SUBJECT:

Conrad J. Sarnecki, Jr., D.O.,

Petitioner,

The Inspector General

By letter dated April 28, 2000, the Inspector General (I.G.), U.S. Department of Health and Human Services (DHHS), notified Conrad J. Sarnecki, Jr., D.O. (Petitioner), that he would be excluded from participation in the Medicare, Medicaid, and all federal health care programs as defined in section 1128B(f) of the Social Security Act (Act), for a period of five years.⁽¹⁾ The I.G. explained that the five-year exclusion was mandatory under sections 1128(a)(4) and 1128(c)(3)(B) of the Act, because Petitioner had been convicted in the Court of Common Pleas of Luzerne County, Pennsylvania of a criminal offense relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

Petitioner filed a request for review of the I.G.'s action. The I.G. moved for summary disposition. Petitioner also moved for summary disposition. Because I have determined that there are no material and relevent 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 eight proposed exhibits (I.G. Ex. 1-8). Petitioner did not object to these exhibits, and I accept into I.G. Ex. 1-8 into evidence. The I.G. also submitted a reply brief in this matter. Petitioner did not submit any exhibits.

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, and all federal health care programs for a period of five years.

Sections 1128(a)(4) and 1128(c)(3)(B) of the Act mandate exclusion of any individual who has been convicted of a felony criminal offense relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance from participation in Medicare, Medicaid, and all federal health care programs for a period of at least five years.

Section 1128(i) of the Act provides that an individual or entity is considered to have 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.

Section 1128(i) of the Act 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 contends that he was not convicted within the meaning of section 1128(i) of the Act. Petitioner contends that the procedure under which he was tried did not result in a conviction under Pennsylvania law. He notes that under Pennsylvania law, probation was imposed without verdict and his guilty plea was expunged and the charges against him were dismissed upon his successful completion of probation. Pennsylvania statute provides that the court shall discharge such a person and dismiss the proceedings within and that such discharge and dismissal shall be without adjudication of guilt and shall not constitute a conviction for any purpose whatsoever. 35 Penn. Stat. §780-117.

Further, Petitioner asserts that his violation involved self-medication and did not involve any injury to a third party. Moreover, Petitioner notes that there was no element of gain or financial benefit to him.

Finally, Petitioner maintains that it is a violation of his constitutional rights to exclude him as he claims such action constitutes double jeopardy, since he has already been tried for the same conduct in a criminal proceeding. He also contends that an exclusion represents the imposition of an ex post facto application of law. Petitioner asserts that his exclusion is barred under the procedure of Pennsylvania law, which permitted the imposition of probation without verdict and provides that discharge under such procedure shall not constitute a conviction for any purpose.

1. During the period relevent to this case, Petitioner was licensed to practice osteopathic medicine and surgery in the Commonwealth of Pennsylvania. I.G. Ex. 5.

2. On May 8, 1998, Petitioner was charged in a Police Criminal Complaint with 16 counts of knowingly and intentionally acquiring or obtaining possession of Hydrocone/APAP 7.5mg/500, a Schedule III controlled substance, from CVC Pharmacy in Kingston, Pennsylvania, through illegal prescriptions, in violation of Section 13(a)(12) of Act 64 of the Pennsylvania Controlled Substance, Drug, Device and Cosmetic Act. I.G. Ex.3.

3. On December 10, 1998, in the Court of Common Pleas of Luzerne County, Pennsylvania, Petitioner pleaded guilty to all 16 felony counts as charged. I.G. Exs. 4 and 5.

4. The Court accepted Petitioner's guilty plea and sentenced him to one year of probation "without a verdict" on the condition that he comply with the terms of the drug treatment program of the Pennsylvania Medical Society. I.G. Exs. 4 and 5.

5. On January 26, 2000, on Petitioner's Motion for Dismissal of Charges and Expungement of Record, the Court of Common Pleas of Luzerne County ordered that Petitioner's charges be dismissed and that his arrest record related to these charges be expunged from "the criminal repositiories of all criminal and justice agencies" because Petitioner had successfully met the conditions of probation by completing the drug treatment program of the Pennsylvania Medical Society. I.G. Exs. 6,7, and 8.

6. The Secretary of DHHS has delegated to the I.G. the duty to determine and impose exclusions pursuant to section 1128(a)(4) of the Act.

7. On April 28, 2000, the I.G. notified Petitioner that he was being excluded from participation in the Medicare/Medicaid program for a period of five years pursuant to section 1128(a)(4) of the Act.

I.G. Ex. 1.

8. Once an individual has been convicted of a felony criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance under section 1128(a)(4) of the Act, exclusion is mandatory under section 1128(c)(3)(B) of the Act.

9. Where the I.G. excludes an individual pursuant to section 1128(a)(4) of the Act, the minimum term of exclusion is five years pursuant to section 1128(c)(3)(B) of the Act.

10. Petitioner's entry of a guilty plea and the acceptance of such plea by the Luzerne County Court, Commonwealth of Pennsylvania, constitutes a conviction within the meaning of sections 1128(i)(3) and (4) of the Act.

11. Petitioner's felony conviction related to the unlawful prescription or dispensing of a controlled substance is within the scope of section 1128(a)(4) of the Act.

12. The I.G. properly excluded Petitioner, pursuant to section 1128(a)(4) 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)(4) 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. Section 1128(i) of the Act established for alternative definitions of the "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.

The record reflects that Petitioner pleaded guilty to sixteen counts of knowingly and intentionally acquiring or obtaining Hydrocone/APAP 7.5 mg/500, a Schedule III controlled substance, from CVC Pharmacy in Kingston, Pennsylvnia, through illegal prescriptions in violation of section 13(a)(12) of Act 64 of the Pennsylvania Controlled Substance, Drug, Device and Cosmetic Act. The Court accepted his plea and sentenced him to probation without verdict for one year. Therefore, Petitioner was convicted within the meaning of section 1128(i)(3). A plea is "accepted within the meaning of section 1128(i)(3) of the Act whenever a party offers a plea and a court consents to receive it as an element of an arrangement to dispose of a pending criminal matter." Maximo Levin, M.D., DAB CR343 (1994); Lila M. Nevrekar, M.D., DAB CR319 (1994).

I further find that Petitioner was convicted within the scope of section 1128(i)(4) of the Act. The record reflects that Petitioner was sentenced pursuant to a deferred adjudication procedure. Departmental Appeals Board (DAB) decisions, which have dealt with such deferred adjudications, have held that such procedures constitute convictions within the scope of section 1128(i)(4) of the Act. Benjamin P. Council, M.D., DAB CR391 (1995); Carlos E. Zamora, M.D., DAB CR22 (1989) (five-year exclusion of physician who entered a plea of nolo contendere which was later withdrawn upheld). The petitioner in Council entered a guilty plea and was not adjudicated guilty or sentenced but was instead placed on probation as part of a deferred sentencing option. Based on those facts, the administrative law judge (ALJ) held that the petitioner had entered into a deferred sentencing arrangement within the scope of section 1128(i)(4) of the Act.

In the present case, it is clear that judgment of conviction has been withheld as Petitioner satisfactorily completed his probation term but, under DAB precedent cited above, such procedure is within the scope of section 1128(i)(4) of the Act. The fact that the court set aside Petitioner's plea and dismissed the charge does not affect Petitioner's conviction for purposes of the Act. There is nothing in the Act that prohibits the I.G. from excluding a petitioner after a case has been dismissed following a deferred adjudication. Aida Cantu, CR462 (1997). For the purposes of the Act, it is the fact of the conviction itself that gives the I.G. authority to exclude. Id. Here, Petitioner has been convicted within the meaning of sections 1128(i)(3) and (4) of the Act.

Next, it is required under section 1128(a)(4) of the Act that the crime at issue be a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. The record established that these elements existed in Petitioner's case and he does not challenge that these statutory requirements have been satisfied. Petitioner does assert that his offense involved self-medication, did not involve injury to a third party, and did not involve finncial gain to him. To the extent that such assertions involve a collateral attack on his conviction, such claims are not permitted in the context of an exclusion appeal. Paul R. Scollo, D.P.M., DAB No. 1498 (1994); Ernest Valle, DAB CR309 (1994); Peter Edmonson, DAB No. 1330 (1992).⁽²⁾

Petitioner also argues that to exclude him from the Medicare, Medicaid, and all federal health care programs would violate the constitutional protection against double jeopardy because he has been punished in the course of the Pennsylvania criminal case. The ALJ however has no authority to rule upon the constitutionality of the I.G.'s actions. See, e.g., Roberta E. Miller, DAB CR367 (1995). Moreover, the DAB and federal courts have found that exclusions imposed under section 1128 of the Act are remedial in nature, rather than punitive, and do not violate the double jeopardy provision of the Constitution. Id. at 6-7; Manocchio v. Kusserow, 961 F.2d 1539, 1541 (11th Cir. 1992); Kahn v. Inspector General of the U.S. Department of Health and Human Services, 848 F.Supp. 432 (S.D.N.Y. 1994); Westin v. Shalala, 845 F.Supp. 1446 (D. Kan. 1994); Joann Fletcher Cash, DAB No. 1725 (2000). Because the purpose of Petitioner's exclusion is to protect program beneficiaries and not to punish Petitioner, this exclusion is remedial in nature. Paul Karsch, DAB CR454 (1997).

Petitioner also maintains that his exclusion represents the imposition of an ex post facto law. The record reflects that the offenses in question occurred between April 15, 1997 and July 24, 1997 and that he pleaded guilty on December 10, 1998. Section 1128(a)(4) was effective January 1, 1997, prior to Petitioner's crimes. In fact, the language of section 1128(a)(4) states that it applies to any individual who has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, i.e., January 1, 1997. Moreover, the civil remedy of exclusion does not trigger the protections afforded by the constitution which are applicable to criminal laws. Cherlyn J. Parrish, M.D., DAB CR560 (1998).

Finally, Petitioner asserts that his exclusion is barred under the procedure of Pennsylvania law, which permitted the imposition of probation without verdict as such law provides that discharge under such procedure shall not constitute a conviction for any purpose. I find no merit in such claim. Section 1128(i) specifically addresses the fact that an individual is considered to have been "convicted" for purposes of an exclusion under section 1128(a) regardless of whether "the individual...has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld." Section 1128(i)(4) of the Act. Thus, "Congress defined the effect that was to be given to State criminal dispositions such as the one at issue here. Congress stated that such arrangements were to be considered as convictions for purposes of the Federal exclusion law, even if they were not convictions under State law." Michael P. Hiotis, DAB CR316 (1994). The I.G.'s decision to exclude Petitioner from all federal health care programs is a matter governed by federal law, based on the Supremacy Clause of the United States Constitution. Id. "To allow the State to bar enforcement of the Federal law would be to frustrate and override Federal law in violation of the Supremacy Clause." Diane Amicucci, L.P.N., DAB CR540 (1998) (quoting Janet Wallace, L.P. N., DAB No. 1326 (1992)). Consequently, Petitioner's exclusion under section 1128(a)(4) of the Act is not precluded by the dismissal of the charges and expungement of his criminal record by the Pennsylvania court.

Sections 1128(a)(4) and 1128(c)(3)(B) of the Act mandate that Petitioner herein 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. 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 program which receives federal funds, as defined by section 1128(h) of the Act.

2. As the I.G. has imposed the minimum term of exclusion, to the extent Petitioner makes such claims in mitigation, such claims are not relevant.