Elizabeth Ann Prophitt, DAB CR6314 (2023)

DECISION

Petitioner, Elizabeth Ann Prophitt, is excluded from participation in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(4) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(4)), effective December 20, 2022.  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

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I.  Background

The Inspector General of the United States Department of Health and Human Services (IG) notified Petitioner by letter dated November 30, 2022, that she² was excluded from participation in Medicare, Medicaid, and all federal health care programs for five years.  The IG cited section 1128(a)(4) 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 United States District Court, Eastern District of Michigan, Southern Division (district court), of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  IG Exhibit (IG Ex.) 5 at 1.

Petitioner timely filed a request for hearing (RFH) on February 2, 2023.  On February 6, 2023, the case was assigned to me to hear and decide.  I convened a telephone prehearing conference on March 1, 2023, the substance of which is memorialized in my Prehearing Conference Order and Schedule for Filing Briefs and Documentary Evidence issued on March 1, 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 March 31, 2023, the IG filed a brief (IG Br.) and IG Exs. 1 through 5, 7, and 8.  No IG Ex. 6 was filed.³  On May 1, 2023, Petitioner filed her affidavit, which is treated as Petitioner’s testimony and her brief (P. Br.), and Petitioner’s exhibits (P. Exs.) 1 through 3.  On May 17, 2023, the IG filed a notice that it waived filing its reply brief.

No objections were made to my consideration of the offered exhibits.  Nevertheless, I must exclude irrelevant or immaterial evidence.  42 C.F.R. § 1005.17(c).  An administrative law judge (ALJ) determines the admissibility of evidence and is not bound

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by the Federal Rules of Evidence but refers to them as appropriate.  42 C.F.R. § 1005.17(a)-(b).  Under the Federal Rules of Evidence, the test for whether evidence is relevant is whether the evidence has “any tendency to make a fact more or less probable than it would be without the evidence;” and “the fact is of consequence in determining the action.” Fed. R. Evid. 401.  The only issue before me is whether there is a basis to exclude Petitioner.  The reasonableness of the period of exclusion, which is the minimum period authorized in this case, is not at issue before me.  42 C.F.R. § 1001.2007(a)(1), (2).  The elements that trigger exclusion under section 1128(a)(4) of the Act are whether:  Petitioner was convicted of a felony criminal offense under federal or state law; the offense occurred after August 21, 1996; and the offense is related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  Act § 1128(a)(4); 42 C.F.R. § 1001.101(d).

IG Exs. 1 through 5 contain evidence relevant to the determination of whether the elements necessary for exclusion of Petitioner under section 1128(a)(4) of the Act are satisfied.  IG Exs. 1 through 5 are relevant within the meaning of Fed. R. Evid. 401, and the exhibits are admitted and considered as evidence.  The IG stated in its exhibit list that it is not presenting IG Ex. 6, so no admissibility determination is needed.  IG Exs. 7 and 8 contain evidence of the status of Petitioner’s registered nurse license.  This evidence is not material to determining whether there is a basis to exclude Petitioner under section 1128(a)(4) of the Act.  There are no aggravating and mitigating factors relevant where, as here, the IG imposes the minimum authorized five-year exclusion.  Therefore, IG Exs. 7 and 8 are not relevant and are not admitted as evidence.

P. Exs. 1 through 3 are not admitted as evidence because they are not relevant.  The exhibits do not have a tendency to show that it is more or less likely that Petitioner was convicted of a felony criminal offense, that occurred after August 21, 1996, related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  Petitioner’s affidavit (P. Aff.), which is Petitioner’s testimony, includes relevant evidence and it is admitted and considered as evidence.

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)(4) of the Act, the Secretary must exclude from participation in any federal health care program any individual convicted of a felony criminal offense under federal or state law, that occurred after August 21, 1996, related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  Act

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§ 1128(a)(4).  The Secretary has promulgated regulations implementing this provision of the Act.  42 C.F.R. § 1001.101(d).

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. 5 at 1.

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).  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:

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).

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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 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.

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 has waived an oral hearing and the IG agreed that this matter may be decided on the documentary evidence and the parties’ pleadings.  Prehearing Order ¶ 5.

2.  Section 1128(a)(4) of the Act requires Petitioner’s exclusion from participation in Medicare, Medicaid, and all other federal health care programs.

a.  Facts

On December 17, 2019, a grand jury indictment was filed in the district court charging Petitioner with 25 felony counts of knowingly and intentionally obtaining controlled substances by misrepresentation, fraud, forgery, deception, or subterfuge, in violation of 21 U.S.C. § 843(a)(3).  IG Ex. 1.  On July 8, 2021, Petitioner signed a plea agreement in which she agreed to plead guilty to counts one through five of the grand jury indictment.  Petitioner admitted in the plea agreement that from on or about July 1, 2018, through on or about February 12, 2019, she obtained 2,200 vials of Schedule II and IV controlled substances from hospital dispensing machines at the Veterans Administration (VA) hospital where she worked.  She also admitted that she used protected patient information to obtain the controlled substances for purported use for patients.  However, she admitted that she did not obtain the drugs for any legitimate treatment of patients but took the drugs for her personal consumption or diversion of the drugs.  IG Ex. 2 at 2.

On November 9, 2021, the district court imposed judgment accepting Petitioner’s guilty pleas to counts one through five of the grand jury indictment and finding Petitioner guilty of the five counts of obtaining controlled substances by misrepresentation, fraud, forgery, deception, or subterfuge.  The district court dismissed the remaining counts of the

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indictment.  IG Ex. 3 at 1.  The district court sentenced Petitioner to five, three-year terms of probation to run concurrently, and Petitioner was ordered to pay restitution of $1,482.00 and an assessment of $500.  IG Ex. 3 at 2, 5.

The IG notified Petitioner by letter dated December 7, 2021, that the IG was considering Petitioner’s mandatory exclusion from participation in Medicare, Medicaid, and all federal health care programs due to her district court conviction.  IG Ex. 4.  On November 30, 2022, the IG notified Petitioner that she was excluded from participation in Medicare, Medicaid, and all federal health care programs for five years under section 1128(a)(4) of the Act based on her conviction in the district court.  IG Ex. 5 at 1.

b.  Analysis

Section 1128(a)(4) of the Act requires that the Secretary exclude from participation in Medicare, Medicaid, and all federal health care programs any individual or entity:

(1)  Convicted of a felony criminal offense under federal or state law;

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

(3)  The offense was related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

Petitioner does not dispute that on November 9, 2021, pursuant to her guilty plea the federal district court found her guilty of five counts of obtaining controlled substances by misrepresentation, fraud, forgery, deception, or subterfuge in violation of 21 U.S.C. § 843(a)(3).  IG Ex. 3 at 1.  An individual is considered to have been convicted of a criminal offense “when a plea of guilty or nolo contendere [no contest] by the individual or entity has been accepted by a Federal, State, or local court.” Act § 1128(i)(3).  The acceptance of Petitioner’s guilty plea by the district court constitutes a conviction under the Act.  Petitioner was convicted of violations of 21 U.S.C. § 843(a)(3), which authorizes a term of imprisonment up to four years.  21 U.S.C. § 843(d)(1).  A term of imprisonment less than five years but more than one year is a Class E felony.  18 U.S.C. § 3559(a)(5).  The offense of which Petitioner was convicted ended on February 2, 2019.  IG Ex. 3 at 1.  Therefore, I conclude that Petitioner was convicted of a felony criminal offense under federal law which occurred after August 21, 1996, and the first two elements required to trigger an exclusion under section 1128(a)(4) of the Act are satisfied.

Petitioner does not dispute that the offense of which she was convicted is related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, the last element necessary to trigger an exclusion under section 1128(a)(4) of the Act.

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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.  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 and Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998).  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)).

Petitioner was convicted of five counts of obtaining controlled substances by misrepresentation, fraud, forgery, deception, or subterfuge.  Petitioner pleaded guilty to counts one through five of the grand jury indictment which alleged that on or about November 24, 2018, Petitioner obtained vials of hydromorphone, fentanyl, and midazolam.  IG Ex. 1 at 3.  The United States Drug Enforcement Administration classifies hydromorphone and fentanyl as Schedule II controlled substances, and midazolam as a Schedule IV controlled substance.  21 C.F.R. §§ 1308.12(b)(1)(vii), 1308.12(c)(9), 1308.14(c)(40).  Petitioner retrieved vials of these controlled substances by using protected patient information to retrieve the substances from hospital dispensing machines for the purported use on patients.  However, she kept the controlled substances for her own use.  IG Ex. 2 at 2.  As part of her sentence, the district court ordered restitution payable to the VA.  IG Ex. 3 at 5.  The preponderance of the evidence in this case shows that there is a common-sense connection between Petitioner’s conduct of obtaining vials of hydromorphone, fentanyl, and midazolam intended for patient use from VA hospital dispensing machines and the unlawful distribution, prescription, or dispensing of a controlled substance.

Accordingly, I conclude that the elements necessary to trigger exclusion pursuant to section 1128(a)(4) of the Act are satisfied in this case, and that Petitioner’s exclusion is mandated by section 1128(a)(4) of the Act.

3.  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)(4) 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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4.  Petitioner’s exclusion for five years is not unreasonable as a matter of law, and I have no authority to change the effective date of the period of exclusion.  

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 is unreasonable.  Accordingly, I conclude that Petitioner’s exclusion for a period of five years is not unreasonable as a matter of law.

Petitioner states she requested a hearing because she felt it was unreasonable for 11 months to elapse between the IG notice of intent to exclude her and the actual notice of exclusion.  P. Aff. at 1.  It is regrettable that nearly a year passed between the IG’s notice of intent to exclude and the issuance of the notice of exclusion, which amounted to a one-year delay in the running of the period of exclusion.  However, that delay is not grounds for any relief for Petitioner because I have no authority to change the effective date of the running of a period of exclusion in this case.  IG Ex. 4; IG Ex. 5 at 1.  Section 1128(c)(1) of the Act provides that exclusion under section 1128 of the Act shall be effective at “such time and upon such reasonable notice to the public and to the individual or entity excluded as may be specified in regulations . . . .” 42 U.S.C. § 1320a-7(c)(1).  The Secretary has required by regulation that the IG send written notice of the exclusion to the affected individual or entity.  42 C.F.R. § 1001.2002(a).  The Secretary's regulations further provide that the exclusion will be effective 20 days from the date of the notice.  42 C.F.R. § 1001.2002(b).  Both the context and plain language of the regulation are consistent with my conclusion that the notice referred to in 42 C.F.R. § 1001.2002(b) is the written notice required by 42 C.F.R. § 1001.2002(a).  The Secretary's regulations do not give me discretion to either review or change the effective date of Petitioner's exclusion and I may not refuse to follow the Secretary's regulations.  42 C.F.R. § 1005.4(c)(1).  The Departmental Appeals Board has addressed the issue and concluded that ALJs and the Board have no authority to change the effective date of the running of the period of exclusion.  Thomas Edward Musial, DAB No. 1991 at 3 (2005) (and cases cited therein).  I also have no authority to grant Petitioner any equitable relief.  Matthew J. Girardy, DMD, DAB No. 2987 at 7 (2020).  Congress required Petitioner’s exclusion pursuant to section 1128(a)(4) of the Act, the regulation establishes the effective date of a mandatory exclusion, and those requirements are binding upon me.  I am bound to follow the Act and the Secretary’s regulations.  42 C.F.R. § 1005.4(c)(1).

Exclusion is effective 20 days from the date of the IG’s written notice of exclusion to the affected individual or entity.  42 C.F.R. § 1001.2002(b).  The IG’s notice to Petitioner is dated November 30, 2022.  IG Ex. 5 at 1.  Accordingly, the effective date of Petitioner’s exclusion is December 20, 2022.

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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 December 20, 2022.

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Endnotes

¹  Pursuant to 42 C.F.R. § 1001.3001(a), Petitioner may apply for reinstatement only after the period of exclusion expires.  Reinstatement is not automatic upon completion of the period of exclusion.  Citations are to the 2022 revision of the Code of Federal Regulations, unless otherwise stated.

²  The pronouns she, her, and hers are used in this decision as Petitioner expressed no preference.

³  The IG did not file an exhibit list as required by the Prehearing Order, and IG Ex. 5 was not marked as required by Civil Remedies Division Procedures ¶¶ 14b-c.  Therefore, on April 5, 2023, I issued an order rejecting IG Ex. 5 and directing the IG to file an exhibit list and clarify whether the IG intended to file an IG Ex. 6.  On April 5, 2023, the IG filed its exhibit list that lists and describes IG Exs. 1 through 5, 7 and 8, and states that no IG Ex. 6 is filed.  The IG also filed a “corrected” version of IG Ex. 5.  Unfortunately, the corrected version of IG Ex. 5 is marked in the lower right-hand corner as “I.G. Ex. 6” rather than IG Ex. 5.  I recognize the incorrect marking is a clerical error and I determined not to require further correction by the IG.