Health Law Daily Wrap Up, ADMINISTRATION OF MEDICARE/MEDICAID PROGRAMS—DAB DECISIONS: Fraud conviction results in 14 year mandatory exclusion, (Jun 3, 2026)
By WK Editorial Staff
The ALJ sustained the exclusion where undisputed fraud conviction and aggravating factors justified an extended period without recognized mitigation.
The HHS Departmental Appeals Board (DAB) determined that exclusion from federal health care programs was mandated under section 1128(a)(1) of the Social Security Act and that a 14-year exclusion period imposed by the Inspector General (IG) was not unreasonable, because a physician was convicted of a felony related to the delivery of health care services. An administrative law judge (ALJ) noted that the exclusion period was properly extended beyond the statutory minimum due to three aggravating factors. The physician failed to establish the existence of any mitigating factor recognized by the regulations (Linh Cao Nguyen, MD, DAB No. CR6845, Doc. No. C-24-554 (Feb. 26, 2026)).
Section 1128(a)(1) of the Social Security Act requires exclusion from Medicare, Medicaid, and all federal health care programs for any individual convicted of a criminal offense related to the delivery of an item or service under those programs. The statutory framework mandates a minimum exclusion period of five years. The duration may be extended if aggravating factors specified in 42 C.F.R. § 1001.102(b) are present. Mitigating factors under 42 C.F.R. § 1001.102(c) may only be considered if aggravating factors justify an exclusion exceeding five years.
The ALJ found that exclusion was mandatory because the physician was convicted of a qualifying offense within the meaning of section 1128(a)(1). The conviction resulted from a guilty plea to health care fraud under 18 U.S.C. § 1347, which was accepted by a federal district court and resulted in a judgment of conviction. The physician admitted to knowingly submitting thousands of false billing claims to federal health care programs, including Medicare and Medicaid, and acknowledged substantial financial losses exceeding $3.7 million.
The ALJ applied a “common-sense connection” or “nexus” test to determine whether the offense was related to the delivery of health care items or services under federal programs. The admitted fraudulent billing directed at federal and state health care programs by the physician demonstrated a direct and substantial connection. The ALJ determined that the nexus requirement was satisfied, noting that the scheme targeted program reimbursement mechanisms and resulted in significant financial harm to federal health care programs.
The Inspector General (IG) extended the exclusion period to 14 years based on three aggravating factors:
Significant financial loss: The physician’s conduct resulted in losses far exceeding the $50,000 regulatory threshold, with total losses exceeding $3.7 million.
Duration of conduct: The fraudulent scheme occurred over an extended period, from approximately 2016 through 2021.
Incarceration: The physician was sentenced to 24 months of imprisonment.
The physician did not dispute the existence of these aggravating factors. Additionally, the ALJ found that no mitigating factor existed. Although the physician provided evidence showing mental health conditions, including depression and substance dependence, regulations required a specific determination that such conditions reduced culpability. However, the ALJ found that the record did not support this requirement.
The ALJ also emphasized that adjustment of the exclusion period was only appropriate if the IG relied on an aggravating factor that did not exist or failed to consider a mitigating factor that did exist. In this case, all cited aggravating factors were supported by the record, and no mitigating factors were established. The ALJ further noted that the regulations did not require the IG to explain how it weighed aggravating factors when determining the exclusion period. The absence of such an explanation did not undermine the validity of the exclusion.
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