Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Russell E. Baisley and
Patricia Mary Baisley,
Petitioners,
- v. -
The Inspector General.
DATE: April 26, 1991
Docket No. C-276
DECISION
In this case, governed by section ll28 of the Social
Security Act (Act), Petitioners timely filed a request
for a hearing before an Administrative Law Judge (ALJ) to
contest the June 1, l990 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 Petitioners that they were excluded
from participating in the Medicare and Medicaid programs
for five years. 1/ The I.G. alleged that Petitioners
were "convicted", as defined in section ll28(i) of the
Act, of a criminal offense "related to the delivery of an
item or service" under the Medicaid program.
Based on the entire record before me, I conclude that
summary disposition is appropriate in this case, that
Petitioners are subject to the mandatory exclusion
provisions of section ll28(a)(1) of the Act, and that
Petitioners' exclusion for a minimum period of five years
is mandated by section ll28(c)(3)(B) of the Act.
APPLICABLE STATUTES AND REGULATIONS
1. The Federal Statute.
Section ll28 of the Social Security Act is codified at
42 U.S.C. l320a-7 (West U.S.C.A., l990 Supp.). Section
ll28(a)(l) 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 ll28(c)(3)(B) provides for a
five year minimum period of exclusion for those excluded
under section ll28(a)(l).
2. The Federal Regulations.
The governing federal regulations (Regulations) are
codified in 42 C.F.R. Parts 498, l00l, and l002 (l989).
Part 498 governs the procedural aspects of this exclusion
case; Parts l00l and l002 govern the substantive aspects.
Section l00l.l23 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.
2/
BACKGROUND
On July 31, l990, Petitioners requested an administrative
hearing before an ALJ to contest the I.G's determination
to exclude and the case was assigned to me for a hearing
and decision. On September 19, l990, I held a prehearing
conference. I issued a prehearing Order on September 24,
1990 which established a schedule for the parties to
submit briefs and documentary evidence in support of
motions for summary disposition in this case. The I.G.
filed a motion for summary disposition and Petitioners
submitted an opposing brief to which the I.G. replied.
Petitioners requested oral argument in their response
brief, but withdrew their request on March 25, 1991,
prior to oral argument being heard.
ADMISSIONS
During the telephone prehearing conference on September
19, 1990, Petitioners admitted that they had been
"convicted", as defined by section 1128(i) of the Act, of
a criminal offense "related to the delivery of an item or
service" under Medicaid, within the meaning of section
1128(a)(1) of the Act. Later, Petitioners retracted
their admission that they were "convicted", as defined by
section 1128(i) of the Act.
ISSUES
The issues in this case are:
1. Whether Petitioners were "convicted" of a criminal
offense within the meaning of section ll28(i) of the
Act;
2. Whether the criminal offense 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; and
3. Whether the five-year minimum mandatory exclusion
provisions of sections 1128(a)(1) and 1128(c)(3)(B)
of the Act must apply in this case.
FINDINGS OF FACT AND CONCLUSIONS OF LAW 3/
4. Petitioners, at all times relevant to this case,
were "high managerial agents" of C.R. Baisley
Transportation Company, Inc. (C.R.), Main-Transit Taxi
Service, Inc. (Main), McCourt Transportation Company,
Inc. (McCourt), and Suburban Wheelchair of W.N.Y., Inc.
(Suburban)(Defendant Corporations), enrolled Medicaid
providers of ambulance transportation in the State of
New York (State). I.G. Ex. 3. 4/
5. On April 23, 1986, Petitioners were accused by
Indictment 86-0453-A of Grand Larceny in the Second
Degree, in violation of Section 155.35 of the Penal Law,
and, by Indictment 86-0453-G, of Offering a False
Instrument for Filing in the First Degree, in violation
of Section 175.35 of the Penal Law. I.G. Ex. 3.
6. Indictment 86-0453-A alleged that Petitioners, as
"high managerial agents" of each of the Defendant
Corporations, acting within the scope of their employment
and on behalf of the Defendant Corporations, and each
aiding and abetting the other, submitted and caused to be
submitted to the Erie County Department of Social
Services (Social Services) various invoices which falsely
represented that fares for certain multiple ride Medicaid
clients had been billed in accordance with the guidelines
set forth by Erie County (County). I.G. Ex. 3.
7. Indictment 86-0453-A further alleged that by the
false representations, Petitioners intentionally caused
the State and the County to pay the Defendant
Corporations approximately $274,382.00 to which they were
not entitled. I.G. Ex. 3.
8. Indictment 86-0453-G alleged that Petitioners, as
"high managerial agents" of C.R. and Suburban, acting
within the scope of their employment and on behalf of
C.R. and Suburban, and each aiding and abetting the
other, submitted and caused to be submitted to Social
Services invoices which Petitioners knew falsely
represented that Suburban was entitled to bill a full
fare for the transportation of a Medicaid recipient in
accordance with the agreed guidelines promulgated by the
County in that Petitioners well knew the transportation
of this Medicaid recipient, along with other Medicaid
recipients in the same vehicle, was considered a
"multiple fare" and not a full fare. I.G. Ex. 3.
9. Indictment 86-0453-G further alleged that
Petitioners knowingly and intentionally submitted
vouchers so that the County would pay one half fare and
two full fares as if the Medicaid recipients had been
transported in three separate vehicles when Petitioners
knew they had been transported in the same vehicle. I.G.
Ex. 3.
10. Indictment 86-0453-G additionally alleged that
Petitioners intended to defraud the State and the County
into paying Suburban a sum of money to which it was not
entitled. I.G. Ex. 3.
11. On June 6, 1988, The Erie County Supreme Court in
Buffalo, New York (Court), on Petitioners' March 28, 1988
pleas of guilty, entered Certificates of Conviction-
Imprisonment finding Petitioner Russell Baisley guilty of
Grand Larceny in the Second Degree, in violation of
section 155.35 of the Penal Law, and finding Petitioner
Patricia Baisley guilty of Attempt to Offer a False
Instrument for Filing, in violation of section 110-175.30
of the Penal Law. I.G. Ex. 2.
12. The Court sentenced Petitioner Russell Baisley to
pay $250,000 restitution and to five years probation in
Florida, and Petitioner Patricia Baisley to an
unconditional discharge and payment of a $60.00
surcharge. I.G. Ex. 2.
13. The Certificates of Conviction entered by the Court
are judgments of conviction within the meaning of section
1128(i)(1) of the Act.
14. Petitioners' Alford pleas are equivalent to nolo
contendere pleas and constitute a plea of guilty, within
the meaning of section 1128(i)(3) of the Act.
15. Petitioners were "convicted" of a criminal offense,
within the meaning of sections 1128(a)(1) and 1128(i) of
the Act.
16. Petitioners' criminal offenses of submitting
fraudulent claims for ambulance transportation were
"related to the delivery of an item or service" under
Medicaid, within the meaning of section 1128(a)(1) of the
Act. P. Br. 3.
17. The Secretary of Health and Human Services
(Secretary) delegated to the I.G. the authority to
determine, impose, and direct exclusions pursuant to
section 1128 of the Social Security Act. 48 Fed. Reg.
21662 (May 13, 1983).
18. The I.G. was required by section 1128(a)(1) and
1128(c)(3)(B) to exclude Petitioners for a mandatory
period of no less than five years and an ALJ has no
statutory authority to alter this mandatory minimum
exclusion period.
19. By Notice dated June 1, 1990, the I.G. excluded
Petitioners from participating in Medicare and directed
that they be excluded from participating in Medicaid,
pursuant to section 1128(a)(1) of the Act, effective 20
days from the date of the Notice. I.G. Ex. 1.
20. The exclusion imposed and directed against
Petitioners is for the mandatory minimum of five years.
21. There being no disputed issues of material fact in
this case, there is no need for an in-person evidentiary
hearing and the I.G. is entitled to summary disposition.
DISCUSSION
22. Petitioners' Were "Convicted" of a Criminal Offense,
as Defined by Section 1128(i) of the Act.
The evidence establishes that Petitioners were each
charged in an indictment with one count of Grand Larceny
in the Second Degree and one count of Offering a False
Instrument for Filing in the First Degree in New York
State. FFCL 1-7. Petitioners were managerial agents of
C.R., Main, McCourt, and Suburban, enrolled Medicaid
providers of ambulance transportation. FFCL 1-7. The
indictment accused Petitioners of submitting and causing
to be submitted to Social Services various invoices which
falsely represented that fares for certain multiple-ride
Medicaid clients had been billed in accordance with the
guidelines set forth by the County. I.G. Ex. 3. The
indictment further accused Petitioners of submitting and
causing to be submitted invoices which falsely
represented that Petitioners were entitled to bill a full
fare for the transportation of Medicaid recipients when
Petitioners knew this was not the case. FFCL 1-7. The
indictment alleges that this was knowingly and
intentionally done by Petitioners. FFCL 1-7.
The Court's Certificate of Conviction-Imprisonment shows
that Petitioner Russell Baisley pleaded guilty to Grand
Larceny in the Second Degree and that Petitioner Russell
Baisley's plea was accepted by the Court. Judgment on
the plea was entered by the Court and Petitioner Russell
Baisley was ordered to pay restitution and serve five
years probation. FFCL 7-9.
The Court's Certificate of Conviction-Imprisonment shows
that Petitioner Patricia Baisley pleaded guilty to
Attempt to Offer a False Instrument for Filing and that
Petitioner Patricia Baisley's plea was accepted by the
Court. Judgment on the plea was entered by the Court and
Petitioner Patricia Baisley was given an unconditional
discharge and ordered to pay a surcharge. FFCL 7-9
Petitioners contend that their convictions were not upon
a verdict after trial or upon a plea of guilty or nolo
contendere. P. Br. 5. Petitioners argue that New York
does not allow a plea of nolo contendere; that under its
common law system, New York has formulated a system for
accepting pleas where an individual does not contest the
proceedings against him and still maintains his
innocence. P. Br. 6. Petitioners also contend that they
are innocent of the charges against them and have
maintained their innocence throughout the proceedings.
P. Br. 5. Petitioners further argue that their
convictions were not for federal crimes, and Petitioners
are, therefore, not estopped from denying the essential
elements of the criminal offense before the ALJ. P. Br.
5 and 6.
I disagree with Petitioners' contentions. I conclude
that Petitioners were "convicted" of a criminal offense,
within the meaning of sections 1128(i)(1) and 1128(i)(3)
of the Act.
The I.G.'s authority to exclude an individual from the
Medicare and Medicaid programs is based upon "conviction"
for a criminal offense "related to the delivery of an
item or service" as defined in sections 1128(a)(1) and
1128(i) of the Act.
Section 1128(i) of the Act provides that an individual or
entity has been "convicted" of a criminal offense:
(1) when a judgment of conviction has been
entered against the individual or entity by a
Federal, State, or local court, regardless of
whether there is an appeal pending or whether
the judgment of conviction or other record
relating to criminal conduct has been expunged;
or
(3) when a plea of guilty or nolo contendere by
the individual or entity has been accepted by a
Federal, State, or local court.
Petitioners implied argument is that their Alford pleas
are not the same as nolo contendere pleas and, therefore,
do not fall within the meaning of section 1128(i)(3) of
the statute. Petitioners also argue that their entering
of the Alford pleas demonstrate their lack of
culpability. Petitioner Patricia Baisley further argues
that she is additionally not culpable in that she was
convicted of an "attempted", not a completed, offense.
An Alford plea is equivalent to a nolo contendere plea
and entry of an Alford plea and acceptance of such a plea
by a state court amounts to a conviction within the
meaning of sections 1128(i)(1) and 1128(i)(3) of the Act.
Under an Alford plea, an individual enters a plea of
guilty, although maintaining his innocence. North
Carolina v. Alford, 400 U.S. 25 (1970). Under a nolo
contendere plea, an individual enters a plea of guilty,
although not expressly admitting his guilt. 5/ Id. at
35. In its practical results, an Alford plea and a nolo
contendere plea are equivalent. 6/ In both instances,
the individual waives his right to a trial, authorizes
the court for purposes of the case to treat him as if he
were guilty, and consents to the court's imposition of
sentence. 7/ Id. at 35-37. An Alford plea is
therefore a guilty plea within the meaning of section
1128(i). Charles W. Wheeler and Joan K. Todd, DAB App.
1123 (1990); See Alford at 35-38.
No contentions have been made by Petitioners and there is
nothing in the record that would lead to the conclusion
that Petitioners' pleas were not entered knowingly,
voluntarily and understandingly. Even if they had made
such an argument, this would not be the proper forum to
set aside the Alford plea. See Ronald Allen Cormier, DAB
Civ. Rem. C-206 (1990). Petitioners' guilty pleas were
accepted by a state court, which is all that is required
by section 1128(i). Wheeler and Todd, supra at 9; See
Gordon Lee Hanks; DAB Civ. Rem. C-112 at 9-10 (1989). A
guilty plea is "accepted" within the meaning of section
1128(i)(3) whenever a party admits his guilt to a
criminal offense and a court disposes of the case based
on that party's plea. Marie Chappell, DAB Civ. Rem.
C-225 at 8 (1990). See Guido R. Escalante, Sr., M.D.,
DAB Civ. Rem. C-175 (1990); Orlando Ariz and Ariz
Pharmacy, Inc., DAB Civ. Rem. C-115 (1990). Acceptance
by a state court is evidenced here by the Court's entry
of Certificates of Convictions-Imprisonment against
Petitioners which imposed sentence and disposed of the
cases against Petitioners.
Petitioners also argue that they are innocent of the
charges against them and that their entering of Alford
pleas demonstrate their lack of culpability. Petitioner
Patricia Baisley additionally argues that she is not
guilty in that she pled to an "attempted", not a
completed, offense.
Culpability is not a prerequisite to a section 1128(a)(1)
offense. The clear meaning of the statute's requirement
that there be a conviction is evident from its language:
(l) CONVICTION OF PROGRAM-RELATED CRIMES.-Any
individual or entity that has been convicted of a
criminal offense related to the delivery to the
delivery of an item or service under Title XVIII or
under any State health care program.
[Emphasis added]. Section 1128(a)(1) of the Act.
There is nothing in the statutory language requiring that
culpability be established. Furthermore, it is a settled
principle that a petitioner cannot challenge the I.G.'s
authority to exclude him by denying that he is guilty of
that for which he has been convicted. Christino
Enriquez, M.D., DAB Civ. Rem. C-277 (1991) See Andy E.
Bailey, C.T., DAB App. 1131 (1990); John W. Foderick,
M.D., DAB App. 1125 (1990); Daniel B. Salyer, R.Ph., DAB
Civ. Rem. C-224 (1990); Roosevelt A. Striggles, DAB Civ.
Rem. C-301 (1991). The I.G.'s authority to exclude a
party under section 1128(a)(1) arises by virtue of that
party's conviction of a criminal offense, as described in
the Act. A party's actual guilt or innocence is not a
relevant factor to be considered in deciding whether the
I.G. has authority to impose or direct an exclusion
pursuant to section 1128(a)(1). 8/
Petitioners' convictions are established as a matter of
law, within the meaning of the Act. Thus, the facts
which Petitioners would like to establish through
testimony in an in-person evidentiary hearing, such as
Petitioners' lack of culpability regarding the criminal
offenses for which they were convicted, would not
materially affect the outcome of this case. There being
no disputed material facts in this case, summary
disposition is appropriate without an in-person
evidentiary hearing.
23. Petitioners' Convictions are "Related to the
Delivery of an Item or Service" Under Medicaid, Within
the Meaning of Section 1128(a)(1) of the Act.
Sections 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). Petitioners do
not challenge a finding that their convictions were for
program-related offenses.
I also independently find that crimes involving financial
misconduct in the submission of Medicaid claims are
"related to" the "delivery of an item or service."
Black's Law Dictionary, Fifth Edition (West Pub. Co.
1979) defines "related" as: ". . . standing in relation;
connected; allied; akin." The offense for which
Petitioners were convicted were "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 Petitioners' convictions and the
Medicaid program. Thus, the criminal offenses for which
Petitioners were convicted are "related to the delivery
of an item or service" within the meaning of section
1128(a)(1) of the Act.
24. A Minimum Mandatory Exclusion of Five Years is
Required in This Case.
Petitioners' contend that the five year mandatory
exclusion required by sections 1128(a)(1) does not apply
in this case because (if found to be convicted for
purposes of the federal statute) Petitioners' conduct
fell within subparagraph (b) of the statute. P. Br. 9.
Petitioners argue that the I.G. misconstrued the nature
of the exclusion. P. Br. 9. Therefore, the I.G. was not
required to exclude Petitioners for a minimum of five
years. P. Br. 9.
As I said in Charles W. Wheeler, DAB Civ. Rem. C-61
(1989), aff'd, DAB App. 1123 (1990), section 1128(a)(1)
of the Act 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
sections 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 Petitioners were "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 Petitioners for a minimum of five
years and an ALJ has no discretion to reduce the minimum
mandatory five-year period of exclusion. See Wheeler,
DAB App. 1123 at 9; Jack W. Greene, DAB App. 1078 (1989),
aff'd, 731 F. Supp. 835 and 838 (E.D. Tenn 1990).
In Wheeler and Greene, supra, the Departmental Appeals
Board concluded that, absent the section 1128(a)
mandatory requirements, it is possible for an offense to
fall within the scope of section 1128(b) provisions.
Here, Petitioners' criminal offenses met the statutory
requirements of section 1128(a)(1). In cases such as
this, the I.G. has no discretionary authority to choose
between the sanctions under section 1128(a) and section
1128(b), but must apply the minimum mandatory five year
exclusion provisions applicable to a section 1128(a)(1)
offense.
CONCLUSION
Based on the law and the undisputed material facts in the
record of this case, I conclude that the I.G. properly
excluded Petitioners from the Medicare and Medicaid
programs pursuant to section 1128(a)(1) of the Act, and
that the minimum period of exclusion for five years is
mandated by section 1128(c)(3)(B) of the Act, and that
summary disposition in favor of the I.G. is appropriate.
____________________________
Charles E. Stratton
Administrative Law Judge
* * * Footnotes * * *
1. The Medicaid program is one of three types of
federally-financed State health care programs from which
Petitioner is excluded. I use the term "Medicaid" to
represent all three of these programs which are defined
in section ll28(h) of the Act.
2. The I.G.'s Notice adds five days to the l5
days prescribed in section l00l.l23, to allow for receipt
by mail.
3. Some of my statements in the sections
preceding these formal findings and conclusions are also
findings of act and conclusions of law. To the extent
that they are not repeated here, they were not in
controversy.
4. References to the record and to Board cases
in this decision will be cited as follows:
I.G.'s Exhibits I.G. Ex.
(letter/page)
I.G.'s Brief I.G.
Br. (page)
Petitioners' Brief P. Br. (page)
I.G.'s Reply Brief I.G. R. Br. (page)
Findings of Fact and FCCL (number)
Conclusions of Law
Departmental Appeals Board DAB Civ. Rem. (docket
ALJ decisions no./date)
Departmental Appeals Board DAB App. (decision no./
Appellate decisions date)
5. Courts have defined the plea of nolo
contendere in a variety of different ways. On the one
hand, they have described it as a plea of guilty. United
States v. Food & Grocery Bureau, 43 F. Supp. 974, 979
(S.D. Cal. 1942), aff'd, 139 F.2d 973(9th Cir. 1943). On
the other hand, the courts have seen it as a query
directed to the court to determine the defendant's guilt.
State v. Hopkins, 27 Del. 306, 88 A. 473 (1913).
6. "Nor can we perceive any material difference
between a plea that refuses to admit commission of the
criminal act and a plea containing a protestation of
innocence." Alford at 37.
7. "An individual accused of crime may
voluntarily, knowingly, and understandingly consent to
the imposition of a prison sentence even if he is
unwilling or unable to admit his participation in the
acts constituting the crime." Alford at 37.
8. A party who continues to deny his or her
guilt after a conviction is not without recourse. That
party may appeal the conviction in a court which has
jurisdiction over the matter. If the conviction is
overturned on appeal, then the I.G. may reinstate the
excluded party. See 42 C.F.R. 1001.136(a).
(..continued)