Lorena Coburn, DAB CR5198 (2018)

DECISION

The Inspector General of the United States Department of Health and Human Services (the IG) excluded Lorena Coburn (Ms. Coburn or Petitioner) from participation in Medicare, Medicaid, and all other federal health care programs for five years based on her criminal conviction for a felony 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. 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 February 28, 2018, the IG notified Ms. Coburn that she was being excluded, effective 20 days from the date of the letter, from participation in Medicare, Medicaid, and all federal health programs under section 1128(a)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)) for the minimum statutory period of five years. The IG explained he took this action based on Ms. Coburn's conviction in a federal court for a felony offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health

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care item or service, including the performance of management or administrative services relating to the delivery of such items or services. IG Exhibit (Ex.) 1 at 1.1

Petitioner timely requested a hearing before an administrative law judge (Request for Hearing). She asserted the IG improperly excluded her because she was not in fact convicted of a felony "related to any health care." Request for Hearing at 1.

On May 23, 2018, I held a pre-hearing telephone conference, the substance of which is summarized in my May 24, 2018 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order). See 42 C.F.R. § 1005.8. Among other things, I directed the parties to file pre-hearing submissions articulating their respective arguments and identifying witnesses and documentary evidence in support thereof. Summary Order at 4.

The IG filed a brief (IG Br.) and five exhibits (IG Exs. 1-5), while Petitioner filed a short-form brief (P. Br.) with a narrative statement attached (Attachment).

II. Admission of Exhibits and Decision on the Record

In the absence of objections from Petitioner, I admit IG Exs. 1 through 5 into the record. The parties agree that an in-person hearing is unnecessary in this matter, and neither has proffered witnesses for examination. P. Br. at 2; IG Br. at 8-9. Accordingly, I issue this decision on the basis of the record before me.

III. Issue

Whether the IG had a basis to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for the minimum period of five years under 42 U.S.C. § 1320a-7(a)(3). See 42 C.F.R. § 1001.2007(a)(1).

IV. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to an Administrative Law Judge (ALJ) hearing 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, and the rights of both the sanctioned party and the IG to participate in a hearing are specified by 42 C.F.R. § 1005.3. The parties may choose to waive appearance at an oral hearing and to submit only documentary evidence and written argument for my consideration. See 42 C.F.R. § 1005.6(b)(5).

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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, in connection with the delivery of a health care item or service . . . of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct." 42 U.S.C. § 1320a-7(a)(3).2

Pursuant to section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)), 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 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. The statute does not distinguish between misdemeanor and felony convictions. The excluded party may not collaterally attack 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. 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 4.

V. 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.

A. Petitioner's request for hearing was timely, and I have jurisdiction.

Petitioner timely requested a hearing and there is no dispute I have jurisdiction to hear and decide this case. See 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also 42 U.S.C. § 1320a-7(f)(1).

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B. There is a basis for Petitioner's exclusion pursuant to section 1128(a)(3) of the Act.

Exclusion from participation in Medicare, Medicaid, and all federal health care programs is mandated by section 1128(a)(3) of the Act where an individual has been convicted, under Federal or State law, of a criminal offense that occurred after August 21, 1996, consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct that was committed in connection with the delivery of a health care item or service. 42 U.S.C. § 1320a-7(a)(3); 42 C.F.R. § 1001.101(c)(1). The IG has established these elements by a preponderance of the evidence.

1. Petitioner was convicted under federal or state law of a criminal offense that occurred after August 21, 1996.

Petitioner was charged by information in the U.S. District Court for the District of Connecticut (district court) with one count of bank fraud and one count of aggravated identity theft. IG Ex. 2 at 1-3. On November 30, 2016, pursuant to a written agreement with the government, Petitioner pleaded guilty to both counts. IG Ex. 4. On October 18, 2017, the district court issued judgment against Petitioner and sentenced her to a 16-month term of imprisonment on both counts. IG Ex. 3.

Petitioner concedes that she was convicted of a felony offense committed after August 21, 1996. P. Br. at 1. I therefore conclude that this element for exclusion under 42 U.S.C. § 1320a-7(a)(3) is met.

2. Petitioner's offenses of conviction were felonies related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Petitioner disputes the IG's assertion that her felony conviction related to "fraud, theft, embezzlement, breach of fiduciary responsibility or other financial misconduct." P. Br. at 2; IG Br. at 4 (quoting 42 U.S.C. § 1320a7(a)(3)). The term "related to" simply means that there must be a nexus or common sense connection. See Quayum v. U.S. Dep't of Health & Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998); see also 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 omitted).

There is no need to question whether Petitioner's offense of conviction was related to fraud; in this case, her felonious conduct met the very definition of fraud, and she explicitly pleaded guilty to a fraud offense. IG. Ex. 4; 18 U.S.C. § 1344.Moreover, her

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conviction for aggravated identity theft required access to vulnerable individuals whose identities could be acquired and misused for Petitioner's pecuniary benefit, and Petitioner pleaded guilty to a theft offense. IG Ex. 4; 18 U.S.C. § 1028A.

Even looking past the statutory language of her charged offenses, there is little reason to doubt the obvious nexus between Petitioner's offenses of conviction and the statutory basis for exclusion. In her plea agreement, Petitioner stipulated that she and her co-conspirator stole personally identifiable information from victims, including patients at Yale New Haven Hospital, and used those identities to commit fraud. IG Ex. 4 at 10. Petitioner and her co-conspirator used this improperly obtained information to open bank accounts, counterfeit checks, and funnel ill-gotten gains into those accounts, so as to avoid detection. Id. The "common sense" connection is clear and irrefutable.

Accordingly, I have no difficulty concluding Petitioner's offenses of conviction related to "fraud, theft, embezzlement, breach of fiduciary responsibility or other financial misconduct," as that phrase is contemplated in 42 U.S.C. § 1320a-7(a)(3).

3. Petitioner's offenses of conviction were for conduct connected to the delivery of a health care item or service.

Petitioner does not explicitly argue the offenses to which she pleaded were not in connection with the delivery of a healthcare item or service, but she does assert more generally that her conviction did not warrant exclusion. P. Br. at 2.

The plain language of the Act requires exclusion of an individual who has been "convicted for an offense which occurred . . . in connection with the delivery of a health care item or service . . . ." 42 U.S.C. § 1320a-7(a)(3). The Board has interpreted the phrase "in connection with" to require only a "common sense connection" between the circumstances of the offense and the delivery of a health care item or service. W. Scott Harkonen, M.D.,DAB No. 2485 at 7 (2012) (citing Ellen L. Morand, DAB No. 2436 at 9 (2012); Charice D. Curtis, DAB No. 2430 at 5 (2011)).

The Board has also expressly rejected the notion that the underlying criminal offense must involve the actual delivery of a health care item or service. See Kenneth M. Behr, DAB No. 1997 at 8 (2005). It has analogized the "in connection with" standard of section 1128(a)(3) of the Act to the standard found at section 1128(a)(1) of the Act, which requires exclusion of individuals convicted of an offense "related to the delivery of an item or service under title XVIII or under any State health care program." Harkonen, DAB No. 2485 at 9. In doing so, the Board has observed the standard in 1128(a)(1) cases requires only a rational relationship between the offenses of conviction and the delivery of a health care item or service. Id.

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Other instances where the Board has found the connection contemplated by section 1128(a)(3) of the Act involved circumstances where the offense of conviction affected or potentially affected the delivery of a health care item or service. See, e.g., Harkonen, DAB No. 2485 (petitioner's wire fraud conviction for making materially false statements about the efficacy of a prescription drug connected because such touting of a drug potentially impacted delivery of health care); Morand, DAB No. 2436 (finding connection where petitioner stole from evening deposits of her pharmacy employer because she had diverted funds that could have been otherwise used to deliver health care items or services); Curtis, DAB No. 2430 (an administrator's theft of money from her nursing service provider employer connected because the stolen funds could have been used to furnish health care items or services).

An examination of the crimes to which Petitioner stipulated demonstrates her offense conduct could have potentially affected the delivery of health care items or services. Petitioner admitted that, beginning in approximately 2012, she and her co-conspirator, J.W-S., harvested the identities of patients at Yale New Haven Hospital, where J.W-S. worked, as part of their fraudulent scheme. IG Ex. 4 at 10. The plea agreement explicitly identified W.F., a Yale New Haven Hospital patient whose identity Petitioner and J.W-S. used to open a bank account, and from whom they stole over $20,000 after diverting mail meant for W.F. by changing his mailing address. IG Ex. 4 at 10.

Petitioner and her co-conspirator could not have achieved their fraudulent ends without access to a source of vulnerable victims who, by virtue of their status as patients, could not easily become aware of financial misconduct involving their identities or take action against the fraudsters. While the record does not reflect the actual impact, it is entirely foreseeable that such conduct would inevitably result in a negative financial impact on Petitioner's victims, which would then interfere with the delivery of health care items or services to them. For example, the loss of diverted funds and resulting damage to the victims' financial wellbeing, including their credit, could easily have resulted in difficulty obtaining care or paying for medication and other treatment not fully covered by insurance. W.F., whose residential mailing address Petitioner and her co-conspirator changed, would no longer receive important notices by mail, which could then potentially affect his ability to access or pay for health care items or services.

Similarly, the increased vulnerability and stress associated with having their identities stolen and used to commit crimes could easily affect the health and wellbeing of the victims, for whom delivery of health care items or services would thus be affected. I therefore find Petitioner's offenses of conviction were connected to the delivery of a health care item or service.

Finally, I note in passing that the substance of Petitioner's narrative statement is essentially a plea for equitable relief. See Attachment. While I credit Petitioner's efforts in using her time in incarceration to better herself, I do not have the authority to ignore

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the law and cannot provide her equitable relief. See US Ultrasound, DAB No. 2302 at 8 (2010).

For the foregoing reasons, I conclude that Petitioner was convicted of a felony relating to theft that was committed in connection with the delivery of a healthcare item or service as contemplated by 42 U.S.C. § 1320a-7(a)(3).

4. Petitioner must be excluded for a minimum of five years; the period of exclusion is therefore reasonable as a matter of law.

Because I have concluded that the IG had a reasonable basis to exclude Petitioner under 42 U.S.C. § 1320a-7(a)(3), Petitioner must be excluded for a minimum period of five years. 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.

VI. 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)(3) of the Act (42 U.S.C. § 1320a-7(a)(3)), as of the effective date of exclusion provided in the IG's initial notice to her.

• 1. Document 6b 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 has implemented these provisions of the Act by regulation at 42 C.F.R. § 1001.101(a).