Richard Laksonen, DAB CR6407 (2023)

Decision

The Inspector General (IG) of the United States Department of Health and Human Services excluded Richard Laksonen (Petitioner), from participation in Medicare, Medicaid, and all other federal health care programs for 23 years pursuant to section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)).  For the reasons discussed below, it is determined that the IG had a basis to exclude Petitioner from program participation, and a mandatory exclusion must be imposed.  However, the IG failed to prove one of the three aggravating factors relied upon when setting the length of the exclusion.  For that reason, I find that a 23-year exclusion is not reasonable.  I find that an 18-year exclusion is reasonable based on the facts and evidence presented in this case. 

I. Background and Procedural History

By letter dated February 28, 2023, the IG excluded Petitioner from participating in Medicare, Medicaid, and all Federal health care programs pursuant to section 1128(a)(1) of the Act for 23 years effective 20 days from the date of the letter.  IG Exhibit (Ex.) 1.  Petitioner was excluded due to his conviction of a criminal offense related to the delivery

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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 items or services under any such program.  IG Ex. 1.  The conviction took place in the United States District Court, Western District of Michigan, Northern Division.  IG Ex. 1. 

On April 27, 2023, the Civil Remedies Division (CRD) received Petitioner’s timely request for hearing before an administrative law judge (ALJ) to contest the exclusion imposed by the IG.  On May 2, 2023, the CRD issued an Acknowledgment Notice, my Standing Pre-Hearing Order, and the CRD Procedures. 

A pre-hearing conference was held on July 18, 2023.  An order summarizing the pre-hearing conference was issued on the same date. 

On August 29, 2023, the IG filed a brief (IG Br.) in addition to three exhibits (IG Exs. 1-3).  On October 9, 2023, Petitioner filed a brief (P. Br.) along with one exhibit (P. Ex. 1).  The IG filed a no reply statement on October 26, 2023. 

II. Admission of Exhibits and Decision on the Written Record

In their briefs, both parties indicated that an in-person hearing was not necessary to resolve this matter.  IG Br. at 11; P. Br. at 3.  Neither party identified witnesses to provide testimony.  As stated in the Pre-Hearing Order, a hearing will be held only if a party asks to cross-examine a witness for whom the opposing party has provided written direct testimony and the witness’ proposed testimony is found to be relevant and non-cumulative.  Therefore, a hearing is not necessary, and this matter will be decided on the written record. 

Absent objections, IG Exs. 1-3 and P. Ex. 1 are admitted into evidence. 

III. Issues

The issues to be decided are:  

Whether the IG had a basis to exclude Petitioner from participation in Medicare, Medicaid, and all other federal health care programs under section 1128(a)(1) of the Act.  42 C.F.R. § 1001.2007(a)(1)(i). 

Whether the 23-year exclusion imposed by the IG is unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).

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IV. Jurisdiction

This tribunal has jurisdiction to adjudicate this case.  42 C.F.R. §§ 1001.2007(a)(1), 1005.2; see also 42 U.S.C. § 1320a-7(f)(1). 

V. Findings of Fact

1. 1) Petitioner is a nurse practitioner, licensed to practice in the State of Michigan. IG Ex. 2 at 1. 
2. 2) On June 28, 2021, a bill of information (Information) was filed in the United States District Court, Western District of Michigan, Northern Division, charging Petitioner with one count of False Statement Relating to Health Care Matters.
3. 3) The charging documents allege that on or about October 5, 2018, Petitioner signed a medical examination note, letter of medical necessity and orders for bilateral knee braces, bilateral knee suspension sleeves, and a back brace for Medicare beneficiary K.L. Petitioner falsely indicated that he conducted “an assessment of the conditions presented” and that based on his evaluation of K.L., he determined it “medically necessary and appropriate to prescribe treatment today.”  IG Ex. 2 at 6.  However, it is alleged that Petitioner never conducted an evaluation of K.L.  Instead, Petitioner opened a document containing medical notes, letters of medical necessity, and durable medical equipment (DME) brace orders for K.L. and spent 15 seconds signing the document to approve the order.   As a result of Petitioner’s actions, Medicare reimbursed a DME supplier $1,761.41 for braces ordered for K.L.  IG Ex. 2 at 7. 
4. 4) Petitioner’s actions were a part of a larger scheme in which REMN Management, a marketing company located in Florida, purchased leads that included personal identifying information of Medicare beneficiaries. IG Ex. 2 at 1.  REMN used call centers to contact Medicare beneficiaries to inquire about Medicare eligibility, health care status, and whether they wanted DME braces or cancer genetic (CGx) testing.  The call center made records of the calls to build orders for the DME braces and CGx testing.  The orders required the signature of a licensed medical practitioner credentialed in Medicare.  REMN paid practitioners, including Petitioner, $15.00 for each order reviewed and signed.  IG Ex. 2 at 2. 
5. 5) Once an order was signed by a practitioner, REMN either forwarded the orders to the company owners or sold the orders to companies that owned or managed Medicare-enrolled DME supply companies for submission to Medicare for reimbursement. IG Ex. 2 at 3. 

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6. 6) Petitioner pleaded guilty to one count of False Statement Relating to Health Care Matters pursuant to 18 U.S.C. § 1035(a)(2). IG Ex. 3 at 1.  Petitioner was sentenced by the District Court on February 25, 2022 and ordered to pay $5,769,427.79 in restitution to the Medicare program.  Petitioner was also sentenced to 21 months of incarceration.  IG Ex. 3 at 2, 6. 

VI. Legal Authorities

The Secretary of the United States Department of Health and Human Services shall exclude an individual from participation in Medicare, Medicaid, and all other federally funded health care programs if that individual has been convicted of a criminal offense related to the delivery of an item or service under subchapter XVIII or any State health care program.  42 U.S.C. § 1320a-7(a)(1).  The Act requires a minimum exclusion period of five years when the exclusion is mandated under section 1320a-7(a).  42 U.S.C. § 1320a-7(c)(3)(B). 

In exclusion cases, the IG has the burden of proving the basis for the exclusion and the existence of any aggravating factors.  42 C.F.R. § 1005.15(c); Standing Pre-Hearing Order ¶ 6.  Petitioner has the burden of proving any affirmative defenses or factors to mitigate the length of the exclusion, if aggravating factors have been established.  42 C.F.R. § 1001.102(c); Standing Pre-Hearing Order ¶ 6.  The standard of proof is a preponderance of the evidence, which means a fact is proven if the evidence shows that it is more likely true than not true.  42 C.F.R. §§ 1001.2007(c), 1005.15(d).  In this case, the IG must prove that Petitioner was convicted of an offense related to the delivery of a health care item or service under Medicare or a State health care program.  Additionally, the IG has the burden of proving the existence of three aggravating factors as identified in the notice letter. 

An excluded individual may request a hearing before an ALJ, but only on the issues of whether the IG had a basis for the exclusion and whether an exclusion longer than the required minimum period is unreasonable in light of any applicable aggravating and mitigating factors.  42 C.F.R. §§ 1001.2007(a), 1005.2(a). 

VII. Analysis and Conclusions of Law

1. Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under the Medicare program, which subjects him to a mandatory exclusion from all federal health care programs for a minimum of five years.

In order to prevail, the IG must prove that Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under Medicare or a State health care program.  Under the Act, an individual is considered to have been convicted of a

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criminal offense “when a judgment of conviction has been entered against the individual or entity by a Federal, State, or local court, regardless of whether there is an appeal pending or whether the judgment of conviction or other record relating to the criminal record has been expunged” or when “a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court.”  Act § 1128(i)(1), (3) (42 U.S.C. § 1320a-7(i)(1), (3)); see also 42 C.F.R. § 1001.2 (paragraphs (a) and (c) under the definition of “Convicted”).  The evidence shows, and Petitioner does not dispute, that he pleaded guilty to False Statement Relating to Health Care Matters.  The  District Court accepted Petitioner’s guilty plea and sentenced him on February 25, 2022.  IG Ex. 3; P. Br. at 2. 

Next, to prove that Petitioner’s conviction was related to the delivery of a health care item or service, the IG must show that there is a nexus between the offense and the delivery of a health care item or service.  The Departmental Appeals Board (Board) has repeatedly held that the phrase “related to” within the context of section 1128(a)(1) requires only that a common‑sense nexus exist between the offense and the delivery of a health care item or service.  Summit S. Shah, M.D., DAB No. 2836 at 6 (2017) (citing cases).  Petitioner pleaded guilty to participating, “in a matter involving a health care benefit program, specifically Medicare, knowingly and willfully made false, fictitious, and fraudulent statements and entries, in connection with the delivery of and payment for health care benefits, items, and services.”  IG Ex. 2 at 6; IG Ex. 3 at 1.  The record clearly shows that Petitioner’s conviction is related to the delivery of a health care item or service under Medicare.  Additionally, Petitioner does not dispute that his conviction was related to the delivery of a health care item or service.  P. Br. at 2.  

2. The IG has identified aggravating factors that support an exclusion beyond the five-year minimum.

Exclusions imposed under section 1128(a)(1) carry a five-year mandatory minimum exclusion period.  Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)); 42 C.F.R. § 1001.102(a).  The IG may extend the five-year exclusion period based on the application of the aggravating factors listed in 42 C.F.R. § 1001.102(b).  If any of the aggravating factors set forth in 42 C.F.R. § 1001.102(b) justifies an exclusion longer than five years, mitigating factors listed at 42 C.F.R. § 1001.102(c) may be considered as a basis for reducing the period of exclusion to no less than five years.  The IG bears the burden of persuasion with respect to aggravating factors and Petitioner bears the burden of persuasion with respect to mitigating factors.  42 C.F.R. § 1005.15(c); Standing Pre-Hearing Order ¶ 6.  In this case, the IG has proposed a 23-year exclusion based on three aggravating factors which are addressed below.  Petitioner argues that there is a mitigating factor that should have been considered in the IG’s determination of the length of the exclusion. 

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The IG identified the following aggravating factors as a basis for imposing a 23-year exclusion against Petitioner:  loss to a government program or other entities as a result of Petitioner’s criminal conduct was greater than $50,000; the sentence imposed included incarceration; and Petitioner has a prior criminal, civil or administrative sanction record.  IG Ex. 1. 

The District Court ordered Petitioner to pay $5,769,427.69 in restitution to the Medicare program, which is over 100 times the $50,000 threshold for the application of this aggravating factor.  IG Ex. 3 at 6.  Petitioner argues that while full restitution is required, the District Court noted that the “total amount of actual loss substantially exceeded any reasonably foreseeable loss from defendant’s perspective.”  P. Ex. 1 at 4.  However, it is well-established that an amount ordered as restitution constitutes proof of the amount of financial loss to a government program.  See, e.g., Juan de Leon, Jr., DAB No. 2533 at 5 (2013); Craig Richard Wilder, DAB No. 2416 at 9 (2011).  Additionally, the Board has stated that the regulation does not say that an individual or entity has to benefit from the program loss, only that the offense “caused” or “intended to cause” the loss.  Wilder, DAB No. 2416 at 9.  The IG has established that the restitution amount may be used as an aggravating factor. 

The evidence shows, and Petitioner does not dispute, that the District Court sentenced Petitioner to 21 months of incarceration.  IG Ex. 3 at 2; P. Br. at 3.  The IG has proven the existence of a second aggravating factor. 

In regard to the third aggravating factor, the IG submits that the North Dakota Board of Nursing issued an order for Petitioner to cease and desist the practice of nursing.  IG Ex. 1 at 1.  Petitioner disputes this aggravating factor and argues that any actions taken by the North Dakota Board of Nursing were in response to Petitioner’s conviction and that no prior actions were taken.  P. Br. at 2.  Petitioner argues that “prior” refers to the timeframe between the licensing action and the imposition of the mandatory exclusion.  P. Br. at 2.  As previously stated, the IG has the burden of proving aggravating factors to justify imposing an exclusion longer than the mandatory minimum.  42 C.F.R. § 1005.15(c).  Here, the IG has not provided any evidence of Petitioner’s prior criminal, civil, or administrative sanction record.  The IG failed to submit a copy of the order from the North Dakota Board of Nursing.  Therefore, I am unable to review and assess the information to determine if it may be considered as an aggravating factor.  In its brief, the IG  points to the exclusion notice letter and the Criminal Information to support its assertion of Petitioner’s prior sanction record.  IG Br. at 7.  However, there is no mention of Petitioner’s prior criminal, civil, or administrative sanction record in the Criminal Information and the mere mention of its existence in the notice letter is not evidence enough to support the use of an aggravating factor.  Because the IG has not provided any proof of Petitioner’s prior record, I find that the IG has not proven the existence of a third aggravating factor. 

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3. Petitioner has not established any mitigating factors that could reduce the period of exclusion.

The regulations provide a list of mitigating factors that may be applied to reduce an exclusion to no less than five years if aggravating factors are present.  42 C.F.R. § 1001.102(c).  The applicable regulations identify only three mitigating factors that may be considered to reduce a period of exclusion:  (1) a petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to the program was less than $5,000; (2) the record in the criminal proceedings demonstrates that a petitioner had a mental, physical, or emotional condition that reduced their culpability; and (3) a petitioner’s cooperation with federal or state officials resulted in others being convicted or excluded, additional cases being investigated, or a civil money penalty being imposed.  42 C.F.R. § 1001.102(c). 

In this case, Petitioner argues that a mitigating factor exists because of his substantial assistance, as noted in the Criminal Information.  P. Br. at 3; P. Ex. 1 at 2.  The evidence shows that the District Court granted a 2-level 5K1 motion for a departure from sentencing guidelines and imposed a sentence below the guideline range based on a government motion for departure and because of Petitioner’s substantial assistance.  P. Ex. 1 at 2, 3.  The sentencing court noted:  

The guidelines overstated the seriousness of defendant’s wrongdoing because the total amount of actual loss substantially exceeded any reasonably foreseeable loss from defendant’s perspective. In addition, defendant immediately came forward to help law enforcement when confronted with his wrongdoing. Defendant is also generally a person of strong character and uncommon ability. The Court still found custody at some level essential to meet the general deterrent purpose of sentencing and to reflect fairly defendant’s contribution to the harm caused. 

Ex. 1 at 4.

Petitioner has the burden of proof to establish any mitigating factor.  42 C.F.R. § 1005.15(b)(1).  This means that it is Petitioner’s responsibility to locate and present evidence to substantiate both that he cooperated and that his cooperation resulted in others being investigated or convicted.  See Stacey R. Gale, DAB No. 1941 (2004) (2004 WL 2102882 at *6).  The regulations raise “a high standard. . . . Mere cooperation is not enough to establish the mitigating factor; the cooperation must result in an investigation, conviction, or report.”  Begum v. Hargan, No. 16 CV 9624, 2017 WL 5624388, at *8 (N.D. Ill. Nov. 21, 2017). 

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The IG does not have the responsibility to prove that a mitigating factor does not apply.  Id.  As the Gale decision explained: 

[T]he I.G. does not have the responsibility to substantiate under the regulation that even though Petitioner may have cooperated with a state or federal official, that cooperation did not result in additional cases being investigated.  It is entirely Petitioner’s burden to demonstrate that . . .  cooperation with a state or federal official resulted in additional cases being investigated.  

Stacey R. Gale, DAB No. 1941 at 9.  Similarly, in the present case, it is entirely Petitioner’s burden to establish that his cooperation resulted in others being investigated or convicted.  Petitioner has failed to meet that burden. The District Court made it clear that Petitioner substantially cooperated with authorities.  However, there is nothing in the record to show that Petitioner’s cooperation resulted in others being convicted or excluded, additional cases being investigated, or a civil money penalty being imposed as required by the regulation. 

4. Based on the existence of two, as opposed to three, aggravating factors, and no mitigating factors, I find that the 23-year exclusion imposed by the IG falls outside of a reasonable range. Instead, I find that an 18-year exclusion is reasonable. 

In determining whether the length of exclusion is unreasonable, I must determine whether the length of the exclusion falls into a “reasonable range” based on the evidence before me.  The IG has broad discretion in determining the length of an exclusion, based on the IG’s “vast experience” in implementing exclusions.  Craig Richard Wilder, DAB No. 2416 at 8 (citing 57 Fed. Reg. 3298, 3321 (Jan. 29, 1992)).  The regulations provide that the IG’s proposed exclusion must be upheld as long as the length of exclusion is not unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  However, because I have determined that the IG failed to prove one of the alleged aggravating factors, I must reduce the length of Petitioner’s exclusion.  Gary Alan Katz, R.Ph., DAB No. 1842 (2002) (2002 WL 2031575 at *8); see also Jason Hollady, M.D., a/k/a Jason Lynn Hollady, DAB No. 1855 (2002) (2002 WL 31599187 at *7).  

It is important to note that it is the quality of the aggravating (or mitigating) factors that is most important when considering the length of exclusion and not the sheer number of aggravating factors that are 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

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

57 Fed. Reg. 3298, 3314-15 (Jan. 29, 1992).  

The District Court ordered Petitioner to pay $5,769,427.79 in restitution to the Medicare program.  Again, this amount of restitution is over 100 times greater than the threshold for the aggravating factor.  The scope of the losses justifies treating this factor as an “extraordinary aggravating factor” justifying a significant increase in the length of Petitioner’s exclusion.  See Laura Leyva, DAB No. 2704 at 10 (2016).  Additionally, despite noting Petitioner’s substantial assistance, strong character, and uncommon ability, the District Court found Petitioner’s conduct serious enough to warrant a substantial period of incarceration.  P. Ex. 1 at 4.  The Board has stated that periods of incarceration shorter, or in some cases significantly shorter than that imposed on Petitioner, were substantial and supported lengthening the exclusion period.  See, e.g., Yolanda Hamilton, M.D., DAB No. 3061 (2022); Edwin L. Fuentes, DAB No. 2988 at 12 (2020) (characterizing 24-month incarceration as “a substantial term”), aff’d, No. 4:20-cv-00026, 2021 WL 4341115, at *9 (W.D. Va. Sept. 23, 2021); Jeremy Robinson, DAB No. 1905 at 12 (2004) (stating that an incarceration term of one year and a day in concert with other factors supports “sufficient” “weight”); Jason Hollady, M.D., a/k/a Jason Lynn Hollady, DAB No. 1855 at 12 (2002) (characterizing a nine-month incarceration that included a period of work release as “more than a token incarceration and, in that sense, relatively substantial”); Stacy Ann Battle, D.D.S., and Stacy Ann Battle, D.D.S., P.C., DAB No. 1843 at 7 (2002) (stating that placement in a halfway house constituted incarceration, and that four months in a halfway house, followed by four months of home confinement, justified lengthening the exclusion period); Spyros N. Panos, M.D., DAB No. 2709 at 12 (2016) (stating that incarceration for 54 months is “unquestionably a significant period”); Gracia L. Mayard, M.D., DAB No. 2767 at 8 (2017) (describing a 54-month incarceration term as a “substantial” one); Raymond Lamont Shoemaker, DAB No. 2560 at 8 (2014) (agreeing with the ALJ that a 55-month prison term is substantial); Angelo D. Calabrese, M.D., DAB No. 2744 at 7 (2016) (stating that a 37-month incarceration term was “a substantial amount of time considering that incarceration of any length would constitute an aggravating factor under section 1001.102(b)(5)”).Both of these aggravating factors are given a considerable amount of weight and justify a substantial increase in the length of Petitioner’s exclusion. 

Because the IG has proven two out of the three alleged

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aggravating factors, and because Petitioner did not meet the regulatory requirements for proving mitigating factors, I find that reducing the exclusion from 23 years to 18 years is reasonable. 

VIII. Conclusion

For the foregoing reasons, I find that the IG has proven, by a preponderance of the evidence, that Petitioner was convicted of an offense that requires exclusion under section 1128(a)(1) of the Act.  I also find that a 23-year exclusion from participation in Medicare, Medicaid, and all other federal health care programs, effective March 20, 2023, is unreasonable based on the circumstances of this case, and reduce the period of exclusion to 18 years.