Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Thelma C. Villanueva, M.D.,
Petitioner,
- v. -
The Inspector General.
DATE: August 21, 1996
Docket No. C-96-185
Decision No. CR431
DECISION
I find that the two-year exclusion that the Inspector
General (I.G.) imposed against Petitioner is
unreasonable. I modify the exclusion so that Petitioner
will be eligible to apply to the I.G. for reinstatement
into the Medicare program on the date that Petitioner is
reinstated by the State of New York to participate in the
New York Medicaid program. 1/
I. Background
On January 24, 1996, the I.G. excluded Petitioner from
participating in Medicare and State health care programs
(including Medicaid), for a period of two years. 2/
The I.G. advised Petitioner that the exclusion was being
imposed pursuant to section 1128(b)(5) of the Social
Security Act (Act), based on Petitioner's exclusion or
suspension from a federal or State health care program
for reasons bearing on Petitioner's professional
competence, professional performance, or financial
integrity.
Petitioner requested a hearing. The case was assigned to
me for a hearing and a decision. I held a prehearing
conference by telephone, during which time the parties
advised me that they believed that the case could be
heard and decided without an in-person hearing. I
established a schedule for the submission of proposed
exhibits, briefs, and reply briefs. The I.G. submitted
four exhibits (I.G. Ex. 1 - 4) and a brief. 3/
Petitioner submitted a brief and no exhibits. Each party
submitted a reply brief. Petitioner did not object to my
receiving into evidence the I.G.'s proposed exhibits. I
admit into evidence I.G. Ex. 1 - 4.
II. Issues, findings of fact and conclusions of law
The issues in this case are whether the I.G. has
authority to exclude Petitioner pursuant to section
1128(b)(5) of the Act and whether the two-year exclusion
that the I.G. imposed against Petitioner is reasonable.
I make the following findings of fact and conclusions of
law (Findings), which support my decision that the I.G.
has the authority to exclude Petitioner, but that the
two-year exclusion that the I.G. imposed is unreasonable
and must be modified so that Petitioner will be eligible
to apply to the I.G. for reinstatement on the date that
she is reinstated by the State of New York to participate
in the New York Medicaid program. I discuss my Findings
in detail, below.
1. On October 25, 1994, the New York Department of
Social Services (Department of Social Services)
excluded Petitioner from participating in the New
York Medicaid program for a period of two years.
I.G. Ex. 1, 2.
2. The suspension was for reasons bearing on
Petitioner's professional competence, professional
performance, or financial integrity. I.G. Ex. 1 -
3, Decision at 5.
3. The I.G. is authorized to exclude Petitioner
pursuant to section 1128(b)(5) of the Act. Findings
1, 2; Decision at 5.
4. The I.G. did not prove that the acts for which
Petitioner was suspended caused financial damage to
the New York Medicaid program, and, thus, failed to
prove the presence of an aggravating factor.
Decision at 5 - 8.
5. Petitioner proved that she was suspended from
participating in the New York Medicaid program for a
period of less than three years, and, thus, proved
the presence of a mitigating factor. Decision at 6
- 8.
6. A two-year exclusion is not reasonable.
Decision at 8 - 11.
7. It is reasonable to modify the exclusion in this
case so that Petitioner will be eligible to apply to
the I.G. for reinstatement on the date that she is
reinstated by the State of New York to participate
in the New York Medicaid program. Decision at 11 -
12.
III. Discussion
A. The facts (Finding 1)
The material facts of this case are not disputed.
Petitioner is a physician. On October 25, 1994, the
Department of Social Services excluded Petitioner from
participating in the New York Medicaid program for a
period of two years. I.G. Ex. 1. The effective date of
the exclusion was 20 days from the date of the notice.
Id. at 2. Thus, Petitioner's State exclusion commenced
on November 14, 1994, and will end on November 14, 1996.
Id. She will be eligible to apply to the State of New
York for reinstatement to participate in the New York
Medicaid program on that date.
The exclusion was based on a determination that
Petitioner had engaged in unacceptable practices, as
defined in State regulations. These unacceptable
practices consisted of the following:
1. Submitting or causing to be submitted a claim or
claims: for unfurnished medical care, services or
supplies; and for medical care, services or supplies
provided at a frequency or in an amount not
medically necessary.
2. Unacceptable record keeping, consisting of
failure by Petitioner to maintain records necessary
to fully disclose: the medical necessity for and
the nature and extent of the medical care, services
or supplies furnished by Petitioner; or to comply
with the requirements of State law.
3. Excessive services, consisting of furnishing or
ordering medical care, services or supplies that are
substantially in excess of the needs of patients.
4. Failure to meet recognized standards, consisting
of furnishing medical care, services or supplies:
that failed to meet professionally recognized
standards of health care or which were beyond the
scope of Petitioner's professional qualifications or
license.
I.G. Ex. 1 at 1 - 2.
The Department of Social Services's determination to
exclude Petitioner, and its findings of unacceptable
practices, were based on an audit of 25 records of care
provided or ordered by Petitioner. I.G. Ex. 1 at 6, I.G.
Ex. 2 at 5. The major finding of this audit was that
Petitioner inappropriately and excessively ordered
laboratory tests of patients, without proof that the
patients needed such tests or would benefit from them.
Id. The audit found, however, that, with two exceptions,
Petitioner's clinical work was within acceptable
guidelines. Id.
There is no evidence in this case that Petitioner
profited unlawfully or wrongfully from the laboratory
tests that she ordered which the audit found to be
inappropriate. Moreover, although the Department of
Social Services concluded that Petitioner had submitted
or caused to be submitted inappropriate claims for
services, there is no evidence to show the dollar amount
of the claims that were made for the laboratory services.
Nor is there any evidence to show that the New York
Medicaid program made reimbursement payments for these
claims.
Petitioner appealed the determination of the Department
Social Services to exclude her to a State administrative
law judge. I.G. Ex. 2. In November 1995, Petitioner
withdrew her hearing request. Id. at 2.
B. The I.G.'s authority to exclude Petitioner
(Findings 2 - 3)
Section 1128(b)(5) of the Act authorizes the Secretary,
or her delegate, the I.G., to exclude an individual where
that individual is suspended or excluded from a federal
or State health care program, or is otherwise sanctioned
under such programs, for reasons bearing on that
individual's professional competence, professional
performance, or financial integrity. I find that the
Department of Social Services' exclusion of Petitioner
from the New York Medicaid program constituted an
exclusion of Petitioner for reasons bearing on her
professional competence and professional performance.
Therefore, the I.G. is authorized to exclude Petitioner.
The reasons for the exclusion are self-evident from the
findings made by the Department of Social Services. That
agency found that Petitioner had: submitted or caused to
be submitted claims for unnecessary services, engaged in
improper record keeping, provided excessive services, and
failed to comply with professionally recognized standards
of health care, each of these findings related to
Petitioner's performance as a physician and to her
professional competence.
I do not find that the Department of Social Services'
findings bear on Petitioner's financial integrity. There
was no finding that Petitioner sought to profit
wrongfully from her services. However, it is not
necessary to find that Petitioner was excluded for
reasons bearing on her professional competence,
professional performance, and her financial integrity in
order to find authority to exclude her under section
1128(b)(5). It is enough, for purposes of establishing
the I.G.'s authority to exclude Petitioner, that she was
excluded from participating in a State health care
program for any of the reasons specified in section
1128(b)(5).
C. The presence or absence of aggravating or
mitigating factors (Findings 4 - 5)
An exclusion imposed under one of the subsections of
section 1128 of the Act must be remedial and not
punitive. The purpose of section 1128 is to protect
federally funded health care programs and beneficiaries
and recipients of those programs from individuals or
entities who are not trustworthy to provide care.
Therefore, an exclusion imposed pursuant to any
subsection of section 1128, including section 1128(b)(5),
should be for a period of time that is necessary to
accomplish the Act's remedial purpose.
The criteria for determining the reasonable length of any
exclusion imposed pursuant to section 1128 are contained
in regulations at 42 C.F.R. Part 1001. The regulation
which establishes the criteria for determining the
reasonable length of an exclusion imposed pursuant to
section 1128(b)(5) is 42 C.F.R. § 1001.601. This
regulation prescribes that an exclusion imposed pursuant
to section 1128(b)(5) of the Act will be for a period of
three years, unless there exist factors that the
regulation defines to be either aggravating or
mitigating, which may be a basis for an exclusion of more
or less than three years. 42 C.F.R. § 1001.601(b).
In this case, the I.G. alleges the presence of an
aggravating factor and concedes the presence of a
mitigating factor. The aggravating factor which the I.G.
alleges to be present is stated at 42 C.F.R. §
1001.601(b)(2)(i):
The acts that resulted in the exclusion,
suspension or other sanction under the Federal
or State health care program had, or could have
had, a significant adverse impact on Federal or
State health care programs or the beneficiaries
of those programs or other individuals; . . . .
The mitigating factor which the I.G. concedes to be
present is stated at 42 C.F.R. § 1001.601(b)(3)(i):
The period of exclusion, suspension or other
sanction under the Federal or State health care
program is less than 3 years; . . . .
There is no question that a mitigating factor exists in
this case. Petitioner was excluded from the New York
Medicaid program for a period of two years.
I do not find that the I.G. proved the presence of the
alleged aggravating factor. 4/ The evidence offered
by the I.G. does not prove that Petitioner's actions
caused, or even could have caused, a significant adverse
financial impact on the New York Medicaid program.
According to the I.G., the evidence in this case proves
that, by ordering unnecessary tests, Petitioner engaged
in conduct that had a significant adverse financial
impact on the New York Medicaid program. I.G.'s brief at
8. In effect, the I.G. argues that I should infer that,
by ordering unnecessary tests, Petitioner caused the New
York Medicaid program to make unnecessary reimbursement
payments for those tests. The I.G. argues further that
it need not prove the amount of payments made by the New
York Medicaid program for the unnecessary tests that
Petitioner ordered. The I.G. asserts that it is
axiomatic that payment by the New York Medicaid program
for any claim which is not properly reimbursable results
in significant financial damage to that program. The
I.G. cites Anthony Accuputo, Jr., DAB CR249 (1992), as
support for this assertion.
I would find that the I.G. proved the existence of an
aggravating factor if the I.G. had proved that
Petitioner's ordering of unnecessary laboratory tests
resulted in or could have resulted in substantial
payments by the New York Medicaid program for items or
services for which reimbursement should not have been
made. The Accuputo decision notwithstanding, I do not
agree with the I.G.'s argument that proof of payment of
any amount of reimbursement by a Medicaid program for an
item or service for which reimbursement should not have
been made is proof of a "significant" adverse financial
impact on the program. To accept that argument would
mean that the word "significant" would be interpreted to
mean "any." Such an interpretation does not comport with
the plain meaning of the word "significant."
It is not necessary, however, for me to decide here what
would constitute a significant adverse financial impact
on the New York Medicaid program, within the meaning of
42 C.F.R. § 1001.601(b)(2)(I). Here, there is no
evidence that Petitioner's ordering of unnecessary
laboratory tests either resulted in or even could have
resulted in any reimbursement payments -- much less,
significant reimbursement payments -- by the New York
Medicaid program.
There is no proof that Petitioner's ordering of
unnecessary laboratory tests resulted in the payment by
the New York Medicaid program of any reimbursement for
those tests. The record of this case is simply devoid of
any evidence which proves the dollar amount of the claims
made for the unnecessary tests that Petitioner ordered,
or the amount of reimbursement, if any, paid by the New
York Medicaid program for such claims. No finding was
made by the Department of Social Services that the New
York Medicaid program paid any reimbursement for the
tests. The I.G. offered no evidence, separate from the
Department of Social Services' findings, which would
establish that the New York Medicaid program paid
reimbursement for any of the tests.
There is no proof that Petitioner's ordering of
unnecessary laboratory tests could have had an adverse
financial impact on the New York Medicaid program. Not
only did the I.G. not prove that the program paid
reimbursement for the tests, but the I.G. did not prove
that the New York Medicaid program might have made
significant reimbursement payments on any of the claims
made for those tests.
In order to prove the possibility of significant adverse
financial impact on the New York Medicaid program
resulting from reimbursement claims for unnecessary
tests, the I.G. would have to prove that the tests
ordered by Petitioner were for items or services that
were covered by the New York Medicaid program, and for
which the program would have paid reimbursement if
reimbursement claims were made. The I.G. did not offer
any evidence that the types of tests ordered by
Petitioner were covered services for which the New York
Medicaid program might have paid reimbursement.
Accordingly, the I.G. did not meet its burden of proof
because it failed to offer any evidence from which I
could conclude that Petitioner's ordering of unnecessary
laboratory tests either did have or could have had an
adverse financial impact, within the meaning of 42 C.F.R.
§ 1001.501(b)(2)(i).
D. Whether a two-year exclusion is reasonable
(Finding 6)
The existence of aggravating or mitigating factors in a
case does not mean that an exclusion of any particular
length is necessarily reasonable or unreasonable. The
regulation which governs exclusions imposed pursuant to
section 1128(b)(5) does not prescribe any formula for
determining what is reasonable, aside from establishing a
benchmark exclusion of three years where no aggravating
or mitigating factors are present. 42 C.F.R. §
1001.601(b)(1) - (3). In order to decide whether an
exclusion of more or less than three years is reasonable,
I must look at the evidence which relates to any
aggravating or mitigating factors, and decide what that
evidence shows about an excluded individual's
trustworthiness to provide care.
The I.G. seems to argue that I am without authority to
modify an exclusion that I find to be unreasonable.
According to the I.G., the length of an exclusion has
been left to the I.G.'s discretion. I.G.'s brief at 3.
And, according to the I.G., an administrative law judge
has no authority to review the I.G.'s exercise of
discretion in imposing an exclusion. Id.; See 42 C.F.R.
§ 1005.4(c)(5).
Although the I.G.'s argument is not entirely clear, the
I.G. appears to be asserting that her choice of the
length of an exclusion is immune from review because such
a determination is an act of discretion. If that is what
the I.G. is arguing, I find such argument to be without
merit.
The regulation relied on by the I.G. states that an
administrative law judge may not:
Review the exercise of discretion by the OIG to
exclude an individual or entity under section
1128(b) of the Act, or determine the scope or
effect of the exclusion, . . . .
42 C.F.R. § 1005.4(c)(5).
I do not read this regulation as precluding my review of
the issue of whether the length of an exclusion is
reasonable. The regulation plainly exempts from review
the I.G.'s discretion to impose, or not to impose, an
exclusion in a case involving section 1128(b) of the Act.
The regulation also exempts from review the I.G.'s
determination as to what would constitute a violation of
the terms of an exclusion. But the regulation says
nothing that would suggest that it exempts from review
the I.G.'s determination of the length of an exclusion.
Furthermore, the I.G.'s apparent interpretation of 42
C.F.R. § 1005.4(c)(5) would render meaningless 42 C.F.R.
§ 1005.20(b). This regulation states in relevant part,
that, in deciding a case, including a case brought
pursuant to section 1128 of the Act, the administrative
law judge may:
affirm, increase or reduce the penalties,
assessment or exclusion proposed or imposed by
the IG, or reverse the imposition of the
exclusion.
Although I have authority to review the length of the
exclusion imposed by the I.G., I do not have the
authority to simply substitute my judgment for that which
has been exercised by the I.G. The test that I apply in
reviewing the length of an exclusion is that of
reasonableness. I must sustain an exclusion if it
comports reasonably with the Act's purpose of protecting
federally funded health care programs and program
beneficiaries and recipients from providers who are not
trustworthy. However, if the exclusion does not comport
reasonably with the Act's remedial purpose, then I must
modify it so that it does comport with that purpose.
The presence of a mitigating factor in this case, not
offset by any aggravating factor, suggests that an
exclusion of less than the three-year benchmark stated in
42 C.F.R. § 1001.601(b) may be reasonable. However, that
does not mean that an exclusion of any particular
duration is reasonable. And, where a mitigating factor
is established, an exclusion is not per se reasonable
because it is for a period of less than the benchmark
period. See 42 C.F.R. § 1001.601(b).
The two-year exclusion which the I.G. imposed against
Petitioner is not reasonable. There is no evidence that
it comports with the Act's remedial purpose.
The only evidence in this case which addresses
Petitioner's trustworthiness to provide care is the
record created by the Department of Social Services in
the State exclusion proceedings against Petitioner. It
shows that Petitioner ordered unnecessary tests and that,
in two instances, Petitioner's treatment records failed
to comply with recognized standards of care. However,
the dates of this misconduct are not specified in the
findings of the Department of Social Services, nor are
they specified in the audit report that accompanies those
findings. I.G. Ex. 1. Therefore, upon the record before
me, the I.G. has not included any documentation regarding
whether the episodes upon which the Department of Social
Services premised its findings constitute a protracted
pattern of misconduct by Petitioner, or are relatively
isolated episodes of misconduct.
The Department of Social Services' findings regarding
Petitioner's lack of trustworthiness assume a great
importance in light of the paucity of evidence of
Petitioner's misconduct. The Department of Social
Services found that Petitioner would be eligible to apply
for reinstatement to the New York Medicaid program on
November 14, 1996. That is a finding that Petitioner
will be untrustworthy to provide care at least until
November 14, 1996. It is also a finding that Petitioner
may be able to demonstrate that she is trustworthy on or
after that date.
The effect of the I.G.'s exclusion of Petitioner is that
she will not become eligible to apply to the I.G. for
reinstatement until late February of 1998. That is a
date nearly 15 months later than the date when Petitioner
will be eligible to apply to the State of New York for
reinstatement to the New York Medicaid program. I find
this exclusion to be unreasonable, given that the only
evidence of record relating to Petitioner's
trustworthiness shows that she may become trustworthy to
provide care as early as November 14, 1996. The I.G. has
simply not established any rational or logical basis for
me to conclude that Petitioner must be considered to be
untrustworthy beyond November 14, 1996.
E. Modification of the exclusion (Finding 7)
I modify the exclusion that the I.G. imposed against
Petitioner so that she will be eligible to apply to the
I.G. for reinstatement on the date that the State of New
York reinstates her to participate in the New York
Medicaid program. This date will be no earlier than
November 14, 1996. The modification which I am directing
thus conforms the exclusion to the only credible evidence
of record relevant to when Petitioner will become
trustworthy to provide care. In effect, it makes the
exclusion imposed by the I.G. coterminous with that which
was imposed by the Department of Social Services.
My conclusion that the exclusion ought to be modified to
make it coterminous with that which was imposed by the
Department of Social Services should not be taken to mean
that such a result would be appropriate in every case of
an exclusion imposed pursuant to section 1128(b)(5). The
regulation which implements this section makes it clear
that the Secretary has concluded that a coterminous
federal exclusion is not necessarily appropriate in such
a case. 42 C.F.R. § 1001.601. The fact that the
Department of Social Services imposed an exclusion
against Petitioner which may end as early as November 14,
1996 did not necessarily obligate the I.G. to impose a
coterminous exclusion.
However, in this case, the only evidence of Petitioner's
trustworthiness is that she may become trustworthy as
early as November 14, 1996. In light of that, the I.G.
should have developed additional evidence of Petitioner's
lack of trustworthiness to support an exclusion that
would have not made Petitioner eligible to apply to the
I.G. for reinstatement until February 1998.
Also, I wish to make it clear that I am not modifying the
I.G.'s exclusion to end on November 14, 1996, because
Petitioner may not satisfy the State of New York that she
has become trustworthy to provide care as of that date.
November 14, 1996 is merely the date upon which
Petitioner will become eligible to apply to the State of
New York for reinstatement to the New York Medicaid
program. The State of New York appears to have
discretion not to reinstate Petitioner if she does not
prove herself to be trustworthy as of that date. The
I.G. is under no obligation to consider Petitioner's
application for reinstatement if she has not satisfied
the State of New York that she is trustworthy to provide
care.
IV. Conclusion
I conclude that the two-year exclusion imposed by the
I.G. against Petitioner is unreasonable. I modify it so
that Petitioner's exclusion will be in effect until she
is reinstated by the State of New York to participate in
the New York Medicaid program.
________________________
Steven T. Kessel
Administrative Law
Judge
* * * Footnotes * * *
1. This does not mean that Petitioner will be
reinstated automatically on the date that she is
reinstated to participate in the New York Medicaid
program. As I discuss below, my modification of
Petitioner's exclusion by the I.G. means that she will be
eligible to apply to the I.G. for reinstatement on the
date that she is reinstated by the State of New York to
participate in the New York Medicaid program.
2. The notice which the I.G. sent to
Petitioner on January 24, 1996 erroneously advised
Petitioner that she was being excluded for five years.
The I.G. subsequently corrected this error in a notice
dated April 12, 1996. I.G. Ex. 4.
3. In her brief, the I.G. styled her
submission as a motion for summary disposition. In fact,
I am deciding this case based on the written evidence
that has been submitted. I am not issuing a summary
disposition.
4. I imposed on the I.G. the burden of
proving the existence of any alleged aggravating factors.
See 42 C.F.R. § 1005.15(b).