DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Civil Remedies Division
DATE: March 14, 1990
Docket No. C-125
In the Case of:
Samuel W. Chang, M.D.,
Petitioner,
- v. -
The Inspector General.
DECISION AND ORDER
In this case, governed by section 1128 of the Social Security Act (Act), Petitioner
timely filed a request for
a hearing before an Administrative Law Judge (ALJ) to contest the May 18, 1989
notice of determination
(Notice) issued by the Inspector General (I.G.) of the United States Department
of Health and Human
Services (DHHS). The Notice informed Petitioner that he was excluded from participating
in the Medicare
and Medicaid programs for five years.
Based on the entire record before me, I conclude that there are no material
facts at issue, that Petitioner is
subject to the federal minimum mandatory exclusion provisions of sections 1128(a)(1)
and 1128(c)(3)(B)
of the Act, and that it is appropriate for Petitioner to be excluded for a period
of five years
APPLICABLE STATUTES AND REGULATIONS
I. The Federal Statute.
Section 1128 of the Act is codified at 42 U.S.C. 1320a-7 (West U.S.C.A., 1989
Supp.). Section 1128(a)(1)
of the Act provides for the exclusion from Medicare and Medicaid of those individuals
or entities
"convicted" of a criminal offense "related to the delivery of
an item or service" under the Medicare or
Medicaid programs. Section 1128(c)(3)(B) provides for a five year minimum period
of exclusion for those
excluded under section 1128(a)(1).
Section 1128(b) of the Act provides for the permissive exclusion of individuals
and entities for certain
types of convictions, infractions, or undesirable activities, with no minimum
period of exclusion.
II. The Federal Regulations.
The governing federal regulations (Regulations) are codified in 42 C.F.R.,
Parts 498, 1001, and 1002
(1988). Part 498 governs the procedural aspects of this exclusion case; Parts
1001 and 1002 govern the
substantive aspects.
Section 1001.123 requires the I.G. to issue an exclusion notice to an individual
whenever the I.G. has
"conclusive information" that such individual has been "convicted"
of a criminal offense "related to the
delivery of an item or service" under the Medicare or Medicaid programs;
the exclusion begins 20 days
from the date on the notice.
BACKGROUND
I held a telephone prehearing conference on July 18, 1989, at which time the
parties stated that there was
no need for an evidentiary hearing because the facts were not disputed. The
parties agreed to submit this
case on the basis of documentary evidence and briefs. On August 1, 1989, I issued
a prehearing Order and
Schedule for filing briefs and motions which set forth the issues raised by
the parties. Both parties
submitted briefs, and I heard oral argument by telephone on November 14, 1989.
Petitioner admits that he was "convicted" on October 28, 1987, of
a criminal offense within the meaning of
section 1128(i) of the Act. P. Br. 1.
ISSUES
The remaining issues are:
1. Whether Petitioner's conviction was "related to the delivery of an
item or service" under the Medicaid
program within the meaning of section 1128(a)(1) of the Act.
2. Whether Petitioner is subject to the minimum mandatory five year exclusion
provisions of sections
1128(a)(1) and 1128(c)(3)(B) of the Act.
3. Whether the principles of double jeopardy, laches, equitable estoppel, or
fairness bar the I.G. from
excluding Petitioner.
4. Whether the period of this federal exclusion should be reduced or adjusted
on the grounds that the I.G.
failed to issue the Notice to Petitioner in a timely manner as required by the
Act and Regulations.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Petitioner was a licensed medical doctor who had practiced medicine in Poolesville,
Maryland since
1979.
2. The Maryland Medicaid Fraud Control Unit discovered a billing pattern by
Petitioner that caused them
to initiate an investigation in late 1986. I.G. Ex. M/1.
3. Petitioner was charged by the State of Maryland with Medicaid fraud for
billing for services that were
not performed as claimed. I.G. Ex. N.
4. On October 28, 1987, Petitioner pleaded guilty to one count of Medicaid fraud. I.G. Ex. B/2.
5. Petitioner agreed to pay restitution of $35,540.95, and was given five years probation. I.G. B/2.
6. Petitioner was "convicted" within the meaning of section 1128 (i) of the Act.
7. On November 5, 1987, the State of Maryland suspended Petitioner from participation
in the State
Medicaid program, retroactive to October 28, 1987; the State's suspension was
based on Dr. Chang's
October 28, 1987 conviction of one count of Medicaid fraud. I.G. Ex. E.
8. On November 12, 1987, the I.G. was notified by the State of Maryland of
Petitioner's conviction. I.G.
Ex. F.
9. On January 7, 1988, Petitioner was notified by the I.G. that the I.G. was
proposing to exclude him for at
least five years under the minimum mandatory provisions of section 1128 of the
Act from Medicare and
Medicaid because of his October 28, 1987 conviction. The I.G. allowed him the
opportunity to submit
mitigating circumstances before the I.G. made a final determination on the length
of the exclusion. I. G.
Ex. I, G.
10. By letter of February 4, 1988, Petitioner requested that the I.G. withdraw
the proposed exclusion. I. G.
Ex. H.
11. By letter dated May 18, 1989, the I.G. informed Petitioner that he had
been excluded for five years
under the minimum mandatory provisions of section 1128 (a)(1) of the Act and
that such federal exclusion
from both Medicare and Medicaid would begin twenty days from the date of the
Notice.
12. By letter dated June 5, 1989, Petitioner requested a hearing before an ALJ.
13. Petitioner admits that he was "convicted" of a criminal offense
within the meaning of section 1128(i)
of the Act. P. Br. 4.
14. 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. I.G. Ex.
A through G.
15. The I.G. properly excluded Petitioner from participation in the Medicare
and Medicaid programs for a
period of five years as required by the minimum mandatory exclusion provisions
of section 1128(c)(3)(B)
of the Act.
16. Since the material facts are undisputed in this case, the classification
of Petitioners' conviction of a
criminal offense as subject to the authority of 1128(a)(1) is a legal issue.
17. The I.G. is entitled to summary disposition in this proceeding.
18. The I.G. is not barred by principles of double jeopardy, due process, or
laches from excluding
Petitioner in this case.
19. The I.G.'s Notice in this case was not timely and, thus, was not reasonable
within the meaning of the
Act and Regulations.
20. The five year exclusion from Medicare and Medicaid programs which is required
by federal law in this
case is hereby effective beginning November 22, 1988, which is one year and
twenty days from November
12, 1987, the date that the I.G. received notice of Petitioner's conviction
(instead of May 18, 1989, the date
of the I.G.'s Notice).
21. All Medicare reimbursements, if any, received by Petitioner from November
22, 1988 to May 18,
1989 must be refunded to the Medicare carrier because Petitioner was effectively
excluded during that
period.
DISCUSSION
I. Petitioner's Conviction "Related to the Delivery of an Item or Service"
Within The Meaning of Section
1128(a)(1) of The Act.
Petitioner argues that even though he was "convicted," he should
not be excluded because the criminal
offense to which he pleaded guilty was not "related to the delivery of
an item or service" under section
1128(a)(1) of the Act. Instead, Petitioner contends that his conviction fits
within the provisions of section
1128(b)(1) of the Act, as a conviction relating to fraud, and that, accordingly,
the exclusion is permissive
and not mandatory.
Petitioner was convicted of Medicaid fraud. FFCL 4,6,13. Section 1128(a)(1)
of the Act provides for a
federal exclusion when a conviction is "related to the delivery of an item
or service" under Medicare or
Medicaid. The evidence in the record clearly demonstrates that Petitioner's
criminal activity did cause
financial harm to the Medicaid program and was, thus, "related to the delivery
of an item or service." The
Maryland criminal court ordered Petitioner to pay restitution to the Medicaid
program and ordered him to
serve five years of unsupervised probation. I.G. Ex. E. In the case of Jack
W. Greene, DAB App. 1078
(1989), the Departmental Appeals Board (DAB) held that "the false Medicaid
billing and the delivery of
drugs to a Medicaid recipient are inextricably intertwined and therefore 'related'
under any reasonable
reading of that term." Petitioner's conviction is also "inextricably
intertwined" with the Medicaid program
and, therefore, "related." Accordingly, 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.
II. A Minimum Mandatory Five Year Exclusion Is Required In This Case.
Section 1128(a)(1) of the Act clearly requires the I.G. to exclude individuals
and entities from the
Medicare and Medicaid programs 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. & Admin. News 682, 686.
Since 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 Petitioner for a minimum of five years and an ALJ has
no discretion to reduce
the minimum mandatory five year period of exclusion. See Jack W. Greene v. Louis
Sullivan, No. Civ.-3-
89-758 (E.D. Tenn., Feb. 22, 1990).
III. The I.G. Is Not Precluded From Excluding Petitioner In This Case.
Petitioner contends that the I.G. is barred from excluding him because of the
doctrine of double jeopardy.
P. Br. 12. Petitioner cites the recent Supreme Court case of United States v.
Halper, 109 S. Ct. 1892
(1989), in support of his argument. P. Br. 12-13.
In Halper, the Supreme Court held that under some circumstances, the imposition
of civil penalties under
the False Claims Act, 31 U.S.C. 3729-3231, could constitute double jeopardy
in the narrow circumstances
where there existed a prior federal criminal conviction for the false claims
for which the civil penalty was
imposed and where there was not even a rough relationship between the amount
of the penalty and the cost
to the government resulting from the false claims. The Court noted that the
rule is one for "the rare case."
This case is distinguishable both legally and factually from Halper. First,
this case involves a state
conviction and Halper involved a federal conviction. Double jeopardy does not
apply to a subsequent
federal prosecution based on facts which led to a state conviction. Chapman
v. U.S. Dept. of Health &
Human Services, 821 F.2d 523 (10th Cir. 1987); Abbate v. United States, 359
U.S. 187 (1959). Second,
the major purpose of the exclusion law is not to punish, but to protect program
integrity by preventing
untrustworthy providers from having ready access to the Medicare and Medicaid
trust funds. Greene v.
Sullivan, supra, at p. 3. See, H.R. Rep. No. 97-158, 97th Cong., 1st Sess. Vol.
III, 329, 344, (1981); S.
Rep. No. 139, 97th Cong., 1st Sess. 461-62 (1981), 1981 U.S. Code Cong. &
Admin. News 727-28;
Preamble to the Regulations (48 Fed. Reg. 38827 to 38836, August 26, 1983).
Accordingly, the I.G. is not
barred by the principles of double jeopardy. See also, United States of America
v. Neville Anthony, No.
CV 89-1351 (E.D. N.Y., Nov. 22, 1989).
IV. The I.G.'s Notice Was Not Issued In A Timely Manner.
The State of Maryland excluded Petitioner from Medicaid participation for five
years from the date of his
conviction, October 28, 1987. FFCL 7. The I.G. became aware of Petitioner's
conviction on November
12, 1989. FFCL 8. The I.G. excluded Petitioner from Medicare and Medicaid for
five years from the date
of the I.G.'s Notice, May 18, 1989. FFCL 9,10,11. Petitioner contends that,
since the I.G.'s Notice
excluding him was issued some seventeen months after the I.G. had been notified
by the State of Maryland
of Petitioner's conviction, (1) the I.G.'s Notice was not issued in a timely
manner and (2) that such a delay
in a five-year minimum mandatory exclusion effectively adds time to the length
of such exclusion.
Petitioner argues that the I.G. violated section 1128(c) of the Act, which requires
the I.G. to "promptly
notify" an individual of an exclusion and that the I.G.'s untimely exclusion
results in an "inequitable
tacking on of additional time to the State's Medicaid exclusion." P. Br.
7. Petitioner also argues, in effect,
that the doctrines of laches, equitable estoppel, and fairness dictate relief
in this situation, require a
reduction in the number of years Petitioner is excluded, or, in the alternative,
require the effective date of
the exclusion to be modified. P. Br. 7-12.
The I.G. argues, in effect, that Petitioner cannot be granted relief from this
situation. I.G. Rep. Br. 5-7.
The I.G. argues that the State's Medicaid suspension or exclusion is separate
from this federal exclusion
from Medicare and Medicaid and that laches does not apply. The I.G. contends
that he has no discretion
to reduce the period of exclusion, argues that estoppel does not apply, and
contends, in the alternative, that
an ALJ has no authority to grant the relief sought by Petitioner. I.G. Rep.
Br. 4-7.
I conclude that the doctrines of laches and equitable estoppel have no application
to this case. I find that
the I.G. issued his Notice some 17 months after the I.G. became aware of Petitioner's
conviction. This was
not timely and not reasonable notice. Sections 1128(c) and 1128(f)(1) of the
Act and section 1001.123 of
the Regulations require reasonable notice and an opportunity for a timely hearing.
The delay of 17 months
in issuing the Notice in this case is contrary to those provisions. During oral
argument in this case, counsel
for the I.G. admitted that the delay in sending the Notice was due to administrative
error. This means that
the I.G. did not intentionally delay the Notice, but it does not mean that Petitioner
should suffer the
consequences of the I.G.'s error, however inadvertent. In such a situation,
there should be relief which
redresses the potential wrong. See Federal Deposit Insurance Corp. v. Mallen,108
S.Ct. 1780,1787,1788
(1988); Brock v. Roadway Express, Inc. 107 S.Ct. 1740 (1987); Ram v. Heckler,
792 F2d 444 (4th Cir.
1986); ADL, Inc. v. Perales, F. Supp. (S.D.N.Y., Aug. 2, 1988).
I conclude that, while neither the I.G. nor an ALJ have the authority to reduce
the minimum mandatory
period of exclusion of five years required by section 1128 (c)(3)(B) of the
Act, I do have authority to
correct mistakes which impact in such a way so as to deny a petitioner due process
or fundamental fairness
and which are in direct contradiction to the specific requirements of of the
Act and the Regulations.
Accordingly, I find and conclude that to correct the mistake made and to insure
compliance with the Act,
the Notice to Petitioner should have been issued within a reasonable time from
the date that the I.G.
became aware of Petitioner's conviction. One year from notification of a conviction
is a reasonable period
to effect an exclusion. See Thomas C. Chestney, D.M.D., DAB Civ. Rem. C-53,
fn. 8 (1989). To hold
otherwise would effectively punish Petitioner for a mistake made by someone
on the I.G.'s staff.
I find that the I.G. was notified by letter on November 12, 1987 of Petitioner's
conviction and that the I.G.'s
exclusion of Petitioner, to be reasonable, should have been effective within
one year from that date.
Accordingly, the five year exclusion of Petitioner from Medicare and Medicaid
programs was effective on
November 12, 1988.
It would not be fair for Petitioner to unreasonably profit from this situation
by keeping any monies paid to
him by Medicare for items or services provided after November 12, 1988. Thus,
to have the advantage of
adjusting the period of exclusion, Petitioner must return any such monies paid
by Medicare. The State of
Maryland had already excluded Petitioner from Medicaid as of October 28, 1987.
CONCLUSION
Based on the law and undisputed material facts in the record of this case,
I conclude the I.G. properly
excluded Petitioner from the Medicare and Medicaid programs for the minimum
mandatory period of five
years. The effective date of this five-year exclusion is November 12, 1988.
IT IS SO ORDERED.
______________________
Charles E. Stratton
Administrative Law Judge