By letter dated July 31, 1998, Orzame and Orzame, M.D.s, P.L.L.C. (Petitioner), was notified by the Inspector General (I.G.), U.S. Department of Health and Human Services (HHS), that Petitioner had been excluded for a period of five years from participation in Medicare, Medicaid, and all federal health care programs as defined in section 1128B(f) of the Social Security Act (Act) (Medicare and Medicaid). The I.G. explained that the five-year exclusion was mandatory under sections 1128(a)(1) and 1128(c)(3)(B) of the Act because Petitioner had been convicted of a criminal offense in connection with the delivery of an item or service under the Medicaid program.

Petitioner filed a request for review of the I.G.'s action. The I.G. moved for summary disposition. Because I have determined that there are no material and relevant factual issues in dispute (the only matter to be decided is the legal significance of the undisputed facts), I have decided the case on the basis of the parties' written submissions in lieu of an in-person hearing.

The I.G. submitted a written brief in support of its motion for summary disposition and five proposed exhibits, which I have numbered I.G. Exs. 1-5. Petitioner objected to proposed I.G. exhibits 3, 4, and 5.⁽¹⁾ Petitioner objected to I.G. Exs. 3 and 4 to the extent any culpability is attributed to Dr. Gabriel S. Orzame, and Petitioner objected to all three exhibits as irrelevant and not pertaining to Petitioner.⁽²⁾ I find that I.G. Exs. 3 and 4 are relevant as they represent the charges against Petitioner and Petitioner's plea agreement. I find that I.G. Ex. 5 is relevant as it relates to the false filing of a Medicaid claim that is the basis for the conviction that, ultimately, culminated in the exclusion at issue in this case. Further, I note that the medical services administration settlement agreement was entered into by Gabriel S. Orzame, one of the owners or proprietors of Petitioner who, ostensibly, had some control over Petitioner. Consequently, I accept into evidence I.G. Exs. 1-5.

Petitioner submitted a brief in opposition to the I.G.'s motion for summary disposition and in support of its cross-motion for summary disposition. Petitioner also submitted two proposed exhibits, which I have numbered P. Exs. 1 and 2. The I.G. did not object to these proposed exhibits and I accept into evidence Petitioner Exs. 1 and 2.

I grant the I.G.'s motion for summary disposition. Further, I affirm the I.G.'s determination to exclude Petitioner from participation in the Medicare and Medicaid programs for a period of five years.

Sections 1128(a)(1) and 1128(c)(3)(B) of the Act make it mandatory for any individual who has been convicted of a criminal offense related to the delivery of an item or service under Medicare or Medicaid to be excluded from participation in such programs for a period of at least five years.

Petitioner asserted in its defense that the offenses for which it was convicted constitute misdemeanors not felonies.

1. During the period relevant to this case, Petitioner was operated as the private medical practice of Dr. Gabriel Orzame. I.G. Ex. 1.

2. The Attorney General's Office of the State of Michigan filed a criminal information charging that Petitioner submitted false claims for payment to both private insurance companies and the Michigan Medicaid program. I.G. Ex. 4.

3. On January 20, 1997, pursuant to a plea agreement, Petitioner entered a plea of nolo contendere in the State of Michigan District Court to one count of "Attempted Medicaid Fraud" and one count of "Attempted Healthcare Fraud," in violation of Mich. Comp. Laws section 750.92. I.G. Ex. 3.

4. As a result of its plea, Petitioner was sentenced to pay fines and court costs totaling $3060. I.G. Ex. 4.

5. On July 31, 1998, the I.G. notified Petitioner that it was being excluded from participation in the Medicare and Medicaid programs for a period of five years pursuant to section 1128(a)(1) of the Act.

6. Petitioner's entry of a nolo contendere plea and the acceptance of such plea by the State of Michigan District Court constitutes a conviction within the meaning of section 1128(i)(3) of the Act.

7. Petitioner's conviction for attempted Medicaid fraud and attempted health care fraud are related to the delivery of an item or service under the Medicaid program within the meaning of section 1128(a)(1) of the Act.

8. Once an entity has been convicted of a program-related criminal offense under section 1128(a)(1) of the Act, exclusion is mandatory under section 1128(c)(3)(B) of the Act.

9. The I.G. properly excluded Petitioner, pursuant to section 1128(a)(1) of the Act, for a period of five years, as required by the minimum mandatory exclusion provision of section 1128(c)(3)(B) of the Act.

The first statutory requirement for the imposition of mandatory exclusion pursuant to section 1128(a)(1) of the Act is that the individual or entity in question be convicted of a criminal offense under federal or State law. I find that this requirement is met in Petitioner's case. The term "convicted" is defined in section 1128(i) of the Act. This section provides that an individual or entity will be 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.

This section thus establishes four alternative definitions of the term "convicted." An individual or entity need satisfy only one of the four definitions under section 1128(i) to establish that the individual or entity has been convicted of a criminal offense within the meaning of the Act.

I find that Petitioner was convicted within the meaning of section 1128(i)(3) of the Act. Petitioner's plea of nolo contendere and the court's acceptance of the plea constitute a conviction within the meaning of section 1128(i)(3) of the Act. A plea is "accepted" within the meaning of that section whenever a party offers the plea and the court consents to receive the plea in disposing of the criminal matter. Maximo Levin, M.D., DAB CR343 (1994); Lila M. Nevrekar, DAB CR319 (1994).

Next, it is required under section 1128(a)(1) of the Act that the crime at issue be related to the delivery of an item or service under the Medicare and Medicaid programs. The record establishes that Petitioner, by pleading nolo contendere to attempted Medicaid fraud and attempted Healthcare fraud, was found to have attempted to file, or attempted to cause to be filed, a fraudulent claim against Medicaid. The filing of fraudulent Medicare and Medicaid claims has been consistently held to constitute clear program-related misconduct. Alan J. Chernick, D.D.S., DAB CR434 (1996) (I.G.'s five-year mandatory exclusion of dentist who was convicted in State court of filing false claims upheld); see also Barbra Johnson, D.D.S., DAB CR78 (1990) (I.G.'s five-year mandatory exclusion of dentist convicted of filing false claims upheld).

To determine if an offense is program-related, the administrative law judge (ALJ) must analyze the facts and circumstances underlying the conviction to determine whether a nexus or common sense connection links the offense for which a petitioner has been convicted and the delivery of an item or service under a covered program. Berton Siegel, D.O., DAB 1467 (1994). In Petitioner's case, a necessary nexus links the facts underlying its crime with the delivery of an item or service under Medicaid because the record shows that Petitioner did, in fact, falsify a claim and submit it for payment. Indeed, a sufficient nexus has been found in cases less compelling than the one at issue here. In Rosaly Saba Khalil, M.D., DAB CR353 (1995), the ALJ held that a nexus may exist "despite the fact that Petitioner may not have provided items or services to Medicaid recipients personally or made reimbursement claims for those items or services." In the present case, the nexus between Petitioner's offense and the delivery of such item or service is firmly established by its conviction for the charge of "Attempted Medicaid Fraud."

In its defense, Petitioner asserts that it was convicted of misdemeanor offenses, not felonies. I find that such a factor is irrelevant. Section 1128(a)(1) of the Act requires that an individual or entity be convicted of a "criminal offense"; it does not specify that an individual or an entity be excluded only if convicted of a certain class of crime. See e.g. Glen E. Bandel, DAB CR261 (1993)(involving section 1128(a)(2)).

Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate that Petitioner be excluded from the Medicare and Medicaid programs, for a period of at least five years, because Petitioner has been convicted of a criminal offense related to the delivery of an item or service under the Medicaid program. The five-year exclusion is therefore sustained.

1. Petitioner also objected to I.G. Ex. l, and the I.G. conceded that the identification of a letter of exclusion as I.G. Ex. 1 on the first page of the I.G.'s brief was a typographical error, and that I.G. Ex. 1 is, instead, the felony information. Therefore, I overrule Petitioner's objection.

2. I.G. Ex. 3 is a plea agreement by Dr. Gabriel S. Orzame and Orzame and Orzame, M.D.s, P.L.L.C.; I.G. Ex. 4 is a criminal information charging Petitioner and identifying Petitioner's plea; I.G. Ex. 5 is a medical services administration settlement agreement between the Michigan Department of Community Health, Medicaid Utilization Review Division, and Gabriel S. Orzame, M.D.