$05:Exclusion Case
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Michael P. Hiotis, Petitioner,
- v. -
The Inspector General.
DATE: May 16, 1994
Docket No. C-94-018
Decision No. CR316
DECISION
By letter dated October 22, 1993, Michael P. Hiotis, 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. 1/ The I.G.'s rationale was that exclusion, for at least
five years, is mandated by sections 1128(a)(1) and 1128(c)(3)(B) of
the 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.
The I.G. moved for summary disposition. Petitioner made a
cross-motion for summary disposition.
Because I have determined that there are no facts of decisional
significance genuinely in dispute, and that the only matters to be
decided are the legal implications of the undisputed facts, I have
decided the case on the basis of the parties' written submissions.
I affirm the I.G.'s determination to exclude Petitioner from
participation in Medicare and to direct that Petitioner be excluded
from 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 any individual who has been convicted of a criminal offense
related to the delivery of an item or service under Medicare or
Medicaid to be excluded from participation in such programs for a
period of at least five years.
FINDINGS OF FACT AND CONCLUSIONS OF LAW 2/
1. During the period relevant to this case, Petitioner was a
pharmacist employed in Baltimore, Maryland. I.G. Ex. 4 at 4.
2. On May 6, 1993, the State of Maryland indicted Petitioner on
three counts of Medicaid fraud, four counts of fraudulently
obtaining a controlled substance, and four counts of forgery. I.G.
Ex. 3.
3. The indictment alleged that Petitioner had forged the
signatures of physicians on prescriptions for controlled substances
and had then submitted claims for Medicaid reimbursement for
filling those prescriptions. I.G. Ex. 3.
4. On June 9, 1993, Petitioner entered into a plea agreement with
the State in the Circuit Court for Baltimore City (Baltimore
court). I.G. Ex. 4.
5. Pursuant to the agreement, Petitioner pled guilty to count one
of the indictment (charging him with Medicaid fraud) and count four
of the indictment (charging him with obtaining a controlled
substance by fraud and forgery). I.G. Exs. 4, 5.
6. The "Statement of Facts" accompanying Petitioner's plea
agreement alleged that Petitioner had been engaged in dispensing
controlled substances to himself, for his own use. I.G. Ex. 4.
7. Based on Petitioner's guilty plea, the Baltimore court entered
a guilty verdict against Petitioner on both counts, and sentenced
him to one year of imprisonment (suspended), two years' supervised
probation, a $500 fine, $145 in costs, $169.41 in restitution to
the Medicaid program, and 350 hours of community service. I.G.
Exs. 4, 5.
8. On or about September 3, 1993, Petitioner moved the Baltimore
court to reduce his sentence on each count to probation before
judgment, pursuant to Md. Ann. Code art. 27, 641 (1957). P. Ex.
3.
9. A docket entry made by the Baltimore court, dated November 17,
1993, indicates that Petitioner's motion for reduction of sentence
was granted, the guilty verdict against Petitioner was stricken,
and Petitioner was placed on probation pursuant to Md. Ann. Code
art. 27, 641 (1957). I.G. Ex. 5.
10. Md. Ann. Code art. 27, 641 (1957) provides in part:
Whenever a person accused of a crime pleads guilty or nolo
contendere or is found guilty of an offense, a court exercising
criminal jurisdiction, if satisfied that the best interests of the
person and the welfare of the people of the State would be served
thereby, and with the written consent of the person after
determination of guilt or acceptance of a nolo contendere plea, may
stay the entering of judgment, defer further proceedings, and place
the person on probation . . . .
Upon fulfillment of the terms and conditions of probation, the
court shall discharge the person from probation. The discharge is
a final disposition of the matter. Discharge of a person under
this section shall be without judgment of conviction and is not a
conviction for purposes of any disqualification or disability
imposed by law because of conviction of crime.
11. The Baltimore court made a finding of guilt against
Petitioner, within the meaning of section 1128(i)(2) of the Act.
FFCL 7.
12. Petitioner's guilty plea was accepted by the Baltimore court,
within the meaning of section 1128(i)(3) of the Act. FFCL 5, 7.
13. Petitioner entered into a first offender, deferred
adjudication, or other arrangement or program where judgment of
conviction has been withheld, within the meaning of section
1128(i)(4) of the Act. FFCL 9, 10.
14. Petitioner did not prove that his conviction was reversed or
vacated on appeal.
15. Petitioner was convicted of a criminal offense, within the
meaning of section 1128(i) of the Act. FFCL 11-14.
16. Determination of whether an individual has been convicted
within the meaning of section 1128(i) of the Act is a matter of
federal law and thus does not deny "Full Faith and Credit" to any
State court's factual determination.
17. Petitioner's conviction is related to the delivery of items or
services under the Medicaid program within the meaning of section
1128(a)(1) of the Act because, by pleading guilty, Petitioner
admitted to billing the Medicaid program for controlled substances
which were not delivered to Medicaid recipients. FFCL 1-7.
18. 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 minimum of five years.
PETITIONER'S ARGUMENT
Petitioner contends that neither his original conviction in the
Baltimore court, nor the probation before judgment which replaced
it, provides legal justification for the I.G. to exclude him from
Medicare and direct his exclusion from Medicaid. Petitioner
asserts that the principle of "Full Faith and Credit," established
by the United States Constitution, and codified in statutory form
at 28 U.S.C. 1738, requires that Maryland law be honored by
other jurisdictions by being given the same effect it would have in
Maryland. In particular, Petitioner argues that Maryland law
(which holds that neither a vacated judgment nor probation before
judgment is the equivalent of a conviction) should be binding in
this proceeding, as should all State courts' factual
determinations. P. Br. at 12-14.
Petitioner states that the Baltimore court granted his request to
vacate his guilty plea because the court believed, as he did, that
a criminal conviction based upon such a plea could lead to
disproportionate and unjustifiable collateral consequences. P. Br.
at 7; P. Ex. 3.
DISCUSSION
I. Petitioner was convicted of a criminal offense within the
meaning of section 1128(i) of the Act.
The first statutory requirement for mandatory exclusion pursuant to
section 1128(a)(1) of the Act is that the individual or entity in
question must have been convicted of a criminal offense under
federal or State law. The term "convicted" is defined at section
1128(i) of the Act. Section 1128(i) provides that an individual or
entity has been convicted of a criminal offense:
(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;
(3) when a plea of guilty or nolo contendere by the individual
or entity has been accepted by a Federal, State, or local court; or
(4) when the individual or entity has entered into
participation in a first offender, deferred adjudication, or other
arrangement or program where judgment of conviction has been
withheld.
The disposition of an individual's criminal case need meet only one
of the statutory definitions for that person to be deemed
"convicted" within the meaning of section 1128(i).
Petitioner argues that none of the definitions of "convicted" found
in section 1128(i) of the Act may be applied to him. Petitioner
advances two arguments. First, Petitioner contends that neither
section 1128(i)(2) nor section (i)(3) applies, because the
Baltimore court vacated its previous guilty verdict when it changed
its disposition of Petitioner's case to probation before judgment,
pursuant to Md. Ann. Code art. 27, 641. Second, Petitioner
contends that, under Maryland law, the disposition of his case was
not the equivalent of a conviction and that failure to give
Maryland law the same effect in this proceeding would violate the
principle of Full Faith and Credit, as codified at 28 U.S.C.
1738.
The I.G. contends that Petitioner was convicted within the meaning
of section 1128(i)(3). I agree. In addition, I conclude that
Petitioner was convicted also within the meaning of sections
1128(i)(2) and 1128(i)(4).
A. Petitioner was convicted of a criminal offense within the
meaning of section 1128(i)(3) of the Act.
In the present case, it is undisputed that, pursuant to a plea
bargain, Petitioner pled guilty in the Baltimore court to one count
of Medicaid fraud and one count of unlawfully obtaining a
controlled substance by fraud and forgery. FFCL 5. Also, it is
undisputed that the Baltimore court entered a guilty verdict and
imposed a penalty upon him. FFCL 7. The I.G. has not offered a
transcript of Petitioner's plea allocution, and the Baltimore
court's docket sheet (I.G. Ex. 5) does not state unequivocally that
the plea was accepted. Nevertheless, the facts surrounding
Petitioner's guilty plea, and the imposition of sentence, lead me
to conclude that the Baltimore court accepted Petitioner's plea.
The term "accept" is not defined in section 1128(i)(3). However,
other administrative law judges have held that a plea is accepted
within the meaning of section 1128(i)(3) whenever a party offers a
plea and a court consents to receive it as part of an arrangement
to dispose of a pending criminal matter. Robert W. Emfinger,
R.Ph., DAB CR92 (1990). Here, the Baltimore court consented to
receive Petitioner's plea as an element of an arrangement to
dispose of the criminal charges against him. The plea agreement
between Petitioner and the State of Maryland's Attorney General's
Office states that the parties will present the agreement to the
Baltimore court for approval. I.G. Ex. 4 at 2. The agreement
states that, if the court rejects the agreement, the parties will
have the right to withdraw from the agreement. Here, the court did
not reject the agreement. Instead, the court received guilty pleas
from Petitioner pursuant to the plea agreement and, as provided in
the plea agreement, imposed sentence. Thus, the court accepted
Petitioner's plea. Accordingly, Petitioner was convicted within
the meaning of section 1128(i)(3).
B. Petitioner was convicted of a criminal offense within the
meaning of section 1128(i)(2) of the Act.
The facts of this case also demonstrate that Petitioner was
convicted within the meaning of section 1128(i)(2). Here, the
Baltimore court entered a verdict of guilty against Petitioner.
This is indicated by the letter "G" entered in the court docket
sheet in the space labeled "VERD." I.G. Ex. 5, at 2. I conclude
that the court's entry of a guilty verdict against Petitioner
represents a finding of guilt against Petitioner, within the
meaning of section 1128(i)(2).
Petitioner contends that his guilty plea and the Baltimore court's
guilty verdict may not be the basis for a finding that he was
"convicted" within the meaning of section 1128(i). Petitioner
appears to argue that because the court's guilty verdict was
stricken when the court changed the disposition of Petitioner's
case to probation before judgment, his guilty plea and the court's
finding of guilt were nullified. I do not agree. As Petitioner
recognizes in his brief (P. Br. at 15), convictions which have been
expunged remain convictions under section 1128(i). The only
convictions which cannot serve as the basis for an exclusion are
those which have been reversed or vacated. 3/ Nothing in section
1128(i)(2) or (i)(3) states or suggests that the definition of
conviction is qualified or limited by judicial actions taken
subsequent to acceptance of the plea or a finding of guilt.
Douglas L. Reece, D.O., DAB CR305 (1994)(decision on remand).
In the present case, the Baltimore court's action in striking the
guilty verdict it had entered against Petitioner did not amount to
a finding that he was not guilty of the offenses to which he had
pled. Indeed, by the terms of Md. Ann. Code art. 27, 641, a
plea of guilty or a finding of guilt is required before a court may
place a person on probation before judgment. Thus, the court's
original acceptance of Petitioner's guilty plea and its guilty
verdict were not deprived of their force as convictions within the
meaning of sections 1128(i)(2) and (i)(3) by the Baltimore court's
later action in striking the verdict. However, even were I to find
that Petitioner had not been convicted within the meaning of
sections 1128(i)(2) and (i)(3), I would nevertheless find that
Petitioner has been convicted within the meaning of section
1128(i)(4).
C. Petitioner was convicted of a criminal offense within the
meaning of section 1128(i)(4) of the Act.
Petitioner also was convicted within the meaning of section
1128(i)(4). The Baltimore Court granted Petitioner's motion for a
reduction of sentence, and imposed probation pursuant to Md. Ann.
Code art. 27, 641. As quoted above, that statutory provision
permits a court, after a plea or finding of guilt, to stay the
entering of judgment, defer further proceedings, and place the
offender on probation. If the offender successfully completes
probation, the court will dispose of the matter by discharging the
offender from probation, without judgment of conviction. This
disposition falls squarely within the definition of conviction at
section 1128(i)(4), which includes all dispositions involving
deferred adjudications and arrangements where a judgment of
conviction is withheld.
Moreover, if there were any doubt that the language of section
1128(i)(4) encompasses the disposition of Petitioner's case
pursuant to Md. Ann. Code art. 27, 641, examination of the
legislative history of section 1128(i) would remove all doubt that
Congress intended to cover situations like the present case. The
congressional committee charged with drafting the 1986 amendments
to the Act stated:
The principal criminal dispositions to which the exclusion
remedy [currently] does not apply are the "first offender" or
"deferred adjudication" dispositions. It is the Committee's
understanding that States are increasingly opting to dispose of
criminal cases through such programs, where judgment of conviction
is withheld. The Committee is informed that State first offender
or deferred adjudication programs typically consist of a procedure
whereby an individual pleads guilty or nolo contendere to criminal
charges, but the court withholds the actual entry of a judgment of
conviction against them and instead imposes certain conditions of
probation, such as community service or a given number of months of
good behavior. If the individual successfully complies with these
terms, the case is dismissed entirely without a judgment of
conviction ever being entered.
These criminal dispositions may well represent rational
criminal justice policy. The Committee is concerned, however, that
individuals who have entered guilty or nolo [contendere] pleas to
criminal charges of defrauding the Medicaid program are not subject
to exclusion from either Medicare or Medicaid. These individuals
have admitted that they engaged in criminal abuse against a Federal
health program and, in the view of the Committee, they should be
subject to exclusion. If the financial integrity of Medicare and
Medicaid is to be protected, the programs must have the prerogative
not to do business with those who have pleaded to charges of
criminal abuse against them.
H.R. Rep. No. 727, 99th Cong., 2d Sess. 75 (1986), reprinted in
1986 U.S.C.C.A.N. 3607, 3665.
I find that disposition of Petitioner's criminal case pursuant to
Md. Ann. Code art. 27, 641 constitutes a conviction under the
definition of the first offender and deferred adjudication
provisions mentioned in the committee report. Petitioner pled
guilty to Medicaid fraud and was found guilty of that crime. Even
if he ultimately is discharged by the Baltimore court without a
judgment of conviction, Congress has made clear that it does not
intend for Medicare and Medicaid to do business with him.
Therefore, Petitioner was convicted within the meaning of section
1128(i)(4).
D. The principle of "Full Faith and Credit" is not applicable to
this case.
It is precisely the clarity with which Congress spoke in enacting
section 1128(i)(4) which demonstrates the flaw in Petitioner's
argument that treating his probation before judgment as a
conviction denies full faith and credit to the Baltimore court's
judgment. Congress defined the effect that was to be given State
criminal dispositions such as the one at issue here. Congress
stated that such arrangements were to be treated as convictions for
purposes of the federal exclusion law, even if they were not
convictions under State law. The governing principle here is the
Supremacy clause, not the principle of "Full Faith and Credit." 4/
The I.G. has not ignored the Baltimore court's judgment; rather,
the I.G.'s decision to exclude Petitioner from Medicare and to
direct his exclusion from Medicaid is a matter governed by federal
law, based on the Supremacy clause.
The fact that Md. Ann. Code art. 27, 641 further purports to
remove all disabilities imposed by virtue of conviction does not
compel a different result. Administrative law judges' decisions
have held that State court orders purporting to relieve an offender
from civil disabilities arising from a conviction cannot shield the
offender from an exclusion imposed under federal law. See, e.g.,
Richard G. Philips, D.P.M., DAB CR133, at 7, aff'd DAB 1279 (1991);
Janet Wallace, L.P.N., DAB CR155, at 4 (1991), aff'd DAB 1326
(1992). Similarly, in the present case, Maryland may define what
scope probation before judgment is given under State law, but it
cannot bind the federal government. See Dickerson v. New Banner
Institute, Inc., 460 U.S. 103 (1983).
Specifically, in the case at hand, the I.G. is not refusing to
honor a State court's factual determination. Indeed, there is no
dispute at all as to matters of fact. The I.G.'s role was to decide
whether these undisputed facts amounted to a conviction under
federal law. This is a legitimate federal function, not violative
of the principle of "Full Faith and Credit." See Id. Therefore,
it is my determination that the I.G. was not precluded from acting
on Petitioner's exclusion by the Baltimore court's having
previously expunged his conviction and imposed probation pursuant
to Md. Ann. Code art. 27, 641.
II. Petitioner's conviction relates to the delivery of an item or
service under the Medicare or Medicaid programs.
I find also that the second requirement of section 1128(a)(1) --
that the criminal offense leading to the conviction be related to
the delivery of an item or service under Medicare or Medicaid --
has been satisfied here.
Petitioner's conviction is related to the delivery of items or
services under the Medicaid program, within the meaning of section
1128(a)(1) of the Act, because, by pleading guilty, Petitioner
admitted to billing the Medicaid program for controlled substances
which were not delivered to Medicaid recipients. FFCL 17.
Pursuant to his plea agreement with the State, Petitioner pled
guilty to count one of the State's indictment (charging him with
Medicaid fraud) and count four of the indictment (charging him with
obtaining a controlled substance by fraud and forgery). FFCL 5.
Specifically, count one alleged that Petitioner:
did knowingly and willfully make and cause to be made false
statements and misrepresentations of material fact in applications
for benefits and payments submitted to the Maryland Medical
Assistance Program in Baltimore City, Maryland, which is a State
plan established pursuant to Title XIX of the Social Security Act
. . .in that [Petitioner] did fraudulently obtain a controlled
dangerous substance. . . by forging the name of a physician. . . on
a blank medical assistance prescription and did knowingly and
willfully prepare and cause to be submitted an invoice claiming
reimbursement for such controlled dangerous substance. . .
I.G. Ex. 3 at 2.
This language plainly establishes a direct connection between the
criminal offense for which Petitioner was convicted and the
Medicaid program. Moreover, because Petitioner's fraudulent claims
for Medicaid reimbursement related to the alleged furnishing of
drugs to Medicaid recipients, I find that there exists the
requisite nexus or common sense connection between the criminal
offense for which Petitioner was convicted and the delivery of an
item or service under Medicaid. Berton Siegel, D.O., DAB 1467, at
5 (1994).
It is well established that financial misconduct directed at the
Medicare and Medicaid programs, connected with the delivery of
items or services under a covered program, constitutes a
program-related offense invoking mandatory exclusion. Id. at 5-6.
In particular, filing fraudulent Medicare or Medicaid claims has
been held to constitute program-related misconduct. 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).
Further, as an appellate panel of the Departmental Appeals Board
pointed out in Niranjana B. Parikh, M.D., DAB 1334 (1992), the
Board "has consistently recognized common sense connections between
an offense and the delivery of an item or service, even if the
individual at issue did not physically deliver the item or
service." Id. at 5.
Thus, I find that the criminal offense which provided the basis for
Petitioner's conviction constitutes a criminal offense related to
the delivery of an item or service under Medicaid, within the
meaning of section 1128(a)(1).
CONCLUSION
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate that the
Petitioner herein be excluded from the Medicare and Medicaid
programs for a period of at least five years because of his
criminal conviction for, among other things, filing a false
Medicaid claim, which conviction is related to the delivery of
items or services under these programs. Neither the I.G. nor an
administrative law judge is authorized to reduce the five-year
mandatory minimum exclusion. Greene, DAB CR19, at 12-14; Stanley
H. Guberman, D.C., DAB CR111, at 9 (1990) (citing Samuel W. Chang,
M.D., DAB 1198 (1990)).
The five-year exclusion is, therefore, sustained.
Joseph K. Riotto
Administrative Law Judge
1. Unless the context indicates otherwise, I refer to all
programs from which Petitioner has been excluded, other than
Medicare, as "Medicaid."
2. The parties' briefs and my findings of fact and conclusions of
law will be cited as follows:
I.G.'s Brief I.G. Br. (at page)
Petitioner's Brief P. Br. (at page)
I.G.'s Reply Brief I.G. R. Br. (at page)
My Findings of Fact FFCL
and Conclusions of Law
The I.G. submitted five exhibits. I admit I.G. exhibits 1-5 into
evidence. I cite the I.G.'s exhibits as "I.G. Ex(s). (number) (at
page)." Petitioner submitted three exhibits. I admit Petitioner's
exhibits 1-3 into evidence. I cite Petitioner's exhibits as "P.
Ex. (number) (at page)."
3. This conclusion is reinforced by the legislative history:
With respect to convictions that are "expunged," the Committee
intends to include all instances of conviction which are removed
from the criminal record of an individual for any reason other than
the vacating of the conviction itself, e.g., a conviction which is
vacated on appeal.
H.R. Rep. No. 727, 99th Cong., 2d Sess. 75 (1986), reprinted in
1986 U.S.C.C.A.N. 3607, 3665.
4. The Supremacy clause of the U.S. Constitution states that "all
laws made in pursuance of the Constitution and all treaties made
under the authority of the United States shall be the 'supreme law
of the land' and shall enjoy legal superiority over any conflicting
provision of a State constitution or law." Black's Law Dictionary,
5th Ed. 1979.
Although Petitioner relied on the Full Faith and Credit
statute, 28 U.S.C. 1738 (1966), rather than the Full Faith and
Credit clause of the U.S. Constitution, the principle behind both
is the same. Nevertheless, as discussed above, "Full Faith and
Credit" is not applicable here.