitioner failed to complete the PACE program, as required by the Stipulated Settlement
and Disciplinary Order. P. Ex. 4 at 50. Petitioner did not dispute he failed to complete
the PACE program, but rather provided reasons why he was unable to do so. P. Ex. 4 at
51-53. In June 2014, a California ALJ issued an order in which he vacated Petitioner’s
original probation, revoked his medical license, stayed the revocation, and placed
Petitioner on three more years of probation with conditions. P. Ex. 4 at 56-59. However,
the ALJ prohibited Petitioner from practicing medicine until he completed the PACE
program. P. Ex. 4 at 56. In July 2014, the Medical Board adopted the ALJ’s order and
made it effective August 14,2014. P. Ex. 4 at 48.

On January 23, 2015, the Medical Board acknowledged that Petitioner completed the
PACE program. P. Ex. 4 at 46. However, on January 27, 2015, the California
Department of Health Care Services terminated Petitioner’s participation in the Medi-Cal
program because the Medical Board prohibited Petitioner from practicing medicine
effective August 14,2014. CMS Ex. 1.

In a September 11, 2015 initial determination, CMS revoked Petitioner’s Medicare
enrollment and billing privileges under 42 C.F.R. § 424.535(a)(12) (termination or
revocation of Medicaid billing privileges by a state Medicaid agency). CMS stated that it
revoked Petitioners’ billing privileges because:

[bly letter dated January 27", 2015, Joseph Asprec was
informed that he was terminated from the California
Medicaid program. California Medicaid confirmed that
Joseph Aspec’s appeal rights have been exhausted with
respect to this termination.

CMS Ex. 2 at 1.

Petitioner requested reconsideration on September 17, 2015. CMS Ex. 3. Petitioner
explained that he had completed the PACE program, had an active medical license, and
was waiting for his application to participate in the Medi-Cal program again to be
processed. CMS Ex. 3 at 1.
CMS issued a November 25, 2015 reconsidered determination upholding Petitioner’s
revocation. CMS Ex. 4.

On January 14, 2016, the California Department of Health Care Services lifted its
termination of Petitioner’s participation in Medi-Cal. P. Ex. 3.

On January 21, 2016, Petitioner timely requested a hearing to dispute CMS’s revocation
of his Medicare enrollment billing privileges. On January 29, 2016, I issued an
Acknowledgment and Pre-Hearing Order (Order) establishing deadlines for the
submission of prehearing exchanges. In accordance with the Order, CMS filed its
prehearing exchange, which included a brief and four exhibits (CMS Exs. 1-4).
Petitioner filed a prehearing exchange consisting of a brief (P. Br.) and six exhibits

(P. Exs. 1-6). CMS filed a reply brief.

II. Decision on the Record

Neither party objected to any of the proposed exhibits submitted by the opposing party.
Order J 7; Civil Remedies Division Procedures § 14(e). Therefore, I admit all of the
proposed exhibits into the record.

My Order advised the parties that they must submit written direct testimony for each
proposed witness and that an in-person hearing would only be necessary if the opposing
party requested to cross-examine a witness. Order JJ 8-10; Civil Remedies Division
Procedures §§ 16(b), 19(b). Neither party submitted written direct testimony. Therefore,
Tissue this decision based on the written record. Order § 11; Civil Remedies Division
Procedures § 19(d).

III. Issue

Whether CMS had a legitimate basis for revoking Petitioner’s Medicare enrollment and
billing privileges under 42 C.F.R. § 424.535(a)(12).

IV. Jurisdiction

Ihave jurisdiction to decide this issue. 42 C.F.R. §§ 498.3(b)(17), 498.5(1)(2); see also
42 USC. § 1395cc(j)(8).
V. Findings of Fact, Conclusions of Law, and Analysis!

Dr. Asprec is a physician. P. Ex. 2. Therefore, he is a supplier for purposes of the
Medicare program. See 42 U.S.C. § 1395x(d); 42 C.F.R. §§ 400.202 (compare definition
of Supplier and Provider), 410.20(b)(1). CMS may revoke the Medicare billing
privileges of a supplier for any of the reasons stated in 42 C.F.R. § 424.535. Relevant to
this case, CMS may revoke a supplier’s Medicare billing privileges if:

(i) Medicaid billing privileges are terminated or revoked by a
State Medicaid Agency.

(ii) Medicare may not terminate unless and until a provider or supplier has
exhausted all applicable appeal rights.

42 CFR. § 424.535(a)(12).

1. Petitioner was enrolled in the Medi-Cal program; however, on
January 27, 2015, the California Department of Health Care Services
terminated Dr. Asprec’s participation in Medi-Cal effective August 14,
2014.

Petitioner was enrolled in the Medi-Cal program. CMS Ex. 3 at 1. On January 27, 2015,
the California Department of Health Care Services informed Petitioner that the Medical
Board prohibited Petitioner from the practice of medicine effective August 14, 2014, and
that:

As a provider of health care services, [Petitioner was] granted
certain permissions to receive payment from the Medi-Cal
program by operation of law with or without applying for
enrollment. Pursuant to Welfare and Institutions Code,
section 14043.6, the Department is required to automatically
suspend these permissions in certain cases, which means that
the affected individual or entity is precluded from being
eligible to receive payment from the Medi-Cal program
directly or indirectly. This requirement applies to any
individual or entity who has a license, certificate, or other
approval to provide health care, which is revoked or
suspended by a federal or state licensing, certification, or
approval authority, has otherwise lost that license, certificate,

' My findings of fact and conclusions of law are set forth in italics and bold font.
or approval, or has surrendered that license, certificate, or
approval while a disciplinary hearing on that license,
certificate, or approval was pending. This suspension is non-
discretionary, and shall be effective on the date that the
license, certificate, or approval was revoked, lost, or
surrendered ....

Therefore . . . [Petitioner is] hereby notified that [Petitioner
is] prohibited from being able to receive payment from the
Medi-Cal program for an indefinite period of time, effective
August 14, 2014 .... During the period of [Petitioner’s]
suspension, no person or entity, including an employer, may
submit any claims to the Medi-Cal program for items or
services rendered by [Petitioner]. If [Petitioner] is currently
enrolled in Medi-Cal, that enrollment will be terminated.

CMS Ex. | at 1.

Therefore, I find that Petitioner was terminated from the Medi-Cal program effective
August 14, 2014.

2. CMS had a legitimate basis for revoking Dr. Asprec’s Medicare
enrollment and billing privileges under 42 C.F.R. § 424.535(a)(12)
because a state Medicaid agency terminated Dr. Asprec’s participation
in Medicaid and Dr. Asprec has no appeal of the termination pending.

a. The California Department of Health Care Services
administers Medi-Cal, the California Medicaid program.

The California Department of Health Care Services terminated Dr. Asprec’s Medi-Cal
program participation. CMS Ex. 1. Medi-Cal is California’s Medicaid program. See
Jesusa N. Romero, M.D., DAB CR380, at 1 n.1 (1995). The California Department of
Health Care Services administers the Medi-Cal program. See Cal. Welf. & Inst. Code

§ 14000.03. Medi-Cal benefits are benefits that California provides to individuals who
are eligible for Medicaid under Title XIX of the Act, which established the Medicaid
program. Cal. Welf. & Inst. Code § 14005.60. Petitioner has not disputed that Medi-Cal
is California’s state Medicaid program. Therefore, I conclude that the state agency that
terminated Dr. Asprec’s participation in the Medi-Cal program is a state Medicaid agency
within the meaning of 42 C.F.R. § 424.535(a)(12).

b. The California Department of Health Care Services terminated
Dr. Asprec’s Medi-Cal billing privileges.

Petitioner was enrolled in the Medi-Cal program prior to his termination from that
program. CMS Ex. 3 at 1 (“I have submitted the provider enrollment application for the
Medi-Cal program and am waiting for my application to be processed, so that I may once
again be a participating provider in the California Medicaid program.”). The January 15,
2015 letter from the California Department of Health Care Services indicates that if
Petitioner was enrolled in the Medi-Cal program, then that enrollment will be terminated.
CMS Ex. | at 2. Petitioner confirms and admits that he was terminated from the Medi-
Cal program. CMS Ex. 3 at 1.

Therefore, I conclude, for purposes of 42 C.F.R. § 424.535(a)(12), Dr. Asprec was
terminated from the California Medicaid program.

c. Dr. Asprec does not have an appeal of his Medi-Cal
termination pending.

The January 27, 2015 letter informing Dr. Asprec that he was being terminated from the
Medi-Cal program indicated that this action was automatic and required by law. CMS
Ex. | at 1. The letter did not indicate that there were any further appeal rights. CMS Ex.
1. Petitioner has not argued that he appealed the termination, but rather, that his
termination has been lifted because he is once again licensed to practice medicine. P. Br.
at 2; P. Ex. 3. Therefore, I conclude that Petitioner does not have an appeal of his Medi-
Cal termination pending and that the termination may serve as a basis for a revocation
under 42 CFR. § 424.535(a)(12).

Based on the evidence of record, CMS had a legitimate basis to revoke Petitioner’s
Medicare billing privileges under 42 C.F.R. § 424.535(a)(12).

3. I reject Petitioner ’s other arguments.

Petitioner asserts that he is now eligible to re-enroll in the Medi-Cal program and has an
application presently pending. P. Exs. 3-5. Petitioner argues that I should stay this case
until the Department of Health Care Services decides whether to re-enroll Petitioner in
the Medi-Cal program, and asserts that this would benefit the patients he serves. P. Br. at
1-5.

A stay in this case would serve no purpose. I am not authorized to review whether CMS
exercised its discretion wisely, merely whether CMS acted permissibly based on the law
and facts in a case. Letantia Bussell, M.D., DAB No. 2196, at 13 (2008) (‘[T]he right to
review of CMS’s determination by an ALJ serves to determine whether CMS had the
authority to revoke . . . not to substitute the ALJ’s discretion about whether to revoke.”).
Rather, “[t]he ALJ’s review of CMS’s revocation . . . is thus limited to whether CMS had
established a legal basis for its actions.” Id. Petitioner’s potential re-enrollment in Medi-
Cal is not relevant as to whether CMS legitimately revoked Petitioner’s enrollment
effective October 11,2015.

III. Conclusion

I affirm CMS’s determination to revoke Petitioner’s Medicare enrollment and billing
privileges.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Joanne Parkhurst
(OI File No. H-15-4-2871-9),

Petitioner,
v.
The Inspector General.
Docket No. C-16-352
Decision No. CR4647

Date: June 27, 2016

DECISION

The Inspector General (IG) of the United States Department of Health and Human
Services excluded Petitioner, Joanne Parkhurst, from participation in Medicare,
Medicaid, and all other federal health care programs pursuant to section 1128(a)(2) of the
Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(2)) for a period of five years. For the
reasons discussed below, I conclude that the IG has a basis for excluding Petitioner, and
an 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)).

I. Background

In a letter dated December 31, 2015, the IG excluded Petitioner from participation in
Medicare, Medicaid, and all federal health care programs as defined in section 1128B(f)
of the Act (42 U.S.C. § 1320a-7b(f)) for a minimum period of 5 years, effective 20 days
from the date of the letter. IG Exhibit (Ex.) | at 1. The IG explained that Petitioner’s
exclusion was based on a “conviction as defined in section 1128(i) (42 U.S.C. [§] 1320a-
7(i)), in the Fulton City Court, Oswego County, of the State of New York, of a criminal
offense related to neglect or abuse of patients, in connection with the delivery of a health
care item or service, including any offense that the Office of Inspector General (OIG)
concludes entailed, or resulted in, neglect or abuse of patients ....” IG Ex. 1 at 1. The
IG explained Petitioner was excluded pursuant to section 1128(a)(2) of the Act, which
mandates the exclusion of any individual who is convicted under federal or state law of a
criminal offense related to the neglect or abuse of patients while in connection with the
delivery of a health care item or service. The IG informed Petitioner that the exclusion
was for the “minimum statutory period of five years.” IG Ex. | at 1; see 42 U.S.C.

§ 1320a-7(c)(3)(B).

Petitioner, through counsel, submitted a timely request for hearing that was dated
February 24, 2016, and received on February 25, 2016. On March 23, 2016, pursuant to
42 CFR. § 1005.6, I presided over a telephonic pre-hearing conference, and on March
24, 2016, I issued an Order and Schedule for Filing Briefs and Documentary Evidence
(Order).

Pursuant to my Order, the IG filed an informal brief (IG Br.) and a reply brief, along with
six exhibits (IG Exs. 1-6). Petitioner filed an informal brief (P. Br.) and twelve exhibits
(P. Exs. 1-12). I admit the parties’ submissions and exhibits into the record. Neither
party requested that I convene a hearing in person, and I am therefore deciding this case
based on the parties’ written filings.

II. Issue

The issue in this case is whether there is a legal basis under section 1128(a)(2) of the Act
for the IG to exclude Petitioner from participation in Medicare, Medicaid, and other
federal health care programs. If I find a legitimate basis for the exclusion, I am required
to uphold the mandatory five-year exclusion.

III. Jurisdiction
Ihave jurisdiction to adjudicate this case. 42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. § 1005.2.
IV. Findings of Fact, Conclusions of Law, and Analysis!
1. Petitioner was convicted of endangering the welfare of an
incompetent or physically disabled person, which is an offense,
pursuant to section 1128(a)(2) of the Act, that subjects her to a

mandatory exclusion from all federal health care programs for a
minimum of five years.

' My findings of fact and conclusions of law are set forth in italics and bold font.
Section 1128(a)(2) requires a mandatory exclusion from all federal health care programs
under certain conditions. Section 1128(a)(2) states:

(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)):

Te
(2) Conviction relating to patient abuse

Any individual or entity that has been convicted, under
Federal or State law, of a criminal offense relating to neglect
or abuse of patients in connection with the delivery of a
health care item or service.

42 USC. § 1320a-7(a)(2).

The IG argues that Petitioner was properly excluded from all federal health care
programs based on a conviction for an offense related to patient abuse in connection with
the delivery of a health care item or service. IG Br. at 3-4. Petitioner, in her informal
brief, concedes that “the Inspector General is within its authority to impose the minimum
mandatory five-year exclusion.” P. Br. at 1. However, Petitioner states that she is
“asking for the exercise of some discretion in setting the effective date of the exclusion.”
P. Br. at 2. As explained below, I find that Petitioner was convicted of a criminal
offense, for purposes of the Act, that mandates exclusion from all federal health care
programs effective January 20, 2016.

On or about March 12, 2013, the State of New York charged in a misdemeanor
information that Petitioner committed four counts of endangering the welfare of an
incompetent or physically disabled person pursuant to New York State Penal Law

§ 260.25. The information detailed that Petitioner was “employed as a private-duty
Medicaid Nurse” and that on four separate occasions in 2012, she “knowingly acted in a
manner likely to be injurious to the physical, mental or moral welfare of a person who is
unable to care for himself because of physical disability ....” IG Ex. 4 at 1.
Specifically, on those four occasions in 2012, Petitioner “was incapable of rendering
medical care” to the disabled patient due to her own alcohol intoxication. IG Ex. 4 at 1-2.
The information charged that on July 25, 2012, Petitioner consumed a third of a bottle of
wine, two 8-ounce glasses of mint schnapps mixed with half and half, and a half bottle of
Jagermeister mixed with soda. IG Ex. 4 at 2. The information stated that on that
occasion, Petitioner left a disabled patient slouched in a forward position in his

wheelchair while she crawled into the patient’s bed and “laughed and laid down for 25 to
30 minutes.” * IG Ex. 4 at 2. On April 10, 2014, Petitioner pleaded guilty to one count
of endangering the welfare of an incompetent or physically disabled person. IG Ex. 3 at
6; IG Ex. 6 at 2. At the time of her guilty plea, the judge explained that if she completed
her probation requirements, she would be permitted to withdraw her guilty plea at a later
date. IG Ex. 3 at 8. Petitioner was placed on interim probation and paid restitution in the
amount of $2,054.85. IG Ex. 6 at 2; see IG Ex. 5 at 1.

On May 28, 2015, Petitioner withdrew her guilty plea to the offense of endangering the
welfare of an incompetent or physically disabled person (IG Ex. 6 at 1), and entered a
plea of guilty to a single count of disorderly conduct pursuant to New York State Penal
Code § 240.20. IG Ex. 5; IG Ex. 6 at 1.

I find that Petitioner has a conviction for a criminal offense relating to the neglect or
abuse of a patient in connection with the delivery of a health care item or service.
Pursuant to section 1128(i)(3) of the Act, she is considered to have been convicted of a
criminal offense “when a plea of guilty or nolo contendere by the individual or entity has
been accepted by a Federal, State, or local court.” 42 U.S.C. § 1320a-7(i)(3). Section
1128(i)(4) of the Act states that an individual has been convicted of a criminal offense
“when the individual or entity has entered into participation in a first offender, deferred
adjudication, or other arrangement or program where judgment of conviction has been
withheld.” 42 U.S.C. § 1320a-7(i)(4). On April 10, 2014, Petitioner entered a plea of
guilty to the offense of endangering the welfare of an incompetent or physically disabled
person who was under her care while she was working as a private-duty licensed practical
nurse. A Fulton City Court judge accepted Petitioner’s guilty plea to the offense of
endangering the welfare of an incompetent or physically disabled person. IG Ex. 3 at 7.
Even though Petitioner later withdrew her guilty plea and pleaded guilty to a reduced
charge of disorderly conduct after she completed more than a year of probation, the IG
correctly determined that a judge accepted the guilty plea to the offense of endangering
the welfare of an incompetent or disabled person and that Petitioner has a conviction
pursuant to 42 U.S.C. § 1320a-7(i)(3).

> The information reports that when the patient is seated in the forward position in his
wheelchair, he has difficulty speaking and saying if something is wrong and that he
cannot move his head on his own when it is tipped forward. IG Ex. 4 at 2. Petitioner
acknowledged that this patient “needs constant supervision from his nurses, especially at
night” and that “[t]he care givers need to be responsive at all times in case [the patient’s]
breathing becomes compromised.” IG Ex. 4 at 13. Petitioner asserted that she would not
consume more than two drinks while caring for the patient and that she would normally
feel a “buzz” from alcohol after consuming two drinks. IG Ex. 4 at 13.
Congress, through enactment of the Social Security Act, has determined that an
individual who has been convicted of an offense relating to the abuse of a patient in
connection with the delivery of a health care item or service must be excluded from
federal health care programs for no less than five years, and it has afforded neither the IG
nor an administrative law judge (ALJ) the discretion to impose an exclusion of a shorter
duration. 42 U.S.C. § 1320a-7(c)(3)(B). Even if I were so inclined, I cannot shorten the
length of the exclusion because I do not have authority to “find invalid or refuse to follow
Federal statutes or regulations.” 42 C.F.R. § 1005.4(c)(1). I therefore agree with the IG
and Petitioner that an exclusion for a minimum period of five years is mandated.

2. The effective date of Petitioner’s exclusion is January 20, 2016.

While Petitioner has conceded that a five-year exclusion is mandated, she asks that I
exercise discretion in “setting the effective date of the exclusion.” P. Br. at 2. In support
of this request, Petitioner submitted a copy of a January 13, 2014 letter that her attorney
sent to the New York Attorney General’s Medicaid Fraud Control Unit in which he
argued that a criminal conviction of Petitioner would not be appropriate under the
circumstances. P. Ex. 1. Petitioner’s attorney submitted numerous letters from family
and friends in support of his request. P. Ex. 1; see P. Exs. 3-12. Petitioner’s counsel also
submitted a letter from a clinical supervisor at the intensive outpatient alcohol treatment
program that Petitioner completed. P. Ex. 2.

The Departmental Appeals Board (Board) has explained that an ALJ does not have the
authority to alter the effective date of an exclusion. Lisa Alice Gantt, DAB No. 2065 at
2-3 (2007). In addressing the effective date of an exclusion, the Board has stated the
following:

The Board has repeatedly held that the applicable statute and regulations
give an ALJ no authority to adjust the beginning date of an exclusion by
applying it retroactively. Thomas Edward Musial, DAB No. 1991, at 4-5
(2005), citing Douglas Schram, R.Ph., DAB No. 1372, at 11 (1992)
(“Neither the ALJ nor this Board may change the beginning date of
Petitioner’s Exclusion.”); David D. DeFries, DAB No. 1317, at 6 (1992)
(“The ALJ cannot . . . decide when [the exclusion] is to begin.”); Richard
D. Phillips, DAB No. 1279 (1991) (An ALJ does not have “discretion . . .
to adjust the effective date of an exclusion, which is set by regulation.”);
Samuel W. Chang, M.D., DAB No. 1198, at 10 (1990) (“The ALJ has no
power to change . . . [an exclusion’s] beginning date.”). In Schram, we
held that this lack of discretion extends to the Board as well as the ALJs,
and we reiterated that holding in Musial.
Gantt, DAB No. 2065 at 2-3 (footnote omitted). The effective date of the exclusion,
January 20, 2016, is established by regulation, and I am therefore bound by the effective
date imposed by the IG. 42 C.F.R. §§ 1001.2002(b); 1005.4(c)(1).

V. Conclusion

For the foregoing reasons, I affirm the IG’s decision to exclude Petitioner from
participation in Medicare, Medicaid, and all | health care programs for a minimum period
of five years, effective January 20, 2016.

/s/
Leslie C. Rogall
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

MEN Services Corp.
d/b/a 7-Eleven 32620,

Respondent.

Docket No. C-15-3031
FDA Docket No. FDA-2015-H-2246

Decision No. CR4646

Date: June 28, 2016

INITIAL DECISION

I sustain the determination of the Center for Tobacco Products (CTP) of the
United States Food and Drug Administration (FDA) to impose a civil money
penalty of $500 against Respondent, MEN Services Corp. d/b/a 7-Eleven 32620.

I. Background

Respondent requested a hearing in order to challenge CTP’s determination to
impose a $500 civil money penalty against it. I held a hearing by telephone on
April 7, 2016. At the hearing I received exhibits into evidence from CTP that are
identified as CTP Ex. 1-CTP Ex. 9. I heard the cross-examination testimony of
James Naso, an inspector working on behalf of CTP. I also heard the cross-
examination testimony of Kristen Neves, Respondent’s owner.'

CTP filed a brief in support of its position. Respondent filed a pre-hearing brief
and a post-hearing brief.

II. Issues, Findings of Fact and Conclusions of Law
A. Issues

The issues are whether Respondent violated regulations governing the sale of
tobacco products to minors and whether a civil money penalty of $500 is
reasonable.

B. Findings of Fact and Conclusions of Law

CTP determined to impose a civil money penalty against Respondent pursuant to
the authority conferred by the Federal Food, Drug, and Cosmetic Act (Act) and
implementing regulations at Part 21 of the Code of Federal Regulations (C.F.R.).
The Act prohibits the misbranding of tobacco products while they are held for sale
after shipment in interstate commerce. 21 U.S.C. § 331(k). FDA and its agency,
CTP, may seek civil money penalties from any person who violates the Act’s
requirements as they relate to the sale of tobacco products. 21 U.S.C. § 331(f)(9).
The sale of tobacco products to an individual who is under the age of 18 and the
failure to verify the photographic identification of an individual who is not over
the age of 26 are violations of implementing regulations. 21 C.F.R. §§ 1140.14(a),
(b)C).

There is no dispute that Respondent offers tobacco products for sale to the public.
At issue in this case is whether Respondent unlawfully: sold tobacco products to
minors; and failed to check the identification of minor purchasers of tobacco
products.

CTP’s case against Respondent rests on the testimony of Mr. Naso and
corroborating evidence including photographs of packages of cigarettes. CTP Ex.
4. Mr. Naso testified that he visited Respondent’s business establishment on two
occasions. On each occasion he came in the company of a minor who was
employed for the purposes of determining whether Respondent sold tobacco

' Respondent offered Ms. Neves’ written direct testimony as an exhibit. I
inadvertently failed to admit that testimony as an exhibit at the hearing. I do so
now, and identify it as R. Ex. 1.
products to minors and checked their identification. CTP Ex. 4 at 2. He testified
that on November 20, 2014, he went to Respondent’s establishment in the
company of a minor, entered the establishment, and personally witnessed the
minor purchase a package of Marlboro cigarettes. Id. at 3. He observed that the
employee who sold the cigarettes to the minor did not check the minor’s
identification. Id. Mr. Naso testified that he labeled the cigarettes as identification
and photographed all of the panels of the package. The photographs are in
evidence as an attachment to CTP Ex. 4.

Mr. Naso testified that he again visited Respondent’s establishment in the
company of a minor on February 27, 2015. CTP Ex. 4 at 3. On this occasion he
did not enter the store but verified that the minor did not possess tobacco products
prior to her entry. Id. at 4. He also verified that the minor had her identification in
her possession. Id. Mr. Naso averred that he then watched the minor enter the
establishment and subsequently exit the premises and return to his vehicle. The
minor told him that she had purchased a package of cigarettes and that the
employee who sold her the package did not check her identification. Id. The
minor presented Mr. Naso with a package of Marlboro Gold Pack cigarettes. Id.
Mr. Naso testified that, as with the previous inspection, he labeled the cigarettes as
identification and photographed all of the panels of the package. The photographs
are in evidence as an attachment to CTP Ex. 4.

I find Mr. Naso’s testimony to be credible and unbiased. It, plus the corroborating
evidence, consisting of the photographs made of cigarette packages on November
20, 2014 and February 27, 2015, is sufficient in my opinion to prove that
Respondent unlawfully sold tobacco products to a minor on both dates and failed
to check the minor’s identification on those occasions. On November 20, 2014
Mr. Naso personally witnessed Respondent’s sale of a tobacco product to a minor
and the failure to check the minor’s identification. He did not witness the
transaction that occurred on February 27, 2015. However, the corroborating
evidence produced by the minor — a package of Marlboro Gold Pack cigarettes — is
sufficient proof to establish an unlawful sale and a failure to check identification
on that date. Mr. Naso testified, credibly, that the minor had no cigarettes in her
possession when she entered Respondent’s establishment. He observed the
establishment while she was inside and observed the minor proceed immediately
to his vehicle upon her departure from the establishment. At that point the minor
presented him with a package of Marlboro Gold Pack cigarettes. There would
have been no means for the minor to obtain those cigarettes between the time she
entered the establishment and when she presented them to Mr. Naso upon exiting
unless someone in Respondent’s establishment provided them to her.

Moreover, it is reasonable to infer that the Respondent employee who sold the
cigarettes to the minor on February 27, 2015 failed to check the minor’s
identification. That identification clearly identified the minor as being underage.
The reasonable inference is that the employee would not have sold the cigarettes
to the minor but for his or her failure to check the identification on February 27.

Respondent attacks Mr. Naso’s credibility on several grounds. I do not find that it
impeached his credibility substantially. First, it asserts that Mr. Naso bases his
conclusions about what happened on February 27, 2015 on the hearsay statements
of the minor who made the purchase on that date. Respondent points out that CTP
did not produce the minor as a witness and that her assertions to Mr. Naso are not
only hearsay but also that it is not possible to impeach them. It asserts, therefore,
that I should not accept her statements as reliable evidence of what happened on
February 27.

I agree with Respondent that the minor’s account of what occurred on February
27, 2015 is not, in and of itself, reliable proof. It is, as Respondent points out,
hearsay that is not subject to impeachment. I would not rule in favor of CTP if her
statements to Mr. Naso were the only evidence of what occurred on that date.
However, there is, as I have discussed, important independent proof that an
unlawful transaction occurred on that date and that Respondent failed to check the
minor’s identification. That proof consists of the package of Marlboro Gold
cigarettes that the minor obtained and gave to Mr. Naso coupled with Mr. Naso’s
credible testimony that the minor did not possess cigarettes prior to entering
Respondent’s establishment. That is enough to establish an unlawful transaction
and failure to check the minor’s identification on that date.

Respondent also argues that Mr. Naso’s testimony is not credible because, as of
the hearing, he no longer remembered the precise details of what occurred on
November 20, 2014 and February 27, 2015. That may be so — and understandable
given the large number of inspections that Mr. Naso performs — but,
notwithstanding, his memory of what occurred, even if not precise in every detail,
is more than amply corroborated by Mr. Naso’s contemporaneous report of the
events on the two dates plus the physical evidence consisting of the cigarettes
purchased on each date.

Respondent argued additionally that Mr. Naso has a “clear financial bias” because
he gets paid by the hour and the more inspections he performs the more he gets
paid. Respondent’s post-hearing brief at 4. I do not find the evidence of how Mr.
Naso is compensated establishes bias on his part because his compensation is not
predicated on the outcome of his inspections. Presumably, Mr. Naso gets paid as
much to perform inspections that reveal no unlawful transactions as he is
toperform inspections that establish violations.
Respondent also asserts that Ms. Neves’ testimony proves that no unlawful
transaction occurred on February 27, 2015 because she watched her
establishment’s surveillance tape for that date and saw no sales of tobacco
products at the time when the unlawful transaction of that date occurred. R. Ex. 1.
Ido not find this testimony to be credible. It is contradicted by physical proof of
an unlawful transaction consisting of the photographs of the Marlboro Gold Pack
cigarettes that the minor purchased from Respondent on February 27.
Furthermore, Respondent did not produce the surveillance tape made on February
27.

CTP elected to impose a civil money penalty of $500 against Respondent. That is
the maximum amount allowed by law. I find it to be reasonable. The evidence
shows that on two occasions Respondent willfully sold tobacco products to a
minor and failed to check the minor’s identification. The dangers of tobacco
products are well established and the penalty amount reflects not only the
willfulness of Respondent’s conduct but the potential harm that can be caused by
selling tobacco products to underage individuals. Respondent has not shown that a
penalty of $500 would impose an undue financial burden on it.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Heather Anne Howells,

(OI File No. H-15-42515-9),
Petitioner,

v.

The Inspector General
Docket No. C-16-355
Decision No. CR4645

Date: June 24, 2016

DECISION

Petitioner, Heather Anne Howells, was convicted of operating an unlicensed assisted
living facility, which is a felony under Florida law. Based on this conviction, the
Inspector General (IG) has excluded her for five years from participating in Medicare,
Medicaid, and all federal health care programs, as authorized by section 1128(a)(3) of the
Social Security Act (Act). Petitioner appeals the exclusion.

For the reasons discussed below, I find that the IG properly excluded Petitioner Howells
and that the statute mandates a minimum five-year exclusion.

Background

In a letter dated December 31, 2015, the IG advised Petitioner Howells that, because she
had been convicted of a felony offense related to fraud, theft, embezzlement, breach of
fiduciary responsibility or other financial misconduct in connection with the delivery of a
healthcare item or service, the IG was excluding her from participating in Medicare,
Medicaid, and all federal health care programs for a period of five years. The letter
explained that section 1128(a)(3) of the Act authorizes the exclusion. IG Exhibit (Ex.) 1.

Petitioner timely requested review.

The parties have submitted their written arguments. (IG Br.; P. Br.). With his brief, the
IG submitted five exhibits (IG Exs. 1-5). In the absence of any objections, I admit into
evidence IG Exs. 1-5.

The parties agree that an in-person hearing is not necessary. IG Br. at 5; P. Br. at 2.
Discussion

Petitioner Howells must be excluded from program
participation for a minimum of five years because she was
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. Act § 1128(a)(3).!

Section 1128(a)(3) mandates that the Secretary of Health and Human Services exclude an
individual who has been 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. See 42 C.F.R. § 1001.101(c).

Here, in 2010 and 2011, Petitioner Howells rented a house in a residential neighborhood
in Pinellas County, Florida. IG Ex. 5 at 3. From this house, she operated an assisted
living facility, which housed at least three elderly and incapacitated residents. IG Ex. 5 at
4-7. But the facility was not licensed, as required by Florida state law. IG Ex. 5 at 9. In
a felony information, dated July 17, 2013, Petitioner was charged with owning, operating,
or maintaining an unlicensed assisted living facility, in violation of section 429.08(1)(b)
of the Florida Statutes. IG Ex. 4. On May 6, 2014, she pled guilty. IG Ex. 2. She was
sentenced to five years probation “with special conditions” and ordered to pay $650 in
fines and costs. IG Ex. 3.

Petitioner denies that she was convicted of a felony, claiming that the adjudication of
guilt was “withheld.” P. Br. at 1? As part of its Order of Probation, the sentencing court
entered an Order Withholding Adjudication. The order sets forth a long list of conditions

' | make this one finding of fact/conclusion of law.

> Neither party made any effort to develop this issue. Aside from raising the issue,
Petitioner did not argue the point nor cite to any portion of the record to support this
claim. For his part, the IG did not respond at all to Petitioner’s claim.
and provides that Petitioner’s probation could be revoked and that she could be arrested
and adjudicated guilty if she failed to comply with all the conditions. IG Ex. 3 at 2.

The statute and regulations provide that a person is “convicted” when “a judgment of
conviction has been entered” regardless of whether that judgment has been (or could be)
expunged or otherwise removed. Act § 1128(i)(1); 42 C.F.R. § 1001.2(a)(2). Individuals
who participate in “deferred adjudication or other program or arrangement where
judgment of conviction has been withheld” are also “convicted” within the meaning of
the statute. Act § 1128(i)(4); 42 C.F.R. § 1001.2(d). Based on these provisions, the
Departmental Appeals Board (Board) characterizes as “well established” the principle
that a “conviction” includes “diverted, deferred and expunged convictions regardless of
whether state law treats such actions as a conviction.” Henry L. Gupton, DAB No. 2058
at 8 (2007), aff'd sub nom. Gupton v. Leavitt, 575 F. Supp. 2d 874 (E.D. Tenn. 2008).

The Board explained why, in these IG proceedings, the federal definition of “conviction”
must apply. That definition differs from many state criminal law definitions. For
exclusion purposes, Congress deliberately defined “conviction” broadly to ensure that
exclusions would not hinge on the state criminal justice policies. Quoting the legislative
history, the Board explained:

The rationale for the different meanings of “conviction” for
state criminal law versus federal exclusion law purposes
follows from the distinct goals involved. The goals of
criminal law generally involve punishment and rehabilitation
of the offender, possibly deterrence of future misconduct by
the same or other persons, and various public policy goals.
[footnote omitted] Exclusions imposed by the I.G., by
contrast, are civil sanctions, designed to protect the
beneficiaries of health care programs and the federal fisc, and
are thus remedial in nature rather than primarily punitive or
deterrent .. . . In the effort to protect both beneficiaries and
funds, Congress could logically conclude that it was better to
exclude providers whose involvement in the criminal system
raised serious concerns about their integrity and
trustworthiness, even if they were not subjected to criminal
sanctions for reasons of state policy.

Gupton, DAB No. 2058 at 7-8.

Next, Petitioner trivializes her conviction as a mere “technical violation” and argues that
it was not related to fraud, theft, embezzlement, breach of fiduciary responsibility, or
other financial misconduct in connection with the delivery of a health care item or
service. She claims that the facility residents “received every service and
accommodation that they purchased” and were not harmed financially. P. Br. at 2.

In determining whether a conviction is “related” within the meaning of section
1128(a)(3), the Board has long applied what it calls a “common sense” analysis. An
offense is “related” if there is “a nexus or common-sense connection” between the
conduct giving rise to the offense and one of the listed factors, including fraud or breach
of fiduciary responsibility. Andrew D. Goddard, DAB No. 2032 at 4-5 (2006); Kenneth
M. Behr, DAB No. 1997 (2005); Erik D. Desimone, RPh., DAB No. 1932 (2004).

I find that Petitioner’s crime is “related” within the meaning of section 1128(a)(3).

Under Florida law, an assisted living facility provides housing, meals, and a variety of
personal care and supportive services — including administering medications — to the aged
and disabled. Florida Stat. §§ 429.02, 429.256(3); see IG Ex. 5 at 2. The residents of
Petitioner’s facility suffered dementia, memory loss, and a host of other impairments.
Each had been adjudicated incapacitated and in need of a guardian. IG Ex. 5 at 6-7. In
return for room and board and, in one case, a small stipend ($600 per month), facility
employees assisted the residents with their activities of daily living and administering
medications. IG Ex. 5 at 8-9.

To promote the health, safety, and welfare of its residents (among other reasons), the
State of Florida requires that an assisted living facility be licensed. Florida Stat.

§ 429.01. I agree with the IG that facility staff provided health care items and services —
including administering medications — to facility residents. I also agree that operating an
unlicensed assisted living facility is fraud. Petitioner’s crime is therefore related to fraud
in connection with the delivery of a healthcare item or service. In the alternative, I agree
that Petitioner owed a fiduciary duty to the incapacitated residents of her facility. By
housing them in an unlicensed facility, she breached that duty.

An exclusion brought under section 1128(a)(3) must be for a minimum period of five
years. Act § 1128(c)(3)(B); 42 C.F.R. §§ 1001.102(a); 1001.2007(a)(2).

Conclusion

The I.G. properly excluded Petitioner from participation in Medicare, Medicaid and other
federal health care programs, and the statute mandates a five-year minimum period of
exclusion.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Barbara Vizy, M.D.,

(PTAN: H461440),
and

Richard Weinberger, M.D.,
(PTAN: H459530)

Petitioners,
v.
Centers for Medicare and Medicaid Services.
Respondent
Docket Nos. C-16-367 and C-16-368
Decisions CR4643 and CR4644

Date: June 24, 2016

DECISIONS

Petitioners Barbara Vizy, M.D. (Docket No. C-16-367) and Richard Weinberger, M.D.
(Docket No. C-16-368) challenged the effective dates of their reactivation of Medicare
billing privileges. I am issuing a consolidated decision in the two cases although the
Petitioners filed separate appeals that were not consolidated. I explain my reasons for
doing so, below. In each case I sustain the determination of a Medicare contractor, as
affirmed on reconsideration and adopted by the Centers for Medicare & Medicaid
Services (CMS), to reactivate the Petitioner’s Medicare billing privileges effective
September 29, 2015.
I. Background

As I note above, these cases are two individual challenges of CMS’s determination to
assign each Petitioner an effective reactivation date of September 29, 2015. However, it
makes sense to issue a consolidated decision in these cases. Petitioners are members of
the same group medical practice. The facts in these cases are identical as are the parties’
arguments. The identical legal principles apply in each case.

My consolidated decisions do not constrain the parties’ appeal rights. Any party that is
dissatisfied with my decision in that party’s case may individually appeal it to the
Departmental Appeals Board.

In each case CMS filed exhibits. In Docket No. C-16-367 (Vizy) CMS filed exhibits that
it identified as CMS Ex. 1-CMS Ex. 15. In Docket No. C-16-368 (Weinberger) CMS
filed exhibits that it identified as CMS Ex. 1-CMS Ex. 15. I receive these exhibits into
the record. Petitioners also filed exhibits in each case. In Docket No. C-16-367 (Vizy)
Petitioner filed exhibits that she identified as P. Ex. 1-P. Ex. 11. In Docket No. C-16-368
(Weinberger) Petitioner filed exhibits that he identified as P. Ex. 1-P. Ex. 12. I receive
these exhibits into the record as well.’

In each case CMS moved for summary judgment and Petitioner cross-moved for
summary judgment. I need not decide whether the criteria for summary judgment are
met in either case inasmuch as none of the parties has provided me with a basis for
convening an in-person hearing to receive testimony. CMS did not file written direct
testimony in either case. In each case Petitioner filed the written direct testimony of two
witnesses (Dr. Weinberger and Mary Mason). 367 P. Ex. 1, 367 P. Ex. 2; 368 P. Ex. 1,
368 P. Ex. 2. CMS did not request to cross-examine either of these witnesses. Therefore,
I decide these cases on their written records and resolve any disputed issues of fact
without convening in-person hearings.

II. Issues, Findings of Fact and Conclusions of Law
A. Issues

The sole issue in each of these cases is whether CMS’s contractor properly reactivated
the Petitioner’s Medicare billing privileges effective September 29, 2015.

' For purposes of efficiency I refer to the exhibits in each case using the three-digit
docket number prefix of that case. For example, in Docket No. C-16-367 (Vizy) I refer
to P. Ex. 1 as “367 P. Ex. 1.”
B. Findings of Fact and Conclusions of Law

CMS relies on the following facts in support of the determination to assign each
Petitioner the September 29, 2015 reactivation date. A Medicare contractor sent each
Petitioner a letter on September 12, 2014, requesting that he/she file an application to
revalidate his/her Medicare billing privileges. 367 CMS Ex. 3; 368 CMS Ex. 3. The
contractor did not receive responses to the requests, so on March 6, 2016, the contractor
called the Petitioners’ office and advised them that it had not received revalidation
applications from Petitioners.

On April 10, 2015, the contractor still had not received applications and it deactivated
each Petitioners’ Medicare billing privileges. 367 CMS Ex. 4; 368 CMS Ex. 4. During
the months that ensued, the contractor received several documents from Petitioners’
group practice but did not receive reactivation applications from either Petitioner.
Finally, the contractor received applications for re-enrollment (reactivation of billing
privileges) from each Petitioner on September 29, 2015. 367 CMS Ex. 5; 368 CMS Ex.
5. The contractor found these applications to be acceptable and on October 27, 2015, it
approved them and assigned each Petitioner an effective date of reactivation of billing
privileges of September 29, 2015. 367 CMS Ex. 7; 368 CMS Ex. 7.

Petitioners dispute these facts. They contend that there are “additional facts and
circumstances that make this matter more complex and support [each] Petitioner’s
position that [each] Petitioner’s provider enrollment date should remain unaffected and
that [each] Petitioner should be allowed to bill for the services provided to Medicare
beneficiaries during the time in which . . . [each Petitioner’s Medicare billing privileges]
was deactivated.” Petitioners’ pre-hearing brief and motion for summary judgment
(Petitioners’ brief) at 2.” In support of their assertion Petitioners make the following
allegations:

e¢ On March 10, 2015, Petitioners mailed the “proper forms” for Medicare
enrollment to the Medicare contractor;

e On May 20, 2015, Petitioners mailed CMS form 855B to the Medicare contractor,
“intending to revalidate” not only their group practice but Petitioners, individually;

¢ On July 2, 2015, Petitioners mailed the “proper forms” for Medicare enrollment to
the contractor;

¢ On July 16, 2015, Petitioners mailed forms 855B to the contractor “intending to
revalidate” not only their group practice but Petitioners, individually;

¢ On September 8, 2015, Petitioners again mailed forms 855B to the contractor
“intending to revalidate” not only their group practice but Petitioners, individually;

Although each Petitioner filed a brief the two briefs are essentially identical so I refer to
them collectively as “Petitioners” brief.”
e Correspondence with the contractor, on multiple occasions, “indicated that”
Petitioners’ individual enrollments were “occurring simultaneously” with that of
their group practice; and

e The contractor’s representatives told Petitioners that their individual enrollments
would be “backdated” to the dates when their billing privileges were reactivated.

Petitioners’ brief at 2.

Ihave examined closely these fact allegations and I find them to be unsupported.
Petitioners have not proven that they applied as individual suppliers for revalidation of
their Medicare billing privileges on any date prior to September 29, 2015.

Petitioners did not prove that they mailed individual re-enrollment forms to the contractor
on March 10, 2015, notwithstanding their assertions that they mailed the “proper forms”
on that date. They rest their assertion that they mailed “proper forms” on the fact that
they sent in forms other than the 855B re-enrollment forms. Petitioners’ brief at 7. In
fact, they have not even provided analysis of the information contained in these forms in
order to prove that they satisfied re-enrollment requirements, relying instead on affidavits
asserting baldly that the forms were adequate. Id.; see 367 P. Ex. 1, 367 P. Ex. 2; 368 P.
Ex. 1, 368 P. Ex. 2. I find those contentions to be insufficient to establish that Petitioner
mailed individual re-enrollment forms to the contractor on March 10, 2015.

By Petitioners’ own admissions the CMS form 855B that Petitioners mailed to the
contractor on May 20, 2015 was not an individual re-enrollment form for either Petitioner
Vizy or Petitioner Weinberger. Rather, it was a re-enrollment form for their group
practice, a separate entity. 367 P. Ex. 1 at 3, 367 P. Ex. 2 at 3; 368 P. Ex. 1 at 3, 368 P.
Ex. 2, at 3. Petitioners argue that this form contained information that pertains to them as
individuals. That may be so, but Petitioners do not aver, nor did they prove that the form
contained all of the information needed to qualify them for re-enrollment. Petitioners
also argue that they submitted what they thought would be sufficient information based
on conversations that they or their agents had with the contractor’s representatives. That
is, in effect, an assertion that they were misled. As I discuss in more detail below, this is
an equitable argument that I have no authority to consider because principles of equity
and in particular, estoppel, do not apply here.

As to Petitioners’ assertion that they mailed “proper” forms to the contractor on July 2,
2015, they again refer to forms that are not individual supplier re-enrollment forms.
Petitioners’ brief at 10. Petitioners did not prove that they submitted individual provider
re-enrollment forms on July 2, 2015, nor did they prove that whatever information they
submitted on that date was sufficient to qualify them for re-enrollment.

Petitioners’ assertions about the 855B form that they submitted on July 16, 2015, relate to
a form that they submitted on behalf of their group practice. Petitioners’ brief at 10-11.
This was not an individual re-enrollment form for either Petitioner. Once again,
Petitioners argue that some of the information in that form may have pertained to them as
individuals but they make no effort to prove that it contained all of the information
needed to qualify either of them for re-enrollment. Petitioners also make the equitable
argument that they were misled by the contractor into believing that, by submitting this
form, they were providing adequate information to qualify for re-enrollment.

Petitioners make very similar arguments about the 855B form that they submitted to the
contractor on September 8, 2015. Petitioners’ brief at 12. Once again, this form was not
an individual re-enrollment form filed on behalf of either Petitioner but a form that was
filed on behalf of their group practice.

Indeed, the documents submitted by Petitioners or their practice prior to September 29,
2015 were at best of tangential relevance to the issue of their re-enrollment as Medicare
suppliers. These documents included electronic funds transfer authorization agreements,
applications for Petitioners’ group practice enrollment, and an application for enrollment
of another individual besides Petitioners. They do not in any sense constitute completed
individual re-enrollment applications for either Petitioner

Thus, the evidence does not establish that either Petitioner filed an individual re-
enrollment form with the contractor at any time prior to September 29, 2015. That date
was the earliest date on which the contractor received a completed form from each
Petitioner that it could approve to qualify that Petitioner for re-enrollment.

Policy and regulations govern the determination of a supplier’s effective re-enrollment
date. CMS will allow a supplier to re-enroll effective the date of the deactivation of his
or her billing privileges if the supplier submits a reactivation application within 120 days
of the deactivation date. This is a matter of Departmental policy, expressed in the
Medicare Program Integrity Manual (MPIM). MPIM § 15.29.4.3. However, if a supplier
submits a re-enrollment application more than 120 days from the date of deactivation,
then the effective date of re-enrollment will be governed by 42 C.F.R.
§ 424.520(d). MPIM §§ 15.17, 15.29.4.3. The regulation provides, in relevant part, that
the earliest effective date of enrollment is the date on which a supplier files an application
that CMS or its contractor finds to be acceptable and can approve.

CMS’s policy does not carry the force of law but in this case it is entirely consistent with
regulatory requirements that generally establish that the earliest effective date o
participation is the date on which a supplier submits an application that is acceptable and
can be approved. 42 C.F.R. § 424.520(d). Indeed, allowing a grace period of 120 days to
file an application for re-enrollment after deactivation of billing privileges is a matter of
largesse because nothing in the regulations requires CMS to do so. CMS could have

established the earliest effective date of all applications for re-enrollment as the date
when an acceptable application is submitted and remained true to the regulatory
requirements.

Administrative Law Judges are instructed to give substantial deference to Departmental
policy where it applies in a particular case. 42 C.F.R. § 405.1062(a). I defer to
Departmental policy here because it is, as I have found, entirely consistent with
regulatory requirements.

Thus, the earliest date when Petitioners could qualify for re-enrollment was September
29,2015. That is because they waited more than 120 days from their deactivation to file
acceptable re-enrollment applications.

Petitioners argue that they should have retained authority to bill Medicare for their
services even if the documents that they submitted to the contractor between March and
September 29, 2015 were inadequate to qualify as acceptable re-enrollment applications.
They essentially make two assertions: first, that they acted at all times in good faith and
should not be penalized for honest errors or omissions on their part; and second, that they
were often misled by what they were told by the contractor’s agents into believing that
they were filing the correct documents. Indeed, they take this second argument further,
asserting that the contractor and its agents had an affirmative duty to instruct them as to
what they should file. The asserted failure of the contractor and its agents to satisfy this
duty, according to Petitioners, excuses them from any failure on their part to file
acceptable re-enrollment documents prior to September 29, 2015.

These arguments are all equitable arguments and are unavailing. Principles of equity do
not apply here. I am not authorized to provide equitable relief by ordering re-enrollment
of either Petitioner on a date when that Petitioner did not satisfy regulatory requirements.
US. Ultrasound, DAB No. 2302, at 8 (2010). Moreover, even if I had such authority,
equitable estoppel does not apply against the government in the absence of proof of
affirmative misconduct, and the records in these two cases are devoid of any such proof.
Wade Pediatrics v. Dep’t of Health & Human Servs. ,567 F.3d 1202, 1206 (10th Cir.
2009). Mere erroneous advice is insufficient evidence of affirmative misconduct. Id.

/s/
Steven T. Kessel
Administrative Law Judge


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

(OI File No. M-12-401 10-9),
Petitioner,

v.

The Inspector General.

Docket No. C-16-400
Decision No. CR4642

Date: June 23, 2016

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Cecelia
Valdes, from participating in Medicare, State Medicaid programs, and all other federally
funded health care programs, for a period of at least eight years. Exclusion in this case is
based on Petitioner’s conviction of a crime as is described at section 1128(a)(1) of the
Social Security Act (Act).

I. Background

Petitioner filed a hearing request to challenge the I.G.’s determination to exclude her.
The IG. filed a brief in support of its determination plus six exhibits that are identified as
1G. Ex. 1 —1.G. Ex. 6. Petitioner filed a brief (P. Br.) in support of her challenge to the
exclusion determination plus 14 exhibits that are identified as P. Ex. 1 — P. Ex. 14.

' Tissued a pre-hearing order in which I instructed Petitioner to file her brief and exhibits
after the I.G. filed his brief and exhibits. My intent was to allow Petitioner the
opportunity to review and reflect on the I.G.’s arguments and evidence before

responding. However, Petitioner filed her brief and exhibits a week prior to the I.G.
(Continued next page.)
Neither the I.G. nor Petitioner requested an in-person hearing. P. Br. at 4; 1.G. Br. at 7. I
decide the case based on the parties’ written exchanges. I receive the parties’ exhibits
into the record.

II. Issue, Findings of Fact and Conclusions of Law
A. Issue

The sole issue in this case is whether the duration of the exclusion imposed by the I.G. —
at least eight years — is reasonable.

B. Findings of Fact and Conclusions of Law

Petitioner admits that she was convicted of a criminal offense that falls within the
meaning of section 1128(a)(1) of the Act. P. Br. at 2. Section 1128(a)(1) mandates the
exclusion of any individual who is convicted of a criminal offense related to the delivery
of an item or service under Medicare or a State health care program. On September 23,
2014, Petitioner was convicted of one count of a conspiracy to commit health care fraud.
1G. Ex. 3; LG. Ex. 4. Specifically, she pled guilty to conspiring to falsely certify, in
connection with Medicare reimbursement, claims that she had provided physical therapy
services that, in fact, she had not provided. I.G. Ex. 5. That is obviously an 1128(a)(1)
crime in that the conspiracy’s target was the Medicare program itself and the
reimbursement that the program paid for health care items or services.

Petitioner’s challenge is directed at the length of the exclusion imposed by the LG. She
asserts that an exclusion of eight years is unreasonable.”

Section 1128(a)(1) mandates the exclusion of any individual who is convicted of a
criminal offense that falls within its purview. An exclusion imposed pursuant to section
1128(a)(1) must be for at least five years. Act, § 1128(c)(3)(B).

(Continued from preceding page.)

filing his submission. I gave Petitioner a renewed opportunity to respond to the I.G.’s
submission and she did so by filing a letter response, which I am accepting as Petitioner’s

reply.

Originally, the I.G. determined to exclude Petitioner for at least 10 years. I.G. Ex. 1.
The I.G. reduced the length of the exclusion to at least eight years based on evidence
proving that Petitioner’s cooperation with prosecuting authorities led to the conviction of
other individuals. I.G. Ex. 2.
The I.G. has discretion to impose an exclusion of more than five years’ duration in
appropriate cases. An exclusion of more than five years may be reasonable where the
evidence satisfies criteria set forth in the regulations. 42 C.F.R. § 1001.102(b), (c). The
regulations describe these criteria as aggravating and mitigating factors. The factors
function very much as rules of evidence. Evidence falling within an aggravating or a
mitigating factor may be relevant to deciding whether an exclusion of more than five
years is reasonable and, if so, for how long. However, the presence of such evidence
does not direct an exclusion of a particular length. Relevant evidence must be weighed in
order to decide how untrustworthy an individual is to provide care to program
eneficiaries and recipients.

In this case, the I.G. offered proof that falls under three of the regulation’s aggravating
factors. First, he established that Petitioner’s crime caused the government to sustain
significant financial loss. 42 C.F.R. § 1001.102(b)(1). Petitioner participated in a
conspiracy that caused the Medicare program to sustain losses in the neighborhood of
$355,000. I.G. Ex. 3; 1.G. Ex. 4; I.G. Ex. 5. Second, the conspiracy in which Petitioner
participated occurred over a period of more than a year. 42 C.F.R. § 1001.102(b)(2).
Petitioner pled guilty to participating in a conspiracy that began on April 20, 2011, and
that continued until April 9, 2013. 1G. Ex. 5; LG. Ex. 6. Third, Petitioner’s sentence for
er crime included a period of incarceration. 42 C.F.R. § 1001.102(b)(5). Petitioner was
sentenced to a year and a day of imprisonment. I.G. Ex 3; LG. Ex. 4.

This evidence establishes a very substantial crime on Petitioner’s part and a high level of
untrustworthiness. It proves that she was a willing member of a conspiracy that was
calculated to defraud the Medicare program and that had a very significant financial
impact on the program. Given that, an exclusion of eight years, which takes into account
her cooperation with prosecuting authorities ultimately leading to the conviction of other
individuals, is not unreasonable.

Petitioner attempts to minimize the significance of her role in the conspiracy by asserting
that the order to pay restitution applied not just to her, but also to the other participants in
the conspiracy. She contends that her share of the total restitution amount is somewhat in
excess of $50,000. P. Br. at 3. Petitioner misses the point with this argument, however.
The evidence unequivocally establishes that Petitioner participated in a crime that had a
very substantial impact on the Medicare program. She was a willing member of a
conspiracy to defraud that program and that conspiracy had a total impact of over
$350,000 on the program. She cannot now minimize her role by suggesting that one can
apportion responsibility by dividing the dollar impact of the conspiracy by the total
number of participants. In this case, the crime was a group effort of which she was an
active member.
Petitioner argues also that she should be given credit for cooperating with government
authorities and assisting in the conviction of other members of the conspiracy. 42 C.F.R.
§ 1001.102(c)(3)(i). It is true that her cooperation was valuable. That was reflected in
the reduction of her prison sentence. I.G. Ex. 4 at 2. But, the I.G. took that cooperation
into account in reducing the length of Petitioner’s exclusion from ten to eight years (1.G.
Ex. 2), and I do not find that to be unreasonable.

/s/
Steven T. Kessel
Administrative Law Judge