DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board

Civil Remedies Division

In the Case of:

MAY 5, 1989

Arthur B. Stone, D.P.M., DATE:

Petitioner,
“Vv. - Docket No. C-52

The Inspector General. DECISION CR 26

DECISION AND ORDER

The Petitioner requested a hearing to contest the
Inspector General’s (1I.G.’s) determination to exclude him
from participation in Medicare and to direct that the
Petitioner be excluded from participation in State health
care programs (e.g., Medicaid), for a period of five
years. This Decision and Order resolves this case on the
basis of written briefs and a stipulated record. I hereby
deny the Petitioner’s motion to dismiss and I conclude
that the I.G. was required under federal law to exclude
the Petitioner for five years from Medicare and
Medicaid.1/

APPLICABLE STATUTES AND REGULATIONS

I. The Federal Statute.

This case is governed by section 1128 of the Social
Security Act (Act), codified at 42 U.S.C. 1320a-7 (West
U.S.C.A. Supp., 1988). Section 1128(a) of the Act, headed
"Mandatory Exclusion," provides for the exclusion from
Medicare, and a directive to the State to exclude from
State health care programs, any individual who is
“convicted of a criminal offense related to the delivery
of an item or service" under the Medicare or Medicaid

1/ For the sake of brevity, I hereafter refer only to
Medicaid as constituting "State health care programs"
under section 1128 of the Social Security Act.
programs. Section 1128(c)(3)(B) provides that the period
of such exclusion shall be for a minimum period of five
years.2/

The term "convicted" is defined in section 1128(i) to
include "when a judgment of conviction has been entered
against the physician or individual by a Federal, State,
or local court," or when a plea of guilty or nolo
contendere has been "accepted by a Federal, State, or
local court." (Emphasis added.)

While section 1128(a) of the Act provides for a minimum
five-year mandatory exclusion for (1) convictions of
program-related crimes and (2) convictions relating to
patient abuse, section 1128(b) of the Act provides for the
permissive exclusion of "individuals and entities" for
twelve types of other convictions, infractions, or
undesirable behavior, such as convictions relating to
fraud, license revocation, or failure to supply payment
information. The Act does not prescribe a minimum period
of exclusion in the case of a permissive exclusion.

II. The Federal Regulations.

The governing federal regulations (Regulations) are found
in 42 C.F.R. Parts 498, 1001, and 1002 (1987). Part 498
governs the procedural aspects of this exclusion case and
Parts 1001 and 1002 govern the substantive aspects.

In accordance with section 498.5(i), a practitioner,
provider, or supplier who has been excluded from program
coverage is “entitled to a hearing before an ALJ
(Administrative Law Judge)." Pursuant to section
1001.128, an individual who has been excluded from
participation has a right to request a hearing before an
ALJ on the issues of whether: (1) he or she was, in fact,
convicted; (2) the conviction was related to the delivery
of an item or service under Medicare or Medicaid; and (3)
the length of the exclusion is reasonable.

Section 1001.123(a) requires the I.G. to send written
notice of his determination to exclude an individual or
entity when he has "conclusive information" that the
individual or entity has been convicted of a crime related

2/ The current version of section 1128 of the Act was
enacted in August 1987. Before August 1987, the Act did
not prescribe a minimum period of exclusion.
to the delivery of an item or service under Medicare or
Medicaid.3/

BACKGROUND

By letter dated July 19, 1988 (Notice), the I.G. notified
the Petitioner that, as a result of his conviction of a
criminal offense related to the delivery of an item or
service under Medicaid, he would be excluded from
participation in Medicare and Medicaid for a mandatory
five year period, commencing 20 days from the date of the
Notice. The I.G.’s stated basis for the exclusion was
the Petitioner’s nolo contendere plea and conviction in
the County Court of Westmoreland County, Pennsylvania of a
criminal offense related to the delivery of an item or
service under Medicaid.

On September 14, 1988, the Petitioner timely requested a
hearing on the I.G.’s determination. I held a prehearing
telephone conference call on November 16, 1988, at which I
determined that the issues raised by the Petitioner’s
hearing request were legal issues, which could be further
developed by the parties in written briefing, and that
there was no dispute as to any material fact. As
reflected in the November 21, 1988 Prehearing Order and
Notice of Hearing Schedule, I stated that, if it was
determined later that an evidentiary hearing was needed, I
would contact the parties to schedule such a proceeding.

EVIDENCE

The material facts in this case are stipulated to and
evidenced by exhibits concerning the underlying State
court documents pertaining to the Petitioner’s plea of
nolo contendere, such as the criminal complaint (I.G.
Ex. 1), and the transcript of the Petitioner’s plea and

3/ Section 1001.123 of the Regulations provides that the
period of exclusion is to begin 15 days from the date on
the notice; however, the I.G. allowed 5 days for mailing
in this case.
sentencing (P. Ex. A-4).4/ See also Tape (containing the
stipulation by the parties as to the authenticity of all
exhibits). In addition, the Petitioner acknowledges that
he pleaded nolo contendere in State court to three counts
of submitting false Medicaid invoices. P. Br. 1.

ISSUES 5/

1. Whether the Petitioner is subject to the minimum
mandatory five year exclusion provisions of section
1128(c) (3) (B) of the Act.

2. Whether the Petitioner was "convicted" of a criminal
offense within the meaning of sections 1128(a)(1) and (i)
of the Act.

3. Whether the Petitioner was convicted of a criminal
offense "related to the delivery of an item or service"
under the Medicaid program within the meaning of section
1128(a)(1) of the Act.

4. Whether the I.G. failed to comply with the federal
Administrative Procedure Act, by (1) not publishing
regulations to implement the distinction between the
mandatory and permissive exclusion authorities, and
(2) relying upon unpublished guidelines/directives in
implementing the Act.

4/ The citations to the record in this Decision and Order
are noted as follows:

Petitioner’s Request P. Req. (page)

Petitioner’s Statement of P, Statement (page)
Facts to be Established

Petitioner’s Brief P. Br. (page)

Petitioner’s Reply Brief P. Rep. Br. (page)

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

I.G.’s Brief I.G. Br. (page)

I.G.’s Exhibit I.G. Ex. (number) / (page)

Tape of March 10, 1989 Tape

oral argument (by
telephone conference)

5/ The Petitioner’s 56 pages of briefing were highly
repetitive, and contained numerous variations of the
issues outlined here. Some arguments he made are not
directly addressed in this Decision and Order because I
found them to be either repetitive or irrelevant under
the Act and Regulations.
5. Whether the I.G. was prohibited by provisions of
federal law (regarding program operating responsibilities)
from excluding the Petitioner.

6. Whether there is a need for an evidentiary hearing in
this case.

FINDINGS OF FACT AND CONCLUSIONS OF LAW 6/

Having considered the entire record, the arguments and
submissions of the parties, and being fully advised
herein, I make the following Findings of Fact and
Conclusions of Law:

1. The Petitioner is a resident of the Commonwealth of
Pennsylvania, and has been licensed in Pennsylvania as a
doctor of podiatric medicine since 1966. P. Ex. A-4/9.

2. On November 16, 1987, the Petitioner was charged with
151 counts of fraud and abuse against the Medicaid
program. I.G. Ex. 1; P. Ex. A-4/4.

3. On November 16, 1987, the Petitioner pleaded nolo
contendere in the Court of Common Pleas of Westmoreland
County, Pennsylvania, Criminal Division (State Criminal
Court) to three counts of fraud and abuse against the
Medicaid program. P. Ex. A-4.

4. The State Criminal Court sentenced the Petitioner to a
total of five years probation, and the Petitioner was
ordered to pay restitution in the amount of $5,734.64, a
fine of $5,000, and $632.02 for the costs of prosecution.
P. Ex. A~4/20-21.

5. The Petitioner was "convicted" of a criminal offense
within the meaning of sections 1128(a)(1) and 1128(i) of
the Act.

6. The Petitioner was convicted of a criminal offense
"related to the delivery of an item or service" under the
Medicaid program within the meaning of section 1128(a) (1)
of the Act.

6/ Any other part of this Decision and Order which is
obviously a finding of fact or conclusion of law is
incorporated herein.
7. In accordance with section 1128 of Act, the I.G.
properly excluded the Petitioner from participation in
Medicare, and directed his exclusion from Medicaid, for a
period of five years.

8. The I.G. did not violate the federal Administrative
Procedure Act, 5 U.S.C. 551 et seq., by not promulgating
regulations to distinguish the exclusion authorities in
section 1128(a)(1) and 1128(b)1) of the Act.

9. The I.G. did not rely upon an "unpublished
guidance/directive" in classifying the Petitioner as
subject to the mandatory exclusion authority of section
1128(a) (1) of the Act.

10. The material and relevant facts in this case are not
contested.

11. The classification of the Petitioner’s conviction of
a criminal offense as subject to the authority of
1128(a)(1) is a legal issue.

12. There is no need for an evidentiary hearing in this
case.

13. The 1.G. is not prohibited by federal law or
regulations from participation in the exclusion process.

14. The I.G. is entitled to summary disposition in this
proceeding.

DISCUSSION

I. A Minimum Mandatory Five Year Exclusion Was Required
In This Case.

Section 1128(a)(1) of the Act clearly requires the I.G. to
exclude individuals and entities from the Medicare
program, and direct their exclusion from the Medicaid
program, for a minimum period of five years, when such
individuals and entities have been "convicted" of a
criminal offense "related to the delivery of an item or
service" under the Medicare or Medicaid programs within
the meaning of section 1128(a)(1) of the Act.
Congressional intent on this matter is clear:

A minimum five-year exclusion is appropriate, given
the seriousness of the offenses at issue. . ..
Moreover, a mandatory five-year exclusion should
provide a clear and strong deterrent against the
commission of criminal acts.

S. Rep. No. 109, 100th Cong., 1st Sess. 2, reprinted in
1987 U.S. Code Cong. and Ad. News 682, 686.

Since the Petitioner was "convicted" of a criminal
offense and it was “related to the delivery of an item or
service" under the Medicaid program within the meaning of
section 1128(a)(1) and (i) of the Act, the I.G. was
required to exclude the Petitioner for a minimum of five
years.7/

II. fhe Petitioner Was "Convicted" of A Criminal offense
As A Matter Of Federal Law.

I find and conclude that the Petitioner was "convicted"
within the meaning of sections 1128(a)(1) and (i) (3) of
the Act because he pleaded nolo contendere to the charges
against him and the State Criminal Court "accepted" his
plea.8/ Section 1128(i)(3) provides that "convicted"
includes a plea of nolo contendere "accepted by a Federal,
State, or local court."

The term "accepted" in section 1128(i)(3) is defined by
Webster’s Third New International Dictionary, 1976
Unabridged Edition, as the past tense of "to receive with
consent." The term "accepted" is the opposite of the
term rejected. The State Criminal Court did not reject
the Petitioner’s plea. Quite the contrary, the State
Criminal Court "accepted" the Petitioner’s plea within
the meaning of section 1128(i)(3). Once that happened,

7/ Since I have found and concluded that the mandatory
exclusion provisions of section 1128(a)(1) apply in this
case, I need not address the issue raised by the
Petitioner of whether I should make a de novo
determination to reclassify the Petitioner’s criminal
offense as subject to the permissive authority under
section 1128(b) of the Act.

8/ It is axiomatic that the interpretation of a federal
statute or regulation is a question of federal, not state,
law, so any interpretation by the Commonwealth of
Pennsylvania as to whether the Petitioner was "convicted"
would not be directly relevant to this case. United
States v. Allegheny Co., 322 U.S. 174, 183 (1944); United
States v. Anderson Co., Tenn., 705 F.2d 184, 187 (6th
Cir., 1983), cert. denied, 464 U.S. 1017 (1984).

the provisions of subsection 1128(i) (3) were triggered,

and what happened after that is of no consequence to the
determination that the Petitioner was "convicted," as a

matter of federal law.

Iii. The Petitioner’s Conviction Is "Related To The
Delive Of An Ite .

Section 1128(a)(1) requires the I.G. to exclude from
participation any individual who is convicted of a
criminal offense "related to the delivery of an item or
service" under Medicaid (emphasis added). The Petitioner
was convicted under Pennsylvania law of submitting claims
to the Medicaid program which "misrepresent[ed] the
services actually rendered." P. Ex. A-4/10.

The Petitioner argues that the I.G.’s "classification" of
this case under section 1128(a), and this requiring the
five year period of exclusion, is erroneous and that the
exclusion should be subject to the permissive authority of
1128(b). The Petitioner maintains that the I.G.
improperly interpreted Congressional intent in
distinguishing the mandatory and permissive authorities
and that the offense to which he pleaded nolo contendere
was related to the "reimbursement" function, rather than
the "delivery" function. The Petitioner argues that this
offense "related to fraud . . . or financial misconduct"
and was not "related to the delivery of an item or
service" under Medicaid. The Petitioner also
characterized the criminal charges as concerning the false
submission "of an invoice for a service which had not
occurred." P. Br. 1. However, as the I.G. observed in
his brief, the record indicates that this description of
the criminal charges is incorrect. I.G. Br. 10 (fn. 3).
The transcript of the plea hearing, and an affidavit of a
State Medicaid investigator “in Support of Probable Cause
for Arrest," describe the Medicaid claims (which were the
subject of the criminal charges) as involving procedures
agifferent from those actually performed by the Petitioner.
P. Ex. A-4/10; I.G. Ex. 2/3.9/

9/ In any event, even if the criminal charges in question
here had concerned the billing for services which were
never rendered, I would still find that the Petitioner’s
conviction "related to the delivery of an item or
service" under Medicaid within the meaning of section
1128(a)(1) of the Act. The Petitioner offered no
explanation for why Congress would have chosen to treat
(continued...)
I find that crimes involving financial misconduct in the
submission of an Medicaid claims are "related to" the
"delivery of an item or service." Black’s Law
Dictionary, Fifth Edition (West Pub. Co., 1979) defines
"related" as: ". . . standing in relation; connected;
allied; akin." Clearly, the offense for which the
Petitioner was convicted was "connected to" the delivery
of an item or service under Medicaid. This case should
not be decided in a vacuum, or with a strict,
hypertechnical interpretation of the term "related to" in
section 1128(a)(1) of the Act. There is a simple, common-
sense connection, supported by the record, between the
actions associated with the Petitioner’s conviction and
the Medicaid program. The Petitioner’s interpretation of
"related to" is that the criminal offense must be
"restricted to" the delivery of an item or service under
Medicaid or Medicare. The Petitioner’s strained
interpretation of "related to" is not borne out by the
plain words of section 1128 of the Act or its legislative
history.

The offense to which the Petitioner pleaded nolo
contendere involved fraud and financial misconduct, and
was "related to the delivery of an item or service" under
Medicaid. The criminal offense for which the Petitioner
was convicted involved the Petitioner in fraudulently
obtaining reimbursement from Medicaid for items or
services which were not rendered as claimed.10/

9/ (...continued)

convictions concerning the claiming for services which
were not rendered at all differently from convictions for
services not rendered as claimed. The statute does not
state that the offense in question must concern acts which
occurred as part of the actual delivery of medical
services, only that they be "related to" their delivery.
The fraudulent billing of Medicaid for medical services,
whether they were actually rendered or not, clearly
"related to" the delivery of such services.

10/ Congress intended to exclude individuals convicted of
this type of offense. In the legislative history to the
1977 enactment, Congress stated that:

Perhaps the most flagrant fraud involves billings for
patients whom the practitioner has not treated. A
(continued...)
-10-

Congress’s purpose in enacting a separate permissive
exclusion authority in section 1128(b)(1) was not to
provide a more lenient treatment as to any provider
convicted of offenses concerning "financial misconduct."
The separate authority of section 1128(b)(1) was designed
to broaden the scope of the law to authorize the I.G. to
exclude providers who were convicted of offenses involving
government funded health programs in addition to Medicaid
and Medicare, as well as to permit exclusions for offenses
relating to fraud and other types of financial misconduct,
for all such programs.11/

10/. (...continued)
related form of fraud involves claims for services to
a practitioner’s patients that were not actually
furnished and intentionally billing more than once
for the same service.

H.R. Rep. No. 393-Part II, 95th Cong., lst Sess. 47,
reprinted in 1977 U.S. Code Cong. & Ad. News 3039, 3050.

Congress reiterated its intent by enacting the Medicare
and Medicaid Patient and Program Protection Act of 1987,
Pub. L. 100-93 (August 18, 1987), and by stating that its
purpose in enacting the legislation was:

to improve the ability of the Secretary and Inspector
General of the Department of Health and Human
Services to protect the Medicare, Medicaid, Maternal
and Child Health Services Block Grant, and Title XX
Social Services Block Grant from fraud and abuse, and
to protect the beneficiaries from incompetent
practitioners and from inappropriate and inadequate
care.

S. Rep. No. 109, 100th Cong., 1st Sess. 2, reprinted in
1987 U.S. Code Cong. & Ad. News 682. Congress did this by
providing a minimum mandatory period of exclusion for
those convicted of crimes that "relate to the delivery of
an item or service."

11/ Since I find that the offense for which the
Petitioner was convicted "related to" the delivery of
services under Medicaid, I conclude that the I.G. properly
classified this case as falling under the mandatory
exclusion authority. It is not relevant here that the
offense in question might hypothetically also fall within
the scope of section 1128(b). Congress clearly provided
(continued...)
-1l-

As support for his contention that the offense for which
he was convicted did not relate to the "delivery" of
medical services, the Petitioner submitted an affidavit
from a former employee of the Health Care Financing
Administration (HCFA), which administers the Medicaid and
Medicare programs. P. Ex. A-5. In the context of a
provider’s compliance with program requirements, the
affiant drew a distinction between more serious
deficiencies which the affiant described as relating to
the "delivery of patient care," such as "an unsafe and
hazardous environment," and those allegedly less critical
deficiencies involving Medicare "conditions of
participation" under the regulations, such as “inadequate
social worker visits" and the proper signing of medical
records. The affiant explained that those more serious
deficiencies relating to "delivery of care" would result
in termination of a provider from the program, while a
violation of other conditions of participation would only
require submission of a plan of correction. In
considering the present case, the affiant concluded that
the offenses for which the Petitioner was convicted
related to "reimbursement through financial misconduct"
and were not "related to the delivery of an item or
service within the conceptual context of the Department’s
Medicare/Medicaid programs."

Assuming the affiant’s distinction to be a valid one
regarding HCFA’s certification of providers, this would
have no relevance in determining Congress’s intent in
distinguishing exclusions based upon a conviction for
crimes relating to the "delivery" of medical services from
convictions relating to fraud or other financial
misconduct. As noted by the I.G., the affiant has no
expertise with either the Office of Inspector General, any
health program to detect fraud and abuse, or with section
1128 of the Act. I.G. Br. 9; P. Ex. A-5/(attached

ll/ (...continued)

that if an offense falls within the scope of 1128(a), the
I.G. has no choice but to exclude the provider for a
minimum five year period. Given that I find that the
plain meaning of section 1128 of the Act to be clear, I
also do not address here any arguments raised by the
Petitioner concerning the legislative history of the Act,
which, in any event, I did not find to support his
interpretation.
-12-

curriculum vitae).12/ The affiant’s opinions are not
germane to the issue of defining the phrase "related to
the delivery of an item or service." The Petitioner’s
conviction in this case clearly "related to" the delivery
of medical services, because the Petitioner pleaded nolo
contendere to improperly billing for services that were
not delivered as claimed. Thus, the criminal offense for
which the Petitioner was convicted is one "related to the
delivery of an item or service" within the meaning of
section 1128(a)(1) of the Act.13/

Iv. The I.G. Has Complied With The Administrative
Procedure Act.

The Petitioner argued that the I.G. (1) failed to comply
with the federal Administrative Procedure Act, 5 U.S.c.
552(a)(1) and 553, by not promulgating regulations to
distinguish section 1128(a) from 1128(b), and (2) was,
instead, relying on "unpublished guidelines/directives in
implementing the statutory provisions." P. Br. 3 et seq.
He argued that, because of this, he lacked "notice" of the
effect of his court plea. P. Br. 8, 22.

12/ Neither the affiant nor the Petitioner explained how
the distinction which the affiant drew between
deficiencies relating to "delivery of services" and what
he describes as less serious deficiencies are supported by
the scheme of the federal regulations concerning
certification of providers. Department regulations
describe in detail the various deficiencies to consider in
determining whether to certify a facility, and themselves
do not distinguish deficiencies concerning "delivery" from
other types of deficiencies. See, e.g., 42 C.F.R. 442.16.

13/ Another argument raised by the Petitioner was that
his nolo contendere plea was improperly used by the I.G.
as "evidence" against the Petitioner in a subsequent
proceeding, contrary to the Federal Rules of Criminal
Procedure and other authority. P. Rep. Br. 2-3; Tape.
I find that the Petitioner’s plea was not used as
"evidence" against him in the sense intended by the
authority cited. Section 1128(i)(3) of the Act directs
the I.G. to exclude individuals who are convicted of
criminal offenses related to delivery of services under
Medicaid, and the statute itself defines the term
"convicted" to encompass pleas of guilty or nolo
contendere.

~13-

There is no ambiguity in the Act such that the
promulgation of regulations to distinguish the two
authorities would be necessary or appropriate.14/ Section
1128(a)(1) of the Act clearly provides that the I.G. must
exclude any provider who has been convicted of an offense
"related to the delivery of an item or service" under
Medicare or Medicaid. The separate authority of section
1128(b) (1), providing for a permissive exclusion based on
a conviction "in connection with the delivery of a health
care item or service" or for "fraud, theft, embezzlement,
breach of fiduciary responsibility, or other financial
misconduct," is clear on its face and without a doubt it

14/ The I.G. argued in his brief that I lack jurisdiction
to decide questions relating to whether the Secretary
should promulgate regulations in this circumstance. I.G.
Br. 18. (The Petitioner did not present argument on this
issue.) Since I conclude that there is no ambiguity in
section 1128 of the Act so that the promulgation of
regulations would be necessary, I do not resolve this
question. In Jack W. Greene v. The Inspector General,
Docket No. C-56, decided January 31, 1989, and Michael J.
- ‘tor General, Docket No. C-59,
decided February 22, 1989, the ALJ in both cases concluded
that he indeed lacked such jurisdiction, based on the
language of the governing statute and regulations. For
instance, 42 C.F.R. 1001.172 limits the grounds on which
an excluded provider may request a hearing before an ALJ.

On the other hand, a comparison of the regulations
pertaining to exclusion actions with regulations governing
the other major health care sanction authority of the I.cG.
may support accepting jurisdiction in matters such as
these. Part 1003 of 42 C.F.R., governing hearings under
the Civil Monetary Penalties Law, section 1128A of the
Act, provides at section 1003.115 ("Authority of ALJ."):

(c) The ALJ does not have the authority to decide
upon the validity of Federal statutes or regulations.

This provision might be interpreted to preclude an AIJ’s
review of whether the Secretary must promulgate
regulations in certain circumstances. By comparison, no
restrictions on the "authority" of the ALJ are contained
in either the Regulations or the Act governing exclusion
cases, and it would seem a reasonable conclusion that the
Secretary may have intended for the ALJ to review matters
concerning the validity of the Regulations in these cases.
- 14 -

concerns programs "financed in whole or in part by any
Federal, State, or local government agency...

Section 1128(b)(1) by its terms does nothing to alter the
I.G.’s charge to exclude providers for a minimum five-year
period when an individual has been convicted (as defined
in section 1128) of a criminal offense "related to the
delivery of an item or service" under Medicaid or
Medicare. An agency is not required to promulgate
implementing regulations when the express terms of the

statute are clear. See, e.g., S.E.C. v. Chenery Corp.,
332 U.S. 194, 201 (1947).

Since I find that the terms of the Act itself to be

clear, I find that the Petitioner had "notice" that his
court plea would result in an exclusion for a minimum five
year period.

I likewise find that the I.G. did not rely upon
“unpublished guidelines/directives" in classifying the
Petitioner’s offense. P. Statement 2-3. The Petitioner
submitted (as P. Ex. A-3) a 15=-page document entitled
"Civil Monetary Penalty and Exclusion Authorities," which
contains a listing of each of the statutory authorities
under which the I.G. may proceed in sanctioning a health
care provider. The document contains a brief description
of "conduct" and the corresponding period of exclusion or
other appropriate information. The Petitioner presented
no direct support for his allegation that the I.G. used
this document in determining whether to classify a
particular case as subject to section 1128(a) or 1128(b),
nor did the Petitioner even speculate how these pages
might conceivably serve such a purpose. An examination of
the document indicates that it was apparently used as a
convenient listing of the numerous statutory authorities
which authorize the I.G.’s sanction activities. By its
terms, the document provides no guidance in determining
how to classify a particular case between the various
statutory provisions.15/

15/ Another argument by the Petitioner concerning P. Ex.
A-3 is that it used the language from an earlier version
of section 1128(a)(1), referring to "an individual or
entity convicted of a criminal offense related to
participating in Medicare or any State health program."
(Emphasis added). The Petitioner also noted that similar
language was used in a letter from the I.G. tentatively
informing the Petitioner that he would be excluded.
P. Br. 10-11, citing P. Ex. A-6. The Petitioner argued
(continued...)
-15-

V. There Is No Need For An Evidentiary Hearing In This

Case.

I also find the Petitioner’s argument that he is entitled
to an evidentiary hearing concerning the classification of
his exclusion to be without merit. P. Br. 37-38. The
Petitioner availed himself of the opportunity to present
oral argument on the legal issues raised in his briefs.16/
The Petitioner does not convincingly explain how the
record might be further developed through the holding of
an evidentiary hearing.

The issue of "categorizing" the Petitioner’s offense as
being subject to the mandatory exclusion authority is a
legal issue. The Petitioner has already stipulated to
the court documents concerning the nature of his criminal
conviction, and has even presented an affidavit from an
expert concerning the meaning of the phrase "delivery of
services." There are no material facts in issue.

15/  (...continued)

that the use of this language somehow prejudiced the
Petitioner. Even if I accepted that P. Ex. A-3 were a
rule or guidance of the I.G., there is no basis to find
that the use of this "participation" language would harm
the Petitioner. The criminal offense to which the
Petitioner pleaded nolo contendere, the improper billing
for Medicaid services, was both "related to delivery of an
item or service" under Medicaid, as well as being "related
to" the Petitioner’s participation in the Medicaid
program. In any event, I am not convinced, contrary to
the Petitioner’s assumption here, that the phrase
"participating in Medicare or any State health care
program" is a more expansive category than that described
by the present language "related to the delivery of an
item or service" under Medicaid. If the standard is to
require a provider’s actual participation in the delivery
of items or services, this would appear to limit the
circumstances subject to the mandatory exclusion, since it
might require the provider’s actual involvement in the
delivery of services.

16/ It was unclear at the closing of the record whether
the Petitioner continued to assert the need for an
evidentiary hearing since, at oral argument, the
Petitioner’s counsel did not renew his request. Tape.
-16-

In his final brief, the Petitioner maintained that he
would demonstrate at an evidentiary hearing that his
"omissions for which he was prosecuted" will be shown at a
hearing to be related "to his failure to properly
supervise his staff" and not to be "criminal." P. Rep.
Br. 4-5. This is a collateral attack on a criminal
judgment issued in another forum and a frivolous argument
as it relates the I.G.’s determination to exclude the
Petitioner under the section 1128(a)(1) authority. I have
already addressed the Petitioner’s arguments concerning
whether the activities at issue "related to the delivery
of an item or service" or were instead related only to
"fraud" or "other financial misconduct." The underlying
activities that gave rise to the criminal charges against
him are otherwise irrelevant; while such matters might be
pertinent to actually trying criminal charges against hin,
or to the State Criminal Court for purposes of sentencing,
they would have no further relevance to a determination

in this case.17/

VI. The I.G.’s Participation In The Exclusion Process
Does Not Violate Federal Law.

The I.G.’s "participation" in the exclusion process is

not contrary to the Act, because it does not conflict with
the prohibition on the "transfer of program operating
responsibilities" to the I.G. 42 U.S.C. 3526(a). The
need for such a prohibition arose when the Office of
Inspector General was created from other components of

the Department, such as the Health Care Financing

17/ The Petitioner submitted two affidavits concerning
the reasons underlying his criminal conviction and nolo
contendere plea, one from the Petitioner himself, and the
other from an employee of the Petitioner who had knowledge
of the circumstances at issue in the criminal proceedings.
These statements appear, largely, to address the
Petitioner’s state of mind or intent, a matter irrelevant
to this particular mandatory exclusion case, since the
Petitioner conceded that he pleaded nolo contendere to the
charges against him. If the Petitioner presented this
evidence to contend that the Petitioner was subject only
to the permissive exclusion authority, I also do not find
this evidence to be relevant, since the only pertinent
inquiry here is whether the Petitioner’s offense was
"related to the delivery of an item or service" under
Medicaid, a matter which I have already fully addressed
above, and about which these affidavits shed no light.
-~17-

Administration; Congress wanted to maintain the
independent and objective nature of the I.G. S. Rep. No.
1324, 94th Cong., 2d Sess. 8, reprinted in 1976 U.S. Code
Cong. and Ad. News 5420, 5427; see 42 U.S.C. 3521. The
Petitioner argued, in effect, that the act of excluding
providers from federal programs violates this prohibition
since this constitutes a "program." As support for this
position, the Petitioner cited certain Department
regulations which refer to the transfer of
"responsibility" to the I.G. for fraud and abuse
determinations. P. Br. 31-32. The Petitioner also
argued that the I.G. would be unable to "objectively
assess the Department’s administrative law process if the
OIG is a participant." P. Br. 32.

The Petitioner has provided no basis for me to conclude
that the exclusion of a provider from the Medicare and
Medicaid programs is a "program operating responsi-~
bility."18/ The term "program" is subject to various
meanings, and the Petitioner has cited no authority that
Congress intended this term to encompass exclusion
determinations or other fraud and abuse sanction
activities. That regulations refer to the transfer of
fraud and abuse "responsibility" to the I.G. is

18/ The I.G. argued in his brief that I lack jurisdiction
to decide this question, relying on Jack W. Greene vy. The

Inspector General, Docket No. C-56, decided January 31,
1989, in which the ALJ concluded that he lacked such
jurisdiction, based on the language of the governing
statute and regulations. I.G. Br. 18. As I noted in
footnote 14, above, I do not need to resolve this
jurisdictional question, since I find the Petitioner’s
argument here to be so clearly without merit. As I also
noted in the context of the promulgation of regulations,
the issue of my jurisdiction over this matter is not so
clearly established. For instance, in contrast to the
regulations governing exclusion determinations, the
regulations pertaining to the Civil Monetary Penalties
law, 42 C.F.R. Part 1003, specifically preclude an ALJ’s
review of the "validity of Federal statutes or
regulations," (section 1003.115(c)) which could encompass
the issue of the I.G.’s "involvement" in the exclusion
process, through its issuance of regulations which in
effect delegate the Secretary’s authority to the I.G.
Moreover, even if I did not have authority to rule on the
validity of federal statutes or regulations, I do have
authority to interpret them.
- 18 -

irrelevant, since they do not describe this responsibility
as involving a "program."

Moreover, Congress, in amending and strengthening the
exclusion law, has itself approved the involvement of the
I.G. in the exclusion process, since it is the I.G. who
has performed this responsibility from the law’s
inception. Indeed, the legislative history of the 1987
amendments to the law expressly approves the Secretary’s
delegation of the exclusion authority to the I.G.:

Under current practice, the Secretary has delegated
all existing suspension, exclusion, and civil
monetary penalty authorities to the Department’s
Inspector General. The Committee believes that this
delegation of authority by the Secretary is entirely
consistent with the statutory mandate of the HHS
Inspector General (42 U.S.C. section 3521 et seq.)
and has resulted in the efficient administration of
these authorities. The Committee expects the
Secretary both to continue this existing practice and
to delegate all new statutory exclusion authorities
created by this bill to the Department’s Inspector
General.

S. Rep. No. 109, 100th Cong., 1st Sess. 14, reprinted in
1987 U.S. Code Cong. and Ad. News 682, 695.

CONCLUSION
Based on the law and undisputed material facts in the
record of this case, I conclude the I.G. properly excluded
the Petitioner from the Medicare program, and directed his
exclusion from State health care programs, for the
minimum mandatory period of five years.

IT IS SO ORDERED.

/s/

Charles E. Stratton
Administrative Law Judge


DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board

Civil Remedies Division

In the Case of:

Howard B. Reife, D.P.M., APR 28, 1989

DATE:
Petitioner,
~ Vem Docket No. C-64

The Inspector General. DECISION CR 25

DECISION OF ADMINISTRATIVE LAW JUDGE
ON MOTION FOR SUMMARY DISPOSITION

The Inspector General (the I.G.) notified Petitioner on
August 31, 1988 that he was being excluded from
participation in Medicare and any State health care
programs for a period of five years.1/ The I.G. told
Petitioner that his exclusions were due to his conviction
of a criminal offense related to the delivery of an item
or service under the Medicare program. Petitioner was
advised that the law required five year minimum exclusions
from participation in Medicare and State health care
programs for individuals convicted of a program-related
offense.

Petitioner timely requested a hearing, and the case was
assigned to me for a hearing and decision. I conducted a
prehearing conference on December 20, 1988, at which the
I.G. stated that he intended to move for summary
disposition. I issued a prehearing Order on December 23,
1988, which established a schedule for filing the motion
and responding to it, and which also provided for oral
argument on the motion. The I.G. filed a motion for
summary disposition which was opposed by Petitioner.

ay "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 Title XIX of the
Act (Medicaid).
Petitioner also moved for summary disposition in his
favor. The I.G. requested leave to file a reply to
Petitioner’s motion, which I granted. Petitioner
requested oral argument, and I conducted oral argument in
Kansas City, Missouri, on April 17, 1989.

I have considered the arguments of the parties, the
undisputed material facts, and applicable law and
regulations. I conclude that the exclusions imposed and
directed by the I.G. are mandatory. Therefore, I am
deciding this case in favor of the I.G.

ISSUES
The issues raised by the parties 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;
and

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.

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.
"Conviction" is defined at 42 U.S.C. 1320a-7(i) to include
those circumstances when a party pleads guilty to a
criminal charge. The law provides, at 42 U.S.C.
1320a-7(c) (3) (B), that for those excluded under section
1320a-7(a), the minimum exclusion period shall be five
years.

The law also provides the Secretary with discretion in
certain enumerated circumstances to exclude parties from
participation in Medicare and to direct their exclusion
from participation in State health care programs.

42 U.S.C. 1320a-7(b) (1)-(14). The law does not prescribe
a minimum exclusion period in such cases.

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 XxX... ."

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 for the
grounds now provided by 42 U.S.C. 1320a-7(b).

Both the pre-1987 law and the 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. Begulations Governing Suspension, Exclusion, or

Terminationof 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
cases 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 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 Doctor of Podiatry. P. Ex.
A-1.2/

2. On March 28, 1988, Petitioner was charged with
the federal criminal offense of knowingly and willfully
making false and material statements and representations
in applications for Medicare payments. I.G. Ex. 4.

3. The criminal information filed against Petitioner
specifically charged him with executing and submitting
Medicare claim forms for podiatric services which
contained false and fraudulent statements relating to the
type of podiatry services allegedly provided to Medicare
patients. I1.G. Ex. 4,

4. The criminal information filed against Petitioner
was filed pursuant to a plea agreement entered between
Petitioner and the United States Attorney. I.G. Ex. 3.
The agreement recited that the information would be filed
against Petitioner, and that Petitioner agreed to plead
guilty to the charges contained in the information. Id.

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

Petitioner’s Exhibit P. Ex. (letter-page number)
Inspector General’s Exhibit I.G. Ex. (number)
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

Memorandun at (page)
5. On May 25, 1988, Petitioner pleaded guilty to the
charges in the information. I.G. Ex. 5. Petitioner was
sentenced to three years’ probation, the requirement that
he contribute 400 hours of community service, a $5,000
fine, and a $25.00 special assessment. Id.

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

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 Federal Rules of Civil Procedure,

Rule 56.

13. The I.G. excluded Petitioner from participation
in the Medicare program, and 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 Medicare program. The exclusions are
mandatory and for the minimum period of time required by
law. 42 U.S.C, 1320a-7(a)(1) and (c) (3) (B).

ANALYSIS

The I.G. bases his motion for summary disposition on
Petitioner’s conviction of a federal criminal offense of
making false statements and representations in claims for
Medicare reimbursement, and the provisions of 42 U.S.C.
1320a~7(a) (1), which mandate five year exclusions from
participation in the Medicare and State health care
programs for persons convicted of criminal offenses
related to the delivery of an item or service under the
Medicare or Medicaid programs. The 1.G. asserts that
Petitioner was convicted of an offense "related to" the
delivery of an item or service under the Medicare program;
therefore, Petitioner’s exclusions were mandatory.

Petitioner does not deny that he was convicted of a
criminal offense, nor does he deny the particulars of his
conviction. However, he challenges his exclusions on the
following bases: (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
relying on "unpublished guidelines/directives" to
determine exclusions; and (3) the I.G. improperly
characterized the crime for which Petitioner was

convicted as an offense "related to" the delivery of an
item or service under the Medicare program, and improperly
imposed and directed 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), (b) (6), or (b) (7).

Petitioner also contends that a factual controversy exists
in this case and that he is therefore entitled to an
evidentiary hearing. Petitioner claims that if he is
denied a hearing, such denial constitutes improper
application of "collateral estoppel" to the case. See
P.’s Memorandum at 26.

Petitioner’s arguments in this case are in many respects
identical to arguments made by petitioners in Jack W.
Greene v. The Inspector General, Docket No. C-56, decided
January 31, 1989, and Michael I. Sabbagh, M.D. v. The
Inspector General, Docket No. C-59, decided February 22,
1989. Counsel for Petitioner in this case also
represented petitioners in the Greene and Sabbagh cases.
Where appropriate, I will incorporate by reference my
analysis in Greene and Sabbagh in resolving the issues in
this case, rather than repeating verbatim the discussion
of those decisions.

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 asserts that a "default judgment"
should be entered against the I.G. because the Secretary
has improperly delegated to the I.G. the authority to
impose and direct exclusions. P.’s Memorandum at 35-38.
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 37. Thus, according to
Petitioner, exclusions imposed or directed pursuant to
this allegedly illegal delegation are invalid. Id. at 38.
The I.G. disputes these assertions, arguing that the
delegation of exclusion authority to the I.G. is nota
"program operating responsibility," and arguing further
that Congress has expressly approved the delegation.
I.G.’s Memorandum at 3-4.

The identical arguments concerning the lawfulness of the
delegation of exclusion authority to the I.G. were made by
petitioners in Greene and Sabbagh. In both cases I
decided that I lacked authority to hear and decide
contentions concerning the lawfulness of delegations of
authority from the Secretary to the I.G. My conclusion
was premised on my holding 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.
I additionally held that 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.

Petitioner offers nothing which augments that which was
asserted by petitioners in Greene and Sabbagh, and I
incorporate the analysis of those decisions, again
concluding that I do not have authority to hear and decide
Petitioner’s contentions concerning the delegation of
exclusion authority to the I.G.
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 asserts 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 predicates his argument on his claim that the
I.G. is relying on an "unpublished" regulation to
determine exclusions. P.’s Memorandum at 4-5. He also
bases his argument on an asserted requirement for the
Secretary to issue regulations clarifying allegedly
ambiguous provisions of the law. The I.G. denies that
regulations are necessary to implement the provisions of
42 U.S.C. 1320a-7, because the exclusion determination in
this case was made in accordance with "ascertainable
standards." Patchogue Nursing Center v. Bowen, 797 F.2d
1137, 1143 (2d Cir. 1986), cert. denied 107 S.Ct. 873
(1987).

Petitioner’s arguments again repeat those made by
petitioners in Greene and Sabbagh. In those cases I held
that I lacked authority to decide whether the Secretary
was under a duty to issue regulations before implementing
the 1987 law, for the same reason that I lacked authority
to determine the lawfulness of the Secretary’s delegations
to the I.G. Inasmuch as Petitioner makes no new argument
in this case, I incorporate the analysis of those cases
and again hold that I do not have authority to decide
whether the Secretary is obligated to issue regulations
implementing the 1987 revisions to 42 U.S.C. 1320a-7.3/

3. Summary disposition is appropriate in this case.
In both Greene and Sabbagh I held that the absence of
disputed material facts made summary disposition
appropriate. In Sabbagh I elaborated on the basis for
summary disposition, noting that summary disposition would
not be appropriate if the case hinged on disputed issues
of material fact, but that summary disposition should be

3/ As I noted in Greene and Sabbagh, my holding that I

do not have authority to resolve Petitioner’s claims
concerning the Secretary’s alleged obligation to issue
regulations makes it unnecessary at this point to decide
Petitioner’s contention that the law is ambiguous. But my
discussion at Part 4 of this Analysis and at analogous
parts of Greene and Sabbagh makes clear that the law is
not ambiguous.
entered where there was no disputed issue of material
fact, and where the undisputed facts demonstrated that one
party is entitled to judgment as a matter of law. Federal
Rules of Civil Procedure, Rule 56; Collins v. American
Optometric Ass’n., 693 F.2d 636 (7th Cir. 1982).

The issue which I must resolve in deciding the 1.G.’s
motion for summary disposition is whether the offense
which Petitioner was convicted of falls within the ambit
of 42 U.S.C. 1320a-7(a) (1). Certain facts must be
established in order for me to decide this issue. First,
I must determine whether Petitioner was "convicted" of an
offense. Here, there is no dispute, because Petitioner
concedes that his guilty plea constitutes a "conviction"
within the meaning of the law. P.’s Memorandum at 26.
Second, I must determine what offense Petitioner pleaded
guilty to. Again, there is no dispute on this question.
The I.G. has offered as an exhibit Petitioner’s plea of
guilty and Petitioner has not disputed the authenticity or
truthfulness of the document. I.G. Ex. 5.

The parties dispute whether Petitioner’s offense is
related to the delivery of an item or service under the
Medicare program. But, as the factual elements of this
issue have been established, the only question left for me
to determine is how Petitioner’s offense must be
characterized under the law. That is a legal question.

Petitioner asserts that there are disputed issues of
material fact in this case and argues that, as a
consequence, he is entitled to an evidentiary hearing.
P.’s Memorandum at 44. His assertion is grounded on his
allegation that, despite having pleaded guilty toa
criminal offense, he did not engage in unlawful conduct.
P.’s Memorandum at 26. From this, he argues that he is
“entitled to present . . . his side of the case." Id.
Petitioner argues further that entry of summary
disposition against him without permitting an evidentiary
hearing on the question of whether his conduct was
actually unlawful is an improper application of collateral
estoppel against him. P.’s Memorandum at 24, 26; see P.
Ex. A-1.

Petitioner’s argument is without merit, because the facts
which he alleges are not material to the issues in this
case. The act which triggers the mandatory exclusion
provisions of 42 U.S.C. 1320a-7(a)(1) is conviction of an
offense related to the delivery of an item or service
under the Medicare or State health care programs. The law
does not permit an individual convicted of such an offense
-10-

to argue against imposition of exclusions, on the ground
that he really wasn’t guilty of the offense he was
convicted of. Furthermore, in a case where the mandatory
exclusion provisions of subsection (a) (1) apply,
mitigating evidence is irrelevant.4/

Petitioner also offers the affidavit of a former
Department of Health and Human Services employee,
apparently as expert opinion to show that the offense
which Petitioner was convicted of was not an offense
related to the delivery of an item or service under the
Medicare or State health care programs. P. Ex. A~2.
Petitioners in both the Greene and Sabbagh cases made
similar offers. In both of those cases I held that how
the offenses which petitioners were convicted of should be
classified pursuant to 42 U.S.C. 1320a-7 is not a question
of fact, but of law. Expert opinion on this legal
question is irrelevant.

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 an appropriate mechanism
for deciding the case.

4. Given the undisputed material facts, the Ic.’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. The undisputed facts of this
case are that Petitioner pleaded guilty to, and was
convicted of, a criminal offense consisting of
fraudulently making false Medicare claims for podiatry
services. I.G. Ex. 5. 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). These sections require mandatory

4/ The mandatory exclusion provisions of 42 U.S.C. 1320a-
7(a)(1) and (c)(3)(B) establish a minimum exclusion period
of five years, but permit lengthier exclusions in
appropriate cases. The facts underlying Petitioner’s
conviction might be relevant if, pursuant to 42 U.S.C.
1320a-7(a) (1), the I.G. had imposed and directed
exclusions for a period greater than the statutory

minimum period of five years. The seriousness of
Petitioner’s conduct in that circumstance could be
relevant in assessing the reasonableness of the
exclusions. 42 C.F.R. 1001.125(b).
-1li-

five year minimum exclusions from participation in
Medicare and State health care programs, of five years,
for 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.

The offense which Petitioner pleaded guilty to is
indistinguishable from the offenses involved in the Greene
and Sabbagh cases. Petitioners in those cases were
convicted of defrauding the Medicaid program, by
misrepresenting the items for which reimbursement claims
were made (Greene), or by billing the program for a
fictitious service (Sabbagh).

In opposing the exclusions, Petitioner reiterates
arguments that failed in Greene and Sabbagh. His
principal contention is that the offense which Petitioner
was convicted of is not related to the delivery of an item
or service under Medicare, within the meaning of 42 U.S.C.
1320a-7(a) (1). He asserts that in 1987 Congress narrowed
the scope of offenses which are subject to the mandatory
exclusion provisions of 42 U.S.C. 1320a-7(a)(1) by
deleting "financial" crimes from the category of offenses
which requires exclusions. He argues that in 1987
Congress classified fraud against Medicare or Medicaid as
offenses which might justify exclusions under the
discretionary exclusion provisions of 42 U.S.C. 1320a-
7(b) (1). P.’s Memorandum at 15-23. Therefore, according
to Petitioner, his criminal conviction would, at most,
justify an exclusion under the discretionary exclusion
provisions of 42 U.S.C. 1320a-7(b).5/

Petitioner’s argument as to the meaning of the law has two
elements. First, Petitioner asserts that in revising the
statute in 1987, Congress changed key phrasing in section
(a) (1) to narrow its meaning to no longer include
"financial offenses" within the mandatory exclusion
provisions. He predicates this argument on Congress’ 1987
substitution of the term in section (a)(1) "related to the
delivery of an item or service" for the predecessor

5/ A tactic employed by Petitioner throughout his
argument is to characterize his offense as benign or
noncriminal. He at times refers to the offense as a
"billing dispute" (see P.’s Memorandum at 8), and at other
times as an "alleged offense" (see P.’s Memorandum at 2).
But Petitioner’s plea indelibly establishes a criminal
conviction for making false claims for Medicare
reimbursement. I.G. Ex. 5.
-12-

language "related to such individual’s participation in
the delivery of medical care or services."

I do not accept this analysis. The plain meaning of the
1987 enactment is to require exclusions of individuals or
entities convicted of fraud, theft, or embezzlement in
connection with the rendering of items or services under
the Medicare or State health care programs.6/

The second aspect of Petitioner’s argument is based on the
language of 42 U.S.C. 1320a-7(b)(1). He asserts that this
section, which provides for permissive exclusions of
individuals or entities convicted of fraud, theft or
embezzlement against government-financed health care
programs, was intended to provide the sole basis for
excluding parties who committed "financial" offenses
related to the delivery of items or services under the
Medicare or State health care programs. As I noted in
both Greene and Sabbagh, this statutory section, when read
out of context, is broad enough in its terms to encompass
Petitioner’s offense. However, when it is read in
context, it becomes evident that Congress intended this
section to provide for discretionary exclusions of
individuals and entities who are convicted of offenses
directed against programs other than Medicare or State
health care programs.7/

Petitioner makes two additional arguments concerning the
classification of his conduct under 42 U.S.C. 1320a-7. He
contends that his conduct should be considered as a claim
for "excessive charges" under the discretionary exclusion
provisions of 42 U.S.C. 1320a-7(b) (6). He also asserts
that, as he was convicted of a criminal offense pursuant
to 42 U.S.C. 1320a-7b, his offense falls within the
category of discretionary exclusions described in

6/ Because its meaning is plain, it is unnecessary to
compare the current law with predecessor statutes or to
examine legislative history to find Congressional intent.
However, as I noted in both Greene and Sabbagh, my
interpretation of the meaning of 42 U.S.C. 1320a-7(a) (1)
is supported by both a comparison of the present statute
with its predecessors, and legislative history of the 1987
enactment and predecessor legislation.

7/ This intent is clear without reference to legislative
history. Again, however, as I noted in Greene and
Sabbagh, legislative history supports my interpretation of
the law.
- 13 -

42 U.S.C. 1320a-7(b) (7), and, therefore, he cannot be
excluded pursuant to 42 U.S.C. 1320a-7(a)(1). P.’s
Memorandum at 31.

The operative fact which triggers the mandatory exclusion
provisions of subsection (a)(1) is a conviction for an
offense related to the delivery of an item or service
under Medicare or Medicaid. Had Petitioner not been
convicted of an offense, then the I.G. could appropriately
consider whether Petitioner’s conduct provided a basis for
his exclusion under any of the subsections of 42 U.S.C.
1320a-7(b), including subsections (b)(6) and (b) (7).
However, as Petitioner was convicted of an offense
described in subsection (a)(1), the I.G. has no choice but
to exclude him from participation in Medicare, and to
direct his exclusion from participation in State health
care programs, for at least five years.

Thus, 42 U.S.C. 1320a-7(b) (7) permits the Secretary to
exclude, and to direct the exclusions of, any individual
or entity "that the Secretary determines has committed an
act which is described" in either 42 U.S.C. 1320a-7a or

42 U.S.C. 1320a-7b (emphasis added). This subsection
permits the Secretary to impose and direct exclusions on a
party that the Secretary determines has engaged in
criminal conduct directed against Medicare or Medicaid,
without waiting for that party to be charged with or
convicted of a criminal offense. Once that party is
convicted, then for purposes of determining exclusions,
the facts of the case no longer fall within the provisions
of subsection (b) (7), but within subsection (a)(1). The
same conclusion applies to cases that, but for a criminal
conviction, fall within the provisions of subsection

(b) (6) .8/

I therefore conclude that this case involves a conviction
of a criminal offense related to the delivery of an item
or service under the Medicare program, and is governed by
the mandatory exclusion provisions of 42 U.S.C. 1320a-
7(a) (1).

8/ At any rate, it is difficult to perceive how
Petitioner’s conduct would fall within the ambit of
subsection (b)(6). That subsection permits exclusion of
an individual or entity whom the Secretary determines has
made excessive or unnecessary charges for services.
Petitioner was neither indicted nor convicted for making
excessive or unnecessary charges, but, rather, for making
false statements in Medicare claims. I.G. Ex. 4, 5.
- 14 -

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:

Roberto V. Salinas,
DATE: APR 12, 1989

Petitioner,
“veo Docket No. C-72

The Inspector General. DECISION CR 23

DECISION OF ADMINISTRATIVE LAW JUDGE
ON MOTION FOR SUMMARY DISPOSITION

On October 14, 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.1/ Petitioner was advised that his
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.

Petitioner timely requested a hearing as to the
exclusions, and the matter was assigned to me for a
hearing and decision. I conducted a prehearing conference
on January 17, 1989, at which the parties expressed their
intent to move for summary disposition. I issued a
prehearing Order on January 26, 1989, which established a
schedule for moving for summary disposition but did not
request oral argument on the motion.

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 Title XIX of the
Act (Medicaid).
Petitioner neither filed a motion for summary disposition
nor responded to the I.G.’s motion. The time limit
established by my Order for responding to the I.G.’s
motion has expired. I have considered the uncontested
facts asserted by the I.G., as well as the I.G.’s
arguments and the contention made by Petitioner in his
hearing request. I conclude that the exclusions imposed
and directed by the I.G. are mandatory. Therefore, I am
deciding this case in favor of the I.G.

ISSUE

The issue raised by Petitioner in his hearing request and
argued by the I.G. in his motion for summary disposition
is whether Petitioner was "convicted" of an offense within
the meaning of 42 U.S.C. 1320a-7(i).

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 State health care
programs, of any individual or entity "convicted of a
criminal offense related to the delivery of an item or
service" under Medicaid or any State health care program.

Prior to July 1988, "conviction" was 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.ox other program where judgment of
convictiowt has beén withheld. In July 1988, Congress
revised subsection (i) (4), substituting the language
“first offender, deferred adjudication, or other
arrangement or program" for the language "first offender
or other program." Pub. L. 100-360, Sec. 411 (July 1,
1988).

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
-3-

years. ... It further provides that an excluded party
may request a hearing as to the exclusions. 42 U.S.C.
1320a-7(f).

2. Texas Code of Criminal Procedures: The Texas
Code of Criminal Procedure states at Art. 42.12, Sec.
3d(a), that a court may, after receiving a defendant’s
guilty plea or plea of nolo contendere, hearing the
evidence, and finding that it substantiates the
defendant’s guilt, defer further proceedings without
entering an adjudication of guilty, and place the
defendant on probation. It further states, at Sec. 7,
that after a defendant convicted in a criminal proceeding
has satisfactorily completed a term of probation, the
sentencing court shall "amend or modify the original
sentence imposed, if necessary, to conform to the
probation period and shall discharge the defendant." This
section further states that, with exceptions, the court
may, in discharging the defendant, "set aside the verdict
or permit the defendant to withdraw his plea, and shall
dismiss the accusation, complaint, information or
indictment against such defendant, who shall thereafter be
released from all penalties and disabilities resulting
from the offense or crime of which he has been convicted
or to which he has pleaded guilty, except that proof of
his said conviction or plea of guilty shall be made known
to the court should the defendant again be convicted of
any criminal offense."

3. 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 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 1001.128 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. On April 15, 1988, a criminal information was
issued against Petitioner in Texas state court, charging
him with the felony of Securing Execution of Document by
Deception. I.G. Ex. 1.2/

2. The information accused Petitioner of intending
to defraud the Texas Department of Human Services by
making a false entry in a claims form for services. I.G.
Ex. 1.

3. On April 15, 1988, Petitioner pleaded guilty to
the charge in the information. I.G. Ex. 2. In accepting
his plea, the Texas court found that there existed
sufficient evidence to find Petitioner guilty of the
offense. Id..

4. The court decided that the interests of society
and Petitioner would be served by deferring further
proceedings without entering an adjudication of guilty.
I.G. Ex. 2. It imposed a four-year term of probation on
Petitioner, and assessed a $1000.00 fine. Id..

5. The court concluded that, upon successful
completion of Petitioner’s probation, Petitioner would be
discharged and the proceeding against him dismissed,
except that Petitioner’s sentence would be admissible in
any future proceedings against Petitioner, to be
considered on the issue of penalty. I.G. Ex. 2.

6. On October 14, 1988, the I.G. excluded Petitioner
from participating in the Medicare program, and directed
that he be excluded from participating in State health
care programs, for five years. The exclusions were based
on the I1.G.’s determination that Petitioner had been
convicted of an item or service under the Medicaid
progran.

7. Petitioner’s guilty plea in Texas state court
constitutes a “conviction” within the meaning of 42 U.S.C.

2/ The I.G.’s exhibits and memorandum will be cited as
follows:

1.G.’s Exhibit I.G. Ex. (number)
I.G.’s Memorandum I.G.’s Memorandum at (page)
1320a-7(i), notwithstanding the terms of the sentence
imposed on Petitioner pursuant to Texas law.

8. The actions taken by the I.G., excluding
Petitioner from participating in the Medicare program and
directing his exclusion from participating in State health
care programs, were mandated by 42 U.S.C. 1320a-7(a) (1).

ANALYSTS

There are no contested issues of material fact in this
case. The I.G. offered evidence to establish that
Petitioner entered a guilty plea to a criminal offense
related to the delivery of an item or service under the
Medicaid program. The I.G. contends that this plea is a
"conviction" within the meaning of 42 U.S.C. 1320a-7(i)
and that Petitioner’s exclusions from participation in the
Medicare and State health care programs were, therefore,
mandated by 42 U.S.C. 1320a-7(a)(1). I.G.’s Memorandum at
4-12.

Petitioner did not file a response to the I.G.’s motion
for summary disposition of this case. However, Petitioner
asserted in his hearing request that he was not
"convicted" within the meaning of the law. Apparently,
Petitioner’s sole contention is that his guilty plea does
not fall within the definition of "conviction" contained
in 42 U.S.C. 1320a-7(i). This contention appears to be
premised on the fact that Petitioner’s plea was received
and his sentence entered under the deferred adjudication
provisions of the Texas Code of Criminal Procedure.

The issues in this case duplicate those presented in
another recent case, Ca SE. 2. bat -D. v. The
Inspector General, Docket No. C-74. Petitioner in Zamora
entered a nolo contendere plea in Texas court to an
offense related to the delivery of an item or service
under the Medicaid program. As with Petitioner in this
case, his plea was entered under the deferred adjudication
provisions of Texas law.3/ Petitioner in Zamora argued
that, because his plea was subsequently expunged under
Texas law, it did not constitute a "conviction" within the

3/ Petitioner in Zamora completed his probation and his
conviction was expunged under Texas law. In the present
case, Petitioner is serving a term of probation, and,
under Texas law, will be eligible to have his conviction
expunged if he satisfactorily completes his probation.
See Texas Code of Criminal Procedure, Art. 42.12, Sec. 7.
meaning of 42°U.S.C. 1320a-7(i). He also asserted that to
the extent his plea does constitute a "conviction" within
the meaning, of federal law, the federal statute conflicted
with Texas faw. He argued that Congress had not intended
in enactirg exclusion legislation to preempt state penal
law. Therefore, according to Petitioner in Zamora, the
conflict between federal and state law must be resolved by
holding that his nolo contendere plea was not a
"conviction."

I reject these arguments. As I concluded in Zamora, both
the plain meaning of the federal exclusion law and
legislative history establish that the definition of
"conviction" in 42 U.S.C. 1320a-7(i) encompasses pleas
accepted under state deferred adjudication statutes. The
definition of "conviction" is premised on the entry of a
plea by an individual and its acceptance by a court, It
is irrelevant that the conviction may subsequently be
expunged.

There exists no issue of preemption because there is no
conflict between the federal exclusion law and Texas penal
statutes. The purpose of the federal law is remedial and
not punitive. It does not impose criminal penalties in
addition to those imposed by state criminal laws. There
is nothing in the Texas Code of Criminal Procedure which
suggests that its deferred adjudication provisions
immunize defendants from federal remedies.

CONCLUSION

Based on the uncontested material facts and the law, 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:

Thomas C. Chestney, D.M.D., paTE: MAR 29, 1989

Petitioner,
7~ Vem Docket No. C-53

The Inspector General. DECISION CR 21

DECISTON AND ORDER

The Petitioner waived his right to a formal evidentiary
hearing in this five year federal exclusion case, and the
parties jointly requested that I issue a decision and
order based on the uncontested facts.

APPLICABLE STATUTES AND REGULATIONS

I. Federal Statutes

This case is governed by section 1128 of the Social
Security Act (Act); section 1128 is codified at 42 U.S.c.
1320a-7 (West U.S.C.A., 1988 Supp.). Section 1128(a) (1)
of the Act provides for the exclusion from Medicare and
Medicaid of those “convicted of a criminal offense related
to the delivery of an item or service" under the Medicare
or “any State health care" (Medicaid) programs. Section
1128(c)(3)(B) provides for a five year minimum period of
exclusion for those, like the Petitioner, excluded under
section 1128(a)(1). The Inspector General (1.G.) is
required to exclude such individuals from participation in
Medicare, and to direct each State to exclude such
individuals from participation in Medicaid for a period
which is at least the "same as" the period of the Medicare
exclusion. 42 U.S.C. 1320a-7(d)(1), (d) (2), (d)(3)- See
also, 42 U.S.C. section 1396(a) (39). Section
1128(d) (3) (B) (ii) of the Act allows a State to
independently exclude a convicted individual from Medicaid
for a period which is "longer" than the federally directed
period of exclusion.
II. Federal Regulations

The governing federal regulations (Regulations) are
codified in 42 C.F.R. Parts 498, 1001, and 1002 (1987).
Part 498 governs the procedural aspects of this exclusion
case; Parts 1001 and 1002 govern the substantive aspects.

Sections 1001.123, and 1001.124, at 42 C.F.R., consistent
with section 1128(d)(2) of the Act, provide that the I.G.
must direct a State to exclude such individual from the
Medicaid program for at least the "same period" that the
I.G. has excluded the individual from the Medicare
program. Section 1001.123 requires the I.G. to issue a
notice to an excluded individual whenever the I.G. has
“conclusive information" that such individual has been
convicted of a crime related to the delivery of Medicare
or Medicaid items or services; such exclusion must begin
"15 days from the date on the notice." A State must
follow the I.G.’s direction to exclude convicted
individuals from Medicaid for at least the "same period"
as the federal Medicare exclusion. Sections 1002.211(a)
and 1002.211(b), consistent with section 1128(d) (3) of the
Act, provide that a State may also impose separate
Medicaid exclusions under State law.

Sections 1001.125 and 1001.130 provide that the individual
shall remain excluded from the Medicare and Medicaid
programs until reinstated by the I.G. Section 1002.230(a)
provides that a State may not reinstate until the I.G.
notifies the State that the individual may be reinstated.

III. State Statutes

Pennsylvania law, similar to section 1128 of the Act,
provides for a separate five year termination from
Medicaid of any person convicted of a program-related
crime. 62 P.S. 1407(b)(3). The State termination,
however, begins as of the date of conviction, rather than
15 days after the notice is received.

PROCEDURAL AND FACTUAL BACKGROUND

On March 30, 1988, the State of Pennsylvania notified the
Petitioner that, pursuant to State law, it had terminated
his participation in the Medicaid program for a period of
five years beginning January 19, 1988 and ending on
January 19, 1993.1/

By letter dated July 25, 1988 (Notice), the I.G. notified
the Petitioner, that pursuant to federal law, the
Petitioner was being excluded from Medicare for a period
of five years, commencing 20 days from the date of the
Notice. The Notice also stated that the I.G. had directed
the State of Pennsylvania to exclude the Petitioner from
Medicaid for at least the "same period"; the basis for
these exclusions was the Petitioner’s criminal conviction.

Pursuant to the I.G.’s directive, Pennsylvania notified
the Petitioner on August 16, 1988 that he was excluded
from Medicaid for the period August 13, 1988 to August 13,
1993.2/

By letter dated September 21, 1988 (Request), the
Petitioner requested a hearing before a federal
Administrative Law Judge (ALJ) and this case was docketed.
I conducted a telephone prehearing conference with counsel
for the parties on October 25, 1988. On October 27, 1988,
I issued a Prehearing Order and Notice of Hearing, noting
that the parties had agreed that the only dispute was
legal and not factual. Thereafter, the parties submitted
briefs in support of their respective motions for summary
disposition.

The Petitioner admitted that he was convicted of a
criminal offense related to the delivery of Medicaid
services and does not contest that the I.G. is required by
federal law to exclude him from both the Medicare and
Medicaid programs for a five year minimum period. Also,

a1/ January 19, 1988 was the date of the Petitioner’s
criminal conviction in Blair County Pennsylvania of a
criminal offense related to the delivery of services under
the Medicaid program. Specifically, the Petitioner was
found guilty of submitting Medicaid claims stating that
less than six (6) teeth were extracted (when, in fact,
more than five (5) teeth were extracted) in order to avoid
obtaining prior authorization for Medicaid payment, which
is required when more than five (5) teeth are extracted.
The Petitioner pled guilty to "Theft By Deception" and
committing a "Provider Prohibited Act" in violation of 18
P.C.S.A. 3922(a)(1) and 62 P.S. 1407(a) (7).

2/ The I.G. excluded the Petitioner from August 14, 1988
to August 13, 1993. I.G. Br/3; I.G. Ex./II.
-4-

the Petitioner does not contest the timing of or the
period of his Medicare exclusion. P.Br/3. Instead, the
Petitioner argues that since the State of Pennsylvania had
already terminated him from Medicaid for five years,
beginning seven months prior to his federally directed
Medicaid exclusion, the federally directed Medicaid
exclusion should last only four years and five months,
rather than five years. He argues, in effect, that the
I.G. added seven months to his five year Medicaid
exclusion by simply delaying the sending of the Notice for
seven months, a result that is contrary to the Act and
Congressional intent.

SSU.
The issue in this case is whether the timing or length of
the federally directed Medicaid exclusion imposed upon the
Petitioner by the I.G. is reasonable.

FINDINGS OF FACT AND CONCLUSIONS OF LAW 3/

Having considered the entire record, the arguments and the
submissions of the parties, and being advised fully
herein, I make the following Findings of Fact and
Conclusions of Law:

1. The Petitioner, a provider of dental services, admits
that he was "convicted of a criminal offense" on

January 19, 1988 and that the criminal offense to which he
pled guilty is "related to the delivery of an item or
service" under Medicaid within the meaning of section 1128
of the Act. P.Br./1,2,7; P.Ex./A. 4/

3/ Any part of this Decision and Order preceding and
following the Findings of Fact and Conclusions of Law
which is obviously a finding of fact or conclusion of law
is incorporated herein; these are primarily the facts and
conclusions that were not disputed or which are clear and
do not need to be repeated.

4/ The citations in this Decision and Order are as
follows:

Petitioner’s Brief P. Br./ (page)
1.G.’s Brief I.G. Br./ (page)
Petitioner’s Exhibit P. Ex./ (letter)

I.G.’s Exhibit I.G. Ex./ (number)
2. Pursuant to Pennsylvania law, an individual who is
convicted of "Provider Prohibited Acts" must be terminated
from participation in Medicaid for a five year period, to
begin on the date of conviction. P. Br./7; I.G. Br./3; 62
Pa. Stat. Ann. Section 1407(b) (3); See P. Ex./A.

3. Pennsylvania properly terminated the Petitioner from
the Medicaid program for the five year period from January
19, 1988 through January 19, 1993. P. Br./2; I.G. Br./7;
P. Ex./B.

4. In accordance with section 1128 of the Act and the
Regulations, the I.G. did properly exclude the Petitioner
from Medicare for a five year period, from August 14, 1988
through August 13, 1993. P.Ex./C.

5. As required by sections 1128(d) (2) and (da) (3) (A) of
the Act, the I.G. properly notified Pennsylvania of the
Petitioner’s exclusion from participation in Medicare and
properly directed Pennsylvania to exclude the Petitioner
from Medicaid for at least the "same period" of time as
the federal exclusion from Medicare.

6. Pursuant to federal direction from the I.G.,
Pennsylvania properly excluded the Petitioner from
Medicaid for the same five year period as the federal
exclusion from Medicare, from August 14, 1988 through
August 13, 1993.

7. Both the length and the timing of the five year period
of exclusion from Medicare, imposed by the I.G., and the
five year period of exclusion from Medicaid, directed by
the I.G., are reasonable within the meaning of section
1128 of the Act and the Regulations.

8. The State of Pennsylvania’s March 30, 1988 Medicaid
termination is independent of both the Medicare exclusion
and the federally directed Medicaid exclusion. I have no
authority to decide any issues with respect to this State
imposed termination.

9, The I.G. acted appropriately and properly under the
Act and Regulations in this case, and the Petitioner is
not entitled to the relief he sought.
DISCUSSION

Section 1128 of the Act clearly requires the I.G. to
exclude from Medicare, for a minimum of five years,
individuals who are convicted of "a criminal offense
related to the delivery of" a Medicare or Medicaid "item

or service." The I.G. has no discretion in reducing the
period of time for such an exclusion. 42 U.S.C.
(c) (3) (B). The I.G. must exclude for at least five years

and the exclusion must begin 15 days from the date on the
notice.5/ 42 U.S.C. 1320a - 7(c) (B)(B); 42 C.F.R.
1001.123, 1002.206. This provision of federal law also
requires the I.G. to direct any State to exclude such
individuals from Medicaid for a minimum of five years,
with the five year period being at least "the same as any
period" of Medicare exclusion. 42 U.S.C. 1320a-7(a) (1),
(c) (3) (B), and (d)(3)(A); 42 C.F.R. 1002.211. The I.G.
has no authority to reduce the time or alter the Medicaid
period of exclusion, nor does the State, pursuant to the
I.G.’s directive, possess any authority to reduce the time
or alter the Medicaid period of exclusion. Congressional
intent on this matter is clear:

A minimum five-year exclusion is appropriate, given
the seriousness of the offenses at issue. .. .
Moreover, a mandatory five-year exclusion should
provide a clear and strong deterrent against the
commission of criminal acts.

S. Rep. No. 100-109, 100th Cong. 1st Sess. 2; 1987 U.S.
Cong. & Ad. News 682, 686.

In this case, the I.G. properly excluded the Petitioner
from participation in Medicare for a five year period,
beginning on August 14, 1988 and ending on August 13,
1993. The exclusion by the I.G. resulted from the
Petitioner having been "convicted of a criminal offense
related to the delivery of" Medicaid services. The I.G.
then properly directed Pennsylvania to exclude the
Petitioner from the Medicaid program for at least the
"same period" as the Petitioner’s Medicare exclusion. The
State of Pennsylvania complied with this federal direction
and properly excluded the Petitioner for a period at least
"the same as" the period of the Petitioner’s Medicare
exclusion. 42 U.S.C. 1320a-7(d)(3) (A). In addition, the
Petitioner was separately terminated from participation in

5/ The I.G. allowed an additional 5 days for mailing.
the Medicaid program by the State of Pennsylvania under
its own authority.

The Petitioner complains that the difference in the timing
of the State law Medicaid termination, which was seven
months prior to the federally directed Medicaid exclusion,
effectively results in a five year and seven month
exclusion from Medicaid. The Petitioner argues that this
result is due to the I.G.'s instruction to the State of
Pennsylvania to exclude the Petitioner from the Medicaid
program for at least the "same period" the period of his
Medicare exclusion. The Petitioner asserts that an
exclusion from Medicaid for a period in excess of five
years is both unintended and unreasonable. He argues that
the federally directed Medicaid exclusion should run
concurrently with the State Medicaid termination (i.e.,
January 19, 1988 through January 19, 1993) rather than
concurrently with the Medicare exclusion (i.e., August 14,
1988 through August 13, 1993). Thus, the issue raised by
the Petitioner concerns the reasonableness of the length
or period of the federally directed Medicaid exclusion.6/

The Petitioner's loss in being effectively excluded from
Medicaid for a period in excess of five years, is

something for which there is no relief for.7/ The reason
for this is that the Act and Regulations clearly provide
no discretion for reducing a five year minimum period of

6/ In federal exclusion cases, the Regulations, at
section 1000.128(a), enumerate three issues which may be
considered by an ALJ in a federal exclusion case. The ALJ
may consider whether: (1) the Petitioner was convicted of
a criminal offense, (2) the conviction was related to the
Petitioner's delivery of Medicare or Medicaid items or
services, and (3) the length of the exclusion is
reasonable, The Petitioner does not contest the first two
issues.

7/ The only relief available to the Petitioner under the
Act and Regulations appears to be pursuant to section
1002.214 of the Regulations, which allows a State to
request reinstatement by the I.G. if there is a “shortage
of providers or other health care personnel in the area."
The Petitioner must first seek such relief from the State,
and the I.G.'s decision does not appear to be reviewable.
Also, the Petitioner had the option of appealing the
August 16, 1988 Notice from Pennsylvania, but solely on
the grounds of mistaken identity. 1I.G. Ex/II.
-8-

exclusion or for altering the effective dates of that five
year period. The I.G. properly complied with the Act and
Regulations in excluding the Petitioner from August 14,
1988 through August 13, 1993, and Pennsylvania correctly
followed the I.G.'s directive to exclude the Petitioner
from Medicaid for at least the same period. Furthermore,
the timing of the I.G.'s Notice in this case, some seven
months after the Petitioner's conviction, was reasonable
considering that seven months is a reasonable amount of
time for the I.G. (1) to obtain "conclusive information"
of the Petitioner's program-related conviction in State
court, (2) to make a determination regarding that program-
related conviction, and (3) to issue his notice of said
determination.8/ In summary, under the circumstances in
this case, the I.G. acted reasonably and had no authority
under the Act and Regulations to reduce the length or
alter the period of the federally directed Medicaid
exclusion.

CONCLUSION

I conclude that the Petitioner is not entitled to the
relief sought. Accordingly, I decide this case in favor
of the I.G. Based on the law and the undisputed material
facts in the record, I conclude that the length and the
period of the five year Medicare exclusion imposed upon
the Petitioner by the I.G. was reasonable and that the
period of the federally directed exclusion from the
Medicaid program was correctly imposed to run concurrently
with the Petitioner's exclusion from Medicare.

IT IS SO ORDERED.

/s/

Charles &. Stratton
Administrative Law Judge

8/ A delay in issuing a notice of exclusion much beyond
seven months from the date of conviction in a minimum five
year exclusion case, like this one, might result in the
necessity of an evidentiary hearing to determine if the
I.G. issued the notice in a timely fashion as required by
section 1003.123 of the Regulations.