$05:Exclusion Case
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Richard F. Jaskiewicz, R.N., Petitioner,
- v. -
The Inspector General.
DATE: May 9, 1994
Docket No. C-93-073
Decision No. CR315
DECISION
By letter (Notice) dated March 23, 1993, the Inspector General
(I.G.) notified Petitioner that he was being excluded from
participation in the Medicare, Medicaid, Maternal and Child Health
Services Block Grant and Block Grants to States for Social Services
programs for five years. 1/ The I.G. informed Petitioner that he
was being excluded due to his conviction in the Superior Court of
Arizona, Pima County, of a criminal offense related to the delivery
of an item or service under the Medicaid program. 2/ The I.G.
further advised Petitioner that the exclusion of individuals
convicted of such an offense is mandated by section 1128(a)(1) of
the Social Security Act (Act), and that section 1128(c)(3)(B) of
the Act provides that an exclusion effected pursuant to section
1128(a)(1) must be for a minimum five-year period.
As an additional basis for the exclusion, the I.G. notified
Petitioner that he was being excluded also under section 1128(b)(1)
of the Act. The I.G. told Petitioner that he was being excluded
under section 1128(b)(1) of the Act because he was convicted of a
criminal offense relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct. The
regulations provide for a three-year exclusion when the exclusion
is based on section 1128(b)(1). 42 C.F.R. 1001.201. However,
that period may be increased if aggravating circumstances exist.
42 C.F.R. 1001.201(b)(2). The I.G. found such circumstances
here, in that the acts which resulted in Petitioner's conviction
had a significant adverse physical or mental impact on one or more
program beneficiaries or other individuals; that Petitioner caused
financial loss to the program in excess of $1500; and that the acts
leading to Petitioner's conviction took place over a period longer
than one year. 3/ 42 C.F.R. 1001.201(b)(2)(i) - (iii). The
I.G. contends that these circumstances, as well as the mandatory
five-year exclusion under section 1128(a)(1) of the Act, justify
the five-year exclusion.
Petitioner, appearing pro se during this proceeding, requested a
hearing on May 12, 1993, and the case was assigned to me for
hearing and decision. 4/ I have considered the parties' exhibits,
their arguments, and the applicable law and regulations. I find
that there are no disputed issues of fact and that summary
disposition in favor of the I.G. is warranted. I conclude that,
pursuant to section 1128(a)(1) of the Act, the I.G. has authority
to exclude Petitioner from Medicare and to direct his exclusion
from Medicaid. Further, I conclude that, pursuant to section
1128(c)(3)(B) of the Act, the five-year exclusion imposed by the
I.G. is mandated by law.
ADMISSION
During the prehearing conference held on June 4, 1993, Petitioner
admitted that he was convicted based on charges of fraudulent
schemes and artifices and conflict of interest. Petitioner stated
that his convictions are on appeal. Prehearing Order; see also
Petitioner's response to the I.G.'s request for summary disposition
(P. Br.) at 2.
ISSUES
1. Whether Petitioner was convicted of a criminal offense.
2. Whether Petitioner's conviction relates to the delivery of an
item or service under the Medicare or Medicaid programs, within the
meaning of section 1128(a)(1) of the Act
FINDINGS OF FACT AND CONCLUSIONS OF LAW 5/
Background findings
1. At all times relevant to this case, Petitioner was a
registered nurse, licensed to practice nursing by the Arizona State
Board of Nursing, and an employee of Pima County, Arizona. I.G.
Ex. 6 at 2.
2. In June 1987, Petitioner was employed as the administrator of
Clinical Nursing and Medical Services for Pima County's Department
of Aging and Medical Services (AMS). I.G. Ex. 7.
3. Petitioner's duties as administrator included: supervision of
a professional nursing staff assigned to work in outside nursing
homes under contract; provision of primary care as a member of a
health care team; responsibility for on-going health maintenance
and clinical management of stable, chronically ill patients;
regulation or adjustment of medications and treatments as
prescribed or authorized by a licensed physician; and ordering
laboratory and x-ray procedures. I.G. Ex. 8.
4. At all times relevant to this case, Petitioner maintained a
private business identified as Extended Care Limited (ECL). I.G.
Ex. 9 at 4; I.G. Ex. 15 at 18 - 19.
The indictment
5. On December 19, 1990, an eight-count criminal indictment was
filed against Petitioner and another individual in the Superior
Court of the State of Arizona. I.G. Ex. 6.
6. Count two of the indictment charged that, between June 10,
1987 and June 16, 1989, Petitioner and another individual, pursuant
to a scheme or artifice to defraud, knowingly obtained $65,140.73
from Marion Laboratories in connection with the clinical study of
Agent M, by means of false or fraudulent pretenses,
representations, promises, or material omissions. I.G. Ex. 6 at
10.
7. Count three of the indictment charged that, between August 15,
1988 and May 16, 1990, Petitioner and another individual, pursuant
to a scheme or artifice to defraud, knowingly obtained $23,616.16
from Marion Laboratories in connection with a study of Ditropan, by
means of false or fraudulent pretenses, representations, promises,
or material omissions. I.G. Ex. 6 at 11.
8. Count five of the indictment charged that, between September
1987 and December 1989, Petitioner, a public employee of a public
agency, maintained a substantial interest in a contract to such
public agency and knowingly failed to make known that interest in
the official records of such public agency, and failed to refrain
from participating in any manner as an employee in such contract.
Said conduct occurred in connection with Petitioner doing business
as ECL and receiving $23,200 to conduct a test using an
experimental drug, known as Agent M, on indigent and elderly county
patients. Petitioner, a public employee of Pima County, was
employed by the county to care for these patients. I.G. Ex. 6 at
13.
9. Count six of the indictment charged that, between January 13,
1989 and May 16, 1990, Petitioner, a public employee of a public
agency, maintained a substantial interest in a contract to such
public agency and knowingly failed to make known that interest in
the official records of such public agency, and failed to refrain
from participating in any manner as an employee in such contract.
Said conduct occurred in connection with Petitioner doing business
as ECL, receiving $12,650 to conduct a test using a drug known as
Ditropan on indigent and elderly county patients. Petitioner, a
public employee of Pima County, was employed by the county to care
for these patients. I.G. Ex. 6 at 14.
Conviction and sentence
10. On June 23, 1992, a jury found Petitioner guilty of two counts
of violating A.R.S. 13-2310 (counts two and three of the
indictment, pertaining to fraudulent schemes and artifices) and two
counts of violating A.R.S. 38-503 (counts five and six of the
indictment, pertaining to conflicts of interest in public
employment). I.G. Ex. 28.
11. On August 10, 1992, the State court, based on the jury
verdict, rendered a judgment of conviction, imposing a fine and
sentencing Petitioner to probation for two years. I.G. Ex. 2.
The Arizona Health Care Cost Containment System (AHCCCS)
12. On October 1, 1982, the State of Arizona established AHCCCS,
a demonstration project receiving Title XIX (Medicaid) funding.
AHCCCS consisted of contracts with providers of health care for the
provision of hospitalization and medical care services to AHCCCS'
members. I.G. Ex. 1 at 7 - 8; I.G. Ex. 5.
13. AHCCCS is a "prepaid capitated" system. "Prepaid capitated"
is a mode of payment by which a health care provider directly
delivers health care services for the duration of a contract to a
maximum specified number of members based on a fixed rate per
member. I.G. Ex. 1 at 3.
14. Services covered by AHCCCS include patient and outpatient
hospital services, laboratory and x-ray services, and medications.
I.G. Ex. 1 at 5 - 6.
15. Prior to January 1, 1989, AHCCCS capitation payments to the
Pima County long-term care program were designated by
identification number 010182. I.G. Ex. 17.
16. Effective January 1, 1989, AHCCCS expanded to cover long-term
care services, with the implementation of the Arizona long-term
care system (ALTCS). Under ALTCS, Title XIX (Medicaid) funds are
available to pay for nursing home care for members, in addition to
the medical care and other services they received prior to January
1, 1989. I.G. Ex. 5.
17. Under AHCCCS, capitation payments are made directly to
providers to cover the costs of care rendered to the program's
members. I.G. Ex. 1.
18. Long-term services covered by AHCCCS include nursing facility
services and acute care health and medical services. I.G. Ex. 1 at
11.
The Agent M study
19. On September 1, 1987, Mario Valdez, M.D., a Pima County
contract physician, entered into an agreement with Pima County to
provide medical services to designated AMS long-term care patients.
I.G. Ex. 10.
20. On September 21, 1987, Dr. Valdez and Dr. Martin Highbee, a
nontenured clinical associate professor of pharmacy employed by the
University of Arizona, executed a standardized "Statement of
Investigator," a document required by the Food and Drug
Administration (FDA) as a condition for conducting a study for
Marion Laboratories, Inc., of an experimental drug, identified as
"Agent M." I.G. Ex. 6 at 2; I.G. Ex. 11.
21. The Statement of Investigator includes a certification that
the drug, Agent M, would be administered either under the personal
supervision of Drs. Highbee or Valdez, or under the supervision of
three investigators: Robert A. Mead, Pharm.D.; Dick Jaskiewicz,
F.N.P.; or Barbara Jarrett, R.N. I.G. Ex. 11 at 2.
22. The purpose of the Agent M study was to "determine the dose
which provides adequate benefit with acceptable safety following
the application of Agent M versus placebo to pressure ulcers."
I.G. Ex. 12 at 7.
23. On September 29, 1987, Petitioner participated in a meeting of
the Pima County AMS Clinical Nursing and Medical Services, Research
and Education Committee (committee). I.G. Ex. 13.
24. The minutes of the September 29th meeting indicated that the
"committee discussion included concerns regarding patients being
'treated' with the placebo agent." This was not considered a
problem because "due to the effect of the close monitoring of all
patients involved in the study by the A.M.S. Clinical Nursing
Division, it was agreed that patients presenting problems would be
discontinued from the study." I.G. Ex. 13.
25. Neither the experimental nature of Agent M nor the plan to
divert the compensation for the study to Petitioner's private
company, ECL, was disclosed to the committee. I.G. Ex. 6 at 4; see
also I.G. Ex. 12.
26. On February 3, 1988, Drs. Highbee and Valdez signed a letter
of agreement with Marion Laboratories for the Agent M study. I.G.
Ex. 6 at 4.
27. On March 24, 1988, Petitioner telephoned Marion Laboratories
and told a representative there that Dr. Valdez was not authorized
to sign any contractual agreement. Petitioner then requested that
a copy of the budget and agreement letter for the Agent M study be
sent to him. I.G. Ex. 6 at 4.
28. On March 30, 1988, Dr. Highbee telephoned Marion Laboratories
and falsely informed it that AMS had changed its name and was now
called ECL. I.G. Ex. 6 at 5.
29. The Agent M study began in or about April 1988. I.G. Ex. 14
at 7.
30. Petitioner's firm, ECL, received periodic payments for the
study, either through the University of Arizona or directly from
Marion Laboratories. I.G. Ex. 6 at 5 - 9; I.G. Ex. 15 at 16 - 18;
I.G. Ex. 9 at 8.
31. ECL was paid $1000 per patient for the Agent M study. I.G.
Ex. 9 at 8.
32. Before the study began, Petitioner recruited Pima County AMS
nurse coordinators to take part in the Agent M study in exchange
for a per-patient fee of approximately $250, which fee was paid by
ECL. I.G. Ex. 14 at 3 - 8; see I.G. Ex. 15 at 4 - 5, 19 - 20.
33. AMS nurse coordinators were registered nurses who, as part of
their regular duties as Pima County employees, oversaw the
management of decubitus ulcers (e.g., bedsores) in facilities under
contract with Pima County. I.G. Ex. 15 at 4 - 5.
34. AMS nurse coordinators used a protocol developed by AMS which
listed the different types of decubitus ulcers and choices of
treatments. I.G. Ex. 15 at 6.
35. The use of Agent M was not included in the AMS protocol. I.G.
Ex. 15 at 7 - 8.
36. As part of their regular Pima County position, AMS nurse
coordinators went to facilities under contract with Pima County
once a week to see patients who had bedsores; the AMS nurse
coordinators operated under a protocol with the medical staff to
write orders for treatments for the decubitus ulcers and to take
wound measurements. I.G. Ex. 15 at 5.
37. AMS nurse coordinators used the AMS protocol to be able to go
out into the field to evaluate the ulcers and to write appropriate
treatments for the Agent M study. I.G. Ex. 15 at 6.
38. Petitioner directed and encouraged the nurse coordinators
under his supervision to participate in the Agent M study while
working on Pima County time, and also Petitioner worked on the
Agent M study on Pima County time. I.G. Ex. 15 at 25; see I.G. Ex.
9 at 19.
39. Petitioner was in charge of the Agent M study and directed and
supervised the activities of the AMS nurse coordinators. I.G. Ex.
14 at 8; I.G. Ex. 15 at 9 - 15.
40. Pima County did not give Petitioner approval to participate in
the Agent M study, and Petitioner concealed his receipt of payments
for the study from the County. I.G. Ex. 6 at 3; see I.G. Ex. 9 at
19.
41. Neither Pima County nor AMS received any payment for the Agent
M study. I.G. Ex. 6 at 3.
42. Pima County received acute care capitation payments from
AHCCCS on behalf of the following patients for at least one month
during the period in which these patients took part in the Agent M
study: PCa, PCo, AM, LS, GS, and JT. 6/ I.G. Exs. 16, 17.
Petitioner's Pima County salary, and the salaries of the nurse
coordinators working for him, were reimbursed, at least in part, by
AHCCCS. I.G. Ex. 5.
43. Medicare claims were submitted and electrocardiograms (EKGs)
were performed on the following patients in connection with their
participation in the Agent M study: PCo, MC, MG, MH, GS, JT, RW,
and EY. I.G. Ex. 18.
44. On August 25, 1988, Petitioner wrote a memorandum to the
director of AMS requesting an increase in the staff of the Clinical
Nursing and Medical Services Divisions, asserting that the current
staff "is stretched beyond capacity and are stressed to their
maximum capabilities." I.G. Ex. 19.
The Ditropan study
45. On August 30, 1988, Petitioner executed a letter of agreement
on behalf of ECL, in which ECL would participate in a "Sustained
Release Oxybutinin Study" (hereinafter referred to by the brand
name "Ditropan"), in which ECL agreed, among other things, to
receive $200 per patient for performing numerous functions,
including the collection of clinical and laboratory data, patient
monitoring, interviews, and visits. I.G. Ex. 20.
46. On January 13, 1989, Drs. Highbee and Valdez executed an FDA
"Statement of Investigator" for "evaluation of the effect of
Ditropan SR on the quality of life and economic impact in elderly
patients suffering with urinary incontinence." I.G. Exs. 21, 22.
47. Urinary incontinence is the failure of voluntary control of
urination, which causes loss of urine through the urethra. I.G.
Ex. 23 at 3.
48. Petitioner and members of his AMS nursing staff were listed as
assistant investigators in the Ditropan study. I.G. Ex. 21; see
I.G. Ex. 15 at 29 - 30; see also I.G. Ex. 14 at 20 - 21.
49. Each patient selected for the Ditropan study was to
participate for a total of 13 weeks; the overall study duration was
to be 10 months. I.G. Ex. 23 at 7 - 8, 32.
50. The primary providers in the Ditropan study were going to be
the AMS nurse practitioners having responsibility for maintaining
the books and doing the documentation for the study. I.G. Ex. 15
at 29 - 30.
51. Petitioner's firm, ECL, was to receive $2000 from Marion
Laboratories for each patient in the Ditropan study. I.G. Ex. 20;
I.G. Ex. 9 at 8.
52. The AMS nurses were paid approximately $250 to $350 per
patient for the Ditropan study. I.G. Ex. 9 at 18.
53. Petitioner did not obtain approval from Pima County to
participate in the Ditropan study, and he also concealed his
receipt of payments for the study. I.G. Ex. 6 at 3; I.G. Ex. 9 at
20 - 21.
54. Pima County received AHCCCS acute care capitation payments for
the following patients for at least one month during the period in
which they took part in the Ditropan study: EB, HL, ES. I.G. Exs.
24, 25.
55. Long-term care for the following patients was paid for by
ALTCS for at least one month during the period in which these
patients took part in the Ditropan study: DC, BF, NM, MN. I.G.
Exs. 26, 27.
56. Neither Pima County nor AMS received any compensation from
Marion Laboratories for the Ditropan study. I.G. Ex. 9 at 20 - 21.
Other Findings of Fact and Conclusions of Law
57. On August 10, 1992, the State court issued a judgement of
conviction, based on a jury verdict of June 23, 1992, finding
Petitioner guilty of violating Arizona criminal law. This action
constitutes a "conviction" of Petitioner within the meaning of
section 1128(i)(1) and(i)(2) of the Act. Findings 10 - 11.
58. Petitioner was convicted of a criminal offense related to the
delivery of an item or service under Medicare and Medicaid, within
the meaning of sections 1128(a)(1) and 1128(i) of the Act.
Findings 1 - 57.
59. The Secretary of the Department of Health and Human Services
has delegated to the I.G. the authority to determine, impose, and
direct exclusions pursuant to section 1128 of the Act. 48 Fed.
Reg. 21,662 (1983).
60. On March 23, 1993, the I.G. excluded Petitioner from
participating in Medicare and directed that he be excluded from
Medicaid, pursuant to section 1128(a)(1) of the Act.
61. The five-year exclusion imposed and directed against
Petitioner by the I.G. is for the minimum period required by
sections 1128(a)(1) and 1128(c)(3)(B) of the Act. Findings 57 -
58.
62. Neither the I.G. nor an administrative law judge has the
authority to reduce the five-year minimum exclusion mandated by
sections 1128(a)(1) and 1128(c)(3)(B) of the Act.
ANALYSIS
1. Petitioner was "convicted" within the meaning of sections
1128(a)(1) and 1128(i)(1) and (2) of the Act.
Section 1128(a)(1) of the Act requires that an individual be
"convicted" of a criminal offense. The term "conviction"
is
defined in section 1128(i) of the Act. The applicable subsections
of section 1128(i) are set forth below:
(1) when a judgment of conviction has been entered against the
individual or entity by a Federal, State, or local court,
regardless of whether there is an appeal pending or whether the
judgment of conviction or other record relating to criminal conduct
has been expunged;
(2) when there has been a finding of guilt against the
individual or entity by a Federal, State, or local court.
Act, section 1128(i)(1) and (i)(2).
Petitioner admits that, on June 23, 1992, he was convicted based on
charges of conflict of interest and fraudulent schemes and
artifices. P. Br. at 2; Prehearing Order. Specifically, the
record reflects that, on that date, a State court jury found
petitioner guilty of two counts of violating A.R.S. 13-2310
(counts two and three of the indictment, pertaining to fraudulent
schemes and artifices) and two counts of violating A.R.S. 38-503
(counts five and six of the indictment, pertaining to conflicts of
interest in public employment). Finding 10. On August 10, 1992,
the State court, based on that jury verdict against Petitioner,
rendered a judgment imposing a fine and sentencing Petitioner to
probation for two years. Finding 11. This judgment of the State
court, based on the jury's finding of guilt, constitutes a
"conviction" of Petitioner, within the meaning of section
1128(i)(1) and (2) of the Act. Finding 57.
Accordingly, I find that Petitioner was convicted, within the
meaning of sections 1128(a)(1) and 1128(i) of the Act.
2. Petitioner was convicted of a criminal offense related to the
delivery of an item or service under the Medicare and Medicaid
programs.
Section 1128(a)(1) of the Act requires that Petitioner's criminal
conviction be "program-related." Thus, the criminal offense for
which Petitioner was convicted must be related to the delivery of
an item or service under Medicare or Medicaid. The Act does not
define the term "criminal offense related to the delivery of an
item or service." However, a criminal offense has been held to
meet the statutory test when there is a "common sense connection"
between the criminal offense and the delivery of items or services
under Medicare or Medicaid. Berton Siegel, D.O., DAB 1467, at 5
(1994); Thelma Walley, DAB CR207 (1992); Jack W. Greene, DAB 1078
(1989), aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835, 838
(E.D. Tenn. 1990); Larry W. Dabbs, R.Ph., et al., DAB CR151 (1991);
Boris Lipovsky, M.D., DAB 1363 (1992).
A criminal offense has been held to meet the statutory test also
where the unlawful conduct can be shown to affect an identifiable
Medicare or Medicaid item or service or to affect reimbursement for
such an item or service. Walley, DAB CR207 (1992); DeWayne
Franzen, DAB 1165 (1990); Danny E. Harris, R.Ph., DAB CR166 (1991).
A criminal offense has been held to meet the statutory test where
either the Medicare or Medicaid program is the victim of the crime.
Napoleon S. Maminta, M.D., DAB 1135 (1990).
Petitioner's primary contention is that his offenses do not relate
to the delivery of a health care item or service because the
Arizona statutes under which he was convicted do not, on their
face, state that his offenses are related to any State health care
program. Petitioner's request for hearing, dated May 12, 1993.
Petitioner contends further that the research for the Agent M study
was conducted from September 1987 through December 1988, and, that,
during this period, there was no Arizona long-term care program.
He argues further that if there was a violation of AHCCCS' program,
there should have been a policy outlining such procedure.
The I.G. contends that Petitioner was convicted of: (1) obtaining
compensation from Marion Laboratories for the conduct of the Agent
M and Ditropan drug studies by means of false or fraudulent
pretenses, representations, promises, or material omissions; (2)
failing to disclose to Pima County his private contract -- through
ECL -- to conduct the drug studies; and (3) participating in the
studies during his regular hours of employment with the County
without official approval to do so. I agree with the I.G.'s
contention that --
[i]n establishing whether the relationship between an offense
and the delivery of items or services under Medicare or Medicaid
exists, . . . the I.G. is not bound by the four corners of the
judgment but must look at the circumstances of the conviction and
determine whether there is a "common sense connection" between the
conduct for which Petitioner was convicted and the delivery of
program-related items or services.
(citing Robert C. Greenwood, N.A., DAB 1423 (1993)). I.G. Br. at
17 - 18.
A. Medicare claims were paid for services required by the
Agent M study protocol.
The I.G. argues that Petitioner's conviction is related to the
delivery of an item or service under Medicare because Medicare
patients participated in the experimental drug studies and that
Medicare was billed for EKGs that were performed solely because of
the patients' participation in the drug studies. Petitioner
requested that the I.G. submit documentation "proving that I
[Petitioner] subcontracted to do EKGs, that I took the EKGs, and
that I billed Medicare for these EKGs, or that I told anyone to
bill Medicare." Petitioner's letter dated November 12, 1993. Such
documentation of Petitioner's direct personal involvement in the
program-related activities is unnecessary. I conclude that there
is substantial evidence in the record to prove the relationship
between Petitioner's conviction and the delivery of items or
services. See Greene, DAB 1078 (1989) (a person may be guilty of
a program-related offense even if he or she did not physically
deliver items or services).
The protocol for the Agent M study required that each patient
undergo clinical testing, which included an electrocardiogram or
EKG. I.G. Ex. 12 at 10. The record indicates that Medicare was
billed for EKGs performed solely for the purpose of complying with
the Agent M study protocol. The record shows further that Medicare
paid these claims on behalf of patients referred for EKGs performed
in connection with their participation in the Agent M study. I.G.
Ex. 18. There is no evidence that the EKGs were otherwise required
for the diagnosis or treatment of these patients. The EKGs were
performed only to be in compliance with the Agent M study protocol.
Had Petitioner not participated in the actions for which he was
convicted -- that is, illegally contracting for and conducting the
Agent M study -- the EKGs would not have been done and Medicare
would not have paid for them.
As the Departmental Appeals Board has explained, the task of the
administrative law judge is to --
examine all relevant conduct to determine if there is a
relationship between the judgment of conviction and the Medicaid
[or Medicare] program. Had Congress intended a different result,
it would have used the phrase "conviction for" or conviction
"restricted to" instead of "related to." An examination
of whether
a condition is "related to" Medicaid [or Medicare] necessarily
involves an inquiry into Petitioner's conduct.
Franzen, DAB 1165, at 7 - 8, (quoting H. Gene Blankenship, DAB
CR42, at 11 (1989)).
The Act does not require a conviction for Medicare or Medicaid
program fraud to sustain a finding that the conviction is
program-related. In this case, the criminal conduct for which
Petitioner was convicted was directly related to the delivery of
reimbursable but unnecessary Medicare services.
B. The drug studies were performed by on-duty nursing
personnel whose salaries were paid, in part, by Medicaid.
Petitioner was the administrator of Clinical Nursing and Medical
Services for Pima County's AMS. Finding 2. During this period, he
also owned a private business -- ECL. Finding 4. In September
1987, Petitioner agreed to administer Agent M, an experimental
drug, to designated AMS long-term care patients, beginning in April
1988. Findings 21, 23 - 29. His firm, ECL, received periodic
payments for the study. Findings 30 - 31. Petitioner recruited
Pima County AMS' nurse coordinators to take part in the Agent M
study and they were paid by ECL. Finding 32. The AMS nurse
coordinators were registered nurses who, as part of their regular
duties as Pima County employees, oversaw the management of
decubitus ulcers in facilities under contract with Pima County.
Finding 33. The AMS nurse coordinators used a protocol developed
by AMS which listed the different types of decubitus ulcers and
choices of treatments -- Agent M was not included in the AMS
protocol. Findings 34 - 35. The AMS nurse coordinators used the
AMS protocol in the field to evaluate the ulcers and write
appropriate treatments for the Agent M study. Finding 37.
Petitioner directed and encouraged the nurse coordinators under his
supervision to work on Pima County time while participating in the
Agent M study, and he worked on Pima County time himself. Finding
38.
Petitioner agreed also, on behalf of ECL, to participate in a study
for the drug Ditropan. Finding 45. Petitioner and members of his
AMS nursing staff were listed as assistant investigators in the
Ditropan study. Finding 48. The primary providers in the Ditropan
study were the nurse practitioners, having responsibility for
maintaining the books and doing the documentation for the study.
Finding 50. Pima County did not give Petitioner approval to
participate in the Agent M and Ditropan studies and Petitioner
concealed his receipt of payments for the studies from the county.
Findings 40, 53. Neither Pima county nor AMS received any payment
for the Agent M or Ditropan studies. Findings 41, 56.
Effective October 1, 1982, the State of Arizona established a
demonstration project under section 1115 of the Act. The project
was designated AHCCCS. AHCCCS is funded by a combination of
county, State, federal (which funding comes from the Title XIX
(Medicaid) program), and private contributions. Finding 12; I.G.
Br. at 4. Instead of the traditional Title XIX fee-for-service
model, AHCCCS is a "prepaid capitated" system in which contractors
receive a designated sum each month for each person assigned to
that contractor's program or plan. Finding 13; I.G. Br. at 4 - 5;
see also Findings 14 - 18; I.G. Ex. 1 at 5 - 6, 11 - 12. AHCCCS
expanded to cover long-term care services with the implementation
of ALTCS, which program became effective on January 1, 1989.
Finding 16; I.G. Ex. 5.
The I.G. asserts that Petitioner's conviction was related to the
Medicaid program because the experimental drug studies which were
found to have created a conflict of interest for Petitioner were
performed by on-duty nursing personnel whose salaries were paid, in
part, by Medicaid. I.G. Br. at 20 - 24. In support of this
argument, the I.G. has offered a letter from the administrator of
the Long Term Care Division of the Pima County Health System. I.G.
Ex. 5. In that letter, the administrator asserts that Pima County
received capitation payments from AHCCCS, a demonstration project
which received Title XIX (Medicaid) funds, on behalf of nursing
home residents who received medical services covered by AHCCCS.
According to the administrator, these capitation payments, in part,
covered the services of nurse service coordinators and nurse
practitioners who were treating these patients. 7/ I conclude that
Petitioner's illegal conflict of working on drug studies while he
and those he supervised were being paid by Pima County is related
to the Medicaid program because Petitioner's salary, and the salary
of his subordinates, was paid for from AHCCCS capitation payments
received by Pima County from Arizona's Medicaid program, AHCCCS,
or, after January 1, 1989, from ALTCS.
Specifically, the record shows that, for at least one month during
the Agent M study, Pima County received acute care capitation
payments from AHCCCS on behalf of six patients. Finding 42. Thus,
Medicaid did, via AHCCCS, pay for services for participants in the
Agent M study. These services should not have been reimbursed by
Medicaid.
Petitioner queries also whether patients have a right to
participate in drug studies without receiving permission from
Medicare, Medicaid, or AHCCCS. Petitioner's question, however, has
no bearing on the issue of whether his criminal offenses are
program-related. Examination of Petitioner's conduct shows that
what Petitioner did was to interfere with the treatment plan
already implemented by these patients' treating physicians. These
patients unknowingly became Petitioner's pawns. Not only were they
denied prescribed treatment by their treating physician, but Agent
M was substituted as the treatment of record. Moreover, some of
the patients received placebos, which means that they were not
receiving any medication at all for their bedsores. I find
Petitioner's use of these patients for his own personal gain, and
his interference with their treatment, to be reprehensible.
Further, if such action on Petitioner's part was not enough,
Medicaid payments (via AHCCCS) were made on behalf of these
patients for at least one month while these patients received Agent
M. Thus, there is a common sense connection between Petitioner's
criminal offense and the delivery of items or services under
Medicaid.
Finally, Petitioner attempts to rebut the program-relatedness of
his conviction by arguing that Marion Laboratories never sought
restitution from him for monies paid for his involvement in the
drug studies because it was satisfied with his work. P. Br. at 2;
P. Ex. 1. He argues also that Marion Laboratories is not related
to Medicare or any State programs. P. Br. at 3. Petitioner's
arguments completely miss the point. Marion Laboratories failure
to seek restitution is irrelevant for purposes of determining
whether Petitioner's criminal offenses are program-related.
Similarly, there is no need to establish Marion Laboratories
connection with program activities. Petitioner, not Marion
Laboratories, is the subject of the I.G.'s five-year exclusion.
The only nexus that is relevant to Petitioner's exclusion is his
relationship to the Medicare or Medicaid program. Under the
applicable case law, the required relationship has been established
by this record.
3. The I.G. was required to exclude Petitioner for a minimum
period of five years.
Petitioner was convicted of a criminal offense relating to the
delivery of an item or service under the Medicare and Medicaid
programs, within the meaning of section 1128(a)(1) of the Act.
Thus, the I.G. has authority to impose and direct an exclusion
against Petitioner pursuant to sections 1128(a)(1) and
1128(c)(3)(B) of the Act. Congress has mandated that the minimum
period of exclusion be five years.
CONCLUSION
Based on the undisputed material facts, the evidence, and the law,
I conclude that Petitioner was convicted of a criminal offense,
within the meaning of section 1128(a)(1) of the Act. I conclude
further that the I.G.'s determination to exclude Petitioner from
participation in Medicare and to direct that Petitioner be excluded
from Medicaid for five years is mandated by law. Therefore, I
sustain Petitioner's five-year exclusion.
________________________
Edward D. Steinman
Administrative Law Judge
1. The State health care programs from which Petitioner was
excluded are defined in section 1128(h) of the Social Security Act
and include the Medicaid program under Title XIX of the Act.
Unless the context indicates otherwise, I use the term "Medicaid"
here to refer to all State health care programs listed in section
1128(h).
2. In her brief, the I.G. advised Petitioner that she was arguing
also that his conviction related to the Medicare program.
3. In my Prehearing Order and Schedule for Filing Submissions for
Summary Disposition (Prehearing Order) dated June 22, 1993, one of
the issues posed was "[w]hether Petitioner was convicted of a
criminal offense related to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct within the
meaning of section 1128(b)(1) of the Act." I will not address the
merits of a five-year exclusion under section 1128(b)(1) of the Act
in this Decision, since I am sustaining the five-year exclusion
under section 1128(a)(1) of the Act.
4. This case was originally scheduled to be decided on the
written submissions of the parties. Prehearing Order at 3. A
schedule was set which allowed the I.G. to file a motion and brief
for summary disposition, with supporting documents. Petitioner was
given the opportunity to respond and the I.G. was permitted to file
a reply brief. Both parties were given the opportunity to request
oral argument. I convened a conference call on November 8, 1993,
to determine whether a disputed issue of material fact existed
which would require an in-person hearing. After listening to the
parties' arguments, I decided that an in-person hearing was not
necessary. I afforded the parties the opportunity to supplement
the record with additional evidence before I issued a Decision. As
stated in my December 20, 1993 Order, I granted Petitioner's
request for production of documents in part and denied it in part.
The I.G. mailed documents required by my Order to Petitioner but
they were returned from the post office marked "unclaimed." Upon
receiving no further response from Petitioner, the parties were
notified on March 7, 1994, that the record was closed.
5. The I.G. submitted 28 exhibits. I admit all of the I.G.'s
exhibits into evidence and refer to them as "I.G. Ex(s). (number)
at (page)." I refer to the I.G.'s memorandum in support of the
I.G.'s motion for summary disposition as "I.G. Br. at (page)."
Petitioner submitted two exhibits and designated them as exhibits
A and B. Since Petitioner's exhibits were not prepared in
accordance with my Prehearing Order, I am redesignating
Petitioner's exhibits. I admit Petitioner's exhibits into evidence
and I refer to Petitioner's exhibit A as "P. Ex. 1 at (page)" and
to Petitioner's exhibit B as "P. Ex. 2 at (page)."
6. Here, and elsewhere in this Decision, I use initials for the
patients to protect their privacy.
7. Petitioner has contended that there were no Medicare or
Medicaid programs in Arizona at the time he committed the offense
for which he was convicted. Based on this assertion, he challenged
the validity of the statements in I.G. Ex. 5 (a letter from the
administrator of the Long Term Care Division of the Pima County
Health System). Petitioner was advised in a conference call that
his unsupported assertion about the funding for AHCCCS was
insufficient to overcome the evidence submitted by the I.G. I gave
Petitioner an opportunity to make a supplemental submission to
support his claim. Petitioner submitted no evidence, but did argue
that, by requiring him to supply such evidence, I had improperly
placed the burden of proof on him. Moreover, Petitioner requested
that the I.G. produce documents that would trace Medicaid funds to
salary payments made to him and his nurses for work on the drug
studies during the time he committed the offenses for which he was
convicted. I ordered the I.G., pursuant to 42 C.F.R. 1005.7, to
turn over to Petitioner whatever documents in her possession were
relevant to this issue. Order Re: Discovery, dated December 20,
1993. The I.G. replied on January 5, 1994, indicating that no
documents existed other than I.G. Ex. 5. On January 24, 1994,
Petitioner again contended that the I.G.'s exclusion action against
him should be dismissed, but he offered no additional evidence to
support his prior assertions regarding Medicaid funding. An
unsupported assertion is insufficient to place a fact in dispute.
Requiring Petitioner to substantiate his assertion did not place
the burden of proof on him. It remains on the I.G. Petitioner was
given ample opportunity to support his contention with evidence.
Discovery was afforded him. No evidence was ever submitted. Thus,
the I.G.'s evidence relating to the existence of Medicaid funding
remains unrefuted.