DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
In the Case of:
Jack W. Greene,
Petitioner,
- v. -
The Inspector General
DATE: July 31, 1989
Appellate Docket No. 89-59
Decision No. 1078
FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE
DECISION
The Petitioner, Jack W. Greene, appealed the decision of Administrative
Law Judge Steven T. Kessel affirming the determination of the Inspector
General (the I.G. or Respondent) to exclude the Petitioner from
participating in the Medicare program for five years and to direct that
he be excluded from participating in State health care programs for the
same length of time. The exclusion was based on the Petitioner's
conviction of a criminal offense under Tennessee law. On appeal, the
Petitioner disagreed with the disposition of three issues (and the
related findings of fact and conclusions of law) in Judge Kessel's
decision. We discuss each of these exceptions below.
Although our analysis differs in certain respects with Judge Kessel's on
some of the issues, we affirm the five-year exclusion because we
conclude, as did Judge Kessel, that the exclusion was required by
statute. Our conclusion is based primarily on the language of the
mandatory exclusion provision, but is also supported by the meaning and
effect of related provisions of the exclusion statute and its
legislative history. Although we agree with the Petitioner that Judge
Kessel had the authority to decide whether an exclusion could be imposed
in the absence of regulations (since this issue is inseparable from the
broader issue of whether the mandatory exclusion provision applies
here), we find that the statute is self-implementing and that no
regulations implementing the 1987 revisions were required before
imposing the exclusion. Finally, we affirm Judge Kessel's finding that
he lacked authority to review the lawfulness of the I.G.'s role in
imposing the exclusion since that issue is clearly outside the scope of
the issues prescribed by regulation for review by the Administrative Law
Judge (A.L.J.).
We set out at the beginning of our decision the findings of fact and
conclusions of law in support of the exclusion. The facts were the
subject of stipulations by the parties during the proceedings below.
The record before us includes the entire record before Judge Kessel as
well as written submissions to the Board and the transcript (Tr.) of
oral argument made before the Board during a telephone conference.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Petitioner, Jack W. Greene, is a pharmacist who operated a
pharmacy in Oliver Springs, Tennessee. Stipulation (Stip.) 1.
2. On April 21, 1987, Petitioner was indicted on 18 counts of
filing false reports, statements, or documents in violation of
Tennessee law. Stip. 3; Exhibit (Ex.) 7.
3. Petitioner pleaded guilty to Count 1 of the indictment on
January 29, 1988. Stip. 4; Exs. 11, 12.
4. On February 3, 1988, a felony judgment was entered against
Petitioner. Stip. 5; Ex. 6. The felony judgment represented a
conviction for the charge identified in Count 1 of the indictment.
Petitioner was convicted of "unlawfully feloniously and willfully
falsify[ing] a report or document required by Tennessee Code
Annotated 14-23-101, et seq., by falsely billing the State for
having filled a prescription with a brand-named medicinal drug(s),
. . . when instead the defendant or one of his agents did dispense
a generic drug of a lesser value, contrary to Tennessee Code
Annotated 14-23-118, against the peace and dignity of the State of
Tennessee." Stip. 6; Ex. 7.
5. As to Count 1 of the indictment (for which Petitioner was
convicted), a Medicaid claim was submitted for two brand name drugs
when, in fact, Petitioner had dispensed FDA-approved generic drugs.
The claim was paid by Medicaid and caused a Medicaid overpayment.
Stip. 7.
6. Sections 1128(a)(1) and (c)(3)(B) of the Social Security Act
(42 U.S.C. 1320a-7(a)(1) and (c)(3)(B)) require a mandatory minimum
exclusion of five years for any individual convicted of a criminal
offense related to the delivery of an item or service under a State
health care program.
7. The Medicaid program is a "State health care program" within
the meaning of section 1128(a)(1) of the Social Security Act.
8. Petitioner was convicted of a criminal offense related to the
delivery of an item or service under the Medicaid program.
9. The I.G. decision affirmed by Judge Kessel excluded Petitioner
from participation in the Medicare program, and directed that
Petitioner be excluded from participation in State health care
programs, for five years. The exclusions were mandatory and for
the minimum period of time required by section 1128(a)(1) and
(c)(3)(B).
10. The Secretary was not required to promulgate regulations
implementing the 1987 revisions to section 1128 of the Act before
imposing the exclusion here.
11. Section 1128(c), as revised in 1987, does not require the
Secretary to promulgate regulations prior to the effective date of
any exclusion under the revised statute.
12. The A.L.J. had the authority to decide whether this exclusion
could be imposed in the absence of regulations implementing the
1987 revisions to section 1128 of the Act.
13. The A.L.J. lacked the authority to decide whether the
Secretary's delegation of duties to the I.G. pursuant to section
1128 was lawful.
PROCEDURAL BACKGROUND
On June 24, 1988, the I.G. sent notice to Petitioner, advising him that
he was being excluded from Medicare and any State health care programs
for a period of five years. Ex. 1. Petitioner was advised that his
exclusions were due to his conviction of a criminal offense related to
the delivery of an item or service under the Medicaid program.
Petitioner was further advised that the law required minimum mandatory
exclusions from Medicare and State health care programs, of five years,
for individuals convicted of a program-related offense. The I.G. told
Petitioner that, in consideration of the circumstances of his case, he
was being excluded for the minimum period required by law.
Petitioner timely requested a hearing as to the exclusions before an
A.L.J. On January 31, 1989, Judge Kessel decided the appeal in favor of
the I.G. on motions for summary disposition. The Petitioner
subsequently requested review of Judge Kessel's decision before this
Board pursuant to 42 C.F.R. 1001.126(c) as amended at 54 Fed. Reg. 9995
(March 9, 1989). The Petitioner raised one substantive and two
jurisdictional exceptions, which are discussed below. The Petitioner
disagreed with the finding that the statute required a five-year
mandatory exclusion under the circumstances here because he alleged that
his offense did not meet the statutory requirement that it be related to
the delivery of an item or service under the Medicaid program.
Moreover, the Petitioner objected to the finding that the A.L.J. lacked
the authority to decide whether an exclusion could be imposed in the
absence of regulations implementing revisions to the statute enacted in
1987. Finally, the Petitioner objected to the finding that the A.L.J.
lacked the authority to decide whether the Secretary's delegation of
duties to the I.G. relating to exclusions had been lawful, and whether,
consequently, the exclusion could be imposed here by the I.G.
PETITIONER'S EXCEPTIONS
1. Substantive Exception Concerning Application of Section
1128(a)(1)
The Petitioner's substantive exception on appeal concerned findings of
fact and conclusions of law numbers 6, 8, and 12 made by Judge Kessel,
and discussed in his decision as issue number 3. These findings and
conclusions concerned the applicability here of the mandatory five-year
exclusion under section 1128(a)(1) of the Social Security Act. In
addition to the primary issue of whether a mandatory five-year exclusion
is required here under section 1128(a)(1), we also address the
subsidiary issue of whether the exclusion may be imposed in the absence
of regulations implementing the 1987 statutory revisions. Although the
A.L.J. had held that the latter issue was outside the scope of his
authority, we conclude in Part 2 below that this issue is inseparable
from the broader issue of whether the mandatory exclusion is required by
statute and, therefore, was within the scope of the A.L.J.'s authority.
A. The mandatory exclusion of section 1128(a)(1) applies here.
Section 1128(a)(1) provides as follows:
(a) Mandatory exclusion
The Secretary shall exclude the following individuals and
entities from participation in any program under title XVIII and
shall direct that the following individuals and entities be
excluded from participation in any State health care program (as
defined in subsection (h) of this section):
(1) Conviction of program-related crimes
Any individual or entity that has been convicted of a criminal
offense related to the delivery of an item or service under
title XVIII or under any State health care program.
(Emphasis supplied.)
Section 1128(c)(3)(B) further provides:
(B) In the case of an exclusion under subsection (a) of this
section, the minimum period of exclusion shall be not less than
five years, . . . .
Although the Petitioner conceded that he had been convicted of a
criminal offense, he argued that his particular offense was not "related
to the delivery of an item or service" under the Tennessee Medicaid
program. Thus, the Petitioner concluded that the mandatory minimum
exclusion of five years prescribed by statute would not apply. The
Petitioner conceded that his conviction supported an exclusion under a
different statutory provision, section 1128(b)(1), under which the
length of the exclusion would be discretionary, and under which
Petitioner could present arguments about the appropriateness of the
length of exclusion.
Petitioner's counsel summarized his position as follows:
The offense for which he was convicted does not relate to the
delivery of any item or service. His services were fully and
lawfully rendered and his conviction related to his financial
activity occurring after the delivery of the services which he
lawfully rendered. Thus, his conviction does not relate to
[section 1128(a)(1)] but rather [section 1128(b)(1)] which
provides for the permissive exclusion of practitioners who are
convicted of criminal offenses "relating to fraud, theft,
embezzlement, breach of fiduciary responsibility, or other
financial misconduct."
Petitioner's Brief (Br.) dated December 1, 1988, pp. 1-2.
We conclude that Petitioner's substantive exception is without merit and
affirm Judge Kessel's conclusion that Petitioner was convicted of an
offense which was related to his delivery of an item or service under
the Medicaid program.
Petitioner argued that the false billing was not an offense related to
the delivery of the drug because the act of billing did not involve an
element of the actual delivery of the drug to the recipient. Petitioner
argued that the statute, in requiring that an offense be related to
delivery of an item, requires that the offense pertain specifically to
an aspect of the delivery. Petitioner developed this position as
follows:
Delivery of items or services in the context of this statute
pertaining to medical programs must be viewed in the context of
the meaning of the concept of delivery of medical services or
items. That relates to three aspects. First the nature of the
service or item delivered. Second, the quality of the service
or item delivered and third, the quantity of the service or item
delivered. However, the billing function is separate from the
medical function of the delivering of the service or item. The
former is a financial aspect of the program but the latter is
not a financial aspect but, rather, a professional medical
aspect. What services or items must be professionally delivered
to maintain professional standards is separate and distinct from
what services and items the programs are willing to pay for.
Id. at 10.
While Petitioner is correct that an offense pertaining to an "aspect"
or
element of the actual delivery of the service is of course related to
the delivery, he overlooks the fact that other offenses are also
"related" because they concern acts that directly and necessarily
follow
under the health care program from the delivery of the item or service.
Petitioner was convicted for submitting a false bill to the State under
the Medicaid program. The Petitioner falsely billed the State for
having filled prescriptions with brand-named drugs when instead he or
one of his agents dispensed generic drugs of lesser value. This offense
is directly related to the delivery of the item or service since the
submission of a bill or claim for Medicaid reimbursement is the
necessary step, following the delivery of the item or service, to bring
the "item" within the purview of the program. The delivered drug
becomes a program item once a bill or claim has been filed. If no claim
is ever filed for the item delivered, the item is never recognized and
reimbursed by the program. Moreover, the submission of the bill to the
Medicaid program is related to the delivery of the item to the Medicaid
recipient because the amount of the bill is based entirely on the nature
of the item delivered. In fact, the Petitioner here was convicted
because his bill misrepresented what had been delivered. The Petitioner
billed the program for a more expensive brand-named drug when he or his
agent delivered a generic drug to the recipient. The false billing
would have caused Petitioner to receive a higher payment than he was
entitled to under the program. The false Medicaid billing and the
delivery of the drugs to the Medicaid recipient are inextricably
intertwined and therefore "related" under any reasonable reading of
that
term. Without focusing on what the Petitioner had in fact delivered to
the recipient, a court could not have entered a judgment against him for
the false billing offense.
While our conclusion here that the mandatory exclusion applies is based
primarily on the language of the provision, it is also strongly
supported by other critical factors such as the meaning and effect of
parallel provisions of the exclusion statute and the legislative history
of the 1987 revisions. We discuss these factors below, addressing as
necessary Petitioner's arguments:
o Petitioner argued that section 1128(a)(1) covers only
convictions directly impacting on patients in the delivery of
program items or services. Br. at 11-20. Section 1128(a)(2),
however, provides separate authority for a five-year mandatory
exclusion for convictions "relating to neglect or abuse of
patients in connection with the delivery of a health care item
or service." This provision covers the very examples of what
the Petitioner alleged would be covered by section 1128(a)(1).
Thus, the Petitioner's reading of section 1128(a)(1) would
largely negate any purpose for section 1128(a)(2).
o Petitioner alleged that his exclusion would appropriately
fall under section 1128(b)(1), which provides for permissive
exclusions that are discretionary in length. While it is not
inconceivable that one of these provisions could have been
applied in the absence of section 1128(a), which provides that
the Secretary "shall" exclude individuals where applicable,
these provisions focus on different circumstances from those
raised here, such as where the individual has not been convicted
of an offense or where the conviction does not relate to the
Medicare program or a State health care program. Contrary to
what the Petitioner argued, the Secretary has no obligation
under the statute to decide that section 1128(b)(1) would not
apply before imposing the mandatory provisions of section
1128(a). Congress clearly viewed the exclusion provisions,
including sections 1128(a)(1) and 1128(b)(1), as a comprehensive
and inter-related set of provisions. The application of the
provisions here gives full weight and effect to each of the
provisions, and clearly does not nullify the effect of section
1128(b)(1) as the Petitioner argued.
o Petitioner contended that section 1128(b)(7) provided
additional support for his argument that the permissive
exclusions of section 1128(b) were applicable. Section
1128(b)(7) provides for the permissive exclusion of:
Any individual or entity that the Secretary determines
has committed an act which is described in [42 U.S.C.
1320a-7a] or [42 U.S.C. 1320a-7b].
Section 1320a-7a is a civil statute imposing civil money
penalties and assessments, and section 1320a-7b is a federal
criminal statute. The exclusion here, however, is not based on
determinations that Petitioner violated either of these
statutes. Rather, the exclusion is based on his conviction
under Tennessee State law. While it is possible that the
Secretary might have found that Petitioner had violated the
cited federal laws in addition to the Tennessee State laws, the
Secretary reasonably chose not to establish such violations
here. Clearly, section 1128(b)(7) does not require the
Secretary to undertake independent investigations of possible
further violations when section 1128(a)(1) on its face applies
and Petitioner may be excluded based upon his actual conviction
under State law. Thus, section 1128(b)(7) does not support
Petitioner's position concerning the applicability of section
1128(a)(1).
o The specific language changes in the 1987 revisions to
section 1128(a)(1) suggest that the revised version broadened,
rather than narrowed, the category of offenses covered by the
statute. This factor is particularly damaging to Petitioner's
position since Petitioner conceded that his offense would have
been covered by the prior law. If the revised law in fact
broadened the prior standard, Petitioner's offense obviously
would remain covered by the revised law. The prior law mandated
suspension from participation in the Medicare and state programs
of physicians and other individuals convicted of a "criminal
offense related to such individual's participation in the
delivery of medical care or services" under Medicare, Medicaid,
or the social services programs. The 1987 amendments deleted
the phrase "medical care" and "such individual's participation"
and added "item" along with "service." As a result, the
revised
version appears to encompass a broader category of offenses. An
offense related to an individual's "participation" in the
delivery of a service (the prior standard) is more closely
related to the actual act of delivery, and thus a narrower
category, than an offense merely related to delivery. Thus, the
revised standard more readily encompasses Petitioner's specific
offense. Moreover, as the I.G. argued (Appeal Br., p. 16), the
language changes appear to have two additional effects: 1) the
changes indicate that program-related convictions are not just
those related to providing medical care, but to the whole range
of activities involved in delivering items and services under
Medicare and state health programs, and 2) the changes indicate
that individuals who provided accounting and billing services to
providers, but who themselves did not directly provide the
medical care or items, were subject to the mandatory exclusion.
o The legislative history confirms that, by means of its
revisions in 1987, Congress intended to expand and strengthen,
rather than weaken, the already existing mandatory exclusion
requirements. The Senate Report that accompanied the
legislation stated:
While there is currently a mandatory exclusion from
Medicare and Medicaid for crimes related to the delivery
of health care under Medicare, Medicaid or Title XX, no
minimum period of exclusion is specified, and
participation in the Title V MCH Block Grant is
unaffected. This provision would amend current law to
require exclusion for a minimum of five years for
conviction of such crimes, and to apply the exclusion to
Title V as well. The Committee believes that a minimum
five-year exclusion is appropriate, given the
seriousness of the offenses at issue. The minimum
exclusion provides the Secretary with adequate
opportunity to determine whether there is a reasonable
assurance that the types of offenses for which the
individual or entity was excluded have not recurred and
are not likely to do so. Moreover, a mandatory
five-year exclusion should provide a clear and strong
deterrent against the commission of criminal acts.
S. Rep. No. 109, 100th Cong., 1st Sess. p. 5 (1987), reprinted in 1987
U.S. Code Cong. & Ad. News 686.
We think that it is particularly telling here that Congress
referred to the prior law by using the standard in the revised
law -- "crimes related to the delivery of health care" (rather
than crimes related to the individual's "participation" in the
delivery of medical care, which is what the prior law actually
provided.) This strongly suggests that Congress viewed the
prior and revised standards to be similar in effect and that
Congress did not view the deletion of the word "participation"
to represent any substantive weakening of the standard, as
Petitioner argued. Moreover, as we stated above, the
legislative history to the prior law confirms that prior law did
cover Medicaid-related convictions for false or fraudulent
billings (and indeed, Petitioner conceded that the prior law
would have covered the very conviction at issue here). If the
Congress had intended to delete such a significant category of
convictions from the scope of the mandatory exclusion provision
by the oblique deletion of the word "participation," it
presumably would have clarified its intent in the legislative
history.
Thus, on the basis of all of the factors identified above, we conclude
that Judge Kessel properly determined that the mandatory minimum
exclusion in the 1987 revisions applies to the Petitioner here.
B. The mandatory exclusion applies on the basis of the statute
alone.
Petitioner raised the subsidiary issue of whether the mandatory
exclusion could be applied here in the absence of implementing
regulations. (Although the A.L.J. concluded that this issue was outside
the scope of his authority, we conclude in Part 2 below that the issue
is inseparable from the broader issue of whether the mandatory exclusion
applies here.) We proceed to address the issue (rather than remand to
the A.L.J.) because the parties have already fully briefed the issue and
because many of the factors that bear on the subsidiary question were in
fact considered by Judge Kessel in his finding that the statute required
the mandatory exclusion.
Petitioner argued that the Secretary was required under the
Administrative Procedure Act (5 U.S.C. 552 and 553) to publish a
definition of "related to the delivery of an item or service" before
imposing a mandatory exclusion under the circumstances here. Petitioner
argued that, without such a publication interpreting the statute to
cover false billing convictions, he lacked adequate notice of the effect
of the statute when he decided to plead guilty in January, 1988. We
find, however, that the revised statutory provisions concerning the
mandatory minimum exclusion on their face cover the Petitioner's
conviction and do not require the promulgation of regulations before
they may be implemented. It is well settled that "[a]n agency is
authorized to carry out its statutory duty even in the absence of
regulations." See, e.g., Patchogue Nursing Center v. Bowen, 797 F.2d
1137, 1143 (2d Cir. 1986), cert. denied, 479 U.S. 1030 (1987)
[hereinafter cited as Patchogue decision] and cases cited therein. As
long as the agency proceeds in accordance with "ascertainable standards"
and "provides a statement showing its reasoning in applying the
standards," formal rulemaking is not required. Id. We have concluded
above that the I.G.'s application of section 1128(a) is clearly
encompassed by the language of the statute, is consistent with the
meaning and effect of parallel exclusion provisions, and is supported by
the legislative history of the 1987 revisions. Moreover, at least with
respect to the particular issue in question here, i.e., whether the
mandatory exclusion provision covered convictions involving false
billing under Medicaid, it appears that the revised statute did not even
represent a substantive change from the prior statute. Thus, we
conclude that the applicable standards were indeed "ascertainable"
based
on the statute alone, and that the application of the statute in this
instance clearly did not involve any violation of the Administrative
Procedure Act, as Petitioner had submitted. At the time that Petitioner
pleaded guilty to the offense of false billing (January 29, 1988), he
had notice by means of statutory provisions that were indisputably in
effect that conviction of his offense would require the imposition of a
mandatory minimum exclusion of five years.
Moreover, the I.G. has proceeded to implement the exclusion under the
appeals process in the existing regulations, which implement the law in
effect just prior to the revisions. This process is clearly sufficient
to provide Petitioner with notice of the basis for his exclusion and
with full opportunity to be heard by an A.L.J. and with further review
by this Board. 42 C.F.R. 498.80 and 42 C.F.R. 1001.128(c). The
exclusion notice provided the Petitioner on June 24, 1988 (Ex. 1) fully
and accurately portrays the statutory standard that applies to this
case.
Moreover, the amendment providing for the five-year minimum exclusion is
effective for convictions occurring on or after August 18, 1987. See
section 15 of Pub. L. 100-93 and S. Rep. No. 109, supra, at 27. The
revisions contain no provision requiring that the exclusions be "tolled"
until the Secretary promulgates regulations. Moreover, as the I.G.
argued, there is no evidence of congressional intent that individuals
convicted between August 18, 1987 and the promulgation of regulations
not be excluded until regulations are issued or in other words that they
be given "amnesty" for their crimes.
Petitioner also argued for the first time in his request for appellate
review before this Board that section 1128(c), as revised in 1987,
requires the Secretary to promulgate regulations prior to the effective
date of any exclusion under the revised statute. Section 1128(c), as
revised, provides:
(1) An exclusion under this section . . . shall be effective at
such time and upon such reasonable notice to the public and to
the individual or entity excluded as may be specified in
regulations consistent with paragraph (2).
Contrary to what Petitioner argued, this provision does not bar the
imposition of an exclusion prior to promulgation of new regulations
implementing statutory revisions. The Secretary clearly may rely on
existing regulations as long as they are compatible with the revised
statute. Section 1128(c), as revised, does not differ materially from
the prior version of section 1128(c) insofar as the circumstances raised
here are concerned. The prior version was implemented by regulations
that have not yet been revised. These regulations provide for the
timing and the notice of the exclusion in a manner that is fully
consistent with the revised statutory provisions and were applied to
Petitioner in this case. See 42 C.F.R. 1001.124 and 1001.126, providing
for notice of suspension based upon a criminal conviction related to
Medicare or Medicaid and for the effect of the suspension. Thus, the
Petitioner here has received the full procedural protection required by
statute as well as by existing regulations that are compatible with the
revised statute. We also note that section 1128(c), as revised, does
not in any event mandate the promulgation of regulations. See the
Patchogue decision, pages 1142-1143.
Moreover, Congress clearly authorized the Secretary to apply the revised
provisions prior to promulgating new regulations when it authorized
exclusions based on convictions occurring on or after the enactment of
the revisions and it made the revisions themselves effective the
fifteenth day after enactment (August 18, 1987).
Thus, we conclude that the mandatory exclusion may be applied here on
the basis of the statute alone and the existing regulations that
preceded the 1987 revisions.
2. Jurisdictional Exception Concerning Whether Regulations Must Be
Promulgated
Although Judge Kessel held that Petitioner's exclusion for five years
was mandated by the 1987 revisions to section 1128, he declined to
consider whether the Secretary was required to adopt regulations
implementing the 1987 revisions before imposing the exclusion here. The
Petitioner disagreed with Judge Kessel's holding on page 2 of his
decision and the related finding that he did not have authority to
consider the issue whether the Secretary is required to adopt
regulations before imposing an exclusion under the facts raised here.
We conclude that this issue was properly within the A.L.J.'s authority,
and address the issue above as a subsidiary question to whether the
mandatory exclusion was required by statute.
In support of his conclusion concerning his lack of authority, Judge
Kessel relied upon 42 C.F.R. 1001.128(a). Section 1001.128(a) limits an
appeal before an A.L.J. in suspensions of individuals for conviction of
a program-related crime to the following issues:
(1) Whether he or she was, in fact, convicted; (2) Whether the
conviction was related to his or herparticipation in the delivery
of medical care of services under the Medicare, Medicaid, or social
services program; and (3) Whether the length of the suspension
isreasonable.
This regulation, however, does not prevent the A.L.J. from considering
the issue of whether the exclusion can be imposed here based on the
statute alone. In order to consider the "issues" as stated by the
regulation, the A.L.J. must apply the underlying statutory provisions
that the issues were designed to address. The A.L.J. must consider the
meaning of the pertinent statutory provision as well as related
provisions, relevant legislative history, the effective date of the
statute, case law interpretations, and implementing regulations and
policy issuances. It would literally be impossible to apply the issue
identified by the regulation in a legally correct manner without
considering these factors, as appropriate. In fact, the statutory
provisions concerning exclusions were revised in 1987, and the "issues"
specified in the regulations have not yet been amended to reflect the
revisions. Thus, it is necessary, at a minimum, to read into paragraph
2 of the regulation the revised statutory standard concerning conviction
of a "criminal offense related to the delivery of an item or service."
Here, Petitioner argued that the statutory standard (effectively
recognized by paragraph 2 of the regulation) cannot be applied in the
manner the I.G. proposed since the Department has not first issued
regulations affording notice of its interpretation. In other words, the
Petitioner argued that the statute alone would not sanction the
exclusion here. We find that this issue is properly within the scope of
the inquiry identified by paragraph 2 of the regulation, since it is
inextricably intertwined with the application of the authorizing statute
itself, which paragraph 2 was intended to implement. Thus, we find that
section 1001.128(a) contemplates that this issue be within the scope of
the A.L.J.'s authority. We also find that consideration of this issue
by the A.L.J. is consistent with the Petitioner's right to reasonable
notice and opportunity for a hearing with respect to the exclusion
decision provided by section 1128(f). Without fully considering the
effect of the underlying statute, which is the sole authority for the
exclusion in this instance, the A.L.J. would not have provided the
review of the exclusion decision that is contemplated by the statutory
hearing requirement.
3. Jurisdictional Exception Concerning Whether Delegation to I.G.
to Impose Exclusions Was Lawful
In a holding on page 2 of the decision and in a related finding, Judge
Kessel also found that he lacked authority to decide the lawfulness of
the Secretary's delegations of duties to the I.G. relating to the
imposition of exclusions under section 1128. Petitioner objected,
arguing that such an issue was within the scope of the A.L.J.'s review
authority. Petitioner had contended that the delegation was unlawful
because the delegated duty to impose exclusions is a "program operating
responsibility" which is prohibited from transfer to the I.G. by 42
U.S.C. 3526(a). We affirm the finding that the A.L.J. lacked authority
to consider the lawfulness of the delegation for the reasons discussed
by Judge Kessel in his decision.
As we concluded above, the scope of the review by the A.L.J. is set out
in 42 C.F.R. 1001.128(a). The three issues identified by the regulation
are all related to the propriety of the imposition of the exclusion in
particular cases and clearly do not encompass collateral attacks against
the authority of the official delegated the responsibility to impose the
exclusion. Moreover, the delegations have been reflected in the
regulations that set out the procedures for imposing exclusions. If the
Secretary had intended that the A.L.J., in reviewing exclusion
decisions, would have the authority to review collateral attacks on the
validity of the procedural regulations themselves, such authority
presumably would have been made explicit in 42 C.F.R. 1001.128(a).
Otherwise, the reasonable assumption is that the A.L.J. (and this Board)
is bound by procedures set out in applicable regulations. Moreover,
section 1128(f) directs the Secretary to provide excluded parties with
the opportunity to have hearings as to their exclusion. There is no
language in that section suggesting that, in conducting hearings as to
the propriety of individual exclusions, the Secretary is required to
consider collateral challenges to the validity of his regulatory
procedures based on statutory provisions that are wholly outside the
realm of the exclusion authorities.
Finally, even if the A.L.J. had the authority to consider this issue,
we find that the delegations, which were reflected in the regulations,
were clearly valid. As the I.G. argued, the legislative history of the
very revisions relied upon for the mandatory exclusion here affirm this
delegation in the most explicit terms. See S. Rep. No. 109, supra, at
14, reprinted in 1987 U.S. Code Cong. & Admin. News 682, at 695 (Ex.
10). The two House Reports similarly approve and endorse the delegation
of the exclusion authority to the Inspector General. H. Rep. (Energy &
Commerce Committee) No. 85(I), 100th Cong., 1st Sess. p. 14 (May 7,
1987) (Ex. 23); H. Rep. (Ways & Means Committee) No. 85(II), 100th
Cong., 1st Sess. p. 14 (May 21, 1987) (Ex. 24).
CONCLUSION
Based on the foregoing, we affirm the five-year exclusion imposed on the
Petitioner.
_____________________________ Judith A. Ballard
_____________________________ Theodore J. Roumel U.S. Public
Health Service
_____________________________ Donald F. Garrett Presiding Board