Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Paul Karsch,
Petitioner,
- v. -
The Inspector General.
DATE: January 27, 1997
Docket No. C-96-374
Decision No. CR454
DECISION
By letter dated July 19, 1996, Paul Karsch (Petitioner)
was notified by the Inspector General (I.G.), U.S.
Department of Health & Human Services, that it had
decided to exclude him for a period of five years from
participation in the Medicare program and from
participation in the State health care programs described
in section 1128(h) of the Social Security Act (Act). I
use the term "Medicaid" in this Decision when referring
to the State programs. The I.G. explained that the five-
year exclusion was mandatory under 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 the Medicare program.
Petitioner filed a timely request for review of the
I.G.'s action, and the I.G. filed a motion for summary
disposition, accompanied by a supporting brief with five
exhibits. I have marked and identified these exhibits as
I.G. Ex. 1 through 5. Petitioner submitted a brief in
response, with three exhibits. I have marked these
exhibits as Petitioner's Ex. 1 through 3. As neither
party has contested the authenticity of the exhibits
introduced by the other party, I am admitting all the
exhibits into evidence.
Because I have determined that there are no material and
relevant factual issues in dispute (i.e., the only matter
to be decided is the legal significance of the undisputed
facts), I have granted the I.G.'s motion and decide the
case on the basis of 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 Medicaid to be excluded from
participation in such programs for a period of at least
five years.
PETITIONER'S ARGUMENT
Petitioner concedes that he pled guilty to a misdemeanor
pursuant to a Plea Agreement executed on November 22,
1994. Petitioner contends, however, that the document
specifically identified the terms and conditions of the
plea and that such document failed to inform him of the
exclusion provisions of 42 U.S.C. § 1320a-7, the
codification of section 1128 of the Act. Petitioner
maintains that, in order for him to have knowingly and
voluntarily entered into a plea agreement, he was
entitled to full disclosure of all consequences,
including exclusion from the Medicare and Medicaid
programs, as a result of entering a guilty plea.
Petitioner contends that his right to make an informed
decision concerning his guilty pleas was thus violated.
Petitioner further argues that his right to be free from
double jeopardy was violated when, after being punished
in a criminal prosecution, he is penalized by the
subsequent civil sanction of exclusion from the Medicare
and Medicaid programs.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Petitioner was the manager of ATS Medical Services
Inc. (ATS), a Pennsylvania corporation providing medical
services for Medicare patients. I.G. Ex. 3.
2. ATS was affiliated with AMOX Medical (AMOX), a
Massachusetts corporation providing similar services to
Medicare patients. I.G. Ex. 3.
3. Medicare contracts with various private insurance who
will administer the processing and payment of claims by
Medicare providers.
4. All claims for Medicare services provided by ATS to
patients in Pennsylvania were required to be filed with
Pennsylvania Blue Shield. I.G. Ex. 3.
5. All claims for Medicare services provided by AMOX for
patients in Maine, New Hampshire, and Massachusetts were
required to be filed with Massachusetts Blue Shield.
I.G. Ex. 3.
6. Reimbursement rates for medical services vary from
location to location throughout the United States.
7. Petitioner caused to be filed with Pennsylvania Blue
Shield a claim which falsely represented that certain
health care services were provided in Pennsylvania,
whereas in fact the services had been provided by AMOX in
Massachusetts. I.G. Ex. 3.
8. On December 29, 1994, a criminal information was
filed in the United States District Court, Middle
District of Pennsylvania, charging Petitioner with
wilfully making false statements on an application for
Medicare reimbursement. I.G. Ex. 3.
9. Petitioner pleaded guilty to the offense charged in
the information pursuant to a plea bargain negotiated
with the United States Attorney. I.G. Ex. 4.
10. The Court accepted Petitioner's plea and entered
judgment against him on June 1, 1995. I.G. Ex. 5.
11. Petitioner was ordered to pay a $3000 fine and $25
assessment. I.G. Ex. 5.
12. Petitioner's guilty plea, and the court's acceptance
of that plea, constitutes a "conviction" within the
meaning of section 1128(i)(3) of the Act.
13. For the mandatory exclusion of section 1128(a)(1) to
apply, the criminal offense giving rise to the conviction
must be related to the delivery of items or services
under the Medicare or Medicaid programs.
14. Filing false claims under the Medicare or Medicaid
programs is a program-related offense.
15. Petitioner herein was convicted of a criminal
offense "related to the delivery of an item or service"
under the Medicare program, within the meaning of section
1128(a)(1) of the Act.
16. Exclusion of Petitioner does not subject him to
double jeopardy.
17. A defendant in a criminal proceeding does not have
to be advised of all the possible consequences, such as
temporarily being barred from government reimbursement
for his professional services, which may flow from his
guilty plea.
18. Sections 1128(a)(1) and 1128(i) of the Act, read
together, provide adequate notice of the consequences
which could result from conviction of an offense related
to the delivery of an item or service under the Medicare
program.
19. Pursuant to section 1128(a)(1) of the Act, the I.G.
is required to exclude Petitioner from participating in
the Medicare and Medicaid programs.
20. The minimum mandatory period for exclusions pursuant
to section 1128(a)(1) of the Act is five years.
21. The I.G. properly excluded Petitioner from
participation in the Medicare and Medicaid programs for a
period of five years pursuant to sections 1128(a)(1) and
1128(c)(3)(B) of the Act.
22. Neither the I.G. nor the administrative law judge
has the authority to reduce the five-year minimum
exclusion mandated by sections 1128(a)(1) and
1128(c)(3)(B) of the Act.
DISCUSSION
The first statutory requirement for mandatory exclusion
pursuant to section 1128(a)(1) of the Act is that the
individual subject to such action must have been
convicted of a criminal offense under federal or State
law. Section 1128(i)(3) provides, inter alia, that when
a person enters a guilty plea to a criminal charge and
the court accepts such plea, the individual will be
regarded as having been convicted within the meaning of
section 1128 of the Act. In the case at hand, Petitioner
concedes that he entered a plea of guilty to filing false
claims under the Medicare program in violation of 42
U.S.C. § 1320a-7b(a) and that the United States District
Court for the Middle District of Pennsylvania accepted
his plea. Petitioner's admissions are supported by the
evidence adduced by the I.G., and I therefore find that
Petitioner was convicted of a criminal offense within the
meaning of the Act.
Next, section 1128(a)(1) of the Act requires that the
criminal offense in question be related to the delivery
of an item or service under Medicare or Medicaid.
Petitioner does not dispute that he pled guilty to the
offense of filing a false claim under the Medicare
program. Departmental Appeals Board (DAB) case law has
long held that filing false Medicare or Medicaid claims
constitutes clear program-related misconduct, sufficient
to mandate exclusion. See, e.g., 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). I
accordingly find that the offense which Petitioner was
charged and convicted of in the present case constitutes
criminal fraud related to the delivery of Medicare
services.
With respect to the double jeopardy issue, the impact of
the double jeopardy clause on civil and criminal multiple
"punishments" was extensively reviewed in U.S. v. Halper,
490 U.S. 435 (1985). There, the Supreme Court recognized
that in the rare case a civil penalty may be so extreme
and so disproportionate to the Government's actual
damages and expenses as to constitute prohibited
punishment. Id. at 447-51. The Halper Court
specifically recognized that the question of double
jeopardy was not dependent solely on whether the penalty
was characterized as "civil" or "criminal." Rather, the
focus was on the purpose and effect of the penalties on
the particular case.
The remedial nature of the mandatory exclusion was
examined in Manocchio v. Sullivan, 768 F.Supp. 814 (S.D.
Fl. 1991), where the Court applied the Supreme Court's
two-prong test. The first prong is a determination of
Congress' intent. The Court found that because specific
sections of the 1987 Amendments were labelled "criminal,"
other sections not so entitled, such as the mandatory
exclusion, were remedial. Second, the Court examined the
purpose and effect of the exclusion period and found its
intent, as expressed by Congress, was clearly remedial
and intended: (i) to protect the Medicare and Medicaid
programs from fraud and abuse, and (ii) to protect
citizens who rely on the integrity of participants in the
program. 1/ The Court held that there was sufficient
public interest in excluding convicted providers that the
exclusion did not violate either the double jeopardy or
the ex post facto clauses. Therefore, the Court found
that, as the provider failed to establish that there was
no rational relationship between the nonpunitive
interests and the exclusion period, his appeal must fail.
The remedial nature of the 1987 Amendments was also
considered in Greene v. Sullivan, 731 F.Supp. 838, 840
(E.D. Tenn. 1990). 2/ There a District Court held the
double jeopardy arguments of Halper inapplicable to the
case of a pharmacist who had been convicted for having
filed a false report and as a result had received a
mandatory five-year exclusion. That Court particularly
noted the agency's argument that in Greene, as opposed to
Halper, the government was not seeking any monetary
recovery. Rather, as in the instant case, the government
sought to protect the Medicare and Medicaid programs by
excluding persons convicted of defrauding those programs.
These goals, the Court declared, "are clearly remedial
and include protecting beneficiaries, maintaining program
integrity, fostering public confidence in the program,
etc." 731 F. Supp. at 840. Thus, the exclusion remedy
is more analogous to the revocation of a professional
license for misconduct than it is punitive, and
accordingly there is no double jeopardy. 731 F. Supp. at
840; Dewayne Franzen, DAB 1165, at 11-12 (1990).
Clearly Petitioner has not here established that his
exclusion presents one of those rare Halper cases in
which the civil penalty is extreme and bears no rational
relation to the remedial goals. The primary purpose of
this exclusion is not to punish Petitioner, but to
protect the programs, beneficiaries, and recipients from
future misconduct by a provider who has proved himself
untrustworthy. See Manocchio v. Sullivan, supra.
Finally, Petitioner argues that he should not be subject
to an exclusion under section 1128(a)(1) because he was
not informed in the criminal proceeding that he would be
excluded from the Medicare and Medicaid programs as a
result of his conviction. Petitioner asserts that he was
deprived of his due process, as he claims that he has
been deprived of his livelihood.
This argument is essentially the same as an argument made
by a petitioner in the case Douglas Schram, R.Ph., DAB
CR215 (1992), aff'd DAB 1372 (1992). In that case, the
petitioner argued that his due process rights were
violated because he was deprived of the notice necessary
to understand the possible consequences of his guilty
plea. The petitioner asserted that, had he known of the
consequences of his plea, he would have pled differently.
This argument was rejected. 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. DAB CR215, at 6. The appellate panel of the DAB
affirmed this decision, finding that it "correctly held
that, as defendant, Petitioner did not have to be
advised of all the possible consequences of his plea."
DAB 1372, at 11. The DAB has held in other cases that
arguments about the process leading to a petitioner's
criminal conviction are completely irrelevant to an
exclusion proceeding. See, e.g., Charles W. Wheeler, DAB
1123 (1990). In view of the foregoing, Petitioner's
argument that the I.G. is precluded from imposing an
exclusion in this case because Petitioner did not know
that his conviction would result in an exclusion is
without merit.
CONCLUSION
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 period of at least five years
because of his conviction of a program-related criminal
offense. Neither the I.G. nor the judge is authorized to
reduce the five-year minimum mandatory period of
exclusion. Jack W. Greene, DAB CR19, at 12-14 (1989).
The I.G.'s five-year exclusion of Petitioner is therefore
upheld.
________________________
Joseph K. Riotto
Administrative Law Judge
* * * Footnotes * * *
1. See S.Rep. No. 100-109, 100th Cong., 1st
Sess.
1-2 (1987), reprinted in 1987 U.S.C.C.A.N. 682.
2. For additional discussion of the remedial
nature of the 1987 Amendments, see 57 Fed. Reg. 3744
(January 29, 1992).