SUBJECT:

Joseph Picciotti, D.P.M.,

Petitioner,

The Inspector General

DECISION

I conclude that Joseph Picciotti, D.P.M. (Petitioner) is subject to a 10-year exclusion from participation in Medicare, Medicaid, and all other federally funded health care programs. Therefore, I affirm the Inspector General's (I.G.'s) determination. Additionally, I conclude that a 10-year exclusion is not unreasonable. I base my decision on the documentary evidence, the applicable law and regulations, and the arguments of the parties.

By letter dated August 31, 2000, the Inspector General (I.G.) notified Petitioner that he was being excluded from participation in the Medicare, Medicaid, and all other federal health care programs as defined in section 1128B(f) of the Social Security Act (Act) for a minimum period of 10 years. The I.G. informed Petitioner that his exclusion was imposed under section 1128(a)(1) of the Act, due to his conviction (as defined in section 1128(i) of the Act) in the United States District Court for the District of New Jersey of a criminal offense related to the delivery of an item or service under the Medicare program.

Petitioner filed a request for a hearing on September 16, 2000, and this case was assigned to me for adjudication. The I.G. is represented in this case by the Office of Counsel. Petitioner appeared on his own behalf. The parties agreed that the case could be decided based on written briefing and that an in-person hearing was unnecessary. The I.G. submitted a written brief and four proposed exhibits on December 4, 2000. These have been identified as I.G. Exhibits (I.G. Exs.) 1-4. Petitioner did not submit a brief but submitted two unmarked proposed exhibits which were received by the Civil Remedies Division on January 8, 2001.⁽¹⁾ I have identified Petitioner's unmarked exhibits as Petitioner Exhibits (P. Exs.) 1-2.⁽²⁾ Since neither party opposed the admission of the other's exhibits, I am admitting I.G. Exs. 1-4 and P. Exs. 1-2 into evidence.

It is my finding that Petitioner was convicted of a criminal offense related to the delivery of an item or service under the Medicaid program. Additionally, I find that a 10-year exclusion is not unreasonable.

1. Whether the I.G. had a basis upon which to exclude Petitioner from participation in the Medicare, Medicaid, and all other health care programs.

2. Whether the 10-year exclusion imposed by the I.G. is unreasonable.

Section 1128(a)(1) of the Act authorizes the Secretary of the U.S. Department of Health and Human Services (Secretary) to exclude from participation in any federal health care program (as defined in section 1128B(f) of the Act), any individual convicted under federal or state law of a criminal offense relating to the delivery of a health care item or service.

An exclusion under section 1128(a)(1) of the Act must be for a minimum period of five years. Section 1128(c)(3)(B) of the Act. Aggravating factors can serve as a basis for lengthening the period of exclusion. 42 C.F.R. § 1001.102(b). As relevant here, the aggravating factors include:

(2) The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more;

(5) The sentence imposed by the court included incarceration;

(9) Whether 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 imposition of the exclusion.

If aggravating factors justify an exclusion longer than five years, mitigating factors may be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c). The mitigating factors are:

(1) The 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 $1,500;

(2) The 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) The individual's or entity's cooperation with Federal or State officials resulted in-

(i) Others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs,

(ii) Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or

(iii) The imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.

Pursuant to 42 C.F.R. § 1001.2007, a person excluded under section 1128(a)(1) of the Act may file a request for hearing before an administrative law judge limited to the issues of whether (i) the basis for the imposition of the sanction exists, and (ii) the length of exclusion is unreasonable. If the length of the exclusion imposed by the I.G. is "within a reasonable range" under the circumstances of the case, the ALJ has no authority to change it. 57 Fed. Reg. 3298, 3321 (Jan. 29, 1992); see also Gerald A. Snider, M.D., DAB No. 1637 (1997); Frank A. DeLia, D.O., DAB No. 1620 (1997); Barry D. Garfinkel, M.D., DAB No. 1572 (1996).

I make the following findings of fact and conclusions of law (FFCLs) to support my decision in this case.

1. Petitioner was licensed to practice podiatry in the State of New Jersey. I.G. Ex. 4.

2. Petitioner participated in illegal schemes to defraud the Medicare program which involved two providers of durable medical equipment and supplies. In the first scheme, he received kickbacks disguised as lease payments for referring patients to Leon SCD and placing orders with Leon SCD for durable medical equipment and supplies paid for in whole or in part by the Medicare program. In the second scheme, he failed to disclose his ownership interest on an application by BKA⁽³⁾ to become a Medicare provider, and after approval of BKA as a provider, received payments from BKA in exchange for referring patients and placing orders for durable medical equipment and supplies paid for in whole or in part by the Medicare program. In addition, on some occasions, Petitioner falsely stated on certificates of medical necessity that patients had chronic intractable lymphedema, placing orders with Leon SCD and BKA for excessive and medically unnecessary wound care supplies and durable medical equipment for this condition. I.G. Ex. 1.

3. Petitioner conspired to carry out these illegal schemes from on or about January 1, 1994 through on or about December 31, 1995. He carried out the illegal scheme with Leon SCD from on or about July 14, 1994 through on or about October 20, 1995. He carried out the illegal scheme with BKA from on or about September 29, 1994 through on or about December 31, 1995. I.G. Ex. 1.

4. On July 2, 1999, Petitioner was found guilty after a jury trial in the U.S. District Court for the District of New Jersey of one count of conspiracy to defraud the United States in violation of 18 U.S.C. § 371, six counts of soliciting and receiving kickbacks in violation of 42 U.S.C. § 1320(a)-7b(b)(1)(B), and six counts of mail fraud in violation of 18 U.S.C. § 1341. I.G. Ex. 2, at 1.

5. Petitioner was sentenced to 30 months imprisonment to be followed by three years of supervised probation and ordered to pay a fine of $40,000. I.G. Ex. 2, at 2-3, 5.

6. Based on Petitioner's criminal conviction, the New Jersey Board of Medical Examiners revoked Petitioner's license to practice podiatry in the State of New Jersey effective December 17, 1999. I.G. Ex. 4.

7. Based on Petitioner's criminal conviction and on the revocation of his license to practice podiatry, the New Jersey Department of Human Services, Division of Medical Assistance and Health Services, disqualified Petitioner from participating in the New Jersey Medicaid and KidCare programs effective February 16, 2000. I.G. Ex. 3.

8. The I.G. notified Petitioner by letter dated August 31, 2000 that, pursuant to section 1128(a)(1) of the Act, he was being excluded from participating in the Medicare, Medicaid, and all Federal health care programs for 10 years, effective 20 days from the date of the letter.

9. Petitioner was convicted of a criminal offense related to the delivery of an item or service under title XVIII (Medicare) within the meaning of section 1128(a)(1) of the Act.

10. The minimum length of exclusion under section 1128(a)(1) of the Act is five years.

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

12. The I.G. notified Petitioner that the period of exclusion was greater than the minimum of five years because the I.G.'s records contained evidence of three aggravating factors.

13. The I.G. established the existence of aggravating factors under 42 C.F.R. §§ 1001.102(b)(2), (5), and (9).

14. Petitioner did not establish the existence of any of the mitigating circumstances in 42 C.F.R. § 1001.102(c).

15. An exclusion of 10 years is within the range of reasonable exclusion periods under the circumstances of this case.

In his request for hearing, Petitioner did not dispute that a five-year exclusion was properly imposed by the I.G. under section 1128(a)(1) of the Act. Petitioner took the position, however, that a 10-year exclusion was unreasonable. Specifically, Petitioner disputed that the I.G. had established the existence of two of the aggravating factors on which it relied in imposing the exclusion, i.e., that the acts that resulted in the conviction occurred over a period of more than one year (42 C.F.R. § 1001.102(b)(2)), and that Petitioner was the subject of other adverse action by a state agency or board (42 C.F.R. § 1001.102(b)(9)). In addition, Petitioner argued that there were mitigating circumstances which should have been considered in setting the length of the exclusion period. Finally, Petitioner argued that the exclusion should have been effective at the onset of his incarceration rather than 20 days from the date of the I.G.'s notice of exclusion. I discuss each of Petitioner's arguments below.

The I.G. established the existence of the aggravating factor at 42 C.F.R. § 1001.102(b)(2)

Petitioner stated that, according to testimony at the trial, the acts on which the exclusion was based were for a period of less than one year. Section 1001.102(b)(2) requires that the acts have occurred for a period of one year or more in order to constitute an aggravating factor.

The testimony at the trial is irrelevant, however. The counts of the indictment of which Petitioner was convicted describe several illegal activities in which Petitioner was engaged for a period of one year or more.⁽⁴⁾ The facts charged in those counts must be accepted as true for purposes of determining the reasonableness of the length of the exclusion since the applicable regulations preclude a collateral attack on the underlying conviction in these proceedings. See 42 C.F.R. § 1001.2007(d).

Accordingly, I conclude that the I.G. established the existence of the aggravating factor at section 1001.102(b)(2).

The I.G. established the existence of the aggravating factor at 42 C.F.R. § 1001.102(b)(9)

Petitioner asserted that "the other adverse actions taken against me were all based on the same circumstances." It is unclear what Petitioner intended by this; however, I take it to be an argument that the aggravating factor at section 1001.102(b)(9) did not apply here because the other adverse actions, i.e., the revocation of Petitioner's license to practice podiatry in the State of New Jersey and the disqualification of Petitioner from participating in the New Jersey Medicaid and KidCare programs, were based on the same circumstances as the exclusion. As is evident from the language of section 1001.102(b)(9) itself, however, this is precisely the situation covered by that section. See also Feyerdoon Abir, M.D., DAB No. 1764, at 7-9 (2001) (finding that the history of this provision confirms that the I.G. intended it to be read in this manner).

Accordingly, I find that the I.G. established the existence of the aggravating factor at section 1001.102(b)(9).

Petitioner did not establish the existence of any mitigating factors

In his hearing request, Petitioner stated that, given his current age, a 10-year exclusion "would essentially exclude [him] from ever practicing again." He also stated that since his "specialty, wound care, involves treating a significant number of Medicare recipients, the lengthy exclusion would bar [him] from providing his expertise to those who need it most." He further stated that this was "a first and only offense during a twenty year career . . . ." Petitioner's letter dated September 16, 2000. In addition, Petitioner submitted a copy of a letter from his former counsel to the I.G. requesting that the exclusion be for the five-year minimum and stating that there are very few podiatrists in the town in which Petitioner practiced, that Petitioner's specialization in wound care was unique, that Petitioner was the director of residency and medical director at the hospital in his town-a rare level of professional responsibility for a podiatrist, and that there was no allegation or evidence that any patient received inadequate treatment. Letter dated August 18, 2000 from Lodge to Smith. Although Petitioner did not expressly identify these as mitigating factors, he clearly took the position that they should be considered as such.

Section 1001.102(c) of 42 C.F.R. sets out a limited list of factors which may be considered mitigating. These factors, quoted earlier in this decision, relate to the seriousness of the crime, diminished capacity in committing the crime, and cooperation with the government. Since none of the considerations noted by Petitioner are on the list, they are not mitigating factors within the meaning of the regulations. See John E. Calhoon, DAB No. 1729, at 7 (2000).

Moreover, I conclude that, even if Petitioner could establish that there were mitigating factors, a 10-year exclusion is still warranted because of the seriousness and magnitude of the offenses committed by Petitioner, as measured by the aggravating factors.⁽⁵⁾ Some of Petitioner's illegal activities spanned a period of two full years, double the minimum necessary to establish the existence of this aggravating factor. In addition, he was sentenced to incarceration for two and one-half years, a lengthy period which reflects his central role in planning and executing various schemes to defraud the Medicare program. Furthermore, two state entities concluded that Petitioner was so untrustworthy as to warrant their taking action to permanently prevent him from practicing podiatry in the state or receiving any payments from the Medicaid or KidCare programs.

Accordingly, I conclude that a 10-year exclusion is within the range of reasonable exclusion periods necessary to protect federally funded health care programs and beneficiaries and recipients of those programs from Petitioner.

The I.G.'s exclusion was effective 20 days from the date of the August 31, 2000 notice of exclusion

The I.G.'s August 31, 2000 notice of exclusion stated that the exclusion would be effective "20 days from the date of this letter," consistent with the requirement at 42 C.F.R. § 1001.2002(b) that an exclusion will be effective 20 days from the date of the notice. In Petitioner's request for hearing, he questioned this effective date, asserting that "[a]ccording to previous letters from H.H.S. and Medicare, my exclusion started at the onset of my incarceration." Letter to Chief, Civil Remedies Division, dated September 16, 2000. The record indicates that Petitioner was scheduled to surrender for service of his sentence at the designated institution within 60 days of the July 2, 1999 judgment. I.G. Ex. 2, at 2.

Petitioner did not provide any further information regarding the content of the letters to which he referred. In any event, it is well-settled that neither the statute nor the regulations set any specific deadline for the I.G. to act to exclude an individual once that individual is convicted, and that an ALJ is without authority to change the effective date of an exclusion prescribed by the regulations. See Alfredo Rodriguez-Machado, DAB CR706 (2000), and cases cited therein.

Accordingly, I find that the exclusion was effective 20 days from the date of the I.G.'s August 31, 2000 notice of exclusion.

I find that the I.G. was authorized to exclude Petitioner pursuant to section 1128(a)(1) of the Act and that a 10-year exclusion was within a range of reasonable exclusion periods under the circumstances.

Jose A. Anglada

Administrative Law Judge

1. In accordance with the briefing schedule which I established, Petitioner's response brief and exhibits should have been filed by January 4, 2001. On December 26, 2000, Petitioner requested a continuance of this case until after his release from the Fairfield Correctional Institution, which he stated was scheduled for May 2001, on the grounds that he did not have access to the necessary legal research material and that he was unable to afford counsel at that time. In a letter of the same date, Petitioner requested a telephone conference to further discuss his appeal. Petitioner subsequently submitted the two proposed exhibits referred to above. Petitioner was advised by letter dated January 22, 2001 that I had denied both of his requests but extended the time for submission of his brief to February 9, 2001. Petitioner was further advised that if he did not respond, I would close the record and proceed to decision. By letter dated March 26, 2001, Petitioner was advised that the record in the case was closed.

2. The first exhibit is a letter, dated August 18, 2000, from an attorney to the Office of the Inspector General request that Dr. Picciotti's exclusion be reduced to five years. The second exhibit is request from Dr. Picciotti to the education department of the prison requesting certain documents.

3. BKA is company created by Petitioner in or about September 1994 to provide durable medical equipment and supplies. I.G. Ex. 1, at 9.

4. Petitioner was convicted of all counts in the indictment with the exception of one of seven counts of mail fraud. I do not rely on the mail fraud counts in determining the period of time covered by Petitioner's criminal activities since the indictment describes all seven mail fraud counts together.

5. Thus, Petitioner was not prejudiced by his purported ignorance of the mitigating factors enumerated in the regulations resulting from his lack of access to legal reference materials or ability to afford counsel.