Breton Morgan v. Kathleen Sebelius

Filed: September 11, 2012

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 10-2270

(3:09-cv-01059)

BRETON LEE MORGAN, M.D.,

Plaintiff - Appellant,

v.

KATHLEEN SEBELIUS, Secretary of Department of Health and

Human Services,

Defendant - Appellee.

O R D E R

Upon Appellee’s motion for publication of the Court’s

opinion,

IT IS ORDERED that the motion to publish is granted.

The Court amends its opinion filed June 14, 2012, as

follows:

On the cover sheet, section 1 -- the status is changed from

“UNPUBLISHED” to “PUBLISHED.”

On the cover sheet, section 6 -- the status line is changed

to read “Affirmed by published per curiam opinion.”

On page 2 -– the reference to the use of unpublished

opinions as precedent is deleted.

For the Court – By Direction

/s/ Patricia S. Connor

Clerk

2

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRETON LEE MORGAN, M.D., 

Plaintiff-Appellant,

v.

KATHLEEN SEBELIUS, Secretary of  No. 10-2270

Department of Health and Human

Services,

Defendant-Appellee.



Appeal from the United States District Court

for the Southern District of West Virginia, at Huntington.

Robert C. Chambers, District Judge.

(3:09-cv-01059)

Argued: May 17, 2012

Decided: June 14, 2012

Before TRAXLER, Chief Judge, and MOTZ and KEENAN,

Circuit Judges.

Affirmed by published per curiam opinion.

COUNSEL

ARGUED: James Michael Casey, Point Pleasant, West Vir-

ginia, for Appellant. Daniel Tenny, UNITED STATES

DEPARTMENT OF JUSTICE, Washington, D.C., for Appel-

2 MORGAN v. SEBELIUS

lee. ON BRIEF: William B. Schultz, Acting General Coun-

sel, Catherine L. Hess, Senior Counsel, DEPARTMENT OF

HEALTH AND HUMAN SERVICES, Washington, D.C.;

Tony West, Assistant Attorney General, Michael S. Raab,

UNITED STATES DEPARTMENT OF JUSTICE, Washing-

ton, D.C.; R. Booth Goodwin II, United States Attorney,

Charleston, West Virginia, for Appellee.

OPINION

PER CURIAM:

Breton Lee Morgan appeals a district court order dismiss-

ing his action challenging the decision of the Secretary of the

United States Department of Health and Human Services

("the Secretary") to exclude him for five years from partici-

pating in Medicare, Medicaid, and all other federally spon-

sored health care programs pursuant to the applicable terms of

42 U.S.C.A. § 1320a-7(a)(3) (West 2011). Finding no error,

we affirm.

I.

Morgan is a physician licensed to practice medicine in

West Virginia. In March 2007, he pled guilty to one count of

violating 21 U.S.C. § 843(a)(3), which proscribes "knowingly

or intentionally . . . acquir[ing] or obtain[ing] possession of a

controlled substance by misrepresentation, fraud, forgery,

deception, or subterfuge." 21 U.S.C.A. § 843(a)(3) (West

1999). His plea was based upon several occasions in which

Morgan obtained free hydrocodone samples from pharmaceu-

tical representatives for his personal use by leading the repre-

sentatives to believe that he would be giving the samples to

his patients for medical purposes. As a result of the plea, Mor-

gan was sentenced to 30 days’ imprisonment and three

months of supervised release.

MORGAN v. SEBELIUS 3

On May 30, 2008, the Inspector General ("I.G.") of the

Department of Health and Human Services ("HHS") wrote

Morgan, notifying him that he would be excluded for five

years from participating in Medicare, Medicaid, and all other

federal health-care programs pursuant to the applicable terms

of 42 U.S.C.A. § 1320a-7(a)(3). This statute requires the Sec-

retary to impose such an exclusion on "[a]ny individual or

entity that has been convicted for an offense which occurred

after August 21, 1996, under Federal or State law, in connec-

tion with the delivery of a health care item or service" if that

offense consists of a "felony relating to fraud, theft, embezzle-

ment, breach of fiduciary responsibility, or other financial

misconduct." 42 U.S.C.A. § 1320-7(a)(3).

Morgan appealed the I.G.’s decision in a proceeding before

an Administrative Law Judge ("ALJ") in HHS’s Departmental

Appeals Board ("DAB") Civil Remedies Division. The ALJ

found that the I.G. had a sufficient basis to exclude Morgan

and that the five-year term of the exclusion was not unreason-

able in light of applicable law.

Morgan then appealed the ALJ’s decision to the DAB

Appellate Division on April 3, 2009. In his proceeding before

the Appeals Board (the "Board"), Morgan argued, as is rele-

vant here, that to warrant an exclusion under 42 U.S.C.A.

§ 1320a-7(a)(3), a conviction must be for an offense that

relates to financial misconduct. Morgan maintained that his

fraud conviction was not related to "financial misconduct"

since he neither had a corrupt motive nor received any sub-

stantial pecuniary benefit in committing the crime to which he

pled guilty. The Board rejected Morgan’s argument, finding

that Morgan was excludable under § 1320a-7(a)(3) because

his conviction constituted "fraud" within the plain meaning of

the statute regardless of whether it was related to financial

misconduct. The Board additionally concluded, in any event,

that his crime was related to financial misconduct insofar as

he "derived some unquantifiable measure of pecuniary value

by illegally diverting the controlled substances." J.A. 31.

4 MORGAN v. SEBELIUS

Morgan subsequently brought an action in federal district

court, asserting that the Board erred in failing to recognize

that § 1320a-7(a)(3) applies only to offenses relating to finan-

cial misconduct. Concluding that the statute unambiguously is

not limited to offenses relating to financial misconduct, the

district court dismissed Morgan’s action.

II.

Reiterating his argument that § 1320a-7(a)(3) is limited to

offenses relating to financial misconduct, Morgan argues that

the district court erred in dismissing his suit. We disagree.

"We review questions of statutory construction de novo."

Orquera v. Ashcroft, 357 F.3d 413, 418 (4th Cir. 2003).

Because the Secretary is charged with administering § 1320a-

7(a)(3), the established rules of deference in Chevron U.S.A.

Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837

(1984), guide our analysis. Under Chevron, if a statute is

unambiguous regarding the question presented, the statute’s

plain meaning controls. See Saintha v. Mukasey, 516 F.3d

243, 251 (4th Cir. 2008). However, "[i]f . . . the statute is

silent or ambiguous with respect to the specific issue before

us, the question for this court becomes whether the [Secre-

tary’s] interpretation ‘is based on a permissible construction

of the statute.’" Id. (quoting Chevron, 467 U.S. at 843).

Under Chevron’s first step, we "employ[ ] traditional tools

of statutory construction" in considering whether Congress

addressed "the precise question at issue." Chevron, 467 U.S.

at 842, 843 n.9. In doing so, "we begin with the text and struc-

ture of the statute." National Elec. Mfrs. Ass’n v. United

States Dep’t of Energy, 654 F.3d 496, 504 (4th Cir. 2011).

Congress required the Secretary to exclude from participa-

tion 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 consist[s] of a fel-

MORGAN v. SEBELIUS 5

ony relating to fraud, theft, embezzlement, breach of fiduciary

responsibility, or other financial misconduct." 42 U.S.C.A.

§ 1320-7(a)(3). It is undisputed that Morgan was convicted of

a felony relating to fraud and connected to the delivery of

health care. He nevertheless maintains that his conviction was

not for "a felony relating to fraud, theft, embezzlement,

breach of fiduciary responsibility, or other financial miscon-

duct" since his offense did not relate to financial misconduct.

That is incorrect.

The applicable language makes clear that to warrant man-

datory 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 mis-

conduct. The argument that the presence of the fifth category,

"other financial misconduct," somehow narrows the meaning

of "fraud" from its ordinary usage is unpersuasive. See Car-

bon Fuel Co. v. USX Corp., 100 F.3d 1124, 1133 (4th Cir.

1996) (explaining that unless there is "explicit legislative

intent to the contrary," we must give words in a statute their

"plain and ordinary meaning"). Morgan maintains that if the

presence of the word "other" did not have this narrowing

effect, "there would be no reason to have the word ‘other’ in

the statute." Appellant’s brief at 11. But that is simply not cor-

rect. That the fifth category is "other financial misconduct"

reflects the fact that the other four categories can, themselves,

relate to financial misconduct. In this way, the presence of

"other" eliminates the possible confusion that could have

resulted from a statute that applied to "embezzlement . . . or

financial misconduct."

In fact, it is Morgan’s interpretation that would render

much of the language surplusage. See Gustafson v. Alloyd

Co., 513 U.S. 561, 574 (1995) (explaining that a court should

"avoid a reading which renders some words altogether redun-

dant"). 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," "embez-

6 MORGAN v. SEBELIUS

zlement," and "breach of fiduciary responsibility" and simply

required the exclusion for offenses "relating to financial mis-

conduct."

Furthermore, Morgan’s interpretation would not serve the

statute’s purposes. See, e.g., United States Nat’l Bank of Ore-

gon v. Independent Ins. Agents of Am., Inc., 508 U.S. 439, 455

(1993) (explaining that "[i]n expounding a statute, we must

not be guided by a single sentence or member of a sentence,

but look to the provisions of the whole law, and to its object

and policy" (internal quotation marks omitted)). Congress

enacted the Health Insurance Portability and Accountability

Act of 1996 ("HIPAA"), of which 42 U.S.C. § 1320-7(a)(3)

is a part, "to combat waste, fraud, and abuse in health insur-

ance and health care delivery." Pub. L. No. 104-191, 110 Stat.

1936, 1936 (1996). In fact, the legislative history to § 1320-

7(a)(3) as it was originally enacted indicates that it was spe-

cifically intended to protect federal programs from untrust-

worthy individuals and to "provide a clear and strong

deterrent against the commission of criminal acts."* S. Rep.

100-109, at 5 (1987), reprinted in 1987 U.S.C.C.A.N. 682,

686. These purposes indicate that Congress was targeting

fraud generally, not simply fraud relating to financial miscon-

duct, and none of the purposes would be served by narrowing

the scope of the statute as Morgan urges.

Finally, it is worth noting that the Senate Report that

accompanied the statute as originally enacted described the

provision as applying to "a criminal offense relating to fraud,

theft, embezzlement, breach of fiduciary responsibility or

financial abuse." S. Rep. No. 100-109, at 6 (1987), reprinted

in 1987 U.S.C.C.A.N. 682, 687; see National Elec. Mfrs.

Ass’n, 654 F.3d at 504-05 ("[W]e have described legislative

history as one of the traditional tools of interpretation to be

consulted at Chevron’s step one."). Considering that the word

*As originally enacted, the statute made exclusion from the federal pro-

grams only optional as opposed to mandatory.

MORGAN v. SEBELIUS 7

"other" did not even appear in the description, there was no

suggestion that Congress intended that "fraud" would have

anything other than its ordinary meaning.

For all of these reasons, we hold that regardless of whether

the district court correctly concluded that the statute unam-

biguously does not require that any fraud relate to financial

misconduct in order to warrant the mandatory five-year exclu-

sion, the Secretary’s construction was, at the very least, a per-

missible one to which we must defer.

III.

Finding no error, we affirm the district court’s dismissal of

Morgan’s case.

AFFIRMED