Brantley Paul Nichols, D.M.D., DAB CR6209 (2022)

DECISION

Petitioner, Brantley Paul Nichols, D.M.D., was convicted of a felony count of conspiracy to commit healthcare fraud in violation of 18 U.S.C. § 1349.  Petitioner signed blank prescription forms for compounded medications for individuals, including TRICARE¹  beneficiaries, without examining the individuals.  Petitioner sent the prescriptions to co‑conspirators who later used the prescriptions in a scheme to defraud the TRICARE program and other health care benefit programs.  Based on this conviction, the Inspector General (IG) excluded Petitioner from participating in Medicare, Medicaid, and all

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federal health care programs for 15 years,²  under section 1128(a)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)).³ 

Petitioner agrees that the IG was required to exclude him based on his felony conviction relating to fraud, theft, embezzlement, breach of fiduciary responsibility or other financial misconduct.  Petitioner argues that the length of the exclusion is unreasonable, however.  For the reasons set forth below, I affirm that the IG was required to exclude Petitioner and find that a 10-year exclusion is reasonable.

I.  Background and Procedural History

Petitioner is a doctor of dental medicine who is licensed to practice in Mississippi.  Petitioner’s Exhibit (P. Ex.) 1 at 1.  Hope Thomley was an owner and operator of Total Care Marketing and Advantage Pharmacy, both located in Mississippi.  IG Ex. 3 at 3 (¶ 15).

As charged in the criminal information to which Petitioner pleaded guilty, in or around October 2014, Thomley and others solicited Petitioner to prescribe Advantage Pharmacy’s “High-Yield Compounded Medications” to individuals, including TRICARE beneficiaries.  Id. at 3 (¶ 17), 5 (¶ 19d).  Petitioner signed blank, preprinted prescription forms for the compounded medications and returned the signed prescription forms to Thomley.  Id. at 5 (¶ 19e).  Thomley, or another person related to Total Care Marketing, filled out the preprinted prescription forms to indicate that the compounded medications were being prescribed to individuals, including TRICARE beneficiaries, who, Thomley knew, Petitioner had not examined.  Id. at ¶ 19e-f.  Thomley or another co-conspirator submitted the prescriptions to Advantage Pharmacy which, in turn, dispensed the medications and billed TRICARE.  Id. at ¶ 19e.  TRICARE, relying upon Petitioner’s signature on the preprinted prescription forms, reimbursed Advantage Pharmacy approximately $696,000.  Id. at 6 (¶ 19i).

On July 24, 2018, Petitioner pleaded guilty to count 1 of the bill of information filed in the United States District Court for the Southern District of Mississippi (federal district court).  P. Ex. 8 at 1, 10.⁴   The information charged that:  

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[b]eginning in or about October 2014, and continuing through in or around January 2017, in . . . the Southern District of Mississippi, and elsewhere, [Petitioner] conspired and agreed with Hope Thomley, and others known and unknown to the United States Attorney, to knowingly and willfully execute a scheme and artifice to defraud a health care benefit program . . . that is, TRICARE, and other health care benefit programs[.]

IG Ex. 3 at 3-4 (¶ 17).

The federal district court accepted Petitioner’s guilty plea and adjudicated him guilty of one count of conspiracy to commit healthcare fraud in violation of 18 U.S.C. § 1349.  See P. Ex. 8 at 32-33; see also IG Ex. 5 at 1.  The court sentenced Petitioner to twelve months and one day of incarceration and ordered him to pay restitution in the amount of $696,026⁵  to “Defense Health Agency (TRICARE).”  IG Ex. 5 at 2, 6.

From Spring 2018 through Summer 2020, Petitioner met with the government to provide information on the roles of his co-conspirators, to include emails and images of his cellular telephone, and cooperated to make undercover recordings of a co-conspirator.  P. Ex. 5 at 2.  Petitioner’s cooperation provided “valuable evidence against [his co-conspirators], all of which helped secure their guilty pleas.”  Id.; P. Ex. 6; see P. Ex. 7 at 2 (Section V.C.5K1.1).

By letter dated April 14, 2021, the IG notified Petitioner that he must be excluded from participation in Medicare, Medicaid, and all federal health care programs under section 1128(a) of the Act because of his felony conviction in the federal district court.  IG Ex. 7 at 1.  The letter further advised that the minimum period of exclusion would be five years, but could be increased “if aggravating circumstances warrant.”  Id. at 2.  Finally, the letter gave Petitioner 30 days from the date of the letter to submit any information and supporting documentation for the IG to consider before making a final determination regarding the exclusion.  Id.  Petitioner represents that he never received this notice and that, pursuant to 42 C.F.R. § 1001.2001, remand to the IG is required.  P. Request for Hearing (RFH) at 3 (Docket Entry 1 in DAB E-File).

By letter dated April 29, 2022, the IG notified Petitioner that he was excluded from participation in Medicare, Medicaid, and all federal health care programs for 15 years.

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IG Ex. 1 at 1.  The letter explained that Petitioner was excluded because he was convicted “of a criminal offense related to fraud, theft, embezzlement . . . in connection with the delivery of a health care item or service,” and that the period of exclusion is greater than the five-year statutory minimum because of three aggravating circumstances:  

1. The acts resulting in the conviction, or similar acts, caused, or were intended to cause, a financial loss to a government agency or program or to one or more other entities of $50,000 or more . . .  The court ordered you to pay approximately $696,000 in restitution.

2. The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more.  The acts occurred from about October 2014 to about January 2017.  

3. The sentence imposed by the court included incarceration. The court sentenced you to 12 months and 1 day of incarceration.  

Id.

Petitioner timely requested a hearing before an administrative law judge and the case was assigned to me.  On June 21, 2022, I held a telephone prehearing conference with the parties.  Among other things, I asked IG counsel if the IG would agree to a remand.  Counsel stated that, in her view, a remand would not be useful, as the IG would not likely reconsider the exclusion or its effective date.  I therefore denied Petitioner’s request for a remand but confirmed that he may address the issue in his brief.⁶   Order and Schedule for Filing Briefs and Documentary Evidence (Briefing Order) at 2 (Docket Entry 4 in DAB E-File).

On June 22, 2022, I issued a Briefing Order which directed the parties to file short-form briefs.  Briefing Order ¶ 7.b; see 42 C.F.R. § 1005.8.  Pursuant to the Briefing Order, the IG filed a brief (IG Br.) and eight exhibits (IG Exs. 1-8).  Petitioner filed a brief (P. Br.) and eight exhibits (P. Exs. 1-8).  The IG filed a reply brief (IG Reply) and an amended exhibit list to add a ninth exhibit (IG Ex. 9).  IG Ex. 9 is a letter dated October 25, 2022, in which the IG’s reviewing official notified Petitioner that the IG was reducing the exclusion period from 15 years to 10 years in consideration of the mitigating factor at 42 C.F.R. § 1001.102(c)(3), due to Petitioner’s cooperation with Federal or State officials.  IG Ex. 9.

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Neither party objected to any of the proposed exhibits.  Accordingly, in the absence of objection, I admit IG Exs. 1-9 and P. Exs. 1-8 into the record.  42 C.F.R. § 1005.8(c); Briefing Order ¶ 8; Civil Remedies Division Procedures § 14(e).  The parties agree that this case may be resolved without an in-person hearing.  IG Br. at 12; P. Br. at 20.  I therefore decide this case based on the written record.  See Briefing Order ¶ 9.

II.  Discussion

1. The IG was required to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(a)(3) of the Act because he was convicted of a felony offense related to fraud in connection with the delivery of a health care item or service.

Section 1128 of the Act authorizes the Secretary of Health and Human Services (Secretary) to exclude certain individuals from participating in federal health care programs, as defined in section 1128B(f) of the Act.  Act § 1128 (42 U.S.C. § 1320a-7).  Section 1128(a)(3) of the Act requires the Secretary to exclude from program participation any individual who has been convicted of a criminal offense “consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct” that is “in connection with the delivery of a health care item or service.”  Act § 1128(a)(3).

The Secretary has delegated this exclusion authority to the IG.  42 C.F.R. § 1001.101(c).  Accordingly, the IG must prove the following elements by a preponderance of the evidence to establish a basis for Petitioner’s exclusion pursuant to section 1128(a)(3):  (1) Petitioner must have been convicted of a felony after August 21, 1996;⁷  (2) the felony offense for which Petitioner was convicted must have been related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct; and (3) the offense must have been committed in connection with the delivery of a health care item or service.  See 42 C.F.R. §§ 1001.101(c), 1001.2007(c).

The IG has met this burden.  Moreover, Petitioner concedes that the IG was required to exclude him based on his conviction of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility or other financial misconduct that was committed in connection with the delivery of a health care item or service.  P. Br. at 2.

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1. Petitioner was convicted of a felony offense after August 21, 1996.

On July 24, 2018, the federal district court accepted Petitioner’s guilty plea and adjudicated him guilty of the felony⁸  offense of conspiracy to commit healthcare fraud in violation of 18 U.S.C. § 1349.  IG Ex. 4; P. Ex. 8.  Petitioner does not dispute that he was convicted of a felony after August 21, 1996.  P. Br. at 1.

An individual is convicted “when there has been a finding of guilt against the individual . . . by a Federal, State, or local court;” or “when a plea of guilty . . . by the individual . . . has been accepted by a Federal, State, or local court.”  Act § 1128(i)(2), (3) (42 U.S.C. § 1320a-7(i)(2), (3)); see also 42 C.F.R. § 1001.2 (definition of “convicted”).

Therefore, Petitioner was convicted of a felony offense occurring after August 21, 1996, because the federal district court accepted his guilty plea and adjudicated him guilty of the felony offense of conspiracy to commit healthcare fraud on July 24, 2018.

2. The felony offense for which Petitioner was convicted was related to fraud.

The federal district court accepted Petitioner’s guilty plea and adjudicated him guilty of one count of conspiracy to commit healthcare fraud in violation of 18 U.S.C. § 1349.  P. Ex. 8 at 32-33; see also IG Ex. 5 at 1.  On its face, the offense for which Petitioner was convicted is related to fraud.  Moreover, Petitioner does not dispute that his conviction “was of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility or other financial misconduct that was committed[.]”  P. Br. at 2.

3. The felony offense for which Petitioner was convicted was in connection with the delivery of a health care item or service.

The federal district court accepted Petitioner’s guilty plea and adjudicated him guilty of a felony offense.  P. Ex. 8 at 32-33.  Petitioner does not dispute that his conviction was of a felony “in connection with the delivery of a health care item or service[.]”  P. Br. at 2.

To determine whether a conviction is in connection with the delivery of a health care item or service, “we look to whether there is a ‘common sense connection’ (or ‘nexus’) between the offense of which a petitioner was convicted and the delivery of a health care item or service.”  Kenneth M. Behr, DAB No. 1997 at *4 n.5 (2005) (2005 WL 2835001).  A common sense connection exists where the offense occurs “in the context of an individual’s participation in the chain of delivery of health care items or services.”  Id. at *5.

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Writing prescriptions for compounded medications that were later dispensed by a pharmacy to TRICARE beneficiaries is part of the chain of delivery for health care items and services.  See IG Ex. 3 at 5 (¶ 19e-f); see also P. Ex. 3.  Petitioner’s conviction is therefore “in connection with the delivery of a health care item or service” within the meaning of section 1128(a)(3) of the Act.

I conclude that all elements required to establish a basis for a mandatory exclusion pursuant to section 1128(a)(3) of the Act are present; therefore, the IG was required to exclude Petitioner 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).  Here, the IG has imposed an exclusion longer than the mandatory minimum.  I next consider whether, in light of aggravating or mitigating factors defined by regulation, the length of the exclusion is reasonable.  See Hussein Awada, M.D., DAB No. 2788 at 5 (2017) (“An [administrative law judge] reviews the length of an exclusion de novo to determine whether it falls within a reasonable range.”).

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

In determining the length of an exclusion pursuant to section 1128(a)(3) of the Act, the IG is authorized to consider certain aggravating factors as a basis for lengthening the period of exclusion beyond the five-year minimum period.  42 C.F.R. § 1001.102(b).  If any of the aggravating factors found in section 1001.102(b) justify an exclusion longer than five years, then the IG may consider the mitigating factors in section 1001.102(c) as a basis for reducing the period of exclusion to no less than five years.  The IG bears the burden of proving the existence of any aggravating factors, and Petitioner bears the burden of proving the existence of any mitigating factors.  Briefing Order ¶ 6; see 42 C.F.R. § 1005.15(c).

The IG initially relied on three aggravating factors and no mitigating factors to support imposing a 15-year exclusion.  IG Ex. 1 at 1.  After considering Petitioner’s evidence concerning a mitigating factor, the IG reduced Petitioner’s exclusion to 10 years.  IG Ex. 9.  Petitioner nevertheless argues that the 10-year exclusion period is unreasonable because, in Petitioner’s view, the IG has failed to establish two of the alleged aggravating factors.  P. Br. at 2.  As I explain below, I disagree.

1. The IG has established three aggravating factors. 
   1. The acts that resulted in Petitioner’s conviction caused a loss of $50,000 or more to a government agency or program.

42 C.F.R. § 1001.102(b)(1) provides that an aggravating factor exists where:  

The acts resulting in the conviction, or similar acts, caused, or were intended to cause, a financial loss to a government

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agency or program or to one or more other entities of $50,000 or more.  (The entire amount of financial loss to such government agencies or programs or to other entities, including any amounts resulting from similar acts not adjudicated, will be considered regardless of whether full or partial restitution has been made)[.] 

The IG argues that Petitioner’s felony conviction caused a financial loss of $50,000 or more to the government because the federal district court ordered him to pay restitution in the amount of $696,026.  IG Br. at 7; IG Reply at 3 (“it is well-established that an amount ordered as restitution constitutes proof of the amount of financial loss to a government program.”) (citing cases).  Petitioner disputes that he is responsible for TRICARE’s loss as measured by the federal district court’s restitution order.

Petitioner argues that “because his acts were remote from the actual cause of the loss . . . [h]is acts, as indefensible as they were, did not cause the government loss.”  P. Br. at 13.  His position is that his felony conviction “does not equate to being the cause of the Government’s loss,” P. Br. at 8 (emphasis omitted), because “[a]lthough Dr. Nichols admitted [to] signing the forms in blank and, thus, the unlawfulness of his acts, Thomley and her co-conspirators used these prescriptions without making Dr. Nichols aware of how his actions allowed . . . Thomley and her co-conspirators to enrich themselves.”  P. Br. at 9-10.

Petitioner is wrong to suggest that the IG must prove Petitioner’s individual acts were the proximate cause of the loss to a government agency or program.  Petitioner’s reading ignores the broad language of the regulation, which includes not only “the acts resulting in the conviction,” but “similar acts.”  42 C.F.R. § 1001.102(b)(1).  Nor is the regulation limited to acts that were the cause in fact of a government loss, but extends as well to acts that were “intended to cause” such a loss.  Id.  It is apparent that the acts of Petitioner’s co-conspirators from which he seeks to distance his own conduct, were “similar” to his acts, in that the acts of the co-conspirators were part of the conspiracy to defraud TRICARE, and all the co-conspirators, including Petitioner, intended their acts to further the scheme.

Indeed, Petitioner admitted as much in his plea allocution, which he made under oath.  See P. Ex. 8 at 5.  During the allocution, the Assistant U.S. Attorney (AUSA) read into the record the charges in the bill of information to establish the factual basis for Petitioner’s guilty plea.  Id. at 28-32.  In particular, the AUSA stated that Petitioner, Thomley, and others conspired to “knowingly and willfully execute a scheme and artifice to defraud . . . TRICARE” by submitting fraudulent prescriptions signed by Petitioner and that TRICARE paid out “approximately $696,000” in reimbursements based on the fraudulent prescriptions.  Id. at 29, 32 (emphasis added).  Following the AUSA’s recitation, the presiding judge asked Petitioner if he agreed that what she had related was, in fact, what happened.  Id. at 32.  Petitioner answered, “Yes, Your Honor.”  Id.  The

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judge asked if Petitioner disagreed with anything the AUSA had said and Petitioner answered “no.”  Id.  On that basis, the court accepted Petitioner’s guilty plea, finding that it was knowing and voluntary and was “supported by an independent basis in fact, containing each of the essential elements of the offense.”  Id. at 33.

Thus, Petitioner stipulated that he knowingly participated in a conspiracy, the object of which was to defraud TRICARE and that, as a result of the conspiracy, TRICARE paid $696,000 for fraudulently-prescribed drugs.  All these facts were finally adjudicated by Petitioner’s guilty plea and Petitioner may not now disavow them.  To do so represents an impermissible collateral attack on his conviction, which is prohibited by 42 C.F.R. § 1001.2007(d).  See Yolanda Hamilton, M.D., DAB No. 3061 at 13 (2022); see also Laura Leyva, DAB No. 2704 at 7 (2016) (rejecting Petitioner’s “collateral attack on the convictions by citing extraneous facts – such as findings made for sentencing purposes and testimonies about her character – that she claims prove that her role in the conspiracies was smaller than stated in the indictment and that she is trustworthy.”), aff’d, Leyva v. Price, No. 8:16-cv-1986 (M.D. Fla. Apr. 24, 2017).  I therefore reject Petitioner’s argument that the acts that resulted in Petitioner’s conviction did not cause a financial loss to the government.

As the IG correctly states, it is settled law that the amount of restitution ordered is a reasonable measure of financial losses of a government program.  See e.g., Leyva, DAB No. 2704 at 9; Juan de Leon, Jr., DAB No. 2533 at 5 (2013).  I find no reason to reach a different result here.  Moreover, because the court-ordered restitution amount of $696,026 (IG Ex. 5 at 6) is so far above the $50,000 threshold amount for aggravation, the IG may justify a significant increase in Petitioner’s period of exclusion.  Juan de Leon, Jr., DAB No. 2533 at 5; see also Sushil Aniruddh Sheth, M.D., DAB No. 2491 at 7 (2012), appeal dismissed, Sheth v. Sebelius, No. 13-cv-00448 (BJR) (D.D.C. Oct. 22, 2013), aff’d, Sheth v. Burwell, No. 14‑5179, 2015 WL 3372286 (D.C. Cir. May 7, 2015); Jeremy Robinson, DAB No. 1905 at 12 (2004) (2004 WL 230865 at *8); Donald A. Burstein, Ph.D., DAB No. 1865 at 12 (2003) (2003 WL 1055659 at *7).

2. The acts that resulted in Petitioner’s conviction were committed over a period of one year or more.

Pursuant to 42 C.F.R. § 1001.102(b)(2), it is an aggravating factor if the acts that resulted in conviction, or similar acts, were committed over a period of one year or more.  The IG argues that “the acts that resulted in Petitioner’s conviction, or similar acts, were committed between about October 2014 to about January 2017[.]”  IG Br. at 7-8 (citing IG Exs. 3, 4).  The record indicates that on July 24, 2018, Petitioner pleaded guilty to count 1 of the bill of information filed in the federal district court.  IG Ex. 4 at 1; see P. Ex. 8 at 4.  The information provides that:  

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[b]eginning in or about October 2014, and continuing through in or around January 2017,[⁹ ] in Lamar County . . . [Petitioner] conspired and agreed with Hope Thomley, and others known and unknown to the United States Attorney, to knowingly and willfully execute a scheme and artifice to defraud . . . TRICARE, and other health care benefit programs[.]

IG Ex. 3 at 3-4 (¶ 17) (emphasis added).  In pleading guilty, Petitioner stipulated that he participated in a fraud conspiracy for at least 15 months, and possibly for as long as 27 months, either of which exceeds the one-year minimum required to establish the aggravating factor.  P. Ex. 8 at 29-32.

Petitioner concedes that his involvement in the conspiracy was for more than 12 months.  P. Br. at 14.  Nevertheless, Petitioner argues that various discrepancies in the date ranges “show[] the unreliability of using the dates in the Information as a basis for this Aggravating Factor.”  Id.  Petitioner further points to his written direct testimony as evidence that his acts of signing blank prescription forms occurred during a period of less than one year.¹⁰   P. Br. at 15-16.  To the extent that Petitioner intends by this to argue that the IG failed to establish the second aggravating factor, this represents an impermissible collateral attack on the factual basis for his conviction for the same reasons explained in the previous section of this decision.

Regardless of when precisely Petitioner signed the blank prescription forms, his guilty plea conclusively establishes that the conspiracy of which he was a part continued for over one year.  Any attempt to argue otherwise constitutes an impermissible collateral

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attack on the factual basis for his guilty plea.¹¹   The length of Petitioner’s participation in the fraud scheme represents more than a short-lived lapse of integrity and reflects negatively on his trustworthiness.  Hamilton, DAB No. 3061 at 14 (citing Burstein, DAB No. 1865 at 8).  This fact justifies an enhancement of the minimum exclusion period.  See id.  Therefore, the IG has established, by a preponderance of the evidence, the presence of a second aggravating factor.

3. The sentence imposed against Petitioner included a period of incarceration.

The IG argues that Petitioner’s criminal conviction resulted in a period of incarceration that satisfies 42 C.F.R. § 1001.102(b)(5).  IG Br. at 12.  Petitioner does not contest the presence of this aggravating factor.  See P. Br. at 2.  The federal district court sentenced Petitioner to 12 months and one day of incarceration.  IG Ex. 5 at 2.  Petitioner notes that the federal district court judge found a downward departure from the sentencing guidelines to be appropriate in light of Petitioner’s substantial assistance, personal and criminal history, and other pertinent characteristics (P. Br. at 17), and that the 12-month and one-day sentence was imposed to “guarantee the defendant a chance at the benefits that inure to a defendant with respect to computation of time by the U.S. Bureau of Prisons.”  P. Br. at 19.  Even if true, this fact is irrelevant.  The only relevant inquiry on which the aggravating factor may be based is whether Petitioner’s sentence included incarceration.  There is no doubt that it did.

The record establishes that Petitioner was sentenced to 12 months and one day of incarceration.  IG Ex. 5 at 2.  The appellate panel has held that “incarceration of any length would constitute an aggravating factor.”  Angelo D. Calabrese, M.D., DAB No. 2744 at 8 (2016) (emphasis added).  Petitioner notes in a separate section of his brief that he was “incarcerated from November 18, 2020, through July 7, 2021, . . . released on ‘Home Confinement,’ and finally released from his sentence on September 24, 2021.”  P. Br. at 20.  However, even a nine-month incarceration that included a period of work release has been characterized as “relatively substantial.”  Jason Hollady, M.D., a/k/a Jason Lynn Hollady, DAB No. 1855 at 12 (2002) (2002 WL 31599187 at *8).  Based on Petitioner’s incarceration, the IG has established the presence of a third aggravating factor.

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2. Petitioner has established one mitigating factor.

The IG has established the presence of three aggravating factors to support lengthening the period of exclusion beyond the five-year minimum required by 42 C.F.R. § 1001.102(a).  Petitioner argues that a mitigating factor exists which warrants a reduction in the length of his exclusion:  namely, his cooperation with federal agencies to provide substantial assistance in the investigation of his co-conspirators.  P. Br. at 18-20; see 42 C.F.R. § 1001.102(c)(3).

The mitigating factor at section 1001.102(c)(3) requires that: 

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.

Petitioner offered P. Exs. 5 and 6, the written declarations of an AUSA and an FBI special agent, who both attest that Petitioner provided substantial assistance to the government.  Petitioner’s cooperation provided “valuable evidence against [his co-conspirators], all of which helped secure their guilty pleas.”  P. Ex. 5 at 2.  “To date, over 20 persons, including doctors, nurses, pharmacists, and others have been convicted of crimes related to this investigation.”  Id. at 1.  These statements establish that Petitioner’s cooperation with federal officials resulted in “[o]thers being convicted” or “[a]dditional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses” within the meaning of 42 C.F.R. § 1001.102(c)(3).

The IG does not dispute the presence of this mitigating factor.  In fact, the IG specifically considered this factor in reducing Petitioner’s exclusion from 15 years to 10 years.  IG Reply at 1; IG Ex. 9.  I therefore find that the record establishes the presence of a mitigating factor that justifies a reduction in the length of Petitioner’s exclusion.

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3. Based on the presence of three aggravating factors and one mitigating factor, a 10-year exclusion falls within a reasonable range

The IG has broad discretion in determining the length of an exclusion.  See, e.g., Hamilton, DAB No. 3061 at 12; Awada, DAB No. 2788 at 5 (deference owed to IG’s determination of exclusion length due to experience with implementing exclusions).  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 *10 (2000 WL 710697) (citing 57 Fed. Reg. 3298, 3321 (1992)).

Based on the record before me, I find that a 10-year exclusion falls within a reasonable range.  Petitioner was convicted of a felony offense relating to fraud that occurred in connection with the delivery of a health care item or service.  The IG established the presence of three aggravating factors justifying an enhancement of the length of exclusion.  The court ordered restitution in the amount of $696,026, which is nearly fourteen times the $50,000 threshold amount for aggravation in 42 C.F.R. § 1001.102(b)(1).  See IG Ex. 5 at 6.  The scope of TRICARE’s losses justifies treating this factor as an “extraordinary aggravating factor” justifying a significant increase in the length of Petitioner’s exclusion.  See Leyva, DAB No. 2704 at 10.  Accordingly, this factor alone justifies extending the period of exclusion by a substantial amount.  Petitioner participated in the conspiracy for more than a one-year period, IG Ex. 3 at 3-4 (¶ 17), which reflects negatively on his trustworthiness.  See Hamilton, DAB No. 3061 at 14.  The court also sentenced him to 12 months and one day of incarceration, IG Ex. 5 at 2, which is an aggravating factor that may warrant a greater exclusion period.  See Calabrese, DAB No. 2744 at 8.  Together, these facts justify a substantial enhancement of the exclusion period to safeguard “federally-funded health care programs from untrustworthy individuals.”  See Burstein, DAB No. 1865 at *8 (citing Patel v. Thompson, 319 F.3d 1317, 1319 (11th Cir. 2003); Mannocchio v. Kusserow, 961 F.2d 1539, 1543 (11th Cir. 1992)). 

Petitioner has established the presence of one mitigating factor justifying a reduction in the length of exclusion.  In light of his substantial cooperation with federal agencies to secure guilty pleas from his co-conspirators, the IG reduced the exclusion period from 15 years to 10 years.  IG Ex. 9.  Five years represents a significant reduction.  Taking into account the aggravating factors, in particular the very substantial program losses that resulted from the conspiracy, as well as the mitigating factor of Petitioner’s cooperation, I find that a 10-year exclusion falls within a reasonable range.

3. Petitioner’s procedural arguments concerning remand are moot.

In addition to his substantive challenge to the length of the exclusion the IG has imposed, Petitioner contends that the IG failed to afford him the procedures required by regulation.  P. Br. at 21.  Petitioner objects that he did not receive a notice of intent to exclude, as required by 42 C.F.R. § 1001.2001.  Id.  He asserts that he was prejudiced by the

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deficient notice because he could have raised arguments concerning the effective date of the exclusion before the IG that cannot be raised before me.  Id. at 23.  On that basis, Petitioner asserts that I erred by failing to remand the case to the IG.¹²   Id. at 21-24.

I disagree that Petitioner was deprived of any procedural right by failing to receive the notice described in 42 C.F.R. § 1001.2001.¹³   The regulation provides that an individual who receives a notice of intent to exclude may “submit documentary evidence and written argument concerning whether the exclusion is warranted and any related issues.”  42 C.F.R. § 1001.2001(a).  The regulation does not include the effective date of the exclusion as an issue that a party may address.  This is undoubtedly because, as the IG points out, the effective date of an exclusion is set by regulation.  See IG Reply Br. at 5.

Section 1128(c)(1) of the Act (42 U.S.C. § 1320a-7(c)) provides that “[a]n exclusion under this section or under section 1128A shall be effective at such time and upon such reasonable notice to the public and to the individual or entity excluded as may be specified in regulations consistent with paragraph (2).”  The implementing regulation provides that “[t]he exclusion will be effective 20 days from the date of the notice.”  42 C.F.R. § 1001.2002(b).  Many appellate decisions of the DAB interpret this regulation to mean that the DAB may not alter the effective date of an exclusion.  See, e.g., Shaikh M. Hasan, M.D., DAB No. 2648 at 9 (2015) (citing, inter alia, Kailash C. Singhvi, M.D., DAB No. 2138 (2007), aff’d, Singhvi v. Inspector General, Dept. of Health & Human Servs., No. CV-08-0659 (SJF) (E.D.N.Y. Sept. 21, 2009); Thomas Edward Musial, DAB No. 1991 at 4-5 (2005); Douglas Schram, R.Ph., DAB No. 1372 at *6 (1992 WL 685407) (“Neither the [administrative law judge] nor this Board may change the beginning date of Petitioner’s exclusion.”)).¹⁴ 

Under 42 C.F.R. § 1001.2001(a), the only issue that may be addressed in response to a notice of intent to exclude is whether an exclusion is warranted.  Because exclusion pursuant to section 1128(a)(3) of the Act is mandatory, Petitioner could not submit

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argument or evidence that his exclusion is unwarranted, as he appears to recognize.  See P. Br. at 2.  Thus, the only arguments Petitioner could properly have presented (and the IG could consider) at that stage were arguments concerning the length of the exclusion.

As to the length of the exclusion, Petitioner was not prejudiced by losing the opportunity to present argument and evidence concerning the mitigating factor of his cooperation.  To the contrary, Petitioner effectively got the benefit of a remand to the IG because the IG’s Reviewing Official considered the evidence Petitioner proffered regarding his cooperation and substantially reduced the exclusion.  See IG Ex. 9.  For this reason, assuming Petitioner did not, in fact, receive the notice of intent to exclude, such omission represents harmless error because his substantial rights were not affected.  See 42 C.F.R. § 1005.23 (“The [administrative law judge] and the DAB at every stage of the proceeding will disregard any error or defect in the proceeding that does not affect the substantial rights of the parties.”).  Petitioner did not, and does not now, contest whether the exclusion is warranted, the only right triggered by section 1001.2001 notice, and has already availed himself of his appeal rights under 1001.2002(b).  Thus, any failure to provide a notice of intent to exclude under section 1001.2001(a) or to remand on that basis is moot.

III.  Conclusion

For the reasons stated above, I affirm the IG’s determination to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for a period of 10 years as authorized by section 1128(a)(3) of the Act (42 U.S.C. § 1320a-7(a)(3)) and 42 C.F.R. §§ 1001.101, 102.  

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Endnotes

¹ TRICARE is a health care program under which the United States Department of Defense provides health care coverage to military service members, retirees, and their families.  See, e.g., Inspector General Exhibit (IG Ex.) 3 at 1 (¶ 1).

² The IG later reduced the period of exclusion to 10 years after considering the mitigating factor at 42 C.F.R. § 1001.102(c)(3).  IG Ex. 9.

³ 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.

⁴ P. Ex. 8 is marked with multiple page numbers.  These markings are inconsistent with one another and with the page breaks in the PDF document as displayed in DAB E-File.  To avoid confusion, I cite to the PDF page numbers.

⁵ The federal district court ordered Petitioner to pay restitution of $696,026.  IG Ex. 5 at 6.  The bill of information states that the financial loss was “approximately $696,000.”  IG Ex. 3 at 6 (¶ 19i) (emphasis added).  Petitioner states, and I agree, that the $26 discrepancy is inconsequential.  P. RFH at 1 n.2.

⁶ In his brief, Petitioner reasserts the argument that a remand is required.  P. Br. at 21-24.  I discuss Petitioner’s argument in greater detail in section II.C, below.

⁷ August 21, 1996, is the date of enactment of the Health Insurance Portability and Accountability Act of 1996.  110 Stat. 1936; see also 42 C.F.R. § 1001.101(d).

⁸ See 18 U.S.C. §§ 1347, 1349 (providing that conspiracy to commit healthcare fraud generally carries a term of imprisonment up to 10 years); cf. 18 U.S.C. § 3559(a) (a ten‑year term of imprisonment is a felony).

⁹ The transcript of Petitioner’s plea allocution states that the conspiracy continued through “in or around January 2016,” whereas the information states that the conspiracy continued through January 2017.  CompareP. Ex. 8 at 29 with IG Ex. 3 at 3 (¶ 17).  This discrepancy is immaterial to my decision, however, because either period exceeds the one-year duration required to establish the aggravating factor described in 42 C.F.R. § 1001.102(b)(2).

¹⁰ Petitioner represents that he signed all the blank prescription forms at issue on five occasions between the fall of 2013 and the spring of 2014.  P. Ex. 1 at 4.  He further asserts that his co-conspirators (and not he) filled in the dates on the prescriptions – from October 24, 2013, to November 6, 2014.  Id.; see also P. Ex. 3 at 1, 55.

¹¹ Petitioner argues that his guilty plea does not establish the duration of the conspiracy because the dates on which the conspiracy occurred are not elements of the crime of conspiracy.  P. Br. at 15.  Whether or not the dates of the conspiracy are an element of the crime, Petitioner stipulated under oath that he agreed with the dates recited by the AUSA at his plea allocution.  P. Ex. 8 at 32.  Petitioner’s overly legalistic attempts to cast doubt on this stipulation do not convince me otherwise.

¹² Petitioner has not explained why his counsel could not raise this or any other issue in informal settlement discussions with counsel for the IG.

¹³ The IG appears to contend that Petitioner has not proved that he never received the notice of intent to exclude.  The IG argues that the notice of intent was sent by letter dated April 14, 2021, and not returned as undeliverable.  IG Br. at 13-14 (citing IG Exs. 7, 8).  However, for purposes of this discussion, I assume that Petitioner did not receive the notice.

¹⁴ Petitioner asserts, without citation to authority, that the IG, unlike the DAB, has authority to change the effective date of an exclusion.  P. Br. at 23.  As the IG’s Reply Brief makes clear, the IG does not view the effective date of exclusion as an issue subject to negotiation.  IG Reply at 6.  Thus, according to the IG, remand for this purpose would have been futile.  Id. at 5-6.