Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the case of:
Robert A. Woolhandler, M.D.,
Petitioner,
- v. -
The Inspector General.
DATE: April 15, 1991
Docket No. C-323
DECISION
In this case, governed by section 1128 of the Social
Security Act (Act), the Inspector General (I.G.) of the
United States Department of Health and Human Services
(DHHS) notified Robert A. Woolhandler, M.D. (Petitioner)
by letter dated October 12 1990, that he would be
excluded from participation in the Medicare and three
federally-financed state health care programs, for a
period of three years. 1/ The I.G. further advised
Petitioner that his exclusion was due to his state court
conviction of a criminal offense related to the unlawful
manufacture, distribution, prescription, or dispensing of
a controlled substance. Petitioner was informed that
exclusions from Medicare and Medicaid programs after such
a conviction are authorized by section 1128(b)(3) of the
Act.
Petitioner requested a hearing before an Administrative
Law Judge (ALJ) to contest his exclusion. I held a
prehearing conference in this case on January 3, 1991.
During the conference, the parties agreed to have this
case decided on the basis of submitted documentary
evidence, in lieu of an in-person hearing. Based on the
evidence in the record and the applicable law, I conclude
that an exclusion of three years is reasonable and
appropriate.
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., 1990 Supp.). Section 1128(a) 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).
Section 1128(b) of the Act provides for permissive
exclusions after convictions relating to fraud, license
revocations, failure to supply payment information, or,
as in this case, conviction for a criminal offense
related to the unlawful manufacture, distribution,
prescription, or dispensing of a controlled substance
under section 1128(b)(3).
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.
ISSUES
The issues in this case are:
1. whether Petitioner was "convicted" of a
criminal offense within the meaning of section
1128(i) of the Act.
2. whether Petitioner's conviction "relates to the
unlawful manufacture, distribution, prescription,
or dispensing of a controlled substance," within
the meaning of section 1128(b)(3) of the Act;
3. whether the length of the exclusion imposed and
directed against Petitioner is reasonable.
FINDINGS OF FACT AND CONCLUSIONS OF LAW 2/
3/
1. At all times relevant to this case, Petitioner was a
physician licensed to practice medicine in Pennsylvania.
Stip. 8, 9, 10.
2. On or about May 26, 1988, Petitioner was charged in
a 15 count Criminal Information with actions including:
1) prescribing drugs not in good faith and not within the
scope of the patient relationship; 2) prescribing to drug
dependent persons (with the intention that such
individuals would fill the prescriptions and then return
some portion of the controlled substance to the actor);
and 3) possession of controlled substance (as a result of
writing prescriptions for individuals with the intention
that such individuals would fill the prescriptions and
deliver the controlled substance to the actor), all in
violation of 35 P.S. Section 780-113(a)(13), 780-
113(a)(14), and 780-113(a)(16). I.G. Ex. 2, 5.
3. On July 15, 1988, in the Court of Common Pleas,
Allegheny County, Pennsylvania (County Court), Petitioner
pled guilty to 10 counts of the 15 count information.
I.G. Ex. 3; Stip. 1.
4. The 10 counts to which Petitioner pled guilty
(counts 2,3,5,6,8,9,11,12,14,15) were all misdemeanors.
Petitioner did not plead guilty to the felony counts of
the Information (counts 1,4,7,10,13). I.G. Ex. 2, 3;
Stip. 2, 3.
5. Petitioner was sentenced to 10 years probation, with
the special conditions that he: 1) continue in the
impaired physician program; 2) surrender his D.E.A.
license and not reapply until his 10 year probation was
completed; and 3) pay a $5,000 fine on each count, for a
total of $50,000.00. I.G. Ex. 1, 3; Stip. 4.
6. As a result of Petitioner's conviction, by Order
dated March 28, 1990, the Pennsylvania State Board of
Medicine (Pa. Board) suspended Petitioner's license to
practice medicine for two years. I.G. Ex. 5, 6; Stip. 5,
6.
7. The Pa. Board stayed all but three months of
Petitioner's suspension. After three months, Petitioner
was to be put on a period of probation to run
concurrently with the period of probation ordered by
the County Court. Petitioner also had to meet certain
conditions of probation, including: 1) continued
participation in the Impaired Physicians Program; 2)
abstinence from alcohol and controlled substances not
prescribed by another physician; and 3) submission to
drug and urine screens. I.G. Ex. 5, 6; Stip. 7.
8. Petitioner was "convicted" of a criminal offense
within the meaning of section 1128(i) of the Act.
9. Petitioner was convicted of a criminal offense
"relating to the unlawful manufacture, distribution,
prescription or dispensing of a controlled substance,"
within the meaning of section 1128(b)(3) of the Act.
FFCL 3.
10. Pursuant to section 1128(b)(3) of the Act, the
Secretary of DHHS (Secretary) has authority to impose and
direct an exclusion against Petitioner from participating
in Medicare and Medicaid.
11. The Secretary properly delegated to the I.G. the
duty to impose and direct exclusions pursuant to section
1128 of the Act. 48 Fed. Reg. 21662 (May 13, 1983).
12. On October 12, 1990, the I.G. advised Petitioner
that he was excluding him from participating in the
Medicare and Medicaid programs for three years, pursuant
to section 1128(b)(3) of the Act.
13. A purpose of section 1128(b)(3) of the Act is to
protect beneficiaries and program funds by excluding
individuals or entities who by conduct have demonstrated
a risk that they may engage in fraud, substandard
services, abuse, or unsafe practices in connection with
controlled substances until such time as those excluded
can demonstrate that such risk no longer exists. S. REP.
No. 109, 100th Cong. 1st Sess. 2, reprinted in 1987 U.S.
Code Cong. & Admin. News 682.
14. There is no length or period of exclusion mandated
by statute for section 1128(b)(3) exclusions. The
exclusion provisions of section 1128 of the Act do not
establish a minimum or maximum period of exclusion to
be imposed and directed in cases where the I.G. has
discretion to impose and direct exclusions. Act, section
1128(b)(1)-(14).
15. There are substantial reasons for a lengthy
exclusion in this case, including: 1) Petitioner's
conviction of serious violations of controlled substance
laws; 2) Petitioner's abuse of his position of trust as a
physician, and the placement of his patients in a
position where serious harm could result to themselves or
others who might come into contact with those controlled
substances; 3) Petitioner's own addiction to controlled
substances, when as a physician he should have known of
their potential for harm and eschewed them; 4) the County
Court's imposition of a lengthy probationary period and
other sanctions on Petitioner; and 5) the Pa. Board's
suspension of Petitioner's license and subsequent period
of probation of Petitioner's license, coupled with the
Pa. Board's restriction of that license.
16. Petitioner has not proven that an exclusion of three
years is unreasonable.
17. The I.G.'s determination to exclude Petitioner from
participation in the Medicare or Medicaid programs for
three years is reasonable. FFCL 1 - 16; See 42 C.F.R.
1001.125(b)(1) - (7).
DISCUSSION
I. Petitioner Was "Convicted" Of A Criminal Offense
"Relating To The Unlawful Manufacture, Distribution,
Prescription, Or Dispensing Of A Controlled Substance",
Within The Meaning Of Section 1128(b)(3) Of The Act.
Section 1128(b)(3) of the Act authorizes the I.G. to
exclude from participation in the Medicare and Medicaid
programs individuals who have been "convicted" of
criminal offenses "relating to the unlawful manufacture,
distribution, prescription, or dispensing of a controlled
substance". On July 15, 1988, Petitioner was convicted
of ten counts of violation of the Controlled Substance,
Drug, Device and Cosmetic Act, PA. STAT. ANN. tit. 35
section 780-113(a). Petitioner has stipulated to the
fact of his conviction. FFCL 2, 3; Stip. 1.
Accordingly, Petitioner was "convicted" of a criminal
offense within the meaning of section 1128(i) of the Act.
Petitioner admits that his crimes were misdemeanors.
FFCL 4; Stip. 3. Petitioner argues, however, that there
is no statutory or regulatory authority to exclude
Petitioner for being convicted of misdemeanor violations
of a state drug act. I disagree.
Section 1128(b)(3) of the Act clearly authorizes
exclusions from the Medicare and Medicaid programs of
"Any individual or entity that has been convicted, under
Federal or State law, of a criminal offense relating to
the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance. Pursuant to
section 1128(i), an "individual is considered to have
been convicted of a criminal offense - (1) when a
judgment of conviction has been entered against the
physician or individual by a Federal, State, or local
court. . ." Nowhere in the statute or in its legislative
history is the term criminal offense, in the context of
section 1128(b)(3) violations, limited to refer to
convictions for felonies as opposed to misdemeanors.
See S. REP. No. 109, 100th Cong., lst Sess., reprinted in
1987 U.S. Code Cong. & Admin. News.
Petitioner has stipulated that he was convicted of a
criminal offense relating to a violation of controlled
substances laws (Stip. 1 - 3). Accordingly, based on the
stipulation and the documentary evidence in the record,
I find that Petitioner's conviction falls within the
purview of criminal offenses enumerated in section
1128(b)(3).
II A Five-Year Exclusion Is Appropriate And Reasonable
In This Case.
Since Petitioner has admitted, and I have concluded, that
Petitioner was "convicted" of a criminal offense for
which the I.G. may impose an exclusion, pursuant to
section 1128(b)(3) of the Act, the remaining issue is
whether the three-year exclusion is reasonable and
appropriate. For the reasons set out below, I conclude
that a three-year exclusion is reasonable and
appropriate.
As I stated in Lakshmi N. Murty Achalla, M.D., DAB Civ.
Rem. C-146 (1990), Thomas J. DePietro, R. Ph., DAB Civ.
Rem. C-282 (1991), and Falah R. Garmo, R.Ph., DAB Civ.
Rem C-222 (1990) (citing Victor M. Janze, M.D., DAB Civ
Rem. C-212 (1990) and Charles J. Burks, M.D., DAB Civ.
Rem. C-111 (1989)) in making a determination regarding
the length of an exclusion, I am guided by the purpose
behind the exclusion law. Congress enacted section 1128
of the Act to protect the Medicare and Medicaid programs
from fraud and abuse and to protect the beneficiaries
and recipients of those programs from impaired and
incompetent practitioners and inappropriate or inadequate
care. S. REP. No. 109, 100th Cong., lst Sess.; reprinted
in 1987 U.S. Code Cong. & Admin. News 682, 708; Greene v.
Sullivan, 731 F. Supp. 838 (E.D. Tenn. 1990). The key
term is "protection," the prevention of harm. See
Websters II New Riverside University Dictionary 946
(1984). As a means of protecting the Medicare and
Medicaid programs and their beneficiaries and recipients,
Congress chose to mandate, and in other instances to
permit, the exclusion of individuals and entities.
Through the exclusion law, individuals and entities who
have caused harm, or may cause harm, to the program or
its beneficiaries or recipients are no longer permitted
to receive reimbursement for items or services which
they provided to Medicare beneficiaries or Medicaid
recipients. Thus, individuals are removed from a
position which provides a potential avenue for causing
harm to the programs. An exclusion also serves as a
deterrent to other individuals and entities against
errant or deviant behavior which may result in harm to
the Medicare and Medicaid programs or their beneficiaries
and recipients.
No statutory minimum mandatory exclusion period exists
for section 1128(b)(3) exclusions. The determination of
when an individual should be trusted and allowed to
reapply for participation as a provider in the Medicare
and Medicaid programs is a difficult issue and is one
which is subject to discretion; there is no mechanical
formula. The ALJ must give a complete de novo review
of the facts in determining the length of exclusions.
See Vincent Barratta, M.D., DAB App. 1172 (1990). The
federal regulations provide some guidance which may be
followed in making this determination. The regulations
provide that the length of Petitioner's exclusion may be
determined by reviewing: 1) the number and nature of the
offenses; 2) the nature and extent of any adverse impact
the violations have had on beneficiaries; 3) the amount
of the damages incurred by the Medicare, Medicaid, and
social services programs; 4) the existence of mitigating
circumstances; 5) the length of sentence imposed by the
court; 6) any other facts bearing on the nature and
seriousness of the violations; and 7) the previous
sanction record of Petitioner. See 42 C.F.R.
1001.125(b). These regulations were adopted by the
Secretary to implement the Act prior to the 1987
Amendment. The regulations specifically apply only to
exclusions for "program related" offenses. To the extent
that they have not been repealed, however, they embody
the Secretary's intent that they continue to apply, at
least as broad guidelines, to the cases in which
discretionary exclusions are imposed. See Garmo, supra
at 10; Leonard N. Schwartz, R.Ph., DAB Civ. Rem. C-62 at
p. 12 (1989).
In addition to the factors listed above, given
Congressional intent to exclude untrustworthy individuals
from participation in Medicare and Medicaid programs, I
also consider those circumstances which indicate the
extent of an individual's or entity's trustworthiness.
Moreover, the legislative history of section 1128 as a
whole discusses factors which may be considered in
setting the exclusion period. Both the House and
Senate reports on the proposed legislation stated:
In the case of all exclusions other than those
under 1128(a) and 1128(b)(12), the Committee
intends that, in setting the period of
exclusion, the Secretary will take into
consideration such factors as the seriousness
of the offense, the impact of both the offense
and the exclusion on beneficiaries, and any
mitigating circumstances, such as the
availability of alternate providers of needed
health care services.
H.R.REP. No. 85, 100th Cong., 1st Sess., Part 1, 12
(1987); S.REP. No. 109, supra, at 12.
By not mandating that exclusions from participation in
the Medicare and Medicaid program be permanent, Congress
has allowed the I.G. the opportunity to give individuals
a "second chance." The placement of a limit on the
period of exclusion allows an excluded individual or
entity the opportunity to demonstrate that he or she can
and should be trusted to participate in the Medicare and
Medicaid programs as a provider of items and services to
beneficiaries and recipients. A determination of an
individual's current and future trustworthiness thus
necessitates an appraisal of the crime for which that
individual was convicted, the circumstances surrounding
it, whether and when that individual sought help to
correct the behavior which led to the criminal
conviction, and how far that individual has come towards
rehabilitation.
Petitioner argues that a three year exclusion is
excessive in his case because: 1) Petitioner has some
long-time Medicare patients he treats and who would
not be willing to be treated by another physician; 2)
Petitioner is a recovered drug addict, drug-free since
August 1987; 3) Petitioner is in the Impaired Physicians
Program of the Pennsylvania Medical Society and gets
tested for urine screenings. Petitioner has had no
positive test since monitoring began; 4) Petitioner
has no D.E.A. license, and cannot write scheduled
prescriptions; 5) Petitioner monitors pharmacists
with drug problems and does addiction counseling; 6)
Petitioner has suffered because of his illness of drug
addiction; 7) Petitioner is being selectively excluded
from the Medicare program, as a number of physicians
convicted of violations of the State drug act, or of
Medicare fraud, have not been excluded from the Medicare
or Medicaid programs. Petitioner has offered no evidence
to support these contentions. The only evidence before
me in this case are the exhibits submitted by the I.G.
and the stipulations signed by both parties to this
action. Petitioner's unsubstantiated arguments cannot be
accorded much weight by me in my decision concerning the
reasonableness of Petitioner's exclusion as it relates to
Petitioner's trustworthiness to participate in the
Medicare and Medicaid programs.
The evidence in support of a three year exclusion is
that: 1) Petitioner was convicted of serious drug
violations; 2) as a physician licensed to prescribe
potentially dangerous and addictive controlled
substances, Petitioner was in a position of great trust.
Petitioner abused that trust when he prescribed
controlled substances to drug dependent persons, with
the intention that they return some of the controlled
substances to him. His means of illegally obtaining
controlled substances created the potential for serious
harm to his patients or to anyone else who might misuse
these controlled substances through them (FFCL 2, 3, 15);
3) Petitioner himself abused controlled substances, even
obtaining them from his own patients, although as a
trained physician he should have known better than anyone
else their potential for harm and addiction (FFCL 15); 4)
The County Court imposed a lengthy probationary period in
which to monitor Petitioner's conduct, and imposed other
conditions of that probation, including continued
participation in the impaired physicians program,
surrender of Petitioner's D.E.A. license, and a $50,000
fine (FFCL 5, 15); and 5) the Pa. Board suspended
Petitioner's license and only returned it to Petitioner
on a probationary period concurrent with Petitioner's
court ordered probation, and with conditions relating to
Petitioner's enrollment in rehabilitative programs and
use of alcohol or controlled substances (FFCL 6, 7, 15).
In this case, I cannot find that the period of exclusion
imposed by the I.G. is unreasonable. The County Court
and the Pa. Board both determined that it would take ten
years of probation in order for Petitioner to prove that
he was trustworthy to interact with society in general
and his patients in particular in an unsupervised manner.
A three year period of exclusion is reasonable in this
case in order to protect the Medicare and Medicaid
programs, and to give Petitioner the time to show that he
can again be trusted to provide items and services to
program beneficiaries and recipients. See Barratta
supra, and Lakshmi N. Murty Achalla, DAB App. 1231
(1991).
CONCLUSION
Based on the evidence in the record of this case, the
arguments of the parties, and federal law and regula-
tions, I conclude that the I.G.'s determination to
exclude Petitioner from participation in the Medicare
and Medicaid programs for three years is reasonable and
appropriate. Therefore, I am entering a decision in
favor of the I.G. in this case.
IT IS SO ORDERED
Charles E. Stratton
Administrative Law Judge
* * * Footnotes * * *
1. "State health care program" is defined by
section 1128(h) of the Social Security Act to cover three
types of federally-assisted programs, including State
plans approved under Title XIX of the Act (Medicaid). I
use the term "Medicaid" hereafter to represent all State
health care programs from which Petitioner was excluded.
2. Citations to the record and to Board cases
in this Decision are as follows:
I.G. Exhibits I.G. Ex. (number/page)
Stipulations Stip. (number)
I.G.'s Br. I.G. Br. (page)
Petitioner's Brief P. Br. (page)
I.G.'s Reply Brief I.G. Rep. Br. (page)
Findings of Fact and FFCL (number)
Conclusions of Law
Departmental Appeals DAB Civ. Rem. (docket no./
Board ALJ decisions date)
Departmental Appeals DAB App. (decision no./date)
Board Appellate
decisions
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.