Wesley J Hammer and Four Star Health Care Systems, Inc.,
d/b/a Gold Star Ambulance, Advanced Life Support Systems,
d/b/a Gold Star Ambulance

The Inspector General.

The Petitioners requested review of a decision by Administrative Law Judge Mimi Wang Leahy imposing a five-year exclusion on the Petitioners under section 1128(b)(7) of the Social Security Act (Act), 42 U.S.C. � 1320a-7. Wesley J. Hammer, Four Star Health Care Systems, Inc., d/b/a Gold Star Ambulance, Advanced Life Support Systems, d/b/a Gold Star Ambulance, DAB CR565 (1999) (ALJ Decision). Section 1128(b)(7) of the Act authorizes exclusion from participation in Medicare and State health care programs of an individual or entity who the Secretary determines has committed acts described in section 1128A of the Act. The Inspector General (I.G.) proposed exclusion of Petitioners based on the I.G.'s determination that Petitioners had presented claims for Medicare services in reckless disregard of the truth or falsity of those claims. The claims were admittedly presented more than six years prior to the proposal to exclude.

The Petitioners took exception to the ALJ Decision on a number of grounds, including that the action was untimely in light of a six-year statute of limitations in section 1128A of the Act. Since we conclude that acts described in section 1128A are acts occurring within six years of initiation of the action, we conclude that there is no basis for exclusion under section 1128(b)(7) of the Act. Accordingly, we reverse the ALJ Decision.

Legal background

Section 1128(b)(7) of the Act authorizes exclusion of an individual or entity "that the Secretary determines has committed an act which is described in section 1128A" of the Act. (Emphasis added.)

Section 1128A of the Act, referred to as the Civil Monetary Penalties Law (CMPL), authorizes the Secretary to impose civil monetary penalties and assessments against--

(a) Any person (including an organization, agency, or other entity . . . ) that--

(1) presents or causes to be presented to an officer, employee, or agent of the United States . . . , a claim . . . that the Secretary determines--

* * *

(B) is for a medical or other item or service and the person knows or should know the claim is false or fraudulent . . . .

42 U.S.C. � 1320a-7a; see 42 C.F.R. � 1003.102.

Section 1128A(a) further authorizes the Secretary to "make a determination in the same proceeding to exclude the person from participation" in Medicare and State health care programs.

Section 1128A(c)(1) provides in part:

The Secretary may not initiate an action under this section with respect to any claim, request for payment, or other occurrence described in this section later than six years after the date the claim was presented, the request for payment was made, or the occurrence took place.

(Emphasis added.) The Medicare and Medicaid Patient and Program Protection Act of 1987 (MMPPPA), Public Law No. 100-93, added section 1128(b)(7) of the Act and amended section 1128A.⁽¹⁾

The Senate Report explained:

Under the bill, the Secretary's authority to exclude a person against whom a civil monetary penalty or assessment is imposed would be relocated from section 1128 to section 1128A . . . to make explicit the policy that the Secretary may use a single administrative procedure both for imposition of penalties and assessments and for exclusions.

The Committee bill, in the new section 1128(b)(7), would also authorize the Secretary to exclude an individual or entity who commits an act that would be a basis for a civil monetary penalty under section 1128A. Thus, the Committee bill would give the Secretary two alternative procedures for exclusion. The Secretary could use section 1128, which does not involve civil monetary penalties or could use section 1128A, which combines actions for exclusion and civil monetary penalties. It is the Committee's intent, however, that the Secretary not subject an individual or entity to both procedures on the same set of facts.

By consolidating the exclusion and penalty provisions in section 1128A, the bill would also provide a single forum for judicial review of such penalties, assessments and exclusions. Under current law, civil monetary penalties and assessments are subject to review by the Courts of Appeals; whereas, exclusions based on them under section 1128 are subject to review under section 205(g) in the District Courts. This bill would consolidate review in the Courts of Appeals.

Under the bill, the Secretary would not be permitted to initiate an action under the civil monetary penalty provisions later than six years after a claim had been presented. This is the same period provided in the False Claims Act (31 U.S.C. 3731).

S.REP. No. 109, 100th Cong., 1st Sess. 16 (1987)(emphasis added).

The Senate Report further explained section 1128(b)(7) as follows:

The Secretary would be authorized to exclude any individual or entity that has committed an act described in 1128A . . . . The Secretary could exercise this authority to exclude an individual or entity without the necessity of imposing a civil monetary penalty . . . . It is the Committee's intent that the burden of proof requirements under this authority would be those customarily applicable to administrative proceedings. (See discussion below regarding the special due process protection relating to exclusion under this authority.)

Id. at 9-10 (emphasis added).

With respect to the special due process protection, the Senate Report explained that, while an individual or entity excluded under section 1128 would generally be entitled to a post-termination hearing, a "special due process protection is established for cases where the Secretary seeks to exclude an individual or entity pursuant to section 1128(b)(7)," describing that section as giving the Secretary authority to exclude "on the grounds that the individual or entity has committed an act that is subject to civil monetary penalties . . . ." Id. at 12 (emphasis added).

The House bill had the same provisions and explanations, except that the House bill did not provide for the due process protection that was in the Senate bill and that was ultimately enacted. See section 1128 of the Act; H.R. REP. No. 85, PT. 1, 100th Cong., 1st Sess. 2, 10, 15-16 (1987).

Regulations at 42 C.F.R. � 1001.901 provide:

(a) Circumstance for exclusion. The OIG may exclude any individual or entity that it determines has committed an act described in section 1128A of the Act. The imposition of a civil money penalty or assessment is not a prerequisite for an exclusion under this section.

The preamble to the proposed rule to implement the MMPPPA explained generally:

The MMPPPA has expanded the bases for exclusion to include any act that is described in sections 1128A . . . of the Act. As a result, any activity that would serve as the basis for imposition of a civil money penalty (CMP) under section 1128A may now serve as the basis for an exclusion as well, independent of whether penalties and assessments are also being imposed. . . . Specifically, � 1001.901 provides for exclusion actions based on acts described in section 1128A of the Act (42 U.S.C. 1320a-7a), the CMP law.

55 Fed. Reg. 12,205, 12,208 (April 2, 1990) (emphasis added).⁽²⁾

Commenters on the proposed rule indicated that "if someone successfully defended against imposition of a CMP, then those same defenses should apply to bar the imposition of an exclusion." 57 Fed. Reg. 3298, 3308 (January 29, 1992). The preamble to the final rule responded to this comment with the statement: "We agree. If a respondent successfully defends against imposition of a CMP, we would not then impose an exclusion under � 1001.901 based on the conduct at issue in the CMP case." Id.

The preamble to the proposed rule explained that the MMPPPA established two categories of permissive exclusions under section 1128(b). The first category, referred to as "derivative exclusions," involves "the authority to exclude an individual or entity . . . based on an action previously taken by a court, licensing board or other agency." 55 Fed. Reg. 12,206. For derivative exclusions, the "OIG would not be required to reestablish the factual or legal basis for such underlying sanction." Id. Non-derivative exclusions, the second category, are "based on determinations of misconduct that would originate with determinations made by the OIG" and "would require the OIG, if challenged, to make a prima facie showing that the improper behavior did occur." Id. An exclusion under section 1128(b)(7) of the Act (including an exclusion under � 1001.901 of the regulations) is classified as a non-derivative exclusion. 55 Fed. Reg. 12,208.

Moreover, a non-derivative exclusion under � 1001.901 is distinguished from some other exclusions because the exclusion is not effective until after the ALJ hearing, absent a finding that warrants the exclusion going into effect prior to the hearing (basically, health and safety reasons). If the I.G. proposes to exclude an individual or entity under � 1001.901 and has not made such a finding, a proposed notice is sent out in accordance with � 1001.2003. A request for a hearing in response to the proposal to exclude must set forth--⁽³⁾

(1) The specific issues or statements in the notice with which the individual or entity disagrees;
(2) The basis for that disagreement;
(3) The defenses on which reliance is intended;
(4) Any reasons why the proposed length of exclusion should be modified; and
(5) Reasons why the health or safety of individuals receiving services under Medicare or any of the State health care programs does not warrant the exclusion going into effect prior to the completion of an [ALJ proceeding].

The regulation at 42 C.F.R. � 1001.2007(d) provides:

When the exclusion is based on the existence of a conviction, a determination by another government agency or any other prior determination, the basis for the underlying determination is not reviewable and the individual or entity may not collaterally attack the underlying determination, either on substantive or procedural grounds, in this appeal.

(Emphasis added.) The preamble to the proposed rule explains this provision in the context of referring to "derivative exclusions--proposed �� 1001.101 through 1001.601" and gives the examples of a conviction or a licensing action. 55 Fed. Reg. 12,211.

Section 1128A contains a provision estopping a person convicted of a criminal offense involving the same transaction from denying the essential elements of that offense in a CMPL proceeding. The regulations in Part 1003 of 42 C.F.R. for proceedings to impose a civil money penalty, assessment, or exclusion incorporate this provision and also provide:

Where a final determination that the respondent presented or caused to be presented a claim or request for payment falling within the scope of � 1003.102 has been rendered in any proceeding in which the respondent was a party and had an opportunity to be heard, the respondent shall be bound by such determination in any proceeding under this part.

42 C.F.R. � 1003.114(a)(emphasis added).

Also, while the proposed rule would have placed the burden of persuasion on the petitioner in all exclusion cases, the final rule at � 1005.15 took a different approach. The preamble explained with respect to CMP exclusions such as those under � 1001.901 that "we have placed the burden of persuasion on the government because Congress intended 'special due process protections' to accompany such exclusions (see Senate Report 100-109, . . . at 12-13)." 57 Fed. Reg. 3326.

The ALJ Decision

The I.G. issued a proposal to exclude Petitioner Wesley J. Hammer and a proposal to exclude Petitioner Four Star Health Care Systems, Inc., d/b/a Gold Star Ambulance, Advanced Life Support Systems, d/b/a Gold Star Ambulance, each for a period of five years. The notice letters proposed to exclude Petitioners on the basis of section 1128(b)(7) of the Act and 42 C.F.R. � 1001.901. The letters each cited to the Magistrate's decision in United States v. Four Star Health Care Systems et al., No. H-93-2093 (S.D. Tex. Apr. 9, 1997), and stated that--

you were found to have violated the False Claims Act ("FCA"), 31 U.S.C. � 3729 et seq., with respect to your submission of forty-nine (49) claims for Medicare payment . . . . Based on the acts that resulted in your liability under the FCA, I have determined that you presented or caused to be presented to an agent of the United States . . . claims for medical or other items or services that you knew or should have known were false and/or fraudulent, in violation of section 1128A(a)(1)(B) of the Act . . . .

The 49 claims were for ambulance services provided to kidney dialysis patients. Essentially, the court found that the claims were submitted with reckless disregard for their truth or falsity since a statement regarding the medical necessity of the services was inserted by computer without an examination as to whether the statement was consistent with the information on the ambulance "run sheets" prepared by the emergency medical technicians at the time the services were provided.

The proposals to exclude referred to 42 C.F.R. � 1001.2003 for the requirements for any request for hearing. The issues listed in that section were addressed in the requests for hearing submitted by Petitioners. The ALJ, however, identified the issues in her prehearing order as those set out in section 1001.2007(a)(1): Whether there is a basis for exclusion and whether the length of the exclusion is unreasonable.

The parties agreed to waive an in-person hearing and that the ALJ could go to decision based on the documentary record. In addition to the notices and requests for hearing, that record consists of the complaint and Magistrate's Order in the FCA case, the Court of Appeals decision upholding the District Court's decision, and an affidavit of Petitioner Hammer in which he asserts that the facts as stated in the accompanying brief are true and then gives reasons why an exclusion would adversely affect him. Among the facts asserted in the accompanying brief are that Petitioner Hammer did not personally engage in conduct violating the FCA, even though the court found him liable. Issues raised by the Petitioners included whether the exclusion was barred by the six-year limit in section 1128A (since the claims at issue were submitted more than six years before the I.G.'s notices) or by the doctrine of res judicata (since exclusion was not raised in the FCA case).

The ALJ Decision contained the following four Findings of Fact and Conclusions of Law (FFCLs):⁽⁴⁾

1. The I.G.'s proposals to exclude Respondents are not time-barred.

2. The doctrines of res judicata and collateral estoppel do not bar the I.G. from proposing to exclude Respondents.

3. The I.G. has properly relied upon section 1128(b)(7) of the Act as the basis for proposing to exclude Respondents and, therefore, the proposed exclusions cannot be set aside in their entirety.

4. The I.G.'s proposed exclusion of five years for each Respondent is not unreasonable.

The ALJ Decision concluded, and Petitioners did not deny, that both the CMPL and the FCA impose liability on a person who presents or causes to be presented a Medicare claim in reckless disregard of the truth or falsity of the information provided with the claim. For her conclusion that a basis for exclusion under section 1128(b)(7) exists, the ALJ relied on the fact that the District Court had found Petitioners "liable under the FCA for the submission of 49 claims for ambulance services that were not medically necessary to the patients on the dates claimed, in reckless disregard of the truth of those claims" and that this finding was upheld on appeal. ALJ Decision at 10-11. Thus, she concluded that the preponderance of the evidence showed that Petitioners had committed acts described by section 1128A.⁽⁵⁾

In concluding that the six-year time limit in section 1128A does not apply to an exclusion under section 1128(b)(7), the ALJ Decision states that "if the [six-year limit] in section 1128A(c)(1) of the Act were controlling whenever the Secretary determines that an exclusion should be proposed because an individual has acted in contravention of section 1128A, there would have been no purpose to Congress enacting also section 1128(b)(7) of the Act." ALJ Decision at 4. The ALJ Decision also reasons that: 1) section 1128A(c)(1) limits the authority to initiate action under "this section" and "this section" refers to section 1128A; 2) for the six-year limit to apply to an exclusion, the exclusion must be made in the same proceeding as a civil money penalty and/or assessment; 3) section 1128A(a) makes clear that the remedies under section 1128A are "in addition to any other penalties that may be prescribed by law"; and 4) there is no statute of limitations in section 1128 of the Act.

Petitioners objected to the ALJ Decision as a whole, in addition to taking exception to each of the FFCLs. For the reasons stated below, we reverse.

The standard for our review of a disputed issue of fact is whether an ALJ decision is based on substantial evidence in the record as a whole. The standard of review on a disputed issue of law is whether the ALJ decision is erroneous.

We note at the outset that, because of the existence of the court decisions in the FCA action, both the I.G. and the ALJ analyzed the case as though it involved a derivative exclusion. This is inconsistent with the history of section 1128(b)(7) and 42 C.F.R. � 1001.901. Moreover, it appears to have resulted in application of several regulatory provisions that were not intended to apply to non-derivative exclusions, such as the collateral estoppel provision at 42 C.F.R. � 1001.2007(d) and the limitations on issues for hearing at � 1001.2007(a)(1). We do not need to consider here, however, the extent to which this approach affected the ALJ's conclusions, since we dispose of the case through our analysis of the six-year limit.

Below, we analyze the statutory language used in section 1128(b)(7) of the Act, the regulatory implementation of that section, the underlying purpose of the six-year limit, and the I.G.'s arguments about that limit. We conclude that "acts described in section 1128A" means acts committed within six years of initiation of the exclusion action. Given the undisputed fact that the claims in question here were presented more than six years prior to the initiation of the exclusion action, we further conclude that there is no basis for exclusion under section 1128(b)(7).

The issue

The ALJ Decision analyzed the Petitioners' arguments about the six-year limit primarily by considering whether section 1128A(c)(1) of the Act applies by its own terms beyond section 1128A. The Petitioners, however, were arguing in effect that section 1128(b)(7) incorporates the six-year limit by reference. Viewed this way, the question raised may be framed as follows: whether an act that occurred more than six years prior to the notice of proposed exclusion is an "act described in section 1128A" so that it may form the basis for an exclusion under section 1128(b)(7).

The statutory language

The ALJ Decision does not analyze the language of section 1128(b)(7) in concluding that the six-year limit does not apply. Instead, the ALJ Decision states conclusorily in a footnote that the "conduct subject to an exclusion is described in section 1128A(a)(1) through (3)." ALJ Decision at 5, n. 6. The plain language of section 1128(b)(7), however, incorporates section 1128A in its entirety. Congress did not refer merely to subsections (a)(1) through (3), but to section 1128A as a whole. Thus, the statutory language is more consistent with the reading advocated by Petitioners than with the reading adopted in the footnote in the ALJ Decision. At the very least, the reference to section 1128A as a whole renders the statutory language ambiguous with respect to whether Congress intended to refer to subsection (c)(1) of section 1128A, as well as to subsections (a)(1) through (3).

Thus, to determine the intent of Congress in enacting section 1128(b)(7), it is appropriate to examine the legislative and regulatory history of the relevant provisions, and the underlying intent of the six-year limit.

The legislative and regulatory history

Both the legislative and the regulatory history, set out above, describe section 1128(b)(7) as providing an "alternative procedure" where there is a "basis for imposing a civil money penalty" under section 1128A. A penalty could not be imposed under section 1128A, however, unless the action were initiated within the six-year period. Also, if Congress had intended to authorize exclusion under circumstances where no CMP could be imposed, we doubt if section 1128(b)(7) would have been referred to as merely authorizing an "alternative procedure."

As noted above, the preamble to the final rule implementing these provisions stated in response to comments that any defenses available in a CMP action would be available in an exclusion action brought on the same facts. Thus, this Department's longstanding interpretation of the interaction of the two provisions is that the choice of the alternative exclusion procedure under section 1128(b)(7) would not result in exclusion where no civil money penalty could be imposed if the procedural choice had been different.

The I.G. stated in a footnote to its brief before the ALJ that the I.G. chose the section 1128(b)(7) alternative here because it would not have been fair to impose another penalty on top of the FCA penalty. Yet, if the I.G. had chosen to act under section 1128A at the time of the proposal to exclude, the six-year limit would have applied by its own terms, both to the proposed civil money penalty and to the proposed exclusion.

The ALJ Decision cited to nothing in either the legislative or the regulatory history to support the conclusion that there would be no purpose to section 1128(b)(7) if it does not permit the I.G. to propose exclusion under circumstances in which the I.G. would be barred from bringing a combined CMP and exclusion action. Instead, the history indicates that the alternative procedure was intended to permit the I.G. to choose to propose only an exclusion as the remedy in circumstances where a basis for imposing a CMP exists. There clearly are circumstances where exclusion only might be a preferred remedy -- for example, if the I.G. thought it was unlikely to collect a CMP or did not want to use the process of consultation with the Department of Justice contemplated by section 1128A. The legislative history further indicates that Congress offered the alternative so that imposing a CMP is not a prerequisite to exclusion, as it was under the provisions in effect prior to the MMPPPA. Indeed, this is precisely what the implementing regulation at � 1001.901 states. Nothing in the statutory or regulatory history suggests that section 1128(b)(7) was intended to authorize exclusion under circumstances where no CMP could be imposed.

The purposes of the six-year limit

While the congressional reports on the MMPPPA do not state the purpose of the six-year limit, the context throws light on that purpose.

The CMPL, as enacted in 1981, did not contain any limit, but the regulations published in 1983 contained a five-year limit, which was explained as follows:

Comment: Three commenters criticized the regulations for failing to include limitation on the time period during which the Department could seek penalties, assessments, and/or suspensions under � 1128A(a) and � 1128A(b). They noted that this could result in unfairness in cases where the passage of time would impair a respondent's ability to defend an action due to lack of memory on the part of witnesses, loss of documentation, etc. One suggested that the six-year statute of limitations in the False Claims Act . . . might be appropriate. All suggested tailoring the limitations period to the time requirements imposed by the Medicare and Medicaid programs for the retention of records.

Response: We agree that a limitations period should be stated expressly in the regulations. We have included final � 101.132 (sic), which bars the Department from proceeding against a party for violations concerning which a right of action has accrued more than five years before the filing of a Notice of Proposed Determination . . . . The five-year period chosen comports with 28 U.S.C. 2462, governing actions to enforce civil fines, penalties and forfeitures. This time period is sufficient to protect a respondent from being forced to defend stale claims.

48 Fed. Reg. 38,827, 38,828 (August 26, 1983). After the MMPPPA was amended, the regulation was amended with the following explanation:

When originally enacted in 1981, the civil money penalties law contained no statute of limitations governing the time in which actions under it must be brought. This lack of such an express limitations period was a matter of concern to both the Department and the provider community which felt that failure to include limitations on a time period could result in unfairness in cases where the passage of time could impair a respondent's ability to defend an action due, for example to lack of memory on the part of witnesses or the loss of documentation.

* * *

[The MMPPPA] adds an express 6-year statute of limitations to the CMP law. As a result, we are amending 42 CFR 1003.132 to indicate that the OIG is not permitted to initiate an action under the CMP provisions later than 6 years after a claim has been presented. This 6-year period is consistent with the limitations period set for the False Claims Act, 31 U.S.C. 3731.

52 Fed. Reg. 49,412 - 49,213 (December 31, 1987).

This suggests that the MMPPPA lengthened the limitation from the five-year period to a six-year period to make it consistent with the FCA period, but that Congress agreed with the Department that there should be an express limitation. The concerns about fairness underlying the CMPL provision also apply to a section 1128(b)(7) exclusion. Thus, it makes sense to interpret the reference to section 1128A in section 1128(b)(7) to include the six-year limit in section 1128A(c)(1), especially since the two provisions were enacted at the same time.

Finally, the fact that Congress established special due process protections for a section 1128(b)(7) exclusion further supports a determination that the phrase "acts described in section 1128A" means acts committed within the six-year period. Applying those protections to a section 1128(b)(7) exclusion as well as a proceeding under section 1128A makes sense because both section 1128A and section 1128(b)(7) contemplate non-derivative determinations involving potentially complex issues. Similarly, both section 1128A and section 1128(b)(7) actions potentially involve unfairness if the alleged acts occurred more than six years before initiation of the action because the passage of time could impair a respondent's ability to defend an action because of lack of memory on the part of witnesses, loss of documentation, or even destruction of documentation after the end of a record retention period.

The I.G.'s arguments are not persuasive

In asserting that the six-year limit does not apply, the I.G. relied primarily on the fact that section 1128A(c)(1) refers to actions "under this section." We agree that this wording means that section 1128A(c)(1), read by itself, does not appear to apply to anything other than an action under section 1128A. This argument, however, ignores the fact that section 1128(b)(7) refers to "acts described in section 1128A" and can thus be read as meaning acts that occurred within the six-year period prior to initiation of an exclusion action.

The I.G. also asserted that there is no statute of limitations provision applicable to exclusion authorities under the Act and that the DAB has previously recognized this. I.G. App. Br. at 5-6, citing, for example, Paul R. Scollo, D.P.M., DAB No. 1498 (1994); Marshall J. Hubsher, M.D., DAB CR188 (1992). These assertions are true. Nothing here implies that the six-year limit applies to all exclusions, however. The I.G.'s reliance on these decisions is misplaced since the Board has never previously addressed the issue raised here regarding what Congress intended by its reference to section 1128A in section 1128(b)(7).

The I.G. also argued that, since an exclusion under section 1128(b)(7) has a remedial purpose, the six-year limit should not apply. First, we note that the CMPL has a remedial purpose, as well, as do the civil penalty provisions of the FCA. The remedial purpose of an exclusion is, moreover, to protect the program from individuals who are untrustworthy. Making an untimely determination in a non-derivative exclusion action could lead to exclusion of an individual who is trustworthy but could not fairly defend the action because of the passage of time. Moreover, the need to protect the program is less compelling if someone committed acts ending over six years previously but has not committed any since then. If the I.G. has evidence of egregious acts outside the time limit that the I.G. believes are part of a continuing pattern, the I.G. may closely scrutinize the subsequent acts and may propose an exclusion based on subsequent acts, so long as the action is initiated timely.

The I.G. pointed out that an exclusion under section 1128(b)(7) is discretionary, implying that the I.G. should be able to bring such an action whenever the I.G. decides. The I.G.'s discretionary authority is limited, however. The I.G. may propose a section 1128(b)(7) exclusion only if the I.G. determines that an individual or entity has "committed an act described in section 1128A" (or alternatively, section 1128B). That determination is reviewable by the ALJ and then this Board. Since we conclude that "an act described in section 1128A" means an act that occurred within six years of initiation of the action, we conclude, in effect, that no basis for exclusion exists here.

The I.G. further argued that the "triggering event" here was the FCA court decision rendered on April 9, 1997, and that "because of her reliance on the prior FCA liability determination, the I.G. could only propose exclusion of Petitioners after there had been a final judgment on the issue of liability since exclusions are remedial in nature and not punitive." I.G. App. Br. at 6. In support of this argument, the I.G. cited Manocchio v. Kusserow, 961 F.2d 1539 (11th Cir. 1992). While the cited decision stands for the proposition that exclusions are remedial and not punitive, it does not support a conclusion that the I.G. could act only after the FCA final judgment.⁽⁶⁾ First, the court in Manocchio simply did not address the question of when the I.G. may act to exclude an individual or entity. Second, Manocchio involved a mandatory exclusion based on a conviction for a program-related offense, not an exclusion under section 1128(b)(7). The fact that an individual or entity has committed an act described in section 1128A is sufficient to "trigger" a basis for exclusion under section 1128(b)(7), whereas a conviction is a prerequisite for the type of derivative exclusion at issue in Manocchio. Nothing in Manocchio precludes the I.G. from initiating a proceeding to propose a section 1128(b)(7) exclusion pending an FCA action, even if it might be preferable to wait until final judgment on the FCA action before moving forward with the proceeding.

We recognize that, because of the existence of the FCA action in this particular case, the considerations of fairness underlying the six-year limit are not as compelling, given that Petitioners have had an opportunity to present evidence in a proceeding involving many of the same issues, brought before expiration of the six-year period. Indeed, one could argue that the bar should not apply because of the FCA action. There are several reasons, however, why we do not take this approach.

Our conclusion above is based on the statute and its history and regulatory implementation, not on an equitable theory. Congress did not provide for any exception to the six-year limit in section 1128A, and, therefore, Congress did not incorporate any exception into section 1128(b)(7).

Moreover, there are equities on both sides of this case. We do not consider an exclusion to be an issue that could have been raised in the FCA action but was not, as Petitioners argued in support of their res judicata argument. Rather, exclusion is a remedy available only through an administrative proceeding. It is significant, however, that the FCA action was brought on behalf of the Department of Health and Human Services, as Petitioners alleged. I.G. Ex. 6 (Complaint) at 2. Thus, the I.G. can be presumed to have known of the alleged acts within the six-year period. Since there are some factual issues relevant to determining the length of an exclusion that are not relevant in an FCA action, lack of timely notice of a proposed exclusion may, under the circumstances here, have resulted in some prejudice to Petitioners. Indeed, in arguing that res judicata should not bar the I.G.'s exclusion action here, the I.G. argued that the issues to be adjudicated in an exclusion are "quite different" from the issues in an FCA proceeding. I.G. App. Br. at 10.

To the extent the I.G.'s arguments imply that Petitioners should be collaterally estopped from raising the six-year limit here, we disagree. Whether acts described in section 1128A include acts not committed within six years of initiation of an exclusion action under section 1128(b)(7) was not an issue that was actually and necessarily determined in the FCA action.⁽⁷⁾ See Montana v. United States, 440 U.S. 147, 153 (1979). Second, while section 1128(b)(7) incorporates section 1128A, the estoppel provision in section 1128A applies only to a criminal conviction and estops a person only from "denying the essential elements" of the offense of which the person was convicted. While there is a provision for estoppel at 42 C.F.R. � 1003.114(a) based on a civil determination, that provision applies only to a CMPL proceeding under 42 C.F.R. Part 1003.⁽⁸⁾ The corresponding estoppel provision in 42 C.F.R. Part 1001 does not apply to a non-derivative exclusion under 42 C.F.R. � 1001.901, contrary to what the ALJ Decision concluded. Under 42 C.F.R. � 1001.2007(d), estoppel applies when the exclusion is "based on the existence of a conviction, a determination by another government agency or any other prior determination." The preamble to the proposed rule explained this as relating to derivative exclusions under regulatory sections other than section 1001.901. The mere fact that, in this particular case, the I.G. relied on the FCA determination does not convert an exclusion under section 1001.901 into a derivative exclusion where the existence of a conviction or another determination provides the basis for an exclusion.

For the reasons stated above, we reverse the ALJ Decision. We adopt the following conclusions in place of the FFCLs in the ALJ Decision:

A1. By referring to "acts described in section 1128A of the Act," section 1128(b)(7) means acts committed within six years of the initiation of the exclusion action.

A2. Since it is undisputed here that the alleged acts occurred more than six years prior to the initiation of the exclusion action, those acts do not provide a basis for exclusion under section 1128(b)(7).

1. The phrase "knew or should have known" was substituted for the phrase "knew or had reason to know" by the Omnibus Budget Reconciliation Act of 1987, but no change in meaning was intended. See Pub. L. No. 100-203 (1987). The Health Insurance Portability and Accountability Act of 1996 clarified that the liability standard under the CMPL, like that in the False Claims Act, encompasses actual knowledge, deliberate ignorance, and reckless disregard. See Pub. L. No. 104-191 (1996).

2. In a notice about internal guidelines developed by the I.G. to provide specific criteria on which it will base its decision as to whether to seek to impose a permissive exclusion under section 1128(b)(7) of the Act, the I.G. described that section as authorization "to exclude a provider . . . for engaging in conduct described in sections 1128A and 1128B of the Act." 62 Fed. Reg. 55,410, 55,411 (emphasis added).

3. The regulatory section at 1001.2007(a)(1) provides:

Except as provided in � 1001.2003, an individual or entity excluded under this Part may file a request for a hearing before an ALJ only on the issues of whether:

(I) The basis for the imposition of the sanction exists, and

(ii) The length of the exclusion is unreasonable.

(Emphasis added.) The preamble to the final rule explained this section as "restricting the ALJ's authority to review the length of an exclusion imposed by the OIG." 57 Fed. Reg. 3321 (emphasis added).

4. The ALJ Decision used the term "Respondents," presumably because there was only a proposal to exclude. We use the term "Petitioners" to be consistent with the regulations at 42 C.F.R. Part 1005, which state that, in an exclusion case, the parties are the "petitioner" and the I.G. 42 C.F.R. � 1005.2(b).

5. Petitioner Hammer argued that the ALJ erred because she confused the concept of liability with the concept of personal culpability. Petitioner Hammer asserted that he had conceded liability in the FCA case as the employer liable for the wrongful acts of his servant, but that the record showed that: 1) it was the employees of the corporate defendants who engaged in the improper conduct; 2) this conduct had been prohibited by Petitioner Hammer, and 3) he had diligently attempted to prevent the filing of improper claims.

We do not need to reach this issue here since we reverse on another ground. We note, however, that the I.G. had the burden of persuasion to show that Petitioner Hammer committed acts described in section 1128A. Yet, the ALJ Decision did not state what in the Magistrate's findings in the FCA action supports a determination that Petitioner Hammer committed such acts. Instead, the ALJ Decision analyzed the arguments solely in the context of considering whether the length of exclusion was unreasonable. The ALJ Decision first concluded (without specific citation to the Magistrate's findings) that "portions of the District Court's Memorandum Order can be read to support the inferences drawn by the I.G." regarding the degree of Petitioner Hammer's culpability. ALJ Decision at 17. Then, the ALJ Decision went on to reject Petitioner Hammer's arguments, quoting part of a numbered conclusion in the Magistrate's Order regarding liability, but not including the corresponding citations. Those citations suggest that the Magistrate's conclusion was based on waiver of the affirmative defense that an owner is not liable for corporate acts. See I.G. Ex. 7 (Magistrate's Order), at 51 and cases cited therein. If we needed to reach the issue raised, we would have asked for further argument on the effect of the Magistrate's Order in this case and for more specific citations from the I.G. on precisely what parts of the Magistrate's Order support a finding that Petitioner Hammer committed the acts described in section 1128A.

6. We see no basis for concluding that imposing a civil penalty under the FCA is a prerequisite to an exclusion under section 1128(b)(7) and 42 C.F.R. � 1001.901. The FCA is not referred to in either the statutory or regulatory exclusion provision. Moreover, since imposition of a CMP is explicitly not a prerequisite to such an exclusion (even though the CMPL is referred to in section 1128(b)(7)), it would be anomalous to say that imposition of a civil penalty under the FCA is a prerequisite.

7. While the FCA has a statute of limitations, it is not precisely parallel to the provision at section 1128A. The statute of limitations provision in the FCA was amended in 1986 to permit the Government to bring an action within six years of when a false claim was submitted or within three years of when the Government learned of a violation, whichever is later (but in no event more than 10 years after the alleged violation). See Pub. L. No. 99-562. The related Senate Report stated that "because fraud is, by nature, deceptive, such tolling of the statute of limitations is necessary to ensure the Government's rights are not lost through a wrongdoer's successful deception." S.REP. No. 345, 99th Cong. 2d Sess. 15 (1986). Congress did not provide a similar tolling provision in the MMPPPA, enacted the following year. Even if it had, however, it clearly would not apply here since the Government brought the FCA action through a complaint filed in 1993, and the I.G. did not propose exclusion until 1998.

8. That provision binds a respondent in a CMPL proceeding to a determination that "the respondent presented or caused to be presented a claim or request for payment falling within the scope of � 1003.102." Section 1003.102 does not contain the six-year limit provision; rather, that provision appears in the regulations in section 1003.132. The preamble to the final rule stated that section 1003.114 sets forth the basic elements of collateral estoppel, but that "[i]n order to safeguard the due process rights of respondents in CMP proceedings, we intend to apply � 1003.114 in full accordance with recognized legal standards," and that the issues could best be disposed of by the ALJs based on "the governing law and the facts of each case." 57 Fed. Reg. 3323.