Delores L. Knight, DAB CR5227 (2019)

DECISION

Petitioner, Delores L. Knight, is excluded from participating in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)), effective January 18, 2018.  There is a proper basis for exclusion.  Petitioner’s exclusion for five years is required by section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).  An additional exclusion of 45 years, for a total minimum exclusion of 50 years,1 is not unreasonable based upon the presence of three aggravating factors and the absence of any mitigating factors.

I.  Background

The Inspector General (IG) of the United States Department of Health and Human Services (HHS) notified Petitioner by letter dated December 29, 2017, that she was being

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excluded from participation in Medicare, Medicaid, and all federal health care programs for 50 years.  The IG advised Petitioner that she was being excluded pursuant to section 1128(a)(1) of the Act, based on her conviction in the United States District Court, Northern District of Ohio of a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  The IG further advised Petitioner that the mandatory five-year exclusion was extended to 50 years because Petitioner’s acts that resulted in conviction caused a financial loss to a government agency or program of $5,000 or more, the acts were committed over a period of more than one year, and Petitioner’s sentence included incarceration.  IG Exhibit (IG Ex.) 1.

Petitioner timely requested a hearing on February 25, 2018 (RFH).  The case was assigned to me on March 28, 2018, to hear and decide.  I convened a prehearing conference by telephone on April 18, 2018, the substance of which is memorialized in my order issued on April 23, 2018 (Prehearing Order).  Petitioner failed to appear and participate in the prehearing conference and she was ordered to show cause why the case should not be dismissed for abandonment.  Petitioner responded by letter dated April 18, 2018, in which she explained why she missed the conference.  On May 4, 2018, I ruled that Petitioner showed good cause for not dismissing her case and I advised the parties to comply with the requirements of the Prehearing Order.  On June 14, 2018, the IG filed a motion for summary judgment and supporting brief (IG Br.) and IG Exs. 1 through 4.  On September 6 and 18, 2018, I again required that Petitioner show cause why the case should not be dismissed because Petitioner failed to comply with the Prehearing Order and respond to the IG motion.  Petitioner responded and, on October 4, 2018, I again found Petitioner had stated good cause not to dismiss or for other sanctions.  Petitioner responded to the IG motion by letter dated October 23, 2018, with Petitioner’s Exhibits (P. Exs.) 100-111 (Departmental Appeals Board Electronic Filing System #13).  The IG filed a reply brief (IG Reply) on November 15, 2018.

Petitioner did not object to my consideration of IG Exs. 1 through 4, and they are admitted as evidence.  The IG objected to my consideration of P. Exs. 100-111 on grounds that the exhibits are irrelevant and constitute collateral attacks on her underlying conviction.  IG Reply at 1-4.  I am limited in this case to determining only two issues, whether the IG had a basis to exclude Petitioner and whether the period of exclusion is unreasonable.  42 C.F.R. § 1001.2007(a)(1).  Because the IG imposed exclusion for a period longer than the five year minimum required by Congress in § 1128(c)(3)(B) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(c)(3)(B)), I must also consider the aggravating and mitigating factors established by 42 C.F.R. § 1001.102(b) and (c).  I am required to determine the admissibility of evidence and I must exclude irrelevant evidence.  42 C.F.R. §§ 1005.4(b)(10); 1005.17(a), (c).  Evidence is relevant if it has any tendency to make a fact that may help me resolve an issue before me more or less probable than it would be without the evidence.  Fed. R. Evid. 401.  When, as in this case, the exclusion is based on a criminal conviction, I have no authority to review the basis for the conviction and Petitioner has no right to collaterally attack the conviction on

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either substantive or procedural grounds.  42 C.F.R. § 1001.2007(d).  Therefore, evidence attacking the underlying criminal conviction is irrelevant and must be excluded.  P. Exs. 100 through 111 do not make the existence of any fact that is of consequence to an issue I may decide more or less probable.  Therefore, P. Exs. 100 through 111 are not relevant to any issue that I may decide and they must be excluded and not considered as evidence.

II.  Discussion

A.  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 HHS (Secretary).  The right to 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.  Either or both parties may choose to waive appearance at an oral hearing and to submit only documentary evidence and written argument for my consideration.  42 C.F.R. § 1005.6(b)(5).

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation in the Medicare and Medicaid programs any individual convicted of a criminal offense related to the delivery of an item or service under the Medicare or a State health care program.  42 C.F.R. § 1001.101(a).  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.

Exclusion for a minimum period of five years is mandatory for any individual or entity convicted of a criminal offense for which exclusion is required by section 1128(a) of the Act.  Act § 1128(c)(3)(B).  Pursuant to 42 C.F.R. § 1001.102(b), an individual’s period of exclusion may be extended based on the presence of specified aggravating factors.  Only if the aggravating factors justify an exclusion of longer than five years, however, are mitigating factors considered as a basis for reducing the period of exclusion to no less 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), 1005.15(d).  There may be no collateral attack of the conviction that is the basis of the exclusion.  42 C.F.R. § 1001.2007(d).  Pursuant to authority of 42 C.F.R. § 1005.15(c), I  advised the parties in the Prehearing Order, paragraph B.4, that Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors, and the IG bears the burden on all other issues.

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B.  Issues

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

Whether there is a basis for the imposition of the exclusion; and

Whether the length of the exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).

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.

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

Petitioner requested a hearing on February 25, 2018, within 60 days after the IG sent Petitioner the December 29, 2017 notice of exclusion. RFH; IG Ex. 1.  Therefore, Petitioner’s request is timely pursuant to 42 C.F.R. § 1005.2(c).

There is no dispute that I have jurisdiction pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

2.  Summary judgment is appropriate in this case.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to reasonable notice and an opportunity for a hearing.  The Secretary has provided by regulation that a sanctioned party has the right to a hearing before an ALJ, and both the sanctioned party and the IG have a right to participate in the hearing.  42 C.F.R. § 1005.2‑.3.  Either or both parties may choose to waive appearance at an oral hearing and to submit only documentary evidence and written argument for my consideration.  42 C.F.R. § 1005.6(b)(5).  Petitioner has not waived an oral hearing in this case.  An ALJ may also resolve a case, completely or in part, by summary judgment.  42 C.F.R. § 1005.4(b)(12).

Summary judgment is appropriate in an exclusion case when there are no disputed issues of material fact and when the disputed facts, clear and not subject to conflicting interpretation, demonstrate that one party is entitled to judgment as a matter of law.  Tanya A. Chuoke, R.N., DAB No. 1721 (2000); David A. Barrett, DAB No. 1461 (1994); Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367 (1992); Catherine L. Dodd, R.N., DAB No. 1345 (1992); John W. Foderick, M.D., DAB

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No. 1125 (1990).  When the undisputed material facts of a case support summary judgment, there is no need for a full evidentiary hearing, and neither party has the right to one.  Surabhan Ratanasen, M.D., DAB No. 1138 (1990); Foderick, DAB No. 1125.  In opposing a properly supported motion for summary judgment, the nonmoving party must show that there are material facts that remain in dispute, and that those facts either affect the proponent’s prima facie case or might establish a defense.  Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No. 1628 (1997).  It is insufficient for the nonmovant to rely upon mere allegations or denials to defeat the motion and proceed to hearing.  See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986).

There are no genuine disputes of material fact in this case.  The facts that trigger exclusion under section 1128(a)(1) of the Act are conceded, undisputed, or not subject to dispute.  Petitioner does not argue that the IG considered aggravating factors not established by the evidence or that there were mitigating factors the IG failed to consider.  Accordingly, summary judgment is appropriate.

3.  Petitioner’s exclusion is required by section 1128(a)(1) of the Act.

a.  Facts

On June 17, 2015, Petitioner was indicted with four other individuals of four counts of conspiracy to commit health care fraud and health care fraud from on or about November 21, 2007, through November 30, 2014, in violation of 18 U.S.C. §§ 2, 1347, and 1349, against Medicare, Ohio Medicaid, and the Veterans Health Administration (VA).  The total alleged loss for Medicare, Ohio Medicaid, Passport, and the VA exceeded $7 million.  Petitioner was also charged with nine counts of money laundering of funds derived from the alleged conspiracy and health care fraud in violation of 18 U.S.C. § 1957.  IG Ex. 2.

On May 17, 2017, Petitioner was convicted of one count of conspiracy to commit health care fraud, two counts of health care fraud, and nine counts of money laundering.  Petitioner was sentenced to prison for 120 months and to pay restitution of $8,168,107.24, including $3,034,245.81 to Medicare, $4,704,257.79 to Ohio Medicaid and PASSPORT, and $429,603.64 to the VA.  IG Ex. 4.

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b.  Analysis

The IG cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory exclusion.  The statute provides:

(a) MANDATORY EXCLUSION.–The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):

* * * *

(1) CONVICTION OF PROGRAM-RELATED CRIMES.–Any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under title XVIII or under any State health care program.

Act § 1128(a)(1).  The statute requires that the Secretary exclude from participation in Medicare, Medicaid, and all federal health care programs any individual or entity:  (1) convicted of a criminal offense; (2) where the offense is related to the delivery of an item or service under Medicare or a state health care program, such as Medicaid.

In her request for hearing, Petitioner states that she disagrees with the exclusion and she challenges whether the IG has a basis for exclusion.  RFH.  In a document dated September 18, 2018, Petitioner argues that the IG should not exclude the home health care services companies, Just Like Familee II, Inc. and Just Like Familee III, Inc., for which she was one of the owners and an officer.  P. Br. at 12.  However, Petitioner does not dispute that she was convicted of criminal offenses after a trial or that a judgment of conviction was entered on May 17, 2017.  IG Ex. 4 at 1.  Petitioner also does not dispute that the offenses of which she was convicted were related to the home health care services companies she owned or that claims were submitted to and paid by Medicare, Medicaid, and the VA as alleged in the indictment.  IG Ex. 2.  Accordingly, I conclude that the elements of section 1128(a)(1) of the Act are satisfied and there is a basis for Petitioner’s exclusion.  Petitioner’s argument that her companies should not be excluded is without merit, as the exclusion at issue before me is Petitioner’s exclusion and not an action by the IG against either company.  IG Ex. 1.

4.  Pursuant to section 1128(c)(3)(B) of the Act, a five-year period of exclusion is mandatory.

I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(1) of the Act.  Therefore, the IG must exclude Petitioner for a minimum period of five

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years pursuant to section 1128(c)(3)(B) of the Act.  The IG has no discretion to impose a lesser period and I may not reduce the period of exclusion below five years. 

5.  Petitioner has not presented evidence of any mitigating factors and does not allege the existence of any mitigating factors.

6.  Three aggravating factors are present that justify extending the minimum period of exclusion.

The remaining issue is whether it is unreasonable to extend Petitioner’s exclusion by an additional 45 years.  My determination of whether the exclusionary period in this case is unreasonable turns on whether:  (1) the IG has proven that there are aggravating factors; (2) Petitioner has proven that the IG considered an aggravating factor that does not exist or that there are mitigating factors that the IG failed to consider; and (3) the period of exclusion is within a reasonable range.

The IG notified Petitioner that three aggravating factors are present in this case that justify an exclusion of more than five years: 

(1) Petitioner’s acts that resulted in her conviction caused or were intended to cause financial loss to a government agency or program of $50,0002 or more;

(2) Petitioner’s acts that resulted in her conviction were committed over a period of one year or more; and

(3) The sentence imposed by the court included incarceration.

IG Ex. 1 at 2.

Petitioner does not dispute that the indictment alleges loss to federal and state health care programs in excess of $7 million.  IG Ex. 2 at 15.  Petitioner also does not dispute that she was ordered as part of her sentence to pay restitution of $8,168,107.24, including $3,034,245.81 to Medicare, $4,704,257.79 to Ohio Medicaid and PASSPORT, and $429,603.64 to the VA.  IG Ex. 4 at 5-6.  The Departmental Appeals Board (Board) has previously accepted that an amount ordered as restitution constitutes proof of the amount

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of financial loss to a government program.  Laura Leyva, DAB No. 2704 at 9 (2016); Juan de Leon, Jr., DAB No. 2533 at 5 (2013); Craig Richard Wilder, DAB No. 2416 at 9 (2011).  I conclude that there is no dispute that the acts of which Petitioner was convicted resulted in a loss to federal and state health care programs of $50,000 or more.

The undisputed facts also establish the existence of the second aggravating factor considered by the IG.  Petitioner does not dispute that the acts for which she was convicted lasted for a period of roughly seven years from on or about November 21, 2007, through November 30, 2014.  IG Ex. 2.  Finally, it is undisputed that Petitioner was sentenced to 120 months in prison, which establishes the existence of the third aggravating factor considered by the IG.  IG Ex. 4 at 2.

I conclude that the aggravating factors that the IG considered are established by the undisputed facts.  The aggravating factors are a basis for the IG to extend the period of exclusion beyond the minimum exclusion of five years.  42 C.F.R. § 1001.102(b)(1), (2), (5).

7.  Exclusion for 50 years is not unreasonable in this case.

The regulation states that the ALJ must determine whether the length of exclusion imposed is “unreasonable.”  42 C.F.R. § 1001.2007(a)(1).  The Board, however, has made clear that the role of the ALJ in exclusion cases is to conduct a de novo review of the facts related to the basis for the exclusion and the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102 and to determine whether the period of exclusion imposed by the IG falls within a reasonable range.  Juan De Leon, Jr., DAB No. 2533 at 3 (2013); Craig Richard Wilder, M.D., DAB No. 2416 at 8 (2011); Joann Fletcher Cash, DAB No. 1725 at 17 n.6 (2000).  The Board has explained that, in determining whether a period of exclusion is “unreasonable,” the ALJ is to consider whether such period falls “within a reasonable range.”  Cash, DAB No. 1725 at 17 n.6.  The Board cautions that whether the ALJ thinks the period of exclusion too long or too short is not the issue.  The ALJ may not substitute his or her judgment for that of the IG and may only change the period of exclusion in limited circumstances.

In John (Juan) Urquijo, DAB No. 1735 (2000), the Board made clear that, if the IG considers an aggravating factor to extend the period of exclusion and that factor is not later shown to exist on appeal, or if the IG fails to consider a mitigating factor that is shown to exist, then the ALJ may make a decision as to the appropriate extension of the period of exclusion beyond the minimum.  In Gary Alan Katz, R.Ph., DAB No. 1842 (2002), the Board suggests that when it is found that an aggravating factor considered by the IG is not proved before the ALJ, then some downward adjustment of the period of exclusion should be expected absent some circumstances that indicate no such adjustment is appropriate.  Thus, the Board has by these various prior decisions significantly limited

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my authority under the applicable regulation to judge the reasonableness of the period of exclusion.

Based on my de novo review, I conclude that a basis for exclusion exists and that the undisputed evidence establishes the three aggravating factors that the IG relied on to extend the period for exclusion by 45 years to a 50-year exclusion.  Petitioner has not presented any evidence that would establish that the IG failed to consider any mitigating factor recognized under 42 C.F.R. § 1001.102(c) or considered an aggravating factor under 42 C.F.R. § 1001.102(b) that did not exist.  I conclude that a period of exclusion of 50 years is in a reasonable range and not unreasonable considering the existence of three aggravating factors, including the extensive loss to federal and state health care programs, the duration of the offenses, the 120-month prison sentence, and the absence of any mitigating factors.  No basis exists for me to reassess the period of exclusion.

III.  Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all other federal health care programs for a minimum of 50 years, effective January 18, 2018.

• 1. 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 minimum period of exclusion. Citations are to the 2017 revision of the Code of Federal Regulations (C.F.R.), unless otherwise stated.
• 2. The first aggravating factor listed in the notice of exclusion refers to “financial loss to a Government program or one or more entities of $5,000 or more.” IG Ex. 1 at 2. The reference to “$5,000” is clearly a clerical error. The aggravating factor established by 42 C.F.R. § 1001.102(b)(1) is a loss of “$50,000” or more. Petitioner has not alleged that this error in the notice of exclusion caused any prejudice to her and I conclude that there is no prejudice that requires any remedy.