SUBJECT:

Gary Alan Katz, R.Ph.,

Petitioner,

The Inspector General

DECISION

Gary Alan Katz, R.Ph. (Petitioner) is excluded from participation in Medicare, Medicaid, and all other Federal health care programs for a period of ten years pursuant to section 1128(a)(4) of the Social Security Act (Act), effective April 19, 2001, based upon his felony conviction for the manufacture of marijuana. There is a proper basis for exclusion and a ten-year exclusion is reasonable.

PROCEDURAL HISTORY

Petitioner was notified of his exclusion by letter dated March 30, 2001. The Inspector General (I.G.) cited section 1128(a)(4) of the Act (42 U.S.C. § 1320a-7(a)(4)) as the basis for Petitioner's exclusion. Petitioner appeals the I.G.'s action by letter dated May 14, 2001. Petitioner advances several arguments in support of his appeal which challenges both the basis for the exclusion and the reasonableness of the length of the period of exclusion.

On June 5, 2001, the case was assigned to Administrative Law Judge (ALJ) Carolyn C. Hughes for hearing and decision. On September 14, 2001, Judge Hughes conducted a telephonic prehearing conference, the substance of which is memorialized in her order of September 21, 2001 and her amended order of September 25, 2001. The parties agreed during the conference that no oral hearing is necessary and that the matter may be resolved on briefs. Judge Hughes denied Petitioner's request for stay but she granted an extended briefing schedule. The I.G. filed her brief on November 15, 2001, with attached exhibits 1 through 7 (I.G. Ex.). Petitioner filed his response on January 16, 2002, with exhibits 1 through 5 (P. Ex.). The I.G. elected to waive filing a reply brief which was due not later than February 26, 2002. The case was assigned to me for decision on October 11, 2001.

The offered exhibits are admitted. The only inconsistency in the facts alleged by the parties relates to the duration of Petitioner's misconduct. The factual inconsistency is resolved in favor of Petitioner for purposes of this motion. The parties have identified no other material issues of fact in dispute. The parties have waived an oral hearing. Furthermore, summary judgment is appropriate and no hearing is necessary in this case for a full and fair disposition of the issues presented.

FINDINGS OF FACT

The following findings of fact are based upon the uncontested and undisputed assertions of fact in the parties pleadings and the exhibits admitted.

1. Petitioner was, on the date of the I.G. action, a pharmacist licensed by the State of Michigan and authorized to participate in Medicare, Medicaid or other Federal health care programs, although Petitioner was not working as a pharmacist at that time.

2. On November 24, 1999, judgment was entered in case number 99-011039-FH by Judge Daniel A. Burress, 44^th Circuit Court, State of Michigan, finding Petitioner guilty of the following felony offense: on or about May 5, 1998, in Genoa Township, Livingston County, Michigan, manufacture of five kilos or more but less than 45 kilos of marijuana or a mixture containing marijuana and 20 marijuana plants or more but less than 200 plants, contrary to the statutes of the State of Michigan (I.G. Ex. 3; P. Ex. 5).

3. Petitioner was sentenced to: serve a minimum of one year confinement up to a maximum of seven years confinement with credit for one day served, to pay a $150.00 forensic laboratory fee, to pay a $60 Victim's Rights Fund fee as a condition of parole, and a six month driver's license suspension. (I.G. Ex. 3; P. Ex. 5).

4. By letter dated March 30, 2001, the I.G. advised Petitioner that he was being excluded from further participation in Medicare, Medicaid or other Federal health care programs for a period of 10 years, effective 20 days after the date of the letter, based upon Petitioner's conviction as described in Finding 2.

5. The I.G. found three aggravating factors that justify an extended period of exclusion in this case: (a) the acts for which Petitioner was convicted occurred over a period of one year or more from 1995 through May 5, 1998; (b) Petitioner's sentence included incarceration; and (c) the Petitioner has a prior conviction or was subject to adverse action by a Federal, State or local government agency or board, specifically, the State of Michigan, Board of Pharmacy suspended Petitioner's pharmacist's license for a minimum period of three years effective October 7, 2000. I.G. Ex. 1.

6. Two aggravating factors exist: (a) Petitioner's sentence included incarceration, and (b) Petitioner was subject to adverse action by the Michigan Board of Pharmacy which suspended his pharmacist's license for a minimum period of three years.

7. Petitioner was not convicted for acts that occurred over a period of one year or more.

CONCLUSIONS OF LAW

1. Summary judgment is appropriate in this case as there are no material facts in dispute.

2. Petitioner's conviction was for a felony criminal offense involving the manufacture of a controlled substance within the meaning of the Act, section 1128(a)(4) (42 U.S.C. 1320a-7(a)(4)).

3. Petitioner must be excluded from participation in any Federal health care program for a minimum period of five years pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) due to his conviction.

4. The I.G. may increase the term of exclusion based on a finding of any of the aggravating factors specified at 42 C.F.R. § 1001.102(b).

5. If the I.G. finds that any of the aggravating factors specified at 42 C.F.R. § 1001.102(b) justify a term of exclusion greater than the statutory minimum exclusion of five years, then the I.G. may consider the mitigating factors specified at 42 C.F.R. § 1001.102(c) to reduce the period of exclusion to no less than five years.

6. The range of exclusionary periods contemplated by the Act and the Secretary's regulations extend from a minimum of five years to permanent exclusion, in the case of a mandatory exclusion under section 1128(a). See Act, § 1128(c)(3)(B) and (G) (42 U.S.C. § 1230a-7(c)(3)(B) and (G)); 42 C.F.R. § 1001.102(a) and (d).

7. Two aggravating factors have been established by the I.G. by a preponderance of evidence: (a) Petitioner's sentence included incarceration, and (b) Petitioner was subject to adverse action by the Michigan Board of Pharmacy which suspended his pharmacist's license for a minimum period of three years.

8. The I.G. has not established by the preponderance of the evidence that Petitioner was convicted for acts that occurred over a period of one year or more.

9. None of the mitigating factors specified at 42 C.F.R. § 1001.102(c) have been proven by Petitioner, who bears the burden to make such showing. 42 C.F.R. § 1005.15(b) and (c).

10. A 10-year exclusion (5 years mandatory and a 5 year extension) is within a reasonable range and is not unreasonable.

DISCUSSION

A. APPLICABLE LAW

Petitioner's right to a hearing by an ALJ and judicial review of the final action of the Secretary is provided by section 1128(f) of the Act (42 U.S.C. § 1230a-7(f)). Petitioner's request for a hearing was timely filed and I do have jurisdiction. However, the Secretary has by regulation limited my scope of review to two issues: (1) whether there is a basis for the imposition of the sanction; and, (2) whether the length of the exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(1). The standard of proof is a preponderance of the evidence and there may be no collateral attack of the conviction that is the basis for the exclusion. 42 C.F.R. § 1001.2007(c) and (d). Petitioner bears the burden of proof and persuasion on any affirmative defenses or mitigating factors and the I.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(b) and (c).

Pursuant to section 1128(a)(4) of the Act, the Secretary must exclude from participation in the Medicare and Medicaid programs any individual or entity that has been convicted of a felony criminal offense related to the unlawful manufacture of a controlled substance. Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a)(4) of the Act shall be for a minimum period of five years, unless specified aggravating or mitigating factors are present which form the basis for lengthening or shortening the period of exclusion. See also 42 C.F.R. § 1001.102(a), (b), and (c). Only if the aggravating factors justify an exclusion of longer than five years, may mitigating factors 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 1001.102(b) of 42 C.F.R. provides, in relevant part, that the following factors may be considered to be aggravating and a basis for lengthening the period of exclusion:

(2) [t]he acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; . . . (5) [t]he sentence imposed by the court included incarceration; . . . (9) the individual or entity . . . has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for imposition of the exclusion.

Section 1001.102(c) of 42 C.F.R. provides that only if any of the aggravating factors justify a period of exclusion longer than five years, may mitigating factors be considered as a basis for reducing the period of the exclusion to no less than five years. The following factors may be considered as mitigating and a basis for reducing the period of exclusion:

(1) [t]he 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 $1500; (2) [t]he 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) [t]he individual's or entity's cooperation with Federal or State officials resulted in - (i) [o]thers being convicted or excluded from Medicare, Medicaid, or all other Federal health care programs, (ii) [a]dditional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or (iii) [t]he imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.

Evidence which does not relate to an aggravating factor or a mitigating factor is irrelevant to determining the length of an exclusion. The burden is upon petitioners to show the presence of mitigating factors. The I.G. bears the burden of proving the existence of aggravating factors. 42 C.F.R. § 1005.15; John (Juan) Urquijo, DAB No. 1735 (2000).

B. ISSUES

Whether there is an appropriate basis for the exclusion of Petitioner.

Whether the length of exclusion imposed was unreasonable.

C. ANALYSIS

1. Summary judgment is appropriate.

Summary disposition is appropriate where either: there are no disputed issues of material fact and the only questions that must be decided involve application of law to the undisputed facts; or, the moving party must prevail as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made. A party opposing summary disposition must allege facts which, if true, would refute the facts relied upon by the moving party. See, e.g., Fed.R.Civ.P. 56(c). The only issue of material fact in dispute relates to the duration of Petitioner's misconduct and, for purposes of this motion, I resolve that issue in favor of Petitioner. Because I find no other inconsistencies in the facts alleged by the parties and no other specific factual disputes have been identified by the parties, I conclude there are no disputed issues of material facts. The issues may thus be decided by application of the law to the undisputed facts and summary judgment is appropriate.

2. There is an appropriate basis for the exclusion of Petitioner.

The preponderance of the evidence shows that Petitioner was convicted of a felony offense of manufacture of marijuana. The fact that it was a felony conviction is indicated by the sentence to confinement of one year or more. Petitioner does not dispute that he was convicted and sentenced. In fact, Petitioner provided the transcript of the criminal proceeding at P.Ex. 5, which confirms both the conviction and sentence.

Petitioner concedes that a minimum exclusion of five years is mandatory if Petitioner is considered to have committed a felony related to the manufacture of marijuana. Petitioner argues however, that the I.G. could have elected to exclude Petitioner under the permissive exclusion provisions of the Act (§ 1128(b)(3) (42 U.S.C. § 1320a-7(b)(3)) as implemented by 42 C.F.R. § 1001.401) which would have allowed the I.G. to impose less than a five-year exclusion. Petitioner's argument is in error as § 1128(b)(3) of the Act and 42 C.F.R. § 1001.401 by their plain language only apply to a misdemeanor conviction for the unlawful manufacture, distribution, prescription or dispensing of a controlled substance. Petitioner was convicted by a Michigan court and sentenced to a year or more confinement which clearly constitutes a felony conviction and that conviction and sentence are not subject to collateral attack in this forum. 42 C.F.R. § 1001.2007(d). The felony conviction of manufacture of a controlled substance triggers the mandatory exclusion provided by § 1128(a)(4) of the Act and neither the I.G. nor the Secretary are granted discretion not to exclude or to characterize the conviction so to avoid mandatory exclusion. Petitioner cites no authority to the contrary.

3. A 10-year exclusion of Petitioner is within a reasonable range and is reasonable given the presence of two aggravating factors and no mitigating factors.

I note that the regulations strictly limit my jurisdiction in cases such as this. I may decide whether or not the I.G. had a proper basis for the exclusion of Petitioner and whether the period of exclusion for Petitioner was "unreasonable." The Departmental Appeals Board (DAB) has made clear that the role of the ALJ in cases such as this is to conduct a "de novo" review as to the facts related to the basis for the exclusion and the facts related to the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102. See Joann Fletcher Cash, DAB No. 1725 (2000), fn. 6, and cases cited therein. The regulation specifies that I must determine whether the length of exclusion imposed is "unreasonable" (42 C.F.R. § 1001.2007(a)(1)). The DAB has explained that in determining whether a period of exclusion is "unreasonable," I am to consider whether such period falls "within a reasonable range." Cash, fn. 6. The DAB cautions that whether I think the period of exclusion too long or too short is not the issue. I am not to substitute my judgment for that of the I.G. and may only change the period of exclusion in limited circumstances.

Despite a thorough search of prior DAB decisions and Federal precedent, I have found no clear statement of what constitutes the "reasonable range" referred to by the DAB. My review of the statute and regulations shows that the range of possible exclusions provided for in the case of mandatory exclusions range from the minimum of 5 years to a maximum of permanent exclusion. 42 U.S.C. § 1320a-7(c)(3)(B) and (G), 42 C.F.R. § 1001.102(a) and (d). This is the only range I have found specified in the law and it seems to be "reasonable."

My reading of 42 C.F.R. § 1001.102 is that with a mandatory exclusion under section 1128(a) of the Act, there is an automatic exclusion of five years. Pursuant to 42 C.F.R. § 1001.102(d) one prior conviction for conduct that would cause mandatory exclusion under section 1128(a) of the Act, increases the minimum period of exclusion to 10 years and two prior convictions automatically causes permanent exclusion.

The five-year and ten-year minimum exclusions may only be extended if the I.G. can point to evidence that one or more of the aggravating factors specified at 42 C.F.R. § 1001.102(b) are present. The regulations do not limit the additional period of exclusion the I.G. may impose based upon the presence of aggravating factors. The regulations also do not specify how much of an extension is warranted by the existence of an aggravating factor. The DAB has indicated that it is not the number of aggravating factors that is determinative rather, it is the quality of the circumstances, whether aggravating or mitigating, which is controlling in analyzing these factors. Barry D. Garfinkel, M.D., DAB No. 1572 (1996).

Section 1001.102 of 42 C.F.R. provides that when aggravating factors justify an exclusion of more than the mandatory minimum period, then the I.G. may consider any of the three specified mitigating factors if they are shown to exist. In Urquijo, the DAB suggested that the I.G.'s failure to consider a mitigating factor amounts to an abuse of discretion. The DAB also made clear in Urquijo that: if the I.G. considers an aggravating factor to extend the period of exclusion and that factor is not later shown to exist on appeal; or if the I.G. fails to consider a mitigating factor that is shown to exist, then the ALJ may make a decision as to the appropriate extension of the period of exclusion beyond the minimum.

Thus, my determination of whether or not the exclusionary period in this case is unreasonable hinges on three-points: (1) whether the period of exclusion is within the reasonable range; (2) whether the I.G. has shown the existence of aggravating factors; and, (3) whether the Petitioner has shown that there are mitigating factors that the I.G. failed to consider.

The 10-year exclusion ordered in this case is more than the minimum 5-year exclusion, but less than permanent exclusion. The 10-year exclusion is within the range established by the regulations, and it is reasonable.

The I.G. found three aggravating factors existed that justified an extended period of exclusion in this case: (a) the acts for which Petitioner was convicted occurred over a period of one year or more from 1995 through May 5, 1998; (b) Petitioner's sentence included incarceration; and (c) the Petitioner has a prior conviction or was subject to adverse action by a Federal, State or local government agency or board, specifically, the State of Michigan, Board of Pharmacy suspended Petitioner's pharmacist's license for a minimum period of three years effective October 7, 2000. I.G. Ex. 1. The I.G. has shown by a preponderance of the evidence that Petitioner's sentence included incarceration and that Petitioner's pharmacist license was suspended for three years. Petitioner does not argue to the contrary.

However, upon review of P.Ex. 5, pp. 37-38, I agree with Petitioner that he was not convicted of an offense that occurred over a period of one year or more. Judge Burress only found that the conduct occurred on or about May 5, 1998. Certainly, one may infer that growing 20 or more marijuana plants occurred over a period of more than one day, but certainly not one year. The I.G. incorrectly relies upon the felony complaint for the conclusion that the conduct occurred over the course of a year or more. I.G. Ex. 3, I.G. Brief, p. 4. I find that the conviction controls and that the I.G. has thus failed to prove this aggravating factor.

The I.G. has shown the existence of two aggravating factors. The existence of two aggravating factors justifies extending the period of exclusion beyond the minimum period of five years. The existence of the aggravating factors also triggers the requirement to consider any mitigating factors under 42 C.F.R. § 1001.102(c). But, the regulation is clear that only the three listed mitigating factors may be considered and none of those mitigating factors have been shown by Petitioner to be present in this case. Instead, Petitioner seeks to excuse his unlawful conduct arguing that: the manufacture of marijuana was for Petitioner's own use; Petitioner had not practiced as a pharmacist for more than two years prior to his arrest; he never used marijuana while working as a pharmacist; the attorney who represented him in the license revocation proceeding did a poor job and gave poor advice regarding challenging the I.G. action; Petitioner was addicted to marijuana; and there is no evidence that the use of marijuana adversely affected Petitioner's performance as a pharmacist. I accept none of these arguments as they are not recognized as mitigating factors under the regulation. Petitioner was convicted of a felony and not misdemeanor offenses involving loss to the Medicare/Medicaid Program, hence the first mitigating factor is not present. There is no evidence of record that Judge Buress found Petitioner suffered any mental disease or defect that contributed to or caused his criminal conduct and the second mitigating factor is not present. Regarding the third permissible mitigating factor, there is no evidence that Petitioner aided authorities in excluding others for program fraud or other misconduct.

Petitioner also argues that lesser periods of exclusion were ordered in other cases on more egregious facts. However, Petitioner cites no authority for why I should consider this argument.

The I.G. erroneously relied upon three aggravating factors when it determined to extend the period of exclusion in this case from the minimum of five years to ten years. The I.G.'s error places the burden upon me to reassess the appropriateness of imposing more than the minimum period of exclusion given the existence of two aggravating factors. I have carefully considered the two aggravating factors in this case and find that a 10-year exclusion is very reasonable. Although Petitioner was sentenced to serve a minimum of one-year confinement, the maximum to which he was subject was seven years. The maximum authorized confinement indicates the seriousness of the offense. Further, as Petitioner points out, the suspension of Petitioner's pharmacist license was for much longer than the minimum, also an indication of the seriousness of the offense. Petitioner's Response, pp. 9-10. Petitioner's attempts to minimize or excuse his conduct do not militate against extending the minimum period of exclusion by five years as his excuses do not constitute mitigating factors under the regulations.

The effective date of Petitioner's exclusion is April 19, 2001, 20 days after the March 30, 2001, I.G. notice of exclusion. 42 C.F.R. § 1005.20(b).

CONCLUSION

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid and all other Federal health care programs for a period of ten years effective April 19, 2001.

Keith W. Sickendick

Administrative Law Judge