Rosaly Saba Khalil, M.D., CR No. 353 (1995)

$05:Exclusion Case

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

Rosaly Saba Khalil, M.D.,

Petitioner,

- v. -

The Inspector General.

DATE: January 25, 1995
Docket No. C-94-370
Decision No. CR353


DECISION

On June 10, 1994, the Inspector General (I.G.) notified Petitioner
that she was being excluded from participating in the following
programs: Medicare, Medicaid, Maternal and Child Health Services
Block Grant and Block Grants to States for Social Services. 1/ The
I.G. told Petitioner that she was being excluded because she had
been convicted of a criminal offense related to the delivery of an
item or service under the Medicaid program. The I.G. cited section
1128(a) of the Social Security Act (Act) as authority for the
I.G.'s determination to exclude Petitioner.

The I.G. further notified Petitioner that the Act requires that
individuals who are excluded pursuant to section 1128(a) be
excluded for not less than five years. The I.G. told Petitioner
that she was being excluded for 15 years in light of circumstances
specified in the I.G.'s notice to Petitioner. 2/

Petitioner requested a hearing and the case was assigned to me for
a hearing and a decision. I conducted a prehearing conference, at
which the parties agreed that there was no need for an in-person
hearing. The parties agreed that the case could be decided based
on their submissions of exhibits and arguments. The parties each
submitted proposed exhibits and briefs. 3/

I have considered the evidence, the applicable law, and the
parties' arguments. I conclude that Petitioner was convicted of a
criminal offense, as defined by section 1128(a)(1) of the Act. The
I.G. is required to exclude her. I conclude also that the 15-year
exclusion imposed by the I.G. is reasonable, and, accordingly, I
sustain it.

I. Issues, findings of fact, and conclusions of law

There are two issues in this case. I make specific findings of
fact and conclusions of law in deciding each of these issues.
These findings and conclusions are set forth below, beneath the
relevant issue. In setting forth these findings and conclusions,
I cite to relevant portions of my decision at which I discuss my
findings and conclusions in detail.

A. Is the I.G. required to exclude Petitioner from
participating in the Medicare and Medicaid programs?

1. Under section 1128(a)(1) of the Act, the Secretary of
the United States Department of Health and Human Services
(Secretary) is required to exclude any individual or entity who has
been convicted of a criminal offense related to the delivery of an
item or service under the Medicare or Medicaid programs. Page 4.

2. Petitioner was convicted of criminal offenses related
to the delivery of items or services under the New York Medicaid
program. Pages 4 - 9.

3. The I.G., acting as the Secretary's delegate, is
required to exclude Petitioner. Pages 4 - 9.

B. Is the 15-year exclusion which the I.G. imposed
reasonable?

4. The Act requires the Secretary, or the I.G., acting
as the Secretary's delegate, to exclude for at least five years any
individual or entity who is convicted of an offense described in
section 1128(a)(1) of the Act. Pages 6, 9.

5. Regulations provide that an exclusion of more than
five years may be imposed in any case where there exist factors
which the regulations define as aggravating, and that are not
offset by factors which the regulations define as mitigating.
Pages 9 - 10.

6. In this case, the I.G. proved that there exist three
aggravating factors. Petitioner did not allege or prove that there
exist any mitigating factors. Pages 11 - 12.

7. The evidence which is relevant to the aggravating
factors proves that Petitioner is a highly untrustworthy
individual. Pages 11 - 17.

8. The degree of untrustworthiness established in this
case proves that an exclusion of 15 years is reasonably necessary
to protect the integrity of federally financed health care
programs. Pages 11 - 17.

II. Discussion of the issues

A. Background

The following facts are not disputed. Petitioner is a physician
who specializes in anesthesiology. P. Ex. 2, page 11. She was a
participating provider in the New York Medicaid program. I.G. Ex.
6, page 5. Beginning in October 1990 and continuing through April
1991, Petitioner associated with clinics in New York City that were
operated by Mohammed Sohail Khan (Khan). I.G. Ex. 1, pages 16 -
17. The clinics presented reimbursement claims to the New York
Medicaid program for services allegedly provided by Petitioner. P.
Ex. 6, pages 5 - 7.

Petitioner, Khan, and other individuals were indicted in United
States District Court for the Southern District of New York on
federal criminal offenses related to the operation of Khan's
clinics. I.G. Ex. 6. After a trial, Petitioner was convicted of
25 separate criminal offenses. I.G. Ex. 9, page 1. Petitioner was
convicted of conspiring with Khan and the other named defendants to
engage in a pattern of racketeering. I.G. Ex. 6, pages 1 - 16;
I.G. Ex. 9, page 1. An element of the conspiracy was a scheme to
defraud the New York Medicaid program by submitting reimbursement
claims for unnecessary medical services and unnecessary diagnostic
tests ostensibly performed at Khan's clinics. I.G. Ex. 6, pages 9
- 10, 15. Additionally, Petitioner was convicted of engaging in a
pattern of racketeering activity to implement the conspiracy. I.G.
Ex. 6, pages 16 - 17; I.G. Ex. 9, page 1.

Petitioner was convicted also of 13 counts of mail fraud. I.G. Ex.
6, pages 17 - 18, 22 - 23; I.G. Ex. 9, page 1. These offenses
involved fraudulently obtaining through the mail reimbursement
checks from the New York Medicaid program. I.G. Ex. 6, pages 17 -
18. Petitioner was convicted of fraudulently obtaining from the
New York Medicaid program reimbursement checks totalling more than
$135,000. I.G. Ex. 6, pages 22 - 23; I.G. Ex. 9, page 1. Finally,
Petitioner was convicted of ten counts of money laundering. I.G.
Ex. 6, pages 25 - 28; I.G. Ex. 9, page 1. These offenses involved
depositing checks that had been obtained by defrauding the New York
Medicaid program to specified bank accounts, and withdrawing funds
from those accounts, with the intent to disguise the nature,
location, source, ownership and control of the proceeds of unlawful
activity. I.G. Ex. 6, pages 25 - 26.

Petitioner was sentenced to 41 months' imprisonment on each count
of which she was convicted, with the sentences to be served
concurrently. I.G. Ex. 9, page 2. She was sentenced to serve a
term of three years' supervised release upon completion of her
prison sentence. Id. at 3. She was sentenced also to pay
restitution in the amount of $1,931,992 to the New York Department
of Social Services. Id. at 4.

B. The I.G.'s duty to exclude Petitioner

Section 1128(a)(1) of the Act mandates the exclusion from
participation in the Medicare and Medicaid programs of any
individual convicted of a criminal offense related to the delivery
of an item or service under the Medicare or Medicaid programs. The
I.G., acting as the Secretary's delegate, must exclude any
individual or entity who is convicted of an offense described by
section 1128(a)(1). In this case, the I.G. contends that
Petitioner was convicted of criminal offenses described by section
1128(a)(1). Petitioner asserts that she was not convicted of such
offenses.

The evidence in this case establishes that Petitioner was convicted
of participating in a criminal enterprise whose purpose was to
defraud the New York Medicaid program. I.G. Ex. 6, 9. The essence
of the scheme for which Petitioner was convicted was to defraud the
New York Medicaid program into making payments for unnecessary
services provided to Medicaid recipients. Id. Petitioner was not
only a co-conspirator, but was convicted of engaging in acts
intended to further the conspiracy. Id. I conclude that
Petitioner plainly was convicted of criminal offenses which were
related to the delivery of items or services under the New York
Medicaid program. The I.G., acting as the Secretary's delegate,
was required to exclude Petitioner.

According to Petitioner, her crimes are not program-related, but
are, instead, "financial offenses." The gravamen of her argument
is that she did not engage in acts which defrauded the New York
Medicaid program. She argues that, while others may have defrauded
the New York Medicaid program, her criminal involvement was limited
to receipt of the avails of that fraud. Petitioner characterizes
her crimes as errors of omission and negligence that are unrelated
to the delivery of Medicaid items or services. Petitioner contends
that she was merely the passive and uninformed recipient of
reimbursement checks from the New York Medicaid program and that
the payments she received were attributable to the fraud of other
persons.

To support her argument, Petitioner asserts that there is no
evidence that she ever personally delivered the Medicaid items or
services which are the basis for the indictment and convictions.
Petitioner's Brief at 17 - 18. Petitioner asserts also that there
is no evidence that she ever made reimbursement claims to the New
York Medicaid program for those items or services. Id.

Petitioner concedes that she has been convicted of offenses which
would give the I.G. authority to exclude her under the permissive
exclusion authority contained in section 1128(b)(1) of the Act.
Petitioner's Brief at 17 - 18. Petitioner's aim in characterizing
her conviction as being for offenses that fall within section
1128(b)(1) is to support her argument that the I.G. should have
exercised discretion, either to not exclude her at all, or to
exclude her for less than five years.

Section 1128(b)(1) permits the I.G., acting as the Secretary's
delegate, to exclude an individual or entity who has been convicted
of a criminal offense relating to fraud, theft, embezzlement,
breach of fiduciary responsibility, or other financial misconduct,
either in connection with the delivery of a health care item or
service or with respect to any act or omission in a program
operated by or financed in whole or in part by any federal, State,
or local government agency. The authority to exclude under section
1128(b)(1) is permissive, not mandatory. In contrast to the
mandatory exclusion requirements of section 1128(a)(1), section
1128(b)(1) gives the I.G. discretion to determine whether to
exclude an individual or entity. Section 1128(b)(1) permits
exclusions to be for less than five years, whereas exclusions
imposed under section 1128(a)(1) must be for at least five years.
Social Security Act, 1128(c)(3)(B).

Petitioner's description of her crimes ignores the criminal charges
of which she was convicted. Contrary to Petitioner's argument, she
was not convicted of being merely a passive beneficiary of fraud.
Petitioner was convicted of being an active participant in a
conspiracy. While Petitioner's role in the conspiracy did not
include providing unnecessary services or personally making
reimbursement claims for those services, she was nonetheless a key
player in the conspiracy.

Petitioner's primary role in the conspiracy of which she was
convicted was to agree to allow her co-conspirators to make use of
her name and Medicaid provider number to generate fraudulent
Medicaid reimbursement claims for unnecessary items and services.
I.G. Ex. 6, pages 9 - 10. Petitioner's participation gave her
co-conspirators a vehicle by which to claim reimbursement for
unnecessary services to Medicaid recipients. But for Petitioner's
consent to allow her co-conspirators to use her name and her
provider number, her co-conspirators would not have been able to
present fraudulent Medicaid claims in her name, using her Medicaid
provider number. But for this consent, Petitioner would not have
received checks totalling more than $135,000 from the New York
Medicaid program as reimbursement for fraudulent Medicaid claims.
I.G. Ex. 6, pages 22 - 23.

Petitioner's characterization of her conduct as that of a passive
bystander to the fraud of others constitutes an attempt to look
behind the jury's findings in her case. In a sense, she is
asserting that she is not really guilty of the crimes of which she
was convicted. However, the I.G.'s authority to exclude Petitioner
under section 1128(a)(1) derives from the crimes of which
Petitioner was convicted, and not from her conduct. Paul R.
Scollo, D.P.M., DAB 1498, at 14 (1994); Peter J. Edmonson, DAB
1330, at 4 (1992). In view of the fact that Petitioner was
convicted of actively participating in a conspiracy, her attempt to
now characterize her involvement in the conspiracy as being only
passive is not relevant to the I.G.'s authority to exclude
Petitioner. In Edmonson, an appellate panel of the Departmental
Appeals Board stated:

It is the fact of the conviction which causes the exclusion.
The law does not permit the Secretary to look behind the
conviction. Instead, Congress intended the Secretary to exclude
potentially untrustworthy individuals or entities based on criminal
convictions. This provides protection for federally funded
programs and their beneficiaries and recipients, without expending
program resources to duplicate existing criminal processes.

Id. (emphasis in original). 4/

Furthermore, Petitioner would stand convicted of offenses as
described by section 1128(a)(1) even if I accepted her
characterization of her conviction as being of "financial offenses"
resulting from her unlawful receipt of Medicaid reimbursement that
had been obtained fraudulently. Petitioner's conviction plainly is
of offenses related to the delivery of Medicaid items or services,
even under her own characterization of those convictions.

Section 1128(a)(1) has never been interpreted so narrowly as to
limit the authority to exclude to only those individuals who have
been convicted of crimes involving their personal delivery of
Medicare or Medicaid items or services, or their personal
presentation of reimbursement claims for Medicare or Medicaid items
or services. See, e.g., Napoleon S. Maminta, M.D., DAB 1135, at 7.
5/ The statutory phrase "related to the delivery of" a Medicare or
Medicaid item or service has been interpreted to encompass any
crime where there exists some reasonably perceivable nexus between
the crime and the delivery of a Medicare or Medicaid item or
service. Berton Siegel, D.O., DAB 1467 (1994); Thelma Walley, DAB
1367 (1992). Section 1128(a)(1) encompasses the circumstance where
the delivery of a Medicare or Medicaid item or service is an
element in the chain of events leading to the commission of the
criminal offense.

There exists an obvious nexus between Medicaid items and services
and Petitioner's crimes which satisfies the Act's requirement that,
for a conviction to fall within the purview of section 1128(a)(1),
it be of an offense related to the delivery of a Medicare or
Medicaid item or service. That nexus lies in the relationship
between Medicaid items and services and Petitioner's receipt of
reimbursement checks for those items and services. Items or
services which Petitioner's co-conspirators unnecessarily provided
to Medicaid recipients caused the New York Medicaid program to
issue reimbursement checks which Petitioner accepted. That nexus
exists despite the fact that Petitioner may not have provided items
or services to Medicaid recipients personally or made reimbursement
claims for those items or services.

Thus, Petitioner was convicted of criminal offenses which are
program-related, within the meaning of section 1128(a)(1). Even
though these offenses might arguably be characterized as "financial
crimes" within the meaning of section 1128(b)(1), that does not
relieve the I.G. of the duty to exclude Petitioner under the
mandatory exclusion authority of section 1128(a)(1). Congress did
not intend the permissive exclusion authority of section 1128(b)(1)
to supersede the mandatory exclusion requirement it enacted for
individuals and entities convicted of program-related offenses.
Travers v. Sullivan, 801 F.Supp. 394, 405 (E.D. Wash. 1992).

C. The basis for the 15-year exclusion

The preponderance of the evidence in this case establishes that the
15-year exclusion imposed against Petitioner is reasonable. I
conclude that Petitioner has, by her conduct, shown herself to be
a highly untrustworthy individual. The lengthy exclusion imposed
against Petitioner is necessary to protect federally funded health
care programs and program beneficiaries and recipients from
possibly damaging conduct by Petitioner in the foreseeable future.

Section 1128 is a remedial statute. Its purpose is to protect the
integrity of federally funded health care programs, and the welfare
of program beneficiaries and recipients, from individuals and
entities who have been shown to be untrustworthy. Exclusions
imposed pursuant to section 1128 (including exclusions of more than
five years imposed under section 1128(a)(1)) have been found
reasonable only insofar as they are consistent with the Act's
remedial purpose. Robert Matesic, R.Ph., d/b/a Northway Pharmacy,
DAB 1327, at 7 - 8 (1992); William F. Middleton, DAB CR297, at 8
(1993). 6/

Prior to 1993, there were no regulations governing the
administrative adjudication of exclusions imposed pursuant to
section 1128. In cases decided prior to 1993, appellate panels of
the Departmental Appeals Board and administrative law judges held
that the criteria used to evaluate the trustworthiness of excluded
parties, and the reasonableness of exclusions, were derived from
the Act itself. These criteria encompassed any evidence relevant
to an excluded party's trustworthiness to provide care. Matesic,
at 7 - 8.

However, in January 1993, regulations published originally in
January 1992, became binding on administrative adjudicators. 42
C.F.R. Part 1001; 42 C.F.R. 1001.1(b). The regulations
established criteria by which the length of exclusions imposed
pursuant to section 1128 are to be evaluated. These regulations
provide that, in cases involving exclusions imposed pursuant to
section 1128(a) of the Act, the reasonableness of the length of any
exclusion imposed for a period of more than five years will be
decided based on the presence of, and the weight assigned to,
certain aggravating and mitigating factors which the regulations
identify. 42 C.F.R. 1001.102(b)(1) - (6), (c)(1) - (3).

One consequence of the regulations is to limit the factors which I
may consider as relevant to an excluded party's trustworthiness to
provide care. I may no longer, for example, consider evidence as
to a party's remorse for his or her crimes, or rehabilitation, as
evidence of that party's trustworthiness. See Matesic, at 7 - 8.
Such evidence does not fall within any of the aggravating or
mitigating factors contained in the regulations. In any case in
which the reasonableness of an exclusion is at issue, I am
obligated to decide, using the factors contained in the
regulations, whether an exclusion of a particular length is
reasonably necessary to protect the integrity of federally financed
health care programs and the welfare of the programs' beneficiaries
and recipients. Middleton at 8.

The presence of aggravating factors in a case is not in and of
itself a basis to exclude a party for a particular length of time.
In a case involving an exclusion imposed pursuant to section
1128(a)(1), the presence of an aggravating factor does not
automatically justify an exclusion of more than five years. 7/ Nor
is the presence of mitigating factors an automatic ground to reduce
an exclusion. The regulations contain no formula for assigning
weight to aggravating and mitigating factors once the presence of
any of such factors is established. It is apparent both from the
regulations themselves, and from the Act's remedial purpose that,
I must explore in detail, and assign appropriate weight to, those
factors which are aggravating or mitigating. At bottom, an
exclusion must not be punitive. It must comport with the Act's
remedial purpose. 8/

The evidence in this case establishes the presence of three
aggravating factors alleged by the I.G. There were no mitigating
factors alleged or proven by Petitioner. The aggravating factors
are as follows:

The acts resulting in Petitioner's conviction resulted
in financial loss to the New York Medicaid program of more than
$1,500. 42 C.F.R. 1001.102(b)(1). The New York Medicaid
program issued reimbursement checks to Petitioner totaling more
than $135,000, which were the ultimate consequence of Petitioner's
fraud. I.G. Ex. 6, pages 22 - 23. The impact of Petitioner's
fraud extended beyond the amount paid to her by the New York
Medicaid program. The services allegedly provided by Petitioner
were used by the conspirators as the basis for additional
fraudulent claims, including claims for laboratory services,
diagnostic tests, and prescription drugs. In sentencing
Petitioner, United States District Court Judge John S. Martin found
that Petitioner participated in a massive fraud from which it was
reasonable to foresee that the New York Medicaid program would be
defrauded of more than $1,900,000. I.G. Ex. 10, page 45.
Accordingly, he sentenced Petitioner to pay restitution in the
amount of $1,931,992. I.G. Ex. 9, page 4.

In the notice letter to Petitioner, the I.G. asserts that
Petitioner's participation in the conspiracy caused the New York
Medicaid program to experience financial damages of $8 million. I
do not conclude from the evidence of record in this case that the
I.G. proved that Petitioner was responsible for damages in that
amount. Although the total damages caused by the conspiracy may
have exceeded $8 million, not all of this amount was attributable
to Petitioner's involvement in the conspiracy. While the I.G. has
not proven that Petitioner was responsible for causing financial
loss to the New York Medicaid program in the amount of $8 million,
the record shows that the fraudulent claims attributable to
Petitioner resulted in a financial loss of almost $2 million. This
is an enormous sum of money, and it amply meets the test for the
presence of the aggravating factor specified at 42 C.F.R.
1001.102(b)(1).

The sentence imposed on Petitioner for her crimes
included a period of incarceration. 42 C.F.R. 1001.102(b)(4).
Petitioner was sentenced to 41 months' imprisonment on each of the
25 counts of which she was convicted, with the sentences to be
served concurrently. I.G. Ex. 9, page 2.

Petitioner was overpaid more than $1,500 by the New
York Medicaid program as a result of improper billings. 42 C.F.R.
1001.102(b)(6). Reimbursement checks were paid by the New York
Medicaid program to Petitioner for more than $135,000 as payment
for services which were medically unnecessary and for which
reimbursement was claimed fraudulently. I.G. Ex. 6, pages 22 - 23.

Petitioner attempts to portray herself as the naive recipient of
wrongfully acquired funds from the New York Medicaid program.
Throughout her brief, Petitioner attempts to minimize her
involvement in the criminal activity or to shift the culpability of
her crimes to others. Petitioner argues that a 15-year exclusion
is unreasonable because the evidence fails to establish that she is
a threat to the integrity of the Medicare and Medicaid programs.

I do not accept Petitioner's portrayal of herself as a naive
participant in the criminal activity. While I do not accept
Petitioner's assertion that she was merely a naive or passive
recipient of monies that were obtained fraudulently, I have
considered the evidence Petitioner submitted in support of this
contention. Had Petitioner been able to persuade me that she did
not knowingly participate in fraudulent activities, then this would
have diminished the impact of the aggravating factors and would
have been a basis to reduce the length of the exclusion. However,
such is not the case here.

I recognize that Petitioner's arguments are tantamount to a
collateral attack on the findings made at her criminal trial. It
is a settled principle that Petitioner cannot challenge the I.G.'s
authority to exclude her by denying that she is guilty of that
which she has been convicted. However, the issue of whether the
length of an exclusion is reasonable is separate from the issue of
whether the I.G. has the authority to impose and direct an
exclusion. In evaluating the reasonableness of an exclusion, I am
required to explore in detail, and assign appropriate weight to,
those regulatory factors which are aggravating and mitigating.

The aggravating factors which the I.G. alleges to be present in
this case are indices of the nature and extent of Petitioner's
offenses and the effect her offenses had on the Medicare and
Medicaid programs. Evidence related to these factors shed light on
an individual's culpability. In promulgating these aggravating
factors, the Secretary has determined that evidence related to a
provider's culpability is relevant in ascertaining the need for an
exclusion remedy. Therefore, I may admit evidence which develops
these aggravating factors as long as the evidence sheds light on
the ultimate issue of whether an exclusion is reasonably necessary
to meet the Act's remedial goals.

Petitioner argues also that a lengthy exclusion ought not to be
imposed against her because the I.G. proved the presence of only
three of the six aggravating factors identified in the regulations.
See 42 C.F.R. 1001.102(b)(1) - (6). However, in evaluating the
length of an exclusion imposed under section 1128(a)(1), the issue
is not the number of aggravating factors that have been proven to
exist in a given case. Rather, the issue is what the evidence
relevant to any aggravating factor says about an individual or
entity's trustworthiness. I reach my conclusion about the
reasonableness of the exclusion in this case based not on the
number of aggravating factors proven by the I.G., but on what the
evidence that is relevant to those factors says about Petitioner's
lack of trustworthiness.

The amount of damages which Petitioner's involvement in the
conspiracy caused the New York Medicaid program suggests that
Petitioner is so untrustworthy as to necessitate a lengthy
exclusion. Petitioner was found to have caused the New York
Medicaid program to suffer nearly $2 million in damages in a few
months' time as a knowing participant in a massive fraud against
that program. I.G. Ex. 10, page 45. The amount of damages caused
by Petitioner to the New York Medicaid program demonstrates that
Petitioner is an individual who is capable of causing great harm to
federally financed health care programs. Damages of nearly $2
million could not have been caused by simple inadvertence. To the
contrary, the quantity of damages created by Petitioner in and of
itself leads to the conclusion that she participated knowingly in
massive fraud.

My conclusion as to Petitioner's untrustworthiness which I draw
from the amount of damages which she caused is reinforced by the
evidence in this case that shows the manner in which Petitioner
caused the damages to occur. This evidence belies Petitioner's
assertion that she was merely a naive or passive recipient of
monies that were obtained fraudulently, and belies her assertion
that she is trustworthy. To the contrary, the evidence proves
Petitioner to have been at the very center of the fraud, and
responsible for the damages she caused. I am convinced from this
evidence that Petitioner was a willing -- even eager -- participant
in massive and protracted fraud against the New York Medicaid
program. This evidence satisfies me that Petitioner remains a
danger to federally financed health care programs. A 15-year
exclusion is necessary to protect these programs against the
possibility that Petitioner may engage in additional
program-related fraud in the future.

Petitioner helped Khan to operate sham medical clinics whose sole
purpose was to generate fraudulent Medicaid reimbursement claims.
Petitioner facilitated the sham clinics' operations by knowingly
allowing Khan and his operatives to make use of her name and
Medicaid provider number to implement their fraudulent scheme.
Furthermore, Petitioner participated in transactions which were
designed to conceal the true nature of Khan's clinics.

Petitioner's role in causing damages to the New York Medicaid
program is described in the indictment of the offenses of which
Petitioner was convicted. I.G. Ex. 6. It is described also in
excerpts of trial testimony of various witnesses, which the I.G.
has offered as exhibits in this case. I.G. Ex. 1 - 4, 7 - 8. To
rebut this evidence, Petitioner has offered additional excerpts of
testimony. These excerpts offered by Petitioner consist primarily
of portions of cross-examination of various witnesses who testified
at Petitioner's trial. P. Ex. 1.

I base most of my conclusions as to Petitioner's involvement in the
conspiracy on the elements in the indictment of which Petitioner
was convicted. Indeed, I could have reached nearly all of the
conclusions that I make in this decision without reference to the
additional evidence offered by the I.G. However, my analysis is
supported also by the testimony excerpts offered by the I.G. I do
not find this testimony to have been rebutted substantially by the
excerpts of cross-examination offered by Petitioner. More
significantly, I do not find that any of the evidence offered by
Petitioner rebuts meaningfully the evidence which establishes the
extent of Petitioner's involvement in the conspiracy and the effect
that her involvement had on the New York Medicaid program.

The scheme of which Petitioner was an integral participant operated
in the following manner. Khan ran clinics at several locations in
New York City. I.G. Ex. 6, pages 1 - 2. The purpose of these
clinics was to fraudulently claim reimbursement from the New York
Medicaid program for unnecessary services to Medicaid recipients.
In order to accomplish this objective, the clinics' employees
generated sham treatment records and wrote unnecessary
prescriptions for Medicaid recipients. I.G. Ex. 6, pages 2 - 6.
Petitioner was "employed" at two of these clinics. I.G. Ex. 1,
page 16; I.G. Ex. 6, pages 5 - 6. 9/ Her "employment" consisted of
allowing her name and Medicaid provider number to be used on
treatment records of Medicaid recipients and on Medicaid
reimbursement claims. I.G. Ex. 6, page 3.

Petitioner was almost never present at the clinics and, but for one
or two instances, never personally examined or treated Medicaid
recipients. I.G. Ex. 1, page 24; I.G. Ex. 2, pages 46 - 48; I.G.
Ex. 3, pages 14 - 15, 18 - 21, 27 - 28; I.G. Ex. 6, page 3; see
I.G. Ex. 8, page 7. However, Petitioner knew, from the very terms
of her agreement with Khan, from the monies she was receiving from
the New York Medicaid program as reimbursement for services that
she had never provided, and from her rare contacts with employees
of Khan's clinics, that her agreement with Khan facilitated massive
fraud against, and concomitant damages to, the New York Medicaid
program.

The clinics employed physicians' assistants. I.G. Ex. 6, page 2.
Under New York law, physicians' assistants are permitted to examine
and treat patients, and to prescribe certain medications while
under the active supervision of physicians. I.G. Ex. 2, pages 4 -
5. The physicians' assistants were told by Khan that, if ever
questioned about their employment, they were to say that they were
employed by physicians. I.G. Ex. 3, pages 6 - 7.

The physicians' assistants saw from 25 to 40 Medicaid recipients
daily at the clinics, but they did not actually examine or treat
the recipients. I.G. Ex. 2, pages 14 - 19; I.G. Ex. 6, page 3.
They drew blood from the recipients, which would be sent to
laboratories for testing. I.G. Ex. 2, pages 40 - 42; I.G. Ex. 6,
pages 3 - 4.

The physicians' assistants fabricated examination reports and
treatment records to make it look as if the recipients had been
examined and treated by the physicians' assistants under the
supervision of physicians, including Petitioner. I.G. Ex. 2, pages
46 - 48; I.G. Ex. 6, pages 4 - 5. These fabricated records were
used as a basis for fraudulent reimbursement claims that were
attributed to physicians, including Petitioner, who were associated
with Khan's clinics.

The physicians' assistants wrote prescriptions for the Medicaid
recipients that the recipients filled at pharmacies. I.G. Ex. 6,
pages 2 - 4. The prescriptions were for medications intended to
treat peptic ulcers, high blood pressure, high blood cholesterol,
skin rashes, and respiratory problems. I.G. Ex. 2, pages 20 - 23,
32; I.G. Ex. 6, page 2. The recipients were issued these
prescriptions without regard to their actual illnesses. I.G. Ex.
2, pages 20 - 23, 32, 37; I.G. Ex. 3, page 12; I.G. Ex. 6, page 2.
Once the recipients obtained the drugs from the pharmacies, they
were free to sell them on the street. I.G. Ex. 2, pages 25 - 26;
I.G. Ex. 6, page 2.

Petitioner knew that the physician assistants were seeing patients
on her behalf without supervision, and that they were generating
reimbursement claims for services which she had not provided and
which were not medically necessary. I.G. Ex. 2, pages 45 - 48;
I.G. Ex. 3, pages 19 - 24; I.G. Ex. 6, pages 2 - 6, 9 - 10. She
knew also
from the checks that she was receiving from the New York Medicaid
program that Khan's clinics were committing massive fraud in her
name.

Khan's clinics claimed reimbursement from the New York Medicaid
program for the sham "services" which physicians, including
Petitioner, purportedly provided to Medicaid recipients. I.G. Ex.
6, pages 3 - 6. Petitioner agreed to give Khan 30 percent of New
York Medicaid's reimbursement to her for her "services" as
compensation for Khan's creation of Medicaid reimbursement claims
in her name. I.G. Ex. 1, page 17.
Petitioner helped Khan disguise the true nature of his clinics.
Although Khan operated the clinics, Petitioner executed leases for
clinic facilities and paid rent on them. I.G. Ex. 1, pages 18 -
21. The effect was to make it appear as if the clinics were run by
Petitioner, and not by Khan. Id.

The evidence relevant to the aggravating factors in this case
persuades me that Petitioner knowingly and actively participated in
a massive fraud against the New York Medicaid program. The
seriousness of Petitioner's offenses demonstrates a high level of
culpability and convinces me that she is a threat to the Medicare
and Medicaid programs. In view of this, I assign great weight to
the aggravating factors in this case. Based on the totality of the
evidence, I conclude that the 15-year exclusion is reasonably
necessary to protect the integrity of the Medicare and Medicaid
programs.

III. Conclusion

I conclude that Petitioner was convicted of criminal offenses
related to the delivery of items and services under the New York
Medicaid program. The I.G. was required to exclude Petitioner. I
conclude also, in light of the evidence relating to aggravating
factors, that the 15-year exclusion imposed by the I.G. comports
with the Act's remedial purposes. Therefore, I sustain the
exclusion.


Steven T. Kessel
Administrative Law Judge

1. In this Decision, I refer to all programs from which
Petitioner has been excluded, other than Medicare, as Medicaid.

2. The circumstances specified by the I.G. are the following:

1. Petitioner's participation in criminal activity caused $8
million in financial damage to the New York Medicaid program.

2. Petitioner was ordered to pay restitution to the New York
Medicaid program in the amount of $1,900,000.

3. Petitioner was sentenced to imprisonment for a term of 41
months.

3. The I.G. submitted 12 exhibits (I.G. Ex. 1 - 12).
Petitioner submitted five exhibits (P. Ex. 1 - 5). Neither party
objected to the admission into evidence of the other party's
exhibits. Therefore, I admit into evidence I.G. Ex. 1 - 12 and P.
Ex. 1 - 5.

4. The Edmonson case involved an exclusion imposed pursuant to
section 1128(a)(2) of the Act, which mandates exclusions of
individuals convicted of criminal offenses relating to neglect or
abuse of patients in connection with the delivery of health care
items or services. However, both sections 1128(a)(1) and
1128(a)(2) mandate that exclusions be imposed based on convictions
for offenses described within those sections. Therefore, the
derivative authority for exclusions under the two sections
(convictions for specified offenses) is the same.

5. In Maminta, the petitioner's crime did not relate to any
Medicare or Medicaid item or service that he provided personally,
nor did it relate to any reimbursement claim that he presented or
caused to be presented for a Medicare or Medicaid item or service.
Petitioner was convicted of unlawfully converting to his benefit a
Medicare reimbursement check that had been intended for another
entity, but which had been sent to him inadvertently. The
requisite nexus was found to exist because Petitioner's crime
related to a Medicare item or service, even though the item or
service had been provided by someone other than Petitioner, and
even though someone other than Petitioner had made the
reimbursement claim for that item or service.

6. Exclusions imposed under section 1128(a)(1) of the Act must
be for at least five years. Social Security Act, 1128(c)(3)(B).


7. Nor must an exclusion of more than five years necessarily be
imposed due to the presence of more than one aggravating factor in
a case.

8. The I.G. argues that a lengthy exclusion is necessary here
in part because it might deter others from engaging in the crimes
which Petitioner engaged in. I do not accept the premise that an
exclusion may be justified on the basis that it will deter others
from engaging in misconduct, if that exclusion does not satisfy the
Act's remedial purpose. In other words, an exclusion may not be
justified if it cannot be shown that the exclusion is necessary to
protect federally financed health care programs from possible
future misconduct by the excluded individual. However, if an
exclusion that satisfies the Act's remedial purpose serves also to
deter others from engaging in misconduct, then that is a legitimate
ancillary consequence of the exclusion.

9. One of the two clinics was operated by Khan at 1153 Grand
Concourse, in the borough of the Bronx. I.G. Ex. 1, page 16. Up
until December 1990, Petitioner was associated also with a clinic
operated by Khan at 461 Lenox Avenue, in New York City. Id. In
December 1990, Khan relocated this clinic to 2301 Second Avenue.
Petitioner remained involved with this clinic at its new address.
Id. at 16 - 17.