DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Civil Remedies Division
In the Case of: Arthur B. Stone, D.P.M., Petitioner,
- v. -
The Inspector General.
DATE: May 5, 1989
Docket No. C-52
DECISION AND ORDER
The Petitioner requested a hearing to contest the Inspector General's (I.G.'s)
determination to exclude him
from participation in Medicare and to direct that the Petitioner be excluded
from participation in State
health care programs (e.g., Medicaid), for a period of five years. This Decision
and Order resolves this
case on the basis of written briefs and a stipulated record. I hereby deny the
Petitioner's motion to dismiss
and I conclude that the I.G. was required under federal law to exclude the Petitioner
for five years from
Medicare and Medicaid.
APPLICABLE STATUTES AND REGULATIONS
I. The Federal Statute.
This case is governed by section 1128 of the Social Security Act (Act), codified
at 42 U.S.C. 1320a-7
(West U.S.C.A. Supp., 1988). Section 1128(a) of the Act, headed "MANDATORY
EXCLUSION,"
provides in subsection (1) for the exclusion from Medicare, and a directive
to the State to exclude from
"any State health care program", any individual who is "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
that the period of exclusion from Medicare and Medicaid, for conviction of a
criminal offense related to the
delivery of an item or service, shall be for a minimum period of five years.
The term "convicted" is defined in section 1128(i) to include "when
a judgment of conviction has been
entered against the physician or individual by a Federal, State, or local court,"
or when a plea of guilty or
nolo contendere has been "accepted by a Federal, State, or local court."
(Emphasis added.)
While section 1128(a) of the Act provides for a minimum five-year mandatory
exclusion for (1)
convictions of program-related crimes and (2) convictions relating to patient
abuse, section 1128(b) of the
Act provides for the permissive exclusion of "individuals and entities"
for twelve types of other
convictions, infractions, or undesirable behavior, such as convictions relating
to fraud, license revocation,
or failure to supply payment information. The Act does not prescribe a minimum
period of exclusion in
the case of a permissive exclusion.
II. The Federal Regulations.
The governing federal regulations (Regulations) are found in 42 C.F.R. Parts
498, 1001, and 1002 (1987).
Part 498 governs the procedural aspects of this exclusion case and Parts 1001
and 1002 govern the
substantive aspects.
In accordance with section 498.5(i), a practitioner, provider, or supplier
who has been excluded from
program coverage is "entitled to a hearing before an ALJ (Administrative
Law Judge)." Pursuant to section
1001.128, an individual who has been excluded from participation has a right
to request a hearing before
an ALJ on the issues of whether: (1) he or she was, in fact, convicted; (2)
the conviction was related to the
delivery of an item or service under Medicare or Medicaid; and (3) the length
of the exclusion is
reasonable.
Section 1001.123(a) requires the I.G. to send written notice of his determination
to exclude an individual or
entity from participation in Medicare when he has "conclusive information
that the individual or entity has
been convicted of a crime related to the delivery of an item or service under
Medicare or Medicaid.
BACKGROUND
By letter dated July 19, 1988 (Notice), the I.G. notified the Petitioner that,
as a result of his conviction of a
criminal offense related to the delivery of an item or service under Medicaid,
he would be excluded from
participation in Medicare and Medicaid for a mandatory five year period, commencing
20 days from the
date of the Notice. The I.G.'s stated basis for the exclusion here was the Petitioner's
nolo contendere plea
and conviction in a county court in Westmoreland County, Pennsylvania of a criminal
offense related to
the delivery of an item or service under Medicaid.
On September 14, 1988, the Petitioner timely requested a hearing on the I.G.'s
determination. I held a
prehearing telephone conference call on November 16, 1988, at which I determined
that the issues raised
by the Petitioner's hearing request were legal issues, which could be further
developed by the parties in
written briefing and that there was no dispute as to any material fact. As reflected
in the November 21,
1988 Prehearing Order and Notice of Hearing Schedule, I stated that, if it was
determined later that an
evidentiary hearing was needed, I would contact the parties to schedule such
a proceeding.
EVIDENCE
The material facts in this case are stipulated to and evidenced by exhibits
concerning the underlying State
court documents pertaining to the Petitioner's plea of nolo contendere, such
as the criminal complaint (I.G.
Ex. 1), and the transcript of the Petitioner's plea and sentencing (P. Ex. A-4).
See also Tape (containing the
stipulation by the parties as to the authenticity of all exhibits). The Petitioner
acknowledges that he
pleaded nolo contendere in State court to three counts of submitting false Medicaid
invoices. P. Br. 1.
ISSUES
1. Whether the Petitioner is subject to the minimum mandatory five year exclusion
provisions of section
1128(c)(3)(B) of the Act.
2. Whether the Petitioner was "convicted" of a criminal offense within
the meaning of sections 1128(a)(1)
and (i) of the Act.
3. Whether the Petitioner was convicted of a criminal offense "related
to the delivery of an item or service"
under the Medicaid program within the meaning of section 1128(a)(1) of the Act.
4. Whether the I.G. failed to comply with the federal Administrative Procedure
Act, by (1) not publishing
regulations to "implement" the distinction between the mandatory and
permissive exclusion authorities,
and (2) relying upon unpublished guidelines/directives in implementing the Act.
5. Whether the I.G. was prohibited by provisions of federal law (regarding
program operating
responsibilities) from excluding the Petitioner.
6. Whether there is a need for an evidentiary hearing in this case.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
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. The Petitioner is a resident of the Commonwealth of Pennsylvania, and has
been licensed in
Pennsylvania as a doctor of podiatric medicine since 1966. P. Ex. A-4/9.
2. On November 16, 1987, the Petitioner was charged with 151 counts of fraud
and abuse against the
Medicaid program. I.G. Ex. 1; P. Ex. A-4/4.
3. On November 16, 1987, the Petitioner pleaded nolo contendere in the Court
of Common Pleas of
Westmoreland County, Pennsylvania, Criminal Division (State Criminal Court)
to three counts of fraud
and abuse against the Medicaid program. P. Ex. A-4.
4. The State Criminal Court sentenced the Petitioner to a total of five years
probation, and the Petitioner
was ordered to pay restitution in the amount of $5,734.64, a fine of $5,000,
and $632.02 for the costs of
prosecution. P. Ex. A-4 (transcript of the Petitioner's plea and sentencing)/20-21.
5. The Petitioner was "convicted" of a criminal offense within the
meaning of sections 1128(a)(1) and
1128(i) of the Act.
6. The Petitioner was convicted of a criminal offense "related to the
delivery of an item or service" under
the Medicaid program within the meaning of section 1128(a)(1) of the Act.
7. The I.G. properly excluded the Petitioner from participation in Medicare,
and directed his exclusion
from Medicaid, for a period of five years and was required to do so under section
1128 of the Act.
8. The I.G. did not violate the federal Administrative Procedure Act, 5 U.S.C.
551, et seq., by not
promulgating regulations to distinguish the exclusion authorities in section
1128(a)(1) and 1128(b)1) of the
Act.
9. The I.G. did not rely upon an "unpublished guidance/directive"
in classifying the Petitioner as subject to
the mandatory exclusion authority of section 1128(a)(1) of the Act.
10. The material and relevant facts in this case are not contested.
11. The classification of the Petitioner's criminal offense as subject to the
authority of 1128(a)(1) is a legal
issue.
12. There is no need for an evidentiary hearing in this case.
13. The I.G. is not prohibited by federal law or regulations from participation in the exclusion process.
14. The I.G. is entitled to summary disposition in this proceeding.
DISCUSSION
I. A Minimum Mandatory Five Year Exclusion Was Required In This Case.
Section 1128(a)(1) of the Act clearly requires the I.G. to exclude individuals
and entities from the
Medicare program, and direct their exclusion from the Medicaid program, for
a minimum period of five
years, when such individuals and entities have been "convicted" of
a criminal offense "related to the
delivery of an item or service" under the Medicare or Medicaid programs
within the meaning of section
1128(a)(1) of the Act. Congressional intent on this matter is clear:
A minimum five-year exclusion is appropriate, given the seriousness of the
offenses at
issue. . . . Moreover, a mandatory five-year exclusion should provide a clear
and strong deterrent against
the commission of criminal acts.
S. Rep. No. 109, 100th Cong., 1st Sess. 2, reprinted in 1987 U.S. Code Cong. and Ad. News 682, 686.
Since the Petitioner was "convicted" of a criminal offense and it
was "related to the delivery of an item or
service" under the Medicaid program within the meaning of section 1128(a)(1)
and (i) of the Act, the I.G.
was required to exclude the Petitioner for a minimum of five years.
II. The Petitioner Was "Convicted" Of A Criminal Offense As A Matter Of Federal Law.
Here, I find and conclude that the Petitioner was "convicted" within
the meaning of sections 1128(a)(1) and
(i)(3) of the Act because he pleaded nolo contendere to the charges against
him and the State Criminal
Court "accepted" his plea. Section 1128(i)(3) provides that "convicted"
includes a plea of nolo contendere
"accepted by a Federal, State, or local court."
The term "accepted" in section 1128(i)(3) is defined by Webster's
Third New International Dictionary,
1976 Unabridged Edition, as the past tense of "to receive with consent."
The term "accepted" is the
opposite of the term rejected. The State Criminal Court did not reject the Petitioner's
plea. Quite the
contrary, the State Criminal Court "accepted" the Petitioner's plea
within the meaning of section 1128(i)(3).
Once that happened, the provisions of subsection 1128(i)(3) were triggered,
and what happened after that is
of no consequence to the determination that the Petitioner was "convicted,"
as a matter of federal law.
III. The Petitioner's Conviction Is "Related To The Delivery Of An Item Or Service" Under Medicaid.
Section 1128(a)(1) requires the I.G. to exclude from participation any individual
who is convicted of a
criminal offense "related to the delivery of an item or service" under
Medicaid (emphasis added). The
Petitioner was convicted under Pennsylvania law of submitting claims to the
Medicaid program which
"misrepresent[ed] the services actually rendered." P. Ex. A-4/10.
The Petitioner argues that the I.G.'s "classification" of this case
under section 1128(a) as requiring the five
year period of exclusion, is erroneous and that the exclusion should be subject
to the permissive authority
of 1128(b). The Petitioner maintains that the I.G. improperly interpreted Congressional
intent in
distinguishing the mandatory and permissive authorities and that the offense
to which he pleaded nolo
contendere was related to the "reimbursement" function, rather than
the "delivery" function. The Petitioner
argues that this offense "related to fraud . . . or financial misconduct"
and was not "related to the delivery
of an item or service" under Medicaid. The Petitioner also characterized
the criminal charges as
concerning the false submission "of an invoice for a service which had
not occurred." P. Br. 1. However,
as the I.G. observed in his brief, the record indicates that this description
of the criminal charges is
incorrect. I.G. Br./10 (fn. 3). The transcript of the plea hearing and an affidavit
of a State Medicaid
investigator "in Support of Probable Cause for Arrest," describe the
Medicaid claims (which were the
subject of the criminal charges) as involving procedures different from those
actually performed by the
Petitioner. P. Ex. A-4/10; I.G. Ex. 2/3.
Black's Law Dictionary, Fifth Edition (West Pub. Co. 1979) defines "related"
as: I find that crimes
involving financial misconduct in the submission of Medicaid claims are clearly
"related to" the "delivery
of services." . . ." standing in relation; connected; allied; akin."
Clearly, the offense for which the
Petitioner was convicted was "connected to" the delivery of an item
or service under Medicaid. This case
should not be decided in a vacuum, or with a strict, hypertechnical interpretation
of the term "related to" in
section 1128(a)(1) of the Act. There is a simple, common-sense connection, supported
by the record,
between the actions associated with the Petitioner's conviction and the Medicaid
program. The Petitioner's
interpretation of "related to" is that the criminal offense must be
"restricted to" the delivery of an item or
service under Medicaid or Medicare. The Petitioner's strained interpretation
of "related to" is not borne out
by the plain words of the Act or its legislative history.
The offense to which the Petitioner pleaded nolo contendere involved fraud
and financial misconduct, and
was "related to the delivery of an item or service" under Medicaid.
The criminal offense for which the
Petitioner was convicted involved the Petitioner in fraudulently obtaining reimbursement
from Medicaid
for items or services which were not rendered as claimed. Congress's purpose
in enacting a separate
permissive exclusion authority in section 1128(b)(1) was not to provide a more
lenient treatment as to any
provider convicted of offenses concerning "financial misconduct."
The separate authority of section
1128(b)(1) was designed to broaden the scope of the law to authorize the I.G.
to exclude providers who
were convicted of offenses involving government funded health programs in addition
to Medicaid and
Medicare, as well as to permit exclusions for offenses relating to fraud and
other types of financial
misconduct, for all such programs.
As support for his contention that the offense for which he was convicted did
not relate to the "delivery" of
medical services, the Petitioner submitted an affidavit from a former employee
of the Health Care
Financing Administration (HCFA), which administers the Medicaid and Medicare
programs. P. Ex. A-5.
In the context of a provider's compliance with program requirements, the affiant
drew a distinction between
more serious deficiencies which the affiant described as relating to the "delivery
of patient care," such as
"an unsafe and hazardous environment," and those allegedly less critical
deficiencies involving Medicare
"conditions of participation" under the regulations, such as "inadequate
social worker visits" and the proper
signing of medical records. The affiant explained that those more serious deficiencies
relating to "delivery
of care" would result in termination of a provider from the program, while
a violation of other conditions
of participation would only require submission of a plan of correction. In considering
the present case, the
affiant concluded that the offenses for which the Petitioner was convicted related
to "reimbursement
through financial misconduct" and were not "related to the delivery
of an item or service within the
conceptual context of the Department's Medicare/Medicaid programs."
Assuming the affiant's distinction to be a valid one regarding HCFA's certification
of providers, this would
have no relevance in determining Congress's intent in distinguishing exclusions
based upon a conviction of
crimes relating to the "delivery" of medical services from convictions
relating to fraud or other financial
misconduct. As noted by the I.G., the affiant has no expertise with either the
Office of Inspector General,
any health program to detect fraud and abuse, or with section 1128 of the Act.
I.G. Br. 9; P. Ex. A-
5/(attached curriculum vitae). The affiant's opinions are not germane to the
issue of defining the phrase
"related to the delivery of an item or service." The Petitioner's
conviction in this case clearly "related to"
the delivery of medical services, because the Petitioner pleaded nolo contendere
to improperly billing for
services that were not delivered as claimed. Thus, the criminal offense for
which the Petitioner was
convicted is one "related to the delivery of an item or service" within
the meaning of section 1128(a)(1) of
the Act.
IV. The I.G. Has Complied With The Administrative Procedure Act.
The Petitioner argued that the I.G. (1) failed to comply with the federal Administrative
Procedure Act, 5
U.S.C. 552(a)(1) and 553, by not promulgating regulations to distinguish section
1128(a) from 1128(b),
and (2) was, instead, relying on "unpublished guidelines/directives in
implementing the statutory
provisions." P. Br. 3 et seq. He argued that, because of this, he lacked
"notice" of the effect of his court
plea. P. Br. 8, 22.
There is no basis for the conclusion that there exists any ambiguity in the
Act such that the promulgation of
regulations to distinguish the two authorities would be necessary or appropriate.
Section 1128(a)(1) clearly
provides that the I.G. must exclude any provider who has been convicted of an
offense "related to the
delivery of an item or service" under Medicare or Medicaid. The separate
authority of section 1128(b)(1),
providing for a permissive exclusion based on a conviction relating to delivery,
or for fraud and other
financial misconduct, clearly concerns programs "financed in whole or in
part by any Federal, State, or
local government agency . . . ." Section 1128(b)(1) by its terms does nothing
to alter the I.G.'s charge to
exclude providers for a minimum five-year period when an individual has been
convicted (as defined in the
statute) of a criminal offense related to the delivery of an item or service
under Medicaid or Medicare. An
agency is not required to promulgate implementing regulations when the express
terms of the statute are
clear. See, e.g., S.E.C. v. Chenery Corp., 332 U.S. 194, 201 (1947).
Since I find that the terms of the Act itself to be clear, I find that the
Petitioner had "notice" that his court
plea would result in an exclusion for a minimum five year period.
I likewise find that the I.G. did not rely upon "unpublished guidelines/directives"
in classifying the
Petitioner's offense. P. Statement 2-3. The Petitioner submitted (as P. Ex.
A-3) a 15-page document
entitled "Civil Monetary Penalty and Exclusion Authorities," which
contains a listing of each of the
statutory authorities under which the I.G. may proceed in sanctioning a health
care provider. The
document contains a brief description of "conduct" and the corresponding
period of exclusion or other
appropriate information. The Petitioner presented no direct support for his
allegation that the I.G. used this
document in determining whether to classify a particular case as subject to
section 1128(a) or 1128(b), nor
did the Petitioner even speculate how these pages might conceivably serve such
a purpose. An
examination of the document indicates that it was apparently merely used as
a convenient listing of the
numerous statutory authorities which authorize the I.G.'s sanction activities.
By its terms, the document
provides no guidance in determining how to classify a particular case between
the various statutory
provisions.
V. There Is No Need For An Evidentiary Hearing In This Case.
I also find to be without merit the Petitioner's argument that he is entitled
to an evidentiary hearing
concerning the classification of his exclusion. P. Br. 37-38. The Petitioner
availed himself of the
opportunity to present oral argument on the legal issues raised in his briefs.
The Petitioner does not
convincingly explain how the record might be further developed through the holding
of an evidentiary
hearing.
The issue of "categorizing" the Petitioner's offense as being subject
to the mandatory exclusion authority is
a legal issue. The Petitioner has already stipulated to the court documents
concerning the nature of the
criminal proceedings against the Petitioner, and has even presented an affidavit
from an expert concerning
the meaning of the phrase "delivery of services."
In his final brief, the Petitioner maintained that he would demonstrate at
an evidentiary hearing that his
"omissions for which he was prosecuted" will be shown at a hearing
to be related "to his failure to properly
supervise his staff" and not to be "criminal." P. Rep. Br. 4-5.
This is a collateral attack on a criminal
judgment issued in another forum and a frivolous argument as it relates the
I.G.'s determination to exclude
the Petitioner under the section 1128(a)(1) authority. I have already addressed
the Petitioner's arguments
concerning whether the activities at issue "related to the delivery of
an item or service" or were instead
related only to "fraud or other financial misconduct." The underlying
activities that gave rise to the
criminal charges against him are otherwise irrelevant; while such matters might
be pertinent to actually
trying criminal charges against him, or to the State Criminal Court for purposes
of sentencing, they would
have no further relevance to a determination in this case.
VI. The I.G.'s Participation In The Exclusion Process Does Not Violate The Act.
The I.G.'s "participation" in the exclusion process is not contrary
to the Act, because it does not conflict
with the prohibition on the "transfer of program operating responsibilities"
to the I.G. 42 U.S.C. 3526(a).
The need for such a prohibition arose when the Office of Inspector General was
created from other
components of the Department, such as the Health Care Financing Administration,
and Congress wanted to
maintain the independent and objective nature of the I.G. S. Rep. No. 1324,
94th Cong., 2d Sess. 8,
reprinted in 1976 U.S. Code Cong. and Ad. News 5420, 5427; see 42 U.S.C. 3521.
The Petitioner argued,
in effect, that the act of excluding providers from federal programs violates
this prohibition since this
constitutes a "program." As support for this position, the Petitioner
cited certain Department regulations
which refer to the transfer of "responsibility" to the I.G. for fraud
and abuse determinations. P. Br. 31-32.
The Petitioner also argued that the I.G. would be unable to "objectively
assess the Department's
administrative law process if the OIG is a participant." P. Br. 32.
The Petitioner has provided no basis for me to conclude that the exclusion
of a provider from the Medicare
and
Medicaid programs is a "program operating responsibility." The term
"program" is subject to various
meanings, and the Petitioner has cited no authority that Congress intended this
term to encompass
exclusion determinations or other fraud and abuse sanction activities. That
regulations refer to the transfer
of fraud and abuse "responsibility" to the I.G. is irrelevant, since
they do not describe this responsibility as
involving a "program."
Moreover, Congress, in amending and strengthening the exclusion law, has itself
approved the involvement
of the I.G. in the exclusion process, since it is the I.G. who has performed
this responsibility from the law's
inception. Indeed, the legislative history of the 1987 amendments to the law
expressly approves the
Secretary's delegation of the exclusion authority to the I.G.
Under current practice, the Secretary has delegated all existing suspension,
exclusion, and civil
monetary penalty authorities to the Department's Inspector General. The Committee
believes that this
delegation of authority by the Secretary is entirely consistent with the statutory
mandate of the HHS
Inspector General (42 U.S.C. section 3521 et seq.) and has resulted in the efficient
administration of these
authorities. The Committee expects the Secretary both to continue this existing
practice and to delegate all
new statutory exclusion authorities created by this bill to the Department's
Inspector General.
S. Rep. No. 109, 100th Cong., 1st Sess. 14, reprinted in 1987 U.S. Code Cong. and Ad. News 682, 695.
CONCLUSION
Based on the law and undisputed material facts in the record of this case,
I conclude the I.G. properly
excluded the Petitioner from the Medicare program, and directe
his exclusion from State health care programs, for the minimum mandatory period of five years.
IT IS SO ORDERED.
__________________________
Charles E. Stratton
Administrative Law Judge