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CASE | DECISION | JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
IN THE CASE OF  


SUBJECT:

Thomas Edward Musical,

Petitioner,

DATE: April 07, 2005
                                          
             - v -

 

The Inspector General.

 

Docket No.C-04-402
Decision No. CR1291
DECISION
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DECISION

Thomas Edward Musial, Petitioner, is excluded from participation in Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(a)(4) of the Social Security Act (the Act) (42 U.S.C. � 1320a-7(a)(4)), effective June 16, 2004, based upon his conviction of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. There is a proper basis for exclusion. Petitioner's exclusion for five years is mandatory pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. � 1320a-7(c)(3)(B)).

I. PROCEDURAL HISTORY

Petitioner was notified by the Inspector General (the I.G.) by letter dated May 28, 2004, that he was being excluded from participation in Medicare, Medicaid and all federal health care programs for the minimum period of five years. The I.G. advised Petitioner that his exclusion was pursuant to section 1128(a)(4) of the Act, due to his felony conviction in the Kern County Superior Court, East Division, State of California, of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. Petitioner requested a hearing by an administrative law judge (ALJ) by letter dated June 14, 2004.

This case was assigned to me for hearing and decision on July 14, 2004. I convened a telephonic prehearing conference on August 18, 2004, the substance of which is memorialized in my order of that date. Petitioner was advised of his right to be represented by counsel at no expense to the government, and he elected to proceed pro se. The parties agreed that this case may be decided upon the written record, and a briefing schedule was set. On October 13, 2004, the I.G. filed a motion for summary affirmance, which I construe to be a motion for judgment on the written record without hearing; a supporting brief (I.G. Brief); and I.G. exhibits (I.G. Exs.) 1 through 5. Petitioner filed a response (P. Response) on December 13, 2004 with Petitioner's exhibits (P. Exs.) 1 through 8. The I.G filed a reply brief (I.G. Reply) on January 26, 2005. Petitioner filed a supplemental response (P. S. Response) with additional documents attached on February 13, 2005. I have marked the additional 14 pages of documents attached to Petitioner's supplemental response as P. Ex. 9, pages 1 through 14, for ease of reference. On February 25, 2005, the I.G. filed a reply to Petitioner's supplement response and objected to the documents that I have marked P. Ex. 9. The I.G. objection to P. Ex. 9 is overruled, and all exhibits, I.G. Exs. 1 through 5 and P. Exs. 1 through 9, are admitted as evidence.

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

A. FINDINGS OF FACT

The following findings of fact are based upon the uncontested and undisputed assertions of fact in the pleadings and the exhibits admitted. Citations may be found in the analysis section of this decision if not included here.

1. On April 5, 2001, in the Kern County Superior Court, East Division, State of California, Petitioner entered a plea of no contest to and was convicted of a felony charge that on or about January 24, 2000, he obtained or attempted to obtain Valium, a controlled substance, by fraud, deceit and misrepresentation, in violation of California law. I.G. Ex. 3, at 3, 8.

2. Petitioner was sentenced in the state court to confinement for one year, but the sentence was suspended and Petitioner was placed on probation for a period of three years. Petitioner was also sentenced to pay a fine of $50, and restitution of $200. I.G. Ex. 4.

3. Petitioner completed his sentence to the satisfaction of the state court, and his conviction was expunged January 31, 2005. P. Ex. 9.

4. Petitioner was notified by the I.G., by letter dated May 28, 2004, that he was being excluded from participation in Medicare, Medicaid and all federal health care programs for the minimum period of five years pursuant to section 1128(a)(4) of the Act, due to his felony conviction of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

5. Petitioner requested a hearing by letter dated June 14, 2004.

B. CONCLUSIONS OF LAW

1. Petitioner's request for hearing was timely and I have jurisdiction.

2. The parties waived oral hearing, and disposition based upon the documentary evidence and written submissions of the parties is appropriate in this case.

3. Petitioner was convicted of a felony offense within the meaning of the Act.

4. Petitioner was convicted of a felony offense that was committed prior to the effective date of the Health Insurance Portability and Accountability Act of 1996.

5. Petitioner was convicted of a felony offense that related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, Valium.

6. There is a basis for Petitioner's exclusion pursuant to section 1128(a)(4) of the Act, whether or not Petitioner's conviction was expunged.

7. The I.G. may not exercise authority for permissive exclusion pursuant to section 1128(b) of the Act when exclusion is mandatory pursuant to section 1128(a).

8. The minimum period of Petitioner's exclusion is five years beginning on June 16, 2004, the date 20 days from the date of the May 28, 2004 I.G. notice.

9. The minimum period authorized for a mandatory exclusion pursuant to section 1128(a) is five years, and that period is presumptively reasonable and unaffected by any extenuation or mitigation.

III. ANALYSIS

A. ISSUES

The Secretary of the Department of Health and Human Services (the Secretary) has by regulation limited my scope of review to two issues:

1. Whether there is a basis for the imposition of the exclusion; and,

2. Whether the length of the exclusion is unreasonable.

42 C.F.R. � 1001.2007(a)(1). The standard of proof is a preponderance of the evidence, and there may be no collateral attack of the conviction that is the basis for the exclusion. 42 C.F.R. � 1001.2007(c) and (d). Petitioner bears the burden of proof and persuasion on any affirmative defenses or mitigating factors, and the I.G. bears the burden on all other issues. 42 C.F.R. � 1005.15(b) and (c).

B. APPLICABLE LAW

Petitioner's right to a hearing by an ALJ and judicial review of the final action of the Secretary is provided by section 1128(f) of the Act (42 U.S.C. � 1230a-7(f)). Petitioner's request for a hearing was timely filed and I do have jurisdiction.

Pursuant to section 1128(a)(4) of the Act, the Secretary must exclude from participation in the Medicare and Medicaid programs any individual convicted of a felony criminal offense that occurred after enactment of the Health Insurance Portability and Accountability Act of 1996, related 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) of the Act shall be for a minimum period of five years. Pursuant to 42 C.F.R. � 1001.102(b), the period of exclusion may be extended based on the presence of specified aggravating factors. Only if the aggravating factors justify an exclusion of longer than five years may mitigating factors be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. � 1001.102(c).

C. DISCUSSION

1. Disposition based upon the documentary evidence and written submissions of the parties is appropriate in this case.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to reasonable notice and an opportunity for a hearing. The right to a hearing before an ALJ is accorded to a sanctioned party by 42 C.F.R. � 1005.2, and the rights of both the sanctioned party and the I.G. to participate in a hearing are specified in 42 C.F.R. � 1005.3. Either or both parties may choose to waive appearance at an oral hearing and to submit only documentary evidence and written argument for my consideration. 42 C.F.R. � 1005.6(b)(5). The ALJ may also resolve a case, in whole or in part, by summary judgment. 42 C.F.R. � 1005.4(b)(12). Summary judgment is appropriate and no hearing is required where either: there are no disputed issues of material fact and the only questions that must be decided involve application of law to the undisputed facts; or, the moving party must prevail as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made. A party opposing summary judgment must allege facts which, if true, would refute the facts relied upon by the moving party. See e.g., Fed. R. Civ. P. 56(c); Garden City Medical Clinic, DAB No. 1763 (2001); Everett Rehabilitation and Medical Center, DAB No. 1628, at 3 (1997) (in-person hearing required where non-movant shows there are material facts in dispute that require testimony); see also, New Millennium CMHC, DAB CR672 (2000); New Life Plus Center, DAB CR700 (2000).

In this case, the parties have waived oral hearing and elected to submit documentary evidence and written argument for my consideration. I also conclude, based on the submissions of the parties, that there are no issues of material fact in dispute in this case and summary judgment is appropriate.

2. There is a basis for Petitioner's exclusion pursuant to section 1128(a)(4) of the Act, whether or not Petitioner's conviction was expunged.

The I.G.'s position is that Petitioner must be excluded from participation in Medicare, Medicaid and all federal health care programs pursuant to section 1128(a)(4) of the Act, due to his felony conviction in the Kern County Superior Court, East Division, State of California, of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. I.G. Brief at 5-8. There is no dispute that on April 5, 2001, Petitioner entered a plea of no contest to a charge that he did

on or about January 24 of the year 2000, . . . willfully and unlawfully obtain or attempt to obtain a controlled substance, to wit, Valium . . . and did procure or attempt to procure the administration of or prescription for said controlled substance by fraud, deceit and misrepresentation, in violation of (California) Health and Safety Code Section 11173(a), a felony.

I.G. Ex. 3, at 3. Petitioner's plea was accepted and he was found guilty. I.G. Ex. 3, at 8. Petitioner was subsequently sentenced to confinement for one year, but the sentence was suspended and Petitioner was placed on probation for a period of three years. Petitioner was also sentenced to pay a fine of $50, and restitution of $200. I.G. Ex. 4.

Petitioner does not dispute the foregoing facts related to his conviction and sentencing. Petitioner agrees that there is prima facie evidence for the elements of a violation of section 1124(a)(4). There is no question that Petitioner's offense occurred after August 21, 1996, the effective date of the Health Insurance Portability and Accountability Act of 1996. Petitioner does not dispute that he was convicted within the meaning of section 1128(i) of the Act. Petitioner acknowledges that he was convicted of a felony offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. P. Brief at 1 (Petitioner stipulates to the I.G.'s proposed findings 1 through 9).

In Petitioner's supplemental response, he argues that his conviction was recently expunged, or set aside, and vacated. Petitioner submitted the court docket printout, which shows that on January 31, 2005, his motion to dismiss was granted and his prior no contest plea was set aside, a plea of not guilty to the charge was entered and the charge was dismissed. P. Ex. 9, at 3-5. Petitioner suggests that his prior conviction was effectively vacated, eliminating the basis for exclusion. Section 1128(i) of the Act (42 U.S.C. � 1230a-7(i)) defines the term "convicted" to include entry of a judgment of conviction by any court whether or not an appeal is taken or the record is later expunged; when there has been a finding of guilt against the individual or entity; when a plea of guilty or nolo contendere has been accepted; or when the individual has entered into a first offender, deferred adjudication, or other arrangement or program where a judgment of conviction has been withheld. Congress specifically defined the term "convicted" in the Act to include a "judgment of conviction" whether or not an appeal is still pending or the record of conviction has been expunged. Hence, the fact that Petitioner's conviction was "expunged" is not helpful to Petitioner with respect to his proposed exclusion. Petitioner's suggestion that the action of the court on his conviction was tantamount to the conviction having been vacated on appeal is also without merit. The regulations provide that when a conviction is reversed or vacated on "appeal" the individual excluded on the basis of that conviction will be reinstated. 42 C.F.R. � 1001.3005. The regulation clearly applies only in the situation where a conviction is reversed or vacated on appeal for some legal, factual, or procedural error that invalidates the conviction that is the basis for the exclusion. In Petitioner's case, his conviction was not invalidated on appeal; rather, he completed his sentence to the court's satisfaction and the court gave him relief from the conviction as authorized by the state law.

Accordingly, I conclude that Petitioner was convicted within the meaning of the Act, and there is a basis for his exclusion pursuant to section 1128(a)(4) of the Act.

3. The I.G. may not exercise authority for permissive exclusion pursuant to section 1128(b) when exclusion is mandatory pursuant to section 1128(a).

Petitioner argues in his supplemental response that the I.G. could have and should now consider excluding him under section 1128(b)(4), which he believes would allow him to be reinstated sooner than he will be with the present mandatory exclusion of five years under 1128(a)(4). The statute provides the answer to Petitioners argument. Section 1128(a) of the Act is entitled "Mandatory Exclusion" and indicates in the first-line that the "Secretary shall exclude" those individuals and entities who fit within any of its four provisions. Section 1128(b) of the Act is entitled "Permissive Exclusion" and provides the "Secretary may exclude . . . ." The language of the Act is clear and it requires or mandates that the Secretary exclude under section 1128(a) when it is applicable. See Stacy Ann Battle, D.D.S. and Stacy Ann Battle, D.D.S., P.C., DAB No. 1843 (2002); Lorna Fay Gardner, DAB No. 1733 (2002); Jose Grau, M.D. DAB CR930 (2002). The Secretary, the I.G., and I cannot deviate from the clear direction of Congress.

4. The minimum period of Petitioner's exclusion is five years beginning the date 20 days from the date of the I.G. notice.

Petitioner agrees that the Act provides that the minimum period of exclusion under section 1124(a)(4) is five years. P. Brief at 1 (Petitioner stipulates to the I.G.'s proposed finding 10). However, he argues that the period of exclusion should run from the date of his sentence, May 31, 2001, and not the date 20 days after the May 28, 2004 I.G. notice. Petitioner argues that the I.G. action is not timely, is unreasonable, "unfair, double jeopardy, cruel and unusual and punitive." P. Response at 2. In his supplemental response, Petitioner notes that the docket of the court by which he was convicted, shows that the Department of Justice was provided information in 1999 (P. Ex. 9, at 6) and that when the I.G. finally requested information in 2004, it received it by facsimile in less than a day. P. Ex. 9, at 8.

The Act provides that an exclusion pursuant to section 1128(a) "shall be effective at such time and upon such reasonable notice to the public and to the individual or entity excluded as may be specified in regulations . . . ." Section 1128(c)(1). Congress granted the Secretary essentially unfettered discretion through section 1128(c)(1) to establish the effective date of exclusion by regulation. The regulation promulgated as 42 C.F.R. � 1001.2002(b) provides that an exclusion is effective 20 days from the date of the notice of exclusion. The regulation does not give an ALJ discretion to change the effective date. Furthermore, 42 C.F.R. � 1005.4(c)(1) specifically provides that an ALJ may not refuse to follow a regulation of the Secretary. (1) My decision is consistent with prior decisions of the Departmental Appeals Board involving the same issue. See e.g. Shanti Jain, DAB No. 1398 (1993); David D. DeFries, DAB No. 1317 (1992); Samuel W. Chang, DAB No. 1198 (1990). Thus, I conclude that I am without authority to accord Petitioner any relief.

Regarding Petitioner's concern that his exclusion is punitive, double jeopardy, or in violation of due process, it has been held that the purpose and effect of exclusion is civil and remedial, intended to protect the Medicare and Medicaid programs from fraud and abuse and to protect the beneficiaries and recipients who rely on the programs; and that neither the remedy of exclusion or its purpose is punitive and criminal, and therefore subject to scrutiny under the double jeopardy clause or the prohibition against cruel and unusual punishment. Susan Malady, R.N., DAB No. 1816 (2002); Mannochio v. Kusserow, 961 F.2d 1539 (11th. Cir. 1992). (2) Exclusion is more analogous to the revocation of a professional license than to a punishment and does not constitute double jeopardy. Greene v. Sullivan, 731 F. Supp. 838 (E.D. Tenn. 1990). No doubt Petitioner is adversely affected by his exclusion, but its purpose is remedial and protective, not punitive. Narendra M. Patel, M.D., DAB No. 1736, at 11 (2000).

The effective date of Petitioner's exclusion is June 16, 2004, 20 days after the May 28, 2004 I.G. notice of exclusion. 42 C.F.R. � 1005.20(b).

5. The minimum period authorized for a mandatory exclusion pursuant to section 1128(a) is five years, and that period is presumptively reasonable and unaffected by any extenuation or mitigation.

Petitioner has acknowledged in his pleadings that the Act imposes a minimum exclusion of five years. The I.G., the Secretary, and I have no discretion or authority to shorten the five-year minimum exclusion for any reason. Act, �1128(c)(3)(B); 42 U.S.C. � 1320a-7(c)(3)(B).

IV. CONCLUSION

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid and all federal health care programs for a period of five years effective June 16, 2004, the date 20 days after the May 28, 2004 I.G. notice of exclusion.

JUDGE
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KEITH W. SICKENDICK

Administrative Law Judge

FOOTNOTES
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1. I note that no similar restriction is imposed upon the Departmental Appeals Board to which the Secretary has granted regulatory authority to review ALJ decisions in cases of this type. 42 C.F.R. � 1005.21. I express no opinion on the issue of whether the Board, as the representative of the Secretary, might accord the relief requested by the Petitioner in the interest of equity or on other grounds.

2. The exclusion remedy serves twin congressional purposes: the protection of federal funds and program beneficiaries from untrustworthy individuals and the deterrence of health care fraud. S. Rep. No. 109, 100th Cong., 1st Sess. 1-2 (1987), reprinted in 1987 U.S.C.C.A.N. 682, 686 ('clear and strong deterrent'); Joann Fletcher Cash, DAB No. 1725, at 18 (2000) (discussing trustworthiness and deterrence). When Congress added section 1128(a)(3) in 1996, it again focused upon the desired deterrent effect: 'greater deterrence was needed to protect the Medicare program from providers who have been convicted of health care fraud felonies . . . .' H.R. Rep. 496(I), 104th Cong., 2nd Sess. (1996), reprinted in 1996 U.S.C.C.A.N. 1865, 1886.

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