Danna Elizabeth Waltz aka Danna Elizabeth Henkelman, DAB CR6148 (2022)

DECISION

Petitioner, Danna Elizabeth Waltz, was a nurse aide, working for a company that provided home health services to Medicaid beneficiaries.  She was indicted on three felony counts of theft, forgery, and computer crime because she claimed to have provided Medicaid-covered services that she did not provide.  She ultimately pleaded guilty to one misdemeanor count of theft.  Based on this, the Inspector General (IG) has excluded her for five years from participating in Medicare, Medicaid, and all federal health care programs, as authorized by section 1128(a)(1) of the Social Security Act (Act).  Petitioner appeals the exclusion.  For the reasons discussed below, I find that the IG properly excluded Petitioner Waltz.  Because the statute mandates a minimum five-year exclusion, the length of her exclusion is, by law, reasonable.

Background

In a letter dated February 28, 2022, the IG notified Petitioner that she was excluded from participating in Medicare, Medicaid, and all federal health care programs for a period of five years because she had been convicted of a criminal offense related to the delivery of

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an item or service under Medicare or a state health care program.  The letter explained that section 1128(a)(1) of the Act authorizes the exclusion.  IG Ex. 1. 

Petitioner timely requested review.

The IG submitted a written argument (IG Br.) and nine exhibits (IG Exs. 1-9).  Petitioner submitted her own brief (P. Br.) with three exhibits (P. Exs. 1-3).  The IG filed a reply.

Without identifying any specific exhibits, Petitioner objects to the IG’s submitting “internal investigation reports prepared by the Office of the Attorney General of the State of Colorado.”  Petitioner does not challenge the authenticity of the documents but argues that they are unfairly prejudicial and inadmissible hearsay documents.  P. Br. at 9.  I assume that Petitioner refers to IG Exs. 3 and 9.

• IG Ex. 3 is an Investigative Memorandum, dated March 11, 2020, prepared and signed by an investigator from the Office of the Attorney General for the State of Colorado.  The investigator reviewed home health care records establishing the dates and hours Petitioner claimed to be providing home health services to a Medicaid beneficiary and compared them to the dates and hours that she was physically present and working at her hospital jobs or was otherwise not providing the home health services.
• IG Ex. 9 is also an Investigative Memorandum, dated March 16, 2020, prepared and signed by the same investigator.  The investigator obtained and reviewed disciplinary records from the home health agency (HHA) that employed Petitioner.  The HHA records reflected that it disciplined her for falsely claiming that she had provided services that she did not provide.  The records also showed that the HHA reimbursed the Medicaid program for the erroneous payments it received, but, aware that Petitioner had no discretionary funds available, had not sought reimbursement from her.

Petitioner has not explained why my admitting these reports would be “unfairly prejudicial” to her.  No doubt, they weaken her claims that the IG has not established that her criminal offense was related to the delivery of an item or service under the Medicaid program, but the fact that evidence tends to undermine a party’s defense does not make its admission unfair or prejudicial.

With respect to her hearsay objections, I have broad authority to determine the admissibility of evidence, and, with limited exceptions, I admit all evidence that is relevant and material.  See 42 C.F.R. § 1005.17(a), (c), (d), (e), and (f).  Nancy L. Clark, DAB No. 2989 at 8 (2020).  I am not bound by the Federal Rules of Evidence, and, thus, hearsay is admissible.  42 C.F.R. § 1005.17(b).  Arguably, even under the federal rules, the documents would be admissible under an exception to the hearsay rule because they

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are public records that include factual findings from a “legally authorized investigation,” and Petitioner has not shown that the source of the information or other circumstances “indicate a lack of trustworthiness.”  Fed. R. Evid. 803(8).

In any event, the Departmental Appeals Board has repeatedly observed that hearsay “can be probative on the issue of the truth of the matter asserted, where sufficient indicia of reliability are present.”  Clark, DAB No. 2989 at 8, and cases cited therein.  Evidence that is extrinsic to the criminal court process is admissible “to show that the conduct underlying the offense met the elements of the exclusion law” so long as that evidence is “reliable and credible.”  Id.; Narendra M. Patel, M.D., DAB No. 1736 (2000); Tanya A Chuoke, R.N., DAB No. 1721 (2000); Bruce Lindberg, D.C., DAB No. 1280 (1991).

The investigative memoranda are official documents, plainly relevant to this inquiry.  Petitioner has not challenged as inaccurate any specific provisions of the reports nor explained why I should consider the documents unreliable.  They reflect the Colorado Attorney General’s findings of erroneous Medicaid billing and align with the allegations of the Complaint and Information filed a month later.  See IG Ex. 2.  Because they are relevant and material, and because Petitioner suggests no specific reason why I should consider them unreliable, I will admit them.  See Summit S. Shah, M.D., DAB No. 2836 at 5-6 (2017) (finding that the administrative law judge properly admitted the Medicaid agency’s report of restitution payments).

I therefore admit IG Exs. 1-9.

In the absence of any objections, I admit into evidence P. Exs. 1-3.

Hearing on the written record.  I instructed the parties to indicate, in their briefs, whether an in-person (video) hearing would be necessary and, if so, to explain why, identify any proposed witness, and submit, “in the form of an affidavit or a written sworn declaration,” the witness’s testimony.  Order and Schedule for Filing Briefs and Documentary Evidence at 4 (¶ 7) (May 19, 2022) (emphasis added).  The IG indicates that an in-person hearing is not necessary.  IG Br. at 9.

Petitioner, however, maintains that an in-person video hearing is necessary.  She lists herself as a witness and indicates, generally, that she would testify about “the circumstances of her employment” at the home health agency, the stipulation for deferred judgment, and her guilty plea.  P. Br. at 10-11.  Contrary to the explicit instructions in my order, she did not offer an affidavit or sworn declaration.  She will therefore not be allowed to testify.

Because there are no witnesses, an in-person hearing would serve no purpose, and this case may be decided based on the written record.

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Discussion

1. Petitioner must be excluded from program participation for a minimum of five years because she was convicted of a criminal offense related to the delivery of an item or service under a state health care program.  Act § 1128(a)(1).¹

Under section 1128(a)(1) of the Act, the Secretary of Health and Human Services must exclude an individual who has been convicted under federal or state law of a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  42 C.F.R. § 1001.101(a).

The charges.  Here, in 2015 and 2016, Petitioner worked for a home health agency.  IG Exs. 3, 9.  In a Complaint and Information, filed April 2, 2020, she was charged with: 

• felony theft, in violation of Colo. Rev. Stat. § 18-4-401(1)(a), (2)(g).  Between June 14, 2015, and July 15, 2016, she took between $5,000 and $20,000 from the Colorado Department of Healthcare Policy and Finance, which is the State Medicaid Agency;
• felony forgery, in violation of Colo. Rev. Stat. § 18-5-102(1)(d).  Between June 14, 2015, and July 15, 2016, intending to defraud the State Medicaid Agency, she falsely completed “VISIT RECORDS,” which were filed with the State Medicaid Agency; and
• felony computer crime, in violation of Colo. Rev. Stat. § 18-5.5-102(1)(d), (3)(a)(VI).  Between June 14, 2015, and July 15, 2016, she accessed a computer, computer network, or computer system to commit theft of between $5,000 and $20,000.

IG Ex. 2 at 2.  Attached to the complaint is an “endorsed witness list,” which names as witnesses individuals from the State Attorney General’s Office, the IG’s office, and the State Medicaid Agency, as well as the HHA and the two hospitals that employed Petitioner in 2015 and 2016.  IG Ex. 2 at 3.

The two reports, prepared by an investigator from the State Attorney General’s Office, align with the felony complaint.  The first, signed March 13, 2020, describes the investigator’s review of records from the HHA and two hospitals, as well as records from the mother of the Medicaid beneficiary for whom Petitioner was providing care.  The

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investigator looked at Petitioner’s “Visit Records,” for which the home health agency claimed Medicaid reimbursement and compared them to records from the hospitals where Petitioner also worked and to the beneficiary’s mother’s records of Petitioner’s visits.  The investigator found 54 days between June 14, 2015, and July 15, 2016, for which Petitioner submitted Visit Records for services not provided.  Of 149 Visit Records, 87 were for services not provided.  Based on those Visit Records, Medicaid reimbursed the home health agency $9,160.87, of which $5,264.25 was for services not provided.  The HHA subsequently reimbursed the Medicaid agency for most of the fraudulent claims.  The report includes a chart detailing the dates, total visits, total fraudulent claims of visits, amounts paid by Medicaid, and amounts repaid by the HHA.  IG Ex. 3.

In the second report, signed March 6, 2020, the investigator describes disciplinary records maintained by the HHA, which culminated in the agency firing Petitioner for:  1) violating company rules; and 2) dishonesty/theft.  The HHA records described a “routine cell track” of Petitioner’s phone on June 23, 2016, which showed that she was not at the home of her client during the time she reported providing services.  She had claimed she provided services from 8:40 p.m. until 11:47 p.m.  GPS records showed that she left the home at 9:45 p.m. and returned at 11:42 p.m.  IG Ex. 9 at 1.

The investigator noted that the HHA provided a record of its repaying Medicaid for the fraudulent claims.  He confirmed that Petitioner did not repay the HHA.  The HHA’s director decided not to seek reimbursement because he knew that Petitioner did not have the money.  IG Ex. 9 at 2; see IG Ex. 4 at 2 (prosecution and Petitioner acknowledging that restitution had been paid).

The conviction.  On September 10, 2020, the Attorney General for the State of Colorado, who was prosecuting the criminal case, and Petitioner stipulated to a deferred judgment and sentence.  Petitioner agreed to plead guilty.  Her guilty plea would be deferred subject to her complying with certain conditions:  a) she would not commit any other offense; b) she would establish a residence of record and maintain gainful employment; and c) she would pay the crime victim compensation fund, fees, costs, and fines in the amount and manner ordered by the court.  The agreement noted that restitution had already been fully paid.  The agreement also provided that the court would enter judgment and impose sentence on the guilty plea if Petitioner breached its conditions.  IG Ex. 4.

On October 15, 2020, Petitioner signed the plea agreement.  By its terms, an additional count was added to the complaint:  Count 4 – Theft, in violation of Colo. Rev. Stat. § 18-4-401(2)(c), which is a misdemeanor.  In return for her guilty plea on the misdemeanor charge, the prosecution agreed to dismiss Counts 1, 2, and 3.  IG Ex. 5.

On October 21, 2020, the court found that a factual basis existed for the entry of the plea (or had been stipulated or waived) and accepted the guilty plea.  The court entered a

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deferred sentence, and, finding that Petitioner had successfully completed the conditions of her sentence, withdrew the guilty plea and closed the case.  IG Ex. 6 at 9-10; IG Ex. 8 at 7, 9; see IG Ex. 8 at 12 (showing that Petitioner had paid the fees and costs ordered).

Petitioner concedes that she pleaded guilty to misdemeanor theft but maintains that she was not convicted because the charges against her were dismissed after she completed all the terms of the stipulation.  Under Colorado law, the guilty plea does not exist.  P. Br. at 2-3.  Acknowledging that administrative law judges have sustained exclusions that were based on deferred judgments, she argues that her case differs because she was excluded after she completed her deferred judgment, not while the conviction was still pending.  P. Br. at 3.  She also points to dicta from an ALJ decision that purportedly suggests that, upon successfully completing his pretrial diversion, the petitioner would no longer be convicted and would be entitled to reinstatement.  P. Br. at 4-5 (citing Steven Michael Margolin, DAB CR5250 at 5 (2019)).

Even if this were the ALJ’s decision – which it is not – ALJ decisions have no precedential value.  Shaun Thaxter, DAB No. 3053 at 29 (2021).  In any event, the Margolin decision is hardly an endorsement of Petitioner’s claim that she was not convicted and is therefore not subject to an exclusion.  The ALJ there expressed skepticism that the petitioner would be entitled to reinstatement after he completed his pretrial diversion, and the criminal court vacated his conviction.  The ALJ noted that the claim was based on a regulation, 42 C.F.R. § 1001.3005(a)(1), that requires the IG to reinstate an individual whose conviction has been vacated or reversed on appeal.  It does not apply to deferred adjudications.²

The statute and regulations provide that a person is “convicted” when “a judgment of conviction has been entered” regardless of whether that judgment has been (or could be) expunged or otherwise removed.  Act § 1128(i)(1); 42 C.F.R. § 1001.2(a)(2).  Individuals who participate in “deferred adjudication or other arrangement or program where judgment of conviction has been withheld” are “convicted” within the meaning of the statute.  Act § 1128(i)(4); 42 C.F.R. § 1001.2(d).  Based on these provisions, the Departmental Appeals Board characterizes as “well established” the principle that a “conviction” includes “diverted, deferred and expunged convictions regardless of whether state law treats such actions as a conviction.”  Henry L. Gupton, DAB No. 2058 at 8 (2007), aff’d sub nom. Gupton v. Leavitt, 575 F. Supp. 2d 874 (E.D. Tenn. 2008).

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Related to the delivery of an item or service under Medicaid.  Petitioner also argues that her conviction was not related to the delivery of an item or service under Medicare or Medicaid because she was not convicted under any health care statute and payment of restitution was not required.  P. Br. at 6-8.

In determining whether her conviction is program-related within the meaning of section 1128(a)(1), I may look beyond the language of the statute under which she was convicted.  It is well-settled that the IG may rely on extrinsic evidence to explain the circumstances underlying a conviction.  The regulations specifically provide that evidence of “crimes, wrongs or acts other than those at issue in the instant case is admissible in order to show motive, opportunity, intent, knowledge, preparation, identity, lack of mistake, or existence of a scheme.”  42 C.F.R. § 1005.17(g); see Patel, DAB No. 1736 at 7 (2000), aff’d sub nom. Patel v. Thompson, 319 F.3d 1317 (11th Cir. 2003) (“We thus see nothing in section 1128(a)(2) that requires that the necessary element of the criminal offense must mirror the elements of the exclusion authority, nor that all statutory elements required for an exclusion must be contained in the findings or record of the state criminal court.”); Timothy Wayne Hensley, DAB No. 2044 (2006); Scott D. Augustine, DAB No. 2043 (2006); Lyle Kai, R.Ph., DAB No. 1979 at 5 (2005), aff’d sub nom. Kai v. Leavitt, No. 05-00514 BMK (D. Haw. July 17, 2006); Berton Siegel, D.O., DAB No. 1467 at 5 (1994); Carolyn Westin, DAB No. 1381 (1993), aff’d sub nom. Westin v. Shalala, 845 F. Supp. 1446 (D. Kan. 1994); Chuoke, DAB No. 1721; Lindberg, DAB No. 1280.

Here, the investigative reports directly link Petitioner’s crime to the Medicaid program.  Moreover, even if I were I to ignore those investigative reports (which I decline to do), there is a direct connection between the initial felony charges and the misdemeanor charge to which she pleaded guilty.  The victim of her crime was the Colorado Department of Healthcare Policy and Finance, which is the state’s Medicaid program.  IG Ex. 2 at 2.  Although those felony charges were dismissed, the prosecution did so only upon her agreeing to plead to the misdemeanor charge of theft.

Petitioner was not convicted in a vacuum.  If the charges against her were not related to her submitting false claims to her HHA employer and then to the Medicaid program, as all of the evidence before me establishes, she was, of course, free to explain that she was convicted of a theft wholly unrelated to her job at the HHA or the Medicaid program.  She has, of course, not done so.

Finally, I find it somewhat disingenuous for Petitioner to argue that, because the court did not order her to pay restitution, her conviction was not related to the Medicaid program. In fact, as the record shows, and Petitioner acknowledged in her stipulation for deferred judgment, the court did not order restitution because full restitution had already been paid, and that was a factor in the court’s accepting the deferred judgment.  IG Ex. 4 at 2.  The HHA repaid those amounts to the Medicaid program.  IG Ex. 3 at 2-4; IG Ex. 9 at 2.

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Petitioner’s conviction thus falls squarely within the statutory and regulatory definition of “conviction,” and her crime was related to the delivery of services under a state health care program.  She is therefore subject to exclusion.  An exclusion brought under section 1128(a)(1) must be for a minimum period of five years.  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.2007(a)(2).

Conclusion

For these reasons, I conclude that the IG properly excluded Petitioner from participation in Medicare, Medicaid and all federal health care programs, and I sustain the five-year exclusion.

Endnotes

¹  I make this one finding of fact/conclusion of law.

²  The Margolin decision indicates that IG counsel suggested that the petitioner might be eligible for reinstatement after dismissal of his conviction pursuant to deferred adjudication.  If so, this is truly extraordinary inasmuch as it is contrary to the statute, regulations, decades of decisions by the Departmental Appeals Board (as I discuss), and, as the IG emphasizes in this case, it is not the IG’s position (“[I]t is the IG’s position that the law does not permit reinstatement for an excluded individual under the circumstances in either Margolin or the Petitioner here.”)  IG Reply at 2.