SUBJECT:

Oliver U. Obi,

Petitioner,

The Inspector General.

DECISION

I sustain the determination of the I.G. to exclude Petitioner, Oliver U. Obi, from participating in the Medicare, Medicaid, and all other federal health care programs, for a period of 15 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 the Petitioner was convicted of "a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance," within the meaning of section 1128(a)(4) of the Social Security Act (Act).

This case is before me pursuant to a request for hearing filed by Petitioner on June 19, 2006. See 42 C.F.R. § 1001.2007.

By letter dated May 31, 2006, the Inspector General (I.G.) notified Petitioner, a pharmacist, that he was being excluded from participating in the Medicare, Medicaid, and all federal health care programs as defined in section 1128B(f) of the Act, for a period of 15 years. The I.G. informed Petitioner that the action was taken under section 1128(a)(4), due to his conviction, as defined in section 1128(i), in the U.S. District Court, Eastern District of Michigan, Southern Division, of a felony offense related to the unlawful, manufacture, distribution, prescription, or dispensing of a controlled substance. Section 1128(c)(3)(B) of the Act provides that the minimum period of exclusion shall be no less than five years. In this instance the I.G. determined that 15-year period of exclusion was necessary due to certain aggravating factors.

The parties agreed that this matter could be decided based on written arguments and documentary evidence, and that an evidentiary hearing was unnecessary. Each side has made written submissions in support of their respective contentions. The I.G. submitted six proposed exhibits. These have been identified as I.G. Exhibits (Exs.) 1-6. Petitioner proposed no exhibits.

1. Whether the I.G. had a basis upon which to exclude Petitioner from participating in the Medicare, Medicaid, and all other federal health care programs.

2. Whether the aggravating factors justify increasing the five-year mandatory period of exclusion required by law.

Section 1128(b) of the Act authorizes the Secretary to exclude individuals from receiving payment for services that would otherwise be reimbursable under Medicare, Medicaid, or other federal health care programs.

Section 1128(a)(4) of the Act authorizes the Secretary of Health and Human Services (Secretary) to exclude from participation in any federal health care program (as defined in section 1128B(f), any individual convicted under federal or state law, of a criminal offense relating to the manufacture, distribution, prescription, or dispensing of a controlled substance.

The exclusion under section 1128(a)(4) of the Act must be for a minimum period of five years. Section 1128(c)(3)(B) of the Act. However, aggravating factors can serve as a basis for lengthening the period of exclusion. 42 C.F.R. § 1001.102(b).

Pursuant to 42 C. F. R. § 1001.2007, a person excluded under section 1128(a)(4) may file a request for hearing before an Administrative Law Judge.

The findings of fact and conclusions of law enumerated below are followed by a discussion of each finding.

FFCL 1. Petitioner, Oliver U. Obi, was convicted of a criminal offense relating to the manufacture, distribution, prescription, or dispensing of a controlled substance pursuant to section 1128(a)(4) of the Act.

Petitioner is a pharmacist, licensed in the State of Michigan. On June 11, 2003, a federal grand jury returned an 18 count felony indictment against Petitioner. One of the counts involved conspiracy to illegally distribute controlled substances, and 10 counts were related to the illegal distribution of controlled substances. I.G. Ex. 2.

Petitioner pleaded guilty to counts 1 and 13 of the indictment, and an amended judgment was entered accordingly on March 23, 2005. I.G. Ex. 4. The offenses to which Petitioner entered a plea of guilty at count 1 occurred between 1999 and May 2003. I.G. Ex. 2.

Petitioner contends that the I.G. lacks jurisdiction to exclude him from participation in Medicare, Medicaid, and all federal health care programs, inasmuch as his offense was not in connection with, or a violation of the requirements of, any health care program as defined under the Health Insurance Portability and Accountability Act of 1996. Petitioner further argues that, during the four years that he operated his pharmacy, he was never involved in any act to defraud Medicare, Medicaid, or any other federal health care program. Petitioner's contentions are misplaced.

Sections 1128(a) and 1128(a)(4) of the Act direct the Secretary to exclude from participation in any federal health care program (as defined in section 1128B(f) of the Act), any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under a federal or state law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. For an exclusion under this provision there is no requirement that the offense be in connection with, or a violation of the requirements of, any health care programs; nor is it necessary that fraud to a Medicare, Medicaid, or other Federal health care program be established.

Thus, the threshold question to be decided here is whether Petitioner was convicted of a criminal offense relating to the manufacture, distribution, prescription, or dispensing of a controlled substance pursuant to section 1128(a)(4) of the Act. The Act provides that, for purposes of an exclusion under section 1128(a)(4), an individual is considered "convicted" of a criminal offense -

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

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

(3) when a plea of guilty or nolo contendere by the individual or entity 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.

Section 1128(i) of the Act.

Petitioner does not refute the fact that he entered a plea of guilty to counts 1 and 13 of the indictment, nor that the U.S. District Court, Eastern District of Michigan, accepted his plea, and that such plea constituted an admission that he engaged in the illegal distribution of controlled substances, in violation of 21 U.S.C. §§ 1841 and 1846. Consequently, I find that the I.G. has established a basis for Petitioner's exclusion, inasmuch as he has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under a federal or state law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

An exclusion under section 1128(a)(4) of the Act must be for a minimum mandatory period of five years, as set forth in section 1128(c)(3)(B) of the Act:

Subject to subparagraph (G), in the case of an exclusion under subsection (a), the minimum period of exclusion shall be not less than five years . . . .

When the I.G. imposes an exclusion for the mandatory five-year period, the reasonableness of the length of the exclusion is not an issue. 42 C.F.R. § 1001.2007(a)(2). Aggravating factors that justify lengthening the exclusion period may be taken into account, but the five-year term will not be shortened. Petitioner was convicted of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. He does not dispute his conviction. As a result of Petitioner's conviction, the I.G. was required to exclude him, pursuant to section 1128(a)(4) of the Act, for at least five years.

The I.G. has discretion to impose an exclusion of more than five years in appropriate circumstances. In Petitioner's case, the I.G. added 10 years to the statutory five-year minimum period.

The aggravating factors that the I.G. may consider as a basis for lengthening a period of exclusion are found at 42 C.F.R. § 1001.102(b). In the case at hand, the I.G. alleges the existence of three aggravating factors to justify the 15-year exclusion period imposed against Petitioner:

1. The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more.

2. The sentence imposed by the court included incarceration.

3. Petitioner was subjected to adverse action by a State government agency based on the same set of circumstances that gave rise to his conviction. Specifically, the State of Michigan, Board of Pharmacy, revoked Petitioner's license to practice as a pharmacist.

42 C.F.R. § 1001.102(c) provides that if any of the aggravating factors set forth in paragraph (b) of that section justifies an exclusion longer than five years, mitigating factors may be considered as a basis for reducing the period of exclusion to no less than five years. This regulation states that only the following factors may be considered mitigating:

1. The individual or entity was convicted of three or fewer misdemeanor offenses, and the entire amount of financial loss to Medicare and State health care programs due to the acts that resulted in the conviction, and similar acts, is less than $1,500;

2. The record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual's culpability; or

3. The individual's or entity's cooperation with federal or state officials resulted in -

(i) Others being convicted or excluded from Medicare, Medicaid, and all other federal health care programs,

(ii) Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or,

(iii) The imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter. 42 C.F.R. § 1001.102(c)

Petitioner contends that I should consider the following factors in my decision as to whether the 15-year exclusion is unreasonable:

• The 15 years exclusion is too harsh and excessive. The law does not authorize the I.G. to extend exclusions beyond the five-year mandatory minimum in multiples of five years for each aggravating factor. ⁽¹⁾

• The acts that resulted in his conviction did not occur from about 1999 to May 2003. That was the period during which he operated his pharmacy, and the court where he was convicted could not prove that he began to commit the offense as soon as he opened for business.

• The inclusion of incarceration and revocation of his license as aggravating factors constitutes double jeopardy in violation of the Sixth Amendment of the U.S. Constitution.

• The I. G. did not consider the mitigating factors in his case. The I. G. did not take in to account the fact that his pharmacy was closed in 2002 from February until October, due to a near fatal accident that required multiple surgeries. The emotional and physical scars contributed to his "mental and physical inability and incapability."

Petitioner's Response Brief at, 1-3.

To decide whether the length of the exclusion imposed by the I.G. is unreasonable, I must consider evidence submitted by the parties pertaining to the aggravating and mitigating factors contained in 42 C.F.R. § 1001.102, to determine whether the I.G.'s decision is within a reasonable range. I conclude that the I.G. has established the existence of three aggravating factors, and Petitioner has failed to point to even one mitigating factor. In fact, the evidence before me points to the seriousness of Petitioner's deliberate conduct over several years. Moreover, in pleading guilty to count 1 of the indictment, Petitioner admitted that from on or about 1999 to May 2003, he engaged in a conspiracy to illegally distribute controlled substances, in violation of 21 U.S.C. § 1841(a)(1). I.G. Ex. 2, at 3. This is clear evidence of Petitioner's untrustworthiness.

Petitioner's Sixth Amendment argument is beyond the scope of my authority to consider. However, suffice it to say that exclusion actions by the I. G. are not intended to be punitive in nature, but rather are remedial remedies directed at protecting federal health care programs from individuals who are likely to place the soundness of those programs in jeopardy. Obviously, Petitioner's conduct is the type that Congress sought to deter for the protection of the integrity of Medicare, Medicaid, and all other federal health care programs. It follows that since Petitioner poses a risk to the soundness of all federal health care programs, his untrustworthiness makes him unfit to participate in any of them.

Petitioner also appears to contend that a mitigating factor exists, in that he had a mental and physical condition during the commission of the offense that reduced his culpability.

To establish a mitigating factor under 42 C.F.R. § 1001.102(c)(2), a petitioner must show that the record in the criminal proceedings demonstrates that the court determined that the individual had a mental, emotional, or physical condition before or during the commission of the offense that reduced the individual's culpability. Thus, my analysis involves two separate steps: 1) a determination of whether a condition existed and that the condition was responsible for, or contributed to Petitioner's criminal conduct; and, 2) a determination of whether the court record demonstrates that the condition reduced Petitioner's culpability. See Paul G. Klein, D.P.M., DAB CR317 (1994). Petitioner presented no such evidence before me.

For the reasons stated above, and in light of my consideration of the current statutory and regulatory criteria, I find that the 15-year exclusion imposed by the I.G. is within a reasonable range of possible exclusion periods given the circumstances of Petitioner's case, in which three aggravating factors are present and no mitigating factors have been established. The 15-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).

Sections 1128(a)(4) and 1128(c)(3)(B) of the Act mandate that Petitioner be excluded from Medicare, Medicaid, and all other federal health care programs, for a period of at least five years, because he was convicted of a "a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance," within the meaning of section 1128(a)(4) of the Act.

The I.G. is also justified in lengthening the period of exclusion, due to the existence of aggravating factors. I therefore sustain Petitioner's 15-year exclusion.

José A. Anglada

Administrative Law Judge

1. Apart from the fact that this argument is of no value in establishing the existence of a mitigating factor, I fail to see Petitioner's logic, inasmuch as the exclusion was extended for a period of 10 years based on three aggravating factors. This does not constitute a lengthening of the exclusion period in multiples of five.