DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board

Civil Remedies Division

In the Case of:
FEB 22, 1989

Michael I. Sabbagh, M.D., DATE:
Petitioner,
- ven Docket No. C-59

The Inspector General. anal cet

DECISION OF ADMINISTRATIVE LAW JUDGE
ON MOTIONS FOR SUMMARY DISPOSITION

Petitioner requested a hearing to contest the Inspector
General's (the I.G.) determination excluding him from
participating in the Medicare program, and directing that
he be excluded from participating in State health care
programs, for five years.]/ Both parties filed motions
for summary disposition of this case. I have considered
the supporting memoranda of both parties. Based on the
undisputed facts, the law, and the applicable regulations,
I conclude that the exclusions imposed and directed by the
I.G. are mandatory. There remain no questions of fact, to
be addressed at a4 hearing, which could affect the outcome
of this case. Therefore, I am deciding this case in favor
of the I.G.

BACKGROUND

On August 31, 1988, the I.G. sent notice to Petitioner,
advising him that he was being excluded from participation
in Medicare and any State health care programs for a
period of five years. Petitioner was advised that his

1/"State health care program" is defined by section
1128(h) of the Social Security Act, 42 U.S.C. 1320a-7(h),
to include any State Plan approved under subchapter XIX of
the Act (such as Medicaid).
exclusions were due to his conviction of a criminal
offense related to the delivery of an item or service
under the Medicaid program. Petitioner was further
advised that the law required minimum five year mandatory
exclusions from participation in Medicare and State health
care programs for individuals convicted of a program-
related offense. The I.G. told Petitioner that, because
of the circumstances of his case, he was being excluded
for the minimum period required by law.

Petitioner timely requested a hearing as to the
exclusions, and the case was assigned to me for a hearing
and decision. I conducted a prehearing conference on
November 18, 1988, at which both parties expressed their
intent to move for summary disposition. I issued a
prehearing Order on November 22, 1988, which established a
schedule for moving for summary disposition and for
responding to such motions. The Order also provided for
oral argument on the motions, at the request of either
party. The I.G. moved for summary disposition.

Petitioner opposed the motion, and filed cross motions for
summary relief. Petitioner requested oral argument, and,
by agreement of the parties, I conducted oral argument via
telephone on February 7, 1989.

ISSUES

The issues raised by the parties in their respective
motions are whether:

1. the delegation of authority by the Secretary of
Health and Human Services (the Secretary) to the I.G. to
determine and impose or direct exclusions pursuant to
42 U.S.C. 1320a-7 is unlawful;

2. the Secretary is required to adopt regulations
implementing the 1987 revisions to 42 U.S.C. 1320a-7
before the I.G. may make exclusion determinations pursuant
to the law;

3. summary disposition is appropriate in this case;

4. given the undisputed material facts, the I.G.'s
determination to exclude Petitioner from participation in
the Medicare program, and to direct that he be excluded
from participation in State health care programs, for five
years, is mandated by law; and
5. I have authority to review the I.G.'s decision
that there exists no basis to waive the exclusions imposed
on Petitioner or to consider Petitioner's request that I
grant a waiver from the exclusions that have been imposed
on him.

APPLICABLE LAWS AND REGULATIONS

1. Section 1128 of the Social Security Act: Section
1128(a)(1) of the Social Security Act, 42 U.S.C. 1320a-
7(a)(1), requires the Secretary to exclude from
participation in the Medicare program, and to direct the
exclusion from participation in any State health care
programs, of any individual or entity "convicted of a
criminal offense related to the delivery of an item or
service" under Medicare or any State health care program.
Exclusions are also mandated by 42 U.S.C. 1320(a) (2), for
“any individual or entity that has been convicted .. . of
a criminal offense relating to neglect or abuse of
patients in connection with the delivery of a health care
item or service." "Conviction" is defined at 42 U.S.C.
1320a-7(i) to include those circumstances when: (1) a
judgment of conviction has been entered against a
physician or individual, regardless of whether there is an
appeal pending or the judgment of conviction or other
record of criminal conduct has been expunged; (2) there
has been a finding of guilt against the physician or
individual; (3) a plea of guilty or nolo contendere by the
physician or individual has been accepted; and (4) the
physician or individual has entered into participation in
a first offender or other program where judgment of
conviction has been withheld. The law provides at
42 U.S.C. 1320a-7(c) (3) (B), that for those excluded under
section 1320a-7(a), “the minimum period of exclusion shall
be not less than five years. ..."

The law also provides the Secretary with discretionary
authority to exclude individuals from participation in
Medicare and to direct their exclusion from participation
in State health care programs, in certain enumerated
circumstances. These include conviction "in connection
with the delivery of a health care item or service or with
respect to any act or omission in a program operated by or
financed in whole or in part by any Federal, State, or
local government agency, of a criminal offense relating to
fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct." 42 U.S.C.
1320a-7(b) (1). The law does not prescribe a minimum
period of exclusion in such cases.
The law further provides that the Secretary may waive
exclusions imposed pursuant to 42 U.S.C. 1320a-7(a) (1), in
the case of an individual or entity that is the sole
community physician or the sole source of essential
specialized services in the community, "upon the request
of a State." 42 U.S.C. 1320a-7(c)(3)(B). However, "the
Secretary's decision whether to waive the exclusion shall
not be reviewable." Id..

The current law was enacted in August 1987 and embodies
revisions of preexisting law. Prior to August 1987, the
law provided, at 42 U.S.C. 1320a-7(a), that the Secretary
must bar from participation in Medicare, and direct
debarment from participation in State plans approved under
title XIX, any physician or other individual "convicted

- . . of a criminal offense related to such individual's
participation in the delivery of medical care or services
under title XVIII, XIX, or XX... ." Unlike current
law, the law did not prescribe a minimum suspension or
exclusion period for such mandatory suspensions.
Furthermore, the law did not grant the Secretary the
discretionary exclusion authority now provided by

42 U.S.C. 1320a-7(b) (1).

Both the pre-1987 law and current law provide that an
excluded party may request a hearing as to the exclusion.
The law presently states, at 42 U.S.C. 1320a-7(f), that an
excluded party is entitled to a hearing to the same extent
as is provided in 42 U.S.C. 405(b). That section provides
that a party entitled to an administrative hearing by
virtue of an adverse decision by the Secretary shall be
given reasonable notice and opportunity for a hearing
before the Secretary "with respect to such decision."

2. Regulations Governing Suspension, Exclusion, or
Termination of Practitioners, Providers, Suppliers of
Services, and Other Individuals: 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. Regulations
governing suspension and exclusion of individuals pursuant
to section 1128 and this delegation are contained in
42 C.F.R. Part 1001. Section 1001.123(a) provides that
when the I.G. has conclusive information that an
individual has been convicted of a program-related crime,
he shall give that individual written notice that he is
being suspended (excluded) from participation. Section
1001.125(b) establishes criteria for the I.G. to use in
determining the appropriate length of exclusions in those
circumstances where the I.G. may exercise discretion.
Section 1001.128 provides that an individual excluded
based on conviction of a program-related offense may
request a hearing before an administrative law judge on
the issues of whether: (1) he or she was in fact,
convicted; (2) the conviction was related to his or her
participation in the delivery of medical care or services
under the Medicare, Medicaid, or social services program;
and (3) whether the length of the exclusion is reasonable.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. Petitioner is a physician who has practiced in
Michigan. P. Ex. 1/10.2/

2. Petitioner was indicted for, and on March 7,
1988, pleaded guilty to, the crime of Attempted False
Medicaid Claim, a high misdemeanor under the laws of the
State of Michigan. P. Ex. 1/2, 8; P.'s Memorandum at 1.

3. In his guilty plea, Petitioner admitted
submitting a fraudulent claim to the State Medicaid
program for reimbursement for an office visit, which in
fact did not occur. P. Ex. 1/9, 12. The crime to which
Petitioner pleaded guilty exposed him to a potential
prison sentence of two years. P. Ex. 1/6.

4. During the hearing on Petitioner's guilty plea,
counsel represented to the court that, as a condition for
the plea, "the Medical Services Administration, which is
Medicaid, and the Department of Social Services will,
before sentencing, provide to... [Petitioner] a letter
affirmatively assuring . . . [him] that as a result of
this conviction, Medicaid Services Administration will
take no affirmative action against . . . [Petitioner's]
present provider enrollment." P. Ex. 1/7.

2/The parties' exhibits and memoranda will be cited as
follows:

Petitioner's Exhibit P. Ex. (number) / (page)

Inspector General's Exhibit I.G. Ex. (number) / (page)

Inspector General's Memorandum I.G.'s Memorandum at
(page)

Petitioner's Memorandum P.'s Memorandum at (page)

Inspector General's Reply I.G.'s Reply Memorandum

Memorandum at (page)
5. In October, 1988, the St. Clair, Michigan, county
health department requested that Petitioner be allowed to
continue treating indigent patients, because Petitioner
was "the only OB-GYN specialist from our county accepting
new Medicaid General Assistance patients at this time."

P. EX. 2.

6. The offense to which Petitioner pleaded guilty is
a "criminal offense related to the delivery of an item or
service" under the Medicaid program. 42 U.S.C. 1320a-
7(a)(1).

7. Petitioner's guilty plea is a "conviction" as
defined by 42 U.S.C. 1320a-7(1i).

8. The minimum mandatory exclusion period is five
years for a person who has been excluded based on
conviction of a criminal offense related to the delivery
of an item or service under Medicaid. 42 U.S.C. 1320a-
7(c) (3) (B)-

9. The Secretary delegated to the I.G. the duty to
exclude from participation in Medicare, and to direct the
exclusion from participation in State health care
programs, persons whose exclusion is required or permitted
under 42 U.S.C. 1320a-7. 48 Fed. Reg. 21662, May 13,
1983.

10. I do not have authority to decide whether the
Secretary's delegation of duties to the I.G. pursuant to
42 U.S.C. 1320a-7 is lawful. 42 U.S.C. 1320a-7(f);

42 U.S.C. 405(b); 42 C.F.R. 1001.128.

11. I do not have authority to decide whether the
Secretary is required to adopt regulations implementing
the 1987 revisions to 42 U.S.C. 1320a-7 before the I.G.
may make exclusion determinations pursuant to the law.
42 U.S.C. 1320a-7(f); 42 U.S.C. 405(b); 42 C.F.R.
1001.128.

12. There do not exist disputed issues of material
fact in this case; therefore, summary disposition is
appropriate. See F.R.C.P. 56.

13. The I.G. has excluded Petitioner from
participation in the Medicare program and has directed
that Petitioner be excluded from participation in State
health care programs, for five years, based on
Petitioner's conviction of a criminal offense related to
the delivery of an item or service under the Medicaid
program. The exclusions are mandatory and for the minimum
period of time required by law. 42 U.S.C. 1320a-7(a) (1);
(c) (3) (B)-

14. I do not have authority to review the I.G.'s
determination that there exists no basis to waive the
exclusions imposed on Petitioner. 42 U.S.C. 1320a-
7(c)(3)(B). I have no authority to consider Petitioner's
request that the exclusions be waived. 42 U.S.C. 1320a-
7(c) (3) (B); 42 C.F.R. 1001.128.

ANALYSIS

Petitioner pleaded guilty to, and was convicted of, a
crime involving a claim he submitted for Medicaid
reimbursement. As a consequence of Petitioner's
conviction, the I.G. imposed on Petitioner a five-year
exclusion from participating in Medicare and directed that
he be excluded from participating in State health care
programs for five years. Petitioner challenged his
exclusions, asserting that: (1) the Secretary's
delegation of authority to the I.G. to impose and direct
exclusions pursuant to 42 U.S.C. 1320a-7 is unlawful;

(2) Petitioner's exclusions are contrary to law because
the Secretary has not yet adopted regulations implementing
the 1987 revisions to 42 U.S.C. 1320a-7, and the I.G. is
instead relying on a "verbal directive, rule, or writing"
to determine exclusions; (3) the I.G. improperly
characterized the crime for which Petitioner was excluded
as an offense "related to the delivery of an item or
service" under the Medicare or State health care programs
and improperly imposed and directed mandatory five-year
exclusions on Petitioner pursuant to 42 U.S.C. 1320a-
7(a)(1), whereas the offense for which he was convicted
should be characterized as an offense for which
discretionary exclusions, rather than mandatory
exclusions, would be appropriate, pursuant to 42 U.S.C.
1320a-7(b) (1)? and (4) assuming Petitioner was properly
excluded pursuant to 42 U.S.C. 1320a-7(a) (1), his
exclusions ought to be waived because he is the sole
provider of Ob-Gyn medical services to indigent patients
in St. Clair County, Michigan.

Petitioner also contends that, in any event, he is
entitled to an evidentiary hearing as to these issues. He
asserts that "this matter is factually contested" and
that, therefore, an evidentiary hearing is re~uired to
resolve contested issues. P.'s Memorandum at 44. He
further asserts that an evidentiary hearing is necessary
for fact finding on "constitutional issues" to "permit
subsequent judicial review." Id. at 50.

I have carefully considered the contentions of the
parties, their exhibits, and relevant law and regulations.
I conclude that the Secretary's delegation of authority to
me to hear and decide cases concerning exclusions does not
include jurisdiction to decide whether the Secretary's
delegation of authority to the I.G. was lawful, or whether
the Secretary is required to issue regulations to
implement the 1987 revisions to 42 U.S.C. 1320a-7 before
the I.G. may make exclusion determinations pursuant to the
law. I conclude that when the relevant factual assertions
of the parties are considered in a light most favorable to
Petitioner, there exist no disputed issues of material
fact in this case and, consequently, summary disposition
is appropriate.

I further conclude that the offense for which Petitioner
was convicted is an offense "related to the delivery of an
item or service" under the Medicare and State health care
programs, for which exclusions of at least five years are
mandated by 42 U.S.C. 1320a-7(a) (1). I conclude that I
have no authority to decide the propriety of any decision
the I.G. may have made concerning Petitioner's request for
waiver of his exclusions. Furthermore, I have no
authority to consider a request that I determine whether a
waiver is appropriate in this case.

Several of the arguments made by Petitioner in this case
are identical to arguments made by petitioner in Jack W.
Greene v. The Inspector General, Docket No. C-56. Indeed,
counsel for Petitioner also represented petitioner in
Greene. I will not repeat verbatim my analysis in the
Greene decision in deciding this case; however, where
relevant, I will cite to aspects of that decision.

1. Ido not have authority to decide whether the

Secretary lawfully delegated to the I.G. the duty to
i Ss i U.S.C. _1320a-

7. Petitioner contends that the duty to impose and direct
exclusions is a "program operating responsibility" which
is prohibited from transfer to the I.G. by 42 U.S.C.
3526(a). P.'s Memorandum at 30. Petitioner argues that
exclusions imposed or directed pursuant to this allegedly
illegal delegation are invalid. Id. at 31. Therefore,
according to Petitioner, I should enter a "default
judgment" (summary disposition) in his favor, voiding the
exclusions imposed and directed against him by the I.G.
Id. at 32. The I.G. disputes these contentions, asserting
that the delegation of exclusion authority to the I.G. is
not a "program operating responsibility" as is defined by
law. Furthermore, according to the I.G., the delegation
has been expressly condoned and directed by Congress.
I.G.'s Memorandum at 3-6.

The identical contentions as to the delegation of
exclusion authority were raised by petitioner in Greene.

I held in Greene that neither 42 U.S.C. 1320a-7 nor

42 U.S.C. 405(b) (incorporated by reference in 42 U.S.C.
1320a-7) provided for administrative review of regulations
or policy determinations in exclusion cases. Furthermore,
the Secretary's regulatory grant of jurisdiction to
administrative law judges to hear and decide exclusion
cases did not include a grant of authority to decide the
lawfulness of regulations and policies. 42 C.F.R.
1001.128. I concluded that I did not have authority to
hear and decide contentions concerning the lawfulness of
delegations of authority from the Secretary to the I.G.
Neither party to this case has provided anything which
adds to the arguments presented by the parties in Greene.
Therefore, I again conclude that I do not have authority
to hear and decide Petitioner's contentions concerning the
delegation of exclusion authority to the I.G. I make no
findings or conclusions as to the merits of this issue,
and I deny Petitioner's motion for summary disposition.3/

2. o not have authori to decide whether the
Secretary is required to adopt requlations implementing
the 1987 revisions to 42 U.S.C. 1320a-7 before the I.G.
May make exclusion determinations pursuant to the law.
Petitioner argues that the exclusions imposed on him are
invalid because the Secretary has not adopted regulations
implementing the 1987 revisions to 42 U.S.C. 1320a-7.
Petitioner premises this conclusion on his contention that
the 1987 law is ambiguous. According to Petitioner, the
I.G. is interpreting the ambiguous provisions of the law
in a manner which classifies Petitioner's case as a
"mandatory" exclusion case pursuant to 42 U.S.C. 1320a-
7(a) (1). The Petitioner argues that this alleged
classification is invalid because the Secretary has not
first conducted a rulemaking proceeding pursuant to the
Administrative Procedure Act. 5 U.S.C. 552 et _seq..

3/I make no finding as to Petitioner's right to
challenge the lawfulness of regulations or policies on
appeal.
-10-

Instead, according to Petitioner, the I.G. is relying on
"unpublished, internal . . . guidelines/directives" to
interpret and apply the law. P.'s Memorandum at 7.
Petitioner also argues that these alleged acts or
omissions by the Secretary are unfair because Petitioner,
at the time he pleaded guilty, did not know that his
offense would be characterized as one which mandated
exclusions. P.'s Memorandum at 2-11.

In response to these assertions, the I.G. contends that no
regulations are required for an agency to carry out its
statutory responsibilities, so long as it proceeds in
accordance with ascertainable standards. Petitioner's
exclusions were imposed according to such standards and,
therefore, were lawful. I.G.'s Memorandum at 6-7.
Moreover, according to the I.G., Petitioner received more
than adequate notification of the standards pursuant to
which the I.G. proceeded. Id..

As with the issue of the lawfulness of the delegation of
exclusion authority to the I.G., this issue was argued by
petitioner in Greene. I held in my Greene decision that I
am without authority to decide the issue for the same
reason that I lack authority to decide the lawfulness of
the Secretary's delegations. I decided that neither the
law nor regulations conferred jurisdiction upon me to
decide the circumstances in which the Secretary must issue
regulations. I held that my jurisdiction is limited by
law to deciding whether the I.G. has acted reasonably in
applying law, regulations, and policies to the facts of
individual cases. 42 U.S.C. 1320a-7(f); 42 U.S.C. 405(b);
42 C.F.R. 1001.128.

Neither party to this case has offered anything which adds
to the arguments presented in Greene. Therefore, I again
conclude that I am without jurisdiction to decide whether
the Secretary is obligated to issue regulations
implementing the 1987 revisions to 42 U.S.C. 1320a-7.4/

3. Summary disposition is appropriate in this case.
Petitioner has advanced several arguments to support his
contention that this case cannot be decided without an
evidentiary hearing. Petitioner contends that a hearing
is necessary to adduce evidence which will clarify the

4/It is not necessary for me, at this point, to discuss
Petitioner's claim that the law is ambiguous. However, as
my discussion at Part 4 of this Analysis makes clear, the
law is not ambiguous.
-11-

nature of the offense pleaded to by him, and how it should
be classified pursuant to 42 U.S.C. 1320a-7. He argues
that if his offense falls under the "discretionary"
exclusion provisions of 42 U.S.C. 1320a-7(b) (1), a hearing
will be necessary to determine which, if any, exclusions
are reasonable. He asserts that a hearing is required to
determine whether a waiver of exclusions is appropriate in
his case. Finally, Petitioner contends that an
evidentiary hearing is necessary in order to make a
factual record upon which to premise appeals concerning
the constitutionality of the actions taken by the I.G.
P.'s Memorandum at 44-50.

Summary disposition has long been utilized as an
efficiency-promoting mechanism to decide federal cases
where there exist no disputed issues of material fact or
where the undisputed facts demonstrate that one party is
entitled to judgment as a matter of law. 56 F.R.C.P;
Collins v. American Optometric Ass'n., 693 F. 2d 636 (7th
Cir. 1982). The remedy must be cautiously employed to
assure that parties are not unfairly deprived of their
hearing rights. Summary disposition should not be granted
unless, after viewing the facts in the light most
favorable to the party against whom the motion is made,
the decision-maker is convinced that there exists no
genuine issue of material fact remaining for trial; the
moving party then is entitled to a decision as a matter of
law. Continental Casualty Co. v. City of Richmond, 763
F.2d 1076, 1078-79 (9th Cir. 1985); Lang v. New York Life
Ins. Co., 721 F.2d 118, 120 (3rd Cir. 1983); D.L. Auld Co.
v. Chroma Gr. ics Co: , 714 F.2d 1144, 1146 (Fed. Cir.
1983). Summary disposition is an appropriate method of
disposing of a legal question of statutory construction in
which the legislative history and policy are the primary
considerations. Mobil Oil Corp. v. Federal Enerqy
Administration, 566 F.2d 87, 92 (Temp. Em. Cir. 1977).

It is clear that 42 U.S.C. 1320a-7 and 42 U.S.C. 405(b)
require that petitioners in exclusion cases be granted
hearings on all issues of disputed material facts.
However, the law is silent as to whether summary
disposition is appropriate in cases where material facts
are not in dispute. I conclude that, so long as
petitioners are provided hearings on issues of disputed
material fact, there is nothing in the law which would
prohibit use of summary disposition as an appropriate
technique for deciding cases where material facts are not
controverted or where the only issues involve questions of
law.
-12-

Petitioner's contentions that an evidentiary hearing is
necessary in this case are without merit. He asserts that
a "factual controversy" exists concerning the nature of
his offense and how it should be characterized pursuant to
the law. However, Petitioner and the I.G. agree that
Petitioner pleaded guilty to an attempt to defraud the
Medicaid program and rely on the same document to
establish these facts. See P. Ex. 1; I1.G. Ex. 1. My
findings of fact concerning the offense pleaded to by
Petitioner are based entirely on Petitioner's own exhibits
and his allegations and accept as true the facts most
favorable to Petitioner. See Findings 1-5. The area of
disagreement between the parties is the manner in which
Petitioner's conviction ought to be characterized under
the law. That is a legal question.

At oral argument on the motions for summary disposition,
Petitioner's counsel stated that he wanted to offer expert
testimony as to whether the offense of which Petitioner
was convicted is an offense encompassed by 42 U.S.C.
1320a-7(a)(1). He also stated that he wished to take the
testimony of the I.G. employee who reviewed Petitioner's
case in order to ascertain the criteria that employee used
in deciding that the case fell under the aforesaid
subsection. But how the offense of which Petitioner was
convicted is classified pursuant to 42 U.S.C. 1320a-7 is
not a question of fact, but of law. Expert opinion, or
the state of mind of the I.G.'s employees, is irrelevant
to this issue.

Petitioner's assertion that a hearing is necessary to
determine which, if any, discretionary exclusions should
be imposed pursuant to 42 U.S.C. 1320a-7(b)(1) hinges on
his claim that the offense to which he pleaded guilty
should be classified pursuant to that statutory
subsection. As I shall discuss at Part 4 of this
Analysis, Petitioner's offense falls within the ambit of
42 U.S.C. 1320a-7(a) (1), and not subsection (b) (1).
Therefore, Petitioner's argument fails.

I also conclude that Petitioner's claim that he must have
a hearing to offer evidence regarding why he deserves a
waiver from the exclusions imposed on him is without merit
because there exists no authority for me to review the
I.G.'s determination on that issue or to independently
decide whether a waiver should be granted. See Part 5 of
this Analysis. In so concluding, I accept as true, albeit
irrelevant, that the St. Clair County, Michigan, health
department has certified that Petitioner is the only Ob-
Gyn specialist in St. Clair County accepting indigent
-13-

referrals, and that Petitioner's guilty plea was
conditioned on the prosecutor's representation that
Medicaid would provide Petitioner with a letter assuring
him that it would take no action against his "present
provider enrollment" as a result of the conviction. See
Findings 4 and 5.

Petitioner argues that he must take testimony as to the
I.G.'s exclusion determination process, so that he can
challenge its constitutionality. But there is not any
meaningful factual dispute regarding what the I.G. has
done in this case. The I.G.'s exclusion determinations,
and the reasoning which supports those determinations, are
described in the notice of exclusion which the I.G. sent
to Petitioner on August 31, 1988.

I conclude that there are no disputed issues of material
fact in this case. The only issues in dispute are legal
issues. Summary disposition is, therefore, an appropriate
mechanism for deciding the matter.

4. Given the undisputed material facts, the 1.G.’s
i i iti i on_in

the Medicare program, and to direct that he be excluded
from participation in State health care programs, for five
years, is mandated by law. The undisputed facts of this

case are that Petitioner pleaded guilty to, and was
convicted of, a criminal offense consisting of attempted
fraud against the Michigan state Medicaid program.
Specifically, Petitioner, a physician, sought to obtain
reimbursement from the program for an office visit by a
patient when, in fact, the service that he rendered was a
telephone consultation--a service not covered by the
Medicaid program. Petitioner attempted to fraudulently
obtain reimbursement which he was not owed and to deceive
the Medicaid program into making a payment to Petitioner
which it was not obligated to make.

The I.G. excluded Petitioner from participation in the
Medicare program, and directed that he be excluded from
participation in State health care programs, for five
years, pursuant to 42 U.S.C. 1320a-7(a)(1) and (c) (3) (B)-
Subsection (a) (1) requires the Secretary to exclude from
participation in Medicare and to direct the exclusion from
participation in State health care programs (including
Medicaid) "any individual or entity that has been
convicted of a criminal offense related to the delivery of
an _ item o: ervice" under Medicare or any State health
care program. (Emphasis added.) Subsection (c) (3) (B)
directs that for those parties excluded pursuant to
- 14 -

subsection (a), the minimum exclusion period shall be for
five years.

The I.G. contends that, given the undisputed facts of this
case, the law requires that Petitioner be excluded from
participation in Medicare and State health care programs
for at least five years. I.G.'s Memorandum at 16-25.

Petitioner asserts that the I.G. has mischaracterized the
offense to which Petitioner pleaded guilty and was
convicted. According to Petitioner, his conviction was
for “financial misconduct" and was not related to the
delivery of an item or service under the Medicare or State
health care programs. Petitioner contends that exclusions
of parties convicted of such offenses are governed by

42 U.S.C. 1320a-7(b) (1), which gives the Secretary
discretion to exclude from Medicare and to direct the
exclusion from participation in State health care
programs, parties convicted "in connection with the
delivery of a health care item or service with respect to
any act or omission in a program operated by or financed
in whole or in part by any Federal, State, or local
government agency, of a criminal offense relating to
fraud, theft, embezzlement, breach of fiduciary
responsibility or other misconduct." There is no
statutory requirement that such exclusions be for a
minimum period. Therefore, according to Petitioner, if
any exclusion is appropriate, it must be determined
without regard to statutory minimum standards. P.'s
Memorandum at 23-29.

The crime committed by Petitioner is not materially
different from that committed by the petitioner in the
Greene case. Petitioner in Greene was convicted of fraud
against the Tennessee Medicaid program. His crime
consisted of substituting a generic drug for a brand name
drug, and billing the program for the more expensive brand
name drug. In Greene and the present case, the
petitioners attempted to obtain reimbursement for items or
services which were not rendered as claimed. Both cases,
therefore, involve fraudulent acts against Medicaid
programs, related to the delivery of services pursuant to
those programs.

In Greene, I concluded that the conduct at issue fell
within the ambit of the mandatory exclusion provisions of
42 U.S.C. 1320a-7(a) (1) and not the permissive exclusion
provisions of 42 U.S.C. 1320a-7(b) (1). My conclusion was
based on the plain meaning of the law, comparison of the
current law with the pre-1987 version, and legislative
-15-

history. Petitioner, in this case, has simply reiterated
the arguments that were made by the petitioner in Greene.
He has offered nothing new which would derogate from my
analysis or my conclusion.

The plain meaning of 42 U.S.C. 1320a-7(a)(1) is that
individuals or entities who are convicted of "financial"
crimes against the Medicare or State health care programs,
including all forms of fraudulent billing schemes directed
against those programs, must be excluded from
participation. That meaning is evident when the section
is read in context with the other sections of 42 U.S.C.
1320a-7. Congress' intent was to require exclusion of
those individuals or entities who committed offenses
directed against the Medicare and State health care
programs and to permit exclusion of those individuals or
entities who committed offenses directed against
government-financed health care programs other

than Medicare or State health care programs. See

42 U.S.C. 1320a-7(b) (1).

The law is the latest version of a series of Congressional
enactments which have progressively strengthened remedies
against providers of services and others who commit crimes
related to or directed against government-financed health
care programs. In 1977, Congress passed a law requiring
the Secretary to suspend physicians or practitioners
convicted of criminal offenses related to their
involvement in Medicare or State health care programs.

91 Stat. 1175, 1192-1193 (1977) (codified as section
1862(e) (1) of the Social Security Act). By its terms and
history, this mandatory exclusion law was directed against
physicians or practitioners who were convicted of fraud
against the Medicare or State health care programs. In
the legislative history to the law, Congress specifically
stated its intent to mandate exclusion of those who were
convicted of acts of fraud against these programs. H.R.
Rep. No. 95-393-Part II, 95th Cong., 1st Sess. 44 (1977).

The law was revised in 1980 to assure that exclusions
would also be imposed against health professionals other
than physicians who committed program-related crimes.

94 Stat. 2599, 2619 (1980) (codified as section 1128(a) of
the Social Security Act). The 1980 revision maintained
the mandatory exclusion features of the 1977 enactment,
but broadened the scope of its coverage.

The current law was adopted by Congress in Ug meg
Congress again broadened the reach of the law by ng
sections which: (1) required exclusion of individuals or
-16-

entities from participation in the Medicare and State
health care programs who were convicted of offenses
involving patient neglect or abuse (42 U.S.C. 1320a-
7(a)(2))# and (2) permitted exclusion of individuals or
entities convicted of a range of other offenses, including
fraud directed at government-financed health care programs
other than Medicare or Medicaid. See 42 U.S.C.

1320(b) (1).

Petitioner would stand this history on its head. The
thrust of his argument is that in 1987 Congress weakened
the mandatory exclusion requirements of 42 U.S.C. 1320a-
7(a)(1) by enacting subsection (b)(1). He asserts that
exclusions which were mandated prior to the 1987
enactment, including exclusions based on convictions for
fraud against Medicare or State health care programs,
became discretionary by virtue of the 1987 revision. I
conclude that this argument ignores both the plain meaning
of the law and Congress' intent as expressed through
legislative history and is without merit. As I noted in
Greene, this argument can only appear credible if
subsection (b)(1) is read out of context, without
reference to the rest of the law.

Petitioner attempts to distinguish this case from Greene
by arguing that in Greene the offense involved charging
more for a covered item or service than Medicaid was
required to reimburse, whereas in the present case the
offense involved an attempt to obtain reimbursement for an
act or service that was not covered by the Medicaid
program. He argues that even if some "financial crimes"
fall within the ambit of 42 U.S.C. 1320a-7(a) (1), the
offense committed by him does not, because it did not
relate to a service actually rendered and reimbursable
under the Medicaid program. According to Petitioner, a
fraudulent claim for reimbursement which represents that a
covered service had been rendered when, in fact, it had
not would not fall within the coverage of the section,
even i* a fraudulent overcharge for a covered service
does.

This is a distinction without a difference. The language
of 42 U.S.C. 1320a-7(a)(1) is plainly broad enough to
include false claims as well as overcharges. The history
of the law makes it clear that a primary objective of
Congress has always been to mandate exclusion of those who
sought to defraud Medicare and State health care programs
with charges for fictitious services, as this Petitioner
did. In the legislative history to the 1977 enactment,
Congress stated that:
-17 -

Perhaps the most flagrant fraud involves billings for
patients whom the practitioner has not treated. A

i i ices to
apractitioner's patients that were not actually
furnished and intentionally billing more than once
for the same service.

H.R. Rep. No. 95-393-Part II, 95th Cong., 1st Sess. 44
(1977), reprinted in 1977 U.S. Code Cong. & Ad. News 3050.
(Emphasis added.) Legislative revisions since 1977 (1980
and 1987) do not suggest that Congress' intent is any
different today than it was then.

I conclude that this case involves a conviction of a
criminal offense related to the delivery of an item or
service under the Medicaid program, and is governed by the
mandatory exclusion provisions of 42 U.S.C. 1320a-

7(a) (1) .5/

5. Ido not have authority to review the I.G.'s
2 7 7
denieion—that—there—exiate-no-basis-to-walyethesxcluaien

that lgranta waiver from the exclusions that have been
imposed on him. Petitioner has produced a letter from the
St.Clair County, Michigan, health department which states
that he is the only provider of Ob-Gyn services in that
county willing to accept referrals of indigent patients,
and Petitioner requests that he be allowed to continue
serving them. See Finding 5. He argues that the 1.G.
should have considered this as a request to waive the
exclusions imposed on him. Alternatively, he argues that
I should construe this letter to be a waiver request and
either waive the exclusions or grant a hearing so that he
may prove that a waiver is justified.

5/It was represented at Petitioner's plea hearing that,
as a condition for his plea, state authorities would
provide him with a letter assuring Petitioner that they
would take no action against Petitioner's provider
enrollment. Petitioner has not argued that state
authorities have authority to prevent exclusions from
being directed pursuant to 42 U.S.C. 1320a-7, but he has
contended that the plea condition should be viewed as a
mitigating circumstance in determining the length of his
exclusion. However, the exclusions imposed on Petitioner
are mandatory, and Petitioner received the minimum
prescribed exclusions. Mitigating facts cannot be
considered in this case.
- 18 -

The I.G. challenges the significance of the letter and has
produced letters from the Michigan Department of Social
Services which arguably dispute the conclusions set forth
in the letter from the County health department.
Furthermore, the I.G. argues that I lack authority to
review waiver decisions or to independently decide whether
a waiver of exclusions should be granted.

The law provides that the Secretary may waive exclusions
imposed pursuant to 42 U.S.C. 1320a-7(a)(1), "upon the
request of a State," "in the case of an individual or
entity that is the sole community physician or sole source
of essential specialized services in a community."

42 U.S.C. 1320a-7(c) (3)(B). The Secretary's decision
whether to waive exclusions "shall not be reviewable."
Id..

It is unclear from the record of this proceeding whether
"a State" has actually requested that Petitioner's
exclusions be waived. The letter request is from a County
department, and not from the State Department of Social
Services or from some other State government authority.

It is not addressed to the Secretary, but "to whom it may
concern," and it does not specifically request that the
Secretary grant waivers. It is also unclear whether the
Secretary or his delegate, the I.G., has denied the
request, or simply not considered it. I need not resolve
these ambiguities, because I am without authority to order
relief based on their resolution.

The law is specific in its injunction that the Secretary's
decisions on waiver requests are not reviewable.
Irrespective of whether the "decision" at issue is to deny
or to not consider a request, I do not have authority to
review that decision.

Petitioner has urged that, as the Secretary's delegate to
hear and decide exclusion cases, I have the authority to
grant a waiver request, even if the I.G. has not made a
determination on the request. This assertion is
incorrect. There is nothing in the law or regulations
which either states or suggests that the Secretary has
delegated to administrative law judges the authority to
consider waiver requests. The administrative law judge's
jurisdiction in hearings concerning exclusions is limited
to those issues specified in 42 C.F.R. 1001.128(a)(1)-(3).
The issues which may be heard and decided do not include
the issue of waiver.
-19-

CONCLUSION

Based on the undisputed material facts, the law, and
regulations, I conclude that the I.G.'s determination to
exclude Petitioner from participation in the Medicare
program, and to direct that Petitioner be excluded from
participation in State health care programs, for five
years, was mandated by law. Therefore, I am entering a
decision in favor of the I.G. in this case.

/s/

Steven T. Kessel
Administrative Law Judge


DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board

Civil Remedies Division

In the Case of:
Jack W. Greene, DATE: Jan 31, 1989
Petitioner,

Docket No. C-56
DECISION CR 19

-v-

The Inspector General

DECISION OF ADMINISTRATIVE LAW JUDGE
QN_MOTIONS FOR SUMMARY DISPOSITION

Petitioner requested a hearing, protesting the Inspector
General's (the I.G.) determination to exclude him from
participating in the Medicare program, and to direct that
he be excluded from participating in State health care
programs, for five years.1/ Both parties filed motions
for summary disposition of this case. I have considered
the supporting memoranda of both parties and their
stipulations. Based on the undisputed facts, the law, and
applicable regulations, I conclude that the exclusions
imposed and directed by the I.G. are mandatory. There
remain no questions to be addressed at a hearing whose
answers could affect the outcome of this case. Therefore,
I am deciding this case in favor of the I.G.

BACKGROUND

On June 24, 1988, the I.G. sent notice to Petitioner,

advising him that he was being excluded from Medicare and
any State health care programs for a period of five years.
Petitioner was advised that his exclusions were due to his

1/ "State health care program" is defined by section
1128(h) of the Social Security Act, 42 U.S.C. 1320a-7(h),
to include any State Plan approved under subchapter XIX of
the Act (Medicaid).
conviction of a criminal offense related to the delivery
of an item or service under the Medicaid program.
Petitioner was further advised that the law required
minimum mandatory exclusions from Medicare and State
health care programs, of five years, for individuals
convicted of a program-related offense. The I.G. told
Petitioner that, in consideration of the circumstances of
his case, he was being excluded for the minimum period
required by law.

Petitioner timely requested a hearing as to the
exclusions, and the case was assigned to me for a hearing
and decision. I conducted a prehearing conference on
October 26, 1988, at which both parties expressed their
intent to move for summary disposition in this case. I
issued a prehearing Order on October 28, 1988, which
established a schedule for moving for summary disposition
and for responding to such motions. The Order also
provided for exchanges of documents and for stipulations.
It further provided for oral argument of motions at the
request of either party. The parties filed and responded
to motions and agreed to stipulations pursuant to my
Order. At Petitioner's request, I heard oral argument by
telephone as to the motions on January 24, 1989.

ISSUES

The issues raised by the parties in their respective
motions are whether:

1. The delegation of authority by the Secretary of
Health and Human Services (the Secretary) to the I.G. to
determine and to impose or direct exclusions pursuant to
42 U.S.C. 1320a-7 is unlawful;

2. The Secretary is required to adopt regulations
implementing the 1987 revisions to 42 U.S.C. 1320a-7,
before the I.G. may make exclusion determinations pursuant
to the law.

3. Given the undisputed material facts, the I.G.'s
determination to exclude Petitioner from participation in
the Medicare program, and to direct that he be excluded
from participation in State health care programs, for five
years, is mandated by law.
APPLICABLE LAWS AND REGULATIONS

1. Section 1128 of the Social Security Act:
Section 1128(a)(1) of the Social Security Act, 42 U.S.C.
1320a-7(a) (1), requires the Secretary to exclude from
participation in the Medicare program, and to direct
exclusion from participation in any State health care
programs, any individual or entity "convicted of a
criminal offense related to the delivery of an item or
service" under Medicare or any State health care program.
Exclusions are also mandated by 42 U.S.C. 1320(a) (2), for
"any individual or entity that has been convicted . . . of
a criminal offense relating to neglect or abuse of
patients in connection with the delivery of a health care
item or service." "Conviction" is defined at 42 U.S.C.
1320a-7(i) to include those circumstances when: (1) a
judgment of conviction has been entered against a
physician or individual, regardless whether there is an
appeal pending, or the judgment of conviction or other
record of criminal conduct has been expunged; (2) there
has been a finding of guilt against the physician or
individual; (3) a plea of guilty or nolo contendere by the
physician or individual has been accepted; and (4) the
physician or individual has entered into participation in
a first offender or other program where judgment of
conviction has been withheld. The law provides at 42
U.S.C. 1320a-7(c) (3) (B), that for those excluded under
section 1320a-7(a), "the minimum period of exclusion shall
not be less than five years."

The law also provides the Secretary with discretionary
authority to exclude individuals from participation in
Medicare, and to direct their exclusion from participation
in State health care programs, in certain enumerated
circumstances. These include conviction "in connection
with the delivery of a health care item or service or with
respect to any act or omission in a program operated by or
financed in whole or in part by any Federal, State, or
local government agency, of a criminal offense relating to
fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct." 42 U.S.C.
1320a-7(b) (1). The law does not prescribe a minimum
period of exclusion in such cases.

The current law was enacted in August 1987, and embodies
revisions to preexisting law. Prior to August 1987, the
law provided at 42 U.S.C. 1320a-7(a), that the Secretary
must bar from participation in Medicare, and direct
debarment from participation in State plans approved under
title XIX, any physician or other individual "convicted .
. - of a criminal offense related to such individual's
participation in the delivery of medical care or services
under title XVIII, XIX, or XX... ." Unlike current
law, the law did not prescribe a minimum suspension or
exclusion period for such mandatory suspensions.
Furthermore, the law did not grant the Secretary the
discretionary exclusion authority now provided by 42
U.S.C. 1320a-7(b) (1).

Both the pre-1987 law and current law provide that an
excluded party may request a hearing as to the exclusion.
The law presently states, at 42 U.S.C. 1320a-7(f), that an
excluded party is entitled to a hearing to the same extent
as is provided in 42 U.S.C. 405(b). That section provides
that a party entitled to an administrative hearing by
virtue of an adverse decision by the Secretary shall be
given reasonable notice and opportunity for a hearing
before the Secretary "with respect to such decision."

2. Regulations Governing Suspension, Exclusion, or
Termination of Practitioners, Providers, Suppliers of
Services and Other Individuals: 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. Regulations
governing suspension and exclusion of individuals pursuant
to section 1128 and this delegation are contained in
42 C.F.R. Part 1001. Section 1001.123(a) provides that
when the I.G. has conclusive information that an
individual has been convicted of a program-related crime,
he shall give that individual written notice that he is
being suspended (excluded) from participation. Section
1001.125(b) establishes criteria for the I.G. to use in
determining the appropriate length of exclusions, in those
circumstances where the I.G. may exercise discretion.
Section 1001.128 provides that an individual excluded
based on conviction of a program-related offense may
request a hearing before an administrative law judge on
the issues of whether: (1) he or she was, in fact,
convicted; (2) the conviction was related to his or her
participation in the delivery of medical care or services
under the Medicare, Medicaid, or social services program;
and (3) whether the length of the exclusion is reasonable.
FINDINGS 0:

1. Petitioner is a pharmacist who operated a
pharmacy in Oliver Springs, Tennessee. Stip. 1.2/

2. On April 21, 1987, Petitioner was indicted on 18
counts of filing false reports, statements, or documents
in violation of Tennessee law. Stip. 3; Ex. 7.

3. Petitioner pleaded guilty to one count of the
indictment on January 29, 1988. Stip. 4. On February 3,
1988, a felony judgment was entered against Petitioner.
Stip. 5; Ex. 6.

4. Petitioner was convicted of "unlawfully
feloniously and willfully falsify(ing) a report or
document required by (Tennessee law) by falsely billing
the State for having filled a prescription with a brand-
named medicinal drug(s), . . . when instead the defendant
or one of his agents did dispense a generic drug of a
lesser value, contrary to (Tennessee law), against the
peace and dignity of the State of Tennessee." Stip. 6;
Ex. 7.

5. In the indictment for which Petitioner was
convicted, a Medicaid claim was submitted for brand name
drugs when in fact, Petitioner had filled prescriptions
with FDA-approved generic drugs. The claims were paid by
Medicaid and caused a Medicaid overpayment. Stip. 7.

2/ The parties' stipulations, agreed exhibits, and
memoranda will be cited as follows:

Stipulation Stip. (number)
Agreed Exhibit Ex. (number)
Memorandum of the I.G. I.G.'s Memorandum at page)

Petitioner's Memorandum in
Opposition to OIG's Exclusion P.'s Memorandum at (page)

Reply Memorandum of the I.G. I.G.'s Reply Memorandum at
(page)

Petitioner's Memorandum in
Response to OIG's Motion P.'s Reply Memorandum at
(page)
-6-~-

6. The offense to which Petitioner pleaded guilty is
a "criminal offense related to the delivery of an item or
service" under the Medicaid program. 42 U.S.C. 1320a-~
7(a) (1).

7. Petitioner's guilty plea is a "conviction" as
defined by 42 U.S.C. 1320a-7(i).

8. The minimum mandatory exclusion period for a
person excluded based on conviction of a criminal offense
related to the delivery of an item or service under
Medicaid is five years. 42 U.S.C. 1320a~-7(c) (3) (B).

9. The Secretary delegated to the I.G. the duty to
exclude from participation in Medicare, and to direct the
exclusion from participation in State health care
programs, of persons whose exclusion is required or
permitted under 42 U.S.C. 1320a-7. 48 Fed. Reg. 21662,
May 13, 1983.

10. I do not have authority to decide whether the
Secretary's delegation of duties to the I.G pursuant to
42 U.S.C. 1320a-7 is lawful. 42 U.S.C. 1320a-7(f)?

42 U.S.C. 405(b); 42 C.F.R. 1001.128.

11. I do not have authority to decide whether the
Secretary is required to adopt regulations implementing
the 1987 revisions to 42 U.S.C. 1320a-7, before the I.G.
may make exclusion determinations pursuant to the law.
42 U.S.C. 1320a-7(f); 42 U.S.C. 405(b); 42 C.F.R.
1001.128.

12. The I.G. has excluded Petitioner from
participation in the Medicare program, and has directed
that Petitioner be excluded from participation in State
health care programs, for five years. The exclusions are
mandatory and for the minimum period of time required by
law. 42 U.S.C. 1320a-7(a) (1); (c) (3) (B).

ANALYSTS

Petitioner pleaded guilty to, and was convicted of, a
crime involving claims he submitted for Medicaid
reimbursement. As a consequence of Petitioner's
conviction, the I.G. imposed on Petitioner a five-year
exclusion from participating in Medicare, and directed
that he be excluded from participating in State health
care programs for five years. Petitioner challenged his
-~7J-

exclusions, asserting that: (1) the Secretary's
delegation of authority to the I.G. to impose and direct
exclusions pursuant to 42 U.S.C. 1320a~-7 is unlawful;

(2) his exclusions are contrary to law because the
Secretary has not yet adopted regulations implementing the
1987 revisions to 42 U.S.C. 1320a-7; and (3) the I.G.
improperly characterized the crime for which Petitioner
was excluded as an offense "related to the delivery of an
item or service" under the Medicare or State health care
programs, and improperly imposed and directed mandatory
five-year exclusions on Petitioner pursuant to 42 U.S.C.
1320a~-7(a) (1). According to Petitioner, the offense for
which he was convicted should be characterized as an
offense for which discretionary exclusions, rather than
mandatory exclusions, would be appropriate, pursuant to
42 U.S.C. 1320a-7(b) (1).

I have carefully considered the contentions of the
parties, their joint exhibits, and relevant law and
regulations. I conclude that the Secretary's delegation
of authority to me to hear and decide cases concerning
exclusions does not include jurisdiction to decide whether
the Secretary's delegation of authority to the I.G. was
lawful, or whether the Secretary is required to issue
regulations to implement the 1987 revisions to 42 U.S.C.
1320a-7 before the I.G. may make exclusion determinations
pursuant to the law. I further conclude that the offense
for which Petitioner was convicted is an offense "related
to the delivery of an item or service" under the Medicare
and State health care programs, for which exclusions of at
least five years are mandated by 42 U.S.C. 1320a-7(a) (1).

1. Ido not have authority to decide whether the
Secretary lawfully delegated to the I.G. the duty to
impose and direct exclusions pursuant to 42 U.S.C.
1320a-7. Petitioner contends that the duty to impose and
direct exclusions is a "program operating responsibility"
which is prohibited from transfer to the I.G. by 42 U.S.C.
3526(a). Therefore, according to Petitioner, "the
imposition of an exclusion upon Petitioner by the (I.G.)
is in violation of Congress' specific prohibition," and
this in turn voids any exclusions imposed or directed by
the I.G. P.'s Memorandum at 26. The I.G. contends that
the duty to exclude and to direct exclusions is not a
“program operating responsibility," asserting that the
legislative history of the Inspector General statute shows
that Congress intended the term to mean "day-to-day hands-
on responsibilities for overall administration of HHS's
health and safety programs." I.G.'s Memorandum at 6. The
I.G. also cites legislative history to the 1987 revision
to 42 U.S.C. 1320a-7 to urge that Congress specifically
approved the Secretary's delegation of exclusion authority
to the I.G.

I am satisfied from the language of 42 U.S.C. 1320a-7,

42 U.S.C. 405(b), and relevant regulations that I do not
have jurisdiction to decide this issue. Neither Congress
nor the Secretary intended to confer that jurisdiction on
me, and there exists no other source of authority which
confers it.3/

Congress directed the Secretary to provide excluded
parties with the opportunity to have hearings as to their
exclusions. 42 U.S.C. 1320a-7(f); 42 U.S.C. 405(b).

There is no language in 42 U.S.C. 1320a-7(f) which states
or implies that in conducting hearings as to the propriety
of exclusions, the Secretary is required to consider
challenges to his broad regulatory and policy
determinations. The law requires that an excluded party
is entitled to reasonable notice and opportunity for a
hearing by the Secretary "to the same extent as is
provided in section 405(b) of this title." Section 405(b)
states that:

Upon request by any . . . individual who makes a
showing in writing that his or her rights may be
prejudiced by any decision the Secretary has
rendered, (the Secretary) shall give such
(individual) reasonable notice and opportunity

for a hearing with respect to such decision, and,

if a hearing is held, shall on the basis of evidence
adduced at the hearing, affirm, modify, or reverse
his findings of fact and such decision. (Emphasis
added).

The plain meaning of this language is that the Secretary
has the duty only to provide hearings as to decisions made
in applying laws, regulations, and policies in specific
cases. The law does not create hearing rights before the
Secretary to challenge laws, regulations, or policy
determinations.

The Secretary has issued regulations providing for
administrative law judges to hear and decide exclusion
cases involving criminal offenses. 42 C.F.R.

3/ I make no finding as to Petitioner's right to
challenge the lawfulness of regulations or policy on
appeal.
1001.128(a).4/ The regulations are consistent with the
law. 42 C.F.R.1001.128 limits administrative law judges'
authority to hear and decide such cases to the issues of
whether: (1) the petitioner was in fact, convicted;

(2) the conviction was related to his or her participation
in the delivery of medical care or services under the
Medicare, Medicaid, or social services program; and

(3) the length of the suspension (exclusion) is
reasonable. Id..

Subsection (a) (3) of this regulation appears on its face
to permit administrative law judges to hear and decide
issues pertaining to the reasonableness of the I.G.'s
decision-making processes and procedures he used in
determining, imposing and directing individual exclusions.
Indeed, in adopting this regulation, the Secretary made it
clear that the administrative law judge's role was to
decide whether the I.G.'s exclusion determination in a
particular case was reasonable. 48 Fed. Reg. 3744

(Jan. 27, 1983). For example, a question of whether the
I.G. had improperly failed to consider relevant facts
would clearly relate to the issue of whether the
exclusions imposed and directed by the I.G. were
reasonable, and would therefore be reviewable by an
administrative law judge. Similarly, a question
concerning whether the I.G. gave the excluded party
reasonable notice and opportunity to be heard would
ultimately relate to the issue of whether the length of
the exclusion is reasonable.

There is no language in 42 C.F.R. 1001.128, or in other
regulations, which states or implies that the Secretary
has conferred on administrative law judges authority to
examine the lawfulness of regulations or of departmental
delegations. The jurisdiction conferred upon
administrative law judges by 42 C.F.R. 1001.128 only

4/ The only reference to administrative law judges in 42
U.S.C. 1320a-7 is at subsection (f) (2), which provides
that except in limited circumstances, a party proposed to
be excluded pursuant to subsection (b)(7) shall be
entitled to a hearing before an administrative law judge
prior to the exclusion becoming effective. Exclusions
proposed pursuant to subsection (b)(7) involve those
individuals whom the Secretary determines have committed
acts of fraud, or engaged in other activities prohibited
by 42 U.S.C. 1320a-7a or 7b. Such hearings shall be
conducted as provided by 42 U.S.C. 405(b).
-~ 10 -

permits inquiry into the propriety of the I.G.'s decisions
in individual cases.

Petitioner cites several decisions for the proposition
that the administrative law judge's jurisdiction includes
authority to decide the lawfulness of the Secretary's
regulations and delegations. None of these decisions
support this argument. Firth v. Celebrezze, 333 F.2d 557,
560 (5th Cir. 1964), and Taliferro v. Califano, 426 F.
Supp. 1380 (N.D. Mo. 1977), hold that administrative law
judges must apply correct legal standards in their
decisions. Neither case addresses the question of whether
an administrative law judge may rule on the Secretary's
legal or policy determinations. Locklear v. Matthews,

424 F. Supp. 639, 646 (D. Md. 1976), holds that an
administrative law judge correctly relied on the statutory
standard for disability in a Social Security disability
case. The case does not address a conflict between the
Secretary's policies and the law, much less hold that
administrative law judges had jurisdiction to decide that
issue.

Marion v. Gardner, 359 F. 2d 175, 181 (8th Cir. 1966),
merely holds that an administrative law judge too narrowly
applied a regulation. Pollard v. Gardner, 267 F. Supp.
891, 907 (W.D. Mo. 1967), holds that the Secretary may not
defeat Congressional intent through regulations. It says
nothing about the administrative law judge's jurisdiction.
Finally, Shrader v. Harris, 631 F. 2d 297, 302-303 (4th
Cir. 1980), deals with the administrative law judge's
responsibility to develop a record and to make findings on
issues over which he has jurisdiction. It does not
suggest that the administrative law judge has jurisdiction
to overrule the Secretary's regulatory or administrative
decisions.

Because I do not have jurisdiction to adjudicate questions
concerning the lawfulness of the Secretary's delegations
of authority to the I.G., I make no findings or
conclusions as to the merits of this issue. I therefore
deny Petitioner's motion for summary disposition on this
issue.

2. Ido not have authority to decide whether the
Secretary is required to adopt requlations implementing
the 1987 revisions to 42 U.S.C. 1320a~7 before the I.G.
may_make exclusion determinations pursuant to the law.

Petitioner argues that the exclusions imposed on him are
invalid because the Secretary has not adopted regulations
implementing the 1987 revisions to 42 U.S.C. 1320a-7.
-1l1l-

More specifically, he asserts that regulations are
necessary to clarify any "ambiguities" that may exist
between the mandatory exclusion provisions of 42 U.S.C.
1320(a) and the permissive exclusion provisions of 42
U.S.C. 1320(b). P.'s Memorandum at 12. He urges that I
conclude that the Secretary is ignoring a need for
clarifying regulations, and that the I.G. is relying on
"unpublished, internal . . . guidelines/directives" to
determine whether individual exclusion cases should be
characterized as mandatory or permissive. P.'s Memorandum
at 5. Such actions allegedly violate the Administrative
Procedure Act, 5 U.S.C. 552 et seq.. Petitioner also
contends that the Secretary's failure to adopt
implementing regulations injured him, because had he known
that the I.G. would conclude that mandatory five-year
exclusions were required in his case, Petitioner "would
not have agreed to his guilty plea... ." P.'s
Memorandum at 4.

The I.G. responds to these arguments by asserting that
Petitioner's contentions are based on a misunderstanding
of 42 U.S.C. 1320a-7. I.G.'s Memorandum at 12. According
to the I.G., the law clearly and unambiguously requires
mandatory five-year exclusions in Petitioner's case, and
therefore, no regulations are required to resolve
nonexistent ambiguities. I.G.'s Reply Memorandum at 12.
The I.G. also asserts that the Secretary is, in any event,
entitled to execute his statutory duty in the absence of
regulations, so long as he proceeds in accordance with
“ascertainable standards" and "provides a statement
showing (his) reasoning in applying the standards."

I.G.'s Memorandum at 14. The I.G. contends that the
Secretary complied with these legal requirements in this
case.

Petitioner's argument reduces to the contention that the
Secretary is obligated to adopt implementing regulations
before applying 42 U.S.C. 1320a-7 to particular cases. I
am without authority to decide this issue for the same
reason that I lack authority to decide the lawfulness of
the Secretary's delegations. Neither the law nor existing
regulations confer jurisdiction on me to decide under what
circumstances the Secretary must issue regulations.5/ As
I have held supra, my jurisdiction is limited by law to

5/ It is not necessary for me to discuss Petitioner's
claim that the law is ambiguous at this point. However,
as my discussion in the next section makes clear, the law
is not ambiguous.
-12-

deciding whether the I.G. has acted reasonably in applying
law, regulations, and policies to the facts of individual
cases. 42 U.S.C. 1320a-7(f); 42 U.S.C. 405(b); 42 C.F.R.
1001.128.

Therefore, I make no findings or conclusions as to whether
the Secretary is obligated to issue regulations
implementing the 1987 revisions to 42 U.S.C. 1320a-7, and
I deny Petitioner's motion for partial summary disposition
on this issue.

3. Given the undisputed material facts, the I.G.'s
determination to exclude Petitioner from participation in
the Medicare program, and to direct that he be excluded

ro} articipation i t i

ars, is mandat: - The undisputed facts of this
case are that Petitioner pleaded guilty to, and was
convicted of, a felony charge of fraud against the
Tennessee Medicaid program. Specifically, Petitioner, a
pharmacist, billed the Medicaid program for dispensing
brand name drugs, when in fact, he had sold cheaper,
generic medication. Petitioner fraudulently obtained
reimbursement which he was not owed, and he deceived the
Medicaid program into making a payment to Petitioner which
it was not obligated to make.

The I.G. excluded Petitioner from participation in the
Medicare program, and directed that he be excluded from
participation in State health care programs, for five
years, pursuant to 42 U.S.C. 1320a-7(a)(1) and (c) (3) (B).
Subsection (a) (1) requires the Secretary to exclude from
participation in Medicare, and direct the exclusion from
participation in State health care programs (including
Medicaid), “any individual or entity that has been
convicted of a criminal offense related to the delivery of

item or service" under Medicare or any State health
care program. (Emphasis added). Subsection (c) (3) (B)
directs that for those parties excluded pursuant to
subsection (a), the minimum exclusion period shall be for
five years.

The I.G. contends that, given the undisputed facts of this
case, the law requires that Petitioner be excluded from
participation in Medicare and State health care programs
for at least five years. The I.G. asserts that there
exist neither facts nor law which could alter this
conclusion; consequently he urges that I enter a summary
disposition upholding the exclusions imposed on
Petitioner. I.G.'s Memorandum at 8.
-13-

Petitioner asserts that the I.G. has mischaracterized the
offense to which Petitioner pleaded guilty and was
convicted of committing. According to Petitioner, his
conviction was for "financial misconduct" and was not
related to the delivery of an item or service under the
Medicare or State health care programs. Petitioner
contends that exclusions of parties convicted of such
offenses are governed by 42 U.S.C. 1320a-7(b) (1), which
gives the Secretary discretion to exclude from
participation in Medicare, and direct the exclusion from
participation in State health care programs, parties
convicted "in connection with the delivery of a health
care item or service with respect to any act or omission
in a program operated by or financed in whole or in part
by any Federal, State, or local government agency, of a
criminal offense relating to fraud, theft, embezzlement,
breach of fiduciary responsibility, or other financial
misconduct." There is no statutory requirement that such
exclusions be for a minimum period. Therefore, according
to Petitioner, if any exclusion is appropriate, it must be
determined without regard to statutory minimum mandatory
periods. P.'s Memorandum at 23. Petitioner also contends
that in any event, he is entitled to an evidentiary
hearing to determine which statutory section applies to
the offense for which he was convicted. P.'s Memorandum
at 19.

I conclude that it is manifest, both from the language of
the statute, and from legislative history, that the
offense committed by Petitioner is governed by 42 U.S.C.
1320a-7(a) (1). The I.G. had no choice but to exclude
Petitioner from participation in Medicare, and to direct
his exclusion from participation in State health care
programs, for at least five years.

There is no question that if subsection (b)(1) of the law
is read in isolation, its language would literally
encompass the offense for which Petitioner was convicted.
His conviction was for an act of fraud, and certainly
constituted "financial misconduct" directed against a
program financed in part by a State government agency.
However, when this subsection is read in context with
subsection (a)(1), it becomes clear that Petitioner's case
is not governed by the permissive exclusion provisions.

This is so because the law specifically requires
exclusions of parties who commit offenses described in
subsection (a)(1), and Petitioner's offense obviously
falls within the ambit of offenses characterized by that
subsection. The plain meaning of the language of
-14-

subsection (a) (1) is to require exclusion from
participation in the Medicare and State health care
programs of those parties who commit offenses, including
fraud or financial misconduct, in connection with the
delivery of or billing for items or services rendered
pursuant to these programs. The phrase in subsection

(a) (1), "related to the delivery of an item or service,"
conveys legislative intent to sweep within the subsection
all "financial" offenses directed against the Medicare and
State health care programs. Petitioner's offense-~which
amounted to theft or conversion of Medicaid funds--is
covered by this language.

Subsection (a)(1), therefore, encompasses the same kinds
of "financial" offenses which are described in subsection
(b) (1), but limited to those offenses which are directed
against, or committed in connection with the rendering of
services pursuant to, the Medicare and State health care
programs. The legislative scheme apparent from reading
subsections (a) (1) and (b)(1) in conjunction with each
other is to mandate exclusions of those who commit
financial crimes directed against Medicare and State
health care programs, and to permit exclusions of those
who commit financial crimes in connection with the
delivery of a health care item or service pursuant to
programs other than Medicare or State health care
programs, which are financed by federal, state, or local
government agencies. As the fraud committed by Petitioner
was directed against Medicaid, a State health care
program, his exclusion is covered by subsection (a) (1).

Petitioner asserts that subsection (a) (1) was intended to
encompass only "the illegal delivery of services,
themselves" and not "subsequent illegal billing" for
services pursuant to the Medicare and State health care
programs. P.'s Memorandum at 20. He seeks to distinguish
"billing offenses" from such offenses as "taking sexual
advantage of a patient" or "charging for medically
unnecessary diagnostic and testing procedures," asserting
that section (a)(1), by its terms, applies only to the
latter offenses. However, although the language of
subsection (a)(1) is arguably broad enough to apply to
those kinds of offenses identified as covered by
Petitioner, it also covers the offense he committed.
Furthermore, 42 U.S.C. 1320a-7(a) (2) requires exclusion of
parties convicted of "neglect or abuse of patients in
connection with the delivery of a health care item or
service." This subsection, then, covers the kinds of
"abuse" cases that Petitioner asserts constitute the ambit
of subsection (a) (1).
-15-

The purpose of the law is underscored when the current law
is compared with the law in effect prior to enactment of
the 1987 revisions. The law then in effect mandated
suspensions from participation in the Medicare and state
programs of physicians or other individuals convicted of a
"criminal offense related to such individual's
participation in the delivery of medical care or services
under" Medicare, Medicaid, or the social services
programs. The law then in effect did not specify a
minimum suspension period. This law covered a narrower
class of offenses than are covered by the present

42 U.S.C. 1320a-7(a) and (b). For example, the pre-1987
law would not have permitted exclusions of individuals
committing offenses against government-financed health
care programs other than Medicare and State health care
programs, whereas exclusions of such persons are now
permitted by subsection (b)(1). So, an obvious objective
of the 1987 revisions was to broaden the kinds of offenses
for which exclusions could be imposed.

The kind of offense for which Petitioner was convicted
(fraud against the Medicaid program) would have resulted
in a mandatory exclusion under the pre-revision version of
the law. There is nothing in the language of the current
law to suggest that Congress, in broadening the scope and
reach of the law, narrowed the category of cases which
require exclusions. Indeed, the mandatory exclusion
language of the present subsection (a) (1) is, if anything,
more sweeping than that of its predecessor.

Legislative history to the 1987 revisions also makes it
clear that Congress intended its enactment to enlarge the
scope of offenses for which exclusions could be imposed--
and not limit or undercut the mandatory exclusion
requirements which had previously been enacted. The
Senate Report which accompanied the 1987 legislation
explained Congressional intent in enacting subsection

(b) (1):

The Secretary would be authorized to exclude any
individual or entity convicted under Federal or State
law of a criminal offense relating to fraud, theft,
embezzlement, breach of fiduciary responsibility or
financial abuse if such offense was committed either
in connection with the delivery of health care or
with respect to a program that is financed, at least
partially, by Federal, State, or local government.
-~16-

Under current law, the Secretary does not have the
authority to exclude individuals or entities
convicted of criminal offenses which are not related
to Medicare or Medicaid or the other State health
care programs. This provision would permit the
Secretary to exclude persons and entities who have
already been convicted of offenses relating to their
financial integrity, if the offenses occurred in
delivering health care to patients not covered by
public programs or if they occufred during
participation in any other governmental program.

S. Rept. No. 100-109, 100th Cong., 1st Sess. 5, 6-7
(1987), reprinted in, 1987 U.S. Code Cong & Admin. News
682, 687. (Emphasis added). Thus, Congress intended the
new subsection (b)(1) to permit exclusion for offenses not
related to Medicare and State health care programs.
Subsection (a)(1) was reserved, in part, for those
"financial" offenses which were related to the Medicare
and State health care programs.

Finally, there is no merit to Petitioner's claim that he
is entitled to an evidentiary hearing to determine under
which statutory subsection his offense falls. Petitioner
has stipulated to the material facts of this case. He has
acknowledged that he was convicted of a criminal offense
consisting of fraud against the Medicaid program. He has
not offered any facts which would derogate from this
admission or suggest that he was convicted of something
other than that to which he has stipulated. At oral
argument on the motions for summary disposition,
Petitioner's counsel stated that he would like to consider
offering expert testimony as to whether the offenses of
which Petitioner was convicted are offenses encompassed by
42 U.S.C. 1320a-7(a) (1). But the question of how to
legally classify facts to which the parties have
stipulated is not an issue which can be resolved with
expert testimony. How the offense for which Petitioner
was convicted is characterized pursuant to 42 U.S.C.
1320a-7 is a question of law. Therefore, given the
undisputed material facts, there is no need for an
evidentiary hearing in this matter.
-17 -

CONCLUSION

Based on the undisputed material facts, the law, and
regulations, I conclude that the I.G.'s determination to
exclude Petitioner from participation in the Medicare
program, and to direct that Petitioner be excluded from
participating in State health care programs, for five
years, was mandated by law. Therefore, I am entering a
decision in favor of the I.G. in this case.

/s/

Steven T. Kessel
Administrative Law Judge