SUBJECT:

Joseph M. Rukse, jr., R.Ph.,

Petitioner,

The Inspector General

DECISION

The Inspector General (I.G.) notified Joseph M. Rukse, Jr., R.Ph., (Petitioner) that he was being excluded from participation in Medicare, Medicaid and all other Federal health care programs for a period of ten years pursuant to sections 1128(a)(1) and (a)(4) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)). Petitioner's section 1128(a)(1) exclusion was based upon his "conviction" of a program-related crime. Petitioner's section 1128(a)(4) exclusion was based upon his "conviction" for an offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. Petitioner timely requested review. I find that the I.G. failed to consider a mitigating factor when she imposed Petitioner's 10-year exclusion. Therefore, I modify the exclusion to a term of seven years and six months.

The I.G. notified Petitioner of his exclusion by letter dated July 31, 2001. By letter dated September 25, 2001, Petitioner filed his appeal. This case was assigned to me for a hearing and a decision. I conducted a telephonic prehearing conference at which the parties agreed that the case could be decided based on their written submissions. The I.G. filed a Brief in Support of Motion for Summary Affirmance and a reply brief. The I.G. also submitted six proposed exhibits (I.G. Ex. 1 - I.G. Ex. 6). Petitioner filed a brief and one proposed exhibit (P. Ex. 1). Neither party objected to my admitting any of the proposed exhibits into evidence. Therefore, the offered exhibits are admitted.

Summary judgment is appropriate and no hearing is necessary in this case for a full and fair disposition.

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 West Virginia and authorized to participate in Medicare, Medicaid and other Federal health care programs, although Petitioner was not working as a pharmacist at that time.

2. Petitioner entered into a plea agreement with the United States Attorney's Office of the Southern District of West Virginia on November 13, 2000. (I.G. Ex. 2).

3. On November 13, 2001, Petitioner was adjudged guilty, pursuant to his pleas, by Judge Robert C. Chambers, United States District Court, Southern District of West Virginia, of health care fraud, pursuant to 18 U.S.C. § 1347, and acquisition of a controlled substance by fraud, pursuant to 21 U.S.C. § 843(a)(3). (I.G. Ex. 3).

4. On January 22, 2001, Petitioner was sentenced to: 15 months imprisonment, 3 years supervised release following his release from prison, participation in a drug treatment program while on supervised release, to pay an assessment of $200, a fine of $5,000 and restitution of $3,600. (I.G. Ex. 4).

5. By letter dated July 31, 2001, the I.G. advised Petitioner that he was being excluded from participation in Medicare, Medicaid and all 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 3.

6. 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 resulted in financial loss to a government program of $1,500 or more; (b) the acts for which Petitioner was convicted occurred over a period of one year or more from September 1998 to December 1999; and (c) Petitioner's sentence included incarceration. (I.G. Ex. 6).

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

2. Petitioner was convicted, within the meaning of the Act, of a criminal offense related to the delivery of an item or service, under the Medicaid program, Act, section 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)), and of a felony criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, 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 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. Three aggravating factors have been established by the I.G. by a preponderance of the evidence: (a) the acts for which Petitioner was convicted resulted in financial loss to a government program of $1,500 or more; (b) the acts for which Petitioner was convicted occurred over a period of one year or more from September 1998 to December 1999; and (c) Petitioner's sentence included incarceration.

8. Petitioner has established by a preponderance of the evidence that one mitigating factor exists: [t]he record in the criminal proceedings, including sentencing documents, demonstrates that the court considered that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual's culpability.

9. A seven year and six months exclusion (five years mandatory and a two year and six months extension) is within a reasonable range and is not unreasonable.

A. APPLICABLE LAW

Petitioner's right to a hearing by an administrative law judge (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)(1) 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 criminal offense related to the delivery of an item or service under Medicare or Medicaid. Further, section 1128(a)(4) of the Act provides, in part, that the Secretary must exclude any individual or entity that has been convicted of a felony criminal offense related to the unlawful dispensing of a controlled substance. Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) 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:

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

Section 1001.102(c) of 42 C.F.R. provides that 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 the length of the exclusion imposed by the I.G. was unreasonable based on the existence of a mitigating factor.

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). There are no issues of material fact in dispute is this case. The only issue involves the interpretation of whether certain undisputed facts establish the existence of a mitigating factor within the meaning of 42 C.F.R 1001.102(c). Thus, the issue may be decided by application of the law to the undisputed facts and summary judgment is appropriate.

2. A 10-year exclusion of Petitioner is not within a reasonable range and is unreasonable based on the I.G.'s failure to consider a mitigating factor.

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 ⁽¹⁾ 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 is a mitigating factor that the I.G. failed to consider.

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 resulted in financial loss to a government program of $1,500 or more; (b) the acts for which Petitioner was convicted occurred over a period of one year or more from September 1998 to December 1999; and (c) Petitioner's sentence included incarceration. As previously stated, Petitioner concedes these aggravating factors. However, Petitioner argues that the length of the exclusion is nevertheless unreasonable because the I.G. failed to consider Petitioner's mitigating factors.

Petitioner argues that two mitigating factors are present in his case. Petitioner argues that, since he gave extensive cooperation to prosecuting authorities that resulted in the return of the overpayments and investigative fees to the government, 42 C.F.R. § 1001.102(c)(3) is applicable to his case as a mitigating factor. Additionally, Petitioner asserts that section 1001.102(c)(2) of 42 C.F.R. is applicable to Petitioner's case because the record in the criminal proceeding shows that Petitioner had a "mental, emotional or physical condition before or during the commission of the offense" that reduced Petitioner's culpability in that Petitioner suffered from a chemical addiction to hydrocodone cough syrup.

I do not accept Petitioner's argument that a mitigating factor exists because he gave extensive cooperation to prosecuting authorities. It is clear that Petitioner has misinterpreted the regulatory provision. Section 1001.102(c)(3) of 42 C.F.R. provides that a factor may be considered mitigating if the individual's cooperation resulted in "[o]thers being convicted or excluded,"which is not the situation in this case. Given the plain language of the regulatory provision, I need not discuss Petitioner's argument further.

However, I am persuaded by Petitioner that 42 C.F.R. § 1001.102(c)(2) is applicable to his case as the record in the criminal proceeding demonstrates that the court considered in sentencing, that Petitioner had a mental, emotional or physical condition before or during the commission of the offense that reduced Petitioner's culpability. Although the judge did not enter specific findings of reduced culpability due to mental impairment, the I.G. cites no law for the proposition that the sentencing judge must make such specific findings. Also contrary to the I.G.'s position, I find several reasons in the record of the criminal proceeding, including the sentencing documents, to conclude that Petitioner's drug addiction was considered by the court and such consideration resulted in a lesser sentence due to Petitioner's reduced culpability. The court's sentencing document adopted the factual findings and guideline application as presented in the Pre-sentence Investigation Report. I.G. Ex. 4 at 9. The Pre-sentence Investigation Report documents Petitioner's addiction. P. Ex. 1 at ¶53. Further, a review of Petitioner's plea agreement and of the offenses of which Petitioner was convicted shows that Petitioner faced a maximum confinement of 14 years. I.G. Exs. 1 and 2. However, Petitioner was sentenced to 15 months confinement, the lower range of the sentencing guideline for such offenses. As further indication that the judge considered the impact of Petitioner's drug addiction, the judge's sentence recommended that Petitioner be allowed to participate in a drug abuse treatment program. I.G. Ex. 4 at 2. Finally, while Petitioner faced a possible restitution amount of $35,000, the judge only ordered Petitioner to pay restitution in the amount of $3,600.

Because the IG failed to consider a mitigating factor which is shown by a preponderance of the evidence, I must reassess the appropriate period of exclusion in this case. I consider the existence of the three aggravating factors and the one mitigating factor and conclude that a two year six month extension of the mandatory minimum exclusion of five years is warranted. According, Petitioner should be excluded for a total period of seven years and six months.

For the foregoing reasons, I find that the I.G. failed to consider a mitigating factor when she imposed Petitioner's exclusion. Therefore, I modify Petitioner's exclusion to a term of seven years and six months.

Keith W. Sickendick

Administrative Law Judge

1. In this case, Petitioner concedes the basis for the exclusion and the mandatory minimum 5-year exclusion period.