By letter dated November 30, 1998, the Inspector General (I.G.), United States Department of Health and Human Services, notified David Sternberg, M.D. (Petitioner), that he would be excluded for a period of 15 years from participation in Medicare, Medicaid, and all federal health care programs.⁽¹⁾ The I.G. imposed this exclusion pursuant to section 1128(a)(1) of the Social Security Act (Act), based on Petitioner's conviction in the United States District Court for the District of Kansas for a criminal offense related to the delivery of an item or service under the Medicare program.

Petitioner filed a request for review of the I.G.'s action. The I.G. moved for summary disposition. Because I have determined that there are no material and relevant factual issues in dispute (the only matter to be decided is the legal significance of the undisputed facts), I have decided the case on the basis of the parties' written submissions in lieu of an in-person hearing. The I.G. submitted a brief accompanied by nine proposed exhibits (I.G. Exs. 1-9) and a reply brief. Petitioner submitted a response accompanied by five proposed exhibits (P. Exs. 1-5) and a sur-reply brief. Petitioner did not object to my receiving into evidence the I.G.'s proposed exhibits, and I receive into evidence I.G. Exs. 1-9. The I.G. did not object to my receiving Petitioner's proposed exhibits into evidence and I receive into evidence P. Exs. 1-5.

I affirm the I.G.'s determination to exclude Petitioner from participating in Medicare and Medicaid for a period of 15 years.

Under section 1128(a)(1) of the Act, the Secretary may exclude from participation in the Medicare and Medicaid programs any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under title XVIII or under any State health care program. Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a)(1) of the Act shall be for a minimum period of five years, unless specified aggravating or mitigating factors are present which form the basis for lengthening or shortening the period of exclusion. See also 42 C.F.R. section 1001.102(a), (b), and (c). Only if the aggravating factors justify an exclusion of longer than five years, may mitigating factors be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. §1001.102(c). Evidence which does not relate to an aggravating factor or a mitigating factor, as stated by the regulations, is irrelevant to determining the length of an exclusion.

The regulation at 42 C.F.R. § 1001.102(b) provides that the following factors may be considered to be aggravating and a basis for lengthening the period of exclusion: "(1) [t]he acts resulting in the conviction, or similar acts, resulted in financial loss to a government program or to one or more other entities of $1500 or more. (The entire amount of financial loss to such programs or entities, including any amounts resulting from similar acts not adjudicated, will be considered regardless of whether full or partial restitution has been made); (2) [t]he acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; (3) [t]he acts that resulted in the conviction, or similar acts, had a significant adverse physical, mental or financial impact on one or more program beneficiaries or other individuals; (4) [i]n convictions involving patient abuse or neglect, the action that resulted in the conviction was premeditated, was part of a continuing pattern or behavior, or consisted of non-consensual sex acts; (5) [t]he sentence imposed by the court included incarceration; (6) [w]hether the individual or entity has a documented history of criminal, civil or administrative wrongdoing; (7) [t]he individual or entity has at any time been overpaid a total of $1500 or more by Medicare, Medicaid and all other Federal health care programs, or other third-party payers, as a result of improper billings; or (8) [w]hether the individual or entity was convicted of other offenses besides those which formed the basis for the exclusion, or has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for the exclusion."

The regulation at 42 C.F.R § 1001.102(c) provides that only if any of the aggravating factors justify an exclusion of longer than five years, may mitigating factors be considered as a basis for reducing the period of the exclusion to no less than five years. The following factors may be considered as mitigating and a basis for reducing the period of exclusion: "(1) [t]he individual or entity was convicted of 3 or fewer misdemeanor offenses, and the entire amount of financial loss to Medicare and the State health care programs due to the acts that resulted in the conviction, and similar acts, is less than $1500; (2) [t]he record in the criminal proceedings, 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; or (3) [t]he individual's or entity's cooperation with Federal or State officials resulted in --(i) [o]thers being convicted or excluded from Medicare, Medicaid, or all other Federal health care programs, (ii) [a]dditional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or (iii) [t]he imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter." 42 C.F.R § 1001.102(c).

Petitioner contends that the length of his exclusion is not reasonable. He asserts that the I.G. has misconstrued facts relating to aggravating circumstances in his case. He asserts that the I.G. has cited his alleged 7-year long involvement in the scheme which resulted in his criminal conviction, but he maintains that the record demonstrates that such involvement occurred over only a 20-month period. He also notes that the while the I.G. cited his 60-month prison sentence as an aggravating factor, he asserts that the actual period of incarceration will be substantially shorter, 24 months, due to good time credits. Petitioner also contends that the restitution amount, cited by the I.G. as an aggravating factor, is incorrect and that he is responsible only for $175,000. Petitioner also asserts that he is challenging the sentencing agreement, which he entered into with prosecutors in his case and which set the amount of restitution and length of incarceration. He, therefore, maintains that such factors cannot be relied upon by the I.G. He further notes that if his challenge is successful, there is no procedure before the Departmental Appeals Board (DAB) to amend his exclusion.

Petitioner also cites a number of factors in his case which he maintains warrant mitigation of the exclusion period. He maintains that he has a long and distinguished medical career and is well-known in his field. He notes that he has no other criminal record and that while his offenses involved improper billing, he has on many occasions provided low cost or free medical care to his patients. In support of these contentions, Petitioner has provided letters from patients and others who attest to his good character and professional competence. Petitioner also contends that he cooperated with the authorities who investigated the criminal matter for which he was convicted. He maintains that, considering the mitigating and aggravating factors in his case, his exclusion is impermissibly lengthy and has the result, given his age, of depriving him of his medical career. He asserts that he intends to seek a position as a salaried physician with no involvement in billing matters upon his release from prison and that such a long exclusion is not warranted in that situation. Further, he maintains that such exclusion period violates the plea agreement in his criminal case, as the plea agreement accords him the right to apply for reinstatement as a provider in Federally funded health care programs.

Finally, Petitioner contests the procedure followed in his exclusion case and asserts that his case requires a hearing. To support his claim, he cites his challenge to the facts concerning the aggravating circumstances cited by the I.G. and the evidence which he maintains warrants mitigation. He maintains that such issues are contested and mandate that an in-person hearing be conducted in his case.

1. During the period of time relevant to this case, Petitioner was licensed to practice as a psychiatrist in the states of Kansas and Missouri. I.G. Ex. 1.

2. During the period of time relevant to this case, Petitioner conducted a private psychiatric practice at four offices and had staff privileges at three hospitals in the Kansas City, Kansas area. I.G. Ex. 1.

3. On July 15, 1997, a Superceding Indictment was filed in the United States District Court for the District of Kansas charging Petitioner with 13 counts of Mail Fraud (counts 1-13), 1 count of Interstate Transportation in Aid of Racketeering (count 14), 21 counts of Money Laundering (Counts 15-35), 1 count of Bribery Concerning a Federal Program (count 36), and 1 count of Health Care Fraud (count 37). I.G. Ex. 1.

4. According to the Superceding Indictment, this scheme involved submitting false and fraudulent claims by Petitioner for medical services which Petitioner either never rendered or were rendered by third parties who were not authorized to provide such treatment. Third parties rendered services and these services were billed under Petitioner's name, as though Petitioner had personally provided the billed services. I.G. Ex. 1.

5. All the claims for services allegedly performed by Petitioner, were generated and then submitted, under the direction of Petitioner, by clerical personnel, through his private practice offices. I.G. Ex. 1.

6. In November 1997, Petitioner was found guilty by a jury of 13 counts of Mail Fraud (counts 1-13 of the Superceding Indictment), 1 count of Interstate Transportation in Aid of Racketeering (count 14 of the Superceding Indictment), and 21 counts of Money Laundering (counts 15-35 of the Superceding Indictment). I.G. Ex. 8.

7. On May 4, 1998, a Judgment was entered in Petitioner's case in accord with the jury verdict in his case. I.G. Ex. 8.

8. The Superceding Indictment and Judgment in Petitioner's case reflects that the conduct for which Petitioner was found guilty commenced in 1990 and concluded in June, 1997. I.G. Exs. 1 and 8.

9. As a result of his conviction, Petitioner was sentenced to 60 months in prison for each count, to be served concurrently; 36 months supervised release on each count, to be served concurrently; an assessment of $1,750; and restitution in the amount of $926,940.43 including restitution to Medicare in the amount of $308,626.51 and to the Tricare program (formerly CHAMPUS) in the amount of $42,091.20. I.G. Ex. 8.

10. On November 30, 1998, Petitioner was notified by the I.G. that he was being excluded from participation in the Medicare and Medicaid programs for a period of 15 years pursuant to section 1128(a)(1) and section 1128(c)(3)(B) of the Act. I.G. Ex. 4.

11. Under section 1128(a)(1) of the Act, the I.G. is authorized to exclude any individual or entity that has been convicted of a criminal offense related to the delivery of a health care item or service under Medicare or Medicaid.

12. Where the I.G. determines to exclude an individual pursuant to section 1128(a)(1) of the Act, the term of exclusion will be for a minimum period of five years, in the absence of aggravating or offsetting mitigating factors that would support an exclusion of no less than five years.

13. Petitioner's criminal conviction constitutes a conviction within the scope of section 1128(i)(2) of the Act.

14. Petitioner's conviction for Mail Fraud, Money Laundering and Interstate Transportation in Aid of Racketeering is related to the delivery of an item or service under the Medicare/Medicaid programs within the meaning of section 1128(a)(1) of the Act.

15. The I.G. is authorized to exclude Petitioner pursuant to section 1128(a)(1) of the Act.

16. The I.G. proved the presence of an aggravating factor, in that the acts resulting in Petitioner's conviction, or similar acts, caused financial loss of $1,500 or more to a government program or to one or more other entities. 42 C.F.R. § 1001.102(b)(1).

17. The I.G. proved the presence of an aggravating factor, in that the acts that resulted in Petitioner's conviction, or similar acts, were committed by Petitioner over a period of one year or more. 42 C.F.R. § 1001.102(b)(2).

18. The I.G. proved the presence of an aggravating factor, in that the sentence imposed on Petitioner for his crimes included a period of incarceration. 42 C.F.R. § 1001.201(b)(2)(5).

19. The I.G. proved the presence of an aggravating factor, in that Petitioner was overpaid a total of $1,500 or more by Medicare and Medicaid and other third-party payers as a result of improper billings. 42 C.F.R. § 1001.102(b)(7).

20. The Petitioner did not prove the presence of any mitigating factors.

21. The aggravating factors established by the I.G. prove Petitioner to be untrustworthy to the extent that a 15-year exclusion is reasonably necessary to protect the integrity of federally financed health care programs, and to protect program beneficiaries and recipients.

22. A 15-year exclusion of Petitioner is reasonable and appropriate. FFCL 1-21.

Petitioner does not challenge that he is subject to exclusion under section 1128(a)(1) of the Act and I so find. His conviction, which was based on a jury finding of guilt, constitutes a conviction under section 1128(i)(2) of the Act. Next, it is required under section 1128(a)(1) of the Act that the crime at issue be related to the delivery of an item or service under the Medicare/Medicaid program. The record establishes that Petitioner, by being found guilty of Mail Fraud, Money Laundering, and Interstate Transportation in Aid of Racketeering, was found to have filed or caused to be filed fraudulent claims for medical services with Medicare. The filing of fraudulent Medicare claims has been held to constitute clear program-related misconduct. Alan J. Chernick, D.D.S., DAB CR434 (1996).

Petitioner has argued in his brief that his 15-year exclusion should be reduced due to the presence of mitigating factors. In his favor, he maintains that he has had a long and distinguished medical career; he has no other criminal record; he has provided low cost or free medical services; and that he fully cooperated with the Government in the investigation of the fraudulent scheme. It is Petitioner's burden to prove the existence of mitigating factors. James H. Holmes, DAB CR270 (1993). Petitioner has not established any of the mitigating factors listed at 42 C.F.R § 1001.102(c). His claims that he is a competent physician, that he has no other criminal record and that he has provided free or reduced-cost services are not relevant. The only relevant argument that Petitioner makes with respect to mitigating factors is that he fully cooperated with the Government. Petitioner, however, has not demonstrated the further requirements stated in 42 C.F.R. § 1001.102(c)(3)(i), (ii) or (iii) that his cooperation led to the conviction or investigation of others or the imposition of a monetary penalty against others. Therefore, I consider Petitioner's claim, but find it without merit. As Petitioner has the burden concerning mitigating factors, I find that he has not met such burden and conclude that Petitioner has not proved the existence of any mitigating factors.

In determining whether the length of an exclusion is reasonable, it is the responsibility of the administrative law judge (ALJ) to consider and evaluate all of the relevant evidence brought to bear in this case. The regulation at 42 C.F.R. § 1001.102(b) sets forth the aggravating factors which may be considered in determining the length of an exclusion. I find that the I.G. proved the presence of four aggravating factors. The four aggravating factors consist of the following:

- The acts resulting in Petitioner's conviction, or similar acts, caused financial loss of $1,500 or more to a government program or to one or more other entities. 42 C.F.R. § 1001.102(b)(1). Petitioner's fraud caused very substantial losses to be incurred by Medicare. The record reflects that the loss to Medicare was calculated at $308,626.51 and Petitioner was ordered to pay restitution in that amount to Medicare. In addition, the loss to the Tricare program was $42,091.20. Amounts to private insurers were also substantial as reflected by the Judgment which included an accounting. I.G. Ex. 8. These included, for example, a loss of over $91,000 to Blue Shield and over $39,000 to Aetna. Numerous other insurers also incurred losses over $1,500. Petitioner disputes the amount of the losses, but the Judgment reflects the restitution owed to each entity and reflects the total restitution amount to all parties was over $900,000. Petitioner, in his brief, concedes that he has paid over $175,000 in restitution. Petitioner also states that he has assigned, pursuant to the sentencing agreement, accounts receivable valued at $300,000. P. Brief at 5.

- The acts that resulted in Petitioner's conviction, or similar acts, were committed by Petitioner over a period of one year or more. 42 C.F.R. § 1001.102(b)(2). The I.G., in its brief, claims that, under the Superceding Indictment the acts occurred from 1990 through 1997. (See Paragraph 1 of the Superceding Indictment). I.G. Ex. 1. Petitioner asserts that under counts 1-35, for which he was convicted, the acts in question occurred from September, 1992 through April, 1994. The Judgment reflects that the last act occurred in June, 1997. I.G. Ex. 8. Even if I accept Petitioner's claim that the acts occurred from September, 1992 through April, 1994, such period spans 20 months which is substantially longer than the one year specified by the regulation.

- The sentence imposed on Petitioner for his crimes included a period of incarceration. 42 C.F.R. § 1001.201(b)(2)(5). Petitioner has been sentenced to 60 months in prison. I.G. Ex. 8. Petitioner contends that, in fact, he will serve only 24 months but, even if true, such fact is irrelevant. The Judgment reflects that the sentenced "imposed" on Petitioner was 60 months. I.G. Ex. 8.

-The individual or entity has at any time been overpaid a total of $1,500 or more by Medicare, Medicaid and all other Federal health care programs, or other third-party payers, as a result of improper billings. 42 C.F.R. § 1001.102(b)(7). The record reflects a Medicare loss of $308,626.51 and a loss to Tricare of $42,091.20 and other insurers also incurred substantial losses. I.G. Ex. 8. Although this factor was not cited in the notice of exclusion, the I.G. cited it in the appellate brief and under the briefing schedule, Petitioner was accorded an opportunity to respond. On such facts, I consider this factor in my analysis.

Considering Petitioner's failure to meet his burden to prove any mitigation and the I.G.'s evidence of aggravating factors, I find that the aggravating factors in Petitioner's case make the imposition of the 15-year exclusion reasonable. I note that in evaluating these factors, it is not the mere presence of a greater number of aggravating factors which forms the basis for my decision here. As an appellate panel of the DAB has previously held in Barry D. Garfinkel, M.D., DAB 1572 (1996), it is the quality of the circumstances, whether aggravating or mitigating, which is to be disposiive in analyzing evidence of these factors. Garfinkel, at 31.

In this case, the aggravating factors established by the I.G. prove Petitioner to be an untrustworthy individual to the extent that a 15-year exclusion is reasonably necessary to protect the integrity of federally financed health care programs, and to protect program beneficiaries and recipients. Petitioner's lack of trustworthiness is established by his involvement for at least 20 months in a scheme to defraud Medicare and private insurers. His fraud was persistent and deliberate, not random or impulsive. The extent to which Petitioner persisted in defrauding Medicare and insurers is established by the large losses he caused the Medicare program and other insurers to incur. His high level of culpability is reflected in the lengthy prison sentence he received. Therefore, I find that the 15-year exclusion is reasonable and appropriate.

Petitioner also raises a number of challenges to the exclusion in his case. He asserts that he is appealing the sentencing agreement which was used by the District Court in the Judgment in his case. On such basis, he asserts that the restitution amount and the period of incarceration may be overturned. The record reflects that Petitioner consented to such sentencing agreement. Additionally, he has submitted no evidence to show that he is, in fact, challenging such Judgment. Furthermore, Petitioner is not permitted to question the validity and I am not permitted to consider the validity of such judgment in these proceedings. See Paul R. Scollo, D.P.M., DAB 1498 (1994).

Petitioner also asserts that, as part of the Judgment in his case the District Court permitted him to apply for reinstatement for Medicare/Medicaid provider status after his release from incarceration. He asserts that it is unfair to exclude him on these circumstances as a 15-year exclusion is beyond his period of incarceration. However, I note that the I.G. was not a party to that agreement and presumably is not bound by it. Also, such agreement merely permits Petitioner to apply for reinstatement and does not guarantee that such status will be granted. On such facts, I find no error in the I.G.'s exclusion action. Petitioner also contends that such a lengthy exclusion deprives him of the right to practice his profession, but such argument has been previously rejected in other cases. See Arlene Elizabeth Hunter, DAB CR270 (1997).

I conclude that the I.G. was authorized to exclude Petitioner, pursuant to section 1128(a)(1) of the Act. I find that the 15-year exclusion is reasonable and I sustain it.

1. In this decision, I use the term "Medicaid" to refer to all the State health care programs from which Petitioner was excluded. I use the term "Medicare" to refer to all of the federal health care programs from which Petitioner was excluded.