SUBJECT:

Paul W. Williams, Jr. and Grand Coteau Prescription,

Petitioner,

The Inspector General

Docket No.C-00-739 and C-01-085
Decision No. CR787

DECISION

This case is before me pursuant to requests for hearing filed on July 27, 2000, by Paul W. Williams, Jr. (Docket No. C-00-739), and on October 9, 2000, by Grand Coteau Prescription (Docket No. C-01-085).⁽¹⁾

By letter dated May 31, 2000, the Inspector General (I.G.) notified Petitioner Paul W. Williams, Jr., that he was being 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 10 years. The I.G. informed Petitioner that his exclusion was imposed under section 1128(a)(1) of the Act, due to his conviction of a criminal offense (as defined in section 1128(i) of the Act) related to the delivery of an item or service under the Medicaid program. Petitioner Williams was also informed that his exclusion was for a period greater than the minimum period of five years under section 1128(c)(3)(B) of the Act because of the following circumstances:

1. The acts resulting in the conviction, or similar acts, resulted in a financial loss to a government program or one or more entities of $1,500 or more.

2. The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more.

On September 29, 2000, the I.G. notified Petitioner Grand Coteau Prescription that it was being excluded under section 1128(b)(8) of the Act for a period of 10 years because Petitioner Williams had ownership or managerial control over this entity.

I held a telephone prehearing conference in Docket No. C-00-739 on September 27, 2000. At that time, I established a briefing schedule under which the I.G. would file a motion for summary judgment. In the event unresolved issues remained after I issued a ruling on the summary judgment motion, I scheduled a hearing to take place in Baton Rouge, Louisiana, on July 10 - 11, 2001. Subsequently, by Order dated March 19, 2001, I stated that I would not grant Petitioners' motion for an extension unless the parties submitted a stipulation stating that there were no material facts in controversy and the only issues to be decided were legal issues. My Order stated further that if the parties were not able to agree on such a stipulation, I would cancel the briefing schedule and set prehearing deadlines.

In response, the parties submitted a Stipulation dated April 5, 2001, agreeing to all but the following Proposed Findings of Fact and Conclusions of Law attached to the I.G.'s brief dated January 8, 2001: 3, 24, 25, 27, 30, 33, 35 and 36.⁽²⁾ In view of that Stipulation, I concluded that no factual issues remained in controversy and that an evidentiary in-person hearing was unnecessary. I therefore canceled the hearing scheduled for July 10 - 11, 2001, in Baton Rouge, Louisiana (See letter order dated May 3, 2001), and have issued this decision as dispositive of all pending matters in the consolidated cases.

Each party submitted written briefs in support of their respective contentions. The I.G. submitted 10 exhibits with its January 8, 2001 brief in support of its motion for summary affirmance. These have been identified as I.G. Exhibits (I.G. Exs.) 1 - 10. Petitioner offered one exhibit consisting of the court record of his entry of a no contest plea of guilty. I have not admitted that document into the record because it is a duplicate of I.G. Ex. 6. Petitioner did not object to the I.G.'s proposed exhibits. Therefore, I admit into evidence I.G. Exs. 1 - 10. I have designated the parties' Stipulation as ALJ Ex. 1 and admitted it into the record. On May 3, 2001, I granted the I.G.'s motion for leave to file a reply to Petitioners' brief dated April 5, 2001. The I.G. filed its reply brief concurrently with its motion.

It is my decision to sustain the determination of the I.G. to exclude Petitioners Paul W. Williams, Jr. and Grand Coteau Prescription from participating in the Medicare, Medicaid, and all federal health care programs, for a period of 10 years. I base my decision on the documentary evidence, the applicable law and regulations, and the arguments of the parties. It is my finding that Petitioner Williams was convicted of a criminal offense related to the delivery of an item or service under the Medicaid program. Furthermore, I find that by reason of the conviction and exclusion of Petitioner Williams, and because of his ownership of Grand Coteau Prescription, the I.G. is authorized to exclude Petitioner Grand Coteau Prescription from Medicare, Medicaid, and all federal health care programs pursuant to section 1128(b)(8) of the Act. See Paul S. Barrentine, R.Ph., DAB CR174 (1992). Additionally, I find that the 10-year exclusions imposed on Petitioners are not unreasonable.

2. Whether the 10-year exclusion imposed by the I.G. upon Petitioner Williams is unreasonable.

3. Whether the 10-year exclusion imposed by the I.G. upon Petitioner Grand Coteau Prescription is unreasonable.

Section 1128(a)(1) of the Act authorizes the Secretary of the U.S. Department of Health and Human Services (Secretary) to exclude from participation in any federal health care program (as defined in section 1128B(f) of the Act), any individual convicted of a criminal offense relating to the delivery of a health care item or service.

An exclusion under section 1128(a)(1) of the Act must be for a minimum period of five years. Section 1128(c)(3)(B) of the Act. Aggravating factors can serve as a basis for lengthening the period of exclusion. 42 C.F.R. § 1001.102(b). If aggravating factors justify an exclusion longer than five years, mitigating factors may be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).

Section 1128(b)(8) of the Act authorizes the Secretary to exclude from participation in Medicare, Medicaid, and all federal health care programs any entity that is owned, controlled, or managed by any person who has been convicted of any offense described in section 1128(a) of the Act or who has been excluded from a federal or State health care program. Exclusions under section 1128(b) of the Act are permissive, and entities excluded under § 1128(b)(8) generally must be excluded for the same length of time as the individual whose relationship with the entity is the basis for the exclusion, if the individual has been or is being excluded. 42 C.F.R. § 1001.1001(b)(1).

Pursuant to 42 C.F.R. § 1001.2007, an individual or entity excluded under sections 1128(a)(1) or 1128(b)(8) of the Act may file a request for a hearing before an administrative law judge.

The findings of fact and conclusions of law noted below in bold face are followed by a discussion of each finding.

1. Petitioner Williams' conviction of a criminal offense related to the delivery of an item or service under the Medicaid program justified his exclusion by the I.G. from participation in the Medicare, Medicaid, and all other federal health care programs.

Petitioner Williams was a registered pharmacist and the owner of Grand Coteau Prescription in Grand Coteau, Louisiana. I.G. Ex. 7, at 1; ALJ Ex. 1, at 3 (Numbered ¶ 1).

On September 15, 1998, a Bill of Information was filed in the 19^th Judicial District Court, Parish of East Baton Rouge, Louisiana, charging Petitioner Williams with one count of felony theft, specifically that between June 1, 1992 and December 31, 1994, Petitioner Williams, d/b/a Grand Coteau Prescription Shoppe, misappropriated monies having an aggregate value in excess of $500 from the State of Louisiana's Medicaid program, by means of fraudulent conduct, practices, or representations. I.G. Ex. 5; see ALJ Ex. 1, at 3 (Numbered ¶ 2).

Petitioner Williams' felony theft of Medicaid funds was committed through his fraudulent submission of claims for reimbursement to the Louisiana Medicaid program, from June 1, 1992 through December 31, 1994, for greater quantities of drugs than he had purchased and could account for in his pharmacy's inventory. I.G. Exs. 7 - 9; ALJ Ex. 1, at 3 (Numbered ¶ 6). Based on the submission of those false claims to the Louisiana Medicaid program, Petitioner Williams received a total overpayment of $43,792.10. I.G. Exs. 7 - 9; ALJ Ex. 1, at 3 (Numbered ¶ 7).

On February 16, 2000, Petitioner Williams pleaded guilty to one count of felony theft. After accepting Petitioner Williams' guilty plea, the court deferred the imposition of a sentence for a period of three years and placed him on active, supervised probation for that period. I.G. Exs. 6, 7.

Petitioner Williams' conviction was related to the delivery of an item or service under the Medicaid program. ALJ Ex. 1, at 5 (Numbered ¶ 26).

2. Petitioners' exclusion for a period of ten years is not unreasonable.

An exclusion under section 1128(a)(1) of the Act must be for a minimum mandatory period of five years as set forth in section 1128(c)(3)(B) of the Act:

[s]ubject to subparagraph (G), in the case of an exclusion under subsection (a), the minimum period of exclusion shall be not less than five years, . . .

When the I.G. imposes an exclusion for the mandatory five-year period, the reasonableness of the length of the exclusion is not an issue. 42 C.F.R. § 1001.2007(a)(2). Aggravating factors that justify lengthening the exclusion period may be taken into account, but the five-year term will not be shortened. Petitioner Williams entered a no contest plea of guilty as charged to one count of felony theft perpetrated against the State of Louisiana's Medicaid program. He does not dispute his conviction of a criminal offense related to the delivery of an item or service under the Louisiana Medicaid program. See ALJ Ex. 1. As a result of Petitioner's program-related conviction, the I.G. was therefore required to exclude him pursuant to section 1128(a)(1) of the Act for at least five years.

Petitioner Grand Coteau Prescription's exclusion is derivative of Petitioner Williams' mandatory exclusion pursuant to ¶ 1128(b)(8) of the Act. Consequently, the only issue in controversy regarding Petitioner Grand Coteau Prescription is whether the 10-year exclusion imposed and directed against it is unreasonable.

The I.G. has discretion to impose an exclusion of more than five years in appropriate circumstances. In Petitioner Williams' case, the I.G. added five years to the statutory five-year minimum period.

The aggravating factors that the I.G. may consider as a basis for lengthening a period of exclusion are found at 42 C.F.R. § 1001.102(b). In the case at hand, the I.G. alleges the existence of two aggravating factors, which justify the 10 year exclusion period imposed against Petitioner Williams:

1. The acts resulting in Petitioner's conviction, or similar acts, resulted in financial loss to a State health care program of $1,500 or more (42 C.F.R. § 1001.102(b)(1));

2. The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more (42 C.F.R. § 1001.102(b)(2)).

Petitioners concede by way of stipulation that both of these two aggravating factors are present in this case. Specifically, they stipulated to the following proposed FFCLs attached to the I.G.'s brief:

Based on Petitioner Williams' submission of false claims to the Louisiana Medicaid Program, between June 1, 1992 and December 31, 1994, he received a total overpayment of $ 43,792.10.

Petitioner Williams' acts in fraudulently over-billing the Louisiana Medicaid Program between June 1, 1992 and December 31, 1994 resulted in his conviction for felony theft of Medicaid funds, and these same acts also resulted in a financial loss to the Lousiana Medicaid Program of $43,792.10.

The acts resulting in Petitioner Williams' conviction resulted in a financial loss to the Louisiana Medicaid program of more than $1,500. 42 C.F.R. § 1001.102(b)(1).

The acts resulting in Petitioner Williams' conviction, or similar acts, were committed over a period of more than one year. 42 C.F.R. § 1001.102(b)(2).

ALJ Ex. 1, at 3, 5, and 6 (Numbered ¶ 7, 21, 28 - 29).

Petitioner Williams asserts that Article 893 of the Louisiana Code of Criminal Procedure, pursuant to which he entered his plea, provides that, in the event a probationary period is served satisfactorily, the court may set aside the conviction and enter a dismissal. Such dismissal, he states, is deemed to have the same effect as an acquittal. Inasmuch as Petitioner Williams was placed on supervised probation for a period of three years, he may qualify for the benefits of the legislative largess made available to him under Article 893 of the Louisiana Code of Criminal Procedure. Under these circumstances, he argues, the I.G.'s 10-year exclusion is excessive because it goes far beyond the three-year probationary period resulting from his conviction, and because of the possibility that his criminal record may be cleansed by the Court at the end of his probationary term.

(1) The individual or entity was convicted of 3 or fewer misdemeanor offenses, and the entire amount of financial loss to Medicare and the State health care programs due to the acts that resulted in the conviction, and similar acts, is less than $1,500;

(2) The record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual's culpability; or

(3) The individual's or entity's cooperation with Federal or State officials resulted in -

(i) Others being convicted or excluded from Medicare, Medicaid, and all other Federal health care programs,

(ii) Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or

(iii) The imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.

42 C.F.R. § 1001.102(c).

Two conclusions are obvious from the language of 42 C.F.R. § 1001.102(c). First, it is clear that only the mitigating factors set forth in that section may be considered for purposes of reducing the term of exclusion when the I.G. exercises the discretion to go beyond the five-year mandatory minimum period. Secondly, the possibility that, at the termination of Petitioner Williams' three-year probationary period, the court may exercise its discretion to expunge his criminal conviction, is not listed as a mitigating factor. Moreover, for purposes of subsections (a) and (b) of section 1128 of the Act, an individual or entity is considered to have been "convicted" of a criminal offense 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. Act, section 1128(i).

In view of the foregoing, I find that Petitioners have not come forward with evidence of any mitigating factor. To determine if the I.G.'s length of exclusion is unreasonable, I must consider evidence submitted by the parties pertaining to the aggravating and mitigating factors contained in 42 C.F.R. § 1001.102, and if the I.G.'s decision is within a reasonable range, given my findings. I conclude that the I.G. has established the existence of two aggravating factors, and Petitioners have failed to point to even one mitigating factor. In fact, the evidence before me points to the seriousness of Petitioner Williams' deliberate conduct over an extended period of time, impairing the fiscal soundness of federal and State health care programs and the public confidence in those programs. This is clear evidence of Petitioners' untrustworthiness.

For the reasons stated above, and in light of my consideration of the current statutory and regulatory criteria, I find that the 10-year exclusion imposed by the I.G. was within a reasonable range of possible exclusion periods given the circumstances of Petitioner Williams' case, in which two aggravating factors were present and no mitigating factors were established. The 10-year exclusion is a legitimate remedy consistent with the purpose of section 1128 of the Act. That purpose is to protect federally funded health care programs and their beneficiaries and recipients from untrustworthy individuals and entities. See Joann Fletcher Cash, DAB No. 1725 (2000).

CONCLUSION

Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate that Petitioner Paul W. Williams, Jr. be excluded from Medicare, Medicaid, and all other federal health care programs for a period of at least five years because he was convicted of a criminal offense related to the delivery of an item or service under Medicare or any State health care program. The I.G. was also justified in lengthening the period of exclusion due to the existence of aggravating factors. The 10-year exclusion is therefore sustained. 42 C.F.R. § 1001.1001(b)(1) requires that Petitioner Grand Coteau Prescription be excluded for the same 10 year period of time and therefore, the entity's exclusion is not unreasonable in this case.

Jose A. Anglada

Administrative Law Judge

1. In the absence of objection, I consolidated Docket Nos. C-00-739 and C-01-085 by Order dated December 26, 2000, and the case was thereafter designated as "C-00-739."

2. The I.G. proposed 36 Findings of Fact and Conclusions of Law (FFCL). In their Stipulation, the parties listed the numbered FFCLs as to which they agreed. However, here, I am listing those FFCLs as to which they did not agree, since they are fewer in number.