SUBJECT:

Joseph Spektor, M.D.,

Petitioner,

The Inspector General

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Joseph Spektor, M.D., from participating in Medicare and other federally funded healthcare programs for a period of ten years.

I. Background

In a letter that is dated June 22, 2002, the I.G. notified Petitioner that he was being excluded for a period of ten years from participating in Medicare and other federally funded healthcare programs. The I.G. advised Petitioner that she was authorized to exclude him because Petitioner had been convicted of a criminal offense within the meaning of section 1128(a)(3) of the Social Security Act (Act). Additionally, the I.G. told Petitioner that the length of the exclusion in his case was justified by the presence of certain aggravating factors.

Petitioner requested a hearing and the case was assigned to me for a hearing and a decision. I held a prehearing conference at which the I.G. advised me that she intended to move for a decision based on her written submission. I advised Petitioner that he had a right to reply to the I.G.'s motion. Additionally, I told Petitioner that, if he believed that he needed to present essential evidence in person, he could explain in his response to the I.G.'s motion why he believed that an in-person hearing was necessary.

The I.G. filed her motion and submitted five proposed exhibits (I.G. Ex. 1 - I.G. Ex. 5) in support of her argument. Petitioner filed a written opposition to the motion and submitted a proposed exhibit (P. Ex. 1) in support of his position. Petitioner did not ask to present testimony in person. Neither party objected to my admitting any of the proposed exhibits into evidence. Consequently, I receive I.G. Ex. 1 - I.G. Ex. 5 and P. Ex. 1 into evidence.

II. Issues, findings of fact and conclusions of law

A. Issues

There are three issues in this case. The first issue is whether there is a basis for the I.G. to exclude Petitioner pursuant to section 1128(a)(3) of the Act. The second issue is whether the length of the exclusion imposed by the I.G. - ten years in this case - is unreasonable. Finally, Petitioner requests that any exclusion imposed against him be made retroactive to 1998.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below as a separate heading. I discuss each Finding in detail.

1. The I.G. proved a basis to exclude Petitioner pursuant to section 1128(a)(3) of the Act.

I find that the evidence in this case plainly establishes a basis for the I.G. to exclude Petitioner pursuant to section 1128(a)(3) of the Act. Section 1128(a)(3) mandates the I.G. to exclude:

[a]ny individual or entity 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.

42 U.S.C. § 1320a-7(a)(3).

The facts of this case that emerge from the parties' exhibits establish that all of the requisite elements of a section 1128(a)(3) offense are present here. Specifically:

• Petitioner was convicted of a criminal offense in federal court;

• Petitioner's offense occurred in substantial part after the effective date of the Health Insurance Portability and Accountability Act of 1996, which I take notice to be August 21, 1996;

• Petitioner's offense was committed in connection with the delivery of health care items or services; and

• The offense was a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Petitioner is a physician who, at one time, was licensed to practice medicine in both the States of New York and New Jersey. I.G. Ex. 2 at 5; I.G. Ex. 5 at 1. On September 11, 2000, an indictment was issued against Petitioner and others in the United States District Court for the Southern District of New York. I.G. Ex. 2. Count One of that indictment charged Petitioner and several co-conspirators with having participated in a criminal conspiracy that began in or about 1995, and which continued until early 1998. Id. at 3. It charged that Petitioner and his co-conspirators devised a scheme and artifice to defraud health care benefit programs. Id. at 4.

Specifically, the indictment charged that co-conspirators not charged as defendants in the indictment operated and managed an entity in New York that held itself out as a medical group which performed reconstructive and cosmetic surgery and which provided skin care services. I.G. Ex. 2 at 5. It charged that operators of this group and other employees, none of whom held medical licenses, regularly performed various medical surgeries and cosmetic procedures on patients. The co-conspirators hired doctors who were licensed in New York to work for them and these doctors included Petitioner. Id. According to the indictment, from about 1995 through in or about early 1998, Petitioner and co-conspirators caused this entity to submit false claims to insurance companies in order to obtain payments for services that were: (a) not rendered to patients; (b) not reimbursable because they were not medically necessary; and (c) not performed by a licensed medical service provider. Id. at 5-6.

Count One charged also that, in order to conceal the false and fraudulent nature of the claims that were submitted, Petitioner prepared false and fraudulent documents, including anesthesia records that: (a) made it appear that Petitioner had performed procedures on patients when, in fact, these procedures had been performed by unlicensed co-conspirators; (b) made it appear that patients had received anesthesia when, in fact, they had not; and (c) exaggerated the length of time a patient had undergone anesthesia. I.G. Ex. 2 at 6. Furthermore, Count One charged that, in order further to conceal the false and fraudulent claims that were submitted by the conspiracy to insurance companies, Petitioner signed false and fraudulent documents, including operative reports and operative notes, which: (a) indicated that treatments had been performed on patients when, in fact, they had not been performed; (b) misrepresented the patients' conditions and symptoms; and (c) misrepresented the treatments that were provided to patients. Id. at 6-7. Finally, it charged that, as a result of their unlawful scheme, Petitioner and his co-conspirators caused insurance companies to remit hundreds of thousands of dollars directly either to the conspirators' entity or to patients who then paid these monies over to the entity. Id. at 7.

On July 31, 2001, Petitioner pled guilty to and was convicted of Count One. I.G. Ex. 1 at 1. Specifically, Petitioner was convicted of a conspiracy to commit mail and healthcare fraud under 18 U.S.C. § 371.

2. The I.G. established the presence of aggravating factors which might justify an exclusion of more than five years.

The Act mandates that an exclusion imposed pursuant to section 1128(a)(3) be for a minimum period of five years. Act, section 1128(c)(3)(B). An exclusion may be for more than the five-year minimum period where circumstances warrant a lengthier exclusion.

The Secretary has published regulations which govern the length of exclusions imposed pursuant to section 1128 of the Act. The regulation which governs exclusions that are imposed under section 1128(a)(3) is 42 C.F.R. § 1001.102. The regulation describes certain aggravating factors which, if present and not offset by mitigating factors, may justify an exclusion of more than five years. 42 C.F.R. § 1001.102(b); see 42 C.F.R. § 1001.102(c).

In this case the I.G. proved the presence of four aggravating factors. They are as follows:

• The acts resulting in Petitioner's conviction, or similar acts, caused financial losses to one or more entities of $1,500 or more. 42 C.F.R. § 1001.102(b)(1). Petitioner pled guilty to a crime that caused insurance companies to remit hundreds of thousands of dollars. I.G. Ex. 2 at 7. Moreover, he was sentenced to pay restitution of $28,585. I.G. Ex. 1 at 4, 5. While the indictment and Petitioner's restitution sentence may not affix precisely the amount of damages that Petitioner caused health insurers to suffer, they certainly are evidence from which I may infer that Petitioner caused damages to insurers of more than $1,500.

• The acts that resulted in Petitioner's conviction, or similar acts, occurred over a period of one year or more. 42 C.F.R. § 1001.102(b)(2). Petitioner pled guilty to a criminal conspiracy that began in 1995 and which continued up until early 1998.

• The sentence imposed against Petitioner for his crime included incarceration. 42 C.F.R. § 1001.102(b)(5). Petitioner was sentenced to five months home confinement. I.G. Ex. 1 at 2, 4. A term of home confinement satisfies the regulatory definition of "incarceration." 42 C.F.R. § 1001.2.

• Petitioner has a prior administrative sanction record. 42 C.F.R. § 1001.102(b)6). As a result of Petitioner's crimes and related misconduct, his license to practice medicine in New York was revoked in 1999. His license to practice medicine in New Jersey was suspended in 2000. I.G. Ex. 3; I.G. Ex. 5.

3. Petitioner failed to prove the presence of any mitigating factors which might offset the aggravating factors established by the I.G.

As I discuss above, at Finding 2, the presence of aggravating factors in a case might justify excluding an individual for more than the five-year minimum period. Conceivably, evidence relating to an aggravating factor or factors might be offset by evidence relating to any of the mitigating factors set forth at 42 C.F.R. § 1001.102(c).

In his opposition to the I.G.'s motion Petitioner asserts a number of arguments which he contends to be mitigating. These include: his present age of 61; the strain he has experienced personally and the emotional duress which his family has experienced from his inability to practice medicine; his financial distress and the impact that this has had on his family; the service he has given to society; his unblemished record aside from the conviction that is the basis for his exclusion; and his desire to regain the opportunity to become productive.

None of these arguments establish any of the limited mitigating factors identified by the regulation. I must find them to be irrelevant inasmuch as they do not relate to mitigating factors.

4. An exclusion of ten years is not unreasonable.

Section 1128 of the Act is remedial. Its purpose is not to impose additional punishment on an excluded individual but to protect federally funded health care programs and the beneficiaries and recipients of those programs from individuals and entities who have established themselves to be untrustworthy to provide care to those beneficiaries and recipients.

Neither the Act nor implementing regulations direct that an exclusion of any particular length beyond the minimum five-year period be imposed based on the presence of aggravating factors or the absence of mitigating factors. The aggravating and mitigating factors that are identified at 42 C.F.R. § 1001.102(b) and (c) function in a sense as rules of evidence which establish what evidence may be considered in deciding whether an exclusion is reasonable but which do not establish the weight that must be afforded to any evidence that is relevant to the issue. The presence of aggravating factors not offset by mitigating factors is not an automatic basis for deciding that an exclusion of any particular length is reasonable. Nor is the number of aggravating factors that may be present in a case a particularly significant indicator of reasonableness.

What is relevant to deciding reasonableness is evidence that relates to an aggravating or a mitigating factor. Ultimately, it is that evidence which establishes whether an exclusion is reasonable and not the presence or absence of factors. Thus, the regulatory factors merely determine what is relevant. The weight that attaches to the evidence that is admissible, because it relates to an aggravating or mitigating factor, must be adjudicated on a case by case basis.

In this case the evidence that relates to aggravating factors establishes that Petitioner was a conscious participant in a highly organized and extremely destructive criminal conspiracy that put patients at risk in order to extract funds illegally from health insurers.

The evidence shows, first, that Petitioner was deeply and actively involved in a criminal conspiracy that lasted for years. As is made clear from Count One of the indictment, over a period that began in 1995 and which did not end until some time in 1998, Petitioner knowingly allowed non-physicians to make fraudulent use of his medical license to practice unauthorized surgery. He participated in the filing of false and fraudulent reimbursement claims with insurers. Petitioner intentionally generated false records in order to facilitate this criminal scheme.

The evidence also shows that this conspiracy was highly successful for a time in extracting monies from health insurers. Petitioner pled guilty to a conspiracy that extracted hundreds of thousands of dollars from insurers over the life of the conspiracy.

Finally, it is evident that Petitioner's criminal activity jeopardized the health and safety of patients. I infer from the evidence in this case that Petitioner put his patients at risk so as to enable the success of the criminal conspiracy of which he was a part. Petitioner allowed non-physicians to perform services that could only be provided by physicians and he generated fraudulent patient records.

In revoking Petitioner's license to practice medicine in New York, the New York Department of Health Administrative Review Board for Professional Medical Conduct (ARB) found that Petitioner practiced with fraud, negligence on more than one occasion and gross negligence, and that Petitioner engaged in conduct that evidenced moral unfitness. I.G. Ex. 3 at 8. It found, among other things, that Petitioner created patient records with fraudulent intent. In doing so, Petitioner:

• used different names when acting as a surgeon than when he acted as an anesthesiologist;

• created records which failed to note that an unlicensed person participated in providing anesthesia to Petitioner's patients; and

• failed to indicate in his records that the records were not created contemporaneously with the events recorded.

Id. at 6.

An exclusion of ten years is certainly not unreasonable in light of the foregoing evidence. From this evidence I infer that Petitioner acted for years with callous disregard for the welfare of his patients so as to be able to criminally obtain funds from health insurers. The evidence shows that Petitioner was willing to, and in fact did, put patients at great risk in order to further his criminal enterprise. There is nothing in this evidence to suggest that Petitioner will be any less of a risk in the future.

5. I do not have authority to change the onset date of Petitioner's exclusion.

Petitioner argues that any exclusion that is imposed against him be made retroactive to 1998. Presumably, Petitioner has chosen this date because that is when his criminal activity ended according to Count One of his indictment.

I have no authority to change the onset date of an exclusion. My authority to hear and decide cases involving the I.G. is limited to hearing and deciding only those issues which regulations allow a party to appeal. An excluded individual may appeal only the issues of whether there is a basis for an exclusion and whether the length of an exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(1)(i), (ii). The regulation does not permit an excluded individual to appeal the onset date of his or her exclusion.

Steven T. Kessel

Administrative Law Judge