Fuentes v. Becerra, Civil Action 4:20-cv-00026

CourtUnited States District Courts. 4th Circuit. United States District Court (Western District of Virginia)
Writing for the CourtMichael F. Urbanski, Chief United States District Judge
Docket NumberCivil Action 4:20-cv-00026
PartiesDR. EDWIN L. FUENTES, Plaintiff, v. XAVIER BECERRA, in his official capacity as Secretary of the United States Department of Health and Human Services, [1]Defendant.
Decision Date23 September 2021

DR. EDWIN L. FUENTES, Plaintiff,

XAVIER BECERRA, in his official capacity as Secretary of the United States Department of Health and Human Services, [1]Defendant.

Civil Action No. 4:20-cv-00026

United States District Court, W.D. Virginia, Danville Division

September 23, 2021


Michael F. Urbanski, Chief United States District Judge

Dr. Edwin L. Fuentes, a licensed osteopathic physician, was convicted of health care fraud and tax evasion in January 2018. The Secretary of the Department of Health and Human Services (the “Secretary”), acting through the Office of Inspector General, notified Dr. Fuentes shortly thereafter that he would be excluded from participating in federal health care programs for 15 years under 42 U.S.C. § 1320a-7(a). Following an unsuccessful administrative appeal, Dr. Fuentes filed this action seeking judicial review of the Secretary's final decision.

The case is presently before the court on (1) the Secretary's motion for judgment on the pleadings or, in the alternative, for summary judgment; (2) Dr. Fuentes's motion for judgment on the pleadings or, in the alternative, for summary judgment; and (3) Dr. Fuentes's motion to supplement the administrative record or, in the alternative, admit extra-record evidence. The matter has been fully briefed, and the court heard oral argument on August 30, 2021. For the reasons set forth below, Dr. Fuentes's motions are DENIED, the Secretary's motion is GRANTED, and the Secretary's final decision is AFFIRMED.


I. Statutory and Regulatory Background

Section 1128(a) of the Social Security Act requires the Secretary to “exclude . . . individuals and entities from participation in any Federal health care program” if they have been convicted of certain types of criminal offenses. 42 U.S.C. § 1320a-7(a). The Secretary has delegated the responsibility for imposing exclusions to the Office of the Inspector General (“OIG”). 53 Fed. Reg. 12, 993 (Apr. 20, 1998). Individuals and entities for whom exclusion is mandatory include the following:

(1) Conviction of program-related crimes
Any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under [Medicare] or under any State health care program
(3) Felony conviction relating to health care fraud
Any individual or entity that 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 paragraph (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

42 U.S.C. § 1320a-7(a)(1), (3).

Unless certain exceptions apply, the mandatory exclusion period lasts a minimum of five years. See 42 U.S.C. § 1320a-7 (c)(3)(B). Regulations implementing the mandatory exclusion provisions list nine factors that may be considered when increasing an exclusion beyond the five-year mandatory minimum. See 42 C.F.R. § 1001.102(b). The regulations provide that “[a]ny” of the listed factors “may be considered to be aggravating and a basis for lengthening the period of exclusion, ” including the following factors relevant to this case:

(1) 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);
(2) The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; [and] ....
(5) The sentence imposed by the court included incarceration[.]

Id. If any aggravating factors are found to exist, certain “mitigating factors [may] be considered as a basis for reducing the period of exclusion to no less than 5 years.” Id. § 1001.102(c).

If the OIG determines that exclusion is warranted, it sends a written notice to the excluded individual that identifies the basis for the exclusion, the length of the exclusion, and the factors considered in determining the length. Id. § 1001.2002. The excluded individual may request a hearing before an administrative law judge (“ALJ”). Id. § 1005.2(a). The ALJ may “only” consider the following issues: (1) whether “[t]he basis for the imposition of the sanction exists, ” and (2) whether “[t]he length of exclusion is unreasonable.” Id. § 1001.2007(a).

The parties to the proceedings before the ALJ are the petitioner (the excluded individual) and the Inspector General (“IG”). Id. § 1005.2(b). Either party “may make a request to another party for the production of documents for inspection and copying which are relevant and material to the issues before the ALJ.” Id. § 1005.7(a). If the request is refused, the requesting party may file a motion for an order compelling discovery. Id. § 1005.7(e). The opponent of the discovery request may, in turn, file a motion for protective order, which an ALJ may grant if the ALJ finds that the requested discovery is irrelevant, unduly costly or burdensome, will unduly delay the proceeding, or seeks privileged information. Id.

An ALJ has the authority to schedule a hearing; examine witnesses; and receive, rule on, and exclude or limit evidence. Id. § 1005.4(b). Either party may choose to “waive appearance at an oral hearing and to submit only documentary evidence (subject to the objection of other parties) and written argument.” Id. § 1005.6(b)(5). An ALJ is also authorized to decide a case, “in whole or in part, by summary judgment where there is no disputed issue of material fact.” Id. § 1005.4(b)(12).

Either party may appeal the ALJ's initial decision by filing a notice of appeal with the Appellate Division of the Departmental Appeals Board (“DAB”). Id. § 1005.21(a). “Within 60 days after the time for submission of briefs and reply briefs, if permitted, has expired, the DAB will issue to each party to the appeal a copy of the DAB's decision . . . .” Id. § 1005.21(i). In reaching its decision, the DAB applies the following standards of review:

The standard of review on a disputed issue of fact is whether the initial decision [of the ALJ] is supported by substantial evidence on the whole record. The standard of review on a disputed issue of law is whether the initial decision [of the ALJ] is erroneous.

42 C.F.R. § 1005.21(h).

The DAB's decision “becomes final and binding 60 days after the date on which the DAB serves the parties with a copy of the decision.” Id. § 1005.21 (j). Within that same timeframe, a party may seek judicial review in federal district court. Id. § 1005.21(k)(1); see also 42 U.S.C. § 1320a-7(f)(1) (providing that “any individual or entity that is excluded (or directed to be excluded) from participation under this section is entitled to . . . judicial review of the Secretary's final decision . . . as is provided in section 405(g) of this title”).

II. Factual and Procedural Background

A. Criminal Proceedings

Dr. Fuentes owned and operated Morning Star Family Medicine (“Morning Star”) in Danville, Virginia. Admin. R. (“A.R.”), ECF No. 13-1, at 710.[2] From January 2012 through December 2014, Dr. Fuentes “knowingly and willfully directed and ordered Morning Star employees to bill various health care benefit programs through a scheme designed to defraud those programs.” Id. In addition to billing health care benefit programs for patient visits under an evaluation and management code, Dr. Fuentes “would bill the health care benefit programs for ‘preventative counseling' sessions for the exact same patient visits, which would result, effectively, in a double billing of the health care benefit program for a single patient visit.” Id. Dr. Fuentes “attempted to conceal the fraud by marking the progress notes with a stamp that stated that the patient had received some type of counseling, although this counseling had not occurred and this statement in the patient file was false.” Id. During the three-year period in which the fraudulent billing occurred, various health care benefit programs overpaid Dr. Fuentes over $998, 000 for services that were not never provided to patients. Id. at 710-11.

On July 18, 2017, Dr. Fuentes pleaded guilty to a two-count information filed in the United States District Court for the Western District of Virginia, which charged him with health care fraud, in violation of 18 U.S.C. § 1347, and tax evasion, in violation of 26 U.S.C. § 7201. Id. at 683-85. On January 9, 2018, Dr. Fuentes was sentenced to a term of imprisonment of 24 months. Id. at 704. As part of his sentence, he was ordered to pay $1, 859, 963.40 in restitution, of which $243, 451.27 was owed to Medicare. Id. at 708.

B. Exclusion by the Inspector General

By letter dated April 30, 2018, the OIG notified Dr. Fuentes that he was being excluded from participation in Medicare, Medicaid, and all other federal health care programs “for a minimum period of 15 years.” Id. at 679. The letter stated that “[t]his action is being taken under sections 1128(a)(1) and 1128(a)(3) of the Act, ” as a result of the conviction for health care fraud in the Western District of Virginia. Id. The letter explained that the 15-year period of exclusion was based on the following aggravating factors set forth in 42 C.F.R. § 1001.102(b):

1. The acts resulting in the conviction, or similar acts, caused, or were intended to cause, a financial loss to a

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