Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
In the Case of:
Berton Siegel, D.O.,
Petitioner,
- v. -
The Inspector General.
DATE: March 22, 1994
Docket No. C-93-070
Decision No. 1467
FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE
DECISION
Berton Siegel, D.O. (Petitioner) appealed a December 21, 1993 decision
by Administrative Law Judge (ALJ) Joseph K. Riotto upholding
Petitioner's five-year exclusion from participation in Medicare and
state health care programs. 1/ Berton Siegel, D.O., DAB CR298 (1993)
(ALJ Decision). The Inspector General (I.G.) excluded Petitioner under
section 1128(a)(1) of the Social Security Act (42 U.S.C.
1320a-7(a)(1)) (Act) based on Petitioner's conviction by an Arizona
criminal court of three counts of facilitation of theft. The ALJ
Decision was based on 28 findings of fact and conclusions of law
(FFCLs). Petitioner specifically objected to five of the FFCLs on
appeal; based on the argument section of his appeal, we have determined
that Petitioner objected to three additional FFCLs. 2/
We accept review of the ALJ Decision to consider the limited issue of
whether the offense of which Petitioner was convicted related to the
delivery of items or services under Medicaid. We decline to consider
Petitioner's exceptions which are related to other issues Petitioner
raised. For this reason, we accept review of Petitioner's exceptions to
FFCLs 26 and 27 only. These FFCLs state:
26. Petitioner's conviction relates to the delivery of health care
items or services under Medicaid, within the meaning of
section 1128(a)(1) of the Act.
27. The I.G. properly excluded Petitioner from participation in
Medicare and Medicaid for five years, as required by section
1128(c)(3)(B) of the Act.
ALJ Decision at 6 (citations omitted). Based on the analysis below, we
affirm and adopt FFCLs 26 and 27. We also affirm and adopt all other
FFCLs in the ALJ Decision without further discussion.
BACKGROUND
Section 1128(a)(1) of the Act provides as follows:
(a) MANDATORY EXCLUSION.-- The Secretary [of the Department of
Health and Human Services] shall exclude the following individuals
and entities from participation in any program under . . .
[Medicare] and shall direct that the following individuals and
entities be excluded from participation in . . . [Medicaid]:
(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 . . . [Medicare] or . . .
[Medicaid].
Section 1128(c)(3)(B) provides that --
[i]n the case of an exclusion under subsection (a), the minimum
period of exclusion shall be not less than five years . . . .
Petitioner argued on appeal, as well as before the ALJ, that his
conviction was not related to the delivery of items or services under
the Medicare or Medicaid programs because his conviction related only to
facilitation of theft violations under Arizona Revised Statutes.
Petitioner's Brief (Br.) at 10. Petitioner asserted that all charges
relating to Health Care Providers of Arizona, Inc. (HCPA), the Medicaid
prime contractor of which he was part owner, and to the Arizona Health
Care Cost Containment System (AHCCCS), Arizona's Medicaid demonstration
program, were specifically dismissed by the court as a result of his
plea agreement. Id. Therefore, he argued, since the charges
specifically referencing his relationship with the Medicaid prime
contractor and the state Medicaid program were dropped as a result of
his plea agreement, his conviction did not relate to the delivery of
items or services under Medicare or Medicaid.
The ALJ Decision acknowledged that certain charges relating to
Petitioner's relationship with HCPA and AHCCCS were dropped:
The State court judge granted the motion for dismissal contained in
Petitioner's plea agreement regarding any and all charges arising
out of Petitioner's relationship with HCPA and AHCCCS (which
included counts 1-11 and 15-17 of the indictment).
FFCL 22, citing the Arizona criminal court's sentencing order (I.G.
Exhibit (Ex.) 1) at 5 and Petitioner's plea agreement (I.G. Ex. 11) at
1. The ALJ Decision found that Petitioner had signed admissions of the
facts supporting his guilty pleas. Specifically, Petitioner admitted
that HCPA was a state-controlled provider of indigent care under AHCCCS,
that AHCCCS paid monthly checks to HCPA which were deposited into HCPA's
checking account, and that Petitioner caused checks to be written on
HCPA's checking account to pay for the purchase of medical equipment to
be used by Petitioner solely for non-AHCCCS patients. ALJ Decision at
9, citing FFCL 21. The ALJ also found that HCPA's primary source of
income consisted of AHCCCS payments and that all money paid by AHCCCS
was to be accounted for separately from non-AHCCCS money. FFCLs 12 and
20.
The ALJ Decision stated that these facts therefore related the offenses
to which Petitioner pled guilty to the Medicaid program --
The theft of Medicare and Medicaid assets relates to the delivery
of health care items or services by diminishing Medicare and
Medicaid's efficiency and ability to supply benefits to their
beneficiaries and recipients. Indeed, Departmental Appeals Board
(DAB) case precedent has established a general rule that all crimes
involving financial misconduct directed at Medicare or Medicaid
are, by their very nature, related to the delivery of items or
services under such programs, within the meaning of section
1128(a)(1). Samuel W. Chang, M.D., DAB 1198 (1990) (false
billing); Carlos E. Zamora, M.D., DAB 1104 (1989) (false billing);
Napoleon S. Maminta, M.D., DAB 1135 (1990) (conversion of a
Medicare reimbursement check).
ALJ Decision at 8.
DISCUSSION
An offense may be "related to the delivery of an item or service"
under
a covered program, even if the crime was committed by someone providing
billing or accounting services who did not directly participate in the
delivery of an item or service under the program. Travers v. Sullivan,
791 F. Supp. 1471, 1481 (E.D. Wash. 1992). This conclusion is based on
wording changes introduced in the 1987 amendments to section 1128 of the
Act, which substituted the current language for the prior reference to
"a criminal offense related to such individual's participation in the
delivery of medical care or services . . . ." Id. Moreover, as the
court stated in Greene v. Sullivan, 731 F. Supp. 835, 838 (E.D. Tenn.
1990), the statutory language and legislative history indicate that the
dichotomy between mandatory exclusions covered by section 1128(a)(1) and
permissive exclusions under section 1128(b)(1) "was not between
financial crimes and crimes in the delivery of services (such as direct
patient abuse) but between program-related crimes and other relevant
crimes which did not defraud the program itself (such as fraud on
insurance companies)." 3/
Contrary to what the ALJ said, however, DAB precedent has not
established a "general rule" that --
all crimes involving financial misconduct directed at Medicare or
Medicaid are, by their very nature, related to the delivery of
items or services under such programs, within the meaning of
section 1128(a)(1).
ALJ Decision at 8. The precedent instead has recognized that the plain
wording of the statute requires some "nexus" or "common sense
connection" between the offense of which a petitioner was convicted and
the delivery of an item or service under a covered program. See, e.g.,
Thelma Walley, DAB 1367 (1992); Niranjana B. Parikh, M.D., DAB 1334
(1992). In drafting section 1128(a)(1), Congress could have simply
required that a person be excluded when convicted of an offense related
to Medicare or Medicaid. However, Congress instead required that a
person be excluded when convicted of an offense related to the delivery
of items or services under Medicare or Medicaid. Neither the ALJ nor
the Board may fail to give effect to the plain meaning of the statute.
Therefore, finding that an offense is program-related financial
misconduct is insufficient without also finding a nexus to the delivery
of items or services under one or more covered programs. Such a nexus
was found in Chang, Zamora, and Maminta, the cases cited by the ALJ.
In this case, it is clear from the record that Petitioner pled guilty to
three charges which, though labeled as "facilitation of theft," were
related to the delivery of items or services under Medicaid. Petitioner
did not dispute that AHCCCS was Arizona's Medicaid demonstration program
or that HCPA was a corporation set up solely for the purpose of acting
as a prime contractor under that program. In the first of the charges
to which Petitioner pled guilty (count 12), Petitioner admitted
countersigning a check in the amount of $3,400.00 drawn on the HCPA
account to purchase liposuction equipment. Petitioner admitted
countersigning the check despite knowing that the equipment was to be
used only for Petitioner's non-AHCCCS patients and that liposuction was
not a procedure covered by AHCCCS. I.G. Ex. 11 at 3. In the second of
the charges (count 13), Petitioner admitted to directing two other
persons to sign a check in the amount of $1,156.40 drawn on the HCPA
account to purchase dermabrasion equipment. Petitioner admitted
directing the signing of the check despite knowing that the equipment
was to be used only for Petitioner's non-AHCCCS patients and that
dermabrasion was not a procedure covered by AHCCCS. Id. at 4. In the
third of the charges (count 14), Petitioner admitted to countersigning a
check in the amount of $2,650.00 drawn on the HCPA account to purchase
surgical knife equipment. Petitioner likewise admitted countersigning
the check despite knowing that the equipment was to be used only for
Petitioner's non-AHCCCS patients. Id. at 5.
Petitioner's actions in removing, or causing to be removed, funds from
the HCPA account for the purchase of equipment to be used for non-AHCCCS
patients resulted in less funds being available to pay for covered
services delivered to AHCCCS patients. Essentially, the theft which
Petitioner facilitated was a misappropriation of funds which should have
been used to pay for items or services delivered to recipients under
Arizona's Medicaid program, but instead were used for non-Medicaid
purposes. This nexus is sufficient to establish that Petitioner's
offenses were related to the delivery of items or services under
Medicaid, within the meaning of section 1128(a)(1). Indeed, these
offenses are parallel to the offense of falsely billing a covered
program. Congress clearly considered such false billing to be a
program- related crime even under the narrower exclusion provision of
section 1128(a)(1) amended in 1987. See H.R. Rep. No. 393, Part II,
95th Cong., 1st Sess. 47 (1977); Jack W. Greene, DAB 1078 (1989),
affirmed Greene, supra.
The fact that Petitioner's offense was labeled "facilitation of theft"
is irrelevant. Petitioner's appeal correctly acknowledged that evidence
as to the nature of an offense may be considered when determining
whether an offense is related to the delivery of items or services under
Medicare or Medicaid:
It is consistent with congressional intent to admit limited
evidence concerning the facts upon which a conviction was
predicated in order to determine whether the statutory criteria of
the exclusion law has [sic] been satisfied.
Petitioner's Br. at 8. Petitioner also noted that --
[t]he A.L.J., the finder of fact, can look beyond the findings of
the State court . . . .
Id. at 11, citing Dewayne Franzen, DAB 1165 at 6 (1990). For this
reason, it is not the labeling of the offense under the state statute
which determines whether the offense is program-related.
The ALJ properly relied on Petitioner's admissions in his brief in which
he agreed with, or "stipulated" to, certain of the findings of fact
proposed by the I.G. Petitioner has not withdrawn those stipulations.
Petitioner did not object, in his brief before the ALJ, to the
authenticity of any of the documents introduced by the I.G. 4/ While
Petitioner said he disputed various FFCLs, he did not offer any evidence
supporting his view of the facts, much less discuss how his view of the
facts differed from that of the I.G. Rather, Petitioner's arguments
focused on the conclusions to be drawn from the facts. The facts, as
established by the record, clearly indicated that Petitioner's offense
was related to the delivery of items or services under Medicaid.
For these reasons, we affirm and adopt FFCL 26. Since we find that
Petitioner's offense met the criteria of section 1128(a)(1) of the Act,
we find that the I.G. properly excluded Petitioner and we affirm and
adopt FFCL 27.
CONCLUSION
For the above reasons, we uphold Petitioner's five-year exclusion under
section 1128(a)(1) of the Act.
______________________________ Donald F.
Garrett
______________________________ M. Terry Johnson
______________________________ Judith A.
Ballard Presiding Board Member
1. "State health care program" is defined in section 1128(h) of the
Social Security Act and includes the Medicaid program under Title XIX of
the Act. Unless the context indicates otherwise, we use the term
"Medicaid" to refer to all programs listed in section 1128(h).
2. We find that Petitioner has also objected to FFCLs 17, 20 and 21.
Petitioner argued before the ALJ that summary judgment was improper
because he disputed certain of the I.G.'s proposed FFCLs, which he
listed. Petitioner did not introduce evidence addressing the content of
the proposed FFCLs or showing that there were genuine issues of material
fact on the matters raised. The ALJ found against Petitioner on
substantially all of these proposed FFCLs and adopted many of them as
his own FFCLs. On appeal, Petitioner argued again that summary judgment
was improperly granted by the ALJ because the ALJ Decision "did not take
into consideration the Petitioner's response" to the FFCLs he originally
objected to. For this reason, we find that Petitioner has objected to
each of the FFCLs which he originally disputed but which were
substantially adopted by the ALJ.
3. Section 1128(b)(1) provides that the Secretary of the Department of
Health and Human Services may exclude from participation in Medicare or
Medicaid --
[a]ny individual or entity that has been convicted, under Federal
or State law, in connection with the delivery of a health care item
or service or with respect to any act or omission in a program
operated by or financed in whole or in part by any Federal, State
or local government agency, of a criminal offense relating to
fraud, theft, embezzlement, breach of fiduciary responsibility, or
other financial misconduct.
4. Petitioner was instructed by the ALJ in a May 26, 1993 Prehearing
Order and Schedule for Filing Motions for Summary Disposition
(Prehearing Order) that he was to make all objections to exhibits
offered by the I.G. when he filed his response to the I.G.'s Motion for
Summary Judgment. Prehearing Order at 3. In his response, Petitioner
objected only to the I.G.'s proposed exhibit 2 on the grounds that "it
is in conflict with the actual Court Order, I.G. Exhibit 1."
Petitioner's Brief before the ALJ at 2. The ALJ admitted all exhibits
offered by both parties, including I.G. Exhibit 2, without discussing
Petitioner's objection. ALJ Decision at 2, n.4. However, finding that
I.G. Exhibit 2 was not relied on in the ALJ Decision, we do not reach
the issue of its