I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, John D. Strom, D.C., from participating in Medicare, Medicaid, and other federally funded health care programs for a period of 15 years.

I. Background

By letter dated October 31, 2002, the I.G. notified Petitioner that he was being excluded for a period of 15 years from participating in Medicare, Medicaid, and other federally funded health care programs. The I.G. advised Petitioner that she was authorized to exclude him because Petitioner had been convicted of a criminal offense within the meaning of section 1128(a)(3) of the Social Security Act (Act). Additionally, the I.G. told Petitioner that the length of the exclusion in his case was justified by the presence of certain aggravating factors and the nature of Petitioner's offense.

Petitioner requested a hearing and the case was assigned to me for a hearing and a decision. I held a prehearing conference on February 19, 2003. I advised Petitioner that he had a right to have an attorney represent him in this matter. Petitioner, however, decided to represent himself. The parties agreed that an in-person hearing in this case would not be necessary and that they wished to proceed based on the written record. I, then, established a briefing schedule.

The I.G. filed her motion and submitted four proposed exhibits (I.G. Ex. 1 - I.G. Ex. 4) in support of her argument. Petitioner filed a written resoponse to the motion and submitted two proposed but unmarked exhibits in support of his position. I have labeled Petitioner's exhibits as P. Ex. 1and P. Ex. 2. In addition, the I.G. filed a reply brief. Neither party objected to my admitting any of the proposed exhibits into evidence. Consequently, I receive I.G. Ex. 1 - I.G. Ex. 4 and P. Ex. 1 and P. Ex. 2 into evidence.

II. Issues, findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below as a separate heading. I discuss each Finding in detail.

I find that the evidence in this case plainly establishes a basis for the I.G. to exclude Petitioner pursuant to section 1128(a)(3) of the Act. Section 1128(a)(3) mandates the I.G. to exclude:

At all times relevant to this case, Petitioner was a licensed chiropractor doing business as Affordable Chiropractic Clinics. I.G. Ex. 3, at 5. Petitioner was also controlling owner of Peoples Chiropractic, Inc., Cross Healthcare, Inc., Praise Healthcare, Inc., Lamb Healthcare, Inc., Life Healthcare, Inc., Dove Healthcare, Inc., and Chris-Jen Healthcare, Inc., all of which also did business as Affordable Chiropractic Clincs. Id. On October 16, 2000, Petitioner entered into a plea agreement and submitted it for approval to the United States District Court for the Northern District of Ohio, Eastern Division. I.G. Ex. 3. In this plea agreement, Petitioner plead guilty to four counts of conspiracy to defraud in violation of 18 U.S.C. §§ 2, 371, 1341, and 1346, and to one count of mail fraud in violation of 18 U.S.C. §§ 2, 1341, and 1346. Id. at 2 - 3.

Specifically, in the plea agreement, Petitioner admitted that beginning on or about October 11, 1991, Petitioner entered into purported lease agreements with different mobile medical services providers (MMSPs). Id. at 7 - 12. Under these agreements, the MMSPs paid illegal remuneration or "kickbacks" to Petitioner as rent in exchange for patient referrals and for orders of medically unnecessary tests that Petitioner made to the various MMSPs. Id. The kickbacks that Petitioner received bore no resemblance to the fair market value of the space purportedly rented. Id. In addition, Petitioner encouraged his co-owner/employee chiropractors to make patient referrals and order tests from the MMSPs with which Petitioner had purported lease agreements. Id. at 11 - 12. Petitioner set up a program permitting certain co-owner/employee chiropractors to negotiate their own purported lease agreements, thus relieving Petitioner of the necessity for providing these chiropractors with salary increases. Id. at 11. From January, 1992, until April, 1998, Petitioner knowingly caused the MMSPs to mail to Petitioner, his various businesses, and his co-owner/employee chiropractors, checks totalling approximately $62,907, which constitued kickbacks for patient referrals and the ordering of tests. Id. at 13. Petitioner does not dispute that there exists a basis for the I.G. to exclude him. P. Br. at 1.

On March 7, 2001, Petitioner was sentenced by the United States District Court for the Northern District of Ohio, Eastern Division, on four counts of conspiracy to defraud and one count of mail fraud. I.G. Ex. 2, at 1. Petitioner was sentenced to four months of imprisonment, to be followed by three years of supervised probation. Id. at 2 - 3. Petitioner was also sentenced to spend the first four months of supervised probation in electronically monitored home confinement. Id. In addition, Petitioner was required to pay $62,907 to Medicare, Medicaid, and various defrauded insurers and individuals, the costs of home confinement, and an assessment of $500. Id. at 3, 5 - 6.

Petitioner's guilty plea, and the United States District Court for the Northern District of Ohio, Eastern Division's acceptance of the guilty plea, constitutes a conviction under section 1128(i)(3) of the Act. Petitioner was convicted of four counts of conspiracy to defraud and one count of mail fraud on March 7, 2001. These are felony offenses that occurred in connection with the delivery of a health care item or service under section 1128(a)(3) of the Act and relate to financial misconduct.

Petitioner's offense occurred in substantial part after the effective date of HIPAA, August 21, 1996. Petitioner's criminal acts occurred between October, 1991, and April, 1998. That part of Petitioner's criminal acts that occurred from August 21, 1996, through April, 1998, occurred after the effective date of HIPAA.

The Secretary has published regulations which govern the length of exclusions imposed pursuant to section 1128 of the Act. The regulation which governs exclusions that are imposed under section 1128(a)(3) is found at 42 C.F.R. § 1001.102. This regulation describes certain aggravating factors which, if present and not offset by mitigating factors, may justify an exclusion of more than five years. 42 C.F.R. § 1001.102(b); see 42 C.F.R. § 1001.102(c).

In this case the I.G. proved the presence of three aggravating factors. They are as follows:

In his response to the I.G.'s motion, Petitioner asserts a number of arguments which he contends to be mitigating. These include: his lack of knowledge of the I.G.'s exclusion authority; his apology for his criminal acts; his present age of 41 and his need to support his wife and four children; his lack of training for another career; his payment of the entire amount of restitution; the absence of physical harm caused to his patients; his unblemished record aside from the conviction that is the basis for his exclusion; and his desire to continue to help his patients.

None of these arguments establish any of the limited mitigating factors identified by the regulation. I must find them to be irrelevant inasmuch as they do not relate to mitigating factors.

Neither the Act nor implementing regulations direct that an exclusion of any particular length beyond the minimum five-year period must be imposed based on the presence of aggravating factors or the absence of mitigating factors. The aggravating and mitigating factors that are identified at 42 C.F.R. § 1001.102(b) and (c) function in a sense as rules of evidence which establish what evidence may be considered in deciding whether an exclusion is unreasonable, but which do not establish the weight that must be afforded to any evidence that is relevant to the issue. The presence of aggravating factors not offset by mitigating factors is not an automatic basis for deciding that an exclusion of any particular length is unreasonable. Nor is the number of aggravating factors that may be present in a case a particularly significant indicator whether an exclusion is unreasonable.

What is relevant to deciding whether an exclusion is unreasonable is evidence that relates to an aggravating or a mitigating factor. Ultimately, it is that evidence which establishes whether an exclusion is unreasonable and not the presence or absence of factors.

In this case the evidence that relates to aggravating factors establishes that Petitioner was a conscious participant in a highly organized criminal conspiracy. Petitioner involved not only himself but encouraged certain co-owner/employee chiropractors to become involved as well. The evidence shows that Petitioner was deeply and actively involved in a criminal conspiracy that lasted for years. Petitioner's actions were intentional. The evidence also shows that this conspiracy was highly successful for a time. Petitioner's offenses were grievous enough to justify an eight month period of incarceration. An exclusion of 15 years is certainly not unreasonable in light of the foregoing evidence.

I have no authority to change the onset date of an exclusion. My authority to hear and decide cases involving the I.G. is limited to hearing and deciding only those issues which regulations allow a party to appeal. An excluded individual may appeal only the issues of whether there is a basis for an exclusion and whether the length of an exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(1)(i), (ii). The regulation does not permit an excluded individual to appeal the onset date of his or her exclusion. The I.G. has discretion to decide the timing of the determination to exclude an individual and I have no authority in this area. John A. Saydegh, M.D., DAB CR 551 (1998).

Alfonso J. Montano

Administrative Law Judge