Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Douglas Schram, R.Ph.
Petitioner,
- v. -
The Inspector General.
DATE: July 21, 1992
Docket No. C-92-055
DECISION
By letter dated December 3, 1991, Douglas Schram, R.Ph., the Petitioner herein,
was notified by the
Inspector General (I.G.), U.S. Department of Health & Human Services (HHS),
that it had been decided to
exclude him for a period of five years from participation in the Medicare program
and those State health
care programs mentioned in section 1128(h) of the Social Security Act (Act).
(I will use "Medicaid"
hereafter in this Decision to represent those State programs.) The I.G. explained
that the five-year
exclusion was mandatory under sections 1128(a)(1) and 1128(c)(3)(B) of the Act
because Petitioner had
been convicted of a criminal offense related to the delivery of an item or service
under Medicaid.
Petitioner filed a timely request for review of the I.G.'s action, and the
I.G. moved for summary
disposition.
Because I conclude that there are no material and relevant factual issues in
dispute, I have granted the I.G.'s
motion and have decided the case on the basis of written submissions in lieu
of an in-person hearing.
APPLICABLE LAW
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act make it mandatory for any
individual who has been
convicted of a criminal offense related to the delivery of an item or service
under Medicare or Medicaid to
be excluded from participation in such programs, for a period of at least five
years.
FINDINGS OF FACT AND CONCLUSIONS OF LAW 1/
1. During the period June 1975 to August 16, 1988, Petitioner was a registered
pharmacist in Detroit,
Michigan. P. Ex. 1.
2. Petitioner pled guilty in, and was sentenced by, the 30th Judicial District
Court, State of Michigan, of
attempted conspiracy to defraud Medicaid. I.G. Ex. 3, 5, 8: P. Br. at 5.
3. Petitioner had previously been deprived of his pharmacist's license and
barred from the State Medicaid
program by the State of Michigan. P. Ex. 3.
4. Judgment was entered against Petitioner on July 27, 1990, and amended November
2, 1990. The court
sentenced him to probation for a period of five years and required him to pay
restitution and costs totalling
$26,000. I.G. Ex. 7, 8.
5. The Secretary of the Department of Health and Human Services has delegated
to the I.G. the authority to
determine and impose exclusions pursuant to section 1128 of the Act. 48 Fed.
Reg. 21662 (May 13, 1983).
6. A criminal conviction based upon attempted conspiracy to defraud Medicaid
is related to the delivery of
an item or service under Medicaid and justifies application of the mandatory
exclusion provisions of
section 1128(a)(1).
7. The permissive exclusion provisions of section 1128(b) apply to convictions
for offenses other than
those related to the delivery of an item or service under either Medicare or
Medicaid.
8. The Secretary and his delegate, the I.G., are under no obligation to institute
a permissive exclusion
action under section 1128(b).
9. A defendant in a criminal proceeding does not have to be advised of every
possible penalty or loss he
may suffer as a consequence of being found guilty.
10. Petitioner was not deprived of his right to due process even if he was
not told by the prosecutor or the
court that his guilty plea would eventually lead to his mandatory exclusion.
11. The purpose of Section 1128 is remedial in nature -- to protect federally-funded
health care programs
and their beneficiaries from untrustworthy providers.
12. The exclusion proposed by the I.G. herein is not disproportionate to the
harm done by Petitioner to the
Medicaid program and the need to preclude repetition of his behavior, and thus
may be deemed remedial.
13. The mandatory minimum exclusion provisions of section 1128(a) apply to
all exclusions based on
convictions occurring after August 18, 1987, the effective date of the Medicare
and Medicaid Patient and
Program Protection Act of 1987.
ARGUMENT
Petitioner makes a number of arguments opposing summary judgment in favor of
the I.G. He contends: 1)
he was not convicted, because the offense to which he pled guilty is not a crime
under Michigan law; 2)
even if it were, it was not related to the delivery of an item or service under
Medicaid; 3) his should have
been a permissive exclusion under one of the provisions of section 1128(b) of
the Act; 4) his exclusion is
punitive and thus in violation of the Double Jeopardy Clause of the United States
Constitution; 5) the acts
on which his "conviction", and thus his exclusion, was based occurred
prior to the enactment of the statute
under which he is being excluded, and thus violates the Ex Post Facto Clause
of the Constitution; and 6)
the delay between the time that the I.G. knew of Petitioner's alleged infractions
and the imposition of the
exclusion prejudiced Petitioner in a variety of ways to the extent that he is
denied equal protection of the
laws.
DISCUSSION
The first statutory requirement for mandatory exclusion pursuant to section
1128(a)(1) of the Act is that the
individual or entity in question be convicted of a criminal offense under federal
or State law. Petitioner
argues that the offense to which he admittedly pled guilty is not a cognizable
offense under the laws of
Michigan. P. Br. at 5 - 10. Even assuming, as I must here, that he is correct,
I conclude that he was
"convicted" within the meaning of section 1128(i) of the Act. Petitioner
pled guilty to what the court
papers represent as a crime and was sentenced by a court of competent jurisdiction.
This satisfies the
definition of "convicted" within the meaning of section 1128(i) of
the Act.
If, as Petitioner argues, "attempted conspiracy" is an inherent impossibility
and not an offense under
Michigan law, the place for him to seek his remedy likely would be the State
appellate courts. In this
review of his exclusion, Petitioner may not collaterally attack the criminal
conviction on which the
exclusion is based. The indictment and other court documents establish beyond
dispute the nature of
Petitioner's criminal conduct and the fact that he voluntarily pled guilty to
a bargained-down offense
predicated upon such conduct. Even assuming that the conviction is erroneous
as a matter of Michigan
law, the I.G. is authorized to exclude Petitioner on the basis of that conviction.
I find also that the requirement of section 1128(a)(1), that the criminal offense
leading to the conviction be
related to the delivery of an item or service under Medicare or Medicaid, has
been satisfied. Petitioner
argues that his was not a related offense because the only cognizable crime
-- false billing -- was
committed well after the delivery of the health care item or service. P. Br.
at 10 - 12. However, it is well-
established in decisions by appellate panels of the Departmental Appeals Board
(DAB) that financial
misconduct directed at these programs in the course of the delivery of items
or services constitutes a
program-related offense invoking mandatory exclusion. David D. De Fries, D.C.,
DAB 1317 at 3 (1992).
In particular, fraud involving Medicare or Medicaid claims has been held to
constitute program-related
conduct. Marie Chappell, DAB CR109 at 10 - 11 (1990); Russell E. Baisley, et
al., DAB CR128 at 10
(1991). Thus, the fact that Petitioner attempted to conspire to defraud Medicaid
is sufficient to bring his
conviction within the ambit of the program-related financial misconduct discussed
above.
Petitioner argues that the I.G. should have treated his criminal conduct as
the basis of a permissive
exclusion action. In this regard, although the literal language of the Act may
cause some confusion
between the mandatory exclusion provisions of section 1128(a) and the permissive
exclusions authorized
by section 1128(b), it has long been held that section 1128(a) addresses Medicare
or Medicaid related
crimes. Permissive exclusions, by contrast, can be based upon a much wider spectrum
of conduct (which
may or may not involve convictions for crimes against the government). This
distinction was central to the
appellate decision in Samuel W. Chang, M.D., DAB 1198 at 8 (1990), which held:
"The permissive
exclusion provisions of section 1128(b) apply to convictions for offenses other
than those related to the
delivery of an item or service under either the Medicare or Medicaid . . . programs."
There is also
precedent dealing with the scope of the Secretary's discretion, holding that
HHS is under no obligation to
institute a permissive exclusion under section 1128(b), but that once a person
has been convicted of a
program-related criminal offense, exclusion is mandatory. See, e.g., Leon Brown,
M.D., DAB CR83, aff'd
DAB 1208 (1990).
Next, Petitioner contends that the proposed exclusion is essentially punitive
in nature. P. Br. at 15 - 18.
The purpose of section 1128 of the Act is remedial in nature, i.e., to protect
federally-funded health care
programs and their beneficiaries from untrustworthy providers. S. Rep. No. 109,
100th Cong., 1st Sess.,
reprinted in 1987 U.S.C.C.A.N. 682. In this case, the I.G. has proposed excluding
a provider who
defrauded the Medicaid program. Such action, on its face, fully comports with
the remedial nature of the
statute. That the I.G. did not seek more than the minimum period of exclusion
does not suggest that there
was a punitive motivation.
As a matter of law, the constitutional ban on double jeopardy does not preclude
a federal civil sanction
being imposed against a person who has been convicted by a State of a criminal
offense arising out of the
same facts. Where the sanction is based on a federal conviction, an exception
to this rule is that there could
be a double jeopardy bar to such civil action if the civil penalty so far exceeds
actual harm to the
government that it cannot be characterized as remedial. U.S. v. Halper, 490
U.S. 435, 447 - 51 (1989). In
the case at hand, though, I reiterate that the exclusion advocated by the I.G.
is proportionate to the harm
done by Petitioner to the Medicaid program and the need to preclude repetition
of his behavior, and thus
may be deemed remedial.
Also, Petitioner alleges that the conduct being penalized pre-dated the enactment
of the mandatory
exclusion law, so that such law is being applied in an unlawful ex post facto
manner. This point, however,
has been repeatedly litigated, and it has been established that the mandatory
minimum exclusion provisions
apply to all exclusions based on convictions occurring after August 18, 1987
-- the effective date of the
Medicare and Medicaid Patient and Program Protection Act of 1987, Pub. L. 100-93
15(b), 101 Stat. 698
(1987). See Francis Shaenboen, R.Ph., DAB 1249 at 5, 6 (1991).
Finally, Petitioner contends that the I.G. did not act within a reasonable time
to effect his exclusion. P. Br.
at 18 - 23. He argues that the I.G. could have imposed a permissive exclusion
as early as his termination
from the Medicaid program in October 1988. He contends that, as a result of
the delay, the permissive
exclusion became mandatory, and a five year exclusion, in effect, caused him
to be barred from the
Medicaid program for nine years. He asserts that had he known the consequences,
he would have pled
differently, and, therefore, the delay also resulted in the denial of his right
to effective counsel and to
appeal his conviction. 2/
Petitioner's reliance on these equal protection arguments is misplaced. His
exclusion was predicated on his
conviction of a crime, not on the underlying conduct, and the record shows that
such conviction occurred
only five months before the I.G. informed Petitioner that an exclusion might
be imposed. I.G. Ex. 9. A
defendant in a criminal proceeding does not have to be advised of all the possible
consequences, such as
temporarily being barred from government reimbursement for his professional
services, which may flow
from his plea of guilty. See, U.S. v. Suter, 755 F.2d 523, 525 (7th Cir. 1985).
Thus, even if I were
authorized to review Petitioner's conviction, the alleged failure of the court
or the prosecutor to fully advise
him of the consequences would not be a basis for me to throw out the conviction.
Neither the I.G. nor this judge is authorized to reduce the five-year minimum
mandatory period of
exclusion. Jack W. Greene, DAB CR19 at 12 - 14 (1989), aff'd DAB 1078 (1989),
aff'd Greene v.
Sullivan, 731 F. Supp. 835, 838 (E.D. Tenn. 1990). An administrative law judge
also lacks the authority to
alter the effective date of exclusion designated by the I.G. Christino Enriquez,
DAB CR119 at 7 - 9
(1991). Similarly, the exclusion of providers from the Medicare and Medicaid
programs is expressly
required by statute in cases such as this, and I am not authorized to nullify
or reduce it.
CONCLUSION
Petitioner's conviction requires his exclusion for a period of at least five
years, pursuant to section
1128(a)(1).
____________________________
Joseph K. Riotto
Administrative Law Judge
1. Petitioner and the I.G. submitted written argument and documentary exhibits.
I admitted all of the
exhibits into evidence and refer to them herein as
P. Ex. (number) or I.G. Ex. (number).
2. In his request for hearing, Petitioner asserted that the delay deprived
him of the right to call witnesses
on his behalf. He never identified who these witnesses were or what testimony
they might provide. He
appears to have abandoned this argument in his brief.