Health Law Daily Wrap Up, PROGRAM INTEGRITY—DAB DECISIONS: No Due Process error where improper Amended Notice caused no actual prejudice to Petitioner, (May 12, 2026)

By Jeffrey H. Brochin, J.D.

Board rejected Petitioner’s claim that the I.G. attempted to circumvent the power of ALJ and ‘reset’ the proceedings by issuing an amended exclusion notice, because this did not violate his Due Process in the absence of showing actual prejudice.

The Department of Health and Human Services Departmental Appeals Board (DAB or Board) has affirmed the decision of the ALJ which upheld the Inspector General’s (I.G.’s) 16 -year exclusion of the Petitioner from participation in all federal health care programs for 16 years under section 1128(a)(1) of the Social Security Act (Act). The Petitioner had pleaded guilty to one count of health care fraud, and the presence of three mitigating factors allowed the I.G. to impose the 16-year exclusion after finding that there were no mitigating factors applicable to the determination. Although the Petitioner pointed to personal circumstances as a mitigating factor to be considered, only those mitigating factors specified in the regulation were permitted to be weighed by the I.G, the ALJ and the Board (Cesar Sturla, DAB No. 3217, Doc. No. A-25-105 (Dec. 4, 2025)).

DME fraud scheme. In October 2021, the United States Department of Justice charged the Petitioner, a Michigan physician, with one count of Health Care Fraud under 18 U.S.C. §§1347 and 2. He allegedly ordered braces that were medically unnecessary, for patients with whom he lacked a pre-existing doctor-patient relationship, without a physical examination, without communicating with the Medicare beneficiary, and frequently without reviewing the patient information that was provided to him. He also allegedly falsely represented that he had performed particular diagnostic tests and concealed the fact that he never saw the beneficiaries face-to-face, nor had any telephone conversations with the beneficiaries for whom he fraudulently submitted Durable Medical Equipment (DME) orders.

Petitioner agreed to plead guilty to one count of Health Care Fraud, and acknowledged that he accepted kickbacks in exchange for signing doctors’ orders that were provided to him electronically for medically unnecessary DME. He further admitted that the orders he signed were used to fraudulently bill Medicare at least $1,817,004.69 for the DME. He was ordered to pay restitution in the amount of $922,006.31, and was sentenced to 20 months of imprisonment with one subsequent year of supervised release.

Exclusion from program participation. In May 2024, the State of Michigan Board of Medicine suspended the Petitioner’s license to practice as a medical doctor in that state, as required upon his conviction for a felony offense. The I.G. then notified the Petitioner on September 30, 2024 that he was excluded for 17 years from participation in all federal health care programs pursuant to section 1128(a)(1) of the Act. The I.G.’s Notice of Exclusion cited his conviction of a ‘criminal offense related to the delivery of an item or service under Medicare or a State health care program’, and stated four aggravating factors as cause to impose an exclusion beyond the statutory five year minimum period.

The Petitioner requested an ALJ hearing in which he conceded that the I.G. had a basis for imposition of an exclusion but he argued that the exclusion period should be reduced to five years. In response the I.G. argued that the original 17-year exclusion term was “reasonable” in light of the four originally cited aggravating factors including: (a) acts resulting in conviction and causing or intended to cause a financial loss to the government of $50,000 or more; (b) that the sentence imposed by the court included incarceration; and (c) that the individual had been the subject of any other adverse action by any federal, state or local government agency or board. Although there was initially a fourth aggravating factor cited by the I.G, on April 24, 2025, the I.G. filed a notice amending the original Notice of Exclusion, and reducing the Petitioner’s exclusion term to 16 years, based on reevaluation of the aggravating circumstances, and the removal of the aggravating factor applicable when the acts that resulted in the conviction were committed over a period of one year or more. The ALJ entered his decision affirming the exclusion from program participation for a period of 16 years from which the Petitioner took the instant appeal.

Claim of improper Amended Notice. The Petitioner argued on appeal that the ALJ improperly admitted the Amended Notice – which held that one of the four originally-cited aggravating factors did not apply – which therefore ‘reset the proceedings. This amounted to the I.G. attempting to circumvent the power given to an ALJ by issuing an amended exclusion notice to the Petitioner during proceedings before the ALJ, and was therefore a denial of Due Process.

The Board referenced precedent which has held that ‘absent a showing of actual prejudice, the Board will not find that a party has been denied Due Process based on improper notice of a federal agency’s adverse determination.’ Here, the Board rejected the Petitioner’s contention, noting that he showed no actual prejudice from the Amended Notice.

Aggravating and mitigating factors. The Petitioner next argued that the I.G. improperly weighed the value of the deleted aggravating factor and that this should have resulted in a greater reduction than one year. However, the Board observed that an ALJ reviews the length of an I.G. exclusion de novo to determine whether it falls within a reasonable range, considering all applicable aggravating and mitigating factors. By design, the I.G. has broad discretion in determining an exclusion’s length, and so long as the I.G. chooses an amount of time within a reasonable range--based on demonstrated criteria--the ALJ has no authority to change it. Furthermore, the deference by the ALJ was appropriate, given the I.G.’s ‘vast experience in implementing exclusions under these authorities.’ Accordingly, the Board found no error by the ALJ in accepting the 16-year exclusion.

The Petitioner cited the fact that he ‘has a wife and two children who rely on him for support,’ as a mitigating factor, however, The Board ruled that his circumstances did not fall within one of the three permissible mitigating factors pursuant to the regulations.

Based on the foregoing, the Board affirmed the IG’s exclusion of the Petitioner from participation in Medicare, Medicaid, and all other federal health care programs for 16 years pursuant to section 1128(a)(2) of the Social Security Act.

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