SUBJECT:

John E. Calhoon,

Petitioner,

The Inspector General

I conducted further proceedings in this case in accord with the appellate panel's decision. Both parties submitted additional briefs. Neither party submitted additional exhibits. I decide, based on the appellate panel's decision and the parties' arguments, that the exclusion in this case should be modified to a term of seven years.

Issue, findings of fact and conclusions of law

A. Issue

The issue on remand is whether an exclusion of 10 years is unreasonable.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision. I set forth each Finding below as a separately numbered heading. I discuss each Finding in detail.

1. A 10-year exclusion is unreasonable given that the I.G. failed to establish that Petitioner's crimes had any financial impact on the Medicare program.

In my initial decision in this case I sustained the I.G.'s exclusion determination based on the presence of three aggravating factors. These were that: (1) the acts which were the basis for Petitioner's conviction of a program-related offense resulted in financial loss to the Medicare program of more than $1,500; (2) the acts resulting in Petitioner's conviction, or similar acts, were committed over a period of one year or more; and (3) Petitioner was sentenced to a period of incarceration for his crimes. DAB CR641 at 7 - 9. I concluded that the most significant of these factors were the duration of Petitioner's crimes and the financial impact that Petitioner's crimes had on the Medicare program. I stated that:

The two most serious aggravating factors, in my judgment, are those which address the duration and impact of Petitioner's crimes. Petitioner participated in fraud against Medicare over a period of at least 20 months. The financial impact of his crimes during this period was substantial. When such evidence is considered in its totality, it reveals Petitioner to have engaged in a systematic and massive fraud against the Medicare program.

DAB CR641 at 10.

On appeal, the appellate panel found that the weight of the evidence did not sustain my finding that Petitioner's crimes had a substantial financial impact on the Medicare program. DAB No. 1729 at 6 - 12. Therefore, I may no longer decide whether the I.G.'s exclusion determination is reasonable based in part on the financial impact that Petitioner's crimes had on the program. I may evaluate Petitioner's untrustworthiness based essentially on the fact that he perpetrated crimes over a substantial period of time.

Although I continue to find that Petitioner's crimes were protracted, I can no longer say that they constituted a "massive fraud" against Medicare. Indeed, I can draw no conclusion as to the financial impact of Petitioner's crimes. In my judgment the absence of evidence that Petitioner's crimes had any financial impact on the program significantly undercuts my original conclusion concerning the level of Petitioner's untrustworthiness. There now is significantly less evidence that Petitioner is untrustworthy.

I conclude that a 10-year exclusion is not reasonable in the absence of evidence that Petitioner's crimes had a substantial financial impact on the Medicare program. There simply is not persuasive evidence in this case that Petitioner is so untrustworthy as the I.G. contends him to be.

The I.G. argues that a 10-year exclusion is reasonable in the presence of only two aggravating factors because the exclusion falls within a "reasonable range" of possible exclusions that may be imposed against Petitioner. I disagree. It is evident that the I.G. initially premised her exclusion determination on her belief that Petitioner's crimes had a very substantial financial impact on the Medicare program. Originally, the I.G. argued that Petitioner's crimes had resulted in a loss to the program exceeding $900,000. DAB CR641 at 11. And, although I did not agree with this assertion, I concluded that Petitioner's crimes had cost the program at least between $20,001 and $50,000. Id.

In the absence of evidence about the financial impact that Petitioner's crimes had on Medicare, all that can be said about them is that Petitioner perpetrated fraud on a number of occasions over a period of more than one year. This certainly is significant and is strong evidence that Petitioner is untrustworthy. But, I am not persuaded that Petitioner's untrustworthiness rises to the level that would be established in the presence of evidence that he had perpetrated fraud having a substantial financial impact. The case for an exclusion of 10 years - or even for a range of exclusions that includes 10 years - is not persuasive in the absence of evidence to support the I.G.'s contention that Petitioner's crimes had a substantial financial impact on the program.

2. An exclusion of seven years is reasonable.

Although there is no evidence that Petitioner's crimes had a substantial financial impact on the program, there is evidence that they were protracted and systematic. This evidence of aggravation is a basis for an exclusion of more than the five-year minimum period that is mandated for program-related crimes. I modify Petitioner's exclusion to a term of seven years. An exclusion of seven years is reasonable in light of the fact that the evidence continues to demonstrate that Petitioner shows a high degree of untrustworthiness, albeit not so high as the I.G. asserts to be present.

The evidence which relates to duration establishes that Petitioner submitted a small number of fraudulent Medicare cost reports over a relatively lengthy period of time (20 months). DAB CR641 at 11. I reiterate my original holding in this case that Petitioner's repeated submission of fraudulent cost reports is evidence of determined and protracted criminal activity by Petitioner. Id.

As I have discussed above, however, the significance of this activity is diminished somewhat by the absence of any evidence which explains its financial impact. It is not possible for me to conclude, as I did in my previous decision, that Petitioner's crimes had a massive impact on the Medicare program.

That is not to say that the evidence shows Petitioner to have engaged in inconsequential or trivial crimes. Petitioner was convicted of several crimes. He was found to have engaged in a scheme to defraud the Health Care Financing Administration of money by various false and fraudulent pretenses, representations, and documents. DAB CR641 at 3 - 4. And, he was sentenced to incarceration for his crimes. This evidence shows that the crimes that Petitioner committed over a period of 20 months were, indeed, serious and demonstrate a propensity by Petitioner to engage in criminal conduct. In addition, Petitioner did not prove the presence of any mitigating factors under the relevant regulations. DAB CR641 at 9 - 10. Petitioner is a highly untrustworthy individual even in the absence of evidence establishing the financial impact of his crimes.

My conclusion that Petitioner should be excluded for a period of seven years strikes a balance between evidence establishing the duration and scope of Petitioner's crimes and the lack of evidence establishing that Petitioner's crimes had any significant financial impact on the Medicare program. I conclude that the evidence shows that Petitioner is not so untrustworthy as the I.G. contends. I conclude also that he is a manifestly untrustworthy individual.

Steven T. Kessel

Administrative Law Judge