Esther L. Villanueva Valdes, M.D., DAB CR6191 (2022)

DECISION

Respondent, the Inspector General of the United States Department of Health and Human Services (the IG), excluded Petitioner, Esther Villanueva Valdes, M.D., from participation in Medicare, Medicaid, and all other federal health care programs for eight years pursuant to Section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)).  Petitioner challenges the IG’s exclusion action, which, for the reasons stated below, I affirm.

I.    Procedural History

By letter dated February 28, 2022, the IG notified Petitioner of her exclusion from participation in all federal health programs for a minimum period of eight years pursuant to section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)).  The IG explained she took this action based on Petitioner’s conviction in the U.S. District Court for the District of Puerto Rico (District Court) for a criminal offense related to the delivery of an item or service under the Medicare or a state health care program, including the performance of management or administrative services relating to the delivery of such items or services.  IG Ex. 1 at 1.

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Petitioner timely sought review by an Administrative Law Judge (ALJ) in the Civil Remedies Division and I was designated to hear and decide this case.  I held a pre-hearing telephone conference on June 8, 2022, the substance of which is summarized in my June 13, 2022 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order).  Among other things, I directed the parties to file pre-hearing briefs articulating their respective arguments as well as identifying witnesses and exhibits in support thereof.  Summary Order at 3-4.

The IG filed a brief (IG Br.) and four proposed exhibits (IG Exs. 1-4) while Petitioner filed a brief (P. Br.)¹ with one proposed exhibit (P. Ex. 1).²  The IG waived her right to reply.

II.   Admission of Exhibits and Decision on the Record

In the absence of objections, I admit IG Exhibits 1 through 3 and P. Exhibit 1 into the record. 

I advised the parties I would hold an in-person hearing only if a party submitted written direct testimony from a witness and the opposing party asked to cross-examine that witness, or if a party identified an adverse witness and made a valid subpoena request consistent with the requirements found at 42 C.F.R. § 1005.9.  Summary Order at 5. 

Petitioner submitted her own written direct testimony.  P. Ex. 3.  The IG did not identify witnesses or request to cross-examine Petitioner.  Neither party believes an in-person hearing to be necessary.  IG Br. at 5; P. Br. at 4.  I therefore decide this case on the written record before me.  Summary Order at 5; see Civ. Remedies Div. Pro. § 19(d). 

III.  Issues

Whether the IG has a basis for excluding Petitioner from participating in Medicare, Medicaid, and all other federal health care programs and, if so, whether the eight-year period of exclusion selected by the IG is unreasonable.  See 42 C.F.R. § 1001.2007(a)(1). 

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IV.   Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to an administrative hearing and judicial review of the final action of the Secretary of Health and Human Services (Secretary).  The right to a hearing before an ALJ is set forth in 42 C.F.R. §§ 1001.2007(a) and 1005.2.  The rights of both the sanctioned party and the IG to participate in a hearing are specified by 42 C.F.R. § 1005.3. 

Section 1128(a)(1) of the Act requires the Secretary to exclude from participation in federal health care programs “[a]ny individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under subchapter XVIII of this chapter or under any State health care program.”  Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)); see also 42 C.F.R. § 1001.101(a). 

For purposes of exclusion, the Act deems an individual convicted of a criminal offense when:  (1) a judgment of conviction has been entered against him or her in a federal, state, or local court whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or nolo contendere is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.  Act § 1128(i) (42 U.S.C. § 1320a-7(i)); 42 C.F.R. § 1001.2.  The statute does not distinguish between misdemeanor and felony convictions.  There may be no collateral attack of the conviction that provides the basis of the exclusion.  42 C.F.R. § 1001.2007(d). 

Section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) provides an exclusion imposed under section 1128(a) of the Act (42 U.S.C. § 1320a-7(a)) shall be for a minimum period of five years.  The exclusion is effective twenty days from the date of the notice of exclusion.  42 C.F.R. § 1001.2002(b).  The period of exclusion may be extended based on the presence of specified aggravating factors.  42 C.F.R. § 1001.102(b).  Mitigating factors identified by regulation may be considered to reduce the period of exclusion where aggravating factors have first been applied to extend that period more than five years.  42 C.F.R. § 1001.102(c). 

The standard of proof is a preponderance of the evidence.  42 C.F.R. § 1001.2007(c).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors; the IG bears the burden on all other issues.  Summary Order at 3; 42 C.F.R. § 1005.15(c). 

V.    Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold and followed by pertinent findings of fact and analysis.

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1. I have jurisdiction to hear this case.

Petitioner timely requested a hearing.  I therefore have jurisdiction to hear and decide this case.  See 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also Act § 1128(f)(1) (42 U.S.C. § 1320a-7(f)(1)). 

2. There is a basis for Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act.

Exclusion from participation in Medicare, Medicaid, and all federal health care programs is mandated by section 1128(a)(1) of the Act where an individual has been convicted, under Federal or State law, of a criminal offense related to the delivery of an item or service under Medicare or any state health care program.  Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)); 42 C.F.R. § 1001.101(a).  Petitioner concedes she was convicted of a criminal offense requiring exclusion.  P. Br. at 1-2.  Nevertheless, I have independently reviewed the record before me and find the IG has established by a preponderance of the evidence that Petitioner’s offense of conviction warrants exclusion pursuant to section 1128(a)(1) of the Act. 

1. Petitioner was convicted of a criminal offense within the meaning of section 1128(a)(1) of the Act. 

In April 2021, the U.S. Attorney for the District of Puerto Rico charged Petitioner via information with one count of health care fraud in violation of 18 U.S.C. § 1347.  IG Ex. 4.  According to that information, Petitioner knowingly and willfully executed a scheme in April 2018 to defraud the Medicare program in connection with the delivery of and payment for health care benefits, items, and services.  Id. at 2. 

On March 31, 2021, Petitioner executed an agreement to plead guilty to the criminal offense described in the information filed against her by the government.  IG Ex. 2. at 1.  Petitioner stipulated that from July 2015 through 2018, she “knowingly caused claims to be submitted to Medicare for services that were never rendered.”  Id. at 9.  She did so by submitting claims to the Medicare program for time-based services that often exceeded 24 hours per day.  Id. at 9-14.  The District Court accepted Petitioner’s plea and on August 30, 2021, imposed judgment of conviction against her.  IG Ex. 3.  I find Petitioner was convicted of a criminal offense within the meaning of the Act.  Act § 1128(i)(1), (3) (42 U.S.C. § 1320a-7(i)(1), (3)); 42 C.F.R. § 1001.2.

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2. Petitioner’s criminal offense is related to the delivery of an item or service under Medicare or a state health care program within the meaning of section 1128(a)(1) of the Act. 

The Act requires Petitioner be excluded from participation in federal healthcare programs if her offense of conviction is related to the delivery of an item or service under Medicare or a state health care program.  See Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)).  In order to be “related to” the delivery of an item or service under Medicare, only a nexus or common sense connection is required.  See Quayum v. U.S. Dep’t of Health & Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998); see also Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012); Berton Siegel, D.O., DAB No. 1467 (1994) (“[T]he statute requires some ‘nexus’ or ‘common sense connection’ between the offense of which a petitioner was convicted and the delivery of an item or service under a covered program.”). 

Petitioner appears to dispute the relatedness of her crime to the delivery of an item or service to a covered healthcare program.  P. Br. at 2.  But the conduct to which she admitted clearly evidences the “common sense” connection required by section 1128(a)(1) of the Act.  Petitioner, a physician, pleaded guilty to one count of health care fraud in violation of 18 U.S.C. § 1347.  IG Exs. 2, 3.   The offense of conviction on its face demonstrates the nexus between Petitioner’s criminal conduct and a covered healthcare program sufficient to warrant exclusion.  Beyond that, Petitioner stipulated in her plea agreement that she “knowingly caused claims to be submitted to Medicare for services that were never rendered.”  Id. at 9.  She admitted she submitted claims to the Medicare program based on the time she allegedly spent providing services to program beneficiaries that would often exceed 24 hours per day.  Id. at 9-14.  I need not look beyond the charged offense or the stipulations Petitioner made to resolve that charge to conclude her offense of conviction occurred in connection with the delivery of an item or service to the Medicare program. 

The relatedness of Petitioner’s criminal offense to delivery of an item or service to a covered healthcare program is reinforced by the fact that the District Court ordered her to pay restitution to the Medicare program.  IG Ex. 3 at 5.  Payment of restitution to a covered healthcare program for losses incurred as a result of criminal conduct demonstrates the nexus between the offense of conviction and the delivery of an item or service to that program.  Summit S. Shah, M.D., DAB No. 2836 at 8-9 (2017), quoting Siegel, DAB No. 1467 at 6-7 (“[A] criminal offense resulting in financial loss to a State Medicaid program is ‘related to’ the delivery of items or services under that Medicaid program because it results ‘in less funds being available to pay for covered services’ delivered to Medicaid patients.”).  In sum, these facts establish to my satisfaction the requisite “common sense” connection between Petitioner’s offense of conviction and the delivery of services to the Medicare program.

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3. Petitioner must be excluded for a minimum of five years. 

Because I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)), Petitioner must be excluded for a minimum of five years.  Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)); 42 C.F.R. § 1001.102(a). 

4. The IG has established one aggravating factor which justifies exclusion beyond the five-year statutory minimum. 

1. The IG established financial loss to a government program of $50,000 or more, as required by 42 C.F.R. § 1001.102(b)(1). 

Consistent with the stipulations made by Petitioner in her plea agreement, the District Court ordered her to pay restitution to the Medicare program in the amount of $250,000.  IG Ex. 2 at 10; IG Ex. 3 at 5.  Restitution may be used to demonstrate program loss.  See Shah, DAB No. 2836 at 8.  Petitioner does not dispute that the restitution she agreed to pay represents the amount of loss suffered by the Medicare program due to her criminal offense.  The IG properly applied the aggravating factor found at 42 C.F.R. § 1001.102(b)(1) because Petitioner was responsible for more than $50,000 in loss to the Medicare program. 

5. Petitioner has not demonstrated the existence of a mitigating factor recognized by the Secretary’s regulations. 

Petitioner asserts mitigating factors are present in this case that warrant reduction of her period of exclusion.  P. Br. at 3.  She has the burden of establishing such factors.  Summary Order at 3; 42 C.F.R. § 1005.15(c).  The Secretary’s regulations specify only three circumstances that permit mitigation:  (1) where the exclusion is premised on three or fewer misdemeanor offenses and the financial loss is less than $5,000; (2) where records from the underlying criminal proceeding establish a mental, emotional, or physical condition that a court determined reduced an individual’s culpability; and (3) where the record reflects cooperation with federal or state officials that results in others being convicted or excluded, other cases being investigated or reports being issued to identify program vulnerabilities, or others being subject to a civil money penalty or assessment.  42 C.F.R. § 1001.102(c)(2). 

Petitioner cites none of these mitigating factors as grounds to reduce her exclusion period.  P. Br. at 3.  She instead points to various circumstances she believes provide a basis for me to do so on equitable grounds, including her inability to work as a doctor in her final years, limited access to medical care in her community, and the emotional harm caused to her by the unfortunate and untimely passing of her son.  Id. at 6-10.  I am sympathetic to Petitioner’s circumstance and do not find her claims without merit.  But

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the regulations do not permit me to consider any grounds to mitigate an extended period of exclusion except the three bases identified at 42 C.F.R. § 1001.102(c)(2).  The record before me fails to demonstrate an evidentiary basis to find any of these mitigating circumstances are present.  Therefore, while I am sympathetic to the specific circumstances cited by Petitioner, I cannot consider them.  Petitioner has not met her burden to identify a permissible basis for reduction of her period of exclusion.

6. An eight-year exclusion period is not unreasonable.

I must uphold the IG’s determination as to the length of exclusion if it is not unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  This means that: 

[s]o long as the amount of time chosen by the OIG is within a reasonable range, based on demonstrated criteria, the ALJ has no authority to change it under this rule.  We believe that the deference [42 C.F.R.] § 1001.2007(a)(2) grants to the OIG is appropriate, given the OIG’s vast experience in implementing exclusions under these authorities.

57 Fed. Reg. 3298, 3321 (Jan. 29, 1992).

In making my determination, the quality of the aggravating (or mitigating) factors is of greater significance than the mere number of the factors present in a given case.  As the Secretary stated in the preamble to the final rule establishing the exclusion regulations:

We do not intend for the aggravating and mitigating factors to have specific values; rather, these factors must be evaluated based on the circumstances of a particular case.  For example, in one case many aggravating factors may exist, but the subject’s cooperation with the OIG may be so significant that it is appropriate to give that one mitigating factor more weight than all of the aggravating.  Similarly, many mitigating factors may exist in a case, but the acts could have had such a significant physical impact on program beneficiaries that the existence of that one aggravating factor must be given more weight than all of the mitigating.  The weight accorded to each mitigating and aggravating factor cannot be established according to a rigid formula, but must be determined in the context of the particular case at issue.

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Id. at 3314-15.

In assessing the reasonableness of the exclusion period selected by the IG, I must consider both mitigating and aggravating factors.  42 C.F.R. § 1001.102(b), (c).  Here, the IG appropriately applied an aggravating factor to extend Petitioner’s period of exclusion.  Petitioner has not identified a mitigating factor recognized by the regulations to reduce it.  The only question remaining is whether the eight-year period of exclusion selected by the IG is unreasonable.  I cannot say it is.  Petitioner’s criminal conduct resulted in a substantial loss to the Medicare program – by her own admission, $250,000.  IG Ex. 2 at 10; IG Ex. 3 at 5.  Petitioner’s criminal conduct resulted in a loss to the Medicare program five times greater than regulatory minimum of $50,000 in program loss required to be considered an aggravating factor.  42 C.F.R. § 1001.102(b)(1).  It is “entirely reasonable” to give significant weight to loss amounts “substantially larger” than the minimum regulatory threshold.  Laura Leyva, DAB No. 2704 at 9-10 (2016). 

Petitioner concedes she “acted badly with the billing process” but claims that in the end, she provided appropriate and competent medical services to her patients.  P. Br. at 6.  But her characterization of her scheme to fraudulently bill the Medicare program understates the significance of her crime, reflected in the large amount of restitution she was ordered to repay.  Petitioner’s willingness to fraudulently overbill a safety net program intended for the elderly strongly suggests she poses a serious threat to its integrity.  Under these circumstances, I cannot say excluding Petitioner from participation in Medicare, Medicaid, and all other federal health care programs for eight years is unreasonable. 

VI.   Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for eight years starting May 20, 2019, pursuant to section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)). 

Endnotes

¹   Petitioner filed her documents in Spanish.  My office had them translated into English and uploaded.  Both language versions of her documents are part of the record.  I cite the English translation of her pre-hearing brief.  DAB E-file Dkt. No. C-22-485, Doc. No. 19.

²  Petitioner’s pre-hearing brief includes three “attachments” which are in fact narrative responses appended to her short-form brief.  P. Br. at 6-10.  She also appended her son’s death certificate, which I take to be a proposed exhibit.  Id. at 12.