SUBJECT:

Dr. Darren J. James, D.P.M.,

Petitioner,

The Inspector General

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Dr. Darren James (Petitioner) from participation in Medicare, Medicaid, and all federal health care programs for a period of eight years. I find that the I.G. is authorized to exclude Petitioner pursuant to section 1128(a)(1) of the Social Security Act (Act). I find also that the eight-year exclusion imposed by the I.G. against Petitioner is reasonable.

I. Background

By letter dated March 31, 2000, the I.G. notified Petitioner that he was being excluded from participation in the Medicare, Medicaid and all federal health care programs for a minimum period of 10 years. The I.G. informed Petitioner that, pursuant to section 1128(a)(1) of the Act, he was being excluded because of a conviction, as defined in section 1128(i) of the Act, in the Superior Court of New Jersey, County of Mercer, Law Division - Criminal, for a criminal offense related to the delivery of an item or service under the Medicaid program. By letter dated April 28, 2000, the I.G. advised Petitioner that Petitioner's submission of evidence showing Petitioner's cooperation with federal officials during the course of their investigation into his activities qualified as a mitigating circumstance for purposes of setting the period of exclusion. As a result, the period of exclusion was reduced from 10 years to eight years.

Petitioner filed a request for hearing before an administrative law judge (ALJ) on May 24, 2000. The case was assigned to me for hearing and decision.

A prehearing telephone conference was conducted on August 24, 2000. During the telephone conference, the parties agreed that initial written submissions would be required in this case. Accordingly, with the parties' agreement, I issued an order establishing a briefing schedule. In my Order, I directed that Petitioner could request an in-person hearing in his response to the I.G.'s reply brief.

The I.G. submitted her brief in support of summary disposition (I.G. Br.) on October 20, 2000, which included eight proposed exhibits (I.G. Exs. 1-8). Petitioner submitted his response brief (P. Resp.) on November 13, 2000, which included 12 proposed exhibits (P. Exs. A-L). On December 15, 2000, the I.G. filed her reply brief (I.G. Reply), which included four additional proposed exhibits (I.G. Exs. 9-12). On December 29, 2000, Petitioner filed his sur-reply (P. Sur-Reply).⁽¹⁾ Neither party objected to the admission of the opposing party's exhibits. I therefore admit into evidence I.G. Exs. 1-12 and P. Exs. A-L.

On April 12, 2001, Petitioner requested that a telephonic hearing be conducted for the presentation of evidence of purported additional mitigating factors not previously considered by the I.G. Specifically, Petitioner sought to show additional instances of his cooperation with governmental agencies for the purpose of investigation and subsequent prosecution of individuals involved in the same or similar activities. A hearing, via telephone conference, was held on July 26, 2001. The hearing was held for the purpose of examination of the hearing's only witness Bruce Levy, former Assistant United States Attorney, to elicit testimony as to the degree of Petitioner's cooperation with government officials in the investigation and prosecution of related Medicaid fraud cases. During the hearing, the I.G. submitted five proposed hearing exhibits (I.G. Hearing Exs. 1-5). Petitioner cited to his November 13, 2000 brief at pages 9-12 during examination of the hearing's only witness as a proposed hearing exhibit. For clarity, I will refer to the referenced pages as P. Hearing Ex. 1. Thus, I.G. Hearing Exs. 1-5 and P. Hearing Ex. 1 were admitted and made part of the hearing record.

I base my decision in this case on the law, the evidence, and the parties' arguments.

II. Applicable law

Under section 1128(a)(1) of the Act, the Secretary of the U.S. Department of Health and Human Services (Secretary) may exclude from participation in the Medicare and Medicaid programs any 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 period not less than five years.See also, 42 C.F.R. § 1001.102(a).

42 C.F.R. § 1001.102(b) provides that the following factors may be considered to be aggravating and a basis for lengthening the 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 $1,500 or more by Medicare, Medicaid and all other Federal health care programs as a result of intentional (original emphasis) improper billings; (8) [t]he individual or entity has been previously 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."⁽²⁾

42 C.F.R. § 1001.102(c) provides that only in the event that any of the aforementioned aggravating factors justifies the exclusion for a period longer than five years, may any of the following factors be considered as mitigating and a basis for reducing the period of exclusion to not 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, and similar acts, is less than $1,500; (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; or (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, and 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."

III. Findings of fact and conclusions of law

1. At all times relevant to this case, Petitioner was licensed to practice podiatry in the State of New Jersey. I.G. Ex. 10, at 2.

2. On June 14, 1999, a criminal Accusation was filed against Petitioner in the New Jersey Superior Court for the County of Mercer, charging one count of Medicaid Fraud in the Third Degree. I.G. Ex. 2, at 1; see also N.J.S.A. 30:4D-17(a).

3. On June 14, 1999, Petitioner pled guilty to one count of Medicaid Fraud in the Third Degree. Id., at 2.

4. On June 14, 1999, Petitioner agreed, in a Consent Order of Exclusion, to a minimum exclusion period of five years from the New Jersey Medicaid program. I.G. Ex. 6.

5. As a result of his conviction, Petitioner was ordered to pay $74,233 in restitution, $200 and $211,867.35 as civil and administrative penalties to the New Jersey Medicaid Program. I.G. Ex. 5.

6. On March 31, 2000, Petitioner was notified by the I.G. that he was being excluded from participation in the Medicare and Medicaid programs for a minimum period of 10 years pursuant to sections 1128(a)(1) and 1128(c)(3)(B) of the Act. I.G. Ex. 1.

7. Under section 1128(a)(1) of the Act, the I.G. is authorized to exclude any individual or entity that has been convicted of a criminal offense related to the delivery of a health care item or service under Medicare or Medicaid. Act, section 1128(c)(3)(B).

8. Where the I.G. determines to exclude an individual pursuant to section 1128(a)(1) of the Act, the term of exclusion will be for a minimum period of five years.

9. A finding of aggravating factors may support an exclusion of more than five years. 42 C.F.R. § 1001.102(b).

10. A finding of mitigating factors may result in a reduction of the exclusion period, but in any case, no less than the minimum period of five years. 42 C.F.R. § 1001.102(c).

11. Petitioner's plea agreement constitutes a "conviction" within the scope of sections 1128(a)(1) and (3) of the Act.

12. The acts that resulted in the conviction, or similar acts, resulted in financial loss to the New Jersey Medicaid Program of more than $1,500. Petitioner agreed to pay restitution in the amount of $74,233. I.G. Exs. 1 and 5, at 1; see also 42 C.F.R. § 1001.102(b)(1).

13. Petitioner was convicted of other offenses besides those which formed the basis for the exclusion, or has been subject of another adverse action by a federal, state, or local government agency or board. Petitioner agreed to be excluded from the New Jersey Medicaid Program. I.G. Ex. 6; see also 42 C.F.R. § 1001.102(b)(9).

14. Petitioner did not prove the presence of any additional mitigating factors apart from those previously presented to the I.G., which resulted in a modification of the period of exclusion from 10 years to eight years.

15. The I.G. established the existence of aggravating factors under 42 C.F.R. §§ 1001.102(b)(1) and (9).

16. The aggravating factors established by the I.G. proved Petitioner to be untrustworthy.

17. I conclude that the I.G. was authorized to exclude Petitioner pursuant to section 1128(a)(1) of the Act.

18. An eight-year exclusion of Petitioner is reasonable and appropriate.

IV. Discussion

A. The I.G. is required to exclude Petitioner.

This case presents two issues: (1) whether the I.G. has the authority to exclude Petitioner; and (2) whether the period of exclusion is reasonable. The first statutory requirement for the imposition of mandatory exclusion pursuant to section 1128(a)(1) of the Act is that the individual or entity in question is convicted of a criminal offense under federal or state law. Petitioner does not challenge that he has been convicted under state law, and I so find. The record reflects that Petitioner pled guilty to the offense on June 14, 1999 in the Superior Court of New Jersey, County of Mercer, Law Division - Criminal. I.G. Exs. 1 at 4, 2 at 3. Petitioner was thus convicted within the meaning of section 1128(i)(3) of the Act.

Next, it is required under section 1128(a)(1) of the Act that the crime in question be related to the delivery of a health care item or service under the Medicare/Medicaid program. To determine if an offense is program-related, the ALJ must analyze the facts and circumstances underlying the conviction to determine whether a nexus or common sense connection links the offense, for which a petitioner has been convicted, and the delivery of a health care item or service under a covered program. Berton Siegel, D.O., DAB No. 1467 (1994). In Petitioner's case, a nexus links the facts underlying his crime with the delivery of health care items or services under Medicaid. The record reflects that Petitioner was employed as a licensed podiatrist in the State of New Jersey. I.G. Ex. 10, at 2. In such capacity, Petitioner was responsible for providing care and services to patients who were Medicare and Medicaid recipients. In the course of his employment, Petitioner falsely submitted claims for health care services and received reimbursement for services he had not provided. In the present case, the nexus between Petitioner's offense and the delivery of health care items or services is firmly established by his guilty plea on the charge of Third Degree Medicaid Fraud. I.G. Ex. 2. A plea constitutes a conviction under section 1128(i)(2) of the Act.

B. The applicable regulations were not applied Ex Post Facto.

Petitioner challenges the I.G.'s authority to impose sanctions pursuant to section 1128(a)(1) of the Act. Specifically, Petitioner contends that section 1128(a)(1) of the Act was not effective until 1997 -- two years after the commission of the crimes at issue. P. Resp. at 2. As authority for this supposition, Petitioner relies heavily on Florence Peters, D.P.M., DAB No. 1706 (1999). In Peters, the petitioner was excluded pursuant to section 1128(b)(1) of the Act. Section 1128(b)(1) was amended in 1997 to incorporate the provision that the underlying criminal act must have occurred after August 1996. The criminal acts in Peters occurred between 1987 and 1992. An appellate panel of the Departmental Appeals Board (the Board) ultimately determined that, under the amended regulation, the petitioner could not be excluded. The Peters case is not analogous to the facts in this case and therefore does not support Petitioner's assertions. In the instant case, Petitioner was excluded under section 1128(a)(1) of the Act, which was not only in effect at the time of Petitioner's criminal acts, but also at the time of the I.G.'s exclusion determination. At any rate, this is a moot issue. Recent case law has established that it is the law in effect at the time of the exclusion notice which is controlling. In this case, it is the version of the regulation in effect at the time of the I.G.'s March 31, 2000 notice of exclusion. See Robert Alan Spriggs, R.P.T., DAB CR718 (2000).

C. The period of exclusion was reasonable in light of the circumstances.

Petitioner also challenged whether the period of exclusion is reasonable. Petitioner contends that, in light of the extent of his cooperation with state and federal governmental agencies in assisting with on-going investigations and potential prosecution of related suspects, additional weight should be given to the degree of Petitioner's cooperation for the purpose of further modification of the exclusion period. P. Sur-Reply, at 3-5. An exclusion period of more than five years may be imposed where aggravating factors, as identified in the regulations, are present in a case. 42 C.F.R. § 1001.102(b). Only where aggravating factors have been proven to support the extended period of exclusion may mitigating factors be considered as a basis for reducing the period of exclusion (but not less than five years). 42 C.F.R. § 1001.102(c).

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. has proven the presence of the two following aggravating factors:

1. Petitioner was ordered by the court to pay $74,233 in restitution; and

2. Petitioner was excluded from participation in the New Jersey Medicaid program.

I.G. Ex. 1, at 1; I.G. Br. at 11.⁽³⁾

Following the I.G.'s issuance of the exclusion notice, Petitioner presented evidence of mitigating factors to the I.G. for consideration of modification of the 10-year exclusion period. Petitioner contends that, given the risks Petitioner undertook in order to assist the federal and state governmental agencies in their ongoing investigations of related Medicaid fraud cases, the I.G. did not give sufficient weight to this mitigating factor. Therefore, the eight-year exclusion should be modified further. P. Resp. at 9.

1. Aggravating factors exist in this case.

The I.G. has effectively argued that an eight-year period of exclusion is within a reasonable range given the facts, the aggravating factors and the consideration previously given to the degree of Petitioner's cooperation.

It is well settled that the presence of aggravating factors, such as those advanced by the I.G., substantiates a determination for an extended period of exclusion. Ruth Ferguson, DAB CR725 (2000); Tarvinder Singh, D.D.S., DAB CR697 (2000); Dale F. Lowe, DAB CR655 (2000); Steven Alonzo Henry, M.D., DAB CR638 (2000); JoAnn Fletcher Cash, DAB CR624 (2000).

a. The acts resulting in Petitioner's conviction, or similar acts, resulted in a loss to a State health care program of more than $1,500 (42 C.F.R. § 1001.102(b)(1)).

The I.G. asserts that Petitioner's acts for which he was convicted resulted in a financial loss of more than $1,500 to the State health care program. I.G. Br. at 11. The record reflects that Petitioner was ordered to pay Medicaid $74,233 in restitution as a condition of his plea agreement. I.G. Exs. 5. In Steven Alonzo Henry, M.D., DAB CR638 (2000), the ALJ determined that the amount of ordered restitution is "a fair estimate of the quantum of damages" caused by Petitioners' criminal act. See also Gilbert Ross, DAB CR478 (1997). Additionally, in the Consent Judgment, the court ordered Petitioner to pay $200 and $211,867.35 in civil and administrative penalties to Medicaid. I.G. Ex. 5, at 1. Thus, it is quite clear that Petitioner's criminal act resulted in a substantial financial loss to the Medicaid program.

b. Petitioner was convicted of offenses other than those which formed the basis of the exclusion, and has been subject to adverse action by a federal, state, or local government agency or board.

Next, the I.G. argues that Petitioner's exclusion from the New Jersey State Medicaid program is another aggravating factor specifically listed in the regulations. I.G. Br. at 12. As a stipulation to the Consent Order of Exclusion dated June 14, 1999, Petitioner agreed to a minimum exclusion period of five years from the New Jersey State Medicaid program. I.G. Ex. 6. The basis for exclusion from participation was Petitioner's conviction for Medicaid fraud. I.G. Exs. 5, 6. I find that Petitioner's exclusion from the New Jersey State Medicaid program constitutes an aggravating factor under 42 C.F.R. § 1001.102(b)(9).

c. Petitioner did not prove the presence of additional mitigating factors.

It is Petitioner's burden to prove any mitigating factors. James H. Holmes, DAB CR270 (1993). Aside from those factors entertained by the I.G., which resulted in the April 28, 2000 modification of the exclusion period, Petitioner has not established the existence of any additional mitigating factors. The record reflects that all due consideration was given to Petitioner's mitigating factor by the I.G. well in advance of Petitioner filing his request for hearing. Mr. Levy's testimony at hearing did not assist Petitioner in establishing that the I.G. did not wholly consider Petitioner's mitigating factors. The only relevant argument Petitioner makes with respect to mitigating factors is that he has, and continues to, fully cooperated with the government. However, despite being given ample opportunity, Petitioner has failed to present any evidence which supports his contention that his continued cooperation has led to the conviction or investigation of others or the imposition of a monetary penalty against others as required by 42 C.F.R. § 1001.102(c)(3)(i), (ii), and (iii). Therefore, I have considered Petitioner's claim, but it is without merit. As Petitioner has the burden concerning mitigating factors, I find that he has not met such burden and conclude that Petitioner has not proven the existence of any additional mitigating factors.

V. Conclusion

Based on the foregoing, I conclude that the I.G. was authorized to exclude Petitioner, pursuant to section 1128(a)(1) of the Act. I also find that, based on the existence of aggravating factors, the eight-year period of exclusion is reasonable.

Alfonso J. Montano

Administrative Law Judge

1. Following the conclusion of the scheduled briefing process, Petitioner filed numerous motions, with supporting documentation, on a variety of issues. I have admitted into evidence all supplemental exhibits submitted by both parties, although in some instances the exhibits were duplicative.

2. Effective October 1, 2000, Title 42 of the Code of Federal Regulations was revised. In this matter, the controlling regulatory provisions are those in effect prior to October, 2000. See Robert Alan Spriggs, R.P.T., DAB CR718 (2000).

3. Although the I.G.'s exclusion letter dated March 31, 2000 refers to three aggravating circumstances, i.e., 42 C.F.R. §§ 1001.102(b)(1), (8), and (9), only sections 1001.102(b)(1) and (9) are addressed in the I.G.'s briefs.