SUBJECT: Andrew D. Goddard,

Petitioner,

Inspector General

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Andrew D. Goddard (Petitioner) appealed the February 27, 2006 decision by Administrative Law Judge (ALJ) Carolyn Cozad Hughes to uphold a decision by the Inspector General (I.G.) to exclude him from participating in federal health care programs for five years. Andrew D. Goddard, DAB No. CR1419 (2006) (ALJ Decision). The ALJ found that Petitioner was subject to exclusion under section 1128(a)(3) of the Social Security Act (Act), ⁽¹⁾ which mandates the exclusion of individuals convicted of certain criminal offenses "in connection with the delivery of a health care item or service." In this appeal, Petitioner disputes the ALJ's finding that the criminal offense that triggered his exclusion by the I.G. was connected with the delivery of a health care item or service. We conclude that the disputed finding is [Page 2] legally sound and supported by substantial evidence. Accordingly, we affirm the ALJ Decision.

Relevant Law

Section 1128(a)(3) of the Act requires the Secretary of Health and Human Services to exclude from participation in any federal health care program (as defined in section 1128B(f)) any individual who "has been convicted for an offense . . . under Federal or State law, in connection with the delivery of a health care item or service . . . consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct" (emphasis added). ⁽²⁾ The mandatory minimum period of exclusion for an individual subject to section 1128(a)(3) is five years. Social Security Act § 1128(c)(3)(B).

The regulation that implements section 1128(a)(3) states, in relevant part, that the I.G. will exclude any individual who --

[h]as been convicted, under Federal or State law, of a felony . . . relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct . . . [i]n connection with the delivery of a health care item or service, including the performance of management or administrative services relating to the delivery of such items or services[.]

42 C.F.R. § 1001.101(c)(1). The term "convicted" means, among other things, that a "judgment of conviction has been entered" by a federal, state, or local court. 42 C.F.R. 1001.2(a).

Case Background

In August 2005, the I.G. informed Petitioner that he was being excluded from participation in federal health care programs for five years pursuant to section 1128(a)(3) of the Act. I.G. Ex. 1. The I.G. imposed the exclusion based on Petitioner's Ohio [Page 3] conviction for a single count of theft of drugs, a fourth degree felony under state law. ⁽³⁾ See I.G. Exs. 1, 5-6.

Petitioner requested a hearing before the ALJ to challenge the exclusion. The parties subsequently agreed to forego an in-person hearing and have the matter decided on their written submissions.

As the ALJ found, there is no dispute about the facts underlying Petitioner's theft conviction. While employed as a pharmacist by a Rite Aid pharmacy, Petitioner took one 20-milligram tablet of furosemide, a diuretic (and a non-controlled substance), and put the tablet in the office coffee pot. Petitioner says that he did this as a practical joke. Nevertheless, he was charged with, and pled guilty to, the criminal offense identified above. ⁽⁴⁾ See I.G. Ex. 3 (bill of information); I.G. Ex. 4 (guilty plea).

In his brief to the ALJ, Petitioner did not deny that he had been "convicted" of a "felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct." He claimed only that his offense was not "in connection with the delivery of a health care item or service" within the meaning of section 1128(a)(3). The ALJ disagreed, concluding that there was a connection between Petitioner's theft offense and the delivery of a health care item or service, and that the I.G. therefore had a legally adequate basis to exclude him for five years pursuant to that provision.

[Page 4] As his sole ground for appeal, Petitioner reiterates the argument he presented to the ALJ. See Petitioner's Appellate Brief (App. Br.).

Standard of Review

The Board's standard of review with respect to a disputed issue of law is whether the ALJ's decision is erroneous. 42 C.F.R. § 1005.21(h). The Board's standard of review on disputed issues of fact is whether the ALJ's decision is supported by substantial evidence on the record as a whole. Id.

Discussion

In prior cases involving mandatory exclusions under section 1128(a)(3), the Board has held that an adjudicator should perform a "common sense" analysis to determine whether there is a connection between the offense for which the petitioner was convicted and the delivery of a health care item or service. See Erik D. Desimone, R.Ph., DAB No. 1932 (2004) (DeSimone); Kenneth M. Behr, DAB No. 1997 (2005). In DeSimone, the I.G. sought the exclusion of a pharmacist who had been convicted of felony theft of drugs from his employer, a retail pharmacy. The drugs in question were controlled substances and had been stolen by the pharmacist for his personal use. The ALJ found that the required connection between offense and "delivery" existed because the pharmacist's employer had obtained the drugs for the purpose of delivering them to the general public, and the pharmacist had prevented that delivery by diverting the drugs for his own use. The Board agreed with the ALJ's analysis, stating:

The ALJ found, and [DeSimone] has never disputed, that [DeSimone]'s responsibilities as a pharmacist for Eckerd Drugs involved the delivery of health care items or services to the general public. [DeSimone] 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). Indeed, [DeSimone] 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. [DeSimone]'s theft of the drug while under the guise of performing [Page 5] 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.

DAB No. 1932, at 5 (citations omitted).

The situation here is analogous in all key respects. Like the pharmacist in DeSimone, Petitioner was convicted of stealing a drug - "a health care item" -- from his employer, a retail pharmacy. Moreover, like the pharmacist in DeSimone, Petitioner had access to and stole this drug while performing his professional responsibility for delivering health care items to the general public. The drug had been obtained by the pharmacy for sale to retail customers and would ordinarily have been delivered by Petitioner to those customers. Petitioner interfered with that delivery by stealing the drug for his own purpose. His offense was therefore connected with the delivery of a health care item.

Petitioner contends that the theft of a single tablet of a non-controlled substance, worth no more than 20 cents, does not establish the common-sense connection called for by DeSimone and other Board or ALJ decisions. App. Br. at 2-3. He asserts that prior decisions upholding the exclusion of pharmacists have involved theft of drugs in "amounts significant enough to be of value either for resale or to support the habit of an impaired pharmacist." Id. at 2. Petitioner asserts that he "is neither an impaired pharmacist supporting a habit nor engaged in the diversion of drugs for illegal sale." Id. at 2, n.2. He asserts that a pharmacist's theft of drugs can have no "common sense connection" to the delivery of a health care item unless the amount of drugs stolen is "significant" or "substantial" or the drugs are "subject to increased regulatory controls." Id. at 2-3.

We find no merit in this argument. As a matter of logic and fact, the nature or monetary value of a stolen health care item has no bearing on whether the offense has occurred in connection with the item's "delivery." As in DeSimone, the required connection exists in this case because Petitioner, while performing his duties of dispensing drugs to the general public, stole one of these drugs.

[Page 6] To the extent that Petitioner contends that section 1128(a)'s applicability depends, as a matter of law, on the value or regulatory status of the stolen "health care item," that position is not supported by the statute's text. Nothing in section 1128(a)(3) or the corresponding regulation requires that the health care item have "significant" or "substantial" monetary value. There is also no requirement that the excluded person reap a profit from the misconduct. In addition, the statute and regulation contain no exceptions for felony offenses involving small or de minimis quantities of drugs, drugs that are not controlled substances, or drugs that are taken for purposes other than resale or abuse by the defendant. ⁽⁵⁾ The statute simply requires that the offense of which the individual was convicted have some connection with the delivery of a health care item. If the offense meets that criterion -- as it does in this case -- it is covered by section 1128(a)(3) and a basis for mandatory exclusion.

In short, we find that Petitioner's offense is covered by the plain language of section 1128(a)(3). ⁽⁶⁾ To ignore the statute's plain language under these circumstances would undermine Congress's "intent that the mandatory exclusion authority be used broadly to protect the integrity of covered programs." Kenneth M. Behr at 7; see also Lyle Kai, R.Ph., DAB No. 1979, at 10 (2005) (noting the Board's reluctance to "read into the exclusion provisions requirements that are not contained in the literal language of the law").

The ALJ expressed her belief that Petitioner did not pose a threat to the financial integrity of the federal health care programs. ALJ Decision at 3. However, as the ALJ correctly concluded, she had no alternative but to sustain the exclusion. Moreover, the applicable statutory and regulatory language does not require a finding that the individual pose a threat to federal programs. Congress has, in effect, already determined who is, and who is not, a threat to federal health care programs by enacting section 1128(a)(3). By drafting and passing this [Page 7] legislation, Congress determined that an individual who commits a felony connected with the delivery of a health care item or service is, by virtue of that misconduct, a threat to federal programs and must therefore be excluded in order to preserve their integrity (fiscal and otherwise) and ensure the safety and well-being of program beneficiaries. See Joann Fletcher Cash, DAB No. 1725 (2000) (noting, in a case involving an exclusion under section 1128(a)(1), that "[i]f a provider has been convicted of a criminal offense related to the delivery of an item or service under Medicare or Medicaid, that provider is presumed by Congress to be untrustworthy and a threat to federal health programs and their beneficiaries"). Having been convicted of an offense covered by section 1128(a)(3), Petitioner is subject to an exclusion under that authority.

Conclusion

For the reasons discussed above, we affirm the ALJ Decision.

Donald F. Garrett

Sheila Ann Hegy

Judith A. Ballard
Presiding Board Member

1. The current version of the Social Security Act can be found at www.ssa.gov/OP_Home/ssact/comp-ssa.htm. Each section of the Act on that website contains a reference to the corresponding United States Code chapter and section. Also, a cross reference table for the Act and the United States Code can be found at 42 U.S.C.A. Ch. 7, Disp Table.

2. Section 1128(a)(3) also mandates the exclusion of individuals convicted of certain felonies "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[.]" See Erik D. DeSimone, R.Ph., DAB No. 1932, at 4 (2004) (discussing the different grounds for exclusion under section 1128(a)(3)).

3. By its terms section 1128(a)(3) applies only to felony convictions that occurred after August 21, 1996, the date of enactment of the Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191. The conviction at issue here occurred in 1999. I.G. Ex. 2, at 2.

4. According to the settlement agreement that resolved a disciplinary action brought against Petitioner by the Ohio State Board of Pharmacy, an allegation was made that some of Petitioner's co-workers drank the furosemide-laced coffee and experienced "severe discomfort due to the effect of the drug." I.G. Ex. 2, at 2. The settlement agreement states that although Petitioner neither admitted nor denied this allegation, the Board of Pharmacy had "evidence sufficient to sustain" it. Id. The affidavit submitted by Petitioner to the ALJ (the affidavit is attached to Petitioner's Brief in Opposition to the Inspector General's Motion for Summary Judgment) does not rebut or deny any of the factual allegations recited in the settlement agreement.

5. We note that, in section 1128(a)(4) of the Act, the I.G. has exclusion authority that directly and expressly pertains to felony convictions involving controlled substances.

6. The clarity of section 1128(a)(3) is reflected in the corresponding regulation (42 C.F.R. § 1001.101(c)), which, like the statute, contains no exception for the circumstances that Petitioner believes take his offense outside the scope of the exclusion authority.