Health Law Daily Wrap Up, FRAUD AND ABUSE—DAB DECISIONS: Submission of claims for patient appointments that never occurred results in 20 year exclusion, (Sep 6, 2024)

By Susan L. Smith, JD, MA

The HHS Inspector General properly excluded a physician from participating in all federal health care programs for a minimum period of 20 years after the physician pleaded guilty of submitting false claims to Medicare for a period of four years for services he never rendered.

The Departmental Appeals Board (DAB) administrative law judge (ALJ) affirmed the HHS Inspector General’s (IG’s) determination to exclude a physician who was convicted of a criminal offense from participation in all federal health care programs for a period of 20 years. The physician pleaded guilty health care fraud admitting that he had submitted false and fraudulent claims for prescription drugs to the Medicare program for patients based on face-to-face office visits that never occurred. The District Court sentenced the physician to five years of probation, 100 hours of unpaid community service, and ordered him to pay $1,941,017.26 in restitution to the Medicare program. The ALJ found that the IG had established two aggravating factors to support extending the exclusion period to 20 years; the amount of the loss to Medicare and the length of the scheme to defraud the Medicare program. The physician, however, failed to identify any mitigating factors that would reduce the exclusion period. Thus, the ALJ concluded that the length of the exclusion is not unreasonable (Cubano-Martinez, DAB No. CR6446, Doc. No. C-23-665 (Mar. 22, 2024)).

ALJ’s analysis. The ALJ concluded that the facts presented established the connection between the physician’s conviction and the delivery of services to the Medicare program; thus, the physician had to be excluded for a minimum of five years. The ALJ also determined that the IG had established two aggravating factors to justify extending the physician’s exclusion period beyond the five year statutory minimum.

Aggravating factors. First, the IG established that the physician offense conviction arose from acts that occurred for one year or more. Specifically, the physician participated in a scheme to defraud the Medicare program from approximately June 2016 through May 2020. Second, the IG established that the physician was responsible for more than $50,000 in loss to the Medicare program. The District Court ordered the physician to pay $1,941,017.26 in restitution to the Medicare program.

Mitigating factors. Although the physician contended that his exclusion should be reduced to one year, he failed to identify mitigation factors to reduce his exclusion period. The regulation states only three circumstances that permit mitigation: (1) the exclusion is premised on three or fewer misdemeanor offenses and the financial loss is less than $5,000; (2) records from the underlying criminal proceeding establish a mental, emotional, or physical condition that a court determined reduced an individual’s culpability; and (3) the record reflects cooperation with federal or state officials that results in others being convicted or excluded, other cases being investigated or reports being issued to identify program vulnerabilities, or others being subject to a civil money penalty or assessment (42 C.F.R. § 1001.102(c)).

Rather than identify any of the mitigating factors as grounds to reduce his exclusion period, the physician argued that a 20-year exclusion period constitutes cruel and unusual punishment in violation of the Eighth Amendment of the United States Constitution. Further, he asserted that a 20-year period of exclusion would essentially preclude him from ever repaying the restitution he owes and constitutes a hardship given his advanced age. In addition, he argued that his poor, rural patients would be ill-served by his exclusion and thus alternatively seeks a six-month delay in his exclusion to allow time for him to transition them as needed. The ALJ explained that he could not weigh the merit of his arguments because he was not empowered to hear constitutional claims and the physician claim was misplaced because the exclusion action taken by the IG is not a criminal sanction and is not intended as a punitive measure.

Reasonableness of exclusion period. In assessing the reasonableness of the IG’s exclusion period, the ALJ noted that the physician’s conduct resulted in a staggering loss to the Medicare program, over $1.9 million. Further, the duration of the physician offense reflects a level of culpability, unworthiness, and a sustained lack of integrity.

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