Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Eugene Shusman, R. Ph.,
Petitioner,
- v. -
The Inspector General.
DATE: May 24, 1991
Docket No. C-227
DECISION
Petitioner, a registered pharmacist, timely requested a hearing before an Administrative
Law Judge (ALJ)
to contest a determination by the Inspector General (I.G.) of the United States
Department of Health and
Human Services (DHHS) to exclude Petitioner from participation in the Medicare
and Medicaid programs,
pursuant to section 1128(b)(5)(B) of the Social Security Act (Act). The I.G.
stated that Petitioner's federal
exclusion was predicated on Petitioner's State preclusion from the Pennsylvania
Medical Assistance
Program because of improper billings and dispensings. The I.G. informed Petitioner
that his federal
exclusion was for an indefinite period (until he is reinstated in the Pennsylvania
Medical Assistance
program). Petitioner argues that the I.G. has no basis to exclude him under
section 1128 (b)(5)(B) because
his State preclusion was voluntary and without a determination of fault or culpability.
The parties submitted this case on cross-motions for summary disposition, with
supporting documentary
evidence. Petitioner waived an in-person evidentiary hearing. Based on the documentary
evidence, briefs,
and arguments submitted by the parties, and the applicable law, I conclude that
the exclusion imposed by
the I.G. is reasonable and appropriate.
BACKGROUND
By letter dated February 6, 1990, the I.G. notified Petitioner that he was
being excluded as a result of his
preclusion from the Pennsylvania Medical Assistance Program by the Pennsylvania
Department of Welfare
(DPW) for reasons bearing upon his professional competence, professional performance,
or financial
integrity within the meaning of section 1128(b)(5)(B) of the Act. The I.G. further
advised Petitioner that
he was being excluded until he is "re-instated in the Pennsylvania Medical
Assistance Program." In his
request for a hearing, Petitioner disputed the basis and authority of the I.G.
to exclude him. I held a
telephone prehearing conference in this case on June 27, 1990, and an oral argument
on December 21,
1990. During the prehearing conference and the oral argument, Petitioner waived
his right to an in-person
evidentiary hearing and the parties agreed to submit the case on the basis of
documentary evidence and
briefs.
APPLICABLE STATUTES AND REGULATIONS
I. The Federal Statute.
Section 1128 of the Act is codified at 42 U.S.C. 1320a-7 (West U.S.C.A., 1990
Supp.). Section
1128(b)(5)(B) of the Act permits the I.G. to exclude from Medicare and Medicaid
participation 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.
II. The Federal Regulations.
The governing federal regulations (Regulations) are codified in 42 C.F.R.,
Parts 498, 1001, and 1002
(1989). Part 498 governs the procedural aspects of this exclusion case; Parts
1001 and 1002 govern the
substantive aspects.
ISSUES
The issues are:
1. Whether Petitioner was "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," within the meaning of section 1128(b)(5)(B) of
the Act;
2. Whether this exclusion violates the ex post facto clause of the Constitution of the United States; and
3. Whether the length of Petitioner's exclusion is reasonable and appropriate.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Petitioner is a registered pharmacist in Philadelphia, Pennsylvania, and
was the owner of six
pharmacies. P. Br. 2.
2. By an Order to Show Cause (State Order to Show Cause) dated June 16, 1986,
Petitioner was notified
by the Pennsylvania Department of Public Welfare (DPW) that DPW proposed to
terminate Petitioner's
provider agreement and the provider agreement of three of his pharmacies and
to preclude him and his
three pharmacies from participation in the Medical Assistance Program, which
is the Pennsylvania
Medicaid program. Joint Ex. A.
3. DPW alleged that Petitioner or his pharmacies had, among other things, illegally
billed for brand name
drugs, but supplied generics, at various times in 1984 and 1985. Joint Ex. A.
4. DPW and Petitioner entered into a stipulation (State (Stipulation). On December
13, 1988, the State
Stipulation became final and was adopted by DPW. The State Stipulation stated
that: (1) Petitioner was
precluded from participation in the Pennsylvania Medical Assistance Program
for a period from March 28,
1988 through and including March 28, 1992 (four years); (2) the three pharmacies
owned by Petitioner
(and the subject of allegations in the State Order to Show Cause) were sold
by Petitioner effective March
28, 1988; and (3) there was no determination of fault or culpability. Joint
Ex. B.
5. By letter dated October 24, 1989, the I.G. informed Petitioner that the
DHHS was considering excluding
Petitioner from participation in the Medicare and Medicaid programs until he
is reinstated in the
Pennsylvania Medicaid Program by DPW. Joint Ex. C.
6. By letter dated November 22, 1989, Petitioner responded to the I.G.'s October
24, 1989 letter. Joint Ex.
D.
7. By letter dated February 6, 1990, the I.G. notified Petitioner that he was
being excluded from
participating in the Medicare and Medicaid programs pursuant to section 1128(b)(5)(B)
of the Act until he
is reinstated in the Pennsylvania Medical Assistance Program by DPW. I.G. Ex.
6.
8. The Pennsylvania Medical Assistance program, which is administered by DPW,
is a State health care
program, within the meaning of sections 1128(h) and 1128(b)(5)(B) of the Act.
9. Petitioner was "excluded or suspended" or "otherwise sanctioned"
under "a State health care program
for reasons bearing" on his "professional competence, professional
performance, or financial integrity",
within the meaning of section 1128(b)(5)(B) of the Act.
10. The Secretary of Health and Human Services (the Secretary) delegated to
the I.G. the authority to
determine, impose, and direct exclusions pursuant to section 1128 of the Act.
48 Fed. Reg. 21662, May
13, 1983.
11. The I.G. was authorized to impose an exclusion against Petitioner under
section 1128(b)(5)(B) of the
Act. 42 U.S.C. 1320a-7(b)(5)(B).
12. This exclusion does not violate the ex post facto clause of the United States Constitution.
13. The exclusion imposed and directed by the I.G. is reasonable and appropriate.
DISCUSSION
I. Petitioner Was "Suspended Or Excluded" From or "Otherwise
Sanctioned" Under A "State
Health Care Program, For Reasons Bearing On [His] Professional Competence, Professional
Performance,
or Financial Integrity," Within The Meaning Of Section 1128(b)(5)(B) Of
The Act.
Section 1128(b)(5)(B) of the Act grants the authority to exclude any individual who has been:
...suspended or excluded from participation, or otherwise sanctioned, under
-
. . .
(B) a State health care program, for reasons bearing upon the individual's or
entity's professional
competence, professional performance, or financial integrity.
Thus, the first question to be resolved here is whether Petitioner was "suspended",
"excluded", or
"otherwise sanctioned". This question can be resolved by examining
the terms of the State Stipulation.
There is no dispute that Petitioner agreed to be "precluded" from
the Pennsylvania Medical Assistance
Program for a period of four years. FFCL 4. Accordingly, I conclude that Petitioner
was "excluded,"
within the meaning of section 1128 (b)(5)(B). Next, under the terms of the State
Stipulation, Petitioner
agreed that he sold his three pharmacies. FFCL 4. Accordingly, I conclude that
Petitioner was "otherwise
sanctioned," within the meaning of section 1128 (b)(5)(B).
I conclude that the term "excluded" in section 1128 (b)(5)(B) is
synonymous with the term "precluded" in
the State Stipulation. Under the terms of the State Stipulation, Petitioner
agreed to be "precluded" from
participation in the State Medical Assistance Program. The dictionary defines
"preclude" as "2. to shut
out...: prevent or hinder by necessary consequence or implication : deter action
of, access to, or enjoyment
of...." Webster's Third New International (unabridged) Dictionary, 1976
edition at 1785. The same
dictionary (at p. 793) defines "exclude" as to "bar from participation"
or to "shut out." The definition of the
term "preclude" is so similar to the term "exclude" as to
make the terms synonymous. Thus, the State
Stipulation, although entered into without a finding of culpability, shut out
or "excluded" Petitioner from
the enjoyment of the Pennsylvania Medical Assistance Program, within the meaning
of Section 1128
(b)(5)(B) of the Act.
The definition of the word sanction includes "a mechanism of social control
that punishes deviancy from or
rewards conformance to the normative standards of behavior existing in a society."
Webster's Third New
International (unabridged) Dictionary, 1976 Edition at 2009. As part of the
settlement between Petitioner
and DPW, and in the wake of serious charges of wrongdoing, Petitioner sold his
three pharmacies. Such a
forced sale is a "mechanism of social control." Thus, Petitioner was
"otherwise sanctioned", within the
meaning of section 1128 (b)(5)(B) of the Act.
Petitioner argues, in effect, that he was not "suspended or excluded"
or "otherwise sanctioned" by a State
health care program because his was a voluntary preclusion from the Pennsylvania
Medical Assistance
Program and culpability was not established. P. Br. 5. Petitioner, in effect,
asserts that since the findings
of DPW in the State Order To Show Cause are only allegations, and since the
State Stipulation specifically
states that there is no determination of culpability or wrongdoing, I must conclude
that Petitioner was not
"suspended or excluded" or "otherwise sanctioned." He relies
on the case of Joel A. Korins, D.P.M., DAB
Civ. Rem. C-176 (1989), and argues, in effect, that individuals who agree to
be excluded from or
sanctioned by a State Medicaid Program without admitting wrongdoing are not
susceptible to section 1128
(b)(5)(B) exclusions.
Korins involved a petitioner who had been indicted in Massachusetts for the
criminal offenses of larceny
and filing false claims with the Massachusetts Medicaid program. Petitioner
there entered into an
agreement with prosecuting authorities which resolved the criminal charges against
him. As an element of
that agreement, Petitioner agreed to withdraw as a provider from the Massachusetts
Medicaid Program, but
did not admit that he had violated any laws. ALJ Kessel concluded that no "sanction"
had been imposed
because no wrongdoing was ever established.
The I.G. argues that Petitioner's federal exclusion is properly based upon
a review of the State Stipulation
and the State Order To Show Cause, and is authorized by section 1128(b)(5)(B)
of the Act. I.G. Br. 3-10.
The I.G. attempts to distinguish Korins. The I.G. argues that the State Stipulation
here stated that
Petitioner was "precluded" from participation, whereas in Korins the
agreement stated that Petitioner
"withdrew" from participation. Thus, the I.G. argues, under the terms
of the State Stipulation itself,
Petitioner was excluded from the State Medicaid program by DPW and the central
issue of Korins need not
be reached (i.e., whether Petitioner was "sanctioned" if no wrong
was ever admitted).
The I.G. erroneously tries to distinguish the term "exclusion" from
the term "sanction". An exclusion is a
sanction; there is no distinction between an exclusion and a sanction under
section 1128 (b)(5)(B).
Petitioner, in effect, erroneously argues that wrongdoing must be found in order
for his State "preclusion"
to be held to be a "sanction" under section 1128 (b)(5)(B). I conclude
that an individual can voluntarily
agree to be excluded or sanctioned without a finding of culpability or wrongdoing.
Petitioner correctly
argues that such a conclusion requires a departure from the decision in Korins.
I disagree with Korins
insofar as I conclude that a voluntary preclusion and a sale of three pharmacies
during the pendency of
charges or allegations of serious wrongdoing, as here, is an "exclusion"
and a "sanction."
My findings and conclusions that Petitioner was "excluded" and "otherwise
sanctioned" are based on my
analysis of the terms of the State Stipulation and State Order to Show Cause.
That the State Stipulation
may have been entered into voluntarily by Petitioner, and that no determination
of fault or culpability was
made, does not mean that an exclusion or sanction was not involved. The State
Stipulation stated that
Petitioner was "precluded from direct and indirect participation in the
Medical Assistance Program for the
time period March 28, 1988 through and including March 28, 1992." Joint
Ex. B/1. The State Stipulation
noted that "as a result of withdrawing the appeals," Petitioner had
sold the three pharmacies in question on
March 28, 1988, the first day of the preclusion, and had no further ownership
interest or involvement in the
pharmacies. Joint Ex. B/1. The State Stipulation also stated that Petitioner
was acknowledging that he
would not engage in specified practices constituting "indirect participation."
Joint Ex. B/2. The State
Stipulation incorporated the first paragraph of the State Order To Show Cause.
Joint Ex. B/2. Finally, the
State Stipulation stated that Petitioner was not acknowledging fault or culpability.
Joint Ex. B/3.
In addition to the fact that section 1128 (b)(5)(B) does not specifically require
a finding of wrongdoing, I
am influenced by my belief that Congress did not intend that an individual could
automatically evade
exclusion under section 1128(b)(5)(B) by simply entering into a stipulation
or agreement during the
pendency of serious charges of wrongdoing. I conclude that such an outcome is
contrary to the legislative
intent of section 1128(b)(5)(B). The legislative history states:
The purpose of the provision is to correct the anomaly in current law whereby
individuals
or entities found unfit to participate in one Federal health care program, or
in one Federally funded State
health care program, may continue to participate in Medicare or Medicaid or
the other State programs.
S. Rep. No. 109, 100th Cong., 1st Sess., 8, reprinted in U.S. Code Cong. and
Admin. News 682, 689
("Senate Report"). While there is some support for Petitioner's argument
in the words "found unfit" above,
interpreting the section as Petitioner argues would allow the anomaly Congress
sought to correct. The fact
is, there would never have been a voluntary preclusion of Petitioner without
the charges of wrongdoing by
DPW in its State Order To Show Cause.
Korins noted that where Congress intended to mandate or authorize exclusion
of parties who voluntarily
entered into agreements in order to avoid exclusions, it specifically stated
its intent. Korins looked to other
parts of section 1128 in which Congress found it necessary to provide explicitly
that a plea of nolo
contendere constituted a "conviction" and that license surrender pending
a disciplinary proceeding
constituted a "license revocation" under section 1128.
I do not agree with the analysis of Korins that a parallel provision would
be necessary for a voluntary
agreement to be considered a "sanction" under section 1128 (b)(5)(B).
As the I.G. points out, the terms
"convictions" and "license revocations" are specific, whereas
the term "otherwise sanctioned" is general.
I.G. Br. 9. Hence, it is reasonable to conclude that Congress intended to include
voluntary agreements,
during the pendency of proceedings involving serious allegations of wrongdoing,
within the meaning of the
term "sanction" or the term "exclusion," without an explicit
statement to that effect.
I also find and conclude that Petitioner's preclusion was for reasons bearing
on his "professional
competence, professional performance, or financial integrity," within the
meaning of section 1128(b)(5)(B)
of the Act. The determination of whether or not the State preclusion was for
reasons bearing on
professional competence, performance, or financial integrity also has to be
made by examining DPW's
Order to Show Cause and the State Stipulation. These documents reflect that
Petitioner was notified that
DPW proposed to terminate Petitioner's provider agreement and to preclude him
from participation in the
program. The State Order to Show Cause alleged that Petitioner had violated
the program's regulations by
altering prescriptions, dispensing misbranded drugs by using false prescription
labels, allowing employees
who were neither registered pharmacists nor supervised by registered pharmacists
to dispense drugs,
dispensing drugs which were not in containers with child-proof caps, and billing
DPW for different drugs
than those which were actually dispensed to medical assistance recipients. Joint
Ex. A/2-4.
Although section 1128(b)(5)(B) does not define the terms "professional
competence," "professional
performance," or "financial integrity," it is reasonable to conclude
that these terms encompass those
circumstances where a termination or preclusion proceeding concerns a provider's
qualifications and
manner of functioning in his profession. DPW's basis for proposing to preclude
Petitioner was that he had
engaged in the activities described above. Although the parties agree, and the
State Stipulation states, that
culpability was not established, Petitioner entered into the State Stipulation
because of the allegations.
Therefore, while the facts were not established by a court, the State Stipulation
must be read in the context
of the State Order to Show Cause. The allegations in the State Order to Show
Cause bear on professional
competence, professional performance, and financial integrity.
Petitioner attempts to distance himself from the actions outlined in the State
Order To Show Cause.
Petitioner states that the actions were those of his employees and, therefore,
have no bearing on his
professional competence, performance, or financial integrity. A similar argument
was rejected in Summit
Health Limited, dba Marina Convalescent Hospital, DAB Civ. Rem. C-108 (1989),
aff'd DAB App. 1173
(1990). See also, Leonard Harman, D.O., DAB Civ. Rem. C-162 (1990). Petitioner
signed the State
Stipulation and he agreed to be precluded, not his employees. Moreover, assuming,
arguendo, that
Petitioner's statements are true, he nevertheless is responsible for the acts
of his employees.
Accordingly, the exclusion imposed against Petitioner by the I.G. was authorized
by section 1128(b)(5)(B)
of the Act.
II. The 1987 Amendments to Section 1128 of the Act Apply To This Case.
Congress amended section 1128 in 1987 (1987 Amendments) to include permissive
exclusions, such as this
one. Petitioner argues that Congress did not intend to apply the 1987 Amendments
to conduct occurring
prior to their passage, as in this case. Petitioner then argues that if Congress
did intend the 1987
Amendments to apply, this would violate the ex post facto clause of the United
States Constitution.
For the same reasons I expressed in the case of Betsy Chua, M.D. and Betsy
Chua, M.D., S.C., DAB Civ.
Rem. C-139 (1990), aff'd. DAB App. 1204 (1990), I conclude (1) that Congress
did intend to apply the
1987 Amendments to final actions occurring after August 18, 1987 (the effective
date of the 1987
Amendments), such as the state preclusion here; and (2) that the constitutional
prohibition against ex post
facto laws does not bar the I.G. from imposing an exclusion in this case. The
Board in Chua (at p. 7) stated
that section 1128 is a civil remedy, not a penal law, and did not trigger the
Constitutional protection from
ex post facto laws. Moreover, the State preclusion, which is the predicate for
this federal exclusion, took
place after the effective date of the 1987 Amendments, i.e., August 18, 1987.
See Francis Shaenboen,
R.Ph., DAB App. 1249, at 5-6 (1991).
III. The Exclusion Imposed and Directed by the I.G. Is Appropriate In This Case.
The I.G. excluded Petitioner from participating in the Medicare and Medicaid
programs until he is
reinstated in the Pennsylvania Medicaid program. His exclusion from the Pennsylvania
Medicaid program
is until March 28, 1992, less than a year away. Since I have decided that the
I.G. had discretion to impose
an exclusion in this case, I must now decide if the length of exclusion imposed
is reasonable and
appropriate.
The Regulations provide that certain criteria be considered in determining
the length of exclusion in this
case. 42 C.F.R. 1001.125. Although the Regulations do not define what circumstances
may be considered
as mitigating, I must also consider any mitigating circumstances. See 42 C.F.R.
1001.125(b)(4).
The I.G. argues that the purpose of an exclusion under section 1128(b)(5)(B)
is to protect program
recipients and beneficiaries. The I.G. argues that the exclusion in this case
is reasonable because the State
precluded Petitioner for four years and Congress intended that Petitioner be
excluded from Medicare and
other state health care programs for the same period.
Petitioner argued that section 1128(b)(5) does not apply here, not that mitigating
factors exist for reducing
the length of the exclusion. Petitioner presented no argument that the term
of the exclusion should be
reduced because of mitigating factors. Nevertheless, Petitioner's arguments
contain references which could
be considered to be of a mitigating nature: that the actions were not committed
by Petitioner, but by his
employees and without his knowledge.
I conclude that the exclusion here is reasonable and appropriate. My decision
is influenced by the fact that
Petitioner did not present any evidence to support his assertion that the actions
which led to the State
preclusion were committed by Petitioner's employees and without Petitioner's
knowledge. My decision is
also influenced by the fact a shorter exclusion would result in the very anomaly
which Congress has sought
to remove -- a Petitioner excluded in one state participating in Medicare or
Medicaid programs in other
states during the period of the exclusion. I do not foreclose the possibility
of a different outcome in
another case. But in such a case, facts would necessarily have to be established
which demonstrate that the
provider is trustworthy and that program recipients and beneficiaries would
not be harmed by a shorter
exclusion. This is not such a case.
IV. It Is Well Settled That Summary Disposition Is Appropriate In Exclusion
Cases And That There
Is No Need For An Evidentiary Hearing In This Case.
Summary disposition is appropriate in an exclusion case where there are no
disputed issues of material fact
and where the undisputed facts demonstrate that one party is entitled to judgment
as a matter of law. Leon
Brown, DAB App. 1208 (1990); Surabhan Ratanasen, M.D., DAB App. 1138 at 8 (1990).
Also, a
petitioner may waive an in-person evidentiary hearing and have his or her case
decided on the basis of
documentary evidence and briefs, as here.
I have concluded that, based on the undisputed material facts contained in
the record of this case, the I.G.
properly excluded Petitioner from the Medicare and Medicaid programs, until
he is reinstated in the
Pennsylvania Medical Assistance Program. Accordingly, the I.G. is entitled to
summary disposition as a
matter of law. See Charles W. Wheeler and Joan K. Todd, DAB App. 1123 at 7-9
(1990); Fed. R. Civ. P.
56.
c\
CONCLUSION
Based on the undisputed material facts and the law, I conclude that the I.G.'s
determination to exclude
Petitioner from participation in the Medicare and Medicaid programs was authorized
by law. I further
conclude that the exclusion is reasonable and appropriate in this case.
IT IS SO ORDERED.
__________________________
Charles E. Stratton
Administrative Law Judge