James D. Redd, M.D., CR No. 213 (1992)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
James D. Redd, M.D.,

Petitioner,
- v. -
The Inspector General.

DATE: July 7, 1992

Docket No. C-92-070

DECISION

By letter dated January 15, 1992, James D. Redd, M.D., the Petitioner herein, was notified by the Inspector
General (I.G.), Department of Health & Human Services (HHS), that, pursuant to section 1128(a)(1) of the
Social Security Act (the Act), he would be excluded for a period of five years from participation in the
Medicare program and State health care programs as defined in section 1128(h) of the Act (referred to here
as Medicaid). The reason given for this exclusion was Petitioner's conviction 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 by an administrative law judge. The I.G.
moved for summary disposition of the case. Inasmuch as there are no material facts in dispute, I conclude
that there is no need for oral testimony or the confrontation of witnesses, and that summary disposition is
appropriate. I further conclude that, under the facts of this case, a five-year exclusion is mandatory, and,
accordingly, I enter summary disposition in favor of the I.G.


Applicable Law

Sections 1128(a)(1) and (c) of the Act (codified at 42 U.S.C. 1320a-7 (a)(1) and (c) (1988) 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 partici-pation in such programs for a
period of at least five years.

Section 1128(i) of the Act provides that an individual will be regarded as having been convicted when a
judgment of conviction has been entered against him by a competent court (regardless of whether there is
an appeal pending or whether the judgment is ultimately expunged); or when there has been a formal
finding of guilt by a court; or when a court accepts a nolo or guilty plea; or when a court defers judgment
to allow a guilty defendant who complies with certain conditions to preserve a clean record.


Argument

Petitioner contends that he was not convicted within the meaning of the statute inasmuch as there was no
finding by the court that he was guilty, no sentencing, and his plea, although entered, was not accepted by
the court, but was held in abeyance pending payment of restitution and costs. Subsequently, the plea was
withdrawn and the charge dismissed.


Findings of Fact and Conclusions of Law 1/

1. During the period relevant to this case, Petitioner was a licensed physician and Medicaid provider in the
State of Utah.

2. On June 3, 1991, Petitioner pled guilty in the Third Circuit Court in and for Salt Lake County, State of
Utah, to filing a false Medicaid claim, resulting in overpayment for services rendered. I.G. Ex. 3, 5.

3. Petitioner and the Utah Attorney General entered into a Plea Agreement whereby Petitioner would pay
restitution, costs, and a penalty, totalling $12,000.
I.G. Ex. 4.

4. The parties agreed that as long as Petitioner complied with the Plea Agreement, they would recommend
that the court hold his guilty plea and sentencing in abeyance. I.G. Ex. 4.

5. The court accepted Petitioner's guilty plea.

6. On February 6, 1992, following the payment by Petitioner of restitution, costs, and penalty, as required
by the Plea Agreement, he was permitted by the court to withdraw his guilty plea and the charge against
him was dismissed. I.G. Ex. 8,9.

7. 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).

8. By letter dated January 15, 1992, Petitioner was notified by the I.G. that he would be excluded for five
years from participation in the Medicare and Medicaid programs, based upon his conviction of a criminal
offense related to the delivery of an item or service under Medicaid. I.G. Ex. 1.

9. Petitioner was "convicted" within the meaning of sections 1128 (i)(3) and (4) of the Act.

10. A criminal conviction for submitting a fraudulent bill to Medicaid 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).


Discussion

The section of the Act under which the I.G. seeks Petitioner's exclusion, 1128(a)(1), contains two
requirements. It requires that an individual (1) be convicted of a criminal offense, and (2) that such
conviction be related to the delivery of an item or service under Medicare or Medicaid.

As to the requirement that Petitioner have been convicted, the relevant statute, cited above, indicates that
there are essentially four sets of actions a court could take which would be regarded as a conviction -- i.e.,
the court could enter a judgment of conviction (it is immaterial whether there is an appeal pending or
whether the judgment is ultimately expunged); or the court could make a formal finding of guilt; or the
court could accept a guilty or nolo plea; or the court could defer judgment to allow a guilty defendant (who
complies with certain conditions) to preserve a clean record. As we have seen, Petitioner contends that the
Utah court did none of these things in his case.


In this regard, the evidence of record does not show that there was a formal finding of guilt or judgment of
conviction. However, I find that a preponderance of the evidence establishes that the court "accepted"
Petitioner's guilty plea, and further find that the fourth alternative for establishing conviction -- the
arranged deferral or withholding of judgment -- also has been met.

Petitioner submitted to the Utah court a document described as a waiver (I.G. Ex. 5) in which he pleads
guilty to filing a false Medicaid claim. This document was not signed by the judge, even though it
contained a place for him to affix his signature to indicate that the plea was accepted. Also, the I.G. did not
offer proof that the court had declared its acceptance verbally. However, the absence of an explicit
acceptance by the court does not mean that Petitioner's plea was not accepted, particularly where the
totality of the facts and circumstances indicates otherwise. Petitioner addressed his plea to the court; he
entered into an agreement with the prosecutor, an officer of the court, to recommend that the court hold in
abeyance any action on Petitioner's case; and, when restitution had been made, the withdrawal of the
charges and the plea was made with the court's explicit permission. I find that the inference to be drawn
from the court's overseeing and approving of this entire process, from entry of the plea through final
disposition of the charges, is that there was an acceptance of Petitioner's plea, in the context of a deferred
adjudication arrangement, thereby satisfying sections 1128 (i)(3) and (4) of the Act.

I recognize that at least one United States court has refused, in part, to sustain a similar decision by an
administrative law judge of the DAB regarding acceptance of a guilty plea. Michael Travers, M.D., v.
Louis Sullivan, No. CS-91-232-JLQ (E.D. Wash. 1992) (Travers). In Travers, however, the State court
whose action on the plea was in question not only had not formally "accepted" it, but also stated that it was
taking the plea under advisement, and that plea acceptance would require a further petition by the parties.
Thus, I find that the facts of the present case differ from Travers and are sufficient to support the inferences
and conclusion drawn.

The evidence shows that the agreement between Petitioner and the prosecutor which caused Petitioner to
plead guilty and ultimately led to his making restitution and the dismissal of the charges was not solely a
bargain involving only the prosecutor and a defendant. The court involved itself early in the process to
impose the restitution and later entered the case again to ascertain that the court-imposed conditions had
been met and to ratify the dismissal/withdrawal of the charges. This is indicative not only of the court's
pervasive involvement and acceptance of the plea and process, as noted above, but also shows that there
was a well-established deferred adjudication arrangement in the jurisdiction in question, which the court
and parties all expected to utilize. (Other decisions that are a matter of public record, such as the Travers
case, reveal that the procedure by which Petitioner avoided a formal judgment is apparently quite common
in Utah).

This holding and interpretation of the law are in accord with the intent of Congress with regard to section
1128. In H.R. Rep. No. 727, 99th Cong., 2d Sess. 75, 1986 U.S.C.C.A.N. 3607, 3665, the committee that
drafted section 1128 declared that persons who defraud Medicare or Medicaid should not escape exclusion
simply because their criminal cases are handled under first offender or deferred adjudication programs,
whereby a defendant pleads guilty but no actual judgment of conviction is entered against him, provided he
maintains good behavior and satisfies any other conditions that may be imposed. As noted in a prior
decision by a judge of this office, "Congress intended the definition of conviction in section 1128(i) to
include all circumstances where a party pleaded guilty to an offense, except where a conviction is vacated
on appeal." Gordon Lee Hanks, R.Ph, DAB CR44 (1989).

As to the requirement that the conviction be related to the delivery of an item or service under Medicare or
Medicaid, it has already been held that submitting fraudulent Medicaid claims constitutes a program-
related offense which justifies mandatory exclusion. Russell E. Baisley, et al., CR128 (1991), and Marie
Chappell, CR109 (1990).

Thus, I find that Petitioner was convicted of an offense related to the delivery of items under Medicaid, and
that, as a consequence, the mandatory provisions of Section 1128(a)(1) require his exclusion for a
minimum of five years.


Conclusion

Petitioner's conviction mandates a five-year exclusion pursuant to section 1128(a)(1) of the Act.

____________________________
Joseph K. Riotto
Administrative Law Judge

1. The I.G. and Petitioner submitted documentary exhibits and briefs. I admitted all the exhibits into
evidence and refer to them here as "I.G. Ex. ..." or
"P. Ex. ..."