DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Civil Remedies Division
DATE: March 1, 1990
Docket No. C-152
In the Case of:
James F. Allen, M.D.F.P.,
Petitioner,
- v. -
The Inspector General.
DECISION
On June 7, 1989, the Inspector General (the I.G.) notified Petitioner that
he was being excluded from
participation in Medicare and State health care programs. The I.G. told Petitioner
that his exclusion
resulted from his conviction in a Utah State Court of a criminal offense related
to the delivery of an item or
service under Medicaid. Petitioner was advised that exclusions, from participation
in Medicare and
Medicaid, of individuals or entities convicted of such an offense are mandated
by section 1128(a)(1) of the
Social Security Act for a period of five years. Petitioner was advised that
his exclusion was for the
minimum five-year period.
Petitioner timely requested a hearing, and the case was assigned to me for
hearing and decision. The I.G.
moved for summary disposition of the case, and Petitioner opposed the motion.
I heard oral argument of
the motion on February 14, 1990.
I have considered the parties' arguments, the undisputed material facts, and
the law. I conclude that the
exclusion imposed and directed by the I.G. in this case is mandated by law.
Therefore, I enter summary
disposition in favor of the I.G.
ISSUES
The issues in this case are whether:
1. Petitioner was "convicted" of a criminal offense within the meaning
of section 1128(i) of the
Social Security Act; and
2. Petitioner's conviction was "vacated" within the meaning of 42 C.F.R. 1001.136(a).
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. On November 7, 1988, Petitioner was charged under Utah law with the criminal
offense of filing false
Medicaid claims. I.G. Ex. 1.
2. On November 18, 1988, Petitioner entered a plea bargain agreement. I.G. Ex. 2.
3. Petitioner agreed to plead guilty to filing false claims. I.G. Ex. 2, 3.
4. As restitution, penalty, and the cost of investigating his case, Petitioner
agreed to pay the sum of
$8,195.46 to the Utah Bureau of Medicaid Fraud. I.G. Ex. 2.
5. Petitioner acknowledged that, if he failed to comply with each and every
term of the plea agreement and
the orders of the Third Circuit Court, Salt Lake County, State of Utah, the
court would accept Petitioner's
guilty plea and impose a sentence in his case. I.G. Ex. 2.
6. The parties to the plea agreement recommended that the court: (1) receive
Petitioner's plea, and (2) hold
the plea and imposition of sentence in abeyance pending Petitioner's successful
completion of probation.
I.G. Ex. 2.
7. On November 18, 1988, Petitioner pleaded guilty to a misdemeanor offense
of Medicaid fraud. I.G. Ex.
3.
8. The court: (1) agreed to accept the terms of the plea agreement, and (2)
advised Petitioner that, on the
recommendation of the prosecution, it would hold the plea in abeyance and stay
execution of sentence,
pending Petitioner's satisfaction of the terms of the agreement. I.G. Ex. 3.
10. The court placed Petitioner on unsupervised probation. I.G. Ex. 3.
11. Based on his compliance with the terms of the plea agreement, on January
17, 1989, Petitioner moved
to withdraw his plea. I.G. Ex. 5.
12. On January 24, 1989, the court allowed Petitioner to withdraw his plea
and dismissed the charges
against Petitioner. I.G. Ex. 5.
13. Petitioner was convicted of a criminal offense within the meaning of section
1128(i) of the Social
Security Act. Findings 1-12; Social Security Act, section 1128(i)(3), (4).
14. Petitioner's conviction was not "vacated" within the meaning
of 42 C.F.R. 1001.136. See Findings 11-
12.
15. Petitioner was convicted of a criminal offense related to the delivery
of an item or service under the
Medicaid program. Findings 1-12; Social Security Act, section 1128(a)(1).
16. 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.
17. On June 7, 1989, the I.G. excluded Petitioner from participating in Medicare
and directed that he be
excluded from participating in Medicaid, pursuant to section 1128(a)(1) of the
Social Security Act. I.G.
Ex. 6.
18. There are no disputed issues of material fact in this case, and summary
disposition is appropriate.
Findings 1-12.
19. The exclusion imposed and directed against Petitioner by the I.G. is for
five years, the minimum
period required by section 1128(a)(1) of the Social Security Act. I.G. Ex. 6;
Social Security Act, section
1128(c)(3)(B).
20. The exclusion imposed and directed against Petitioner by the I.G. is mandated
by law. Finding 15;
Social Security Act, sections 1128(a)(1); 1128(c)(3)(B).
ANALYSIS
There are no disputed material facts in this case. Petitioner was charged under
Utah law with the crime of
filing false Medicaid claims. Petitioner and the prosecutor entered into an
agreement which provided that
Petitioner would plead guilty to a single misdemeanor charge of filing false
Medicaid claims, and pay
restitution, costs, and a penalty to the Utah Bureau of Medicaid Fraud. The
agreement further recited that
the parties would recommend that the court receive Petitioner's plea, but hold
it in abeyance pending
Petitioner's satisfying the terms of the agreement.
Petitioner pleaded guilty to a misdemeanor offense of Medicaid fraud. The court
placed Petitioner on a
brief period of unsupervised probation. Subsequently, based on his compliance
with the terms of his plea
agreement, Petitioner moved to withdraw his plea. The court granted Petitioner's
request, and his plea was
withdrawn.
The parties agree that, if I conclude that Petitioner was "convicted"
of a criminal offense within the
meaning of section 1128(i) of the Social Security Act (the Act), that conviction
related to the delivery of an
item or service under the Utah Medicaid program. However, the parties dispute:
(1) whether Petitioner
was "convicted" of a criminal offense within the meaning of the law,
and (2) assuming that Petitioner was
convicted of a criminal offense, whether the conviction was subsequently "vacated"
within the meaning of
42 C.F.R. 1001.136.
The issues contested by the parties are legal issues involving questions of
interpretation and application of
law to the undisputed material facts. Therefore, summary disposition is an appropriate
mechanism for
deciding this case. John W. Foderick, M.D., DAB Civ. Rem. C-113 (1989), aff'd
DAB App. 1125 at 10
(1990).
1. Petitioner was "convicted" of a criminal offense within the meaning
of section 1128(i) of the Social
Security Act.
Petitioner asserts that he was not "convicted" of a criminal offense
within the meaning of section 1128(i) of
the Social Security Act. Therefore, according to Petitioner, there exists no
authority for the I.G. to impose
and direct an exclusion against him.
Section 1128(a)(1) of the Act requires the Secretary (or his delegate, the
I.G.) to exclude from participation
in Medicare, and to direct the exclusion from participation in Medicaid of:
any individual or entity that has been convicted of a criminal offense related
to the delivery of an item
or service under . . . [Medicare] or under . . . [Medicaid]. (Emphasis added).
The term "convicted" is defined at section 1128(i) of the Social
Security Act. The law provides that an
individual or entity is considered to have been "convicted" of a criminal
offense:
(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 theindividual or entity has
been accepted by a
Federal, State or local court; or
(4) when the individual or entity has entered intoparticipation in a first
offender, deferred
adjudication, or other arrangement or program where judgment of conviction has
been withheld.
The I.G. does not contend that Petitioner's guilty plea is a conviction within
the meaning of section
1128(i)(1) or (2). However, the I.G. and Petitioner dispute whether Petitioner
was convicted within the
meaning of section 1128(i)(3) or (4). More specifically, they dispute the issues
of whether: (1) the Court
"accepted" Petitioner's guilty plea within the meaning of section
1128(i)(3), and (2) Petitioner's plea
constitutes an "other arrangement or program where judgment of conviction
has been withheld" within the
meaning of section 1128(i)(4).
a. Section 1128(i)(3).
Petitioner acknowledges that the determination of what is a conviction is a
matter of federal law. But, he
asserts that any such determination must be based upon an accurate interpretation
of the impact of a given
disposition under state procedures. According to Petitioner, the Court did not
"accept" Petitioner's plea of
guilty within the meaning of Utah law and relevant state procedures. Therefore,
the plea was not accepted
within the meaning of section 1128(i)(3).
It is apparent that, notwithstanding his acknowledgment, Petitioner contends
that the exclusion law must be
defined in terms of state usage of terminology contained in the federal statute.
Taken to its logical end,
Petitioner's argument means that every term in section 1128(i) is susceptible
to as many definitions of that
term as may exist under the laws of the various states.
I disagree with Petitioner's analysis. Section 1128 is a federal statute. It
defines what constitutes a
conviction independently from the definitions or interpretations applied by
the states. It is not relevant that
an action might not constitute a conviction within the meaning of state law,
so long as the action meets the
federal definition of conviction. See Carlos E. Zamora, M.D., DAB Civ. Rem.
C-74 (1989), aff'd DAB
App. 1104 (1989).
Petitioner cites the decision in Doe v. Bowen, Case No. 87-1068-WD, 5-6, n.
5 (D. Mass. July 30, 1987),
to support his analysis. The Doe case consisted of a federal court challenge
to an exclusion imposed by the
I.G. pursuant to section 1128. Plaintiff in Doe argued that he had not been
convicted of a criminal offense
under Massachusetts law, and therefore had not been convicted within the meaning
of section 1128(i). The
court concluded that the case was not ripe for judicial review because plaintiff
had not exhausted his
administrative remedies. However, the court criticized the I.G.'s determination
to apply the definition of
"conviction" without regard to "distinctions among the protean
variety of dispositions of criminal matters
in the courts of the Commonwealth." Id. at 5-6.
This critical statement was made in a footnote which was dictum to the court's
decision. It is, therefore, not
a binding precedent. Furthermore, the facts of the Doe case are distinguishable
from the present case, in
that the plaintiff in Doe did not make a guilty plea to any offense in state
court. I disagree with the Doe
decision to the extent that it is construed as stating that the terminology
contained in section 1128(i) must
be defined and applied in terms of state practice.
The term "accept" is not specifically defined in section 1128(i)(3)
or elsewhere in section 1128. In the
absence of a specific statutory definition, the term should be given its common
and ordinary meaning.
"Accept" is defined in Webster's Third New International Dictionary
1969 Edition as:
2a: to receive with consent (something given or offered) . . . .
A guilty plea is "accepted" within the meaning of section 1128(i)(3)
whenever a party admits his guilt to a
criminal offense and a court disposes of the case based on that party's plea.
This interpretation is not only consistent with the common and ordinary meaning
of the term "accept" but
with Congressional intent, as expressed through legislative history. Congress
intended that its definition of
conviction sweep in the situation where a party has been adjudicated guilty
of an offense, and the situation
where a party admits guilt in order to dispose of a complaint. In Congress'
view, a party's admission of
guilt in order to dispose of a criminal complaint is sufficient to establish
a conviction, regardless of how
that admission is treated under the various states' criminal statutes and procedures.
The Congressional
committee which drafted the 1986 version of section 1128 stated:
The principal criminal dispositions to which the exclusion remedy [currently]
does not apply are the
"first offender" or "deferred adjudication" dispositions.
It is the Committee's understanding that States are
increasingly opting to dispose of criminal cases through such programs, where
judgment of conviction is
withheld. The Committee is informed that State first offender or deferred adjudication
programs typically
consist of a procedure whereby an individual pleads guilty or nolo contendere
to criminal charges, but the
court withholds the actual entry of a judgment of conviction against them and
instead imposes certain
conditions of probation, such as community service or a given number of months
of good behavior. If the
individual successfully complies with these terms, the case is dismissed entirely
without a judgment of
conviction ever being entered.
These criminal dispositions may well represent rational criminal justice policy.
The Committee is
concerned, however, that individuals who have entered guilty or nolo [contendere]
pleas to criminal
charges of defrauding the Medicaid program are not subject to exclusion from
either Medicare or
Medicaid. These individuals have admitted that they engaged in criminal abuse
against a Federal health
program and, in the view of the Committee, they should be subject to exclusion.
If the financial integrity
of Medicare and Medicaid is to be protected, the programs must have the prerogative
not to do business
with those who have pleaded to charges of criminal abuse against them.
H.R. No. 727, 99th Cong., 2d Sess. 75, reprinted in 1986 U.S. Code Cong. &
Admin. News 3607, 3665;
see Zamora, supra, at 5-6.
The Utah court accepted Petitioner's guilty plea within the meaning of section
1128(i)(3). Petitioner
offered to admit his guilt to a criminal offense in return for: (1) a term of
probation; (2) payment by
Petitioner of restitution, costs, and a penalty; and (3) the opportunity to
apply to the court to have the
criminal complaint dismissed upon satisfactory completion of the aforesaid conditions.
I do not accept Petitioner's contention that the Utah court's determination
to hold Petitioner's plea "in
abeyance" meant that the court did not accept Petitioner's plea. Petitioner
admitted his guilt in order to
dispose of the complaint, and the court received Petitioner's plea. That transaction
amounts to acceptance
of a plea within the meaning of federal law, irrespective of the court's characterization
of its actions.
Petitioner argues that the language of the plea agreement establishes that
the court did not accept a guilty
plea. Specifically, he refers to page two of the agreement at paragraph (3),
which states:
Defendant acknowledges that if he fails to live up to each and every term
of this agreement and the
orders of the Court, the Court will accept the Defendant's plea of guilty and
proceed to impose sentence.
I.G. Ex. 2.
However, a different representation from that contained in the written plea
agreement was made to the
court by the prosecuting attorney at the time that Petitioner pleaded guilty.
In presenting the agreement,
the prosecuting attorney stated:
And what we're proposing asking the Court to consider is to take . . . [Petitioner's]
plea and accept that
but rather than proceed to impose sentence, place sentencing and taking the
sentencing under abeyance and
on the condition that . . . [Petitioner] complete the terms of probation that
the Court may set. Then at that
point the Court -- we would ask the Court to entertain a motion to dismiss the
action. (Emphasis added).
I.G. Ex. 3 at 3. This contradictory language underscores that the issue here
is what Petitioner admitted in
court, not what arrangement Petitioner negotiated with the prosecutor, or what
the parties intended their
agreement to mean. Petitioner unambiguously admitted guilt to a criminal offense,
and the court accepted
that plea. I.G. Ex. 3 at 4-5.
Petitioner asserts that his withdrawal of his guilty plea upon completion of
probation and payment of
restitution, costs, and penalty, effectively nullifies the plea. He argues that,
under Utah law, once a court
grants leave to withdraw a plea of guilty, that plea is totally without effect
for any purpose.
This argument again constitutes an effort to superimpose state procedures on
the federal statute. There is
no language in section 1128(i)(3) which states or suggests that the definition
of conviction in this section is
qualified or limited by judicial actions taken subsequent to acceptance of a
plea. See Zamora, supra, at 5-6;
Gordon Lee Hanks, R.Ph., DAB Civ. Rem. C-112 (1989); Mark M. Akagi, R. Ph.,
DAB Civ. Rem. C-91
(1989).
Also, this interpretation is consistent with legislative history. Congress
intended that arrangements which
provided for post-pleading erasures of convictions be included within the statutory
definition of conviction.
The House Committee report, cited supra, states:
With respect to convictions that are "expunged," the Committee intends
to include all instances of
conviction which are removed from the criminal record of an individual for any
reason other than the
vacating of the conviction itself, e.g., a conviction which is vacated on appeal.
Id.; Zamora, supra, at 6.
Petitioner argues that, under Utah law, withdrawal of a plea is distinguishable
from expungement of a
conviction. According to Petitioner, when a party's conviction is expunged,
a judicial action concerning
that party is still of record, whereas when a plea is withdrawn, the entire
proceeding is erased, and becomes
a nullity. That may be so under Utah law, but it is not relevant. What is relevant
is that under section
1128(i)(3), a guilty plea or a nolo contendere plea is a conviction, once it
is accepted by a court.
Subsequent action by the court to erase that conviction, whether it is an act
of expungement or permission
to the pleading party to withdraw the plea, does not alter the fact that the
party has been convicted of an
offense.
Petitioner references the Supreme Court's decision in Kercheval v. United States,
274 U.S. 220 (1926), in
support of his argument that his withdrawn guilty plea is a nullity and should
not be the basis of an
exclusion. However, Kercheval does not support Petitioner's argument. The Supreme
Court in Kercheval
held that a withdrawn guilty plea may not be used as evidence against an accused
where he has substituted
that plea with a plea of not guilty in a subsequent criminal proceeding. Unlike
Petitioner's case, Kercheval:
(1) involved a criminal proceeding; (2) the court permitted the defendant to
withdraw his guilty plea and
proceed to trial with a substituted plea of not guilty; and (3) the prosecutor
proposed to use the withdrawn
guilty plea as evidence of guilt at the trial. Petitioner withdrew his guilty
plea in order to have it removed
from his record. He did not withdraw it for the purpose of substituting a plea
of not guilty so that he could
establish his innocence at a trial.
Petitioner's withdrawal of his guilty plea is distinguishable from the situation
where a party's conviction is
reversed and vacated on appeal, or where a party is permitted to withdraw a
plea so that he may have a trial
on the merits. In the latter situation, the withdrawal of the plea effectively
acts as a judicial determination
that no adjudication of guilt is of record, and that the party has not admitted
his guilt. In Petitioner's case,
the withdrawal of the plea only signifies that Petitioner has complied with
court-imposed punishment.
b. Section 1128(i)(4).
Petitioner contends that his plea arrangement does not constitute a "deferred
adjudication or other
arrangement or program where judgment of conviction has been withheld"
within the meaning of section
1128(i)(4) of the Act. Central to Petitioner's argument is his contention that
informal or "bargained" plea
arrangements, such as the one entered into by Petitioner, do not fall within
the purview of section
1128(i)(4). According to Petitioner, this section was intended by Congress to
encompass only formal first
offender, deferred adjudication, or other arrangements or programs authorized
by state statute.
I disagree with this argument. The term "other arrangement or program"
is broad enough to encompass
any disposition of a criminal complaint, including a "bargained" plea
arrangement, which results in a court
withholding a judgment of conviction. There is nothing in section 1128(i)(4)
which suggests that Congress
meant the law to encompass only arrangements or programs authorized by state
statute. The Court's
agreement to hold Petitioner's plea in abeyance pending Petitioner's satisfying
the terms of the plea
agreement is an "other arrangement or program where judgment of conviction
has been withheld" within
the plain meaning of section 1128(i)(4).
This interpretation of the law is supported by examination of the legislative
evolutionary process which
resulted in enactment of the current version of section 1128(i)(4). Prior to
December 1987, section (i)(4)
provided that a party was convicted of a criminal offense when that party entered
"into participation in a
first offender or other program where judgment of conviction has been withheld."
Congress revised this
section in December 1987 by substituting the phrase "deferred adjudication,
or other arrangement or
program" for the phrase "or other program." P.L. 100-203, 4118(e)(5)(C)
[as added by P.L. 100-360,
411(k)(10)(D)], December 22, 1987. The 1987 revision communicates Congressional
intent to ensure that
its definition of "conviction" include both formal and informal arrangements
where judgment of conviction
has been withheld.
It is also apparent from the legislative history cited above that Congress
did not intend section 1128(i)(4) to
distinguish between those arrangements and programs which are codified in state
laws, and those which are
negotiated as a matter of custom or common law between a court and criminal
defendants. The distinction
advocated by Petitioner is inconsistent with Congress' objectives.
Petitioner asserts that his interpretation of section 1128(i)(4) is consistent
with decisions by the
Departmental Appeals Board or its administrative law judges which have applied
that section to the facts of
specific cases. This contention is not supported by the decisions which Petitioner
cites. Indeed, two of
these decisions, Hanks, supra, and Akagi, supra, involve guilty pleas in Utah
courts under arrangements
which are essentially identical to that entered into by Petitioner.
2. Petitioner's conviction was not "vacated" within the meaning of 42 C.F.R. 1001.136(a).
Petitioner asserts that, even assuming he was convicted of a criminal offense
within the meaning of section
1128(i), his conviction was subsequently vacated by the Court. He contends that
his conviction was,
therefore, "vacated" within the meaning of 42 C.F.R. 1001.136(a),
and the I.G. may therefore not premise
an exclusion on it.
This regulation provides that:
The . . . [I.G.] will reinstate a suspended party whose conviction has been reversed or vacated.
This regulation is part of a regulatory framework adopted by the Secretary
to implement the exclusion law.
The exclusion law has subsequently been amended and revised. However, the regulations
continue to be
effective to the extent that they are consistent with the statute. Charles W.
Wheeler and Joan K. Todd,
DAB App. 1123 at 5 (1990).
Petitioner was permitted to withdraw his plea only after he had completed a
term of probation and paid
restitution, costs, and a penalty. As I have held supra, Congress did not intend
to except from its definition
of conviction those situations where parties plead guilty to offenses, and subsequently
have their pleas
withdrawn upon satisfaction of court-imposed conditions. Congress intended the
"vacated" exception to
apply in those circumstances where a conviction is reversed and vacated on appeal,
and perhaps where a
party withdraws his plea in order to be tried on the merits.
The Secretary did not intend to exempt parties from the reach of the exclusion
law in a manner inconsistent
with Congress' stated intent. By withdrawing his guilty plea, Petitioner did
not vacate his conviction
within the meaning of 42 C.F.R. 1001.136(a).
3. The exclusion imposed and directed against Petitioner was mandated by law.
As is noted above, the parties do not disagree that, assuming Petitioner was
convicted of a criminal offense
within the meaning of section 1128(i), he was convicted of a criminal offense
related to the delivery of an
item or service under a Medicaid program. The exhibits establish that Petitioner
was convicted of filing
false Medicaid claims. This offense relates to the delivery of an item or service
under Medicaid. Jack W.
Greene, DAB App. 1078 (1989).
Petitioner's conviction falls within the provisions of section 1128(a)(1) of
the Act. This section mandates
exclusion of parties convicted of criminal offenses related to the delivery
of an item or service under the
Medicare or Medicaid programs. Section 1128(c)(3)(B) of the Act provides that,
in the case of parties
against whom mandatory exclusions are imposed, the minimum length of such exclusions
shall be for five
years. The I.G. imposed and directed a five-year exclusion against Petitioner,
which was for the minimum
mandatory period. Therefore, the exclusion imposed against Petitioner was mandated
by law.
CONCLUSION
Based on the undisputed material facts and the law, I conclude that the I.G.'s
determination to exclude
Petitioner from participation in Medicare, and to direct that Petitioner be
excluded from participation in
Medicaid, for five years, was mandated by law. Therefore, I am entering a decision
in this case sustaining
the five year exclusion imposed against Petitioner.
__________________________
Steven T. Kessel
Administrative Law Judge