Gary Green, DAB CR6266 (2023)

DECISION

Petitioner, Gary Green, pleaded guilty to two counts of false or fraudulent material omission, one count of health care fraud, one count of money laundering, and aiding and abetting those offenses.  Petitioner failed to inform the Drug Enforcement Administration (DEA) that he transferred Schedule II‑IV and III‑IV controlled substances from closed pharmacies and stored the controlled substances in an unapproved commercial unit leased through the offices of Guaranteed Total Construction, for which Petitioner was the registered agent.  Petitioner also wrote pain cream prescriptions for himself, his family, and his pharmacy employees and billed two health care benefit programs for the fraudulent prescriptions.  Petitioner deposited $40,000 obtained through the scheme into his personal banking account. 

Based on Petitioner’s convictions, the Inspector General of the U.S. Department of Health and Human Services (IG) excluded Petitioner from participating in Medicare,

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Medicaid, and all federal health care programs for eight years, under section 1128(a)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)).¹

For the reasons set forth below, I find that Petitioner was convicted of felony criminal offenses related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service.  The IG was therefore required to exclude him from program participation for a minimum period of five years.  I further find that the IG had a basis to extend the period of exclusion and that the eight-year exclusion falls within a reasonable range.

I.     Background and Procedural History

Petitioner is a pharmacist who was licensed to practice in Kentucky.  IG Exhibit (Ex.) 7 at 1.  A Superseding Information filed in the United States District Court for the Western District of Kentucky (federal district court) on December 16, 2019, charged Petitioner with two counts of false or fraudulent material omission and aiding and abetting in violation of 21 U.S.C. § 843(a)(4)(A) and 18 U.S.C. § 2, one count of health care fraud and aiding and abetting in violation of 18 U.S.C. §§ 2, 1347, and one count of money laundering and aiding and abetting in violation of 18 U.S.C. §§ 2, 1957.  IG Ex. 3. 

On January 17, 2020, Petitioner pleaded guilty to all four counts charged in the Superseding Information.  IG Ex. 4.  Petitioner agreed that he was “in fact guilty of the charges” and agreed to a factual basis for his plea.  Id. at 1.  According to the statement of facts, beginning no later than April 3, 2014, and continuing through on or about January 9, 2019, Petitioner knowingly and intentionally omitted material information from a required report and filing when he failed to inform the DEA that he transferred controlled substances, thousands of which were expired, from closed pharmacies to an unapproved commercial storage unit he was leasing.  Id. at 2; see also IG Ex. 6 at 2; P. Ex. 1 at 9. 

Petitioner further agreed he was guilty of health care fraud because between on or about November 2015, and December 2018, he fraudulently billed Anthem Blue Cross Blue Shield of Kentucky (Anthem) and Akebono Brake Corporation Group Benefits Plan (Akebono) for pain creams that purported to be prescribed for himself, his family, and his employees.  IG Ex. 4 at 2; see also IG Ex. 6 at 2-3; P. Ex. 1 at 7-9.  The fraudulent prescriptions used the National Provider Identifiers of two physicians without their authorization, and at least some of Petitioner’s employees did not receive the pain creams described in the prescriptions.  P. Ex. 1 at 7-8.  Finally, Petitioner agreed he was guilty of money laundering because on or about March 24, 2017, he knowingly engaged in a monetary transaction in criminally derived property of a value greater than $10,000, i.e.,

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he deposited $40,000 of proceeds obtained from the fraudulently billed prescriptions into his personal banking account.  IG Ex. 4 at 2. 

Petitioner also signed a Plea Supplement on January 17, 2020.  P. Ex. 3.  Petitioner agreed that “complete and truthful cooperation is a material condition of the Plea Agreement and this Plea Supplement” and that cooperation included:  providing all information regarding any known criminal activity, including but not limited to the offenses described in the Plea Agreement; complying with all reasonable instructions from the United States; submitting to interviews by investigators and attorneys; and testifying fully and truthfully before any grand juries or at any trials or proceedings where Petitioner’s testimony is deemed by the United States to be relevant.  Id. at 1-2. 

On November 18, 2021, the federal district court entered judgment finding Petitioner guilty of two counts of false or fraudulent material omission, one count of health care fraud, one count of money laundering, and aiding and abetting those offenses.  IG Ex. 2 at 1, 2.  The federal district court sentenced Petitioner to nine months of incarceration and two years of supervised release and ordered restitution in the amount of $185,557.37 to Anthem and $2,600.18 to Akebono, for a total restitution amount of $188,157.55.  Id. at 3, 4, 7; IG Ex. 5 at 1-2; see P. Ex. 1 at 9. 

Following his convictions, Petitioner agreed to surrender his pharmacist license to the Kentucky Board of Pharmacy (Pharmacy Board).  IG Ex. 7.²  Under the terms of the agreement, Petitioner may not seek reinstatement or apply for a new license until five years and one day after January 17, 2020, the date he entered his guilty plea in federal district court.  Id. at 3. 

By letter dated August 31, 2022, the IG notified Petitioner that he was excluded from participation in Medicare, Medicaid, and all federal health care programs for eight years under section 1128(a)(3) of the Act because of his felony convictions in the federal district court.  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 factors: 

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 $188,100 in restitution.

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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 April 2014 to about January 2019. 

3. The sentence imposed by the court included incarceration. The court sentenced you to [nine] months of incarceration. 

Id. at 1-2.

The letter also explained the IG considered a mitigating factor in setting the length of Petitioner’s exclusion.  The IG acknowledged that Petitioner had cooperated with federal or state officials and that Petitioner’s cooperation resulted in others being convicted or excluded from Medicare, Medicaid, and other federal health care programs.  Id. at 2. 

Petitioner timely requested a hearing before an administrative law judge and the case was assigned to me.  Following a telephone prehearing conference with the parties, I issued an Order and Schedule for Filing Briefs and Documentary Evidence (Briefing Order). 

Pursuant to the Briefing Order, the IG submitted a brief and seven proposed exhibits (IG Br.; IG Exs. 1-7).  Petitioner submitted a brief and four proposed exhibits (P. Br.; P. Exs. 1-4).  The IG waived filing a reply brief.  Neither party objected to the exhibits proposed by the opposing party.  Accordingly, in the absence of objection, I admit IG Exs. 1-7 and P. Exs. 1-4 into the record. 

I 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.c.ii.  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.  The IG indicated that an in-person hearing is not necessary and did not submit testimony from any proposed witness.  IG Br. at 13-14.  Petitioner also indicated he did not have any testimony that he wished to offer at an in‑person hearing.  P. Br. at 9.  Petitioner instead requested to present oral argument.  Id.  I deny the request for oral argument because I do not find it would aid me in deciding this case.  In the absence of any witness testimony or request for cross-examination, I decline to convene a hearing, and I decide this case based on the written record.

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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 felony offenses related to fraud and other financial misconduct 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;³ (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 for felonies relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct that were committed in connection with the delivery of a health care item or service.  P. Br. at 1-2.  Because Petitioner admits the IG has a basis to exclude him, I discuss only briefly the elements establishing that basis. 

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

On November 18, 2021, the federal district court accepted Petitioner’s guilty plea and adjudicated him guilty of false or fraudulent material omission and aiding and abetting in violation of 21 U.S.C. § 843(a)(4)(A) and 18 U.S.C. § 2, health care fraud and aiding and abetting in violation of 18 U.S.C. §§ 2, 1347, and money laundering and aiding and

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abetting in violation of 18 U.S.C. §§ 2, 1957.  IG Ex. 2 at 1, 2.  These offenses are felonies.  18 U.S.C. § 3559(a) (offenses for which more than one year of imprisonment is authorized are classified as felonies); see also 21 U.S.C. § 843(d)(1) (term of imprisonment up to four years); 18 U.S.C. § 1347 (term of imprisonment up to 10 years); 18 U.S.C. § 1957 (term of imprisonment up to 10 years).  Petitioner does not dispute that he was convicted of felonies after August 21, 1996.  P. Br. at 1. 

2. The felony offenses for which Petitioner was convicted were related to fraud and other financial misconduct.

Petitioner’s convictions include two counts of false or fraudulent material omission in violation of 21 U.S.C. § 843(a)(4)(A) and one count of health care fraud in violation of 18 U.S.C. § 1347.  IG Ex. 2 at 1, 2.  On their face, the offenses of fraudulent material omission and health care fraud are related to fraud.  Moreover, Petitioner’s conviction for money laundering in violation of 18 U.S.C. § 1957 is related to financial misconduct.  In addition, Petitioner does not dispute that he was convicted of felonies “relating to fraud, theft, embezzlement, breach of fiduciary responsibility or other financial misconduct.”  P. Br. at 2. 

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

Petitioner was convicted for money laundering, among other offenses.  As part of his plea agreement, Petitioner stipulated that he transferred $40,000 into his personal bank account “knowing that the funds involved . . . represented the proceeds of . . . unlawful activity, that is, health care fraud.”  IG Ex. 4 at 2.  In turn, the health care fraud to which the $40,000 related was the submission of fraudulent prescriptions for pain creams to health care benefit programs.  Id.  As the appellate decision in Benny R. Bailey explained, improper “financial transactions with the proceeds [of] . . . illegitimate prescriptions” have a connection to the delivery of health care items or services.  DAB No. 2935 at 8-9 (2019), aff’d, Bailey v. Azar, No. 6:20-CV-00166 (E.D. Ky. Aug. 6, 2021).  Petitioner does not dispute that his felony convictions were “in connection with the delivery of a health care item or service.”  P. Br. at 2. 

In summary, 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.”).

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2. The eight-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 relied on three aggravating factors and one mitigating factor to support imposing an eight-year exclusion.  IG Ex. 1 at 1-2.  Petitioner does not disagree with the IG’s identification of the three aggravating factors.  P. Br. at 2, 3, 6.  Petitioner nevertheless argues the eight‑year exclusion period is unreasonable because the IG did not properly weigh the aggravating and mitigating factors.  Id. at 3, 6-9.  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 financial loss of $50,000 or more to a government agency or program or other entity.

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 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 because the federal district court ordered him to pay restitution in the amount of $188,157.55.  IG Br. at 8. 

As part of his plea agreement, Petitioner stipulated that he would pay restitution based on his “total offense conduct, . . . not limited to the counts of conviction.”  IG Ex. 4 at 4.  The federal district court finally adjudicated the restitution amount as $188,157.55.

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IG Ex. 2 at 7; see also P. Ex. 1 at 9.  Many appellate decisions of the Departmental Appeals Board (DAB) hold that restitution is a reasonable measure of program losses.  See, e.g.,Laura Leyva, DAB No. 2704 at 9 (2016); Juan de Leon, Jr., DAB No. 2533 at 5 (2013).  Nevertheless, despite acknowledging that the IG appropriately identified and considered the financial loss aggravating factor (P. Br. at 3, 5), Petitioner argues that “this factor should not be weighted to lengthen the period of exclusion in any meaningful way.”  Id. at 5. 

It appears Petitioner’s argument that I should accord the restitution amount little or no weight is based on his belief that the restitution order overstates the actual losses incurred by Anthem and Akebono.  Petitioner asserts the restitution amount was based on the gross number of prescriptions he issued for himself, family members, and pharmacy employees and hinged on the assumption that none of the prescriptions were filled.  Id.  Petitioner claims a significant number of those prescriptions were filled and the recipients received the intended benefit of the pain cream.⁴  Id. 

Petitioner insists he does not intend these arguments as collateral attacks on his conviction, but only as “context.”  Id.  However, the appellate decision in Yolanda Hamilton, M.D. rejected these same types of arguments as collateral attacks on the restitution amount.  DAB No. 3061 at 13 (2022).  The Hamilton decision went further, also declining to accept that the arguments supported assigning less weight to the factor.  Id. (party’s reliance on “extraneous facts about the criminal proceedings” that cause the restitution amount to be higher than the party deems justified are “to no avail”). 

Petitioner also argues his conduct did not result in losses to the government, only to Anthem and Akebono, both private health insurance companies.  P. Br. at 5-6.  Petitioner further claims he repaid the total amount of the restitution to Anthem and Akebono.  Id. at 6.  Neither contention aids Petitioner.  The regulation specifically states that “financial losses to a government agency or program or to one or more other entities” is an aggravating factor.  42 C.F.R. § 1001.102(b)(1) (emphasis added).  Therefore, financial losses to Anthem and Akebono also establish the financial loss aggravating factor under the regulation.  See Jeremy Robinson, DAB CR1078 (2003) (2003 WL22052938 at *3-4), aff’d, DAB No. 1905 (2004) (2004 WL 230865); Jason Hollady, M.D., a/k/a Jason Lynn

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Hollady, DAB No. 1855 (2002) (2002 WL31599187 at *5).  Similarly, the regulation provides the entire amount of financial loss is considered regardless of whether full or partial restitution has been made.  42 C.F.R. § 1001.102(b)(1); see also Roji Esha, DAB No. 3076 at 17 n.10 (2022); Awada,DAB No. 2788 at 7-8. 

Thus, as measured by the restitution for which he was held responsible, Petitioner’s actions resulted in program losses nearly four times greater than the $50,000 threshold for aggravation.  Because the financial losses were so far above the 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), 2014 WL 11813597 (D.D.C. Jan. 10, 2014), aff’d, Sheth v. Burwell, No. 14‑5179, 2015 WL 3372286 (D.C. Cir. May 7, 2015); Robinson, DAB No. 1905 (2004 WL 230865 at *8); Donald A. Burstein, Ph.D., DAB No. 1865 (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 April 3, 2014 to about January 9, 2019.”  IG Br. at 11-12 (citing IG Ex. 3 at 1-3; IG Ex. 4 at 2).  On January 17, 2020, Petitioner pleaded guilty to all four counts of the superseding information filed in the federal district court.  IG Ex. 4 at 1.  Petitioner stipulated that “[b]eginning no later than April 3, 2014, and continuing through on or about January 9, 2019,” he omitted material information from required reports when he failed to inform the DEA that he transferred controlled substances from closed pharmacies and stored the controlled substances in an unapproved commercial unit he was leasing.  Id. at 2.  Petitioner also admitted that “[o]n or about and between November 2015, and December 2018,” he executed a scheme to bill Anthem and Akebono for fraudulent pain cream prescriptions and deposited the proceeds from the fraudulent scheme into his personal bank account.  Id. 

Petitioner failed to report required information about controlled substances to the DEA for nearly five years and submitted false claims to Anthem and Akebono for roughly three years.  The length of Petitioner’s fraudulent omissions and health care 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 [2003WL 1055659 at *4]).  This fact justifies an enhancement of the minimum exclusion period.  See id.  Petitioner does not dispute the existence of this factor.  Therefore, the IG has established, by a preponderance of the evidence, the presence of a second aggravating factor.

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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 12-13.  Petitioner does not contest the presence of this aggravating factor.  See P. Br. at 2, 3, 6.  However, Petitioner notes that the federal district court judge found appropriate a four-level departure from the sentencing guidelines considering Petitioner’s substantial assistance with two investigations.  P. Br. at 7 (citing P. Ex. 2 at 2-3).  The federal district court judge reduced the potential incarceration range from 27-33 months to 15-21 months and ultimately sentenced Petitioner to nine months of incarceration and two years of supervised release.  IG Ex. 2 at 3, 4; P. Ex. 2 at 3.  Petitioner also maintains he only served seven months at a federal medical center, under minimal security, and two months at a halfway house.  P. Br. at 6. 

To establish this aggravating factor, the only relevant inquiry is whether Petitioner’s sentence included incarceration.  The DAB 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).  A nine-month incarceration that included a period of work release has been characterized as “relatively substantial.”  Hollady, DAB No. 1855 (2002 WL31599187 at *8).  The fact that Petitioner’s incarceration was in a minimal security medical center or that he completed two months in a halfway house is irrelevant in determining whether the aggravating factor existed.  See id. at *6.  Therefore, based on Petitioner’s incarceration, the IG has established the presence of a third aggravating factor. 

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 resulted in conviction of one physician and investigation and likely conviction of another physician.  P. Br. at 7-9; 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,

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(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 a sealed transcript of a bench conference during his November 18, 2021 sentencing hearing to support that he provided substantial assistance to the government.  P. Ex. 2.  During the bench conference, an Assistant U.S. Attorney (AUSA) moved for a four-level downward departure from the sentencing guidelines.  Id. at 2.  According to the AUSA, Petitioner “provided cooperation with respect to a defendant . . . in a six-week physician/nurse practitioner trial” and “provided information regarding the operation of the dispensary and the pharmacy in that particular practice.”  Id.  Petitioner also participated in the ongoing investigation of another physician’s pharmacy and “provided valuable information regarding how that particular pharmacy, which was unique in its operation and illegal in its operation, . . . worked.”  Id.  The transcript reflects that Petitioner’s cooperation “led directly to at least one conviction and . . . will lead to a second conviction.”  Id. at 3.  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 explicitly considered this factor in determining Petitioner’s eight-year exclusion.  IG Ex. 1 at 2; IG Br. at 8-9.  I therefore find that the record establishes the presence of a mitigating factor that justifies reducing the length of Petitioner’s exclusion. 

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

Petitioner argues the IG improperly weighed the aggravating and mitigating factors by applying a rigid formula.  P. Br. at 4.  Petitioner hypothesizes that the IG calculated the length of exclusion by adding one year to the minimum mandatory period for each of the three aggravating factors to arrive at an eight-year exclusion.  Id.  According to Petitioner, the IG’s calculation was unreasonable, based on the preamble to the final rule establishing the exclusion regulations, which states: 

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,

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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. 

57 Fed. Reg. 3298, 3314 (1992). 

Petitioner contends the IG placed too much weight on the financial losses caused by his acts and his term of incarceration and not enough emphasis on his substantial and fruitful cooperation with the federal government, which “should outweigh all of the aggravating factors combined.”  P. Br. at 3, 5, 7.  I take Petitioner’s point to be that, as described in the preamble, his cooperation was “so significant that it is appropriate to give that one mitigating factor more weight” than the three aggravating factors that are also present in his case. 

I agree with Petitioner that there is no rigid formula for weighing aggravating and mitigating factors.  Rather, an administrative law judge reviews de novo the duration of an exclusion period to determine whether it falls within a reasonable range based on any aggravating and mitigating factors and the circumstances underlying those factors.  Hamilton, DAB No. 3061 at 12 (citing Sheth, DAB No. 2491 at 5).  The administrative law judge’s evaluation does not rest on the number of aggravating or mitigating factors or any rigid formula for weighing them, “but rather on a case-specific determination of the weight to be accorded [to] each factor based on a qualitative assessment of the circumstances surrounding the factors in th[e] case.”  Mrugeshkumar Shah, M.D., DAB No. 3079 at 9-10 (2022) (quoting Sheth, DAB No. 2941 at 5).  However, administrative law judges may not substitute their judgment for that of the IG or choose an exclusion period that they prefer over that set by the IG.  Hamilton, DAB No. 3061 at 12.  Moreover, 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 (2000) (2000 WL 710697 at *10) (citing 57 Fed. Reg. at 3321); see also Robinson, DAB No. 1905 (2004 WL230865 at *3). 

While arguing that the IG acted improperly in applying a rigid formula to set the length of his exclusion, Petitioner simultaneously – and somewhat inconsistently – suggests that the IG and administrative law judge should weigh his cooperation using the same metric as did the federal district court when it reduced his potential period of imprisonment by one-third.  P. Br. at 7.  However, Petitioner provides no authority to support his claim that the IG or administrative law judge should weigh his cooperation with federal officials in

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the same manner as did the federal district court.⁵  In fact, the regulations do not require the IG and administrative law judge to apply the mitigating factor of cooperation to offset the aggravating factors.  See Awada, DAB No. 2788 at 15. 

Based on the record before me, I find that an eight-year exclusion falls within a reasonable range.  Petitioner was convicted of felony offenses relating to fraud and other financial misconduct that occurred in connection with the delivery of health care items.  The IG established the presence of three aggravating factors justifying an enhancement of the length of exclusion.  The federal district court ordered restitution in the amount of $188,157.55, nearly four times the $50,000 threshold amount for aggravation in 42 C.F.R. § 1001.102(b)(1).  See IG Ex. 2 at 7; IG Ex. 5 at 1-2.  It is “entirely reasonable” to consider financial losses substantially greater than the regulatory threshold to be an “exceptional aggravating factor entitled to significant weight.”  Devon Rambert-Hairston, DAB No. 3069 at 13 (2022) (citing Eduardo Miranda, M.D., DAB No. 2755 at 4-5 (2016) (internal quotation marks omitted)).  Accordingly, this factor alone justifies extending the period of exclusion by a significant amount. 

Similarly, Petitioner engaged in fraud and financial misconduct much longer than the one-year period required for aggravation.  He did not report required information about controlled substances to the DEA for almost five years.  IG Ex. 4 at 2.  He also billed Anthem and Akebono for fraudulent pain cream prescriptions for about three years and deposited those proceeds into his personal bank account.  Id.  Petitioner’s engagement in illegal conduct for nearly five years demonstrates that he is untrustworthy and poses a substantial threat to federal health care programs and beneficiaries.  See, e.g., Shah, DAB No. 3079 at 10; Hamilton, DAB No. 3061 at 14; Awada, DAB No. 2788 at 8.  Significant weight may be assigned to illegal conduct that “occurred for even slightly longer than the one-year threshold.”  Shah, DAB No. 3079 at 10 (citing Awada, DAB No. 2788 at 8-10).  Therefore, this factor also weighs heavily in favor of enhancing the exclusion period to protect health care programs and their beneficiaries from the threat of untrustworthy actors.  See Cash, DAB No. 1725 (2000 WL 710697 at *11). 

Additionally, the federal district court sentenced Petitioner to nine months of incarceration and two years of supervised release, IG Ex. 2 at 3, 4, which is an

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aggravating factor that may warrant a greater exclusion period.  See Calabrese, DAB No. 2744 at 8.  Even a nine-month period of incarceration justifies lengthening the exclusion period.  See e.g., Shaun Thaxter, DAB No. 3053 at 32 (2021) (affirming “a six-month sentence is not insignificant” and “[a]ny period of incarceration justifies increasing the period of exclusion”); Stacy Ann Battle, D.D.S., DAB No. 1843 (2002) (2002 WL 2031576 at *4) (finding four months in a halfway house, followed by four months of home confinement, justified lengthening the exclusion period).  Further, the fact that Petitioner was sentenced to incarceration demonstrates the federal district court judge deemed Petitioner’s conduct sufficiently serious to merit incarceration.  Esha, DAB No. 3076 at 29-30 (citing Gerald A. Snider, M.D., DAB No. 1637 at 8 (1997)).  Petitioner’s sentence of incarceration serves as further evidence of his untrustworthiness.  Esha, DAB No. 3076 at 29. 

I note that the three aggravating factors in this case might well justify an exclusion far greater than eight years.⁶  The three proven aggravating factors establish that Petitioner manifests a high degree of untrustworthiness, justifying a lengthy exclusion.  See Burstein, DAB No. 1865 (2003 WL 1055659 at *8) (citing Patel v. Thompson, 319 F.3d 1317, 1319 (11th Cir. 2003); Mannocchio v. Kusserow, 961 F.2d at 1543).  The financial loss to Anthem and Akebono was almost four times the amount required to establish the aggravating factor, and the duration of Petitioner’s illegal conduct exceeded the threshold by nearly five times.  Additionally, Petitioner’s period of incarceration supports at least some increase in the exclusion.  For comparison, the DAB has often upheld exclusions of up to 15 years based on the presence of three aggravating factors and no mitigating factors.  See, e.g., Mrugeshkumar Shah, DAB CR6114, aff’d, DAB No. 3079 (2022); Ilya Kogan, DAB CR5750 (2020), aff’d, DAB No. 3034 (2021); Robinson, DAB CR1078 (2003) (2003 WL22052938), aff’d, DAB No. 1905 (2004) (2004 WL 230865); Cash,DAB No. 1725 (2000 WL 710697). 

Of course, in the present case, Petitioner cooperated with federal officials.  The investigations with which he assisted resulted in one conviction and were likely to result in a second conviction.  P. Ex. 2 at 2-3.  I agree with Petitioner that his cooperation deserves significant weight in mitigation.  See P. Br. at 7-9.  However, contrary to

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Petitioner’s position, I infer that the IG gave considerable weight to Petitioner’s cooperation in setting the term of his exclusion at eight years.⁷  Overall, considering the aggravating factors, particularly the long duration of Petitioner’s illegal conduct and significant losses to health care benefit programs that resulted from the fraudulent scheme, as well as the mitigating factor of Petitioner’s cooperation, I find that an eight‑year exclusion falls within a reasonable range. 

3. Petitioner’s exclusion is effective September 20, 2022, 20 days from the date of the IG’s notice of exclusion. 

Petitioner argues that the effective date of his exclusion should be made retroactive to January 17, 2020, the date of his guilty plea.  P. Br. at 9-10.  Petitioner notes that this would be consistent with the retroactive suspension of Petitioner’s pharmacist license by the Pharmacy Board.  Id. at 10; see IG Ex. 7; P. Ex. 4. 

I have no authority to modify the effective date of Petitioner’s exclusion.  The DAB has made clear that administrative law judges may not decline to apply a regulation based on equity alone because DAB adjudicators are bound by all applicable laws and regulations.  Rita Patel, DAB No. 2884 at 7 (2018) (citing Kenneth Schrager, DAB No. 2366 at 6 (2011)).  The statute and regulations governing exclusions do not give an administrative law judge authority to adjust the beginning date of an exclusion.  Id.; see also 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)); accord Douglas Schram, R.Ph., DAB No. 1372 (1992) (1992 WL 685407 at *6) (“Neither the [administrative law judge] nor this Board may change the beginning date of Petitioner’s exclusion.”). 

Accordingly, as required by regulation, “[t]he exclusion will be effective 20 days from the date of the notice.”  42 C.F.R. § 1001.2002(b). 

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

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period of eight 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  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.

²  IG Ex. 7 is a copy of the agreement between Petitioner and the Pharmacy Board revoking his pharmacy license.  Petitioner offered a copy of the same order as P. Ex. 4.

³  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).

⁴  Even if some of the pain cream prescriptions were filled, I infer it is unlikely that the pain cream was medically necessary for the family members and employees who received the pain cream.  I draw this inference because Petitioner stipulated that, when writing the fraudulent prescriptions, he used the names of two physicians without their knowledge or consent.  IG. Ex. 4 at 2.  Further, when interviewed, one of the physicians confirmed that the persons for whom the pain creams were prescribed were not his patients.  P. Ex. 1 at 8.  Payment for health care items that are not medically necessary constitutes a loss to health care benefit programs regardless of whether the items were in fact provided to beneficiaries.

⁵  When it sentenced Petitioner, the federal district court determined what term of incarceration would adequately punish Petitioner for his crimes and serve as a deterrent to future unlawful conduct, considering the federal sentencing guidelines and other aspects of criminal procedure.  By contrast, the IG’s exclusion authority is not punitive, but serves the remedial purpose of protecting “present and future Medicare beneficiaries from the abusers of these programs.”  Manocchio v. Kusserow, 961 F.2d 1539, 1542 (11th Cir. 1992).  Given the differing policies underlying criminal prosecution and civil remedies, it is unsurprising that the factors influencing a sentence of incarceration might be weighed differently in the context of an exclusion under section 1128(a) of the Act.

⁶  Moreover, the record includes evidence of another potential aggravating factor that the IG did not identify or consider.  Petitioner and the Pharmacy Board entered an “Agreed Order of Revocation” that revokes Petitioner’s pharmacy license for at least five years from the date of his conviction.  IG Ex. 7 at 3 (duplicated at P. Ex. 4).  It is an aggravating factor under the regulations if an individual has been subject to an adverse action by a state government agency or board if the adverse action is based on the same circumstances as the exclusion.  42 C.F.R. § 1001.102(b)(9).  I need not decide if the aggravating factor is applicable here, however, because the aggravating factors I have identified above are more than sufficient to support the eight-year exclusion.

⁷  If we assume Petitioner may have been excluded for up to 15 years absent any mitigating factor, then the IG reduced the exclusion over 40 % based on Petitioner’s cooperation.  This exceeds the one-third reduction in his prison sentence to which Petitioner invites comparison.  See P. Br. at 7.