SUBJECT:

William J. Arnold, Jr. M.D.,

Petitioner,

The Inspector General

DECISION

This case is before me pursuant to a request for hearing filed on October 16, 2002, by William J. Arnold, Jr., M.D. (Petitioner). It is my decision to sustain the determination of the Inspector General (I.G.) to exclude Petitioner from participating in Medicare, Medicaid, and all federal health care programs, for a period of five years. Additionally, I find that the five-year exclusion imposed on Petitioner is not unreasonable.

By letter dated August 30, 2002, the I.G. notified Petitioner that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for the minimum period of five years. The I.G. informed Petitioner that his exclusion was imposed under section 1128(a)(3) of the Social Security Act (Act), due to his conviction of a criminal offense (as defined in section 1128(i) of the Act) 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 or any act or omission in a health care program operated or financed by any federal, State, or local agency.

On December 19, 2002, 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 based on the parties' written submissions. Petitioner appeared on his own behalf, and I advised him of his right to legal representation.

I issued an order dated, December 19, 2002, establishing briefing deadlines. Pursuant to that order, the I.G. filed a brief on January 21, 2003, accompanied by four proposed exhibits. I have admitted the I.G.'s exhibits (I.G. Exs. 1 - 4) into the record, without objection. Petitioner did not file a brief nor respond in any way to the arguments and documentary evidence submitted by the I.G. Therefore I only consider the arguments and points of contention contained in Petitioner's request for hearing.

On May 7, 2003, I notified the parties that I was closing the record and proceeding to the issuance of a decision.

It is my decision to sustain the determination of the I.G. to exclude Petitioner from participating in the 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 consisting of a felony 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. Additionally, I find that the five-year exclusion imposed on Petitioner is not unreasonable.

(1) Whether the I.G. had a basis upon which to exclude Petitioner from participation in the Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(3) of the Act; and, if so,

(2) Whether the length of the exclusion imposed by the I.G. upon Petitioner is unreasonable.

III. APPLICABLE LAW AND REGULATIONS

Section 1128(a)(3) of the Act authorizes the Secretary of Health and Human Services (Secretary) to exclude from participation in any federal health care program (as defined in section 1128B(f) of the Act), any individual convicted of a criminal offense consisting 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.

An exclusion under section 1128(a)(3) 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)(3) 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 fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service justifies his exclusion by the I.G. from participation in the 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:

Petitioner was a medical doctor with a practice located in Detroit, Michigan. On February 17, 2000, an Information was filed in the United States District Court, Eastern District of Michigan, charging Petitioner with one felony count of mail fraud. 18 U.S.C. § 1341. This charge arose out of Petitioner's participation in a scheme to defraud a disability insurance carrier and obtain money by means of false and fraudulent pretenses. Workers who wished to receive disability pay for time offwork would ask Petitioner to complete medical disability reports in order to justify their time off. Although a disability determination by a physician could only occur after appropriate examination and/or treatment by the physician, Petitioner prepared false and fraudulent medical reports for automobile workers.

Petitioner then mailed the falsified reports to an insurance company for processing in order to generate disability payments. The false disability reports prepared and submitted by Petitioner would, in turn, cause payment checks to be mailed to the worker for time offwork. I.G. Ex. 2.

On February 17, 2000, the United States Attorney for the Eastern District of Michigan, filed an Information against Petitioner charging him with one count of mail fraud occurring in or about March 1998. I.G. Ex. 2. On February 15, 2000, Petitioner pleaded guilty to that count, and was subsequently sentenced to 12 months probation and a $10,000 fine. See I.G.'s Brief at, 3-4.

In his request for hearing, Petitioner alleges that he has not participated in Medicare, Medicaid, or other federal health care programs for the past 20 years. Additionally, he states that the criminal action against him resulted from signing "an incorrect insurance blank for a stranger, who, in turn, gave it to the prosecutor's office." None of these contentions has any merit. It is not relevant to the I.G.'s exclusion action that Petitioner did not participate in Medicare, Medicaid, or other federal health care programs in the past. Also, Petitioner's assertion of innocence is immaterial. Peter J. Edmonson, DAB No. 1330 (1992). The applicable law and regulations do not allow for re-adjudication of the facts underlying the criminal conviction that gives rise to the I.G.'s exclusion. 42 C.F.R. § 1001.2007 (a). It is evident that Petitioner's conduct is the type of untrustworthy conduct that Congress sought to prevent.

In view of the foregoing, I find that the I.G. properly excluded Petitioner under section 1128(a)(3) of the Act. Further the I.G. has established that Petitioner was convicted of a felony offense involving fraud or other financial misconduct in connection with the delivery of a health care item or service, occurring after the date of enactment of the Health Insurance Portability and Accountability Act of 1996. Petitioner's guilty plea to mail fraud pursuant to 18 U.S.C. § 1341, constitutes a felony conviction under section 1128 of the Act.

2. Petitioner's exclusion for a period of five years is not unreasonable.

An exclusion under section 1128(a)(3) 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 five-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 fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service. As a result of Petitioner's conviction, the I.G. was required to exclude him pursuant to section 1128(a)(3) of the Act, for at least five years.

V. CONCLUSION

Based on Petitioner's conviction, sections 1128(a)(3) and 1128(c)(3)(B) of the Act mandate that he be excluded from Medicare, Medicaid, and all other federal health care programs for a period of at least five years.

Jose A. Anglada

Administrative Law Judge