SUBJECT:

Robert F. Tschinkel, R.Ph.,

Petitioner,

The Inspector General.

DECISION

By letter dated August 31, 2004, the Inspector General, United States Department of Health and Human Services (I.G.), notified Robert F. Tschinkel, R.Ph., Petitioner, that he would be excluded from participation in the Medicare, Medicaid, and all federal health care programs as defined in section 1128B(f) of the Social Security Act (Act), for a period of five years. The I.G. imposed this exclusion, pursuant to section 1128(a)(3) of the Act, because of Petitioner's felony conviction in the State of Ohio, Court of Common Pleas, Cuyahoga County, of a criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service. As explained below, I sustain the I.G.'s determination to exclude Petitioner from participating in Medicare, Medicaid, and all federal health care programs for a period of five years.

I. Background

After Petitioner's timely request for hearing on September 8, 2004, to contest the basis for his exclusion, I held a prehearing telephone conference with the parties. During the telephone conference, the I.G. counsel said he planned to file a motion for summary affirmance and believed an in-person hearing would be unnecessary. Petitioner agreed that a decision could be made on the written submissions and exhibits. Thereafter in this proceeding, the following motions and supporting briefs were filed:

�On December 21, 2004, the I.G. filed The Inspector General's Motion for Summary Affirmance and Brief in Support (I.G. Br.) and six proposed exhibits (I.G. Exs. 1 - 6).

�On January 24, 2005, Petitioner filed Petitioner's Opposition to the Inspector General's Motion for Summary Affirmance (P. Br.) and one proposed exhibit (P. Ex. A).

�The I.G. requested leave to file a reply brief. Petitioner filed a brief in opposition to the I.G.'s motion for leave to reply. I found good cause for the I.G.'s request to reply, and I established a supplementary briefing schedule by Order dated March 16, 2005.

�On March 30, 2005, the I.G. filed The Inspector General's Reply to Petitioner's Opposition to the Inspector General's Motion for Summary Affirmance (I.G. R. Br.) and two additional proposed exhibits (I.G. Exs. 6A - 7). ⁽¹⁾

�Although Petitioner was given until April 7, 2005, to file a sur-reply, Petitioner submitted nothing further. I closed the record on May 10, 2005.

Petitioner objected to the admission of his conviction, which is now sealed and expunged. I discuss below the admissibility and applicability of an expunged and sealed conviction for purposes of the I.G.'s proposed exclusion of Petitioner. Neither party objected to the admission of the party-opponent's other proposed exhibits. As explained below, I am admitting all proposed exhibits into the record.

In making this Decision to sustain the I.G.'s imposition of an exclusion against Petitioner, I have considered the record exhibits, the parties' arguments, and the applicable law and regulations.

II. Applicable Law

III. Issues

One primary issue is presented in this case; that is, whether a basis exists under section 1128(a)(3) of the Act for Petitioner's exclusion.

IV. The Parties' Contentions

A. The I.G.'s arguments

The I.G. contends that all of the elements exist for Petitioner's mandatory exclusion for the statutory minimum of five years in that: (1) Petitioner was convicted; (2) of a felony; (3) after August 21, 1996; and, (4) the conviction involved theft in connection with the delivery of a health care item or service.

B. Petitioner's Arguments

Petitioner contends that his conviction for theft had no relation to health care fraud.

P. Br. at 2. Petitioner further argues that the I.G. is estopped by the doctrine of laches because the I.G. waited so long after his conviction to exclude him. Id. at 3. Petitioner also contends that the I.G. is inappropriately using a sealed, expunged conviction in support of his exclusion. Id. at 6.

V. Findings of Fact and Conclusions of Law

I discuss my findings and conclusions below each lettered heading.

A. Petitioner was convicted as conviction is defined in the Act.

Petitioner was a pharmacist licensed to practice in the State of Ohio. I.G. Ex. 2, at 3. Beginning on or around August 1, 1998, through September 8, 1999, Petitioner stole Vicodin from Medic Drugs, where he was employed as a pharmacist. Id.; I.G. Exs. 3, 4. An Information was filed in the Court of Common Pleas, Cuyahoga County, on March 23, 2000, charging Petitioner with one count of theft for "knowingly and by deception" obtaining or exerting control over Vicodin, with the purpose to deprive the owner, Medic Drugs, of the same, in contravention of Ohio Revised Code Annotated (Ohio Rev. Code Ann.) � 2913.02(B). I.G. Ex. 3. Petitioner pleaded guilty as charged in the Information; the Court found Petitioner guilty on March 23, 2000. I.G. Ex. 4. Petitioner was sentenced to one year of probation. I.G. Ex. 5. On November 2, 2004 (received for filing on November 3, 2004), Petitioner's conviction was expunged and the records relating to his conviction were sealed by Judge Richard J. McMonagle of the Court of Common Pleas, Cuyahoga County, Ohio. P. Ex. A.

By statute, a person is "convicted" within the meaning of section 1128(i) of the Act:

(1) when a judgment of conviction has been entered against the individual by a Federal, State, or local court, regardless of whether there is an appeal pending or whether the judgment of conviction or other record relating to criminal conduct has been expunged;

(2) when there has been a finding of guilt against the individual by a Federal, State, or local court;

(3) when a plea of guilty or nolo contendere by the individual has been accepted by a Federal, State, or local court; or

(4) when the individual or entity has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.

42 U.S.C. � 1320a - 7(i).

By the express language of the Act, a person is convicted for purposes of exclusion under the Act when a judgment of conviction has been entered against the individual by a federal, state, or local court, even if that judgment and the records relating to it have been expunged. Section 1128(i)(1) of the Act. In this case, even though Petitioner's conviction was later expunged, a judgment of conviction was entered against him by a state court of Ohio. I.G. Ex. 4, at 1. Therefore, Petitioner has been convicted as conviction is defined in the Act.

B. The expungement and sealing of records relating to Petitioner's conviction do not prevent the use of the conviction for exclusion purposes.

In November 2004, well after the I.G. issued its notice of exclusion on August 31, 2004, the Court of Common Pleas, Cuyahoga County, upon application, expunged Petitioner's conviction that the I.G. uses to support Petitioner's exclusion and sealed the records pertaining thereto. P. Ex. A. Petitioner argues that, as a result, the conviction cannot be used to support exclusion. I disagree. As noted above, Congress acknowledged that convictions may be expunged and specifically expressed that such convictions support exclusion. Section 1128(i)(1) of the Act.

As a result of the sealing of Petitioner's records, the I.G. did not obtain certified copies of Petitioner's plea and finding of guilt. Petitioner contends that the I.G. may not use an old or previously-obtained record of Petitioner's court proceeding for this exclusion and, therefore, the I.G. Exs. 3 - 5 should not be admitted into the record in this case. I find, on the contrary, that I.G. Exs. 3 - 5 have indicia of reliability even though they are not certified copies. Such indicia include file stamps and notarized signatures. I conclude that these exhibits are admissible as a result.

More importantly, Petitioner has not contended that he was not convicted as indicated in the exhibits. He argues instead that his conviction was expunged. Petitioner has been aware since August 28, 2002, that the I.G. was seeking to exclude him from participation in Medicare, Medicaid, and all federal health care programs. I.G. Ex. 7, at 4. Petitioner filed his appeal in this exclusion case on September 8, 2004. I.G. Ex. 7, at 1. Justice would not be served by allowing excluded individuals to seek expungement and sealing of records after filing an appeal of the I.G.'s exclusion and thereby preventing the I.G. from establishing support for the exclusion. ⁽²⁾

Petitioner's substantial quotation from Ohio law regarding the meaning of expungement is also unavailing to Petitioner in this case. P. Br. at 6-8. The I.G.'s decision to exclude a petitioner from all federal health care programs is a matter governed by federal law (and supercedes state law) based on the Supremacy Clause of the United States Constitution. Exclusions from federally funded health care programs do not hinge on state criminal justice policies. Carolyn Westin, DAB No. 1381 (1993).

C. The criminal offense for which Petitioner was convicted took place after the passage of HIPAA.

One of the elements the I.G. must show to support an exclusion under section 1128(a)(3) of the Act is that the criminal offense underlying the exclusion took place after passage of HIPAA. HIPAA was enacted on August 21, 1996. Pub. L. 104-191, 110 Stat. 1936 (1996). The charge in the Information to which Petitioner pleaded guilty alleged that Petitioner committed the acts at issue between August 1998 and September 1999. I.G. Ex. 3, at 1. Therefore, Petitioner was convicted of an offense that occurred after the enactment date of HIPAA.

D. Petitioner was convicted of a felony relating to theft in connection with the delivery of a health care item or service.

The Act provides that exclusion applies to an individual convicted of a criminal offense "consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct." Act, section 1128(a)(3); 42 U.S.C. � 1320a-7(a)(3).

The criminal offense to which Petitioner pleaded guilty was a felony. Petitioner pleaded guilty to aggravated theft as set forth in Ohio Rev. Code Ann. � 2913.02(B). I.G. Ex. 4, at 1. Under Ohio Rev. Code Ann. � 2913.02(B)(6), "[i]f the property stolen is any dangerous drug, a violation of this section is theft of drugs, a felony of the fourth degree . . . ." Vicodin is considered a dangerous drug under Ohio Rev. Code Ann. � 4729.02. Therefore, Petitioner was convicted of a felony criminal offense, and that criminal offense was theft. I.G. Ex. 6.

The Act also provides that exclusion under section 1128(a)(3) applies if the criminal offense was "in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program . . . operated by or financed in whole or in part by any Federal, State, or local government agency . . . ." 42 U.S.C. � 1320a-7(a)(3). Petitioner has two arguments with respect to this part of the Act. First, Petitioner argues that his theft conviction (for taking Vicodin from his employer, Medic Drugs) was not "in connection" with the delivery of a health care item or service. Second, Petitioner argues that his theft conviction was not "with respect" to any act or omission in a health care program operated or financed by a government agency. P. Br. at 3.

I agree with Petitioner that the I.G. did not show that Petitioner's underlying offense had any relationship with a government operated or financed program. Nonetheless, the language of section 1128(a)(3) of the Act shows that the two triggering requirements for exclusion under this section of the Act are stated in the disjunctive. That is, exclusion can be predicated on either a felony criminal offense that was in connection with the delivery of a health care item or service or a felony offense that was an act or omission in a governmentally operated or financed health care program. Exclusion under section 1128(a)(3) does not require that the criminal offense be both in connection with the delivery of a health care item or service and an act or omission in a governmentally operated or financed health care program. The Departmental Appeals Board (Board) has clearly adopted the disjunctive interpretation of section 1128(a)(3). Erik D. DeSimone, R.Ph., DAB No. 1932 (2004). The I.G. can prove this element of the basis for exclusion if the I.G. shows that Petitioner's felony criminal offense of theft was in connection with the delivery of a health care item or service.

I find unpersuasive Petitioner's argument that taking a prescription drug from the pharmacy by which he was employed is not connected to the delivery of a health care item or service. P. Br. at 3. I am required to make a common sense determination whether Petitioner's theft was in connection with the delivery of a health care item or service. DeSimone, DAB No. 1932. Petitioner's conviction was for a theft of Vicodan from the pharmacy where he was employed as a pharmacist. I.G. Exs. 2, 3. As a pharmacist, Petitioner was preparing and delivering prescription medicines (health care items and services) to the pharmacy's customers. His misappropriation of the pharmacy's medicine for his own use diverted those health care items and services away from the pharmacy's customers. DeSimone, DAB No. 1932. The criminal act for which he was convicted was in connection with his professional activities of preparing and delivering controlled substances to the pharmacy's customers. I conclude, therefore, that Petitioner's felony conviction was in connection with the delivery of a health care item or service.

The I.G. has shown by a preponderance of the evidence all four elements required for exclusion under section 1128(a)(3) of the Act. Petitioner was convicted for an offense which occurred after the date of the enactment of HIPAA, under federal or state law, in connection with the delivery of a health care item or service consisting of a felony relating to theft.

E. Petitioner's exclusion is not barred by the principle of laches.

Petitioner argues that the I.G. waited too long before deciding to seek to exclude him, to Petitioner's prejudice. Because Petitioner's conviction was in 2000, and Petitioner was precluded from practicing pharmacy for a number of years thereafter, Petitioner contends that to exclude him now inappropriately lengthens the time he is barred from practice. According to Petitioner, because the I.G. waited so long to exclude him, the government has acted unfairly and should be estopped from taking action against him. P. Br. at 4.

The evidence of record shows that Petitioner was convicted on March 23, 2000. P. Ex. 4, at 1. Petitioner was first notified on August 28, 2002, that the I.G. planned to exclude him. As part of that notice, Petitioner was invited to submit information to the Office of Inspector General in Milwaukee, Wisconsin, that he wished the I.G. to consider before the I.G. made a final determination of exclusion. I.G. Ex. 7, at 4. In his request for hearing, Petitioner acknowledged receiving correspondence from the "Wisconsin Office." Id. at 1. The record contains no explanation why it took the I.G. two years, from August 28, 2002 until August 31, 2004, to notify Petitioner that the I.G. had definitely decided to exclude him. Nonetheless, neither the statute nor the regulations set any specific deadline for the I.G. to act once an individual has become subject to exclusion. Chander Kachoria, R.Ph., DAB No. 1380 (1993). An I.G. exclusion imposed after the running of other sanctions a petitioner may have garnered for the acts at issue is a no less valid exclusion. Further, an Administrative Law Judge (ALJ) cannot adjust the effective date of a validly imposed exclusion based on fairness principles. Samuel W. Chang, M.D., DAB No. 1198 (1990). An ALJ is commissioned to follow applicable statutes, rules and regulations. It is questionable whether an ALJ can invoke an equitable remedy such as estoppel by laches. Moreover, to establish estoppel by laches, a party must establish that he changed his position to his detriment and prejudice through reliance upon the unreasonable delay in instituting actions against him. See Akers v. State Marine Lines, Inc., 344 F.2d 217 (5^th Cir. 1965). Petitioner has made no such showing in this case.

F. The length of exclusion under section 1128(a)(3) of the Act is mandatory and cannot be for less than five years.

Once an individual has been convicted of a criminal offense within the meaning of section 1128(a)(3) of the Act, exclusion from participation in Medicare, Medicaid, and all other federal health care programs for a minimum period of five years is mandatory. Act, section 1128(c)(3)(B). By reason of his conviction, Petitioner was subject to, and the I.G. was required to impose upon him, exclusion from participation in Medicare, Medicaid, and all federal health care programs for a period of not less than five years. Id. The I.G.'s exclusion of Petitioner for the minimum mandatory period of five years is supported by fact and law, and is, therefore, reasonable and proper.

VI. Conclusion

For the foregoing reasons, I sustain the Petitioner's exclusion from participation in Medicare, Medicaid, and all federal health care programs for a period of five years.

Anne E. Blair

Administrative Law Judge

1. The I.G. submitted two exhibits marked as I.G. Ex. 6. I have renumbered the I.G.'s proposed Ex. 6, submitted with the reply brief, as I.G. Ex. 6A.

2. There is no evidence in the record before me establishing when the expungement application was made.