Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
David D. DeFries, D.C.,
Petitioner,
- v.-
The Inspector General.
DATE: October 11, 1991
Docket No. C-393
DECISION
This case is before me on both Petitioner's and the I.G.'s motions for summary
disposition on the matter of
Petitioner's exclusion from participation in the Medicare program and certain
federally-assisted State health
care programs.
By letter dated April 12, 1991, the I.G. notified Petitioner that he was being
excluded from participation in
the Medicare program, and any State health care program (such as Medicaid),
as defined in section 1128(h)
of the Social Security Act (Act) 1/. The I.G.'s notice informed Petitioner that
his exclusion resulted from
his State conviction of a criminal offense related to the delivery of an item
or service under Medicare. The
I.G. further informed Petitioner that section 1128(a)(1) of the Act requires
that individuals convicted of
such program-related offenses be excluded for a minimum period of five years.
The I.G. told Petitioner
that he was being excluded for the mandatory minimum five year period under
section 1128(c)(3)(B) of the
Act.
Petitioner timely requested a hearing, and the case was assigned to me for
hearing and decision. By my
prehearing order of July 19, 1991, the I.G. was given until August 26, 1991
to file his motion for summary
disposition and supporting brief. Petitioner was given until September 30, 1991
to file a response and
supporting brief. In his response, Petitioner also moved for summary disposition.
Oral argument was not
requested.
I have considered the parties' briefs, the undisputed material facts, and the
law. I conclude that there are no
disputed questions of material fact that would require an evidentiary hearing.
I further conclude that the
exclusion imposed and directed by the I.G. in this case is mandated by law.
I accordingly enter summary
disposition in favor of the I.G. and deny Petitioner's motion for summary disposition.
ISSUES
The issues in this case are whether:
1. Petitioner's conviction is more properly classified under section 1128(a)(1)
of the Act or section
1128(b)(1) of the Act.
2. Petitioner's conviction pursuant to a plea of nolo contendere to two counts
of Medicaid fraud,
under 62 Pa. Cons. Stat. Ann. sections 1407(a)(7)and (12), was a conviction
of a criminal offense within
the meaning of section 1128(a)(1) of the Act and is therefore subject to the
mandatory minimum five year
exclusion.
3. The effective date of Petitioner's exclusion should be the date when the
State of Pennsylvania
first suspended payments of Medicaid reimbursement.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Petitioner is a licensed chiropractor in the Commonwealth of Pennsylvania.
I.G. Ex. 4; I.G. Ex. 6
at 2. 2/
2. On August 23, 1990, Petitioner was convicted, in the Court of Common Pleas,
Dauphin County,
Pennsylvania, pursuant to a plea of nolo contendere, for Medicaid fraud under
62 Pa. Cons. Stat. Ann.
sections 1407(a)(7) and (12). I.G. Ex. 2; I.G. Ex. 5 at 1.
3. Petitioner admits that he was convicted of a criminal offense within the
meaning of section
1128(i) of the Act. July 19, 1991 prehearing order at 2.
4. On August 23, 1990, Petitioner was sentenced to two years probation, fined
$7,669.50, ordered to
make restitution in the amount of $4,035, and ordered to pay $500 to the Office
of the Attorney General of
Pennsylvania to cover the cost of his investigation. I.G. Ex. 2.
5. Petitioner's Medicaid fraud involved submitting claims for reimbursement
for x-rays. It is not
disputed that Medicaid does not reimburse chiropractors for x-rays. I.G. brief
at 5; Pet. brief at 3.
6. Petitioner submitted his patients' x-ray reports to a Dr. Hirsh, who then
submitted the bills to
Medicare to obtain reimbursement. Dr. Hirsh would then give Petitioner a referral
fee. Pet. brief at 3; I.G.
brief at 5 - 6.
7. There are no disputed issues of material fact in this case, and summary disposition is appropriate.
8. The Secretary of Health and Human Services (the Secretary) delegated to
the I.G. the authority to
determine, impose, and direct exclusions pursuant to section 1128 of the Social
Security Act. 48 Fed. Reg.
21622 (May 13, 1983).
9. Petitioner's exclusion properly falls under section 1128(a)(1), not under
section 1128(b)(1) of the
Act.
10. The exclusion imposed and directed against Petitioner by the I.G. is for
five years, the minimum
period required by the Act. Sections 1128(a)(1) and (c)(3)(b) of the Act.
11. The exclusion imposed and directed against Petitioner by the I.G. is mandated
by law. Sections
1128(a)(1) and (c)(3)(b) of the Act.
ANALYSIS
1. Petitioner was "convicted" of a criminal offense within the meaning
of section 1128(a)(1) of the
Act.
There are no disputed issues of material fact in this case. Petitioner was
convicted, via a plea of nolo
contendere, of Medicaid fraud under Pennsylvania law, specifically, 62 Pa. Cons.
Stat. Ann. sections
1407(a)(7) and (12). The I.G. imposed and directed an exclusion against Petitioner,
pursuant to section
1128(a)(1) of the Act, which mandates an exclusion of any individual or entity
who is convicted of a
criminal offense related to the delivery of an item or service under Medicare
or Medicaid. Petitioner
disputes that his conviction is a conviction within the meaning of 1128(a)(1)
of the Act. He argues that his
"misconduct" is more properly classified under section 1128(b)(1)
and, therefore, is subject to a
permissive, not mandatory, exclusion. Petitioner argues that the fact that his
offense could colorably be
characterized under 1128(b)(1) as a conviction for fraud means that 1128(a)(1)
is inapplicable. Petitioner
argues, in effect, that section 1128(B)(1) narrows the reach of section 1128(a)(1)
to program-related crimes
other than fraud.
The I.G. counters that Petitioner's conviction is the result of his conspiring
with a Dr. Hirsh to obtain
reimbursement from Medicaid for x-rays which would have been non-compensable
if rendered by the
Petitioner. The I.G. argues that this offense is properly classified under 1128(a)(1)
because it is a program-
related criminal conviction for fraud.
In earlier decisions, I have addressed similar arguments to Petitioner's that
section 1128(b)(1) applies.
See, e.g., Mark D. Bornstein, DAB Civ. Rem. C-218 at 8 (1990), citing Greene
v. Sullivan, 731 F. Supp.
835, 838 (E.D. Tenn. 1990), affirming Jack W. Greene, DAB App. 1078 (1989).
In Bornstein I held:
[W]here financial crimes, such as fraud, theft, or embezzlement are committed
in connection with
the rendering of services under the Medicare or State health care programs,
section 1128(a)(1) mandates
exclusion. By contrast, section 1128(b)(1) applies to convictions for financial
misconduct committed
against programs other than Medicare and State health care programs. The fraud
committed by Petitioner
was directed against the Medicare program. Accordingly, his exclusion is governed
by section 1128(a)(1).
Petitioner's crime was a financial crime directed against the Medicare and
Medicaid programs, within the
meaning of section 1128(a)(1), Greene, and Bornstein. Petitioner was convicted
of fraud. It is undisputed
that Petitioner falsely billed Medicaid for non-reimbursable x-ray services.
Therefore, Petitioner's fraud
was directed against the Medicaid program and is covered by section 1128(a)(1)
of the Act.
I am not persuaded by Petitioner's contention that section 1128(b)(1) of the
Act governs this case.
Petitioner's arguments imply that, because the terms "fraud" and "financial
offense" are not explicitly used
in section 1128(a)(1), section 1128(b)(1) is the proper arena for all fraud
and financial misconduct cases.
Similar arguments were made by petitioners in Howard B. Reife, DAB Civ. Rem.
C-64 (1989). I
acknowledged then, as I do now, that section 1128(b)(1) is broad enough, when
read out of context, to
encompass Petitioner's offense. Reife at 12. I held:
However, when it is read in context, it becomes evident that Congress intended
this section to
provide for discretionary exclusion of individuals and entities who are convicted
of offenses directed
against programs other than Medicare or State health care programs.
Reife at 12. See, Jack W. Greene, DAB Civ. Rem. C-56 (1989) and Michael A.
Sabbagh, DAB Civ. Rem.
C-59 (1989).
I have spoken to the issue of congressional intent as it relates to the categorization
of Petitioner's exclusion.
Specifically:
Congress' intent was to require exclusion of those individuals or entities
who committed offenses
directed against the Medicare and State health care programs and to permit exclusion
of those individuals
or entities who committed offenses directed against government-financed health
care programs other than
Medicare or State health care programs. The plain meaning of 42 U.S.C. 1320a-7(b)(1).
Sabbagh at 14.
Moreover, an appellate panel of the Departmental Appeals Board has stated that
section 1128(b) applies to
convictions for offenses other than those related to the delivery of an item
or service under Medicaid.
Samuel W. Chang, DAB App. 1198 at 8 (1990).
A straightforward interpretation of congressional intent as given in Reife,
Sabbagh and Greene, coupled
with a careful reading of section 1128(b)(1) in conjunction with Bornstein,
reveals that section 1128(b)(1)
is applicable to crimes outside of the Medicare program and not to the case
before me.
It makes no difference under section 1128(a(1) that the crime perpetrated by
Petitioner was against
Medicaid, as opposed to Medicare. The section applies equally to criminal offenses
related to the delivery
of an item or service under either program. A conviction for presentation of
a false Medicaid claim is a
conviction of an offense related to the delivery of an item or service under
Medicaid. Richard G. Phillips,
DAB Civ. Rem. C-347 at 5 (1991), citing Greene, id. The Board has also held
that a conviction of a
criminal offense is related to the delivery of an item or service under Medicare
or Medicaid where the
victim of the offense is the Medicare or Medicaid program. Phillips at 5, citing
Napoleon S. Maminta,
DAB App. 1135 (1990).
Petitioner's conviction was for Medicaid fraud. Petitioner submitted claims
for x-ray services that were not
reimbursable under Medicaid. Moreover, Petitioner's crime victimized the Medicaid
program as it caused
Medicaid to financially reimburse for x-rays that were not covered under the
program. Therefore,
Petitioner's crime is a criminal offense within the meaning of section 1128(a)(1)
of the Act. This result fits
squarely within both the Phillips and Maminta cases.
2. The exclusion imposed and directed against Petitioner is required under sections
1128(a)(1) and
1128(c)(B)(3) of the Act.
Petitioner's conviction falls within the provisions of section 1128(a)(1) of
the Act. This section mandates
exclusion of any individual or entity convicted of a criminal offense related
to the delivery of an item or
service under the Medicare or Medicaid programs. Section 1128(c)(3)(B) of the
Act provides that, in the
case of individuals against whom a mandatory exclusion is imposed, the minimum
length of such an
exclusion shall be five years. The I.G. properly imposed and directed a five-year
exclusion against
Petitioner.
3. I have no authority to change the effective date of Petitioner's exclusion.
Petitioner argues that the I.G. erred in not imposing its exclusion concurrently
with that imposed by the
Pennsylvania Department of Welfare (PDW). PDW imposed its exclusion on Petitioner
effective August
23, 1990. Alternatively, Petitioner argues that the exclusion should be effective
as of January 1, 1991, the
date on which Petitioner voluntary ceased participation in the Medicare program.
The I.G. argues that the
ALJ does not have the authority to change the effective date of the exclusion.
My authority to hear and decide cases under section 1128 does not include authority
to change the
commencement date of an exclusion. Christino Enriquez, DAB Civ. Rem. C-277 (1991)
citing Samuel W.
Chang, DAB App. 1198 at 9 (1990). See, Richard G. Philips, DAB Civ. Rem. C-347
(1991). Therefore,
Petitioner's request must be denied. Petitioner's exclusion date resultant from
this proceeding will not run
concurrent with PDW's exclusion, nor should it. Petitioner argues that his voluntary
cessation of
participation in Medicare should somehow serve to lessen his exclusion. Under
section 1128(a)(1), there is
no credit given for the exercise of a party's free choice not to participate
in the program. Furthermore, even
if I had the authority, which I do not, to change the date of the exclusion,
Petitioner's voluntary cessation of
participation in the program would not be a compelling reason to do so.
CONCLUSION
Based on the undisputed material facts, the parties' briefs, and the law, I
conclude that Petitioner's
conviction falls squarely within section 1128(a)(1). Section 1128(b)(1) is not
applicable to this case. I
conclude that the I.G.'s determination to exclude Petitioner from participation
in Medicaid for five years
was mandated by law. I also conclude that I have no authority to change the
effective date of Petitioner's
exclusion. Therefore, I enter summary disposition in favor of the I.G. and sustain
the five year exclusion
imposed against Petitioner. I deny Petitioner's motion for summary disposition.
___________________________
Steven T. Kessel
Administrative Law Judg
1. "State health care program" is defined by section 1128(h) of the
Social Security Act to cover three types
of federally-financed health care programs, including Medicaid. I use the term
"Medicaid" hereafter to
represent all State health care programs from which Petitioner was excluded.
2. The I.G. submitted ten numbered and paginated exhibits in support of his
motion for summary
disposition. Petitioner did not object and I have admitted them into evidence.
They will be referred to as
I.G. Ex. (number) at (page). Petitioner submitted a brief but no exhibits.