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MALLOY v. STATE (2013)

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Supreme Court of Georgia.


No. S13A0188.

Decided: June 17, 2013

M. Katherine Durant, Durant Law LLC, Tucker, GA, Dwight L. Thomas, D. Lowell Thomas, PC, Thelma W. Cummings Moore, Moore Law, LLC, Atlanta, GA, for Malloy. Keith E. Adams, Decatur, GA, Nancy B. Allstrom, A.A.G., Henry Allen Hibbert, Samuel S. Olens, A.G., Department of Law, Atlanta, GA, for State.

Appellant Tyrone Cecil Malloy, a Georgia gynecologist, was indicted along with his office manager on two counts of Medicaid fraud in violation of OCGA § 49–4–146.1(b)(2).1 Specifically, appellant was charged with knowingly and wilfully accepting medical assistance payments to which he was not entitled and in amounts greater than he was entitled from the State of Georgia Medicaid program because the services charged for were either “associated with the performance of elective abortions,” or had not been performed. Prior to the indictment, the Program Integrity Unit of the Georgia Department of Community Health (DCH)2 had conducted a review of appellant's clinic looking for violations of the “Hyde Amendment” which prohibits the use of federal funds to pay for elective abortions. Based on its findings, DCH referred appellant's case to the State's Medicaid Fraud Control Unit for a full investigation, while concurrently instituting a “withhold” on reimbursements to appellant's Medicaid provider number.3

Appellant requested an administrative review of the withhold by DCH and, in response, received a letter informing him that based on its determination that appellant had billed abortion-related services to Medicaid the withhold would remain in effect. Appellant then requested and was granted an administrative hearing before an administrative law judge (ALJ) on the issue of the withhold. The ALJ subsequently issued an initial decision in favor of appellant reversing DCH's decision to maintain the withhold. Although noting that the State's interpretation of the services as abortion-related was reasonable, the ALJ determined that the record did not support a conclusion that appellant wilfully misrepresented a material fact and thus could not support a finding of fraud or wilful misrepresentation under the Medicaid program.4 As DCH neither filed a motion for reconsideration or rehearing with respect to the ALJ's decision nor sought to reject or modify it pursuant to the provisions of OCGA § 50–13–41(e)(1),5 the ALJ's decision was affirmed by operation of law, and effectively became the decision of DCH. See Alexander v. Dep't of Revenue, 316 Ga.App. 543, 728 S.E.2d 320 (2012). Thereafter, the “withhold” status was terminated and the withheld funds were released to appellant.

During the period appellant was challenging the withhold, the State's Medicaid Fraud Control Unit continued to conduct its own investigation into the fraud allegations, including executing a search warrant at appellant's clinic. Despite DCH's affirmance of the ALJ's decision finding no evidence that appellant had committed fraud or wilful misrepresentation under the Medicaid program, the State decided to seek criminal charges against appellant and his office manager and, on December 8, 2011, a DeKalb County grand jury issued indictments.

In response to the indictments, appellant filed a special demurrer and motion to strike surplusage, a plea in abatement based on collateral estoppel, and a motion to dismiss his indictment claiming the statute under which he was charged was unconstitutionally vague. Following separate hearings, the trial court denied each of appellant's motions via separate orders. After his application for certificate of immediate review was denied by the trial court, appellant filed a notice of appeal seeking review of the trial court's orders.

The State moved to dismiss the appeal arguing that the trial court's orders either were not appealable or that jurisdiction belonged in the Court of Appeals. For the reasons that follow, we deny the State's motion to dismiss and affirm the decisions of the trial court.

1. Addressing the issue of jurisdiction, we find the instant appeal is properly before this Court. Appellant seeks review of three rulings made by the trial court: the denial of his plea in abatement based on collateral estoppel, the denial of his motion to dismiss in which he challenged the constitutionality of OCGA § 49–4–146.1(b)(2) as applied to him, and the denial of his special demurrer and motion to strike surplusage in the indictment. First, we note that the trial court's denial of appellant's plea in abatement based on collateral estoppel, a motion which in essence constitutes a plea in bar based on double jeopardy, is directly appealable. See Patterson v. State, 248 Ga. 875, 876, 287 S.E.2d 7 (1982) (timely filed plea of double jeopardy is directly appealable). Second, given appellant's right to directly appeal the denial of that motion, he was entitled to seek appellate review of the trial court's denial of his other two motions. See OCGA 5–6–34(d). Finally, because this Court has jurisdiction over appellant's claim that the trial court erred in rejecting his constitutional challenge to OCGA 49–4–146.1(b)(2) as applied, this Court also has jurisdiction to consider the other allegations of error presented on appeal. See Ga. Const. of 1983, Art. VI, Sec. VI, Para. II(1); see also State v. Boyer, 270 Ga. 701, 702, 512 S.E.2d 605 (1999).

2. Next, we address appellant's contention that the trial court erred in denying his plea in abatement based on collateral estoppel. Appellant argues that the doctrine of collateral estoppel precludes the State from prosecuting him for Medicaid fraud as set forth in the indictment because the ultimate issue in the criminal prosecution, i.e., whether he knowingly and wilfully accepted medical assistance payments to which he was not entitled, was decided adversely to the State in the earlier administrative proceeding. Appellant claims that the trial court erred in applying a double jeopardy multiple prosecution analysis under Hudson v. United States, 522 U.S. 93, 98–99, 118 S.Ct. 488, 139 L.Ed.2d 450 (1997) to his collateral estoppel claim and, more specifically, erred in determining that the doctrine of collateral estoppel did not apply.6

While we agree with appellant that the trial court should have analyzed the issue pursuant to the requirements for application of the doctrine of collateral estoppel rather than multiple punishment, the primary question presented, i.e., whether a determination made in an administrative proceeding has preclusive effect in a subsequent criminal proceeding pursuant to the doctrine of collateral estoppel, is one which has not been conclusively addressed by this Court. Based on our consideration of this case, we find that the trial court's determination that the ALJ's civil ruling had no preclusive effect on the State's subsequent criminal prosecution of appellant is correct.

a. The United States Supreme Court has held that the doctrine of collateral estoppel is incorporated in the Fifth Amendment's guarantee against double jeopardy. Ashe v. Swenson, 397 U.S. 436, 443, 90 S.Ct. 1189, 25 L.Ed.2d 469 (1970). Collateral estoppel “means simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit.” Id. Collateral estoppel may affect a later criminal prosecution in two ways: (1) it may operate to bar the introduction of certain facts necessarily established in a prior proceeding; or (2) it may completely bar a subsequent prosecution where one of the facts necessarily determined in the former proceeding is an essential element of the conviction sought. United States v. DeMarco, 791 F.2d 833, 836 (11th Cir.1986); United States v. Mulherin, 710 F.2d 731, 740 (11th Cir.1983). See State v. Tate, 136 Ga.App. 181, 185, 220 S.E.2d 741 (1975).

Even before Ashe, Georgia courts recognized the doctrine of collateral estoppel in criminal, as well as civil cases.7 See Waldroup v. Greene County Hosp. Authority, 265 Ga. 864, 866(2), 463 S.E.2d 5 (1995); Lindsey v. State, 227 Ga. 48, 52(2), 178 S.E.2d 848 (1970); Harris v. State, 193 Ga. 109, 110, 17 S.E.2d 573 (1941). “The doctrine of collateral estoppel precludes the readjudication of an issue of law or fact already adjudicated between the parties or their privies, where that issue is essential to the judgment. [Cit.]” Jordan v. Board of Public Safety, 253 Ga.App. 339, 340, 559 S.E.2d 94 (2002). See Phillips v. State, 272 Ga. 840, 841, 537 S.E.2d 63 (2000). Moreover, the doctrine provides that “an issue previously litigated and adjudicated on the merits cannot be relitigated even as part of a different cause of action.” Jordan, supra at 342.

Administrative decisions, however, are not generally given collateral estoppel effect by Georgia courts in subsequent judicial proceedings unless certain requirements are met. Swain v. State, 251 Ga.App. 110, 113, 552 S.E.2d 880 (2001). See Epps Air Svc. v. Lampkin, 229 Ga. 792, 795(2), 194 S.E.2d 437 (1992); Blackwell v. Ga. Real Estate Comm., 205 Ga.App. 233, 234, 421 S.E.2d 716 (1992). Specifically, administrative decisions may have a collateral estoppel effect in a subsequent judicial proceedings where: (1) both proceedings involve the same parties or their privies; (2) the issue was actually litigated and determined in the first proceeding; (3) the determination was essential to the judgment in the first proceeding; and (4) the party against whom the doctrine is asserted had a full opportunity to litigate the issue in question. Swain, 251 Ga.App. at 113, 552 S.E.2d 880. Compare Allen v. Santana, 303 Ga.App. 844, 847(1), 695 S.E.2d 314 (2010) (collateral estoppel did not apply where issue deemed not essential to first judgment).

Applying these requirements, Georgia courts have repeatedly held that questions of fact ruled upon by an administrative body are thereafter precluded from relitigation in civil suits by the doctrines of res judicata and collateral estoppel, see Jordan, supra at 342, 559 S.E.2d 94; Blackwell, supra at 234, 421 S.E.2d 716. Less clear, however, are rulings with respect to the collateral estoppel effect in subsequent criminal proceedings. See Swain, supra at 113–114, 552 S.E.2d 880; Culver v. State, 254 Ga.App. 297, 303(1)(c), 562 S.E.2d 201 (2002), rev'd on other grounds, State v. Kell, 276 Ga. 423, 577 S.E.2d 551 (2003). In both Culver and Swain, the Court of Appeals acknowledged the possible application of collateral estoppel to preclude the State from raising issues allegedly decided in an earlier administrative action in subsequent criminal proceedings. Id. However, in each of these cases the court found insufficient evidence in the record showing the State had a full opportunity to litigate the issue in question at the administrative hearing and/or to seek judicial review of any adverse decision. Id.

Appellant asserts that the requirements for application of the doctrine of collateral estoppel have been met in his case because: (1) DCH is considered the State of Georgia pursuant to OCGA § 50–21–22, thus both this case and the administrative hearing involved the same parties; (2) the same issues were litigated and decided in the administrative hearing wherein the ALJ found that the evidence did not support a determination of fraud or wilful misrepresentation under the Medicaid program; (3) the ALJ's findings that appellant had not engaged in any fraudulent conduct nor wilful misrepresentation were essential to the judgment reversing the withhold on appellant's Medicaid provider number; and (4) the State had a full opportunity to litigate the issues before the ALJ and failed to file for reconsideration or rehearing, thus adopting the ALJ's decision. Appellant's argument is persuasive in many respects and, for purposes of this opinion, we accept without deciding that the first three requirements have been met. However, based on our review, it is the fourth requirement which must inform our decision in this case.

b. In answering the question of whether the State had a full opportunity to litigate the issue of whether appellant knowingly and wilfully accepted medical assistance payments to which he was not entitled, it is important to consider differences in the nature of the respective proceedings. What appears to have been a full opportunity to litigate in the context of the first proceeding, may not be sufficient when viewed in the context of the second proceeding. See Restatement (Second) of Judgments § 28(3).

As a general rule, the weight of authority points to a conclusion that administrative decisions should not be the basis for application of collateral estoppel against the government in criminal proceedings. See Cook v. State, 921 S2d 631, 633 (Fla. 2d DCA 2005) (conducting a survey of the law addressing this question in the context of probation and parole revocation proceedings, professional disciplinary proceedings, public employee disciplinary proceedings, driver's license revocation proceedings, and welfare fraud proceedings); State v. Williams, 132 Wash.2d 248, 937 P.2d 1052 (1997). Noting that nearly every state which has considered this question with respect to driver's license suspension hearings has determined such hearings did not provide the government with a full opportunity to litigate the issues, the Georgia Court of Appeals in Swain observed that to hold administrative decisions have preclusive effect in later criminal proceedings “would frustrate the purpose of the summary suspension hearing.” Swain, supra, 251 Ga.App. at 114, 552 S.E.2d 880.

Other courts similarly have refused to give preclusive effect to administrative rulings in a criminal proceeding. In a case with issues similar to this one, the Supreme Court of Washington held that the doctrine of collateral estoppel did not preclude the State from criminally prosecuting a defendant for welfare fraud despite a prior administrative determination that the defendant had acted unintentionally. Williams, supra, 132 Wash.2d at 250, 937 P.2d 1052. Although deciding that the first three requirements for application of the doctrine of collateral estoppel had been met, the Williams court nonetheless determined that “public policy” simply would not allow an administrative hearing to prevent the State from criminally prosecuting the defendant for two reasons. Id. at 256–257, 937 P.2d 1052.8 First, the purposes underlying the administrative hearing and the criminal trial were completely different as the administrative proceeding was intended to determine whether the defendant had received overpayments of public assistance, while the purpose of the criminal prosecution was to determine whether the defendant had committed a crime. Id. at 257, 937 P.2d 1052. Second, allowing an administrative proceeding to bar a criminal action would have broad consequences requiring the State

to marshall all the prosecution's potential witnesses and evidence at the administrative level ․ leav[ing] district attorney offices to allocate a greater proportion of their ever-decreasing resources to administrative matters, rather than reserving these scarce resources for the actual prosecution of serious criminal cases in court.

Williams, supra at 258, 937 P.2d 1052, quoting from People v. Sims, 32 Cal.3d 468, 651 P.2d 321, 337, 186 Cal.Rptr. 77 (1982) (Kaus, J., dissenting).

Likewise, in Cook v. State, the Florida District Court of Appeals concluded that the State was not collaterally estopped in a criminal proceeding from presenting similar fact evidence which had been determined in a prior administrative proceeding to be lacking in credibility, observing that

[a]llowing the course of proceedings in a criminal case to be determined by the litigation failure of a state agency with no constitutional authority with respect to criminal proceedings would be in derogation of the constitutional authority of the state attorney.

Cook, supra at 644.9

We find the rationale of these opinions persuasive. To allow the decision of an administrative law judge to subvert the constitutional authority of the district attorneys and attorney general of this state would be in derogation of our Constitution. At the same time, the practical effect of holding that a finding in an administrative hearing could have a determinative effect in a subsequent criminal trial would impose upon the State a virtually insurmountable burden of investigating and preparing for administrative matters in the same manner in which it prepares a criminal prosecution. Here, the only purpose of the administrative hearing was to determine whether the DCH withhold on appellant's Medicaid reimbursements would continue during the pendency of the State Medicaid Fraud Control Unit's investigation. To require the State to treat the administrative hearing as an integral part of the criminal trial rather than merely as an administrative device allowing the defendant to halt the temporary suspension of reimbursements to his Medicaid provider number during the course of the investigation would frustrate the purpose of the administrative hearing. See Swain, supra at 114, 552 S.E.2d 880. The dissimilar jurisdictions of the hearing officer and the criminal court lead us to conclude that the State's interest in having guilt or innocence determined is not adequately served in an administrative proceeding.

Given the different purposes served by the administrative proceeding and the criminal proceeding in the instant case, we find that the State did not have a full opportunity to litigate the issue and conclude that preclusive effect should not be given to the administrative determination.

3. Appellant contends the trial court erred in denying his motion to dismiss the indictment on the basis that OCGA § 49–4–146.1(b)(2) as applied to him is unconstitutionally vague. The statute provides, in pertinent part, that it is unlawful for a Medicaid provider to knowingly and wilfully “accept medical assistance payments to which he or she is not entitled or in an amount greater than that to which he or she is entitled.” Id. The indictment alleges appellant violated the statute by “causing claims to be submitted in an amount greater than that to which [he was] entitled to receive because the services were associated with the performance of elective abortions,” and ineligible for Medicaid reimbursement under the Hyde amendment.10 Appellant argues that the statute is unconstitutionally vague as applied to him in that it failed to provide him with sufficient notice of the prohibited conduct with which he is charged. We disagree.

Appellant has not raised a First Amendment challenge to the statute, thus his vagueness argument must be decided on the particular facts of this case. See Boyer, supra at 702, 512 S.E.2d 605.

The Due Process Clause requires that the law give a person of ordinary intelligence fair warning that specific conduct is forbidden or mandated. United States v. Harriss, 347 U.S. 612, 617, 74 S.Ct. 808, 98 L.Ed. 989 (1954); Hall v. State, 268 Ga. 89, 92, 485 S.E.2d 755 (1997). Vagueness may invalidate a criminal law on either of two bases: a statute may fail to provide notice sufficient to enable ordinary people to understand what conduct it prohibits or requires, or the statute may authorize and encourage arbitrary and discriminatory enforcement. City of Chicago v. Morales, 527 U.S. 41, 55, 119 S.Ct. 1849, 144 L.Ed.2d 67 (1999); Roemhild v. State, 251 Ga. 569(2), 308 S.E.2d 154 (1983).

Santos v. State, 284 Ga. 514(1), 668 S.E.2d 676 (2008). Appellant complains that the statute fails to reference, define or give any guidance distinguishing between permissible diagnostic services to determine pregnancy and gestational status for Medicaid patients and those “associated with the performance of elective abortions.” He argues that as the only definition of “abortion-related services” or of services “associated” with abortions in the Medicaid manual is in section 904.2 pertaining to abortions performed for medical necessity, a provision11 under which the parties agree appellant never sought payment, the statute did not give him sufficient notice as to what constitutes prohibited criminal conduct and makes the law susceptible to arbitrary and selective enforcement. See Hall v. State, 268 Ga. 89, 92, 485 S.E.2d 755 (1997). See also United States v. Lanier, 520 U.S. 259, 266, 117 S.Ct. 1219, 137 L.Ed.2d 432 (1997) (court must resolve statute's ambiguity in favor of applying it only to conduct which is clearly covered).

The trial court found that although the statute did not explicitly state all the manners in which one could violate OCGA § 49–4–146.1(b)(2), the procedures for which one would not be entitled to payment through the program were listed in the Medicaid manual; thus, the statute in conjunction with the manual provided appellant with appropriate notice as required by law. The court also concluded that when the facts in the indictment were combined with the statute there was no vagueness. Finally, the court rejected appellant's claim that the statute was susceptible to subjective application by law enforcement—noting that either there was enough evidence to meet the statute's elements or not. We agree with the trial court.

The State's allegations of fact as recited in the indictment coupled with the applicable law, OCGA § 49–4–146.1(b)(2), show appellant had sufficient notice of the prohibited conduct. See Stewart v. State, 246 Ga. 70, 71, 268 S.E.2d 906 (1980).12 Whether appellant was “entitled” to certain payments is merely a question of fact. Use of the words “knowingly” or “willful” in the construction of a statute satisfies a scienter requirement that mitigates a law's vagueness by placing a person on notice as to what conduct is prohibited. See Screws v. United States, 325 U.S. 91, 102, 65 S.Ct. 1031, 89 L.Ed.2d 1495 (1945). An ordinary person can easily understand that knowingly taking money from Medicaid to which one is not entitled is prohibited conduct. Further, appellant's contention that the statute is unconstitutionally vague with respect to expenditures related to abortions because the manual is too vague on this subject is relevant to the issue of whether appellant knowingly made false claims, a question of fact which does not overcome the presumption that the statute is constitutional. See generally Buice v. Dixon, 223 Ga. 645, 646–647, 157 S.E.2d 481 (1967). Accordingly, we find that OCGA § 49–4–146.1(b)(2) as applied in this case is not unconstitutionally vague and we affirm the trial court's denial of appellant's motion to dismiss the indictment.

4. Finally, appellant asserts the trial court erred in denying his special demurrer and motion to strike surplusage. He argues the extensive “background” section included in each count contains politically charged, misleading and prejudicial surplusage likely to diminish the presumption of innocence to which he is entitled and is prejudicial and redundant.

Having filed a timely special demurrer objecting to the form of the indictment, appellant is entitled to an indictment perfect in form and substance. State v. Corhen, 306 Ga.App. 495, 498, 700 S.E.2d 912 (2010). However, mere surplusage does not vitiate an otherwise valid indictment. State v. Barnett, 268 Ga.App. 900, 901, 602 S.E.2d 899 (2004); Eidson v. State, 262 Ga.App. 664, 586 S.E.2d 362 (2003). The trial court found that the challenged language accurately describes the offenses charged and makes the charges more easily understood by explaining why federal funds could not be applied to elective abortions. The language of an indictment is to be interpreted liberally in favor of the State and a demurrer raising special objections strictly construed against the pleader, see Johnson v. State, 233 Ga.App. 450, 451, 504 S.E.2d 290 (1998). We find no error in the trial court's denial of appellant's special demurrer and motion to strike surplusage.

Judgment affirmed.

THOMPSON, Presiding Justice.

All the Justices concur.

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