Cesar M. Cubano-Martinez, M.D., DAB CR6446 (2024)

DECISION

Respondent, the Inspector General of the United States Department of Health and Human Services (the IG), excluded Petitioner, Cesar M. Cubano-Martinez, M.D., from participation in Medicare, Medicaid, and all other federal health care programs for 20 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 July 31, 2023, the IG notified Petitioner of his exclusion from participation in all federal health programs for a minimum period of 20 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 District of Puerto Rico (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, resulting in my designation to hear and decide this case.  I held a pre-hearing telephone conference on November 15, 2023, the substance of which is summarized in my November 22, 2023 Order Consolidating Cases¹ and Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order).  Petitioner appeared with counsel, who indicated he and his client did not require the service of an interpreter at the pre-hearing conference or translation of documents in this case.  Summary Order at 2.  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.  Id. at 4-5.

The IG filed a brief (IG Br.) and four proposed exhibits (IG Exs. 1-4).  Petitioner filed a brief (P. Br.)² with three unlabeled and unpaginated documents, which I take to be proposed exhibits.³  The first is correspondence dated March 6, 2023 from Petitioner to IG Reviewing Official Joann Francis asking the IG to refrain from excluding him.  DAB E-file Dkt. No. C-23-665, Doc. No. 12(a), hereinafter P. Exhibit 1.  The second is a statement from Petitioner outlining his personal and education background and includes an e-mail from his attorney to an IG official making an offer of repayment.  DAB E-file Dkt. No. C-23-665, Doc. No. 12(b), hereinafter P. Exhibit 2.  The third document is Petitioner’s hearing request, which includes arguments asserting his exclusion is unreasonable and restating his proposed repayment plan.  DAB E-file Dkt. No. C-23-665, Doc. No. 12(c), hereinafter P. Exhibit 3.  The IG subsequently filed a reply (IG Reply).

II.  Admission of Exhibits and Decision on the Record

In the absence of objections, I admit IG Exhibits 1 through 4 and P. Exhibits 1 through 3 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, or if a party identified an adverse witness and made a valid subpoena request consistent with the requirements found at 42 C.F.R. § 1005.9.  Summary Order at 5.

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Neither party requested an in-person hearing.  IG Br. at 10; P. Br.  I therefore decide this case on the written record before me.  Summary Order at 5-6; see 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 20-year period of exclusion selected by the IG is unreasonable.  See 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 criminal offense related to the delivery of an item or service under subchapter XVIII of this chapter 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 him or her in a federal, state, or local court, regardless of whether 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 an exclusion imposed under section 1128(a) of the Act (42 U.S.C. § 1320a-7(a)) shall be for a minimum period of five years.  The 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).

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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 4; 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 concerning an exclusion action taken against him by the IG.  I 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)).

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, under Federal or State law, 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 does not appear to contest either the fact of his conviction or its relation to the delivery of an item or service under Medicare or a state health care program.  P. Br.; P. Exs. 1-3.  Nevertheless, I have independently reviewed the record before me and find the IG established by a preponderance of the evidence that Petitioner’s offense of conviction warrants exclusion pursuant to section 1128(a)(1) of the Act.

1. Petitioner was convicted of a criminal offense within the meaning of section 1128(a)(1) of the Act.

In September 2022, the U.S. Attorney for the District of Puerto Rico charged Petitioner via information with one count of health care fraud in violation of 18 U.S.C. § 1347.  IG Ex. 2.  The government accused Petitioner of knowingly and willfully executing a scheme to defraud the Medicare program in connection with the delivery of and payment for health care benefits, items, and services.  Id. at 2-3.

That same month, Petitioner executed an agreement to plead guilty to the criminal offense described in the information filed against him by the government.  IG Ex. 3 at 9.  Petitioner stipulated that from June 2016 through May 2020, he caused “false and fraudulent claims to be submitted to Medicare for services not rendered.”  Id. at 12.  He

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did so by submitting claims for prescription drugs to the Medicare program for patients based on face-to-face office visits that never occurred.  Id. at 12.  The District Court accepted Petitioner’s plea and on February 15, 2023, imposed judgment of conviction against him.  IG Ex. 4.  The District Court sentenced Petitioner to five years’ probation, 100 hours of unpaid community services, and ordered him to pay $1,941,017.26 in restitution to the Medicare program.  Id. at 2, 4, 5.

I find the IG has established Petitioner was convicted of a criminal offense within the meaning of the Act.  Act § 1128(i)(1), (3) (42 U.S.C. § 1320a-7(i)(1), (3)); 42 C.F.R. § 1001.2.

2. Petitioner’s criminal offense is related to the delivery of an item or service under Medicare or a state health care program within the meaning of section 1128(a)(1) of the Act.

The Act requires Petitioner be excluded from participation in federal healthcare programs if his offense of conviction is related to the delivery of an item or service under Medicare or a state health care program.  See Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)).  In order to be “related to” the delivery of an item or service under Medicare, only a nexus or common sense connection is required.  See Quayum v. U.S. Dep’t of Health & Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998); see also Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012); Berton Siegel, D.O., DAB No. 1467 (1994) (“[T]he statute requires some ‘nexus’ or ‘common sense connection’ between the offense of which a petitioner was convicted and the delivery of an item or service under a covered program.”).

Petitioner does not dispute his conviction requires exclusion under section 1128(a)(1) of the Act.  P. Br.  There is little basis to do so, as his crime of conviction and admitted conduct clearly evidence the “common sense” connection required by section 1128(a)(1) of the Act.  Petitioner, a physician, pleaded guilty to one count of health care fraud in violation of 18 U.S.C. § 1347.  IG Exs. 2, 3.  His offense of conviction on its face demonstrates the nexus between Petitioner’s criminal conduct and a covered healthcare program necessary to warrant exclusion.  So too does his actual offense conduct; Petitioner stipulated in his plea agreement that he “knowingly and willfully execute[d] a scheme” to defraud the Medicare program by billing it for false and fraudulent office visits resulting in the prescription of drugs to patients he had not actually seen.  IG Ex. 3 at 11-12.  Petitioner admitted he billed the Medicare program for patients he purportedly examined in his office in Hatillo, Puerto Rico while he was employed full-time at Puerto Rico’s Department of Health in Bayamon, Puerto Rico.  Id. at 12.  Petitioner’s offense of conviction and the stipulations he made to resolve the criminal case against him make clear his offense of conviction occurred in connection with the delivery of an item or service to the Medicare program.

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The relatedness of Petitioner’s criminal offense to the delivery of an item or service to a covered healthcare program is further reinforced by the fact that the District Court ordered him to pay restitution to the Medicare program.  IG Ex. 4 at 5.  Payment of restitution to a covered healthcare program for losses incurred as a result of criminal conduct demonstrates the nexus between the offense of conviction and the delivery of an item or service to that program.  Summit S. Shah, M.D., DAB No. 2836 at 8-9 (2017), quoting Siegel, DAB No. 1467 at 6-7 (“[A] criminal offense resulting in financial loss to a State Medicaid program is ‘related to’ the delivery of items or services under that Medicaid program because it results ‘in less funds being available to pay for covered services’ delivered to Medicaid patients.”).  In sum, these facts establish the requisite “common sense” connection between Petitioner’s offense of conviction and the delivery of services to the Medicare program.

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

Because I have concluded 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 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 two aggravating factors to justify extending Petitioner’s exclusion period beyond the five-year statutory minimum.

Petitioner does not dispute the application of the aggravating factors identified by the IG to extend his period of exclusion.  P. Br.  Because the IG bears the burden of establishing these factors, however, I have nevertheless scrutinized them and conclude the IG has established a basis to apply them.  42 C.F.R. § 1005.15(c).

1. The IG established 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 conceded in his plea agreement with the government that he participated in a scheme to defraud the Medicare program that lasted from approximately June 2016 through May 2020.  IG Ex. 3 at 12.  The IG has established Petitioner’s offense of conviction arose from acts that occurred for one year or more.

2. 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).

Consistent with the stipulations made by Petitioner in his plea agreement, the District Court ordered him to pay restitution to the Medicare program in the amount of $1,941,017.26.  IG Ex. 3 at 12; IG Ex. 4 at 5.  The Board has recognized that restitution

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may be used to demonstrate program loss.  See Shah, DAB No. 2836 at 8.  Petitioner does not dispute this restitution amount represents the amount of loss suffered by the Medicare program due to his criminal offense.  The IG has established Petitioner was responsible for considerably more than $50,000 in loss to the Medicare program.

E. Petitioner has not demonstrated the existence of a mitigating factor recognized by the Secretary’s regulations.

Petitioner argues his exclusion should be reduced to one year but identifies no mitigating factors I could apply to reduce his exclusion period, despite bearing the burden to do so.  Summary Order at 4; 42 C.F.R. § 1005.15(c).  The applicable regulation specifies only three circumstances that permit mitigation:  (1) where the exclusion is premised on three or fewer misdemeanor offenses and the financial loss is less than $5,000; (2) where records from the underlying criminal proceeding establish a mental, emotional, or physical condition that a court determined reduced an individual’s culpability; and (3) where the record reflects cooperation with federal or state officials that results in others being convicted or excluded, other cases being investigated or reports being issued to identify program vulnerabilities, or others being subject to a civil money penalty or assessment.  42 C.F.R. § 1001.102(c).

Petitioner identifies none of these mitigating factors as grounds to reduce his exclusion period.  P. Br.  He instead argues a 20-year exclusion period constitutes cruel and unusual punishment in violation of the Eighth Amendment of the United States Constitution.  Id.  He otherwise asserts a 20-year period of exclusion would essentially preclude him from ever repaying the restitution he owes and constitutes a hardship given his advanced age.  Id.  Petitioner elsewhere argues his poor, rural patients would be ill-served by his exclusion and thus alternatively seeks a six-month delay in his exclusion to allow time for him to transition them as needed.  P. Ex. 3 at 2-3.

I am sympathetic to Petitioner’s circumstance but cannot weigh the merit of his arguments.  In the first place, I am not empowered to hear constitutional claims.  1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (“An ALJ is bound by applicable laws and regulations and may not invalidate either a law or regulation on any ground, even a constitutional one.”); Funmilola Mary Taiwo, DAB No. 2995 at 10 (2020) (observing Eighth Amendment attacks on exclusion actions “constitute an attack upon the Act and regulations on which neither the ALJ nor the Board may rule.”) (quoting W. Scott Harkonen, M.D., DAB No. 2485 at 22 (2012), aff’d, Harkonen v. Sebelius, No. C 13-0071 PJH, 2013 WL 5734918 (N.D. Cal. Oct. 22, 2013)).

Even if I could consider Petitioner’s claim, it is misplaced; the exclusion action taken by the IG is not a criminal sanction and is not intended as a punitive measure.  Baldwin Ihenacho, DAB No. 2667 at 10 (2015) (“The Board has recognized that it is ‘well-established that section 1128 exclusions are remedial in nature, rather than punitive, and

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are intended to protect federally funded health care programs from untrustworthy individuals.’”) (quoting Donald A. Burstein, Ph.D., DAB No. 1865 at 12 (2003)).

Petitioner’s claim that preventing him from billing the Medicare program coupled with his advanced age would make it unlikely he could ever repay the amount he stole is equally beyond my authority.  The regulations do not permit me to consider any grounds to mitigate an extended period of exclusion except the three bases identified at 42 C.F.R. § 1001.102(c).

Finally, while Petitioner’s desire to ensure his most critical patients receive uninterrupted care is laudable, I have no authority to delay his exclusion, which by regulation must start 20 days after the IG issues the notice of exclusion.  42 C.F.R. § 1001.2002(b) (“The exclusion will be effective 20 days from the date of the notice.”); Thomas Edward Musial, DAB No. 1991 (2005), citing 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.”); Richard G. Philips, D.P.M., DAB No. 1279 (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 ALJ has no power to change [an exclusion’s] beginning date.”).

In sum, Petitioner has not met his burden to identify a permissible mitigating factor to reduce his period of exclusion.

F. A 20-year exclusion period 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 the factors present in a given case.  As the Secretary stated in the preamble to the final rule establishing the exclusion regulations:

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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 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 established the existence of two aggravating factors to extend Petitioner’s period of exclusion.  Petitioner has identified no mitigating factor recognized by the regulations I could apply to reduce it.  Therefore, the only question is whether the 20-year period of exclusion selected by the IG is nevertheless unreasonable.  I cannot say it is.

First and foremost, Petitioner’s criminal conduct resulted in a staggering loss to the Medicare program – by his own admission, over $1.9 million.  IG Ex. 3 at 12; IG Ex. 4 at 5.  Petitioner’s criminal conduct resulted in a loss to the Medicare program 38 times greater than regulatory minimum of $50,000 in program loss required to be considered an aggravating factor.  42 C.F.R. § 1001.102(b)(1).  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).

Petitioner admitted to fraudulently billing the Medicare program for visits with patients he never examined and ordering prescription medicine based on these illusory visits.  By his own admission, he did so while Puerto Rico suffered the arrival of Hurricane Maria in 2017.  P. Ex. 1 at 1.⁴  Petitioner claimed to serve “old and poor people” but clearly gave no thought to their wellbeing when he drained nearly $2 million from their health care

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safety net.  Id.  His willingness to do so reflects a profound level of untrustworthiness the IG reasonably considered when she opted to prolong the period of time he could not bill that program.  Hussein Awada, M.D., DAB No. 2788 at 7 (2017) (“[t]he millions of dollars in losses that Petitioner’s actions caused . . . merits a substantial increase in the length of his exclusion beyond the minimum period”).

The duration of Petitioner’s offense also signals a level of culpability and untrustworthiness the IG appropriately considered.  Criminal conduct lasting more than four years is “a protracted period of criminal conduct” that shows an individual “is extremely untrustworthy.”  Rosa Velia Serrano, DAB No. 2923 at 9 (2019).  Petitioner engaged in fraudulent billing to the Medicare program from June 2016 through May 2020, almost precisely four years.  IG Ex. 3 at 12.  Petitioner’s persistent criminal conduct reflects a sustained lack of integrity, not a momentary lapse of judgment.  Donald A. Burstein, Ph.D., DAB No. 1865 at 8 (2003) (“the purpose of the aggravating factor is to distinguish . . . petitioners whose lapse in integrity is short-lived from those who evidence a lack of such integrity over a longer period. . . .”).  The IG properly gave this aggravating factor significant weight in determining Petitioner’s period of exclusion.

In sum, Petitioner fraudulently overbilled a safety net program intended for the elderly for nearly four years and caused almost $2 million in loss.  Under these circumstances, I cannot say excluding Petitioner from participation in Medicare, Medicaid, and all other federal health care programs for 20 years is unreasonable.

VI.  Conclusion

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

Endnotes

¹ Petitioner filed an earlier hearing request regarding the same exclusion action, docketed before me as C-23-658.

² Petitioner’s counsel proved unable to file his pre-hearing exchange through the Departmental Appeals Board (DAB) E-file system.  Civil Remedies Division staff uploaded these documents on his behalf.

³ I excuse Petitioner’s failure to adequately identify or paginate his proposed exhibits, owing to his attorney’s lack of facility with electronic filing and the limited number and size of these documents.

⁴ Besides being a collateral attack on his conviction I cannot entertain, Petitioner’s attempt to blame electrical outages resulting from the hurricane for his four-year criminal scheme to defraud the Medicare program is altogether unpersuasive.  42 C.F.R. § 1001.2007(d).