SUBJECT:

Georgia Goldfarb, M.D.,

Petitioner,

The Inspector General

On February 18, 1997, the United States Department of Justice and the Public Health Service accepted a compromise offer of settlement from Petitioner. On February 24, 1997, the I.G. notified Petitioner that she was reinstated to participate as a provider in Medicare, effective February 18, 1997, and that appropriate State health care programs had been notified of this action.

Although she was already reinstated, Petitioner requested a hearing by letter dated March 13, 1997. At Petitioner's request, the case was stayed for an indefinite period in order to allow her the opportunity to obtain counsel. Petitioner was instructed to contact my office when she was ready to proceed. Petitioner did not contact my office, and on August 11, 1999, I issued an Order to Cause why this case should not be dismissed for abandonment. In response to the Order to Show Cause, Petitioner submitted a letter dated August 24, 1999, in which she stated that she never intended to abandon the appeal and that she wished to proceed.

The I.G. subsequently filed a motion to dismiss accompanied by a supporting brief (I.G. Br.) and 26 proposed exhibits (I.G. Exs. 1 - 26). Petitioner filed a response brief (P. Br.). Petitioner did not object to the I.G.'s exhibits in her response brief, and I admit I.G. Exs. 1 - 26 into evidence.

Petitioner referred to two documents in her response brief which were not contained in the record. By letter dated February 3, 2000, I gave Petitioner the opportunity to submit these documents. I gave the I.G. the opportunity to object to my admitting these documents into evidence in the event that Petitioner submitted them. I also noted that Petitioner had submitted 10 documents with her initial hearing request, which I identified as P. Exs. 1 - 10. I gave the I.G. the opportunity to object to my admitting P. Exs. 1 - 10 into evidence.

Petitioner subsequently submitted the two documents referred to in her response brief. I identify these documents as P. Exs. 11 - 12. The I.G. filed a reply in which she did not object to my admitting P. Exs. 1 - 12 into evidence. In the absence of objection, I admit P. Exs. 1 - 12 into evidence.

Based on my review of the record, I have determined that there are no material and relevant factual issues in dispute and that the only matters to be decided are the legal implications of the undisputed facts. Thus, I am able to decide the case on the basis of the parties' written submissions. I conclude that the I.G. properly excluded Petitioner under section 1128(b)(14) of the Act from participation in Medicare and Medicaid for the period February 5, 1997 until February 18, 1997 when Petitioner satisfied her post-due indebtedness.

Medicare and Medicaid exclusions imposed by the Secretary as a result of a health care practitioner's failure to repay a HEAL loan are governed by sections 1128(b)(14) and 1892 of the Act. In 1987 Congress enacted section 1128(b)(14) as a part of the Medicare and Medicaid Patient and Program Protection act of 1987, Pub.L. 100-93 (MMPPPA). MMPPPA recodified and expanded the Secretary's existing authority to exclude a provider from participation in Medicare and Medicaid, including "[a]ny individual who the Secretary determines is in default on repayments of . . . loans in connection with health professions education made or secured, in whole or in part, by the Secretary and with respect to whom the Secretary has taken all reasonable steps available to the Secretary to secure repayment of such obligations or loans . . ." Section 1128(b)(14) of the Act. Section 1128(b)(14) applies to HEAL loans.

Section 1892 of the Act authorizes the Secretary to enter into an agreement with a health care practitioner who owes "a past-due obligation to the United States" to deduct from amounts otherwise payable to the debtor by Medicare "until such past-due obligation (and accrued interest) have been repaid . . ." If an individual does not generate sufficient program reimbursement to satisfy the outstanding debt, or if he or she "refuses to enter into an agreement or breaches any provision of the agreement," the Secretary is directed by sections 1892(a)(2)(C)(ii) and 1892(a)(3)(B) of the Act to exclude the individual from participation in Medicare "until such time as the entire past-due obligation has been repaid." The Secretary's exclusion authority under section 1892 of the Act has been delegated to the I.G.⁽²⁾

Petitioner does not contest that she took out the HEAL loans in question. Petitioner contends, instead, that the exclusion was unlawful because the "government did not offer me all reasonable administrative opportunities to repay the loan." Petitioner Hearing Request at p. 4. Petitioner asserts that she "was always willing to enter into an agreement to repay the entire amount of the loan plus some interest." P. Br. at p. 1. According to Petitioner, the difference between the government's position and her position concerned only the amount of interest she should pay. Petitioner maintains that due to job setbacks and personal hardships, she was unable for many years to repay the amounts which the government demanded be paid. Petitioner contends that the government's insistence on requiring repayment at a level which she could not afford was not reasonable. Petitioner asserts that it was not until after the exclusion was imposed that the government finally agreed to reasonable repayment terms. Petitioner states that the governments's lack of good faith is shown by the fact that the amount of the final settlement was comparable to the amount she had originally offered.

In addition, Petitioner states that the government acted unreasonably because it did not respond to communications from her representatives in a timely manner during the 20-day period from the time the exclusion letter was issued on January 15, 1997 and the time it went into effect on February 5, 1997. Petitioner argues that the exclusion would not have ever become effective if the government had acted in a timely manner to reach a settlement agreement. Petitioner maintains that in view of the government's unreasonable actions and its unfair treatment of her, the exclusion should never have been imposed and it should be rescinded.

1. On February 10, 1982, Petitioner, while studying medicine, executed a promissary note in which she promised to repay a HEAL loan in the amount of $14,000 with a variable rate of interest and a repayment term to commence on the first day of the tenth month after her ceasing to be a full-time student or an intern or resident in an accredited program. I.G. Ex. 1.

2. In correspondence dated February 10, 1983, the State of Wisconsin notified Petitioner that, as a result of her ceasing to be a full-time student, scheduled repayment of her HEAL loan was to commence July 1, 1983. I.G. Ex. 2.

3. On December 15, 1983, Petitioner's HEAL loan was declared in default, and the promissory note was subsequently assigned to the Public Health Service. I.G. Ex. 4.

4. Commencing in 1984, and continuing through July 1986, the Public Health Service contacted Petitioner regarding her entering into a repayment agreement to satisfy her unpaid HEAL loans. I.G. Exs. 4 - 16.

5. By letter dated August 14, 1986, the Public Health Service notified Petitioner that, due to her financial difficulties, it was granting her a six-month forbearance on her HEAL loan from September 1, 1986 through March 31, 1987. I.G. Ex. 17.

6. Petitioner's failure to repay her HEAL loan resulted in a judgment against her on February 16, 1988 in United States District Court, Central District of California, in the amount of $36,196.71. I.G. Ex. 19.

7. As of January 15, 1997, Petitioner had not entered into a repayment agreement or other arrangement to satisfy the outstanding debt. I.G. Exs. 20 - 22.

8. On January 15, 1997, the I.G. notified Petitioner of her exclusion under section 1128(b)(14) of the Act from participation in Medicare and Medicaid, which exclusion would remain in effect until her HEAL loans were satisfied. I.G. Ex. 23.

9. On February 18, 1997, Petitioner paid $45,000, which the Public Health Service and the Department of Justice accepted in satisfaction of Petitioner's HEAL loan debt. I.G. Ex. 24.

10. As a result of her satisfaction of the HEAL loan debt, the I.G. reinstated Petitioner effective February 18, 1997. I.G. Ex. 25.

11. Petitioner's unpaid HEAL loans were loans within the scope of section 1128(b)(14) of the Act.

12. Prior to imposing the exclusion, the Secretary had taken all reasonable steps available to secure repayment of Petitioner's HEAL loans.

13. The Secretary has delegated to the I.G. the duty to determine and impose exclusions pursuant to section 1128(b) of the Act.

14. The I.G. properly excluded Petitioner under section 1128(b)(14) of the Act from participation in Medicare and Medicaid for the period February 5, 1997 until February 18, 1997 when Petitioner satisfied her past-due indebtedness.

As an initial matter, the I.G. has moved that I dismiss Petitioner's request for a hearing for abandonment under 42 C.F.R. § 1005.2(e)(3). The I.G. asserts that Petitioner requested that the case be stayed so that she could obtain counsel, but then failed to respond to my April 17, 1997 letter directing her to contact my office when she would be ready to proceed. While it is true that Petitioner never contacted this office to reschedule the prehearing conference as directed by my April 17, 1997 letter, the record shows that Petitioner did timely respond to my August 11, 1999 Order to Show Cause. Insofar as Petitioner timely responded to my Order to Show Cause, I find that she has not abandoned her hearing request and I shall consider her claims on their merits.

It is uncontested that Petitioner was enrolled as a student at the Medical College of Wisconsin in 1982 and that in 1982 she borrowed a total of $14,000 from the HEAL program to finance her medical education. She received and executed a promissory note for the loan. The promissary note detailed the interest rate, amount borrowed, and the date on which interest began to accrue. Petitioner acknowledges receiving the loan and does not dispute that the loan was made "in connection with health professions education." Section 1128(b)(14) of the Act. See e.g. Mohammad H. Azarpira, D.D.S., DAB CR372 (1995); James F. Cleary, D.D.S., DAB CR252 (1993)(uncontested that debt arose from loans made in connection with health professions education where petitioners attended dental school when they applied for HEAL loans).

According to the terms of the promissary note, Petitioner promised to repay the loan in periodic installments beginning the first day of the tenth month after she either ceased being a full-time student at a HEAL-recognized school or ceased being an intern or resident in an accredited program. The amount of money repaid would include an interest amount based on the terms of the individual promissary note. Repayment of Petitioner's HEAL loans was to begin in July 1983. The record further reflects that Petitioner did not repay the sums owed under the terms of the HEAL loan agreement, and she was found in default on December 15, 1983. Petitioner does not dispute that she defaulted on repayment of her HEAL debt and that she had not successfully negotiated a compromise payment with the government at the time that the exclusion was imposed in 1997.

Given the undisputed facts in this case, I must find that the I.G. had authority to exclude Petitioner under section 1128(b)(14) if I conclude that the Secretary took "all reasonable steps available" to secure Petitioner's repayment of her HEAL debt. The term "all reasonable steps available" has been construed to mean all reasonable and legitimate means of debt collection. In attempting to collect a debt, the Secretary must be reasonable only in the sense that she should not insist on repayment arrangements which are "palpably unfair." Cleary, DAB CR252.

The reasonableness standard also does not require the Secretary to excuse individuals from repayment obligations because of financial status, or to accept financial arrangements which do not accomplish the objective of repayment, or enter into relationships that are not in the public interest. Id. at 13; see also Majauskas, DAB CR441. The Secretary has also interpreted the phrase "all reasonable steps available" by regulation. The applicable regulation provides that "all reasonable administrative steps available to secure repayment" of a HEAL debt will have been achieved where the debtor has been offered a Medicare offset arrangement. 42 C.F.R. § 1001.1501(a)(2). Although an offset agreement is not a necessary element of "all reasonable administrative steps," it is conclusive proof that all reasonable steps have been taken by the Secretary. Charles K. Angelo, Jr., DAB CR290, at 12 (1993).

I find that the record establishes that Petitioner was accorded all reasonable steps to repay her HEAL debt and I reject Petitioner's claim that she was not provided with such opportunity. The record reflects that repayment of Petitioner's HEAL loan was to commence in July 1983. Despite her express promise to repay the loan, Petitioner failed to begin repayment on the debt as scheduled and was found in to be in default on December 15, 1983. The Public Health Service sent numerous written inquiries regarding the loan to Petitioner between 1984 and 1986. These letters from the Public Health Service are replete with warnings that the failure to respond could lead to legal action. The letters repeatedly provided her with opportunities to work out an arrangement to repay her debt. By letter dated August 14, 1986, the Public Health Service notified Petitioner that, due to her financial difficulties, it was granting her a six-month forbearance on her loan from September 1, 1986 through March 31, 1987. However, Petitioner still failed to work out repayment terms after that, and a judgment was entered against her on February 16, 1988 in the United States District Court, Central District of California, for $36,196.71. By its terms, the judgment was to accrue interest at 6.59% per annum until paid.

Even after judgment was entered against her, Petitioner did not repay the loan. During 1991 and 1992, Petitioner, through her husband, Walter Zelman, attempted to negotiate a compromise payment with the Public Health Service, but was unsuccessful in coming to an agreement. On July 25, 1996, the Public Health Service sent a letter to Petitioner offering her the opportunity to enter into a repayment agreement or to pay the loan back in full within 60 days. The letter gave Petitioner notice that if she did not negotiate the repayment agreement within 60 days, or agree to an offset from Medicare and Medicaid reimbursements, the matter would be referred to the I.G. and Petitioner would be excluded until the entire debt had been repaid. Petitioner did not repay the loan, enter into a repayment agreement, or agree to an offset from Medicare and Medicaid reimbursements. The case was referred to the I.G. and a notice of exclusion was issued on January 15, 1997. On such facts, I find that the Secretary has taken all reasonable steps to obtain repayment of Petitioner's HEAL loan.

Petitioner asserts that the Public Health Service did not afford her ample opportunity to repay a reduced amount of the debt because she was unable to afford to repay the full amount and also that the repayment plans offered by the Public Health Service were at amounts she could not afford. On this basis, Petitioner asserts that the Secretary did not take all reasonable steps to secure repayment. I find that the statute and regulations do not require that Petitioner be provided with the opportunity to repay a reduced amount, only that the Secretary take all reasonable steps available to secure repayment of the loan. The record reflects that Petitioner, on numerous occasions, was offered opportunities to repay her loan under various repayment plans. Such record satisfies the requirements of the statute.

Finally, Petitioner asserts that her exclusion is unfair because government officials did not timely respond to communications from her representatives during the 20-day period from the time the exclusion notice was issued on January 15, 1997 and the time it went into effect on February 5, 1997. According to Petitioner, the exclusion would never have gone into effect if the government had acted in a timely manner to reach a settlement agreement during this period.

Petitioner's argument is without merit. The record shows that attempts were made by Petitioner's representatives to negotiate a settlement during the 20-day period which might have prevented the exclusion from taking effect. However, the fact that these attempts to negotiate a quick settlement of Petitioner's debt were not successful within a matter of days is not unexpected, and there is no evidence that the government deliberately delayed discussions in order to ensure that the exclusion would become effective. Indeed, a settlement agreement was expeditiously reached, and Petitioner's exclusion lasted less than two weeks. The record is devoid of evidence that government officials acted unreasonably or with undue delay in negotiating a settlement agreement after the notice of exclusion was issued.

In view of the foregoing, I conclude that the I.G. had the authority to exclude Petitioner from participating in Medicare and Medicaid under section 1128(b)(14) of the Act. See Azarpira, DAB CR372 (exclusion is reasonable where petitioner failed to respond to instructions on how to enter into repayment agreement; failed to provide information necessary to enter into an offset agreement; made his first payment only after exclusion; and never made payments large enough to pay even the accruing interest on his HEAL loans).

I conclude also that the length of the exclusion is reasonable. The regulations provide that an exclusion remains in effect until the default is cured or the obligations have been resolved to the Public Health Service's satisfaction. 42 C.F.R. § 1001.1501(b). The fact that the Public Health Service referred the matter to the I.G. after giving Petitioner numerous opportunities to resolve the debt indicates that the Public Health Service was not satisfied within the meaning of the regulation. The debt remained unpaid until February 18, 1997. The exclusion from February 5, 1997 until February 18, 1997 therefore was proper. Petitioner also evidently asserts that because the debt is now satisfied, the ALJ should rescind the period of exclusion. As I have found that the I.G. properly excluded Petitioner, I have no authority to retroactively reinstate Petitioner. Mark Baldwin, D.O., DAB CR614 (1999) and cases cited therein.

Joseph K. Riotto
Administrative Law Judge

1. In this decision, I use the term "Medicaid" to refer to all State health care programs from which Petitioner was excluded.

2. My decision here does not address Petitioner's exclusion under section 1892 of the Act for two reasons. First, I have found Petitioner's exclusion to be authorized under section 1128(b)(14) of the Act and I need not consider whether it is also authorized under section 1892. Second, it is not clear whether I have the authority to review an exclusion imposed by the I.G. under section 1892. See Rikantas (Rik) Majauskas, D.O., DAB CR441 (1996).