Drew Toriano Armstead, DAB CR6382 (2023)

DECISION

Petitioner, Drew Toriano Armstead, 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 April 20, 2023.  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 U.S. Department of Health and Human Services (IG) notified Petitioner by letter dated March 31, 2023, that he¹ 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 19th Judicial District Court, Parish of East Baton Rouge, Louisiana (state court), of a criminal offense related

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to the delivery of an item or service under Medicare or a state health care program.  IG Exhibit (Ex.) 1 at 1.

Petitioner timely filed a request for hearing (RFH) on May 3, 2023.  On May 11, 2023, the case was assigned to me to hear and decide.  I convened a telephone prehearing conference on June 1, 2023, the substance of which is memorialized in my Prehearing Conference Order and Schedule for Filing Briefs and Documentary Evidence issued on June 5, 2023 (Prehearing Order).

On July 13, 2023, the IG filed a motion for summary judgment, supporting brief, and IG Exs. 1 through 4.  On August 30, 2023, Petitioner timely filed a brief in opposition (P. Br.) to the IG’s motion with Petitioner’s exhibit (P. Ex.) 3, but no P. Exs. 1 and 2.  The IG filed a waiver of reply on September 18, 2023.  Neither party objected to the opposing party’s exhibits.  CMS Exs. 1 through 4 and P. Ex. 3 are admitted as evidence.

II.  Discussion

A.  Applicable Law

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

Pursuant to section 1128(a) 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).²

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

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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.  Accordingly, aggravating and mitigating factors are not relevant in this case.

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:

Whether the IG has a basis for excluding an individual or entity from 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 request for hearing, 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.  Summary judgment 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

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

Summary judgment is appropriate in an exclusion case when there are no disputed issues of material fact and when the undisputed facts, clear and not subject to conflicting interpretation, demonstrate that one party is entitled to judgment as a matter of law.  Tanya A. Chuoke, R.N., DAB No. 1721 (2000); David A. Barrett, DAB No. 1461 (1994); Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367 (1992); Catherine L. Dodd, R.N., DAB No. 1345 (1992); John W. Foderick, M.D., DAB No. 1125 (1990).  When the undisputed material facts of a case support summary judgment, there is no need for a full evidentiary hearing, and neither party has the right to one.  Surabhan Ratanasen, M.D., DAB No. 1138 (1990); Foderick, DAB No. 1125.

In opposing a properly supported motion for summary judgment, the nonmovant must allege facts that show there is a genuine dispute of material fact that affects the proponent’s prima facie case or that might establish a defense.  The nonmovant may not rely upon mere allegations or denials to defeat a properly supported motion for summary judgment.  To defeat a properly supported motion for summary judgment and proceed to a trial, the nonmovant must show there is a genuine dispute as to a material fact that requires determination by the fact finder.  On summary judgment, the judge does not weigh the evidence or attempt to determine the truth.  Rather, the judge accepts the nonmovant’s evidence as true and draws all permissible inferences in the nonmovant’s favor.  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-57 (1986).

There are no genuine disputes of material fact in this case.  The undisputed facts show that Petitioner was convicted pursuant to his guilty plea of an offense related to the delivery of an item or service under the Louisiana Medicaid program.  The IG did not extend Petitioner’s exclusion beyond the minimum mandatory five years and, as a matter of law, no aggravating or mitigating factors may be considered.  Petitioner’s arguments that there are mitigating factors and that, if he is to be excluded, it should be a permissive exclusion with a shorter period of exclusion, are issues of law that must be resolved against him.

Accordingly, I conclude that summary judgment is appropriate.

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

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a.  Undisputed Facts

The following material facts are not disputed, and any inferences are drawn in Petitioner’s favor on summary judgment.

On March 3, 2020, a “felony bill of information” (information) was filed against Petitioner in the state court, charging Petitioner with two counts of Medicaid fraud and two counts of filing and/or maintaining false public records.  CMS Ex. 2; P. Br. at 1-2 (document page counter).

State court records show that on September 13, 2022, one count of Medicaid fraud from the information was amended to misdemeanor theft and Petitioner pleaded guilty to the amended charge pursuant to a plea agreement.  The remaining charge of Medicaid fraud and two charges of filing and/or maintaining false public records were dismissed.  The state court accepted Petitioner’s guilty plea.  The state court deferred imposition of sentence for six months and placed Petitioner on unsupervised probation, subject to conditions including that Petitioner pay approximately $23,000 to the Louisiana Department of Health.  CMS Exs. 2, 3 at 1; P. Br. at 2-3 (document page counter).

Petitioner placed in evidence the stipulated civil money judgment Petitioner agreed to as part of his plea agreement in the state court.  In the stipulated civil money judgment Petitioner agreed to and was ordered by the state court to pay restitution of $23,982.50, which included:

$13,982.50 in actual damages to the Louisiana Medicaid Program as restitution arising from the commission of various schemes to defraud the Louisiana Medicaid Program during the operation of [Petitioner’s] Medicaid business, Destined for a Change, Inc., between the years of 2017 and 2019 and civil monetary penalties in the amount of $10,000.00 . . . payable to the Louisiana Department of Justice arising from a criminal investigation and subsequent prosecution . . . .

P Ex. 3 at 1, 3 (emphasis in original) (document page counter); P. Br. at 2 (document page counter).

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

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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.

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)).  There is no dispute that the state court accepted Petitioner’s guilty plea to a charge of misdemeanor theft.  IG Ex. 2 at 1.  The state court’s acceptance of Petitioner’s guilty plea constitutes a conviction of a criminal offense for purposes of exclusion under section 1128(a)(1) of the Act.  Act § 1128(i)(3).  Therefore, the first element triggering exclusion under section 1128(a)(1) of the Act is satisfied in this case.

Congress requires that Petitioner be excluded if he was convicted of an offense related to the delivery of an item or service under Medicare or a state health care program – the second and third elements necessary to trigger exclusion under section 1128(a)(1) of the Act.  The evidence does not show that the charge of misdemeanor theft of which Petitioner was convicted specifically alleged that the criminal conduct was related to the delivery of an item or service under Louisiana Medicaid.  Appellate panels of the Departmental Appeals Board (the Board) have 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 an exclusion pursuant to section 1128(a) of the Act.  Rather, an ALJ and the Board must determine whether there is a commonsense connection or nexus between the offense and the delivery of a health care item or service.  An ALJ and the Board consider evidence as to the nature of the offense and the facts that were the basis for the conviction.  Kimbrell Colburn, DAB No. 2683 at 5 (2016); Scott D. Augustine, DAB No. 2043 at 5-6 (2006); Berton Siegel, D.O., DAB No. 1467 at 6-7 (1994); Dewayne Franzen, DAB No. 1165 (1990).  An ALJ may also use extrinsic evidence to “[fill] in the circumstances surrounding the events which formed the basis for the offense of which Petitioner was convicted.”  Narendra M. Patel, M.D., DAB No. 1736 at 7 (2000), aff’d, Patel v.

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Thompson, 319 F.3d 1317 (11th Cir. 2003), cert. denied, 539 U.S. 959 (2003).  In Patel, the Board specifically rejected the position that all elements necessary for exclusion must be found in the record of the state criminal court.  Id. at 10.  The terms “related to” and “relating to” in section 1128(a) of the Act simply mean that there must be a nexus or commonsense 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).  Based on these prior Board decisions, it is necessary for me to consider not only the charge of which Petitioner was convicted and related court records, but also all the extrinsic evidence of record that shows the basis for the charge.  In deciding this case on summary judgment, I rely only upon the undisputed facts and draw all reasonable inferences in Petitioner’s favor.  I conclude that there is a nexus between Petitioner’s offense and the delivery of a service under Louisiana Medicaid based on the following:

Petitioner was originally charged with two counts of Medicaid fraud by submitting for payment numerous false or fraudulent claims to Louisiana Medicaid for services furnished to numerous Medicaid recipients.  IG Exs. 2, 4.  The first count of Medicaid fraud was amended to misdemeanor theft as part of Petitioner’s plea agreement and that is the charge of which he stands convicted.  IG Ex. 2, 3; P. Ex. 3.

The state court ordered that Petitioner pay restitution to the Louisiana Department of Health.  IG Ex. 3 at 1.

In the Stipulated Civil Monetary Judgement, signed by Petitioner and his counsel and submitted as P. Ex. 3, it is clearly stated in no uncertain terms that the restitution to be paid by Petitioner to Louisiana Medicaid was for “actual damages to the Louisiana Medicaid Program” due to “the commission of various schemes to defraud the Louisiana Medicaid Program during the operation of [Petitioner’s] Medicaid business . . . between 2017 and 2019. . . .”  P. Ex. 3 at 1.

The information (IG Ex. 2), state court minute entry (IG Ex. 3), and investigator’s affidavit supporting the information (IG Ex. 4) show that there was a loose nexus between Petitioner’s alleged Medicaid fraud and the amended charge of misdemeanor theft of which Petitioner was convicted.  Whether the IG’s evidence shows the nexus by a preponderance of the evidence need not be resolved because P. Ex. 3 establishes by a preponderance of the evidence the nexus between the criminal conduct of which Petitioner was convicted and fraud committed against Louisiana Medicaid.

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I conclude that there is a nexus between Petitioner’s criminal conviction and the delivery of a service under Louisiana Medicaid.  Therefore, the second and third elements triggering exclusion under section 1128(a)(1) of the Act are satisfied.

Accordingly, based upon the undisputed facts, I conclude that there is a basis for Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act.

4. The IG had no discretion to exclude Petitioner under the permissive exclusion provisions of section 1128(b) of the Act rather than the mandatory exclusion provisions of section 1128(a) of the Act.  

Petitioner argues that the IG should not have excluded him under the mandatory exclusion provisions of section 1128(a) of the Act.  Petitioner argues that, if there is a basis for exclusion, the IG should have used the permissive exclusion authority under section 1128(b) of the Act.  P. Br. at 2-4.  Petitioner’s argument is contrary to law.  If mandatory exclusion under section 1128(a) of the Act is triggered, the IG has no discretion to impose a permissive exclusion under section 1128(b) of the Act.  The Board has been consistent that the IG must exclude under section 1128(a) of the Act even if an individual’s conduct could be a basis for permissive exclusion under section 1128(b) of the Act.  Gregory J. Salko, M.D., DAB No. 2437 at 4 (2012), citing Timothy Wayne Hensley, DAB No. 2044 at 16 (2006) (and cases cited therein); Craig Richard Wilder, DAB No. 2416 at 7 (2011); Lorna Fay Gardner, DAB No. 1733 at 6 (2000).  Congress required Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act and that requirement is binding upon the Secretary, the IG, the Board, and me.³

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

Congress established five years as the 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.

Petitioner argues that “mitigating factors exist,” which he would present at a hearing in this matter.  P. Br. at 2.  However, I am only permitted to consider mitigating factors if the IG considered aggravating factors to extend the period of exclusion beyond the mandatory minimum of five years.  42 C.F.R. § 1001.102(c).  Here, the IG did not consider any aggravating factors to extend the period of exclusion beyond the five-year mandatory minimum.  Accordingly, mitigating factors are wholly irrelevant to the present matter.

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

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 April 20, 2023.

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Endnotes

¹ The pronouns he, his, and him are used as Petitioner indicated no preference.

² Citations are to the 2022 revision of the Code of Federal Regulations (C.F.R.), unless otherwise stated.

³ Petitioner mentioned in his request for hearing but not his brief that the Louisiana Department of Health and Hospitals was pursing an exclusion of Petitioner, I infer from Louisiana Medicaid and possibly other state programs.  RFH at 1 (document page counter).  Petitioner does not assert that fact is a basis for any relief in this forum.  The IG acting under federal law is mandated by Congress to exclude based on the facts of this case.  Petitioner cites no authority to support an argument that the fact that the state is taking action against Petitioner under state law has any impact on the IG acting pursuant to federal law.