Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
In the Case of:
Boris Lipovsky, M.D.
Petitioner,
- v. -
The Inspector General.
DATE: October 13, 1992
Docket No. C-92-050
Decision No. 1363
FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE
DECISION
Petitioner appealed a decision by Administrative Law Judge (ALJ) Joseph
K.
Riotto issued on June 10, 1992. See Boris Lipovsky, M.D., DAB
CR208
(1992) (ALJ Decision). The ALJ Decision granted the Inspector
General's
(I.G.) motion for summary disposition of Petitioner's appeal
and
affirmed the I.G.'s determination to exclude Petitioner
from
participation in Medicare, Medicaid, and other federally funded
State
health care programs for five years.
Based on the following analysis, we uphold the ALJ Decision
affirming
Petitioner's exclusion for five years. We affirm and adopt
all findings
of fact and conclusions of law (FFCLs) in that decision except
FFCL 7,
which we modify for purposes of accuracy and clarity.
BACKGROUND
On February 26, 1990, Petitioner pled guilty in the United States
District
Court for the Eastern District of New York to violating
section
1128B(b)(1)(B) of the Social Security Act (Act) (42 U.S.C.
.
1320a-7b(b)(1)(B)). That section provides, in part:
(b)(1) Whoever knowingly and willfully solicits or receives
any
remuneration (including any kickback, bribe, or rebate)
directly
or indirectly, overtly or covertly, in cash or in kind --
(B) in return for purchasing, leasing, ordering,
or
arranging for or recommending purchasing, leasing,
or
ordering any good, facility, service, or item for
which
payment may be made in whole or in part under
title
XVIII [Medicare] or a State health care program, 1/
shall be guilty of a felony . . . .
Petitioner pled guilty to receiving $100 in return for ordering
and
arranging for ordering a nebulizer for which payment was made under
the
Medicaid program. I.G. Exhibit (Ex.) 2; I.G. Ex. 3.
Petitioner's exclusion was based on section 1128(a)(1) of the Act
(42
U.S.C. . 1320a-7(a)(1)). Section 1128(a)(1) mandates exclusion
from
Medicare and Medicaid for any individual or entity "convicted of
a
criminal offense related to the delivery of an item or service
under
title XVIII or under any State health care program." Any such
exclusion
must be imposed for at least five years. Section
1128(c)(3)(B) of the
Act.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The ALJ entered the following findings of fact and conclusions of
law
(FFCLs). On appeal, Petitioner took exception to FFCLs 2, 7, 8 and
9.
2/
1. During the period relevant to this decision, Petitioner was a
duly
licensed physician and Medicaid provider in the State of New York.
2. Petitioner pled guilty in the United States District Court for
the
Eastern District of New York to violating section 1128B(b)(1)(B) of
the
Act by knowingly and willfully receiving kickbacks from a supplier
of
medical equipment for authorizing the purchase of items paid for
under
the Medicaid program.
3. The District Judge found that there was a factual basis
for
Petitioner's plea. In a written statement to the New York
Department of
Health dated October 2, 1991, Petitioner reaffirmed that he had
been
guilty of receiving remuneration for ordering items paid for
by
Medicaid.
4. Petitioner was sentenced to probation for three years and was
fined
$5000.
5. The Secretary of Health and Human Services has delegated to the
I.G.
the authority to determine and impose exclusions pursuant to
section
1128 of the Act. 48 Fed. Reg. 21662 (May 13, 1983).
6. On November 4, 1991, Petitioner was notified by the I.G. that it
had
been decided to exclude him for a period of five years
from
participation in the Medicare and Medicaid programs because of
his
conviction of a criminal offense related to the delivery of an item
or
service under Medicaid.
7. A criminal conviction for knowing acceptance of cash
payments
designed to influence purchasing decisions on medical equipment
payable
by Medicaid justifies application of the mandatory exclusion
provisions
of section 1128(a)(1).
8. Section 1128(a) addresses only Medicare or Medicaid related
crimes
and requires exclusion by HHS once there has been a relevant
conviction.
Permissive exclusions under 1128(b) can be based upon a much
wider
spectrum of misconduct (which may or may not involve crimes against
the
government), but their application is discretionary. Section
1128(b)
may be applied to convictions only for offenses other than those
related
to the delivery of an item or service under Medicare or Medicaid.
9. The I.G. is under no obligation to proceed under the
permissive
exclusion provisions of sections 1128(b)(1) or (7) of the Act
against a
person who might have committed fraud. However, once there
has been a
conviction of a program-related offense, a five-year exclusion
is
mandatory under section 1128(a).
ALJ Decision at 2-3 (citations omitted).
Since Petitioner did not challenge FFCLs 1 and 3-6, we adopt and
affirm
those FFCLs without further discussion. Below we review the
FFCLs
contested by Petitioner.
DISCUSSION
Petitioner's exceptions to the FFCLs involved two types of challenges
to
his exclusion: he disputed the ALJ's characterization of
his
conviction, and he disputed the applicability of section 1128(a)(1)
to
his conviction. As discussed below, we reject both of these
challenges.
1. The ALJ did not mischaracterize Petitioner's
conviction
under section 1128B(b)(1)(B).
Petitioner did not dispute that he was convicted of a criminal
offense
under section 1128B(b)(1)(B). Rather, in his exceptions to FFCL
2 and
7, he disputed the ALJ's characterization of his offense.
Petitioner
represented that his acceptance of the money was for
instructing
patients in how to use the nebulizer rather than as a basis
for
influencing his decision to order that type of nebulizer. 3/
He
represented that "[t]he nature of the plea was solely based upon
the
improper receipt of monies for performing services which the
appellant
considered was remuneration for instructing in the use of the
device
ordered." Petitioner's Appellate Brief at 2. Petitioner
pointed out
that the I.G. never argued that the nebulizer was not
medically
necessary.
On the basis of these representations, Petitioner disputed the
ALJ's
characterization of the transaction as a "kickback" (FFCL 2),
his
finding that Petitioner received the money for authorizing the
purchase
of the device (FFCL 2), and his finding that Petitioner's conviction
was
for acceptance of cash payments designed to influence
purchasing
decisions (FFCL 7).
We reject Petitioner's challenges to these FFCLs. The relevant issue
in
determining whether section 1128(a)(1) applies is the fact of
a
conviction of a program-related criminal offense, not the mental
state
of the convicted person. In Michael Travers, M.D., DAB 1237
(1991), the
Board rejected the doctor's argument that he should be able to
prove
that he never intentionally committed a criminal offense. That
decision
has been affirmed. Travers v. Sullivan, 2 MMLR . 144, __ F.
Supp. __
(E.D. Wash. 1992). In considering the elements of "conviction"
and
"program-related offense," the court concluded that the scope of
its
review of a five-year exclusion was limited to whether there was
a
conviction and whether the conviction was for a program-related
offense.
The court expressly found that it should not "reevaluate the
underlying
facts which gave rise to the conviction" or "delve into
facts
surrounding the conviction." Id. at 578. Therefore, once
Petitioner
pled guilty and was convicted under section 1128B(b)(1)(B), his
mental
state at the time he committed the acts or entered his plea
became
immaterial to whether a five-year exclusion should be imposed
under
section 1128(a)(1). See also Peter J. Edmonson, DAB 1330, at 4
(1992)
(Petitioner's assertions of innocence immaterial in an appeal of
a
five-year exclusion under section 1128(a)(2) after conviction of
a
criminal offense.)
Further, in making his findings, the ALJ relied on Petitioner's
conviction
under section 1128B(b)(1)(B). By entering a plea of guilty
and having
that plea accepted by the court, Petitioner admitted each
element of this
crime. U.S. v. Broce, 488 U.S. 563 (1989); LaMagna v.
U.S., 646 F.2d
775 (2d Cir. 1981), cert. denied, 454 U.S. 898 (1981).
Pursuant to section
1128B(b)(1)(B), Petitioner admitted to "knowingly
and willfully . . .
receiv[ing] . . . remuneration . . . in return for .
. . ordering, or
arranging for . . . ordering any . . . item for which
payment may be
made" under Medicaid. 4/ (Emphasis added.) Therefore,
the ALJ's
findings that Petitioner received remuneration in return for
ordering a
nebulizer paid for under the Medicaid program are consistent
with the terms
of Petitioner's plea to the charge of violating section
1128B(b)(1)(B).
Petitioner's objection to the use of the term "kickback" by the ALJ
is
without merit. Petitioner was charged with "soliciting and
receiving
kickbacks" (I.G. Ex. 1) under a provision which is commonly
referred to
as the "anti-kickback" or "kickback" statute. The Hanlester
Network,
DAB 1275, at 1 (1991). Under the terms of section
1128B(b)(1)(B), the
ALJ could have limited the language in FFCL 2 to a
finding that
Petitioner had received "remuneration." Instead, we
conclude that the
ALJ used the term "kickback" in a generic sense as the
equivalent to
"remuneration," which we conclude does not affect the accuracy
or
clarity of the FFCL.
As to FFCL 7, Petitioner objected to the finding that his conviction
was
for acceptance of "cash payments designed to influence
purchasing
decisions." Petitioner contended the payments were for
instructing his
patient how to use the nebulizer. While Petitioner's
contention lacks
merit in view of his previously discussed conviction, we
conclude that
FFCL 7 should be modified to refer to the specific elements of
section
1128B(b)(1)(B) and to link that offense explicitly to the
requirements
of section 1128(a)(1). Therefore, we modify FFCL 7 as
follows:
7. The conviction of a criminal offense for knowingly
and
willfully receiving any remuneration in return for ordering,
or
arranging for ordering, any item for which payment may be
made
under Medicaid constitutes a conviction of a criminal
offense
related to the delivery of an item or service under
Medicaid
within the meaning of section 1128(a)(1) and therefore
justifies
application of that exclusion provision.
This modification clarifies what the ALJ discussed in the remaining
FFCLs
and his analysis.
2. Petitioner was convicted of a criminal offense related
to
the delivery of an item or service under Medicaid.
Therefore,
the mandatory exclusion provision of section 1128(a)(1),
rather
than the permissive exclusion provision of section
1128(b)(1),
applies to this case.
The Medicare and Medicaid Patient and Program Protection Act of
1987
(MMPPPA), Pub. L. No. 100-93, established two categories of
exclusion:
mandatory and permissive. The mandatory provisions are found
in section
1128(a) and impose a term of five years or greater. 5/ The
permissive
provisions are found in section 1128(b). 6/ They provide for
no minimum
term. The obvious advantage to being sanctioned under
section 1128(b)
is that, according to the circumstances of the case, an
individual might
be excluded for less than five years. 7/
In disputing FFCLs 7-9, Petitioner argued that the I.G. should
have
proceeded against him under the permissive exclusion provision
of
section 1128(b)(1) rather than the mandatory provision of
section
1128(a)(1). This would have, he asserted, permitted him the
opportunity
to show that a shorter exclusion period or no exclusion should
be
imposed. The I.G. responded that Petitioner was properly excluded
under
the mandatory provisions. For the following reasons, we
reject
Petitioner's arguments and conclude that he was properly excluded
under
section 1128(a)(1).
The Board has previously considered the relationship between
section
1128(a)(1) and section 1128(b)(1). We have decided that, where
a
conviction falls within the terms of section 1128(a)(1), it is
governed
by that section. The fact that the conviction also meets the
more
inclusive elements of section 1128(b)(1) does not remove it from
the
ambit of section 1128(a)(1) and the I.G. must impose a
mandatory
exclusion. 8/
This construction is consistent with the history of the MMPPPA.
The
other possible constructions, that section 1128(b)(1) applies to
the
exclusion of section 1128(a)(1) or that the sections are
mutually
applicable, are not consistent with that history. For example,
many
section 1128(a)(1) exclusions involve some form of financial
misconduct.
Therefore, reading section 1128(b)(1) as governing all
convictions
"related to fraud, theft, embezzlement, breach of
fiduciary
responsibility, or other financial misconduct" would
significantly
reduce the possibility of exclusions under the section
1128(a)(1).
Alternatively, reading these sections as mutually applicable
would
negate the mandatory nature of the section 1128(a)(1) exclusions.
If a
conviction could fall either in section 1128(a)(1) or 1128(b), the
I.G.
would be required to choose between the sections--a result which
would
nullify the mandatory nature of the section 1128(a)(1) by allowing it
to
be avoided. Either of these two constructions would therefore
violate
Congress's intent to strengthen the mandatory category of
exclusion
offenses, one of its primary purposes in enacting the MMPPPA.
S. Rep.
No. 109, 100th Cong., 1st Sess. 5 (1987), reprinted in 1987 U.S.
Code
Cong. & Ad. News 686.
Petitioner submitted a lengthy brief as to why the Board's construction
of
sections 1128(a) and 1128(b) is incorrect. However,
Petitioner's
arguments and citation of legislative history appear to be based
on a
misunderstanding of the Board's decisions. Petitioner asserted
that the
Board's "tortured reading" of section 1128(b) "decrees that the
entire
permissive exclusion section of Title 42, section 1320a-7(b)
[section
1128(b)] does not apply to Medicare and Medicaid at all."
Petitioner's
Appeal Brief at 5.
Petitioner's reading is incorrect. The Board has not said that
section
1128(b) does not apply to Medicare and Medicaid. Rather, it has
said
that where there is a (1) conviction of a criminal offense (2)
related
to the delivery of an item or service (3) under Medicare or
Medicaid,
then section 1128(a)(1) applies rather than section 1128(b).
Section
1128(b) therefore may apply to Medicare and Medicaid cases in
which
there is no conviction or in which the conviction is not related to
a
delivery of an item or service. 9/
Petitioner cited extensively to the legislative history of the MMPPPA
to
show that Congress intended to strengthen the Secretary's authority
to
exclude individuals. Petitioner then argued that the Board's
cases
narrow the Secretary's power by denying the Secretary the use of
the
section 1128(b) sanctions in Medicare and Medicaid cases. As
explained
above, the Board has concluded that section 1128(b) is applicable
to
Medicare and Medicaid. Further, the Board has relied on the
same
legislative history in upholding the I.G.'s use of section
1128(a)(1).
The Board's construction of the MMPPPA has been consistent with
the
Congressional intent of enhancing the Secretary's authority to
exclude
individuals.
Petitioner also argued that the Board's construction of "related to
the
delivery or an item or service" was too broad and that
section
1128(a)(1) should be read to include only "medically
dangerous"
activities. Petitioner asserted that "generic crimes such as
fraud or
kickback could be treated differently than by mandatory exclusion,
and
could take into account mitigating factors, by allowing a
permissive
application." Petitioner's Appeal Brief at 6.
However, the Board has repeatedly rejected the argument that
section
1128(a)(1) covers only certain types of convictions affecting
the
delivery of program items or services to patients. The Board has
relied
on the following aspects of the structure, the language, and
legislative
history of the MMPPPA:
o The plain language of section 1128(a)(1) does not
restrict
its application to medically dangerous activities or
exclude
financial wrongdoing from its reach.
o Section 1128(a)(2) provides for five-year
mandatory
exclusions for convictions "relating to neglect or abuse
of
patients in connection with the delivery of a health care
item
or service." Section 1128(a)(2) therefore explicitly covers
at
least some types of "medically dangerous" activities
which
Petitioner argued should be covered by section
1128(a)(1).
Reading section 1128(a)(1) to cover only medically
dangerous
activities would partially negate the purpose for
section
1128(a)(2). DAB 1078, at 9.
o The prior version of section 1128(a) encompassed
fraudulent
financial practices. The specific language changes in
the 1987
revisions to section 1128(a)(1) suggest that that
amendment
broadened, rather than narrowed, the category of
offenses
covered by that section. Thus, Petitioner's argument
that
fraudulent financial offenses now fall exclusively in
section
1128(b)(1) is inconsistent with these changes. Id. at
11.
o The legislative history confirms that Congress intended
to
expand and strengthen, rather than weaken, the already
existing
mandatory exclusion requirements. Id. at 12; S. Rep. No.
109,
100th Cong., 1st Sess. 5 (1987), reprinted in 1987 U.S.
Code
Cong. & Ad. News 686.
Further, the Board has previously concluded that convictions pursuant
to
section 1128B(b)(1)(B) constitute a conviction related to the
delivery
of an item or service under Medicare or Medicaid. In Niranjana
B.
Parikh, M.D., et al., DAB 1334 (1992), each of the petitioners
was
excluded under section 1128(a)(1) for the same offense for
which
Petitioner was excluded here. The Board concluded that receipt of
the
remuneration was directly related to the program that paid for
the
equipment which was the subject of the remuneration. Id. at
6. In
Parikh, the Board reiterated the common sense connection implicit
in
section 1128(a)(1) between the offense and the delivery of an item
or
service, even though the individual at issue did not physically
deliver
the item or service. See DAB 1123 (convictions for false cost
reports
by nursing home officers); DAB 1135 (conviction for diversion of
a
Medicare check provided for payment to another physician for delivery
or
items or services under the program); DAB 1198 (convictions for
failing
to provide services for which the doctor billed Medicaid); Betsy
Chua,
M.D., and Betsy Chua, M.D., S.C., DAB 1204 (1990) (convictions
involving
acceptance of kickbacks from Medicaid provider laboratory).
Finally, Petitioner argued that, because the nebulizer was
medically
necessary, he did not harm the Medicaid program. As we said
in Parikh,
the medical necessity of this equipment is completely irrelevant
to
either the crime for which Petitioner was convicted or to the
exclusion.
By referring patients to a supplier of medical equipment who
made
payments to referring doctors, Petitioner has undercut the
public's
perception of the honesty and integrity of other program
providers. See
DAB 1135, at 16; DAB 1334, at 6. Further, the
practice of choosing
equipment based on the receipt of remuneration harms the
programs by
"increasing the cost" and by "undermin[ing] the quality of
services
which are offered since operators become more concerned with
rebates
than with care." Senate Special Comm. on Aging, Kickbacks
Among
Medicaid Providers, S. Rep. No. 320, 95th Cong., 1st Sess. 2
(1977).
The anti-kickback provisions were strengthened precisely
because
Congress determined that such harmful practices were "rampant."
Id. See
generally DAB 1275 for an extensive discussion of the
legislative
history and rationale of the kickback provisions.
CONCLUSION
On the basis of the foregoing analysis, we uphold Petitioner's
mandatory
exclusion under section 1128(a)(1) of the Act. We affirm and
adopt all
FFCLs except FFCL 7, which we modify as discussed on page six.
__________________________
Judith
A. Ballard
__________________________
Cecilia
Sparks Ford
__________________________
Donald
F. Garrett
Presiding Board Member
1. "State health care program" is defined by section 1128(h) of the
Act
to include, in part, a State plan approved under Title XIX of the
Act
(Medicaid). Unless the context indicates otherwise, the term
Medicaid
is used here to refer to all State health care programs.
2. Petitioner listed the FFCLs to which he was taking exception as
2,
7, 8 and 9. In his discussion of the exceptions he then referred
to
FFCL 3. Petitioner's Appeal Brief at 2. However, the
discussion which
accompanies the reference to FFCL 3 deals with the text of
FFCL 2.
Therefore, we assume that the reference to FFCL 3 is inadvertent
and
Petitioner meant to refer to FFCL 2.
3. While Petitioner's attorney made a number of
representations
concerning Petitioner's understanding of his guilty plea, the
record
does not contain evidence supporting these representations.
Since we
conclude below that these matters are not relevant to the result of
this
case, we do not reach the problem of the lack of proof.
4. The phrase "knowingly and willfully" was added in 1980 by
the
Omnibus Reconciliation Act of 1980, Pub. L. No. 96-499, section
917
(1980). The purpose was to avoid prosecution of persons "whose
conduct,
while improper, was inadvertent" and to "assure that only persons
who
knowingly and willfully engaged in the proscribed conduct" would
be
punished. H.R. Rep. No. 1167, 96th Cong., 2d Sess. 59 (1980),
reprinted
in 1980 U.S. Code Cong. & Ad. News 5526, 5572. In light
of the scienter
element of this statute, if Petitioner did not take the money
"in
return" for ordering or arranging for ordering the nebulizer, he
should
not have pled guilty.
5. Section 1128(a)(1) provides in pertinent part:
(a) Mandatory Exclusions.--The Secretary shall exclude
the
following individuals . . . (1) Conviction of
Program-Related
Crimes.--Any individual or entity that has been
convicted of a
criminal offense related to the delivery of an item or
service
under title XVIII or under any State health care program.
Section 1128(c)(3)(B) imposes an exclusion period of not less than
five
years for an exclusion under section 1128(a).
6. The permissive exclusion section cited by Petitioner as
applicable
to his conviction was section 1128(b)(1). That section
provides in
pertinent part:
(b) Permissive Exclusion.--The Secretary may exclude
the
following individuals . . . (1) Conviction Relating
to
Fraud.--Any individual or entity that has been convicted,
under
Federal or State law, in connection with the delivery of
a
health care item or service or with respect to any act
or
omission in a program operated by or financed in whole or
in
part by any Federal, State, or local government agency, of
a
criminal offense relating to fraud, theft, embezzlement,
breach
of fiduciary responsibility, or other financial misconduct.
7. In a permissive exclusion, the seriousness of the offensive
conduct
is evaluated and the individual is allowed to submit mitigating
evidence
as to why his or her exclusion should be reduced. Petitioner
cited 42
C.F.R. . 1001.125(b) as authority for his position that his
exclusion
should be permissive. That section lists factors to be
considered in
imposing an exclusion. The section was applicable to the
pre-1987
version of section 1128 in which the length of an exclusion
for
conviction of a program-related crime was discretionary. It is
not
relevant to the current version of section 1128 which sets the
minimum
term for mandatory exclusions.
Further, 42 C.F.R. . 1001.125(b) has been superseded by new
regulations
implementing the current version of section 1128. See 57
Fed. Reg. 3298
(1992). The new regulation concerning the length of a
mandatory
exclusion tracks the Act by setting a minimum of five years. See
42
C.F.R. . 1001.102.
8. See, e.g., Leon Brown, M.D., DAB 1208, at 3-4 (1990); Napoleon
S.
Maminta, M.D., DAB 1135, at 14-15 (1990); Charles W. Wheeler and Joan
K.
Todd, DAB 1123, at 6-7 (1990); Jack W. Greene, DAB 1078, at 9-11
(1989),
aff'd 731 F. Supp. 835, 838 (E.D. Tenn. 1990); DAB 1237, aff'd 2 MMLR
.
144, at 579-580.
9. The source of Petitioner's confusion appears to be this
sentence
used in the ALJ Decision concerning the scope of section
1128(b)(1):
"The permissive exclusion provisions of section 1128(b) apply
to
convictions for offenses other than those related to the delivery of
an
item or service under either the Medicare or
Medicaid . . .
programs." ALJ Decision at
5. See also Samuel W. Chang, DAB 1198, at 8
(1990). There are two
elements to this holding: delivery of an item or
service and the type
of program. Therefore, a conviction not "related
to the delivery of an
item or service" could fall into section
1128(b)(1) even though it involved
Medicare or Medicaid.
An example of a case in which a conviction was governed by
section
1128(b)(1) is Hussaini v. Inspector General, DAB CR193 (1992).
There,
the ALJ imposed a two-year permissive exclusion under 1128(b)(1)
after
an intern pharmacist was convicted pursuant to 18 U.S.C. . 371,
a
section criminalizing conspiracies to commit offenses against or
to
defraud the United States. Hussaini's conviction resulted from
his
participation in a conspiracy to defraud the
Medicaid