Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Nabil Zawaideh, R.Ph., Petitioner,
- v. -
The Inspector General.
DATE: November 4, 1992
Docket No. C-92-112
Decision No. CR239
DECISION
The case comes to me on the timely request for hearing filed by Nabil Zawaideh,
R.Ph. ("Petitioner"
herein), under 42 C.F.R. 1005.2 (1992). Petitioner contests the sanctions imposed
by the Inspector
General (I.G.) of the Department of Health and Human Services (DHHS) under section
1128(a)(1) of the
Social Security Act (Act), 42 U.S.C. 1320a-7(a). By delegation from the Secretary
of DHHS, the I.G. has
the authority to determine and impose sanctions under said law. 48 Fed. Reg.
21662 (May 13, 1983).
Petitioner takes issue with the I.G.'s determination that he should be excluded
from partici-pating in the
Medicare and relevant State health care programs for the minimum period of five
years mandated by law
due to his conviction for a program-related crime. 1/ See, 42 U.S.C. 1320a-7(a),
(c)(3)(B), and (i).
It is undisputed that the I.G. had initially sought to notify Petitioner of
the five-year exclusion by notice
dated April 14, 1992. On receiving Petitioner's protest concerning the nonreceipt
of this April 14, 1992
letter, the I.G. reinformed Petitioner of this mandatory five-year exclusion
by letter dated May 13, 1992.
Further, the I.G. denied Petitioner's request for staying the exclusion pending
the disposition of Petitioner's
assets. The effective date of the exclusion was changed to the date of the reissued
notice, May 13, 1992.
Petitioner then requested a hearing by letter dated May 27, 1992.
On July 15, 1992, the I.G. moved for summary disposition, with a supporting
brief and the various
attachments detailed below. Petitioner responded on August 14, 1992. The I.G.
chose not to file a reply
brief.
In the absence of any genuine issue of material fact, and in consideration
of the record, the relevant laws
and regulations, and legal precedents that are controlling, I enter summary
judgment in favor of the I.G..
ISSUE
As specified by section 1128(a)(1) of the Act, the sole issue is whether a
basis for the imposition of the
sanction exists; that is,
a. whether Petitioner was "convicted" of a criminal offense,
and
b. whether Petitioner's "conviction" related to the delivery of
an item or service under the Medicare or
Medicaid Programs
as required by section 1128(a)(1) of the Act.
APPLICABLE LAW
Section 1128 of the Act mandates that persons or entities convicted of a program-related
crime (i.e.,
"criminal offense related to the delivery of item or service under Title
XVIII or under any State health care
program") be excluded from participation in the Medicare and Medicaid Programs
for a period of not less
than five years. Sections 1128(a)(1) and (c)(3)(B) of the Act. For purposes
of the law, "convicted"
includes "when a plea of guilty or nolo contendere by the individual or
entity has been accepted by a
federal, State, or local court . . . ." Section 1128(i) of the Act.
Section 1102 of the Act, 42 U.S.C. 1302(a), authorizes the Secretary of DHHS
to "make and publish such
rules and regulations not inconsistent with this Act, as may be necessary to
the efficient administration of
the functions" with which he has been charged.
The final regulations promulgated by the Secretary of DHHS on January 29, 1992,
limit the issues in
hearings before administrative law judges in exclusion cases. At most, individuals
may raise only the
following two issues:
1. Whether the basis for the imposition of the sanction exists.
and
2. Whether the length of exclusion is unreasonable.
42 C.F.R. 1001.2007(a)(1). The same regulation also specifies that, where the
I.G. has imposed sanctions
pursuant to the mandatory provisions of the statute, and the exclusion is for
the minimum period of five
years, there is no right to a hearing on the issue of whether the length of
exclusion is reasonable. 42 C.F.R.
1001.2007(a)(2).
Other sections of the regulations reemphasize the statutory mandate that no
exclusion imposed for any
program-related conviction shall be for less than five years. 42 C.F.R. 1001.102(a).
Therefore, no
mitigation factor shall be considered in any case where the I.G. has imposed
the minimum exclusion. 42
C.F.R. 1001.102(c).
As especially relevant to many of the arguments made by Petitioner, the final
regulations promulgated by
the Secretary of DHHS also state:
The OIG [Office of I.G.] will exclude any individual or entity that --
(a) Has been convicted of a criminal offense related to the delivery of an
item or service under Medicare
or State health care program, including the performance of management or administrative
services related
to the delivery of items or services under any such program . . . .
42 C.F.R. 1001.101 (emphasis added).
When the exclusion is based on the existence of a conviction . . . , the basis
for the underlying
determination is not reviewable and the individual or entity may not collaterally
attack the underlying
determination, either on substantive or procedural grounds, in this appeal.
42 C.F.R. 1001.2007(d).
Finally, it is well settled that all components of an agency are bound by duly
promulgated substantive rules,
which have the force of law. See, e.g., Dyer v. Secretary of Health and Human
Services, 889 F.2d 682,
685 (6th Cir. 1989) (discussion of differences between an agency's policy statements
and substantive
rules).
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. During the time period relevant to these proceedings, Petitioner was a registered
pharmacist and the
owner of Seven-Van Pharmacy in the State of Michigan. I.G.'s Brief at p. 1 and
Petitioner's Brief at p. 3.
2. As owner of Seven-Van Pharmacy, Petitioner has had a Medicaid provider number,
which was used to
file claims with the State of Michigan under the Medicaid Program. I.G. Exhibit
(Ex.) 2 at p. 29 and
Petitioner's Brief at p. 3.
3. On June 21, 1991, Petitioner pled nolo contendere in the Circuit Court of
Michigan to 10 counts of
filing false Medicaid claims during the period from August 22, 1986 to January
2, 1987, in violation of the
State's Medicaid False Claim Act. I.G. Ex. 2.
4. Petitioner's nolo contendere plea to the 10 counts was accepted by a court
of competent jurisdiction.
I.G. Ex. 2, 3.
5. The statute directs the I.G. to consider the State court's acceptance of
Petitioner's nolo contendere plea
as a "conviction" for purposes of determining and imposing sanctions
under section 1128 of the Act.
6. The filing of false claims for reimbursement by the Medicaid Program, for
which Petitioner was
convicted, was related to the delivery of an item or service under the Medicaid
Program.
7. In requesting and obtaining payments from the Medicaid Program for false
claims, Petitioner has caused
harm to the Medicaid Program.
8. Petitioner's criminal conviction in State court for the use of his Medicaid
provider number to repeatedly
file false claims, and in obtaining payments from the State Medicaid Program
pursuant to these false
claims, is a conviction for a program-related crime, within the meaning of section
1128(a)(1) of the Act.
9. The I.G. acted properly under the law by imposing the mandatory exclusion
of not less than five years
directed by statute for Petitioner's program-related criminal conviction.
ANALYSIS OF FACTS AND LAW
A. The Parties' Contentions
On July 15, 1992, the I.G. moved for summary disposition, contending that there
exists no genuine issue of
material fact and that, as a matter of law, the outcome of this case is controlled
by section 1128 of the Act.
Petitioner agreed with the I.G. that he did plead nolo contendere to 10 counts
of filing false Medicaid
claims and that his plea had been accepted by the presiding judge. Petitioner's
Brief at p. 3. Petitioner
opposed his exclusion, however, on the basis that he was not convicted of a
criminal offense related to the
delivery of an item or service under section 1128(a)(1) of the Act. Further,
Petitioner argued that
imposition of the mandatory five-year exclusion is punitive in nature and violative
of his rights under the
U.S. and Michigan Constitutions. He contended also that the I.G. has caused
him harm by having taken an
excessive amount of time in notifying him of the exclusion.
Both parties seem to be in agreement that the moving party is entitled to summary
judgment only when,
even by viewing the evidence and the inferences arising therefrom in favor of
the nonmoving party, there
exists no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law.
B. The Supporting Documents Tendered by the Parties
As earlier noted, the parties have attached to their briefs various documents
marked as exhibits in support
of their respective arguments. The I.G. originally relied on four exhibits but
later withdrew Ex. 4 by letter
dated July 21, 1992. Petitioner also attached as support a copy of the document
that duplicates I.G. Ex. 2.
I admit I.G. Ex. 2 and 3 but will not admit Petitioner's duplicative exhibit.
Even though neither side has
objected to the admission of any exhibit, I will analyze the relevancy of each
of the three remaining non-
duplicative exhibits and especially explain why I am rejecting I.G. Ex. 1.
I.G. Ex. 1 is irrelevant. This exhibit is a copy of the nine-count Complaint
filed against Petitioner on
August 10, 1988. This Complaint does not jibe with the I.G.'s assertion that
Petitioner had pled nolo
contendere to 10 counts of filing false Medicaid claims (I.G. brief at p. 1),
nor with the Petitioner's
acknowledgement of this same plea (Petitioner's brief at p. 3). In fact, the
transcript of the plea
proceedings, submitted by the I.G. as Ex. 2 and also adopted as an exhibit by
the Petitioner in his own
support, makes quite clear that Petitioner had only pled nolo contendere to
the 10 counts contained in the
amended Information filed June 4, 1991 in Circuit Court. See I.G.'s Ex. 2 at
p. 10. Neither party has
indicated that the nine-count Complaint dated August 10, 1988 has any bearing
on the dispute before me.
Accordingly, this exhibit does not give rise to any triable issue and is stricken
for its irrelevancy.
I.G. Ex. 2, a copy of the transcript of Petitioner's plea proceedings in the
Circuit Court for the County of
Ingham, Michigan, is clearly relevant and admissible. Neither side questions
its reliability, and both draw
from its contents to support their respective positions.
I.G. Ex. 3, a copy of the Order of Probation and Judgment of Sentence dated
September 4, 1991, is also
material and reliable for the same reasons.
Even though neither party has submitted a copy of the amended Information filed
on June 4, 1991 in the
Circuit Court of Michigan (i.e., the 10 charges to which Petitioner pled nolo
contendere and for which he
was convicted), the transcript of the plea proceedings together with Petitioner's
admissions in his brief
provide all the facts material to resolution of this case under the laws and
regulations that are binding on
me. See especially Petitioner's Brief at pp. 3-4 and I.G. Ex. 2 at p. 10. The
amended Information, had it
been submitted, would have provided some additional background details. Its
absence from the record
does not give rise to any issue of material fact.
C. The Relationship Between Petitioner's Conviction and the Medicaid Program
Petitioner argued that he should not have been excluded for a program-related
conviction because, among
other reasons, his "conviction is no more than a crime of fraud which occurred
after the delivery of the
item or service rather than one related to the delivery of an item or service."
Petitioner's Brief at p. 6. He
asserted that "the billing performed in connection with the fraud more
correctly constitutes the crime of
obtaining money under false pretense" under another Michigan criminal statute
cited in his brief. Id.. He
contended, therefore, that the I.G. should have acted under the permissive exclusion
provisions, section
1128(b) of the Act, because his conviction was for fraud unrelated to the delivery
of an item or service.
In rejecting Petitioner's position, I will first point out that neither the
I.G. nor I can substitute Petitioner's
preferred conviction for his actual conviction. The question of whether or not
Petitioner has violated
another Michigan statute as well, such as the one cited in his brief, is not
litigable before me. Petitioner's
actual conviction, the only one reflected by the record, decides whether the
I.G. had the proper basis for
imposing the mandatory exclusion for a period of not less than five years.
Even though the Act does not list examples of what constitute criminal offenses
related to the delivery of a
program item or service, the commentaries to the current regulations have made
clear that it was the
Secretary's intent that the I.G. continue to analyze the program-relatedness
of each conviction on a case-by-
case basis as he has done over the years. 57 Fed. Reg. 3298, 3303 (Jan. 29,
1992). There is no indication
that the I.G. has abused his discretion in this case. In fact, the I.G.'s application
of the law was in accord
with the Departmental Appeals Board's interpretations of the statutory test.
The Board has held that the statutory test is met when the Medicare or Medicaid
Program is the victim of
the criminal offense. Napoleon S. Maminta, M.D., DAB 1135 (1990). A criminal
offense also meets the
statutory test where the delivery of an item or service is an element in the
chain of events giving rise to the
item or service. See, e.g., Jack W. Greene DAB 1078 (1989), aff'd sub nom. Greene
v. Sullivan, 731 F.
Supp. 835, 838 (E.D. Tenn. 1990) (Greene); Travers v. Sullivan, 2 MMLR Para.
144 (E.D. Wash. 1992)
(Greene). In Greene, the petitioner was convicted of filing a fraudulent Medicaid
reimbursement claim
(prescription for a Medicaid-covered drug), and an appellate panel of the Board
held that the offense was
within the meaning of section 1128(a)(1) of the Act. In Travers, also, the petitioner
was convicted for
filing a false Medicaid reimbursement claim (using the wrong billing code number),
and the court affirmed
the Board's holding that the offense was program-related.
The record in the case before me leaves no doubt that Petitioner's offense has
met the statutory test.
Petitioner was in fact prosecuted by the Michigan Attorney General's Health
Care Fraud Division under the
Michigan Medicaid False Claims Act for using his Medicaid provider number to
file multiple false claims
with Medicaid and thereby receive Medicaid money to which neither he nor his
pharmacy was legally
entitled. Medicaid reimburses only for covered items or services actually rendered
under the Program;
Petitioner, who owned Seven-Van Pharmacy, received Medicaid payments only because
certain claims
falsely asserted that items or services had been delivered under the Program.
The transcript of the plea
proceedings shows that Petitioner was fully apprised of his rights -- including
his right to be presumed
innocent until the State proves him guilty beyond a reasonable doubt under the
criminal statute -- and that
Petitioner knowingly waived his rights in pleading nolo contendere to 10 counts
of filing false Medicaid
claims. Since the Judgment of Sentence requires Petitioner to pay the State
of Michigan $85,900.00 in
restitution, I also conclude that he had derived financial benefit at the expense
of the Medicaid Program.
The Program had been injured and victimized by Petitioner's criminal activities.
Therefore, even if I were
to believe Petitioner's arguments that his actions constituted another type
of criminal offense as well, the
facts have already established that Petitioner's conviction was "program-related"
within the meaning of
section 1128(a)(1) of the Act.
Petitioner's assertions of personal innocence under State law and his references
to his efforts to set aside the
Michigan Medicaid False Claims Act in State proceedings have created no legally
cognizable issue before
me. As already noted in the "Applicable Law" section, Petitioner has
no right to be heard by me on the
validity of his conviction, and he may not collaterally attack his conviction
in appealing his exclusion from
the Medicare and Medicaid Programs. 42 C.F.R. 1001.2007(d). See, also, Peter
J. Edmonson, DAB 1330
(1992). Also, the regulations direct the I.G. to consider the conviction "related
to the delivery of an item or
service" even if the convicted individual had been performing only the
management or administrative
services involved therewith. 42 C.F.R. 1001.101(a).
D. The Applicability of Mandatory Sanctions
I further reject Petitioner's arguments that the I.G. should have limited his
actions to the permissive
exclusion provisions of section 1128 of the Act and imposed the permissive exclusion
first. Where, as
here, the only conviction was program-related, the law directed the I.G. to
impose an exclusion of not less
than five years. Even where the same conviction could give rise to mandatory
as well as permissive
exclusions, the Board has already decided that the I.G. must impose the mandatory
exclusion when the
conviction falls within the meaning of section 1128(a). See, e.g., Niranjana
B. Parikh, M.D., et al., DAB
1334 at 6-7 (1992), and DAB cases cited therein.
In Travers, the court had occasion also to address arguments very similar to
the ones presented to me: that
the permissive exclusion provisions, instead of the mandatory exclusion provisions,
applied to a conviction
for filing false Medicaid claims. The court rejected these arguments by reasoning
that the permissive
exclusion issue became moot once the prerequisites of the mandatory exclusion
have been satisfied: "[i]t is
only after the Secretary determines that the individual's conviction was not
for a `program related crime'
that the permissive exclusion statutes become relevant." 2 MMLR Para. 144
at p. 579. I therefore find no
basis for accepting Petitioner's contentions concerning the applicability of
permissive sanctions to this case.
I have been unable to find any authority for Petitioner's contention that a
doctrine of lenity exists or is
applicable in this case. Nor has Petitioner cited any support for his proposition.
I note, however, that
Congress has already specified five years as the most lenient exclusion the
I.G. could impose under the
facts of this case. Neither I nor the I.G. has the discretion to create a more
lenient standard even if a
doctrine of lenity generally exists as asserted.
E. Petitioner's Constitutional Arguments
As for Petitioner's constitutional arguments and the remedy he seeks based thereon,
I would first note that
as an administrative law judge, I am without legal authority to declare a statute
unconstitutional or to alter
the clear mandate of Congress. Moreover, it has been well settled by the Board
that the statutory sections
at issue are not punitive in nature. See, e.g., John A. Crawford, M.D., DAB
1324 at 5-9 (1992). The
constitutionality of administrative exclusions based on criminal convictions
has also been extensively
discussed in the commentaries to the new regulations. 57 Fed. Reg. 3298, 3300-01
(Jan. 29, 1992). The
published rationale of the agency, including the court decisions cited therein,
have further persuaded me
that summary disposition must be entered in the I.G.'s favor notwithstanding
Petitioner's constitutional
claims.
To the extent that Petitioner has tied his constitutional theory to his factual
contention that the exclusion
will deprive him of a living (Petitioner's Brief at p. 10), I feel constrained
to point out that the Constitution
does not guarantee any individual the right to make a living as a Medicare or
Medicaid supplier. How
Petitioner might be able to earn his living as a pharmacist or otherwise outside
the Medicaid or Medicare
Programs is not an issue of constitutional proportions. No citizen has been
required to earn his living by
participating in either Program, and the Constitution does not guarantee anyone
the right to make his living
from these federally funded programs.
Generally, pharmacists and other vendors in the health care field may apply
to participate in these
programs by agreeing to follow the rules set by Congress and the Secretary.
As a condition of
participation, they also agree that should they breach the rules, they would
abide by the consequences
specified by Congress and the Secretary. Like other vendors, Petitioner had
voluntarily subjected himself
to the jurisdictions of those federal laws governing Medicare and Medicaid participants.
On its face, the
I.G.'s exclusion determination does not deprive Petitioner of his right to make
a living; it merely keeps
Petitioner from receiving Medicare or Medicaid funds in making his living for
five years. Due to
Petitioner's failure to abide by his obligations, the government has merely
revoked a privilege it had
voluntarily granted to him.
F. Petitioner's Arguments Concerning Prejudicial Delay
Petitioner also contended that he has been harmed by the I.G.'s excessive delay.
To support his contention
that excessive delay had occurred, he asserted that he entered his plea in June
1991, and the I.G. did not
issue his exclusion notice until April 1992. I am unable to construe the contentions
of excessive delay and
ensuing harm as raising any valid issue that might be resolved in Petitioner's
favor.
First, it is not within my authority to consider the amount of time taken by
the I.G. to impose and direct
exclusions. See Samuel W. Chang, M.D., DAB 1198 (1990). The regulations do not
authorize an
administrative hearing on this matter.
Even if Petitioner has a right to a hearing on the amount of time taken by
the I.G. to impose the exclusion, I
would find against Petitioner on the basis of other relevant undisputed chronology
of record. According to
the I.G.'s exhibits, Petitioner violated the Medicaid False Claims Act from
August of 1986 to January of
1987, but did not enter his plea until June 21, 1991 (I.G. Ex. 2 at p. 10);
it then took until September 9,
1991 before the "Order of Probation and Judgment of Sentence" was
entered (I.G. Ex. 3); the I.G. first
issued an exclusion notice on April 14, 1992, which Petitioner said he did not
receive; and the I.G. then
reissued the exclusion notice on May 13, 1992. Since the Act does not specify
any time limits under which
the I.G. must act, the length of time taken by the I.G. to issue his notice
of exclusion in this case does not
appear excessive or unreasonable.
I point out to Petitioner also that his arguments concerning prejudicial delay
seem totally disingenuous
given that previously he had asked the I.G. to stay the exclusion. According
to the I.G.'s letter of May 13,
1992, Petitioner wanted the exclusion delayed so that he could have more time
to disburse his assets. At
that time, Petitioner's request implied that "delay" had been and
would be to his benefit. It was the I.G.
who refused to delay the effective date of the exclusion.
It seems that faulty arithmetic has given rise to Petitioner's argument that
"[i]f respondent is allowed to
exclude petitioner for the mandatory five years as it now contends, respondent's
belated notice will have
effected [sic] petitioner's exclusion from participation in the program for
almost one year longer than
contemplated by the Social Security Act." Petitioner's Brief at p. 14.
The exclusion mandated by law runs
for five years after its starting date, not before. That is to say, Petitioner
was able to participate in the
Programs until the I.G.'s letter informed him that the exclusion was to begin
May 13, 1992. There is no
factual basis for Petitioner's suggestion that being excluded until May 13,
1997 prejudices him, whereas
having the five-year exclusion begin immediately upon his entering his plea
on June 21, 1991, or, for
example, having it stayed pending the distribution of his assets, as he had
requested, would not have
prejudiced him.
Conclusion
For the foregoing reasons, I have concluded that there exists no genuine issue
of fact on the sole legal issue
before me: whether the I.G. had a basis for imposing the minimum five-year exclusion
specified by law for
a program-related conviction. The record as presently constituted contains all
the facts necessary to decide
the case. Even though Petitioner has opposed summary disposition, he has failed
to establish any real issue
of material fact with his submissions. Controlling laws, regulations, and Board
precedents require rejection
of Petitioner's legal arguments and characterization of the facts he has sought
to place into controversy.
There is no basis for Petitioner to prevail on any legally cognizable issue
of law or fact before me, and
there is no legitimate interest to be served by proceeding to an in-person hearing.
In sum, I find that the
I.G. is entitled to summary judgment as a matter of law.
____________________________
Mimi Hwang Leahy
Administrative Law Judge
1. "State health care plans," defined at section 1128(h) of the Act,
denotes various State health care
programs receiving federal funds under Titles XIX, V, and XX of the Act. Unless
the context indicates
otherwise, Medicaid, which is funded under Title XIX, will be used as an abbreviation
for "State health
care plans" when discussing sanctions under section 1128 of the Act.