Nakia Palmer, DAB CR5626 (2020)

DECISION

The Inspector General of the United States Department of Health and Human Services (the IG) excluded Nakia Palmer (Petitioner) from participation in Medicare, Medicaid, and all other federal health care programs for five years based on her conviction for criminal offenses related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct with respect to any act or omission in a program, other than a health care program, operated by or financed in whole or in part by any Federal, State or local government agency.  Petitioner sought review of the exclusion.  For the reasons stated below, I affirm the IG’s exclusion determination.

I.  Procedural History

By letter dated August 30, 2019, the IG notified Petitioner she was being excluded, effective 20 days from the date of the letter, from participation in Medicare, Medicaid, and all federal health programs under section 1128(b)(1) of the Social Security Act (Act)

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(42 U.S.C. § 1320a-7(b)) for five years.  IG Exhibit (Ex.) 1.1   The IG explained she took this action based on Petitioner’s conviction, as defined in section 1128(i) (42 U.S.C. 1320a-7(i)), in the U.S. District Court for the Middle District of Alabama (District Court), of a misdemeanor offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of any health care item or service, including the performance of management or administrative services relating to the delivery of such items or services; or with respect to any act or omission in a health care program, other than Medicare and a State health care program, operated by, or financed in whole or in part by, any Federal, State or local Government agency; or of a criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct with respect to any act or omission in a program, other than a health care program, operated by or financed in whole or in part by any Federal, State or local Government agency.  Id. at 1.

Petitioner timely requested a hearing before an administrative law judge.  I held a pre-hearing telephone conference on December 18, 2019, the substance of which is summarized in my December 19, 2019 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order).  See 42 C.F.R. § 1005.6.  Among other things, I directed the parties to file pre-hearing briefs articulating their respective arguments as well as identifying witnesses and exhibits in support thereof.  Summary Order at 3-5.

The IG filed a brief (IG Br.) and three exhibits (IG Exs. 1-3), while Petitioner filed a brief (P. Br.) and five exhibits (P. Exs. 1-5).  The IG subsequently filed a reply brief (IG Reply).

II.  Admission of Exhibits and Decision on the Record

Neither party objects to the opposing party’s proposed exhibits.  I therefore enter IG Exs. 1 through 3 and P. Exs. 1 through 5 into the record.

Both parties indicated that a hearing is not necessary in this case and that they did not have any witnesses to offer.  P. Br. at 4; IG Br. at 11-12.  Accordingly, I will decide this case on the briefs submitted and the exhibits of record.

III.  Issues

Whether the IG had a basis to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs, and whether the length of the proposed exclusion is unreasonable.  42 C.F.R. § 1001.2007(a)(1).

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IV.  Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to an Administrative Law Judge (ALJ) hearing and judicial review of the final action of the Secretary of Health and Human Services (Secretary).  The right to a hearing before an ALJ is set forth in 42 C.F.R. §§ 1001.2007(a) and 1005.2, and the rights of both the sanctioned party and the IG to participate in a hearing are specified by 42 C.F.R. § 1005.3.  The parties may choose to waive appearance at an oral hearing and to submit only documentary evidence and written argument for my consideration.  See 42 C.F.R. § 1005.6(b)(5).

Pursuant to section 1128(b)(1)(B) of the Act (42 U.S.C. § 1320a-7(b)(1)(B)), the Secretary may exclude from participation in any federal health care program an individual convicted under federal or state law of a criminal offense relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct with respect to any act or omission in a program (other than a health care program) operated by or financed in whole or in part by any Federal, State, or local government agency.  See 42 C.F.R. § 1001.201(a)(2).

Under section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)), an individual is convicted of a criminal offense when:  (1) a judgment of conviction has been entered against him or her in a federal, state, or local court, regardless of whether an appeal is pending or whether the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no contest is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.  Further, there may be no collateral attack of the conviction that provides the basis of the exclusion.  42 C.F.R. § 1001.2007(d).

Section 1128(c)(3)(D) of the Act provides that an exclusion imposed under section 1128(b)(1) of the Act will be for a period of three years, unless the Secretary determines in accordance with published regulations that a shorter period is appropriate because of mitigating circumstances or that a longer period is appropriate because of aggravating circumstances.  See 42 C.F.R. § 1001.201(b).  Authorized aggravating and mitigating factors are listed in 42 C.F.R. § 1001.201(b)(2) and (3).  The exclusion is effective twenty days from the date of the notice of exclusion.  42 C.F.R. § 1001.2002(b).

The standard of proof is a preponderance of the evidence.  42 C.F.R. § 1001.2007(c).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors, while the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(b).

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V.  Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold and followed by pertinent findings of fact and analysis.

A. Petitioner’s request for hearing was timely, and I have jurisdiction.

Petitioner timely requested a hearing.  I have jurisdiction to hear and decide this case.  See 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also 42 U.S.C. § 1320a-7(f)(1).

B. There is a basis for Petitioner’s exclusion pursuant to section 1128(b)(1) of the Act.

Section 1128(b)(1)(B) of the Act authorizes the Secretary of the Department of Health and Human Services to exclude from participating in Federal health care programs any individual who has been convicted “of a criminal offense relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct with respect to any act or omission in a program (other than a health care program) operated by or financed in whole or in part by any Federal, State or local government agency.”  42 U.S.C. § 1320a-7(b)(1)(B).  The IG has established these elements by a preponderance of the evidence.

In April 2014, Petitioner submitted an application with a number of false and fraudulent statements to the Social Security Administration (SSA) for Supplemental Security Income (SSI) benefits on behalf of her disabled son.  IG Ex. 2 at 3.  Specifically, Petitioner made misrepresentations about the identity of her son’s legal guardian, where her son resided, and her gross monthly household income.  Id. at 4.  In April 2016, Petitioner applied for renewal of SSI benefits for her son and again made false and fraudulent statements to SSA in the application.  Id. at 6.  Additionally, from July 2015 to June 2016, Petitioner fraudulently obtained Supplemental Nutrition Assistance Program (SNAP) benefits from the U.S. Department of Agriculture (USDA).  Id. at 11.

On February 15, 2018, Petitioner was found guilty of Mail Fraud, Theft of Government Property, Social Security Benefit Fraud, and Fraudulent Acquisition of Food Stamp Benefits.  IG Ex. 3 at 1-2.  On May 11, 2018, the District Court entered judgment of conviction against Petitioner.  Id.  Pursuant to Petitioner’s conviction, the District Court sentenced Petitioner to 24 months of imprisonment, two years of supervised release, and ordered restitution in the amount of $25,985.95.  Id. at 3, 4, 7.

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1. Petitioner was convicted under Federal law of an offense that occurred after August 21, 1996 within the meaning of sections 1128(b)(1) and 1128(i) of the Act.

Section 1128(i)(1) of the Act provides that an individual is convicted of a criminal offense when a judgment of conviction has been entered against him or her in a federal, state, or local court, regardless of whether an appeal is pending or whether the record of the conviction is expunged.  42 U.S.C. § 1320a-7(i)(1); see also 42 C.F.R. § 1001.2.

The record clearly establishes Petitioner was convicted within the meaning of section 1128(i)(1) of the Act.  The District Court entered judgment against Petitioner after she was found guilty of Mail Fraud, Theft of Government Property, Social Security Benefit Fraud, and Fraudulent Acquisition of Food Stamp Benefits.  IG Ex. 3 at 1-2.  The record also establishes that Petitioner’s offense of conviction occurred after August 21, 1996, as the District Court entered judgment against her on May 16, 2018.  Id. at 1.

Though she indicated otherwise, Petitioner does not actually argue she was not convicted within the meaning of the Act.  P. Br. at 1-2, 5.  Instead, she argues her conviction resulted from improper actions taken by SSA that amounted to a deprivation of her constitutional right to due process.  Id. at 2, 5.

But Petitioner may not attack her conviction before me, as the Secretary’s regulations make clear.  42 C.F.R. § 1001.2007(d) (“When the exclusion is based on the existence of a criminal conviction . . . the basis of the underlying conviction . . . is not reviewable and the individual or entity may not collaterally attack it either on substantive or procedural grounds in this appeal.”).  I therefore conclude that Petitioner was convicted of a criminal offense that occurred after August 21, 1996 as contemplated by 42 U.S.C. § 1320a-7(b)(1).

2. Petitioner’s convictions were related to fraud, theft, embezzlement, breach of fiduciary responsibility or other financial misconduct.

The IG asserts Petitioner’s convictions for Mail Fraud, Theft of Government Property, Social Security Benefit Fraud, and Fraudulent Acquisition of Food Stamp Benefits are related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.  IG Br. at 3-5.

Petitioner’s offenses of conviction plainly relate to fraud and theft.  IG Ex. 3 at 1-2.  As described above, Petitioner applied to SSA for benefits and received over $1,000 to which she was not entitled, forming the basis for her convictions for Mail Fraud, Theft of Government Property, and Social Security Benefit Fraud.  IG Ex. 2 at 1-10.  Petitioner also fraudulently obtained SNAP benefits, forming the basis for her conviction for Fraudulent Acquisition of Food Stamp Benefits.  Id. at 10-11.

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The IG has established that Petitioner’s convictions for Mail Fraud, Theft of Government Property, Social Security Benefit Fraud, and Fraudulent Acquisition of Food Stamp Benefits are related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct as contemplated by 42 U.S.C. § 1320a-7(b)(1).

3. Petitioner’s offenses of conviction were with respect to acts or omissions in a program other than a health care program operated by or financed in whole or in part by any Federal, State or local government agency.

Section 1128(b)(1)(B) of the Act specifies that Petitioner’s misconduct must be with respect to an act or omission in a program, other than a health care program, which is operated or financed in whole or in part by a Federal, State or local government agency.  See 42 C.F.R. § 1001.201(a)(2).  Federal health care program is defined under Section 1128B(f) and includes “any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government . . . .”  42 U.S.C. § 1320a-7(f).

Petitioner does not explicitly argue that her convictions were not with respect to acts or omissions in a program, other than a health care program, operated by or financed in whole or in part by any Federal, State or local government agency, but she does assert more generally that her convictions do not warrant exclusion.  P. Br. at 2-3.

In this case, Petitioner’s convictions resulted from her scheme to fraudulently obtain payments through the SSI program.  IG Ex. 2 at 1-10; IG Ex. 3 at 1.  SSI is a Federal income supplement program administered by the SSA pursuant to Title XVI of the Act.  42 U.S.C. § 1381 et seq.; 20 C.F.R. § 416.101 et seq.  Petitioner was also convicted for fraudulently obtaining benefits from the SNAP program.  IG Ex. 2 at 10-11; IG Ex. 3 at 2.  The SNAP program provides nutrition benefits and is administered by the USDA Food and Nutrition Service.  7 U.S.C. § 2011 et seq.; 7 C.F.R. § 271.1 et seq.

Both the SSI and SNAP programs are non-health care programs operated by and financed in whole by the Federal government.  Therefore, I conclude that Petitioner’s convictions were with respect to acts or omissions in a program, other than a health care program, operated by or financed in whole or in part by any Federal, State or local government agency, as contemplated by 42 U.S.C. § 1320a-7(b)(1)(B).

4. The IG has proven two aggravating factors exist to support an exclusion period beyond the three-year statutory minimum.

In this case, the IG advised Petitioner in the exclusion notice of two aggravating factors that justified excluding her for more than three years.  IG Ex. 1 at 2.  The regulations

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establish aggravating factors that the IG may consider to lengthen the period of exclusion beyond the three-year minimum period of exclusion required by section 1128(b)(1).  42 C.F.R. § 1001.201(b)(2); 42 U.S.C. § 1320a-7(c)(3)(D).  The aggravating factors invoked by the IG to impose a five-year period of exclusion were:  (1) the acts resulting in the conviction, or similar acts, were committed over a period of one year or more, and (2) the sentence imposed by the court included incarceration.  42 C.F.R. § 1001.201(b)(2)(ii), (iv).  The IG has demonstrated the presence of these aggravating factors, and thus appropriately relied upon them to increase Petitioner’s period of exclusion.

a. The IG established the acts resulting in Petitioner’s conviction lasted a period of one year or more.

The IG asserted that Petitioner’s criminal acts were committed over a period of one year or more, from April 2014 to July 2016.  IG Br. at 8; see 42 C.F.R. § 1001.201(b)(2)(ii).  Petitioner was convicted of Mail Fraud, Theft of Government Property, Social Security Benefit Fraud, and Fraudulent Acquisition of Food Stamp Benefits.  IG Ex. 3 at 1-2.  According to the superseding indictment, Petitioner committed theft of government property by willfully and knowingly stealing and purloining SSI benefits to which she was not entitled from April 2014 until about July 2016.  IG Ex. 2 at 8.  Petitioner indicates she disagreed with the IG’s identification of aggravating factors.  P. Br. at 3.  However, Petitioner does not dispute that the acts for which she was convicted were committed over a period of one year or more.  Therefore, I find the IG appropriately applied this aggravating factor to lengthen Petitioner’s period of exclusion.

b. The IG established the sentence imposed against Petitioner included a period of incarceration.

The IG asserted that Petitioner’s criminal convictions resulted in a sentence of incarceration.  See 42 C.F.R. § 1001.201(b)(2)(iv).  The record shows that pursuant to her convictions, the District Court sentenced Petitioner to 24 months of incarceration.  IG Ex. 3 at 3.  Again, Petitioner has not disputed this aggravating factor.  See P. Br. at 3.  Therefore, I find the record amply supports the IG’s reliance on Petitioner’s sentence of incarceration as an aggravating factor to lengthen her period of exclusion.

5. Petitioner did not prove any mitigating factors exist in this case upon which I may rely to reduce the exclusion period.

Where the IG has properly exercised her discretion to increase the exclusionary period, as she has done here, I may only reduce that period after considering the specific mitigating factors found at 42 C.F.R. § 1001.201(b)(3).  Petitioner has the burden to prove by a preponderance of the evidence that there is a mitigating factor or factors for me to consider.  42 C.F.R. § 1005.15(c).

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In this case, Petitioner has failed to establish any mitigating factor that I am permitted to consider to reduce the period of her exclusion.  To that end, Petitioner asserts she has a history of health conditions.  P. Br. at 4.  But however sympathetic they may be, Petitioner’s asserted reasons for mitigation are not recognized by the governing regulations.  See 42 C.F.R. § 1001.201(b)(3).  Only the mitigating factors authorized by 42 C.F.R. § 1001.201(b)(3) may be considered in order to reduce the period of exclusion.  I therefore cannot consider them, whatever their merit.  Accordingly, I find that Petitioner has not met her burden to establish any mitigating factors that would justify reducing the period of exclusion.

6. A five-year exclusion period is not unreasonable.

I must uphold the IG’s determination as to the length of exclusion unless it is unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  It is important to note that it is the quality of the aggravating (or mitigating) factors that is most important when considering the length of exclusion, not the number of aggravating factors that are present in a given case.  As stated in the preamble to the final rule establishing the exclusion regulations:

We do not intend for the aggravating and mitigating factors to have specific values; rather, these factors must be evaluated based on the circumstances of a particular case.  For example, in one case many aggravating factors may exist, but the subject’s cooperation with the OIG may be so significant that it is appropriate to give that one mitigating factor more weight than all of the aggravating.  Similarly, many mitigating factors may exist in a case, but the acts could have had such a significant physical impact on program beneficiaries that the existence of that one aggravating factor must be given more weight than all of the mitigating.  The weight accorded to each mitigating and aggravating factor cannot be established according to a rigid formula, but must be determined in the context of the particular case at issue.

57 Fed. Reg. 3298, 3314-15 (Jan. 29, 1992).

Here, the quality of the aggravating factors proven by the IG demonstrates a longer exclusion period is not unreasonable.  First, Petitioner’s involvement was not simply a mistake or temporary involvement in the scheme; she persisted in criminal conduct for more than two years, from April 2014 until July 2016.  During this time, Petitioner fraudulently obtained benefits from two different safety net programs meant to benefit the most needy.  IG Ex. 2 at 3-7.  Petitioner’s prolonged criminal conduct demonstrates a high level of untrustworthiness and shows her involvement was not merely a “minimal

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lapse in judgment” but instead a “significant risk to program integrity and risk to program beneficiaries.”  Hussein Awada, M.D., DAB No. 2788 at 9 (2017).

Second, Petitioner’s sentence of 24 months of incarceration represents a substantial period of incarceration and indicates the severity of her criminal conduct.  The Board determined even a nine-month period of incarceration to be “relatively substantial,” and sufficient to support an eight-year exclusion period.  Jason Hollady, M.D., DAB No. 1855 at 12 (2002).  The imposition of a significant length of incarceration for Petitioner’s conduct leads me to conclude the IG gave appropriate weight to this particular aggravating factor.

Given the nature of Petitioner's offenses, I conclude the IG has established both the existence of aggravating factors, and that she gave appropriate weight to those factors in imposing a five-year period of exclusion.  The length of exclusion imposed by the IG is not unreasonable.

VI.  Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for five years pursuant to section 1128(b)(1)(B) of the Act (42 U.S.C. § 1320a-7(b)(1)(B)), as of the effective date of exclusion  provided in the IG’s initial notice to her.

1. Document No. 6b in the official case file maintained in the DAB E-File system; for clarity and simplicity, whenever possible I will cite to the exhibits attached to the parties’ respective briefs by the exhibit numbers therein, not the document numbers assigned by the E-file system.
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