Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | |
Donald R. Hamlin and Burnside Pharmacy, |
DATE: February 8, 2002 |
- v - |
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The
Inspector General
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Docket No.C-01-444 and |
DECISION | |
CONSOLIDATED DECISION I affirm the determinations of the Inspector General (I.G.)
to exclude Donald R. Hamlin and Burnside Pharmacy, Inc. (Petitioners),
from participation in Medicare, Medicaid, and all other Federal health
care programs for a period of 15 years. I find that the I.G.'s determinations
have a proper basis and that 15-year exclusions are not unreasonable. PROCEDURAL HISTORY Petitioners were notified of their respective exclusions
by separate letters dated December 29, 2000. The I.G. cited section 1128(a)(1)
of the Social Security Act (Act) (42 U.S.C. � 1320a-7(a)) as the basis
for Petitioner Hamlin's exclusion. Petitioner, Burnside Pharmacy, was
excluded pursuant to section 1128(b)(8) of the Act (42 U.S.C. � 1320a-7(b))
due to its association with Petitioner Hamlin. Petitioners jointly appealed from the I.G.'s actions through
their single counsel by letter dated February 22, 2001. In as much as
Petitioner Burnside Pharmacy's fate shall be decided by the decision related
to Petitioner Hamlin, a consolidated decision is also appropriate. Petitioners
only cite as grounds for their appeals that the length of the exclusion
of Petitioner Hamlin and the resulting exclusion of Petitioner Burnside
Pharmacy, are unreasonably long. On March 13, 2001, the cases were assigned to Administrative
Law Judge (ALJ) Joseph Riotto for hearing and decision. The cases were
subsequently reassigned to Chief ALJ Marion Silva on April 30, 2001. On
August 14, 2001, Judge Silva conducted a prehearing telephone conference
in these cases and established a briefing schedule. The substance of the
conference is memorialized in an Order dated August 28, 2001. The cases
of Petitioner Hamlin and Petitioner Burnside Pharmacy were reassigned
to me by memoranda dated October 22, 2001 and October 25, 2001, respectively. The I.G. filed a separate Brief in Support of Exclusion
in each case with attached exhibits on September 14, 2001.(1)
Petitioners filed their "Opposition" November 2, 2001. Petitioners submitted
no exhibits for my consideration. The I.G. filed its reply brief on December
4, 2001. Judge Silva's Order of August 28, 2001, which established the
briefing schedule, also established the presumption that absent objection,
offered exhibits are both authentic and factually correct in content.
The Order also established the presumption that uncontested or undisputed
statements of fact in the pleadings are true. I find no objection by either
Petitioner to the exhibits offered in these cases by the I.G., therefore
I.G. exhibits 1 through 9 are admitted. Furthermore, I find no objections
by either party to the factual assertions contained
in the briefs of opposing parties and any or all assert facts may be accepted
as true under the terms of the August 28, 2001 Order.(2) The parties have identified no material issues of fact
in dispute. Thus, I determine that summary judgment is appropriate and
no hearing is necessary in this case for a full and fair disposition of
the issues presented. FINDINGS OF FACT The following findings of fact are based upon the uncontested
and undisputed assertions of fact in the parties pleadings and the exhibits
admitted. 1. Petitioner, Donald R. Hamlin, was on the date of the
I.G. action, a pharmacist licensed by the Commonwealth of Kentucky and
authorized to participate in Medicare, Medicaid or other Federal health
care programs. 2. Petitioner, Burnside Pharmacy, Inc., was on the date
of the I.G. action, a pharmacy located in the Commonwealth of Kentucky
and authorized to participate in Medicare, Medicaid or other Federal health
care programs. 3. Petitioner Hamlin was, at the time of the I.G. action,
an owner or principal stockholder of Petitioner Burnside Pharmacy. 4. Petitioner Hamlin was Petitioner Burnside Pharmacy's
sole officer, its initial director and accomplished its incorporation
according to the records of the Commonwealth of Kentucky. 5. On June 23, 2000 final judgment was entered in case
number 00-CR-00096 by Judge Daniel Venters, 28th Judicial Circuit,
Pulaski Circuit Court Division 1, finding Petitioner Hamlin guilty pursuant
to his pleas, of the felony offense of Assistance Program Fraud in excess
of $10,000 by billing the Kentucky Medical Assistance Program for drugs
not provided to Medicaid patients and by billing some drugs in unit dosages
when in fact the drugs were not dispensed in unit dosages.
6. Petitioner Hamlin's sentence included the requirement
to make restitution to the Commonwealth of Kentucky in the amount of $575,000
(the amount of loss to the program), and to serve 60 days in jail in addition
to time served of roughly 30 days, with 3 years supervised probation.
Petitioner Hamlin also paid $15,000 to cover the cost of the investigation
of his misconduct. 7. By letters dated December 29, 2000, the I.G. advised
Petitioners that they were being excluded from further participation in
Medicare, Medicaid or other Federal health care programs for a period
of 15 years, effective 20 days after the date of the letters. 8. The I.G.'s decision to exclude was based upon Petitioner
Hamlin's conviction as described in Finding 5 and Petitioner Hamlin's
association with Petitioner Burnside Pharmacy as described in Findings
3 and 4. 9. The I.G. found three aggravating factors existed that justified an extended period of exclusion in this case: (a) the financial loss to the government exceeded $1,500; (b) the acts for which Petitioner Hamlin was convicted occurred over the course of more than a year; (c) and the sentence imposed included incarceration. CONCLUSIONS OF LAW 1. Summary judgment is appropriate in this case as there
are no material facts in dispute. 2. Petitioner Hamlin's conviction was a criminal offense
involving the delivery of a health care item or service under Medicare
or a State health care program within the meaning of the Act, section
1128(a)(1) (42 U.S.C. 1320a-7(a)(1). 3. Petitioner Hamlin must be excluded from participation
in any Federal health care program for a minimum period of five years
pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. � 1320a-7(c)(3)(B))
due to his conviction. 4. Petitioner Burnside Pharmacy may be excluded from participation
in any Federal health care program pursuant to section 1128(b)(8)(A) of
the Act (42 U.S.C. � 1320a-7(b)(8)(A)), for a period equivalent to that
imposed upon Petitioner Hamlin (42 C.F.R. � 1001.10(b)) due to the conviction
of Petitioner Hamlin and his ownership, control and/or management of Petitioner
Burnside Pharmacy. 5. The I.G. may increase the term of exclusion based on
a finding of any of the aggravating factors specified at 42 C.F.R. � 1001.102(b). 6. If the I.G. finds that any of the aggravating factors
specified at 42 C.F.R. � 1001.102(b) justify a term of exclusion greater
than the statutory minimum exclusion of five years, then the I.G. may
consider the mitigating factors specified at 42 C.F.R. � 1001.102(c) to
reduce the period of exclusion to no less than five years. 7. The range of exclusionary periods contemplated by the
Act and the Secretary's regulations extend from a minimum of five years
to permanent exclusion, in the case of a mandatory exclusion under section
1128(a). See Act, � 1128(c)(3)(B) and (G) (42 U.S.C. � 1230a-7(c)(3)(B)
and (G); 42 C.F.R. �� 1001.102(a) and (d). 8. Three aggravating factors have been established by
the I.G. by a preponderance of evidence: (a) Petitioner Hamlin's criminal
acts resulted in a loss to the government of $1500 or more; (b) the acts
for which Petitioner Hamlin was convicted occurred over a period of one
year or more; and (c) the sentence imposed by the court included a period
of incarceration. 9. None of the mitigating factors specified at 42 C.F.R.
� 1001.102(c) have been proven by Petitioners, who bear the burden to
make such showing. 10. The 15-year exclusion (5 years mandatory and a 10
year extension) ordered by the I.G. is within a reasonable range and is
not unreasonable. DISCUSSION A. APPLICABLE LAW Petitioner's right to a hearing by an ALJ and judicial
review of the final action of the Secretary is provided by section 1128(f)
of the Act (42 U.S.C. � 1230a-7(f)). Petitioner's joint request for a
hearing was timely filed and I do have jurisdiction. However, the Secretary
has by regulation limited my scope of review to two issues: (1) whether
there is a basis for the imposition of the sanction; and, (2) whether
the length of the exclusion is unreasonable. 42 C.F.R. � 1001.2007(a)(1).
The standard of proof is a preponderance of the evidence and there may
be no collateral attack of the conviction which is the basis for the exclusion.
42 C.F.R. � 1001.2007(c) and (d). Pursuant to 42 C.F.R. � 1005.4(c)(5),
I have no authority to review the I.G.'s discretionary decision to actually
exclude Petitioner Burnside Pharmacy pursuant to section 1128(b) of the
Act. Pursuant to 42 C.F.R. � 1001.1001(b) the length of exclusion of Petitioner
Burnside Pharmacy is automatically the same length as that for Petitioner
Hamlin. Pursuant to section 1128(a)(1) of the Act, the Secretary
may exclude from participation in the Medicare and Medicaid programs any
individual or entity that has been convicted of a criminal offense related
to the delivery of an item or service under Title XVIII or under any State
health care program. Section 1128(c)(3)(B) of the Act provides that an
exclusion imposed under section 1128(a)(1) of the Act shall be for a minimum
period of five years, unless specified aggravating or mitigating factors
are present which form the basis for lengthening or shortening the period
of exclusion. See also 42 C.F.R. � 1001.102(a), (b), and
(c). Only if the aggravating factors justify an exclusion of longer than
five years, may mitigating factors be considered as a basis for reducing
the period of exclusion to no less than five years. 42 C.F.R. �1001.102(c). Section 1001.102(b) of 42 C.F.R. provides, in relevant
part, that the following factors may be considered to be aggravating and
a basis for lengthening the period of exclusion:
Section 1001.102(c) of 42 C.F.R. provides that only if
any of the aggravating factors justify a period of exclusion longer than
five years, may mitigating factors be considered as a basis for reducing
the period of the exclusion to no less than five years. The following
factors may be considered as mitigating and a basis for reducing the period
of exclusion:
Evidence which does not relate to an aggravating factor
or a mitigating factor is irrelevant to determining the length of an exclusion.
The burden is upon Petitioners to show the presence of mitigating factors.
The I.G. bears the burden of proving the existence of aggravating factors.
42 C.F.R. � 1005.15; John (Juan) Urquijo, DAB No. 1735 (2000). B. ISSUES
C. ANALYSIS
In this case, ALJ Silva made clear in her August 28, 2001
Order, that absent objection, offered exhibits are presumed to be both
authentic and factually correct in content. The Order also established
the presumption that uncontested or undisputed statements of fact in the
pleadings are true. I find no objection by Petitioners to the exhibits
offered in these cases by the I.G. Furthermore, I find no objections by
either party to the factual assertions contained in the briefs of opposing
parties and any or all asserted facts may be accepted as true under the
terms of the August 28, 2001 Order. Because I find no inconsistencies
in the facts alleged by the parties and no specific factual disputes have
been identified by the parties, I conclude there are no disputed issues
of material facts. The issues may thus be decided by application of the
law to the undisputed facts and summary judgment is appropriate.
Petitioners do not contend that Petitioner Hamlin's conviction
was not an appropriate basis for the exclusion of Petitioner Hamlin. My
review of the exhibits and pleadings satisfies me that Petitioner Hamlin
was convicted of fraud by improper billings amounting to at least $575,000.
The fraud was perpetrated upon the Commonwealth of Kentucky and its State
health care program. Thus, section 1128(a)(1) of the Act requires that
Petitioner Hamlin be excluded from participation in any Federal health
care program for a minimum period of five years.
Petitioner Burnside Pharmacy has not contended that Petitioner
Hamlin's conviction was not an appropriate basis for exclusion of Petitioner
Burnside Pharmacy based on Petitioner Hamlin's association with the pharmacy.
Petitioner Burnside Pharmacy has not challenged the conclusion of the
I.G. that Petitioner Hamlin owned, controlled or managed it. Petitioner
Burnside pharmacy has not alleged that the I.G. abused her discretion
by ordering its exclusion from Federal health care programs. My review
of the exhibits satisfies me that Petitioner Hamlin incorporated Petitioner
Burnside Pharmacy, maintained an ownership and controlling interest in
the pharmacy, and managed the pharmacy. Thus, the pharmacy was subject
to a permissive exclusion under section 1128(b)(8) of the Act due to the
conviction of Petitioner Hamlin.
The only issue truly joined on this appeal is whether
the 15-year exclusion was unreasonable. Petitioners argue that 15 years
is unreasonably long, without indicating what period of exclusion might
be reasonable. Petitioners argue that when determining what is reasonable,
I should consider that Petitioner Hamlin made restitution of $575,000
and paid an additional $15, 000 for the cost of the investigation of his
fraud. Petitioners also argue that I should consider that only a brief
period of incarceration was ordered in this case -- 60 days in addition
to the 30 days time served. Finally, Petitioners argue that I should consider
that in other cases involving more egregious conduct, the I.G. ordered
shorter periods of exclusion. The I.G. argues, of course, that the regulations
accord the I.G. discretion and that the 15-year exclusion is within the
reasonable range in this case. I note that the regulations strictly limit my jurisdiction
in cases such as this. I may decide whether or not the I.G. had a proper
basis for the exclusion of Petitioner Hamlin but not Petitioner Burnside
Pharmacy. I may decide whether the period of exclusion for Petitioner
Hamlin was "unreasonable" but the period of exclusion for Petitioner Burnside
pharmacy is fixed by regulation. The Departmental Appeals Board (DAB)
has made clear that the role of the ALJ in cases such as this is to conduct
a "de novo" review as to the facts related to the basis for the
exclusion and the facts related to the existence of aggravating and mitigating
factors identified at 42 C.F.R. � 1001.102. See Joann Fletcher
Cash, DAB No. 1725 (2000), fn. 6, and cases cited therein. The regulation
specifies that I must determine whether the length of exclusion imposed
is "unreasonable" (42 C.F.R. � 1001.207(a)(1)). The DAB has explained
that in determining whether a period of exclusion is "unreasonable," I
am to consider whether such period falls "within a reasonable range."
Cash, fn. 6. The DAB cautions that whether I think the period of
exclusion too long or too short is not the issue. I am not to substitute
my judgment for that of the I.G. and may only change the period of exclusion
in limited circumstances. Despite a thorough search of prior DAB decisions and Federal
precedent, I have found no clear statement of what constitutes the "reasonable
range" referred to by the DAB. I do note that the 15-year exclusion ordered
in this case is close to the maximum ordered in any DAB or ALJ decisions
I located. However, I also note that there are many approved 15-year exclusions.
My review of the statute and regulations shows that the range of possible
exclusions provided for in the case of mandatory exclusions range from
the minimum of 5 years to a maximum of permanent exclusion. 42 U.S.C.
� 1320a-7(c)(3)(B) and (G), 42 C.F.R. � 1001.102(a) and (d). This is the
only range I have found specified in the law and it seems to be "reasonable." My reading of 42 C.F.R. � 1001.102 is that with a mandatory
exclusion under section 1128(a) of the Act, there is an automatic exclusion
of five years. Pursuant to 42 C.F.R. � 1001.102(d) one prior conviction
for conduct that would cause mandatory exclusion under section 1128(a)
of the Act, increases the minimum period of exclusion to 10 years and
two prior convictions automatically causes permanent exclusion. The five-year and ten-year minimum exclusions may only
be extended if the I.G. can point to evidence that one or more of the
aggravating factors specified at 42 C.F.R. � 1001.102(b) are present.
The regulations do not limit the additional period of exclusion the I.G.
may impose based upon the presence of aggravating factors. The regulations
also do not specify how much of an extension is warranted by the existence
of an aggravating factor. The DAB has indicated that it is not the number
of aggravating factors that is determinative rather, it is the quality
of the circumstances, whether aggravating or mitigating, which is controlling
in analyzing these factors. Barry D. Garfinkel, M.D., DAB No. 1572
(1996). Section 1001.102 of 42 C.F.R. provides that when aggravating
factors justify an exclusion of more than the mandatory minimum period,
then the I.G. may consider any of the three specified mitigating factors
if they are shown to exist. In Urquijo, the DAB suggested that
the I.G.'s failure to consider a mitigating factor amounts to an abuse
of discretion. The DAB also made clear in Urquijo that: if the
I.G. considers an aggravating factor to extend the period of exclusion
and that factor is not later shown to exist on appeal; or if the I.G.
fails to consider a mitigating factor that is shown to exist, then the
ALJ may make a decision as to the appropriate extension of the period
of exclusion beyond the minimum. Thus, my determination of whether or not the exclusionary
period in this case is unreasonable hinges upon on three-points: (1) whether
the period of exclusion is within the reasonable range; (2) whether the
I.G. has shown the existence of aggravating factors; and, (3) whether
the Petitioners have shown that there are mitigating factors that the
I.G. failed to consider. The 15-year exclusion ordered in this case is more than
the minimum 5-year exclusion, but less than permanent exclusion. The 15-year
exclusion is within the range recognized by the regulations, and it is
reasonable. The presence of three aggravating factors has never been
disputed in this case. See Petitioners Opposition, p. 3. The three
aggravating factors are: (1) the acts for which Petitioner Hamlin was
convicted resulted in a loss of $1500 or more; (2) the acts occurred over
a period of a year or more; and (3) the sentence imposed included incarceration.
These three factors are among the aggravating factors the I.G. is permitted
to consider under 42 C.F.R. � 1001.102(b). Considering the admissions
of the parties in their pleadings and the exhibits admitted, a preponderance
of the evidence supports finding that each of the three aggravating factors
exist in this case. The existence of the three aggravating factors justifies
extending the period of exclusion beyond the minimum. The existence of the aggravating factors, also triggers
the requirement to consider any mitigating factors under 42 C.F.R. � 1001.102(c).
However, the regulation is clear that only the three listed mitigating
factors may be considered. As quoted above, none of those mitigating factors
are present in this case. Instead, Petitioners argue in mitigation in
this case that Petitioner made restitution and paid the cost of investigation.
However, 42 C.F.R. � 1001.102(b)(1) specifically provides that restitution
may not be considered when considering the aggravating factor of a loss
of $1,500 or more. Further, restitution is not a mitigating factor listed
under 42 C.F.R. � 1001.102(c). Petitioners also argue that I should consider
that the period of incarceration ordered in this case was brief. However,
the aggravating factor under the regulation is that incarceration was
ordered, length is not the issue under 42 C.F.R. � 1001.102(b)(5). The
brevity of the incarceration is also not a mitigating factor under 42
C.F.R. � 1001.102(c). Finally, Petitioners argue that lesser periods of exclusion
were ordered in other cases on more egregious facts. However, Petitioners
cite no authority for why I should consider this argument. They are correct
that in the cases they cite more aggravating factors existed but shorter
exclusions were ordered than in these cases. Petitioners cannot allege,
however, that there are no DAB or ALJ decisions where there are only three
aggravating factors found with a 15-year exclusion ordered. Indeed, in
Cash the DAB found the same three aggravating factors existed that
Petitioners concede exist here, and the DAB affirmed the ALJ's conclusion
that the 15-year exclusion was not unreasonable. Further, the DAB has
indicated it is the nature or quality of the aggravating factors and not
their number that is controlling. Here, the total loss was $575,000, a
very significant amount. The fraudulent activity of Petitioner Hamlin
occurred over two years, more than double the period considered as an
aggravating factor under the regulation. Although the period of incarceration
served by Petitioner Hamlin was only approximately 90 days, the State
judge also imposed three years of supervised probation. I also note that
Petitioner Hamlin agreed to a plea agreement that provided for the Commonwealth
of Kentucky to recommend a sentence of 10 years, a significant sentence
reflecting the gravity of his offenses. Considering the quality of the
aggravating factors in this case, the 15-year exclusion is certainly not
unreasonable. The aggravating factors exist and their quality is not
inconsistent with the period of exclusion ordered by the I.G. in Petitioner
Hamlin's case and, consequently, in Petitioner Burnside pharmacy's case.
The only remaining factor to consider is whether Petitioners have proven
any mitigating factors that the I.G. failed to consider. Petitioners concede
that Petitioner Hamlin was convicted of a felony with a loss to the government
of $1,500 or more. There is no evidence that the State judge found any
evidence of diminished mental, emotional, or physical condition that limited
Petitioner Hamlin's culpability. There is no evidence that Petitioner
Hamlin cooperated with Federal or State authorities with the effect specified
by the regulation. Therefore, I conclude that none of the mitigating factors
specified by 42 C.F.R. � 1001.102(c) exist to justify reduction of the
15-year exclusion ordered by the I.G. CONCLUSION For the foregoing reasons, the 15-year exclusions of Petitioners are affirmed. |
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JUDGE | |
Keith W. Sickendick Administrative Law Judge |
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FOOTNOTES | |
1. The I.G. offered Exhibits (Exs.) 1 through 7 in C-01-444 and Exs. 1 through 6 in C-01-470. Exhibits 1 through 4 are the same in both cases. It was not specified before briefing that the cases would be heard and decided in a consolidated manner, albeit under separate case numbers. However, Petitioners filed joint submissions throughout this proceeding, and the I.G. has not objected. I find that it is judicially efficient to handle these cases in a consolidated manner. While, the I.G.'s election to file separate exhibits for each case was not improper, it is easier to handle one set of exhibits. Therefore, I strike one set of the I.G.'s Exs. 1-4 and consider these exhibits entered in both cases. In addition, I renumber Exs. 5 and 6 filed in C-01-470 as I.G. Exs. 8 and 9 and refer to I.G. Exs. "1 through 9" in the text. 2. There appears to be no inconsistency in the facts asserted by the parties, which is consistent with my conclusion that there are no issues of material fact in dispute. 3. Pursuant to 42 C.F.R. � 1005.4(c)(5), I have no authority to review the I.G.'s decision to actually exclude Petitioner Burnside Pharmacy pursuant to section 1128(b) of the Act. My review extends only to the issue of whether or not the association between Petitioners existed. | |