$05:Exclusion Case
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Thomas Malik,
Petitioner,
- v. -
The Inspector General.
DATE: February 10, 1995
Docket No. C-94-415
Decision No. CR357
DECISION
By letter dated July 21, 1994, Thomas Malik, the Petitioner herein,
was notified by the Inspector General (I.G.) of the United States
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. 1/ The I.G. asserted that an exclusion of at least five
years is mandatory under sections 1128(a)(1) and 1128(c)(3)(B) of
the Social Security Act (Act) because Petitioner had been convicted
of a criminal offense related to the delivery of an item or service
under Medicaid.
Petitioner filed a timely request for review of the I.G.'s action.
On September 7, 1994, I held a prehearing conference in this case.
During that conference, the parties agreed to proceed by filing
briefs supported by documentary evidence.
Thereafter, the I.G. filed a brief and two exhibits. I identify
these exhibits as I.G. Ex. 1 and I.G. Ex. 2.
By telephone on November 21, 1994, counsel for Petitioner indicated
that Petitioner did not wish to file a responsive brief in this
case. However, he stated that Petitioner would like to offer the
three documents attached to his hearing request as evidence in this
case.
By letter dated November 28, 1994, I identified these three
documents as P. Ex. 1 through 3. In addition, I allowed the I.G.
additional time to file a submission indicating whether the I.G.
objected to admitting these documents into the record, and to
comment on the contents of the proposed exhibits.
The I.G. submitted a letter stating that she did not object to
admitting P. Ex. 1 through 3 into evidence.
Since neither party has objected to the exhibits offered by the
other party, I admit I.G. Ex. 1 and 2 and P. Ex. 1 through 3.
I have considered the parties arguments, supporting exhibits, and
the applicable law. I conclude that there are no material factual
issues in dispute (i.e., the only matter to be decided is the legal
significance of the undisputed facts). I conclude also that
Petitioner is subject to the minimum mandatory exclusion provisions
of sections 1128(a)(1) and 1128(c)(3)(B) of the Act, and I affirm
the I.G.'s determination to exclude Petitioner from participation
in Medicare and Medicaid for a period of five years.
APPLICABLE LAW
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act make it mandatory
for 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
1. During the period relevant herein, Petitioner was a licensed
nursing home administrator. Petitioner was employed as the
Administrator of the Arcadia Nursing Center, a nursing facility
located in Gargatha, Virginia. I.G. Ex. 1.
2. Medicaid recipients residing at the Arcadia Nursing Center
entrusted Petitioner with safeguarding their personal funds in
accordance with Medicaid regulations. I.G. Ex. 1.
3. Medicaid regulations required the Arcadia Nursing Center to
establish and maintain a system which assures a full and complete
and separate accounting of each resident's personal funds entrusted
to the facility on the resident's behalf. 42 C.F.R.
483.10(c)(4).
4. From January 26 through 28, 1993, Medicaid auditors conducted
a surprise on-site audit of Arcadia Nursing Center's financial
data. The audit revealed that Petitioner received and deposited
$14,919.49 of residents' personal funds into the facility's
operating account and used the residents' personal funds to pay the
facility's operating expenses. I.G. Ex. 1.
5. Petitioner admitted to Medicaid auditors that his actions
violated Medicaid regulations. Petitioner admitted that he was
aware that residents of Arcadia Nursing Center were being denied
access to their personal funds and were not earning interest on
their personal funds. I.G. Ex. 1.
6. Based on information obtained as a result of the Medicaid
audit, the Virginia Accomack County General District Court issued
two warrants. One warrant (Case No. C93-1275) charged Petitioner
with the offense of knowing failure to deposit, transfer, or
maintain residents' trust funds in a separate account as required
by 42 C.F.R. 483.10(c)(3 - 8). The other warrant (Case No.
C93-1274) charged Petitioner with the offense of embezzlement
deemed larceny. I.G. Ex. 1, I.G. Ex. 2.
7. Petitioner entered into a plea agreement in which he agreed to
plead guilty to the offense of knowing failure to deposit,
transfer, or maintain residents' trust funds in a separate account.
The Commonwealth of Virginia agreed to recommend that a fine and
suspended jail sentence be imposed on Petitioner for this offense.
I.G. Ex. 1.
8. Petitioner agreed to plead no contest to the offense of
embezzlement deemed larceny. The Commonwealth of Virginia agreed
to recommend that this warrant be continued for six months, with
the understanding that this charge would be dismissed if Petitioner
engaged in good behavior during that period of time. I.G. Ex. 1.
9. Pursuant to the plea agreement, on August 30, 1993 Petitioner
pled guilty to the offense of knowing failure to deposit, transfer,
or maintain residents' trust funds in a separate account and the
court found Petitioner to be guilty as charged. Based on its
acceptance of Petitioner's guilty plea, the court imposed a fine of
$1000 and a 30-day suspended jail sentence. I.G. Ex. 2.
10. The Secretary of HHS has delegated to the I.G. the authority
to determine and impose exclusions pursuant to section 1128 of the
Act. 48 Fed. Reg. 21662 (1983).
11. Petitioner's guilty plea, and the court's acceptance of that
plea, constitutes a conviction within the meaning of sections
1128(a)(1) and 1128(i) of the Act.
12. A nursing facility's protection of funds held in trust for
Medicaid recipients who are residents of the facility is an
integral element of the delivery of health care services under
Medicaid.
13. Petitioner was convicted of a criminal offense "related to the
delivery of an item or service" under Medicaid, within the meaning
of section 1128(a)(1) of the Act.
14. A defendant in a criminal proceeding does not have to be
advised of all the possible consequences which may flow from his
guilty plea, such as temporarily being barred from government
reimbursement for his professional services.
15. The I.G.'s determination to impose and direct a five-year
exclusion in this case does not violate the United States
Constitution's prohibition against double jeopardy.
16. The I.G. properly excluded Petitioner from participation in
Medicare and Medicaid for a period of five years pursuant to
sections 1128(a)(1) and 1128(c)(3)(B) of the Act. Findings 1 - 15.
17. Neither the I.G. nor an administrative law judge has the
authority to reduce a five-year minimum exclusion mandated by
sections 1128(a)(1) and 1128(c)(3)(B) of the Act.
PETITIONER'S ARGUMENT
Petitioner claims that he entered into a plea agreement with State
officials in order to save the Arcadia Nursing Center from total
financial disaster. He contends that since he "made the sacrifice
of accepting the error alone to save the [nursing] home", it is
"not equitable" to prevent him from earning a living.
Petitioner contends further that he has received "dual punishment"
for a single offense. Lastly, Petitioner objects to the fact that
he was not informed about the collateral consequences of pleading
guilty.
DISCUSSION
The evidence adduced by the I.G., and not disputed by Petitioner,
demonstrates that Petitioner was convicted of a criminal offense
related to the delivery of an item or service under Medicaid,
within the meaning of section 1128(a)(1) of the Act. For this
reason, Petitioner's five-year exclusion is required as a matter of
law. 2/
The first requirement that must be satisfied in order to establish
that the I.G. had the authority to exclude Petitioner under section
1128(a)(1) of the Act is that Petitioner must have been convicted
of a criminal offense. Petitioner does not dispute that he was
convicted of a criminal offense within the meaning of the Act. The
undisputed facts establish that Petitioner entered a guilty plea to
the offense of knowing failure to deposit, transfer, or maintain
residents' trust funds in a separate account, and that the Virginia
Accomack County General District Court accepted Petitioner's guilty
plea. The Act defines the term "convicted of a criminal offense"
to include those circumstances in which a plea of guilty by an
individual has been accepted by a federal, State, or local court.
Act, section 1128(i)(3). Therefore, I conclude that Petitioner was
convicted of a criminal offense within the meaning of sections
1128(a)(1) and 1128(i) of the Act.
I further find that the second requirement of section 1128(a)(1) --
that the criminal offense leading to the conviction must be related
to the delivery of an item or service under Medicare or Medicaid --
has also been met. Section 1128(a)(1) encompasses far more than
just the theft of Medicare and Medicaid funds or frauds directed
against the programs. For example, in Jerry L. Edmonson, DAB CR59
(1989), the petitioner, who was a nursing home administrator, was
convicted of the offense of misapplying funds that he had held in
a fiduciary capacity for a Medicaid recipient. The administrative
law judge in Edmonson found that the protection of Medicaid
recipients' funds is an integral element of the Medicaid services
delivered by nursing facilities. Since the petitioner in Edmonson
had been convicted of a criminal offense affecting an integral
element of Medicaid services, the administrative law judge reasoned
that the petitioner's offense was related to the delivery of
Medicaid services within the meaning of section 1128(a)(1) of the
Act. I find that in this case, as in Edmonson, Petitioner's breach
of his fiduciary duty had a direct impact on the Medicaid's
integrity and that it justifies an exclusion under section
1128(a)(1) of the Act. See also Gary Gregory, DAB CR274 (1993).
Petitioner claims that he entered into a plea agreement in order to
save the Arcadia Nursing Center from total financial disaster. He
argues that under the circumstances of this case, it is "not
equitable" to prevent him from earning a living. I conclude that,
based on the undisputed material facts in the record of this case,
the I.G. properly excluded Petitioner from Medicare and Medicaid
pursuant to section 1128(a)(1) of the Act and that the length of
the exclusion is controlled by section 1128(c)(3)(B), which
mandates a minimum period of exclusion of five years. Since I do
not have the authority to reduce the five-year minimum exclusion
mandated by section 1128(c)(3)(B) of the Act,
the mitigating circumstances which Petitioner alleges exist in this
case could not affect the outcome of this case.
Petitioner contends that he is receiving "dual punishment." I take
this to mean that Petitioner contends that his exclusion violates
the prohibition against double jeopardy under the United States
Constitution. Petitioner's argument is without merit. When an
exclusion is imposed pursuant to section 1128 of the Act, its
primary purpose is to protect Medicare and Medicaid from future
misconduct by a provider who has shown himself to be untrustworthy.
Francis Shaenboen, R.Ph., DAB CR97 (1990), aff'd DAB 1249 (1991).
Federal district courts have specifically found that exclusions
under section 1128 are remedial in nature, rather than punitive,
and do not violate the double jeopardy provisions of the United
States Constitution. Manocchio v. Sullivan, 768 F. Supp. 814 (S.D.
Fla. 1991). Additionally, Petitioner was initially convicted in a
State court, and it has been held that double jeopardy does not
apply to a subsequent federal prosecution based on facts which led
to a State conviction. Abbate v. United States, 359 U.S. 187
(1959).
In addition, Petitioner's argument that the I.G. is precluded form
imposing an exclusion in this case because Petitioner did not know
that his conviction would result in an exclusion is without merit.
This argument is essentially the same as an argument made by a
petitioner in the case of Douglas Schram, R.Ph., DAB CR215 (1992),
aff'd DAB 1372 (1992). In rejecting this argument, I cited U.S. V.
Suter, 755 F.2d 523, 525 (7th Cir. 1985) for the proposition that
a defendant in a criminal proceeding does not have to be advised of
all the possible consequences which may flow from his plea of
guilty, including temporarily being barred from government
reimbursement for his professional services.
CONCLUSION
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate that the
Petitioner herein be excluded from Medicare and Medicaid for a
period of at least five years because of his conviction of a
criminal offense related to the delivery of items or services under
these programs. Neither the I.G. nor an administrative law judge
is authorized to reduce a five-year mandatory minimum exclusion.
The five-year exclusion is, therefore, sustained.
Joseph K. Riotto
Administrative Law Judge
1. In this decision, I refer to all programs from which
Petitioner has been excluded, other than Medicare, as "Medicaid."
2. In a letter to the Commonwealth Attorney dated May 12, 1994,
Petitioner urges the Commonwealth of Virginia to dismiss his case
based on his good behavior pursuant to the terms of the plea
agreement. Petitioner appears to take the position in that letter
that a dismissal of his case would undermine the I.G.'s authority
to exclude him under the Act. P. Ex. 3. I disagree. The record
shows that two warrants were issued charging Petitioner with two
separate offenses. Pursuant to the terms of the plea agreement,
Petitioner pled guilty to the warrant charging him with knowing
failure to deposit, transfer, or maintain residents' trust funds in
a separate account and the court accepted Petitioner's guilty plea.
The I.G. stated in her brief that she excluded Petitioner based on
the court's disposition of this warrant. The plea agreement
provided also that the disposition of the other warrant charging
Petitioner with embezzlement deemed larceny would be continued,
with a recommendation that the charge would be dismissed in six
months in return for good behavior. Since the I.G. does not argue
that the court's disposition of the warrant charging Petitioner
with the offense of embezzlement deemed larceny is a basis for the
exclusion in this case, the disposition of that warrant is
irrelevant to this proceeding.