SUBJECT:

Alfredo Rodriguez-Machado,

Petitioner,

The Inspector General

By letter dated February 29, 2000, Alfredo Rodriguez-Machado, (Petitioner), was notified by the Inspector General (I.G.), U.S. Department of Health and Human Services (DHHS), that he would be excluded for a period of five years from participation in the Medicare, Medicaid, and all federal health care programs.⁽¹⁾ The I.G. explained that the five-year exclusion was mandatory under sections 1128(a)(1) and 1128(c)(3)(B) of the Social Security Act (Act) because Petitioner had been convicted of a criminal offense in connection with the delivery of a health care item or service under the Medicare program.

Petitioner filed a request for review of the I.G.'s action. The I.G. moved for summary disposition. In a prehearing conference, the parties agreed that the issue in this case could be decided by written submissions. 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.

Both parties submitted briefs in this matter. The I.G. submitted four proposed exhibits (I.G. Exs. 1-4). Petitioner did not object to these exhibits. Petitioner submitted 24 exhibits, which I have marked as P. Ex. 1-24. P. Exs. 6 and 7, the indictment and criminal conviction in his case, are duplicates of those exhibits submitted by the I.G., and I will not accept them into evidence for that reason. The I.G. did not object to Petitioner's other exhibits which I renumber and accept as P. Ex. 1-22.

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

Under section 1128(a)(1) of the Act, the Secretary of DHHS, shall exclude from participation in the Medicare and Medicaid programs any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under Medicare or Medicaid. Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a)(1) of the Act shall be for a period of at least five years.

Petitioner contends that he was not guilty of the criminal conduct for which he has been convicted. Instead, Petitioner asserts that he pled guilty on the advice of his attorney. Further, Petitioner maintains that the I.G. acted improperly in having his exclusion begin almost five years after the date his case first came under investigation.

1. During the period relevant to this case, Petitioner was the general manager and principal officer of Ivonyx, Inc. for Puerto Rico. I.G. Ex. 1.

2. Ivonyx was in the business of providing parenteral hemodialysis nutrition therapy treatment (treatment) to Medicare beneficiaries. I.G. Ex. 1.

3. Ivonyx contracted with Farmacia Nueva Modelo (Farmacia), a company in Puerto Rico, to prepare and dispense for Ivonyx the treatment for Medicare beneficiaries in plastic bags. Id.

4. Petitioner and Farmacia devised a scheme to defraud Medicare in which Farmacia would present Petitioner with an invoice for five units of treatment when in fact only three units of treatment were provided; Petitioner would, in turn, refer the fraudulent invoice for five units of treatment to Ivonyx's headquarters which would thereafter submit a claim to Medicare for five units of treatment; and, as a result, Medicare paid Ivonyx for two units of treatment that were never prepared by Farmacia or delivered to Medicare beneficiaries. Id.

5. On December 11, 1996, a Grand Jury Indictment was filed in the United States District Court, District of Puerto Rico, charging that Petitioner and Farmacia, in violation of 42 U.S.C. § 1320a-7b(a)(1) and 18 U.S.C. § 2, aiding and abetting each other, did knowingly, wilfully, and unlawfully make, or cause to be made, multiple false statements or representations of material facts in applications for payment from the Medicare program in that Petitioner and his co-defendants fraudulently certified to Medicare that parenteral hemodialysis patients were receiving five weekly bags of treatment when in fact, as Petitioner knew, such statements were false. Id.

6. On February 9, 1998, Petitioner entered a plea of guilty to the indictment of false statements or representations for payment under a federal health care program (Medicare), in violation of 42 U.S.C. § 1320a-7b(a)(1) and the District Court found him guilty thereof. I.G. Ex. 2.

7. As a result of his conviction, Petitioner was sentenced to a five-month period of incarceration with work release, two years of supervised probation after release, and a $50 special assessment. I.G. Ex. 2.

8. Petitioner's guilty plea, the acceptance of such plea by the District Court, and the entry of a judgment of conviction against Petitioner by the District Court, constitutes a "conviction" within the meaning of sections 1128(i)(1) and 1128(i)(3) of the Act.

9. Petitioner's conviction for false statements or representations for payment under a federal health care program, in violation 42 U.S.C. § 1320a-7b(a)(1), is related to the delivery of a [health care] item or service under the Medicare/Medicaid programs within the meaning of section 1128(a)(1) of the Act.

10. The Secretary of DHHS has delegated to the I.G. the duty to determine and impose exclusions pursuant to section 1128(a)(1) of the Act.

11. Once an individual 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.

12. On February 29, 2000, Petitioner was notified by the I.G. that he was being excluded from participation in the Medicare, Medicaid, and all federal health care programs for a five-year period, pursuant to section to section 1128(a)(1) of the Act.

13. 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.

DISCUSSION

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 first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.

This section 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.

Petitioner pled guilty and the record shows that the District Court accepted his plea. Therefore, Petitioner was convicted within the meaning of section 1128(i)(3). The District Court also entered a judgment of conviction against Petitioner. Accordingly, Petitioner also was convicted within the meaning of section 1128(a)(i) of the Act.

Next, it is required under section 1128(a)(1) of the Act that the crime at issue be related to the delivery of a health care item or service under the Medicare/Medicaid program. The record establishes that the Petitioner, in pleading guilty to Count 1 of the indictment, admitted to filing, or causing to be filed, claims against Medicare that charged for items or services which were never provided. The filing of fraudulent Medicare and Medicaid claims consistently has been 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 Barbara 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 health care item or service under a covered program. Berton Siegel, D.O., DAB No. 1467 (1994). In Petitioner's case, a necessary nexus links the facts underlying his crime with the delivery of health care items or services under Medicare. The falsified claims leading to Petitioner's conviction resulted in his receipt of fraudulent Medicare reimbursement. In Rosaly Saba Khalil, M.D., DAB CR353 (1995), the ALJ found that a criminal offense stemming from the fraudulent receipt of reimbursement checks from Medicaid provided a sufficient nexus between the offense and the delivery of health care items or services under Medicaid. Additionally, the ALJ in Khalil 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." Id. In the present case, the nexus between Petitioner's offenses and the delivery of health care items or services is firmly established by his guilty plea to the charge of "false statements or representations for payment under a Federal Health Care Program" in violation of 42 U.S.C. § 1320a-7b(a)(1).

Petitioner also seeks to challenge the propriety of his criminal conviction, claiming that he was in fact not guilty of the offense for which he has been convicted and only pled guilty on advice of counsel. Petitioner's argument amounts to a collateral attack on his conviction, which the Departmental Appeals Board has previously held to be an ineffectual argument in the context of an exclusion appeal as the I.G. and the ALJ are not permitted to look beyond the fact of conviction. Paul R. Scollo, D.P.M., DAB No. 1498 (1994); Ernest Valle, DAB CR309 (1994); Peter Edmondson, DAB No. 1330 (1992).

In his statement, Petitioner also asserts that it is unfair that his exclusion did not commence on the date he entered into an agreement with the Department of Justice acknowledging his role in the criminal scheme. I find no merit in this claim. The I.G. has the discretion to determine when to impose an exclusion. Laurence Wynn, M.D., DAB CR344 (1994), and neither the statute nor the regulations set any specific deadline for the I.G. to act. Chander Kachoria, DAB No. 1380 (1993). It is clear that an exclusion must take effect 20 days from the date of the I.G.'s notice of exclusion. 42 C.F.R. § 1001.2002(b). Consequently, this exclusion must take effect 20 days after the February 29, 2000 exclusion letter. Although Petitioner implies that his exclusion should be retroactive, an ALJ is without authority to change the effective date of an exclusion. Stanley Karpo, D.P.M., CR356 (1995); Chander Kachoria, supra; Laurence Wynn, M.D., supra; Samuel W. Chang, M.D., DAB No. 1198 (1990). Similarly, the I.G. has no authority to make exclusions retroactive. Thus, neither the ALJ nor the I.G. can move the effective date of the exclusion back to Petitioner's date of conviction. See Karpo, at 12. In Chander Kachoria, supra, there was a three-year delay between the date of the I.G. initial investigation and the date when the Petitioner received the exclusion notification from the I.G. The Petitioner argued that his rights were violated by the length of time between the conviction and the exclusion letter. The ALJ ruled however that neither the statute nor the regulations set any specific deadline for the I.G. to act, once an individual is convicted. Consequently, I find that the time which has elapsed between Petitioner's conviction or some earlier point and the receipt of the exclusion letter does not violate his due process rights.

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 he has been convicted of a criminal offense related to the delivery of a [health care] item or service under the Medicare program. The five-year exclusion is therefore sustained.

Joseph K. Riotto

Administrative Law Judge

1. In this decision, I use the term "Medicaid" to include any State health care programs which receives federal funds as defined by section 1128(h) of the Social Security Act.