SUBJECT:

Karen J. Coates a/k/a Karen Jeannie Coates,

Petitioner,

The Inspector General.

Docket No.C-04-376
Decision No. CR1260

DECISION

Karen J. Coates (Petitioner) appeals the decision of the Inspector General (I.G.), made pursuant to section 1128(a)(4) of the Social Security Act (Act), to exclude her from participation in Medicare, Medicaid, and all federal health care programs for a period of five years. For the reasons discussed below, I find that the I.G. is authorized to exclude Petitioner, and that the statute mandates a minimum five-year exclusion.

I. Background

By letter dated March 31, 2004, the I.G. notified Petitioner of his decision to exclude her from program participation for five years. The letter explained that exclusion was mandatory under section 1128(a)(4) of the Act because Petitioner was convicted of a felony offense relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. I.G. Exhibit (I.G. Ex.) 1. In an undated letter, received June 8, 2004, Petitioner requested review, and the matter has been assigned to me for resolution. I held a telephone prehearing conference on August 11, 2004, at which Petitioner participated without benefit of counsel. I advised her that she is entitled to be represented by an attorney, but she indicated that she would represent herself. The parties have agreed that the sole issue in dispute is whether Petitioner's deferred judgment constitutes a "conviction" within the meaning of the Act, an issue that does not require an in-person hearing. Order (August 16, 2004).

Pursuant to my scheduling order, on September 10, 2004, the I.G. submitted his Brief in Support of Motion for Summary Affirmance, with exhibits attached. I granted Petitioner an extension of time in which to respond, and on November 4, 2004, she faxed to this office her response, a letter dated November 2, 2004, with two attachments. The I.G. submitted a reply. The I.G. subsequently advised that its exhibits had been mislabeled, and submitted an amended set of exhibits. In the absence of objection, I have substituted these documents.

The I.G. has thus submitted I.G. Exhibits (I.G. Exs.) 1 - 6. There being no objections, I.G. Exs. 1 - 6 are admitted into evidence. Attached to Petitioner's letter are two attachments, which Petitioner did not mark as exhibits. One of those documents is already in the record as I.G. Ex. 6. I have marked the other document, a copy of her criminal record, as P. Ex. 1, which, in the absence of objection, I admit into evidence.

II. Issue

The sole issue before me is whether the I.G. had a basis upon which to exclude Petitioner from participation in the Medicare, Medicaid, and all federal health care programs. This depends on whether she was "convicted" of a felony within the meaning of section 1128(a)(4) of the Act.

Because an exclusion under section 1128(a)(4) must be for a minimum period of five years, the reasonableness of the length of the exclusion is not an issue.

III. Discussion

The critical facts of this case are not in dispute. Petitioner was a registered nurse in the State of Iowa. On August 29, 2001, she pled guilty to a class C felony of "obtaining or attempting to obtain" a prescription drug (Vicodin) by fraud, in violation of sections 155A.23, 155A.24, and 124.401(1)(c)(8) of the Iowa Code. I.G. Exs. 4, 5. The state court accepted her guilty plea, and entered an order granting deferred judgment, and sentenced her to two years probation plus 125 hours of community service. I.G. Ex. 6. The judgment was subsequently characterized as a "non conviction." P. Ex. 1.

A. Petitioner was convicted of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, within the meaning of section 1128(a)(4) of the Act. ⁽¹⁾

Section 1128(a)(4) of the Act requires that any individual or entity convicted of a felony criminal offense "relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance" be excluded from all federal health care programs. ⁽²⁾ An individual is considered to have been "convicted" within the meaning of the statute if her plea of guilty or nolo contendere "has been accepted by a Federal, State, or local court" (Act, section 1128(i)(3)), or she has "entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld." Act, section 1128(i)(4).

Petitioner notes that she successfully completed probation and community service, and points to the court record indicating a "non-conviction." P. Ex. 1. While the State of Iowa may no longer consider that she has been convicted, she nevertheless is considered to have been "convicted" for section 1128(a)(4) purposes. Congress broadly defined the term "conviction" in order "to ensure that exclusions from federally funded health programs would not hinge on state criminal justice policies," so the fact that a court's adjudication is not a "conviction" under state law is not controlling. Carolyn Westin, DAB No. 1381, at 6 (1993). In Westin, the petitioner participated in a deferred adjudication program, and her plea of nolo contendere was dismissed. She argued, accurately, that she had not been convicted under state law. Nevertheless, the Departmental Appeals Board recognized that the federal statute controls, and concluded that her participation in the deferred adjudication program fell within the statutory definition of a conviction. See Travers v. Shalala, 20 F.3d 993, 996 (9^th Cir. 1994). Here, Petitioner admits that she pled guilty to a class C felony. The state court accepted her plea, she successfully completed her sentence, and her criminal record shows "deferred judgment," and "discharged from deferred judgment." P. Ex. 1. These are the types of processes described in sections 1128(i)(3) and (4). See Victoria L. Winterhalter, DAB CR1114 (2003); Handel J. Roberts, M.D., DAB CR911 (2002).

B. The statute mandates a five-year minimum period of exclusion, and mitigating factors may not be considered to reduce that period of exclusion.

Petitioner also points out that she complied with the court's orders, has learned from her experience and, because of it, is in a position to help others. No one disputes that she fully complied with all of the terms and conditions of her probation. However, an exclusion under section 1128(a)(4) must be for a minimum mandatory period of five years. As set forth in section 1128(c)(3)(B) of the Act:

Subject to subparagraph (G), in the case of an exclusion under subsection (a), the minimum period of exclusion shall be not less than five years . . . .

When the I.G. imposes an exclusion for the mandatory five-year period, the reasonableness of the length of the exclusion is not an issue. 42 C.F.R. � 1001.2007(a)(2).

IV. Conclusion

For these reasons, I conclude that the I.G. properly excluded Petitioner from participation in Medicare, Medicaid, and all other federal health care programs, and I sustain the five-year exclusion.

Carolyn Cozad Hughes

Administrative Law Judge

1. I make findings of fact and conclusions of law to support my decision in this case. I set forth each finding below, in italics, as a separate numbered or lettered heading.

2. "Federal health care program" is defined in section 1128B(f) of the Act as any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government, or any State health care program.