SUBJECT:

Sheshiqiri Rao Vavilikolanu,

Petitioner,

The Inspector General

DECISION

Sheshiqiri Rao Vavilikolanu, M.D., (Petitioner), is excluded from participation in Medicare, Medicaid, and all other Federal health care programs pursuant to section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1), effective August 20, 2002, based upon his conviction for program-related crimes. There is a proper basis for exclusion. Petitioner's exclusion for five years is mandatory pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)). Further, extension of the minimum period of exclusion by 20 years, for a total period of 25 years, is not unreasonable given the presence of four aggravating factors and one mitigating factor.

PROCEDURAL HISTORY

Petitioner was notified by letter from the Inspector General (I.G.) dated July 31, 2002, that he was being excluded from participation in Medicare, Medicaid and all Federal health care programs for a period of 25 years. The I.G. stated in her notice that the basis for the action was Petitioner's conviction of a criminal offense related to the delivery of an item or service under Medicare or Medicaid and Petitioner's conviction of an offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct related to the delivery of a health care item or service. I.G. Exhibit (I.G. Ex.) 1. The offenses cited by the I.G. subject Petitioner to a mandatory exclusion pursuant to section 1128(a)(1) and (3) of the Act, respectively for a period of not less than five years. The I.G. also notified Petitioner that his period of exclusion was increased to 25 years based on consideration of four aggravating factors and one mitigating factor.

Petitioner submitted a request for hearing on October 1, 2002. The request for hearing was received at the Civil Remedies Division of the Departmental Appeals Board (DAB), docketed as C-03-001, and assigned to me for hearing and decision on October 30, 2002. A telephonic prehearing conference was convened on November 12, 2002, the substance of which is memorialized in my Order of November 14, 2002. The Parties agreed that this case is susceptible to resolution on the written record and that an in-person, oral hearing is not necessary. Thus, a briefing schedule was established.

The I.G. filed her motion for summary affirmance with supporting brief and exhibits 1 through 8 on December 20, 2002. Petitioner filed his brief in response with exhibits 1 through 7 (P. Ex.) on January 20, 2003. The I.G. filed her reply on February 10, 2003. No objections have been made as to any of the offered exhibits and I.G. Exs. 1 through 8 and P. Exs. 1 through 7 are admitted.

FINDINGS OF FACT

The following findings of fact are based upon the uncontested and undisputed assertions of fact in the Parties' pleadings and the exhibits admitted.

1. It is undisputed that at all relevant times, Petitioner was a medical doctor, licensed to practice medicine and authorized to participate in Medicare and Medicaid.

2. It is undisputed that on about May 24, 2001, in the U.S. District Court, Northern District of Illinois, Eastern Division, Petitioner pled guilty to participating in a racketeering enterprise, a felony violation of 18 U.S.C. § 1962(c). I.G. Ex. 3.

3. It is undisputed that Petitioner admitted in his plea agreement that he engaged in a criminal enterprise with others and hospitalized hundreds of patients who did not need to be hospitalized; falsely told other patients they needed to be hospitalized when no treatment or testing was required on an in-patient basis; and paid or otherwise compensated others to seek admission by giving false signs and symptoms. Id.

4. It is undisputed that on October 10, 2001, Petitioner was sentenced to 35 months of incarceration followed by 3 years, supervised release, to pay restitution of $5,000,000, a forfeiture of $1,000,000, and an assessment of $100. I.G. Ex. 4.

5. It is undisputed that Petitioner's medical license was summarily suspended by the Michigan Department of Consumer & Industry Services, Bureau of Health Services, Board of Medicine, Disciplinary Subcommittee, on February 25, 2002, based upon his conviction as described in finding of fact 2. I.G. Ex. 5, at 1.

6. It is undisputed that as a result of the suspension of his medical license on February 25, 2002, Petitioner's participation in the Michigan Medicaid program was terminated effective February 24, 2002. I.G. Ex. 8.

7. Petitioner's misconduct resulted in loss to Medicare and/or Medicaid in excess of $5,000 and, in fact, Petitioner was ordered to pay restitution of $5,000,000. See P. Ex. 2, at 9; I.G. Ex. 3, at 9.

8. Petitioner's criminal conduct occurred over a period greater than one year, from October 1996 to January 1998. I.G. Ex. 3, at 3.

9. Petitioner was sentenced to incarceration of 35 months. I.G. Ex. 4, at 2.

10. The I.G. notified Petitioner by letter dated July 31, 2002, that he was being excluded from participation in Medicare, Medicaid and all Federal health care programs (effective 20 days from the date of letter) for a period of 25 years. I.G. Ex. 1.

11. Petitioner filed a timely request for a hearing.

CONCLUSIONS OF LAW

1. Petitioner was convicted within the meaning of section 1128(i) of the Act. 42 U.S.C. § 1320a-7(i).

2. Petitioner was convicted of a program-related offense within the meaning of section 1128(a)(1) of the Act. 42 U.S.C. § 1320a-7(a)(1).

3. Petitioner's conviction of a program related-offense requires that he be excluded from participation in Medicare, Medicaid, and other federal health care programs for a minimum period of five years. Act, §§ 1128(a)(1) and 1128(c)(3)(B) (42 U.S.C. § 1320a-7(a)(1) and (c)(3)(B)).

4. Extending Petitioner's period of exclusion by 20 years for a total of 25 years, is not unreasonable given the presence of four aggravating factors and one mitigating factor.

5. Petitioner failed to establish by a preponderance of the evidence that the sentencing court considered his mental illness as impacting upon his culpability; thus, there is no mitigating factor within the meaning of 42 C.F.R. § 1001.102(c)(2).

6. The I.G. did not consider an aggravating factor that did not to exist or fail to consider a mitigating factor.

7. Exclusion pursuant to section 1128(a)(1) of the Act is remedial in nature and purpose and not punitive; thus, the Double Jeopardy clause of the Fifth Amendment has no application.

8. Petitioner's exclusion was effective August 20, 2002, 20 days after the date of the I.G. notice. 42 C.F.R. § 1001.2003.

DISCUSSION

A. Issues

(1) Whether there is a basis for Petitioner's exclusion.

(2) Whether a period of exclusion of 25 years, the minimum five year exclusion plus 20 additional years, is unreasonable.

B. Applicable Law

Petitioner's right to a hearing by an administrative law judge and judicial review of the final action of the Secretary is provided by section 1128(f) of the Act (42 U.S.C. § 1230a-7(f)). Petitioner's request for a hearing was timely filed and I do have jurisdiction. However, the Secretary has by regulation limited my scope of review to two issues: (1) whether there is a basis for the imposition of the sanction; and (2) whether the length of the exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(1). The standard of proof is a reponderance of the evidence and there may be no collateral attack of the conviction that is the basis for the exclusion. 42 C.F.R. § 1001.2007(c) and (d). Petitioner bears the burden of proof and persuasion on any affirmative defenses or mitigating factors and the I.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(b) and (c).

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation in the Medicare, Medicaid, and all Federal health care programs any individual or entity convicted of a criminal offense related to the delivery of an item or service under the Medicare and Medicaid programs. Pursuant to section 1128(a)(3) of the Act, the Secretary must exclude from participation in Medicare, Medicaid, and all Federal health care programs any individual convicted of a felony offense of fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct which occurred after August 21, 1996, and involved the delivery of a health care item or service or any other act or omission in a health care program operated or financed by any governmental agency and not included under section 1128(a)(1). Section 1128(i) of the Act (42 U.S.C.§1230a-7(i)) defines the term "convicted" to include instances when a judgment of conviction has been entered by any court whether or not an appeal is taken or the record is later expunged; when there has been a finding of guilt against the individual or entity; when a plea of guilty or nolo contendere has been accepted; or when the individual has entered into a first offender, deferred adjudication, or other arrangement or program where a judgment of conviction has been withheld.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act shall be for a minimum period of five years. Pursuant to 42 C.F.R. §§ 1001.101 and 102(b) no exclusion pursuant to 1128(a) may be for less than five years, but the period of exclusion may be extended based on the presence of specified aggravating factors. Only if the aggravating factors justify an exclusion of longer than five years may mitigating factors be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R.§1001.102(c).

C. Analysis

1. It is undisputed that there is a basis for Petitioner's exclusion pursuant to section 1128(a)(1) and (3) of the Act.

Petitioner does not dispute that on about May 24, 2001, in the U.S. District Court, Northern District of Illinois, Eastern Division, he pled guilty to participating in a racketeering enterprise, a felony violation of 18 U.S.C. § 1962(c). I.G. Ex. 3. Petitioner admitted in his plea agreement that he engaged in a criminal enterprise with others and hospitalized hundreds of patients who did not need to be hospitalized; falsely told other patients they needed to be hospitalized when no treatment or testing was required on an in-patient basis; and paid or otherwise compensated others to seek admission by giving false signs and symptoms. Id. Petitioner was sentenced to 35 months of incarceration followed by 3 years, supervised release, to pay restitution of $5,000,000, a forfeiture of $1,000,000, and an assessment of $100. I.G. Ex. 4.

In her notice letter of July 31, 2002, the I.G. cites both subsections 1128(a)(1) and (3) as grounds for Petitioner's exclusion. The I.G. argues in her brief in support of the motion for summary affirmance that Petitioner's racketeering conviction requires mandatory exclusion under both subsections 1128(a)(1) and (3). Petitioner does not dispute that he was convicted within the meaning of the Act: (1) of a felony; (2) related to the delivery of an item or service under Medicare or Medicaid; and (3) the felony offense involved fraud related to the delivery of a health care item or service. There is no dispute that Petitioner is subject to mandatory exclusion under section 1128(a) of the Act.

I do find the I.G. erred as a matter of law, albeit harmless error, by citing both subsections 1128(a)(1) and (3). Subsection 1128(a)(3) clearly provides that it only applies to felony convictions related to health care fraud "other than those specifically described in" subsection 1128(a)(1). Thus, while Petitioner's single offense may be accurately described under either subsection 1128(a)(1) or (3), the plain language of the Act clearly precludes application of both, giving preference to section 1128(a)(1). However, even without application of the doctrine of waiver against Petitioner, this is harmless error. Exclusion is mandatory under either provision and there is no indication that the error had any impact upon the I.G.'s determination of the appropriate period of exclusion. Because the Act gives preference to subsection 1128(a)(1) and it is clear Petitioner's offense was related to delivery of an item or service under Medicare and Medicaid, I find that Petitioner's mandatory exclusion is directed by subsection 1128(a)(1).

2. It is undisputed that there are four aggravating factors which are properly considered in this case pursuant to 42 C.F.R. § 1001.102(b) as grounds for extending the period of exclusion beyond the minimum five years.

Pursuant to section 1128(c)(3)(B) of the Act, five years is the minimum period for a mandatory exclusion pursuant to 1128(a)(1). The I.G. added 20 years to the minimum five years, for a total of 25 years, after considering 4 aggravating factors and 1 mitigating factor. The I.G. considered the following four aggravating factors, set forth at 42 C.F.R. §1001.102(b), as grounds for lengthening the period of exclusion in this case:

(1) (t)he acts . . . caused, . . . , a financial loss to a Government program . . . of $5,000 or more;

(2) [t]he acts that resulted in the conviction, or similar acts, were committed over a period of one year or more;

(5) [t]he sentence imposed by the court included incarceration;

(9) the individual or entity . . . has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for imposition of the exclusion.

Petitioner does not challenge the aggravating factors cited by the I.G. Petitioner's Brief (P. Br.) at 3. Petitioner does not dispute that the loss to Medicare and/or Medicaid exceeded $5,000 and, in fact, he was ordered to pay restitution of $5,000,000. See P. Ex. 2, at 9; I.G. Ex. 3, at 9. Petitioner cannot dispute that he agreed in his plea agreement that his criminal conduct occurred over a period greater than one year, from October 1996 to January 1998. I.G. Ex. 3, at 3. Petitioner was clearly sentenced to incarceration of 35 months. I.G. Ex. 4, at 2. Finally, Petitioner was also subject to adverse State action based on his conviction, as he was terminated from the Medicaid program and his medical license was suspended. I.G. Exs. 5, 8.

Accordingly, I too conclude that the four aggravating factors are established in this case.

3. The I.G. properly identified one mitigating factor which was considered in determining the correct period of exclusion in this case.

In the notice of July 31, 2002, the I.G. stated that she considered that Petitioner's cooperation with federal or state officials resulted in the arrest of others. I.G. Ex. 1, at 2. The Secretary has provided by regulation at 42 C.F.R. § 1001.102(c) that only if any of the aggravating factors justify a period of exclusion longer than five years may mitigating factors be considered as a basis for reducing the period of the exclusion to no less than five years. The following factors may be considered as mitigating and a basis for reducing the period of exclusion:

(1) [t]he individual or entity was convicted of 3 or fewer misdemeanor offenses, and the entire amount of financial loss to Medicare and the State health care programs due to the acts that resulted in the conviction, and similar acts, is less than $1500;

(2) [t]he record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional, or physical condition before or during the commission of the offense that reduced the individual's culpability; or

(3) [t]he individual's or entity's cooperation with Federal or State officials resulted in -

(i) [o]thers being convicted or excluded from Medicare, Medicaid, or all other Federal health care programs,

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

(iii) [t]he imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.

Evidence which does not relate to an aggravating factor or a mitigating factor specified in the regulation is irrelevant to determining the appropriate length of an exclusion. The burden is upon Petitioner to show the presence of mitigating factors. The I.G. bears the burden of proving the existence of aggravating factors. 42 C.F.R. § 1005.15; John (Juan) Urquijo, DAB No. 1735 (2000).

Petitioner, does not dispute that this mitigating factor was properly identified by the I.G. Rather, Petitioner argues that the I.G. did not give appropriate weight to this factor. Petitioner also argues that there exists a second mitigating factor not considered by the I.G. I do not find Petitioner's arguments persuasive.

4. A 25-year period of exclusion (5 year minimum plus 20 additional years) is not unreasonable in light of the aggravating and mitigating factors properly considered by the I.G.

a. The I.G.'s did not err in failing to consider as a mitigating factor that the sentencing court considered Petitioner's mental health issues as reducing his culpability.

Petitioner argues that the criminal judgment reflects that the sentencing judge adopted the findings of Petitioner's presentence report. Because the presentence report includes a discussion of Petitioner's mental health issues and the specific statement of Petitioner's personal doctor that his mental health issues impacted his criminal conduct, Petitioner urges that I infer that the sentencing judge imposed a lesser sentence due to Petitioner's reduced culpability. P. Br. at, 3-6. It seems that the Latin, expressio unius est exclusio alterius (the expression of one thing is the exclusion of another), may actually apply in this case as the sentencing judge specifically states she departed from sentencing guidelines based on Petitioner's substantial assistance but makes no reference to mental health issues impacting upon her judgment. I also note that Petitioner's doctor's statement may or may not be read as indicating reduced culpability.

In the case of Joseph M. Rukse v. The Inspector General, DAB No. 1851 (2002) an appellate panel of the DAB stated:

We agree with the ALJ that it was not necessary for the record in the criminal proceedings to contain "specific findings" that Petitioner had a substance abuse condition at the time of the offense and that the condition reduced his culpability. The I.G. acknowledged in its appeal that an ALJ might be able to reasonably infer from a court record that the judge had made the determinations required by the regulation, even if the judge did not make a finding using the precise terms of the federal regulation

Rukse is important because it is a clear statement that a mitigating factor may be found by inference and that a specific statement may not be required. The inference simply may not be drawn in this case however.

The transmittal for the presentence report indicates:

The enclosed report (referring to the final copy of the presentence report) reflects the following revisions in the Offender Characteristics Section: verification of the defendant's immigration status was included at lines 457 to 459. Information provided by Dr. Daniel N. Uwah was added under the mental and emotional health section at lines 506 to 545. No changes were made in the offense level computation section.

P. Ex. 2, at 1. Thus, clearly the probation officer who prepared the report was not suggesting or recommending a departure from sentencing guidelines based on Petitioner's mental illness.

Pursuant to the plea agreement, the Petitioner stipulated to the sentencing guideline calculations set forth in that document. P. Ex. 3, at 9-11. No mention is made in the plea agreement that mental illness was a factor that affected "culpability" or justified a departure from sentence guidelines. Furthermore, pursuant to paragraph 7 of the plea agreement, Petitioner had the ability to correct the application of the sentencing guidelines and calculation thereunder. P. Ex. 3, at 11. Petitioner has offered no evidence that he sought to have the judge consider his mental health issues as bearing upon his culpability for purposes of sentencing.

The presentence report, Part E, entitled Factors That May Warrant Departure, does not include any discussion of Petitioner's mental health issues. The probation officer only states that Petitioner's cooperation will be a basis for asking the judge to depart from the sentencing guidelines with a downward reduction. P. Ex. 2, at 24, 26; I.G. Ex. 7, at 23, 25; see also P. Ex. 3, at 2. The criminal judgment indicates that the court adopted the "factual findings and guideline application in the presentence report" (P. Ex. 1, at 6.), but specifically states that the departure from the sentencing guidelines was on government motion due to Petitioner's substantial assistance. P. Ex. 1, at 7. Petitioner's mental health issues are not listed as a reason for departure from sentencing guidelines.

Petitioner's mental health issues are discussed under Part C, entitled Offender Characteristics, of the presentence report. P. Ex. 2, at 18; I.G. Ex. 7, at 18. The report reflects that Petitioner carries a diagnosis of Bipolar Disorder (Manic Depressive Disorder), which, in the opinion of his doctor, had a direct effect upon his commission of the criminal act for which he was convicted. I note that Petitioner's doctor does not suggest that Petitioner's mens rea was in anyway reduced or that he was any less culpable for his misconduct due to his mental illness.

Based on the foregoing, I do not find that an inference may be drawn that the judge in Petitioner's criminal case found him of lesser culpability due to any mental illness. Accordingly, the mitigating factor simply does not exist.

b. The I.G.'s properly weighed the mitigating factor that Petitioner provided assistance to law enforcement.

Petitioner argues generally that the 25-year exclusion imposed by the I.G. is unreasonable and punitive. P. Br. at 11. I note at the outset that the mandatory exclusion provisions of section 1128 of the Act (42 U.S.C. § 1320a-7) have been held to be remedial in nature and purpose, not punitive. See Manocchio v. Kusserow, 961 F.2d 1539 (11^th Cir., 1992); Erickson v. U.S. ex rel. Department of Health and Human Services, 67 F.3d 858, 864 n.2 (9^th Cir., 1995), cf. Patel v. Thompson, 319 F.3d 1317 (11^th Cir., 2003) (retroactive application is not prohibited because exclusion provisions are remedial and not punitive). Petitioner cites no case in which a court has held that the mandatory exclusion provisions of the Act are punitive rather than remedial.

Petitioner's specific argument is that his cooperation with law enforcement was extensive and the I.G. did not give him enough credit for his cooperation when arriving at the exclusion period. Referring back to the controlling regulation, 42 C.F.R.§ 1001.102, I note that the regulation does not specify how the I.G. is to weigh aggravating and mitigating factors. In fact, 42 C.F.R. § 1001.102(c) uses the discretionary "may" in the context of consideration of mitigating factors, implying that the I.G. may choose to give no weight at all to a mitigating factor. I also note that there is no requirement that the I.G. articulate how it weighed the factors present in a particular case. Thus, I have no way of knowing how the I.G. actually weighed the aggravating and mitigating factors in this case.

The DAB has made clear that the role of the ALJ in cases such as this is to conduct a "de novo" review as to the facts related to the basis for the exclusion and the facts related to the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102. See Joann Fletcher Cash, DAB No. 1725 (www.hhs.gov/dab/decisions/dab 1725.html) (2000), n.6 (n.9 in the original decision and Westlaw™), and cases cited therein. The regulation specifies that I must determine whether the length of exclusion imposed is "unreasonable" (42 C.F.R. § 1001.2007(a)(1)). The DAB has explained that in determining whether a period of exclusion is "unreasonable," I am to consider whether such period falls "within a reasonable range." Cash, n.6. The DAB cautions that whether I think the period of exclusion too long or too short is not the issue. I am not to substitute my judgment for that of the I.G. and may only change the period of exclusion in limited circumstances.

My reading of 42 C.F.R. § 1001.102 is that with a mandatory exclusion under section 1128(a) of the Act, there is an automatic exclusion of five years. Pursuant to 42 C.F.R. § 1001.102(d), one prior conviction for conduct that would cause mandatory exclusion under section 1128(a) of the Act, increases the minimum period of exclusion to 10 years and two prior convictions automatically causes permanent exclusion. The five-year and ten-year minimum exclusions may only be extended if the I.G. can point to evidence that one or more of the aggravating factors specified at 42 C.F.R. § 1001.102(b) are present. The regulations do not limit the additional period of exclusion the I.G. may impose based upon the presence of aggravating factors. The regulations also do not specify how much of an extension is warranted by the existence of an aggravating factor. The DAB has indicated that it is not the number of aggravating factors that is determinative; rather, it is the quality of the circumstances, whether aggravating or mitigating, which is controlling in analyzing these factors. Barry D. Garfinkel, M.D., DAB No. 1572 (1996).

Section 1001.102 of 42 C.F.R. provides that when aggravating factors justify an exclusion of more than the mandatory minimum period, then the I.G. may consider any of the three specified mitigating factors if they are shown to exist. In Urquijo, the DAB suggested that the I.G.'s failure to consider a mitigating factor amounts to an abuse of discretion. The DAB also made clear in Urquijo that: if the I.G. considers an aggravating factor to extend the period of exclusion and that factor is not later shown to exist on appeal; or if the I.G. fails to consider a mitigating factor that is shown to exist, then the ALJ may make a decision as to the appropriate extension of the period of exclusion beyond the minimum.

Thus, my determination of whether or not the exclusionary period in this case is unreasonable hinges on three points: (1) whether the period of exclusion is within the reasonable range; (2) whether the I.G. has shown the existence of aggravating factors; and, (3) whether the Petitioner has shown that there is a mitigating factor that the I.G. failed to consider.

In this case, the aggravating factors the I.G. considered are not disputed and I agree those factors are present in this case. Furthermore, it has not been shown by Petitioner that the I.G. failed to consider a mitigating factor other than the one the I.G. specifically considered. Under the circumstances, there are no grounds for me to reassess the proper period of exclusion, for I would simply be substituting my judgment for that of the I.G. However, I do find that the 25-year exclusion imposed in this case is not unreasonable given the facts of this case. Specifically, I consider the total loss to the government of $5,000,000 or more; the fact Petitioner was sentenced to nearly 3 years of confinement; the fact that Petitioner engaged in the proven misconduct for more than a year; and the fact that Petitioner was excluded from Medicaid and his medical license was suspended. Based on the details of his offenses as set forth in Petitioner's plea agreement and the magnitude of the abuse of the Medicare and Medicaid system and of individual patients, I would be comfortable with a much longer period of exclusion. I also recognize that a mitigating factor exists in this case in the nature of Petitioner's cooperation with law enforcement authorities after he was caught and as part of his plea agreement (I.G. Ex. 3, at 15-16). In my opinion, upon weighing the single mitigating factor against the four aggravating factors, the I.G. was generous by not excluding Petitioner for a much longer period. Nevertheless, I will not substitute my judgment for that of the I.G. in this case.

CONCLUSION

For the foregoing reasons, Petitioner shall remain excluded from participation in Medicare, Medicaid, and all Federal health care programs for a period of 25 years, effective August 20, 2002.

Keith W. Sickendick

Administrative Law Judge