Morgan v. Sebelius (Lawyers Weekly No. 12-01-0954, 9 pp.) (Per Curiam) No. 10-2270, June 14, 2012 (Published Sept. 11, 2012) USDC at Huntington, W.Va. (Chambers, J.) 4th Cir.
Holding: A physician who obtained hydrocodone samples for his personal use by misleading sales representatives into believing the samples were for patients, and who pleaded guilty to knowingly obtaining a controlled substance by fraud, cannot avoid the ban on participating in the Medicare and Medicaid programs by arguing that the statutory ban under 42 U.S.C. § 1320a-7(a)(3) only applies to “financial misconduct”; the 4th Circuit dismisses the physician’s challenge to application of the ban.
Congress required the Secretary of Health and Human Services to exclude from participation in federal health-care programs any person who has been convicted of an offense “in connection with the delivery of a health care item or service” if that offense consists of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility or other financial misconduct. It is undisputed that appellant was convicted of a felony relating to fraud and connected to the delivery of health care. He maintains his conviction was not covered by the statute because his offense did not relate to financial misconduct. That is incorrect.
The applicable language makes clear that to warrant mandatory exclusion, an offense need only relate to at least one of five categories: 1) fraud, 2) theft, 3) embezzlement, 4) breach of fiduciary responsibility, or 5) other financial misconduct. The argument that the presence of the fifth category, “other financial misconduct,” somehow narrows the meaning of “fraud” from its ordinary usage is unpersuasive. That the fifth category is other financial misconduct reflects the fact that the other four categories can, themselves, relate to financial misconduct. The presence of “other” eliminates the possible confusion that could have resulted from a statute the applied to “embezzlement … or financial misconduct.”
Had Congress intended that an offense must relate to financial misconduct for the mandatory exclusion to apply, then it could have omitted the terms “fraud,” “theft,” “embezzlement,” and “breach of fiduciary responsibility” and simply required the exclusion for offenses “relating to financial misconduct.”
Further, appellant’s interpretation would not serve the statute’s purposes, as Congress was targeting fraud generally, not simply fraud relating to financial misconduct, and none of the purposes would be served by narrowing the scope of the statute as appellant urges.
We hold that, regardless of whether the district court correctly concluded that the statute unambiguously does not require that any fraud relate to financial misconduct in order to warrant the mandatory five-year exclusion, the Secretary’s construction was, at the very least, a permissible one to which we must defer.