Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Robert L. Alexander, M.D., Petitioner,
- v. -
The Inspector General.
DATE: December 8, 1992
Docket No. C-255
Decision No. CR244
DECISION
This case is governed by section 1128 of the Social Security Act (Act). By
letter dated February 21, 1990
(Notice), the Inspector General (I.G.) notified Petitioner that he was being
excluded from participation in
Medicare and all federally funded State health care programs for a period of
15 years. 1/ The I.G.
informed Petitioner that his exclusion resulted from his conviction of a criminal
offense related to the
unlawful manufacture, distribution, prescription, or dispensing of a controlled
substance. The I.G. further
advised Petitioner that exclusions from the Medicare and Medicaid programs after
such a conviction are
authorized by section 1128(b)(3) of the Act (42 U.S.C. 1320a-7(b)).
By letter dated June 12, 1990, Petitioner requested a hearing before an Administrative
Law Judge (ALJ),
and the case was assigned to me for hearing and decision.
I have considered the evidence of record, the parties' arguments, and the applicable
law. I conclude that
the I.G. had authority to exclude Petitioner, that the 15-year exclusion imposed
and directed by the I.G. is
excessive, and that an exclusion for 10 years is reasonable under the circumstances
of the case.
BACKGROUND
In September 1988, Petitioner was convicted in federal court, by jury trial,
on 12 of 15 counts brought
against him. 2/ I.G. Ex. 21 at 10/5. 3/ The conviction included one count of
conspiracy to distribute eight
controlled substances and eleven counts of distributing or aiding and abetting
the distribution of four of
those controlled substances. 4/ I.G. Ex. 13. Petitioner was sentenced to several
concurrent four-year terms
of imprisonment, a $25,000 fine, and a three-year special parole term. Petitioner's
case is now on remand.
5/ I.G. Ex. 14. Petitioner began his prison term on January 3, 1989, served
23 months of his sentence in
prison and in a half- way house, and is currently on parole through December
31, 1996.
At the time of the above-described offenses, Petitioner was a physician licensed
in the State of Michigan
and serving his residency at Providence Hospital in Detroit, Michigan. Petitioner
moonlighted part time as
a physician at a "weight loss" clinic for approximately six months
during 1982. The evidence adduced at
Petitioner's federal court trial indicated that, during the course of his employment
at the "weight loss"
clinic, he wrote prescriptions for various controlled substances under illegal
circumstances and these
prescriptions were sold to drug dealers and drug addicts. See generally, I.G.
Ex. 21.
On August 3, 1990 (as reaffirmed on remand by order dated August 21, 1992),
the State of Michigan
Department of Commerce Board of Medicine (Michigan Board) revoked Petitioner's
license to practice
medicine. I.G. Ex. 24.
As stated above, the I.G. issued his Notice on February 21, 1990 and Petitioner
filed his hearing request on
June 12, 1990. On August 23, 1990, the I.G. filed a Motion to Dismiss Petitioner's
Request For Hearing
(I.G.'s Motion to Dismiss), on the ground that the request was filed late without
a showing of good cause
for an extension. Petitioner filed a reply. I ruled that I would not decide
the timeliness issue at that time.
Order To Show Cause Why Petitioner's Request For A Hearing Should Not Be Dismissed
Because Of
Abandonment, at 1, dated April 26, 1991; Order and Notice of Hearing, at 1-2,
dated October 23, 1991.
During the almost three years since the I.G.'s Notice was issued, Petitioner
has asked for and has been
granted several delays and continuances.
The parties submitted numerous exhibits or attachments with their briefs in
this matter. In an Amended
Prehearing Order (Amended PHO) at 3, dated April 17, 1992, I admitted into evidence
what were at that
time marked by the I.G. as I.G. Exhibits 1-12. Subsequent to that date I renumbered
the I.G.'s exhibits and
have admitted them into evidence as follows: I.G. Exhibits (I.G. Exs.) 1-9 are
those documents that the
I.G. filed with his motion to dismiss dated August 23, 1990. I.G. Exs. 10-21
are those documents that the
I.G. filed as proposed exhibits 1-12 and which I admitted into evidence on April
17, 1992. I.G. Exs. 22-24
are documents that the I.G. filed with his brief in support of the exclusion,
dated September 25, 1992.
Also, I have renumbered Petitioner's exhibits and have admitted them into evidence
as follows. On July
28, 1992, Petitioner submitted proposed exhibits lettered A through H, plus
also unnumbered portions of
transcripts from Petitioner's April 15, 1992 and May 6, 1992 hearings before
the Michigan Board. These
exhibits were not properly numbered. Petitioner's Exhibits (P. Exs.) 1-3 are
documents filed with
Petitioner's response to the I.G.'s motion to dismiss, dated September 6, 1990.
P. Exs. 4-16 are documents
Petitioner filed as proposed exhibits on July 28, 1992. P. Ex. 17 is the Scrutchions'
affidavit, dated August
25, 1992. P. Exs. 18-19 are orders from the United States Court of Appeals for
the Sixth Circuit
remanding the case to the district court. See note 5, supra. P. Ex. 20 is Petitioner's
affidavit, which states
that his new trial was still pending.
In a conference call on August 10, 1992, Petitioner waived his right to an
in-person hearing if his only
witness, Patricia Scrutchions, his parole officer, were allowed to submit an
affidavit. The I.G. did not
object to proceeding without an in-person hearing. I admitted that affidavit
(P. Ex. 17) into evidence by
letter dated August 27, 1992 and also ruled that this case will be decided based
on the written record.
ADMISSIONS
Petitioner admits that he was "convicted" of a crime, that he was
incarcerated in a federal prison for that
crime for 23 months, and that his conviction related to the illegal sale of
a controlled substance. Amended
PHO at 2-3. Based on this admission, I found that Petitioner had been "convicted"
within the meaning of
section 1128(i) of the Act and that Petitioner was convicted of a crime relating
to the "distribution,
prescription, or dispensing of a controlled substance" within the meaning
of section 1128(b)(3) of the Act.
Amended PHO at 3.
ISSUES
1. Whether the new regulations published on January 29, 1992 govern the disposition of this case.
2. Whether Petitioner's request for a hearing before an ALJ was filed timely
or whether Petitioner
established "good cause" for filing untimely.
3. Whether the 15-year exclusion imposed by the I.G is reasonable and appropriate.
FINDINGS OF FACT AND CONCLUSIONS OF LAW 6/
Having considered the entire record, the arguments, and the submissions of
the parties, and being advised
fully, I make the following Findings of Fact and Conclusions of Law (FFCLs):
1. I reaffirm each and every prehearing ruling and FFCL.
2. This proceeding is governed by section 1128 and especially subsection 1128(b)(3) of the Act.
3. The regulations concerning time limitations for filing appeals of exclusion
determinations (to be
codified at 42 C.F.R. 1005.2(c), published at 57 Fed. Reg. 3298, 3350 on Jan.
29, 1992), were not
intended to apply retroactively to appeals of I.G. exclusion determinations
that were pending before ALJs
at the time the regulations were published.
4. The regulations concerning permissive exclusion proceedings brought under
section 1128(b)(3) of
the Act (to be codified at 42 C.F.R. Part 1001, published at 57 Fed. Reg. 3298
et seq. on Jan. 29, 1992)
were not intended to apply retroactively to proceedings which began before the
regulations were published.
5. Petitioner's hearing request, filed June 12, 1990, was not timely filed.
6. According to applicable regulations, "good cause" occurs where
unusual or unavoidable factors
beyond a party's control prevent him from filing in a timely manner. Cf. 20
C.F.R. 404.911.
7. Petitioner has shown "good cause" for submitting a late request
for a hearing based on the
cumulative circumstances of his medical condition, his incarceration, and his
pro se and in forma pauperis
status at the time he received the Notice.
8. Petitioner is granted an extension of time to file his hearing request,
and the request for a hearing
is granted. The I.G.'s Motion to Dismiss is denied.
9. Petitioner, Robert L. Alexander, M.D., was licensed by the State of Michigan
to practice
medicine. In 1982, he worked as a resident at Providence Hospital in Detroit,
Michigan. I.G. Ex. 21.
10. Petitioner was convicted of a criminal offense within the meaning of sections
1128(i) and
1128(b)(3) of the Act. Amended PHO at 3.
11. The I.G. had authority to exclude Petitioner from participation in the
Medicare and Medicaid
programs pursuant to the permissive exclusion provision of section 1128(b)(3)
of the Act.
12. The remedial purpose of section 1128 of the Act is to protect federally
financed health care
programs and their beneficiaries and recipients from providers who have demonstrated
by their conduct
that they cannot be trusted to handle program funds or treat beneficiaries and
recipients.
13. The serious nature of Petitioner's violations is reflected in the fact
that they involve a criminal
conviction on one count of conspiracy to distribute eight controlled substances
and eleven counts of
distributing or aiding and abetting the distribution of four of those controlled
substances. I.G. Ex. 13.
14. It is an aggravating factor that Petitioner was sentenced to several concurrent
four-year terms of
imprisonment, fined $25,000, and paroled on a three-year special parole term.
I.G. Ex. 14.
15. It is an aggravating factor that the Michigan Board revoked Petitioner's
license to practice
medicine and imposed a $50,000 fine which must be paid before Petitioner can
apply for reinstatement of
his license. I.G. Ex. 24.
16. An exclusion is needed in this case to satisfy the remedial purposes of the Act.
17. It is a neutral factor that Petitioner's crimes were not directly related
to the Medicare or Medicaid
programs.
18. Petitioner suffers from a medical condition, a chronic bipolar disorder,
which manifests itself with
symptoms of manic depression. P. Exs. 5, 7, and 16.
19. Petitioner has received continuous treatment for his disorder since he
entered prison in 1989, and
his prognosis is fair to good if he continues to receive medication and therapy.
P. Ex. 8.
20. Petitioner has been involved in community volunteer services since his
release from prison and
has complied with the terms of his parole.
21. Petitioner acknowledges his actions and demonstrates remorse for them.
22. In light of the remedial purpose of section 1128(b)(3) and the progress
Petitioner has made toward
rehabilitation, a 15-year exclusion is unreasonable and excessive.
23. Under the circumstances of this case, the remedial considerations of the
Act will be served by a
ten-year exclusion.
DISCUSSION
I. The New Regulations Published On January 29, 1992 Do Not Govern The Disposition
Of This
Case.
On January 29, 1992, the Secretary published new regulations which effect both
procedural and substantive
changes with respect to exclusion cases. 42 C.F.R. Parts 1001-1007; 57 Fed.
Reg. 3298 et seq. (new
regulations). The I.G. argues that the new regulations should apply because
they were effective upon
publication. Petitioner has not addressed this issue.
In my April 17, 1992 Amended PHO, I found that the procedural aspects of the
new regulations (Part
1005) should govern the conduct of the hearing and the substantive aspects of
the former regulations (Part
1001) should apply to the issues in this case. An appellate panel of the Departmental
Appeals Board
(DAB) held on May 28, 1992 that the new regulations do not apply retroactively
in cases such as this one,
where the exclusion determination was made prior to the regulations' publication
date. Behrooz Bassim,
M.D., DAB 1333, at 5-9 (1992) (retroactive application would deprive petitioner
of due process).
Consistent with my Amended PHO and the appellate panel's decision in Bassim,
I find that, with respect to
the timeliness of the request for hearing, the regulations at 42 C.F.R. 498.40
-- not the new regulations at
42 C.F.R. 1005.2(c) -- should apply because this issue affects the right of
Petitioner to be heard. I also
find that, with respect to the reasonableness of the length of the exclusion,
my review is not governed by
the new regulations' criteria for the I.G.'s determination of that matter and
that 42 C.F.R. 1001.401 of the
new regulations was not intended by the Secretary to govern de novo hearings
as to the reasonableness of
the I.G.'s exclusion determinations. See Anthony W. Underhill, DAB CR231, at
12-13 (1992); Willeta J.
Duffield, DAB CR225, at 9-13 (1992).
The I.G. did not rely on the new regulations at 42 C.F.R. 1001.401(b) to determine
the length of
Petitioner's exclusion. But, he now argues that these criteria, published almost
two years after his original
Notice, are now binding on my de novo review.
The I.G. asserts that, as the new regulations were effective when they were
published on January 29, 1992,
they apply to any exercise of ALJ authority on and after that date. He argues
that 42 C.F.R. 1001.401
limits my review of the circumstances of this case to the specific aggravating
and mitigating factors listed
in the new regulations. Petitioner did not address the applicability of the
new regulations to this case.
The issue of the applicability of the new regulations to cases pending when
the regulations were published
has been extensively considered by Administrative Law Judges of the DAB, including
myself. Recently,
in Duffield at 9-13, I found that the new regulations did not govern my review
of an 1128(b)(3) case which
was pending at the time the new regulations were published. In addition to relying
on the Bassim holding
with respect to application of the new regulations to pending cases, I found
that:
[T]he plain language of section 1001.401 and the comments of Part 1001 indicate
that this
provision is to be applied to the I.G.'s determination only and does not control
my determination in this
case. Until an appellate panel interprets these regula-tions as the I.G. contends,
I shall continue to apply
them consistent with my obligation under the Act to consider a myriad of facts
to determine the length of
time necessary to establish that Petitioner is not likely to repeat the type
of conduct which precipitated the
exclusion. [citation omitted].
Duffield at 12-13.
The above reasoning is equally applicable to the instant proceeding. I find
that the application of the new
regulations, and, in particular, the application of 42 C.F.R. 1001.401 to this
proceeding would materially
alter Petitioner's substantive due process rights. The new regulations are not
applicable because: (1) they
were published after the date of the Notice; and (2) they are not binding on
my de novo review of the
reasonableness of the length of the exclusion imposed by the I.G.
II. Petitioner Has Established "Good Cause" Within The Meaning Of
42 C.F.R. 498.40 For Not
Timely Filing His Request For Hearing.
A. Petitioner's Request For A Hearing Was Filed Untimely.
Having concluded that the prior regulations govern this case, I must now apply
those regulations to the
facts at issue. As noted above, the applicable regulations require that a party
requesting a hearing must file
the request within 60 days from receipt of the letter from the I.G. notifying
of the exclusion (Notice). 42
C.F.R. 498.40(a)(2). However, 42 C.F.R. 498.40(c)(2) provides that for "good
cause shown" the ALJ to
whom the case is assigned may extend the time for filing the hearing request.
7/
The I.G.'s Notice advising Petitioner of his exclusion is dated February 26,
1990. The records of the
Federal Prison Camp (FPC) at Yankton, South Dakota, in which Petitioner was
incarcerated at that time,
show that the return-receipt for the Notice was signed by an agent of the FPC
on March 8, 1990. Also, the
official legal mail log of the FPC shows that Petitioner signed for an item
of mail from the Department of
Health and Human Services, Washington, D.C., on March 10, 1990. I.G. Exs. 5
and 6. Petitioner
requested a hearing by letter dated June 12, 1990, 94 days after he received
the Notice.
Thus, the undisputed material facts establish that Petitioner did not timely file his hearing request.
B. Petitioner Has Shown "Good Cause" For The Untimely Filing Of His
Hearing Request.
In his Memorandum In Support Of Motion To Dismiss, dated August 23, 1990, the
I.G. argues that the
case be dismissed pursuant to 42 C.F.R. 498.70(c). 8/ More recently, in the
I.G.'s brief, dated September
25, 1992, at 2, the I.G. specifically renews his motion to dismiss and incorporates
by reference the August
23, 1990 brief and accompanying exhibits. Thus, the I.G. has not argued that
the new regulations should
apply on this issue. Therefore, I conclude that under the DAB ruling in Bassim,
the new regulations do not
apply to the issue of the timeliness of Petitioner's request for a hearing or
whether Petitioner established
"good cause" for not filing timely. I will consider Petitioner's request
for a hearing under 42 C.F.R.
498.40.
Since Petitioner did not file his hearing request within the 60-day period
required by regulation, he is not
entitled to a hearing before an ALJ. However, the applicable regulations establish
circumstances where a
petitioner may be granted a hearing, even though there is no right to one. In
my discretion, I may extend
the time for filing a hearing request upon written request for an extension
stating the reasons the request
was not timely filed and a showing of "good cause." 42 C.F.R. 498.40(c).
While Petitioner does not dispute that his request for a hearing was untimely
filed, he contends that he had
"good cause." Petitioner argues that he was delayed in filing his
hearing request because of the
circumstances of his medical condition (manic-depressive bipolar mental illness
and depression), his
incarceration, and his pro se and in forma pauperis status. See Petitioner's
September 6, 1990 Response to
the I.G.'s Motion to Dismiss. 9/
While the regulations do not define "good cause," ALJs at the DAB
have looked to the examples of "good
cause" set forth at the regulations governing Social Security disability
hearings. 10/ See John T. Clardy,
M.D., DAB CR199, at 11 (1992) (proceeding dismissed for failure to establish
"good cause"). These
examples are enumerated at 20 C.F.R. 404.911(b)(1)-(9) and include circumstances
such as serious
illness, receiving incorrect information regarding the request for review, the
destruction of important
records, failure to receive the notice, a good faith submission of the request
to the wrong agency, and
unusual or unavoidable circumstances preventing the individual from filing in
a timely manner. These
examples are not inclusive of the circumstances which would qualify for a "good
cause" exemption, but
they do establish a commonality indicating that "good cause" should
be found when the circumstances
preventing a timely filing are for reasons beyond the petitioner's control.
Clardy at 11; see I.G. Ex. 8,
David Cooper, R.Ph., DAB C-51, Order Denying I.G.'s Motion to Dismiss Request
for Hearing, dated
February 3, 1989 (imprisoned petitioner showed "good cause" due to
lack of control over either his own
affairs or prison mailing procedures and also due to his pro se status); I.G.
Ex. 9, Rose Farias, M.D.,
Docket No.000-44-7-049 (SSA/OHA) (August 26, 1988) (no showing of "good
cause" where respondent
denied receipt of notice of exclusion although the notice was received by the
respondent's agent at the
address she normally received correspondence); see also David L. Golden, M.D.,
DAB CR55 (1989) (same
holding as Farias).
In this case, there is persuasive evidence which leads me to conclude that
Petitioner's failure to timely file
was due to circumstances beyond his control. Petitioner has introduced several
reports from physicians
which establish that Petitioner has been diagnosed as having a bipolar disorder
and has exhibited symptoms
of manic-depressive disorder. P. Exs. 5 and 11. Bipolar disorder manifests itself
through fluctuating
periods of high energy and feelings of euphoria followed by periods of depression.
11/ While in prison,
Petitioner was treated at the Federal Medical Center from April through June
1989 for the disorder. At that
time, Petitioner received treatment for his disorder through a combination of
medications. Id.; Petitioner's
Response at 1. According to Dr. Joseph Daniels, Petitioner's psychiatrist, the
disorder was only in partial
remission in 1990, and "he was still suffering some problems." P.
Ex. 16 (Deposition of Dr. Daniels at 11).
Petitioner also argues that while in prison his only income came from working
for 11 cents an hour, for a
total of $13-$14 a month. This, he states, made the required postage a major
expense. In support,
Petitioner introduced evidence that in 1989 a federal court found that Petitioner
did "not have sufficient
assets to enable him to retain appellate counsel" and granted him leave
to proceed in forma pauperis. 12/
P. Ex. 2. Lastly, Petitioner states that he was incarcerated in prison at the
time the Notice was received and
did not have the assistance of counsel.
While none of these circumstances may have been persuasive standing alone,
I find that, taken together,
some of them establish "good cause." See I.G. Ex. 8, Cooper at 3-4.
Petitioner received the Notice on
March 10, 1990 and his request is dated June 12, 1990. Thus, his request is
approximately one month late.
Under the circumstances, it is not unreasonable to find that Petitioner was
prevented from timely filing by a
combination of forces beyond his control. Justice is not harmed by my exercise
of discretion here. I
accept Petitioner's "good cause" for failing to file timely, grant
the extension of time, and accept the request
for hearing. The I.G.'s Motion to Dismiss is denied.
I emphasize that my finding here is based solely on the circumstances peculiar
to this case. I do not find
that pro se status, a disability, or incarceration, taken alone or under other
circumstances, would sustain a
finding of "good cause." Each case must be decided on its own merits.
13/
III. The I.G. Had The Authority To Exclude Petitioner Pursuant To 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 or entities who have been "convicted, under
Federal or State law, of a
criminal offense relating to the unlawful manufacture, distribution, prescription,
or dispensing of a
controlled substance."
The first criterion that must be satisfied to establish the I.G.'s authority
to exclude Petitioner under section
1128(b)(3) of the Act is that Petitioner must be convicted of a criminal offense.
Petitioner has admitted
that he was convicted of a crime, and I have previously found that Petitioner
was "convicted" of a criminal
offense within the meaning of sections 1128(b)(3) and 1128(i)(3) of the Act.
Amended PHO at 3.
The second criterion is that the criminal offense must relate to the unlawful
manufacture, distribution,
prescription, or dispensing of a controlled substance. Petitioner has admitted
that his conviction related to
the illegal sale of a controlled substance, and thus I find that the second
criterion is established. Id.
Accordingly, I conclude that the I.G. was authorized to exclude Petitioner pursuant
to section 1128(b)(3) of
the Act.
IV. The Remedial Purpose Of The Act Is Satisfied In This Case By A 10-Year Exclusion.
A. Several Factors Are Relevant To DeterminingTrustworthiness.
The exclusion laws are civil statutes designed to protect government financed
health care programs from
fraud and abuse by providers and to protect the beneficiaries and recipients
of these programs from
incompetence and dishonesty. 14/ Exclusion is intended also to serve as a deterrent
to future misdeeds.
Congress did not, however, intend that exclusions from the Medicare and Medicaid
programs be
permanent; transgressors are meant to have an opportunity to rehabilitate themselves.
Michelle Donaldson,
D.P.M., DAB CR234, at 5 (1992). Thus, resolution of the reasonableness of Petitioner's
15-year exclusion
depends on an analysis of the evidence of record in light of the remedial purposes
of the Act. See id.;
Arthur V. Brown, M.D., DAB CR226, at 9 (1992); Charles J. Burks, M.D., DAB CR54,
at 8-9 (1989).
Therefore, in determining an exclusion, all of the circumstances should be
considered. In performing this
analysis, the following criteria have been found suitable by the DAB's ALJs
for evaluating an excluded
provider's trustworthiness and the appropriateness of the length of an exclusion:
(1) the provider's degree
of culpability and the seriousness of the offense; (2) the degree (if any) of
the provider's willingness to
place the programs in jeopardy (even if no actual harm resulted); (3) the provider's
failure to admit
misconduct, or express remorse, or demonstrate rehabilitation; and (4) the likelihood
of future abuse.
Donaldson at 5-6, citing Bhupandra Patel, M.D., DAB CR227 (1992), aff'd, DAB
1370 (1992).
In addition to the above indicia of trustworthiness, the appropriateness of
an exclusion may be determined
by assessing the following criteria which are incorporated in the regulations
at 42 C.F.R. 1001.125.
These regulations set forth criteria which have been used in setting the length
of exclusions for program-
related offenses. I may refer to these criteria -- but am not required to rely
on them -- in determining the
reasonableness of the length of the exclusion. These factors include: (1) the
number and nature of the
offenses; (2) the nature and extent of any adverse impact the violations have
had on beneficiaries; (3) the
amount of the damages incurred by the Medicare or Medicaid programs; (4) whether
there are any
mitigating circumstances; (5) the length of the sentence imposed by the court;
(6) any other facts bearing
on the nature and seriousness of the program violations; and (7) the previous
sanction record of the
excluded party under the Medicare or Medicaid programs. These factors may be
used by me as general
guidance as to the type of evidence that may be relevant to determining a Petitioner's
trustworthiness to be
a health care provider. See, e.g., Eric Kranz, M.D., DAB 1286, at 11 (1991);
Chander Kachoria, R.Ph.,
DAB CR220, at 13 (1992).
Finally, an appellate panel of the DAB, in adopting criteria previously outlined
by ALJs in section 1128
cases, has provided a listing of some of the factors which should be considered:
the nature of the offense 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.
Robert Matesic, R.Ph., d/b/a Northway Pharmacy, DAB 1327, at 12 (1992).
B. The Evidence Of Untrustworthiness In This CaseSupports A 10-Year Exclusion.
By not mandating that exclusions from participation in the programs be permanent,
Congress has allowed
the I.G. to give medical providers a second chance. An excluded individual or
entity has the opportunity to
demonstrate that he or she can and should be trusted to participate in the Medicare
and Medicaid programs
as a provider. Duffield at 13, citing Lakshmi N. Murty Achalla, M.D., DAB 1231
(1991).
By reason of section 205(b)(1) of the Act, this proceeding is de novo. Thus,
all evidence relevant to
Petitioner's trustworthiness or the remedial objectives of the law is admissible,
even if that evidence does
not pertain to the legal basis for the exclusion, and even if the I.G. did not
consider it or if it was not
available to the I.G. at the time the Notice was issued. Duffield at 13; Christino
Enriquez, M.D., DAB
CR119, at 10-12 (1991).
The I.G. argues that a 15-year exclusion is justified in this case because
of: (1) the circumstances leading
to Petitioner's conviction; (2) Petitioner's sentence, which included imprisonment,
a large fine, and a term
of parole; (3) the revocation of Petitioner's Michigan medical license and a
fine for reinstatement; and (4)
Petitioner's lack of remorse or acceptance of his responsibility. The I.G. contends
also that Petitioner's
disability does not relieve him of his criminal responsibility. These factors,
the I.G. asserts, require a
conclusion that Petitioner is so untrustworthy as to justify a 15-year exclusion.
Petitioner offers as mitigating circumstances: (1) his acknowledgment of his
mistake and the
circumstances surrounding his actions; (2) his efforts at rehabilitation; (3)
the benefit to the community of
an early reinstatement; (4) his knowledge and reputation as a physician; and
(5) the treatment that he now
receives for his disability.
I have evaluated the evidence presented in this case and have attempted to
balance the seriousness and
impact of the offense with other factors which may demonstrate trustworthiness.
I find Petitioner's violations to be serious. Even taking into account the
effects of Petitioner's medical
disorder at that time, the evidence of Petitioner's culpability for his offenses
is overwhelming. According
to the trial transcript, Petitioner, while a resident at Providence Hospital
in Detroit in 1982, also worked
part time for several "weight loss" clinics in the area. 15/ I.G.
Ex. 21 at 8/41. Although in Michigan, at
that time, it was legal to prescribe controlled substances for weight loss,
strict standards for their
prescription were in effect. Id. at 3/83, 5/76, and 5/87. The law required that,
to dispense the "weight loss"
drugs, a clinic had to have a physician on staff who had a license to dispense
controlled substances (a DEA
number). 16/
At Petitioner's 1988 trial, the government presented numerous witnesses, including
owners, employees, and
clients of the clinic, undercover agents who visited the clinic, and experts
who testified regarding
Petitioner's handwriting on prescriptions. See I.G. Ex. 21 (trial transcript).
Their combined testimony
indicated that the owners had operated other "weight loss" clinics
and used other doctors in the past. The
owners stated that they opened this clinic for the sole reason of making money
by distributing controlled
substances. One of the owners testified that all that was needed at that time
was a building, a receptionist, a
person to take blood pressure and weights, and a physician with a DEA number.
Id. at 1/128-29 and 1/154.
The owner stated that she met Petitioner while he was working at another "weight
loss" clinic owned by an
acquaintance. She hired Petitioner for $100 per hour (plus after seeing 50 patients
a day, he received an
incentive of $10 for each patient he saw). Id. at 1/151 and 1/155. Petitioner
worked part time at the clinic
for about six months. An owner stated that she opened the clinic around the
days and times Petitioner was
able to work there.
The trial testimony also indicated that the "patients" of the clinic
were rarely overweight and received little
or no medical care or examinations. Diet sheets were discontinued because the
"patients" threw them on
the floor. In fact, there were almost no facilities or equipment for examinations
other than a blood pressure
cuff and weight scale. "Patients" paid a flat $30 fee for two prescriptions
of controlled substances. Id. at
1/134-35 and 7/28. Payments for the prescriptions were in cash, and no medical
insurance was accepted.
Id. at 1/179, 3/25-26, and 3/32-33. After payment, the patient would fill out
a chart, and an employee
would take the patient's blood pressure and weight. Id. at 1/163-64 and 1/180.
Sometimes the weight
would be increased on the chart if the patient was too thin. Id. at 2/77, 3/28-29,
and 3/98-100. The patient
did not always see the doctor. Id. at 6/106. An employee would take the chart
back to the doctor. Either
the chart would have a notation on the back regarding the type of prescription
the "patient" wanted, or he
or she would tell the doctor. Id. at 1/158-60. The doctor would fill out the
body of the prescription (the
medication, his name, and DEA number), send out the chart and prescription,
and the clinic employees
would fill in the name(s) the "patient" was using. Sometimes, a "patient"
would pay for and receive several
prescriptions under different names or for "friends" or "relatives."
An owner stated that they saw about
100 people a day. To keep things moving, she had to remind the doctor not to
take too long with each
"patient." These prescriptions would be taken to a pharmacy by the
"patient," who would then use or sell
the controlled substances. Id. at 1/219-20, 2/111-12, 3/158, 3/171, 4/15-16,
4/21, 4/132, and 4/148-49.
There was also testimony that Petitioner signed his name to pads of prescriptions
for certain controlled
substances. He would be paid $15 per prescription for the Schedule II drugs
such as Desoxyn, Preludin,
Percodan, and Percocet, with a prescription for Valium or cough syrup "thrown
in" without charge. 17/ Id.
at 6/112-13 and 7/23. Petitioner vigorously denied this at his trial. Id. at
8/69.
The government agents were able also to survey 21 of the 914 pharmacies in
the area. I.G. Ex. 21 at
4/227-28. An analysis of half of the 11,500 prescriptions sampled showed that
Petitioner had prescribed
15,360 tablets of Desoxyn; 1,260 tablets of Preludin; 3,630 tablets of Percodan;
150 tablets of Quaaludes
or methaqualone; 6,750 tablets of Valium; 3,480 doses of Talwin; 540 doses of
Tuinal; 88 doses of Tylenol
#4 with codeine; and 560 ounces of Tussionex. Id. at 4/238-40. Thus, a small
sample of area pharmacies
turned up 1,156 prescriptions written by Petitioner during his six months of
part-time work at the clinic.
Id. at 5/45. Petitioner left the clinic in June 1982, and, shortly thereafter,
the owners opened a new clinic.
Several of the owners and employees were also indicted and convicted in separate
trials.
In his defense at the trial, Petitioner testified that he always examined each
patient fully and prescribed
only what was medically necessary. He stated that many of the patients came
for weight loss, but that
others came for pain -- for example, for back pain from shoveling snow. He argued,
and the government
agreed, that some of the prescriptions were forgeries written by the clinic's
owners or others. However, the
jury convicted Petitioner on 12 of the 15 counts, and the judge sentenced him
to several concurrent terms
of four-years' imprisonment, a $25,000 fine, and parole ending December 31,
1996. Petitioner served 23
months of his sentence.
As stated previously, I find that Petitioner's actions had the potential for
serious harm to his patients, and
his criminal behavior lasted for several months. As a result of these actions,
Petitioner was convicted and
his sentence was substantial. The evidence also establishes that Petitioner's
conduct was motivated by
considerations of unlawful and personal gain. Testimony at the trial indicated
that, based on clinic receipts,
Petitioner was paid about $500 to $800 a day and received between $9,000 and
$10,000 for his work. I.G.
Ex. 21 at 1/169-70 and 8/85. Petitioner stated that he had worked at the clinic
approximately 19 days. Id.
at 8/98.
As Petitioner notes, his actions were not directly related to the Medicare
or Medicaid programs, and there
is no evidence that any Medicare or Medicaid benefici-aries or recipients were
"patients" of the clinic. The
clinic accepted only cash. Therefore, there are neither aggravating nor mitigating
considerations with
respect to this factor.
It is an aggravating factor that the Michigan Board considered Petitioner's
conduct to be so serious that it
revoked his medical license for an indefinite period of time and ordered that
he pay a fine of $50,000 prior
to applying for reinstatement to the Michigan Board. 18/
In an effort to explain the circumstances leading to his conviction, Petitioner
offers evidence of his medical
disorder. See generally P. Exs. 5, 7-8, and 11. Petitioner states that the stresses
caused by this illness were
a strong factor leading to his inability to tell right from wrong. 19/ Petitioner
is considered to be 100
percent disabled. P. Ex. 7. He has been under the care and treatment of Dr.
Joseph Daniels, M.D., a
certified psychiatrist, since 1990. Dr. Daniels has diagnosed Petitioner as
having a medical condition
known as a "bipolar disorder mixed." P. Ex. 16 (Dr. Daniels' deposition
at 11); P. Ex. 5. This medical
condition is considered to be an affective mood disorder caused by a chemical
disturbance within the body,
which is usually hereditary. Untreated, it produces mood swings which move from
a period of elation and
energy which may result in bad judgment or poor insight to a downslide into
a state of depression with
crying spells, lethargy, and lack of motivation and self-worth. Id. at 11-13.
Also, Dr. Daniels stated that,
when not treated, an individual with this disorder may exhibit dishonesty inconsistent
with one's normal set
of values. Id. at 21-22. Petitioner's diagnosis of a manic-depressive illness
is supported by the psychiatric
evaluation made on August 8, 1989 while Petitioner was in prison. P. Ex. 15.
At the time the criminal
actions were committed, Petitioner states that he was not receiving treatment
for the disorder.
Although it appears that the period during which the offenses occurred was
an extremely difficult period in
Petitioner's life, I am still troubled that Petitioner dealt with these stresses
by failing to take his medications
and by committing criminal acts. This raises questions about his trustworthiness
because it indicates that it
could happen again should Petitioner fail to take his medication. Thus, were
this the only evidence
relevant to Petitioner's culpability, I would not find it sufficiently mitigating
to reduce the exclusion
imposed by the I.G.
However, there is considerable evidence that Petitioner has made commendable
progress toward
rehabilitation. The record shows that Petitioner's incarceration in 1989 was
a turning point for him.
Although Petitioner was aware of his disorder and had taken medication for it
in the past, it appears that it
was not until he was incarcerated that he realized the seriousness of the disorder
and started to obtain
regular medical counseling and medication. Dr. Daniels testified on April 15,
1992, during Petitioner's
rehearing on his medical license, that Petitioner was being treated with lithium
carbonate and Prozac and
was being seen almost weekly. He stated also that Petitioner now was functioning
well and that he
understands the necessity of continued treatment. P. Ex. 16 (Dr. Daniels' deposition
at 19-20).
Dr. Daniels noted that many people -- including physicians, attorneys, and
accountants -- are able to live
normal lives with this disorder as long as they receive treatment. Id. at 20.
In a report from earlier this
year, Dr. Daniels stated that he believes Petitioner's prognosis is fair to
good if he continues with his
medication and therapy. P. Ex. 8. Thus, the evidence indicates that Petitioner
has responded reasonably
well to treatment and appears determined to continue to take steps to retain
the progress he has made.
This case is markedly different from that of Timothy L. Stern, M.D., DAB 1314
(1992), in which an
appellate panel of the DAB found that an unsubstantiated drug addiction was
not a mitigating factor in a
civil money penalties and exclusion case. There, Dr. Stern argued, first, that
he had not committed fraud
on the Medicare and Medicaid programs for three years, but alternatively, if
he had, it was because of his
drug addiction. The appellate panel found that Dr. Stern had introduced no evidence
of his addiction as a
disease or whether it was a contributing factor in his commission of the fraudulent
acts. 20/ Id. at 20-25.
In contrast, there is substantial evidence to support a finding that Petitioner's
disability is not substance
abuse, but a chemical imbalance, the origins of which are beyond his control.
He has admitted that at the
time of the actions he did not have the disorder under control, and his psychiatrist
has stated that the
disorder could have adversely affected his actions at that time. Also, while
the effective regulations do not
specifically make provision for disease as a mitigating factor, neither do they
preclude it. 21/ The
Petitioner here has admitted his actions and his remorse for them. Thus, I find
that Petitioner's disorder,
combined with the rehabilitative steps he has taken to control the disorder,
is a mitigating factor.
Petitioner introduced other evidence regarding his activities since his release
from prison which support his
argument that he has realized the extent of his problems and the need to correct
them. For example, he
introduced evidence of his continuing medical education (CME) as a mitigating
factor. P. Ex. 9. Petitioner
has taken 186 CME credits in the last two years. While CME credits do not, on
their own, demonstrate
trustworthi-ness, in Petitioner's case I find that they indicate the seriousness
of his attempts at rehabilitation
and his interest in pursuing his medical career in the face of numerous obstacles.
22/
Petitioner asks also that I consider as a mitigating factor his community involvement
since his release from
prison. Petitioner states that he volunteers at the Boys and Girls Club of Kalamazoo
and has been active in
his church. This is supported by the August 25, 1992 affidavit of Patricia A.
Scrutchions, his parole
officer. P. Ex. 17. I find this to be a mitigating factor. Ms. Scrutchions states
also that Petitioner has
complied with the conditions of his parole which involve bimonthly home visits.
She states that he is a
"changed and improved individual" who admits his guilt, continually
expresses remorse, and has actively
participated in community affairs as an additional repayment of his debt to
society. 23/
Petitioner asserts that, in light of his efforts at rehabilitation, and, considering
the remedial purpose of the
Act, he should be reinstated into the Medicare and Medicaid programs immediately.
The I.G. suggests,
however, that none of the above are mitigating factors but are more likely a
"callous attempt to obtain
quicker reentry as a full-fledged medical practitioner in good standing."
I.G. R.Br. at 7. The I.G. argues
also that Petitioner has not admitted his guilt because he has relied on his
"alleged" disorder as an excuse.
24/ Finally, the I.G. asserts that I must find the 15-year exclusion reasonable
to protect the beneficiaries
and recipients of Medicare and Medicaid, especially in the event Petitioner
should fail in his rehabilitation.
I have found that Petitioner has established that he has a chronic medical
disorder which was not
adequately treated until 1989. While Petitioner cannot be held responsible for
having a hereditary
chemical imbalance, he is responsible for his reckless behavior or failure to
take his medication to control
his disorder prior to 1989. He must be held responsible for his actions with
respect to his failure to
adequately treat the disorder, especially in light of his medical education.
Petitioner has made great steps
toward his rehabilitation, and these are mitigating factors which I must consider
because of the remedial
nature of section 1128.
The actions at issue happened during a period of several months over 10 years
ago. Since that time,
Petitioner has paid a severe price for those actions and the effects on his
life and his career have been
extensive. He has been through several trials, imprisonment and parole, and
has lost his medical license.
He has not been able to practice medicine since his incarceration in 1989 --
almost four years ago. Nor will
he be able to practice unless and until his license is reinstated. He will be
on parole until the end of 1996.
I do not find Petitioner's attempts at rehabilitation to be "callous."
In light of evidence provided by the
affidavits and statements of Petitioner, his physicians, and his parole officer,
it is difficult to see what more
Petitioner could do to prove his remorse and his progress toward rehabilitation.
Petitioner has expressed
his remorse for his actions in several arenas. And, contrary to the I.G.'s allegations,
it is not unreasonable
for Petitioner to condition his remorse and acceptance of his responsibility
by reference to his disorder,
especially considering the statements of his physicians regarding the nature
of his disorder and the Sixth
Circuit remand. It is unrealistic to demand that a petitioner state that he
is 100 percent guilty with no
extenuating circumstances when his criminal conviction is on remand, based,
in part, on the failure of the
lower court to hear evidence on those extenuating circumstances.
The remedial nature of section 1128 of the Act requires exclusion to protect
the programs and their
beneficiaries and recipients from future misconduct. But the sanction may not
be so extreme and
disproportionate that it bears no rational relation to the remedial goals. To
do so would raise it to the level
of prohibited punishment. See U.S. v. Halper, 490 U.S. 435, 447-51 (1989).
My duty, therefore, is to balance the myriad factors and determine whether
the length of the exclusion
imposed by the I.G. is reasonable under the circumstances -- whether its length
will serve the remedial
purposes of the Act.
Having considered all the evidence, I find that the I.G. has not met his burden
of proof that an exclusion of
15 years is reasonable. I am satisfied that Petitioner has stabilized his condition
as long as he continues to
take his medication and that he is strongly motivated to do so. Petitioner was
released from prison and is
now on parole and living with his family. Thus, he has shown that he can control
his disease outside the
confines of a prison. Based on Petitioner's continued rehabilitation, the chance
that he would repeat his
criminal actions is minimal. Under these circumstances, I find that an exclusion
of 15 years is
unreasonable and excessive.
On the other hand, I do not accept Petitioner's assertion that the evidence
establishes that he should be
entrusted with caring for Medicare and Medicaid patients immediately. I am persuaded
that Petitioner has
made great strides in his rehabilitation and that his illness is currently under
control. However, there has
not been a sufficient period of time to gauge Petitioner's trustworthiness with
respect to the Medicare and
Medicaid programs and their beneficiaries and recipients. The evidence indicates
that Petitioner is at risk
should he cease taking his medication. Furthermore, there is a potential of
danger to Petitioner's future
patients should Petitioner relapse. Under these circumstances, an exclusion
for a period of 10 years is
necessary to determine that Petitioner's unlawful conduct will not recur. 25/
Petitioner has been excluded
almost three years already. Assuming that Petitioner continues to adhere to
his current program of
rehabilitation, when he is eligible to apply for reinstatement he will have
been off parole for over three
years. Ten years is long enough, given Petitioner's determination to fully comply
with the law, to establish
that he no longer constitutes a risk to the integrity of the programs or to
the welfare of the programs'
beneficiaries and recipients. See S. Rep. No. 109, 100th Cong. 1st Sess. 2 (1987),
reprinted in 1987
U.S.C.C.A.N. 682.
The remedial purposes of the exclusion law will be served in this case by a
10-year exclusion. This
exclusion will provide a sufficient period of time to test Petitioner's assurances
that he will be trustworthy
in the future.
CONCLUSION
Based on the law and the evidence, I conclude that the 15-year exclusion imposed
against Petitioner is
excessive and unreasonable, and I modify it to 10 years.
Charles E. Stratton
Administrative Law Judge
1. "State health care program" is defined by section 1128(h) of the
Act to include three types of
federally assisted programs, including State plans approved under Title XIX
of the Act (Medicaid). Unless
the context indicates otherwise, I use the term "Medicaid" in this
decision to represent all State health care
programs from which Petitioner was excluded.
2. Petitioner's first trial on the drug-related charges was in 1986 and ended
in a mistrial. He was then
tried and acquitted on charges of obstruction of justice. The instant proceeding
arises out of Petitioner's
conviction at his second trial on the drug-related charges.
3. In addition to specific documentary references in the text of this decision,
the record of this case
will be cited as follows:
I.G.'s Exhibits I.G. Ex. (number at page or at volume/page)
I.G.'s Brief I.G. Br. at (page)
I.G.'s Reply Brief I.G. R.Br. at (page)
Petitioner's Exhibits P. Ex. (number at page)
Petitioner's Brief P. Br. at (page)
4. I use the phrase "controlled substances" here to refer to those
drugs included in the Federal Drug
Enforcement Administration (DEA) Schedules 1-5. These drugs are controlled because
they have potential
for abuse, causing either physical or psychological addiction. I.G. Ex. 21 at
5/70.
5. The record in this case includes two orders from the United States Court
of Appeals for the Sixth
Circuit -- No. 90-1248, dated October 5, 1990 and No. 90-1525, dated July 2,
1991, which remanded
Petitioner's case to the district court because of its failure to receive evidence
on Petitioner's disorder. P.
Exs. 18-19. By affidavit dated August 19, 1992, Petitioner stated that his new
trial was still pending. P.
Ex. 20.
6. Some of my statements in the sections preceding these formal findings and
conclusions are also
FFCLs. To the extent that they are not repeated here, they were not in controversy.
7. The new regulations also require filing a request within 60 days but do
not specifically provide for
an extension of the 60-day period based on "good cause." 42 C.F.R.
1005.2(c), 57 Fed. Reg. 3350. Thus,
there is a difference between the two regulations which could, in this proceeding,
substantively affect the
due process rights of Petitioner.
8. This regulation provides, among other things, for dismissal of a hearing
request on the motion of
the ALJ or a party on the ground of failure to timely file the request. 42 C.F.R.
498.70(c).
9. I accept Petitioner's Response as his written statement requesting an extension
of time to file. The
regulations do not require that the "good cause" statement be made
at the same time as the request for
hearing.
10. The Social Security disability case regulation governing "good cause" is 20 C.F.R. 404.909(b).
11. See part IV.B. of this decision for a more complete discussion of Petitioner's disorder.
12. The I.G. alleges that Petitioner had an adequate income from Social Security
and insurance
disability payments. See my Order dated March 18, 1992 and Amended PHO at 2.
Petitioner disputes this,
contending that although he had an income, it went to support his family, and
that his expenses exceeded
his income. See Petitioner's letter dated March 24, 1992. I do not resolve this
because my finding of
"good cause" is not based on Petitioner's alleged lack of funds.
13. In finding "good cause" based on the cumulative circumstances,
I do not decide whether the
medications Petitioner was taking at that time contributed to the delay as alleged
by Petitioner or could not
have affected his mental state as asserted by the I.G.
14. Congress enacted the exclusion law to protect the integrity of federally
funded health care
programs. Among other things, the law is designed to protect program beneficiaries
and recipients from
individuals who have demonstrated by their behavior that they threaten the integrity
of the programs or that
they can not be entrusted with the well-being and safety of beneficiaries and
recipients. See S. Rep. No.
109, 100th Cong., 1st Sess. (1987), reprinted in 1987 U.S.C.C.A.N. 682.
15. Petitioner was a resident at Providence Hospital from July 1, 1981 to June
30, 1986. I.G. Ex. 21
at 4/108 and 4/129.
16. This number is obtained from the DEA and permits a physician to write prescriptions
for
controlled substances. I.G. Ex. 21 at 3/64. See also note 4, supra.
17. Schedule II drugs have a high potential for abuse but have currently accepted
medical uses. 21
U.S.C. 812. I.G. Ex. 21 at 5/70.
18. The original August 3, 1990 revocation of Petitioner's license was vacated
and remanded by the
Ingham County Circuit Court. Following a subsequent administrative hearing on
the issue, by decision
dated August 21, 1992, the Michigan Board reaffirmed its previous order of revocation
and in addition
assessed the $50,000 fine. I.G. Ex. 24.
19. In discretionary exclusion cases, petitioners are permitted to introduce
evidence concerning lack
of culpability, even if this amounts to challenging findings (other than the
conviction itself) reached in the
actions underlying the exclusion, since the degree of culpability directly affects
the length of the exclusion.
Donaldson at 6-7; see Bernardo G. Bilang, M.D., DAB 1295, at 8-9 (1992).
20. The panel also noted that in federal sentencing guidelines, drug or alcohol
abuse is not a reason
for imposing a sentence below the guidelines. Stern at 25.
21. While not applicable to this case, the new regulations, provide that, in
exclusions based on
convictions of specified offenses (other than 1128(b)(3) offenses), a disease
may be considered a
mitigating factor in determining the length of the exclusion. The record in
the criminal proceeding must
demonstrate, however, that the court determined that the individual had a mental,
emotional, or physical
condition, before, after, or during the commission of the offense that reduced
the individual's culpability.
42 C.F.R. 1001.102(c)(2), .201(b)(3), and .301(b)(3). While Petitioner's disorder
was not a factor in his
1988 trial, the Sixth Circuit remand is based, in part, on the failure of the
district court to receive evidence
on Petitioner's disorder. See note 5, supra.
22. Petitioner's argument that he should be reinstated because the country
needs medical doctors who
are willing to provide services to the poor cannot be considered a mitigating
factor. The beneficiaries and
recipients of Medicare and Medicaid are entitled to receive medical care from
a physician who is fully
qualified to participate in the programs.
23. I note that under the new regulations at 42 C.F.R. 1001.401(c)(3), Petitioner's
cooperation with
the investigating grand juries would be a mitigating factor. See I.G. Ex. 21
at 8/77, 8/111, and 8/129.
24. Although the I.G. refers to Petitioner's "alleged bipolar disorder"
in his briefs, he states also that
"[o]ther evidence in the file shows that he [Petitioner] was diagnosed
with this disorder [bipolar disorder]
long before his crimes at the KAI Clinic, and that he had taken lithium long
before that time." I.G. R.Br. at
5. Thus, the I.G. appears to recognize that Petitioner's medical condition is
more than "alleged."
25. Should Petitioner obtain a reversal of his conviction in the remand to
the district court, he would
be reinstated retroactively to the date of the Notice. 42 C.F.R. 1001.3005(a)(1).