Mark Clarkson, D.O., DAB CR6533 (2024)

DECISION

The Inspector General of the U.S. Department of Health and Human Services (IG) excluded Petitioner, Mark Clarkson, D.O., from participation in Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(b)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(b)(3)).  Petitioner challenges the exclusion.  For the reasons stated below, I conclude that the IG had a basis for excluding Petitioner from program participation, and that a one-year exclusion shall be imposed.  The IG’s exclusion determination is affirmed.

I. Background and Procedural History

By letter dated January 31, 2024, the IG notified Petitioner that he was being excluded from Medicare, Medicaid, and all other Federal health care programs for a minimum one- year period due to a misdemeanor conviction in the United States District Court for the Southern District of West Virginia (District Court).  IG Ex. 1.

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On March 25, 2024, Petitioner requested a hearing before an administrative law judge (ALJ) pursuant to 42 C.F.R. §§ 1001.2007 and 1005.2.  Petitioner filed a motion for discovery on April 10, 2024.

A prehearing conference was held on April 17, 2024, and an Order Following Prehearing Conference and Setting Schedule for Prehearing Submissions (Prehearing Order) was issued on the same date.  During the prehearing conference, a briefing schedule was set and Petitioner’s request for discovery was addressed.  The IG was given an opportunity to respond to Petitioner’s motion.  Prehearing Order § 1; see 42 C.F.R. § 1005.7(e)(1).  On May 8, 2024, the IG filed a response in opposition to Petitioner’s motion for discovery.  On May 20, 2024, an order denying Petitioner’s motion for discovery was issued.  The order explained that Petitioner failed to meet his burden of showing that discovery should be allowed.  Departmental Appeals Board Electronic Filing System (DAB E-File) Doc. No. 8; 42 C.F.R. § 1005.7(a), (e)(4).

The IG filed a brief (IG Br.) and three exhibits (IG Exs. 1-3) on May 22, 2024.  On June 27, 2024, Petitioner filed a brief (P. Br.) and eight exhibits (P. Exs. 1-8).  On July 12, 2024, the IG filed a no-reply statement.

II. Admission of Exhibits and Decision on the Written Record

Absent objection, P. Exs. 1-8 and IG Exs. 1-3 are admitted into the record.

Neither party proposed witnesses and both parties indicated that a hearing was not necessary to resolve this matter.  P. Br. at 6; IG Br. at 6.  Therefore, this matter will be decided on the written record.

III. Issue

Whether the IG has a basis for excluding Petitioner from participating in Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(b)(3) of the Act.  42 U.S.C. § 1320a-7(b)(3).

IV. Jurisdiction

This tribunal has jurisdiction to hear this case.  42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also 42 U.S.C. § 1320a-7(f)(1).

V. Findings of Fact

Petitioner is a Doctor of Osteopathic Medicine licensed to practice in Virginia and West Virginia.  P. Ex. 1 at 1; IG Ex. 2 at 11.  Petitioner was employed as a contract physician

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at HOPE Clinic, an opioid pain management clinic, from September 2013 to June 11, 2015.  P. Ex. 1 at 1; IG Ex. 2 at 10-11.

Patients of HOPE Clinic were having trouble getting prescriptions for opioids because major retail pharmacies stopped filling prescriptions from HOPE Clinic and local, smaller pharmacies could not meet the demand from the clinic.  P. Ex. 2 at 1.  In response, some pharmacies agreed to compound oxycodone1 and other Schedule II controlled substances.  Petitioner wrote prescriptions for compounded oxycodone in milligram doses that were different from the commercially available oxycodone and that were not for a legitimate medical reason.  P. Ex. 2 at 1-2; IG Ex. 2 at 13-14.  On or about September 8, 2022, a criminal information was issued charging Petitioner with five misdemeanor counts of misbranding of a drug in interstate commerce.  IG Ex. 2 at 10, 13-15.  A drug is misbranded if its container is misleading, or it is an imitation of another drug, or it is offered for sale under the name of another drug.  21 U.S.C. § 352(I).

On September 6, 2022, Petitioner signed a Stipulation of Facts agreeing that on October 15, 2014, November 14, 2014, December 10, 2014, December 17, 2014, and March 4, 2015, Petitioner issued prescriptions for compounded oxycodone pills for several patients (J.M.B., J.W., L.C., V.J., and J.W.) knowing that they did not have a legitimate medical need for the compounded oxycodone.  P. Ex. 2 at 2-4; IG Ex. 2 at 14.  Petitioner also agreed that the prescriptions were not written for a “patient specific need” and that oxycodone was commercially available when he wrote the prescriptions for the compounded oxycodone.IG Ex. 2 at 13, 17.

On July 13, 2023, the District Court accepted Petitioner’s guilty plea to two counts of adulteration or misbranding of any food or drug in violation of 21 U.S.C. § 331(a) and one count in violation of 18 U.S.C. § 2.  IG Ex. 3 at 1.  The District Court sentenced Petitioner to five years of probation with the first three months served in home confinement and ordered $5,075.00 in criminal monetary penalties.  Id. at 2, 6.

VI. Legal Authorities

The Secretary of the U.S. Department of Health and Human Services may exclude an individual from participation in all federal health care programs if that individual:

[H]as has been convicted, under Federal or State law, of a criminal offense consisting of a misdemeanor relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

42 U.S.C. § 1320a-7(b)(3).

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This exclusion may be imposed on any individual or entity that has ever been employed in any capacity in the health care industry.  42 C.F.R. § 1001.401(a)(3).

The IG has the burden of proving the basis for the exclusion.  42 C.F.R. § 1005.15(c); Prehearing Order § 6.  The standard of proof is a preponderance of the evidence, which means a fact is proven if the evidence shows that it is more likely true than not true.  42 C.F.R. §§ 1001.2007(c), 1005.15(d).

An exclusion imposed in accordance with this section will be for a period of three years, unless aggravating or mitigating factors exist which serve as the basis for lengthening or shortening that period.  42 C.F.R. § 1001.401(c)(1).

An excluded individual may request a hearing before an ALJ to determine whether the IG had a legal basis for imposing the exclusion and whether an exclusion, longer than the required minimum period, is unreasonable in light of any applicable aggravating and mitigating factors.  42 C.F.R. §§ 1001.2007(a)(1), 1005.2(a).

VII. Analysis

1. Petitioner was convicted of a misdemeanor criminal offense under 42 U.S.C. § 1320a-7(i)(1)-(3).

In order to prevail, the IG must prove, by a preponderance of the evidence, that Petitioner was convicted of a misdemeanor relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  An individual is considered convicted of a criminal offense “when a plea of guilty or nolo contendere by the individual . . . has been accepted by a Federal, State, or local court.”  Act § 1128(i)(3) (42 U.S.C. § 1320a-7(i)(3)); see also 42 C.F.R. § 1001.2 (subparagraph (c) under the definition of “Convicted”).  It is undisputed that on or aboutSeptember 6, 2022, Petitioner entered into an agreement pleading guilty to misdemeanor counts of misbranding.  On July 13, 2023, the District Court accepted Petitioner’s guilty plea and sentenced him to five years of probation with the first three months served in home confinement.  IG Ex. 3 at 1-2.  Petitioner admits that he was convicted of a misdemeanor criminal offense.  P. Br. at 1.

2. Petitioner’s misdemeanor criminal conviction was related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, as defined under federal law.

The IG argues that Petitioner’s conviction for misbranding and the underlying facts are related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance because he provided several people with prescriptions for

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compounded oxycodone products in milligram doses that were different from the commercially available oxycodone without a legitimate medical reason.  IG Br. at 4.

The terms “related to” and “relating to” in 42 U.S.C. § 1320a-7 mean that there must be a common-sense connection or nexus.  See James Randall Benham, DAB No. 2042 at 5 (2006) (internal citations omitted); see also Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase “related to” in another part of section 1320a-7 as “deliberately expansive words,” “the ordinary meaning of [which] is a broad one,” and one that is not subject to “crabbed and formalistic interpretation.”) (internal quotation marks omitted).  In determining whether a conviction is “related to” the manufacture, distribution, prescription, or dispensing of a controlled substance, it is important to review the underlying facts of the conviction and the entirety of the evidence presented.  In this case, Petitioner was found guilty of violating 21 U.S.C. § 331(a) which prohibits “the introduction or delivery for introduction into interstate commerce of any food, drug, device, tobacco product, or cosmetic that is adulterated or misbranded.”

In the request for hearing, Petitioner argues that he wrote legitimate prescriptions for patients with longtime chronic pain who were unable to find pharmacies to fill the prescriptions with commercially available oxycodone.  However, in the stipulation of facts for his plea agreement, Petitioner admits to issuing prescriptions for compounded oxycodone to get around the supply and demand problem facing HOPE Clinic patients.  P. Ex. 2 at 1-2.  He also admitted that at the time the prescriptions were written, oxycodone was commercially available, and the patients did not have a medical need for the dosage of the compounded oxycodone that he prescribed.  Id.  The underlying facts and circumstances surrounding Petitioner’s criminal conviction show a clear relation to the manufacture, distribution, prescription, or dispensing of a controlled substance, as defined by federal law.

Petitioner correctly notes that his convictions fall under the Federal Food, Drug, and Cosmetic Act (FDCA), not the Controlled Substances Act (CSA).  IG Ex. 2 at 12.  Because of this, Petitioner argues that a violation of 21 U.S.C. § 331(a) does not meet the “relating to” requirement of 42 U.S.C. 1320a-7(b)(3).  P. Br. at 2.  Without authority, Petitioner claims that Congress intended for the CSA to cover all offenses that may be considered relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled drug, for purposes of exclusion.  However, Petitioner’s argument is misplaced.  At the time of the criminal information, the Food and Drug Administration was charged with the regulation of prescription drugs.  IG Ex. 2 at 11.  The imposition of an exclusion is not determined by what “act” a conviction falls under; it is determined by the requirements set forth in the pertinent regulations.  It is well settled that when determining whether an individual is subject to an exclusion, one must look beyond the label of the offense and look at the underlying facts and circumstances surrounding the conviction.  The Departmental Appeals Board has repeatedly held that the basis for an exclusion stems from the nature and circumstances of the underlying conviction, not the

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label or even the elements of the crime.  Dr. Timothy Baxter, DAB No. 3074 at 26 (2022) (citing Berton Siegel, D.O., DAB No. 1467 at 7 (1994)(“[I]t is not the labeling of the offense under the state statute which determines whether the offense is program-related.” (Underlining replaced by italics)); see also Funmilola Mary Taiwo, DAB No. 2995 at 8 (2020) (collecting cases).  Regardless of what act the convictions fall under, the underlying facts remain the same.  Petitioner also argues that violations of 21 U.S.C. § 331 are strict liability offenses.  I assume that Petitioner finds this to be relevant to claim that Petitioner did not have the requisite intent to commit the offense.  However, intent is not a requirement for imposing an exclusion.   The Board has long held that it will not “read into the exclusion provisions requirements that are not contained in the literal language of the law.”  Baxter, DAB No. 3074 at 15.

Lastly, Petitioner argues that consideration should be given to Petitioner’s sentencing guidelines.  P. Br. at 7.  However, I find that information to be irrelevant to determining whether Petitioner is subject to an exclusion under the existing regulations.  The IG has proven, by a preponderance of the evidence, that there is a basis to impose an exclusion.

 3. Petitioner is or has been employed in the health care industry.

It is undisputed that at all times relevant to this matter, Petitioner was a licensed physician at a pain management clinic and was authorized to issue prescriptions for legitimate medical purposes.  IG Ex. 2 at 10.  Therefore, Petitioner is employed in the health care industry and subject to exclusion pursuant to 42 C.F.R. § 1001.401(a)(3).

4. The length of the exclusion is not unreasonable.

An exclusion imposed under 42 C.F.R. § 1001.401 will be imposed for a period of three years, unless aggravating or mitigating factors form a basis for lengthening or shortening that period.  42 C.F.R. § 1001.401(c)(1).  In this case, without explanation, the IG imposed a one-year exclusion.  The regulations provide one mitigating factor that may be considered when determining the length of an exclusion:

The individual’s or entity’s cooperation with Federal or State officials resulted in—
(i) Others being convicted or excluded from Medicare, Medicaid, and any other Federal health care program;
(ii) Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses; or
(iii) The imposition of a civil money penalty against others.

42 C.F.R. § 1001.401(c)(3).

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Petitioner asserts that the exclusion is unreasonable, that the IG failed to show that Petitioner is a threat, and the IG did not consider the length of time that he was not practicing medicine due to the pendency of his criminal case.  P. Br. at 8-9.  However, Petitioner failed to identify the presence of the sole mitigating factor that may be considered when determining whether the length of an exclusion is reasonable.

In this case, the IG has failed to address the length of the exclusion imposed against Petitioner.  However, the regulation requires a three-year exclusion in the absence of aggravating or mitigating factors, and the IG has reduced the period to one year.  In the notice letter the IG noted, “we have considered the information furnished to the OIG in response to our letter to you.”  IG Ex. 1 at 1.  One can only assume that the information provided served as the impetus for a reduced exclusion.  Additionally, Petitioner’s plea agreement required him to “give signed, sworn statements and grand jury and trial testimony upon request of the United States.”  IG Ex. 2.  That agreement speaks to Petitioner’s possible cooperation with Federal or State officials.

Petitioner highlights the purpose of an exclusion and argues that the IG’s failure to find that Petitioner constitutes a threat to programs or participants constitutes prima facie evidence that the exclusion is unreasonable.  P. Br. at 9.  However, the IG is not required to prove that Petitioner constitutes a threat to the program.  Nor is there anything to suggest that failure to prove such indicates that an exclusion is unreasonable.

Petitioner argues that the provisions of 42 C.F.R. § 1001.401(c)(3) are arbitrary and capricious as the grounds for mitigating an exclusion are arbitrarily limited where there is no statutory directive to do so.  P. Br. at 10.  However, the Board has ruled that “the ‘arbitrary and capricious’ standard of review is not the standard applicable to ‘administrative appeals of I.G. exclusions.’”  Baxter, DAB No. 307 at 28 (quoting Benny R. Bailey, DAB No. 2935 at 10 (2019)).  ALJs do not have the authority to disregard federal statutes or regulations, even on constitutional grounds.  42 C.F.R. § 1005.4(c)(1); Taiwo, DAB. No. 2995 at 9-10.

Based on the facts and circumstances of this case, I find that a one-year exclusion is reasonable.

5. Petitioner’s request for equitable relief must be denied.

Petitioner submitted several letters from colleagues which highlight the need for Petitioner to be able to participate in Medicare, Medicaid, and other federal healthcare programs.  P. Exs. 3, 4.  According to the letters, the exclusion is keeping Petitioner from taking advantage of employment opportunities in Mercer County, West Virginia, which is a medically underserved area.  P. Exs. 5, 7.  Though I appreciate the sentiments of Petitioner’s colleagues, they do not serve as a basis to deny an exclusion.  Petitioner’s arguments may be construed as a request for equitable relief, but an ALJ is not

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empowered to grant equitable relief.  Matthew J. Girardy, DMD, DAB No. 2987 at 7 (2020).

VIII. Conclusion

The IG has proven by a preponderance of the evidence that Petitioner was (1) convicted of a misdemeanor criminal offense; (2) the offense was related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance; and (3) Petitioner was employed in the health care industry at the time of the conviction.  Therefore, the IG has met her burden and Petitioner shall be excluded from participating in Medicare, Medicaid, and other federal health care programs.  The one-year exclusion imposed by the IG is AFFIRMED.