Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
John Strausbaugh, R.Ph.,
Petitioner,
- v. -
The Inspector General.
DATE: March 27, 1992
Docket No. C-92-022
DECISION
By letter dated September 16, 1991 (Notice), the Inspector General (I.G.) notified
John Strausbaugh, R. Ph.
(Petitioner), that he was excluded from participation in the Medicare program,
and any State health care
program, 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 a State conviction of a criminal
offense related to the delivery of
an item or service under Medicare. The I.G. told Petitioner that he was being
excluded for a period of five
years, the mandatory minimum under sections 1128(c)(3)(B) and 1128(a)(1) of
the Act.
In a letter dated November 8, 1991, Petitioner requested a hearing before an
Administrative Law Judge
(ALJ) and the case was assigned to me for hearing and decision. On December
18, 1991, I held a
prehearing conference at which Petitioner contended that he had not been aware
of the ramifications of his
plea of nolo contendere in State court. Petitioner also contended that his age,
the extreme embarrassment
he suffered due to the exclusion, and his record of community service were all
factors that should be
considered favorable to him. I established a schedule for the parties to brief
the issues on cross motions for
summary disposition.
The parties timely filed their motions and briefs along with supporting exhibits.
I have admitted all of the
parties' exhibits into evidence. 2/ I have considered the evidence, the parties'
written briefs and supporting
exhibits, and the applicable laws and regulations. There are no disputed issues
of material fact in this case
which would preclude the entry of summary disposition. I conclude that sections
1128(a)(1) and
1128(c)(3)(B) required the I.G. to exclude Petitioner for five years. I therefore
sustain the exclusion. 3/
ISSUES
1. Whether 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 Act.
2. Whether Petitioner must be excluded for five years.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. At all times relevant, Petitioner was a licensed pharmacist in the State of Michigan.
2. Petitioner was indicted in State court in Michigan for four separate criminal
counts. These were:
conspiracy to defraud Medicaid; conspiracy to unlawfully deliver controlled
substances, common plan or
scheme to deliver unlawfully controlled substances; and common plan or scheme
to defraud Medicaid,
specifically, causing claims to be made for unnecessary drugs. I.G. Ex. 2.
3. Petitioner pled nolo contendere to the charge of a common plan or scheme
to defraud Medicaid.
Petitioner also pled guilty to the charge of a common plan or scheme to unlawfully
deliver controlled
substances. Petitioner's nolo contendere plea and his guilty plea were accepted
by a Michigan State court
and judgment of sentence was entered on August 6, 1990. 4/ I.G. Ex. 1.
4. Petitioner was sentenced to pay a fine of $1,000 and court costs of $1,000. I.G. Ex. 1.
5. The Secretary of Health and Human Services (Secretary) delegated to the
I.G. the authority to
determine, impose, and direct exclusions pursuant to section 1128 of the Act.
48 Fed. Reg. 21622 (May
13, 1983).
6. Petitioner was "convicted" of a criminal offense within the meaning
of sections 1128(i) and
1128(a)(1) of the Act.
7. Petitioner's conviction is "related to" the Medicare program within
the meaning of section 1128(a)(1) of
the Act.
8. On September 16, 1990, the I.G. excluded Petitioner from participating in
Medicare and directed
he be excluded from Medicaid, pursuant to section 1128 of the Act.
9. There are no disputed issues of material fact in this case and summary disposition is appropriate.
10. The exclusion imposed and directed against Petitioner is for five years,
the minimum period
required under sections 1128(a)(1) and 1128(c)(3)(B) of the Act.
11. Neither the I.G. nor the ALJ has the discretion or authority to reduce
the five year minimum exclusion
mandated by sections 1128(a)(1) and 1128(c)(3)(B) of the Act.
DISCUSSION
I. Petitioner Was "Convicted" Of A Criminal Offense As A Matter Of Federal Law.
Section 1128(a)(1) of the Act mandates an exclusion of:
Any individual or entity that has been convicted of a criminal offense related
to the delivery of an
item or service under . . . [Medicare] or under . . . [Medicaid].
On August 6, 1990, Petitioner pled guilty to the offense of common plan or
scheme to deliver unlawfully
controlled substances. On that same date, Petitioner also pled nolo contendere
to the offense of common
plan or scheme to defraud Medicaid, specifically, causing claims to be made
for medically unnecessary
drugs. Count five of Petitioner's indictment specifically states that Petitioner
was charged with causing
Medicaid claims to be submitted for medically unnecessary drugs, and the judgment
of sentence indicates
that Petitioner's plea of nolo contendere was accepted as to Count five. Based
on this conviction, the I.G.
excluded Petitioner under section 1128(a)(1) of the Act.
Petitioner admits that he was "convicted" of a criminal offense and
that his plea of nolo contendere to the
charge of Medicaid fraud is a conviction for the purposes of section 1128(i)
of the Act. P. Sec. Br. 7.
Charles Wheeler and Joan Todd, DAB 1123 (1990).
II. Petitioner Was Convicted Of A Criminal Offense "Related To The Delivery
Of An Item Or Service"
Under The Medicaid Program.
Having concluded that Petitioner was "convicted" of a criminal offense,
I must determine whether the
criminal offense which formed the basis for the conviction was "related
to the delivery of an item or
service" under the Medicaid program, within the meaning of section 1128(a)(1)
of the Act.
Petitioner admits his conviction is related to the delivery of a health care
item or service within the
meaning of section 1128(a)(1). P.Br. 7. Moreover, a Board Appellate panel has
held that a conviction of a
criminal offense meets the statutory requirements of section 1128(a)(1) of the
Act where the unlawful
conduct can be shown to affect an identifiable Medicare or Medicaid item or
service or to affect
reimbursement of such an item or service. DeWayne Franzen, DAB 1165(1990). Such
is the case here,
where Petitioner pled guilty to an indictment that charged him with causing
Medicaid claims to be
submitted for medically unnecessary drugs.
III. A Five Year Exclusion Is Required In This Case.
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act require the I.G. to exclude
individuals and entities from
the Medicare and Medicaid programs for a minimum period of five years, when
such individuals have been
"convicted" of a criminal offense "related to the delivery of
an item or service" under the Medicare or
Medicaid programs, within the meaning of sections 1128(i) and 1128(a)(1) of
the Act.
Since Petitioner was "convicted" of a criminal offense and it was
"related to the delivery of an item or
service" under the Medicaid program within the meaning of section 1128(a)(1)
and (i) of the Act, the I.G.
was required by section 1128(c)(3)(B) of the Act to exclude Petitioner for a
minimum of five years.
Neither the I.G. nor the ALJ has discretion to reduce the mandatory minimum
five year period of
exclusion. Charles W. Wheeler and Joan K. Todd, DAB 1123 (1990).
Petitioner contends that the imposition of the minimum mandatory five-year
exclusion in this case
constitutes cruel and unusual punishment under the Eighth Amendment of the United
States Constitution.
Although I do not have the authority to rule on the constitutionality of sections
1128(a)(1) and
1128(c)(3)(B), I do have the authority to interpret and apply the federal statute
and regulations. See
Francis Shaenboen DAB CR97 (1990). The Eighth Amendment prohibition against
cruel and unusual
punishment applies to only to criminal punishments and not to civil sanctions.
See Stamp v. Commissioner
of Internal Revenue, 579 F.Supp. 168 (1984); Bell v. Wolfish, 441 U.S. 520 (1979);
Popow v. City of
Margate, 478 F.Supp. 1237 (1979); Ingraham v. Wright, 430 U.S. 651 (1977). The
Supreme Court in
United States v. Halper, 109 S.Ct. 1892 (1989) stated
only in rare cases will a civil sanction imposed after a criminal sanction
violate the double
jeopardy clause, and even in those rare cases, only where the sanction may not
fairly be characterized as
remedial, but only as a deterrent or retribution.
As Petitioner correctly states, under Halper, whether a civil sanction constitutes
punishment depends in
large part upon the goal served by the sanctions--if the civil sanction can
be said to serve a remedial
purpose, its imposition does not violate the double jeopardy clause. Halper
at 1902.
Exclusions are remedial sanctions that serve a remedial purpose and as such
do not constitute a second
punish-ment. Halper. The Inspector General's goals are clearly remedial and
include protecting
beneficiaries, maintain-ing program integrity, fostering public confidence in
the program, etc. See Greene
v. Sullivan, 731 F. Supp. 835 (E.D. Tenn. 1990), affirming Jack W. Greene, DAB
1078 (1989).
As I stated in Dewayne Franzen, DAB CR58 (1990):
The primary purpose of an exclusionary sanction is
remedial, not punitive. When the OIG imposes an exclusion under section 1128
of the Act, it is
simply carrying out Congress' intent to protect the Medicare and Medicaid programs
from individuals or
entities who have already been tried and convicted of a criminal offense.
Thus, relevant case law and DAB precedent hold that the imposition of an exclusion
is not a punishment,
but a remedial action. As a remedial action, an exclusion cannot be a cruel
and unusual punishment.
Therefore, Petitioner's argument that exclusions are subject to Eighth Amendment
prohibitions is without
merit.
Petitioner argues that his advanced age and poor health, coupled with his desire
to teach, are factors which
should lessen the penalty in this case. Petitioner also argues that his involvement
in the activities which
ultimately led to his conviction was minimal and peripheral, compared with the
culpability of his co-
conspirators. Petitioner indicates that he has no desire to actively practice
pharmacy, only to teach others.
First, Petitioner is not prohibited from engaging in private practice or from
teaching; he is only excluded
from the Medicare and Medicaid programs. Second, I cannot reduce a mandatory
five year exclusion.
Section 1128(c)(3)(B) provides that the minimum term for any exclusion imposed
under section 1128(a)(1)
is five years. The Act and the regulations require me to uphold the provisions
of the Act as authored by
Congress. Because the I.G. correctly determined that Petitioner was convicted
within the meaning of
sections 1128(i) and 1128(a)(1) of the Act, Petitioner's exclusion for a period
of five years is required as a
matter of law.
IV. Summary Disposition Is Appropriate In This Case.
The issue of whether the I.G. had the authority to exclude Petitioner under
section 1128(a)(1) is a legal
issue. I have concluded as a matter of law that Petitioner was properly excluded
and that the length of his
exclusion is mandated by law. There are no genuine issues of material fact which
would require the
submission of additional evidence, and there is no need for an evidentiary hearing
in this case.
Accordingly, the I.G. is entitled to summary disposition as a matter of law.
Charles W. Wheeler and Joan
K. Todd, supra.
CONCLUSION
Based on the undisputed material facts, the evidence and the law, I conclude
that Petitioner was convicted
of a criminal offense within the meaning of section 1128(a)(1) of the Act. I
conclude that the I.G.'s
determination to exclude Petitioner from participation in Medicare and Medicaid
programs for five years
was mandated by law. Therefore, I enter summary disposition in favor of the
I.G.
_________________________Charles E. Stratton
Administrative Law Judge
1. "State health care program" is defined by section 1128(h) of the
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 parties' submissions will be referred to as follows:
I.G.'s Exhibits I.G. Ex. (number/page)
Petitioner's Exhibits P. Ex. (number/page)
I.G.'s Brief I.G. Br. (page)
Petitioner's Brief P. Br. (page)
Petitioner's Second P. Sec. Br. (page)
Brief
Departmental Appeals Board
- ALJ decisions DAB CR (docket no./year)
- Appellate decisions DAB (no./year)
3. In light of the federal regulations at 57 Fed. Reg. 3298 et seq., published
on January 29, 1992, I
permitted the parties to submit additional briefs addressing the impact of the
new regulations on this case.
Petitioner took this opportunity to submit an additional brief (Pet. Sec. Br.).
The I.G. stated that the new
regulations should not impact upon my determination in this case.
4. Petitioner correctly notes that the judgment of sentence of the Michigan
State Court, I.G. Ex. 1,
contains a mistake. The document refers to counts five and six as the counts
for which judgment was
entered. However, Count Six of the indictment states that Sidney Brickman was
charged with a common
plan or scheme to unlawfully deliver controlled substances, whereas Count Four
states that John
Strausbaugh was charged as common plan or scheme to unlawfully deliver controlled
substances.
Petitioner concedes this mistake by the Court is harmless error for the purposes
of these proceedings,
because he is not contesting the fact that he was convicted of a common plan
or scheme to unlawfully
deliver controlled substances.