DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Appellate Division
In the Case of:
Leonard R.
Friedman, M.D.,
Petitioner,
- v. -
The Inspector General.
DATE: November 18, 1991
Decision No. 1281
FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE
DECISION
Petitioner, Dr. Leonard R. Friedman, appealed the decision
of
Administrative Law Judge (ALJ) Constance T. O'Bryant affirming
the
determination of the Inspector General (I.G.) to exclude Petitioner
from
participating in the Medicare and Medicaid programs. See Leonard
R.
Friedman, M.D., DAB CR125 (1991)(C-269).
Petitioner's exclusion was based on section 1128(b)(4)(A) of the
Social
Security Act (Act), which permits the exclusion of an individual
or
entity--
whose license to provide health care has been revoked
or
suspended by any State licensing authority, or who
otherwise
lost such a license, for reasons bearing on the individual's
or
entity's professional competence, professional performance,
or
financial integrity.
The Inspector General excluded Petitioner from the Medicare and
Medicaid
programs on the grounds that the Office of Professional Discipline
of
the State Education Department of New York had revoked
Petitioner's
license to practice medicine in the State of New York.
Petitioner's
exclusion is to remain in effect until he .obtains a valid
license to
practice medicine in either Massachusetts or New York.
Based on the following analysis, we affirm the ALJ's decision to
uphold
Petitioner's exclusion.
Background
The ALJ made the following findings and conclusions:
1. Petitioner is a physician specializing in forensic psychiatry
and
held a valid license to practice medicine in the State of
Massachusetts
prior to June 24, 1987 and in the State of New York prior to
November
29, 1989.
2. On or about June 24, 1987, the Massachusetts Board of
Registration
in Medicine issued a Final Decision and Order whereby
Petitioner's
license to practice medicine in Massachusetts was revoked.
The Board
found that Petitioner, a psychiatrist, engaged in sexual activity
with
one of his patients, during one or more office visits made by
the
patient. The Board concluded that Petitioner committed
"gross
misconduct in the practice of medicine."
3. The Massachusetts Board of Registration in Medicine concluded
that
Petitioner's conduct in engaging in sexual activity with his
patient
during one or more office visits demonstrated a lack of good
moral
character and undermined public confidence in the integrity of
the
medical profession.
4. The Massachusetts Board of Registration in Medicine is the
duly
authorized professional disciplinary agency of that state.
5. In November, 1989 the New York State Education Department
revoked
Petitioner's license to practice medicine.
6. The New York State revocation was based on its findings that:
[Petitioner] has been found guilty, after an
administrative hearing
in the State of
Massachusetts, of improper professional practice
and
professional misconduct by a duly authorized
professional
disciplinary agency of another state,
which conduct would, if
committed in New York State,
constitute professional misconduct
under New York
Education Law section 6509(9) in conjunction with 8
NYCRR section 29.1(b)(5) and 8 NYCRR section 29.4(a)(5)(i)
--
conduct in the practice of a profession which
evidences moral
unfitness to practice the profession
and which conduct includes any
physical contact of a
sexual nature between physician and patient
-- as
set forth in the statement of charges and the record herein.
7. The New York State Education Department is a state
licensing
authority within the meaning of section 1128(b)(4)(A).
8. Physical conduct of a sexual nature between physician and patient
is
a professional activity and is related to Petitioner's
professional
competence and professional performance.
9. Petitioner's license was revoked by the Massachusetts Board
for
reasons bearing on his professional competence and
professional
performance.
10. Petitioner's license was revoked by the New York State
Department
of Education for reasons bearing on his professional competence
and
professional performance within the meaning of section 1128(b)(4)(A)
of
the Act.
11. By letter dated July 5, 1990, the I.G. notified Petitioner that
he
would be excluded from the Medicare and Medicaid programs until
he
obtained a valid license to practice medicine in New York.
12. The I.G. subsequently modified his position and gave notice
to
Petitioner that he would be excluded from the Medicare and
Medicaid
programs until he obtained a valid license to practice medicine
in
either New York or Massachusetts.
13. Section 1128(b)(4)(A) authorizes the Secretary of Health and
Human
Services (and his delegate, the I.G.) to impose and direct exclusions
of
individuals whose license to provide health care has been revoked by
any
State licensing authority for reasons bearing on professional
competence
or professional performance. 42 U.S.C. 1320a-7(b)(4)(A).
14. The I.G. had authority to exclude Petitioner under
section
1128(b)(4)(A) of the Act.
15. The I.G.'s exclusion of Petitioner until he obtains a valid
license
to practice medicine in either New York or Massachusetts is
reasonable.
ALJ Decision at 2-4.
In his appeal, Petitioner did not identify the specific findings
and
conclusions with which he disagreed.
Analysis
In his Appeal Brief, Petitioner advanced a number of
extensively
researched arguments in his challenge to this exclusion. 1/
In summary,
Petitioner argued that the New York revocation was not a basis
for a
section 1128(b)(4) exclusion because both the New York revocation
and
the Massachusetts revocation, on which the New York revocation
was
based, violated constitutional and common law standards and
were
therefore invalid. Specifically, Petitioner stated these
eight
substantive exceptions to the ALJ Decision:
(1) The acceptance of the New York decision by
the Administrative
Law Judge reflects unacceptable
legal reasoning which violates
Anglo-American common
law history and republican constitutional
guarantees;
. (2) Appropriate judicial interpretation of the case
demands the
use of constitutional principles of constitutional rights,
privileges
and immunities and of the appropriate constitutional
interpretation of
fundamental fairness;
(3) The Administrative Law Judge's decision
based on a New York
decision opens up federal
questions of whether the pre-Act decision
of
Massachusetts violated state or federal
constitutionally
protected rights;
(4) The union of executive, legislative and
judicial powers in the
same [State licensing] agency
is an unconstitutional violation of
common law and
constitutional principles;
(5) Only total separation of the prosecutorial
and judicial
functions in an independent hearing
officer [in the State licensing
proceedings] is the
constitutional interpretation of due process
rights;
(6) The underlying constitutional issue is a
constitutional
privilege for an independent tenured
hearing examiner to have heard
the [State licensing]
case at any level for the federal judge to
grant
full faith and credit to the New York decision;
(7) The New York Decision creates an ex post
facto judgment under
the Act by bootstrapping the
Massachusetts decision onto the New
York decision
and fails to pass the protections of the Fifth
Amendment to the Constitution.
(8) The Massachusetts and New York decisions
are flawed by not
having a finding of harm to the
patient to meet the test of common
law harm and the
statutory standards of the Act.
Petitioner's Appeals Brief at 1, 6, 9, 10, 14, 20, 25, 32.
On the basis of the following analysis, we reject Petitioner's
challenges
to the ALJ Decision and affirm and adopt all of the ALJ's
findings and
conclusions.
A. In a section 1128(b)(4) exclusion proceeding, the I.G.
is
entitled to rely on revocation actions of state
licensing
authorities and is not required to examine the fairness of
such
state processes. Therefore, arguments pertaining to
the
fairness of the state processes are not relevant to
this
exclusion proceeding.
Petitioner contended that the procedures and standards used in
the
Massachusetts and New York revocations violated constitutional
and
common law principles and therefore were not a basis for exclusion
under
section 1128(b)(4)(A) of the Act. Petitioner relied extensively
on the
writings of Sir Edward Coke, particularly in Bonham's Case, 77 Eng.
Rep.
638 (K.B. 1609), and other treatises on the development
of
administrative law.
In light of the language and history of section 1128(b)(4)(A), we
reject
Petitioner's arguments and find that Petitioner's challenges to
the
procedures or standards used by the Massachusetts and New York
licensing
authorities are not relevant to the I.G.'s authority to exclude
him
pursuant to section 1128(b)(4)(A).
Section 1128(b)(4)(A) was enacted as part of the Medicare and
Medicaid
Patient Protection Act of 1987 in which Congress sought to expand
the
I.G.'s authority to exclude certain individuals and entities
from
participating in Medicare and Medicaid. To achieve this goal,
Congress
authorized the I.G. to do either of the following: (A) to rely
on the
results of other forums such as courts (sections 1128(a) and
1128(b)(1),
(2), (3)), other federal agencies (section 1128(b)(5)), and
state
licensing authorities (section 1128(b)(4)); or (B) to make
an
independent determination of improper conduct (sections 1128(b)(6),
(7),
(8)).
By enacting section 1128(b)(4)(A), Congress granted the I.G. authority
to
rely on the fact of a state licensing authority's revocation and did
not
intend for the I.G. to review the process and standards used by the
state
licensing authority. We base this conclusion on the following:
o The basis of an exclusion under section
1128(b)(4)(A) is the
fact of a state license
revocation "for reasons bearing on the
individual's
or entity's professional competence, professional
performance, or financial integrity." There is no requirement
in
that section that the I.G. go behind the state
proceeding to review
the state process and standards
used in the revocation process.
o Rather than burden the I.G. with a de novo
review of a state's
process and standards, the
legislative history indicates that
Congress intended
to expand and strengthen the I.G.'s authority to
exclude practitioners based on the actions of state
licensing
authorities. S. Rep. No. 109, 100th
Cong., 1st Sess. 7, reprinted
in 1987 U.S. Code
Cong. & Admin. News 682. The only
qualification
of the I.G.'s authority in the
legislative history concerns "minor
infractions." The Senate Finance Committee report indicated
that
Congress expected the I.G. not to exclude
practitioners for
revocations based on "minor
infractions not relating to quality of
care, such as
failure to pay licensing fees or violations of
strict
advertising requirements. In these
limited circumstances, the
exclusion penalty would,
in the Committee's view, be too harsh."
Id. at
688. The reason given here for the license
revocation
certainly cannot be characterized as such
a minor infraction.
o This division of responsibilities between
the state and federal
governments is reasonable
since state licensing authorities have a
compelling
interest in the practice of professions within their
boundaries and in insuring that practitioners operating pursuant
to
state licenses are qualified and honest.
Goldfarb v. Virginia
State Bar, 421 U.S. 773, 792
(1975). They are the most appropriate
authorities to determine whether a license should be
revoked
because they have a fundamental interest in
the practitioner's
fitness, better access to the
evidence concerning fitness, and more
experience and
expertise in applying the relevant state licensing
standards.
o Construing section 1128(b)(4)(A) to preclude
collateral attacks
on state licensing authorities'
revocations does not infringe on
the constitutional
rights of practitioners. Since state licensing
proceedings are subject to the due process and equal
protection
clauses of the Fourteenth Amendment
(Schware v. Board of Bar
Examiners of State of N.M.,
353 U.S. 232, 238 (1957)) practitioners
can directly
attack the validity of the process and substance of
state proceedings. If there are constitutional
infirmities,
practitioners have appeal rights which
include certiorari review by
the United States
Supreme Court. 28 U.S.C. 1257.
Therefore,
practitioners' constitutional rights are
adequately and more
appropriately protected by
direct appeal from state revocation
decisions.
o Allowing practitioners to attack
collaterally the decisions of
state licensing
authorities in the exclusion process would
unnecessarily encumber that process by granting practitioners
a
remedy which duplicates a pre-existing
remedy. Such collateral
attacks would also be
wasteful, because the Departmental Appeals
Board
would have no power to reform the actions of the
offending
state licensing authority, and would
potentially subject a
practitioner's patients to two
proceedings concerning a
practitioner's
offenses.
o Federal and state governments spend hundreds
of billions of
dollars annually for the Medicare and
Medicaid programs. See Staff
of the House
Committee on Ways and Means, 101st Cong., 2d Sess.,
Overview of Entitlement Programs 131, 1290 (Comm. Print 1990).
In
such immense programs, in which tens of thousands
of licensees
participate, Congress reasonably sought
a variety of methods of
identifying and excluding
practitioners who are a threat to the
programs'
integrity. Reliance on the results of state
licensing
authorities is such an appropriate method,
particularly in light of
state authorities' primary
jurisdiction over and interest in the
conduct of
their own licensees.
The Departmental Appeals Board has previously determined that claims
of
impropriety in state license revocation proceedings are not relevant
to
deciding whether the I.G. acted properly to impose and direct
exclusions
pursuant to section 1128(b)(4)(A). See John W. Foderick,
M.D., DAB No.
1125 (1990); Andy E. Bailey, C.T., DAB No. 1131 (1990); see
also Frank
Waltz, M.D., DAB CR41 (1989) (C-86). Therefore, an exclusion
proceeding
may not be used by Petitioner to mount a collateral attack on the
state
boards' decisions. If Petitioner believes that there are serious
flaws
in either or both state decisions, he must challenge them in
the
appropriate forum. 2/
For the foregoing reasons we reject Petitioner's exceptions 1 through
6
and 8, and we affirm the ALJ's findings and conclusions.
B. Section 1128(b)(4)(A) does not require the
state licensing
authority or the I.G. to make a
finding that a patient was actually
"harmed" by the
conduct which constitutes the basis for the license
revocation.
In addition to arguing that common law standards require the
Massachusetts
or New York licensing authorities to have made a finding
of "harm" to the
patient before revoking his license to practice
medicine, Petitioner also
argued that a finding of "harm" to the patient
was required as an element of
a section 1128(b)(4)(A) exclusion.
Accepting for the sake of argument that Petitioner's patient suffered
no
harm in this case, we disagree with Petitioner's construction of
section
1128. The elements of a section 1128(b)(4)(A) exclusion are a
state
license revocation or suspension of a license for "reasons bearing
on
the individual's . . . professional competence,
professional
performance, or financial integrity." There is no
requirement that an
identifiable patient have actually suffered harm as a
result of the
offending conduct. In this case, the basis of the
revocation,
Petitioner's "sexual activity" with his patient, clearly bears on
his
professional competence and performance and therefore the
exclusion
falls within the terms of section 1128(b)(4)(A). 3/
The legislative history of the Medicare and Medicaid Patient and
Program
Protection Act of 1987 supports this reading of section
1128(b)(4)(A).
The purpose of the Act was ". . . to protect the beneficiaries
of those
programs from incompetent practitioners and from inappropriate
or
inadequate care." S. Rep. No. 109, supra at 688. There is
no
suggestion that the I.G. must identify a specific patient who
has
suffered actual harm, only that the care at issue be
incompetent,
inappropriate, or inadequate.
To read "harm" into the requirements of section 1128(b)(4)(B)
would
inappropriately hamper the I.G.'s authority to exclude practitioners
who
represent a threat to their patients and the federal programs. In
some
cases, certain proven conduct, while unethical or an
improper
professional practice, does not cause actual harm. However,
the mere
fact of the conduct could evidence such fundamental moral unfitness
or
incompetence that it would be inappropriate and unnecessary
for
licensing authorities or the I.G. to identify a victim who was
actually
"harmed." Engaging in "sexual activity" with a psychiatric
patient
certainly falls within the range of substandard care from which the
I.G.
is authorized to protect program beneficiaries and whether
any
particular patient was proved to be "harmed" is irrelevant to the
I.G.'s
authority to exclude under section 1128(b)(4)(A).
For the foregoing reasons we reject Petitioner's exception 8, and
we
affirm the ALJ's findings and conclusions.
C. Section 1128(b)(4)(A) is not being
applied retroactively by the
I.G. in this case.
Section 1128(b)(4)(A) of the Act was enacted August 18, 1987 and
became
effective September 1, 1987. Massachusetts revoked Petitioner's
license
in June of 1987, prior to the enactment of section
1128(b)(4)(A). New
York revoked his license in November of 1989, after
the enactment of
section 1128(b)(4)(A). The federal exclusion
proceedings were commenced
in July of 1990 on the basis of the New York
revocation.
In revoking Petitioner's license, the New York licensing authority
adopted
Massachusetts' findings that Petitioner had engaged in sexual
activity with a
patient and concluded that such conduct, if committed in
New York, would
constitute professional misconduct and grounds for
license revocation.
I.G. Ex. 2. Petitioner argued that section
1128(b)(4)(A) was being
applied retroactively because New York adopted
the Massachusetts' findings
and did not afford him a second evidentiary
hearing to contest the original
charges that he had engaged in sexual
activity with a patient. 4/
For the following reasons, we affirm the ALJ's conclusion that the
I.G.
could rely on the New York revocation to exclude Petitioner even
though
the New York decision was based on the findings of the
Massachusetts
board. 5/
First, there is simply no question that section 1128(b)(4)(A) applies
to
any revocation proceeding commencing after its effective date,
September
1, 1987. Since the New York proceeding was commenced in 1989,
it
postdates the amendment of section 1128 and is subject to
section
1128(b)(4)(A). 6/
Second, as we previously discussed, under the terms of
section
1128(b)(4)(A), the critical element is the fact of a revocation
for
reasons bearing on professional competence, performance or
financial
integrity. The nature of the revocation proceeding, the date
of the
offensive conduct or the sequence of any prior proceedings are
not
relevant to the I.G.'s authority to exclude. Therefore, the fact
that
New York adopted the Massachusetts findings of fact and did not
afford
Petitioner a second evidentiary hearing is irrelevant to a
section
1128(b)(4)(A) exclusion. 7/ Similarly, the fact that New York
adopted
the findings of fact which Massachusetts had adopted prior to
September
1, 1987 is irrelevant to a section 1128(b)(4)(A) exclusion. 8/
Moreover, allowing Petitioner to avoid the application of
section
1128(b)(4)(A) on the grounds that the New York revocation is
derivative
of the Massachusetts revocation would frustrate one of Congress'
primary
goals in enacting that section. The legislative history of
section
1128(b)(4) demonstrates that one of the main problems Congress sought
to
address with the 1987 amendments was the phenomenon of a doctor
losing
his license in one state and then using a preexisting license in
another
state to continue or reestablish his participation in Medicare
and
Medicaid. S. Rep. No. 109, supra at 684. In this case,
the
Massachusetts revocation occurred in June 1987, the amendment to
section
1128 occurred in September 1987, and the New York revocation occurred
in
November 1989. By retaining his New York license and the option
of
participating in Medicare and Medicaid in New York long after the
1987
amendments, Petitioner brought himself within the terms of
1128(b)(4).
Having preserved his option to participate in the these health
programs
well after the revocation of his Massachusetts license and the
amendment
of section 1128, he cannot now complain that section 1128 is
being
retroactively applied to him.
For the foregoing reasons we reject Petitioner's exception 7 and we
affirm
the ALJ's findings and conclusions.
Conclusion
Based on the analysis above, we affirm the ALJ's April 10, 1990
decision
sustaining Petitioner's exclusion from the Medicare and
Medicaid
programs.
_____________________________ Judith A. Ballard
_____________________________ Theodore J. Roumel
_____________________________ Cecilia Sparks Ford
Presiding
Board Member
1. At the oral argument conducted in this appeal, Petitioner
also
objected to the participation of the Departmental Appeals Board
staff
attorney in the case. Transcript of argument conducted August 2,
1991
at 7. Petitioner subsequently filed a Supplemental
Memorandum
concerning this objection and contended that a staff attorney's
presence
"casts unconstitutional doubts over the judicial nature of
the
proceeding." This objection is overruled. As the Presiding
Panel
Member explained at the time of the argument, it is the Board's
routine
and standard procedure to use staff attorneys in developing its
cases
and their presence does not constitute ex parte contact. Id. at
10.
Further, the use of staff assistants by administrative hearing
officers
is well accepted. See Morgan v. United States, 298 U.S. 468
(1936); KFC
National Management Corp. v. N.L.R.B., 497 F. 2d 298, 303-305
(2nd Cir.
1974); Braniff Airways, Inc. v. C.A.B., 379 F.2d 453, 461 (D.C.
Cir.
1967); Davis, Administrative Law Treatise, section 17.8 (2nd ed.).
2. The record shows that Petitioner did, in fact, challenge
the
decision of the Massachusetts licensing authority in the
Massachusetts
Supreme Judicial Court. His appeal was heard first by a
single justice
of the court and then by four justices. In the two
decisions issued by
that court, dated November 14, 1989 and December 18,
1989, the court
affirmed the license revocation action taken by the
Massachusetts Board.
I.G. Exs. 5 and 6.
While there is no evidence in the record that Petitioner attacked the
New
York revocation, New York law provides for judicial review of the
decisions
of the New York licensing authority. See N.Y. Education Law
section
6510-a.4.
3. The record clearly supports the ALJ's finding that
Petitioner's
revocation was for reasons which bear on his professional
competence and
performance. For example, the Massachusetts Board of
Registration in
Medicine cited the minimal standards for ethical behavior
for
psychiatrists promulgated by the American Psychiatric Association
in
Principles of Medical Ethics with Annotations Especially Applicable
to
Psychiatry. Those standards state that "Sexual activity with a
patient
is unethical." I.G. Ex. 4 at 46. The standards contain
explanatory
passages setting forth why the prohibition on sexual activity
between a
psychiatrist and his patient is particularly critical to the
treatment
relationship. Id. Further, the New York revocation was
based on N.Y.
Educ. Law section 6509(9) pursuant to which such activity
constitutes
professional misconduct and 8 NYCRR section 29.1(b)(5) pursuant
to which
such activity constitutes conduct in the practice of a profession
which
evidences moral unfitness to practice the profession. All of
these
standards go to aspects of Petitioner's competence and performance
in
treating patients.
4. Petitioner makes reference to the term "ex post facto" but does
not
cite to the United States Constitution. The ex post facto clause of
the
United States Constitution is found at Article I, Section 9.
It
prohibits any statute "which makes more burdensome the punishment for
a
crime, after its commission . . . ." Beazell v. Ohio, 269 U.S.
167,
169-170 (1925). However, the ex post facto clause applies only
to
"punishments." Whether an exclusion constitutes a "punishment" has
been
considered by the United States District Court for the Southern
District
of Florida. In Manocchio v. Sullivan, C.A. No. 90-8114 (S.D.
Fla. July
12, 1991) the court found that the exclusion penalty was remedial
and
its purpose was to protect the Medicare and Medicaid programs
rather
than to punish the excluded individual. Because exclusions were
not
punitive, the Court found that the ex post facto clause did not apply
to
exclusions. Cf. United States v. Halper, 490 U.S. 435
(1989). In
Halper, the Supreme Court found that civil penalties imposed
after a
criminal conviction could constitute "punishment" under the
Double
Jeopardy Clause of the Fifth Amendment where the amount of the
penalty
($130,000) bore no relation to the goal of compensating the
government
for its estimated loss ($16,000). However, in exclusion
cases, the
relationship between the exclusion of a practitioner whose license
has
been revoked and the goal of protecting Medicare and Medicaid
from
untrustworthy or incompetent practitioners is apparent.
5. The ALJ addressed the question of whether the fact that the
conduct
at issue occurred prior to the amendment of section 1128(b)(4)
prevented
the I.G. from relying on section 1128(b)(4) in this case. We
agree with
the ALJ that the I.G. has authority to exclude for conduct
which
occurred prior to the amendment of section 1128(b)(4). See ALJ
Decision
at 7-8. However, we find that the focus of Petitioner's
argument
concerns not the date of the conduct but the fact that New York
relied
on the Massachusetts decision which pre-dated the amendment of
section
1128(b)(4).
6. Note 54 of the Historical and Statutory Notes provides that Pub.
L.
100-93, section 2, which amended section 1128, was effective
September
1, 1987 and would not apply to administrative proceedings
commenced
before that date. Because that note goes on to say that
subsection
(c)(3)(B) shall not apply to exclusions based on convictions
occurring
before August 18, 1987, it appears that the term
"administrative
proceeding" refers to the federal exclusion proceeding rather
than the
state revocation proceeding. However, since the New York
revocation
proceeding commenced after the effective date of the amendment, we
do
not reach the question of whether the term "administrative
proceeding"
refers to the state revocation proceeding or the federal
exclusion
proceeding.
7. We note however that New York specifically found that
the
Massachusetts procedures were constitutionally adequate: ". . . we
do
not find any constitutional infirmity in the
Massachusetts
administrative hearing relied on by petitioner herein that
would prevent
the Massachusetts decision from being accorded full faith and
credit in
New York." I.G. Ex. 2 at 3. If this New York conclusion
is erroneous,
Petitioner was entitled to seek judicial review of the
revocation. See
n. 2.
8. See Vincent Baratta, DAB No. 1171 (1990), in which the
Departmental
Appeals Board sustained an exclusion based on a state revocation
which
post-dated the amendment of section 1128(b)(4)(A) but which stemmed
from
a conviction which pre-dated the