Steven Michael Margolin, DAB CR5250 (2019)

DECISION

The Inspector General of the United States Department of Health and Human Services (the IG) excluded Petitioner, Steven Michael Margolin, from participation in Medicare, Medicaid, and all other federal health care programs for five years based on his conviction for a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  Petitioner sought review of the exclusion.  For the reasons stated below, I affirm the IG’s exclusion determination.

I.  Procedural History

By letter dated May 31, 2018, the IG notified Petitioner that he was being excluded, effective 20 days from the date of the letter, from participation in Medicare, Medicaid, and all federal health programs under section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)) for the minimum statutory period of five years.  The IG explained he took this action based on Petitioner’s conviction in a California court for a criminal offense related to the delivery of an item or service under the Medicare or a state

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health care program, including the performance of management or administrative services relating to the delivery of such items or services.  IG Ex. 1 at 1.1

Petitioner timely requested a hearing before an administrative law judge.  I held a pre-hearing telephone conference on August 15, 2018, the substance of which is summarized in my August 20, 2018 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order).  Among other things, I directed the parties to file pre-hearing briefs articulating their respective arguments as well as identifying witnesses and exhibits in support thereof.  Summary Order at 5-6.

The IG filed a brief (IG Br.) and four exhibits (IG Exs. 1-4), while Petitioner filed a brief (P. Br.) with no exhibits.  The IG subsequently filed a reply brief (IG Reply).

II.  Exhibits and Decision on the Record

In the absence of objection from Petitioner, I admit IG Exs. 1 through 4.

Neither party identified witnesses or requested an in-person hearing.  IG Br. at 5; P. Br. at 2.  Therefore, a hearing is unnecessary and I will decide this case on the written record.  See Civ. Remedies Div. Pro. § 19(d).

III.  Issue

Whether the IG had a basis to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for five years under 42 U.S.C. § 1320a-7(a)(1).  See 42 C.F.R. § 1001.2007(a)(1).

IV.  Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to an administrative hearing and judicial review of the final action of the Secretary of Health and Human Services (Secretary).  The right to a hearing before an ALJ is set forth in 42 C.F.R. §§ 1001.2007(a) and 1005.2, and the rights of both the sanctioned party and the IG to participate in a hearing are specified by 42 C.F.R. § 1005.3.

The Secretary must exclude from participation in federal health care programs “[a]ny individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under subchapter XVIII of this chapter or under any State health care program.”  42 U.S.C. § 1320a-7(a)(1); see also 42 C.F.R. § 1001.101(a).

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An individual is convicted of a criminal offense when:  (1) a judgment of conviction has been entered against him or her in a federal, state, or local court whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or nolo contendere is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.  42 U.S.C. § 1320a-7(i).  The statute does not distinguish between misdemeanor and felony convictions.  There may be no collateral attack of the conviction that provides the basis of the exclusion.  42 C.F.R. § 1001.2007(d).

Section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) provides that an exclusion imposed under section 1128(a) of the Act (42 U.S.C. § 1320a-7(a)) shall be for a minimum period of five years.  The exclusion is effective twenty days from the date of the notice of exclusion.  42 C.F.R. § 1001.2002(b).  The period of exclusion may be extended based on the presence of specified aggravating factors.  42 C.F.R. § 1001.102(b).  Mitigating factors are considered as a basis for reducing the period of exclusion only if aggravating factors justify an exclusion of longer than five years.  42 C.F.R. § 1001.102(c).

The standard of proof is a preponderance of the evidence.  42 C.F.R. § 1001.2007(c).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors; the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(b).

V.  Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold and followed by pertinent findings of fact and analysis.

A.  I have jurisdiction to hear this case.

Petitioner timely requested a hearing.  I therefore have jurisdiction to hear and decide this case.  See 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also 42 U.S.C. § 1320a-7(f)(1).

B.  There is a basis for Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act.

Exclusion from participation in Medicare, Medicaid, and all federal health care programs is mandated by section 1128(a)(1) of the Act where an individual has been convicted, under Federal or State law, of a criminal offense related to the delivery of an item or service under Medicare or any state health care program.  42 U.S.C. § 1320a-7(a)(1); 42 C.F.R. § 1001.101(a).  The IG has established these elements by a preponderance of the evidence.

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1.  Petitioner was convicted of a criminal offense within the meaning of section 1128(a)(1) of the Act.

In May 2015, Petitioner was accused by criminal complaint of making false and fraudulent health care claims, grand theft, and identity theft when he, in concert with others, obtained personal identifying information from a pharmacist and used that information to forge prescriptions and submit false claims to Medicare.  IG Ex. 2.

On February 15, 2018, the adjudicating California state court ordered the complaint against Petitioner amended to include a misdemeanor count for violation of section 4329 of the California Business and Practice code.2  IG Ex. 3 at 10-11.  Petitioner pleaded nolo contendere3 to that misdemeanor charge, and the court found him guilty.  Id. at 11.  The court ordered Petitioner placed on diversion for a period of one year, and ordered him to appear February 15, 2019 for a diversion hearing.  Id.

Diversion or pre-trial diversion in California refers to “the procedure of postponing prosecution of an offense filed as a misdemeanor either temporarily or permanently at any point in the judicial process from the point at which the accused is charged until adjudication.”  Cal. Penal Code § 1001.1.  Where a defendant satisfies the conditions of a period of diversion, the criminal charges against that defendant are dismissed.  Id. at 1001.7.

Presumably, if Petitioner successfully meets the terms of his diversion, charges against him will be dismissed on February 15, 2019.  For this reason, Petitioner argues that the IG has not shown he was convicted of a criminal offense within the meaning of the Act for purposes of exclusion.  P. Br. Att. at 1-2.  Petitioner’s understanding is reasonable but erroneous; in determining what criminal dispositions should be subject to exclusion, Congress chose to view the term ‘conviction’ broadly and explicitly defined exclusion-worthy convictions to include pre-trial diversions.  42 U.S.C. § 1320a-7(i)(4) (“[A]n individual or entity is considered to have been ‘convicted’ of a criminal offense . . . 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.”); see also 42 C.F.R. § 1001.2.  Thus, Petitioner’s nolo contendere plea resulting in diversion is a conviction for a criminal offense within the meaning of the Act.

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Petitioner asserts that because the charge against him is likely to be dismissed upon successful completion of his term of diversion, it would in the best interests of justice to prevent the exclusion from proceeding, or at least delaying it until his diversion hearing on February 15, 2019.  P. Br. Att. at 1.  I am sympathetic to Petitioner’s point but cannot provide him equitable relief.  See US Ultrasound, DAB No. 2302 (2010).  Nor can I suspend or delay an exclusion action.  Shaikh M. Hasan, M.D., DAB No. 2648 at 12 (2015) (“[T]here is no authority to adjust the effective date of the [IG]’s exclusion, which was set based on 42 C.F.R. § 1001.2002.”).

Petitioner also complains that the IG will have no way to terminate the mandatory minimum five-year period of exclusion.  Id.  The IG claims that upon successful completion of his pretrial diversion resulting in dismissal of the charges against him, Petitioner will no longer be “convicted” within the meaning of the Act, and can seek to be reinstated.  IG Reply at 2.

It is not clear to me that the regulation cited by the IG, 42 C.F.R. § 1001.3005(a)(1), is applicable here, since that provision requires the IG to reinstate an individual whose convictions has been vacated or reversed on appeal.  Petitioner’s successful completion of pre-trial diversion does not meet that requirement.  Completion of his term of diversion is not a basis for me to find he was never convicted of a criminal offense within the meaning of the Act.  See Nenice Marie Andrews, DAB 2656 at 7 (2015) (providing in regards to post-conviction expungement proceedings like pre-trial diversion programs, “[w]e conclude that, once an individual has been convicted . . . within the meaning . . . of the Act, any further proceeding affecting the characterization of that conviction – other than vacating or reversing the conviction itself – are irrelevant for purposes of determining whether the [IG] has the authority to impose exclusion under section 1128(a) or (b)”).

Nevertheless, assuming IG counsel’s view is correct, this circumstance may very well be one where the IG is either obligated to reinstate Petitioner or can exercise his discretion in Petitioner’s favor.  In either case, I encourage Petitioner to seek reinstatement should charges against him be dismissed on February 15, 2019, as he anticipates.

2.  Petitioner’s criminal offense is related to the delivery of an item or service under Medicare or a state health care program within the meaning of section 1128(a)(1) of the Act.

The Act requires Petitioner be excluded from participation in federal healthcare programs if he was convicted of an offense relating to the delivery of an item or service under Medicare or a state health care program.  See 42 U.S.C. § 1320a-7(a)(1).  “[T]he statute requires some ‘nexus’ or ‘common sense connection’ between the offense of which a petitioner was convicted and the delivery of an item or service under a covered program.  Berton Siegel, D.O., DAB No. 1467 (1994).

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Petitioner contends his conviction was not related to the delivery of a healthcare item or service under Medicare or a state program because he was a driver for the pharmacy where the criminal conduct at issue occurred and that there was no evidence he filled prescriptions, aside from the hearsay contained in the criminal complaint against him.  P. Br. Att. at 1-2.

Petitioner’s claim amounts to a collateral attack on his conviction, which I am not permitted to entertain.  See 42 C.F.R. § 1001.2007(d).  Here, it is undisputed that Petitioner pleaded to an offense that on its face plainly relates to the delivery of healthcare items or services – the misdemeanor criminal conduct to which Petitioner actually admitted refers to “any nonpharmacist who takes charge of or acts as a supervisor, manager, or pharmacist-in-charge of any pharmacy, or who compounds or dispenses a prescription or furnishes dangerous drugs . . . .”  Cal. Bus. & Prof. Code § 4329.  Even if I inquired no further, the offense to which Petitioner actually pleaded is obviously related to the delivery of a healthcare item or service within the meaning of the Act.

Beyond that, however, the criminal complaint against him confirms conduct that would squarely meet this element.  IG Exs. 2, 4.  Petitioner correctly states that he did not plead guilty to the felony charges first brought against him, and that a felony complaint and arrest warrant cannot by themselves form the basis of his conviction.  P. Br. Att. at 2.  However, I need only find a nexus or connection between the offense of conviction and the delivery of an item or service – that broad notion refers to all relevant facts, not merely those found in a specific order or charging document.  Summit S. Shah, M.D., DAB No. 2836 at 7-8 (2017).

Here, the facts found in the original complaint form the basis for Petitioner’s misdemeanor charge, which relates to improper delivery of drugs or prescriptions by a non-pharmacist.  The complaint, arrest warrant, and declaration in support thereof make clear that Petitioner’s conviction stemmed from filling prescriptions as an unlicensed pharmacist resulting in claims submitted to Medicare.  IG Exs. 2, 4.  I therefore conclude that Petitioner was convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program as contemplated by 42 U.S.C. § 1320a-7(a)(1).

C.  Petitioner must be excluded for a minimum of five years; the period of exclusion is therefore reasonable as a matter of law.

Because I have concluded that a basis exists to exclude Petitioner under 42 U.S.C. § 1320a-7(a)(1), Petitioner must be excluded for a minimum period of five years.  42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).  The IG has no discretion to impose a lesser period of exclusion, and I may not reduce the period of exclusion below five years.

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VI.  Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for five years starting June 20, 2018, pursuant to section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)).

• 1. Document 7b in the official case file maintained in the DAB E-file system; for clarity and simplicity, whenever possible I will cite to the exhibits attached to the parties’ respective briefs by the exhibit numbers therein, not the document numbers assigned by the E-file system.
• 2. This provision states that “any nonpharmacist who takes charge of or acts as a supervisor, manager, or pharmacist-in-charge of any pharmacy, or who compounds or dispenses a prescription or furnishes dangerous drugs . . . is guilty of a misdemeanor.”  Cal. Bus. & Prof. Code § 4329.
• 3. In California, six kinds of pleas are available to a criminal defendant.  Relevant here, a nolo contendere plea is considered the same as a guilty plea, and “[t]he legal effect of such a plea, to a crime punishable as a felony, shall be the same as that of a plea of guilty for all purposes.”  Cal. Penal Code § 1016.