Michael Blake Runyon, D.P.M., DAB No. 1555 (1996)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Appellate Division

In the Case of:

Michael Blake Runyon, D.P.M.

Petitioner,
- v. -
The Inspector General

DATE: January 19, 1996
Docket No. C-95-067
Decision No. 1555


FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Michael Blake Runyon, D.P.M. (Petitioner) appealed a decision
dated September 8, 1995 by Administrative Law Judge (ALJ) Joseph
K. Riotto upholding Petitioner's exclusion for five years from
participation in the title XVIII (Medicare), the title XIX
(Medicaid), the Maternal and Child Health Services Block Grant,
and the Block Grant to States for Social Services programs.
Michael Blake Runyon, D.P.M., DAB CR392 (1995) (ALJ Decision).
The Inspector General (I.G.) based the exclusion on section
1128(a)(1) of the Social Security Act (Act) mandating exclusion
for a minimum of five years as a result of a conviction of a
criminal offense relating to the delivery of an item or service
under Medicare. 1/ Petitioner did not dispute that he pled no
contest to and was convicted under California law of a single
count of receiving unlawful remuneration for patient referrals.

The ALJ determined that no facts of decisional significance were
in dispute and decided the case on written submissions.
Petitioner challenged three findings of fact and conclusions of
law (FFCLs) in the ALJ Decision and argued that he was not
convicted of a criminal offense under section 1128(a)(1).

We conclude that the receipt of unlawful remuneration for
referrals of patients for health care items or services billed or
paid for under Medicare is an offense relating to the delivery of
a health care item or service under Medicare. However, although
the ALJ Decision makes reference to the billing of Medicare for
the medical equipment for which Petitioner received kickbacks,
the ALJ Decision does not make a clear finding on the record
tying the remuneration referenced in the count of which
Petitioner was convicted to the Medicare program. ALJ Decision
at 6. We remand the case to the ALJ to permit him to determine
whether the record supports a finding that the unlawful
remuneration related to referrals for equipment for which the
supplier billed Medicare and to undertake further proceedings if
appropriate to develop the record.

Background

Petitioner, in his filing before the ALJ, specifically admitted a
number of facts, but argued that the offense of which he was
convicted, as opposed to those with which he was charged, was not
related to the delivery of an item or service under Medicare. 2/
The record indicates that it was undisputed that Petitioner was
originally charged in a five-count complaint with conspiracy to
defraud Medicare (and the state Medicaid program) in relation to
which the complaint set forth eighteen overt acts including
agreeing to refer patients to Sunmac Medical Supply Company
(Sunmac) in return for remuneration and receiving seven specific
checks from the company, as well as with four counts of forgery
of prescriptions. I.G. Ex. 14. However, under a plea agreement,
Petitioner pled no contest only to a sixth count which was added
at the colloquy as follows:

[O]n December 20th, 1989, that on/or about, in Los Angeles
County, State of California, you unlawfully received
remuneration for sending medical business to Sunmac, in
violation of Section 650 of the Business and Professions
Code . . .

I.G. Ex. 17. Petitioner admitted that he treated Medicare
patients, as well as privately insured patients, that he referred
patients to Sunmac to obtain Transcutaneous Electrical Nerve
Stimulators (TENS units) for which prescriptions were required,
and that he received administrative fees from Sunmac as
remuneration for patient referrals. Petitioner's Memorandum and
Declaration before the ALJ, passim.

The FFCLs to which Petitioner excepted were:

10. Petitioner's plea of no contest, and the court's
acceptance of that plea, constitute a conviction within the
meaning of sections 1128(a)(1) and 1128(i)(3) of the Act.

11. The offense of which Petitioner was convicted
-- receiving remuneration in exchange for patient referrals
-- is related to the delivery of items or services under
Medicare, within the meaning of section 1128(a)(1) of the
Act.

12. The I.G. properly excluded Petitioner, pursuant to
section 1128(a)(1) of the Act, for a period of five years,
as required by the minimum mandatory exclusion provision of
section 1128(c)(3)(B) of the Act.

ALJ Decision at 4.

Issues

Petitioner argued that the charge to which he pled did not
constitute a conviction under the cited sections of the Act, that
the offense of receiving remuneration in exchange for patient
referrals is not related to the delivery of items or services
under Medicare, and that the exclusion is improper. Petitioner's
Br. at 1-2. 3/

The I.G. reiterated that the mandatory provisions apply because
the offense of receiving remuneration for patient referrals
related to the delivery of an item or service under Medicare.
I.G. Br. at 14-28. However, in support of the conclusions about
the factual connection of the conviction to Medicare, the I.G.
relied upon the factual underpinnings of the charges of which
Petitioner was not convicted and upon evidence proffered by the
I.G. but contested by Petitioner below.

The standard for our review of Petitioner's appeal is whether the
findings of fact are based on substantial evidence in the record
and whether the ALJ erred in his legal conclusions. Bruce
Lindberg, D.C., DAB 1386, at 3 (1993).

Analysis

1. A conviction for receiving remuneration for referring
patients for items or services under Medicare properly requires a
mandatory exclusion.

Petitioner did not deny that he was convicted of a criminal
offense, but rather denied that his conviction was of a nature
requiring a mandatory exclusion under the Act. The substance of
FFCL 10 is that the plea of no contest and its acceptance
constitute a "conviction" within the meaning of that term in
section 1128(a)(1) of the Act. Since Petitioner did not
challenge that conclusion, we affirm FFCL 10.

We turn next to the question of whether the nature of the
conviction for receiving remuneration related to delivery of
items or services under Medicare. In Boris Lipovsky, M.D., DAB
1363 (1992), the petitioner was convicted of receiving a kickback
in return for ordering a nebulizer for which payment was made
under the Medicaid program, a federal criminal offense. The
Petitioner in that case also argued that he should be subject to
the permissive provisions (under which the seriousness of the
conduct and other circumstances affect the term of exclusion)
rather than mandatory provisions (requiring a minimum of five
years' exclusion). The Board determined that, when a conviction
falls within the ambit of section 1128(a)(1), 4/ the I.G. must
impose a mandatory exclusion, regardless of whether the elements
of the permissive provisions may also be met. DAB 1363, at 8;
see also Travers v. Sullivan, 801 F. Supp. 394 (E.D.Wash. 1992).
Furthermore, the Board concluded that conviction for receiving
kickbacks for equipment for which Medicaid or Medicare made
payment constituted an offense relating to the delivery of an
item or service under those programs, regardless of whether or
not the equipment was medically necessary. See also Niranjana B.
Parikh, M.D., et al., DAB 1334, at 6 (1992); Betsy Chua, M.D. and
Betsy Chua, M.D., S.C., DAB 1204 (1990).

We find that the ALJ did not err in concluding that the offense
of receiving remuneration for patient referrals for TENS units is
related to the delivery of an item or service. However,
Petitioner's objections may be read as questioning whether the
delivery to which his conviction was related was of an item or
service for which Medicare was billed or made payment. As
explained below, we do not find that question fully resolved on
the record before us and therefore remand to the ALJ to clarify
this point.

2. A mandatory exclusion is appropriate in this case only if the
conviction related to referrals for items or services billed or
paid for under Medicare.

Since Petitioner's exceptions challenge whether this conviction
is in fact related to Medicare, we reviewed the decision to
determine whether the ALJ reached a conclusion on the record as
to whether the items for which Petitioner accepted remuneration
were billed or paid for by Medicare. The ALJ must make findings
supported by substantial evidence as to whether each of the
elements required for a mandatory exclusion was met. The ALJ
Decision does not contain such a finding on this issue.

Uncontested FFCLs set forth the nature of Petitioner's
conviction. ALJ Decision, FFCLs 2 and 9. Uncontested FFCLS also
set forth the scheme alleged in the complaint, including
conspiracy between Petitioner and Sunmac to defraud Medicare,
alleged receipt of unlawful remuneration for referring patients
to Sunmac for TENS units, and submission of Medicare claims based
on false prescriptions. Id., FFCLs 4-8. However, the ALJ
Decision does not contain an express FFCL setting forth the
factual basis of the conviction.

The ALJ Decision does state at one point that the "kickback paid
by Sunmac to Petitioner involved medical equipment (TENS units)
for which Sunmac billed Medicare" and therefore that "the receipt
of the kickback was directly related to the program that paid for
the equipment." ALJ Decision at 6. However, the ALJ cites to
nothing in the record in support of the factual assertion that
the kickback on which the conviction was based did in fact
involve TENS units for which Medicare was billed. Petitioner had
private insurance patients as well as Medicare patients.
Petitioner's Declaration before the ALJ at 4. The count on which
Petitioner was convicted referred to receiving unlawful
remuneration "on or about December 20, 1989" for sending medical
business to Sunmac. None of the payments referenced in the
criminal complaint nor the payment checks from Sunmac to
Petitioner in the record are dated on or near that date. None of
the checks contains a notation indicating the particular claim or
patient to which it relates. The I.G. brief appears to indicate
that remuneration was paid to Petitioner in relation to a
specific Medicare patient, J.D., 5/ but cites nothing in the
record connecting that particular patient to the count under
which Petitioner was convicted. I.G. Br. at 25-27. 6/ The I.G.
brief before the ALJ asserted correctly that Petitioner did not
contest at the plea colloquy that there was a factual basis for
his plea and that the court so found. I.G. Memorandum in Support
of Summary Disposition before ALJ at 22; I.G. Ex. 17, at 10-12.
However, the colloquy does not set forth what that factual basis
was, i.e. what remuneration was received for which patient
referrals on or about December 20, 1989. The I.G. proceeded to
set forth facts relating to the criminal complaint and preceding
investigation which it contended were "uncontested," but, as
noted, the record does not disclose a basis for concluding that
Petitioner did not contest the facts relating to counts other
than that to which he pled.

It is essential to a summary disposition of this case that the
ALJ examine the undisputed facts in relation to the count of
which Petitioner was convicted to determine if that conviction is
related to delivery of an item or service under Medicare. A
review of the record below reveals that Petitioner disputed the
allegations relating to the wider scheme set forth in the
criminal complaint and in the I.G.'s submission. Petitioner's
Memorandum before the ALJ, passim.

3. The ALJ on remand should determine whether the remuneration
which Petitioner was convicted of receiving related to Medicare
patients.

Because of the inadequacies of the briefing before us, discussed
above, it is not clear that there is any real dispute that
remuneration was paid for Medicare patients or that such
remuneration was part of the underpinnings of the offense for
which Petitioner was convicted. Therefore, it may be sufficient
on remand for the ALJ to determine whether Petitioner contests
that the patients for whose referral he was convicted of
receiving remuneration included Medicare patients. If this fact
is disputed, the ALJ should determine how to develop the record
on this point and may, if necessary, hold a hearing to resolve
it.

If the ALJ determines that the conviction did not, in fact,
relate to receiving remuneration in relation to referral of
Medicare patients, then a mandatory exclusion is not appropriate
and a hearing would be necessary as requested by Petitioner to
determine the disputed facts relating to the appropriateness of a
permissive exclusion.

Conclusion

Those findings to which Petitioner did not except are affirmed,
as well as FFCL 10. The case is remanded to the ALJ for further
proceedings to resolve Petitioner's exceptions in accordance with
the decision herein.


___________________________
Judith A. Ballard


___________________________
M. Terry Johnson


___________________________
Cecilia Sparks Ford
Presiding Board Member


1.
The original notice letter notified Petitioner that he was being
excluded because he was convicted of a criminal offense relating
to delivery of an item or service "under the Medi-Cal program," a
State health care program. However, the I.G. informed Petitioner
and the ALJ in her brief that the reference to Medi-Cal was an
inadvertent error and argued that it was of no legal consequence
since section 1128(a)(1) applied in either case. ALJ Decision at
1, n.1. The ALJ noted that Petitioner had not contested the
adequacy of the notice and found that this was not an issue in
the case. Petitioner did not challenge that conclusion before
us, and we therefore do not address this subject further in this
decision.

2.
In moving the ALJ for summary disposition, the I.G. asserted that
the parties had agreed at a prehearing conference that the case
could "be decided by submitting written documentation," but that
Petitioner continued to request an in-person hearing if the ALJ
found that permissive exclusion provisions applied. I.G.
Memorandum in Support of Summary Disposition before ALJ at 2.
Petitioner filed a response before the ALJ in which he did not
dispute the agreement described by the I.G., but stated that the
facts might warrant a permissive but not a mandatory exclusion
and asked for an in-person hearing should the ALJ "wish to pursue
an in depth inquiry into the facts of this matter." Petitioner's
Memorandum before the ALJ
at 10-11. As noted, the ALJ proceeded to summary disposition.

3.
Petitioner's brief failed to make clear the basis for his
exceptions to the ALJ Decision. Indeed, Petitioner simply added
the statement of objections to the three listed FFCLs to the text
of his brief before the ALJ. Petitioner did not address the
content of the ALJ Decision or explain specifically what he
disputes.

4.
The statute, in pertinent part, requires a mandatory exclusion of
at least five years for any "individual or entity that has been
convicted of a criminal offense related to the delivery of an
item or service under [Medicare] . . . ." Section 1128(a)(1) of
the Act.

5. We refer to individual patients by initials in order to
preserve their privacy.

6.
The record contains a prescription for a TENS unit for J.D. dated
December 20, 1989, but nothing relating to remuneration for this
prescription. I.G. Ex. 13.