DEPARTMENT OF HEALTH AND HUMAN SERVICES
DEPARTMENTAL APPEALS BOARD
In the Case of
Carlos E. Zamora, M.D.,
Petitioner
vs.
The Inspector General
Date: September 25, 1989
Appellate Docket No. 89-100
Decision No. 1104
FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE
DECISION
The Petitioner, Dr. Carlos E. Zamora, appealed the decision of
Administrative Law Judge (ALJ) Steven T. Kessel affirming the
determination of the Inspector General (the I.G.) to exclude the
Petitioner from participating in the Medicare program (Title XVIII of
the Social Security Act, (Act)) for five years and to direct that he be
excluded from participating in State health care programs (including
Medicaid, Title XIX of the Act) for the same length of time.
Criminal proceedings were instituted against the Petitioner in a Texas
state court based on his alleged submission of false Medicaid claims.
The petitioner pled nolo contendere to the charges against him and was
placed on probation. After successfully completing his probation, the
Petitioner was allowed to withdraw his plea and the charges against him
were dismissed. Consequently, under Texas law, no conviction existed
under those circumstances. However, the I.G. found that, under the
applicable federal statute, the Petitioner had been convicted of a
criminal offense and excluded him from participation in Medicare.
Before Judge Kessel, the Petitioner relied on state law to argue that
since he had not been convicted of a criminal offense, there was no
basis for his exclusion from the Medicare program. Judge Kessel
rejected the Petitioner's argument and sustained the exclusion. On
appeal to this Board, the Petitioner relied on his arguments before the
ALJ as well as those made in the Petitioner's motion for a preliminary
injunction to enjoin his suspension from Medicare. See Zamora v. Bowen,
Civil Action No. A-88-CA-987 (W.D. Texas 1988); I.G. Exhibit (Ex.) D.
Additionally, the Petitioner raised a new argument in which he alleged
that the I.G.'s decision to exclude him was contrary to the applicable
program regulations. Petitioner's Brief (Br.), pp. 1-2.
Based on the following analysis, we conclude that the ALJ's decision to
exclude Dr. Zamora was correct. Accordingly, we affirm Judge Kessel's
decision in its entirety.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Judge Kessel made the following findings and conclusions:
1. Petitioner is a physician who has practiced in Texas.
2. In 1988, the State of Texas indicted Petitioner for
tampering with a governmental record for submitting false
Medicaid claims.
3. On May 18, 1988, Petitioner entered a nolo contendere plea
in Texas state court to a misdemeanor offense of tampering with
a government[al] record. In accepting the plea, the Court found
that the evidence substantiated the Petitioner's guilt of
tampering with a governmental record.
4. The Court also found that the ends of justice and the best
interests of both society and the Petitioner would be served by
deferring further proceedings without entering an adjudication
of guilt at that time, and by placing the Petitioner on
probation.
5. On November 2, 1988, an order was entered in Texas state
court, pursuant to Art. 42.12, Sec. 7 of the Texas Code of
Criminal Procedure, modifying Petitioner's period of probation
to the time served from May 18, 1988, discharging Petitioner
from probation, withdrawing Petitioner's nolo contendere plea,
and dismissing the prosecution against him.
6. On October 28, 1988, the I.G. advised Petitioner that he was
excluding Petitioner from participating in the Medicare program,
and was directing that Petitioner be excluded from participating
in State health care programs, for five years. The exclusions
were based on the I.G.'s determination that Petitioner had been
convicted of a criminal offense related to the delivery of an
item or service under the Medicaid program.
7. Petitioner's nolo contendere plea in Texas state court
constitutes a "conviction" within the meaning of 42 U.S.C.
1320a-7(i), notwithstanding the provisions of Article 42.12 of
the Texas Code of Criminal Procedure, or the terms of the
November 2, 1988 Order entered in Texas state court in
Petitioner's case.
8. The actions taken by the I.G., excluding Petitioner from
participating in the Medicare program and directing his
exclusion from participating in State health care programs, were
mandated by 42 U.S.C. 1320a-7(a)(1).
Decision No. C-74, pp. 4-5 (citations to that record omitted).
PROCEDURAL BACKGROUND
During its February 1988 term, the Grand Jury for Hays County, Texas,
indicted the Petitioner for tampering with a governmental record, by
submitting false Medicaid claims. On May 18, 1988 the petitioner
entered a plea of nolo contendere to this charge in the 22nd Judicial
District Court of Hays County. That Court found that the evidence
before it substantiated Dr. Zamora's guilt and accepted the plea.
However, the Court deferred adjudication and placed Dr. Zamora on
probation. See State of Texas v. Carlos Zamora, No. CR 88-74; I.G. Ex.
A. On November 2, 1988 the Court granted the Petitioner's motion for
termination of probation (reduced to time served), dismissed the charges
against Dr. Zamora, and allowed him to withdraw his plea. I.G. Ex. B.
On October 28, 1988 the I.G. notified the Petitioner that, due to his
program-related conviction, he would be suspended from participation in
Medicare on November 17, 1988 pursuant to subsection 1128(a) of the Act.
On November 16, the Petitioner unsuccessfully sought to enjoin the I.G.
from excluding the Petitioner from Medicare. See Zamora v. Bowen,
supra.
The Petitioner then timely requested a hearing as to the exclusion
before an ALJ. The basis of that appeal was that since no judgment of
conviction was entered by the state court, then, under Texas law, the
Petitioner had not been convicted. Accordingly, there was no basis for
his exclusion from Medicare. On March 30, 1989, the ALJ issued his
decision in which he found that the Petitioner's nolo contendere plea
was a "conviction" as defined by the Act, regardless of how that plea
was viewed by the Texas court.
The Petitioner took specific exception "to Findings of Fact and/or
Conclusions of Law Number 7 and 8" (set out above), arguing that the
ALJ's interpretation of the federal statutes and regulations relating to
exclusion from the Medicaid and Medicare programs was erroneous.
Further, the Petitioner generally contended that those findings and
conclusions represented an erroneous application of the federal statutes
and regulations to the facts of this case. Petitioner Br., p. 4.
Analysis
1. The ALJ's decision to exclude Dr. Zamora was fully supported by
the law and was, therefore, correct.
The Petitioner's argument that, since the nolo contendere plea was
vacated by a Texas Court, he had not been "convicted" for purposes
of
subsection 1128(a), ignores the plain language of the federal statute
and its underlying legislative history. There is simply no question
that under the circumstances presented here, the Petitioner cannot avoid
the exclusion. This point was driven home emphatically, both by Judge
Kessel's decision and by Judge James R. Nowlin in U.S. District Court
proceedings denying the Petitioner's Motion for a preliminary
injunction. See I.G. Ex. D.
Subsection 1128(i) of the Act defines "conviction" for purposes of
subsection 1128(a). In relevant part, that section provides that a
person or entity is considered to have been convicted of a criminal
offense--
* * *
(3) when a plea of guilty or nolo contendere by the individual
or entity has been accepted by a Federal, State or local court;
or
(4) when the individual or entity has entered into
participation in a . . . deferred adjudication . . . program
where judgment of conviction has been withheld.
Although the statutory language is clear, the corresponding legislative
history emphatically affirms that Congress intended to include a plea of
nolo contendere within the scope of the term "conviction", even though
under state law and practice no judgment of conviction is ever entered.
The Congressional committee charged with drafting the 1986 amendments to
the statute stated--
The principal criminal dispositions to which the exclusion
remedy [currently] does not apply are the "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. If the
financial integrity of Medicare and Medicaid is to be protected,
the programs must have the prerogative not to do business with
those who have pleaded to charges of criminal abuse against
them.
H.R. No. 727, 99th Cong., 2d Sess. 75, reprinted in 1986 U.S. CODE CONG.
& AD. NEWS 3607, 3665.
The committee added --
With respect to convictions that are "expunged," the Committee
intends to include all instances of conviction which are removed
from the criminal record of an individual for any reason other
than the vacating of the conviction itself, e.g., a conviction
which is vacated on appeal. Id.
Thus, it is readily apparent that Congress intended to exclude from the
Medicare program not only those individuals convicted of criminal
wrongdoing by a judge or jury, but those, such as the Petitioner, who
pleaded nolo contendere, had their pleas entered and accepted by the
court, but after serving a period of probation had the case against them
dismissed without a judgment of conviction ever being entered. Thus,
the statute focuses the I.G.'s inquiry on whether an individual (or
entity) pled guilty or nolo contendere to the criminal charges against
him, rather than allowing an individual state's ultimate disposition of
a case without entering a judgment of conviction to dictate the I.G.'s
course of action. As the ALJ pointed out, Congress determined that
parties who pled guilty (or nolo contendere) to program-related offenses
were as untrustworthy as those convicted after a trial. Decision C-74,
p. 8.
In view of the clear direction of the controlling statute, the
Petitioner's argument regarding the manner in which Texas law views
deferred adjudication is not persuasive. As the ALJ noted, the purpose
of the deferred adjudication and expungement provisions in Texas law was
to provide an individual with limited protection from further penalties
by Texas. See Decision C-74, pp. 9-10; citing Gonzalez de Lara v.
United States, 439 F.2d 1316 (5th Cir. 1971). Whatever its underlying
purpose, the state law cannot reasonably be read as altering an
individual's status under federal law.
Based on the foregoing analysis we affirm Judge Kessel's Findings and
Conclusions Numbers 7 and 8 to which the Petitioner had taken exception.
2. The Petitioner alleged that the I.G.'s exclusion of Dr. Zamora
was contrary to the applicable implementing regulations.
The Petitioner noted that in 1987 section 1128 of the Act was amended to
define the term "conviction." The Petitioner then cited 42 C.F.R.
1001.136 which provides that the I.G. "will reinstate a suspended party
whose conviction has been reversed or vacated." The Petitioner asserted
that, since the regulation had not been repealed or amended to reflect
the statutory definition, the I.G. was bound to reinstate Dr. Zamora
after the court vacated his conviction.
The I.G. asserted that since the Petitioner's argument was one which
could have and should have been raised before the ALJ, the Board should
not consider it here. Alternatively, the I.G. contended that the
Petitioner's argument is without merit. The I.G. noted (and we have
pointed out elsewhere in this decision) that the legislative history of
the statute clearly contemplated that a vacated conviction is one that
is overturned or vacated on appeal. The I.G. indicated that acceptance
of the Petitioner's plea of nolo contendere was based on the Court's
belief that the Petitioner had committed the charged offense. The
conviction was vacated on the Court's determination that the defendant
had satisfactorily fulfilled the conditions of his probation. The I.G.
distinguished this situation from a court's finding that an adjudication
of a defendant's guilt was in error so that it should be rendered void;
in that case, there would not be a "conviction" under the statutory
definition. Thus, the I.G. argued, dismissal of proceedings against the
Petitioner after probation cannot be considered a disposition on appeal.
Rather, only a reversal by an appellate court would require the I.G. to
reinstate an individual. I.G. Br., pp. 22-24.
The Appellate Division Guidelines provide in relevant part --
III. (c) . . . The Panel will not consider issues not raised
in the appeal, nor issues which could have been presented to the
ALJ but were not.
As we note in section III.(b) of the Guidelines, the standard which we
employ in reviewing a disputed factual issue is whether the ALJ's
decision is supported by substantial evidence in the record. The
standard of review which we use regarding a disputed issue of law is
whether the ALJ's decision is erroneous. Our process was not meant to
be one of de novo review. See 42 C.F.R. 498.80 - 498.95.
Clearly, the Petitioner's argument as to whether the I.G. followed the
regulation at 42 C.F.R. 1001.136 should have been raised before the ALJ.
Since this argument cannot be raised at this stage in the process, we do
not consider whether the Petitioner could avoid the statutory exclusion.
In any event, the I.G. is correct that the regulation does not apply.
Conclusion
Based on the foregoing, we affirm the five-year exclusion imposed on the
Petitioner.
_____________________________ Cecilia Sparks
Ford
_____________________________ Theodore J. Roumel
U.S. Public Health Service
_____________________________ Alexander G. Teitz
Presiding Board