SUBJECT:

John (Juan) Urquijo,

Petitioner,

The Inspector General

BACKGROUND

On October 28, 1997, Petitioner pled guilty to conspiracy to commit Medicare fraud, mail fraud, and false and fraudulent claims against the United States. On June 29, 1998, he was sentenced to 30 days imprisonment, 11 months of house arrest, and ordered to pay $360,000 in restitution. By letter dated July 30, 1999, the I.G. notified Petitioner that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of 15 years. By letter dated August 31, 1999, Petitioner timely appealed the 15-year exclusion and requested a hearing before an administrative law judge.

On December 14, 1999, a telephone prehearing conference was conducted. After exchanges of proposed exhibits and witness lists, a hearing was convened before me in Miami, Florida, on February 24, 2000. At the hearing, I received into evidence Joint Exhibit (Joint Ex.) 1, which consisted of a stipulation by the parties as to much of the applicable law and material facts, I.G. Exhibits (I.G. Ex.) 1-9, and Petitioner's Exhibits (P. Ex.) 1, 3, 4, and 5. I heard the testimony of two witnesses on behalf of the I.G., as well as the testimony of Petitioner and his wife. A briefing schedule was established at the close of the hearing.

Before briefs could be filed, I was notified that I had been selected to fill the vacant seat in the Departmental Appeals Board at this Agency, effective April 9, 2000. Since the Board position was not designated as an administrative law judge position, and since hearings in I.G. matters must be conducted, and the decision issued, by administrative law judges, it appeared that I would not be able to render a decision on this case if we adhered to the established briefing schedule. Accordingly, on March 27, 2000, I convened a telephone conference with Petitioner, his representative, and I.G. counsel. We discussed several possible options, including: retaining the briefing schedule, but reassigning the case to another judge for decision; reassigning the case to another judge and conducting an entire new hearing; or entering into an agreement (of doubtful validity) that I would decide the case after briefing even though I was no longer classified as an administrative law judge. After both counsel indicated that they preferred that I decide the case, we agreed that, in lieu of the established briefing schedule, I would conduct a telephone oral argument on March 30, 2000, I would allow written submissions, if received by April 3, 2000, and I would issue my written decision by April 8, 2000. Accordingly, I did hear oral argument on March 30. Counsel for Petitioner elected not to file any additional submissions, while the I.G. submitted a short brief on April 3, 2000.

1. At all times relevant to this case, Petitioner was an owner and an operator of Dade Care Health Center, Inc. Joint Ex. 1, ¶ 1.

2. From January 1992 through April 1994, Petitioner was President, Treasurer, Secretary, and Director of Dade Care Health Center, Inc. and had the primary responsibility of managing the company's finances. Joint Ex. 1, ¶ 3.

3. Dade Care Health Center, Inc. was a Medicare provider and engaged in furnishing health care services to patients, including Medicare beneficiaries. Joint Ex. 1, ¶¶ 4-5.

4. On or about June 17, 1997, a Grand Jury Indictment was filed in the United States District Court, Southern District of Florida, charging Petitioner with Conspiracy to Commit Offenses or to Defraud the United States, False and Fraudulent Claims against the United States, and Mail Fraud. These charges related to Petitioner's management of Dade Care Health Center, Inc. The Indictment indicated the conspiracy began on or about January 25, 1993 and continued until on or about February 6, 1996. Joint Ex. 1, ¶¶ 6-7.

5. On or about October 28, 1997, Petitioner pled guilty to one count of conspiracy to file false Medicare claims and to use the United States mails in furtherance of the scheme. Joint Ex. 1, ¶ 8; I.G. Ex. 4, ¶ 1.

6. On June 29, 1998, Petitioner was sentenced to 30 days' imprisonment, 11 months home detention, three years' supervised release and was ordered to pay restitution of $360,000.
Joint Ex. 1, ¶ 9.

7. Petitioner's guilty plea and the acceptance of the plea by the United States District Court constitutes a "conviction" for the purposes of an exclusion under section 1128(a)(1) of the Social Security Act (Act).⁽¹⁾ Act, section 1128(i).

8. Petitioner's conviction was for an offense related to the delivery of a health care item or service under the Medicare program. Joint Ex. 1, ¶ 11.

9. The I.G. is required to exclude any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under the Medicare program from participation in any federal health care program. The minimum exclusion period is five years. Act, sections 1128(a), 1128(c)(3)(B).

10. At a minimum, Petitioner must be excluded for at least five years from participation in any federal health care program. Findings 8-9.

11. An exclusion for longer than five years may be imposed when certain aggravating factors are present. 42 C.F.R. § 1001.102(b).

12. The I.G. proved that the sentence imposed by the court on Petitioner included incarceration, which is one of the aggravating factors. 42 C.F.R. § 1001.102(b)(5).

13. Petitioner's criminal conduct resulted in a loss to the government of approximately $660,000 of which he was directed, as part of his sentence, to make restitution, jointly and severally with his co-conspirators, of $360,000. Joint Ex. 1, ¶ 9; I.G. Ex. 4 at 5.

14. The I.G. proved that the financial loss to the government from Petitioner's criminal activities was over $1500, which is one of the aggravating factors. 42 C.F.R. § 1001.102(b)(1); Finding 13.

15. The I.G. did not prove that the acts of Petitioner which resulted in his conviction lasted over one year, so that the aggravating factor described in 42 C.F.R. § 1001.102(b)(2) is not present.

16. I may consider certain mitigating factors when the I.G. applies aggravating factors to increase the exclusion to a period of over five years. 42 C.F.R. § 1001.102(c).

17. Petitioner's cooperation with federal officials resulted in additional cases being investigated, although these investigations were eventually abandoned. Petitioner was extremely cooperative with federal officials in their investigation of his crime as well as the activities of others. Petitioner was willing and able to testify in several other prosecutions, but federal officials decided not to call him as a witness. Overall, Petitioner's cooperation met the criteria for qualifying as a mitigating factor as per 42 C.F.R. § 1001.102(c)(3).

18. Factoring together the aggravating and mitigating circumstances involving the acts that resulted in Petitioner's conviction, the exclusion of 15 years imposed by the I.G. is unreasonable and excessive. I conclude that the exclusion period should be reduced to seven years.

DISCUSSION

Petitioner was one of about a dozen individuals, including his father and brother, who were indicted for a variety of counts arising out of operations which involved false and fraudulent claims for a variety of health care benefits. See Transcript (Tr.) 29. Petitioner's involvement was primarily for his role in owning and operating Dade Care Health Center, Inc. (Dade Care). It is not disputed that Petitioner's role in the overall conspiracy was substantially less than most of the other named individuals, and that his sentence reflected that fact. See Tr. 30. However, it is also not disputed that Petitioner received substantial sums of money from his illegal activities, that he knew that the money he was receiving was ill-gotten, and that he is unable to account for most of these gains. Tr. 81-83, 116-17.

Petitioner is an x-ray technician by training, who, in January 1992, purchased Dade Care and served as its President, Treasurer, Secretary, and Director. Tr. 78-79. Petitioner ran the business legitimately and not very successfully. Tr. 80. Beginning sometime in early 1993, after being approached by his brother, he began working with Manny Alvarez in operating Dade Care. Tr. 81. At this point, Petitioner had very little involvement in the day-to-day operation at Dade Care, generally working his full-time job at a hospital during the day, and occasionally dropping by Dade Care at night. Tr. 82. He received large sums of money, knowing it was the product of illegal activity, and performed acts, including filing false claims, that he knew were illegal. Id.

It is unclear exactly when he decided to stop performing illegal activity, but he stated it was less than a year after beginning such activity that he ordered the illegal operations to stop, although it was months after that before the clinic was closed. Tr. 88-90. Neither William Healy, the Assistant United States Attorney who coordinated the criminal investigation, nor Thomas Murach, the I.G.'s Special Agent investigating this matter, were able to state that the involvement of Petitioner in these criminal activities lasted as long as a year. Tr. 32-34, 73. Mr. Healy pointed out that the time period covered by the indictment involved approximately one dozen individuals over the three-year period of time and that the specific activities for which Petitioner was charged took place well within one year of each other. Tr. 32-34. The burden of proving aggravating circumstances is on the I.G. See 42 C.F.R. § 1005.15(b)(2). Because I have concluded that the evidence is equivocal on this point, I find that the I.G. did not meet her burden to establish that Petitioner's acts were committed over a period of one year or more. Accordingly, the aggravating circumstance described at 42 C.F.R. § 1001.102(b)(2) is not established.

It is undisputed that Petitioner was imprisoned for his criminal activities, serving 30 days imprisonment and being under house arrest for an additional eleven months. Joint Ex. 1, ¶ 9; Tr. 26, 45. This establishes the aggravating factor described in 42 C.F.R. § 1001.102(b)(5). The regulations do not provide guidelines, and the I.G. has not provided any guidelines of its own, as to how to factor in the length of imprisonment in terms of additional time to exclude an individual. The I.G. has not provided any guidance to me on how to treat an individual sentenced to 30 days compared to an individual sentenced to 5, 10, or 20 years. The U.S. District Judge who sentenced Petitioner noted on the record that she was convinced Petitioner was a good person who had made a mistake. I.G. Ex. 6 at 34. Given the remedial nature of the statute, the relative leniency of Petitioner's sentence, and the sentencing judge's remarks, I do not find the fact that Petitioner's sentence included incarceration probative of significant additional untrustworthiness on Petitioner's part.

The financial aspects of the crime are more troubling, however. While the trigger for this aggravating factor is $1500, Petitioner admitted receiving a salary of around $230,000 during the time of his involvement for doing very little with regard to the operation of Dade Care. See Tr. 50-51, 116-117. The estimated cost to the government for the crimes involving Dade Care is $660,000 of which Petitioner was ordered by the sentencing judge to pay, jointly and severally, $360,000. Tr. 26; Joint Ex. 1, ¶ 9. Thus far, Petitioner has repaid less than $6,000 and claims to have no funds to pay back more at present, due in part to his having to give up his x-ray technician job as a result of this exclusion. Tr. 96-97; Joint Ex. 1 ¶ 14. What particularly troubles me is Petitioner's inability to account for his ill-gotten gains, as well as his alleged recollection-or lack thereof--of whether he even received funds upon selling Dade Care. See Tr. 116-117. I believe that Petitioner is remorseful and has been a good citizen other than during the time he participated in the criminal activities at issue. Nevertheless, the large amount of financial damage to the government over a relatively short period of time (400 times the amount necessary to trigger this aggravating factor) and Petitioner's inability to account for these funds is evidence of significant untrustworthiness. Accordingly, the I.G. has proved a basis for significantly lengthening the period of exclusion pursuant to 42 C.F.R. § 1001.102(b)(1).

Petitioner is entitled to partial mitigation of his exclusionary period. I find that Petitioner has met the requirements of 42 C.F.R. § 1001.102(c)(3) as a result of his extensive cooperation with Federal officials in the investigation not only of his own crime but in the crimes of others. Testimony of the Assistant U.S. Attorney, Mr. Healy, makes it unquestionably clear that from his first post-indictment meeting with law enforcement authorities, Petitioner was totally forthcoming and cooperative. Tr. 59. See also I.G. Ex. 6 at 24. Petitioner was willing and able to testify in other trials, and was prevented from doing so only by the decision of prosecutors that his testimony was not necessary for conviction. Tr. 42-43. In addition, he was the source of "a good deal of information about certain individuals" which the government was pursuing, but these investigations were "shut down" for reasons totally beyond Petitioner's control. Tr. 59. His cooperation was not reluctant or begrudging, but was given willingly and from the outset.

The extent of Petitioner's cooperation is also reflected in the statement of Mr. Healy at Petitioner's sentencing hearing. Mr. Healy stated that Petitioner had testified before a grand jury that was investigating the activities of another individual. I.G. Ex. 6 at 24. Mr. Healy also wrote to the I.G. to inform her office of Petitioner's cooperation and indicated that this cooperation led the government to file a sentence reduction request. P. Ex. 1. The sentencing reduction request was granted by the judge. See I.G. Ex. 6 at 31.

As with the other aggravating and mitigating factors at issue in this case, the I.G. has no formally established policy as to the weight to be given, in terms of number of years of reduction of the exclusion, that should be attributed to full cooperation of Petitioner. Given the nature of Petitioner's assistance, I conclude that he has shown that he is remorseful for his criminal wrongdoing and has sought to lessen the effect of that wrongdoing through his cooperation. See Tr. 49-50. This evidence convinces me that Petitioner is unlikely to offend again and, accordingly, he is entitled to more than a minimal reduction in his exclusionary period.

The I.G. did not consider Petitioner's cooperation with authorities in mitigation of the period of his exclusion. See Exclusion Letter, dated July 30, 1999. In her posthearing brief, the I.G. defends that decision, arguing that Petitioner's cooperation did not lead to the conviction or exclusion of others. I.G. Brief at 2. The I.G.'s argument fails to account for the language of the regulation which provides that a mitigating factor exists where an individual's cooperation results in "[a]dditional cases being investigated." 42 C.F.R.§ 1001.102(c)(3)(ii). As I have noted above, Petitioner's cooperation, at a minimum, led to additional cases being investigated. For this reason, I conclude that the I.G.'s failure to consider this mitigating factor was incorrect as a matter of law.

For the reasons discussed above, I find that the I.G. failed to prove one of the aggravating factors on which she relied in imposing a 15-year exclusion. Additionally, I find that the I.G. erred in failing to consider as a mitigating factor Petitioner's cooperation with Federal authorities. Several appellate panels of the Departmental Appeals Board have held that an administrative law judge's review of the length of an exclusion imposed by the I.G. is to determine whether that exclusion falls within a reasonable range. See, e.g., Arie Oren, M.D., DAB No. 1650 (1998)(and cases there cited). Factoring in the nature of Petitioner's crime, and weighing against the large amount of money involved, the relatively brief duration of his participation and the short length of his prison sentence, along with the degree of cooperation he provided the government, I conclude that a 15-year exclusion falls outside a reasonable range, and is excessive. I have reviewed a number of other administrative law judge decisions and believe that this length of exclusion is well above the norm, especially when factoring in Petitioner's relatively small role in the conspiracy to which he pled guilty. Accordingly, I find that seven years is a reasonable exclusion, taking into consideration the level of untrustworthiness manifested by Petitioner.

The 15-year exclusion imposed by the I.G. against Petitioner falls outside the range of reasonable exclusions. I find that an exclusion of seven years is appropriate based on the nature of Petitioner's crime, a balancing of the aggravating and mitigating factors specified in the regulation, and the remedial purpose of the Act.

Marc R. Hillson
Administrative Law Judge

1. The provisions of the Social Security Act discussed herein are codified at 42 U.S.C. § 1320a-7.