DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Civil Remedies Division
In the Case of:
Arthur D. Freiberg, D.P.M.,
Petitioner,
- v. -
The Inspector General.
DATE: January 19, 1990
Docket No. C-58
DECISION AND ORDER
Petitioner requested a hearing to contest the Inspector General's (I.G.'s) determination
to exclude him from
participation in the Medicare and Medicaid programs for a period of ten years,
pursuant to section 1128 of
the Social Security Act (Act).
I conducted a hearing in New York, New York, on September 19 and 20, 1989.
Based on the evidence
introduced at the hearing, and on applicable federal law and regulations, I
conclude that Petitioner was
properly excluded by the I.G. and that it is appropriate for Petitioner to be
excluded for a period of seven
years.
BACKGROUND
By letter dated August 18, 1986 (Notice), the I.G. notified Petitioner of his
ten-year exclusion from
participation in the Medicare and Medicaid programs. Further, the I.G. notified
Petitioner that the
exclusion determination was mandated by section 1128 of the Act, which required
the I.G. to impose and
direct exclusions against an individual convicted of a criminal offense related
to his participation in the
Medicaid program.
By letter dated September 2, 1986, Petitioner submitted his initial request
for a hearing regarding his ten-
year exclusion. Subsequently, Petitioner withdrew his hearing request. By Order
dated November 19,
1986, Administrative Law Judge Joseph C. Medicis dismissed the case without
prejudice. By letter dated
September 30, 1988, Petitioner renewed his hearing request and the case was
assigned to me for a hearing
and decision.
On November 3, 1988, the I.G. filed a Motion to Dismiss Petitioner's request
for a hearing as being
untimely. The I.G. based his motion on a November 11, 1986, stipulation in which
the I.G. and Petitioner
agreed that the case could be dismissed without prejudice and that Petitioner
could request reinstatement of
his hearing request within 60 days of the date of the stipulation. On November
21, 1988, Petitioner filed a
brief in opposition to the I.G.'s motion. I issued a Ruling on December 1, 1988,
in which I: (1) denied the
I.G.'s motion to dismiss, and (2) scheduled a telephone prehearing conference
for December 9, 1988.
In response to the discussions and consent of the parties during the December
9, 1988, prehearing
conference, I issued a Prehearing Order on December 15, 1988, in which I proposed
a remand of this case
to the I.G. for consideration of evidence not previously considered by the I.G.
in determining Petitioner's
period of exclusion.
By letter dated January 9, 1989, Petitioner submitted the information which
he proposed to have the I.G.
review on remand. On January 13, 1989, the I.G. filed a brief in which he asserted
that I lacked the
authority to direct him to consider the information submitted by Petitioner.
Although the I.G.'s brief did
not state whether the I.G. objected to a remand of this case, further discussions
revealed that the I.G. did
object to a remand.
As a result of a telephone conference which I held on February 28, 1989, I
issued an Order and Summary
of Telephone Conference on March 8, 1989. On March 24, 1989, Petitioner filed
a motion to remand and
brief in support thereof. On April 19, 1989, the I.G. filed a brief in opposition
to Petitioner's motion to
remand. On May 22, 1989, I issued a Ruling denying Petitioner's motion to remand.
On June 15, 1989, I held a telephone prehearing conference for the purpose
of setting the date and location
for an evidentiary hearing. I issued a Prehearing Order on June 23, 1989. Finally,
a trial-type hearing was
conducted on September 19 and 20, 1989, in New York, New York.
ADMISSIONS
Petitioner admits that: (1) he was "convicted" of a criminal offense
within the meaning of section 1128(i)
of the Act; and (2) the offense was "related to the delivery of an item
or service" within the meaning of
section 1128(a)(1) of the Act.
APPLICABLE STATUTES AND REGULATIONS
The statutes and regulations which are applicable to this case are those which
were in effect in August
1986, the date on which the I.G. issued Petitioner's Notice.
I. The Federal Statute.
On August, 18, 1986, section 1128 of the Act required the Secretary of Health
and Human Services to
exclude from participation in the Medicare program, and to direct that the states
to exclude from
participation in the Medicaid program, any physician or other individual who
had been convicted of a
criminal offense related to that person's delivery of medical care or services
under the Medicare or
Medicaid program. The law did not prescribe a minimum period of exclusion.
The law was revised in August, 1987, to provide for a five-year minimum period
of exclusion from
Medicare and Medicaid for those individuals or entities convicted of a criminal
offense related to the
delivery of an item or service under the Medicare or Medicaid programs.
II. The Federal Regulations.
The governing federal regulations (Regulations) are codified in 42 C.F.R.,
Parts 498, 1001, and 1002.
Part 498 governs the procedural aspects of this exclusion case; Parts 1001 and
1002 govern the substantive
aspects.
Section 1001.123 requires the I.G. to issue an exclusion notice to an individual
whenever the I.G. has
"conclusive information" that such individual has been "convicted"
of Medicare or Medicaid item or
service; such exclusion must begin 15 days from the date on the notice.
ISSUE
The issue in this case is whether the ten-year period of exclusion imposed against Petitioner is appropriate.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Having considered the entire record, the arguments and submissions of the parties,
and being fully advised
herein, I make the following Findings of Fact and Conclusions of Law:
1. Petitioner was engaged in the private practice of podiatry, in the State
of New York, from April 1978
through October 1986. Tr. 165.
2. On March 3, 1986, Petitioner was convicted in the Supreme Court of the State
of New York, Kings
County, of one count of grand larceny in the second degree, 18 counts of filing
a false instrument in the
first degree, and four counts of falsifying business records in the first degree.
I.G. Ex. 4.
3. Petitioner's convictions were the result of actions taken from about January
1981 through August 1984.
Tr. 135; I.G. Ex. 3, 4.
4. Petitioner's grand larceny conviction resulted from Medicaid's reimbursement
to Petitioner based upon
claims, submitted by Petitioner, for items or services not provided. I.G. Ex.
3, 4.
5. Petitioner's convictions for 18 counts of offering a false instrument resulted
from his submission of
claims to the Medicaid program for reimbursement for surgical procedures which
he did not perform. I.G.
Ex. 3, 4.
6. Petitioner's convictions for four counts of falsifying business records
resulted from his falsifying his
medical records to reflect that services were performed for various Medicaid
recipients, although, in
actuality, the services had not been performed. I.G. Ex. 3, 4.
7. Petitioner's convictions resulted in sentences of: (1) four months in prison,
to be served on weekends;
(2) five years probation for each count of filing a false instrument and falsifying
business records, to run
concurrently; (3) $49,000 in fines; and (4) $40,000 in restitution to the Medicaid
program. I.G. Ex. 5.
8. Section 1128 of the Act required the I.G. to impose and direct an exclusion
against individuals
convicted of criminal offenses related to their participation in the delivery
of medical care or services under
the Medicaid program. 1128(a)(1986); 42 U.S.C. 1320a-7(a).
9. The purpose of the exclusion law is to protect the Medicare and Medicaid
programs from fraud and
abuse and to protect the beneficiaries and recipients of those programs from
incompetent practitioners and
inappropriate or inadequate care.
10. Petitioner admits, and I conclude, that he was convicted of criminal offenses
which are related to his
delivery of medical care or services under the Medicaid program, within the
meaning of section 1128(a) of
the Act. Tr. 10, 136; FFCL 2-4.
11. The I.G. properly imposed and directed an exclusion from participation in
the Medicare and Medicaid
programs against Petitioner.
12. During the time period applicable to this case, section 1128 of the Act
did not provide for a minimum
or maximum period of exclusion.
13. In addition to reviewing and weighing indicia of trustworthiness, the length
of Petitioner's exclusion is
to be determined by reviewing and weighing: (1) the number and nature of the
offenses, (2) the nature and
extent of any adverse impact the violations have had on beneficiaries, (3) the
amount of the damages
incurred by the Medicare, Medicaid, and social services programs, (4) the existence
of mitigating
circumstances, (5) the length of sentence imposed by the court, (6) any other
facts bearing on the nature
and seriousness of the violations, and (7) the previous sanction record of Petitioner.
42 C.F.R.
1001.125(b).
14. The fact that the criminal acts which formed the basis for Petitioner's
conviction were committed over
a period of time in excess of one year is an aggravating factor in determining
an appropriate length of
exclusion. FFCL 2.
15. The fact that Petitioner was convicted of a total of 23 counts of criminal
offenses related to the
delivery of items and services under the Medicaid program is an aggravating
factor in determining an
appropriate length of exclusion. FFCL 3.
16. The fact that Petitioner's violations did not have a direct adverse impact
on Medicaid recipients, in that
the alleged items and services were never provided, is a neutral factor in determining
an appropriate length
of exclusion. FFCL 5, 6.
17. The fact that Petitioner was ordered to pay $40,000 in restitution to the
Medicaid program is an
aggravating factor in determining an appropriate length of exclusion. FFCL 7.
18. The fact that Petitioner was: (1) sentenced to four months in prison; (2)
placed on probation for five
years (although he was released from probation prior to the expiration of the
five-year period); and (3)
ordered to pay $49,000 in fines (although Petitioner was excused from paying
the balance of the fines
amounting to $23,000) are aggravating factors in determining an appropriate
length of exclusion. FFCL 7;
Tr. 145.
19. Petitioner received treatment from a psychoanalyst from about 1982 through
1986. Petitioner learned
from this treatment that he was exhibiting self-destructive behavior patterns
and was experiencing feelings
of inadequacy. Tr. 142.
20. The fact that Petitioner received treatment from a psychoanalyst from about
1982 through 1986 is a
mitigating factor in determining an appropriate length of exclusion. FFCL 18.
21. The I.G. did not consider the medical treatment, which Petitioner received
from a psychoanalyst, as a
mitigating factor in determining an appropriate length of exclusion.
22. The various community services performed by Petitioner are not mitigating
factors in determining an
appropriate period of exclusion, but the behavior evidenced by Petitioner's
participation in those
community services is a mitigating factor.
23. Petitioner engaged in the community services at issue subsequent to his
conviction and subsequent to
the I.G.'s exclusion determination.
24. An exclusion is unreasonable if it is extreme or excessive.
25. In light of the evidence presented in this case, a seven year period of
exclusion is appropriate and
would serve the purposes of the exclusion law.
DISCUSSION
There is no dispute in this case that Petitioner was convicted of a criminal
offense relating to his
participation (or lack thereof) in the delivery of medical care or service under
the Medicaid program.
Therefore, pursuant to section 1128 of the Act as it existed on the date of
the I.G. Notice in 1986, the I.G.
had the authority to impose and direct an exclusion from participation in the
Medicare and Medicaid
programs against Petitioner. FFCL 8, 9. Therefore, the remaining issue in this
case is the appropriate
length of exclusion.
In making the determination of the appropriate length of an exclusion, it is
helpful to look at the following
factors: (1) the purpose of the exclusion law, and (2) the facts and circumstances
of the case at issue.
I. The Purpose of The Exclusion Law Should be Considered in Determining an Appropriate
Length of
Exclusion.
In determining an appropriate length of exclusion, major consideration must
be given to the purpose of the
exclusion law. As I held in Charles J. Burks, M.D., Petitioner, v. The Inspector
General, DAB Docket No.
C-111 (1989):
Congress enacted section 1128 of the Act to protect the Medicare and Medicaid
programs from fraud and abuse and to protect the beneficiaries of those programs
from incompetent
practitioners and inappropriate or inadequate care. See, S. Rep. No. 109, 100th
Conf., 1st Sess. 1; reprinted
1987 U.S. Code Cong. and Admin. News 682. The key term to keep in mind is "protection,"
the
prevention of harm. See, Webster's II New Riverside University Dictionary 946
(1984). As a means of
protecting the Medicare and Medicaid programs and its beneficiaries, Congress
chose to mandate, and in
other instances to permit, the exclusion of individuals. Through exclusion,
individuals who have caused
harm, or may cause harm, to the program or its beneficiaries are no longer permitted
to receive
reimbursement for items or services which they provide to Medicare or Medicaid
beneficiaries. Thus,
individuals are removed from a position which provides a potential avenue for
causing harm to the
programs and their beneficiaries. Exclusion also serves as a deterrence to other
individuals against deviant
behavior which may result in harm to the Medicare and Medicaid programs or its
beneficiaries.
The exclusion law, as it existed during the time period applicable to this
case, is analogous to the present
exclusion law relating to permissive exclusion in that Congress has not prescribed
a minimum or maximum
period of exclusion to be imposed. By not mandating that exclusions from participation
in the Medicare
and Medicaid program be permanent, Congress has allowed the I.G. the opportunity
to give individuals a
"second chance." The placement of a limit on the period of exclusion
allows an excluded individual the
opportunity to demonstrate that he or she can and should be trusted to participate
in the Medicare and
Medicaid programs and to provide items and services to program beneficiaries.
II. The Facts and Circumstances of Each Case Should be Considered in Determining
an Appropriate
Length of Exclusion.
The determination of when an individual should be allowed to reapply for participation
as a provider in the
Medicare and Medicaid programs is based on evidence concerning that individual's
trustworthiness. The
Regulations provide some guidance which may be followed in making this determination.
The Regulations provide that the length of a petitioner's exclusion may be
determined by reviewing: (1) the
number and nature of the offenses, (2) the nature and extent of any adverse
impact the violations have had
on benefici-aries, (3) the amount of damages suffered by the Medicare, Medicaid,
and social services
programs, (4) the existence of mitigating circumstances, (5) the length of sentence
imposed by the court,
(6) any other facts bearing on the nature and seriousness of the violations,
and (7) the previous sanction
record of Petitioner. 42 C.F.R. 1001.125(b).
A. The fact that the criminal acts which formed the basis for Petitioner's
conviction were committed over a
period of time in excess of one year is an aggravating factor in determining
an appropriate length of
exclusion.
The criminal offenses of which Petitioner was convicted were committed over
a three-year period. The
facts of this case do not present a situation where the provider's offenses
occurred during a brief period
(e.g., a few months or a year), but instead reveal a provider who repeatedly,
over an extended period of
time, committed fraud against the Medicaid program.
B. The fact that Petitioner was convicted of a total of 23 counts of criminal
offenses related to the delivery
of items and services under the Medicaid program is an aggravating factor in
determining an appropriate
length of exclusion.
The Regulations provide that the number of criminal offenses of which Petitioner
was convicted should be
used as a guide in determining the appropriate period of exclusion. Petitioner
was convicted of 23 criminal
offenses, a significant number.
C. The fact that Petitioner's violations did not have a direct adverse impact
on Medicaid recipients is a
neutral factor in determining an appropriate length of exclusion.
In determining an appropriate length of exclusion, the Regulations provide that
I should consider whether
Petitioner's violations had an adverse impact on Medicaid recipients. The I.G.'s
witness testified, and
accordingly I find and conclude, that Petitioner's violations did not have a
direct adverse impact on
Medicaid recipients. Although Petitioner's actions adversely affected the Medicaid
program, the I.G. did
not prove that Petitioner's failure to provide the services claimed resulted
in direct harm to Medicaid
recipients.
D. The fact that Petitioner was ordered to pay $40,000 in restitution to the
Medicaid program is an
aggravating factor in determining an appropriate length of exclusion.
In determining an appropriate length of exclusion, the Regulations instruct
me to consider the amount of
damages incurred by the Medicaid program. The fact that Petitioner was ordered
to pay $40,000 in
restitution to the Medicaid program evidences that his conduct resulted in damage
to the program. By
definition, restitution means "an act of repaying or compensating for loss,
damage or injury." See,
Webster's II New Riverside University Dictionary 1002 (1984). Petitioner caused
a substantial amount of
loss, damage, or injury to the Medicaid program, as evidenced by the $40,000
in restitution which he was
ordered to pay. Therefore, this is an aggravating factor in determining an appropriate
length of exclusion.
E. The fact that Petitioner was sentenced to substantial penalties and incarceration
as a result of his
conviction are aggravating factors in determining an appropriate length of exclusion.
Petitioner was: (1) sentenced to four months in prison, (2) placed on probation
for five years; and (3)
ordered to pay $49,000 in fines. FFCL 7; Tr. 145. Petitioner was excused from
paying the balance of
$23,000 in fines and was released from probation prior to the scheduled probation
termination date.
However, the Regulations instruct me to review the sentence imposed by the Court,
not the amount of fines
which Petitioner ultimately paid, or the term of probation he ultimately served.
F. Petitioner has proved the existence of mitigating factors in determining
an appropriate length of
exclusion.
The Regulations state that I should consider mitigating factors in determining
an appropriate length of
exclusion. However, the Regulations do not provide a definition of what constitutes
a "mitigating factor."
I have held in previous decisions that mitigating factors include, but are not
limited to, factors which
demonstrate trustworthiness. See, Burks, supra.
Medical conditions which relate to a petitioner's culpability in committing
criminal offenses may be
mitigating in determining an appropriate length of exclusion. The fact that
Petitioner received treatment
from a psychoanalyst from about 1982 through 1986 is a mitigating factor. The
I.G. stated that he did not
consider this factor in determining the length of exclusion to be imposed upon
Petitioner because the
information was not presented to him in a timely fashion. I.G. Br. 11. However,
in determining an
appropriate length of exclusion, I am not bound to consider only the information
which the I.G. had before
him at the time he made his exclusion determination. Vincent Baratta, M.D. v.
The Inspector General,
DAB Docket No. C-144 (1990).
Petitioner testified that, during the time period in which he committed the
criminal offenses for which he
was convicted, he was receiving treatment for a psychological problem. The psychoanalyst
who treated
Petitioner was deceased and therefore, unavailable to testify at the hearing.
Tr. 143. However, Petitioner
also testified that, subsequent to the death of his psychoanalyst, he sought
and received medical treatment
from other professionals, none of whom testified, and that he stopped receiving
treatment because of
financial hardship. Tr. 144. Petitioner did not testify that he stopped receiving
treatment because the
problems for which he sought treatment initially no longer existed. Therefore,
although the fact of
Petitioner's medical treatment is mitigating, the amount of weight which I assign
to this factor in
determining an appropriate period of exclusion will be minimal. The purpose
of the exclusion law is to
protect the program from fraud and abuse, and to assure that program participants
are qualified and willing
to provide the required items and services in a professional and competent manner.
Subsequent to Petitioner's conviction, he has engaged in various community
services. Tr. 163. The I.G.
cites Judge Steven T. Kessel's decision in Leonard N. Schwartz, R. Ph. v. The
Inspector General, DAB
Docket No. C-62 (1989), in support of his argument that Petitioner's community
services are not mitigating
factors. Judge Kessel held in Schwartz that the petitioner's community services
demonstrated that he
manifested "personal virtues other than trustworthiness." In this
case, Petitioner's engagement in
community services following his conviction illustrates that he is remorseful.
Tr. 145 -146. It is
reasonable to infer from Petitioner's remorse that he now understands the magni-tude
of, and harm caused
by, his unlawful activities. Out of Petitioner's remorse, an understanding may
have been born: (1) that
actions which he takes may result in undue harm to the Medicaid program and
its recipients; and (2) he will
be punished for his unlawful actions to a degree which he may be unwilling or
afraid to face. Petitioner's
participation in community activities and his testimony concerning his insight
into his criminal activities
indicates that he is well into the process which will hopefully culminate in
his being a an individual who
can be trusted to participate in the Medicaid program and to administer services
to the program's recipients.
Thus, Petitioner's community services, coupled with his testimony, are mitigating
factors.
As stated, the Regulations set forth criteria to follow in determining an appropriate
length of exclusion.
The Regulations do not provide a formula which specifies the amount of weight
to accord each factor. The
final determination of an appropriate length of exclusion must be based upon:
(1) a consideration of the
factors stated in the Regulations; (2) the purpose of the exclusion law; (3)
the immediate individual facts
and circumstances of the case (although they may differ from the facts and circumstances
which were
before the I.G. at the time he made his exclusion determination); (4) the experience
of the Administrative
Law Judge.
In applying the above considerations to this case, I conclude that the I.G.'s
determination to exclude
Petitioner for a period of ten years was excessive. This determination would
have been reached based
upon my consideration of the facts and circumstances which the I.G. had before
him at the time he made
his exclusion determination. The mitigating factors presented by Petitioner
serve to further reduce what I
have concluded, based upon the evidence presented, was an unreasonable length
of exclusion.
I recognize that Petitioner was convicted of serious criminal offenses which
resulted in substantial harm to
the Medicaid program. I also recognize, although I accord them a lesser degree
of weight, that Petitioner
has proven two mitigating factors. However, in consideration of the purpose
of the exclusion law, and the
totality of the facts and circumstances presented in this case, I conclude that
a seven-year period of
exclusion is appropriate.
CONCLUSION
Based on the evidence of this case and the law, I conclude that the I.G. had
authority to impose and direct
an exclusion against Petitioner from participation in the Medicare and Medicaid
programs. Further, I
conclude that the purpose of the exclusion law will be best served by a seven-year
period of exclusion.
Therefore, I modify the exclusion imposed and directed against Petitioner to
a term of seven years.
IT IS SO ORDERED.
_______________________________
Charles E. Stratton
Administrative Law Judge