DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Civil Remedies Division
In the Case of:
Walter J. Mikolinski, Jr.,
Petitioner,
- v. -
The Inspector General.
DATE: August 8, 1989
Docket No. C-83
DECISION OF ADMINISTRATIVE LAW JUDGE
ON MOTIONS FOR SUMMARY DISPOSITION
The Inspector General (the I.G.) notified Petitioner on December 9, 1988 that
he was being excluded from
participation in Medicare and State health care programs. The I.G. told Petitioner
that his exclusions were
due to the fact that his license to practice pharmacy in the State of Massachusetts
had been suspended by
that State's Board of Registration in Pharmacy (Pharmacy Board). The I.G. asserted
that the exclusions
were authorized by section 1128(b)(4) of the Social Security Act, 42 U.S.C.
1320a-7(b)(4). Petitioner was
advised that that the exclusions would remain in effect until such time as Petitioner
obtained a valid license
to practice pharmacy in the State of Massachusetts. The I.G. told Petitioner
that when he obtained a valid
license, he had the right to apply for reinstatement to the Medicare and Medicaid
programs.
Petitioner timely requested a hearing, and the matter was assigned to me for
hearing and decision. I held a
prehearing conference on February 9, 1989. The parties advised me that they
believed the case could be
disposed of on a stipulated record, and on motions for summary disposition.
I issued a prehearing Order on
February 21, 1989, which established a schedule for the parties to agree to
stipulations and file motions for
summary disposition. Stipulations of fact were timely filed pursuant to this
Order, and each party moved
for summary disposition. I held oral argument on the motions in Washington,
D.C., on June 6, 1989. I
invited the parties to file postargument briefs and each party availed himself
of this opportunity.
I have considered the parties' arguments, the stipulated facts, and applicable
law. I conclude that the I.G.
lawfully excluded Petitioner from participating in Medicare and lawfully directed
that he be excluded from
participating in Medicaid. 42 U.S.C. 1320a-7(b)(4)(A). I conclude further that
the exclusions imposed and
directed by the I.G. are unreasonable to the extent that they condition Petitioner's
reinstatement as a
participating nursing home proprietor on his passing a pharmacy law examination
with a score of no less
than 75 percent, or on maintaining continuing education credits in pharmacy.
I conclude that I have
authority pursuant to 42 U.S.C. 405(b) to modify the exclusions imposed and
directed by the I.G.
Therefore, I modify the exclusions in this case to permit Petitioner to apply
for reinstatement as a
participating nursing home proprietor after completion of an exclusion term
of two years. I find the
exclusions to be reasonable in all other respects.
ISSUES
The issues in this case are whether:
1. Petitioner's license to provide health care was revoked or suspended by
a State
licensing authority for reasons bearing on his professional competence, professional
performance, or
financial integrity;
2. the I.G. lawfully excluded Petitioner from participating in the Medicare
program
and lawfully directed that Petitioner be excluded from participating in Medicaid;
3. the length of the exclusions imposed and directed against Petitioner from
participating in Medicare and Medicaid as a nursing home proprietor is unreasonable;
4. I have authority to modify the terms of the exclusions imposed and directed
against
Petitioner; and
5. the exclusions imposed and directed against Petitioner from participating
in
Medicare and Medicaid should be modified to permit Petitioner to apply for reinstatement
as a participant
after a two-year period.
APPLICABLE LAW
1. Section 1128(a) of the Social Security Act, 42 U.S.C. 1320a-7;
2. Section 205(b) of the Social Security Act, 42 U.S.C. 405(b).
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Petitioner is a registered pharmacist in the State of Massachusetts. Stip Ex. 6.
2. On August 22, 1986, Petitioner was indicted in Massachusetts State court
for receiving stolen
property in the form of pharmaceuticals stolen from Massachusetts General Hospital.
Stip. Ex. 1.
3. On April 13, 1988, Petitioner pleaded guilty to receiving stolen property. Stip. Ex. 3.
4. In his guilty plea Petitioner admitted that he had paid cash to employees
of Massachusetts General
Hospital to receive stolen pharmaceuticals from them. Stip. Ex. 3.
5. In his guilty plea Petitioner admitted that he regularly received stolen pharmaceuticals. Stip. Ex. 3.
6. Petitioner agreed to pay restitution to Massachusetts General Hospital
in the amount of $25,000.00.
Stip. Ex. 3.
7. As a consequence of his guilty plea, Petitioner received a suspended prison
sentence and was placed
on probation for two years. Stip. Ex. 4.
8. Petitioner was also sentenced to pay $15,000.00 as costs for investigation of his case. Stip. Ex. 4.
9. On September 20, 1988, the Pharmacy Board issued an Order to Show Cause
against Petitioner.
Stip. Ex. 6.
10. On September 26, 1988, the Pharmacy Board issued a Decision and Order
in Petitioner's case. Stip.
Ex. 6.
11. The Pharmacy Board found that Petitioner had violated a state law by knowingly
possessing, with
intent to distribute, a Class E Controlled Substance. Stip. Ex. 6.
12. The Pharmacy Board found that Petitioner had conspired to divert drugs
from the Massachusetts
General Hospital. Stip. Ex. 6.
13. The Pharmacy Board found that Petitioner had not at all times conducted
his professional activities
in conformity with federal, state, and municipal laws, ordinances and regulations.
Stip. Ex. 6.
14. The Pharmacy Board found that its findings, as enumerated in Findings
11-13, established that
Petitioner had committed gross misconduct in the practice of pharmacy. Stip.
Ex. 6.
15. The Pharmacy Board suspended Petitioner's pharmacy license for a two year
period, effective
beginning September 26, 1988. Stip. Ex. 6.
16. The Pharmacy Board directed Petitioner to maintain his continuing education
requirements as a
pharmacist during the suspension period. Stip. Ex. 6.
17. The Pharmacy Board conditioned reinstatement of Petitioner's pharmacy
license on his taking a
pharmacy law examination and passing with a grade of no less than 75 percent.
Stip. Ex. 6.
18. Petitioner did not appeal the Board's Order. Stip. 21.
19. Petitioner is a stockholder in corporations which own and operate nursing homes. Stip. Ex. 3.
20. Petitioner's license to provide health care was revoked or suspended by
a State licensing authority
for reasons bearing on his professional competence, professional performance,
or financial integrity. Stip.
Ex. 6; Findings 10-17; 42 U.S.C. 1320a-7(b)(4)(A).
21. On December 9, 1988, the I.G. excluded Petitioner from participating in
Medicare and directed that
he be excluded from participating in Medicaid. Stip. Ex. 13.
22. The Secretary of Health and Human Services (the Secretary) delegated to
the I.G. the authority to
determine, impose, and direct exclusions pursuant to section 1128 of the Social
Security Act. 48 Fed. Reg.
21662, May 13, 1983.
23. The I.G. had discretion to exclude Petitioner from participating in Medicare
and to direct his
exclusion from participation in Medicaid for all items or services for which
he may have claimed
reimbursement pursuant to these programs. 42 U.S.C. 1320a-7(b)(4)(A).
24. The I.G.'s discretion to exclude Petitioner from participating in Medicare
and to direct his exclusion
from participating in Medicaid is not limited to his participation as a pharmacist.
42 U.S.C. 1320a-7(b).
30. The length of the exclusions imposed and directed by the I.G. against
Petitioner is reasonable
insofar as it applies to Petitioner's participation as a pharmacist in the Medicare
and State health care
programs. 42 U.S.C. 1320a-7(b)(4)(A).
31. The length of the exclusions imposed and directed by the I.G. against
Petitioner is not reasonable
insofar as it applies to Petitioner's participation as a nursing home operator,
administrator, or employee.
See 42 U.S.C. 1320a-7(b)(4)(A).
32. I have authority to modify the terms of the exclusions imposed and directed
by the I.G. against
Petitioner. 42 U.S.C. 405(b).
33. Two-year exclusions against Petitioner from participating in Medicare
and Medicaid as a nursing
home operator, administrator, or employee are reasonable in this case. See Finding
29; see 42 U.S.C.
1320a-7(b)(4)(A).
ANALYSIS
There are no disputed issues of material fact in this case, the parties having
entered stipulations as to those
facts which they believe to be relevant to their respective positions. Therefore,
the issues to be resolved
involve applications of law to the facts of the case.
The I.G. contends that he is entitled to summary disposition on all issues.
He asserts that Petitioner had his
license to practice pharmacy suspended by a state licensing board for reasons
having to do with Petitioner's
professional competence, professional performance, or financial integrity. Therefore,
according to the I.G.,
he had discretion to exclude Petitioner from participating in the Medicare program
and to direct his
exclusion from participation in Medicaid, pursuant to 42 U.S.C. 1320a-7(b)(4)(A).
The I.G. argues that the length of Petitioner's exclusions, which coincide
with the terms of his pharmacy
license suspension, is reasonable because it takes into account the behavior
engaged in by Petitioner which
occasioned his license suspension, and other relevant facts.
Petitioner argues that the Pharmacy Board failed to articulate reasons for
Petitioner's license suspension
which establish that Petitioner was suspended for reasons having to do with
Petitioner's professional
competence, professional performance, or financial integrity. Tr. at 29-30.
Therefore, according to
Petitioner, there exists no lawful basis to exclude him under 42 U.S.C. 1320a-7.
Petitioner also contends that if the I.G. does have discretion to exclude him
pursuant to 42 U.S.C. 1320a-
7(b)(4)(A), such discretion extends only to reimbursement claims which Petitioner
may submit as a
pharmacist. Petitioner asserts that it is unreasonable to exclude him for services
rendered in connection
with his nursing home business based on suspension of Petitioner's license to
practice pharmacy.
Finally, Petitioner argues that even if the I.G. may exclude Petitioner for
reimbursement for all items or
services under Medicare and Medicaid, the length of the exclusions imposed and
directed against Petitioner
by the I.G. are unreasonable as they apply to claims he may submit in connection
with his nursing home
business. Petitioner notes that his pharmacy license suspension will be effective
until he completes certain
continuing education courses and passes an examination in pharmacy law with
a score of at least 75
percent. According to Petitioner, these conditions effectively make the license
suspension an indefinite
suspension, and thus have the effect of making indefinite Petitioner's exclusions
from participation in
Medicare and Medicaid. According to Petitioner, it is unfair to condition his
exclusion as a nursing home
operator on his satisfying requirements which he may never satisfy, and which
are not related to his
performance as a nursing home operator.
Both parties contend that, should I conclude that the exclusions imposed and
directed against Petitioner are
unreasonable in any respect, I have authority pursuant to 42 U.S.C. 405(b) to
modify the terms of the
exclusions.
1. Petitioner's license to provide health care was revoked or suspended by
a State licensing
authority for reasons bearing on his professional competence, professional performance,
or financial
integrity.
I disagree with Petitioner's contention that the I.G.'s determination to exclude
Petitioner pursuant to 42
U.S.C. 1320a-7(b)(4) is not supported by the Pharmacy Board's Decision and Order.
The Pharmacy
Board's Decision and Order provides ample support for the conclusion that Petitioner's
pharmacy license
was suspended for reasons bearing on Petitioner's professional competence, professional
performance, or
financial integrity. Findings 10-17; Stip. Ex. 6.
The Pharmacy Board concluded that Petitioner committed "gross misconduct"
in the practice of pharmacy,
and based this conclusion on three findings. They were that Petitioner had:
(1) knowingly possessed, with
intent to distribute, a class E controlled substance; (2) conspired to divert
drugs from the Massachusetts
General Hospital; and (3) failed to conduct his professional activities at all
times in conformity with
federal, state, and municipal laws, ordinances and/or regulations. Findings
11-13; Stip. Ex. 6. These
findings constitute reasons for suspending Petitioner's pharmacy license which
relate to Petitioner's
professional performance. Therefore, the I.G. had discretion to exclude Petitioner
pursuant to 42 U.S.C.
1320a-7(b)(4)(A).
Petitioner contends that it was unreasonable for the I.G. to base his exclusion
determination on the
Pharmacy Board's Decision and Order. According to Petitioner, the I.G. was obligated
to review the record
underlying the Pharmacy Board's Decision and Order in order to determine whether
the Pharmacy Board's
decision was supported by that record. Tr. at 30.
The I.G.'s authority to impose and direct exclusions pursuant to 42 U.S.C.
1320a-7(b)(4)(A) is triggered by
a state licensing board's revocation or suspension of a petitioner's license
to provide health care. It is not a
relevant argument that the Pharmacy Board's decision, on which the I.G.'s exclusion
authority rests, is
legally or factually deficient.
Petitioner also contends that the I.G.'s exclusion determination amounts to
an unlawful retroactive
application of 42 U.S.C. 1320a-7(b)(4)(A) to the facts of his case. P.'s Memorandum
at II. Petitioner
premises this argument on his assertion that the conduct on which his license
suspension was based "relates
back" to January, 1983, and the fact that the exclusion law was revised
by Congress to include section (b)
in 1987. Petitioner also contends that, if the law is applied retroactively
to his case, there are "grave due
process" implications which would arise from that retroactive application.
P.'s Memorandum at II.
It is unnecessary for me to decide whether the exclusion law may be applied
retroactively in particular
cases, because it is evident that it was not retroactively applied in this case.
The Pharmacy Board issued its
Decision and Order suspending Petitioner's pharmacy license on September 15,
1988, more than a year
after Congress adopted the discretionary exclusion provisions contained in 42
U.S.C. 1320a-7(b). The
I.G.'s authority to impose and direct exclusions against Petitioner arises from
the Pharmacy Board's act of
suspending Petitioner. Therefore, the act which gave the I.G. grounds to exclude
Petitioner occurred after
the date that Congress enacted statutory revisions.
2. The I.G. lawfully excluded Petitioner from participating in the Medicare
program and lawfully
directed that Petitioner be excluded from participating in Medicaid programs.
Petitioner's central argument is that the I.G. unreasonably imposed and directed
exclusions against
Petitioner in his capacity as a nursing home operator, based on the Board's
suspending Petitioner's
pharmacy license. Petitioner asserts that there exists no legal authority which
permits the I.G. to take this
action. See P.'s Memorandum at IA-C. Implicit in this contention is the argument
that, at most, the I.G.
only has authority to exclude Petitioner from receiving reimbursement for his
services as a pharmacist.
Petitioner also argues that evidence of Petitioner's misconduct in the practice
of pharmacy provides no
rational basis for the I.G. to impose and direct exclusions against Petitioner
from receiving reimbursement
as a nursing home operator. Id.
I disagree with both of these contentions. First, the exclusion law plainly
permits the I.G. to impose and
direct exclusions from reimbursement for any item or service that an excluded
party may provide to a
Medicare or Medicaid beneficiary. The first sentence of 42 U.S.C. 1320a-7(b)
states that the Secretary has
discretion in enumerated cases to impose exclusions from participation in "any
program under subchapter
XVIII" and to direct exclusions from participation in "Medicaid .
. . ."
Moreover, the exclusion law's remedial purpose would be frustrated if the law
were read to limit the I.G.'s
authority to impose and direct exclusions under section (b)(4) to only those
items or services which a party
had been permitted to provide by his health care license, prior to the suspension
or revocation of that
license. The purpose of the exclusion law is to protect the Medicare and Medicaid
funds, and individual
beneficiaries of those funds, from individuals or entities who have been shown
to be capable of either
financial misconduct or mistreating beneficiaries. A party's propensity to engage
in misconduct across the
range of Medicare and Medicaid programs can, in appropriate cases, be inferred
by evidence of his
misconduct as to any one of those programs. Congress, therefore, intended the
Secretary (and his delegate,
the I.G.) to have discretion to fashion broad exclusions based on demonstrated
misconduct under any
program. Senate Report No. 100-109, at 6-8, July 14, 1987, reproduced in U.S.
Code Cong. and Ad.
News, 100th Congress First Session 1987, Vol. 2, at 687-688.
That is not to suggest that the I.G. must exclude individuals or entities from
participation in Medicare and
Medicaid in all cases where exclusion is permitted by law. The I.G. has discretion
to impose and direct
broad exclusions in appropriate cases. The reasonableness of an exclusion depends
on the facts of the case.
Second, I conclude that, based on the facts of this case, it was reasonable
for the I.G. to impose and direct
exclusions against Petitioner for reimbursement for all items or services he
might provide under Medicare
or Medicaid, including reimbursement for any services Petitioner might provide
as a nursing home
operator. The stipulated facts of this case establish that Petitioner's license
suspension was based, in part,
on Petitioner's conviction for receiving pharmaceuticals stolen from a hospital.
Findings 3-5; 12.
Petitioner's admitted unlawful conduct calls into question not only his honesty
but his trustworthiness as a
provider of services to Medicare and Medicaid beneficiaries -- not just as a
pharmacist, but in any capacity.
3. The length of the exclusions imposed and directed against Petitioner from
participating in
Medicare and Medicaid as a nursing home proprietor is unreasonable.
The I.G. imposed and directed exclusions against Petitioner from participating
in Medicare and Medicaid
until such time as Petitioner's license to practice pharmacy in Massachusetts
is restored. Finding 21.
Restoration of Petitioner's pharmacy license is contingent on Petitioner satisfying
the conditions of the
Board's Decision and Order. These include requirements that Petitioner: (1)
maintain his continuing
pharmacy education requirements during the two-year suspension period; and (2)
take and pass a pharmacy
law examination with a grade of no less than 75 percent.
Petitioner does not dispute that it is rational for the I.G. to require him
to regain his pharmacy license as a
condition for restoring his participating status as a pharmacist. Tr. at 53.
However, Petitioner contends
that the State's conditions for Petitioner regaining his pharmacy license effectively
render his suspension
indefinite in term. And, according to Petitioner, it is unreasonable for the
I.G. to condition Petitioner's
reinstatement as a nursing home operator on an indefinite State suspension of
Petitioner's pharmacy
license--particularly where the conditions for return of the license have nothing
to do with Petitioner's
trustworthiness as a nursing home operator.
The I.G. does not directly refute these assertions. He tacitly concedes that
the exclusions imposed and
directed against Petitioner are of indefinite duration, but argues that Petitioner
has not established that he
will fail to comply with continuing education requirements, or fail to take
the pharmacy law examination
within the two year suspension period, and pass with a score of at least 75
percent. I.G.'s Supp.
Memorandum at 8.
I conclude that the exclusions imposed and directed by the I.G. against Petitioner
are of indefinite duration,
and are unreasonable, insofar as they apply to Petitioner's participation in
Medicare and Medicaid as a
nursing home operator. Notwithstanding the I.G.'s assertions, there is no way
to predict when, if at all,
Petitioner might fulfill the continuing education and examination requirements
of his license suspension.
The continuing education and examination requirements have no rational relationship
to the issue of when
Petitioner might become trustworthy to operate nursing homes.
The evidence of this case establishes that Petitioner conspired to receive
stolen pharmaceuticals. His
conduct demonstrates intentional violation of State law. By his conduct, Petitioner
established that he is an
untrustworthy provider of Medicare and Medicaid services. It is reasonable for
the I.G. to impose and
direct exclusions against Petitioner for a sufficient period of time to assure
that he will not engage in
misconduct against trust funds or beneficiaries. Given the seriousness of Petitioner's
misconduct, a two-
year exclusion from participating as a nursing home operator is reasonable.
However, it is not reasonable for the I.G. to condition Petitioner's reinstatement
as a provider of a particular
service on Petitioner fulfilling conditions that are unrelated to his trustworthiness
as a provider of that
service. There is no evidence in the record of this proceeding to show that
Petitioner will be a more
trustworthy provider of nursing home services, by virtue of his having completed
continuing education
courses in pharmacy, and having passed a pharmacy law examination with a score
of at least 75 percent. It
is within the realm of reasonable possibility that Petitioner might never satisfy
these conditions, and yet
become a trustworthy individual.
4. I have authority to modify the length of the exclusions imposed and directed against Petitioner.
The exclusion law provides that an excluded party is entitled to a hearing
as to his exclusions "to the same
extent as is provided by" 42 U.S.C. 405(b). 42 U.S.C. 1320a-7(f)(1). Section
405(b) states that, in those
cases where the Secretary provides a hearing with respect to a decision the
Secretary has rendered, the
Secretary:
"(S)hall, on the basis of evidence adduced at the
hearing, affirm, modify, or reverse his findings of
fact and such decision." (Emphasis added.)
The Secretary delegated to Administrative Law Judges assigned to the Departmental
Appeals Board the
authority to conduct hearings and render decisions with respect to the imposition
of civil remedies,
including exclusions imposed and directed under 42 U.S.C. 1128. 55 Fed. Reg.
25544, July 7, 1988. I
conclude that my delegated authority includes authority to modify the term of
exclusions in those cases
where I decide that the exclusions are appropriate, but the I.G.'s determination
is in some respect
unreasonable.
5. The exclusions imposed and directed against Petitioner from participating
in Medicare and
Medicaid are modified to permit Petitioner to apply for reinstatement as a participant
after a two-year
period.
Given the seriousness of Petitioner's misconduct, it is reasonable to impose
and direct exclusions against
him from participating in Medicare and Medicaid for a substantial period of
time. The only unreasonable
aspect of the exclusions imposed and directed by the I.G., as they apply to
Petitioner's participation as a
nursing home operator, is that they are indefinite in duration and tie his reinstatement
as a nursing home
operator to his fulfilling conditions which are unrelated to the issue of his
trustworthiness to operate
nursing homes. Therefore, I modify the exclusions imposed and directed against
Petitioner as follows.
Petitioner is excluded from participating as a nursing home operator in the
Medicare and Medicaid for a
two year period, beginning September 26, 1988. No payment may be made to Petitioner
for any service
for which he claims reimbursement as an employee, administrator, operator, or
in any other capacity in
connection with the operation of nursing homes. No payment may be made to any
nursing home in which
Petitioner serves as an employee, administrator, operator, or in any other capacity
for any services that
Petitioner furnishes on or after the effective date of the exclusions. No payment
will be made to any
nursing home wholly owned by Petitioner during the exclusion period. At the
completion of the two year
exclusion period, Petitioner may apply for reinstatement as a participating
nursing home operator.
The exclusions originally imposed and directed by the I.G. against Petitioner
are sustained insofar as they
apply to any reimbursement Petitioner may seek for pharmacy services. They will
remain in effect until
Petitioner obtains a valid license to practice pharmacy in the State of Massachusetts.
At such time,
Petitioner may apply for reinstatement as a participating pharmacist.
The I.G. asserts that two nursing homes owned by Petitioner were convicted
of criminal offenses related to
the delivery of items or services under the Massachusetts Medicaid program.
I.G.'s Supp. Memorandum at
9; Stip. Ex. 3. This decision does not preclude the I.G. from imposing and directing
exclusions against
these entities as may be mandated or permitted by law.
CONCLUSION
Based on the stipulated facts and the law, I conclude that the I.G. had authority
to exclude Petitioner from
participation in the Medicare program, and to direct his exclusion from participation
in Medicaid, pursuant
to 42 U.S.C. 1320a-7(b)(4)(A). I conclude further that the I.G. reasonably imposed
exclusions against
Petitioner from participating in all programs under Medicare and Medicaid.
I conclude that the term of the exclusions imposed and directed against Petitioner
is reasonable as it applies
to his participation as a pharmacist. However, I conclude that it is unreasonable
as it applies to his
participation as a nursing home operator, because it ties Petitioner's reinstatement
to his fulfilling
conditions which are not reasonably related to his trustworthiness as a nursing
home operator.
Therefore, I sustain the exclusions imposed and directed against Petitioner,
except as modified in Part 5 of
the Analysis section of this Decision.
___________________________
Steven T. Kessel
Administrative Law Judge