Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
In the Case of: Betsy Chua,
M.D.
Docket No. C-139 and
Decision No. 1204 Betsy Chua, M.D., S.C.,
Petitioners,
-
v.
The Inspector General.
DATE: November 5, 1990
FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW
JUDGE
DECISION
Betsy Chua, M.D. and Betsy Chua, M.D., S.C. (Petitioners) requested
review
of an April 23, 1990 decision by Administrative Law Judge (ALJ)
Charles E.
Stratton excluding Petitioners from participation in Medicare
and Medicaid
for five years. See Betsy Chua, M.D. and Betsy Chua, M.D.,
S.C., DAB
Civ. Rem. C-139 (1990) (ALJ's Decision).
Petitioners' exclusion was based on sections 1128(a)(1) and
1128(c)(3)(B)
of the Social Security Act (Act). Section 1128(a)(1)
mandates exclusion from
Medicare and Medicaid for any individual or
entity "convicted of a criminal
offense related to the delivery of an
item or service under title XVIII or
under any State health care
program." 1/ Section 1128(c)(3)(B)
establishes that "[i]n the case of
an exclusion under subsection (a), the
minimum period of exclusion shall
be not less than five years . . . ."
Based on the following analysis, we affirm the ALJ's decision to
uphold
Petitioners' exclusion.
Background
The facts are undisputed. In October 1986 the Grand Jury for
Cook
County, Illinois, handed down a two count indictment
against
Petitioners, namely, Betsy Chua, M.D., as an individual and Betsy
Chua,
M.D., S.C., an Illinois corporation. See Petitioners' Brief
(Br.), p.
1. The indictment alleged that from January 1985 to August
1986
Petitioners conspired to, and did in fact, accept kickbacks from
a
laboratory which was a Medicaid provider for referring
laboratory
specimens of Medicaid recipients. On June 30, 1988,
Petitioners pleaded
guilty to kickback charges, and the conspiracy charges
were apparently
dropped. Betsy Chua as an individual was sentenced to a
conditional
discharge for one year. The corporation was sentenced to
pay
restitution of $3000.00 and placed on probation for one year.
See
Inspector General's (I.G.) Exhibits before the ALJ (Exs.) 1, 2, 5,
and
6.
On May 15, 1989, the I.G. notified Petitioners of their exclusion
from
Medicare and Medicaid based upon their conviction of criminal
offenses
related to the Medicaid program. On July 13, 1989, Petitioners
appealed
their exclusion to the ALJ.
The ALJ's decision, granting summary disposition for the I.G.
and
sustaining Petitioners' exclusion, was supported by 17 findings of
fact
and conclusions of law (FFCLs). In general, the ALJ found
that
Petitioners admitted that they were "convicted" of a criminal
offense
within the meaning of that term as defined in section 1128(i) of
the
Act, and that the criminal offense "related to the delivery of an
item
or service" under Medicaid. Consequently, the ALJ found that
an
exclusion was warranted under the law. ALJ's Decision, pp. 4-5.
As we discuss below, the Petitioners took exception to two of the FFCLs
in
the ALJ's decision. Additionally, on September 5, 1990, counsel for
the
Petitioners notified the Presiding Panel Member that, by Order dated
July 12,
1990, the Cook County Circuit Court had vacated the sentence of
Dr. Chua, as
an individual. Counsel subsequently provided the Panel
with a copy of
the Order, which became part of the record in this case.
On September 11,
1990, the Presiding Panel Member conducted a telephone
conference during
which he determined that he would allow the parties an
opportunity to brief
the issue of the effect of the July 12th Order on
Dr. Chua's exclusion.
2/ Our analysis of that issue, together with a
finding of fact and
conclusion of law, is contained in Part IV. of this
decision, following our
discussion of the Petitioners' exceptions. See
42 C.F.R.
498.88(f)(1)(ii).
Petitioners' Exceptions
The Petitioners took exception to the following FFCLs:
12. The I.G. properly excluded Petitioners
from participation in
the Medicare and Medicaid
programs for a period of five years as
required by
the minimum mandatory exclusion provisions of
section
1128(c)(3)(B) of the Act.
13. The I.G. is not barred by the ex post
facto and due process
clauses of the United States
Constitution from applying the 1987
Amendments to
section 1128 of the Act mandating a minimum five
year
exclusion to this case.
ALJ's Decision, p. 5.
Since the Petitioners did not challenge FFCL Nos. 1-11 and 14-17, we
adopt
and affirm those FFCLs without further discussion.
Prior to August 18, 1987, section 1128 of the Act provided for
exclusion
in the case of conviction for a program-related offense. The
period of
exclusion was to be determined by the Secretary. On August
18, 1987,
section 1128(c)(3)(B) of the Act was amended to provide a
mandatory
minimum period of exclusion of five years for convictions
of
program-related crimes under section 1128(a)(1). See Medicare
and
Medicaid Patient and Program Protection Act of 1987, Pub. L. No.
100-93
(1987). The essence of Petitioners' exceptions was that this
amendment
significantly altered the provisions of the statute by enhancing
the
penalty, from a discretionary period to be determined by the
Secretary,
to a mandatory period of at least five years.
Petitioners asserted that application of section 1128(c)(3)(B),
as
amended, violated the ex post facto prohibition of the United
States
Constitution and their Fifth Amendment due process rights.
Analysis
I. The ALJ's authority to decide the constitutional issues
The I.G. contended that Petitioners cannot raise their
constitutional
arguments before us, since these were not properly before the
ALJ, and
we review only issues properly before the ALJ. The regulations
limit
the ALJ's review in a hearing on suspension for conviction of
a
program-related crime to whether the person was in fact
convicted;
whether the conviction was related to his or her participation in
the
delivery of medical services under the Medicare or Medicaid program;
and
whether the length of the suspension was reasonable. 42
C.F.R.
100l.128(a).
Petitioners admitted that they were "convicted" of a criminal
offense
within the meaning of section 1128(i) of the Act, and the offense
was
"related to the delivery of an item or service" under the
Medicaid
program within the meaning of section 1128(a)(1) of the Act.
ALJ's
Decision, p. 3. Petitioners did not deny these admissions before
us.
The only remaining issue for the ALJ, under the regulation, was
whether
the length of the suspension was reasonable. Section
1128(c)(3)(B) of
the Act requires a five-year minimum period of exclusion,
and the ALJ
can not decrease the time. See Samuel W.Chang, DAB
App. No. 1198
(1990), p. 9. 3/
Before the ALJ, the I.G. argued that the ALJ did not have authority
to
decide constitutional issues. The ALJ replied that in order to
consider
the three issues set forth in section 1001.128(a), an ALJ
must
"interpret, construe, and apply the underlying statutory provisions
to
individual cases." ALJ's Decision, p. 9, citing Jack W. Greene,
DAB
App. 1078 (1989) at 17, aff'd, Greene v. Sullivan, 731 F. Supp.
835
(E.D. Tenn. 1990). The ALJ concluded that although he did not have
the
authority to declare the 1987 amendments unconstitutional, he did
have
the authority "to interpret and apply the amendments." ALJ's
Decision,
pp. 9-10.
The I.G. also argued that we do not have the authority to
decide
constitutional issues, since the issues for administrative review
are
limited to those set out in 42 C.F.R. 1001.128(a).
We conclude, as we did in Greene, supra, that while the ALJ does not
have
the authority to decide constitutional issues as such, he may
properly
consider arguments as to whether the 1987 amendments were
applicable in this
cases in deciding whether the mandatory exclusion of
five years was
appropriate.
We have therefore considered all the arguments of the Petitioners and
the
I.G. 4/ We conclude that the ALJ properly interpreted
Congressional
intent as evidenced in the 1987 amendments to the exclusion
provision.
Consequently, we conclude that the ALJ's decision upholding the
I.G.'s
exclusion of Petitioners for the mandatory minimum five-year period
was
correct.
II. Petitioners' ex post facto argument
Petitioners correctly noted that the ex post facto provision of Article
I,
Section 10, of the Constitution prohibits Congress from enacting any
law
which imposes a punishment for an act which was not punishable at
the time it
was committed, or imposes additional punishment to that
then
prescribed. Pointing to decisions by the United States Supreme
Court,
Petitioners then cited to the two elements which must be present for
a
criminal or penal statute to be considered ex post facto -- it must
be
retrospective in that it applies to events occurring before
its
enactment, and it must adversely affect the offender. See Weaver
v.
Graham, 450 U.S. 24 (1981); Lindsey v. Washington, 301 U.S. 397
(1937).
Petitioners cited Weaver for the proposition that even where a
statute
merely alters the penal provisions accorded by the "grace of
the
legislature," it violates the ex post facto clause if it is
both
retrospective and more onerous than the law in effect on the date of
the
offense. Petitioners relied on Lindsey for the concept that they
were
not barred from challenging a change in the penal code under an ex
post
facto rationale simply because the sentence they received was no
more
onerous than that which they might have received under the
previous
version of the statute, where there was no minimum mandatory
exclusion.
Petitioners asserted that the effect of the Act, as amended, led to
an
"unacceptable disparity" between claims based on a petitioner's luck
in
working a case through the judicial system. Petitioners contended
that
a "slow judicial process" had worked against them; had their
convictions
been earlier they would not be subject to the mandatory minimum
period
of exclusion. Thus, the Petitioners argued that they were
unfairly
subjected to a five-year exclusion. Petitioners' Br., pp. 5-6,
8.
As the ALJ noted, "[t]he mandatory exclusion provision of the
1987
amendments is not a penal law, imposing a punishment." Rather, the
ALJ
continued, "the major purpose of the exclusion sanction is to
protect
program integrity by preventing untrustworthy providers from
having
ready access to the Medicare and Medicaid . . . funds."
ALJ's
Decision, p. 10. Consequently, the ALJ determined that the
exclusion
provision in the 1987 amendments is a civil law imposing a
remedial
sanction. Thus, the amended exclusion provision did not trigger
the
Constitutional protection from ex post facto laws.
The ALJ's rationale was sound. It is well-established that
the
Constitutional prohibition against ex post facto laws forbids
penal
legislation which imposes or increases criminal punishment for
conduct
lawful previous to its enactment. Harisiades v. Shaughnessy,
342 U.S.
580, 594 (1952). Thus, it follows that "the inhibition against
the
passage of an ex post facto law by Congress . . . applies only
to
criminal laws . . . ." Id. at 595. Even in the face of the
ALJ's
conclusion, Petitioners have not shown that the exclusion provision
is
anything other than a civil remedy. Consequently, we find that
the
ALJ's conclusion on this issue was correct and we need not examine
it
any further. The Constitutional protection against ex post facto
laws
is not available to the Petitioners.
Accordingly, we affirm the ALJ's FFCL No. 12.
III. Petitioners' due process argument
Regarding their Fifth Amendment due process rights, Petitioners
argued
that Congress did not intend the mandatory exclusion provision
of
section 1128(c)(3)(B) to be applied retroactively. Petitioners
relied
on section 15 of Public Law No. 100-93, which provided that
the
amendment to the exclusion provision "shall not apply to
exclusions
based on convictions occurring before the date of enactment of
this
Act." Petitioners maintained that, although it spoke in terms
of
"convictions," the manifest intention of the law was to provide for
fair
prospective application of the amendment. Petitioners then argued
that
a statute is not to be given retroactive effect except where
the
legislative will is set out in such plain terms that there is no
doubt
that the legislature intended such an effect. See Dion v.
Secretary of
Health and Human Services, 823 F.2d 669 (1st Cir. 1987).
Petitioners also relied on the holding of the U.S. Court of Appeals
in
Griffon v. United States Dept. of Health and Human Services, 802
F.2d
146 (5th Cir. 1986). There, Griffon, who had been convicted
of
submitting false Medicaid claims in 1979, was fined by the I.G.
(in
1984) under the 1981 Civil Monetary Penalties Law (CMPL). On
appeal,
the Fifth Circuit held that the CMPL could not be applied
retroactively.
The court found that due process mandated that, in the absence
of clear
Congressional intent, every statute changing an established right
must
be given prospective application.
Petitioners conceded that while it was the intent of Congress to apply
the
mandatory exclusion provision prospectively, the Secretary had
insisted on
basing exclusions "on convictions which occur after the
effective date of the
Act, as amended." Petitioners' Br., p. 11.
As the ALJ noted, Petitioners' reliance on Griffon is misplaced.
In
that case, the court found that the applicable statute was silent
("the
deafening congressional silence") on the question of
retrospective
application. Id. at 151. In support of his
conclusion that the minimum
five-year exclusion was meant to be applied in
the circumstances of this
case, the ALJ cited section 15(b) of Public Law
100-93, which enacted
the amended exclusion provision. Section 15(b),
titled "Mandatory
minimum exclusions apply prospectively," specifically
provided that "an
exclusion of not less than 5 years . . . shall not apply to
exclusions
based on convictions occurring before the date of enactment of
this Act
[August 18, 1987]." The corresponding legislative history
provides
"[t]he five year minimum exclusion . . . would apply to
convictions
occurring on or after the date of enactment." S. Rep. No.
109, 100th
Cong., 1st Sess. 27 (1987), reprinted in 1987 U.S. CODE CONG.
& ADMIN.
NEWS 682, 708 (emphasis added).
Based on the language of the statute itself and the legislative
history,
the ALJ concluded that Congress intended that the mandatory
minimum
exclusion provision would apply prospectively from the date of
the
statute's enactment to all convictions occurring on or after August
18,
1987, even though the circumstances leading to the convictions may
have
occurred prior to that date. See ALJ's Decision, pp. 11-12.
We agree.
The ALJ correctly found that Petitioners' due process rights were
not
violated.
Accordingly, we affirm the ALJ's FFCL No. 13.
IV. The Order by the Cook County Circuit Court
On July 12, 1990, the Cook County Circuit Court issued an Order
vacating
the sentence of Dr. Chua, as an individual. By its own terms
the Order
--
vacates the Order of Conditional Discharge [6-30-88]
and Nunc Pro
Tunc enters an Order of (1) year
Supervision on Dr. Betsy Chua, Dr.
Chua having
fulfilled all conditions of her supervision.
Supervision is terminated, and the Defendant [Dr. Chua]
is
discharged as of 6-30-89.
Counsel for Dr. Chua noted that under Illinois law, "a disposition
of
'supervision' is not a conviction." Thus, Counsel asserted that
absence
of a conviction under Illinois law should be "the operative factor"
in
deciding whether to exclude Dr. Chua. Additionally, Counsel argued
that
the July 12th nunc pro tunc Order caused the charge against Dr. Chua
to
be dismissed without a conviction. 5/ Counsel contended that the
July
12th Order established the fact that it was not the Court's intention
to
convict Dr. Chua. See Petitioners' Comments (October 2, 1990).
A somewhat analogous issue was raised in Carlos E. Zamora, M.D.,
DAB
App. 1104 (1989). There, Dr. Zamora entered a plea of nolo
contendere
to the criminal offense of filing false Medicaid claims. The
state
court deferred adjudication and placed Dr. Zamora on
probation.
Approximately six months after the conviction, the court granted
the
Doctor's motion for termination of probation (reduced to time
served),
dismissed the charges, and allowed the Doctor to withdraw his
plea.
However, subsequent to the conviction, but prior to the court
order
vacating the conviction, the I.G. notified Dr. Zamora of his
exclusion
based on his program-related conviction under section 1128(a) of
the
Act. Id. at 3-4.
In upholding the ALJ's decision to exclude Dr. Zamora, the Board found
no
merit in Dr. Zamora's argument that since his plea was vacated by the
state
court, he had not been "convicted" for purposes of section
1128(a). The
Board concluded that Congress had carefully considered
circumstances such as
those present in Dr. Zamora's case. The wording
and the legislative
history clearly shows that Congress intended to
exclude from the Medicare
program not only those individuals convicted
of criminal wrongdoing by a
judge or jury, but also those who entered
pleas which were ultimately
dismissed after probation without a judgment
of conviction ever being
entered. The statute focuses the I.G.'s
inquiry on whether an
individual (or entity) pleaded guilty or nolo
contendere to the criminal
charges, rather than allowing an individual
state's ultimate disposition of a
case to dictate the I.G.'s course of
action. Id. at 6.
The rationale of Zamora applies here as well. Section 1128(a)(1) of
the
Act mandates that anyone convicted of a program-related offense
be
excluded. For purposes of section 1128(a), section 1128(i)
dictates
that there has been a "conviction" --
(1) when a judgment of conviction has been entered
against the
individual . . . regardless of whether .
. . the judgment of
conviction . . . has been
expunged;
* * *
(3) when a plea of guilty . . . has been accepted by
a . . . court
. . . .
Thus, under either of the subsections cited above, an exclusion
is
appropriate, regardless of the Circuit Court's Order. Petitioner
Chua
entered a plea of guilty to a program-related offense. Therefore,
she
was "convicted" within the statutory meaning of that term.
Congress
clearly intended that individuals pleading guilty to
program-related
criminal charges should be excluded even if such pleas are
ultimately
expunged after a period of probation. The relevant
legislative history
provides --
These criminal dispositions may well represent
rational criminal
justice policy. The
Committee is concerned, however, that
individuals
who have entered guilty . . . pleas to criminal
charges
of defrauding the Medicaid program are not
subject to exclusion
from either Medicare or
Medicaid. These individuals have admitted
that
they engaged in criminal abuse against a Federal
health
program and, in the view of the Committee,
they should be subject
to exclusion. If the
financial integrity of Medicare and Medicaid
is to
be protected, the programs must have the prerogative not
to
do business with those who have pleaded to
charges of criminal
abuse against them.
* * *
With respect to convictions that are "expunged," the
Committee
intends to include all instances of
conviction which are removed
from the criminal
record of an individual for any reason other than
the vacating of the conviction itself, e.g., a conviction which
is
vacated on appeal.
H.R. Rep. No. 727, 99th Cong., 2d Sess. 75 (1986), reprinted in 1986
U.S.
CODE CONG. & ADMIN. NEWS 3607, 3665.
FINDING OF FACT AND CONCLUSION OF LAW
1. Based on the wording and legislative history of section 1128(a)
of
the Act and our reasoning in Zamora, we find that the July 12th Order
of
the Cook County Circuit Court does not have any effect on the
exclusion
of Dr. Chua as an individual.
Conclusion
Based on the foregoing analysis, we affirm the ALJ's decision
upholding
Petitioners' exclusion. In doing so, we affirm each and every
one of
the ALJ's findings of fact and conclusions of law and adopt them as
our
own. Additionally, we incorporate into the record our FFCL No.
1
regarding the effect of the July 12th Order of the Cook County
Circuit
Court on the exclusion of Dr. Chua as an individual.
Judith A. Ballard
Theodore J. Roumel U.S. Public Health Service
Alexander G. Teitz Presiding Panel Member
1. "State health care program" is defined by section 1128(h) of
the
Act to include any State Plan approved under Title XIX of the
Act
(Medicaid). We use the term Medicaid to refer to all state
health
programs.
2. The Presiding Panel Member's decision to permit the parties
to
address this issue de novo was based on the Panel's authority
as
outlined in the regulations at 42 C.F.R. Part 498 which govern
the
appeals procedures for determinations that affect participation
in
Medicare. Specifically, 42 C.F.R. 498.86(a) provides that this Panel
--
may admit evidence into the record in
addition
to the evidence introduced at the ALJ
hearing,
. . . if . . . [the Panel] considers that
the
additional evidence is relevant and
material
to an issue before it.
The I.G. did not object to the admission of the Order in our record;
in
any event, it was clearly relevant and material to an issue
raised
before us.
3. We need not decide whether the ALJ could, in determining
whether
the length of the exclusion was reasonable, increase the length of
the
exclusion, since that issue was not raised here.
4. The I.G. noted that, before us, the Petitioners did not
give any
reasons why FFCL Nos. 12 and 13 are wrong which they did not
raise
before the ALJ (other than the Illinois court's subsequent
Order).
Petitioners merely repeated their arguments before the ALJ
virtually
verbatim. Although our guidelines (Departmental Appeals
Board,
Appellate Division Guidelines, Appellate Review Of Decisions
Of
Administrative Law Judge In "Exclusion Only" Cases, B.1.(c)), state
that
a party is not merely to incorporate a brief by reference or
duplicate
materials in the record, we have nevertheless considered the
entire
record.
5. While we consider the effect of the Order (taking it at its
face
value), it was probably not a true nunc pro tunc entry. Black's
Law
Dictionary (Fifth Edition, p. 964) defines such an entry as "an
entry
made now of something actually previously done to have effect of
former
date; office being not to supply omitted action, but to supply
omission
in record of action really had but omitted through inadvertence
or
mistake." The correction must be based on something in the court
files
or records. See In Re Marriage of Hirsch, 135 Ill. App. 3d 945, 482
N.E.
2d 625 (1985), cited by Petitioners. There is no indication that
the
entry the court purported to make at the later date represented
action
which actually took place at the earlier