I uphold the Inspector General's exclusion of Petitioner, Ronald Marvin Hatter, Jr., from participation in Medicare, Medicaid, and all federal health care programs for five years. I conclude that there is a basis for the exclusion, and I conclude that the five-year length of the exclusion is reasonable.

I. Background

Petitioner was convicted in the State of North Carolina of embezzlement of controlled substances by a pharmacist-a felony. Inspector General's exhibit (I.G. Ex.) 1. Section 1128(a)(3) of the Social Security Act (Act) requires the Secretary of Health and Human Services to exclude from federal health care programs any person convicted of, inter alia, a felony offense consisting of embezzlement in connection with the delivery of a health care item or service. The exclusion must be for a minimum period of five years. Act, at section 1128(c)(3)(B); 42 C.F.R. � 1001.102(a).

Petitioner does not dispute his felony conviction, but Petitioner asserts that his offense "was not related to the delivery of a health care item or service . . . [and] thus was not a program related crime." Petitioner's brief at 1.

Petitioner's request for a hearing is dated November 27, 2003. It stems from the Inspector General's letter, dated October 31, 2003, notifying Petitioner of his exclusion. I held a prehearing conference with the parties on January 29, 2004. During the conference, the parties agreed that it would be appropriate for me to decide this matter based on their written submissions without an oral hearing.

In accordance with the schedule I established for the parties to file briefs, on January 13, 2004, I received The Inspector General's Brief in Support of Motion for Summary Affirmance (Inspector General's brief), accompanied by five marked exhibits (I.G. Exs. 1-5). I received Petitioner's Reply and Opposition to the Motion for Summary Affirmance (Petitioner's brief) on April 6, 2004. I received The Inspector General's Reply Brief (Inspector General's reply brief) on April 22, 2004. Petitioner filed also Petitioner's Sur-Reply to Inspector General's Reply Brief (Petitioner's sur-reply brief) which I received on May 27, 2004. Petitioner did not object to the Inspector General's exhibits, so I admit I.G. Exs. 1-5.

II. Issue

III. Discussion

Based on my review of the parties' briefs and the exhibits, I conclude that Petitioner's conviction of embezzlement of controlled substances by a pharmacist is a lawful basis for his exclusion from Medicare, Medicaid, and all federal health care programs. Petitioner's argument, as I discuss in detail below, is that his conviction cannot form the basis for his exclusion under section 1128(a)(3) of the Act because the conviction was not for an offense related to the delivery of a health care item or service. I find, however, that Petitioner's embezzlement of controlled substances was in connection with the delivery of a health care item or service. I conclude, therefore, that Petitioner's conviction supports his mandatory exclusion from federal health care programs pursuant to section 1128(a)(3) of the Act.

As I noted above, section 1128(a)(3) of the Act requires, in pertinent part, the exclusion of individuals convicted of certain felony health fraud offenses " . . . in connection with the delivery of a health care item or service . . . ." To distinguish offenses that are not in connection with the delivery of a health care item or service from offenses that are, the analysis in Eric D. DeSimone, R.Ph, DAB No. 1932 (2004) is instructive. In that case, an appellate panel of the Departmental Appeals Board (Board) held that the section 1128(a)(3) language "requires a common sense analysis of whether the offense had a 'connection' with the delivery of a health care item or service." DeSimone, DAB No. 1932, at 4.

Furthermore, the overarching purpose of section 1128 is the designation of certain individuals and entities to be excluded from participation in federal and state health care programs. The purpose of exclusion is, in turn, a part of Congress' effort to protect federal health care programs from fraud and abuse, and to protect the beneficiaries of those programs from incompetent practitioners and from inappropriate or inadequate care. See S. Rep. No. 100-109, at 2 (1987), reprinted in 1987 U.S.C.C.A.N. 682.

In light of the Board's discussion in DeSimone, I conclude that to give effect to the plain language of section 1128(a)(3) that requires a connection between the offense and the delivery of a health care item or service, I must judge whether there is a common sense connection between Petitioner's offense and the delivery of a health care item or service. Moreover, considered in the context of Congress' aim to protect beneficiaries from, among other things, fraud and abuse, my deliberation is aided by considering whether the nature of the common sense connection indicates that the convict, if allowed to continue to participate in federal health care programs, threatens the beneficiaries of those programs.

The facts of Petitioner's offense are not disputed. On July 8, 2002, in the North Carolina General Court of Justice, Superior Court Division, Petitioner pled guilty to embezzlement of controlled substances by a pharmacist. Petitioner's conviction was based on his having stolen drugs from Eckerd Drugs between May 1, 2000 and June 27, 2000. I.G. Ex. 1. At the time Petitioner stole the drugs from Eckerd he was employed there as a pharmacist. I.G. Exs. 2, 3. Petitioner concedes that his offense " . . . was in connection with the removal without authorization of controlled substances from Eckerd Drug." Petitioner's brief at 2.

Petitioner argues, however, that his conviction cannot provide a basis for his exclusion because it was not for an offense related to a health care item or service. Petitioner's brief at 1. Petitioner distinguishes between "removing drugs without authorization" and "delivery [of drugs to a third party]." Id. at 2. Petitioner indicated that the North Carolina Board of Pharmacy (the body that suspended Petitioner's license to practice pharmacy on December 21, 2001, and reinstated it on October 8, 2002 (see I.G. Ex. 5)) determined that his offense was not related to the dispensing of controlled substances. Id. Petitioner characterizes this determination by the North Carolina Board of Pharmacy as a "finding" that his offense was not related to the delivery of a health care item or service. Id. Petitioner asserts further that he was not "on duty" or "engaged in the delivery of prescription drugs" at the time he committed his offense. Petitioner's sur-reply brief at 1. Thus, while Petitioner has not explicitly linked these points to his argument, I infer from his discussion of how the North Carolina Board of Pharmacy allegedly viewed his offense that Petitioner believes if he had delivered or dispensed the drugs he stole that would have constituted an offense in connection with a health care item or service, but merely stealing them, so long as he was not "on duty," does not.

I find Petitioner's argument unpersuasive. The health care items and services in this instance are intertwined with the health care related business of the pharmacy: filling prescriptions for customers, offering advice related to prescriptions, and the handling and storage of the drugs incident to those services, among other items and services. I find that the most obvious connection between Petitioner's offense and the delivery of these health care items and services is that Petitioner stole some of the items (the drugs) available for delivery to customers. Thus, there is a common sense connection between the offense (stealing drugs) and the delivery of a health care item or service (delivery of the drugs, providing advice about them, safeguarding them, and so on). Moreover, Petitioner's offense was an abuse of his position of trust: to control substances that are "controlled" precisely because they are prone to deliberate and accidental misuse. Thus, Petitioner's offense indicates that he would be a threat to defraud, commit some abuse, or otherwise threaten beneficiaries of federal health care programs if he were allowed to continue his participation in those programs.

I conclude, therefore, that there is a basis for the Inspector General to exclude Petitioner from participation in Medicare, Medicaid, and all federal health care programs. The length of the period of Petitioner's exclusion from federal health care programs, five years, is the mandatory minimum period required by the statute and I conclude it is, therefore, reasonable as a matter of law.