SUBJECT:

Donald A. Burstein, Ph.D.,

Petitioner,

The Inspector General

The Inspector General (I.G.) notified Donald Burstein, Ph.D. (Petitioner) that he was being excluded from participation in Medicare, Medicaid, and all other federal health care programs for a period of 15 years pursuant to section 1128(a)(1) of the Social Security Act (Act); (42 U.S.C. § 1320a-7(a)). Petitioner's section 1128(a)(1) exclusion was based upon his conviction of a criminal offense related to the delivery of an item or service under the Medicare or Medicaid programs. Section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) provides that the minimum period of exclusion for such offense is five years. However, the I.G. excluded Petitioner for 15 years, asserting that two aggravating circumstances existed in the case justifying a longer period of exclusion. Petitioner timely requested review. I find that the I.G. has proved that only one aggravating circumstance exists in the case. The I.G. concedes a mitigating factor exists. Consequently, I modify the exclusion to a term of five years and six months.

BACKGROUND

The I.G. notified Petitioner of his exclusion by letter dated November 30, 2001. By letter dated January 28, 2002, Petitioner filed his appeal. This case was assigned to me for hearing and decision. I conducted a telephonic prehearing conference on April 8, 2002. During the conference, the I.G. stated that the case could be decided based on an exchange of briefs and Petitioner did not object. I concluded that the parties should brief the case in order to better define the issues and to help me decide whether an in-person hearing was necessary. The I.G. submitted a motion for summary disposition accompanied by five proposed exhibits (I.G. Exs. 1 - 5). Petitioner filed a brief (P. Br.) and no proposed exhibits. Petitioner did not object to my admitting any of the I.G.'s proposed exhibits into evidence. Therefore, the offered exhibits are admitted.

After considering the arguments and evidence submitted by the parties, I find that summary judgment is appropriate and no hearing is necessary in this case for a full and fair disposition because there are no relevant material facts in dispute.

The circumstances that led ultimately to the subject exclusion are as follows. The Petitioner was employed by a health care company that had been certified to provide mental health services as a partial hospitalization program (PHP). To be eligible for Medicaid payments in Pennsylvania, a PHP must have a certain staff-to-patient ratio. Around March of 1996, Petitioner's employing PHP was about to have an annual on-site inspection. Petitioner's employing PHP apparently knew it did not have the required staff-to- patient ratio and, as a result, Petitioner prepared, signed and submitted staff rosters that overstated the number of qualified clinical staff. Petitioner also orchestrated other employees to pose as clinical staff during the on-site inspection. Based on the false staff-to-patient ratio information obtained during the on-site visit, the Pennsylvania Medicaid officials certified Petitioner's employing PHP to provide Medicaid services for the next year beginning May 1996. I.G. Ex. 1; P. Br.

APPLICABLE LAW

Petitioner's right to a hearing by an administrative law judge (ALJ) and judicial review of the final action of the Secretary of Health and Human Services (Secretary) is provided by section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)). Petitioner's request for a hearing was timely filed and I do have jurisdiction. However, the Secretary has by regulation limited my scope of review to two issues: (1) whether there is a basis for the imposition of the exclusion; and, (2) whether the length of the exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(1). The standard of proof is a preponderance of the evidence and there may be no collateral attack of the conviction that is the basis for the exclusion. 42 C.F.R. § 1001.2007(c) and (d). Petitioner bears the burden of proof and persuasion on any affirmative defenses or mitigating factors and the I.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(b) and (c).

Pursuant to section 1128(a)(1) of the Act, the Secretary must 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 Medicare or Medicaid. Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act shall be for a minimum period of five years, unless specified aggravating or mitigating factors are present which form the basis for lengthening or shortening the period of exclusion. See also 42 C.F.R. § 1001.102(a), (b), and (c). Only if the aggravating factors justify an exclusion of longer than five years, may mitigating factors be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).

Section 1001.102(b) of 42 C.F.R. provides, in relevant part, that the following factors may be considered to be aggravating and a basis for lengthening the period of exclusion:

(1) The acts resulting in the conviction, or similar acts, resulted in financial loss to a government program . . . of $1,500 or more. . . . ; (2) [t]he acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; . . .

Section 1001.102(c) of 42 C.F.R. provides that only if any of the aggravating factors justify a period of exclusion longer than five years may mitigating factors be considered as a basis for reducing the period of the exclusion to no less than five years. The following factors may be considered as mitigating and a basis for reducing the period of exclusion:

(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 $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; 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, 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.

Evidence which does not relate to an aggravating factor or a mitigating factor is irrelevant to determining the length of an exclusion. Petitioner has the burden to show the presence of mitigating factors. The I.G. bears the burden of proving the existence of aggravating factors. 42 C.F.R. § 1005.15; John (Juan) Urquijo, DAB No. 1735 (2000).

FINDINGS OF FACT

The following findings of fact are based upon the uncontested and undisputed assertions of fact in the parties' pleadings and the exhibits admitted:

1. Petitioner was the assistant director and a practicing psychologist at the Northwest Center (subsequently, Northwestern Human Services, Inc.) which provided outpatient and partial hospitalization services to Medicaid beneficiaries in Pennsylvania. I.G. Ex. 1.

2. A two-count Information was filed against Petitioner on March 29, 2001. The Information contained allegations that Petitioner had committed one count of mail fraud in violation of 18 U.S.C. § 1341 and one count of Medicaid fraud in violation of 42 U.S.C. § 1320a-7b(a)(2). I.G. Ex. 1.

3. On August 1, 2001, the United States District Court, Eastern District of Pennsylvania, entered judgment against Petitioner, pursuant to Petitioner's guilty plea, to one count of the Information - Mail Fraud. I.G. Ex. 2.

4. Count One of the Information specifically charged Petitioner with causing to be delivered to The Northwest Center, a check in the amount of $4,377.50 and payable to the Northwest Center from the Commonwealth of Pennsylvania, Department of Public Welfare, and which represented Medicaid payments for mental health services rendered by the Northwest Center on behalf of certain patients. I.G. Ex. 1.

5. Petitioner was sentenced to five years' probation and ordered to pay restitution of $1,749,453 to Pennsylvania's Director of Bureau Program Integrity. The restitution was ordered on a joint and several basis among Petitioner and his employing companies. I.G. Ex. 2.

6. By letter dated November 30, 2001, the I.G. notified Petitioner that he was excluded for a period of 15 years from Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(1) of the Act.

7. The I.G. found two aggravating factors that justified an extended period of exclusion in this case: (a) the acts for which Petitioner was convicted resulted in financial loss to a government program of $1,500 or more; and (b) the acts for which Petitioner was convicted occurred over a period of one year or more, from March 1996 to May 1997.

CONCLUSIONS OF LAW

1. Summary judgment is appropriate in this case because there are no material facts in dispute.

2. Petitioner was convicted, within the meaning of the Act, of a criminal offense related to the delivery of an item or service under the Medicare program. Act, section 1128(a)(1); (42 U.S.C. § 1320a-7(a)(1)).

3. Due to his conviction, Petitioner must be excluded from participation in any federal health care program for a minimum period of five years, pursuant to section 1128(c)(3)(B) of the Act; (42 U.S.C. § 1320a-7(c)(3)(B)).

4. The I.G. may increase the term of exclusion based on a finding of any of the aggravating factors specified at 42 C.F.R. § 1001.102(b).

5. If the I.G. finds that any of the aggravating factors specified at 42 C.F.R. § 1001.102(b) justify a term of exclusion greater than the statutory minimum exclusion of five years, then the I.G. may consider the mitigating factors specified at 42 C.F.R. § 1001.102(c) to reduce the period of exclusion to no less than five years.

6. The range of exclusionary periods contemplated by the Act and the Secretary's regulations extend from a minimum of five years to permanent exclusion in the case of a mandatory exclusion under section 1128(a). See Act, sections 1128(c)(3)(B) and (G); (42 U.S.C. § 1230a-7(c)(3)(B) and (G)); 42 C.F.R. § 1001.102(a) and (d).

7. One aggravating factor has been established by the I.G. by a preponderance of the evidence: the acts for which Petitioner was convicted resulted in financial loss to a government program of $1,500 or more.

8. The I.G. did not establish the other aggravating factor that the I.G. alleged: that the offense for which Petitioner pled guilty occurred over a period of more than one year.

9. Petitioner did establish by a preponderance of the evidence the mitigating factor he alleged to exist under 42 C.F.R. § 1001.103(c)(3).

10. A five year and six-month exclusion (five years mandatory and six months extension) is within a reasonable range and is not unreasonable.

ISSUES

The two issues before me are: (1) whether the I.G. has shown a basis for an exclusion; and (2) whether the length of the exclusion imposed by the I.G. is unreasonable.

ANALYSIS

I discuss my Findings in detail below.

1. Summary disposition is appropriate.

Summary disposition is appropriate where either there are no disputed issues of material fact and the only questions that must be decided involve application of law to the undisputed facts; or, the moving party must prevail as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made. A party opposing summary disposition must allege facts which, if true, would refute the facts relied upon by the moving party. See, e.g., Fed. R. Civ. P. 56(c). There are no issues of material fact in dispute in this case.

2. The I.G. has proven a basis for exclusion.

Section 1128 of the Act authorizes the Secretary to exclude individuals and entities from participation in Medicare, Medicaid, and other federal health care programs. Section 1128(a)(1) directs the Secretary to exclude:

[a]ny individual or entity that has been convicted, under Federal or State law, 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(a)(1) of the Act.

a. Petitioner was convicted of a criminal offense under federal law.

Under section 1128(i)(1) of the Act, an individual or entity is considered to have been "convicted" when a judgment of conviction has been entered against the individual or entity by a federal, state, or local court. Under section 1128(i)(3) of the Act, an individual is considered to have been "convicted" when a plea of guilty or nolo contendere by the individual or entity has been accepted by a federal, state, or local court. In this case, the Petitioner pleaded guilty to one count of the criminal offense of mail fraud in violation of 18 U.S.C. § 1341 and the judgment of conviction was entered against him by a judge of the United States District Court of the Eastern District of Pennsylvania. I.G. Ex. 2. Therefore, the Petitioner was convicted of a criminal offense under federal law.

b. The criminal offense for which Petitioner was convicted was related to the delivery of an item or service under Title XVIII or a state health care program.

The count to which the Petitioner pleaded guilty alleged that he had:

knowingly caused to be delivered, according to the direction thereon, by the United States Postal Service, a check in the amount of $4,377.50, payable to the Northwest Center, from the Commonwealth of Pennsylvania, Department of Public Welfare, to the Northwest Center, 27 E. Mt. Airy Avenue, Philadelphia, Pennsylvania, 19119, which represented Medicaid payments for mental health services rendered by the 27 E. Mt. Airy Avenue PHP on behalf of certain patients.

The information in which Petitioner pleaded guilty, indicated that the check Petitioner illegally delivered was for Medicaid payments, and therefore was related to the delivery of an item or service under a state health care program.

3. Petitioner must be excluded for at least the mandatory minimum of five years.

Once it has been shown that an individual was convicted for a criminal offense related to the delivery of an item or service under title XVIII or a state health care program, neither the I.G. nor the ALJ can fail to exclude the individual for the mandatory five-year minimum exclusion.

An exclusion under section 1128(a)(1) of the Act must be for a minimum mandatory period of five years as set forth in section 1128(c)(3)(B) of the Act which states:

[s]ubject to subparagraph (G), in the case of an exclusion under subsection (a), the minimum period of exclusion shall not be less than five years . . .

When the I.G. imposes an exclusion for the mandatory five-year period, the issue of the length of such exclusion is not considered. 42 C.F.R. § 1001.2007(a)(2). Aggravating factors which justify extending the exclusion period may be taken into account, but the five-year term will not be shortened.

The regulations strictly limit my jurisdiction in cases such as this. I may decide whether or not the I.G. had a proper basis for the exclusion of Petitioner and whether the period of exclusion for Petitioner was unreasonable. The Departmental Appeals Board (DAB) has made clear that the role of the ALJ in cases such as this is to conduct a de novo review as to the facts related to the basis for the exclusion and the facts related to the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102. See Joann Fletcher Cash, DAB No. 1725 (2000) and cases cited therein. The regulation specifies that I must determine whether the length of exclusion imposed is unreasonable. 42 C.F.R. § 1001.2007(a)(1). The DAB has held that in determining whether a period of exclusion is unreasonable, I am to consider whether such period falls within a reasonable range. As stated above, with a mandatory exclusion under section 1128(a) of the Act, there is a minimum mandatory exclusion of five years. 42 C.F.R. § 1001.102.

The five-year minimum exclusion may only be extended if the I.G. can point to evidence that one or more of the aggravating factors specified at 42 C.F.R. § 1001.102(b) are present. The regulations do not limit the additional period of exclusion the I.G. may impose based upon the presence of aggravating factors. The regulations also do not specify how much of an extension is warranted by the existence of an aggravating factor. The DAB has indicated that it is not the number of aggravating factors that is determinative, rather, it is the quality of the circumstances, whether aggravating or mitigating, which is controlling in analyzing these factors. Barry D. Garfinkel, M.D., DAB No. 1572 (1996).

Section 1001.102 of 42 C.F.R. provides that when aggravating factors justify an exclusion of more than the mandatory minimum period, then the I.G. may consider any of the three specified mitigating factors if they are shown to exist. The DAB made clear in John (Juan) Urquijo, DAB No. 1735 (2000) that: if the I.G. considers an aggravating factor to extend the period of exclusion and that factor is not later shown to exist on appeal, or if the I.G. fails to consider a mitigating factor that is shown to exist, then the ALJ may make a decision as to the appropriate extension of the period of exclusion beyond the minimum.

Thus, my determination of whether or not the exclusionary period in this case is unreasonable hinges on: (1) whether the I.G. has shown the existence of two aggravating factors and the quality of the circumstances surrounding the factors; and, (2) the quality of the circumstances surrounding the mitigating factor that the Petitioner claims and the I.G. concedes.

With regard to whether aggravating factors exist in this case, the I.G. argues that two aggravating factors exist which justify an extended period of exclusion: (1) the acts for which Petitioner was convicted resulted in financial loss to a government program of $1,500 or more; and (2) the acts for which Petitioner was convicted occurred over a period of one year.

4. The I.G. has proven that Petitioner was convicted of an act that resulted in the financial loss to a government program of $1,500 or more.

The I.G. relies on the amount of restitution ordered by the Court; i.e., $1,749,453, as constituting the amount of financial loss to the government program occasioned by the acts for which Petitioner was convicted. The amount of the court-ordered restitution in this case is apparently the amount of money Medicaid paid Northwest Center the entire year when Northwest Center was not staffed sufficiently to be qualified for any Medicaid payments. Petitioner has argued that, in fact, the Northwest Center was paid for services actually rendered to Medicaid patients and, therefore, the loss to the Medicaid program cannot be equated with the amount of money actually paid to the Northwest Center. I find Petitioner's argument somewhat misplaced. Moreover, because Medicaid participation requirements were written to assure that Medicaid patients get quality care, if a PHP falsely presents itself as meeting the participation requirements, the Medicaid patients treated during that period were likely not getting the quality of care that would equal the PHP's receipts from Medicaid.

Certainly, the DAB has previously relied on restitution ordered by the Court as one way to approximate the amount of financial loss caused an entity by the criminal acts of the convicted individual. Steven Alonzo Henry, M.D., DAB CR638 (2000). With respect to proof of this aggravating factor, moreover, the count to which Petitioner pleaded guilty references a $4,377.50 check. I.G. Ex. 1. As this amount, alone, represented a financial loss to a government program of $1,500 or more, I find that the I.G. has proven the existence of one aggravating factor.

5. The I.G. did not prove that the act for which Petitioner was convicted occurred over a period of one year or more, and therefore failed to prove the second aggravating factor.

It is well established that section 1128 of the Act is triggered by a conviction, and neither the ALJ nor appellate panels of the DAB can collaterally attack the underlying conviction or relitigate the validity of the conviction. 42 C.F.R. § 1001.2007(d); Travers v. Shalala, 20 F. 3^rd 993 (9^th Cir. 1994). This means that an excluded individual cannot appeal by saying he or she did not actually commit the acts for which the individual was convicted. The rules against collaterally attacking the conviction do not mean, however, that the I.G. does not have to proffer any evidence in support of an aggravating factor if that factor is not clear from the conviction itself.

In this case, the Petitioner's only conviction is for mail fraud, a one-time act, of delivering a check to the PHP from Medicaid when the PHP had not been properly certified to receive the check. The information to which Petitioner pleaded guilty does refer to a time period of "from March 1996, through in or about May, 1997" that Petitioner "knowingly and willfully devised and intended to devise a scheme and artifice to defraud the Medicaid program and to obtain money and property by means of false and fraudulent pretenses, representations, and promises." I.G. Ex. 1. The Petitioner did not plead guilty, however, to the information count charging him with a false representation to obtain a payment under Medicaid.

In his first responsive brief dated June 6, 2002, Petitioner protested that the actions for which he was convicted did not occur over a period of more than one year. The I.G. was on notice that it needed to prove this aggravating factor. The I.G. provided no more than the bald statement in the information that the acts were committed over a period of more than one year to prove this aggravating factor. Petitioner admitted that, as ordered by his employer, he supervised a site visit by the Pennsylvania Medicaid authorities and he created, again at the behest of his employers, false staff rosters to make the Pennsylvania Medicaid authorities believe the PHP had sufficient staff to meet Medicaid participation requirements. But this act, as well as the act of mail fraud, lasted only a few days or was a one-time act. Petitioner denied he had any involvement with staffing, budgeting, or billing for the PHP. If the I.G. is arguing that Petitioner's acts lasted from the time of the on-site visit to the end of the year during which the PHP received Medicaid payments under false pretenses, the I.G. should have provided some evidence concerning the date of the payment for which Petitioner pleaded guilty and/or Petitioner's further involvement in the scheme past the on-site visit.

Thus, the only probative evidence I have regarding the duration of Petitioner's misconduct is his guilty plea, which reflects a judicial finding that Petitioner's offense was a one-time act, and Petitioner's admission (not judicial finding) that he was involved in the PHP's on-site visit by the Pennsylvania Medicaid authorities. The I.G. has the burden of proof with respect to the existence of aggravating factors. Accordingly, I find that the I.G. has not proven that the acts for which Petitioner was convicted occurred over a period of one year or more.

6. Petitioner has shown the existence of one mitigating factor.

With regard to whether a mitigating factor, as identified at 42 C.F.R. § 1001.102(c)(3), exists in this case, the I.G. concedes this mitigating factor is present. Petitioner argues, however, that "the I.G. did not give me full credit for the extensive cooperation I gave." P. Br. I agree with Petitioner. Petitioner reported that he wore many wires over a four-year period, helped the FBI conduct a raid at the PHP's headquarters, taped phone conversations with staff from his home with full knowledge of the FBI. Petitioner reports that the company that owns the offending PHP has agreed to pay $7.8 million in fines in addition to pleading guilty to related mail-fraud charges. If Petitioner's assertions are incorrect, the I.G. had a responsibility to come forward with evidence establishing that Petitioner's assertions are false.

7. A 15-year exclusion of Petitioner is not within a reasonable range. The I.G. has proven one aggravating factor, rather than two, and Petitioner has proven one mitigating factor.

The aggravating and mitigating factors that are set forth in the regulations function as rules of evidence for deciding the length of exclusions. Evidence which does not pertain to one of the specific aggravating or mitigating factors is not relevant and may not be used to decide whether an exclusion of a particular length is reasonable.

The regulations do not prescribe the weight that is to be given to evidence that relates to an aggravating or a mitigating factor. While the regulation tells the decision-maker what criteria may be used to determine the length of an exclusion, it does not tell the decision-maker how to weigh relevant evidence to arrive at an exclusion that is reasonable in a given case.

However, there is an overall statutory purpose to which the regulations must adhere. An exclusion is not intended to be punishment. The purpose of any exclusion that is imposed under section 1128 of the Act is to protect federally funded health care programs and beneficiaries and recipients of those programs from an individual who has been shown not to be trustworthy. Therefore, in deciding the length of an exclusion that is imposed pursuant to section 1128, the question that must be considered is: what is reasonably necessary to protect the programs and their beneficiaries and recipients from an untrustworthy individual? I weighed the circumstances surrounding the aggravating and mitigating factors shown to be present in this case in consideration of the statutory purpose of section 1128 of the Act.

I find the circumstances surrounding the amount of the loss to the program do not strongly suggest, as opposed to the argument of the I.G., that the "enormous amount" of the loss should be necessarily rested on the shoulders of the Petitioner. Yes, he was jointly and severally charged with the restitution of the "enormous amount." But he was not an owner of the company or likely to profit from the "enormous amount" in any way other than to keep his job and salary. While I agree that restitution is a reasonable measure of the loss to the Medicaid program, I must give some thought to the circumstances of Petitioner's participation in creating the loss for purposes of weighing this aggravating factor against the mitigating factor also present. When I consider the circumstances of Petitioner's extensive cooperation with investigating agencies and the Petitioner's limited benefits from the fraudulent scheme, I find the mitigating factor almost outweighs the aggravating factor.

Having found that one of the aggravating factors alleged by the I.G. has not been proven, I must reassess the appropriate period of exclusion in this case. I consider the existence of the one aggravating factor, and the one mitigating factor, and conclude that a six-month extension of the mandatory minimum exclusion of five years is warranted. Accordingly, Petitioner should be excluded for a total period of five years and six months.

CONCLUSION

For the foregoing reasons, I find that the I.G. proved one of the two alleged aggravating factors and Petitioner proved one mitigating factor. Therefore, I modify Petitioner's exclusion to a term of five years and six months.

Anne E. Blair

Administrative Law Judge