Zandrea Johnson Rayford, DAB CR5196 (2018)

DECISION

Petitioner, Zandrea Johnson Rayford, was a registered nurse employed by home health agencies in Louisiana. She was indicted for, among other things, conspiracy to commit health care fraud and wire fraud by submitting claims to Medicare for home health services that either were not medically necessary, were not in fact provided, or for which kickbacks had been paid. Petitioner pled guilty and was sentenced to incarceration and ordered to pay restitution to Medicare. Now, pursuant to section 1128(a)(1) of the Social Security Act (Act),1 the Inspector General (I.G.) has excluded Petitioner from participation in Medicare, Medicaid, and all federal health care programs. Petitioner appeals the exclusion. For the reasons discussed below, I find that the I.G. properly excluded Petitioner and that a ten-year exclusion is not unreasonable.

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I. Background

Petitioner was a registered nurse who worked for Bayou River Health Systems, Inc. and Maxima Home Health Care Corporation (Bayou River/Maxima), which were home health agencies located in Louisiana that participated in Medicare as providers of home health services. I.G. Exhibit (Ex.) 2 at 5-6; see also I.G. Ex. 3 at 2. Beginning in or around November 2011, and continuing through approximately June 2015, Petitioner falsified medical records of Bayou River/Maxima to make it appear that beneficiaries met the requirements to qualify for Medicare reimbursement of home health services, although Petitioner knew that the beneficiaries did not qualify for such services. I.G. Ex. 3 at 4-5. Petitioner also received kickbacks from an owner of Bayou River/Maxima for referring Medicare beneficiaries to Bayou River/Maxima. Id. at 2, 4; see also I.G. Ex. 2 at 6. Petitioner and her co-conspirators submitted or caused to be submitted approximately $13,146,832 in claims to Medicare for home health services, the majority of which were not medically necessary or in some cases were not provided. I.G. Ex. 2 at 9. Medicare paid approximately $10,935,564 on these claims. Id. Based on this conduct, Petitioner was indicted for conspiracy to commit health care fraud and wire fraud, in violation of 18 U.S.C. § 1349 (Count 1), among other offenses. I.G. Ex. 2. Petitioner pled guilty to Count 1 of the indictment. I.G. Ex. 5 at 1; see also I.G. Ex. 4. The U.S. District Court for the Eastern District of Louisiana (federal district court) adjudicated Petitioner guilty, sentenced her to imprisonment for one year and one day, and required her to pay restitution to Medicare in the amount of $473,445.81, among other penalties. I.G. Ex. 5 at 1, 2, 6.

By letter dated February 28, 2018, the I.G. notified Petitioner that she was being excluded from Medicare, Medicaid, and all federal health care programs for a period of ten years because she had been convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program, including the performance of management or administrative services relating to the delivery of items or services under any such program. I.G. Ex. 1. The letter explained that section 1128(a)(1) of the Act authorizes the exclusion. Id. Petitioner timely requested review. I convened a telephone prehearing conference and issued an Order and Schedule for Filing Briefs and Documentary Evidence (Briefing Order).2

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Pursuant to my Briefing Order, the I.G. submitted a written argument (I.G. Br.), a reply brief (I.G. Reply) and five proposed exhibits (I.G. Exs. 1-5). Petitioner filed her informal brief (P. Br.). Petitioner did not offer any proposed exhibits, nor did she object to the exhibits offered by the I.G. Therefore, in the absence of objection, I admit into evidence I.G. Exs. 1-5.

I directed the parties to indicate in their briefs whether an in-person hearing would be necessary and, if so, to submit the testimony of any proposed witness as "written direct testimony in the form of an affidavit or declaration." Briefing Order ¶ 7.c.ii. Neither party offered the written direct testimony of any witness. Further, the parties agree that an in-person hearing is not necessary. I.G. Br. at 14; P. Br. at 4. I therefore decide this case based on the written record.

II. Discussion

A. Petitioner must be excluded pursuant to section 1128(a)(1) of the Act because she was convicted of a criminal offense related to the delivery of an item or service under the Medicare program.3

The Act requires the Secretary of Health and Human Services (Secretary) to exclude from program participation any individual or entity that has been convicted of 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 delegated this authority to the I.G. 42 C.F.R. § 1001.101(a).

1. Petitioner was convicted of a criminal offense.

Petitioner concedes that she was convicted of a criminal offense. P. Br. at 1. The I.G.'s evidence demonstrates that, on October 24, 2017, the federal district court entered judgment, finding Petitioner guilty of conspiracy to commit health care fraud and wire fraud in violation of 18 U.S.C. § 1349, pursuant to her guilty plea. I.G. Ex. 5 at 1; see also I.G. Ex. 3. Accordingly, Petitioner was convicted of a criminal offense as that term is defined in subsections 1128(i)(1), (2), and (3) of the Act.

2. The criminal offense of which Petitioner was convicted is related to the delivery of an item or service under Medicare.

The I.G. argues that Petitioner's conviction for conspiracy to commit health care fraud and wire fraud is related to the delivery of items or services under Medicare within the meaning of section 1128(a) of the Act. I.G. Br. at 8-9. Petitioner concedes that her

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conviction is one for which exclusion is required. P. Br. at 2. It is clear from the record that Petitioner's conviction is program-related.

Petitioner was convicted of conspiracy to commit health care fraud and wire fraud based on her participation in a scheme to bill Medicare for home health services that were not medically necessary, were not provided at all, or were the subject of kickback payments. I.G. Exs. 2, 3, 5. Appellate panels of the Departmental Appeals Board (DAB) have long held that the submission of false claims under Medicare or Medicaid falls within the ambit of section 1128(a)(1). See, e.g., Emannuel Adebayo Ayodele,DAB No. 2602 at 3-4 (2014); Juan de Leon, Jr.,DAB No. 2533 (2013); Jack W. Greene,DAB No. 1078 (1989), aff'd, Greene v. Sullivan, 731 F. Supp. 835 (E.D. Tenn. 1990). Therefore, I conclude that Petitioner's conviction for conspiracy to commit health care fraud and wire fraud in violation of 18 U.S.C. § 1349 is related to the delivery of an item or service under Medicare and that the I.G. was required to exclude Petitioner from participation in the Medicare program for a minimum period of five years. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).

Because Petitioner's conviction for conspiracy to commit health care fraud is related to the delivery of items or services under Medicare, she must be excluded for at least five years. Act § 1128(c)(3)(B). However, the I.G. may exclude an individual for a period longer than five years if certain aggravating factors are present. 42 C.F.R. § 1001.102(b). If the I.G. imposes an exclusion longer than five years based on the presence of aggravating factors, I may consider whether certain mitigating factors exist that may justify shortening the exclusion to not less than five years. 42 C.F.R. § 1001.102(c). In the following sections of this decision, I consider whether, in light of any aggravating or mitigating factors, the length of Petitioner's exclusion falls within a reasonable range.

B. The ten-year exclusion imposed by the I.G. falls within a reasonable range.

If the I.G. imposes an exclusion longer than five years based on the presence of aggravating factors, I may consider whether certain mitigating factors exist that may justify shortening the exclusion to not less than five years. 42 C.F.R. § 1001.102(c). Evidence that does not pertain to one of the aggravating or mitigating factors listed in the regulations may not be used to decide whether an exclusion of a particular length is reasonable.

1. The I.G. has established three aggravating factors.

The I.G. argues that an exclusion of ten years is reasonable based on the presence of three aggravating factors:

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1. The acts resulting in the conviction, or similar acts, caused, or were intended to cause, a financial loss to a government agency or program or to one or more other entities of $50,000 or more.

2. The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more.

3. The sentence imposed by the court included incarceration.

I.G. Br. at 10-13. Petitioner does not dispute that the cited aggravating factors are present in her case. P. Br. at 2. Moreover, the evidence offered by the I.G. proves that the factors are present. See I.G. Ex. 5 at 2 (period of incarceration), 6 (restitution of $473,445.81); I.G. Ex. 3 at 3 (duration of the conspiracy from approximately November 2011 through June 2015).

2. Petitioner failed to establish any mitigating factor.

The regulations enumerate the only mitigating factors I may consider when the period of exclusion is more than five years. 42 C.F.R. § 1001.102(c); see also Hussein Awada, M.D.,DAB No. 2788 at 6 (2017). The burden is on Petitioner to prove that any mitigating factors exist. 42 C.F.R. § 1005.15(c); Briefing Order ¶ 6.c. Petitioner argues that a mitigating factor exists in that she cooperated with federal authorities. P. Br. at 4.

The regulations provide that cooperation with government officials may be a mitigating factor under the following circumstances:

The individual's or entity's cooperation with Federal or State officials resulted in -

(i) Others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs,

(ii) Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or

(iii) The imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.

42 C.F.R. § 1001.102(c)(3). Therefore, if Petitioner produces evidence that her assistance to government officials resulted in additional convictions, investigations, or civil penalties, I may consider that factor in deciding whether the exclusion length is reasonable.

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In Petitioner's brief, counsel states: "Zandrea Johnson Rayford's cooperation with Federal authorities resulted in others being convicted and excluded from Medicare, Medicaid and all other Federal Health Care Programs [and] resulted in additional cases being investigated." P. Br. at 4. However, Petitioner did not offer any documentary evidence or testimony in support of this assertion.

As I have stated, the burden is on Petitioner to prove this, or any, mitigating factor. 42 C.F.R. § 1005.15(c); Briefing Order ¶ 6.c.; see also Stacey R. Gale,DAB No. 1941 at 6 (2004) ("it is Petitioner's responsibility to locate and present evidence to substantiate the existence of any alleged mitigating factor in [Petitioner's] case"). Petitioner's bare allegation that her cooperation with federal authorities resulted in others being convicted, excluded, or investigated is insufficient to satisfy Petitioner's burden of proof.4 Therefore, Petitioner has not established the presence of this mitigating factor.

3. Based on the presence of three aggravating factors and no mitigating factors, the ten-year exclusion imposed by the I.G. falls within a reasonable range.

The I.G. has broad discretion in determining the length of an exclusion. See, e.g., Awada,DAB No. 2788 at 5. So long as the period of exclusion imposed by the I.G. is within a reasonable range, based on demonstrated criteria, I have no authority to change it. Joann Fletcher Cash,DAB No. 1725 at 16-17 (2000) (citing 57 Fed. Reg. 3298, 3321 (1992)); see also Jeremy Robinson,DAB No. 1905 at 5 (2004).

Exclusions imposed pursuant to section 1128 and its implementing regulations serve to protect the integrity of federal health care programs from untrustworthy individuals. See, e.g., Awada,DAB No. 2788 at 5. The conduct for which Petitioner was convicted and the restitution and incarceration to which she was sentenced demonstrate that she presents a significant risk to the integrity of health care programs, justifying a lengthy exclusion. See Cash,DAB No. 1725; see also Awada,DAB No. 2788. Petitioner's conviction arose from her participation in a scheme to defraud Medicare. Petitioner's demonstrated dishonesty in submitting false Medicare claims resulted in financial losses more than nine times greater than the minimum required to establish the aggravating factor. Additionally, her criminal conduct persisted for approximately three and a half years, which similarly is significantly greater than the one-year period required to establish the aggravating factor. Finally, Petitioner was sentenced to incarceration for one year and one day. These aggravating factors demonstrate that Petitioner is highly untrustworthy.

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Although Petitioner argued that I should consider her cooperation with federal authorities as a basis to reduce her exclusion to less than ten years, she failed to carry her burden of proof to establish this mitigating factor. Accordingly, I do not consider it.

Based on the record before me, I cannot find that the ten-year exclusion is unreasonable, given that Petitioner's criminal conduct provides evidence that she cannot be trusted to deal honestly with Medicare and other health care programs. The three aggravating factors significantly exceed the thresholds set forth in the regulations. By contrast, the ten-year exclusion imposed is only two times greater than the minimum statutory period. Under the circumstances, I cannot conclude that the exclusion imposed by the I.G. is excessive. I therefore find that the ten-year exclusion falls within a reasonable range.

III. Conclusion

For the reasons explained above, I conclude that the I.G. properly excluded Petitioner from participation in Medicare, Medicaid, and all federal health care programs, and I sustain the ten-year period of exclusion.

• 1. The current version of the Social Security 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.
• 2. Petitioner’s hearing request consists of a letter signed by an attorney who states that he has been retained to represent Petitioner. See Docket Entry 1 in DAB E-File. Counsel appeared for Petitioner at the telephone prehearing conference (Briefing Order ¶ 1) and entered a notice of appearance (Docket Entry 7 in DAB E-File). Yet counsel did not register for DAB E-File, despite having agreed to do so. See Briefing Order ¶ 7.a. This may explain why Petitioner herself appears to have uploaded her brief to DAB E-File. Further, although counsel signed Petitioner’s brief (P. Br. at 5), the content suggests that Petitioner may have taken the lead in drafting it, as well.
• 3. My findings of fact and conclusions of law appear as headings in bold italic type.
• 4. As I have noted above, Petitioner is nominally represented by an attorney in this proceeding. I expect counsel to understand the meaning of “burden of proof” and to explain that concept to Petitioner. My Briefing Order clearly stated that Petitioner would have the burden of proof to establish any mitigating factors.