Gina Bell, DAB CR5752 (2020)

DECISION

Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)), effective June 18, 2020.  Petitioner’s exclusion for the minimum period of five years is required by section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).1

I.  Background

The Inspector General (IG) notified Petitioner by letter dated May 29, 2020, that she was excluded from participation in Medicare, Medicaid, and all federal health care programs for a minimum of five years.  The IG cited section 1128(a)(3) of the Act as the basis for Petitioner’s exclusion.  The IG stated that the exclusion was based on Petitioner’s felony conviction in the Superior Court, Pima County, Arizona (state court) of a criminal

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offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service.  IG Exhibit (Ex.) 1 at 1.

Petitioner requested a hearing pursuant to 42 C.F.R. § 1005.2 on July 15, 2020 (RFH).  I convened a prehearing conference by telephone on August 11, 2020, the substance of which is memorialized in my Prehearing Conference Order and Schedule for Filing Briefs and Documentary Evidence dated August 11, 2020 (Prehearing Order). 

The IG filed a motion for summary judgment with supporting brief on September 9, 2020, and IG Exs. 1 through 6.  On September 25, 2020, Petitioner filed a document titled “Amended Petition to Early Terminate Probation and Order” originally filed in the state court, which I treat as if marked Petitioner’s exhibit (P. Ex.) 1.  Petitioner filed a response to the IG’s motion for summary judgment on October 12, 2020, in which she also requests summary judgment (P. Br.).  On October 26, 2020, the IG filed a reply brief.  Petitioner did not object to my consideration of IG Exs. 1 through 6 and the IG did not object to my consideration of P. Ex. 1.  All the offered exhibits are admitted as evidence.

II.  Discussion

A.  Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a hearing by an administrative law judge (ALJ) and judicial review of the final action of the Secretary of Health and Human Services (the Secretary).

Pursuant to section 1128(a)(3) of the Act, the Secretary must exclude from participation in any federal health care program:

Any individual or entity that has been convicted for an offense which occurred after [August 21, 1996], under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program (other than those specifically described in [section 1128(a)(1)]) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

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The Secretary has promulgated regulations implementing those provisions of the Act.  42 C.F.R. § 1001.101(c).2

Pursuant to section 1128(i) of the Act, an individual is convicted of a criminal offense when:  (1) a judgment of conviction has been entered by a federal, state, or local court whether or not an appeal is pending or the record has been expunged; (2) there is a finding of guilt in 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 has been withheld.  42 U.S.C. § 1320a-7(i)(1)-(4); 42 C.F.R. § 1001.2.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act will be for no fewer than five years.  42 C.F.R. § 1001.102(a).  The Secretary has published regulations that establish aggravating factors that the IG may consider to extend the period of exclusion beyond the minimum five-year period, as well as mitigating factors that may be considered only if the IG proposes to impose an exclusion greater than five years.  42 C.F.R. § 1001.102(b), (c).  No aggravating factors are alleged by the IG and the five-year period of exclusion is the minimum period authorized.

The standard of proof is a preponderance of the evidence, and there may be no collateral attack of the conviction that provides the basis of the exclusion.  42 C.F.R. § 1001.2007(c), (d).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors, and the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(c); Prehearing Order ¶ 4.

B.  Issues

The Secretary has by regulation limited my scope of review to two issues:

Whether the IG has a basis for excluding Petitioner from participation in Medicare, Medicaid, and all federal health care programs; and

Whether the length of the proposed period of exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).

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When, as in this case, the IG imposes the minimum authorized five-year exclusion under section 1128(a) of the Act, there is no issue as to whether the period of exclusion is unreasonable.  42 C.F.R. § 1001.2007(a)(2).

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

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

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

2.  Summary judgment is appropriate in this case.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to reasonable notice and an opportunity for a hearing.  The Secretary has provided by regulation that a sanctioned party has the right to a hearing before an ALJ, and both the sanctioned party and the IG have a right to participate in the hearing.  42 C.F.R. § 1005.2‑.3.  Either or both parties may choose to waive appearance at an oral hearing and to submit only documentary evidence and written argument for my consideration.  42 C.F.R. § 1005.6(b)(5).  An ALJ may also resolve a case, in whole or in part, by summary judgment.  42 C.F.R. § 1005.4(b)(12).

Summary judgment is appropriate in an exclusion case when there are no disputed issues of material fact and when the undisputed facts, clear and not subject to conflicting interpretation, demonstrate that one party is entitled to judgment as a matter of law.  Tanya A. Chuoke, R.N., DAB No. 1721 (2000); David A. Barrett, DAB No. 1461 (1994); Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367 (1992); Catherine L. Dodd, R.N., DAB No. 1345 (1992); John W. Foderick, M.D., DAB No. 1125 (1990).  When the undisputed material facts of a case support summary judgment, there is no need for a full evidentiary hearing and neither party has the right to one.  Surabhan Ratanasen, M.D., DAB No. 1138 (1990); Foderick, DAB No. 1125.  In opposing a properly supported motion for summary judgment, the nonmovant must allege facts that show there is a genuine dispute of material fact that affects the proponent’s prima facie case or that might establish a defense.  The nonmovant may not rely upon mere allegations or denials to defeat a properly supported motion for summary judgment.  To defeat a properly supported motion for summary judgment and proceed to a trial, the nonmovant must show there is a genuine dispute as to a material fact that requires determination by the fact finder.  On summary judgment, the judge does not weigh the evidence or attempt to determine the truth.  Rather, the judge accepts the nonmovant’s evidence as true and draws all permissible inferences in the nonmovant’s favor.  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-57 (1986).

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There is no genuine dispute of material fact in this case.  Petitioner does not dispute that she was convicted of an offense that occurred after August 21, 1996.  Petitioner does not dispute that her offense was related to theft.  Petitioner does not dispute that her offense was committed in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program other than Medicare or Medicaid (programs described in section 1128(a)(1) of the Act) operated by or financed in whole or in part by a federal, state, or local government agency.  Petitioner only disputes that the offense of which she was convicted was a felony.  RFH; P. Br.  Petitioner’s argument that she was not convicted of a felony must be resolved against her as a matter of law.  Petitioner does not dispute that the mandatory minimum exclusion for participation in Medicare and all federal healthcare programs is five years.  However, Petitioner requests leniency.  RFH; P. Br.  The minimum period of exclusion is fixed by Congress and neither the IG nor I have the authority to reduce the period of exclusion if there is a basis for exclusion pursuant to section 1128(a)(3) of the Act.  Therefore, Petitioner’s request for leniency must also be resolved against her as a matter of law.  I conclude that summary judgment is appropriate.

3.  Petitioner’s exclusion is required by section 1128(a)(3) of the Act.

a.  Undisputed Facts

There is no genuine dispute as to the following facts. 

On February 12, 2019, Petitioner was indicted on one count of obtaining a dangerous drug, Xanax®, by fraud, deceit, misrepresentation, or subterfuge, and one count of obtaining a narcotic drug, hydrocodone, by fraud, deceit, misrepresentation, or subterfuge, Class 3 felonies under Arizona law.  Petitioner was also charged with one count of second degree burglary, a Class 3 felony, and one count of unlawful possession of drug paraphernalia, a Class 6 felony, under Arizona law.  IG Ex. 3. 

On April 15, 2019, Petitioner agreed to plead guilty to an amended count alleging the sale, transfer or offer to sell or to transfer a prescription-only drug, hydrocodone, a Class 6 undesignated felony under Arizona law, committed on June 28, 2018.  Petitioner agreed to plead guilty in exchange for a sentence limitation and dismissal of all other charges upon sentencing.  IG Ex. 4.  Petitioner does not dispute the allegations of the presentence report that she took the drugs from a patient under her care for her use and to transfer to her boyfriend.  IG Ex. 2 at 3.

On April 15, 2019, the state court accepted Petitioner’s guilty plea to the amended count alleging the sale, transfer or offer to sell or to transfer a prescription-only drug, a Class 6 undesignated felony under Arizona law, committed on June 28, 2018.  IG Ex. 5.

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On May 23, 2019, the state court entered a judgment of guilty pursuant to Petitioner’s guilty plea to the amended count alleging the sale, transfer or offer to sell or to transfer a prescription-only drug, hydrocodone, a Class 6 undesignated felony under Arizona law, committed on June 28, 2018.  The state court suspended imposition of sentence and placed Petitioner on probation for 18 months.  IG Ex. 6.

On August 26, 2020, the state court terminated Petitioner’s probation.  The state court also changed the designation of Petitioner’s offense from a Class 6 undesignated felony to a misdemeanor pursuant to Ariz. Rev. Stat § 13-604(A)(B).  P. Ex. 1. 

b.  Analysis

The IG cites section 1128(a)(3) of the Act as the basis for Petitioner’s mandatory exclusion.  The statute, as applicable in this case, requires the Secretary to exclude Petitioner from participation in Medicare, Medicaid, or other federal health care program if:  

(l)  Petitioner was convicted of an offense under state law;

(2)  Petitioner’s offense occurred after August 21, 1996 (the date of enactment of the Health Insurance Portability and Accountability Act of 1996);

(3)  Petitioner’s offense was committed in connection with the delivery of a health care item or service;

(4)  The criminal offense was a felony; and

(5)  Petitioner’s offense was related to theft.

Act § 1128(a)(3); 42 C.F.R. § 1001.101(c).  When the elements of section 1128(a)(3) of the Act are satisfied, Congress mandates exclusion and the Secretary and I have no discretion not to exclude.  I conclude that the elements that trigger exclusion are satisfied in this case.

Petitioner does not dispute that she was convicted under state law.  Petitioner does not dispute that the offense of which she was convicted occurred on about June 28, 2018, which is after August 21, 1996.  Petitioner does not dispute that her offense involved theft of drugs from one of her patients for her use and to transfer/give to her boyfriend.  Petitioner does not dispute that the theft was in connection with the delivery of a health care item or service under a health care program other than Medicare or Medicaid operated or financed by a federal, state, or local government agency.  I conclude that the undisputed facts establish the required connection, rational link, or nexus between

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Petitioner’s criminal offense and the delivery of a health care item or service, in a health care program other than Medicare or Medicaid.  My decision is guided by the decision of the Departmental Appeals Board (Board) in W. Scott Harkonen, M.D., DAB No. 2485 (2012), aff’d, Harkonen v. Sebelius No. C13-0071 PJH, 2013 WL 5734918 (N.D. Cal. Oct. 22, 2013).  In Harkonen, an appellate panel of the Board discussed in detail the elements of section 1128(a)(3) of the Act, which requires that the offense of which one is convicted have been committed in connection with the delivery of a health care item or service.  The Board discussed that in prior cases, it had interpreted the language “in connection with” to require a common sense connection or nexus, also characterized as a “rational link,” between the criminal offense and the delivery of a health care item or service.  Harkonen, DAB No. 2485 at 7.  The Board noted that in Erik D. DeSimone, R.Ph., DAB No. 1932 (2004), it found the required nexus in a case where a pharmacist, in the guise of performing his professional duties, took controlled substances for his own use.  Harkonen, DAB No. 2485at 7.  In Kenneth M. Behr, DAB No. 1997 (2005), the Board found the nexus where a pharmacist who had access to drugs due to his position attempted to embezzle those drugs, rejecting the argument that the underlying criminal offense must involve actual delivery of a health care item or service.  Harkonen, DAB No. 2485 at 7-8.  In Ellen L. Morand, DAB No. 2436 (2012), the Board concluded that the Petitioner’s theft from the evening deposit of the pharmacy that employed her had the requisite nexus considering that the evening deposit included revenue from the sale of health care items and that the Petitioner diverted those funds to her use.  Harkonen, DAB No. 2485 at 8.  The Board summarized its prior holdings to be that “frauds or thefts that are linked in a rational way to the delivery of a health care item or service do fall within the ambit” of section 1128(a)(3).  Harkonen, DAB No. 2485 at 8.  The Board further noted that its interpretation is consistent with the interpretation of similar language found in section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)).  Harkonen, DAB No. 2485 at 9.  The Board pointed out that its interpretations of the language of section 1128(a) “effectuate the twin purposes of section 1128(a):  (1) to protect federal health care programs and their beneficiaries from individuals who have been shown to be untrustworthy; and (2) to deter health care fraud.”  Harkonen, DAB No. 2485at 9 (citations omitted).  In Harkonen, the Board stated that section 1128(a)(3) does not require proof of an actual impact or effect upon the delivery of a health care item or service, rather the ALJ must consider all the evidence of circumstances underlying the criminal offense, including evidence extrinsic to the criminal proceedings if reliable and credible, to find the rational link between the criminal offense and the delivery of a health care item or service.  Id. at 10, n.6.  The rational link or nexus between Petitioner’s offenses and the delivery of a health care item or service exists in this case because Petitioner used her employment to gain access to drugs intended for a patient under her care. 

Petitioner disputes that she was convicted of a felony because the designation of her offense was changed to a misdemeanor by order of the state court.  P. Br.; P. Ex. 1.

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Petitioner’s argument must be resolved against her as a matter of law.  There is no dispute that Petitioner pleaded guilty to a felony offense.  IG Ex. 4.  Her guilty plea to the felony offense was accepted and a judgment of conviction was entered by the state court on April 15 and May 23, 2019.  IG Exs. 5, 6.  Pursuant to section 1128(i)(1) and (3) of the Act, Petitioner was convicted of the felony offense when her guilty plea to the felony was accepted and a judgment of conviction was entered by the state court.  The fact that the state court ordered on August 26, 2020, that Petitioner’s offense be reduced from a felony to a misdemeanor does not change the undisputed fact that she was originally convicted of a felony within the meaning of section 1128(a)(i)(1) and (3) of the Act. 

Accordingly, I conclude that the elements necessary to trigger an exclusion pursuant to § 1128(a)(3) of the Act are satisfied, and Petitioner’s exclusion is required by the Act.

4.  Section 1128(c)(3)(B) of the Act requires a minimum exclusion of five years for any exclusion pursuant to section 1128(a) of the Act.

I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(3) of the Act.  Therefore, the IG must exclude Petitioner for a minimum period of five years pursuant to section 1128(c)(3)(B) of the Act.  Petitioner requests leniency but there is no discretion to impose a lesser period. 

Exclusion is effective 20 days from the date of the IG’s notice of exclusion to Petitioner.  42 C.F.R. § 1001.2002(b).

III.  Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for five years, effective June 18, 2020.

1. Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after the period of exclusion expires.  Reinstatement is not automatic upon completion of the period of exclusion.
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2. Citations are to the 2019 revision of the Code of Federal Regulations (CFR), unless otherwise stated.
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