Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
_____________________________ In the Case of: ) ) DATE:
June 29, 1990 Vincent Baratta, M.D.,
) Petitioner, ) Docket No. C-144 ) Decision No. 1172 - v.
- ) ) The Inspector General. )
_____________________________)
FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE
DECISION
On January 17, 1990, Administrative Law Judge (ALJ) Charles E. Stratton
issued a decision concluding that the Inspector General (the I.G.) had
authority to exclude Petitioner from participation in the Medicare
program and to direct his exclusion from participation in State health
care programs. Petitioner's exclusion was based on section
1128(b)(4)(A) of the Social Security Act (the Act), which permits the
exclusion of any individual or entity --
whose license to provide health care has been revoked or suspended
by any State licensing authority, or who otherwise lost such a
license, for reasons bearing on the individual's or entity's
professional competence, professional performance, or financial
integrity . . . .
The ALJ found that Petitioner's license to provide health care was
revoked for reasons bearing on Petitioner's professional competence,
professional performance, or financial integrity. The ALJ therefore
sustained the exclusion imposed by the I.G. However, the ALJ modified
the exclusion from five years to three years, concluding that a
three-year exclusion is reasonable and appropriate.
For the reasons stated below, we affirm the ALJ's decision.
The ALJ'S Decision
The ALJ made the following findings of fact and conclusions of law
(FFCL):
1. A six-count indictment was filed against Petitioner in the United
States District Court for the Eastern District of New York. This
indictment alleged that Petitioner had committed crimes with respect to
a drug study within the jurisdiction of the [Food and] Drug
Administration (FDA).
2. At the time of the indictment, Petitioner was a medical doctor
licensed in New York and Florida.
3. Counts 2, 3, and 4 of the indictment alleged that Petitioner, along
with others, had devised a scheme and artifice to defraud and obtain
money and property by means of false pretenses and representations with
respect to a study on a new drug, Captopril, and had falsified patient
reports relevant to this study.
4. Count 5 of the indictment alleged that Petitioner had made a false
declaration to a grand jury conducting an investigation into the same
drug study of Captopril.
5. On May 6, 1985, Petitioner pled guilty to count 5 and was convicted
on counts 2, 3, and 4, of the indictment. Petitioner was acquitted on
count 1, and count 6 was dismissed.
6. Petitioner was sentenced to three years in prison on each count,
fined the sum of $26,000, and was required to serve 250 hours of
community service. Petitioner's three-year sentences were suspended and
he was placed on probation for a period of three years on each count.
7. As a result of Petitioner's convictions, the Office of Professional
Medical Conduct of the State of New York filed an application for the
revocation of Petitioner's license to practice medicine.
8. The application to revoke was referred to the Regents Review
Committee (the Committee) of the University of the State of New York.
After a hearing on March 11, 1986, the Committee recommended to the
Board of Regents that Petitioner's license be revoked, but that the
revocation be stayed and Petitioner be placed on probation for three
years. This recommendation was approved by the Board of Regents, the
state licensing authority in New York.
9. The Committee's recommendation to place Petitioner on probation and
allow him to continue to practice medicine was based upon the following
considerations:
a. the misconduct involved a field study for a pharmaceutical
company which was not used;
b. there was no harm to any patient [by Petitioner];
c. [Petitioner] had an otherwise unblemished record for
approximately 26 years; and
d. it appears that [Petitioner] has learned his lesson and is
unlikely to repeat this or any similar misconduct.
10. On November 3, 1987, the Florida Department of Professional
Regulation filed an administrative complaint with the Florida Board of
Medicine (Board of Medicine).
11. The complaint alleged that:
(1) Petitioner was a physician and was licensed to practice
medicine in Florida and New York;
(2) On or about May 5, 1985, Petitioner was convicted of the
crimes of mail fraud, use of false documents and making false
declarations to a grand jury;
(3) Petitioner's convictions were directly related to Petitioner's
ability to practice medicine; and
(4) On April 1, 1986, Petitioner's license to practice medicine in
the State of New York had been placed on probation as a result of
these convictions.
12. On June 15, 1988, the Board of Medicine issued a final order
approving, adopting, and incorporating by reference the allegations set
forth in the administrative complaint as findings of fact and
conclusions of law.
13. The Board of Medicine's final order revoked Petitioner's license to
practice medicine in the State of Florida.
14. The Florida Board of Medicine revoked Petitioner's license for
reasons bearing on his professional competence and professional
performance within the meaning of section 1128(b)(4)(A) of the Act.
15. The Secretary of Health and Human Services (the Secretary)
delegated to the I.G. the authority to determine, impose, and direct
exclusions pursuant to section 1128 of the Act. 48 Fed. Reg. 21662, May
13, 1983.
16. On July 11, 1989, the I.G. excluded Petitioner from participating
in the Medicare and Medicaid programs for a period of five years
pursuant to section 1128(b)(4)(A) of the Act.
17. The exclusion imposed by the I.G. was authorized by section
1128(b)(4)(A) of the Act. 42 U.S.C. 1320a- 7(b)(4)(A).
18. An exclusion of three years is appropriate in this case.
ALJ Decision, pp. 3-5 (citations omitted).
In discussing the issue raised by Petitioner of whether the application
of section 1128 of the Act to the circumstances of this case conflicted
with the legislative purpose of the Act, the ALJ stated:
While I do have the authority to decide whether the I.G. is
authorized by law to exclude an individual or entity under section
1128 of the Act, based on the facts of a particular case, and have
done so in this case, I do not have the authority to decide whether
the I.G. should or should not exercise that legal power when his
discretion is involved.
ALJ's decision, p. 7. As his basis for this statement, the ALJ stated
that "[t]he lawful exercise of the I.G.'s discretion is a matter of
policy for the I.G." Id. The ALJ provided no further analysis of this
issue (although, apparently, FFCL 15 was related to his statement).
Petitioner's Arguments
Petitioner did not take exception to any specific numbered findings of
fact and conclusions of law in the ALJ's decision. 1/ Instead,
Petitioner argued that the ALJ erred in refusing to consider whether the
I.G. properly used his discretion in deciding to impose a permissive
exclusion in this case. Section 1128(b)(4)(A) of the Act, having been
enacted in August 1987, is a relatively new statute which permits, but
does not mandate, exclusion. Petitioner noted that no regulations have
been issued implementing section 1128(b)(4)(A), and that the published
regulations at 42 C.F.R. Parts 1001 and 1002 apply only to mandatory
exclusions.
Further, Petitioner maintained that, since appeals under section 205(b)
of the Act are de novo administrative appeals, the first issue to be
considered by the ALJ in a permissive exclusion case is whether the
decision to impose the discretionary exclusion was reasonable in a
particular case and, if so, what is the appropriate length of that
exclusion. Petitioner's brief, pp. 5-6. Petitioner cited Bernard
Lerner, M.D., DAB Civ. Rem. C-48 (1989), as support for his position.
Petitioner asserted that ALJ Kessel indicated in Lerner that the role of
an ALJ in a de novo hearing is not to determine how accurately the I.G.
applied the law to the facts before him, but to determine whether, based
on all relevant evidence, the exclusion comports with the legislative
purpose.
Petitioner asserted that the published regulations should not be used
out of context to limit the scope of administrative review, because
these regulations were developed to apply to mandatory exclusions.
Petitioner concluded that use of such regulations to determine the scope
of review of permissive exclusions would, effectively, negate the
statutory right to a de novo review.
Finally, Petitioner maintained that the I.G.'s decision was unreasonable
because it did not comport with the legislative purpose of the statute.
Petitioner asserted that the statute was enacted to meet one specific
need, to protect Medicare and Medicaid patients from practitioners who
lose their licenses in one state, move to another state and continue to
treat program beneficiaries. Petitioner's brief, pp. 7-8. Petitioner
alleged that this is simply not applicable to his case. Here, the
exclusion was based on a Florida licensure revocation entered by default
on June 15, 1988. The Florida action was based on a 1985 federal
conviction in the Eastern District of New York involving certain
statements made in connection with a clinical study performed for a
pharmaceutical company. Petitioner stated that the conviction concerned
activities that took place solely in New York, and Florida was in no way
connected. In addition, Petitioner also noted that HHS (and thus the
I.G.) had no authority to exclude Petitioner based solely on the 1985
conviction, since the permissive authority to take such exclusions
applied only to convictions which occurred on or after September 1,
1987. 2/
Moreover, Petitioner asserted that immediately after the conviction, the
New York State Board of Regents Review Committee examined Petitioner's
fitness to continue to practice medicine in New York and, after a
hearing, unanimously found that a revocation of Petitioner's license was
not warranted. Petitioner noted that the Committee was influenced by
the fact that:
(1) no patients were harmed by Petitioner's activities; and
(2) Petitioner had an otherwise unblemished record for
approximately twenty-six years.
The I.G.'s Response
The I.G. made two arguments which can be stated in the alternative.
First, the I.G. maintained that the ALJ's decision was correct in that
the ALJ does not have the authority to decide whether the I.G. should or
should not exercise his discretion. The I.G. asserted that "to find
that the ALJ was required to substitute his judgement for that of the
I.G. in determining whether the I.G. should have exercised his valid
statutory authority implies that the ALJ has the obligation . . . to
apply policy as opposed to legal judgement" and "confuses the role
of
the judiciary with the role of the executive and legislative branches of
the government." I.G.'s brief, p. 17. The I.G. asserted that while the
Secretary's regulations, as they currently exist, are silent as to the
allowable scope of the ALJ's review in a permissive exclusion case, the
Secretary has issued a Notice of Proposed Rulemaking, at 55 Fed. Reg.
12205 (1990), which limits the ALJ review to whether there is a basis
for liability and whether the period of exclusion is unreasonable.
In the alternative, the I.G. argued that, while there may be a
theoretical distinction between whether a review of a discretionary
exclusion is limited to review of the reasonableness of the length of
the exclusion (including a determination that the length should be zero)
or whether the review can include an inquiry into the appropriateness of
the I.G.'s discretionary use of a legal sanction authority, in this case
there is no practical distinction. The I.G. argued that the ALJ had
exercised the authority to review both the legal and factual basis for
the exclusion and to determine the appropriate length of the exclusion.
Moreover, the I.G. maintained that the ALJ considered all of
Petitioner's arguments, including all the surrounding facts and
circumstances, in determining that a three-year exclusion was
appropriate. The I.G. concluded that "no different result would be
achieved by the review [Petitioner] claims was required and not done."
I.G.'s brief, p. 17.
Analysis
There is no disputed factual issue in this case. The standard for our
review of a disputed issue of law is whether the ALJ's decision is
clearly erroneous. We find that Petitioner has not provided any
persuasive reasons why we should conclude that the ALJ was clearly
erroneous about the scope of his review. In any event, if we were to
conclude that the ALJ did err, we would still affirm his decision
because the ALJ did, in fact, consider all of Petitioner's arguments in
determining that a three- year exclusion was appropriate. Petitioner
raised the issues of authority and reasonableness; we discuss both below
in the order raised by Petitioner.
A. The ALJ's Authority
The first question under the authority issue, as raised by Petitioner,
is whether the statute requires that the ALJ review the I.G.'s decision
to impose an exclusion in the first instance. The I.G. does not dispute
that the statute provides for a de novo review. Indeed, the I.G.
acknowledged that the ALJ clearly had the authority to determine that
"the exclusion should be reduced up to [and] including a finding that
the exclusion period should be zero." I.G.'s brief, p. 17.
Section 205(b)(1) of the Act, regarding hearing procedures, provides in
pertinent part:
The Secretary is directed to make findings of fact, and decisions .
. . [which, if adverse] contain a statement of the case . . .
setting forth a discussion of the evidence and stating the
Secretary's determination and the reason or reasons upon which it
is based. Upon request by any such individual . . . who makes a
showing in writing that his or her rights may be prejudiced by any
decision the Secretary has rendered, he shall give such applicant
and such other individual reasonable notice and opportunity for a
hearing with respect to such decision, and, if a hearing is held,
shall, on the basis of evidence adduced at the hearing, affirm,
modify, or reverse his findings of fact and such decision . . . .
Petitioner pointed to nothing in the language of this section which
supports his conclusion that the ALJ review must include the issue of
whether the I.G. should have imposed a permissive exclusion in the first
instance.
Further, while we agree with Petitioner that the regulations issued to
implement the mandatory exclusions prior to the enactment of the
permissive exclusion authority in 1987 are not determinative, these
regulations do show that the Secretary was not interpreting 205(b) to
provide for wholly unlimited review by the ALJ in exclusion cases. 3/
See Jack W. Greene, DAB App. No. 1078 (1989), pp. 18-19. Moreover,
while we are not bound by the proposed regulations, and the ALJ did not
rely on them, they may provide some indication about the Secretary's
preliminary interpretation of how the section 205(b)(1) provisions apply
in permissive exclusion cases. 4/ Thus, there is some support for the
conclusion the ALJ reached regarding the limited scope of his review.
On the other hand, we do not entirely agree with the I.G.'s reasoning
presented here. The statute gives the Secretary discretion in
permissive exclusion cases. The Secretary's delegation indicates that
the I.G. was given the authority to decide whether to impose an
exclusion in the first instance but was not given unfettered discretion.
The Secretary retained the authority to issue regulations, which may
establish policy about when the discretionary authority given to the
Secretary under the statute should be exercised. Moreover, the
delegation excluded the authority to conduct hearings.
Further, we specifically reject the I.G.'s argument that if the ALJ had
reviewed the I.G.'s exercise of discretion, the ALJ would have been
applying policy as opposed to legal judgment. Whether there has been an
abuse of discretion is a factual and legal issue, and resolution of this
issue would not be an attempt to establish policy. For example, if
Petitioner presented evidence to show that the I.G. imposed an exclusion
inconsistent with internal guidelines adopted by the I.G. in
circumstances which showed discrimination based on a petitioner's race,
an ALJ conclusion that the I.G. abused his discretion would not be a
policy decision. 5/
In addition, we reject the I.G.'s position that this would confuse "the
role of the judiciary with the role of the executive and legislative
branches of the government." I.G.'s brief, p. 17. The review by the
ALJ is part of the administrative process specifically provided for
under section 205(b). See Califano v. Sanders, 430 U.S. 99, 103
(1977). The fact that the review role is quasi-judicial may have some
bearing on how the Secretary interprets that role, but does not
necessarily preclude the Secretary from interpreting that role to
include a broader scope of review than the I.G. might wish.
While we therefore cannot say that we entirely agree with either party,
the question for this Board is whether the ALJ committed a clear error
in this case. We find that Petitioner presented nothing to us that
shows clear error, since we conclude that the ALJ was not legally
required by section 205(b) to review the I.G.'s exercise of discretion
per se and since there is no clear delegation of this authority to the
ALJ. Thus, we find no basis on which to overturn the ALJ's conclusion
regarding his authority.
B. The Reasonableness of the I.G.'s Exclusion
Petitioner's main argument, regarding the unreasonableness of the I.G.'s
exclusion, focused on the legislative history of the statute.
Petitioner did not, however, directly challenge the ALJ's conclusion
that the language of section 1128(a)(4)(A) is clear and needs no
legislative history to clarify its application to this case. The ALJ
noted that, while the exact circumstances of Petitioner's case were not
cited in the legislative history, the legislative history demonstrates
that Congress intended to protect Medicare and Medicaid patients from
physicians whose license had been revoked by any state licensing
authority. ALJ Decision, p. 7.
In reaching his conclusion that an exclusion for three years was
reasonable, the ALJ considered the same facts and circumstances which
Petitioner maintained on appeal showed the unreasonableness of the
I.G.'s action, and also considered the statutory purpose of protecting
Medicare and Medicaid patients.
As noted above, Petitioner argued that the New York State Board of
Regents Committee was influenced by the facts that no patients were
harmed by Petitioner's activities and that Petitioner had an otherwise
unblemished record for approximately 26 years. Petitioner's brief, p.
8. The ALJ's decision, at page 10, stated:
I am influenced by the fact that the Board of Regents thought that
three years was an appropriate period of time in which to determine
whether or not Petitioner is trustworthy, since one of the central
purposes of an exclusion is to insure trustworthiness.
Accordingly, based on all the facts and circumstances in this case,
I conclude that a three-year exclusion is appropriate. Thus, the
ALJ obviously considered the same facts that influenced the Committee.
In addition, the ALJ considered other factors. 6/ Specifically, the ALJ
stated that --
I must make a de novo determination by making an independent
assessment of the seven factors listed in section 1001.125 of the
Regulations and consider all of the purposes designated by Congress
for the enactment of section 1128 of the Act.
ALJ Decision, p. 8. 7/
Consequently, the ALJ provided Petitioner with a complete de novo review
of the facts here in determining that a three-year exclusion was
appropriate and reasonable. Given this, we have no reason to think that,
even if the ALJ had viewed his authority differently, that would have
made a difference in this case. Conclusion
Based on the foregoing, we affirm the three-year exclusion imposed on
Petitioner.
__________________________ Cecilia Sparks Ford
__________________________ Theodore J. Roumel
__________________________ Judith A. Ballard
Presiding Panel Member
1. We, therefore, affirm and adopt each of the ALJ's numbered
findings of fact and conclusions of law as written without further
discussion.
2. While we note Petitioner's argument, the statute specifically
provides for the exclusion of any individual or entity whose license to
provide health care has been revoked or suspended by any State licensing
authority, and the Florida licensure action occurred after the effective
date of the statute. Petitioner did not present any evidence to show
that the I.G.'s action was in fact based on the 1985 conviction, rather
than on the Florida licensure action.
3. Additionally, we note that while Petitioner cited Bernard Lerner,
M.D., DAB Civ. Rem. C-48 (1989), to support his position, that decision
provides no support for Petitioner's case. The ALJ did determine here
whether the exclusion comported with the legislative purpose, providing
a de novo hearing of the type referred to in Lerner.
4. There is nothing in the preamble to the proposed rule which
indicates that the Secretary specifically considered the issue raised
here, however.
5. Although Petitioner's arguments suggest that an ALJ should review
the "reasonableness" of the I.G.'s exercise of discretion, review
of
such an exercise is ordinarily under an abuse of discretion standard.
Under this standard, the reviewer may not simply substitute his or her
judgment for that of the person exercising discretion.
6. Contrary to the I.G.'s assertion, there is more than a
theoretical distinction between the review of the discretionary decision
about whether to impose any exclusion at all and the reasonableness of
length of an exclusion. However, absent any separate basis for an
allegation of abuse of discretion, we agree with the I.G. that in
effect the ALJ's decision could be read as necessarily implying that the
I.G.'s decision to impose some exclusion was reasonable, given that the
ALJ decided that a three-year exclusion was reasonable.
7. Although the ALJ stated that he "must" independently assess the
seven factors listed in section 1001.125 of the existing regulation in
determining the length of an exclusion (ALJ Decision, p. 8), we do not
read this as meaning that the ALJ considered himself bound by the
existing regulation. The case which he cited for this proposition
states only that he "may" properly use the existing regulation as
guidance. See Charles J. Burks, M.D. v. The Inspector General, DAB Civ.
Rem. No. C-111 (1989), p.