Miguel A. Garcia, DAB No. 3098 (2023)

REMAND OF ADMINISTRATIVE LAW JUDGE DECISION

Miguel A. Garcia (Petitioner), a pharmacist, appealed a decision of an Administrative Law Judge (ALJ) upholding the determination of the Inspector General (I.G.) to exclude Petitioner from participating in all federal health care programs for a mandatory minimum period of five years under section 1128(a)(1) of the Social Security Act (Act).¹    Miguel A. Garcia, DAB CR6222 (2023) (ALJ Decision).  The ALJ concluded that the I.G. had a lawful basis to exclude Petitioner based on a conviction for “criminal simulation” involving fraudulent prescriptions and/or prescription transfer requests.  Petitioner argues that the ALJ erred in concluding that his conviction related to the delivery of an item or service under a covered program.  For the reasons explained below, we remand this matter to the ALJ for further fact-finding on whether Petitioner’s conviction related to the delivery of an item or service under Medicare or Medicaid.

Legal Background

Section 1128(a)(1) of the Act requires the Secretary of the Department of Health and Human Services (Secretary) to exclude from participation in all federal health care programs any individual who has been “convicted of a criminal offense related to the delivery of an item or service under [Medicare] or under any State health care program.”  Act § 1128(a)(1); see also 42 C.F.R. § 1001.101(a).²    An individual is “convicted” within the meaning of section 1128(a)(1) when, among other things, “a judgment of conviction has been entered against the individual . . . by a Federal, State, or local court” or “when a

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plea of guilty . . . by the individual . . . has been accepted by a Federal, State, or local court.”  Act § 1128(i)(1), (3).  “State health care program” is defined by section 1128(h) of the Act to include “a State plan approved under title XIX” of the Act, that is, a state’s federally approved Medicaid program. 

The mandatory minimum period of an exclusion imposed under section 1128(a) is five years.  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).  “Although a mandatory exclusion is based on a criminal conviction, the exclusion’s purpose is ‘not to punish the wrongdoer,’” but rather to “protect federal health care programs and program beneficiaries from ‘untrustworthy providers.’” Kimberly Jones, DAB No. 3033, at 2 (2021) (quoting Edwin L. Fuentes, DAB No. 2988, at 14 (2020), aff’d, No. 4:20-cv-00026, 2021 WL 4341115 (W.D. Va. Sept. 23, 2021)).

An excluded individual may request a hearing before an ALJ, but only on the issues of (i) whether the “basis for” exclusion exists, and (ii) whether “[t]he length of exclusion is unreasonable.”  42 C.F.R. §§ 1001.2007(a), 1005.2(a).  When, as here, the exclusion is imposed under section 1128(a) for the minimum five-year period, the excluded individual may request a hearing only on the issue of whether the I.G. had a basis for the exclusion.  Id. § 1001.2007(a)(1)-(2); Robert C. Hartnett, DAB No. 2740, at 2 (2016).  The underlying conviction is not reviewable or subject to collateral attack on substantive or procedural grounds.  42 C.F.R. § 1001.2007(d).  An ALJ is authorized to schedule a hearing; examine witnesses; and receive, rule on, and exclude or limit evidence.  Id. § 1005.4(b).  “The ALJ will issue an initial decision, based only on the record, which will contain findings of fact and conclusions of law.”  Id. § 1005.20(a).

A party dissatisfied with the ALJ’s initial decision may appeal that decision to the Board.  Id. § 1005.21(a).  Board review of an ALJ decision is, in general, based on the record developed before the ALJ.  See id. § 1005.21(f); Gracia L. Mayard, M.D., DAB No. 2767, at 6-8 (2017).  The Board may decline to review the case, or may affirm, reverse, or remand any exclusion determined by the ALJ.  42 C.F.R. § 1005.21(g).

Case Background

Petitioner is a pharmacist licensed in the State of Arizona.  I.G. Ex. 4, at 4.  On July 6, 2020, the Arizona State Board of Pharmacy (Pharmacy Board), pursuant to an “Interim Consent Agreement for Interim Suspension of License and Psychological Evaluation” (Consent Agreement), suspended Petitioner’s pharmacist license for a minimum of six months.  I.G. Ex. 4 (Consent Agreement), at 1, 6, 9.  Petitioner signed the Consent Agreement and, in doing so, agreed to its terms and conditions and relinquished any right to a hearing on all matters set forth in the Consent Agreement.  Id. at 1-2, 9.  Petitioner did not intend his acceptance of the Consent Agreement to constitute an admission of any facts and did not relinquish his right to an administrative hearing concerning matters related to a final disposition of the matter.  Id. at 2.  Petitioner’s interim suspension was

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based on the Pharmacy Board’s “Interim Findings of Fact and Interim Conclusions of Law” set forth in the Consent Agreement.  Id. at 6.

Under the “Interim Findings of Fact,” the Pharmacy Board found that Petitioner worked as a “float pharmacist” with Bashas’ Pharmacy (Bashas’) in Arizona.  Id. at 4.  On or about April 16, 2020, Bashas’ notified the Pharmacy Board that Petitioner had been under investigation for unprofessional conduct involving multiple instances of prescription fraud and impersonating another pharmacist.  Id. at 4-5.  Bashas’ confronted Petitioner with evidence that between February 1, 2020, and April 3, 2020, Petitioner transferred prescriptions for glucose test strips³  to another pharmacy using the names and information of patients for whom no such prescription existed.  Id.  The Consent Agreement did not identify the patients or indicate whether any of them were Medicare or Medicaid beneficiaries.  Bashas’ also confronted Petitioner with evidence that he had falsely created prescriptions for glucose test strips for himself and his wife, neither of whom were identified in the Consent Agreement as Medicare or Medicaid beneficiaries.  Id. at 5.  According to the Consent Agreement, the physician prescribers who allegedly wrote the false prescriptions denied writing or issuing any of them.  Id.  Petitioner admitted to Bashas’ that he fraudulently obtained approximately fifteen boxes of glucose test strips and sold them online.  Id. at 5.  Bashas’ terminated Petitioner on April 17, 2020, for prescription fraud and impersonating another pharmacist.  Id. 

Petitioner acknowledged that the Consent Agreement is a public record and formal action of the Pharmacy Board and would be reported to the National Practitioner Data Bank and the Healthcare Integrity and Protection Data Bank.  Id. at 3.  The Consent Agreement, however, was not a final resolution of the matter.  Id. at 8.  According to the Consent Agreement, Petitioner’s suspension would continue until the Pharmacy Board enters a final order after a formal hearing or a subsequent consent agreement is accepted as a final resolution of the matter.  Id. at 7-8.   

On or about January 12, 2021, Petitioner was charged with three felonies in Pima County, Arizona.  I.G. Ex. 5 (Criminal Complaint). Count one (fraudulent schemes and artifices) alleged that between May 2019 and April 2020, Petitioner engaged in a scheme to defraud and knowingly obtained glucose test strips by means of false or fraudulent pretenses, representations, promises, or material omissions in violation of Arizona law.  Id. at 1.  Count two (aggravated taking of the identity of another person or entity) 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 use their identity for unlawful purposes in violation of Arizona law.  Id. at 2. 

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Count three (forgery) alleged that during the same period, Petitioner offered or presented, whether accepted or not, a forged instrument or one containing false information, specifically “PRESCRIPTION TRANSFER REQUESTS AND/OR PRESCRIPTION(S),” in violation of Arizona law.  Id.   

On or about September 7, 2021, Petitioner agreed to plead guilty to an amended count three, alleging “criminal simulation” in violation of Ariz. Rev. Stat. § 13-2004(A).  I.G. Ex. 6 (Plea Agreement).⁴    The amended count three specified that between May 2019 and April 2020, Petitioner, with the intent to defraud, made, altered, or presented or offered “Prescription Transfer Requests and/or Prescriptions,” so that these items appeared to have a source or authorship that they did not in fact possess.  Id. at 1-2.  As part of the plea agreement, Petitioner agreed to pay investigative costs in the total amount of $1,000 to the Health Care Fraud and Abuse Section of the Arizona Office of the Attorney General.  Id. at 3 (¶ G).  According to the plea agreement, “[a]ll other charges listed in the indictment shall be dismissed at the time of sentencing.”  Id. at 3 (¶ H).  

On October 27, 2021, the Superior Court of Arizona, Pima County (State Court) entered judgment based on Petitioner’s guilty plea and found Petitioner guilty of the amended count three for criminal simulation committed during the period May 1, 2019, through April 1, 2020.  I.G. Ex. 7 (Judgment), at 1.  The State Court designated the offense as a misdemeanor.  Id.  Petitioner was sentenced to probation for eighteen months and ordered to pay certain fees and assessments, including a $1,000 fee to the “Attorney General Health Care Fraud and Abuse Section.”  Id. at 1-2.  The State Court dismissed “all remaining counts and allegations” pursuant to the plea agreement.  Id. at 2.  Nothing in the criminal complaint (I.G. Ex. 5), plea agreement (I.G. Ex. 6), or judgment of conviction (I.G. Ex. 7) linked the fraudulent prescriptions or prescription transfer requests to a Medicare or Medicaid beneficiary.

By letter dated November 4, 2021, the Office of the Arizona Attorney General, Health Care Fraud and Abuse Section, notified the I.G. of Petitioner’s conviction.  I.G. Ex. 2 (Referral).  The letter purported to enclose several documents including:  Arizona Health Care Cost Containment System (AHCCCS)⁵  provider query, signed felony information, sentencing minute entry, probation presentence report, and plea agreement/minute entry.  Id. at 1.⁶    The letter explained that Petitioner was terminated by his former employer (Bashas’) after it learned Petitioner had “taken the identity of another Pharmacist and had

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written several fraudulent prescriptions for diabetic test strips under his wife’s name as well as other patient names.”  Id.  The letter explained that Petitioner had “used the patients’ insurance information to pay for the fraudulent diabetic test strips prescriptions” and that Petitioner “admitted to the offense” and “admitted to selling the diabetic test strips for personal gain.”  Id.  The letter noted that Bashas’ is an Arizona Medicaid provider but did not specify whether Petitioner (i) wrote any of the fraudulent prescriptions in the name of a Medicare or Medicaid beneficiary, or (ii) used the Medicare or Medicaid information of any patient to pay for the fraudulent prescriptions.  See id.  The letter recounted that Petitioner was initially charged with three felonies but pled guilty to an amended count three (criminal simulation), which was designated a misdemeanor by the State Court.  Id. at 1-2.      

By letter dated May 31, 2022, the I.G. notified Petitioner that he was being excluded from participation in all federal health care programs for the mandatory minimum period of five years.  I.G. Ex. 1 (Exclusion Notice), at 1.  According to the I.G., Petitioner was being excluded under section 1128(a)(1) of the Act due to his conviction in the State Court of a criminal offense related to the delivery of an item or service under Medicare or a state health care program (i.e., Medicaid).  Id.

ALJ Proceedings and Decision

Petitioner timely requested an ALJ hearing.  ALJ Decision at 1.  The ALJ convened a prehearing conference during which Petitioner waived an oral hearing and the parties agreed that the matter may be resolved on the written record.  Id. at 2 (citing Prehearing Order ¶ 5).  The I.G. submitted a brief and nine exhibits (I.G. Exs. 1-9), including an amended Ex. 8.  Id.⁷  Petitioner submitted a brief and no exhibits.  Id.  Petitioner objected to the admissibility of I.G. Exs. 2, 3, 4, 5, 8 (amended), and 9 on relevancy and hearsay grounds and because, according to Petitioner, the exhibits contain allegations that Petitioner did not concede or have an opportunity to contest.  Id. at 2-3 (citing Informal Brief of Petitioner at 1-5).  The I.G. filed a reply.  Id. at 2.  The ALJ admitted all of the I.G.’s exhibits (apart from the original I.G. Ex. 8) over Petitioner’s objections.  Id. at 2-3 (finding that the exhibits “contain evidence related to Petitioner’s conviction that is material to the issue of whether Petitioner was convicted of a program related offense” but acknowledging that the ALJ must “decide how much weight to give the evidence”).    

Before the ALJ, Petitioner conceded that he was convicted of a criminal offense but argued that the offense was not program-related and, therefore, did not trigger an exclusion under section 1128(a)(1) of the Act.  ALJ Decision at 6, 9.  The ALJ concluded

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that Petitioner’s criminal offense was program-related and upheld Petitioner’s exclusion under section 1128(a)(1) for the mandatory minimum period of five years.  Id. at 1, 6, 8-10.  Based on the criminal complaint (I.G. Ex. 5), the plea agreement (I.G. Ex. 6), and the judgment of conviction (I.G. Ex. 7), the ALJ found that Petitioner’s criminal simulation conviction “involved prescription transfer requests and/or prescriptions for the purpose of obtaining glucose test strips between about May 1, 2019, and April 1, 2020.”  Id. at 7.  The ALJ noted that this finding is supported by a preponderance of the evidence found in I.G. Exs. 5, 6, and 7.  Id.  

The ALJ further noted that other evidence in the record “is consistent with and supports” this finding, including the Consent Agreement (I.G. Ex. 4).  ALJ Decision at 7.  The ALJ explained that the “interim findings of fact” in the Consent Agreement show that Petitioner falsified prescriptions and/or prescription transfer requests for glucose test strips; that Petitioner fraudulently obtained fifteen boxes of glucose test strips that he later sold online; and that Bashas’ terminated Petitioner for prescription fraud and impersonating another pharmacist.  Id. (citing I.G. Ex. 4).  The ALJ found that the Consent 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.”  Id. at 8.  The ALJ further noted, without discussing the evidence, that “I.G. Exs. 2, 3, and 8 (amended) also allege facts that are consistent with those Petitioner admitted to in the consent agreement . . . .”  Id.⁸ 

The ALJ then turned to the legal analysis.  ALJ Decision at 8-10.  The ALJ concluded that “there is a nexus between Petitioner’s offense and the delivery of a health care item or service under Medicare or Arizona Medicaid.”  Id. at 10.  In this regard, the ALJ found that Petitioner was convicted of criminal simulation which involved fraudulent prescription transfer requests and/or prescriptions; the purpose of Petitioner’s criminal action was to obtain the delivery of glucose test strips for himself; Petitioner used his status as a pharmacist to facilitate his illegal activity; and Petitioner was required to pay $1,000 to the Arizona Attorney General Health Care Fraud and Abuse Section as part of his sentence.  Id.  The ALJ further found that Petitioner offered no evidence that the fraudulent prescriptions and prescription transfer requests that were the basis for Petitioner’s conviction “were for any item or service other than glucose test strips . . . .”  Id.

In concluding that there is a nexus between Petitioner’s criminal simulation offense and the delivery of a health care item or service under Medicare or Arizona Medicaid, the ALJ did not rely on or discuss several of the exhibits the I.G. had submitted to establish

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this nexus, including a prosecution memo (I.G. Ex. 3), investigator’s affidavit (I.G. Ex. 8), and Medicaid claim data (I.G. Ex. 9).  See I.G. Informal Br. at 2-3, 6; I.G. Reply at 3.  While the ALJ admitted each of these exhibits into evidence, the ALJ acknowledged that “not all the allegations of fact in each of the [I.G.’s exhibits] has been admitted or conceded by Petitioner or found as fact by the state court in Petitioner’s criminal proceeding.”  ALJ Decision at 3.

The prosecution memo alleged, among other things, that Petitioner forged multiple prescriptions or prescription transfer requests in his name, his wife’s name, and the names of two other unwitting individuals, one of whom, C.V., was a Medicaid beneficiary.  I.G. Ex. 3 (Prosecution Memo).  Other evidence submitted by the I.G. purported to show that a claim was submitted to Arizona Medicaid for the fraudulent prescription made in the name of C.V., causing a loss to the program in the amount of $123.41.  I.G. Ex. 8 (¶¶ 4-5); I.G. Ex. 9 (Medicaid Claim Data).⁹  Notwithstanding this evidence, the ALJ made no finding that Petitioner forged a prescription for glucose test strips in the name of any Medicaid beneficiary or that Petitioner fraudulently obtained glucose test strips that were billed to or paid for by Arizona Medicaid.     

Petitioner timely requested Board review of the ALJ Decision.

Standard of Review

The Board reviews a disputed issue of fact as to whether the ALJ “decision is supported by substantial evidence on the whole record.”  42 C.F.R. § 1005.21(h).  The Board reviews a disputed issue of law as to whether the ALJ decision “is erroneous.”  Id.  The term “substantial evidence” means “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”  Richardson v. Perales, 402 U.S. 389, 401 (1971) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).

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Analysis

Before the Board, Petitioner concedes that he was convicted of criminal simulation but argues that “the conviction is indisputably not for a program-related offense.”  Notice of Appeal and Brief (P. Br.) at 2.  According to Petitioner, the ALJ erred by:  (i) improperly considering evidence going beyond the four corners of the conviction (id. at 4-6); (ii) concluding that Petitioner’s conviction was program-related without finding actual delivery of an item or service from a program-related provider (id. at 2-4); and (iii) finding that Petitioner’s criminal simulation offense was “for the purpose of obtaining glucose test strips” (id. at 5-6).  The I.G. filed a brief in opposition (I.G. Opp’n), asserting that the Board should affirm the ALJ Decision because it is supported by substantial evidence and free of legal error.  Petitioner had an opportunity to request leave to file a reply but did not do so.  Acknowledgment of Appeal (2/21/2023) at 2, n.1. 

We reject each of Petitioner’s arguments and conclude that (i) evidence other than the plea agreement and criminal judgment may be considered to determine whether the conduct underlying Petitioner’s offense met the elements of section 1128(a)(1); (ii) section 1128(a)(1) does not require a finding of actual delivery of an item or service from a program-related provider; and (iii) the ALJ’s finding that Petitioner’s conviction related to the delivery of glucose test strips is supported by substantial evidence.  While we largely reject Petitioner’s arguments, we find that the ALJ erred by not determining whether the specific offense of which Petitioner was convicted related to the delivery of glucose test strips under Medicare or Medicaid.  Cf. Catherine L. Dodd, R.N., DAB No. 1345, at 4-5 (1992) (“The issue is whether the conviction related to the delivery of an item or service under Medicare or Medicaid, a necessary element under section 1128(a)(1).”).  As the ALJ recognized, section 1128(a)(1) requires the exclusion of any individual or entity (i) convicted of a criminal offense, (ii) where the offense is related to the delivery of an item or service, and (iii) the delivery of the item or service was under Medicare or a state health care program.  ALJ Decision at 8-9 (emphasis added).  The lack of a factual finding on this third element is a legal error.  Accordingly, we remand this matter to the ALJ for further fact-finding on whether Petitioner’s conviction related to the delivery of an item or service under Medicare or Medicaid.

1. The ALJ did not err by considering evidence beyond the plea agreement and judgment of conviction.

Petitioner complains that the ALJ erred by considering evidence beyond the four corners of the conviction.  P. Br. at 2, 4-5 (citing Travers v. Sullivan, 801 F. Supp. 394 (E.D. Wash. 1992)).  Petitioner contends it was improper for the ALJ to “delve into the facts underlying the conviction” and to make factual findings “outside the statute of conviction.”  Id. at 5.  According to Petitioner, the plea agreement was the basis for the conviction, and the ALJ should not have considered evidence beyond the plea agreement

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(I.G. Ex. 6) and criminal judgment (I.G. Ex. 7).  Id. at 4-5.  We reject Petitioner’s argument because it misconstrues Travers and is contrary to Board precedent.

“The Board has repeatedly held that the phrase ‘related to’ within the context of section 1128(a)(1) requires only that a common-sense nexus exists between the offense and the delivery of a health care item or service under the state healthcare program.”  Summit S. Shah, M.D., DAB No. 2836, at 6 (2017) (citing James O. Boothe, DAB No. 2530, at 3 (2013); James Randall Benham, DAB No. 2042, at 5 (2006)); see also Scott D. Augustine, DAB No. 2043, at 5-6 (2006) (collecting cases).  When determining whether the requisite nexus exists to satisfy the elements of section 1128(a)(1), it is well-settled that an ALJ may consider “evidence as to the nature of an offense,” including the “facts upon which the conviction was predicated.”  Shah at 7 (citations omitted). 

ALJs are “not limited to considering the bare elements or labels of the criminal statutes under which the individual was convicted.”  Funmilola Mary Taiwo, DAB No. 2995, at 8 (2020) (citing Shah at 7 (“The Board has long held . . . that an ALJ is free to look beyond the narrow constructs of a state’s criminal statutes.”)).  “[T]he test for whether a common-sense nexus exists is ‘based on all relevant facts’ and ‘not merely a narrow examination of the language within the four corners of the final judgment and order of the criminal trial court.’”  Yolanda Hamilton, M.D., DAB No. 3061, at 10 (2022) (alteration in original) (quoting Shah at 8).  

“Moreover, in evaluating the nature of the offense and predicate for the underlying conviction, ALJs are not limited to considering only those facts established in the underlying criminal proceedings.”  Shelia Ann Reed, DAB No. 3059, at 15 (2022).  “ALJs may, among other things, look to ‘the factual allegations underpinning the offense with which a petitioner was charged and which form the basis for the requisite conviction.’”  Id. (quoting Hartnett, DAB No. 2740, at 7).  “This has led to a body of case law in which the convicted charges displayed no explicit link to a protected health care program, but where additional extrinsic evidence established a nexus under section 1128(a)(l).”  Shah at 8 (collecting cases).

The district court’s decision in Travers v. Sullivan, 801 F. Supp. 394 (E.D. Wash. 1992), is not controlling precedent and, in any event, has no bearing on these issues.¹⁰    The language Petitioner quoted from Travers is taken out of context.  P. Br. at 4-5.  In Travers, a physician was excluded under section 1128(a)(1) after pleading no contest to knowingly filing a false claim for reimbursement under the Medicaid program.  Travers,
801 F. Supp. at 396.  The physician appealed the I.G.’s exclusion determination and

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complained his due process rights were violated when he was “denied the opportunity to collaterally attack the facts underlying his state court ‘conviction.’”  Id. at 403.  The district court rejected the physician’s argument, explaining that under applicable law, the court’s role was to review the validity of the exclusion, not the validity of the underlying conviction.  Id.¹¹    Thus, the district court found no due process violation when the physician was “denied the ability to relitigate the facts underlying his state court ‘conviction.’”  Id.  As the ALJ correctly noted, “[t]he 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 [to] determine whether the crime was program-related.”  ALJ Decision at 3. 

We find no error in the ALJ’s decision to admit into evidence and consider the criminal complaint (I.G. Ex. 5), which is relevant to determining whether the conduct underlying Petitioner’s offense met the elements of section 1128(a)(1).  See, e.g., Hartnett at 7 (rejecting argument that the ALJ erred in finding the requisite nexus between petitioner’s offense and patient neglect or abuse based, in part, on allegations in the underlying criminal complaint); Taiwo at 7-8 (rejecting argument that allegations in criminal complaint cannot be considered in determining whether conduct underlying nurse’s conviction met the elements for exclusion under section 1128(a)(2)).  The fact that two felony counts in the criminal complaint were dismissed (and count three was amended) does not make the criminal complaint inadmissible or irrelevant.  See Reed at 12 (finding no error in the ALJ’s decision to admit original criminal information that was later amended because it is relevant to examining the nature of petitioner’s criminal offense).

Finally, we find no error by the ALJ in admitting other evidence beyond the “four corners” of the conviction (or in considering such evidence as appropriate), including the referral letter (I.G. Ex. 2), prosecution memo (I.G. Ex. 3), Consent Agreement (I.G. Ex. 4), investigator’s affidavit (I.G. Ex. 8), and Medicaid claim data (I.G. Ex. 9).  Cf. Nancy L. Clark, DAB No. 2989, at 8-9 (2020) (affirming the ALJ’s admission of an internal memorandum summarizing the investigative findings of an assistant attorney general prepared in connection with the excluded individual’s underlying criminal case); Reed at 7 (affirming ALJ ruling admitting into evidence state investigator’s arrest warrant affidavit because it contained evidence of the nature of the charge against petitioner and is relevant to assessing the legal basis for petitioner’s exclusion).  “The Board has made clear . . . that ‘evidence that is extrinsic to the criminal court process (regardless of whether or not the evidence or its content were presented at the grand jury, trial, plea or sentencing phases) is admissible to show that the conduct underlying the offense met the elements of the exclusion law.’”  Shah at 5 (quoting Narendra M. Patel, M.D., DAB No. 1736, at 14 (2000)). 

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2. Section 1128(a)(1) does not require actual delivery of an item or service from a program-related provider.

Petitioner asserts that “an essential element of a conviction for a program-related offense is actual delivery of an item or service from a Medicaid provider.”  P. Br. at 2.  According to Petitioner, the ALJ Decision must be reversed because there is no finding that glucose test strips “were ever actually delivered much less delivered from a program-related provider.”  Id. at 3.  We reject Petitioner’s argument because it is unsupported by any authority and is contradicted by Board precedent. 

“Section 1128(a)(1) requires merely that an offense be ‘related to’ the delivery of an item or service under a covered program.”  Benham, DAB No. 2042, at 5.  “It does not require that the offense result in a delivery and therefore does not require an actual delivery of an item or service.”  Id.; see also Boothe at 4 (“An offense may be ‘related to’ the delivery of an item or service even if the offense did not directly involve the delivery of items or services.”); Augustine at 6 (“[A]n offense could be related even if no service or item was actually delivered.”).¹²  As the Board has held many times before, “an offense is ‘related to’ the delivery of an item or service under a covered program if there is a common sense connection or nexus between the offense and the delivery of an item or service under the program.”  See Benham at 5-6 (collecting cases).

Moreover, Petitioner’s contention that section 1128(a)(1) requires actual delivery of an item or service by a program-related provider has no basis in the language of the statute.  “[T]he Board has long held that it will not ‘read into the exclusion provisions requirements that are not contained in the literal language of the law.’”  Shaun Thaxter, DAB No. 3053, at 15 (2021) (citation omitted).  Accordingly, we reject Petitioner’s attempt to read into section 1128(a)(1) a requirement that Petitioner’s offense relate to the actual delivery of an item or service from a Medicaid provider.

Petitioner further asserts that the absence of a finding of actual delivery is “not surprising” given that criminal simulation under Arizona law does not require a delivery.  P. Br. at 3 (arguing that the offense is “complete before any delivery or receipt of service occurs”).  Petitioner’s narrow focus on the statutory elements of “criminal simulation,” rather than the facts and circumstances underlying the conviction, also contradicts Board precedent.  See Thaxter at 22 (“The Board has repeatedly held that the basis for an exclusion stems from the nature and circumstances of the underlying conviction, not the label or even the elements of the crime.”); see also Taiwo at 8 (collecting cases).  The ALJ did not err in concluding that the statutory elements of a criminal offense do not control whether an offense is “related to” the delivery of an item or service under a

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covered program.  ALJ Decision at 9.  Here, the ALJ was free to consider evidence of the facts upon which Petitioner’s conviction was based and was not limited to looking only at the Arizona statute under which Petitioner was convicted.  See Taiwo at 8.

3. The ALJ’s finding that Petitioner was convicted of an offense related to the delivery of glucose test strips is supported by substantial evidence.

The ALJ found Petitioner’s offense (criminal simulation) related to the delivery of a health care item (glucose test strips).  ALJ Decision at 7, 10 (“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.”).  Focusing only on I.G. Exhibits 5, 6, and 7, Petitioner argues that this finding is not supported by the record evidence.  P. Br. at 5-6.  Based on our review of the record, we conclude that the ALJ’s finding, which was not based solely on three exhibits, is supported by substantial evidence.  See ALJ Decision at 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.”). 

The record evidence establishes that in July 2020, the Pharmacy Board suspended Petitioner’s pharmacist license for at least six months, based on evidence that Petitioner impersonated another pharmacist and forged prescriptions and prescription transfer requests for glucose test strips.  I.G. Ex. 4, at 4-5.  In its interim findings of fact, the Pharmacy Board pointed to evidence that between February 1, 2020, and April 3, 2020, Petitioner transferred prescriptions for glucose test strips to another pharmacy using the names and information of patients for whom no such prescription existed; that Petitioner fraudulently created prescriptions for glucose test strips for himself and his wife; that Petitioner admitted to fraudulently obtaining fifteen boxes of glucose test strips that he then sold online; and that Petitioner’s employer terminated him for prescription fraud and impersonating another pharmacist.  Id.  

Less than six months later, Petitioner was charged with three felonies based on allegations that between May 2019 and April 2020, Petitioner engaged in a scheme to defraud and knowingly obtained glucose test strips by means of false or fraudulent representations; that Petitioner knowingly took, possessed, or used personal identifying information of three or more persons without their consent and with intent to use their identity for unlawful purposes; and that Petitioner offered or presented forged prescription transfer requests and/or prescriptions in violation of Arizona law.  I.G. Ex. 5, at 1-2.

Petitioner subsequently pled guilty to an amended count three (criminal simulation), conceding that between May 2019 and April 2020, Petitioner, with the intent to defraud, made, altered, or presented or offered “Prescription Transfer Requests and/or Prescriptions,” so that these items appeared to have a source or authorship that they did

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not possess.  I.G. Ex. 6, at 1-2.  Petitioner was subsequently convicted of criminal simulation and the remaining charges were dismissed.  I.G. Ex. 7, at 1-2. 

While the plea agreement did not specify the purpose of the fraudulent prescriptions or prescription transfer requests, the I.G. submitted a prosecution memo summarizing the details of the investigation that led to criminal charges being brought against Petitioner.  I.G. Ex. 3; I.G. Ex. 8, at 1 (¶¶ 3, 6).  The prosecution memo detailed a scheme by Petitioner to forge prescriptions and prescription transfer requests in his name, his wife’s name, and the names of two other individuals for the purpose of obtaining glucose test strips that Petitioner later sold online.  I.G. Ex. 3, at 2-7.  

Still further, in notifying the I.G. of Petitioner’s conviction, the Office of the Arizona Attorney General, Health Care Fraud and Abuse Section, explained that Petitioner was terminated by his former employer because Petitioner “had taken the identify of another Pharmacist and had written several fraudulent prescriptions for diabetic test strips under his wife’s name as well as other patient names.”  I.G. Ex. 2, at 1.  The letter further explained that Petitioner had “used the patients’ insurance information to pay for the fraudulent diabetic test strips prescriptions” and that Petitioner “admitted to the offense” and “admitted to selling the diabetic test strips for personal gain.”  Id.  

Finally, as the ALJ observed, Petitioner presented no evidence that his conviction related to any other fraudulent prescriptions or prescription transfer requests other than those for glucose test strips.  ALJ Decision at 10.  In other words, Petitioner made no showing that his criminal simulation conviction related to forged prescriptions or prescription transfer requests other than the ones that resulted in the suspension of his pharmacy license and termination of his employment.  See I.G. Exs. 2, 3, and 4.

Accordingly, we conclude that the ALJ’s determination that Petitioner was convicted of an offense related to the delivery of glucose test strips is “supported by substantial evidence on the whole record.”  See 42 C.F.R. § 1005.21(h).   

4. The ALJ’s conclusion that Petitioner’s conviction related to the delivery of a health care item or service under Medicare or Medicaid is not supported by the ALJ’s factual findings.

In this case, there is no question that Petitioner was convicted of a criminal offense (criminal simulation) based on his guilty plea; the issue is whether Petitioner’s conviction related to the delivery of an item or service under Medicare or Medicaid.  P. Br. at 2.  The ALJ concluded “that there is a nexus between Petitioner’s offense and the delivery of a health care item or service under Medicare or Arizona Medicaid.”  ALJ Decision at 10.  Specifically, the ALJ found that Petitioner was convicted of criminal simulation which involved fraudulent prescription transfer requests and/or prescriptions; the purpose of Petitioner’s criminal action was to obtain the delivery of glucose test strips for himself;

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Petitioner used his status as a pharmacist to facilitate his illegal activity; and Petitioner was ordered to pay $1,000 to the Arizona Attorney General Health Care Fraud and Abuse Section.  Id.  Although we agree that each of these findings is supported by substantial evidence, none establishes the requisite nexus between Petitioner’s conviction and the delivery of an item or service under Medicare or Medicaid.  While the ALJ concluded that the I.G. established all the elements of section 1128(a)(1), the ALJ’s factual findings do not support that conclusion. 

In Catherine L. Dodd, R.N., DAB No. 1345 (1992), the Board affirmed an ALJ decision vacating the exclusion of a nurse under section 1128(a)(1) where extrinsic evidence showed program-related misconduct but did not establish the necessary link between that misconduct and the nurse’s conviction.  The nurse was charged with making false entries in the records of multiple patients, but the resulting conviction did not make clear which false entries formed the basis for the conviction.  Id. at 6-7 (“[W]hile we are able to identify at least some of the patients in whose records [the nurse] allegedly made false entries, we are unable to identify to which of these patients, if any, [the nurse’s] conviction related.”).  The Board affirmed the ALJ’s determination that the requisite nexus under section 1128(a)(1) was not established because the I.G. did not establish that any of the patients referenced in the guilty plea were beneficiaries of Medicare or Medicaid or that either program was a victim of the nurse’s crime.  See id. at 7-11.    

The I.G. argued in Dodd that the ALJ erred by failing to give sufficient weight to the evidence, including a report of the Texas Medicaid Fraud Control Unit and a written admission of the nurse, demonstrating that one of the patients whose records were falsified was a Medicare beneficiary receiving medication and services under the program at the relevant time.  See Dodd at 7-8.  According to the I.G., this evidence established a common-sense nexus between the nurse’s conviction and the delivery of an item or service under Medicare.  Id.  The Board rejected the I.G.’s argument, explaining that “although we know that [the nurse] pled guilty to making false entries in the records of patients, the I.G. did not establish which patients were referenced in the guilty plea.”  Id. at 9-10 (emphasis added).  Thus, the Board agreed with the ALJ that “the record does not identify which patients’ records [the nurse] pled guilty to falsifying and whether any of those patients were Medicare beneficiaries or Medicaid recipients.”  Id. at 10.¹³ 

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The I.G. further argued in Dodd that the requisite nexus was established because the I.G. had shown that the Medicare program was billed for drugs that the nurse had converted for her own use.  Id. at 10.  The Board rejected this argument too, again explaining that “the I.G. did not establish that [the nurse’s] conviction related to false entries in the records of . . . the only Medicare or Medicaid patient receiving services” at the relevant time.  Id. at 11 (“[T]here has been no evidence that the specific offense of which Petitioner was convicted resulted in financial harm to the Medicare program.”).  In affirming the ALJ’s decision to vacate the exclusion, the Board concluded:

In summary, the I.G. did not show that [the nurse’s] conviction either related to a specific named Medicare or Medicaid patient or that the Medicare or Medicaid program was the victim of [the] crime in that the offense increased costs charged to either program.  Therefore, the I.G. failed to establish any nexus between [the] conviction and the delivery of an item or service under Medicare or Medicaid.

Id. at 11.

Here, the ALJ found that Petitioner’s criminal simulation offense related to the delivery of a health care item (glucose test strips); however, the ALJ did not further find that Petitioner’s conviction related to the delivery of glucose test strips under Medicare or Medicaid.  ALJ Decision at 10.  To be sure, the I.G. submitted evidence before the ALJ attempting to establish the requisite nexus between Petitioner’s conviction and the delivery of glucose test strips under Arizona Medicaid.  See I.G. Informal Br. at 4-5 (citing I.G. Exs. 3, 8, 9).  The I.G. continues to argue that Petitioner transferred “a fraudulent prescription for diabetic test strips . . . under the name of a Medicaid beneficiary” and those “test strips were delivered to Petitioner rather than the Medicaid beneficiary and then billed to Medicaid . . . .”  I.G. Opp’n at 7 (citing I.G. Exs. 3, 8, 9).  This evidence, according to the I.G., establishes “a common-sense connection between Petitioner’s conviction and the delivery of the diabetic test strips, a health care item, under the Medicaid program.”  Id.  The ALJ, however, made none of these findings. 

This is not a case in which the requisite nexus is self-evident because, as in Dodd, the record contains evidence that Petitioner engaged in both program-related misconduct and non-program-related misconduct.  There is indeed evidence that Petitioner engaged in program-related misconduct by allegedly forging a prescription transfer request for glucose test strips in the name of a Medicaid beneficiary.  See I.G. Exs. 3, 8, 9.  However, there also is evidence that Petitioner engaged in non-program-related misconduct by allegedly forging prescriptions and prescription transfer requests for glucose test strips in the names of himself, his wife, and another individual, none of whom are alleged to be Medicare or Medicaid beneficiaries.  See I.G. Exs. 3, 4.  The ALJ did not determine which, if any, of these fraudulent prescriptions or prescription transfer requests were referenced in Petitioner’s guilty plea.  And, even assuming the truth of the I.G.’s

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allegations that Petitioner transferred a fraudulent prescription for glucose test strips in the name of a Medicaid beneficiary, the ALJ did not determine that the specific offense of which Petitioner was convicted related to that particular misconduct.  See Dodd at 9-11; see also Tanya A. Chuoke, R.N., DAB No. 1721, at 6 (2000) (“Even evidence of the basis for an indictment for a program-related offense related to health care delivery is irrelevant unless it resulted in the conviction on which the I.G. then relied.”); Bruce Lindberg, D.C., DAB No. 1280, at 6-8 (1991) (remanding section 1128(a)(2) exclusion case to resolve factual issue regarding patient abuse where chiropractor was convicted of abusing two children, but factual questions remained as to whether either victim was a patient of the chiropractor).

We further note that the ALJ’s finding that Petitioner was ordered to pay $1,000 to the Arizona Attorney General Health Care Fraud and Abuse Section is insufficient to establish that Petitioner’s conviction was program-related.  See ALJ Decision at 7, 10.  The fact that Petitioner agreed to pay these investigative costs as part of his plea agreement and was ordered to pay them as part of his sentence (I.G. Ex. 6, at 3 (¶ G); I.G. Ex. 7, at 2) is not sufficient in itself to establish the requisite nexus between Petitioner’s conviction and Arizona Medicaid.  See Dodd at 11 (rejecting argument that investigative expenses incurred by Texas Medicaid Fraud Control Unit established link between Petitioner’s conviction and financial harm to the Medicaid program).

In this case, the ALJ needed to determine whether the record evidence established a common-sense nexus between Petitioner’s conviction and the delivery of glucose test strips under Medicare or Medicaid and to support that conclusion with findings of fact.¹⁴  The ALJ did not fully address this issue and, therefore, remand is appropriate.  See 42 C.F.R. § 1005.21(g) (authorizing Board remand to the ALJ).

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Conclusion

For the reasons stated above, we remand this matter to the ALJ to determine whether Petitioner’s conviction for criminal simulation related to the delivery of an item or service under Medicare or Medicaid. 

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Endnotes

¹   Section 1128 of the Act is codified at 42 U.S.C. § 1320a–7.  The current version of the Act can be found at https://www.ssa.gov/OP_Home/ssact/ssact-toc.htm.  Each section of the Act on that website contains a reference to the corresponding United States Code chapter and section.  Cross-reference tables for the Act and the United States Code can be found at https://www.ssa.gov/OP_Home/comp2/G-APP-H.html.

²   As permitted by the Act, the Secretary has delegated to the I.G. the authority to enforce section 1128’s exclusion provisions.  Act § 1128A(j)(2); 48 Fed. Reg. 21,523, 21,662 (May 13, 1983); 53 Fed. Reg. 12,909, 12,993 (Apr. 20, 1988).  The I.G. has issued regulations, codified in 42 C.F.R. Parts 1001 and 1005, implementing the delegated exclusion authority.  See, e.g., 42 C.F.R. §§ 1001.101, 1005.1.

³   The Consent Agreement and ALJ Decision use the terms “diabetic test strips” and “glucose test strips” interchangeably and neither party has drawn any distinction between these terms.  See I.G. Ex. 4, at 4-5; ALJ Decision at 6-7, 10.  Unless quoting source material, we refer to “glucose test strips” throughout this decision with the understanding that “glucose test strips” and “diabetic test strips” mean the same thing.

⁴   Ariz. Rev. Stat. Ann. § 13-2004(A) states:  “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.”

⁵   AHCCCS is Arizona’s Medicaid program, which we will refer to as “Arizona Medicaid.”  

⁶   None of these enclosures were included with I.G. Ex. 2.  It is unclear which of these documents, if any, were filed by the I.G. as other exhibits.  Petitioner filed no exhibits.  

⁷   I.G. Ex. 8 (amended) differs from the original in that it was signed and notarized on a later date.  Unless otherwise noted, all references to “I.G. Ex. 8” in this decision refer to the amended exhibit.   

⁸   It is not clear that Petitioner “admitted to” the interim findings of fact in the Consent Agreement; but, even if that were true, nothing in the Consent Agreement shows that Petitioner falsified prescriptions or prescription transfer requests for the purpose of obtaining glucose test strips under Medicare or Medicaid.

⁹   Other evidence in the record seems to contradict the assertion that Arizona Medicaid incurred a loss based on the prescription for glucose test strips in the name of C.V.  The prosecution memo indicates that before the glucose test strips were picked up from a Walgreens Pharmacy, C.V. informed the pharmacy that she had no such prescription and was advised by the pharmacist that “the transaction would be reversed.”  I.G. Ex. 3, at 5.  On remand, the ALJ should consider what, if any, impact this evidence may have on this matter.  See Barry D. Garfinkel, M.D., DAB No. 1572, at 6 (1996) (“[A] decision may not be upheld based solely on the evidence ‘which in and of itself justified it, without taking into account contradictory evidence or evidence from which conflicting inferences could be drawn.’” (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 487 (1951)).  As the Board explained in Garfinkel, “‘if there is evidence in the record which directly contradicts the evidence cited by the ALJ (or which might render inferences otherwise drawn from that evidence unreasonable), the ALJ should not disregard that evidence without explaining why.’”  Id. (citation omitted).

¹⁰   The Board is not required to treat as ‘controlling precedent’ a district court holding from a federal judicial district different than the one from which the pending Board appeal arises.”  William Garner, M.D., DAB No. 3026, at 11 (2020).  Petitioner’s case and the Travers case arise from different federal judicial districts and, therefore, we are not bound by the district court’s decision.

¹¹   The regulations applicable to proceedings before the ALJ and Board state that the underlying conviction is not reviewable or subject to collateral attack on substantive or procedural grounds.  42 C.F.R. § 1001.2007(d).

¹²   We further note that the ALJ found Petitioner’s offense related to the delivery of glucose test strips to Petitioner.  ALJ Decision at 10.  That finding is supported by substantial evidence.  See infra Analysis, § III.

¹³   The Board further noted that its holding does not mean it is always necessary under section 1128(a)(1) to link an offense to specific program beneficiaries.  See Dodd at 10.  The link to individuals in Dodd was necessary because the conviction on which the exclusion was based was the falsification of certain patient records, and the I.G. had not shown that the patient records on which the conviction was based were records of Medicare or Medicaid beneficiaries.  Id.  We reiterate here that in many exclusion cases the requisite nexus under section 1128(a)(1) may be self-evident or otherwise established by the facts and circumstances of the offense.  Thus, it is not always necessary to establish a link to a specific Medicare or Medicaid beneficiary to uphold an exclusion under section 1128(a)(1).

¹⁴   We express no opinion as to whether the evidence in the record is sufficient to establish the requisite nexus under section 1128(a)(1).