SUBJECT:

Andrew Anello,

Petitioner,

The Inspector General

DECISION

I affirm the I.G.'s determination to exclude Andrew Anello (Petitioner) under section 1128(a)(1) of the Social Security Act for a five year minimum mandatory period from participation in Medicare, Medicaid, and other federally funded health care programs.

BACKGROUND

By letter dated January 31, 2000, Petitioner was notified by the Inspector General (I.G.), United States Department of Health and Human Services (HHS), that she had decided to exclude Petitioner for a period of five years from participation in Medicare, Medicaid, and all federally funded health care programs. The I.G. imposed this exclusion pursuant to 1128(a)(1) of the Social Security Act (Act), 42 U.S.C. § 1320a-7 (a), based on Petitioner's conviction in the U.S. District Court, Northern District of Texas, Dallas Division, of a criminal offense related to the delivery of an item or service under the Medicare program.

Petitioner filed a timely request for review of the I.G's action. Petitioner requested an in-person hearing. The I.G. objected to an in-person hearing. Because I have determined that there are no material facts genuinely in dispute, and that the only matters to be decided are the legal implications of the undisputed facts, I have decided that summary affirmance is appropriate. See Rulings On Request For An In-Person Hearing And Exparte Contact. (February 1, 2000).

In Petitioner's brief of July 10, 2000, Petitioner filed five proposed exhibits which I have identified as Petitioner's Exhibits (P. Exs.) A - E. On February 26, 2001, Petitioner submitted five additional exhibits (A - E) which I have remarked and identified as P. Exs. A1 - E1. The I.G. filed three proposed exhibits. I have identified these exhibits as I.G. Exhibits (I.G. Exs.) 1 - 3. The parties did not object to each other's proposed exhibits. Therefore, I admit into evidence P. Exs. A - E and P. Exs. A1 - E1. I am also admitting into evidence I.G. Exs. 1 - 3.

ISSUE

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

APPLICABLE LAW

Section 1128(a)(1) of the Act authorizes the Secretary of HHS to exclude from participation in any federal health care program (as defined in section 1128B (f) of the Act):

[a]ny 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 not less than five years.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. At all times relevant to this case, Petitioner was the Vice President of Finance and Reimbursement at Staff Builders Health Care Services, Inc. (Staff Builders) of New York. Staff Builders is a franchiser of home health care agencies throughout the United States. I.G. Ex. 2.

2. Staff Builders franchisee agencies provide home health care services to Medicare beneficiaries under the Medicare program. I.G. Ex. 2.

3. As the Vice President of Finance and Reimbursement, Petitioner was responsible for the accuracy and appropriateness of payroll checks issued to franchise owners and reimbursed by Medicare. P. Ex. A1.

4. Peter Topham was the owner and operator of a Staff Builders franchise located in Dallas, Texas. P. Ex. B.

5. In September of 1995, Petitioner became aware of certain Medicare ineligible payroll expenses fraudulently submitted by Peter Topham. I.G. Ex. 2.

6. Despite Petitioner's knowledge of the improper expenses submitted by Topham, Petitioner processed the requested payments and filed for reimbursement from Medicare. I.G. Ex. 2.

7. Petitioner did not report Topham's fraudulent payroll expenses to law enforcement authorities. I.G. Ex. 2.

8. The amount of the fraudulent payroll checks expenses that were issued and subsequently billed to Medicare totaled $92,758.00. I.G. Ex. 2.

9. Petitioner was charged with Misprison of a Felony in violation of 18 U.S.C. § 4, for failing to disclose Topham's fraudulent Medicare reimbursement submissions.

10. On June 14, 1999, Petitioner plead guilty to Misprison of a Felony in the United States District Court, Northern District of Texas, Dallas Division. I.G. Ex. 3.

11. Petitioner was sentenced to one year probation, fined $ 5,000.00, and required to perform 150 hours of community service. I.G. Ex. 3.

12. Petitioner's guilty plea constitutes a conviction within the meaning of sections 1128(i)(1) and (2).

13. On January 31, 2000, Petitioner was notified by the I.G. that he was being excluded from participation in the Medicare and Medicaid program for the minimum mandatory period of five years, pursuant to sections 1128(a)(1) and 1128(c)(3)(B) of the Act.

14. Petitioner was convicted of a criminal offense related to the delivery of an item or service under a federal health care program and falls within the scope of section 1128(a)(1) of the Act.

15. Because he was convicted of a program related crime, Petitioner's five-year exclusion from participation in the Medicare, Medicaid, and all other federal health care programs, is mandatory.

16. The I.G. properly excluded Petitioner for a period of five years as mandated by section 1128(c)(3)(B) of the Act.

DISCUSSION

At all times pertinent to this case, Petitioner worked as an executive for Staff Builders Health Care Services, Inc. (Staff Builders) of New York. Staff Builders is the parent company and franchiser of more than 80 home health care agencies throughout the United States. P. Ex. B. Staff Builders home health care agencies are reimbursed by Medicare for providing medically necessary services to Medicare recipients. As the Vice President of Finance and Reimbursement, Petitioner was responsible for reviewing franchisee home health agency monthly expenses for reasonableness. P. Ex. A1.

From 1993 to 1995, Peter Topham (and his wife) was the owner/operator of a Staff Builders franchise located in Dallas, Texas (Staff Builders-Dallas). Topham also owned and operated an adult day care center known as the Circle of Friends, also located in Dallas, Texas. I.G. Ex. 2. During this period, Topham submitted Circle of Friends payroll time sheets to Staff Builders which fraudulently listed employees of the Circle of Friends as employees of Staff Builders-Dallas. Employees of Circle of Friends are not eligible for payroll reimbursement under the Medicare home health care program. Topham also submitted other financial reports to Staff Builders which contained other expenses not eligible for reimbursement under Medicare. I.G. Ex. 2.

In September of 1995, Petitioner became aware that Topham's Staff Builders-Dallas franchise had submitted fraudulent payroll time sheets and other expenses to Staff Builders. Despite this information, Petitioner authorized Staff Builders to file for reimbursement from Medicare for the fraudulent expenses. Petitioner did not report the fraud to law enforcement officials. In addition, Petitioner denied any knowledge of Topham's illegal activity when questioned by law enforcement officials. The amount of loss to the Medicare program as a result of the fraudulent billing amounted to at least $92,758.00. I.G. Ex. 2.

Petitioner was charged with Misprision of a Felony under 18 U.S.C. § 4 for failing to disclose the fraud. On June 14, 1999, Petitioner plead guilty and was sentenced to one year probation, a $5,000.00 fine, and 150 hours of community service.⁽¹⁾ I.G. Ex. 3.

On January 31, 2000, Petitioner was notified by the I.G. that he was being excluded from participation in the Medicare and Medicaid program for the minimum mandatory period of five years, pursuant to section 1128(a)(1) of the Act.

Petitioner does not dispute that he was "convicted" of a criminal offense within the meaning of sections 1128(i) (1) and (2) of the Act. However, Petitioner argues that his conviction does not fall within section 1128(a)(1) of the Act because his conviction is not related to the delivery of an item or service under a federal health care program. Petitioner has maintained that his conviction is related to his failure to report a bonus payment of $7,000.00, which Topham paid to himself, and not, as the I.G. contends, failing to report Topham's fraudulent submission of payroll expenses for reimbursement by Medicare.⁽²⁾

An administrative law judge (ALJ) does not have the authority to re-evaluate the underlying facts which gave rise to the conviction or delve into facts surrounding the conviction. See 42 C.F.R. §1001.2007 (d). Thus, the Petitioner may not use this forum to re-litigate or collaterally attack the specific facts and circumstances surrounding his criminal conviction.

Moreover, I note that the I.G. has provided documentary, independent, and reliable evidence of the underlying facts that led to the conviction of Petitioner. Specifically, the I.G. has submitted a Factual Resume dated February 22, 1999, (and other court documents) from the U.S. District Court for the Northern District of Texas, Dallas Division. I.G. Ex. 2. The Factual Resume contains the signatures of the Petitioner, Petitioner's attorney, and the Assistant U.S. Attorney, and indicates that the Petitioner was advised by counsel, and that he agreed with the facts contained therein. The Petitioner has not offered any independent documentary evidence to refute these documents. Therefore, I am satisfied that the Factual Resume of February 22, 1999, fairly describes Petitioner's criminal conduct.

Petitioner's conviction for failing to report Topham's fraudulent activities is related to the delivery of an item or service under a federal health care program. Filing fraudulent Medicare/Medicaid claims has been held to constitute program related misconduct. Alan J. Chernick, D.D.S., DAB No. 434 (1996). See also Green v. Sullivan, 731 F. Supp. 835, 838 (E. D. Tenn. 1990). The crimes for which Petitioner was convicted are related to the delivery of a health care item or service, as described in the Factual Resume, because they involve fraudulent billing and the submission of claims to Medicare for services which were represented as being rendered to Medicare beneficiaries by home health agency employees.

The Departmental Appeals Board has held that offenses other than the actual delivery "are also 'related' because they concern acts that directly and necessarily follow under the health care programs from the delivery of the item or service." Niranjana B. Parikh, M.D., Mohammed Akhtar, M.D., George Tsakonas, M.D., Chandra B. Singh, M.D, DAB No. 1334 (1992). Petitioner's duties as Director of Finance and Reimbursement involved management and administration of services related to the delivery of health care items or services under Medicare. He was responsible for reviewing financial statements and claims from Staff Builders franchise locations for services involving home health care services claimed to have been rendered to Medicare beneficiaries. I.G. Ex. 2 at 2; I.G. Ex.1 at 1 and 2. Petitioner then submitted claims to Medicare for reimbursement of the franchise expenses. Petitioner's duties directly involved the provision of management and administrative services related to the delivery of a health care item of service.

In essence, Mr. Anello's actions amounted to complicity with the fraudulent scheme, which resulted in Topham's defrauding of the Medicare program. In addition, Petitioner's crime involved the management and administration of services related to the delivery of health care items or service. The regulations contemplate that administrative and management services may satisfy the statutory requirement. 42 C.F.R. § 1001.101(a)(1). Therefore, I find that Petitioner's conviction was related to the delivery of a health care item or service under a covered program.

Further, Petitioner argues, that since his improper conduct took place in 1995, prior to the passing of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the permissive exclusion authority is applicable. Petitioner is incorrect. While HIPAA did change some parts of section 1128, exclusions for section 1128(a)(1) convictions have been mandatory since 1987, when the current version of section 1128(a)(1) was enacted. See S. Rep. No. 109, 100th cong., 1st Sess. p. 5 (1987), reprinted in 1987 U.S. Code Cong. & Ad. News 686. Thus, under section 1128(a)(1) of the Act, the exclusion must be mandatory. Indeed, section 1128(c)(3)(B) provides that:

in the case of an exclusion under section (a), the minimum period of exclusion shall be not less than five years . . . .

Therefore, the five-year exclusionary period cannot be reduced by the ALJ or the I.G.

Finally, Petitioner asserts several factors as grounds for mitigation: (1) his stellar record as an executive in the health care field for over 20 years; (2) the improper acts which led to his conviction were isolated and were an error in judgment rather than an intentional, malicious criminal act; and (3) letters from his colleagues and co-workers attesting to his reputation for integrity and trustworthiness.

These arguments are without merit. The length of the exclusion is controlled by 1128(c)(3)(B) of the Act. Neither the I.G. nor the ALJ has the authority to reduce the five-year minimum exclusion mandated by sections 1128(a)(1) and 1128(c)(3)(B) of the Act. Thus, the mitigating circumstances which Petitioner seeks to establish do not affect the outcome of this case.

CONCLUSION

I conclude that the I.G. was authorized to exclude Petitioner, pursuant to section 1128 (a)(1) of the Act for the mandatory minimum of five years. Therefore, the five-year exclusion is sustained.

Alfonso J. Montano

Administrative Law Judge

1. Topham and his wife subsequently plead guilty to mail fraud. Topham was sentenced to jail time and his wife received probation. Topham alleged that not only was Anello aware of the scheme, but maintained that Anello was intimately involved in helping to commit the fraud. However, authorities were unable to substantiate Topham's claims that Anello was actively involved in perpetrating the fraud.

2. I note that even if the facts and circumstances of Petitioner's conviction were as he has alleged, the outcome of the case would be the same.