Kedar K. Deshpande, MD, DAB CR6157 (2022)

DECISION

The Inspector General (IG) of the United States Department of Health and Human Services excluded Petitioner, Kedar K. Deshpande, MD, from participation in Medicare, Medicaid, and all other federal health care programs based on his conviction of an offense that was related to the delivery of an item or service under Medicare or a state health care program and felony conviction related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  For the reasons discussed below, I conclude that Petitioner’s conviction subjects him to exclusion on both bases.  I affirm the eight-year length of the exclusion because the IG proved the existence of three aggravating factors and there are no mitigating factors.  I also affirm the April 20, 2022 effective date of Petitioner’s exclusion. 

I.   Background

In a letter dated March 31, 2022, the IG informed Petitioner that he would be excluded from participation in Medicare, Medicaid, and all federal health care programs as defined in section 1128B(f) of the Social Security Act (Act), effective 20 days from the date of the letter.  IG Ex. 1 at 1.  The IG explained that Petitioner’s exclusion was based on a

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conviction in the United States District Court, Southern District of Ohio, that was “related to the delivery of an item or service under Medicare or a State health care program, including the performance of management or administrative services relating to the delivery of items or services, under any such program,” and is also a felony offense “related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”  IG Ex. 1 at 1; see 42 U.S.C. § 1320a-7(a)(1), (4); 42 C.F.R. § 1001.101(a), (d).  The IG lengthened the exclusion beyond the mandatory minimum of five years based on the presence of following three aggravating factors:  1.) the acts resulting in the conviction, or similar acts, caused or intended to cause, a financial loss to a government agency or program or to one or more other entities of $50,000 or more, with the court ordering Petitioner to pay approximately $117,110 in restitution; 2.) the sentence imposed by the court included incarceration, specifically, one day of incarceration and 12 months of home confinement; and 3.) Petitioner was the subject of another adverse action by the State Medical Board of Ohio based on the same circumstances that formed the basis of his exclusion.  IG Ex. at 1-2; see 42 C.F.R. § 1001.102(b)(1), (5), (9). 

Petitioner, through counsel, submitted a timely request for hearing that was received by the Civil Remedies Division on May 27, 2022.¹  On June 2, 2022, the Civil Remedies Division issued my standing pre-hearing order (Pre-Hearing Order), and on June 14, 2022, pursuant to 42 C.F.R. § 1005.6, I presided over a telephonic pre-hearing conference.  That same day, I established a schedule for the filing of briefs and documentary evidence.  The IG filed a brief (IG Br.) and a reply brief, along with five proposed exhibits (IG Exs. 1-5).  Petitioner filed a brief (P. Br.) and two proposed exhibits (P. Exs. 1-2). 

Neither party has submitted the written testimony of any witnesses, and therefore, a hearing is unnecessary for the purpose of cross-examination of any witnesses.²  Pre-

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Hearing Order § 14; see Lena Lasher, DAB No. 2800 at 4 (2017) (discussing that when neither party submits written direct testimony as directed, “no purpose would be served by holding an in-person hearing”), aff’d sub nom. Lasher v. Dep’t of Health & Human Servs., 369 F.Supp.3d 243 (D.D.C. 2019). I will decide this case on the written submissions and documentary evidence. 

II.   Issue

Whether the IG has a basis for exclusion and, if so, whether the eight-year length of the exclusion imposed by the IG is unreasonable.  42 C.F.R § 1001.2007(a)(1)-(2). 

III.   Jurisdiction

I have jurisdiction to adjudicate this case.  42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. § 1005.2. 

IV.   Findings of Fact, Conclusions of Law, and Analysis³

1.  Petitioner was convicted of making a false statement relating to health care, and he was ordered to pay restitution to the Ohio Medicaid Program, the Medicare program, the Ohio Bureau of Workers’ Compensation, and TRICARE.

2.  The conduct underlying the conviction for making a false statement relating to health care involved Petitioner’s submission of claims for services or items that were illegally provided, provided by unqualified or non-credentialled staff, or by staff other than the medical professional under whose name the claim was submitted.

3.  Petitioner has been convicted of a criminal offense related to the delivery of an item or service under Medicare or under any state health care program, and therefore, exclusion is mandated pursuant to section 1128(a)(1).

4.  On April 15, 2021, a federal district court imposed judgment after accepting Petitioner’s guilty plea to the offense of illegally dispensing schedule II controlled substances.

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5.  Petitioner’s violation of 21 U.S.C. § 841(a)(1), (b)(1)(C) and 18 U.S.C. § 2 was punishable by up to 20 years of incarceration and is therefore a felony offense.

6.  Because Petitioner was convicted of a felony offense relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, exclusion is mandated pursuant to section 1128(a)(4).

Section 1128(a)(1) requires a mandatory exclusion from all federal health care programs under certain conditions.⁴  Section 1128(a)(1) states: 

(a) Mandatory exclusion

The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)): 

(1) Conviction of program-related crimes

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. 

See 42 U.S.C. § 1320a-7(a)(1). 

Additionally, section 1128(a)(4) requires a mandatory exclusion from all federal health care programs under additional circumstances, to include the following: 

(4) Felony conviction relating to controlled substance

Any individual or entity that has been convicted for an offense which occurred after August 21, 1996, under Federal

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or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. 

See 42 U.S.C. § 1320a-7(a)(4).  The minimum period of exclusion for both exclusion authorities is five years.  42 U.S.C. § 1320a-7(c)(3)(B). 

The IG argues that she properly excluded Petitioner from all federal health care programs because he has a conviction that is related to the delivery of an item or service under Medicare or any state health care program, and also has been convicted of a felony offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  IG Br. at 4-7.  Petitioner does not dispute that he was convicted of these offenses after August 21, 1996.  See P. Br. at 2 (“On October 7, 2020, [Petitioner] consented to a plea agreement to resolve the criminal case.”).  However, Petitioner disputes the IG’s authority to impose an exclusion, as summarized by Petitioner in the paragraphs below: 

[T]he Act is not applicable in this case as the State of Ohio, Department of Medicaid excluded [Petitioner] from participation in Ohio Medicaid on March 28, 2019 . . . .The I.G.’s action, which is more sever [sic] than that of the State of Ohio, Department of Medicaid, rests on the same underlying criminal case.  The I.G.’s action fails to give full faith and credit to the prior decision against [Petitioner]. 

Additionally, [Petitioner] is currently reviewing his criminal prosecution to see if his case should be reexamined in the wake of Xiulu Ruan v. United States, USCCT No. 20-1410. 

P. Br. at 3.  Because Petitioner has been convicted of an offense that relates to the delivery of an item or service under Medicare or any state health care program and has been convicted of a felony offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, exclusion from all federal health care programs is mandated pursuant to sections 1128(a)(1) and (4). 

On or about March 26, 2019, a federal grand jury returned a true bill of indictment charging, in part¸ that Petitioner “knowingly, intentionally, and illegally dispensed and distributed a quantity of Schedule II controlled substances . . . not for a legitimate medical purpose in the usual course of professional practice.”  IG Ex. 2 at 13 (Counts 2 – 8).  In Counts 13 through 19, the indictment also charged:

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[Petitioner] knowingly, willfully and in connection with the payment for health care benefits, items or services involving a health care benefit program, that is Medicare, Medicaid CareSource, and [Bureau of Workers’ Compensation], falsified, concealed or covered up by trick or scheme a material fact, that is caused the submission of claims for services or items that were illegally provided, provided by an unqualified or non-credentialed . . . staff member, or provided by [a] . . . staff member other than the medical professional under whose name the claims were submitted.  

IG Ex. 2 at 17. 

Pursuant to a plea agreement, Petitioner pleaded guilty to Counts 5 and 19 of the indictment on October 7, 2020.  See IG Ex. 3 at 1 (United States’ Sentencing Memorandum).  The United States reported that Petitioner agreed that, pursuant to the United States Sentencing Guidelines, “an eight-level increase to Count [19] for a loss amount to the health care benefit programs of between $95,000 and $150,000” was warranted.  IG Ex. 3 at 1.  The United States also reported that Petitioner had agreed to “pay restitution in the amount of $117,121.88 to the victim health care benefit programs.”  IG Ex. 3 at 2.  The United States and Petitioner mutually agreed that “due to [Petitioner’s] increased risk for developing severe illness from Covid-19 because of his medical issues, [he] serve any period of incarceration imposed by the Court through home detention.”  IG Ex. 3 at 2. 

Addressing the “nature and circumstances” of Petitioner’s criminal conduct, which the United States stated was “serious,” the United States reported the following: 

[Petitioner] was the owner and primary medical professional at Orthopaedic and Spine Center LLC (OSC), a pain management clinic located in Columbus and Dublin.  While working at OSC, [Petitioner] knowingly pre-signed blank prescriptions for OSC staff to complete and dispense to patients.  At the direction of [Petitioner], OSC staff filled-in Schedule II controlled substances before dispensing the prescriptions to patients.  These prescriptions were dispensed without [Petitioner] examining the patients or reviewing the patients’ medical records to verify the need for the controlled substances.  Furthermore, [Petitioner] was often on vacation or otherwise not in the office when the pre-signed prescriptions were completed by staff members and distributed to patients. 

[Petitioner] as a licensed physician was in a position of trust and had a responsibility to provide his patients with quality medical care,

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including to provide services and medications that were necessary based on a thorough examination of the patient, complete review of the patient[’]s medical history and sound medical judgment.  Unfortunately, in this instance, [Petitioner] intentionally violated that trust when he pre-signed prescriptions for controlled substances without ever examining or seeing the patient and without reviewing the patient’s medical history.  Similarly, by causing the submission of false claims to the health care benefit programs for illegal prescriptions, as well as billing for service performed by unqualified and non-credentialed employees, [Petitioner] also violated the trust of the health care benefit programs. 

IG Ex. 3 at 3-4.  The United States further explained, in response to Petitioner’s claim in his sentencing memorandum that his billings were made in error and not part of a credentialling scheme, that a statement of facts provided in the plea agreement stated that Petitioner “caused the submission of false claims to [the] health insurance programs for . . . noncredentialled and non-qualified providers . . . .”  IG Ex. 3 at 4 n.2 (emphasis omitted).  The United States pointed out that Petitioner signed this statement of facts and admitted this information to the probation officer who conducted the pre-sentencing interview and the United States District Judge who accepted his guilty plea.  IG Ex. 3 at 4 n.2. 

On April 15, 2021, the district court imposed sentence and judgment based on Petitioner’s guilty plea to Counts 5 (unlawful distribution of controlled substance) and 19 (false statements relating to health care matters).⁵  IG Ex. 4 at 1-2.  Petitioner was sentenced to one day of imprisonment and 12 months of home detention.  IG Ex. 4 at 3, 6.  Petitioner was also ordered to pay restitution to the following entities:  Ohio Department of Medicaid ($18,483.16); The Medicare Program CMS ($27,061.32); Ohio Bureau of Workers’ Compensation ($70,956.67); and TRICARE⁶ ($623.73).  IG Ex. 4 at 4, 7-8. 

With respect to Petitioner’s exclusion pursuant to section 1128(a)(1), the IG has submitted evidence that Petitioner was convicted of making false statements relating to health care matters in violation of 18 U.S.C. § 1035 and 18 U.S.C. § 2 and was ordered to pay significant restitution to the health care program victims of his crime, specifically the Ohio Medicaid Program, the Medicare program, the Ohio Bureau of Workers’

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Compensation, and TRICARE.  IG Ex. 2 at 17 (indictment charging that he “knowingly, willfully and in connection with the payment for health care benefits, items or services involving a health care benefit program . . . caused the submission of claims for services or items that were illegally provided by an unqualified or non-credentialed . . . staff member, or provided by . . . [a] staff member other than the medical professional under whose name the claims were submitted”); IG Ex. 4 at 2 (finding of guilt to the offense charged by Count 19 of the indictment).  Petitioner acknowledges that his criminal conviction involved his billing practices for office visits.  P. Br. at 3-4. 

Petitioner does not cite any factual or legal basis for why exclusion is not mandated based on his conviction of a criminal offense that is related to the delivery of an item or service under Medicare or a state health care program.  Rather, Petitioner irrelevantly argues that the IG’s exclusion “is more sever [sic]” than his state Medicaid exclusion and does not “give full faith and credit to the” state Medicaid exclusion.  P. Br. at 3; see P. Ex. 2 (“Excerpts from Ohio Medicaid Exclusion List”).  Petitioner offers no authority supporting that the IG is purportedly required to give “full faith and credit” to a state Medicaid exclusion.  To the contrary, the IG could have lengthened the minimum period of exclusion based on Petitioner’s exclusion from a state Medicaid program.  See 42 C.F.R. § 1001.102(b)(9).  The evidence indicates that Petitioner was convicted of making false statements in connection with health care, specifically involving “a health care benefit program,” and section 1128(a)(1) mandates an exclusion for a minimum period of five years.  See IG Ex. 3 at 1 (addressing Petitioner’s agreement that an eight-level increase pursuant to the United States Sentencing Guidelines is applicable based on “a loss amount to the health care benefit programs of between $95,000 and $150,000”). 

Petitioner also does not present a cognizable argument that exclusion is not mandated pursuant to section 1128(a)(4).  Petitioner was convicted of the illegal dispensing of a schedule II controlled substance, in violation of 21 U.S.C. § 841(a)(1), (b)(1)(C), and 18 U.S.C. § 2.  Pursuant to 21 U.S.C. § 841(b)(1)(C), this offense was punishable by up to 20 years of incarceration and is therefore a felony offense relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  See IG Ex. 3 at 5 (“Unlawful distribution of controlled substances carries a maximum prison term of 20 years”); 18 U.S.C. § 3559(a) (federal criminal code classifying a crime as a felony if the offense is punishable by more than one year of incarceration); see also 42 C.F.R. § 1001.2 (defining incarceration to include house arrest and home detention); Laura Leyva, DAB No. 2704 at 11 (2016) (“We are bound by the definition of incarceration in the applicable regulation, which expressly defines that term to include home detention.”).  Therefore, Petitioner’s felony conviction for illegally dispensing controlled substances mandates exclusion pursuant to section 1128(a)(4) of the Act.⁷ 

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7.  A minimum period of exclusion of eight years is warranted based on the presence of three aggravating factors and no mitigating factors.

Pursuant to 42 U.S.C. § 1320a-7(c)(3)(B), the minimum period of exclusion based on sections 1128(a)(1) and (a)(4) is five years.  Owing to the existence of aggravating factors, the IG imposed an eight-year exclusion, which is three years longer than the mandatory five-year minimum period of exclusion.  The IG has the discretion to impose an exclusion longer than the minimum period when aggravating factors are present.  See 42 C.F.R. § 1001.102.  Without support, Petitioner argues that an exclusion for a minimum period of eight years is not warranted.  Petitioner does not present any plausible arguments why the regulatory aggravating factors cited by the IG are inapplicable, nor has Petitioner identified any applicable regulatory mitigating factors. 

As previously discussed, the IG asserts the presence of three aggravating factors.  IG Ex. 1 at 1-2; IG Br. at 7-11.  First, Petitioner’s acts caused a financial loss of more than $50,000, as shown by the district court’s order that he pay $117,124.88 in restitution to four health care programs and entities.  IG Ex. 4 at 7-8; see 42 C.F.R. § 1001.102(b)(1).  Second, the sentence imposed included incarceration, as defined by regulation, with one day of incarceration and 12 months of home confinement.  IG Ex. 4 at 3, 6; see 42 C.F.R. §§ 1001.2, 1001.102(b)(5).  Third, Petitioner was subject to another adverse action by the State Medical Board of Ohio that was based on the same circumstances underlying the exclusion.  IG Ex. 5; see 42 C.F.R. § 1001.102(b)(9). 

The first aggravating factor is that the loss to federal and state health care programs and entities as a result of Petitioner’s criminal conduct was greater than $50,000, as evidenced by the district court’s order that Petitioner pay $117,124.88 in restitution to the Ohio Medicaid Program, the Medicare program, the Ohio Bureau of Workers’ Compensation, and TRICARE.  IG Exs. 1 at 1; 4 at 7-8; see IG Ex. 5 at 5; 42 C.F.R. § 1001.102(b)(1).  The $117,124.88 ordered for restitution is more than twice the threshold for application of this aggravating factor, and the IG had a reasonable basis to lengthen the exclusion based on this factor.  42 C.F.R. § 1001.102(b)(1). 

Regarding the aggravating factor of incarceration, Petitioner was sentenced to a significant period of incarceration, as defined by regulation, of 12 months of home confinement.⁸  IG Ex. 4 at 6; see 42 C.F.R. § 1001.2 (defining incarceration to include

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home confinement).  The IG properly considered Petitioner’s lengthy sentence of home confinement to be an aggravating factor in this case.  42 C.F.R. § 1001.102(b)(5); see Laura Leyva, DAB No. 2704 at 11 (upholding a 10-year exclusion based on three aggravating factors, to include a sentence of eight months of home confinement).  

Finally, and with respect to the third aggravating factor, Petitioner was subject to another adverse action by his state medical board based on the same underlying conduct.  IG Ex. 5 at 9.  The State Medical Board of Ohio took significant action, not only imposing an indefinite suspension (with a minimum period of suspension of five years), but also imposing a permanent limitation/restriction forbidding Petitioner from prescribing, ordering, administering, or furnishing any controlled substances.  IG Ex. 5 at 3; see 42 C.F.R. § 1001.102(b)(9).  Because Petitioner’s license suspension and permanent restriction/limitation were based on the same conduct underlying his exclusion, the IG properly considered the adverse actions by the State Medical Board of Ohio to be an aggravating factor pursuant to 42 C.F.R. § 1001.102(b)(9).  IG Ex. 5 at 3, 9.  

Evidence of aggravation may be offset by evidence of mitigation if it relates to one of the factors set forth at 42 C.F.R. § 1001.102(c).  I cannot consider evidence of mitigation unless it offsets the lengthening of a period of exclusion due to one or more of the enumerated aggravating factors listed in 42 C.F.R. § 1001.102(b).  42 C.F.R. § 1001.102(c).  Petitioner has not identified a factor that warrants mitigation of an exclusion pursuant to 42 C.F.R. § 1001.102(c).⁹

A minimum period of exclusion of eight years is not unreasonable based on the presence of three aggravating and no mitigating factors; the additional three years of exclusion is not unreasonable.  See, e.g., Gary Katz, R.Ph., DAB No. 1842 (2002) (DAB’s determination that an eight-year period of exclusion is not unreasonable based on two aggravating factors of a minimum period of incarceration of one year and a license suspension).  The minimum period of exclusion of eight years is not unreasonable.  

V.   Effective Date of Exclusion

The effective date of the exclusion, April 20, 2022, is established by regulation, and I am bound by that provision.  42 C.F.R. §§ 1001.2002(b), 1005.4(c)(1).

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VI.   Conclusion

For the foregoing reasons, I affirm the IG’s decision to exclude Petitioner from participation in Medicare, Medicaid, and all federal health care programs for a minimum period of eight years.

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Endnotes

¹ On May 27, 2022, Petitioner’s counsel sent an email message reporting that he was unable to file the request for hearing via DAB E-File.  DAB E-File docket entry # 1b.  The Civil Remedies Division uploaded the request for hearing for counsel on June 2, 2022.  Counsel again reported on August 24, 2022, that he was unable to file Petitioner’s pre-hearing exchange via DAB E-File, and I authorized Civil Remedies Division staff to upload the pre-hearing exchange to DAB E-File.  Inasmuch as counsel has repeatedly been unable to file documents via DAB E-File, I caution counsel that he is expected to comply with orders and procedures.  Civil Remedies Division Procedures §§ 2(b), 6(a); Pre-Hearing Order § 4; see DAB E-File docket entry # 7 (August 24, 2022 email message from Civil Remedies Division Team Lead, stating:  “In the future, counsel must file documents via DAB EFile.”).

² Petitioner argues that his case cannot be fairly decided without an in-person hearing.  P. Br. at 4.  Because Petitioner did not avail himself of the opportunity to submit written direct testimony, there is no purpose for an in-person hearing.  Petitioner has been given an opportunity to submit written arguments and supporting evidence. 

³ My findings of fact and conclusions of law are set forth in italics and bold font. 

⁴ While there are slight differences in the wording of Section 1128 of the Act and its codification at 42 U.S.C. § 1320a-7, the two authorities are substantively identical, and I refer to them interchangeably.  I further note that the Secretary of the Department of Health and Human Services has delegated to the IG the authority “to suspend or exclude certain health care practitioners and providers of health care services from participation in these programs.”  48 Fed. Reg. 21,662 (May 13, 1983); see also 42 C.F.R. § 1005.1.

⁵ The remaining 17 counts were dismissed.  IG Ex. 4 at 1.

⁶ TRICARE is a federal health insurance program for eligible Department of Defense beneficiaries, to include active and retired servicemembers, eligible veterans, family members of sponsoring beneficiaries, and survivors.  See 32 C.F.R. § 199.17.

⁷ Inasmuch as Petitioner stated he is “currently reviewing his criminal prosecution to see if his case should be reexamined in the wake of Xiulu Ruan v. United States, USSCT No. 20-1410,” the issue before me is whether Petitioner has a conviction as contemplated by section 1128(a)(4).  He does.  Pursuant to 42 C.F.R. § 1001.3005(a)(1), “[a]n exclusion will be withdrawn” when a conviction is reversed or vacated on appeal.

⁸ Petitioner was also sentenced to one day of imprisonment for each count, to run concurrently.  IG Ex. 4 at 3.

⁹ Petitioner did not identify any regulatory mitigating factors in his brief.  Rather, Petitioner makes irrelevant claims that “[s]ignificant mitigating evidence” includes that he is willing to take continuing education, “is willing to practice medicine without a full DEA certificate,” and “possesses the attitude and attributes of a physician who can practice in accordance with acceptable standards of care.”  P. Br. at 4; see 42 C.F.R. § 1001.102(c).