Parrino v. Sebelius
155 F. Supp. 3d 714
W.D. Ky.2015Background
- Plaintiff Leo Parrino, a licensed pharmacist, pled guilty to a misdemeanor for introducing misbranded inhalation drugs into interstate commerce and received one year probation and restitution.
- HHS/OIG notified Parrino that, under the mandatory exclusion provision 42 U.S.C. § 1320a-7(a), he was excluded from participation in all federal health care programs (e.g., Medicare/Medicaid) for the statutory minimum of five years.
- Parrino challenged the agencies’ application of the mandatory exclusion as a Fifth Amendment substantive due process violation, arguing that his underlying strict-liability conviction required no mens rea and that applying mandatory exclusion substantially increased his penalty.
- Parrino did not challenge the constitutionality of § 1320a-7 itself but contested the agencies’ discretionary choice to use subsection (a) (mandatory) rather than subsection (b) (permissive).
- The record shows Parrino received notice of exclusion and administrative appeal rights; he did not allege inadequate procedural process or that the exclusion was publicly disclosed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Parrino has a property interest in continued participation in federal health programs | Parrino claims economic entitlement tied to his professional license and practice | HHS/OIG: providers are not intended beneficiaries of federal programs and have no entitlement to participate | Court: No property interest in continued participation; providers lack a protected property right |
| Whether Parrino has a liberty interest (reputation/profession) implicated by exclusion | Exclusion harms reputation and effectively forecloses ability to practice during exclusion | HHS/OIG: no public disclosure alleged; mere reputational harm without public stigma not enough | Court: No liberty interest because Parrino did not allege public disclosure of stigmatizing information |
| Whether agencies’ discretionary use of mandatory exclusion was arbitrary and capricious (substantive due process) | Applying mandatory five-year exclusion to a strict-liability misdemeanor is disproportionate and shocks the conscience | HHS/OIG: application of §1320a-7(a) to conviction falls within agency authority and is not conscience-shocking | Court: Agency action was not arbitrary, capricious, or conscience-shocking; no substantive due process violation |
| Whether procedural due process claim exists (adequate notice/hearing) | Parrino did not press procedural claim but suggests unfairness in outcome due to mandatory exclusion | HHS/OIG: provided statutory notice and appeal process | Court: Procedural claim would fail in any event because no protected property or liberty interest shown |
Key Cases Cited
- Prater v. City of Burnside, 289 F.3d 417 (6th Cir. 2002) (discussing substantive and procedural due process framework)
- Salerno v. United States, 481 U.S. 739 (1987) (due process protections and government interests)
- Lewis v. County of Sacramento, 523 U.S. 833 (1998) (shocks-the-conscience standard for substantive due process)
- Bowers v. City of Flint, 325 F.3d 758 (6th Cir. 2003) (arbitrary-and-capricious as synonymous with conscience-shocking)
- EJS Properties, LLC v. City of Toledo, 698 F.3d 845 (6th Cir. 2012) (high bar for substantive due process relief)
- Erickson v. U.S. ex rel. Dep’t of Health & Human Servs., 67 F.3d 858 (9th Cir. 1995) (no property interest in continued participation in federal health programs)
- Koerpel v. Heckler, 797 F.2d 858 (10th Cir. 1986) (same)
- Cervoni v. Sec’y of Health, Ed. & Welfare, 581 F.2d 1010 (1st Cir. 1978) (providers not intended beneficiaries; no entitlement to program participation)