SUBJECT:

Buena Vista Pharmacy, Inc.,

Petitioner,

The Inspector General

DECISION

This case is before me pursuant to a request for hearing filed on December 4, 2000 by Buena Vista Pharmacy, Inc. (Petitioner).

By letter dated October 31, 2000, the Inspector General (I.G.) notified Petitioner that it was being 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. informed Petitioner that the exclusion was imposed pursuant to section 1128(b)(8) of the Act, due to its association with Angelo M. DeLeon, a sanctioned or convicted individual. The I.G. further stated that Mr. DeLeon had a direct or indirect ownership or managerial control over Petitioner, and that he was convicted of an offense (as defined in section 1128(i) of the Act) related to the delivery of an item or service under the Medicaid program.

On June 7, 2001, I convened a telephone conference, during which the parties agreed that only written briefing would be required in this case.

Each party submitted written briefs in support of their respective contentions. On July 23, 2001, the I.G. submitted five proposed exhibits with her initial brief in support of her motion for summary affirmance. These have been identified as I.G. Exhibits (I.G. Exs.) 1-5. Petitioner offered four proposed exhibits with its initial brief of July 23, 2001, which it identified as Exhibits A-D. I have re-labeled them as Petitioner's Exhibits (P. Exs.) 1-4, in conformity with the Civil Remedies Division (CRD) Rules of Procedures. In the absence of objections by either party, I admit the proposed exhibits as marked. The I.G. submitted a response brief on August 15, 2001.⁽¹⁾

It is my decision to sustain the I.G.'s determination to exclude Petitioner from participating in the Medicare, Medicaid, and all federal health care programs for a period of five years. I base my decision on the documentary evidence, the applicable law and regulations, and the arguments of the parties. It is my finding that Angelo M. DeLeon was convicted of a criminal offense related to the delivery of an item or service under the Medicaid program. Furthermore, I find that by reason of the conviction and exclusion of Mr. DeLeon, and because of his ownership interest in Petitioner, the I.G. is authorized to exclude Petitioner from Medicare, Medicaid, and all federal health care programs pursuant to section 1128(b)(8) of the Act. See Paul S. Barrentine, R.Ph., DAB CR174 (1992). Additionally, I find that the five-year exclusion imposed on Petitioner is not unreasonable.

I. Applicable Law and Regulations

Section 1128(a)(1) of the Act authorizes the Secretary of the U.S. Department of Health and Human Services (Secretary) to exclude from participation in any federal health care program (as defined in section 1128B(f) of the Act) any individual convicted of a criminal offense relating to the delivery of a health care item or service.

Section 1128(b)(8) of the Act authorizes the Secretary to exclude from participation in Medicare, Medicaid, and all federal health care programs any entity that is owned, controlled, or managed by any person who has been convicted of any offense described in section 1128(a) of the Act, or who has been excluded from a federal or State health care program. Exclusions under section 1128(b) of the Act are permissive, and entities excluded under section 1128(b)(8) generally must be excluded for the same length of time as the individual whose relationship with the entity is the basis for the exclusion, if the individual has been or is being excluded. 42 C.F.R. § 1001.1001(b)(1).

Pursuant to 42 C.F.R. § 1001.2007, an individual or entity excluded under sections 1128(a)(1) or 1128(b)(8) of the Act may file a request for a hearing before an administrative law judge.

II. Issue

Whether the five-year exclusion commencing on November 20, 2000, imposed by the I.G. upon Petitioner, is unreasonable.

III. Finding and Discussion

The finding of fact and conclusion of law noted below in bold face is followed by a discussion of the finding:

1. Petitioner's exclusion for a period of five years commencing November 20, 2000 is not unreasonable.

Angelo M. DeLeon was vice-president and owner of 33 percent of the shares of Petitioner entity. I.G. Ex. 1, at 3. On March 5, 1999, Mr. DeLeon was convicted of petit larceny related to his submission of false Medicaid prescription claims. I.G. Ex. 2, at 6; I.G. Ex. 3. Section 1128(b)(8) of the Act provides that if a person with direct or indirect ownership or control interest of five percent or more in an entity has been convicted of an offense described in subsection 1128(a), or has been excluded from participation under a program under Title XVIII of the Act, or under a State health care program, that entity is subject to exclusion. These circumstances would serve as the underlying basis for exclusion of Petitioner in this case. However, I need not discuss this matter further inasmuch as Petitioner concedes that the I.G. had a basis for her exclusion. P. Br. at 1.

The remaining issue is whether Petitioner's exclusion commencing November 20, 2000 is unreasonable. Petitioner's response to this query would be in the affirmative, contending that the effective date of the exclusion should begin on March 7, 1997, when the Department of Social Services of the State of New York notified Petitioner that all payments under the Medical Assistance Program were being withheld until such time as the office of Special Prosecutor determined that there was insufficient evidence to support an action, or until completion of any criminal proceeding. Pivotal to Petitioner's reasoning is that Petitioner has been under a de facto exclusion since March 7, 1997. Consequently, argues Petitioner, the I.G.'s five-year exclusion beginning November 20, 2000, would effectively increase the exclusion period to a minimum of more than five years. P. Br. at 4. I am not persuaded by Petitioner's reasoning.

The withholding of payments under the Medical Assistance Program by the State of New York is different from the I.G.'s exclusion remedy. Additionally, the I.G.'s authority to impose an exclusion remedy against an entity derives only from the circumstances set forth in the law and regulations. Specifically, 42 C.F.R. § 1001.1001 establishes that:

The I.G. may exclude an entity if:

(i) A person with a relationship with such entity-

(A) Has been convicted of a criminal offense as described in sections 1128(a) and 1128(b)(1), (2), or (3) of the Act;

(B) Has had civil money penalties or assessments imposed under section 1128A of the Act; or

(C) Has been excluded from participation in Medicare or any of the State health care programs . . . .

In the case before me, the circumstance that gave rise to the I.G.'s exclusion action was Mr. DeLeon's conviction. The withholding of Petitioner's payments under the New York State's Medical Assistance Program is not one of the circumstances from which the I.G.'s exclusion authority would derive. Furthermore, even if more than one ground were to justify an I.G. exclusion action, it is within her discretion to determine how and when to proceed. Neither the law nor the regulations impose any constraints on the I.G. in this regard. Thus, in order to grant Petitioner the remedy it seeks I would have to backdate the I.G.'s exclusion action to a date prior to the conviction that gave rise to such exclusion. I find that I am without authority to alter the effective date of an exclusion imposed by the I.G. acting within the scope of discretion delegated by statute. Christino Enriquez, M.D., DAB CR119 (1991); Tanya A. Chuoke, R.N., DAB No. 1721 (2000).

In view of the foregoing, I find that Petitioner has not come forward with any persuasive reason to lead me to conclude that the five-year exclusion imposed by the I.G. is unreasonable. The five-year exclusion is a legitimate remedy consistent with the purpose of section 1128 of the Act. That purpose is to protect federally funded health care programs and their beneficiaries and recipients from untrustworthy individuals and entities. See JoAnn Fletcher Cash, DAB No. 1725 (2000). Moreover, Petitioner's exclusion is a derivative of Mr. DeLeon's mandatory exclusion pursuant to section 1128(b)(8) of the Act. In that regard, the regulations prescribe that exclusion under section 1128(b) of the Act will be for the same period as that of the individual whose relationship with the entity is the basis for the exclusion. 42 C.F.R. § 1001.1001(b)(1).

IV. Conclusion

The I.G. had a basis for excluding Petitioner. Furthermore, the five-year exclusion imposed by the I.G. in this case was not unreasonable.

José A. Anglada

Administrative Law Judge

1. Petitioner did not submit a response brief as established in the Briefing Schedule dated June 20, 2001.