Phong Hung Tran, M.D., DAB No. 3120 (2023)

DECISION REMANDING CASE TO THE ADMINISTRATIVE LAW JUDGE

Phong Hung Tran, M.D. (Petitioner) appeals the June 29, 2023 decision of an Administrative Law Judge (ALJ) affirming the determination of the Inspector General (I.G.) to exclude Petitioner from participation in all federal health care programs pursuant to section 1128(a)(3) of the Social Security Act (Act) based on a felony conviction related to health care fraud.  Phong Hung Tran, M.D., DAB CR6309 (ALJ Decision).  The ALJ also concluded that excluding Petitioner for 15 years was not unreasonable based on evidence of two aggravating factors in 42 C.F.R. § 1001.102(b)(1) and (b)(2), and in the absence of any mitigating factor in 42 C.F.R. § 1001.102(c).¹   

Before the Board, Petitioner disputes the reasonableness of the 15-year exclusion. Petitioner asserts the presence of two mitigating factors in sections 1001.102(c)(2) and (c)(3) – Petitioner’s history of trauma and cooperation with the authorities – as established in new evidence Petitioner submitted to the Board with Petitioner’s opening brief.  Petitioner asks the Board to set aside the ALJ’s Decision upholding a 15-year exclusion or remand the case to the ALJ to reassess the reasonableness of the lengthened exclusion period in light of the new evidence. 

The I.G., in response, has reduced the exclusion period from 15 years to 12 years but maintains that this case need not be remanded to the ALJ and urges the Board to uphold the ALJ Decision.    

We remand this case under 42 C.F.R. § 1005.21(g) to enable the ALJ to consider, in the first instance, whether the 12-year exclusion period falls within a reasonable range, because the I.G. applied the mitigating factor in section 1001.102(c)(3) and reduced the 15-year exclusion period to 12 years after Petitioner appealed the ALJ Decision.  We otherwise affirm the ALJ Decision as factually supported and free of legal error.

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Legal Background

Section 1128(a) of the Act mandates the exclusion of those who have been convicted of certain criminal offenses from participating in Medicare, Medicaid, and other federal health care programs.  Section 1128(a)(3), titled “Felony conviction relating to health care fraud,” requires the exclusion of –

[a]ny individual . . . [who] has been convicted for an offense which occurred after [August 21, 1996], under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program (other than those specifically described in [section 1128(a)(1)]) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct. 

Act § 1128(a)(3); accord 42 C.F.R. § 1001.101(c).

An individual is “convicted” of a criminal offense within the meaning of the statute 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); 42 C.F.R. § 1001.2 (paragraphs (a) and (c) under the definition of “Convicted”).  

When an exclusion is validly imposed under section 1128(a), the I.G. must exclude the individual for a period of “not less than five years[.]”  Act § 1128(c)(3)(B); accord 42 C.F.R. § 1001.102(a).  The I.G. may extend the exclusion period beyond the statutory minimum if certain “aggravating factors” are present.  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[.]”).  Two aggravating 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 acts that resulted in the conviction, or similar acts, were committed over a period of one year or more[.]”

Id. § 1001.102(b)(1)-(2).

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If any aggravating factor applies to lengthen the five-year exclusion period, then the mitigating factors in 42 C.F.R. § 1001.102(c) – and only those mitigating factors – may be considered as a basis for reducing the exclusion period to no less than five years.  Two mitigating factors are relevant here:  

• “The record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual’s culpability[.]”;
• “The individual’s . . . cooperation with Federal or State officials resulted in” certain outcomes, including “[o]thers being convicted or excluded from Medicare, Medicaid and all other Federal health care programs[.]”

Id. § 1001.102(c)(2)-(3). 

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 and length of the exclusion and the factors, if any, the I.G. considered in determining the length of the exclusion.  42 C.F.R. § 1001.2002(a), (c).  The excluded individual may request a hearing before an ALJ, but only on the issues of whether the I.G. had a basis for the exclusion, and whether an exclusion longer than the required minimum period is “unreasonable” in light of any applicable aggravating and mitigating factors.  Id.  §§ 1001.2007(a)(1), 1005.2(a). 

“The ALJ conducts a de novo review ‘as to the evidence and factual determinations’ relevant to the scope of the ALJ’s review.”  Shaun Thaxter, DAB No. 3053, at 3 (2021) (quoting Edwin L. Fuentes, DAB No. 2988, at 10 (2020), aff’d, Fuentes v. Becerra, No. 4:20-cv-00026, 2021 WL 4341115 (W.D. Va. Sept. 23, 2021)).  In assessing an exclusion period longer than the five-year minimum, the ALJ “‘reviews 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)).  The ALJ issues an “initial decision” based on the record developed before the ALJ.  42 C.F.R. § 1005.20(a). 

A party dissatisfied with the “initial decision” may appeal it to the Board.  Id. § 1005.21(a).  The Board’s standard of review in I.G. exclusion cases is established by regulation.  Id. § 1005.21(h).  Board review is, in general, based on the record developed before the ALJ.  Gracia L. Mayard, M.D., DAB No. 2767, at 6 (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). 

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Case Background²

Petitioner is a physician and surgeon who, at the time of the I.G.’s exclusion, owned Coastline Medical Clinic, in California.  I.G. Ex. 2 (Plea Agreement), at 5 (¶ 1).  On August 29, 2018, Petitioner pleaded guilty to one count of felony Conspiracy to Commit Honest Services Mail Fraud and Health Care Fraud in violation of 18 U.S.C. § 1349, in the United States District Court for the Southern District of California (District Court).  Id. at 1-4; I.G. Ex. 3 (Superseding Information).  On September 13, 2021, the District Court accepted Petitioner’s guilty plea and entered a judgment against Petitioner based on the plea.  I.G. Ex. 4.

Under the terms of the “Factual Basis” section of the Plea Agreement, which Petitioner swore “under penalty of perjury” were “true” (I.G. Ex. 2, at 25), Petitioner agreed that “[f]rom at least April 2013 through June 2016,” Petitioner and others “conspired . . . to commit . . . Honest Services Mail Fraud, in violation of 18 U.S.C. §§ 1341 and 1346, and Health Care Fraud, in violation of 18 U.S.C. § 1347.”  Id. at 5 (¶ 2).  Among other factual admissions, Petitioner agreed that Petitioner knowingly conspired to fraudulently obtain money from health care programs by “submitting claims for prescription pharmaceuticals, Durable Medical Equipment,” and other medical goods and services that “were generated through a secret pattern of bribes to [Petitioner] and other doctors . . . to induce doctors to refer patients to those services, and to refer to particular providers, in violation of the doctors’ fiduciary duty to their patients.”  Id. at 5 (¶ 3).  Petitioner agreed that these criminal actions caused more than $1 million in losses to the California Workers’ Compensation Program.  Id. at 10 (¶ 32).

In late 2020, the California Medical Board issued a Decision and an Order revoking Petitioner’s Physician and Surgeon’s Certificate (medical license).  I.G. Ex. 5, at 1, 42.  The decision stated that the basis for the revocation was Petitioner’s guilty plea in federal court and Petitioner’s guilty plea for analogous state health care fraud crimes in California Superior Court, deriving from the same alleged conspiracy.  Id. at 4-5, 6-18.

On September 13, 2021, the District Court entered judgment against Petitioner, sentenced Petitioner “to be imprisoned” for “time served,” and placed Petitioner on supervised release for two years.  I.G. Ex. 4, at 1-3.

By letter dated August 31, 2022, the I.G. excluded Petitioner from participation in Medicare, Medicaid, and all other federal health care programs for 17 years under section 1128(a)(3) of the Act, based on the felony conviction in the District Court “of a criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other

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financial misconduct, in connection with the delivery of a health care item or service.”  I.G. Ex. 1, at 1.  The I.G. stated that Petitioner was being excluded for 17 years based on three aggravating factors:  (i) financial loss to a government agency or program of $50,000 or more, i.e., Petitioner caused “financial loss of at least $1,000,000 to the California’s Worker[s’] Compensation system;” (ii) the acts resulting in the conviction were committed over a period of a year or more, i.e., “from about April 2013 to about June 2016;” and (iii) Petitioner was the subject of an “adverse action” that was “based on the same set of circumstances” that formed the basis for Petitioner’s exclusion, i.e., the California Medical Board “revoked” Petitioner’s medical license.  Id. at 1-2; see 42 C.F.R. § 1001.102(b)(1)-(2), (9). 

ALJ Proceedings and Decision

After Petitioner requested an ALJ hearing, the I.G. submitted a brief (I.G. Pre-hearing Br.) and five exhibits (I.G. Exs. 1-5).³  Petitioner submitted a brief (P. Pre-hearing Br.) and four exhibits (P. Exs. 1-4).  Petitioner “d[id] not contest” that there was a valid basis for the exclusion, but challenged the length of the exclusion.  P. Pre-hearing Br. at 2, 5-6.  Petitioner asked the ALJ to either “set aside” the 17-year exclusion or reduce it to five years.  Id. at 6.

Petitioner argued that the I.G. failed to establish that when the I.G. issued its August 31, 2022 exclusion notice, Petitioner was subject to an adverse action “based on the same set of circumstances that serves as the basis for the . . . exclusion” and, accordingly, the aggravating factor in 42 C.F.R. § 1001.102(b)(9) did not apply.  P. Pre-hearing Br. at 3-4.  Petitioner maintained that, on June 13, 2022, after the medical license was revoked, the California Superior Court entered an order and issued a writ of mandate that “set aside” the California Medical Board’s decision to revoke the license and directed the California Medical Board to reconsider the revocation.  Id. at 4-5.  Petitioner further maintained that on remand the California Medical Board again revoked the medical license but on a petition for reconsideration stayed execution of the revocation to consider the petition, and, on Petitioner’s application, the California Superior Court issued its own order staying execution.  Id. at 4; see P. Exs. 2-4.  Petitioner asserted, therefore, the medical license was “active and valid since June 13, 2022,” meaning that, when the I.G. issued its initial exclusion notice on August 31, 2022, Petitioner’s medical license was not “revoked” as the I.G. indicated in that notice.  P. Pre-hearing Br. at 4-5.⁴  Petitioner also

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challenged the length of the exclusion on the ground that Petitioner could not practice medicine from June 2016 (when the license was suspended) to June 2022; that this “prolonged period . . . should be factored into the period of exclusion;” and that “[t]o add 17 years to” that period by the imposition of an exclusion was “excessive to an extreme.”  Id. at 5.

The I.G. agreed that the aggravating factor in section 1001.102(b)(9) did not apply.  I.G. Reply at 1-2.  The I.G. reduced the exclusion from 17 years to 15 years, as shown in an amended (May 9, 2023) exclusion notice.  I.G. Ex. 6.  The I.G. maintained that there was a valid basis for the exclusion and that the aggravating factors in sections 1001.102(b)(1) and (b)(2) were both uncontested and supported by the record.  I.G. Reply at 2.  The I.G. argued that a 15-year exclusion was not unreasonable and should be affirmed.  Id. at 2-3.

The ALJ admitted all proffered exhibits and, noting that neither party proposed any witnesses for a hearing, found that a hearing was unnecessary and decided the case based on the written record.  ALJ Decision at 2.  Noting Petitioner’s concession that the I.G. lawfully excluded Petitioner under section 1128(a)(3) of the Act, the ALJ found that Petitioner’s felony conviction “on its face relates to fraud and is in connection to the delivery of a health care item or service,” thus establishing a basis for the exclusion under section 1128(a)(3) of the Act.  Id. at 2, 4.  The ALJ found that Petitioner therefore “must be excluded for a minimum of five years.”  Id. at 5 (ALJ’s emphasis omitted).  

The ALJ also found that the I.G. established the two aggravating factors in sections 1001.102(b)(1) and (b)(2), which “permit the IG to lengthen the exclusion period beyond the five-year statutory minimum.”  ALJ Decision at 5 (ALJ’s emphasis omitted).  The ALJ noted that “Petitioner conceded in his plea agreement that the California Worker[s’] Compensation Program suffered a loss of greater than $1,000,000 due to Petitioner’s crime,” and that “[t]his loss is greater than the $50,000 threshold that [section 1001.102(b)(1)] establishes for application of this aggravating factor.”  Id. at 6 (citing I.G. Ex. 2, at 10).  The ALJ also stated that Petitioner conceded having committed the crime for over three years (from April 2013 to June 2016), longer than the one-year threshold as required by section 1001.102(b)(2).  Id.  The ALJ did not reach Petitioner’s argument that Petitioner had not been subject to a qualifying “adverse action” under section 1001.102(b)(9), noting that the I.G.’s removal of that factor mooted the issue.  Id. at 5-6.  The ALJ also found that Petitioner had not established any mitigating factor in section 1001.102(c).  Id. at 6-7. 

The ALJ then found that the 15-year exclusion was not “unreasonable,” emphasizing that Petitioner did not dispute the weight the I.G. had assigned to the two aggravating factors.  ALJ Decision at 7-8.  The ALJ also addressed Petitioner’s argument that the six-year period during which Petitioner could not practice medicine in California, and thus was “unable to submit claims or receive payment from any federal health care program,” “should be factored” into the ALJ’s assessment of the exclusion length.  Id. at 8 (citing P.

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Pre-hearing Br. at 5; P. Ex. 2, at 8-9).  The ALJ stated that “while the IG may consider such facts when determining the period of exclusion (akin to time served), I do not have the authority to adjust the effective date of the exclusion for the 15-year exclusionary period to coincide, in whole or in part, with the six-year period during which Petitioner was unable to practice medicine.”  Id. at 9.  The ALJ stated that Petitioner’s exclusion took effect on September 20, 2022 (id. at 8), which we note is 20 days after the date of the I.G.’s August 31, 2022 notice of exclusion.  See I.G. Ex. 1; 42 C.F.R. § 1001.2002(b) (“The exclusion will be effective 20 days from the date of the [I.G.’s] notice” of exclusion.).

Board Proceedings

Petitioner’s arguments and submission of new evidence

Petitioner does not dispute that the I.G. lawfully excluded Petitioner under section 1128(a)(3) of the Act, but argues that a 15-year exclusion is “contrary to the record evidence” and accordingly the ALJ’s upholding the 15-year exclusion is “erroneous and an abuse of discretion.”  Petitioner’s Notice of Appeal and Supporting Brief (P. Br.) at 2-3 (stating that Petitioner “did not contest” the legal basis for exclusion).  Specifically, Petitioner asserts the record does not support the ALJ’s finding that the acts resulting in the conviction caused over a million dollars in losses to California, or even “a financial loss to a government program of $50,000 or more,” as required by section 1001.102(b)(1).  Id. at 5.  Petitioner also states that “the judgment in the criminal proceeding” shows that Petitioner was ordered to pay only a $100.00 fine but “was not ordered to pay any restitution.”  Id.  Petitioner does not challenge the ALJ’s findings that the aggravating factor in section 1001.102(b)(2) was present, or that Petitioner agreed in the Plea Agreement to having committed the acts resulting in the conviction for about three years.

Petitioner also argues that the “ALJ erred in refusing to consider the prolonged period of [Petitioner’s] suspension from the practice of medicine as a mitigating factor.”  P. Br. at 9 (Petitioner’s emphasis removed).  Petitioner claims the ALJ “misse[d] the point” when stating that “ALJs do not have the authority to change the effective date of an exclusion,” as Petitioner had only asked the ALJ to “take the six-year [license] suspension into consideration in arriving at a fair and reasonable period of exclusion.”  Id. at 10 (citing ALJ Decision at 8).  Petitioner also asserts that the record of the ALJ proceedings supports two factors that should qualify as mitigating factors:  (i) the District Court sentenced Petitioner to a “relatively lenient sentence” of “probation for only two years, which is an indication that the court took mitigating factors into account;” and (ii) the court granted Petitioner’s request for early termination of probation, which Petitioner

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says is “an action indicating that [Petitioner] was compliant with” the court’s sentencing terms.  Id. at 6-7.⁵

Petitioner also presents new evidence – the transcript of the September 13, 2021 sentencing hearing in the criminal proceedings, filed with the District Court on November 16, 2021 – which, Petitioner says, is “relevant and material,” was “previously unavailable,” supports mitigation, and therefore warrants ALJ examination on remand.  P. Br. at 6 (Petitioner’s emphasis removed), 8 n.14 (citing 42 C.F.R. § 1005.21(f)),⁶ 9; Tr. at 1 (reflecting date of hearing and date of filing of transcript).  Submitted with the transcript is the July 28, 2023 declaration of Petitioner’s attorney, who represented Petitioner during the ALJ proceedings and argues there are “reasonable grounds” for now submitting the transcript for review on remand because the attorney did not represent Petitioner in the criminal proceedings, and was unaware of and did not come into possession of the transcript until July 24, 2023 (meaning, after the ALJ Decision was issued).  P. Br. at 8; Att’y Decl. at 1-2 (¶¶ 3-4, 7). 

Petitioner states that the transcript contains remarks by the federal prosecutor “confirming [Petitioner’s] cooperation with government officials, as well as statements by the court regarding that cooperation” – evidence supporting the mitigating factor in section 1001.102(c)(3).  P. Br. at 8-9; Att’y Decl. at 2 (¶ 5) (stating that “[t]he transcript reveals that [Petitioner] cooperated with the government in its investigation of” the fraud).  Petitioner also argues that the transcript contains references to “childhood trauma” Petitioner experienced as a refugee from Vietnam following the Vietnam War which, Petitioner says, establishes the mitigating factor in section 1001.102(c)(2).  P. Br. at 8, 9; Att’y Decl. at 2 (¶ 5) (stating that the transcript “contains references to traumatic events” in Petitioner’s “childhood, when [Petitioner] was among 25 survivors of the 50 refugees adrift at sea on a boat following the end of the Vietnam War”).  Petitioner also refers to portions of the transcript addressing, mainly, cooperation with the investigation (including providing testimony at trial that helped secure the conviction of another defendant, which the government acknowledged during the sentencing hearing).  See Att’y Decl. at 2 (¶¶ 5-6); Tr. at 13, 19-20, 25 (court stating:  “And to his credit, not only have we had no problems with him, he’s done things to try to help the situation, including by testifying.”).

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The I.G.’s response and reduction of the exclusion period to 12 years

The I.G. argues that the ALJ Decision upholding a 15-year exclusion “was in accordance with the law and supported by substantial evidence” and thus “should be upheld.”  I.G.’s Br. in Opp’n to Appellant’s Appeal (I.G. Resp.) at 1.  Disagreeing with Petitioner’s arguments about the aggravating factor in 42 C.F.R. § 1001.102(b)(1) (financial loss), the I.G. argues that the record evidence establishes that Petitioner’s crimes caused over $1 million in loss and thus establishes the aggravating factor.  Id. at 3-4.  The I.G. also argues that the allegedly lenient sentence and early termination of “probation,” and the period during which the medical license was suspended before the exclusion took effect, are not mitigating factors in 42 C.F.R. § 1001.102(c) and, moreover, Petitioner did not previously raise such arguments (other than the argument about the license suspension).  Id. at 6. 

Concerning the mitigating factors in sections 1001.102(c)(2) and 1001.102(c)(3), the I.G. asserts that Petitioner offers no explanation for not having raised and submitted earlier arguments and evidence about them and, accordingly, such arguments should not be considered and the evidence “should not be admissible.”  Id. at 4-6.  Furthermore, with respect to the mitigating factor in section 1001.102(c)(2), the I.G. maintains that Petitioner did not provide any evidence that the sentencing judge determined that Petitioner’s mental, emotional, or physical condition reduced Petitioner’s culpability in commission of the crime.  Id. at 6.  As Petitioner failed to argue and prove mitigating factors earlier, the I.G. maintains that the ALJ’s decision upholding the 15-year exclusion was not erroneous and was supported by the evidence that was before the ALJ.  Id. at 4-7. 

Nevertheless, the I.G. states that, after considering the transcript of the sentencing hearing “in the interest of fairness,” the I.G. “agree[d]” the transcript substantiates Petitioner’s cooperation with the investigation that resulted in the conviction of another individual and, accordingly, applied the mitigating factor in section 1001.102(c)(3) and reduced the 15-year exclusion to 12 years.  I.G. Resp. at 5; see I.G.’s second amended exclusion notice, dated August 28, 2023, submitted with the I.G.’s response brief (stating the I.G. is “amending the length of [Petitioner’s] exclusion to a minimum period of 12 years,” because “the mitigating factor at 42 C.F.R. 1001.102(c)(3) is applicable due to [Petitioner’s] cooperation with Federal or State officials”).⁷  The I.G. nonetheless

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maintains that the Board need not remand this case to the ALJ “because the [Petitioner] failed to previously present evidence of the additional mitigating factor [in section 1001.102(c)(3)], although [Petitioner] could have” done so.  I.G. Resp. at 7.

Standard of Review

The Board reviews a disputed issue of fact as to whether the ALJ “decision is supported by substantial evidence on the whole record.”  42 C.F.R. § 1005.21(h).  The Board reviews a disputed issue of law as to whether the ALJ decision “is erroneous.”  Id.  The term “substantial evidence” means “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”  Ellen L. Morand, DAB No. 2436, at 3 (2012) (quoting Richardson v. Perales, 402 U.S. 389, 401 (1971) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938))).

Analysis

We summarily affirm the ALJ’s conclusion that the I.G. lawfully excluded Petitioner from participation in all federal health care programs under section 1128(a)(3) of the Act, thus requiring a mandatory minimum five-year exclusion.  We also affirm the ALJ’s conclusion that the I.G. established the existence of two aggravating factors in sections 1001.102(b)(1) and (b)(2) that support lengthening of the five-year period.  

We then address Petitioner’s arguments about mitigation, some of which could have been raised, but were not raised, before the ALJ.  Though we would have no obligation to now consider the late arguments (see 42 C.F.R. § 1005.21(e)), we address them for completeness and to convey the more important point that, regardless of when Petitioner raised those arguments, they identify no mitigating factor within the ambit of section 1001.102(c).

The remaining issue for resolution is the reasonableness of the lengthened exclusion period, which the I.G. reduced from 15 years to 12 years after Petitioner appealed the ALJ Decision to the Board.  This development warrants a remand to the ALJ to determine whether a 12-year exclusion period lies within a reasonable range. 

1. 1. The ALJ’s conclusion that the I.G. had a lawful basis to exclude Petitioner under section 1128(a)(3) of the Act, which requires a minimum five-year exclusion, is supported by substantial evidence and is free of legal error.

As the ALJ stated, Petitioner did not dispute that the I.G. was authorized to exclude Petitioner under section 1128(a)(3) of the Act based on the felony conspiracy conviction.  ALJ Decision at 4 (“Again, Petitioner concedes that the IG had a basis to exclude him pursuant to section 1128(a)(3).”) (citing P. Pre-hearing Br. at 2).  The ALJ also correctly determined (and Petitioner does not dispute) that, “on its face,” Petitioner’s conviction

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“relates to fraud and is in connection to the delivery of a health care item or service.”  ALJ Decision at 4.    

Accordingly, we summarily affirm the ALJ’s conclusion that the I.G. had a lawful basis to exclude Petitioner from all federal health care programs under section 1128(a)(3) of the Act.  ALJ Decision at 3.  Given this sound conclusion, the ALJ also correctly determined that the I.G. was required to exclude Petitioner for no less than five years, a conclusion that Petitioner does not now contest.  See id. at 5 (citing Act § 1128(c)(3)(B)); accord 42 C.F.R. § 1001.102(a) (“No exclusion imposed in accordance with § 1001.101 will be for less than 5 years.”).  Accordingly, we also summarily affirm that part of the ALJ Decision.

2. 2. The ALJ correctly found that the I.G. established the presence of aggravating factors in 42 C.F.R. § 1001.102(b)(1) and (b)(2).

The ALJ concluded that the I.G. established the presence of two aggravating factors in sections 1001.102(b)(1) and (b)(2), which “permit the I.G. to lengthen the exclusion beyond the five-year statutory minimum.”  ALJ Decision at 5 (ALJ’s emphasis omitted); id. at 5-6 (addressing both factors).  We affirm the ALJ’s conclusion. 

1001. a. Financial loss – 42 C.F.R. § 1001.102(b)(1)

The ALJ found that, in the Plea Agreement, Petitioner expressly conceded (under penalty of perjury) having caused the California Workers’ Compensation Program to sustain a loss of more than $1,000,000, which “is greater than the $50,000 threshold” for applying the aggravating factor in section 1001.102(b)(1).  ALJ Decision at 6 (citing I.G. Ex. 2, at 10).  Having made such a concession, Petitioner cannot and does not now attempt to disavow it.  Petitioner thus caused a loss in an amount at least 20 times the threshold amount to establish this aggravating factor.  

Petitioner nevertheless attempts to challenge the existence of this factor, asserting that the judgment of conviction “shows” the court ordered Petitioner “to pay a fine . . . of $100.00” and did not order Petitioner “to pay any restitution.”  P. Br. at 5 (citing I.G. Ex. 4).⁸  Neither the court-ordered fine, nor the amount of it, is relevant here, given

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Petitioner’s sworn agreement that Petitioner’s fraud caused over $1 million in financial loss to a state government program.  Further, Board decisions addressing section 1001.102(b)(1) make clear that the presence of this aggravating factor does not depend on a finding that the excluded individual was ordered to pay restitution or that the individual paid any restitution, if ordered.  See, e.g., Thaxter at 29 (“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.”); 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); see also 42 C.F.R. § 1001.102(b)(1) (stating that “[t]he 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”).

We agree with the ALJ’s finding as to the aggravating factor in section 1001.102(b)(1) and affirm it. 

1001. b. Duration of criminal acts – 42 C.F.R. § 1001.102(b)(2)

Petitioner has not challenged, and does not now challenge, the application of this aggravating factor.  In the Plea Agreement, Petitioner agreed that the criminal acts that resulted in the conviction occurred over a period of more than three years (April 2013-June 2016), surpassing the one-year minimum required to apply the aggravating factor in section 1001.102(b)(2).  I.G. Ex. 2, at 5 (¶ 2); ALJ Decision at 6.  We therefore summarily affirm the ALJ’s conclusion that “the IG has established Petitioner’s criminal conduct occurred for over one year,” thus “establish[ing] the basis for application of the aggravating factor set forth at [section] 1001.102(b)(2).”  ALJ Decision at 6.

3. 3. The District Court’s imposition and early termination of supervised release, and the period during which Petitioner’s California medical license was inactive, are not cognizable mitigating factors and thus cannot be the basis for reducing the exclusion period.

Petitioner argues that the ALJ’s finding that Petitioner did not establish any mitigating factor is “contrary to the record evidence.”  P. Br. at 6.  Petitioner asserts additional factors that, according to Petitioner, support mitigation.    

Petitioner argues that the District Court’s imposition of only a two-year period of “probation” (presumably referring to supervised release) is “an indication that the court

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took mitigating factors into account.”  P. Br. at 6.⁹  Petitioner reasons that, because the Board considers “long periods of incarceration” as a justification for increasing exclusion length, “it follows . . . that a lenient sentence calling for no incarceration at all should be considered a mitigation factor.”  Id. at 6-7.  Petitioner also argues that the court’s decision to terminate supervised release early is “a significant mitigating factor,” as it indicated Petitioner “was compliant with the terms of his probation.”  Id. at 7 (citing statements from Petitioner’s probation monitor in P. Ex. 1).  And, Petitioner again argues that, when considering the length of exclusion, the I.G. should have considered the six-year period when Petitioner’s medical license was “suspended” prior to the effective date of the exclusion, during which time Petitioner was “ineligible to participate in any Federal health care programs.”  Id. at 9-10.  Petitioner argues that this period “should have been considered as a mitigating factor” and “[i]t was error for the ALJ to have ignored that mitigating factor by claiming an inability to alter the effective date of the exclusion,” when Petitioner never raised an issue about the effective date of the exclusion.  Id. at 10.

Petitioner raises certain arguments about the supervised release and its early termination, for the first time, before the Board.  Id. at 6-8.  Petitioner offers no explanation for only now raising these arguments, which presumably could have been raised when the case was before the ALJ.  For this reason, we have no obligation to consider these arguments.  See 42 C.F.R. § 1005.21(e); Dike H. Ajiri, DAB No. 2821, at 6 (2017) (stating that petitioner’s failure to introduce an issue before the ALJ “precludes him from now arguing the issue before the Board”).

Nevertheless, even if we were to address these untimely arguments, they ultimately cannot advance Petitioner’s cause.  Neither the imposition of a “relatively lenient sentence” (P. Br. at 8) of supervised release nor a grant of early release based on compliance with the court’s terms is among the authorized mitigating factors in section 1001.102(c).  Moreover, Petitioner’s hypothetical assertion that the court could have imposed incarceration that may have provided a basis for the I.G. to apply the aggravating factor in 42 C.F.R. § 1001.102(b)(5) but allegedly did not, falls far short of proving a cognizable mitigating factor.  Most importantly, nowhere in any exclusion notice did the I.G. indicate the I.G. was excluding Petitioner for any period longer than the required minimum based on the assumption that the District Court imposed a sentence that included incarceration; in short, the I.G. did not apply the aggravating

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factor in section 1001.102(b)(5).¹⁰  The Board has held that “the absence of an aggravating factor” recognized in the regulations “is not itself a mitigating factor.”  See Eugene Goldman, M.D., DAB No. 2635, at 10 (2015). 

Petitioner did argue before the ALJ that the “prolonged” period when Petitioner could not practice medicine should have been “factored in” as a basis for reducing the length of the exclusion, though Petitioner did not expressly argue to the ALJ that this qualified as a “mitigating factor” under the regulations.  Compare P. Pre-hearing Br. at 5 (Petitioner’s emphasis removed) with P. Br. at 9-10.  In any case, whether or not the excluded individual’s ability to practice medicine was restricted in any way has no bearing on the issue of whether an exclusion period longer than the required minimum may be reduced.  None of the mitigating factors in 42 C.F.R. § 1001.102(c) concerns an excluded physician’s licensing status.  Moreover, the Board has stated, “There is . . . no legal requirement that the length of an exclusion match or track the suspension of an individual’s state professional license.”  See Kimberly Jones, DAB No. 3033, at 12 (2021).  The ALJ therefore committed no legal error in declining to reduce the length of Petitioner’s exclusion based on the asserted factor related to restrictions on Petitioner’s medical license.  ALJ Decision at 8-9.  The ALJ also made no error in stating that the ALJ had no authority to alter the effective date of exclusion.  ALJ Decision at 8-9.  The effective date of an I.G. exclusion “is determined by regulation and may not be adjusted at the discretion of an ALJ or the Board.”  See Anthony Joseph Moschetto, D.O., DAB No. 3030, at 13 (2021) (and cited authorities). 

4. 4. Remand is appropriate to give the ALJ an opportunity to consider, in the first instance, whether the 12-year exclusion period lies within a reasonable range.

We have determined that the ALJ’s findings and conclusions on the legality of the exclusion under section 1128(a)(3) and the presence of two aggravating factors are supported by substantial evidence and are free of legal error and, accordingly, affirm them, as discussed above.  As also discussed above, we have determined that the District Court’s imposition and early termination of supervised release, and the period during which Petitioner could not practice medicine in California, have no bearing on the issue of mitigation and, ultimately, the issue of whether an exclusion period longer than the mandatory minimum lies within a reasonable range.  None of these events fall within the ambit of 42 C.F.R. § 1001.102(c), which states that “[o]nly” the factors enumerated in that section “may be considered mitigating.”  In short, Petitioner has not identified any

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cognizable mitigating factor based on the arguments about the sentence to supervised release, early termination of it, and the inability to practice medicine for six years.    

The remaining issue for resolution is the reasonableness of the exclusion period.  On this issue, the I.G. is not wrong in stating that the ALJ’s determination that Petitioner did not establish any mitigating factor in section 1001.102(c) was consistent with the record that was before the ALJ.  We are not stating that the ALJ’s decision was erroneous.  But, when the ALJ issued the decision, the question was whether a 15-year exclusion was reasonable.  Now, as a result of the I.G.’s second amended exclusion notice, the issue is whether a 12-year exclusion is reasonable, and the ALJ has not had an opportunity to consider this specific issue, which we presume remains in dispute.¹¹  Accordingly, we decline the I.G.’s request that we affirm the ALJ Decision, rather than remand this case to the ALJ.   

A remand is appropriate, in accordance with 42 C.F.R. § 1005.21(g), to give the ALJ an opportunity to consider, in the first instance, the specific question of whether a 12-year exclusion lies within a reasonable range.  See Andrew Louis Barrett, DAB No. 2887, at 8-9 (2018) (remanding to ALJ under section 1005.21(g), where I.G. submitted revised exclusion notice to Board that reduced exclusion length, “because the ALJ has not had an opportunity to address that contested issue in the first instance”).

The regulation in 42 C.F.R. § 1005.21(f) provides that the Board may remand the case to the ALJ for consideration of additional evidence not presented to the ALJ if the evidence is relevant and material and there were reasonable grounds for failure to present such evidence to the Board.  The Board is aware that, despite having reduced the 15-year exclusion to 12 years based on the transcript Petitioner initially presented to the Board, the I.G. objects to Petitioner’s submission of it, asserting that Petitioner could have presented and raised mitigation arguments based on it earlier.  But because we have determined that remand to the ALJ is appropriate to issue an “initial decision,” see 42 C.F.R. § 1005.20(a), on the contested exclusion for a period of 12 years, we decline to

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rule on the relevance and materiality of the transcript,¹² and whether Petitioner had “reasonable grounds” for not presenting it earlier to the ALJ, in favor of providing the ALJ an opportunity to rule on the request to admit the transcript into the record. 

Conclusion

We remand this case to the ALJ to consider the reasonableness of the 12-year exclusion period and issue a decision on that issue.  Before issuing a decision, the ALJ is to rule on Petitioner’s request to admit into the record the transcript of the sentencing hearing, based on which the I.G. decided to decrease the exclusion period to 12 years.  Before issuing a decision, the ALJ also may permit the parties to submit additional written argument, as the ALJ determines appropriate, concerning the possible applicability of the mitigating factor in 42 C.F.R. § 1001.102(c)(2), and the mitigating factor in 42 C.F.R. § 1001.102(c)(3) (cooperation with authorities) the I.G. already has applied to reduce the exclusion period from 15 years to 12 years, in furtherance of determining whether a 12-year exclusion lies within a reasonable range.

This remand is not intended to define or prescribe all ALJ actions to be taken before the ALJ issues a decision.  The ALJ may take appropriate actions committed to the ALJ’s authority under 42 C.F.R. Part 1005 before the ALJ issues a decision.

Endnotes

¹  As discussed below, the I.G. initially applied three aggravating factors and excluded Petitioner for 17 years, but during the ALJ proceedings, the I.G. removed the third aggravating factor in section 1001.102(b)(9) and issued an amended exclusion notice that reduced the exclusion to 15 years.

²  This section is drawn from the ALJ Decision and the record before the ALJ.  It is not intended to substitute for the ALJ’s findings.

³  As noted below, the I.G. submitted a sixth exhibit (I.G. Ex. 6) as an attachment to its reply brief.

⁴  The record does not reveal, and Petitioner does not address, the eventual outcome of Petitioner’s challenge of the California Medical Board’s decision to revoke Petitioner’s medical license.  In any event, the California Medical Board’s “adverse action” on Petitioner’s medical license would be relevant only to the extent it raises the possibility of an additional aggravating factor in 42 C.F.R. § 1001.102(b)(9), but that is no longer at issue since the I.G. decided that factor did not apply and accordingly reduced the exclusion period.  See I.G. Ex. 6.

⁵  Petitioner apparently is referring to the District Court’s imposition of “supervised release” as “probation.”  We need not delve into the differences, if any, between “supervised release” and “probation” for purposes of our analysis.

⁶  The regulation in 42 C.F.R. § 1005.21(f) provides that if a party “demonstrates to the satisfaction of the [Board] that additional evidence not presented at [an ALJ] hearing is relevant and material and that there were reasonable grounds for the failure to adduce such evidence at such hearing, the [Board] may remand the matter to the ALJ for consideration of such additional evidence.”

⁷  The August 28, 2023 exclusion notice states:  “Except for the amendment to the period of exclusion and the basis for that amendment, the [original] August 31, 2022, Notice of Exclusion remains in effect,” and “this amendment does not alter or modify in any way the conditions of your exclusion as explained in the enclosure to that notice.”   We understand the I.G.’s August 28, 2023 exclusion notice as meaning that the effective date of the exclusion – 20 days after the date of the original exclusion notice (August 31, 2022) – was not changed.  Accordingly, Petitioner was excluded starting on September 20, 2022 (20 days after August 31, 2022), under section 1128(a)(3) of the Act, for a period of 12 years based on the two aggravating factors in sections 1001.102(b)(1) and (b)(2) and one mitigating factor in section 1001.102(c)(3).

⁸ Petitioner’s brief to the ALJ did not challenge the “financial loss” aggravating factor, but alluded to it in page 1 of the request for hearing, stating, “Petitioner disputes the amount of losses claimed by the [I.G.] and points out that [Petitioner] was not required to make any restitution at all.  Fines were waived and the only monetary sanction was the imposition of a $100.00 assessment.”  The ALJ Decision did not address this point, presumably because Petitioner’s brief to the ALJ did not specifically assert this as a mitigating factor.  In any event, regardless of whether Petitioner could or should have expressly advanced the argument in the brief to the ALJ, ultimately, the argument is unavailing for the reasons we explain.

⁹  In page 1 of the request for hearing, Petitioner made a passing reference to the District Court’s imposition of a light sentence (stating “[n]o prison time was ordered” and “Petitioner was placed on supervised release for a period of two years”), but did not further argue before the ALJ that this supports any mitigating factor in section 1001.102(c).  The ALJ Decision presumably did not address that point because Petitioner did not expressly advance it in the brief submitted to the ALJ.  In any case, regardless of when Petitioner expressly raised the argument, it is unavailing.

¹⁰  For this reason, it is immaterial whether Petitioner was in fact sentenced to “incarceration,” which is defined as “imprisonment or any type of confinement with or without supervised release, including, but not limited to, community confinement, house arrest and home detention.”  42 C.F.R. § 1001.2.  We do note, however, that the probation monitor referred to Petitioner’s completion of the court’s conditions for “home detention.”  See P. Ex. 1. 

¹¹  Petitioner presumably does not take issue with the I.G.’s reduction of the exclusion period after the ALJ upheld the 15-year exclusion.  However, since the I.G. filed the response brief and the August 28, 2023 exclusion notice, Petitioner has not requested leave to file a reply brief stating Petitioner’s position, withdrawn the appeal, or otherwise notified the Board that Petitioner accepts the imposition of a 12-year exclusion and no longer wishes to challenge that action.  See Acknowledgment of Appeal at 2 (July 31, 2023) (stating that Board may “permit[] a party to file a reply”).  Under these circumstances, we assume that Petitioner wishes to continue pursuing the appeal and, specifically, to challenge the 12-year exclusion period. 

¹²  Were we to consider this question now, we could not say that the transcript has no relevance to the mitigation issue, especially when it is plain that the I.G. was satisfied that the transcript sufficiently proves the existence of the mitigating factor in section 1001.102(c)(3), and therefore further reduced the exclusion period to 12 years, despite arguing that Petitioner presented the transcript late.  We note, moreover, that Petitioner raises an argument based on the transcript – history of trauma as a refugee from Vietnam following the war – that implicates the potential applicability of a mitigating factor recognized in section 1001.102(c)(2).