Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Marie Chappell,
Petitioner,
- v. -
The Inspector General.
DATE: November 14, 1990
Docket No. C-225
DECISION
In this case, governed by section 1128 of the Social
Security Act (Act), Petitioner timely filed a request for
a hearing before an Administrative Law Judge (ALJ) to
contest the February 27, 1990 notice of determination
(Notice) issued by the Inspector General (I.G.). The
Notice informed Petitioner that she was excluded from
participating in the Medicare and Medicaid programs for
five years. 1/
Based on the entire record before me, I conclude that
summary disposition is appropriate in this case, that
Petitioner is subject to the minimum mandatory exclusion
provisions of sections 1128(a)(1) and 1128(c)(3)(B) of
the Act, and that Petitioner's exclusion for a minimum
period of five years is mandated by federal law.
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.
Section 1128(c)(3)(B) provides for a five-year minimum
period of exclusion for those excluded under section
1128(a)(1).
II. The Federal Regulations.
The governing federal 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.
Section 1001.123 requires the I.G. to issue an exclusion
Notice to an individual whenever the I.G. has conclusive
information that such individual 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.
2/
BACKGROUND
By letter dated February 27, 1990, the I.G. notified
Petitioner that she would be excluded from participation
in the Medicare and Medicaid programs for a period of
five years. The I.G. based the exclusion on Petitioner's
conviction (within the meaning of section 1128(i) of the
Act) of a criminal offense related to the delivery of an
item or service under the Medicaid program. The I.G.
stated that such exclusions are mandated by section
1128(a)(1).
On March 13, 1990, Petitioner requested a hearing to
contest the I.G.'s determination, and the case was
assigned to me for a hearing and decision. On May 15,
1990, I held a prehearing conference. I issued a
prehearing Order on May 23, 1990 which established a
schedule for moving for summary disposition of the case.
Both parties moved for summary disposition. Neither
party requested oral argument.
Based on the undisputed facts and the law, I conclude
that the exclusion imposed and directed by the I.G. in
this case is mandated by law. Therefore, I enter summary
disposition in favor of the I.G.
ISSUES
The issues in this case are whether:
1. Petitioner was "convicted" of a criminal offense
within the meaning of section 1128(i) of the Act.
2. Petitioner was 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.
3. Petitioner was subject to the minimum mandatory
five-year exclusion provisions of sections 1128(a)(1) and
1128(c)(3)(B) of the Act.
FINDINGS OF FACT AND CONCLUSIONS OF LAW 3/
1. Petitioner, at all times relevant to this case, was
an owner and managerial agent of DAC Community Service
(DAC), an enrolled provider of ambulance transportation
in the state of Pennsylvania. I.G. Ex. D. 4/
2. From May 1, 1987 through June 1, 1989, the Medicaid
Fraud Control Section of the Office of Attorney General
for the State of Pennsylvania conducted an investigation
which revealed that Petitioner allegedly submitted
fraudulent invoices to the Department of Public Welfare's
(DPW) Office of Medical Assistance. I.G. Ex. D/3.
3. An undated document entitled "Amended Information"
(information) which appears to amend a criminal
information (not contained in the record in this case)
was filed in the Court of Common Pleas of Berks County,
Pennsylvania, charging Petitioner with 123 counts of
Medicaid fraud which involved submitting claims for
unnecessary ambulance transportation. I.G. Ex. E.
4. Petitioner entered into a plea agreement, wherein
she agreed to be placed in the Accelerated Rehabilitative
Disposition (ARD) program on the following conditions:
(1) Petitioner's participation in ARD would be for two
years; (2) Petitioner would pay the costs incurred by
Berks County in administering her participation in the
ARD program; and (3) Petitioner would pay restitution in
the amount of $6,908.00 to the Commonwealth of
Pennsylvania. I.G. Ex. F.
5. On June 28, 1989, Petitioner signed a Waiver which
states that, in return for the opportunity to earn a
discharge and avoid a record of conviction if she
participated in the ARD program, Petitioner waives her
right to a speedy trial and waives the statute of
limitations. I.G. Ex. G.
6. On June 28, 1989, the court issued an Order which
placed Petitioner on two years' probation under the ARD
program and ordered payment of court costs and
restitution. I.G. Ex. H.
7. Petitioner was "convicted" of a criminal offense
within the meaning of sections 1128(a)(1) and 1128(i) of
the Act.
8. The offense of submitting fraudulent claims for
unnecessary ambulance transportation was "related to the
delivery of an item or service" under Medicaid, within
the meaning of section 1128(a)(1) of the Act.
9. The Secretary of Health and Human Services (the
Secretary) 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).
10. By Notice dated February 27, 1990, the I.G. excluded
Petitioner from participating in Medicare and directed
that she be excluded from participating in Medicaid,
pursuant to section 1128(a)(1) of the Act. I.G. Ex. B.
11. The I.G. is entitled to summary disposition in this
case.
12. The I.G. acted properly in excluding and directing
the exclusion of Petitioner from participation in the
Medicare and Medicaid programs for the minimum period of
five years.
DISCUSSION
I. Petitioner was "convicted" of a criminal offense as
a matter of federal law, within the meaning of section
1128(i).
The evidence in the record indicates that Petitioner was
charged with 123 counts of Medicaid fraud. P. Br. 2;
I.G. Ex. E. Petitioner was an owner and managerial agent
of DAC, an enrolled provider of ambulance transportation.
I.G. Ex. D. An investigation conducted by the Office of
the Attorney General for the State of Pennsylvania
revealed that Petitioner was involved in a Medicaid fraud
scheme. I.G. Ex. D. The information accused Petitioner
of submitting fraudulent invoices to DPW's Office of
Medical Assistance for reimbursement of ambulance
transportation services that were not provided to
"medical recipients." I.G. Ex. E. Additionally,
Petitioner allegedly attempted to provide ambulance
transportation to medical recipients when ambulance
transportation was not medically necessary and in which
the "destination was noncompensable under the Medical
Assistance Program." I.G. Ex. E.
Petitioner argues that she should not be excluded from
participation in the Medicare and Medicaid programs
because she has not been convicted of any criminal
offense, thus making her exclusion improper under section
1128(a)(1) of the Act. P. Br. 1. Petitioner asserts
that "she was not tried, did not waive her right to a
trial, nor was she adjudicated guilty in any fashion."
P. Br. 2. Additionally, Petitioner argues that she never
offered a plea of guilty to any charge against her. P.
Br. 7. Petitioner further claims that because of her
participation in the ARD program, a judgment of
conviction was not entered against her within the meaning
of section 1128(i)(4) of the Act. P. Br. 9.
The I.G. contends that under section 1128(i)(3) of the
Act, Petitioner admitted her guilt, her guilty plea was
"accepted" by the court, and she was entered into
Pennsylvania's ARD program. The I.G. also argues that
Pennsylvania's ARD program fits squarely within the
definition of "conviction" as defined in section
1128(i)(4) of the Act and that Congress intended to
include all deferred adjudication programs within the
Act's definition of conviction. I.G. Br. 4; I.G. R. Br.
1.
I disagree with Petitioner's contentions. I conclude
that Petitioner was "convicted" of a criminal offense,
within the meaning of sections 1128(i)(3) and 1128(i)(4)
of the Act.
The Secretary's authority to exclude an individual from
the Medicare and Medicaid programs is based upon the
"conviction" of a criminal offense "related to the
delivery of an item or service" as defined in sections
1128(a)(1) and 1128(i) of the Act.
Section 1128(i) of the Act provides that an individual or
entity has been "convicted" of a criminal offense:
(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.
Petitioner entered into a plea agreement whereby she
agreed to participate in the ARD program. I.G. Ex. F.
Petitioner signed a Waiver (I.G. Ex. G) which states in
part:
. . . the Defendant . . . having been afforded
the privilege of participating in the
Accelerated Rehabilitative Disposition in order
to afford an opportunity to win a complete
discharge of the above captioned charge and to
avoid a record of conviction, does hereby waive
the right to a speedy trial; . . . I plead
guilty to the summary offense(s) set forth in
the information, and in the event it is found
necessary to try me of the within charge, I
hereby waive the right to claim double jeopardy
. . . (Emphasis added.)
Additionally, the court's Order, dated June 28, 1989,
acknowledges that Petitioner agreed to participate in the
ARD program. I.G. Ex. H. The Order states:
In the event you fail to comply with the
conditions of your program, you will be subject
to removal from the ARD Program, and upon
removal therefrom, you will be tried on the
charge(s) filed against you in the above
captioned action. . . .
Thus, pursuant to Pennsylvania's law, Petitioner was
permitted to plead guilty to the summary offenses in the
information filed against her. I.G. Ex. G. However, the
information does not specifically address summary
offenses, but rather the information recites the 123
counts with which Petitioner was charged. I.G. Ex. E.
Thus, the court found that the evidence against
Petitioner substantiated her guilt as charged in the
information and as stated in Petitioner's plea agreement.
The court deferred further proceedings without an
adjudication of guilt on the condition that Petitioner
agree to participate in the ARD program for two years,
make restitution, and pay court costs. I.G. Ex. H.
Thus, upon fulfilling the aforementioned conditions,
Petitioner could apply to the court for a dismissal of
the charges against her. However, the fact that
Petitioner's guilty plea was dismissed based on her
satisfactory completion of a probation period in the ARD
program is of no consequence to the determination that
the entry and acceptance of her plea constituted a
"conviction" within the meaning of sections 1128(a)(1)
and 1128(i).
Petitioner cites the decision in Doe v. Bowen, 682 F.
Supp. 637 (D. Mass. 1987) as being similar to the present
case. The Doe case consisted of a federal court
challenge to an exclusion imposed by the I.G. pursuant to
section 1128. Plaintiff in Doe argued that he had not
been convicted of a criminal offense under Massachusetts
law, and therefore had not been convicted within the
meaning of section 1128(i). The court concluded that the
case was not ripe for judicial review because plaintiff
had not exhausted his administrative remedies. However,
the court criticized the I.G.'s determination to apply
the definition of "conviction" without regard to
"distinctions among the protean variety of dispositions
of criminal matters in the courts of the Commonwealth."
Id. at 5-6. This critical statement was made in a
footnote which was dictum. It is, therefore, not a
binding precedent. Furthermore, the facts of the Doe
case are distinguishable from the present case, in that
the plaintiff in Doe did not make a guilty plea to any
offense in state court.
The term "accepted" in section 1128(i)(3) is defined by
Webster's Third New International Dictionary, 1976
Unabridged Edition, as the past tense of "to receive
consent." A guilty plea is "accepted" within the
meaning of section 1128(i)(3) whenever a party admits his
guilt to a criminal offense and a court disposes of the
case based on that party's plea. See Guido R. Escalante,
Sr., M.D., DAB Civ. Rem. C-175 (1990); Orlando Ariz and
Ariz Pharmacy, Inc., DAB Civ. Rem. C-115 (1990). In the
instant case, the court "accepted" Petitioner's plea
agreement and Waiver as statements of her guilt to the
charges of Medicaid fraud, pursuant to section
1128(i)(3). Thus, under section 1128(i)(3), Petitioner's
plea constitutes a conviction for purposes of this
federal law exclusion.
This interpretation is consistent not only with the
common and ordinary meaning of the term "accept," but
also with Congressional intent, as expressed through
legislative history. Congress intended that its
definition of conviction include the situation where a
party has been adjudicated guilty of an offense and the
situation where a party admits guilt in order to dispose
of a complaint. In Congress' view, a party's admission
of guilt in order to dispose of a criminal complaint is
sufficient to establish a conviction, regardless of how
that admission is treated under the various states'
criminal statutes and procedures. The Congressional
committee which drafted the 1986 version of section 1128
stated:
The principal criminal dispositions to which
the exclusion remedy [currently] does not apply
are the "first offender" or "deferred
adjudication" dispositions. It is the
Committee's understanding that States are
increasingly opting to dispose of criminal
cases through such programs, where judgment of
conviction is withheld. The Committee is
informed that State first offender or deferred
adjudication programs typically consist of a
procedure whereby an individual pleads guilty
or nolo contendere to criminal charges, but the
court withholds the actual entry of a judgment
of conviction against them and instead imposes
certain conditions on probation, such as
community service or a given number of months
of good behavior. If the individual
successfully complies with these terms, the
case is dismissed entirely without a judgment
of conviction ever being entered.
These criminal dispositions may well represent
rational criminal justice policy. The
Committee is concerned, however, that
individuals who have entered guilty or nolo
[contendere] pleas to criminal charges of
defrauding the Medicaid program are not subject
to exclusion from either Medicare or Medicaid.
These individuals have admitted that they
engaged in criminal abuse against a Federal
health program and, in the view of the
Committee, they should be subject to exclusion.
If the financial integrity of Medicare and
Medicaid is to be protected, the programs must
have the prerogative not to do business with
those who have pleaded to charges of criminal
abuse against them.
H. Rep. No. 727, 99th Cong., 2d Sess. 1986 reprinted in
1986 U.S. Code Cong. & Admin. News, 3607, 3664-65; see
Carlos E. Zamora, M.D., DAB App. 1104 at 5-6 (1989); see
James F. Allen, M.D.F.P., DAB Civ. Rem. C-152 (1990).
The court's disposition of Petitioner's plea under the
terms of the plea agreement and Waiver constitutes a
"deferred adjudication," within the meaning of section
1128(i)(4), even though an adjudication of guilt was
withheld by the court. The Waiver recited that
Petitioner's participation in ARD could result in her
winning a complete discharge of the charges filed against
her and the opportunity to avoid a record of conviction.
My interpretation of the law and my application of the
law to the facts of the case is consistent with Congress'
intent as expressed in legislative history. The
arrangement entered into by Petitioner falls squarely
within the types of arrangements which the committee
responsible for drafting the law sought to include within
the ambit of section 1128(i)(4). H.R. No. 727, supra.
II. Petitioner's conviction "related to the delivery of
an item or service," within the meaning of section
1128(a)(l) of the Act.
Having concluded that Petitioner was "convicted" of a
criminal offense, I must determine whether the evidence
demonstrates a relationship between the judgment of
conviction and "the delivery of an item or service" under
the Medicare or Medicaid programs as provided in section
1128(a)(1) of the Act.
The I.G. contends that Petitioner was "convicted" of a
criminal offense related to the delivery of an item or
service under Medicaid. I.G. Br. 3. Petitioner
challenges the finding that she was "convicted" of a
criminal offense but does not challenge the finding that
the conviction was program related.
Petitioner was charged with 123 counts of Medicaid fraud.
P. Br. 2.; I.G. Ex. E. Additionally, Petitioner was
alleged to have provided ambulance transportation through
DAC to medical recipients when ambulance transportation
was not medically necessary and in which the ambulance
trip was noncompensable under the Medical Assistance
Program. I.G. Ex. D/1; I.G. Ex. E.
Section 1128(a)(1) requires exclusion from participation
in the Medicare and State health care programs of those
parties who commit offenses, including fraud or financial
misconduct, in connection with the delivery of or billing
for items or services rendered pursuant to these
programs. The phrase in 1128(a)(1), "related to the
delivery of an item or service," conveys legislative
intent to include within the reach of the statute all
"financial" offenses which affect the Medicare and
Medicaid programs. Petitioner's offenses--which amount
to theft or conversion of Medicaid funds--are covered by
this language.
Based on the evidence in the record, the Medicaid fraud
charges filed against Petitioner establish that
Petitioner's actions were "program related." I find and
conclude that Petitioner's offenses were "related to the
delivery of an item or service" under the Medicare and
Medicaid programs within the meaning of section
1128(a)(1) of the Act.
III. A minimum mandatory five-year exclusion is required
in this case.
Section 1128(a)(1) of the Act requires 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 Petitioner was "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)(l) and (i) of the Act, the I.G. was
required to exclude Petitioner for a minimum of five
years and an ALJ has no discretion to reduce the minimum
mandatory five-year period of exclusion. See Jack W.
Greene, DAB App. 1078 (1989), aff'd Greene v. Sullivan,
731 F. Supp. 835 and 838 (E.D. Tenn. 1990).
CONCLUSION
Based on the law and the undisputed material facts in the
record of this case, I conclude that 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
* * * Footnotes * * *
1. The Medicaid program is one of three types
of federally-financed State health care programs from
which Petitioner is excluded. I use the term "Medicaid"
to represent all three of these programs which are
defined in section 1128(h) of the Act.
2. The I.G.'s Notice letter adds five days to
the 15 days prescribed in section 1001.123, to allow for
receipt by mail.
3. Some of my statements in the sections
preceding these formal findings and conclusions are also
findings of fact and conclusions of law. To the extent
that they are not repeated here, they were not in
controversy.
4. The parties' exhibits and memoranda will be
cited as follows:
I.G.'s Exhibit I.G. Ex. (letter)/(page)
Petitioner's Brief P. Br. (page)
I.G.'s Brief I.G. Br. (page)
I.G.'s Reply Brief I.G. R. Br. (page)