SUBJECT:

Ivy M. Muhar, M.D.,

Petitioner,

The Inspector General

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Ivy M. Muhar, M.D., (Petitioner) from participation in the Medicare, Medicaid, and all federal health care programs (Medicare and Medicaid) for a period of three years. I find that the I.G. is authorized to exclude Petitioner pursuant to section 1128(b)(3) of the Social Security Act (Act), and that the three-year period of exclusion imposed by the I.G. against Petitioner falls within a reasonable range.

I. BACKGROUND

By letter dated December 29, 2000, the I.G. notified Petitioner that she was being excluded from participation in Medicare and Medicaid for three years due to her conviction in the Court of Common Pleas for Lycoming County, Pennsylvania (Pennsylvania court), of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. The I.G. advised Petitioner that the exclusion of individuals convicted of such offenses is authorized by section 1128(b)(3) of the Act. By letter dated February 26, 2001, Petitioner requested a hearing before an administrative law judge. The case was assigned to me for a hearing and decision.

I convened a telephone prehearing conference on March 22, 2001. During the conference, Petitioner's counsel stated that she had not been "convicted," as that term is defined in the Act, which I determined to be a legal issue that I could decide on the written record in lieu of an in-person evidentiary hearing. With the consent of the parties, I set a briefing schedule for the case. The I.G. submitted a brief in support of exclusion (I.G. Br.) accompanied by six exhibits (I.G. Exs. 1 - 6). Petitioner submitted a response (P. Br.) accompanied by four exhibits (P. Exs. 1 - 4).⁽¹⁾ The I.G. submitted a reply brief (I.G. Reply Br.). In the absence of objection, I accept I.G. Exs. 1 - 6 and P. Exs. 1 - 4 into evidence.

II. UNCONTESTED FACTS

Petitioner does not contest the following facts as stated by the I.G. (I.G. Br. at 2 - 3).⁽²⁾ P. Br. at 1.

1. On June 2, 2000, the Commonwealth of Pennsylvania filed a criminal complaint against Petitioner, Ivy M. Muhar, M.D., a physician then residing in the Commonwealth of Pennsylvania and licensed to practice medicine and surgery in Pennsylvania. The criminal complaint accused her of violating sections 780-113(a)(21) and 780-113(a)(16) of Title 35 of the Pennsylvania Controlled Substance, Drug, Device and Cosmetic Act. See I.G. Ex. 1.

2. The complaint states that Petitioner "refused or failed to make, keep or furnish any record, notification, order form, statement, invoice or information required under the act" in violation of section 780-113(a)(21) of Title 35 of the Pennsylvania Controlled Substance, Drug, Device and Cosmetic Act. See I.G. Ex. 1; 35 Pa. Cons. Stat. Ann. � 780-113(a)(21).

3. The complaint also accuses Petitioner of "knowingly or intentionally possessing a controlled or counterfeit substance by a person not registered under this act, or a practitioner not registered or licensed by the appropriate State Board, unless the substance was obtained directly from, or pursuant to, a valid prescription order or order of a practitioner, or except as otherwise authorized by this act." See I.G. Ex. 1; 35 Pa. Cons. Stat. Ann. � 780-113(a)(16).

4. The complaint states that Petitioner prescribed a Schedule III Controlled Substance, Hydrocodone, in the name of her husband, Stephen J. Marrocco, and that these prescriptions were received by and solely used by Petitioner. See I.G. Ex. 1.

5. Ninety-one prescriptions were prescribed in this manner, resulting in the dispensing of 5,140 dosage units from May 8, 1998 to December 13, 1999. See I.G. Ex. 1.

6. No patient records were kept regarding these prescriptions as required by State law.⁽³⁾ See I.G. Ex. 1.

7. Petitioner was charged, by an information filed on June 12, 2000, in the Court of Common Pleas, Lycoming, Pennsylvania, Criminal Division, with one count of failure to keep records and one count of possession of a controlled substance. See I.G. Ex. 2.

8. Petitioner pled guilty to both counts of the criminal information. See I.G. Exs. 3, 4.

9. On June 12, 2000, Petitioner was sentenced to "probation without verdict" for a period of one year and ordered to pay a $500 fine and related costs. See I.G. Ex. 4.

10. On September 21, 2000, the Commonwealth of Pennsylvania's Bureau of Professional and Occupational Affairs notified Petitioner of the automatic one-year suspension of her license to practice medicine. See I.G. Ex. 5.

11. By letter dated December 29, 2000, Petitioner was notified by the I.G. of her three-year exclusion from participation in Medicare, Medicaid and all federal health care programs, pursuant to section 1128(b)(3) of the Act. See I.G. Ex. 6.

III. PETITIONER'S CONTENTIONS

Petitioner disputes the I.G.'s fact number 12, which states, "Petitioner's exclusion from participation in Medicare, Medicaid and all Federal health care programs, pursuant to section 1128(b)(3), is legally supportable and appropriate."

Specifically, Petitioner asserts that her criminal charges in Pennsylvania were disposed of in accordance with 35 Pa. Cons. Stat. Ann. � 780-117 (section 17), Probation Without Verdict, which should be applied here. Petitioner notes that the statute states, in relevant part, that: "Discharge and dismissal shall be without adjudication of guilt and shall not constitute a conviction for any purpose whatever. . . ." Petitioner notes a second provision of the statute, 35 Pa. Cons. Stat. Ann. � 780-119 (section 19), Expunging Criminal Records, which states, in relevant part, that:

(B) Any expunged record of arrest or prosecution shall not hereafter be regarded as an arrest or prosecution for the purpose of any statute or regulation or license or questionnaire or any civil or criminal proceeding or any other public or private purpose. No person shall be permitted to learn of an expunged arrest or prosecution, or of the expunction, either directly or indirectly. Any person, except the individual arrested or prosecuted, who divulges such information in violation of this subsection shall be guilty of a summary offense and shall, upon conviction thereof, be punished by imprisonment not exceeding thirty (30) days or a fine not exceeding five hundred dollars ($500) or both.

Petitioner argues that she pled to misdemeanor charges and that she accepted a plea agreement in exchange for a section 17 disposition, as set forth above. Petitioner asserts that an individual granted a section 17 disposition under this statute is entitled to a discharge and dismissal of charges "without adjudication of guilt and [it] shall not constitute a conviction for any purpose whatever." 35 Pa. Cons. Stat. Ann. � 780-117(3). Petitioner asserts that under section 19, as set forth above, Petitioner's conviction is to be expunged and it is criminal under Pennsylvania law to use the expunged conviction in a civil proceeding such as the I.G. exclusion.

Petitioner accepts that the federal government has the right to establish eligibility criteria for providers in Medicare and Medicaid. However, Petitioner argues that the federal government's power to do so is not unlimited and is subject to Constitutional due process. Petitioner asserts that using a State conviction as the sole basis for an exclusion must have some rational relationship to the proceedings that are the basis of the I.G.'s action.

Here, Petitioner argues that she was not "convicted" as the term is defined at section 1128(i) of the Act. Instead, the Pennsylvania court deferred adjudication in Petitioner's case and placed her on probation. Petitioner argues that on April 17, 2001, the Pennsylvania court dismissed the charges against Petitioner and ordered that the records of Petitioner's case be expunged. P. Ex. 1. Thus, Petitioner argues that the criminal proceedings are a nullity, as if they had never occurred, and that the I.G. could not exclude her because the sole basis for her exclusion is a conviction which has been expunged.

Petitioner asserts that this case is distinguishable from the case of Conrad J. Sarnecki, Jr., D.O., DAB CR722 (2000), a case where the petitioner was excluded under section 1128(a)(4) for a minimum mandatory period based on a felony conviction under the same statute as Petitioner. Dr. Sarnecki appealed his exclusion and his exclusion was affirmed by the administrative law judge. Petitioner argues that her case is different, because his case, although a section 17 adjudication, involved a felony rather than a misdemeanor and did not cite section 19 and, thus, Dr. Sarnecki's exclusion was not expunged as was Petitioner's.

Petitioner also asserts that the regulations do not meet a test of fundamental fairness, because they do not recognize as a mitigating factor conduct which does not involve fraud, financial gain, or injury to a patient or other third party. Petitioner asserts that she is trustworthy to participate in Medicare and Medicaid because her personal addiction, for which she has successfully sought treatment, should not be used as a basis for exclusion.

IV. APPLICABLE LAW

Section 1128(b)(3) of the Act allows the Secretary of Health and Human Services (Secretary) to exclude from participation in Medicare and Medicaid an individual who has been convicted under federal or State law of a misdemeanor criminal offense "relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance."

The Secretary has delegated to the I.G. the authority to impose an exclusion pursuant to section 1128(b)(3) of the Act. 42 C.F.R. � 1001.401(a). The regulations specify a benchmark exclusion period of three years, which may be lengthened or shortened based on the presence of specific aggravating or mitigating factors listed in the regulations. 42 C.F.R. � 1001.401(c).

V. ISSUES, FINDINGS OF FACTS AND CONCLUSIONS OF LAW

A. Issues

The issues in this case are:

1. Whether Petitioner was "convicted" of an offense as described in section 1128(b)(3) of the Act authorizing the I.G. to exclude her.

2. Whether the exclusion imposed by the I.G. falls within a reasonable range of exclusion periods.

B. Findings of Fact and Conclusions of Law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding, below, in italics, as a separately numbered heading. I discuss each finding in detail.

1. Petitioner was convicted of a misdemeanor criminal offense relating to the unlawful prescription of a controlled substance, which under section 1128(b)(3) of the Act gives the I.G. the authority to impose a period of exclusion against her.

Petitioner does not dispute that, if the Pennsylvania court's action constituted a conviction, that conviction, for unlawfully prescribing a controlled substance and failing to keep a record of the prescription and possession of a controlled substance, would be a basis for the I.G. to impose a period of exclusion against her under the Act. Petitioner argues only that the expungement of her conviction by the Pennsylvania court means that no conviction ever existed and that the absence of a conviction means that the I.G. is without a basis or the authority to exclude her. I disagree.

Section 1128(i) of the Act states that an individual will be considered to have been "convicted" of a criminal offense for the purposes of exclusion under section 1128(b) if "the individual . . . has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld." Act, section 1128(i)(4).

In amending the Act in 1986, Congress was particularly concerned that the exclusion remedy should apply to "first offender" or deferred adjudication dispositions:

It is the Committee's understanding that States are increasingly opting to dispose of criminal cases through such programs, where judgment of conviction is withheld. The Committee is informed that State first offender or deferred adjudication programs typically consist of a procedure whereby an individual pleads guilty or nolo contendere to criminal charges, but the court withholds the actual entry of a judgment of conviction against them and instead imposes certain conditions of probation, such as community service or a given number of months of good behavior. If the individual successfully complies with these terms, the case is dismissed entirely without a judgment of conviction ever being entered.

These criminal dispositions may well represent rational criminal justice policy. The Committee is concerned, however, that individuals who have entered guilty or nolo [contendere] pleas to criminal charges of defrauding the Medicaid program are not subject to exclusion from either Medicare or Medicaid. These individuals have admitted that they engaged in criminal abuse against a Federal health program and, in the view of the Committee, they should be subject to exclusion.

Lily V. Nevrekar, M.D., DAB CR319 (1994) (quoting H.R. Rep. No. 727, 99^th Cong., 2d Sess. 75 (1986), reprinted in 1986 U.S.C.C.A.N. 3607, 3665).

Petitioner argues that the expungement of her conviction under section 19 removes the basis for her exclusion. However, the congressional committee amending the provisions of the Act in 1986 stated that the committee intended to include all instances of conviction which are removed from the criminal record of an individual for any reasons other than the vacating of the conviction itself, e.g., a conviction which is vacated on appeal. See id. In this case, Petitioner pled guilty, a conviction under section 1128(i)(3) of the Act, her plea was accepted by the Pennsylvania court, and she received a deferred adjudication under section 17. This is precisely the situation envisioned by section 1128(i)(4) of the Act. The fact that the Pennsylvania court set aside her plea and dismissed the charges against her does not affect her conviction for the purposes of the Act nor does it prohibit the I.G. from excluding her after her record was expunged following the conclusion of her deferred adjudication. See Conrad J. Sarnecki, Jr., D.O., DAB CR722.⁽⁴⁾

2. Petitioner's three-year exclusion falls within a reasonable range of exclusion periods.

The regulations state, at 42 C.F.R. � 1001.401(c)(1), that in the absence of the aggravating or mitigating factors specified in 42 C.F.R. � 1001.401(c)(2) or 1001.401(c)(3), a three-year exclusion will be imposed for misdemeanor convictions relating to the unlawful manufacture, distribution, prescription or dispensing of a controlled substance. The I.G. has not asserted that aggravating factors exist in this case and Petitioner has not proved that any mitigating factors as specified in the regulations exist. Instead, Petitioner has asserted that the regulations are unfair because they do not recognize as mitigating factors situations in which a petitioner's conduct does not involve fraud or financial gain or injury to a patient or third party or where an individual has successfully been treated for addiction.

I am unable to consider Petitioner's arguments regarding mitigating factors because I am bound by the regulations which limit the type of mitigating factors I can consider. The I.G. has excluded Petitioner for the minimum period specified in the regulations. As it is for the minimum period specified in the regulations, in the absence of specified mitigating or aggravating factors, I must find that Petitioner's exclusion is within a reasonable range of exclusion periods.

Marion T. Silva

Chief Administrative Law Judge

1. P. Ex. 4 contains three attachments, which Petitioner has titled Exhibits 1 - 3.

2. The following paragraphs 1 - 11 are direct quotes from the I.G.'s brief.

3. Title 35, sec. 780-112(b) requires that every practitioner licensed by law to administer, dispense, or distribute controlled substances shall keep a record of all such substances administered, dispensed, or distributed. These records are required to show the amount administered, dispensed, or distributed, the date, the name and address of the patient to whom such substances are dispensed or distributed. See 35 Pa. Cons. Stat. Ann. � 780-112(b); I.G. Ex. 1 at 4.

4. Petitioner attempts to distinguish this case from Sarnecki because the administrative law judge's decision in Sarnecki did not expressly mention section 19. However, section 19 does not distinguish between misdemeanor and felony convictions and Petitioner was prosecuted under the same statute that was the subject of the Sarnecki exclusion.