Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
DATE: July 30, 1997
Rolland G. Eckley, R.Ph.,

Petitioner,

Docket No. C-96-219
Decision No. CR483

-v-

The Inspector General.

DECISION

I conclude that Petitioner, Rolland G. Eckley, is subject to
a three-year period of exclusion from participation in the
Medicare, Medicaid, Maternal and Child Health Services Block
Grant and Block Grants to States for Social Services programs
and, therefore, I affirm the Inspector General's (I.G.)
determination.’

I. Procedural History

By letter dated February 23, 1996, the Petitioner herein, was
notified by the I.G., U.S. Department of Health and Human
Services (HHS), that he was to be excluded from the Medicare
and Medicaid programs for three years. The I.G. explained
that such an exclusion is authorized by section 1128(b) (3) of
the Social Security Act (Act), because Petitioner was
convicted, as defined in section 1128(i) of the Act, in the
State of Ohio, Court of Common Pleas, Wood County, of a
criminal offense related to the unlawful manufacture,
distribution, prescription, or dispensing of a controlled
substance.

Petitioner filed a timely request for review of the I.G.'s
action. The parties agreed that this case could be decided
without an in-person hearing as there were no facts of

1 Unless otherwise indicated, hereafter I refer to all
programs from which Petitioner has been excluded other than
Medicare, as "Medicaid."
2

significance genuinely in dispute and that the only matters
to be decided are the legal implications of the undisputed
facts. Accordingly, I set a schedule for the I.G. to file a
motion for judgment on the record and for Petitioner to

respond.

II. Applicable law

Section 1128(b)(3) of the Act permits the Secretary of HHS
(Secretary) to exclude any individual from participation in
the Medicare program and also to direct that individual's
exclusion from the Medicaid, Maternal and Child Health
Services Block Grant and Block Grants to States for Social
Services programs, if the individual "has been convicted,
under Federal or State law, of a criminal offense relating to
the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance." The applicable
regulations provide, in relevant part:

(a)

(b)

(c)

Circumstances for exclusion. The OIG may
exclude an individual or entity convicted
under Federal or State law of a criminal
offense relating to the unlawful manufacture,
distribution, prescription, or dispensing of a
controlled substance, as defined under Federal
or State law.

for purposes of this section, the definition
of "controlled substance" will be the
definition that applies to the law forming the
basis for the conviction.

Length of exclusion. (1) An exclusion
imposed in accordance with this section will

be for a period of 3 years, unless aggravating
or mitigating circumstances listed in
paragraphs (b)(2) and (b)(3) of this section
form a basis for lengthening or shortening
this period.

the following factors may be considered
tigating and a basis for shortening the
period of exclusion--

(i) The individual's or entity's cooperation
with Federal or State officials resulted in--

(A) Others being convicted or excluded from
Medicare or any of the State health care
programs, or
3

(B) The imposition of a civil money penalty
against others; or

(ii) Alternative sources of the type of health
care items or services furnished by the
individual or entity are not available.

42 C.F.R. § 1001.401 (1995).

III. Rulings on Outstanding Motions

A. Sustaining of Petitioner's Objections to I.G. Exhibits 4
through 9.

During the briefing period, Petitioner filed objections to
the I.G.'s Exhibits 1, 4, 5, 6, 7, 8, and 9, on grounds of
irrelevancy, undue prejudice, hearsay, and lack of
authentication. The I.G. responded to these objections and,
in addition, submitted amended copies of her exhibits 1, 4,
5, 8, and 9, with certifications of authenticity. Having
considered the parties' arguments concerning the disputed
exhibits, I sustain Petitioner's objections except with
respect to the I.G.'s Exhibit 1, as revised.

The objections to the I.G.'s Exhibits 4, 5, 8 and 9 are
sustained on the basis of their irrelevancy and potential for
undue prejudice. Even as amended by the I.G., these
documents pertain to actions taken by the Ohio State Board of
Pharmacy, whereas the sanction imposed by the I.G. was based
on Petitioner's conviction in Ohio State Court. The I.G.'s
other exhibits contain sufficient relevant information
concerning the nature and extent of Petitioner's conviction
for violation of State criminal statutes. In order to
resolve the issues before me, it is not necessary for me to
consider the actions taken also by the State Board of
Pharmacy or its interpretations of Petitioner's criminal
conviction.

I am also sustaining Petitioner's objection to I.G.'s Exhibit
7, which contains an explanation of Tylenol with Codeine as
published in a medical reference work. Petitioner has
correctly noted that, as relevant to this case, a "controlled
substance" is defined by law -- not by medical texts.
Therefore, the I.G.'s Exhibit 7 is irrelevant to this action.

Because the I.G. did not provide any information to
invalidate Petitioner's objection to the I.G.'s Exhibit 6,.I
an excluding from the record said document as well. The
document marked as I.G.'s Exhibit 6 consists of a letter
dated September 25, 1995 from the I.G., which seeks to inform
Petitioner of a possible exclusion and to solicit relevant
information from Petitioner. Petitioner objected to its
4

admission by noting that there is no evidence that the letter
was ever sent by the I.G. The I.G. has not provided any
information to show the actual mailing of the letter. Nor
has the I.G. stated what relevancy a notice of possible
exclusion (even if sent to Petitioner) has to these
proceedings. The exclusion at issue here was imposed by the
I.G. in a later dated letter. The letter by which the I.G.
imposed the exclusion against Petitioner, dated February 23,
1996, was entered into the record for jurisdictional purposes
when this case was docketed.

I have accepted into evidence the I.G.'s Exhibit 1 as
revised, with certification of authenticity, over
Petitioner's objections. This exhibit is a copy of the
Indictment issued against Petitioner. It is necessary for me
to read the Indictment in order. to understand the contents of
the I.G.'s Exhibit 2, in which the court summarized the
prosecutor's motion to modify one of the charges against
Petitioner as well as the pleas entered by Petitioner.
Petitioner has filed no objection to the admission of the
I.G.'s Exhibit 2. Given also that the certification of
authenticity provided by the I.G. overcomes the question of
reliability raised by Petitioner, there is no valid basis for
excluding the I.G.'s Exhibit 1, as revised, from evidence.”

B. Denial of Petitioner's Motion to Enforce Settlement
Agreement.

After the parties concluded their briefing on the merits of
the case, Petitioner filed a document styled, "Petitioner's
Motion to Enforce Settlement Agreement." In the motion,
Petitioner alleged that a settlement offer had been made by
the I.G. without any apparent deadline for acceptance;
however, when Petitioner's counsel contacted the I.G.'s
counsel several months later to state that Petitioner had
authorized his counsel to accept the I.G.'s offer,
Petitioner's counsel was told that the I.G. was no longer
willing to settle the case. Accordingly, Petitioner's
"Motion to Enforce Settlement Agreement" is premised on
Petitioner's asserted belief that the I.G. did not in fact
withdraw the settlement offer prior to Petitioner's decision
to accept it.

2 Since Petitioner has offered no exhibits of his own,
the evidence I have admitted into the record consists of I.G.
Exhibits (Exs.) 1 Revised, 2, and 3.
5

The I.G. objected to the motion on grounds which included her
counsel's contention that she thought Petitioner, by counsel,
had earlier rejected the settlement offer outright. In
addition, the I.G. argued that I lack the authority to rule
upon Petitioner's motion under 42 C.F.R. § 1005.4(b), (c) (3).

I find the I.G.'s reliance upon said regulations to be
inapposite. The regulations preclude administrative law
judges from compelling settlement agreements between the
parties. 42 C.F.R. § 1005.4(c)(3). The regulations do not,
as the I.G. contends, preclude an administrative law judge
from determining whether the parties have already entered
into a settlement agreement and, if so, the consequences of
the agreement. These regulations also do not support the
proposition that an administrative law judge is without the
authority to ascertain whether counsel was acting with or
without authorization from her client during settlement
discussions.

Petitioner herein alleged that when Petitioner's counsel
contacted the I.G.'s counsel on November 14, 1996, the I.G.'s
counsel stated that "‘because the (I. G.'s] Brief had been
submitted, it was too late to settle.'" Motion to Enforce
Settlement Agreement, 2. Petitioner noted in his motion that
no order or instructions issued by me indicated that the
filing of any brief would preclude the parties from
discussing or reaching a settlement agreement. Petitioner
alleged also in his motion that the I.G.'s settlement offer
had not been made with any deadline for response.

In this case, Petitioner's summary of the alleged exchange
between counsel does not make appropriate my looking behind
the presumption that an attorney follows her client's wishes
and directives in settlement negotiations. Therefore, I will
not attempt to verify that counsel for the I.G. was in fact
speaking with the authority of her client on November 14,
1996, when Petitioner was informed that settlement was no
longer an option. Nor will I attempt to ascertain why a
settlement offer from the I.G. was withdrawn -- whether it
was due to the filing of a brief by her counsel or for other
reasons.

Petitioner has not proven the existence of any settlement
agreement to be enforced in this case. There is not even any
proof that the parties had reached a meeting of the minds to
resolve the case on specific terms. Accordingly, I deny
Petitioner's Motion to Enforce Settlement Agreement.
6
Iv. Issues, Findings of Fact and Conclusions of Law
A. Issues
The issues in the case are:

a. Whether Petitioner was convicted of a criminal
offense related to the unlawful manufacture,
distribution, prescription, or dispensing of a
controlled substance, within the meaning of section
1128(b) (3) of the Act; and

b. Whether the length of Petitioner's exclusion is
reasonable.

B. Findings of Fact and Conclusions of Law

1. On September 16, 1993, a Criminal Indictment was filed by
the Grand Jury charging that pursuant to Count Three,
Petitioner did knowingly sell or offer to sell Tylenol #3
with codeine, a schedule III controlled substance, in an
amount equal to or exceeding the bulk amount but in an amount
less than three times that amount in violation of Ohio
Revised Code Title 29, Section 2925.03(A)(5), a felony of the
third degree. I.G. Ex. 1 Revised.

2. On September 16, 1993, a Criminal Indictment was filed by
the Grand Jury charging that pursuant to Count Four,
Petitioner did knowingly make a false statement in any
prescription, order, report or record required by chapter
3719 of the Revised Code, for a schedule III substance,
Tylenol #3 with codeine, in violation of Ohio Revised Code
Title 29, Section 2925.23(A), a felony of the fourth degree.
I.G. Ex. 1 Revised.

3. On January 19, 1994, Petitioner waived his right to trial
and pled guilty to and was adjudged guilty of the criminal
offenses of illegal processing of drug documents, a felony of
the fourth degree, and of attempted trafficking in drugs, a
misdemeanor of the first degree. I.G. Ex. 2.

4. Pursuant to the Judgment Entry on Plea dated January 19,
1994, Judge Williamson granted the motion to amend Count
Three of Petitioner's Indictment to attempted trafficking in
drugs, which is knowingly or purposely engaging in conduct,
which, if successful, would constitute or result in the
offense of trafficking in drugs, a violation of Ohio Revised
Code Title 29, Sections 2925.03 and 2923.02 and a misdemeanor
of the first degree. I.G. Ex. 2.
7

5. Petitioner's sentence by the State court to one year
imprisonment for the offense of illegal processing of drug
documents and six months imprisonment for the offense of
attempted trafficking in drugs, was suspended, and he was
placed on probation for two and one-half years provided he
met certain conditions which included, in part, 45 days
detention, evaluation by and appropriate treatment, if
necessary, by a chemical dependency treatment center, 100
hours of community service and a mandatory fine of $1500.
I.G. Ex. 3.

6. Petitioner was convicted of a criminal offense related to
the distribution, prescription or dispensing of a controlled
substance. Findings 2 - 5; Act, section 1128(b) (3).

7. The Secretary delegated to the I.G. the authority to
determine, impose, and direct exclusions pursuant to section
1128 of the Act.

8. The I.G. has authority to impose and direct exclusions
pursuant to section 1128(b)(3) of the Act.

9. Petitioner's conviction is related to the unlawful
distribution, prescription or dispensing of a controlled
substance.

10. An exclusion imposed pursuant to section 1128(b)(3) of
the Act will be for a period of three years, unless specified
aggravating or mitigating factors are present. 42 C.F.R. §
1001.401(c) (1).

11. Only the mitigating factors set forth in 42 C.F.R. §
1001.401(c) (3) may be considered as a basis for decreasing
the period of exclusion.

12. The record in this case does not support the presence of
any of the mitigating factors.

13. Petitioner was properly excluded for a period of three
years pursuant to regulations promulgated by the Secretary
under the authority of section 1128(b)(3) of the Act.

Vv. Petitioner's Arguments

Petitioner contends that his exclusion under 1128(b) (3) of
the Act and 42 C.F.R. § 1001.401 is not justified because
there is no evidence that controlled substances were a
necessary element of his convictions for illegal processing
of drug documents, a felony in the fourth degree, and for
attempted drug trafficking, a misdemeanor of the first
degree. Petitioner also contends that the length of his
exclusion is unreasonable because the I.G. waited two years
8

before implementing the three-year exclusion, effectively
creating a five-year exclusion, because the I.G. exclusion
came immediately after his State Pharmacy license two-year
suspension ended.

VI. Discussion

The statute authorizes the I.G. to exclude the Petitioner
from participation in the Medicare and Medicaid programs for
a period of three years if the Petitioner was convicted under
federal or state law of a criminal offense relating to the
unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance as defined under federal
or state law.

In this instance, Petitioner does not dispute that he pled
guilty to and therefore, was convicted of two drug related
offenses; rather, Petitioner merely contends that neither
offense was "related to the unlawful manufacture,
distribution, prescription, or dispensing of a controlled
substance." Contrary to Petitioner's contentions, I conclude
that the relevant record, taken together, supports a finding
that Petitioner was convicted of a criminal offense relating
to the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance.

Petitioner does not dispute that he pled guilty to and was
adjudged guilty of attempted trafficking in drugs pursuant to
Count Three of the Criminal Indictment as amended. See I. G.
Exs. 1 Revised, 2, and 3. Moreover, Petitioner does not
dispute that this offense prohibits knowingly or purposely
engaging in conduct which, if successful, would result in the
selling or offering to sell a controlled substance. Ohio
Revised Code Title 29, Sections 2923.02 and 2925.03.

The undisputed facts of this case show that a Criminal
Indictment was filed by the Grand Jury against Petitioner on
six criminal counts. After that, based on a plea agreement,
Petitioner, in lieu of going forward to a hearing on all
these counts, agreed to plead guilty to Count Three, as
amended, and to Count Four, with the State agreeing to drop
the other four counts filed against Petitioner. Petitioner,
however, argues that this indictment is of no effect in these
proceedings and that I am limited to only the Judgment Entry
on Plea and the Judgment Entry on Sentencing to determine the
basis for Petitioner's convictions.’ I disagree. In light

3 Petitioner initially moved against admission of the
Criminal Indictment as an exhibit in this case, arguing that
it was not properly authenticated, that in any event it is

(continued...)
9

of the circumstances here, the Criminal Indictment must be
read together with the Judgments in order to determine the
actual offenses for which Petitioner has pled guilty. It
would lead to ludicrous results if that indictment was not
considered to be incorporated into these Judgments,
especially when Judge Williamson specifically granted the
State's motion to amend Count Three of the Indictment to
Attempted Trafficking in the Judgment Entry on Plea and then
granted the State's motion to dismiss Counts One, Two, Five
and Six of the Indictment in the Judgment Entry on
Sentencing. I.G. Exs. 2 and 3.

Further, Count Three of the Criminal Indictment clearly and
specifically states that the Grand Jury found that on or
about January 1992, Petitioner "did knowingly sell or offer
to sell Tylenol #3 with codeine, a schedule III controlled
substance, in an amount equal to or exceeding the bulk amount
but in an amount less than three times that amount, to-wit:
60 tablets." I.G. Ex. 1 Revised. There is nothing in the
record which would indicate that Judge Williamson's Judgment
Entry on the Plea for Count Three, as amended, was not based
on these same facts.

I find no merit in Petitioner's additional argument that his
conviction for attempted drug trafficking is not an
excludable offense under section 1128(b) (3) of the Act
because he was convicted under an Ohio Statute which did not
require the State to prove the actual existence of any
controlled substance to be trafficked. To have an exclusion
upheld under section 1128(b)(3) of the Act, the I.G. need
only show that the individual has been convicted of a
criminal offense related to the distribution, prescription or
dispensing of a controlled substance. Petitioner's knowing
attempt to sell or offer to sell a controlled substance such
as Tylenol #3, a controlled substance, establishes‘that his
offense was related to the distribution or dispensing of a
controlled substance. Therefore, it is immaterial whether
Petitioner was selling or offering to sell a supply of
Tylenol #3 actually in existence or in his possession at the
time, or whether he was selling or offering to sell a supply
of Tylenol #3 which was to be manufactured or otherwise
obtained after he had secured the orders for it. For the
foregoing reasons, I conclude that Petitioner's conviction

3(...continued)
nothing more than a statement of probable cause, and for
other reasons under the Federal Rules of Evidence. The I.G.
resubmitted an authenticated, certified copy of this exhibit
as Ex. 1 Revised. I see no reason. to bar this document from
admission into the record, and admitted it and received it as
I.G. Ex. 1 Revised.
10

for attempted trafficking in drugs was an excludable offense
within the meaning of the statute.‘ Where an individual is
subject to an exclusion under section 1128(b)(3) of the Act,
the regulations prohibit review of the I.G.'s exercise of her
discretion to impose an exclusion permitted by law. 42
C.F.R. § 1005.3(c)(5). Therefore, the only remaining issue
in this case is whether the length of the exclusion imposed
by the I.G. is unreasonable. 42 C.F.R. § 1001.2007(a).

As to the length of Petitioner's exclusion, the controlling
regulation, 42 C.F.R. § 1001.401(c) provides that "an
exclusion imposed in accordance with this section will be for
a period of 3 years, unless aggravating or mitigating factors
listed in paragraphs (b)(2) and (b)(3) of this section form a
basis for lengthening or shortening that period."’ The
regulations state that only the factors set forth may be
considered as mitigating and the basis for shortening the
length of the exclusion. The regulation then sets forth two
mitigating factors: (1) the individual's cooperation with
federal or State officials resulted in the conviction,
exclusion of others or imposition of a civil monetary
penalty; or (2) alternative sources of the type of health
care items or services furnished by the individual or entity
are not available. 42 C.F.R. § 1001.401(c)(3)(i) and (ii).

Petitioner has not presented any such mitigating factors.
While Petitioner contends that under the circumstances the
length of the exclusion is unreasonable where the I.G. did
not exclude him until two years after his conviction, this is
not a basis under the regulations for shortening the period
of the exclusion. The three-year period of exclusion is
mandated by regulation where there is an absence of any of
the specified mitigating factors. Whatever events may have
transpired during the years immediately following
Petitioner's conviction, they were not caused by the I1.G.'s
decision to impose the three-year exclusion pursuant to
section 1128(b)(3) of the Act. Therefore, in the absence of
any evidence in the record that any mitigating factors exist
here, I am bound by the regulations, and have no authority to
modify the three-year exclusion.

‘4 While Petitioner was also convicted for illegal
processing of drug documents, given my finding that
Petitioner's conviction for attempted trafficking in drugs is
an excludable offense pursuant to section 1128(b) (3) of the
Act, there is no reason to make any further determinations
here. .

5 No aggravating factors have been alleged by the I.cG.
Therefore, aggravating factors are not an issue here.
11
VII. Conclusion

Petitioner was properly excluded for a three-year period

pursuant to section 1128(b)(3) of the Act and the applicable
regulations at 42 C.F.R. § 1001.401.

/s/

Mimi Hwang Leahy

Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: )
) Date: July 29, 1997
Donna Scotti, Orthotic and Prosthetic, )
Images, Ltd. And Louis Scotti )
)
Petitioners, )
) Docket Nos. C-97-282
-V.- ) C-97-337
) C-97-365
The Inspector General. ) Decision No. CR481
)
)
DECISION

I decide that the Inspector General (I.G.) is authorized to exclude Petitioners Louis Scotti, Donna
Scotti, and Orthotic and Prosthetic Images, Ltd. (Petitioner Orthotic), from participating in
Medicare and State health care programs, including State Medicaid programs. The exclusion of
each of the Petitioners is authorized under section 1128(b)(5)(B) of the Social Security Act
(Act), as it was revised and amended in 1996. I decide additionally that the length of the
exclusions which the I.G. imposed against Petitioners is reasonable. The I.G. excluded each
Petitioner for the same period of time that the Petitioner is excluded by the New York Medicaid
program. An exclusion of at least that length is required for an exclusion imposed under the
revised and amended section 1128(b)(5)(B) of the Act.

As I discuss in more detail below, at Finding 4, the I.G. made her determination to exclude
Petitioners on the following facts. Petitioner Louis Scotti is the president and chief operating
officer of Petitioner Orthotic. Petitioner Donna Scotti is a shareholder in Petitioner Orthotic. The
New York State Department of Social Services (Department of Social Services) determined to
exclude all three Petitioners from participating in the New York State Medicaid program. The
asis for the Department of Social Services determination included findings that Petitioners had:
submitted false Medicaid reimbursement claims; made false statements in connection with
submitting Medicaid reimbursement claims; failed to disclose information concerning their right
to reimbursement from the New York Medicaid program; and engaged in unacceptable record
‘eeping. Petitioners negotiated a settlement with the Department of Social Services in which
they agreed to be excluded from the New York Medicaid program for a two-year period,
commencing on April 8, 1996 and ending on April 7, 1998.

Each Petitioner requested a hearing from the I.G.'s determination to exclude that Petitioner.
Petitioners and the I.G. requested that the cases be consolidated. I ruled that the cases should be
consolidated in light of the parties' request to consolidate the cases, and also in light of the issues,
facts, and law that the cases share.

The parties agreed that the cases should be heard and decided based on their written submissions.
The LG. submitted a brief and a reply brief. Petitioners jointly submitted a brief and a reply brief.
The deadline for submitting reply briefs was July 7, 1997. The I.G. submitted her reply brief
timely. Petitioners did not submit their reply brief until July 11, 1997, and have not offered any
explanation for submitting it untimely. I have decided not to exclude Petitioners' reply brief,
however, inasmuch as it contains no arguments or assertions of fact that would affect my
decision in these cases.

The LG. submitted five exhibits (I.G. Ex. 1 - 5). Additionally, the I.G. provided me with a copy
of the revised and amended version of section 1128 of the Act, as an attachment to her proposed
exhibits ("Attachment A"). Petitioner submitted an exhibit, "Exhibit A", which I have
redesignated as P. Ex. 1. I note that P. Ex. 1 is the same exhibit as is I.G. Ex. 5. Petitioners also
submitted an affidavit of Petitioner Louis Scotti as an attachment to their reply brief, which they
ave not designated as an exhibit. I have designated the affidavit of Petitioner Louis Scotti as P.
Ex. 2.

No objections have been made to my receiving into evidence I.G. Ex. 1 - 5 and P. Ex. 1.
Petitioner seeks to have me admit into evidence P. Ex. 2, and the IG. objects to my receiving
into evidence P. Ex. 2. I base these conclusions on Petitioners' reliance on the exhibit, and the
.G.'s motion that I strike P. Ex. 2. Motion to Strike Affidavit in Response to the Draft Audit
report. Prior to filing this motion, the I.G. had filed a motion that I strike portions of Petitioners’
rief which comprise arguments based on the facts alleged in P. Ex. 2. Inspector General's
Motion to Strike, or in the Alternative, Give no Weight to Louis Scotti's Statement; See
Petitioners' brief at 11 - 12. On July 28, 1997, this office received an affidavit from Petitioners!
counsel in opposition to the I.G.'s Motion to Strike. I have designated this affidavit as P. Ex. 3.

As I discuss below, at Finding 6, I find the contents of P. Ex. 2, and Petitioners’ arguments that
are based on the contents of P. Ex. 2, to be irrelevant to deciding the issues in these cases.
However, I do not find the LG. to be prejudiced by my receiving into evidence P. Ex. 2, and I
deny both of the I.G.'s motions. Therefore, I receive into evidence I.G. Ex. 1 - 5 and P. Ex. 1 - 3.
do not receive into evidence the I.G.'s Attachment A, inasmuch as it is not evidence and was
not submitted as evidence.

n her brief, the I.G. noted that the caption of these cases inaccurately designates Petitioner
Orthotic as "Orthotic and Prosthetic Images, Inc." when, in fact, the correct designation of
Petitioner Orthotic is "Orthotic and Prosthetic Images, Ltd." I.G. Ex. 5; P. Ex. 1. The LG. moved
to correct the incorrect nomenclature in the caption. Petitioner did not oppose the motion.
Therefore, I order that the caption of these cases be amended to designate Petitioner Orthotic as
"Orthotic and Prosthetic Images, Ltd."

These cases involve two issues. The first issue is whether the I.G. is authorized to exclude
Petitioners pursuant to the revised and amended version of section 1128(b)(5)(B) of the Act. The
second issue is whether it is reasonable for the I.G. to exclude each Petitioner for a period that is
coterminous with the exclusion which was imposed on that Petitioner by the Department of
Social Services. In deciding that each exclusion is authorized and is reasonable, I make findings
of fact and conclusions of law (Findings). Below, I state each Finding as a heading, and I discuss
each Finding in detail.

1. These cases are governed by the amendments and revisions to section 1128 of the
Act which Congress adopted on July 31, 1996.

On July 31, 1996, Congress adopted amendments and revisions to section 1128 of the Act. These
amendments and revisions are contained in legislation known as the Health Insurance Portability
and Accountability Act of 1996 (HIPAA), Pub.L. 104-191 (104th Congress, 2nd Session); 110
Stat. 1978, Title II, Secs. 201, 211 - 213. HIPAA was signed into law on August 21, 1996. With
exceptions that are not relevant here, the effective date of HIPAA is January 1, 1997. Pub.L.
104-191, section 218.

These cases are governed by the provisions of HIPAA which revise and amend section
1128(b)(5) of the Act. These revisions and amendments became effective on January 1, 1997.
The exclusions that are at issue here became effective on April 16, 1997, more than four months
after the effective date of HIPAA. Petitioners have not argued that their cases should be
governed by the version of section 1128(b)(5) which predates the effective date of HIPAA.

In this case, the provisions of HIPAA may actually inure to Petitioners' benefit. Prior to the
effective date of HIPAA, the Act did not mandate an exclusion of any given length in the case of
an exclusion imposed under the pre-HIPAA version of section 1128(b)(5). The Secretary of the
United States Department of Health and Human Services (Secretary) adopted a regulation
implementing the pre-HIPAA version of section 1128(b)(5), which directed that an exclusion
imposed under the pre-HIPAA version of section 1128(b)(5) be for a period of three years, in the
absence of aggravating or mitigating factors which established a basis for an exclusion of more
than or less than three years. 42 C.F.R. § 1001.601. That regulation has now been superseded by
the provisions of HIPAA which direct that in the case of an exclusion imposed under section
1128(b)(5) the exclusion be for a period that is at least coterminous with the State action on
which the exclusion is based.

The State actions at issue in these cases consist of two-year exclusions. The I.G. determined to
impose exclusions that are coterminous with the two-year exclusions. Had these cases been
governed by the pre-HIPAA version of section 1128(b)(5), then, absent proof of aggravating or
mitigating factors, the exclusions imposed by the I.G. would have been for a period of three
years, rather than a period which is coterminous with the two-year exclusions imposed by the
Department of Social Services.

2. Section 1128(b)(5)(B) of the Act authorizes the I.G. to exclude any individual or
entity who is suspended, excluded from participation, or otherwise sanctioned, under a
State health care program, for reasons bearing on the individual's or entity's
professional competence, professional performance, or financial integrity.

HIPAA retained, at section 1128(b)(5)(B), the exclusion authority which predated the enactment
of HIPAA and which was formerly codified at section 1128(b)(5) of the Act. Section
1128(b)(5)(B), like the pre-HIPAA version of section 1128(b)(5), authorizes the I.G. to exclude
any individual or entity who is suspended, excluded from participation, or otherwise sanctioned,
under a State health care program, for reasons bearing on that individual's or entity's professional
competence, professional performance, or financial integrity. Act, section 1128(b)(5)(B).

The L.G.'s authority to impose an exclusion under section 1128(b)(5)(B) derives from the action
taken by or pursuant to a State health care program. The LG. is authorized to impose an
exclusion under section 1128(b)(5)(B) where a State takes one of the actions described in that
section for any of the reasons described in that section. Because the L.G.'s authority to exclude
under section 1128(b)(5)(B) derives from the action taken by a State, and not from the conduct
on which that action is based, an individual or entity who is excluded pursuant to the section may
not attack the I.G.'s authority to exclude by asserting that the State acted improperly, or that the
individual or entity did not engage in the conduct which the State found to be grounds for its
action.

3. An exclusion that is imposed by the I.G. under section 1128(b)(5)(B) of the Act must
be at least coterminous with the State exclusion, suspension, or other sanction on
which the I.G.'s exclusion determination is based.

The LG. has discretion to impose an exclusion under section 1128(b)(5)(B) where there exists
State action authorizing an exclusion. However, under HIPAA, where the I.G. chooses to impose
an exclusion, Congress has directed that the exclusion be for a period of time that is at least
coterminous with the State exclusion, suspension, or other sanction on which the LG.'s exclusion
determination is based. Act, section 1128(c).

Arguably, sections 1128(b)(5)(B) and 1128(c) give the I.G. discretion to impose an exclusion
under section 1128(b)(5)(B) that is for a period which is greater than coterminous with a State
exclusion, suspension, or other sanction. If the I.G. did so, there would be an evidentiary issue of
whether the greater-than-coterminous exclusion is reasonable. But, where the I.G. elects to
impose a coterminous exclusion, there can be no evidentiary issue of reasonableness, because
Congress established that a coterminous exclusion is reasonable in a case involving an exclusion
imposed under section 1128(b)(5)(B) of the Act. Act, section 1128(c).

4. Petitioners were excluded from participating in a State health care program for
reasons bearing on their financial integrity.

Petitioners were excluded from participating in a State health care program for reasons bearing
on their financial integrity. I base this conclusion on the following undisputed facts. Petitioner
Louis Scotti is an orthotist and prosthetist. He is president and chief operating officer of
Petitioner Orthotic. Petitioner Donna Scotti is a shareholder in Petitioner Orthotic. Petitioners'
Brief at 2; See I.G. Ex. 5 at 1. Petitioner Orthotic was established to operate as a vendor of
durable medical equipment including durable medical equipment that is requisitioned for use by
recipients of the New York Medical Assistance Program. I.G. Ex. 5 at 1. I take notice that the
New York Medical Assistance Program is New York's Medicaid program, and is a State health
care program within the meaning of the Act. See LG. Ex. 5 at 1.

On March 28, 1996, the Department of Social Services notified Petitioner Louis Scotti that it had
determined to exclude him, Petitioner Donna Scotti, and Petitioner Orthotic from participating in
the New York Medical Assistance Program for a period of at least five years. I.G. Ex. 1 at 2.
Additionally, the Department of Social Services notified Petitioner Louis Scotti that it would
seek restitution of $38,577.22, plus interest. Id. The Department of Social Services sent a
substantially identical notice to Petitioner Donna Scotti on or about April 1, 1996. LG. Ex. 2.
The determinations to exclude Petitioners were premised on an audit report of Petitioner Orthotic
which found that Petitioner Orthotic had engaged in unacceptable and improper billing practices
resulting in overpayments to Petitioner Orthotic. I.G. Ex. 3 at 3.

The Department of Social Services based its determinations on a conclusion that Petitioners had
engaged in unacceptable practices. I.G. Ex. | at 1; 1.G. Ex. 2 at 1. The Department of Social
Services defined an "unacceptable practice" to be a practice that includes fraud or abuse. Id.
Specifically, the Department of Social Services found that Petitioners had engaged in the
following unacceptable practices: submitting false claims; making false statements to support
Medicaid reimbursement claims; failing to disclose facts concerning possible unauthorized
payments or overpayments; and failing to maintain records or to make relevant records available
to auditors. I.G. Ex. 1 at 1 - 2; LG. Ex. 2 at 1 - 2.

On October 31, 1996, Petitioners entered into a settlement agreement with the Department of
Social Services. I.G. Ex. 5. I note that, in its preamble, the settlement agreement refers only to
the Department of Social Services and Petitioner Orthotic as parties. Id. at 1. However, it is
evident from the text of the agreement and from the signatures of Petitioners Louis and Donna
Scotti, that the agreement is between the Department of Social Services and all three Petitioners.
1G. Ex. 5.

Petitioners and the Department of Social Services agreed that the period of exclusion of
Petitioners from participating in the New York Medical Assistance Program would be reduced
from five years to two years. The exclusion was agreed to commence on April 8, 1996 and to end
on April 7, 1998. Any of the Petitioners could apply to the Department of Social Services for
reinstatement to the New York Medical Assistance Program on or after April 7, 1998. LG. Ex. 5
at 2 - 3. The parties also agreed that the Department of Social Services could offset $38,577.22 in
withheld payments against the overpayment in that amount which the Department of Social
Services had determined that Petitioners caused. I.G. Ex. 5 at 3; see LG. Ex. 1 at 2, 1.G. Ex. 2

at 2.
The settlement agreement contains a disclaimer of liability by Petitioners. It recites that:

[b]y entering into this Stipulation of Settlement . . . [Petitioners] do not admit to
committing specific acts of wrong doing, nor does the Department [of Social Services]
contend that specific acts of wrong doing, or specific practices deemed "unacceptable"
under the Department's regulations were committed by . . . [Petitioners].

.G. Ex. 5 at 3 - 4.

The evidence plainly establishes that Petitioners were excluded from participating in a State
ealth care program. Petitioners agreed to be excluded from the New York Medical Assistance
Program, a State health care program, as part of their settlement agreement with the Department
of Social Services. I.G. Ex. 5.

Petitioners argue that an exclusion which is agreed to as part of a settlement is not an "exclusion"
within the meaning of section 1128(b)(5)(B) of the Act. Petitioners assert that there must be an
adjudication of culpability for an exclusion to be an "exclusion" within the meaning of section
128(b)(5)(B). Petitioners contend that their agreement to settle their cases with the Department
of Social Services may not be construed to include an exclusion of Petitioners from participating
in the New York Medical Assistance program because no final adjudications of culpability were
made in Petitioners' cases. Petitioners' brief at 4 - 7.

Section 1128(b)(5)(B) does not require that there be an adjudication of culpability in order for
there to be a State action giving the I.G. the authority to impose an exclusion. The Act contains
no language which supports Petitioners' argument. An exclusion is an "exclusion" within the
meaning of the section, whether it is imposed by a State agency based on an adjudication, or
whether it is agreed to as a settlement of a State action, as is the case here.

Petitioners were excluded for reasons bearing on their financial integrity. The exclusion
determinations by the Department of Social Services were predicated on findings that Petitioners
had engaged in financial misconduct resulting in overpayments to Petitioner Orthotic, which
included submitting false reimbursement claims and making false statements in connection with
those claims. I.G. Ex. | at 1 - 2; I.G. Ex. 2 at 1 - 2; LG. Ex. 3 at 3.

Petitioners argue that the reasons for their exclusions may not be inferred from the Department
of Social Services exclusion determinations in their cases, inasmuch as they settled their cases
with the Department of Social Services with an agreement in which liability was disclaimed. See
LG. Ex. 5 at 3 - 4. The disclaimer notwithstanding, I find that Petitioners were excluded for
reasons bearing on their financial integrity.

The settlement agreement between Petitioners and the Department of Social Services did not
take place in a vacuum. Had the Department of Social Services not made determinations of
financial misconduct, then there would not have been a settlement agreement. Petitioners entered
into the settlement agreement because it offered them less restrictive sanctions than those which
the Department of Social Services at first determined to impose.

Section 1128(b)(5)(B) does not require that the State determination which impels a settlement
become a final determination by the State in order for it to be the reason underlying a settlement
agreement which results in an individual or entity being excluded. Nor does the Act require that
an excluded party accept or agree to a finding of liability. The Act only requires that an exclusion
(whether it be imposed or agreed to by settlement) relate to the excluded individual's
professional competence, professional performance, or financial integrity.

Under section 1128(b)(5)(B), I find that the requisite relationship between an exclusion and an
individual's professional competence, professional performance, or financial integrity exists if a
State determines to impose an exclusion based on any of the reasons described in section
1128(b)(5)(B), and the excluded party then settles with the State for a less stringent exclusion as
a way of avoiding the exclusion that the State originally determined to impose. In such a case, a
reason for the exclusion agreed to between the State and the excluded individual is the findings
of misconduct by the State which underlie the State's initial determination. That is so, because no
exclusion would be agreed to absent the underlying findings of misconduct.

Petitioners argue additionally that the Department of Social Services determinations may not be
used as a basis for establishing their culpability. However, Petitioners' culpability is not at issue
here. As I hold at Finding 2, the I.G.'s authority to exclude pursuant to section 1128(b)(5)(B)
derives from the exclusion action taken by a State authority. What is necessary to give the LG.
authority to exclude under section 1128(b)(5)(B) is that a State make a determination about an
individual's culpability which becomes a reason for that individual's ultimate exclusion by the
State. The accuracy of that determination is not relevant.

5. The 1.G. is authorized to exclude Petitioner under section 1128(b)(5)(B) of the Act.

The evidence establishes the necessary prerequisites to give the LG. authority to exclude
Petitioners pursuant to section 1128(b)(5)(B) of the Act. Petitioners were excluded from
participation in a State health care program. They were excluded for reasons bearing on their
financial integrity.

6. The exclusions are reasonable.

The LG. imposed exclusions against Petitioners that are coterminous with the exclusions that
were imposed against them as a result of their settlement agreement with the Department of
Social Services. The remedies that were imposed by the I.G. in this case comport with the
requirements of section 1128(c) of the Act. Therefore, they are reasonable.

Petitioners assert that it would not be in the interest of justice for the I.G. to exclude them.
Petitioners' brief at 11 - 12; P. Ex. 2. Essentially, they argue that the exclusions are not fair to
Petitioners. They assert also that, to the extent that Petitioners submitted inaccurate or
unsupported reimbursement claims to the New York Medical Assistance Program, such claims
were the consequence of innocent errors and not of misconduct. Id.
I do not find that these arguments are relevant to the issues I may hear and decide. Congress
settled the issue of whether exclusions imposed by the I.G. pursuant to section 1128(b)(5)(B) that
are coterminous with the State sanctions on which they are based are reasonable, by requiring
that the I.G. impose exclusions in such cases that are at least coterminous with the State
sanctions on which they are based.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Sabina E. Acquah, DATE: July 10, 1997
Petitioner,

Docket No. C-97-021
Decision No. CR480

-v-

The Inspector General.

DECISION

I conclude that Petitioner, Sabina E. Acquah, is subject toa
five-year minimum mandatory period of exclusion from
participation in the Medicare, Medicaid, Maternal and Child
Health Services Block Grant and Block Grants to States for Social
Services programs and therefore, I affirm the Inspector General's
determination.

I. Procedural History

By letter dated August 21, 1996, Sabina E. Acquah, the Petitioner
herein, was notified by the Inspector General (I.G.), U.S.
Department of Health and Human Services (HHS), that it had been
decided to exclude Petitioner for a period of five years from
participation in the Medicare, Medicaid, Maternal and Child
Health Services Block Grant, and Block Grants to States for
Social Services programs.' The I.G.'s rationale was that
exclusion, for at least five years, was mandated by sections
1128(a) (1) and 1128(c) (3) (B) of the Social Security Act (Act)
because Petitioner had been convicted of a criminal offense
related to the delivery of an item or service under Medicaid.

Petitioner filed a timely request for review of the I.G.'s
action. The I.G. moved for summary disposition.

' Unless otherwise indicated, hereafter I refer to all
programs from which Petitioner has been excluded, other than
Medicare, as "Medicaid."
2

Because I have determined that there are no facts of significance
genuinely in dispute, and that the only matters to be decided are
the legal implications of the undisputed facts, I have decided
the case on the basis of the parties' written submissions.

II. Applicable Law

Sections 1128(a)(1) and 1128(c)(3)(B) of the Act make it
mandatory for any individual who has been convicted of a criminal
offense related to the delivery of an item or service under the
Medicare or Medicaid programs to be excluded from participation
in such programs for a period of at least five years.

III. Issues, Findings of Fact and Conclusions of Law
A. Issues

The issues in this case are whether Petitioner was convicted of a
criminal offense under federal or State law; and if Petitioner
was so convicted, whether the conviction relates to the delivery
of an item or service under Medicaid.

B. Findings of Fact and Conclusions of Law

1. Maryland's Medicaid program is administered by the Maryland
Department of Health and Mental Hygiene ("DHMH"). I.G. Exhibit
(Ex.) 5.

2. Chesapeake Health Plan, Inc. (Chesapeake) is a Health
Maintenance Organization ("HMO") incorporated in the State of
Maryland. I.G. Ex. 10.

3. Pursuant to an HMO contract between Chesapeake and DHMH,
Chesapeake enrolls persons eligible for Medicaid. DHMH then pays
Chesapeake a monthly fee for each patient served by Chesapeake.
Chesapeake is responsible for providing, arranging, and paying
for all medical items and services to which enrollees are
entitled under the Medicaid State Plan. I.G. Ex. 10.

4. HMOs in Maryland are allowed to recruit new patients.
However, HMOs are not provided the names and addresses of
Medicaid-eligible families, because disclosing this information
is prohibited by Maryland law. I.G. Ex. 5.

5. At all times relevant to this proceeding, Petitioner was the
Medicaid Marketing Director employed by Chesapeake. In this
position, Petitioner oversaw the HMO's efforts, through its
marketing representatives, to enroll Medicaid recipients. I.G.
Exs. 3, 4.
3

6. Chesapeake paid its marketing representatives a commission
based on the number of Medicaid recipients they successfully
enrolled each month. I.G. Ex. 5.

7. The Medicaid Fraud Control Unit of the Maryland Office of
Attorney General found that Petitioner had conspired with
Chesapeake marketing representatives to illegally obtain Medicaid
"leads" in order to assist them in locating and persuading
Medicaid recipients to enroll in Chesapeake. I.G. Exs. 3, 4.

8. On June 13, 1995, a Criminal Indictment was filed by the
State Attorney General charging Petitioner with conspiracy to
bribe a State official and conspiracy to obtain unlawful access
to a government record, from September 1993 through February
1995, in violation of the Annotated Code of Maryland, Article 27,
sections 22 and 38, and the State Government Article, section 10-
627(a). I.G. Ex. 3.

9. Petitioner entered a plea of not guilty. On December 20,
1995, after a jury trial in the Circuit Court for Baltimore City,
at which Petitioner was represented by counsel, the jury returned
a verdict of guilty as to Count 2 (conspiracy to obtain unlawful
access to a government record).

10. On January 19, 1996, judgment was entered against Petitioner
by Judge Hammerman of the Circuit Court for Baltimore City, and
Petitioner was ordered to pay a $1000 fine and costs. I.G. Ex.
6.

11. Petitioner's conviction was upheld by the Maryland Court of
Special Appeals.

12. The finding of Petitioner's guilt by the jury, and the entry
of a judgment of conviction against Petitioner by Judge Hammerman
of the Circuit Court, both satisfy the definition of "conviction"
found in section 1128(i) of the Act for purposes of mandatory
exclusion. Findings 9, 10.

13. For a conviction to subject an individual or entity to
exclusion under section 1128(a)(1) of the Act, there must be some
nexus or common sense connection between the criminal offense for
which the individual or entity has been convicted and the
delivery of an item or service under the Medicare or Medicaid

programs. Siegel, D.0., DAB No. 1467, at 5 (1994).

14. There exists a nexus or common sense connection between the
criminal offense for which Petitioner was convicted and the
delivery of an item or service under Medicaid.
4

15. The criminal offense which provided the basis for
Petitioner's conviction constitutes a criminal offense related to
the delivery of an item or service under Medicaid within the
meaning of section 1128(a) (1).

16. Petitioner cannot collaterally attack her criminal
conviction in these administrative proceedings.

17. The Secretary is required under section 1128(a)(1) of the
Act to exclude Petitioner from participation in Medicare and
Medicaid, and to direct the State to exclude her from
participation in State health care programs, because of her
conviction of a program-related offense.

18. The mandatory minimum period of exclusion for a person
convicted of a program-related offense is five years, pursuant to
sections 1128(a)(1) and 1128(c)(3)(B) of the Act.

19. The Secretary has delegated to the I.G. the duty to impose a
mandatory exclusion when an individual is convicted of a program-
related offense, pursuant to section 1128(a) of the Act.

20. Petitioner is subject to the mandatory minimum exclusion of
five years for her conviction of a criminal offense related to
the delivery of an item or service under the Medicaid program.

21. The I.G. properly excluded Petitioner from participation in
the Medicare and Medicaid programs for a period of five years,
pursuant to sections 1128(a)(1) and 1128(c) (3) (B) of the Act.

22. Petitioner's exclusion from the Medicare and Medicaid
programs does not constitute unconstitutional double jeopardy.

IV. Petitioner's arguments

Petitioner contends that, although she was found guilty of
conspiracy to obtain unlawful access to a government record, the
facts of her case do not establish that she was actively involved
in the scheme for which she has been convicted and, also, that
she did not have criminal intent.

She further maintains that her offense was not related to the
Medicaid program, in that her job responsibilities at Chesapeake
Health Plan were not directly related to medical services, nor
did she provide medical services to Medicaid recipients.

Although she acknowledges that she was Director of Marketing, she
contends that she is not responsible for the scheme, as she was
not an officer or owner of Chesapeake Health Plan.

Finally, Petitioner contends that it is unconstitutional double
jeopardy to subject her to exclusion, as she has already been
punished in the criminal matter by having to pay a fine.
Vv. Discussion

The first requirement for mandatory exclusion pursuant to section
1128(a) (1) of the Act is that the individual or entity in
question must have been convicted of a criminal offense under
federal or state law. In the present case, I find that
Petitioner was "convicted" of a criminal offense within the
meaning of sections 1128(i)(1) and (2) of the Act.? In the
matter at hand, a jury heard the case presented in the Circuit
Court for Baltimore City and found Petitioner guilty. The
finding of guilt by the jury establishes, pursuant to section
1128(i) (2) of the Act, that Petitioner was "convicted" for
purposes of this exclusion. Further, Judge Hammerman of that
Court entered a judgment of conviction against Petitioner. The
fact that the Circuit Court judge entered a judgment of
conviction against Petitioner also establishes, pursuant to
section 1128(i)(1) of the Act that Petitioner was "convicted."

Next, the statute requires that the criminal activity must have
been related to the delivery of a health care item or service
under the Medicare or Medicaid programs. The determination of
whether a conviction is related to the delivery of an item or
service under the programs "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." Surabhan Ratanasen, M.D., DAB No. 1138 at 5 (1990)
(citing Jack W. Greene, DAB No. 1078 (1989), aff'd sub nom.
Greene v. Sullivan, 731 F.Supp. 835 (E.D. Tenn. 1990). As
otherwise stated, "there must be some nexus or common sense
connection between the criminal offense for which the individual
or entity has been convicted and the delivery of an item or
service under the Medicare or Medicaid programs." Jacqueline Q.
Cordle-Boggs, DAB CR311 at 6 (1994).

The nexus between Petitioner's offense and the delivery of
Medicaid services is evident upon consideration of the scheme in
which Petitioner was implicated. Petitioner was the individual
at Chesapeake responsible for overseeing the enrollment of
persons eligible for Medicaid into the HMO. I.G. Exs. 3, 4.
Petitioner participated in an ongoing conspiracy in which
Chesapeake representatives sought to use illegally obtained
names, addresses, and other confidential information to solicit
and attempt to enroll Medicaid recipients into Chesapeake. I.G.

2 For a Petitioner to be "convicted" of a criminal
offense within the meaning of section 1128(i) of the Act, it is
only necessary to find that one of the four subsections of
section 1128(i) has been satisfied. Here, however, I found that
Petitioner's conviction fell within two subsections of that
section.
6

Exs. 3, 4. In turn, Chesapeake billed or would have billed the
Medicaid program for each Medicaid recipient so enrolled. I.G.
Ex. 10. The prospect of payment from Medicaid was the impetus
behind the scheme. Without this connection, Chesapeake would not
have compelled its marketing representatives to enroll Medicaid
recipients, and the marketing representatives would not have
unlawfully obtained the Medicaid "leads." See Asadollah
Amrollahifar, Ph.D, DAB CR238 (1992).

Significantly, in other cases, administrative law judges (ALJ)
assigned to the Departmental Appeals Board (DAB) have held that
selling or buying Medicaid "leads" or conspiring to commit such
offense is a program-related offense. In ViNita R. Warren, DAB
CR423 (1996), the petitioner was involved in the very same scheme
as Petitioner in this case. The petitioner was a Maryland State
employee who was convicted of receiving bribes in exchange for
disclosing Medicaid "leads" to Chesapeake marketing
representative James Donovan. The ALJ found that the offense was
program-related, and analogous to numerous DAB decisions
upholding exclusions for convictions of receiving bribes or
kickbacks for referrals of Medicaid or Medicare business, and he
upheld the five-year exclusion.

In Fred R. Spierer, DAB CR359 at 4 (1995), and Chris M. Spierer,
DAB CR360 at 4 (1995), the ALJ found that the offenses of
conspiracy to commit bribery and conspiracy to commit fraudulent
acts, respectively, were program-related. The petitioners were
principals of a medical supply company who knew and had shown
support for operating with Medicare "leads" illegally obtained by
the company's employees. The ALJ in both Spierer cases
determined that five-year exclusions pursuant to section 1128 (a)
were proper, because the offenses were related to the Medicaid
program.

The offenses in Fred R. Spierer, Chris M. Spierer, and ViNita R.
Warren, are virtually indistinguishable from Petitioner's
offense. These cited cases establish that Petitioner's offense
is related to the delivery of an item or service under the
Medicaid program. The nexus between Petitioner's offense and the
Medicaid program clearly exists for purposes of section
1128(a)(1) of the Act and Petitioner's conviction is for an
offense related to the delivery of Medicaid items or services.

Petitioner also argues that she did not provide medical services
herself to Medicaid recipients, and that she was not an officer
or owner of the HMO. These facts are of no consequence.

Congress intended the imposition of a mandatory exclusion
whenever the Medicare or Medicaid programs are victimized by the
offense at issue, whether or not this offense involved actual
delivery of care by the convicted individual. Napoleon S.
Maminta, M.D., DAB No. 1135 at 12 (1990). The regulations are
also clear that program-related offenses include "the performance

7

of management or administrative services relating to the delivery
of items or services under any such programs." 42 C.F.R. ยง
1001.101.

In this proceeding, Petitioner seeks to attack the criminal
conviction further, alleging that the facts do not establish that
she participated in the conspiracy and that she also lacked
criminal intent. I find that I have no authority to consider
such claims. Once it is shown that an appropriate program-
related criminal conviction has occurred, exclusion is mandatory
under section 1128(a) as a purely derivative action and the
Secretary is not permitted to look behind the conviction. Peter
J. Edmonson, DAB CR163 (1991), aff'd, DAB No. 1330 (1992). The
intent of the individual committing the offense is not relevant
under section 1128(a). DeWayne Franzen, DAB CR58 (1989), aff'd,
DAB No. 1165 (1990). Moreover, assertions by a petitioner that
he or she is actually innocent cannot be addressed in this forum.
Edmonson, DAB No. 1330.

Petitioner also contends that her exclusion rises to the level of
unconstitutional double jeopardy. On this issue, the impact of
the double jeopardy clause on civil and criminal multiple
"punishments" was extensively considered in U.S. v. Halper, 490
U.S. 435 (1985). There, the Supreme Court recognized that ina
rare instance, a civil penalty may be so extreme and so
disproportionate to the government's actual damages and expenses
as to constitute prohibited punishment. Id at 447-51. The
Halper court specifically recognized that the question of double
jeopardy was not dependent solely on whether the penalty was
characterized as "civil" or "criminal." Rather, the focus was on
the purpose and effect of the penalties on the particular case.

The remedial nature of the mandatory exclusion was examined in
Manocchio v. Sullivan, 768 F. Supp. 814 (S.D. Fla. 1991). The
Court held that there was sufficient public interest in excluding
convicted providers that the exclusion did not violate the double
jeopardy clause. Therefore, the Court found that as the provider
failed to establish that there was no rational relationship
between the nonpunitive interests (of protecting the integrity of
the Medicare/Medicaid programs) and the exclusion period, his
appeal must be dismissed.

The remedial nature of the exclusion was also considered in
Greene v. Sullivan, 731 F.Supp. 838, 840 (E.D. Tenn. 1990).
There, as in the instant case, the government sought to protect
the Medicare and Medicaid programs by excluding persons convicted
of defrauding them. These goals, the Court declared, "are
clearly remedial and include protecting beneficiaries,
maintaining program integrity, fostering public confidence in the
program, etc." 731 F.Supp. at 840. Thus, the exclusion remedy
is more analogous to the revocation of a professional license for
8

misconduct than it is punitive and there is no double jeopardy.
731 F.Supp. at 840; DeWayne Franzen, DAB No. 1165, at 11-12
(1990).

Clearly, Petitioner here has not established that her exclusion
presents one of those rare cases in which the civil penalty is
extreme and bears no rational relation to the remedial goals.
The primary purpose of this exclusion is not to punish
Petitioner, but to protect the Medicare and Medicaid programs,
and their beneficiaries and recipients from future misconduct.
See Manocchio v. Sullivan, supra.

VI. Conclusion

Petitioner's five-year exclusion is mandated by sections
1128(a) (1) and 1128(c)(3)(B) of the Act, because of her
conviction of a criminal offense related to the delivery of an
item or service under the Medicaid program.

/s/

Joseph K. Riotto
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Cc. William Alexander, Ph.D., Date: June 26, 1997
Petitioner,

Docket No. C-97-116
Decision No. CR479

-v-

The Inspector General.

DECISION

By letter dated September 20, 1996, Petitioner C. William
Alexander, Ph.D., was notified by the Inspector General (I.G.),
U.S. Department of Health and Human Services (HHS), that it had
been decided to exclude him for a period of three years from
participation in the Medicare, Medicaid, Maternal and Child
Health Services Block Grant and Block Grants to States for Social
Services (Medicare and Medicaid) programs. The I.G. explained
that the three-year exclusion was authorized under section
1128(b) (5) (B) of the Social Security Act (Act). The exclusion
was based upon the May 19, 1994 termination by the Kansas
Department of Social and Rehabilitative Services (SRS) of
Petitioner's Medicaid provider agreement, for reasons bearing on
his professional competence, professional performance, or
financial integrity.

Petitioner filed a timely request for review of the I.G.'s
action, and the I.G. moved for summary disposition. Because I
have determined that there are no material and relevant factual
issues in dispute (i.e., the only matter to be decided is the
legal significance of the undisputed facts), I have granted the
I.G.'s motion and decide the case on the basis of written
submissions in lieu of an in-person hearing.!

1 The I.G. submitted five proposed exhibits (I.G. Exs. 1-
5). Petitioner submitted 10 proposed exhibits (P. Exs. 1-10).
Neither party objected to my receiving any of these proposed
exhibits into evidence. Therefore, I am receiving into evidence
I.G. Exs. 1-5 and P. Exs. 1-10.
2

I affirm the I.G.'s determination to exclude Petitioner from
participation in the Medicare and Medicaid programs for a period
of three years.

APPLICABLE LAW

Section 1128(b) (5)(B) of the Act authorizes the I.G. to exclude
"any individual or entity which has been suspended or excluded
from participation, or otherwise sanctioned, under . . . a State
health care program, for reasons bearing on the individual's or
entity's professional competence, professional performance, or
financial integrity."

An appellate panel of the Departmental Appeals Board (DAB) has
held that to justify exclusion under section 1128(b) (5) (B), the
I.G. need prove that only two elements have been met: (1) a
petitioner must have been excluded or suspended from a state
health care program; and (2) the exclusion or suspension must
have been for reasons bearing on the petitioner's professional
competence, professional performance, or financial integrity.
George Iturralde, M.D., DAB 1374 (1992).

Because exclusion under section 1128(b)(5)(B) is wholly
derivative of suspension or exclusion under a state health care
program, a petitioner may not collaterally attack the state
proceeding which led to the state exclusion or suspension in a
hearing before an administrative law judge (ALJ) of the DAB's
Civil Remedies Division. Olufemi Okonuren, DAB 1319 (1992).
Similarly, an ALJ is not required to determine the guilt or
innocence of a petitioner with reference to the conduct on which
the state action is based. Behrooz Bassim, M. D., DAB 1330
(1992). As stated by the DAB, "there would be no point in
relying on these [state] actions if they would be reopened and
relitigated during the (section 1128] exclusion proceedings."
Iturralde, at 7.

Unless aggravating or mitigating factors provide a basis for
lengthening or shortening a period of exclusion, an exclusion
imposed under section 1128(b)(5)(B) will be for a period of three
years. 42 C.F.R. § 1001.601(b) (1). Only the following factors
may be considered in mitigation: (1) the period of exclusion,
suspension or other sanction imposed under the federal or state
health care program is less than three years; (2) the
individual's or entity's cooperation with federal or state
officials resulted in the sanctioning of other individuals or
entities; or (3) alternative sources of the types of health care
items or services furnished by the individual or entity are not
available. 42 C.F.R. § 1001.601(b) (3).
3
ISSUES, FINDINGS OF FACT AND CONCLUSIONS OF LAW

The issues in this case are whether the I.G. was authorized to
exclude Petitioner pursuant to section 1128(b) (5)(B) of the Act,
and whether the three-year exclusion imposed by the I1.G. is
reasonable.

I make the following findings of fact and conclusions of law to
support my decision that the I.G.'s determination to exclude
Petitioner is authorized and that the three-year term of the
exclusion is reasonable.

1. At all times relevant to this case, Petitioner was a
psychologist providing mental health services to Medicaid
patients in Kansas.

2. As a general rule, the Medicaid program in Kansas will not
pay for psychotherapy services provided at an Intermediate Care
Facility for the Mentally Retarded (ICF-MR). I.G. Ex. 2.

3. On September 18, 1990, SRS notified Petitioner that
Petitioner had received a Medicaid overpayment in the amount of
$105,480, which was related to his submission of claims for
psychotherapy services. I.G. Exs. 1, 2.

4. Subsequent to the SRS notice of overpayment, the director of
SRS reduced to $46,165 the amount of the overpayment which it was
requesting that Petitioner repay. The $46,165 equaled the amount
that Kansas Medicaid had paid Petitioner for non-covered
psychotherapy services provided at ICF-MRs from December 1988
through May 1990. I.G. Exs. 1, 2.

5. On January 25, 1991, SRS notified Petitioner that it was
proposing to terminate him from participation in the Kansas
Medicaid program for five years.

6. On May 19, 1994, as a result of Petitioner's request for an
administrative hearing, an SRS hearing officer entered an initial
order affirming a five-year termination of Petitioner's Kansas
Medicaid provider agreement, effective May 19, 1994, as well as
requiring recoupment of the $46,165 overpayment. I.G. Ex. 1

7. On September 13, 1994, the SRS State Appeals Committee
issued a final order affirming the hearing officer's initial
order (I.G. Ex. 1), which stated that "the Committee finds there
is evidence to support (that] the appellant had a history of
submitting improper billings. He billed for noncovered services
and may have billed for unnecessary services. Good cause to
terminate him as a provider in the Medicaid program has been
established." Id. at 3.
4

8. Petitioner filed suit in Kansas State court contesting the
SRS State Appeals Committee's order. On March 29, 1995, the
District Court of Shawnee County affirmed the SRS termination and
recoupment order, herein to be referred to as the "State court
order." 1I.G. Ex. 2.

9. The March 29, 1995 State court order states in part: "based
solely on Alexander's conduct with respect to providing
noncovered psychotherapy at the ICF-MRs, the Appeals Committee's
decision to affirm the hearing officer's decision to terminate
Alexander's participation in the Medicaid program is consistent
with the provisions of the regulation allowing termination."
I.G. Ex. 2 at 10.

10. The hearing officer, the SRS State Appeals Committee, and
the Kansas State court, all rejected Petitioner's arguments
concerning his authority to submit claims to Kansas Medicaid for
psychotherapy services provided at ICF-MRs.

11. On June 27, 1995, Petitioner and SRS entered into a consent
agreement, which states that "Dr. Alexander shall immediately
stop participating in the Kansas Medicaid program and shall not
rejoin that program before May 19, 1999." I.G. Ex. 3.

12. Under sections 3(a) and 3(b) of the consent agreement,
Petitioner agreed to repay the balance of the $46,165 overpayment
that had not already been withheld by SRS. I.G. Ex. 3.

13. As required by section 3(e) of the consent agreement,
Petitioner's lawsuit seeking judicial review of the State court
order was dismissed with prejudice at the request of both
parties. I.G. Exs. 3, 4.

14. The Kansas Medicaid termination affirmed by the SRS final
order and the State court order has not been revoked and remains
in effect. I.G. Br. at 5.

15. Kansas Medicaid is a State health care program, within the
meaning of sections 1128(h) and 1128(b)(5)(B) of the Act.

16. Pursuant to section 1128(b) (5)(B) of the Act, the Secretary
of HHS has authority to impose and direct an exclusion against
Petitioner from participating in Medicare and Medicaid.

17. The Secretary has delegated to the I.G. the duty to impose
and direct exclusions pursuant to section 1128 of the Act. 48
Fed. Reg. 21,662 (1983).

18. On September 20, 1996, the I.G. excluded Petitioner from
participation in the Medicare and Medicaid programs. I.G. Ex. 5.
5

19. Petitioner's termination from participation in the Kansas
Medicaid program constitutes an exclusion or suspension or other
sanction as those terms are used in section 1128(b)(5)(B) of the
Act. 42 C.F.R. § 1001.601(a) (2).

20. Petitioner was excluded from participation in a State health
care program for reasons bearing on his professional competence,
professional performance, or financial integrity. I.G. Ex. 5;
FFCL 7, 9.

21. %In this administrative proceeding, Petitioner cannot
collaterally attack the Kansas administrative and judicial
actions which led to his exclusion from the Medicare and Medicaid
programs. 42 C.F.R. § 1001.2007(d).

22. Petitioner has not established the existence of any
mitigating factors within the scope of 42 C.F.R § 1001.601(b) (3).

23. Petitioner's three-year exclusion from participation in the
Medicare and Medicaid programs is proper.

DISCUSSION

Petitioner argues that, in view of his settlement agreement, his
"inactivity" in the Kansas Medicaid program is the result of
mutual agreement, not an exclusion or suspension. P. Br. at 1.
I find no merit in his argument. The orders of the State
administrative agency and the State court constitute sufficient
bases to exclude Petitioner from participation in the Medicare
and Medicaid programs. The facts reflect that the settlement
agreement is a result of SRS actions to terminate Petitioner's
Medicaid provider status. As I found above, the record in this
case reflects that SRS terminated Petitioner's Kansas Medicaid
provider agreement for five years, beginning on May 19, 1994, as
a result of Petitioner's improper billing practices. Following
this, an SRS hearing officer issued an initial order affirming
Petitioner's exclusion from Kansas Medicaid. On September 13,
1994, the SRS State Appeals Committee issued a final order
unanimously affirming the hearing officer's initial order. On
May 29, 1995, in response to Petitioner's appeal, the State court
issued a memorandum decision and order affirming the SRS final
order. On June 27, 1995, Petitioner and the SRS entered into a
consent agreement, in which Petitioner agreed to stop
participating in Kansas Medicaid and to a dismissal with
prejudice of his appeal of the State court order.

Petitioner cites clauses in the consent agreement which stated
that such agreement constitutes the "full and complete agreement
between the parties," "that any other prior or written
understandings or agreements are superseded hereby," and that
"nothing in the agreement is to be construed to be a concession
or admission by Dr. Alexander of any wrongdoing." I.G. Ex. 3 at
6

2. Petitioner contends these terms undermine any claim that he
has been sanctioned within the scope of section 1128(b) (5) (B) of
the Act. I reject these arguments. I find that the record shows
that the existence of the SRS consent agreement does not negate
the fact that, on three separate occasions, administrative and
judicial reviewers upheld Petitioner's five-year exclusion from
Kansas Medicaid. Under section 1128(b)(5)(B), it is the fact of
an exclusion or suspension by a state for reasons bearing on an
individual's professional competence, professional performance,
or financial integrity, which gives the I.G. the authority to
exclude that individual. The orders referenced here have not
been revoked, remain in effect, and by themselves constitute
sufficient bases for the I.G. to exclude Petitioner from
participation in the Medicare and Medicaid programs. These
clauses cited by Petitioner merely show that he has not conceded
wrongdoing, and that the agreement constitutes the only agreement
between the parties, but it does not in any way alter the legal
effect of the judgements against hin.

Based on this factual background, I find that Petitioner's case
constitutes an exclusion, suspension, or other sanction within
the scope of section 1128(b)(5)(B) of the Act. Moreover, I find
further that the consent agreement provides an additional basis
for Petitioner's exclusion. An appellate panel of the DAB has
previously found that "an individual who withdraws voluntarily
from participating in a federal or State health care program in
order to avoid the imposition of a formal sanction against that
individual, is ‘otherwise sanctioned' within the meaning of
section 1128(b)(5)(B)." Hassan Ibrahim, M.D., DAB 1613 (1997) at
1-2.

In Petitioner's case, a formal sanction was already in place at
the time the SRS consent agreement was executed, but settlement
was entered into to forestall continued appeal of the exclusion
which had already been upheld by a State court judge. The
petitioner in Ibrahim, like Petitioner here, contended that the
I.G. should rely only on the settlement agreement in which the
petitioner did not admit wrongdoing. The DAB rejected such
argument, stating:

Petitioner's arguments are without merit . . . Petitioner
executed the agreement to remove a state exclusion resulting
from an audit of his practice which found Petitioner's
professional care to be below standard in numerous respects,
as well as finding that Petitioner submitted a false
Medicaid claim. Even though Petitioner did not admit any
unacceptable practice in the agreement, the State action
which the agreement resolved was clearly taken for reasons
bearing on Petitioner's professional competence and
performance, as well as financial integrity. Petitioner's
voluntary withdrawal from full participation in the Medicaid
program, even while retaining by agreement some limited
7

ability to participate, in order to avoid a formal
exclusion, meets the definition of ‘otherwise sanctioned.'
(within the meaning of section 1128(b)(5)(B) of the Act].
Id. at 2-3.

I find Petitioner's case presents an even more compelling example
of a "sanction," in that the SRS consent agreement does not alter
or remove the State exclusion which was affirmed in both
administrative and judicial proceedings and does not even permit
Petitioner the "limited ability to participate" in Medicaid, as
the agreement in Ibrahim did for the petitioner in that case.

In his response, Petitioner seeks to collaterally attack the
State proceedings, but I reject this challenge. Petitioner
contends that he maintained legitimate offices on the premises of
the ICF-MRs and, therefore, his practice of billing Kansas
Medicaid for services in the ICF-MRs was proper and should not
have resulted in his exclusion from Kansas Medicaid. It is
clear, however, that Petitioner is not entitled to use this
proceeding to relitigate or collaterally attack the State
Medicaid proceedings. The regulations specifically preclude such
action and state that "when the exclusion is based on the
existence of a conviction, a determination by another government
agency or any other prior determination, the basis for the
underlying determination is not reviewable and the individual or
entity may not collaterally attack the underlying determination,
either on substantive or procedural grounds, in this appeal." 42
C.F.R. § 1001.2007(d).

Moreover, on this issue, an appellate panel of the DAB has
precluded a collateral attack in a case involving a settlement
agreement. Specifically, in Ibrahim, the panel held that
"Petitioner was not entitled to collaterally attack the State
proceedings before the ALJ. See George Iturralde, M.D., DAB No.
1374 (1992); Olufemi Okunoren, M.D., DAB No. 1319 (1992). The
I.G. could reasonably rely on the State action in imposing a
derivative federal exclusion." Ibrahim at 2-3.

In order to show that exclusion is justified, the I.G. must also
establish that the exclusion, suspension, or other sanction
occurred for reasons bearing on Petitioner's professional
competence, professional performance, or financial integrity. I
find that this requirement is established in Petitioner's case.
The record shows that the exclusion was based on a finding that
Petitioner had submitted claims to Kansas Medicaid for
psychotherapy services provided at ICF-MRs that he knew or should
have known were noncovered services. I.G. Ex. 1 at 3. I find
that Petitioner's submission of claims to Kansas Medicaid for
noncovered services bears on his professional performance and
financial integrity.
8

In George Iturralde, M.D., an appellate panel of the DAB stated
that exclusion under section 1128(b) (5) (B) is authorized where
there is a "common sense connection between a state's findings
and either professional competence, performance, or financial
integrity," and that the "common sense connection is obvious" in
a case of repeated overbilling. Iturralde, at 11. In Iturralde,
the panel upheld the finding that the petitioner was properly
excluded from Kansas Medicaid on the basis that "repeated
overbilling of Medicaid evidenced a lack of financial integrity"
within the meaning of section 1128(b)(5)(B). Id. at 9. In
Petitioner's case, the SRS State Appeals Committee unanimously
found "evidence to support [that] the appellant had a history of
submitting improper billings. He billed for noncovered services
and may have billed for unnecessary services." I.G. Ex. 1 at 4.
The State court order pointed to "Alexander's conduct with
respect to providing noncovered psychotherapy at the ICF-MRs," as
an example of "a pattern of submitting billings for services not
covered under the program." I.G. Ex. 2 at 10. I find that there
is a common sense connection between these State findings and a
lack of financial integrity.

I find also that the three-year term of exclusion is proper. In
so finding, I reject Petitioner's arguments for mitigation. He
contends that he has been fully cooperative in providing
requested information. However, unless such cooperation results
in the sanctioning of other individuals or entities, it does not
qualify as a mitigating circumstance under 42 C.F.R. §
1001.601(b) (3) (ii).

Petitioner also asserts that he was in compliance with Medicaid
guidelines. I cannot consider this assertion in mitigation of
Petitioner's period of exclusion, because such compliance is not
an enumerated mitigating circumstance under the regulations. He
also maintains that he discontinued the use of satellite offices
10 years ago, but passage of time also is not an enumerated
mitigating circumstance.?

Finally, Petitioner contends that his period of exclusion should
be shortened because "he is the only psychologist who is board
certified (by the American Association of Pain Management) to
provide pain management services to this population in his area
for hundreds of miles." P. Br. at 7. Petitioner has the burden
of proof on this issue, since a mitigating factor is in the
nature of an affirmative defense. Barry D. Garfinkel, M.D., DAB

2? Petitioner had satellite offices at ICF-MRs where he
provided non-covered psychotherapy services. The Medicaid
overpayment derived from Petitioner's billing for these non-
covered services.
9

1572 (1996). Petitioner has provided no evidence to support his
contention. Thus, Petitioner has not met his burden of proof on
this issue.

CONCLUSION

Section 1128(b)(5)(B) authorizes the I.G. to exclude Petitioner
from participation in the Medicare and Medicaid programs for a
period of three years, because he has been suspended or excluded
from participation, or otherwise sanctioned, under a State health
care program for reasons bearing on his professional competence,
professional performance, or financial integrity. Therefore, I
sustain Petitioner's three-year exclusion.

/s/

Joseph K. Riotto
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: )
) Date: June 9, 1997

Yorkshire Health Care Center, )
)
Petitioner, )

) Docket Nos. C-97-026

-v.— ) Decision No. CR477
)
Health Care Financing )
Administration. )
)
)
DECISION

During the prehearing conference in the above-captioned case, it came to my attention that
Petitioner was seeking a hearing to challenge the merits of certain survey findings even though
the Health Care Financing Administration (HCFA) has taken no enforcement actions

against Petitioner based on those survey findings. In earlier issued decisions, I had concluded on
the basis of 42 C.F.R. § 498.3(b)(12) and (d)(1) that HCFA's findings of deficiencies are not
reviewable by an administrative law judge unless they resulted also in HCFA's decision to
impose at least one of the enforcement remedies specified in 42 C.F.R. § 488.406. E.g., Arcadia
Acres, Inc., DAB CR424 (1996), aff'd DAB 1607 (1997); Country Club Center, I], DAB CR433
(1996), affid DAB 1614 (1997). I discussed also in those decisions my conclusion that, because
HCFA has the right to revise and rescind its own determinations, providers do not retain any
right to a hearing when HCFA has rescinded its previously made decisions to impose
enforcement remedies. Id.

l advised the parties of my earlier decisions and directed Petitioner to show cause in writing why
this action should not be dismissed.
In accordance with the schedule I had established, the parties have filed their briefs and their
supporting documents.' The parties' submissions establish the following facts material to the
disposition of this case:

1. By letter dated January 4, 1996, HCFA notified Petitioner that, based on the results of surveys
conducted in August and October of 1995, HCFA would impose the enforcement remedy of
denying payments for all new Medicare and Medicaid admissions (DPNA) effective on January
24, 1996, and would terminate Petitioner's participation in the Medicare and Medicaid programs
on February 17, 1996. P. Ex. 6.

2. By letter dated February 20, 1996, HCFA notified Petitioner that, because a revisit survey
conducted on January 18, 1996 had found Petitioner in compliance with federal participation
requirements, the enforcement remedies of DPNA and termination would not be imposed against
Petitioner. HCFA Ex. 3.

3. By letter dated July 30, 1996, HCFA reconfirmed for Petitioner that no remedies had been
enforced against Petitioner on the basis of the surveys conducted in August and October, 1995.
P. Ex. 7.

4. Petitioner filed a request for hearing dated August 28, 1996 in order to challenge the findings
of deficiencies made during the surveys conducted in August 1995, October 1995, and on
January 18, 1996. P. Ex. 8.

5. There is no evidence showing that any enforcement remedy listed in 42 C.F.R. § 488.406 has
in fact been taken by HCFA against Petitioner on the basis of those survey findings Petitioner is
seeking to challenge.

Based on the foregoing facts and for the reasons I discussed in Arcadia and Country Club, I
conclude that Petitioner does not have a right to a hearing under 42 C.F.R. Part 498.

Accordingly, I dismiss Petitioner's hearing request pursuant to 42 C.F.R. § 498.70(b).

/s/
Mimi Hwang Leahy
Administrative Law Judge

' Petitioner submitted eight exhibits (P. Ex.) with its brief. HCFA submitted six exhibits (HCFA Ex.) with
its brief. Neither party has objected to my receiving into evidence the exhibits offered by the other party. Therefore,
I receive into evidence P. Exs. 1 - 8 and HCFA Exs. | - 6.