SUBJECT:

Rosemary Oteri,

Petitioner,

The Inspector General

I sustain the determination of the Inspector General (I.G.) to exclude Rosemary Oteri, Petitioner, from participating in Medicare, Medicaid, and all federal health care programs for a period of five years.

Background

By letter dated August 31, 2000, the I.G. notified Petitioner that she was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of five years. By letter dated October 20, 2000, Petitioner contested the exclusion. During a prehearing conference, held December 12, 2000, the parties agreed that Petitioner had been convicted of program-related crimes, and that the regulations mandate a five-year minimum period of exclusion. Petitioner, however, argued that the exclusion constitutes double jeopardy, prohibited by the Fifth Amendment of the United States Constitution. The parties agreed that an in-person hearing would not be necessary, and that the matter could be decided on the written record.

The parties submitted briefs. Petitioner's brief was not accompanied by any proposed exhibits. The I.G.'s response was accompanied by four proposed exhibits (I.G. Exs. 1 - 4). Petitioner declined to file a reply brief, and did not object to my receiving into evidence the I.G.'s proposed exhibits. I.G. Exs. 1 - 4 are therefore admitted. I base my decision in this case on the parties' stipulations, arguments, the exhibits admitted, and the applicable law.

Issues

The issues in this case are:

1. Whether the I.G. appropriately excluded Petitioner from participating in Medicare, Medicaid, and all federal health care programs;

2. Whether the five year exclusion is mandated; and

3. Whether the I.G. violated the Double Jeopardy Clause of the United States Constitution by imposing the exclusion.

Discussion⁽¹⁾

1. Petitioner was convicted of criminal offenses related to the delivery of items or services under the Massachusetts Medicaid program.

Petitioner owned and operated a company known as Hanson Medical Supply in Massachusetts. I.G. Exs. 3 and 4. This business sold medical supplies and equipment for severely disabled persons. Almost all of the company's billings were made through the Medicaid program. P. Br. at 1.

Although the details of her offenses are somewhat sketchy, the parties agree that Petitioner engaged in conduct that defrauded the Division of Medical Assistance, Massachusetts' Medicaid program, out of a substantial amount of money. She was indicted, and, on January 5, 2000, pled guilty in the Suffolk County Superior Court, a Massachusetts State Court, to: one count of larceny of over $250 from the Massachusetts' Medicaid Program, in violation of G.L. Ch. 266, � 30; three counts of making false claims against the Massachusetts' Medicaid Program, in violation of G.L. Ch. 118E, � 40; and one count of filing false health insurance claims against the Tufts Health Plan, in violation of G.L. Ch. 175H, � 3. I.G. Exs. 1 and 3. She was sentenced to: two years in the Suffolk County House of Corrections (sentence suspended); two years probation; and was ordered to pay $50,000 in restitution to the Division of Medical Assistance, and $10,000 in restitution to the Tufts Health Plan. Id. Petitioner's pleas of guilt as described above, and the Suffolk County Superior Court's acceptance of Petitioner's pleas, constitute convictions under section 1128(i)(3) of the Social Security Act (Act).

Section 1128(a)(1) of the Act requires the exclusion from participation in federal health care programs of any individual or entity convicted of a criminal offense "related to the delivery of an item or service under" Medicare or any State health care program.⁽²⁾ The filing of fraudulent Medicaid claims constitutes program-related misconduct. Alan J. Chernick, D.D.S., DAB CR434 (1996); see also Rosaly Saba Khalil, M.D., DAB CR353 (1995). Here, Petitioner was convicted of larceny and filing false Medicaid claims, and does not challenge that she is subject to an exclusion under section 1128(a)(1) of the Act. Therefore, I conclude that Petitioner was convicted of program-related crimes within the meaning of section 1128(a)(1) of the Act.

2. Petitioner was convicted of a felony offense relating to health care fraud.

On July 31, 1996, amendments to section 1128 of the Act created section 1128(a)(3), which requires that an individual convicted of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service, be excluded for a minimum of five years. Here, Petitioner was convicted of filing false health insurance claims with the Tufts Health Plan, a felony. I.G. Exs. 1 and 3. She does not challenge that, under the regulations, she is subject to an exclusion under section 1128(a)(3) of the Act, and I so find. See John A. Sayegh, M.D., DAB CR551 (1998).

3. The I.G. is required to exclude Petitioner from participation in Medicare, Medicaid, and all federal health care programs.

Section 1128(a)(1) of the Act mandates that the I.G. exclude any individual or entity convicted of an offense related to the delivery of an item or service under Medicare or any State health care program. The I.G. must exclude Petitioner, inasmuch as Petitioner was convicted of such an offense.

Section 1128(a)(3) of the Act mandates that the I.G. exclude any individual or entity convicted of a felony criminal offense in connection with the delivery of a health care item or service relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct, which occurred after August 21, 1996,⁽³⁾ and involved a health care program. Therefore, the I.G. must exclude Petitioner under section 1128(a)(3).

4. The statute requires that Petitioner be excluded from participation in federal healthcare programs for a minimum of five years.

An exclusion of at least five years is mandatory for any individual or entity who has been convicted of a criminal offense under section 1128(a). Act, section 1128(c)(3)(B). In a case where the exclusion is for the minimum amount of time, no question of reasonableness exists.

5. The imposition of an exclusion does not violate the Double Jeopardy Clause of the United States Constitution.

As explained above, Petitioner concedes that she was convicted of a program-related crime and of a felony related to health care fraud. She does not dispute that the statute and regulations mandate a five-year exclusion. Instead, she challenges the constitutionality of the statute and regulations, arguing that the Fifth Amendment's Double Jeopardy Clause precludes the I.G. from imposing the sanction.⁽⁴⁾ Petitioner cannot prevail on this argument in this forum, and is not likely to prevail on it in any other forum.

As a threshold matter, I am bound by the federal statute and regulations, and have no authority to declare them unconstitutional. 42 C.F.R. � 1005.4(c)(1).

Moreover, even if I had that authority, an appellate panel of the Departmental Appeals Board (Board) has ruled definitively that the imposition of a mandatory five-year exclusion does not violate the Double Jeopardy Clause. Joann Fletcher Cash, DAB No. 1725 (2000); Douglas Schram, R.Ph., DAB No. 1372 (1992). In Cash, the Board relied on the leading Supreme Court decision, Hudson v. United States, 522 U.S. 93 (1997), to confirm that the Double Jeopardy Clause does not "prohibit the imposition of any additional sanction that could 'in common parlance' be described as punishment," but, instead, protects against the imposition of multiple criminal punishments for the same offense. Cash at 5, quoting Hudson at 98-99. The Board in Cash, citing a line of Supreme Court cases, articulated the test for determining whether a punishment constitutes a criminal punishment within the ambit of the Double Jeopardy Clause:

1) Did the legislature express or imply a preference for a civil or criminal label to the penalty; and

2) If the legislature indicated its intention to establish a civil penalty, is the statutory scheme so punitive, in either purpose or effect, as to transform a civil remedy into a criminal penalty?

Applying this test to section 1128(a)(1), the Board concluded that the statute does not violate the Double Jeopardy Clause.

With respect to the first question, the Board pointed out that in the Medicare and Medicaid Patient Protection Act of 1987, Public Law No. 100-93, Congress established exclusion sanctions, civil money penalties, and criminal penalties, and "plainly distinguished between these types of penalties and grouped the exclusion sanctions with civil money penalties." That Congress conferred both the authority to impose exclusions and the authority to impose civil money penalties on the Secretary of the Department of Health and Human Services (DHHS), but authorized the Attorney General to impose criminal penalties, is prima facie evidence that Congress intended this to be a civil sanction. Cash at 6, citing Hudson at 103. The Board also observed that Congress directed that DHHS's administrative processes, which are civil, be used to review exclusions (section 1128(f) of the Act), and that exclusions and civil money penalties can be part of the same administrative proceeding.

The Board then cited a line of cases holding that a section 1128 exclusion is civil and remedial rather than criminal and punitive. Manocchio v. Kusserow, 961 F.2d 1539 (11th Cir. 1992); Greene v. Sullivan, 731 F. Supp. 838 (E.D. Tenn. 1990); Carolyn Westin, DAB No. 1381 (1981); Douglas Schram, R.Ph., DAB No. 1382 (1992); and Janet Wallace, L.P.N., DAB No. 1126 (1992). The statute's purpose is to protect federal health care programs and the programs' beneficiaries and recipients from untrustworthy providers, and a provider convicted of a criminal offense related to the delivery of an item or service under Medicare or Medicaid is presumed by Congress to be untrustworthy and a threat to federal health care programs and their beneficiaries and recipients.

Moving to the second question - is the statutory scheme so punitive, in either purpose or effect, that it transforms a civil remedy into a criminal penalty - the Hudson Court considered seven factors:

1) has the sanction historically been regarded as punishment;

2) does it involve an affirmative disability or restraint;

3) does it come into play only on a finding of scienter;

4) is the behavior to which it applied already a crime;

5) is an alternative purpose, to which it may rationally be connected, assignable to it;

6) will its operation promote the traditional aims of punishment, retribution, and deterrence; and

7) does it appear excessive in relation to the alternative purpose assigned.

In assessing these factors, the Hudson Court also ruled that the evaluation was to be made "in relation to the statute on its face" and "only the clearest proof [would] suffice to override legislative intent and transform what has been denominated a civil remedy into a criminal penalty." Cash at 6, citing Hudson at 94. Carefully reviewing these factors, the Board found "little evidence, much less the clear proof required by the Supreme Court, that the I.G.'s exclusion authority is so punitive in form as to render exclusions criminal despite Congress' intent to the contrary," and concluded that the five year exclusion provision of section 1128(a)(1) does not violate the Double Jeopardy Clause. Cash at 6. I am bound by this decision and I also agree with its reasoning.

Conclusion

I find that the I.G. was authorized to exclude Petitioner pursuant to sections 1128(a)(1) and 1128(a)(3) of the Act. A five-year exclusion is the minimum mandatory period of exclusion required for Petitioner.

Carolyn Cozad Hughes

Administrative Law Judge

1. Findings of fact and conclusions of law are set out as separate numbered headings in the Discussion section of this decision.

2. 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).

3. August 21, 1996 is the date of the enactment of the 1996 amendments to section 1128(a) of the Act.

4. The Double Jeopardy Clause provides that no person shall be subject "for the same offense to be twice put in jeopardy of life or limb." U.S. Const. amend. V.