Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
DATE: April 23, 1990
Docket No. C-139
In the Case of:
Betsy Chua, M.D. and
Betsy Chua, M.D.,S.C.,
Petitioners,
- v. -
The Inspector General.
DECISION AND ORDER
In this case, governed by section 1128 of the Social Security Act (Act), Petitioners
timely filed a request
for a hearing before an Administrative Law Judge (ALJ) to contest the May 15,
1989 notice of
determination (Notice) issued by the Inspector General (I.G.) of the United
States Department of Health
and Human Services (DHHS). The Notice informed Petitioners that they were excluded
from participating
in the Medicare and Medicaid programs for five years.
Based on the entire record before me, I conclude that there are no material
facts at issue, that Petitioners are
subject to the federal mandatory minimum exclusion provisions of sections 1128(a)(1)
and 1128(c)(3)(B)
of the Act, and that it is required that Petitioners be excluded for a period
of five years.
APPLICABLE STATUTES AND REGULATIONS
I. The Federal Statute.
Section 1128 of the Act is codified at 42 U.S.C. 1320a-7 (West U.S.C.A., 1989
Supp.). Section 1128(a)(1)
of the Act provides for the exclusion from Medicare and Medicaid of those individuals
or entities
"convicted" of a criminal offense "related to the delivery of
an item or service" under the Medicare or
Medicaid programs. Prior to August 18, 1987, the law did not prescribe a minimum
period of exclusion.
By amendments enacted on August 18, 1987, section 1128(c)(3)(B) requires a five
year minimum period
of exclusion for those excluded under section 1128(a)(1).
II. The Federal Regulations.
The governing federal regulations (Regulations) are codified in 42 C.F.R.,
Parts 498, 1001, and 1002
(1988). Part 498 governs the procedural aspects of this exclusion case; Parts
1001 and 1002 govern the
substantive aspects.
Section 1001.123 requires the I.G. to issue an exclusion notice to an individual
or entity whenever the I.G.
has "conclusive information" that such individual or entity has been
"convicted" of a criminal offense
"related to the delivery of an item or service" under the Medicare
or Medicaid programs; the exclusion
begins 20 days from the date on the notice.
BACKGROUND
I held a telephone prehearing conference on August 29, 1989, at which time
the parties stated that there
was no need for an evidentiary hearing because the facts were not disputed.
The parties agreed to submit
this case on the basis of documentary evidence and briefs. I issued a Prehearing
Order and schedule for
filing briefs and motions which set forth the issues raised by the parties.
Both parties submitted briefs, and
I heard oral argument by telephone on March 14, 1989.
ADMISSIONS
Petitioners admit that: (1) they were "convicted" of a criminal offense
within the meaning of section
1128(i) of the Act; and (2) the offense was "related to the delivery of
an item or service" under the
Medicaid program within the meaning of section 1128(a)(1) of the Act.
ISSUES
The remaining issues are:
1. Whether Petitioners' conviction of a program-related criminal offense triggers
the mandatory minimum
five year exclusion provisions of sections 1128(a)(1) and 1128(c)(3)(B) of the
Act.
2. Whether the 1987 amendments to section 1128 of the Act mandating a minimum
five year exclusion for
program-related convictions apply to this case.
3. Whether summary disposition is appropriate in this case.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Having considered the entire record, the arguments and submissions of the parties,
and being fully advised
herein, I make the following Findings of Fact and Conclusions of Law:
1. Petitioner Betsy Chua, M.D., was a licensed medical doctor in the State of
Illinois and was the president
of Petitioner Betsy Chua, M.D., S.C. I.G. Ex. 2/5.
2. Petitioner Betsy Chua, M.D., S.C., is an Illinois Corporation. I.G. Ex. 2/5.
3. In 1986 the Medicaid Fraud Unit of the Illinois State Police conducted an
investigation which revealed
that Petitioners were involved in a kickback-conspiracy scheme to defraud the
Medicaid program. I.G. Ex.
2/4-5.
4. Petitioners were indicted by the Grand Jury serving in the Circuit Court
of Cook County, Illinois, for
committing the offense of "conspiracy" during the period from January
1985 to August 1986 by conspiring
with other co-conspirators to commit the offense of "kickbacks." Petitioners
were also indicted for
committing the offense of "kickbacks" during the period from August
1985 to August 1986 by unlawfully
receiving remuneration in an amount of more than $1,000, but less than $5,000,
in exchange for referring
laboratory work ordered by them for Medicaid recipients to a Medicaid provider
laboratory. I.G. Ex. 1.
5. On June 30, 1988 Petitioners entered a plea of guilty to the offense of
"kickbacks" and the Circuit Court
of Cook County in the State of Illinois entered a judgment convicting Petitioners
of that offense. I.G. Ex.
6.
6. The Cook County Circuit Court sentenced Petitioner Betsy Chua to a conditional
discharge for a period
of one year. The Cook County Circuit Court sentenced Petitioner Betsy Chua,
M.D. to probation for a
period of one year and ordered Betsy Chua, M.D., S.C., to pay restitution in
the amount of $3,000. I.G.
Ex. 5.
7. Petitioners were "convicted" of a criminal offense within the meaning of section 1128(i) of the Act.
8. Petitioners were 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)(1) of the Act.
9. By letter dated May 15, 1989, the I.G. notified Petitioners that, effective
twenty days from the date of
the Notice, they would be excluded from participation as providers in the Medicare
and Medicaid program
for a period of five years.
10. Petitioners admit that they were "convicted" of a criminal offense
within the meaning of section
1128(i) of the Act.
11. Petitioners admit that they were 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)(1)
of the Act.
12. The I.G. properly excluded Petitioners from participation in the Medicare
and Medicaid programs for a
period of five years as required by the minimum mandatory exclusion provisions
of section 1128(c)(3)(B)
of the Act.
13. The I.G. is not barred by the ex post facto and due process clauses of
the United States Constitution
from applying the 1987 Amendments to section 1128 of the Act mandating a minimum
five year exclusion
to this case.
14. I do not have the discretion or authority to reduce the five year minimum
exclusion mandated by
section 1128(c)(3)(B) of the Act.
15. Since there are no material facts in dispute, there is no need for an evidentiary hearing in this case.
16. Since the material facts are undisputed in this case, the classification
of Petitioners' conviction as a
criminal offense subject to the authority of 1128(a)(1) is a legal issue.
17. The I.G. is entitled to summary disposition in this proceeding.
DISCUSSION
I. A Minimum Mandatory Five Year Exclusion Is Required In This Case.
Petitioners admit that they were "convicted," of a criminal offense
which was "related to the delivery of an
item or service" under the Medicaid program.
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act clearly require the I.G. to
exclude individuals and entities
from the Medicare and Medicaid programs for a minimum period of five years,
when such individuals and
entities have been "convicted" of a criminal offense "related
to the delivery of an item or service" under the
Medicare or Medicaid programs within the meaning of section 1128(a)(1) of the
Act. Congressional intent
on this matter is clear:
A minimum five-year exclusion is appropriate, given the seriousness of the
offenses at
issue. . . . Moreover, a mandatory five-year exclusion should provide a clear
and strong deterrent against
the commission of criminal acts.
S. Rep. No. 109, 100th Cong., 1st Sess. 2, reprinted in 1987 U.S. Code Cong. & Admin. News 682, 686.
Since Petitioners were "convicted" of a criminal offense and it was
"related to the delivery of an item or
service" under the Medicaid program within the meaning of section 1128(a)(1)
and (i) of the Act, the I.G.
was required by section 1128(c)(3)(B) of the Act to exclude Petitioners for
a minimum of five years and an
ALJ has no discretion to reduce the mandatory minimum five year period of exclusion.
See Jack W.
Greene v. Louis Sullivan, No. Civ.-3-89-758 (E.D. Tenn., Feb. 22, 1990).
II. The 1987 Amendments to Section 1128 of the Act Mandating A Minimum Five-Year
Exclusion For
Program-Related Convictions Apply To This Case.
The record demonstrates that the conduct for which Petitioners were "convicted"
occurred between 1985
and 1986, and that the final disposition of the proceedings resulting in the
criminal conviction did not occur
until June 1988. On August 18, 1987, during the pendency of Petitioners' criminal
proceedings, Section
1128(a) of the Act was amended by the Medicare and Medicaid Patient and Program
Protection Act of
1987, Public Law 100-93, 101 Stat. 680. While the pre-August 1987 version of
section 1128 provided for
an exclusion for a conviction of a program-related criminal offense, there was
no mandatory minimum
exclusion. Congress provided for the first time on August 18, 1987 that the
exclusion must be for a
mandatory minimum period of five years for program-related criminal offenses.
Petitioners argue that the ex post facto and due process clauses of the United
States Constitution bar
application of the five year mandatory minimum exclusion to this case.
Petitioners contend first that application of the mandatory minimum period
of exclusion to this case would
violate the ex post facto clause of the United States Constitution, which prohibits
Congress from enacting
any law "which imposes a punishment for an act which was not punishable
at the time it was committed; or
imposes additional punishment to that then prescribed." The foundation
of Petitioners' argument is that the
conduct giving rise to their conviction took place prior to the effective date
of the August 18, 1987
amendments. Petitioners contend that application of the 1987 amendments to this
case "imposes additional
punishment," because after the enactment of the 1987 amendments, the I.G.
no longer had the authority to
impose an exclusion of less than five years, thereby depriving Petitioners of
any possibility of being
excluded for a shorter time than the mandatory minimum five year period.
Petitioners argue that since their conduct which formed the basis of their
conviction occurred prior to the
effective date of the August 18, 1987 amendments, application of the 1987 amendments
to this case would
have an improper retroactive effect because they lacked fair notice of the full
extent of the legal
consequences of their conduct at the time they engaged in it. Since the purpose
of the ex post facto clause
is to "assure that legislative acts give fair warning of their effect,"
Petitioners conclude that the ex post
facto clause forbids application of the 1987 amendments to this case. P. Br.
4.
Petitioners also contend that application of the 1987 amendments to this case
would violate their rights to
due process guaranteed by the Fifth Amendment of the United States Constitution.
Petitioners argue that
the due process clause prohibits a statute which interferes with antecedent
rights from being applied
retroactively except where the legislative will is expressed so plainly that
there is no doubt that the
legislature intended the statute to be applied retroactively. According to Petitioners,
there is no explicit
statement of Congressional intent to retroactively apply the 1987 amendments
to misconduct which
occurred prior to the effective date of the statute. Petitioners contend that
in the absence of such explicit
Congressional intent, the due process clause bars the application of the 1987
amendments to this case.
During oral argument, Petitioners stated that if their ex post facto and due
process claims prevail, they
would like to revive their request for a hearing to determine the appropriate
length of the exclusion based
on the facts of this case. It is the belief of Petitioners that there are sufficient
"mitigating factors" in this
case to justify the imposition of an exclusion that is shorter than the mandatory
minimum five year period
and they desire the opportunity to have these factors considered.
The I.G. argues first that I do not have authority to decide constitutional
issues. The I.G. also argues that
even if I do have authority to decide constitutional issues, there is no violation
of the ex post facto clause of
the Constitution because the exclusion sanction is not a penal law imposing
a "punishment" contemplated
by the Constitution.
The I.G. also argues that even if I determine that the five year mandatory
minimum exclusion is penal,
Petitioners' ex post facto claim would still be without merit. The I.G. contends
that application of the 1987
amendments to this case would not have retroactive effect because the legislative
history and the text of the
Act make it clear that Congress intended the mandatory minimum exclusion provision
to apply
prospectively to all convictions occurring on or after the date of enactment
of the amendments on August
18, 1987, regardless of whether the misconduct giving rise to the conviction
occurred before or after
August 18, 1987. Since Petitioners in this case were convicted of a program-related
crime after the
effective date of the 1987 amendments, the I.G. contends that there is no basis
for asserting that the
amendments have been retroactively applied to them.
The I.G. also uses this reasoning to attack Petitioners' contention that the
due process clause of the
Constitution bars application of the 1987 amendments to this case. The I.G.
argues that Congressional
intent regarding the application of the mandatory exclusion period is clear.
According to the I.G., the text
of the amendments and their legislative history clearly indicate that the only
factual predicate to the
imposition of the five year mandatory minimum exclusion is the conviction of
a program-related crime
after August 18, 1987. Since Petitioners' conviction occurred after the enactment
of the amendments, the
I.G. contends that it is clear that Congress would have intended the mandatory
exclusion to apply to this
case.
The I.G. additionally argues that even if I determine that Congressional intent
regarding the applicability of
the mandatory exclusion to this case is ambiguous, Petitioners' objections on
due process grounds would
still fail. The I.G. points out that even under the law in effect prior to August
18, 1987, Petitioners' conduct
would have justified the imposition of an exclusion. The I.G. argues that given
the strong national interest
in protecting the integrity of the Medicaid and Medicare programs and the fact
that the 1987 amendments
do not prohibit conduct which had previously been lawful, application of the
1987 amendments to this case
would not be "harsh and oppressive" or result in "manifest injustice."
I.G. Rep. Br. 6-7.
I have carefully considered the contentions of the parties and the relevant
law, and I will address the
jurisdictional question regarding the scope of my review raised by the I.G.
first. Guidance concerning the
scope of review by an ALJ in hearing federal exclusion cases is found in section
1001.128(a) of the
Regulations. That section provides that an ALJ has the authority to hear and
decide issues of whether: (1)
a petitioner was in fact, convicted; (2) the conviction was related to his or
her participation in the delivery
of medical care or services under the Medicare, Medicaid, or social services
program; and (3) the length of
the suspension (exclusion) is reasonable. There is no language in section 1001.128
of the Regulations or in
other federal regulations, which states that an ALJ has the authority to consider
collateral challenges to the
validity of the underlying federal statutory provisions that the issues were
designed to address. However,
the jurisdiction conferred upon an ALJ by section 1001.128 of the Regulations
does permit inquiry into the
propriety of the imposition of an exclusion in particular cases. In order to
consider the three issues set
forth in section 1001.128 of the Regulations, an ALJ must therefore interpret,
construe, and apply the
underlying statutory provisions to individual cases. As stated by the Departmental
Appeals Board in Jack
W. Greene, DAB App. 1078 at 17 (1989):
The ALJ must consider the meaning of the pertinent statutory provision as
well as related provisions,
relevant legislative history, the effective date of the statute, case law interpretations,
and implementing
regulations and policy issuances. It would literally be impossible to apply
the issue identified by [42
C.F.R. 1001.128] in a legally correct manner without considering these factors,
as appropriate.
Thus, although I do not have the authority to declare the 1987 amendments unconstitutional,
I do have the
authority to interpret and apply the amendments. See Hai Nhu Bui, DAB Civ. Rem.
C-103 (1990), citing
Jack W. Greene, supra.
In this case, Petitioners raise the issue of whether the 1987 amendments to
section 1128 of the Act
mandating a minimum five year exclusion apply to them under the particular facts
of this case. I am
empowered to decide how Congress intended the 1987 amendments to apply. In addition,
where there is
room to decide how to apply the statute, I have a duty to apply it in a manner
that is constitutional and
valid. See generally, Dickerson, The Interpretation and Application of Statutes,
Ch. 3 (Little, Brown and
Co. 1975).
I disagree with Petitioners' assertion that the constitutional prohibition
against ex post facto laws bars the
I.G. from imposing the mandatory minimum exclusion in this case.
Petitioners' objections to application of the mandatory exclusion provision
to this case on ex post facto
grounds are necessarily premised on the assertion that Congress intended the
imposition of the five year
mandatory minimum exclusion to be a punishment. The mandatory exclusion provision
of the 1987
amendments is not a penal law, imposing a punishment. As the title of the 1987
amendments, the
Medicare and Medicaid Patient and Program Protection Act of 1987, suggests,
the purpose of the
exclusion, and the amendments as a whole, is not to punish anyone. Instead,
the major purpose of the
exclusion sanction is to protect program integrity by preventing untrustworthy
providers from having ready
access to the Medicare and Medicaid trust funds. See Orlando Ariz and Ariz Pharmacy
Inc., DAB Civ.
Rem. C-115 (1990). See also H. R. Rep. No. 158, 97th Cong., 1st Sess. Vol. III,
329, 344 (1981); S. Rep.
No. 139, 97th Cong., 1st Sess. 461-62, reprinted in 1981 U.S. Code Cong. &
Admin. News 727-28;
Preamble to the Regulations at 48 Fed. Reg. 38827 to 38836 (August 26, 1983).
Thus, the exclusion
provision of the 1987 amendments is a civil law that imposes a protective or
remedial sanction, and it is not
a punishment within the meaning of that term in the United States Constitution.
Therefore, this civil
remedy does not trigger the protections afforded by the Constitution which are
applicable to criminal laws.
I also disagree with Petitioners' assertion that the due process clause bars
the I.G. from imposing the five
year mandatory minimum exclusion in this case.
In making their due process claim, Petitioners rely heavily on the decision
of the Court of Appeals in
Griffon v. United States Department of Health and Human Services, 802 F.2d 146
(5th Cir. 1986). On
March 15, 1982, Griffon was convicted of submitting false claims to the Louisiana
Medicaid program in
1979. The I.G. subsequently notified Griffon that he intended to impose a $44,000
fine under the Civil
Monetary Penalties Law (CMPL) which had been passed by Congress on August 13,
1981. Griffon
challenged the retroactive application of the CMPL to actions committed by him
before the effective date
of the statute. On appeal from an adverse ALJ decision, the Fifth Circuit decided
that the CMPL cannot be
applied retroactively, holding that due process considerations embodied in the
first rule of statutory
construction mandate that, in the absence of clear Congressional intent, every
statute which changes
established rights must be given prospective application. Petitioners argue
that the circumstances in this
case are similar to the circumstances present in Griffon. Here, the conduct
in question occurred prior to the
effective date of the relevant amendments to the already existing federal exclusion
statute and the criminal
convictions resulting from the conduct occurred after the date of the amendments.
Petitioners argue that, in
this case, as in Griffon, there is no clear Congressional intent to apply the
amendments to the statute to
actions which occurred prior to the date of enactment.
I disagree with Petitioners' assertion that Griffon is controlling or that
the facts on Griffon are close to the
facts of this case. In Griffon, there was "deafening congressional silence
regarding retrospective
application" of the CMPL. Id. at 238. In this case, both the language of
the statute and its legislative
history clearly show that Congress intended the 1987 amendments to apply to
this case.
The 1987 amendments were enacted by Public Law 100-93, and section 15(b) of
Public Law 100-93
specifically states:
Mandatory minimum exclusions apply prospectively. Section 1128(c)(3)(B) of
the Social Security Act
(subsec (c)(3)(B) of this section) (as amended by this Act [Pub. L. 100-93,
section 2]) which requires an
exclusion of not less than 5 years in the case of certain exclusions, shall
not apply to exclusions based on
convictions occurring before the date of the enactment of this Act [Aug. 18,
1987].
Regarding this provision, the legislative history states: "The provision
establishing mandatory five year
minimum exclusion periods for conviction of certain crimes would apply to convictions
occurring on or
after the date of enactment." S. Rep. No. 109, 100th Cong., 1st Sess. 27,
reprinted in 1987 U.S. Code
Cong & Admin. News 682, 708.
It is clear from both the language of the statute itself and its legislative
history that Congress intended the
mandatory minimum exclusion provisions to apply prospectively from the date
of the statute's enactment to
all convictions occurring on or after August 18, 1987. Obviously, if a conviction
occurred on August 18,
1987 or shortly thereafter, the misconduct giving rise to the conviction would
necessarily have occurred
prior to August 18, 1987. Accordingly, in enacting this provision, Congress
must have been aware that
there would be many convictions that would be entered after the effective date
of the amendments and that
these convictions would be based on acts that were committed prior to that date.
Thus, by logical
inference, Congress intended the 1987 amendments to apply even in those cases
where the misconduct
occurred prior to August 18, 1987, as long as the conviction resulting from
the misconduct occurred on or
after August 18, 1987. This logical inference is inescapable, and the only way
it could be overcome would
be by specific language in the text of the statute itself or in its legislative
history indicating Congressional
intent not to apply the mandatory exclusion to convictions based on misconduct
occurring prior to August
18, 1987.
In this case, Petitioners pleaded guilty to, and were convicted of, a program-related
criminal offense on
June 30, 1988, nearly a year after the enactment of the amendments to the Act.
Accordingly, I conclude
that it is evident, both from the language of the 1987 amendments and from the
legislative history, that
Congress intended to make the mandatory minimum exclusion applicable to all
convictions occurring on or
after August 18, 1987, and that Petitioners' due process arguments are misplaced.
Since Petitioners in this
case were convicted of a program-related offense after August 18, 1987, the
I.G. had no choice but to
apply the 1987 amendments and exclude Petitioners from participation in the
Medicare and Medicaid
programs for at least five years.
III. There Is No Need For An Evidentiary Hearing In This Case.
Summary disposition is appropriate in an exclusion case where there are no
disputed issues of material fact
and where the undisputed facts demonstrate that one party is entitled to judgment
as a matter of law.
Surabhan Ratanasen, M.D., DAB App. 1138 at 8 (1990). Petitioners have stipulated
to the material facts of
this case. They admit that they were "convicted" of a criminal offense
within the meaning of section
1128(i) of the Act and that it was "related to the delivery of an item
or service" under the Medicaid
program within the meaning of section 1128(a)(1) of the Act.
I have concluded that, based on the undisputed material facts in the record
of this case, the I.G. properly
excluded Petitioners from the Medicare and Medicaid programs pursuant to section
1128(a)(1) of the Act
and that the length of their exclusion is controlled by section 1128(c)(3)(B),
which mandates a minimum
period of exclusion for five years.
At oral argument on the motion for summary disposition, Petitioners requested
a hearing so that I would
have the opportunity to consider mitigating circumstances which, in their view,
would compel a reduction
in the five year exclusion imposed upon them. 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 facts which
Petitioners seek to
establish in an evidentiary hearing would not materially affect the outcome
of this case. See, Orlando Ariz
and Ariz Pharmacy, Inc., DAB Civ. Rem. C-115 (1990). There are no genuine issues
of material fact
which would require the submission of additional evidence, and, therefore, there
is no need for an
evidentiary hearing in this case. Accordingly, the I.G. is entitled to summary
disposition as a matter of
law. See, Charles W. Wheeler and Joan K. Todd, DAB App. 1123 (1990) and Rule
56, F.R.C.P.
CONCLUSION
Based on the law and undisputed material facts in the record of this case,
I conclude the I.G. properly
excluded Petitioner from the Medicare and Medicaid programs pursuant to section
1128(a)(1) of the Act,
and that the minimum period of exclusion for five years is mandated by federal
law.
IT IS SO ORDERED.
________________________
Charles E. Stratton
Administrative Law Judge