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

Raymond Lamont Shoemaker,
(O.I. No. 4-10-41039-9),

Petitioner,
v.

The Inspector General.
Docket No. C-13-839
Decision No. CR2993
Date: November 13, 2013
DECISION

This matter is before me on the Inspector General’s (1.G.’s) Motion for Summary
Disposition affirming the I.G.’s determination to exclude Petitioner Raymond Lamont
Shoemaker from participation in Medicare, Medicaid, and all other federal health care
programs for a period of 10 years. The I.G.’s Motion and determination to exclude
Petitioner are based on section 1128(a)(1) of the Social Security Act (Act), 42 U.S.C.

§ 1320a-7(a)(1). The undisputed material facts of this case demonstrate that the
minimum five-year exclusion must be imposed, and that the I.G.’s determination to
enhance that period to 10 years based on proof of the aggravating factors found at 42
C.F.R. §§ 1001.102(b)(2) and (b)(5) is supported fact and law. However, the proposed
10-year term is unreasonably short. Accordingly, I grant the I.G.’s Motion for Summary
Disposition but enhance the period of Petitioner’s exclusion to 12 years.

I. Procedural Background

On September 21, 2011, Petitioner was named as one of three co-defendants in a 14-
count Superseding Indictment handed up by the Federal Grand Jury sitting for the United
States District Court for the Northern District of Mississippi. He was charged in Counts
One, Three, Four, Six, Seven, Eight, Nine, Ten, Eleven, Twelve, and Fourteen of that
Superseding Indictment.
That document charged Earnest Levi Garner, Jr., and Robert S. Corkern as additional co-
defendants. More specifically, it charged Petitioner and Garner as co-conspirators, and
named David Chandler as an unindicted co-conspirator, in Counts One and Four. It
charged Petitioner and Corkern as co-conspirators, and named David Vance as an
unindicted co-conspirator, in Count Eight. Petitioner and Corkern were also charged as
co-defendants in Counts Nine, Ten, and Eleven, and Vance was named as an unindicted
aider-and-abettor of Petitioner and Corkern in Counts Nine, Ten, and Eleven. Petitioner
was charged individually as a defendant in Counts Three, Seven, and Twelve. I.G. Ex.
3.

Corkern pleaded guilty to one count of violating 18 U.S.C. § 666, while Petitioner and
Garner pleaded not guilty and went to trial. On a jury verdict they were both found guilty
of all of the charges they faced at trial in February and March 2012. P. Ex. 1.7

Post-trial practice pursuant to FED. R. CRIM. P. 29 and 33 resulted in the District Court’s
granting defense motions for judgment of acquittal on two of the conspiracy counts on
which guilty verdicts had been returned against Garner and Petitioner, Counts One and
Four, and for a new trial on another count, Count Three, in which Petitioner was charged
and found guilty. P. Ex. 1. Those proceedings notwithstanding, Petitioner remained
convicted of seven felonies: Count Six, Health Care Fraud (Kickback, Bribe, or Rebate),
in violation of 42 U.S.C. § 1320a-7b; Count Seven, False Statements to the United States,
in violation of 18 U.S.C. § 1001; Count Eight, Conspiracy to violate 18 U.S.C. § 1014
(False Statements in a Federal Loan or Credit Application), in violation of 18 U.S.C.

§ 371; Counts Nine, Ten, and Eleven, False Statements in a Federal Loan or Credit
Application, in violation of 18 U.S.C. § 1014; and Count Twelve, Embezzlement from an
Organization Receiving Federal Assistance, in violation of 18 U.S.C. § 666. LG. Ex. 2;
P. Ex. 5.

On September 24, 2012, Petitioner was sentenced to seven concurrent 55-month terms of
imprisonment, one on each of the seven counts. I.G. Ex. 2.

' Thave prepared and attached to this Decision an Appendix that may be helpful in the
discussion that follows. It sets out — so far as this evidentiary record permits — the
disposition of each of the 14 Counts in the Superseding Indictment.

> Tt does not appear that Petitioner stood trial on Count Fourteen, but nothing in this
record explains its disposition. Petitioner was charged in Count Fourteen, but given the
details of that Count, it seems possible that it was severed from the charges on which
Petitioner and Garner stood trial in February and March 2012.
On March 29, 2013, the LG. wrote to Petitioner giving notice of his exclusion for a
period of 10 years pursuant to the terms of section 1128(a)(1) of the Act. The LG.’s letter
told Petitioner that the mandatory minimum five-year period of exclusion was to be
enhanced by an additional five years based on the presence of two aggravating factors.

Acting through counsel, Petitioner sought review of the I.G.’s determination on May 30,
2013.

In order to discuss procedures for addressing the issues presented by this case, I convened
a prehearing conference by telephone on June 13, 2013, pursuant to 42 C.F.R. § 1005.6.
By order of June 14, 2013, I established those procedures and a schedule for the
submission of documents and briefs. The record in this case closed for purposes of 42
C.F.R. § 1005.20(c) on September 19, 2013.

The evidentiary record on which I decide the issues before me contains eight exhibits.
The I.G. proffered three exhibits marked I.G. Exhibits 1-3 (LG. Exs. 1-3). Petitioner
proffered five exhibits marked Petitioner’s Exhibits 1-5 (P. Exs. 1-5). I have admitted all
proffered exhibits as marked.

II. Issues

The legal issues before me are limited to those set out at 42 C.F.R. § 1001.2007(a)(1). In
the context of this record, they are:

a. Whether the LG. has a basis for excluding Petitioner from participating
in Medicare, Medicaid, and all other federal health care programs pursuant
to section 1128(a)(1) of the Act; and

b. Whether the 10-year length of the proposed period of exclusion is
unreasonable.

For all of the reason set out below, the first issue is here resolved in favor of the I.G.’s
position. Because Petitioner’s predicate conviction is established in the record before me,
section 1128(a)(1) of the Act mandates Petitioner’s exclusion. A five-year period of
exclusion is the minimum period established by section 1128(c)(3)(B) of the Act, 42
U.S.C. § 1320a-7(c)(3)(B). The enhancement of that period to 10 years is authorized and
supported because the two aggravating factors relied on by the I.G. and found at 42
C.F.R. § 1001.102(b) (2) and (b)(5) are established in the record, but the 10-year period is
unreasonably short. A 12-year period of exclusion is not unreasonable. Petitioner has
demonstrated no mitigating factor that would reduce the proposed period of his
exclusion.
Ill. Controlling Statutes and Regulations

Section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1), requires the exclusion from
participation in Medicare, Medicaid, and all other federal health care programs of any
individual or entity convicted of a criminal offense related to the delivery of an item or
service under Title XVIII of the Act (the Medicare program) or any state health care
program (the Medicaid program). The terms of section 1128(a)(1) are restated in similar
language at 42 C.F.R. § 1001.101(a).

The Act defines “conviction” as including those circumstances “when a judgment of
conviction has been entered against the individual . . . by a Federal . . . court, regardless
of... whether the judgment of conviction or other record relating to criminal conduct has
been expunged,” section 1128(i)(1) of the Act; “when there has been a finding of guilt
against the individual . . . by a Federal . . . court,” section 1128(i)(2) of the Act; “when a
plea of guilty or nolo contendere by the individual . . . has been accepted by a Federal . . .
court,” section 1128(i)(3) of the Act; or “when the individual . . . has entered into
participation ina... deferred adjudication ... program where judgment of conviction

as been withheld,” section 1128(i)(4) of the Act. 42 U.S.C. §§ 1320a-7(i)(1)-(4). These
definitions are repeated at 42 C.F.R. § 1001.2.

An exclusion based on section 1128(a)(1) is mandatory and the I.G. must impose it for a
minimum period of five years. Act § 1128(c)(3)(B), 42 U.S.C. § 1320a-7(c)(3)(B). The
regulatory language of 42 C.F.R. § 1001.102(a) affirms the statutory provision.

The mandatory minimum period of exclusion may be enhanced in some limited
circumstances, but only on the L.G.’s proof of certain narrowly-defined aggravating
factors listed at 42 C.F.R. § 1001.102(b). In this case, the I.G. relies on the two
aggravating factors set out at 42 C.F.R. §§ 1001.102(b)(2) and (b)(5) to enhance the
period of Petitioner’s exclusion to 10 years. The aggravating factor set out at 42 C.F.R.
§ 1001.102(b)(2) is present when “acts that resulted in the conviction, or similar acts,
were committed over a period of one year or more.” The aggravating factor set out at 42
C.F.R. § 1001.102(b)(5) is present when the “sentence imposed by the court included
incarceration.”

In cases when the I.G. proposes to enhance the period of exclusion by relying on one or
more aggravating factors, a petitioner may attempt to limit or nullify the proposed
enhancement through proof of certain mitigating factors, carefully defined at 42 C.F.R.

§ 1001.102(c)(1)-(3). The petitioner who claims the mitigating factor or factors bears the
burden of proving any mitigating factors claimed. 42 C.F.R. § 1005.15(b)(1).
IV. Findings and Conclusions
I find and conclude as follows:

1. In the United States District Court for the Northern District of Mississippi, Petitioner
Raymond Lamont Shoemaker was found guilty on a jury verdict of, inter alia, one count
of Health Care Fraud (Kickback, Bribe, or Rebate), in violation of 42 U.S.C. § 1320a-7b;
one count of False Statements to the United States, in violation of 18 U.S.C. § 1001; one
count of Conspiracy to violate 18 U.S.C. § 1014 (False Statements in a Federal Loan or
Credit Application), in violation of 18 U.S.C. § 371; three counts of False Statements in a
Federal Loan or Credit Application, in violation of 18 U.S.C. § 1014; and one count of
Embezzlement from an Organization Receiving Federal Assistance, in violation of 18
USS.C. § 666. IG. Exs. 2, 3; P. Exs. 1, 5.

2. Judgment of conviction on that verdict was entered against Petitioner and sentence
was imposed on him in the District Court on September 24, 2012. As part of his
sentence, Petitioner was ordered to serve seven concurrent 55-month terms of
imprisonment, and was ordered to pay a fine and an assessment in the total sum of
$10,700.00. I.G. Ex. 2.

3. The judgment of conviction and finding of guilt described above in Findings 1 and 2
constitute a “conviction” within the meaning of sections 1128(a)(1) and 1128(i)(1) and
(2) of the Act, and 42 C.F.R. § 1001.2.

4. A nexus and a common-sense connection exist between the criminal offenses of which
Petitioner was convicted, as noted above in Findings 1, 2 and 3, and the delivery of an
item or service under the Medicare and Medicaid programs. I.G. Exs. 2, 3; Berton Siegel,
D.O., DAB No. 1467 (1994).

5. By reason of Petitioner’s conviction, a basis exists for the 1.G.’s exercise of authority,
pursuant to section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1), to exclude him from

participation in Medicare, Medicaid, and all other federal health care programs.

6. Because the acts resulting in Petitioner’s conviction were committed over a period of
one year or more, the aggravating factor set out at 42 C.F.R. § 1001.102(b)(2) is present.

7. Because Petitioner was sentenced to a term of incarceration, the aggravating factor set
out at 42 C.F.R. § 1001.102(b)(5) is present.

8. None of the mitigating factors set out at 42 C.F.R. § 1001.102(c)(1)-(3) is present.
9. The I.G.’s exclusion of Petitioner for an enhanced period of ten years is supported by
fact and law. It is, however, unreasonably short. On the evidence before me, a period of
exclusion of 12 years is not unreasonable. See Findings 1-8 above.

10. There are no disputed issues of material fact and summary disposition is appropriate
in this matter. Michael J. Rosen, M.D., DAB No. 2096 (2007); Thelma Walley, DAB No.
1367 (1992); 42 C.F.R. § 1005.4(b)(12).

V. Discussion

The parties do not debate the I.G.’s authority to exclude Petitioner for the mandatory
minimum period of five years as provided by section 1128(a)(1) of the Act. They agree
that the elements essential to that exclusion are present. Those two essential elements
Act are: (1) the individual to be excluded must have been convicted of a criminal
offense; and (2) the criminal offense must have been related to the delivery of an item or
service under Title XVIII of the Act (Medicare) or any state health care program.
Tamara Brown, DAB No. 2195 (2008); Thelma Walley, DAB No. 1367; Boris Lipovsky,
M.D., DAB No. 1363 (1992); Lyle Kai, R.Ph., DAB CR1262 (2004), rev'd on other
grounds, DAB No. 1979 (2005). See Russell Mark Posner, DAB No. 2033, at 5-6
(2006).

Petitioner implicitly conceded the presence of those elements in his May 30, 2013
hearing request, and has done so explicitly on the first pages of his August 16, 2013
Answer Brief and his September 19, 2013 Response Brief. In any case, Petitioner’s
conviction and its relation to the protected programs are manifest in the United States
District Court’s records. I. G. Exs. 2, 3; P. Ex. 1, 5. Thus, the first issue before me is
resolved in the I.G.’s favor: the LG. has a basis for excluding Petitioner from
participating in Medicare, Medicaid, and all other federal health care programs pursuant
to section 1128(a)(1) of the Act.

It is the second issue, the reasonableness of the I.G.’s proposed 10-year period of
exclusion, that the parties vigorously debate. Petitioner denies that any of the crimes for
which he has been convicted were committed over the period of a year or more, and thus
denies the application of the aggravating factor set out at 42 C.F.R. § 1001.102(b)(2).
Petitioner admits that he was sentenced to 55 months of incarceration, but argues that
even the conceded fact of his incarceration and the length of his confinement do not
support the reasonableness of a 10-year exclusion pursuant to 42 C.F.R.

§ 1001.102(b)(5). The debate over these two questions — and especially over the first,
involving 42 C.F.R. § 1001.102(b)(2) — requires a careful review of the Superseding
Indictment and the charges on which Petitioner was actually convicted. LG. Ex. 3.
The Superseding Indictment on which Petitioner and his co-defendant Garner went to
trial comprised 14 counts and 29 pages. All but the final count (which may not have been
at issue at the trial) bore some relation to a hospital located in Batesville, Mississippi
called Tri-Lakes Medical Center (TLMC). During the times material to the Superseding
Indictment — that is, between May 2005 and March 2010 — TLMC participated in the
Medicare and Medicaid programs. At the times material to the charges he faced,
Petitioner was TLMC’s chief management official, first designated chief operating
officer and later chief executive officer. Over that period, and while Petitioner exercised
his management role at TLMC, he became a co-conspirator in three schemes to which his
authority at TLMC was essential. I.G. Ex. 3, at 1-6; 8-9; 12-20. These three conspiracy
charges are the best points to begin review of the Superseding Indictment and the charges
on which Petitioner stands convicted.

The first charged conspiracy was formed among Petitioner, Garner, and Chandler, and is
set out in Count One of the Superseding Indictment as a violation of 18 U.S.C. § 371.

1.G. Ex. 3, at 1-6. The statute intended to be violated by the conspirators was 18 U.S.C.

§ 666. In its essence, the conspiracy aimed at gaining, by bribery of Petitioner and
Chandler, a preference for Garner’s nursing staffing businesses when workloads at
TLMC required hiring temporary nursing staff. Garner believed — incorrectly, as the
District Court later found — that Chandler’s position as the county administrator where
TLMC was located would allow Chandler to influence the hiring process in Garner’s
favor, and believed that Petitioner’s position at TLMC would be useful in influencing that
iring process. Following a meeting among the three in November 2005, Garner over the
course of the next year and a half paid Chandler approximately $268,000 in bribes for
what Garner believed was Chandler’s influence in the hiring process. Between January
27 and July 27, 2006, Chandler paid five checks totaling approximately $12,000 to
Petitioner, who demanded the money as his share of Garner’s payment for the scheme to
favor Garner’s nursing staffing businesses. The overt acts of conspiracy charged in
Count One began on May 25, 2005 and continued until June 15, 2007. The District Court
treated the activities described in Count One as two separate conspiracies, but they were
charged as only a single scheme. P. Ex. 1, at 13-16.

The second conspiracy was charged in Count Four of the Superseding Indictment, also as
a violation of 18 U.S.C. § 371. LG. Ex. 3, at 8-9. The statute intended to be violated by
the conspirators was 42 U.S.C. § 1320a-7b. Count Four named the same three
conspirators — Petitioner, Garner, and Chandler — and adopted literally all of the
language of Count One’s paragraphs | through 13 in setting out the background and overt
acts of the overall scheme to obtain preference for Garner’s businesses at TLMC. The
gravamen of Count Four lay in the charge that the TLMC funds paid to Garner’s
businesses came from the Medicare and Medicaid programs; the overt acts of conspiracy
charged in Count Four were explicitly based on Garner’s payment to Chandler of the
$268,000 between May 2005 and June 2007, and on Chandler’s payment to Petitioner of
the $12,000 between January 27 and July 27, 2006.

The substantive violation of 42 U.S.C. § 1320a-7b with which Petitioner was charged in
Count Six, and of which he remains convicted, is based on his demanding and receiving
the five payments totaling $12,000 from Chandler between January and July 2006. I.G.
Ex. 1, at 10. Count Seven charged Petitioner with violating 18 U.S.C. § 1001 when he
lied to investigators in October 2009 and March 2010 about those five payments, and he
remains convicted of that charge.

The third conspiracy was charged in Count Eight of the Superseding Indictment, and was
formed by Petitioner, Corkern, and Vance. Corkern was a physician in Batesville, but he
was also associated with Petitioner in the management of TLMC through his business
Physicians and Surgeons Hospital Group (PSHG). Vance was a business consultant, and
though his firm MTV Healthcare (MTVH) represented Corkern. Count Eight charged a
complex scheme to facilitate the purchase of TLMC by Corkern and PSHG, and to do so
through a series of false statements to the federal agency whose approval, cooperation,
and assistance became essential to the success of the purchase. This TLMC-purchase
conspiracy was also charged as a violation of 18 U.S.C. § 371, and the statute the
conspirators intended to violate was 18 U.S.C. § 1014, which forbids the making of false
statements to certain federal agencies in support of loan or credit applications. I.G. Ex. 3,
at 12-20.

The course of the Count Eight TLMC-purchase conspiracy was tortuous, but at two
points Petitioner’s help was a necessary factor. The first point was reached when the
conspirators learned that the federal agency’s participation required the entity proposing
to buy TLMC to be a non-profit organization. As it happened, Petitioner had formed a
non-profit called Kaizen CMR (KCMR) in March 2003. This record does not show what
Petitioner did with KCMR before 2005, but as charged in Count Eight, in the summer of
2005 Petitioner sold KCMR for $250,000 to Corkern, who then used it as the nominee
purchaser of TLMC. LG. Ex. 3, at 13. The second point was reached at a particularly
delicate stage of the purchase process when the federal agency’s essential approval of a
four million dollar interim line of credit appeared doubtful. LG. Ex. 3, at 17. At that
point Vance and Petitioner — in his role as chief executive officer at TLMC — submitted
to the agency a flurry of materially-false statements in which they misrepresented the
uses to which the interim credit would be put, and in which they concealed the fact that
Corkern was to take $291,508.31 from the line of credit and Petitioner was to take
$250,000 from it. The agency acted on these false statements and approved the line of
credit. The funds received by Petitioner were diverted to him through KCMR. LG. Ex. 3,
at 17-19. The overt acts of conspiracy charged in Count Eight began on March 6, 2006
and continued until April 11, 2006, but Count Eight charged that the conspiracy had
actually begun in June 2005 with Corkern’s purchase of KCMR from Petitioner.

Counts Nine, Ten, and Eleven were based on Petitioner’s submission of three of the false
statements identified as overt acts in Count Eight, and charged him with substantive
violations of 18 U.S.C. § 1014. Count Twelve was based on Petitioner’s diversion to
himself of the $250,000, another overt act in the Count Eight conspiracy, and charged
him with the substantive violation of 18 U.S.C. § 666.

Once two or more persons agree to violate a federal criminal statute, as soon as one of
them commits an “overt act” intended to effect or bring about the violation, the crime of
conspiracy as defined at 18 U.S.C. § 371 is complete. That “overt act” need not in itself
be illegal, and indeed may be perfectly innocent per se, but if it is completed with the
goal or intended effect of furthering the agreement to violate a federal criminal statute
then the crime of conspiracy itself is complete; the ultimate success of the overall
conspiracy is only very rarely material. But overt acts can be and often are criminal in
themselves, and when they are it is not at all unusual for grand juries to charge them both
as overt acts and as additional substantive counts based on the statute or statutes the overt
acts violated. As I have noted, the Superseding Indictment involved here reflects that
practice: Count Two charged Garner with a substantive Count of violating 18 U.S.C.

§ 666 based on the payments he made to Chandler, which payments were charged as
overt acts in Counts One and Four; similarly, Petitioner was charged in Count Three with
the substantive violation of 18 U.S.C § 666 based on the payments he solicited in return
for favoring Garner’s businesses, charged as overt acts in Counts One and Four. But —
and this point is central to the following discussion — Petitioner remains convicted of the
substantive crimes set out in Counts Six, Seven, Nine, Ten, Eleven, and Twelve, as well
as the conspiracy charge set out in Count Eight.

Now, it is true that Petitioner and Garner have been acquitted on Counts One and Four
via FED. R. CRIM. 33. The reason is quite clear: following the jury’s guilty verdict on
those charges, the District Court found that Chandler was simply not in a position to
affect or influence in any way the selection of Garner’s businesses when extra nursing
staff was needed at TLMC, and concluded that because he was not, whatever Garner and
Petitioner may have agreed to do, even if carried to completion, could not have resulted
in the bribery of an “agent of an organization” with sufficient authority to be within the
reach of 18 U.S.C. § 666 and 42 U.S.C. § 1320a-7b.? P. Ex. 1, at 5-13. As to the six
payments totaling $12,000 Chandler made to Petitioner in 2006, the District Court found
that other than the hearsay statements Chandler attributed to Petitioner, there was no

> The validity of the “impossibility” defense to a conspiracy charge brought under
federal law is discussed with interesting implications for this appeal in United States v.
Recio, et al., 537 U.S. 270 (2003). Recio itself is discussed in terms of interest in this
context in United States v. Min, et al., Nos. 11-4702, etc., (4th Cir. Jan. 3, 2013); United
States v. Corson, 579 F.3d 804 (7th Cir, 2009); United States v. Orisnord, 483 F.3d 1177
(11th Cir. 2007); and United States v. Rodriquez, 360 F.3d 949 (9th Cir. 2004).
10

direct evidence that those payments, although made, were part of a conspiratorial
agreement between Garner and Petitioner.’ P. Ex. 1, at 13-16. It is also true that after the
jury’s guilty verdict on it, the District Court granted Petitioner a new trial on Count Three
via FED. R. CRIM. P. 29, based on Chandler’s status and a related jury instruction.’ As
far as this record shows, no further action has been taken in the District Court on Count
Three. As far as this Decision is concerned, Petitioner has not been convicted on those
three Counts.

That does not mean, however, that the chronology of the overt acts charged in those
Counts cannot be considered as a measurement for the aggravating factor set out at 42
C.F.R. § 1001.102(b)(2). Those overt acts were re-asserted and recited as the core
evidentiary facts in the charge for which Petitioner was and remains convicted on Count
Six, the substantive violation of 18 U.S.C. § 1320a-7b. By Count Six’s terms that
violation began in November 2005 and continued until June 2007. Count Six alone is
sufficient to support the I.G.’s reliance on 42 C.F.R. § 1001.102(b)(2).

Nor does it mean that the six payments from Chandler to Petitioner between January and
July 2006 do not mark the beginning of another such measurement, for it was about those
five payments that Petitioner lied to investigators nearly four years later in October 2009
and March 2010. Petitioner was and remains convicted on Count Seven of violating 18
U.S.C. § 1001 by falsely telling investigators that the five payments were sums he had
borrowed from Chandler. It seems perfectly reasonable to understand Count Seven as a
charge requiring proof first of Petitioner’s receipt of the five payments in 2006, then of
the corrupt nature of those payments, and finally of his lies about their nature in 2010, a
series of criminal acts plainly “committed over a period of one year or more.” As an
alternate and independent measure of the temporal span of Petitioner’s crimes, I find and
conclude that the facts of Count Seven support the I.G.’s invocation of 42 C.F.R.

§ 1001.102(b)(2).

* Hearsay statements attributed to one co-conspirator by another co-conspirator can be
admissible, but only under certain conditions. Bourjaily v. United States, 483 U.S. 171
(1987). The District Court specifically noted that the prosecution never attempted to
meet those conditions, and thus Chandler’s testimony that Petitioner had told him of
Garner’s agreement to bribe Petitioner, although presented to the jury, was of no
probative value. P. Ex 1, at 16.

> The final disposition of Count Three is unclear on this record. On August 23, 2012,
Petitioner’s motion for judgment of acquittal on that Count was denied; in that same
document his motion for new trial was granted per FED. R. CRIM. P. 33. P. Ex. 1, at 2,
20-21. In its Order of September 21, 2012, the District Court appeared to reconsider the
motion for new trial on Count Three and to deny it, but that may simply be a clerical
error, since Petitioner was not sentenced on Count Three. P. Ex. 5; I.G. Ex. 2.
11

And the fact that Petitioner has not been convicted on Counts One, Three, and Four most
certainly does not mean that his convictions on Counts Eight, Nine, Ten, Eleven, and
Twelve — charges based on the TLMC-purchase conspiracy and the substantive crimes
Petitioner committed during the spring of 2006 in connection with it — are not to be
treated as “similar acts” related to the crimes detailed in Counts Six and Seven and
therefore suitable as yet another alternate and independent measuring point for the
beginning of Petitioner’s criminal activity. Count Eight alleged that the TLMC-purchase
conspiracy began in June 2005. Counts Nine through Twelve represent convictions for
substantive felonies committed in March and April 2006 as that TLMC-purchase
conspiracy was carried through to completion. Accordingly, even the last of Petitioner’s
substantive crimes in the TLMC-purchase scheme, his violation of 18 U.S.C.§ 666 on or
about April 7, 2006 as charged in Count Twelve, precedes Count Six’s end-date of June
2007 by more than one year and Count Seven’s end-date of March 2010 by almost four.
Should it be objected that the crimes charged in Counts Eight through Twelve are not acts
similar to those in Counts Six and Seven, I note that they have in common Petitioner’s
abuse of his position at TLMC, his apparent avidity for under-the-table profit, his
manifest willingness to heap untruth upon misrepresentation and to then attempt to
conceal both by prevarication, and his ability to accomplish all this at the same time in
two simultaneous, parallel campaigns of criminality. These “similar acts” provide a third
basis for the I.G.’s reliance on 42 C.F.R. § 1001.102(b)(2).

Thus, in summary, the evidence as to the aggravating factor dependent on Petitioner’s
criminal conduct lasting more than a year is this: Count Six supports a finding that
Petitioner’s criminal conduct continued from November 2005 to June 2007; Count Seven
supports a finding that Petitioner’s criminal conduct continued from January 2006 to
March 2010; and Counts Eight, Nine, Ten, Eleven, and Twelve support a finding that
Petitioner’s interconnected, contemporaneous, and similar crimes began as early as June
2005 and not later than April 2006, and continued thereafter until March 2010. The I. G.
has proven the aggravating factor set out at 42 C.F.R. § 1001.102(b)(2).

The LG. has also invoked the aggravating factor requiring proof that Petitioner’s sentence
included incarceration. Petitioner does not deny the nature and 55-month length of his
sentence, and the records of the District Court support the I.G.’s reliance on the terms of
42 C.F.R. § 1001.102(b)(5). It is important to note that Petitioner’s argument about this
second factor is in large part dependent on his assertion that the I’G.’s proof has failed as
to the first aggravating factor, and that only Petitioner’s incarceration should be weighed
against him. Put simply, Petitioner begins his argument in the faulty assumption that the
incarceration factor is the only one actually proven against him. He then argues:

This Court cannot genuinely assess the reasonableness of Shoemaker’s
exclusion beyond the statutory minimum by relying solely on the length
of Shoemaker’s prison term. It is certainly relevant to this Court’s
consideration of Shoemaker’s trustworthiness that Shoemaker did not
12

cause or intend to cause Medicare and Medicaid financial loss and that
his sentence was four years and seven months based in greater part on
his other convictions, not the single healthcare related crime.

Pet. Ans. Br. 8.

This argument overlooks the “similar acts” language in 42 C.F.R. § 1001.102(b)(5), and
appears to trivialize the degree of untrustworthiness demonstrated by Petitioner’s
calculated commission of several similar acts against non-program victims while he
himself was in a position of authority and trust. But it is most seriously flawed in its
failure to accept that both aggravating factors, and not merely one, have been established
here. And of course it is quite true that no Medicare or Medicaid funds were lost as a
consequence of Petitioner’s crimes, but Petitioner’s all-but-explicit claim that an absence
of loss by those programs amounts to a factor in mitigation is impossible to accept when
it is recalled that Petitioner illegally skimmed and diverted to his own use a quarter-
million dollars from the federally-guaranteed line of credit as charged in Count Twelve,
and channeled an even greater sum to Corkern as charged in Count Eight, funds to which
he gained access through the criminal transactions set out in Counts Eight through
Eleven.

Let me be clear on this point: I have not assumed that Petitioner’s defalcations from the
line of credit constitute program losses that could prove the aggravating factor at 42
C.F.R. § 1001.102(b)(5). Nor have I weighed the amounts involved in those diversions
in my considerations of the two proven aggravating factors. But I reject his argument
that the absence of loss to the Medicare and Medicaid programs is in any fashion a
diminution of the serious implications of his long prison sentence. To accept his
argument would simply reward him for being lucky, or cunning, or both, in his choice of
victims. If Manocchio v. Sullivan, 768 F. Supp. 814, 817 (S.D. Fla. 1991), aff'd, 961
F.2d 1539 (11th Cir. 1992) and Joann Fletcher Cash, DAB No. 1725 (2000) are still the
law in this forum and a petitioner’s trustworthiness is still the touchstone for evaluating
an exclusion, then this forum should blush if it can hold that stealing from a federal
health-care program reflects a different degree of untrustworthiness than stealing from a
line of credit guaranteed by another federal agency and intended to be applied toward the
purchase of a hospital.
13

But even though this record fully demonstrates the two aggravating factors the I. G. relied
on and proved — one precisely as alleged by the I.G., and one even more glaring on the
record before me — and even though Petitioner has offered to prove not a single
mitigating factor defined by regulation,° Petitioner’s claim that the 10-year length of his
exclusion is unreasonably long raises questions that have recently grown clouded, if not
vexed.

For at least a decade, the Administrative Law Judge (ALJ) evaluating such a claim was
guided by a settled line of authority in doing so. Consistent with that line of authority,
the I.G.’s discretion when weighing the importance of aggravating and mitigating factors
commanded great deference in this forum. Jeremy Robinson, DAB No. 1905 (2004);
Keith Michael Everman, D.C., DAB No. 1880 (2003); Stacy Ann Battle, D.D.S., et al.,
DAB No. 1843 (2002). The rationale for that doctrine was anchored by the drafters of
the regulations in the I.G.’s “vast experience” in implementing exclusions. 57 Fed. Reg.
3298-3321 (Jan. 24, 1992). According to that doctrine, an ALJ was forbidden to
substitute his or her own view of what period of exclusion might seem best in any given
case for the view taken by the I.G. on the same evidence. So long as the period chosen
by the I.G. was within a reasonable range and was based on demonstrated criteria, the
ALJ was forbidden to alter it. Jeremy Robinson, DAB No. 1905; Joann Fletcher Cash,
DAB No. 1725, at 20. According to that line of authority, an ALJ might reduce an
exclusionary period only when the ALJ discovered some meaningful evidentiary failing
in the aggravating factors upon which the I.G. relied, or when the ALJ was shown
evidence reliably establishing a mitigating factor not considered by the LG. in setting the
enhanced period.

That line of authority was for all useful purposes abandoned by the Departmental
Appeals Board (the Board) in Craig Richard Wilder, M.D., DAB No. 2416 (2011).
Although the Wilder ALJ found that the I.G. had considered all proven aggravating and
mitigating factors, and although the Board acknowledged that there were no differences
whatsoever between the record of those factors before it and the record before the ALJ
and the I.G., the Board nevertheless departed from its own settled rule and revised the 35-

° In particular, Petitioner has declined to claim or to attempt proof of the mitigating factor
based on “a mental, emotional, or physical condition” set out at 42 C.F.R.

§ 1001.102(c)(2). For that reason I attribute no weight whatsoever to the many
references to alcohol abuse that appear in Petitioner’s briefing, or to its asserted influence
on the District Court in sentencing him. There is nothing in the record before me, and
particularly nothing in pages 3 and 5 of I.G. Ex. 2, that would suggest otherwise. See
Russell Mark Posner, DAB CR1410 (2006), aff'd, DAB No. 2033 (2006).
14

year period of exclusion downward to 18 years, so that the period might conform more
satisfactorily to what the Board, viewing the matter at two steps’ removal from vast
experience, considered best. In doing so, the Board implicitly rejected the I.G.’s and the
ALJ’s identical assessment of the value of Wilder’s cooperation and, on exactly the same
evidence, substituted its own assessment.

The Board next considered this issue in Vinod Chandrashekhar Patwardhan, M.D., DAB
No. 2454 (2012). That decision declined any mention or discussion of Wilder, and
seemed at least to pay lip-service to the Robinson-Everman-Battle-Cash line of authority.
But it also affirmed — on proof of the same two aggravating factors here proven, plus the
factor set out at 42 C.F.R. § 1001.101(b)(1), and in the absence of any mitigating factors,
as here — the ALJ’s reduction of the I.G.’s proposed 23-year period of exclusion to 12
years. And eight months later the Board decided Sushil Anniruddh Sheth, DAB No. 2491
(2012).

There the Board set out at length both its theoretical justification for its de novo review of
enhanced periods of exclusion in general and the specific rationale for its de novo
letermination that a 95-year period of exclusion was unreasonable if imposed on Dr.
Sheth, but that a 60-year period was best.’ The Board accomplished this substitution of
judgment on precisely the same evidence considered by the I.G. who set the 95-year
term, and on precisely the same evidence examined thoroughly and with approval by the
ALJ who found the 95-year period perfectly reasonable and declined to reduce it. I shall
return to certain portions of the Board’s decision in Sheth below, but for now it is enough
to note that it is the latest expression of the Board’s understanding of its authority in
assessing enhanced exclusions.

It seems to me certain that the Robinson-Everman-Battle-Cash line of authority has been
overruled sub silentio by Wilder, Patwardhan, and now, by Sheth. 1am convinced that
Wilder, Patwardhan, and Sheth announce the Board’s assumption of a new authority in
overseeing the I.G.’s application of his “vast experience.” If that is the case then it is
impossible not to understand that Wilder, Patwardhan, and Sheth go further and
vouchsafe on the ALJ discretion to alter — that is, to lengthen or to shorten — the period
of exclusion determined by the I.G. upon the same facts and circumstances relied upon by
the I.G. I have suggested as much in Keith Nisonoff, DAB CR2927, at 8, n.1; Jose C.
Menendez Campos, M.D., DAB CR2923, at 8, n.2 (2013); Ollie Futrell, DAB CR2901, at
9 (2013), Anthony Lynn Hester, DAB CR2529, at 9 (2012); Edward Alexander Birts,
DAB CR2516, at 9, n.1 (2012) and Marcellius Jnekwuoba Anunobi, DAB CR2480, at 10
(2012). Those decisions were not appealed to the Board and no further explication of

7 Tn considering the difference between a 95-year exclusion and the Board’s preference
of a 60-year period effective October 2011 — in terms of reasonableness, of course — it
may be illuminating to note that Dr. Sheth was 50 years old when convicted in 2010.
15

Wilder, Patwardhan, and Sheth is available in any other Board decision to date.® But if
the Robinson-Everman-Battle-Cash rule has been abandoned and no longer restricts the
Board’s considering what term of exclusion might be best on the facts of record, I can see
no reason why an ALJ should now lack the authority to alter by lengthening as well as by
shortening the term proposed by the LG.

This case presents both an opportunity and an obligation to exercise that authority and
lengthen the period of this exclusion. Given the weight I accord below to the length of
Petitioner’s sentence, and considering the weight I accord to the extended temporal span
of his criminal activity, I find and conclude that the proposed 10-year term of Petitioner’s
exclusion is unreasonably short. The Board has reiterated and its decisions show that
comparisons with other cases are of limited utility and are certainly not controlling, but
comparisons can still illustrate what a reasonable range has been understood to mean
when the Board and ALJs evaluate an exclusion period longer than the statutory
minimum. Paul D. Goldenheim, M.D., et al., DAB No. 2268, at 29 (2009). The length
of this exclusion is commensurate with the range established as reasonable in Kamron
Hakhamimi, M.D, DAB No. 2408 (2011); Rajashakher P. Reddy, M.D., DAB CR2681
(2013); Tamara Varnado, DAB CR2305 (2011); Doantrang Thi Nguyen, et al., DAB
CR2191 (2010); James A. Holland, M.D., DAB CR2169 (2010); Victor E. Igiebor, DAB
CR2114 (2010); Mukunda Mukherjee, M.D., DAB CR1835 (2008); Thomas P. Donahue,
U.S.M., DAB CR1057 (2003); Cheryl Elizabeth Richardson, M.D., DAB CR682 (2000).
These cases suggest that a 12-year period of exclusion is squarely within a reasonable
range.

The 10-year period ought to be lengthened because the full span of Petitioner’s criminal
exploitation of his position at TLMC lasted from not more recently than June 2005, when
he and Corkern formed their conspiracy to manipulate for corrupt purposes the purchase
of TLMC as charged in Count Eight, paragraphs 5, 6, and 7, through at least March 2010,
when he lied to investigators about the five checks he received from Chandler in 2006,
checks he demanded as his payoff for facilitating the TLMC nursing scheme, as charged
in Count Seven. Before the aggravating factor set out at 42 C.F.R. § 1001.102(b)(2) can
be invoked there must be proof that “The acts that resulted in the conviction, or similar
acts, were committed over a period of one year or more.” Petitioner was convicted of
interconnected acts at TLMC that spanned almost five years, and those acts were marked
by an abuse of his position in that federally-funded health care facility, by peculation and
deceit as his chosen path to corrupt personal financial gain, and by attempted deception
and concealment of that abuse and deceit as an ongoing modus operandi. It is not enough
simply to note that the span of Petitioner’s criminal conduct exceeds the regulatory

® In Nisonoff, Menendez Campos, Hester, Birts, and Anunobi, the petitioners appeared
pro se. For what the observation may be worth, however, I point out that Anunobi was
cited by the Board without obvious disapproval in Sheth, although not on the precise
point here under discussion.
16

threshold more than fourfold: what must also be recognized is Petitioner’s willingness to
exploit opportunistically such varied aspects of his position at TLMC, and to persist in
his variegated and calculated crimen falsi for so long, even in the face of questioning by
law enforcement officials. Petitioner’s conduct at TLMC was no “short-lived lapse of
integrity,” in the sense that phrase is used in Donald A. Burstein, Ph.D., DAB No. 1865
(2003) to suggest a certain transient and presumably therefore pardonable impulsiveness
or short-term venality: Petitioner’s convictions are based on criminal conduct undertaken
thoughtfully, craftily, deliberately, and repeatedly, and undertaken from a position of
trust. This sustained demonstration of untrustworthiness is entirely sufficient to warrant a
substantial enhancement of the proposed 10-year exclusion, even if no other aggravating
factor were present.

The 10-year period ought to be lengthened because Petitioner was sentenced to a
substantial term of confinement. It may be significant that the length of that term is
commensurate with the temporal span of his crimes: he has been sentenced to prison for
55 months, and his criminal conduct as described in the paragraph above continued over
approximately 57 months from June 2005 to March 2010. It is certainly significant that
the vast part of the mandatory minimum exclusion of five years will have no more than a
trivial effect as a prophylactic against Petitioner’s abuse of the protected programs and
their beneficiaries, simply because he will for 55 months be in no position to harm them.
For all practical purposes, it is the period following Petitioner’s release from prison when
the programs and their beneficiaries will need protection from him. As matters stand,
that period would extend approximately five more years after his release, and after that
the programs must rely on Petitioner’s trustworthiness and welcome him if he chooses to
take up his former occupations. On this evidence, and relying substantially on the length
of Petitioner’s sentence, I cannot regard that as a reasonable proposition: if the programs
and their vulnerable beneficiaries are to be protected, and if schemes like those described
here are to be discouraged, then a material extension of the proposed exclusion beyond
the end of Petitioner’s prison sentence is essential. Even if no other beneficial purpose
might be served by requiring Petitioner to wait an extra two years before being eligible
for reinstatement, those two extra years will allow an extra span of time for him to
demonstrate his trustworthiness vel non.

The length of that sentence seems an unmistakable reflection of the District Court’s
assessment of Petitioner’s untrustworthiness, and I rely on it in reaching the conclusions I
announce in the paragraph above. But any application of the aggravating factor set out at
42 C.F.R. § 1001.102(b)(5) must come to terms with the Board’s observations regarding
it in Sheth, which now assume obvious importance in assessing the weight to be given
Petitioner’s four-and-a-half-year imprisonment:

The regulations do not rank factors by importance, and the incarceration
factor rests merely on whether the sentence included incarceration; it does
not specify that more or less weight should be given based on the length
17

of a prison term. Furthermore, the length of a criminal sentence is influenced
by factors not present in the exclusion context, such as sentencing guidelines
and the number of counts .... A criminal sentence also serves different
purposes than those of the exclusion statute and regulations, including
punishment which . . . is not a purpose of the exclusion statute. Moreover,

as stated earlier, financial loss to health care programs is “an exceptional
aggravating factor” . . . that the I.G. may reasonably conclude outweighs the
incarceration factor in any given case.

Sushil Anniruddh Sheth, DAB No. 2491, at 9.

It may very well seem that Thomas Selden’s comment about equity and the length of the
Chancellor’s foot has a certain application to the Board’s evaluation of aggravating
factors, and that there may be a certain tension between the Board’s assertions that “The
regulations do not rank factors by importance” on the one hand and “financial loss to
health care programs is an ‘exceptional aggravating factor’” on the other. When the
Chancellor’s foot trips over equal factors because one factor is more equal than the
others, a stumble should surprise no one. The stumble here is that if the language above
means what it says, then the incarceration factor becomes to the Board a mere “on/off
switch,” either present or not, but deriving no intrinsic significance from its length or
conditions. If the language above says what it means, a three-month term of home
confinement or a 30-day ankle-bracelet sojourn in a halfway house reveals to the Board
exactly as much about a petitioner’s trustworthiness as a 50-year commitment to the
federal prison in Joliet. And finally, if the language above is a correct expression of the
Board’s thinking, then the measure of loss to a protected health care program is such “an
exceptional aggravating factor” that it tells the Board more about a criminal’s
trustworthiness than the character and duration of his scheme, the nature, number, and
vulnerability of his victims, the number of discrete dishonest acts involved, or even the
nature of the trust he betrayed in committing his crime. Effect — in this example, simple
pecuniary loss or damage — will have replaced motive, method, and mens rea as the
yardsticks by which trustworthiness is tested.

It is possible that when the Board wrote Sheth it had forgotten the wisdom of its approach
to this aggravating factor a decade before. In Jason Hollady, M.D., DAB No. 1855
(2002), one of the issues before the Board required it to decide whether the incarceration
factor was entitled to more or less weight if the incarceration included work-release. The
Board expressed itself satisfied that a nine-month jail term was per se “relatively
substantial,” but rather clearly found that its amelioration through a work-release program
demanded that the incarceration factor, although proven, be given less weight in
assessing the reasonableness of a term of exclusion:

Moreover, there is no evidence that . . . the I.G. took into account the fact
that the sentence included work release. This is a circumstance relevant in
18

weighing the aggravating factor since it is an aspect of the sentencing judge’s
evaluation of Petitioner; compared to a nine-month period with no release it
has less weight . .. The sentence of incarceration for nine months, even with
the work release, also is more than a token incarceration and, in that sense,
relatively substantial, as the ALJ found.

Jason Hollady, M.D., DAB No. 1855, at 12 (emphasis added).

When the Board applied that analysis in Hollady, it had quite recently employed an
approach very like it in Gary Alan Katz, R.Ph., DAB No. 1842 (2002):

Incarceration for an indeterminate period with a minimum of one
year and a maximum of seven is significant in itself and certainly
justifies a longer period of exclusion than if there was no
incarceration or incarceration of a lesser type or shorter period.

Gary Alan Katz, R.Ph., DAB No. 1842, at 10.

And perhaps most significantly, the Board’s decision in Sheth was preceded only sixteen
months earlier by its action in Enitan Osagie Isiwele, DAB No. 2405 (2011). There, the
Board remanded an exclusion proceeding with instructions that the ALJ consider whether
a trial-court ordered reduction of the length of Isiwele’s prison sentence from 97 to 78
months warranted a reduction in the length of the I.G.’s proposed exclusion, the period of
which the I.G. had already reduced from 17 to 15 years. The Board wrote that “we
remand the case to the ALJ to determine whether the revised period of exclusion is
reasonable, given the federal court’s reduction of the period of imprisonment.” The
totality of the Board’s rationale in doing so was this:

We accordingly remand the appeal to the ALJ to review the reasonableness
of the 15-year period of exclusion imposed by the I.G. in light of the district
court’s decision, subsequent to the ALJ hearing, to reduce Petitioner’s
sentence of imprisonment from 97 to 78 months.

Enitan Osagie Isiwele, DAB No. 2405, at 4 (emphasis added).

The nuanced Hollady-Katz-Isiwele analysis seems much more likely to produce sound
results than the simplistic “either-or” approach suggested in Sheth. The Hollady-Katz-
Isiwele analysis would also be of obvious importance in a situation where the
incarceration factor were the only aggravating factor involved, but where the I.G. was
obliged to set a period of exclusion within “a reasonable range.” In such a situation, the
length of incarceration would be the only metric available. 1 believe that the Board was
right in Hollady, Katz, and Isiwele, and | believe further that it would not intentionally
abandon such a rational position without saying so. Accordingly, I follow Hollady-Katz-
19

Isiwele here and give great weight to the 55-month length of Petitioner’s prison term as a
measure of his trustworthiness. The weight I accord the length of Petitioner’s sentence is,
I believe, sufficient in itself to justify an increase in the proposed 10-year exclusion.
Having given great weight to the long temporal span of Petitioner’s crimes proven as an
aggravating factor, and having given great weight to the length of his prison sentence
proven as an aggravating factor, I find and conclude that both the factors and their proven
circumstances show a degree of untrustworthiness that requires Petitioner’s exclusion
from the protected programs for a period of 12, not merely 10, years.

Resolution of a case by summary disposition is fitting when settled law can be applied to
undisputed material facts. Michael J. Rosen, M.D., DAB No. 2096; Thelma Walley,
DAB No. 1367. Summary disposition is authorized by the terms of 42 C.F.R.

§ 1005.4(b)(12). This forum looks to FED. R. CIV. P. 56 for guidance in applying that
regulation. Robert C. Greenwood, DAB No. 1423 (1993). The material facts in this case
are undisputed and unambiguous. They support summary disposition as a matter of
settled law. This Decision issues accordingly.

VI. Conclusion

For the reasons set forth above, the I.G.’s Motion for Summary Disposition should be,
and it is, GRANTED. The I.G.’s exclusion of Petitioner Raymond Lamont Shoemaker
from participation in Medicare, Medicaid, and all other federal health care programs
pursuant to the terms of section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1) is
SUSTAINED. Based on the provisions of 42 C.F.R. §§ 1001.102(b)(2) and (b)(5), the
period of Petitioner’s exclusion is 12 years.

/s/
Richard J. Smith
Administrative Law Judge
20

APPENDIX

This appendix shows the disposition of each Count of the 14-Count Superseding

Indictment returned in United States v. Shoemaker, et al., Criminal No. 2:11CR38 (N. D.
Miss.), insofar as a disposition appears in the exhibits submitted by the parties. It should
be noted that those exhibits are, by the parties’ choice, few in number and include a very
limited number of court records. The exhibits do not include the District Court’s docket
sheet for the entire proceedings or any judgments, orders, memoranda opinions, or other
documents relating to the final disposition of Counts Three and Fourteen as to Petitioner.

COUNT ONE: 18 U.S.C. § 371. Petitioner and Garner charged in this Count. Both
found guilty on jury verdict. Defense motions for judgments of acquittal granted per
FED. R. CRIM. P. 29 in favor of Petitioner and Garner; defense motions for new trial (in
the event that the judgments of acquittal should be appealed and reversed) granted per
FED. R. CRIM. P. 33 in favor of Petitioner and Garner. P. Ex. 1, at 2, 20-21.

COUNT TWO: 18 U.S.C. § 666. Petitioner was not charged in this Count. Defense
motion for judgment of acquittal granted per FED. R. CRIM. P. 29 in favor of Garner;
defense motion for new trial (in the event that the judgment of acquittal as to Garner
should be appealed and reversed) granted per FED. R. CRIM. P. 33 in favor of Garner. P.
Ex. 1, at 2, 20.

COUNT THREE: 18 U.S.C. § 666. Petitioner charged in this Count and fund guilty on
jury verdict. On August 23, 2012, Petitioner’s motion for judgment of acquittal was
denied; in that same document his motion for new trial was granted per FED. R. CRIM. P.
33. P. Ex. 1, at 2, 20-21. In its Order of September 21, 2012, the District Court
reconsidered Petitioner’s motion for new trial and appeared to deny it, but that may
simply be a clerical error, since Petitioner was not sentenced on Count Three, and there is
no mention of that Count in Petitioner’s sentencing document. P. Ex. 5; I1.G. Ex. 2. No
further information is available in this record as to the disposition of Count Three.

COUNT FOUR: 18 U.S.C. § 371. Petitioner and Garner charged in this Count. Both
found guilty on jury verdict. Defense motions for judgments of acquittal granted per
FED. R. CRIM. P. 29 in favor of Petitioner and Garner; defense motions for new trial (in
the event that the judgments of acquittal should be appealed and reversed) granted per
FED. R. CRIM. P. 33 in favor of Petitioner and Garner. P. Ex. 1, at 2, 20-21.

COUNT FIVE: 42 U.S.C. § 1320a-7b. Petitioner was not charged in this Count.
Defense motion for judgment of acquittal granted per FED. R. CRIM. P. 29 in favor of
Garner; defense motion for new trial (in the event that the judgment of acquittal as to
Garner should be appealed and reversed) granted per FED. R. CRIM. P. 33 in favor of
Garner. P. Ex. 1, at 2, 20-21.
21

COUNT SIX: 42 U.S.C. § 1320a-7b. Petitioner was convicted as charged and
sentenced. I.G. Ex. 2, at 1.

COUNT SEVEN: 18 U.S.C. § 1001. Petitioner was convicted as charged and
sentenced. I.G. Ex. 2, at 1.

COUNT EIGHT: 18 U.S.C. § 371. Petitioner was convicted as charged and sentenced.
LG. Ex. 2, at 2.

COUNT NINE: 18 U.S.C. § 1014. Petitioner was convicted as charged and sentenced.
LG. Ex. 2, at 2.

COUNT TEN: 18 U.S.C. § 1014. Petitioner was convicted as charged and sentenced.
LG. Ex. 2, at 2.

COUNT ELEVEN: 18 U.S.C. § 1014. Petitioner was convicted as charged and
sentenced. I.G. Ex. 2, at 2.

COUNT TWELVE: 18 U.S.C. § 666. Petitioner was convicted as charged and
sentenced. I.G. Ex. 2, at 2.

COUNT THIRTEEN: 18 U.S.C. § 666. Petitioner was not charged in this Count. No
further information is available in this record.

COUNT FOURTEEN: 18 U.S.C. § 666. Petitioner was charged in this Count, but no
further information as to its disposition appears in this record. Given that the details of
this Count charge Petitioner with misconduct not obviously connected with TLMC, and
at a different county hospital in a different town, it seems possible that it was severed
from the charges on which Petitioner and Garner stood trial in February and March 2012.
See FED. R. CRIM. P. 14(a).


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Margie Ellen Hollingsworth,
Petitioner,
v.
The Inspector General.
Docket No. C-13-709
Decision No. CR2992

Date: November 14, 2013

DECISION

The Inspector General (1.G.) of the Department of Health and Human Services notified
Margie Ellen Hollingsworth (Petitioner) that she was being excluded from participation
in Medicare, Medicaid, and all other federal health care programs for 16 years. The LG.
based the length of exclusion on three aggravating factors. Petitioner appealed. I find
that Petitioner is subject to mandatory exclusion; however, because the I.G. only proved
the existence of two aggravating factors, I reduce the period of exclusion to 15 years.

I. Background

Petitioner was a Licensed Professional Counselor in Texas who pled guilty, in the United
States District Court, Northern District of Texas, Lubbock Division (District Court), to
violating 18 U.S.C. § 1035. LG. Exhibit (Ex.) 2. In a March 29, 2013 letter, the LG.
notified Petitioner that, under 42 U.S.C. § 1320a-7(a)(1), she was being excluded from
participation in Medicare, Medicaid, and all federal health care programs for a period of
16 years. I.G. Ex. 1. The I.G. based the exclusion on Petitioner’s conviction of a
criminal offense 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.
Petitioner, proceeding pro se, filed an appeal of the I.G’s exclusion with the Civil
Remedies Division (CRD). The CRD Director assigned this case to me for hearing and
decision,’ and on May 22, 2013, I convened a telephonic prehearing conference, the
substance of which is summarized in my May 24, 2013 Order and Schedule for Filing
Briefs and Documentary Evidence (Order). Pursuant to the Order, the I.G. filed a brief
(LG. Br.) on June 25, 2013, with I.G. Exs. 1 through 5. Petitioner filed a response (P.
Br.) on August 3, 2013, with no exhibits attached. In her response, however, Petitioner
asserted that she had requested an extension of time within which to file her response, but
was filing as much as she could in advance of the deadline to file the response. P. Br. at
1. Lissued an order on August 14, 2013, indicating that the CRD had not received
Petitioner’s extension request and granting Petitioner additional time to supplement her
response. Also on August 14, 2013, the I.G. filed a reply brief (LG. Reply). The CRD
as not received any supplemental material from Petitioner. Because Petitioner did not
file an objection to the I.G.’s exhibits, I admit I.G. Exs. 1-5 into the record.

The L.G. did not offer any witnesses to testify in this case and indicated that an in-person
earing is unnecessary. I.G. Br. at 5. Petitioner, however, indicated that she believed an
in-person hearing is necessary. She offered numerous proposed witnesses and provided a
escription of the testimony that these witnesses would offer. P. Br. at 3-5. Each of
Petitioner’s proposed witnesses would offer testimony designed to undermine the validity
of her conviction. See P. Br. at 3-5. Because “the basis for the underlying conviction .. .
is not reviewable and [the petitioner] may not collaterally attack it either on substantive
or procedural grounds in this appeal,” and I am bound by the regulations to exclude
irrelevant evidence, I must deny Petitioner’s request for her witnesses to testify.

42 C.F.R. §§ 1001.2007(d), 1005.17(c). Therefore, I issue this decision on the basis of
the written record.

IL. Issues
Under 42 C.F.R. § 1001.2007(a)(1), the issues in this case are limited to:

1. Whether the LG. has a basis to exclude Petitioner from participating in all federal
health care programs under 42 U.S.C. § 1320a-7(a)(1); and

2. Whether the length of the exclusion is unreasonable.

' On May 9, 2013, Petitioner submitted a letter to the CRD staff attorney assigned to this
case, Mr. Jowers, detailing her challenges to the exclusion. Mr. Jowers replied in a May
14, 2013 letter explaining that I would discuss some issues in her case at a prehearing
conference, but that he could only discuss procedural matters with her. The 1.G.
subsequently submitted Petitioner’s letter as I.G. Ex. 5.
III. Findings of Fact, Conclusions of Law, and Analysis

A, Petitioner pled guilty to one felony count of making false statements
involving health care matters, in violation 18 U.S.C. § 1035.

On December 14, 2011, an 18-count indictment filed in the District Court charged
Petitioner with: Counts 1 through 12, Health Care Fraud, in violation of 18 U.S.C.

§ 1347 and; Counts 13 through 18, False Statements Involving Health Care Matters, in
violation of 18 U.S.C. § 1035. I.G. Ex. 3.

According to the indictment, Petitioner, a Licensed Professional Counselor, filed claims
for payments for services that she did not render, filed claims for payment for services in
a greater quantity than those actually rendered, and filed claims for payment for services
that were not payable as she billed them. LG. Ex. 3, at 3. Petitioner allegedly performed
these acts from about January 2, 2004, to December 31, 2009. LG. Ex. 3, at 3.
According to the indictment, Counts 13 through 18, False Statements Involving Health
Care Matters, specifically involved Petitioner “submit[ing] to Medicaid [claims] for
payment for counseling services that were not rendered and that she knew to have not
been rendered.” I.G. Ex. 3, at 7.

Petitioner pled guilty to Count 18, making False Statements Involving Health Care
Matters, in violation of 18 U.S.C. § 1035. I.G. Ex. 2, at 1. On October 19, 2012, the
District Court accepted Petitioner’s plea, entered judgment against her, and dismissed
Counts 1-17 at the behest of the United States. I.G. Ex. 2, at 1. The District Court
sentenced Petitioner to: 46 months of incarceration; three years of supervised release at
the conclusion of her incarceration; and payment of $556,704.12 in restitution, as well as
a $6,000 fine. I.G. Ex. 2. The District Court ordered Petitioner’s restitution amount to be
disbursed to the Texas Medical Assistance Program (I.G. Ex. 2), Texas’ Medicaid
program.* LG. Ex. 3.

B. Petitioner’s conviction requires exclusion under 42 U.S.C. § 1320a-7(a)(1)
because her criminal conduct related to the delivery of an item or service
under Medicaid.

An individual must be excluded from participation in any federal health care program if
the individual was 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 U.S.C.

> My findings of fact and conclusions of law are set forth in italics and bold font.

> Medicaid is a state health care program under 42 U.S.C. § 1320a-7(a)(1). 42 U.S.C.
§ 1320a-7(h)(1); 42 C.F.R. § 1001.2(a) (defining “State health care program[s]” to
include Medicaid programs).
§ 1320a-7(a)(1). Petitioner contests that her conviction requires exclusion under section
1320a-7(a)(1). P. Br. at 1-2. She argues that her conviction is under appeal, and she
disputes the elements of her conviction. P. Br. at 1-2.

Individuals are considered “convicted” of an offense “when a judgment of conviction has
been entered against the individual or entity by a Federal, State, or local court, regardless
of whether there is an appeal pending .. . [.]” 42 U.S.C. § 1320a-7(i)(1). In the present
matter, the District Court issued a judgment of conviction. I.G. Ex. 2. Further, for the
purposes section 1320a-7, the fact that Petitioner pled guilty and this plea was accepted
by acourt (LG. Ex. 2, at 1) is sufficient to conclude that she was “convicted.” 42 U.S.C.
§ 1320a-7(i)(3).

Petitioner’s conviction was related to the delivery of an item or service under Texas’
Medicaid program. In order for Petitioner’s conviction to support her exclusion under
42 U.S.C. § 1320a-7(a)(1), there must be a “nexus” between her conduct and the delivery
of an item or service of health care. See, e.g., James O. Boothe, DAB No. 2530, at 5
(2013). The statute under which Petitioner pled guilty, 18 U.S.C. §1035, implicates the
delivery of an item or service of health care on its face. I.G. Ex. 2. Section 1035 of Title
18 states:

(a) Whoever, in any matter involving a health care benefit program,
knowingly and willfully—
(1) falsifies, conceals, or covers up by any trick, scheme, or device a
material fact; or
(2) makes any materially false, fictitious, or fraudulent statements or
representations, or makes or uses any materially false writing or
document knowing the same to contain any materially false, fictitious,
or fraudulent statement or entry,
in connection with the delivery of or payment for health care benefits,
items, or services, shall be fined under this title or imprisoned not more
than 5 years, or both.

The fact that Petitioner pled guilty to a violation of 18 U.S.C. § 1035 appears to
demonstrate that there is a “nexus” between Petitioner’s criminal conduct and the
delivery of an item or service of health care. However, relying solely on the statutory
provision that Petitioner was convicted of violating is not conclusive as to whether
Petitioner’s conviction is related to the delivery of an item or service under a state health
care program. See, e.g., Dewayne Franzen, DAB No. 1165 (1990). Therefore, I must
review the record to determine whether it supports the conclusion that such a nexus
exists.

The indictment states that Count 18, to which Petitioner pled guilty, involved Petitioner
“submit[ing] to Medicaid a claim for payment for counseling services that were not
rendered and that she knew not to have been rendered.” I.G. Ex. 3, at 7-8. Submitting a
false claim to Medicaid is “related” to the delivery of an item or service under a state
health care program. Jack W. Greene, DAB No. 1078 (1989), aff'd, Green v. Sullivan,
731 F. Supp. 835 (E.D. Tenn. 1990); Michael Travers, M.D., DAB No. 1237 (1991),
aff'd, Travers v. Sullivan, 791 F. Supp. 1471, 1481 (E.D. Wash. 1992) and Travers v.
Shalala, 20 F.3d 993 (9th Cir. 1994). Therefore, I conclude that the record fully supports
Petitioner’s mandatory exclusion. LG. Exs. 1-3.

Petitioner raises numerous challenges to her exclusion, almost all of which constitute
collateral attacks on her conviction. For instance, Petitioner argues: the victim of the
count to which Petitioner pled guilty was not a victim; Petitioner actually performed
much of the work for which she fraudulently billed Medicaid; an individual in the Office
of the Attorney General of Texas had a grudge against her; witnesses who would have
testified on her behalf died before they could testify; the state of Colorado refused to act
on the allegations against her Colorado counseling license; investigators did not
understand how counseling works and did not properly consider the facts of her therapy;
and she received instructions that she should bill for all time worked and any
overpayments would be handled through recoupment. See I.G. Ex. 5; P. Br. at 1-5. I
have considered Petitioner’s arguments and determined that they either amount to
impermissible collateral attacks on her conviction, which can play no role in the case
before me, or are otherwise irrelevant. 42 C.F.R. § 1001.2007(d).

Petitioner has also argued that her conviction is currently on appeal based on ineffective
assistance of counsel and that there may be a favorable outcome. If Petitioner is
successful in her appeal, then she can seek reinstatement from the I.G. 42 C.F.R.
1001.3005(a)(1). However, a pending appeal has no effect on the present proceeding.
See 42 U.S.C. § 1320a-7(i)(1) (an individual against whom a judgment of conviction has
been entered is still consider “convicted” for purposes of section 1320a-7 even if an
appeal of that judgment is pending).

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

Because I have concluded that a basis exists to exclude Petitioner pursuant to 42 U.S.C.
§ 1320a-7(a)(1), Petitioner must be excluded for a minimum period of five years.
42 US.C. § 1320a-7(c)(3)(B).

D. The I.G. proved that two aggravating factors exist in this case that justify
lengthening the period of exclusion beyond the five-year statutory minimum.

The remaining issue is whether it is unreasonable to extend Petitioner’s period of
exclusion by an additional eleven years. 42 C.F.R. § 2007(a)(1). My determination of
whether the exclusionary period in this case is unreasonable includes an analysis as to
whether: (1) the I.G. has proven that there are aggravating factors; and (2) Petitioner has
proven that there are mitigating factors the I.G. failed to consider or that the I.G.
considered an aggravating factor that does not exist. 42 C.F.R. § 1001.102.

The regulations establish aggravating factors that the I.G. may consider to lengthen the
period of exclusion beyond the five-year minimum for a mandatory exclusion. 42 C.F.R.
§ 1001.102(b). Only if an aggravating factor justifies an exclusion longer than five years
may mitigating factors be considered as a basis for reducing the period of exclusion to no
less than five years. 42 C.F.R. § 1001.102(c).

In this case, the I.G. advised Petitioner in the March 29, 2013 exclusion notice that there
were three aggravating factors that justify excluding her for more than five years:

1. The acts resulting in the conviction, or similar acts, that caused, or were
intended to cause, a financial loss to a government program or to one or more
entities of $5,000 or more. 42 C.F.R. § 1001.102(b)(1). The I.G. stated that
the District Court ordered Petitioner to pay restitution of approximately
$556,700.

2. The sentence imposed by the court included incarceration. 42 C.F.R.

§ 1001.102(b)(5). The LG. stated that the District Court sentenced Petitioner
to 46 months of incarceration.

3. Petitioner was the subject of other adverse action by any Federal, State, or
local government agency or board, where the adverse action was based on the
same set of circumstances that served as the basis of the exclusion. 42 C.F.R.
§ 1001.102(b)(9). The I.G. stated that the Texas State Board of Examiners of
Professional Counselors (State Board) revoked Petitioner’s license to practice
as a Professional Counselor.

1G. Ex. 1.

1. The I.G. has proven the aggravating factor at 42 C.F.R.
§ 1001.102(b)(1) (financial loss to a government program of $5,000 or
more).

The LG. proved that the acts resulting in Petitioner’s criminal conviction, or similar acts,
caused a financial loss to a government program of $5,000 or more. See 42 C.F.R.

§ 1001.102(b)(1). The record shows that the District Court sentenced Petitioner to pay
restitution totaling $556,704.12 to the Texas Medical Assistance Program, Texas’
Medicaid program (I.G. Ex. 2, at 4-5), which is the same amount the government
originally identified Petitioner as having billed and been paid based on fraudulent claims.
1.G. Ex. 3, at 3. It is well-established that an amount ordered as restitution constitutes
proof of the amount of financial loss. See e.g., Juan de Leon, Jr., DAB No. 2533, at 5
(2013); Craig Richard Wilder, DAB No. 2416, at 9 (2011).
Petitioner argues that the facts do not support the restitution amount and that her
counsel’s ineffectiveness prevented her from challenging the restitution amount. P. Br. at
2-3. She disputes the restitution amount based on the fact that she only pled guilty to one
count in the 18-count indictment and that there has been $89,000 in recoupments. P. Br.
at 3. Petitioner’s argument disputing the amount of restitution ordered by the District
Court is an impermissible collateral attack on her underlying conviction, which I cannot
entertain. 42 C.F.R. § 1001.2007(d); Craig Richard Wilder, DAB No. 2416, at 9.
Further, even if Petitioner’s assertion that $89,000 has been recouped from her is
accurate, it is not relevant to the determination of financial loss. See 42 C.F.R.

§ 1001.102(b)(1) (‘the entire amount of financial loss to . . . programs . . . will be
considered regardless of whether full or partial restitution has been made.”). Therefore,
the I.G. has sustained its burden of proving financial loss to a government program of
$5,000 or more.

2. The I.G. has proven the aggravating factor at 42 C.F.R.
§ 1001.102(b)(5) (sentence imposed by the court included incarceration).

The record clearly demonstrates, and Petitioner does not dispute, that the District Court
sentenced Petitioner to 46 months of imprisonment. I.G. Ex. 2, at 2; P. Br. at 2-3. See
42 C.F.R. § 1001.102(b)(5). I conclude that the I.G. has proven this aggravating factor.

3. The I.G. did not prove the aggravating factor at 42 C.F.R.

§ 1001.102(b)(9) (a Federal, State, or local government agency or board
took adverse action based on the same set of circumstances that served as
the basis for imposition of the exclusion).

The L.G. did not prove that Petitioner has been subject to an adverse action “based on the
same set of circumstances that serves as the basis for imposition of the exclusion.” See
42 C.F.R. § 1001.102(b)(9). Petitioner challenged the I.G.’s application of this factor,
arguing that her Texas Professional Counselor license had been suspended only while she
was incarcerated, rather than revoked. P. Br. at 2. She offered, in challenging the
application of this factor, that the Office of the Attorney General of Texas “never
complained [to the State Board] and or supplied [Petitioner’s] notes” to the State Board.
P. Br. at 2. The State Board initially considered whether Petitioner’s license was subject
to revocation pursuant 22 Tex. Admin. Code § 681.164(c) and (d)(6).4 1.G, Ex. 2, at 2.
The actual order revoking Petitioner’s license, however, cites to Tex. Occ. Code Ann.

§ 53.021(b), which is a general provision (not specific to licensed counselors) requiring a

* The “Professional Licensing & Certification Unit Complaint Tracking Form” states that
the jurisdiction for the initial determination was an alleged violation of 22 Tex. Admin.
Code § “681.164(c) . . . (6) the felony offense of fraud.” I.G. Ex. 2, at 2. The correct
citation for the relevant provision quoted is 22 Tex. Admin. Code § 681.164(d)(6).
licensing authority to revoke the license of any licensee incarcerated for a felony offense.
LG. Ex. 4, at 8.

The “set of circumstances that served as the basis for Petitioner’s exclusion” was her
conviction for violating 18 U.S.C. § 1035, which was related to items or services
provided under Medicaid. I.G. Ex. 1, at 1. The circumstance that led the State Board to
revoke Petitioner’s license was her incarceration. Admittedly, Petitioner was
incarcerated because she pled guilty to violating 18 U.S.C. § 1035. But if Petitioner had
not been incarcerated as a result of violating 18 U.S.C. § 1035, the State Board could not
have revoked her license pursuant to Tex. Occ. Code Ann. § 53.021(b), while the I.G.
could still have excluded her. Therefore, a separate set of circumstances underlie the
Petitioner’s exclusion and the State Board’s revocation of her license.

The nuanced application of section 1001.102(b)(9) to this case is warranted when reading
that section as a whole. It would not be reasonable to lengthen the period of exclusion
unless the facts showed that there was an increased likelihood that the excluded
individual’s trustworthiness to participate in federal health care programs was further
eroded. The direct application of a statute simply requiring the State Board to revoke the
licenses of individuals convicted of a felony and incarcerated does not add to Petitioner’s
untrustworthiness. However, had the State Board revoked Petitioner’s license under

22 Tex. Admin. Code § 681.164(c) and (d)(6), that would have sufficed to prove the
aggravating factor because that basis shows that the the State Board’s action would have
been based on Petitioner violating a criminal law that “directly relate[s] to the duties and
responsibilities of a licensee.” An adverse action on this ground would have shown that
the State Board considered Petitioner’s conduct and found that it violated its rules related
to a licensee’s conduct. However, simply applying section 1001.102(b)(9) by rote to any
adverse action imposed by a government agency or board arising out of a felony
conviction and incarceration would simply result in lengthening exclusions for no
discernible reason.

Because the State Board revoked Petitioner’s license based upon the fact that she was
incarcerated, rather than the fact that she was convicted of an offense that specifically
demonstrated her unsuitability to be a licensed counselor, I conclude that the I.G. did not
prove the existence of the aggravating factor at 42 C.F.R. § 1001.102(b)(9) by a
preponderance of the evidence.*

4. There are no mitigating factors in this case.

Because | found that aggravating factors are present in this case, I next consider whether
there are any mitigating factors under 42 C.F.R. § 1001.102(c)) to offset the aggravating

> Pursuant to 42 C.F.R. § 1005.15(c), I informed the parties at the prehearing conference
that the I.G. had the burden of proving the existence of aggravating factors. Order §j 2(h).
factors. In her brief, Petitioner asserts that: her conviction is under appeal; Colorado
refused to revoke her license; her court-ordered restitution amount bears no relationship
to the offense to which she pled guilty; and she received ineffective assistance of counsel.
P. Br. at 2-3. However, the regulations specifically outline what factors may be
considered mitigating and none of Petitioner’s arguments relate to any of those mitigating
factors. See 42 C.F.R. § 1001.102(c). Accordingly, I find that no mitigating factors exist
which would justify reducing the period of exclusion.

E. Because the I.G. has only proven that two aggravating factors exist in this
case, I find that a 15-year exclusion, reduced from 16 years, is reasonable.

As discussed above, I found that the I.G. proved by a preponderance of the evidence the
existence of two aggravating factors, but did not prove the existence of a third
aggravating factor. Because I found that an aggravating factor considered by the I.G. in
its exclusion notice is not proved, then some downward adjustment of the period of
exclusion should be expected absent some circumstances that indicate no such adjustment
is appropriate. Gary Alan Katz, R. Ph., DAB No. 1842 (2002); Jason Hollady, M.D.,
a/k/a Jason Lynn Hollady, DAB No. 1855 (2002). Accordingly, given that the LG. did
not prove one of the three aggravating factors on which the LG. relied in imposing the
16-year exclusion, I must reassess the appropriate period of exclusion in this case. In
doing so, it is necessary that I weigh the aggravating factors that the I.G did prove. My
evaluation does not follow a specific formula for weighing those factors, but rather
considers the weight to be accorded each factor based on the circumstances surrounding
them in this case. Sushil Aniruddh Sheth, M.D., DAB No. 2491 (2012).

As previously discussed, the District Court ordered Petitioner to pay restitution of
$556,704.12. I.G. Ex. 2, at 5. Despite dismissing 17 of the 18 counts for which
Petitioner was indicted, the District Court held Petitioner financially responsible for the
full amount that she fraudulently billed the Texas Medical Assistance Program. I.G. Ex.
3, at 3. The District Court ordered Petitioner to pay more than 110 times the $5,000
threshold for the loss to be considered aggravating. I.G. Ex. 2, at 5; 42 C.F.R.

§ 1001.102(b)(1). Restitution in an amount so substantially greater than the statutory
standard is an “‘exceptional[ly] aggravating factor” that is entitled to significant weight.
Jeremy Robinson, DAB No. 1905 (2004); Donald A. Burstein, Ph.D., DAB No. 1865
(2003).

Petitioner’s sentence of 46 months of incarceration for her crimes constitutes the other
piece of aggravating evidence. I.G. Ex. 2, at 2. The statute to which Petitioner pled
guilty, 18 U.S.C. § 1035, allows for a sentence of up to sixty months in prison;
Petitioner’s 46-month sentence represents more than three-fourths of that maximum.
18 U.S.C. § 1035; LG. Ex. 2, at 2. A prison sentence of as little as nine months is
considered to be relatively substantial. Jason Hollady, M.D., DAB No. 1855, at 12
10

(2002). Petitioner’s sentence represents very substantial jail time, which clearly indicates
the seriousness of her offense.

I find that the two proven aggravating factors are entitled to significant weight.
Petitioner’s crime had a substantial financial impact on Medicaid. Her crime resulted in a
lengthy term of imprisonment, nearly the maximum allowable under the statute. Ample
evidence exists that Petitioner is an untrustworthy individual who should be excluded for
a lengthy period. However, in light of the fact that the I.G. did not prove one of the
aggravating factors, I will reduce the exclusion period to 15 years.

Iam only reducing the period of exclusion by one year because the two proven
aggravating factors are of such a significant nature that they provide a basis for an
exclusion lasting well beyond the five-year minimum. I conclude that the fact that the
State Board revoked Petitioner’s license under a general provision, rather than one
specific to her misconduct, does not merit a substantial reduction in Petitioner’s
exclusion. This is particularly true where, by Petitioner’s own admission, the State Board
acted as it did for reasons disconnected from a specific judgment about Petitioner’s
misconduct. See P. Br. at 2. Petitioner is a threat to Medicaid and excluding her from
participating in federal healthcare programs for less than 15 years would be insufficient
to safeguard those programs.

Based on the evidence of record and with consideration of the I.G.’s original exclusion
determination, I conclude that a 15-year period of exclusion is reasonable.

IV. Conclusion

For the foregoing reasons, I sustain the I.G.’s determination to exclude Petitioner from
participating in Medicare, Medicaid, and all federal health care programs pursuant to
42 U.S.C. § 1320a-7(a)(1). I hereby order Petitioner excluded for a period of 15 years
commencing on the date that the I.G.’s exclusion originally took effect. See 42 C.F.R.
§ 1005.20(b).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Rutland Nursing Home,
(CCN: 33-5537),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-272
Ruling No. 2014-12

Date: November 8, 2013

ORDER OF DISMISSAL

For the reasons set forth below, I dismiss as untimely the hearing request filed by
Petitioner, Rutland Nursing Home.

I. Background

Petitioner is a long-term care facility located in Brooklyn, New York, and participates in
the Medicare program. Based on a survey completed on February 23, 2012, the Centers
for Medicare & Medicaid Services (CMS) notified Petitioner, by letter dated April 13,
2012, that it was not in substantial compliance with Medicare participation requirements
and that CMS was imposing a denial of payment for new admissions (DPNA), beginning
April 28, 2012, and continuing until the facility returned to substantial compliance. The
notice letter also informed Petitioner that if it disagreed with CMS’s determination, it
could request a hearing before an administrative law judge (ALJ) within 60 days of its
receipt of CMS’s notice letter. CMS Exhibit (CMS Ex.) 3.
By letter dated December 20, 2012, Petitioner filed a request for hearing (RFH).
Petitioner concedes that it failed to request a hearing within 60 days of receipt of the
April 13, 2012 letter. Petitioner argues, however, that CMS issued a subsequent “initial
determination” when CMS decided not to follow the recommendations of the state
Internal Dispute Resolution (IDR) body. In the alternative, Petitioner argues that good
cause exists to extend the time for filing.

The hearing request and request was docketed, and the case was assigned to me. On
February 19, 2013, CMS filed a motion to dismiss because Petitioner’s hearing request
was untimely filed and no good cause exists to extend the time for filing (CMS Br.).!
CMS filed four exhibits with its motion (CMS Exs. 1-4). Petitioner filed a response (P.
Br.) on March 20, 2013, accompanied by eight exhibits marked as P. Exs. A-H. CMS
then submitted a reply brief on March 26, 2013. In the absence of objection, I admit
CMS Exs. 1-4 and P. Exs. A-H into the record.

II. General Authority

Section 1866(h) of the Social Security Act (Act) (42 U.S.C. § 1395cc(h)) authorizes
administrative review of determinations that a provider has failed to comply substantially
with Medicare program requirements “to the same extent as is provided in section 205(b)
[of the Act].” The Secretary of Health and Human Services must provide notice and
opportunity for a hearing “upon request by [the affected party] who makes a showing in
writing that his or her rights may be prejudiced” by the Secretary’s decision. The hearing
request “must be filed within sixty days” after the affected party receives notice of
CMS’s determination. Act § 205(b), 42 U.S.C. § 405(b) (emphasis added).

Similarly, the applicable regulations mandate that an affected party “file the request in
writing within 60 days from receipt of the notice . . . unless that period is extended... .”
42 C.F.R. § 498.40(a)(2). On motion of a party, or on his or her own motion, an ALJ
may dismiss a hearing request that was not timely filed if the time for filing was not
extended. 42 C.F.R. § 498.70(c). Receipt of the notice is “presumed to be 5 days after
the date on the notice unless there is a showing that it was, in fact, received earlier or
later.” 42 C.F.R. §§ 498.40(a)(2); 498.22(b)(3). The affected party may file a written
request for an extension of the 60-day period, stating the reason why the hearing request
was not timely filed. For good cause shown, an ALJ may extend the time for filing the
hearing request. 42 C.F.R. § 498.40(c).

' CMS initially filed a motion to dismiss pursuant to 42 C.F.R. § 498.70(b) and (c) on
February 14, 2013. However, on February 19, 2013, CMS filed an amended motion
adding another basis for dismissal.
Ifa facility is successful during an IDR proceeding at demonstrating that the deficiencies
should not have been cited, they are removed from the statement of deficiencies (SOD)
and any enforcement action imposed solely as a result of those deficiencies is rescinded.
42 C.F.R. § 488.331(c). However, failure of the state or CMS to complete IDR timely
cannot delay the effective date of any enforcement action against the facility, and a
facility may not seek a delay of such action on the ground that IDR was not completed
before the effective date of the enforcement action. 42 C.F.R. § 488.331(b).

II. Issue

The issue in this case is whether:

There is good cause to extend the time period for Petitioner to file a hearing
request.

IV. Findings

Petitioner is not entitled to a hearing because it did not file a timely hearing
request, and no good cause justifies extending the time for filing.

Petitioner concedes that it did not file a timely hearing request but argues that good cause
exists to extend its time for filing.

The New York State Department of Health (NYSDOH or state agency) conducted a
recertification survey of Petitioner’s facility on February 23, 2012. The state agency
determined that Petitioner was not in compliance with nineteen separate Medicare
requirements. CMS Ex. 2. Based on the state agency’s findings, CMS notified Petitioner
by letter dated April 13, 2012, that it would impose a DPNA effective April 28, 2012, and
it would continue until the facility returned to substantial compliance. CMS Ex. 3. The
letter notified Petitioner that it could request a hearing before an ALJ, citing 42 C.F.R.

§§ 498.40 et seq. as the regulations governing this process. The letter further stated that
a written request for a hearing must be filed no later than 60 days from the date of receipt
of the letter. CMS faxed the notice to Petitioner on April 13, 2012, and Petitioner does
not dispute receiving it on the same date. Accordingly, Petitioner was required to file its
request for hearing within 60 days of April 13, 2012, or by June 12, 2012.

On April 27, 2012, Petitioner requested IDR from the NYSDOH, citing 42 C.F.R.

§ 488.331, regarding one of the deficiencies cited (F-325). RFH Attachment Ex. A. The
June 12, 2012 deadline for requesting a hearing under 42 C.F.R. § 498.40 passed without
Petitioner filing a request for an ALJ hearing. According to Petitioner, on or about
October 18, 2012, one of Petitioner’s representatives spoke with a representative from the
NYSDOH regarding the IDR proceeding. During that conversation, the NYSDOH
representative informed Petitioner “that the NYSDOH had recommended to [CMS] that

Rutland’s F 325 Nutritional Status deficiency . . . be reduced to a scope and severity level
D citation.” P. Br. at 2; P. Ex. A. By letter dated October 23, 2012, the NYSDOH
notified Petitioner of the results of the IDR review. The IDR panel concluded that the
scope and severity level of “G” cited for Petitioner’s challenged citation (F-325), would
remain unchanged. P. Ex. B. Subsequently, on December 20, 2012, or 251 days after its
receipt of the April 13, 2012 CMS notice, Petitioner filed a request for an ALJ hearing.

Petitioner concedes that it filed the request for hearing more than 60 days after the CMS
initial determination contained in its April 13, 2012 letter, but argues that CMS issued a
“subsequent initial determination” when CMS decided not to follow the
recommendations of the state IDR body. It is Petitioner’s position that the CMS decision
not to accept the NYSDOH IDR panel’s recommendation constituted an initial
determination, triggering a new 60-day appeal period. Accordingly, Petitioner argues
that it had 60 days from the October 23, 2012, NYSDOH letter following the IDR
process, or until December 22, 2012, to file its request for ALJ hearing.

Section 498.3(b) of 42 C.F.R. sets forth a range of actions that constitute “initial
determinations by CMS.” Subsection 498.3(b)(13) provides that “‘a finding of
noncompliance that results in the imposition of a remedy specified in 42 C.F.R.

§ 488.406” is an initial determination. The NYSDOH letter informing Petitioner of the
IDR results is not an initial determination by CMS, and thus it does not trigger any appeal
rights under 42 C.F.R. Part 498. The regulations provide that a provider may appeal only
an initial determination of CMS. The IDR result from NYSDOH is not an administrative
action by CMS that may be appealed to an ALJ. See 42 C.F.R. §§ 498.3(b)(13), 498.3(d),
498.40(a); Capitol House Nursing & Rehab Ctr., DAB No. 2252, at 4-5 (2009); High
Tech Home Health, Inc., DAB No. 2105, at 7-8 (2007), aff'd, High Tech Home Health,
Inc. v. Leavitt, Civ. No. 07-80940 (S.D. Fla. Aug. 15, 2008).

In the alternative, Petitioner makes a number of arguments that good cause exists to
extend the time for filing. Petitioner argues that the IDR panel’s delay in issuing its
recommendation prevented Petitioner from learning of the IDR “negative conclusion,”
and therefore it was not able to timely file an ALJ request for hearing. Further, Petitioner
argues that CMS’s determination to reject the NYSDOH IDR panel’s recommendation
was arbitrary and capricious.

As Petitioner notes, the regulations do not define “good cause” but leave that
determination to the discretion of the ALJ. Many ALJs have ruled that “good cause”
means circumstances beyond a party’s ability to control. See, e.g., Hillcrest Healthcare,
L.L.C., DAB CR976 (2002), aff'd, DAB No. 1879 (2003); Hammonds Lane Ctr., et al,
DAB CR913 (2002), aff'd, DAB No. 1853 (2002); Glen Rose Medical Ctr., DAB CR918
(2002), aff'd, DAB No. 1852 (2002); Parkview Care Ctr., DAB CR785 (2001); Hospicio
San Martin, DAB CR387 (1995), aff'd, DAB No. 1554 (1996); 20 C.F.R. §§ 404.911,
404.933(c). The Departmental Appeals Board (Board) has never reached the issue of
whether “good cause” is limited to circumstances beyond a party’s ability to control.
Hammonds Lane Ctr., et al., DAB No. 1853, at n.3; Wellington Oaks Care Ctr., DAB
No. 1626 (1997). Nevertheless, the Board has consistently ruled that where, as here, a
party consciously chooses for reasons of its own not to request a hearing, it must accept
the consequences of its inaction. Hammonds Lane Ctr., DAB No. 1853, at 1; Hillcrest
Healthcare, L.L.C. DAB No. 1879 (2003).

In Hillcrest, DAB No. 1879 (2003), the petitioner argued that it had been attempting to
resolve the dispute through the state’s IDR and revisit processes. Further, it argued it did
not know “the full extent of imposed sanctions” and could not make an intelligent
decision about waiving its hearing rights. The Board concluded that under any
reasonable definition of “good cause,” the petitioner’s election to resolve its dispute by
other means and its deliberate decision to focus its resources on achieving compliance
rather than challenging adverse survey findings did not excuse its failure to file a timely
hearing request. See also, Nursing Inn of Menlo Park, DAB No. 1812 (2002) (provider
must bear the consequences of its “conscious decision” to focus on its plan of correction
and resurvey rather than to prepare an appeal.)

The state IDR process is entirely separate from the ALJ appeals process, which is a de
novo review. I note, however, that CMS maintains authority to accept or reject state
recommendations following IDR proceedings. Britthaven of Chapel Hill, DAB No. 2284
(2009). The formal ALJ appeal and informal IDR processes are distinct proceedings that
can occur simultaneously and are not interdependent. The Board has long held that
pursuit of IDR does not toll or stay the time period for requesting a hearing and that
engaging in IDR does not excuse a failure to timely file or constitute good cause for
making an untimely filing. The Board has pointed out that a state IDR process is separate
from and in addition to appeal rights provided to a facility under federal regulations, that
requesting both IDR and a hearing at the same time are not mutually exclusive, and that a
petitioner could not reasonably conclude that participation in IDR would somehow toll
the federal appeals process. Quality Total Care, L.L.C., d/b/a The Crossings, DAB No.
2242, at 10 (2009) (citing Concourse Nursing Home, DAB No. 1856 (2002), aff'd,
Concourse Rehab. & Nursing Ctr., Inc. v. Thompson, No. 03 Civ. 260 (NRB) (S.D.N.Y
Mar. 8, 2004), 2004 WL 434434, aff'd, 155 Fed. App’x 28, No 04-2586-CV, 2005 WL
3076899 (2d Cir. Nov. 17, 2005)); Hillcrest Healthcare, L.L.C., DAB No. 1879; Royal
Suites, DAB CR2585, at 5 (2012). Moreover, participation in the IDR process, even if
prolonged, does not establish good cause or toll the applicable appeal period for seeking
an ALJ hearing. Nursing Inn of Menlo Park, DAB No. 1812, at 3-5.
Petitioner also argues that the CMS notice lacked clarity in delineating its appeal rights,
and I should accordingly find good cause for the delayed request for hearing. However,
the letter explicitly states that: “[a] written request for a hearing must be filed no later
than 60 days from the date of receipt of this letter.’ CMS Ex. 3, at 2. The letter also
provides the citation to the regulations governing the appeals process. I find the CMS
letter is clear and unambiguous.

Petitioner further argues that the question of whether there is good cause turns on
material facts that are in dispute, and to support its position, seeks that I grant its request
for a subpoena duces tecum. Accordingly, Petitioner argues that a determination on
whether there is good cause is premature. P. Br. at 13-14. Petitioner requests that I
require CMS to produce correspondence between NYSDOH IDR and CMS regarding the
IDR recommendation and the CMS determination. Petitioner argues that these
documents prove that the IDR panel recommended that CMS reduce the scope and
severity of the challenged deficiency. However, as explained above, I find any state IDR
recommendation, or CMS’s rejection of it, non-interdependent and not relevant to the
issue of the timeliness of Petitioner’s hearing request.

Here the regulatory timeframe to file a hearing request is clear and detailed in the CMS
April 2012 letter. Petitioner failed to meet the deadline and has failed to show good
cause, so its hearing request must be dismissed under 42 C.F.R. § 498.70(c).”

V. Conclusion

For the reasons discussed above, I deny Petitioner’s request for a subpoena duces tecum,
and I dismiss Petitioner’s hearing request, pursuant to 42 C.F.R. § 498.70(c), because it
was not timely filed. I further deny Petitioner’s request for an extension of time to file
that hearing request, as no good cause justifies extending the time. Petitioner did not
timely take advantage of the opportunity to request a hearing, of which it was clearly
notified in CMS’s April 13, 2012 notice letter.

/s/
Joseph Grow
Administrative Law Judge

> Because I dismiss this case as untimely pursuant to 42 C.F.R. § 498.70(c), I need not
address the CMS motion to dismiss raised under section 498.70(b).