Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
In the Case of:
Chander Kachoria, R.Ph.,
Petitioner,
- v. -
The Inspector General.
DATE: January 13, 1993
Docket No. C-92-032
Decision No. 1380
FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE
DECISION
Chander Kachoria, R.Ph. (Petitioner) appealed a decision dated August
7,
1992 by Administrative Law Judge (ALJ) Charles E. Stratton upholding
a
determination by the Inspector General (I.G.) to exclude Petitioner
from
participation in Medicare and State health care programs for three
years
pursuant to section 1128(b)(1) of the Social Security Act
(Act).
Chander Kachoria, R.Ph., DAB CR220 (1992)(ALJ Decision). Based
on the
analysis below, we affirm the ALJ Decision and affirm and adopt each
of
the findings of fact and conclusions of law (FFCLs) in that decision.
Background
Petitioner was a licensed pharmacist in Ohio who was indicted on one
count
of theft and one count of filing a false insurance claim. On
March 22,
1989, Petitioner pled guilty and was convicted on the theft
count, and the
other count was nullified. The indictments were based on
reports of
field investigations carried out by Blue Cross-Blue Shield of
Ohio (BCBSO)
and an audit report prepared by Heritage Information
Systems, Inc. for
BCBSO. The investigations included undercover
shopping, under the
direction of Mr. Richard Rob, Manager of Financial
Investigations for
BCBSO. Mr. Rob and his agents presented 47
prescriptions at
Petitioner's pharmacy during two months in 1988. BCBSO
concluded that
Petitioner filled 33 of those prescriptions with generic
substitutes but
billed BCBSO at the more expensive brand name rate and
filled five of the
prescriptions with a smaller quantity than prescribed
but billed for the full
quantity. BCBSO determined that the excess
amounts billed totalled more
than $300. On October 5, 1988, Petitioner
signed a statement at the
request of Mr. Rob, acknowledging substituting
generics but billing brand
name prices for some of the undercover
prescriptions.
Petitioner received the maximum sentence for his conviction, including
a
sentence of one and one-half years, suspended upon
Petitioner's
incarceration for 30 days in the county jail, in addition to
probation,
a fine and a period of community service. Petitioner's
license was
later suspended by the State Board of Pharmacy for one year (of
which 10
months were suspended).
The ALJ found that Petitioner's exclusion was authorized under
section
1128(b)(1). The ALJ concluded that, despite some showing
of
rehabilitation, the evidence of Petitioner's untrustworthiness
was
sufficient to require a three-year exclusion to accomplish the
remedial
purposes of the Act. 1/
Petitioner's Arguments
On appeal, Petitioner raised the following arguments:
(1) Petitioner contended that his exclusion was not authorized
under
section 1128(b)(1) of the Act, because the drugs dispensed during
the
undercover investigation were not connected with "delivery of a
health
care item," since the recipients never intended to use the drugs
for
health care purposes. In addition, Petitioner argued that
section
1128(b)(1) did not apply because only a private insurer was affected
and
because the state statute did not refer to health care.
(2) Petitioner asserted that the ALJ erred in declining to
consider
Petitioner's challenge to his criminal conviction on the basis that
he
did not receive warnings of his constitutional rights before signing
the
incriminating statement. Further, Petitioner asserted that basing
his
exclusion on his criminal conviction amounted to a taking of
his
property without due process of law.
(3) Petitioner argued that the three-year period of exclusion
was
excessive, in light of the delay in instituting the exclusion
until
after other sanctions resulting from the conviction had expired.
(4) Petitioner asserted that the ALJ erred in refusing to
consider
Petitioner's claim, based on a court decision in Melashenko v.
Bowen,
Civ. No. CV-F-87-533 (E.D. Cal., June 19, 1990), that the I.G.
was
biased by a pecuniary interest resulting from a merit pay system
that
allegedly rewarded the I.G. on the basis of the number of
exclusions
prosecuted.
(5) Petitioner contended that the ALJ's evaluation of
Petitioner's
untrustworthiness was not supported by substantial evidence
based on the
record as a whole.
Analysis
1. Application of section 1128(b)(1)
Section 1128(b)(1) of the Act, in relevant part, permits the Secretary
to
exclude from Medicare and Medicaid 2/ any individual who has been
convicted
under state law "in connection with the delivery of a health
care item or
service . . . of a criminal offense relating to fraud,
theft, embezzlement,
breach of fiduciary responsibility, or other
financial misconduct."
Petitioner's conviction was for one of the enumerated criminal
offenses,
i.e., theft, and thus was expressly covered by the statute.
Petitioner
repeatedly pointed out that his conviction involved fraud against
a
private insurer, and argued that "the Act under which the
[I.G.]
operates was not passed by Congress to protect" BCBSO.
Petitioner's
Brief (Br.) at 2. We agree that the exclusion provisions
are aimed at
protecting Medicare and Medicaid from untrustworthy providers,
not at
protecting private insurers. Nevertheless, the judgment of
Congress in
passing the Medicare and Medicaid Patient and Program Protection
Act of
1987, which amended those provisions, was that those programs could
best
be protected by excluding, among others, those convicted of
financial
misconduct "if the offenses occurred in delivering health care
to
patients not covered by public programs." S. Rep. No. 109, 100th
Cong.,
1st Sess. 7, reprinted in 1987 U.S.C.C.A.N. 687. In other
words,
Congress judged that those who cheat private health care payors
cannot
be trusted to deal honestly with public health care
payors.
Consequently, we conclude that section 1128(b)(1) applies in this
case
where the party suffering the loss was a private insurer.
Petitioner also argued that his conviction was for a crime which had
no
connection to health care on its face. It is irrelevant that the
count
of the indictment and the language of the statute under which
Petitioner
was convicted do not directly refer to health care, but rather
relate to
"simply . . . an insurance theft based upon a state insurance
theft
statute." Petitioner's Br. at 4. Section 1128(b)(1)
requires only that
the conviction be for theft or other financial misconduct
and that the
conduct be "in connection with" health care delivery.
Petitioner also questioned whether dispensing a prescription drug to
an
undercover agent who has no intent to actually use it for health
care
purposes is properly considered to be "in connection with the
delivery
of a health care item." The ALJ pointed out that identical
conduct,
substituting generic drugs while billing at brand name prices, has
been
held to be related to the delivery of a health care item. ALJ
Decision
at 10-11, citing Larry W. Dabbs, R.Ph., et al., DAB CR151 (1991);
see
also Dewayne Franzen, DAB 1165 (1990); Jack W. Greene, DAB 1078
(1989),
aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835 (E.D. Tenn.
1990).
While the ALJ recognized that the Dabbs case arose under the
section
1128(a)(1) mandatory exclusion provision, as did the others cited
above,
rather than the section 1128(b)(1) permissive exclusion
provision
applicable here, he concluded that the statutory language
was
substantially similar. 3/ ALJ Decision at 11, n.6. Section
1128(a)(1)
requires exclusion of individuals or entities "convicted of a
criminal
offense related to the delivery of an item or service" under
Medicare or
Medicaid.
Petitioner articulated absolutely no reason for interpreting the
phrase
"in connection with" in section 1128(b)(1) to require a different
nexus
between the conviction and the delivery of a health care item or
service
than the phrase "related to" in section 1128(a)(1). An
examination of
section 1128 as a whole indicates that Congress intended no
difference.
For example, the subheading in section 1128(b)(2) is
"CONVICTION
RELATING TO OBSTRUCTION OF AN INVESTIGATION," but the text refers
to an
individual convicted "in connection with the . . . obstruction of
any
investigation . . . ." Moreover, nothing in the legislative
history
indicates that Congress intended a difference.
We find that the only relevant distinction between the two sections
is
whether the item or service is provided under Medicare or
Medicaid
(section 1128(a)(1)) or is a health care item or service
otherwise
financed (section 1228(b)(1)), here by a private insurer.
Therefore, we
affirm the ALJ's application of the decisions exploring the
range of
convictions which are "related to" delivery of an item or service;
they
are relevant to our consideration of whether Petitioner's
criminal
offense occurred "in connection with" his delivery of a health care
item
or service.
We find the reasoning in Greene and Franzen, that submission of a bill
or
claim necessarily asserts the nature of the item for which the
reimbursement
is claimed, applicable here. Greene at 7; Franzen at 8.
Petitioner
billed BCBSO for brand name drugs, which represented that he
had properly
dispensed these drugs in the course of health care
delivery. 4/ Here
too the "fraud exists only by comparing the claim to
the actual item or
service delivered, and so is plainly `related' to
that delivery." David
D. DeFries, D.C., DAB 1317, at 3 (1992)
(upholding exclusion of chiropractor
who obtained referral fees for
X-rays he performed himself but billed as
performed by a different
provider).
Furthermore, prescription medications are an integral part of health
care
delivery by a pharmacist. Petitioner dispensed them in
circumstances
where he had no reason to know that they would not be used
for health care
and then represented in his claims that the drugs were
to fill medical
prescriptions. Whether the recipients in fact used
these particular
items for health care purposes is irrelevant to their
delivery as health care
items. An inquiry into the motives of
recipients, or their actual
disposition of items received, in order to
ascertain the health care nature
of items would carry exclusion hearings
far afield and potentially would
distinguish among providers based on a
factor which has no bearing on their
trustworthiness.
The ALJ also cited a decision construing section 1128(a)(1) to apply
to
the conversion of a Medicare reimbursement check issued for
services
delivered by a third party, Napoleon S. Maminta, M.D., DAB 1135
(1990).
In that case, the Appellate Panel rejected the argument that
the
conviction had to be related to the convicted party's own delivery of
a
Medicare service. Id. at 6. Rather, the scope of section
1228(a)(1)
was held to include "circumstances such as those here where a
covered
program is a victim of the crime." Id. at 8 (emphasis in
original).
The circumstances involved were described as analogous to false
billing
offenses, which were covered even though they "do not necessarily
arise
from delivery of any item or service," such as when the falsely
billed
item was never actually delivered. Id. at 8-9, n.6. 5/
Since here, as
in Maminta, the criminal activity impinged on the service
delivery
process, we find that Petitioner's conviction of theft was in
connection
with the delivery of a health care item.
We conclude that the ALJ did not err in finding that Petitioner
was
convicted of a crime covered by section 1128(b)(1).
2. Constitutional
arguments
The ALJ rejected as "irrelevant" to the proceedings before
him
Petitioner's contentions that the underlying criminal conviction
was
invalid due to constitutional defects in the prosecution, such
as
entrapment and failure to warn Petitioner of his rights. ALJ
Decision
at 11. On appeal, Petitioner pressed only the argument that
the ALJ
erred in refusing evidence relating to the absence of
constitutional
warnings before Petitioner signed an incriminating statement
at the
request of a BCBSO investigator. Since a state investigator was
also
present, and allegedly played some role in obtaining the
statement,
Petitioner argued that the omission of such warnings was
illegal.
Petitioner argued that the ALJ erred in not accepting evidence and
in
declining to review "clear violations of constitutional safeguards,"
or
at least in failing to reduce the length of the exclusion in light
of
the "flawed constitutional basis" upon which the I.G.
relied.
Petitioner's Br. at 5.
Petitioner's arguments are without merit. 6/ First, it is not
correct
that the ALJ refused to accept Petitioner's proffered evidence that
his
statement was coerced. The record shows that the ALJ
permitted
testimony by Petitioner and the other parties present at the
signing of
the statement as to the circumstances. However, in his
decision the ALJ
properly refused to consider Petitioner's contention that
this evidence
could be used to attack his conviction and therefore overturn
his
exclusion. On the other hand, the ALJ did consider this evidence
in
determining what weight to give the statement as a factor in making
his
determination of Petitioner's culpability and trustworthiness
in
connection with concluding that the exclusion length is
reasonable.
Thus, as we discuss below, the ALJ handled this evidence and
the
associated contentions correctly.
We agree with the ALJ that constitutional arguments about the
process
leading to a state criminal conviction are not relevant in
determining
whether the I.G. has authority to exclude a petitioner.
See, e.g.,
David S. Muransky, D.C., DAB 1227 (1991). The Secretary's
exclusion
authority under section 1128(b)(1) is derived from the fact of a
state
conviction, and is not dependent on an independent assessment of
the
validity of that conviction. Any complaint about the conduct of
the
prosecutor or judge or challenge to the constitutionality of
the
conviction must be raised in state court. Cf. Schram at 12.
Numerous decisions have established that the I.G.'s authority to
exclude
based on state actions suspending professional licenses or
suspending
participation in Medicaid cannot be challenged by collateral
attacks on
the fairness of the state proceedings. See, e.g., John W.
Foderick,
M.D., DAB 1125, at 10-11 (1990); Leonard R. Friedman, M.D., DAB
1281, at
6-9 (1991). We reasoned in those cases that the exclusion
authority
derives from the fact of the state action, that the statute
contemplated
that the I.G. would rely on the results of state proceedings,
and that
any due process or equal protection issues could have been raised
by
direct appeal on the state level. Friedman at 6-9. If
anything, this
reasoning is even more applicable to criminal proceedings
which afford
additional constitutional protections to defendants that can be
asserted
in the proper state forum. There is no reason to
"unnecessarily
encumber the exclusion process" with efforts to reexamine the
fairness
of state convictions. Cf. Olufemi Okonuren, M.D., DAB 1319, at
7
(1992). The state is in the best position to police its own process
and
to apply the appropriate legal standards to resolve
Petitioner's
challenges.
Petitioner also contended that "the length of time of the exclusion
is
made more unreasonable by the flawed constitutional basis being
relied
upon by the Inspector General." Petitioner's Br. at 5. We
have already
discussed how the I.G.'s reliance on the conviction (which did
not in
this case rest upon the statement since Petitioner pled guilty)
is
condoned by statute. To the extent that this contention means
that
Petitioner should somehow be compensated for an alleged
constitutional
wrong by a reduction in the length of his exclusion or that
his
statement should not be used by the ALJ in determining
the
reasonableness of the exclusion, we reject both propositions. An
ALJ's
determination of the reasonableness of the length of the exclusion
is
based on his evaluation of Petitioner's trustworthiness, including
his
degree of culpability. See, e.g., Robert Matesic, R.Ph., d/b/a
Northway
Pharmacy, DAB 1327, at 12 (1992). Any constitutional
infraction that
has not been identified as such in the proper judicial forum
is
irrelevant to this evaluation. At the same time, the ALJ could and
did
take into consideration evidence about the events
underlying
Petitioner's constitutional claim in determining what weight to
give
Petitioner's signed statement as evidence of
Petitioner's
trustworthiness. He rejected Petitioner's attempt to
minimize his
culpability by claiming that the statement was coerced, based on
his
assessment of the credibility of the witnesses who testified that
no
threats were made. The ALJ also found it significant that
Petitioner,
although represented by counsel in state court, did not raise the
issue
there but instead pled guilty. As the ALJ therefore
addressed
Petitioner's evidence and contentions relevant to the weight to be
given
this statement in the exclusion proceeding, we affirm him.
Petitioner's contention that the exclusion constitutes a taking of
his
property without due process of law is similarly without
merit.
Although the economic effects of exclusion on a provider may be
adverse,
the goal of an exclusion is to protect federal programs from
financial
losses by removing untrustworthy providers. Petitioner
provided no
legal authority to support a conclusion that the decision by the
federal
government to exclude a provider who has been found to be
untrustworthy
constitutes a taking. Even if the exclusion were properly
considered a
taking, Petitioner received a full hearing and an administrative
appeal.
In sum, Petitioner pointed to no basis for concluding that
the
administrative process has provided him with anything less than all
the
process that was due.
3. Petitioner's claims of delay
The ALJ rejected Petitioner's claim that his exclusion was
unreasonably
"tacked on" to his court-ordered punishment as a result of
arbitrary
delay on the I.G.'s part. ALJ Decision at 12. The ALJ
concluded that
he had no authority to change the beginning date of an
exclusion. Id.
at 12, citing Samuel W. Chang, M.D., DAB 1198
(1990). On appeal,
Petitioner referred to a three-year delay,
calculated from the date of
the investigation, and argued that the I.G. was
unreasonable because
"there is no evidence that the [I.G.] considered any
factors other than
the conviction itself." Petitioner's Br. at 7-8.
7/
The ALJ did not err in concluding that the conviction itself is the
proper
factor to trigger the I.G. to institute an exclusion action and
that
Petitioner did not show that the timing of the exclusion made its
length
unreasonable. Furthermore, neither the statute nor the
regulations set
any specific deadline for the I.G. to act once an
individual becomes subject
to exclusion due to a conviction. Schram at
10; Chang at 13-16.
While Petitioner may have been adversely affected by the fact that
the
period of exclusion began after other sanctions imposed by the
state,
Petitioner did not show prejudice in the legal sense, since
Petitioner
was able to participate in Medicaid and Medicare until the
exclusion
began (except during the two months that his license was suspended)
and
the I.G. was not responsible for actions taken by other bodies
under
their own authority. See Chang at 16. Further, the ALJ was
correct in
determining that he had no authority to alter the beginning date
of the
exclusion, but only to evaluate whether its length was extreme
or
excessive. See Chang at 9. As we discuss below, we agree with
the ALJ
as well that the length of the exclusion was reasonable.
4. Merit pay issue
The ALJ declined to admit Petitioner's documentation regarding merit
pay
or to consider Petitioner's arguments that the I.G.'s agents were
biased
in favor of imposing exclusions in order to receive higher pay based
on
merit. The ALJ determined that Petitioner failed to show good cause
for
omitting the documents from Petitioner's exhibit list and evidence
at
the hearing. ALJ Decision at 12. The ALJ also stated that
the
documents would not have proved an "improper pecuniary interest" even
if
they had been admitted. ALJ Decision at 12, n.7. Petitioner
argued on
appeal that the ALJ erred in not accepting evidence on this point
and
that Melashenko (which struck down the merit pay system then in
effect
and overturned the exclusion at issue) was binding on the ALJ in
the
present case. Petitioner's Br. at 5-6. 8/
The Prehearing Order issued by the ALJ on December 30, 1991 required
the
parties to file lists of proposed exhibits by January 17, 1992
and
stated that any exhibit not on the list which a party attempted
to
introduce "may not be admitted" absent a showing of "good cause (such
as
surprise or rebuttal) and lack of prejudice." Prehearing Order at
5
(emphasis in original). Petitioner submitted a list of 51 exhibits
on
January 17, 1992, which did not include the documentation excluded.
At
the conclusion of the hearing, Petitioner raised the merit pay issue
for
the first time by requesting a stipulation from counsel for the I.G.
as
to whether a merit pay system such as that struck down in Melashenko
was
in effect at the time Petitioner's exclusion was processed. Tr.
at
426-432. Petitioner did not ask permission to submit
documentation
regarding performance ratings for merit pay, but was allowed to
argue in
post-hearing briefing the effect of a merit pay system on
the
reasonableness of the length of Petitioner's exclusion.
Id.
Petitioner's post-hearing brief proffered a copy of the decision
in
Melashenko and performance plans and ratings for the period of
October
30, 1989 through September 30, 1991 purporting to be for James
F.
Patton, Director, Health Care Administrative Sanctions (who signed
the
exclusion notices both here and in Melashenko). The post-hearing
brief
contained no demonstration of either good cause for the late
submission
of the exhibit or of lack of prejudice. We conclude that the
ALJ acted
within his discretion to manage the proceeding by excluding
the
documentation proffered by Petitioner in violation of the
Prehearing
Order. 9/
Furthermore, we have previously noted in a civil money penalties case
that
"where a hearing is requested, the administrative law judge is
the
decisionmaker and that an administrative law judge is not
compensated
pursuant to a merit pay system and does not receive additional
pay based
on performance." Edward J. Petrus, Jr., M.D., et al., DAB
1264, at 36
(1991). In the present case, although a post-exclusion,
rather than
pre-exclusion hearing is involved, the ALJ reviewed the length of
the
exclusion and found it reasonable, as do we.
We conclude that the ALJ did not err in rejecting Petitioner's
evidence
and arguments relating to the merit pay system.
5. ALJ's evaluation of Petitioner's trustworthiness
The ALJ found that the three-year exclusion of Petitioner was
"neither
extreme nor excessive," based on his review of all the
circumstances
involved. ALJ Decision at 11-16. The factors which
the ALJ considered
included the seriousness and duration of the offense, 10/
Petitioner's
admission of deception in his guilty plea, the court's
imposition of a
maximum sentence on Petitioner, the adverse findings and
action of the
State Board of Pharmacy, and Petitioner's failure to
accept
responsibility for his actions. Id. The ALJ rejected
Petitioner's
explanations as lacking credibility. The ALJ noted some
signs of
rehabilitation by Petitioner, such as compliance with the terms of
his
sentence, completion of a jurisprudence examination, and monitoring
by
BCBSO without further discrepancies. However, the ALJ concluded that
a
three-year exclusion was needed to protect the federally-funded
programs
from the risk that Petitioner might repeat his misconduct. Id.
at 16.
On appeal, Petitioner argued that he need not be contrite because he
"is
not guilty of any crime" and yet has been "punished and punished
and
punished." Petitioner's Br. at 10. Petitioner argued that the
ALJ
should have disregarded the imposition of a maximum sentence by
the
criminal court because it resulted from "fraud and abuse
hysteria
passing through Cleveland due to the Blue Cross Blue Shield
advertising"
causing public pressure on the elected judge. Id.
Petitioner argued
that his conviction was based on "the flimsiest of
confessions" secured
by a private investigator paid on an incentive basis
whose veracity the
ALJ improperly assumed. Id. at 9-10. 11/
Finally, Petitioner alluded
to the support which he enjoyed in the community
and to character
witnesses who could testify on his behalf.
As we discussed above, the ALJ properly considered all the
evidence
relating to Petitioner's trustworthiness, including that relating to
his
signed statement. Petitioner may not permissibly attack
the
constitutionality of his criminal conviction in this forum,
especially
since Petitioner did not raise his complaints regarding the
criminal
prosecution until the administrative proceeding. In weighing
the
reasonableness of the length of the exclusion, the ALJ did not err
in
relying on the evidence of Petitioner's misconduct and
consequent
potential for causing future harm to the federally-funded
programs.
Petitioner's speculations about the motives of the judge in setting
his
sentence were irrelevant here and should have been raised in
state
appellate processes.
The assessment of credibility is generally a matter for the ALJ, who
can
observe the witnesses. We have no basis to believe that the
ALJ
"assumed" the veracity of the investigators, as opposed to
observing
their demeanor and weighing their testimony. Obviously,
Petitioner was
not a disinterested witness, either.
The character evidence offered by Petitioner was not directly related
to
the question of his trustworthiness to participate in federal
programs,
but rather consisted largely of customers' testimonials about
his
services and letters about his civic activities and general
reputation.
See Petitioner's Exs. 1, 4-46, 50-52. The conduct of which
Petitioner
was convicted would be discoverable only by comparing the actual
product
delivered with the bill to BCBSO, but the BCBSO customer who
testified
for Petitioner agreed with the I.G.'s witnesses that customers
never saw
bills to or statements from BCBSO for their pharmacy
purchases. See Tr.
at 116-17. The BCBSO customers therefore could
not know whether or not
Petitioner was conducting his business in a fiscally
dishonest manner
based on their dealings with him. Even if other
(non-BCBSO) customers
were not subjected to mislabeling or misbilling,
Petitioner's dishonesty
in handling BCBSO funds would be no less
egregious. Cf. ALJ Decision at
16.
It was proper for the ALJ to make his own assessment of
Petitioner's
trustworthiness. In so doing, the ALJ not only found that
Petitioner
failed to display contrition after admitting in his guilty plea
"that he
had knowingly committed acts involving deception," but also
that he
"engaged in elaborate rationalizations" aimed at shifting the blame
for
his conviction elsewhere. Id. at 14-15. In fact, Petitioner
offered a
variety of inconsistent explanations for how the misconduct could
have
occurred without fault on his part, despite his guilty plea, and
blamed
a remarkable number of parties for his conviction. See, e.g.,
id. at
15-16; Petitioner's Br. at 10. In light of this, the ALJ
reasonably
found additional evidence of untrustworthiness in Petitioner's
failure
to take "ultimate responsibility" as "Pharmacist in charge" for
the
misconduct, even if he denied criminal guilt. ALJ Decision at
16.
The ALJ provided a detailed discussion of the evidence supporting
his
conclusion that a three-year exclusion was warranted. Id. at
14-16. We
conclude that Petitioner provided no basis to disturb
that
determination. .Conclusion
We affirm the ALJ Decision, and we affirm and adopt each of the
findings
of fact and conclusions of law in the ALJ Decision. 12/
___________________________
Judith
A.
Ballard
___________________________
Donald
F.
Garrett
___________________________
M.
Terry Johnson
Presiding
Board
Member
1. The above summary is based on the undisputed facts and is
not
intended as a substitute for the more detailed factual findings in
the
ALJ Decision.
2. "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).
3. Petitioner mistakenly asserted that Dabbs arose under a
different
portion of section 1128(b)(1), dealing with government-funded
or
operated programs. Petitioner's Br. at 3.
4. We note that past decisions have found that a conviction
was
"related to" delivery under section 1128(a)(1), even where no item
or
service was actually provided, because the filing of a false claim
"was
`inextricably intertwined' with the delivery of an item or service
since
a claim by its very nature alleges such delivery." Francis
Shaenboen,
R.Ph., DAB 1249, at 4 (1991) (pharmacist convicted for billing for
drugs
never dispensed), and cases cited therein; see also Douglas
Schram,
R.Ph., DAB 1372, at 8 (1992) (pharmacist convicted of conspiracy
to
submit claims which falsely represented that drugs had been
prescribed).
5. It is not necessary for our purposes here to determine
whether
section 1128(a)(1) applies whenever Medicare or Medicaid is the
"victim"
of a criminal offense. Generally, we believe that our later
discussion
of this issue in Niranjana B. Parikh, M.D., DAB 1334, at 5-6
(1992),
focussing on the "common sense connections" between the offense and
the
health care delivery, offers a better analytical approach.
6. In light of our conclusion below that the constitutional
challenges
to Petitioner's conviction are not properly heard here, we do
not
address conflicts in the evidence regarding what the actual role of
the
state investigator was in obtaining the statement, whether
warnings
would have been legally necessary under the circumstances, or
what
importance the statement had to the ultimate conviction, in light of
the
evidence already available to the investigators before the statement
was
obtained.
7. Petitioner miscalculated the relevant time period. The I.G.
cannot
be charged with any time before the conviction took place on April
26,
1989 because the exclusion authority under section 1128(b)(1)
derives
from a covered conviction. The I.G. learned of the conviction
by notice
from the State Pharmacy Board in 1991. Transcript of Hearing
Before
ALJ, held March 4, 1992 (Tr.) at 430-31. An I.G. letter to
Petitioner
dated September 5, 1991, acknowledging receipt of information
submitted
by Petitioner for the I.G.'s consideration in mitigation, shows
that the
I.G. had initiated the exclusion process, at least by that date
and
presumably earlier in order for Petitioner to have known to submit
any
mitigating information. I.G. Exhibit (Ex.) 8. Therefore, the
I.G.
appears to have taken action within something less than nine months
of
becoming aware that Petitioner was subject to exclusion.
8. Petitioner asserted that Petitioner's counsel made a request
for
discovery on the issue which was "ignored" by the I.G. and the
ALJ.
Petitioner's Br. at 5-6. The record does not contain any
prehearing
request for discovery on this issue, and Petitioner did not offer
any
citation to substantiate his assertion on this point. In fact, at
the
hearing, Petitioner's counsel apologized and stated that "I would
have
asked for discovery on this, but unfortunately, in preparation, I
only
read the case a few days before the hearing." Tr. at 427.
9. In any case, we agree with the ALJ that the proffered
documents,
even if admitted, would not support Petitioner's allegation that
his
exclusion was affected by a "bounty" system. The performance
plan
nowhere refers to the number of sanctions imposed, but rather
measures
the number of sanctions "processed," which is expressly defined
as
"bringing cases to an appropriate conclusion; i.e., a proposed
sanction
is considered and closed, or a sanction is successfully
imposed."
Petitioner's Post-Hearing Br., Attachment 2, at 3, 6.
10. The ALJ made no finding as to whether Petitioner's
misconduct
continued for more than one year, as the audit concluded, since
the ALJ
found the conduct to which Petitioner pled guilty sufficient to
support
the three-year exclusion. ALJ Decision at 15.
11. Petitioner referred to the investigators as "paid on an
incentive
basis . . . based upon their success in obtaining convictions
through
their undercover work," but pointed to no evidence in the
record
supporting this assertion. Petitioner's Br. at 8.
12. Neither party excepted to FFCL 21, which states that
"[t]he
regulations concerning permissive exclusions pursuant to section
1128(b)
of the Act, promulgated at 57 Fed. Reg. 33320-42 . . . were
not
intended to govern ALJ review of I.G. exclusion determinations."
Thus,
we affirm this FFCL without reviewing it. We note, however, that
FFCL
21 was unnecessary, since, as FFCL 20 states, the regulations were
not
applicable to this case because Petitioner's exclusion was
pending
before an ALJ at the time they were