CASE | DECISION | JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
IN THE CASE OF  


SUBJECT:

John A. Brackney, R.Ph.,

Petitioner,

DATE: October 19, 2001
                                          
             - v -

 

The Inspector General

 

Docket No.C-00-866
Decision No. CR828
DECISION
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DECISION

I sustain the Inspector General's (I.G.) determination to exclude John A. Brackney, R. Ph. (Petitioner), from participation in Medicare, Medicaid, and all other federal health care programs for a period of 15 years. I find that the I.G. is authorized to exclude Petitioner under section 1128(a)(1) of the Social Security Act (Act), and that the 15-year exclusion imposed by the I.G. against Petitioner falls within a reasonable range.

I. BACKGROUND

By letter dated August 31, 2000, the I.G. notified Petitioner that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of 15 years. In that letter, the I.G. explained that she was authorized to exclude him under section 1128(a) of the Act based on his conviction in the United States District Court for the Central District of Illinois of a criminal offense related to the Medicaid program. Petitioner thereafter requested a hearing, arguing that his period of exclusion should be reduced to five years.(1) The case was assigned to Administrative Law Judge Mimi Hwang Leahy, who held a prehearing conference on November 22, 2000. At that time, the parties agreed that an in-person hearing was not necessary, and that the matter could be resolved on the written record. Petitioner, representing himself, conceded that he was convicted in federal court of a matter involving the delivery of a health-care item or service, that the court ordered restitution greater than $1500, and that the sentence imposed included incarceration. He agreed that the mitigating factors set forth in 42 C.F.R. § 1001.102 (c)(1) and (c)(2) do not apply, although he suggested that factors included in (c)(3) could apply.

Thereafter, Judge Leahy left the Departmental Appeals Board, and this matter was reassigned to me. I held a prehearing telephone conference on March 13, 2001, at which the parties reaffirmed that the case could be heard and decided based on written submissions. Both parties submitted briefs, accompanied by documentary evidence. The I.G. filed four exhibits (I.G. Exs. 1 - 4) as part of her submission, and Petitioner filed two exhibits, labeled exhibits A and B, which I have renumbered as Petitioner's exhibits 1 and 2 (P. Exs. 1 - 2) to conform to Civil Remedies procedures. In the absence of objection, I receive into evidence I.G. Exs. 1 - 4 and P. Exs. 1 - 2.

During the time period relevant to this case, Petitioner was a licensed pharmacist, working for LTC Pharmacy in Central Illinois. His pharmacy served long-term care facilities that were owned or managed by LTC's parent corporation. Petitioner was manager of the pharmacy, receiving a base salary and an incentive bonus of 10 percent of the net profit of the business. The long-term care facilities that were the pharmacy's clients were required to return to the pharmacy "for credit" any unused medications that were not controlled substances. I.G. Ex. 2. If the pharmaceuticals had been ordered and paid for by the individual patient or his/her family, Petitioner extended a credit for the returned items. If ordered and paid for by the Medicaid program or by private insurance, Petitioner gave no credit, notwithstanding Medicaid regulations requiring that he do so, and notwithstanding the fact that the medications were then re-sold to other pharmacy clients. Id.

On February 5, 1999, Petitioner was indicted and charged with seven counts of mail fraud and two counts of filing false, fictitious, or fraudulent claims, in violation of 18 U.S.C. §§ 1341 and 287. Id. Following a jury trial, on January 31, 2000, Petitioner was convicted on all nine felony counts. I.G. Ex. 3. Petitioner's conviction constitutes a conviction under section 1128(i)(3) of the Act. He was sentenced to five months in jail, followed by five months home confinement, and ordered to pay a $30,000 fine and $349,000 in restitution. I.G. Ex. 3.(2)

II. FINDINGS OF FACT AND CONCLUSION OF LAW

1. I must sustain an exclusion of at least five years pursuant to section 1128(a)(1) of the Act.

2. Petitioner has been excluded from the Medicare/Medicaid program for a period of 15 years.

3. An exclusion for more than five years may be reasonable, pursuant to section 1128(a)(1) of the Act, in a case where there are aggravating factors that are not offset by mitigating factors.

4. The I.G. established the presence of three aggravating factors: Petitioner's acts resulted in a financial loss to the State Medicaid program of more than $1500; the acts were committed over a period of more than one year; and Petitioner's sentence included incarceration.

5. Petitioner did not establish the presence of any mitigating factors.

6. A 15-year exclusion falls within a reasonable range.

III. DISCUSSION

Petitioner concedes that he was convicted under federal law of a criminal offense related to the delivery of an item or service under the Medicaid program, and acknowledges that the imposition of a five-year exclusion is mandatory. P. Hearing Request; See Order dated December 21, 2000. The sole issue before me is whether the length of the exclusion in excess of the five-year mandatory minimum is reasonable. 42 C.F.R. § 1001.2007.

Section 1128(a)(1) of the Act requires that the Secretary of Health and Human Services (Secretary) exclude an individual who has been convicted under federal or State law of a criminal offense related to the delivery of an item or service under Medicare or a State health care program.(3) 42 C.F.R. § 1001.101. Individuals excluded under section 1128(a)(1) of the Act must be excluded for a period of not less than five years. Act, section 1128(c)(3)(B). The mandatory minimum period of exclusion may be increased with the existence of certain aggravating factors that are not offset by certain mitigating factors. 42 C.F.R. § 1001.102. The following three factors may serve as a basis for lengthening the period of exclusion: (1) the acts resulting in the conviction, or similar acts, resulted in a financial loss to Medicare and the State health care programs of $1500 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)); and (3) the sentence imposed by the court included incarceration (42 C.F.R. § 1001.102(b)(5)).

The Secretary has delegated to the I.G. the authority to impose exclusions. 42 C.F.R. § 1001.401(a). So long as the amount of time chosen for the exclusion imposed on Petitioner by the I.G. is within a reasonable range, based on demonstrated criteria, I have no authority to change it. Joann Fletcher Cash, DAB No. 1725 at 7 (2000), citing 57 Fed. Reg. 3298, 3321 (1992).

A. The presence in this case of three aggravating factors which are not offset by any mitigating factors leads me to conclude that a 15-year exclusion falls within a reasonable range.

By regulation, the Secretary has established the criteria for determining the length of exclusions imposed pursuant to section 1128 of the Act. Section 1001.102 of 42 C.F.R. lists the aggravating and mitigating factors applicable to a section 1128(a) exclusion. The presence of an aggravating factor or factors not offset by any mitigating factor or factors justifies lengthening the mandatory five-year period of exclusion. Evidence that does not pertain to one of the specific aggravating or mitigating factors is not relevant and may not be used to decide whether an exclusion of a particular length is reasonable. The I.G. cited three factors as the bases for extending the period of Petitioner's exclusion beyond the mandatory five-year minimum: (1) the sentence imposed by the court included incarceration; (2) his actions were committed over a period of more than one year; and (3) Petitioner's actions resulted in a program financial loss in excess of $1500.

1. Petitioner's sentence, imposed following his conviction, included incarceration.

Petitioner acknowledges the presence of the aggravating factor listed at 42 C.F.R. § 1001.102(b)(5): that the sentence imposed by the court included incarceration.

2. The crime that resulted in Petitioner's conviction occurred over a period of more than one year and he may not use this forum to relitigate his culpability over that period of time.

Petitioner also acknowledges that his actions occurred over a period of more than 1 year, but argues that he did not understand that he was "in violation of a policy," and once he learned of the violation, he "corrected the practice immediately. It was only because of ignorance that the violation occurred for a period of more than 1 year." I.G. Ex. 4. I reject this argument. Petitioner's convictions establish that he participated actively in a scheme to defraud the Medicaid program, that he profited from that scheme, and that he is criminally responsible for those serious crimes. I.G. Ex. 2. His criminal trial resolved the question as to whether his conduct was deliberate or simply careless, and he may not use this forum for relitigating the issues resolved by that court. The regulations are explicit:

[w]hen the exclusion is based on the existence of a conviction . . . the basis for the underlying determination is not reviewable and the individual or entity may not collaterally attack the underlying determination, either on substantive or procedural grounds, in this appeal.

42 C.F.R. § 1001.2007(d). Joann Fletcher Cash, DAB No. 1725 (2000); Chander Kachoria, R Ph., DAB No. 1380 at 8 (1993) ("There is no reason to 'unnecessarily encumber the exclusion process' with efforts to reexamine the fairness of state convictions"). The record establishes that Petitioner's criminal conduct spanned many years, from January 1, 1990 through April 1, 1996. Pursuant to 42 C.F.R. § 1001.102(b)(1), that aggravating fact should be considered in setting the length of his exclusion.

3. Petitioner's crimes resulted in a loss to the State health care program of more than $1500.

With respect to whether his actions resulted in a program financial loss in excess of $1500, Petitioner acknowledges that the court ordered him to pay $349,000 in restitution to the State Medicaid program. Nevertheless, citing portions of testimony from his criminal trial, Petitioner argues that his actions caused no monetary loss to any government program. I.G. Ex. 4. Again, the cost to the Medicaid program is an issue resolved at Petitioner's criminal trial, and I consider the restitution portion of the district court's sentencing order convincing evidence of program financial loss attributable to Petitioner's actions.

I note also that the indictment itemizes amounts of money representing "payment for one or more pharmaceuticals returned to the pharmacy and for which no credit was made or intended to be made," and those amounts, which do not even include all of the counts on which Petitioner was convicted, significantly exceed $349,000: Count 1- $91,161.86; Count 2 - $84,899.17; Count 3 - $96,866.22; Count 4 - $75,378.35; Count 5 - $74,641.93; Count 6 - $40,875.53; Count 7- $73,920.74. I.G. Ex. 2. Thus, as established by his $349,000 restitution order, and on the face of the indictment itself, Petitioner's criminal acts resulted in a financial loss to the Illinois Medicaid program of significantly more than $1500. That the pharmacy may have paid the restitution does not lessen Petitioner's culpability nor negate the significance of this as an aggravating factor as defined by 42 C.F.R. § 1001.102(b)(1).

4. This case does not present any mitigating factors.

The only factors considered mitigating under the regulation are: (1) Petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to the program was less than $1500; (2) the record demonstrates that Petitioner had a mental, physical, or emotional condition that reduced his culpability; or (3) Petitioner's cooperation with federal or State officials resulted in others being convicted or excluded, or additional cases being investigated, or a civil money penalty being imposed. 42 C.F.R. § 1001.102(c). This case presents no mitigating factors. Petitioner was convicted of nine felony offenses (significantly more than three misdemeanors); program losses substantially exceeded $1500; no evidence suggests any physical, mental, or emotional conditions; nor did Petitioner's cooperation result in any investigations or convictions. Petitioner asserts that his cooperation with law enforcement should be considered a mitigating factor because he provided information that led law enforcement to detailed records of the pharmacy practices. However, he does not claim that his cooperation resulted in others being convicted or excluded, additional cases being investigated, or a civil money penalty being imposed against any others, factors that he must establish in order to show mitigation. I therefore find that no mitigating factors justify reducing the period of exclusion.

IV. CONCLUSION

For the reasons set forth above, I conclude that the I.G. was authorized, under section 1128(a)(1) of the Act, to exclude Petitioner from participation in Medicare, Medicaid, and all other federal health care programs. Considering the totality of the evidence, I find that the 15-year exclusion falls within a reasonable range.

JUDGE
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Carolyn Cozad Hughes

Administrative Law Judge

 

FOOTNOTES
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1. Although Petitioner's hearing request is not dated, the I.G. acknowledges that it was timely filed. I.G. Brief at 2.

2. I note that restitution was apparently paid by LTC Pharmacy. I.G. Ex. 3 at 7; Petitioner's Hearing Request.

3. The term "State health care program" includes a State's Medicaid program. Section 1128(h)(1) of the Act; 42 U.S.C. § 1320a-7(h)(1).

CASE | DECISION | JUDGE | FOOTNOTES