Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Daniel B. Salyer, R.Ph.,
Petitioner,
- v. -
The Inspector General.
DATE: October 30, 1990
Docket No. C-224
DECISION
Petitioner was notified by the Inspector General (I.G.) in a letter dated January
11, 1990 that he would be
excluded from participation in the Medicare program and any State health care
program, as defined in
section 1128(h) of the Social Security Act, for a period of five (5) years.
The I.G. further advised him that
his exclusion was due to his conviction in the Circuit Court, Franklin County,
Division II, Kentucky, of a
criminal offense related to the delivery of an item or service under Medicaid.
Petitioner was also informed
that exclusions from Medicare and State health care programs after a program-related
conviction are made
mandatory by sections 1128(a)(1) and 1128(c)(3)(B) of the Social Security Act
for a period of not less than
five years.
Petitioner timely requested a hearing by letter dated March 10, 1990. The case
was originally assigned to
Judge Steven T. Kessel. By Prehearing Order dated June 15, 1990, Judge Kessel
established a timetable
for the filing of motions and briefs for summary disposition. Subsequent to
the submission of the
requested pleadings by the parties, there was a reassignment of the case to
me. Neither party contends that
there is any question of material fact which would necessitate an evidentiary
hearing. Nor has either party
requested oral argument on any issue raised in the motions for summary disposition.
Based on the applicable law, the parties' arguments, and the undisputed material
facts, I conclude that the
minimum mandatory exclusion of five years is mandated by law. Therefore, I enter
summary disposition
in favor of the I.G.
ISSUES
1. Whether Petitioner was convicted of a criminal offense related to the delivery
of an item or service
under the Medicaid Program, within the meaning of section 1128(a)(1) of the
Social Security Act.
2. Whether Petitioner's nolo contendere plea is within the definition of "convicted"
of a criminal offense
as set forth in section 1128(i) of the Social Security Act.
3. Whether I have the authority to review the underlying facts and circumstances
leading to Petitioner's
conviction or to consider certain alleged mitigating factors relating to the
I.G.'s minimum mandatory
exclusion of five years.
4. Whether the minimum mandatory five year exclusion required by section 1128(c)(3)(B)
of the Social
Security Act is applicable to this case.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. At the time of his conviction, Petitioner, Daniel B. Salyer, a registered
pharmacist, owned and operated
the Big Sandy Drug, Paintsville Clinic Pharmacy, Medical Center Pharmacy, Village
Pharmacy, and Kwik
Script Pharmacy, all located in Paintsville, Kentucky. I.G. Ex. 1.
2. Petitioner was charged with violating KRS sections 205.805(4) and 205.990(4),
during the period of
approximately July 1, 1985 through approximately November 10, 1987, for presenting
or causing to be
presented, to a representative of the Kentucky Medical Assistance Program (KMAP),
in Franklin County,
Kentucky, false or fraudulent claims or documents used in determining the extent
of payment to the above-
named pharmacies for products provided to KMAP recipients, knowing such claims
and documents to
contain false or fraudulent information. I G. Ex. 1.
3. On August 7, 1989, Petitioner pled guilty to the charges and signed a Waiver
of Further Proceedings
and Petition to Enter Guilty Plea and a Plea Bargain Agreement. I.G. Exs. 2
and 3; P. Br. pg. 1.
4. Also on August 7, l989, the Circuit Court for Franklin County entered a
Judgement and Sentence on
Plea of Guilty. The Court sentenced Petitioner to eight months in the Franklin
County Jail, probation for
an additional two years, and a fine of $500; and ordered Petitioner to pay restitution
of $50,000 to the
KMAP, and $25,000 to the Kentucky Attorney General for investigative costs plus
court costs. I.G. Ex. 4.
5. On December 13, 1989, the Kentucky Board Of Pharmacy (Board) found Petitioner
"not guilty" of the
charges for which Petitioner had previously pled "guilty" relating
to reimbursement for false claims to the
KMAP. The Board permitted Petitioner to retain his pharmacy license but admonished
him to verify the
correctness of future billings prior to their submission to agencies for payment.
P. Br. Attachment.
6. The Secretary of the Department of Health and Human Services (DHHS) has
delegated to the I.G. the
authority to determine, impose and direct exclusions pursuant to section 1128
of the Social Security Act.
48 Fed. Reg. 21662 (May 13, 1983); 42 U.S.C. 3521 et seq.
7. On January 11, 1990, the I.G. excluded Petitioner from participating in
the Medicare and Medicaid
programs for a period of five years. I.G. Ex. 7.
8. There are no disputed issues of material facts in this case; therefore, summary
disposition is an
appropriate means of resolving this matter. See, F.R.C.P., Rule 56.
9. Petitioner was convicted of a criminal offense related to the delivery of
an item or service under
Medicaid, within the meaning of section 1128(a)(1) of the Social Security Act.
Findings 1 - 4; Social
Security Act, Section 1128(a)(1).
10. Petitioner's conviction after submission of a Waiver of Further Proceedings
and Petition to Enter
Guilty Plea and Plea Bargain Agreement comes within the term "convicted"
as that term is defined in
section 1128(i)(3) of the Social Security Act.
11. Pursuant to section 1128(a)(1) of the Social Security Act, the Secretary
is required to exclude
Petitioner from participating in Medicare and Medicaid. Social Security Act,
Section 1128(a)(1).
12. Petitioner's conviction occurred after the enactment of the 1987 amendments
to section 1128
instituting the mandatory exclusion provision of section 1128(c)(3)(B) for exclusions
under 1128(a) of the
Social Security Act.
13. A minimum mandatory exclusion of five years is required
by law under sections 1128(a)(1) and 1128(c)(3)(B) of the Social Security Act
and I do not have any
authority to alter its imposition.
RATIONALE
1. Petitioner was convicted of a criminal offense related to the delivery of
an item or service under the
Medicaid program.
Petitioner does not specifically challenge the I.G.'s exhibits 1 - 4 showing
that, pursuant to a plea bargain
agreement, he was convicted on August 7, 1989 of submitting false or fraudulent
claims to representatives
of the KMAP. There is a difference between the I.G. and Petitioner as to the
underlying facts of that
conviction. In deciding the nature of Petitioner's conviction, I must rely on
the court documents which the
parties do not dispute. In the Information, Petitioner was charged by the Attorney
General of the state of
Kentucky with presenting or causing to be presented to representatives of KMAP,
during the period of July
1, 1985 through November 10, 1987, false or fraudulent claims or documents used
in determining the
extent of payment to Petitioner's drug stores for products provided to KMAP
recipients. I.G. Ex. 1. It was
further charged that Petitioner knew the claims and documents to contain false
or fraudulent information.
Also before me is the Waiver of Further Proceedings and Petition to Enter Guilty
Plea signed by Petitioner.
I.G. Ex. 2. In this document, Petitioner acknowledged that he had received the
Information, that he had
discussed it with his attorney and that he understood the charges contained
therein. In addition, such
document shows that Petitioner pled "guilty" to the charges in the
Information. Lastly, the Judgment and
Sentence on Plea of Guilty, found Petitioner guilty of the charges in the Information.
I.G. Ex. 4. For my
part, it is not important or relevant to this proceeding whether I accept the
I.G.'s version of the facts
underlying the criminal offense or that of Petitioner. What is material to this
proceeding is that Petitioner
pled "guilty" to the charges contained in the Information which clearly
demonstrate that his criminal
offense related to the delivery of an item or service under the Medicaid program.
Dewayne Franzen, DAB
App. 1165 (1990); Jack W. Greene, DAB App. 1078 (1989), aff'd, 731 F. Supp.
835, (E.D. Tenn. 1990).
Petitioner concedes that the guilty plea resulted in a determination that he
was convicted of a criminal
offense related to the delivery of an item or service as required by section
1128(a)(1). However, he argues
that "all services and items were properly delivered." P. Brief, page
5. He contends that he delivered
"arguably superior drugs" (i.e., brand name rather than generic).
P. Brief, page 6. The violation was that at
times the drugs billed to KMAP exceeded the allowable costs under the program.
Even if I accepted
Petitioner's version of the facts underlying the offense, the consistent but
illogical extension of his
argument is that recipients of KMAP were not harmed by his criminal conduct.
Petitioner's argument
misses the point.
Petitioner's submission of billings for drugs over a two year period which
exceeded the allowable costs for
such drugs under KMAP were criminal offenses (misdemeanors) under state law
(KRS sections 205.805(4)
and 205.990(4)). The submission of such billings for reimbursement created overpayments
under KMAP
that clearly impacted adversely on the fiscal integrity of the program. Petitioner
breached his duty to
program recipients. The Medicaid program is authorized to pay for drugs only
within the limitations of
state and federal laws. 42 C.F.R. 440.120(a); Dewayne Franzen, supra. Moreover,
the injury or cost to
Medicaid by Petitioner's criminal conduct is shown by the fact that the Judgement
and Sentence on Plea of
Guilty issued by the state court required Petitioner to pay $50,000 in restitution
to the KMAP. It has been
held that the intentional causing of an overpayment by the Medicaid program
is an offense within section
1128. In Greene v. Sullivan, 731 F. Supp. 839 (E.D. Tenn. 1990), the district
court stated that criminal
offenses that caused the Medicaid program to overpay a provider were "program
related" crimes within
section 1128(a)(1). See also, Michael I. Sabbagh, M.D., DAB Civ. Rem. C-59 (1989);
Robert W.
Emfinger, R.Ph., DAB Civ. Rem. C-207 (1990); and Essa Abdulla, M.D., DAB Civ.
Rem C-211 (1990).
Moreover, in deciding whether the I.G. has authority to impose an exclusion
pursuant to section
1128(a)(1), it is not relevant that Petitioner believes that he is not guilty
of the offense for which he entered
a guilty plea. See, Michael Travers, M.D., DAB Civ. Rem. C-170 (1990); John
W. Foderick, M.D., DAB
App. 1125 (1990); Andy E. Bailey, C.T., DAB App. 1131 (1990). The operative
facts in this case are that
Petitioner's offense related to an item or service under Medicaid, that such
offense was violative of state
criminal code, and that he pled "guilty" to such an offense. See,
findings 1 - 4. Thus, the statutory
elements to meet the requirements of section 1128(a)(1) have been met.
2. Petitioner's "Alford" or nolo contendere plea and resultant conviction
are within the meaning of the term
"convicted" as that term is defined in section 1128(i) of the Social
Security Act.
Petitioner argues that his entering of the "Alford" or nolo contendere
plea demonstrates a lack of criminal
intent in committing the violations of law. Criminal intent is not a prerequisite
to a section 1128(a)(1)
offense. The clear meaning of the statute is evident from its language:
(1) Conviction of Program-Related Crimes -- Any individual or entity that
has been convicted of a
criminal offense related to the delivery or an item or service under Title XVIII
or under any State health
care program.
There is nothing in the statutory language that criminal intent is a necessary
element of a section 1128(a)(1)
offense. The Secretary (or his delegate the I.G.) has authority to exclude Petitioner
from Medicaid based
on the conviction alone. Such an interpretation is consistent with section 1128(i),
which defines the term
"convicted." Congress clearly intended to cover within the ambit of
section 1128(a)(1) offenses where a
guilty plea is accepted by the court as part of a plea bargain. This is reflected
in section 1128(i)(3) which
states that an individual or entity is considered to have been "convicted"
of a criminal offense "when a plea
of guilty or nolo contendere has been accepted by a Federal, State or local
court." In similar cases where a
nolo contendere plea has been entered by Petitioner, it has held that the resulting
conviction meets the
statutory definition. See, Carlos Z. Zamora, M.D., DAB App. 1104 (1989); James
F. Allen, M.D.F.B.,
DAB Civ. Rem. C-152 (1990); Francis Shaenboen, R.Ph., DAB Civ. Rem. C-221 (1990).
3. I have no authority to review the facts and circumstances leading to Petitioner's
conviction nor consider
allegedly mitigating factors relating to the minimum mandatory exclusion imposed
by the I.G.
The authority of an administrative law judge (ALJ) in an appeal of the I.G.'s
imposition of an exclusion of
a petitioner from the Medicare and Medicaid programs is limited by the regulations.
Specifically, section
100l.128 restricts the issues that an ALJ can hear to the following:
(1) whether Petitioner was in fact, convicted;
(2) whether the conviction was related to his or her participation in the
delivery of medical care o[r]
services under the Medicare, Medicaid or social services programs; and
(3) whether the length of the suspension is reasonable.
In the instant case, the I.G. has imposed the five year minimum mandatory exclusion
under section
1128(c)(3)(B). As discussed at pages 7-9. infra., this is an exclusion mandated
by statute which the I.G.
has very limited discretion to reduce. Neither the I.G. nor I have the authority
to reduce a minimum
mandatory exclusion. David S. Muransky, D.C., DAB Civ. Rem. C-229 (1990); Soon
Jack Leung, DAB
Civ. Rem. C-209 (1990). Therefore, mitigating factors are not relevant nor can
they be considered.
Barbara Johnson, D.D.S., DAB Civ. Rem. C-181 (1990); Charles W. Wheeler and
Joan K. Todd, supra.;
Guido Escalante, Sr., M.D., DAB Civ. Rem. C-175 (1990).
Thus, it is not relevant nor germane to this proceeding under what circumstances
1) Petitioner accepted the
plea bargain; 2) whether Petitioner was aware of potential intervention of the
I.G. under section 1128; 3)
whether the Kentucky Board of Pharmacy found Petitioner "not guilty"
of the charges in the Information
and allowed him to retain his pharmacy license; 4) whether Petitioner was convicted
of any other criminal
offenses or was the subject of investigative or disciplinary proceedings by
the Kentucky Board of
Pharmacy; and 5) whether the I.G.'s exclusion will deprive Petitioner of his
financial livelihood and lead to
his financial destruction. See, Petitioner's arguments in his brief, pages 3-6.
4. The minimum mandatory exclusion of five years required by section 1128(c)(3)(B)
is required in this
case.
Sections 1128(a)(1) and 1128(c)(3)(B) of the Social Security Act required the
I.G. to exclude individuals
and entities from the Medicare and Medicaid programs for a minimum period of
five years, when such
individuals and entities have been "convicted" of a criminal offense
"related to the delivery of an item or
service" under such programs. The intent of Congress is clear from the
express language of section
1128(c)(3)(B):
In the case of an exclusion under subsection (a), the minimum period of exclusion
shall be not less than
five years...
The legislative history also supports the imposition of minimum mandatory five
year exclusions for section
1128(a) offenses:
A minimum five-year exclusion is appropriate, given the seriousness of the
offenses at issue...
Moreover, a mandatory five-year exclusion should provide a clear and strong
deterrent against the
commission of criminal acts.
S. Rep. No. 109, 100th Cong., 1st Sess. 2, reprinted in 1987 U.S. Code Cong.
& Admin. News 682, 686.
See, Barbara Johnson, D.D.S., supra.
The only basis in law to reduce a minimum mandatory exclusion is through a
state request establishing that
the individual or entity being excluded under section 1128(a) is the "sole
community physician or sole
source of essential specialized services in a community." Section 1128(c)(3)(B).
Petitioner makes no such
assertion in the instant case. Therefore, under the applicable statues and regulatory
principles, the I.G. was
required to exclude Petitioner for a minimum of five years.
Petitioner argues that while his criminal offense comes within the purview
of section 1128(a)'s mandatory
exclusion criteria, I must look to the permissive provisions of section 1128(b)
which would allow him to
present mitigating circumstances relating to exclusionary period sought by the
I.G. P. Br. Pages 4-5.
There is no merit to Petitioner's argument. As stated by the DAB in Samuel W.
Chang, M.D., DAB App.
1198 (1990) at page 8:
The permissive exclusion provisions of section 1128(b) apply to convictions
for offenses other than
those related to the delivery of an item or service under either the Medicare
or Medicaid or other covered
programs. While it is not inconceivable that one of the provisions of section
1128(b) could have been
applied in the absence of section 1128(a), which provides that the Secretary
"shall" exclude individuals
where applicable, the permissive exclusion provisions of subsection (b) focus
on different circumstances
from those raised here, such as where an individual's conviction does not relate
to the Medicare or
Medicaid programs.
See, Jack W. Greene, supra.; Surabhan Ratanasen, M.D., DAB App. 1138 (1990);
Soon Jack Leung,
supra., Michael Travers, M.D., supra.; Napoleon S. Maminta, M.D., DAB App. 1135
(1990), and Howard
B Reife, D.P.M., DAB Civ Rem. C-64 (1989).
Since Petitioner's criminal offenses meet the statutory requirements of section
1128(a), the I.G. has no
discretionary authority to choose between the sanctions under section 1128(a)
and section 1128(b), but
must apply the minimum mandatory five year exclusion applicable to a section
1128(a) offense as set forth
in section 1128(c)(3)(B).
CONCLUSION
Based on the law and the undisputed material facts in the record of this case,
I conclude that the I.G.
properly excluded Petitioner from the Medicare and Medicaid programs for a period
of five years, pursuant
to sections 1128(a)(1) and 1128(c)(3)(B) of the Social Security Act.
____________________________
Edward D. Steinman
Administrative Law Judge