DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board

Civil Remedies Division

In the Case of:

Gordon Lee Hanks, R.Ph.,
DATE: September 22, 1989
Petitioner,
Docket No. C-112
DECISION CR 44

-v-

The Inspector General.

DECISION OF ADMINISTRATIVE LAW JUDGE
ON MOTION FOR SUMMARY DISPOSITION

On February 28, 1989, the Inspector General (the I.G.)
notified Petitioner that he was being excluded from
participation in Medicare and State health care

programs. The I.G. told Petitioner that he was being
excluded as a result of his conviction in Utah State
Court of an offense related to the delivery of an item or
service under Medicaid. Petitioner was advised that
exclusions from participation in Medicare and Medicaid of
individuals or entities convicted of such an offense are
mandated by section 1128(a)(1) of the Social Security
Act. The I.G. further advised Petitioner that the law
required that the minimum period of such exclusions be
not less than five years. Petitioner was advised that
his exclusions were for the minimum five-year period.

Petitioner timely requested a hearing, and the case was
assigned to me for a hearing and a decision. The I.G.
moved for summary decision in the case, and Petitioner
opposed the motion. I heard oral argument of the motion
in Salt Lake City, Utah, on September 6, 1989.

1 “state health care program" is defined by
section 1128(h) of the Social Security Act to include any
State Plan approved under Title XIX of the Act (such as
Medicaid). I use the term "Medicaid" hereafter to
represent all State health care programs from which
Petitioner was excluded.
2

I have considered the parties' arguments, their fact
submissions, and applicable law. I conclude that the
exclusions imposed and directed by the I.G. in this case -
are mandated by section 1128(a)(1) of the Social Security
Act. Therefore, I enter summary disposition in favor of
the I.cG.

ISSUES
The issues in this case are whether:

1. Summary disposition is appropriate;

2. Petitioner was "convicted" of a criminal offense
within the meaning of section 1128(i) of the Social
Security Act;

3. Petitioner was convicted of a criminal offense
related to the delivery of an item or service under a
Medicaid program; and

4. The exclusions imposed and directed by the I.G.
against Petitioner were mandated by law;

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. Petitioner is the proprietor of a pharmacy in
Holladay, Utah. Oral Arg.

2 The parties' exhibits, memoranda, and the
recorded oral argument will be cited as follows:

I.G.'s Exhibit I.G. Ex. (number)
Petitioner's Exhibit Pa,Ex. (number)
Inspector General's Brief I.G.'s Brief at (page)
in Support of Motion to
Affirm
Petitioner's Brief in P.'s Brief at (page)

Response to Inspector
General's Motion to

Affirm & Petitioner's
Request for Dismissal

Oral Argument Oral Arg.
3

2. On September 14, 1988, Petitioner was charged with
the criminal offense of filing false Medicaid claims.
P. EX. 4; I.G. Ex. 3.

3. On October 6, 1988, Petitioner entered a plea bargain
agreement. P. Ex. 2; I.G. Ex. 5.

4. Petitioner agreed to plead guilty to filing false
claims. P. Ex. 2; I1.G. Ex. 5.

5. Petitioner agreed to pay the sum of $4,200.00 to the
Utah Bureau of Medicaid Fraud, as restitution, penalty,
and to cover the costs of investigating his case. P. Ex.
2; I1.G. Ex. 5.

6. Petitioner acknowledged that if he failed to comply
with each and every term of the plea agreement and the
orders of the Third Circuit Court, Salt Lake County,
State of Utah (the Court), the Court would accept
Petitioner's guilty plea and impose a sentence in his
case. P. Ex. 2; 1.G. Ex. 5.

7. The parties to the plea agreement recommended that
the Court receive Petitioner's plea and hold the plea and
imposition of sentence in abeyance pending Petitioner's
successful completion of probation.

P. Ex. 2; I.G. Ex. 5.

8. On October 6, 1988, Petitioner pleaded guilty to
filing false claims with Medicaid. P. Ex. 3;
I.G. Ex. 6.

9. The Court agreed to accept the terms of the plea
agreement, and advised Petitioner that if he violated the
agreement, the Court would enter Petitioner's guilty plea
and impose a sentence.

P. Ex. 3; I.G. Ex. 6.

10. On December 6, 1988, the Court dismissed the charges
against Petitioner, based on Petitioner's assertion that
he had complied with the terms of the plea agreement.

Pp. Ex. 1.

11. Petitioner was convicted of a criminal offense
within the meaning of section 1128(i) of the Social

3 Neither party offered a copy of the statute to

which Petitioner pleaded guilty to having violated. At
oral argument, counsel agreed that Petitioner had pleaded
guilty to filing false claims with Medicaid.
4

Security Act. Findings 3-9; Social Security Act, section
1128(i). -

12. Petitioner was convicted of an offense related to
the delivery of an item or service under a Medicaid
program. Findings 4, 8; Social Security Act, section
1128(a) (1).

13. The Secretary of Health and Human Services (the
Secretary) delegated to the I.G. the authority to
determine, impose, and direct exclusions pursuant to
section 1128 of the Social Security Act. 48 Fed. Reg.
21662, May 13, 1983.

14. On February 28, 1989, the I.G. excluded Petitioner
from participating in the Medicare program and directed
that he be excluded from participating in Medicaid,
pursuant to section 1128(a)(1) of the Social Security
Act. I.G. Ex. 1.

15. Summary disposition is appropriate in this case.
See 56 F.R.C.P.

16. The exclusions imposed and directed against
Petitioner by the I.G. were for five years, the minimun
period required by section 1128(a)(1) of the Social
Security Act. I.G. Ex. 1; Social Security Act,

section 1128(c) (3) (B).

17. The exclusions imposed and directed against
Petitioner by the I.G. are mandated by law. Finding 12;
Social Security Act, sections 1128(a) (1); 1128(c) (3) (B).

ANALYSIS
1. Summary disposition is appropriate in this case.

The I.G. moved for summary disposition in this case,
contending that he is entitled to a*favorable decision as
a matter of law. The motion raises the threshold
question of whether this is an appropriate case to enter
summary disposition.

Summary disposition is appropriate in an exclusion case
where there are no disputed issues of material fact and
where the undisputed facts demonstrate that one party is
entitled to judgment as a matter of law. John W.
Foderick, M.D., v. The Inspector General, Docket No.
C-113, decided September 8, 1989; Howard B. Reife,
D.P.M., v. The Inspector General, Docket No. C-64,
decided April 28, 1989; Michael I. Sabbagh, M.D., v. The

5

Inspector General, Docket No. C-59, decided February 22,
1989; Jack W. Greene v. The Inspector General, Docket No.
C-56, decided January 31, 1989, appeal docketed, DAB No.
89-59, Decision No. 1078 (1989); see F.R.C.P. 56.

Summary disposition should not be granted unless, after
considering the facts in the light most favorable to the
party against whom the motion is made, the decision maker
is convinced that there exists no genuine issue of
material fact remaining for trial; the moving party then
is entitled to a decision as a matter of law.

Continental Casualty Co. v. City of Richmond, 763 F.2d
1076, 1078-79 (9th Cir. 1985); Lang v. New York Life Ins.
Co., 721 F.2d 118, 120 (3rd Cir. 1983); D.L. Auld Co. v.
Chroma Graphics Corp., 714 F.2d 1144, 1146 (Fed. Cir.
1983). Summary disposition is an appropriate method of
disposing of a legal question of statutory construction
in which the legislative history and policy are the
primary considerations. Mobil Oil Corp. v. Federal
Energy Administration, 566 F.2d 87, 92 (Temp. Emer.

Ct. App. 1977).

I conclude that the material facts in this case are not
disputed. Indeed, the parties both rely on the identical
documents to establish the facts of this case. The
parties vigorously dispute the meaning of the language in
section 1128 of the Social Security Act, and how that
language should be applied to the undisputed facts of
this case. Therefore, the issues which must be decided
in this case are issues of legal interpretation, and
summary disposition is an appropriate mechanism to
resolve these issues.

* In his Request for Oral Argument on the motion
for summary disposition, Petitioner stated that he
intended to call witnesses to rebut+the I.G.'s motion.
After hearing the parties' contentions as to whether
testimony was appropriate, I ruled that there existed no
dispute as to material facts which justified
supplementation of the record through testimony or
additional evidence in the form of affidavits or other
documents. See Prehearing Order and Notice of Hearing
for Oral Argument, August 7, 1989. At oral argument, I
permitted Petitioner's counsel to make an offer of proof
as to any additional facts he deemed relevant to the
case. I accept counsel's representations as true for
purposes of deciding the I.G.'s motion for summary
disposition.
6

2. Petitioner was "convicted" of a criminal offense
within the meaning of section 1128(i) of the Social
Security Act.

Petitioner's principal contention is that he was not
"convicted" of a criminal offense within the meaning of
section 1128 of the Social Security Act. Therefore,
according to Petitioner, there exists no authority for
the I.G. to impose and direct exclusions against him.

Section 1128(a)(1) of the Social Security Act requires
the Secretary (or his delegate, the I.G.) to exclude from
participation in Medicare, and to direct the exclusion
from participation in Medicaid:

any individual or entity that has been convicted
of a criminal offense related to the delivery of
an item or service under title XVIII or under any
State health care program. (Emphasis added).

The term "convicted of a criminal offense" is defined at
section 1128(i) of the Social Security Act. The law
provides that an individual or entity is considered to
have been convicted of a criminal offense:

(1) when a judgment of conviction has been entered
against the individual or entity by a Federal,
State, or local court, regardless of whether there
is an appeal pending or whether the judgment of
conviction or other record relating to criminal
conduct has been expunged;

(2) when there has been a finding of guilt against
the individual or entity by a Federal, State, or
local court;

(3) when a plea of guilty or nolo contendere by
the individual or entity has been accepted by a
Federal, State or local court; or

. i
(4) when the individual or entity has entered into
participation in a first offender, deferred
adjudication, or other arrangement or program
where judgment of conviction has been withheld.

The undisputed facts in this case establish that
Petitioner was charged under Utah law with the crime of
submitting false Medicaid claims. Finding 2. Petitioner
entered a plea agreement with the prosecutor, which was
accepted by the Court. Findings 3-9. Petitioner pleaded
guilty to filing false claims against Medicaid, and he
agreed to pay restitution, a penalty, and the costs of
7

investigation. Id. The Court held Petitioner's plea in
abeyance pending Petitioner's compliance with the terms
of the plea agreement. Id. The court then dismissed the
charges against Petitioner, based on his representation
that he had complied with the terms of the plea
agreement. Finding 10.

Petitioner contends that he made his guilty plea as part
of a "unique" arrangement with the prosecutor. P.'s
Brief at 7. According to Petitioner, the terms of this
arrangement enabled him to discharge a "civil" obligation
to the State without any criminal judgment being entered
against him. The key to this arrangement was that the
court agreed to hold Petitioner's guilty plea in abeyance
pending satisfaction of the terms of the plea agreement.
Once the agreement was complied with by Petitioner, the
court dismissed the criminal charges against Petitioner.
P.'s Brief at 7-8.

Petitioner argues that his plea agreement does not fall
within any of the definitions of conviction contained in
section 1128(i). He contends that no judgment of
conviction was entered against him, as is specified by
subsection (i)(1). Nor, according to Petitioner, was any
finding of guilt made by the court, as would be necessary
to meet the criteria of subsection (i)(2). Petitioner
asserts that no plea of guilty or nolo contendere was
accepted by the Utah court within the meaning of
subsection (i)(3). Finaily, Petitioner claims that his
plea agreement is not a first offender, deferred
adjudication, or "other arrangement or program where
judgment of conviction has been withheld" as described in
subsection (i) (4).

The I.G. argues that the plea agreement was not "civil"
in character, pointing out that Petitioner expressly
pleaded guilty to a criminal offense in both the plea
agreement and at his court appearance. The I.G. asserts
that Petitioner was convicted of a criminal offense
because the plea agreement falls within the express
criteria of subsections (i) (3) and (4).

For purposes of this decision, I accept Petitioner's
assertion that his plea agreement was a "unique"
arrangement. I also accept Petitioner's argument that
the plea agreement reflected his belief that he was not
actually guilty of the offense to which he pleaded, but
embodied his desire to put to rest the criminal charges
which had been filed against him. See P.'s Brief at 7-8.
Nonetheless, I conclude that Petitioner was convicted of
a criminal offense as defined by section 1128(i).
8

I conclude that Petitioner's plea agreement is a "guilty
plea" pursuant to subsection (i)(3). It also constitutes
entry into a deferred adjudication or other arrangement
or program where judgment of conviction has been withheld
pursuant to subsection (i)(4). I base my conclusion on
both the plain meaning of the law and on legislative
history.

Both the plea agreement and the transcript of
Petitioner's court appearance establish that Petitioner
pleaded guilty to a criminal offense. Findings 4, 8-9.
Petitioner's guilty plea was voluntary and was made as a
choice among the alternative courses of action available
to him, including a trial of the charges. The court
"accepted" Petitioner's plea. The statutory definition of
acceptance of a plea was met when Petitioner offered to
plead guilty and the court accepted his offer.
Petitioner's plea and the court's acceptance of the plea
precisely conform to the criteria established in section
1128(i)(3). The fact that the court held entry of the
plea in abeyance and subsequently dismissed the charges
against Petitioner, conditioned on Petitioner's
satisfying the terms of his plea agreement, is not
relevant, because there is no language in subsection

(i) (3) which states or suggests that the definition of
"conviction" in this subsection is qualified or limited
by judicial actions taken subsequent to acceptance of a
plea. Carlos E. Zamora, M.D., v. The spector General,
Docket No. C-74, decided March 30, 1989; Roberto V.

Salinas, v. The Inspector General, Docket No. C-72,
decided April 12, 1989.

The language of subsection (i)(4) is also plain and
without qualifying terms or conditions. It encompasses
those arrangements where a party pleads guilty, but the
court agrees to withhold entry of the conviction pending
the party's satisfaction of the terms of a plea
agreement. I conclude that the court's agreement to hold
Petitioner's plea in abeyance pending Petitioner's
satisfying the terms of the plea agreement is an "other
program where judgment of conviction has been withheld."
This is evident from the transcript of Petitioner's court
appearance:

MR. KROLL (the prosecutor): Just so the defendant is
clear or that I make on the record my clear intention:
This is a plea given, and as the Court indicated, if
there was violations of probation, the defendant would be
brought back and sentenced. We would not come back and
have a trial. The defendant is waiving his opportunity
for trial.
9

THE COURT: He's pled guilty at this point but I'm
holding him, conditioned upon his compliance with that
agreement. If he doesn't, then we enter the guilty plea
and sentence.

MR. KROLL: That's my understanding.

MR. McCONKIE (Petitioner's counsel): Right. But the
guilty plea hasn't been entered. That's the critical
thing to us in this hearing.

P. EX. 3 at 8-9; I.G. Ex. 6 at 8-9.

Petitioner asserts that a plea agreement does not meet
the criteria of subsections (i) (3) or (i) (4) absent an
admission of guilt by an individual or a finding of guilt
by the court which accepts the plea. I disagree with
this assertion. Section 1128(i) establishes four
alternative definitions of "conviction". A finding of
guilt is a necessary element of a “conviction" as defined
by section (i)(2). It is not an element of the
definitions of conviction contained in either subsection
(4) (3) or (4) (4).

I also disagree with Petitioner's argument that a guilty
plea must be "entered" by a court in order to establish a
conviction under section 1128(i). Subsection (i) (1) does
require that a judgment be "entered" by a court.

However, that requirement is absent in the definition of
conviction contained in subsection (i) (3), which only
requires that a court accept an individual's offer to
plead guilty. Subsection (i) (4) does refer to "entry" by
an individual in a first offender program or other
program where judgment of conviction has been withheld.
This is distinguishable from "entry" of a plea as the
term is used in subsection (i)(1). In the former
subsection, “entry" refers to an action taken by a court
based on a conviction. In the latter subsection, “entry"
refers to an action taken by an individual in lieu of
admitting guilt.

As I noted in the Zamora decision, the plain meaning of
the law is underscored by legislative history. Congress
intended the definition of "conviction" in section
1128(i) to include all circumstances where a party
pleaded guilty to an offense, except where a conviction
is vacated on appeal. The law providing for exclusion of
individuals and entities who are convicted of certain
offenses from participating in Medicare and Medicaid is a
legislative judgment that such individuals and entities
cannot be trusted with public funds or to treat
beneficiaries or recipients of such funds. Congress
10

determined that parties who pleaded guilty to such
offenses were as untrustworthy as those convicted after a
trial. Zamora, supra, at 8-9; 1986 U.S. Cong. Code &
Adm. News, 3664-65.

3. Petitioner was convicted of a criminal offense
related to the delivery of an item or service under a
Medicaid program.

Petitioner contends that, assuming he was convicted of a
criminal offense, he was not convicted of an offense
related to the delivery of an item or service under the
Medicaid program. Petitioner asserts that the I.G.
improperly excluded him pursuant to section 1128(a)(1) of
the Social Security Act. I conclude that Petitioner was
convicted of a criminal offense within the meaning of
section 1128(a) (1).

The undisputed facts of this case are that Petitioner was
charged with filing false Medicaid claims. Finding 2.
Petitioner pleaded guilty to a lesser offense, but the
crime to which he pleaded nevertheless consisted of the
offense of fraud against a Medicaid program. Finding 8.

Section 1128(a)(1) of the Social Security Act has been
consistently interpreted to encompass convictions for
fraud or other financial crimes directed against Medicare
and Medicaid. Greene and Reife, supra. On its face,

the conviction in this case does not appear to be
distinguishable from those at issue in the aforementioned
cases.

Petitioner attempts to distinguish the conviction in the
present case on two grounds. First, he argues that,
notwithstanding his guilty plea, he "was never involved
in any criminal conduct . . .." P.'s Brief at 10.
Second, he argues that he was not "found guilty" of
criminal conduct. Id. By the latter argument,
Petitioner evidently means that the Utah court never
found’ as fact that Petitioner had committed the crime to
which he pleaded guilty.

I conclude that these purported distinctions are not
meaningful. The mandatory exclusion provisions of
section 1128(a)(1) of the Social Security Act are
triggered by conviction of a criminal offense related to
the delivery of an item or service under Medicare or
Medicaid. It is not relevant that a petitioner
subsequently contends that he did not commit the offense
of which he was convicted. Reife, supra, at 10. Nor
does section 1128(a)(1) require that a conviction of a
11

program-related offense be supported by a finding of
guilt. See Part 2 of this Analysis, supra

4. The exclusions imposed _and directed by the I.G.
against Petitioner were mandated by law.

The exclusion law requires the Secretary (or his
delegate, the I.G.) to impose and direct exclusions
against individuals or entities convicted of offenses
described in section 1128(a)(1) for a minimum period of
five years. Social Security Act, section 1128(c) (3) (B).
In this case, the I.G. correctly determined that
Petitioner was convicted of a criminal offense described
in section 1128(a) (1), and excluded him for the minimum
period required by law.

Petitioner argues that the mandatory exclusions imposed
against him are unreasonable, because he allegedly did
not participate in any criminal activity against Medicare
or Medicaid. P.'s Brief at 11. However, even as the
mandatory exclusion provisions of section 1128(a)(1) are
triggered by conviction of an offense related to the
delivery of an item or service under the Medicare or
Medicaid programs, so also are the five-year minimum
exclusion requirements of section 1128(c)(3)(B). The
I.G. was required by law to exclude Petitioner for at
least five years. Evidence concerning the degree of
Petitioner's culpability does not obviate this
requirement. Therefore, it is not relevant.

5 petitioner asserts, without elaboration, that
the I.G. failed to comply with the Administrative
Procedure Act, at 5 U.S.C. 552-553, "through the use of
unpublished guidelines, policies, and procedures which
not only were applied without adherence to the law but
also violates the purpose and intent of the recent
revisions to the Social Security Act." P.'s Brief at 11.
There is nothing in the record of this case to suggest
that the I.G. relied on anything other than the terms of
section 1128 of the Social Security Act, and on
legislative history, in determining to impose and direct
exclusions against Petitioner. The sections of the law
at issue in this case are unambiguous, and were properly
relied on and applied by the I.G. Greene, supra.

6 The I.G. has discretion in section 1128(a) (1)
cases to impose and direct exclusions for terms exceeding
five years. Had the I.G. done so in this case, then
evidence as to the degree of Petitioner's culpability
would have been relevant in weighing the reasonableness
of the length of the exclusions.
12
CONCLUSION

Based on the undisputed material facts and the law, I
conclude that the I.G.'s determination to exclude
Petitioner from participation in Medicare, and to direct
that Petitioner be excluded from participation in
Medicaid, for five years, was mandated by law.
Therefore, I am entering a decision in 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:
John W. Foderick, M.D., DATE: September 8, 1989

Petitioner,
Docket No. C-113

DECISION CR 43

-v-

The Inspector General.

DECISION OF ADMINISTRATIVE LAW JUDGE
ON MOTION FOR SUMMARY DISPOSITION

On March 29, 1989, the Inspector General (the I.G.)
notified Petitioner that he was being excluded from
participation in the Medicare program and any State
health care program. The I.G. told Petitioner that his
exclusions were due to the fact that Petitioner
surrendered his license to practice medicine in the State
of Minnesota while a formal disciplinary proceeding was
pending before the Minnesota Board of Medical Examiners
(the Board of Medical Examiners). Petitioner was advised
that in the event he obtained a valid license to practice
medicine from the State of Minnesota, he would have the
right to apply for reinstatement to the Medicare and
State health care programs.

Petitioner timely requested a hearing, and the case was
assigned to me for a hearing and decision. I conducted a
prehearing conference by telephone on May 23, 1989, at
which Petitioner appeared pro se. He requested that I
appoint counsel to represent him in this proceeding. I
ruled that I had no authority to appoint counsel to

1 «state health care program" is defined by
section 1128(h) of the Social Security Act, to include
any State Plan approved under Title XIX of the Act (such
as Medicaid). I use the term "Medicaid" hereafter to
represent all State health care programs from which
Petitioner was excluded.
2

represent Petitioner, but I advised him that he had the
right to obtain counsel. I suggested to Petitioner that
he contact resources in his community which might provide
legal services. Petitioner did not obtain counsel.

During the May 23 prehearing conference, the I.G. stated
that he intended to move for summary disposition in this
case. I issued a Prehearing Order on June 1, 1989,
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. timely filed a motion
for summary disposition, to which Petitioner responded.
Neither party requested oral argument on the motion.

I have considered the arguments contained in the I.G.'s
motion for summary disposition, the undisputed material
facts, and applicable law and regulations. I conclude
that the exclusions imposed and directed by the I.G. are
authorized by section 1128(b) (4) (B) of the Social
Security Act and are reasonable. Therefore, I am
deciding this case in favor of the I.G.

ISSUES
The issues in this case are whether:

1. Petitioner surrendered his license to practice
medicine and surgery while a formal disciplinary hearing
was pending which concerned his professional competence,
professional performance, or financial integrity within
the meaning of Section 1128(b) (4) (B) of the Social
Security Act;

2. It would be relevant for Petitioner to prove that the
Board of Medical Examiners deprived him of due process;

3. The exclusions imposed and directed against
Petitioner are reasonable;

4. Summary disposition is appropriate in this case.
3
FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. Petitioner is a doctor of medicine. I.G. Ex. 1/3.

2. Petitioner held a license to practice medicine and
surgery in the State of Minnesota. I.G. Ex. 1/3.

3. The Board of Medical Examiners is the state agency
responsible for the licensure of, and, if necessary, the
imposition of discipline, against physicians and surgeons
in Minnesota. I.G. Ex. 5/2.

4. In the Fall of 1987, the Board of Medical Examiners
received a complaint against Petitioner, alleging that he
abused alcohol. I.G. Ex. 5/2.

5. In May 1988, pursuant to an order issued by the Board
of Medical Examiners, Petitioner submitted to a mental
and physical examination. I.G. Ex. 1/3.

6. The Board of Medical Examiners Discipline Committee
concluded that the examination established that
Petitioner suffered from serious physical impairments and
deteriorating mental abilities that rendered him unable
to practice medicine and surgery safely and that provided
a basis for disciplinary action by the Board. I.G. Ex.
5/2.

7. Based on this evidence, the Discipline Committee held
a conference with Petitioner at which it recommended that
Petitioner permanently surrender his license to practice
medicine in Minnesota, in order to avoid the necessity of
further disciplinary proceedings. I.G. Ex. 5/2.

8. On June 15, 1988, as a condition for the Board of
Medical Examiners terminating its investigation,
Petitioner agreed to permanently surrender his license to
practice medicine and surgery in Minnesota. I.G. Ex.
1/4-5.

2 The parties' exhibits and memoranda will be

cited as follows:

Petitioner's Exhibit P. Ex. (number) / (page)
Petitioner's Memorandum P.'s Memorandum at
a (page)
I.G.'s Exhibit I.G.'s Ex. (number) /
(page)
I.G.'s Memorandum I.G.'s Memorandum at

(page)
4

9. On June 15, 1988, the Board of Medical Examiners
issued a Stipulation and Order accepting Petitioner's
surrender of his license to practice medicine and surgery
in Minnesota. I.G. Ex. 1/6.

10. Subsequently, Petitioner requested the Board of
Medical Examiners to modify or void its June 15, 1988
Stipulation and Order. I.G. Ex. 2/3.

11. Petitioner's request was denied by the Board of
Medical Examiners on February 14, 1989. I.G. Ex. 2/3.

12. Subsequently, Petitioner requested the Board of
Medical Examiners to reconsider its decision not to
modify or void its June 15, 1988 Stipulation and Order.
I.G. Ex. 3/3.

13. On May 17, 1989, the Board of Medical Examiners
affirmed its February 14, 1989 decision not to void or
modify the June 15, 1988 Stipulation and Order. I.G. Ex.
3/3.

14. On May 17, 1989, the Board of Medical Examiners held
that its June 15, 1988 Stipulation and Order was its
final decision in Petitioner's case. I.G. Ex. 3/5.

15. The Secretary of Health and Human Services (the
Secretary) delegated to the I.G. the authority to
determine, impose, and direct exclusions pursuant to
section 1128 of the Social Security Act. 48 Fed. Reg.
21662, May 13, 1983.

16. On March 29, 1989, the I.G. excluded Petitioner from
participating in the Medicare program, and directed that

he be excluded from participating in Medicaid. I.G. Ex.

4/2.

17. Petitioner's exclusions are effective until such
time as his license to practice medicine and surgery in
Minnesota is restored and he is reinstated as a provider.
I.G. Ex. 4/3.

18. Petitioner's exclusions are based upon section
1128(b) (4) (B) of the Social Security Act. I.G. Ex. 4/2.

19. Petitioner's assertion that the Board of Medical
Examiners deprived him of due process is not relevant.
See Social Security Act, sections 205(b), 1128(b) (4) (B).

20. There do not exist disputed issues of material fact
in this case; therefore, summary disposition is
5

appropriate. ee Federal Rules of Civil Procedure, Rule
56.

21. Petitioner surrendered his license to practice
medicine and surgery while a formal disciplinary hearing
was pending which concerned his professional competence,
professional performance, or financial integrity within
the meaning of section 1128(b) (4) (B) of the Social
Security Act. Findings 3-17.

22. The I.G. had discretion to exclude Petitioner from
participation in Medicare and to direct his exclusion
from participation in Medicaid. Social Security Act,
Section 1128(b) (4) (B).

23. The exclusions imposed and directed by the I.G. are
reasonable. Social Security Act, section 1128(b) (4) (B).

ANALYSIS

The I.G. bases his motion for summary disposition on
Petitioner's voluntary surrender of his license to
practice medicine and surgery in Minnesota. According to
the I.G., there are no disputed issues of material fact
in this case. The I.G. asserts that Petitioner
surrendered his license as a condition for terminating a
formal disciplinary proceeding against Petitioner which
concerned his professional competence. Therefore,
according to the I.G., Petitioner's case falls within the
provisions of section 1128(b) (4) (B) of the Social
Security Act, and the I.G. has discretion to exclude
Petitioner from participation in Medicare and to direct
that he be excluded from participation in Medicaid. The
I.G. argues that the indefinite length of the exclusions
is justified by the purpose of the exclusion law, which
is in part to protect program beneficiaries from
individuals or entities who are capable of causing harm.

3 Section 1128(b) (4) (B) provides that the

Secretary may impose and direct exclusions against any
individual or entity who:

surrendered . . . a license... [to provide
health care] while a formal disciplinary hearing
was pending before . . . [any State licensing
authority] and the proceeding concerned the
individual's or entity's professional competence,
professional performance, or financial integrity.
6

Petitioner argues that the Board of Medical Examiners'
actions in this case are not justified by the facts. He
contends that elements in the record of the investigation
concerning his license are "clearly false... ." P.'s
Memorandum at 3. He also contends that the Board of
Examiners' Medical decision in his case is not final,
evidently because an appeal of the Board's decision is
pending or contemplated.

1. Petitioner surrendered his license to practice

i ea su: il 1 discipli i
was pending which concerned his professional competence,
professional performance, or financial integrity within

the meaning of section 1128(b)(4)(B) of the Social
Security Act.

I conclude that the Board of Medical Examiners!
investigation of Petitioner constituted a "formal
disciplinary proceeding" pertaining to Petitioner's
professional competence or performance. I conclude
further that Petitioner's surrender of his professional
license to the Board of Medical Examiners Disciplinary
Committee was a surrender of a license while a
disciplinary hearing was pending concerning Petitioner's
professional competence or performance. Therefore the
I.G. had authority to exclude Petitioner pursuant to
section 1128(b) (4) (B) of the Social Security Act.

The undisputed facts of this case are that the Board of
Medical Examiners received a complaint concerning
Petitioner and initiated an investigation, which included
ordering that Petitioner submit to a physical and mental
examination. Based on the results of this examination,
the Board of Medical Examiners Disciplinary Committee
scheduled a conference with Petitioner at which it
recommended that Petitioner permanently surrender his
license to practice medicine and surgery as a condition
for avoiding further proceedings against him. Petitioner
agreed, and this agreement was memorialized in a written
Board order. Findings 3-9.

Although section 1128(b) (4) (B) does not define the term
"formal disciplinary proceeding," it is reasonable to
conclude from the face of the statute, and from
legislative history, that the law refers to a license
proceeding which places a party's license in jeopardy and
which provides that party with an opportunity to defend
against charges which might result in a license
suspension or revocation. This interpretation is
consistent with the purpose of the law. As is noted
above, the law is intended to protect Medicare
beneficiaries and Medicaid recipients from individuals
7

and entities who are demonstrated to be untrustworthy.
The law presumes that an individual or entity who
surrenders a health care license in the face of charges,
and in the circumstance where he has the opportunity to
defend himself, is as likely to be untrustworthy as the
individual or entity who loses a license after litigating
the issue of his or her professional competence,
performance, or financial integrity.

The facts of this case establish both that charges had
been made against Petitioner and that he had been
afforded. an opportunity to defend himself against those
charges. It is apparent that the confrontational phase
of the Board of Medical Examiners' case against
Petitioner was in its early stages. See I.G. Ex. 5/2.
But it is equally apparent that Petitioner agreed to
surrender his license to practice medicine and surgery at
a point in the process where it was apparent that the
ultimate result would be a formal resolution of his
entitlement to retain his license.‘

The law does not define the terms "professional
competence, professional performance, or financial
integrity." I conclude that the plain meaning of the
terms "professional competence" and "professional
performance" encompasses those circumstances where
license revocation proceedings concern the question of
whether a party's ability to provide health care ina
competent and professional manner has been compromised
for reasons of health. That is precisely what was at
issue in the Board of Medical Examiners' proceeding
against Petitioner.

I conclude that Petitioner "surrendered" his license
within the meaning of the law. Petitioner asserts that
the decision of the Board of Medical Examiners to accept
his surrender of his license is not "final," evidently
contending that he plans to continue to petition the
Board of Medical Examiners to reconsider its final order,
to take such appeals from that order as may be available
to him, or to collaterally attack the order. Petitioner
appears to be arguing that there may be some uncertainty
as to the finality of the order, and that he has not
actually "surrendered" his license to practice medicine.

4 Arguably, a different situation might have

existed had Petitioner surrendered his license at the
point where the Board of Medical Examiners had received a
complaint concerning Petitioner, but before the
Disciplinary Committee had taken any action in
Petitioner's case.
I disagree with Petitioner's contentions. First, the
record of this case does not show that there are
additional proceedings pending concerning the surrender
of Petitioner's license. But even if additional
proceedings were pending, I conclude that Petitioner's
surrender of his license to the Board of Medical
Examiners constitutes a "surrender" within the meaning of
section 1128(b) (4) (B).

The law does not contain qualifying language which would
suggest that a license surrender must be litigated
through all potential appeals and collateral attacks in
order to constitute a surrender upon which exclusions
could be predicated. Indeed, the law provides that a
license surrender which occurs during a disciplinary
proceeding is sufficient to trigger the exclusion
provisions--regardless whether the individual or entity
who surrenders the license subsequently has a change of
heart and appeals or petitions for reconsideration.

2. Petitioner's assertion that the Board deprived him of
due process is not relevant.

Petitioner's central argument is that the proceedings
before the Board of Medical Examiners which led to his
surrendering his license to practice medicine were based
on an incomplete and inaccurate record, and were thus
deficient. Therefore, according to Petitioner, actions
taken by the I.G. to exclude him from participation in
Medicare and State health care programs are unjustified.

Petitioner's assertions concerning the Board of Medical
Examiners! proceedings in his case amount to a claim that
these proceedings are defective because he was denied due
process of law. Petitioner's argument is the same
argument as was offered by the petitioner in Frank Waltz
M.D. v. The Inspector General, Docket No. C-86, decided
September 1, 1989. I held in the Waltz case that the
petitioner's argument concerning the fairness of a state
licensing board's license revocation proceeding was
irrelevant to the issue of the I.G.'s authority to impose
and direct exclusions based on the state board's final
action. I reaffirm that holding here.

My authority to hear and decide exclusion cases is
limited to deciding whether the decisions made by the
Secretary comport with statutory and regulatory
standards. If Petitioner's assertions are not relevant
to the Secretary's exclusion decision, then they are
beyond the bounds of the issues which I may consider ina
hearing concerning that decision.
There are several issues which a petitioner may
potentially argue in a hearing brought to challenge
exclusions imposed pursuant to section 1128(b) (4) (B).
A petitioner may argue that: a formal disciplinary
proceeding was not pending against him; the proceeding
was not before a State licensing authority; the
proceeding did not concern his professional competence,
professional performance, or financial integrity; he did
not actually surrender his license to provide health
care; or that the term of the exclusions imposed and
directed against him is unreasonable.

However, as I held in Waltz, a hearing on exclusions
imposed and directed pursuant to section 1128(b) (4) may
not be used by a petitioner to mount a collateral attack
on a state board's action. The I.G.'s authority to
impose and direct exclusions pursuant to section
1128 (b) (4) (B) emanates from the actions taken by state
licensing boards. The law instructs the Secretary to
rely on these boards' actions. The law does not intend
that the Secretary examine the fairness or propriety of
the process which led to the boards' actions.
Consequently, the section of the exclusion law pursuant
to which Petitioner was excluded does not provide him
with a legitimate basis in this hearing td argue that the
Board of Medical Examiners deprived him of due process.

Furthermore, the sections of the law which provide for
administrative hearings in exclusion cases do not
authorize collateral challenges of state board decisions
on due process grounds. Congress directed the Secretary
to provide excluded parties with the opportunity to have
hearings as to their exclusions. Social Security Act,
section 1128(f). The law provides that an excluded party
be given reasonable notice and opportunity for a hearing
by the Secretary to the same extent as is provided by
section 205(b) of the Social Security Act.

5 As I noted in Waltz, the exclusion law does not
operate as a bar to a petitioner appealing a state
board's action. Moreover, were Petitioner to
successfully appeal the Board of Medical Examiners'
action, and thereby have his license to practice medicine
and surgery in Minnesota reinstated, then the duration
aspect of the exclusions would be satisfied, and
Petitioner would be eligible for reinstatement as a
participant in Medicare and Medicaid.
10
Section 205(b) states that:

Upon request by any . . . individual who makes a
showing in writing that his or her rights may be
prejudiced by any decision the Secretary has
rendered . .. [the Secretary] shall give such

. . + [individual] reasonable notice and
opportunity for a hearing with respect to such
decision, and if a hearing is held, shall on the
basis of evidence adduced at the hearing, affirm,
modify, or reverse his findings of fact and such
decision.

(Emphasis added).

As I held in Waltz, this section does not provide a
petitioner with the right in an administrative hearing to
argue issues which are not relevant to the Secretary's
(or pursuant to delegation, the I.G.'s) exclusion
decision. In this case, the "decision" which is
challenged is the I.G.'s determination to exclude
Petitioner based on the Board of Medical Examiners'
acceptance of Petitioner's surrender of his license to
practice medicine and surgery. The fairness of the Board
of Medical Examiners' action is not relevant to the
I.G.'s exclusion decision and is not a basis on which I
may decide the reasonableness of the exclusions.

3. Summary disposition is appropriate in this case.

Summary disposition is appropriate in an exclusion case
where there are no disputed issues of material fact and
where the undisputed facts demonstrate that one party is
entitled to judgment as a matter of law. Howard B.
Reife, D.P.M. v. The Inspector General, Docket No. C-64,
decided April 28, 1989; Michael I. Sabbagh, M.D. v. The
Inspector General, Docket No. C-59, decided February 22,
1989; Jack W. Greene v. The Inspector General, Docket No.
C-56, decided January 31, 1989, appeal docketed, DAB No.
89-59, Decision No. 1078 (1989); See F.R.C.P. 56.

As is noted supra, there are potential questions of fact
which may arise in an exclusion hearing brought to
challenge exclusions imposed and directed pursuant to
section 1128(b) (4) (B) of the Social Security Act. I have
carefully considered the arguments of the parties with
respect to each of these possible issues, and I conclude
that there exist no disputed issues of material fact with
respect to any of them.

The first potential question of fact in this case is
whether a formal disciplinary hearing was brought against
11

Petitioner. The I.G. has offered the Orders of the Board
of Medical Examiners and the affidavit of the Chairman of
its Disciplinary Committee which establish that, based on
a complaint filed against Petitioner, and the results of
physical and mental examinations, a disciplinary hearing
had been implemented. Findings 4-9; I.G. Ex. 5.
Petitioner has not challenged the veracity of any of this
evidence. He asserts, however, that the proceedings of
the Board of Medical Examiners were not "formal
disciplinary proceedings" within the meaning of section
1128(b)(4)(B). P.'s Memorandum at 8. The issue asserted
by Petitioner is not a question of fact, but is a legal
question of how to characterize the Board proceedings
which involved Petitioner. I concluded that the
proceeding before the Board of Medical Examiners
concerning Petitioner was a "formal disciplinary
proceeding." See, Part I of this Analysis, supra.

The second potential question of fact is whether the
proceeding was before a State licensing authority. The
unrebutted evidence in this case is that the Board of
Medical Examiners is a State licensing authority.
Finding 3. Petitioner argues that he did not actually
appear before the Board of Medical Examiners, but before
its Disciplinary Committee. P.'s Memorandum at 7.
However, it is not disputed that the Disciplinary
Committee is a component of the Board of Medical
Examiners with delegated authority to hear and decide
questions of potential license suspension or revocation.

The third potential question of fact is whether the
proceeding concerned Petitioner's professional
competence, professional performance, or financial
integrity. The evidence offered by the I.G. as to this
issue establishes that the disciplinary proceeding
against Petitioner was grounded on complaints that he
abused alcohol, and findings from physical and mental
examinations which showed that Petitioner experienced
diminished physical and mental capacity. Findings 4-6.
Although Petitioner asserts that the facts upon which the
Board of Medical Examiners based its actions are "false,"
he does not dispute that the proceeding against him
concerned his professional competence or performance.

The fourth potential question of fact in this case is
whether Petitioner actually surrendered his license to
provide health care. Petitioner seems to argue that, in
fact, he did not surrender his license, asserting that
"final disposition" of his case has not been made. P.!
Memorandum at 9. However, the evidence offered by the
I.G. establishes that Petitioner surrendered his license
to practice medicine and surgery to the Board of Medical
12

Examiners. Findings 8-9. The Board of Medical Examiners
issued its final order in Petitioner's case. Finding 14.
And, although Petitioner disputes the characterization of
these acts pursuant to section 1128(b) (4) (B), he does not
offer meaningful challenge to the evidence offered by the
I.G. Petitioner's argument therefore relates to the
legal issue of how to characterize his license surrender
pursuant to the exclusion law, and not to the facts. As
I have held supra at Part I of this analysis, Petitioner
"surrendered" his license, as defined by law.

The final potential question of fact is the
reasonableness of the exclusions the I.G. imposed and
directed against Petitioner. The I.G. imposed and
directed exclusions which will remain in effect until
Petitioner's license to practice medicine and surgery in
Minnesota is restored and he is reinstated by the I.G.

The I.G. asserts that its exclusion determination in this
case is consistent with Congress' intent that individuals
or entities who lose their licenses to provide health
care in any State for reasons pertaining to their
professional competence or performance, or their
financial integrity, be excluded in all states from
participating in Medicare or in Medicaid until such time
as they reacquire their licenses and demonstrate their
trustworthiness as providers of services. I.G.'s
Memorandum at 16. The I.G. therefore asserts that, as a
matter of law, the only reasonable exclusion
determination that can be made in a case of this type is
to impose and direct exclusions which will remain in
effect until the restoration of a petitioner's license.
If this analysis is accepted, then the only factual
issues that may be litigated in a hearing to challenge
exclusions imposed pursuant to section 1128(b)(4)(B) are
those discussed su , which relate to the issue of
whether there exists a basis in law to impose exclusions.

I agree with the I.G.'s argument in this case as it
pertains to exclusions of Petitioner from participating
in Medicare or Medicaid programs which encompass the
activities which had been licensed under state law. In
this instance, it is apparent, from both the face of the
statute and from legislative history, that Congress
concluded that individuals and entities who lost their
licenses to provide health care in a State were not to be
trusted to provide previously licensed care to Medicare
beneficiaries or Medicaid recipients:

The provisions of . . . [the law] would permit the
Secretary to exclude . . . persons [whose licenses
13

had been revoked] in all States and to require the
State to exclude them from participation in any
State health care program.

This provision would also permit the exclusion of
individuals or entities who surrender their licenses
while disciplinary proceedings involving professional
competence, professional conduct, or financial integrity
are pending. This provision will prevent unfit
practitioners from avoiding exclusion through the
expedient of surrendering their license before the State
can conclude proceedings against them.

S. REP. No. 109, 100th Cong., lst Sess. 7, reprinted in
1987 U.S. CODE CONG. & ADMIN. NEWS 688.

Given this legislative directive, it is reasonable to
conclude that Congress intended that individuals and
entities excluded pursuant to section (b) (4) be excluded
with respect to their licensed activities until such time
as they regain their licenses and demonstrate their
fitness for reinstatement. Thus, the exclusions imposed
and directed in this case are reasonable, given the
nature and terms of Petitioner's license revocation.

CONCLUSION

Based on the undisputed material facts and the law, I
conclude that the 1.G.'s determination to exclude
Petitioner from participation in the Medicare program,
and to direct that Petitioner be excluded from
participating in Medicaid, was justified pursuant to
section 1128(b)(4)(B) of the Social Security Act. I
conclude further that the exclusions imposed and directed
by the I.G. are reasonable insofar as the exclusions
apply to Petitioner's rendering care as a physician.
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:

H. Gene Blankenship,
Date: September 7, 1989
Petitioner,
Docket No. C-67

on DECISION CR 42

The Inspector General.

DECISION AND ORDER

Petitioner requested a hearing to contest the
determination of the Inspector General (I.G.) excluding
him from participating in the Medicare and Medicaid
programs for five years. Both parties filed motions for
summary disposition of this case. I granted the I.G.'s
motion on one issue and conducted an evidentiary hearing
on the remaining issues. Based on the entire record
before me, I conclude that the exclusion imposed and
directed by the I.G. is mandatory and that the I.G. was
required to exclude Petitioner for five years.

PPLICABLE_ ST,
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., 1989 Supp.). Section 1128(a) (1) of the Act
provides for the exclusion from Medicare and Medicaid of

' Section 1128 of the Act provides for an exclusion

from the Medicare program and "any State health care
program" as defined in section 1128(h). The Medicaid
program is only one of three types of State health care
programs defined in Section 1128(h), and for the sake of
brevity, I refer only to it.
2

those individuals or entities "convicted of a criminal
offense related to the delivery of an item or service"
under the Medicare or Medicaid programs. Section
1128(c)(3)(B) provides for a five year minimum period of
exclusion for those excluded under section 1128 (a) (1).
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.

II. The Federal Requlations.

The governing federal regulations (Regulations) are
codified in 42 C.F.R., Parts 498, 1001, and 1002 (1988).
Part 498 governs the procedural aspects of this exclusion
case; Parts 1001 and 1002 govern the substantive aspects.

Section 1001.123 requires the I.G. to issue an exclusion
notice to an individual whenever the I.G. has "conclusive
information" that such individual has been "convicted of
a criminal offense related to the delivery of" a Medicare
or Medicaid item or service; such exclusion must begin
"15 days from the date on the notice."

III. The State Statutes.

The Tennessee Code Annotated (TCA) states at section
47~25-403 that it is unlawful for any person to knowingly
misrepresent the manufacture or origin or commercial
sponsorship of any drug sold or offered for sale. This
criminal offense, entitled "Trade Practices" and
"Prohibited Acts", is a misdemeanor punishable by fines
of not less than $100 nor more than $500, and by
confinement for not less than 30 days, nor more than 11
months, 29 days. T.C.A., section 47-25-405.

Section 40-21-109, T.C.A., states that if any person who
had not previously been convicted of a felony or
misdemeanor is found guilty of, or pleads guilty to, a
misdemeanor which is punishable by imprisonment, the
court may, without entering a judgment of guilt, place
him on probation and, upon satisfactory completion of the
probation, dismiss the proceedings against him.

2 The I.G.'s notice letter allows an additional

five days for receipt by mail.
3

Thereafter, the official record may be expunged.

However, section 40-21-109, T.C.A., provides that, even
if the official record is expunged, (1) nonpublic records
are retained by the court, (2) these "constitute the
official record of conviction," and (3) they are
admissible in court proceedings where the person has
assumed the role of plaintiff in a civil action based on
the same transaction.

BACKGROUND >

On October 11, 1988, the I.G. issued a notice (Notice) to
Petitioner stating that, pursuant to federal law,
Petitioner was being excluded from both the Medicare and
Medicaid programs for a period of five years, commencing
20 days from the date of the Notice.” The I.G. stated
that the basis for these exclusions was H. Gene
Blankenship's criminal conviction of an offense covered
by the mandatory exclusion provisions of section
1128(a)(1) of the Act.

On November 3, 1988, Petitioner timely filed a request
for a hearing (Request) before a federal Administrative

3 Citations to the record in this Decision and

Order are as follows:

Petitioner's Brief P.Br./ (page)
Petitioner's Reply Brief P.Rep.Br./ (page)
Petitioner's Post Hearing Brief P.P.H.Br./ (page)
Petitioner's Post Hearing Reply P.P.H.R.Br./ (page)

Brief
I.G.'s Pre-hearing Brief I.G. Br./ (page)
I.G.'s Reply Brief I.G. Rep.Br./ (page)
I.G.'s Post Trial Brief I.G.P.T.Br
I.G.'s Post Trial Reply Brief I.G.P.T.Rep.Br.
Petitioner's Exhibits P.Ex. (letter)/
(page)
I.G.'s Exhibits I.G.Ex. (number) /
(page)
Joint Exhibits J.Ex. (number) /
(page)
Transcript of May 24, 1989 Tr. (page)
Hearing

* The Notice letter excluded both H. Gene

Blankenship and Blankenship Pharmacy. The I.G. did not
object to Petitioner's motion to dismiss the Pharmacy as
a party to the case, and I ordered that at the May 24,
1989 hearing. Tr. 13,14.
4

Law Judge (ALJ), and this case was docketed. I conducted
a telephone prehearing conference with counsel for the
parties on January 5, 1989. On January 13, 1989, I
issued a Prehearing Order and Notice of Hearing, noting
that the parties had agreed that there were no material
facts in dispute. Thereafter, (1) the parties submitted
briefs; and (2) the Petitioner presented oral argument in
person on March 3, 1989, at my office in Washington,
D.C., and the I.G. participated by telephone. On April
20, 1989, I granted the I.G.'s motion for summary
disposition on the issue of whether Petitioner was
"convicted" of a criminal offense within the meaning of
sections 1128(a)(1) and (i) of the Act and I scheduled an
evidentiary hearing on the remaining issues in the case.
I conducted an evidentiary hearing in Washington, D.C. on
May 24, 1989. Thereafter, the parties submitted post-
hearing briefs and post-hearing reply briefs.

EVIDENCE

The material facts in this case are evidenced by: (1) the
parties! Stipulation of Authenticity (Stipulations of
Fact) with eight exhibits attached thereto (and referred
to in this Decision as J. Ex.), consisting of the
underlying State court documents pertaining to H. Gene
Blankenship's plea of guilty; and (2) testimony and
exhibits, received at the May 26, 1989 evidentiary
hearing.’ The Petitioner acknowledges that H. Gene
Blankenship waived his right to a trial by jury in the
Cumberland County, Tennessee, Criminal Court (State
Criminal Court), and pled guilty to a misdemeanor.

5 The eight documents attached to the stipulation

are: (1) order granting authority to proceed by
information; (2) criminal information containing 31
counts brought against H. Gene Blankenship in the
criminal court for Cumberland County; (3) petition for
waiver of trial by jury and acceptance of pleas of
guilty; (4) order authorizing waiver of jury trial and
acceptance of guilty plea; (5) order amending counts 2,
4, 6, 8, 10, 12, 14, 15, 17, 19, 21, and 26 of the
information herein; (6) order of nolle prosequi; (7)
judgment dated April 11, 1988; and (8) Order of April 11,
1988 by Judge Leon C. Burns, Thirteenth Judicial
District, Tennessee.
5
ISSUES

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

3. Whether 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.

FINDINGS OF FACT AND CONCLUSIONS OF LAW 6

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. On June 4, 1987, the State of Tennessee issued an
Order (with an attached Criminal Information Sheet)
requiring the District Attorney General to proceed
against Petitioner by way of an "Information" on 31
counts of "substituting generic drugs for prescribed
drugs and billing Medicaid for the brand name drugs" in
violation of T.C.A. sections 39-6-451, 14-23-118b, and
47-25-403. J. Ex. 1.

2. On April 11, 1988, Petitioner moved the State
Criminal Court for an "acceptance of pleas of guilty" to
12 counts charging him with violating T.C.A. section 45-
205-403. J. Ex. 3.

3. All other counts in H. Gene Blankenship's
Information were subject to an Order of nolle prosequi
signed by State Criminal Court Judge Leon C. Burns, Jr.
J. Ex. 6.

4. Judge Burns signed an Order of "Acceptance of
Guilty Plea." J. Ex. 4.

6 Any part of this Decision and Order preceding the
Findings of Fact and Conclusions of law which is
obviously a finding of fact or conclusion of law is
incorporated herein.
6

5. On April 11, 1988, based on stipulated facts, the
State Criminal Court found Petitioner guilty on 12 counts
of violating T.C.A. 45-205~403; the Court issued the
maximum sentence of $500.00 for each violation and a jail
sentence of 11 month and 29 days on each count (to be
served concurrently). J. Ex. 7.

6. On April 11, 1988, pursuant to T.C.A. 40-21-109,
the State Criminal Court ordered that all proceedings be
deferred for a period of 11 months and 29 days, that
judgment of guilt not be entered until further order of
the court, and that Petitioner be placed on probation for
11 months and 29 days. J. Ex. 7; J. Ex. 8.

7. The judgment dated April 11, 1988 and T.C.A. 45-
205-403, themselves, do not establish that Petitioner's
conviction was "related to" the delivery of an item or
service under the Medicaid program, because the
petitioner pled guilty under T.C.A. 45-205-403 to
misrepresenting the origin of drugs.

8. The testimony of Special Agents Daniel and Wright
is relevant. See, Tr. pp. 18-19.

9. The testimony of Special Agent Raymond Daniel, Jr.,
Medicaid Fraud Control Unit, Tennessee Bureau of
Investigation, and Special Agent Douglas Wright, Office
of the Inspector General, Department of Health and Human
Services, establish that Petitioner's conviction was
“related to" the delivery of an item or service under
Medicaid. See, Tr. p. 23-35 and pp.41-44.

10. Although the Medicaid fraud charges in the criminal
information were dismissed, the criminal information
supports the testimony of Special Agents Daniel and
Wright in establishing that Petitioner's conviction was
“related to" the delivery of an item or service under
Medicaid. See, J.Ex. 6.

11. Petitioner, a pharmacist, was "convicted" of a
criminal offense on April 11, 1988 within the meaning of
sections 1128 (a)(1) and 1128(i) of the Act.

12. Petitioner pled guilty and was convicted of a
criminal offense "related to" the delivery of an item or
service under Medicaid, within the meaning of section
1128(a) (1) of the Act.

13. The I.G.'s action in excluding the Petitioner from
the Medicare and Medicaid programs for five years was
appropriate and required by the Act and Regulations.
DISCUSSION

I. Petitioner was "Convicted" of a Criminal Offense as a
Matter of Federal Law.

Section 1128(i) of the Act provides that an individual
has been "convicted" of a criminal offense when:

(1) a judgment of conviction has been entered against
the individual or entity by a Federal, State or
local court, regardless of whether there is an
appeal pending or whether the judgment of
conviction or other record relating to criminal
conduct had been expunged;

(2) there has been a finding of guilt against the
individual or entity by a Federal, State, or
local court;

(3) a plea of guilty or nolo contendere by the
individual, or entity has been accepted by a
Federal State, or local court; or

(4) the individual or entity has entered into
participation in a first offender deferred
adjudication or other arrangement or program
where judgment of conviction has been withheld.

Petitioner argues, in essence, that his plea does not
fall within the reach of section 1128(i) because: (1) the
Tennessee State Court never "accepted" a plea of guilty
within the meaning of section 1128(i)(3) of the Act; and
(2) a "judgment of conviction" was never "entered,"
within the meaning of section 1128(i)(1) or "withheld"
within the meaning of section 1128(i)(4) of the Act.
Instead, Petitioner argues that there was a deferral of
judgment or "diversion" which is akin to a situation
where prosecution has been withheld. Petitioner also
argues that the I.G.'s policy is that pre-trial
diversions are not subject to mandatory exclusions.

The I.G. contends that section 1128(i)(4) encompasses H.
Gene Blankenship's situation. I.G. Br. 4. The I.G.
notes that Mr. Blankenship's period of probation has not
yet expired and argues that whether judgment will ever be
entered is, at this point, a speculative matter. The
I.G. also argues that the Tennessee program in question
does not have the characteristics of a pre-trial
diversion program. In support of this argument, the I.G.
notes that Mr. Blankenship was ordered to pay a fine, was
not diverted to any community service or rehabilitation
8

program, and was placed on probation subject to
supervision by a parole board. The I.G. argues that
prosecution was not deferred because, under the plea
arrangement, if parole were violated, trial would not be
necessary prior to sentencing. The I.G. asserts that all
that was withheld was a judgment of guilt under the terms
of the substantive statute and that judgment was, in
fact, "entered" under the terms of the plea agreement
program (citing section 40-21-109 of the Code). Finally,
the I.G. asserted that he does not have a policy that
pre-trial diversions are not subject to mandatory
exclusions.

I find and conclude that Petitioner was "convicted"
within the meaning of section 1128(a)(1) and (i)(3) and
(i) (4) because it is axiomatic that the interpretation of
a federal statute or regulation is a question of federal
and not state law. 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). My task is to interpret the words
of section 1128 of the Act in light of the purposes that
section 1128 was designed to serve. See Chapman v.

Houston Welfare Rights Organization, 441 U.S. 600, 608
(1979).

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. Judge Burns of the Criminal Court of
Cumberland County, Tennessee, did not reject H. Gene
Blankenship's plea of guilty. Quite the contrary, I find
from a reading of Joint Exhibits 6 and 7 that Judge Burns
"accepted" the Petitioner's plea of guilty on April 11,
1988, within the meaning of section 1128(i)(3). Once
Judge Burns signed the April 11, 1988 Order authorizing
"Acceptance of Guilty Plea" (J. Ex. 4), the provisions of
subsection 1128(i)(3) were triggered, and what happened
after that is of no consequence to the determination that
Mr. Blankenship was "convicted", as a matter of federal
law, within the meaning of section 1128(i)(3) of the Act.

I also find and conclude that the circumstances of this
case also fall within the reach of subsection 1128(i) (4).
This subsection includes within the definition of
convicted the situation in which an "individual has
entered into participation in a first offender or other
program where judgment of conviction has been withheld."
The Order memorializing H. Gene Blankenship's plea
specifically states that "all proceedings in this cause
will be deferred for a period of . . . ." J. Ex. 8.
9

Pursuant to the Tennessee Code, section 40-21-109, the
court could dismiss the proceedings only after
satisfactory completion of probation. On its face, the
treatment of Mr. Blankenship's case by the Tennessee
court falls within the term "other program where judgment
of conviction has been withheld," as a matter of federal
law. Moreover, section 40-21-109 of the Tennessee Code
states that even after dismissal of the proceeding and
expungement of the public record, nonpublic records are
retained which "constitute the official record of
conviction" and are admissible in certain, albeit
narrowly proscribed, court proceedings.

II. H. Gene Blankenship's Conviction "Related to" the
Delivery of a Medicaid Item Within The Meaning of

Section 1128 of The Act.

Petitioner argues that even if I rule that he was
"convicted," he should not be excluded because the
offense was not a program-related crime giving rise to a
mandatory exclusion under section 1128(a)(1) of the Act.
Petitioner argues that the offense was a trademark
violation committed against the trademark owner, not
against Medicare or Medicaid and, therefore, not "related
to" the delivery of an item or service under Medicare or
Medicaid. Petitioner states that it was Congress' intent
that only a fraud against the Medicare and Medicaid
programs would invoke the mandatory exclusion provisions
of section 1128(a)(1) and that the State's action in
dropping the Medicaid fraud charges against him
effectively terminated the I.G.'s opportunity to exclude
Petitioner from Medicare and Medicaid. Petitioner also
argues that since the State statute (section 47-25~-403)
on its face does not mention Medicaid, Medicare, or any
health care program, a conviction under the State
provision could not logically be considered a violation
against Medicaid. Petitioner argues that fraudulently

7 In July 1988, Congress enacted language revising

section 1128(i)(4) by replacing the phrase "first
offender or other program" with the phrase "first
offender, deferred adjudication, or other arrangement or
program." It appears that Congress intended that this
language apply retroactively to all actions brought by
the I.G. after September 1, 1987. See The Inspector
General v. Donald 0. Bernstein, D.C., Docket No. C-40,
decided January 12, 1989. However, I make no findings or
conclusions on this issue because the parties did not
have an opportunity to address it. Moreover, the new
language appears to more directly support the I.G.'s case
and, therefore, the result here would be the same.
10

selling a vacuum cleaner to a Medicaid patient would not
invoke the mandatory exclusion provisions and,
accordingly, neither should selling a beneficiary
prescription medication if the State statute under which
a person admits guilt relates to a trademark violation
rather than a Medicaid fraud violation. Finally,
Petitioner argues that the mandatory exclusion would
violate the double jeopardy clause, as he has already
been convicted under Tennessee law and the federal
exclusion would result in multiple punishments for the
same offense. Petitioner cites the recent Supreme Court
case of United States, v. Irwin Halper 57 U.S. Law Week
4526 (No. 87-1383, May 15, 1989), as support for his
position and argues that the exclusion is "punitive"
because it did not attempt to make the government whole
(actual damages suffered and expenses incurred in
prosecution), but caused economic loss to Petitioner (Mr.
Blankenship had to sell his pharmacy).

The I.G. argues that the substance of the offense was
dispensing generic prescription drugs under brand labels
and billing Medicaid for the higher priced brand label
drugs. The I.G. argues that Medicaid patients could have
been harmed by not receiving the specific drug prescribed
by the physician and that both the patients and the
program were harmed. The I.G. argues that, in any event,
H. Gene Blankenship's conviction is "related to" the
delivery of prescription medication to Medicaid patients.
The I.G. also argues that the Petitioner's restrictive
reading of section 1128 of the Act is contrary to both
the plain language of the law and to Congressional
intent. Finally, the I.G. argues that I have no
authority to invalidate the exclusion based on the double
jeopardy clause because to do so would require me to
invalidate as unconstitutional the mandatory exclusion
statute itself. The I.G. also argues that Halper,
supra, would not prohibit this exclusion because this
case is legally and factually distinguishable.

I find and conclude, as a matter of federal law, that the
mandatory exclusion provisions of section 1128 are not
limited to situations where a medical provider or other
individual or entity is convicted under a statute
expressly criminalizing fraud against a federal or state
health care program. Several State statutes were
involved here: (1) TCA 14-23-118(b) (recodified as TCA
71-5~118(b)), a State statute specifying sanctions for
fraudulently obtaining benefits for payments for medical
assistance; (2) TCA 39-6-451, a State statute making it
illegal to substitute a drug for one prescribed by the
physician (except under specified circumstances); and (3)
TCA 47~25-403, a State statute making it illegal to
11

knowingly misrepresent the origin of a drug without the
written authority of the owner of the trademark for the
drug. The original criminal information contained
reference to TCA 14-23-118(b) and TCA 39-6-451, but the
final judgment and order of the court referred only to
TCA 47-25-403, inasmuch as all counts in the criminal
information referring to TCA 14-23-118(b) were dropped
and the order amending the remaining counts replaced
references to TCA 39-6-451 with references to TCA 47-25-
403. J.Exs. 2-6.

Petitioner bases much of his case on distinctions among
these statutes and the fact that the judgment and order
of the court referred only to a statute which did not
expressly prohibit Medicaid fraud (i.e. not TCA 14-23-
118(b)). One can only speculate as to why the State
chose to proceed as it did. But the vagaries of state
jurisprudence should not dictate an unreasonable and
unfair result under the facts of a case such as this,
where it is clear that the "conviction" was "related to"
Medicaid within the meaning of section 1128(a)(1) and
(i).

The test of whether a "conviction" is "related to"
Medicaid must be a common sense determination based on
all relevant facts as determined by the finder of fact,
not merely a narrow examination of the language within
the four corners of the final judgment and order of the
criminal trial court.

The inquiry is whether the conviction "related to"
Medicaid fraud, not whether the state court convicted
Petitioner of Medicaid fraud. Thus, my task is not
simply to examine the judgment and state criminal statute
to determine whether they specifically refer to Medicaid
fraud. Rather, my task is to examine all relevant
conduct to determine if there is a relationship between
the judgment of conviction and the Medicaid program. Had
Congress intended a different result, it would have used
the phrase "conviction for" or conviction "restricted to"
instead of "related to." An examination of whether a
conviction is "related to" Medicaid necessarily involves
an inquiry into Petitioner's conduct.

Accordingly, the finder of fact must consider all
relevant documents pertaining to the trial court
proceeding. These may include the indictment, the
transcript of the sentencing proceeding, and plea
agreements. Of course, the finder of fact must also
consider the relevant testimony of witnesses.
12

Here, the criminal information specifically referred to
Medicaid fraud, and the uncontroverted testimony of two
witnesses at the May 24, 1989 hearing established that
the drugs were indeed purchased with Medicaid eligibility
cards as part of a "sting" operation. The fact that the
Medicaid fraud charges in the criminal information were
dismissed is not a bar to considering evidence that this
conviction was "related to" the Medicaid program. The
original criminal information, along with the testimony
of the two witnesses, establish that the "conviction" of
Petitioner was "related to" the delivery of a Medicaid
item within the meaning of section 1128 of the Act.
Petitioner does not deny that he sold some of these drugs
to Medicaid patients and that he billed Medicaid for
them. The testimony of Special Agents Daniel and Wright
establishes that the drugs were purchased with Medicaid
eligibility cards and billed to Medicaid. Tr. at 23-26,
30-35 and 43. Thus, whether or not the State statute
under which he was "convicted" specifically mentioned
Medicaid, his conviction was "related to" the Medicaid
program.

Black's Law Dictionary, Fifth Edition (West Publishing
1979) defines "related" as: "standing in relation;
connected; allied; akin." Clearly, the offense for which
H. Gene Blankenship 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 conviction and the
Medicaid program. Petitioner would have me rule that the
billing of Medicaid for the higher-priced drugs was only
incidental to the offense of misrepresenting the origin
of the drugs. Petitioner's strained reading of section
1128 of the Act is not borne out by the plain words of
the Act.

Petitioner also attempts to illustrate his point by
arguing that if he had sold vacuum cleaners, instead of
drugs, he would not have been excluded. I do not find
this argument to be persuasive. The fact is, Medicaid
was billed for higher priced drugs because the origin of
the drugs was misrepresented; there was a direct
monetary impact on the program which directly affected
the financial integrity of the program. Clearly, the
offense was one that "related to" the Medicaid progran,
and "related to" is all section 1128(a)(1) of the Act
requires. The same outcome would result for the illegal
13

sale of vacuum cleaners if the Medicaid program were
billed for the vacuum cleaners.

In the recent Decision in the case of Jack W. Greene v.
iuspector General, Appellate Docket No. 89-59, Decision
No. 1078 (July 31, 1989), the Appellate Division of the
Departmental Appeals Board (in reviewing the decision of
the ALJ) stated (at page 7): "The false Medicaid billing
and the delivery of the drugs to the Medicaid recipient
are inextricably intertwined and therefore 'related'
under any reasonable reading of that term."

I need not address the I.G.'s contention that I have no
authority to rule on the double jeopardy question raised
by the Petitioner, as I conclude that Halper, supra, does
not apply to this case.

In Halper, the Supreme Court held that under some
circumstances the imposition of civil penalties may
violate the double jeopardy clause of the Sixth Amendment
to the United States Constitution. The Court held that
the imposition of a penalty under the False Claims Act,
31 U.S.C. 3729-3231, could constitute double jeopardy in
the narrow circumstances where there existed a prior
federal criminal conviction for the false claims for
which the civil penalty was imposed and where there was
not even a rough relationship between the amount of the
penalty and the cost to the government resulting from the
false claims.

This case is distinguishable both legally and factually
from Halper. First, this case involves a state
conviction whereas Halper involved a federal conviction.
Double jeopardy does not apply to a subsequent federal
prosecution based on facts which led to a state
conviction. Chapman v. U.S. Dept. of Health & Human
Services, 821 F.2d 523 (10th Cir. 1987); Abbate v. United
States, 359 U.S. 187 (1959). Next, Halper involved the
application of a different law, the False Claims Act.
Finally, Halper involved different factual circumstances
~~ the federal government was attempting to recover
approximately $130,000 in civil penalties based on an
individual's federal conviction of overcharging the
Medicare program by $585. 57 LW 4527. While the Court
held that the double jeopardy clause prevented the
government from recovering an excessively large amount
not rationally related to the financial loss incurred,
the Court noted that the rule is one for "the rare case
++. where a fixed-penalty provision subjects a prolific
but small-guage offender to a sanction overwhelmingly
disproportionate to the damages he has caused." 57 LW at
4530. There has been no showing of such a sanction in
14

this case. Moreover, the major purpose of the exclusion
law is not to punish, but to protect program integrity by
preventing untrustworthy providers from having ready
access to the Medicare and Medicaid trust funds. See,
H.R. Rep. No. 97-158, 97th Cong., 1st Sess. Vol. III,
329, 344, (1981); S. Rep. No. 139, 97th Cong., lst Sess.
461-62 (1981), 1981 U.S. Code Cong. & Ad. News 727-28;
Preamble to the Regulations (48 Fed. Reg. 38827 to 38836,
August 26, 1983).

III. A Minimum Mandatory Five Year Exclusion was
Reguired in this Case.

Section 1128(a)(1) of the Act clearly requires the I.G.
to exclude individuals and entities for a minimum period
of five years from the Medicare and Medicaid programs
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 ADMIN. NEWS 682, 686.

Since I have found and concluded that Petitioner was
"convicted" of a criminal offense and it was "related to"
the delivery of an item under the Medicaid program within
the meaning of section 1128(a)(1) and (i) of the Act, I
conclude that the I.G. was required to exclude the
Petitioner for a minimum of five years.
15

ONCLUSION

Based on the undisputed material facts and the law, I
conclude that the I.G.'s determination to exclude the
Petitioner from participation in the Medicare and
Medicaid programs for five years was appropriate and
required by the Act and Regulations because H. Gene
Blankenship was "convicted" of a criminal offense
“related to" the delivery of an item under the Medicaid
program within the meaning of section 1128(a)(1) and (i)
of the Act.

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:

SEP 1, 1989

Frank Waltz, M.D. DATE:

Petitioner,

-~ Vv. Docket No. C-86
DECISION CR 41

The Inspector General.

DECISION OF ADMINISTRATIVE LAW JUDGE

On November 4, 1988, the Inspector General (the I.G.)
notified Petitioner that he was being excluded from
participation in the Medicare program and State health
care programs.’ The I.G. told Petitioner that his
exclusions were due to revocation by the Alabama State
Board of Medical Examiners (the Board of Examiners) of
Petitioner's license to practice medicine in Alabama.
Petitioner was advised that at the time he obtained a
valid license to practice medicine in Alabama, he would
have the right to apply for reinstatement to the Medicare
and State health care programs.

Petitioner timely requested a hearing, and the case was
assigned to me for a hearing and decision. I conducted a
prehearing conference by telephone on February 9, 1989,
at which Petitioner appeared pro se. I advised
Petitioner that he had a right to obtain legal counsel.
Petitioner acknowledged that he knew he had that right,
but stated that he intended to appear pro se. Asa
result of this prehearing conference, I issued a

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 (such as Medicaid). State health
care programs are referred to hereinafter as "Medicaid."
2

Prehearing Order on February 21, 1989, which, among other
things, scheduled a hearing to be held in the case in
Mobile, Alabama, on April 4, 1989.

Subsequently, I was advised by the parties that they had
agreed to try this case on the basis of the written
record, with oral argument to be conducted by telephone.
I issued a Prehearing Order on March 31, 1989, which
recited this agreement and established a schedule for the
parties to submit proposed exhibits and briefs.

On July 31, 1989, I conducted oral argument of this case
by telephone. Prior to hearing the parties' arguments, I
admitted into evidence all of the exhibits that the
parties proffered.

I have considered the evidence in this case, the parties'
arguments, and applicable law. I conclude that the
exclusions imposed and directed by the I.G. are permitted
by section 1128(b) (4) (A) of the Social Security Act.
Therefore, I am deciding this case in favor of the I.G.

ISSUES
The issues in this case are whether:
1. the Board of Examiners revoked Petitioner's
license to practice medicine in Alabama for

reasons bearing on Petitioner's professional
competence or performance;

2. it would be relevant for Petitioner to prove
that the Board of Examiners deprived him of due
process;

3. I have authority to grant Petitioner relief
based on his argument that section 1128(b) (4) (A)
of the Social Security Act is unconstitutional;

4. the exclusions imposed and directed against
Petitioner are reasonable.
3
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Petitioner is a doctor of medicine. 1.G. Ex. 1.?

2. Petitioner held a license to practice medicine in
the State of Alabama. I.G. Ex. 1.

3. On September 17, 1987, the Board of Examiners
issued an administrative complaint against Petitioner.
I.G. Ex. 1.

4. The complaint alleged that Petitioner was unable
to practice medicine, with reasonable skill and safety to
patients, by virtue of physical and mental illness
characterized by a physical impairment, mental and
emotional depression, and misuse and abuse of controlled
substances. I.G. Ex. 1.

5. The Board of Examiners issued an order,
temporarily suspending Petitioner's license to practice
medicine, and scheduled a hearing in Petitioner's case.
I.G. Ex. 2.

6. On November 25, 1987, the Board of Examiners held
a hearing concerning the allegations against Petitioner.
I.G. Ex. 4.

7. On January 8, 1988, the Board of Examiners issued
an Order revoking Petitioner's license to practice
medicine in Alabama. I.G. Ex. 3.

8. The Board of Examiners found that in several
instances Petitioner had prescribed, dispensed, furnished
or supplied controlled substances for reasons other than
a legitimate medical purpose and/or in quantities not
reasonably related to a patient's medical condition.

I.G. Ex. 3.

9. The Board of Examiners found that Petitioner was
unable to practice medicine, with reasonable skill and
safety to patients, by virtue of physical and mental

2 The parties' exhibits and memoranda will be

cited as follows:

I.G.'s Exhibit I.G. Ex. (number)

Petitioner's Exhibit P. Ex. (letter
designation)

Brief of the Inspector General I.G.'s Brief at (page)

Petitioner's Memoranda P.'s Memoranda
4

illness characterized by physical and mental impairment.
I.G. Ex. 3.

10. The Board of Examiners revoked Petitioner's
license to practice medicine in Alabama, for reasons
bearing on Petitioner's professional competence or
performance. Findings 7-9; Social Security Act, section
1128(b) (4) (A).

11. The Secretary of Health and Human Services
(the Secretary) delegated to the I.G. the authority to
determine, impose, and direct exclusions pursuant to
section 1128 of the Social Security Act. 48 Fed. Reg.
21662, May 13, 1983.

12. On November 4, 1988, the I.G. excluded
Petitioner from participating in the Medicare program and
directed that he be excluded from participating in
Medicaid, pursuant to section 1128(b)(4)(A) of the Social
Security Act. I.G. Ex. 9.

13. Petitioner's exclusions are effective until such
time as his license to practice medicine in Alabama is
restored and his participation status is reinstated.

I.G. Ex. 9.

14. The I.G. had discretion to exclude Petitioner
from participation in Medicare and to direct his
exclusion from participation in Medicaid. Social
Security Act, section 1128(b) (4) (A).

15. Petitioner's assertion that he was deprived of
due process by the Board of Examiners is not relevant.
See Social Security Act, section 1128(b) (4) (A).

16. I do not have authority to grant Petitioner
relief based on his argument that section 1128(b) (4) (A)
of the Social Security Act is unconstitutional. See
Social Security Act, section 205(b).

17. The exclusions imposed and directed against
Petitioner are reasonable. Social Security Act, section
1128(b) (4) (A).

ANALYSIS

The Board of Examiners revoked Petitioner's license to
practice medicine in Alabama based on findings that
Petitioner prescribed controlled substances to patients
in circumstances where such prescriptions were not
medically indicated and that Petitioner was unfit to
5

practice medicine, by virtue of physical and mental
illness. Findings 7-9. Subsequently, the I.G. imposed
and directed exclusions against Petitioner pursuant to
section 1128(b) (4) (A) of the Social Security Act, which
permits such exclusions in cases where an individual or
entity's license to provide health care has been
suspended or revoked by a state licensing authority for
reasons bearing on the individual's or entity's
professional competence or performance, or financial
integrity. The exclusions imposed and directed by the
I.G. are indefinite in duration. Petitioner may request
reinstatement as a provider in Medicare and Medicaid when
his license is reinstated.

Petitioner does not deny that the Board of Examiners
revoked his license to practice medicine in Alabama. He
does not dispute that the rationale expressed by the
Board of Examiners pertained to Petitioner's professional
competence or performance. He does not claim that,
assuming it was reasonable for the I.G. to exclude hin,
the indefinite nature of the exclusions is unreasonable.

Petitioner argues that the exclusions in this case are
unreasonable because the Board of Examiners allegedly did
not give him a fair hearing. P.'s Ex. A-L; P.'s
Memoranda. Alternatively, he argues that if section
1128(b) (4) (A) permits his exclusion from Medicare and
State health care programs based on unfair Board of
Examiners proceedings, then the exclusion law is
unconstitutional.

The I.G. asserts that the authority contained in section
1128(b) (4) (A) for the Secretary (or his delegate, the
I.G.) to impose and direct exclusions derives from the
actions taken by state licensing boards, not the
underlying facts on which state boards' decisions may be
based. According to the I.G., the exclusion law does not
authorize the Secretary to examine state boards' actions
to ascertain their validity under state or federal
statutes and constitutions, nor does it authorize the
Secretary to examine the facts on which boards' actions
are based, except to determine whether the reasons for
such actions bear on the individuals' or entities'
professional competence, performance, or financial
integrity. I.G.'s Brief at 4.
6

1. he Board of Examiners revoked Petitioner's
license to practice medicine in Alabama for reasons
bearing on Petitioner's professional competence or
performance.

As noted above, the Board of Examiners concluded that
Petitioner had prescribed controlled substances, in a
number of cases, to patients under circumstances where
such prescriptions were not medically indicated. Finding
7. The Board of Examiners also found that Petitioner was
unfit to practice medicine by virtue of physical and
mental illness. Finding 8. These findings manifestly
pertain to Petitioner's professional competence and
performance. Therefore, the Board of Examiners revoked
Petitioner's license to practice medicine in Alabama for
reasons bearing on Petitioner's professional competence
or performance, within the meaning of section

1128(b) (4) (A).

2. Petitioner's assertion that he was deprived of

due_process he Bo. of Examiners is irrelevant. Se
Social Security Act, section 1128(b) (4) (A).

The heart of Petitioner's case is his assertion that he
was not given a fair hearing by the Board of Examiners.
According to Petitioner, the I.G.'s exclusion
determination is invalid because it is based on a
defective Board of Examiners' decision.

I conclude that Petitioner's claims concerning the
fairness and completeness of the state licensing board
proceedings are irrelevant. There are several possible
issues which a petitioner may raise in a hearing brought
to challenge exclusions imposed pursuant to section
1128(b) (4) (A). A petitioner may argue that his license
was not, in fact, suspended or revoked; that no action
was taken by a state licensing authority; or that the
suspension or revocation imposed against the petitioner
was not for reasons bearing on his or her professional
competence, performance, or financial integrity. A
petitioner may also argue that the terms of the
exclusions imposed and directed by the I.G. are
unreasonable.

A hearing on exclusions imposed and directed pursuant to
section 1128(b) (4) (A) may not be used by a petitioner to
mount a collateral attack on a state board's decision.
The I.G.'s authority to impose and direct exclusions
pursuant to section 1128(b) (4) (A) emanates from the
actions taken by state licensing boards. The law
instructs the Secretary to rely on these boards'
decisions. The law does not intend that the Secretary
7

examine the fairness or propriety of the process which
led to the decisions.

The sections of the law which provide for administrative
hearings in exclusion cases do not authorize collateral
challenges of state board decisions on due process
grounds. Congress directed the Secretary to provide
excluded parties with the opportunity to have hearings on
their exclusions. Social Security Act, section 1128(f).
The law requires that an excluded party be afforded
reasonable notice and opportunity for a hearing by the
Secretary to the same extent as is provided in section
205(b) of the Social Security Act.

Section 205(b) states that:

Upon request by any . . . individual who makes a
showing in writing that his or her rights may be
prejudiced by any decision the Secretary has rendered
» . .[the Secretary] shall give such...
{individual] reasonable notice and opportunity for a
hearing with respect to such decision, and if a
hearing is held, shall on the basis of evidence
adduced at the hearing, affirm, modify, or reverse

his findings of fact and such decision. (Emphasis
added.)

This section does not provide a petitioner with the right
in an administrative hearing to prevail based on issues
which are not relevant to the Secretary's (or pursuant to
delegation, the I.G.'s) exclusion decision. In this
case, the "decision" which is challenged is the I.G.'s
decision to exclude Petitioner based on the Board of
Examiners' license revocation determination. The
fairness of the Board of Examiners' license revocation
determination is not relevant to the I.G.'s exclusion
decision, and thus evidence of the Board of Examiners'
alleged lack of due process is similarly not relevant.

3 The exclusion law does not operate as a bar to a

petitioner appealing a state board's suspension or
revocation decision. As the I.G. notes in his brief,
were Petitioner to successfully appeal the Board's
license revocation decision and, thereby, have his
license to practice medicine reinstated, the duration
aspect of the exclusions would be satisfied, and
Petitioner would be eligible for reinstatement as a
participant in Medicare and State health care programs.
I.G.'s Brief at 7.
8

3. Ido not have authority to grant Petitioner
relief based on his argument that section 1128 (b) (4) (A)
of the Social Security Act is unconstitutional. See
Social Security Act, section 205(b).

At oral argument of this case, Petitioner asserted that
if the exclusion law did not permit him to challenge the
fairness of the Board of Examiners' license revocation
decision in this case then the law is unconstitutional.
I conclude that I do not have authority to decide this
issue.

There is no language in section 1128(f) which provides
that, in conducting hearings as to the propriety of
exclusions, the Secretary must consider challenges to the
constitutionality of the exclusion law. Section 205(b)
does not suggest that challenges to the Secretary's
decisions in administrative hearings may include
arguments as to the constitutionality of statutes which
give the Secretary authority to make decisions in
individual cases.

4. The exclusions imposed and directed against
Petitioner are reasonable.

Although Petitioner has challenged the basis for the
I.G.'s exclusion determination, he has not asserted that,
assuming the I.G. had authority to impose and direct
exclusions in this case, the duration of the exclusions
imposed and directed against Petitioner is unreasonable.

The I.G. imposed and directed conditional exclusions
against Petitioner's participation as a provider in
Medicare and Medicaid. The I.G. asserts that his
exclusion determination in this case is consistent with
Congress' intent that individuals or entities who lose
their licenses to provide health care in any State, for
reasons pertaining to their professional competence or
performance, or their financial integrity, be excluded in
all States from participating in Medicare or in Medicaid
until such time as they reacquire licenses and
demonstrate trustworthiness as providers of services.
I.G.'s Brief at 8-9.

One purpose of the exclusion law is to give the Secretary
a remedy to protect Medicare beneficiaries and Medicaid
recipients from individuals or entities who are found

4 I make no finding as to Petitioner's right to

challenge the constitutionality of the exclusion law in
another forum.
9

capable of causing harm to beneficiaries or recipients.
Congress intended that the Secretary exclude individuals
or entities who have lost their licenses for reasons
pertaining to their professional competence or
performance, or their financial integrity, from
performing those services for which they had been
licensed, until such time as their licenses are restored.
S. REP. No. 109, 100th Cong., 1st Sess. 7, reprinted in
1987 U.S. CODE CONG. & ADMIN. NEWS 688.

The I.G. imposed and directed exclusions against
Petitioner based on the Commission's revoking
Petitioner's license to practice medicine for reasons
pertaining to Petitioner's professional competence and
performance. Given this, and in light of legislative
purpose, the conditional exclusions imposed and directed
by the I.G. are reasonable.

CONCLUSION

Based on the evidence and the law, I conclude that the
I.G.'s determination to exclude Petitioner from
participating in Medicare, and to direct that Petitioner
be excluded from participating in Medicaid, was justified
pursuant to section 1128(b)(4)(A) of the Social Security
Act. I conclude further that it was reasonable to base
the duration of the exclusions on Petitioner's obtaining
a license to practice medicine in Alabama. Therefore, I
am entering a decision in favor of the I.G. in this case.

/s/

Steven T. Kessel
Administrative Law Judge