Jessica Hayes-Cook, CR6276 (2023)

DECISION

Petitioner, Jessica Hayes-Cook, 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 November 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 October 31, 2022, that she¹  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 Montana First

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Judicial District Court, Lewis and Clark 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 December 29, 2022.  On January 3, 2023, the case was assigned to me to hear and decide.  I convened a telephone prehearing conference on January 19, 2023, the substance of which is memorialized in my Prehearing Conference Order and Schedule for Filing Briefs and Documentary Evidence issued on January 19, 2023 (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 February 15, 2023, the IG filed a brief and IG Exs. 1 through 5.  On March 20 and 22, 2023, Petitioner filed a brief (P. Br.) and P. Exs. 1 through 4.  The IG filed a reply brief (IG Reply) on April 4, 2023. 

Petitioner did not object to my consideration of IG Exs. 1 through 5, and they are admitted and considered as evidence. 

The IG objects to the admission of P. Ex. 4 as evidence on the grounds that the exhibit contains irrelevant information.  IG Reply at 8.  Pursuant to 42 C.F.R. § 1005.17,²  the administrative law judge (ALJ) determines whether evidence should be admitted to the record.  The Federal Rules of Evidence are not binding except as guidance that the ALJ may choose to apply.  42 C.F.R. § 1005.17(b).  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.  Relevant evidence is evidence that has any tendency to make a fact of consequence more or less probable.  Fed. R. Evid. 401. 

P. Ex. 4 contains more than 30 letters or email statements attesting to Petitioner’s quality of care and upstanding character.  The documents may not be admitted as evidence because they are unsworn.  42 C.F.R. § 1005.16(a) (testimony of witnesses must be under oath or affirmation).  The letters are also not admissible as evidence because they are not relevant to any issue that I may decide in this case.  42 C.F.R. § 1005.17(c).  The letters are not relevant because they do not have any tendency to make a fact of consequence to determining whether there is a basis for exclusion more or less probable.  The letters are

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also not relevant because good character is not a mitigating factor that I may consider in determining whether the period of exclusion is unreasonable.  42 C.F.R. § 1001.102(c).  Further, there is no issue in this case of the reasonableness of the period of exclusion because the IG imposed the minimum five-year period of exclusion authorized by Congress.  Act § 1128(c)(3)(B); 42 C.F.R. §§ 1001.101(a), 1001.2007(a)(2).  P. Exs. 1 through 3 are admitted and considered as evidence. 

II.    Discussion

1. 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)(1) 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 this provision of the Act.  42 C.F.R. § 1001.101(a). 

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 them 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 in extending 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; there is no issue of the reasonableness of the period of exclusion; and aggravating and mitigating factors are not relevant in this case.  Act § 1128(c)(3)(B); 42 C.F.R. §§ 1001.101(a), 1001.2007(a)(2). 

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.  

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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). 

2. Issues

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

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). 

3. 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 her hearing request and I have jurisdiction. 

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. 

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

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 ¶ 5. 

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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 she entered a guilty plea to the criminal offense of Medicaid fraud.  RFH at 1; P. Br. at 2.  However, Petitioner argues that because she withdrew her guilty plea she was not convicted of the offense and mandatory exclusion under section 1128(a)(1) of the Act is not triggered.  RFH at 1-2; P. Br. at 2-6.  The issue to be resolved is whether the preponderance of the evidence shows that Petitioner was convicted of an offense 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 was convicted of a criminal offense, the criminal offense was related to the delivery of an item or service under the Montana Medicaid program, and exclusion is mandatory. 

1. Facts

On May 23, 2022, Petitioner was charged by information filed in the state court with one felony count of Medicaid fraud by a common scheme.  The information alleged that between October 1, 2020, and March 1, 2021, Petitioner engaged in a scheme that resulted in her receiving more than $1,500 in Medicaid payments by submitting misleading claims to Medicaid for psychotherapy services provided to two Medicaid-eligible individuals but the services she provided were not eligible for reimbursement by Medicaid.  The complaint alleged violations of Mont. Code Ann. sections 45-6-313(1)(a) and 45-2-101(8).³    IG Ex. 2. 

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On May 22, 2022, Petitioner signed a plea agreement in which she agreed to plead guilty to the felony charge of Medicaid fraud by common scheme.  IG Ex. 4. 

On June 1, 2022, Petitioner appeared before the state court and pleaded guilty to the charge of Medicaid fraud, common scheme.  Petitioner also appeared before the state court for sentencing on June 1, 2022.  IG Ex. 5 at 1.  The state judge signed the judgment on June 8, 2022.  IG Ex. 5.  The judgment does not specifically state that the state court accepted Petitioner’s guilty plea.  However, the judgment states that “it is the sentence and judgment of this Court.”  IG Ex. 5 at 1.  The judgment subsequently states that the imposition of sentence was deferred for six months.  IG Ex. 5 at 1.  The state court did impose conditions for the deferred sentencing including the payment of restitution of $2,501.82.  IG Ex. 5 at 1-4.  Pursuant to Mont. Code Ann. sections 46-18-201(5) and 46-18-241, restitution is a sentence that will be imposed if a person is found guilty upon a verdict of guilty or a plea of guilty or no contest, and the sentencing court finds that any victim suffered a pecuniary or economic loss.  Therefore, even though the judgment signed June 8, 2022, does not specifically state that the state court accepted Petitioner’s guilty plea and entered a verdict of guilty on June 1, 2022, under the Montana statutes the imposition of restitution was authorized only if Petitioner was convicted pursuant to her guilty plea.  Accordingly, I find and conclude that the preponderance of the evidence shows that on June 1, 2022, the state court accepted Petitioner’s guilty plea, found her guilty, and sentenced her to pay restitution, even though the state court deferred imposition of further sentencing.  I further conclude based on the plain language of the judgment that it was a deferred imposition of sentence not a deferred adjudication.  IG Ex. 5. 

Petitioner filed a motion in the state court dated September 8, 2022, requesting that the remainder of her sentence be terminated, that she be allowed to withdraw her guilty plea, and that the charge against her be dismissed under Mont. Code Ann. sections 46-18-204

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and 46-18-208⁴  P. Ex. 1.  On September 30, 2022, the state court judge found Petitioner had complied with the conditions of her deferred sentence.  The state court ordered that the guilty plea was withdrawn and the charge of Medicaid fraud, common scheme, was dismissed.  P. Ex. 3. 

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2. 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: 

1. 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).  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 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 such as Medicaid. 

1. Petitioner was “convicted” of a criminal offense within the meaning of section 1128(i) of the Act. 

Petitioner argues that she was not convicted of a criminal offense within the meaning of section 1128(i) of the Act and that there is no basis for her exclusion.  P. Br. at 2-6.  Petitioner’s analysis is that she was not convicted because the state court ordered the guilty plea withdrawn, the case dismissed, and the records and data relating to the charge of Medicaid fraud in the criminal docket to be considered confidential criminal information.  P. Br. at 3, 5-6.  Petitioner’s argument is without merit. 

Section 1128(i) of the Act establishes four circumstances when one is considered convicted for purposes of exclusion under the Act.  An individual or entity is considered “convicted” of an offense if: 

1. A judgment of conviction has been entered against one by a federal, state, or local court, even if an appeal is pending or the judgment of conviction or other record has been expunged.  Act § 1128(i)(1). 

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   2. There is a finding of guilt by a federal, state, or local court.  Act § 1128(i)(2). 
   3. A plea of guilty or nolo contendere (no contest) has been accepted by a federal, state, or local court. Act § 1128(i)(3). 
   4. The individual or entity entered a first offender, deferred adjudication, or other arrangement or program where judgment of conviction was withheld.  Act § 1128(i)(4). 

   Petitioner was convicted under at least three of the definitions and arguably the fourth definition. 

   Petitioner was convicted within the meaning of section 1128(i)(1) of the Act.  Petitioner entered a guilty plea to Medicaid fraud, common scheme, and the state court subsequently entered a judgment and sentenced Petitioner to pay restitution while deferring further sentencing.  IG Ex. 5.  I have found that the judgment of the state court was a judgment of conviction as the state court imposed the sentence of restitution while deferring further sentencing.  The state court effectively expunged the record of the conviction in September 2022.  P. Ex. 3.  However, the fact a conviction is expunged is made irrelevant by section 1128(i)(1) of the Act.  

   Petitioner was convicted within the meaning of section 1128(i)(3) of the Act.  She entered a guilty plea.  IG Exs. 4, 5.  Petitioner’s guilty plea was clearly accepted by the state court as the state court imposed restitution and deferred further sentencing.  IG Ex. 5. 

   Petitioner was convicted within the meaning of section 1128(i)(4) of the Act, if one concludes that the June 8, 2022 judgment of the state court reflected a deferred adjudication of guilt rather than simply deferred sentencing.  

   The June 8, 2022 judgment of the state court shows that Petitioner was found guilty by the state court, otherwise there would be no basis for imposing restitution or deferring further sentencing.  Therefore, Petitioner was also arguably convicted on June 1, 2022, within the meaning of section 1128(i)(2) of the Act. 

   Petitioner’s argument that she was not convicted within the meaning of section 1128(i) of the Act is without merit.  The Departmental Appeals Board (Board) has consistently rejected arguments like Petitioner’s, stating that it is the definition of conviction in the Act that controls, even if, under state law one might not be convicted based on entering a deferred adjudication or similar arrangement.  Henry L. Gupton, DAB No. 2058 at 3-6 (2007).  Accordingly, I conclude Petitioner was convicted within the meaning of the Act – the first element required to trigger an exclusion under section 1128(a)(1) of the Act. 

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   2. Petitioner was convicted of a criminal offense related to the delivery of an item or service under the Montana Medicaid program. 

   Petitioner disputes that she was convicted.  She does not deny that her criminal offense was related to the delivery of an item or service under Montana Medicaid.  Petitioner does not deny she was charged with and pleaded guilty to Medicaid fraud and the fraud related to her filing misleading Medicaid claims for providing psychotherapy services to Medicaid beneficiaries.  P. Br. at 2; IG Ex. 2 at 3-4; IG Ex. 4.  The state offense reflects on its face the connection or nexus to the delivery, or non-delivery, of an item or service under Medicaid. 

   The 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.  See, 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).  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 section 1128(a) of the Act simply mean that there must be a nexus or common-sense connection.  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). 

   Filing improper claims with a Medicaid program, as Petitioner concedes she did in this case, has previously been found to be a “program-related offense” and “such financial misconduct is exactly what Congress sought to discourage” through exclusions.  Travers v. Shalala, 20 F.3d 993, 998 (9th Cir. 1994); see also Siegel, DAB No. 1467 at 6-7 (finding a criminal offense resulting in financial loss to a state Medicaid program “related to” the delivery of items or services under that program because it resulted “in less funds

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   being available to pay for covered services” to beneficiaries).  It is well-settled that “a criminal offense resulting in financial loss to a state Medicaid program is ‘related to’ the delivery of items or services under that Medicaid program because it results in ‘less funds being available to pay for covered services’ delivered to Medicaid patients.”  Summit S. Shah, M.D., DAB No. 2836 at 8-9 (2017) (quoting Siegel, DAB No. 1467 at 6-7). 

   I conclude that there is a nexus between Petitioner’s offense and the delivery of a health care item or service under Montana Medicaid.  Petitioner was convicted of Medicaid fraud, which involved submitting claims to the Montana Medicaid program for psychotherapy services, but the services delivered did not qualify for Medicaid reimbursement.  The preponderance of the evidence shows that the purpose of Petitioner’s criminal action was to obtain Medicaid payments for herself by submitting misleading claims for services she was not entitled to have reimbursed.  The preponderance of the evidence also shows that Petitioner used her status as a licensed clinical professional counselor to facilitate her illegal activity.  Furthermore, the judgment of conviction entered by the state court on June 8, 2022, shows that the court ordered that Petitioner pay restitution of $2,501.82 directly to the Montana Medicaid program, which is further evidence of the connection or nexus between Petitioner’s misconduct and Montana Medicaid.  IG Ex. 5 at 3. 

   The evidence shows Petitioner was convicted of a criminal offense and the conduct that formed the basis of her conviction was related to the delivery or failure to deliver a health care service under the Montana Medicaid program – the second and third elements that trigger an exclusion under section 1128(a)(1) of the Act.  All three elements that trigger mandatory exclusion pursuant to section 1128(a)(1) of the Act are satisfied in this case.  Accordingly, I conclude that there is a basis for Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act. 

   Petitioner argues that Petitioner’s exclusion was improper because records and data related to Petitioner’s conviction are “confidential criminal justice information” within the meaning of Mont. Code Ann. section 44-5-103(3) pursuant to the state court order and Mont. Code Ann. section 46-18-204(2).  P. Br. at 3, 5-6; P. Ex. 3.  Petitioner did not object to the admissibility of IG Exs. 2, 4, and 5, and Petitioner placed in evidence P. Ex. 3, all records related to Petitioner’s conviction and subject to confidentiality.  Petitioner cites no authority supporting an argument that her exclusion must be overturned because the IG may have failed to obtain the records of Petitioner’s criminal conviction upon leave of the state court or that the IG was bound to obtain leave of the state court to use those records in this proceeding enforcing section 1128(a) of the Act as mandated by Congress.  Further, the Board has long recognized that Congress adopted the definitions of conviction in section 1128(i) of the Act to ensure that state criminal justice policies related to deferred adjudications and such and expunging criminal records do not prevent one who admits to committing Medicaid fraud from avoiding exclusion.  Carolyn Westin, DAB No. 1381 (1993). 

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

   I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(1) of the Act.  Therefore, the IG must exclude Petitioner for the minimum period of five years required by Congress in section 1128(c)(3)(B) of the Act.  There is no review of the reasonableness of the five-year period of exclusion or any discretion to impose a lesser period.  42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).  

   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); 42 C.F.R. § 1001.102(a).  Pursuant to 42 C.F.R. § 1001.2007(a)(2), when the IG imposes an exclusion under 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 November 20, 2022, 20 days from the date of the October 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 November 20, 2022. 

   ---

   Endnotes

   ¹   The pronouns she and her are used in this decision as Petitioner indicated no other preference. 

   ²   Citations are to the 2021 revision of the Code of Federal Regulations (C.F.R.), unless otherwise stated. 

   ³   Mont. Code Ann. section 45-6-313(1)(a) provides: 

   1. A person commits the offense of medicaid fraud when: 
      1. the person obtains a medicaid payment or benefit for the person or another person by purposely or knowingly making, submitting, or authorizing the making or submitting of a false or misleading medical claim, statement, representation, application, or document to a medicaid agency for a service or item that the person is not entitled to under applicable statutes or rules adopted under Title 2, chapter 4. 

          

         Mont. Code Ann. section 45-2-101(8) provides: 

         “Common scheme” means a series of acts or omissions resulting in a pecuniary loss to the victim of at least $1,500, or $1,500 in value, motivated by a purpose to accomplish a single criminal objective or by a common purpose or plan that results in the repeated commission of the same offense or that affects the same person or the same persons or the property of the same person or persons.  

   Available at https://leg.mt.gov/bills/mca/.  

   ⁴   Mont. Code Ann. section 46-18-204 permits dismissal of a matter after a deferred imposition of a sentence under the following circumstances: 

   1. Whenever the court has deferred the imposition of a sentence and after termination of the time period during which imposition of sentence has been deferred or upon termination of the time remaining on a deferred sentence under 46-18-208: 
      1. for a felony conviction, the court shall strike the plea of guilty or nolo contendere or the verdict of guilty from the record and order that the charge or charges against the defendant be dismissed provided that a petition for revocation under 46-18-203 has not been filed; or
   2. A copy of the order of dismissal must be sent to the prosecutor and the department of justice, accompanied by a form prepared by the department of justice and containing identifying information about the defendant.  After the charge is dismissed, all records and data relating to the charge are confidential criminal justice information, as defined in 44-5-103, and public access to the information may be obtained only by district court order upon good cause shown. 

   Available at https://leg.mt.gov/bills/mca/ (emphasis in the original).  

   Mont. Code Ann. section 46-18-208 permits the prosecutor, defendant, or the defendant’s attorney to file a motion to terminate the remaining portion of a deferred sentence if the defendant has served two years or one-half of the sentence, whichever is less, and demonstrated compliance with supervision requirements.