SUBJECT:

Karl Eric Swanson, M.D.,

Petitioner,

The Inspector General

DECISION

By letter dated February 28, 2002, the Inspector General (I.G.), United States Department of Health and Human Services, notified Karl Eric Swanson, M.D., (Petitioner), that he would be excluded from participation in the Medicare, Medicaid, and all federal health care programs as defined in section 1128B(f) of the Social Security Act (Act), for a period of five years. The I.G. imposed this exclusion, pursuant to section 1128(a)(4) of the Act because of Petitioner's guilty plea in the United States District Court for the Northern District of Florida to the charge of conspiracy to possess with intent to distribute a controlled substance in violation of 21 U.S.C. �� 841, 846. As explained below, I sustain the I.G.'s determination to exclude Petitioner from participating in Medicare, Medicaid, and all federal health care programs for a period of five years.

I. Background

After Petitioner's timely request for hearing on May 1, 2002, to contest the basis for his exclusion, I held a prehearing telephone conference with the parties. During the telephone conference, the I.G. said she planned to file a motion for summary judgment and that she believed an in-person hearing would be unnecessary. At Petitioner's request, however, I agreed to reserve judgment on the necessity of an in-person hearing until after the parties had filed their proposed exhibits and briefs. Thereafter in this proceeding, the following motions and supporting briefs were filed:

� On July 19, 2002, The I.G. filed The Inspector General's Motion for Summary Disposition and Brief in Support (I.G. Br.).

� On August 26, 2002, Petitioner filed Petitioner's Proposed Findings of Fact and Conclusions of Law (P. Br.).

� On October 18, 2002, the I.G. filed The Inspector General's Reply to Petitioner's Response (I.G. R. Br.).

� On December 1, 2002, Petitioner filed Petitioner's Brief and Response and Request for an In-Person Hearing (P.R. Br.).

The I.G. submitted four proposed exhibits (I.G. Exs. 1 - 4). Petitioner submitted three proposed exhibits (P. Exs. 1-3) and four affidavits. Petitioner did not object to the I.G.'s proposed exhibits and they are therefore admitted into the record. The I.G. objected pursuant to 42 C.F.R. � 1005.17(c) to the admission of Petitioner's proposed exhibits and affidavits as the I.G. claims the submissions are irrelevant. For purposes of a complete record, I have admitted P. Exs. 1 - 3 and Petitioner's affidavits. I discuss below the weight I give to Petitioner's proposed exhibits and Peitioner's four affidavits.

Because I have determined there are no material facts at issue and the only matter to be decided is the legal significance of the facts, I have decided that summary disposition is appropriate. Even if I were to assume all facts as alleged by Petitioner, my decision would not change. Petitioner's credibility is not at issue. Therefore, the case can be decided on the basis of the parties' written submissions in lieu of an in-person hearing. See, e.g., Fed. R. Civ. P. 56(c); Garden City Medical Center, DAB No. 1763 (2001); Everett Rehabilitation and Medical Center, DAB No. 1628, at 3 (1977) (in-person hearing required where non-movant shows there are material facts in dispute that require testimony). To show material facts are in dispute, the opposing party must go beyond mere allegations, and come forward with factual evidence that creates a genuine issue of material fact. All reasonable inferences are to be drawn in the opposing party's favor. Pollock v. American Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3rd Cir. 1986).

In making this Decision to sustain the I.G.'s imposition of an exclusion against Petitioner, I have considered the record exhibits, the parties' arguments, and the applicable law and regulations.

II. Applicable Law

Under section 1128(a)(4) of the Act, it is mandatory that the Secretary exclude from participation in the federal health care programs any individual who has been convicted of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a)(4) shall not be less than five years.

Under 21 U.S.C. � 841(a), it is unlawful to knowingly or intentionally manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance. Moreover, any person who attempts or conspires to commit this offense shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt or conspiracy. 21 U.S.C. � 846. The penalty for this offense is set forth in 21 U.S.C. � 841(b)(1)(C). The penalty is a term of imprisonment of not more than 20 years.

III. Issues

Two primary issues are presented in this case: (1) whether a basis exists under section 1128(a)(4) of the Act for Petitioner's exclusion, and (2) whether the length of the exclusion is reasonable.

IV. The Parties' Contentions

A. Petitioner's Arguments

The Petitioner's main argument is that a conviction for "conspiracy to possess with intent to distribute a controlled substance" is not a criminal offense related to the "unlawful manufacture, distribution, prescription, or dispensing of a controlled substance" within the meaning of section 1128(a)(4). Petitioner asserts that "possession with intent to distribute" is not "distribution" and "distribution" is what is required for exclusion under section 1128(a)(4). His rationale is that "possession and a state of mind to distribute is not a crime relating to actual distribution anymore than possession of a firearm with a state of mind to kill is related to an actual murder." P.R. Br. at 2. He refers to the language of section 1128 (a)(4) as clearly setting forth Congress' intention that the mandatory exclusion be applied to individuals who are convicted of crimes of drug trafficking or the enterprise of drug dealing. He argues that Congress did not intend to exclude individuals with an alcohol or drug problem, but to exclude individuals convicted of more nefarious crimes such as drug dealing and trafficking. Id. Finally, Petitioner argues that some weight should be given to the fact that he is the only board certified anesthesiologist on staff at the local hospital in an underserved area with primarily Medicare/Medicaid patients.

B. The I.G.'s Arguments

The I.G. contends that all of the elements exist to require Petitioner's exclusion for the statutory minimum of five years in that: (1) Petitioner was convicted (2) of a felony (3) after August 21, 1996 (4) that is related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. The I.G. responds to Petitioner's arguments by arguing that the Departmental Appeals Board (DAB or Board) has already considered and affirmed that "possession of a controlled substance with intent to distribute" is related to "distribution" of a controlled substance within the meaning of Section 1128 (a)(4), and the I.G. cites Frank R. Pennington, M.D., DAB No. 1786 (2001) as support. It is the I.G.'s contention that a clear nexus or connection exists between the offense of "conspiracy to possess with intent to distribute a controlled substance" and "distribution of a controlled substance." The I.G. proffers that if a clear nexus or connection exists between the two, the offense committed relates to the exclusion-triggering activities listed in the statute.

V. Findings of Fact and Conclusions of Law

I discuss my findings and conclusions below each lettered paragraph.

A. Petitioner pled guilty to violating 21 U.S.C. �� 841, 846.

Petitioner argues that whether an exclusion authority applies in a particular case depends on the facts that formed the basis for the conviction. He further contends that these facts can only be determined by an in-person hearing where documentary evidence, witnesses, and oral arguments can be presented. I cannot accept Petitioner's arguments on these points. It is clear the conviction stands on its own and I cannot retry what led to the conviction. 42 C.F.R. � 1001.2007 (d); Travers v.Shalala, 20 F.3rd 993, at 998 (9^th Cir. 1994).

All subsections of section 1128(a) of the Act use the term "relating to" in setting forth the activities that trigger mandatory exclusions. For purposes of other subsections, e.g., a crime that is "related to" Medicare or Medicaid, whether the required relationship exists must be a common sense determination based on all relevant facts as determined by the finder of fact, ". . . not merely a narrow examination of the language within the four corners of the final judgment and order of the criminal trial court." Teri L. Gregory, DAB CR336 (1994). This does not mean, however, that an in-person hearing is required in this case.

I will accept all facts as proffered in the affidavit of Petitioner's attorney concerning what occurred that led to the charges against Petitioner. In-person testimony about the facts leading to the charges against Petitioner or Petitioner's character, credibility, current sobriety, or importance to the medical community where he practices would, however, be unavailing to him in altering the plain fact that he pled guilty to a violation of 21 U.S.C. �� 841, 846. Petitioner also argues that a material fact exists as to whether he was convicted of a criminal offense that falls within the meaning of section 1128(a)(4). I find this inquiry to be a legal question, not a factual issue.

I will summarize, nonetheless, Petitioner's factual allegations concerning his arrest and later guilty plea. These facts are relevant only in determining whether there is a common sense nexus between what Petitioner was convicted of and the language of section 1128 (a)(4) of the Act. I cannot retry whether Petitioner was actually guilty of conspiracy to possess with the intent to distribute controlled substances.

1. There is no evidence Petitioner was a drug dealer or trafficking in controlled substances. Petitioner was involved in an acrimonious divorce and custody proceeding for his four children. As a result of his depression over this situation, he was using alcohol and occasionally cocaine and Ecstacy. Petitioner and his woman friend were at a local nightclub one evening and met another couple. The other man purchased cocaine from an unknown source for consumption by the four of them. Thereafter, the other man was arrested for trafficking in cocaine. The other man began cooperating with police and contacted Petitioner several times over the next several weeks during which Petitioner agreed to purchase cocaine for his own use. The Petitioner was then arrested and his house was searched. A small amount of Ecstasy and an empty Valium bottle were seized. No trafficking amounts of drugs were found. "The 'intent to distribute' drugs is limited to the sharing of the drugs with his girlfriend." Drew Pinkerton Affidavit, at 2.

2. Petitioner successfully completed the Florida Physician's Recovery Network In-House Program. Petitioner suffered from alcoholism and drug addiction which caused him to seek illegal drugs for his own use. Petitioner has since remained sober and is periodically monitored by the program to assure sobriety. Raymond M. Pomm, M.D., affidavit.

3. The Petitioner is currently serving in a rural area which is designated as 'underserved' by physicians. The area where Petitioner currently practices has a large population of Medicare/Medicaid recipients and Petitioner is the only anesthesiologist available to support the general surgeons at the hospital where Petitioner has privileges. James H. Thompson, Ph.D., FACHE, affidavit.

B. Petitioner was convicted of a criminal offense that occurred after 1996 and is a felony under federal or State law.

On July 13, 2000, a criminal information was filed against Petitioner in the U.S. District Court for the Northern District of Florida. I.G. Ex. 3. The information alleged that between March 1, 2000, and July 13, 2000, Petitioner "did knowingly, willfully combine, conspire, confederate, agree, and have a tacit understanding with other persons to possess with intent to distribute" cocaine, a Schedule II controlled substance, Ecstacy, a Schedule I controlled substance, and Valium, a Schedule IV controlled substance, in violation of 21 U.S.C. �� 841 and 846. Id.

Also on July 13, 2000, Petitioner entered into a plea agreement with the United States Attorney for the Northern District of Florida. I.G. Ex. 4. As part of that agreement, Petitioner pled guilty to conspiracy to possess with intent to distribute the controlled substances of cocaine, Ecstacy, and Valium. I.G. Ex. 4.

On October 26, 2000, criminal judgment was entered against Petitioner based upon his plea of guilty. I.G. Ex. 2. Petitioner was sentenced to five years probation, mandatory participation in a drug treatment program, 400 hours of community service, and payment of a $5000 fine. Id.

Because an individual is considered to be "convicted" for the purposes of section 1128 of the Act "when a judgment of conviction has been entered against the individual or entity by a Federal, State, or local court" or "when a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State or local court," I find that Petitioner was convicted because his guilty plea was accepted by a federal court and a criminal judgment was entered against him on that plea. I.G. Exs. 2, 4. Sections 1128(i)(1) and (3) of the Act; 42 C.F.R. � 1001.2.

As set forth in 21 U.S.C. �� 841 (a)(1), (b)(1)(C) and (b)(2), and 846, the federal crime of "conspiracy to possess with intent to distribute a controlled substance" is punishable by a sentence of up to twenty years. Absent an alternative classification, if an offense in the federal criminal statutes has a maximum authorized term of imprisonment between ten and twenty-five years, it is considered a Class C felony. 18 U.S.C. � 3559(a)(3). Therefore, I find that Petitioner was convicted of a felony under federal law.

Because the criminal information to which Petitioner pled guilty describes the criminal activity as taking place between March 2000 and July 2000 and because the criminal judgment was entered against him in October 2000, I find that Petitioner's conviction was after the enactment of the Health Insurance Portability and Accountability Act of 1996. Therefore, I find that, if Petitioner's crime was related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, his conviction has met all other elements required for triggering the mandatory exclusion under section 1128 (a)(4) of the Act.

C. The felony to which Petitioner pled guilty is related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

I find many of Petitioner's arguments to be facially compelling. In particular, is there not a difference between "conspiracy to possess with intent to distribute" and distribution itself? I searched for prior Board cases for guidance. I could not find any cases which are on "all fours" with this case and in which the petitioner had actually contested the issue of whether "conspiracy to possess with intent to distribute" is related to unlawful distribution.

The closest case to this one is Frank R. Pennington, M.D., DAB No. 1786 (2001), in which the Board stated that by its very definition, the offense of "intent to distribute" a controlled substance is an offense related to the distribution of controlled substances within the meaning of section 1128(a)(4) of the Act. As Petitioner argues, the petitioner in the Pennington case conceded his conviction was related to the distribution of controlled substances. Nonetheless, the Board commented in a very adamant manner on the relationship between the exact language of Petitioner's conviction and section 1128 (a)(4). I must infer that the Board had no doubt, given the wording of the Social Security Act and the Controlled Substance Act, 21 U.S.C. �� 841, 846, that the required relationship exists. Moreover, the Board specifically stated that there is nothing in any provision of section 1128(a)(4) requiring that controlled substances must be intended for sale, as opposed to simple distribution in order for the offense to form the basis of an exclusion.

As noted above, I have found that Petitioner had no intention to sell controlled substances. As he said in his brief, the facts that form the basis for Petitioner's conviction are that he agreed to meet an undercover operative for the purpose of purchasing illegal drugs for his own personal use and to possibly share it with his woman friend. P. Br. at 3.

Sharing drugs, however, is distributing drugs. As the I.G. pointed out in her brief, a number of courts have determined that distribution under 21 U.S.C. � 841(a)(1) does not require the sale of controlled substances. United States v. Boswell, 792 F.2d 755 (8^th Cir. 1986); see also, United States v. Meyers, 601 F. Supp. 1072, 1074 (D.Or. 1984). In United States v. Washington, 41 F.3d 917 (4^th Cir. 1994), the Court cited United States v. Ramirez, a Ninth Circuit case, in finding that sharing drugs with another constitutes "distribution" under � 841(a)(1). It is interesting to note that in the Washington case, the Court specifically determined that the defendant's intent to deliver cocaine to his friends to share constituted an "intent to distribute." United States v. Washington, 41 F.3d at 919.

While Petitioner makes several arguments that intent is a state of mind and cannot be the same as actually doing the act intended, I find that a state of mind is certainly "related to" the intended act. One can turn Petitioner's argument around and say that if Congress intended to only require exclusion for the specific crimes of the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, Congress would not have included in the Act the "relating to" language. I read the language of section 1128 as manifesting Congress' intention to be more inclusive than only referring to exact specified offenses.

Moreover, until August 21, 1996, exclusions for crimes related to the distribution, manufacture, prescription, or dispensing of controlled substances were considered under the "permissive" exclusion subsections of section 1128, at (b)(3). When Congress added the mandatory exclusion for felonies related to controlled substances, Congress could have distinguished between users and traffickers. Instead, Congress distinguished the three-year permissive exclusion from the five-year mandatory exclusion based on whether the crime was a misdemeanor or a felony. See Eulalia Marie Jones, LPN, DAB CR593 (1999).

I also point out that the analogies Petitioner presents in his brief are misplaced. For example, Petitioner presents a situation about a woman who intends to hit her husband with her car and misses. Petitioner posits that the woman could not be charged with murder. P.R. Br. at 4-5. Indeed, the woman may not be charged with murder but the woman might lose her license to drive. Similarly, under the facts of this case as presented by Petitioner, prosecutors may not be able to prove that Petitioner distributed drugs (although under United States v. Washington, Petitioner could be considered to have distributed drugs if he shared them with a friend), the felony for which he was convicted, but nonetheless, the conviction can form the basis for his exclusion for Medicare and Medicaid.

Finally, I find that exclusion for conspiracy to possess with an intent to distribute controlled substances suits the remedial purposes of section 1128 of the Act. Petitioner argues that Section 1128 (a)(4) was clearly designed to exclude only those who are drug traffickers not minor drug users. I find, on the contrary, the underlying purpose behind Section 1128 of the Act is the need to protect the integrity of the programs and Medicare and Medicaid beneficiaries from providers and others who are untrustworthy or otherwise pose a danger to the beneficiaries. Obviously a provider impaired by substance abuse is untrustworthy and a danger to the beneficiaries. Further, a person who would share controlled substances is engaged in untrustworthy behavior in that the conduct could result in the proliferation of illegal narcotic use. Frank R.Pennington, DAB CR763 at 6 (2001). Simple users as well as drug traffickers are a risk for beneficiaries of federal health care programs.

D. The length of exclusion for section 1128(a)(4) of the Act is mandatory and cannot be for less than five years.

Once an individual has been convicted of a criminal offense within the meaning of section 1128(a)(4) of the Act, exclusion from participation in Medicare, Medicaid, and all other federal health care programs for a minimum term of five years is mandatory. Section 1128(c)(3)(B) of the Act. By reason of his conviction, Petitioner was subject to, and the I.G. was required to impose upon him, mandatory exclusion from participation in Medicare, Medicaid, and all other federal health care programs for a period of not less than five years. Section 1128(c)(3)(B) of the Act. The I.G.'s exclusion of Petitioner for the minimum mandatory period of five years is supported by fact and law, and is therefore reasonable and proper.

I cannot consider the fact that Petitioner may be providing important services to Medicare/Medicaid beneficiaries to change his period of exclusion. The I.G. must impose the five-year minimum mandatory term of exclusion, and she is authorized, at her discretion, to enlarge the term. See 42 C.F.R. � 1002. The I.G. may extend the five-year period if certain specified aggravating factors are demonstrated. Those aggravating factors are defined in detail at 42 C.F.R. �� 1001.102(b)(1)-(9). And, in the clear language of 42 C.F.R. � 1001.102(c):

Only if any of the aggravating factors set forth in paragraph (b) of this section justifies an exclusion longer than 5 years, may mitigating factors be considered as a basis for reducing the period of exclusion to no less than 5 years (emphasis added). ⁽¹⁾

In this case the I.G. has not exercised her discretion to enlarge the term of exclusion beyond the mandatory minimum, and has declined to offer proof of any of the aggravating factors defined by regulation. Thus, by the explicit terms of 42 C.F.R. � 1001.102(c), I cannot consider Petitioner's importance to the medical care of an underserved area both because: (1) the I.G. demonstrated no aggravating factors; and (2) service to a medically unserved area is not a listed mitigating factor.

^{VI. Conclusion}

For the foregoing reasons, I sustain Petitioner's exclusion from participation in the Medicare, Medicaid, and all federal health care programs for a period of five years.

^{Anne E. Blair}
Administrative Law Judge

^1. The three mitigating factors are defined with particularity in 42 C.F.R. � 1001.102(c)(1)-(3). No other factors may be considered.