SUBJECT:

Morganna Elizabeth Allen,

Petitioner,

The Inspector General.

DECISION

This matter is before me on the Inspector General's (I.G.'s) Motion for Summary Affirmance of the I.G.'s determination to exclude Petitioner herein, Morganna Elizabeth Allen, from participation in Medicare, Medicaid, and all other federal health care programs for a period of five years. The I.G.'s Motion and determination to exclude Petitioner are based on the terms of section 1128(a)(3) of the Social Security Act (Act), 42 U.S.C. � 1320a-7(a)(3). There is a proper basis for Petitioner's exclusion and the undisputed facts in this case require the imposition of the minimum five-year period of exclusion.

I. Procedural Background

Morganna Elizabeth Allen was first licensed as a pharmacist by the State of Ohio in 1999. In 2002, she was employed by Rite Aid Pharmacy in Marion, Ohio. On February 13, 2004, the Grand Jury sitting for the Court of Common Pleas of Marion County, Ohio, handed up an Indictment charging Petitioner with 23 felony violations of Ohio statutes related to obtaining property by theft, and to obtaining prescription medications by deception.

Petitioner appeared with counsel in the Court of Common Pleas on August 13, 2004, and pleaded guilty to seven counts of the Indictment, each of which charged her with obtaining prescription medications by deception, in violation of OHIO REV. CODE ANN � 2925.22(A). Each of the crimes charged and admitted is classified by Ohio statutes as a fifth-degree felony. The court accepted Petitioner's seven guilty pleas, and proceeded to final disposition of the case on September 24, 2004, at which time Petitioner was sent to jail for 15 days and thereafter placed on a form of probation called "community control" for two years. Her driver's license was suspended for six months. The remaining 16 counts of the Indictment were dismissed on prosecution motion.

Acting on the authority of section 1128(a)(3) of the Act, the I.G. began the process of excluding Petitioner from participation in Medicare, Medicaid, and all other federal health care programs. On December 30, 2005, the I.G. notified Petitioner that she was to be excluded for a period of five years, the mandatory minimum period of exclusion established by section 1128(c)(3)(B) of the Act, 42 U.S.C. � 1320a-7(c)(3)(B).

Petitioner timely sought review of the I.G.'s action by counsel's letter of January 18, 2006. On the authority of 42 C.F.R. � 1005.6, I convened a prehearing conference by telephone on March 29, 2006, to discuss the issues presented by the case with both parties, and to discuss procedures best suited for addressing those issues. The parties agreed that the case could be decided on written submissions, and I established a schedule for the submission of documents and briefs. The results of that conference and my directions to the parties appear in the Order of March 29, 2006. All briefing is now complete, and the record in this case closed on July 5, 2006.

The proffer of exhibits in this case has been greatly facilitated by the parties' cooperative approach, which I here acknowledge with thanks. The parties have submitted ten agreed-upon documents as Joint Exhibits (J. Exs.) 1-10, and they are admitted as designated. Petitioner has submitted an additional exhibit marked Petitioner's Exhibit 11 (P. Ex. 11); the I.G. has not objected to it, and it is admitted as designated.

II. Issues

The factual and legal issues before me are limited to those listed at 42 C.F.R. � 1001.2007(a)(1). In the specific context of this record, they are:

1. Whether the I.G. has a basis for excluding Petitioner from participating in Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(a)(3) of the Act; and

2. Whether the five-year term of the exclusion is unreasonable.

The controlling authorities require that both issues be resolved in favor of the I.G.'s position. I find a basis for Petitioner's exclusion pursuant to section 1128(a)(3) of the Act, and the five-year term of exclusion, the minimum established by section 1128(c)(3)(B) of the Act, 42 U.S.C. � 1320a-7(c)(3)(B), is reasonable as a matter of law.

III. Controlling Statutes and Regulations

Section 1128(a)(3) of the Act, 42 U.S.C. � 1320a-7(a)(3), requires the mandatory exclusion from participation in Medicare, Medicaid, and all other federal health care programs of "[a]ny individual or entity that has been convicted for an offense which occurred after [August 21, 1996,] 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 health care program (other than those specifically described in [section 1128(a)](1)) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct."

The regulation implementing section 1128(a)(3) appears at 42 C.F.R. � 1001.101(c)(1). It states, in relevant part, that the I.G. must exclude any individual who:

[h]as been convicted, under Federal or State law, of a felony . . . relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct . . . [i]n connection with the delivery of a health care item or service, including the performance of management or administrative services relating to the delivery of such items or services[.]

The Act defines "convicted" as including those circumstances, among others:

(1) when a judgment of conviction has been entered against the individual . . . by a . . . State . . . court, regardless of whether . . . the judgment of conviction or other record relating to criminal conduct has been expunged;

(2) when there has been a finding of guilt against the individual . . . by a . . . State . . . court; (or)

(3) when a plea of guilty or nolo contendere by the individual . . . has been accepted by a . . . State . . . court[.]

Act, section 1128(i)(1)-(3), 42 U.S.C. �� 1320a-7(i)(1)-(3). These definitions are repeated at 42 C.F.R. � 1001.2.

An exclusion based on section 1128(a)(3) is mandatory, and the I.G. must impose it for a minimum period of five years. Section 1128(c)(3)(B) of the Act, 42 U.S.C. � 1320a-7(c)(3)(B). The regulatory language of 42 C.F.R. � 1001.102(a) affirms the statutory provision. Although the mandatory minimum period of exclusion is subject to enhancement in some limited and carefully-defined circumstances set out at 42 C.F.R. � 1001.102(b), the I.G. has not sought to enhance the five-year mandatory minimum period in this case. For that reason, I may not consider any of the specific aggravating or mitigating factors set out at 42 C.F.R. � 1001.102(b) and (c).

IV. Findings and Conclusions

I find and conclude as follows:

1. On August 13, 2004, in the Court of Common Pleas of Marion County, State of Ohio, Petitioner Morganna Elizabeth Allen pleaded guilty to seven fifth-degree felony charges of obtaining prescription medications by deception, in violation of OHIO REV. CODE ANN. � 2925.22(A). Her pleas of guilty were accepted, and she was found guilty. J. Exs. 7, 8, 9.

2. On September 24, 2004, final sentence was imposed against Petitioner on the basis of the pleas set out in Finding 1. The Judgment Entry of Sentencing recited that Petitioner was convicted of the crimes of "Deception to Obtain [R.C. 2925.22(A)]," a fifth-degree felony. J. Ex. 9.

3. The plea, conviction, and sentence described above in Findings 1 and 2 constitute a felony "conviction" within the meanings of sections 1128(a)(3) and 1128(i)(1), (2) and (3) of the Act, and 42 C.F.R. � 1001.2.

4. The conduct that resulted in Petitioner's conviction described above in Findings 1 and 2 occurred between August 9, 2002 and October 16, 2002, and thus after August 21, 1996. J. Exs. 7, 9.

5. The conduct that resulted in Petitioner's conviction described above in Findings 1 and 2 related to fraud in connection with the delivery of a health care item or service. J. Exs. 3, 4, 5, 6, 7, 8, 9.

6. By reason of her conviction of a felony offense which occurred after August 21, 1996, related to fraud in connection with the delivery of a health care item or service, Petitioner was subject to, and the I.G. was required to impose, a period of exclusion from participation in Medicare, Medicaid, and all other federal health care programs. Act, section 1128(a)(3).

7. On December 30, 2005, the I.G. notified Petitioner that she was to be excluded from participation in Medicare, Medicaid, and all other federal health care programs for a period of five years, based on the authority set out in section 1128(a)(3) of the Act. J. Ex. 1.

8. Acting through counsel, Petitioner perfected her appeal from the I.G.'s action by filing a timely hearing request on July 29, 2005. J. Ex. 2.

9. The I.G. properly and reasonably set the period of Petitioner's exclusion at five years, the mandatory minimum term provided by law. Act, section 1128(c)(3)(B); 42 C.F.R. �� 1001.102(a), 1001.2007(a)(2).

10. There are no disputed issues of material fact before me and summary disposition on the written submissions is appropriate in this matter. Tanya A. Chuoke, R.N., DAB No. 1721 (2000); Thelma Walley, DAB No. 1367 (1992).

V. Discussion

The essential elements necessary to support an exclusion based on section 1128(a)(3) of the Act are: (1) the individual to be excluded must have been convicted of a felony offense; (2) the felony offense must have been based on conduct relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct; (3) the felony offense must have been for conduct in connection with the delivery of a health care item or service, or the felony offense must have been with respect to any act or omission in a health care program operated by or financed in whole or in part by any federal, state, or local government agency; and (4) the felonious conduct must have occurred after August 21, 1996. Andrew D. Goddard, DAB No. 2032 (2006); Erik D. DeSimone, R.Ph., DAB No. 1932 (2004); Jeremy Robinson, DAB No. 1905 (2004); Michael Patrick Fryman, DAB CR1261 (2004), Fryman v. Leavitt, No. 3-CV-256-S, at 7 (W.D. Ky., June 29, 2006); Golden G. Higgwe, D.P.M., DAB CR1229 (2004); Thomas A. Oswald, R.Ph., DAB CR1216 (2004); Katherine Marie Nielsen, DAB CR1181 (2004).

No material facts in this case are contested, and Petitioner concedes that she pleaded guilty to and was convicted of felony-level use of deception in order to obtain prescription drugs, and that her misconduct occurred between August and October 2002. She does not deny that her behavior in doing so was deceptive and therefore fraudulent. The first, second, and fourth essential elements are thus established without the need for further discussion. The third element is what Petitioner contests.

Her argument over the third essential element is based on her reading of the language of section 1128(a)(3) of the Act. Petitioner believes that the statutory language demands that the I.G. must prove not only that the predicate conviction occurred in connection with the delivery of a health care item or service -- a connection she does not contest -- but that the I.G. must also prove that the crime took place in the context of a health care program operated or funded by a government agency. She asserts: "Although section 1128(a)(3) identifies two (2) categories of offenses requiring mandatory exclusion - it is necessary that both offenses involve Medicaid, Medicare, or some other federal or state funded program." P. Answer Brief at 7. Petitioner denies that Congress' use of the disjunctive "or" in the statute's expression "or with respect to any act or omission in a health care program . . . operated by or financed in whole or in part by any Federal, State, or local government agency . . ." separates crimes related to protected programs into a second category of predicate offenses subject to mandatory exclusion under section 1128(a)(3).

Now, in candor it must be said that section 1128(a)(3) is no template for clarity. The word "or" appears in the section nine times in a total of approximately 104 words, more frequently than any other word including the articles "a," "an," and "the." ⁽¹⁾ This turbidity of language has led other petitioners to make the same argument that this Petitioner makes now. It may also have led the Departmental Appeals Board (Board) to modify in the interests of clarity the form in which its decisions quote the statute. But neither those previous arguments nor the one at hand can prevail over settled precedent in this forum and before the Board.

The disjunctive and separate classification of predicate convictions identified by section 1128(a)(3) was settled by the Board in Erik D. DeSimone, R.Ph, DAB No. 1932, on facts not materially different from those before me now. DeSimone had been employed at a pharmacy where he stole medications. He was convicted under state law for those thefts. Part of his resistance to the I.G.'s exclusion effort was based on his argument that the thefts had nothing to do with a protected health care program, the precise argument Petitioner advances now. The Board made the dual scope of the statute clear:

Petitioner's appeal is altogether without merit. His arguments fail to recognize that section 1128(a)(3) of the Act is written in the disjunctive to cover two different categories of felonies relating to "fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct." Each category has its own distinct requirements for an exclusion. Thus, section 1128(a)(3) covers as a first category, any individual convicted of one of the listed felonies "in connection with the delivery of a health care item or service" (see 42 C.F.R. � 1001.101(c)(1)), and it covers, as a second category, any individual convicted of a listed felony with respect to any act or omission in a health care program operated by or financed in whole or in part by any Federal, State, or local government. See 42 C.F.R. � 1001.101(c)(2). As the ALJ clearly recognized, Petitioner was excluded based on his conviction of a listed felony under the first category "in connection with the delivery of a health care item or service."

Erik D. DeSimone, R.Ph., DAB No. 1932 , at 5-6.

The Board's ruling was quickly applied by the Administrative Law Judges (ALJs) of this forum in a series of cases arising from conduct and convictions similar to those in this case, and based on a theory similar to that urged here. Robert F. Tschinkel, R.Ph., DAB CR1323 (2005); Michael Patrick Fryman, DAB CR1261; Golden G. Higgwe, D.P.M., DAB CR1229; Thomas A. Oswald, R.Ph., DAB CR1216. Indeed, the ALJs of this forum had begun to fashion such an interpretation of the statute before the Board gained the opportunity to do so. Mohammad A. Adas, M.D., DAB CR1202 (2004); Erik D. DeSimone, R.Ph., DAB CR1163 (2004); William J. Arnold, Jr., M.D., DAB CR1058 (2003); Jason Hollady, M.D., a/k/a Jason Lynn Hollady, DAB CR912 (2002); Donald R. Kirks, M.D., DAB CR765 (2001).

The Board's DeSimone analysis, as reflected in the ALJ's decision in Fryman, has won explicit approval in the United States District Court for the Western District of Kentucky. The Board affirmed the ALJ's Fryman decision by memorandum Order in Michael Patrick Fryman, DAB No. 1965 (2005); no separate decision was issued. Fryman pursued his appeal in United States District Court. On June 29, 2006, that court affirmed the ALJ and the Board, and specifically wrote that with respect to the exclusion remedy established by section 1128(a)(3): "The court affirms the conclusion of the ALJ that no nexus to a government funded health care program is required with respect to a conviction in connection with the delivery of a health care item or service." Fryman v. Leavitt, No. 3-CV-256-S, at 7 (W.D. Ky., June 29, 2006).

It may be worth noting that the Board has acknowledged, at least implicitly, the confusion engendered by the section's infelicitous text, and has made an effort to clarify it. That acknowledgment and that effort can be seen in the form in which the Board now quotes section 1128(a)(3). Since DeSimone, it has addressed that section's language twice. Its first post-DeSimone reference to the statute quotes it this way:

(3) FELONY CONVICTION RELATED TO HEALTH CARE FRAUD - Any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under Federal or State law, in connection with the delivery of a health care item or service . . . of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Kenneth M. Behr, DAB No. 1997, at 2 (2005).

The quote contains an ellipsis: beginning with the clause that opens with the fourth appearance of the word "or" and continuing through the phrase "local government agency," the second disjunctive classification of predicate convictions is excised. The text as it appears is, of course, entirely consistent with DeSimone and with the rule I apply here, but it is much clearer.

Clarity is even better served by the Board's most recent quotation of section 1128(a)(3). The text as it appears in Andrew D. Goddard, DAB No. 2032, is not only trimmed further, but parts of it are pointedly emphasized. I here set out the Board's rendition of the statute precisely as it appeared, with emphases and parentheses reproduced exactly:

any individual who "has been convicted for an offense . . . under Federal or State law, in connection with the delivery of a health care item or service . . . consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct" (emphasis added).

Andrew D. Goddard, DAB No. 2032, at 2.

Thus, the short answer to Petitioner's argument is that the settled law of this forum compels its rejection. Rejection of Petitioner's argument means that the I.G. has proved the third essential element. Since the four elements essential to this exclusion proceeding have been proved, Petitioner's exclusion is mandated by the terms of section 1128(a)(3) of the Act.

Petitioner does not develop the suggestion vigorously, but does hint at the notion that the permissive exclusion provisions of section 1128(b)(1)-(15) of the Act should be applied to her situation: "Should this Court find that Petitioner is subject to a permissive exclusion and that further notice is not mandated, Petitioner should be given an opportunity to submit evidence as to the reasonableness of any length of exclusion imposed." P. Brief at 10. But once a conviction is shown to be within the ambit of section 1128(a)(3), the mandatory operation of that section bars Petitioner from claiming that other discretionary exclusion provisions, perhaps more lenient, should be applied instead. Kenneth M. Behr, DAB No. 1997.

The five-year period of exclusion proposed in this case is the absolute minimum required by section 1128(c)(3)(B) of the Act. As a matter of law it is not unreasonable, and neither the Board nor I can reduce it. Mark K. Mileski, DAB No. 1945 (2004); Salvacion Lee, M.D., DAB No. 1850 (2002); 42 C.F.R. � 1001.2007(a)(2).

In an exclusion case such as this one, summary disposition is appropriate when there are no disputed issues of material fact, when the undisputed facts are clear and not subject to conflicting interpretation, and when those undisputed facts demonstrate that one party is entitled to judgment as a matter of law. Summary disposition is explicitly authorized by the terms of 42 C.F.R. � 1005.4(b)(12), and this forum relies on FED. R. CIV. P. 56 for guidance in applying that regulation. Tanya A. Chuoke, R.N., DAB No. 1721 (2000); Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367 (1992); John W. Foderick, M.D., DAB No. 1125 (1990). When the undisputed material facts of a case support summary disposition, there is neither a right to a full evidentiary hearing nor a need for one. Surabhan Ratanasen, M.D., DAB No. 1138 (1990); John W. Foderick, M.D., DAB No. 1125. The material facts in this case are undisputed, clear, and unambiguous. They support summary disposition as a matter of law, and this Decision issues accordingly.

VI. Conclusion

For the reasons set out above, the I.G.'s Motion for Summary Affirmance should be, and it is, GRANTED. The I.G.'s exclusion of Petitioner Morganna Elizabeth Allen from participation in Medicare, Medicaid, and all other federal health care programs for a term of five years, pursuant to the terms of section 1128(a)(3) of the Act, is sustained.

Richard J. Smith

Administrative Law Judge