Pebla Jones Wright, DAB CR5558 (2020)

DECISION

The Inspector General of the United States Department of Health and Human Services (the IG) excluded Pebla Jones Wright (Petitioner) from participation in Medicare, Medicaid, and all other federal health care programs for five years based on her 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 July 31, 2019, the IG notified Petitioner 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 that she took this action based on Petitioner's felony conviction in the Circuit Court of the First Judicial District of Hinds County, Mississippi, for a criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial

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misconduct in connection with the delivery of a health 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

On September 30, 2019, Petitioner, through her attorney, timely requested a hearing before an administrative law judge (Request for Hearing). Petitioner asserted that the IG improperly excluded her because she was not in fact "convicted of any crime involving health care fraud." Request for Hearing at 1.

On November 5, 2019, I held a pre-hearing telephone conference, the substance of which is summarized in my November 6, 2019 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 ¶ 6.

The IG filed a brief (IG Br.) and four exhibits (IG Exs. 1-4), while Petitioner filed a brief (P. Br.) and five exhibits (P. Exs. 1-5). The IG subsequently filed a reply brief (IG Reply).

II. Admission of Exhibits and Decision on the Record

In the absence of objections from either party, I admit IG Exs. 1 through 4 and P. Exs. 1 through 5 into the record.

The IG asserts an in-person hearing is not necessary to decide this case. IG Br. at 7; IG Reply at 5-6. Petitioner believes an in-person hearing to be necessary and identifies five potential witnesses. P. Br. at 5-7. However, Petitioner did not submit the proposed testimony of any witness in the form of an affidavit or sworn declaration. On this basis alone, a decision on the record would be appropriate, since both my Summary Order and the procedures governing hearings in this division require submission of written testimony. Civ. Remedies Div. P. § 19(d); Summary Order ¶ 6(c). Moreover, the IG did not request to cross examine any of Petitioner's proposed witnesses. Even if Petitioner submitted written direct testimony, I would issue a decision on the record on that basis. Civ. Remedies Div. P. § 19(d); Summary Order ¶ 8.

In any event, Petitioner's description of the proposed testimony makes clear that the testimony of the witnesses she identified would serve no permissible purpose. Two of the witnesses Petitioner proposed, herself and her husband, would testify as to the circumstances underlying Petitioner's criminal case in state court. P. Br. at 6-7 (stating

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that Petitioner and her husband "will be able to testify to the facts of the underlying case for which [Petitioner] is currently being prosecuted."). However, the governing regulations forbid an individual excluded based on a criminal conviction,2 like Petitioner, from collaterally attacking the underlying basis for the conviction before me on either substantive or procedural grounds. 42 C.F.R. § 1001.2007(d). Therefore, I conclude that Petitioner's and her husband's testimony, even if it had been properly proffered, would be irrelevant.

Petitioner also identified three current or former Hinds County, Mississippi, Circuit Court judges as witnesses who "will be able to testify to Mississippi practice with regards to nonadjudication and expunction, and that Petitioner's matter is still pending. Additionally they will be able to testify regarding the effect of dismissal and expunction under Mississippi statutes." P. Br. at 6. This testimony is also irrelevant, as Mississippi state law concerning the nature of the action taken against Petitioner by the state court has no bearing on whether that action is considered a "conviction" within the meaning of the Act. I must instead determine under applicable federal law whether Petitioner was convicted for purposes of exclusion for federal health care programs. Even if properly submitted, I would have concluded the testimony of these three jurists to be irrelevant.

Because neither party offered relevant proposed witnesses for which the opposing party requested cross-examination, an in-person hearing is unnecessary, and I issue this decision on the basis of the record before me. Civ. Remedies Div. P. § 19(d)

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)-(2).

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).3

Under 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, regardless of whether an appeal is pending or whether 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. Further, there may be no collateral attack of 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. Id.  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. §§ 1001.2007(e), 1005.15(b).

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.

There is no dispute that Petitioner timely requested a hearing. I therefore 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.

Section 1128(a)(3) of the Act mandates exclusion from participation in Medicare, Medicaid, and all federal health care programs 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). The IG has established these elements by a preponderance of the evidence.

On April 12, 2017, a Mississippi grand jury indicted Petitioner on 13 felony counts of Exploitation of a Vulnerable Person, in violation of section 43-47-19(2)(b) of the Mississippi Code (Miss. Code Ann. § 43-47-19(2)(b)). IG Ex. 2. On November 30, 2018, Petitioner pleaded guilty to one of the charges, Count 10. IG Ex. 2 at 6; IG Ex. 3. The elements of that charge required an individual to:

[W]illfully, feloniously and unlawfully retain property having a value of more than $250.00 that properly belongs to a person defined by Section 43-47-5(q) of the Mississippi Code as a "vulnerable adult" and to use said property for one's own profit.

IG Ex. 2 at 6; IG Ex. 3 at 3; P. Ex. 3.

In pleading guilty to Count 10, Petitioner averred:

I submit the following facts which I state to be true, and feel that all of the above elements are proven by these facts.

On June 8, 2016, the Social Security Administration deposited a payment in the amount of $1,026.00 into the bank account of Methodist Home Road Living Center for the benefit of [H.O.]. I failed to forward that payment to [H.O.]'s new residence, and instead the money remained in the operating account of the Methodist Home Road Living Center, which I own and operate.

Therefore, I am guilty and ask the Court to accept my plea of guilty.

IG Ex. 3 at 3.

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Pursuant to Petitioner's guilty plea, the state court sentenced her to three years of "non-adjudicated probation subject to successful payment of restitution in the amount of $3,893.50 . . . ." IG Ex. 4 at 1.

1. Petitioner was convicted under Federal or State law of a felony offense that occurred after August 21, 1996 within the meaning of sections 1128(a)(3) and 1128(i) of the Act.

The IG initially argued Petitioner was "convicted" as defined in subsection 1128(i)(3) of the Act because the state court accepted her guilty plea. IG Br. at 3. Petitioner responded the state court's sentence did not establish that she was convicted of a felony crime because:

No guilty plea has been accepted by the court. Rather, the case against [Petitioner] is still pending. Section 1128(i)(3) of the Social Security Act unfortunately does not contemplate the posture of cases created by Mississippi's nonadjudication statute, Miss. Code Ann. § 99-15-26. Under Mississippi law, the felony action at issue is still pending. Upon dismissal, the Petitioner will be absolutely entitled to, and will receive, an order of expunction from the Court pursuant to Miss. Code Ann. § 99-19-71 which will "restore the (Petitioner), in the contemplation of the law, to the status (s)he occupied before any arrest . . . ." While the Social Security Act understandably and admittedly governs the actions of the IG, the IG must be bound by Mississippi law to the extent it defines both the crimes for which exclusions are mandated and the processes by which those alleged crimes are adjudicated.

P. Br. at 2 (internal citations omitted).

In her reply brief, the IG abandoned her claim that subsection 1128(i)(3) of the Act is applicable. She instead argues Petitioner was "convicted" as defined in subsection 1128(i)(4) of the Act, which defines a conviction to include a criminal offense where the individual "has entered into any arrangement or program where judgment of conviction is withheld." IG Reply at 3-4; 42 U.S.C. § 1320a-7(i).

Petitioner's claim that "the IG must be bound by Mississippi law" in defining crimes for which exclusion is mandated is plainly incorrect. P. Br. at 2. Neither the Act nor any controlling authority suggests that the law of the state where the conviction was entered is relevant to this determination. See Ellen L. Morand, DAB No. 2436 at 5 (2012), quoting Carolyn Westin, DAB No. 1381 at 6 (1993), aff'd, Westin v. Shalala, 845 F.Supp. 1446 (D.Kan. 1993) ("Congress has defined for the ALJ and this Board what 'convicted' means for purposes of section 1128 and that definition is binding on us.").

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Indeed, the Board specifically rejected Petitioner's argument, noting that for purposes of section 1128 of the Act, "it is clear from the legislative history of this provision that Congress adopted such broad definitions to ensure that exclusions from federally funded health programs would not hinge on state criminal justice policies." Westin, DAB No. 1381 at 6.

Instead, I must determine whether Petitioner was "convicted" of a crime for purposes of exclusion within the meaning of the Act. Section 1128(i)(4) of the Act provides an individual has been "convicted" of a criminal offense "when the individual . . . has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld." 42 U.S.C. § 1320a-7(i)(4); see also 42 C.F.R. § 1001.2 (definition of "convicted" for purposes of exclusion from federal health care programs).

Here, Petitioner pleaded guilty to one felony count (Count 10), for which the court imposed three years of "non-adjudicated probation subject to successful payment of restitution in the amount of $3,893.50 . . . ." IG Ex. 2 at 6; IG Ex. 3 at 3; IG Ex. 4 at 1. While Petitioner claims the Act did not contemplate the circumstance of her guilty plea resulting in non-adjudicated probation, P. Br. at 2, it is evident that however it is labeled in Mississippi, Petitioner entered into a deferred adjudication arrangement where judgment of conviction was withheld. 42 U.S.C. § 1320a-7(i)(4).

The Board and federal courts have consistently found such arrangements establish an individual was "convicted" within the broad definition of that term found in section 1128(i)(4) of the Act. See Olandis Moore, DAB No. 2963 at 4-5 (2019), citing Michael S. Rudman, M.D., DAB No. 2171 at 6-7 (2008), aff'd, Rudman v. Leavitt, 578 F. Supp.2d 812 (D. Md. 2008) (holding "probation before judgment" amounted to a deferred adjudication arrangement whereby judgment of conviction was withheld); Leon Brown, M.D., DAB No. 1208 at 2 (1990) (conviction within the meaning of the Act where the petitioner "specifically agreed to an arrangement whereby the judge stayed entry of judgment and placed [him] on probation, with the balance of the probation to be suspended after [he] had made restitution . . . .").

Petitioner also points to the fact that she will eventually be eligible to receive an "order of expunction" under Mississippi state law that would in essence wipe out her conviction. P. Br. at 2. But whatever the privileges available to her as a result of successfully abiding by the terms of her non-adjudicated probation, the fact remains Petitioner entered into a deferred adjudication arrangement where judgment of conviction was withheld, and was thus convicted of a crime within the meaning of section 1128(i)(4) of the Act. Rudman, 578 F. Supp. 2d at 815 (even where a petitioner's state court conviction "could be expunged after three years if he successfully completes the term of probation," that "does not erase the fact that [he] entered into a 'program where judgment of conviction has

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been withheld. The material inquiry is whether [42 U.S.C.] § 1320a-7(i)(4) treats [his] guilty plea as a conviction, not how state law may treat his guilty plea in the future.").

Petitioner was convicted within the meaning of section 1128(i)(4) of the Act once she pleaded guilty and entered into an arrangement to enter into probation and repay restitution in lieu of the imposition of judgment. IG Exs. 3 and 4. The record also establishes that the felony offense to which Petitioner pleaded guilty, and for which she was convicted, occurred after August 21, 1996. IG Ex. 3 at 3. Therefore, I conclude that Petitioner was convicted of a felony offense that occurred after August 21, 1996, within the meaning of 42 U.S.C. § 1320a-7(a)(3).

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

The IG asserts Petitioner's felony conviction for Exploitation of a Vulnerable Person is related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct. IG Br. at 4-5; IG Reply at 4-5. Petitioner denies that her offense of conviction is related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct, arguing the allegations in the underlying state court case "stemmed from fee disputes" between her and family members of residents in the care facility Petitioner operated. Request for Hearing at 1.

Petitioner explains that her conviction under Mississippi's vulnerable adult statute is not on its face related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct, but instead stems from "exploitation," a term so broadly used by the statute that it could encompass Petitioner's actions here but still not relate to the financial crimes contemplated as worthy of exclusion under section 1128(a)(3) of the Act. P. Br. at 3-4. Petitioner contends that because it is overbroad, "the Mississippi definition [of exploitation] potentially ensnares the Petitioner's otherwise completely normal, legal actions which fall outside of the Social Security Act's definitions." Id.

Petitioner's belief that Mississippi state law unfairly designated her conduct as criminal or exploitative is irrelevant. I do not review the legitimacy of an individual's conviction under state law. My review is limited to determining whether the IG had a basis to exclude Petitioner from participating in all federal health care programs.

To do so under section 1128(a)(3) of the Act, the IG need only identify a felony conviction "relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct" to merit exclusion. 42 U.S.C. § 1320a-7(a)(3) (emphasis added). 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)

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(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).

To determine whether Petitioner's felony conviction is related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct, I am not limited to considering the actual charge to which she pleaded guilty. Instead, I am "free to look beyond the narrow constructs of a state's criminal statutes" in determining whether Petitioner was convicted of a felony that requires exclusion under the Act. Summit S. Shah, M.D., DAB No. 2836 at 7 (2017); see also Charice D. Curtis, DAB No. 2430 at 4 (2011) ("[T]he plain language of section 1128(a)(3) encompasses felonies 'relating to' fraud and the other types of listed offenses, not just to felonies that constitute fraud or one of the other listed offenses.").

The critical question is thus not whether Petitioner's offense conduct fairly meets the definition of exploitation under Mississippi law, but whether her offense of conviction relates to the financial crimes contemplated by section 1128(a)(3) of the Act. Here, Petitioner admitted she "willfully, feloniously and unlawfully retain[ed] property having a value of more than $250.00" belonging to another person and "use[d] said property for [her] own profit" by retaining the Social Security payment of a resident of the personal care home she operated, rather than forwarding that payment to the resident. IG Ex. 2 at 6; IG Ex. 3 at 3.4

I have no difficulty finding that Petitioner's conduct, which amounted to converting a government entitlement payment intended for someone else for her own use and profit, constitutes, or at the very least relates to, financial misconduct akin to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct. Petitioner appears to concede as much, stating "Mississippi's extremely broad definition of "exploitation" covers the improper use of a vulnerable person's resources for profit. That potentially would encompass the actions of the Petitioner here, which were to accept a Social Security Administration payment to cover the legal debts of a resident at her personal care home." P. Br. at 3.

Thus, the IG has established that Petitioner's felony conviction for Exploitation of a Vulnerable Person is related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct. 42 U.S.C. § 1320a-7(a)(3); 42 C.F.R. § 1001.101(c)(1).

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3. Petitioner's offense of conviction was connected to the delivery of a health care item or service.

Petitioner does not explicitly argue the offense to which she pleaded guilty was not in connection with the delivery of a healthcare item or service, but she does assert more generally that her conviction does not warrant exclusion. P. Br. at 3-4.

Relevant here, 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); 42 C.F.R. § 1001.101(c). 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 Morand, DAB No. 2436 at 9; 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 offense of conviction and the delivery of a health care item or service. Id.

An examination of the criminal conduct to which Petitioner admitted demonstrates at least a rational relationship between her offense and the delivery of health care items or services. Petitioner acknowledged "she retained the Social Security payment as payment for the rent [the resident] owed" while that resident "was admitted to inpatient care at a local hospital." P. Br. at 3-4. Petitioner could not have accessed the resident's Social Security payment but for his stay at the care facility Petitioner operated and where she presumably delivered health care items and services.

Similarly, the increased vulnerability and stress associated with having his Social Security payment misappropriated could easily affect the resident's health and wellbeing. These concerns were particularly acute where Petitioner converted the resident's Social Security payments after he was admitted as a hospital inpatient, and later left Petitioner's facility because he required "a more intensive level of care." P. Br. at 3-4. Under these circumstances, I conclude that the offense for which Petitioner was convicted was connected to the delivery of a healthcare item or service. 42 U.S.C. § 1320a-7(a)(3).

For the foregoing reasons, I conclude that Petitioner was convicted of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial

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misconduct 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 8b in the official case file maintained in the Departmental Appeal Board's E-File (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. I explain in greater detail below why Petitioner's guilty plea and participation in a deferred adjudication arrangement amount to a conviction within the meaning of the Act.
• 3. The Secretary has promulgated regulations implementing these provisions of the Act at 42 C.F.R. § 1001.101(a).
• 4. To the extent Petitioner now asserts she believed she could legally retain, for her own use, a Social Security payment intended for a resident at the personal care home she operated, her claim amounts to an impermissible effort to re-litigate the factual basis for her conviction in state court, which I need not consider. 42 C.F.R. § 1001.2007(d).