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