DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Civil Remedies Division
In the Case of:
Bernard Lerner, M.D.,
Petitioner,
- v. -
The Inspector General. )
DATE: December 22, 1989
Docket No. C-48
DECISION OF ADMINISTRATIVE LAW JUDGE
On July 1, 1988, the Inspector General (the I.G.) notified Petitioner that
he was being excluded from
participation in Medicare and State health care programs for 15 years. The I.G.
told Petitioner that he was
being excluded as a result of his conviction in federal court of a criminal
offense related to the unlawful
manufacture, distribution, prescription, or dispensing of a controlled substance.
Petitioner was advised that
exclusion from participation in Medicare and Medicaid of individuals or entities
convicted of such an
offense is permitted by section 1128(b)(3) of the Social Security Act. The I.G.
stated that the 15-year
exclusion imposed and directed against Petitioner was based on factors which
included the fact that the
sentence resulting from Petitioner's criminal conviction included incarceration.
Petitioner requested a hearing, and the case was assigned to me for a hearing
and a decision. I held a
hearing in Chicago, Illinois on August 1, 1989. Based on the evidence introduced
at the hearing, and on
applicable law, I conclude that the exclusion imposed and directed against Petitioner
is reasonable.
Therefore, I am entering a decision in this case sustaining the exclusion imposed
and directed against
Petitioner.
ISSUE
The issue in this case is whether the exclusion imposed and directed against
Petitioner by the I.G. is
reasonable.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Petitioner is a physician who has specialized in neurosurgery. Tr. at 157; I.G. Ex. 15/ 2, 5.
2. On April 10, 1987, Petitioner was charged in a 167 count indictment with
knowingly, willfully and
unlawfully obtaining, possessing controlled substances, in violation of 21 U.S.C.
841(a)(1) and 843(a)(3),
and 21 C.F.R. 1306.04(a). I.G. Ex. 6.
3. Following a jury trial, on November 25, 1987, Petitioner was convicted of
163 counts of the indictment.
I.G. Ex. 1.
4. Petitioner was convicted of possessing and distributing Dilaudid in violation
of 21 U.S.C. 841(a)(1) and
843(a)(3), and 21 C.F.R.1306.04(a). I.G. Ex. 1; 6/3-1, 32-34, 36-40, 41-54,
56-93.
5. Dilaudid is a Schedule II controlled substance. 21 C.F.R. 1308.12(c).
6. A Schedule II controlled substance is a drug that meets the following criteria:
(1) it has a high potential
for abuse; (2) it has a currently accepted medical use in the United States
or a currently accepted medical
use with severe restrictions; and (3) abuse of the drug may lead to severe psychological
or physical
dependence. 21 U.S.C. 812(b)(2).
7. Administration of Dilaudid may cause side effects, including drowsiness
and impaired judgment. I.G.
Ex. 19/9; 32; Tr. at 287, 289.
8. Dilaudid has a very high potential for abuse. I.G. Ex. 19/9.
9. Petitioner was convicted of possessing and distributing biphetamine in violation
of 21 U.S.C. 841(a)(1)
and 21 C.F.R. 1306.04(a). I.G. Ex. 1; 6/94-95; 132-133.
10. Biphetamine is a Schedule III controlled substance. I.G. Ex. 19/13; 21 C.F.R. 1308.13(b).
11. A Schedule III controlled substance is a drug which meets the following
criteria: (1) it has a potential
for abuse; (2) it has a currently accepted medical use in the United States
or a currently accepted medical
use with severe restrictions; and (3) abuse of the drug may lead to limited
physical or high psychological
dependence. 21 U.S.C. 812(b)(3).
12. Petitioner was convicted of possessing and distributing Quaaludes in violation
of 21 U.S.C. 841(a)(1)
and 21 C.F.R. 1306.04(a). I.G. Ex. 1; 6/146-147.
13. At the time Petitioner unlawfully possessed and distributed Quaaludes,
it was a Schedule II controlled
substance. I.G. Ex. 19/14.
14. Petitioner was convicted of possessing and distributing Dolophine in violation
of 21 U.S.C. 841(a)(1),
and 21 C.F.R. 1306.04(a). I.G. Ex. 1; 6/146-169.
15. Dolophine is a Schedule II controlled substance. 21 C.F.R. 1308.12(c); I.G. Ex. 33/1191.
16. On January 14, 1988, Petitioner was sentenced to three and one-half years
incarceration and five years
probation to run consecutively to the prison sentence, and to a special parole
term of ten years. Stip. 3.
17. Between 1981 and 1986, Petitioner engaged in criminal activity whereby
he wrote prescriptions for
controlled substances to some patients who gave some of these drugs back to
him for his use. I.G. Ex. 6/1-
2; Tr. at 36, 172.
18. Between 1980 and 1987 Petitioner unlawfully used Dilaudid, Dolophine, biphetamines
and cocaine.
Tr. at 247.
19. Between 1980 and 1987 Petitioner was addicted to Dilaudid. Tr. at 172.
20. Petitioner continued to treat patients and perform neurological surgeries
while he suffered from the
physical and mental problems associated with his addiction to drugs and his
withdrawal from drug
addiction. Stip. 8; Tr. at 247-248.
21. Several of the individuals to whom Petitioner prescribed controlled substances
had received treatment
for drug addiction. I.G. 16/90; Tr. at 236, 263.
22. The individuals who had received treatment for drug addiction and to whom
Petitioner prescribed
controlled substances included a 15-year old female employed by Petitioner as
a receptionist. Tr. at 263.
23. Petitioner persisted in his unlawful conduct despite warnings from investigative
and regulatory
agencies. Tr. at 35, 50, 108, 303.
24. Petitioner did not seek treatment for his addiction until after he had
been indicted for criminal
violations. Tr. at 182.
25. Petitioner did not complete the drug rehabilitation programs in which he
enrolled. I.G. Ex. 35/25, 60-
65, 74; Tr. at 184-185.
26. Petitioner was convicted of criminal offenses relating to the unlawful
manufacture, distribution,
prescription, or dispensing of controlled substances. Findings 3-16.
27. The criminal offenses of which Petitioner was convicted are criminal offenses
as described in section
1128(b)(3) of the Social Security Act. Social Security Act, section 1128(b)(3).
28. The Secretary of the Department of Health and Human Services (the Secretary)
has authority to
impose and direct an exclusion against Petitioner from participating in Medicare
and Medicaid, pursuant to
section 1128(b)(3) of the Social Security Act. Social Security Act, section
1128(b)(3).
29. The Secretary delegated to the I.G. the duty to impose and direct exclusions
pursuant to section 1128
of the Social Security Act. 48 Fed. Reg. 21662 (May 13, 1983).
30. On July 1, 1988, the I.G. notified Petitioner that he was being excluded
from participation in the
Medicare and Medicaid programs as a result of his conviction of a criminal offense
related to the unlawful
manufacture, distribution, prescription, or dispensing of a controlled substance.
I.G. Ex. 4; Stip. 6.
31. Petitioner was notified that he was being excluded pursuant to section
1128(b)(3) of the Social
Security Act. I.G. ex. 4.
32. The exclusion provisions of section 1128 of the Social Security Act establish
neither minimum nor
maximum exclusion terms in those circumstances where the I.G. has discretion
to impose and direct
exclusions. Social Security Act, section 1128(b)(1)-(14).
33. A remedial objective of section 1128 of the Social Security Act is to protect
program beneficiaries and
recipients by permitting the Secretary (or his delegate, the I.G.) to impose
and direct exclusions from
partici-pation in Medicare and Medicaid of those individuals who demonstrate
by their conduct that they
cannot be trusted to treat beneficiaries and recipients. Social Security Act,
section 1128.
34. An additional remedial objective of section 1128 of the Social Security
Act is to deter individuals from
engaging in conduct which jeopardizes the integrity of federally-funded health
care programs. Social
Security Act, section 1128.
35. Petitioner was convicted of many criminal violations. Findings 3-16; see 42 C.F.R. 1001.125(b)(1).
36. Petitioner's actions endangered the health and safety of individuals, including
Petitioner's patients, who
obtained prescriptions for controlled substances from Petitioner. Findings 3-16,
20-22; see 42 C.F.R.
1001.125(b)(2).
37. Petitioner's criminal activities were perpetrated over a six-year period,
a lengthy period of time.
Findings 3-19; see 42 C.F.R. 1001.125(b)(6).
38. As a result of his convictions, Petitioner was sentenced to a lengthy period
of incarceration, three and
one-half years. Finding 16; see 42 C.F.R. 1001.125(b)(5).
39. The seriousness of Petitioner's offenses is also established by the fact
that he was sentenced to serve
ten years special parole in addition to his incarcera-tion. Finding 16; see
42 C.F.R. 1001.125(b)(5).
40. Petitioner did not prove a community need for his services as a neurological
surgeon which establishes
that the exclusion imposed against him is unreasonable. See Tr. at 227-229.
41. Even if Petitioner proved a community need for his services as a neurological
surgeon, that would not
establish that the exclusion imposed against him is unreasonable.
42. Petitioner did not prove that his early release from incarceration establishes
that the exclusion imposed
against him is unreasonable. See Tr. at 157-158.
43. Petitioner did not prove that his age establishes that the exclusion imposed
against him is
unreasonable. See Tr. at 227.
44. Petitioner did not prove that his current drug-free status or his acknowledgement
of responsibility for
his addiction establishes that the exclusion imposed against him is unreasonable.
See Tr. at 120, 161-162,
236.
45. Petitioner did not prove that his involvement in drug education and rehabilitation
programs establishes
that the exclusion imposed against him is unreasonable. See Tr. at 187-188,
208-209.
46. Petitioner did not establish that, in light of mitigating factors, the
exclusion imposed against him is
unreasonable. Findings 42-47.
47. The 15-year exclusion against Petitioner participating in Medicare or Medicaid
is reasonable. Findings
40-46; Social Security Act, section 1128(b)(3); see 42 C.F.R. 1001.125(b)(1)-(7);
42 C.F.R. 1001.128.
ANALYSIS
The parties do not dispute that Petitioner was convicted of criminal offenses
relating to the unlawful
distribution, prescription, or dispensing of controlled substances. The I.G.
has authority under section
1128(b)(3) of the Social Security Act to impose and direct an exclusion against
Petitioner from
participating in the Medicare and Medicaid programs. The only contested issue
in this case is the
reasonableness of the 15-year exclusion which the I.G. imposed and directed
against Petitioner.
The I.G. contends that the lengthy exclusion imposed and directed against Petitioner
is reasonable, when
considered in the context of the evidence and the purpose of the exclusion law.
The I.G. argues that
Petitioner was convicted of very serious criminal offenses perpetrated over
a period of several years.
According to the I.G., Petitioner's conduct was not only unlawful, but it endangered
the health and well-
being of others, including the patients whom Petitioner treated. The I.G. argues
that a lengthy exclusion is
necessary to protect Medicare recipients and Medicaid beneficiaries from the
possibility that Petitioner
might again jeopardize their well-being by abusing controlled substances.
Petitioner acknowledges his unlawful conduct, but contends that there is little
likelihood that it will recur.
He asserts that there exists a need in his community for his special medical
skills and that restoring his
participant status will serve to meet that need. Petitioner argues that, because
there is little likelihood that
he will again engage in the conduct for which he was convicted, a lengthy exclusion
is unnecessarily
punitive.
The exclusion law was enacted by Congress to protect the integrity of the Medicare
and Medicaid
programs. Among other things, the law was designed to protect program recipients
and beneficiaries from
individuals who had demonstrated by their behavior that they posed a threat
to the well-being and safety of
recipients and beneficiaries.
There are two ways that exclusions imposed and directed pursuant to this law
advance this remedial
purpose. First, the law protects recipients and beneficiaries from untrustworthy
providers until such time
as these providers demonstrate that they can be trusted to treat program recipients
and beneficiaries.
Second, exclusions serve as examples to deter providers of items or services
from engaging in conduct
which threatens the well-being and safety of recipients and beneficiaries. See
House Rep. No. 95-393, Part
II, 95th Cong., 1st Sess., reprinted in 1977 U.S. Code Cong & Admin. News,
3072.
An exclusion imposed and directed pursuant to section 1128 will likely have
an adverse financial impact
on the person against whom the exclusion is imposed. However, the law places
the well-being and safety
of recipients and beneficiaries ahead of the pecuniary interests of providers.
Thus, in determining the
reasonableness of an exclusion, the primary consideration must be the degree
to which the exclusion serves
the law's remedial objectives. An exclusion is not punitive if it does reasonably
serve these objectives,
even if it has a severe adverse impact on the person against whom it is imposed.
In order to decide whether an exclusion is reasonable in a particular case,
I must judge the exclusion in
light of the evidence of the case and the intent of the exclusion law. The purpose
of the hearing is not to
determine how accurately the I.G. applied the law to the facts before him, but
whether, based on all
relevant evidence, the exclusion comports with the legislative purpose.
The hearing is, by law, de novo. Social Security Act, section 205(b). Evidence
which is relevant to the
reasonableness of an exclusion will be admitted in a hearing on an exclusion
even if that evidence was not
available to the I.G. at the time the I.G. made his exclusion determination.
I permitted the parties to this
case to offer evidence as to the reasonableness of the exclusion which was not
available to the I.G. at the
time he made his exclusion determination. For example, I admitted evidence from
Petitioner pertaining to
his efforts at rehabilitation while incarcerated in federal prison.
An exclusion will be held to be reasonable where, given the evidence of the
case, it is shown to fairly
comport with legislative intent. "The word `reasonable' conveys the meaning
that . . . [the I.G.] is required
at the hearing only to show that the length of the . . . [exclusion] determined
. . . was not extreme or
excessive." (Emphasis added). 48 Fed. Reg. 3744 (Jan. 27, 1983). However,
should I determine that an
exclusion is unreasonable, I have authority to modify the exclusion, based on
the law and the evidence.
Social Security Act, section 205(b).
The Secretary has adopted regulations to be applied in exclusion cases. The
regulations specifically apply
only to exclusions for "program-related" offenses (convictions for
criminal offenses related to Medicare
and Medicaid). However, they do express the Secretary's policy for evaluating
cases where permissive
exclusions may be appropriate. Thus, the regulations are instructive as broad
guidelines for determining
the appropriate length of exclusions in cases where the Secretary has authority
to exclude individuals and
entities. The regulations require the I.G. in determining exclusions to consider
factors related to the
seriousness and program impact of the offense and to balance those factors against
any mitigating factors
that may exist. 42 C.F.R. 1001.125(b)(1)-(7).
I conclude that the 15-year exclusion imposed against Petitioner is entirely
consistent with the exclusion
law's remedial purpose. My conclusion is grounded on the very serious crimes
Petitioner committed and
the jeopardy in which Petitioner's unlawful conduct placed his patients. I find
that the danger of harm to
patients is so great, should Petitioner resume his previous behavior, that a
lengthy exclusion is justified to
insure that program recipients and beneficiaries are protected from even a slight
possibility that they will be
exposed to such danger. I also conclude that a lengthy exclusion may have the
additional benefit of
deterring other providers of services from engaging in the conduct engaged in
by Petitioner.
The evidence establishes a pattern of many criminal violations by Petitioner
over a long period of time.
See 42 C.F.R. 1001.125(b)(1). The seriousness of Petitioner's violations is
in some measure reflected in
the sentence imposed on him. See 42 C.F.R. 1001.125(b)(5). The evidence also
establishes that
Petitioner's conduct jeopardized the safety of his patients. See 42 C.F.R. 1001.125(b)(2).
For years, Petitioner was addicted to Dilaudid, and he abused other medications.
Findings 4-17. In order
to support his addiction, Petitioner engaged in a scheme whereby he prescribed
Dilaudid and other
controlled substances to patients who were also addicted to these drugs. These
patients then gave back to
Petitioner a portion of the drugs they obtained from him. Finding 17.
Among the people whom Petitioner enlisted in his scheme were patients who had
histories of substance
abuse and treatment for drug addiction. Rather than treat these patients, Petitioner
abetted and encouraged
their addiction in order to supply his own needs. The persons whom Petitioner
used as fronts for the
purpose of obtaining drugs included a child, aged 15 years.
Moreover, Petitioner rendered treatment, including performing neurological
surgery, while addicted to
Dilaudid. He did so despite the potential side effects of this drug, which include
drowsiness and impaired
judgment. Finding 20.
The record establishes that on several occasions prior to being indicted, Petitioner
was investigated for his
pattern of prescribing large quantities of controlled substances and warned
by investigating authorities that
his conduct was questionable. These warnings failed to deter Petitioner. It
was only after Petitioner was
indicted and faced the possibility of incarceration that he sought treatment
for his addiction. Even then,
Petitioner failed to complete the programs he enrolled in. Findings 23-25.
The inescapable inference that this evidence creates is that Petitioner is
an individual who is highly
susceptible to the temptations posed by addictive drugs. He is a person who
has engaged in destructive and
self-destructive behavior in spite of his education and his knowledge of the
medical risks and dangers
posed by his conduct. Most disturbing, the record supports the conclusion that
Petitioner is an individual
who can consciously place gratification of his needs above the well-being of
those he has sworn to treat
and to protect.
Petitioner's argument that the exclusion is unreasonable is essentially premised
on his contention that he
has learned his lesson and that he is therefore not about to repeat his misconduct.
He asserts that in light of
his rehabilitation, the very long exclusion imposed against him is punitive.
The evidence does show that Petitioner has made some recent efforts to rehabilitate
himself. For example,
while incarcerated, Petitioner instructed fellow inmates on the dangers of drug
addiction. Tr. at 187-188,
208-209. Petitioner has remained drug-free since his conviction. However, I
conclude that the 15-year
exclusion imposed against Petitioner is nonetheless reasonable. See 42 C.F.R.
1001.125(b)(4).
I do not accept Petitioner's argument that the exclusion is unreasonable in
light of his efforts at rehabilita-
tion. Petitioner has not established to my satisfaction that he will not relapse,
if again exposed to the
temptation presented by unlawful drugs. The evidence in this case documents
a long history of substance
abuse by Petitioner, and a stubborn refusal by him to do anything about his
condition. The record also
documents efforts by Petitioner to cover up the dimensions of his addiction
and his involvement of his
patients in his scheme to obtain drugs. His rehabilitation, so far, has been
accomplished in environments of
confinement (including federal prison) where his access to unlawful substances
has been restricted, and
where he has been subjected to strict scrutiny. The opportunities for relapse
will multiply if and when
Petitioner returns to his former profession.
Furthermore, the potential dangers to Petitioner's future patients are enormous
should Petitioner relapse.
Given this, a substantial margin of safety must be built into any exclusion
imposed against Petitioner. A
15-year exclusion does not appear to be unreasonable in view of the damage that
Petitioner could cause to
recipients and beneficiaries should he resume his past conduct.
Petitioner argues that the exclusion imposed against him is unreasonable in
view of the asserted need for
neurological surgeons in his community. Petitioner's evidence as to need consists
largely of his uncorrob-
orated assertion that a need exists. More important, even if a need for surgeons
of Petitioner's specialty
does exist, that need is for surgeons who are not addicted to controlled substances.
In this case, the loss to
recipients and beneficiaries of Petitioner's talents and skills is more than
compensated for by the protection
to the safety of recipients and beneficiaries which results from excluding Petitioner.
I am not persuaded by Petitioner's assertion that, in light of his age (46),
a 15-year exclusion is
unreasonable. As is noted supra, an exclusion will be upheld as reasonable,
even where it has an adverse
effect on the excluded party, if there is a legitimate need for the exclusion
in order to protect the integrity
of the Medicare and Medicaid programs.
Both parties compared this case to my decision in the case of Leonard N. Schwartz,
R.Ph., v. The Inspector
General, DAB Docket No. C-62 (1989). In Schwartz, I upheld an eight-year exclusion
for a pharmacist
convicted of two counts of knowingly and intentionally omitting material information
from required
records in dispensing controlled substances, a violation of 21 U.S.C. 843(a)(4)(A).
I held in Schwartz (p.
13), that an eight-year exclusion is justified where an individual participated
in numerous unlawful
transactions of a controlled substance, after having succumbed to personal and
psychological pressures,
and where the individual's conduct endangered the health and safety of others.
Both parties argued the comparisons between this case and Schwartz. The I.G.
stressed the many ways in
which the circumstances here justify a lengthier exclusion than Schwartz; Petitioner
relied principally on
his assertion that he was driven by his addiction and did not profit from his
wrongdoing, whereas the
petitioner in Schwartz did profit.
I conclude that the comparison with Schwartz amply justifies the greater 15
year exclusion in this case.
The petitioner in Schwartz was convicted on two counts of omitting required
information in connection
with the distribution of controlled substances; Petitioner here on 163 counts
of illegally distributing
controlled substances. The offenses in Schwartz were committed over a period
of 17 months; here, over a
period of six to seven years. The petitioner in Schwartz was sentenced to 18
months prison; Petitioner here
was sentenced to 3.5 years. Both endangered the lives of others by making controlled
substances available
in an unlawful manner; in addition Petitioner here risked the lives of patients
on whom he performed
operations while he was under the influence of controlled substances, ignored
warnings by governmental
agencies that he should discontinue the activities of which he was later convicted,
and perjured himself
when questioned by authorities about his activities.
Petitioner attempted to distinguish Schwartz by contending that the petitioner
there profited from his illegal
activities, whereas Petitioner was driven by his addiction and not profit. The
I.G. argues that Petitioner did
profit because had he not been able to obtain these substances in the illegal
manner which he did (i.e., by
having patients give him a share of their prescriptions), he would have had
to pay for them himself, at
considerable expense. I find that Petitioner did "profit" to the extent
described by the I.G. Also, I conclude
that even if Petitioner did not "profit" per se, the fact that he
was driven by his addiction instead of a desire
for profit makes him less, not more, trustworthy. Thus, even Petitioner's alleged
distinction supports a
lengthier exclusion.
The exclusion imposed in this case may have the ancillary benefit of deterring
other individuals from
engaging in the conduct Petitioner engaged in. It should send a message that
individuals who engage in
this kind of behavior can expect to incur substantial exclusions from participation
in Medicare and
Medicaid.
CONCLUSION
Based on the evidence in this case and the law, I conclude that the 15-year
exclusion imposed against
Petitioner from participating in the Medicare and Medicaid programs is reasonable.
Therefore, I sustain
the exclusion imposed against Petitioner, and I enter a decision in favor of
the I.G.
_______________________
Steven T. Kessel
Administrative Law Judge