Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Thomas Bruce Vest, M.D.,
Petitioner,
- v. -
The Inspector General.
DATE: January 6, 1997
Docket No. C-96-110
Decision No. CR453
DECISION
I conclude that Petitioner, Thomas Bruce Vest, M.D., is
subject to a five-year minimum mandatory period of
exclusion from participation in the Medicare, Medicaid,
Maternal and Child Health Services Block Grant and Block
Grants to States for Social Services programs. 1/
I. Procedural History
By letter dated January 23, 1996, the Inspector General
(I.G.) of the United States Department of Health and
Human Services (DHHS) notified Petitioner that he was
being excluded for five years from participation as a
provider in Medicare and Medicaid. The I.G. advised
Petitioner that he was being excluded as a result of his
conviction of a criminal offense related to the delivery
of an item or service under the Medicare program and that
the exclusion of individuals convicted of such offenses
is mandated by section 1128(a)(1) of the Social Security
Act (Act). 2/ The I.G. further advised Petitioner
that, for exclusions imposed pursuant to section
1128(a)(1), section 1128(c)(3)(B) of the Act mandates a
five-year minimum period of exclusion.
By letter dated February 5, 1996, Petitioner filed a
request for hearing. In his request for a hearing,
Petitioner asked that his exclusion be stayed pending a
decision by the United States Court of Appeals for the
Seventh Circuit in the appeal of his criminal conviction.
In a telephone prehearing conference which I convened on
March 6, 1996, the I.G. argued that, as a matter of law,
a mandatory exclusion imposed pursuant to section
1128(a)(1) of the Act becomes effective 20 days after
notice and continues in effect until an administrative
law judge issues a decision finding that the I.G. lacked
authority to impose the exclusion or until the conviction
underlying the exclusion is reversed or vacated.
Petitioner nevertheless requested the opportunity to
brief the issue of whether the administrative law judge
has authority to stay the effect of an exclusion.
Petitioner filed a brief and a supplemental brief on this
issue. The I.G. filed a motion for summary disposition,
in which she argued also that the administrative law
judge lacks authority to stay the effect of a mandatory
exclusion. Petitioner responded, opposing the I.G.'s
motion for summary disposition. On August 28, 1996, I
issued an order directing the parties to supplement the
record. The parties filed supplemental submissions in
response to my order. 3/
By motion dated November 7, 1996, the I.G. requested to
further supplement the record. The I.G. attached to her
motion the I.G.'s proposed exhibit 8. 4/
Petitioner has not objected to the I.G.'s motion to
supplement the record nor to the admission into evidence
of the exhibits submitted by the I.G. The I.G. has not
objected to the admission into evidence of the exhibits
submitted by Petitioner. 5/ In the absence of
objection, I grant the I.G.'s motion to supplement the
record, and I admit into evidence I.G. Exhibits (Exs.) 1
through 8, and P. Exs. 1 through 5.
After careful consideration of the briefs and documentary
evidence submitted by the parties, I conclude that, to
the extent there are facts in dispute, I am able to
resolve them based on the written record before me,
without the need for an in-person hearing. Based on the
record before me, I conclude that Petitioner is subject
to the minimum mandatory exclusion provisions of sections
1128(a)(1) and 1128(c)(3)(B) of the Act. Accordingly, I
affirm the I.G.'s determination to exclude Petitioner
from participation in Medicare and Medicaid for a period
of five years.
II. Issues
The issues are: 1) Whether Petitioner's exclusion may be
stayed pending the outcome of his appeal of his
conviction; 2) whether Petitioner was convicted of a
criminal offense under federal or State law; and 3) if
Petitioner was so convicted, whether the conviction
relates to the delivery of an item or service under
Medicare.
III. Findings of Fact and Conclusions of Law
1. Petitioner is a physician who practiced in Alton
Illinois and operated Doctors Clinic there.
2. In an indictment filed in the United States District
Court for the Southern District of Illinois (District
Court) on or about March 18, 1993 (indictment), a Grand
Jury charged Petitioner with 40 counts of mail fraud.
I.G. Ex. 2.
3. After a jury trial in the District Court, Petitioner
was found guilty of 33 counts of mail fraud. I.G. Ex. 3
at 1, I.G. Ex. 8 at 11-14.
4. On October 11, 1995, the District Court entered
judgment against Petitioner. I.G. Ex. 3 at 1.
5. The District Court sentenced Petitioner to 24 months'
incarceration and to pay $1,650 in assessments, $25,000
in fines, and $41,460.98 in restitution. I.G. Ex. 3 at
5.
6. Petitioner was convicted of a criminal offense,
within the meaning of section 1128(i) of the Social
Security Act. Findings 2-5.
7. Petitioner's conviction is currently on appeal to the
United States Court of Appeals for the Seventh Circuit.
P. Stay Br. at 1.
8. The fact that Petitioner's conviction is on appeal is
irrelevant to my determination that Petitioner has been
convicted within the Social Security Act's definition.
9. Count 14 of the indictment charged, among other
things, that Petitioner had knowingly and intentionally
mailed or caused to be mailed false, fraudulent, and
fictitious correspondence, claim forms, and billings
regarding patient L.F. from Doctors Clinic to the
Medicare Part-B Carrier, Blue Shield of Illinois, P.O.
Box 1210, Marion, Illinois. 6/ I.G. Ex. 2 at 34.
10. Count 17 of the indictment charged, among other
things, that Petitioner had knowingly and intentionally
mailed or caused to be mailed false, fraudulent, and
fictitious correspondence, claim forms, and billings
regarding patient L.G. from Doctors Clinic to the
Medicare Part-B Carrier, Blue Shield of Illinois, P.O.
Box 1210, Marion, Illinois. I.G. Ex. 2 at 39.
11. Count 29 of the indictment charged, among other
things, that Petitioner had knowingly and intentionally
mailed or caused to be failed false, fraudulent, and
fictitious correspondence, claim forms, and billings
regarding patient E.M. from Doctors Clinic to the
Medicare Carrier, Travelers Insurance Company, P.O. Box
10066, Augusta, Georgia. I.G. Ex. 2 at 58.
12. The jury found Petitioner guilty of counts 14, 17,
and 29 of the indictment. I.G. Ex. 3 at 1; I.G. Ex. 8 at
5, 7.
13. Petitioner's conviction is related to the delivery
of an item or service under Medicare, within the meaning
of section 1128(a)(1) of the Act. Findings 9-12.
14. The Secretary of DHHS (Secretary) has delegated to
the I.G. the authority to exclude individuals from
participation in Medicare and to direct their exclusion
from participation in Medicaid. 48 Fed. Reg. 21,662
(1983); 53 Fed. Reg. 12,993 (1988).
15. The I.G. was required to exclude Petitioner from
participation in Medicare and Medicaid for at least five
years. Act, sections 1128(a)(1), 1128(c)(3)(B).
16. By law, an exclusion imposed pursuant to section
1128(a)(1) of the Act takes effect 20 days after notice
to the excluded party. 42 C.F.R. § 1001.2002(b).
17. The administrative law judge is not authorized to
delay the effective date of an exclusion imposed pursuant
to section 1128(a)(1) of the Act.
18. The administrative law judge is not authorized to
declare statutes or regulations unconstitutional.
IV. Discussion
The I.G. excluded Petitioner from participation in
Medicare and directed that Petitioner be excluded from
participation in Medicaid, pursuant to section 1128(a)(1)
of the Act. As a preliminary matter, Petitioner has
argued that his exclusion should be stayed pending the
outcome of the appeal of his criminal conviction to the
U.S. Court of Appeals for the Seventh Circuit. I
conclude that I lack authority to stay Petitioner's
exclusion. Therefore, Petitioner's exclusion remains in
full force and effect unless I conclude that the I.G.
lacked a basis for imposing the exclusion. To establish
a basis for Petitioner's exclusion, the I.G. must prove
that (1) Petitioner was convicted, under federal or State
law, of a criminal offense, and (2) the conviction
related to the delivery of an item or service under
Medicare or Medicaid. I find that the I.G. has proved
both elements. Therefore, Petitioner's five-year
exclusion is required as a matter of law.
A. I lack authority to stay the effect of
Petitioner's exclusion under the circumstances
of this case.
Petitioner argues that, by regulation, the effect of his
exclusion is automatically stayed pending my decision on
his request for a hearing in this case. Petitioner
contends that 42 C.F.R. §§ 1001.2003(b)(2) and 1005.22(a)
compel this conclusion. Petitioner misconstrues both
regulations.
The I.G. correctly points out that 42 C.F.R. § 1001.2003
does not apply to mandatory exclusions imposed pursuant
to section 1128(a) of the Act. I.G. Br. at 8.
Petitioner's strained reading of section 1001.2003 fails
to recognize that the regulation sets forth exceptions to
the general rule governing the effective date of
exclusions. The general rule, which is found at 42
C.F.R. § 1001.2002(b), provides that exclusions take
effect 20 days after the date of the I.G.'s notice
imposing the exclusion. By contrast, when the I.G. seeks
to impose an exclusion based on sections 1001.901, .951,
.1601, or .1701 of the regulations, a timely request for
a hearing by an affected individual will delay imposition
of the exclusion until an administrative law judge issues
a decision upholding the I.G.'s determination to exclude.
42 C.F.R. § 1001.2003(b). Section 1001.2003(b) is
inapplicable to the present case because Petitioner's
exclusion was not imposed pursuant to any of the
enumerated regulatory sections, but was imposed pursuant
to section 1001.101.
The effective date of Petitioner's exclusion is governed
by 42 C.F.R. § 1001.2002. Like other exclusions governed
by section 1001.2002, Petitioner's exclusion is
derivative of an action taken by another fact-finder, in
this case, his conviction in the District Court. Both
Congress and the Secretary have determined that
individuals who have been convicted by courts or
sanctioned by State agencies for certain types of
misconduct should be presumed to be untrustworthy to
participate in Medicare and Medicaid.
The Secretary has established a regulatory scheme in
which no exclusion takes effect before an excluded party
has had the opportunity to contest in a due process
hearing the determination that the party engaged in
conduct demonstrating untrustworthiness. Thus, the
regulations establishing the effective dates of
exclusions treat separately derivative exclusions based
on prior criminal or administrative sanctions (governed
by section 1001.2002), and those described in section
1001.2003, in which the I.G. seeks an exclusion based on
facts which have not previously been established in
judicial or administrative proceedings. Where an
individual has been convicted or has had a professional
license revoked, the individual has been afforded the
right to a due process hearing in another forum. In such
cases, the exclusion takes effect 20 days after notice
and remains in effect pending any administrative law
judge hearing. On the other hand, where the I.G. seeks
to exclude an individual or entity based on alleged
wrongdoing that has not been the subject of prior
findings by a court or administrative agency, an
individual who requests a hearing will not be excluded
until after an administrative law judge determines that
the I.G. has proven a factual basis for the exclusion.
In the present case, Petitioner was convicted after a
lengthy trial in the District Court. The I.G. is
entitled to rely on that conviction as establishing
Petitioner's untrustworthiness. Pursuant to 42 C.F.R. §
1001.2002, Petitioner remains excluded pending my ruling
on his request for a hearing.
Petitioner's reading of 42 C.F.R. § 1005.22 is equally
inapposite. Petitioner argues that this regulation
allows, or perhaps mandates, that Petitioner's exclusion
be stayed pending judicial review. P. Stay Br. at 4.
Petitioner acknowledges that the regulation, by its
terms, applies to civil money penalty (CMP) cases.
Nevertheless, Petitioner argues that the phrase "any
penalty" in section 1005.22(b)(1) should be read to apply
to exclusions, as well. I disagree. The context
demonstrates that the phrase refers to a CMP. But even
if the regulation could be read to apply to exclusions,
subsection (a) contemplates a stay of enforcement pending
appeal of the administrative law judge's decision to an
appellate panel of the Departmental Appeals Board (DAB).
Similarly, subsection (b)(1) describes a process for
requesting a stay of any appellate panel decision pending
appeal to a federal court. Thus, section 1005.22
contains no provision for implementing a stay of
penalties during the pendency of proceedings before an
administrative law judge.
Petitioner argues also that section 705 of the
Administrative Procedure Act authorizes me to stay the
effect of Petitioner's exclusion "when justice so
requires." P. Stay Br. at 2. According to Petitioner,
justice requires that his exclusion be stayed because he
will suffer irreparable harm if he is excluded. I
conclude that section 705 does not authorize me to stay
Petitioner's exclusion. Moreover, even if I had such
authority, I would not find that Petitioner has proved
that he would suffer irreparable harm.
Section 705 of the Administrative Procedure Act provides
that when an agency finds that justice so requires, the
agency may postpone the effective date of action taken by
it, pending judicial review. Plainly, the Secretary has
authority to stay the effect of an exclusion, should she
find that justice so requires. However, the Secretary
has not delegated plenary authority to administrative law
judges to take all actions on behalf of the Secretary.
The limits of the Secretary's delegation of authority to
administrative law judges are set forth at 42 C.F.R. §
1005.4. Nothing in that regulation states or suggests
that the Secretary has delegated to administrative law
judges the authority to stay exclusions. On the
contrary, 42 C.F.R. § 1005.4(c)(4) specifically states
that administrative law judges do not have authority to
enjoin any act of the Secretary. Pursuant to this
section, I lack authority either to enjoin the imposition
of an exclusion or to stay the exclusion once it is
imposed. See David A. Barrett, DAB CR288 (1993); see
also, prehearing order in Barrett (Docket No. C-93-113,
September 8, 1993) (Leahy, Administrative Law Judge).
Even if I had authority to grant a stay, I would not find
that justice requires such a stay in this case.
Petitioner's argument that he would suffer irreparable
harm if I do not stay his exclusion appears to be based
on his fear that he will lose his right to be reinstated
to Medicare participation if his conviction should be
reversed after I have issued a decision upholding the
I.G.'s decision to exclude him. This concern is
unfounded. The regulations provide for reinstatement of
individuals if their convictions are reversed or vacated.
See 42 C.F.R. § 1001.3005. Therefore, I conclude that
Petitioner's argument that he would suffer irreparable
harm is without merit.
For these reasons, I conclude that Petitioner's arguments
that the effect of his exclusion should be stayed pending
the outcome of his appeal to the Seventh Circuit are
without merit. Therefore, I will proceed to consider the
I.G.'s authority to impose the exclusion at issue in this
case.
B. Petitioner has been convicted of a criminal
offense.
The evidence submitted by the I.G. demonstrates that
Petitioner was convicted of a criminal offense, as
defined under the Social Security Act. Section 1128(i)
defines the term "convicted" to include the following
dispositions of criminal cases:
(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.
After a trial in the District Court, a jury returned
guilty verdicts against Petitioner on 33 counts of mail
fraud. Finding 3. Based on those verdicts, the trial
judge found Petitioner guilty on those counts. In
addition, the court entered a judgment of conviction
against Petitioner on October 11, 1995. Finding 4.
Thus, Petitioner's conviction falls within the definition
of section 1128(i)(1) of the Act, in that a judgment of
conviction has been entered against him by a federal
court. In addition, Petitioner's conviction is within
the definition of section 1128(i)(2) because the District
Court found Petitioner guilty.
Petitioner has not explicitly argued that he was not
convicted. However, an element of Petitioner's argument
that he should not be excluded until after the Court of
Appeals has ruled on his criminal appeal appears to be
that his conviction is not "final." Petitioner seems to
contend that a conviction which has been appealed ought
not to be the basis for an exclusion until all appeals
have been exhausted. P. Stay Br. at 3. In support of
this argument, Petitioner cites several decisions of
Illinois State courts. Id.
Petitioner's argument is not persuasive. Federal
regulations specifically authorize the I.G. to proceed
based upon convictions, "regardless of whether
. . . [t]here is a post-trial motion or an appeal
pending." 42 C.F.R. § 1001.2. Thus, whether or not
Illinois State courts would treat Petitioner's conviction
as final, I am bound by the federal definition of
conviction found in the Social Security Act and the
applicable regulations. For these reasons, I conclude
that Petitioner was convicted within the meaning of the
Act, despite the fact that his appeal is pending before
the Seventh Circuit.
C. Petitioner's conviction was related to the
delivery of an item or service under Medicare.
I have concluded that Petitioner was convicted of a
criminal offense, within the meaning of the Social
Security Act. The criminal offenses of which Petitioner
was convicted were 33 counts of mail fraud. A conviction
for mail fraud may not, on its face, appear related to
the delivery of an item or service under Medicare.
However, in determining whether or not Petitioner's
conviction is program-related, I am not limited to
considering the formal designation of the criminal
statute an individual was convicted of violating.
Instead, I may inquire into the conduct which led to the
conviction. As an appellate panel of the DAB held in
DeWayne Franzen, DAB 1165 (1990), in determining whether
a conviction is program-related, the administrative law
judge may appropriately look beyond the four corners of
the trial court's judgment:
[T]he ALJ, the finder of fact, can look beyond the
findings of the . . . court to determine if a
conviction was related to [a federal program].
Therefore, the ALJ's characterization of an offense
is not limited to the . . . court's or the violated
statute's precise terms for purposes of determining
whether a conviction related to [a federal program].
Id. at 6. See also H. Gene Blankenship, DAB CR42 (1989)
(Docket No. C-67). Thus, I am authorized to inquire into
the circumstances surrounding Petitioner's conviction to
determine whether it was program-related. In this case,
the circumstances surrounding Petitioner's conviction
convince me that it was "related to the delivery of an
item or service" under Medicare.
In the present case, the indictment charged, and the jury
concluded, that, in three instances, Petitioner knowingly
mailed or caused to be mailed false and fraudulent claims
to Medicare Part B Carriers seeking reimbursement for
health care services provided to Medicare beneficiaries.
Such conduct is plainly related to the delivery of
Medicare items or services.
Petitioner argues that the evidence produced by the I.G.
fails to establish that Petitioner's conviction relates
to the delivery of an item or service under Medicare.
Petitioner argues that the indictment offered by the I.G.
as I.G. Ex. 2 does not accurately reflect the offenses of
which Petitioner was convicted. P. Ex. 4. Based on
Petitioner's argument and the affidavit which is in
evidence as P. Ex. 4, I ordered that the parties
supplement the record in this case. The parties
submitted supplemental briefs and exhibits. In his
supplemental response, Petitioner continues to assert
that the I.G. failed to prove that the offenses of which
Petitioner was convicted related to the Medicare program.
The I.G. moved to further supplement the record and I
granted the motion and admitted in evidence I.G. Ex. 8.
I.G. Ex. 8 is a copy of the transcript of the portion of
Petitioner's criminal trial at which the jury's verdicts
were read. I conclude that this exhibit is sufficient to
prove, by a preponderance of the evidence, that
Petitioner was convicted of offenses that are related to
the delivery of items or services under Medicare.
Petitioner has offered no evidence or argument to rebut
the contents of I.G. Ex. 8.
I.G. Ex. 8 demonstrates that the jury found Petitioner
guilty on counts 14, 17, and 29 of the indictment.
Those counts involved patients L.F., L.G., and E.M. Each
of those counts charged that Petitioner submitted false
and fraudulent claims to the Medicare Carrier in
connection with his treatment of the named patients. It
is well-settled that submitting false claims for Medicare
reimbursement is related to the delivery of an item or
service under Medicare, within the meaning of section
1128(a)(1).
In Douglas Schram, R.Ph., DAB 1372 (1992), an appellate
panel of the DAB held that submitting a false claim to
Medicaid is related to the delivery of an item or service
under Medicaid, within the meaning of section 1128(a)(1)
of the Act. The Board reasoned:
By submitting a claim . . . seeking payment or
allowance, an individual or entity is representing
that an item or service has been (or will be)
delivered under the program for which payment or
allowance is due.
Id. at 8. See also Jack W. Greene, DAB 1078 (1989),
aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835 &
838 (E.D. Tenn. 1990). Thus, in the present case,
Petitioner's conviction is related to the delivery of
items or services under Medicare because in submitting or
causing to be submitted false claims to the Medicare
Carrier, Petitioner falsely represented that he had
provided services to beneficiaries for which he was
entitled to be compensated by the Medicare program.
D. I lack authority to declare unconstitutional
statutes or regulations.
Petitioner argues finally that imposition of an exclusion
before he has been afforded a hearing violates his right
to due process under the Constitution. As I have
discussed at length in section A. of this Decision, the
I.G. has excluded Petitioner based on Petitioner's
conviction in the District Court of 33 counts of mail
fraud. It can hardly be said that Petitioner was
deprived of due process, having been afforded a trial of
more than four months' length, after which he was found
guilty, beyond a reasonable doubt, of having committed
mail fraud directed at the Medicare program. Thus, I do
not find persuasive Petitioner's argument that his
exclusion prior to hearing violates his constitutional
right to due process. Nevertheless, even were I
persuaded of the merits of Petitioner's constitutional
arguments, I do not have the authority to decide the
constitutional validity of an exclusion imposed and
directed in accordance with the Act and regulations. Lee
G. Balos, DAB 1541, at 9 (1995); Shanti Jain, M.D., DAB
1398, at 7 (1993). The Act and regulations do not
entitle Petitioner to a pre-exclusion hearing. The Act
and regulations give Petitioner only the right to request
a hearing on the issue of whether there is a basis for
his exclusion. 42 C.F.R. § 1001.2007. I have afforded
Petitioner the hearing (based on the written record)
contemplated by the Act and regulations.
V. Conclusion
The I.G. properly imposed and directed against Petitioner
a five-year minimum mandatory period of exclusion from
participation in Medicare and Medicaid.
Jill S. Clifton
Administrative Law Judge
* * * Footnotes * * *
1. Unless otherwise indicated, hereafter I
refer to all programs from which Petitioner has been
excluded, other than Medicare, as "Medicaid."
2. Those parts of the Act discussed herein
are codified in 42 U.S.C. § 1320a-7.
3. In this Decision, I refer to the parties'
submissions as follows:
Petitioner's
Submission Abbreviation
The ALJ Has the Authority to P. Stay Br.
Stay the Exclusion...
Supplemental Brief in Support P. Cont. Br.
of Motion to Continue...
Response to Respondent's Motion P. Resp. Br.
For Summary Disposition
Response to Respondent's Sup- P. Supp. Br.
plemental Brief
I.G. Submission
Respondent's Motion for I.G. Br.
Summary Disposition
Respondent's Supplemental Brief I.G. Supp. Br.
Respondent's Motion to Supplement I.G. Mot.
4. I have renumbered the pages of I.G. Ex. 8,
from 1 through 15.
5. Petitioner attached three documents to his
opening brief. Two of them were marked as "Ex. #A" and
"Ex. B." The third document, a letter dated March 7,
1996, from Petitioner's attorney to Michael T. Dyer,
Regional Inspector General, was unmarked. Petitioner
attached an affidavit of his attorney to his Response to
the I.G.'s motion for summary disposition. The affidavit
was unmarked. Petitioner attached excerpts from the
transcript of his criminal trial to his Response to the
I.G.'s supplemental brief. The transcript excerpts were
also unmarked. I have marked these exhibits to conform
to the requirements of my prehearing order. I have
marked Petitioner's Exhibits as follows: Ex. #A is now
P. Ex. 1; Ex. B is now P. Ex. 2; the March 7 letter to
Michael T. Dyer is P. Ex. 3; the affidavit of
Petitioner's attorney is P. Ex. 4; the transcript
excerpts together constitute P. Ex. 5.
6. In this Decision, I refer to the patients
by their initials to protect their privacy.