Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Graciela Bolumen, R.Ph., Petitioner,
- v. -
The Inspector General.
DATE: March 5, 1993
Docket No. C-386
Decision No. CR254
DECISION
In a letter dated March 31, 1991, the Inspector General (I.G.) notified Petitioner
that she was being
excluded from participation in the Medicare program and any State health care
program for a period of five
years. 1/ The I.G. stated that Petitioner was being excluded because she had
been convicted of a criminal
offense related to the delivery of an item or service under the Florida Medicaid
program. The notice letter
informed Petitioner that sections 1128(a)(1) and 1128(c)(3)(B) of the Social
Security Act (Act) require that
individuals convicted of such crimes be excluded from participation in the Medicare
and Medicaid
programs for a minimum of five years.
Petitioner timely requested a hearing. In a letter dated June 13, 1991, Jose
E. Ferrer, Esq., entered his
appearance on behalf of Petitioner. In that letter, he requested that proceedings
be stayed for 30 days. In a
subsequent telephone communication, Mr. Ferrer's office requested that proceedings
be stayed pending the
outcome of an appeal of Petitioner's criminal conviction. I issued an Order
Staying Proceedings which
required Mr. Ferrer to provide a status report regarding Petitioner's appeal
on or before October 1, 1991.
Mr. Ferrer did not provide such a report, nor did he respond to telephone calls
and letters from this office
inquiring as to the status of the case.
On August 24, 1992, I issued an Order to Show Cause requiring Petitioner or
her counsel to respond as to
why the case should not be dismissed for abandonment. Petitioner responded by
letter dated August 27,
1992. In that letter she stated that she had not intended to abandon her appeal
of her exclusion and that she
was no longer represented by Mr. Ferrer. Petitioner's letter stated that she
was being represented by Eladio
Armesto, III. On the basis of Petitioner's representations, I concluded that
she had not abandoned her
appeal.
On October 7, 1992, I conducted a telephone prehearing conference in this case
at which Petitioner was
represented by Mr. Armesto. At the prehearing conference, Mr. Armesto admitted
that Petitioner had been
convicted of a criminal offense, within the meaning of section 1128(i) of the
Act. During the conference,
the parties also agreed that this case could appropriately be decided on motions
for summary disposition.
The I.G. submitted a motion for summary disposition, supported by documentary
evidence. Petitioner did
not file a response to the I.G.'s motion. For this reason, the facts as presented
in the I.G.'s motion and
exhibits are uncontested. 2/ On the basis of these uncontested facts and the
law, I conclude that 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. Therefore, the exclusion imposed and
directed against Petitioner
was mandated by law. Accordingly, I enter summary disposition in favor of the
I.G., sustaining the
exclusion.
ISSUE
The issue in this case is whether the offense of which Petitioner was convicted
related to the delivery of an
item or service under Medicaid, within the meaning of section 1128(a)(1) of
the Act.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. During 1989 and 1990, Petitioner was a pharmacist licensed in the State
of Florida and was the sole
owner of St. Gema Pharmacy. I.G. Ex. 1 at p.1.
2. On or about February 9, 1989, in response to a complaint from the Florida
Department of Health and
Rehabilitative Services (DHRS), the State Medicaid agency, the Florida Office
of Auditor General,
Medicaid Fraud Control Unit (MFCU) initiated an investigation of the billing
practices of St. Gema
Pharmacy. I.G. Ex. 1 at p. 2.
3. On various dates from February 22, 1989 through October 24, 1989, special
agents of the MFCU, in an
undercover capacity, presented themselves at St. Gema Pharmacy as Medicaid recipients
with prescriptions
to be filled. I.G. Ex. 1 at pp. 2-6.
4. On various dates from February 22, 1989 through October 24, 1989, Petitioner,
or her employees,
offered the special agents merchandise credits at the pharmacy in exchange for
the agents' Medicaid
prescriptions. The pharmacy then billed the Medicaid program for filling the
prescriptions, although no
medications were actually dispensed to the agents. I.G. Ex. 1 at pp. 2-6.
5. On May 15, 1990, a criminal information was filed in Dade County Court charging
Petitioner with
"Medicaid fraud -- receiving unauthorized payments for false claims,"
in violation of sections
409.325(4)(c) and (5)(a) of the Florida Statutes. I.G. Ex. 2.
6. Specifically, the information charged that, from about February 22, 1989
to November 1, 1989,
Petitioner knowingly and unlawfully received, attempted to receive, or aided
and abetted in the receipt of
unauthorized payments based on false claims made to the Florida Medicaid program
seeking payment for
pharmaceutical services which were not rendered as represented. I.G. Ex. 2.
7. On July 19, 1990, Petitioner pled nolo contendere to the offense charged
in the information. I.G. Ex. 4
at pp. 1-2.
8. On July 19, 1990, the Dade County Court found Petitioner guilty of the offense,
but withheld
adjudication, ordering Petitioner to pay a fine of $100.00, restitution of $360.77
to DHRS, investigative
costs of $1500.00 to the Florida Office of the Auditor General, and court costs.
I.G. Ex. 4 at pp. 2-3.
9. The Dade County Court accepted Petitioner's nolo contendere plea. I.G. Br. 4.
10. Petitioner admits that she was convicted of a criminal offense, within
the meaning of section 1128(i) of
the Act. Prehearing Order, dated October 9, 1992, at 2.
11. Petitioner was convicted of a criminal offense, within the meaning of section 1128(i) of the Act.
12. The offense of which Petitioner was convicted was related to the delivery
of an item or service under
Medicaid, within the meaning of section 1128(a)(1) of the Act. Findings 1-6.
13. The Secretary of the Department 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.
21662 (1983).
14. The exclusion imposed and directed against Petitioner by the I.G. is for
five years, the minimum
period required under the Act. Social Security Act, sections 1128(a)(1) and
1128(c)(3)(B).
15. The exclusion imposed and directed against Petitioner by the I.G. is mandated
by law. Findings 1-11;
Social Security Act, sections 1128(a)(1) and 1128(c)(3)(B).
ANALYSIS
The evidence adduced by the I.G. and not disputed by Petitioner amply demonstrates
that 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. For this reason, Petitioner's five-year
exclusion is required as a
matter of law, and summary disposition in favor of the I.G. is appropriate.
Petitioner has admitted that she was convicted of a criminal offense within
the meaning of section 1128(i)
of the Act. Finding 10. I note that, even without Petitioner's admission, there
is uncontested evidence in
the record proving that Petitioner's conviction meets the statutory definition.
Section 1128(i)(3) provides
that an individual is convicted, "when a plea of guilty or nolo contendere
. . . has been accepted by a
Federal, State, or local court. . . ."
In the present case, Petitioner pled nolo contendere to Medicaid fraud as charged
in the information.
Finding 7. The I.G. has represented that the Dade County Court accepted that
plea. I.G. Br. 4. Petitioner
has not disputed the I.G.'s representation. Additionally, the documentary evidence
submitted by the I.G.
tends to support the I.G.'s representation, as the court found Petitioner guilty
of the offense, based on her
plea. Finding 8. Therefore, I find that the court accepted Petitioner's plea
of nolo contendere and,
accordingly, Petitioner's conviction falls within the definition of section
1128(i)(3). Findings 9-11.
Petitioner did not file a response to the I.G.'s motion for summary disposition.
However, at the October 7,
1992 telephone prehearing conference in this case, Petitioner argued that her
conviction should not subject
her to the mandatory exclusion provision of section 1128(a)(1) because she did
not personally engage in
any illegal acts directed at the Medicaid program. Petitioner represented that
she had been convicted based
solely on the illegal acts of others in her employ. These arguments are insufficient
to negate the
application of section 1128(a)(1).
Petitioner's assertion that she did not engage in any illegal acts directed
at the Medicaid program is, in
essence, an assertion that she is not guilty of the offense for which she was
convicted. However,
arguments regarding an individual's culpability for the acts underlying a conviction
are irrelevant in
determining the applicability of section 1128(a)(1). An appellate panel of the
Departmental Appeals Board
(Board) held in DeWayne Franzen, DAB 1165 (1990), that the authority to impose
an exclusion pursuant
to section 1128(a)(1) of the Act derives from a party's conviction of a program-related
offense and not
from the party's conduct on which the conviction is premised:
[Section 1128(a)(1)] merely requires . . . that the individual's acts cause
the individual to be
convicted of an offense and that the offense be related to the delivery of an
item or service under the
Medicaid program.
Id. at 7. Therefore, Petitioner's assertion that she is not guilty of the offense
for which she was convicted is
not a basis to negate the I.G.'s authority to impose an exclusion under section
1128(a)(1).
Petitioner's second argument is, essentially, that her conviction does not
qualify for an exclusion under
section 1128(a)(1) because, even if she may have been convicted of fraud, she
never manifested an intent
to commit fraud. The facts in this case do not support Petitioner's apparent
argument that her conviction
did not subsume an element of intent. The criminal information charging Petitioner
with Medicaid fraud,
pursuant to which she was convicted, charged her with acting "knowingly."
Finding 6. Thus, the crime of
which Petitioner was convicted encompassed an element of criminal intent. However,
the exclusion
authority in section 1128(a)(1) is not limited to convictions which involve
an element of criminal intent. In
Franzen, the Board held that criminal intent is not required to bring a conviction
within the ambit of section
1128(a)(1):
Section 1128(a)(1) does not require that the individual must intend to commit
a criminal offense,
or indeed fraud, for an exclusion to be proper.
DAB 1165, at 7. Therefore, even if the offense of which Petitioner was convicted
had involved no element
of criminal intent, the I.G. would nevertheless be required to exclude her if
the offense was related to the
delivery of an item or service under Medicaid, within the meaning of section
1128(a)(1) of the Act.
The offense of which Petitioner was convicted is, by the terms of the criminal
information, related to the
delivery of an item or service under Medicaid. Petitioner was charged with "Medicaid
fraud -- receiving
unauthorized payments for false claims." Finding 5. The information alleged
that Petitioner knowingly
and unlawfully received, attempted to receive, or aided and abetted in the receipt
of unauthorized payments
from the Florida Medicaid program based on claims for pharmaceutical services
that were not provided as
claimed. Finding 6. In accepting Petitioner's plea of nolo contendere, the Dade
County Court found her
guilty of the offense charged in the information. Finding 8. Thus, Petitioner
was convicted of the criminal
offense of receiving unauthorized payments based on false Medicaid claims. On
its face, this crime is
related to the delivery of Medicaid items or services.
In Douglas Schram, R.Ph., DAB 1372 (1992), the Board held that submitting a
false claim to Medicaid is
related to the delivery of an item or service under Medicaid, within the meaning
of section 1128(a)(1) of
the Act. The Board reasoned:
By submitting a claim to Medicaid seeking payment or allowance, an individual
or entity is
representing that an item or service has been (or will be) delivered under the
program for which payment or
allowance is due.
Id. at 8. See also Jack W. Greene, DAB 1078 (1989), aff'd sub nom. Greene v.
Sullivan, 731 F. Supp. 835
& 838 (E.D. Tenn. 1990)(pharmacist who billed Medicaid for brand name drugs
while dispensing less
expensive generic drugs was convicted of a program-related offense).
In the present case, Petitioner was convicted of receiving unauthorized payments
on account of false
Medicaid claims rather than of submitting the false claims. Petitioner obtained
the unauthorized payments
because her pharmacy submitted claims to Medicaid for services that were not
rendered. An investigation
by the Florida MFCU revealed that Petitioner, or employees of her pharmacy,
offered Medicaid recipients
(special agents operating undercover) merchandise credits at the pharmacy in
exchange for their Medicaid
prescriptions. The pharmacy then billed the Medicaid program for filling the
prescriptions, although no
medications were actually dispensed to the recipients. Findings 2-4.
Petitioner's receipt of unauthorized payments would not have been possible
had she, or some employee of
her pharmacy, not submitted claims to the Medicaid program representing that
an item or service had been
delivered for which Medicaid payment was due. Therefore, as was the case in
Schram, Petitioner's
conviction here is related to the delivery of an item or service under Medicaid.
This is so even though the
false Medicaid claims for which Petitioner received unauthorized payments sought
reimbursement for
items or services that were never in fact provided. See Francis Shaenboen, R.Ph.,
DAB 1249, at 4 (1991).
Because Petitioner's conviction was related to the delivery of an item or service
under Medicaid, within the
meaning of section 1128(a)(1) of the Act, her exclusion was required, as a matter
of law.
CONCLUSION
Based on the law and the undisputed facts, I conclude that the I.G.'s determination
to exclude Petitioner
from participation in Medicare, and to direct her exclusion from Medicaid, for
five years was mandated by
law. Therefore, I am granting the I.G.'s motion for summary disposition.
___________________________
Steven T. Kessel
Administrative Law Judge
1. "State health care program" is defined by section 1128(h) of the
Social Security 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 plans from which Petitioner was excluded.
2. I have numbered (which the I.G. should have done in accordance with my prehearing
Order) and have
admitted the I.G.'s documents into evidence as I.G. Exhibits (I.G. Ex.) 1 through
5.