$05:Exclusion Case
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
William D. Miles, M.D.,
Petitioner,
- v. -
The Inspector General.
DATE: January 30, 1995
Docket No. C-94-348
Decision No. CR354
DECISION
On March 14, 1994, the Inspector General (I.G.) notified Petitioner
that he was being excluded for five years from participating in the
following programs: Medicare, Medicaid, Maternal and Child Health
Services Block Grant and Block Grants to States for Social
Services. The I.G. advised Petitioner that he was being excluded
because he had been 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, within the meaning of section
1128(b)(1) of the Social Security Act (Act).
The I.G. stated that the length of Petitioner's exclusion was based
in part on the I.G.'s determination that Petitioner was convicted
of a criminal offense related to fraud and/or other financial
misconduct resulting in financial loss to Medicaid and two other
entities in excess of $1500. The I.G. stated further that the
determination to exclude Petitioner for five years was based in
part also on evidence that the criminal acts which resulted in
Petitioner's conviction, or similar acts, were committed over a
period of one year or more.
Petitioner requested a hearing. The case was assigned to me for a
hearing and a decision. I conducted a prehearing conference by
telephone, at which the parties agreed that there was no need for
an in-person hearing. The parties agreed that the case could be
heard and decided based on their submissions of exhibits and
briefs.
The I.G. submitted five exhibits (I.G. Exs. 1-5). Petitioner did
not object to their admission into evidence. Petitioner submitted
four exhibits (P. Exs. 1-4). The I.G. did not object to their
admission into evidence. I admit into evidence I.G. Exs. 1-5 and
P. Exs. 1-4.
I have considered the evidence, the applicable law and regulations,
and the parties' arguments. I conclude that the I.G. had authority
to exclude Petitioner pursuant to section 1128(b)(1) of the Act.
I conclude also that the five-year exclusion which the I.G. imposed
is reasonable, and I sustain it.
I. Issues, findings of fact, and conclusions of law
Petitioner has not disputed that he was convicted of a criminal
offense within the meaning of section 1128(a)(1) of the Act. He
does not dispute that the I.G. is authorized to exclude him. He
asserts that the five-year exclusion which the I.G. imposed is
unreasonable, arguing that in light of the evidence, the exclusion
ought to be reduced to a term of one year. Therefore, the issue in
this case is whether the five-year exclusion which the I.G. imposed
is reasonable, and if it is not reasonable, the extent to which it
ought to be modified. In finding the exclusion to be reasonable,
I make the following findings of fact and conclusions of law. 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.
1. Under applicable regulations, an individual who is
excluded pursuant to section 1128(b)(1) of the Act must be excluded
for three years, unless aggravating or mitigating factors exist
which provide a basis for lengthening or shortening the exclusion.
Page 3.
2. The I.G. proved the presence of an aggravating factor, in
that Petitioner was convicted of having obtained unlawfully more
than $1,500 from Medicaid and two other entities. Pages 5-6.
3. The I.G. proved the presence of an additional aggravating
factor, in that the crimes that Petitioner committed were committed
over a period of more than one year. Pages 6-7.
4. There are no mitigating factors present in this case.
Pages 7-8.
5. The evidence relating to the aggravating factors proven by
the I.G. establishes Petitioner is untrustworthy, justifying
an exclusion of five years. Pages 8-9.
II. Discussion
A. Governing law
Congress enacted section 1128 of the Act to protect the integrity
of federally-funded health care programs. Among other things, the
law was designed to protect program beneficiaries and recipients
from individuals who have demonstrated by their behavior that they
threaten the integrity of federally-funded health care programs or
that they could not be entrusted with the well-being and safety of
beneficiaries and recipients. Syed Hussani, DAB CR193 (1992)
(citing S. Rep. No. 109, 100th Cong., 1st Sess., reprinted in 1987
U.S.C.C.A.N. 682). Congress included non-governmental health care
programs within the purview of section 1128(b)(1) as an additional
means of protecting program beneficiaries and recipients. H.R.
Rep. No. 393, Part II, 95th Cong., 1st Sess., reprinted in 1977
U.S.C.C.A.N. 3072. Congress reasoned that those who cheat private
health care payers cannot be trusted to deal honestly with program
beneficiaries and recipients.
Regulations establish a framework for deciding whether a party is
trustworthy in a particular case, and if not, the length of the
exclusion which is reasonable in that case. These regulations are
contained in 42 C.F.R. Part 1001. The regulation which governs the
length of exclusions imposed under section 1128(b)(1) of the Act is
42 C.F.R. 1001.201(b). This regulation establishes a baseline
exclusion of three years for individuals who are convicted of
criminal offenses within the meaning of section 1128(b)(1) of the
Act. It provides that an exclusion may be imposed for a period of
more than three years in a particular case if any of certain
specified aggravating factors are present in that case. Those
factors are stated in 42 C.F.R. 1001.201(b)(2)(i) - (v).
The regulation provides also that certain enumerated mitigating
factors may be a basis for reducing an exclusion imposed pursuant
to section 1128(b)(1) of the Act. The factors which may be
mitigating are stated in
42 C.F.R. 1001.201(b)(3)(i)-(iv). A mitigating factor or
factors may offset an aggravating factor or factors. The presence
of a mitigating factor may also constitute a basis for reducing an
exclusion below the three-year benchmark, either where no
aggravating factors exist, or where the presence of a mitigating
factor offsets the presence of an aggravating factor or factors.
Although the regulation requires consideration of only enumerated
aggravating factors and mitigating factors in deciding whether to
lengthen or shorten an exclusion, the regulation is not intended to
serve as a mechanical basis for determining the length of an
exclusion. In any case, the ultimate question remains whether the
petitioner is not trustworthy to provide care to program
beneficiaries and recipients. The factors enumerated in the
regulation are indicia of trustworthiness or a lack of
trustworthiness. Thus, where aggravating factors or mitigating
factors exist in a particular case, they, and the evidence which
explains the petitioner's conduct which resulted in the presence of
aggravating factors or mitigating factors must be weighed carefully
in order to determine whether the exclusion comports with the Act's
remedial purpose. William F. Middleton, DAB CR297 at
10-11 (1993).
B. Relevant facts
Petitioner is a licensed psychiatrist, who established a
professional corporation, known as Psychiatric Medicine of
Virginia, P.C. I.G. Ex. 2, page 1. Petitioner was charged by a
13-count federal indictment with the criminal offense of mail fraud
related to his delivery of health care services in violation of 18
U.S.C. 1341. I.G. Ex 2.
Count One of the indictment charged Petitioner with a scheme to
defraud Medicaid, the Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS), and Blue Cross/Blue Shield of
Virginia (BC/BS/VA) (the health care plans). It asserted that
Petitioner submitted reimbursement claims to these health care
plans which falsely represented that certain procedures or services
had been rendered. I.G. Ex. 2, page 7. It charged also that
Petitioner presented reimbursement claims which asserted that he
had performed certain procedures when, in fact, other members of
his staff had performed them. Id. It charged additionally that
Petitioner claimed reimbursement for his services under incorrect
procedure codes. Id. at 6-7.
The indictment alleged at Count One that Petitioner presented
claims to the health care plans which falsely represented the
services he performed in an attempt to defraud these health care
plans. I.G. Ex. 2, pages 6-7. By representing falsely that: 1)
he had provided services that he had not, in fact, provided; 2) he
had provided services that were, in fact, provided by others; and,
3) he had performed more complicated or lengthy services than he
had in fact performed, Petitioner was able to submit claims for
reimbursement which he was not entitled to receive. Count One
charged that Petitioner had perpetrated his fraudulent scheme
during a period beginning in or about January 1987 and ending in or
about October 1991. Id. at 6. It charged that, during this
period, Petitioner submitted false and fraudulent claims for
services totalling in excess of $38,000. Id. at 7.
Petitioner pled guilty to Count Ten of the indictment, which
charged him with using the United States Postal Service to
fraudulently obtain funds from BC/BS/VA, through the submission of
a claim form for a patient with the initials C.M. I.G. Ex. 2, page
17; I.G. Ex. 3, page 1. Although Count Ten alleges a single charge
of mail fraud, that Count incorporates by reference all of the
allegations contained in paragraphs one through 15 of Count One of
the indictment. Id. Thus, Count Ten describes a fraud which was
committed by Petitioner in furtherance of a much broader scheme to
defraud various health care plans.
In agreeing to plead guilty to Count Ten, Petitioner agreed also to
pay restitution in the amount of $38,500.00. I.G. Ex. 5, page 2.
He stipulated that this sum constituted: "the `loss' in this case
for purposes of readily provable relevant conduct." Id.
Petitioner was sentenced to serve five years of probation and to
pay restitution in the amount of $38,500. I.G. Ex. 3, pages 2-4.
Petitioner was sentenced also to receive mental health counseling
at the direction of the probation office. Id. at 8.
C. The presence of aggravating factors
The I.G. argues that there are two aggravating factors present
here. First, she asserts that the conduct resulting in
Petitioner's conviction, or similar acts, resulted in a loss to
health care plans of more than $1500. 42 C.F.R.
1001.201(b)(2)(i). Second, she contends that the I.G. has proved
that the conduct resulting in Petitioner's conviction, or similar
acts, transpired over a period exceeding one years's duration. 42
C.F.R. 1001.201(b)(2)(ii).
Petitioner disputes that either of the aggravating factors alleged
by the I.G are applicable to his case. Regarding the first
aggravating factor asserted by the I.G., Petitioner argues that the
amount of loss caused by his criminal conduct is only $931.75, and
therefore, less than the $1500 amount specified as an aggravating
factor in the regulations. Petitioner asserts that he was found
guilty of committing only one incident of fraud, involving a
fraudulent payment for C.M.'s treatment, as described in Count Ten
of the indictment. He contends that Count Ten cannot be read
reasonably to include paragraphs one through 15 of Count One,
because to do so would contravene the principles of federal
criminal jurisprudence and the federal sentencing guidelines.
Thus, he maintains that findings as to the financial loss he
engendered should be limited to the payment he received from
BC/BS/VA as a result of his request for payment in the case of C.M.
Petitioner argues also that the acts that resulted in his
conviction were not committed over a period of one year or more,
and therefore, the second aggravating factor alleged by the I.G. is
also not present here. Petitioner contends that the length of time
during which the criminal conduct occurred must be limited to a
three and a half month period, which began with C.M.'s treatment
and ended when payment was received from BC/BS/VA for this
treatment. Again Petitioner relies on principles of federal
criminal jurisprudence and the federal sentencing guidelines as
support for this argument.
I conclude that the record in this case establishes the presence of
the two aggravating factors asserted by the I.G. First, I find
that the amount of loss caused by Petitioner's crime and by similar
acts was greater than $1500. The charge to which Petitioner
pleaded guilty incorporates by reference a scheme which involved
$38,500.00 in fraud. Petitioner has acknowledged defrauding health
care financing plans of this amount, and his sentence to pay
restitution of $38,500.00 reflects Petitioner's admission.
Second, I find that the acts that resulted in Petitioner's
conviction and similar acts were committed over a period exceeding
one year. Count One of the indictment, incorporated by reference
in Count Ten, alleges a scheme which transpired over a greater than
one year period. Furthermore, by acknowledging that he defrauded
health care plans of the amount alleged in Count One of the
indictment, Petitioner tacitly admitted that he committed
fraudulent acts over a more than one-year period.
As I find above, the allegations of the first 15 paragraphs of
Count One of Petitioner's indictment were incorporated by reference
into Count Ten. A fair reading of Count Ten is that it
incorporated the scheme described in the first 15 paragraphs of
Count One and asserted a specific unlawful act as an act in
furtherance of that scheme. I conclude that, by pleading guilty to
Count Ten, Petitioner admitted not only to committing the specific
crime charged in that Count, but to committing the scheme which
that crime furthered.
This is evident, not only from a reasonable reading of Count Ten,
but from the plea agreement entered into by Petitioner and by the
sentence which was imposed against Petitioner. In pleading guilty,
Petitioner acknowledged that he had defrauded health care plans of
$38,500.00, the total fraud which was charged in Count One of the
indictment. He was sentenced to pay restitution in that amount,
which surely reflected his admission of culpability.
I am not persuaded by Petitioner's characterization of federal
criminal practice and sentencing guidelines that, for purposes of
this case, I may not read his plea to Count Ten as constituting an
admission by Petitioner of the underlying scheme and its impact on
health care financing programs. This case does not involve the
question of the reasonableness of Petitioner's sentence for his
crime, but involves the reasonableness of a remedial exclusion
imposed under section 1128 of the Act. I see nothing in section
1128 of the Act which suggests that federal criminal practice or
sentencing guidelines impose strictures on the way in which I am to
read and interpret a criminal charge or a plea to that charge for
purposes of determining whether an exclusion is reasonable.
Moreover, the aggravating factors which the I.G. asserts exist in
this case are not based solely on the crime to which Petitioner
pleaded guilty. In deciding whether these two aggravating factors
are present, I may look not only at the specific crime to which
Petitioner pled, but at evidence relating to similar acts committed
by Petitioner. Thus, 42 C.F.R. 1001.201(b)(2)(i) states that an
aggravating factor shall exist if the acts resulting in the
conviction, or similar acts, resulted in a financial loss of $1,500
or more to a government program or to other entities.
Additionally, 42 C.F.R. 1001.201(b)(2)(ii) states that an
aggravating factor shall exist if the acts that resulted in the
conviction, or similar acts, were committed over a period of one
year or more.
Here, Petitioner has acknowledged committing acts similar to the
count of mail fraud to which he pleaded guilty. He has admitted
defrauding the health care plans of $38,500.00. Although he did
not admit specifically to committing that fraud over a one year
period, Petitioner did plead guilty to Count Ten of the indictment.
Count Ten of the indictment incorporates by reference Count One of
the indictment. Count One of the indictment alleges that
Petitioner's scheme to defraud the health care plans occurred over
more than a one-year period. Moreover, the $38,500 that Petitioner
admitted defrauding from the health care plans is identical to the
amount ($38,500) that Count One of the indictment charged that
Petitioner wrongfully obtained from approximately October 1987
through January 1991. Thus, Petitioner admitted to defrauding the
health care plans by means of a scheme which lasted almost four
years.
D. The absence of mitigating factors
Petitioner argues that a mitigating factor exists in this case.
Petitioner cites to the court's note in the sentencing document
that Petitioner undergo mental health counseling, "at direction of
probation office," as support for his argument that the court found
Petitioner to have a mental or emotional condition. I.G. Ex. 3 at
8. Petitioner contends, in essence, that this note proves the
presence of a mitigating factor pursuant to 42 C.F.R.
1001.201(b)(3)(ii).
42 C.F.R. 1001.201(b)(3)(ii) states that the following factor
may be considered as a basis for reducing an individual's period of
exclusion:
The record in the criminal proceeding, 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.
The court's suggestion that Petitioner undergo mental health
counseling at the direction of the probation office does not prove
that the judge who sentenced Petitioner found that he had a mental
condition that reduced his culpability. That Petitioner's sentence
included giving the probation office the option of ordering
Petitioner to receive mental health counseling certainly suggests
that the judge who sentenced Petitioner concluded that such
counseling might be an appropriate element of Petitioner's
probation or rehabilitation. That, in turn, creates an inference
that the sentencing judge found that Petitioner might be suffering
from a mental or emotional problem. However, there is nothing in
any of the exhibits that are in evidence to suggest that the judge
found that these possible problems reduced Petitioner's culpability
for his crime. Indeed, it is not clear from these exhibits at what
point these problems may have developed, or that they had any
bearing on the crime to which Petitioner pleaded guilty to.
This case is distinguishable from John M. Thomas, Jr., M.D. and
Texoma Orthopedic Associates, d/b/a Orthopedic and Sports Medicine
Center of North Texas, DAB CR281 (1993). In that case, the I.G.
conceded in her notice letter and posthearing brief that the judge
who sentenced the petitioner found that he had a mental illness,
during the commission of his offense, that diminished his
culpability. Thus, unlike the present case, a mitigating factor
was proven in Thomas.
Thus, I find no evidence in this case that the court found
Petitioner's culpability to be reduced due to the presence of a
mental or emotional condition. Petitioner has not established the
presence of any mitigating factor.
E. The basis for the five-year exclusion
The record demonstrates the presence of two aggravating factors in
this case. There is no evidence which establishes the presence of
any mitigating factors. The presence of aggravating factors is not
offset by mitigating factors and is a basis for imposing an
exclusion of more than three years' duration. However, as I hold
at Part A of this section, that does not mean that an exclusion of
any particular duration is necessarily justified. I must still
consider the evidence relating to the aggravating factors as
evidence of Petitioner's lack of trustworthiness and decide from
this evidence whether or not an exclusion of more than three years
is justified, and if so, for what duration.
In this case, the evidence establishing the existence of
aggravating factors establishes also that Petitioner is a highly
untrustworthy individual. Petitioner has admitted to an extensive
scheme, carried out over a period of nearly four years, to defraud
several health care plans. The duration of the fraud suggests that
Petitioner engaged in a pattern of criminal activity which required
planning and persistence to execute. The financial impact of
Petitioner's crimes on the health care plans was substantial. He
has admitted to having received wrongfully $38,500.00. Damages in
that amount could not have been caused by simple inadvertence. It
is reasonable to infer from the amount of damages caused by
Petitioner, and the period of time during which he perpetrated his
fraud, that he is capable of causing significant and extensive harm
to both private and federally-financed health care programs.
Furthermore, the unrebutted evidence which describes the manner in
which Petitioner perpetrated his fraud reinforces the inference of
culpability and untrustworthiness that arises from the amount of
fraud and the period of time during which Petitioner committed that
fraud. The allegations to which Petitioner pleaded guilty
establish a conscious and willful plan on Petitioner's part to
systematically misrepresent his services to not one, but several,
health care plans.
I conclude from the evidence that relates to the aggravating
factors proven by the I.G. that Petitioner is a highly
untrustworthy individual. Thus, a five year exclusion is
reasonably necessary to protect federally-financed health care
programs and their beneficiaries and recipients from the
possibility that Petitioner may engage in conduct that is harmful
to them.
CONCLUSION
Based on applicable regulations and the evidence, I find the
five-year exclusion which the I.G. imposed against Petitioner to be
reasonable and I sustain it.
Steven T. Kessel
Administrative Law Judge