Paulette Jackson, DAB CR5946 (2021)

DECISION

Petitioner, Paulette Jackson, owned and operated a company that supplied oxygen equipment to Medicaid recipients in Virginia.  Petitioner pleaded guilty to one felony count of health care fraud and one felony count of aggravated identity theft related to her company’s dealings with the Virginia Medicaid program.  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 sixteen years, pursuant to section 1128(a)(1) of the Social Security Act (Act).1 Petitioner now challenges the exclusion.

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 Medicaid program.  The IG was therefore required to exclude her from program participation for a minimum period of five years.  I further find that the IG had a basis to extend the period of exclusion and that the sixteen-year exclusion imposed falls within a reasonable range.

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I. Background

From at least 2006 through August of 2017, Petitioner owned and operated United Medical Home Oxygen & Med Supply (United Med), a Medicaid-enrolled durable medical equipment (DME) supplier located in Franklin, Virginia.  IG Exhibit (Ex.) 5 at 1 2.  On February 6, 2019, a federal grand jury in the Eastern District of Virginia returned a six-count indictment charging Petitioner with four counts of health care fraud in violation of 18 U.S.C. § 1347 and two counts of aggravated identity theft in violation of 18 U.S.C. § 1028A.  IG Ex. 4 at 1.  On September 16, 2019, Petitioner agreed to plead guilty to one count each of health care fraud and aggravated identity theft.  IG Ex. 6.  On May 29, 2020, the United States District Court for the Eastern District of Virginia (federal district court) entered judgment finding Petitioner guilty based on her plea.  IG. Ex. 2 at 1.  Among other things, the federal district court sentenced Petitioner to 48 months’ incarceration (24 months on each count) and to pay $506,058.66 in restitution to the Virginia Department of Medical Assistance Services (Virginia Medicaid). IG Ex. 2 at 1, 2, 5; see also IG Ex. 5 at 1.

As part of her plea agreement, Petitioner signed a statement of facts, in which she agreed that “the factual allegations . . . filed in this case are true and correct, and that the United States could have proven them beyond a reasonable doubt.”  IG Ex. 5 at 1.  According to the statement of facts, between January 8, 2010, and August 3, 2017, Petitioner, through United Med, fraudulently billed Medicaid for refills of liquid oxygen by submitting requests for prior authorization and claims for reimbursement to Medicaid reflecting oxygen tank refill costs 45 to 78 times greater than the actual cost of the oxygen. IG Ex. 5 at 2-5.  Further, the statement of facts recites that Petitioner knowingly transferred, possessed, and used, without lawful authority, a means of identification of another person (name, date of birth, and insurance identification number) to commit health care fraud by submitting claims to Medicaid under the individual’s insurance.  Id. at 5.  Petitioner requested that Medicaid reimburse United Med for liquid oxygen purportedly furnished to this individual at a cost of $14.27 per pound when United Med was only entitled to be reimbursed at the rate of $0.62 per pound.  Id.  According to the statement of facts, based on the inflated costs reported by Petitioner, United Med improperly billed Medicaid $506,058.66. Id. at 6.

In a letter dated October 30, 2020 (notice letter), the IG advised Petitioner that she was excluded from participation in Medicare, Medicaid, and all federal health care programs for sixteen years 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 Ex. 1.  The notice letter explained that the exclusion was imposed pursuant to section 1128(a)(1) of the Act.  Id.  The letter further explained that the sixteen-year exclusion exceeded the statutory minimum due to the following aggravating factors:  the acts resulting in conviction caused financial loss to a government program in excess of $50,000; the acts 

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that resulted in conviction were committed over a period of one year or more; and the sentence imposed by the court included incarceration.  Id.

Petitioner, who is self-represented, timely requested a hearing before an administrative law judge and the case was assigned to me.  I convened a telephone prehearing conference in which both parties participated. Thereafter, I issued an Order and Schedule for Filing Briefs and Documentary Evidence (Briefing Order).  In the briefing order, I waived the requirement for Petitioner to file documents electronically, instead permitting her to file by mail.

Pursuant to the Briefing Order, the IG submitted a brief and six proposed exhibits (IG Br.; IG Exs. 1-6). Petitioner did not file her brief by June 30, 2021, as required.  I therefore directed Petitioner to show cause why I should not dismiss her hearing request for abandonment.  My office did not receive Petitioner’s brief or response to the show cause order by the due date of August 9, 2021.  Therefore, on August 25, 2021, I dismissed Petitioner’s hearing request.  However, counsel for the IG notified my office that the IG had received a mailed copy of Petitioner’s brief (P. Br.) and provided my office a copy of the brief.  I therefore vacated the dismissal I had issued and accepted the copy of Petitioner’s brief obtained from the IG in satisfaction of the show cause order.  With her brief, Petitioner filed five exhibits: 1) one page from her indictment; 2) two pages purportedly from a Medicaid policy manual; 3) a partial page purportedly from a Medicaid policy manual; 4) what appears to be a page from a dictionary or other reference book in which “lead poisoning” and “learning” are defined; and 5) an email purportedly from Petitioner’s daughter to Petitioner.  Id.  The IG waived the opportunity to reply to Petitioner’s brief.  Neither party objected to the exhibits proposed by the opposing party.  In the absence of objection, I admit IG Exs. 1-6 and P. Exs. 1-5.

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, 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 9.  Petitioner did not state whether she wished to appear or present testimony at a hearing.  P. Br. Moreover, Petitioner did not offer her own written direct testimony or that of any other witness.  Id.  Finally, even if I construed the assertions in Petitioner’s brief as a proffer of her testimony, should she appear at a hearing, the IG did not request to cross-examine her.  I therefore decline to convene a hearing, and I decide this case based on the written record.

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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. 2

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.  P. Br.  Rather, she argues that her conviction should be set aside for reasons that I discuss in more detail below.  Id.  In any event, the evidence of record demonstrates that Petitioner pleaded guilty, and the federal district court accepted the plea and adjudicated her guilty of one felony count of health care fraud and one felony count of aggravated identity theft. IG Exs. 2, 6; P. Br.  Accordingly, Petitioner was convicted of a criminal offense as that term is defined in subsections 1128(i)(2) and (3) of the Act (an individual is “convicted” where there has been a finding of guilt against the individual, or where a court has accepted an individual’s guilty plea).

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

As described above, Petitioner stipulated, in the statement of facts accompanying her plea agreement, that she caused United Med to submit requests for reimbursement to the Virginia Medicaid program in which the cost of liquid oxygen was grossly overstated.  IG Ex. 5 at 4.  Petitioner further stipulated that she used the identity of a Medicaid recipient, without the recipient’s authorization, to file fraudulent Medicaid claims under that individual’s insurance.  Id. at 5.  Petitioner further stipulated that United Med’s improper bills to Medicaid totaled $506,058.66.  Id. at 4, 6; IG Ex. 3.  

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.  Many appellate decisions of the Departmental Appeals Board (DAB) have held that that the phrase “related to the delivery of an item or service” requires only a “nexus” or “common

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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 Petitioner stipulated, her conviction occurred because she fabricated documentation used to support United Med’s claims for Medicaid reimbursement.  Id.  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); see also Clemenceau Theophilus Acquaye, DAB No. 2745 at 4-5 (2016).

In addition, Petitioner was ordered to pay $506,058.66 in restitution to the Virginia Department of Medical Assistance Services.  IG Ex. 2; IG Ex. 3.  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 offenses are related to the delivery of items or services under the Virginia Medicaid program, and she is therefore subject to exclusion pursuant to section 1128(a)(1) of the Act.

B. Petitioner may not collaterally attack her conviction in this forum.

Petitioner’s sole argument against her exclusion is that she was “tricked” by the prosecutor and her criminal defense attorney into pleading guilty to “false” charges.  P. Br.  Petitioner argues, essentially, that she should not have been convicted.  In legal terms, such an argument is referred to as a “collateral attack” on the conviction.

However, the regulations are clear 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).  Accordingly, whatever the merits of Petitioner’s contention that her guilty plea was coerced or otherwise improper, I am without authority to consider this argument.

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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.  In the following sections of this decision, I consider whether, in light of the aggravating and mitigating factors (if any) that may be present, the sixteen year exclusion imposed by the IG falls within a reasonable range.

D. A sixteen-year period of exclusion is reasonable.

1. The IG has proven three aggravating factors supporting an exclusion period beyond the five-year statutory minimum.

The regulations establish aggravating factors that the IG may consider to lengthen the period of exclusion beyond the five-year minimum for a mandatory exclusion.  42 C.F.R. § 1001.102(b).  In this case, the IG’s notice letter advised Petitioner of three aggravating factors that justified excluding her for more than five years.  IG Ex. 1 at 2.  These factors are listed in 42 C.F.R. §§ 1001.102(b)(1), (2), and (5).

a. The acts resulting in Petitioner’s conviction caused financial loss of $50,000 or more.

The IG asserted that the acts resulting in Petitioner’s conviction caused financial loss to a government agency or program of over $50,000.  IG Ex. 1; 42 C.F.R. § 1001.102(b)(1).  The federal district court ordered Petitioner to pay a total of $506,058.66 in restitution to the Virginia Department of Medical Assistance Services; an amount to which Petitioner stipulated.  IG Ex. 3; IG Ex. 5.  Restitution has long been considered a reasonable measure of program losses.  Jason Hollady, M.D., DAB No. 1855 (2002).  Thus, as measured by the restitution for which she was held responsible, Petitioner’s actions resulted in program losses more than ten times greater than the $50,000 threshold for aggravation. Because the financial losses were so far in excess of the threshold amount for aggravation, the IG may justify a significant increase in Petitioner’s period of exclusion.  See, e.g., Juan de Leon, Jr., DAB No. 2533 at 5 (2013), (citing Sushil Aniruddh Sheth, M.D., DAB No. 2491 at 7 (2012); Jeremy Robinson, DAB No. 1905 at 12 (2004); and Donald A. Burstein, Ph.D., DAB No. 1865 at 12 (2003)).

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b. The criminal acts for which Petitioner was convicted were committed over a period of more than one year.

The IG asserted that Petitioner’s acts resulting in conviction were committed over a period of one year or more.  IG Ex. 1; 42 C.F.R. § 1001.102(b)(2).  In the statement of facts, to which she stipulated as part of her plea agreement, Petitioner admitted that the fraudulent acts for which she was convicted occurred between January 8, 2010, and August 3, 2017, a period of more than seven years.  IG Ex. 5. Accordingly, I find that the IG has met her burden in proving this aggravating factor.

c. The sentence imposed against Petitioner included a period of incarceration.

The IG asserted that Petitioner’s criminal conviction resulted in a sentence of incarceration.  IG Ex. 2; 42 C.F.R. § 1001.102(b)(5).  The record shows that the federal district court sentenced Petitioner to 48 months of incarceration.  IG Ex. 2.  Again, Petitioner has not disputed this factor.  P. Br.  Therefore, the evidence of record establishes the presence of this aggravating factor.

2. Petitioner has not established any mitigating factors that could reduce her period of exclusion.

Where the IG has properly exercised her discretion to increase the exclusionary period, as she has done here, I may only reduce that period after considering the specific mitigating factors found at 42 C.F.R. § 1001.102(c):

(1) [W]hether the individual or entity was convicted of three or fewer misdemeanor offenses and the entire amount of financial loss (both actual loss and intended loss) to Medicare or any other Federal, State, or local governmental health care program due to the acts that resulted in the conviction, and similar acts, is less than $5,000

(2) The record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual’s culpability; or

(3) The individual’s or entity’s cooperation with Federal or State officials resulted in—

(i) Others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs,

(ii) Additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or

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(iii) The imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.  

Petitioner has the burden to prove by a preponderance of the evidence that there is a mitigating factor for me to consider.  42 C.F.R. § 1005.15(b)(1).  Based on my consideration of the entire record, I conclude that Petitioner has failed to allege or prove any mitigating factor that I am permitted to consider to reduce the period of her exclusion.  

3. Based on the presence of three aggravating factors and no mitigating factors, the sixteen-year exclusion imposed in this case falls within a reasonable range.

I must uphold the IG’s determination as to the length of exclusion unless it is unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  It is important to note that it is the quality of the aggravating (or mitigating) factors that is most important when considering the length of exclusion and not the sheer number of aggravating factors that are present in a given case.  As the drafters stated in the preamble to the final rule establishing the exclusion regulations:

We do not intend for the aggravating and mitigating factors to have specific values; rather, these factors must be evaluated based on the circumstances of a particular case.  For example, in one case many aggravating factors may exist, but the subject’s cooperation with the OIG may be so significant that it is appropriate to give that one mitigating factor more weight than all of the aggravating.  Similarly, many mitigating factors may exist in a case, but the acts could have had such a significant physical impact on program beneficiaries that the existence of that one aggravating factor must be given more weight than all of the mitigating.  The weight accorded to each mitigating and aggravating factor cannot be established according to a rigid formula, but must be determined in the context of the particular case at issue.

57 Fed. Reg. at 3298, 3314-15 (Jan. 29, 1992). 

The acts for which Petitioner was convicted caused the Virginia Medicaid program to overpay United Med by more than half-a-million dollars.   IG. Ex. 2; IG Ex. 5.  These acts were also committed over the course of more than seven years.  IG Ex. 5.  Finally, Petitioner was sentenced to 48 months’ incarceration for her crimes.  IG Ex. 2.

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Each of the factors present in this case exceeds the minimum required for aggravation by many times. I conclude that the three proven aggravating factors establish that Petitioner manifests a high degree of untrustworthiness, justifying a lengthy exclusion.  Petitioner has not established any mitigating factor that would justify a shorter exclusion.  The sixteen-year exclusion imposed is just over three times the minimum mandatory exclusion.  The loss to Medicaid by itself is more than ten times the amount required to establish the aggravating factor.  Thus, that factor alone might justify an exclusion three times above the minimum.  Given the presence of two additional significant aggravating factors, I cannot conclude that a sixteen-year period of exclusion is unreasonable.

III. Conclusion 

For the reasons explained above, I conclude that the IG properly excluded Petitioner from participation in Medicare, Medicaid, and all federal health care programs, and I sustain as reasonable the sixteen-year period of exclusion.

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. My conclusions of law appear as headings in bold italic type. My findings of fact appear in the supporting text.
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