Phong Hung Tran, M.D., DAB CR6309 (2023)

DECISION

The Inspector General of the United States Department of Health and Human Services (the IG) excluded Petitioner, Phong Hung Tran, M.D., from participation in Medicare, Medicaid, and all other federal health care programs for 15 years¹ pursuant to section 1128(a)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)).  Petitioner challenges the length of the exclusion.  For the reasons stated below, I conclude that the 15-year exclusion period is not unreasonable.  I affirm the IG's exclusion determination.

I.  Procedural History

The IG issued a notice to Petitioner on August 31, 2022, that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for 17 years, which was later reduced to 15 years in an amended notice on May 9, 2023.  IG Exhibit (Ex.) 1 at 1; IG Ex. 6.  The IG cited section 1128(a)(3) of the Act, which mandates exclusion when an individual is convicted of certain criminal offenses related to the

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delivery of a healthcare item or service under a health care program operated by or financed at least in part by a government agency.  Id.  Petitioner timely requested a hearing, and I was designated to hear and decide this case.

I conducted a pre-hearing telephone conference on February 23, 2023, the substance of which I memorialized in my February 27, 2023 Order (Summary Order), including a schedule for submission of arguments and evidence by the parties.  The IG submitted a brief (IG Br.), a reply brief (IG reply), and six exhibits (IG Exs. 1-6).²  Petitioner submitted a brief (P. Br.) and four exhibits (P. Exs. 1-4).

II.  Jurisdiction

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

III.  Issues

The Secretary of Health and Human Services (Secretary) has, by regulation, limited my scope of review to two 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 length of the exclusion imposed by the IG is unreasonable.  See 42 C.F.R. § 1001.2007(a)(1).  Here, Petitioner concedes the IG has a basis to exclude him from participation in federal health care programs under section 1128(a)(3) of the Act.  P. Br. at 2.  Therefore, the only issue in this case is whether the 15-year period of exclusion imposed by the IG is within a reasonable range.  42 C.F.R. § 1001.2007.

IV.  Exhibits and Decision on the Record

Petitioner did not object to the IG's proposed exhibits, and the IG did not object to Petitioner's proposed exhibits.  Therefore, I admit IG Exs. 1-6 and P. Exs. 1-4 into the record.

Neither party has proposed any witnesses for a hearing, and I find that a hearing is unnecessary given the written record.  I therefore proceed to a decision based on the record before me.  Civ. Remedies Div. P. § 19(d).

V.  Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner's right to a hearing by an administrative law judge (ALJ) and judicial review of the final action of the Secretary.  The right to a hearing before an ALJ is set forth in 42 C.F.R.

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§§ 1001.2007(a) and 1005.2, while the rights of both the sanctioned party and the IG to participate in a hearing are specified at 42 C.F.R. § 1005.3.

The Secretary shall exclude an individual from participation in Medicare, Medicaid, and all other federally funded health care programs if that individual:

[H]as been convicted for an offense which occurred after August 21, 1996, under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program . . . operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

42 U.S.C. § 1320a-7(a)(3); Act § 1128(a)(3).  The Secretary has promulgated regulations implementing this provision of the Act.  42 C.F.R. § 1001.101(c).  The Secretary has interpreted this statutory provision to include "the performance of management or administrative services relating to the delivery of such items or services" as sufficient to mandate exclusion.  42 C.F.R. § 1001.101(c)(1).

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act will be for a period of no fewer than five years.  Pursuant to 42 C.F.R. § 1001.102(b), an individual's period of exclusion may be extended based on the presence of specified aggravating factors.  Only if the aggravating factors justify an exclusion of longer than five years, however, are mitigating factors considered as a basis for reducing the period of exclusion to no less 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, and the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(b), (c).

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

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

1. The IG established a basis for Petitioner's exclusion pursuant to section 1128(a)(3) of the Act (42 U.S.C. § 1320a-7(a)(3)) and Petitioner does not otherwise contest this.

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On September 13, 2021, Petitioner entered into a plea agreement and pled guilty to one count of felony Conspiracy to Commit Honest Services Mail Fraud and Health Care Fraud.  IG Ex. 2 at 1-2.  Specifically, from at least April 2013 through June 2016, Petitioner knowingly and intentionally conspired with others to fraudulently obtain money from health care benefit programs by:

[S]ubmitting claims for prescription pharmaceuticals, Durable Medical Equipment, Autonomic Nervous System testing, sleep studies, toxicology testing, and other medical goods and services that were generated through a secret pattern of bribes to [Petitioner] and other doctors, to induce doctors to refer patients to those services, and to refer to particular providers, in violation of the doctors' fiduciary duty to their patients.

Id. at 5.  Petitioner agreed to receive and pay unlawful per-patient fees and bribes to bill insurance companies for unnecessary goods and services.  Id. at 5-6.

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

Petitioner concedes that he pled guilty to one count of felony Conspiracy to Commit Honest Services Mail Fraud and Health Care Fraud, and that on September 13, 2021, the United States District Court for the Southern District of California (Court) entered a judgment against Petitioner based on his guilty plea.  IG Ex. 4; P. Br. at 2-3.  The acts underlying Petitioner's offense occurred between April 2013 and June 2016.  IG Ex. 2 at 5.

2. Petitioner was convicted 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. 

Section 1128(a)(3) of the Act requires that Petitioner's felony offense relate to "fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct."  42 U.S.C. § 1320a-7(a)(3).  Additionally, under section 1320a-7(a)(3), the felony offense that was the basis of Petitioner's conviction must have been for conduct "in connection with the delivery of a health care item or service."

Again, Petitioner concedes that the IG had a basis to exclude him pursuant to section 1128(a)(3).  P. Br. at 2.  Petitioner's conviction of felony Conspiracy to Commit Honest Services Mail Fraud and Health Care Fraud on its face relates to fraud and is in connection to the delivery of a health care item or service.  Petitioner received fees to refer patients to the companies of his co-conspirators for those companies to deliver

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health care items and/or services to the patients, and Petitioner paid per-patient fees to his co-conspirators so that he could obtain access to patients for whom he could bill for health care items and services that he delivered to them.  See IG Ex. 2 at 5-10.  There is a nexus and common sense connection between this conduct and the delivery of a health care item or service.

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

Because I have concluded that a basis exists to exclude Petitioner pursuant to 42 U.S.C. § 1320a-7(a)(3), Petitioner must be excluded for a minimum of five years.  42 U.S.C. § 1320a-7(c)(3)(B).

3. The IG has established two aggravating factors which permit the IG to lengthen the exclusion beyond the five-year statutory minimum should the additional length not be unreasonable.

Petitioner disagreed with the imposition of one of the three initial aggravating factors that the IG applied when the IG determined to lengthen the exclusion beyond the five‑year statutory minimum to 17 years.³  Petitioner disputed that he was subject to an adverse action by any Federal, State, or local government agency or board and therefore disputed  the applicability of 42 C.F.R. § 1001.102(b)(9) – the third of the three initial aggravating factors the IG applied.  IG Ex. 1 at 2.  In his brief, Petitioner explained that while his medical license was suspended initially by the Medical Board of California, upon judicial review of the Medical Board's decision, the Superior Court of California for the County of Sacramento issued a writ of mandate setting aside the decision until May 8, 2023.  P. Br. at 4; P. Exs. 2-4.  Thus, at the time of the IG's issuance of the initial exclusion notice, the third aggravating factor was applied erroneously.  The IG acknowledged this in its reply and decreased the exclusion period to 15 years in an amended notice of exclusion issued May 9, 2023.  IG Reply at 2; IG Ex. 6.

The IG bears the burden of establishing aggravating factors, 42 C.F.R. § 1005.15(c), and the IG has met its burden with respect to the remaining two aggravating factors as addressed below.

Petitioner has the burden of proving any mitigating factors and affirmative defenses.  42 C.F.R. § 1005.15(c).  Petitioner argues that the IG abused its discretion for two reasons: (1) by including the third aggravating factor when determining the initial 17-year period of exclusion, and (2) for failing to account for the six-year period that Petitioner was unable to practice medicine prior to the IG's issuance of its initial notice of exclusion

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therefore rendering an additional 17-year exclusionary period unreasonable.  P. Br. at 4-6.  Because the IG has now removed the application of the third aggravating factor and revised the period of exclusion to 15 years, there is no need to further address Petitioner's first argument.  I address Petitioner's second argument below.

1. The IG established that the acts resulting in Petitioner's conviction caused a financial loss to a government program of $50,000 or more under 42 C.F.R. § 1001.102(b)(1). 

The IG may extend the length of an exclusion if:

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).

42 C.F.R. § 1001.102(b)(1).  Here, Petitioner conceded in his plea agreement that the California Worker's Compensation Program suffered a loss of greater than $1,000,000 due to Petitioner's crime.  IG Ex. 2 at 10.  This loss is greater than the $50,000 threshold that the regulation establishes for application of this aggravating factor under 42 C.F.R. § 1001.102(b)(1).

2. The IG established that Petitioner's conviction arose from acts that lasted for a period of one year or more, as required by 42 C.F.R. § 1001.102(b)(2).  

Under 42 C.F.R. § 1001.102(b)(2), the IG may extend the length of an exclusion if "the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more."  In this case, Petitioner also concedes in his plea agreement that his offenses were committed over a span of more than three years, from April 2013 through June 2016.  IG Ex. 2 at 5.  Accordingly, the IG has established Petitioner's criminal conduct occurred for over one year; thus, the IG has established the basis for application of the aggravating factor set forth at 42 C.F.R. § 1001.102(b)(2).

3. Petitioner has not established a mitigating factor for reducing the period of exclusion.

42 C.F.R. § 1001.102 provides that, if the IG establishes one or more of the aggravating factors set forth in that section, then:

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Only the following factors may be considered mitigating

(1)  In the case of an exclusion under § 1001.101(a), whether the individual or entity was convicted of three or fewer misdemeanor offenses and the entire amount of financial loss (both actual loss and intended loss) to Medicare or any other Federal, State, or local governmental health care program due to the acts that resulted in the conviction, and similar acts, is less than $5,000;

(2)  The record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual's culpability; or

(3)  The individual's or entity's cooperation with Federal or State officials resulted in -

(i)  Others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs,

(ii)  Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or

(iii)  The imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.

42 C.F.R. § 1001.102(c).  The IG contends that none of the mitigating factors enumerated at 42 C.F.R. § 1001.102(c) pertain to Petitioner's exclusion and Petitioner does not offer evidence of any of the mitigating factors above.  IG Br. at 9; see P. Br. generally.

4. A 15-year exclusion period is not unreasonable under the specific facts and circumstances of this case; and the Board has limited my discretion to change the effective date of the exclusion.

The role of the ALJ in exclusion cases is to conduct a de novo review of the facts related to the basis for the exclusion and the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102 and to determine whether the period of exclusion imposed by the IG falls within a reasonable range.  42 C.F.R. § 1001.2007(a)(1)(ii); Craig Richard Wilder, DAB No. 2416 at 8 (2011); Joann Fletcher Cash, DAB No. 1725 at 17 n.6 (2000).

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While the IG is not compelled to extend the length of exclusion for any period beyond five years in the presence of aggravating factors, it may choose to exercise its discretion to do so.  42 C.F.R. § 1001.102(b) ("Any of the following factors may be considered to be aggravating and a basis for lengthening the period of exclusion." (emphasis added)).  An ALJ must uphold the IG's determination as to the length of exclusion unless it is unreasonable, and an ALJ has no authority to change the amount of time chosen by the IG if it is within a reasonable range.  42 C.F.R. § 1001.2007(a)(1)(ii); 57 Fed. Reg. 3298, 3321 (Jan. 29, 1992).

The IG has established two aggravating factors to which Petitioner does not dispute, and Petitioner has established no mitigating factors.  Furthermore, Petitioner does not dispute the weight the IG assigned to the two remaining aggravating factors in determining the length of the exclusion period.  I therefore conclude that the IG's assessment of a 15-year exclusionary period is not unreasonable.  Devin Rambert-Hairston, DAB No. 3069 (2022) (The Board upheld a 13-year exclusion based on a loss amount of approximately $813,000 and incarceration of one year and one day); Raymond Lamont Shoemaker, DAB No. 2560 (2014) (The Board upheld a 10-year exclusion based on conduct lasting approximately 19 months and a 55-month prison sentence); Jeremy Robinson, DAB No. 1905 (2004) (The Board upheld a 15-year exclusion based on conduct occurring over approximately three years and four months, incarceration of one year and one day, and an order of $205,000 in restitution).

Petitioner does, however, contend that the period during which his California Physician and Surgeon's Certificate remained suspended should be factored into determining the reasonable range for the period of exclusion.  P. Br at 5.  Specifically, Petitioner was unable to practice medicine from June 2016 to June 2022 and therefore was unable to submit claims or receive payment from any federal health care program during that six-year period even though it was prior to the IG's exclusion.  P. Br. at 5; P. Ex. 2 at 8-9.  Petitioner pled guilty to the superseding information on August 29, 2018 and judgment from the Court was entered on September 13, 2021.  IG Exs. 3-5.  The IG then issued its Notice of Exclusion Letter almost one year thereafter on August 31, 2022, and so Petitioner's exclusion became effective on September 20, 2022.  IG Ex. 1.

The effective date of the exclusion combined with the period for which Petitioner was unable to practice medicine pending the underlying criminal proceeding effectively means that Petitioner will have a 21-year minimum period – instead of 15 years – for which Petitioner is unable to seek or obtain reimbursement from federal health care programs (among other limitations).  Even so, the Board has made the determination that itself and ALJs do not have the authority to change the effective date of an exclusion established by the IG.  Douglas Schram, R.Ph., DAB No. 1372 at 11 (1992) ("Neither the ALJ nor this Board may change the beginning date of Petitioner's exclusion . . . Section

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1128(c)(1) of the Act states that an exclusion will become effective 'at such time' as may be specified by regulation."); Richard G. Philips, D.P.M., DAB No. 1279 at 4 (1991) (an ALJ does not have "discretion . . . to adjust the effective date of an exclusion, which is set by regulation.") ; Samuel W. Chang, M.D., DAB No. 1198 at 10 (1990) (The Board held that the ALJ has no authority to change the effective date of Petitioner's five year exclusion.); Thomas Edward Musial, DAB No. 1991 (2005) ("the Board has repeatedly held that the applicable statute and regulations give an ALJ no authority to adjust the beginning date of an exclusion.").

Therefore, while the IG may consider such facts when determining the period of exclusion (akin to time served), I do not have the authority to adjust the effective date of the exclusion for the 15-year exclusionary period to coincide, in whole or in part, with the six-year period during which Petitioner was unable to practice medicine while his license was suspended.

VII. Conclusion

For the foregoing reasons, I affirm the IG's determination to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for 15 years.

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Endnotes

¹  The IG initially issued an exclusion period of 17 years, but later amended the notice of exclusion to reduce the exclusion from 17 years to 15 years.

²  The IG filed IG Ex. 6 with its reply.  IG Ex. 6 is an amended exclusion notice, which reduces Petitioner's exclusion to 15 years.

³  The IG issued its initial notice of exclusion on August 31, 2022, which applied three aggravating factors in reaching the determination to increase the exclusion beyond the five-year minimum to a minimum of 17 years.