DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board

Civil Remedies Division

In the Case of:

The Inspector General, DATE: AUG 22, 1989

“vee
Docket No. C-50
Dean G. Hume, D.O., DECISION CR 40

Respondent,

DECISION AND ORDER

In this case, the Inspector General (I.G.) of the United
States Department of Health and Human Services (DHHS)
issued a Notice of Determination (Notice) informing Dean
G. Hume, D.O. (Respondent) that the I.G. was seeking a
civil monetary penalty of $135,000, an assessment of
$4,948.20, and a ten year exclusion of Respondent from
participation as a medical provider in the Medicare,
Medicaid, and other federal and state health care
programs. In the Notice, the I.G. alleged that
Respondent had violated the Civil Monetary Penalties Law
(CMPL) and its implementing federal regulations
(Regulations) by presenting false or improper claims for
Medicare and Medicaid payment. The I.G. alleged that
Respondent had claimed to have provided 270 medical items
or services, during the period from December 1983 to
January 1986, and that Respondent knew, had reason to
know, or should have known that the items or services
were not provided as claimed.

Respondent filed a timely appeal to the Notice (Request)
denying the I.G.'s allegations, challenging the proposed
sanctions, and requesting a hearing before an
Administrative Law Judge (ALJ).
2
PPLICABLE FEDERAL

I. Statutes

This case is governed by the Civil Monetary Penalties Law
(CMPL), Section 1128A of the Social Security Act,

42 U.S.C. 1320a-7a (42 U.S.C.A. 1320a-7a, West Supp.
1989). See Stip. A2.

II. The Regulations

The governing federal regulations (Regulations) are
codified in 42 C.F.R. sections 1003.100 through 1003.133
(1988). These Regulations provide for a full and fair
trial-type hearing before an ALJ, implement the
provisions of the CMPL, delegate authority from the
Secretary to the I.G. and his delegates to make
determinations regarding the CMPL, and provide for
appeals from an ALJ's decision and order.

BACKGROUND '

Dr. Dean G. Hume, a doctor of osteopathic medicine, was
engaged in the general practice of medicine in Des
Moines, Iowa for about fifty years, until he surrendered
his license in March 1986. Tr. 382. Dr. Hume enrolled
as a provider with the Iowa Medicaid program on or about
September 1, 1977. Supp. Stip. 6. He was also enrolled
as a provider with Blue Cross/Blue Shield of Iowa, the

' he citations to the record in this Decision and

Order and noted as follows:

Feb 29, 1989 Stipulation Stip. (number)
of Facts
March 8, 1989 Supplemental Supp. Stip. (number)
of Facts
Hearing Transcript Tr. (page)
I.G.'s Exhibits I.G. Ex. (number)/
(page)
Respondent's Exhibits R Ex. (number) / (page)
Respondent's Brief R Br. (page)
Respondent's Reply Brief R Rep. Br. (page)
I.G.'s Brief I.G. Br. (page)
I.G.'s Reply Brief I.G. Rep. Br. (page)
ALJ Findings of Fact FFCL (number)
and Conclusions of Law
March 1, 1989 ALJ ALJ Ruling

Ruling
3

Medicare carrier, at all times pertinent to this action.
Supp. Stip. 6, 7.

The Notice was issued on July 22, 1988 by Eileen T. Boyd,
Deputy Assistant I.G., and listed items or services in
the Appendix to the Notice as line items one through 270.
Stip. B2, B3, B5, B6. The I.G. charged that Dr. Hume had
vacationed in Florida during the winter months of 1983
through 1986 and, during these periods, had allowed his
untrained bookkeeper and other office personnel to treat
patients in his absence. Tr. 9. The I.G. charged that
these untrained persons were allowed to dispense
medication, provide injections, perform urinalysis,
refill prescriptions, and present pre-signed insurance
forms to the Medicare and Medicaid programs for
reimbursement, while the Respondent was in Florida. The
I.G. further contended, as an aggravating circumstance,
that Dr. Hume had failed to provide adequate
documentation for 1309 additional claims. Respondent
requested $1994.60 from the Medicaid program for 218 line
items, and $480.00 from the Medicare program for 52 line
items; Respondent was paid $2,052.67 by the Medicaid and
Medicare programs. Stip. B2. Finally, the I.G. alleged
that, because Dr. Hume had been previously found guilty
in State Court of the charge of submitting fraudulent
claims, Dr. Hume was collaterally estopped from providing
a defense for 246 out of the 270 line items in issue.
I.G. Br. 41; Tr. 10-11; R Br. 2.

In his September 19, 1988 Request, Respondent refuted the
I.G.'s allegations and asserted that he either (1) had
provided the services or (2) had properly supervised
other medical providers in their provision of the items
or services as claimed. RBr, 7-14. Respondent argues
that, if I find that liability was proven by the I.G.,
the mitigating circumstances should reduce the amount of
any penalty and assessment to the amount of actual
damages to the Medicare and Medicaid programs. R Br.
15-22; R Rep. Br. 4.

I conducted a prehearing conference on November 15, 1988,
and a formal evidentiary trial-type hearing on March 14
and 15, 1989, in Des Moines, Iowa.

At the hearing, the I.G. presented five witnesses,
Respondent testified on his own behalf, and both parties
entered exhibits into the record. Each of the parties
4

filed two post-hearing briefs and proposed findings of
fact and conclusions of law.

PREHEARING RULINGS

On January 5, 1989, the I.G. moved to bar Respondent from
relitigating 246 of the 270 items or services at issue in
this case, alleging that they were the subject matter of
a prior "final determination" within the meaning of
section 1003.114(c) of the Regulations. Respondent
admits that he was found guilty and that items one
through 246 were the subject matter of his criminal
conviction. Stip. B5. On March 1, 1989, I issued a
Ruling in which I found and concluded that (1) Respondent
was barred from relitigating line items one through 246
because they were the subject matter of a "final
determination" in Respondent's State Court criminal case,
and (2) that liability for the claims containing line
items one through 246 was established by section
1003.114(c) of the Regulations. This left line items
247-270 remaining in issue at the hearing. See Tr. 12.

ISSUES

The issues are:
I. Liability.

1. Whether the I.G. proved, by a preponderance of
the evidence, that Respondent knew, had reason
to know, or should have known that the Medicare
and Medicaid items or services at issue, and
listed as items 247-270, were not provided as
claimed, in violation of the CMPL and
Regulations.

2 some of the proposed findings of fact and
conclusions of law which the parties offered were
rejected because they were not supported by the evidence,
needed to be modified, or were irrelevant.

3 after the hearing, I invited the parties to
address (in their reply briefs) the issue of whether the
recent United States Supreme Court decision in United
States - v.- Halper, U.S. (1989), 57
U.S.L.W. 4526 (1989), is applicable to this case.

5

II. Phe Amount of the Penalty, Assessment, and the
Period of Exclusion.

1. Whether the I.G. proved by a preponderance of
the evidence the aggravating circumstances
alleged.

2. Whether the Respondent proved by a preponderance
of the evidence any circumstances that would
justify reducing the amount of the penalty, the
assessment, or the period of exclusion proposed
by the I.G.

3. Whether the recent United States Supreme Court
decision in United States - v.~ Halper,
U.S. , 57 U.S.L.W. 4526 (1989), is applicable
to this case.

FINDINGS OF FACT AND 4

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. For the purposes of this proceeding, I have taken
judicial notice of the statutes of the United States, the
regulations of the Secretary of the Department of Health
and Human Services (Secretary), the statutes of the State
of Iowa, and the regulations of the Iowa Department of
Human Services (formerly the Iowa Department of Social
Services). Supp. Stip. 1.

2. Respondent, Dean G. Hume, D.O., was engaged as a
physician in the general practice of medicine for
approximately fifty years. He surrendered his license to
practice medicine in March 1986. I.G. Ex. 4/5, 5; Tr.
89-90, 381, 482-483.

3. Respondent graduated from the University of
Osteopathic Medicine in 1938. He was a member of the
American Osteopathic Association from the time he was
licensed until approximately 1983-1984, when he elected
to relinquish his membership. Tr. 381, 439.

4 Any part of this Decision and Order preceding

these Findings of Fact and Conclusions of Law which is
obviously a finding of fact or conclusion of law is
hereby incorporated into this section.
6

4. At all times pertinent to this action, the Iowa
Department of Human Services (IDHS), formerly known as
the Iowa Department of Social Services, was the agency
designated to administer the Medicaid program in Iowa.
Supp. Stip. 5.

5. Respondent enrolled as a provider with the Iowa
Medicaid Program on or about September 1, 1977, and
remained enrolled at all times pertinent to this action.
Supp. Stip. 6.

6. Instructions governing participation in the Iowa
Medicaid program are set forth in the Iowa Medicaid
Provider Manual. Supp. Stip. 3.

7. Regulations governing the provision of services and
submission of claims for reimbursement under the Iowa
Medicaid program are set forth in the Iowa Administrative
Code (IAC). Supp. Stip. 4; Tr. 272, 282.

8. It is the policy of the IDHS to send a copy of the
Iowa Medicaid Program Provider Manual and copies of
subsequent amendments to all participating physicians.
I.G. Ex. 12-5/1.

9. Respondent received a copy of the Iowa Medicaid
Program Provider manual and copies of subsequent
amendments. I.G. Ex. 12-5; Tr. 493-494.

10. At all times pertinent to this action, the
Respondent was enrolled with Blue Cross/Blue Shield of
Iowa (BCBS), the designated Medicare carrier in Iowa.
Supp. Stip. 7.

11. Regulations and instructions governing participation
in the Medicare program are set forth in the Medicare
Medical Assistant Manual and Medicare Bulletins. Supp.
Stip. 4; Tr. 272, 282.

12. BCBS sends copies of the Medicare Medical Assistant
Manual and Medicare Bulletins to all participating
physicians. Tr. 272.

13. The Medicare Medical Assistant Manual and Medicare
Bulletins were sent to Respondent. Tr. 272.

14. Respondent received a copy of the Medicare Medical
Assistant Manual and Medicare Bulletins. Tr. 493-494,

15. As a provider of services, the Respondent was
obligated to make himself aware of program requirements.
7

16. Respondent presented or caused to be presented to
the Medicare program, claims for reimbursement containing
52 line items for services allegedly performed between
December 1983 - January 1986. Stip. B2.

17. Respondent was reimbursed $480.00 for the 52 line
items, which were on claims presented to the Medicare
program. Stip. B3.

18. Respondent presented or caused to be presented to
the Medicaid program claims containing 218 line items for
items and services allegedly rendered during the period
December 1983 - January 1986. Stip. B2.

19. Respondent was reimbursed $1,994.60 for the 218 line
items, which were on claims presented to the Medicaid
program. Stip. B3.

20. On November 21, 1986, Respondent was charged in Iowa
District Court with violating section 714.8 and 714.11

of the Code of Iowa, Fraudulent Practice in the Third
Degree, by "knowingly executing or tendering, under
penalty of perjury, a false affidavit or certification
given in support of a claim for compensation, thereby
illegally receiving payments under Medicaid in an amount
in excess of one hundred dollars. ..." I.G. Ex. 15.

21. On November 21, 1986, Respondent was found guilty of
the charge of Fraudulent Practice in the Third Degree.
I.G. Ex. 15; Stip. B5, 11.

22. On November 21, 1986, Respondent executed a
Statement Confessing Judgment by which he declared that
he had received overpayments totalling $1,1917.39 as a
result of claims submitted to the Medicare and Medicaid
programs on behalf of his medical practice. Stip. B4,
11.

23. Respondent's judgment was deferred and he was placed
on probation for two years and ordered to pay $1,809.97
of restitution to the Medicaid program and $107.42 of
restitution to the Medicare program. Stip. B5, 11.

24. The claims presented by Respondent, containing line
items one through 246, were the subject matter of a
"final determination" in Respondent's criminal State
court proceeding within the meaning of section
1003.114(c) of the Regulations.

25. I issued a Ruling which addressed the effect of the
determinations made in Respondent's prior criminal State
court proceeding. ALJ Ruling. I ruled that Respondent
8

was barred from relitigating the issue of liability for
the claims containing line items one through 246, and I
affirm that March 1, 1989 Ruling. Respondent's liability
with respect to those claims was established prior to
this hearing. ALJ Ruling.

26. At the hearing, the remaining issues regarding
liability involved the claims containing line items
247-270.

27. All claims at issue were presented, or caused to be
presented, on "HCFA 1500" forms. Supp. Stip. 10.

28. HCFA 1500 forms contain a block for the physician's
signature. I.G. Ex. 29.

29. Respondent signed the claims, which he presented or
caused to be presented to the Medicaid and Medicare
programs. Supp. Stip. 10; Tr. 485-486.

30. By signing block 25 of the HCFA 1500 forms,
subsequently presented to the Medicare program for
reimbursement, Respondent certified that the services
listed on the form were medically indicated and necessary
for the health of the patient and were personally
rendered by him or were rendered incident to his
professional service by an employee under his immediate
personal supervision. I.G. Ex. 29; FFCL 29; Tr. 277,
486.

31. By signing block 25 of HCFA 1500 forms, presented to
the Medicaid program for reimbursement, Respondent
certified that the services were personally rendered

by him or by his employee while under his personal
direction. I.G. Ex. 29; FFCL 29; Tr. 277, 486.

32. A Medicare Bulletin, dated August 7, 1979, was sent
to all participating physicians in Iowa. The Bulletin
provided that services rendered by physicians' assistants
had to be provided under the physician's direct personal
supervision. I.G. Ex. 28/2; Tr. 272, 282.

33. A Medicare Bulletin, dated May 1, 1981, was sent to
all participating physicians in Iowa. The information
reiterated Medicare's requirements for services provided
to beneficiaries by the physician's auxiliary staff.
Specifically, services provided by the physician's
auxiliary staff would only be covered by Medicare if the
auxiliary staff was directly supervised by the physician.
"Direct personal supervision" requires the physician's
presence while services are being provided to a
9

beneficiary by the physician's auxiliary staff. I.G.
Ex. 28/3; Tr. 272, 282.

34. The May 1982 revision to the Medicare Medical
Assistant Manual included the above definition for
"direct personal supervision." I.G. Ex. 26-1/1-2;
Tr. 273-277.

35. The November 1982 revision to the Medicare Medical
Assistant Manual provided that, in the office setting,
the physician's presence in the same room with the
auxiliary staff performing the services was not required.
I.G. Ex. 26-1/2.

36. The July 1985 revision to the Medicare Medical
Assistant Manual provided that direct personal
supervision required the physician's presence in the same
office suite, not necessarily the same room where an
auxiliary staff member was providing services. However,
the physician was required to be available to provide
immediate assistance and direction. I.G. Ex. 27

37. Respondent received the Medicare Bulletin dated
May 1, 1981. Tr. 493-494.

38. Effective February 13, 1985, the Iowa Administrative
Code provided that payment will be made to physicians for
services rendered by auxiliary personnel employed by, and
working under, the direct supervision of the physician.
I.G. Ex. 12-5/2, 12-4.

39. The April 1, 1985 revision to the Iowa Medicaid
Program Provider Manual, issued by the Iowa Department of
Social Services, defined auxiliary personnel as nurses,
physician's assistants, psychologists, social workers,
audiologists, occupational therapists, and physical
therapists. Requirements for the provision of services
by auxiliary personnel are consistent with that of the
Iowa Medicare program. I.G. Ex. 12-5/10-11.

40. During her employment, Ms. Bradberry provided
assistance to Respondent in his medical practice. I.G.
Ex. 1, 17.

41. Ms. Bradberry was one of Respondent's auxiliary
personnel.

42. Prior to going on vacation, Respondent instructed
Ms. Bradberry to dispense and refill prescriptions,
provide injections, perform urinalyses, and assist
patients onto the osteopathic table. I.G. Ex. 1; Tr.
326-329, 396, 433.
10

43. Respondent vacationed in Florida during the month of
January 1986. I.G. Ex. 1, 16; Tr. 321-323, 446.

44. During that period, Ms. Bradberry dispensed and
refilled prescriptions, gave injections, performed
urinalyses, and assisted patients onto the osteopathic
table. I.G. Ex. 1, 17.

45. Respondent signed blank claim forms for
Ms. Bradberry's use while he was on vacation during the
month of January 1986. I.G. Ex. 1, 17; Tr. 486.

46. Respondent instructed Ms. Bradberry to use the
presigned claim forms to request reimbursement from the
Medicare and Medicaid programs for services which she
provided to patients in the Respondent's absence. I.G.
Ex. 1, 17.

47. Ms. Bradberry used the presigned claim forms to
request reimbursement from the Medicare and Medicaid
programs for services which she performed for
Respondent's patients during his absence in January 1986.
I.G. Ex. 1, 17.

48. Claims for line items 247 - 270 were for services
provided during the month of January 1986. Supp. Stip.
B2.

49. Respondent did not personally render any of the
items or services provided during the month of January
1986, as listed in claims containing line items 247 -270.
Tr. 395, 446.

50. A Medicare Bulletin, dated May 4, 1979, was sent to
all physicians in Iowa clarifying the fact that
"services" provided by a telephone call between a
physician and a patient, or visits for the sole purpose
of obtaining or renewing a prescription, where no
examination was needed, would not be reimbursable. I.G.
Ex. 28/1; Tr. 272, 282.

51. Respondent received the Medicare Bulletin dated May
4, 1979. Tr. 493-494,

52. Respondent was not aware of the requirements as set
forth in the May 4, 1979 Medicare Bulletin. Tr. 185,
494,

53. Respondent telephoned Ms. Bradberry during the month
of January 1986, with instructions as to items or
services which were to be provided to patients. Tr. 396.
11

54. Respondent did not directly supervise Ms. Bradberry
while she performed the services claimed in line items
247-270. %I.G. Ex. 28/3; FFCL 53; Tr. 397.

55. The I.G. proved, by a preponderance of the evidence,
that Respondent had reason to know and should have known
that the Medicare and Medicaid items or services at
issue, and listed as items 247 through 270, were not
provided as claimed. FFCL 9, 15-16, 30-34, 37-40, 52.

56. The amount of penalty and assessment, and the length
of exclusion from participation in the various programs,
is to be determined by reviewing: (1) the nature and
circumstances under which the requests for payment were
made; (2) the degree of Respondent's culpability; (3) the
existence of prior offenses; (4) Respondent's financial
condition; and (5) any other matters that justice may
require. 42 C.F.R. 1003.106, 1003.107.

57. The I.G. proved that it is an aggravating
circumstance that the claims presented by Respondent
contained at least five different types of items and
services. Supp. Stip. 8.

58. The I.G. proved that it is an aggravating
circumstance that the services or items were provided
over a lengthy period of time. Stip. B2.

59. The I.G. proved that it is an aggravating
circumstance that there were a substantial number of
claims involved in this case. Stip. B2.

60. Respondent vacationed in Florida during the winter
months of 1983-1986. Tr. 426-431; I.G. Ex. 1, 17.

61. The I.G. proved that it is an aggravating
circumstance that there was a pattern of claims for the
services or items presented or caused to be presented by
Respondent. Stip. B2.

62. The I.G. proved that it is an aggravating
circumstance that the amount claimed for the 270 services
or items was substantial. Stip. B3.

63. Respondent did not prove, by a preponderance of the
evidence, that the services were of the same type. Supp.
Stip. 8

64. Respondent did not prove, by a preponderance of the
evidence, that the services and items were provided
within a short period of time. Stip. B2.
12

65. Respondent did not prove, by a preponderance of the
evidence, that there were few services or items involved
in this case. Stip. B2.

66. Respondent did not prove, by a preponderance of the
evidence, that the total amount claimed for the 270
services or items was less than $1,000. Stip. B3.

67. Respondent was convicted of "knowingly executing or
tendering, under penalty of perjury, a false affidavit or
certificate given in support of a claim for compensation,
thereby illegally receiving payments under Medicaid in an
amount in excess of $100. Stip. B3.

68. The I.G. proved that it is an aggravating
circumstance that Respondent knew that the claims
containing line items one through 246 were not provided
as claimed. FFCL 21.

69. The I.G. did not prove, by a preponderance of the
evidence, that Respondent knew that the claims containing
line items 247 through 270 were not provided as claimed.
FFCL 52.

70. Respondent did not prove, by a preponderance of the
evidence, that the claims containing line items one
through 246 were the result of an unintentional and
unrecognized error in the process by which Respondent
presented claims. FFCL 32.

71. Respondent did not prove, by a preponderance of the
evidence, that it is an mitigating circumstance that the
claims containing line items one through 270 were the
result of an unintentional and unrecognized error and
that he took corrective steps promptly.

72. The I.G. did not prove, by a preponderance of the
evidence, that at any time prior to the presentment of an
actionable claim, Respondent had been held liable for
criminal, civil, or administrative sanctions in
connection with a program of reimbursement for medical
services.

73. Respondent did not prove, by a preponderance of the
evidence, that the imposition of the proposed penalty and
assessment, without reduction, would jeopardize
Respondent's ability to continue as a health care
provider. Rep. Br. 6.
13

74. Respondent does not have the necessary resources to
pay the maximum penalty and assessment which the I.G.
seeks to impose. Rep. Br. 6; Tr. 482-483.

75. On March 5, 1965, Respondent pled guilty to two
counts of illegally dispensing controlled substances
without a prescription, in violation of federal law.
I.G. Ex. 7. The I.G. proved that it is an aggravating
factor that the Respondent admitted that no medical
justification existed for his actions. I.G. Ex. 7/10.

76. The I.G. proved that Respondent's 1965 conviction is
an aggravating circumstance.

77. The Iowa Board of Medical Examiners disciplined the
Respondent based upon his conviction in 1965. On June
24, 1965, the Board suspended the Respondent's license to
practice medicine for a six month period and subsequently
placed him on probation. I.G. Ex. 4/5, 8.

78. The I.G. proved that Respondent's administrative
sanctions, as a result of his 1965 conviction, are an
aggravating circumstance.

79. The I.G. did not prove, by a preponderance of the
evidence, that Respondent's delegation of certain duties
to be performed by his assistants, in his absence, is an
aggravating circumstance.

80. The I.G. did not prove, by a preponderance of the
evidence, that Respondent repeatedly violated the
requirements of the Medicare and Medicaid programs
through the presentment of 1309 undocumented claims, in
addition to the 270 items and services at issue in this
case. Tr. 392-393, 397.

81. Respondent proved by a preponderance of the evidence
that it is a mitigating circumstance that he suffers from
a serious medical illness. REx. 14, 16; Tr. 401-402.

82. The I.G. did not prove, by a preponderance of the
evidence, all of the aggravating circumstances which he
alleged. FFCL 69, 72, 80.

83. The Respondent proved by a preponderance of the
evidence that circumstances exist which would justify
reducing the amount of penalty and assessment, or the
period of the exclusion imposed.

84. The recent United States Supreme Court decision in

United States v. Halper, U.S. 57 U.S.L.W
4526 (1989), is not applicable to this case.
14

85. The appropriate amount of civil monetary penalty in
this case is $73,500, the appropriate assessment is
4,948.20, and the appropriate period of exclusion is ten
years.

ISCUSSTO)

I. The Elements Of Liability Under The CMPL And
Regulations.

The CMPL provides that any person who presents a false or
improper claim for Medicare or Medicaid reimbursement
shall be subject to (1) a civil money penalty of not more
than $2,000 for each item or service, (2) an assessment
of not more than twice the amount claimed for each item
or service, and (3) an exclusion from participating in
the Medicare and Medicaid programs. These sanctions are
in addition to any other penalties that may be prescribed
by law.

To establish liability, the CMPL and Regulations require
the I.G. to prove all of the elements of liability. The
elements that the I.G. must prove are: (1) that a
respondent (2) who "presented or caused to be presented"
(3) a "claim" at issue (4) to the Medicare or Medicaid
programs (5) for "a medical or other item or service"
(6) knew, had reason to know, or should have known that
(7) the items or services in issue were "not provided as
claimed." CMPL_1320a-7a(1) (A) (B) (C); Regulations
1003.102(a)(1).°

The I.G. has the burden of proving by a preponderance of
the evidence all elements of liability under the CMPL and
Regulations for each claim in issue.

5 "claim" is defined as an application for payment

submitted for an item or service for which payment may be
made under the Title XVIII (Medicare) Title XIX
(Medicaid) or Title V (Maternal and Child Health Services
Block Grant) programs. 42 U.S.C. Section 1320a(i)(2); 42
C.F.R. Section 1003.101.
15
II. The I.G. Proved Liability By A Preponderance Of The

Evidence.

A. Line Items One Through 246.

I find and conclude that, based on the principles of
collateral estoppel set forth in section 1003.114 (c) of
the Regulations, the I.G. proved, by a preponderance of
the evidence, that the items and services in issue (and
identified as line items one through 246 in the Appendix
to the I.G.'s Notice) were presented by Respondent and
that he knew that these items or services in issue were
not provided as claimed. This finding and conclusion is
based on the fact that Respondent's criminal conviction,
is a prior "final determination" within the meaning of
section 1003.114(c) of the Regulations. Stip. B4., BS.
Supp. Stip. 11. As stated earlier, prior to the hearing
I issued a Ruling in which I held that Respondent's prior
“final determination" established liability (for items
one through 246). This left line items 246-270 at issue
at the time of the hearing.

B. Line Items 247-270.

Based on the entire record in this case, I find and
conclude that the I.G. proved by a preponderance of the
evidence that Respondent violated the CMPL and
Regulations because he had reason to know and should have
known that the Medicare and Medicaid items or services at
issue, and listed as items 247-270, were not provided as
claimed.

1. Most of the Elements of Liability Were Conceded.

Most of the elements of liability have been conceded by
Respondent. First, Respondent admits that all the items
or services at issue were listed on HCFA 1500 claim forms
and were presented or caused to be presented by him.
Supp. Stip. 10. The parties stipulated that the five
types of items or services at issue were described by
using the following procedure codes:

97260 Manipulation, (cervical, thoracic,
lumbosacral, sacroiliac, hand,
wrist (separate procedure),
performed by physician, one area.

90050 Office medical service, established
patient; limited service.

81000 Urinalysis, routine (PH specific
gravity, protein, test for reducing
16

substances such as glucose), with

microscopy.

N1020 Alpha Redisol, 1000 mg/cc.

N1160 Estrogen injection, up to 2 mg. per
cc.

The parties also stipulated to the authenticity and
admission into evidence of documentation, pertaining to
Respondent, contained in the files of the Iowa Board of
Medical Examiners, the Iowa Department of Inspections and
Appeals, the Medicaid Fraud Control Bureau, and Blue
Cross/Blue Shield of Iowa. Supp. Stip. 12, 13,14.

Thus, all of the elements of liability have been
stipulated to, except whether the items or services in
issue (listed as 247-270) were personally provided by
Respondent or were provided under his personal direction
or personal supervision. The I.G. had the burden of
proving by a preponderance of the evidence that items
247-270 were "not provided as claimed" and that
Respondent "knew or should have known" that they were not
provided as claimed.

2. The Medicaid Services listed by Respondent were
"Not Provided as Claimed."

There is no doubt that items 247-270 were "not provided
as claimed." The I.G. proved that Respondent did not
personally provide these items or services and that he
did not personally direct or supervise his employee's
provision of these items or services as required.

Respondent testified during the hearing that he was on
vacation in Florida during the month of January 1986.

The claims containing line items 247-270 were for items
or services which were listed as having been provided
during that month. Respondent's testimony that he was on
vacation in Florida during the month of January 1986 was
corroborated through the affidavit of Al Pamquist, owner
of the Bay Breeze motel in Clearwater, Florida, as well
as through the deposition of Sharon Bradberry,
Respondent's assistant.

Mr. Pamquist stated that he personally observed
Respondent "nearly on a daily basis," at the Bay Breeze
Motel in Clearwater, Florida during the month of January
1986. Ms. Bradberry declared that Respondent was on
vacation during the month of January 1986. Thus,
Respondent could not have personally rendered any of the
items or services listed in line items 247-270.
17

The I.G. has also proved that Respondent's employee did
not provide the items of services while under
Respondent's personal direction or supervision, as
claimed.

Respondent defended the submission of claims for services
provided in his absence by asserting that the definition
for the phrase "direct personal supervision" was not
written on the HCFA 1500 form that Respondent presented
for payment. Respondent is correct in his assertion.
However, the term "direct personal supervision" is
defined in Medicare and Medicaid publications. In the
Medicare Medical Assistant Manual bulletins dated August
1979, May 1981, May 1982, and July 1985, the terms
“direct personal supervision" were defined to require the
physician's presence during the provision of services by
the physician's auxiliary personnel. FFCL 34-37. The
April 1985 and July 1986, Iowa Department of Human
Services bulletins defined "direct personal supervision"
ire the physician's 2)
s ite. not necessarily the same room, where the Medical
Provider's assistant is providing the items or services.
Also, the physician would need to be available to provide
immediate assistance or direction. FFCL 40.

Respondent's assistant, Sharon Bradberry, declared that
Respondent instructed her to provide items or services
while he was on vacation in Florida, and that she
provided various items or services in his absence. Thus,
the provision of items or services by Respondent's
assistant did not comply with the requirements set forth
above.

In further defense of Respondent's submission of claims
reflecting items or services provided during the month of
January 1986, Respondent testified that he had provided
instruction and supervision to his assistant through
telephone calls which he made to her on every Tuesday and
Thursday throughout his absence. However, the issue of
whether Respondent telephoned his assistant, as he
testified, is irrelevant because the definition of
personal direction or supervision requires the
physician's physical presence during the provision of the

items or services. FFCL 50.
18

3. he I. roved that spondent Had Suffi.
Knowledge for Liability to Attach.

a. The Element of knowledge Required by the
CMPL and Regulations.

The final element of liability that the I.G. must prove
for liability to be established in a CMPL case is
knowledge.

As I stated in my Decision and Order in The Inspector
General _v. Geo A. Kern, M.D., Docket No. C-25, decided
August 26, 1987, at pp. 5-8, all the elements of
liability set forth in the CMPL and Regulations are
straightforward and need little interpretation, with the
exception of the element of knowledge -- the most
difficult element to apply. The element of knowledge
required for liability to attach is that a person

"knows" or "should know" that any item or service claimed
was not provided as claimed.

In analyzing the breadth and scope of the element of
knowledge required for liability to attach under the
CMPL, I am guided by the preamble to the Regulations,
which declares: "The statute sweeps within its ambit not
only the knowing, but the negligent. ..." 48 Fed. Reg.
38827, 38831 (Aug. 26, 1983). From this, and from
analyzing the CMPL and Regulations, I conclude that the
phrase "knows or should know" in the CMPL and the phrase
“knew or had reason to know" in the Regulations encompass
a spectrum of knowledge where liability attaches on one
end when a respondent files false claims with actual
knowledge and on the other end where a respondent files
false or improper claims in a negligent manner.

b. The I.G. Did Not Prove By A Preponderance Of The
Evidence That Respondent Had Actual Knowledge.

The I.G. did not prove by a preponderance of the evidence
that Respondent knew that items 247-270 were not provided
as claimed at the time the claims were presented.

6 The CMPL and Regulations contain slightly

different language with regard to the element of
Knowledge. Under section 1320a-7a(1)(a) of the CMPL,
liability attaches when the person "knows or should
know." Under section 1003.102(a)(1) of the Regulations,
liability attaches when the person "knew or had reason to
know."
19

Respondent's position was that the items or services
(247-270) were rendered under his personal direction or
supervision and, thus, were provided as claimed. He
based this position upon the fact that the terms
“personal direction or supervision," were not defined on
the HCFA 1500 forms which he presented. I previously
determined that Respondent was sent, and received,
publications from the Medicare and Medicaid programs
which contained a definition of the terms "personal
direction or supervision." However, I did not determine
that Respondent was aware of the contents of the
publications because the I.G. did not prove this factor
by a preponderance of the evidence. Respondent testified
that he received publications from the Medicare and
Medicaid programs and that the publications were kept in
his office. He also testified that he could not recall
whether he had ever read any of the publications which he
received, but that it was his assistant's responsibility
to read the bulletins and to make sure that Respondent
acted in compliance with the law.

The I.G. is correct in his assertion that Respondent,
because of his vacation in Florida during the month of
January 1986, had actual knowledge that he did not
personally provide the items or services at issue.
However, the I.G. did not prove, by a preponderance of
the evidence, that Respondent was actually aware of the
requirements of "personal supervision or direction."
Therefore, the I.G. did not prove, by a preponderance of
the evidence, that Respondent had actual knowledge that
the items or services were not provided as claimed.

c. The I.G. Proved that Respondent "Had Reason To

Know."

The I.G. proved liability by establishing that Respondent
"had reason to know" that the items and services at issue
were not provided as claimed.

As I stated in my Decision and Order in The Inspector
General v. George A. Kern, M.D., supra, at pp. 5-7, the
“reason to know" standard attaches where: (1) a
respondent has sufficient information to place him, as a
reasonable medical provider, on notice that the claims
presented were for services not provided as claimed; or
(2) a respondent has an obligation to investigate and
find out whether certain services are billable under the
Medicare or Medicaid programs (such as a duty which would
require a respondent to verify the truth, accuracy, and
completeness of claims presented). Thus, in this case,
the I.G. proved that Dr. Hume was negligent. He
purposely ignored Medicare and Medicaid rules and
20

regulations of which he had notice. He ignored pre-
existing requirements or duties (such as a Medicare and
Medicaid requirements to examine the claims at issue
before they were presented to Medicare or Medicaid).

As I also said in Kern, supra, the "reason to know"
standard requires only objective knowledge. In
discussing the concept of objective knowledge, Dean
Prosser, in Keeton and Prosser on Torts (Fifth Ed. 1984),
states that the actor must "give to his surroundings the
attention which a standard reasonable man would consider
necessary under the circumstances and that he must use
such senses as he has to discover what is readily
apparent."

Respondent admits that he received publications which set
forth rules and procedures for his participation in the
Medicare and Medicaid programs. Respondent's testimony
indicated that he knew that the Medicare and Medicaid
programs had rules with which he needed to comply, and,
further that the publications which he received contained
rules and amendments to existing rules. Respondent
stated that it was his assistant's duty to "read the
bulletins and correct them, and to comply with what the
law said." FFCL 52. As a participant in the Medicare
and Medicaid programs, Respondent was obligated to make
himself aware of the rules and regulations with which he
was required to comply. His decision to delegate that
responsibility to his assistant, which he acknowledges,
evidences negligence on his part.

dad. The I.G. Proved that Respondent "Should Have
Known."

The I.G. also proved that Respondent "should have known"
that the items or services listed as 247-270 in the
Appendix to the Notice were not provided as claimed. The
"should know" standard is on the opposite end of the
spectrum of knowledge from the "actual knowledge"
standard and is less stringent than the "reason to know"
standard. See, The Inspector General v. Thuong Vo, M.D.
and Nga Thieu Du, Docket No. C-45, decided August 15,
1989, at p. 20; In the Matter of The Inspector General v.
Frank P. Silver, M.D., Docket No. C-19, Opinion of Deputy
Under Secretary, decided April 27, 1987. The "should
know" standard includes reckless disregard for the
consequences of a person's acts and negligence in
preparing, presenting, or supervising the preparation and
presentation of claims. Mayers v. U.S. Dept. of Health
and Human Services, 806 F.2d 995 (11th Cir. 1986), cert.
denied, __U.S.___s (1988).
21

The same reasons that establish that Respondent "had
reason to know" also establish that Respondent "should
have known."

III. The Appropriate Amo ° a Si
and_ Exclusion.

A. e Agqravating and Mitigatin ors a
Considerations.

The CMPL and Regulations require the ALJ to consider
aggravating and mitigating circumstances in deciding the
appropriate amount of the sanctions that should be
imposed in any case where the I.G. has established
liability. Specifically, the CMPL and Section 1003.106
of the Regulations require me to examine: (1) the nature
of the claims or requests for payment and the
circumstances under which they were presented, (2) the
degree of culpability of Respondent, (3) the history of
prior offenses of Respondent, (4) the financial condition
of Respondent, and (5) such matters as justice may
require. Section 1003.106(b) of the Regulations contains
some general guidelines for the interpretation and
application of these aggravating and mitigating factors.

While the CMPL and Regulations require consideration of
aggravating and mitigating factors to determine the
appropriate amount of the penalty, assessment, and
exclusion to be imposed in a given case, there is no
formula set forth for computing them, and there is little
guidance to be found in the CMPL and its legislative
history (except with regard to assessments). See 48 Fed.
Reg. 38827 (Aug. 26, 1983). The preamble to the
Regulations states that "fixed numbers" have been
"eliminated" as "triggering devices." This emphasizes
that discretion is preferable to a mechanical formula.
Id. The preamble further states: "as we gain more
experience in imposing sanctions under the statute, we
may further refine the guidelines, but at this early
stage we believe that increased flexibility is
preferable."

The ALJ must also keep in mind that the CMPL is a
remedial federal statute and the purpose of a civil
monetary penalty in a CMPL case is deterrence, rather
than retribution or punishment. See, Mayers v. U.s.
Department of Health and Human Services, 806 F.2d (11th
Cir. 1986), cert. denied, U.S. (1988); see
also, Chapman v. United States of America, Department of
Health and Human Services, 821 F.2d 523 (10th Cir.,
1987). The dual purpose of the deterrence is to

22

encourage others to comply with the law and to discourage
a respondent from committing the wrong again.

In addition to deterrence, the ALJ must consider that the
purpose of the penalty and assessment in a CMPL case is
to enable the United States to recover the damages
resulting from false or improper claims. This includes
recovering amounts paid to a respondent by the Medicare
and Medicaid programs and the costs of investigating and
prosecuting unlawful conduct. See 48 Fed. Reg. 38831
(Aug. 26, 1983). Kern, at pg.63; Vo, supra, at pg. 22.
48 Fed. Reg. 38832 (Aug. 26, 1983). See, H.R. Rep. No.
97-158, 97th Cong., 1st Sess. 329, 461-62 (1981), 1981
U.S. Code Cong. & Ad. News 727-28.

Thus, to arrive at an appropriate penalty that would be a
deterrent, rather than retribution, the ALJ must consider
the factors outlined in the Regulations, weigh the
gravity of the wrong done by a respondent, and consider
what would prevent the wrong from being committed again
by a given respondent and others. Kern, supra, at p.63.

The I.G. must prove, by a preponderance of the evidence,
any aggravating circumstances and Respondent must prove,
by a preponderance of the evidence, any mitigating
circumstances. In applying these criteria, I must look
at all of the claims for which liability has been
established (the claims containing line items one through
246 for which liability was established prior to the
hearing, as well as, the claims containing line items 247
through 270 for which liability was established as a
result of the hearing).

1. _The Nature and Circumstances of the Claims and
Services at Issue.

The guidelines, at section 1003.106(b)(1) of the
Regulations, state that it is a mitigating circumstance
if the nature and circumstances of the requests for
payment were all of the same type, occurred within a
short period of time, were few in number, and the total
amount requested from Medicaid recipients was under
$1,000. The Regulations do not specify what constitutes

’ Section 1003.107 of the Regulations requires that

the same criteria used in determining the penalty and
assessments be used in determining the length of any
exclusion.
23

a "short period of time" or how to evaluate the number of
claims.

The guidelines at section 1003.106(b) (1) of the
Regulations also state that an aggravating circumstance
exists where the requests for payment were of several
types, occurred over a lengthy period of time, were large
in number, indicated a pattern of making such requests
for payment, or the amount was substantial. Again, the
guidelines do not indicate what period constitutes a
"lengthy" period, what number of requests is a "large"
number, or what amount is a "substantial amount." See,
48 Fed. Reg. 38827 (Aug.26, 1983). These judgments are
left to the discretion of the ALJ. Kern, supra, at
pg-66.

Since examples of mitigating circumstances in the
guideline are couched in the conjunctive, all must be
proven by Respondent in order for the nature and
circumstances of the claims at issue to be considered
mitigating. Here, Respondent did not prove all of them.
On the other hand, since examples of aggravating
circumstances in the guidelines are couched in the
disjunctive, only one need be proven by the I.G. to
establish the nature and circumstances of the claim at
issue to be considered aggravating. Here, the I.G. has
established more than one.

The I.G. proved that there were several types of items
and services involved. The parties stipulated to the
authenticity of the procedure codes as listed in the
Appendix to the Notice. There were at least five
different types of services and items involved in this
case.

The I.G. proved that the services and items at issue were
provided over a lengthy period of time. The items and
services were provided during the period December 1983
through January 1986, a period of over three years.

The I.G. proved that there were a substantial number of
claims at issue. Respondent presented or caused to be
presented 270 claims for items or services.

The I.G. also proved that there was a pattern of claims
for such items or services. Respondent consistently
presented or caused to be presented, during the winter
months of 1983 through 1986, improper claims for several
types of items or services.
24
ee of abili of the Respondent.

One of the most complex factors to be considered by the
ALJ in determining the amount of the penalty is the
“degree of culpability." The guidelines in the
Regulations indicate that this factor relates to the
degree of a respondent's knowledge and intent. Knowledge
is an aggravating factor, and "unintentional or
unrecognized error" is a mitigating factor if a
respondent "took corrective steps promptly after the
error was discovered." Regulations, section
1003.106(b) (2). Thus, the determination of the degree of
culpability involves an inquiry into the degree of a
respondent's knowledge. See, 48 Fed. Reg. 38831 (Aug.
26, 1983). In this case, the degree of Respondent's
Knowledge ranges from one end of the "spectrum of
knowledge" to the other. See Discussion at page 18.

The I.G. also proved that the amounts claimed for the
items and services at issue were substantial. Respondent
claimed a total of $2,474.60 for the items and services
listed in line items one through 270.

The I.G. proved that Respondent knew that the items and
services reflected in line items one through 246 were
not provided as claimed. Respondent's November 1986
conviction, which involved the items or services
reflected in line items one through 246, was for
“knowingly executing or tendering, under penalty of
perjury, a false affidavit or certificate given in
support ef a claim for compensation, thereby illegally
receiving payments under the Title XIX Medicaid program
in an amount in excess of one hundred dollars. ..."
Thus, Respondent had actual knowledge that the items or
services claimed in line items one through 246 were not
provided as claimed.

With respect to the claims containing line items 247 -
270, the I.G. did not prove by a preponderance of the
evidence that Respondent knew that the items or services
were not provided as claimed. The rules and regulations
governing participation in the Medicare and Medicaid
programs are contained in manuals and bulletins which
were received by Respondent. However, Respondent
testified that he did not review, or did not recall
reviewing, the manuals and bulletins which he received.
Respondent testified that he designated the
responsibility for maintaining the manuals and bulletins,
and for complying with their requirements, to his
assistant, Sharon Bradberry, who rendered the services
and items claimed in line items 247 through 270. He
testified that he instructed Ms. Bradberry through weekly
25

telephone calls from Florida. The rules and regulations
make it clear that the term "personal supervision" does
not encompass supervision by means of telephone
communications.

The I.G. proved that Respondent should have ascertained
the proper definition of this key term and, thus, both
had "reason to know" and "should have known" that the
services or items were not provided as claimed. Also,
it is an aggravating circumstance that Respondent had a
reckless disregard for the Medicare and Medicaid program
requirements, in that he knowingly ignored the
requirements when presenting claims to Medicare and
Medicaid.

The guidelines state that I should consider it a
mitigating circumstance if: (1) the claim for the item
or service was the result of an unintentional and
unrecognized error in the process Respondent followed in
presenting claims, and (2) corrective steps were taken
promptly after the error was discovered. I conclude that
Respondent did not prove that his presentment of claims
containing line items 247 -270 was a result of
unrecognized and unintentional error because he did not
prove by a preponderance of the evidence that corrective
steps were taken promptly after the error was discovered.

3. History of Prior Offenses.

The next factor discussed in the Regulations is "prior
offenses." The guidelines in section 1003.106(b) state
that an aggravating circumstance exists if, prior to
the presentation of the improper claims at issue, a
respondent had been held liable for criminal, civil, or
administrative sanctions in connection with one of the
programs covered by the CMPL or any other medical
services program. This guideline would clearly prevent
consideration of mere allegations of past wrongdoing.

A respondent must have been held liable, subjected to
actual sanctions, and the claims must not have been the
subject of the instant proceeding. The preamble makes
clear that prior offenses are not an aggravating
circumstance, unless there has been a final agency
determination or a final court adjudication. 48 Fed.
Reg. 38832 (Aug. 26. 1983).

There were no such sanctions imposed against Respondent.
He was convicted in 1965 of illegally dispensing
controlled substances, but this conviction and the
resultant sanctions had no connection to any program for
reimbursement of medical services.
26

4. Respondent's Financial Condition.

The regulations state that the financial condition of a
respondent should constitute a mitigating circumstance
if the penalty or assessment, without reduction, would
jeopardize the ability of a respondent to continue as a
health care provider. Thus, it is clear that the ALJ
may consider a respondent's financial condition.
Furthermore, the guidelines at section 1003.106(b) (4)
note that the ALJ must consider the resources available
to a respondent. This indicates that financial
disclosure by a respondent is a key requirement in
evaluating a respondent's financial condition.

In this instance, the Respondent has ceased his practice
as a medical provider. This decision was not prompted by
the possible imposition of a severe penalty or exclusion
but, as he put it, was based upon the fact that he had
been in "this rat race" for fifty years and decided that
he no longer wanted to pursue a medical career. Tr. 483.
Thus, the imposition of a penalty and assessment would
not impact his ability to continue as a health care
provider.

Respondent testified that he had $25,000 in a United
Federal Bank savings account; approximately $45,000 in
American Federal Bank; approximately $10,000 in an United
Federal checking account; an apartment building which is
worth approximately $100,000 and returns rental income of
approximately $1,000 to $1,200 per month. Respondent
placed other evidence in the record attesting to the fact
that: (1) he jointly owns his home, which is valued at
$90,000; (2) he has a 1980 Chevrolet valued at
approximately $500.00; (3) he jointly owns a 1985 Dodge
Diplomat valued at $4,000 to $5,000; (4) he has an IRA
worth approximately $400; (5) he collects Social Security
benefits of $978 per month; (6) his wife collects Social
Security benefits in the amount of $300 per month; and,
(7) he has diamond jewelry worth approximately $250.

This evidence has convinced me that Respondent does not
have the resources to pay the maximum penalties and
assessments proposed by the I.G. Also, Respondent's age,
physical condition, and retiree status would probably
have a direct effect on his ability to accumulate the
necessary resources to pay such a penalty and assessment.
27

5. Other Matters to be Considered as Justice Requires.

The CMPL and the Regulations also contain an umbrella
factor: “other matters as justice may require." The
Regulations do not provide further detail, except to
indicate that consideration of other matters should be
limited to those which relate to the purpose of civil
money penalties and assessments. Regulations section
1003.106 (b) (5).

Respondent was convicted in 1965 of illegally dispensing
controlled substances. A conviction for this type of
offense represents a blatant disregard for the standards
of the medical profession and the trust which persons
place in those fortunate enough to pursue a medical
career. Respondent chose to engage in a profession which
directly affects the health and welfare of persons in our
society. During his 1965 criminal proceeding, Respondent
stated that no medical justification existed for his
dispensing of the controlled substances. Respondent's
statement evidences a conscious disregard for the duties
and responsibilities which he chose to accept. Coupled
with Respondent's 1986 conviction, Respondent's 1965
conviction is relevant and evidences Respondent's
continued engagement in illegal activities related to the
medical profession.

The I.G. has not proved by a preponderance of the
evidence that Respondent's delegation of certain duties
to his assistants while he was on vacation in Florida is
an aggravating circumstance. The fact that the services
were not rendered under Respondent's personal supervision
addresses the issue of liability, and I have already
concluded that Respondent was liable for the claims at
issue based upon his failure to provide personal
supervision. However, the I.G. failed to prove that:

(1) Respondent's assistants were not qualified to provide
the services, and (2) the services performed were of a
type which could not properly be delegated to an
assistant.

The I.G. did not prove by a preponderance of the evidence
that Respondent repeatedly violated the requirements of
the Medicare and Medicaid programs and, as a result,
received improper reimbursement. The I.G. alleged that,
in addition to the claims containing the 270 line items
in this case, Respondent received an overpayment of
$12,157.55, as a result of his presentment of and
reimbursement for 1309 undocumented claims. However,

the evidence adduced at trial was not convincing.
28

Finally, Respondent testified that he believed his
medical records were in compliance with the requirements
set forth by the Medicare and Medicaid programs. The
MFCB auditor, James Jones, testified that each medical
record had to contain: (1) a date of service,

(2) treatment provided, (3) progress of treatment and,
(4) prescriptions provided. The absence of any of the
above listed items would result in MFCB's finding of an
undocumented claim, even though the particular factor,
such as a diagnosis, may not yet have been made by the
physician. The MFCB auditor testified that most of
Respondent's claims which were reviewed lacked: (1) a
statement of the treatment provided, and (2) a diagnosis.
The MFCB auditor was uncertain about whether a claim
would be reimbursable if a physician had not yet made a
diagnosis or had not provided treatment, and, therefore,
had not included these factors in his records. In this
case, the MFCB auditor automatically rejected and
regarded as an undocumented claim any of Respondent's
claims which were without one of the required factors.

The MFCB auditor who reviewed Respondent's claims
admitted that he had no medical background or training.
Furthermore, Respondent testified that he was not given
the opportunity to explain his medical record-keeping
system and was not notified of his possible violation of
record keeping requirements. The I.G. did not offer the
1309 claims into evidence so that I could determine
whether they were, in fact, undocumented, and, thus,
should be viewed as an aggravating circumstance.

B. The Amount of the Penalty, Assessment, and
Suspension, as Modified Here, is Supported by the
Record.

The I.G. in his post-hearing brief (at page 62),
requested that I impose the maximum penalty of
$540,000.00, the maximum assessment of $4,948.20, and a
"significant program exclusion." Previously, the I.G.
had proposed a penalty of $135,000, assessment of
$4,948.20, and a ten-year exclusion.®

® on November 21, 1986, in a criminal proceeding,

Respondent pled guilty in the State Court for Polk
county, Iowa to the charge of Fraudulent Practice in the
Third Degree and was ordered to pay $1,809.97 in
restitution for overpayments which he received from the
Medicaid program and to pay $107.42 in restitution for
overpayments which he received from the Medicare program.
The I.G. proposed to allow Respondent to apply a credit
(continued...)
29

After weighing all of the evidence in this case,
inclusive of the existence of aggravating and mitigating
circumstances, I conclude that the imposition of the
maximum penalty and assessment is excessive. However, I
conclude that a ten-year exclusion from participation in
the Medicare and State health care programs is
appropriate.

I conclude that, based on the record in this case, giving
special weight to the poor health of Respondent, and
based on my experience in other CMPL cases, a penalty of
$73,500 is a sufficient deterrent under the circumstances
of this case; an assessment of $4,948.20 is sufficient to
compensate the Government; and an exclusion for a period
of ten years is sufficient to ensure the integrity of the
Medicare and Medicaid programs. See Kern, supra, at

pp. 69-70.

8 (...continued)

of $1,917.39 towards the amount of penalty and assessment
sought. See Stip. B.5. I have considered this in my
determination of the appropriate sanctions.

° Following the hearing, I invited the parties to
address, in their reply briefs, the issue of whether the
recent United States Supreme Court decision in United
States v. Halper, U.S. (1989), 57 U.S.W.
4526(1989), is applicable to the facts of this case.
Based upon my analysis of law and facts of this case, I
conclude that Halper, does not apply.

In Halper, the Supreme Court held that under certain
limited circumstances, the imposition of a civil money
penalty may be viewed as a "punishment," and, as such,
may violate the Double Jeopardy Clause of the Sixth
Amendment to the United States Constitution. The initial
issue to be addressed in determining the applicability of
Halper to a CMPL case is whether a respondent's prior
conviction was also based upon federal law and ina
federal court. If the prior conviction was in a state
court and based on state law the "Separate Sovereign
Doctrine" would prohibit the Double Jeopardy clause from
taking effect. Under the Separate Sovereign Doctrine,"
one sovereign, (i.e., the United States Government), is
not barred from seeking a sanction against a respondent,
even though another sovereign (i.e., a state government),
may already have imposed sanctions against that
respondent based upon the same act or crime. Dr. Hume
was convicted in State Court for State law violations.
(continued...)
ORDER

Based on the entire record, the CMPL, and the
Regulations, it is hereby Ordered that Respondent:
(1) pay a civil monetary penalty of $73,500;

(2) pay an assessment of $4.948.20; and

(3) be excluded for a period of ten years from the
Medicare and Medicaid programs.

/s/

Charles E. Stratton
Administrative Law Judge


DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board

civil Remedies Division

In the Case of:
Walter J. Mikolinski, Jr., DATE: August 8, 1989
Petitioner,

Docket No. C-83
DECISION CR 37

-v-

The Inspector General.

DECISION OF ADMINISTRATIVE LAW JUDGE
ON MOTIONS FOR SUMMARY DISPOSITION

The Inspector General (the I.G.) notified Petitioner on
December 9, 1988 that he was being excluded from
participation in Medicare and State health care
programs.’ The I.G. told Petitioner that his exclusions
were due to the fact that his license to practice
pharmacy in the State of Massachusetts had been suspended
by that State's Board of Registration in Pharmacy
(Pharmacy Board). The I.G. asserted that the exclusions
were authorized by section 1128(b)(4) of the Social
Security Act, 42 U.S.C. 1320a-7(b) (4). Petitioner was
advised that that the exclusions would remain in effect
until such time as Petitioner obtained a valid license to
practice pharmacy in the State of Massachusetts. The
I.G. told Petitioner that when he obtained a valid
license, he had the right to apply for reinstatement to
the Medicare and Medicaid programs.

Petitioner timely requested a hearing, and the matter was
assigned to me for hearing and decision. I held a
prehearing conference on February 9, 1989. The parties

' "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). I use the term
"Medicaid" hereafter to represent all State health care
programs from which Petitioner was excluded.
2

advised me that they believed the case could be disposed
of on a stipulated record, and on motions for summary
disposition. I issued a prehearing Order on February 21,
1989, which established a schedule for the parties to
agree to stipulations and file motions for summary
disposition. Stipulations of fact were timely filed
pursuant to this Order, and each party moved for summary
disposition. I held oral argument on the motions in
Washington, D.C., on June 6, 1989. I invited the parties
to file postargument briefs and each party availed
himself of this opportunity.

I have considered the parties' arguments, the stipulated
facts, and applicable law. I conclude that the I.G.
lawfully excluded Petitioner from participating in
Medicare and lawfully directed that he be excluded from
participating in Medicaid. 42 U.S.C. 1320a-7(b) (4) (A).
I conclude further that the exclusions imposed and
directed by the I.G. are unreasonable to the extent that
they condition Petitioner's reinstatement as a
participating nursing home proprietor on his passing a
pharmacy law examination with a score of no less than 75
percent, or on maintaining continuing education credits
in pharmacy. I conclude that I have authority pursuant
to 42 U.S.C. 405(b) to modify the exclusions imposed and
directed by the I.G. Therefore, I modify the exclusions
in this case to permit Petitioner to apply for
reinstatement as a participating nursing home proprietor
after completion of an exclusion term of two years. I
find the exclusions to be reasonable in all other
respects.

ISSUES
The issues in this case are whether:

1. Petitioner's license to provide health
care was revoked or suspended by a State licensing
authority for reasons bearing on his professional
competence, professional performance, or financial
integrity;

2. the I.G. lawfully excluded Petitioner from
participating in the Medicare program and lawfully
directed that Petitioner be excluded from
participating in Medicaid;

3. the length of the exclusions imposed and
directed against Petitioner from participating in
Medicare and Medicaid as a nursing home proprietor
is unreasonable;
4. I have authority to modify the terms of
the exclusions imposed and directed against
Petitioner; and

5. the exclusions imposed and directed
against Petitioner from participating in Medicare
and Medicaid should be modified to permit
Petitioner to apply for reinstatement as a
participant after a two-year period.

APPLICABLE LAW

1. Section 1128(a) of the Social Security Act,
42 U.S.C. 1320a-7;

2. Section 205(b) of the Social Security Act, 42 U.S.c.
405(b).

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. Petitioner is a registered pharmacist in the
State of Massachusetts. Stip Ex. 6.

2 The parties' stipulations, stipulated exhibits,

memoranda, and the transcript of oral argument will be
cited as follows:

Stipulation Stip. (number)

Stipulated Exhibit Stip. Ex. (number)

Memorandum in Support of the I.G.'s Memorandum at
I.G.'s Motion for Summary (page)
Disposition

Petitioner's Memorandum in P.'s Memorandum at
Support of Summary (page)
Disposition

I.G.'s Response to Petitioner's I.G.'s Response at
Motion (page)

Petitioner's Response to P.'s Response at
I.G.'s Motion (page)

I.G.'s Memorandum on Issues I.G.'s Supp.
Raised in June 6, 1989 Memorandum at
Prehearing Order (page)

P.'s Supplemental Memorandum P.'s Supp.
Memorandum at
page)

Transcript Tr. at (page)
4

2. On August 22, 1986, Petitioner was indicted in
Massachusetts State court for receiving stolen property
in the form of pharmaceuticals stolen from Massachusetts
General Hospital. Stip. Ex. 1.

3. On April 13, 1988, Petitioner pleaded guilty to
receiving stolen property. Stip. Ex. 3.

4. In his guilty plea Petitioner admitted that he
had paid cash to employees of Massachusetts General
Hospital to receive stolen pharmaceuticals from them.
Stip. Ex. 3.

5. In his guilty plea Petitioner admitted that he
regularly received stolen pharmaceuticals. Stip. Ex. 3.

6. Petitioner agreed to pay restitution to
Massachusetts General Hospital in the amount of
$25,000.00. Stip. Ex. 3.

7. As a consequence of his guilty plea, Petitioner
received a suspended prison sentence and was placed on
probation for two years. Stip. Ex. 4.

8. Petitioner was also sentenced to pay $15,000.00
as costs for investigation of his case. Stip. Ex. 4.

9. On September 20, 1988, the Pharmacy Board issued
an Order to Show Cause against Petitioner. Stip. Ex. 6.

10. On September 26, 1988, the Pharmacy Board
issued a Decision and Order in Petitioner's case. Stip.
Ex. 6.

11. The Pharmacy Board found that Petitioner had
violated a state law by knowingly possessing, with intent
to distribute, a Class E Controlled Substance. Stip. Ex.
6.

12. The Pharmacy Board found that Petitioner had
conspired to divert drugs from the Massachusetts General
Hospital. Stip. Ex. 6.

13. The Pharmacy Board found that Petitioner had
not at all times conducted his professional activities in
conformity with federal, state, and municipal laws,
ordinances and regulations. Stip. Ex. 6.

14. The Pharmacy Board found that its findings, as
enumerated in Findings 11-13, established that Petitioner
had committed gross misconduct in the practice of
pharmacy. Stip. Ex. 6.
15. The Pharmacy Board suspended Petitioner's
pharmacy license for a two year period, effective
beginning September 26, 1988. Stip. Ex. 6.

16. The Pharmacy Board directed Petitioner to
maintain his continuing education requirements as a
pharmacist during the suspension period. Stip. Ex. 6.

17. The Pharmacy Board conditioned reinstatement of
Petitioner's pharmacy license on his taking a pharmacy
law examination and passing with a grade of no less than
75 percent. Stip. Ex. 6.

18. Petitioner did not appeal the Board's Order.
Stip. 21.

19. Petitioner is a stockholder in corporations
which own and operate nursing homes. Stip. Ex. 3.

20. Petitioner's license to provide health care was
revoked or suspended by a State licensing authority for
reasons bearing on his professional competence,
professional performance, or financial integrity. Stip.
Ex. 6; Findings 10-17; 42 U.S.C. 1320a-7(b) (4) (A).

21. On December 9, 1988, the I.G. excluded
Petitioner from participating in Medicare and directed
that he be excluded from participating in Medicaid.
Stip. Ex. 13.

22. 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.

23. The I.G. had discretion to exclude Petitioner
from participating in Medicare and to direct his
exclusion from participation in Medicaid for all items or
services for which he may have claimed reimbursement
pursuant to these programs. 42 U.S.C. 1320a-7(b) (4) (A).

24, The I.G.'s discretion to exclude Petitioner
from participating in Medicare and to direct his
exclusion from participating in Medicaid is not limited
to his participation as a pharmacist. 42 U.S.C. 1320a-
7(b).

25. The length of the exclusions imposed and
directed by the I.G. against Petitioner is reasonable
insofar as it applies to Petitioner's participation as a
6

pharmacist in the Medicare and State health care
programs. 42 U.S.C. 1320a~-7(b) (4) (A).

26. The length of the exclusions imposed and
directed by the I.G. against Petitioner is not reasonable
insofar as it applies to Petitioner's participation as a
nursing home operator, administrator, or employee. See
42 U.S.C. 1320a-7(b) (4) (A).

27. I have authority to modify the terms of the
exclusions imposed and directed by the I.G. against
Petitioner. 42 U.S.C. 405(b).

28. Two-year exclusions against Petitioner from
participating in Medicare and Medicaid as a nursing home
operator, administrator, or employee are reasonable in
this case. See Finding 24; see 42 U.S.C. 1320a-
7(b) (4) (A).

NALYSIS

There are no disputed issues of material fact in this
case, the parties having entered stipulations as to those
facts which they believe to be relevant to their
respective positions. Therefore, the issues to be
resolved involve applications of law to the facts of the
case.

The I.G. contends that he is entitled to summary
disposition on all issues. He asserts that Petitioner
had his license to practice pharmacy suspended by a state
licensing board for reasons having to do with
Petitioner's professional competence, professional
performance, or financial integrity. Therefore,
according to the I.G., he had discretion to exclude
Petitioner from participating in the Medicare program and
to direct his exclusion from participation in Medicaid,
pursuant to 42 U.S.C. 1320a-7(b) (4) (A).

The I.G. argues that the length of Petitioner's
exclusions, which coincide with the terms of his pharmacy
license suspension, is reasonable because it takes into
account the behavior engaged in by Petitioner which
occasioned his license suspension, and other relevant
facts.

Petitioner argues that the Pharmacy Board failed to
articulate reasons for Petitioner's license suspension
which establish that Petitioner was suspended for reasons
having to do with Petitioner's professional competence,
professional performance, or financial integrity. Tr. at
7

29-30. Therefore, according to Petitioner, there exists
no lawful basis to exclude him under 42 U.S.C. 1320a-7.

Petitioner also contends that if the I.G. does have
discretion to exclude him pursuant to 42 U.S.C. 1320a-
7(b) (4) (A), such discretion extends only to reimbursement
claims which Petitioner may submit as a pharmacist.
Petitioner asserts that it is unreasonable to exclude him
for services rendered in connection with his nursing home
business based on suspension of Petitioner's license to
practice pharmacy.

Finally, Petitioner argues that even if the I.G. may
exclude Petitioner for reimbursement for all items or
services under Medicare and Medicaid, the length of the
exclusions imposed and directed against Petitioner by the
I.G. are unreasonable as they apply to claims he may
submit in connection with his nursing home business.
Petitioner notes that his pharmacy license suspension
will be effective until he completes certain continuing
education courses and passes an examination in pharmacy
law with a score of at least 75 percent. According to
Petitioner, these conditions effectively make the license
suspension an indefinite suspension, and thus have the
effect of making indefinite Petitioner's exclusions from
participation in Medicare and Medicaid. According to
Petitioner, it is unfair to condition his exclusion as a
nursing home operator on his satisfying requirements
which he may never satisfy, and which are not related to
his performance as a nursing home operator.

Both parties contend that, should I conclude that the
exclusions imposed and directed against Petitioner are
unreasonable in any respect, I have authority pursuant to
42 U.S.C. 405(b) to modify the terms of the exclusions.

1. Petitioner's license to provide health care was

evoked or suspended a St. ic ‘tho
reasons bearing on his professional competence,
professional performance, or financial integrity.

I disagree with Petitioner's contention that the I.G.'s
determination to exclude Petitioner pursuant to 42 U.S.C.
1320a-7(b) (4) is not supported by the Pharmacy Board's
Decision and Order. The Pharmacy Board's Decision and
Order provides ample support for the conclusion that
Petitioner's pharmacy license was suspended for reasons
bearing on Petitioner's professional competence,
8

professional performance, or, financial integrity.
Findings 10-17; Stip. Ex. 6.

The Pharmacy Board concluded that Petitioner committed
"gross misconduct" in the practice of pharmacy, and based
this conclusion on three findings. They were that
Petitioner had: (1) knowingly possessed, with intent to
distribute, a class E controlled substance; (2) conspired
to divert drugs from the Massachusetts General Hospital;
and (3) failed to conduct his professional activities at
all times in conformity with federal, state, and
municipal laws, ordinances and/or regulations. Findings
11-13; Stip. Ex. 6. These findings constitute reasons
for suspending Petitioner's pharmacy license which relate
to Petitioner's professional performance. Therefore, the
I.G. had discretion to exclude Petitioner pursuant to 42
U.S.C. 1320a-7(b) (4) (A).

Petitioner contends that it was unreasonable for the I.G.
to base his exclusion determination on the Pharmacy
Board's Decision and Order. According to Petitioner, the

3 The section of 42 U.S.C. 1320a-7 pursuant to

which the I.G. excluded Petitioner from participation in
the Medicare program and directed his exclusion from
participation in any State health care program provides
in relevant part:

(b) Permissive exclusion

The Secretary may exclude the following
individuals
and entities from participation in any program
under
subchapter XVIII of this chapter and may direct that
the following individuals and entities be excluded from
participation in any State health care program: ...

(4) License revocation or suspension

Any individual or entity--

(A) whose license to provide health care has been
revoked or suspended by any State licensing
authority,
or who otherwise lost such a license, for reasons

bearing on the individual's or entity's
professional
competence, professional performance, or financial
integrity, ....
9

I.G. was obligated to review the record underlying the
Pharmacy Board's Decision and Order in order to determine
whether the Pharmacy Board's decision was supported by
that record. Tr. at 30.

The I.G.'s authority to impose and direct exclusions
pursuant to 42 U.S.C. 1320a-7(b) (4) (A) is triggered by a
state licensing board's revocation or suspension of a
petitioner's license to provide health care. It is not a
relevant argument that the Pharmacy Board's decision, on
which the I.G.'s exclusion authority rests, is legally or
factually deficient.

Petitioner also contends that the I.G.'s exclusion
determination amounts to an unlawful retroactive
application of 42 U.S.C. 1320a-7(b) (4) (A) to the facts of
his case. P.'s Memorandum at II. Petitioner premises
this argument on his assertion that the conduct on which
his license suspension was based "relates back" to
January, 1983, and the fact that the exclusion law was
revised by Congress to include section (b) in 1987.
Petitioner also contends that, if the law is applied
retroactively to his case, there are "grave due process"
implications which would arise from that retroactive
application. P.'s Memorandum at II.

It is unnecessary for me to decide whether the exclusion
law may be applied retroactively in particular cases,
because it is evident that it was not retroactively
applied in this case. The Pharmacy Board issued its
Decision and Order suspending Petitioner's pharmacy
license on September 15, 1988, more than a year after
Congress adopted the discretionary exclusion provisions
contained in 42 U.S.C. 1320a-7(b). The I.G.'s authority
to impose and direct exclusions against Petitioner arises
from the Pharmacy Board's act of suspending Petitioner.
Therefore, the act which gave the I.G. grounds to exclude
Petitioner occurred after the date that Congress enacted
statutory revisions.

4 hat is not to suggest that the facts on which

the suspension is based are irrelevant to the question of
the reasonableness of the length of the exclusions
imposed and directed by the I.G. It is certainly
reasonable for the I.G., in determining the appropriate
length of exclusions, to consider all facts which would
establish a petitioner's trustworthiness as a
participating provider of health care. Moreover, either
party to an exclusion hearing may offer evidence on this
issue. 42 U.S.C. 405(b); see 42 C.F.R. 1001.125,
1001.128.
10

2. The I.G. lawfully excluded Petitioner from
participating in the Medicare program and lawfully
directed that Petitioner be excluded from participating
in Medicaid programs.

Petitioner's central argument is that the I.G.
unreasonably imposed and directed exclusions against
Petitioner in his capacity as a nursing home operator,
based on the Board's suspending Petitioner's pharmacy
license. Petitioner asserts that there exists no legal
authority which permits the I.G. to take this action.
See P.'s Memorandum at IA-C. Implicit in this
contention is the argument that, at most, the I.G. only
has authority to exclude Petitioner from receiving
reimbursement for his services as a pharmacist.
Petitioner also argues that evidence of Petitioner's
misconduct in the practice of pharmacy provides no
rational basis for the I.G. to impose and direct
exclusions against Petitioner from receiving
reimbursement as a nursing home operator. Id.

I disagree with both of these contentions. First, the
exclusion law plainly permits the I.G. to impose and
direct exclusions from reimbursement for any item or
service that an excluded party may provide to a Medicare
or Medicaid beneficiary. The first sentence of 42 U.S.C.
1320a-7(b) states that the Secretary has discretion in
enumerated cases to impose exclusions from participation
in "any program under subchapter XVIII" and to direct
exclusions from participation in "Medicaid... ."

Moreover, the exclusion law's remedial purpose would be
frustrated if the law were read to limit the I.G.'s
authority to impose and direct exclusions under section
(b) (4) to only those items or services which a party had
been permitted to provide by his health care license,
prior to the suspension or revocation of that license.
The purpose of the exclusion law is to protect the
Medicare and Medicaid funds, and individual beneficiaries
of those funds, from individuals or entities who have
been shown to be capable of either financial misconduct
or mistreating beneficiaries. A party's propensity to
engage in misconduct across the range of Medicare and
Medicaid programs can, in appropriate cases, be inferred
by evidence of his misconduct as to any one of those
programs. Congress, therefore, intended the Secretary
(and his delegate, the I.G.) to have discretion to
fashion broad exclusions based on demonstrated misconduct
under any program. Senate Report No. 100-109, at 6-8,
July 14, 1987, reproduced in U.S. Code Cong. and Ad.
11

News, 100th Congress First Session 1987, Vol. 2, at 687-
688.

That is not to suggest that the I.G. must exclude
individuals or entities from participation in Medicare
and Medicaid in all cases where exclusion is permitted by
law. The I.G. has discretion to impose and direct broad
exclusions in appropriate cases. The reasonableness of
an exclusion depends on the facts of the case.

Second, I conclude that, based on the facts of this case,
it was reasonable for the I.G. to impose and direct
exclusions against Petitioner for reimbursement for all
items or services he might provide under Medicare or
Medicaid, including reimbursement for any services
Petitioner might provide as a nursing home operator. The
stipulated facts of this case establish that Petitioner's
license suspension was based, in part, on Petitioner's
conviction for receiving pharmaceuticals stolen from a
hospital. Findings 3-5; 12. Petitioner's admitted
unlawful conduct calls into question not only his honesty
but his trustworthiness as a provider of services to
Medicare and Medicaid beneficiaries -- not just as a
pharmacist, but in any capacity.

3. The length of the exclusions imposed and directed
against Petitioner from participating in Medicare and
Medicaid as a nursing home proprietor is unreasonable.

The I.G. imposed and directed exclusions against
Petitioner from participating in Medicare and Medicaid
until such time as Petitioner's license to practice
pharmacy in Massachusetts is restored. Finding 21.
Restoration of Petitioner's pharmacy license is
contingent on Petitioner satisfying the conditions of the
Board's Decision and Order. These include requirements
that Petitioner: (1) maintain his continuing pharmacy
education requirements during the two-year suspension
period; and (2) take and pass a pharmacy law examination
with a grade of no less than 75 percent.

Petitioner does not dispute that it is rational for the
I.G. to require him to regain his pharmacy license as a
condition for restoring his participating status as a
pharmacist. Tr. at 53. However, Petitioner contends
that the State's conditions for Petitioner regaining his
pharmacy license effectively render his suspension
indefinite in term. And, according to Petitioner, it is
unreasonable for the I.G. to condition Petitioner's
reinstatement as a nursing home operator on an indefinite
State suspension of Petitioner's pharmacy license--
particularly where the conditions for return of the
12

license have nothing to do with Petitioner's
trustworthiness as a nursing home operator.

The I.G. does not directly refute these assertions. He
tacitly concedes that the exclusions imposed and directed
against Petitioner are of indefinite duration, but argues
that Petitioner has not established that he will fail to
comply with continuing education requirements, or fail to
take the pharmacy law examination within the two year
suspension period, and pass with a score of at least 75
percent. I.G.'s Supp. Memorandum at 8.

I conclude that the exclusions imposed and directed by
the I.G. against Petitioner are of indefinite duration,
and are unreasonable, insofar as they apply to
Petitioner's participation in Medicare and Medicaid as a
nursing home operator. Notwithstanding the I.G.'s
assertions, there is no way to predict when, if at all,
Petitioner might fulfill the continuing education and
examination requirements of his license suspension.’ The
continuing education and examination requirements have no
rational relationship to the issue of when Petitioner
might become trustworthy to operate nursing homes.

The evidence of this case establishes that Petitioner
conspired to receive stolen pharmaceuticals. His conduct
demonstrates intentional violation of State law. By

his conduct, Petitioner established that he is an
untrustworthy provider of Medicare and Medicaid services.
It is reasonable for the I.G. to impose and direct
exclusions against Petitioner for a sufficient period of
time to assure that he will not engage in misconduct
against trust funds or beneficiaries. Given the
seriousness of Petitioner's misconduct, a two-year
exclusion from participating as a nursing home operator
is reasonable.

However, it is not reasonable for the I.G. to condition
Petitioner's reinstatement as a provider of a particular
service on Petitioner fulfilling conditions that are
unrelated to his trustworthiness as a provider of that
service. There is no evidence in the record of this
proceeding to show that Petitioner will be a more

5 Any number of circumstances might make

suspension extend past the two-year term. Petitioner
might fail to attain a score of 75 percent on the
pharmacy law examination. He might be prevented from
completing continuing education requirements by accident
or illness. Or, he might simply opt not to comply with
these requirements.
13

trustworthy provider of nursing home services, by virtue
of his having completed continuing education courses in
pharmacy, and having passed a pharmacy law examination
with a score of at least 75 percent. It is within the
realm of reasonable possibility that Petitioner might
never satisfy these conditions, and yet become a
trustworthy individual.

4. Ihave authority to modify the length of the
exclusions imposed and directed against Petitioner.

The exclusion law provides that an excluded party is
entitled to a hearing as to his exclusions "to the same
extent as is provided by" 42 U.S.C. 405(b). 42 U.S.C.
1320a-7(f) (1). Section 405(b) states that, in those
cases where the Secretary provides a hearing with respect
to a decision the Secretary has rendered, the Secretary:

"(S)hall, on the basis of evidence adduced at the
hearing, affirm, modify, or reverse his findings of
fact and such decision." (Emphasis added.)

The Secretary delegated to Administrative Law Judges
assigned to the Departmental Appeals Board the authority
to conduct hearings and render decisions with respect to
the imposition of civil remedies, including exclusions
imposed and directed under 42 U.S.C. 1320a-7. 55 Fed.
Reg. 25544, July 7, 1988. I conclude that my delegated
authority includes authority to modify the term of
exclusions in those cases where I decide that the
exclusions are appropriate, but the 1.G.'s determination
is in some respect unreasonable.

5. The exclusions imposed and directed against
Petitioner from participating in Medicare and Medicaid
are modified to permit Petitioner to apply for

reinstatement as a participant after a two-year period.

Given the seriousness of Petitioner's misconduct, it is
reasonable to impose and direct exclusions against him
from participating in Medicare and Medicaid for a
substantial period of time. The only unreasonable aspect
of the exclusions imposed and directed by the I.G., as
they apply to Petitioner's participation as a nursing
home operator, is that they are indefinite in duration
and tie his reinstatement as a nursing home operator to
his fulfilling conditions which are unrelated to the
issue of his trustworthiness to operate nursing homes.
Therefore, I modify the exclusions imposed and directed
against Petitioner as follows.
14

Petitioner is excluded from participating as a nursing
home operator in the Medicare and Medicaid for a two year
period, beginning September 26, 1988. No payment may be
made to Petitioner for any service for which he claims
reimbursement as an employee, administrator, operator, or
in any other capacity in connection with the operation of
nursing homes. No payment may be made to any nursing
home in which Petitioner serves as an employee,
administrator, operator, or in any other capacity for any
services that Petitioner furnishes on or after the
effective date of the exclusions. No payment will be
made to any nursing home wholly owned by Petitioner
during the exclusion period. At the completion of the
two year exclusion period, Petitioner may apply for
reinstatement as a participating nursing home operator.

The exclusions originally imposed and directed by the
I.G. against Petitioner are sustained insofar as they
apply to any reimbursement Petitioner may seek for
pharmacy services. They will remain in effect until
Petitioner obtains a valid license to practice pharmacy
in the State of Massachusetts. At such time, Petitioner
may apply for reinstatement as a participating
pharmacist.

The I.G. asserts that two nursing homes owned by
Petitioner were convicted of criminal offenses related to
the delivery of items or services under the Massachusetts
Medicaid program. I1.G.'s Supp. Memorandum at 9; Stip.
Ex. 3. This decision does not preclude the I.G. from
imposing and directing exclusions against these entities
as may be mandated or permitted by law.

CONCLUSTON

Based on the stipulated facts and the law, I conclude
that the I.G. had authority to exclude Petitioner from
participation in the Medicare program, and to direct his
exclusion from participation in Medicaid, pursuant to 42
U.S.C. 1320a-7(b) (4) (A). I conclude further that the
I.G. reasonably imposed exclusions against Petitioner
from participating in all programs under Medicare and
Medicaid.

I conclude that the term of the exclusions imposed and
directed against Petitioner is reasonable as it applies
to his participation as a pharmacist. However, I
conclude that it is unreasonable as it applies to his
participation as a nursing home operator, because it ties
Petitioner's reinstatement to his fulfilling conditions
15

which are not reasonably related to his trustworthiness
as a nursing home operator.

Therefore, I sustain the exclusions imposed and directed
against Petitioner, except as modified in Part 5 of the
Analysis section of this Decision.

/s/

Steven T. Kessel
Administrative Law Judge