Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
In the case of:
Douglas Schram, R.Ph.,
Petitioner,
- v. -
The Inspector General.
DATE: November 24, 1992
Docket No. C-347
Decision No. 1372
FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE
DECISION
Douglas Schram, R.Ph. (Petitioner) appealed a July 21, 1992 decision
by
Administrative Law Judge (ALJ) Joseph K. Riotto. See Douglas
Schram,
R.Ph., DAB CR215 (1992) (ALJ Decision). The ALJ Decision upheld
a
determination by the Inspector General (I.G.) excluding Petitioner
from
participation in the Medicare program and the State health care
programs
described in section 1128(h) of the Social Security Act (Act) for
a
five-year period.
The exclusion was based on sections 1128(a)(1) and 1128(c)(3)(B) of
the
Act. 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 [Medicare] or
under
any State health care program." 1/ Section 1128(c)(3)(B) states
that
"[i]n the case of an exclusion under subsection (a), the minimum
period
of exclusion shall not be less than five years . . . ." The
exclusion
here was based on Petitioner's conviction by the State of Michigan
for
attempted conspiracy to defraud Medicaid..Based on the
following
analysis, we affirm the ALJ Decision upholding Petitioner's
exclusion
for five years. We affirm and adopt each of the findings of
fact and
conclusions of law (FFCLs) in that decision except FFCL 6, which
we
modify for purposes of accuracy and clarity.
Issues on Appeal
On appeal, Petitioner raised five major issues:
Whether the ALJ erred in concluding
that
attempted conspiracy to defraud Medicaid is a
criminal
offense;
Whether the ALJ erred in concluding
that
Petitioner's conviction under section 1128(a)
was
related to the delivery of an item
or
service under Medicaid;
Whether the ALJ erred in concluding that
Petitioner's due process rights had not been
violated;
Whether the ALJ erred by applying the mandatory
exclusion provision of section 1128(a)(1),
rather than the
permissive exclusion
provision
of
section 1128(b)(5); and
Whether the ALJ erred by refusing to invoke
the double
jeopardy or ex post facto clause of the
Constitution.
Petitioner also argued that summary judgment was inappropriate in
this
case. Petitioner took specific exception to FFCLs 4 and 6-13.
Analysis
I. Whether the ALJ erred in concluding
that
attempted
conspiracy to defraud Medicaid is
a
criminal offense
Petitioner challenged the following FFCL:
6. A criminal conviction based upon attempted conspiracy to
defraud
Medicaid is related to the delivery of an item or service under
Medicaid
and justifies application of the mandatory exclusion provisions
of
section 1128(a)(1).
ALJ Decision at 2..Petitioner argued that the ALJ committed
reversible
error by overlooking the fact that attempted conspiracy is not
a
criminal offense under Michigan law. Petitioner contended
that
attempted conspiracy is not a crime in Michigan because "attempt"
and
"conspiracy" are mutually exclusive crimes. Petitioner argued that
the
I.G. had the burden of proving that Petitioner had been convicted of
a
criminal offense and had failed to meet that burden.
These arguments have no merit.
The issue of whether Petitioner was "convicted of a criminal
offense"
within the meaning of section 1128(a)(1) is a question of federal
law.
The ALJ concluded in his analysis that Petitioner was "convicted"
based
on section 1128(i) of the Act. ALJ Decision at 4. Section
1128(i)
states:
For purposes of subsections (a) and (b), an
individual or entity is
considered to have been
"convicted" of a criminal offense --
(1) when a judgment of conviction has been entered
against the
individual or entity by a Federal,
State, or local court . . . ;
* * *
(3) when a plea of guilty or nolo contendere by
theindividual or
entity has been accepted by a
Federal, State or local court.
Petitioner did not challenge the ALJ's finding that "Petitioner
pled
guilty in, and was sentenced by, the 30th Judicial District Court,
State
of Michigan, of attempted conspiracy to defraud Medicaid." FFCL
2. Nor
did Petitioner challenge the authenticity of the court documents
on
which this finding was based. See I.G. Ex. 3, 5, and 8.
While the ALJ did not specify which subsection of section 1128(i) he
was
applying, the court documents support a finding that, at the very
least,
both subsections (1) and (3) apply. While the document signed by
the
Circuit Judge is labeled an "ORDER OF PROBATION AND JUDGMENT
OF
SENTENCE," Petitioner described this document (in his
statement
certifying that he was submitting a true copy) as
"evidencing
petitioner's 1990 conviction in the 30th Circuit Court of
Michigan,
Ingham County." Certification of P. Ex. 2. Moreover, it
is reasonable
to infer from the fact that the court sentenced Petitioner,
that the
court had accepted his guilty plea and entered a judgment.of
conviction.
2/ Thus, substantial evidence supports the ALJ's finding
that
Petitioner was "convicted," and, indeed, Petitioner did not
directly
attack that finding. 3/
Petitioner's arguments, however, treat the issue of whether the offense
of
which he was convicted was a "criminal offense" under State law as an
issue
separate from the question of whether he was "convicted" within
the meaning
of section 1128(i). Petitioner would require the I.G. to
prove
separately that the conduct to which Petitioner pled guilty was,
in
fact, a criminal offense under State law.
Petitioner's interpretation of the statute is inconsistent
with
Congressional intent. Although Congress defined only the
term
"convicted," section ll28(i) sets out when an individual or entity
will
be considered to have been convicted "of a criminal offense."
We
conclude that, under the statute, the I.G.'s burden was met by
proof
that Petitioner pled guilty to attempted conspiracy to defraud
Medicaid
and that the State court entered a judgment of sentence based on
that
plea. The fact that both Petitioner and the State court
treated
attempted conspiracy as an offense under State law is conclusive
for
purposes of section.1128(a). As the ALJ noted, the court
papers
represent attempted conspiracy as a crime. ALJ Decision at
4. To
require the I.G. to go behind the court documents to prove
that
"attempted conspiracy" was in fact a criminal offense under State
law
would be contrary to the purpose of section 1128(a)(1) to permit
the
I.G. to rely on state actions and would substantially hamper the
I.G.'s
efforts to protect the Medicare and Medicaid programs.
The ALJ properly concluded that Petitioner could not, in
effect,
collaterally attack his criminal conviction in a review of his
mandatory
exclusion. As the ALJ noted, the proper place for
Petitioner's argument
is State appellate court. 4/ Cf. Travers v.
Sullivan, 791 F. Supp.
1471 (E.D. Wash. 1992).
We therefore modify FFCL 6 to reflect our more complete analysis
of
whether Petitioner was convicted of a criminal offense within
the
meaning of section 1128(a)(1), and to set out separate conclusions
with
respect to the various issues raised by Petitioner regarding
the
application of section 1128(a)(1). In section II of our decision
below,
we set out our conclusions on the issue of whether the criminal
offense
of which Petitioner was convicted related to the delivery of an item
or
service.
FFCLs 6.A. and 6.B. read as follows:
6.A. Petitioner was "convicted," as defined in section 1128(i) of
the
Act, since it is reasonable to conclude from the fact that a judgment
of
sentence was entered that Petitioner's guilty plea was accepted by
State
court and a judgment of conviction entered..6.B. Proof that a
petitioner
was "convicted," as defined in section 1128(i), is conclusive on
the
issue of whether a petitioner was "convicted of a criminal
offense"
within the meaning of section 1128(a)(1). To require the I.G.
to
separately prove that "attempted conspiracy" was a criminal
offense
under Michigan State law would be inconsistent with the intent
of
section 1128(a)(1), which permits the I.G. to rely on state actions.
II. Whether the ALJ erred in concluding that
Petitioner's conviction
was related to the delivery of an item or service
under Medicaid
Petitioner alleged that his offense did not involve the delivery of
an
item or service under Medicaid. Petitioner contended that his
offense
was a crime of fraud which occurred after the delivery of the item
or
service. Accordingly, Petitioner argued that his offense was
not
"related to the delivery of an item or service" under the
mandatory
exclusion provision in section 1128(a)(1), and that, therefore, he
was
improperly excluded.
Petitioner also argued that a hearing would have been appropriate,
in
order to show that he submitted the false claims after the delivery
of
the items or services. 5/ Petitioner contended that this would
have
proved that the crime was unrelated to the delivery of items or
services
under Medicaid.
The ALJ in his FFCL 6 concluded that "a criminal conviction based
upon
attempted conspiracy to defraud Medicaid is related to the delivery
of
an item or service.under Medicaid." ALJ Decision at 2. In our
view,
this wording is overbroad since not every type of Medicaid fraud
is
necessarily related to delivery of an item or service under
that
program. Congress did not say "related to the programs" generally,
but
limited the scope of section 1128(a)(1) to criminal offenses "related
to
the delivery of an item or service under" the programs. 6/
The ALJ, however, correctly concluded that the particular offense of
which
Petitioner was convicted is "related to the delivery of an item or
service
under Medicaid" within the meaning of section 1128(a)(1) of the
Act. In
Jack W. Greene, DAB 1078 (1989), aff'd Greene v. Sullivan, 731
F. Supp. 835
(E.D. Tenn. 1990), the Board rejected a similar argument
that
Petitioner's offense was not related to the delivery of an item or
service
because it was related to his financial activity occurring after
the delivery
of services. The Petitioner in Greene, another pharmacist,
had falsely
billed Medicaid for brand name drugs, when instead he or one
of his agents
had dispensed generic drugs of lower value. The Board
held that the
offense of filing a false claim there was inextricably
intertwined with the
delivery of the drugs to the Medicaid recipient
and, therefore, was "related"
under any reasonable reading of the term.
Petitioner here tried to distinguish Greene, stating that he would
show
that "the submitted bills were unrelated to the actual services
and
items provided by [Petitioner] to his patients." Petitioner's
Appellate
Brief (P. App. Br.) at 12. This distinction is
irrelevant.
In the amended information, Petitioner was charged with having
"attempted
to enter into an agreement, combination or conspiracy . . .
to defraud the
state by obtaining or aiding others to obtain the payment
or allowance of a
false claim under the Social Welfare Act (MCL 400.1
to.400.121), in violation
of MCL 400.606." I.G. Ex. 5. 7/ MCL 400.606
is Michigan's
Medicaid False Claim Act. By its very nature, an offense
under the
Medicaid False Claim Act is related to the delivery of an item
or service
under Medicaid. By submitting a claim to Medicaid seeking
payment or
allowance, an individual or entity is representing that an
item or service
has been (or will be) delivered under the program for
which payment or
allowance is due. The timing of the actual delivery of
some item or
service relative to the submission of a claim is irrelevant
and immaterial,
as the ALJ correctly held. Nor does it matter that the
items or
services actually delivered by Petitioner to his patients may
have been
different from the items or services which Petitioner listed
in any false
claims submitted to Medicaid. Indeed, the Board has held
that the
filing of a false claim was a program-related offense even
where it was
alleged that no item or service was in fact rendered.
Francis Shaenboen,
R.Ph., DAB 1249, at 4 (1991). 8/
Since the question of when Petitioner filed (or attempted to conspire
to
file) Medicaid claims in relation to delivery of the items or
services
was irrelevant, there was no need for the ALJ to hear any testimony
on
the matter. By offering testimony that the false claims were
submitted
after the delivery and were for items or services different from
those
actually delivered to Medicaid recipients, Petitioner did not raise
a
genuine issue of material fact. The court documents, which
Petitioner
did not deny were authentic, conclusively establish the nature of
the
offense as related to the delivery of an item or service
under
Medicaid..Based on this analysis, we further modify the ALJ Decision
to
add FFCLs 6.C., 6.D., and 6.E.:
6.C. An offense of attempted conspiracy to defraud Medicaid by
obtaining
the payment or allowance of a false claim under Medicaid is
"related to
the delivery of an item or service" under Medicaid. By
submitting a
claim to Medicaid seeking payment or allowance, an individual
is
representing that an item or service has been (or will be)
delivered
under the program for which payment or allowance is due.
6.D. Evidence that Petitioner submitted false claims after the
actual
delivery of some items or services and that the false claims
were
unrelated to the actual items or services provided by Petitioner to
his
patients is irrelevant and immaterial. Thus, no hearing is required
to
receive such evidence.
6.E. Section 1128(a)(1) applies to Petitioner's conviction and,
therefore,
a five-year exclusion is mandated under section
1128(c)(3)(B).
III. Whether the ALJ erred in concluding thatPetitioner's due
process
rights had not beenviolated
Petitioner took exception to FFCLs 4, 9 and 10, which state:
4. Judgment was entered against Petitioner on July 27, 1990, and
amended
November 2, 1990. The court sentenced him to probation for a
period of
five years and required him to pay restitution and costs
totalling
$26,000.
9. A defendant in a criminal proceeding does not have to be advised
of
every possible penalty or loss he may suffer as a consequence of
being
found guilty.
10. Petitioner was not deprived of his right to due process even if he
was
not told by the prosecutor or the court that his guilty plea would
eventually
lead to his mandatory exclusion.
ALJ Decision at 2.
Petitioner's exception to FFCL 4 did not directly challenge the
factual
accuracy of the FFCL. Petitioner asserted that he was sentenced
on July
27, 1990 and that "[a]ny amendment to the judgment and commitment
order
subsequent to July 27, 1990, was merely a ministerial clerk action
and
had no substantive effect on the.conviction." P. App. Br. at
1.
Apparently, Petitioner considered the mention of the November 2,
1990
action prejudicial in light of his argument that he had been denied
due
process.
Petitioner alleged that his due process rights were violated
for
essentially two reasons. First, Petitioner alleged that the I.G.
did
not act within a reasonable time to effect his exclusion as required
by
42 C.F.R. . 1001.123(a). Petitioner argued that the I.G. had failed
to
comply with this regulation since the judgment of sentence was issued
in
July 1990 and the I.G.'s notice of intent to exclude Petitioner was
not
issued until December 1991, an 18-month delay. Petitioner also
argued
that, on about October 18, 1988, he had received a notice from
the
Michigan Department of Social Services that his participation
in
Medicaid had been terminated as of August 16, 1988, and, therefore,
the
I.G.'s delay in effect would result in an inequitable
nine-year
exclusion.
Second, Petitioner argued that he should be provided an opportunity for
a
hearing to show that the I.G. was aware of the Michigan action since
copies
of the notice were directed to two officials of the Department of
Health and
Human Services. Petitioner argued that the I.G.'s failure to
act at
that time deprived him of the notice necessary to understand the
possible
consequences of a guilty plea.
The ALJ did not err in concluding that Petitioner's due process
rights
were not violated. First, the ALJ correctly held that the I.G.
did in
fact act within a reasonable time to effect Petitioner's
exclusion. An
individual may be excluded under section 1128(a)(1) of
the Act only
after having been convicted. As the ALJ correctly noted,
such an
exclusion is the consequence of a conviction and not of the
conduct
which led to the conviction. The regulation at 42 C.F.R. .
1001.123
requires the I.G. to act "whenever" the I.G. has
"conclusive
information" that an individual has been convicted of a
program-related
crime. It does not set any specific deadline for
action. Petitioner
did not allege that the I.G. had delayed after
receiving conclusive
information regarding Petitioner's conviction.
Section 1128(f)(1) of
the Act requires only that an .individual or entity
being excluded be
given "reasonable notice and an opportunity for a hearing."
9/
Furthermore, contrary to what Petitioner argued, the Michigan action
was
not an exclusion or suspension. The October 18, 1988 letter on
which
Petitioner relied simply notified Petitioner that, because he had
lost
his license, he was terminated from the Michigan Medicaid
program
because he was no longer eligible to participate. P. Ex.
3.
Termination from the program for failure to meet requirements
of
participation is different from an exclusion, which is for a period
of
years and which is based on different considerations. While
an
exclusion or suspension from the Michigan Medicaid program may be
a
basis for a federal exclusion under section 1128(b)(5) of the
Act,
exclusion based on this section is not automatic, but is
permissive.
Thus, Petitioner could not have reasonably thought that he had
already
been excluded from Medicare and Medicaid simply based on the
Michigan
notice.
We also reject Petitioner's contention that, at the very least,
any
exclusion instituted against him should begin from the date he
was
notified of his termination from the Michigan Medicaid program.
Neither
the ALJ nor this Board may change the beginning date of
Petitioner's
exclusion. Chang, DAB 1198, at 10. Section
1128(c)(1) of the Act
states that an exclusion will become effective "at such
time" as may be
specified by regulation, and the applicable regulation at 42
C.F.R. .
1001.123(a) provides that an exclusion will take effect 15 days from
the
date of the I.G.'s notice. Thus, the date on the I.G.'s
notice
determines the start date for an exclusion. The ALJ did not err
in
refusing to change the beginning date.
Furthermore, we reject Petitioner's argument that the I.G.'s
delay
violated his due process rights by depriving him of the notice
necessary
to understand the possible consequences of his guilty plea.
The ALJ
correctly held that, as a defendant, Petitioner did not have to
be
advised of all the possible consequences of his plea..More
importantly,
Petitioner was on notice that his guilty plea could lead to a
mandatory
exclusion. Sections 1128(a)(1) and 1128(i), read together,
provide
adequate notice of the consequences which could result from
conviction
of a program-related offense. If Petitioner's complaint is
with the
actions of the Michigan prosecutor, which he claimed violated his
rights
under the Michigan Constitution, the proper forum for this complaint
is
a Michigan State court.
Accordingly we affirm and adopt FFCLs 4, 9, and 10.
IV. Whether the ALJ erred by applying the
mandatory
exclusion
provision of section
1128(a)(1)
rather than the
permissive exclusion
provision
of 1128(b)(1)
Petitioner challenged FFCLs 7 and 8, which state:
7. 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 Medicare or Medicaid.
8. The Secretary and his delegate, the I.G., are under no obligation
to
institute a permissive exclusion action under section 1128(b).
ALJ Decision at 2.
Petitioner alleged that at the time he agreed to enter a guilty plea,
he
"believed that the HHS was already aware of his suspension,"
and
therefore he "reasonably assumed that he was effectively precluded
under
the permissive [exclusion] section" at section 1128(b)(5) of the
Act.
P. App. Br. at 16. This provision states that the Secretary may
exclude
"[a]ny individual or entity which has been suspended or excluded
from
participation, or otherwise sanctioned, under . . . a State health
care
program, for reasons bearing on the individual's or
entity's
professional competence, professional performance, or
financial
integrity." Petitioner conceded that the I.G. is under no
obligation to
institute a permissive exclusion action under section
1128(b). However,
he argued that according to the explicit language of
the statute, his
license suspension mandated application of this provision
rather than
the mandatory exclusion provision of section 1128(a)(1).
The ALJ correctly held that a mandatory exclusion, rather than
a
permissive exclusion, was appropriate in this .case. In Travers
v.
Sullivan, 791 F. Supp. 1471 (E.D. Wash. 1992), the court held:
An exclusion determination under . 1320a-7 [section 1128 of
the
Act] is a two-step process. First, the Secretary must
determine
whether the mandatory provision applies. Under .
1320a-7(a) the
Secretary shall exclude individuals who have been
convicted of a
program-related crime . . . . If the prerequisites
of this
section are met, the Secretary is directed by Congress
to
exclude that individual, and the issue of permissive
exclusion
becomes moot. It is only after the Secretary determines
that
the individual's conviction was not for a
"program-related
crime" that the permissive exclusion statute becomes
relevant.
Thus, the mandatory exclusion provision of section 1128(a)(1)
is
self-executing. Travers, and the Board decisions relied on by the
ALJ,
involved only state criminal convictions, and did not involve
any
additional state action which would arguably fall within
section
1128(b)(5). 10/ The rationale of Travers and previous Board
decisions
nonetheless supports the result here. Because Petitioner was
convicted
of a program-related offense, we must affirm the five-year
mandatory
exclusion.
Furthermore, Petitioner incorrectly relied upon the doctrine of
lenity
(essentially a preference for narrow application of statutory
language)
to justify application of the permissive exclusion section of the
Act,
rather than the mandatory exclusion section. The rule of lenity
applies
only to criminal statutes, and the statute here is civil.
Moreover, as
Petitioner noted, the rule of lenity is used only when the
statute at
issue is susceptible to two different interpretations. See
The
Hanlester Network, et al., DAB 1275, at 21 (1991). In the instant
case
there is no ambiguity in the Act as to the scope of section
1128(a)(1);
therefore, the rule of lenity is inapplicable..Based on the
preceding
analysis, we affirm FFCLs 7 and 8.
V. Whether the ALJ erred by refusing to invoke
the
double
jeopardy or ex post facto clauses of
the
Constitution
Petitioner also raised arguments concerning the
appropriate
characterization of his five-year exclusion as either a punitive
or
remedial sanction. Specifically, he challenged FFCLs 11, 12, and
13,
which state:
11. The purpose of Section 1128 is remedial in nature -- to
protect
federally-funded health care programs and their beneficiaries
from
untrustworthy providers.
12. The exclusion proposed by the I.G. herein is not disproportionate
to
the harm done by Petitioner to the Medicaid program and the need
to
preclude repetition of his behavior, and thus may be deemed remedial.
13. The mandatory minimum exclusion provisions of section 1128(a) apply
to
all exclusions based on convictions occurring after August 18, 1987,
the
effective date of the Medicare and Medicaid Patient and Program
Protection
Act of 1987.
ALJ Decision at 3.
Petitioner argued that the I.G.'s mandatory exclusion was a violation
of
the constitutional ban on double jeopardy. Petitioner alleged
that,
notwithstanding the legislative history describing the
mandatory
exclusion as a remedial measure, institution of a mandatory
exclusion in
this case would have a punitive effect. Petitioner relied
upon the
Supreme Court's holding in United States v. Halper, 490 U.S. 435
(1989).
Petitioner described Halper as holding that "whenever a civil
sanction
serves other than a solely remedial purpose, for example, a
retributive
or deterrent purpose, it constitutes `punishment'. . . . "
P. App. Br.
at 21 (emphasis in original). Petitioner relied on a
statement in the
legislative history of section 1128 that "a mandatory five
year
exclusion should provide a clear and strong deterrent against
the
commission of criminal acts." P. App. Br. at 19, citing S. Rep.
No.
109, 100th Cong., 1st Sess., reprinted in 1987 U.S.C.C.A.N.
682.
According to Petitioner, a mandatory, five-year exclusion would have
a
retributive effect here, since Petitioner had already been
"suspended"
from practice for nearly four years. Thus, Petitioner
asserted that
institution of a mandatory exclusion would constitute a
second
punishment. Petitioner argued that application of the test
used
in.Kennedy v. Mendoza-Martinez, 372 U.S. 144 (1962), for determining
if
a sanction is penal or regulatory, results in the finding that in
this
case a mandatory exclusion is punitive.
We conclude that the ALJ did not err in concluding that the
double
jeopardy clause was not violated. The double jeopardy clause
embodies
three protections: "It protects against a second prosecution
for the
same offense after acquittal. It protects against a second
punishment
for the same offense after conviction. And it protects
against multiple
punishments for the same offense." North Carolina v.
Pearce, 395 U.S.
711, 717 (1969) (footnotes omitted). Successive
prosecutions, whether
following acquittals or convictions, raise a number of
concerns. Grady
v. Corbin, 495 U.S. 508 (1990). The primary
concern is "that the State
with all its resources and power should not be
allowed to make repeated
attempts to convict an individual for an alleged
offense, thereby
subjecting him to embarrassment, expense and ordeal and
compelling him
to live in a continuing state of anxiety and insecurity . . .
." Green
v. United States, 355 U.S. 184, 187 (1957). The "dual
sovereignty"
doctrine of Abbate v. United States, 359 U.S. 187 (1959), holds
that a
federal prosecution is not barred by a prior state prosecution of
the
same person for the same acts. The doctrine is based on the
principle
that federal law enforcement should not be hindered by
state
prosecutions, where a defendant's acts may impinge more seriously on
a
federal interest than on a state interest. 359 U.S. 195.
Section 1128(a) of the Act does not contemplate a federal
"prosecution"
for an offense separately defined under federal law.
Rather, it
provides that, whenever an individual has been convicted of
a
program-related crime in a federal, state, or local court, the
Secretary
must exclude that individual from Medicare and Medicaid. Once
the I.G.
establishes that an individual has been convicted of a
program-related
crime, a five-year exclusion automatically applies.
Thus, a mandatory
exclusion does not raise the double jeopardy concerns of
successive
prosecutions by the same government based on the same
conduct. Also,
the mandatory exclusion here, like the situation in
Abbate, involves a
federal action following a state action, where the state
action is not
sufficient to protect the federal interest.
On the other hand, in Halper, which involved two federal actions
(a
criminal case followed by a civil monetary penalty action under
section
1128A of the Act), the Supreme Court addressed the question of
multiple
punishments for the same conduct. A mandatory exclusion.is
based on a
conviction, but it is the underlying conduct which Congress sought
to
protect against. Thus, several courts have treated an exclusion
action
as also raising the question of multiple punishments for the
same
conduct. They have acknowledged that the Halper analysis of
the
relationship between the amount of monetary penalty and the
government's
monetary loss is inapposite to mandatory exclusions. 11/
However, they
have applied a similar analysis in determining whether the
exclusion
constituted a punishment. They have concluded that the double
jeopardy
clause was not violated because the intent, as well as the nature
and
effect, of the exclusion was remedial rather than punitive. Greene
v.
Sullivan, 731 F. Supp. 838 (E.D. Tenn, 1990); Manocchio v. Kusserow,
961
F.2d. 1539 (11th Cir. 1992).
In Greene the court found, based on the context and history of
section
1128(a), that the section had a remedial purpose and that the
five-year
exclusion there was not one of the "rare cases" alluded to in
Halper in
which an excessive civil penalty subsequent to criminal
sanctions
implicates the double jeopardy clause. The court noted the
"apt
comparison between the exclusion remedy and professional
license
revocations for lawyers, physicians, and real estate brokers which
have
the function of protecting the public and have routinely been held
not
to violate the double jeopardy clause." 731 F. Supp. 838, 840.
In Manocchio the court looked to the purposes served by the
exclusion
sanction. It concluded that the legislative history
demonstrated that
the primary goal of the legislation was to protect present
and future
Medicare beneficiaries from abusers of these programs. In
support of
this conclusion, it quoted the following language from the
relevant
Senate Finance Committee report:
[T]he basic purpose of the Medicare and Medicaid
Patient and
Program Protection Act is to improve the
ability of the Secretary
and the Inspector General
of [HHS] to protect Medicare, Medicaid,
[and other
social services programs] from fraud and abuse, and
to
protect the .
beneficiaries of those programs from incompetent
practitioners and from inappropriate or inadequate care. S.
Rep.
No. 109, 100th Cong., 1st Sess. 1-2 (1987),
reprinted in 1987
U.S.C.C.A.N. 682.
961 F.2d at 1542; see also statements of Rep. Waxman, Chairman,
House
Subcommittee on Health and the Environment, and Sen. Bentsen quoted
at
961 F.2d 1542. The court considered the reference, on which
Petitioner
relied here, to the potential deterrent effect of the provision,
but
found that "the legislative history, taken as a whole, demonstrates
that
the primary goal" is remedial. 961 F.2d at 1542.
Petitioner contended that evaluating the factors traditionally applied
to
determining whether a sanction is punitive leads to the conclusion
that a
mandatory five-year exclusion is punitive. Petitioner quoted
the
following listing of the relevant tests from Kennedy
v.
Mendoza-Martinez, 372 U.S. 144, 168-169 (1962) (footnotes omitted):
Whether the sanction involves an affirmative
disability of
restraint, whether it has historically
been regarded as punishment,
whether it comes into
play only on a finding of scienter, whether
its
operation will promote traditional aims of punishment
--
retribution and deterrence, whether the behavior
to which it
applies is already a crime, whether an
alternative purpose to which
it may rationally be
connected is assignable for it, and whether it
appears excessive in relation to the alternative purpose assigned.
The Mendoza-Martinez test, however, is inapplicable. 12/
In
Mendoza-Martinez, the Supreme Court held that certain statutes
which
automatically imposed forfeiture of.citizenship were invalid because,
in
those statutes, "Congress has plainly employed the sanction
of
deprivation of nationality as a punishment -- for the offense of
leaving
or remaining outside the country to evade military service --
without
affording the procedural safeguards guaranteed" by the
Constitution.
372 U.S. at 165-166. Thus, the tests set out in
Mendoza-Martinez and
quoted by Petitioner are to be considered "[a]bsent
conclusive evidence
of congressional intent as to the penal nature of a
statute . . . ."
372 U.S. at 169. In our view, the context and
legislative history of
section 1128(a) discussed in Greene and Manocchio are
conclusive
evidence of congressional intent to enact a statute that is
primarily
remedial.
Thus, the exclusion here may fairly be characterized as remedial, and
not
solely as a deterrent or retribution. See Halper, 490 U.S. at 449.
The
exclusion mechanism protects these programs from any individual who
has been
convicted of a program-related crime. Manocchio upheld a
five-year
exclusion for a false claim of $62.40. Here, Petitioner pled
guilty to
an attempted conspiracy charge with far greater potential for
harm to the
programs, and agreed to restitution of $20,000. The fact
that
Petitioner had previously lost his license in Michigan and was
therefore
terminated from the Michigan Medicaid Program does not render
the federal
action punitive. Congress determined that five years is a
reasonable
exclusion period for such an individual and mandated that we
apply the
five-year period.
Therefore, we conclude that the ALJ did not err in rejecting
Petitioner's
double jeopardy claim.
As for FFCL 13, Petitioner alleged that by instituting the
mandatory
exclusion provision, the I.G. applied the Medicare and Medicaid
Patient
and Program Protection Act of 1987 in an unlawful ex post facto
manner.
Petitioner argued that the ex post facto clause of the Constitution
was
violated because his conduct pre-dated the enactment of the
mandatory
exclusion provision. Again, we agree with the ALJ's
conclusion that the
mandatory exclusion law has not been applied in an ex
post facto manner.
In order for a statute to be considered ex post facto, it must be
a
criminal or penal statute, and it must be retrospective in that
it
applies to events occurring before its enactment. See Betsy Chua,
M.D.
and Betsy Chua, M.D., S.C., DAB 1204 (1990). In this case, the
ALJ
determined, and we have agreed, that the exclusion provision in the
1987
amendment is a civil statute imposing a remedial sanction, and not
a
criminal statute.with a penal intent. Furthermore, as this Board
has
previously held, Congress intended that the 1987 amendment should
be
applied "prospectively to all convictions occurring on or after
August
18, 1987, even though the circumstances leading to the conviction
may
have occurred prior to that date." See Shaenboen, DAB 1249 at
6. Thus,
the amended exclusion provision does not trigger the
constitutional
protection from ex post facto laws. Consequently, we
find that the
ALJ's conclusion on this issue was correct.
For the reasons stated above, we affirm and adopt FFCLs 11, 12, and 13.
Conclusion
Based on the preceding analysis, we affirm the ALJ Decision and affirm
and
adopt all the FFCLs except FFCL 6, which we modify. The FFCLs,
as
modified, are set out in the appendix to this decision for
the
convenience of the reader.
_____________________________ Cecilia Sparks Ford
_____________________________ Donald F. Garrett
_____________________________ Judith A.
Ballard Presiding
Board Member
APPENDIX TO DOUGLAS SCHRAM, R.Ph.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. During the period June 1975 to August 16, 1988, Petitioner was
a
registered pharmacist in Detroit, Michigan. P. Ex. 1.
2. Petitioner pled guilty in, and was sentenced by, the 30th
Judicial
District Court, State of Michigan, of attempted conspiracy to
defraud
Medicaid. I.G. Ex. 3, 5, 8; P. Br. at 5.
3. Petitioner had previously been deprived of his pharmacist's license
and
barred from the State Medicaid program by the State of Michigan. P.
Ex.
3.
4. Judgment was entered against Petitioner on July 27, 1990, and
amended
November 2, 1990. The court sentenced him to probation for a
period of
five years and required him to pay restitution and costs
totalling
$26,000. I.G. Ex. 7, 8.
5. The Secretary of the Department 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.A. Petitioner was "convicted," as defined in section 1128(i) of the
Act,
since it is reasonable to conclude from the fact that a judgment of
sentence
was entered that Petitioner's guilty plea was accepted by State
court and a
judgment of conviction entered.
6.B. Proof that a petitioner was "convicted," as defined in
section
1128(i), is conclusive on the issue of whether a petitioner
was
"convicted of a criminal offense" within the meaning of
section
1128(a)(1). To require the I.G. to separately prove that
"attempted
conspiracy" was a criminal offense under Michigan State law would
be
inconsistent with the intent of section 1128(a)(1), which permits
the
I.G. to rely on state actions.
6.C. An offense of attempted conspiracy to defraud Medicaid by
obtaining
the payment or allowance of a false claim under Medicaid is
"related to
the delivery of an .item or service" under Medicaid. By
submitting a
claim to Medicaid seeking payment or allowance, an individual
is
representing that an item or service has been (or will be)
delivered
under the program for which payment or allowance is due.
6.D. Evidence that Petitioner submitted false claims after the
actual
delivery of some items or services and that the false claims
were
unrelated to the actual items or services provided by Petitioner to
his
patients is irrelevant and immaterial. Thus, no hearing is required
to
receive such evidence.
6.E. Section 1128(a)(1) applies to Petitioner's conviction and,
therefore,
a five-year exclusion is mandated under section
1128(c)(3)(B).
7. 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 Medicare or Medicaid.
8. The Secretary and his delegate, the I.G., are under no obligation
to
institute a permissive exclusion action under section 1128(b).
9. A defendant in a criminal proceeding does not have to be advised
of
every possible penalty or loss he may suffer as a consequence of
being
found guilty.
10. Petitioner was not deprived of his right to due process even if he
was
not told by the prosecutor or the court that his guilty plea would
eventually
lead to his mandatory exclusion.
11. The purpose of Section 1128 is remedial in nature -- to
protect
federally-funded health care programs and their beneficiaries
from
untrustworthy providers.
12. The exclusion proposed by the I.G. herein is not disproportionate
to
the harm done by Petitioner to the Medicaid program and the need
to
preclude repetition of his behavior, and thus may be deemed remedial.
13. The mandatory minimum exclusion provisions of section 1128(a) apply
to
all exclusions based on convictions occurring after August 18, 1987,
the
effective date of the Medicare and Medicaid Patient and Program
Protection
Act of 1987.
1. "State health care program" is defined in section 1128(h) of the
Act
and includes the Medicaid program under Title XIX of the Act.
Unless
the context indicates otherwise, we use the term "Medicaid" here
to
refer to all programs listed in section 1128(h).
2. Black's Law Dictionary defines "sentence" as the "judgment
formally
pronounced by the court or judge upon the defendant after his
conviction
in a criminal prosecution . . . . " Black's Law Dictionary
1222 (5th
ed. 1979).
3. In his analysis, the ALJ stated that he would conclude
that
Petitioner was "convicted within the meaning of section 1128(i) of
the
Act" even "assuming, as I must here, that [Petitioner] is correct
[that
the offense to which Petitioner pled was not a cognizable crime
under
the laws of Michigan]." ALJ Decision at 4. Apparently, the
ALJ viewed
the question of whether attempted conspiracy was a criminal
offense
under Michigan Law as a factual issue which he was required to view
in
Petitioner's favor for purposes of resolving the I.G.'s summary
judgment
motion. Petitioner was not, however, seeking to present
testimony on
this issue; rather, Petitioner was relying on Michigan case law
and
Michigan Standard Criminal Jury Instructions. The I.G. did not
dispute
Petitioner's allegation that the jury instructions did not
specifically
address attempted conspiracy.
4. In any event, the State court cases cited by Petitioner are
not
directly on point. These cases address other issues, such as
whether
attempted assault or conspiracy to commit second-degree murder
are
criminal offenses in Michigan. The Michigan Standard Criminal
Jury
Instructions do not provide any definitive insight either; the fact
that
there is no provision for the lesser offense of attempted conspiracy
is
not dispositive. Also, contrary to Petitioner's assertions,
attempted
conspiracy is not an illogical combination of two inchoate
crimes. A
person may approach another with the intention of forming a
conspiracy.
If the person approached does not reply, or does not agree to
get
involved, an attempt to form a conspiracy has occurred.
5. This argument implies that Petitioner in fact did submit some
false
claims. We note that the original information (which the I.G.
submitted
and Petitioner did not challenge) charged that Petitioner
"routinely
caused to be made to employees of [Michigan], claims under
Medicaid
which he knew falsely represented that various drugs were prescribed
or
authorized by a licensed physician," specifically, that
Petitioner
"added-on drugs or directed others to add on drugs to
prescriptions for
Medicaid patients, when such drugs had not been prescribed
or authorized
by any physician." I.G. Ex. 1 at 4. Although
Petitioner pled guilty
only to attempted conspiracy, Petitioner was ordered
to pay $20,000 in
restitution. Petitioner was also sentenced to a
five-year probationary
period and ordered to pay $6,000 in court and
investigative costs. P.
Ex. 2.
6. The term "item or service" is not defined specifically for
purposes
of section 1128. For purposes of section 1128A, "item or
service" is
defined to include "(A) any particular item, device, medical
supply, or
service claimed to have been presented to a patient and listed in
an
itemized claim for payment, and (B) in the case of a claim based
on
costs, any entry in the cost report, books of account or other
documents
supporting such claim."
7. Petitioner did not challenge the authenticity of this
document,
submitted by the I.G. Moreover, Petitioner admitted in his
brief that
the substantive statute under which he was convicted is the
Michigan
Medicaid False Claim Act. P. App. Br. at 6.
8. Although Petitioner here was not convicted of actually
submitting
any false claims, the attempted conspiracy to submit such claims
could
potentially result in substantial harm to the program. Moreover,
as we
noted in Schaenboen, an offense of billing for items not delivered
at
all has a greater potential for harming the programs than the offense
of
billing for more costly items than those delivered. Schaenboen,
DAB
1249, at 4-5.
9. In Samuel W. Chang, M.D., DAB 1198 (1990), this Board
distinguished
reasonable notice from prompt notice and held that "reasonable
notice
does not require prompt notice." The Board defined reasonable
notice as
notice which is "reasonably calculated to reach [the party to
be
excluded] in adequate time for him to request a hearing, and notify
him
what the proceeding is about, and inform him how he is to go
about
requesting a hearing." Chang, DAB 1198, at 14.
10. Petitioner, in effect, argued here, but did not offer
evidence
sufficient to show, that Michigan's action was an exclusion
or
suspension for reasons bearing on Petitioner's professional
competence,
professional performance, or financial integrity. As noted
above,
termination from the program for failure to meet
participation
requirements is not the same as an exclusion or suspension.
11. In Halper, the respondent was subject to liability of
$130,000
under the False Claims Act for false claims amounting to $585.
The
Supreme Court concluded that the disparity between the amount of
the
statutory penalty and the amount of the government's loss was so
extreme
that the penalty constituted a punishment.
12. Even if the Mendoza-Martinez test was applicable here,
Petitioner
improperly applied it to the facts of this case. Petitioner
ignored the
fact that the mandatory exclusion has not "historically [been]
regarded
as punishment;" rather, as previously discussed, it has always
been
characterized as a remedial measure. Petitioner also
incorrectly
applied the "alternative purpose" determination as if it were
a
comparison between the mandatory exclusion measure and any
alternative
measures, i.e., the permissive exclusion, rather than looking to
the
purposes behind the