Nancy L. Clark, DAB No. 2989 (2020)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Nancy L. Clark (Petitioner) appeals a decision by an Administrative Law Judge (ALJ) upholding on the written record the Inspector General’s (I.G.) exclusion of Petitioner from participation in all federal health care programs for a period of five years.  Nancy L. Clark, DAB CR5483 (2019) (ALJ Decision).  The ALJ concluded that the I.G. properly excluded Petitioner based on her conviction for a criminal offense related to neglect or abuse of patients in connection with the delivery of a health care item or service, pursuant to section 1128(a)(2) of the Social Security Act (Act),1 which requires a minimum exclusion period of five years (Act § 1128(c)(3)(B)).

For the reasons set out below, we reject Petitioner’s arguments and affirm the ALJ’s decision.

Legal Background

Section 1128(a)(2) of the Act provides that the Secretary of Health and Human Services “shall exclude” from participation in federal health care programs an individual who “has been convicted, under Federal or State law, of a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service.”

When an exclusion is imposed under section 1128(a), section 1128(c)(3)(B) requires that the “minimum period of exclusion . . . be not less than five years . . . .”  An excluded individual may request a hearing before an ALJ, but only on the issues of whether the I.G. had a basis for the exclusion and whether an exclusion longer than the mandatory minimum period is unreasonable in light of any of the aggravating and mitigating factors

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specified in the regulations that apply to the case before the ALJ.  42 C.F.R. §§ 1001.2007(a), 1005.2(a).  A party dissatisfied with the ALJ’s decision (to which 42 C.F.R. § 1005.20 refers as the “initial decision”) may appeal it to the Board.  Id. § 1005.21.

Case Background2

Petitioner was a nurse at an Ohio nursing facility.  ALJ Decision at 5.  Following an investigation into the death of a resident at the nursing home where Petitioner was employed, the state of Ohio charged Petitioner by criminal complaint in an Ohio municipal court with one count of making a false statement with the purpose to mislead a public official in performing his or her official function, in violation of Ohio Revised Code § 2921.13.  Id. (citing I.G. Ex. 3).  An internal memorandum dated May 26, 2017, summarizing the Ohio Attorney General’s investigation findings (AG Memo, I.G. Ex. 2), stated that “[o]n May 14, 2016, Nancy Clark lied to [state nursing home] surveyors [S.S.] and [D.M.] concerning her actions in response to the medical emergency experienced by [a resident].”  I.G. Ex. 2, at 4.  The complaint alleged that, on May 14, 2016,3 Petitioner, “an employee of [the nursing facility] did make [a] false statement to state officials during the course of their investigation . . . .”  P. Ex. 1.  On April 20, 2018, Petitioner entered a plea of no contest to the reduced misdemeanor charge of attempted falsification in violation of Ohio Revised Code § 2923.02.  ALJ Decision at 5 (citing I.G. Ex. 5).  The court accordingly entered judgment of conviction against Petitioner based on her plea.  Id. at 5-6 (citing I.G. Ex. 4, at 1).    

By letter dated March 29, 2019, the I.G. notified Petitioner that, pursuant to section 1128(a)(2) of the Act, she was being excluded from Medicare, Medicaid, and all federal health care programs for a minimum period of five years due to her conviction “in the Garfield Heights Municipal Court, Cuyahoga County, Ohio of a criminal offense related to neglect or abuse of patients, in connection with the delivery of a health care item or service . . . .”  I.G. Ex. 1, at 1.

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Petitioner filed a timely request for an ALJ hearing.  ALJ Decision at 2.  In support of its determination to exclude Petitioner, the I.G. submitted five exhibits, including the May 26, 2017 AG Memo recommending that Petitioner be referred to local authorities for prosecution for providing false information to state surveyors.4

Specifically, the AG Memo alleged that, on the morning of May 14, 2016, Petitioner was on duty at the nursing facility – along with a second nurse (Nurse 2) and an inexperienced nurse aide (Aide 1) – when a resident (R1) experienced a medical emergency.  ALJ Decision at 5 (citing I.G. Ex. 2, at 1, 2).  At the time of the emergency, Petitioner was on an extended break and Nurse 2 was indisposed.5  Id. (citing I.G. Ex. 2).  Aide 1 discovered R1 in a state of distressed breathing, and attempted to administer breathing treatment.  Id.  Two state surveyors employed by the Ohio Department of Health arrived at the facility and suggested that Aide 1 call 911.  Id.  Emergency medical personnel arrived and began administering care to R1.  Id.  At this time, Petitioner returned from her break, but instead of entering R1’s room, “went directly to the nurse station and began to make telephone calls.”  I.G. Ex. 2, at 2.  A state surveyor observed Petitioner “from the time she entered the building from her break until the EMS personnel arrived and never saw her enter [R1]’s room.”  Id. at 3.  R1 was eventually transported to the hospital where he was pronounced dead.  ALJ Decision at 5 (citing I.G. Ex. 2, at 3).  The state surveyors later interviewed Petitioner, who “insisted” that upon returning from her break, she assessed R1, called 911, then returned to R1’s room before emergency responders arrived.  Id.  Petitioner also provided a written statement to the surveyors to that effect and entered a nursing note for R1’s file consistent with her claims.  Id.  “Multiple witnesses” – including Nurse 2, Aide 1, and the state surveyors – agreed “that details provided by [Petitioner] during her interview with the surveyors, in her written statement to the surveyors, and in the nursing note were false.”  I.G. Ex. 2, at 3.

Before the ALJ, Petitioner admitted that she was convicted of a criminal offense but disputed that the conviction related to the neglect or abuse of patients in connection with the delivery of a health care item or service.  Pet. Br. at 1-2.  Petitioner proposed to testify that she had no knowledge of the AG Memo or the information contained therein, and that “[h]er understanding was that her plea to the amended charge, leading to her misdemeanor conviction, had to do with a time-keeping issue and did not involve patient care.”  Id. at 3.  Petitioner also stated that she would dispute as untrue many of the statements in the AG Memo.  Id.  Petitioner objected to the admission of the memo “as unreliable and untrustworthy hearsay.”  Id.

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The I.G. filed a reply brief accompanied by a sworn declaration by the Ohio Assistant Attorney General (AAG) who authored the AG Memo.  (I.G. Ex. 6, AAG Declaration).  In the declaration, the AAG stated that the Medicaid Fraud Control Unit (MFCU) of the Ohio Attorney General’s Office investigated Petitioner, which “revealed the facts as alleged” in the AG Memo.  I.G. Ex. 6.  The AAG further stated that “the investigation led to Petitioner’s conviction . . . on April 20, 2018.”  Id. 

Petitioner objected to the admission of the AAG Declaration and renewed her objection to the AG Memo.  Petitioner subsequently filed a declaration (Pet. Decl.) (which the ALJ accepted as Petitioner’s written direct testimony) in which she expressed her “belief that the nature of the charge resulted from a timekeeping issue and did not involve patient care.”  Pet. Decl. at 2.  Petitioner disputed several “suppositions and hearsay statements” contained in the AG Memo, and stated that if the memo “were made known to me and were I advised that such formed the basis for the falsification charge before the municipal court, I would not have entered a ‘no contest’ plea, but would have contested the charge given the false facts set forth therein.”  Id. at 3.   

ALJ Decision

In a decision issued on the written record, the ALJ affirmed the I.G.’s determination to exclude Petitioner from all federal health care programs for five years in accordance with section 1128(a)(2) of the Act.  The ALJ admitted Petitioner’s exhibits and her declaration into the record.  ALJ Decision at 2.  The ALJ also admitted the I.G.’s exhibits, overruling Petitioner’s objections to the AG Memo (I.G. Ex. 2) and the AAG Declaration (I.G. Ex. 6), first noting that “Petitioner concedes hearsay evidence is admissible in this proceeding,” then stating that her arguments concerned the weight to be accorded to the hearsay evidence, not its admissibility. Id.  The ALJ next determined that an in-person hearing was unnecessary because the I.G. declined to cross-examine Petitioner and did not raise any objection to her written direct testimony. Id. at 2-3.

The ALJ concluded that the I.G. “had a reasonable basis to exclude Petitioner under 42 U.S.C. § 1320a-7(a)(2)” (Act § 1128(a)(2)) because “Petitioner’s offense of conviction related to neglect of a patient” and the “criminal conduct took place in connection with the delivery of a health care item or service.” Id. at 7.  The ALJ also concluded that “Petitioner must be excluded for a minimum period of five years.”  Id. (citing 42 U.S.C. § 1320a-7(c)(3)(B) (Act § 1128(c)(3)(B)); 42 C.F.R. § 1001.102(a)). 

In reaching his conclusions, the ALJ relied on the “facts gleaned from” the AG Memo, which the ALJ found “to be sufficiently reliable to provide the underlying basis for Petitioner’s conviction.”  Id.  The ALJ found that the I.G. “cured any defect in foundation associated with” the memo by submitting a declaration from the AAG, whose statements the ALJ found “credible.”  Id. at 6; see also id. at 7 (“Petitioner has failed to explain why the sworn declaration of a state prosecutor, who has no stake in the outcome of this

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proceeding, is not credible.”).  The ALJ also found Petitioner’s written direct testimony “not credible.”  Id. at 7.  The ALJ found it “altogether implausible” that Petitioner believed her conviction was for a timekeeping error, and stated that “[n]o reasonable person could have concluded the criminal charge against Petitioner related to anything but her attempt to cover up her unexcused absence at work on the day of R1’s death.”  Id. at 6. 

Standard of Review

Our standard of review of an exclusion imposed by the I.G. is established by regulation. We review a disputed issue of fact as to “whether the initial decision is supported by substantial evidence on the whole record.”  42 C.F.R. § 1005.21(h).  We review a disputed issue of law as to “whether the initial decision is erroneous.”  Id.

Analysis

Petitioner’s arguments before the Board concern both the admissibility and weight of the evidence.  Petitioner renews her assertion that the ALJ should have excluded the AG Memo and AAG Declaration from the record.  Notice of Appeal (NA) at 5-7.  Petitioner also argues that the ALJ erred by according more weight to the AG Memo than to her testimony when determining the underlying basis for her conviction.  Id. at 9-11.  Petitioner asserts that the “reliable and probative evidence does not support” the ALJ’s finding that her April 20, 2018 “criminal conviction was related to the neglect or abuse of a patient in connection with the delivery of a health care item or service.”  Id. at 5 (emphasis removed). 

We reject Petitioner’s arguments and determine that the ALJ’s conclusion that the I.G. had a lawful basis to exclude Petitioner under section 1128(a)(2) of the Act for a minimum period of five years is supported by substantial evidence and free of legal error.  First, we explain that the ALJ did not err by issuing a decision on the written record without conducting a hearing.  Next, we discuss the ALJ’s evidentiary ruling, and explain that the ALJ did not err or abuse his discretion by admitting and relying on the AG Memo and AAG Declaration.  Finally, we explain that the ALJ did not err in his conclusion that the I.G. had a lawful basis to exclude Petitioner under section 1128(a)(2) of the Act. 

I. The ALJ did not err by issuing a decision on the written record.

Petitioner argues that the ALJ “committed prejudicial error by not conducting an in‑person hearing.”  NA at 11.  Petitioner asserts that the ALJ “should have permitted” her to testify at a hearing, and be subject to cross‑examination.  Id. at 10.  Petitioner also asserts that the ALJ denied her the right to question the AAG and other individuals whose statements discussed in the AG Memo were the basis for the recommendation to charge Petitioner with a crime.  Id. at 6-7.

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The regulations permit ALJs to admit testimony in the form of a written statement.  42 C.F.R. § 1005.16(b).  The Board has previously observed that the federal courts “have allowed, and even strongly encouraged, written direct testimony in a variety of proceedings.  Since it is offered under oath, [written direct testimony] is generally no less credible in most instances than oral testimony in the hearing room, as long as the witness is subject to cross-examination.”  James Brian Joyner, M.D., DAB No. 2902, at 11 (2018) (quoting Pacific Regency Arvin, DAB No. 1823,at 7-8 (2002)).  The Board has also held that “where neither party seeks to cross-examine any witness for whom the opposing party has submitted written direct testimony, the ALJ’s decision to forego an in‑person hearing does not generally pose a due process concern.”  Id. (citing Lena Lasher, aka Lena Contang, aka Lena Congtang, DAB No. 2800, at 4 (2017);6 Igor Mitreski, M.D., DAB No. 2665, at 7 (2015)).  Moreover, Petitioner was advised in the Civil Remedies Division Procedures (CRDP) that the ALJ could determine that an in‑person hearing was unnecessary if the parties do not offer proposed witnesses or written direct testimony, or if the parties do not request the opportunity to cross-examine proposed witnesses.  CRDP § 19(d).7

Petitioner has not shown how the ALJ’s determination not to convene an in-person hearing prejudiced her or abrogated her rights in any way.  The ALJ found an in-person hearing “unnecessary” because:  1) he permitted Petitioner the opportunity to provide written direct testimony, which she submitted on October 3, 2019; and 2) the I.G. declined to cross-examine Petitioner and did not object to her testimony.  ALJ Decision at 2-3.  The I.G. did not proffer any proposed witnesses, and Petitioner did not ask the ALJ to issue a subpoena to compel the AAG or anyone else to testify.  See 42 C.F.R. § 1005.9.  Thus, an in-person hearing was only necessary to permit the I.G. to cross‑examine Petitioner, which the I.G. declined to do.  Id.

Moreover, Petitioner’s attempt to challenge the veracity of the statements in the AG Memo could reasonably be read as an impermissible collateral attack on the facts underlying her conviction.  42 C.F.R. § 1001.2007(d); see also Adel A. Kallini, MD, DAB No. 2944, at 6 n.3 (2019) (“[I]n challenging an exclusion or sanction based on, or derivative of, a prior criminal conviction, the respondent is precluded from collaterally

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attacking the factual or procedural elements of the underlying offense.”).  Petitioner pleaded no contest to the charge of attempted falsification before the Garfield Heights Municipal Court.  The court accepted her plea and entered judgment of conviction.   See I.G. Ex. 5.  That conviction is the basis for the I.G.’s exclusion.  Petitioner is now precluded from litigating the criminal charge in administrative proceedings before the ALJ and the Board on the I.G.’s exclusion. 

We therefore find no error in the ALJ’s determination to proceed to decision without conducting a hearing. 

II. The ALJ did not err or abuse his discretion in his evidentiary ruling.

A. The ALJ did not err or abuse his discretion in admitting I.G. Exhibits 2 and 6 into the record.

Petitioner argues that the ALJ should have excluded the AG Memo from the record because it includes unreliable “hearsay upon hearsay upon hearsay.”  NA at 4.  Petitioner notes that the memo “contained no attachments such as contemporaneous notes of the investigators, affidavits of the persons who spoke with the investigators, records of the [nursing facility] prepared in connection with the event at issue, etc.”  Id. at 3.  Petitioner then discusses factors that “may be considered to evaluate the reliability of hearsay statements” found in Florence Park Care Center, DAB No. 1931, at 10 (2004).8 She asserts, among other things, that she was unaware of the AG Memo until the I.G. filed it as a proposed exhibit; that she did not have an opportunity to question the individuals whose statements evidently formed the basis for the recommendation to charge Petitioner with a crime; that there is no other evidence in the record to corroborate the statements in the AG memo; that she is disputing the statements in the AG Memo, as her written direct testimony indicates; and that the memo was not signed and sworn to.  Id. at 6-7.

Petitioner also argues that the ALJ should have excluded the AAG Declaration because the AAG had no personal knowledge of the facts as alleged in the AG Memo, and therefore his declaration does not make the memo any more “reliable or trustworthy.”  Id. at 3-4.  Petitioner asserts that the AAG “did not conduct the interview(s) and there is nothing to reflect the source of his comments, whether by direct conversation with the secondary declarant(s) or review of notes/memos, if such exists.”  Id. at 10. Thus,

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Petitioner argues, “the lack of any reasonable basis to vest these hearsay statements with reliability and trustworthiness render them inadmissible.”  Id. at 7. 

We reject Petitioner’s arguments.  The governing regulations grant ALJs broad authority to “determine the admissibility of evidence.”  42 C.F.R. § 1005.17(a).  ALJs are not bound by the Federal Rules of Evidence, but “must exclude irrelevant or immaterial evidence.”  Id. § 1005.17(b), (c).  ALJs may also exclude relevant and material evidence “if its probative value is substantially outweighed by the danger of unfair prejudice . . . .”  Id. § 1005.17(d).  With respect to hearsay, the Board has repeatedly held that “hearsay is admissible in administrative proceedings generally and can be probative on the issue of the truth of the matter asserted, where sufficient indicia of reliability are present.”  See, e.g., Summit S. Shah, DAB No. 2836,at 5-6 (2017) (citing Britthaven, Inc., d/b/a Britthaven of Smithfield, DAB No. 2018, at 3 (2006) (and cases cited therein)). The Board has also held that “evidence that is extrinsic to the criminal court process (regardless of whether or not the evidence or its content were presented at the grand jury, trial, plea or sentencing phases) is admissible to show that the conduct underlying the offense met the elements of the exclusion law.  However, such evidence is probative only if it is reliable and credible.”  Shahat 5 (quoting Narendra M. Patel, M.D., DAB No. 1736, at 14 (2000), aff’d sub nom., Patel v. Thompson, 319 F.3d 1317 (11th Cir. 2003), cert. denied, 539 U.S. 959 (2003)).  Here, Petitioner does not dispute that the AG Memo is relevant9 and material to the question of whether Petitioner’s conduct underlying her criminal offense met the elements of section 1128(a)(2).  Nor does she directly dispute the ALJ’s determination that “the IG cured any defect in foundation associated with the prosecution memorandum by submitting a declaration from its author,” that is, the AAG Declaration.  ALJ Decision at 6.  Accordingly, we find no legal error in the ALJ’s ruling to admit these documents into the record.

Petitioner’s arguments, in essence, are an attempt to cast the ALJ’s ruling as an abuse of discretion.  See NA at 1 (“The touchstone of any decision where discretion is involved . . . is whether there has been the proper exercise of discretion.  Because hearsay evidence may be admitted in an administrative proceeding[,] that does not necessarily mean that all hearsay should be admitted . . . .”).  Petitioner’s arguments are based on the concept that unfair prejudice posed by unreliable hearsay statements outweighed the probative value of the proposed exhibits.  The ALJ has broad discretionary authority to admit or exclude evidence under 42 C.F.R. § 1005.17.  He found the AG Memo highly probative in determining whether Petitioner’s criminal conviction was related to the neglect of a patient in relation to the delivery of a health care item or service.  See ALJ Decision at 6-7.  We defer to the ALJ’s evidentiary determinations, including his determination to

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admit (and rely on) the AG Memo in the absence of compelling reason not to do so.  See, e.g., HeartFlow, Inc., DAB No. 2781, at 19 (2017) (“In general, the Board does not disturb the ALJ’s evidentiary determinations unless there is compelling reason to do so.”).  In any case, Petitioner has not specifically explained how the admission of evidence that includes hearsay statements – which is allowed in this forum – unfairly prejudiced her case.  Moreover, contrary to Petitioner’s assertion, her arguments regarding the reliability of the hearsay statements go to the weight and credibility of those statements accorded by the ALJ, not to their admissibility.  We fully discuss Petitioner’s reliability arguments in our analysis of the ALJ’s assessment of the evidence below.

In sum, Petitioner presents no compelling reason why the ALJ – acting fully within the scope of his authority granted by the regulations – erred or abused his discretion by admitting relevant and material hearsay evidence.  We thus conclude that the ALJ properly admitted the AG Memo and AAG Declaration into the record. 

B. We defer to the ALJ’s assessment of the evidence.

Petitioner raises several arguments about the weight and credibility accorded to the evidence.  Petitioner argues that since the AG Memo is (and contains) hearsay, it “lacks sufficient indicia of trustworthiness which cannot serve as substantial evidence in support of the ALJ’s Decision.”  Id. at 5 (emphasis removed); see also Petitioner’s arguments regarding the memo’s reliability, id. at 6-7.  Petitioner notes that nothing in the court documents show “any underlying factual basis for the complaint or plea” and, absent the factual assertions made in the memo, “there exists no evidence to support the allegation that [her] conviction of attempted falsification had any connection with the delivery of a health care item or service.”  Id. at 2, 5.  Petitioner asserts, for example, that the criminal complaint did not specify the date of the investigation, the nature of the investigation, or the false statement that Petitioner allegedly made.  Id. at 2.  Petitioner also argues that the ALJ erred by according more weight and credibility to the assertions made in the AG Memo than to her own written direct testimony.  Petitioner argues that the ALJ had no basis for determining her testimony – specifically her assertion that her conviction was related to a timekeeping error that did not involve patient care – was not credible.  NA at 9; see also ALJ Decision at 6. 

It is well settled that the Board defers to ALJ findings on credibility and the weight of testimony absent a compelling reason for rejecting them.  Putnam Ctr., DAB No. 2850, at 13 (2018), aff’d, Putnam Center v. U.S. Dept. of Health & Human Servs., 770 Fed. Appx. 630 (4th Cir. May 8, 2019); E & I Medical Supply Servs., Inc., DAB No. 2363, at 9 (2011) (“[U]nder the substantial evidence standard applicable to findings of fact by an ALJ (or other trier-of-fact), the Board does not make credibility findings, re-weigh the evidence, or substitute its evaluation of the evidence for that of the ALJ.”).  The Board has recognized, however, that hearsay presents “inherent reliability concerns since the declarant is not subject to the safeguard of cross-examination.”  Lifehouse of Riverside

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Healthcare Center, DAB No. 2774, at 9 (2017).  The weight to be accorded to hearsay evidence “is determined by the degree of reliability based on relevant indicia of reliability and whether it is corroborated by other evidence in the record as a whole.”  Id. (citing Cmty. Northview Care Ctr., DAB No. 2295, at 28 (2009)); see also supra note 8 (discussing indicia of reliability of hearsay).

The ALJ determined that the documents submitted by the I.G. were reliable and weighed their probative value against the assertions made by Petitioner in her written declaration.  First, the ALJ noted that the AG Memo was prepared by a “state prosecutor, who has no stake in the outcome of this proceeding . . . .”  ALJ Decision at 7  Next, the ALJ found that “any defect in foundation” was cured by submitting the declaration of the AAG, who asserted “under penalty of perjury that the facts outlined in [the memo] resulted from an investigation . . . that led to Petitioner’s conviction on April 20, 2018.”  Id. at 6.10  The ALJ therefore found the memo to be “sufficiently reliable to provide the underlying basis for Petitioner’s conviction.”  Id. at 7.  Conversely, the ALJ found Petitioner’s testimony that the Ohio Attorney General brought criminal charges against her for a timekeeping error “altogether implausible.”  Id. at 6.

We have no reason not to defer to the ALJ in his assessment of the evidence, including the weight and credibility accorded to any hearsay statements.   

III. The ALJ did not err in his conclusion that Petitioner’s conviction provides a legal basis for exclusion under Act § 1128(a)(2).

Section 1128(a)(2) of the Act mandates that the I.G. exclude for a minimum of five years an individual who:  1) has been convicted under federal or state law of a criminal offense; 2) relating to neglect or abuse of patients; and 3) in connection with the delivery of a health care item or service.  Act §§ 1128(a)(2), 1128(c)(3)(B).  For the purposes of the first element, a person is considered to have been “convicted” of a criminal offense when (among other circumstances) “a judgment of conviction has been entered against the individual . . . by a Federal, State, or local court,” or “a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local Court[.]”  42

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C.F.R. § 1001.2; Dr. Robert Kanowitz, DAB No. 2942, at 2 n.2 (2019).  In her brief, Petitioner admitted that she was convicted of a criminal offense.  Pet. Br. at 1.  Petitioner attached to her brief an entry of judgment, Pet. Ex. 2, which shows she pleaded no contest to one charge of attempted falsification, in violation of Ohio Revised Code § 2923.02, and that the municipal court accepted that plea and entered judgment against her on April 20, 2018.  Accordingly, Petitioner was “convicted” consistent with the definition of that term in 42 C.F.R. § 1001.2.11

Petitioner does not dispute that the facts the ALJ stated he had gleaned from the AG Memo clearly show that the state of Ohio charged Petitioner with falsification – which led to her April 20, 2018 conviction – because of her actions related to the neglect of a patient in connection with the delivery of a health care item or service.  We therefore conclude that the ALJ did not err as a matter of law that the I.G. had a valid legal basis to exclude Petitioner for a minimum of five years under section 1128(a)(2) of the Act.

Conclusion

For the reasons stated above, we affirm the ALJ Decision.