Peggy Colleen Stover, DAB CR5501 (2019)

DECISION

The Inspector General of the United States Department of Health and Human Services (the IG) excluded Petitioner, Peggy Colleen Stover, from participation in Medicare, Medicaid, and all other federal health care programs for five years, based on her felony criminal conviction for an offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. Petitioner sought review of the exclusion. For the reasons stated below, I affirm the IG’s exclusion determination.

I. Background and Procedural History

By letter dated April 30, 2019, the IG notified Petitioner that she was excluded from participating in Medicare, Medicaid, and all federal health care programs under section 1128(a)(4) of the Social Security Act (Act) for a period of five years due to her conviction for a criminal offense related to the unlawful manufacture, distribution,

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prescription, or dispensing of a controlled substance. IG Exhibit (Ex.) 1.1 The IG based the exclusion on Petitioner’s felony conviction in Arizona state court of a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. Id. at 1. Petitioner timely requested a hearing before an Administrative Law Judge (ALJ) and I was designated to hear and decide this case.

I held a pre-hearing telephone conference on June 27, 2019, the substance of which is summarized in my June 28, 2019 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order). Among other things, I directed the parties to file pre-hearing briefs articulating their respective arguments as well as identifying witnesses and exhibits in support thereof. Summary Order at 3-4.

The IG timely filed a brief (IG Br.) and five exhibits (IG Exs. 1-5), while Petitioner filed a brief (P. Br.) and four exhibits (P. Exs. 1-4).

II. Admission of Exhibits and Decision on the Record

Petitioner did not object to the IG’s proposed exhibits. I therefore admit IG Exs. 1-5 into evidence.

The IG objects to P. Exs. 3 and 4, which corroborate Petitioner’s claims she completed a drug and alcohol rehabilitation program, and has since passed all random drug and alcohol tests. IG Reply at 3-4. The IG contends these exhibits are irrelevant to the issue before me and do not relate to any mitigating factor I can properly consider. IG Reply at 3-4. I overrule the IG’s objection. Both parties rely on these exhibits to make their arguments concerning the propriety of mitigation. These exhibits are therefore at least minimally relevant for me to consider the IG’s argument. Accordingly, I admit P. Exs. 1-4 into evidence. 

The IG indicated that a hearing is not necessary and did not propose any witnesses. IG Br. at 6. Petitioner did not affirmatively request an in-person hearing or propose witnesses. P. Br. An in person hearing would therefore serve no purpose and the matter may be decided on the written record. See Civ. Remedies Div. P. § 19(d).

III. Issue

Whether the IG has a basis to exclude Petitioner from participation in all federal health care programs under section 1128(a)(4) of the Act (42 U.S.C. § 1320a-7(a)(4)). 42 C.F.R. § 1001.2007.

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IV. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to a hearing before an ALJ and judicial review of the final action of the Secretary of Health and Human Services (Secretary). The right to a hearing before an ALJ is set forth in 42 C.F.R. §§ 1001.2007(a) and 1005.2, while the rights of both the sanctioned party and the IG to participate in a hearing are specified at 42 C.F.R. § 1005.3.

The Secretary must exclude from participation in federal health care programs “[a]ny individual or entity that has been convicted for an offense which occurred after August 21, 1996, under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.” Act § 1128(a)(4) (42 U.S.C. § 1320a-7(a)(4)); see also 42 C.F.R. § 1001.101(d).

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 regardless of 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. Act § 1128(i) (42 U.S.C. § 1320a-7(i)). There may be no collateral attack of the conviction that provides the basis of the exclusion. 42 C.F.R. § 1001.2007(d).

Section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) provides that an exclusion imposed under section 1128(a) of the Act (42 U.S.C. § 1320a-7(a)) shall be for a minimum period of five years. 42 C.F.R. § 1001.102(a). The exclusion is effective twenty days from the date of the notice of exclusion. 42 C.F.R. § 1001.2002(b). The period of exclusion may be extended based on the presence of specified aggravating factors. 42 C.F.R. § 1001.102(b). Mitigating factors are considered as a basis for reducing the period of exclusion only if aggravating factors justify an exclusion of longer than five years. 42 C.F.R. § 1001.102(c).

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; the IG bears the burden on all other issues. 42 C.F.R. § 1005.15(c); Summary Order at 3.

V. Jurisdiction

Because Petitioner timely requested a hearing, I have jurisdiction to hear and decide this case.  See 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also Act § 1128(f)(1) (42 U.S.C. § 1320a‑7(f)(1)).

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VI. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold and followed by pertinent findings of fact and analysis.

1. Petitioner was convicted of a felony offense after August 21, 1996.

Section 1128(a)(4) requires the Secretary to exclude from program participation any individual or entity convicted of a felony criminal offense that occurred after August 21, 1996, “relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”  42 U.S.C. § 1320a‑7(a)(4).2

The evidence submitted by the IG confirms the fact of Petitioner’s felony conviction after August 21, 1996.  On February 5, 2018, Petitioner was charged with multiple felony counts of fraud, acquisition of narcotic drugs, and taking the identity of another person or entity.  IG Ex. 2.  Petitioner resolved the charges against her on June 4, 2018 by pleading guilty to two felony counts of attempted possession of a narcotic drug.  IG Ex. 3 at 1.  On July 17, 2018, an Arizona court entered judgment against Petitioner on those counts and sentenced her to probation and a suspended 120-day period of incarceration.  IG Ex. 5 at 1-2.  The record before me clearly reflects Petitioner was convicted of a felony offense after August 21, 1996.  Act § 1128(i) (42 U.S.C. § 1320a-7(i)).

2. Petitioner’s conviction falls within the meaning of section 1128(a)(4) of the Act because it relates to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

Petitioner disputes the IG’s assertion that her conviction related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance because the charges to which she pleaded, and which form the basis of her conviction, refer only to “attempted possession.”  P. Br. at 2.  She contends that possession does not hold the same meaning as “unlawful manufacturing, distributing, prescribing, or dispensing of a controlled substance” and that the language of the Act specifically prevents the IG from relying on a possession conviction to exclude her under section 1128(a)(4) of the Act.  Id. at 3. 

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The IG replies that Petitioner “takes issue with the I.G.’s reliance on the facts within her indictment to support that her conviction relates to the unlawful prescription and dispensing of a controlled substance.” IG Reply at 2. The IG further asserts that “Petitioner misunderstands the facts underlying her conviction must only relate to unlawful prescription and dispensing of a controlled substance and that she does not have to be actually convicted of unlawfully manufacturing, distributing, prescribing or dispensing of a controlled substance.” Id. at 2-3.

For a qualified felony conviction to trigger exclusion under section 1128(a)(4) of the Act, Petitioner’s offense of conviction need only be related to the manufacture, distribution, prescription, or dispensing of a controlled substance. The term “related to” simply means that there must be a nexus or common sense connection. See Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase “related to” in another part of section 1320a 7 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 quotation marks and citations omitted); see also Quayum v. U.S. Dep’t of Health & Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998).

And, I am not cabined by the language of the charges made against Petitioner to which she ultimately pleaded; instead, to assess relatedness, I may consider evidence extrinsic to the charging instruments or other associated court documents. Narendra M. Patel, M.D., DAB No. 1736 at 11 (2000) (“[T]he Board has repeatedly held that the basis for the federal exclusion authority need not appear in the charges or associated court documents, but may be demonstrated by extrinsic evidence of the underlying facts and circumstances of the offense.”) (citations omitted), aff’d sub nom. Patel v. Thompson, 319 F.3d 1317 (11th Cir. 2003).

In this instance, neither the judgment nor the plea agreement include any narrative description of the facts underlying Petitioner’s guilty plea or conviction. IG Exs. 3, 5. I must therefore rely solely on the language in the charges made against Petitioner. Petitioner pleaded guilty to amended Counts 3 and 7 of the 13-count indictment by which she was initially charged. IG Exs. 2, 3. Count 3 initially described her act of knowingly obtaining Hydrocodone “by fraud, deceit, misrepresentation, or subterfuge (to wit: Fraudulent prescription of Hydrocodone written on 12/29/2014).” IG Ex. 2 at 3. Count 7 initially specified that Petitioner knowingly obtained Hydrocodone “by fraud, deceit, misrepresentation, or subterfuge (to wit: Fraudulent prescription of Hydrocodone written on 3/2/2015).” Id. at 4-5. Both counts clearly describe Petitioner using fraudulent and deceptive means to induce the prescription and dispensing of Hydrocodone, a controlled substance.

It is true that Counts 3 and 7 were substantially revised for the purpose of resolving the criminal case against Petitioner to describe only a violation of Ariz. Rev. Stat. § 13-3408(A)(1), the Arizona criminal statue prohibiting possession or use of a narcotic drug.

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IG Exs. 3, 5.3 But Petitioner did not plead to these two attempted possession charges in a vacuum; instead, it is clear from the course of conduct described in the initial 13-count indictment that Petitioner could not have been charged and convicted of attempted possession of illicit Hydrocodone if she had not sought to induce the prescription and dispensing of that controlled substance.  The fact that the prosecutor in Petitioner’s case amended two of the original charges against her to resolve the matter demonstrates that her offense of conviction was at least related to the other 11 counts of the initial indictment, which describes Petitioner inducing the unlawful prescribing and dispensing of a controlled substance.

I have also considered the possibility that the Act was not meant to apply to an individual like Petitioner who did not directly manufacture, distribute, prescribe, or dispense a controlled substance.  However, Congress intended section 1128 of the Act to be construed broadly so as to protect federally funded health care programs.  Baldwin Ihenacho, DAB No. 2667 at 10 (2015) (“The Board has recognized that it is ‘well-established that section 1128 exclusions are remedial in nature, rather than punitive, and are intended to protect federally funded health care programs from untrustworthy individuals.’” (quoting Donald A. Burstein, Ph.D., DAB No. 1865 at 12 (2003)). 

Here, Petitioner attempted to use fraud, deceit, and misrepresentation to cause a controlled substance to be prescribed and dispensed to her on at least two occasions.  While she may not have actually prescribed or dispensed the controlled substance in question, as a registered nurse she is a licensed supplier of health care services whose trustworthiness to participate in federally funded health care programs is necessarily implicated by the nature of the crimes she committed. 

As such, I conclude that Congress intended individuals like Petitioner, who induce prescription or dispensing of a controlled substance, to be viewed with the same level of concern as a supplier who directly engages in improper prescription or dispensing of a controlled substance.  Accordingly, I find Petitioner was convicted of a felony criminal offense that occurred after August 21, 1996 which related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, as contemplated by section 1128(a)(4) of the Act (42 U.S.C. § 1320a-7(a)(4)).

Petitioner’s remaining arguments provide no basis to overturn the IG’s exclusion.  Petitioner explains that she voluntarily entered into a rehabilitation program which she successfully completed.  P. Br. at 3.  She also provides that she has successfully passed random drug testing and actively participates in Alcoholics Anonymous.  Id. at 4.  She contends she is therefore not a risk to the health, safety, or well-being of beneficiaries in

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federal health care programs.  Id.  Finally, Petitioner outlines the hardships which have followed her conviction and her desire to practice in a field she loves and in which she is proficient.  Id. at 4-5.   

I am sympathetic to Petitioner’s position, and fully applaud her efforts to date to achieve rehabilitation and retain sobriety.  However, these arguments are equitable in nature, and I may not “review the IG’s decision to impose an exclusion . . . on the ground that the excluded person is a good person or well-thought of in the profession or suffering from the loss of his/her vocation.”  Donna Rogers, DAB No. 2381 at 6 (2011); see also Stefan Murza, D.C., DAB No. 2848 at 4 (2018). 

3. Petitioner must be excluded for a minimum period of five years.

Because I have concluded that a basis exists to exclude Petitioner under section 1128(a)(4) of the Act (42 U.S.C. § 1320a-7(a)(4)), Petitioner must be excluded for a minimum period of five years.  Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).  The IG has no discretion to impose a lesser period of exclusion, and I may not reduce the period of exclusion below five years.

VII.  Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for five years pursuant to section 1128(a)(4) of the Act (42 U.S.C. § 1320a-7(a)(4)), effective 20 days from the date of the notice provided to her by the IG.

• 1. Document 7b in the official case file maintained in the DAB E-File system; for clarity and simplicity, whenever possible I will cite to the exhibits attached to the parties’ respective briefs by the exhibit numbers therein, not the document numbers assigned by DAB E-file.
• 2. The Secretary’s regulations clarify that exclusion on this basis applies to any individual who: “(1) Is, or has ever been, a health care practitioner, provider, or supplier or furnished or furnishes items or services; (2) Holds, or has held, a direct or an indirect ownership or control interest in an entity that furnished or furnishes items or services or is, or has ever been, an officer, director, agent, or managing employee of such an entity; or (3) Is, or has ever been, employed in any capacity in the health care industry.” 42 C.F.R. § 1001.101(d). Petitioner, a registered nurse, does not argue she falls outside the scope of this regulation.
• 3. Counts 3 and 7 originally described violations of Ariz. Rev. Stat. § 13-3408(A)(6), which prohibits obtaining or procuring “the administration of a narcotic drug by fraud, deceit, misrepresentation or subterfuge.” IG Ex. 2.