Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
In the Case of:
L arry White, R.Ph.,
Petitioner,
- v. -
The Inspector General.
DATE: July 23, 1992
Docket No. C-415
Decision No. 1346
DECISION
Larry White, R.Ph. (Petitioner) appealed a March 11, 1992 decision
by
Administrative Law Judge (ALJ) Joseph K. Riotto. See Larry
White,
R.Ph., DAB CR183 (1992)(ALJ Decision). That decision upheld
a
determination by the Inspector General (I.G.) excluding Petitioner
from
participation in Medicare and in State health care programs
identified
in section 1128(h) of the Social Security Act (the Act),
including
Medicaid.
Based on the following analysis, we affirm the ALJ Decision.
BACKGROUND
On August 21, 1990, Petitioner entered a plea of guilty and was
convicted
in the Circuit Court, Cook County, Illinois, of theft (vendor
fraud) against
the State of Illinois. Petitioner, acting for Larr
Pharmacy, falsely
billed Illinois Medicaid for medicines which were not
actually provided to
Medicaid recipients. Petitioner was sentenced to
five years probation
and required to pay $52,401.67 in restitution to
the Illinois Department of
Public Aid. On October 11, 1990, the trial
court vacated Petitioner's
conviction upon his enrollment in the
Treatment Alternatives To Street Crimes
program, in compliance with a
pre-sentencing agreement.
The I.G. based Petitioner's exclusion on sections 1128(a)(1)
and
1128(c)(3)(B) of the Act. Section 1128(a)(1) mandates exclusion for
any
individual or entity "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) establishes that
"[i]n the
case of an exclusion under subsection (a), the minimum period
of
exclusion shall be not less than five years . . . ." The ALJ
upheld a
five-year exclusion of Petitioner.
On appeal from the ALJ Decision, Petitioner raised two issues:
1)
whether the ALJ erred in concluding that Petitioner had been
"convicted"
even though the trial court had vacated his conviction; and 2)
whether
the ALJ erred in concluding that the exclusion did not violate
the
Double Jeopardy Clause of the United States Constitution. 1/
ANALYSIS
I. Whether the ALJ erred in concluding that Petitioner had
been
convicted
The ALJ concluded that, even though the trial court had
ultimately
"vacated" Petitioner's conviction, Petitioner had been
"convicted"
within the meaning of section 1128(i)(1) of the Act. FFCL
8; ALJ
Decision at 4. That section provides that an individual is
considered
to have been "convicted of a criminal offense" for purposes of
section
1128 "when a judgment of conviction has been entered against
the
individual . . . by a Federal, State, or local court, regardless
of
whether . . . the judgment of conviction or other record relating
to
criminal conduct has been expunged; . . ."
Petitioner did not challenge the ALJ's finding that
Petitioner's
conviction had been vacated on his enrollment in a supervised
treatment
program. FFCL 5. Petitioner did not assert that no
judgment of
conviction had been entered against him, nor did he allege that
his
conviction had been vacated due to a decision on the merits in
his
favor. 2/ Rather, Petitioner's sole argument on appeal was that it
was
improper and offensive to the principles of federalism "for a
federal
agency to second guess a state court and impose an additional penalty
on
petitioner." Appeal br. at 2. Petitioner relied for this
proposition
on the following statement from the Supreme Court's decision in
Coleman
v. Thompson, __ U.S. __, 111 S.Ct. 2546, 2564 (1991):
"Federal
intrusions into state criminal trials frustrate . . . the
States'
sovereign power to punish offenders . . . ." Petitioner argued
that the
Illinois court, the trier of fact, had determined that the
conviction
should be vacated and that to the extent that court's action
constitutes
a punishment, "that court determined what punishment fit that
crime."
Appeal br. at 2.
Imposition of an exclusion in this case does not violate the principles
of
federalism or the holding in Coleman for at least two reasons.
First, the
purpose of this exclusion is to secure a legitimate federal
interest, not to
punish Petitioner. Second, this exclusion does not
interfere with the
State's criminal process or frustrate the State's
sovereign power to punish
offenders.
As we discuss below, the purpose of the exclusion here is to
protect
federally funded health programs, not to punish Petitioner.
Both the
State of Illinois and the federal government have an interest
in
protecting such programs from untrustworthy individuals. False
billing
under Medicaid affects both federal and state fiscs, and indicates
a
potential for false billing to Medicare, which is
federally
administered. Thus, in our view, the exclusion action here
does not
violate the principles of federalism and arguably promotes
those
principles by enabling the federal government to protect such
programs
from untrustworthy individuals.
Further, an administrative exclusion is not the type of federal
intrusion
into a State criminal process that the Supreme Court
disallowed in
Coleman. In that case, the defendant petitioned for
federal habeas
corpus after a state court had dismissed his state habeas
corpus claim on
procedural grounds. The Supreme Court denied the
petition, holding
that, because of the disruption to a state's judicial
process and the costs
to a state of defending such an action, a federal
habeas corpus action is
barred in such circumstances unless the
petitioner demonstrates cause for the
procedural default and actual
prejudice or demonstrates that review of his
claim is necessary to
correct a fundamental miscarriage of justice. In
contrast with a
federal habeas corpus action, an administrative exclusion
does not
potentially interfere with a state court's disposition of a
criminal
case. Also, while a state may incur great costs in defending a
federal
habeas corpus action, we see no cost to the state resulting from
the
federal imposition of an exclusion.
Thus, we conclude that the ALJ did not err in finding that Petitioner
had
been "convicted" within the meaning of section 1128(i)(1) of the
Act.
II. Whether the ALJ erred in concluding that the Double Jeopardy
Clause
was not violated
The ALJ rejected Petitioner's Double Jeopardy argument. He
concluded
that the purpose of this exclusion was remedial rather than
punitive and
that, under the Supreme Court's decision in United States v.
Halper, 490
U.S. 435 (1989), an exclusion is regarded as putting its subject
in
Double Jeopardy only in certain cases where such sanction's purpose
is
essentially deterrent or retributive. The ALJ also noted that the
"dual
sovereignty" doctrine in Abbate v. United States, 359 U.S. 187
(1959),
held that Double Jeopardy does not apply to a subsequent
federal
prosecution based on facts which led to a state conviction.
ALJ
Decision at 4-5.
On appeal, Petitioner contended that the ALJ had misapplied the
Abbate
"dual sovereignty" doctrine, which involved a successive
federal
prosecution after conviction for a state crime. Here,
Petitioner
argued, he is not charged with a separate federal offense.
Rather,
according to Petitioner, his federal offense is that he was convicted
of
a state crime, and he is being exposed to additional punishment for
that
crime. Citing Halper, Petitioner also argued that the Double
Jeopardy
Clause prohibits a second punishment for the same conduct and
that
second punishment was "exactly what is happening to [Petitioner] in
this
case." Appeal br. at 2-3.
The Double Jeopardy Clause embodies three protections: "It
protects
against a second prosecution for the same offense after
acquittal. It
protects against a second prosecution for the same
offense after
conviction. And it protects against multiple punishments
for the same
offense." North Carolina v. Pearce, 395 U.S. 711, 717
(1969)(footnotes
omitted). Successive prosecutions, whether following
acquittals or
convictions, raise a number of concerns. Grady v. Corbin,
495 U.S. 508
(1990). The primary concern is "that the State with all
its resources
and power should not be allowed to make repeated attempts to
convict an
individual for an alleged offense, thereby subjecting him
to
embarrassment, expense and ordeal and compelling him to live in
a
continuing state of anxiety and insecurity . . . ." Green v.
United
States, 355 U.S. 184, 187 (1957). The "dual sovereignty"
doctrine of
Abbate holds that a federal prosecution is not barred by a prior
state
prosecution of the same person for the same acts. The doctrine is
based
on the principle that federal law enforcement should not be hindered
by
state prosecutions, where a defendant's acts may impinge more
seriously
on a federal interest than on a state interest. 359 U.S. at
195.
Section 1128(a) of the Act does not contemplate a federal
"prosecution"
for an offense separately defined under federal law.
Rather, it
provides that, whenever an individual has been convicted for
a
program-related crime in a federal, state, or local court, the
Secretary
must exclude that individual from Medicare and Medicaid. Once
the I.G.
establishes that an individual has been convicted of a
program-related
crime, a five-year exclusion automatically applies.
Thus, a mandatory
exclusion does not raise the Double Jeopardy concerns of
successive
prosecutions by the same government based on the same
conduct. Also, a
mandatory exclusion, like the situation in Abbate,
involves a federal
action following a state action, where the state action is
not
sufficient to protect the federal interest.
On the other hand, in Halper, which involved two federal actions
(a
criminal case followed by a civil monetary penalty action under
section
1128A of the Act), the Supreme Court addressed the question of
multiple
punishments for the same conduct. A mandatory exclusion is
based on a
conviction, but it is the underlying conduct which Congress sought
to
protect against. Thus, several courts have treated an exclusion
action
as also raising the question of multiple punishments for the
same
conduct. They have acknowledged that the Halper analysis of
the
relationship between the amount of the monetary penalty and
the
government's monetary loss is inapposite to mandatory exclusions.
3/
However, they applied a similar analysis in determining whether
the
exclusion constituted a punishment. They concluded that the
Double
Jeopardy Clause was not violated because the intent, as well as
the
nature and effect, of the exclusion was remedial rather than
punitive.
Greene v. Sullivan, 731 F. Supp. 838 (E.D. Tenn. 1990); Manocchio
v.
Kusserow, 961 F.2d 1539 (11th Cir. 1992).
Petitioner argued that Greene was wrongly decided. Petitioner
contended
that evaluating the factors traditionally applied to determining
whether
a sanction is punitive leads to the conclusion that a
mandatory
five-year exclusion is punitive. Petitioner quoted the
following
listing of the relevant tests from Kennedy v. Mendoza-Martinez, 372
U.S.
144, 168-169 (1962)(footnotes omitted):
Whether the sanction involves an affirmative disability
or
restraint, whether it has historically been regarded
as
punishment, whether it comes into play only on a finding
of
scienter, whether its operation will promote traditional aims
of
punishment -- retribution and deterrence, whether the
behavior
to which it applies is already a crime, whether an
alternative
purpose to which it may rationally be connected is
assignable
for it, and whether it appears excessive in relation to
the
alternative purpose assigned.
Petitioner did not, however, state specifically how he thought these
tests
should be applied here.
We conclude that the ALJ correctly relied on Greene. That case
is
directly on point. The court in Greene found, based on the context
and
history of section 1128(a), that the section had a remedial purpose
and
that the five-year exclusion there was not one of the "rare
cases"
alluded to in Halper in which an excessive civil penalty subsequent
to
criminal sanctions implicates the Double Jeopardy Clause. The
court
noted the "apt comparison between the exclusion remedy and
professional
license revocations for lawyers, physicians, and real estate
brokers
which have the function of protecting the public and have routinely
been
held not to violate the double jeopardy clause." 731 F. Supp. at
840.
The ALJ's construction of the Double Jeopardy Clause is further
supported
by Manocchio. That court looked to the purposes served by the
exclusion
sanction. It concluded that the legislative history
demonstrated that
the primary goal of the legislation was to protect
present and future
Medicare beneficiaries from abusers of these
programs. In support of
this conclusion, it quoted the following
language from the relevant Senate
Finance Committee report:
the basic purpose of the Medicare and Medicaid
Patient
and Programs Protection Act is to improve the ability
of
the Secretary and the Inspector General of [HHS]
to
protect Medicare, Medicaid, [and other social
services
programs] from fraud and abuse, and to protect
the
beneficiaries of those programs from
incompetent
practitioners and from inappropriate or inadequate
care.
S.Rep. No. 109, 100th Cong., 1st Sess. 1-2
(1987),
reprinted in 1987 U.S.C.C.A.N. 682.
961 F.2d at 1542. See also statements of Rep. Waxman, Chairman,
House
Subcommittee on Health and the Environment, and Sen. Bentsen quoted
at
961 F.2d 1542.
We conclude that Petitioner's reliance on Mendoza-Martinez is
misplaced.
In Mendoza-Martinez, the Supreme Court held that certain statutes
which
automatically imposed forfeiture of citizenship were invalid because,
in
those statutes, "Congress has plainly employed the sanction
of
deprivation of nationality as a punishment -- for the offense of
leaving
or remaining outside the country to evade military service --
without
affording the procedural safeguards guaranteed by the"
Constitution.
372 U.S. at 165-166. The tests set out in
Mendoza-Martinez and quoted
by Petitioner are to be considered "[a]bsent
conclusive evidence of
congressional intent as to the penal nature of a
statute . . . ." 372
U.S. at 169. In our view, the context and
legislative history of
section 1128(a) discussed in Greene and Manocchio are
conclusive
evidence of congressional intent to enact a statute that is
primarily
remedial. Even if the court in Greene should have discussed
all of the
tests listed in Mendoza-Martinez, Petitioner did not explain how
this
would have made a difference in this case. None of those tests
is
determinative, and, in our view, the indicia that the statute
is
remedial outweigh any indication that it is punitive.
Finally, the exclusion here may fairly be characterized as remedial,
and
not solely as a deterrent or retribution. See Halper at 449.
The
exclusion mechanism protects these programs from any individual who
has
been convicted of the program-related crime of submitting false
claims.
Manocchio upheld a five-year exclusion for a false claim of
$62.40. In
contrast, Petitioner agreed to make $52,401.67 restitution
to the State
for his false claims. ALJ Decision at 1. Congress
determined that five
years is a reasonable exclusion period for such an
individual and
mandated that we apply the five-year period.
Therefore, we conclude that the ALJ did not err in rejecting
Petitioner's
Double Jeopardy claim..
CONCLUSION
For the reasons stated above, we uphold the ALJ Decision. We affirm
and
adopt each of the ALJ's FFCLs.
_____________________________
Judith
A. Ballard
_____________________________
Cecilia
Sparks Ford
_____________________________
Donald
F. Garrett
Presiding Board Member
1. Petitioner did not specifically object to any particular Finding
of
Fact and Conclusion of Law (FFCL). However, since the substance
of
Petitioner's appeal is that he was not "convicted" within the meaning
of
the Act and that his exclusion violates the Double Jeopardy Clause,
we
infer that he objected to FFCLs 8, 10 and 11.
2. Pursuant to section 1128(i)(1), this Board has previously
upheld
exclusions based on judgments of conviction which have been
expunged.
See Betsy Chua, M.D., DAB No. 1205 (1990). In doing so, the
Board has
relied on the plain language of the Act and the legislative history
of
the Medicare and Medicaid Patient and Program Protection Act of
1987,
Pub. L. No. 100-93 (1987). The relevant legislative history
provides:
"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." H.R. Rep. No. 727, 99th Cong., 2d Sess. 75 (1986),
reprinted
in 1986 U.S. CODE CONG. & ADMIN. NEWS 3607, 3665.
3. In Halper, the respondent was subject to liability of $130,000
under
the False Claims Act for false claims amounting to $585. The
Supreme
Court concluded that the disparity between the amount of the
statutory
penalty and the amount of the government's loss was so extreme that
the
penalty constituted a