Trina A. Ruchelman, DMD, DAB CR5468 (2019)

DECISION

The Inspector General of the United States Department of Health and Human Services (the IG) excluded Petitioner, Trina A. Ruchelman, DMD, from participation in Medicare, Medicaid, and all other federal health care programs for eight years pursuant to Section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)).  Petitioner challenges the exclusion.  For the reasons stated below, I conclude that the IG had a basis for excluding her from program participation, and that the eight-year exclusion period is not unreasonable.  I affirm the IG’s exclusion determination.

I. Procedural History

By letter dated April 30, 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)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)) for a minimum period of eight years.  The IG explained she took this action based on Petitioner’s conviction in a New Jersey court for a criminal offense related to the delivery of an item or service under the Medicare or a state health care program,

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including the performance of management or administrative services relating to the delivery of such items or services.  IG Ex. 1 at 1.1

Petitioner timely requested a hearing before an administrative law judge, and I was designated to hear and decide this case.  I held a pre-hearing telephone conference on June 12, 2019, the substance of which is summarized in my June 13, 2019 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order).  Among other things, I directed the parties to file pre-hearing briefs articulating their respective arguments as well as identifying witnesses and exhibits in support thereof.  Summary Order at 3-4.

The IG filed a brief (IG Br.) and three exhibits (IG Exs. 1-3), while Petitioner filed a brief (P. Br.) with eight exhibits (P. Exs. 1-8).  The IG subsequently filed a reply brief (IG Reply).

II. Exhibits and Decision on the Record

In the absence of objections, I admit IG Exs. 1 through 3 and P. Exs. 1 through 8.

I informed the parties that I would hold an in-person hearing only if a party submitted written direct testimony from a witness and the opposing party asked to cross-examine that witness, or if a party identified an adverse witness and made a valid subpoena request consistent with the requirements found at 42 C.F.R. § 1005.9.  Summary Order at 5.

Petitioner submitted her own written direct testimony.  P. Ex. 3.  The IG did not propose any witnesses or request to cross-examine Petitioner and indicated an in-person hearing was not necessary.  IG Br. at 12; IG Reply at 7.  Petitioner claims an in-person hearing is necessary to take testimony from six witnesses whose testimony Petitioner claims can only be elicited by subpoena.  P. Br. at 8-9.  However, Petitioner never made a subpoena request consistent with the requirements found at 42 C.F.R. § 1005.9.

Because neither party asked to cross-examine a witness for whom the other party submitted written direct testimony, or identified an adverse witness and made a valid subpoena request, an in-person hearing is unnecessary and I will decide this case on the written record.  Summary Order at 5; see Civ. Remedies Div. Pro. § 19(d).

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III. Issues

Whether the IG has a basis for excluding Petitioner from participating in Medicare, Medicaid, and all other federal health care programs and, if so, whether the eight-year exclusion imposed by the IG is unreasonable.  See 42 C.F.R. § 1001.2007(a)(1).

IV. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to an administrative hearing and judicial review of the final action of the Secretary of Health and Human Services (Secretary).  The right to a hearing before an administrative law judge (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 Secretary must exclude from participation in federal health care programs “[a]ny individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under subchapter XVIII of this chapter or under any State health care program.”  Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)); see also 42 C.F.R. § 1001.101(a).

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 whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or nolo contendere is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.  Act § 1128(i) (42 U.S.C. § 1320a-7(i)); 42 C.F.R. § 1001.2.  The statute does not distinguish between misdemeanor and felony convictions.  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.  42 C.F.R. § 1001.102(b).  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

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defenses or mitigating factors; the IG bears the burden on all other issues.  Summary Order at 3; 42 C.F.R. § 1005.15(c).

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. I have jurisdiction to hear this case.

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 Act § 1128(f)(1) (42 U.S.C. § 1320a-7(f)(1)).

B. There is a basis for Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act.

Exclusion from participation in Medicare, Medicaid, and all federal health care programs is mandated by section 1128(a)(1) of the Act where an individual has been convicted, under Federal or State law, of a criminal offense related to the delivery of an item or service under Medicare or any state health care program.  Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)); 42 C.F.R. § 1001.101(a).  As explained herein, the IG has established these elements by a preponderance of the evidence.

1. Petitioner was convicted of a criminal offense within the meaning of section 1128(a)(1) of the Act.

In February 2013, a New Jersey grand jury indicted Petitioner on one count of conspiracy to commit health care claims fraud, Medicaid fraud, theft by deception, and insurance fraud; three counts of insurance fraud; one count of Medicaid fraud; and one count of theft by deception.  IG Ex. 2 at 32-38, 41-42, 49.  Between January 2004 and August 2009, Petitioner conspired with others to defraud the New Jersey Medicaid program by knowingly submitting, or causing to be submitted, thousands of claims for services she did not provide as claimed, and receiving significant sums in reimbursement for those false claims.  Id. at 32-38, 41-42.

On November 1, 2018, the adjudicating New Jersey state court ordered the charges against Petitioner amended to a single count of theft by deception in violation of N.J. Stat. Ann. § 2C:20-4.2   IG Ex. 3 at 1.  Petitioner pleaded guilty to that charge, and the

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court accepted the plea and entered a judgment of conviction against her.  Id.; P. Ex. 2 at 10-14.

The record shows, Petitioner concedes (P. Br. at 3),3 and I find that Petitioner was convicted of a criminal offense within the meaning of the Act when the New Jersey court accepted her guilty plea and adjudicated her guilty.  Act § 1128(i)(1), (3) (42 U.S.C. § 1320a-7(i)(1), (3)); 42 C.F.R. § 1001.2.

2. Petitioner’s criminal offense is related to the delivery of an item or service under Medicare or a state health care program within the meaning of section 1128(a)(1) of the Act.

The Act requires Petitioner be excluded from participation in federal healthcare programs if she was convicted of an offense relating to the delivery of an item or service under Medicare or a state health care program.  See Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)).  In order to be “related to” the delivery of an item or service under Medicare, only a nexus or common sense connection is required.  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); Berton Siegel, D.O., DAB No. 1467 (1994) (“[T]he statute requires some ‘nexus’ or ‘common sense connection’ between the offense of which a petitioner was convicted and the delivery of an item or service under a covered program.”).

The conduct to which Petitioner admitted clearly demonstrates she was convicted of a criminal offense within the meaning of the Act.  During her plea colloquy, Petitioner testified under oath that while employed as a dentist for New Jersey Mobile Dental between January 1, 2004 and August 1, 2009, she “purposefully reinforce[d] false impressions held by New Jersey Mobile billing staff as to the value of the dental services that were provided to New Jersey Mobile Medicaid beneficiaries.”  P. Ex. 2 at 12, 13.

She further admitted that “New Jersey Mobile billing staff, based upon those false impressions, subsequently submit[ted] false claims to Medicaid for reimbursement”; that “Medicaid, in fact, reimburse[d] New Jersey Mobile for those false claims”; and that she “purposefully obtain[ed] payments [in excess of $500] from New Jersey Mobile for those false claims which were reimbursed by Medicaid.”  Id. at 13-14.  Based on this testimony, the New Jersey court found an adequate factual basis for her guilty plea to the charge of theft by deception.  Id. at 14.

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Moreover, Petitioner’s criminal conduct resulted in financial loss to the New Jersey Medicaid program, evinced by the fact the sentencing court ordered her to pay restitution to the state of New Jersey.4   IG Ex. 3 at 2; Summit S. Shah, M.D., DAB No. 2836 at 8-9 (2017) (“[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.”) (quoting Siegel, DAB No. 1467 at 6-7).

These facts establish to my satisfaction the requisite “common sense” connection between Petitioner’s crime of conviction and the delivery of services under the New Jersey Medicaid program, a state health care program.  Her admitted criminal conduct caused her employer to submit false claims to the New Jersey Medicaid program based on her reinforcement of false impressions held by her employer’s billing staff.  As a result of her criminal conduct, Petitioner was ordered to repay the state of New Jersey for losses incurred by its Medicaid program.

Petitioner argues her criminal offense was not related to the delivery of a healthcare service under the New Jersey Medicaid program.  P. Br. at 3-5.  She contends her conviction for a “generic theft offense . . . did not relate to the delivery of a healthcare service.”  Id. at 3-4.  She instead explains that she improperly acquired funds from her employer and “did not submit a single bill or claim the Medicaid program . . . .”  Id. at 4, 5.  In essence, she attributes any detrimental impact her crimes had on the New Jersey Medicaid program to intervening criminal acts of others.  Id.  For further support, she points to the fact that the New Jersey Medicaid program ultimately “decided not to disqualify her” until the IG excluded her.  Id. at 5.

Petitioner’s arguments are unpersuasive.  Her claim that her offense of conviction on its face did not relate to the delivery of a healthcare service is without merit.  The Departmental Appeals Board (the Board) “has long held . . . that an ALJ is free to look beyond the narrow constructs of a state’s criminal statutes.”  Shah, DAB No. 2836 at 7.  In resolving the criminal case against her, Petitioner admitted to facts that established a connection between her offense and the delivery of a service under the New Jersey Medicaid program, regardless of whether her employer submitted the actual fraudulent bills.

The fact that Petitioner was not responsible for directly submitting false claims to the New Jersey Medicaid program does not undercut the connection between her criminal offense and that program.  In fact, the sentencing court’s order requiring Petitioner to pay restitution to the state of New Jersey, not her employer, strongly indicates that the New Jersey Medicaid program was the true victim of her crime, not her employer.  Id. at 9

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(“Petitioner does not deny that payment of restitution made directly to a State Medicaid program would be compelling evidence of a nexus between the criminal offense and the State Medicaid Program.”).

Finally, it is irrelevant that the New Jersey Medicaid program did not disqualify Petitioner from participation until the IG excluded her.  Congress obliged the Secretary to exclude any individual convicted of a criminal offense related to the delivery of an item or service under any state health care program, regardless of whether the state program has taken action against the individual.  Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)).  Nothing in the Act suggests the Secretary’s obligation can be estopped by the determination (or, as in this case, a non-determination) made by a state health care program.

C. Petitioner must be excluded for a minimum of five years.

Because I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)), Petitioner must be excluded for a minimum of five years.  Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)); 42 C.F.R. § 1001.102(a).

D. The IG has established two aggravating factors which together justify exclusion beyond the five-year statutory minimum.

1. The IG established financial loss to a government program of $50,000 or more, as required by 42 C.F.R. § 1001.102(b)(1).

As part of her plea agreement, Petitioner agreed to pay restitution in the amount of $197,778 to the state of New Jersey, and the sentencing court ordered her to pay the same.  P. Ex. 2 at 4, 9-10; IG Ex. 3 at 2.  The Board has recognized that restitution may be used to demonstrate program loss.  See Shah, DAB No. 2836 at 8.  Petitioner does not dispute that the restitution she agreed to pay represents the amount of loss suffered by the New Jersey Medicaid program due to her criminal offense.  I therefore find the IG has sufficiently established that Petitioner was responsible for more than $50,000 in loss to the New Jersey Medicaid program.

2. The IG established that Petitioner’s conviction arose from acts that lasted for a period of one year or more, as required by 42 C.F.R. § 1001.102(b)(2).

As discussed above, Petitioner admitted during her plea colloquy that, “between January 1, 2004 and August 1, 2009, she . . . purposefully reinforce[d] false impressions held by New Jersey Mobile billing staff as to the value of the dental services that were provided to New Jersey Mobile Medicaid beneficiaries.”  P. Ex. 2. at 12, 13.  I therefore find the

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IG also has sufficiently established that Petitioner’s criminal conduct continued for longer than one year.

3. The IG properly declined to apply a mitigating factor.

Petitioner has the burden of proving any mitigating factors exist that could be considered as a basis to reduce the exclusion period.  Summary Order at 3; 42 C.F.R. § 1005.15(c).  Here, Petitioner asserts the record supports application of the mitigating factor at 42 C.F.R. § 1001.102(c)(2).5   P. Br. at 7-8.  As evidence of this purported mitigating factor, Petitioner points to the amended judgment of conviction against her, in which the court cited the following as a factor in mitigation:  “There were substantial grounds tending to excuse or justify the defendant’s conduct, though failing to establish a defense.”  P. Ex. 8 at 3.  Petitioner contends this reference “speaks to [her] mental condition during the commission of the crime” insofar as “she was acting based upon representations from her employer that were later determined to be false but had been concealed by her employer.”  P. Br. at 8.

There is no evidence in the record that establishes the sentencing court considered a mental, emotional, or physical condition to reduce Petitioner’s culpability.  Instead, the sentencing court stated vaguely that “substantial grounds tend[ed] to excuse or justify [Petitioner’s] conduct,” without reference to the nature of those “substantial grounds.”  Petitioner argues this statement refers to her mental condition, declaring that “the sentencing judge noted that my mental impressions at the time of my employment with NJ Mobile justified or excused my conduct.”  P. Ex. 3 at 2.

This claim is unsupported by the record.  I have reviewed the plea hearing transcript submitted by Petitioner and nowhere does the sentencing court reach such a conclusion.  See P. Ex. 2.  Petitioner does not even attempt to make such a claim in her brief, instead asserting the “mental condition” referenced by the court referred to the fact that she was acting on false representations made to her by her employer.  P. Br. at 8.  But participating in criminal conduct on false pretenses provided by a co-defendant does not amount to a mental, emotional, or physical condition, though it might otherwise reduce Petitioner’s culpability.  The sentencing court’s reference to a substantial ground appears consistent with Petitioner’s own characterization of being misled by her employer.  There is simply no basis in the record to conclude the sentencing court even entertained the notion that Petitioner’s culpability was reduced by her mental, emotional, or physical condition.  Accordingly, I conclude the IG properly declined to apply this mitigating factor in determining the appropriate period of exclusion.

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E. An eight-year exclusion period is not unreasonable.

I must uphold the IG’s determination as to the length of exclusion if it is not unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).  This means that:

[s]o long as the amount of time chosen by the OIG is within a reasonable range, based on demonstrated criteria, the ALJ has no authority to change it under this rule.  We believe that the deference [42 C.F.R.] § 1001.2007(a)(2) grants to the OIG is appropriate, given the OIG’s vast experience in implementing exclusions under these authorities.

57 Fed. Reg. 3298, 3321 (Jan. 29, 1992).

In making my determination, the quality of the aggravating (or mitigating) factors is of greater significance than the mere number of the factors present in a given case.  As the Secretary 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.

Id. at 3314-15.

In assessing the reasonableness of the exclusion period selected by the IG, I must consider both mitigating and aggravating factors.  42 C.F.R. § 1001.102(b), (c).  Here, the IG appropriately applied the two aggravating factors discussed above and correctly found none that served to mitigate the seriousness of Petitioner’s offense.  Petitioner’s criminal

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conduct resulted in a substantial loss to the New Jersey Medicare program – nearly $200,000.  IG Ex. 3 at 2; P. Ex. 2 at 4, 9-10.  The Board has previously observed that it is “entirely reasonable” to give significant weight to loss amounts “substantially larger” than the minimum regulatory threshold.  Laura Leyva, DAB No. 2704 at 9-10 (2016).  Here, Petitioner’s criminal conduct resulted in a loss to the New Jersey Medicaid program almost four times the already substantial regulatory minimum of $50,000 in program loss required to be considered an aggravating factor.  42 C.F.R. § 1001.102(b)(1).

The seriousness of Petitioner’s offense is also reflected in its lengthy duration.  The Board has held that criminal conduct lasting more than four years is “a protracted period” that shows the individual “is extremely untrustworthy.”  Rosa Velia Serrano, DAB No. 2923 at 9 (2019).  Here, Petitioner’s criminal conduct continued for more than five years, between January 1, 2004 and August 1, 2009.  P. Ex. 2 at 12, 13.

Petitioner asserts that, “[a]s evidenced by the plea allocution and cumulative record of this case, [she] is not an ‘untrustworthy’ individual as to merit exclusion at all, but certainly not to a length longer than the mandatory minimum.”  P. Br. at 7.  She claims “[s]he poses absolutely no threat to the health or safety of Medicare beneficiaries.”  Id.

The record belies these assertions.  Petitioner was convicted of an offense that literally includes the word ‘deception’ in its name and as an element of that offense.  N.J. Stat. Ann. § 2C:20-4.  Petitioner engaged in criminally deceptive conduct for a protracted period that resulted in significant losses to the New Jersey Medicaid program.  The IG reasonably concluded Petitioner poses a serious threat to the integrity of the Medicare program and all other federal health care programs.  Program beneficiaries rely on these programs for their health, meaning a threat to program integrity ultimately poses a threat to their health.  Under these circumstances, I cannot say excluding Petitioner from participation in Medicare, Medicaid, and all federal health care programs for eight years is unreasonable.

VI. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all federal health care programs for eight years starting May 20, 2019, pursuant to section 1128(a)(1) of the Act (42 U.S.C. § 1320a-7(a)(1)).

1. Document 7 in the official case file maintained in the 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 the E-file system.  However, the IG did not mark her exhibits at all, much less in accordance with my instructions.  See Summary Order at 4.  Therefore, to identify the IG’s exhibits (documents 7 through 9 in the official case file), I rely on the file names of the electronic documents and document descriptions contained in the DAB E-File system.  When citing to specific pages of the IG’s exhibits, I rely on the pagination of the electronic documents.  I counsel the IG to take better care in complying with the filing requirements before me and in this division.
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2. N.J. Stat. Ann. § 2C:20-4 provides that “[a] person is guilty of theft if he purposely obtains property of another by deception” and goes on to define what it means to “deceive” another.
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3. Petitioner states she “concedes that she was convicted of a criminal offense, but disputes that she was convicted of a criminal offense as defined in 42 U.S.C. [§] 1320a-7(i).”  P. Br. at 3.  I take this statement to mean Petitioner concedes she was convicted of a crime but disputes that her crime was one requiring exclusion.
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4. Petitioner’s defense attorney stated during the plea colloquy that Petitioner would pay restitution as part of her plea agreement, an understanding she confirmed to the sentencing court.  P. Ex. 2 at 4, 9-10.
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5. This regulation provides a basis for mitigation where “[t]he 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[.]”  42 C.F.R. § 1001.102(c)(2).
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