Sudhir Kumar, Ph.D., CR No. 328 (1994)

$05:Exclusion Case

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: Sudhir Kumar, Ph.D., Petitioner,
- v. -
The Inspector General.

DATE: August 17, 1994

Docket No. C-94-029
Decision No. CR328

DECISION

By letter dated September 9, 1993, the Inspector General (I.G.)
notified Petitioner that, effective September 29, 1994, he was
excluded from participation in the Medicare, Medicaid, Maternal and
Child Health Services Block Grant and Block Grants to States for
Social Services Programs for a period of ten years. The I.G.
further informed Petitioner that she was taking these actions
because Petitioner had been "convicted," within the meaning of
section 1128(i) of the Social Security Act (Act), of a criminal
offense related to the Medicaid program. 1/ The I.G. stated that
section 1128(a)(1) provides for a mandatory minimum five year
exclusion and that, due to the presence of certain aggravating
factors, she had decided to exclude Petitioner for a period of ten
years. By letter dated November 10, 1993, Petitioner requested a
hearing to contest his exclusion and the case was subsequently
assigned to me for hearing and decision.

I have considered all of the evidence and argument of record 2/ by
the parties and have concluded that the ten year exclusion imposed
and directed against Petitioner by the I.G. is reasonable.


ISSUE

Petitioner has admitted that he was convicted of a criminal offense
related to the delivery of an item or service under Medicaid,
within the meaning of section 1128(a)(1) and that, based on his
conviction, he is subject to a minimum mandatory five year
exclusion. Therefore, the only issue in this case is whether the
ten year exclusion directed and imposed against Petitioner is
reasonable.


BACKGROUND

I conducted a prehearing conference on December 15, 1993. At the
conference, Petitioner, representing himself, conceded that his
criminal conviction was program related and that he was subject to
a mandatory minimum five year exclusion under section 1128(a)(1) of
the Act. However, Petitioner contested the reasonableness of the
additional five years of exclusion that the I.G. had imposed and
directed against him. Petitioner requested a continuance to
undertake settlement negotiations with the I.G. and to become
familiar with the applicable regulations. The I.G. had no
objection to Petitioner's request for a continuance. Therefore, I
granted the request.

I conducted a second prehearing conference on January 28, 1994.
The parties informed me at that time that they wanted to proceed
with a hearing on the record. Petitioner stated that he did not
desire an in-person hearing, but rather wanted to present his
evidence and arguments to me in writing. The I.G. reiterated her
position that Petitioner had been excluded for the mandatory
minimum five years because he had been convicted of a criminal
offense related to the delivery of an item or service under
Medicaid, within the meaning of section 1128(a)(1) of the Act. The
I.G. further stated that she had decided to exclude Petitioner for
ten years based on the presence of various aggravating factors
listed in 42 C.F.R. 1001.102(b). 3/

Petitioner agreed with the I.G.'s representation that none of the
mitigating factors contained at 42 C.F.R. 1001.102(c) is present
in this case.

I granted Petitioner's motion to proceed on a written record. My
prehearing Order of February 7, 1994 established the procedures and
deadlines for the parties to submit their briefs along with any
documentary evidence as proposed exhibits. The I.G. timely filed
her initial brief and proposed exhibits.

On March 14, 1994, two days after Petitioner was to have submitted
his brief and proposed exhibits, Petitioner contacted my office and
requested an extension for the filing of his brief and proposed
exhibits. The I.G. did not object to Petitioner's request. In my
letter of March 14, 1994, I granted Petitioner an extension until
April 8 to file his initial brief and proposed exhibits. I also
directed the parties to file response briefs by April 29, and I
allowed the parties until May 6 to request oral argument.

On April 5, 1994, Petitioner timely filed his initial brief and
proposed exhibits. The parties then timely filed their response
briefs as well. However, Petitioner submitted additional proposed
exhibits with his response brief dated April 25, 1994, and, on May
12, 1994, Petitioner submitted additional proposed exhibits
accompanied by his written arguments entitled "Request for Leave to
Submit of [sic] Additional Documentary Evidence and Clarification
of Documents Already Submitted." In his response brief, Petitioner
asserted that the additional proposed exhibits had not been
available to him when he filed his initial brief. The I.G. moved
to strike Petitioner's response brief, the additional exhibits
submitted by Petitioner on April 25 and May 12, and Petitioner's
motion dated May 12, 1994. I deferred ruling on the I.G.'s motion
until this Decision.

Ruling on the parties' cross-motions on the written arguments
and submissions Petitioner filed on and after April 25, 1994

As a preliminary matter, I must rule on the parties' pending
cross-motions. I construe Petitioner's May 12 motion for leave to
submit additional documentary evidence as a motion for me to admit
and consider all of the proposed exhibits he submitted on April 25
and on May 12, as well as a motion for me to consider the
additional arguments contained in his May 12 motion. As earlier
noted, the I.G. has moved to strike all filings made by Petitioner
on and after April 25, 1994.

For the following reasons, I deny the I.G.'s motion to strike
Petitioner's April 25 response brief, and I deny Petitioner's
motion in its entirety.

Petitioner timely filed his response brief under my Order dated
March 12, 1994. Petitioner is entitled to have me consider the
merits of the arguments he has set forth in said brief. Therefore,
I deny the portion of the I.G.'s motion seeking to strike
Petitioner's response brief.
However, I grant the remainder of the I.G.'s motion to the extent
it seeks to exclude from the record those documents Petitioner
submitted on April 25 and May 12, as well as the additional
arguments Petitioner filed on May 12.

First, the additional proposed exhibits filed by Petitioner on
April 25 and May 12 were not timely submitted and not authorized by
my February 7 Order. Likewise, Petitioner's additional arguments
and clarifications dated May 12 were also not timely submitted and
not authorized by my scheduling order. In my February 7 Order, I
established deadlines to enable both parties to explain their
positions fully and expeditiously for the record. I did so after
considering the parties' suggestions at the prehearing conferences.
At no time did Petitioner indicate that he might have difficulty
submitting his evidence or arguments on time. The additional
documents and arguments in issue relate to matters contained in
Petitioner's initial brief. As such, they should have been offered
with Petitioner's initial brief and not thereafter. Petitioner
failed to make his submissions in accordance with my scheduling
order even after I had granted him a substantial extension of time
after his initial deadline had elapsed.
More importantly, I find that the proposed exhibits Petitioner
filed untimely on April 25 and May 12 are not probative or relevant
to the issue before me: i.e., whether the length of the exclusion
is reasonable. Even if they had been submitted by Petitioner on
time, I would not have admitted them into evidence or accorded
weight to arguments concerning them. I will discuss the contents
of each proffered document in turn.

P. Ex. 3 4/ is a four page exhibit containing a copy of an April
15, 1991 letter from Petitioner to the Illinois Department of
Public Aid and a return receipt for that letter. 5/ In the letter,
Petitioner asserted that his laboratory had found a number of
incorrect bills to the Illinois Department of Public Aid and
requested guidance on correcting the mistakes. The remaining two
pages of P. Ex. 3 are a fax cover sheet and a copy of a phone bill,
which were probably included to show that Petitioner faxed the
letter to the Illinois Department of Public Aid on April 15, 1991.


Petitioner submitted P. Ex. 3 without any proof as to the context
in which the letter was written. There is nothing contained in any
of Petitioner's submissions to indicate that the "mistakes"
referenced in the letter related to any of the billings that formed
the basis for Petitioner's criminal conviction. Moreover, the
issue of Petitioner's intent to submit false billings is not before
me. Petitioner's intent to commit a crime should have been
litigated at Petitioner's criminal proceedings. Although I
recognize that Petitioner, in pleading guilty to the charge of
submitting false billings, may have been precluded from offering
any evidence with regard to his intent, the fact remains that
Petitioner did plead guilty to the offense of submitting false
billings. Therefore, Petitioner's argument that he did not intend
to submit false billings amounts to a collateral attack upon his
conviction in these proceedings.

It is well settled that an excluded individual may not utilize
these administrative proceedings to collaterally attack or
relitigate his conviction. Ernest Valle, DAB CR309 (1993) at 12;
Peter J. Edmonson, DAB 1330 (1992) at 4; Richard G. Philips,
D.P.M., DAB CR133 (1991), aff'd, DAB 1279 (1991). Even if P. Ex.
3 constituted irrefutable proof that the billing discrepancies that
resulted in Petitioner's conviction were generated by computer
error as alleged in his letter, this proof does not vitiate the
fact that Petitioner was convicted of a program related crime. The
asserted error is not among the mitigating factors that I can
consider in determining the reasonableness of the exclusion period.
42 C.F.R. 1001.102(c). Accordingly, with respect to P. Ex. 3,
I grant the relevant portion of the I.G.'s motion, deny
Petitioner's motion, and, in doing so, reject this proposed
exhibit.

P. Ex. 4 is a copy of a one page letter dated October 16, 1990 from
Petitioner to the Illinois Department of Public Aid. In the
letter, Petitioner stated that his laboratory had submitted
incorrect bills for services performed from October 1, 1990 to
October 6, 1990, and he requested that all bills submitted for this
period be cancelled. I find this document irrelevant and lacking
in probative value for the same reasons I stated for P. Ex. 3.
Accordingly, with respect to P. Ex. 4, I grant the relevant portion
of the I.G.'s motion, deny Petitioner's motion, and, in doing so,
reject this proposed exhibit.

P. Ex. 5 and P. Ex. 6 each contain three pages of computer
printouts, filed untimely by Petitioner on May 12, 1994. In his
motion for leave to file these two proposed exhibits, Petitioner
states that he only recently obtained them. Petitioner argues that
these documents show that errors in the computer program caused the
submission of incorrect invoices to the Illinois Department of
Public Aid. No independent analysis of the computer data
accompanied these proposed exhibits to support Petitioner's
arguments that the computer program was defective. Nothing of
record shows whether Petitioner was convicted of acts related to
his use of the computer program. Moreover, Petitioner's reliance
on such proposed exhibits amounts to a collateral attack upon his
conviction. As I stated earlier, it is well established that
Petitioner may not use these proceedings to collaterally attack his
conviction. I find also that P. Ex. 5 and P. Ex. 6 are not
relevant to any issue before me. Accordingly, I deny Petitioner's
motion to admit P. Ex. 5 and P. Ex. 6, and, in doing so, reject
these proposed exhibits.


FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. At all times relevant to this Decision, Petitioner was
president and director of Clinical Regional Laboratory (Clinical).
I.G. Ex. 2, 3.

2. On August 27, 1991, Petitioner and Clinical were each indicted
on one count of fraud and one count of theft. I.G. Ex. 1.

3. Count I of the indictment charged that, from on or about
January 1990 to on or about May 1991, Petitioner and Clinical
committed the criminal offense of vendor fraud, specifically,
knowingly causing fraudulent billing invoices for Medicaid
laboratory services to be submitted, resulting in the receipt of
more than $10,000 in Medicaid payments to which they were not
entitled. I.G. Ex. 1.

4. Count II of the Indictment charged that, from on or about
January 1990 to on or about May 1991, Petitioner and Clinical
committed the criminal offense of theft, specifically, knowingly
and with intent to permanently deprive, obtaining control of
payments from the Illinois Department of Public Aid in an amount
over $100,000. I.G. Ex. 1.

5. On July 31, 1992, Petitioner pled guilty to vendor fraud, as
charged in Count I of the indictment. I.G. Ex. 1, 4.

6. In pleading guilty to the vendor fraud charge, Petitioner
admitted that he knowingly caused fraudulent invoices to be
submitted for Medicaid laboratory services. I.G. Ex. 1, 4;
Petitioner's November 15, 1993 request for hearing.

7. Petitioner was sentenced to incarceration for a period of four
years and was ordered to pay $480,000 in restitution. I.G. Ex. 4.

8. When an individual has been convicted of a criminal offense
related to the delivery of an item or service under Medicaid, the
individual must be excluded from participation in the Medicare and
Medicaid programs for a period of not less than five years.
Sections 1128(a)(1), (c)(3) of the Act.

9. The Secretary of Health and Human Services (Secretary) has been
charged with the responsibility for implementing the statutory
provisions for excluding individuals from participation in the
Medicare and Medicaid programs. E.g., section 1128(a) of the Act.

10. The Secretary has delegated to the I.G. the authority to
determine, impose, and direct exclusions pursuant to section 1128
of the Act. 48 Fed. Reg. 21,662 (1983).

11. An individual is considered to have been "convicted" of a
criminal offense when his guilty plea has been accepted by a court
of competent jurisdiction. Section 1128(i)(3) of the Act.

12. The evidence does not establish that Petitioner was convicted
of the offense of theft over $100,000, the charge contained in
Count II of the indictment. See I.G. Ex. 1, 4.

13. Petitioner was convicted of vendor fraud, as charged in Count
I of the indictment. I.G. Ex. 1, 4; Findings 3, 5, 11.

14. Petitioner was convicted of a criminal offense related to the
delivery of a health care item or service under Medicaid, within
the meaning of section 1128(a)(1) of the Act. Findings 1 - 13.

15. On September 12, 1986, in a separate matter, Petitioner pled
guilty to a mail fraud charge. I.G. Ex. 5.

16. Based on his guilty plea to mail fraud, Petitioner was
sentenced to incarceration for one year and one day and placed on
probation for a period of one year, to run consecutively with his
incarceration. I.G. Ex. 5.

17. By letter dated September 9, 1993, the I.G. notified
Petitioner that, pursuant to sections 1128(a)(1) and 1128(c)(3)(B)
of the Act, he was being excluded from participation in the
Medicare and Medicaid programs for a period of ten years.

18. The regulations issued by the Secretary list the only
mitigating and aggravating factors that may be considered in
determining the length of an exclusion. 42 C.F.R. 1001.101,
1001.102.

19. My adjudication of the length of the exclusion is governed by
the contents of the regulations at 42 C.F.R. 1001.101 and
1001.102, and I may not order the increase or decrease of any
exclusion in controversy on the basis of a factor not listed in the
regulations. See 58 Fed. Reg. 5617, 5618 (1993).

20. An exclusion imposed pursuant to section 1128(a)(1) of the Act
may be for a period in excess of five years if the aggravating
factors listed in the regulation are present and not offset by any
listed mitigating factor in the case. 42 C.F.R. 1001.102(b),
(c).

21. In evaluating the reasonableness of the ten year exclusion
directed and imposed against Petitioner, I must weigh the evidence
relative to the aggravating and mitigating factors enumerated in
the regulations in a manner that is consistent with the remedial
goals of the Act. See Act, section 1102(a).

22. A remedial purpose of section 1128 of the Act is to protect
the integrity of federally-funded health care programs and the
welfare of beneficiaries and recipients of such programs from
individuals and entities who have been shown to be untrustworthy.
See S. Rep. No. 109, 100th Cong., 1st Sess. 1 (1987), reprinted in
1987 U.S.C.C.A.N. 682.

23. An aggravating factor exists in that the fraudulent activities
for which Petitioner was convicted caused the Illinois Medicaid
program to lose more than $10,000 in payments for clinical
laboratory services not performed. 42 C.F.R. 1001.102(b)(1);
I.G. Ex. 1, 4; Findings 4, 13.

24. An aggravating factor exists in that the acts of fraud for
which Petitioner was convicted took place over a period of more
than one year. 42 C.F.R. 1001.102(b)(2); I.G. Ex. 1, 4;
Findings 3, 5.

25. An aggravating factor exists in that the sentence imposed upon
Petitioner by the court included incarceration for a period of four
years. 42 C.F.R. 1001.102(b)(4); I.G. Ex. 4; Finding 7.

26. An aggravating factor exists in that Petitioner has a prior
conviction for mail fraud. 42 C.F.R. 1001.102(b)(5); I.G. Ex.
5; Findings 15, 16.

27. An aggravating factor exists in that Petitioner has been
overpaid more than $10,000 by the Illinois Medicaid agency as a
result of his improper billing practices. 42 C.F.R.
1001.102(b)(6); I.G. Ex. 1, 4; Findings 3, 5, 6.

28. The existence of aggravating factors in this case permits
Petitioner to introduce evidence of the mitigating factors
contained at 42 C.F.R. 1001.102(c)(1) - (3). 42 C.F.R.
1001.102(c)(1) - (3).

29. Petitioner has introduced evidence that he is currently
undertaking medical research on the acquired immune deficiency
syndrome (AIDS). P. Ex. 2.

30. Petitioner contends that he alerted the Illinois Department of
Public Aid of the Medicaid billing errors, which resulted in his
own conviction. Tr. at 7.

31. Petitioner's alleged reports to the Illinois Department of
Public Aid did not result in the conviction of any other
individual. Tr. at 7 - 8.

32. Petitioner has failed to establish the presence of any
mitigating factor within the meaning of the regulations. 42 C.F.R.
1001.102(c)(1) - (3); Findings 29 - 31.

33. The evidence and inferences relevant to the foregoing
aggravating factors have probative weight on the issue of
Petitioner's trustworthiness. Findings 21 - 26.

34. The remedial purposes of the Act will be served by excluding
Petitioner for a period of ten years. Findings 1 - 33.

35. The ten year exclusion imposed and directed by the I.G. is
reasonable in length. Findings 1 - 34.


ANALYSIS

A. The record establishes that Petitioner was convicted of
only one program related offense.

Petitioner has admitted that he was convicted of a program related
criminal offense within the meaning of section 1128(a)(1) of the
Act. The I.G. argues, however, that Petitioner was convicted of
two program related offenses. I.G. Br. at 2. I find that the
evidence establishes Petitioner's conviction for only one program
related offense.

The I.G. has submitted a copy of the indictment in which Petitioner
was charged with two offenses. I.G. Ex. 1. Count I of the
indictment charged Petitioner and his clinical laboratory 6/ with
vendor fraud involving an unspecified amount exceeding $10,000. 7/
Count II of the indictment charged Petitioner and his clinical
laboratory with theft. 8/ The I.G. has also offered a copy of a
document entitled "Certified Statement of Conviction." I.G. Ex. 4.
This document shows that Petitioner pled guilty to the offense of
"vendor fraud, etc." on July 31, 1992 and that judgment was entered
on August 6, 1992. Petitioner was sentenced to four years
incarceration and required to pay $480,000 in restitution.

In order for me to accept the I.G.'s contention that Petitioner was
convicted of two program related offenses, I would need to construe
the term "etc." in the "Certified Statement of Conviction" as
referring to the theft charge. This I decline to do. It appears
unlikely that in a document as important as a "Certified Statement
of Conviction," no express reference would have been made to theft
or Count II if Petitioner's guilty plea were of the scope described
by the I.G. Moreover, for purposes of deciding whether the length
of an exclusion is reasonable, I need not find that Petitioner was
convicted of more than one program related offense. A prior
conviction in a petitioner's criminal record is considered an
aggravating factor and may justify lengthening an exclusion;
however, an exclusion may not be lengthened merely because the
individual was contemporaneously convicted of multiple
program-related offenses. See, 42 C.F.R. 1001.102(b).

Throughout these proceedings, Petitioner has admitted that he was
convicted of a criminal offense within the meaning of section
1128(a)(1). The evidence submitted by the I.G., in conjunction
with Petitioner's admission, shows that the vendor fraud specified
in Count I was the program related offense to which Petitioner had
pled guilty.

B. The aggravating factors present in this case justify
lengthening the period of exclusion beyond the minimum five year
period.

The controlling regulations for exclusions imposed pursuant to
section 1128(a)(1) of the Act were codified at 42 C.F.R.
1001.101 and 102. Both the Act and the regulations make clear that
no exclusion imposed under section 1128(a)(1) may be for less than
five years. The regulations further provide that, in appropriate
cases, an exclusion imposed under section 1128(a)(1) may be for a
period greater than five years when certain enumerated aggravating
factors are present and not offset by any enumerated mitigating
factors. 42 C.F.R. 1001.102(b)(1) - (6), 42 C.F.R.
1001.102(c)(1) - (3).

The regulations provide that six circumstances may be considered
aggravating and a basis for lengthening the term of Petitioner's
exclusion beyond the five year mandatory period. 42 C.F.R.
10001.102(b)(1) - (6). In this case, the I.G. has alleged and
proven that the presence of five of those aggravating circumstances
justify lengthening Petitioner's exclusion from five years to ten
years:

(1) Petitioner was convicted of a program-related offense
involving a financial loss to the Medicaid program in an amount
greater than or equal to $1500 (42 C.F.R. 1001.102(b)(1));
(2) the crimes engaged in by Petitioner were perpetrated by
him over a period of one year or more (42 C.F.R.
1001.102(b)(2));

(3) the sentence imposed by the court included a period of
incarceration (42 C.F.R. 1001.102(b)(4));

(4) Petitioner has a prior criminal, civil or administrative
sanction record (42 C.F.R. 1001.102(b)(5)); and

(5) Petitioner has been overpaid a total of $1500 or more by
Medicare or State health care programs as a result of improper
billings (42 C.F.R. 1001.102(b)(6)).

The I.G. has not alleged, nor has she offered any evidence, that
the acts that resulted in Petitioner's conviction, or similar acts,
had a significant adverse physical, mental or financial impact on
one or more program beneficiaries or other individuals within the
meaning of 42 C.F.R. 1001.102(b)(3).

The evidence shows that, in pleading guilty to the charge of vendor
fraud, Petitioner admitted that he received payments to which he
was not entitled from the Illinois State Medicaid agency in an
amount exceeding $10,000. I.G. Ex. 1, 4; Petitioner's November 15,
1993 Request for Hearing. Therefore, the acts for which Petitioner
was convicted, or similar acts, caused damage to the Medicaid
program in excess of the $1500 threshold specified by the
Secretary's regulations. Accordingly, I find that the I.G. has
shown that the aggravating circumstance defined at 42 C.F.R.
1001.102(b)(1) is present in this case.

Petitioner's guilty plea constitutes his admission that he
knowingly and willfully caused false bills to be submitted, with
the result that he or his laboratory received over $10,000 in
Medicaid payments to which they were not entitled. The admissions
contained in Petitioner's guilty plea are highly probative of
Petitioner's lack of trustworthiness. I have given them
substantial weight in determining the reasonableness of the length
of Petitioner's exclusion.

I find that Petitioner's lack of trustworthiness is further
demonstrated by the fact that his criminal activities occurred over
a period of more than one year, as shown by Petitioner's guilty
plea to Count I of the indictment and the court's entry of
judgment. I.G. Ex. 4. Count I charged that Petitioner committed
the offense of vendor fraud from approximately January 1990 to
approximately May 1991. I.G. Ex. 1. The I.G. has proven that the
acts that resulted in Petitioner's conviction were committed over
a period of one year or more, within the meaning of 42 C.F.R.
1001.102(b)(2). 9/

Petitioner's guilty plea to Count I indicates that his fraudulent
activities against the Illinois Medicaid program were not isolated
occurrences. Instead, he took deliberate and calculated actions
during a 15-month period. This factor is also highly probative of
the issue of Petitioner's trustworthiness, and I have accorded it
substantial weight in determining what period of exclusion is
appropriate for Petitioner.

As required by the relevant regulations, I have also reviewed the
evidence relevant to the sentence imposed by the court. In this
case, Petitioner's sentence included a four year term of
incarceration. I.G. Ex. 4. The mere presence of a term of
incarceration in the sentence imposed by the court is sufficient to
trigger the aggravating factor at 42 C.F.R. 1001.101(b)(4).
Under established constitutional principles, the sentence should
correspond to the seriousness of an individual's offense and the
extent of his culpability. Thus, the four year term of
incarceration is relevant to the issue of Petitioner's
trustworthiness.

However, I find the court's order of incarceration in this case to
be less probative than the admissions made by Petitioner in
conjunction with his guilty plea. First, absent a plea colloquy
from the sentencing court, I cannot ascertain the court's precise
reasons for ordering incarceration. For example, was the court
required to do so under mandatory sentencing provisions, or did the
court find Petitioner's conduct reprehensible or flagrant?
Secondly, the record evidence also does not detail why a four year
term of incarceration (as opposed to a shorter term) was imposed.
Thirdly, the evidence does not show if Petitioner actually served
the amount of time to which he was sentenced, and if he did not
serve his full sentence, whether that outcome is indicative of the
sentencing court's view of Petitioner's rehabilitation. Absent
such information, I have merely assigned Petitioner's four year
term of incarceration some weight in deciding the reasonableness of
the exclusion period in issue.

I agree with the I.G. that Petitioner has a prior criminal record
that constitutes an aggravating factor for increasing the length of
an exclusion. The I.G. submitted evidence which establishes that,
on September 12, 1986, Petitioner pled guilty to the charge of mail
fraud. I.G. Ex. 5. Based on his guilty plea, Petitioner was
sentenced to one year and one day of incarceration, the imposition
of which was suspended by the court. Id.. Petitioner has not
disputed the existence of a prior conviction for mail fraud.
Accordingly, I find that Petitioner has a prior criminal sanction
record within the meaning of 42 C.F.R. 1001.102(b)(5).

The I.G. contends that Petitioner's prior conviction involved
"health care fraud" (I.G. Br. at 6). There is insufficient
evidence in the record to support the I.G.'s conclusion, however.
The evidence merely shows that Petitioner's prior conviction
involved sending for delivery by the U.S. Postal Service "envelopes
containing checks drawn on the account of Evangelical Hospital
Association . . . ." I.G. Ex. 5. This reference to Evangelical
Hospital Association is not sufficient to prove that the mail fraud
conviction was related to the delivery of health care services. It
is possible that Petitioner was convicted of the fraudulent
activities he perpetrated against a corporation, the Evangelical
Hospital Association, for reasons having nothing to do with the
nature of its business in the health care industry.

I have assessed Petitioner's prior conviction and sanction record
in light of the remedial purposes of the Act. Viewed in the
context of the conviction for which the I.G. has imposed the
exclusion at issue, Petitioner's previous conviction is very
probative of his lack of trustworthiness. Petitioner has shown a
tendency to commit fraud of a type that is serious enough to
warrant incarceration. His recidivistic tendency is especially
apparent because he committed the vendor fraud offenses within five
years of having been convicted and sentenced for mail fraud. I.G.
Ex. 1, 4, 5. The sanctions imposed by the court for his mail fraud
conviction, which included a suspended sentence of incarceration
for a period of one year and one day, did not deter Petitioner from
committing vendor fraud crimes. I agree with the I.G. that the
length of the exclusion imposed on Petitioner must be adequate for
safeguarding the Medicare and Medicaid programs against the
likelihood that he may undertake other fraudulent activities in the
future. See I.G. Br. at 3 - 4. Accordingly, I have given
substantial weight to Petitioner's prior conviction and sanction
record in determining the appropriate length of Petitioner's
exclusion.

I find that the I.G. has also proven the applicability of the
aggravating factor listed at 42 C.F.R. 1001.101(b)(6). When
Petitioner pled guilty to Count I of the indictment, Petitioner
admitted that he fraudulently obtained Medicaid payments to which
he was not entitled in an amount greater than $10,000. November
15, 1993 request for hearing; February 7, 1994 Order. His
admission is, in essence, that Medicaid overpaid him by more than
$10,000 as a direct consequence of the false bills he submitted or
caused to be submitted to Medicaid. The amount of Medicaid
overpayment to Petitioner far exceeds the $1500 threshold specified
in 42 C.F.R. 1001.101(b)(6).

The regulations do not mandate the lengthening of an exclusion
whenever an aggravating factor is present. 42 C.F.R.
1001.101(b). I conclude on the facts of this case that the acts
that resulted in Petitioner's conviction and the financial loss to
the Medicaid program of more than $1500 were the same acts that
caused Petitioner to be overpaid more than $1500 by the Medicaid
program. See 42 C.F.R. 1001.102(b)(1), (6). 10/ Thus, I do
not find it appropriate or necessary to give effect to both
aggravating factors stemming from the same set of facts, even
though both aggravating factors are technically present in this
case.

I have already considered the fiscal damage Petitioner caused to
the federally funded health care programs in my consideration of
the aggravating factor at 42 C.F.R. 1001.102(b)(1). Given the
facts of this case, the aggravating factor at 42 C.F.R.
1001.102(b)(1) is more probative of Petitioner's trustworthiness in
light of the remedial purposes of the Act. It deals with
Petitioner's deliberate fraud against federally funded health care
programs, whereas the aggravating factor at 42 C.F.R.
1001.102(b)(6) merely deals with improper billings, irrespective of
whether the improper billings bear any relationship to Petitioner's
offense, or whether they contain deliberately created false or
inaccurate information. For these reasons, I have given the
aggravating factor at 42 C.F.R. 1001.102(b)(6) no weight in
determining the appropriate length of Petitioner's exclusion.

C. Petitioner has not shown the presence
of any mitigating factors.

The regulations provide that, if any enumerated aggravating factors
are present and justify an exclusion of more than five years, then
certain mitigating factors may be considered as a basis for
reducing the exclusion to a period of not less than five years. 42
C.F.R. 1001.102(c). The regulations provide that only the
following factors may be considered as mitigating:

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

(2) The 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) The individual's or entity's cooperation with Federal or
State officials resulted in --

(i) Others being convicted or excluded from Medicare or
any of the State health care programs, or

(ii) The imposition against anyone of a civil
monetary penalty or assessment under part 1003 of this chapter.

42 C.F.R. 1001.102(c)(1) - (3).

Petitioner has not claimed the existence of these mitigating
factors. 11/ I have already discussed my finding that the damage
caused by Petitioner's criminal offense exceeded $10,000.
Moreover, the offense to which Petitioner pled was not a
misdemeanor. I.G. Ex. 1 (citing to Chapter 23, Section 8A-3(a) of
Illinois Revised Statutes, as amended). Therefore, the first
mitigating factor is not present in this case.

In addition, nothing of record indicates that the sentencing court
determined that Petitioner had any type of mental, emotional or
physical condition that bears on his culpability for the crimes he
committed. Petitioner bases his claim of reduced culpability on
alleged computer errors. His contentions, even if true, do not
constitute mitigating factors within the meaning of 42 C.F.R.
1001.102(c).

Lastly, while Petitioner claims to have cooperated with the
Illinois Department of Public Aid by notifying them of billing
errors, Petitioner's actions have not resulted in the conviction or
exclusions of others. Tr. at 7 - 8. Nor has Petitioner alleged
that his cooperation resulted in the imposition of a civil monetary
penalty against anyone. The record is therefore devoid of any
evidence that would make the third mitigating factor applicable.

Petitioner's remaining argument against the ten year exclusion is
that his work on finding a cure for AIDS is important and could
even lead to a cure of this terrible disease. Tr. at 6 - 7.
Petitioner contends that his exclusion from the Medicare and
Medicaid programs will make it impossible for him to continue his
research. However, even assuming that Petitioner has been
performing valuable research on AIDS and such research activities
would be hindered by his inability to participate as a health care
provider in the Medicare and Medicaid programs, I cannot consider
these matters as mitigating factors under the regulations.

D. The exclusion imposed and directed by the I.G. is
reasonable in length.

I have already noted that the presence of any of the aggravating
factors enumerated in the regulations only makes it possible to
increase the period of exclusion beyond the mandatory five years.
The presence of aggravating factors in a given case means that an
exclusion of more than five years may be reasonable. The
regulation uses the word "may" to indicate the permissive,
discretionary use of these aggravating factors as a basis for
lengthening the exclusion period. 42 C.F.R. 1001.102(b). What
controls the exclusion period is the relative weight of the
material evidence of such factors in the context of the total
record. Paul G. Klein, D.P.M., DAB CR317 (1994). Any exclusion
imposed for more than five years under section 1128(a)(1) of the
Act must comport with the remedial purpose of protecting the
programs and those individuals served by the programs against
untrustworthy health care providers.

At bottom, the related issues of reasonableness and trustworthiness
before me concern only the period of exclusion that is in excess of
five years. In enacting section 1128(a)(1) of the Act, Congress
has already determined that persons convicted of program related
offenses are not sufficiently trustworthy to continue participating
in the Medicare and Medicaid programs. Such persons must be
excluded for a period of no less than five years. Section
1128(c)(3) of the Act. Therefore, I am bound by the legislative
determination that five years is the minimally reasonable period
for the exclusion at issue.

In this case, the totality of the record persuades me that
excluding Petitioner for five additional years beyond the minimum
period mandated by law (i.e., excluding Petitioner for a total
period of ten years) is reasonable. The I.G. has explained her
legal and factual basis for imposing and directing the ten year
exclusion. I have considered the inferences arising from the
parties' evidence, and, as discussed above, I have assigned
relative weight to the aggravating factors to reflect their
probative value on the issue of Petitioner's trustworthiness.

Petitioner has not been able to offer any relevant evidence to
prove his trustworthiness or the inappropriateness of the ten year
exclusion. Instead, Petitioner has sought to collaterally attack
his conviction and has interposed assertions that were not legally
relevant even if true. Based on the nature, extent, and weight of
the aggravating evidence present in this case and the remedial
purposes of the Act, I find the ten year exclusion reasonable.


CONCLUSION

For the foregoing reasons, I uphold the ten year exclusion imposed
and directed against Petitioner by the I.G.



Mimi Hwang Leahy
Administrative Law Judge

1. The State health care programs from which Petitioner was
excluded are defined in section 1128(h) of the Act and include the
Medicaid program under Title XIX of the Social Security Act.
Unless the context indicates otherwise, I use the term "Medicaid"
here to refer to all State health care programs listed in section
1128(h).

2. By argument of record, I mean all of the argument contained
in the parties' briefs as well as all of the argument that the
parties made at the June 22, 1994 oral argument.

I have admitted into evidence all exhibits offered by the parties,
with the exception of those I identify in this Decision as being
excluded.

3. As I noted during the conference, the I.G. did not refer to
Petitioner's sanction record as an aggravating factor in her notice
letter dated September 9, 1993. During the conference, the I.G.
asserted Petitioner's sanction record as an aggravating factor in
support of the reasonableness of a ten year exclusion. I find,
therefore, that Petitioner received notice of this aggravating
factor. 42 C.F.R. 1005.15(f).

4. Petitioner's April 25, 1994 submission contained several
documents which were labelled collectively by Petitioner as
"Exhibit A." I have revised the markings and numbered the exhibits
consecutively as Petitioner's Exhibit 3 (P. Ex. 3) and P. Ex. 4.

5. I refer to the parties' exhibits, the transcript of the oral
argument, and my findings of fact and conclusions of law as
follows:

Petitioner's Exhibit . . . . . . . . . . . . . . P. Ex. (number)
I.G.'s Exhibit . . . . . . . . . . . . . . . . I.G. Ex. (number)
Transcript of Oral Argument . . . . . . . . . . . Tr. at (page)
My Findings of Fact and Conclusions of Law . . Findings (number)
Petitioner's Brief . . . . . . . . . . . . . . P. Br. at (page)
I.G.'s Brief . . . . . . . . . . . . . . . . I.G. Br. at (page)


6. The record evidence does not disclose the outcome of the
charge against the laboratory. In this case involving only the
exclusion of Petitioner, I need not decide whether the laboratory
was Petitioner's alter ego, because Petitioner, in his individual
capacity, pled guilty to the charges contained in Count I of the
indictment.

7. The offense of vendor fraud is described in the indictment
as "knowingly and willfully, by means of a fraudulent scheme and
device . . . causing to be made billing invoices which falsely
stated that a Medicaid Provider had performed certain clinical
laboratory services for certain public aid recipients and others,
when, in fact said services had not been provided . . ." I.G. Ex.
1.

8. The offense of theft is described in the indictment as --

knowingly, in furtherance of a single intention and design, to
wit: to obtain money and/or property on behalf of Sudhir Kumar
and/or Clinical Regional Laboratory, Inc., Medicaid Providers, by
deception, obtained control over two or more payments from the
State of Illinois, Illinois Department of Public Aid, said payments
having a value in excess of one-hundred-thousand dollars, intending
to deprive the owner permanently of the use and benefit of the
money and/or property. I.G. Ex. 1.

9. This section of the regulation states that the duration of
Petitioner's bad acts is aggravating if the acts that led to the
conviction, or similar acts, were committed over a period of one
year or more. As discussed below, Petitioner has a prior
conviction for mail fraud. Therefore, Petitioner's prior
conviction gives rise to an inference of "similar acts" under 42
C.F.R. 1001.102(b)(2). However, the evidence before me is
insufficient for me to conclude that Petitioner's prior conviction
was the result of "similar acts" within the meaning of 42 C.F.R.
1001.102(b)(2). Moreover, the record is devoid of evidence as to
the duration of the acts giving rise to Petitioner's mail fraud
conviction. Assuming for the sake of argument that Petitioner's
conviction for mail fraud is a "similar act", I am unable to make
any conclusions on how, if at all, the activities that led to
Petitioner's conviction for mail fraud would increase the period of
time over which Petitioner committed "similar acts." Nor is there
anything in the record from which I can conclude that the acts
which led to Petitioner's prior conviction for mail fraud
overlapped in time with the acts that led to Petitioner's
conviction for vendor fraud. However, since the I.G. has shown
that Petitioner, in pleading guilty to vendor fraud, admitted that
he perpetrated the acts that resulted in his conviction over a
period of more than one year (Findings 3, 5, 24), this fact alone
is sufficient to meet the criteria contained at 42 C.F.R.
1001.102(b)(2). Therefore, Petitioner's previous conviction for
mail fraud adds nothing to my determination of the applicability of
42 C.F.R. 1001.102(b)(2).

10. The two aggravating factors focus on different things. The
regulation at 42 C.F.R. 1001.102(b)(1) focuses on financial loss
to the Medicare and State health care programs independent of
billings. Under this regulation, such financial loss could be
manifested in a number of ways that may not be related to the party
billing Medicare. The regulation at 42 C.F.R. 1001.102(b)(6)
focuses exclusively on overpayment that a party receives as a
result of improper billings.

11. Petitioner has never alleged any of these mitigating
factors. However, for the sake of completeness and clarity, I have
examined the record to determine if these mitigating circumstances
exist.