$05:Exclusion Case
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Muhammad R. Chaudhry, M.D.,Petitioner,
- v. -
The Inspector General.
DATE: August 12, 1994
Docket No. C-94-019
Decision No. CR326
DECISION
By letter dated October 15, 1993, Muhammad R. Chaudhry, M.D., 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 him 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.'s rationale was that exclusion, for at least five years, is
mandated by 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 is no dispute as to any
material fact, 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 in lieu of an
in-person hearing.
I affirm the I.G.'s determination to exclude Petitioner from
participation in the Medicare and Medicaid programs 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 a
State health care program to be excluded from participation in such
programs for a period of at least five years. The definition of
what constitutes a "State health care program" is contained at
section 1128(h) of the Act, and it includes the Medicaid program.
I use the term Medicaid to represent all of the State health care
programs from which Petitioner was excluded.
Sections 1128(b)(7) and 1128B(b)(1)(B) of the Act permit, but do
not mandate, the exclusion from these same programs of any person
whom the Secretary of HHS concludes is guilty, or has been
convicted, of health care related fraud, kickbacks, false claims,
or similar activities. It incorporates by reference, as bases for
exclusion, the offenses described in sections 1128A and 1128B of
the Act. Relevant to the Petitioner herein is section
1128B(b)(1)(B), which proscribes the soliciting or receiving of any
remuneration in return for purchasing, ordering, or arranging for
the acquisition of goods or services for which payment may be made
under Medicare or Medicaid. Section 1128(f)(2) of the Act provides
that, under certain circumstances, before a person may be excluded
pursuant to these actions, he or she is entitled to a hearing
before an administrative law judge.
FINDINGS OF FACT AND CONCLUSIONS OF LAW(FFCL) 1/
1. On May 1, 1991, Petitioner was indicted for six counts of
violating section 1128B(b)(1)(B) of the Act by "unlawfully,
willfully and knowingly solicit[ing] and receiv[ing] . . .
kickbacks, in return for ordering and arranging for the ordering of
items of durable medical equipment . . . , for which payment could
have been made in whole or in part under the Medicaid Program."
I.G. Ex. 1.
2. A plea is accepted within the meaning of section 1128(i)(3) of
the Act whenever a party offers a plea and a court consents to
receive it as an element of an arrangement to dispose of a pending
criminal matter. Section 1128(i)(3) of the Act.
3. Petitioner pled guilty to count five of the indictment to
willfully receiving "a kickback in the amount of $300, in return
for ordering or arranging for the ordering [of aerosol
compressors], for which payment could have been made in whole or in
part under the Medicaid Program." I.G. Ex. 2, 3.
4. In consideration of Petitioner's plea, the Office of the
United States Attorney for the Southern District of New York
dismissed the remaining counts of the indictment. I.G. Ex. 2, 3.
5. Petitioner was sentenced to three years of probation, 600
hours of community service and a $4,500 fine. I.G. Ex. 3.
6. Petitioner was convicted of a criminal offense within the
meaning of section 1128(i)(3) of the Act. FFCL 2-5.
7. The offense of which Petitioner was convicted -- receiving
kickbacks in exchange for patient referrals -- is related to the
delivery of items or services under Medicaid within the meaning of
section 1128(a)(1) of the Act. FFCL 1-6.
8. The Secretary delegated to the I.G. the authority to
determine, impose, and direct exclusions pursuant to section 1128
of the Act. 48 Fed. Reg. 21662 (1983).
9. The I.G. is under no obligation to proceed under the
permissive exclusion provisions of sections 1128(b)(1) or (7) of
the Act against a person who might have committed fraud.
10. The I.G. properly excluded Petitioner, pursuant to section
1128(a)(1) of the Act, for a period of five years as required by
the minimum mandatory exclusion provision of section 1128(c)(3)(B)
of the Act.
FFCL 1-9.
11. I do not have the authority or discretion to reduce the
five-year minimum exclusion mandated by section 1128(c)(3)(B) of
the Act. 42 C.F.R. 1001.102.
12. Petitioner was not entitled to a pre-exclusion hearing in
accordance with section 1128(f)(2) of the Act because he was not
excluded pursuant to section 1128(b)(7) of the Act. Section
1128(f)(2) of the Act.
13. Petitioner was not entitled to an in-person hearing since
there was no disputed issue of material fact.
PETITIONER'S ARGUMENT
Petitioner does not deny that he was convicted of violating section
1128B(b)(1)(B) of the Act by entering a guilty plea for knowingly
and willfully receiving a $300 kickback. Petitioner admits that he
received this kickback in exchange for referring patients to a
health care provider, for the purpose of ordering certain medical
equipment for which payment could have been made under the Medicaid
program. P. Br. at 3. Petitioner's principal argument, based on
his analysis of the law, is that he should be sanctioned under the
permissive exclusion provision of section 1128(b)(7) of the Act,
rather than the mandatory exclusion provision of 1128(a)(1). P.
Br. at 2. Petitioner contends that his conduct does not fall under
section 1128(a)(1) because his conviction does not relate to the
"delivery of an item or service" under Medicare, Medicaid or any
other State health care program. Id. Petitioner asserts that,
instead, his conduct falls under the "Fraud, Kickbacks, and other
Prohibited Activities" provision of section 1128(b)(7) of the Act
because this provision sanctions "[a]ny individual or entity that
the Secretary determines has committed an act which is described in
section 1128A or section 1128B" and, as stated above, Petitioner
was admittedly convicted of violating section 1128B(b)(1)(B). Id.
Petitioner argues also that, because he should be excluded under
section 1128(b)(7) of the Act, he is entitled to a pre-exclusion
hearing in accordance with section 1128(f)(2). 2/ P. Br. at 4. In
addition, Petitioner asserts, in essence, that he is entitled to an
in-person post-exclusion hearing in accordance with section
1128(f)(1). Petitioner contends that an in-person hearing is
necessary for him to present evidence of mitigating factors in
accordance with 42 C.F.R. 1001.102(c). Id. 42 C.F.R.
1001.102(c) allows individuals to present evidence of certain
mitigating factors as a basis for reducing the period of exclusion.
Petitioner argues that he should be afforded an in-person hearing
so that he may prove that the five-year exclusion is not warranted.
Id.
DISCUSSION
I. Petitioner was properly excluded under section 1128(a)(1) of the
Act.
Despite Petitioner's assertions to the contrary, I find that
Petitioner's conviction does relate to the "delivery of an item or
service" under Medicaid and that he should be excluded under
section 1128(a)(1) of the Act. I have considered Petitioner's
arguments that he merely referred patients with pulmonary disorders
to a provider of medical equipment (who could be reimbursed under
the Medicaid program) and that he did not provide medical services
nor bill the Medicare or Medicaid programs. However, I find that
Petitioner's offense was program-related. P. Br. at 3. A person
may be guilty of a program-related offense even if he or she did
not physically deliver any items or services. Napoleon S. Maminta,
M.D., DAB 1135 (1990); Charles W. Wheeler and Joan K. Todd, DAB
1123 (1990); Jack W. Greene, DAB CR19 (1989), aff'd, DAB 1078
(1989), aff'd sub nom., Greene v. Sullivan, 731 F. Supp. 835 (E.D.
Tenn. 1990). An offense is program-related if there is a common
sense connection between the offense and the Medicare or Medicaid
programs. Berton Siegel, D.O., DAB 1467 (1994). Petitioner admits
that he was convicted of violating section 1128B(b)(1)(B) of the
Act by knowingly and willfully receiving a $300 kickback in
exchange for "ordering and arranging for the ordering" of certain
medical equipment from a health care provider who would seek
reimbursement from the Medicaid program. See I.G. Ex. 2. Thus,
Petitioner's receipt of the kickback was directly related to the
program that paid for the equipment which was the subject of the
kickback. Niranjana B. Parikh, M.D., DAB 1334 (1992).
Applying a mandatory exclusion under these circumstances also
comports with the intent of Congress to strengthen the mandatory
exclusion provision by amendment of the exclusion laws in 1987.
See Medicare and Medicaid Patient and Program Protection Act of
1987, Pub. L. No. 100-93, 4(a)-(c), 101 Stat. 688, 689 (1987)
(codified at 42 U.S.C. 1396); Maminta. In Maminta, an appellate
panel of the DAB examined the legislative history of the mandatory
exclusion provision and found that Congress intended mandatory
exclusions to be instituted whenever the covered programs were
victimized by the offense at issue whether or not this offense
involved actual delivery of medical care by the convicted
individual or entity. Id. at 12. 3/
I reject also Petitioner's argument that he should be sanctioned
under section 1128(b)(7) of the Act, which provides for the
exclusion of individuals who have committed an act described in
section 1128B(b)(1)(B).
P. Br. at 2. It is undeniable that there is some subject matter
overlap between the mandatory exclusion for criminal conviction
authorized by section 1128(a)(1) and the permissive exclusion for
fraud or kickbacks authorized by section 1128(b)(7). Parikh, at 4.
Nevertheless, it has consistently been held that the Secretary is
under no obligation to proceed under section 1128(b) of the Act;
once a person has been convicted of a program-related criminal
offense, exclusion is mandatory. Id. at 4 (citing Leon Brown,
M.D., DAB CR83, aff'd, DAB 1208 (1990)). Thus, once the I.G.
determined that Petitioner's convictions were within the meaning of
section 1128(a)(1), there was no obligation to consider whether
section 1128(b)(7) was applicable.
I have previously considered this issue, in cases which were upheld
by a DAB appellate panel and which were factually similar to the
case at hand, and found that a conviction for receiving kickbacks
in violation of section 1128B(b)(1)(B) of the Act justifies
mandatory exclusion pursuant to section 1128(a)(1). Parikh; Boris
Lipovsky, M.D., DAB CR208 (1992), aff'd, DAB 1363 (1992).
As I did in Parikh, I reject also Petitioner's assertion that he
should be permissively excluded because in Syed Hussaini, DAB CR193
(1992), the I.G. previously considered similar conduct to fall
under the permissive exclusion provision. P. Br. at 3.
Petitioner's allusion to the outcome in Hussaini is without any
merit. In Hussaini, Petitioner was convicted under a different
statute and the I.G.'s initial determination that the conviction
did not fall within the parameters of section 1128(a) of the Act
allowed the I.G. to consider whether the conviction merited a
permissive exclusion. In the present case, the I.G. properly
determined that Petitioner was convicted of a program-related crime
pursuant to section 1128(a)(1) of the Act, thereby foreclosing the
possibility of a permissive exclusion. Parikh, at 7-8.
Additionally, since Petitioner's conviction was "related to the
delivery of an item or service" under the Medicaid program, within
the meaning of section 1128(a) of the Act, the I.G. was required to
exclude Petitioner for a mandatory minimum of five years. Section
1128(c)(3)(B) of the Act. Since the five-year exclusion is the
shortest period of exclusion for his offense permitted by law, an
administrative law judge cannot reduce it. Jack W. Greene, DAB
1078 (1989), aff'd sub nom., 731 F. Supp. 835 and 838 (E.D. Tenn.
1990); See Charles W. Wheeler and Joan K. Todd, DAB 1123 (1990), at
9.
II. Petitioner was not entitled to either a pre-exclusion hearing
under section 1128(f)(2) of the Act or to an in-person
post-exclusion hearing pursuant to section 1128(f)(1).
Petitioner's contention regarding his right to a pre-exclusion
hearing under section 1128(f)(2) of the Act is related to his
arguments above regarding the applicability of the permissive
exclusion provisions and is rejected for the same reasons. P. Br.
at 4. Under section 1128(f)(2), any individual or entity excluded
under section 1128(b)(7) is entitled to a pre-exclusion
administrative hearing. Section 1128(b)(7) provides for permissive
exclusions when the I.G. determines that an individual or entity
has committed an act which is described in section 1128A or section
1128B of the Act. The right to a section 1128(f)(2) pre-exclusion
hearing, however, is limited solely to those receiving permissive
exclusions pursuant to section 1128(b)(7). As the legislative
history of section 1128(f)(2) makes clear, one of the primary
purposes of a pre-exclusion hearing is to afford the party to be
excluded an opportunity to present evidence regarding whether he or
she "knowingly and willfully" committed the acts for which he or
she is excluded. Parikh (citing S. Rep. No. 109, 100th Cong. 1st
Sess. 13 (1987), reprinted in 1987 U.S.C.C.A.N. 682). It is
regarded as a due process safeguard. Id. at 9. In the case of
mandatory exclusions, this due process safeguard is not necessary
since a conviction under section 1128B(b)(1)(B) establishes that
the "knowingly and willfully" standard has been met. Thus, in the
present case, Petitioner has neither a right nor a reason for a
pre-exclusion hearing under section 1128(f)(2), since Petitioner
has already admitted in his guilty plea to "knowingly and
willfully" violating the law, pursuant to section 1128B(b)(1)(B).
Id.
Also, Petitioner is not entitled to an in-person hearing pursuant
to section 1128(f)(1) of the Act. While section 1128(f)(1)
provides that individuals who have been excluded are entitled to
"reasonable notice and opportunity for a hearing," an in-person
hearing is not automatically required. The applicable regulations
provide that an ALJ "has the authority to . . . decide cases, in
whole or in part, by summary judgment where there is no disputed
issue of material fact." 42 C.F.R 1005.4(b)(12) (1992). Since
there are no disputed issues of material fact in this case, I find
that an in-person hearing is not justified. As the I.G. has
correctly noted, the only issues in this case are -- (1) whether
Petitioner was convicted of a crime, and (2) whether that crime is
related to the Medicare or state health care programs. I.G. Br. at
11-12. As for the first issue, Petitioner admitted that he was
convicted of violating section 1128B(b)(1)(B) by entry of a guilty
plea (I.G. Ex. 2), and the second issue, whether Petitioner's
conviction was program-related, is a question of law. Thus, I find
that Petitioner's case can be decided without an in-person hearing.
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. An administrative
law judge is not authorized to reduce the five-year mandatory
minimum exclusion. Greene, DAB CR19, at 12-14.
The five-year exclusion is, therefore, sustained.
_________________________
Joseph K. Riotto
Administrative Law Judge
1. The I.G. submitted three exhibits. I cite the I.G.'s
exhibits as "I.G. Ex(s). (number) at (page)." I admit into
evidence I.G. Exs. 1 - 3. The I.G. submitted a motion and brief
for summary disposition to which Petitioner responded. I cite the
I.G.'s brief for summary disposition as "I.G. Br. at (page)." I
cite Petitioner's response as "P. Br. at (page)." The I.G. also
submitted a reply to Petitioner's response which I cite as "I.G. R.
Br. at (page)."
2. Petitioner argues that he is "entitled to a hearing before
his exclusion takes effect." P. Br. at 4. This articulation of
his argument fails to recognize that Petitioner already has been
excluded from the Medicare and Medicaid programs. Thus, I take
Petitioner's argument to be that he should have been granted a
pre-exclusion hearing before the exclusion here took effect.
3. It is irrelevant whether the Medicaid program was actually
harmed by Petitioner's actions because the determinative factor in
this case is whether Petitioner's criminal conviction is related to
the delivery of a Medicaid item or service. Yet, to the extent
that Petitioner argues that his actions did not perpetrate any
fraud or cause financial harm to the Medicaid program, I find that
his actions were detrimental to the program. Petitioner did not
base his referrals on the best interests of the patients but upon
his ability to obtain a kickback from a particular provider. In
doing so, Petitioner has undercut and tainted the public's
perception of the honesty and integrity of other program providers.
Furthermore, choice based primarily on the receipt of remuneration
potentially raises the cost of the equipment to the program.