SUBJECT:

Igor Strugatsky,

Petitioner,

The Inspector General.

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Igor Strugatsky, D.P.M., from participating in Medicare and other federally funded health care programs for a period of five years.

I. Background

Petitioner is a podiatrist. On March 31, 2006, the I.G. notified Petitioner that he was being excluded from participating in Medicare and other federally funded health care programs for a five-year period. The I.G. told Petitioner that he was being excluded pursuant to the authority of section 1128(a)(1) of the Social Security Act (Act) because he had been convicted of a criminal offense related to the delivery of an item or service under Medicare or a State health care program.

Petitioner requested a hearing and the case was assigned to me for a hearing and a decision. I held a pre-hearing conference at which I set a schedule for the parties to file written submissions including briefs and proposed exhibits. I advised the parties that either of them could request to present testimony in person.

Neither party requested an in-person hearing. The I.G. submitted a brief and three proposed exhibits (I.G. Exhibit (Ex.) 1 - I.G. Ex. 3). Petitioner submitted a brief and two proposed exhibits (Petitioner (P.) Ex. 1 - P. Ex. 2). As I discuss in more detail below, Petitioner objects to the admission into evidence of records of his criminal proceeding. I overrule his objections and receive into evidence I.G. Ex. 1 - I.G. Ex. 3. The I.G. did not object to my receiving into evidence Petitioner's proposed exhibits and, therefore, I receive P. Ex. 1 - P. Ex. 2.

II. Issue, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

1. The I.G. may rely on records of Petitioner's criminal process to establish that he was convicted of an offense that mandates an exclusion under section 1128(a)(1) of the Act;

2. Petitioner was convicted of a criminal offense;

3. Petitioner's conviction was of an offense that mandates exclusion under section 1128(a)(1); and,

4. I have authority to hear and decide Petitioner's arguments that the I.G. is excluding him in violation of the United States Constitution.

Not at issue in this case is whether the length of Petitioner's exclusion - five years - is reasonable. The Act requires an exclusion for at least five years of any individual who is convicted of an offense that is described at section 1128(a)(1). Act, � 1128(c)(3)(B). In this case, the I.G. excluded Petitioner for the minimum period.

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 as a separate heading and I discuss it in detail.

1. The I.G. may rely on the records of Petitioner's criminal process to establish that he was convicted of a criminal offense within the meaning of section 1128(a)(1) of the Act.

Petitioner argues that I should not receive evidence from the I.G. consisting of the records of his criminal process (I.G. Ex. 2; I.G. Ex. 3). Petitioner argues that a State statute prohibits the use of records of his process in a judicial proceeding. Therefore, according to Petitioner, the I.G. is barred from relying on such records as evidence supporting the determination to exclude Petitioner.

I find Petitioner's argument not to be persuasive. This is a federal proceeding and not a criminal or civil proceeding in the State of Kentucky. There is nothing in the Act which requires the I.G. to defer to State law in deciding which records he may obtain or rely on to decide whether to impose an exclusion. Furthermore, Petitioner has offered no basis to show that State law would limit the I.G.'s authority as he contends.

The operative facts are that, on August 25, 2004, Petitioner was charged with a felony under Kentucky law. I.G. Ex. 2. On July 21, 2005, Petitioner entered a plea to the charge. He pled guilty and entered into a pretrial diversion agreement. P. Ex. 1, at 1-3; I.G. Ex. 3, at 1-3. The diversion agreement imposed several terms and conditions on Petitioner including a requirement that he pay restitution. P. Ex. 2, at 2; I.G. Ex. 3, at 2. It provided further that, if Petitioner successfully completed the diversion, the criminal charge to which he pled would be designated as Dismissed-Diverted. It provided also that Petitioner could petition to have the charge expunged from his record upon successful completion of the diversion. P. Ex 1, at 4; I.G. Ex. 3, at 4.

In Kentucky, diversion in criminal cases is governed by State statute. KY. CODE REV. STAT. �� 533.250 - 533.258 (2006); see P. Ex. 2. The statute provides that, if an individual successfully completes the provisions of a pretrial diversion agreement:

Pretrial diversion records shall not be introduced as evidence in any court in a civil, criminal, or other matter without the consent of the defendant.

KY. CODE REV. STAT. � 533.258(3). It is this section which Petitioner contends bars the I.G. from relying on records of Petitioner's criminal process as a basis for excluding him.

The language of the section is expansive, prohibiting the use of diversion records in "any court." However, I do not find that the section operates to prohibit the I.G. from using such records. Section 1128(a) of the Act is federal - not State - law and Congress did not suggest that it intended that the federal exclusion program be limited by State enactments. The I.G.'s authority to exclude is, necessarily, independent from the provisions of State law and is not limited by them.

It is true that the I.G. may not exclude an individual under section 1128(a)(1) unless that person has been "convicted" of a criminal offense which falls under the purview of that section. But, Congress enacted its own definition of what constitutes a "conviction" and that is binding in this proceeding as well as on excluded parties. Act, � 1128(i). The fact that Congress elected to establish a federal definition of a conviction makes it evident that it did not intend to subordinate the I.G.'s authority to State law.

Moreover, the language in the Kentucky statute barring the use of diversion records in any court has no application in an administrative proceeding such as this one. This proceeding is not a judicial proceeding and I am not a "court". A hearing to challenge an exclusion imposed pursuant to any of the subsections of section 1128 of the Act, including section 1128(a)(1), is not a judicial proceeding in a court of law. It is an administrative proceeding, established pursuant to the authority of the Secretary of the Department of Health and Human Services and federal law, including the Administrative Procedures Act, 5 U.S.C. �� 500 et seq.

2. Petitioner was convicted of a criminal offense.

Petitioner's diversion agreement was a conviction as is defined by section 1128(i). The section defines a conviction to include the following circumstances:

(1) when a judgment of conviction has been entered against the individual or entity by a Federal, State, or local court, regardless of whether there is an appeal pending or 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 or entity by a Federal, State, or local court;

(3) when a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court; or

(4) when the individual or entity has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.

Act, � 1128(i). Petitioner's diversion agreement included a plea of guilty that was accepted by a State court and is, therefore, a conviction within the meaning of section 1128(i)(3) of the Act. The diversion agreement is premised on his entry of a plea of guilty to the criminal charge that had been filed against him. I.G. Ex. 3, at 1. Specifically, Petitioner "freely, knowingly, voluntarily and intelligently enter[ed] a plea of guilty." Id. That plea was accepted by the State court as is evidenced by the judge's signature on the final page of the diversion agreement. Id. at 4.

Petitioner's diversion agreement is also a conviction within the meaning of section 1128(i)(4) of the Act. The substance of Petitioner's diversion agreement is a type of deferred adjudication arrangement, an arrangement or program where a judgment of conviction is withheld. An appellate panel of the Departmental Appeals Board held that a diversion agreement identical to this one in the State of Kentucky is a conviction within the meaning of section 1128(i)(4). Marc Schneider, D.M.D., DAB No. 2007 (2005).

In Schneider the panel held that the characteristics of a deferred adjudication include:

(1) the defendant entered a plea of guilty or no contest, which cannot be unilaterally withdrawn; (2) the defendant is not free to set aside his plea or proceed to trial if he or she fails to satisfy the terms of his or her deferred adjudication; and (3) the court overseeing the deferred adjudication maintains authority to enter a judgment of conviction against the defendant if he or she fails to meet the terms of the deferred adjudication. Schneider, at 12. That is precisely the arrangement that Petitioner entered into. First, Petitioner entered a plea of guilty which he had no authority to withdraw. I.G. Ex. 3, at 1. There is no provision in Kentucky law allowing Petitioner to withdraw his plea once he enters it. See KY. CODE REV. STAT. � 533.250 et seq. Second, the diversion agreement in this case did not permit Petitioner, on his own volition, to set aside the terms of the agreement if he failed to comply with it. Under the terms of the agreement only the court had the authority to permit Petitioner to withdraw his plea. I.G. Ex. 3, at 4. Third, the court in Petitioner's case retained the authority to impose a sentence against Petitioner if he violated the terms of the diversion agreement. Id.

3. Petitioner's conviction is of an offense that is covered by section 1128(a)(1) of the Act.

Petitioner was convicted of the crime of filing false reimbursement claims for covered items or services with a State health care program. Specifically, Petitioner was convicted of a scheme in which he submitted false reimbursement claims to the Kentucky Medical Assistance Program for orthopedic shoes and/or shoe inserts. I.G. Ex. 2, at 1-2. The Kentucky Medical Assistance Program is the Kentucky State Agency that is charged with implementing the Kentucky Medicaid program. KY. CODE REV. STAT. �� 205.510 - 205.630.

Petitioner's crime falls within the reach of the mandatory exclusion provisions section 1128(a)(1) of the Act and the I.G. is thus required by law to exclude Petitioner. In this case Petitioner's crime was related directly to false claims for Medicaid items or services.

4. I do not have the authority to hear and decide Petitioner's constitutional arguments.

Petitioner asserts that the exclusion imposed in this case is punitive and not remedial. Therefore, according to Petitioner, he is subject to double jeopardy in violation of provisions of the United States Constitution. Additionally, Petitioner claims, without elaboration, that the exclusion in this case has been imposed against him in violation of his right to due process of law.

I do not have the authority to decide these arguments, although I note that Congress intended section 1128 of the Act to be remedial and that the exclusion in this case is the statutory minimum. My authority here is limited only to deciding whether the I.G. is authorized to exclude Petitioner pursuant to the provisions of sections 1128(a)(1) and (i) of the Act.

Steven T. Kessel

Administrative Law Judge