Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Appellate Division |
|
IN THE CASE OF | |
|
DATE: April 12, 2004 |
- v - |
|
The
Inspector General
|
Docket No.A-04-28
Civil Remedies CR1103 Decision No. 1915 |
DECISION | |
FINAL DECISION ON REVIEW OF Paulette White Jackson (Petitioner) appealed a November 4, 2003 decision by Administrative Law Judge (ALJ) Anne E. Blair excluding Petitioner from participation in Medicare, Medicaid, Maternal and Child Health Services Block Grant and Block Grants to States for Social Services programs (1) for four years. Paulette White Jackson, DAB CR1103 (2003) (ALJ Decision). The Inspector General (I.G.) excluded Petitioner pursuant to section 1128(b)(1) of the Social Security Act (Act) based on Petitioner's June 14, 1999 entry into a plea agreement in the U.S. District Court, Middle District of Louisiana. The I.G. determined that Petitioner was convicted under federal law of a criminal offense, occurring after August 21, 1996, "relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct with respect to any act or omission in a program (other than a health care program) operated by or financed in whole or in part by any Federal, State, or local government agency." Section 1128(b)(1)(B) of the Act. Consequently, the I.G. proposed that Petitioner be excluded from Medicare for six years. (2) Generally, the ALJ found that Petitioner was convicted of a criminal offense within the meaning of section 1128(b)(1)(B) of the Act; that Petitioner's criminal offense occurred after August 21, 1996; and that the offense was related to financial misconduct with respect to an act or omission in a program (other than a health care program) financed in part by a federal government agency. The ALJ indicated that, pursuant to the program regulations, she did not have the authority to determine that the I.G. must eliminate the exclusion altogether. The ALJ did, however, determine that, in spite of the existence of two aggravating factors and no mitigating factors, the I.G.'s proposed six-year exclusion was unreasonable. The ALJ concluded, based on the circumstances of the proven aggravating factors, that a four-year exclusion was reasonable. As discussed below, we summarily affirm the ALJ's factual findings, but consider Petitioner's arguments with respect to the ALJ's legal conclusions. We sustain the ALJ's conclusion that a four-year exclusion was reasonable, although we rely on a different rationale than that articulated by the ALJ regarding one element of the basis for exclusion and one conclusion of law. Our decision is based on the record before the ALJ as well as the parties' briefs on appeal from the ALJ Decision. As part of her appeal submission, Petitioner also submitted four additional exhibits identified as "[Petitioner] Exhibits 7-10." The I.G. objected to Petitioner's attempt to place these exhibits in the record. I.G. Br. at 8. We conclude that these exhibits should not be included as evidence in the record. In relevant part, the regulation at 42 C.F.R. � 1005.21(f) provides:
Petitioner did not demonstrate to the satisfaction of this Board that this new evidence is relevant and material to an issue before the Board or that there were reasonable grounds for Petitioner's failure to adduce such evidence (i.e., to produce it) before the ALJ. Thus, while we retain "[Petitioner] Exhibits 7-10" in the record, we neither admit them as evidence nor consider them in reaching our decision. The ALJ Decision On pages 5-9 of her decision, the ALJ made the following 23 findings of fact and conclusions of law (FFCLs) supporting her decision:
ALJ Decision at 5-9 (footnotes omitted). In her analysis, the ALJ set out four headings, as well as a number of subheadings, which effectively constitute 11 additional FFCLS supporting her decision. These FFCLs are:
ALJ Decision at 9-15. Our standard of review on a disputed conclusion of law is whether the ALJ Decision is erroneous. Our standard of review on a disputed finding of fact is whether the ALJ Decision is supported by substantial evidence on the record as a whole. 42 C.F.R. � 1005.21(h). Exceptions On appeal, Petitioner specifically excepted to FFCLs 5, 10-17 and 22. Additionally, based on the tenor of her arguments, we can infer that Petitioner has also excepted to FFCLs A.2., A.3., A.4., C.1., C.2. and D. Petitioner asserted that Congress had amended the PIP methodology system after Faith Home Health "had fallen into the trap" set by, among others, Dwight S. Cenac, whom she identified as the sponsor/owner of both Faith Home Health's first and second Pension and Health Plans (Plan). Petitioner noted that Faith Home Health's first Plan was not subject to ERISA "when first placed on our books" and that its second Plan "was illegally placed" by Mr. Cenac's management firm. Petitioner asserted that by the time of the 1996 disclosure that the Plan was subject to ERISA regulations, it "was too late, the damage . . . had already occurred." Petitioner noted that, pursuant to 42 C.F.R. � 413.100(c)(2)(vii)(B), the Plan's Management Company had requested good cause extensions to liquidate Faith Home Health's liability. Petitioner further contended that the management firm overseeing the Plan maintained "double erroneous books, records and forms" and that Petitioner was unaware of this situation until August 1998. Petitioner argued that Faith Home Health was not properly instructed as to how to fund its Plan, nor was it ever provided a Plan payment schedule. Moreover, Petitioner maintained that she had never "informed the employees in writing of anything concerning the [Plan]." Rather, according to Petitioner, the Plan's Management Company was responsible for that service. Finally, Petitioner asserted that she pled guilty only to failing to notify her employees of the fact that their Plan was underfunded and not to underfunding the Plan. Petitioner Br. at 4-5. |
|
ANALYSIS | |
Petitioner's arguments provide no basis for overturning the ALJ's factual findings, which are based on substantial evidence in the record. Accordingly, we summarily affirm and adopt the challenged factual findings (FFCLs 5, 10-17, 22, A.2., A.3., A.4., C.1., C.2. and D.), as well as the findings to which Petitioner did not take exception (FFCLs 1-4, 6-9, 18-21, 23, A.1., B. and C.3.). Petitioner's arguments go primarily to the circumstances of and Petitioner's responsibility for the underfunding of the Plan and to the correctness of the ALJ's conclusion that Petitioner had engaged in financial misconduct. Below, we first discuss why we conclude that the circumstances of the underfunding are irrelevant. We then discuss why we uphold the exclusion, but modify the ALJ's key conclusion regarding the basis for the exclusion. The circumstances of the underfunding are irrelevant. In essence, Petitioner argued that she should not be excluded because there were extenuating circumstances that diminished her responsibility for the underfunding. (3) Notwithstanding the references to the underfunding in the ALJ's analysis of some of the elements of the basis for exclusion, however, Petitioner's argument has no bearing on whether there is a valid basis for the exclusion. As Petitioner correctly asserted, the offense to which she pled guilty was not underfunding the Plan, i.e., failing to meet the minimum funding standards. The Bill of Information upon which Petitioner's guilty plea was based states that Faith Home Health, of which Petitioner admitted she was the principal, had both failed to meet the minimum funding standards for the Plan and failed to notify the Plan beneficiaries of this failure. I.G. Ex. 4 at Paras. 2 and 4. However, the only statutory provision cited in the Bill of Information is 29 U.S.C. � 1021(d)(1), which falls under the section 1021(d) heading "Notice of failure meet the minimum funding standards." (4) Although the duty to notify under section 1021(d)(1) does not arise unless an employer has failed to meet the minimum funding standards, the underfunding was not the offense to which Petitioner pled guilty. To the extent that the ALJ Decision implies that the basis for Petitioner's exclusion depends, at least in part, on a conviction for an offense of underfunding, however, that is harmless error since all of the elements necessary to impose an exclusion under section 1128(b)(1)(B) of the Act are satisfied based on Petitioner's guilty plea to the offense of failing to notify the Plan beneficiaries of the underfunding. (5) The court's acceptance of this guilty plea constituted a conviction of a criminal offense within the meaning of section 1128(b)(1)(B) of the Act. Since the Bill of Information stated that the failure to notify (as well as the underfunding itself) occurred "[f]rom in or about July 1996, up to and including March 1998," the offense to which Petitioner pled guilty occurred after August 21, 1996 since the failure to notify continued at least until March 1998. The offense of failing to notify the Plan beneficiaries of the underfunding itself clearly constituted financial misconduct. (6) Finally, as we discuss below, that financial misconduct was related to an omission in a program (other than a health care program) operated or financed by a federal government agency. Thus, the circumstances of the underfunding simply make no difference to the basis for the exclusion. Moreover, although the ALJ noted that "the underfunding of the Plan included several Plan years" in concluding that the I.G. established the aggravating factor at 42 C.F.R. � 1001.201(b)(2)(ii), the ALJ also cited the Bill of Information. As indicated above, the Bill of Information states that the failure to notify occurred "[f]rom in or about July 1996, up to and including March 1998." Since the failure to notify - "the act that resulted in the conviction" - was committed "over a period of one year or more" as required by section 1001.201(b)(2)(ii), the circumstances of the underfunding do not affect the existence of this aggravating factor. (7) The ALJ's finding that Petitioner's financial misconduct was with respect to Medicare is not a basis for an exclusion under section 1128(b)(1)(B) of the Act. In FFCL A.4., the ALJ concluded:
However, the ALJ's analysis underlying this FFCL incorrectly identified Medicare as the program to which Petitioner's financial misconduct was related, stating: "Faith Home Health's Plan was financed in part by a federal government agency; that is, Medicare." See ALJ Decision at 11. Section 1128(b)(1)(B) of the Act specifies that the financial misconduct must be with respect to an act or omission in a program "other than a health care program" which is operated or financed in part by the federal government. (Emphasis added.) See also 42 C.F.R. � 1001.201(a)(2). Medicare is clearly considered a health care program under section 1128 and the implementing regulations. For example, section 1128(b) refers to excluding an individual or entity from "participation in any Federal health care program (as defined in section 1128B(f))." See also 42 C.F.R. � 1001.2. Section 1128B(f) defines "federal health care program" as including "any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government . . . ." Thus, the ALJ's determination that Petitioner's financial misconduct with respect to an act or omission in Medicare (by virtue of the fact that Faith Home Health's Plan was financed in part by Medicare) does not establish this element of the basis for exclusion under section 1128(b)(1)(B) since Medicare is not a program "other than a health care program." We nevertheless conclude that the ALJ's factual findings support a conclusion that Petitioner's financial misconduct was with respect to an omission in a federally operated program that is not a health care program. As noted above, the singular offense of which Petitioner was convicted was related to financial misconduct. The financial misconduct was with respect to an omission under ERISA since the statute creating that program imposes the requirement for notification of underfunding that Petitioner, as a principal for Faith Home Health, failed to meet. ERISA is not a health care program since it does not provide health benefits. Moreover, ERISA is operated by a federal government agency, since it provides for federal oversight, by the Secretary of Labor, of employer pension plans (which may include health care plans). Thus, Petitioner's financial misconduct was with respect to an omission in a program, other than a health care program, operated by a federal government agency. Accordingly, we modify FFCL A.4. to read as follows:
We note that this error has no bearing on the ALJ's subsequent finding in FFCL C.2. that the I.G. proved the aggravating factor listed at 42 C.F.R. � 1001.201(b)(2)(i) of a financial loss to a government program or another entity of $5,000 or more. Notwithstanding her conclusion in FFCL A.4. that the financial misconduct was with respect to Medicare, the ALJ found that the Plan, which qualifies as "another entity" under section 1001.201(b)(2)(i), suffered a financial loss of $5,000 or more. See ALJ Decision at 13-14. Conclusion Based on the preceding analysis, we affirm and adopt each of the FFCLs underlying the ALJ Decision, except FFCL A.4., which we modify as indicated above, and we sustain the ALJ Decision to exclude Petitioner for four years. |
|
JUDGE | |
Cecilia Sparks Ford Donald F. Garrett Judith A. Ballard |
|
FOOTNOTES | |
1. Hereafter, we refer to these programs generally as "Medicare." 2. The mandatory minimum period of exclusion under section 1128(b)(1) of the Act is three years. The I.G.'s proposed exclusion added three additional years to this period based on the presence of two aggravating factors. See 42 C.F.R. � 1001.201(b)(2). 3. In reviewing this case, we have considered each and every argument presented by the parties. Although particular issues may not be discussed in detail in this decision, we have nevertheless considered all of the points in the parties' briefs in reaching the conclusions set forth here. 4. Section 1021, as a whole, is titled "Duty of disclosure and reporting." 5. The ALJ Decision identified those elements as follows:
ALJ Decision at 9. The language of section 1128(b)(1) of the Act from which the fourth element was derived reads "financial misconduct with respect to any act or omission . . . ." 6. The ALJ rejected the I.G.'s contention that Petitioner's criminal offense was related to a breach of fiduciary responsibility, noting that Petitioner did not establish the Plan, nor was she a trustee of the Plan, but found that the offense was nevertheless related to "other financial misconduct." ALJ Decision at 10. We conclude that Petitioner's offense did involve a breach of fiduciary responsibility since section 1021(d)(1) imposes "on an employer maintaining a plan" a duty to notify employees of the failure to meet minimum funding standards, and Petitioner was a principal of the employer, Faith Home Health. Since breach of fiduciary responsibility is a type of financial misconduct, however, the ALJ correctly found financial misconduct. 7. Petitioner did not argue that this aggravating factor did not apply because of the nature of the offense (an "omission" rather than an "act"). |
|