Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Paul R. Scollo, D.P.M. Petitioner,
- v. -
The Inspector General.
DATE: January 4, 1994
Docket No. C-93-058
Decision No. CR300
DECISION
By letter dated February 12, 1993, Paul R. Scollo, D.P.M., the Petitioner herein,
was notified by the
Inspector General (I.G.), U.S. Department of Health & Human Services (HHS),
that it had been decided to
exclude him for a period of five years from participation in the Medicare program
and from participation in
the State health care programs mentioned in section 1128(h) of Social Security
Act (Act). (Unless the
context indicates otherwise, I use the term "Medicaid" in this Decision
when referring to the State
programs.) The I.G. explained that the five-year exclusion was mandatory under
sections 1128(a)(1) and
1128(c)(3)(B) of the Act because Petitioner had been convicted of a criminal
offense related to the delivery
of an item or service under Medicaid.
Petitioner filed a timely request for review of the I.G.'s action, and the
I.G. moved for summary
disposition.
Because I have determined that there are no material and relevant factual issues
in dispute, and that the
only matter to be decided is the legal significance of the undisputed facts,
I agree that it is appropriate to
decide the case on the basis of written submissions, in lieu of an in-person
hearing.
I affirm the I.G.'s determination to exclude Petitioner from participation
in the Medicare and Medicaid
programs for a period of five years.
APPLICABLE LAW
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act make it mandatory for any
individual who has been
convicted of a criminal offense related to the delivery of an item or service
under Medicare or Medicaid to
be excluded from participation in such programs, for a period of at least five
years.
FINDINGS OF FACT AND CONCLUSIONS OF LAW 1/
1. At all times relevant to this proceeding, Petitioner was a podiatrist, licensed to practice in New Jersey.
2. During 1988 and 1989, the U.S. Attorney for the Eastern District of Pennsylvania
investigated certain
unlawful practices connected with laboratory testing of Medicare patients. The
tests were to assess
vascular functioning and were performed by a related group of firms, collectively
referred to here as
Medical Diagnostic Service ("MDS"). I.G. Ex. 1, 2.
3. The U.S. Attorney concluded that MDS was paying illegal kickbacks to medical
practitioners who
referred patients to MDS for testing. I.G. Ex. 1, 2.
4. The U.S. Attorney determined also that MDS submitted false information to
Medicare, enabling it to
bill for tests of a type Medicare did not sanction, as well as for tests which
had not been ordered. I.G. Ex.
1.
5. MDS was charged with defrauding Medicare of more than $100,000. P. Ex. 2.
6. MDS entered into a plea bargain with the government
under which it pled guilty to some charges, paid restitution and damages, and
cooperated with the
investigators. I.G. Ex. 2; P Ex. 2.
7. In or about January 1984, Petitioner was paid $1000 by MDS in connection
with 20 individuals covered
by Medicare, who were tested by MDS during December of 1983. I.G. Ex. 1, 2,
3, 7, 11.
8. MDS was reimbursed by Medicare for the $1000 in referral fees that it paid
to Petitioner in connection
with 20 Medicare beneficiaries. I.G. Ex. 2, 3, 7, 11.
9. In mid-1988, the U.S. Attorney wrote to approximately 400 doctors who had
been identified (through
examination of MDS's cancelled checks and other business records) as having
received payments from
MDS. The U.S. Attorney offered to release each of them from civil liability
should kickbacks be proven if
the doctors voluntarily paid treble damages. I.G. Ex. 3, 10.
10. Doctors cooperating with this offer also would, in effect, be immunized
from criminal prosecution,
since the U.S. Attorney decided that individuals who had given up the monies
received from MDS and had
also been subjected to additional financial sanctions would have been punished
enough. I.G. Ex. 4, 11 at
20 - 23.
11. Several doctors, who had hired a single attorney to represent them, replied
to the government's
proposal by arguing that the payments they received were not kickbacks, but
were rent that MDS paid them
so that MDS could use their examination rooms to do the vascular tests. I.G.
Ex. 2, 4, 5.
12. Because the payment of rent for space used to conduct Medicare-reimbursed
tests in a doctor's office
was thought not unlawful, the U.S. Attorney offered to excuse from repayment
any doctor who would
swear either that he or she had only one examination/treatment room and that
MDS used it for conducting
tests, or would swear that he or she stayed with the individual being tested
throughout the entire duration of
the test. I.G. Ex. 7, 11 at 3 - 10.
13. Three or four doctors opted to submit affidavits pursuant to the U.S. Attorney's offer. I.G. Ex. 11 at 8.
14. In August 1988, Petitioner submitted such an affidavit, swearing that the
money he received from
MDS constituted rent for the use of his examination/treatment room. I.G. Ex.
1, 2, 7, 11.
15. However, it was soon discovered that the 20 named Medicare patients, with
regard to whom Petitioner
was paid $1000 by MDS, were not tested by MDS in any office maintained by Petitioner,
but, instead,
were tested in the Green Briar Home or Newton Home where they resided (and where
Petitioner himself
came on a regular basis to treat their foot problems). I.G. Ex. 3.
16. On January 24, 1991, Petitioner was indicted in the U.S. District Court,
Eastern District of
Pennsylvania. The indictment stated that MDS was reimbursed by Medicare for
conducting laboratory
tests; that some of such monies were paid to doctors, including the Petitioner
herein, as unlawful
remuneration for referring individuals for testing; that in January 1984 Petitioner
received approximately
$1000 from MDS for referring 20 Medicare patients for testing; that such tests
were not conducted in
Petitioner's office or examination/treatment rooms; that Petitioner, in order
to take advantage of the
government's offer to excuse practitioners from liability for taking payments
from MDS, swore, in an
affidavit submitted to the U.S. government, that the MDS payments constituted
rent for the use of his
examination/treatment room; and that thereby Petitioner willfully made a false
statement in relation to a
matter within the jurisdiction of a Department of the United States, in violation
of 18 U.S.C. 1001. I.G.
Ex. 3, 7, 11 at 35; P. Ex. 5, 6.
17. On April 3, 1991, Petitioner pled nolo contendere in federal court to the
charge of knowingly and
willfully making a false and fictitious representation and statement as to a
material matter within the
jurisdiction of the U.S. Department of Justice, in violation of 18 U.S.C. 1001.
I.G. Ex. 11.
18. When questioned by the judge at the time he entered his plea, Petitioner
admitted having had a specific
intention to break the law; admitted receiving the payments from MDS; acknowledged
that, were there a
trial, the government would be able to prove that the settlement was offered
to him because of his taking
kickbacks from MDS, and admitted that an MDS representative would testify that
MDS did not represent
to Petitioner that the fees he received from MDS were rental payments; and lastly,
Petitioner
acknowledged, without reservation, that he did what was charged in the indictment.
I.G. Ex. 11 at 18 - 37.
19. On July 17, 1991, Petitioner was sentenced to probation, community service,
and restitution. I.G. Ex.
8, 12.
20. Petitioner's plea of nolo contendere to a criminal charge, and the United
States District Judge's
acceptance thereof, is a "conviction" for purposes of mandatory exclusion.
Act, Section 1128(i).
21. The Secretary of Health and Human Services delegated to the I.G. the authority
to determine and
impose exclusions pursuant to section 1128 of the Act. 48 Fed. Reg. 21662 (1983).
22. Petitioner is subject to a mandatory minimum exclusion of five years for
his conviction of a criminal
offense related to the delivery of an item or service under Medicare. Act, Section
1128(a)(1), Findings 1 -
21.
PETITIONER'S ARGUMENT
Petitioner contends that he did not intentionally file a false affidavit and
that he was never charged with,
much less convicted of, taking kickbacks. The inaccuracies in his affidavit,
he explains, were the result of
poor memory and poor record keeping on his part. Furthermore, Petitioner avers
that the tests which were
performed were necessary and that the Medicaid and Medicare programs were not
harmed. Petitioner
contends that his conviction is not program-related.
Petitioner argues that it is unfair that the I.G. should direct and impose
an exclusion against him when other
doctors who received payments from MDS were not excluded. Petitioner contends
that he is being singled
out by the I.G. because he submitted an affidavit instead of paying treble damages.
DISCUSSION
The first statutory requirement for mandatory exclusion pursuant to section
1128(a)(1) of the Act is that the
individual in question must have been convicted of a crime. In the case at hand,
Petitioner pled nolo
contendere to a federal criminal offense and a United States District Court
entered judgment and imposed a
sentence against him.
Sections 1128(i)(1) and (3) of the Act expressly state that when an individual
pleads nolo contendere to a
criminal charge, and a court accepts the plea and/or enters a judgment of conviction,
such person is
considered to have been convicted of a criminal offense.
It is further required by section 1128(a)(1) that such criminal offense be program-related;
that is, related to
the delivery of an item or service under Medicaid or Medicare.
A criminal conviction is program-related within the meaning of section 1128(a)
where there is a common-
sense connection between the offense and the delivery of an item or service
under Medicaid or Medicare;
in other words, there must be some "nexus" between the crime and the
functioning of the programs.
Thelma Walley, DAB 1367 (1992); Clarence H. Olson, DAB CR46 (1989).
When the totality of facts and circumstances which comprise and relate to Petitioner's
criminal offense are
taken into account, I conclude that Petitioner's conviction relates to the delivery
of Medicare services. 2/
First, I note that the indictment states that Petitioner accepted unlawful
remuneration from MDS in return
for referring Medicare patients to MDS for testing and that Petitioner admits
this in his plea. I.G. Ex. 7, 11.
Second, the transcript of the plea colloquy shows that an Assistant U.S. Attorney
asserted that he could
prove that the $1000 paid to Petitioner, which Petitioner falsely swore constituted
rent, actually represented
illegal kickbacks; that the settlement offered by the U.S. Attorney to Petitioner
also arose out of the alleged
acceptance of kickbacks by Petitioner; and, finally, that a government witness,
formerly with MDS, would
testify that Petitioner was not told by MDS that the payments he had received
from MDS were rent. When
questioned by the judge at his plea, Petitioner admitted that he did what was
charged in the Indictment and
acknowledged that the government would have been able to prove all the facts
it was alleging if the case
had gone to trial. I.G. Ex. 11, pages 32, 35, 37, 39.
Petitioner's admissions and other documentary evidence are
sufficient to show that he, in fact, accepted remuneration for the referral
of Medicare patients. To be sure,
the government never indicted or tried him on a kickback charge. Petitioner
concludes from this fact that,
since he was not convicted of receiving kickbacks, but instead was convicted
of false swearing, his
conviction cannot serve as a basis for the I.G. to exclude him. However, it
is my determination that, under
these circumstances, the false affidavit submitted by Petitioner was the direct
result of Petitioner obtaining
payments from MDS for the testing of 20 Medicare patients and his subsequent
misrepresentation that the
payments were legitimate rent when, in fact, they were not. 3/ This is relevant
to any assessment of the
effect of his criminal conviction upon the Medicaid and Medicare programs.
There is no doubt that Petitioner accepted remuneration for the testing of 20
Medicare beneficiaries
residing either at the Green Briar facility or the Newton Rest Home. I.G. Ex.
3, 7. It was Petitioner's
attempt to avoid prosecution under the anti-kickback statute that caused him
to attempt to legitimize the
payments he received for the 20 Medicare beneficiaries by stating they were
rent. I.G. Ex. 3, 4, 5, 7. For
purposes of this Decision, the relevance of whether Petitioner received kickbacks
is that it provides
background information that shows that it was Petitioner's attempt to avoid
prosecution under the anti-
kickback statute for referring 20 Medicare beneficiaries that caused him to
submit a false affidavit. I.G.
Ex. 3, 7, 11, 12.
Consequently, Petitioner's criminal conviction need not be analyzed in a factual
vacuum or on the basis of
uninformative statutory language. The question to be resolved is whether Petitioner's
making a false
statement under oath is related to the delivery of an item or service under
Medicare. The evidence shows
that Petitioner was convicted of willfully and falsely stating under oath that
20 Medicare beneficiaries were
treated in his office when, in fact, they were not. I.G. Ex. 3, 7, 11. Petitioner's
false statement is, therefore,
a material misrepresentation related to his medical treatment of these Medicare
beneficiaries. Accordingly,
Petitioner's conviction is program related because it is related to services
Petitioner provided to these 20
Medicare beneficiaries.
Petitioner places mistaken reliance on his argument that he did not intentionally
file a false affidavit and
that errors in his statement are the result of poor memory and poor record keeping.
Upon questioning from
the U.S. District Court Judge who accepted Petitioner's plea, Petitioner admitted
that his false statement
was made willfully, with specific intent to violate the law and with knowledge
of its falsity. I.G. Ex. 11.
Moreover, in his plea Petitioner admitted that he did what was charged in the
Indictment, namely that he
received approximately $1000 in fees for referring 20 named Medicare beneficiaries
for testing. I.G. Ex. 7,
11 at 32, 41. It has been frequently held that when an individual has been convicted
of a program-related
offense encompassed by section 1128(a)(1), exclusion is mandatory and such individual's
subsequent claim
of innocence is irrelevant and will not be considered. Peter J. Edmonson, DAB
1330 (1992).
Petitioner's suggestion that similarly situated doctors were more leniently
treated is irrelevant to the issues
in this case. I must decide this case based on the evidence before me and whether
that evidence supports
that Petitioner was convicted of a program-related offense, rather than delve
into the collateral issue of
whether the I.G. has similarly sanctioned all alleged wrongdoers who received
payments from MDS.
Moreover, Petitioner's suggestion that other doctors received more lenient treatment
from the I.G. is
unfounded and amounts to mere last-minute speculation because, on the record
before me, none of the
doctors whom Petitioner contends received favorable treatment from the I.G.
were convicted, as Petitioner
was, of making a false statement to an agency of the United States.
CONCLUSION
Section 1128(a)(1) of the Act requires that Petitioner be excluded from the
Medicare and Medicaid
programs for a period of at least five years because of his conviction of a
program-related criminal offense.
Neither the I.G. nor the judge i
authorized to reduce the five-year minimum mandatory period of exclusion. Jack
W. Greene, DAB CR19,
at 12 - 14 (1989). The I.G.'s five-year exclusion is, therefore, sustained.
__________________________
Joseph K. Riotto
Administrative Law Judge
1. Initially, pursuant to my March 25, 1993 Prehearing Order and Schedule for
Filing Motions for
Summary Disposition, the I.G. submitted a brief, Petitioner submitted a response
and the I.G. submitted a
reply. Accompanied with the parties' submissions were I.G. Exhibits (referred
to hereafter as I.G. Ex.) 1 -
10 and Petitioner Exhibits (referred to hereafter as P. Ex.) 1 - 14.
On September 20, 1993, I issued a Ruling denying the I.G.'s motion for summary
disposition. This was
based on my determination that, although the I.G. had submitted substantial
evidence in support of the
exclusion, there was insufficient undisputed evidence, and there were material
matters in dispute, all of
which made summary disposition unwarranted at that time. The problems noted
included the use by the
I.G. of an unsigned copy of what was purported to be the indictment; also lacking
was the docket number,
which might link the indictment to the conviction and plea documents. In addition,
other documents were
only partially legible, obscuring information which might show that Petitioner's
conviction was related to
the delivery of an item or service under Medicare.
However, since the I.G. had shown that there was substantial evidence in support
of the exclusion, I
afforded the I.G. another opportunity to submit evidence and Petitioner the
opportunity to respond.
Accordingly, the I.G. submitted two additional exhibits (I.G. Ex. 11 and 12).
The I.G. moved to withdraw
I.G. Ex. 3 and 7 and replace them with new I.G. Ex. 3 and 7. Petitioner did
not submit any additional
exhibits.
I grant the I.G.'s motion to withdraw the previously submitted I.G. Ex. 3 and
7 and replace them with I.G.
Ex. 3 and 7. I admit I.G. Ex. 1 - 12 and P. Ex. 1 - 14 into evidence at this
time.
2. When determining whether a person should be excluded pursuant to section
1128(a)(1) of the Act, the
administrative law judge may look beyond "the judgment entry and plea transcript,"
and "examine the full
circumstances surrounding a conviction to determine whether the statutory elements
. . . are met . . ." See,
Bruce Lindberg, D.C., DAB 1120 (1991).
3. The I.G. established that Petitioner received remuneration from MDS for
his treatment of 20 Medicare
recipients in an amount totalling $1000. I.G. Ex. 3. Of the 20 Medicare recipients,
11 were residents of a
facility called Green Briar and nine were residents of the Newton Rest Home.
I.G. Ex. 3. Petitioner was
reimbursed for his services to the 11 Medicare recipients residing at Green
Briar by check number 356, in
the amount of $550. I.G. Ex. 3. Petitioner was reimbursed for his services to
the nine Medicare recipients
residing at Newton Rest Home by check number 377, in the amount of $450. While
there is additional
evidence that could be construed to support that Petitioner treated other Medicare
recipients, namely
checks 2428 and 521, there is no evidence in the record from which I can conclude
that either of these
checks served as a basis for the charges contained in the Indictment. I.G. Ex.
3. Only the 20 Medicare
recipients who were residents of the Green Briar and Newton Rest Home were listed
in the Indictment to
which Petitioner pled. I.G. Ex. 3, 7. Therefore, for purposes of my determination
that Petitioner's
conviction is program-related, I consider only the 20 Medicare recipients mentioned
in the Indictment and
the payments Petitioner received for them.