Travers v. Shalala

• Decision Date: 31 March 1994
• Docket Number: No. 92-36658,92-36658
• Citation: 20 F.3d 993
• Parties: , Medicare&Medicaid Guide P 42,183 Michael TRAVERS, M.D., Plaintiff-Appellant, v. Donna E. SHALALA, Ph.D., * Secretary of the United States Department of Health and Human Services, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 993

20 F.3d 993

44 Soc.Sec.Rep.Ser. 158, Medicare&Medicaid Guide P 42,183

Michael TRAVERS, M.D., Plaintiff-Appellant, v. Donna E. SHALALA, Ph.D., ^* Secretary of the

United States Department of Health and Human

Services, Defendant-Appellee.

No. 92-36658.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Jan. 7, 1994.

Decided March 31, 1994.

Kenneth Joel Haber, Rockville, MD., for plaintiff-appellant.

Lucille Gonzales Meis, Asst. Regional Counsel, Dept. of Health and Human Services, Denver, CO, Frank A. Wilson, Asst. U.S. Atty., Spokane, WA, for defendant-appellee.

Appeal from the United States District Court for the Eastern District of Washington.

Before: CANBY, and T.G. NELSON, Circuit Judges, and SHUBB, ^** District Judge.

SHUBB, District Judge:

Michael Travers, M.D., appeals a summary judgment in which the district court affirmed the Secretary of Health and Human Services' decision to exclude Travers from participating in the Medicare and State health care programs for a statutory period of five years pursuant to 42 U.S.C. Sec. 1320a-7. On appeal, Travers argues that (1) he was not convicted of a program-related offense within the meaning of 42 U.S.C. Sec. 1320a-7(i); (2) he was entitled to an evidentiary hearing to attack the underlying circumstances in the state court proceedings; (3) the Secretary was required to promulgate regulations articulating the distinction between "deferred adjudication" and "deferred prosecution;" and (4) the district court abused its discretion in granting the Secretary's motion for a protective order barring discovery. All four arguments advanced by Travers lack merit. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Travers, a physician, was accused of filing a false Medicaid claim which resulted in overpayment for services rendered in violation of Utah Code Ann. Sec. 26-20-7(2)(b). He agreed to plead "no contest" to the charge and to pay restitution, investigation costs, and a civil penalty. The plea agreement provided that, in the event Travers failed to make the predetermined payment within 60 days, the Utah court would accept his no contest plea and proceed to set the matter for imposition of sentence. On the other hand, if Travers fully complied with the terms of the plea agreement, the court would allow him to withdraw his no-contest plea and dismiss the charges with prejudice. The Utah state court approved the plea agreement "as a first offender disposition" and took Travers' plea of "no contest" under advisement. On January 9, 1989, after Travers made the required payments, the Utah court entered an order permitting him to withdraw his plea and dismissed, with prejudice, the criminal charges.

In a letter dated June 20, 1989, defendant-appellee, the Secretary of Health and Human Services, through the Inspector General, determined that Travers had been convicted of a criminal offense related to the delivery of an item or service under the Medicaid program which, under 42 U.S.C. Sec. 1320a-7(a)(1), required a mandatory minimum exclusion for a period of five years.

Travers filed a timely appeal of his exclusion to the Administrative Law Judge, arguing that he should have been allowed to show at an evidentiary hearing that he never intentionally committed the criminal offense of filing Medicaid claims in violation of Utah law, and to explain his understanding of the legal significance of his plea agreement. On a motion for summary judgment, the Administrative Law Judge affirmed his five-year exclusion. It was later affirmed by the Department of Health and Human Services, Departmental Appeals Board, Appellate Division.

Travers subsequently filed a complaint in the United States District Court, Eastern District of Washington, challenging the Secretary's decision and seeking injunctive and declaratory relief. Pending the resolution of the case on summary judgment, the district court granted the Secretary's motion for a protective order, preventing Travers from conducting discovery on the ground that the issues raised in the Secretary's motion involved pure legal questions. On April 29, 1992, and June 24, 1992, in two separate orders, the district court granted summary judgment in favor of the Secretary, holding that there was substantial evidence to support the Secretary's findings. Additionally, the district court found no due process violations in the administrative proceedings. Travers filed a timely appeal to this court.

STANDARD OF REVIEW

We review de novo the district court's grant of summary judgment in favor of the

Secretary. United States v. Hatcher, 922 F.2d 1402, 1405 (9th Cir.1991). The Secretary's findings must be affirmed if they are supported by substantial evidence. See Higbee v. Sullivan, 975 F.2d 558, 562 (9th Cir.1992) (citing Martinez v. Heckler, 807 F.2d 771, 772 (9th Cir.1986)). Substantial evidence means " 'more than a scintilla' and is such that a reasonable mind may accept it as adequate to support a conclusion." Hudson v. Bowen, 849 F.2d 433, 434 (9th Cir.1988) (citing Miller v. Heckler, 770 F.2d 845, 848 (9th Cir.1985)).

DISCUSSION

I. SUBSTANTIAL EVIDENCE EXISTS IN THE RECORD TO SUPPORT THE AGENCY'S DETERMINATION THAT TRAVERS HAD BEEN CONVICTED WITHIN THE MEANING OF 42 U.S.C. Sec. 1320a-7(i)

Section 1128(a)(1) of the Social Security Act, as amended, 42 U.S.C. Sec. 1320a-7(a)(1), mandates the Inspector General of the Department of Health and Human Services to exclude providers who have been "convicted," under state or federal law, of a "criminal offense related to the delivery of an item or service" under Medicare, Medicaid or any state health care program for a minimum period of five years. Congress, when enacting the Medicare and Medicaid Patient and Program Protection Act in 1987, broadened the definition of "conviction," to encompass not only the entry of judgment, but also the participation in "a first offender deferred adjudication, or other program where judgment of conviction has been withheld." H.R.Rep. No. 99-727, 99th Cong., 2d Sess. 75, reprinted in 1986 U.S.C.C.A.N. 3607, 3665. Specifically, the statute sets forth four alternative definitions for the term "conviction" in 42 U.S.C. Sec. 1320a-7(i):

(1) when a judgment of conviction has been entered against [an] individual or entity by a Federal, State, or local court, regardless of whether there is an appeal pending or whether the judgment of conviction or other record relating to criminal conduct has been expunged;

(2) when there has been a finding of guilt against [an] individual or entity by a Federal, State, or local court;

(3) when a plea of guilty or nolo contendere by [an] individual or entity has been accepted by a Federal, State, or local court; or

(4) when [an] individual or entity has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.

42 U.S.C. Sec. 1320a-7(i).

The Secretary found that Travers participated in a "first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld," within the meaning of Sec. 1320a-7(i)(4). There is substantial evidence in the record to support that finding. Travers entered a plea of "no contest," which was taken under advisement. His plea agreement provided that if he complied with its terms the court would allow him to withdraw his plea and dismiss the charge against him with prejudice, but if he failed to comply with the terms of the agreement, the court would accept his no contest plea and proceed to sentence.

Travers argues that he was diverted to a non-criminal process under Sec. 77-2-5 of the Utah Code of Criminal Procedure, which states that "[d]iversion is not a conviction and if the case is dismissed the matter shall be treated as if the charge had never been filed." Utah Code Ann. Sec. 77-2-7 (1992). What constitutes a "conviction" under the Medicaid Act, however, is determined by federal law, not state law. See United States v. Brebner, 951 F.2d 1017, 1021 (9th Cir.1991) (citing Dickerson v. New Banner Institute, Inc., 460 U.S. 103, 110, 103 S.Ct. 986, 990, 74 L.Ed.2d 845 (1983) (the definition of "conviction" under the federal Gun Control Act is an issue of federal law except when Congress indicated otherwise)). To determine whether state court proceedings constituted a conviction under Sec. 1320a-7(i), we look to the substance of the proceedings, rather than any formal labels or characterizations used by the state or by the parties.

The Secretary draws a distinction between a "deferred adjudication" and a "deferred prosecution." Whereas a deferred adjudication is a conviction under Sec. 1320a-7(i)(4), a deferred prosecution is not. As the district court observed:

In a deferred prosecution, an agreement is entered into between the prosecutor and the defendant. At the heart of deferred prosecution is an agreement by the prosecutor to delay bringing or prosecuting charges. In a deferred adjudication, there is no such deferral by the prosecutor.

Travers v. Sullivan, 801 F.Supp. 394, 401 (E.D.Wash.1992). This is a rational distinction which is consistent with the language and purposes of the statute. ¹ In a deferred prosecution, it is not simply the judgment, but the initiation of charges altogether, which is withheld. If the defendant does not live up to the terms of his agreement with the prosecutor, he may be free to enter or persist in a plea of not guilty and proceed to trial. In a deferred adjudication, on the other hand, if the defendant does not live up to the terms of his agreement, he is not free to set aside his plea or proceed to trial--the court may simply enter a judgment of conviction. Under those circumstances, the entry of a judgment is a mere formality because the defendant has irrevocably committed himself to a plea of guilty or no contest which cannot be unilaterally withdrawn.

Had Travers participated in a deferred prosecutio...