Karen Kay Dew, DAB CR5437 (2019)

DECISION

Petitioner, Karen Kay Dew, was a behavioral health interventionist employed by Transitional Services of Iowa (TSI).  Petitioner pleaded guilty to one count of fraudulent practice in violation of Iowa Criminal Code §§ 714.8(3), 714.8(4), and 714.10.  Based on the disposition of Petitioner’s criminal case, the Inspector General (IG) excluded Petitioner from participation in Medicare, Medicaid, and all federal health care programs for a minimum period of five years, pursuant to section 1128(a)(1) of the Social Security Act (Act).1

For the reasons explained below, I find that Petitioner was convicted of a criminal offense related to the delivery of an item or service under the Iowa Medicaid program.  The IG was therefore required to exclude her from program participation.  The duration of the exclusion is the minimum period required by section 1128(c)(3)(B) of the Act; accordingly, it is reasonable as a matter of law. 

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I. Background

Following an investigation by the Medicaid Fraud Control Unit of the Iowa Department of Inspections and Appeals (MFCU), Petitioner was charged with five counts of fraudulent practice and five counts of tampering with records.  IG Exhibits (Exs.) 2,2 5, 6.  The MFCU investigator’s affidavit in support of Count I of the Trial Information stated, among other things, that Petitioner had “knowingly and intentionally submitted documentation for Medicaid member A.M. used in billing the State of Iowa for services that [Petitioner] did not provide.”  IG Ex. 6 at 1.3   On or about November 11, 2018, the Iowa District Court for Page County (state court) entered an order dismissing Counts II through X of the Trial Information and deferring judgment and sentence on Petitioner’s guilty plea to Count I.4   IG Ex. 3 at 1; see also IG Ex. 2 at 1.  The state court placed Petitioner on probation and ordered her to pay restitution, costs, and fees.  IG Ex. 3 at 1.

In a letter dated February 28, 2019, the IG advised Petitioner that she was excluded from participation in Medicare, Medicaid, and all federal health care programs because she had been convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  IG Exhibit (Ex.) 1.  The letter explained that the exclusion was imposed pursuant to section 1128(a)(1) of the Act.  Id.  Petitioner timely requested review.  I convened a telephone prehearing conference and issued an Order and Schedule for Filing Briefs and Documentary Evidence (Briefing Order).

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Pursuant to the Briefing Order, the IG submitted a brief and six proposed exhibits (IG Br.; IG Exs. 1-6).  In response, Petitioner filed a number of documents that were not submitted in the form required by my Briefing Order.5   Neither party objected to the exhibits (or submissions) filed by the opposing party.  I therefore admit the IG’s proposed exhibits and Petitioner’s submissions into the record.

I directed the parties to indicate in their briefs whether an in-person hearing would be necessary, and if so, to submit the testimony of any proposed witness as “written direct testimony in the form of an affidavit or declaration.”  Briefing Order ¶ 7.c.ii.  I also explained that I would hold a hearing only if a party offered witness testimony that is relevant and non-cumulative and the opposing party requested cross-examination.  Id. ¶ 9 The IG indicated that an in-person hearing is not necessary and submitted no testimony from any proposed witness.  IG Br. at 6.  Petitioner did not state whether she wished to appear or present testimony at a hearing.  However, Petitioner did not offer the written direct testimony of any witness.  I therefore decline to convene a hearing and I decide this case based on the written record.

II. Discussion

A. Petitioner must be excluded pursuant to section 1128(a)(1) of the Act because she was convicted of a criminal offense related to the delivery of an item or service under the Medicaid program.6

The Act requires the Secretary of Health and Human Services (Secretary) to exclude from program participation any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  Act § 1128(a)(1).  The Secretary has delegated this authority to the IG.  42 C.F.R. § 1001.101(a).

1. Petitioner was convicted of a criminal offense.

Petitioner does not dispute that she was convicted of a criminal offense.  See Docket Entry 6q.  Rather, she argues that her conviction should be set aside for reasons that I discuss in more detail below.  Id.  The IG’s evidence demonstrates that Petitioner pleaded guilty to one count of fraudulent practice in violation of Iowa Criminal Code §§ 714.8(3),

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714.8(4), and 714.10.  IG Ex. 3 at 1; see also IG Ex. 2 at 1.  The state court accepted Petitioner’s plea and deferred judgment of conviction by order dated November 11, 2018.  IG Ex. 3.  Accordingly, Petitioner was convicted of a criminal offense as that term is defined in subsections 1128(i)(3) and (4) of the Act.

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

Petitioner’s conviction is related to the delivery of items or services under the Iowa Medicaid program.  The MFCU investigation revealed that Petitioner engaged in the following conduct:

[Petitioner] was found to have created and submitted false documentation for BHIS[7 ] services that she did not provide.  This documentation was then used to support the billing of the State of Iowa’s Medicaid system for the documented services.

IG Ex. 5 at 2.  Petitioner admits that she “had falsified notes on one family [she] worked with.”  Docket Entry 6q.  She further explains that she “knew [she] was doing wrong . . . but at the time [she] was in great need for clients and hours.”  Id.  Petitioner attempts to deflect blame for her conduct onto her supervisor, who, according to Petitioner, advised her to fabricate the notes and “was the one who would approve the notes for payment.”  Id.

Petitioner emphasizes the fact that she was not responsible for submitting bills to the Iowa Medicaid program for reimbursement.  Id.  However, the fact that Petitioner may not herself have submitted the fraudulent bills does not eliminate the basis for her exclusion.  All that is required to support Petitioner’s exclusion is that her conviction must be “related to” the delivery of an item or service under Medicare or Medicaid.  Appellate panels of the Departmental Appeals Board (DAB) have long held that that the phrase “related to the delivery of an item or service” requires only a “nexus” or “common sense connection” between a conviction and the delivery of items or services under a protected program to invoke the IG’s exclusion authority.  See, e.g., Scott D. Augustine, DAB No. 2043 at 5-6 (2006) (and cases cited therein).

As the MFCU investigation and Petitioner’s own explanation demonstrate, Petitioner’s conviction was directly related to the delivery of items or services under the Iowa Medicaid program.  Petitioner’s conviction occurred because she fabricated documentation that her employer, TSI, used to support its claims for Medicaid

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reimbursement.  Many DAB decisions have held that submitting false bills to a protected program is an offense related to the delivery of an item or service within the meaning of section 1128(a)(1) of the Act.  See, e.g., Rosa Velia Serrano, DAB No. 2923 at 7 (2019) (and cases cited therein).  That Petitioner may not have submitted the claims herself does not alter the fact that TSI’s false billings relied on the fraudulent documentation she created.

In addition, as a result of her conviction, the state court ordered Petitioner to pay restitution to the Iowa Medicaid Program.  See IG Ex. 3 at 1; IG Ex. 4; IG Ex. 5 at 2.  It is well-settled that “a criminal offense resulting in financial loss to a State Medicaid program is ‘related to’ the delivery of items or services under that Medicaid program because it results ‘in less funds being available to pay for covered services’ delivered to Medicaid patients.”  Summit S. Shah, M.D., DAB No. 2836 at 8-9 (2017) (quoting Berton Siegel, D.O., DAB No. 1467 at 6-7 (1994)).  For these reasons, Petitioner’s criminal offense is related to the delivery of items or services under the Iowa Medicaid program and she is therefore subject to exclusion pursuant to section 1128(a)(1) of the Act.

Moreover to the extent Petitioner contends that she was wrongly convicted of the offense with which she was charged, this argument is foreclosed under the applicable regulations, as I explain in the following section of this decision.

B. Petitioner’s argument that she did not directly bill the Iowa Medicaid program for the services at issue represents an impermissible collateral attack on her conviction which cannot be a basis to set aside her exclusion.

The regulations provide that, when appealing an exclusion, an excluded party may not collaterally attack the conviction or civil judgment underlying the exclusion:

When the exclusion is based on the existence of a criminal conviction or a civil judgment imposing liability by Federal, State or local court, a determination by another Government agency, or any other prior determination where the facts were adjudicated and a final decision was made, the basis for the underlying conviction, civil judgment or determination is not reviewable and the individual or entity may not collaterally attack it either on substantive or procedural grounds in this appeal.

42 C.F.R. § 1001.2007(d).  In the present case, Petitioner argues that she could not have submitted false bills to the Iowa Medicaid program because she was not a licensed or enrolled Medicaid provider.  Docket Entry 6q.  I interpret Petitioner’s statement as an argument that she should not have been convicted because an element of the crime was

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impossible.  This amounts to a contention that Petitioner’s conviction is invalid ˗ a collateral attack.

Notwithstanding Petitioner’s arguments to the contrary, she pleaded guilty to Count I of the Trial Information.  See IG Ex. 3.  In so doing, she admitted that she “did knowingly and intentionally make false statements in application for payment of services by a provider participating in the medical assistance program.”8   IG Ex. 2 at 1.  Petitioner’s conviction based on her guilty plea is a “prior determination where the facts were adjudicated and a final decision was made” within the meaning of 42 C.F.R. § 1001.2007(d).  Therefore, Petitioner may not collaterally attack her conviction in this forum.

Finally, if it is Petitioner’s contention that she should not be excluded because she is seeking post-conviction relief based on her contention that she received ineffective assistance of counsel (see Docket Entry 6q), this argument is similarly not a basis to set aside Petitioner’s exclusion.  As an appellate panel of the DAB has explained, “Petitioner may be entitled to reinstatement should she prevail on her appeal of her conviction, if the appeal results in her no longer being convicted for purposes of the exclusions statute, but she is not entitled to have [here, the administrative law judge] reverse or stay her exclusion while her appeal is pending.”  Serrano, DAB No. 2923 at 8.

C. As a matter of law, Petitioner must be excluded for a minimum period of five years.

The Act requires that the period of exclusion for individuals convicted of offenses described in section 1128(a)(1) “shall not be less than five years. . . .”  Act § 1128(c)(3)(B); see also 42 C.F.R. § 1001.102.  Thus, I am required to uphold the length of Petitioner’s exclusion.  Once I have concluded that Petitioner is subject to exclusion, I may not reduce Petitioner’s exclusion to zero, nor may I direct the IG to reinstate Petitioner to program participation.  See 42 C.F.R. § 1005.4(c)(6); see also 42 C.F.R. § 1001.3002(f).

III. Conclusion

For the reasons explained above, I conclude that the IG was required to exclude Petitioner pursuant to section 1128(a)(1) of the Act due to her conviction of a criminal offense related to the delivery of an item or service under the Iowa Medicaid program.

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An exclusion pursuant to section 1128(a)(1) must be for a minimum period of five years; accordingly the length of Petitioner’s exclusion is reasonable as a matter of law.

1. The current version of the Social Security Act can be found at https://www.ssa.gov/OP_Home/ssact/ssact-toc.htm.  Each section of the Act on that website contains a reference to the corresponding United States Code chapter and section.
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2. The copy of the Trial Information that is in evidence as IG Ex. 2 is missing at least one page.  Page 1 of IG Ex. 2 includes Counts I and II, while page 2 of the exhibit includes Counts V, VI, and VII.  Counts III and IV of the information do not appear in the exhibit.  This discrepancy is not material to my decision however, since Petitioner pleaded guilty to Count I, which appears in its entirety on page 1 of the exhibit.
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3. I infer that Count I of the Trial Information charged Petitioner with the same conduct described in the MFCU investigator’s affidavit based on the fact that the Trial Information and the affidavit both describe conduct that occurred between September 1, 2016, and December 31, 2016.  Compare IG. Ex. 2 at 1 with IG Ex. 6 at 1.
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4. Count I of the Trial Information charged Petitioner with violating Iowa Criminal Code § 714.8(4), among other provisions.  IG Ex. 2 at 1.  By contrast, the sentencing order recites that Petitioner pleaded guilty to § 714.8(8).  IG Ex. 3 at 1.  It appears to me that the citation to § 714.8(8) in the sentencing order is a typographical error.  Iowa Criminal Code § 714.8(8) describes the crime of counterfeit labeling, whereas § 714.8(4) describes the crime of making false entries on public or business records.  The record does not suggest that Petitioner engaged in counterfeit labeling.
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5. Petitioner’s submissions appear as Docket Entries #6 through 6q in the electronic file for this case. I consider Petitioner’s letter at Docket Entry 6q as advancing the legal arguments she makes in response to the IG’s brief.
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6. My conclusions of law appear as headings in bold italic type. My findings of fact appear in the supporting text.
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7. Behavioral Health Intervention Services (BHIS) are “Medicaid services that offer tools and support to individuals and families so they can create a supportive environment at home.” IG Ex. 5 at 1.
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8. While I claim no expertise in Iowa criminal law, it does not appear to me that it is a necessary element of the crime for which Petitioner was convicted that she herself be a Medicaid provider or that she herself submit the claim to Medicaid. Rather, the elements of the offense appear to be (1) that she knowingly made a false statement and; (2) that the false statement was used in an application for payment by a participating provider.
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