Correna Pfeiffer, DAB CR5141 (2018)

DECISION

Petitioner, Correna Pfeiffer, is excluded from participation in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)), effective January 18, 2018.  Petitioner’s exclusion for the minimum period of five years is required by section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).*

I.  Background

The Inspector General (I.G.) notified Petitioner by letter dated December 29, 2017, that she was being excluded from participation in Medicare, Medicaid, and all federal health care programs for five years.  The I.G. cited section 1128(a)(3) of the Act as the basis for Petitioner’s exclusion.  The I.G. stated that the exclusion was based on Petitioner’s

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conviction in the U.S. District Court for the Western District of Pennsylvania of a criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service.  I.G. Exhibit (Ex.) 1.

Petitioner filed a request for hearing on February 28, 2018.  I convened a prehearing conference by telephone on March 26, 2018, the substance of which is memorialized in my Ruling Denying Motion to Dismiss, Prehearing Conference Order, and Schedule for Filing Briefs and Documentary Evidence dated March 27, 2018 (Prehearing Order).  The parties waived an oral hearing during the prehearing conference, electing to proceed upon the documentary evidence and briefs.  Prehearing Order ¶ 5.

The I.G. filed his brief on the merits (I.G. Br.) on April 23, 2018, with I.G. Exs. 1 through 6.  Petitioner filed her brief on the merits (P. Br.) on May 25, 2018, with Petitioner’s Exhibits (P. Exs.) 1 through 8.  On June 1, 2018, the I.G. filed a reply brief (I.G. Reply Br.).  The parties have not objected to my consideration of the documentary evidence and I.G. Exs. 1 through 6 and P. Exs. 1 through 8 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 rights 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)(3) of the Act, the Secretary must exclude from participation in any federal health care program:

Any individual or entity that has been convicted for an offense which occurred after . . . [August 21, 1996], under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program (other than those specifically described in [section 1128(a)(1)]) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

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

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Pursuant to section 1128(i) of the Act, an individual is convicted of a criminal offense when:  (1) a judgment of conviction has been entered by a federal, state, or local court whether or not an appeal is pending or the record has been expunged; (2) there is a finding of guilt in 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 has been withheld.  42 U.S.C. § 1320a-7(i)(1)-(4); 42 C.F.R. § 1001.2.

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 the I.G. 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 I.G. proposes to impose an exclusion greater than five years.  42 C.F.R. § 1001.102(b), (c).

The standard of proof is a preponderance of the evidence, and there may be no collateral attack of the conviction that provides the basis of the exclusion.  42 C.F.R. § 1001.2007(c), (d).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors, and the I.G. bears the burden on all other issues.  42 C.F.R. § 1005.15(b), (c).

B.  Issues

The Secretary has by regulation limited my scope of review to two issues:

1. Whether the I.G. has a basis for excluding Petitioner from participation in Medicare, Medicaid, and all federal health care programs; and

2. Whether the length of the proposed period of exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).

When, as in this case, the I.G. 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 followed by the pertinent findings of fact and analysis.

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1.  Petitioner’s request for hearing was timely and I have jurisdiction.

2.  The parties waived an oral hearing on the record and elected to proceed on the documentary evidence and their briefs and no oral hearing is required.  42 C.F.R. §§ 1005.6(b)(5), 1005.15(a).

3.  Petitioner’s exclusion is required by section 1128(a)(3) of the Act.

a.  Facts

On September 15, 2015, Petitioner was charged by an information in the U.S. District Court, Western District of Pennsylvania, with one count of conspiracy in violation of 18 U.S.C. § 371, between about January 2009 and August 21, 2013, to:

Introduce and deliver in interstate commerce misbranded drugs with the intent to defraud and mislead in violation of 21 U.S.C. §§ 331(a), 333(a)(2); and

Commit health care fraud in violation of 18 U.S.C. § 1347.

I.G. Ex. 2.  The charged offense was a felony.  P. Ex. 6.  Petitioner agreed on September 1, 2015, to plead guilty to the charge.  I.G. Ex. 6.  Petitioner entered her guilty plea on October 2, 2015, before Judge Schwab, who accepted the plea and judged Petitioner guilty.  Judge Schwab scheduled sentencing for February 2, 2016.  I.G. Exs. 3-4.  On October 17, 2017, judgment was imposed and Petitioner was sentenced to two years of probation and 150 hours of community service.  I.G. Ex. 5.

On December 29, 2017, more than two years after Petitioner pleaded guilty to conspiracy but just over two months after Petitioner was sentenced, the I.G. notified Petitioner of her exclusion from Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(3) of the Act.

b.  Analysis

The I.G. cites section 1128(a)(3) of the Act as the basis for Petitioner’s mandatory exclusion.  The statute requires the Secretary to exclude from participation any individual or entity:  (1) convicted of an offense under federal or state law; (2) the offense occurred after August 21, 1996 (the date of enactment of the Health Insurance Portability and Accountability Act of 1996); (3) the offense was committed in connection with the delivery of a health care item or service, or with respect to any act or omission in a health care program (other than Medicare or Medicaid) operated by or financed in whole or in part by any federal, state, or local government agency; (4) the criminal offense was a

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felony; and (5) the offense was related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.  Act § 1128(a)(3) (42 U.S.C. § 1320a‑7(a)(3)); 42 C.F.R. § 1001.101(c).

Petitioner concedes that there is a basis for her mandatory exclusion pursuant to section 1128(a)(3) of the Act.  P. Br. at 2.  Petitioner pleaded guilty to one felony count of conspiracy to introduce or deliver misbranded drugs in interstate commerce and to commit health care fraud.  Her guilty plea was accepted, judgment was entered, and she was convicted within the meaning of section 1128(i) of the Act.  Petitioner was convicted pursuant to her guilty plea of a federal felony offense of conspiracy to introduce or deliver misbranded drugs in interstate commerce and to commit health care fraud.  The offense was clearly related to the delivery of a health care item or service and involved fraud.  The conspiracy occurred between about January 2009 and August 2013, which was after August 21, 1996.  I conclude that all the elements that trigger mandatory exclusion under section 1128(a)(3) of the Act are satisfied in this case.  Accordingly, I conclude that Petitioner’s exclusion is required pursuant to section 1128(a)(3) of the Act.

4.  Five years is the minimum authorized period of exclusion pursuant to section 1128(a)(3) of the Act.

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

6.  I have no authority to change the effective date of the running of the period of exclusion.

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).  I have concluded that there is a basis to exclude Petitioner pursuant to section 1128(a)(3) of the Act.  Therefore, the I.G. must exclude Petitioner for a minimum period of five years pursuant to section 1128(c)(3)(B) of the Act.  The I.G. has no discretion to impose a lesser period and I may not reduce the period of exclusion below five years.  Pursuant to 42 C.F.R. § 1001.2007(a)(2), when the I.G. imposes an exclusion pursuant to section 1128(a) of the Act for the statutory minimum period of five years, there is no issue for me to decide as to whether the period of exclusion is unreasonable.  Accordingly, I conclude that Petitioner’s exclusion for a period of five years is not unreasonable as a matter of law.

Petitioner does not dispute that her exclusion for five years is mandated by Congress.  Rather, Petitioner argues that I should order that the running of the period of exclusion in this case began on the date she entered her guilty plea, which was October 2, 2015.  Petitioner urges me to ignore the requirement of 42 C.F.R. § 1001.2002(b), which

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specifies that an exclusion is effective 20 days after the date of the I.G.’s notice of exclusion.  In this case, 20 days after the December 29, 2017 date of the I.G. notice of exclusion is January 18, 2018.

My jurisdiction, i.e., my delegated authority, in this case is limited by the Secretary to the single issue of whether or not the I.G. has a basis to exclude Petitioner.  The issue of whether or not the period of exclusion is unreasonable is not before me.  42 C.F.R. § 1001.2007(a)(1)-(2).

I conclude that I have no authority to change the effective date of the running of the period of exclusion in this case.  Section 1128(c)(1) of the Act provides that exclusion under section 1128 of the Act shall be effective at “such time and upon such reasonable notice to the public and to the individual or entity excluded as may be specified in regulations .  .  .  .”  The Secretary has required by regulation that the I.G. send written notice of the exclusion to the affected individual or entity.  42 C.F.R. § 1001.2002(a).  The Secretary's regulations further provide that the exclusion will be effective 20 days from the date of the notice.  42 C.F.R. § 1001.2002(b).  Both the context and plain language of the regulation are consistent with my conclusion that the notice referred to in section 42 C.F.R. § 1001.2002(b) is the written notice required by 42 C.F.R. § 1001.2002(a).  The Secretary's regulations do not give me discretion to either review or change the effective date of Petitioner's exclusion and I may not refuse to follow the Secretary's regulations.  42 C.F.R. § 1005.4(c)(1).  The Departmental Appeals Board (the Board) has addressed the issue and concluded that ALJs and the Board have no authority to change the effective date of the running of the period of exclusion as required by the Secretary.  Thomas Edward Musial, DAB No. 1991 at 3 (2005) (and cases cited therein).

Exclusion is effective 20 days from the date of the I.G.’s notice of exclusion to the affected individual or entity.  42 C.F.R. § 1001.2002(b).

III.  Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for the minimum statutory period of five years, effective January 18, 2018.

• *. Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after the period of exclusion expires.  Reinstatement is not automatic upon completion of the period of exclusion.
  
  Regulatory citations are to the 2017 revision of the Code of Federal Regulations (C.F.R.), unless otherwise stated.