Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Kenneth G. Schwarz, Petitioner,
- v. -
The Inspector General.
DATE: January 26, 1994
Docket No. C-93-108
Decision No. CR301
DECISION
By letter dated July 13, 1993, Kenneth G. Schwarz, 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
Petitioner for a period of five years from participation in the Medicare program
and from participation in
the State health care programs described in section 1128(h) of the Social Security
Act (Act), which are
referred to herein as "Medicaid." The I.G.'s rationale was that exclusion,
for at least five years, is
mandated by 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 Medicare.
Petitioner filed a timely request for review of the I.G.'s action. The I.G. moved for summary disposition.
Because I determined that there are no facts of decisional significance genuinely
in dispute, and that the
only matters to be decided are the legal implications of the undisputed facts,
I have decided the case on the
basis of the parties' 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. During the period relevant to this case, Petitioner owned and operated a
business in California selling
durable medical equipment -- specializing in prosthetic and orthotic devices.
I.G. Ex. 3 at 3; P. Ex. 1 at 3.
1/
2. Petitioner was a Medicare and Medicaid provider. Petitioner's Brief (P. Br.) at 4.
3. On July 23, 1992, Petitioner was charged, by means of a criminal information,
with theft of government
property
(18 U.S.C. 641) on or about November 30, 1989. I.G. Ex. 1 at 1 - 2.
4. The government property at issue consisted of Medicare funds, unlawfully
acquired by Petitioner
through filing false claims. I.G. Ex. 1, 3.
5. Petitioner submitted a claim form to Medicare dated December 1, 1989, seeking
reimbursement for
services allegedly provided to one of his customers on November 30, 1989. I.G.
Ex. 3 at 17.
6. Petitioner was involved in a major automobile accident on December 3, 1989;
he closed his business in
March of 1990. P. Ex. 1 at 4; P. Ex. 2.
7. According to a Medicare claim notice dated December 29, 1989, sent to the
customer, Medicare stated
that it was reimbursing Petitioner in the amount of $2505.05 for the services
allegedly provided to the
customer on November 30, 1989. I.G. Ex. 3 at 26.
8. Petitioner wrote a letter to the customer dated December 27, [1989], in
which he explained that he had
illegally billed Medicare for some prosthetic work under the customer's name.
I.G. Ex. 3 at 20 - 24.
9. In July 1990, Medicare received a complaint to the effect that one of Petitioner's
customers had received
a Medicare claim notice dated December 29, 1989 indicating that Medicare was
paying Petitioner for
prosthetic work for the customer, although the customer had not ordered or received
the items or services
described in the notice. I.G. Ex. 3 at 14 - 16.
10. When the customer was interviewed by the I.G.'s agents on May 31, 1991,
he signed a sworn affidavit
stating that he had not received any items or services from Petitioner since
May of 1988. I.G. Ex. 3 at 4,
32.
11. On November 5, 1992, Petitioner pled guilty in the U.S. District Court
for the Eastern District of
California to theft of government property in violation of 18 U.S.C. 641. I.G.
Ex. 1.
12. The court entered judgment against Petitioner, sentencing him to three
years' probation, payment of a
special assessment, and payment of restitution. I.G. Ex. 1.
13. The Secretary of Health and Human Services has delegated to the I.G. the
authority to determine and
impose exclusions pursuant to section 1128 of the Act to the I.G. 48 Fed. Reg.
21,662 (1983).
14. The combination of Petitioner's guilty plea and the court's entry of judgment
and imposition of a
sentence are the equivalent of a "conviction" for purposes of mandatory
exclusion under section
1128(a)(1). Findings 11 - 12; Social Security Act, section 1128(i).
15. Petitioner's conviction for submitting a fraudulent claim for Medicare
reimbursement constitutes clear
program-related misconduct, sufficient to mandate exclusion. Findings 3 - 5,
7 - 12; Social Security Act,
section 1128(a)(1).
16. Because Petitioner's criminal conviction related to the delivery of health
care items or services under
Medicare, within the meaning of section 1128(a)(1) of the Act, the I.G. must
exclude him for a period of at
least five years. Findings 3 - 5, 7 - 12; Social Security Act, sections 1128(a)(1),
1128(c)(3)(B).
17. The administrative law judge is not authorized to reduce the length of
a mandatory five-year period of
exclusion.
18. There is no evidence that the I.G. acted outside the discretion afforded
the I.G. by statute and
regulation.
19. The administrative law judge has no authority to alter the effective date
of exclusion imposed by the
I.G.
20. The I.G. properly excluded Petitioner from participation in Medicare and
Medicaid for five years, as
required by section 1128(c)(3)(B) of the Act.
ARGUMENT
Petitioner admits his offense and acknowledges that it was wrong and that a
penalty is justified. He also
notes, though, that it was a once-in-a-lifetime transgression, and that the
I.G.'s inaction, until more than
three years after the offense, unfairly increases his punishment.
He is disturbed also by the harshness of the proposed sanction, contending
that it is unjust for a person who
only committed one unlawful act in more than 20 years of professional practice
(and subsequently
cooperated fully with the authorities) to be deprived of the means to support
himself and his child. (See
generally P. Ex. 1.)
Additionally, Petitioner says that he did not intend to commit fraud. He explains
that, because of extreme
financial difficulties, he billed early for services he fully intended to deliver.
He explains further that an
automobile accident forced him to close his business and thus he was unable
to carry out his intention.
DISCUSSION
The first statutory requirement for mandatory exclusion pursuant to section
1128(a)(1) of the Act is that the
individual or entity in question be "convicted" of a criminal offense
under federal or State law. In the
present case, it is undisputed that Petitioner pled guilty to a criminal charge
and that a United States court
entered judgment and imposed a penalty upon him. Findings 11 - 12. These events
are a "conviction" for
purposes of the mandatory exclusion law. Section 1128(i) of the Act.
I find also that the second requirement of section 1128(a)(1) -- that the criminal
offense leading to the
conviction be related to the delivery of an item or service under Medicare or
Medicaid -- has been satisfied.
It is well-established that financial misconduct directed at the Medicare and
Medicaid programs, connected
with the delivery of items or services, constitutes a program-related offense
invoking mandatory exclusion.
Samuel W. Chang, M.D., DAB 1198 (1990) (false billing); Carlos E. Zamora, M.D.,
DAB 1104 (1989)
(false billing); and Napoleon S. Maminta, M.D., DAB 1135 (1990) (conversion
of a Medicare
reimbursement check). In particular, filing fraudulent Medicare or Medicaid
claims has been held to
constitute clear program-related misconduct. Jack W. Greene, DAB CR19 (1989),
aff'd, DAB 1078
(1989), aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835, 838 (E.D. Tenn.
1990). I find that the act
which provided the basis for Petitioner's criminal conviction in the present
case -- making false
representations in claims for Medicare reimbursement -- constitutes a criminal
offense related to the
delivery of an item or service under Medicare.
As to Petitioner's argument that he was injured by the I.G.'s delay in seeking
his exclusion, it has been held
that an administrative law judge has no authority to alter the effective date
of exclusion where the I.G.
acted, as appears to have been the case here, within the discretion afforded
the I.G. by statute and
regulation. Shanti Jain, M.D., DAB 1398 (1993).
Even if the impact of the exclusion is harsh, his is the minimum penalty provided
by Congress when
section 1128(a)(1) is invoked. Section 1128(c)(3)(B) of the Act and 42 C.F.R.
1001.101 - .102. Neither
the I.G. nor the administrative law judge is authorized to reduce the five-year
minimum mandatory period
of exclusion. Greene, DAB CR19, at 12 - 14 (1989), aff'd, DAB 1078 (1989), aff'd
sub nom. Greene v.
Sullivan, 731 F. Supp. 835, 838 (E.D. Tenn. 1990). Thus, as the I.G. has excluded
Petitioner for the
minimum mandatory period only, I am unable to consider any of the mitigating
factors raised by Petitioner
regarding the reasonableness of the length of his exclusion.
Lastly, Petitioner's contention that he did not intend to commit fraud is irrelevant.
P. Br. at 1, 6. It is the
fact of conviction of a program-related criminal offense that triggers exclusion;
proof of criminal intent is
not required to bring a conviction within the ambit of section 1128(a)(1). DeWayne
Franzen, DAB 1165
(1990).
CONCLUSION
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate that the Petitioner
herein be excluded from the
Medicare and Medicaid programs for a period of at least five years because of
his criminal conviction on a
program-related charge.
The five-year exclusion is, therefore, sustained.
__________________________
Joseph K. Riotto
Administrative Law Judge
1. The I.G. submitted three exhibits. I cite the I.G.'s exhibits as "I.G.
Ex. (number) at (page)." Petitioner
submitted five exhibits. I cite Petitioner's exhibits as "P. Ex. (number)
at (page)." I admit into evidence
I.G. Ex. 1 - 3 and P. Ex. 1 - 5.