Susan Touchstone, DAB CR5047 (2018)

DECISION

Petitioner, Susan Earlene Touchstone, also known as Susan Reeves Touchstone, is excluded from participating in Medicare, Medicaid, and all federal health care programs pursuant to section 1128(b)(1)(A)(i) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(b)(1)(A)(i)), effective July 20, 2017.  There is a proper basis for Petitioner’s exclusion based upon her conviction of a misdemeanor criminal offense related to theft committed after August 21, 1996, in connection with the delivery of a health care item or service.  Petitioner’s exclusion for a minimum period of two years is not unreasonable considering the presence of one mitigating factor.  Act § 1128(c)(3)(D) (42 U.S.C. § 1320a-7(c)(3)(D)); 42 C.F.R. § 1001.201(b)(1).1

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I. Background

The Inspector General (I.G.) for the Department of Health and Human Services notified Petitioner by letter dated June 30, 2017, that she was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of two years.  The I.G. cited section 1128(b)(1) of the Act as the basis for Petitioner’s exclusion and stated that the exclusion was based upon her misdemeanor conviction in the 56th Judicial District Court of Galveston County, Texas. 

Petitioner timely requested a hearing by mail on August 7, 2017 (RFH).  On September 6, 2017, the case was assigned to me to hear and decide.  I convened a telephone prehearing conference on October 17, 2017, the substance of which is memorialized in my Order to Show Cause, Prehearing Conference Order, and Schedule for Filing Briefs and Documentary Evidence (Prehearing Order) issued on October 17, 2017.  Petitioner failed to join the telephone prehearing conference, which convened in her absence, and she was ordered to show cause why the case should not be dismissed.  Counsel for the I.G. did appear during the prehearing conference and requested the opportunity to move for summary judgment.  A schedule for briefing was established.  On November 14, 2017, Petitioner responded to the Order to Show Cause and her showing was accepted on November 15, 2017. 

On November 27, 2017, the I.G. filed a motion for summary judgment (I.G. Brief) with I.G. exhibits 1 through 3.  Petitioner filed her response (P. Br.) with no exhibits on January 15, 2018.  The I.G. waived filing a reply on January 25, 2018.  Petitioner did not object to my consideration of I.G. Exs. 1 through 3 and they are admitted as evidence.

II. Discussion

A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s right to a hearing by an administrative law judge (ALJ) and judicial review of the final action of the Secretary of Health and Human Services (the Secretary).

Pursuant to section 1128(b)(1)(A) of the Act (42 U.S.C. § 1320a-7(b)(1)(A)), the Secretary may exclude from participation in any federal health care program an individual convicted under federal or state law of a misdemeanor criminal offense committed after August 21, 1996, related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of any health care item or service or with respect to any act or omission in a health care program not subject to section 1128(a)(1), operated by or financed in whole or part by any federal, state, or local government.  Pursuant to section 1128(b)(1)(B) (42 U.S.C.

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§ 1320a-7(b)(1)(B)), the Secretary may exclude from participation in any federal health care program an individual convicted under federal or state law of a misdemeanor criminal offense committed after August 21, 1996, related 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 or financed by a federal, state or local government.  The Secretary has promulgated regulations implementing these provisions of the Act.  42 C.F.R. § 1001.201(a).

Section 1128(c)(3)(D) of the Act provides that an exclusion imposed under section 1128(b)(1) of the Act will be for a period of three years, unless the Secretary determines in accordance with published regulations that a shorter period is appropriate because of mitigating circumstances or that a longer period is appropriate because of aggravating circumstances.  42 C.F.R. § 1001.201(b).  Authorized aggravating and mitigating factors are listed in 42 C.F.R. § 1001.201(b)(2) and (3).

The standard of proof is a preponderance of the evidence, and there may be no collateral attack of the conviction that is the basis of the exclusion.  42 C.F.R. § 1001.2007(c), (d).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors, and the I.G. bears the burden on all other issues.  42 C.F.R. § 1005.15(b).

B. Issues

The Secretary has by regulation limited my scope of review to two issues:  

Whether the I.G. has a basis for excluding an individual or entity from participating in Medicare, Medicaid, and all other federal health care programs;  

and

Whether the length of the proposed exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).

C. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold followed by the pertinent findings of fact and analysis.

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1. Petitioner timely filed her request for hearing, and I have jurisdiction

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

2. Summary judgment is appropriate in this case.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to reasonable notice and an opportunity for a hearing.  The Secretary has provided by regulation that a sanctioned party has the right to a hearing before an ALJ, and both the sanctioned party and the I.G. have a right to participate in the hearing.  42 C.F.R. § 1005.2-.3.  Either or both parties may choose to waive appearance at an oral hearing and to submit only documentary evidence and written argument for my consideration.  42 C.F.R. § 1005.6(b)(5).  An ALJ may also resolve a case, in whole or in part, by summary judgment.  42 C.F.R. § 1005.4(b)(12).

Summary judgment is appropriate in an exclusion case when there are no disputed issues of material fact and when the undisputed facts, clear and not subject to conflicting interpretation, demonstrate that one party is entitled to judgment as a matter of law.  Tanya A. Chuoke, R.N., DAB No. 1721 (2000); David A. Barrett, DAB No. 1461 (1994); Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367 (1992); Catherine L. Dodd, R.N., DAB No. 1345 (1992); John W. Foderick, M.D., DAB No. 1125 (1990).  When the undisputed material facts of a case support summary judgment, there is no need for a full evidentiary hearing, and neither party has the right to one.  Surabhan Ratanasen, M.D., DAB No. 1138 (1990); Foderick, DAB No. 1125.  In opposing a properly-supported motion for summary judgment, the nonmoving party must show that there are material facts that remain in dispute, and that those facts either affect the proponent’s prima facie case or might establish a defense.  Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No. 1628 (1997).  It is insufficient for the nonmovant to rely upon mere allegations or denials to defeat the motion and proceed to hearing.  See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986).

There are no genuine issues of material fact in dispute in this case.  Petitioner does not dispute that she was convicted or that there is a basis for her exclusion.  Petitioner does not dispute that the I.G. considered one mitigating factor and imposed a two year exclusion.  Petitioner urges me to further reduce the period to one year.  Whether or not I may consider the facts urged by Petitioner, which I accept as true for purposes of summary judgment, Petitioner’s request to reduce her period of exclusion must be resolved against her as a matter of law.  There are no genuine disputes of material fact.  Accordingly, I conclude that summary judgment is appropriate.

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3. Petitioner was convicted of an offense related to theft within the meaning of section 1128(b)(1)(A)(i) of the Act, that occurred after August 21, 1996, the date of enactment of the Health Insurance Portability and Accountability Act of 1996. 

4. Petitioner was convicted of an offense related to the delivery of a health care item or service within the meaning of section 1128(b)(1)(A)(i) of the Act.

5. There is a basis for Petitioner’s exclusion from Medicare, Medicaid, and all other federal health care programs under section 1128(b)(1)(A)(i) of the Act. 

a. Facts

Petitioner was charged in the 56^th Judicial District Court of Galveston County, Texas of one count of diversion of a controlled substance for personal use.  I.G. Ex. 3.  On January 18, 2017, an order of deferred adjudication was entered by the court based on Petitioner’s guilty plea to the lesser offense of attempted diversion of a controlled substance for personal use, a Class A misdemeanor.  Petitioner’s guilty plea was accepted by the court, adjudication of guilt was deferred, and Petitioner was placed on community supervision for two years.  Petitioner was ordered to participate in a drug screening program and ordered to perform 80 hours of community service approved by the court.  I.G. Ex. 2.  Petitioner admits in her response to the I.G. motion that she did convert a controlled substance for her personal use.  P. Br.

b. Analysis

Petitioner does not dispute that the I.G. has a basis for her permissive exclusion pursuant to section 1128(b)(1)(A)(i) of the Act.  Rather, Petitioner requests that I reduce the period of her exclusion to one year.  RFH; P. Br.  I briefly review the basis for exclusion. 

The I.G. notice of exclusion dated June 30, 2017, cited section 1128(b)(1) of the Act as the basis for Petitioner’s exclusion.  I.G. Ex. 1.  In briefing before me, the I.G. argues more precisely that permissive exclusion is authorized by section 1128(b)(1)(A) of the Act.  I.G. Br. at 5-8.  Section 1128(b)(1)(A)(i) of the Act provides:

(b) PERMISSIVE EXCLUSION. – The Secretary may exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):

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(1) CONVICTION RELATING TO FRAUD. – Any individual or entity that has been convicted for an offense which occurred after [August 21, 1996] the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under Federal or State law –

(A) of a criminal offense consisting of a misdemeanor relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct –

(i) in connection with the delivery of a health care item or service, . . .

The elements for exclusion pursuant to section 1128(b)(1)(A)(i) are:  (1) conviction in a state or federal court; (2) of a misdemeanor offense relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct; (3) the offense occurred after August 21, 1996; and (4) the offense is in connection with the delivery of a health care item or service. 

Petitioner does not dispute that she pleaded guilty to one count of attempting to convert a controlled substance – to which she had access as part of the delivery of a health care item or service in her capacity as a registered nurse – to her personal use after August 21, 1996; that her guilty plea was accepted by the Texas court; and that an order of deferred adjudication of guilt was entered.  An individual or entity is considered to have been “convicted” of an offense if, among other things, a judgment of conviction is entered; or a guilty plea or no contest plea is accepted by a federal, state, or local court; or when an individual is subject to a deferred adjudication or similar program under which a judgment of conviction is withheld.  Act § 1128(i)(1), (3), (4) (42 U.S.C. § 1320a-7(i)(1), (3), (4)).  Petitioner’s guilty plea was accepted and an order of deferred adjudication was entered by the state court.  Therefore, Petitioner was convicted within the meaning of section 1128(i) of the Act.  I conclude that Petitioner’s offense was related to the delivery of a health care item or service as there is no dispute Petitioner was a registered nurse and had access to the controlled substance as part of her duties delivering health care.  Accordingly, I conclude that the I.G. has made a prima facie showing of the elements necessary for permissive exclusion pursuant to section 1128(b)(1)(A)(i) of the Act.

6. Petitioner’s exclusion for two years is not unreasonable considering the presence of one mitigating factor.

The period of exclusion under section 1128(b)(1) is three years, unless aggravating or mitigating factors justify lengthening or shortening that period.  Act § 1128(c)(3)(D); 42 C.F.R. § 1001.201(b)(1).  Only the aggravating factors authorized by 42 C.F.R. § 1001.201(b)(2) may be considered to increase the period of exclusion, and only the

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mitigating factors authorized by 42 C.F.R. § 1001.201(b)(3) may be considered to reduce the period of exclusion.  A mitigating factor may justify a reduction in the three-year period of exclusion, but the regulations do not state that it must result in a downward adjustment or how significant such an adjustment should be.  42 C.F.R. § 1001.201(b)(3).  Similarly, where an aggravating factor is present in a case, the regulations do not require lengthening the period of exclusion or specify how significant the adjustment should be.  42 C.F.R. § 1001.201(b)(2).  Pursuant to 42 C.F.R. § 1001.2002(c)(2), the I.G. is required to state in the notice of exclusion the factors considered in setting the length of the exclusion.  The notice letter in this case stated that the I.G. considered one mitigating factor authorized by 42 C.F.R. § 1001.201(b)(3)(i), that is, Petitioner was convicted of three or fewer offenses and the entire amount of financial loss to a government program or other individuals or entities amounted to less than $5,000.  The mitigating factor resulted in the I.G. reducing the period of exclusion from three to two years.  I.G. Ex. 1 at 1.  

The applicable regulation broadly states that the ALJ must determine whether the length of exclusion imposed is “unreasonable.”  42 C.F.R. § 1001.2007(a)(1)(ii).  Pursuant to 42 C.F.R. § 1005.20(b), I have authority to “affirm, increase or reduce” the period of exclusion proposed by the I.G. or to reverse the exclusion.  The Board, however, has made clear that the role of the ALJ in exclusion cases is more limited than suggested by the regulations.  According to the Board the ALJ’s role is to conduct a de novo review of the facts related to the basis for the exclusion and the existence of aggravating and mitigating factors and to determine whether the period of exclusion imposed by the I.G. falls within a reasonable range.  Juan de Leon, Jr., DAB No. 2533 at 3 (2013); Craig Richard Wilder, M.D., DAB No. 2416 at 8 (2011); Joann Fletcher Cash, DAB No. 1725 at 17, n.6 (2000).  The Board has explained that, in determining whether a period of exclusion is “unreasonable,” the ALJ is to consider whether such period falls “within a reasonable range.”  Cash, DAB No. 1725 at 17, n.6.  The Board cautions that whether the ALJ thinks the period of exclusion too long or too short is not the issue.  The ALJ may not substitute his or her judgment for that of the I.G. and may only change the period of exclusion in limited circumstances.  

In John (Juan) Urquijo, DAB No. 1735 (2000), the Board made clear that, if the I.G. considers an aggravating factor to extend the period of exclusion and that factor is not later shown to exist on appeal, or if the I.G. fails to consider a mitigating factor that is shown to exist, then the ALJ may make a decision as to the appropriate extension of the period of exclusion beyond the minimum.  In Gary Alan Katz, R.Ph., DAB No. 1842 (2002), the Board suggests that, when it is found that an aggravating factor considered by the I.G. is not proved before the ALJ, then some downward adjustment of the period of exclusion should be expected absent some circumstances that indicate no such adjustment is appropriate.  Thus, the Board has by these various prior decisions significantly limited my authority under the applicable regulation to judge the reasonableness of the period of exclusion.

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In her request for hearing Petitioner requests that I reduce the two year period of exclusion.  She states that she has not worked as a registered nurse since August 11, 2016.  She also states that she admitted her mistake and voluntarily surrendered her nursing license, which she can apply to have reinstated in August 2018.  RFH.  In her response to the I.G. motion, Petitioner also makes clear that her only request is that I reduce the period of exclusion from two years to one year.  Petitioner also states that she surrendered her nursing license November 3, 2016, and reiterates that she has not practiced nursing since August 11, 2016.  Petitioner admits she committed the offense of fraud and theft in obtaining a controlled substance for personal use and she made the same admission to the Texas court, the Texas Board of Nursing, and the I.G.  She states that her drug use began after the death of her 19-year-old daughter.  Petitioner states that she is drug free, attends Narcotics Anonymous meetings, and submits to monthly random drug screens.  P. Br.  I accept all Petitioner’s assertions as true for purposes of summary judgment.  However, the mitigating factors that may be considered are limited by 42 C.F.R. § 1001.201(b)(3) to the following:

(3) Only the following factors may be considered as mitigating and a basis for reducing the period of exclusion—

(i) The individual or entity was convicted of 3 or fewer offenses, and the entire amount of financial loss (both actual loss and reasonably expected loss) to a Government program or to other individuals or entities due to the acts that resulted in the conviction and similar acts is less than $5,000;

(ii) 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;

(iii) The individual's or entity's cooperation with Federal or State officials resulted in—

(A) Others being convicted or excluded from Medicare, Medicaid or any of the other Federal health care programs, or

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

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(C) The imposition of a civil money penalty against others; or

(iv) Alternative sources of the type of health care items or services furnished by the individual or entity are not available

There is no dispute that the I.G. properly considered the mitigating factor established by 42 C.F.R. § 1001.201(b)(3)(i).  Unfortunately for Petitioner, even though I accept the facts she asserts as true, none of the facts she asserts establish any of the other mitigating factors permitted to be considered under 42 C.F.R. § 1001.201(b)(3).  Accordingly, I conclude that I have no authority to reduce the period of exclusion set by the I.G.; and that the period set by the I.G. is not unreasonable.

III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid, and all other federal health care programs for a period of two years, effective July 20, 2017.

• 1. Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after the period of exclusion expires. Reinstatement is not automatic upon completion of the period of exclusion. Citations are to the 2016 revision of the Code of Federal Regulations (C.F.R.), unless otherwise stated. Section 1001.201 of Title 42 was amended effective February 13, 2017, by final rule published at 82 Fed. Reg. 4100, 4112 (Jan. 12, 2017).