Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Lloyd M. Kahn, D.P.M.,
Petitioner,
- v. -
The Inspector General.
DATE: May 22, 1992
Docket No. C-92-037
DECISION
By letter dated December 9, 1991, Lloyd M. Kahn, D.P.M., the Petitioner herein,
was notified by the
Inspector General (I.G.), U.S. Department of Health & Human Services (HHS),
that it had been decided to
exclude him for a period of five years from participation in the Medicare and
Medicaid programs
("Medicaid" here refers to the programs mentioned in section 1128(h)
of the Social Security Act (the Act)).
The I.G. explained that the five-year exclusion was mandatory under sections
1128(a)(1) and
1128(c)(3)(B) of the Act because Petitioner had been convicted of a criminal
offense related to the delivery
of an item or service under Medicaid.
Petitioner filed a timely request for review of the I.G.'s action.
The I.G. moved for summary disposition of the case. In the absence of disputed
material facts, I granted
the motion.
APPLICABLE LAW
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act make it mandatory for any
individual who has been
convicted of a criminal offense related to the delivery of an item or service
under Medicare or Medicaid to
be excluded from participation in such programs, for a period of at least five
years.
Section 1128(i)(1) of the Act provides that an individual is deemed to have
been convicted of a criminal
offense when a judgment of conviction has been entered against the individual
or entity by a Federal, State,
or local court, regardless of whether there is an appeal pending or whether
the judgment of conviction or
other record relating to criminal conduct has been expunged.
Sections 1128(b)(1) et seq. permit, but do not mandate, the exclusion from
these same programs of any
person whom the Secretary of HHS concludes is guilty, or has been convicted,
of health care related fraud,
kickbacks, false claims, or similar activities.
FINDINGS OF FACT AND CONCLUSIONS OF LAW 1/
1. During the period relevant here, Petitioner was a licensed podiatrist in
the State of New York and a
Medicaid provider.
2. On April 1, 1991, Petitioner pled guilty in New York State Supreme Court
to attempted grand larceny, a
misdemeanor. P. Ex. 3.
3. During a plea colloquy, Petitioner told the court that he was entering a
guilty plea because he was, in
fact, guilty. P. Ex. 3.
4. Petitioner was sentenced to conditional discharge. He was required to make
restitution in the amount of
$5,910.
5. The facts underlying Petitioner's conviction are that, during the period
1985 - 1986, he submitted
fraudulent bills to Medicaid claiming payment for having "provided foot
molds fabricated from casts to
various Medicaid recipients, when in fact he did not provide appliances made
from a cast." I.G. Ex. 2, 3.
6. The Secretary of Health and Human Services has delegated to the I.G. the
authority to determine and
impose exclusions pursuant to section 1128 of the Act. 48 Fed. Reg. 21662 (May
13, 1983).
7. On December 9, 1991, Petitioner was notified by the I.G. that it had been
decided to exclude him for a
period of five years from participation in the Medicare and Medicaid programs
because the criminal
conviction. I.G. Ex. 1.
8. A criminal conviction for fraudulently billing Medicaid for services not
rendered or goods not delivered
is sufficiently related to the delivery of an item or service under Medicare
or Medicaid to justify
application of the mandatory exclusion provisions of section 1128(a)(1).
9. The I.G. is not obliged to proceed under the permissive exclusion provisions
of section 1128(b) of the
Act against a person who committed fraud. Once such person has been convicted
of a program-related
offense, though, exclusion is mandatory under section 1128(a).
10. The permissive exclusion provisions of section 1128(b) apply to convictions
for offenses other than
those related to the delivery of an item or service under either the Medicare
or Medicaid programs.
11. The mandatory minimum exclusion required by section 1128(a) applies to
all exclusions based on
convictions occurring after August 18, 1987, the effective date of the Medicare
and Medicaid Patient and
Program Protection Act of 1987.
12. It is not necessary for the I.G. to prove intent in an 1128(a)(1) exclusion
action -- it is only necessary
that a relevant conviction be shown.
ARGUMENT
Petitioner maintains that he pled guilty to something he did not do (by this,
he means that he had no
intention to defraud when he submitted his bills) because he was unable to deal
with the financial and
psychological stresses of a trial. He also argues that his conviction for a
fraud-related offense should, if
anything, give rise to a permissive exclusion action under section 1128(b) rather
than to mandatory
exclusion under section 1128(a). Petitioner further objects to the retroactive
application of the mandatory
exclusion law and regulations to conduct which occurred in 1985 and 1986.
DISCUSSION
The first statutory requirement for mandatory exclusion pursuant to section
1128(a) is that the individual or
entity in question be convicted of a criminal offense under federal or State
law. In the present case, the
transcript of the New York Supreme Court proceedings and the certificate of
the clerk of the court (I.G. Ex.
3, 4) show that Petitioner pled guilty and that a conviction was entered against
him, thus satisfying the
Act's definition of "convicted" (1128(i)).
I also find that the requirement of section 1128(a)(1) -- that the criminal
offense leading to the conviction
be related to the delivery of an item or service under Medicare or Medicaid
-- has been satisfied. Specifi-
cally, it is well-established in DAB precedent that submitting fraudulent Medicaid
claims constitutes a
program-related offense which justifies mandatory exclusion. Russell E. Baisley
and Patricia Mary
Baisley, DAB CR128 (1991) and Marie Chappell, DAB CR109 (1990). 2/
This precedent comports fully with the intent of Congress that such suspensions
should "...serve as a
significant deterrent to fraudulent practices under Medicare and Medicaid"
and combat the "misuse of
Federal and State funds." H. Rep. No. 393, 95th Cong., 1st Sess. 44, 69
(1977), reprinted in 1977 U.S.
Code Cong. & Admin. News, 3039, 3047, 3072. Thus, the I.G.'s use of mandatory
exclusion here was
legally justified.
Petitioner argues that the I.G. should have proceeded under those sections
of the Act that deal with
permissive exclusion. In this regard, although there is apparent subject matter
overlap between the
mandatory exclusion for criminal conviction provisions of section 1128(a) and
some of the permissive
exclusions authorized by section 1128(b), section 1128(a) addresses only program-related
crimes and
requires action by HHS. Permissive exclusions, by contrast, may be based upon
a much wider spectrum of
misdeeds and their invocation is wholly discretionary. This distinction was
central to the decision rendered
by an appellate panel in Samuel W. Chang, M.D., DAB 1198 (1990), which held
that "the permissive
exclusion provisions of section 1128(b) apply to convictions for offenses other
than those related to the
delivery of an item or service under either the Medicare or Medicaid . . . programs."
There is also
precedent dealing with the scope of the Secretary's discretion, holding that
HHS is under no obligation to
institute a permissive exclusion under section 1128(b), but that once a person
has been convicted of a
program-related criminal offense, exclusion is mandatory. See
Leon Brown, M.D., DAB CR83, aff'd DAB 1208 (1990).
Petitioner attacked the application of section 1128(a)(1) to his case, contending
it was unlawful if applied
retroactively. This point, however, has been litigated before administrative
law judges and appellate panels
of the Departmental Appeals Board. It has been established, based upon clear
statutory language, that the
mandatory minimum exclusion applies to all exclusions based on convictions occurring
after August 18,
1987, the effective date of the Medicare and Medicaid Patient and Program Protection
Act of 1987, Pub. L.
100-93 15(b), 101 Stat. 698 (1987). See Francis Shaenboen, R.Ph., DAB 1249 (1991).
As to Petitioner's purported lack of intent to defraud, two things must be
noted: The transcript of the plea
proceedings in the New York court discloses that he admitted his guilt and did
not profess ignorance or
inadvertence. Furthermore, it is not necessary for the I.G. to prove intent
in an 1128(a)(1) exclusion action
-- it is necessary only that a relevant conviction be shown. Dewayne Franzen,
DAB 1165 (1990).
In light of the evidence adduced and the reasoning cited, Petitioner must be
excluded pursuant to section
1128(a)(1). Inasmuch as the exclusion and its minimum length are mandated by
statute, there is no basis
for the administrative law judge to consider mitigating evidence or to modify
the term of exclusion.
Howard B. Reife, D.P.M., DAB CR25 (1989).
CONCLUSION
Petitioner's exclusion based upon his criminal conviction is required by section 1128(a)(1).
____________________________
Joseph K. Riotto
Administrative Law Judge
1. Petitioner and the I.G. filed briefs, attached to which were exhibits. I
admitted the exhibits into
evidence and refer to them as "P. Ex. 1" or "I.G. Ex. 1,"
et seq.
2. Decisions have recently been rendered that are exactly on point with the
present proceeding. In Mark
Gventer, D.P.M., DAB CR173 (1992) and Eric Schwartz, D.P.M., DAB CR196 (1992),
it was determined
that the mandatory exclusion provisions of section 1128(a) of the Act apply
to podiatrists who defraud
Medicaid by billing the program for custom casts and molds for orthotic devices,
although they actually
delivered appliances not made from three-dimensional casts.