Chaim Charles Steg, CR6295 (2023)

DECISION

I sustain the determination by the Inspector General (IG) to exclude Petitioner, Chaim Charles Steg, from participating in Medicare and other federally funded healthcare programs for a minimum period of 15 years.  Petitioner’s conviction of a crime relating to patient neglect or abuse mandates his exclusion.  Social Security Act (Act), § 1128(a)(2).  Evidence of aggravation and the absence of mitigating evidence justifies a 15-year exclusion.  42 C.F.R. § 1001.102(b)(3),(5).  

I.    Background

Petitioner requested a hearing to challenge both the basis for and the reasonableness of the IG’s exclusion determination.  The IG filed a brief, a reply brief and eight exhibits, identified as IG Ex. 1-IG Ex. 8.  Petitioner filed a brief, subsequently amended, and ten exhibits, identified as P. Ex. 1-P. Ex. 10.¹ 

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Petitioner offered his testimony as an affidavit, identified as P. Ex. 2.  He also requested an in-person hearing, evidently to confirm his testimony on the record.  I explain below why Petitioner’s affidavit is inadmissible and irrelevant and why an in-person hearing is not necessary to decide this case. 

I receive into evidence IG Ex. 1-IG Ex. 8, and P. Ex. 1 and P. Ex. 3-10.  I exclude P. Ex. 2. 

II.    Issues, Findings of Fact and Conclusions of Law

1. Issues

The issues are whether section 1128(a)(2) of the Act mandates Petitioner’s exclusion and whether the IG’s exclusion determination is reasonable. 

2. Findings of Fact and Conclusions of Law

1.  Grounds for exclusion

Section 1128(a)(2) of the Act mandates the exclusion of any individual who is convicted of a criminal offense relating to neglect or abuse of a patient in connection with the delivery of a health care item or service.  The evidence supports the IG’s determination to exclude Petitioner pursuant to this section’s mandatory exclusion requirements. 

On June 2, 2021, Petitioner pleaded nolo contendere in a Pennsylvania state court to three misdemeanor charges of reckless endangerment.  IG Ex. 6.  An affidavit of probable cause supported these charges.  IG Ex. 5 at 4-6.  Petitioner, through his counsel, acknowledged that the allegations stated in the affidavit, if proven, would establish the crimes to which he entered his nolo contendere plea.  IG Ex. 7 at 14. 

Section 1128(i)(3) of the Act defines “convicted” to include any plea of nolo contendere that is accepted by a state or federal court.  Petitioner’s nolo contendere plea had the identical effect for purposes of determining whether he was convicted of a section 1128(a)(2) crime as if he had entered a guilty plea or if he had been found guilty by a jury after a trial. 

The exclusion mandate of section 1128(a)(2) derives from conviction of a crime as is defined by that section.  Because the exclusion is derivative, an individual may not challenge an exclusion determination made pursuant to the section by alleging innocence of the crime for which that person was convicted.  Nor may the excluded individual attempt to explain away the nature of the crime by offering evidence to counter the official records from which the conviction derives.  42 C.F.R. § 1001.2007(d); Travers v. Sullivan, 801 F. Supp. 394, 403 (E.D. Wash. 1992), aff’d, 20 F.3d 993 (9th Cir. 1994);

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Lyle Kai, R.Ph., DAB No. 1979 at 6 (2005), aff’d, Kai v. Leavitt, 2006 Dist. LEXIS 118564 (D. Haw. July 17, 2006); Stephen Caplan v. Thompson, CIV No. 04-00251 (D. Haw. Dec. 17, 2004). 

The affidavit of probable cause explains in detail the elements of Petitioner’s conviction.  It provides an unassailable fact basis for finding that Petitioner’s conviction was of patient neglect or abuse within the meaning of section 1128(a)(2) of the Act.  Narendra M. Patel, M.D., DAB No. 1736 (2000); Bruce Lindberg, D.C., DAB No. 1280 (1991). 

The affidavit alleges that Petitioner was regional director of operations at a nursing facility, Saint Francis Center for Rehabilitation and Healthcare (St. Francis), located in Darby, Pennsylvania.  IG Ex. 5 at 4.  It charges that Petitioner’s reckless and unjustified decision-making made in his capacity of regional director caused serious bodily injury to three St. Francis residents, eventually resulting in their deaths.  Id.  The three separate counts of reckless endangerment to which Petitioner entered nolo contendere pleas relate directly to the fatal injuries suffered by these three residents and described in the probable cause affidavit.  IG Ex. 2; IG Ex. 5 at 4. 

The probable cause affidavit identifies the three residents by initials as “B.W.”, “O.D.”, and “L.C.” IG Ex. 5 at 4-5.  The affidavit alleges that all three of these residents suffered from conditions that should have been identified and routinely treated by the St. Francis staff.  However, all three residents were neglected and eventually died from their untreated conditions.  Id.  The affidavit alleges that these residents’ deaths were not isolated incidents but rather, were the consequence of systemic failures to provide appropriate care.  Id. 

B.W. died from an infection caused by massive fecal obstruction in her colon and dehydration that staff at St. Francis failed to properly identify and treat.  O.D. died from septic shock and dehydration while suffering from improperly treated Stage IV pressure ulcers that exposed his tendon and bone.  L.C. died from a bacterial infection.  She suffered from a sacral wound that was not discovered by the staff until it had penetrated to the deeper structures of her body and was in the later stages of the wound process.  IG Ex. 5 at 4-5. 

The probable cause affidavit draws a direct connection between Petitioner’s decision-making and the deaths of the three residents: 

Despite making multi-million dollar annual profits, . . . [Petitioner], as Regional Director of Operations at St. Francis, recklessly chose not to adequately invest in adequate staffing and did not adjust other operational factors within his control to mitigate the ongoing staffing crisis.  St Francis was understaffed on a daily basis for months at a time and much of the staff that they did have was inexperienced and not sufficiently trained.  The

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facility suffered from incredibly high turnover amongst the nursing staff and relied heavily on outside agency caretakers who were unfamiliar with St. Francis residents and procedures. 

IG Ex. 5 at 5.  The affidavit alleges further that Petitioner was well aware of the problems at St. Francis but never properly addressed them due to financial concerns.  Id. 

The allegations that are the basis for Petitioner’s nolo contendere plea thus draw a straightforward connection between Petitioner’s actions and the deaths of three residents at St. Francis.  Petitioner’s convictions relate to patient neglect or abuse within the meaning of section 1128(a)(2) because his decisions as Regional Director of St. Francis had a direct impact on the neglect suffered by the residents.  Those decisions were also directly related to the delivery, or in this case, the non-delivery, of health care services to the residents.  Stated succinctly, the allegations to which Petitioner entered his plea are that these residents suffered needlessly and likely died due to Petitioner’s decisions that deprived them of necessary and appropriate care. 

I have considered Petitioner’s arguments and find them to be unavailing.  First, Petitioner characterizes the allegations in the probable cause affidavit as unproven and asserts that he never admitted to them.  Informal Brief of Petitioner (Petitioner’s brief) at 3.  Rather, according to Petitioner, he merely acknowledged that the allegations – if proven – would support his plea. 

This assertion is irrelevant because a nolo contendere plea has the same effect under section 1128 of the act as does a plea of guilty or a conviction by a jury.  Act, § 1128(i)(3).  Petitioner was convicted of crimes when he entered his plea.  The facts and conclusions delineated in the probable cause affidavit describe exactly the crimes of which Petitioner was convicted.  He may not now wish them away by asserting that he merely pled nolo contendere to them. 

Indeed, a nolo contendere plea – while it is not an explicit admission of guilt – is a statement by a defendant that he does not contest the allegations of criminal conduct to which he is entering a plea.  While the defendant may not admit his guilt, he is barred legally from denying it as well.  NO CONTEST Definition & Legal Meaning, The Law Dictionary, (last accessed June 1, 2023, 3:35 P.M.), https://thelawdictionary.org/no-contest/. 

Next, Petitioner asserts that his conviction of three counts of reckless endangerment is insufficient to establish a statutory basis for exclusion because under Pennsylvania law the crime “does not contemplate that a patient was abused or neglected.” Petitioner’s brief at 4. 

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I have no doubt that the crime of reckless endangerment can sweep in all sorts of unlawful conduct that has nothing to do with patient abuse or neglect.  However, it may also include neglect or abuse.  In this case Petitioner was explicitly charged with, and pleaded nolo contendere to, conduct that amounted to patient neglect.  The probable cause affidavit makes that evident.  Patient neglect is thus an integral part of the crimes to which he entered his plea and of which he was convicted. 

Petitioner also asserts that he was not convicted of violating a Pennsylvania statute that directly addresses patient neglect and abuse.  Petitioner’s brief at 4.  From this he apparently contends that I should infer that patient neglect or abuse was not an element of his plea.  However, I need not draw inferences from statutory language to identify the elements of Petitioner’s crime.  As I have stated, the allegations that Petitioner elected not to contest are explicit. 

Petitioner then asserts that his crime does not fall within the reach of section 1128(a)(2) of the Act because he was not involved in direct patient care.  Petitioner’s brief at 4-5.  There is nothing in section 1128(a)(2) of the Act that limits its reach to convictions involving direct patient care.  All that is necessary to establish the requisite nexus between neglect and abuse of a patient in connection with the delivery of a health care item or service is that the criminal conduct be a proximate cause of the neglect or abuse.  That is the case here, because the probable cause affidavit makes it clear that the neglect suffered by the three residents was the direct consequence of Petitioner’s decisions.  Petitioner’s decisions were part of the chain of delivery of health care items or services to the three residents whose care underlies the charges filed against Petitioner.  Kenneth M. Behr, DAB No. 1997 at 9 (2005); Eric DeSimone, R.Ph., DAB No. 1932 (2004). 

Additionally, Petitioner asserts that he was not in fact the regional director of St. Francis.  He asserts that the probable cause affidavit is incorrect.  Petitioner’s brief at 5; see P. Ex. 2.  Indeed, according to Petitioner, he was not even an employee of St. Francis, nor did he make decisions on behalf of that facility.  Ids. 

This argument is an attempt by Petitioner to litigate the facts that underlie his conviction.  As I explain above, such arguments are impermissible and consequently irrelevant.  42 C.F.R. § 1001.2007(d). 

Petitioner’s affidavit is inadmissible because it is an attempt to now litigate the facts leading to his conviction.  See P. Ex. 2.  I do not receive it as evidence for that reason.  I also find no basis to schedule an in-person hearing in this case.  Petitioner has offered nothing as potential testimony that is relevant.  As I have stated, litigating the contents of the probable cause affidavit is out of bounds at this juncture due to Petitioner’s nolo contendere plea and his acknowledgment that the contents of the probable cause affidavit establish the elements of the crime to which he pleaded. 

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Petitioner argues also that a state survey of St. Francis did not find Petitioner personally responsible for the neglect that the survey uncovered.  Petitioner’s brief at 5; see P. Ex. 1.  This is another impermissible attempt by Petitioner to litigate the facts that underlie his conviction.  Moreover, the criminal charges filed against Petitioner did not rely on a state survey of St. Francis.  Rather, the allegations flowed directly from the probable cause affidavit.  IG Ex.5. 

Petitioner contends that he should be immune from exclusion by the IG because his plea agreement with prosecuting authorities in Pennsylvania did not “contemplate his exclusion from . . . Federal health care programs, and this concession was specifically approved by the presiding judge.” Petitioner’s brief at 7; see IG Ex. 4 at 2.  The language in the plea agreement does not restrain the IG from excluding Petitioner.  It has no limiting effect on the duty to exclude.  There is nothing in law that allows a state official to make decisions that limit the mandatory exclusion authority vested by Congress in the Secretary of the United States Department of Health and Human Services. 

2.  Reasonableness of exclusion

An exclusion imposed pursuant to section 1128(a)(2) of the Act must be for a minimum period of five years.  The IG has discretion to impose an exclusion that exceeds the minimum period where there is evidence relating to defined aggravating factors that is not offset by evidence relating to defined mitigating factors.  A regulation enumerates the possible aggravating and mitigating factors.  42 C.F.R. § 1001.102(b), (c). 

The factors are not a formula for establishing the length of an exclusion.  Rather, they operate as rules that establish what evidence is relevant to measuring the trustworthiness of an excluded individual.  Evidence relating to an aggravating or mitigating factor must be weighed to determine what is reasonable.  Evidence that does not relate to an aggravating or mitigating factor is not relevant to deciding what is reasonable and must be excluded.  The ultimate question that I must decide is whether the exclusion period falls within a reasonable range that is intended to protect Medicare beneficiaries, recipients of trust fund benefits, and the programs themselves from an individual who is established to be untrustworthy to provide care.  Sushil Aniruddh Sheth, M.D., DAB 2491 at 5 (2012). 

In evaluating the reasonableness of an exclusion period my role is neither to second-guess nor substitute my judgment for that of the IG.  The IG’s determination is discretionary, and I must sustain that determination unless it is unreasonable on its face or arbitrary.  Juan de Leon Jr., DAB No. 2533 at 5 (2013); Craig Richard Wilder, M.D., DAB No. 2416 at 8 (2011). 

The IG offers evidence addressing two aggravating factors.  The record amply supports the IG’s contentions. 

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First, the acts that resulted in Petitioner’s conviction had a significant adverse physical, mental, or financial impact on one or more program beneficiaries or other individuals.  42 C.F.R. § 1001.102(b)(3).  The probable cause affidavit makes it plain that the three St. Francis residents whose deaths are the predicate for the charges of reckless endangerment suffered as the proximate result of Petitioner’s decisions.  IG Ex. 5 at 4-5. 

Second, Petitioner’s sentence included a period of incarceration.  42 C.F.R. § 1001.102(b)(5).  Petitioner’s sentence included a period of 6 to 23 months of home arrest during which he had to wear an electronic monitor.  IG Ex. 7; IG Ex. 8.  Home arrest is explicitly defined as incarceration at 42 C.F.R. § 1001.2. 

I find the exclusion imposed by the IG – 15 years – falls within a reasonable range.  Evidence relating to the two aggravating factors proved by the IG establishes Petitioner to be manifestly untrustworthy to provide care to program beneficiaries and recipients of program funds.  At the time of his conviction Petitioner offered no defense to allegations that his decisions as regional director of operations at St. Francis resulted in a systemic failure by that facility to provide care that met professional standards.  Nor did he contest allegations that those decisions led to residents suffering grievous harm and injuries that resulted in their deaths.  The seriousness of Petitioner’s crimes and his lack of trustworthiness to provide care may be measured by the fact that he was ordered to be incarcerated for a substantial period of time – up to nearly two years of home confinement. 

Petitioner argues that he was not actually incarcerated, asserting that the commonly accepted meaning of the term “incarceration” is confinement in a jail or a penitentiary.  Petitioner’s brief at 9.  However, and as I have explained, regulations define the term more broadly to include home arrest.  42 C.F.R. § 1001.2. 

Petitioner asserts that there is no basis to conclude that Petitioner’s crimes caused patients’ death.  Petitioner’s brief at 9.  He contends: “if the Pennsylvania criminal authorities believed that . . . [Petitioner’s] conduct caused patient deaths they would not have allowed him to plead to a misdemeanor with no jail time and also would not have agreed that the conviction would not result in his exclusion from the Medicare program.” Id. 

It is unnecessary that I attempt to deconstruct the thinking that led to the plea bargain in Petitioner’s case.  Suffice it to say that the allegations supporting the charges against Petitioner – allegations that Petitioner did not contest – assert explicitly that Petitioner’s decisions led to systemic failures at St. Francis that ultimately caused residents to die.  That is more than sufficient to sustain the IG’s exclusion determination as falling within a reasonable range. 

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Petitioner contends that there is mitigating evidence in his case, asserting that he consulted for six other healthcare facilities besides St. Francis and that none of them manifested any of the problems that were identified in the criminal charges filed against Petitioner.  Petitioner’s brief at 10.  He avers additionally that excluding him would cause him to lose his present employment and would cause his family to experience undue hardship.  Id. 

Neither of these assertions, even if true, conforms to a mitigating factor at 42 C.F.R. § 1001.102(c).  Consequently, they are irrelevant. 

Petitioner contends that his exclusion is unreasonable because he was not convicted of healthcare fraud.  Petitioner’s brief at 11-12.  According to Petitioner, the IG reserves exclusions of 15 years only for extreme cases that typically involve fraud committed against federal healthcare programs.  Id. at 12-15.  He points to a series of determinations that imposed lengthy exclusions against individuals based on their convictions of fraud, receiving kickbacks, or for other financial crimes, and contends that his case is distinguishable because it involved none of the types of crimes identified in those cases. 

The reasonableness of an exclusion period does not depend on comparative analysis with exclusions imposed in other cases.  An exclusion period’s reasonableness stands or falls on its own merits.  Here, and as I have stated, the evidence more than amply supports the exclusion period imposed by the IG. 

Moreover, the determinations cited by Petitioner provide no support for his contention that his exclusion period falls outside of a reasonable range.  It is true that the IG has imposed some lengthy exclusions against individuals who are convicted of a variety of financial crimes.  Those exclusions were justified by the impact of the crimes and by the other factors cited at 42 C.F.R. § 1001.102(b) and (c).  Those exclusions, however, were not imposed pursuant to section 1128(a)(2) but pursuant to other sections of the Act, notably sections 1128(a)(1) (crimes related to the delivery of an item or service under Medicare or other federally funded healthcare programs) or 1128(a)(3) (financial crimes committed against health insurers).  

Section 1128(a)(2) constitutes a separate authority for exclusions based on convictions for patient neglect or abuse.  Comparing an exclusion imposed under section 1128(a)(2) with exclusions imposed for financial crimes under sections 1128(a)(1) and (a)(3) is comparing apples to oranges. 

Petitioner is excluded because his crimes resulted from decisions that he made that resulted in systemic failures of care at the facility that he directed and in injury and death to residents.  His crimes may have been financially motivated in the sense that he was attempting to maximize his facility’s profits, but their impact was directly on the health

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and safety of residents.  The exclusion period is easily justified by considering that impact in light of Petitioner’s motivation.  

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Endnotes

¹  Petitioner identified his amended brief as “P. Ex. 11.” Although I accepted the brief it is not an evidentiary exhibit.