Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
) In the Case
of: )
DATE:
November 15, 1993 ) Douglas L. Reece, D.O., )
Docket No. C-93-048
)
Decision No. 1448 Petitioner,
) ) - v.
- ) ) The
Inspector General. ) )
DECISION
Douglas L. Reece, D.O (Petitioner) appealed an August 12, 1993 decision
by
Administrative Law Judge (ALJ) Joseph K. Riotto. See Douglas L.
Reece,
D.O., DAB CR280 (1993) (ALJ Decision). There, the ALJ granted
the
Inspector General's (I.G.'s) Motion for Summary Disposition and
affirmed the
I.G.'s determination to exclude Petitioner from
participation in Medicare and
Medicaid for five years.
Petitioner's exclusion was based on sections 1128(a)(1) and
1128(c)(3)(B)
of the Social Security Act (Act). Section 1128(a)(1)
mandates exclusion
from Medicare and Medicaid programs 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) establishes that
"[i]n the case of an exclusion under
subsection (a), the minimum period
of exclusion shall be not less than five
years . . . ."
Petitioner raised three exceptions to the ALJ Decision. As
discussed
more fully below, we affirm the ALJ Decision in part and remand in
part
for further consideration by the ALJ.
Background
The ALJ Decision excluding Petitioner was based on the following
findings
of fact and conclusions of law (FFCLs):
1. Petitioner is an osteopathic physician practicing in the State
of
Texas.
2. On June 14, 1990, a grand jury in Lubbock, Texas,
indicted
Petitioner for the felony offense of Tampering with Government
Records.
3. The grand jury decided that there was probable cause to believe
that
on or about November 25, 1988, Petitioner knowingly and
intentionally
made a false claim for reimbursement by Medicaid based upon
Petitioner's
purportedly having provided an "office visit" to a certain
individual
when, in fact, Petitioner knew that such individual had not had
an
office visit.
4. The indictment states that the claim was submitted to the
National
Heritage Insurance Company on a form used by the Texas Department
of
Human Services in determining eligibility for Medicaid benefits.
5. The National Heritage Insurance Company was, on November 25,
1988,
the Medicaid carrier (fiscal intermediary) for the State of Texas.
6. On May 5, 1992, in the 237th District Court, Lubbock County,
Texas,
Petitioner "pleaded guilty to the charge contained in the
indictment,"
and the court accepted the plea.
7. The Texas court determined that the evidence "substantiates
the
Defendant's guilt for the offense charged against him to-wit:
Tampering
with Government Records, a third-degree felony committed on
November 25,
1988."
8. The court declared that the "best interest of society and
the
defendant" would be served by deferring entry of a formal
adjudication
of guilt.
9. The court placed Petitioner on probation for a period of 10
years
and required him to pay a substantial fine ($5000), plus restitution
and
costs.
10. 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 (1983).
11. In making a discretionary determination, in the name of the
State,
to credit Petitioner's plea, thereby formally resolving an
outstanding
criminal charge, the judge was engaged in the "acceptance"
process,
within the meaning of section 1128(i)(3) of the Act.
12. The court's decision that formal entry of Petitioner's guilt
should
be deferred is a common situation, anticipated by Congress, which,
the
statute declares, does not undo the guilty plea.
13. That other federal statutes treat situations involving
deferred
adjudication differently is irrelevant, particularly in light of
the
clear intent of Congress with regard to mandatory exclusions.
14. Filing false Medicaid claims constitutes clear
program-related
misconduct, sufficient to mandate exclusion.
ALJ Decision at 2-3 (citations omitted).
Petitioner's Exceptions
Petitioner raised three interrelated exceptions. Petitioner asserted
that
he had not been "convicted" as that term is defined by section
1128(i) of the
Act. Petitioner disputed the ALJ's findings that
Petitioner had pled
guilty in State Court and that the Court had
accepted the plea and determined
that the evidence substantiated
Petitioner's guilt. Additionally, based
on United States v. Halper, 490
U.S. 435 (1989), Petitioner asserted that the
civil sanction imposed by
the ALJ did not bear a rational relationship to the
goal of compensating
the Government for its loss and thus violated the United
States
Constitution's prohibition against double jeopardy. Finally,
given
these alleged errors, Petitioner asserted that the ALJ erred in
granting
the I.G.'s Motion for Summary Disposition because there
existed
questions of fact which necessitated a hearing. Petitioner
therefore
argued that the Board should either remand this case to the ALJ for
a
hearing or reverse the ALJ Decision based on the facts alleged
by
Petitioner. Petitioner Brief (Br.) at 1-7.
Analysis
1. The ALJ Decision was ambiguous in its treatment of the issue
of
whether Petitioner was convicted.
Section 1128(i) of the Act defines "convicted." That term
includes
situations --
(1) when a judgment of conviction has been entered against
the
individual or entity by a Federal, State, or local
court,
regardless of whether there is an appeal pending or whether
the
judgment of conviction or other record relating to
criminal
conduct has been expunged;
(2) when there has been a finding of guilt against
the
individual or entity by a Federal, State, or local court;
(3) when a plea of guilty or nolo contendere by the
individual
or entity has been accepted by a Federal, State, or local
court;
or
(4) when the individual or entity has entered into
participation
in a first offender, deferred adjudication, or other
arrangement
or program where judgment of conviction has been
withheld.
Petitioner maintained that he had not been convicted under Texas
law,
citing two Texas State Court decisions: Cole v. State, 757
S.W. 2d 864
(Tx. App. 1988), and McNew v. State, 608 S.W. 2d 166 (Tx. Cr.
App.
1978). Further, Petitioner cited this Board's statement in Carlos
E.
Zamora, M.D., DAB 1104 (1989), that a conviction occurred when a plea
of
guilty or nolo contendere had been accepted by a court and asserted
that
his guilty plea had not been accepted. Thus, Petitioner reasoned
that
he could not be considered to have been convicted under the
definition
of that term at section 1128(i)(3) of the Act. Petitioner
Br. at 6.
Petitioner also argued that the United States Court of Appeals decision
in
Martinez-Montoya v. I.N.S., 904 F.2d 1018 (5th Cir. 1990), precluded
a
finding that he had been convicted under the definition of that
term
presented at section 1128(i)(4) of the Act. Martinez-Montoya
involved
an analysis of the Texas deferred adjudication statute in the
context of
the Immigration Reform and Control Act, 8 U.S.C. . 1255.
Petitioner
read Martinez-Montoya to stand for the proposition that a
defendant was
not convicted when final adjudication of his case had been
deferred.
Petitioner argued that it was improper for federal law to utilize
two
different standards for the same type of determinations. Id.
at 5-6.
Additionally, before the ALJ, Petitioner asserted that a finding that
he
had been convicted would run contrary to a federal district
court
decision involving a similarly situated defendant in Travers
v.
Sullivan, 791 F. Supp. 1471 (E.D. Wash. 1992). See Petitioner's
Motion
in Opposition to Summary Judgment at 9-10.
Petitioner also asserted that under Texas law his plea "did not result
in
a �finding� of �guilty� as further proceedings were deferred and . .
. [he]
was placed on probation." Thus, he had not been convicted as
that term
is defined at section 1128(i)(2) of the Act. Petitioner
contended that
when he completed probation the court could enter a
finding of not guilty and
dismiss the charges against him.
Additionally, if he violated the terms of
probation, Texas authorities
had the burden of proceeding with an
adjudication of guilt and he could
"withdraw his guilty plea and undertake a
separate trial on the issue of
guilt." Therefore, Petitioner argued
that the I.G. had not provided
sufficient evidence to show that he had been
convicted of a criminal
offense under section 1128(a)(1) of the Act or to
show that his plea was
a final conviction for purposes of sections 1128(a)(1)
and 1128(i) of
the Act. Petitioner Br. at 7.
Before the ALJ, the I.G. asserted that Petitioner was convicted as
that
term is defined by sections 1128(i)(2), (3) or (4) of the Act. See
I.G.
Motion for Summary Disposition at 4-8; and I.G. Reply to
Petitioner's
Motion in Opposition to Summary Disposition at 1-7. The
essence of the
I.G.'s argument was that Petitioner could be excluded based on
his being
convicted under any one of three definitions of that term.
The ALJ Decision provided specific FFCLs only on the issue of whether
the
Texas Court had accepted Petitioner's guilty plea and thus whether
Petitioner
was "convicted" as defined by section 1128(i)(3) of the Act.
In so focusing
the analysis, however, the ALJ Decision was ambiguous
regarding the
additional bases for exclusion offered by the I.G. -- that
Petitioner was
"convicted" because there had been a finding of guilt
against him by a State
court (section 1128(i)(2)) and because he had
participated in a deferred
adjudication program (section 1128(i)(4)).
For example, FFCL 13 mentions
deferred adjudication and mandatory
exclusion in the same sentence, but there
is no FFCL or statement in the
Discussion section of the ALJ Decision
resolving whether Petitioner was
"convicted" within the meaning of section
1128(i)(4).
The ALJ's determination that Petitioner had been convicted also
ignored
the state court decisions cited by Petitioner as demonstrating that
the
plea was not accepted. We agree with the ALJ that Martinez-Montoya
did
not establish a definition of conviction for purposes of the
federal
exclusion statute. However, the ALJ's failure to address the
Texas
court cases leaves open the question of whether the judge
in
Petitioner's case accepted the plea under Texas law. Further,
although
the ALJ distinguished Travers on its facts, he did not consider
whether
the Travers court's definition of accepting a plea would apply in
this
case if Petitioner's characterization of the possible future
proceedings
in his case was correct. 2/
Because of ambiguities in the ALJ Decision concerning the applicability
of
section 1128(i), subsections (2), (3) and (4) to Petitioner's
circumstances,
we have concluded that this case should be remanded to
the ALJ for
clarification.
2. We need not consider Petitioner's arguments on the ALJ's
summary
disposition of his appeal at this time.
Given that the ALJ's analysis on the question of whether Petitioner
was
convicted is deficient, the issue of whether summary disposition of
this
case was appropriate is not ripe for our consideration.
Further
examination of the conviction issue may alter the ALJ's
analysis
regarding summary disposition. Consequently, we will
reserve
consideration of that issue pending the ALJ's decision on remand.
3. Petitioner's proposed exclusion would not violate the
Constitutional
ban on double jeopardy.
Based on the Supreme Court's decision in Halper, Petitioner argued
that
his proposed exclusion under section 1128(a) of the Act would
violate
the U.S. Constitution's prohibition against double jeopardy.
Petitioner
asserted that as a result of a five-year exclusion he would lose
more
than one-half million dollars in income and would be unable to
continue
his medical practice. Petitioner Br. at 3-4.
The facts in Halper are readily distinguishable from this case.
Halper,
the manager of a company which provided medical services for
patients
eligible for Medicare benefits, was convicted of submitting 65
false
claims for federal reimbursement under the federal false claims
statute.
He was sentence to two years in prison and fined $5,000. He
was then
sued by the United States under the civil False Claims Act. 31
U.S.C.
.. 3729-3731 (1982). In the latter action, the Government sought
a
$130,000 civil penalty, a doubling of its actual damages, and the
costs
of the civil action. The Supreme Court found this
disparity
sufficiently disproportionate that the proposed civil sanction
would
constitute a second punishment in violation of the Double
Jeopardy
Clause. In a decision it specifically noted should not
be construed as
far reaching, the Court found that the Government may not
criminally
prosecute a defendant, impose a criminal penalty on the defendant,
then
bring a separate civil action based on the same conduct and receive
a
judgement that is not rationally related to the goal of making
the
government whole. Halper at 449-452.
While several courts have treated an exclusion action as also raising
the
question of multiple punishments for the same conduct, 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). The
Greene 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 at the legislative
history of this provision and
concluded that its primary goal was to
protect present and future Medicare
and Medicaid beneficiaries "from
incompetent practitioners and from
inappropriate or inadequate care."
961 F.2d 1539, 1542, citing S. Rep. No.
109, 100th Cong., 1st Sess. 1-2
(1987), reprinted in 1987 U.S.C.C.A.N. 682;
see Carolyn Westin, DAB
1381, at 15 (1993); see also Douglas Schram, R.Ph.,
DAB 1372 (1992).
The purpose of the minimum mandatory exclusion under section 1128(a)(1)
is
remedial, not punishment or restitution. It serves to
protect
beneficiaries from an individual or entity whose
trustworthiness
Congress has deemed questionable based on a conviction of
a
program-related crime. Contrary to the underlying theme of
Petitioner's
arguments on this issue, a provider does not have an inalienable
right
to participate in (i.e., to be reimbursed by) the Medicare or
Medicaid
programs. In a case such as this, the Government is not
levying a fine
but, rather, is refusing to do business with someone found to
be
untrustworthy. Moreover, although the exclusion's economic effect
on
this Petitioner may be adverse, it does not follow logically that
he
cannot practice medicine simply because he cannot count on receiving
in
excess of $500,000 from Medicare and Medicaid over the period of
this
exclusion. The five-year exclusion which Petitioner would face is
the
minimum sanction allowed by law. See section 1128(c)(3)(B) of the
Act.
Petitioner did not raise any issues regarding the question of
double
jeopardy in the context of an exclusion under section 1128(a) of the
Act
that have not been addressed by the court cases cited above. Based
on
the above analysis, we reject Petitioner's argument that this
proposed
exclusion would violate the Double Jeopardy Clause.
Conclusion
Based on the preceding analysis, we find that Petitioner's
proposed
five-year exclusion would not violate the U.S.
Constitution's
prohibition against double jeopardy. However, we remand
this matter to
the ALJ so that he may clarify his decision concerning
whether Petitioner was convicted within the meaning of
section
1128(i)(2), (3) or (4). We will reserve judgment on the issue
of
whether summary disposition was appropriate pending the ALJ's
decision
on remand.
_________________________
Donald
F. Garrett
_________________________
Norval
D. (John) Settle
_________________________
M.
Terry Johnson Presiding
Board
Member
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"
to
refer to all programs listed in section 1128(h).
2. The ALJ Decision ignored the fact that although
the Travers court
found that the plea in issue had not been accepted, it did
find that
Travers had been convicted because he had entered into a
deferred
adjudication program. As noted above, although the I.G. raised
the
issue of Petitioner's deferred adjudication, the ALJ made no
FFCLs
relative to