David Russell Weaver, DAB CR6332 (2023)

DECISION

Respondent, the Inspector General of the U.S. Department of Health and Human Services (the IG), excluded Petitioner, David Russell Weaver, from participation in Medicare, Medicaid, and all other federal health care programs for 10 years pursuant to section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)).  Petitioner challenges the IG’s exclusion action.  For the reasons stated below, I affirm the IG’s exclusion determination.

I. Procedural History

By letter dated December 30, 2022, the IG notified Petitioner of his exclusion from participation in all federal health care programs for a minimum period of 10 years pursuant to section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)).  IG Ex. 1.  The IG explained she took this action based on Petitioner’s conviction in the U.S. District Court for the Eastern District of Michigan (District Court) for a criminal offense related to the delivery of an item or service under Medicare or a state health care program, including the performance of management or administrative services relating to the delivery of such items or services.  Id. at 1.

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Petitioner timely sought review by an Administrative Law Judge (ALJ) in the Civil Remedies Division and I was designated to hear and decide this case.  I held a pre-hearing conference by telephone on March 21, 2023, the substance of which is summarized in my March 21, 2023 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order).  Among other things, I directed the parties to file pre-hearing briefs articulating their respective arguments as well as identifying witnesses and exhibits in support thereof.  Summary Order at 5.

The IG filed a brief (IG Br.) and seven proposed exhibits (IG Exs. 1-7) while Petitioner filed a brief (P. Br.) and five proposed exhibits (P. Exs. 1-5).  The IG filed a reply on June 12, 2023 (IG Reply).

II. Admission of Exhibits and Decision on the Record

In her reply, the IG objected to Petitioner’s Exhibits 1, 4, and 5, claiming them to be irrelevant.  IG Reply at 4.  I overrule the IG’s objections.  Petitioner’s exhibits reflect the nature of his cooperation with the government and are thus relevant to his argument that the IG did not sufficiently consider that cooperation as a mitigating factor to select his period of exclusion.  IG Exhibits 1 through 7 and Petitioner’s Exhibits 1 through 5 are admitted into the record.

I advised the parties I would hold an in-person hearing only if a party submitted written direct testimony from a witness and the opposing party asked to cross-examine that witness.  Summary Order at 5.  Neither party contended a hearing was necessary in this case.  IG Br. at 7; P. Br. at 4.  I therefore issue a decision on the record before me.  Summary Order at 5; Civ. Remedies Div. P. § 19(d).

III.  Issues

Whether the IG has a basis for excluding Petitioner from participating in Medicare, Medicaid, and all other federal health care programs and, if so, whether the 10-year period of exclusion selected by the IG is unreasonable.  42 C.F.R. § 1001.2007(a)(1).

IV. Applicable Law

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

Section 1128(a)(1) of the Act requires the Secretary to exclude from participation in federal health care programs “[a]ny individual or entity that has been convicted of a

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criminal offense related to the delivery of an item or service under title XVIII or under any State health care program.”  Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)); see also 42 C.F.R. § 1001.101(a).

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

Section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) provides for a minimum five-year exclusion period when imposed under section 1128(a) of the Act (42 U.S.C. § 1320a-7(a)).  Exclusion is effective 20 days from the date of the notice of exclusion.  42 C.F.R. § 1001.2002(b).  The period of exclusion may be extended based on the presence of specified aggravating factors.  42 C.F.R. § 1001.102(b).  Mitigating factors identified by regulation may be considered to reduce the period of exclusion where aggravating factors have first been applied to extend that period more than five years.  42 C.F.R. § 1001.102(c).

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

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

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

A. I have jurisdiction to hear this case.

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

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

Exclusion from participation in Medicare, Medicaid, and all federal health care programs is mandated by section 1128(a)(1) of the Act where an individual has been convicted of a criminal offense related to the delivery of an item or service under Medicare or any state health care program.  Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)); 42 C.F.R. § 1001.101(a).

Petitioner concedes he was convicted of a criminal offense related to the delivery of an item or service under a governmental health care program.  P. Br. at 1-2.  I therefore need not scrutinize the evidence of record at great length to conclude the IG met her burden as to these elements.  Nevertheless, because Petitioner does contest the reasonableness of the increased period of exclusion selected by the IG, I find it appropriate to articulate the relevant facts.

On July 21, 2020, the United States charged Petitioner by superseding information with one count of Conspiracy to Commit Health Care Fraud in violation of 18 U.S.C. § 1349.  IG Ex. 5.  According to that information, Petitioner conspired with other individuals from approximately November 2013 to December 2015 to willfully and knowingly execute a scheme to defraud the Medicare program by means of false and fraudulent pretenses in connection with the delivery of health care benefits, items, and services.  Id. at 9-10.  Petitioner required Medicare beneficiaries to submit to medically unnecessary injections to receive necessary pain medication.  Id. at 11.  He also referred Medicare beneficiaries for medically unnecessary laboratory testing in exchange for kickbacks and bribes.  Id.  He falsified, fabricated, or altered medical records to support his improper claims.  Id.  As a result of this scheme, Petitioner and his co-conspirators caused false claims to be submitted to the Medicare program resulting in approximately $1,845,779 in improper payments to be made.  Id.

On June 23, 2020, Petitioner executed a plea agreement with the United States to resolve the charge against him.  IG Ex. 2.  The District Court accepted Petitioner’s plea agreement on April 1, 2021.  IG Ex. 3.  On December 2, 2022, the District Court entered judgment against Petitioner.  IG Ex. 4.  The District Court sentenced Petitioner to 36 months’ imprisonment and ordered him to pay $229,500 in restitution to the Department of Health & Human Services.  Id. at 2, 6.  I conclude Petitioner was convicted of a criminal offense requiring exclusion by section 1128(a)(1) of the Act.  Act § 1128(i)(1), (3) (42 U.S.C. § 1320a-7(i)(1), (3)); 42 C.F.R. § 1001.2.

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

Because I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)), Petitioner must be excluded for a

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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).

D. The IG has established four aggravating factors to justify increasing the exclusion period beyond the five-year statutory minimum.

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

On entering judgment against Petitioner, the District Court ordered him to pay $229,500 in restitution based on his participation in a conspiracy to defraud the Medicare program.  IG Ex. 4 at 6.  Restitution may be used to demonstrate program loss.  Summit S. Shah, M.D., DAB No. 2836 at 8 (2017).  Because Petitioner was responsible for more than $50,000 in loss to the Medicare program, the IG properly applied the aggravating factor found at 42 C.F.R. § 1001.102(b)(1).

2. 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).

Petitioner pleaded guilty to a superseding information filed by the United States which specified he participated in a conspiracy to defraud the Medicare program from approximately November 2013 to December 2015.  IG Ex. 5 at 9.  Petitioner stipulated to committing these criminal acts over this period in the plea agreement he executed with the government.  IG Ex. 2 at 2; see also IG Ex. 3 at 23-24.  The IG has established by a preponderance of the evidence that Petitioner’s conviction resulted from conduct that persisted for longer than one year.

3. Petitioner’s sentence included a period of incarceration, as required by 42 C.F.R. § 1001.102(b)(5).

The District Court sentenced Petitioner to 36 months of incarceration.  IG Ex. 4 at 2.  The IG has established application of this aggravating factor was appropriate.

4. Petitioner was the subject of another adverse action by another government entity based on the same set of circumstances forming the basis of exclusion, as required by 42 C.F.R. § 1001.102(b)(9).

The IG properly determined an aggravating circumstance arose as the result of an adverse action taken against Petitioner by another government entity based on the same set of circumstances for which he was excluded.  42 C.F.R. § 1001.102(b)(9).  Here, the Office of Inspector General for Michigan’s Department of Health and Human Services summarily suspended Petitioner’s ability to participate in Michigan’s Medicaid program

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for precisely the same conduct that formed the basis for his criminal conviction.  IG Ex. 6.  The IG has established application of this aggravating factor was appropriate.

E. A mitigating factor exists that permits a reduction in the period of exclusion.

The applicable regulations permit the IG to reduce an exclusion period where an individual or entity cooperates with federal or state officials and that cooperation results in the conviction or exclusion of other individuals or entities, the investigation of additional cases, or the issuance of reports by appropriate law enforcement agencies identifying program vulnerabilities or weaknesses.  42 C.F.R. § 1001.102(c)(3).  There is no dispute a mitigating factor exists in this case; the evidence of record confirms Petitioner cooperated with the government and that his cooperation resulted in the conviction of a co-conspirator.  IG Ex. 7 at 3.  The IG contends she considered Petitioner’s cooperation as a mitigating factor in selecting his 10-year exclusion period.  IG Br. at 5.

F. The 10-year exclusion period selected by the IG is not unreasonable.

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

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

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

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

We do not intend for the aggravating and mitigating factors to have specific values; rather, these factors must be evaluated based on the circumstances of a particular case.  For example, in one case many aggravating factors may exist, but the subject’s cooperation with the OIG may be so significant that it is appropriate to give that one mitigating factor more weight than all of the aggravating.  Similarly, many mitigating factors may exist in a case, but the acts could have

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had such a significant physical impact on program beneficiaries that the existence of that one aggravating factor must be given more weight than all of the mitigating.  The weight accorded to each mitigating and aggravating factor cannot be established according to a rigid formula, but must be determined in the context of the particular case at issue.

Id. at 3314-15.

In assessing the reasonableness of the exclusion period selected by the IG, I must consider both mitigating and aggravating factors.  42 C.F.R. § 1001.102(b), (c).  Here, the IG properly established and applied four aggravating factors to extend Petitioner’s period of exclusion.  The IG also correctly identified a mitigating factor to reduce Petitioner’s period of exclusion.

Therefore, the only question is whether the 10-year period of exclusion selected by the IG is unreasonable.  Petitioner argues the IG did not properly weigh his cooperation as a mitigating factor and that such proper evaluation necessitates reducing his exclusion period to the mandatory minimum of five years.  P. Br. at 3-4.¹  The evidence of record does not support Petitioner’s contention.  First, I acknowledge the significance of Petitioner’s cooperation as a mitigating circumstance.  His cooperation led to the prosecution of a co-conspirator who masterminded the scheme in which Petitioner participated.  The fact the United States asked the District Court to reduce Petitioner’s sentence of incarceration reflects its significance.  IG Ex. 7 at 3.

But the quality of the aggravating factors established by the IG is also significant.  Petitioner participated in a scheme to defraud the Medicare program.  He did so for over two years, meaning his criminal conduct was not the result of a momentary lapse of judgment but instead prolonged criminal intent.  IG Ex. 2 at 2; IG Ex. 5 at 9.  The state of Michigan immediately excluded him from participating as a provider to the state’s Medicaid program, observing “emergency action is necessary to protect the State’s interest in medically indigent individuals and the public funds of the medical assistance program.”  IG Ex. 6 at 1.  The amount of restitution for which the District Court found Petitioner solely responsible – $229,500 – significantly exceeds the $50,000 regulatory threshold for application as an aggravating factor.  IG Ex. 4 at 6; 42 C.F.R. § 1001.102(b)(1).  More broadly, Petitioner participated in a criminal conspiracy that resulted in the submission of more than $1.8 million in false and fraudulent claims to the

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Medicare program.  IG Ex. 2 at 4.  It is “entirely reasonable” to give significant weight to loss amounts “substantially larger” than the minimum regulatory threshold.  Laura Leyva, DAB No. 2704 at 9-10 (2016).

The nature of Petitioner’s offense of conviction undermines his claim the IG misjudged his trustworthiness.  Petitioner conspired to defraud the Medicare program – the nation’s safety net for the disabled and elderly.  He admitted he required program beneficiaries to undergo unnecessary treatments to obtain needed prescription medications and worse, prescribed unnecessary medications to beneficiaries, many of whom were addicted to narcotics.  IG Ex. 2 at 3-4.  Petitioner’s willingness to subject his own patients to unnecessary treatments or alternatively ply them with addictive medications for the sake of his own pecuniary benefit fails to persuade me the IG unreasonably evaluated the established aggravating and mitigating factors.  In sum, I cannot say excluding Petitioner from participation in Medicare, Medicaid, and all other federal health care programs for 10 years is unreasonable.

VI. Conclusion

For the foregoing reasons, pursuant to section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)), Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for 10 years, effective 20 days after December 30, 2022, the date the IG issued the notice of exclusion to him.

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Endnotes

¹  Petitioner cites other factors he believes should be considered for purposes of reducing his exclusion period:  Michigan’s apparent intent to reinstate his medical license in February 2024, his full payment of restitution for his crimes, his limited awareness of the criminal scheme in which he admitted participating, and the otherwise harsh penalties to which he has been subjected because of his conviction.  P. Br. at 4.  But the regulations only permit me to consider three mitigating circumstances, none of which include the circumstances identified by Petitioner.  42 C.F.R. § 1001.102(c).