SUBJECT:

Ira Katz,

Little Five Point Pharmacy,

Petitioner,

The Inspector General

DECISION

I sustain the Inspector General's (I.G.) determinations to exclude Ira Katz and Little Five Points Pharmacy, Petitioners, from participation in Medicare, Medicaid, and all other federal health care programs for a period of 10 years. I find that the I.G. is authorized to exclude Petitioner Katz under section 1128(a)(1) of the Social Security Act (Act), and to exclude Petitioner Little Five Points Pharmacy under section 1128(b)(8) of the Act. The 10-year exclusions imposed by the I.G. against Petitioners fall within a reasonable range.

I. Background

By letter dated September 30, 2002, the I.G. notified Petitioner Katz that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of 10 years. By separate letter, dated September 30, 2002, the I.G. notified Petitioner Little Five Points Pharmacy that it was also being excluded from participation in these programs for a period of 10 years. In those letters, the I.G. explained that she is authorized to exclude Petitioner Katz under section 1128(a)(1) of the Act based on his conviction, in the Superior Court of Dekalb County, Georgia, of a criminal offense related to the delivery of an item or service under the Georgia Medicaid program. She explained to Petitioner Little Five Points Pharmacy that it was being excluded pursuant to section 1128(b)(8) of the Act because of its association with Petitioner Katz.

Petitioners thereafter requested hearings.

I held a prehearing conference on February 5, 2003. In the absence of objections from the parties, I consolidated these matters into one proceeding. The parties agreed that an in-person hearing was not necessary, and that the matter could be resolved on the written record. The parties did not dispute that Petitioner Katz had been convicted of a criminal offense related to the delivery of an item or service under a State health care program. Petitioner Katz also agreed that the acts resulting in his conviction took place over a period of more than one year and caused financial losses to a government program of $5,000 or more. See Order dated February 10, 2003.

Both parties submitted briefs, accompanied by documentary evidence. The I.G. filed four exhibits (I.G. Exs. 1 - 4) as part of her submission, and Petitioner filed two exhibits (P. Exs. 1 - 2). In the absence of objection, I receive into evidence I.G. Exs. 1 - 4 and P. Exs. 1 - 2.

The basic facts of this case are not in dispute. Petitioner is a pharmacist licensed to practice in the State of Georgia. I.G. Ex. 3. He was also the Chief Executive Officer and Registered Agent for Little Five Points Pharmacy. I.G. Ex. 1. On June 18, 2001, he pled guilty to five misdemeanor counts of theft by taking, specifically, submitting false claims to the Georgia Medicaid program. I.G. Ex. 2. He was sentenced to 12 months probation per count, to run consecutively, for a total of 60 months probation. Id. at 2. He was ordered not to participate in the Georgia Medicaid program for a period of twelve months, and to cooperate in the state's investigations of other providers. He was fined $2,500 and ordered to pay $2,500 reimbursement for the costs of investigating and prosecuting his case. Id. at 3. As part of his negotiated plea, he also agreed to pay the Georgia Department of Community Health $74,994.54 as restitution. I.G. Ex. 4.

II. Issue

Petitioner concedes that he was convicted under federal law of a criminal offense related to the delivery of an item or service under the Medicare and Medicaid programs, and acknowledges that he is subject to the mandatory imposition of a five-year exclusion. Petitioner's Brief (P. Brief) at 1, 4. The sole issue before me is whether the length of the exclusion in excess of the five-year mandatory minimum is reasonable. 42 C.F.R. § 1001.2007.

III. Discussion

Section 1128(a)(1) of the Act requires that the Secretary of Health and Human Services (Secretary) exclude an individual who has been convicted under federal or State law of a criminal offense related to the delivery of an item or service under Medicare or a State health care program. ⁽¹⁾ 42 C.F.R. § 1001.101. Individuals excluded under section 1128(a)(1) of the Act must be excluded for a period of not less than five years. Act, section 1128(c)(3)(B). The regulations authorize increasing the mandatory minimum period of exclusion based on the existence of any of the nine specified aggravating factors that are not offset by specified mitigating factors. 42 C.F.R. § 1001.102. Among the factors that may serve as a basis for lengthening the period of exclusion are: (1) the acts resulting in the conviction, or similar acts, resulted in a financial loss to Medicare and the State health care programs of $5,000 or more (42 C.F.R. § 1001.102(b)(1)); and (2) the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more (42 C.F.R. § 1001.102(b)(2)).

Where the Secretary determines that an officer, director, agent, or managing employee of an entity has been convicted of an offense described in section 1128(a) of the Act, or has been excluded from participation in the Medicare or Medicaid programs, section 1128(b)(8) of the Act authorizes him to exclude that entity as well. See 42 C.F.R. § 1001.1001(a). The term of a section 1128(b)(8) exclusion generally runs the same length as the exclusion period of the individual through whom the section 1128(b)(8) exclusion derives. 42 C.F.R. § 1001.1001(b).

The Secretary has delegated to the I.G. the authority to impose exclusions. 42 C.F.R. § 1001.101(a). So long as the amount of time chosen for the exclusion imposed on Petitioner by the I.G. is within a reasonable range, based on demonstrated criteria, I have no authority to change it. Joann Fletcher Cash, DAB No. 1725, at 7 (2000), citing 57 Fed. Reg. 3298, 3321 (1992).

I make findings of fact and conclusions of law to support my decision in this case. I set forth each finding below, in italics, as a separate heading.

1. Petitioner Katz's 10-year exclusion falls within a reasonable range.

a. Two aggravating factors justify lengthening the period of exclusion beyond the five-year mandatory minimum.

By regulation, the Secretary established the criteria for determining the length of exclusions imposed pursuant to section 1128 of the Act. 42 C.F.R. § 1001.102 lists the aggravating and mitigating factors applicable to a section 1128(a) exclusion. The presence of any aggravating factor or factors not offset by any mitigating factor or factors justifies lengthening the mandatory five-year period of exclusion. Evidence that does not pertain to one of the specific aggravating or mitigating factors is not relevant and may not be used to decide whether an exclusion of a particular length is reasonable. Here, the I.G. cited two factors as the bases for extending the period of Petitioner Katz's exclusion beyond the mandatory five-year minimum: (1) Petitioner's actions resulted in a program financial loss in excess of $5,000; and (2) his actions were committed over a period of more than one year. Petitioner Katz does not dispute these aggravating factors. His crimes resulted in program financial loss well in excess of $5,000; he agreed and was ordered to pay $74,994.54 in restitution. Based on these factors, I do not find unreasonable a 10-year exclusion. The amount of restitution ordered evidences crimes of considerable magnitude, establishing him to be a significant risk to program integrity.

I next consider whether any mitigating factors justify reducing the 10-year exclusion. Petitioner Katz does not dispute the presence of aggravating factors, but asserts that his conviction stemmed from the allegations of an employee who, in fact, had submitted the fraudulent claims, but then negotiated a plea in exchange for his testimony against Petitioner Katz. Petitioner Katz then describes the unique and valuable service Little Five Points Pharmacy provides to its community. Finally, he points out that the I.G. has effectively imposed a twelve-year exclusion because she delayed for two years imposing the exclusion. He was excluded by State agencies for two years, and is now being excluded for an additional ten years.

b. No mitigating factors offset the aggravating factors.

This case presents no mitigating factors to offset the aggravating factors. The regulations consider mitigating just three factors: (1) a petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to the program was less than $1,500; (2) the record demonstrates that a petitioner had a mental, physical, or emotional condition that reduced his culpability; and (3) a petitioner's cooperation with federal or State officials resulted in others being convicted or excluded, or additional cases being investigated, or a civil money penalty being imposed. 42 C.F.R. § 1001.102(c). Thus, in determining the reasonableness of the period of exclusion, I may not consider mitigating the pharmacy's contributions to the community. Since, as Petitioners concede, this case presents none of the three mitigating factors set forth in the regulation, I find that no mitigating factors justify reducing the period of exclusion.

2. Petitioner may not re-litigate his criminal conviction in this forum.

Petitioner suggests that he was himself the victim of an unscrupulous employee, and was in fact not guilty, entering his plea for the sake of his family. However, the regulations explicitly preclude my review of the facts underlying his conviction.

When the exclusion is based on the existence of a criminal conviction . . . where the facts were adjudicated and a final decision was made, the basis for the underlying conviction . . . is not reviewable and the individual or entity may not collaterally attack it either on substantive or procedural grounds, in this appeal.

42 C.F.R. § 1001.2007(d); Cash, DAB No. 1725 (2000); Chander Kachoria, R.Ph., DAB No. 1380, at 8 (1993) ("There is no reason to 'unnecessarily encumber the exclusion process' with efforts to reexamine the fairness of state convictions.").

3. I have no authority to change the effective date of Petitioner's exclusion.

Petitioner complains that the effective date of exclusion did not run concurrently with his State-imposed period of exclusion. It is well-settled that an administrative law judge is without authority to change the effective date of an exclusion. As a matter of law, an exclusion must become effective 20 days from the date of the I.G.'s notice of exclusion. 42 C.F.R. § 1001.2002. An administrative law judge has no authority to review the timing of the I.G.'s determination to impose an exclusion or to alter retroactively the date of the imposition of the exclusion. Tanya A. Chuoke, R.N., DAB No. 1721 (2000); Samuel W. Chang, M.D., DAB No. 1198 (1990); Susan Malady, R.N., DAB CR835 (2001), aff'd on other grounds, DAB No. 1816 (2002); Larry B. Shuster, R.Ph., DAB CR872 (2002); Kathleen E. Talbot, DAB CR772 (2001).

IV. Conclusion

For the reasons set forth above, I conclude that the I.G. was authorized, under section 1128(a)(1) of the Act, to exclude Petitioner Katz from participation in Medicare, Medicaid, and all other federal health care programs, and under section 1128(b)(8) was authorized to exclude Petitioner Little Five Points Pharmacy. Considering the evidence before me, I find the 10-year exclusions to be within a reasonable range. I have no authority to disturb the effective dates of those exclusions.

Carolyn Cozad Hughes

Administrative Law Judge

1. The term "State health care program" includes a State's Medicaid program. Act, section 1128(h)(1); 42 U.S.C. § 1320a-7(h)(1).