Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
Shaun Thaxter
Docket No. A-21-94
Decision No. 3053
FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION
Shaun Thaxter (Petitioner) appeals a decision by an Administrative Law Judge (ALJ) upholding the determination of the Inspector General (I.G.) to exclude Petitioner from participation in all federal health care programs under section 1128(a)(1) of the Social Security Act (Act)
Legal Background
Section 1128(a) of the Act requires the Secretary of the Department of Health and Human Services (Secretary) to exclude from participation in federal health care programs individuals that have been convicted of certain types of criminal offenses. Act § 1128(a). Section 1128(a)(1) mandates exclusion of any individual who has been "convicted of a criminal offense related to the delivery of an item or service under [Medicare] or under any State health care program." Act § 1128(a)(1); see also 42 C.F.R. § 1001.101(a).
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An individual is "convicted" within the meaning of section 1128(a) when, among other things, "a judgment of conviction has been entered against the individual . . . by a Federal, State, or local court" or "when a plea of guilty . . . by the individual . . . has been accepted by a Federal, State, or local court." Act § 1128(i)(1), (3). "It is the fact of the conviction which causes the exclusion." Peter J. Edmonson, DAB No. 1330, at 4 (1992) (underlining replaced by italics). The general purpose of section 1128 is to provide "protection for federally funded programs and their beneficiaries and recipients" by excluding "potentially untrustworthy individuals or entities based on criminal convictions." Id. Exclusions imposed under section 1128(a) are referred to as "mandatory" exclusions.
As permitted by the Act, the Secretary has delegated to the I.G. the authority to enforce section 1128's exclusion provisions. Act § 1128A(j)(2); 48 Fed. Reg. 21,523, 21,662 (May 13, 1983); 53 Fed. Reg. 12,909, 12,993 (Apr. 20, 1988). The I.G. in turn has issued regulations, codified in 42 C.F.R. Parts 1001 and 1005, implementing the delegated exclusion authority. See, e.g., 42 C.F.R. §§ 1001.101, 1005.1.
When an exclusion is validly imposed under section 1128(a), the I.G. must (subject to exceptions not relevant here) exclude the individual for a period of "not less than five years[.]" Act § 1128(c)(3)(B); see also 42 C.F.R. § 1001.102(a). The I.G. may extend the exclusion period beyond the statutory minimum if certain aggravating factors, as described in the regulations, are present. 42 C.F.R. § 1001.102(b). Two of those factors are relevant here:
- The acts resulting in the conviction, or similar acts, caused, or were intended to cause, a financial loss to a government agency or program or to one or more other entities of $50,000 or more. (The entire amount of financial loss to such government agencies or programs or to other entities, including any amounts resulting from similar acts not adjudicated, will be considered regardless of whether full or partial restitution has been made[.]);
- The sentence imposed by the court included incarceration[.]
Id. § 1001.102(b)(1), (5).
If one or more aggravating factors justify an exclusion longer than the statutory minimum, then certain mitigating factors may be considered as a basis for reducing the exclusion period to no less than five years. Id. § 1001.102(c). If the I.G. determines that exclusion is warranted, the I.G. will send written notice to the excluded individual identifying, among other things, the basis for the exclusion, the length of the exclusion, and the factors, if any, considered in determining the length of the exclusion. Id. § 1001.2002.
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An excluded individual may request a hearing before an ALJ, but only on the issues of (i) whether the "basis for" exclusion exists, and (ii) whether "[t]he length of the exclusion is unreasonable." Id. § 1001.2007(a). The underlying conviction is not reviewable or subject to collateral attack on substantive or procedural grounds. Id. § 1001.2007(d).
The ALJ conducts a de novo review "as to the evidence and factual determinations" relevant to the scope of the ALJ's review. See Edwin L. Fuentes, DAB No. 2988, at 10 (2020), aff'd, No. 4:20-cv-00026, 2021 WL 4341115 (W.D. Va. Sept. 23, 2021); see also Joann Fletcher Cash, DAB No. 1725, at 17 n.9 (2000). "In conducting this de novo review, the ALJ may consider information and evidence not considered or relied on by the I.G. in making its determination." Olufemi Okonuren, M.D., DAB No. 1319, at 14 (1992). An ALJ has the authority to schedule a hearing; examine witnesses; and receive, rule on, and exclude or limit evidence. 42 C.F.R. § 1005.4(b). The ALJ issues an "initial decision" based on the record developed before the ALJ. Id. § 1005.20(a).
A party dissatisfied with the ALJ's "initial decision" may appeal that decision to the Board. Id. § 1005.21(a). Board review of an ALJ decision is, in general, based on the evidentiary record developed before the ALJ. See id. § 1005.21(f); Gracia L. Mayard, M.D., DAB No. 2767, at 6-8 (2017). The Board "will not consider any issue not raised in the parties' briefs, nor any issue in the briefs that could have been raised before the ALJ but was not." 42 C.F.R. § 1005.21(e). The Board's standard of review in I.G. exclusion cases is established by regulation. Id. § 1005.21(h).
"The [Board's] decision constitutes the ‘final decision' of the Secretary." Fuentes v. Becerra, No. 4:20-cv-26, 2021 WL 4341115, at *5 (W.D. Va. Sept. 23, 2021). A party may seek judicial review of the Board's final decision in federal district court. 42 C.F.R. § 1005.21(k)(1); see also Act § 1128(f)(1) (providing that "any individual or entity that is excluded (or directed to be excluded) from participation under this section is entitled to . . . judicial review of the Secretary's final decision . . . .").
Case BackgroundBackground information is drawn from the ALJ Decision and the record before the ALJ and is not intended to substitute for the ALJ's findings. The facts underlying Petitioner's criminal offense are largely drawn from the facts set forth in the Information (I.G. Ex. 2) and testimony provided at Petitioner's sentencing hearing (I.G. Ex. 5). In his plea agreement, Petitioner agreed the facts set forth in the Information are "true and correct." I.G. Ex. 3, at 2.
Petitioner was the Chief Executive Officer (CEO) of Indivior PLC (Indivior), a pharmaceutical company that markets, promotes, and sells drugs containing buprenorphine, an opioid product used to treat opioid addiction. I.G. Ex. 2 (Information), at 1-3 (¶¶ 2-5, 9-10); Notice of Appeal and Opening Brief (P. Br.) at 4-5. In October
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2002, the Food and Drug Administration (FDA) granted orphan drug status to Indivior's two buprenorphine tablets—Suboxone Tablet and Subutex Tablet—which provided seven years of market exclusivity (meaning the FDA would not approve a competing buprenorphine drug for the same indication for seven years). I.G. Ex. 2, at 3 (¶ 10). Suboxone Tablet, which contained both buprenorphine and naloxone, would dissolve under the tongue and was dispensed in bottles with child-resistant caps. Id. at 3 (¶ 11). Subutex Tablet, which consisted only of buprenorphine, was similar to Suboxone Tablet and was dispensed in bottles with child-resistant caps. Id. at 4 (¶ 12). In 2007, when the market exclusivity periods for Suboxone and Subutex Tablets were nearing their end, Indivior began developing a new buprenorphine product called Suboxone Film. Id. at 4 (¶ 13).
Suboxone Film, like Suboxone Tablet, also had buprenorphine and naloxone; however, it differed from Suboxone Tablet in that it took the form of a thin strip, sticks to the tongue or mouth, dissolves more rapidly, is formulated to taste better, and was packaged in individually wrapped, child-resistant foil pouches. Id. at 4 (¶ 14). In August 2010, the FDA approved Suboxone Film to be marketed for use in the treatment of opioid addiction. Id. at 4 (¶ 15). Although Suboxone Tablet, Subutex Tablet, and Suboxone Film generated "substantially all" of Indivior's revenue, once Suboxone Film received approval, Indivior actively promoted only Suboxone Film. Id. at 5 (¶ 19). Indeed, Petitioner and other company executives structured bonuses and incentives for sales employees to reward only Suboxone Film sales. Id.
In 2010, Suboxone Film was not a preferred drug under the Massachusetts Medicaid (MassHealth) program and, therefore, had restrictions on approval for reimbursement. Id. at 5 (¶ 20). According to the Director of Pharmacy for MassHealth, Suboxone Film was not included on the preferred drug list because it was not the least costly alternative available. I.G. Ex. 5 (Dr. Jeffrey Testimony), at 14-15 (describing Indivior's initial attempts to persuade MassHealth to make Suboxone Film a preferred drug). MassHealth was the largest Medicaid program in the country by volume of addiction-treatment-drug business. I.G. Ex. 2, at 5 (¶ 20). Thus, Petitioner and Indivior "placed high importance on persuading MassHealth to expand coverage of Suboxone Film." Id.
In January 2011, Petitioner received an email from a senior manager of Indivior indicating that MassHealth was considering expanding coverage of a different, non-opioid drug to treat opioid addiction. Id. at 5 (¶ 21). Petitioner emailed Indivior employees seeking a "strategy to counter" the other drug. Id. In response, Indivior's top State Government Affairs employee provided Petitioner with a plan to use poison control center data showing the rates of unintended pediatric exposure to persuade MassHealth to expand its coverage of Suboxone Film. Id. at 5-6 (¶ 21).
Like many drugs, Indivior's products posed the risk that children would accidentally ingest them, referred to as "unintended pediatric exposure." I.G. Ex. 2, at 4 (¶ 17).
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Indivior executives, including Petitioner, received data from poison control centers about unintended pediatric exposure for all buprenorphine drugs. Id. at 5 (¶ 18). In 2012, Indivior contracted with Researched Abuse, Diversion, and Addiction-Related Surveillance System (RADARS) to analyze data regarding such exposure and used the RADARS analyses to market Suboxone Film. Id. at 5 (¶¶ 18-19).
Petitioner tried unsuccessfully to secure a meeting with the Director of Pharmacy for MassHealth, Dr. Jeffrey, the official who decided which drugs received preferred status under the MassHealth program. I.G. Ex. 5, at 12-13, 30-31 (explaining why Dr. Jeffrey was unwilling to meet with Petitioner). On or about May 16, 2012, after Petitioner failed to secure a meeting with Dr. Jeffrey, Indivior's managed care director wrote to Petitioner: "Thanks for the efforts . . . . We know how important MassHealth is[,] and it is #1 ranked Medicaid [for us] by volume in the U.S. . . . My suggestions (in confidence not to be shared): 1) We build our pediatric poison campaign with the largest poison control centers in Mass.[,] and we demonstrate the public health impact" to MassHealth. I.G. Ex. 2, at 6 (¶ 22).
On or about October 2, 2012, Indivior's medical affairs manager, Dr. Ruby, advised Petitioner and other executives that a MassHealth official had reached out, requesting a meeting. Id. at 6 (¶ 23); I.G. Ex. 5, at 32 (identifying Dr. Ruby as the medical affairs manager). Dr. Ruby wrote: "I am very excited at this opportunity to share the pediatric data." I.G. Ex. 2, at 6 (¶ 23). She asked to attend the meeting alone as "the situation is very delicate." Id. She assured the executives that the meeting would be successful and "things will change in Massachusetts." Id. Petitioner agreed that "we commercial people should not attend this meeting," but asked that both Indivior's global medical director and vice president for clinical affairs attend. Id.
On or about October 9, 2012, Dr. Ruby met with Dr. Jeffrey, and provided him with a RADARS analysis of nationwide data of unintended pediatric exposure. Id. at 6 (¶ 24). After the meeting, Dr. Ruby reported to Petitioner and others that the MassHealth official was "very responsive to the pediatric data" and that she had asked RADARS to analyze the rates of unintended pediatric exposure to buprenorphine tablets in Massachusetts, anticipating that the state-specific results would be comparable to the nationwide results. I.G. Ex. 2, at 6-7 (¶ 24); see also I.G. Ex. 5, at 36 (explaining why Dr. Jeffrey considered state-specific data more pertinent than national data).
The following day, RADARS gave Dr. Ruby the Massachusetts-specific analysis, but the results were not what she had expected. I.G. Ex. 2, at 7 (¶ 25). The RADARS analysis showed that, among the three categories of drugs (Suboxone Film, Suboxone Tablet, and Subutex Tablet), Suboxone Film did not have the lowest rate of unintended pediatric exposure. Id. Rather, Suboxone Film fell between Suboxone Tablets (higher) and Subutex Tablets (lower). Id. Thus, the Massachusetts-specific data showed that buprenorphine-only tablets like Subutex Tablets—which are packaged in bottles with
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child-resistant caps, in the same manner as Suboxone Tablets and many other drugs—had the lowest rate of unintended pediatric exposure. Id.
Rather than give Dr. Jeffrey the analysis prepared by RADARS, Dr. Ruby manipulated the data by adding the two tablet rates together, which made it appear that Suboxone Film had the lowest rate of pediatric exposure when, in fact, it did not. Id. at 7-8 (¶ 27). On or about October 16, 2012, Dr. Ruby emailed the falsified data to MassHealth, claiming that Suboxone Film presented the lowest rate of unintentional pediatric exposure when, in fact, Subutex Tablets had the lowest rate in Massachusetts. Id. Dr. Ruby also falsely claimed that she had received the calculations from RADARS when, in fact, she had done the calculations herself. Id. Dr. Ruby forwarded a copy of her email to Indivior's global medical director, stating that she had sent the email to MassHealth to "help us get some movement in Mass." Id.
On or about November 19, 2012, in response to a follow-up question from MassHealth about her false and misleading email, Dr. Ruby sent MassHealth a chart, "indicating that Suboxone Film had a substantially lower rate of pediatric exposure than Suboxone Tablets." Id. at 8 (¶ 28). The chart did not include a third line of data known to Dr. Ruby that showed Subutex Tablets with a lower rate of pediatric exposure than Suboxone Tablets and with less of a difference in the rate of pediatric exposure than Suboxone Film. Id. In light of her prior misleading email, "the chart without the third line of data failed to reveal facts material to MassHealth prior to its updated formulary decision." Id. (emphasis added). By not including the Subutex Tablet data, Dr. Ruby "reinforced her false and misleading claim that Massachusetts-specific data showed Suboxone Film as having the lowest rate of unintended pediatric exposure in the state." Id. at 8-9 (¶ 28); see also I.G. Ex. 5, at 40-41 (Dr. Jeffrey explaining why not including the Subutex Tablet data in the chart mattered).
Dr. Ruby subsequently received additional data that showed Suboxone Film did not have the lowest rate of unintended pediatric exposure in Massachusetts but chose not to share that data with MassHealth. I.G. Ex. 2, at 9 (¶ 29). Dr. Ruby told others at Indivior (although not Petitioner) that her "rationale for withholding the additional data from MassHealth was, ‘don't ask, don't tell.'" Id.
In December 2012, MassHealth announced that it would provide access to Suboxone Film to members who live in households with children under the age of six. Id. at 9 (¶ 30); see also P. Ex. 9. Dr. Jeffrey testified that the pediatric exposure data was the "pivot point" on which MassHealth changed its policy concerning Suboxone Film. I.G. Ex. 5, at 38. Indivior failed to correct the false and misleading statements made to MassHealth until December 2015, two years after the government's investigation began. I.G. Ex. 2, at 9 (¶ 31). The record does not reflect when Petitioner learned about the false statements made to MassHealth but, sometime after he learned of them, he approved sending a correction letter to MassHealth. I.G. Ex. 2, at 9 (¶ 31); P. Ex. 10.
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Based on the foregoing, Petitioner was charged under the responsible corporate officer doctrine with the misdemeanor offense of causing the introduction and delivery for introduction into interstate commerce of a misbranded drug, Suboxone Film, in violation of the Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. §§ 331(a) and 333(a)(1). I.G. Ex. 2, at 10 (¶ 33); I.G. Ex. 3, at 1 (Plea Agreement).
On October 23, 2020, the United States District Court for the Western District of Virginia (Court) accepted Petitioner's guilty plea, sentenced him to six months of incarceration, and ordered him to forfeit $500,000, which "represents in aggregate the value of misbranded drugs introduced into interstate commerce in violation of 21 U.S.C § 331." I.G. Ex. 4 (Judgment), at 1, 2, 8. The Court further ordered Petitioner to pay a fine of $100,000. Id. at 6.
At about the same time Petitioner entered his guilty plea, Indivior pled guilty to felony charges of knowingly and willfully making materially false statements relating to health care matters. P. Ex. 7. Indivior was ordered to pay over $289 million in criminal fines and forfeiture. See id. at 5, 9. The forfeiture amount alone was $244,165,000, which represented "in aggregate[,] the amount of the proceeds of the offense of conviction, whether obtained directly or indirectly as a result of said violations or is traceable to such property." Id. at 9.
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On November 3, 2020, the I.G. notified Petitioner of her intent to exclude Petitioner based on his conviction and invited him to provide, within 30 days, any information or documentation he wanted the I.G. to consider. I.G. Ex. 6. The record does not reflect whether Petitioner submitted a response.
In a letter dated December 31, 2020, the I.G. notified Petitioner that he was excluded from all federal health care programs for a minimum period of 10 years under section 1128(a)(1) of the Act based on his conviction of a criminal offense related to the delivery of an item or service under a state health care program. I.G. Ex. 1, at 1. The I.G. explained that she was extending the exclusion period beyond the minimum five years based on two aggravating factors: (i) financial loss to a government agency or program of $50,000 or more (stating the estimated loss Petitioner's conduct caused or was intended to cause was approximately $500,000); and (ii) the sentence imposed by the court included incarceration for six months. Id. at 1-2.
ALJ Proceedings and Decision
Petitioner requested an ALJ hearing. The ALJ entered an Order and Schedule for Filing Briefs and Documentary Evidence (Pre-Hearing Order), stating that the I.G. "has the burden of proof on all issues, except Petitioner's affirmative defenses and any mitigating factors." Pre-Hearing Order ¶ 4. The Pre-Hearing Order advised that "Petitioner has the burden of proof on affirmative defenses and mitigating factors." Id.; see also 42 C.F.R. § 1005.15(c). The burden of persuasion in exclusion cases is judged by a preponderance of the evidence. See 42 C.F.R. § 1005.15(d).
The I.G. submitted an informal brief along with six proposed exhibits. Petitioner submitted an informal brief in response and sixteen proposed exhibits, including written declarations of four witnesses. In his brief, Petitioner sought an in-person hearing to present "expert testimony" of his four witnesses. P. Informal Br. at 36-37. The I.G. submitted a reply brief with evidentiary objections to Petitioner's witnesses and several of Petitioner's exhibits. Petitioner also moved to subpoena an I.G. official to challenge aspects of the I.G.'s deliberative process in extending the length of Petitioner's exclusion.
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The ALJ denied Petitioner's subpoena request because "the I.G.'s decision-making processes are not relevant." ALJ Decision at 3.
The ALJ determined that the I.G. had a basis to exclude Petitioner under section 1128(a)(1) of the Act because Petitioner was convicted of a criminal offense (misdemeanor drug misbranding) directly related to the delivery of an item (Suboxone Film) under a state health care program (MassHealth). ALJ Decision at 2, 7, 11. The ALJ explained:
Petitioner did not prevent his company from presenting false and misleading information to MassHealth in order to persuade the Medicaid agency to expand its coverage of Suboxone Film. Presenting false information to a state Medicaid agency so that it pays for the drugs your company manufactures and sells is plainly "related to" the delivery of an item under a state health care program and falls squarely within the ambit of section 1128(a)(1).
Id. at 11 (emphasis in original). Accordingly, the ALJ concluded that the I.G. was required to exclude Petitioner for a minimum of five years. Id.
The ALJ further determined that the two aggravating factors cited by the I.G. supported extending Petitioner's exclusion period. Id. at 12-14. The ALJ noted that the I.G. may rely on forfeiture amounts to determine the amount of program loss. Id. at 13 (citing Farzana Begum, M.D., DAB No. 2726, at 16 n.8 (2016)). The ALJ found Petitioner's $500,000 forfeiture amount was ten times the threshold $50,000, which the ALJ viewed as a significant aggravating factor that merited a substantial extension of the mandatory 5-year exclusion period. Id. at 12-13 (explaining that Suboxone Film was not the "least costly alternative" likely to achieve the intended outcome and, therefore, MassHealth paid for drugs it should not have paid for). The ALJ also concluded that "a six-month
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sentence is not insignificant," further supporting an extension of the exclusion period. Id. at 14. The ALJ rejected Petitioner's argument that his crime caused no program loss and found the mitigating factor under section 1001.102(c)(1) inapplicable. Id. at 14-15. Thus, the ALJ concluded that the 10-year exclusion fell within a reasonable range based on the application of two aggravating factors and no mitigating factors. Id. at 15. This appeal followed.
Board Proceedings
Before the Board, Petitioner challenges both the basis for and length of his exclusion. Petitioner contends, among other things, that the I.G. did not have a lawful basis to mandatorily exclude him because (i) Petitioner's misbranding offense does not sufficiently relate to the delivery of an item or service under Medicaid; (ii) the I.G. has misinterpreted section 1128(a)(1) and never previously imposed a mandatory exclusion for a "bare misdemeanor misbranding offense"; and (iii) the exclusion raises serious constitutional due process and double jeopardy concerns. P. Br. at 12-36. In addition, Petitioner contends that the length of his exclusion is unreasonable because the I.G. never established that Petitioner caused or intended to cause a program loss of $50,000 or more and, according to Petitioner, six months of incarceration cannot justify a ten-year exclusion. Id. at 36-39.
The I.G. filed a response brief in opposition (I.G. Opp'n), arguing that the Board should affirm the ALJ Decision upholding the I.G.'s exclusion of Petitioner for ten years, denying Petitioner's subpoena request, denying his request for an in-person hearing, and excluding certain exhibits and testimony because the ALJ Decision is supported by substantial evidence and free of legal error. Petitioner requested and was permitted leave to file a reply brief (P. Reply).
Standard of Review
We review a disputed issue of fact as to whether the ALJ's decision is "supported by substantial evidence on the whole record." 42 C.F.R. § 1005.21(h). We review a disputed issue of law as to whether the ALJ's decision is "erroneous." Id. The term "substantial evidence" means "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Richardson v. Perales, 402 U.S. 389, 401 (1971) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).
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Analysis
I. The ALJ's determination that Petitioner was convicted of a criminal offense related to the delivery of an item or service under a state health care program is supported by substantial evidence and free of legal error.
A. The record evidence plainly establishes the requisite nexus between Petitioner's drug misbranding offense and the delivery of Suboxone Film under the MassHealth program.
Section 1128(a)(1) of the Act requires Petitioner's exclusion because he was convicted of a criminal offense (misdemeanor drug misbranding) related to the delivery of an item (Suboxone Film) under a state health care program (MassHealth). Act § 1128(a)(1). Petitioner does not dispute that he was convicted of a drug misbranding offense but contends that his offense was not "related to the delivery of an item or service" under a covered program within the meaning of section 1128(a)(1). "The Board has repeatedly held that the phrase ‘related to' within the context of section 1128(a)(1) requires only that a common-sense nexus exists between the offense and the delivery of a health care item or service under the state healthcare program." Summit S. Shah, M.D., DAB No. 2836, at 6 (2017) (citing James O. Boothe, DAB No. 2530, at 3 (2013); James Randall Benham, DAB No. 2042, at 5 (2006)). When determining whether the requisite nexus exists, an ALJ may consider "evidence as to the nature of an offense," including the "facts upon which the conviction was predicated." Shah at 7 (internal quotation marks and citations omitted); see also Lyle Kai, R.Ph., DAB No. 1979, at 5 (2005) ("[I]t is not the labeling of the offense . . . which determines whether the offense is program-related.") (internal quotation marks and citations omitted), aff'd, Kai v. Leavitt, No. 05-00514 (D. Haw. July 17, 2006). "[T]he test for whether a common-sense nexus exists is ‘based on all relevant facts' and ‘not merely a narrow examination of the language within the four corners of the final judgment and order of the criminal trial court.'" Shah at 8 (citing Dewayne Franzen, DAB No. 1165, at 7 (1990)).
Here, the ALJ concluded that Petitioner's criminal offense was directly related to the delivery of Suboxone Film under the MassHealth program. ALJ Decision at 11 ("Presenting false information to a state Medicaid agency so that it pays for the drugs your company manufactures and sells is plainly ‘related to' the delivery of an item or service under a state health care program and falls squarely within the ambit of section 1128(a)(1)."). In reaching this conclusion, the ALJ appropriately considered the nature of Petitioner's criminal offense and the facts upon which his conviction was predicated, including the facts set forth in the Information (I.G. Ex. 2) and testimony provided at Petitioner's sentencing hearing (I.G. Ex. 5). We agree with the ALJ that "[t]his is not a close case." ALJ Decision at 11. As explained below, the ALJ's determination that Petitioner was convicted of a criminal offense related to the delivery of an item or service
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under a state health care program, requiring his exclusion under section 1128(a)(1) of the Act, is legally correct and supported by substantial evidence.
In 2010, Suboxone Film was not a preferred drug under the MassHealth program because it was not the least costly alternative available and, therefore, faced restrictions on approval for reimbursement. I.G. Ex. 2, at 5 (¶ 20); I.G. Ex. 5, at 14-15. Because MassHealth was the largest Medicaid program in the country by volume of addiction-treatment-drug business, Petitioner and Indivior "placed high importance" on expanding coverage of Suboxone Film under the MassHealth program. I.G. Ex. 2, at 5 (¶ 20).
There is no serious question that Indivior provided false and misleading data about the safety of Suboxone Film to MassHealth to persuade it to change its policy and make Suboxone Film a preferred drug. In his sentencing memorandum, Petitioner admitted "[a] subordinate—unbeknownst to [him] at the time—provided incorrect data to a state health agency [MassHealth] in order to secure formulary coverage for Suboxone Film." P. Ex. 2, at 5. Petitioner recognized this "misconduct," which amounts to a federal crime, occurred "under his watch" and accepted responsibility "for failing to detect or prevent it." Id. In pleading guilty, Petitioner conceded that, "as a responsible Indivior executive, [he] failed to prevent and promptly correct the distribution of the false and misleading unintended pediatric exposure data and marketing claims to MassHealth." I.G. Ex. 2, at 9 (¶ 32). The record evidence further supports the ALJ's finding that MassHealth did not change its policy regarding Suboxone Film and expand access to the drug to its members until MassHealth was "misled by Indivior's falsified data." ALJ Decision at 13; I.G. Ex. 2, at 7-9 (¶¶ 27-30); see also I.G. Ex. 5, at 36 (explaining why Dr. Jeffrey considered state-specific data more pertinent than national data), 38 (explaining that the pediatric exposure data was the "pivot point" on which MassHealth changed its policy).
Based on his failure to prevent and promptly correct the dissemination of false and misleading data about Suboxone Film to MassHealth, Petitioner pled guilty to introducing misbranded drugs into interstate commerce in violation of federal law. I.G. Ex. 2, at 10; I.G. Ex. 3, at 1-2. In pleading guilty, Petitioner admitted that as "a responsible Indivior executive, [he] caused the introduction and delivery for introduction into interstate commerce of Suboxone Film, a drug that was misbranded in that the drug's
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labeling was false and misleading." I.G. Ex. 2, at 10 (¶ 33).
The ALJ's conclusion is consistent with prior Board decisions that have evaluated the requisite nexus between an excluded individual's criminal offense and the delivery of items or services under a covered program. For example, in James O. Boothe, DAB No. 2530 (2013), the chief operating officer of a managed care organization (MCO) was convicted of falsely representing to the administrator of a Medicaid program that his company complied with marketing guidelines that prohibited the MCO from offering certain financial incentives to its marketing representatives. See Boothe at 1-2, 4. The executive's misrepresentation allowed the MCO to continue to participate in the Medicaid program, despite noncompliance with marketing guidelines that "could have jeopardized" its participation in the program. Id. at 3-4. The Board noted the executive's offense "helped ensure" that the MCO "continued delivering items and services to Medicaid beneficiaries and receiving payment from Medicaid for those items and services." Id. at 4. The Board found those facts "sufficient to establish the requisite nexus" under section 1128(a)(1) between the executive's criminal offense and the delivery of an item or service under a state health care program. Id.
Similarly, Petitioner's failure to prevent and promptly correct Indivior's dissemination of false and misleading data to MassHealth about Suboxone Film led MassHealth to expand access to Suboxone Film to its members (despite the fact that it was not the least costly alternative available) and thereby helped ensure that (i) Suboxone Film would be delivered to Medicaid beneficiaries under the MassHealth program, and (ii) Indivior would receive payment from MassHealth for Suboxone Film. These facts are more than sufficient to establish the requisite common-sense nexus between Petitioner's criminal
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offense and the delivery of an item under a state health care program. See Boothe at 4; see also Kai, DAB No. 1979, at 10-11 (holding that conviction involving the sale of mislabeled pharmaceuticals, some of which were billed to Medicaid, was sufficient to establish the requisite "nexus or common sense connection" between petitioner's offense and the delivery of an item under a covered program); Dewayne Franzen, DAB No. 1165, at 8-9 (1990) (holding that conviction based on mislabeling of generic drugs dispensed to Medicaid recipients "related to" delivery of items under Medicaid as the program "incurred expenses in excess of what it should have").
B. Section 1128(a)(1) of the Act unambiguously requires Petitioner's exclusion.
Petitioner argues that his "strict liability misbranding misdemeanor offense" does not "relate to the delivery of an item or service" within the meaning of section 1128(a)(1) because, according to Petitioner, the statute requires a "close nexus" between the conviction and the delivery of health care items or services to patients. P. Br. at 12; see also P. Reply at 7. Petitioner contends that the phrase "relating to" (or "in connection with") is "essentially indeterminat[e]" and requires application of a "limiting principle consistent with the structure of the statute and its other provisions," and the underlying objectives of the statute. P. Br. at 12-13 (citing Maracich v. Spears, 570 U.S. 48, 59-60 (2013)). According to Petitioner, "[a]s courts have recognized, the phrase ‘related to the delivery of an item or service' establishes ‘Congress's intent that only a particularized set of felonies should subject a medical provider to exclusion' and limits the category of other serious offenses, such as patient abuse, that qualify for exclusion under [section 1128(a)]." P. Br. at 13 (emphasis added) (citing Kabins v. Sebelius, No. 11-1742, 2012 WL 4498295, at *3 (D. Nev. Sept. 28, 2012)).
Petitioner's argument has no merit. As an initial matter, the Supreme Court cases Petitioner cites address principles of statutory construction generally, not the Secretary's interpretation of the exclusion statutes specifically.
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meaning of [which] is a broad one," and one that is not subject to a "crabbed and formalistic interpretation") (internal quotation marks omitted).
Petitioner has identified no case law supporting his interpretation of the phrase "related to the delivery of an item or service" and mischaracterizes the Kabins decision, which involved an exclusion under section 1128(a)(3). Section 1128(a)(3) applies to certain felony convictions "relating to" health care fraud. Act § 1128(a)(3). The language Petitioner quoted from Kabins pertained to the district court's interpretation of the phrase "in connection with the delivery of health care," which is a phrase that does not appear in section 1128(a)(1) or 1128(a)(3). See Kabins, 2012 WL 4498295, at *3. Contrary to Petitioner's argument, Kabins did not interpret the phrase "related to the delivery of an item or service" under section 1128(a)(1) or suggest that any categorical limitations apply under section 1128(a)(1) different from the plain language of the statute. Cf. Hamdan at 6-7 (distinguishing Kabins in the context of a section 1128(a)(1) exclusion case).
Petitioner's contention that section 1128(a)(1) applies only to a "particularized set of felonies" has no basis in the language of the statute, and the Board has long held that it will not "read into the exclusion provisions requirements that are not contained in the literal language of the law." Kai at 10. Indeed, the argument that section 1128(a)(1) only mandates exclusions for certain felonies has been repeatedly rejected by the Board. See, e.g., Craig R. Wilder, M.D., DAB No. 2416, at 6-7 (2011) ("Nothing in the language of section 1128(a)(1) requires Petitioner's conviction to be for a felony rather than a misdemeanor . . . ."); Lorna Fay Gardner, DAB No. 1733, at 5-6 (2000).
Petitioner similarly asserts, without citing any authority, that use of the word "delivery" in section 1128(a)(1) signals Congress's intent to limit mandatory exclusions to individuals whose criminal offenses "relate directly and specifically to delivering items or services to patients that pose significant harm." P. Br. at 13. Again, Petitioner is attempting to read into section 1128(a)(1) requirements and limitations that are not there. Neither the plain language of the statute nor the legislative history supports Petitioner's interpretation of section 1128(a)(1). "Congress indeed ‘spoke' by providing for the exclusion of ‘any individual or entity' with no provision that the offense pertain to that individual's ‘delivery of an item or service.'" Napoleon S. Maminta, M.D., DAB No. 1135, at 8 (1990) (concluding that, under the plain language of section 1128(a)(1), "mandatory exclusions are not limited to individuals convicted of a criminal offense
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involving their own delivery of an item or service in the covered programs") (underlining replaced by italics). For one thing, Petitioner's interpretation "would undercut the effectiveness of the provision by allowing untrustworthy individuals to escape [the statute's] reach simply by acting through intermediaries or simply because another entity, such as a supplier or provider, actually delivers the item under Medicare." Timothy Wayne Hensley, DAB No. 2044, at 9 (2006). Thus, the Board has held that section 1128(a)(1) applies even if the offense does not involve the excluded individual's own delivery of an item or service. See Maminta at 6-7; see also Kimbrell Colburn, DAB No. 2683, at 8 (2016) ("Section 1128(a)(1) does not require an offense in which the excluded person played a decision-making or other direct or influential role in the delivery of medical items or services to program beneficiaries."); Boothe at 4 ("An offense may be ‘related to' the delivery of an item or service even if the [excluded individual's] offense did not directly involve the delivery of items or services."); Jack W. Greene, DAB No. 1078, at 6-7 (1989) (rejecting argument that the excluded individual's criminal offense must "pertain specifically to an aspect of delivery"), aff'd, 731 F. Supp. 835 (E.D. Tenn. 1990), 731 F. Supp. 838 (E.D. Tenn. 1990).
Still further, Petitioner's contention that section 1128(a)(1) covers only offenses that directly and specifically relate to the delivery of items or services that pose significant harm to patients (P. Br. 12) would "largely negate any purpose for section 1128(a)(2)." Greene at 9. As the Board recognized in Greene, "[s]ection 1128(a)(2) . . . provides separate authority for a five-year mandatory exclusion for convictions ‘relating to neglect or abuse of patients in connection with the delivery of a health care item or service." Id. Thus, "[t]his provision covers the very examples" of what Petitioner contends "would be covered by section 1128(a)(1)." Greene at 9; see also Carolyn Westin, DAB No. 1381 (1993), aff'd, Westin v. Shalala, 845 F. Supp. 1446 (D. Kan. 1994). For this additional reason, Petitioner's interpretation of section 1128(a)(1) is incompatible with the statutory text, structure, and objectives.
The legislative history further demonstrates Congress's intent to expand the exclusion provisions to require mandatory exclusion even when the convicted individual did not directly participate in the delivery of an item or service under a covered program. See Travers v. Sullivan, 791 F. Supp. 1471, 1481 (E.D. Wash. 1992) (explaining that Congress intended to broaden the I.G.'s exclusionary authority to individuals who do not provide medical items or services directly to beneficiaries), aff'd sub nom., Travers v. Shalala, 20 F.3d 993 (9th Cir. 1994). Prior to 1987, section 1128(a)(1) authorized a mandatory exclusion only when "the Secretary determines that a physician or other individual has been convicted . . . of a criminal offense related to such individual's participation in the delivery of medical care or services . . . ." Omnibus Reconciliation Act of 1980, Pub. L. No. 96-499, § 913 (1980) (emphasis added). Pursuant to the 1987 amendment, however, Congress "substituted an entirely new section 1128 into the Act," which replaced the wording above to mandate exclusion under section 1128(a)(1) whenever "[a]ny individual or entity" had been "convicted of a criminal offense related
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to the delivery of an item or service" under a covered program. See Maminta at 11 (emphasis altered); Medicare and Medicaid Patient and Program Protection Act of 1987, Pub. L. No. 100-93 (1987). The amended statutory language thus eliminated the requirement that the criminal offense relate to the convicted individual's "participation" in delivering "medical care or services." Accordingly, section 1128(a)(1) "now mandates exclusion when an individual is convicted of a criminal offense ‘related to the delivery of an item or service' under the Medicare and Medicaid programs, not just those individuals who participated in the delivery of such services." Travers, 791 F. Supp. at 1481.
In a footnote, Petitioner states that the Senate Report accompanying the 1987 Amendment specifically identifies three kinds of program-related offenses warranting mandatory exclusion, noting that "none of [these offenses] remotely resemble the facts of this case." P. Br. at 17, n.14. Petitioner's argument misses the mark. The Report states that "[u]nder current law," the I.G. can exclude practitioners "for a number of reasons," referring to a narrow subset of program-related offenses. The Report's mention of "current law" refers to section 1128(a) before the 1987 amendment. As we discussed above, Petitioner was excluded under the amended language of section 1128(a)(1). Accordingly, the subset of offenses listed in the Senate Report is not relevant to our review of Petitioner's exclusion.
Petitioner argues that the legislative history shows "the 1987 amendments were designed to ‘protect program beneficiaries from unscrupulous or unfit physicians, hospitals, and other medical care providers,'" therefore, demonstrating a legislative intent to "reach" only certain health care professionals. P. Br. at 17, n.14. We reject this argument as well. Apart from eliminating language requiring "participation" in the delivery of "medical care or services," the 1987 amendment also changed the words "physician or other individual" to "[a]ny individual or entity," clarifying that section 1128(a)(1) was not intended to "reach" only physicians or certain "health care professionals." As the Board previously determined, our review of the legislative history relating to the 1987 amendments "leads us to conclude that Congress intended this provision to be applied broadly." Maminta at 8.
Petitioner further asserts, based on the "structure" of the exclusion statute, that to construe section 1128(a)(1) to require his exclusion would render other parts of section 1128(a) "superfluous and unnecessary." P. Br. 14-16. We disagree. Petitioner's argument wholly ignores the focus on program-related offenses under section 1128(a)(1) that distinguishes it from other parts of the Act addressing patient abuse, health care
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fraud, and the unlawful manufacture, distribution, prescription, or dispensing of controlled substances. Act § 1128(a)(1)-(4). By way of example, Petitioner argues that the I.G's "expansive reading" of section 1128(a)(1) "would bulldoze the limitations Congress chose to impose" in section 1128(a)(4), "which mandates exclusion for a criminal felony offense ‘relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.'" P. Br. at 15-16 (emphasis in original). But no limitations are being "bulldozed" by applying the plain language of section 1128(a)(1). Petitioner is simply ignoring the explicit differences between sections 1128(a)(1) and (a)(4). Section 1128(a)(1) is broader than section (a)(4) in the sense that it is not limited to felony offenses, but narrower than section (a)(4) because the offense must relate to the delivery of an item or service under a covered program.
Petitioner further argues, based on the "objectives" of the exclusion statute, that to construe section 1128(a)(1) to require his exclusion would "sweep into" section 1128(a)(1) categories of misdemeanor criminal offenses that fall under the permissive exclusion provisions of section 1128(b)(1). P. Br. 16-17. The Board has previously rejected this argument and we do so again here. See Colburn at 9 ("In addition, federal courts have ‘repeatedly held' that, when a criminal offense meets the criteria for a mandatory exclusion, the I.G. must impose a mandatory exclusion ‘even if an individual's conduct also falls within the scope of a permissive exclusion provision.'" (citing cases)). Section 1128(b)(1) applies to criminal offenses that are not related to the delivery of items or services under covered programs, or to crimes "other than those specifically described in subsection (a)(1) of [section 1128]." Act § 1128(b)(1); see also Gardner, DAB No. 1733, at 5-6 (rejecting argument that Congress intended misdemeanor offenses would be subject to permissive, rather than mandatory exclusion provisions) ("The legislative history of these provisions demonstrates that Congress intentionally drew a distinction between program-related and nonprogram-related offenses."); Greene, DAB No. 1078, at 9 (explaining that the permissive exclusion provisions under section 1128(b)(1) "focus on different circumstances from those raised here, such as . . . where the conviction does not relate to the Medicare program or a State health care program") (emphasis added); Parrino v. Price, 869 F.3d 392, 400 (6th Cir. 2017) (rejecting argument that upholding mandatory exclusion for misdemeanor drug misbranding offense under section 1128(a)(1) would render permissive exclusion provisions superfluous). Indeed, "the Act expressly provides for mandatory five-year minimum periods of exclusion whenever an individual has been convicted ‘of a criminal offense related to the delivery of an item or service' under specific programs, including Medicaid, without any requirement that the offense be a felony." Tanya A. Chuoke, R.N., DAB No. 1721, at 13 (2000) (underlining replaced by italics). Once a conviction is determined to be within the scope of section 1128(a)(1), the I.G. is required by the Act to impose a mandatory exclusion. See Colburn at 9. As discussed above, the ALJ correctly
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concluded that Petitioner's misdemeanor criminal offense was a program-related crime triggering mandatory exclusion under section 1128(a)(1).
C. Proof of criminal intent, personal knowledge of criminal conduct, and program loss are not requirements of section 1128(a)(1).
Petitioner argues that he "had no bad intent, had no knowledge of and did not approve the central misstatement by a subordinate in this case (and in fact corrected it when learning about it years later) . . . ." P. Reply at 1. According to Petitioner, the I.G. had no lawful basis to exclude him under section 1128(a)(1). Id. at 7; P. Br. at 1-2. Again, Petitioner is attempting to read into section 1128(a)(1) requirements and limitations that are not there. "[S]ection 1128(a)(1) . . . does not require any particular mental state." Shanti Jain, M.D., DAB No. 1398, at 7 (1993) (underlining replaced by italics); see also Franzen, DAB No. 1165, at 8 ("Section 1128(a)(1) does not require that the individual must intend to commit a criminal offense . . . for an exclusion to be proper.") (underlining replaced by italics). In addition, Petitioner's personal knowledge of the facts underlying his conviction and the notion that he did not approve the criminal conduct are irrelevant. See Goldenheim, DAB No. 2268, at 13-17; Robert C. Greenwood, DAB No. 1423, at 5 (1993). "[T]he exclusion statute does not require any knowledge on the part of a petitioner of the relationship between the offense and the program but only that the factual relationship between the offense and the program exist." Kai, DAB No. 1979, at 7 (citing Greenwood at 5). Petitioner's "specific role" in the offense and "the degree of his responsibility" are both irrelevant. Id. As explained in Kai, "[a]n exclusion under section 1128(a)(1) is a derivative exclusion; it is based on the fact of a criminal conviction." Id. at 8.
Petitioner further contends that his offense "did not cause any financial losses to the government" and, therefore, "his conviction does not qualify for mandatory exclusion."
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P. Reply at 1, 7-8. Petitioner is both legally and factually wrong. As a legal matter, program loss is not a required element of section 1128(a)(1); it may be an aggravating factor that the I.G. considers to lengthen the period of exclusion.
Additionally, Petitioner maintains that he "poses no prospective integrity risk to federal health care programs," suggesting that his exclusion does not serve the remedial purposes of the statute. P. Reply at 1; see also P. Br. at 28. His argument is based on the Court's "positive" statements about him at the time of sentencing and his lack of criminal intent. P. Reply at 1; see also I.G. Ex. 5, at 114-15 (describing him as "a good person" who "is not going to commit anymore crimes ever again"). But we are not reviewing whether Petitioner is a "good person" and the I.G. need not prove that Petitioner is likely to commit more crimes. As the Board has explained many times before:
It is the fact of the conviction which causes the exclusion. The law does not permit the Secretary to look behind the conviction. Instead, Congress intended the Secretary to exclude potentially untrustworthy individuals or entities based on criminal convictions. This provides protection for federally funded programs and their beneficiaries and recipients, without expending program resources to duplicate existing criminal processes.
Henry L. Gupton, DAB No. 2058, at 13 (2007) (quoting Westin at 9-10 (quoting Edmonson at 4)). Moreover, "[t]he definition of ‘trustworthy' includes ‘worthy of confidence' and ‘reliable.'" Goldenheim, DAB No. 2268, at 18 ("[T]he concept of untrustworthiness is not limited to the propensity to engage in fraudulent, deceitful conduct . . . ."). As the ALJ noted, "[t]he goals of exclusion include protecting beneficiaries, maintaining program integrity, and ‘fostering public confidence in the program.'" ALJ Decision at 15 (citing Joann Fletcher Cash, DAB No. 1725 (2000) (citing Greene v. Sullivan, 731 F. Supp. 838, 840 (E.D. Tenn. 1990))). Here, the ALJ reasonably concluded (as the I.G. did) that Petitioner is not reliable or worthy of
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confidence and that his "actions (or inactions)" pose a serious threat to program integrity given his failure to prevent and promptly correct the misstatements directed to MassHealth. ALJ Decision at 15.
D. The ALJ appropriately recognized that Petitioner's program-related offense distinguishes his case from other misdemeanor misbranding offenses.
Before the ALJ, Petitioner argued that the I.G. had never previously interpreted section 1128(a)(1) to exclude individuals convicted of misdemeanor misbranding violations under the FDCA and had instead proceeded under the permissive exclusion provisions of section 1128(b). Request for Hearing at 21-22. In support of his argument, Petitioner listed 22 examples of guilty pleas in misbranding cases that that did not result in a mandatory exclusion. Id. at 22-24. According to Petitioner, this alleged prior practice of the I.G. established a "precedent." Id. The I.G. refuted Petitioner's assertion that his mandatory exclusion is "unprecedented" by identifying several cases where the I.G. had imposed mandatory exclusions for FDCA misbranding offenses. I.G. Informal Br. at 11 (citing Eduardo Miranda, M.D., DAB No. 2755 (2016); Mohamed Basel Aswad, M.D., DAB CR4637 (2016), aff'd, DAB No. 2741 (2016), aff'd, Aswad v. Hargan, 2018 WL 704370 (D. N.M. Feb. 2, 2018); Leo Parrino, DAB No. 2587, aff'd, 869 F.3d 392 (6th Cir. 2020); Christopher Keegan, DAB CR3242 (2014); Vincent Koh, DAB CR5262 (2019)). Petitioner then changed direction, arguing that those cases are distinguishable because they involved a "much closer connection" between the misbranding offense and the actual delivery of health care items or services. P. Informal Br. at 14.
As the Board has previously held, however, the I.G. need not establish Petitioner's personal involvement in the delivery of items to Medicaid beneficiaries to establish a common-sense nexus under section 1128(a)(1). See, e.g., Boothe at 4 (holding that offense may be "related to" the delivery of an item or service for purposes of 1128(a)(1) "even if the offense did not directly involve the delivery of items or services"); Kai at 11 ("[I]t is the scheme, and the fact that Petitioner's conviction was based on his participating in that scheme, that is material, not Petitioner's particular role in the scheme."). The ALJ rejected Petitioner's argument based on "the questionable relevance of the IG's actions in other cases" and because "those cases did not involve an entity's direct misrepresentations to a state Medicaid program, so that the program would pay for its drugs." ALJ Decision at 11.
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Before the Board, Petitioner again asserted that the I.G. "has never before imposed mandatory exclusion with respect to any pharmaceutical manufacturer charged with misdemeanor misbranding under the FDCA." P. Br. at 18 (emphasis original). He directs the Board's attention to the 22 "cases" he cited before the ALJ, reiterating that the I.G.'s longstanding "precedent" is to impose only permissive exclusions against individuals convicted of misdemeanor misbranding offenses. Id. at 18. The I.G. reiterated her position that she had in fact imposed mandatory exclusions against individuals convicted of misdemeanor misbranding offenses, citing the same examples she had cited before the ALJ. I.G. Opp'n at 11-12. Petitioner again changed direction, arguing that the cases cited by the I.G. are distinguishable because they involved a "meaningful connection and close nexus" between the underlying offense and financial loss to a federal health care program. P. Reply at 7-8. We reject Petitioner's attempt to formulate a new legal standard for section 1128(a)(1) contrary to Board precedent and will not read into the plain language of the statute requirements and limitations that are not there.
Indeed, nearly every element of Petitioner's argument is contradicted by Board precedent. First, I.G. exclusion determinations are not "precedent"; even individual ALJ decisions reviewing I.G. exclusions do not create any binding legal precedent. Cf. Fuentes, DAB No. 2988, at 15 ("Individual ALJ decisions are neither precedential nor binding on the Board or other ALJs . . . .").
Second, the I.G.'s enforcement actions against other individuals have no bearing on whether the I.G. had a valid basis to exclude Petitioner in this case. See Benny R. Bailey, DAB No. 2935, at 10 (2019) ("The ALJ's review was limited to the exclusion action before her, not to determining the I.G.'s reasons for not applying mandatory authority in a different case."). The ALJ is bound to apply the exclusion statute and regulations regardless of what may have transpired in other matters. See id.
Third, Petitioner's narrow focus on the label of the offense (i.e., misdemeanor misbranding), rather than the underlying facts of his case, contradicts Board precedent. The Board has repeatedly held that the basis for an exclusion stems from the nature and circumstances of the underlying conviction, not the label or even the elements of the crime. See, e.g., Berton Siegel, D.O., DAB No. 1467, at 7 (1994) ("[I]t is not the labeling of the offense under the state statute which determines whether the offense is program-related." (underlining replaced by italics)); see also Funmilola Mary Taiwo, DAB No. 2995, at 8 (2020) (collecting cases).
Fourth, Petitioner's attempt to distinguish the mandatory exclusion cases cited by the I.G. because they involved health care providers or a provider that knowingly defrauded the government or caused program loss is also without merit. These facts are not relevant to the issue of whether the I.G. had a lawful basis to exclude under section 1128(a)(1). See supra at 15-17, 19-20.
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Fifth, the vast majority of the 22 exclusion "cases" Petitioner references were not challenged and, therefore, were not reviewed by an ALJ, much less the Board. They are not "cases" at all, and we are unable to discern the underlying facts or basis for the exclusions in unreviewed matters. Petitioner's bare assertion that the misbranding offenses in those permissive exclusions had "some connection to a federal health care program" (P. Br. 18), even if true, is not enough for mandatory exclusion under 1128(a)(1) because "some connection" is not the standard applied by the Secretary. See supra at 11. In the handful of the 22 permissive exclusions that were challenged and reviewed by the Board and/or an ALJ,
E. The I.G. has not relied on an "impermissible and unreasonable interpretation" of the exclusion statute.
Petitioner claims that the I.G. "has taken the position that whenever an individual is convicted of an offense and that offense has some conceivable relation to a federal health care program," section 1128(a)(1) requires exclusion. P. Br. at 23 (emphasis added); P. Reply at 2 (arguing that the I.G. "reads the mandatory exclusion provision so broadly [that] ‘any connection' to a health care program will do").
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Petitioner's further contention that Congress allegedly "ratified" the I.G.'s "former interpretation" of section 1128(a) because Congress has not amended section 1128(a)(1) in more than twenty years has no merit. P. Br. at 19-20. First, as explained above, the purported "former interpretation" that Petitioner attributes to the I.G. is unfounded and the I.G. is not applying a "new" interpretation here. Second, the I.G. has never argued in this case that a misdemeanor misbranding offense alone mandates Petitioner's exclusion. I.G. Opp'n at 15 ("The I.G. acted appropriately when concluding that the facts and circumstances surrounding Petitioner's misdemeanor conviction for misbranding drugs established a basis for mandatory exclusion.") (emphasis added); I.G. Informal Br. at 8-9. Third, since the last amendment, the I.G. has imposed mandatory exclusions where an individual was convicted of misdemeanor misbranding. I.G. Opp'n at 11-12 (collecting cases). Fourth, since the last amendment, multiple Board decisions and federal court cases have upheld the Secretary's "nexus" or "common sense connection" analysis (as applied in this case) regarding the meaning of "related to" under the exclusion statute. See Hamdan at 6. None of those cases have prompted a statutory amendment.
The I.G. has not adopted a new interpretation of section 1128(a)(1) and Petitioner's further argument that he was not provided "public notice . . . nor a reasoned explanation" for this "new" interpretation is without merit. See P. Br. at 4; P. Reply at 4. Petitioner's mandatory exclusion is authorized by the plain language of section 1128(a)(1) and, as the Board has previously concluded, "the applicable standards were indeed ‘ascertainable' based on the statute alone . . . ." Greene, DAB No. 1078, at 14.
F. Petitioner's other arguments have no merit.
Petitioner's reliance on Catherine L. Dodd, R.N., DAB No. 1345 (1992), is misplaced. P. Br. at 31 (arguing that section 1128(a)(1) requires an evidentiary link between the criminal offense and actual delivery of items or services to specific individuals). In Dodd, the ALJ found the requisite nexus under section 1128(a)(1) was not established where petitioner pled guilty to making false entries in patient records, but the record evidence did not establish whether any of the patients referenced in the guilty plea were beneficiaries or recipients of Medicare or Medicaid. See id. at 9-10. The Board affirmed the ALJ's decision but noted that its holding does not mean it is always necessary to link an offense to specific program beneficiaries. Id. at 10. As the Board explained, the link to individuals in Dodd was necessary because the conviction on which the exclusion was based was the falsification of certain patient records. Id. Here, Petitioner's conviction was not tied to any specific individuals, but arose from misrepresentations made to the MassHealth program that led MassHealth to expand access to the misbranded drug to its members.
Petitioner further complains that the "ALJ failed to address [the I.G.'s] reliance on insufficient and disputed facts" and instead "took it upon herself" to rely on "additional supposed ‘facts,'" such as facts contained in Petitioner's criminal information. P. Br.
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at 32-33. He maintains that "[t]he ALJ has no authority to rummage through documents and identify her own facts to create post hoc rationalizations" to support the I.G.'s exclusion determination. Id. at 33 (emphasis original). Petitioner's argument is baseless. There was no "post hoc rationalization" to support the I.G.'s exclusion decision. The rationale for Petitioner's exclusion has never changed. Petitioner was excluded under section 1128(a)(1) because he was convicted of a criminal offense related to the delivery of an item or service under the MassHealth program. I.G. Ex. 1. Moreover, the ALJ properly conducted a de novo review "as to the evidence and factual determinations" relevant to the scope of the ALJ's review. See Fuentes, DAB No. 2988, at 10; see also Cash, DAB No. 1725, at 17 n.9. The ALJ's proper role is to consider all the evidence in the record, regardless of what evidence the I.G. initially considered or relied on. See Okonuren, DAB No. 1319, at 14. Petitioner complains that the ALJ Decision draws on the uncontested facts contained in Petitioner's criminal information, but the Information was a part of the record. I.G. Ex. 2; see also ALJ Decision at 5 (admitting the I.G.'s exhibits without objection). The ALJ did not err in citing to or relying on the Information (I.G. Ex. 2) or any of the exhibits in the record.
Petitioner also complains that the ALJ found Petitioner "conceded" he is subject to mandatory exclusion. P. Br. at 35-36. Petitioner quotes from paragraph six of his plea agreement but omits the explicit reference to section 1128(a)(1). Id. at 35. The relevant portion of the plea agreement states: "I agree and acknowledge I may be excluded pursuant to 42 U.S.C. § 1320a-7(a)(1) [section 1128(a)(1) of the Act] from participation in Medicare, Medicaid, and all other Federal health care programs as defined in 42 U.S.C. § 1320a-7b(f)." I.G. Ex. 3, at 6 (¶ 6) (emphasis on the omitted portion). We understand this language serves as notice, not as an express waiver of Petitioner's right to challenge his exclusion. We do not read the ALJ Decision as finding that Petitioner waived his right to challenge the basis for his exclusion as Petitioner suggests. Instead, it appears the ALJ was responding to Petitioner's assertion that he had no notice that he could be subject to exclusion under section 1128(a)(1) when he entered his guilty plea. Petitioner continues to make this same argument before the Board (P. Br. 21, 25), but the argument has no merit, as the ALJ concluded based on the explicit acknowledgement in Petitioner's plea agreement. ALJ Decision at 6.
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II. The ALJ's determination that a ten-year exclusion period is reasonable is supported by substantial evidence and free of legal error.
In analyzing the duration of an exclusion period longer than the five-year statutory minimum, the ALJ's role is to "‘review[] the length of an exclusion de novo to determine whether it falls within a reasonable range, given the aggravating and mitigating factors and the circumstances underlying them.'" Rosa Velia Serrano, DAB No. 2923, at 8 (2019) (quoting Sushil Aniruddh Sheth, M.D., DAB No. 2491, at 5 (2012)). "Such an evaluation ‘does not rest on the specific number of aggravating or mitigating factors or any rigid formula for weighing those factors, but rather on a case-specific determination of the weight to be accorded each factor based on a qualitative assessment of the circumstances surrounding the factors in that case.'" Kimberly Jones, DAB No. 3033, at 7 (2021) (quoting Sheth at 5). "An ALJ may not substitute his or her judgment for that of the I.G. or determine a ‘better' exclusion period." Id. at 8 (quoting Sheth at 5). "Instead, the ALJ's role is limited to considering whether the period of exclusion imposed by the I.G. was within a reasonable range, based on demonstrated criteria." Craig Richard Wilder, M.D., DAB No. 2416, at 8 (2011); see also 57 Fed. Reg. 3298, 3321 (Jan. 29, 1992) (deference to I.G.'s "broad discretion" in setting the length of an exclusion "is appropriate, given the [I.G.'s] vast experience in implementing exclusions").
The Board recently and succinctly summarized the ALJ's role in conducting this de novo review as follows:
[T]he ALJ is to review the record before [her] to determine what the evidence establishes as to the "demonstrated criteria," i.e., the aggravating and mitigating factors, rather than review the record as it was when the I.G. issued the exclusion. The factual determination is thus de novo, in that the appellant has the opportunity to show that the facts are not as they appeared before the I.G. Moreover, the ALJ does not conduct an appellate-type inquiry into how the I.G. arrived at the particular length but determines whether the evidence presented before the ALJ by the I.G. and Appellant shows that that length is not unreasonable.
The ALJ's de novo review authority is not thus an unconstrained mandate to select any period of exclusion that may appear reasonable to the ALJ. The regulation [42 C.F.R. § 1001.2007(a)] provides constraints, as reflected in the preamble language quoted above, that recognize the delegated discretion of the I.G. in the arena of exclusions. The I.G. comes to the initial selection of an exclusion period with extensive experience reflecting a much wider base of excluded individual and entities and of diverse facts and circumstances than those that could ever come before an ALJ (or the Board) in the appeals process. Furthermore, the I.G. is charged with protecting the integrity of federal health care programs, and the exclusion
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mechanism is a remedial tool to this end rather than a punitive action. . . . Thus, the assessment of what period is necessary to achieve that purpose is appropriately assigned to the I.G. in the first instance, with the ALJ review focused on whether the facts as proven show the resulting period to be not unreasonable.
Fuentes, DAB No. 2988, at 9 (citations omitted), aff'd, 2021 WL 4341115, at *9 (W.D. Va. Sept. 23, 2021).
Our review of the ALJ Decision is likewise governed by the same regulatory standards. We do not review the I.G.'s decision-making process in setting the length of an exclusion. See Fuentes, DAB No. 2988, at 11. Rather, "[w]e review whether the outcome of that process (the exclusion period set by the I.G. and affirmed by the ALJ) is unreasonable in light of the facts relating to the factors that the regulation specifies." Id.
Here, the ALJ, in accordance with governing regulations and Board precedent, evaluated the reasonableness of Petitioner's 10-year exclusion by reviewing the record before her to determine what the evidence established with regard to the aggravating factors identified by the I.G. and any mitigating factors relied on by Petitioner. ALJ Decision at 12-15. The ALJ found the record evidence established the presence of two aggravating factors that warrant lengthening the mandatory period of exclusion and no mitigating factors. Id.
Petitioner challenges the ALJ's findings with respect to the two aggravating factors, arguing that the 10-year exclusion period is unreasonable and arbitrary and capricious. P. Br. at 36-39. In reviewing the ALJ's findings, the Board does not apply the "arbitrary and capricious" standard under the Administrative Procedure Act (APA). See Bailey, DAB No. 2935, at 10 ("Nothing in the APA . . . applies the ‘arbitrary and capricious standard' to Board review of an ALJ decision on behalf of the Secretary . . . ." (citations
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omitted)). Rather, the Board's role in an exclusion case is limited to reviewing whether the ALJ's decision on an issue of fact is "supported by substantial evidence on the whole record," and whether the ALJ's decision on an issue of law is "erroneous." 42 C.F.R. § 1005.21(h). As explained below, we affirm the ALJ's conclusion that the ten-year exclusion period falls within a reasonable range because it is supported by substantial evidence and free of legal error.
A. The program loss aggravating factor was established by substantial evidence and weighs heavily in favor of extending the mandatory period of exclusion.
Regarding the program loss aggravating factor (section 1001.102(b)(1)), Petitioner argues the I.G. "improperly conflated" the distinct concepts of forfeiture and restitution, and while restitution "may be appropriate to consider," the I.G. never previously "relied on forfeiture amounts to uphold a program-loss aggravating factor" absent an agreement between the parties. P. Br. at 36-37. Petitioner contends the "government has never established that [he] caused or intended to cause a loss of $50,000 or more to a government agency or program." Id. at 36.
Petitioner's contention that the I.G. conflated forfeiture and restitution or failed to recognize any material distinction between those concepts is unsupported by the record. The ALJ recognized the I.G. was relying on the $500,000 forfeiture money judgment entered against Petitioner and not a restitution order. ALJ Decision at 13 (citing Farzana Begum, M.D., DAB No. 2726, at 16 n.18 (2016), aff'd, No. 16-cv-9624, 2017 WL 5624388 (N.D. Ill. Nov. 21, 2017)). In Begum, the Board recognized, in dicta, that the amount repaid to the government in satisfaction of a forfeiture order was "effectively restitution" and may be considered a "reasonable valuation of financial loss" where the excluded individual agreed the forfeited amount represented the proceeds traceable to the underlying offense (i.e., illegal kickbacks). DAB No. 2726, at 16 n.8. This does not mean that a forfeiture amount, by itself, will always be sufficient to establish the amount of program loss under section 1001.102(b)(1). Nor does it mean that a forfeiture amount can only be considered evidence of program loss when the excluded individual "agrees" the amount forfeited is a reasonable estimate of program loss. Rather, the ALJ may consider the amount forfeited as evidence of program loss, but ultimately must determine whether the aggravating factor is established based on all of the record evidence.
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Although the Board "has long acknowledged that restitution is a measure of program loss," Hussein Awada, M.D., DAB No. 2788, at 7 (2017), the Board has never held that court-ordered restitution is the only measure of program loss for purposes of section 1001.102(b)(1). Nor is there any requirement under section 1001.102(b)(1) that the amount of financial loss be adjudicated and established in the underlying criminal proceedings. The plain language of section 1001.102(b)(1) does not limit application of this aggravating factor to cases where a restitution order has been entered or where the amount of program loss was fully adjudicated and established in court.
We further reject Petitioner's contention that because forfeiture and restitution are "conceptually distinct," forfeiture amounts cannot be used to estimate victim losses. P. Br. at 36-37. Petitioner's argument is based on language from United States v. Blackman, 746 F.3d 137, 143 (4th Cir. 2014), which held that because forfeiture and restitution serve distinct purposes, "ordering both in the same or similar amounts does not generally amount to a double recovery." While that is true, it is beside the point. The relevant point in Blackman is that "[f]orfeiture is calculated on the basis of the total proceeds of a crime." Id. at 144. Indeed, criminal forfeiture statutes "serve important governmental interests such as ‘separating a criminal from his ill-gotten gains. . . .'" Honeycutt v. U.S., 137 S. Ct. 1626, 1631 (2017) (citing Caplin & Drysdale, Chartered v. U.S., 491 U.S. 617, 629–630 (1989)). In cases involving financial crime, the total proceeds of a crime (i.e., the ill-gotten gains) are often the same or similar to the amount of victim losses. Cf. The Interplay Between Forfeiture and Restitution in Complex Multivictim White-Collar Cases, 26 Fed. Sent. R. 10 (Oct. 2013) ("Whereas restitution is measured by the losses to victims and forfeiture is measured by the proceeds of a criminal offense, both amounts frequently turn out to be the same—especially in financial fraud cases."). Although restitution and forfeiture serve distinct purposes, nothing in Blackman or any other case cited by Petitioner precluded the ALJ from relying on Petitioner's forfeiture amount, along with all of the other record evidence, to find the program-loss aggravating factor was established.
Petitioner's assertion that the I.G. had not previously relied on forfeiture amounts to establish financial loss under section 1001.102(b)(1) is also inaccurate. See, e.g., George P. Roussis, DAB CR5242, at 6 (2019); Verlon Lane Pierce, DAB CR2307, at 4-5 (2011). While the foregoing ALJ decisions were not reviewed by the Board and have no precedential value, they refute Petitioner's assertion that the I.G. had not previously
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relied on forfeiture amounts to establish program loss. Moreover, no legal rule or principle can be drawn from Petitioner's list of ALJ decisions where the I.G. did not rely on the program-loss aggravating factor despite a conviction involving forfeiture. P. Br. at 37. The I.G.'s decision-making process in this and other cases is irrelevant. Fuentes at 19-20. Whether the I.G. chooses not to rely on a particular aggravating factor under the facts and circumstances of a particular case is a matter of discretion that neither the ALJ nor the Board reviews. See 42 C.F.R. § 1001.2007(a); see also 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)).
Thus, the question before the Board is not whether restitution was ordered in Petitioner's criminal case, but whether substantial evidence in the record as a whole supports the ALJ's finding that the program loss aggravating factor was established. See Jason Hollady, M.D., DAB No. 1855, at 7-9 (2002) (concluding that substantial evidence in the record supported the ALJ's finding that the program-loss aggravating factor was established without a final restitution order). The Hollady case involved an earlier version of section 1001.102(b)(1), which applied if the acts resulting in the conviction, or similar acts, resulted in financial loss to a government program or other entity of $1,500 or more. Hollady at 3, 7. Although the sentencing judgment in Hollady ordered $0 restitution, the probation order contained a non-final restitution figure of $347,643. Id. at 7. In sustaining the ALJ's finding that the program-loss aggravating factor was sufficiently established, the Board explained that the ALJ appropriately relied on the probation order – not to establish the precise amount of restitution – but as evidence that the amount of financial loss was greater than the $1,500 threshold. Id. at 8. The Board also noted that petitioner failed to provide evidence that the non-final figure in the probation order was inaccurate. Id. at 8-9. The Board concluded that even without a final determination by the court about the amount of financial loss, substantial evidence in the record supported the ALJ's finding that the program-loss aggravating factor was established. Id. at 9.
Here, the ALJ rejected Petitioner's argument that his criminal offense caused MassHealth no financial loss. ALJ Decision at 12-13 ("Petitioner cannot get around the fact that MassHealth paid for drugs that it should not have paid for."). As explained below, we affirm the ALJ's finding that the acts resulting in Petitioner's conviction, or similar acts, caused, or were intended to cause, a financial loss to MassHealth of $50,000 or more based on the totality of the record evidence and the absence of contrary evidence.
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Notwithstanding the undisputed facts and circumstances of Petitioner's criminal conviction, Petitioner contends that the $500,000 he was ordered to forfeit was "entirely untethered" to any estimate of loss to the MassHealth program. P. Br. at 38. We reject this argument. The forfeiture money judgment entered against Petitioner in his criminal case states that the $500,000 forfeiture amount "represents in aggregate the value of misbranded drugs introduced into interstate commerce in violation of 21 U.S.C. § 331." I.G. Ex. 4, at 8. As explained above, the misbranded drugs (Suboxone Film) were introduced into interstate commerce under the MassHealth program when MassHealth expanded access to the drug in reliance on the false and misleading information provided by Indivior. As MassHealth was the only payor at issue in the underlying criminal proceedings, we find the ALJ reasonably inferred that the value of the misbranded drugs introduced into interstate commerce under the MassHealth program represented, at least in part, what MassHealth paid for the misbranded drugs and that amount "must be considered a program loss." ALJ Decision at 13 ("The company received money from the Medicaid program to which it was not entitled. The court ordered Petitioner to return that money (or at least some of it), and he agreed to do so."). The ALJ thus concluded that the evidence "establishes program losses ten times greater than the $50,000 threshold." ALJ Decision at 14-15.
Moreover, Petitioner did not offer any relevant evidence to rebut the financial loss evidence presented by the I.G., such as evidence showing that MassHealth did not provide reimbursement for misbranded Suboxone Film or that the amount MassHealth reimbursed for misbranded Suboxone Film was less than $50,000. Petitioner has provided no plausible explanation for the $500,000 he was required to forfeit if not the ill-gotten gains flowing to him when MassHealth provided reimbursement for misbranded Suboxone Film under the MassHealth program. Cf. Hollady at 8-9 (concluding petitioner's failure to provide evidence contesting the amount of program loss further supported the ALJ's finding that the loss exceeded the threshold amount). Petitioner's assertion that Suboxone Film is an "important drug" and continues to be a preferred drug today under the MassHealth program (P. Br. 38) does not change the fact that the drug was initially marketed to MassHealth using false and misleading data in violation of the FDCA and that MassHealth paid for misbranded drugs it should not have paid for.
Having determined that the program loss aggravating factor was established, the ALJ further considered how much weight to give this factor, where the amount of program loss was "ten times the threshold amount." ALJ Decision at 13. As the ALJ recognized, when program loss amounts are substantially more than the threshold, the aggravating factor is entitled to significant weight. Id. (citing Jeremy Robinson, DAB No. 1905 (2004); Donald A. Burstein, Ph.D., DAB No. 1865 (2003)). Here, the ALJ concluded
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"the Medicaid program's substantial financial loss [is] a significant aggravating factor that compels a period of exclusion much longer than the five-year minimum." ALJ Decision at 13. We find no error in the ALJ assigning significant weight to this aggravating factor. See, e.g., Laura Leyva, DAB No. 2704, at 9-10 (2016) ("[I]t is entirely reasonable to consider a program loss amount substantially larger than" the threshold amount to be "an ‘exceptional aggravating factor' to be accorded significant weight."), aff'd, No. 8:16-cv-1986, 2017 WL 2880125 (M.D. Fla. Apr. 24, 2017).
B. Petitioner's sentence, which included 6 months of incarceration, weighs in favor of extending the mandatory period of exclusion.
With respect to the aggravating factor in section 1001.102(b)(5) – that Petitioner's sentence included incarceration – the ALJ found that "[a]ny period of incarceration justifies increasing the period of exclusion" and "a six-month sentence is not insignificant." ALJ Decision at 14 (citing Stacy Ann Battle, D.D.S., DAB No. 1843, at 7 (2002) (finding four months in a halfway house, followed by four months of home confinement, justified lengthening the exclusion period); Brenda Mills, M.D., DAB CR1461, at 2 (2006) (finding that six months' home confinement justifies an increase in length of exclusion), aff'd, DAB No. 2061 (2007)).
Petitioner does not deny that his sentence included six months of incarceration. ALJ Decision at 13; I.G. Ex. 4, at 2. Petitioner argues, however, that his incarceration does not "justify doubling the exclusionary period" because "[i]ndividuals sentenced to significantly more time in prison have received the same ten-year term of exclusion." P. Br. at 38 (citing Lasher v. HHS, 369 F. Supp. 3d 243, 251 (D.D.C. 2019), Ahmed El Soury, DAB CR5199 (2018)). Petitioner further argues that relying on the incarceration aggravating factor is "particularly inapt" because, according to Petitioner, the term of incarceration reflected "the Court's desire for general deterrence" and "was not a reflection of [his] personal culpability." Id. We reject Petitioner's arguments and find no error in the ALJ's qualitative evaluation of the incarceration factor.
To begin with, Petitioner's exclusion was not "doubled" on the basis of the single aggravating factor of incarceration; rather, the ALJ found the presence of two aggravating factors and no mitigating factors justified extending the exclusion period by five years. ALJ Decision at 12-15. Moreover, the Board has long rejected the kind of case comparison argument Petitioner is making here. "[T]he assessment of aggravating and mitigating factors is qualitative, focusing on the circumstances of the case at hand, rather than quantitative or a matter of mathematical formulas . . . ." Sheth at 8. In reviewing whether the length of an exclusion exceeding the statutory minimum is unreasonable, "[c]omparisons with other cases are not controlling and of limited utility" because aggravating and mitigating factors do not have specific values and "must be evaluated based on the circumstances of a particular case . . . which can vary widely." Robert Hadley Gross, DAB No. 2807, at 6 (2017) (internal quotation marks omitted); see
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also Fuentes at 15 ("The Board has repeatedly explained that comparing exclusion periods is not generally helpful in assessing reasonableness, due in part to the varying mix of factors and wide range of relevant circumstances that may need to be considered in individual cases."). While case comparisons can "inform whether an exclusion falls within a reasonable range," they are unhelpful to the Board's decision-making unless supported by analysis that accounts for the unique circumstances of each case and the relative seriousness of any applicable aggravating and mitigating factors. See Sheth at 6.
Apart from the case-specific nature of each determination, we further reject the premise that any prior determination demonstrates the upper limit of what is reasonable in every case. An adjudicator's determination that the length of an exclusion falls within a reasonable range does not necessarily mean that a longer exclusion would not have been sustained had the I.G. sought to impose it. See Fuentes at 15 ("The I.G. is not obliged to impose the longest sustainable period in every case."). "In other words, a specific period of exclusion (e.g., ten years) sustained by an ALJ or the Board does not necessarily represent the upper limit of what may be considered reasonable and does not necessarily foreclose a longer period of exclusion in a similar case." Kimberly Jones at 15.
Petitioner cites two cases in which the I.G. lengthened an exclusion period to ten years based, in part, on the aggravating factor of incarceration. P. Br. at 38. Petitioner, however, does not meaningfully analyze the circumstances of each case or the relative seriousness of all aggravating factors. Although Petitioner points out that the terms of incarceration in the comparison cases were longer than his, he omits any discussion regarding the other aggravating factors and fails to account for the differences in his own case. Neither of the two cases Petitioner cites demonstrates that his 10-year exclusion falls outside a reasonable range.
In the first case, Lasher v. HHS, 369 F. Supp. 3d 243 (D.D.C. 2019), the district court found "the record fully supports extension of the exclusion period from five to 10 years," where two aggravating factors were present: (i) the criminal acts were committed over a period of one year or more, and (ii) the sentence imposed by the court included incarceration. See id. at 251. Without discussing the length of the criminal conduct (less than two years) or the length of incarceration (three years), the district court found that the two aggravating factors (and no mitigating factors) "support the conclusion that the 10-year exclusion period is not unreasonable." Id. Lasher¸ however, did not involve the program loss aggravating factor, which in Petitioner's case was an "exceptional" factor that the ALJ accorded significant weight. While the incarceration factor in Lasher may have received slightly more weight, along with the fact that the criminal conduct occurred over a period of more than one year, Petitioner's sentence also included a substantial period of incarceration and that combined with program loss of $500,000 (ten times greater than the $50,000 threshold) – and no mitigating factors – fully supports the ALJ's conclusion that the 10-year exclusion period is not unreasonable.
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The second case, Ahmed El Soury, DAB CR5199 (2018), is an unreviewed individual ALJ decision, which is "neither precedential nor binding on the Board or other ALJs." Fuentes at 15 ("[Case] comparisons based on unreviewed ALJ decisions are even less useful."). Apart from having no precedential value, we are not persuaded that the 10-year exclusion upheld in El Soury establishes that Petitioner's 10-year exclusion is unreasonable. While El Soury involved a longer period of incarceration (33 months), the amount he was ordered to forfeit ($66,730) was substantially less than the amount Petitioner was ordered to forfeit ($500,000). Differences such as this are relevant to qualitatively evaluating aggravating factors. El Soury illustrates the problems inherent in trying to draw legal conclusions from factually different cases that fail to account for the wide range of relevant facts and circumstances that may be considered in each case.
While case comparisons are of limited value, Petitioner's 10-year exclusion period is not inconsistent with prior I.G. determinations involving similar aggravating and mitigating circumstances. See, e.g., Stacy Ann Battle, D.D.S., DAB No. 1843 (2002) (upholding 10-year exclusion based on program loss of $85,000, four months of confinement in a half-way house followed by four months of home confinement, and adverse action by state licensing board); Brenda Mills, M.D., DAB CR1461 (2006), aff'd, Brenda Mills, M.D., DAB No. 2061 (2007) (upholding 10-year exclusion based on program loss of more than $30,000 but less than $70,000, and six months of home confinement); Laura Leyva, DAB No. 2704 (2016) (upholding 10-year exclusion based on program loss of more than $200,000, eight months of home confinement, and criminal conduct lasting more than two years). While two of these cases involved three aggravating factors, all of them involved significantly less program loss compared to Petitioner's case and none involved six months of incarceration in federal prison.
Finally, we reject Petitioner's argument that the ALJ erred by relying on the incarceration aggravating factor based on statements made by the Court at Petitioner's sentencing hearing. P. Br. at 38-39. Section 1001.102(b)(5) authorizes the I.G. to lengthen the period of exclusion beyond the mandatory minimum five years when "[t]he sentence imposed by the court included incarceration." The regulation says nothing about the
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sentencing court's rationale for ordering incarceration. Indeed, "the focus of this aggravating factor . . . is the fact that the sentence included incarceration." Gerald A. Snider, M.D., DAB No. 1637, at 8 (1997) (holding ALJ erred by reducing weight of incarceration factor on grounds that the court imposed only the minimum sentence with one day added); see also Kimberly Jones at 8 ("Section 1001.102(b)(5) does not require proof of facts or circumstance other than that the sentence imposed by the court for a covered offense ‘included incarceration.'"). The ALJ did not err in relying on section 1001.102(b)(5) as a basis for upholding the I.G.'s extension of the mandatory minimum period of exclusion based on the undisputed fact that Petitioner's sentence included "incarceration."
We further reject Petitioner's assertion that his purported lack of "personal culpability" and comments made by the Court about him being a "good person" who is "not going to commit anymore crimes" should diminish this aggravating factor. The mitigating factors that ALJs and the Board may consider are limited to those listed in the regulation and evidence of good character or a lack of bad intent are not among them. See 42 C.F.R. § 1001.102(c); see also Leyva at 8-9 (finding evidence of good character is irrelevant because the regulations do not provide for considerations of character as a mitigating factor); Baldwin Ihenacho, DAB No. 2667, at 8 (2015) (same).
We note that the crime of which Petitioner was convicted did not include an element of intent, but this in no way diminishes his "personal culpability," the basis for his conviction, or his six-month term of incarceration in federal prison. Petitioner's sentence included incarceration because the Court found it significant that Petitioner "was the CEO of an important entity operating at the center of one of our national health crises, the opioid addiction crises," and "a serious and intentional misrepresentation occurred in the marketing of his company's premier product, which he admits he failed to prevent." I.G. Ex. 5, at 114-15; see also ALJ Decision at 14. While general deterrence may have been the "dominant theme" at sentencing, it only underscores the Court's view about the personal responsibility leaders of health care entities, such as Petitioner, carry and the seriousness of the crime of which Petitioner was convicted. I.G. Ex. 5, 114-15; see also Cash, DAB No. 1725, at 16 ("[I]ncarceration reflects the court's evaluation of the seriousness of the offense."). We find no error in the ALJ's conclusion that a 10-year exclusion was within a reasonable range of what is required to protect program beneficiaries, maintain program integrity, and foster public confidence in the federal health care programs. ALJ Decision at 15; see also Cash, DAB No. 1725, at 15-16, 18 (discussing the role of aggravating and mitigating factors, including incarceration and program loss, in assessing trustworthiness and deterrence).
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Based on the existence of two aggravating factors, both of which warrant significant weight, and the absence of any mitigating factor permitted by regulation, we find that the ALJ's decision to sustain the 10-year exclusion imposed by the I.G. is supported by substantial evidence and comports with applicable law.
III. Petitioner's constitutional arguments are without merit.
Petitioner makes a number of constitutional arguments that either are outside the Board's authority to adjudicate or, to the extent reviewable, are meritless. Petitioner argues that his 10-year exclusion arose from a "novel interpretation" of law by the I.G., and thus violates the Fifth Amendment's Double Jeopardy Clause because it "transform[s] exclusion into a criminal sanction." P. Br. at 22. He also argues that the exclusion violated his substantive and procedural due process rights, asserting that it infringed on (1) his property interest in continued participation in federal health care programs, and (2) his liberty interest in honor and integrity by stigmatizing his reputation so severely "that it effectively forecloses the opportunity to practice [his] chosen profession." Id. at 20-21.
The regulations governing this matter prohibit the ALJ (and the Board) from "find[ing] invalid or refus[ing] to follow Federal statutes or regulations or secretarial delegations of authority." 42 C.F.R. § 1005.4(c)(1). Aside from one procedural argument alleging lack of notice, Petitioner's contentions that his exclusion violates his constitutional rights "constitute an attack upon the Act and regulations on which neither the ALJ nor the Board may rule." Harkonen, DAB No. 2485, at 22; see also Urology Group of NJ, LLC, DAB No. 2860, at 14 (2018) ("The Board may not declare unambiguous statutes or regulations unconstitutional and decline to follow them on that basis."); Funmilola Mary Taiwo, DAB No. 2995, at 9 (2020) (same). Thus, to the extent Petitioner challenges the validity of the statutes and regulations underlying the I.G.'s exclusion authority, we have no authority to decide those issues here.
We note, moreover, that federal courts and the Board have rejected constitutional arguments like those Petitioner is making here. As to the prohibition against double jeopardy, the Board and federal courts have long held that exclusions under section 1128 are civil and remedial—not criminal or punitive—and therefore do not subject excluded individuals to double jeopardy. See Cash, DAB No. 1725, at 7-15 (in expansive analysis, holding section 1128(a) was plainly a remedial law, and neither five-year exclusion nor ten-year extension violated the Double Jeopardy Clause); see also Shaikh M. Hasan, M.D., DAB No. 2648, at 14 (2015) (rejecting double jeopardy argument in exclusion
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case), aff'd, No. 1:15-cv-4687, ECF No. 27 (E.D.N.Y. July 10, 2017); Harkonen at 22 (collecting cases rejecting double jeopardy argument in the exclusion context); Erickson v. United States, 67 F.3d 858, 864 n.2 (9th Cir. 1995); Manocchio v. Sullivan, 961 F.2d 1539, 1541-43 (11th Cir. 1992).
The Double Jeopardy Clause does not "prohibit the imposition of all additional sanctions that could, in common parlance, be described as punishment," but rather "the imposition of multiple criminal punishments for the same offense." Hudson v. United States, 522 U.S. 93, 98-99 (1997) (internal quotation marks and emphasis omitted). "‘[O]nly the clearest proof' will suffice to . . . transform what has been denominated a civil remedy into a criminal penalty." Id. at 94. Petitioner concedes that "Congress may have crafted [Section 1128(a)] as a prospective civil remedy," but argues that the I.G.'s alleged "novel interpretation" would result in "wildly disproportionate" exclusion periods that "would transform exclusion into a criminal sanction . . . ." P. Br. at 22-23.
Petitioner, however, makes no attempt to apply the criteria that the Supreme Court has identified as relevant in deciding whether a particular civil sanction constitutes criminal punishment. See Cash, DAB No. 1725, at 11 (discussing the factors specified in Hudson). Nor does Petitioner cite any judicial or Board decisions which apply those criteria in a context similar to his case. Moreover, Petitioner's exclusion, as explained above, does not turn on any "novel interpretation" of the law. It was a straightforward application of the law, in accord with the governing statute, regulations, and Board precedent. There was nothing novel or transformative about it. Petitioner's exclusion is no more "punitive" than the fifteen-year exclusion in Cash and many other exclusion cases, which raise no double jeopardy concern.
With regard to his procedural due process argument, Petitioner asserts that the I.G. "never provided notice" that a mandatory exclusion may result from his sworn guilty plea. P. Br. at 21. Procedural due process prohibits government action that deprives one of life, liberty, or property, without adequate process of law. See D.B. v. Cardall, 826 F.3d 721, 741 (4th Cir. 2016).
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further, Petitioner was given explicit notice of the pending exclusion through the I.G.'s notice of intent to exclude and subsequent notice of exclusion, which apprised him of the factual and legal basis for the exclusion and his opportunities to challenge it. I.G. Exs. 1, 6.
Petitioner also failed to provide authority to support his contention that a liberty interest in "reputation, good name, honor, and integrity," as recognized in employment cases, can be violated in the context of an exclusion under section 1128(a)(1). At least one federal circuit court has rejected such a claim in the exclusion context. See Parrino v. Price, 869 F.3d 392, 398 (6th Cir. 2017). Petitioner's alleged liberty interest violation also lacks the key element of falsity on which such claims in the employment context must rest. See, e.g., Quinn v. Shirey, 293 F.3d 315, 320 (6th Cir. 2002) (procedural protections required "only if the employer creates a false and defamatory impression about a particular employee in connection with his termination"); Doe v. Garrett, 903 F.2d 1455, 1462-63 (11th Cir. 1990) ("A critical element of a claimed invasion of a reputational liberty interest . . . is the falsity of the government's asserted basis for the employment decision . . ." (emphasis in original)); Stone v. Univ. of Md. Med. Sys. Corp., 855 F.2d 167, 172 n.5 (4th Cir. 1988) (plaintiff must show "his superiors made charges that . . . ‘imposed on him a stigma or other disability that foreclosed his freedom to take advantage of other employment opportunities,' . . . and that the charges were false"). Petitioner cannot satisfy the falsity element given that he admitted to the truth of the criminal charges brought against him and does not contest the criminal conviction that served as the basis for his exclusion.
Petitioner's substantive due process argument fares no better. Substantive due process "bars certain arbitrary, wrongful government actions" regardless of procedural fairness. Zinermon v. Burch, 494 U.S. 113, 125 (1990). For executive actions, substantive due process rights are violated only by actions "so egregious, so outrageous, that it may fairly be said to shock the contemporary conscience." Cty. of Sacramento v. Lewis, 523 U.S. 833, 847 n.8 (1998). For legislative acts, substantive due process protects only the few "fundamental rights and liberties" that are "deeply rooted in this Nation's history and tradition[,] . . . such that ‘neither liberty nor justice would exist if they were sacrificed[.]'" Washington v. Glucksberg, 521 U.S. 702, 721 (1997). The Supreme Court
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has "been reluctant to expand the concept of substantive due process," and "‘exercise[s] the utmost care whenever . . . asked to break new ground in this field.'" Id. at 720.
Petitioner contends his exclusion violated his substantive due process rights because, as he puts it, it was premised "solely" on his guilty plea, and imposed "career-ending penalties . . . without a substantive assessment of [his] conduct and lack of participation in the underlying offense." P. Br. at 22.
IV. The ALJ's procedural and evidentiary rulings are not legally erroneous.
In footnotes 18 and 20 of his opening brief, Petitioner argues that the ALJ erred by excluding his proposed exhibits (P. Exs. 11-16) and denying his request for subpoena testimony and a live hearing. P. Br. at 29, n.18; P. Br. at 33, n.20. He maintains that the ALJ's rulings "deprived the ALJ of important context and information" that purportedly support Petitioner's arguments. P. Br. at 29, n.18. He also states that he "has the right to counter incorrect and unsupportable allegations and confront the witnesses making those ‘factual' allegations." Id.
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Under the governing regulations, the ALJ determines the admissibility of evidence, and "must exclude irrelevant or immaterial evidence." 42 C.F.R. § 1005.17(a), (c). The ALJ properly rejected Petitioner's proposed exhibits (P. Exs. 11-16) and his motion for a subpoena because they have no bearing on the issues in this case. An excluded individual may request an ALJ hearing, but only on the issues of (1) whether the basis for the exclusion exists, and (2) whether the length of the exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(1). As the ALJ found, Petitioner's proposed exhibits, which included the written declarations of four "expert" witnesses, addressed the merits and safety of Suboxone Film packaging and extolled the benefits of buprenorphine in treating opioid addiction. ALJ Decision at 4-5. Those issues were not before the ALJ. The ALJ further found that P. Ex. 11 attempted to dispute the falsity of the data provided to MassHealth which amounted to an impermissible collateral attack on Petitioner's underlying conviction. ALJ Decision at 4 (citing 42 C.F.R. §§ 1001.2007(d), 1005.17(c)).
We further conclude that the ALJ's decision to deny Petitioner's subpoena request did not "deprive" the ALJ of any information relevant to the presentation of his case. ALJ Decision at 2-3 (citing 42 C.F.R. § 1005.9(a) (a party may request the ALJ to issue a subpoena "if the appearance and testimony" of the witness "are reasonably necessary for the presentation of a party's case")). Petitioner's proposed subpoena sought to compel the I.G. to provide testimony concerning the "specific weights" the I.G. afforded "to the aggravating and mitigating factors" in his case, and "the basis for [the I.G.'s] conclusion that the conduct underlying [Petitioner's] conviction led to $500,000 in program losses." P. Motion for Subpoena for Testimony at 4-5. As the ALJ explained, the I.G.'s internal decision-making process is not relevant to any issue before the ALJ (or the Board). ALJ Decision at 3. "Whether a valid basis exists to exclude Petitioner is a question of law as applied to the facts of Petitioner's conviction. It does not turn on the I.G.'s decision-
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making process . . . ." Bailey, DAB No. 2935, at 15; see also Fuentes, DAB No. 2988, at 19-20 (finding no error by ALJ in not permitting examination of I.G. official that decided length of exclusion), aff'd, Fuentes v. Becerra, 2021 WL 4341115, at *9 (W.D. Va. 2021) (explaining why the I.G.'s internal decision-making process is not relevant to any issue before the ALJ or Board).
We also find the ALJ's decision to decide the case based on the written record was without legal error. ALJ Decision at 5-6. The parties were required to submit with their briefs the written direct testimony of any witness "in the form of an affidavit or sworn declaration." Pre-Hearing Order at 3 (¶ 7). The I.G. did not propose calling any witnesses. Petitioner proposed calling four "experts" and submitted their written direct testimony in the form of declarations. P. Informal Br. at 37-39 (summarizing P. Exs. 11, 14, 15, 16). As described above, the ALJ excluded each of the declarations because they are irrelevant and inadmissible. ALJ Decision at 4-5 (excluding P. Exs. 11, 14, 15, 16). The ALJ concluded there was no need for an in-person (video) hearing because there were "no witnesses to be examined or cross-examined." ALJ Decision at 6. Having concluded that the ALJ did not err in excluding the written direct testimony of Petitioner's proposed witnesses, we find no error in the ALJ's decision to decide this case based on the written record. See, e.g., Bailey, DAB No. 2935, at 13 (holding that in-person hearing was unnecessary because testimony Petitioner sought to elicit goes to issues beyond the scope of the appeal), aff'd, Bailey v. Azar, No. 6:20-cv-00166, at 17-18 (E.D. Ky. Aug. 6, 2021).
Conclusion
For the reasons stated above, we affirm the ALJ Decision.
/s/
Christopher S. Randolph Board Member
/s/
Susan S. Yim Board Member
/s/
Michael Cunningham Presiding Board Member