SUBJECT:

Arlene Verizzo, R. Ph.,

Petitioner,

The Inspector General

DECISION

This case is before me pursuant to a request for hearing filed on August 4, 2003, by Arlene Verizzo, R.Ph., Petitioner.

By letter dated May 30, 2003, the Inspector General (I.G.) notified Petitioner that she was being excluded from participation in the Medicare, Medicaid, and all federal health care programs, as defined in section 1128B(f) of the Social Security Act (Act), for a period of five years. The I.G. informed Petitioner that her exclusion was imposed under section 1128(a)(3) of the Act due to her conviction of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service, or with respect to any act or omission in a health care program operated by or financed in whole or in part by any federal, state, or local government agency. The I.G. informed Petitioner further that the exclusion of individuals convicted of such offenses is mandated by sections 1128(a)(3) and 1128(c)(3)(B) of the Act for a minimum period of five years.

On October 3, 2003, I convened a telephone prehearing conference. Petitioner appeared on her own behalf. Petitioner had with her at the conference her ex-husband, David Verizzo, who stated that he was employed as a paralegal and would be assisting Petitioner with her case. I advised Petitioner that she had a right to legal representation, and she responded that she understood she had a right to counsel. Petitioner did not, however,

retain counsel to represent her in this case. During the conference, the parties agreed that an in-person hearing was not required and that the issues could be decided by an exchange of written briefs and documentary evidence in lieu of an in-person hearing.

Following the conference, I issued an order establishing briefing deadlines. Pursuant to that order, the I.G. filed a brief (I.G. Br.) on November 3, 2003, accompanied by six proposed exhibits. These have been entered into the record as I.G. Exs. 1 - 6, without objection. Petitioner filed a brief (P. Br.) on January 2, 2004, after being granted an extension, accompanied by three exhibits. These have been entered into the record as P. Exs. 1 - 3, without objection. The I.G. filed a reply brief (I.G. R. Br.).

It is my decision to sustain the determination of the I.G. to exclude Petitioner from participating in the Medicare, Medicaid, and all federal health care programs for a period of five years. I base my decision on the documentary evidence, the applicable law and regulations, and the arguments of the parties. It is my finding that Petitioner was convicted of a criminal offense consisting of a felony relating to fraud in connection with the delivery of a health care item or service. Further, I must sustain the five-year exclusion imposed on Petitioner by the I.G., because it is the minimum period of exclusion mandated by the Act.

APPLICABLE LAW AND REGULATIONS

Section 1128(a)(3) of the Act authorizes the Secretary of Health and Human Services (Secretary) to exclude from participation in any federal health care program (as defined in section 1128B(f) of the Act), any individual convicted of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program operated by or financed in whole or in part by any federal, state, or local government agency.

For convictions pursuant to section 1128(a) of the Act, a "conviction" of a criminal offense is defined as:

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

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

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

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

Act, section 1128(i).

An exclusion under section 1128(a)(3) of the Act must be for a minimum period of five years. Act, section 1128(c)(3)(B). Aggravating factors can serve as a basis for lengthening the period of exclusion. 42 C.F.R. § 1001.102(b). If aggravating factors justify an exclusion longer than five years, mitigating factors may be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).

Pursuant to 42 C.F.R. § 1001.2007, an individual or entity excluded under section 1128(a)(3) of the Act may file a request for a hearing before an administrative law judge. The only issues an administrative law judge is authorized to hear are whether: 1) a basis exists for the imposition of the sanction; and 2) the length of the exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(1).

The only issue in this case is whether the I.G. had a basis upon which to exclude Petitioner from participation in Medicare, Medicaid, and all other federal health care programs. As the I.G. has imposed the minimum mandatory exclusion under the Act, there is no issue as to whether the length of the exclusion is unreasonable.

The findings of fact and conclusions of law noted below, in bold face, are followed by a discussion of each finding.

1. Petitioner was convicted of a criminal offense consisting of a felony relating to fraud in connection with the delivery of a health care item or service, within the meaning of section 1128(a)(3) of the Act.

At all relevant times, Petitioner was a pharmacist licensed by the State of Florida Board of Pharmacy. I.G. Ex. 2; P. Ex. 1. On September 27, 2001, a criminal information was filed against her in the Circuit Court in and for Manatee County, Florida (Circuit Court).

I.G. Ex 1; see I.G. Ex. 3, at 1. The information charged her with "obtaining controlled substance by fraud" (a violation of Florida statute 893.13). Id. ⁽¹⁾ Obtaining controlled substances by fraud is a felony of the third degree under Florida law. Id.

The Information was based on an investigation of Petitioner (outlined in a probable cause affidavit and witness affidavit) begun by her employer and documented by the Manatee County Sheriff's Office, which allegedly revealed evidence that Petitioner had taken prescription medication (a schedule IV controlled substance) from her employer, a pharmacy, during the course of her employment, for her own use. I.G. Ex. 2. On September 10, 2002, Petitioner entered a plea of guilty to the charge of obtaining a controlled substance by fraud. I.G. Ex. 4. The Circuit Court accepted Petitioner's plea and entered an order of probation withholding adjudication of guilt and placing her on probation for a period of 24 months. I.G. Ex. 5. In view of the above events, the I.G. informed Petitioner on May 30, 2003, that she was being excluded under section 1128(a)(3) of the Act.

Petitioner has contested the I.G.'s imposition of the five-year exclusion and has briefed her cause accordingly. In her brief, Petitioner raises constitutional objections to the I.G.'s exclusion action that I will not entertain, inasmuch as those matters are not within the purview of my authority as an administrative law judge. 42 C.F.R. § 1005.4(c)(1); see Susan Malady, R.N., DAB No. 1816 (2002). ⁽²⁾ However, I note that Petitoner's constitutional arguments are preserved for appeal in a forum that can hear them. In addition, Petitioner raises the following two arguments:

•The I.G. improperly excluded Petitioner, because she was not convicted of a criminal offense within the clear wording of the statute.

•The I.G. improperly excluded Petitioner, because such exclusion does not further the purposes of the Act.

I will discuss these two arguments separately.

With respect to Petitioner's first contention, I find that for purposes of exclusion under section 1128(a)(3) of the Act, an individual or entity can be considered "convicted" of a criminal offense pursuant to section 1128(i) of the Act when, among other bases:

•a plea of guilty or nolo contendere by the individual or entity has been accepted by a federal, state, or local court; or

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

Act, sections 1128(i)(3) and (4).

Petitioner argues that the statutory requirements under section 1128(i)(3) are satisfied only when an individual "offers" a plea of guilty and the plea is accepted by the court. She contends that it was the State that made the offer to her. Not that it matters, but that is not the wording of the statute. An analysis of the term "offer" would serve no useful purpose since the Act merely requires that a plea of guilty be accepted by the court. The statute attaches no significance to the chronology of events leading up to a guilty plea.

Petitioner also asserts that there is a lack of evidence that the court actually accepted the guilty plea. I find that the Order Withholding Adjudication is evidence that the Circuit Court accepted the guilty plea, as the Circuit Court noted that Petitioner had "entered a plea of Guilty to the offense of Obtaining Controlled Substance by Fraud (emphasis in original). I.G. Ex. 5, at 1. Thus, Petitioner's plea of guilty to obtaining a controlled substance by fraud constitutes a conviction under section 1128(i)(3) of the Act. Furthermore, the order of the Circuit Court withholding judgment also satisfies the definition of conviction for exclusion purposes under section 1128(i)(4) of the Act, in that the judge entered an "order witholding adjudication" and put Petitioner on probation. I.G. Ex. 5. This constitutes a deferred adjudication or other arrangement or program where judgment of conviction has been withheld - a conviction under section 1128(i)(4) of the Act. Furthermore, Petitioner's conviction was for a felony criminal offense. I.G. Ex. 1, at 1; I.G. Ex. 3, at 1, 3. And, I find that Petitioner's criminal conviction for a felony criminal offense was related to fraud in connection with the delivery of a health care item or service, as Petitioner, a pharmacist, was convicted of obtaining a controlled substance by fraud in that she took prescription medication (a Schedule IV controlled substance) from the pharmacy where she was employed for her own use.

I note that in Petitioner's affidavit (P. Ex. 1), she alleges being innocent of the charge of obtaining a controlled substance by fraud. This additional contention is also without merit. It has been established that the law does not permit the Secretary to look behind the conviction of a criminal offense. The exclusion authority derives from the conviction. Thus, as stated in the case of Peter J. Edmonson, DAB No. 1330 (1992):

This provides protection for federally funded programs and their beneficiaries and recipients, without expending program resources to duplicate existing criminal processes.

In view of the foregoing, I find that the I.G. properly excluded Petitioner under section 1128(a)(3) of the Act. The I.G. has established that Petitioner was convicted of a felony offense involving fraud (obtaining a controlled substance by fraud, a felony in the third degree) in connection with the delivery of a health care item or service (taking the controlled substance by fraud in the course of her employment as a pharmacist dispensing medicine to the public), which occurred after the date of enactment of the Health Insurance Portability and Accountability Act of 1996 (in or about June of 2001).

Finally, Petitioner argues that the purpose of the Act is not to create additional penalties for state criminal convictions, but, rather, to protect the federal programs and the recipients and beneficiaries of those programs. Thus, according to Petitioner, the purpose of the proceedings before me is to determine whether, based on all the relevant evidence, the exclusion comports with the legislative purpose.

I agree with Petitioner that the purpose of the Act is not to create "additional penalties" for state criminal convictions. However, the sanctions imposed by the I.G. are certainly not in "addition" to state imposed criminal penalties and are unrelated to state punitive sanctions. Simply because the I.G.'s authority to exclude under section 1128(a)(3) derives from a conviction of a felony does not mean that the civil remedies imposed in any way complement the criminal sanctions. Exclusion under the Act is a remedy separate and totally unrelated to state punitive sanctions for criminal offenses committed against the people of a state. Moreover, since the purpose of exclusion under section 1128 of the Act is to protect federal health care programs and the programs' beneficiaries and recipients from untrustworthy providers, a provider that has been convicted of a criminal offense as described in section 1128(a)(3) is presumed by Congress to be untrustworthy and a threat to the programs and their beneficiaries and recipients. The record reflects that Petitioner has proven herself to be an untrustworthy individual by having obtained a controlled substance by fraud in the course of her employment as a pharmacist dispensing medications. Therefore, Petitioner's exclusion comports with the remedial purpose of the Act.

2. As Petitioner has been excluded for five years, the minimum mandatory period under the Act, I am not authorized to review whether the length of Petitioner's exclusion is unreasonable.

An exclusion under section 1128(a)(3) of the Act must be for a minimum mandatory period of five years, as section 1128(c)(3)(B) of the Act provides that "[s]ubject to subparagraph (G), in the case of an exclusion under subsection (a), the minimum period of exclusion shall not be less than five years . . . ."

When the I.G. imposes an exclusion for the mandatory five-year period, whether the length of the exclusion is unreasonable is not an issue. 42 C.F.R. § 1001.2007(a)(2). As a result of Petitioner's conviction, the I.G. was required to exclude her pursuant to section 1128(a)(3) of the Act, for at least five years.

CONCLUSION

Petitioner's conviction of a criminal offense pursuant to sections 1128(a)(3) and 1128(c)(3)(B) of the Act mandates that she be excluded from Medicare, Medicaid, and all federal health care programs for a period of at least five years.

José A. Anglada

Administrative Law Judge

1. The specific count (Count 1) of the information states that Petitioner "did unlawfully and feloniously acquire or obtain or attempt to acquire or obtain possession of a controlled substance, to-wit: Alpraeolam Xanax a Schedule IV Controlled Substance and/or Vicodin a Schedule III Controlled Substance and/or Diazapam a Schedule IV controlled substance, as named or described in Section 893.03(3) and /or 893.03(4), Florida Statutes, by misrepresentation, fraud, forgery, deception or subterfuge, contrary to Section 893.13(7)(a)9, Florida Statutes, in such case made, and provided and against the peace and dignity of the State of Florida." I.G. Ex. 1, at 1.

2. The Board noted in Malady that neither an administrative law judge nor the Board has the authority to declare a federal statute unconstitutional. The Board stated, however, that "[n]evertheless, as the ALJ correctly noted, it has been repeatedly held that exclusions imposed by the I.G. are civil sanctions and are remedial in nature and not punitive and criminal. They therefore do not violate the double jeopardy clause or the prohibition against cruel and unusual punishments." Manocchio v. Kusserow, 961 F.2d 1539 (11^th Cir. 1992); Greene v. Sullivan, 731 F. Supp. 838 (E.D. Tenn. 1990); Cash, DAB No. 1725; Douglas Schram, R. Ph., DAB No. 1832 (1992); and Janet Wallace, L.P.N., DAB No. 1326 (1992). Further, the double jeopardy clause is not applicable where the 'punishments' are imposed by two different sovereigns such as a state and then the federal government. Abbate v. United States, 359 U.S. 187 (1959); Schram, DAB No. 1372." See also Erickson v. United States Department of Health and Human Services, 67 F.3d 858, 864 (9^th Cir. 1995); Kahn v. Inspector General of United States Department of Health and Human Services, 848 F. Supp 432, 437 (S.D.N.Y. 1994).