$05:Exclusion Case
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Robert Matesic, R.Ph.,
d/b/a Northway Pharmacy,
Petitioner,
- v. -
The Inspector General.
DATE: October 18, 1991
Docket No. C-270
DECISION
In this case, governed by section 1128 of the Social Security Act (Act), the
Inspector General (I.G.) of the
United States Department of Health and Human Services notified Petitioner, Robert
Matesic, R.Ph., d/b/a
Northway Pharmacy (Pharmacy), by letter dated May 21, 1990, that both he and
the Pharmacy would be
excluded from participation in the Medicare and Medicaid programs for a period
of five years. 1/ The I.G.
further advised Petitioner that his exclusion was due to his conviction in the
Allegheny County Court of
Common Pleas, Pittsburgh, Pennsylvania, of a criminal offense related to the
unlawful manufacture,
distribution, prescription, or dispensing of a controlled substance. Petitioner
was informed that exclusions
from the Medicare and Medicaid programs after such a conviction are authorized
by section 1128(b)(3) of
the Act.
Petitioner requested a hearing before an Administrative Law Judge (ALJ) to
contest his exclusion. I held a
prehearing conference in this case on October 17, 1990. During the conference,
the parties requested that
this case be decided upon a written record. I established a schedule for filing
motions, briefs, and
documentary evidence (exhibits). Thereafter, the parties filed their motions,
briefs, and exhibits.
Subsequently, Petitioner requested an in-person evidentiary hearing. Prior to
the hearing, Petitioner filed a
motion in limine. 2/ I held an in-person evidentiary hearing in this case on
February 15, 1991 in
Pittsburgh, Pennsylvania.
I have considered the evidence in the record, the parties' arguments, and the
applicable laws and regula-
tions. I conclude that the I.G.'s determination to exclude Petitioner from participation
in the Medicare and
Medicaid programs for five years is excessive. I conclude further that the remedial
and deterrent purposes
of section 1128 of the Act will be served in this case by a three-year exclusion,
and I modify the exclusion
accordingly.
APPLICABLE STATUTES AND REGULATIONS
I. The Federal Statute.
Section 1128 of the Social Security Act is codified at42 U.S.C. 1320a-7 (1988).
Section 1128(a) of the Act
provides for the exclusion from Medicare and Medicaid of those individuals or
entities "convicted" of a
criminal offense "related to the delivery of an item or service" under
the Medicare or Medicaid programs.
Section 1128(c)(3)(B) provides for a five-year minimum period of exclusion for
those excluded under
section 1128(a)(1). Section 1128(b) of the Act provides for permissive exclusions
after convictions relating
to fraud, license revocations, failure to supply payment information, or, as
in this case, conviction for a
criminal offense related to the unlawful manufacture, distribution, prescription,
or dispensing of a
controlled substance under section 1128(b)(3).
II. The Federal Regulations.
The governing federal regulations are codified in
42 C.F.R. Parts 498, 1001, and 1002 (1990). Part 498 governs the procedural
aspects of this exclusion case;
Parts 1001 and 1002 govern the substantive aspects.
Section 1001.123 requires the I.G. to issue an exclusion notice to an individual
whenever the I.G. has
conclusive information that such individual has been "convicted" of
a criminal offense "related to the
delivery of an item or service" under the Medicare or Medicaid programs.
ADMISSIONS
During the hearing, and as documented by my October 25, 1990 Prehearing Order,
Petitioner admitted that:
(1) he was "convicted" of a criminal offense, within the meaning of
section 1128(i) of the Act; and (2) the
offense was "related to the unlawful manufacture, distribution, prescription,
or dispensing of a controlled
substance," within the meaning of section 1128(b)(3) of the Act. Tr. 14.
3/
ISSUE
The issue in this case is whether the five-year exclusion imposed and directed
against Petitioner by the I.G.
is reasonable and appropriate.
FINDINGS OF FACT AND CONCLUSIONS OF LAW 4/
Having considered the entire record, the arguments and submissions of the parties,
and being fully advised
herein, I make the following Findings of Fact and Conclusions of Law:
1. Petitioner, at all times relevant to this case, is a pharmacist licensed
to practice pharmacy in
Pennsylvania. Tr. 8.
2. Beginning in 1969, Petitioner was the sole owner of and sole pharmacist
at Northway Pharmacy,
located in Etna, Pennsylvania. Tr. 127.
3. During a routine inspection at Northway Pharmacy on December 11, 1985, an
agent of the State Bureau
of Narcotics Investigation (BNI) found numerous violations, which included Petitioner
acquiring Schedule
II drugs with an expired Drug Enforcement Administration (DEA) number and failing
to submit monthly
Bureau of Drug Control Form #6 (BDC-6 forms). I.G. Ex. 6.
4. A BDC-6 form is a monthly report that is required to be filed by every pharmacist,
listing all
prescriptions filled for Schedule II controlled substances. This form is filed
with the Attorney General's
Office. I.G. Ex. 15; Tr. 22.
5. The BDC-6 form provides BNI with the following information: identifies the
Schedule II drugs being
prescribed; identifies the doctors prescribing Schedule II drugs; and identifies
the patients who are being
prescribed Schedule II drugs. Tr. 23.
6. A criminal complaint was filed on July 14, 1987, after subsequent investigations
at Petitioner's
Pharmacy were conducted, revealing that Petitioner had failed to maintain a
current DEA number and had
failed to file BDC-6 forms during various periods of time. I.G. Ex. 14.
7. At a preliminary hearing held on July 23, 1987, Petitioner's counsel attempted
to offer the six BDC-6
forms to the assistant district attorney and a DEA agent, both of whom refused
to accept delivery or take
possession of the forms. Tr. 45; I.G. Ex. 17/2-3.
8. On September 11, 1987, a seven-count information was filed against Petitioner
in the Court of Common
Pleas, Allegheny County, Pennsylvania. I.G. Ex. 15.
9. Petitioner was charged in the information with one felony count of knowingly
and intentionally
acquiring Schedule II drugs by misrepresentation by using an expired DEA number,
in violation of 35 P.S.
section 780- 113(a)(12). I.G. Ex. 15.
10. Petitioner was also charged in the information with six misdemeanor counts
of knowingly or
intentionally refusing or failing to provide BNI with BDC-6 forms for the months
of December 1986
through May 1987, in violation of 35 P.S. section 780-113(a)(21). I.G. Ex. 15.
11. On January 19, 1989, after a jury trial, Petitioner was convicted of six
counts of failing to file BDC-6
forms for the months of December 1986 through May 1987. Petitioner was acquitted
of the felony charge.
I.G. Ex. 2, 16.
12. Petitioner was sentenced to one to six months' incarceration on count 2;
sentenced to 30 months'
probation on counts 3 through 7; fined $5,000; and ordered to pay court costs.
Probation was conditioned
on Petitioner filing the required BDC-6 forms. I.G. Ex. 2.
13. The trial judge sentenced Petitioner to jail because she concluded that
incarceration was necessary
since Petitioner was unwilling to conform to one of the main conditions of probation:
that is, that Petitioner
file the required forms. I.G. Ex. 16/58.
14. Petitioner filed the BDC-6 forms on March 12, 1990 and has been in compliance
with the filing
requirements since that date. Tr. 143.
15. By Consent Agreement dated September 17, 1990, the Pennsylvania State Board
of Pharmacy
suspended Petitioner's license to practice pharmacy and suspended his permit
to operate a pharmacy for
two years because he had no valid DEA registration in effect during the following
time periods: November
1, 1972 to January 1, 1973; November 1, 1976 to November 9, 1977; November 1,
1978 to October 16,
1979; and November 1, 1984 to August 18, 1986. I.G. Ex. 17/2-3.
16. The State Board of Pharmacy found that Petitioner's failure to file the
six BDC-6 forms was a record
keeping violation. I.G. Ex. 17/3.
17. The State Board of Pharmacy stayed Petitioner's suspension in favor of
two years' probation, subject to
certain conditions of probation: (1) Petitioner was to adhere to the State's
laws governing the practice of
pharmacy or the distribution of drugs; (2) Petitioner was to obey the rules
and regulations of the State
Board of Pharmacy; and (3) Petitioner and the Pharmacy were to each pay a $500
civil penalty fee. I.G.
Ex. 17.
18. Petitioner's failure to file the BDC-6 forms was motivated by his concern
for the confidentiality of his
patients' privacy and his belief that the Attorney General's office lacked authority
to receive the BDC-6
forms. Tr. 132-134.
19. Petitioner did not profit from the conduct which resulted in his 1989 conviction,
nor did his conduct
cause direct injury to another person. P. P. Br. 10-11, 15-16.
20. Petitioner was convicted of a criminal offense relating to the unlawful
manufacture, distribution,
prescription, or dispensing of a controlled substance, within the meaning of
sections 1128(i) and
1128(b)(3) of the Act. Act, section 1128(i) and 1128(b)(3).
21. Petitioner admits and I conclude that: (1) he was "convicted,"
within the meaning of section 1128(i) of
the Act; and (2) the criminal offense was "related to the unlawful manufacture,
distribution, prescription, or
dispensing of a controlled substance," within the meaning of section 1128(b)(3)
of the Act. Tr. 14;
Prehearing Order.
22. The Secretary of Health and Human Services (Secretary) delegated to the
I.G. the authority to
determine, impose, and direct exclusions pursuant to section 1128 of the Act.
48 Fed. Reg. 21662 (May
13, 1983).
23. On May 21, 1990, the I.G. excluded Petitioner from participating in Medicare
and directed that he be
excluded from participating in Medicaid, pursuant to section 1128(b)(3) of the
Act. I.G. Ex. 1.
24. The exclusion imposed and directed against Petitioner is for five years.
25. The exclusion provisions of section 1128 of the Act establish neither minimum
nor maximum
exclusion terms in those circumstances where the I.G. has discretion to impose
and direct exclusions. Act,
section 1128(b)(1)- (14).
26. A remedial objective of section 1128 of the Act is to protect program beneficiaries
and recipients by
permitting the Secretary (or his delegate, the I.G.) to impose and direct exclusions
from participation in
Medicare and Medicaid of those individuals who demonstrate by their conduct
that they cannot be trusted
to provide items or services to program beneficiaries and recipients. Act, section
1128.
27. The I.G. has not shown that a five-year exclusion of Petitioner from participating
in Medicare and
Medicaid is reasonably necessary to satisfy the remedial purpose of section
1128 of the Act. See FFCL 1-
19.
28. The remedial purpose of section 1128 of the Act will be satisfied in this
case by modifying the
exclusion imposed and directed against Petitioner to a term of three years.
29. Petitioner was convicted of a serious criminal offense. FFCL 8-13; see 42 C.F.R. 1001.125(b)(1).
30. Petitioner's unlawful conduct did not have a direct adverse impact on his
patients or on program
benefi-ciaries or recipients. FFCL 18-19; see 42 C.F.R. 1001.125(b)(2).
31. Petitioner's unlawful conduct was not intended to cause harm to patients
or to the integrity of the
Medicare and Medicaid programs. FFCL 18-19; see 42 C.F.R. 1001.125(b)(4).
32. The remedial considerations of section 1128 of the Act will be served in
this case by a three-year
exclusion.
DISCUSSION
I. The I.G. is authorized to exclude Petitioner by section 1128(b)(3) of the Act.
Section 1128(b)(3) of the Act authorizes the I.G. to exclude from participation
in the Medicare and
Medicaid programs individuals who have been "convicted" of criminal
offenses "relating to the unlawful
manufacture, distribution, prescription, or dispensing of a controlled substance."
On January 19, 1989,
Petitioner was convicted of six counts of failing to file BDC-6 forms. Petitioner
admits, and I find and
conclude, that he was "convicted" within the meaning of section 1128(i)
of the Act and that his conviction
falls within the purview of criminal offenses enumerated in section 1128(b)(3)
of the Act.
Since Petitioner has admitted, and I have concluded, that Petitioner was convicted
of a criminal offense for
which the I.G. may impose an exclusion, pursuant to section 1128(b)(3) of the
Act, the remaining issue is
whether the five-year exclusion imposed on Petitioner by the I.G. is reasonable
and appropriate under the
circumstances of this case.
II. A three-year exclusion is reasonable.
A. The remedial purpose of section 1128 of the Act is to protect federally-funded
health care programs and
their beneficiaries and recipients from untrustworthy providers.
Congress enacted section 1128 of the Act to protect the Medicare and Medicaid
programs from fraud and
abuse and to protect the beneficiaries and recipients of those programs from
impaired and incompetent
practitioners and inappropriate or inadequate care. S. Rep. No. 109, 100th Cong.,
1st Sess. 27, reprinted in
U.S. Code Cong. & Admin. News 682, 708; Greene v. Sullivan, 731 F. Supp.
835, 838 (E.D. Tenn. 1990).
The key term is "protection," the prevention of harm. See Webster's
II New Riverside University
Dictionary 946 (1984). As a means of protecting the Medicare and Medicaid programs
and their
beneficiaries and recipients, Congress chose to mandate, and in other instances
to permit, the exclusion of
untrustworthy providers. Through the exclusion law, individuals and entities
who have caused harm, or
demonstrated that they may cause harm, to the federally-funded programs or their
beneficiaries or
recipients are no longer permitted to receive reimbursement for items or services
which they provide to
Medicare beneficiaries or Medicaid recipients. Thus, untrustworthy providers
are removed from a position
which provides a potential avenue for causing harm to the programs or to its
beneficiaries or recipients.
See Vladimir Coric, M.D., DAB Civ. Rem. C-244 (1991).
By not mandating that exclusions from participation in federally-funded health
care programs be
permanent, Congress has allowed the I.G. the opportunity to give individuals
a "second chance." The
placement of a limit on the period of exclusion allows an excluded individual
or entity the opportunity to
demonstrate that he or she can and should be trusted to participate in the federally-funded
health care
programs as a provider of items and services to beneficiaries and recipients.
See Thomas J. DePietro,
R.Ph., DAB Civ. Rem. C-282 at 8 (1991).
The ultimate issue to be determined at a hearing pertaining to an exclusion
imposed pursuant to section
1128 of the Act is whether the exclusion is reasonable. 42 C.F.R. 1001.128(a)(3).
In adopting this
regulation, the Secretary stated that:
The word 'reasonable' conveys the meaning that . . . [the I.G.] is required
at the hearing only to show
that the length of the [exclusion] determined . . . was not extreme or excessive.
48 Fed. Reg. 3744 (January 27, 1983).
An exclusion determination will be held to be reasonable where, given the evidence
of the case, it is
consistent with the legislative purpose of protecting federallyfunded health
care programs and their
beneficiaries and recipients and it is not extreme or excessive as a length
of time necessary to establish that
the excluded provider no longer poses a risk to covered programs and their beneficiaries
and recipients.
See Basem F. Kandah, R. Ph., DAB Civ. Rem. C-155 at 5 (1990).
In order to be adjudged reasonable under section 1128, an exclusion must satisfy
the remedial objective of
protecting federally-funded health care programs and their beneficiaries and
recipients from untrustworthy
providers of items or services. An exclusion which satisfies this purpose may
also have the ancillary
benefit of deterring wrongdoing. However, an exclusion fashioned solely to achieve
the objective of
deterrence is punitive if it does not reasonably serve the Act's remedial objective.
See Elias Goldstein,
DAB Civ. Rem. C-104 (1989).
B. The fact finder must evaluate the totality of the circumstances of each
case in light of the remedial
purpose of the exclusion law in order to determine the appropriate length of
an exclusion.
Guidance in determining the appropriate length of an exclusion is found in
regulations contained in 42
C.F.R. 1001.125(b). These regulations were adopted by the Secretary prior to
the enactment of the 1987
Amendments to the Act. The regulations specifically apply only to exclusions
for "program-related"
offenses. To the extent that they have not been repealed, however, they embody
the Secretary's intent that
they continue to apply, at least as broad guidelines, to the cases in which
discretionary exclusions are
imposed. The regulations require the I.G. to consider factors related to the
seriousness and program impact
of the offense, and to balance those factors against any factors that demonstrate
trustworthiness. Leonard
N. Schwartz, R.Ph., DAB Civ. Rem. C-62 (1989).
There are proposed regulations which, if adopted by the Secretary, would supersede
the regulations which
presently govern exclusions. 5/ See 55 Fed. Reg. 12205 (April 2, 1990). The
I.G.'s program analyst
Joseph V. Patti testified that the I.G. uses the proposed regulations as guidelines
to establish the length of
an exclusion. Tr. 94-95. For convictions resulting in exclusions under section
1128(b)(3), Mr. Patti stated
that the I.G. starts with a base period of exclusion of five years and increases
or decreases the exclusion
depending on whether aggravating or mitigating circumstances are present. Tr.
94-95. Mr. Patti testified
that he did not consider aggravating factors in determining the length of the
exclusion in this case because
it did not appear to him that Petitioner was involved in the direct illegal
distribution of drugs. Tr. 95-96,
100.
Since the exclusion remedy is not intended to be a punishment for wrongdoing,
the regulations should not
be applied as sentencing guidelines to the facts of a case to determine the
degree of a provider's culpability
with a view to determining the punishment he "deserves." Instead,
the regulations provide guidance as to
the factors that should be considered in order to make inferences about a provider's
trustworthiness and the
length of time a provider should be excluded to provide the Secretary adequate
opportunity to determine
that a provider no longer poses a risk to the covered programs and to their
beneficiaries and recipients.
A determination of the length of time necessary to establish that a provider
is no longer a threat to the
covered programs and to their beneficiaries and recipients necessitates an evaluation
of the myriad facts of
each case, including the nature of the offenses committed by the provider, the
circumstances surrounding
the offense, whether and when the provider sought help to correct the behavior
which led to the offense,
how far the provider has come toward rehabilitation, and any other factors relating
to the provider's
character and trustworthiness. See DePietro, supra; Joyce Faye Hughey, DAB App.
1121 (1991).
The I.G. argued that under the facts of this case a five-year exclusion is
reasonable since Petitioner was
sentenced to incarceration and probation; was ordered to pay fines and court
costs; operated the Pharmacy
without proper DEA registration; continued his conduct over a lengthy period
of time; and was sanctioned
by the State Pharmacy Board. I.G. Br. 12-17.
Petitioner argued that a five-year exclusion is unreasonable and that he is
now trustworthy to provide goods
and services to the Medicare and Medicaid programs. Petitioner asserted that
his length of exclusion should
be reduced to a term of less than one year or dismissed in its entirety with
retroactive reinstatement to the
date the exclusion was imposed. 6/, 7/ P. Rep. Br. 12.
Based on the evidence in the record, I find that an exclusion of five years
is unreasonable. I conclude that
the I.G. has failed to show a meaningful remedial basis for the five-year exclusion
which he requested that
I impose. I conclude that a five-year exclusion would be excessive given the
evidence of record. I do not
believe that Petitioner presents a high risk to offend again. Imposition of
a three-year exclusion will give
Petitioner enough time to demonstrate that he is fully trustworthy. A three-year
exclusion will provide an
ancillary benefit. It will put providers to the Medicare and Medicaid programs
on notice that they may not
with impunity disregard their record keeping responsibility over long periods
of time and expect to escape
exclusion solely by expressing remorse and declaring themselves no longer a
threat to the integrity of the
Medicare and Medicaid programs.
III. The nature and gravity of Petitioner's offenses were serious.
The record reveals that, as the sole owner and sole pharmacist of Northway
Pharmacy since 1969,
Petitioner fills approximately 15,000 to 20,000 prescriptions per year for the
residents of Etna,
Pennsylvania, a community of about 4,000. Tr. 127-129. The average age of Petitioner's
patients is 65 and
these patients typically suffer from chronic illnesses necessitating daily medication
or maintenance-type
medicines. Tr. 128. The next nearest pharmacy is approximately one and one-half
miles from Petitioner's
Pharmacy. Tr. 127-129. Although some of his patients have automobiles, many
of Petitioner's patients are
served by his direct delivery service. Tr. 127-129.
Petitioner was convicted of failing to submit monthly reports to the Attorney
General's Office on Schedule
II controlled substances on six occasions from December 1986 through May 1987.
Petitioner testified that
he failed to file the BDC-6 forms because the forms required him to list the
name of the physician
prescribing Schedule II drugs, as well as the name of the patient being prescribed
Schedule II drugs. Tr.
131-132. Petitioner alleged that neither the patient nor the prescribing physician
was aware of this
reporting requirement. Petitioner said he believed that disclosure of this information
to a third party
without the consent or knowledge of the patient or physician would be an invasion
of their privacy and a
breach of confidenti-ality. Tr. 132.
Petitioner testified also that before he released this information to the Attorney
General's Office, he
requested that they furnish him with the statutory authority requiring him to
furnish such confidential
information. Tr. 131-133. He stated also that when he received a copy of the
statute authorizing the
release of this information, it directed him to send the forms to the Secretary
of Health. Tr. 133. Petitioner
averred that this confused him because previously he had been directed to send
the forms to the Attorney
General's Office. Petitioner contended that, because of this conflicting information,
he was fearful of doing
anything until he clearly understood which agency should receive the forms.
Tr. 137. At his sentencing
hearing, testify-ing about providing this information to the Attorney General,
Petitioner stated "[i]t
occurred to me, at that time, that providing this information to a police agency
would, in effect, transform
me into a willing or unwill-ing police informant. I made every effort that I
could to determine that." I.G.
Ex. 16/48-49. Petitioner maintained that his failure to file these forms was
not done out of defiance of the
law. Tr. 138.
I believe that Petitioner acted out of a motivation to protect his customers
and the prescribing physicians
from a perceived invasion of privacy and breach of confidentiality. Petitioner
did not want to be an
"informant" on his patients who were legitimately being prescribed
certain types of drugs for their ongoing
ailments. His behavior seems typical of the way a small town pharmacist would
react to a request to
divulge information pertaining to his customers and their physicians, especially,
as in this case, where the
Attorney General is to receive the information. I believe also that it is possible
that Petitioner received
conflicting information regarding which agency was to receive the forms. However,
I do not condone the
manner in which Petitioner resolved the conflict. As a pharmacist, Petitioner
is obliged to abide by the
laws regulating the practice of pharmacy and the distribution of drugs.
Since December 1985, Petitioner has had notice and the opportunity to file
the BDC-6 forms. Petitioner's
attorney did attempt to give the completed BDC-6 forms for the months covered
in the indictment to the
prosecutor and a narcotics agent during a preliminary hearing held on July 23,
1987. Tr. 141-143; P. Ex. 2.
At the hearing, narcotics agent Anthony Iorio confirmed that Petitioner's attorney
attempted to deliver the
forms. Tr. 44-45. However, agent Iorio testified that he did not accept the
forms because Petitioner
offered the forms in exchange for having the charges in the criminal complaint
dropped. Agent Iorio stated
that since Petitioner had not complied with the law for years, there was no
way to guarantee future
compliance by him, and, therefore, no one accepted the forms. Tr. 45-46.
Petitioner's misconduct was considered to be so serious that the trial judge
sentenced Petitioner to jail
because she concluded that incarceration was necessary since Petitioner was
unwilling to conform to one of
the main conditions of probation, filing the required forms. 8/ The State Board
of Pharmacy found
Petitioner's failure to file the forms to be a record keeping violation. However,
because Petitioner had
operated his Pharmacy with an unexpired DEA registration during various periods
of time, the State Board
of Pharmacy suspended his license and then stayed the suspension in favor of
two years' probation. I
conclude that Petitioner's conviction for the unlawful manufacture, distribution,
prescription, or dispensing
of a controlled substance, together with his other misconduct, gave the I.G.
the reasons to conclude that a
substantial exclusion was needed to protect the welfare of beneficiaries and
recipients and the integrity of
the Medicare and Medicaid programs. See 42 C.F.R. 1001.125(b)(6).
The I.G. argued that if I apply the reasoning used to sustain the exclusion
imposed in the case of Schwartz,
supra, to the present case, then I must sustain the exclusion imposed here.
I disagree. The petitioner in
Schwartz was a pharmacist convicted of failing to maintain records pertaining
to the sale, during a 16-
month period, of more than 34,000 tablets of Preludin, a Schedule II controlled
substance. He admitted
that he had sold many Preludin tablets without receiving prescriptions for them.
As a consequence of his
conviction, he was sentenced to a period of incarceration plus five years' probation.
The ALJ sustained an
eight-year exclusion in that case, based in part on the seriousness of the petitioner's
criminal misconduct,
but also based on his conclusions that the petitioner's conduct had been motivated
by personal gain and that
the petitioner had not proven that he could be trusted to deal with program
recipients and beneficiaries.
Schwartz is distinguishable from the present case on several grounds. In Schwartz,
the criminal
misconduct upon which the exclusion was premised was motivated by considerations
of personal gain. In
the present case, Petitioner's unlawful conduct stemmed from his concern for
protecting the privacy and
confidentiality of his customers and their physicians. However, the most important
distinction between this
case and Schwartz is that, in this case, Petitioner offered convincing evidence
as to his willingness to
comply with the filing requirements as indicia of his trustworthiness to provide
services to program
beneficiaries and recipients. I am not minimizing the seriousness of Petitioner's
problems. Petitioner was
convicted of a serious criminal offense. See 42 C.F.R. 1001.125(b)(1). Petitioner's
past misconduct of not
filing the monthly BDC-6 forms demonstrated that he has displayed exceedingly
poor judgment.
Petitioner contends that two previous decisions support his position that the
length of his exclusion is
unreasonable: Kenneth Behymer, M.D., DAB Civ. Rem. C-140 (1990) and James E.
Keil, M.D., DAB Civ.
Rem. C-154 (1990). In Keil, the petitioner's exclusion was reduced from five
years to one. The petitioner
had been convicted of one count of unlawfully dispensing a controlled substance.
The petitioner in Keil
was himself addicted and the drug he prescribed was for himself. The petitioner
in Keil also sought help
before his indictment and demonstrated to the ALJ that he had faithfully adhered
to his treatment regimen
and was drug free. The instant case is very different. Although Petitioner was
not involved in the unlawful
sale of drugs, he was convicted of six counts of failing to file monthly forms.
Although the record reflects
that Petitioner attempted to submit the forms in July 1987, the record does
not reveal any further attempts
by Petitioner to comply with the law until March 1990 when he filed the forms
and was finally in
compliance with the law. The record does not reflect an immediate concept of
self-help on Petitioner's part
as was shown by Dr. Keil.
This case contrasts with the case of Behymer. The petitioner in Behymer had
unlawfully prescribed a
controlled substance. Dr. Behymer's act was motivated by what he considered
at the time to be
humanitarian considerations. In the instant case, Petitioner was motivated by
protecting his customers and
their doctors from an invasion of privacy or breach of confidentiality by divulging
information about their
prescriptions. However, unlike Petitioner, Dr. Behymer had engaged in an isolated
episode of misconduct.
Dr. Behymer persuaded the ALJ by the evidence presented in that case that there
was no likelihood that he
would in the future engage in unlawfully prescribing controlled substances.
Thus, the ALJ found the
exclusion to be excessive and modified it accordingly. In this case, Petitioner
did not engage in an isolated
episode of misconduct: that is, for a substantial period of time between December
1985 and March 1987,
he was reluctant to turn over the forms. His behavior was so egregious that
the trial court was compelled to
impose incarceration, probation conditioned on Petitioner turning in the forms,
and a $5,000 fine. The
record reflects that Petitioner did not feel compelled to obey the law.
In short, the misconduct engaged in by Petitioner posed a much more serious
threat to program integrity
and to the welfare of beneficiaries and recipients than that engaged in by the
petitioners in Keil and
Behymer. The threat posed to programs and to beneficiaries and recipients by
a repetition of unlawful
conduct therefore is greater in this case than was the case in Keil and Behymer.
Petitioner, in what appears
to be a self-serving course of action, decided to abide by his own set of rules
as opposed to the existing
rules and regulations regarding the filing requirements for Schedule II drugs
as promulgated by the
Commonwealth of Pennsylvania.
Moreover, I am somewhat perplexed at Petitioner's attitude toward the DEA agents
who were involved in
the investigation of his Pharmacy. The record reveals that during a routine
inspection of Petitioner's
Pharmacy, he physically assaulted a DEA agent, and this eventually led to Petitioner's
arrest and
arraignment. I.G. Br. 3-4. See I.G. Ex. 6-13. Although the charges were dismissed,
the judge lectured
Petitioner about his behavior toward these agents. I.G. Ex. 9. Agent Iorio also
testified that Petitioner was
not very cooperative during an inspection of his Pharmacy in 1987. Tr. 25-28.
I do not condone
Petitioner's behavior toward DEA agents, who are representatives of the government,
attempting to get
Petitioner to conform to the law. Providers of health care should show considerable
respect toward these
agents and physical or verbal abuse in dealing with these agents is not to be
treated lightly. However, I do
believe that Petitioner's obstinacy in filing these forms is tied into the relationship
that was initially
established with these agents. Thus, I believe Petitioner learned a very hard
lesson and he appears to be on
the right track toward complying with the law.
IV. The evidence shows that Petitioner has made some progress toward being trustworthy.
Petitioner's conduct poses a threat to the integrity of the programs served
by Medicare and Medicaid and to
the welfare of program recipients and beneficiaries. See 42 C.F.R. 1001.125(b)(2),
(b)(6). The I.G. had
reason, as well as authority, to exclude Petitioner. However, the five-year
exclusion imposed and directed
in this case is excessive, because it bars Petitioner from participation for
a longer period of time than is
reasonably required for Petitioner to demonstrate that he is trustworthy since
he has successfully continued
to file the monthly BDC-6 forms since March 1990.
The picture of Petitioner that emerges from the record is that of a pharmacist
in a small town who appears
to be overly protective of the elderly patients whom he serves. Because of his
roots in that community
since 1969, Petitioner has put himself in a position of being a watchdog of
these patients, many of whom
he has probably known since he opened his Pharmacy. In testifying regarding
why he did not file the
BDC-6 forms, petitioner stated: "In my work, I have to be competent, compassion-ate,
and trustworthy,
and without that valid authority, I would have considered that a violation of
my trustworthi-ness in my
patients that I was serving." Tr. 151. This seems to be in line with how
a pharmacist in a small town
would conduct his business. Thus, Petitioner put himself in a position of not
adhering to the law in order to
protect the privacy rights of his customers.
Even though the record reveals that, since March 1990, Petitioner has faithfully
filed the forms, I feel that
Petitioner still needs time to prove that he is trust-worthy. I am persuaded
that, in this case, a three-year
exclusion is reasonable. The State Board of Pharmacy will scrutinize his conduct
and noncompliance with
any rules pertaining to the practice of pharmacy would be a violation of his
probation, resulting in a
suspension of his license. However, I believe that Petitioner's conduct needs
to be monitored for a period
of time after the State Board of Pharmacy's probationary period terminates.
Assuming that Petitioner
continues to adhere to the proper filing requirements for BDC-6 forms, when
he is eligible to apply for
reinstatement he will have complied more than three years. That is long enough,
given Petitioner's
determination to fully comply with the law, to establish that he no longer constitutes
a threat to the integrity
of the Medicare or Medicaid programs, or to the welfare of program beneficiaries
and recipients. See 42
C.F.R. 1001.125(b)(4), (b)(6).
CONCLUSION
Based on the evidence in this case and the law, I conclude that the five-year
exclusion imposed against
Petitioner from participating in the Medicare and Medicaid programs is excessive
and unreasonable. I
modify the exclusion to a three-year exclusion from participating in the Medicare
and Medicaid programs.
_________________________
Charles E. Stratton
Administrative Law Judg
1. The Medicaid program is one of three types of federally-financed State health
care programs from
which Petitioner is excluded. I use the term "Medicaid" to represent
all three of these programs, which are
defined in section 1128(h) of the Act.
2. In Petitioner's motion in limine, he argued that he had been excluded from
the Medicare and Medicaid
programs based solely on his conviction for failure to file records from December
1986 through May 1987.
Petitioner contended that any evidence offered by the I.G. which was not based
on his conviction should be
excluded. Petitioner argued that he would be unfairly prejudiced if the I.G.
were permitted to submit
evidence that was irrelevant, immaterial, or its probative value was outweighed
by its undue prejudicial
effect. The I.G. submitted a reply brief in opposition to Petitioner's motion.
The I.G. argued that in order
to decide the issue of the reasonableness of the length of exclusion, Petitioner's
trustworthiness as a
pharmacist must be determined and that the factors set forth in the regulations
at 42 C.F.R. 1001.125(b)(1)-
(7) should be considered. I reserved ruling on Petitioner's motion until the
hearing. During the hearing, I
denied Petitioner's motion in limine. I held that evidence which was relevant
to the reasonableness of an
exclusion would be admitted at the hearing. I also held that evidence which
related to Petitioner's
trustworthiness would be admissible.
3. Citations to the record and to Departmental Appeals Board cases in this decision are as follows:
Transcript Tr. (page)
I.G.'s Exhibits I.G. Ex. (number/page)
I.G.'s Brief I.G. Br. (page)
I.G.'s Reply Brief I.G. Rep. Br. (page)
I.G.'s Posthearing I.G. P. Br. (page)
Brief
Petitioner's Exhibits P. Ex. (number/page)
Petitioner's Brief P. Br. (page)
Petitioner's Reply P. Rep. Brief
Brief
Petitioner's Post- P. P. Br. (page)
hearing Brief
Findings of Fact and FFCL (number)
Conclusions of Law
Departmental Appeals DAB Civ. Rem. (docket no./
Board ALJ decisions date)
Departmental Appeals DAB App. (decision no./
Board appellate date)
decisions
4. Some of my statements in the sections preceding these formal findings and
conclusions are also findings
of fact and conclusions of law. To the extent that they are not repeated here,
they were not in controversy.
5. These proposed regulations, however, have not been finally adopted. It would
not be appropriate for
me to assume that they will be adopted in their proposed form. Moreover, it
is not clear that, if and when
these proposed regulations are adopted, they would apply retroactively to exclusions
imposed prior to the
date of their adoption. I must make an independent assessment of the reasonableness
of the exclusion,
taking into consideration all of the factors discussed above.
6. In Samuel W. Chang, M.D., DAB App. 1198 at 9 (1990), an appellate panel
of the Departmental
Appeals Board found that an ALJ cannot decide when the exclusion is to begin.
Thus, I am without
authority to adjust the effective date of the exclusion.
7. Congress has not mandated that exclusions from participation in the federally-funded
health care
programs be permanent. Instead, section 1128(g) of the Act provides that an
excluded provider may apply
for reinstatement into the program at the end of the exclusion period. The Secretary
may then reinstate the
provider if there is no basis to deny reinstatement and there are reasonable
assurances that the types of
actions which formed the basis for the exclusion have not recurred and will
not recur.
8. In an article dated October 2, 1989, a newspaper, the Pittsburgh Post-Gazette,
reported that Petitioner
was incarcerated for one day for failing to turn over the BDC-6 forms in a timely
manner. I.G. Ex. 18.