Howard B. Reife, D.P.M., CR No. 25 (1989)

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Departmental Appeals Board

Civil Remedies Division

In the Case of: Howard B. Reife, D.P.M., Petitioner,
- v. -
The Inspector General.

DATE: April 28, 1989
Docket No. C-64

DECISION OF ADMINISTRATIVE LAW JUDGE
ON MOTION FOR SUMMARY DISPOSITION

The Inspector General (the I.G.) notified Petitioner on August 31, 1988 that he was being excluded from
participation in Medicare and any State health care programs for a period of five years. The I.G. told
Petitioner that his exclusions were due to his conviction of a criminal offense related to the delivery of an
item or service under the Medicare program. Petitioner was advised that the law required five year
minimum exclusions from participation in Medicare and State health care programs for individuals
convicted of a program-related offense.

Petitioner timely requested a hearing, and the case was assigned to me for a hearing and decision. I
conducted a prehearing conference on December 20, 1988, at which the I.G. stated that he intended to
move for summary disposition. I issued a prehearing Order on December 23, 1988, which established a
schedule for filing the motion and responding to it, and which also provided for oral argument on the
motion. The I.G. filed a motion for summary disposition which was opposed by Petitioner. Petitioner also
moved for summary disposition in his favor. The I.G. requested leave to file a reply to Petitioner's motion,
which I granted. Petitioner requested oral argument, and I conducted oral argument in Kansas City,
Missouri, on April 17, 1989.

I have considered the arguments of the parties, the undisputed material facts, and applicable law and
regulations. I conclude that the exclusions imposed and directed by the I.G. are mandatory. Therefore, I
am deciding this case in favor of the I.G.


ISSUES

The issues raised by the parties are whether:

1. the delegation of authority by the Secretary of Health and Human Services (the Secretary) to
the I.G. to determine and impose or direct exclusions pursuant to 42 U.S.C. 1320a-7 is unlawful;

2. the Secretary is required to adopt regulations implementing the 1987 revisions to 42 U.S.C.
1320a-7 before the I.G. may make exclusion determinations pursuant to the law;

3. summary disposition is appropriate in this case; and

4. given the undisputed material facts, the I.G.'s determination to exclude Petitioner from
participation in the Medicare program, and to direct that he be excluded from participation in State health
care programs, 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 to exclude from participation in the Medicare program, and to
direct the exclusion from participation in any State health care programs of, any individual or entity
"convicted of a criminal offense related to the delivery of an item or service" under Medicare or any State
health care program. "Conviction" is defined at 42 U.S.C. 1320a-7(i) to include those circumstances when
a party pleads guilty to a criminal charge. The law provides, at 42 U.S.C. 1320a-7(c)(3)(B), that for those
excluded under section 1320a-7(a), the minimum exclusion period shall be five years.

The law also provides the Secretary with discretion in certain enumerated circumstances to exclude parties
from participation in Medicare and to direct their exclusion from participation in State health care
programs. 42 U.S.C. 1320a-7(b)(1)-(14). The law does not prescribe a minimum exclusion period in such
cases.

The current law was enacted in August 1987 and embodies revisions of preexisting law. Prior to August
1987, the law provided, at 42 U.S.C. 1320a-7(a), that the Secretary must bar from participation in
Medicare, and direct debarment from participation in State plans approved under Title XIX, any physician
or other individual "convicted . . . of a criminal offense related to such individual's participation in the
delivery of medical care or services under title XVIII, XIX, or XX . . . ." Unlike current law, the law did
not prescribe a minimum suspension or exclusion period for such mandatory suspensions. Furthermore,
the law did not grant the Secretary the discretionary exclusion authority for the grounds now provided by
42 U.S.C. 1320a-7(b).

Both the pre-1987 law and the current law provide that an excluded party may request a hearing as to the
exclusion. The law presently states, at 42 U.S.C. 1320a-7(f), that an excluded party is entitled to a hearing
to the same extent as is provided in 42 U.S.C. 405(b). That section provides that a party entitled to an
administrative hearing by virtue of an adverse decision by the Secretary shall be given reasonable notice
and opportunity for a hearing before the Secretary "with respect to such decision."

2. Regulations Governing Suspension, Exclusion, or Termination of Practitioners, Providers,
Suppliers of Services, and Other Individuals: The Secretary delegated to the I.G. the authority to
determine, impose, and direct exclusions pursuant to section 1128 of the Social Security Act. 48 Fed. Reg.
21662 (May 13, 1983.) Regulations governing suspension and exclusion of individuals pursuant to section
1128 and this delegation are contained in 42 C.F.R. Part 1001. Section 1001.123(a) provides that when the
I.G. has conclusive information that an individual has been convicted of a program-related crime, he shall
give that individual 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 cases where the I.G. may exercise discretion.

Section 1001.128 provides that an individual 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 Medicare, Medicaid, or
social services program; and (3) whether the length of the exclusion is reasonable.


FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. Petitioner is a Doctor of Podiatry. P. Ex. A-1.

2. On March 28, 1988, Petitioner was charged with the federal criminal offense of knowingly and
willfully making false and material statements and representations in applications for Medicare payments.
I.G. Ex. 4.

3. The criminal information filed against Petitioner specifically charged him with executing and
submitting Medicare claim forms for podiatric services which contained false and fraudulent statements
relating to the type of podiatry services allegedly provided to Medicare patients. I.G. Ex. 4.

4. The criminal information filed against Petitioner was filed pursuant to a plea agreement entered
between Petitioner and the United States Attorney. I.G. Ex. 3. The agreement recited that the information
would be filed against Petitioner, and that Petitioner agreed to plead guilty to the charges contained in the
information. Id.

5. On May 25, 1988, Petitioner pleaded guilty to the charges in the information. I.G. Ex. 5.
Petitioner was sentenced to three years' probation, the requirement that he contribute 400 hours of
community service, a $5,000 fine, and a $25.00 special assessment. Id.

6. The offense which Petitioner pleaded guilty to is a criminal offense related to the delivery of an
item or service under the Medicare program. 42 U.S.C. 1320a-7(a)(1).

7. Petitioner's guilty plea is a conviction as defined by 42 U.S.C. 1320a-7(i).

8. The minimum mandatory exclusion period is five years for a person who has been excluded
based on conviction of a criminal offense related to the delivery of an item or service under Medicare.

9. The Secretary delegated to the I.G. the duty to exclude from participation in Medicare, and to
direct the exclusion from participation in State health care programs, persons whose exclusion is required
or permitted under 42 U.S.C. 1320a-7. 48 Fed. Reg. 21662 (May 13, 1983.)

10. I do not have authority to decide whether the Secretary's delegation of duties to the I.G.
pursuant to 42 U.S.C. 1320a-7 is lawful. 42 U.S.C. 1320a-7(f); 42 U.S.C. 405(b); 42 C.F.R. 1001.128.

11. I do not have authority to decide whether the Secretary is required to adopt regulations
implementing the 1987 revisions to 42 U.S.C. 1320a-7 before the I.G. may make exclusion determinations
pursuant to the law. 42 U.S.C. 1320a-7(f); 42 U.S.C. 405(b); 42 C.F.R. 1001.128.

12. There do not exist disputed issues of material fact in this case; therefore, summary disposition
is appropriate. See Federal Rules of Civil Procedure, Rule 56.

13. The I.G. excluded Petitioner from participation in the Medicare program, and directed that
Petitioner be excluded from participation in State health care programs, for five years, based on Petitioner's
conviction of a criminal offense related to the delivery of an item or service under the Medicare program.
The exclusions are mandatory and for the minimum period of time required by law. 42 U.S.C. 1320a-
7(a)(1) and (c)(3)(B).


ANALYSIS

The I.G. bases his motion for summary disposition on Petitioner's conviction of a federal criminal offense
of making false statements and representations in claims for Medicare reimbursement, and the provisions
of 42 U.S.C. 1320a-7(a)(1), which mandate five year exclusions from participation in the Medicare and
State health care programs for persons convicted of criminal offenses related to the delivery of an item or
service under the Medicare or Medicaid programs. The I.G. asserts that Petitioner was convicted of an
offense "related to" the delivery of an item or service under the Medicare program; therefore, Petitioner's
exclusions were mandatory.

Petitioner does not deny that he was convicted of a criminal offense, nor does he deny the particulars of his
conviction. However, he challenges his exclusions on the following bases: (1) the Secretary's delegation
of authority to the I.G. to impose and direct exclusions pursuant to 42 U.S.C. 1320a-7 is unlawful; (2)
Petitioner's exclusions are contrary to law because the Secretary has not yet adopted regulations
implementing the 1987 revisions to 42 U.S.C. 1320a-7, and the I.G. is relying on "unpublished
guidelines/directives" to determine exclusions; and (3) the I.G. improperly characterized the crime for
which Petitioner was convicted as an offense "related to" the delivery of an item or service under the
Medicare program, and improperly imposed and directed exclusions on Petitioner pursuant to 42 U.S.C.
1320a-7(a)(1), whereas the offense for which he was convicted should be characterized as an offense for
which discretionary exclusions, rather than mandatory exclusions, would be appropriate, pursuant to 42
U.S.C. 1320a-7(b)(1), (b)(6), or (b)(7).

Petitioner also contends that a factual controversy exists in this case and that he is therefore entitled to an
evidentiary hearing. Petitioner claims that if he is denied a hearing, such denial constitutes improper
application of "collateral estoppel" to the case. See P.'s Memorandum at 26.

Petitioner's arguments in this case are in many respects identical to arguments made by petitioners in Jack
W. Greene v. The Inspector General, Docket No. C-56, decided January 31, 1989, and Michael I. Sabbagh,
M.D. v. The Inspector General, Docket No. C-59, decided February 22, 1989. Counsel for Petitioner in
this case also represented petitioners in the Greene and Sabbagh cases. Where appropriate, I will
incorporate by reference my analysis in Greene and Sabbagh in resolving the issues in this case, rather than
repeating verbatim the discussion of those decisions.

1. I do not have authority to decide whether the Secretary lawfully delegated to the I.G. the duty
to impose and direct exclusions pursuant to 42 U.S.C. 1320a-7. Petitioner asserts that a "default judgment"
should be entered against the I.G. because the Secretary has improperly delegated to the I.G. the authority
to impose and direct exclusions. P.'s Memorandum at 35-38. Petitioner contends that the duty to impose
and direct exclusions is a "program operating responsibility" which is prohibited from transfer to the I.G.
by 42 U.S.C. 3526(a). P.'s Memorandum at 37. Thus, according to Petitioner, exclusions imposed or
directed pursuant to this allegedly illegal delegation are invalid. Id. at 38. The I.G. disputes these
assertions, arguing that the delegation of exclusion authority to the I.G. is not a "program operating
responsibility," and arguing further that Congress has expressly approved the delegation. I.G.'s
Memorandum at 3-4.

The identical arguments concerning the lawfulness of the delegation of exclusion authority to the I.G. were
made by petitioners in Greene and Sabbagh. In both cases I decided that I lacked authority to hear and
decide contentions concerning the lawfulness of delegations of authority from the Secretary to the I.G. My
conclusion was premised on my holding that neither 42 U.S.C. 1320a-7 nor 42 U.S.C. 405(b) (incorporated
by reference in 42 U.S.C. 1320a-7) provided for administrative review of regulations or policy
determinations in exclusion cases. I additionally held that the Secretary's regulatory grant of jurisdiction to
administrative law judges to hear and decide exclusion cases did not include a grant of authority to decide
the lawfulness of regulations and policies. 42 C.F.R. 1001.128.

Petitioner offers nothing which augments that which was asserted by petitioners in Greene and Sabbagh,
and I incorporate the analysis of those decisions, again concluding that I do not have authority to hear and
decide Petitioner's contentions concerning the delegation of exclusion authority to the I.G.

2. I do not have authority to decide whether the Secretary is required to adopt regulations
implementing the 1987 revisions to 42 U.S.C. 1320a-7 before the I.G. may make exclusion determinations
pursuant to the law. Petitioner asserts that the exclusions imposed on him are invalid because the Secretary
has not adopted regulations implementing the 1987 revisions to 42 U.S.C. 1320a-7. Petitioner predicates
his argument on his claim that the I.G. is relying on an "unpublished" regulation to determine exclusions.
P.'s Memorandum at 4-5. He also bases his argument on an asserted requirement for the Secretary to issue
regulations clarifying allegedly ambiguous provisions of the law. The I.G. denies that regulations are
necessary to implement the provisions of 42 U.S.C. 1320a-7, because the exclusion determination in this
case was made in accordance with "ascertainable standards." Patchogue Nursing Center v. Bowen, 797
F.2d 1137, 1143 (2d Cir. 1986), cert. denied 107 S.Ct. 873 (1987).

Petitioner's arguments again repeat those made by petitioners in Greene and Sabbagh. In those cases I held
that I lacked authority to decide whether the Secretary was under a duty to issue regulations before
implementing the 1987 law, for the same reason that I lacked authority to determine the lawfulness of the
Secretary's delegations to the I.G. Inasmuch as Petitioner makes no new argument in this case, I
incorporate the analysis of those cases and again hold that I do not have authority to decide whether the
Secretary is obligated to issue regulations implementing the 1987 revisions to 42 U.S.C. 1320a-7.

3. Summary disposition is appropriate in this case. In both Greene and Sabbagh I held that the
absence of disputed material facts made summary disposition appropriate. In Sabbagh I elaborated on the
basis for summary disposition, noting that summary disposition would not be appropriate if the case hinged
on disputed issues of material fact, but that summary disposition should be entered where there was no
disputed issue of material fact, and where the undisputed facts demonstrated that one party is entitled to
judgment as a matter of law. Federal Rules of Civil Procedure, Rule 56; Collins v. American Optometric
Ass'n., 693 F.2d 636 (7th Cir. 1982).

The issue which I must resolve in deciding the I.G.'s motion for summary disposition is whether the
offense which Petitioner was convicted of falls within the ambit of 42 U.S.C. 1320a-7(a)(1). Certain facts
must be established in order for me to decide this issue. First, I must determine whether Petitioner was
"convicted" of an offense. Here, there is no dispute, because Petitioner concedes that his guilty plea
constitutes a "conviction" within the meaning of the law. P.'s Memorandum at 26. Second, I must
determine what offense Petitioner pleaded guilty to. Again, there is no dispute on this question. The I.G.
has offered as an exhibit Petitioner's plea of guilty and Petitioner has not disputed the authenticity or
truthfulness of the document. I.G. Ex. 5.

The parties dispute whether Petitioner's offense is related to the delivery of an item or service under the
Medicare program. But, as the factual elements of this issue have been established, the only question left
for me to determine is how Petitioner's offense must be characterized under the law. That is a legal
question.

Petitioner asserts that there are disputed issues of material fact in this case and argues that, as a
consequence, he is entitled to an evidentiary hearing. P.'s Memorandum at 44. His assertion is grounded
on his allegation that, despite having pleaded guilty to a criminal offense, he did not engage in unlawful
conduct. P.'s Memorandum at 26. From this, he argues that he is "entitled to present . . . his side of the
case." Id. Petitioner argues further that entry of summary disposition against him without permitting an
evidentiary hearing on the question of whether his conduct was actually unlawful is an improper
application of collateral estoppel against him. P.'s Memorandum at 24, 26; see P. Ex. A-1.

Petitioner's argument is without merit, because the facts which he alleges are not material to the issues in
this case. The act which triggers the mandatory exclusion provisions of 42 U.S.C. 1320a-7(a)(1) is
conviction of an offense related to the delivery of an item or service under the Medicare or State health
care programs. The law does not permit an individual convicted of such an offense to argue against
imposition of exclusions, on the ground that he really wasn't guilty of the offense he was convicted of.
Furthermore, in a case where the mandatory exclusion provisions of subsection (a)(1) apply, mitigating
evidence is irrelevant.

Petitioner also offers the affidavit of a former Department of Health and Human Services employee,
apparently as expert opinion to show that the offense which Petitioner was convicted of was not an offense
related to the delivery of an item or service under the Medicare or State health care programs. P. Ex. A-2.
Petitioners in both the Greene and Sabbagh cases made similar offers. In both of those cases I held that
how the offenses which petitioners were convicted of should be classified pursuant to 42 U.S.C. 1320a-7 is
not a question of fact, but of law. Expert opinion on this legal question is irrelevant.

I conclude that there are no disputed issues of material fact in this case. The only issues in dispute are legal
issues. Summary disposition is an appropriate mechanism for deciding the case.

4. Given the undisputed material facts, the IG.'s determination to exclude Petitioner from
participation in the Medicare program, and to direct that he be excluded from participation in State health
care programs, for five years, is mandated by law. The undisputed facts of this case are that Petitioner
pleaded guilty to, and was convicted of, a criminal offense consisting of fraudulently making false
Medicare claims for podiatry services. I.G. Ex. 5. The I.G. excluded Petitioner from participation in the
Medicare program, and directed that he be excluded from participation in State health care programs, for
five years, pursuant to 42 U.S.C. 1320a-7(a)(1) and (c)(3)(B). These sections require mandatory five year
minimum exclusions from participation in Medicare and State health care programs, of five years, for any
individual or entity convicted of a criminal offense related to the delivery of an item or service under
Medicare or any State health care program.

The offense which Petitioner pleaded guilty to is indistinguishable from the offenses involved in the
Greene and Sabbagh cases. Petitioners in those cases were convicted of defrauding the Medicaid program,
by misrepresenting the items for which reimbursement claims were made (Greene), or by billing the
program for a fictitious service (Sabbagh).

In opposing the exclusions, Petitioner reiterates arguments that failed in Greene and Sabbagh. His
principal contention is that the offense which Petitioner was convicted of is not related to the delivery of an
item or service under Medicare, within the meaning of 42 U.S.C. 1320a-7(a)(1). He asserts that in 1987
Congress narrowed the scope of offenses which are subject to the mandatory exclusion provisions of 42
U.S.C. 1320a-7(a)(1) by deleting "financial" crimes from the category of offenses which requires
exclusions. He argues that in 1987 Congress classified fraud against Medicare or Medicaid as offenses
which might justify exclusions under the discretionary exclusion provisions of 42 U.S.C. 1320a-7(b)(1).
P.'s Memorandum at 15-23. Therefore, according to Petitioner, his criminal conviction would, at most,
justify an exclusion under the discretionary exclusion provisions of 42 U.S.C. 1320a-7(b).

Petitioner's argument as to the meaning of the law has two elements. First, Petitioner asserts that in
revising the statute in 1987, Congress changed key phrasing in section (a)(1) to narrow its meaning to no
longer include "financial offenses" within the mandatory exclusion provisions. He predicates this
argument on Congress' 1987 substitution of the term in section (a)(1) "related to the delivery of an item or
service" for the predecessor language "related to such individual's participation in the delivery of medical
care or services."

I do not accept this analysis. The plain meaning of the 1987 enactment is to require exclusions of
individuals or entities convicted of fraud, theft, or embezzlement in connection with the rendering of items
or services under the Medicare or State health care programs.

The second aspect of Petitioner's argument is based on the language of 42 U.S.C. 1320a-7(b)(1). He
asserts that this section, which provides for permissive exclusions of individuals or entities convicted of
fraud, theft or embezzlement against government-financed health care programs, was intended to provide
the sole basis for excluding parties who committed "financial" offenses related to the delivery of items or
services under the Medicare or State health care programs. As I noted in both Greene and Sabbagh, this
statutory section, when read out of context, is broad enough in its terms to encompass Petitioner's offense.
However, when it is read in context, it becomes evident that Congress intended this section to provide for
discretionary exclusions of individuals and entities who are convicted of offenses directed against
programs other than Medicare or State health care programs.

Petitioner makes two additional arguments concerning the classification of his conduct under 42 U.S.C.
1320a-7. He contends that his conduct should be considered as a claim for "excessive charges" under the
discretionary exclusion provisions of 42 U.S.C. 1320a-7(b)(6). He also asserts that, as he was convicted of
a criminal offense pursuant to 42 U.S.C. 1320a-7b, his offense falls within the category of discretionary
exclusions described in 42 U.S.C. 1320a-7(b)(7), and, therefore, he cannot be excluded pursuant to 42
U.S.C. 1320a-7(a)(1). P.'s Memorandum at 31.

The operative fact which triggers the mandatory exclusion provisions of subsection (a)(1) is a conviction
for an offense related to the delivery of an item or service under Medicare or Medicaid. Had Petitioner not
been convicted of an offense, then the I.G. could appropriately consider whether Petitioner's conduct
provided a basis for his exclusion under any of the subsections of 42 U.S.C. 1320a-7(b), including
subsections (b)(6) and (b)(7). However, as Petitioner was convicted of an offense described in subsection
(a)(1), the I.G. has no choice but to exclude him from participation in Medicare, and to direct his exclusion
from participation in State health care programs, for at least five years.

Thus, 42 U.S.C. 1320a-7(b)(7) permits the Secretary to exclude, and to direct the exclusions of, any
individual or entity "that the Secretary determines has committed an act which is described" in either 42
U.S.C. 1320a-7a or 42 U.S.C. 1320a-7b (emphasis added). This subsection permits the Secretary to
impose and direct exclusions on a party that the Secretary determines has engaged in criminal conduct
directed against Medicare or Medicaid, without waiting for that party to be charged with or convicted of a
criminal offense. Once that party is convicted, then for purposes of determining exclusions, the facts of the
case no longer fall within the provisions of subsection (b)(7), but within subsection (a)(1). The same
conclusion applies to cases that, but for a criminal conviction, fall within the provisions of subsection
(b)(6).

I therefore conclude that this case involves a conviction of a criminal offense related to the delivery of an
item or service under the Medicare program, and is governed by the mandatory exclusion provisions of 42
U.S.C. 1320a-7(a)(1).

CONCLUSION

Based on the undisputed material facts, the law, and regulations, I conclude that the I.G.'s determination to
exclude Petitioner from participation in the Medicare program, and to direct that Petitioner be excluded
from participation in State health care programs, for five years, was mandated by law. Therefore, I am
entering a decision in favor of the I.G. in this case.

________________________
Steven T. Kessel
Administrative Law Judge