SUBJECT:

Stephen Douglas Scotti, M.D.,

Petitioner,

The Inspector General

Docket No.C-02-594
Decision No. CR973

DECISION

I sustain the Inspector General's (I.G.) determination, made pursuant to section 1128(b)(4) of the Social Security Act (Act), to exclude Stephen Douglas Scotti, Petitioner, from participation in Medicare, Medicaid, and other federally funded health care programs.

I. Background

The critical facts of this case are not in dispute. Petitioner, a physician licensed in the State of California, was a Lieutenant Colonel in the United States Air Force and Chief of Radiology at David Grant Medical Center at Travis Air Force Base in California. In April 2001, he was discharged from the Air Force following a court martial for wrongfully using Lysergic Acid Diethylamide (LSD), failing to report for duty, and disorderly conduct. I.G. exhibits (Exs.) 1, 2, 3, 4; P. Exs. 1, 3, 5. He subsequently advised the Medical Board of California of his substance abuse problem, court martial, and discharge. P. Ex. 2, at 11. On August 3, 2000, the California Medical Board charged him with unlawful use of controlled substances, having a mental or physical disorder, gross negligence, and conviction of a crime, and sought to suspend his license. P. Ex. 2. By stipulation dated August 16, 2001, Petitioner acknowledged that a factual basis for the charges against him could be established at hearing, and agreed to surrender his license. P. Ex. 2.

By letter dated March 29, 2002, the I.G. notified Petitioner that, pursuant to section 1128(b)(4) of the Act, he was being excluded from participation in Medicare, Medicaid, and all other federally funded health care programs because his license to practice medicine in the State of California had been "revoked, suspended, or otherwise lost" or "was surrendered while a formal disciplinary hearing was pending" before the California Medical Board "for reasons bearing on his professional competence, professional performance, or financial integrity." The letter advised that program exclusion remains in effect as long as Petitioner's California license is revoked, suspended, or otherwise lost. P. Ex. 8; I.G. Ex. 8.

Petitioner requested a hearing and the case was assigned to me. I held a prehearing conference by telephone on July 9, 2002. Because Petitioner had filed a comprehensive hearing request that set forth his position in detail, and the I.G. did not dispute any of his factual assertions, the parties tentatively agreed that the matter could be decided based on written submissions. However, because he had not yet received the I.G.'s submissions, Petitioner reserved the right to request an in-person hearing. The matter has now been fully briefed, no material facts are in dispute, and Petitioner has not requested an in-person hearing.

Both parties submitted briefs (I.G. and P. Br.) accompanied by documentary evidence. The I.G. filed eight exhibits (I.G. Exs. 1-8) as part of her submission, and, in the absence of any objection, I admit I.G. Exs. 1-8.

Petitioner filed ten exhibits (P. Exs. 1-10). On the grounds of relevance, the I.G. objected to the admission of six of them: P. Ex. 3 (a memorandum from one of Petitioner's defense attorneys discussing Petitioner's March 2000 court martial); P. Ex. 4 (an Air Force memorandum regarding its review of Dr. Scotti's performance); P. Ex. 6 (a letter from an Assistant Attorney General for the State of Vermont discussing that state's decision to allow Petitioner a conditional license); P. Ex. 7 (Vermont Cessation of Practice Agreement between Petitioner and the State of Vermont); P. Ex. 9 (a Vermont newspaper article discussing Vermont's decision to allow Petitioner a conditional license); and P. Ex. 10 (a letter from the Health Professionals Services Program regarding Petitioner's participation in its program). In the absence of any objection, I admit P. Exs. 1, 2, 5, and 8. Notwithstanding the I.G.'s objections, I admit P. Ex. 3 and P. Ex. 4. I do not find these documents wholly irrelevant to the issue of whether Petitioner's license suspension related to his professional performance. I decline to admit P. Exs. 6, 7, 9, and 10. As discussed below, I agree with the I.G. that actions taken by the State of Vermont, and Petitioner's compliance with Vermont's licensing program are not relevant to this inquiry.

II. Issue

The sole issue before me is whether, based on the loss of Petitioner's California physicians license, the I.G. appropriately excluded him from participation in Medicare, Medicaid, and other federally funded health care programs.

III. 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 lettered or numbered heading. I discuss each Finding in detail.

A. Because Petitioner surrendered his medical license while a formal disciplinary proceeding was pending before the California licensing authority, and the proceeding concerned Petitioner's professional competence or performance, the I.G. may appropriately exclude him from participation in Medicare, Medicaid, and other federally funded health care programs.

1. Petitioner's license was "surrendered" within the meaning of the Act.

The statute authorizes the Secretary to exclude from participation in any federal health care program ⁽¹⁾ an individual who surrendered his license to provide health care "while a formal disciplinary proceeding was pending before [any state licensing authority] and the proceeding concerned the individual's professional competence, professional performance, or financial integrity." Act, section 1128(b)(4)(B). Petitioner concedes the pendency of a disciplinary proceeding before the California licensing authority, and he concedes that he surrendered his California medical license while that proceeding was pending. He nevertheless argues that his action does not equate to "surrender" within the meaning of the Act.

Petitioner's argument limits the statute's reach to the physician who loses his license in one jurisdiction, subsequently relocates, and obtains a new license in the new location, probably without disclosing his prior license suspension/revocation. Petitioner distinguishes his own situation, because, even though he lost his California license, he consistently maintained a medical license. He points out that he was licensed in both California and Vermont, fully reported his situation to both states, and was granted a conditional license in Vermont. Hearing Request 11-12. Without denying the charges against him, he asserts that, out of economic necessity, he decided to limit himself to one jurisdiction in attempting to maintain/regain his license. He characterizes as "draconian" the requirement that he regain his California medical license in order to participate in federal health care programs, since he does not intend to practice medicine in California.

While I understand that to an individual in Petitioner's position this result may seem unduly harsh, his interpretation finds no support in the unambiguous language of the statute and regulation. The statute applies to any practitioner who loses a medical license for reasons relating to professional competence and performance without regard to whether he remains licensed in another jurisdiction. Indeed, at one time, the statute allowed, and the regulations carved out, an exception for those in Petitioner's position. The 1992 revisions to 42 C.F.R. � 1001.501 specifically allowed for reinstatement in cases where another state, fully apprised of the circumstances surrounding the license loss, nevertheless grants the practitioner a new license or takes no significant adverse action as to a current license. 57 FR 3298, 3304-3305. Section 1001.501(c) of 42 C.F.R. authorized the I.G. to consider a request for early reinstatement if the individual "fully and accurately discloses the circumstances" of his license suspension/revocation to the licensing authority of a different state, and that state grants a new license or "takes no significant adverse action as to a currently held license . . . ."

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Public Law 104-191) mandated changes. Under its provisions, effective January 1, 1997, the length of an exclusion under � 1128(b)(4)

shall not be less than the period during which the individual's or entity's license to provide health care is revoked, suspended, or surrendered, or the individual or entity is excluded or suspended from a Federal or State health care program.

Act, section 1128(b)(4); HIPAA � 212. The regulations were amended to conform to the statutory changes. Subpart (c) to 42 C.F.R. � 1001.501 was eliminated, so, without exception, the exclusion must be imposed for a period "not less than the period during which the individual's . . . license was revoked or suspended." 63 FR 46676, 46688.

Petitioner cites Baker v. Sullivan, 1990 WL 179634 (N.D.N.Y.) to support his claim that he has not "surrendered" his license within the meaning of the Act. Obviously, Petitioner's reliance on that case is misplaced. First, the case was withdrawn and vacated, so it has no legal effect. 1990 WL 210792 (N.D.N.Y.). Second, the 1990 case predates HIPAA. Finally, even if the Baker court's reasoning were somehow applicable here - and I specifically hold that it is not - the court emphasized that Dr. Baker did not surrender his license, but allowed it to "go inactive" during the pendency of a disciplinary proceeding. ("In fact the [State Medical] Board has unequivocally stated that 'Dr. Baker has not surrendered his license to practice medicine in the State of Florida . . . .'.") The court then reviewed the legislative history of the statute then in effect and concluded that "[t]he legislative history does not indicate that a physician who permits his license to go inactive during the pendency of a disciplinary proceeding has in fact surrendered such a license." Baker at 11. The Baker Court also pointed out that when Dr. Baker allowed his license to go inactive, the State of Florida discontinued its investigation. In contrast here, the State of California completed its investigation, the Petitioner acknowledged his wrongdoing, and surrendered his license. ⁽²⁾

2. The pending disciplinary proceeding concerned Petitioner's professional competence or performance.

Where, as here, the exclusion is based on the existence of a determination made by another governmental agency, the basis for the underlying determination is not reviewable. 42 C.F.R. � 1001.2007(d). Roy Cosby Stark, DAB No. 1746 (2000). I am required to determine the reasons for the State Board's actions, but not whether its reasoning was valid. Nor do I need to find actual harm to program beneficiaries. The drafters of the regulations specifically rejected the suggestion that, prior to imposing a permissive exclusion, the I.G. should have to prove that allowing continued program participation would harm beneficiaries. 57 FR 3298, 3303 ("it is not necessary for the OIG to prove that allowing continued program participation would harm beneficiaries. . . ."). Tracey Gates, R.N., DAB No. 1768, at 6 (2001).

Petitioner characterizes the California State Board action as "a simple accusation that he was a doctor with ongoing substance abuse and mental health problems" that is "insufficient to bring him within the scope of the Social Security Act." Hearing Request at 9. In fact, review of the State Medical Board record easily establishes a direct nexus between the proceedings and Petitioner's professional competence or performance. In surrendering his license, Petitioner agreed that the State "could establish a factual basis for the charges in the Accusation." P. Ex. 2, at 3. He also agreed that his medical license "is subject to discipline pursuant to sections 2234 and 2236(a) of the [California] Business and Professions Code." P. Ex. 2, at 4.

Section 2234 requires the Board's Division of Medical Quality to take action against any licensee charged with "unprofessional conduct." "Unprofessional conduct" includes:

(a) Violating or attempting to violate, directly or indirectly, or assisting in or abetting the violation of, or conspiring to violate, any provision of this chapter.

(b) Gross negligence.

Section 2236(a) of the code provides that the conviction of any offense "substantially related to the qualifications, functions, or duties of a physician and surgeon" constitutes unprofessional conduct under the Medical Practice Act. See P. Ex. 2, at 9-10. Thus, based solely on the Stipulation for Surrender of Certificate, and without looking at the specifics of the Accusation, the record establishes that Petitioner's court martial conviction and subsequent loss of license "substantially related to the qualifications, functions, or duties of a physician."

Moreover, review of the Accusation establishes that each of the charges against Petitioner ultimately related to his professional competence or performance. From March through June 1999, he bought 300 LSD tablets, which he ingested on weekends. On the weekend of June 12, 1999, he took LSD; he reported to work at the medical center the following Monday and worked through Thursday, June 17, 1999, calling in sick on Friday. Concerned about his welfare, his commanding officer sent staff to his residence who, because of his bizarre behavior took him to the emergency room for psychiatric evaluation. He tested positive for LSD, and was admitted to the psychiatric hospital. P. Ex. 2, at 11-12. Accepting Petitioner's statement that he last ingested LSD the previous weekend, and the Board's finding that he tested positive for the drug on Friday, leads to the inescapable inference that he was under the influence of the drug while performing his duties Monday through Thursday. As the first cause for discipline, the Accusation concludes:

15. [Petitioner's] conduct . . . constitutes unprofessional conduct . . . in that he administered a Schedule I controlled substance, to wit, LSD, to himself and in fact was in attendance on patients while under the influence of same . . . .

(Emphasis added) P. Ex. 2, at 13.

As the second cause for discipline, mental or physical disorder, the Accusation refers to the findings of two examining psychiatrists, and concludes the Petitioner's "ability to practice medicine is impaired due to mental illness or physical illness affecting competency . . . ." Id. at 15. As the third cause for discipline, gross negligence, the Accusation concludes that Petitioner's conduct in working as a physician under the influence of LSD "constitutes an extreme departure from the standard practice of medicine." Id. Finally, the fourth cause for discipline, conviction of a crime, refers to Petitioner's court martial and convictions for wrongful use of a controlled substance, failure to report for duty, and disorderly conduct, and concludes that his conviction "is substantially related to the qualifications, functions, or duties of a physician and surgeon."

Thus the State Board connected each cause for discipline directly to Petitioner's professional competence or performance.

3. The exclusion period may not be less than the period during which Petitioner's medical license is revoked.

As discussed above, for a person excluded under section 1128(b)(4), the statute requires that the period of exclusion "shall not be less than the period during which the individual's or entity's license . . . is . . . revoked." Act, section 1128(c)(3)(E). I therefore have no authority to shorten the length of the exclusion period. Tracey Gates at 9.

IV. Conclusion

For the reasons stated above, I conclude that the revocation of Petitioner's medical license related to his professional competence and professional performance. I therefore affirm the I.G.'s determination and find that the I.G. had a basis to exclude Petitioner from participation in Medicare, Medicaid, and other federal health care programs for an indefinite period pursuant to section 1128(b)(4) of the Social Security Act.

Carolyn Cozad Hughes

Administrative Law Judge

1. The Act defines a "Federal health care program" in this context to mean

"(1) any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government . . . ; or (2) any State health care program, as defined in section 1128(h)." Act, section 1128B(f); see Act, section 1128(b).

2. I therefore need not address the question of whether the practitioner who allows his license to become inactive during the pendency of an investigation falls within the scope of the current statute, section 1128(b)(4).