$05:Exclusion Case
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Pamela Gail Hill, Petitioner
- v. -
The Inspector General.
DATE: December 8, 1994
Docket No. C-94-345
Decision No. CR347
DECISION
On March 11, 1994, the Inspector General (I.G.) notified Petitioner
that she was being excluded from participating in the following
programs: Medicare, Medicaid, Maternal and Child Health Services
Block Grant, and Block Grants to States for Social Services
programs. The I.G. advised Petitioner that she was being excluded
because she had been convicted of a criminal offense related to the
delivery of an item or service under the Medicaid program, within
the meaning of section 1128(a) of the Social Security Act (Act).
The I.G. informed Petitioner that five years is the minimum
mandatory exclusion period for an individual whose exclusion is
based on conviction of an offense, as set out in section 1128(a) of
the Act. The I.G. stated that Petitioner was being excluded for a
period of 10 years, based in part on the I.G.'s determination that
Petitioner was convicted of a criminal offense related to the
submission of false claims to Medicaid resulting in financial
damage to Medicaid of more than $1500. The I.G. stated also that
that the determination to exclude Petitioner for 10 years was based
in part on evidence that Petitioner's criminal acts resulting in
her conviction, or similar acts, were committed over a period of
one year or more. Finally, the I.G. told Petitioner that the
exclusion determination was based in part on Petitioner's sentence
for her conviction, which included incarceration as a punishment.
Petitioner requested a hearing and the case was assigned to me for
a hearing and a decision. On August 24, 1994, I held a hearing in
Pensacola, Florida. At the hearing, I admitted into evidence I.G.
Exhibits 1 - 3, 5 - 7, 9, and 11 and Petitioner Exhibits 1 - 3, 6,
10, 15, 18, 25, 28, and 29. Subsequently, the parties submitted
briefs.
I have considered carefully the evidence that I received at the
hearing, the arguments which the parties made in their briefs, and
the applicable law. I conclude that the 10-year exclusion which
the I.G. imposed is reasonable, and I sustain it.
I. Issues, findings of fact, and conclusions of law
Petitioner has not disputed that she was convicted of a criminal
offense nor that the offense was related to the delivery of an item
or service under Medicaid, within the meaning of section 1128(a)(1)
of the Act. The sole issue in this case is whether the 10-year
exclusion which the I.G. imposed is reasonable. In finding the
exclusion to be reasonable, I make the following findings of fact
and conclusions of law. In setting forth these findings and
conclusions, I cite to relevant portions of my decision at which I
discuss my findings and conclusions in detail.
1. Under the Act and applicable regulations, an individual who is
excluded pursuant to section 1128(a)(1) of the Act must be excluded
for at least five years. Page 3.
2. An exclusion imposed pursuant to section 1128(a)(1) may be for
more than five years if aggravating factors, not offset by
mitigating factors, are proven. Page 3.
3. The I.G. proved the presence of an aggravating factor, in that
Petitioner was convicted of having obtained unlawfully more than
$1,500 from Medicaid. Page 5.
4. The I.G. proved the presence of an additional aggravating
factor, in that the crimes that Petitioner committed were committed
over a period of more than one year. Page 5.
5. The I.G. proved the presence of an additional aggravating
factor, in that the sentence imposed on Petitioner for her
conviction included a term of incarceration. Page 6.
6. There are no mitigating factors present in this case. Page 6.
7. The evidence relating to the aggravating factors proven by the
I.G. establishes Petitioner to be so untrustworthy so as to justify
an exclusion of 10 years. Page 7.
II. Discussion
A. Governing law
In the case of an exclusion imposed under section 1128(a)(1), the
Act requires that the exclusion be for not less than a period of
five years. Social Security Act, section 1128(c)(3)(B). In this
case, the I.G. excluded Petitioner for a period of 10 years. I
must decide whether the additional five years which the I.G.
imposed beyond the mandatory five-year period is reasonable.
Section 1128 is a remedial statute. Its purpose is to protect
federally-financed health care programs and their beneficiaries and
recipients from individuals who are not trustworthy to provide
care. Regulations establish a framework for deciding whether a
party is trustworthy in a particular case and, if not, the length
of the exclusion which is reasonable in that case. These
regulations are contained in 42 C.F.R. Part 1001. The regulation
which governs the length of exclusions imposed under section
1128(a)(1) of the Act is 42 C.F.R. 1001.102.
Section 1001.102 provides that an exclusion may be imposed for a
period of more than five years in a particular case if any of
certain specified aggravating factors are present in that case.
Those factors are listed in 42 C.F.R. 1001.102(b)(1) - (6). In
the case where one or more aggravating factors is present, then the
aggravating factor or factors may be offset by the presence of a
mitigating factor. The factors which may be mitigating are listed
in 42 C.F.R. 1001.102(c)(1) - (3).
The presence in a case of aggravating factors, not offset by
mitigating factors, means that an exclusion of more than five years
may be appropriate. However, any exclusion imposed for more than
five years under section 1128(a)(1) of the Act and 42 C.F.R.
1001.102(b) and (c) must still comport with the remedial purpose of
establishing protection against untrustworthy parties. Thus, the
aggravating factors established in a given case must be weighed
carefully to decide whether they support a conclusion that a party
is sufficiently untrustworthy so as to necessitate an exclusion of
a particular length. William F. Middleton, DAB CR297 at 10 - 11
(1993).
One consequence of the regulations which govern the length of
exclusions is to limit the factors which I may consider as relevant
to an excluded party's trustworthiness to provide care. An
appellate panel of the Departmental Appeals Board held that,
inasmuch as section 1128 of the Act is a remedial statute, all
factors relevant to an excluded party's trustworthiness to provide
care must be considered in deciding whether an exclusion is
reasonable in a given case. Robert Matesic, R.Ph., DAB 1327, at 7
- 8 (1992). These factors were held to include such elements as a
party's remorse for his or her crimes, or that party's
rehabilitation. Id. However, beginning in January, 1993,
adjudicators were authorized to apply only the criteria contained
in the regulations in deciding whether exclusions were reasonable.
John M. Thomas, Jr., M.D., DAB CR281, at 14 - 18 (1993).
B. Relevant facts
Petitioner is a licensed pharmacist. I.G. Ex. 1 at 1. Petitioner
was President of, and responsible for the operation of, Hill
Pharmacy, Incorporated, (Hill Pharmacy) in Pensacola, Florida. Id.
On February 24, 1993, Petitioner and Hill Pharmacy were indicted in
the United States District Court for the Northern District of
Florida. I.G. Ex. 1. They were charged with a scheme to increase
unlawfully the reimbursement that Hill Pharmacy received from the
Florida Medicaid program, by systematically presenting false,
fictitious, and fraudulent reimbursement claims for drugs. Id. at
3.
The indictment contained 43 counts. Counts 1 through 31 charged
Petitioner and Hill Pharmacy with having presented false,
fictitious, and fraudulent Medicaid claims. Id. at 3 - 33. Each
of these counts enumerated specific claims which were alleged to be
false and fraudulent. See, e.g., Id. at 4. Petitioner and Hill
Pharmacy were charged with having presented false Medicaid claims
beginning on or about June 6, 1989 and continuing through on or
about April 30, 1991. Id. at 5, 11. Counts 32 through 39
charged Petitioner and Hill Pharmacy with having unlawfully
distributed certain controlled substances. Id. at 34 - 37.
Petitioner and Hill Pharmacy were charged with having unlawfully
distributed controlled substances, beginning in December 1989 and
continuing into March 1992. Id. at 34 - 36.
Count 40 charged Petitioner and Hill Pharmacy with intentionally
furnishing false and fraudulent material information in the
dispensing of a controlled substance. Id. at 37. Counts 41
through 43 charged Petitioner and Hill Pharmacy with obstruction of
justice by providing false information to the Drug Enforcement
Administration, in an attempt to deceive both the Drug Enforcement
Administration and a federal grand jury. Id. at 37 - 41.
On July 8, 1993, Petitioner pled guilty to all 43 counts of the
indictment. I.G. Ex. 7. 1/ Petitioner admitted wrongfully
appropriating the sum of $14,742.00. I.G. Ex. 6 at 2. Petitioner
was sentenced to pay restitution to the Florida Medicaid Program in
the amount of $3580.72. I.G. Ex. 7 at 4. She was sentenced to pay
a special assessment of $2150. Id. at 1. Petitioner was sentenced
also to imprisonment for a period of five months. Id. at 2.
C. The presence of aggravating factors
The I.G. has alleged and proved the presence of three aggravating
factors in this case. First, the I.G. has proved that Petitioner's
conduct resulting in her conviction, or similar acts, resulted in
a loss to the Florida Medicaid program of more than $1500. 42
C.F.R. 1001.102(b)(1). Petitioner admits appropriating
wrongfully over $14,000. 2/
Second, the I.G. has proved that the conduct resulting in
Petitioner's conviction, or similar acts, transpired over a period
exceeding one year's duration. 42 C.F.R. 1001.102(b)(2). The
fraudulent claims which Petitioner admitted to having presented
were presented over a period beginning in June 1989 and continuing
through April 1991.
Furthermore, Petitioner admitted to having unlawfully dispensed
controlled substances into the month of March 1992.
Third, the I.G. has proved that the sentence imposed on Petitioner
as a consequence of her plea of guilty included a term of
incarceration. 42 C.F.R. 1001.102(b)(4). Among other things,
Petitioner was sentenced to a term of five months' imprisonment.
D. Petitioner's evidence
As discussed above, the presence of aggravating factors in the case
of an exclusion imposed pursuant to section 1128(a)(1) of the Act
may be offset only by proof of the mitigating factors specified in
the regulations. At the hearing, Petitioner offered evidence
which, arguably, might mitigate the inference of culpability
arising from the aggravating factors proved by the I.G., if I were
permitted to consider it. However, this evidence did not fall
within any of the mitigating factors established under the
regulations. Thus, although I permitted Petitioner some leeway in
presenting her case, I am not now allowed to consider the evidence
she presented.
Petitioner attempted to prove that, in some respects, her unlawful
conduct may have been motivated by the stress she experienced in
operating a pharmacy, and by the problems she may have encountered
in keeping accurate business records and in filling prescriptions
accurately. Tr. at 42 - 61. Petitioner attempted to argue also
that her crimes were more a consequence of poor recordkeeping by
government agencies than of her criminal intent. Tr. at 27 - 28.
This evidence relates generally to the question of Petitioner's
culpability for the offenses of which she was convicted. However,
the regulations do not permit me to consider evidence that is not
described by one or more of the specified aggravating and
mitigating factors. Thus, although I have no doubt that the
evidence that Petitioner offered is relevant to her overall
culpability for the offenses of which she was convicted (and,
indeed, I would have accepted and considered that evidence prior to
the adoption of the regulations), I cannot consider it, because it
does not fall within any of the mitigating factors identified in
the regulations.
E. The basis for the 10-year exclusion
The evidence proves the presence of three aggravating factors in
this case. There is no evidence which establishes the presence of
any mitigating factors. The presence of aggravating factors not
offset by mitigating factors is a basis for imposing an exclusion
of more than five years' duration. However, as I hold at Part A of
this section, that does not mean that an exclusion of any
particular duration is necessarily justified. I must still
consider the evidence relating to the aggravating factors as
evidence of a petitioner's lack of trustworthiness and decide from
it whether or not an exclusion of more than five years is justified
and, if so, for what duration.
In this case, the evidence establishing the existence of
aggravating factors establishes also that Petitioner is a highly
untrustworthy individual. The indictment to which Petitioner pled
guilty describes an extensive scheme, carried out over a period of
nearly two years, to defraud the Florida Medicaid program. The
duration of the fraud suggests that Petitioner engaged in a pattern
of criminal activity which required planning and persistence to
execute. The financial impact of Petitioner's crimes on the
Florida Medicaid program was substantial. In considering this
impact in conjunction with the duration of Petitioner's fraud, I
conclude that Petitioner engaged in criminal activity demonstrating
a high degree of untrustworthiness. For this reason, I find the
10-year exclusion to be reasonable.
I have taken into account Petitioner's characterization of her
conduct in reaching my conclusion that the exclusion is reasonable.
Petitioner characterizes her criminal conduct as being in the
nature of errors and mistakes in judgment. Petitioner's Brief at
2. She denies that she engaged in a scheme to defraud the Florida
Medicaid program. Notwithstanding her present assertions, the
crimes to which she pled guilty plainly establish a scheme to
defraud the Florida Medicaid program. The pattern of criminal
activity described in the 43 count indictment to which Petitioner
pled guilty is compelling evidence of a scheme to defraud the
program.
CONCLUSION
Based on applicable regulations and the evidence, I find the
10-year exclusion which the I.G. imposed against Petitioner to be
reasonable and I sustain it.
____________________________
Steven T. Kessel
Administrative Law Judge
1. On the same date, Hill Pharmacy pled guilty to all 43 counts
of the indictment. I.G. Ex. 7 at 6. It was sentenced to pay
restitution of $3580.72, a special assessment of $8600, and a
one-year term of probation. Id. at 6 - 8.
2. The United States Attorney for the Northern District of
Florida alleged that Petitioner and Hill Pharmacy had defrauded the
Florida Medicaid program of at least $168,974.84. I.G. Ex. 6 at 2.
However, the I.G. did not argue that Petitioner's criminal conduct
had caused a loss to Medicaid in this amount. At the hearing, the
I.G. represented that she would not contend that the evidence
proved that Petitioner had misappropriated more than the $14,742
that Petitioner admitted to having misappropriated. Tr. at 32 -
33.