SUBJECT:

Dinkar N. Patel, M.D.,

Petitioner,

The Inspector General

DECISION

I find that the Inspector General (I.G.) is required to exclude Petitioner, Dinkar N. Patel, M.D. (Petitioner), pursuant to section 1128(b)(3) of the Social Security Act (Act), from participating in Medicare, Medicaid, and all federal health care programs. The exclusion is mandated as a consequence of Petitioner's conviction, under Virginia State law, of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. I find additionally that the length of the exclusion that the I.G. imposed against Petitioner, 12 years, is unreasonable. I therefore deny the I.G.'s Motion for Summary Affirmance and modify the exclusion to a period of three years, the minimum period permitted by the regulations governing exclusions taken under section 1128(b)(3) of the Act where there are no mitigating factors present.

I. Background

Petitioner is a physician. By notice dated January 31, 2001 (Notice), the I.G. informed Petitioner that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of 12 years. The I.G. imposed its exclusion pursuant to section 1128(b)(3) of the Act, based on Petitioner's conviction in the United States District Court for the Western District of Virginia, of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. The I.G. alleged the presence of two aggravating circumstances, which were taken into consideration: (1) Petitioner's court-ordered restitution amounts to the Medicare, Medicaid, and Black Lung Benefits Trust Program, and (2) the fact that Petitioner's license to practice medicine in Virginia was placed on indefinite probation with restrictions.

On March 28, 2001, Petitioner requested a hearing. The case was originally assigned to Administrative Law Judge Joseph K. Riotto. On April 27, 2001, this case was reassigned to me for the hearing and decision.

On May 7, 2001, I convened a telephone prehearing conference. During the conference, the parties agreed that this case could be decided on the written record. With the agreement of counsel, I set a schedule for the parties to file briefs supported by documentary evidence.

The I.G. moved for summary affirmance of the case and filed a brief (I.G. Brief), accompanied by five exhibits (I.G. Ex. 1 - I.G. Ex. 5). Petitioner filed a motion for a substantial reduction in his exclusion, and a brief in opposition to the I.G.'s motion, and in support of his own motion. Accompanying Petitioner's submission were six exhibits (P. Ex. 1 - P. Ex. 6).

The parties did not object to each other's proposed exhibits. In the absence of objection, I admit I.G. Ex. 1 - I.G. Ex. 5 and P. Ex. 1 - P. Ex. 6 into evidence. I base my decision in this case on the parties' arguments, the exhibits, and the applicable law.

II. Issues, applicable law and regulations, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

1. The I.G. was required to exclude Petitioner pursuant to section 1128(b)(3) of the Act; and

2. The 12-year exclusion that the I.G. determined to impose against Petitioner is unreasonable.

B. Applicable Law and Regulations

Under section 1128(b)(3) of the Act, the Secretary of the United States Department of Health and Human Services (Secretary) may exclude any individual or entity that has been convicted, under federal or State law, of a criminal offense consisting of a misdemeanor relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance from participation in Medicare and Medicaid. Section 1128(c)(3)(D) of the Act provides that an exclusion imposed under section 1128(b)(3) of the Act shall be for three years unless the Secretary determines, according to published regulations, that a shorter period is appropriate because of mitigating circumstances or that a longer period is appropriate because of aggravating circumstances. Under the regulations, if certain enumerated mitigating factors are present, the exclusion may be shortened to less than the three-year period. 42 C.F.R. § 1001.401(c)(3). If certain enumerated aggravating factors are present, the exclusion may be extended beyond the three-year period. 42 C.F.R. § 1001.401(c)(2).

Section 1128(i) of the Act lists four alternative definitions of the term "convicted." This section 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.

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.

C. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below, as a separate heading. I discuss each Finding in detail.

1. Petitioner was convicted, in the State of Virginia, of a criminal offense as described by section 1128(b)(3) of the Act.

The statute authorizes the I.G. to exclude an individual or entity from participation in the Medicare and Medicaid programs for a period of three years if the individual or entity was convicted under federal or State law of a criminal misdemeanor offense relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

In this instance, Petitioner does not dispute that he was convicted of a criminal offense within the meaning of section 1128(b)(3) of the Act. Petitioner argues, however, that the 12-year exclusion imposed by the I.G. is unreasonable and punitive because the I.G. has made no showing that the actual offenses were related to Medicare or Medicaid. Petitioner contends that the I.G.'s use of Petitioner's court-ordered restitution amount as an aggravating factor must fail for lack of proof that a program-related nexus existed.

The evidence submitted by the I.G. establishes that, on October 25, 1999, the United States Attorney's Office for the Western District of Virginia filed a five-count Information against Petitioner. I.G. Ex. 2. The Information charged Petitioner with knowingly, intentionally and unlawfully distributing and dispensing diphenoxylate, a Schedule V Controlled Substance, on five separate occasions, "without a legitimate medical purpose in the usual course of [Petitioner's] professional medical practice and beyond the bounds of medical practice," in violation of 21 U.S.C. § 841(b)(3). On the same day, Petitioner pleaded guilty to all five counts listed in the Information. I.G. Ex. 3. On January 21, 2000, based on Petitioner's guilty plea, the court sentenced Petitioner to five years probation on each count, to run concurrently, and ordered him to pay an assessment of $125, a fine of $5,375, and restitution in the amount of $800,000. I.G. Ex. 4.

As stated above, Petitioner has not challenged that he has been convicted of a criminal offense within the meaning of section 1128(b)(3) of the Act, and I so find. Petitioner's conviction, which was based on the court's acceptance of his guilty plea, constitutes a conviction within the meaning of section 1128(i)(3) of the Act. Moreover, his conviction for "unlawfully distributing and dispensing diphenoxylate, a Schedule V Controlled Substance," in violation of 21 U.S.C. § 841(b)(3), is a misdemeanor criminal offense which related to the unlawful distribution or dispensing of a controlled substance, within the meaning of section 1128(b)(3) of the Act.

2. The I.G. failed to prove the presence of aggravating factors.

Based on Petitioner's misdemeanor conviction related to controlled substances, the I.G. determined to exclude Petitioner for 12 years, citing aggravating factors. Petitioner has not challenged that he is subject to an exclusion under section 1128(b)(3) of the Act. What Petitioner does dispute is the length of the exclusion. In support of his position that the 12-year exclusion should be significantly reduced, Petitioner asserts that, because of the lack of any nexus between his misdemeanor conviction and any federal health care program, the amount of court-ordered restitution is not indicative of any losses suffered by federal health care programs, and therefore, cannot be used by the I.G. as an aggravating factor.

The I.G. alleged the presence of two aggravating factors: (1) the acts that resulted in Petitioner's conviction or similar acts had a significant adverse mental, physical or financial impact on program beneficiaries or other individuals or the Medicare, Medicaid or other federal health care programs; and (2) Petitioner has been the subject of other adverse action by any federal, State, or local government agency or board, even if the adverse action was based on the same set of circumstances that serves as the basis for the imposition of the exclusion. See Notice (I.G. Ex. 1); 42 C.F.R. § 1001.401(c)(2)(ii), (v).

For the reasons explained below, I am unpersuaded by the I.G.'s arguments and find that, based on the record, the I.G. has not established the existence of either aggravating factor.

a. The I.G. has not established the aggravating factor set forth at 42 C.F.R. § 1001.401(c)(2)(ii).

In attempting to prove that Petitioner's conviction had a significant financial impact on Medicare and Medicaid, the I.G. relies on the $800,000 in restitution that Petitioner was ordered to pay to several Federal health care programs. The I.G. states, and the court documents show, that the $800,000 figure was allocated as follows: $400,000 to Medicaid; $200,000 to Medicare; and $200,000 to the Black Lung Benefits Trust Fund. I.G. Ex. 4, at 5. According to the I.G., the restitution amount "reflects that the Federal health care programs sustained significant financial loss as a result of Petitioner's criminal conduct." I.G. Brief, at 9.

The crucial question in considering what significance, if any, the $800,000 restitution amount should have in this case turns on whether any sort of program fraud or adverse effect on federal health care programs can be inferred from the facts of Petitioner's conviction. I conclude that no such inference can be made. There is no dispute that Petitioner's conviction of five misdemeanor offenses related to controlled substances. The I.G., however, did not make any showing that Petitioner's actual offenses were related to or directed at the Medicare, Medicaid, or Black Lung programs. The I.G.'s position rests solely on the fact that Petitioner was ordered to make restitution to those programs: it is the assumption of the I.G. that because Petitioner was required to pay large sums to those programs as part of his plea bargain, there must have been losses or adverse effect in some sort of commensurate degree.

Having examined the evidence in the record, I conclude that the I.G.'s position is untenable. The restitution amount of $800,000, and the breakdown of this amount - $400,000 to Medicaid; $200,000 to Medicare; and $200,000 to the Black Lung Benefits Trust Fund - are set out in a sentencing document entitled "Restitution." I.G. Ex. 4, at 5. This document provides for the entry of two sets of figures, under two columns entitled "Total Amount of Loss" and "Amount of Restitution Ordered." The aforementioned "breakdown amounts" to be paid to the three programs are listed under the column "Amount of Restitution Ordered." I find it extremely significant that, under the column "Total Amount of Loss," there are no entries at all except at the bottom of the column, where a "$0.00" has been entered. The complete absence of any specified losses, in a place where there was a clear opportunity to specify them explicitly, can only be taken to mean that there were no losses to the Medicare, Medicaid, or Black Lung Benefits Trust Fund programs. Although the I.G. would have me infer otherwise, without actual proof, I cannot conclude that the restitution amounts Petitioner was ordered to pay is in any way reflective of any losses to the federal health care programs. It seems very likely that the restitution amounts listed on the document were bargained for as a form of penalty, as a part of Petitioner's plea bargain.

Furthermore, the misdemeanor counts to which Petitioner pled guilty involved Petitioner's prescribing the medication Lomotil to one of his patients on five separate occasions, over a period of five months. P. Ex. 1; I.G. Ex. 2.⁽¹⁾ In my review of the Information, Judgment, plea agreement, and the presentence investigation report (I.G. Ex. 2 - 4; P. Ex. 1), I have found nothing in any of these documents which describes or refers to any nexus between the five prescriptions for Lomotil and any federal health care program.

Even assuming that the patient who received the Lomotil was a "program" patient, it is impossible to regard five prescriptions for a Schedule V medication over five months as having any sort of significant impact on the program. In examining the five schedules of controlled substances, known as Schedules I - V, which are set forth in the Controlled Substances Act, one sees that the assessment criteria used to determine the schedule of a drug are based on the presence or absence of a medical application, the presence or absence of potential for abuse, and the potential for creating addiction. Schedule I drugs are those having the highest potential for abuse, no currently accepted medical utility, and lack of accepted safety for use under medical supervision. A drug classified under Schedule V, however, has a low potential for abuse, currently accepted medical utility, and limited potential for creating addiction. Thus, five prescriptions of Lomotil over five months, without a showing of more (e.g., the patient bribed Petitioner, became ill, or billed Medicare or Medicaid for the prescriptions), cannot support the I.G.'s contention that Petitioner's criminal acts had a significant financial impact on the Medicare, Medicaid, or other federal health care programs, on program beneficiaries, or on other individuals.

Finally, the I.G.'s argument that the decisions issued in Steven Alonzo Henry, M.D., DAB CR638 (2000) and Gilbert Ross, M.D., DAB CR478 (1997) support the inference that large amounts of restitution allow me to presume significant program impact or losses is misplaced. The exclusions in the Henry and Ross cases were imposed pursuant to section 1128(a)(1) of the Act, not section 1128(b)(3) as in this case. In both cases, the Petitioners were found guilty of criminal offenses directed at the Medicaid program, and the restitution amounts in the cases were used by the I.G. as evidence of the quantum of losses to the Medicaid program. In the present case, I have found that Petitioner's criminal acts were not program-related in any way. As such, I do not find the Henry and Ross decisions to provide any relevant guidance to my analysis here. The two decisions provide no basis whatsoever for me to conclude that the amount of restitution in the instant case bears any relationship at all to the integrity of the federal health care programs.

b. The I.G. has not established the aggravating factor set forth at 42 C.F.R. § 1001.401(c)(2)(v).

The I.G. argues also that Petitioner was the subject of other adverse administrative action, within the meaning of 42 C.F.R. § 1001.401(c)(2)(v). The evidence relied on by the I.G. to substantiate this assertion is an Order issued by the Virginia Board of Medicine (Board) on May 24, 2000, which placed Petitioner's medical license on indefinite probation, subject to certain terms and conditions. I.G. Ex. 5. The I.G. asserted that the Order was based on the same set of circumstances that served as the basis for the imposition of the I.G.'s exclusion.

I have considered the Board's Order, and disagree with the I.G.'s argument that it constitutes an "adverse action." There is no dispute that the Board's Order placed Petitioner's medical license on probationary status, based on his guilty plea and federal probation. I.G. Ex. 5. However, the Order placed no other restrictions on Petitioner's practice of medicine beyond the terms of his federal probation. In the absence of any additional significant Board penalties against Petitioner's ability to practice medicine, the I.G. has not satisfied me that the aggravating factor at 42 C.F.R. § 1001.401(c)(2)(v) has been met.

A finding that the Board's Order does constitute an "adverse action" against Petitioner would require that I give 42 C.F.R. § 1001.401(c)(2)(v) a broader reading than I am inclined to do. Moreover, even if I were to read 42 C.F.R. § 1001.401(c)(2)(v) so broadly and find that the Board's Order was an "adverse action," I would then be inclined to read the "mitigating factor" provision found at 42 C.F.R. § 1001.401(c)(3)(i)(B) just as broadly. Under this mitigating factor, an individual's or entity's cooperation with federal or State officials is considered mitigating if it resulted in "[a]dditional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses." 42 C.F.R. § 1001.401(c)(3)(i)(B). I would be prepared to view Petitioner's payment of $600,000 to the Virginia Department of Health Professions, "in the form of a grant to enhance the prevention and detection of pharmaceutical drug diversion and health care fraud" (I.G. Ex. 4, at 6), as satisfying the requirements of 42 C.F.R. § 1001.401(c)(3)(i)(B). I would find that Petitioner's "grant" resulted in "reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses."

I thus conclude that the Board's Order does not constitute an "adverse action" within the meaning of 42 C.F.R. § 1001.401(c)(2)(v), and the I.G. has not established this aggravating factor.

3. A 12-year exclusion is unreasonable in light of the absence of any aggravating factors. An exclusion of three years is reasonable.

As I have explained above, the I.G. has failed to prove the existence of the aggravating factors found at 42 C.F.R. § 1001.401(c)(2)(ii) and 42 C.F.R. § 1001.401(c)(2)(v). Petitioner also has not asserted the presence of any mitigating factors, nor have I found that any are present in this case.

The evidence shows that the 12-year exclusion that the I.G. determined to impose is beyond a reasonable range and is excessive. Because there are no aggravating or mitigating factors present in this case, I find that a three-year exclusion period is reasonable and appropriate.

Accordingly, I deny the I.G.'s Motion for Summary Affirmance. I modify the length of Petitioner's exclusion to a term of three years, pursuant to section 1128(c)(3)(D) of the Act.

Richard J. Smith

Administrative Law Judge

1. Lomotil (Diphenoxylate) is a diarrhea medication and a Schedule V controlled substance.