$05:Exclusion Case
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Fred R. Spierer,
Petitioner,
- v. -
The Inspector General.
DATE: February 16, 1995
Docket No. C-94-405
Decision No. CR359
DECISION
By letter dated July 21, 1994, the Inspector General (I.G.)
notified Petitioner that, effective August 10, 1994, he was to be
excluded from participation in the Medicare, Medicaid, Maternal and
Child Health Services Block Grant and Block Grants to States for
Social Services programs 1/ due to his conviction of a criminal
offense related to the delivery of an item or service under the
Medicaid program. The I.G. informed Petitioner further that, even
though the relevant sections of the Social Security Act (Act)
require a minimum exclusion of five years for this type of
conviction, Petitioner was being excluded for a period of 10 years
based on his "prior conviction of a program-related criminal
offense and previous administrative sanction record." 2/ The I.G.
notified Petitioner also that the 10-year exclusion was in addition
to a five-year exclusion that was previously imposed and directed
against him by the I.G.
By letter dated August 1, 1994, Petitioner contested his 10-year
exclusion, and the case was assigned to me for hearing and
decision.
The parties have agreed to submit the case for decision on a
written record. Order and Schedule for Filing Briefs and
Documentary Evidence, dated September 21, 1994. Having considered
the parties' evidence, objections, and arguments, 3/ I conclude
that the 10-year exclusion imposed and directed against Petitioner
by the I.G. is excessive. I have determined that Petitioner is
subject to an exclusion period of only five years. 4/
ISSUES
The issues in this case are:
(a) Whether Petitioner was convicted of a criminal offense
within the meaning of section 1128(i) of the Act, and
(b) If so,
(i) whether Petitioner's conviction is related tothe delivery
of an item or service under Medicaid, within the meaning of section
1128(a)(1) of the Act;
(ii) whether those affirmative defenses asserted by Petitioner
bar the I.G. from imposing and directing an exclusion against
Petitioner; and
(iii) whether the exclusion of 10 years is areasonable length
(or if the length is unreasonable, then the extent to which the
exclusion should be lengthened or shortened).
FINDINGS OF FACT AND CONCLUSIONS OF LAW (FFCL)
I. The I.G.'s Authority to Exclude Petitioner
1. Petitioner arrived in Colorado during January 1990. I.G. Ex.
5 at 3; I.G. Ex. 6 at 2.
2. During or about January 1990, Petitioner and others started a
medical supply company called Solid Care Medical Supplies, Inc.
(Solid Care), in Colorado. P. Br. at 4.
3. Petitioner was the Vice-President of Solid Care. P. Br. at 4,
12.
4. During an investigation of Solid Care by the Colorado Medicaid
Fraud Control Unit, Petitioner admitted to an investigator that the
plan articulated to him was for him and others to open a business
in Colorado and illegally bill Colorado Medicaid by submitting
fraudulent claims (e.g., "bill and bill and bill some more"). I.G.
Ex. 6 at 2, 4.
5. From January 1990 to June 1990, Petitioner was engaged in a
scheme to defraud the Colorado Medicaid program by billing for
items which were not needed by program recipients, which had not
been ordered for program recipients, or which had not been
delivered to program recipients. I.G. Ex. 6 at 3-4; I.G. Ex. 5 at
6-7; I.G. Ex. 23; FFCL 1-4.
6. The scheme involved also a plan to illegally obtain Medicaid
"leads", i.e., names of Medicaid recipients, in Colorado. I.G. Ex.
5 at 5, 7; I.G. Ex. 6 at 5-6.
7. Petitioner admitted to an investigator that he was aware that
a Solid Care employee was attempting to obtain Medicaid "leads"
that were illegal to possess. Petitioner wished to obtain these
leads so that Solid Care sales representatives would not have to
make sales by going door to door. I.G. Ex. 5 at 5; I.G. Ex. 6 at
5.
8. Petitioner was aware also that the Solid Care employee was
negotiating to pay $1 for each name obtained. I.G. Ex. 5 at 5.
9. In 1990, the Colorado Medicaid program paid Solid Care
$65,497.53 in Medicaid reimbursement. I.G. Ex. 23.
10. Some time after June 1990, criminal complaints were filed
against Petitioner and others in the County Court, Jefferson
County, Colorado, charging Petitioner with, among other things, two
counts of bribing a public servant and one count of conspiracy to
commit bribery. I.G. Ex. 7, 8.
11. On or about November 5, 1990, Petitioner pled no contest to
the count of conspiracy to commit bribery, which charged:
On and before June 18, 1990, in the County of Jefferson, State
of Colorado, [Petitioner], with the intent to promote and
facilitate the commission of the crime of bribery, . . ., did
unlawfully and feloniously agree with each other, and with a person
or persons . . ., that one or more of them would engage in conduct
which constitutes said crime and an attempt to commit said crime,
and did agree to aid each other and such other person or persons in
the planning and commission and attempted commission of said crime,
and an overt act in pursuance of such conspiracy was committed by
one or more of the conspirators . . . .
I.G. Ex. 7, 15.
12. On March 11, 1991, pursuant to his pleading no contest to the
count of criminal conspiracy to commit bribery, Petitioner was
convicted. The court suspended imposition of Petitioner's sentence
on the condition that Petitioner perform 1000 hours of community
service at the rate of 16 hours per month. I.G. Ex. 9.
13. I do not find credible Petitioner's denials of any involvement
in a scheme to defraud the Colorado Medicaid program. FFCL 1-12.
14. Petitioner was convicted of a criminal offense within the
meaning of section 1128(i) of the Act. FFCL 10-12.
15. Petitioner was convicted of a criminal offense related to the
delivery of an item or service under the Medicaid program, within
the meaning of section 1128(a)(1) of the Act. FFCL 14; See FFCL
1-13.
16. The Secretary of DHHS (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).
17. Based on Petitioner's conviction in Colorado, the I.G. had
authority to impose and direct an exclusion against Petitioner
pursuant to section 1128(a)(1) of the Act. FFCL 14-16.
18. The I.G. notified Petitioner of the exclusion at issue by
letter dated July 21, 1994.
19. Based on the date of the I.G.'s notice to Petitioner (July 21,
1994), the exclusion necessarily took effect 20 days thereafter.
42 C.F.R. 1001.2002(b); section 1128(c)(1) of the Act.
20. I cannot grant Petitioner's request to change the effective
date of the exclusion at issue to November 5, 1990. 42 C.F.R.
1001.2002(b); But see P. Br. at 15, 23.
II. Petitioner's Arguments to Bar Imposition of the Exclusion at
Issue
21. Petitioner did not prove that he was granted immunity from the
imposition of criminal or civil sanctions against him. I.G. Ex.
19; But see P. Br. at 6-7, 12, 14, 22.
22. In this administrative proceeding, Petitioner is not permitted
to plead his innocence, challenge the law under which he was
convicted, or otherwise collaterally attack the merits of his
conviction. 42 C.F.R. 1001.2007(d); But see P. Br. at 7-8, 22.
23. I cannot give effect to Petitioner's contention that, during
plea negotiations, State prosecutors violated his rights under the
U.S. Constitution by failing to warn him that he might be excluded
from the Medicare and Medicaid programs. FFCL 22; But see P. Br.
at 7-9, 22.
24. Petitioner did not prove that the I.G.'s determination to
exclude him under section 1128(a)(1) of the Act is time-barred or
violative of his procedural due process rights. But see P. Br. at
14-15.
III. Framework for Determining the Length of an Exclusion
25. An exclusion imposed and directed pursuant to section
1128(a)(1) of the Act must be for a period of at least five years.
Act, sections 1128(a)(1), 1128(c)(3)(B); 42 C.F.R. 1001.102(a).
26. The regulations issued by the Secretary list the only factors
that may be considered in determining the length of an exclusion
under section 1128(a)(1) of the Act. 42 C.F.R. 1001.102.
27. The following aggravating factors, if present, may justify
lengthening an exclusion for a program-related conviction to a
period in excess of five years:
a. The acts resulting in a party's conviction, or similar
acts, resulted in financial loss to Medicare and Medicaid of $1500
or more;
b. The acts that resulted in a party's conviction, or similar
acts, were committed over a period of one year or more;
c. The acts that resulted in a party's conviction, or similar
acts, had a significant adverse physical, mental, or financial
impact on one or more program beneficiaries or other individuals;
d. The sentence imposed by the court on a party included
incarceration;
e. The convicted party has a prior criminal, civil, or
administrative sanction record;
f. The convicted party has been overpaid at any time a total
of $1500 or more by Medicare or Medicaid as a result of improper
billings.
42 C.F.R. 1001.102(b)(1)-(6) (paraphrase).
28. If any of the aggravating factors listed at 42 C.F.R.
1001.102(b) is present and supports an exclusion of longer than
five years, the following three mitigating factors may be
considered for reducing or offsetting the effects of the
aggravating factors:
a. A party has been convicted of three or fewermisdemeanor
offenses, and the entire amount offinancial loss to Medicare and
Medicaid due to the acts which resulted in the party's conviction
and similar acts, is less than $1500;
b. The record in the criminal proceedings, including
sentencing documents, demonstrates that the court determined that,
before or during the commission of the offense, the party had a
mental, emotional, or physical condition that reduced that party's
culpability;
c. The party's cooperation with federal or State
officials resulted in others being convicted of crimes, or in
others being excluded from Medicare or Medicaid, or in others
having imposed against them a civil money penalty or assessment.
42 C.F.R. 1001.102(c)(1)-(3) (paraphrase).
29. The aggravating and mitigating factors listed in the
regulations must be evaluated in a manner consistent with the
remedial purposes of the Act. See Act, section 1102(a).
30. Section 1128 of the Act is intended 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. See S. Rep. No. 109, 100th Cong.,
1st Sess. 1 (1987), reprinted in 1987 U.S.C.C.A.N. 682.
31. The I.G. has the burden of proving that aggravating factors
specified in the regulations are present in this case and support
excluding Petitioner for a total of 10 years. See 42 C.F.R.
1005.15(c).
32. Petitioner has the burden of proving that mitigating factors
exist and support reducing the portion of the exclusion that
exceeds five years. 42 C.F.R. 1001.102(c)(1)-(3); See 42 C.F.R.
1005.15(c).
IV. Aggravating Facts Asserted by the I.G.
33. Prior to working for Solid Care in Colorado, Petitioner had
worked for or with several other suppliers of medical equipment in
the State of California, including Systematic Health Services (SHS)
and Emooko Medical Supplies. I.G. Ex. 5; P. Br. at 1-2.
34. On July 6, 1992, Petitioner was convicted in the Superior
Court of the State of California, Orange County, pursuant to his
having pled guilty to the following felony count:
On or about September 8, 1989, in the County of Orange, State
of California, [Petitioner] unlawfully solicited and received
remuneration from Systematic Health Services Company in return for
referring Medi-Cal beneficiaries to Emooko Medical Supply Company
so that Emooko Medical Supply Company could furnish and arrange to
furnish merchandise . . . and . . . for ordering and arranging to
order merchandise for which payment may be made under the Medi-Cal
Act, in violation of section 14107.2, subdivision (a) of the
Welfare and Institutions Code, a felony.
I.G. Ex. 12, 13; P. Ex. 5.
35. By letter dated March 23, 1993, the I.G. notified Petitioner
that he was being excluded from the Medicare and Medicaid programs
pursuant to sections 1128(a)(1) and 1128(c)(3)(B) of the Act for a
period of five years, based on his conviction in Orange County,
California. I.G. Ex. 14.
36. There is no regulation or statute which requires the I.G. to
impose and direct exclusions based on the timing of convictions.
37. At the time Petitioner was convicted in Colorado, Petitioner
had no prior criminal or civil sanctions record within the meaning
of 42 C.F.R. 1001.102(b)(5). FFCL 10-12.
38. Based only on the timing of the exclusions she imposed and
directed against Petitioner, the I.G. has proven the existence of
a prior administrative sanction record, namely the exclusion
imposed in 1993. 42 C.F.R. 1001.102(b)(5); FFCL 35.
39. The I.G. has not proved that Petitioner's actions resulted in
the loss of $1500 or more to any Medicaid program or programs.
See, e.g., I.G. Ex. 7-10, 12, 13, 23; P. Ex. 5; 42 C.F.R.
1001.102(b)(1).
40. The I.G. alleged, but did not prove, that the acts resulting
in Petitioner's conviction in Colorado, or similar acts, caused
significant physical, mental, or financial harm to any program
beneficiary or individual. See, e.g., I.G. Br. at 43 - 44; 42
C.F.R. 1001.102(b)(3).
41. The I.G. has not proved that Petitioner was overpaid $1500 or
more by Medicare or Medicaid due to improper billings, as required
by 42 C.F.R. 1001.102(b)(6). See, e.g., I.G. Ex. 7-10, 12, 13,
23; P. Ex. 5.
42. Petitioner's conviction in Colorado did not result in an order
of incarceration. See 42 C.F.R. 1001.102(b)(4); I.G. Ex. 9.
43. The acts that resulted in Petitioner's conviction in Colorado
were committed during a period of less than one year. FFCL 1-5;
see 42 C.F.R. 1001.102(b)(2).
44. For the period after June 1990, there is no evidence that
Petitioner engaged in any activity similar to those that resulted
in his program-related convictions in California or Colorado.
45. The State of Colorado has never attempted to prove that
Petitioner had engaged in any criminal activity in Colorado prior
to his arrival in Colorado in January 1990. See FFCL 10.
46. The State of California never charged Petitioner with having
engaged in any criminal activity prior to September 8, 1989 or
after November 9, 1989. I.G. Ex. 10-12.
47. The State of California had no probable cause for believing
that Petitioner had engaged in any program-related offense during
any period outside of September to November, 1989. I.G. Ex. 3.
48. The I.G. has not proved her contention that the acts resulting
in Petitioner's Colorado conviction, or similar acts, were
committed over a period of one year or more. See 42 C.F.R.
1001.102(b)(2); FFCL 45-47.
49. Under section 1128(a)(1) of the Act, an exclusion of longer
than five years will be reasonable in those cases where the
evidence relevant to an individual's prior administrative sanction
record proves that a five-year exclusion will be inadequate for
satisfying the remedial purposes of the Act. See FFCL 29-30.
50. The evidence concerning Petitioner's prior administrative
sanction record does not show that a five-year exclusion for his
Colorado conviction would be inadequate for satisfying the remedial
purposes of the Act. See FFCL 17-19, 38.
VI. I.G.'s Use of Facts that Predate her Prior Exclusion
Determination
51. Petitioner's conviction in California occurred prior to the
I.G.'s determination to impose and direct the exclusion at issue
based on his Colorado conviction. FFCL 34-35.
52. Petitioner did not appeal the five-year exclusion imposed and
directed against him by the I.G. in March 1993 based on his
California conviction. FFCL 35.
53. Even if, prior to June 1990 (see FFCL 44-47), Petitioner's
actions that resulted in his conviction in Colorado, or similar
acts, had
a) caused at least $1500 in losses to one or more Medicaid
programs, or
b) taken place over the period of one year or longer, or
c) caused significant adverse physical, mental, or financial
impact on any program beneficiary or other individual,
the I.G. would have had the discretion to consider such facts in
setting the length of Petitioner's exclusion in her 1993
determination for his conviction in California. 42 C.F.R.
1001.102(b)(1)-(3).
54. The I.G. had the discretion to consider the California court's
order regarding incarceration as an aggravating factor in
determining the length of Petitioner's exclusion in 1993. 42
C.F.R. 1001.102(b)(4); P. Ex. 5.
55. If at any time Petitioner had been overpaid a total of $1500
or more by a Medicaid program due to improper billings submitted
prior to June 1990 (see FFCL 1-9), the I.G. had the discretion to
consider such facts as an aggravating factor in setting the length
of Petitioner's exclusion in 1993 for his conviction in California.
42 C.F.R. 1001.102(b)(6).
56. The regulation at 42 C.F.R. 1001.102 is not intended to
punish an individual repeatedly, and for increasingly longer
periods, on the basis of the same set of facts. FFCL 29-30.
57. Under the facts of this case, a 10-year exclusion would be
unreasonable even if Petitioner's circumstances could be
interpreted as satisfying the literal language of those aggravating
factors listed in 42 C.F.R. 1001.102(b). FFCL 27, 35, 55-56.
VII. Mitigating Fact Asserted by Petitioner
58. In the opinion of the Chief Special Investigator for the
Medicaid Fraud Control Unit, a division of the Colorado Attorney
General's Office, it is likely that Petitioner's agreement to
testify against co-defendants was a factor which led two
co-defendants to plead guilty. I.G. Ex. 19.
59. The I.G. does not dispute that Petitioner cooperated with
Colorado State officials, within the meaning of 42 C.F.R.
1001.102(c)(3)(i). I.G. Br. at 33 n.7, 34; I.G. Reply at 28 n.3,
29.
60. The mitigating factor listed at 42 C.F.R. 1001.102(c)(3)(i)
is present in this case. I.G. Ex. 19.
61. The other mitigating factors at 42 C.F.R. 1001.102(c)(3)
are not present in this case.
62. Even if any of the aggravating factors alleged by the I.G.
supported an exclusion of more than five years, Petitioner's
cooperation with Colorado officials would make unreasonable a term
of exclusion in excess of five years. See FFCL 58-60.
DISCUSSION
I. Rulings on Petitioner's Objections to the I.G.'s Exhibits
As a preliminary matter, I have considered Petitioner's objections
to the I.G.'s exhibits. Many of his objections are based on his
contention that the I.G.'s exhibits contain hearsay and unproven
facts gathered for litigation. P. Reply at 1 - 6. Petitioner
argues also that certain of the I.G.'s exhibits contain inaccurate
or incomplete information, such as whether he had been working in
California as an "independent contractor" or "employee"
of SHS and
Emooko. E.g., P. Reply at 2, 5. Other aspects of Petitioner's
objections are based on his unproven contentions, such as his
having been granted immunity from liability 5/, and his having been
prosecuted in California for having taken actions in aid of the
State's investigation of Medicaid fraud. E.g., P. Reply at 5.
For the reasons specified in my findings (e.g., FFCL 21-24), I have
overruled Petitioner's objections based on the alleged existence of
an "immunity agreement" and Petitioner's allegations of innocence
of the crimes for which he has been convicted.
To the extent that Petitioner's other objections relate to the
admissibility of the I.G.'s exhibits, I note first that the Federal
Rules of Evidence are not binding in administrative proceedings.
I note further that only irrelevant, immaterial, or privileged
evidence must be excluded in the case before me. 42 C.F.R.
1005.17. Evidence of crimes, wrongs, or other acts is admissible
for purposes such as showing motive, opportunity, intent, or the
existence of a scheme. 42 C.F.R. 1005.17(g). Moreover, the
regulation on the application of aggravating and mitigating factors
does not limit me to considering only non-hearsay statements or
those facts previously proven in court. 42 C.F.R. 1001.102(b)
and (c).
Whether the I.G.'s exhibits contain unreliable or inaccurate
information goes to the issue of what weight, if any, should be
given to certain portions of the I.G.'s exhibits. For example, the
statements made by co-conspirators to describe Petitioner's
involvement are nondispositive and may even be not credible in
parts. However, such statements may be accorded weight to the
extent they are consistent with other, more reliable, evidence of
record, such as the statements Petitioner made to investigators.
Petitioner has noted his disagreement with certain statements and
conclusions of witnesses, and he has placed before me his version
of the contested facts. The regulations provide that relevant
evidence may be excluded in the interests of fairness. 42 C.F.R.
1005.17(d). However, I do not find the probative value of any
relevant evidence offered by the I.G. to be substantially
outweighed by the danger of unfair prejudice to Petitioner or of
confusion of the issues before me. 42 C.F.R. 1005.17(d).
For the foregoing reasons, I have admitted into evidence all of the
I.G.'s exhibits. However, I have also given due consideration to
Petitioner's arguments and evidence refuting the I.G.'s exhibits.
II. Under the Facts of this Case, the I.G. is Precluded from
Imposing an Exclusion of Longer than Five Years
Section 1128 of the Act mandates an exclusion of at least five
years where an individual has been convicted of a criminal offense
related to the delivery of an item or service under the Medicare or
Medicaid programs. Act, sections 1128(a)(1) and (c)(3)(B). The
I.G. introduced credible and persuasive evidence of Petitioner's
involvement in a scheme to defraud the Colorado Medicaid program,
thus establishing that Petitioner's subsequent conviction in
Colorado State court on one felony count of criminal conspiracy was
program-related within the meaning of the Act. FFCL 1-15. The
I.G.'s authority to impose an exclusion of at least five years is
derived from Petitioner's criminal conviction. Act, section
1128(a)(1). Petitioner's conviction remains valid to date.
Therefore, Petitioner's assertions of innocence and lack of
criminal intent do not bar the imposition of an exclusion. FFCL
22.
Neither can Petitioner bar the exclusion by asserting, as he has,
that the State granted him immunity from future liabilities during
plea bargaining. See FFCL 21. The State denied the allegation
(I.G. Ex. 19), and Petitioner has produced no evidence to support
his contention. In addition, the State has no de facto or apparent
authority to speak on behalf of the I.G. If Petitioner believes
that his guilty plea was improperly secured, he must seek his
remedies in the courts of Colorado. The exclusion at issue is
barred only if the State of Colorado has overturned or set aside
his conviction, neither of which event has occurred. See FFCL 12.
Petitioner alleges as an additional affirmative defense that the
I.G.'s exclusion determination of July 21, 1994 is time-barred
under 42 C.F.R. 1004.130(a). P. Br. at 14-15. That regulation
applies only to actions involving a Peer Review Organization's
recommendations to the I.G. under section 1156 of the Act. 6/ The
regulations specify no time limit for the I.G. in cases involving
exclusions under section 1128(a)(1) of the Act. Thus, there is no
support for Petitioner's contention that the exclusion at issue is
time-barred. FFCL 24.
I have rejected also Petitioner's request to modify the effective
date of his exclusion. FFCL 20. Petitioner asked that I set the
effective date of his exclusion at November 5, 1990, to coincide
with his guilty plea in Colorado. P. Br. at 15, 23. However, the
Act states that the exclusion shall go into effect in accordance
with the requirements specified in regulations promulgated by the
Secretary. Act, Section 1128(c)(1). The Secretary's regulation
states that the exclusion shall go into effect 20 days from the
date of the I.G.'s notice letter. 42 C.F.R. 1001.2002(b).
Here, the I.G. issued the notice letter to Petitioner on July 21,
1994, and the exclusion took effect 20 days thereafter by operation
of law. FFCL 18-19. I have no authority to alter the foregoing
consequence.
As for the reasonableness of the I.G.'s determination that
Petitioner should be excluded for a total of 10 years pursuant to
his conviction in Colorado, I have found against the I.G. on that
issue. FFCL 57, 62. I have concluded that the length of the
exclusion is to be evaluated in accordance with the factors
enumerated in 42 C.F.R. 1001.102 and the remedial purposes of
the Act. FFCL 27-30. The presence of a factor deemed
"aggravating" by the regulation does not mean that the exclusion
period must be lengthened. See FFCL 29.
Even though the I.G. has alleged the presence of five aggravating
factors 7/ associated with Petitioner's conviction in Colorado, she
has proven only the presence of one aggravating factor:
Petitioner's prior administrative sanction record. FFCL 38. This
factor was met only by virtue of the I.G.'s having earlier imposed
a five-year exclusion against Petitioner for having been convicted
in California of a program-related offense. FFCL 35, 38, 52. The
I.G.'s evidence on the other four aggravating factors she alleged
was either non-existent or inadequate. FFCL 39-41, 48.
For example, there was no evidence of record to support the I.G.'s
contention that Petitioner's actions caused a significant adverse
physical, mental, or financial impact on program beneficiaries or
other individuals. See 42 C.F.R. 1001.102(b)(3). FFCL 40.
Also, I examined the periods of time contained in the charges filed
against Petitioner by the States of Colorado and California,
together with the reports of their investigators. Such evidence
showed that, at most, Petitioner was believed to have engaged in
wrongful program-related activities for a period of approximately
eight months (i.e., from some time in September 1989 until June
1990). I found no credible support for the I.G.'s contention that
the criminal acts that resulted in Petitioner's conviction in
Colorado, or like activities by Petitioner, took place over a
period of one year or more. See 42 C.F.R. 1001.102(b)(2). FFCL
48.
Further, I found lacking the I.G.'s evidence on the amount of
financial loss to the programs and the amount of overpayments that
have resulted from improper billings. FFCL 39, 41. The financial
loss or overpayments must be at least $1500 to be considered
aggravating. 42 C.F.R. 1001.102(b)(1) and (6). To prove the
existence of these aggravating factors, the I.G. relied upon
certain post-exclusion statements from an investigator with the
Colorado Medicaid Fraud Control Unit. See I.G. Ex. 23. The
investigator examined the State's record of Medicaid payments to
Petitioner's employer, Solid Care, for the period from January 1 to
December 31, 1990 (which payments totaled $ 65,497.53), as well as
certain Patient Order forms seized from Solid Care. Id. The
investigator stated as his conclusion that 50 percent of the
Medicaid payments (i.e., $32,748.77) had been fraudulently obtained
by Solid Care for the year 1990. Id. However, there is no
adequate explanation of why the investigator concluded that 50
percent ($32,748.77) of the payments were fraudulently obtained or
why any or all of that amount should be attributed to Petitioner's
endeavors. I did not find credible the investigator's conclusion,
and I did not find that the I.G. had adequately met her burden of
showing the existence of the two aggravating factors under 42
C.F.R. 1001.102(b)(1) and (6).
As for Petitioner's prior administrative sanction record, I
concluded that the presence of this aggravating factor did not make
reasonable the I.G.'s lengthening the exclusion period. FFCL 50.
8/ As stated in the agency's commentaries to the regulation at
issue, the weight accorded to each aggravating factor "cannot be
established according to a rigid formula, but must be determined in
the context of the particular case at issue." 57 Fed. Reg. 3316 at
3325 (1992).
In this case, the existence of a prior administrative sanction
record reflects only the I.G.'s timing of her exclusion notices to
Petitioner. Petitioner was convicted in Colorado before he was
convicted in California, even though he had engaged in criminal
acts in California before he left to work in Colorado. FFCL 12,
33-34. Only because the I.G. imposed first an exclusion for
Petitioner's later-dated California conviction, Petitioner had a
prior administrative sanction record when the I.G. later imposed
and directed a 10-year exclusion for his Colorado conviction.
Also, I have made certain alternative findings related to the
I.G.'s present use of facts that pre-dated her March 1993 decision
to sanction Petitioner based on his conviction in California. See
FFCL 51-57. I did so in order to address the I.G.'s use of factors
that pre-date March of 1993 when she imposed a five-year exclusion
based on Petitioner's program-related conviction in California. As
discussed above, most of the aggravating factors asserted by the
I.G. to support the 10-year exclusion at issue turn on facts that
pre-dated the California conviction and the I.G.'s decision to
impose a five-year exclusion for it. In addition, I have accorded
no weight to Petitioner's California conviction in this proceeding
because, in March 1993, the I.G. had already imposed a five-year
exclusion based on the California conviction. FFCL 56-57.
Petitioner never appealed the earlier imposed five-year exclusion
based on his California conviction. FFCL 52. The weight attached
by the I.G. to Petitioner's California conviction yielded an
unreasonable result that is not consistent with the remedial
purposes of the Act.
I do not read the relevant regulation as meaning that the I.G. may
lengthen a subsequently imposed exclusion merely because facts
pre-dating the earlier imposed exclusion permit the argument or
conclusion that certain aggravating factors were present. Nor do
I believe that the regulation on aggravating factors should be read
to mean that the I.G. is authorized to impose more than one
exclusion for the same program-related conviction. Even though
Petitioner's California conviction is a "prior" conviction in the
sense that it occurred before the I.G. imposed and directed the
10-year exclusion at issue (42 C.F.R. 1001.102(b)(5), FFCL 51),
the linchpin of the regulatory scheme is the Act's remedial
purposes. The exclusion authorized by section 1128(a)(1) cannot be
punitive in nature.
As a matter of law, an exclusion of five years is the minimum
period necessary for protecting the fiscal integrity of the
programs and the health of those people the programs serve. Act,
sections 1128(a)(1) and (c)(3). FFCL 25; see also FFCL 30. In
this case, the evidence relevant to the aggravating factors does
not prove that the remedial purposes of the Act would be met by the
I.G.'s using facts that pre-date the earlier exclusion she directed
and imposed against Petitioner. Nor has the I.G. shown by evidence
relevant to those aggravating factors she alleges that the remedial
purposes of the Act will be advanced by increasing the minimum
mandatory period of exclusion because Petitioner was convicted in
California and had received a five-year exclusion from the I.G. as
a consequence. Therefore, I do not find reasonable the I.G.'s
subsequently imposing an exclusion of more than five years for
Petitioner's Colorado conviction.
Having found no basis for increasing the length of Petitioner's
exclusion to a period of more than five years, I do not need to
address Petitioner's evidence on mitigation. 42 C.F.R.
1001.102(c). Nevertheless, I have made findings on Petitioner's
alleged cooperation with authorities to avoid leaving any potential
issue unresolved. I have found in favor of Petitioner under 42
C.F.R. 1001.102(c)(3) primarily because the I.G. stipulated to
the existence of this mitigating factor in her briefs. FFCL 59-60.
Petitioner's cooperation with authorities is evidence that he has
discontinued his illegal activities and is willing to comply with
the law (see FFCL 58). Therefore, even if any aggravating factor
warranted adding additional time to Petitioner's exclusion, I would
reduce the period of his exclusion to five years based on this
mitigating factor. FFCL 62.
CONCLUSION
For the foregoing reasons, I reverse the I.G.'s determination to
exclude Petitioner for a period of 10 years and reduce the length
of Petitioner's exclusion to five years. This five-year exclusion
took effect 20 days after the Inspector General issued her notice
letter dated July 21, 1994.
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 will use the term
"Medicaid" herein to refer to all State health care programs listed
in section 1128(h).
2. As discussed herein, the I.G. alleged in her briefs
additional facts and regulatory bases to justify the 10-year
exclusion at issue.
3. The parties submitted various proposed exhibits, all of
which I have admitted into evidence for the reasons stated herein.
The exhibits submitted by Petitioner will be referenced as "P. Ex.
1 to 8," and those submitted by the I.G. will be referenced as
"I.G. Ex. 1 to 22." In addition, the five pages of documents
appended to the I.G.'s initial brief (consisting of the Declaration
of Larry L. Bailey, a computer printout from the Colorado
Department of Social Services, and a letter dated October 27, 1994)
have been remarked and admitted as a group as I.G. Ex. 23. The
Declaration of Alan K. Ballard, appended to the I.G.'s reply brief,
has been remarked and admitted as I.G. Ex. 24.
The initial briefs filed by each side will be identified herein as
"P. Br." and "I.G. Br." respectively. The parties' reply
briefs
will be identified as "P. Reply" and "I.G. Reply." (Both
of
Petitioner's briefs contain his Declarations and his arguments.)
I am aware there are duplicative exhibits submitted by both sides.
However, because the parties have already made arguments
referencing the exhibits they submitted, I thought it would be
unduly complicated to delete the duplicative exhibits and renumber
others at this point.
4. On this day, I am issuing also a decision in the case of
Chris Mark Spierer, DAB CR360 (1995). Petitioner and Chris Spierer
are brothers. They were convicted in the same two states for their
involvement in the same criminal enterprises. In 1994, the I.G.
imposed and directed a 10-year exclusion against each brother for
the same reasons. Both cases give rise to the same issues.
I am issuing separate decisions in the two cases because the cases
have never been consolidated. Only Chris Spierer has retained a
legal representative, and this representative and Petitioner live
in different states. Petitioner and Chris Spierer's representative
were not available at the same time to participate in a prehearing
conference to discuss the feasibility of consolidating the cases.
For these reasons, the cases have proceeded separately despite the
fact that, on final analysis, they are very similar.
5. Petitioner alleged that the I.G. failed to produce the
"immunity agreement" in accordance with the Best Evidence Rule. P.
Reply at 5.
6. Moreover, the regulation cited by Petitioner does not
preclude the I.G. from imposing a sanction after 120 days of the
Peer Review Organization's recommendation; the recommendation takes
effect automatically if the I.G. fails to act after 120 days. 42
C.F.R. 1004.130.
7. There are six aggravating factors listed in 42 C.F.R.
1001.102(b). The I.G. did not allege that Petitioner's sentence in
Colorado included incarceration under 42 C.F.R. 1001.102(b)(4).
8. In earlier decisions, I have more fully explained why the
factors contained in 42 C.F.R. 1001.102(b) and (c) must be
interpreted and applied in a manner consistent with the purposes of
the Act. Leonard S. Dino, DAB CR260, at 16-19 and 35-36 (1993);
Paul O. Ellis, DAB CR283, at 20 (1993).