Guillermo Tirado-Menendez, M.D., DAB CR5634 (2020)

DECISION

Petitioner, Guillermo Tirado-Menendez, is a physician in Puerto Rico.  Petitioner pleaded guilty to one count of conspiracy to manufacture, distribute and dispense and to possess with intent to distribute and dispense a controlled substance, and one count of possession with intent to dispense a controlled substance outside the scope of professional practice and not for a legitimate medical purpose.  As a result of his guilty plea, Petitioner was sentenced to 24 months of incarceration.

Based on this conviction, the Inspector General (IG) excluded Petitioner from participation in Medicare, Medicaid, and all federal health care programs for 10 years.  The IG relies on section 1128(a)(4) of the Social Security Act (Act),1 which mandates that individuals convicted of a felony offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance be excluded.  Petitioner concedes that the IG has a basis to exclude him, but appeals the length of the exclusion.  For the reasons discussed below, I find that a 10‑year exclusion is not unreasonable.

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I.    Background

Petitioner was an internal medicine physician who had offices located in Caguas and Cidra, Puerto Rico.  IG Exhibit (Ex.) 3 at 2.  Petitioner was a Drug Enforcement Administration (DEA) registrant and maintained DEA authorization to dispense controlled substances.  Id. at 4.  On May 11, 2018, a federal grand jury in the United States District Court for the District of Puerto Rico (federal district court) returned a first superseding indictment against Petitioner for, among other offenses, one count of conspiracy to manufacture, distribute and dispense and possess with intent to distribute and dispense a controlled substance in violation of 21 U.S.C. §§ 841(a)(1) and 846 (Count 1) and one count of possession with intent to dispense a controlled substance outside the scope of a professional practice and not for a legitimate medical purpose in violation of 21 U.S.C. § 841(a)(1) (Count 3).  IG Ex. 3 at 1-7.

More specifically, the grand jury charged, under Count 1, that “[b]eginning on a date unknown, but no later than in or about the year 2009, and continuing up to and until July 2017,” Petitioner and four co‑conspirators ‒

did knowingly and intentionally, combine, conspire, and agree with each other . . . to knowingly and intentionally manufacture, distribute and dispense and possess with the intent to manufacture, distribute and dispense, outside the scope of professional practice and not for a legitimate medical purpose, a controlled substance, that is, at least 70,000 units of Oxycodone (commonly known as Percocet), a Schedule II Controlled Substance and at least 40,000 units of Alprazolam (commonly known as Xanax), a Schedule IV Controlled Substance.

Id. at 2.  Count 3 of the superseding indictment charged that from in or about 2009, up to the return of the indictment, Petitioner,

a registrant authorized to dispense controlled substances[,] did knowingly and intentionally dispense outside the scope of professional practice and not for a legitimate medical purpose and possess with intent to dispense outside the scope of professional practice and not for a legitimate medical purpose at least 70,000 units of Oxycodone (commonly known as Percocet), a Schedule II Controlled Substance and at least 40,000 units of Alprazolam (commonly known as Xanax), a Schedule IV Controlled Substance.

Id. at 7.

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On January 28, 2019, Petitioner, who was represented by counsel, appeared in the federal district court and pleaded guilty to Counts 1 and 3.  IG Ex. 2 at 1-2.  On May 2, 2019, based on Petitioner’s guilty plea, a U.S. District Judge adjudicated Petitioner guilty of the offenses charged in Counts 1 and 3.  Id.

In a letter dated August 30, 2019 (notice letter), the IG notified Petitioner that he was excluded from participating in Medicare, Medicaid, and all federal health care programs for a period of 10 years.  IG Ex. 1.  The notice letter stated that Petitioner was excluded because he had been convicted of a felony offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance as defined under federal or state law.  Id.  The notice letter explained that section 1128(a)(4) of the Act authorized the exclusion.  Id.

Petitioner timely requested a hearing before an administrative law judge.  I held a telephone prehearing conference on December 9, 2019, in which both parties participated.  On December 10, 2019, I issued an Order and Schedule for Filing Briefs and Documentary Evidence (Briefing Order) in which I established a schedule for the parties to exchange their respective arguments and evidence.  Since Petitioner had submitted his hearing request using the short-form brief developed by my office, I modified the order of submissions.  The Briefing Order required Petitioner to submit a supplemental brief and proposed exhibits by January 13, 2020, the IG to submit her brief and proposed exhibits by February 18, 2020, and Petitioner to submit a reply brief, or state in writing that the reply was waived, by March 3, 2020.  By email sent at my direction on January 13, 2020, I granted Petitioner an extension until February 13, 2020, to file his supplemental briefs and any exhibits.  I also extended the deadline for the IG’s response brief to March 16, 2020, and Petitioner’s reply or waiver of reply to March 30, 2020.

Petitioner timely submitted a supplemental brief and seven proposed exhibits (P. Supp. Br.; P. Exs. 1-7).2   The IG timely filed a brief and three proposed exhibits (IG Br.; IG Exs. 1-3).  Petitioner did not timely file a reply brief, objections to the IG’s exhibits, or requests to cross-examine any proposed witnesses.  By email sent at my direction on April 2, 2020, I advised Petitioner that my office had not received anything from him.  The email informed Petitioner that he had until April 7, 2020, either to file a written waiver of his reply or to file his reply, with a motion for leave to file out of time.  Alternatively, the email gave Petitioner permission to file a motion for an extension if he needed more time to respond.  On April 13, 2020, I issued an Order to Show Cause in which I directed Petitioner to show cause why I should not close the record in this case, based on Petitioner’s failure to file his reply brief or to waive the reply.  The Order to Show Cause required Petitioner to respond on or before April 23, 2020.  Petitioner did

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not file a response by April 23, 2020.  Therefore, I closed the record in this case on April 24, 2020.

Neither party objected to the exhibits offered by the opposing party.  Accordingly, in the absence of objection, I admit P. Exs. 1-7 and IG Exs. 1-3 into the record.

The Briefing Order directed the parties to indicate in their briefs whether an in-person hearing would be necessary and, if so, to submit the testimony of any proposed witness as “written direct testimony in the form of an affidavit or declaration.”  Briefing Order ¶ 7.b.ii (emphasis omitted).  I also explained that I would hold a hearing only if a party offered witness testimony that is relevant and non-cumulative and the opposing party requested cross‑examination.  Id. ¶ 9.  Petitioner indicated in his hearing request that an in-person hearing was not necessary.  P. Hrg. Req. at 2.  The IG did not indicate an in‑person hearing was necessary, and neither party submitted the written direct testimony of any proposed witness.  P. Hrg. Req. at 3; see P. Supp. Br.,IG Br.  I therefore decide this case based on the written record.

II.    Discussion

A.  Petitioner must be excluded pursuant to section 1128(a)(4) of the Act because he was convicted of a felony offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance under federal law.3

The Act requires the Secretary of Health and Human Services (Secretary) to exclude from program participation any individual or entity that has been convicted of a felony offense occurring after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996 (that is, after August 21, 1996), and related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance under federal or state law.  Act § 1128(a)(4).  The Secretary has delegated this authority to the IG.  42 C.F.R. § 1001.101(d).

1.  Petitioner was convicted of two felony offenses occurring after August 21, 1996.

Petitioner concedes that he was convicted of two felony offenses occurring after August 21, 1996.  P. Hrg. Req. at 1.  The IG’s evidence demonstrates that the federal district court adjudicated Petitioner guilty of one felony count of conspiracy to manufacture, distribute or dispense and possession with intent to distribute or dispense at least 70,000 units of Oxycodone and 40,000 units of Alprazolam in violation of 21 U.S.C. §§ 841(a)(1), 841(b)(1)(C), and 846 and one count of possession with intent to distribute

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at least 70,000 units of Oxycodone and at least 40,000 units of Alprazolam outside the scope of professional practice and not for a legitimate medical purpose in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(C).  IG Ex. 2 at 1-2.  Accordingly, Petitioner was convicted, as that term is defined in subsections 1128(i)(1), (2), and (3) of the Act, of felony offenses occurring after August 21, 1996.

2.  The felony offenses for which Petitioner was convicted are related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance under federal law.

Petitioner concedes that his convictions are ones for which exclusion is required.  P. Hrg. Req. at 2.  The IG’s evidence establishes that Petitioner’s convictions for conspiracy to distribute controlled substances and possession with intent to distribute controlled substances are related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance under federal law within the meaning of section 1128(a)(4) of the Act.  Here, Petitioner was convicted of felony conspiracy to distribute controlled substances and felony possession with intent to distribute controlled substances based on his guilty plea.  IG Ex. 2.  Therefore, I conclude that Petitioner’s convictions for conspiracy to distribute controlled substances and possession with intent to distribute controlled substances are, by their terms, related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substances.  Accordingly, the IG was required to exclude Petitioner from participation in the Medicare program for a minimum period of five years.  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).

Although Petitioner must be excluded for at least five years, the IG may exclude an individual for a period longer than five years if certain aggravating factors are present.  42 C.F.R. § 1001.102(b).  If the IG imposes an exclusion longer than five years based on the presence of aggravating factors, I may consider whether certain mitigating factors exist that may justify shortening the exclusion to not less than five years.  42 C.F.R. § 1001.102(c).  In the following sections of this decision, I consider whether, in light of any aggravating or mitigating factors, the length of Petitioner’s exclusion falls within a reasonable range.

B.  The 10-year exclusion imposed by the IG falls within a reasonable range.

If the IG imposes an exclusion longer than five years based on the presence of aggravating factors, I may consider whether certain mitigating factors exist that may justify shortening the exclusion to not less than five years.  42 C.F.R. § 1001.102(b) and (c).  I may not consider evidence that does not pertain to one of the aggravating or mitigating factors listed in the regulations to decide whether an exclusion of a particular length is reasonable.

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1.  The IG has established two aggravating factors.

Petitioner concedes that the aggravating factors considered by the IG are established in this case.  P. Hrg. Req. at 2.  The IG argues that an exclusion of 10 years is reasonable based on the presence of two aggravating factors:

1. The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more.
2. The sentence imposed by the court included incarceration.

IG Br. at 6-9; 42 C.F.R. § 1001.102(b)(2) and (b)(5). 

The evidence offered by the IG shows that these factors are present.  First, the record establishes that the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more.  As noted above, Petitioner’s felony convictions were based on his pleading guilty to Counts 1 and 3 of the superseding indictment.  IG Ex. 2 at 1-2; IG Ex. 3 at 1-7.  Count 1 charged that Petitioner, along with four co-conspirators, engaged in a conspiracy to distribute controlled substances, in violation of 21 U.S.C. §§ 841(a)(1) and 846, and specified that this conspiracy began “on a date unknown, but no later than in or about the year 2009, and continuing up to and until July 2017.”  IG Ex. 3 at 1-2.  Count 3 charged Petitioner with possession with intent to dispense a controlled substance outside the scope of a professional practice and not for a legitimate medical purpose in violation of 21 U.S.C. § 841(a)(1) and specified that the act began “on a date unknown, but no later than in or about the year 2009, and continu[ed] up to and the return of the indictment,” which was May 11, 2018.  Id. at 7.  Therefore, Petitioner’s acts that resulted in the convictions were committed over a period of at least eight years.

Second, the record establishes that the sentence imposed by the federal district court included incarceration.  IG Ex. 2 at 3; P Hrg. Req. at 2; P. Supp. Br.  Specifically, the court sentenced Petitioner to 24 months of incarceration.  IG Ex. 2 at 3.  Therefore, the record establishes the aggravating factor of incarceration.  In summary, the IG has established the aggravating factors set out in 42 C.F.R. § 1001.102(b)(2) and (b)(5).

2.  Petitioner did not establish any mitigating factor.

The regulations enumerate the only mitigating factors I may consider when evaluating whether an exclusion of more than five years is reasonable.  42 C.F.R. § 1001.102(c); see also Hussein Awada, M.D.,DAB No. 2788 at 6 (2017).  The burden is on Petitioner to prove that any mitigating factors exist.  42 C.F.R. § 1005.15(c); Briefing Order ¶ 6.c; see also Stacey R. Gale,DAB No. 1941 at 9 (2004) (“[I]t is Petitioner’s responsibility to locate and present evidence to substantiate the existence of any alleged mitigating factor in [Petitioner’s] case.”).  Petitioner argues that a mitigating factor exists because he

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cooperated with Federal officials through the safety valve exception process (18 U.S.C. § 3553(f)) on January 28, 2019.  P. Supp. Br. at 5.

The regulations provide that cooperation with government officials may be a mitigating factor under the following circumstances:

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.

42 C.F.R. § 1001.102(c)(3).  Therefore, if Petitioner produces evidence that his assistance to government officials resulted in additional convictions, investigations, or civil penalties, I may consider that factor in deciding whether the exclusion length is reasonable.

Petitioner argues that he established the mitigating factor of cooperation with law enforcement.  P. Supp. Br. at 5.  However, Petitioner’s bare allegation that his cooperation with authorities resulted in others being convicted, excluded, or investigated is insufficient to satisfy Petitioner’s burden of proof.  I note that Petitioner did not submit his own statement detailing his cooperation in the form of an affidavit or statement under penalty of perjury.  The record does not include any statements from prosecutors or investigators corroborating Petitioner’s claims of cooperation nor is there any evidence (such as a transcript of sentencing) proving that the judge in Petitioner’s criminal case considered his cooperation when imposing sentence.

Petitioner argues that I should conclude he cooperated with authorities because he satisfied the safety valve exception under 18 U.S.C. § 3553(f).  Id.  The safety valve exception codified at 18 U.S.C. § 3553(f) permits a sentencing court to disregard the required statutory minimum sentence in a drug-related case if a defendant meets certain criteria.  One qualifying criterion for the safety valve exception is that the defendant

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provide information and evidence regarding his offense.  The statute provides that, to qualify for a reduced sentence, at or before sentencing, the defendant ‒

truthfully provided to the Government all information and evidence the defendant has concerning the offense or offenses that were part of the same course of conduct or of a common scheme or plan, but the fact that the defendant has no relevant or useful other information to provide or that the Government is already aware of the information shall not preclude a determination by the court that the defendant has complied with this requirement.

18 U.S.C. § 3553(f)(5).  As is apparent from the statutory language, a defendant may qualify for the safety valve exception even if the information provided is not useful to the prosecution or the prosecution is already aware of the information.

Petitioner represents that on the same day that he pleaded guilty to Counts 1 and 3 of the Superseding Indictment, he “met with agents and [the] prosecutor . . . and satisfied the Safety Valve exception requirements.”  P. Supp. Br. at 5.  Petitioner further represents that by his sentencing date on May 2, 2019, all defendants but one had been sentenced and the remaining defendant was sentenced after Petitioner.  Id.  Nevertheless, Petitioner concedes that “[n]either written records of the interview, nor disclosure of information offered by Petitioner during said meeting has been provided to the Petitioner by the government.”  Id.  Moreover, even crediting Petitioner’s assertion that he cooperated with prosecutors, there is no evidence in the record establishing that his cooperation resulted in others being convicted.  In fact, Petitioner admits that “he has no way of knowing if the information provided was used in the conviction of others, investigations of additional cases or imposition against anyone of a civil monetary penalty.”  Id.  I therefore cannot infer that, by qualifying for the safety valve exception, Petitioner cooperated with federal officials within the meaning of 42 C.F.R. § 1001.102(c)(3).  For these reasons, I conclude Petitioner failed to meet his burden to establish the mitigating factor of cooperation with law enforcement.

3.  Based on the presence of two aggravating factors and no mitigating factors, the 10-year exclusion imposed by the IG falls within a reasonable range.

Petitioner contends that the IG’s decision to exclude him for 10 years is not reasonable.  P. Hrg. Req. at 3; P. Supp. Br. at 6.  However, the IG has broad discretion in determining the length of an exclusion.  See, e.g., Awada,DAB No. 2788 at 5.  So long as the period of exclusion imposed by the IG is within a reasonable range, based on demonstrated criteria, I have no authority to change it.  Joann Fletcher Cash,DAB No. 1725 at 16‑17 (2000) (citing 57 Fed. Reg. 3298, 3321 (1992)); see also Jeremy Robinson, DAB No. 1905 at 5 (2004).

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Based on the record before me, I find that the 10‑year exclusion falls within a reasonable range.  As outlined above, the record establishes the presence of two aggravating factors and does not establish the presence of any mitigating factor.  See 42 C.F.R. § 1001.102(b)(2), (b)(5), and (c).  Furthermore, the duration of Petitioner’s criminal conduct and the period of his incarceration significantly exceed the thresholds for establishing these aggravating factors.

First, the conduct for which Petitioner was convicted spanned more than eight years, significantly exceeding the one-year threshold for establishing the aggravating factor set forth in 42 C.F.R. § 1001.102(b)(2).  IG Ex. 4 at 1-7.  Petitioner was convicted after pleading guilty to participating in a drug conspiracy that began “on a date unknown, but no later than in or about the year 2009, and continuing up to and until July 2017,” and possession with intent to dispense a controlled substance outside the scope of a professional practice and not for a legitimate medical purpose that began “on a date unknown, but no later than in or about the year 2009, and continu[ed] up to and the return of the indictment,” which was May 11, 2018.  IG Ex. 3 at 1-2, 7.  The conduct to which Petitioner admitted, and for which he was convicted, continued well beyond the one‑year threshold set forth in 42 C.F.R. § 1001.102(b)(5).

Second, the regulations provide that any sentence including incarceration may be considered an aggravating factor.  42 C.F.R. § 1001.102(b)(5).  Here, Petitioner was sentenced to incarceration for a substantial term of 24 months.  IG Ex. 2 at 3.

Although Petitioner argued that I should consider his cooperation with federal authorities as a basis to reduce his exclusion to less than 10 years, he failed to carry his burden of proof to establish this mitigating factor.  Accordingly, I do not consider it.

Exclusions imposed pursuant to section 1128 and its implementing regulations serve to protect the integrity of federal health care programs from untrustworthy individuals. See, e.g., Awada, DAB No. 2788 at 5.  The conduct for which Petitioner was convicted and the incarceration to which he was sentenced demonstrate that he presents a significant risk to the integrity of health care programs, justifying a lengthy exclusion.  See Cash, DAB No. 1725; see also Awada, DAB No. 2788.  In the present case, excluding Petitioner from participating in federal health care programs for a period of 10 years plainly serves a protective purpose.  Here, Petitioner, as a physician and licensed DEA registrant, participated in a conspiracy to knowingly prescribe Oxycodone, a Schedule II controlled substance, and Alprazolam, a Schedule IV controlled substance, to patients who sold their prescriptions to a co-conspirator.  IG Ex. 3 at 4-5.  The co-conspirator filled those prescriptions and resold the controlled substances in housing projects in the metropolitan area of Puerto Rico for a profit.  Id. at 5-6.  As a result of the conspiracy, at least 70,000 units of Oxycodone and 40,000 units of Alprazolam were dispensed and distributed.  Id. at 2, 7.  Petitioner’s prolonged criminal conduct demonstrates a high level of untrustworthiness and shows his involvement in the conspiracy was not merely a

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“minimal lapse in judgment” but instead a “significant risk to program integrity and risk to program beneficiaries.”  Awada, DAB No. 2788 at 9.  The extended duration of Petitioner’s criminal acts maximized the harm he caused and thus highlights his untrustworthiness to participate in federal or state health care programs.

Additionally, the seriousness of Petitioner’s offense is underscored by the lengthy prison sentence imposed by the federal district court.  Incarceration for any length of time is considered evidence of untrustworthiness.  For example, an appellate panel of the Departmental Appeals Board deemed a nine-month period of incarceration “relatively substantial,” and sufficient to support an eight-year exclusion period.  Jason Hollady, M.D., DAB No. 1855 at 12 (2002).  Similarly, in the present case, Petitioner’s 24-month period of incarceration is substantial and justifies a significant increase in the length of the exclusion.

The duration of Petitioner’s criminal conduct exceeded the threshold set forth in the regulations by at least eight times.  In addition, Petitioner’s period of incarceration was significant.  By contrast, the 10-year exclusion imposed is only two times greater than the minimum statutory period.  Under these circumstances, I cannot conclude that the exclusion imposed by the IG is excessive.  I therefore find that the 10‑year exclusion falls within a reasonable range.

III.    Conclusion

For the reasons explained above, I conclude that the IG properly excluded Petitioner from participation in Medicare, Medicaid, and all federal health care programs, and I sustain the 10‑year period of exclusion.

1. The current version of the Social Security Act can be found at https://www.ssa.gov/OP_Home/ssact/ssact-toc.htm.  Each section of the Act on that website contains a reference to the corresponding United States Code chapter and section.
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2. Petitioner Exs. 1-7 were uploaded as a single docket entry in DAB E-File.  They appear as entry 8b.
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3. My findings of fact and conclusions of law appear as headings in bold italic type.
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