DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Civil Remedies Division
In the Case of:
Charles J. Burks, M.D.,
Petitioner,
- v. -
The Inspector General.
DATE: November 16, 1989
Docket No. C-111
DECISION AND ORDER
Petitioner requested a hearing to contest the Inspector General's (I.G.'s)
determination to exclude him from
participation in the Medicare and Medicaid programs for a period of ten years,
pursuant to section
1128(b)(3) of the Social Security Act (Act), 42 U.S.C. 1320a-7(b)(3). This Decision
and Order resolves
this case on the basis of written briefs and documentary evidence. I hereby
grant the I.G.'s motion for
summary disposition.
APPLICABLE STATUTES AND REGULATIONS
I. The Federal Statute.
Section 1128 of the Social Security Act (Act) is codified at 42 U.S.C.A. 1320a-7
(West Supp. 1989).
Section 1128(a)(1) of the Act provides for the exclusion from Medicare and Medicaid
of those individuals
or entities "convicted" of a criminal offense "related to"
the delivery of an item or service under the
Medicare or Medicaid programs. Section 1128(c)(3)(B) provides for a five year
minimum period of
exclusion for those excluded under section 1128(a)(1).
While section 1128(a) of the Act provides for a minimum five-year mandatory
exclusion for (1)
convictions of program-related crimes and (2) convictions relating to patient
abuse, section 1128(b) of the
Act provides for the permissive exclusion of "individuals and entities"
for twelve types of other
convictions, infractions, or undesirable behavior, such as convictions relating
to fraud, license revocation,
or failure to supply payment information.
II. The Federal Regulations.
The governing federal regulations (Regulations) are codified in 42 C.F.R.,
Parts 498, 1001, and 1002
(1988). Part 498 governs the procedural aspects of this exclusion case; Parts
1001 and 1002 govern the
substantive aspects.
Section 1001.123 requires the I.G. to issue an exclusion notice to an individual
whenever the I.G. has
"conclusive information" that such individual has been "convicted"
of Medicare or Medicaid item or
service; such exclusion must begin 15 days from the date on the notice.
BACKGROUND
By letter dated December 14, 1989 (Notice), the I.G. advised Petitioner of
his ten-year exclusion from
participation in the Medicare and Medicaid programs. The Notice stated that
Petitioner's exclusion was
based upon his conviction of a criminal offense "relating to the unlawful
manufacture, distribution,
prescription, or dispensing of a controlled substance" within the meaning
of section 1128(b)(3) of the Act.
The Notice further stated that the following factors were considered in determining
Petitioner's period of
exclusion: (1) the criminal acts which resulted in Petitioner's conviction were
committed over a lengthy
period of time, (2) the violations had a significant adverse physical, mental
or financial impact on
individuals, and (3) Petitioner had a prior criminal, civil or administrative
record.
By letter dated March 16, 1989, Petitioner timely requested a hearing to contest
the I.G.'s determination,
and this case was assigned to me for a hearing and decision. Thereafter, the
I.G. filed a motion for
summary disposition of this case.
Petitioner admits that he was "convicted" of a criminal offense within
the meaning of section 1128(i) of the
Act. However, Petitioner contends that his conviction was a result of his misconception
that he operated
under a valid DEA registration number which would have permitted him to lawfully
dispense controlled
substances. Petitioner also contends that the factors considered by the I.G.
in determining the length of
Petitioner's exclusion do not warrant a ten-year period of exclusion.
I conducted a prehearing telephone conference on June 1, 1989. During the prehearing
conference: (1)
Petitioner admitted that his conviction was for an offense "relating to
the unlawful manufacture,
distribution, prescription, or dispensing of a controlled substance" within
the meaning of section
1128(b)(3) of the Act, (2) the parties requested that the case be decided based
upon the submission of
briefs and documentary evidence, and (3) Petitioner waived his right to a formal
evidentiary hearing.
I determined that Petitioner had raised legal issues in his Request which could
be further developed by the
parties through written briefing. I further determined that the material facts
of this case were not in
dispute. On June 1, 1989, I issued a Prehearing Order And Schedule For Filing
Motions For Summary
Disposition (Prehearing Order). Thereafter, the I.G. submitted a motion for
summary disposition, a brief in
support thereof, and six exhibits. Petitioner submitted a brief in support of
his opposition to the I.G.'s
motion and three exhibits. Both parties submitted certifications regarding the
authenticity of their exhibits.
ISSUES
The issues in this case are:
1. Whether Petitioner was "convicted" of a criminal offense "relating
to the unlawful manufacture,
distribution, prescription or dispensing of a controlled substance" within
the meaning of section 1128(b)(3)
of the Act
2. Whether ten years is the appropriate length of exclusion to be imposed upon Petitioner.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Having considered the entire record, the arguments and submissions of the parties,
and being fully advised
herein, I make the following Findings of Fact and Conclusions of Law:
1. Petitioner was licensed to practice medicine in the State of Pennsylvania
until his license was suspended
in May 1989. I.G. Ex. 6/335; P. Ex.A/5-7.
2. On June 26, 1978, Petitioner was convicted in the Allegheny County (Pennsylvania)
Court of Common
Pleas, Criminal Division, of seven felony counts of dispensing controlled substances
that were not for a
legitimate medical purpose, and of seven misdemeanor counts of prescribing controlled
substances to drug
dependent persons. I.G. Ex. 4; I.G. Br. 4; P. Br. 1; P. Ex. B.
3. As a result of Petitioner's 1978 conviction, on January 8, 1979, the Administrator
of the Drug
Enforcement Administration (DEA) issued an Order to Show Cause as to why Petitioner's
two DEA
Certificates of Registration should not be revoked. Id
4. Also as a result of Petitioner's 1978 conviction, in March 1980 the Pennsylvania
State Board of
Medicine imposed a five year probationary period upon Petitioner and his medical
license and placed a
restriction upon his prescribing controlled substances. Id.
5. Petitioner requested a hearing before an Administrative Law Judge (ALJ)
on the issue of whether his
DEA Certificates of Registration should be revoked. A hearing was held on March
23, 1979. Id.
6. The ALJ conducting the March 23, 1979 hearing determined that Petitioner's
two DEA Certificates of
Registration should be revoked and that a private medical practice was no longer
a viable option for
Petitioner. P. Ex. B; P. Br. 1; I.G. Br. 5.
7. The Administrator of the DEA adopted the findings, conclusion, and recommended
decision of the ALJ
conducting the March 23, 1979 hearing. Id.
8. Between January 1, 1986 and March 9, 1987, Petitioner prescribed controlled
substances under one of
his revoked DEA registration numbers. I.G. Ex. 5; P. Br. 1.
9. As a result of Petitioner's prescription of controlled substances under
his revoked DEA Certificates of
Registration, Petitioner was charged with 303 counts of violating 21 U.S.C.
843(a)(2). I.G. Ex. 2, 4; P. Br.
1.
10. On April 18, 1988, Petitioner was convicted by a jury of 303 counts of
violating 21 U.S.C. 843(a)(2).
Id
11. As a result of Petitioner's April 18, 1988 conviction, Petitioner was placed
on probation for a period of
five years and was ordered to pay a special assessment of $15,150.00. Id.
12. Section 1128 of the Act permits the I.G. to exclude individuals convicted
of criminal offenses "relating
to the unlawful manufacture, distribution, prescription, or dispensing of a
controlled substance" from
participation in the Medicare and Medicaid programs.
13. Petitioner admits that his April 18, 1988 conviction was for criminal offenses
"relating to the unlawful
manufacture, distribution, prescription, or dispensing of a controlled substance"
within the meaning of
section 1128(b)(3) of the Act. P. Br. 1, 4-5, 7.
14. In addition to indicia of trustworthiness, the length of Petitioner's exclusion
is to be determined by
reviewing: (1) the number and nature of the offenses, (2) the nature and extent
of any adverse impact the
violations have had on beneficiaries, (3) the amount of the damages incurred
by the Medicare, Medicaid,
and social services programs, (4) the existence of mitigating circumstances,
(5) the length of sentence
imposed by the court, (6) any other facts bearing on the nature and seriousness
of the violations, and (7) the
previous sanction record of Petitioner.
15. The fact that the criminal acts which formed the basis for Petitioner's
conviction were committed over
a period of time in excess of one year is an aggravating factor and is considered
in determining an
appropriate length of exclusion. FFCL 8, 10.
16. The fact that Petitioner was "convicted" of 303 counts of prescribing
controlled substances under one
of his two revoked DEA Certificates is an aggravating factor and is considered
in determining an
appropriate length of exclusion. FFCL 10.
17. The I.G. did not prove by a preponderance of the evidence, as an aggravating
factor in determining an
appropriate length of exclusion, that the special assessment of $15,150.00,
paid by Petitioner as a result of
his April 18, 1988 conviction, represented actual damages to the Medicare or
Medicaid programs. FFCL
11, 13.
18. The fact that Petitioner was placed on probation for five years, as a result
of his April 18, 1988
conviction, is an aggravating factor and is considered in determining an appropriate
length of exclusion.
Id.
19. The fact that Petitioner was convicted in June 1978 of seven felony counts
of dispensing controlled
substances that were not for a legitimate medical purpose, and of seven misdemeanor
counts of prescribing
controlled substances to drug dependent persons is an aggravating factor and
is considered in determining
an appropriate length of exclusion. FFCL 2, 14.
20. The fact that Petitioner's two DEA Certificates were revoked, effective
November 26, 1979, is an
aggravating factor and is considered in determining an appropriate length of
exclusion. FFCL 6, 7, 14.
21. The fact that, in March 1980, the Pennsylvania State Board of Medicine
imposed a five year
probationary period upon Petitioner and his medical license and placed a restriction
upon his prescribing
controlled substances is an aggravating factor and is considered in determining
an appropriate length of
exclusion. FFCL 4, 14.
22. The fact that in May 1989 Petitioner's license to practice medicine in
the State of Pennsylvania was
suspended for three years, one year of which is an active suspension, and two
years of probationary
suspension, and that Petitioner was ordered to pay a $1,000.00 civil penalty
by the Pennsylvania State
Board of Medicine is an aggravating factor and is considered in determining
an appropriate length of
exclusion. P. Ex. A.
23. The I.G. has the burden of proving that Petitioner's criminal acts caused
harm to individuals. The I.G.
has not met this burden by a preponderance of the evidence.
24. In this case, a ten-year period of exclusion is reasonable.
DISCUSSION
I. Petitioner Was "Convicted" Of A Criminal Offense "Relating
To The Unlawful Manufacture,
Distribution, Prescription Or Dispensing Of Controlled Substances" Within
The Meaning Of Section
1128(b)(3) of the Act.
Section 1128(b)(3) of the Act authorizes the I.G. to exclude from participation
in the Medicare and
Medicaid programs individuals who have been convicted of criminal offenses "relating
to the unlawful
manufacture, distribution, prescription, or dispensing of controlled substances".
On April 18, 1988,
Petitioner was convicted of 303 counts of unlawfully dispensing controlled substances.
FFCL 10, 13.
Petitioner admits that his conviction falls within the purview of criminal offenses
enumerated in section
1128(b)(3) of the Act. FFCL 13.
II. Ten Years Is An Appropriate Length Of Exclusion In This Case.
Since Petitioner has admitted, and I have concluded, that Petitioner was "convicted"
of a criminal offense
for which the I.G. may impose an exclusion pursuant to section 1128(b)(3) of
the Act, the remaining issue
is the appropriate length of exclusion to be imposed.
In making this determination, it is helpful to look at the purpose behind the
enactment of the exclusion law.
Congress enacted section 1128 of the Act to protect the Medicare and Medicaid
programs from fraud and
abuse and to protect the beneficiaries and recipients of those programs from
incompetent practitioners and
inappropriate or inadequate care. See, S. Rep. No. 109, 100th Conf., 1st Sess.
1; reprinted 1987 U.S. Code
Cong. and Admin. News 682. The key term to keep in mind is "protection,"
the prevention of harm. See,
Webster's II New Riverside University Dictionary 946 (1984). As a means of protecting
the Medicare and
Medicaid programs and their beneficiaries and recipients, Congress chose to
mandate, and in other
instances to permit, the exclusion of individuals. Through exclusion, individuals
who have caused harm,
or may cause harm, to the program or its beneficiaries or recipients are no
longer permitted to receive
reimbursement for items or services which they provide to Medicare beneficiaries
or Medicaid recipients.
Thus, individuals are removed from a position which provides a potential avenue
for causing harm to the
programs. Exclusion also serves as a deterrent to other individuals against
deviant behavior which may
result in harm to the Medicare and Medicaid programs or their beneficiaries
and recipients.
By not mandating that exclusions from participation in the Medicare and Medicaid
program be permanent,
Congress has allowed the I.G. the opportunity to give individuals a "second
chance." The placement of a
limit on the period of exclusion allows an excluded individual the opportunity
to demonstrate that he or she
can and should be trusted to participate in the Medicare and Medicaid programs
to provide items and
services to program beneficiaries and recipients.
The determination of when an individual should be trusted and allowed to reapply
for participation as a
provider in the Medicare and Medicaid programs is a difficult issue and is one
which is subject to much
discretion; there is no mechanical formula. The Regulations provide some guidance
which may be
followed in making this determination. The Regulations provide that the length
of Petitioner's exclusion
may be determined by reviewing: (1) the number and nature of the offenses, (2)
the nature and extent of
any adverse impact the violations have had on beneficiaries, (3) the amount
of the damages incurred by the
Medicare, Medicaid, and social services programs, (4) the existence of mitigating
circumstances, (5) the
length of sentence imposed by the court, (6) any other facts bearing on the
nature and seriousness of the
violations, and (7) the previous sanction record of Petitioner. See 42 C.F.R.
1001.125(b).
As stated by Judge Kessel in the case of Leonard N. Schwartz, R. Ph., Petitioner,
v. The Inspector General,
Docket No. C-62 (1989), at p. 12:
The Regulations at section 1001.125(b) were adopted by the Secretary to implement
the Act prior
to the 1987 Amendment. The Regulations specifically apply only to exclusions
for 'program-related'
offenses. However, . . . to the extent that the Regulations have not been repealed
or modified, they embody
the Secretary's intent that they continue to apply, at least as broad guidelines,
to those cases in which
discretionary exclusions are imposed.
A. The Fact That Petitioner Was Convicted Of 303 Offenses Relating To The Unlawful
Distribution Of
Controlled Substances Is An Aggravating Factor In Determining An Appropriate
Length Of Exclusion.
Petitioner was convicted by a jury of a total of 303 criminal offenses of unlawfully
distributing controlled
substances. Petitioner's offenses were both numerous and of a serious nature.
Certain substances are
enumerated as "controlled" substances because of the potential for
their abuse, and because of the potential
harm which may be caused by their use. See, 21 U.S.C. 812(b)(2) and (4). Petitioner,
through his position
as a medical doctor, was allowed access to these controlled substances and was
entrusted with the authority
to administer and prescribe these controlled substances in an appropriate, legal
and ethical manner.
Petitioner's jury conviction is clear and convincing evidence of his blatant
disregard for this duty.
B. The I.G. Has Not Proved By A Preponderance Of The Evidence That Respondents
Criminal Acts Had
An Adverse Impact On Program Beneficiaries.
The I.G. argues that Congress' creation of a closed distribution system for
controlled substances creates a
legal presumption that harm to individuals results from dispensing those substances
outside the legitimate
chain of distribution. I disagree with the I.G.'s argument. The I.G. has the
burden of proving that
Respondent's actions resulted in harm to individuals. The I.G. has not met this
burden. The I.G. has
offered no evidence regarding whether the controlled substances, although unlawfully
distributed, served a
"legitimate medical purpose." The trial judge in Petitioner's 1987
criminal proceeding declined to presume
that, because Petitioner failed to follow standard medical practices in prescribing
controlled substances, he
did not prescribe those controlled substances for a valid medical purpose. The
I.G. is correct in his
statement that the trial judge's reluctance to establish a presumption in a
criminal trial is not binding on my
decision in this proceeding. However, the I.G. must prove that Petitioner's
criminal acts resulted in harm to
individuals. Therefore, this factor will not be considered an aggravating factor
in determining an
appropriate period of exclusion.
C. The Fact That The Medicare Or Medicaid Program May Have Incurred Damages
As A Result Of
Petitioner's Acts Is An Aggravating Factor In Determining The Appropriate Length
Of Exclusion.
The I.G. has not presented sufficient evidence on the issue of whether the
Medicare or Medicaid program
incurred actual damages as a result of Petitioner's criminal acts. The I.G.
presented evidence which proves
that Petitioner was required to pay an assessment of $15,150.00 as a result
of his April 18, 1988 conviction.
However, the purpose for the assessment is not stated. Thus, without further
evidence regarding the
purpose of the assessment, the fact that Petitioner was required to pay an assessment
will not be considered
an aggravating factor in determining an appropriate length of exclusion.
D. Petitioner Has Not Proven The Existence Of Mitigating Circumstances Which
Might Reduce The
Period Imposed By The I.G.
The Regulations allow for the consideration of mitigating circumstances in
determining an appropriate
length of exclusion. As I stated in Mary Katherine Lyons, Petitioner v. The
Inspector General, Docket No.
C-49 (1989), at p. 9: "it is reasonable to conclude that mitigating circumstances
should constitute those
circumstances which demonstrate trustworthiness." I conclude that Petitioner
has offered no circumstances
which are mitigating and which I might consider in determining an appropriate
length of exclusion.
Petitioner argues that his alleged unawareness that his acts could be considered
as criminal should be
viewed as a mitigating circumstance. He cites the conclusion of the DEA Administrator
permitting
Petitioner to prescribe controlled substances in the course of his practice
as an emergency room physician
and the waiver by the Administrator of the prohibition against Petitioner's
employment by a hospital as an
emergency room physician. P. Ex. B. Petitioner's alleged misconception that
he was permitted to
prescribe controlled substances subsequent to the revocation of his DEA Certificates
of Registration is not
directly relevant to whether Petitioner should be excluded pursuant to section
1128(b)(3), but may be
relevant to the issue of the length of the exclusion to be imposed. Petitioner
was convicted by a jury of 303
counts of knowingly and illegally dispensing controlled substances. The definition
of Petitioner's criminal
offense shows that a jury determined that Petitioner did in fact know that his
acts were in violation of law.
Thus, I do not consider this factor to be a mitigating circumstance.
E. The Sentence Imposed By The Court Is An Aggravating Factor In Determining
The Appropriate
Length Of Exclusion.
Although Petitioner was not incarcerated as a result of his conviction, he
was required to serve a five year
term of probation. The fact that the court deemed it necessary to "monitor"
Petitioner's actions for a period
of five years is an important factor to be considered, and will be considered
an aggravating factor in
determining an appropriate length of exclusion.
F. Petitioner's Prior Offenses And Sanctions Are Factors Which Are Considered
Aggravating
Circumstances.
Petitioner was previously sanctioned on two separate occasions for offenses
relating to controlled
substances. FFCL 2, 12. Petitioner does not deny the fact of these prior sanctions.
However, Petitioner
argues that all of the sanctions imposed against him, and his 1987 conviction
itself, resulted from his 1978
conviction. It is not disputed that Petitioner received sanctions because of
his 1978 conviction: (1)
Petitioner was placed on probation by the State Board of Licensing and (2) his
DEA Certificates were
revoked. However, Petitioner's 1978 conviction, and the resulting sanctions,
did not cause him to be
convicted in 1987. Petitioner was convicted in 1987 because he knowingly disregarded
the fact that his
DEA Certificates were revoked and he elected to prescribe controlled substances
without a required DEA
certification number. Petitioner's convictions, and the sanctions which resulted
from each, are independent
of each other and will be viewed as such. Therefore, the fact that Petitioner
has had criminal, civil, and
administrative sanctions imposed against him is considered an aggravating factor.
CONCLUSION
Based on the law and undisputed material facts in the record of this case,
I grant the I.G.'s motion for
summary disposition and conclude that ten-years is an appropriate length of
exclusion to be imposed
against Petitioner.
____________________________
Charles E. Stratton
Administrative Law Judge