SUBJECT:

Charles F. Barnett, M.D.,

Petitioner,

The Inspector General

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Charles F. Barnett, M.D., from participating in Medicare and other federally funded health care programs for a period of at least 15 years.

I. Background

On August 30, 2002, the I.G. notified Petitioner that he was being excluded from participating in Medicare and other federally funded health care programs for a period of at least 15 years. The I.G. advised Petitioner that he was being excluded because he had been convicted of a criminal offense described at sections 1128(a)(1), 1128(a)(3), and 1128(a)(4) of the Social Security Act (Act), and because aggravating factors existed in his case which justified imposing an exclusion for a period that is longer than the five-year minimum exclusion that is required for such offenses. See Act, section 1128(c)(3)(B).

Petitioner requested a hearing and the case was assigned to me for a hearing and a decision. I held a pre-hearing conference by telephone at which I advised the parties that it appeared to me that all relevant evidence in the case was contained in documents. I therefore advised them that I expected the I.G. to move for disposition based on a written submission and that I expected that Petitioner would reply in writing to any motion that the I.G. filed. However, I also told the parties that if either of them had testimonial evidence which was not contained in a document, that party could move for an in-person hearing.

The I.G. submitted a motion for a written disposition. In her motion the I.G. addressed only the basis for excluding Petitioner pursuant to section 1128(a)(1) of the Act and the aggravating factors that addressed section 1128(a)(1). I directed the I.G. to file a supplemental brief which addressed the additional possible statutory grounds for exclusion and any additional aggravating factors that might exist in the case and the I.G. complied with my direction. Petitioner filed three written statements, on October 23, 2003, December 8, 2003, and December 26, 2003. The most recent of these consists of a reply to the I.G.'s supplemental brief.

The I.G. submitted five proposed exhibits, I.G. Exhibits (Ex.) 1 - 5 with her initial submission and a sixth proposed exhibit (I.G. Ex. 6) with her supplemental brief. Petitioner did not file any exhibits in addition to the three statements that he submitted.

However, Petitioner's statements in his submissions are testimonial in character. For that reason, I am identifying Petitioner's statement of October 23, 2003 as Petitioner's Exhibit (P. Ex.) 1. I am identifying his statement of December 8, 2003 as Petitioner's Exhibit (P. Ex.) 2, and I am identifying his statement of December 26, 2003 as Petitioner's Exhibit (P. Ex.) 3. Neither party has objected to the admission into evidence of any of the proposed exhibits. Therefore, I admit into evidence I.G. Ex. 1 - I.G. Ex. 6 and P. Ex. 1 - P. Ex. 3.

Neither party expressed an interest in presenting testimony to me at an in-person hearing. For that reason, I decide that no in-person hearing is necessary in this case and I rule that the record is closed.

II. Issues, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

1. Petitioner was convicted of criminal offenses for which an exclusion must be imposed;

2. Aggravating factors are present which may justify an exclusion for more than the five-year minimum period;

3. Mitigating factors are present which may offset any aggravating factors;

4. An exclusion of 15 years is reasonable.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below, as a separate heading. I discuss each Finding in detail.

1. Petitioner was convicted of criminal offenses for which an exclusion must be imposed.

The I.G. alleges that Petitioner was convicted of criminal offenses which require exclusion under sections 1128(a)(1), 1128(a)(3), and 1128(a)(4) of the Act. Section 1128(a)(1) of the Act mandates exclusion of any individual who is convicted of a criminal offense related to the delivery of an item or service under Medicare or a State health care (Medicaid) program. Section 1128(a)(3) of the Act mandates exclusion of any individual who is convicted of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct that is committed in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program that is operated or financed by any Federal, State, or local government agency. Section 1128(a)(4) of the Act requires exclusion of any individual who has been convicted of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

The evidence submitted by the I.G. establishes that Petitioner was convicted of criminal offenses under all three of these sections. Consequently, the I.G. is required to exclude Petitioner for at least five years.

On November 13, 2001, Petitioner was convicted by a Pennsylvania jury of seven counts of an eight-count felony information. I.G. Exs. 3, 4. Specifically, Petitioner was convicted of two counts of fraud against the Pennsylvania Medicaid program, one count of insurance fraud, two counts of obtaining a controlled substance by misrepresentation, and two counts of knowingly and intentionally delivering or possessing with intent to deliver controlled substances in violation of the Pennsylvania Controlled Substance Act. Id.

Petitioner's conviction of Medicaid fraud falls within the purview of section 1128(a)(1) of the Act. Petitioner was convicted of writing prescriptions which were not documented in the prescribed manner, which were of little or no benefit to the recipients of these prescriptions, and were below medical standards or were unnecessary. I.G. Ex. 3, at 1. Unstated but implicit in these counts is that these prescriptions not only were the basis for issuing unnecessary or contraindicated medications to recipients, but were used to generate claims against the Medicaid program for unnecessary medical items or services.

Petitioner's conviction of insurance fraud is an offense that is covered by section 1128(a)(3) of the Act. Specifically, Petitioner was convicted under Count 3 of the criminal complaint of submitting a fraudulent claim to a health care insurer. I.G. Ex. 3, at 2. The essence of Petitioner's crime was that he wrote prescriptions in the name of one person knowing that this person would use another person's insurance identification card to obtain payment for drugs. Id.

Petitioner's conviction of the felonies of obtaining controlled substances by misrepresentation and of unlawfully delivering or possessing with the intent to deliver controlled substances plainly falls within the reach of section 1128(a)(4) of the Act. I.G. Ex. 3, at 2 - 3. On their face, these offenses relate to the unlawful distribution, prescription, or dispensing of controlled substances.

In his December 26, 2003 statement, Petitioner essentially denies having committed the acts for which he was convicted. P. Ex. 3. But, in fact, Petitioner's criminal case was tried before a jury and he was convicted of the offenses of which he was charged. The I.G.'s authority to exclude Petitioner derives from his conviction. For that reason, Petitioner may not now deny the facts which are the basis for his conviction.

2. The I.G. proved the presence of aggravating factors.

Exclusions imposed pursuant to sections 1128(a)(1), 1128(a)(3), or 1128(a)(4) of the Act must be for a minimum period of at least five years. Act, section 1128(c)(3)(B). However, in a given case there may exist factors which justify an exclusion for a period that is longer than the minimum period. Regulations published by the Secretary of the Department of Health and Human Services establish the criteria for deciding when an exclusion of more than five years is reasonable. The regulation which establishes such criteria for exclusions imposed pursuant to sections 1128(a)(1), 1128(a)(3), or 1128(a)(4) of the Act is 42 C.F.R. � 1001.102.

The regulation describes factors which may be considered to be aggravating and which may justify a lengthier exclusion than the five-year minimum period. 42 C.F.R. � 1001.102(b)(1) - (9). In this case, the I.G. alleges, and I find, that several of them exist. These are as follows:

� The conduct which is the basis for Petitioner's conviction of an offense that falls within section 1128(a)(1) of the Act occurred over a period of more than one year. 42 C.F.R. � 1001.102(b)(2); I.G. Ex. 3, at 1. Specifically, Petitioner's scheme to defraud the Pennsylvania Medicaid program occurred over a period of more than three years, beginning in January 1997 and continuing until May 2000. Id.

� The sentence which was imposed against Petitioner for his crimes included a period of incarceration. 42 C.F.R. � 1001.102(b)(5). Petitioner was sentenced to a prison term of at least 11� months as a consequence of his conviction. I.G. Ex. 4, at 2.

� Petitioner was sanctioned administratively prior to his conviction. 42 C.F.R. � 1001.102(b)(6). On September 24, 2000 Petitioner surrendered his license to practice medicine in Pennsylvania pursuant to a consent agreement and order that he executed with the Pennsylvania State Board of Medicine. I.G. Ex. 2. The license surrender grew out of a disciplinary proceeding against Petitioner in which Petitioner was alleged to be unable to practice medicine consistent with the requirements of Pennsylvania State law. In surrendering his license Petitioner acknowledged that, by reason of illness, he was unable to practice his profession with reasonable skill and safety to patients. Id. at 2 - 3.

� Petitioner was subject to other adverse administrative action. 42 C.F.R. � 1001.102(b)(9). On March 5, 2002, Petitioner's participation in the Pennsylvania Medicaid program was terminated for a period of five years by the Pennsylvania Department of Public Welfare. I.G. Ex. 5, at 2. The action against Petitioner was adverse because it was taken in response to Petitioner's conviction of criminal offenses. See I.G. Ex. 3; I.G. Ex. 4.

� The acts resulting in Petitioner's convictions for controlled substance related offenses had a significant adverse impact on one or more program beneficiaries or other individuals. 42 C.F.R. � 1001.102(b)(3). Petitioner was convicted of, among other things: providing controlled substances to an individual who was not his patient; prescribing controlled substances to an individual who admitted to him that she was a drug addict; prescribing unnecessary controlled substances to an individual who admitted to him that she was a former heroin addict; and paying his medical assistant's salary with controlled substances and consuming some of these drugs together with his medical assistant. I.G. Ex. 1, at 1 - 15. During the period when Petitioner engaged in his criminal activity, on at least one or two occasions, he consumed controlled substances that had not been prescribed to him and which were not medically necessary. Id. It is clear from the foregoing that Petitioner abetted the drug addictions of numerous individuals through his practice of medicine, thereby endangering them.

Petitioner asserts that his "illegal conduct never represented a danger to anyone's well-being, and did not result in any significant physical, mental, or financial impact to program beneficiaries." P. Ex. 2. I disagree with this assertion. It is apparent from the unrebutted evidence offered by the I.G. that Petitioner's crimes were a substantial danger to the well-being of Petitioner's patients. As I have discussed, Petitioner's crimes included facilitating the substance abuse of drug-addicted patients.

The I.G.'s notice of exclusion to Petitioner recites all of the aggravating factors that I have discussed except for the last one. On my own motion, I asked the parties to brief the question of whether Petitioner's criminal acts had a significant adverse affect on beneficiaries and other individuals. Order Directing Supplemental Briefing, November 10, 2003. ⁽¹⁾ I have considered the question of whether it is fair to Petitioner to raise at the hearing an issue that was not contained in the notice letter. I conclude that Petitioner is not deprived of due process by raising the issue at this time. The issue is inherent in the documents relating to Petitioner's conviction, of which Petitioner certainly had notice. It also is inherent in the I.G.'s exclusion determination even if not specifically cited by the I.G. Finally, I gave Petitioner ample opportunity to brief the issue and to provide any relevant evidence that relates to it.

3. Petitioner did not prove the presence of any mitigating factor.

Aggravating factors that might justify imposing an exclusion for more than five years pursuant to sections 1128(a)(1), 1128(a)(3), or 1128(a)(4) of the Act may be offset by mitigating factors where such factors exist. The regulation which defines what may constitute a mitigating factor is 42 C.F.R. � 1001.102(c).

Petitioner did not prove the existence of any mitigating factors. Petitioner asserts that there were mitigating factors which resulted in a reduction of his prison sentence. P. Ex. 2. However, he offered no evidence to support this contention.

A mitigating factor may exist when:

The record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the [excluded] individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual's culpability.

42 C.F.R. � 1001.102(c)(2). Petitioner alleges that this factor exists in his case. He contends that he suffered from a psychiatric condition which caused him to experience a "psychotic episode and total nervous breakdown." P. Ex. 1, at 1. He asserts that, while in an impaired state, he:

met up with several unsavory characters who claimed to be my patients, then my best friends, then my brothers and sisters. They convinced me to do things that I would have never ordinarily done.

Id. Petitioner apparently argues that these circumstances are among the mitigating factors that were presented to the judge at his sentencing hearing, resulting in a reduced prison sentence. P. Ex. 2.

Petitioner's assertion that he suffered from psychiatric problems finds some support in the record of this case. I.G. Ex. 2. The proceedings brought against his license to practice medicine before the Pennsylvania State Board of Medicine appear to have been based on that board's belief that Petitioner's psychiatric condition rendered him incapable of practicing medicine safely. Id. But, Petitioner offered no evidence to support his contention that the sentencing judge in his criminal case determined that his psychiatric problems reduced his culpability for his crimes.

Petitioner did not offer evidence which is relevant to any of the other possible mitigating factors that are described at 42 C.F.R. � 1001.102(c). Indeed, he did not allege specifically the presence of another mitigating factor described by the regulation although he asserts generally that there were mitigating factors in his case. See P. Ex. 2.

4. An exclusion of 15 years is reasonable.

Section 1128 of the Act is a remedial statute. The section's goal is not to punish wrongdoers but to assure that beneficiaries and recipients of federally funded programs, and the programs themselves, are protected from untrustworthy providers of care. The question that must be answered in any case in which the length of the exclusion is at issue is: is the exclusion reasonably necessary to protect beneficiaries, recipients, and programs from an untrustworthy individual?

The presence of aggravating or mitigating factors in a case does not dictate an exclusion of a particular length. The regulation establishing aggravating and mitigating factors operates, in effect, as rules of evidence governing what may be considered in deciding whether an exclusion is reasonable. See 42 C.F.R. � 1001.102(b), (c). But, it does not establish any formula for deciding whether an exclusion is reasonable. In order to answer that question, one must consider the evidence which relates to aggravating and mitigating factors in order to decide how untrustworthy is the excluded individual.

Here, the evidence shows Petitioner to be highly untrustworthy, and it is such evidence that establishes that an exclusion of 15 years is reasonable in this case. The evidence establishes that, during a period of about three years, Petitioner prescribed controlled substances to individuals whom he knew were drug addicts. Petitioner seriously endangered his patients because he abetted his patients' addictions.

Petitioner's untrustworthiness was recognized by all of the authorities who have reviewed his case. Petitioner received a relatively lengthy prison sentence for his crimes, he lost his license to practice medicine in Pennsylvania, and he was excluded from participating in that state's Medicaid program.

All of this evidence supports a conclusion that an exclusion of 15 years is reasonable. The risks to the public from allowing Petitioner to participate in federally funded health care programs greatly outweigh any personal loss that Petitioner may sustain by being excluded during this period.

At Finding 3, above, I explain why Petitioner did not establish a mitigating factor based on reduced culpability for his crimes. However, I would find an exclusion of 15 years to be reasonable in this case even if Petitioner established the presence of such a factor, absent any evidence that there exists no likelihood that Petitioner would resume his substance abuse and commit similar crimes at a future date.

Reduced culpability, even if it is acknowledged by a sentencing judge, is not, in my judgment a basis for reducing the length of an exclusion unless there are strong assurances that the excluded individual will never again engage in criminal activity.

Recently, in the case of Elliot Heller, M.D., DAB CR1126 (2003), I reduced an exclusion because the mitigating factor of reduced culpability was present in that case and because the sentencing judge concluded that the excluded individual's sentence should be reduced based on the absence of any likelihood that he would engage in criminal activity in the future. Such evidence is totally absent here.

Steven T. Kessel

Administrative Law Judge

1. My order erroneously asked the parties to discuss the aggravating factor at 42 C.F.R. � 1001.401(c)(2)(ii). As the I.G. notes, this regulation addresses convictions for misdemeanors related to controlled substances and not felonies related to controlled substances. However, the language of the aggravating factor is identical to that contained in 42 C.F.R. � 1001.102(b)(3). Moreover, it is obvious from the wording of my November 10, 2003 order that I was concerned whether an aggravating factor existed in the context of Petitioner's conviction for felonies related to controlled substances.