Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Berton Siegel, D.O., Petitioner,
- v. -
The Inspector General.
DATE: December 21, 1993
Docket No. C-93-070
Decision No. CR298
DECISION
By letter dated March 23, 1993, Berton Siegel, D.O.,
the Petitioner herein, was notified by the Inspector General (I.G.), U.S. Department
of Health & Human
Services (HHS), that it had been decided to exclude Petitioner for a period
of five years from participation
in the Medicare, Medicaid, Maternal and Child Health Services Block Grant and
Block Grants to States for
Social Services programs. The I.G. explained that Petitioner's five-year exclusion
was mandatory under
sections 1128(a)(1) and 1128(c)(3)(B) of the Social Security Act (Act) because
Petitioner had been
convicted of a criminal offense related to the delivery of an item or service
under Medicaid.
Petitioner filed a timely request for review of the I.G.'s action, and the
I.G. moved for summary
disposition.
Because I have determined that there are no relevant factual issues in dispute
-- i.e., the only matter to be
decided is the legal significance of the undisputed facts -- I have granted
the I.G.'s motion and decide the
case on the basis of written submissions in lieu of an in-person hearing.
I affirm the I.G.'s determination to exclude Petitioner from participation
in Medicare and Medicaid for a
period of five years.
APPLICABLE LAW
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act make it mandatory for an individual
who has been
convicted of a criminal offense related to the delivery of an item or service
under Medicare or a State
health care program 1/ to be excluded from participation in such programs, for
a period of at least five
years.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
AS STIPULATED BY THE PARTIES 2/
1. On October 1, 1982, the State of Arizona implemented the Arizona Health
Care Cost Containment
System (AHCCCS), an experimental, prepaid, capitated 3/ Medicaid program. I.G.
Br. 5; P. Br. 6. 4/
2. AHCCCS is a State health care program as defined by section 1128(h) of the
Act. I.G. Br. 5; P. Br. 6;
I.G. Exs. 7 at 2, 8 at 6, 9 at 6; P. Ex. 1.
3. Arizona initially entered into agreements with four "prime contractors"
to provide health care services
to AHCCCS qualified patients. I.G. Br. 6; P. Br. 6.
4. The prime contractors received Medicaid funding through the AHCCCS program. I.G. Br. 6; P. Br. 6.
5. The prime contractors subcontracted with hospitals and other health care
providers to fulfill their
obligation to provide health care items and services to AHCCCS patients. I.G.
Br. 6; P. Br. 6.
6. Health Care Providers of Arizona (HCPA) was incorporated on August 6, 1982
for the sole purpose of
providing health care services as mandated by AHCCCS. I.G. Br. 6; P. Br. 6.
7. HCPA was an AHCCCS prime contractor from 1982 until 1984. I.G. Br. 6; P. Br. 6.
8. Petitioner is a licensed osteopathic physician. I.G. Br. 6; P. Br. 6.
9. Petitioner owned one-third of HCPA's shares and served, at various times,
as HCPA's president,
chairman of the board of directors, and co-medical director. I.G. Br. 6; P.
Br. 6.
10. Under its contract with HCPA, AHCCCS was required to make monthly capitation
payments to HCPA
in advance of HCPA's performance of services. I.G. Br. 7; P. Br. 6.
11. This monthly payment constituted prepaid, per member, reimbursement for
all of the covered services
HCPA provided AHCCCS' members. I.G. Br. 7; P. Br. 6; Finding 10.
12. HCPA's contract with AHCCCS required that all funds paid to HCPA under
the contract be accounted
for separately. I.G. Br. 7; P. Br. 6.
13. The monthly checks which AHCCCS paid HCPA were deposited in HCPA's corporate
checking
account. I.G. Br. 7; P. Br. 6.
14. On or about July 28, 1989, a criminal indictment was filed in the Superior
Court of Maricopa County,
Arizona (State court) against Petitioner and two other defendants. I.G. Br.
9; P. Br. 7.
15. The indictment alleged that Petitioner and the two other defendants had
used AHCCCS funds to buy
medical equipment which was to be used for their non-AHCCCS patients, constituting
theft in violation of
A.R.S. 13-1802(A)(2). I.G. Br. 9; P. Br. 7.
16. The indictment alleged further that Petitioner had conspired with the two
other defendants in a
continuing scheme to:
a. defraud HCPA, the primary care physicians under contract with HCPA, and AHCCCS;
b. divert, misappropriate, steal and convert
funds entrusted to HCPA by AHCCCS;
c. use their HCPA positions for personal
benefit, or for the benefit of their other
businesses or ventures in disregard of HCPA's
financial condition;
d. pay themselves or their other businesses
or ventures excess money, i.e., by purchasing
medical equipment for the benefit of their
private medical practice; and
e. conceal from AHCCCS the money they were takingfor their personal benefit
or for the benefit
of
their other businesses or ventures.
I.G. Br. 9 - 10; P. Br. 7.
17. On July 1, 1992, Petitioner pled guilty to three felony counts (amended
counts 12, 13, and 14) of
facilitation of theft in violation of A.R.S. 13-1004, 13-1802(A)(2). I.G. Br.
10; P. Br. 7; I.G. Ex. 1 at 2,
3, I.G. Ex. 11.
18. Based on his guilty plea, Petitioner was convicted of three counts of facilitation
of theft. I.G. Br. 11;
P. Br. 7; I.G. Ex. 1 at 2, 3; Finding 17.
19. The Secretary of HHS delegated to the I.G. the authority to determine,
impose, and direct exclusions
pursuant to section 1128 of the Act. I.G. Br. 11; P. Br. 7.
OTHER FINDINGS OF FACT AND CONCLUSIONS OF LAW
20. HCPA's primary source of income consisted of AHCCCS payments. I.G. Ex.
9 at Appendix B,
paragraph 1(d); I.G. Ex. 10 at 2.
21. The facts upon which Petitioner's conviction was based -- admitted by Petitioner
in signed statements
attached to his plea agreement -- are the following:
a. During 1982 - 1984, HCPA was a State contracted
provider of indigent health care under AHCCCS;
b. AHCCCS paid monthly checks to HCPA which were
deposited into HCPA's corporate checking account;
c. The checking account was controlled by HCPA's
principals, Petitioner and the two other defendants
identified in the indictment;
d. Petitioner ordered, and countersigned a check with a codefendant to pay for
liposuction (fat
suction) equipment. The check was written on HCPA's checking account, despite
the fact that Petitioner
knew that the liposuction equipment was to be used for his non-AHCCCS cosmetic
surgery patients.
Cosmetic procedures are not covered by AHCCCS;
e. Petitioner ordered and then aided and directed the two other defendants
indicted with him to
pay for dermabrasion equipment, despite knowing that the equipment was to be
used for his non-AHCCCS
cosmetic or non-cosmetic surgery patients; and
f. Petitioner ordered and countersigned a check with a codefendant to pay
for surgical knife
equipment. The check was written on HCPA's checking account, despite the fact
that Petitioner knew the
surgical knife equipment was to be used for his non-AHCCCS cosmetic or non-cosmetic
surgery patients.
I.G. Ex. 11 at 3 - 5.
22. The State court judge granted the motion for dismissal contained in Petitioner's
plea agreement
regarding any and all charges arising out of Petitioner's relationship with
HCPA and AHCCCS (which
included counts 1 - 11 and 15 - 17 of the indictment). I.G. Ex. 1 at 5; I.G.
Ex 11 at 1. 5/
23. Petitioner was sentenced to probation for three years; fined $14,000; ordered
to pay $8,619.40 in
restitution to the victim of his crime; 6/ ordered to pay $100,000 as reimbursement
for the costs of
prosecution; and assessed miscellaneous fees. I.G. Ex. 1 at 3 - 5.
24. Petitioner acknowledged in writing that, as a result of his plea agreement,
he was subject to a minimum
five-year exclusion from Medicare and Medicaid. I.G. Ex. 11 at 6.
25. Petitioner's guilty plea, which was accepted by the
State court, satisfies the Act's requirement that Petitioner has been "convicted."
Act, section 1128(i)(3);
Findings 17, 18.
26. Petitioner's conviction relates to the delivery of health care items or
services under Medicaid, within
the meaning of section 1128(a)(1) of the Act. Findings 1 - 25.
27. The I.G. properly excluded Petitioner from participation in Medicare and
Medicaid for five years, as
required by section 1128(c)(3)(B) of the Act.
28. The fact that Petitioner's conviction may fall within the criteria for
permissive exclusion found at
section 1128(b)(1) of the Act is irrelevant.
ARGUMENT
Petitioner maintains that his conviction is not program related and, therefore,
that the only appropriate
sanction is a permissive exclusion. He observes that the State court order entering
judgment against him
also provides that charges arising out of his relationship with HCPA and AHCCCS
be dismissed. I.G. Ex.
1 at 5. Petitioner contends that the State court's holding amounts to a dismissal
of the program-related
charges and leaves a conviction that does not relate to the delivery of items
or services under Medicare or
Medicaid.
Petitioner asserts also that he did not intend to commit any offenses against
Arizona law and that he entered
his guilty plea without legal counsel. Furthermore, Petitioner asserts that
if I find that his exclusion is
permissive, I should consider in mitigation of the length of his exclusion that
he is not a financial threat to
Medicare and Medicaid; that he pled guilty many years after the activity on
which his plea is based took
place; and that, as a physician, he is, overall, an asset to the community and
to his profession.
DISCUSSION
The first requirement for mandatory exclusion under section 1128(a)(1) of the
Act is that the individual in
question has been "convicted" of a federal or State criminal offense.
In the case at hand, Petitioner pled
guilty to a three-count criminal charge. Finding 17. The State court accepted
the plea, entered judgment
against Petitioner, and imposed a significant penalty upon him. Findings 18,
23. Section 1128(i)(3) of the
Act expressly states that when an individual enters a plea of guilty, and the
court accepts the plea, such
person is considered to have been "convicted," within the meaning
of section 1128(a)(1) of the Act.
Next, it is required by section 1128(a)(1) that Petitioner's criminal offense
be related to the delivery of
items or services under Medicare or Medicaid. A criminal conviction is program
related within the
meaning of this section when there is a "common sense connection"
between the criminal offense and the
delivery of Medicare or Medicaid benefits; i.e., that there is some "nexus"
between the criminal offense
and the functioning of the Medicare and Medicaid programs. Thelma Walley, DAB
1367, at 9 (1992).
The theft of Medicare and Medicaid assets relates to the delivery of health
care items or services by
diminishing Medicare and Medicaid's efficiency and ability to supply benefits
to their beneficiaries and
recipients. Indeed, Departmental Appeals Board (DAB) case precedent has established
a general rule that
all crimes involving financial misconduct directed at Medicare or Medicaid are,
by their very nature,
related to the delivery of items or services under such programs, within the
meaning of section 1128(a)(1).
Samuel W. Chang, M.D., DAB 1198 (1990) (false billing); Carlos E. Zamora, M.D.,
DAB 1104 (1989)
(false billing); Napoleon S. Maminta, M.D., DAB 1135 (1990) (conversion of a
Medicare reimbursement
check).
Petitioner does not dispute that AHCCCS constitutes a State health care program
within the meaning of
section 1128(h) of the Act. Finding 2. Moreover, as HHS approved AHCCCS' creation
(initially as a
"demonstration project") in 1982, and thereafter provided it with
substantial financing through Title XIX 7/
of the Social Security Act, and considering that the program and its contractors
were generally expected to
comply with Title XIX (P. Ex. 1; I.G. Ex. 9 at 6), I conclude that AHCCCS should
be regarded as a State
health care program. Accordingly, those who are convicted of a criminal offense
related to the delivery of
an item or service under AHCCCS are subject to a five-year exclusion pursuant
to sections 1128(a)(1) and
1128(c)(3)(B) of the Act.
In the case at hand, Petitioner did not convert funds directly from the State.
However, Petitioner did
convert (or facilitate the conversion of) funds that had been entrusted to HCPA,
a State contractor
established solely to provide health care services as mandated by AHCCCS and
a company Petitioner
helped to establish and over which he had a shared power of control. Findings
6, 7, 9, 17, 18, 21.
Specifically, HCPA worked for the State (via HCPA's contract with AHCCCS) arranging
for the provision
of health care services to a designated group of State residents and using AHCCCS
funds to pay for those
services. I.G. Ex. 9. HCPA's primary revenue source appears to have been the
funds it received from
AHCCCS (a Medicaid program). Findings 1 - 7, 20. In sum, Petitioner misappropriated
public funds from
an entity which was, in essence, an agent of the State.
Petitioner's contention that the dismissal of many of the criminal charges
against him proves that his
offenses could not have been program related is without merit.
His signed admissions of the facts supporting his guilty pleas to amended counts
12, 13, and 14, are
sufficient to establish his commission of program-related offenses. Specifically,
Petitioner admitted that:
1) HCPA was a State controlled provider of indigent care under AHCCCS; 2) AHCCCS
paid monthly
checks to HCPA which were deposited into HCPA's checking account; and 3) Petitioner
either paid from
HCPA's checking account, or directed that others pay from HCPA's checking account,
for the purchase of
medical equipment to be used for Petitioner's non-AHCCCS patients. Finding 21.
Petitioner asserts further that he did not intend to commit any crime when
he undertook the acts which
resulted ultimately in his conviction. Petitioner's intention, however, is irrelevant.
It is Petitioner's
conviction of a program-related criminal offense that triggers exclusion; proof
of criminal intent is not
required to bring a conviction within the ambit of section 1128(a)(1). DeWayne
Franzen, DAB 1165, at 8
(1990).
Moreover, with regard to Petitioner's contention that he was without the benefit
of counsel when he pled
guilty, if Petitioner's intention is to challenge the propriety of his State
court conviction, he must challenge
that conviction in State court. Petitioner may not use this proceeding to collaterally
attack the State
conviction forming the basis for his exclusion. Norman E. Hein, D.D.S., DAB
CR251, at 9 (1993).
Further, Petitioner cannot argue that because he was without benefit of counsel
he did not understand the
consequences of his guilty plea with regard to his Medicare and Medicaid participation.
Petitioner knew
when he entered into his plea agreement that he might be subject to a five-year
exclusion. Finding 24.
Lastly, although Petitioner argues that his exclusion should fall under the
permissive exclusion section of
the Act (section 1128(b)), rather than under the mandatory exclusion section
of the Act (section
1128(a)(1)), Petitioner's argument is not supported by the relevant law. In
Boris Lipovsky, M.D., DAB
1363, at 8 (1992), an appellate panel of the DAB held that where a criminal
conviction satisfies the
requirement of section 1128(a)(1) of the Act that it be related to the delivery
of an item or service under
Medicare or Medicaid, then section 1128(a)(1) is controlling and the I.G. must
impose the mandatory
exclusion established by the Act. The fact that the criminal conviction may
also appear to fall within the
criteria for permissive exclusion found at section 1128(b)(1) is irrelevant.
Id.
CONCLUSION
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act require that Petitioner be
excluded from the Medicare
and Medicaid programs for a period of at least five years because of his conviction
of a program-related
criminal offense. Neither the I.G. nor an administrative law judge is authorized
to reduce the five-year
minimum mandatory period of exclusion. Jack W. Greene, DAB CR19 (1989), aff'd,
DAB 1078 (1989),
aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835, 838 (E.D. Tenn. 1990).
Joseph K. Riotto
Administrative Law Judge
1. The definition of what constitutes a "State health care program"
is contained at section 1128(h) of the
Act. For the purposes of this Decision, my reference to the State health care
programs defined at section
1128(h) of the Act means Medicaid.
2. In his response to the I.G.'s motion for summary disposition, Petitioner
stated specifically that he
agreed with certain of the facts as set forth at pages 5 through 11 of the I.G.'s
motion for summary
disposition. Those undisputed material facts are set forth here.
3. "Capitation" under AHCCCS is defined as fixed monthly payments
which AHCCCS gives in advance
to its contractors (health plans) for the full range of medical benefits available
to each AHCCCS member.
P. Ex. 1, Appendix C.
4. The I.G. submitted 11 exhibits. I cite the I.G.'s exhibits as I.G. Exs.
1 - 11 (at page). The I.G.
withdrew I.G. Exs. 3 and 6. Petitioner submitted one exhibit. I cite Petitioner's
exhibit as P. Ex. 1 (at
page). I admit into evidence I.G. Exs. 1, 2, 4, 5, 7 - 11 and P. Ex. 1. The
I.G. submitted a motion for
summary disposition to which Petitioner responded. The I.G. submitted a reply
to Petitioner's response. I
cite the I.G.'s motion for summary disposition as I.G. Br. (page). I cite Petitioner's
response as P. Br.
(page). I cite the I.G.'s reply as I.G. R. Br. (page).
5. The judge's order indicated that his prohibition of charges relating to
AHCCCS and HCPA did not
affect the three convictions arising out of Petitioner's thefts from HCPA (amended
counts 12, 13, and 14),
which the court had just entered. I.G. Ex. 1 at 5.
6. The I.G.'s exhibits are unclear as to who was the recipient of this restitution.
I.G. Ex. 2, a document
entitled, "Restitution Ledger," is on file in the State court. It
sets forth Petitioner's financial obligations and
reflects that he owes $8,619.40 to AHCCCS. However, in the State court order
constituting the judgment
against Petitioner, the State court judge ordered Petitioner to pay $8,619.40
to HCPA's trustee in
bankruptcy. I.G. Ex. 1 at 4.
Here, however, the entity receiving Petitioner's restitution is immaterial.
The identity of that recipient does
not alter the criminal nature of Petitioner's misconduct or the fact that his
crimes were directed at the
Medicaid program.
7. Title XIX established and continues to govern the Medicaid program.