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                              Loretta Chappell, formerly known as Loretta Davidson, DAB CR5549 (2020)
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Loretta Chappell, formerly known as Loretta Davidson, DAB CR5549 (2020)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Civil Remedies Division





Loretta Chappell,
	formerly known as Loretta Davidson
	(OI File No. H-18-42538-9),
	Petitioner,
v.
The Inspector General.
Docket No. C-20-76Decision No. CR5549March 2, 2020

        
              
    

      DECISION
The Inspector General (IG) of the United States Department of Health and Human Services excluded Petitioner, Loretta Chappell (formerly known as Loretta Davidson), from participation in Medicare, Medicaid, and all other federal health care programs based on Petitioner's conviction of a criminal offense related to the delivery of a health care item or service under Medicare or a state health care program. For the reasons discussed below, I conclude that the IG has a basis for excluding Petitioner based on her criminal conviction, as defined by 42 U.S.C. § 1320a-7(i), for tampering with records based on her false reporting of physical therapy services provided to skilled nursing facility residents. An exclusion for the minimum period of five years is mandatory pursuant to section 1128(c)(3)(B), 42 U.S.C. § 1320a-7(c)(3)(B), of the Social Security Act ("the Act").
I. Background
In a letter dated August 30, 2019, the IG excluded Petitioner from participation in Medicare, Medicaid, and all federal health care programs as defined in section 1128B(f) of the Act, 42 U.S.C. § 1320a-7b(f), for a minimum period of 5 years, effective 20 days
**Page 2**
from the date of the letter. IG Exhibit (Ex.) 1 at 1. The IG explained that Petitioner's exclusion was based on a "conviction as defined in section 1128(i) (42 U.S.C. [§] 1320a‐7(i)), in the Hamilton County Municipal Court, Hamilton County, Ohio,1
 of a criminal offense related to the delivery of an item or service under the Medicare or a State health care program, including the performance of management or administrative services relating to the delivery of items or services, under any such program." IG Ex. 1 at 1. The IG further explained that she had excluded Petitioner pursuant to section 1128(a)(1) of the Act, which mandates the exclusion of any individual who is 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. IG Ex. 1 at 1; *see* 42 U.S.C. § 1320a-7(a)(1). The IG informed Petitioner that the exclusion was for "the minimum statutory period of 5 years." IG Ex. 1 at 1; *see* 42 U.S.C. § 1320a-7(c)(3)(B).
On November 19, 2019, the Civil Remedies Division acknowledged receipt of Petitioner's request for hearing, at which time it issued my standing pre-hearing order (Pre-Hearing Order). On December 3, 2019, pursuant to 42 C.F.R. § 1005.6, I presided over a telephonic pre-hearing conference, and the following day, I issued an order summarizing the pre-hearing conference and setting the schedule for pre-hearing submissions.
Pursuant to my orders, the IG filed a brief and a reply brief, along with seven exhibits (IG Exs. 1-7). Petitioner, who is represented by counsel, filed a brief (P. Br.) and one exhibit. In the absence of any objections, I admit the parties' exhibits into the record.
As relevant here, section 8 of the Pre-Hearing Order directs that a party must submit the written direct testimony of any witness for whom it wishes to provide direct testimony. Further, and as relevant here, sections 9 and 11 of the Pre-Hearing Order explain that a live hearing will be necessary only if a party wishes to cross-examine a witness who provided written direct testimony. Neither party has identified any witnesses or submitted written direct testimony, and therefore, a hearing for the purpose of cross-examination is unnecessary.  *See Lena Lasher,* DAB No. 2800 at 4 (2017) (discussing that when neither party submits written direct testimony as directed, "no purpose would be served by holding an in-person hearing"), *aff'd, Lasher v. Dep't of Health & Human Servs.*, 369 F. Supp.3d 243 (D.D.C. 2019). Because a hearing is unnecessary, I will decide this case on the written submissions and documentary evidence.
**Page 3**
II. Issues
Whether there is a basis for exclusion, and, if so, whether the five-year period of the exclusion that the IG has imposed is mandated by law. 42 C.F.R. § 1001.2007(a)(1)-(2).
III. Jurisdiction
I have jurisdiction to adjudicate this case. 42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. § 1005.2.
IV. Findings of Fact, Conclusions of Law, and Analysis2
***1. Petitioner has a conviction for an offense that is related to the delivery of a health care item or service under a federal or state health care program, which is an offense, pursuant to section 1128(a)(1) of the Act, that subjects her to a mandatory exclusion from all federal health care programs for a minimum of five years.***
Section 1128(a)(1) requires a mandatory exclusion from all federal health care programs under certain conditions.3
 Section 1128(a)(1) states:
(a) Mandatory exclusion. –
The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):
(1) Conviction of program-related crimes--
Any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under title XVIII or under any State health care program.
**Page 4**
*See* 42 U.S.C. § 1320a-7(a)(1). Further, section 1128(i) of the Act states that an individual is "convicted" of a criminal offense for the purpose of an exclusion under, *inter alia*, either of the following circumstances:
(3) when a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court; or
(4) when the individual or entity has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.
42 U.S.C. § 1320a-7(i)(3), (4).
The IG argues that she properly excluded Petitioner from all federal health care programs based on Petitioner's conviction for an offense that was related to the delivery of a health care item or service under Medicare or a state health care program. IG Br. at 5-10. I find that Petitioner was convicted of a criminal offense that, for purposes of the Act, mandates exclusion from all federal health care programs.
Two separate criminal complaints filed on July 6, 2017, charged that Petitioner, on August 3 and 17, 2015, committed the misdemeanor offenses of tampering with records, as detailed below:
[Petitioner] did . . . in the City of Cincinnati, Hamilton County, State of Ohio, violate Ohio Revised Code Section 2913.42, Tampering with Records, when she, knowing that she had no privilege to do so and with purpose to defraud and/or knowing that she was facilitating a fraud, falsify a writing, computer software, data, and/or a record; a misdemeanor of the first degree.
IG Exs. 2, 3. Accompanying statements of probable cause, authored by a special agent employed by the Medicaid Fraud Control Unit of the Ohio Attorney General's Office, reported the following:4
As part of an investigation into the provision of skilled therapy services at . . . a skilled nursing facility . . . , I reviewed video surveillance footage subpoenaed . . . covering a period of time between June and August 2015. I also
**Page 5**
reviewed therapy records subpoenaed from . . . an entity that provided therapy services under contract . . . during the time period covered by the surveillance footage. Through that contract, [the physical therapy provider] would bill [the skilled nursing facility] for therapy services provided . . . to . . . residents.
* * *
In reviewing the therapy records and surveillance footage, I was able to identify [Petitioner] as an occupational therapy assistant who had provided therapy services on behalf of [the physical therapy provider] to . . . residents. On the surveillance footage, I was able to recognize [Petitioner] from photographs in law-enforcement databases. I have also met [Petitioner] in person.
IG Exs. 4 at 1-2; 5 at 1-2. The affiant discussed that Petitioner had recorded in a computer system that is used to generate invoices to the skilled nursing facility "minutes for therapy that she had not actually performed as she did not spend the required amount of time with the . . . resident with whom she recorded she had performed therapy services." IG Exs. 4 at 2; 5 at 2. A Senior Assistant Attorney General, in a "pre-charge memorandum," reported that pursuant to a contract between the physical therapy provider and the skilled nursing facility, the physical therapy provider would bill the skilled nursing facility, and the skilled nursing facility in turn "sought reimbursement directly from Medicare and then compensated [the physical therapy provider] 70% of the [Medicare] Part B reimbursement." IG Ex. 6 at 1.
Petitioner signed an undated "Diversion Guilty Plea" form for both offenses in which she acknowledged the following:
I . . . understand that I am entering a plea of guilty, I further understand that my plea is freely and voluntarily entered and that a plea of guilty is a complete admission of my guilt in this case. I am pleading guilty to the offense because I believe that I am guilty of the offense.
IG Ex. 7 at 1, 3. Petitioner further agreed to the following:
I understand that the Court, pursuant to the Diversion Rules and Ohio Revised Code Section 2935.36, shall withhold its findings until such time as I complete the Diversion Program or I am terminated from the program. Further, if I am
**Page 6**
terminated from the program or otherwise removed from the program, the Court shall schedule this case on its docket and find me guilty [pursuant] to this plea of guilty. If I successfully complete the Diversion Program, the Court will dismiss this criminal charge.
IG Ex. 7 at 1, 3. In signing the diversion guilty plea, Petitioner acknowledged that the offenses carried a maximum period of incarceration of 180 days and $1,000 fine. IG Ex. 7 at 2, 4.
Petitioner also signed a "Diversion Program Participation Agreement Understanding" in which she acknowledged that if she was terminated from the diversion program, she "will be found guilty based upon [her] initial plea(s) and be sentenced accordingly." IG Ex. 7 at 5. Petitioner also agreed, in signing a "Diversion Program Diversion Participation Agreement," that she would, *inter alia*, pay restitution and complete 60 hours of community service. IG Ex. 7 at 8. Petitioner further acknowledged: "I may withdraw from the program at any time, but if I do, I understand and agree that I will return to court, have a guilty finding entered against me based upon my guilty plea(s) and be sentenced accordingly." IG Ex. 7 at 8.
On December 12, 2017, the Court accepted Petitioner's entry into the diversion program. IG Ex. 7 at 10. A Court journal entry reports that Petitioner, "as a condition for participation in the Hamilton County Diversion Program, has knowingly, intelligently and voluntarily entered a guilty plea to all criminal charges filed," and that "a finding on [her] guilty plea(s) will be held in abeyance during [Petitioner's] participation in the diversion program." IG Ex. 7 at 10. The Court further noted that if Petitioner "is unsuccessfully terminated from the diversion program a guilty finding shall be entered against [her] by the court in relation to each and every charge for which [she] entered a guilty plea and [her] case shall proceed directly to sentencing." IG Ex. 7 at 10.
Petitioner limits her arguments to the question of whether she has a criminal conviction pursuant to section 1128(i) of the Act, and she does not otherwise dispute the IG's determination that the offense of tampering with records, as it related to her submission of false reports regarding the time she spent providing services to skilled nursing facility residents, would warrant exclusion pursuant to section 1128(a)(1) of the Act.5
 P. Br. Because Petitioner has not disputed the IG's determination that the offense of tampering
**Page 7**
with records is a criminal offense related to the delivery of any item or service under the Medicare program, she has conceded that an exclusion would be warranted pursuant to 1128(a)(1) of the Act if she has a conviction for that offense. Petitioner's false reports of the time she spent providing services to skilled nursing facility residents are unquestionably related to the delivery of an item or service under the Medicare program; her employer sought reimbursement from the skilled nursing facility for services that she did not actually provide, and the skilled nursing facility sought Medicare reimbursement for those falsely-reported services. IG Exs. 4, 5, 6.
Petitioner does not dispute that, on or about December 12, 2017, the Court accepted her plea of guilty to the offenses of tampering with records when it approved her participation in the diversion program. *See* IG Ex. 7 at 10 (Court's acknowledgment that Petitioner had "knowingly, voluntarily, and intelligently waived [her] constitutional and statutory rights to a speedy trial"; had "knowingly, intelligently and voluntarily entered a guilty plea to all criminal charges filed"; and, that her case "shall proceed directly to sentencing" if she did not successfully complete the diversion program.). Therefore, Petitioner's guilty plea was accepted pursuant to 42 U.S.C. § 1320a-7(i)(3).
Petitioner first argues that exclusion is not warranted pursuant to section 1128(i)(3) because her guilty plea was "conditional upon failure to meet certain court-approved conditions such as diversion agreements." P. Br. at 4. Petitioner also contends that her plea of guilty was "conditional" because it was premised on her admission to the diversion program, and that her successful completion of the diversion program resulted in her guilty plea being rescinded when the Court dismissed her criminal case. P. Br. at 4-5; *see* P. Ex. 1. However, the evidence indicates that Petitioner's guilty plea was not conditioned on anything other than her bare admission that she was guilty of the charged offenses, in that Petitioner explicitly acknowledged that she "[is] pleading guilty to the offense because [she] believe[s] [she is] guilty of the offense." IG Ex. 7 at 1, 3. Petitioner further acknowledged that her guilty "plea is freely and voluntarily entered and that a plea of guilty is a complete admission of [her] guilt in this case." IG Ex. 7 at 1, 3. And to the extent that Petitioner claims that she entered the guilty plea only to gain acceptance into a diversion program that would result in the dismissal of her case (P. Br. at 4; *see* IG Ex. 7 at 10), I note that Petitioner signed two documents acknowledging that she had been informed that the prosecutor would *recommend* that her case be dismissed after she completed the diversion program. IG Ex. 7 at 8 (Diversion Program Diversion Participation Agreement, signed by Petitioner, stating: "Your successful participation will result in a recommendation that the charge(s) now pending against you be dismissed without trial."); IG Ex. 7 at 5 (Diversion Program Participation Agreement Understanding, stating: "I understand that if I demonstrate that I can and will behave in a law-abiding manner, a dismissal recommendation will be made, and if accepted by the court, my case will be dismissed without trial and that I will not have a conviction record because of the present charge(s) against me.").
**Page 8**
Petitioner also contends that the dismissal of her case upon her completion of the diversion program somehow invalidated her guilty plea. P. Br. at 4-5, citing P. Ex. 1. However, Petitioner fails to reconcile that the Court had already accepted her guilty plea when it allowed her to participate in the diversion program, and as such, her guilty plea had been "accepted" pursuant to section 1128(i)(3). Although Petitioner correctly recognizes that a purpose of a diversion agreement is consistent with "the goal of the courts . . . to not punish, [but] rather give the opportunity to the defendant to demonstrate rehabilitation" (P. Br. at 4), she fails to acknowledge that the goals of courts and the IG are not necessarily aligned. The courts may seek to further rehabilitative goals, but the IG seeks to protect federal funds and Medicare beneficiaries. *See Henry L. Gupton*, DAB No. 2058 at 7 (2007) (explaining that the goals of criminal law "generally involve punishment and rehabilitation by the offender, possibly deterrence of future misconduct . . . and various public policy goals," whereas exclusions "are civil sanctions, designed to protect beneficiaries of health care programs and the federal fisc."), *aff'd, Henry L. Gupton v. Leavitt*, 575 F. Supp.2d 874 (E.D. Tenn. 2008).
Petitioner also argues that section 1128(i)(4) of the Act, which provides that a conviction for purposes of an exclusion includes participation in "a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld," is inapplicable because it "does not specify cases in which the individual has entered and completed such a program successfully." P. Br. at 6; *see* 42 U.S.C. § 1320a‐7(i)(4). Petitioner baselessly argues that "if evidence of diversion program completion exist[s], then Section 1128(i)(4) of the Act cannot apply." P. Br. at 6. Petitioner's interpretation of section 1128(i)(4) is utterly inconsistent with a plain reading of the text of that provision, which unambiguously states that an individual's *entry* into such a program when judgment of conviction has been withheld, in and of itself, amounts to a criminal conviction for purposes of exclusion.6
 42 U.S.C. § 1320a‐7(i)(4); *see, e.g., Kim J. Rayborn*, DAB No. 2248 at 7 (2009) (finding that the petitioner had a criminal conviction pursuant to section 1128(i)(4), even though the
**Page 9**
court, following the petitioner's completion of a diversion program, had dismissed her case and explicitly stated there was no criminal conviction). In fact, the Departmental Appeals Board has recognized that Congress contemplated a circumstance akin to the one presented here, explaining:
Congress has defined for the ALJ and this Board what "convicted" means for purposes of section 1128 and that definition is binding on us. Moreover, it is clear from the legislative history of this provision that Congress adopted such broad definitions to ensure that exclusions from federally funded health programs would not hinge on state criminal justice policies. The Committee Report recommending adoption of this definition expressly discussed first offender and deferred adjudication programs stating --
These criminal dispositions may well represent rational criminal justice policy. The Committee is concerned, however, that individuals who have entered guilty or nolo pleas to criminal charges of defrauding the Medicaid program are not subject to the exclusion from either Medicare or Medicaid. These individuals have admitted that they engaged in criminal abuse against a Federal health program and, in the view of the Committee, they should be subject to exclusion.
*Carolyn Westin*, DAB No. 1381 at 4 (1993) (citing H.R. Rep. No. 727, 99th Cong., 2d Sess. 75, reprinted in 1986 U.S.C.C.A.N. 3607, 3665), *aff'd sub nom.*, *Westin v. Shalala*, 845 F. Supp. 1446 (D. Kan. 1994). Petitioner has not shown that her completion of a diversion program renders section 1128(i)(4) inapplicable or that she does not have a conviction for the purposes of exclusion. *See, e.g., Travers v. Shalala*, 20 F.3d 993, 998 (9th Cir. 1994) (upholding determination of a conviction pursuant to section 1128(i)(4) where a court had accepted a no contest plea and approved "first offender disposition," and then allowed withdrawal of the plea and dismissed the case upon satisfaction of a plea agreement).
Congress, through enactment of the Act, determined that an individual who has been convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program must be excluded from federal health care programs for no less than five years, and it afforded neither the IG nor an administrative law judge the discretion to impose an exclusion of a shorter duration. 42 U.S.C. § 1320a‐7(c)(3)(B). I cannot shorten the length of the exclusion to a period of less than
**Page 10**
five years because I do not have authority to "[f]ind invalid or refuse to follow Federal statutes or regulations." 42 C.F.R. § 1005.4(c)(1). I therefore agree with the IG that an exclusion for a minimum period of five years is mandated pursuant to 42 U.S.C. §§ 1320a-7(a)(1), 7(c)(3)(B).
***2. The effective date of Petitioner's exclusion is September 19, 2019.***
The effective date of the exclusion, September 19, 2019, is 20 days after the date of the IG's August 30, 2019 letter and is established by regulation (42 C.F.R. § 1001.2002(b)); I am bound by that regulation. 42 C.F.R. § 1005.4(c)(1).
V. Conclusion
For the foregoing reasons, I affirm the IG's decision to exclude Petitioner from participation in Medicare, Medicaid, and all other federal health care programs for a minimum period of five years, effective September 19, 2019.


          /s/
        Leslie C. Rogall

                      Administrative Law Judge
      1. I refer to the Hamilton County Municipal Court as "the Court" throughout this decision. back to note 1
                      2. My findings of fact and conclusions of law are set forth in italics and bold font. back to note 2
                      3. While there are slight differences in the wording of Section 1128 of the Act and its codification at 42 U.S.C. § 1320a-7, the two authorities are substantively identical and I refer to them interchangeably. I further note that the Secretary of the Department of Health and Human Services (Secretary) has delegated to the IG the authority "to suspend or exclude certain health care practitioners and providers of health care services from participation in these programs." 48 Fed. Reg. 21,662 (May 13, 1983); see also 42 C.F.R. § 1005.1. back to note 3
                      4. I have omitted references that identify the skilled nursing facility and physical therapy provider by name. back to note 4
                      5. In her request for hearing, Petitioner succinctly stated that the criminal charges "are not related to medical fraud rather she was arrested for general tampering with records . . . ." Request for Hearing at 4. Petitioner offered no specific argument that her offense did not relate to the delivery of an item or service under the Medicare program as set forth in section 1128(a)(1). In her pre-hearing brief, Petitioner did not address the applicability of section 1128(a)(1). back to note 5
                      6. Petitioner does not dispute that she entered into a "first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld." See 42 U.S.C. § 1320a-7(i)(4). Nor does she dispute that the judgment of conviction had been withheld based on her participation in such a program. See id.; IG Ex. 7 at 10 ("[Petitioner] understands and agrees that a finding on his/her guilty plea(s) will be held in abeyance during [Petitioner's] participation in the diversion program."); Ellen L. Morand, DAB No. 2436 at 5 (2012) ("[T]he District Court's finding of enough facts to warrant a conviction and deferral of a formal finding to that effect is quintessentially an 'arrangement or program where judgment of conviction has been withheld.' Act § 1128(i)(4). Accordingly, in looking at the substance of the proceeding in this case, we conclude that there was a 'conviction' for the purposes of the Act."). back to note 6 Back to top
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