Phong Hung Tran, M.D., DAB CR6466 (2024)

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 12 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 12-year exclusion period is not unreasonable.  I affirm the IG’s exclusion determination. 

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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 and then further reduced to 12 years in a subsequent amended notice on August 28, 2023.  IG Exhibit (Ex.) 1 at 1; IG Ex. 6; IG Ex. 7.  The IG cited section 1128(a)(3) of the Act as the basis for the exclusion, which mandates exclusion when an individual is convicted of certain criminal offenses related to the delivery of a healthcare item or service under a health care program operated by or financed at least in part by a government agency.  IG Ex. 1 at 1.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, a reply brief, and six exhibits (IG Exs. 1-6).²  Petitioner submitted a brief and four exhibits (P. Exs. 1-4).  Neither party objected to the other party’s exhibits, and IG Exs. 1-6 and P. Exs. 1-4 were admitted and considered as evidence. 

On June 29, 2023, I issued a decision affirming the IG’s determination to exclude Petitioner from participation in all federal health care programs pursuant to section 1128(a)(3) of the Act based on a felony conviction related to health care fraud.  Phong Hung Tran, M.D., DAB CR6309 (2023).  I also ruled that the then 15-year exclusion period was not unreasonable based on evidence of two aggravating factors in 42 C.F.R. § 1001.102(b)(1) and (b)(2), and in the absence of any mitigating factor in 42 C.F.R. § 1001.102(c).  Id. 

Petitioner appealed my decision to the Board disputing the reasonableness of the then 15-year exclusion and asserted the presence of two mitigating factors in sections 1001.102(c)(2) and (c)(3) – Petitioner’s history of trauma and cooperation with the authorities – based on newly-offered evidence Petitioner submitted to the Board.  In response to this evidence, as indicated above, the IG issued a second-amended notice that applied the mitigating factor in section 1001.102(c)(3) and reduced the exclusion period to 12 years. 

On November 1, 2023, the Board remanded the case for me to rule, in the first instance, on whether the 12-year exclusion period falls within a reasonable range and whether the mitigating factor at 42 C.F.R. § 1001.102(c)(2) should be applied.  The Board otherwise

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affirmed the June 29, 2023 Decision as factually supported and free of legal error.  Phong Hung Tran, M.D., DAB No. 3120 (2023). 

I conducted another pre-hearing telephone conference on December 5, 2023, the substance of which I memorialized in my December 8, 2023 Order (Remand Summary Order), including a description of the limited issues to be determined on remand and setting a schedule of briefing for the parties to address said issues.  Petitioner submitted a brief (P. Br.) and three additional exhibits (P. Exs. 5-7).  The IG submitted a brief (IG Br.) and one additional exhibit (IG Ex. 7). 

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. Issue

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).  On remand, the only issue remaining is whether the 12-year period of exclusion imposed by the IG is within a reasonable range.  42 C.F.R. § 1001.2007(a)(1)(ii). 

IV. Exhibits and Decision on the Record

Neither party objected to the other party’s exhibits, and IG Exs. 1-7 and P. Exs. 1-7 are admitted or re-admitted and considered as evidence.³ 

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). 

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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. §§ 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. 

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.  

A. 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.

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

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.

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: 

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[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; see Phong Hung Tran, M.D., DAB No. 3120 at 10-11 (upholding my determination that the IG had a lawful basis to exclude Petitioner pursuant to section 1128(a)(3) of the Act).  

B. 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).  

C. 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 has established one mitigating factor.

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 two aggravating factors as addressed in my June 29, 2023 Decision.  Phong Hung Tran, M.D., DAB CR6309 at 8. 

Petitioner has the burden of proving any mitigating factors and affirmative defenses.  42 C.F.R. § 1005.15(c). 

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).

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).

3. Petitioner has established one mitigating factor for reducing the period of exclusion.

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Petitioner argued on appeal before the Board and on remand that the following two mitigating factors apply and should result in reduction of the length of his exclusion period: 

(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 –

(ii) 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)(2), (3).

In response to Petitioner’s submission of the transcript of his sentencing hearing for the underlying conviction (P. Ex. 5), the IG agreed before the Board that Petitioner’s cooperation with other government officials satisfied the criteria for mitigating factor 42 C.F.R. § 1001.102(c)(3).  Phong Hung Tran, M.D., DAB No. 3120 at 9; IG Br. at 4.  As such, the IG issued a second-amended Notice of Exclusion reducing the exclusion period to 12 years.  IG Ex. 7.  Petitioner further contends on remand that a second mitigating factor also applies due to his mental health, 42 C.F.R. § 1001.102(c)(2), and that his period of exclusion should be further reduced.  P. Br. at 2-3.  I disagree. 

In order for 42 C.F.R. § 1001.102(c)(2) to apply, Petitioner must meet the following criteria:  that the record in the criminal proceedings shows the court determined (1) Petitioner had a mental, emotional, or physical condition that was present before or during the commission of the underlying offense and (2) that the condition reduced petitioner's culpability.  42 C.F.R. § 1001.102(c)(2); see Begum v. Hargan, No. 16 CV 9624, 2017 WL 5624388 at *6 (N.D. Ill. Nov. 21, 2017).  With respect to the first prong,

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Petitioner has provided evidence that a psychiatrist concluded in 2017 that he had a “significant mental disorder,” “multiple symptoms of depression and anxiety,” “appeared to suffer from a major depression,” and has a compulsive gambling addiction.  P. Ex. 7 at 4-5.  The psychiatrist further concluded that the likelihood of any further antisocial behavior “will probably be minimal” with an appropriate treatment program.  Id. at 5.  Petitioner also provided evidence of horrific trauma that he endured as a child following the conclusion of the Vietnam War when he was among the 25 survivors of 50 refugees adrift at sea on a boat.  See P. Ex. 5 at 4, lines 7-12; P. Ex. 6 at 2- 3.  Specifically, Petitioner offered as evidence a letter that he had written to the sentencing Judge in the underlying criminal proceedings that described the following grave ordeal Petitioner had experienced at that time:  

We headed out into the ocean and, after a day, the engine died.  A few days later, we were without food and water.  For thirty days, we prayed for a rescue.  To survive, we drank our own urine.  As people started dying, we wrapped their bodies and rolled them into the sea.  Eventually, the adults consumed the muscle of the deceased for calories.  They thinly sliced the meat and left it to dry in the sun.  This was shocking to see but it was done to survive.  We wanted to live. 

P Ex. 6 at 2-3.  In response to the recounted events, the sentencing Judge, in the sentencing documents, acknowledged that Petitioner “has a life story that is sympathetic.”  P. Ex. 5 at 23.  The IG does not appear to dispute that Petitioner suffered from depression and anxiety (IG Br. at 2-3) or the above recounted events.  

Even if I were to conclude that the court relied on the assessment performed by the psychiatrist to determine that Petitioner had a mental or emotional condition before or during the commission of the underlying offense and that the record reflects that determination, Petitioner would not be able to meet his burden with respect to the second prong:  the record does not demonstrate that the Judge in the underlying criminal proceedings determined that Petitioner’s mental or emotional condition reduced his culpability.  Petitioner argues that a passing reference by Petitioner’s own counsel at the sentencing hearing as to the above traumatic events of his childhood is sufficient to meet the second prong criteria for the mitigating factor at 42 C.F.R. § 1001.102(c)(2) to apply.  See P. Br. at 2-3; P. Ex. 5 at 4, lines 7-12.  To the contrary, while the Court did refer at the sentencing hearing to Petitioner as having a “life story that is sympathetic,” there is no evidence in the record to support that the court determined Petitioner’s mental or emotional condition reduced his culpability.  P. Ex. 5 at 23, lines 21-25. 

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D. A 12-year exclusion period is not unreasonable under the specific facts and circumstances of this case.

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).  The touchstone when evaluating the reasonableness of an exclusion period is whether it serves Congress’s twin remedial purposes of protecting the federal health care programs and their beneficiaries from untrustworthy individuals and deterring health care fraud.  See S. REP. NO. 109, 100th Cong., 1st Sess. (1987), reprinted in 1987 U.S.C.C.A.N. 682, 686; Donald A. Burstein, Ph.D., DAB No. 1865 (2003) (citing Patel v. Thompson, 319 F.3d 1317 (11th Cir. 2003), cert. denied, 123 S. Ct. 2652 (2005); Manocchio v. Kusserow, 961 F.2d 1539, 1543 (11th Cir. 1992)). 

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); Sushil Aniruddh Sheth, M.D., DAB No. 2491 at 5 (2012). 

The IG has established two aggravating factors to which Petitioner does not dispute, and Petitioner has established one mitigating factor.  Petitioner does not dispute the weight the IG assigned to the two aggravating factors in determining the length of the exclusion period, but Petitioner asserts that the application of the two above mitigating factors should reduce the period of exclusion “closer to the minimum exclusionary period,” which would be five years.  See P. Br. at 3-4.  For the reasons addressed above, I find that only one mitigating factor applies: cooperation.  I previously concluded that a 15-year exclusion period was not unreasonable with the application of the two aggravating circumstances in this matter and without any mitigating factors.  Phong Hung Tran, M.D., DAB CR6309 at 7-9.  On remand, the IG has reduced the period to 12 years after applying the mitigation factor of cooperation, and in consideration of the particular facts and circumstances of this case, I conclude that the IG’s assessment of a 12-year exclusionary period is not unreasonable. 

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.  The Secretary has stated that: 

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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. 

57 Fed. Reg. at 3314-3315. 

In this case, Petitioner’s conduct “caused [financial] loss greater than $1 million to a government health care program.”  IG Ex. 2 at 10.  This loss amount is significantly more than the $50,000 regulatory threshold.  See 42 C.F.R. § 1001.102(b)(1).  Financial loss represents an “exceptional aggravating factor” where, as here, the loss is “substantially greater than the statutory standard . . . .”  Jeremy Robinson, DAB No. 1905 at 11 (2004); see also Edwin L. Fuentes, DAB No. 2988 (2020) (upholding a 15-year exclusion based on a loss amount of $243,451.27 and two other aggravating factors); Devon Rambert-Hairston, DAB No. 3069 (2022) (upholding a 13-year exclusion based on a loss amount of approximately $813,000 and incarceration of one year and one day); Natalie M. Evans, DAB CR2766 at 10 (2013) (sustaining a 10-year exclusion and emphasizing that, on its own, intended loss to Medicare of $645,975 would “support a significant increase to the reasonable range of exclusion periods that the [IG] may impose”). 

Additionally, Petitioner’s acts that resulted in the conviction were committed over more than three years, which is above the threshold time period.  IG Ex. 2 at 5.  The purpose of the aggravating factor found at 42 C.F.R. § 1001.102(b)(2) “is to distinguish . . . petitioners whose lapse in integrity is short-lived from those who evidence a lack of such integrity over a longer period of time.”  Burstein, DAB No. 1865 at 8.  The considerable amount of time over which Petitioner perpetrated his fraud scheme demonstrates that his lack of integrity was not “short-lived” and further supports an enhancement to the mandatory minimum five-year period of exclusion.  See Raymond Lamont Shoemaker, DAB No. 2560 (2014) (upholding a 10-year exclusion based on conduct lasting approximately 19 months and a 55-month prison sentence); Anthony Lynn Hester, DAB CR2529 at 7 (2012) (stating that, “even in the absence of any other aggravating factors,” a period of misconduct spanning three years and nine months would “amply support a substantial enhancement of the period of exclusion.”); Jeremy Robinson, DAB No. 1905

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(2004) (upholding 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). 

With respect to mitigation, Petitioner provided evidence that suggested that Petitioner’s cooperation, including testifying in a jury trial, resulted in the conviction of another individual, thereby satisfying the mitigating factor of cooperation.  See P. Ex. 5 at 15-16.  The IG sufficiently accounted for Petitioner’s cooperation by applying a three-year downward departure (from 15 to 12 years).  See IG Ex. 7; see also John Krawczyk, DAB CR6223 (2023) (upholding a 14-year exclusion based on the presence of three aggravating factors ($4 million in financial loss, conduct lasting three years, one day of incarceration), and two mitigating factors, including cooperation); Salman Ali, DPT & Roohi Ali, DPT, DAB No. 3048 (2021) (upholding Petitioners’ 20-year and 10-year exclusions, respectively, based on the presence of three aggravating factors and the mitigating factor of cooperation); James Josiah, DAB CR5514 at 6-7 (2020) (upholding a seven-year exclusion based on the presence of three aggravating factors and one mitigating factor (cooperation).  Here, the IG reduced Petitioner’s exclusion period from ten years to seven years (three-year reduction) for Petitioner’s cooperation with the government that resulted in the prosecution of other individuals). 

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 12 years. 

Endnotes

¹  The IG initially issued an exclusion period of 17 years.  Subsequently, the IG amended the notice of exclusion to reduce the exclusion from 17 years to 15 years and removed the aggravating factor in section 1001.102(b)(9).  While on appeal before an appellate panel of the Departmental Appeals Board (Board), the IG further reduced the exclusion period to 12 years based on newly submitted evidence of the applicable mitigating factor at 42 C.F.R. § 1001.102(c)(3). 

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  While the IG maintains that Petitioner did not have reasonable grounds for failing to present the sentencing transcript and other evidence (P. Exs. 5-7) in the original matter to support the presence of the mitigating factor of cooperation, the IG also asserts that there was minimal prejudice in Petitioner’s failure to do so.  IG Br. at 2.  The IG acknowledges that in the interest of fairness, it was willing to take this new evidence into account and determined it was appropriate to decrease the exclusion period to 12 years.  Id.