Lakshmi N. Murty Achalla, M.D., DAB No. 1231 (1991)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Appellate Division

In the Case of: Lakshmi N. Murty Achalla, M.D.,
Docket No. C-146
Petitioner,
Decision No. 1231
- v. -
The Inspector General.

DATE: March 4, 1991

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

On October 18, 1990, Administrative Law Judge (ALJ) Charles E. Stratton
issued a decision concluding that the Inspector General (I.G.) had
authority to exclude Lakshmi N. Murty Achalla, M.D. (Petitioner) from
participation in the Medicare program and to direct his exclusion from
participation in state health care programs 1/ pursuant to section
1128(b)(4)(A) of the Social Security Act (Act). This provision 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whose license to provide health care has been revoked or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The ALJ found that Petitioner's license to practice medicine had been
revoked by the Florida Board of Medicine for reasons bearing on his
professional competence and professional performance. The ALJ also
found, however, that the I.G.'s exclusion of Petitioner until he obtains
a valid license to practice medicine in the State of Florida was
excessive, and instead imposed a three-year exclusion.

On appeal to this Board, Petitioner argued that a three-year exclusion
was excessive and that no sanction was warranted under the circumstances
of this case. In response, the I.G. argued that the Board should
reinstate the I.G.'s original decision to exclude Petitioner until the
State of Florida restored his license, and that in any event, three
years was the minimum period of exclusion that should be imposed.

For the reasons stated below, we affirm the ALJ's decision imposing a
three-year exclusion.


Findings of Fact and Conclusions of Law

The following findings of fact and conclusions of law (FFCLs) by the ALJ
were not disputed by either party to this appeal, and we therefore adopt
them for purposes of our decision:

1. Petitioner is a physician specializing in physical medicine and
rehabilitation (physiatry) and held a valid license to practice in the
State of Florida prior to December, 1988.

2. On March 24, 1987, in the State of Pennsylvania, Petitioner
delivered to another individual 100 tablets of oxycodone hydrochloride
(generic Percocet) obtained by telephoning a false prescription to a
local pharmacy. Percocet is a Schedule II narcotic controlled
substance.

3. On March 24, 1987, a criminal information was filed against
Petitioner in a Juniata County, Pennsylvania, court charging him with
one count of delivering a controlled substance: 1) not in good faith
within the scope of his professional practice; 2) outside of the patient
relationship; and 3) not in accordance with treatment principles
accepted by a responsible segment of the medical profession.

4. On August 3, 1987, in the Pennsylvania Court of Common Pleas,
Petitioner pled guilty to, and was convicted of, the criminal offense
alleged in the March 24, 1987 criminal information.

5. In December, 1988, the Florida Board of Medicine revoked
Petitioner's license to practice medicine based on the events of March
24, 1987, including telephoning a false prescription for a controlled
substance, and on Petitioner's subsequent conviction.

6. The Florida Board of Medicine is a state licensing agency within the
meaning of 1128(b)(4)(A) of the Act.

7. Telephoning a prescription to a pharmacy is a professional activity
and is related to Petitioner's professional competence and professional
performance.

8. Petitioner's license was revoked by the Florida Board of Medicine
for reasons bearing on his professional competence and professional
performance with[in] the meaning of section 1128(b)(4)(A) of the Act.

9. By letter dated July 25, 1989, the I.G. notified Petitioner that he
would be excluded from the Medicare and Medicaid programs until he
obtained a valid license to practice medicine in Florida.

10. Section 1128(b)(4)(A) authorizes the Secretary of Health and Human
Services (and his delegate, the I.G.), to impose and direct exclusions
of individuals whose license to provide health care has been revoked by
any State licensing authority for reasons bearing on professional
competence or professional performance.

11. The I.G. had authority to exclude Petitioner under section
1128(b)(4)(A) of the Act.

12. An indefinite exclusion is not required by section 1128(b)(4)(A) of
the Act.

13. A purpose of section 1128(b)(4) of the Act is to protect
beneficiaries and program funds by excluding individuals or entities,
who by their conduct have demonstrated a risk that they may engage in
fraud, substandard services, abuse, or unsafe practices, until such time
as those excluded can demonstrate that such risk no longer exists.

14. An additional purpose of section 1128(b)(4) is to prevent
individuals or entities from evading sanctions by moving from their home
jurisdiction to avoid sanctions imposed there, and thus protect the
integrity of State regulation of medical professional standards.

15. The legislative history of the Act illustrates that Congress
intended that, in setting the period of exclusion in this type of case,
such factors as the seriousness of the offense, the impact of both the
offense and the exclusion on beneficiaries, and any mitigating
circumstances, such as the availability of alternate providers of needed
health care services, be considered.

16. The criminal offense of which Petitioner was convicted was a
serious offense involving an abuse of physicians' privileges to
prescribe controlled substances.

17. Petitioner was sentenced to a three-year term of probation, which
was subsequently reduced to sixteen months.

18. Petitioner's criminal conduct did not have an adverse impact on
program beneficiaries or recipients, or involve the Medicare or Medicaid
programs.

19. Petitioner has never been the subject of formal complaints by
either patients or other health care providers, other than one patient
whose narcotic drugs were taken away by Petitioner.

20. Petitioner had attempted to limit distribution of controlled
substances at the Altoona Veterans Administration (VA) Medical Center.

21. Petitioner was suffering from a depressive illness which affected
his judgment during the period in which he engaged in criminal conduct.

22. Petitioner fulfilled the terms of his probation.

23. Since his conviction, Petitioner has participated in the impaired
physician program in both Pennsylvania and New York, and continues to
participate in the New York impaired physician program.

24. Since his conviction, Petitioner has continued psychotherapy and
has demonstrated substantial improvement.

25. Petitioner has been satisfactorily employed since December 1987 at
the Harlem Valley Psychiatric Center and has also been working with
physically disabled prisoners at the Green Haven Correctional Facility
in New York. Green Haven has the only unit for disabled and handicapped
inmates in the New York correctional system.

26. Petitioner's conduct subsequent to his conviction demonstrates that
he is unlikely to again abuse his privileges as a physician.

27. Petitioner does not pose a substantial risk of harm to
beneficiaries or recipients or to the integrity of the Medicare and
Medicaid programs.

28. Petitioner was not practicing medicine or residing in Florida at
the time his license was revoked in that State, nor does he intend to
practice medicine or reside in Florida in the future.

29. Based on the events of March 24, 1987, and Petitioner's subsequent
conviction, the Pennsylvania Board of Medicine revoked Petitioner's
license to practice medicine in the State of Pennsylvania and the
Georgia Board of Medical Examiners placed Petitioner's license to
practice medicine in the State of Georgia on "inactive status" subject
to revocation on certain conditions.

30. Petitioner has been practicing medicine and residing in the State
of New York since December 1987 and did not move to New York to avoid
sanction proceedings or sanctions.

31. Petitioner did not seek to evade sanctions by State licensing
authorities, nor did he challenge the integrity of the State regulation
of medical professionals.

32. The Act establishes neither minimum nor maximum periods for
exclusions based on section 1128(b)(4)(A).

33. I have authority to modify the terms of the exclusion imposed by
the I.G. against Petitioner.

34. It is a mitigating factor that Petitioner: (1) was suffering from a
depressive illness which affected his judgment during the time in which
he engaged in criminal conduct; (2) is continuing to seek treatment for
his depression and has made progress with his psychiatric treatment; and
(3) is providing a needed specialty to the New York correctional system.

ALJ Decision, pages 3 - 7 (citations omitted).

Both Petitioner and the I.G. challenged the FFCLs which addressed the
length of the exclusion. 2/ These were as follows:

35. The exclusion of Petitioner until he obtains a valid license to
practice medicine in the State of Florida is excessive in light of: (1)
the absence of substantial risk of harm to patients or the integrity of
the Medicare and Medicaid programs; (2) the absence of any intent to
evade sanctions or challenge the integrity of the State regulation of
medical professionals; and (3) the mitigating circumstances listed
above.

36. The remedial considerations of section 1128(b)(4)(A) of the Act
will be served in this case by a three-year exclusion from the Medicare
and Medicaid programs.

ALJ Decision, p. 7.

As discussed below, we conclude that FFCL #35 and FFCL #36 are supported
by substantial evidence and are not erroneous, and we therefore also
adopt them. Consequently, we affirm the ALJ's decision in its entirety.


Analysis

Petitioner did not dispute the ALJ's finding that the I.G. had authority
to exclude Petitioner under section 1128(b)(4)(A) of the Act (FFCL #11).
Petitioner took the position, however, that a three-year exclusion was
excessive under the circumstances of the case and that no exclusion was
in fact warranted. In support of this position, Petitioner asserted
that there was uncontradicted evidence in the record that Petitioner's
crime was the result of his psychological difficulties and naivete, that
Petitioner had since received professional care and had made excellent
progress, and that Petitioner was not in danger of erring in the future.

In responding to Petitioner's appeal, the I.G. argued that the Board
should reinstate the original period of exclusion, which was coterminous
with the period for which Petitioner's license was revoked by the State
of Florida. A provision which would make this the minimum period of
exclusion was included in proposed regulations published on April 2,
1990. 55 Fed. Reg. 12205, 12218. The I.G. took the position that this
exclusion period was appropriate here because the licensing of doctors
is a state function. The I.G. argued that, accordingly, "when a state
revokes a license . . . , that same state should be the final authority
on when the health care provider is fit to once again practice
medicine." I.G. response dated January 22, 1991, p. 11.

We find no basis for disturbing the ALJ's judgment that an exclusion was
justified and that a three-year exclusion period was appropriate. After
providing Petitioner a hearing, the ALJ made a de novo determination
regarding the appropriate period of an exclusion in this case. See ALJ
Decision at p. 10. During the hearing, he had the opportunity to
observe the demeanor of Petitioner and other witnesses and to evaluate
their credibility. In contrast, our role as the forum for the
administrative appeal of the ALJ decision is a limited one. See Joyce
Faye Hughey, DAB No. 1221 (1990), and Carlos E. Zamora, M.D., DAB No.
1104 (1989). As we noted in those decisions, our guidelines state that
our standard of review on disputed issues of fact is "whether the ALJ's
decision is supported by substantial evidence" and on disputed legal
issues is whether "the ALJ's decision was erroneous." DAB Guidelines,
Appendix B at 28-29 (1989). Thus, we may not substitute our judgment
for that of the ALJ in this matter unless we find that his decision was
erroneous or unsupported by substantial evidence. As explained below,
we conclude that, under these standards, we must uphold the ALJ's
decision.

The legislative history of section 1128(b) clearly indicates that
Congress contemplated that an exclusion would be imposed for license
revocations unless the license was taken away based on a minor
infraction. The Senate report on the proposed legislation stated --

The Committee expects that the Secretary will not use his
discretion under this authority to exclude individuals whose
licenses have been suspended in the State in which they are
practicing for minor infractions not relating to quality of
care, such as failure to pay licensing fees or violations of
strict advertising requirements. In these limited
circumstances, the exclusion penalty would, in the Committee's
view, be too harsh. However, the Committee expects that the
Secretary in these instances will carefully review the
circumstances of the license suspension to assure himself that
the minor infraction was the sole reason for the loss of
license.

S.REP. No. 109, 100th Cong., 1st Sess. 7 (1987).

Moreover, the legislative history of section 1128 as a whole discusses
factors which may be considered in setting the exclusion period. Both
the House and Senate reports on the proposed legislation stated:

In the case of all exclusions other than those under 1128(a) and
1128(b)(12), the Committee intends that, in setting the period
of exclusion, the Secretary will take into consideration such
factors as the seriousness of the offense, the impact of both
the offense and the exclusion on beneficiaries, and any
mitigating circumstances, such as the availability of alternate
providers of needed health care services.

H.R.REP. No. 85, 100th Cong., 1st Sess., Part 1, 12 (1987); S.REP. No.
109, supra, at 12.

There is no dispute that the revocation of Petitioner's license by the
State of Florida was based on his conviction of a felony. Thus, the
imposition of an exclusion based on revocation for this reason was
clearly consistent with congressional intent.

Petitioner pointed to a number of mitigating factors in support of his
position that a three-year exclusion period was excessive. We agree
that Congress intended such factors to be considered in determining the
appropriate exclusion period. However, it is clear in this case that
the ALJ considered precisely the factors identified by Petitioner.
Petititioner asserted that it was uncontradicted that his crime was the
result of his psychological difficulties and naivete. This was
recognized by the ALJ in FFCL #21, which states that "Petitioner was
suffering from a depressive illness which affected his judgment during
the period in which he engaged in criminal conduct." Petitioner also
asserted that he had received professional care and had made excellent
progress. This was recognized in FFCL #24, which stated that "[s]ince
his conviction, Petitioner has continued psychotherapy and has
demonstrated substantial improvement." Finally, Petitioner asserted
that he was not in danger of erring in the future. This was recognized
in FFCL #26, which stated that "Petitioner's conduct subsequent to his
conviction demonstrates that he is unlikely to again abuse his
privileges as a physician."

In light of these and other factors, the ALJ changed the period of
exclusion from indefinite to three years. As a practical matter, this
represented a substantial reduction of the exclusion period since there
was no guarantee that Petitioner would ever regain his Florida license.
Moreover, three years is less than the five-year minimum period of a
mandatory exclusion under section 1128(a) of the Act. Accordingly, we
find no basis for concluding that the ALJ acted improperly in not
further reducing the exclusion period or in not eliminating the
exclusion altogether. Although the ALJ recognized several mitigating
factors, he also concluded that the license revocation was based on the
commission of a "serious offense" (FFCL #16) and that a three-year
exclusion was therefore appropriate.

We also find no basis for concluding that the ALJ acted improperly in
not retaining the original exclusion period. There is no explicit
statement in section 1128(b)(4) that the exclusion period should be
coterminous with the period of the license revocation on which it is
based. Moreover, there is nothing in the legislative history that is
inconsistent with the approach taken by the ALJ since Congress expressed
an intent that the exclusion period would be set taking into
consideration factors including the seriousness of the offense, the
impact of the offense and the exclusion on beneficiaries, and any
mitigating circumstances. Consideration of these various factors would
not be necessary if the exclusion period was intended to be tied
automatically to the length of the license revocation. In addition, the
I.G. himself conceded that the statute does not require the exclusion
period which he imposed here. I.G. response dated 1/22/91, p. 12.
Moreover, although the proposed regulations would require that exclusion
period, they are not as yet binding since they have not been promulgated
in final form. See Hughey, supra, and Walter J. Mikolinski, Jr., DAB
No. 1156 (1990).

The I.G. thus failed to establish that the ALJ erred as a matter of law
in reducing the exclusion period. In addition, the I.G. did not
challenge the ALJ's finding identifying mitigating factors present in
the case (FFCL #34). The ALJ's reduction of the exclusion period was
expressly based on these factors. Accordingly, the I.G. has shown no
basis for reinstating the original exclusion period.


Conclusion

Based on the foregoing, we affirm the three-year exclusion imposed on
Petitioner.


_____________________________ Donald F. Garrett


_____________________________ Theodore J. Roumel U.S. Public
Health Service


_____________________________ Cecilia Sparks Ford Presiding
Panel Member. 1. "State health care program" is defined by
section 1128(h) of the Act to include any state plan approved under
title XIX of the Act. The term "Medicaid" is used in this decision to
represent all state health care programs from which the I.G. directed
that Petitioner be excluded.

2. In a letter to the parties dated 12/26/90, the Panel noted that,
although Petitioner's appeal did not specifically dispute any FFCLs, it
appeared that Petitioner was disputing only FFCL #36. Petitioner did
not ask for leave to amend his appeal to clarify this matter, nor did
the I.G. identify any other FFCLs as in dispute. Accordingly, we
proceed on the assumption that only FFCL #36 and the closely related
FFCL #35 are in