William J. Schuhmacher, CR No. 18 (1989)

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Departmental Appeals Board

Civil Remedies Division

In the Case of:
William J. Schuhmacher,

Petitioner,
- v. -
The Inspector General

DATE: January 18, 1989

Docket No. C-60

DECISION GRANTING INSPECTOR GENERAL'S MOTION
FOR SUMMARY DISPOSITION

Petitioner has requested a hearing, protesting the Inspector General's (the I.G.'s) determination to exclude
him from participating in the Medicare program and any state health care program, as defined in section
1128(h) of the Social Security Act (Act), for five years. The I.G. moved for summary disposition of this
case. I have considered the I.G.'s motion and Petitioner's response to the motion. I conclude that there are
no disputed material facts in this case and there remain no questions to be addressed at a hearing whose
answers could affect the outcome of this case. Based on the undisputed facts, the law, and applicable
regulations, I conclude that the five-year exclusion imposed on Petitioner by the I.G. is mandatory.
Therefore, I am deciding this case in favor of the I.G.


BACKGROUND STATEMENT

On October 11, 1988, the I.G. sent notice to Petitioner that he was being excluded from participation in the
Medicare and Medicaid programs for a period of five years. Petitioner was advised that his exclusion was
the result of his conviction of a criminal offense related to the delivery of an item or service under the
Medicaid program. He was further advised that the law required a minimum mandatory five-year
exclusion from participation in the Medicare and Medicaid programs, of any individual convicted of a
program-related offense.

Petitioner timely requested a hearing as to his exclusion and the case was assigned to me for a hearing and
decision. I conducted a prehearing conference on November 29, 1988, at which time the I.G. stated his
intent to file a motion for summary disposition of the case. I issued a prehearing Order on December 1,
1988, establishing a schedule for moving for summary disposition and responding to the motion. My
Order also gave either party the option to request oral argument on the motion. The motion has been filed
and responded to according to the schedule I established. Neither party has requested oral argument and I
can discern no reason to schedule oral argument on my own initiative.


ISSUES

The issue in this case is whether, given the undisputed material facts, the I.G.'s determination to exclude
Petitioner from participating in Medicare and Medicaid for five years is mandated by law.


APPLICABLE LAWS AND REGULATIONS

1. Section 1128 of the Social Security Act: Section 1128(a)(1) of the Social Security Act, 42
U.S.C. 1320a-7(a)(1), requires the Secretary of Health and Human Services (Secretary) to exclude from
participation in Medicare and to direct the states to exclude from Medicaid any individual or entity
"convicted of a criminal offense related to the delivery of an item or service" under Medicare or Medicaid.
"Conviction" is defined at 42 U.S.C. 1320a-7(i) to include those circumstances when: (1) a judgment of
conviction has been entered against a physician or individual, regardless whether there is an appeal
pending, or the judgment of conviction or other record of criminal conduct has been expunged; (2) there
has been a finding of guilt against the physician or individual; (3) a plea of guilty or nolo contendere by the
physician or individual has been accepted; and (4) the physician or individual has entered into participation
in a first offender or other program where judgment of conviction has been withheld. The law provides, at
42 U.S.C. 1320a-7(c)(3)(B), that for exclusions based on a conviction for a program-related offense, "the
minimum period of exclusion shall not be less than five years."

2. Regulations Governing Suspension, Exclusion, or Termination of Practitioners, Providers,
Suppliers of Services and Other Individuals: The Secretary has delegated to the I.G. the duty to exclude
individuals or entities convicted of program-related offenses. 42 C.F.R. Part 1001. Section 1001.123(a)
provides that when the I.G. has conclusive information that a person has been convicted of a program-
related crime, he shall give that person written notice that he is being suspended (excluded) from
participation. Section 1001.125(b) establishes criteria for the I.G. to use in determining the appropriate
length of exclusions, in those circumstances where the I.G. may exercise discretion. Section 1001.128
provides that a person excluded based on conviction of a program-related offense may request a hearing
before an administrative law judge on the issues of whether: (1) he or she was, in fact, convicted; (2) the
conviction was related to his or her participation in the delivery of medical care or services under the
Medicare, Medicaid, or social services programs; and (3) whether the length of the suspension is
reasonable.


FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. Beginning in late 1984, Petitioner was employed at a pharmacy owned by Thomas G. Starr.
His duties as an employee related in part to the preparation of Medicaid forms. P.'s Memorandum at 1.

2. In 1987, Petitioner, along with others, was indicted for offenses concerning Medicaid claims
for prescriptions sold by his employer. See P.'s Memorandum at 1-2; P.'s Memorandum, letter to I.G.
dated May 9, 1988; P.'s Memorandum, letter by Guy Till.

3. On January 22, 1988, Petitioner pleaded guilty to crimes consisting of conspiracy and filing
false Medicaid claims. I.G.'s Memorandum, Stipulation for Deferred Judgment and Sentence/2.

4. The offenses to which Petitioner pleaded guilty are "criminal offense(s) related to the delivery
of an item or service" under the Medicaid program. 42 U.S.C. 1320a-7(a)(1).

5. Petitioner's guilty plea is a "conviction" as defined by 42 U.S.C. 1320a-7(i).

6. The Secretary is required to exclude Petitioner from participating in Medicare and to direct the
states to exclude Petitioner from participating in Medicaid because Petitioner has been convicted of an
offense related to the delivery of an item or service under the Medicaid program. 42 U.S.C. 1320a-7(a)(1).

7. The minimum mandatory exclusion period for a person excluded based on conviction of a
program-related crime is five years. 42 U.S.C. 1320a-7(c)(3)(B).

8. The I.G. is authorized to exclude persons convicted of program-related crimes from
participating in Medicare and to require their exclusion from Medicaid. 42 C.F.R. Part 1001.

9. The I.G. has excluded Petitioner from participating in Medicare and has directed the states to
exclude him from Medicaid for five years. The exclusion is mandatory and for the minimum period of
time required by law.

10. Neither Petitioner's cooperation with prosecuting authorities, nor his emotional state during
the time when he committed the offenses for which he pled guilty, nor other evidence concerning the
equities of his case, provides a legal basis for reducing his exclusion from that imposed by the I.G.


ANALYSIS

Petitioner pleaded guilty to, and was convicted of, a crime involving claims for Medicaid reimbursement.
As a consequence of Petitioner's conviction, the I.G. imposed on Petitioner a five-year exclusion from
participating in Medicare and required his exclusion from Medicaid. Petitioner challenged this exclusion,
asserting that equitable considerations in his case justify a shorter exclusion than that imposed by the I.G.
These include his emotional state at the time he committed the crimes, his truthful testimony to the grand
jury which investigated the case, his cooperation with the prosecutor, and the deferred sentence he received
in recognition of his cooperation. He did not disputed that he was convicted of crimes related to the
delivery of an item or service under the Medicaid program.

The law explicitly requires the Secretary to exclude individuals who are convicted of program-related
crimes from participating in the Medicare and to direct their exclusion from Medicaid for a minimum of
five years. 42 U.S.C. 1320a-7(a)(1) and (c)(3)(B). It does not permit exceptions based on the personal
circumstances of excluded individuals. Id.. Congressional intent is plain, both in the letter of the law and
in legislative history:

(A) minimum five-year exclusion is appropriate,given the seriousness of the offenses at issue.
The minimum exclusion provides the Secretary with adequate opportunity to determine whether there is a
reasonable assurance that the types of offenses for which the individual or entity was excluded have not
recurred and are not likely to do so. Moreover, a mandatory five-year exclusion should provide a clear and
strong deterrent against the commission of criminal acts.

S. Rep. No. 100-109, 100th Cong. 1st Sess. 2, reprinted in 1987 U.S. Cong. & Ad. News 682, 686.

A five-year exclusion in this case may appear to be harsh, given the equitable considerations argued by
Petitioner. But these considerations are irrelevant in light of the statutory mandate.


CONCLUSION

Based on the undisputed material facts, the law, and regulations, I conclude that the five-year exclusion
imposed on Petitioner by the I.G. is mandatory. Therefore, I am entering a decision in favor of the I.G. in
this case.


____________________________
Steven T. Kessel
Administrative Law Judge

Addressees:

RETURN RECEIPT REQUESTED

William J. Schuhmacher
1317 East 5th Street
Loveland, Colorado 80537

and

Lucille G. Meis
Assistant Regional Counsel
DHHS - Region VIII
Room 1106
19th and Stout Streets
Denver, Colorado 80294

cc: Office of Inspector General
Office of Investigations
Room 3-C-1, Meadows East Building
Baltimore, Maryland 21207

Kayleen Drissell
Regional Inspector General
Office of Investigations, Department
of Health and Human Services
P.O. Box 2692
Denver, Colorado 80201