Health Law Daily Wrap Up, FRAUD AND ABUSE—DAB DECISIONS: Mandatory exclusion, aggravating factors support 20-year program bar for fraud conviction, (Jul 6, 2026)

By WK Editorial Staff

An HHS Departmental Appeals Board (DAB) administrative law judge (ALJ) affirmed a 20-year exclusion based on substantial fraud, prolonged misconduct, incarceration, and absence of mitigating factors. The ALJ upheld the Inspector General’s (IG) determination to exclude a certified addiction counselor from participation in Medicare, Medicaid, and all federal health care programs for 20 years under section 1128(a)(1) of the Social Security Act, concluding that the exclusion was mandatory and that the length imposed was not unreasonable given the established aggravating factors and the absence of mitigating circumstances (Darla Byus, DAB No. CR6898, Doc. No. C-25-803 (May 18, 2026)).

The ALJ found the Inspector General demonstrated a valid basis for exclusion and properly applied regulatory aggravating factors to extend the exclusion period beyond the five-year statutory minimum, and the petitioner did not establish any mitigating factors to warrant reduction.

Regulations require exclusion of any individual convicted of a criminal offense related to the delivery of health care services under Medicare or a state health care program. The record established that the counselor entered a guilty plea to multiple criminal charges, including health care fraud, aggravated identity theft, and filing false tax returns, which the district court accepted and for which it entered a judgment of conviction. These facts satisfied the statutory definition of “conviction,” which includes guilty pleas accepted by a court and formal judgments entered in criminal proceedings.

The ALJ concluded that the petitioner’s criminal offense was directly related to the delivery of services under a state Medicaid program. The counselor admitted to submitting fraudulent claims for addiction counseling services that were never rendered, targeting individuals whose identities were used without authorization. The fraudulent billing scheme caused financial loss to the state Medicaid program and involved submission of claims for non-existent services, thereby establishing a direct nexus between the offense and the delivery of health care services.

The issue in dispute was whether the IG’s decision to impose a 20-year exclusion was unreasonable. Under the applicable regulations, the IG may extend the exclusion period based on specified aggravating factors, and the ALJ’s role is limited to determining whether the resulting period falls within a reasonable range based on those factors.

The ALJ found that the IG established four aggravating factors that justified extending the exclusion period. First, the financial loss resulting from the counselor’s conduct substantially exceeded the regulatory threshold of $50,000. The counselor admitted to receiving more than $1.5 million in fraudulent payments from the Medicaid program, and this amount was ordered as restitution. The magnitude of the loss significantly exceeded the minimum threshold and reflected a high degree of program harm and untrustworthiness. Additionally, the counselor’s misconduct occurred over a period exceeding one year. The ALJ noted that the admitted time frame for fraudulent conduct spanned approximately two years, demonstrating sustained and deliberate wrongdoing. Moreover, the sentence imposed by the district court included a term of incarceration of 48 months. The ALJ recognized incarceration as a proxy for the seriousness of the offense and an indicator of untrustworthiness. Finally, the counselor was convicted of additional offenses beyond the health care fraud charge forming the basis for exclusion. The convictions for aggravated identity theft and false tax filings constituted separate criminal conduct and satisfied the regulatory criterion for additional offenses. As such, the ALJ noted that the presence of multiple convictions indicated a broader pattern of unlawful behavior and further supported extending the exclusion period.

The ALJ also determined that no mitigating factors were present under the applicable regulations. The ALJ found the extensive financial loss particularly significant, as it was approximately 30 times the regulatory threshold and reflected substantial harm to a public benefits program. The sustained duration of fraudulent conduct and the targeting of vulnerable individuals further demonstrated a pattern of intentional misconduct. The incarceration sentence reinforced the seriousness of the offense, and the existence of additional convictions indicated broader criminality.

The ALJ concluded that the 20-year exclusion fell within a reasonable range given the severity and scope of the misconduct.

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