Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
In the Case of:
David D. DeFries, D.C.,
Petitioner,
- v. -
The Inspector General.
DATE: March 24, 1992
Docket No. C-393
Decision No. 1317
FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW
JUDGE
DECISION
David D. DeFries, D.C. (Petitioner) requested review of a decision
by
Administrative Law Judge (ALJ) Steven T. Kessel, dated October 11,
1991,
excluding Petitioner from participation in Medicare and Medicaid
for
five years. See David D. DeFries, D.C., DAB CR156 (1990)
(ALJ
Decision).
The ALJ decided this case on cross motions for summary disposition,
and
upheld the Inspector General's (I.G.'s) determination to exclude
the
Petitioner for five years. ALJ Decision at 8. Petitioner did
not
specify any of the 11 findings of fact and conclusions of law (FFCLs)
by
the ALJ with which he disagreed. No issues of fact have been
raised
before us, and none were presented to the ALJ. The standard of
review
regarding a disputed issue of law is whether the ALJ Decision
is
erroneous. Lakshmi N. Achalla, DAB 1231, at 7 (1991). The
only
questions in this case are:
(1) whether the ALJ erred in concluding that
Petitioner's
exclusion properly fell within the
mandatory, rather than the
permissive, provisions of the Act; and
(2) whether the ALJ erred in concluding that
he had no authority
to change the commencement date
of Petitioner's exclusion.
See Notice of Appeal at 2. We discuss each question below,
conclude
that the ALJ Decision was correct, and adopt as our own each of
the
ALJ's FFCLs. Accordingly, we affirm the five-year exclusion imposed
on
Petitioner.
I. Petitioner was properly subject to mandatory exclusion
under
section 1128(a)(1).
Petitioner is a chiropractor, who could not legally be reimbursed
by
Medicaid for x-rays. FFCLs 1, 5. Another provider submitted bills
to
Medicaid for x-ray services actually provided by Petitioner and
gave
Petitioner a referral fee. See FFCLs 5, 6. Petitioner was
convicted of
Medicaid fraud in state court pursuant to a plea of nolo
contendere.
FFCL 2.
Petitioner's 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 [of the Act, Medicare] 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 . . . ."
Petitioner contended that the criminal offense for which he was
convicted
should have been subject to the permissive exclusion
provisions of section
1128(b)(1), which permits exclusion of any
individual or entity "convicted .
. . in connection with the delivery of
a health care item or service or with
respect to any act or omission in
a program operated by or financed . . . .
by any Federal, State, or
local government agency, of a criminal offense
relating to fraud, theft,
embezzlement, breach of fiduciary responsibilities,
or other financial
misconduct." No minimum period is established for
exclusions under
section 1128(b)(1).
Petitioner argued that, since he was permitted to take and read
x-rays
within the scope of his license and he did not "misrepresent the
nature
or extent of any service," he did not commit any crime in his
delivery
of services. Petitioner's Reply Brief (Br.) at 4.
Rather, his offense
was a financial one, in improperly accepting a referral
fee. Petitioner
interpreted the two sections as alike in requiring
convictions relating
to state health care programs, but different in that
section 1128(a)(1)
relates to service delivery offenses, while section
1128(b)(1) relates
to financial misconduct offenses. He argued that
this interpretation
was necessary to "give . . . some meaning" to the
exclusion provisions.
Id. Since his offense involved financial
misconduct, Petitioner argued
that it fit more squarely within section
1128(b)(1).
First, Petitioner's characterization of his criminal offense is
inaccurate
on the record. Petitioner certainly misrepresented "the
nature or extent" of
his services when he permitted the identity of the
actual provider to be
falsified in order that Medicaid reimbursement to
which he was not entitled
could be channeled to him. See ALJ Decision
at 5; I.G.'s Response Br.
at 4. An x-ray provided by a medical doctor
(eligible to be paid for
x-rays under Medicaid) is not the same as an
x-ray provided by a chiropractor
(not so entitled). A conviction for
Medicaid fraud by a provider under
such circumstances is clearly related
to the delivery of services under
Medicaid.
Our prior decisions support the application of section 1128(a)(1)
to
financial misconduct directed at the Medicaid program in the course
of
service delivery, rejecting a narrow definition of "related to
the
delivery of an item or service" as limited to offenses such as
patient
abuse or poor quality services. See, e.g., Jack W. Greene, DAB
1078, at
6-7 (1990), aff'd Greene v. Sullivan, 731 F. Supp. 835 (E.D.
Tenn.
1990). Thus, we have held that false billing of Medicaid
resulting in
an overpayment falls within section 1128(a)(1), because
submission of a
bill or claim is the step in the delivery process that
actually brings
the item or service "within the purview of the
program." Greene, DAB
1078, at 7; cf. Charles W. Wheeler and Joan K.
Todd, DAB 1123, at 11-14
(1990) (section 1128(a)(1) properly applied to
conviction for submitting
false cost reports to Medicaid). In Greene,
as here, the fraud exists
only by comparing the claim to the actual item or
service delivered, and
so is plainly "related" to that delivery.
Greene, DAB 1078, at 7-8.
Further, we have also held that conversion by a
Medicare provider of a
check intended as compensation for a service delivered
under Medicare by
another Medicare provider is sufficiently "related."
Napoleon S.
Maminta, M.D., DAB 1135 (1990). Here, as in Maminta, the
victim of the
financial offense was the program in that Petitioner "caused
Medicaid to
financially reimburse for x-rays that were not covered under
the
program" (ALJ Decision at 6) and accepted a referral fee related
to
those x-ray services. Maminta at 8, 15-16. Therefore, we
conclude that
section 1128(a)(1) was properly applied to Petitioner's
conviction.
Second, we have previously held that a mandatory exclusion under
section
1128(a) is required where applicable to the offense, even if
the
permissive exclusion provisions could also be read to apply.
Leon
Brown, M.D., DAB 1208, at 3-4 (1990). Petitioner, unlike Brown,
argued
that his offense did not fit within section 1128(a), rather than that
a
permissive exclusion should be considered in lieu of the mandatory
term
when either section 1128(a) or section 1128(b) could apply. See
I.G.'s
Response Br. at 3-4. However, we have already concluded
that
Petitioner's offense is encompassed by section 1128(a). Therefore,
we
find that Petitioner was subject to the exclusion mandated by
Congress.
Third, Petitioner's argument that principles of statutory
construction
require reading only section 1128(b) to apply to any offense
involving
financial misconduct also fails. We have interpreted the
relationship
of the permissive and mandatory provisions on criminal offenses
in a way
that gives meaning to both sections without doing violence to the
words
used by Congress to express its intent. We explained that
"[t]he
permissive exclusion provisions of section 1128(b) apply to
convictions
for offenses other than those related to the delivery of an item
or
service under either the Medicare or Medicaid or other
covered
programs." Samuel W. Chang, M.D., DAB 1198, at 8 (1990).
Thus,
financial misconduct may fall within either section 1128(a)(1)
or
section 1128(b)(1). The significant distinction intended between
the
two is that section 1128(a)(1) applies when the misconduct
is
program-related, i.e., involves at some point in the chain of
misconduct
a delivery of an item or service claimed under the programs named
above,
whereas section 1128(b)(1) applies, inter alia, to other
financial
misconduct in the context of government-funded health care.
Greene v.
Sullivan, supra.
In addition, Petitioner argued that section 1128(a)(1) should be
read
narrowly to apply only to convictions under federal law.
Petitioner's
Reply Br. at 5. Nothing in the Act suggests that the
criminal offense
to which section 1128(a)(1) applies must be of federal law
or that the
conviction must occur in the federal courts. To the
contrary, section
1128(i) specifically defines "conviction" to include action
by a state
or local court, as well as a federal court. Petitioner did
not offer
any reason that the coexistence of state and federal criminal
law
systems makes it improper for Congress to have provided for
mandatory
exclusions that are derivative from state court convictions of
offenses
"related to the delivery of an item or service" under Medicare
or
Medicaid. The one authority cited by Petitioner merely holds that
the
double jeopardy clause is not offended when the same misconduct
is
prosecuted under federal racketeering law, after an acquittal of
state
charges. United States v. Frumento, 563 F.2d 1083 (3d Cir.
1977).
Here, there is no question of double jeopardy, and this case does
not
involve either a federal criminal prosecution or a prior
state
acquittal. Frumento simply does not support Petitioner's
interpretation
of section 1128(a)(1).
Thus, we conclude that the ALJ did not err in determining that
section
1128(a)(1) applied and therefore a five-year exclusion was
mandated
under section 1128(c)(3)(B).
II. The ALJ correctly declined to change the commencement date of
the
exclusion.
The I.G. had excluded Petitioner under section 1128(a)(1) effective
20
days from the April 12, 1991 exclusion notice. Petitioner
had
previously been excluded from Medicaid by the Pennsylvania Department
of
Welfare on August 23, 1990, and voluntarily ceased participation in
the
Medicare program on January 1, 1991. The ALJ rejected
Petitioner's
argument that his exclusion should have run concurrently with
one of
these periods. The ALJ reasoned that he did not have authority
to
change the commencement date of an exclusion. ALJ Decision at 7.
We have ruled previously that the ALJ "has no power to change . . .
[the]
beginning date" of a mandatory exclusion under section 1128(a)(1).
Chang at
10. We affirm this conclusion here. Section 1128(c)(1) of the
Act
provides that the effective date of an exclusion should be set "at
such time
. . . as may be specified in regulations." The regulations
provide that
the I.G. should give notice of the suspension to begin 15
days from the date
on the notice (to which the I.G. has added five days
for mailing). 42
C.F.R. . 1001.123(a) (1991). 2/ The ALJ is authorized
to review whether
a conviction occurred and was of the required kind and
whether the length of
the exclusion was reasonable. 42 C.F.R. .
1001.128(a) (1991).
There is no issue here as to the length of the
exclusion since the I.G.
imposed the mandatory minimum required by
statute of five years. As we
stated in Chang, "[t]he ALJ can not
decrease the time, nor can he decide when
it is to begin." Chang at 9.
Petitioner cited no authority for the ALJ
to review the effective date
set by the I.G. in accordance with the
regulations.
In Chang, we also pointed out the impracticality of the ALJ's
order
retroactively excluding him, since a difficult review of patient
records
would be necessitated. Chang at 16-17. Petitioner argued
that the
holding in Chang should not apply to him, because no difficulty
with
tracing and returning Medicare reimbursements would arise if
his
exclusion were made to run retroactively, since Petitioner
voluntarily
withdrew from Medicare. Petitioner contended that equity
demands that
if a state conviction automatically results in a mandatory
exclusion,
Petitioner should be permitted to begin the five-year period
immediately
by voluntary withdrawal instead of awaiting government
action.
The practical difficulty of retroactive exclusions mentioned in Chang
was
not the basis for our decision there that the ALJ could not change
the
commencement date set by the I.G., but rather our decision rested on
the
absence of any authority empowering the ALJ to review that issue.
Therefore,
the factual distinction urged by Petitioner makes no
difference to the result
here, i.e., the ALJ was correct that he could
not alter Petitioner's
exclusion date. We see no relevance or merit to
Petitioner's equity
argument that, having been convicted of a criminal
offense triggering section
1128(a)(1), he should be permitted to control
the timing of the resulting
exclusion to best suit his convenience.
Conclusion
For the reasons discussed above, we affirm the ALJ's decision
that
Petitioner was properly excluded for five years beginning on the
date
set by the I.G.'s notice.
_____________________________ Judith A. Ballard
_____________________________ Theodore
J.
Roumel U.S. Public Health Service
_____________________________ Cecilia
Sparks
Ford Presiding Board 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. The
term
"Medicaid" is used herein to represent all state health care
programs
from which the I.G. directed that Petitioner be excluded.
2. The regulations in effect before the 1987 revision of section
1128
use the term "suspension" for what is now termed an "exclusion."
Those
regulations provided for the timing and notice for a suspension in
a
manner that is fully consistent with the revised statutory
provisions.
Chang at 10, n. 5. Regulations implementing the 1987
revisions were
published with an effective date of January 29, 1992. 57
Fed. Reg. 3298
(January 29,