SUBJECT: Erik D. DeSimone, R.Ph.,

Petitioner,

The Inspector General

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Erik D. DeSimone, R.Ph., (Petitioner) appealed a decision by Administrative Law Judge (ALJ) Carolyn Cozad Hughes, dated April 2, 2004. Erik D. Desimone, R.Ph., DAB CR1163 (2004) (ALJ Decision). The ALJ Decision granted summary judgment for the Inspector General (I.G.) and affirmed the I.G.'s determination that, under section 1128(a)(3) of the Social Security Act (Act), Petitioner should be excluded from participation in all federal health care programs as defined in section 1128B(f) of the Act, including Medicare and Medicaid, for a period of five years.

Our decision is based on the record before the ALJ and the parties' briefs on appeal from the ALJ Decision. Based on the analysis below, we affirm the ALJ Decision.

Background

There is no dispute as to the underlying facts of this case which we have drawn from the ALJ Decision.

Petitioner was a pharmacist licensed to practice in the State of Georgia. . . . On August 13, 1998, Petitioner pled guilty to one felony count of theft by taking, and one felony count of obtaining a controlled substance by theft, admitting that he stole drugs from his employer, Eckerd Drugs, for his personal use. . . .

Petitioner was sentenced under Georgia's First Offender Treatment program to three years probation, a $1,000 fine, and $2,500 in restitution. . . . At the same time, his pharmacy license was suspended, and he underwent drug treatment. . . . On February 17, 1999, he entered into a "Public Consent Order" with the Georgia State Board of Pharmacy. By its terms, his license was reinstated, but he agreed to five years probation, with conditions attached, including that he agree to random drug screening. . . . During his period of probation, he admitted to having relapsed. His license was again suspended, and additional conditions were placed on his probation. . . . His relapse appears not to have affected his criminal case, however, and on August 17, 2001, the State court determined that he was eligible for discharge. He was discharged "without court adjudication of guilt." . . . By order dated January 17, 2003, the State Board reinstated his pharmacy license, again with some conditions attached. . . . Shortly thereafter, the I.G. imposed her exclusion under section 1128(a)(3) of the Act.

ALJ Decision at 2 (citations omitted).

Petitioner timely appealed the I.G.'s determination to exclude him and the ALJ Decision followed.

Applicable Law

Section 1128(a)(3) of the Act provides, in relevant part -

The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):

(3) FELONY CONVICTION RELATED TO HEALTH CARE FRAUD - 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 Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program . . . operated by or financed in whole or part by any Federal, State or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Our standard of review of an ALJ decision is set by regulation. We review to determine whether the decision is erroneous as to a disputed issue of law and whether the decision is supported by substantial evidence in the record as a whole as to any disputed issues of fact. 42 C.F.R. § 1005.21(h).

The ALJ Decision

The ALJ Decision contained the following two general findings of fact and conclusions of law (FFCLs):

A. Petitioner was convicted of a felony relating to theft in connection with the delivery of a health care item, within the meaning of section 1128(a)(3) of the Act. ALJ Decision at 2.

B. The statute mandates a five-year mandatory minimum exclusion, and mitigating factors may not be considered to reduce that period of exclusion. ALJ Decision at 4.

Petitioner's arguments on appeal were limited to the nature and scope of the applicable statutory standard. Thus, our examination of the ALJ Decision centers solely on the reasoning underlying FFCL A.

Since Petitioner did not take exception to FFCL B, we affirm and adopt that FFCL without further comment.

Petitioner argued on appeal that there is no factual basis to show that his taking of a controlled substance was connected to any delivery of a health care item or service or related to any government program either "indirectly" or under a "'common sense'" theory. Petitioner Br. at. 2. He added that it was an error for the ALJ to find that theft of drugs from a place of employment which provides care to some patients under a government agency as well as the general public is sufficient to meet the statutory requirement of a "connection with the delivery of a health care item or service." Id. at 2-3. Petitioner faulted the ALJ's reliance on two prior Board decisions because he asserted those decisions either related to the delivery of an item or service under a government program (which Petitioner argued had not occurred here) or because they suggested there must be some connection to a government program. Petitioner Br. at 3-5.

Petitioner's appeal is altogether without merit. His arguments fail to recognize that section 1128(a)(3) of the Act is written in the disjunctive to cover two different categories of felonies relating to "fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct." Each category has its own distinct requirements for an exclusion. Thus, section 1128(a)(3) covers as a first category, any individual convicted of one of the listed felonies "in connection with the delivery of a health care item or service" (see 42 C.F.R. § 1001.101(c)(1)), and it covers, as a second category, any individual convicted of a listed felony with respect to any act or omission in a health care program operated by or financed in whole or in part by any Federal, State, or local government. See 42 C.F.R. § 1001.101(c)(2). As the ALJ clearly recognized, Petitioner was excluded based on his conviction of a listed felony under the first category "in connection with the delivery of a health care item or service." Also, the ALJ correctly concluded that this language necessarily requires a common sense analysis of whether the offense had a "connection" with the delivery of a health care item or service.

While the ALJ cited two prior Board decisions (Narendra M. Patel, M.D., DAB No. 1736 (2000) and Berton Siegel, D.O., DAB No. 1467 (1994)) as illuminating the meaning of the wording, "in connection with the delivery of a health care item or service," these decisions actually involved other exclusion provisions in section 1128 that created different requirements from the exclusion authority at issue here. Thus, we find that these prior decisions are not particularly helpful, and may in fact have been the source of Petitioner's confusion concerning what section 1128(a)(3) specifically required relating to his offense. Section 1128(a)(3) required only that Petitioner's offense be "in connection with the delivery of a health care item or service." Section 1128(a)(3) did not require that the offense have any connection with a government program.

Having concluded that the ALJ identified the correct statutory standard, we also conclude that she did not err in applying that standard. Specifically, the ALJ concluded as follows concerning the "connection" of Petitioner's offense to the "delivery of a health care item or service":

Eckerd is a retail drug store that obtains controlled substances for the purpose of delivering them to individuals in order to meet those individuals' physical, mental or emotional needs. Petitioner interfered with that delivery by taking those controlled substances for his own use. I find these limited facts sufficient to establish a "common sense connection" between Petitioner's crime of stealing controlled substances from Eckerd Drugs and the delivery of a health care item.

ALJ Decision at 4.

We agree that this analysis establishes the common sense connection between the offense and the delivery of a health care item or service required by section 1128(a)(3). The ALJ found, and Petitioner has never disputed, that Petitioner's responsibilities as a pharmacist for Eckerd Drugs involved the delivery of health care items or services to the general public. Petitioner implicitly recognized in his brief before us that the specific drug he was convicted of stealing from Eckerd would have been a drug he otherwise would have delivered to the general public as part of his responsibilities at Eckerd (even if he would not have delivered the drug to individuals participating in state government programs who allegedly were not eligible to receive the drug). Petitioner Br. at 3-4. Indeed, Petitioner was able to steal this drug because he had access to it while he was in the process of performing his professional responsibilities of delivering health care items or services to the general public. Petitioner's theft of the drug while under the guise of performing his professional responsibilities is clearly the requisite common sense "connection" to health care delivery that section 1128(a)(3) requires. Moreover, as the ALJ specifically found, his theft of this particular drug unquestionably had the effect of subverting the delivery by him and his employer of the very same drug to the general public.

Conclusion

Based on the preceding analysis, we sustain the ALJ Decision. In doing so, we affirm and adopt each of the underlying FFCLs.

Judith A. Ballard

Cecilia Sparks Ford

Donald F. Garrett
Presiding Board Member