SUBJECT:

Edward J. Levine, M.D.,

Petitioner,

The Inspector General

Petitioner filed a hearing request. During a prehearing conference on July 26, 2000, the parties agreed with me 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), and that I could decide this case on the basis of the parties' written submissions in lieu of an in-person hearing. The I.G. moved for summary disposition. The I.G. submitted a brief accompanied by 11 proposed exhibits (I.G. Ex. 1-11). Petitioner submitted a brief and four proposed exhibits (P. Ex. 1-4). Petitioner did not object to my receiving into evidence the I.G.'s proposed exhibits, and I receive into evidence I.G. Ex. 1-11. Because Petitioner's proposed exhibits 1-3 are duplicates of I.G. Ex. 1, 4, and 6, I do not admit P. Ex. 1-3 into the record. I do admit P. Ex. 4, which I renumber as P. Ex. 1.

I affirm the I.G.'s determination to exclude Petitioner from participating in Medicare and Medicaid for a period of 10 years.

Section 1128(a)(3) of the Act provides the Secretary with the authority to exclude from participation in federal health care programs "any individual . . . that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program . . . operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct."

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a)(3) of the Act shall be for a minimum period of not less than five years.

42 C.F.R. § 1001.102(b) provides that the following factors may be considered to be aggravating and a basis for lengthening the minimum mandatory five-year 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 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 of behavior, or consisted of non-consensual sex acts; (5) [t]he sentence imposed by the court included incarceration; (6) [t]he convicted individual or entity has a prior criminal, civil or administrative sanction record; (7) [t]he individual or entity has at any time been overpaid a total of $1500 or more by Medicare, Medicaid or any other Federal health care programs as a result of intentional improper billings; (8) [t]he individual or entity has previously been convicted of a criminal offense involving the same or similar circumstances; or (9) [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."

42 C.F.R. § 1001.102(c) provides that only if there are aggravating factors present which justify an exclusion longer than five years may the following factors be considered as mitigating and a basis for reducing the period of exclusion to no less than five years: "(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 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; (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."

Petitioner concedes that the I.G. properly found that he was subject to exclusion under section 1128(a)(3) of the Act. He asserts, however, that a five-year exclusion, rather than the 10-year exclusion imposed, is reasonable. He maintains that facts exist in his case which, while not mitigating per se, tend toward mitigation and warrant a shorter period of exclusion. Petitioner notes that he was at the bottom rung of the conspiracy and that the drugs involved were muscle relaxants, antibiotics, and anti-inflammatories. He notes that he readily accepted responsibility for his role and that he is very contrite. He also states that he assisted prosecutors in their prosecution by readily accepting his guilt and by timely notifying them of his willingness to plead guilty. Finally, he cites his unblemished clinical record.

1. During the period of time relevant to this case, Petitioner was licensed to practice medicine in the State of New York. I.G. Ex. 5.

2. On February 22, 1999, a one-count felony Information was filed against Petitioner in the United States District Court, District of New Jersey, charging him with conspiracy to defraud the United States, 18 U.S.C. § 371, by knowingly and wilfully selling and/or trading drug samples from 1993 until February of 1998 in violation of 21 U.S.C. § 333(b)(1) (B). I.G. Ex. 4.

3. From 1993 until 1998, Petitioner sold, on over 30 occasions, his current supply of drug samples to his co-conspirator, for which Petitioner received payment of approximately $9000. I.G. Ex. 4.

4. On February 22, 1999, Petitioner pleaded guilty to the one-count Information and judgment was entered against him. I.G. Ex. 2 and 4.

5. Petitioner's felony conviction was based in part on conduct that occurred after August 21, 1996. I.G. Ex. 4.

6. Petitioner's actions contributed to the sale of drugs that had neither control numbers, adequate labeling information, nor expiration dates when dispensed to the public, thus defrauding purchasers by misrepresenting that these drugs were obtained from legitimate sources and conformed with applicable federal standards for packaging and labeling. I.G. Ex. 4

7. As a result of his conviction, on September 27, 1999, Petitioner was sentenced to six months of home confinement and five years of probation, ordered to serve 200 hours of community service for each of the five years of probation, and ordered to pay a monetary fine of $20,000. I.G. Ex.2.

8. On April 28, 2000, Petitioner was notified by the I.G. that he was being excluded from participation in the Medicare and Medicaid programs for a 10-year period, pursuant to section 1128(a)(3) and section 1128(c)(3)(B) of the Act.

9. Under section 1128(a)(3) of the Act, the I.G. is authorized to exclude any individual or entity that has been convicted of a criminal offense occurring after August 21, 1996, consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program operated by or financed in whole in part by any federal, State or local government agency under Medicare or Medicaid.

10. Where the I.G. determines to exclude an individual pursuant to section 1128(a)(3) of the Act, the term of exclusion will be for a period of five years, and the I.G. is authorized to increase the length of the term of exclusion beyond five years if any of the aggravating factors set forth in 42 C.F.R. § 1001.102(b) are present.

11. Petitioner's criminal conviction constitutes a conviction within the scope of section 1128(i)(3) of the Act.

12. Petitioner's criminal conviction for Conspiracy to Defraud the United States by selling and/or trading drug samples in violation of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 331(b)(1)(B), is a felony under section 18 U.S.C. §§ 371 and 3359.

13. Petitioner's conviction for Conspiracy to Defraud the United States is related to fraud, theft, embezzlement, breach of fiduciary responsibility or other financial misconduct within the scope of section 1128(a)(3) of the Act.

14. Petitioner's criminal conviction is connected to the delivery of a health care item or service within the meaning of section 1128(a)(3) of the Act.

15. The I.G. is authorized to exclude Petitioner pursuant to section 1128(a)(3) of the Act.

16. Petitioner did not prove the presence of any mitigating factors pursuant to 42 C.F. R. § 1001.102(c) which may be considered as a basis for reducing the mandatory exclusion period to no less than five years.

17. The I.G. established the existence of an aggravating factor under 42 C.F.R. § 1001.102(b)(2), in that Petitioner participated in the conspiracy from 1993 until 1998.

18. The I.G. established the existence of an aggravating factor under 42 C.F.R. § 1001.102(b)(5), in that Petitioner was sentenced to a six-month period of home detention.

19. The I.G. established the existence of an aggravating factor under 42 C.F.R. § 1001.102(b)(9), in that the State of New Jersey Department of Human Services, Division of Medical Assistance and Health Services, suspended Petitioner's participation in all New Jersey funded health care programs.

20. The aggravating factors established by the I.G. prove Petitioner to be untrustworthy.

21. The exclusion of 10 years imposed by the I.G. is within the range of reasonable exclusion periods under the circumstances of this case and is affirmed.

For the reasons indicated below, I find that the I.G. has demonstrated that Petitioner is subject to exclusion under section 1128(a)(3) of the Act. On February 22, 1999, Petitioner pleaded guilty to Conspiracy to Defraud the United States and such plea was accepted by the court. Such procedure constitutes a conviction under section 1128(i)(3) of the Act. Carlos Rivera-Cruz, DAB CR677 (2000).

Next, it is required under section 1128(a)(3) of the Act that the crime at issue be a felony. Pursuant to 18 U.S.C. § 3559(a)(4), a criminal offense not specifically classified by a letter grade is a Class D felony if the maximum term of imprisonment authorized is less than 10 years, but five years or more. The offense for which Petitioner was convicted is not classified by a letter grade, but mandates a term of imprisonment of not more than five years. His conviction is therefore a felony.

Petitioner's conviction is related to fraud or financial misconduct within the scope of section 1128(a)(3) of the Act. Petitioner conspired with other individuals to sell drug samples provided to him free of charge by pharmaceutical companies in violation of federal law. Petitioner and his co-conspirators realized substantial pecuniary gain by this conspiracy. Moreover, because his co-conspirators sold the diverted drugs to members of the public, Petitioner's unlawful actions contributed to the sale of drugs that, due to their repackaging by the co-conspirer, had neither control numbers, adequate labeling information, nor expiration dates when dispensed to the public. As a result, this conspiracy defrauded purchasers of these drugs by misrepresenting that such were obtained from legitimate sources and conformed with applicable federal standards for packaging and labeling. Such misconduct constitutes fraud or other financial misconduct within the scope of section 1128(a)(3) of the Act. Moreover, convictions based on similar conduct to Petitioner's have been found to relate to fraud or other financial misconduct within the scope of section 1128. Michael M. Bouer, DAB CR345 (1994) (finding pharmacist's conviction for conspiracy to commit fraud by selling diverted drugs related to fraud); Leonard S. Dino, R.Ph., DAB CR260 (1993) (finding pharmacist's conviction based on exchange of money for drug samples that were not intended for sale or resale related to conspiracy to defraud and financial misconduct).

Next, it must be shown that Petitioner's conviction related to the delivery of a health care item or service under the Medicare or Medicaid program. In this determination, an ALJ must analyze the circumstances underlying Petitioner's conviction to ascertain whether a nexus links the offense for which Petitioner was convicted to the delivery of a health care item or service. Dale F. Lowe, DAB CR665 (2000). The nexus between Petitioner's felony fraud offense and the delivery of health care items or services is evident upon an examination of the conspiracy in which he participated. Sabina E. Acquah, DAB CR480 (1997). The record reflects that Petitioner was found guilty of Conspiracy to Defraud the United States, as Petitioner participated in the unlawful sale of diverted drugs samples to his co-conspirators for subsequent sale to members of the public. Clearly, conviction for such an offense is connected to the delivery of a health care item or service, i.e. drugs, within the scope of section 1128(a)(3) of the Act. Chander Kachoria, R.Ph., DAB No. 1380 (1993); see also Stephen J. Weiss, DAB CR581 (1999).

Petitioner has argued in his brief that his 10-year exclusion should be reduced. 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). He asserts that he has an unblemished clinical record, that he assisted prosecutors in their prosecution of him because he timely notified them of his willingness to plead guilty, and that he is very contrite. He also states that he was at the bottom rung of the conspiracy and the drugs involved were muscle relaxants and antibiotics. However, none of these factors are ones within the scope of 42 C.F.R. § 1001.102(c). 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 within the range of reasonable exclusion periods, it is the responsibility of the administrative law judge to consider and evaluate all of the relevant evidence brought to bear in a 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 three aggravating factors in this case. The three aggravating factors consist of the following:

• 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 Indictment, for which Petitioner was convicted, reflects that the acts occurred from 1993 through February 1998. See Indictment, I.G. Ex. 4. The facts stated in the Indictment to which Petitioner pleaded guilty may be considered in this exclusion proceeding. See Norman C. Barber, DAB CR123 (1991).

• Petitioner's sentence included a period of incarceration. Under 42 C.F.R. § 1001.102(b)(5) it is an aggravating factor if Petitioner's sentence included incarceration. In this case, Petitioner was sentenced to six months of home confinement. I.G. Ex.2. Petitioner's home confinement, whether characterized as home detention or house arrest, is deemed incarceration under the applicable regulatory provisions and therefore constitutes an aggravating factor within the meaning of 42 C.F.R. § 1001.102(c)(5).

• Petitioner has been the subject of 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 exclusion. 42 C.F.R. § 1001.102(c)(9). On June 27, 2000, the State of New Jersey Department of Human Services, Division of Medical Assistance and Health Services, as a result of Petitioner's criminal conviction, suspended Petitioner's participation in all New Jersey funded health care programs. I.G. Ex. 7.

Considering Petitioner's evidence of mitigation and the I.G.'s evidence of aggravating factors, I find that the aggravating factors in Petitioner's case make the imposition of a 10-year exclusion within a reasonable range under the circumstances of the case. Joann Fletcher Case, DAB No. 1725 (2000). 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 has previously held in Barry D. Garfinkel, M.D., DAB No. 1572 (1996), it is the quality of the circumstances, whether aggravating or mitigating, which is to be dispositive 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 who placed his own financial gain above the public health and welfare. Although Petitioner may have been the "bottom rung" of the conspiracy, he was the crucial foundation for the sale of the unauthorized drugs. His participation was not random or impulsive, but recurrent and deliberate, as he engaged in such transaction on over 30 occasions over a five-year period. He was interested in furthering his own financial well-being over the public's health, as the drugs that were sold were not properly labeled and would be sold without proper marking for dates of expiration or in the event of recall. The fact that he was sentenced to a period of home confinement and was the subject an of adverse administrative action in the State of New Jersey, underscores the risk his misconduct presented to the public's well-being.

I conclude that the I.G. was authorized to exclude Petitioner pursuant to section 1128(a)(3) of the Act. I find that a 10-year exclusion is within the range of reasonable exclusion periods under the circumstances of this case and is affirmed.

Joseph K. Riotto

Administrative Law Judge

1. In this decision, I use the term "Medicaid" to refer to all of the federally funded State health care programs.