By letter dated October 2, 1998, Petitioner requested review of her three-year exclusion. The I.G. moved for summary disposition. Because I have determined that there are no facts of decisional significance 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.

Both parties submitted briefs and reply briefs. The I.G. submitted six proposed exhibits (I.G. Exs. 1-6). Petitioner did not object to the I.G.'s proposed exhibits and I admit into evidence I.G. Exs. 1-6. Petitioner submitted two proposed exhibits (P. Exs. 1 and 2). The I.G. did not object to these exhibits. I note, however, that P. Ex. 1 corresponds to I.G. Ex. 6. Therefore, I will not admit P. Ex. 1 into evidence as it is duplicates another exhibit already in the record. I admit P. Ex. 2 into evidence and renumber it as P. Ex. 1.

I conclude that Petitioner is subject to a three-year period of exclusion from participation in the Medicare and Medicaid programs, and I therefore affirm the I.G.'s determination.

The controlling law in this case is section 1128(b)(3) of the Act which provides:

[T]he Secretary may exclude the following individuals and entities from participation in any program under title XVIII and may direct the following individuals and entities be excluded from participation in any State health care program:

. . .

(3) CONVICTION RELATING TO CONTROLLED SUBSTANCE. - Any individual or entity that has been convicted, under Federal or State law, of a criminal offense relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

See the Medicare and Medicaid Patient and Program Protection Act of 1987, Pub. L. 100-93 (MMPPPA).⁽²⁾

The I.G., acting on behalf of the Secretary and in accordance with section 1128(b)(3) of the Act, will impose a three-year exclusion upon persons or entities convicted of a criminal offense related to a controlled substance. The implementing regulation is 42 C.F.R. � 1001.401(c)(1), which states:⁽³⁾

[A]n exclusion imposed in accordance with this section will be for a period of 3 years unless aggravating or mitigating factors listed in paragraphs (b)(2) and (b)(3) of this section form a basis for lengthening or shortening that period.

See 42 C.F.R. � 1001.401(b); 42 C.F.R. �� 1001.401(c)(2) and (c)(3).⁽⁴⁾

The I.G. may consider only two mitigating factors as a basis for reducing the exclusion period under 42 C.F.R. � 1001.401(c)(3):

1. The individual's or entity's cooperation with federal or State officials resulted in--

(A) Others being convicted or excluded from Medicare or any of the State health care programs, or

(B) Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or

(C) The imposition of a civil money penalty against others; or

2. Alternative sources of the type of health care items or services furnished by the individual or entity are not available.

Petitioner contends that the I.G.'s notice of exclusion is not specific as to which subsection of the Act she relied upon to justify the exclusion. Petitioner contends that the 1996 provisions of section 1128(b)(3) of the Act apply in this case, but that her offense does not fit the description of the offenses covered by that provision. Specifically, Petitioner maintains that the 1996 provision applies only to convictions for misdemeanor offenses, while she was convicted of a felony offense.

Petitioner also maintains that, if excluded, she should be excluded effective as of the date of her criminal conviction. Petitioner argues that the I.G. notified her of the exclusion nearly two years after she committed her offense, and it is unfair that the exclusion period not be concurrent with the probationary period to which she was sentenced as a result of her conviction.

Petitioner also asserts that a three-year exclusion is too harsh. She contends that the I.G. had discretion as to whether to impose an exclusion. In Petitioner's view, the I.G. should have considered the isolated nature of Petitioner's actions, and the unlikelihood that Petitioner will repeat those actions, in making the determination as to whether Petitioner should be excluded. Petitioner also notes that her nursing license has been reinstated with certain conditions. Therefore, Petitioner maintains that if State licensing authorities have found her competent and qualified, public and governmental interests are served, and her exclusion should be mitigated.

1. During the period at issue in this case, Petitioner was licensed in the State of Michigan as a licensed practical nurse. P. Ex. 1.

2. On or about August 28, 1996, a criminal information was filed in the United States District Court, Eastern District of Michigan, Southern Division, charging Petitioner, on or about August 1, 1996 and continuing until on or about August 13, 1996, with knowingly and intentionally distributing and possessing with intent to distribute, methadone, a Schedule II Controlled Substance, in violation of 21 U.S.C. � 841(a)(1). I.G. Ex. 5.

3. On February 27, 1997, Petitioner entered a guilty plea in federal court and was adjudged guilty of Distribution of a Schedule II Controlled Substance, methadone, in violation of 21 U.S.C. � 841(a)(1). I.G. Ex. 6.

4. As a result of her guilty plea and conviction, the court ordered Petitioner to pay a special assessment of $50 and placed Petitioner on probation for a period of three years. Id.

5. The court's acceptance of Petitioner's guilty plea constitutes a conviction within the meaning of section 1128(i)(3) of the Act.

6. Petitioner's conviction, under 21 U.S.C. � 841(a)(1), for distributing methadone, a Schedule II Controlled Substance, constitutes a conviction under federal law for distribution of a controlled substance within the scope of section 1128(b)(3) of the Act.

7. The Secretary has delegated to the I.G. the duty to determine and impose exclusions pursuant to section 1128(b) of the Act.

8. The I.G. is authorized to exclude any individual or entity, pursuant to section 1128(b)(3) of the Act as in effect prior to August 21, 1996, based upon conviction under federal or State law for a criminal offense occurring prior to August 21, 1996, and related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. The term of exclusion will be for a period of three years, in the absence of aggravating or mitigating factors that would support an exclusion of more or less than three years. 42 C.F.R. � 1001.401(c)(1).

9. On July 31, 1998, the I.G. notified Petitioner of her exclusion from participation in the Medicare, Medicaid, and all federal health care programs, pursuant to section 1128(b)(3) of the Act. I.G. Ex. 1.

10.The I.G. has not alleged or established the presence of any aggravating factors under 42 C.F.R. � 1001.401(c)(2).

11. Petitioner has alleged, but not established, the presence of any mitigating factors under 42 C.F.R. � 1001.401(c)(3).

12. The I.G. properly excluded Petitioner from participation in the Medicare and Medicaid programs for a period of three years, pursuant to section 1128(b)(3) of the Act, as amended by the MMPPPA, and 42 C.F.R. � 1001.401(c)(1).

13. The I.G.'s determination to exclude Petitioner for a period of three years is reasonable.

DISCUSSION

Based upon my review of the record, Petitioner does not dispute that she has been convicted of a criminal offense, nor does she dispute that her felony conviction relates to the distribution of a controlled substance. Accordingly, I find that Petitioner has been "convicted," as the term is defined by section 1128(i)(3) of the Act.

To justify an exclusion under section 1128(b)(3) of the Act, the I.G. must prove that the individual being excluded has been convicted of a criminal offense and that the offense involves the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. I find that, for purposes of 42 C.F.R. � 1001.401(b), the I.G. properly applied the definition of "controlled substance" that applied to the law forming the basis for Petitioner's conviction. In this case, the law forming the basis for Petitioner's conviction is 21 U.S.C. � 841(a)(1).

As part of her defense, Petitioner asserts that the I.G. was not specific as to the provision of the statute relied upon for her exclusion. What is clear is that the I.G. did not exclude Petitioner under the provisions enacted by the HIPAA, effective August 21, 1996. Indeed, my review of the relevant statutory provisions reveals that, had the I.G. excluded Petitioner based upon section 1128 of the Act as amended by HIPAA, she would have been subject to a mandatory exclusion of five years, as she had been convicted in federal court of a felony related to a controlled substance. See section 1128(a)(4) of the Act, Pub. L. 104-191, � 211(b)(1), adding paragraph (a)(4), effective January 1, 1997; section 1128(c)(3)(B) of the Act; I.G. Exs. 5-6.

In this case, the record reflects that Petitioner committed the actions related to her offense between the dates of August 1, 1996 and August 13, 1996. I.G. Exs. 3, 5. Therefore, the applicable statutory authority is section 1128(b)(3) of the Act, which Congress enacted in 1987 as part of the MMPPPA, not the provisions of section 1128 of the Act, as amended in 1996. See Arie Oren, M.D., DAB CR490 (1997) at 12; see also, Florence Peters, D.P.M., DAB CR582 (1999).

Petitioner also asserts that it is unfair that her exclusion did not commence at the date of her criminal conviction. I find no merit in this claim. Exclusions are remedial in nature and not punitive. Manocchio v. Kusserow, 961 F.2d 1539 (11th Cir. 1992). The I.G. has the discretion to determine when to impose an exclusion. Lawrence Wynn, M.D., DAB CR344 (1994). Neither the statute nor the regulations set any specific deadline for the I.G. to act. See Chander Kachoria, DAB No. 1380 (1993). In Kachoria, there was a three-year delay between the date of the I.G.'s initial investigation and the date when the petitioner received the exclusion letter. The administrative law judge (ALJ) ruled, however, that neither the statute nor the regulations set any specific deadline for the I.G. to act once an individual had been convicted.

Contrary to Petitioner's implied assertions, the I.G. lacks the authority to impose an exclusion retroactive to the date of a conviction. Nor does an ALJ have the authority to change the effective date of an exclusion so that it runs concurrently with a probationary period or to require the I.G. to notify an individual of an exclusion by a certain date. Stanley Karpo, D.P.M., DAB CR356 (1995) at 17; Kachoria, supra; Wynn, supra; Samuel W. Chang, M.D., DAB No. 1198 (1990). An exclusion must take effect 20 days from the date of the I.G.'s notice of exclusion. Section 1128(c) of the Act; 42 C.F.R. � 1001.2002. Therefore, the I.G. correctly excluded Petitioner effective 20 days from the date of the July 31, 1998 notice letter, not 20 days after her conviction.

Finally, Petitioner asserts that the length of her exclusion is too harsh, especially as her nursing license has been conditionally reinstated by State authorities. The changed status of Petitioner's nursing license, however, is not sufficient to establish one of the mitigating factors within the scope of 42 C.F.R. � 1001.401(c)(3). Therefore, Petitioner has failed to make any showing that might warrant a reduction in her term of exclusion.

I find that the I.G. was authorized to exclude Petitioner for a period of three years, pursuant to section 1128(b)(3) of the Act, as amended by the MMPPPA, and 42 C.F.R. � 1001.401(c)(1). Petitioner has not shown that any of the mitigating factors enumerated in the statute or regulations are present in her case.

Accordingly, I find that the three-year exclusion is reasonable and I sustain it.

1. In this decision, I use the term "Medicaid" to include any State health care program which receives federal funds as defined by section 1128(h) of the Act.

2. The MMPPPA provisions apply to exclusions of individuals or entities convicted (under federal or State law) of felony or misdemeanor criminal offenses which occurred prior to August 21, 1996, and are related to controlled substances. For offenses committed on or after August 21, 1996, the provisions of section 1128 of the Act, as amended by the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. 104-191, apply.

3. Section 1001.401 was amended, effective October 2, 1998. See 63 Fed. Reg. 46,687 (1998). As the I.G. excluded Petitioner prior to the effective date of the amendment to this section, all references herein are to the regulation in effect prior to October 2, 1998.

4. The language of 42 C.F.R. � 1001.401 states that aggravating and mitigating factors are contained in paragraphs (b)(2) and (b)(3). Section 1001.401(b), however, contains no paragraphs (b)(2) and (b)(3). The factors for aggravating and mitigating factors are set forth in paragraphs (c)(2) and (c)(3) of 42 C.F.R. � 1001.401.