Miguel A. Garcia, DAB CR6222 (2023)

DECISION

Petitioner, Miguel A. Garcia, is excluded from participating in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)), effective June 20, 2022.  Petitioner’s exclusion for five years is required by section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a‑7(c)(3)(B)).

I.  Background

The Inspector General of the United States Department of Health and Human Services (IG) notified Petitioner by letter dated May 31, 2022, that he was excluded from participation in Medicare, Medicaid, and all federal health care programs for five years.  The IG cited section 1128(a)(1) of the Act as the basis for Petitioner’s exclusion.  The IG stated that the exclusion was based on Petitioner’s conviction in the Superior Court of Arizona, Pima County (state court), of a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  IG Exhibit (IG Ex.) 1 at 1.

Petitioner timely filed a request for hearing (RFH) on July 17, 2022.  On July 19, 2022, the case was assigned to me to hear and decide.  I convened a telephone prehearing conference on August 29, 2022, the substance of which is memorialized in my Prehearing

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Conference Order and Schedule for Filing Briefs and Documentary Evidence issued on August 30, 2022 (Prehearing Order).  During the prehearing conference, Petitioner waived an oral hearing and the parties agreed that this matter may be resolved based upon the parties’ briefs and documentary evidence.  Prehearing Order ¶ 5.

On October 13, 2022, the IG filed a brief (IG Br.) and IG Exs. 1 through 9.  On November 10, 2022, the IG filed an amended IG Ex. 8.  On November 27, 2022, Petitioner filed a brief (P. Br.) with no exhibits.  The IG filed a reply brief (IG Reply) on December 12, 2022.

Petitioner did not object to my consideration of IG Exs. 1, 6, and 7, and they are admitted and considered as evidence.  Petitioner objects to the admission of IG Exs. 2, 3, 4, 5, 8 (amended), and 9 on the grounds that the exhibits contain irrelevant information, hearsay, and statements of purported fact to which Petitioner has not agreed or had the opportunity to contest.  P. Br. at 1-5.

Pursuant to 42 C.F.R. § 1005.17, ¹ the administrative law judge (ALJ) determines whether evidence should be admitted to the record.  The Federal Rules of Evidence do not apply except as guidance that the ALJ may choose to apply.  Irrelevant and immaterial evidence must be excluded.  Relevant evidence may be excluded if it is unreliable or more prejudicial than probative, privileged, if the evidence is related to an offer of compromise or settlement, or related to a corrective action plan under certain circumstances.  42 C.F.R. § 1005.17.

Petitioner is correct that IG Exs. 2 through 4, IG Ex. 8 (amended), and IG Ex. 9, all include hearsay.  However, the fact that the documents include hearsay is not grounds for excluding the exhibits, so long as the information contained in the exhibits is relevant, reliable, more probative than prejudicial, not privileged, and does not involve offers in compromise or settlement or a corrective action plan.

Relevant evidence is evidence that has any tendency to make a fact of consequence more or less probable.  Fed. R. Evid. 401.  Petitioner does not deny that he² was convicted of criminal simulation under Arizona law.  RFH at 1-2; P. Br. at 5-7.  Petitioner argues, however, that his conviction was not related to the delivery of an item or service under

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Medicare or a state healthcare program which is necessary to trigger exclusion pursuant to section 1128(a)(1) of the Act.  Therefore, the issue of consequence in this case is whether the criminal conduct of which Petitioner was convicted was related to the delivery of an item or service under Medicare or a state healthcare program.  Relevant evidence in this case is any evidence that has a tendency to show that it was more or less likely that the criminal conduct of which Petitioner was convicted was related to the delivery of a health care item or service under Medicare or a state healthcare program.  The authenticity of IG Exs. 2, 3, 4, 5, 8 (amended), and 9 is not challenged and each of the exhibits include evidence related to the alleged criminal conduct of Petitioner.  I recognize as Petitioner argues that not all the allegations of fact in each of the documents has been admitted or conceded by Petitioner or found as fact by the state court in Petitioner’s criminal proceeding.³  However, that does not make the evidence in IG Exs. 2, 3, 4, 5, 8 (amended), and 9 irrelevant or inadmissible.  Rather, it is necessary to decide how much weight to give the evidence included in each document.

Petitioner’s reliance upon the decision in Travers v. Sullivan, 801 F. Supp. 394, 403 (E.D. Wash. 1992) is misplaced.  P. Br. at 2-5.  The discussion from Travers on which Petitioner relies recognizes that one excluded under section 1128(a)(1) of the Act is not permitted to collaterally attack the facts of the underlying conviction.  The district court determined it was only necessary to determine whether there was a conviction and whether the conviction was of a program-related offense.  The district court was clear that it was not for it to scrutinize the validity of the underlying conviction.  The court was also clear that in that case the program related nature of the crime was clear based on the state’s characterization of the offense.  Traver, 801 F. Supp. at 403.  The district court in Travers did not state nor suggest that it was not permissible or appropriate for the IG or an ALJ to consider facts related to the offense of which one is convicted in order determine whether the crime was program‑related.  IG Exs. 2, 3, 4, 5, 8 (amended), and 9 contain evidence related to Petitioner’s conviction that is material to the issue of whether Petitioner was convicted of a program related offense.  I conclude that IG Exs. 2, 3, 4, 5, 8 (amended), and 9 include relevant evidence within the meaning of Fed. R. Evid. 401.  The exhibits are not unreliable or more prejudicial than probative in this forum, which involves only a judge presumed to know the law and the weight to be given the evidence. The exhibits do not contain privileged information and do not involve offers in compromise or settlement or a corrective action plan.  Regarding IG Ex. 8 (amended), the out-of-court declaration of Special Agent Becsey, Petitioner through counsel waived the opportunity to cross-examine and test the accuracy of the declaration.  IG Exs. 2 through 5, 8 (amended), and 9 are admitted and considered as evidence.

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II.  Discussion

A.  Applicable Law

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

Pursuant to section 1128(a) of the Act, the Secretary must exclude from participation in any federal health care program any individual convicted under federal or state law of, among other things, a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  Act § 1128(a)(1).  The Secretary has promulgated regulations implementing these provisions of the Act.  42 C.F.R. § 1001.101(a), (c).

Pursuant to 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 whether an appeal is pending or 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.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act will be for a period of not less 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 minimum five‑year period is extended.  42 C.F.R. § 1001.102(b), (c).  The IG imposed the minimum authorized five-year exclusion and aggravating and mitigating factors are not relevant in this case.  IG Ex. 1 at 1.

In this proceeding, 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, and the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(b), (c); Prehearing Order ¶ 4.  There may be no collateral attack of the conviction that is the basis for the exclusion.  42 C.F.R. § 1001.2007(d).

B.  Issues

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

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Whether the IG has a basis for excluding an individual or entity from participating in Medicare, Medicaid, and all other federal health care programs; and

Whether the length of the exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).

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 text followed by my findings of fact and analysis.

1.  Petitioner timely filed his hearing request and I have jurisdiction.

2.  Decision on the documentary evidence and the parties’ pleadings is appropriate.

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

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).  In this case, Petitioner waived an oral hearing during the prehearing conference and the IG agreed that this matter may be decided on the documentary evidence and the parties’ pleadings.  Prehearing Order ¶ 5d.

In his brief, Petitioner requested “summary adjudication in his favor.” P. Br. at 1, 8.  I do not construe Petitioner’s request for summary adjudication to be a request for summary judgment or a withdrawal of his waiver of an oral hearing.  Rather, I construe Petitioner’s request for “summary adjudication” to be Petitioner’s request for a decision on the merits without the need to convene an oral hearing to receive testimony.

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3.  Section 1128(a)(1) of the Act requires Petitioner’s exclusion from participation in Medicare, Medicaid, and all other federal health care programs.

Petitioner concedes that he was convicted of a criminal offense.  RFH at 1-2; P. Br. at 5.  Petitioner argues, however, that the offense of which he was convicted is not “program-related” and does not trigger exclusion under section 1128(a)(1) of the Act.  RFH at 2; P. Br. at 5-7.  The issue to be resolved is whether the preponderance of the evidence demonstrates that Petitioner’s offense was related to the delivery of an item or service under Medicare or a state health care program triggering mandatory exclusion pursuant to section 1128(a)(1) of the Act.  I conclude Petitioner’s criminal offense was program related and exclusion is mandatory.

a.  Facts

On January 12, 2021, Petitioner was charged by a three-count felony criminal complaint filed in the state court.  Petitioner was charged with one count of fraudulent schemes and artifices, one count of aggravated taking of the identity of another person or entity, and one count of forgery.  Count one alleged that between May 2019 and April 2020, Petitioner engaged in a scheme to defraud and knowingly obtained a benefit, specifically glucose test strips, by means of false or fraudulent pretenses, representations, promises, or material omissions.  Count two alleged that during the same period, Petitioner knowingly took, possessed, or used personal identifying information of three or more persons without their consent and with intent to us their identity for unlawful purposes.  Count three alleged that during the same period, Petitioner offered or presented a forged instrument or one containing false information, specifically prescription transfer requests and/or prescriptions.  All counts alleged violation of Arizona statutes.  IG Ex. 5.

On September 7, 2021, Petitioner signed a plea agreement in which he agreed to plead guilty to an amended count three of the criminal complaint, which as amended alleged “criminal simulation” under Arizona law in violation of Ariz. Rev. Stat. § 13-2004(A).⁴

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The amended charge alleged specifically that between May 2019 and April 2020, with the intent to defraud, Petitioner made, altered, or presented, or offered an object, specifically prescription transfer requests and/or prescriptions, so that the documents appeared to have a source or authorship that they did not possess.  Petitioner entered the plea agreement in exchange for a sentence limitation and dismissal of the other charges from the felony complaint.  IG Ex. 6.

On October 27, 2021, the state court entered judgment finding Petitioner guilty of the amended count three alleging criminal simulation during the period May 1, 2019 through April 1, 2020, that the court designated a class one misdemeanor.  Petitioner was sentenced to probation.  IG Ex. 7 at 1-2.  Petitioner was also ordered to pay various fees including a fee of $1,000 to the “Attorney General Health Care Fraud and Abuse Section.”  IG Ex. 7 at 2.  The remaining counts of the criminal complaint were dismissed.  IG Ex. 7 at 2.

I find, based on the criminal complaint (IG Ex. 5), the plea agreement (IG Ex. 6), and the judgment of conviction (IG Ex. 7), that it is more likely than not that the criminal offense of criminal simulation, of which Petitioner was convicted, involved prescription transfer requests and/or prescriptions for the purpose of obtaining glucose test strips between about May 1, 2019 and April 1, 2020.  My finding is supported by the preponderance of the evidence found in IG Exs. 5, 6, and 7.

Other evidence in the record is consistent with and supports my finding that the criminal offense of criminal simulation, of which Petitioner was convicted, involved prescription transfer requests and/or prescriptions for the purpose of obtaining glucose test strips.

On July 6, 2020, the Arizona State Board of Pharmacy (state board) suspended Petitioner’s pharmacist license for a minimum of six months.  IG Ex. 4 at 1, 6, 9.  The suspension was not based on Petitioner’s conviction which did not occur until October 27, 2021.  Rather, the suspension was based on the “Interim Consent Agreement for Interim Suspension of License and Psychological Evaluation” (consent agreement) that Petitioner signed on June 25, 2020.  IG Ex. 4 at 9.  As part of the consent agreement Petitioner agreed to “interim findings of fact.”  The findings of fact show that Petitioner worked as a “float pharmacist” with Bashas’ Pharmacy.  On or about April 16, 2020, Bashas’ Pharmacy reported to the state board that Petitioner had been under investigation for unprofessional conduct which involved multiple instances between February 1, 2020 and April 3, 2020, when Petitioner transferred prescriptions for glucose test strips using patient names and information for patients who were not prescribed test strips.  Petitioner also admitted to creating false prescriptions for glucose test strips.  Petitioner admitted that he fraudulently obtained roughly 15 boxes of glucose test strips and sold them online.  Petitioner also admitted that he was terminated by Bashas’ Pharmacy for prescription fraud and impersonating another pharmacist.  IG Ex. 4 at 4-5.  Petitioner acknowledged as part of the consent agreement that it is a public record of a formal

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action of the state board that would be reported to the National Practitioner Data Bank and the Healthcare Integrity and Protection Data Bank.  IG Ex. 4 at 3 ¶ 8.  Petitioner agreed that he voluntarily entered the consent agreement and that he would abide by its terms and conditions.  Petitioner also agreed that he voluntarily relinquished all rights to administrative or judicial review related to the consent agreement.  IG Ex. 4 at 1-2 ¶¶ 2-4.  The consent agreement also indicates that Respondent did not intend his acceptance of the agreement to be an admission of any facts, that his intent was to compromise the pending matter with the state board, and that he did not relinquish his rights to administrative or judicial review.  IG Ex. 4 at 2 ¶ 4.  Regardless of what rights Petitioner waived or preserved in the consent agreement, I find that the agreement describes conduct that was either the same as or very similar to the conduct during the same period for which Petitioner was convicted of criminal simulation.

IG Exs. 2, 3, and 8 (amended)⁵ also allege facts that are consistent with those Petitioner admitted to in the consent agreement, facts that describe Petitioner’s conduct that was the same or very similar to the conduct during the same period for which Petitioner was convicted of criminal simulation.

b.  Analysis

The IG cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory exclusion.  The statute provides in relevant part: 

(a) MANDATORY EXCLUSION. – The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):

(1) CONVICTION OF PROGRAM-RELATED CRIMES. – Any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under title XVIII or under any State health care program.

Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)).  Congress has, by the plain language of section 1128(a)(1) of the Act, required the Secretary to exclude from participation in Medicare, Medicaid, and all federal health care programs any individual or entity:  (1) convicted of a criminal offense, whether a misdemeanor or felony; (2) where the

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offense is related to the delivery of an item or service; and (3) the delivery of the item or service was under Medicare or a state health care program.

Petitioner does not dispute that he was “convicted” of a criminal offense within the meaning of section 1128(i) of the Act.  P. Br. at 5.  An individual or entity is considered to have been “convicted” of an offense if, among other things, “a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court.”  Act § 1128(i)(3) (42 U.S.C. § 1320a-7(i)(3)).  The state court accepted Petitioner’s guilty plea to the amended count three which alleged criminal simulation in violation of Ariz. Rev. Stat. § 13-2004(A).  IG Ex. 7 at 1.  Therefore, Petitioner was convicted within the meaning of section 1128(i)(3) of the Act – the first element required to trigger an exclusion under section 1128(a)(1) of the Act.

Petitioner disputes that the offense of which he was convicted was related to the delivery of an item or service under Medicare or a state health care program – the second element required to trigger an exclusion under section 1128(a)(1) of the Act.  RFH; P. Br. at 5-7.  Petitioner does not dispute that his conviction is related to making, altering, presenting, or offering prescription transfer requests and/or prescriptions.  P. Br. at 6.  However, Petitioner argues that the IG has not established by the preponderance of the evidence that his conviction of criminal simulation is a program-related offense because “[n]othing in the elements of the crime of conviction nor the factual basis for conviction require anything to be done with the form after it is made. No delivery of any item is necessary for the crime to be committed nor was delivery of an item ever alleged or established.”  P. Br. at 6-7.

The Departmental Appeals Board has long held that the statutory terms describing an offense do not control whether that offense is “related to” the delivery of a health care item or service under Medicare or a state health care program for purposes of exclusion pursuant to section 1128(a) of the Act.  E.g., Dewayne Franzen, DAB No. 1165 (1990) (inquiry is whether conviction is related to Medicaid fraud, not whether the petitioner was convicted of Medicaid fraud).  Rather, an ALJ must examine whether there is a “common sense connection or nexus between the offense and the delivery of an item or service under the program.”  Scott D. Augustine, DAB No. 2043 at 5-6 (2006) (citations omitted).

To determine whether there is such a nexus or common-sense connection, “evidence as to the nature of an offense may be considered,” such as the “facts upon which the conviction was predicated.”  Robert C. Hartnett, DAB No. 2740 at 7 (2016) (quoting Berton Siegel, D.O., DAB No. 1467 at 6-7 (1994)).  The bar to a petitioner collaterally attacking the conviction underlying an exclusion does not preclude review of the facts and circumstances on which the conviction was based.  An ALJ may consider extrinsic evidence to determine the events which formed the basis for the offense.  Narendra M. Patel, M.D., DAB No. 1736 (2000).  The terms “related to” and “relating to” in 42 U.S.C. § 1320a-7 simply mean that there must be a nexus or common-sense connection.

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Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase “relating to” as “deliberately expansive words,” “the ordinary meaning of [which] is a broad one,” and one that is not subject to “crabbed and formalistic interpretation”) (internal quotes omitted); Quayum v. U.S. Dep’t of Health & Human Servs., 34 F.Supp.2d 141, 143 (E.D.N.Y. 1998).

I conclude that there is a nexus between Petitioner’s offense and the delivery of a health care item or service under Medicare or Arizona Medicaid.  Petitioner was convicted of criminal simulation which involved fraudulent prescription transfer requests and/or prescriptions.  The preponderance of the evidence shows that the purpose of Petitioner’s criminal action was to obtain the delivery of diabetic test strips to himself.  The preponderance of the evidence also shows that Petitioner used his status as a pharmacist to facilitate his illegal activity.  Furthermore, the judgment of conviction entered by the state court on October 27, 2021, shows that the court ordered that Petitioner pay $1,000 to the Arizona Attorney General Health Care Fraud and Abuse Section.  IG Ex. 7 at 2.

Petitioner asserts that in Arizona prescriptions are issued for medical marijuana, medication for animals, compounds, weight loss or weight gain drugs, hair growth drugs, fertility drugs, sexual or erectile dysfunction, cosmetics, and cough and cold drugs.  Petitioner asserts that such prescriptions are not covered by the Act.  P. Br. at 6-7.  However, Petitioner offers no evidence in support of the implication that the prescription transfer requests and/or prescriptions that were the basis for his conviction of criminal simulation were for any item or service other than glucose test strips that were for the humans listed on the prescriptions involved.

The elements necessary to trigger mandatory exclusion pursuant to section 1128(a)(1) of the Act are satisfied in this case.  The evidence shows Petitioner was convicted of a criminal offense and the conduct that formed the basis of his conviction was related to the delivery of a health care item under Medicare or the Arizona Medicaid program.  Accordingly, I conclude that there is a basis for Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act.

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

I have concluded that there is a basis to exclude Petitioner pursuant to section 1128(a)(1) of the Act.  Therefore, the minimum period of exclusion authorized by Congress in section 1128(c)(3)(B) of the Act is five years.  Nenice Marie Andrews, DAB No. 2656 at 5 (2015); Scott D. Augustine, DAB No. 2043 at 13-14 (2006).

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5.  Petitioner’s exclusion for five years is not unreasonable as a matter of law.

Congress has established a five-year minimum period of exclusion for exclusions pursuant to section 1128(a) of the Act.  Act § 1128(c)(3)(B).  Pursuant to 42 C.F.R. § 1001.2007(a)(2), when the IG imposes an exclusion in accordance with section 1128(a) of the Act for the statutory minimum period of five years, there is no issue of whether the period of exclusion is unreasonable.

Accordingly, I conclude that Petitioner’s exclusion for a period of five years is not unreasonable as a matter of law.  Petitioner’s exclusion is effective June 20, 2022, 20 days from the date of the May 31, 2022 IG 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 other federal health care programs for a minimum of five years, effective June 20, 2022.

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Endnotes

¹ Citations are to the 2021 revision of the Code of Federal Regulations, unless otherwise stated.

² The pronouns he, him, and his are used in this decision as Petitioner expressed no preference.

³ There is no requirement that a party admit or concede that evidence is true for the evidence to be admissible.  The nature of fact finding is determining which allegations of fact are more likely true than not based on the evidence presented.

⁴ Ariz. Rev. Stat. § 13-2004(A) provides:

A person commits criminal simulation if, with intent to defraud, such person makes, alters, or presents or offers, whether accepted or not, any object so that it appears to have an antiquity, rarity, source, authorship or value that it does not in fact possess.

Available at https://www.azleg.gov.

⁵ Petitioner waived the right to cross-examine the authors or creators of these three documents by waiving an oral hearing.