Paul O. Ellis, R.Ph., CR No. 283 (1993)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: Paul O. Ellis, R.Ph., Petitioner,
- v. -
The Inspector General.

DATE: August 31, 1993

Docket No. C-93-037
Decision No. CR283

DECISION

The case before me involves an exclusion directed and imposed by the Inspector General (I.G.) for the
United States Department of Health and Human Services (DHHS) pursuant to section 1128(a)(1) of the
Social Security Act (Act). This section requires the Secretary of DHHS (Secretary) or his designee, the
I.G., to exclude an individual or entity from the Medicare and Medicaid 1/ programs for at least five years
following that individual's or entity's conviction of a criminal offense related to the delivery of an item or
service under the programs. Act, section 1128(c)(3)(B). As defined by section 1128(i) of the Act, a
program-related conviction includes those situations where a plea of guilty or nolo contendere by an
individual or entity has been accepted by a court of competent jurisdiction.

On October 29, 1992, the I.G. gave Paul O. Ellis, R.Ph., (Petitioner), written notice that he was being
excluded under section 1128(a)(1) of the Act for a period of 10 years. The exclusion took effect 20 days
after the date of the notice, as required by 42 C.F.R. 1001.2002(b). In accordance with 42 C.F.R.
1001.2007, Petitioner timely filed a request for hearing.

The hearing took place in Lincoln, Nebraska, on April 6, 1993. 2/ In addition to presenting the testimony
of witnesses, the parties submitted their written stipulations at hearing. 3/ Items 3 and 5 of the stipulations
have obviated the I.G.'s need to prove a statutory basis for the exclusion. J. Ex. 1 at 1, 2 4/; Tr. 7 - 8.

After the close of the evidence, the parties filed their briefs. 5/ I have considered the parties' arguments in
conjunction with the hearing testimony, the stipulations, and the documentary evidence 6/ admitted at
hearing concerning the remaining issue as to whether the length of the exclusion is reasonable. For the
reasons that follow, I uphold the 10-year exclusion imposed by the I.G.

ISSUE

The issue before me for decision is whether the 10-year exclusion imposed and directed by the I.G. against
Petitioner is unreasonable based upon the facts of this case. 42 C.F.R. 1001.2007(a)(1)(ii).

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. On February 1, 1966, the State of Nebraska issued Petitioner a license to practice pharmacy. I.G. Ex. 17
at 3.

2. Petitioner became a Medicaid provider on or about June 1, 1982. I.G. Ex. 16 at 2.

3. By delegation from the Secretary, the I.G. has the authority to determine, impose, and direct exclusions
under section 1128 of the Act. 48 Fed. Reg. 21662 (1983).

4. On October 29, 1992, the I.G. notified Petitioner that he was being excluded from the Medicare and
Medicaid Programs for a period of 10 years.

5. The crime for which Petitioner was convicted and sentenced on June 25, 1992, involved his submission
of false Medicaid claims totalling $6203.75, covering the period from May 5, 1990 to December 24, 1990,
while he was still barred from participating in the Medicaid program due to a previously imposed five-year
exclusion. I.G. Ex. 4, 6, 7, 10, 12, 13; P. Ex. 14; J. Ex. 1 at 2 - 3; Tr. 43 - 55.

6. There is no dispute that the I.G. validly excluded Petitioner under section 1128(a)(1) of the Act. J. Ex.
1 at 2.

7. For individuals convicted of program-related offenses within the meaning of section 1128(a)(1), the Act
mandates an exclusion period of not less than five years. Section 1128(c)(3)(B) of the Act.

8. Where, as here, the exclusion imposed pursuant to section 1128(a)(1) exceeds the minimum period
mandated by statute, the factors specified in 42 C.F.R. 1001.102 must be used to determine whether the
length of the exclusion is reasonable. 58 Fed. Reg. 5617 (1993).

9. Only the "aggravating" factors specified in 42 C.F.R. 1001.102(b) may be used to lengthen the
exclusion period from the minimum five years specified by statute. Finding 8.

10. Only where the exclusion at issue has been lengthened with the use of the aforementioned aggravating
factors may the "mitigating" factors specified in 42 C.F.R. 1001.102(c) be considered for decreasing the
exclusion period to five or more years. Findings 8, 9.

11. In considering whether or how the length of an exclusion imposed under section 1128(a)(1) of the Act
should be adjusted by using the aggravating and mitigating factors enumerated in 42 C.F.R. 1001.102, it
is necessary to weigh the evidence relevant to these enumerated factors in a manner that is consistent with
the goals of the Act which is being implemented and interpreted by said regulation. See Act, section 1102.

12. Section 1128(a) of the Act includes among its goals:

a. the protection of the Medicare and Medicaid programs from fraud and abuse, and

b. the deterrence of conduct that is detrimental to the programs and those receiving benefits from the
programs.

Leonard S. Dino, R.Ph., DAB CR260, at 16 - 17 (1993); DeWayne Franzen, DAB CR58 (1989), aff'd
DAB 1165 (1990).
13. These are aggravating factors in this case:

a. The acts that resulted in Petitioner's conviction, or similar acts, have caused financial loss to the
Medicaid program of $1500 or more. 42 C.F.R. 1001.102(b)(1); J. Ex. 1 at 1 - 2; I.G. Ex. 4, 13, 16.

b. The sentence imposed by the court included incarceration. 42 C.F.R. 1001.102(b)(4); J. Ex. 1 at 1;
I.G. Ex. 5.

c. Petitioner has a prior criminal, civil, or administrative sanction record. 42 C.F.R. 1001.102(b)(5); J.
Ex. 1 at 1 - 4; I.G. Ex. 3, 9 - 13, 16 - 22, 29.

d. Petitioner has been overpaid a total of $1500 or more by the Medicaid program as a result of
improper billings. 42 C.F.R. 1001.102(b)(6); J. Ex. 1 at 1; I.G. Ex. 6, 7, 12, 13, 16.

14. A 10-year exclusion is reasonable in order to:

a. protect the fiscal integrity of the programs from the serious damage Petitioner has done to the
Medicaid program repeatedly over the past few years, despite Petitioner's having been sanctioned both
criminally and administratively; and

b. deter Petitioner from harming the Medicaidprogram in the future by imposing a sanction
againsthim which is different from and lengthier than thoseto which he was subjected in years past for
hisviolations of State and federal law.

See Findings 11 - 12, 13 at b - d.

15. I am not required to increase an exclusion because of any one aggravating circumstance.

16. That the acts resulting in Petitioner's conviction, or similar acts, caused financial loss to Medicaid of
$1500 or more -- an aggravating circumstance -- is not of significant independent weight to warrant
increasing the 10-year exclusion already imposed. Finding 13(a)

17. Pursuant to 42 C.F.R. 1001.102(c)(2), in determining whether Petitioner had a mental or emotional
condition at the time he committed his offense, from May 5, 1990 to December 24, 1990, it is appropriate
for me to consider whether:

a. Petitioner developed mental and emotional conditions in the years prior to the commission of his
criminal offense;

b. The judge who sentenced Petitioner found that his culpability had been reduced by mental or
emotional problems;

c. Petitioner has recovered from his mental or emotional problems so that he will not be committing the
same offenses in the future.

See Findings 10 - 12; Tr. 25.

18. It is a mitigating factor that the sentencing judge (U.S. District Judge Warren K. Urbom) found that
Petitioner was under considerable personal stress at the time of the offense. P. Ex. 14 at 56.

19. Judge Urbom's statement constitutes the only finding made by a judge in any of Petitioner's criminal
proceedings concerning the existence of a mental, emotional, or physical condition and its effect on
Petitioner's culpability.

20. The only mental, emotional or physical condition of Petitioner's that fits within 42 C.F.R.
1001.102(c)(2) is the "considerable personal stress" that was in existence during the time Petitioner
committed his offense from May 5 to December 24, 1990. See generally Findings 5, 18.

21. Petitioner's evidence that he suffered from mental or emotional conditions that developed prior to 1990
is not consistent with other, more reliable evidence, and thus is not credible. See P. Ex. 2, 3, 4, 6, 7, 8, 13,
14 at 22 - 24, 56; I.G. Ex. 22 at 8 - 9; Tr. 24, 83 - 111, 122 - 23, 133 - 34, 145.

22. Petitioner has not shown by a preponderance of the evidence that he suffered from mental or emotional
conditions that developed prior to 1990.

23. Even if Petitioner had met the burden of proof that he suffered from mental or emotional conditions
that developed prior to 1990, Petitioner has not met the burden of persuasion that such evidence makes his
10-year exclusion extreme or excessive.

24. Even though Petitioner has established that his "considerable personal stress" during the time he
committed his offense in 1990 merits consideration as a mitigating factor, (see Finding 18), the regulation
does not mandate a reduction in the exclusion period. 42 C.F.R. 1001.102(c).

25. Petitioner has failed to prove that he was given the lightest sentence possible solely because his
culpability had been reduced by his "considerable personal stress." P. R. Br. 4.

26. The exclusion at issue was imposed pursuant to a civil statute that has different purposes than the
criminal statute under which Judge Urbom imposed sentence. See Finding 12; P. Ex. 14.

27. Judge Urbom did not make any finding that the treatment Petitioner received was appropriate to or
successful in eliminating those factors that caused Petitioner to break the law.

28. Judge Urbom's finding of considerable personal stress at the time of the offense does not justify a
reduction in Petitioner's exclusion. Findings 25 - 27.

29. Petitioner's evidence in support of his asserted recovery depends largely on his proclamations of good
intentions in situations where he has incentives to advance his own interests.

30. Even after having received treatment, Petitioner argued at his sentencing hearing that he had damaged
the Medicaid program only to the extent of the 24 percent profit he made from the claims he submitted
during his exclusion. P. Ex. 14 at 42 - 44.

31. Despite treatment, when testifying before me, Petitioner attempted to obscure the nature of his offenses
in 1990, to blame others for his illegal actions, and to place his motives in a better light. Tr. 110 - 111.

32. Petitioner's violations of the June 25, 1992 judgment and confinement order during December 1992
and January 1993 indicate that he is not yet able or willing to conduct himself within the confines of his
legal obligations. I.G. Ex. 1, 4, 31, 32.

33. Many of Petitioner's recent actions have been consistent with his previous pattern of deviating from the
law and then confessing to his offenses while attempting to minimize their significance in order to lessen
the potential penalty to him. See Finding 30.

34. The cumulative effect of the evidence points to the likelihood that Petitioner will commit similar
program-related offenses in the future and that a period of exclusion of less than 10 years will not suffice as
a deterrent. See generally Findings 12 - 14, 30 - 33.

35. A 10-year exclusion is reasonable. See Findings 1 - 34.

ANALYSIS

I. The I.G. has proven by a preponderance of the evidence that the 10-year exclusion is reasonable.

For purposes of this hearing, the I.G. had the burden of proving by a preponderance of the evidence that
there existed a legal basis for the exclusion and that the 10-year exclusion period was reasonable. January
26, 1993 Order and Notice of Hearing, paragraph 5; see also 42 C.F.R. 1001.2007(c). Petitioner had the
burden of persuasion and the burden of proving by a preponderance of the evidence the affirmative
arguments raised to contest the exclusion. Id. In my February 3, 1993 Order and Notice of Hearing, I
determined that, in adjudicating this case, I am bound by the Secretary's implementing regulations that
were initially published on January 29, 1992 and subsequently clarified on January 22, 1993. 57 Fed. Reg.
3298; 58 Fed. Reg. 5617. The parties have not argued that this interpretation is in error.

Given the stipulations of the parties, there is no dispute concerning the I.G.'s authority to impose the
mandatory five-year exclusion under section 1128(a)(1) of the Act. Findings 5, 6. Even though the
evidence and stipulations discussed herein establish that Petitioner was still under a five-year exclusion
when the 10-year exclusion took effect, (I.G. Ex. 3 at 1, 12 at 3), I do not know if the I.G. intends to or has
eliminated nine months and 12 days from the unexpired five-year exclusion. Under the regulations, I have
authority to review only the reasonableness of the 10-year exclusion pursuant to Petitioner's request for
hearing. 42 C.F.R. 1001.2007, 1005.2. Therefore, the current status of the five-year exclusion is not an
issue before me.

A. The I.G. based the 10-year exclusion primarilyon Petitioner's criminal
andadministrativesanctions record.

The regulations authorize me to consider as an aggravating factor, justifying an exclusion of greater length
than the minimum five-years mandated by statute, that the convicted individual has a prior criminal, civil,
or administrative sanction record. 42 C.F.R. 1001.102(b)(5).

According to the evidence and stipulations of record, prior to his 1992 conviction, Petitioner engaged in
many activities that have resulted in criminal convictions, imprisonment, the suspension and revocation of
his license to practice pharmacy, the suspension of his pharmacies' participation in the Medicaid program,
exclusions from the Medicare and Medicaid programs, and other sanctions. I found the following facts
persuasive and material to my determination that the 10-year exclusion is reasonable.

The earliest sanction imposed against Petitioner occurred in 1986, when he violated Nebraska law by
distributing controlled substances without valid prescriptions. On June 19, 1986, Petitioner pled guilty to
the charges in State court. J. Ex. 1 at 4; I.G. Ex. 29, 30. The court ordered Petitioner to pay a fine. I.G.
Ex. 29.

Also during June of 1986, the Nebraska Department of Health initiated administrative disciplinary
proceedings against Petitioner for the foregoing offenses as well as for other offenses. I.G. Ex. 25. The
Amended Petition charged, and Petitioner later stipulated, that he had been unable to account for certain
doses of Class II, III and IV controlled substances and, at Petitioner's pharmacy and under Petitioner's
directions, State undercover investigators were given refills of controlled substances on prescriptions that
were marked either "no refill" or contained no indication that they were refillable. I.G. Ex. 22 at 4, 25 at 2.
Petitioner stated later that he was missing about 6000 doses of controlled drugs. P. Ex. 7 at 1.

At his hearing before the Director of Health for the State of Nebraska, Petitioner sought to prove by way of
mitigation that he had been under a great deal of stress and that he was a victim of his employees'
conspiracy to devalue his pharmacy. I.G. Ex. 22 at 8. Petitioner presented evidence that he was under a
great deal of stress because he was operating three stores located in different communities, he was working
12 to 15 hour work days, and he suffered from fatigue. Id.

On December 28, 1987, the Director of Health found that Petitioner had violated State law. I.G. Ex. 22.
The Director rejected Petitioner's claims of stress as unpersuasive and as "self-imposed" by his decision to
operate three stores, from which he was deriving financial consideration. Id. at 8. Also, the Director found
"very weak" the evidence concerning Petitioner's conspiracy theory. Id. The Director then ordered the
suspension of Petitioner's pharmacist's license for a period of 18 months -- with one year of probation
thereafter, Petitioner's immediate payment of $5000 in civil monetary penalties to the State, and Petitioner's
immediate payment of costs for the administrative proceedings. Id. at 9 - 11; J. Ex. 1 at 4. In addition, the
Director gave Petitioner credit for the 18 month license suspension "as he has voluntarily withdrawn from
practice upon submission of a sworn affidavit as to the same .... " I.G. Ex. 22 at 9.

Three months later, on March 3, 1988, the State Attorney General filed a Motion to Revoke Probation due
to Petitioner's failure to comply with the Director of Health's order. I.G. Ex. 21. Despite repeated requests
by the State, Petitioner had refused to remit any part of the $5000 in civil penalties and the $502.75 in costs
for the administrative proceedings. Id. After the State Attorney General moved to revoke his probation,
Petitioner made partial payment of the fine and costs and agreed to make monthly installment payments of
$500 until his obligations were satisfied. I.G. Ex. 20 at 3.

On June 17, 1988, the Director of Health denied Petitioner's motion that, in serving the 18 month license
suspension period, Petitioner be given credit for the time he had voluntarily withdrawn from the practice of
pharmacy. I.G. Ex. 19. On reviewing Petitioner's affidavit in support of such alleged withdrawal, the
Director found that Petitioner had not in fact withdrawn from the practice of pharmacy during any previous
period. Id. In fact, of the 609 days covered by the motion, Petitioner had practiced his profession 228 days
and, on an average, he practiced 11 days a month. Id.

On August 30, 1988, Petitioner pled guilty in federal district court to one count, (Count I), of a 12 count
indictment for Medicaid fraud. J. Ex. 1 at 2, I.G. Ex. 13, 14, 16. Count I charged Petitioner with having
defrauded the Medicaid program by making false statements in order to inflate the price of a
pharmaceutical product to increase the amount sought for reimbursement in 21 claims he submitted to the
program from July 1984 to March 1986. I.G. Ex. 16. Petitioner later stipulated in another action that said
crime would also constitute a felony under the criminal laws of the State of Nebraska. I.G. Ex. 17 at 3.

The judgment and sentence entered against Petitioner on his federal conviction included two years of
imprisonment -- which sentence was suspended in favor of placing Petitioner on three years of probation.
The special terms of Petitioner's probation included that he was to serve 10 days in jail, perform
community service, be required to undergo counselling or treatment deemed appropriate by his supervising
probation officer, pay a $10,000 fine, pay the costs of his prosecution, and make restitution to the State of
Nebraska in an amount determined by the State. I.G. Ex. 13.

Also on August 30, 1988, following Petitioner's conviction in federal court, Petitioner entered into a
settlement agreement with the I.G. That agreement states that, from January 1, 1983 to December 31,
1986, Petitioner had sought reimbursement under the Medicaid program for services not actually provided
as claimed. I.G. Ex. 12. Petitioner agreed to pay DHHS the sum of $14,944.39 in civil monetary penalties,
which did not include restitution of the money he had been overpaid by the Medicaid program. Id.; J. Ex.
1 at 3. Petitioner agreed also to be excluded from the Medicare and Medicaid programs for a period of five
years under section 1128(a)(1) of the Act. Id. The five-year exclusion took effect upon Petitioner's signing
the agreement on August 30, 1988. I.G. Ex. 12 at 4 - 5.

Thereafter on November 14, 1988, the State of Nebraska notified Petitioner that he was being suspended
also from participating in the Nebraska Medicaid program for a period of five years pursuant to State law.
J. Ex. 1 at 3; I.G. Ex. 10.

By letter of November 30, 1988, the State of Nebraska suspended the participation of Petitioner's affiliate
pharmacies in the Medicaid program for a period of three months (effective December 1, 1988), due to
Petitioner's conviction of Medicaid fraud. J. Ex. 1 at 3; I.G. Ex. 9, 11.

On May 23, 1991, a Petition for Disciplinary Action against Petitioner was filed before the State Director
of Health. I.G. Ex. 18. One count of the Petition alleged that between May 1, 1990 and December 31,
1990, while Petitioner was barred from participating in the Medicaid program, Petitioner violated Nebraska
law by having submitted 312 claims to Medicaid after personally filling the prescriptions and then using
other pharmacists' initials to hide the fact that he was seeking Medicaid reimbursement for his own
services. Id. at 2 - 3. Another count of the Petition alleged additional violations of State law in that, during
1989 through 1991, Petitioner hired various named individuals who were not licensed pharmacists and
allowed them to perform some of the tasks of licensed pharmacists. Id. at 3.

On September 10, 1991, Petitioner entered into a settlement agreement in the disciplinary proceedings
before the Director of Health. I.G. Ex. 17 at 3 - 7. Petitioner agreed that the alleged violations of State
law, which he neither admitted nor wished to contest, took place while he was under suspension from
Nebraska's Medicaid program and while he was under probation by order of the federal court. Id. at 3 - 5.
The State then revoked Petitioner's license to practice pharmacy. J. Ex. 1 at 2; I.G. Ex. 17.

On June 25, 1992, Petitioner pled guilty in federal district court to one count of Medicaid fraud under
federal law. J. Ex. 1 - 2; I.G. Ex. 4. As in the State disciplinary proceedings, Petitioner was charged with
having used other pharmacists' initials to submit claims to the Medicaid program while he was excluded.
I.G. Ex. 6, 7. 7/ On accepting this plea, Judge Urbom sentenced Petitioner to 10 months of imprisonment
(five months of incarceration and five months of home confinement) and supervised release thereafter for a
period of three years. I.G. Ex. 4; P. Ex. 14 at 57 - 59. Judge Urbom ordered Petitioner also to make
restitution to the State in the amount of $6203.75. I.G. Ex. 4 at 3; P. Ex. 14 at 59 - 60. However, having
determined that Petitioner lacked the resources to pay a fine, the court imposed none. P. Ex. 14 at 60 - 61.

Also on June 25, 1992, Judge Urbom adjudicated the related probation revocation action that had been
filed against Petitioner. Petitioner admitted to charges that, by committing the above-described Medicaid
fraud offenses, he had violated the terms of the probation order imposed on August 30, 1988. P. Ex. 14 at
56; I.G. Ex. 5; J. Ex. 1 at 1. The court therefore revoked the terms and conditions of the earlier imposed
probation and ordered Petitioner's imprisonment for five months, which was to run concurrently with the
sentence imposed for his Medicaid fraud offense. I.G. Ex. 5. Judge Urbom warned Petitioner especially
that, in most cases where an individual violates the terms of his probation, the judge believes he should
simply reinstate the original sentence that was suspended -- which would have been two years of
imprisonment in Petitioner's case. P. Ex. 14 at 57.

On October 29, 1992, the I.G. notified Petitioner that he was being excluded from participation in the
Medicare and Medicaid programs for a period of 10 years under section 1128(a)(1) of the Act. The
exclusion went into effect 20 days thereafter. On December 28, 1992, Petitioner requested a hearing to
contest the 10-year exclusion. In seeking a reduction of the 10 years, Petitioner asked especially for the
chance to "do it `right' during my last few years left as a productive and capable professional."

Shortly thereafter, on December 29, 1992, January 6, 1993, January 8, 1993, January 10 to 12, 1993,
January 15, 1993, January 18, 1993, January 20, 1993, and January 21, 1993, Petitioner violated the terms
of his Home Confinement Agreement and certain conditions of the supervised release order imposed by
Judge Urbom on June 25, 1992. I.G. Ex. 1, 31, 32. In his report to Judge Urbom requesting a hearing on
these violations, Petitioner's probation officer stated that Petitioner had violated curfew on all of these
dates. I.G. Ex. 1. In addition, on January 21, 1993, Petitioner had driven to another city without
permission and spent the night at a motel. Id. When his probation officer conversed with him that night,
Petitioner exhibited signs of being under the influence of a controlled substance. The next day Petitioner's
probation officer collected a urine sample from him. Petitioner then indicated that he had ingested a
controlled substance for which he did not have a valid prescription. Id. Therefore, according to his
probation officer, Petitioner also had violated a special condition of his probation that barred him from
purchasing, possessing, using, distributing, or administering any narcotic or other controlled substance
except as prescribed by a physician. Id.; I.G. Ex. 4 at 2, 32.
On March 11, 1993, following a hearing, Judge Urbom entered an order finding that Petitioner had violated
a provision of the June 25, 1992 judgment and commitment order. I.G. Ex. 31. Various letters and
affidavits were offered by Petitioner to explain his curfew violations. P. Ex. 19 - 22. However, Judge
Urbom increased the period of Petitioner's home confinement from five months to six months. I.G. Ex. 31.

Thus, both prior to and following the exclusion at issue, Petitioner violated federal and State laws and court
orders in a series of offenses which indicate that he will pose a threat to federally financed health care
programs for a considerable period of time.

B. The I.G. relied also upon two other aggravatingfactors to support Petitioner's 10-year
exclusion.

The evidence and stipulations noted above support the I.G.'s contention that at least one of the aggravating
factors enumerated in 42 C.F.R. 1001.102 is present in this case. Citing 42 C.F.R. 1001.102(b)(5), the
I.G. established that Petitioner's criminal and administrative sanctions record is an aggravating factor. See
subsection I.A, supra.

In addition, citing 42 C.F.R. 1001.102(b)(4), the I.G. considered as a second aggravating factor that the
sentence imposed on Petitioner for his most recent program-related conviction included incarceration. I.G.
Br. 12. Also, citing 42 C.F.R. 1001.102(b)(6), the I.G. considered as a third aggravating factor that
Petitioner fraudulently obtained thousands of dollars in Medicaid overpayments during the past years. The
I.G. especially noted that, as a result of his June 25, 1992 plea of guilty to Medicaid fraud, Petitioner paid
restitution based on his having submitted 314 false claims and receiving $6203.75 in overpayments from
the Medicaid program. I.G. Br. 12 (citing I.G. Ex. 4 and Tr. 43 - 47). The I.G. did not offer proof of the
amount of Medicaid overpayments to Petitioner on either the 21 false Medicaid claims submitted by him
during the period July 1983 - March 1986 or the unspecified number of allegedly false Medicaid claims
submitted by him during the period January 1983 through December 1986. However, that Petitioner was
ordered to make restitution to Medicaid in the amount of $6203.75, (I.G. Ex. 4 at 3; P. Ex. 14 at 59 - 60),
more than amply satisfies the regulatory criterion that it is an aggravating factor if a petitioner is overpaid
$1500 or more as a result of improper billings.

C. The I.G. has established that Petitioner'sexclusion is reasonable.

Based on these three aggravating factors, a 10-year exclusion is reasonable. Petitioner has done extensive
damage to the fiscal integrity of the Medicaid program on repeated occasions. The I.G. has proved that
Petitioner has consistently pursued illegal activities designed to unjustly enrich himself. I.G. Br. 14. Over
the years, Petitioner has been especially diligent and innovative in his pursuit of unjust enrichment at the
expense of the Medicaid program. He began defrauding the program within months of his having become
an eligible provider in June 1982. He has been sanctioned repeatedly for his submission of numerous false
claims to the Medicaid program from January 1983 to December 1986 (I.G. Ex. 12), from the period
between July 1983 through March 1986 (J. Ex. 1 at 2; I.G. Ex. 13, 14, 16), and, most recently, from May
until December, 1990 (I.G. Ex. 7; J. Ex. 1 at 1). Also, Petitioner has been sanctioned repeatedly for the
various violations of State law he committed in his work as a pharmacist.

Petitioner testified before me that, in 1990, he was more afraid of potential bankruptcy than the
consequences of his illegal actions. Tr. 110. Petitioner was not deterred from again breaking the law in
1990 by his 1986 conviction in the Nebraska State court of three counts of distributing controlled
substances without valid prescriptions; nor by the administrative decision of December 28, 1987 to suspend
his license to practice pharmacy for 18 months and to place him on probation for one year thereafter; nor
by the December 28, 1987 order that he pay a civil penalty of $5000 for having illegally refilled
prescriptions for controlled substances and being unable to account for 6000 doses of controlled
substances; nor by the State's efforts to revoke his probation due to his failure to pay the civil penalty on
time; nor by his federal conviction of August 30, 1988 for submitting falsely inflated Medicaid claims; nor
by the court's giving him a two-year term of incarceration, which was suspended and replaced by probation
for three years, and ordering him to make restitution to the State and to pay an additional $10,000 in fine;
nor by his five-year exclusion from the Medicare and Medicaid programs and his payment of $14,944.39
in civil monetary penalties under his August 30, 1988 agreement with the I.G.; nor by the State's decision
in November 1988 to exclude him from Medicaid pursuant to State law; nor by the State's decision in
November 1988 to suspend for three months the participation of his pharmacies in Medicaid.

Notwithstanding these sanctions, and despite the fact that he was still under probation by order of the
federal court and still barred from participating in Medicaid, Petitioner again broke State and federal laws
and violated the terms of his probation by submitting false claims to the Medicaid program during 1990.
In 1991, he broke additional State laws by hiring unlicensed individuals to perform the tasks of a
pharmacist.

Because Petitioner sought to prove that he is now able to conform to the requirements of law, the I.G.
introduced more current evidence concerning Petitioner's sanction record. Tr. 7 - 17. 8/ Specifically, the
I.G. introduced evidence to prove that Petitioner had violated the terms of Judge Urbom's June 25, 1992
judgment and commitment order by skipping curfew, travelling to another city without permission, and
using controlled substances without a valid prescription. Petitioner committed these violations in
December 1992 and January 1993, in spite of having served months in prison (and having the experience
of being set on fire in prison (P. Ex. 13 at 6)), having surrendered his license to practice pharmacy, and
having been warned by the judge at his June 25, 1992 sentencing hearing that the judge usually reinstates
the original sentence of imprisonment when people violate the terms of their probation. Not only was
Petitioner not deterred by the judge's warning about a lengthier term of imprisonment, he began to violate
the court's order only one day after he filed his request for a hearing on the reasonableness of the 10-year
exclusion period at issue, in which he asserted that he wanted the opportunity to "do it right" at this point of
his life.

The evidence concerning the three aggravating factors cited by the I.G. is sufficient to support the
reasonableness of the 10-year exclusion period. Even though the evidence establishes also an aggravating
factor under 42 C.F.R. 1001.102(b)(1), 9/ I have not used it to increase the exclusion already imposed.
The evidence relied upon by the I.G. overlaps the evidence that establishes the additional aggravating
factor, and, as discussed below, the statute does not mandate an adjustment in the exclusion period solely
on the basis of any single aggravating or mitigating factor. Rather, what controls the exclusion period is
the relative weight of the material evidence in the context of the total record. Here, the totality of the
evidence establishes that a 10-year exclusion for Petitioner is reasonable.

II. Petitioner has failed to prove by a preponderance of the evidence that his 10-year exclusion is
unreasonable.

Petitioner seeks a reduction of his 10-year exclusion based on the fact that Judge Urbom, before whom
Petitioner appeared in June 1992 for sentencing on his Medicaid fraud conviction, stated as follows at the
sentencing hearing:

In Mr. Ellis's case I have taken into account some good features of his. He, I think, has clearly accepted
responsibility for what he has done. He's admitted that when he was on probation he committed a crime,
he knew it was a crime but he did it anyway. And not just once, but he did it many times. He has
acknowledged that he was in need of treatment and he sought that treatment for about seven months, and
that's all to his favor. He has obviously, from the information that I have in this file, much family support,
he has community support, all of which is to his favor. I acknowledge, too, that during the times when this
crime was committed he was under considerable personal stress, and that's to his favor in the sense of
creating a sentence to fit.

P. Ex. 14 at 56.

Petitioner argued that Judge Urbom's finding of "considerable personal stress" serves as a mitigating factor
within the meaning of 42 C.F.R. 1001.102(c)(2). See, e.g., P. R. Br; Tr. 23 - 29. This provision of the
regulations permits reducing the exclusion period upon consideration of an on-record determination by the
court in the relevant criminal proceedings that the individual had "a mental, emotional or physical
condition before or during the commission of the offense that reduced the individual's culpability .... " 42
C.F.R. 1001.102(c)(2). 10/ In contesting the 10-year exclusion imposed by the I.G., Petitioner relied on
three interrelated allegations:

1. Petitioner's mental and emotional condition
developed prior to the offenses that occurred
in 1990;

2. The sentencing judge came to the conclusion thata mental or emotional condition specifically
reducedPetitioner's culpability;

3. Petitioner has recovered so that he will not be committing the same offenses in the future.

Tr. 25.

A. Examination of Petitioner's contention that amental or emotional condition reduced his
culpability properly extends to consideration of
his recovery and the likelihood that he may commit
offenses in the future.

Before proceeding to the evidence on mitigation, I will address the parties' apparent agreement that I
should consider under 42 C.F.R. 1001.102(c)(2) the extent of Petitioner's recovery and whether Petitioner
is likely to commit similar offenses in the future. 11/

Prior to the promulgation of the January 29, 1992 regulations, administrative law judges (ALJs) at the
Departmental Appeals Board (DAB) evaluated an excluded individual's "trustworthiness" in determining
the reasonableness of an exclusion period. See, e.g., Behrooz Bassim M.D., DAB 1333, at 13 (1992), and
general discussion of "trustworthiness" at Leonard S. Dino, DAB CR260, at 17 - 18 (1993).
"Trustworthiness" assessments have been made with reference to evidence of an individual's rehabilitation
(or lack thereof) and the likelihood that an individual might commit the same or similar offenses in the
future. See, e.g., Hanlester Network et al., DAB 1347, at 46 - 47 (1992) (citations omitted).

Neither party disagrees that, in determining the reasonableness of the exclusion period at issue, I must limit
my consideration to the factors enumerated in 42 C.F.R. 1001.102. I.G. Br. 10 - 11; P. Br. 3 - 4. In
allowing me to consider mitigating factors only where aggravating factors are present, the regulation
contemplates that I will evaluate the reasonableness of an exclusion period by assigning relative weight to
the material evidence on the facts of each case. 42 C.F.R. 1001.102. However, no part of 42 C.F.R.
1001.102 expressly authorizes an ALJ to consider a petitioner's recovery from the mental or emotional
condition described in subpart (c)(2) of the regulation; nor does it expressly authorize an ALJ to analyze
the related issue of whether a petitioner is likely to commit the same or similar offenses in the future.
Nevertheless, these matters are logical corollaries to the question of whether the emotional, physical, or
mental condition that has reduced the petitioner's criminal culpability should be used by an ALJ to decrease
the length of an exclusion determined, imposed, and directed against a petitioner by the I.G. -- and, if so,
by how much.

The regulations promulgated by the Secretary cannot do more than interpret and implement the Act itself.
Section 1102 of the Act authorizes the Secretary to publish only those rules and regulations "not
inconsistent with this Act, as may be necessary to the efficient administration of the functions with which
[she] is charged under this Act." The relevant section of the law specifies no time period beyond the
minimum five-year exclusion that the Secretary must impose whenever a provider has been convicted of a
program-related crime. Section 1128(a)(1) of the Act. Therefore, the remedial purposes of the statute
provide guidance where, as here, the regulation at issue simply states that the specified evidence "may" be
considered in determining the length of the exclusion. 42 C.F.R. 1001.102(b) and (c).

The major purposes of section 1128 of the Act include 1) protecting the Medicare and Medicaid programs
from fraud and abuse, and, 2) deterring individuals from engaging in conduct that is detrimental to the
programs and to those receiving benefits from the programs. Finding 12. Thus, in applying 42 C.F.R.
1001.102(b) and (c), I must consider the extent to which an exclusion of more than five years will advance
the remedial purposes of the Act. I agree with the parties' legal interpretation that the proper application of
42 C.F.R. 1001.102(c)(2) in this case necessitates my analyzing the evidence concerning Petitioner's
recovery from his mental or emotional condition, as well as my reaching a conclusion concerning the
likelihood of his committing similar offenses against the programs in the future.

B. Petitioner's evidence regarding his mental or emotional condition prior to May 5, 1990 does
not support a reduction of Petitioner's 10-year exclusion.

As discussed below, I am obliged to accept, for purposes of 42 C.F.R. 1001.102(c)(2), Judge Urbom's
finding that Petitioner was under "considerable personal stress" when he committed the offenses at issue in
1990. I do not accept, however, Petitioner's urging that I find him depressed, under a great deal of stress,
or otherwise mentally impaired in prior years when he broke the law in other ways. Judge Urbom's finding
did not extend to any period prior to the commission of the program-related offenses from May 5, 1990 to
December 24, 1990, or to anything more than Petitioner's "considerable personal stress" during that period.
P. Ex. 14 at 56. In none of Petitioner's other criminal proceedings has any judge made a finding of
Petitioner's diminished culpability for any period prior to May 5, 1990.

Judge Urbom did not adopt Petitioner's descriptions of his longstanding pre-existing mental condition,
which were reported by the mental health experts from whom Petitioner sought treatment at his defense
attorney's recommendation. P. Ex. 13; P. Ex. 14 at 22 - 24, 56; and, e.g., P. Ex. 2, 3, 7, 8. The judge did
not adopt any of the medical diagnoses provided to him. Nor did the judge adopt Petitioner's testimony
concerning his feelings of severe depression, "bashed" self-esteem, and having lived for years with a lot of
pain, apprehension, worry, and protracted fear. P. Ex. 14 at 22 - 24, 56. Since Judge Urbom limited his
findings to Petitioner's "considerable personal stress" occurring "during the times when this crime was
committed" (id. at 56), there is no basis under 42 C.F.R. 1001.102(c)(2) for me to consider as a mitigating
factor Petitioner's allegations of stress or other mental conditions previous to his commission of the
Medicaid fraud crimes from May 5, 1990 to December 24, 1990. See I.G. Ex. 7.

The I.G. did not object to the admission of the evidence concerning Petitioner's condition prior to May 5,
1990. Thus, it is in the record, and I have analyzed it for a better understanding of the parties' positions
under 42 C.F.R. 1001.102. However, even considering Petitioner's evidence of his alleged mental
condition prior to May 5, 1990 as solely an attempt to explain the background of the aggravating and
mitigating factors in this case, I do not find Petitioner's evidence persuasive. His allegations are,
essentially, that he has had many especially serious personal and business problems during and since 1984.
Tr. 86 - 111. He testified before me that his degree of stress had "sky rocketed" in 1984 due to various
setbacks in his business enterprises and the deterioration of his relationship with his wife. Tr. 122 - 23.

As earlier noted, Petitioner had used the "stress" argument without success in 1986 and 1987, when he was
being sanctioned for having filled "no refill" prescriptions and having been unable to account for several
thousand doses of controlled substances. See I.G. Ex. 22; see generally I.G. Ex. 25, 29, 30. The Director
of Health had found the claims of great stress unpersuasive and "self-imposed" by Petitioner's business and
financial decisions. I.G. Ex. 22 at 8. The Director further found that Petitioner's stress "neither justifies
nor excuses his actions." Id. at 9.

In reactivating this same argument with augmented factual contentions in contesting his 10-year exclusion
here, Petitioner alleges that his stress was present in 1986, during his disciplinary proceedings before the
Director of Health, but it was not as obvious at that time as it became later. Tr. 24. However, except for
the deaths in his family and his son's attempted suicide (Tr. 102 - 103) -- both of which events I consider to
have been covered by Judge Urbom's finding of Petitioner's "considerable personal stress" in 1990 --
Petitioner's alleged problems in past years have been caused largely by his desire to acquire more money.
The gravity of his past offenses as a pharmacist and as a Medicaid provider are not lessened by his
contentions that he was in need of money to expand his business empire, to please his father, or to make his
wife happier. Tr. 122 - 23, 133 - 34.

The evidence concerning Petitioner's sanctions record indicates that since at least 1983, shortly after
Petitioner became a Medicaid provider (Finding 2), Petitioner has consistently wanted or needed more
money than he could earn by legitimate means. This need or desire has caused him to commit crimes; once
caught, he has justifiable reasons to feel a great deal of stress, apprehension, or sadness. There is no expert
opinion establishing that any offense committed by Petitioner prior to May 5, 1990 was due to any mental
or emotional defect.

Petitioner's accounts of his emotional difficulties over the years are of dubious reliability, given their
timing and his apparent motive for making such reports. He made the reports many years after the fact and
only when he had the opportunity to show mitigation in court in order to lessen his potential punishment.
Petitioner admitted at hearing that, after his conviction for Medicaid fraud in 1988, he never followed his
probation officer's repeated advice to seek treatment. Tr. 84 - 85. Petitioner rejected this advice, even
though he knew that he was legally obligated to follow it as a condition of his probation. I.G. Ex. 13.
Petitioner knew also, however, that following his probation officer's advice would not reduce the sentence
already imposed for his 1988 offense. It was not until shortly before the sentencing hearing on his second
Medicaid fraud conviction that, on the advice of his defense attorney, Petitioner sought treatment. Tr. 83 -
84. One psychologist acknowledged that he was doing the evaluation on the referral of Petitioner's
attorney, and the "purpose of this assessment is to screen for psychological problems, if any, which may be
relevant to Mr. Ellis' current situation before the court." P. Ex. 4 at 2. Another evaluation report of the
same period noted that Petitioner's presence at the treatment center was prompted by, inter alia, "his
possible federal charges ...." P. Ex. 2 at 1.

Petitioner's brother, Dr. Kenneth Ellis, testified that, on more than one occasion prior to 1990, Petitioner
had stated that he would like to take his own life. Tr. 145. However, there was no evidence from Dr. Ellis
or anyone else that Petitioner made these assertions as a result of a medically diagnosable condition. In
addition, there is evidence indicating that Petitioner was not in serious danger of taking his own life.
Petitioner had explained to one of his treating doctors that, while he has thought about "when will it all
end," he has gone on to think also about his children and his new relationship with a girlfriend. P. Ex. 4 at
4, 5. There has been no report of any actual suicide attempt by Petitioner.

Petitioner contended, with some support in the record, that some of the health care professionals who
evaluated him in 1991 thought him depressed and exhibiting an "extreme amount of anxiety, anger,
frustration and depression at the same time." P. Br. 7 (citing P. Ex. 3 at 4 and P. Ex. 6 at 4)). Even so,
there has been no credible or rational explanation of how the depression, anxiety, anger, or frustration
exhibited in 1991 could have caused him to actively and repeatedly breach laws and default on his legal
obligations during prior years. Even those who remarked on Petitioner's symptoms in 1991 did not render
any opinion on when the symptoms began, and one report noted that, even during evaluation in 1991,
Petitioner's reasoning and judgment were within normal limits. P. Ex. 3 at 2.

The symptoms of anger, frustration, and depression appear to be the natural consequences of Petitioner's
chosen course over time, not its causes. For example, one mental health professional made this
observation:

[Petitioner was] clearly showing evidence of emotional strain as a result of the long period of stress
since his first conviction.

P. Ex. 4 at 5. Another consulting psychiatrist, who evaluated Petitioner in 1991 for treatment of complaints
of depressed feelings and sexual dysfunction, made the following finding:

He has sadness, depression and discomfort, anger and frustration at the financial upheaval that he has
gone through . . . .

P. Ex. 6 at 3. As for the cause of Petitioner's financial upheaval, another psychologist noted this
information provided by Petitioner:

The patient describes his finances as in doubt since he may be fined by the feds. He has paid $19,000 to
attorneys in the last 10 days.

The patient has lost several businesses, both pharmacies and dry cleaning businesses and all he seems to
have left is some real estate that he owns. All of these losses are as a result of his lawyer bills and fines
from the government.

P. Ex. 2 at 2.

In considering Petitioner's argument that his severe emotional problems began before or during 1984, I was
not persuaded by his contention that he had maintained a "clear record" and a good professional reputation
for 20 years. Tr. 24. Petitioner stated that, during his disciplinary proceedings in 1986, "the director [of
health] stipulated that for a period of 20 years Mr. Ellis had a clear record as a pharmacist and a reputation
of maintaining ethical standards as a pharmacist." Id. This contention is not altogether true. The parties to
that proceeding made the stipulation quoted by Petitioner (I.G. Ex. 22 at 5), and the Director of Health
concluded "based on the evidence presented regarding [Petitioner's] character and previous record, that
revocation [of his license] would not be appropriate in this instance." Id. at 9. The evidence already
discussed establishes that, after having obtained stipulations concerning his clean record and good
reputation until 1986, Petitioner was convicted of and sanctioned for the offenses he committed prior to
1986. Petitioner's record was not, in fact, clean for the years prior to 1986. Additionally, even in 1986
there was no credible evidence that Petitioner had been suffering from any serious medical problem. The
Director of Health found no mitigation of the violations established by the evidence in 1986. Id. at 8.
Even with the stipulations noted by Petitioner, the evidence to date is inadequate for inferring that, but for
the onset of a serious emotional problem during approximately 1984, Petitioner would have been working
as an honest and law abiding pharmacist.

In sum, Petitioner has not established the legal relevance or factual validity of his affirmative argument that
his 10 year exclusion should be reduced because of a mental or emotional condition which existed prior to
his committing his most recent Medicaid fraud offenses in 1990.

C. The evidence submitted by Petitioner concerninghis reduced culpability in committing the
offenseupon which this exclusion is based and his allegedrehabilitation does not support a reduction in
his10-year exclusion.

Petitioner has proven that the sentencing judge determined on the record that a mental or emotional
condition in existence during the time he committed his crimes in 1990 reduced his culpability for those
crimes. Ex. 14 at 56; Tr. 25. Petitioner correctly posited that, pursuant to regulation, Judge Urbom's
finding of "considerable personal stress" is relevant to these proceedings. See, e.g., P. R. Br. 1, 3.

The I.G.'s exclusion notice of October 29, 1992 does not mention consideration of any mitigating factor.
However, after Petitioner submitted the transcript of the sentencing proceedings as evidence in this case
(see P. Ex. 14), the I.G. agreed that the court did take account of Petitioner's personal stress and its
existence during the time he committed the offense at issue. I.G. Br. 16; I.G. R. Br. 1. The I.G. agreed
also that the foregoing finding of stress may be considered mitigating under the above referenced
regulation. Id. The I.G. argued, however, that the evidence presented in this case does not warrant
reducing the 10-year exclusion. I.G. Br. 16 - 20. The I.G. has sought to refute Petitioner's assertion that he
has recovered through treatment so that he will not be committing the same offenses in the future. Id.; I.G.
R. Br. 2.

Under the regulations, establishing the existence of a mental or emotional condition does not entitle
Petitioner to an automatic reduction of the exclusion period at issue. The regulation uses the word "may"
to indicate the permissive, discretionary use of this mitigating factor as a basis for reducing the exclusion
period. 42 C.F.R. 1001.102(c)(2). Just as I have not increased the 10-year exclusion period upon finding
evidence of an additional aggravating factor pursuant to my de novo reviewing authority, I need not reduce
the exclusion solely because there is evidence of a mitigating factor. Thus, to further substantiate that his
exclusion should be reduced, Petitioner has sought to persuade me that he has recovered from his mental
condition and is therefore unlikely to commit the same offense in the future.

For several reasons, I have not accorded Judge Urbom's finding of "considerable personal stress," or the
related evidence on which Petitioner relies, the controlling weight urged by Petitioner.

First, contrary to Petitioner's arguments, (see, e.g., P. R. Br. at 4), Judge Urbom did not set the criminal
penalty at the lightest level solely because of Petitioner's reduced culpability. The record in the criminal
proceeding gives no indication of the degree of culpability that was reduced by Petitioner's having been
under personal stress. In setting Petitioner's sentence at the lowest level permitted by the federal
sentencing guidelines, Judge Urbom mentioned several factors in Petitioner's favor, among which were his
"considerable personal stress" and the support expressed by his family and community. P. Ex. 14 at 56.
Judge Urbom's statement regarding Petitioner's "considerable personal stress" does not persuade me that,
pursuant to regulation, I must reduce the length of Petitioner's exclusion.

Second, contrary to Petitioner's arguments, the I.G. has neither set the exclusion at the maximum level
possible nor acted in a manner diametrically opposed to Judge Urbom's assessment. P. R. Br. at 4. A 10-
year exclusion is not the maximum sanction permitted by section 1128(a)(1) of the Act. Section
1128(a)(1) of the Act specifies no maximum length for an exclusion. Section 1128 of the Act is, moreover,
a civil statute, with purposes different from the criminal laws under which Petitioner was sentenced by
Judge Urbom. The purpose of section 1128 is to protect the programs and their beneficiaries and
recipients. I therefore reject Petitioner's argument that "[i]t is inconsistent for one government body to
conclude that a minimum sentence is appropriate and another government body to conclude that a stiff
penalty is appropriate." P. R. Br. at 4.

Third, at the time he sentenced Petitioner in 1992, Judge Urbom had mentioned Petitioner's seven months
of treatment without finding that the treatment had rehabilitated him or that it was successful in any other
respect. Judge Urbom stated only that Petitioner "has acknowledged that he was in need of treatment and
he sought that treatment for about seven months . . . ." P. Ex. 14 at 56. As I found in subsection II.B
supra., Petitioner has failed to establish that the offenses he committed in the years prior to 1990 were due
to any mental or emotional condition. I find instead that Petitioner went into treatment in an attempt to
decrease the sanctions he might be given as a result of the federal charges against him, and to obtain help
with his feelings of depression caused by his legal and financial problems, and with his sexual
dysfunctions. See, e.g., P. Ex. 13 at 37, 39; P. Ex. 15 at 2. Those treating Petitioner allowed him to help
shape his own treatment course; they worked on problem areas identified by Petitioner, and they accepted
as true certain background information provided by Petitioner (which I find to be false). 12/ See, e.g., P.
Ex. 15 at 3, 4, 38, 44. Petitioner also was discharged early -- after 28 days -- from his inpatient treatment
facility solely because his insurance company refused to pay for the treatment. See, P. Ex. 13 at 60, 15 at
22. Therefore, on the issue of whether Petitioner's exclusion should be reduced, evidence that Petitioner
has received treatment, together with Judge Urbom's finding of "considerable personal stress" limited to
1990, do not lead to a conclusion that Petitioner's treatment has made him unlikely to commit future
offenses against the Medicaid program.

Finally, the totality of Petitioner's evidence concerning his alleged rehabilitation is not sufficiently
consistent or persuasive to establish that a 10-year exclusion is excessive. Compared with the I.G.'s
evidence on the aggravating factors, Petitioner's evidence on mitigation is considerably less substantial,
less consistent, and less objective. Petitioner relied in very large part on his own statements in situations
where he had clear incentives to advance his own interests. Thus, Petitioner did not establish by a
preponderance of the evidence that he is not likely to commit similar offenses in the future or that a lesser
period of exclusion will suffice as a deterrent.

Petitioner's evidence has established that the "considerable personal stress" that had weighed on Petitioner
when he committed his latest Medicaid fraud offenses has lessened. Petitioner has been feeling better due
to a combination of factors, including treatment, the alleviation of certain financial difficulties, the
resolution of certain family problems, the transient nature of certain tragic events, and the decreasing
magnitude of his legal problems. See generally the testimony by Petitioner and his witnesses at hearing
(Tr. 71 - 149) and P. Ex. 7. Also, unlike earlier times when Petitioner's sanctions have included the
payment of substantial fines, Judge Urbom imposed no fine for the 1990 crimes in light of Petitioner's
financial situation. P. Ex. 14 at 60 - 61. Witnesses have indicated that Petitioner has benefitted from
treatment and changed for the better. See, e.g., P. Ex. 13 at 47 - 62, 18; Tr. 136 - 40, 146 - 47.

I have noted the progress made by Petitioner and hope that he will continue to improve. However, the
extent of Petitioner's progress does not render the 10-year exclusion unreasonable or unnecessary. Absent
a lengthy exclusion, there is no adequate assurance that Petitioner will refrain from committing offenses
against the programs. Petitioner is not yet able to abide by rules and laws, and he continues to exhibit a
number of his past traits.

I note, for example, that, despite the testimony and evidence concerning Petitioner's newly acquired
insights, improved honesty, and willingness to accept responsibility for his actions (e.g., P. Ex. 13 at 58 -
61), Petitioner -- sitting in court awaiting sentencing after having undergone seven months of treatment --
allowed his lawyer to argue on his behalf that he had committed a victimless crime in 1990 and that his
submission of the false claims in 1990 did not really cause the Medicaid program to lose the $6203.75 paid
to him (rather, the loss to the program was allegedly limited to the 24 percent profit he made on the
prescriptions he filled while under exclusion from the program). P. Ex. 14 at 42 - 44, 47. I agree with
Judge Urbom that Petitioner's position was "not well taken" because, in the judge's words,

The amount of $6,203.75 represents a claim made by Mr. Ellis and paid by the state for matters to
which he was not entitled. He wasn't entitled to reimbursement for everything except profit. He was not
entitled to reimbursement for anything where he was making claim under the Medicaid [f]or prescriptions
that he had filled unlawfully.

Id. at 47 - 48.

The arguments presented at Petitioner's request or with his agreement on June 25, 1992 do not show that he
had recovered sufficiently by that time to recognize that submitting fraudulent Medicaid claims creates
victims: recipients whose health care is impaired by the loss of program integrity and the taxpayers who
fund the Medicaid program. By arguing that he should be allowed to keep all but 24 percent of the
overpayment, he was still exhibiting a desire to reap substantial monetary benefits from his illegal actions.
This and other facts discussed herein tend to show that, even though Petitioner has proclaimed his
willingness to take responsibility for his actions, he still has a skewed outlook on what is right and wrong.
Moreover, Petitioner has shown that the responsibility he is willing to take is in a manner favorable to
himself.

Petitioner's subsequent violation of Judge Urbom's judgment and commitment order is strong evidence that
he cannot yet restrain himself from doing what is legally prohibited. As already noted, Petitioner requested
his hearing on December 28, 1992 so that he could demonstrate that he could "do it right" during his
remaining professional life. However, on the following day, December 29, 1992, Petitioner began to
violate his curfew and, after eight more days of curfew violations, he was found in another city under the
influence of a controlled substance for which he had no prescription. Petitioner then sought to prove to
Judge Urbom and to me that his infractions were insignificant and, in some instances, prompted by others'
requests to him. See, e.g., P. Ex. 19, 20; Tr. 118 - 119. Petitioner argued also that these "relatively minor
infractions" can be attributed to the fact that Petitioner was only in the early weeks of his confinement
program. P. R. Br. 5.

I found Petitioner's violations of Judge Urbom's order very significant in light of Petitioner's assertions that
he is able to abide by laws and regulations. I did not attribute much significance to Petitioner's contention
that he had committed the infractions during the early part of his confinement program. I note that
Petitioner has a history of having defrauded the Medicaid program when he was new to it as well as when
he became more experienced with it. Moreover, only 11 days before he began violating them, he had read
and signed a copy of the rules and procedures he was to follow pursuant to his confinement program. I.G.
Ex. 32 at 5 - 8.

For purposes of deciding whether the length of Petitioner's exclusion from the programs is reasonable, I do
not find it necessary to decide matters such as why he violated the court's judgment and commitment order.
Whatever caused him to violate curfew and use a controlled substance, Petitioner behaved in much the
same way as he had done before. He did what was legally prohibited to him; he then attempted to justify
or minimize the significance of his actions by, inter alia, blaming external events or other people, and he
confessed fault only when doing so was likely to lessen his penalty.

I note Petitioner's recent explanation of why, in 1990, he submitted Medicaid claims during his exclusion.
Petitioner testified before me that he had "relaxed" on the terms of his exclusion in 1990 because he
"rationalized or felt" that his actions were justified as long as he had a backup pharmacist's initials to use or
he made an effort to find other pharmacists to do the work. Tr. 111, 124 - 125. Petitioner used this same
type of rationalization to justify his curfew violations after his treatment. Petitioner pointed out that he had
called and left messages for his probation officer around the time of each incident, (Tr. 119), even though
the explicit terms of his commitment order prohibited him from following his own timetable without the
explicit approval of his probation officer 24 hours in advance. I.G. Ex. 32. The "Home Confinement
Scheduling Procedures" instructed Petitioner, in these unambiguous words, to refrain from doing what he
did:

All schedule changes must be done 24 hours in advance! .... DO NOT call and say you are leaving and
going to take some free time, or whatever. You must schedule everything in advance as I am supposed to
know where you are and what you are doing at any given time. If you do not have preapproved permission
to be somewhere, YOU MUST BE AT HOME!

Id. at 1. In the home confinement participation agreement Petitioner had signed shortly before he
committed his violations, Petitioner acknowledged as follows:

I must obtain my officer's advance permission for any special activities (such as doctor's appointments)
that are not included in my written schedule.

Id. at 5. None of the reasons for Petitioner's curfew infractions (going to church, changing his free time,
working late, or meeting his attorney in another city) constituted an emergency that would have allowed
him to deviate from the foregoing procedures. See id. at 2 and 5; P. Ex. 19, 20.

Petitioner's efforts to minimize his violations of Judge Urbom's judgment and commitment order also
reminded me of Petitioner's explanation for his inability to account for several thousand doses of controlled
substances during 1986. Petitioner sought to mitigate that offense by testifying before the State Director of
Health that employees were conspiring to devalue his pharmacy as part of a scheme to facilitate purchase
by others. I.G. Ex. 22 at 8.

In testifying before me, Petitioner gave additional indications that he was continuing his old pattern of
obfuscating his offenses and blaming others while professing to take responsibility for his own actions. He
testified that his crime in 1990 was in filling Medicaid prescriptions during his exclusion from the program,
and, if he were able to relive that period of his life, he would want to obtain greater clarification from
Medicaid officials in order to follow their instructions as to what he could and could not do during his
exclusion, (Tr. 105, 110 -111). 13/ Both assertions, and their implications, are not in total accord with his
earlier admissions.

When testifying on direct examination at his sentencing hearing on June 25, 1992, Petitioner asserted that
his crime was filling Medicaid prescriptions during his five-year exclusion. P. Ex. 14 at 22. However, on
cross-examination by the U.S. Attorney, Petitioner indicated his awareness that his offense was committed
when he billed the Medicaid program for his services while he was excluded. I.G. Ex. 14 at 26 - 27. The
U.S. Attorney asked him if he recalled a conversation with two Medicaid officials where he was told very
clearly that, if he filled any Medicaid prescriptions, he could not bill for them. Id. Petitioner answered
"That's correct." Id.

These and other facts show that Petitioner knew, prior to testifying before me, that his offense was not in
filling prescriptions for Medicaid recipients. His license to practice pharmacy had been returned to him
prior to 1990, and he was not prohibited from working as a pharmacist under his own name. J. Ex. 1 at 4;
Tr. 105. He also knew prior to the hearing before me that he was prohibited from claiming Medicare or
Medicaid reimbursement for any service he provided to program beneficiaries and recipients during his
exclusion. Tr. 105. If he lacked such clear knowledge when he committed his offenses against the
Medicaid program, he would not have tried to hide his involvement in the submission of numerous false
claims over the six month period in 1990. He falsified those claims by deliberately using other
pharmacists' initials and by altering the transactions recorded on the computer in his store. See Tr. 44 - 45;
I.G. Ex. 7.

The record concerning Petitioner's prior sanctions also contains evidence of similar manipulations used by
Petitioner to advance his own interests. For example, Petitioner had sought to shorten his license
suspension period by claiming in an affidavit that he had "voluntarily withdrawn" from the profession
when, in fact, he had been practicing pharmacy every month. I.G. Ex. 19. Also, until a probation
revocation action was filed against him, Petitioner refused to pay any part of the more than $5000 in fines
and costs assessed against him as a term of his probation. I.G. Ex. 20, 21.

In an effort to put his Medicaid fraud offenses of 1990 in a better light, Petitioner gave considerable
testimony concerning his search for relief pharmacists, his desire to serve his Medicaid patrons, and his
fear of bankruptcy. See Tr. 106 - 11, 130 - 32. The causes of his illegal activities were not, as Petitioner
attempted to portray them, the absence of available pharmacists who were willing to work in his store
between certain hours, or the need to serve Medicaid recipients who came to his store during the final store
hour and only after having run out of their prescription medications. Id. Petitioner was working in his own
store as a relief pharmacist and was legally authorized to fill the prescriptions; having filled the
prescriptions brought in by the Medicaid recipients, he was not in any danger of losing the business of their
friends or relatives. See, e.g., Tr. 110, 124, 131. The percentage of prescriptions filled at Petitioner's store
for Medicaid recipients accounted for only 15 to 18 percent of the store's total. Tr. 130. This low
percentage included the Medicaid work Petitioner's store transacted with nursing homes (id.), which should
not have encountered the types of emergencies and staffing problems described by Petitioner.

Petitioner did not need to bill the Medicaid program during his exclusion to maintain his customers' loyalty
or to serve the needs of his Medicaid customers. He could have accomplished these business goals
legitimately by filling Medicaid prescriptions without charge to his customers or to Medicaid. His lack of
candor on these critical facts at this time is not consistent with his affirmative arguments concerning
recovery.

For these and related reasons, I accorded little weight to Petitioner's expressions of contrition. Neither do I
find credible his explanation on cross-examination that, rather than implying that the Medicaid officials
had not clearly explained the exclusion to him, what he had really meant was he wished he had tried harder
to follow the rules and regulations in 1990. Tr. 125. His counsel's questions on direct examination
produced many of Petitioner's concessions concerning his past offenses. I was not persuaded that, absent
the leading questions that reminded Petitioner of his offenses, the true extent of his knowledge, and the
need to take responsibility for his actions, Petitioner would have voluntarily acknowledged them.

Petitioner's admissions of wrongdoing following his treatment have not persuaded me that he is unlikely to
commit offenses against the programs. For several years prior to treatment, Petitioner had been admitting
wrong-doing as well. What he has not yet learned to do well is to follow the precise terms of those orders
and rules that he is legally obligated to follow in order to avoid committing offenses in the first instance.
The fiscal integrity of the programs cannot be advanced by the participation of a provider who is apt to
deviate from the applicable laws and regulations for reasons he thinks proper.

Petitioner did not prove that an exclusion of less than 10 years would suffice for safeguarding the integrity
of the Medicare and Medicaid programs and would deter him from again defrauding the programs.
Petitioner has a long history of illegally acting on his need for money. The programs remain at risk
because he is either unable or unwilling to abide by the laws as written. Moreover, the current absence of
serious financial problems in his life may be temporary. There is no adequate assurance that Petitioner will
not revert to his old ways when he believes he has a need to do so.

CONCLUSION

In accordance with the facts and law applicable to this case and for the reasons stated above, Petitioner's
10-year exclusion is reasonable. I sincerely hope, for the sake of Petitioner and the programs, that
Petitioner will learn to conform his conduct to the requirements of law.
To avoid any misunderstanding about the significance of this decision, I wish the parties to be aware that I
have made no determination on the current status of the five year exclusion that was imposed against
Petitioner on August 30, 1988. I.G. Ex. 10, 12. Because my jurisdiction of this case is limited to
determining the reasonableness of the 10-year exclusion for which a hearing has been requested, my
decision should not be read as having excused Petitioner from serving his five-year exclusion in full. I
reviewed evidence on the five-year exclusion solely as part of the sanctions record made relevant by 42
C.F.R. 1001.102(b)(5). Only the I.G., as the Secretary's delegate under the Act and as

signatory to the instrument that imposed the five year exclusion, is authorized to review the matter of the
unexpired exclusion and take appropriate action.

Mimi Hwang Leahy
Administrative Law Judge

1. The Medicaid Program is among the State health care programs defined in section 1128(h) of the Act.
Unless the context indicates otherwise, "Medicaid" will be used as an abbreviation herein to designate all
State health care programs from which an individual or entity is subject to exclusion under section
1128(a)(1) of the Act.

2. "Tr. (page)" is used herein to denote the hearing transcript.

3. The document marked and entered as a joint exhibit (J. Ex. 1) contains a typographical error in Item 2.
The underlined word in the following clause of Item 2 should be corrected to read "the I.G.'s":

2. Petitioner stipulates to the authenticity of Petitioner's proposed exhibits ....

4. See Item 3, wherein Petitioner stipulated that he had pled guilty to one count of Medicaid fraud on June
25, 1992; and Item 5, wherein Petitioner stipulated that his guilty plea constituted a conviction covered by
section 1128(a)(1) of the Act.

5. The parties each filed posthearing and response briefs. I refer to the posthearing briefs as either "I.G."
or Petitioner ("P.") "Br. (page)." I refer to the response briefs as "I.G." or "P. R. Br. (page)."

6. I use the abbreviations "Ex. (number at page)," prefixed by I.G. or Petitioner ("P."), to designate the
exhibits I cite in this decision.

7. I.G. Ex. 7 is a summary report prepared by the Nebraska Department of Social Services showing that
314 Medicaid claims were submitted by Petitioner between May and December 1990 (during which time
Petitioner was excluded from the programs), many of which claims used other pharmacists' initials. The
Medicaid program paid Petitioner a total of $6203.75 on these claims. Tr. 43 - 44. One of the I.G.'s
witnesses, the manager of the State's provider fraud investigation unit, described the details of the State's
investigation in this matter. Tr. 38 - 60. The results of the investigation were turned over to the U.S.
Attorney's Office for Petitioner's prosecution. Tr. 53 - 54.

Throughout this decision I refer to this offense as having involved 314 false Medicaid claims, even though
I am aware that Petitioner was charged with only one count of having "made a false statement or
representation of a material fact in an application for a benefit or payment" on or about October 9, 1990,
(I.G. Ex. 6), and that Petitioner has pled guilty to the one count only, (I.G. Ex. 4). However, Judge Urbom
found that Petitioner had committed the crime "not just once, but ... many times," (P. Ex. 14 at 56), and he
ordered Petitioner to make restitution to the Medicaid program in the amount of $6203.75, (I.G. Ex. 4 at 3;
P. Ex. 14 at 59 - 60). The amount of restitution corresponds to the total overpayment calculated for the 314
false claims submitted by Petitioner between May 5, 1990 and December 24, 1990. I.G. Ex. 7. The record
does not contain evidence of any single claim that equalled the amount of Petitioner's restitution to the
program. I have therefore concluded that the restitution for the one count to which Petitioner pled guilty
included his submission of the 314 false claims identified in I.G. Ex. 7.

8. I have overruled Petitioner's objection that the evidence concerning his curfew violations does not
establish his commission of "crimes." Tr. 17. The regulations permit me to review civil and administrative
as well as criminal records. 42 C.F.R. 1001.102(b)(5). Moreover, regardless of how the offenses at issue
are characterized, the curfew violations committed by Petitioner were directly related to his criminal
sanctions. A curfew was imposed as part of the original sentence on Petitioner's criminal conviction, and
Petitioner's curfew violations resulted in the court's increasing the sanction imposed pursuant to that
conviction. I.G. Ex. 31.

9. Petitioner's submission of the false claims between May 1990 and December 1990 has resulted in the
Medicaid program's losing more than $6000 in overpayments. I.G. Exs. 4, 7; Tr. 43 - 47. As discussed
previously, Petitioner's prior convictions also caused losses to the Medicaid program. Where, as here, the
acts that resulted in the conviction at issue (or similar acts) result in financial loss to the Medicaid program
of $1500 or more, this can be considered as an additional aggravating factor under 42 C.F.R.
1001.102(b)(1). Even though the I.G. did not consider this fourth aggravating factor in setting the
exclusion period (see I.G. Br. 12 - 13), I have the authority to review the totality of the evidence de novo.
See section 205(b) of the Act as incorporated by section 1128(f) of the Act; 42 C.F.R. 1005.20.

10. Because section 1128(a)(1) of the Act mandates an exclusion of not less than five years, the regulation
applies only to those cases where aggravating factors have been used to increase the exclusion to more than
five years. Furthermore, the regulation specifies that the exclusion may not be reduced to less than five
years.

11. As counsel for Petitioner stated during opening argument, "Number three[,] we must prove that Paul
Ellis has recovered from that strain that he was suffering and from that depression that he was suffering so
that you can be confident that the same wrongs will not be committed again in the future." Tr. 25.

12. For example, Petitioner gave the following false information to his treating facility:

Last January federal agents came into another pharmacy that he had and indicted him on Medicaid fraud
again for about $300 worth of discrepancies based on him selling prescriptions to Medicaid patients even
though he had another doctor signing off and officially taking responsibility for those interactions.

P. Ex. 15 at 3.

The patient has served the sentence [for his 1988 Medicaid fraud conviction] successfully and then
came to know that he was being charged again for probation violation at this point .... [a]s he was getting
the signatures from one [of] the pharmacists and dispensing drugs.
Id. at 38.

13. Q: If you were placed in the same circumstances again today, what, if anything, would you do
differently?

A: I would, I would hope to, with my mind being occupied in so many different directions and
with all the extenuating circumstances. I wish I would have made better contact with someone like Kris
Logsdon and called her on a regular basis or had her notes and reviewed them regularly and followed her
instructions.

Tr. 110 - 111.