SUBJECT:

Gary A. Kirsch,

Petitioner,

The Inspector General

By letter dated September 30, 2002, the Inspector General (I.G.) notified Petitioner that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs (as defined in section 1128B(f) of the Social Security Act (Act)) for the minimum period of five years. The I.G. informed Petitioner that his exclusion was imposed under section 1128(a)(1) of the Act, due to his conviction of a criminal offense (as defined in section 1128(i) of the Act) related to the delivery of an item or service under the Medicare and Medicaid programs.

On February 10, 2003, I convened a telephone prehearing conference during which the parties agreed that an in-person hearing was not required and that the issues could be decided by summary judgment. Petitioner appeared on his own behalf, and I advised him of his right to legal representation.

I issued an order establishing briefing deadlines on February 27, 2003. Pursuant to that order, the I.G. filed a brief on March 24, 2003, accompanied by four proposed exhibits. These have been entered into the record as I.G. exhibits (Exs.) 1-4, without objection.

Petitioner filed a brief on March 15, 2003 (received on March 26, 2003), accompanied by twelve proposed exhibits. These have been entered into the record as P. Exs. 1-12, ⁽¹⁾ without objection. The parties did not file reply briefs.

It is my decision to sustain the determination of the I.G. to exclude Petitioner from participating in Medicare, Medicaid, and all federal health care programs for a period of five years. I base my decision on the documentary evidence, the applicable law and regulations, and the arguments of the parties. It is my finding that Petitioner was convicted of a criminal offense related to the delivery of an item or service under the Medicare program. Additionally, I find that the 5-year exclusion imposed on Petitioner is mandated by the Act.

Section 1128(a)(1) of the Act authorizes the Secretary of Health and Human Services (Secretary) to exclude from participation in any federal health care program an individual convicted of a criminal offense relating to the delivery of a health care item or service.

An exclusion under section 1128(a)(1) of the Act must be for a minimum period of five years. Section 1128(c)(3)(B) of the Act. Aggravating factors can serve as a basis for lengthening the period of exclusion. 42 C.F.R. § 1001.102(b). If aggravating factors justify an exclusion longer than five years, mitigating factors may be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).

Pursuant to 42 C.F.R. § 1001.2007, an individual or entity excluded under section 1128(a)(1) of the Act may file a request for a hearing before an administrative law judge.

The findings of fact and conclusions of law noted below, in bold face, are followed by a discussion of each finding.

1. Petitioner's conviction of a criminal offense related to the delivery of an item or service under the Medicare program justifies his exclusion by the I.G. from participation in Medicare, Medicaid, and all other federal health care programs.

The facts of this case are properly set forth by the I.G. in her brief as follows:

During the time period relevant to this case, Petitioner was Vice President of Ultrasound Diagnostic Service, Inc. (UDS), located in Bedford Heights, Ohio. I.G. Ex.3, at 4. From about May 1994 and continuing through about April 1998, Petitioner offered and paid remuneration, on behalf of UDS, to chiropractors Dr. John Strom and Dr. Monica Wloszek, in return for patient referrals and arranging for the furnishing of, and ordering, and arranging for the ordering of, ultrasound diagnostic services, for which payment may be made under the Medicare and Medicaid programs. I.G. Ex. 2, at 3-4.

The illegal kickbacks that Petitioner was responsible for were disguised as lease agreements between UDS and Drs. Strom and Wloszek. I.G. Ex. 3, at 6. On or about May 18, 1994, Petitioner entered into a written lease agreement with Dr. Wloszek in which Petitioner authorized UDS to pay Dr. Wloszek $300 per month purportedly for renting a room in Dr. Wloszek's office. I.G. Ex. 3, at 6. On November 11, 1996, Petitioner entered into another purported lease agreement with Dr. Wloszek. Id. The rent payments to Dr. Wloszek were, in fact, direct remuneration in return for Dr. Wloszek's referral of patients, including Medicare and Medicaid patients to UDS, and ordering of ultrasound diagnostic tests from UDS. Id. Between about July 1994 through about March 1998, Petitioner caused UDS to pay Dr. Wloszek and her business a total of approximately $11,114.06 for patient referrals. I.G. Ex. 3, at 8.

At Dr. Wloszek's suggestion, Petitioner also entered into a similar kickback arrangement with Dr. John Strom. I.G. Ex. 3, at 6-7. In about December 1995, Petitioner paid Dr. Strom approximately $175 for patients referred to UDS for ultrasound testing. I.G. Ex. 3, at 6. Petitioner later authorized UDS to pay Dr. Strom about $125 per month, purportedly for renting a room in Dr. Strom's office. Id.

Beginning in about March 1996, Dr. Strom arranged for his employee-chiropractors to negotiate their own purported "lease" agreements with mobile laboratories such as UDS. Id. In about March 1996, Petitioner entered into a purported oral "lease" agreement with Dr. Strom, for the benefit of Dr. Strom and one of Dr. Strom's employee-chiropractors.

Under this arrangement, Dr. Strom was able to avoid increasing the employee-chiropractor's salary, since the employee-chiropractor would be receiving payments from UDS. I.G. Ex. 3, at 7. Between about December 1995 through about April 1998, Petitioner offered to pay, and caused UDS to pay, Dr. Strom, Dr. Strom's business, and his employee-chiropractor a total of approximately $4,800. I.G. Ex. 3, at 7-8.

The payments Petitioner caused UDS to pay Dr. Wloszek and her business, Dr. Strom and his business, and Dr. Strom's employee-chiropractor, were determined in a manner that took into account the value of the referrals and Medicare/Medicaid business that these chiropractors would refer to UDS. I.G. Ex. 3, at 7. Put another way, the payments Petitioner authorized UDS to pay were determined based upon what UDS would earn from the referrals in ultrasound services that could be billed to the Medicare or Medicaid program.

On March 23, 2001, the United States Attorney for the Northern District of Ohio filed a two count Information against Petitioner, charging him with violation of the Federal Anti-Kickback Statute and offering to pay and causing to be paid health care kickbacks. I.G. Ex. 2; Title 18 U.S.C. §§ 2 and 371, and Title 42 U.S.C. §§ 1320a-7(b)(2). On March 25, 2001, Petitioner pled guilty to both counts of the Information. He was sentenced to two years probation and ordered to make restitution to Medicare and the State of Ohio Medicaid program in the amount of $15,914.06. Petitioner was also ordered to pay restitution to private insurers. I.G. Ex. 4; P. Ex. 5.

I have considered the defenses raised by Petitioner in his brief (see P. Br. at 12) and find that none have merit.

Petitioner pled guilty to one count of conspiracy to violate the Federal Anti-Kickback Statute and one count of offering to pay and causing to be paid health care kickbacks in return for Medicare and Medicaid patients, and for aiding and abetting. I.G. Exs. 3 and 4. Petitioner's plea of guilty constitutes a conviction pursuant to section 1128(i)(3) of the Act.

Petitioner's conviction was related to the delivery of health care items or services under the Medicare and Medicaid programs. This is evident from the fact that Petitioner, acting through his company, offered and paid remuneration to certain chiropractors in return for Medicare and Medicaid work that would be reimbursable by federal health care programs. I find that there is a common sense connection between the criminal offense and the Medicare and Medicaid programs in this case. See Andrew Anello, DAB No. 1803 (2001).

Convictions under 42 U.S.C. § 1320a-7b(a) with respect to the Medicare and Medicaid programs are related within the meaning of section1128(a)(1) of the Act. Thus, the Information, the relevant statute, and judgment of conviction establish that Petitioner was convicted of an offense that provides a basis to exclude him under section 1128(a)(1) of the Act.

Petitioner appears to argue that he should not be excluded because the I.G. frequently determines that conduct occurring in the past does not, necessarily, warrant exclusion. Petitioner argues that his conduct was based on a misreading of the I.G.'s regulations and policies, and that the I.G. should not impose an exclusion in his case. P. Br. at 3 and 5. Petitioner's arguments are without merit. Petitioner's illegal conduct under section 1128(a) of the Act, which began in May 1994 and ended in April 1998 is not affected by any statute of limitations. See Arlene Elizabeth Hunter, DAB CR505 at 6 (1997); see, also, Kathleen Ann Kahler, DAB CR498 (1997). The I.G. has statutory authority to impose an exclusion in this type of case. Thus, I will not interfere with the I.G.'s congressionally delegated discretion to impose an exclusion as a remedy pursuant to the Act. Furthermore, Petitioner's argument that his illegal conduct was fostered by his difficulty in the interpretation of the I.G.'s regulations is unavailing.

In sum, the exclusion action instituted by the I.G. here is a legitimate remedial remedy consistent with section 1128 of the Act. That purpose is to protect federally funded health care programs and their beneficiaries and recipients from untrustworthy individuals such as Petitioner.

2. Petitioner's 5-year exclusion is the mandatory minimum.

An exclusion under section 1128(a)(1) of the Act must be for a minimum mandatory period of five years, as set forth in section 1128(c)(3)(B) of the Act:

Subject to subparagraph (G), in the case of an exclusion under subsection (a), the minimum period of exclusion shall be not less than five years . . . .

When the I.G. imposes an exclusion for the mandatory 5-year period, the reasonableness of the length of the exclusion is not an issue. 42 C.F.R. § 1001.2007(a)(2). Aggravating factors that justify lengthening the exclusion period may be taken into account, but the five-year term will not be shortened. Petitioner was convicted of a criminal offense related to the delivery of an item or service under the Medicare and Medicaid programs. As a result of Petitioner's program-related conviction, the I.G. was required to exclude him, pursuant to section 1128(a)(1) of the Act, for at least five years.

CONCLUSION

Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate that Petitioner be excluded from Medicare, Medicaid, and all other federal health care programs, for a period of at least five years, because he was convicted of a criminal offense related to the delivery of an item or service under the Medicare and Medicaid programs.

Jose A. Anglada

Administrative Law Judge

1. Most of Petitioner's exhibits consist of regulations that are not required to be presented as exhibits. Nevertheless, since the I.G. reasonably did not object, rather than deleting those exhibits and renumbering the remainder, I will admit the exhibits as presented.