Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
DATE: September 17, 1990
Docket No. C-164
In the Case of:
Carl Marnatti, M.D.,
Petitioner,
- v -
The Inspector General.
DECISION
Petitioner timely requested a hearing before an Administrative Law Judge (ALJ),
to contest a determination
by the Inspector General (I.G.) excluding him from participation in the Medicare
and Medicaid programs
for three years, pursuant to section 1128(b)(5) of the Social Security Act (Act).
I conducted a hearing in
Pittsburgh, Pennsylvania on June 8, 1990. Based on the evidence introduced at
the hearing, the parties'
submissions, and applicable law, I conclude that the exclusion imposed by the
I.G. should be upheld, but
modified to end concurrently with the exclusion imposed by the Pennsylvania
Department of Public
Welfare (DPW), so that Petitioner will be eligible to apply for re-enrollment
in the programs on April 8,
1992.
BACKGROUND
By letter dated August 2, 1989, the I.G. notified Petitioner that he was being
excluded on August 22, 1989
from participation in the Medicare and Medicaid programs. The I.G. advised Petitioner
that he was being
excluded as a result of his exclusion or suspension by DPW for reasons bearing
upon his professional
competence, professional performance, or financial integrity within the meaning
of section 1128(b)(5) of
the Act. The I.G. further advised Petitioner that he was being excluded for
a period of three years.
Petitioner timely requested a hearing, and the case was assigned to me for a
hearing and a decision. I held
a telephone prehearing conference in this case on October 25, 1989, and set
a briefing schedule. The I.G.
submitted a motion for summary disposition on December 12, 1989, to which the
Petitioner responded on
January 18, 1990. The I.G. submitted a reply brief on February 2, 1990, to which
the Petitioner replied on
February 28, 1990. I heard oral argument in this case on March 22, 1990. In
my Ruling dated May 2,
1990 I denied both the I.G.'s motion for summary disposition and Petitioner's
responsive request to dismiss,
because there were disputed material facts on the issues before me. I held an
evidentiary hearing on June
8, 1990, in Pittsburgh, Pennsylvania. Both parties submitted post-hearing briefs.
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(b)(5)(B) of the Act permits the I.G. to exclude from Medicare and Medicaid
participation any
individual or entity which has been suspended or excluded from participation,
or otherwise sanctioned,
under a State health care program, for reasons bearing on the individual's or
entity's professional
competence, professional performance, or financial integrity.
II. The Federal Regulations.
The governing federal regulations (Regulations) are codified in 42 C.F.R.,
Parts 498, 1001, and 1002
(1989). Part 498 governs the procedural aspects of this exclusion case; Parts
1001 and 1002 govern the
substantive aspects.
ISSUES
The issues are whether:
1. Petitioner was "suspended or excluded from participation" in a
"state health care program, for reasons
bearing on [his] professional competence, professional performance or financial
integrity" within the
meaning of section 1128(b)(5)(B) of the Act.
2. There are circumstances which preclude an exclusion
3. The length of Petitioner's exclusion is reasonable and appropriate under the facts of this case.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Petitioner has been licensed by the Commonwealth of Pennsylvania to practice
medicine as a medical
doctor since 1962. P.P.H. Br. 1.
2. As of December 16, 1987, Petitioner had been for several years a medical
assistance (MA) provider
within the meaning of the Pennsylvania Public Welfare Code, 62 P.S. 401 et seq.,
and 1401 et seq., P.P.H.
Br. 1.
3. On December 16, 1987, DPW advised Petitioner that his MA agreement would
be terminated in 30 days
as a departmental peer review of his billings, record keeping and medical practice
had revealed that: (1)
Petitioner's pattern of treatment regarding five MA recipients was determined
by departmental peers to be
of inferior quality and/or medically unnecessary; (2) Petitioner's billing for
88 office visits provided to 27
patients failed to conform to the standards of practice; and (3) Petitioner
failed to maintain records
consistent with the standards for medical records for 27 patients. P. Ex. 1.
4. Petitioner did not respond to the factual allegations in the December 16, 1987 letter. Tr. 49, 50.
5. On December 31, 1987, Petitioner advised DPW that he was terminating his
MA agreement as of
January 30, 1989. P. Ex. 2; I.G. Ex. 10, 2.
6. On January 21, 1988, in response to Petitioner's request, DPW terminated
Petitioner's MA enrollment as
of January 30, 1988. P.Ex. 3; I.G. Ex. 10, 3-5.
7. On March 8, 1988, Petitioner received a second notice of termination letter
from DPW, identical to that
of December 16, 1987, stating again that DPW proposed to terminate Petitioner's
MA agreement in 30
days, unless Petitioner appealed or sought review of the action. P. Ex. 4; I.G.
Ex. 8/8-10.
8. Both the December 16, 1987 and the March 8, 1988 letters informed Petitioner
that he must respond in
writing to the charges in detail within 15 days or seek review with DPW's Office
of Hearing Appeals
within 30 days. The letters stated that if Petitioner did not "ADDRESS
ANY OF THESE FACTS, YOU
WILL BE DEEMED TO HAVE NO DISPUTE WITH THAT FACT." The letters also requested
repayment of $878 for medical assistance payments made to Petitioner, which
DPW had determined to be
ineligible. P. Ex. 2; I.G. Ex. 10/2; P. Ex. 4; I.G. Ex. 8/ 8-10.
9. On July 12, 1988, DPW issued a Final Order excluding Petitioner from the
Pennsylvania Medical
Assistance Program for four years, effective April 8, 1988, and reiterating
the demand in the December 16,
1987 and March 8, 1988 letters that Petitioner pay $878 in restitution. P. Ex.
5, I.G. Ex. 1,2.
10. Petitioner did not respond to either the March 8, 1988 notice of termination
letter or the July 12, 1988
Final Order within the time permitted to him to contest the termination of his
MA agreement. P.P.H. Br. 2.
11. Petitioner sent a restitution check to the Pennsylvania Medical Assistance
Program in the amount of
$878, dated August 7, 1988. Tr. 63, 64; P. Ex. 6.
12. On June 2, 1989 Petitioner filed a petition for review in Pennsylvania's
Commonwealth Court seeking
review of DPW's decision to involuntarily terminate his MA agreement, as well
as other matters not
germane to this action. I.G. Ex. 14/2.
13. The Commonwealth Court upheld DPW's motion to quash Petitioner's petition
for review of his
involuntary termination of his MA agreement. The Court found DPW's letter of
March 8, 1988 to be
adequate notice to Petitioner of the consequences of its proposed action, notwithstanding
Petitioner's
contention that the notice failed to meet the requirements of 55 Pa. Code 1701
regarding notices of
exclusion. The Court held that the letter, along with a detailed explanation
of the serious charges involved
and the procedures Petitioner should have taken to challenge the termination
belied Petitioner's contention
that Petitioner believed the March 8, 1988 letter was a confirmation of Petitioner's
earlier voluntary
termination of his MA agreement. I.G. Ex. 14/3.
14. On May 16, 1990, the Supreme Court of Pennsylvania, Western District, denied
Petitioner's appeal of
the Commonwealth Court order.
15. As of April 8, 1989, one year of Petitioner's DPW exclusion had expired.
The I.G. gave Petitioner
credit for that time in determining to give Petitioner a three year exclusion,
which commenced on August
22, 1989. I.G. Ex. 11.
16. The Pennsylvania Medical Assistance program (Medicaid) is a State health
care program within the
meaning of sections 1128(h) and 1128(b)(5)(B) of the Act.
17. The Secretary of Health and Human Services (the Secretary) has delegated
to the I.G. the authority to
determine, impose, and direct exclusions pursuant to section 1128 of the Act.
48 Fed. Reg. 21662, May
13, 1983.
18. The I.G. is authorized to impose an exclusion against Petitioner by section
1128(b)(5)(B) of the Act.
42 U.S.C. 1320a-7(b)(5)(B).
19. A modification of Petitioner's exclusion to end concurrently with Petitioner's
state exclusion is
reasonable and appropriate in this case. Petitioner should, thus, be allowed
to apply for reinstatement to
the Medicare and Medicaid programs on April 8, 1992.
DISCUSSION
I. Petitioner Was Suspended Or Excluded From Participation In A "State
Health Care Program, For
Reasons Bearing On [His] Professional Competence Or Performance," Within
The Meaning Of Section
1128(b)(5)(B).
Section 1128(b)(5)(B) of the Act grants the authority to the DHHS Secretary's
delegate, the I.G., to exclude
any individual or entity which has been suspended or excluded from participation,
or otherwise sanctioned,
under:
a State health care program, for reasons bearing
upon the individual's or entity's professional
competence, professional performance, or
financial integrity.
On July 12, 1988, DPW issued a Final Order excluding Petitioner from the Pennsylvania
Medical
Assistance Program for four years, based on a DPW departmental peer review of
Petitioner's billings,
record keeping, and medical practice. FFCL 3, 9. These findings concerned the
care Petitioner rendered to
his medical assistance recipients, and fall directly within the ambit of section
1128(b)(5)(B). In that
statute, Congress authorized the Secretary to exclude individuals on the basis
of the findings and actions of
a State health care agency. Thus, in my May 2, 1990 Ruling denying the I.G.'s
motion for summary
disposition in this case, I concluded that the I.G. had authority to impose
an exclusion based on a state
Medicaid program sanction without reviewing the underlying merits of that action.
I now find and
conclude that the I.G. did not abuse its discretion in doing so in this case.
II. The I.G. Has Authority To Exclude Under The Provisions Of Section 1128(b)(5)(B)
And There Are No
Other Circumstances In This Case Which Preclude Petitioner's Exclusion.
In my Ruling I found narrow issues of fact which bore directly on the reliability
of the state sanction as a
basis for this federal action. These issues did not involve reopening the merits
of the findings of the
Pennsylvania DPW. Petitioner had argued that the state action was essentially
a default judgment and that
the circumstances of the state action had led him to believe that the final
order merely confirmed a
voluntary settlement of charges against him and prevented him from presenting
argument on issues relating
to professional competence or performance. Petitioner also argued that he had
been denied an opportunity
to present argument on these issues when the Pennsylvania courts had rejected
requests to reopen the
action.
At the time of my Ruling, I could not find, as a matter of law, that a state
action which is equivalent to a
default judgment is always a sound basis for an exclusion under section 1128(b)(5).
I stated that, to be
consistent with minimal due process requirements, a default judgment is only
valid if the defaulting party
received sufficient and proper notice of the proceeding, its significance, and
the response requirements.
See Peralta v. Heights Medical Center, 485 U.S. 80 (1988); 47 Am. Jur. 2d Judgments
1174-1178 (1969).
In my Ruling, I left open the possibility that the March 8, 1988 letter may
not have explained the required
response with sufficient clarity to provide notice that a default judgment on
those issues might result.
Based on evidence adduced at the June 8 hearing, and in the subsequent briefing,
I now find that the state
action in this case was more than merely a default judgment. The December 1987
and March 1988 letters
from DPW leave no doubt that Petitioner was put on notice that not contesting
the charges, brought after an
investigation of Petitioner's billing, record keeping, and medical practice,
would result in Petitioner's being
deemed to have no dispute with that fact. FFCL 8. I agree with the Pennsylvania
state courts that
Petitioner was given ample time to contest these facts, and chose not to do
so. FFCL 13.
At the June 8 hearing before me, Petitioner explained that he saw no need to
contest the termination of his
MA agreement, because he had already voluntarily terminated that agreement (Tr.
49-50). He testified that
he had no desire to continue treating medical assistance patients and would
not resume treating them even
if he successfully contested the termination of his MA agreement. Tr. 50, 53.
However, DPW's March 8,
1988 letter, on its face, provided notice of specific charges related to professional
competence and
performance, and was not just a confirmation of Petitioner's voluntary termination.
It specifically informed
Petitioner to, "Please read the Department's analysis of the problem in
this letter very carefully....IF YOU
DO NOT ADDRESS ANY OF THESE FACTS, YOU WILL BE DEEMED TO HAVE NO DISPUTE
WITH THAT FACT." FFCL 8. The attachment to the March 8, 1988 letter also
specifically explained the
bases upon which DPW was taking action. P. Ex. 4/5-6; I.G. Ex. 8/12-13.
On May 16, 1990, the Supreme Court of Pennsylvania, Western District (Pennsylvania
Supreme Court)
recognized the adequacy of DPW's notice to Petitioner when it denied Petitioner's
petition for appeal of
DPW's decision to involuntarily terminate Petitioner's MA agreement. The Pennsylvania
Supreme Court
relied on a Memorandum Opinion and Order by Senior Judge Wilson Bucher of the
Commonwealth Court
of Pennsylvania (Commonwealth Court). In it the Commonwealth Court held:
We find DPW's letter of March 8, 1988 to be adequate notice to the petitioner
of theconsequences of its
proposed actionnotwithstanding the petitioner's contentionthat said note fails
to meet the requirementsof 55
Pa. Code 1701 regarding notices ofexclusion. The letter, along with a detailedexplanation
of the rather
serious charges involved and the procedures the petitioner should take to challenge
the terminationbelie
any contention that Dr. Marnatti mighthave believed the letter was a confirmation
of hisearlier voluntary
termination of his MA agreement.
The Commonwealth Court stated that Petitioner's failure to understand the effect
of involuntary
termination of his MA agreement would not justify an appeal nunc pro tunc. I.G.
Ex. 14/3, 4.
I also left open a question in my Ruling concerning whether the July 12, 1988
Final Order itself referenced
the charges relating to professional competence and performance. I now hold
that it does. FFCL 8, 9. The
March 8, 1990 letter stated that if Petitioner did not appeal his termination
or otherwise challenge the
findings in the letter, the DPW would "enter the attached Final Order."
I.G. Ex. 8,9. The Final Order
referred to is the same one which DPW entered on July 12, 1988, terminating
Petitioner for the reasons
stated in the March 8, 1988 letter, even referencing again the $878 owed in
restitution by Petitioner. Thus
Petitioner should have known that this Final Order concerned the charges relating
to Petitioner's
professional competence and performance.
I have found that Petitioner's exclusion from the Pennsylvania health care
program was for reasons bearing
on his professional competence, professional performance or financial integrity.
I have also found that the
state action was not a default judgment. DPW excluded Petitioner after departmental
peers reviewed
Petitioner's billings, records and medical practice. FFCL 3. Petitioner was
given ample time to contest
these factual findings and chose not to do so, FFCL 10. It is for these reasons,
which bear directly on his
professional competence, professional performance, and financial integrity,
that he was excluded.
III. The length and period of Petitioner's exclusion are not reasonable and
appropriate under the facts of
this case.
As I held in my Ruling, the length of a permissive exclusion is not fixed by
law, but must be based on a
discretionary review of the facts in a particular case. To determine whether
the length of an exclusion is
extreme or excessive, I must make a de novo determination by making an independent
assessment of the
seven factors listed in 42 C.F.R. 1001.125, and I must consider the Congressional
purpose of section 1128.
See Vincent Barratta, M.D., DAB Civ. Rem. C-144 (1990); Charles J. Burks, M.D.,
DAB Civ. Rem. C-111
(1989). Determination of the reasonableness of the length of a permissive exclusion
may include
consideration of the nature and seriousness of the conduct which gave rise to
the sanction. Barratta, pp. 8-
9.
In this case, the I.G. recommended a three year exclusion, after giving Petitioner
a year of credit for what
the I.G. considered an extra long period of time in processing Petitioner's
exclusion. Tr. 28. The I.G.
based his recommendation upon a policy under which no section 1128(b)(5) exclusion
shall be less than
the period determined by the state agency. Tr. 28.
The main purposes of an exclusion are to allow for a period of time in which
to ensure that Petitioner is
trustworthy and that persons helped by these programs are protected. In this
case, taking into consideration
all of the seven factors listed in 42 C.F.R. 1001.125, I find that a substantial
exclusion is reasonable.
Petitioner's departmental peers had determined that Petitioner's treatment of
some MA patients was
potentially harmful and that Petitioner's billing and record keeping functions
were inferior or failed to
conform to standards of practice. FFCL 3. However, I do find that it is unreasonable
that the federal
exclusion in this case would run four and a half months longer than the original
State exclusion, given the
I.G.'s apparent recognition that the I.G.'s exclusion should run concurrent
with the original State exclusion.
In Thomas C. Chestney, D.M.D., DAB Civ. Rem. C-53 (1989), I held that in a
section 1128(a)(1)
mandatory exclusion case the extension of the State's exclusion by several months
due to the processing of
the federal exclusion could not be reduced. The reason for this was that the
Act and the Regulations
clearly provided for no discretion for reducing a five year minimum period of
exclusion, or for altering the
effective dates of that five year period. Similarly, in Samuel W. Chang, M.D.,
DAB Civ. Rem. C-125
(1989), another section 1128 (a)(1) mandatory exclusion case, I held that in
a mandatory exclusion case, to
correct mistakes which would impact in such a way as to deny a petitioner due
process or fundamental
fairness, and to comply with the Act, the exclusion must begin within a reasonable
time from the date that
the I.G. became aware of the petitioner's conviction. I held that one year was
a reasonable period and that
the mandated five year exclusion must begin from that date rather than the negligently
delayed date of
notice. The instant case, however, is different. There is no mandatory period
of exclusion demanded under
section 1128(b)(5), as such exclusions are permissive. There is no reason in
this case to allow the
processing time to extend the exclusion, and I, therefore, modify the exclusion
imposed by the I.G. to run
concurrently with the exclusion originally imposed by DPW. Thus, both exclusions
will end April 8, 1992,
and Petitioner will be eligible to apply for reinstatement at that time.
CONCLUSION
Based on the undisputed material facts and the law, I conclude that the I.G.'s
determination to exclude
Petitioner from participation in the Medicare and Medicaid programs was authorized
by law. I further
conclude that a modification of the exclusion to cause it to end concurrently
with the exclusion originally
ordere
by the Commonwealth of Pennsylvania's Department of Public Welfare -- April
8, 1992 -- is reasonable
and appropriate in this case.
IT IS SO ORDERED.
Charles E. Stratton
Administrative Law Judge