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                              Robert M. Carney, DAB CR5249 (2019)
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Robert M. Carney, DAB CR5249 (2019)








  
  
    

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





Robert M. Carney
	(OI File No. H-18-41063-9),
	Petitioner,
v.
The Inspector General.
Docket No. C-19-25Decision No. CR5249February 15, 2019

        
              
    

      DECISION
The Inspector General (IG) of the United States Department of Health and Human Services excluded Robert M. Carney (Mr. Carney or Petitioner) from participation in Medicare, Medicaid, and all other federal health care programs for the statutory minimum period of five years under 42 U.S.C. § 1320a-7(a)(3).  Mr. Carney requested a hearing before an administrative law judge (ALJ) to dispute the exclusion.  The IG subsequently moved for summary judgment and Petitioner responded to that motion.  Based on the undisputed facts in this case, I conclude that § 1320a-7(a)(3) mandates Mr. Carney’s exclusion for five years.
I.  Background
In an August 31, 2018 letter, the IG notified Mr. Carney that he was being excluded from Medicare, Medicaid, and all other federal health care programs under § 1320a-7(a)(3) for a period of five years.  The IG informed Mr. Carney that the exclusion arose because he was convicted of a felony offense in Utah’s Third District Court (District Court) related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service, including the performance of management or administrative services relating to the delivery of a health
Page 2
care item or service, or with respect to any act or omission in a health care program operated or financed by a federal, state or local government agency (other than Medicare or Medicaid).  IG Exhibit (Ex.) 1.
Mr. Carney requested a hearing.  The case was assigned to Judge Keith Sickendick.  On November 6, 2018, Judge Sickendick held a prehearing conference at which the IG requested to file a motion for summary judgement.  Judge Sickendick granted the IG’s request and established a submission schedule in which:  the IG would file its motion and exhibits first; Mr. Carney would file a response or a cross motion for summary judgment with supporting exhibits; and the IG would file a reply or a written statement waiving his right to file a reply.  *See* November 6, 2018 Prehearing Conference Order and Schedule for Filing Briefs and Documentary Evidence (Order) at 1, 4.
Before the IG’s motion was due, this case was transferred to me.  I did not modify Judge Sickendick’s Order and the IG timely filed a motion for summary judgment with five exhibits (IG Exs. 1-5).  Mr. Carney timely filed a response (P. Response) along with three exhibits (P. Exs. 1-3).1
  The IG then filed notice that he would not file a reply.
I admit the parties’ exhibits into the record because they did not object to any of them.  Order at 4; Civil Remedies Division Procedures § 14(e); *see also* 42 C.F.R. § 1005.8(c).
II.  Issues
1.   Whether summary judgment is appropriate;
2.   Whether the IG has a basis to exclude Petitioner under 42 U.S.C. § 1320a-7(a)(3).
III.  Jurisdiction
I have jurisdiction to adjudicate this case.  42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. §§ 1001.2007, 1005.2.
IV.  Findings of Fact, Conclusions of Law, and Analysis
***1.  Summary Judgment is appropriate.***
The IG moved for summary judgment asserting that there is no issue of material fact in dispute.
Page 3
In his response to the IG’s summary judgment motion, Mr. Carney argued that he:  fully cooperated with the investigators from the Utah Attorney General’s office; paid full restitution; received a reduced charge of “Attempted Abuse, Neglect o[r] Exploitation of a Vulnerable Adult”; was told “that the Third-degree felony would drop to a misdemeanor in two years” (January 17, 2020) and “that this charge would not affect [his] ability to continue to work”; “was told by the prosecutor and [his] attorney at the time, what [he] pled guilty to in the plea agreement does not meet criteria for being excluded”; and argued that a crime involving the word “attempted” did not meet the criteria for exclusion.  P. Response at 1.  Further, Mr. Carney submitted a copy of the judgment of conviction on which the IG relies (*compare* IG Ex. 5 *with* P. Ex. 1) and did not object to the IG’s other exhibits related to the charges against him and conviction.  In sum, Mr. Carney does not dispute the facts in this matter, but raises the legal argument that § 1320a-7 does not authorize the IG to exclude an individual convicted of a felony offense when that felony offense is for an attempt to commit a crime rather than an offense involving a crime that was completed.
At the request of a party, an ALJ may decide an exclusion case by summary judgment “where there is no disputed issue of material fact.”  42 C.F.R. § 1005.4(b)(12).  “Matters presented to the ALJ for summary judgment will follow Rule 56 of the Federal Rules of Civil Procedure and federal case law . . . .”  Civil Remedies Division Procedures § 19(a).  As stated by the United States Supreme Court:
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment ‘shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’  By its very terms, this standard provides that the mere existence of *some* alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no *genuine* issue of *material* fact.
*Anderson v. Liberty Lobby, Inc*., 477 U.S. 242, 247-48 (1986) (emphasis in original).
In the present case, the only issue is whether the IG had a basis to exclude Mr. Carney under § 1320a-7(a)(3).  That statute provides that the Secretary of Health and Human Services must exclude an individual from participation in Medicare, Medicaid, and all other federally-funded health care programs if that individual:
has been convicted for an offense which occurred after August 21, 1996, under Federal or State law, in connection
Page 4
with the delivery of a health care item or service or with respect to any act or omission in a health care program (other than those specifically described in [§ 1320a-7(a)(1)]) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.
42 U.S.C. § 1320a-7(a)(3).
The five essential elements necessary in this case to support the exclusion are:  (1) the individual to be excluded must have been convicted of an offense; (2) the offense must be a felony; (3) the felony conviction must have been related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct; (4) the felony offense must be in connection with the delivery of a health care item or service; and (5) the felonious conduct must have occurred after August 21, 1996.
Because there are no genuine issues of material fact in this case, and the undisputed facts show, as explained below, that the statutory elements for a mandatory exclusion are met, I conclude that summary judgment for the IG is appropriate.
***2.  Petitioner, from January 1, 2015 to January 31, 2016, while serving as the business office manager for Avalon Valley Rehabilitation Center (Avalon Valley), transferred funds, in excess of $5,000, from various resident trust accounts to other resident care accounts in order to ultimately transfer the money to Avalon Valley’s operations account.***
Mr. Carney admitted to the following facts in a Statement of Defendant in Support of Guilty Plea and Certificate of Counsel that Mr. Carney signed on January 19, 2018.
From on or about January 1, 2015, to January 31, 2016, I[] was employed as the Business Office Manager at Avalon Valley Rehabilitation Center (Avalon) located at 2472 South 300 East in Salt Lake City, Utah.  Avalon is a residential care facility for individuals with disabilities.2
Avalon uses a financial program called the Resident Fund Management Services (RFMS) to track and account for their various accounts.  There are three primary accounts that the
Page 5
RFMS tacks:  1) The Resident Trust Account; 2) the Resident Care Account; and 3) the Petty Cash Account.  The Care Account money is eventually transferred to the “operations” account at Zions Bank to primarily pay for resident lodging.  As part of my duties with Avalon, I was responsible for accounting and maintaining accurate records for the Resident Trust Account, the Petty Cash Account, and transferring money from the Resident Care Account to the Operations account.
During the time periods as set forth herein, I was under scrutiny by Avalon management regarding my job performance, and more specifically, collecting accounts receivable.  To make it appear that I was improving in my job duties, and specifically regarding accounts receivable, I transferred funds from various Resident Trust accounts to the other residents’ Care Accounts and/or the Operations Account at Zions Bank.  I admitted to engaging in this activity.  The amount of money that I transferred from various Resident Trust accounts to other residents’ Care Accounts and/or Operations Account at Zions Bank exceeded five thousand dollars ($5,000.00).
IG Ex. 4 at 2-3.
***3.  Petitioner was convicted of a criminal offense.***
An individual is considered to be convicted of a criminal offense for purposes of exclusion under § 1320a-7(a) when there has been:  a judgment of conviction entered against the individual by a federal, state or local court; a finding of guilt against the individual by a federal, state, or local court; a plea of guilty or nolo contendere that has been accepted by a federal, state, or local court; or 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).
On January 18, 2018, the Utah Attorney General filed an Amended Information in the Third Judicial District Court in Salt Lake County, Utah charging Mr. Carney with “**ATTEMPTED ABUSE, NEGLECT OR EXPLOITATION OF A VULNERABLE ADULT, a Third Degree Felony,** in violation of Utah Code Ann. §76-5-111(4)(a)(i) and/or (iii).”  IG Ex. 3 at 1 (emphasis in original).  On January 19, 2018, Mr. Carney pled guilty to the criminal charge in the Amended Information.  IG Ex. 4 at 1-9.  Also on January 19, 2018, the District Court ordered that Mr. Carney’s guilty plea “be accepted and entered.”  IG Ex. 4 at 12.  On January 22, 2018, the District Court entered a judgment acknowledging that Mr. Carney pled guilty and indicating “Disposition:  01/19/2018
Page 6
Guilty.”  IG Ex. 5 at 1; P. Ex. 1 at 1.  The District Court further stated:  “Based on the defendant’s conviction of ATTEMPTED EXPLOITATION OF A VULNERABLE ADULT a 3rd Degree Felony, the defendant is sentenced to an indeterminate term not to exceed five years in the Utah State Prison.  The prison term is suspended.  Restitution Amount:  $20826 Plus Interest.”  IG Ex. 5 at 1-2; P. Ex. 1 at 1-2.  An attorney with the Utah Medicaid Fraud Control Unit acknowledged receipt of Petitioner’s payment of full restitution under the District Court’s order.  P. Ex. 2.
Therefore, the undisputed facts in this case show that Petitioner was convicted of a criminal offense based on a state court’s acceptance of Petitioner’s guilty plea and because a state court issued a judgment of conviction.
***4.  Petitioner was convicted of a felony offense.***
The record indicates that Mr. Carney pled guilty to and was convicted of a third degree felony under Utah law, which carried a maximum term of five years of incarceration.  IG Ex. 4 at 1.  The District Court accepted and entered the guilty plea on January 19, 2018.  IG Ex. 4 at 1-2.  The District Court stated the following when sentencing Mr. Carney:  “Based on the defendant’s conviction of ATTEMPTED EXPLOITATION OF A VULNERABLE ADULT a 3rd Degree Felony, the defendant is sentenced to an indeterminate term of not to exceed five years in the Utah State Prison.”  IG Ex. 5 at 1-2; P. Ex. 1 at 1-2.
Mr. Carney admits that he was convicted of a felony, but states that his conviction will be reduced to a misdemeanor in January 2020.  P. Response; Hearing Request.  However, the issue is whether Mr. Carney was convicted of a felony and not whether the state may reduce his conviction in the future.  *See* 42 U.S.C. § 1320a-7(i) (defining “convicted” to include a judgment of conviction even if the record related to the criminal conduct is later expunged as well as participation in an arrangement or program where conviction has been withheld).  Mr. Carney has not disputed that he was convicted of a felony, and for purposes of § 1320a-7(a)(3), the record shows that he has been.
***5.  Petitioner’s felonious conduct was a breach of a fiduciary responsibility.***
In order for a conviction to qualify as one mandating exclusion under § 1320a-7(a)(3), it must be a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.  The terms “related to” and “relating to” simply mean that there must be a nexus or common sense connection.  *See**James Randall Benham*, DAB No. 2042 (2006) (internal citations omitted); *see also* *Friedman v. Sebelius*, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase “related to” in another part of section 1320a-7 as “deliberately expansive words,” “the ordinary meaning of [which] is a broad one,” and one that is not subject to “crabbed and formalistic interpretation”) (internal quotation marks omitted).
Page 7
Mr. Carney admitted the following:
The elements of the crime to which I am pleading guilty are:
I committed the offense of exploitation of a vulnerable adult when I:
(i)  in **a position of trust and confidence**, had a business relationship, with the vulnerable adult or had undue influence over the vulnerable adult and knowingly, by deception or intimidation, obtained or used, or endeavored to obtain or use, the vulnerable adult’s funds, credit, assets, or other property with the intent to temporarily or permanently deprive the vulnerable adult of the use, benefit, or possession of the adult’s property, for the benefit of someone other than the vulnerable adult; or
(iii)  unjustly or improperly used or managed the resources of a vulnerable adult for the profit or advantage of someone other than the vulnerable adult.
IG Ex. 4 at 2 (emphasis added).
In the present case, there is no doubt that Mr. Carney was convicted of a felony that was a breach of a fiduciary responsibility.  Mr. Carney administered funds that were the property of residents at Avalon Valley, making him a fiduciary of those residents.  *See* Black's Law Dictionary (10th ed. 2014) (defining “fiduciary” as “[s]omeone who must exercise a high standard of care in managing another's money or property.”).  As a result, Mr. Carney had a “fiduciary duty” to those residents, which is generally defined as:
A duty of utmost good faith, trust, confidence, and candor owed by a fiduciary (such as an agent or a trustee) to the beneficiary (such as the agent's principal or the beneficiaries of the trust); a duty of utmost good faith, trust, confidence, and candor owed by a fiduciary (such as a lawyer or corporate officer) to the beneficiary (such as a lawyer's client or a shareholder); a duty to act with the highest degree of honesty and loyalty toward another person and in the best interests of the other person (such as the duty that one partner owes to another).
Black's Law Dictionary (10th ed. 2014).  Under these definitions, I conclude that Mr. Carney’s criminal conduct was related to the breach of a fiduciary responsibility.  As Mr.
Page 8
Carney admitted in his criminal plea, he was acting in a position of trust for vulnerable adults while serving as Avalon Valley’s employee who handled the residents’ various accounts.  Further, Mr. Carney admitted that he transferred money between resident accounts and then to Avalon Valley’s operations account to make it appear that he had obtained payment from residents so that his employer would think he was discharging his duties well.  IG Ex. 4 at 3.
More specific to the nursing home environment, we can see that Mr. Carney’s criminal conduct related to a fiduciary breach because nursing homes that participate in the Medicare program must “hold, safeguard, and account for [resident] personal funds under a system established and maintained by the facility . . . .”  42 U.S.C. §1395i‐3(c)(6)(A)(ii); *see also* 42 C.F.R. § 483.10(c)(2) (2015).  At the time of Mr. Carney’s conduct, CMS subregulatory guidance stated that this requirement meant that the nursing home was acting in a fiduciary capacity with regard to its residents.  81 Fed. Reg. 68,688, 68,718 (Oct. 4, 2016).  In 2016, the regulation implementing this requirement was amended to expressly state this.  81 Fed. Reg. at 68,851 (Oct. 4, 2016) (codified at 42 C.F.R. § 483.10(f)(10)(i)).  As an employee of Avalon Valley, Mr. Carney needed to conform his conduct to these requirements.  *Cf*.*Madison County. Nursing Home*, DAB No. 2895 at 8‐10 (2018).
Petitioner argues that he was only convicted of an attempt to commit a crime and not the crime itself.  He also states no one was harmed since he paid full restitution.  P. Response; Hearing Request.  The record corroborates Petitioner’s assertion.  IG Ex. 3 at 1; IG Ex. 4 at 1; IG Ex. 5 at 1; P. Ex. 1 at 1; P. Ex. 2.  As noted earlier, he paid full restitution to the Utah Medicaid Fraud Control Unit.  P. Ex. 2.  However, the fact that Petitioner only pled guilty to an “attempt” to violate the law does not mean that he is not subject to exclusion.  As stated in another case:
To construe section [1320a-7](a)(3) to require success in the crime attempted would allow untrustworthy individuals continued access to federal health care programs simply because their criminal intentions had been thwarted.
*Kenneth M. Behr*, DAB No. 1997 at 4 (2005).
Further, although Petitioner asserts that he only pled guilty to an attempt to commit a crime, Petitioner’s admission of criminal conduct in his guilty plea shows that he had succeeded in improperly transferring money from resident accounts to other resident accounts and eventually to Avalon Valley’s operations account to pay for resident lodging.  IG Ex. 4 at 2.  This admission shows that Petitioner’s crime was related to a breach of the fiduciary responsibility to “exercise a high standard of care in managing another's money or property” and “to hold, safeguard, and account for” resident funds.  Further, the undisputed facts show some actual breach occurred since Petitioner provided
Page 9
evidence that he paid restitution related to his crime.  P Ex. 2.  Just because Petitioner’s crime is labeled as an “attempt” does not exempt him from exclusion.
***6.  Petitioner’s felonious conduct was in connection with the delivery of a health care item or service.***
In order for the IG to exclude Petitioner under 42 U.S.C. § 1320a-7(a)(3), the felony offense that was the basis of Petitioner’s conviction must have been for conduct in connection with the delivery of a health care item or service.  To be “in connection with” the delivery of a health care item or service, there only needs to be a nexus or common sense connection to the delivery of a health care item or service.  *Charice D. Curtis*, DAB No. 2430 at 5 (2011).
The regulations implementing § 1320a-7(a)(3) make it clear that the delivery of a health care item or service includes “the performance of management or administrative services relating to the delivery of such item or services.”  42 C.F.R. § 1001.101(c)(1).  Petitioner’s position, as business office manager at Avalon Valley, indicates that he did not engage directly in providing medical services to residents.  Further, the description Petitioner provided of his duties with relation to resident accounts and collecting money owed to Avalon Valley shows that a certain aspect of his position involved management or administrative services.  There is a connection between his criminal conduct and the delivery of health care items or services because Petitioner expressly said that he moved funds between accounts to pay for “resident lodging.”  IG Ex. 4 at 3.  Resident lodging at a nursing facility would be necessary for the delivery of health care items and services and, therefore, connected to them.  *Cf*. 42 C.F.R. § 483.10(f)(11)(i)(D) (for residents whose stay at a skilled nursing facility is covered by Medicare or Medicaid, a room is considered an “item or service.”).
In addition, a previous case supports a broader interpretation of the meaning of “management or administrative services” to support the contention that Petitioner’s conduct was in connection with providing health care items or services.
The regulatory language and its history support her exclusion. This language first appeared in a prior version of 42 C.F.R. § 1001.101 published in 1992, mandating exclusions for criminal offenses “related to the delivery of an item or service under 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.”  57 Fed. Reg. 3330 (Jan. 29, 1992).  In proposing that rule, the I.G. stated that mandatory exclusions under section 1001.101(a) “are broadly defined to include offenses relating to performance of management or administrative
Page 10
services relating to delivery of items or services under the program.”  55 Fed. Reg. 12,205, 12,206-07 (Apr. 2, 1990)  Among the examples of offenses mandating exclusion the I.G. included “a nursing home administrator convicted of using a Medicaid beneficiary's patient fund account for his or her own use.”  55 Fed. Reg. at 12,207.  As in the example, Petitioner was able to commit the offense because of her position as the administrator of a health care agency, even if she was not actually engaged in the delivery of health care items or services.
*Curtis*, DAB No. 2430 at 5-6.
Therefore, Petitioner’s criminal offense was in connection with the delivery of health care items and services.
***7.  Petitioner’s criminal conduct occurred after August 21, 1996***
To be excluded under 42 U.S.C. § 1320a-7(a)(3), Petitioner’s felony offense must have occurred after August 21, 1996.  The undisputed facts in this case show that Petitioner’s conviction was based conduct occurring in 2015 and 2016.  IG Ex. 3 at 4; IG Ex. 4 at 2.
***8.  Petitioner must be excluded for five years.***
I conclude that Petitioner’s conviction meets the five elements of a mandatory exclusion under 42 U.S.C. § 1320a-7(a)(3), and, therefore, the IG had to impose a minimum of a five-year exclusion on Petitioner.  42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a) (the reasonableness of a five-year length of exclusion imposed under § 1320A-7(a) is not an appealable issue).
Page 11
V.  Conclusion
I grant the IG’s Motion for Summary Judgment and affirm the IG’s determination to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for a five-year minimum period under 42 U.S.C. § 1320a‐7(a)(3).


          /s/
        Scott Anderson

                      Administrative Law Judge
      1. Petitioner uploaded to DAB E-file a single file with the name of CASE.pdf.  The first page of the file is Petitioner’s response.  I mark as P. Ex. 1 the second and third pages of the file.  I mark the fourth page as P. Ex. 2.  I mark the fifth and sixth pages as P. Ex. 3. back to note 1
                      2. According to Medicare’s Nursing Home Compare website (https://www.medicare.gov/ nursinghomecompare/search.html), Avalon Valley is a nursing home that participates in the Medicare and Medicaid programs.  See 42 U.S.C. 1395i-3(i). back to note 2 Back to top
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