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“UNPUBLISHED” to “PUBLISHED.”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On page 2 -– the reference to the use of unpublished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