SUBJECT:

Larry B. Shuster, R.Ph.,

Petitioner,

The Inspector General

DECISION

I affirm the Inspector General's (I.G.), determination to exclude Larry B. Shuster, R.Ph. (Petitioner), under section 1128(a)(1) of Social Security Act (Act) for a five-year minimum mandatory period from participation in Medicare, Medicaid, and all other federally funded health care programs.

By letter dated May 31, 2001, the I.G. notified Petitioner that he was being excluded from participation in Medicare, Medicaid, and all federal health care programs as defined by 1128B(f) of the Act for a period of five years. In that letter, the I.G. explained that Petitioner was being excluded pursuant to section 1128(a)(1) of the Act based on his conviction in the United States District Court for the Eastern District of Pennsylvania of a criminal offense related to the delivery of an item or service under the State health care (Medicaid) program.⁽¹⁾

By letter dated June 11, 2001, Petitioner requested a hearing and the case was assigned to me for hearing and decision. During an August 6, 2001 prehearing conference, the parties agreed to have the case decided on written submissions in lieu of an in-person hearing. The I.G. submitted a motion for summary judgment and brief in support (I.G. Br.). Petitioner submitted a brief in response (P. Br.) to the I.G.'s motion, and the I.G. submitted a reply (I.G. Reply Br.) to Petitioner's response. The I.G. filed eight exhibits (I.G. Exs.1 - 8) as part of her submission, and Petitioner filed four exhibits (P. Exs. 1 - 4). In the absence of objection, I receive into evidence I.G. Exs. 1 - 8 and P. Exs. 1 - 4.

Based on the documentary evidence, the applicable law and regulation, and the arguments of the parties, I find that the I.G. is authorized to exclude Petitioner pursuant to section 1128(a)(1) of the Act and that the five-year exclusion imposed by the I.G. is reasonable. Accordingly, I sustain the I.G.'s determination to exclude Petitioner, from participation in Medicare, Medicaid, and all other federal health care programs for a period of five years.

The issue in this case is whether I have the authority to change the effective date of the exclusion.

Section 1128(a)(1) of the Act authorizes the Secretary of HHS to exclude from participation in any federal health care program (as defined in section 1128B (f) of the Act):

[a]ny individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under title XVIII or under any State health care program.

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 minimum period of not less than five years.

Pursuant to Section 1128(i) of the Act 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 of 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.

I make the following findings of fact and conclusions of law (Findings) to support my decision in this case. In the discussion section I discuss each Finding in detail and address Petitioner's arguments.

1. Petitioner was convicted of a criminal offense pursuant to section 1128(i) of the Act.

2. Petitioner's criminal offense is related to the delivery of an item or service under the state health care program pursuant to section 1128(a) of the Act.

3. Petitioner was excluded from participation in Medicare, Medicaid, and all federal health care programs as defined by 1128B(f) of the Act for a period of five years.

4. I must sustain an exclusion of at least five years pursuant to section 1128(a)(1) and 1128(c)(3)(B) of the Act.

5. The exclusion becomes effective 20 days from the date of the I.G.'s notice.

6. An administrative law judge is without authority to change the effective date of an exclusion imposed by the I.G.

7. The imposition of an exclusion does not violate the United States Constitution.

8. The I.G. was authorized to exclude Petitioner pursuant to section 1128(a)(1) of the Act.

During the time period relevant to this case, Petitioner was a licensed pharmacist, in the Commonwealth of Pennsylvania working at Queen Village Pharmacy and Center City Pharmacy, both located in Philadelphia. I.G. Exs. 4-6. The pharmacies were owned and operated by Sheldon A. Durst and Larry Durst. I.G. Ex. 6 at 1. During the course of his employment, Petitioner submitted bills for high priced prescription medication to various third-party payors including Medicaid. The third-party payor system of reimbursing prescription claims depends upon the honest submission by pharmacists of true claims based upon valid prescriptions. Petitioner submitted these bills knowing that they were for drugs that were never ordered by a physician nor dispensed by Petitioner or the pharmacies. The amount of loss to all payors as a result of this fraudulent scheme totaled $175,000. I.G. Exs. 4-6.

On November 18, 1997, Petitioner was indicted and charged with one count of wire fraud in violation of 18 U.S.C. § 1343. I.G Ex. 4. On December 19, 1997, Petitioner pleaded guilty to one count of wire fraud. I.G. Ex. 5. On August 10, 1998, judgement was entered against Petitioner and he was sentenced to 15 months of incarceration and three years of supervised release. I.G. Ex. 7 at 2-3. Petitioner was also ordered to pay $3000 in partial restitution. On February 16, 1999, Petitioner's license to practice pharmacy was suspended by the State Board of Pharmacy for a period of three years, retroactive to December 3, 1997. I.G. Ex. 3 at 3.

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. 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 record reflects that Petitioner pleaded guilty to a criminal offense; his guilty plea was accepted by the court; and judgment of conviction was entered against him. I.G. Exs. 5, 7. Petitioners's conviction, based on his guilty plea, and the Court's acceptance of that plea, constitute a conviction under section 1128(i)(3) of the Act. Morever, Petitioner concedes the fact 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. Reply Br. at 1, 5, 7. Therefore, no issue regarding reasonableness of the length of the exclusion exists and I must sustain an exclusion of at least five years pursuant to section 1128(a)(1) and 1128(c)(3)(B) of the Act.

Petitioner does not challenge the I.G.'s authority to exclude him pursuant to section 1128(a)(1) of the Act. However, Petitioner argues that the setting of an effective date (June 20, 2001) at 20 days from the date of the May 31, 2001, notice letter "a violation of Petitioner's rights under the United States Constitution and a denial of Equal Protection under the law." P. Br. at 1.

Petitioner argues, further, that "while the length of the exclusion is mandated and therefore reasonable, the arbitrary and capricious application of an effective date for exclusion is manifestly unreasonable." It is unreasonable, he argues, because it effectively increases the punishment by making the exclusionary periods consecutive rather than concurrent. Petitioner requests that the effective date of the exclusion be backdated to August 10, 1998, the date the Commonwealth of Pennsylvania terminated his participation in the State's Medical Assistance Program.

It is well settled that an administrative law judge is without authority to change the effective date of an exclusion. As a matter of law, an exclusion must become effective 20 days from the date of the I.G.'s notice of exclusion. 42 C.F.R. § 1001.2002. Additionally, neither statute nor regulation set forth any specific time for the I.G. to begin proceedings after a conviction. Tanya A. Chuoke, DAB No. 1721 (2000). Further, an administrative law judge has no authority to review the timing of the I.G.'s determination to impose an exclusion or to retroactively alter the date of the imposition of the exclusion. Samuel W. Chang, M.D., DAB No. 1198 (1990); Kathleen E. Talbot, M.D., DAB CR724 (2000); Ronald J. Crisp, M.D., DAB CR772 (2001). Thus, I do not have the authority to grant the equitable relief sought by Petitioner.

Additionally, I am without authority to hear or decide Petitioner's constitutional arguments. My authority to decide these and other cases involving the I.G. is limited to that which has been delegated to me by the Secretary. Consequently, I have no authority to declare a federal statute unconstitutional. John A. Crawford, DAB CR160 (1991); Roberta E. Miller, DAB CR367 (1995); Richard A. Fishman, DAB CR100 (1990).

The statute's purpose is to protect federal health care programs and the programs' beneficiaries and recipients from untrustworthy providers. A provider that has been convicted of a crime described in section 1128(a) is presumed by Congress to be untrustworthy and a threat to federal health care programs and their beneficiaries and recipients. The record shows that Petitioner has proven himself to be an untrustworthy individual and therefore Petitioner's exclusion comports with the remedial purpose of the Act.

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 federal health care programs for a period of five years. In addition, I am without authority to change the effective date of the exclusion. Accordingly, I must sustain the exclusion as imposed by the I.G.

Richard J. Smith

Administrative Law Judge

1. 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).