William I. Cooper, M.D., DAB No. 1534 (1995) Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Appellate Division ______________________________ In the Case of: ) ) DATE: September 8, 1995 William I. Cooper, M.D., ) ) Petitioner, ) Docket No. C-95-024 ) Decision No. 1534 - v. - ) ) The Inspector General. ) ______________________________) FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION William I. Cooper, M.D. (Petitioner) appealed a June 7, 1995 decision by Administrative Law Judge (ALJ) Steven T. Kessel upholding Petitioner's indefinite exclusion from participation in the following programs: Medicare, Medicaid, Maternal and Child Health Services Block Grant, and Block Grants to States for Social Services. Dr. William I. Cooper, DAB CR381 (1995) (ALJ Decision). The Inspector General (I.G.) had excluded Petitioner under section 1128(b)(4) of the Social Security Act (Act) on the basis that Petitioner's license, or right to renew his license, to practice medicine in Pennsylvania was suspended, or otherwise lost, due to actions taken by the Pennsylvania State Board of Medicine. The ALJ granted summary disposition for the I.G., finding that there was no genuine issue of material fact in dispute. Petitioner appealed the ALJ Decision, taking exception to two of the findings of fact and conclusions of law (FFCLs) made by the ALJ. After review of the written arguments submitted by the parties, we affirm the ALJ Decision for the reasons stated below. BACKGROUND Section 1128(b)(4) of the Act authorizes the Secretary (or her delegate, the I.G.) to exclude an individual or entity from participation in the Medicare program and any State health care program: (A) whose license to provide health care has been revoked or suspended by any State licensing authority, or who otherwise lost such a license or the right to apply for or renew such a license, for reasons bearing on the individual's or entity's professional competence, professional performance, or financial integrity, or (B) who surrendered such a license while a formal disciplinary proceeding was pending before such an authority and the proceeding concerned the individual's or entity's professional competence, professional performance, or financial integrity. On December 23, 1991, the Pennsylvania Board of Medicine issued an order to show cause to Petitioner containing numerous allegations that Petitioner had failed to comply with the ethical or quality standards of the medical profession. The order stated that if the allegations were found to be true, penalties could be imposed against Petitioner, including the revocation or suspension of his license to practice medicine in Pennsylvania. In March 1994 Petitioner and the Pennsylvania Board of Medicine entered into a consent agreement, in which Petitioner agreed to the following: a. That on or before June 30, 1994, Petitioner would voluntarily and permanently cease and desist from practicing medicine and surgery in Pennsylvania; b. That on December 31, 1994, the end of the current biennial renewal period, Petitioner would allow his unrestricted medical license to go on permanent inactive status; and c. That Petitioner would not at any time thereafter apply for reinstatement, reissuance, reactivation or renewal of his unrestricted license to practice medicine and surgery in Pennsylvania. On October 19, 1994, the I.G. informed Petitioner of his exclusion based on the actions of the Pennsylvania State Board of Medicine. Petitioner appealed his proposed exclusion to the ALJ. The ALJ found that the I.G. had properly excluded Petitioner. The ALJ, however, rejected the I.G.'s position that either section 1128(b)(4)(A) or section 1128(b)(4)(B) authorized Petitioner's exclusion. The ALJ found that Petitioner's license to practice medicine was not revoked, suspended, or otherwise lost within the meaning of section 1128(b)(4)(A). The ALJ declared that the plain language of that section applies only to those instances where an individual or entity loses a license to provide health care as the consequence of an action taken by a State licensing authority, but not to instances where an individual such as Petitioner voluntarily surrendered his license in order to end a disciplinary proceeding. ALJ Decision at 7. The ALJ found that Petitioner did "surrender" his license within the meaning of section 1128(b)(4)(B), however. The ALJ rejected Petitioner's argument that section 1128(b)(4)(B) applies only to those instances where an individual or entity physically surrenders to a State licensing authority the document which authorizes that individual or entity to provide health care. The ALJ found that the common and ordinary meaning of the word "license" encompasses permission by an authority to perform an act. ALJ Decision at 8. PARTIES' ARGUMENTS Petitioner took exception to the following findings of fact and conclusions of law made by the ALJ: 1. Petitioner surrendered his license to practice medicine in Pennsylvania during the pendency of a formal disciplinary proceeding which concerned his professional competence or performance. 2. The I.G. was authorized to exclude Petitioner pursuant to section 1128(b)(4)(B) of the Act. ALJ Decision at 3 (citations omitted). Petitioner argued that the ALJ erred in relying on section 1128(b)(4)(B) as the basis for the exclusion when the I.G. did not refer to that specific authority in the exclusion notification. According to Petitioner, he did not receive adequate notice of the basis for the exclusion since the I.G.'s exclusion notification referred to the language of section 1128(b)(4)(A), and the ALJ rejected that basis for the exclusion and improperly substituted section 1128(b)(4)(B) to justify the I.G.'s action. Petitioner also disputed the ALJ's finding that there was a surrender of his license under the facts of this case. Petitioner argued that any ambiguity in the Act over what is meant by the term "license" should be interpreted against the I.G. rather than Petitioner. Petitioner contended that under Pennsylvania law a license is clearly contemplated as a physical document, rather than just a privilege as the ALJ found. The I.G. responded that the reasonable interpretation of a surrender of a license in section 1128(b)(4)(B) within the meaning of section 1128(b) as a whole is clearly the loss of the privilege to practice medicine rather than the loss of a physical document. The I.G. additionally argued that the issue of whether the ALJ erred in rejecting the specific basis which the I.G. cited in her exclusion letter and then relying on a separate basis for the exclusion was not properly before this Panel. The I.G. noted that Petitioner had not raised this issue before the ALJ and that regulations at 42 C.F.R.  1005.21(e) preclude a petitioner from raising that issue for the first time before this forum. Thus, according to the I.G., Petitioner should not be permitted to raise the issue of whether the ALJ's reliance on section 1128(b)(4)(B) was proper. ANALYSIS I. The ALJ did not err in interpreting section 1128(b)(4)(B). The ALJ's reading of section 1128(b)(4)(B) as not requiring actual physical surrender of the license document is consistent with the wording of the statute as a whole and with its purpose. As the ALJ concluded, the term "license" can mean a permission to act, as well as the document evidencing that that permission has been conferred. Nothing in the wording of section 1128(b) suggests that Congress was using the term to mean the document, as opposed to the permission. The ALJ's conclusion that Congress was using the term to mean the permission to practice is supported by the legislative history of section 1128(b). In the Omnibus Budget Reconciliation Act of 1989, Congress added the language to section 1128(b)(4)(A) referring to loss of a right to apply for or renew a license. In explaining this change, the House Committee on the Budget stated: The Committee is informed that, in reviewing State licensure board actions to determine whether exclusion is appropriate, the Inspector General has found a number of cases in which a board has revoked the "license" of a physician whose actual license had already expired, or in which a board has revoked the right of a physician to renew a license which has expired. The Committee bill would clarify that the loss of a right to apply for or renew a license to provide health care is tantamount to losing the license itself and may serve as the basis for exclusion from Medicare and State health care programs. H.R. Rep. No. 247, 101st Cong. 1st Sess. 483. If the term "license" had been used in section 1128(b)(4) to mean solely the license document, Congress would not have referred to the loss of the right to apply or renew the license as being tantamount to loss of the license. Congress enacted section 1128(b)(4)(B) to ensure that practitioners could not place program beneficiaries at risk by surrendering a license pending a disciplinary proceeding and then moving to another State. H.R. Rep. No. 85, 100th Cong. 1st Sess. Pt. 1, 7; S. Rep. No. 109, 100th Cong. 1st Sess. Requiring actual physical surrender of the license document would permit practitioners to evade the consequences of a disciplinary proceeding by carefully worded consent agreements, such as the one at issue here, which effectively give up the practitioner's right to practice in a state, but avoid actual physical surrender of a document. State licensing authorities have no incentive to insist on surrender of the license document if it is due to expire. Yet, the potential harm to program beneficiaries, if the practitioner moves to another State and sets up practice, is as great in this situation as in the situation where the license document has been physically surrendered. Thus, interpreting the section to require physical surrender of a document would frustrate Congressional intent. II. Petitioner is not precluded from raising the question of whether the ALJ properly relied on section 1128(b)(4)(B). We reject the I.G.'s position that Petitioner cannot raise before this Panel the issue of whether the ALJ erred by rejecting the specific statutory basis cited in the I.G.'s exclusion letter and relying instead on a separate basis for the exclusion. The I.G. relied on 42 C.F.R.  1005.21(e). That provision applies only to any issue "that could have been raised before the ALJ but was not." Clearly, Petitioner could not have raised this particular argument before the ALJ because this question did not arise until after the ALJ had issued his decision. Thus, we conclude that Petitioner is not barred from raising the issue here. III. Petitioner had sufficient notice that the ALJ might rely on section 1128(b)(4)(B). Contrary to Petitioner's arguments, Petitioner had adequate notice of the statutory authority for his exclusion. The I.G.'s October 19, 1994 exclusion notification referenced section 1128(b)(4) generally as authority for Petitioner's exclusion, as well as citing specifically to section 1128(b)(4)(A). Furthermore, in a December 14, 1994 Order and Notice of Hearing, the ALJ stated that one of the issues raised by this case was whether the I.G. has authority to exclude Petitioner under section 1128(b)(4) of the Act. At 2. In her February 13, 1995 Response to Petitioner's Motion for Summary Judgment, the I.G. argued that Petitioner could be properly excluded under either section 1128(b)(4)(A) or section 1128(b)(4)(B). At 11-14. In his May 3, 1995 Brief in Opposition to Inspector General's Motion for Summary Disposition, Petitioner advanced arguments as to why section 1128(b)(4)(B) was not applicable to the facts of this case. At 5-6. Therefore Petitioner cannot now reasonably claim lack of notice of section 1128(b)(4)(B) as a potential basis for his exclusion. 1/ CONCLUSION For the reasons stated above, we affirm the ALJ Decision and uphold Petitioner's exclusion from participating in the Medicare, Medicaid, Maternal and Child Health Services Block Grant and Block Grants to States for Social Services programs. _________________________ Cecilia Sparks Ford _________________________ M. Terry Johnson _________________________ Judith A. Ballard Presiding Board Member 1. Irrespective of Petitioner's complaints about the lack of notice for his exclusion under section 1128(b)(4)(B), we would additionally conclude that Petitioner could also have been excluded under the provisions of section 1128(b)(4)(A). The broad "otherwise lost" language Congress included in section 1128(b)(4)(A) indicates that Congress intended that section to encompass any loss that occurs by a means other than revocation or suspension by a licensing authority. Moreover, the I.G.'s interpretation of section 1128(b)(4)(A) would not render section 1128(b)(4)(B) superfluous, as the ALJ reasoned. Section 1128(b)(4)(A) focuses on the reasons for the loss, rather than on the circumstances of the loss, and applies to an individual or entity who otherwise lost the right to apply for or renew such a license, for reasons bearing on the individual's or entity's professional competence, professional performance, or financial integrity. See H.R. Rep. 386, 101st Cong. 1st Sess. 389-90. Section 1128(b)(4)(B), on the other hand, permits the I.G. to exclude an individual or entity who surrenders a license pending a disciplinary proceeding without having to prove the reasons for the surrender.