Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

The Inspector General of the Social Security Administration,
v.
Aretha Harris,
Respondent.
Docket No. C-14-1659
Decision No. CR4542

Date: March 4, 2016

DECISION

The Inspector General (IG) of the Social Security Administration (SSA) notified Aretha
Harris (Ms. Harris or Respondent) that he proposed to impose a civil monetary penalty
(CMP) on her because she made false statements and misrepresentations to SSA
regarding her functional ability. Specifically, the SSA IG alleged that “on June 19, 2013
and June 26, 2013, [Respondent] attended Consultative Examinations and stated that
[she] could not walk without a walker. However, an [SSA IG] investigation . . . revealed
that [she] can walk without assistance.” SSA Exhibit (Ex.) 10 at 1. Respondent
requested a hearing to dispute the SSA IG’s allegations.

As explained below, I conclude that the SSA IG proved by a preponderance of the
evidence that Respondent knowingly made a misleading statement to SSA consultative
examiner Hasan Assaf, M.D., when she told him that she a/ways uses a walker.

However, I also conclude that the SSA IG did not prove by a preponderance of the
evidence that Respondent made a second false or misleading statement when she told
another SSA consultative examiner, Michael Faust, Ph.D., that she uses a walker, because
she does use a walker some portion of the time. The very difficult nature of this case
arises from the fact that SSA has alleged violations based on statements that Respondent
made to others as recorded in written reports that were not necessarily meant to be a
word-for-word transcription of Respondent’s statements. Further, this is not a case in
which Respondent never uses a walker. Rather, she undisputedly used a walker in the
past and did use one at times relevant to her statements to Drs. Assaf and Faust. None of
the medical personnel who have treated or examined Respondent have described her as a
malingerer. However, the central issue in this case is how she described her need for a
walker to the consultative examiners. While Respondent characterized her need for a
walker to Dr. Assaf as being constant or always, which was inaccurate, she merely
reported to Dr. Faust that she did use a walker, which was accurate. Because I find that
Respondent’s culpability in this matter is not absolute and because she undisputedly has
extremely limited financial resources, I reduce the CMP for one misleading statement
from the proposed statutory maximum amount of $5,000 to $1,000.

I. Background and Procedural History

Respondent has a long history of health problems, some of which may date as far back as
1998. SSA Ex. 6 at 3; SSA Ex. 12 at 6-13; Respondent Exhibits (R. Exs.) 1-3, 6-13, 18-
26. Her reported ailments have, at various points, included the following: lumbosacral
spondylosis, degenerative disc disease and neuritis, severe fibromyalgia, chronic pain
syndrome, urinary incontinence, musculoskeletal back pain, severe depression, asthma,
ypertension, disc extrusion at the L5-S1 vertebrae causing moderate left lateral recess
stenosis and contacting the S1 nerve root stem, herniated disc, obesity, lumbar facet
arthropathy, thoracic back pain, type II diabetes, polycystic ovarian syndrome, and floppy
lid syndrome in both eyes; and abdominal/pelvic pain. SSA Ex. 11 at 13; SSA Ex. 12 at
6-13; SSA Ex. 18 at 11.

Respondent applied for disability benefits under Titles II and XVI of the Social Security
Act (Act) on January 21, 2010. She stated that her disability began December 31, 2008.
SSA denied her applications initially and on reconsideration. She requested a hearing
and an SSA administrative law judge (ALJ) held a video hearing on December 13, 2011.
SSA Ex. 12 at 4. In a January 9, 2012 decision, the ALJ found that while Respondent

ad a number of severe impairments (i.e., degenerative disc disease of the lumbar spine,
fibromyalgia, obesity, and elective left nephrectomy), Respondent was not disabled
within the meaning of sections 216(i), 223(d) or 1614(a)(3)(A) of the Act. SSA Ex. 12 at
6, 17-18.

Respondent submitted a new application for disability benefits under Titles II and XVI of
the Act on April 15, 2013. SSA Ex. 5. The Ohio Department of Disability
Determination Service, acting on SSA’s behalf, sent Respondent for two consultative
examinations in conjunction with her application. On June 19, 2013, Dr. Assaf
performed a physical examination of Respondent. SSA Ex. 6 at 2. Dr. Assaf observed
that Respondent “uses a walker for pain, weightbearing [sic], and for balance. She uses it
always. It was prescribed three years ago by her doctor. In my opinion, the use of the
walker is necessary for standing and walking, even for a few steps.” SSA Ex. 6 at 4. On

June 26, 2013, Dr. Faust performed a psychological consultative examination of
Respondent. SSA Ex. 7 at 2. In his report following the examination, Dr. Faust noted
that Respondent “walks with the use of a walker and had difficulty ambulating in that she
shows a significant limp.” SSA Ex. 7 at 5.

Following the examinations, the Ohio Department of Disability Determination Service
referred Respondent’s disability applications to SSA’s Cleveland Cooperative Disability
Investigations Unit to investigate potential fraud because there were “areas of conflict in
the medical evidence of record in comparison to [Respondent’s] statements regarding her
limitations.” SSA Ex. 1 at 3. The referral for an investigation asked investigators to
determine, among other things, Respondent’s: “ability to stand, walk, and move about”;
“Does she use a walker or any other type of ambulatory aid?”; “Information such as the
length of time she was observed doing something, such as distance walked or length of
time standing would be helpful.” SSA Ex. | at 3. As part of the investigation, Detectives
James Falb and Mitch Kelly interviewed Respondent on January 15, 2014. SSA Ex. 1 at
5-6. Detective Falb later testified that Respondent was able to “ambulate throughout her
apartment without the use of a walker or cane.” Hearing Transcript (Tr.) 162-63. SSA
denied Respondent’s applications for benefits on February 11, 2014. SSA Ex. 4. SSA
informed Respondent that “[b]ased on a preponderance of the evidence, there is reason to
believe that [she] knowingly ha[s] concealed and incorrectly provided information about
[her] ability to complete daily activities, hobbies and work related activities.” SSA Ex. 4
at 2.

On February 21, 2014, the SSA IG attempted to notify Respondent that he intended to
commence an administrative sanction action against her pursuant to section 1129 of the
Act based on alleged false statements and misrepresentations that Petitioner made to
SSA. The SSA IG specifically identified statements that Respondent allegedly made to
Drs. Assaf and Faust during the consultative examinations the doctors performed on
Respondent. SSA Ex. 9. Respondent apparently did not receive the February 21, 2014
letter because the SSA IG incorrectly addressed it. SSA Prehearing Brief at 6.
Nonetheless, on June 5, 2014, the SSA IG issued a notice proposing the imposition of a
CMP on Respondent. SSA Ex. 10. Specifically, the SSA IG proposed imposing a
$10,000 CMP on Respondent based upon his determination that Respondent made two
false or misleading statements or representations of a material fact for the SSA’s use in
determining her initial right to, or the amount of, monthly insurance benefits under Title
II of the Act or benefits or payments under Title XVI of the Act. SSA Ex. 10 at 1.

In response to the June 5, 2014 CMP notice, Respondent, through counsel, requested a
earing before an ALJ and filed an “Answer.” SSA Ex. 11 at 1-2. Respondent’s Answer
stated that the SSA IG was taking Respondent’s statements out of context and
inaccurately, and that Respondent has severe health limitations that require her to “use a
walker or cane a vast majority of the time.” SSA Ex. 11 at 2.

I issued an Acknowledgment and Prehearing Order on August 19, 2014. The SSA IG
filed a prehearing brief (SSA Br.) and a reply brief (SSA Reply). The SSA IG proposed
calling five witnesses (including Respondent) and offered SSA Exs. 1-19 into evidence.
Respondent filed a prehearing brief (R. Br.), proposed calling four witnesses, and offered
R. Exs. 1-28 into evidence.’ The SSA IG requested to cross-examine only Respondent.
Respondent requested to cross-examine Drs. Assaf and Faust, as well as SSA’s other
witnesses.

On April 8, 2015, I held a prehearing conference with counsel, the substance of which is
summarized in my April 13, 2015 Order Following Prehearing Conference. In that order,
I granted the SSA IG’s motion to withdraw one of its proposed witnesses (Chad
Bungard), denied Respondent’s request to cross-examine Mr. Bungard because the SSA
IG withdrew him, and withheld ruling on the SSA IG’s objections to R. Exs. 1, 3, 4, 11,
20, 23, and 24. I denied the SSA IG’s motion to strike SSA Ex. 10 for the reasons stated
therein. Order Following Prehearing Conference at 2.

Prior to the prehearing conference, Respondent requested subpoenas to compel the
testimony of Drs. Faust and Assaf and requested that she be allowed to examine them as
if on cross-examination. Despite relying on the doctors’ reports as evidence of
Respondent’s alleged false statements, the SSA IG did not list the doctors as witnesses.
The SSA IG opposed the requests for subpoena on the basis that Respondent had
conceded the alleged false statements, therefore rendering the doctors’ testimony
unnecessary. Further, the SSA IG argued it would be inappropriate for Respondent to be
permitted to cross-examine the witnesses (should I grant the subpoenas) because
Respondent was offering the doctors as her witnesses. January 30, 2015 SSA IG
Objections at 1-2. At the prehearing conference, I granted Respondent’s request for
subpoenas. Order Following Prehearing Conference at 4. Later, I limited Respondent to
asking questions on direct (i.e., no leading questions) to Drs. Assaf and Faust unless voir
dire at the hearing showed them to be adverse witnesses or they otherwise proved to be
ostile witnesses. Aretha Harris, ALJ Ruling 2015-14, at 4 (HHS CRD July 22, 2015).

I held a hearing in this case on August 3, 2015, and September 2, 2015. On August 3, I
eard testimony from Respondent, Patrick Olexa, Detective James Falb, Dr. Michael
Faust, and Special Agent James Altman. I admitted SSA Exs. 1-14 and 16-19, and R.
Exs. 1-28. Tr. 20-21, 26-27. On September 2, I heard testimony from Dr. Hasan Assaf.
Following the hearing, the parties submitted post-hearing briefs (R. Post-Hrg. Br., SSA
Post-Hrg. Br.), and Respondent submitted a reply brief (R. Reply). SSA notified my
office on December 3, 2015, that it would not file a reply brief.

' Respondent offered 26 numbered exhibits and written direct testimony for two of her
witnesses, Latasha Harris and Respondent herself. I subsequently marked the declaration
of Latasha Harris as R. Ex. 27 and Respondent’s declaration as R. Ex. 28. See Order
Following Prehearing Conference at 3.
Because the Departmental Appeals Board’s operations were disrupted in November and
December 2015 due to a change in offices, on January 7, 2016, I notified the parties that I
would issue a decision on this matter no later than March 7, 2016. See 20 C.F.R.

§ 498.220(c).

IL. Issues

1) Whether Respondent violated 42 U.S.C. § 1320a-8 by knowingly making two
false or misleading statements of material fact regarding her use of a walker
during consultative examinations performed by Drs. Assaf and Faust.

2) Ifso, whether the SSA IG’s proposed CMP of $10,000 is appropriate under the
provisions of 42 U.S.C. § 1320a-8(c).

IV. Jurisdiction

Individuals against whom the SSA IG proposes to impose a CMP have a right to a formal
earing on the record before the CMP is imposed. 42 U.S.C. § 1320a-8(b)(2).
Respondent filed a timely request for an ALJ hearing. 20 C.F.R. § 498.202. ALJs at the
Departmental Appeals Board (DAB) adjudicate SSA CMP cases. See 20 C.F.R.
§ 498.201 (definition of ALJ); see also 20 C.F.R. §§ 498.202-220. The ALJ must
“determine whether the respondent should be found liable” for a CMP and issue a
decision in which he “may affirm, deny, increase, or reduce the penalties or assessments
proposed by the Inspector General.” 20 C.F.R. §§ 498.215(a), 498.220(b). Therefore, I
ave jurisdiction to hear and decide this case.

V. Findings of Fact, Conclusions of Law, and Analysis”

The Act establishes a number of programs for which qualified individuals may receive
benefits. Under titles Il and XVI of the Act, SSA will pay benefits to individuals who are
unable to work based on disability. 42 U.S.C. §§ 423, 1611. For purposes of the Act, a
disability is the “inability to engage in substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of not less
than 12 months.” Jd. §§ 423(d)(1)(A), 1614(a)(3)(A).

Under the Act, a person is subject to a CMP if he or she:

(A) makes, or causes to be made, a statement or
representation of a material fact, for use in determining any
initial or continuing right to or the amount of monthly

> My findings of fact and conclusions of law are set forth in italics and bold font.
insurance benefits under title II or benefits or payments under
title VII or XVI, that the person knows or should know is
false or misleading,

(B) makes such a statement or representation for such use
with knowing disregard for the truth, or

(C) omits from a statement or representation for such use, or
otherwise withholds disclosure of, a fact which the person
knows or should know is material to the determination of any
initial or continuing right to or the amount of monthly
insurance benefits under title II or benefits or payments under
title VIII or XVI, if the person knows, or should know, that
the statement or representation with such omission is false or
misleading or that the withholding of such disclosure is
misleading.

Id. § 1320a-8(a)(1). For purposes of this CMP statute, “a material fact is one which the
Commissioner of Social Security may consider in evaluating whether an applicant is
entitled to benefits under title II or title VIIL or eligible for payments under title XVI [of
the Social Security Act.]” Id. § 1320a-8(a)(2).

In the present case, the SSA IG has proposed the imposition of a CMP on Respondent, an
applicant for title If and XVI benefits based on disability. Therefore, in order to prevail,
the SSA IG must prove by a preponderance of the evidence that Respondent: 1) made a
false or misleading statement or representation of a material fact; 2) for use in
determining her initial right to benefits under titles II and XVI of the Social Security Act;
and 3) she knew or should have known that the statement was false or misleading or she
made the statement in knowing disregard of its truth. 20 C.F.R. §§ 498.102(a);
498.215(b)(2), (c).

A. Respondent made a misleading statement when she told Dr. Assaf, during
his consultative examination, that she requires a walker to walk at all times
because she only requires a walker at some times.

Respondent undoubtedly has a number of health problems. See, e.g.,Tr. 60-68; R. Exs. 6-
13, 18-26. The issue is whether she made misleading statements relevant to SSA’s
determination that she was or was not disabled during the June 19, 2013 examination that
Dr. Assaf performed. Tr. 6-7. I find that she did.

In his consultative examination report, Dr. Assaf indicated that Respondent “uses [a]
walker for pain, weightbearing, and for balance. She uses it always. In my opinion, the
use of the walker is necessary for standing and walking, even for a few steps.” SSA Ex.
6 at 4. Respondent testified that she told Dr. Assaf that she “uses a walker all the time,
24/7” during Dr. Assaf’s examination of her. Tr. 42. She made consistent statements in
her written application for disability benefits. SSA Ex. 8 (“She is using a walker all the
time now); R. Ex. 26 at 2091 (“Walker to walk with all the time”). Dr. Assaf testified
that he relied on Respondent’s statements during the consultative examination and gave
her the benefit of the doubt during his examination. Tr. 262, 269, 272. Dr. Assaf’s
testimony demonstrates that he relied on Respondent’s characterization of her condition
in reaching his conclusion. Tr. 272. As a result of the consultative examination, Dr.
Assaf concluded that Respondent had “marked limitations in activities requiring standing,
walking, bending, and lifting.” SSA Ex. 6 at 6.

During the hearing, Respondent explained what she meant by “all the time, 24/7.” She
testified:

And what I meant by that was that I do have a prescribed walker that I have
been prescribed, and I use it all the time. What I meant by all the time, like
24/7, is that I depend on it and use it every day practically throughout the
jay. I obviously do not use it 24 hours a day, such as when I am sleeping
r sitting down or when I| am taking pictures . . . But I do use it. It’s always
ree feet away from me.

ao

Tr. 42-43.

Respondent did not require a walker “all the time” even as she defines it. Both several
months before Dr. Assaf’s examination and as little as three weeks after his examination,
Respondent did not require a walker at all. Over a period of roughly a year, including the
six months before the consultative examinations and six months after them, Respondent
made a number of conflicting statements regarding her use of a walker to various
healthcare providers or demonstrated that she could walk without a walker. In a January
20, 2013 examination, Respondent was able to walk without an assistance device. R. Ex.
26 at 922-23. On February 12, 2013, Respondent reported that she was able to “work out
3 times per week,” an effort she began because she had put on some weight. R. Ex. 26 at
1439. Throughout the spring of 2013, Respondent attended community college, though it
is true that it was reportedly hard for her to get around. R. Ex. 26 at 1435, 1581. On
March 26, 2013, Respondent went to the emergency room for a condition unrelated to her
back and spine, during which the physician who examined her noted that she had “full
range of [musculoskeletal] motion. She exhibits no edema or tenderness.” R. Ex. 26 at
1749. The week after Respondent’s appointment with Dr. Assaf, Respondent discussed
Dr. Assaf’s examination with another healthcare provider and noted that she had been
using her walker “lately,” connoting a change in her condition and suggesting that she
had not previously needed to use her walker as much. R. Ex. 26 at 1586. This
qualification is absent from her examination with Dr. Assaf, in which she did not explain
to Dr. Assaf, and he did not believe, that her condition varied but was particularly bad
around the time of the consultative examination. Tr. 273. Approximately two weeks
after Dr. Assaf’s examination, Respondent “was able to ambulate with none [sic]

assistant device.” R. Ex. 26 at 906. On October 2, 2013, one of Respondent’s heath care
providers noted that her use of her walker was “limited by embarrassment.” R. Ex. 26 at
768. By December of 2013, Respondent had a treadmill at home and was using it every
other day. R. Ex. 26 at 710.

Detective Falb testified that he observed Respondent walk in her apartment as part of his
January 15, 2014 investigatory interview. Tr. 149; SSA Ex. 3 at 1-2. He noted that she
seemed to walk “without any type of pain or any type of ailment that [he] could
determine.” Tr. 149. Further, he testified that he observed Respondent “ambulate
throughout her apartment without the use of a walker or a cane” and without holding on
to any furniture or anything else as she walked. Tr. 162-63, 179. I give Detective Falb’s
testimony little weight, however. His statements were at times ambiguous and contained
assumptions, while at other times he conceded that he left information out of the report he
prepared. Tr. 149, 158, 159, 160, 161, 162, 164. He did not take any notes when
interviewing Respondent, even though doing so would have been natural and expecte
for a detective investigating a potential crime. Tr. 140-41. He never asked Respondent
whether she had a walker. Tr. 148. Inexplicably, even though he believed Respondent to
be preparing to leave after he concluded the interview, he did not wait outside
Respondent’s residence to observe her as she left her apartment, apparently satisfied that
a 30-minute conversation during which Respondent was primarily seated sufficed for his
investigation. Tr. 162-63.

Finally, Detective Falb gained entrance to Respondent’s home and interviewed
Respondent under false pretenses, by telling her that she may have been the victim of
identity theft and that she was not the subject of an investigation. Tr. 144-45, 182-83.
Although when ruling on an objection during testimony, I gave Detective Falb the benefit
of the doubt that he had acted using proper police technique (Tr. at 145-46), I came to
realize as questioning continued that Detective Falb interrogated the subject of his
investigation, in her home, after assuring her that she was not the subject of his
investigation, but rather a potential victim of a non-existent crime. Tr. 182-83. Detective
Falb’s false pretense is particularly disconcerting because Respondent had been a victim
of identity theft in the past (R. Ex. 26 at 1423, 1589), information that would have been
available to him before deciding on his ruse. Therefore, I conclude that Detective Falb’s
actions negatively affect his credibility in this case.

SSA introduced evidence showing Respondent standing in high-heeled shoes to prove
that she did not require a walker all the time. SSA Ex. 17 at 1-2. I give this evidence
minimal weight. Respondent credibly testified that when she was photographed, she
placed her walker outside the picture because it embarrassed her. Tr. 43. A statement
she made to at least one other healthcare provider regarding her embarrassment at using a
walker corroborates her testimony. R. Ex. 26 at 768. Respondent’s sister testified that
Respondent “temporarily puts [the walker] aside . . . when she is in photos, due to
humiliation and embarrassment ... .” R. Ex. 27 at 1. The SSA IG did not offer evidence
to rebut either Respondent’s statements or her sister’s, other than to vaguely attack her
sister’s testimony as biased. SSA Reply at 3. Further, the SSA IG did not request to
cross-examine Respondent’s sister to demonstrate her purported biases.

Respondent argues that her statements must be understood in context. She argues that
“her conditions wax and wane and some days she is better.” R. Post-Hrg. Br. at 6. I
accept Respondent’s assertions that her condition is variable. But it is the very nature of
her condition juxtaposed with what she told Dr. Assaf that makes her statements to him
misleading. While Respondent now readily admits after the fact that her condition varies
and that some days are better than others, she did not provide this context to Dr. Assaf,
who was responsible for assessing her physical condition on behalf of SSA. See
20 C.F.R. § 404.1519. Although Respondent testified that she told him she had good and
bad days (Tr. 43), Dr. Assaf testified that she did not do so. Tr. 273. She did not tell Dr.
Assaf that she could sometimes drive, as she testified. Tr. 36, 273. Dr. Assaf testified
that had he known that, his opinion of Respondent’s condition would have been different.
Tr. 275 (“I think the fact that she’s able to drive makes it more likely that she’s able to
stand and walk more freely.”). She did not tell Dr. Assaf that she could wear high-heeled
shoes, even briefly, in order to pose for a picture. SSA Ex. 17. Dr. Assaf testified that
had he known that, his opinion would have been different. Tr. 275. I credit Dr. Assaf’s
testimony over Respondent’s regarding these matters. Dr. Assaf testified freely at the
hearing and without any apparent bias. By the time of the hearing in this case, Dr. Assaf
was no longer working as a consultative examiner in SSA cases, but rather seeking
employment in the field of his specialty, pathology. Tr. at 251-52.

Therefore, while Respondent’s description of needing a walker was sometimes true, she
described her need for a walker as much more acute than she now concedes it to be. As a
result of Dr. Assaf’s testimony, Respondent’s testimony, and my review of record, I find
that Respondent made a misleading statement to Dr. Assaf during the consultative
examination that she always needed a walker. In so doing, Respondent led Dr. Assaf to
believe that her physical condition on the day of the examination was generally
representative of her physical condition, which as the evidence demonstrates, is not the
case. While Respondent has good days and bad days, Tr. 43, she essentially only
reported the bad days to Dr. Assaf, and thus misled him regarding her condition.

B. Respondent’s statement regarding her use of a walker at all times was
material to SSA’s determination of her right to disability benefits and she
knew or should have known that the statement was misleading.

Respondent made a misleading statement to Dr. Assaf. However, in order for a statement
to be one of “material fact,” subjecting Respondent to a CMP, it must be “one which the
Commissioner of Social Security may consider in evaluating whether an applicant is
entitled to benefits under title II or title VIIL, or eligible for payments under title XVI [of
the Social Security Act.]” 42 U.S.C. § 1320a-8(a)(2).
10

When reviewing a claim for disability benefits, SSA must ascertain the residual
functional capacity of the claimant, which is an assessment as to the capabilities of the
claimant when considering the claimant’s physical and mental impairments. SSA “will
assess [the applicant’s] residual functional capacity based on all the revenant evidence in

[the ay

pplicant’s] case record. 20 C.F.R. §§ 404.1545 (a)(1), 416.945(a)(1).

SSA sent Respondent to Dr. Assaf so that he could evaluate her physical condition. SSA
Exs. 4 at 1; 6 at 2. Consultative examinations are “physical or mental examination[s] or

test[s

purchased for [a claimant] at [SSA’s] request and expense, from a treating source

or another medical source.” 20 C.F.R. §§ 404.1519, 416.919. Statements as to a
claimant’s abilities from consultative examiners are evidence that SSA can use in making
a disability determination. 20 C.F.R. §§ 404.1513(c), 416.913(c). As discussed, Dr.
Assaf based his report on Respondent’s description of her physical ability, including her

need

or a walker at all times or always. Dr. Assaf was sufficiently persuaded by

Respondent that her condition necessitated a walker for her to ambulate,” he stated in his
report: “In my opinion, the use of the walker is necessary for standing and walking, even

> Alt
years

ough Dr. Assaf conducted many consultative examinations for SSA during the two
he worked for Industrial Medicine Associates, he recalled Respondent’s

examination in part because of her extreme physical limitations. As Dr. Assaf testified:

Tr. 25

I worked in that clinic for more than two years, and I’ve seen
many claimants who walked in with back pain and also with
fibromyalgia, like the claimant said that she was diagnosed
with. But none of them had the severity of symptoms like she
id. So that by itself also registered in my mind.

The unusual thing is that, like I mentioned in my report, she
was saying that she was in so much pain that she will not
carry many of the instructions that I was asking her to do,
which I thought was unusual. I will give you an example.
For example, one of the things that I’m supposed to do is test
for the range of motion of the joints, which I asked her to do,
and she didn’t wish to do any of it because she said that it was
a pain. I even asked her to make a fist just to see how her
and functions, and even making a fist, she said she cannot do
it because of the pain, which is quite unusual. I mean, I’ve
seen many fibromyalgia people, and none of them was unable
to make a fist.

3-54. Dr. Assaf’s report is consistent with this testimony. SSA Ex. 6 at 7-10.
11

a few steps.” SSA Ex. 6 at 4. This opinion is “evidence” that SSA must consider when
rendering a disability decision. 20 C.F.R. §§ 404.1512(b)(2); 416.912(b)(2). In fact,
when SSA ultimately determined that Respondent was not disabled, it specifically relied
on her visit to Dr. Assaf and the fact that she reported that she “must use a walker at all
times.” SSA Ex. 4 at 1. Therefore, Respondent’s statement regarding her need to use a
walker at all times was not only a statement the Commissioner of Social Security could
rely on, it was a statement that he did rely on in considering whether Respondent was
eligible for disability benefits.

The Function Report that SSA asked Respondent to complete further demonstrates the
materiality of her ability to ambulate to SSA’s decision regarding her disability. The
Function Report asked Respondent to check boxes to indicate whether her condition
affected her ability to squat, bend, stand, walk, sit, kneel and climb stairs. It asked her to
explain how her condition impacted these abilities. It asked how far she could walk
without needing to stop. It asked whether she needed crutches, a walker, a wheelchair, or
acane. It asked whether a doctor had prescribed these assistive devices, when, and how
often she needs to use them. SSA Ex. 18 at 8-9. In the SSA ALJ’s decision ultimately
finding that Respondent was not disabled, he discussed Respondent’s ability to walk
extensively. SSA Ex. 12 at 10, 11, 12, 13. Respondent specifically questioned the need
for her to participate in the consultative examination and SSA told her that they needed
an updated examination. R. Ex. 26 at 49. Respondent’s ability to ambulate was plainly a
fact that the Commissioner of SSA could consider and considered in evaluating
Respondent’s eligibility for benefits.

Respondent knew or should have known that her statement was misleading. The
evidence shows that Respondent’s condition varied and that, within a relatively short
time period before and after Dr. Assaf examined her, Respondent’s condition was less
severe than on the day he examined her. Respondent now acknowledges that her
condition waxed and waned, but she made no effort to explain to Dr. Assaf that her
condition on the day of the consultative examination was particularly bad. Given the
extreme nature of her pain that day, and the fact that her condition that day represented a
departure from her recent condition, I can only conclude that Respondent appreciated the
difference in her condition that day and knowingly mislead Dr. Assaf when she told him
she always needed a walker.

Respondent argues that she did not knowingly make a false or misleading statement to
Dr. Assaf because she suffers from a somatoform disorder that somehow led her to
overstate her use of a walker. R. Post-Hrg. Br. at 11-12. Respondent argues that such a
disorder leads a sufferer to “genuinely believe[] in the severity of [her] symptoms” such
that the individual would not be exaggerating severe symptoms. R. Post-Hrg. Br. at 11.
Respondent’s argument does not persuade me. Dr. Faust, who diagnosed Respondent
with this disorder, testified that she was not suffering from it when he performed his
consultative examination in 2013. Tr. 195 (“I didn’t diagnose the somatic pain disorder

12

in June 2013 . . . I didn’t think it was present at that time.”). Further, Respondent has not
explained why she would genuinely believe she needed a walker to walk at all times
when Dr. Assaf examined her, but she would not believe she needed one to walk in the
period several months before Dr. Assaf’s examination or the period several months after
the examination. Respondent has offered neither evidence nor argument that her
disorder, even if present in 2013, would cause her to only exaggerate her need for a
walker to Dr. Assaf and not to other medical professionals to whom she spoke in the
months before and after Dr. Assaf examined her. Therefore, I reject Respondent’s
assertion that she could not have knowingly made her statement to Dr. Assaf or that she
somehow did not know or should not have known that her statement to Dr. Assaf was
misleading.

C. Respondent did not make a false or misleading statement when she told Dr.
Faust during his consultative examination that she uses a walker because
she does use a walker some of the time.

Dr. Faust performed a psychological evaluation of Respondent on behalf of SSA. The
purpose of Dr. Faust’s evaluation was “to assess her mental status and the existence of
any psychological condition that would impair her ability to function on a daily basis in
an employment setting.” SSA Ex. 7 at 2. SSA identified statements on two particular
pages of Dr. Faust’s report as constituting false or misleading statements. SSA Br. at 8
(citing “SSA Ex. 7, p. 5 and 7”). SSA Ex. 7 is Dr. Faust’s “Disability Assessment
Report.” Page five of that report mentions Respondent using a walker only once, ina
section in which he described Respondent’s “Appearance and Behavior.” SSA Ex. 7 at 5
(“She walks with the use of a walker and had difficulty ambulating in that she shows a
significant limp.”). It is undisputed that Respondent walked with a walker on the day Dr.
Faust examined her. Page seven of Dr. Faust’s report also mentions Respondent using a
walker only once, in which Dr. Faust quoted Respondent as saying “No one would want
me when they see the walker.” SSA Ex. 7 at 7. Counsel for the SSA IG specifically
identified these statements when she cross-examined Dr. Faust. Tr. 204.
Notwithstanding SSA’s assertions regarding which statements were allegedly false or
misleading, Dr. Faust reported that Respondent mentioned using a walker in two other
portions of his report. Dr. Faust indicated that Respondent said she “ha[s] a lot of
problems with [her] spine and walking with a walker.” SSA Ex. 7 at 2. Dr. Faust also
reported that Respondent told him “I’m on a walker and have a lot of spine problems and
other problems.” SSA Ex. 7 at 3. None of Respondent’s statements to Dr. Faust about
needing a walker are false or misleading.

Respondent undisputedly does use a walker at times. As far back as March 2012, a
doctor assessed her “able to ambulate with a wheeled assistant device.” R. Ex. 8 at 1. In
November 2012, Respondent reported that she “has been in so much pain that she has had
to use her walker.” R. Ex. 26 at 1455. In April 2013, Respondent told one healthcare
provider that “she has a walker, was trying to walk without it and has fallen about four

13

times since January.” R. Ex. 26 at 912. On June 11, 2013, very shortly before the
consultative examinations, Respondent reported that “her back continues to hurt a lot.”
R. Ex. 26 at 1431. The day before Dr. Faust examined her, Respondent reported to
another provider that “she has been using her walker lately because she has been in a lot
of pain.” R. Ex. 26 at 1586. In July 2013, several weeks after Dr. Faust examined her,
Respondent reported that she “‘[h]as been using her walker frequently and para-transit
system.” R. Ex. 26 at 904. In a December 20, 2013 evaluation, a doctor noted that
Respondent reported she “must use a walker at home because it is hard for her to
ambulate.” R. Ex. 10 at 3. On February 20, 2014, she later reported to a different doctor
that she had been using a walker for two years. R. Ex. 25 at 12. That physician
prescribed a “Rollator walker with seat (hand brakes and basket)” for her. R. Ex. 1 at 1.
The physician prescribed the walker to Respondent the day before the SSA IG attempted
to notify Respondent of his intent to impose a CMP, showing that, even at that late date
(relative to the consultative examinations), Respondent’s motivation for a prescription
ad nothing to do with this case.

Respondent’s statements to Dr. Faust were neither misleading nor false. Unlike her
statement to Dr. Assaf, Respondent did not attempt to characterize how often she needs a
walker. She stated that she uses one, and she does. The difference between an individual
stating that she uses a walker “always” and stating that she uses a walker is important
because the former reflects a constant impairment, whereas the latter conveys a less
pervasive, though still present, impairment. The SSA IG has not explained why he
believes Respondent’s statements to Dr. Faust are false or misleading. He argues that
“during both exams, [Respondent] stated and or presented that she always needed a
walker.” SSA Br. at 8. In his reply brief, the SSA IG again argues that “during two
different Consultative Examinations, the Respondent falsely stated (and misrepresented)
that she needs a walker at all times.” SSA Reply at 2. There is no such evidence, at least
regarding Respondent’s statements to Dr. Faust. Respondent simply did not use the same
words in describing her condition to Dr. Faust that she used in describing it to Dr. Assaf.
The SSA IG also asserts that during the hearing, Respondent admitted that she told Dr.
Faust that she needed the walker all of the time. However, I find Respondent’s
ambiguous and qualified answer insufficient to draw a definitive conclusion. Tr. 45.
Therefore, this statement is insufficient for the SSA IG to meet its burden in this case.

In a close case such as this one, I find that the difference between Respondent’s
statements to Drs. Assaf and Faust is sufficient to render her statements to the former
misleading, while her statements to the latter are not so. The SSA IG has not met its
burden to prove by a preponderance of the evidence that Respondent’s statements to Dr.
Faust regarding her using a walker were either false or misleading.
14

D. Based on the factors in 42 U.S.C. § 1320a-8(c), I reduce the SSA IG’s
proposed CMP to $1,000.

The SSA IG proposed imposing a $10,000 CMP based on Respondent’s alleged false or
misleading statements to Drs. Assaf and Faust during their examinations of Respondent.
SSA Ex. 10. Ihave found that Respondent did not make a false or misleading statement
to Dr. Faust during his examination. Therefore, I deny the SSA IG’s proposed CMP for
that alleged offense. However, I must consider the appropriateness of the SSA IG’s
proposed $5,000 CMP based on Respondent’s misleading statement to Dr. Assaf.

As an initial matter, $5,000 is the maximum CMP the SSA IG can impose for a single
false or misleading statement of a material fact for SSA’s use in determining an
individual’s eligibility for initial or continuing benefits. 42 U.S.C. § 1320a-8(a)(1).
Therefore, Respondent is potentially subject to a maximum CMP amount of $5,000, as
proposed by the SSA IG.

In addition to establishing this maximum CMP amount, the statute requires that I take the
following factors into account when determining the appropriate amount of the CMP:

(1) the nature of the statements, representations, or actions referred to in
[42 U.S.C. § 1320a-8(a)] and the circumstances under which they
occurred;

(2) the degree of culpability, history of prior offenses, and financial
condition of the person committing the offense;

(3) such other matters as justice may require.
42 U.S.C. § 1320a-8(c).
1. The nature and circumstances of Respondent’s misconduct.

With respect to the first factor, the SSA IG stated in his CMP notice that he determined
aggravating factors to be present in Respondent’s case. SSA Ex. 10 at 1. The SSA IG
believed that Respondent intentionally misrepresented her functional abilities on two
occasions, and “feigned a mental disability while attending college.” SSA Ex. 10 at 1.
The SSA IG repeated this accusation in his opening brief. SSA Br. at 12. Further, the
SSA IG considered the fact that Respondent had previously submitted three applications
for disability benefits and was “suspected of providing false information in the past.”
SSA Ex. 10 at 1.

As discussed, I have determined that Respondent misrepresented her functional abilities
on one occasion, i.e., during her consultative examination with Dr. Assaf, so I depart
15

from the SSA IG in that regard. The SSA IG does not cite in his notice letter and has not
provided any evidence that Respondent feigned a mental disability while attending
college or otherwise. Quite to the contrary, SSA’s own ALJ acknowledged that
Respondent “tested positive for depression.” SSA Ex. 12 at 11. SSA’s own consultative
examiner, Dr. Faust, has twice diagnosed Respondent with having substantial mental and
emotional impairments, including major depressive disorder. SSA Ex. 7 at 7; R. Ex. 4 at
7. The SSA IG’s reliance on Respondent’s purported “feigning” a mental disability is
unsupported.

I share the SSA IG’s concern, however, regarding Respondent’s multiple applications for
disability benefits. It would be hard to believe, given the experience that Respondent has
with SSA’s disability system, that she was confused by the role Drs. Assaf and Faust
played in SSA’s determination and, therefore, how important it was that she be forthright
with those doctors. It further concerns me that Respondent twice questioned the need for
the consultative examinations and emphasized that she sees her own doctors often.

R. Ex. 26 at 49.

2. Respondent’s level of culpability, prior offenses, and financial
condition.

The second factor includes three parts. The SSA IG considered each of these in its CMP
notice.

a. Culpability

The SSA IG considered Respondent to bear “substantial” culpability. SSA Ex. 10 at 2.
The basis for his opinion was that Respondent was “warned and, then, reminded, of [her]
duty to be truthful regarding the information that [she] report[ed] to SSA.” SSA Ex. 10 at
2. Respondent does not consider herself very culpable, however, and believes that the
SSA IG’s decision to pursue this case is significantly misplaced. R. Br. at 1-2; R. Reply
at 3; R. Post-Hrg. Br. at 16. She concedes, at most, “perhaps some loose language.” R.
Post-Hrg. Br. at 3.

I do not share the SSA IG’s view as to Respondent’s culpability. The SSA IG is at pains
to concede that Respondent truly does possess significant, documented health problems.
Tr. 66 (“We're not disputing whether or arguing either if she’s disabled or not”). As I
discussed at the outset, this case is fundamentally different from other cases that the SSA
IG often brings, in that Respondent has undeniable health problems. While she made a
misleading statement to Dr. Assaf, she did not mislead Dr. Faust. At the hearing, she
readily testified that she told Dr. Assaf she always needs a walker, so, though she
disagrees with the legal consequences of that statement, she accepts responsibility for her
words.
16

On the other hand, Respondent is not without culpability. SSA warned Respondent on
both her applications that making a false statement for use in determining her right to
disability benefits constituted a crime and was punishable by fine, imprisonment or both.
SSA Ex. 5 at 2, 10. Further, Respondent had applied for disability benefits on multiple
occasions and so should have been familiar with such warnings. Respondent argues that
her culpability is limited by her somatoform pain disorder. R. Post-Hrg. Br. at 11-12, 17.
I disagree with Respondent’s argument that her psychological impairments somehow
caused her to mislead Dr. Assaf. R. Br. at 8. While Dr. Faust did diagnose Respondent
with recurrent, severe, major depressive disorder (SSA Ex. 7 at 7), Dr. Faust did not
testify that her disorder would have caused her to mislead a healthcare provider about her
use of a walker at the time of his 2013 evaluation. At most, he testified that he believed
she was not exaggerating her symptoms. Tr. 201. Dr. Faust did not diagnose Respondent
with this somatoform disorder until May 2014, and he specifically testified that it was not
present in June 2013. Tr. 195, 197.

Taking all the relevant facts into consideration, Respondent’s characterization of her
statements to Dr. Assaf (“loose language”) is closer to my weighing of the evidence than
the SSA IG’s view that Respondent bears “substantial” culpability.

b. Prior Offenses

The SSA IG also considered that Respondent has no prior offenses involving SSA. SSA
Ex. 10 at 2. I agree that there is no evidence in the record to suggest that Respondent has
a prior offense related to Social Security programs. See Tr. 62.

ec. Financial Condition

The SSA IG considered Respondent’s financial condition and determined that
Respondent has the ability to pay the proposed penalty. However, he also acknowledged
that he had limited information to consider. SSA Ex. 10 at 2. After considering evidence
of Respondent’s financial condition, the SSA IG recognized that she has “limited
resources,” but still believed she could pay the penalty in time. SSA Post-Hrg. Br. at 6.
Respondent submitted several documents to demonstrate her limited financial condition.
She submitted bank statements showing monthly ending account balances ranging from
$10.93 to $102, with one outlier month of $1,687. R. Ex. 14. She submitted her
transaction history that shows purchases from January 2014 to November 2014. R. Ex.
15. This purchase history is particularly instructive. It shows that Respondent made no
more than a few purchases a month, most of which were for her cellular phone. R. Ex. 15
at 1-2. The history also shows that, with two exceptions that Respondent does not
17

explain, the deposits into her account were also for very small amounts, all under $100.*
Respondent’s running balance over this period of months very rarely exceeded $100. So,
for nearly a year, Respondent received a very small sum, spent a very small sum, and
made purchases that appear to be for necessities, including a cellular phone. Respondent
receives food stamp benefits of $194 a month. Tr. 35; R. Ex. 16 at 2. Her rent expenses
are $25 a month, which Respondent’s brother pays. Tr. 34; R. Ex. 16 at 3. She does
have one moderate-sized asset, a 2004 Buick Rendezvous, that as of April 2013 had
141,405 miles on it. Tr. 35; R. Ex. 17. She has not worked since 2010. Tr. 33-34; R. Ex.
26 at 233. The record, therefore, indicates that Respondent is indigent. Based on this
information, I do not believe that Respondent has the financial ability to pay the penalty
the SSA IG proposes.

3. Others matters as justice may require.

In the CMP notice, the SSA IG did not identify any matters that the interests of justice
require him to consider. SSA Ex. 10 at 2. Respondent argues that the SSA IG’s actions
in even bringing this case risk “chill[ing] the rights of an American citizen to file for
disability benefits ....” R. Br. at 2. While I would not go so far as Respondent, I agree
the SSA IG’s decision to pursue this case raises legitimate concerns about how it might
impact other claimants. I have found that Respondent made a misleading statement, but I
did so by the narrowest of margins. I have also found the SSA IG’s other charged
statement not to be misleading. Although I believe the law dictates this result, | am
concerned about the negative effect this case could have on claimants legitimately
seeking benefits. However, this concern is not sufficient to result in a reduction of the
CMP amount.

4. I reduce the SSA IG’s proposed penalty to $1,000.

As discussed above, Respondent is subject to a potential CMP of $5,000. I agree that a
penalty is necessary to ensure that Respondent does not misstate her conditions in future
applications for disability benefits and to ensure the integrity of the disability payment
system. However, my evaluation of the factors above involving Respondent’s culpability
and financial condition, as well as the narrow basis on which this penalty rests,
necessitates a significant reduction in the penalty amount. Based on those factors, a
penalty of $1,000 is appropriate.

* Even these two exceptions appear to be money deposited into her account for a specific
purpose, since there are corresponding withdrawals of basically the same amounts very
shortly thereafter in both cases.
18

Order

Based on the evidence of record, and consistent with my findings of fact and conclusions
of law, I hereby order the following:

1. Respondent is LIABLE under 42 U.S.C. § 1320a-8(a)(1) to pay a CMP based on
one misleading statement of material fact;

2. The SSA IG’s proposed CMP is REDUCED to $1,000;
3. Respondent is directed to pay a total of $1,000 in the manner specified by the

SSA IG in his CMP notice (SSA Ex. 10 at 2-3) or in any other manner prescribed
by the SSA IG following the issuance of this decision.

/s/

Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Lawrence Carpenter, M.D.
(OI File No. H-15-40586-9),

Petitioner,
v.
The Inspector General.
Docket No. C-16-80
Decision No. CR4541

Date: March 4, 2016

DECISION

The Inspector General (IG) of the United States Department of Health and Human
Services excluded Petitioner, Lawrence Carpenter, M.D., from participation in Medicare,
Medicaid, and all other federal health care programs based on Petitioner’s conviction of a
felony offense in connection with the delivery of a health care item or service relating to
fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial
misconduct. For the reasons discussed below, I conclude that the IG has a basis for
excluding Petitioner because he was convicted of misprision of a felony, a felony offense
that involved his active concealment of health care fraud that was committed by his
partner in his medical practice. I affirm the 10-year exclusion period because the IG has
proven three aggravating factors. Even with the presence of one mitigating factor, the
length of the exclusion period is reasonable. I also affirm that the effective date of
Petitioner’s exclusion is September 20, 2015.

I. Background

By letter dated August 31, 2015, the IG notified Petitioner that, pursuant to section
1128(a)(3) of the Social Security Act, 42 U.S.C. § 1320a-7(a)(3), he was being excluded
from participation in Medicare, Medicaid, and all federal health care programs for a
minimum period of 10 years, effective 20 days from the date of the letter. IG Exhibit
(Ex.) 1 at 1. In the letter, the IG informed Petitioner of the factual basis for the exclusion,
stating:

This exclusion is due to your felony conviction as defined in section
1128(i) (42 U.S.C. 1320a-7(i)), in the United States District Court,
Southern District of Alabama, Southern Division, of a criminal offense
related to fraud, theft, embezzlement, breach of fiduciary responsibility or
other financial misconduct in connection with the delivery of a health care
item or service, including the performance of management or
administrative services relating to the delivery of such items or services, or
with respect to any act or omission in a health care program (other than
Medicare and a State health care program) operated by, or financed in
whole or in part, by any Federal, State, or local Government agency.

IG Ex. | at 1. The IG extended the exclusion period from the statutory minimum of five
years to 10 years based on the presence of three aggravating factors and one mitigating
factor. LG. Ex. | at 2. As for the three aggravating factors, the IG found: (1) The loss to
the Government or other entity as a result of Petitioner’s criminal acts was greater than
$5,000; (2) The acts leading to Petitioner’s conviction lasted one year or more; and, (3)
Petitioner was subject to another adverse action based on the same facts that form the
basis for his criminal conviction. IG Ex. | at 2; 42 C.F.R. § 1001.102(b)(1), (2), (9). The
sole mitigating factor considered by the IG was that Petitioner cooperated with
government officials. IG Ex. 1 at 2; 42 C.F.R. § 1001.102(c)(3).

Petitioner, through counsel, timely filed a request for hearing before an administrative
law judge on November 2, 2015. On November 18, 2015, I convened a prehearing
conference by telephone pursuant to 42 C.F.R. § 1005.6, during which I clarified the
issues of the case and established a schedule for the submission of prehearing briefs and
exhibits. The schedule and summary of the prehearing conference was memorialized in
my Order and Schedule for Filing Briefs and Documentary Evidence (Order), dated
November 20, 2015.

Pursuant to the Order, the IG filed an Informal Brief (IG Br.) along with five proposed
exhibits (IG Exs. 1-5). Petitioner thereafter filed his Informal Brief (P. Br.) and two
proposed exhibits (P. Exs. 1-2). The IG then filed a reply brief (IG Reply). In the
absence of any objections, I admit the parties’ submissions and exhibits into the record.'

' My November 20, 2015 Order detailed the process for filing and marking exhibits.
Petitioner submitted two exhibits, Exhibits 1 and 2, in a manner that was not compliant
with my Order. See Order § IV (stating “[t]he parties must mark all evidence they submit
to me” and instructing the parties how to mark exhibits). Neither exhibit was marked
Both parties agreed that an in-person hearing was not necessary for me to decide this
case. IG Br. at 13; P. Br. at 9. Therefore, I am deciding this case on the written
submissions and documentary evidence. See Order § IV.

IL. Issues

The regulations limit the issues in this case to whether there is a basis for exclusion, and,
if so, whether the length of the exclusion that the IG has imposed is unreasonable.

42 CFR. § 1001.2007(a)(1)-(2).

HI. Jurisdiction

I have jurisdiction to decide this case. 42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. § 1005.2.

IV. Findings of Fact, Conclusions of Law, and Analysis”

I. Petitioner’s conviction for misprision of a felony requires his exclusion from
all federal health care programs for a minimum of five years.

The Social Security Act requires the exclusion of any individual or entity from
participation in all federal health programs based on four types of criminal convictions.
42 U.S.C. § 1320a-7(a). In this case, the IG relied on section 1320a-7(a)(3) as the legal
basis to exclude Petitioner, which states:

(a) Mandatory exclusion
The Secretary shall exclude the following individuals and entities

from participation in any Federal health care program (as defined in section
1320a-7b(f) of this title):

(3) Felony conviction relating to health care fraud

with a “P” in the lower right corner followed by a whole number for each document
offered, and each page of each exhibit was not numbered. Order § IV; see Civil
Remedies Division Procedures (CRDP) § 14. Nonetheless, I have admitted both of
Petitioner’s exhibits into the record. While Petitioner appended six alphabetically
referenced “exhibits” to his request for hearing, none of these exhibits are referenced in
either his informal brief or in the exhibit list that he submitted on January 27, 2016.

I observe that a number of these documents were submitted by the IG as IG Exs. 1-4.

> My findings of fact and conclusions of law are set forth in italics and bold font.
Any individual or entity that has been convicted for an
offense which occurred after August 21, 1996, under Federal or
State law, in connection with the delivery of a health care item or
service or with respect to any act or omission in a health care
program (other than those specifically described in paragraph (1))
operated by or financed in whole or in part by any Federal, State, or
local government agency, of a criminal offense consisting of a
felony relating to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct.

Id. § 1320a-7(a)(3).

The IG argues that Petitioner’s exclusion is required based on his conviction for
misprision of a felony because it occurred after August 21, 1996, is related to fraud, and
was committed in connection with the delivery of a health care item or service. IG Br.
at 4-6. Petitioner does not dispute that he was “convicted” for purposes of the Act of
misprision of a felony based on his guilty plea to that offense. P. Br. at 1-2; 42 U.S.C.

§ 1320a-7(i)(3). However, Petitioner argues that his federal felony conviction does not
mandate exclusion because it is not related to fraud nor was it committed in connection
with the delivery of a health care item or service. P. Br. at 2-5. As explained below, I
reject Petitioner’s arguments and find that Petitioner’s conviction for misprision of a
felony requires his exclusion.

On May 6, 2014, the United States Attorney for the Southern District of Alabama filed a
one-count Information charging that Petitioner committed the felony offense of
misprision of a felony in violation of 18 U.S.C. § 4.° IG Ex. 3 at 1. Specifically, the
Information charged that “[b]eginning in or about January 2008 and continuing through
in or about December 2011,” Petitioner, “having knowledge of the actual commission of
a felony . . . to wit: healthcare fraud, did actively conceal the same... .” IG Ex. 3 at 1.
The same day the United States Attorney filed the Information, Petitioner, with the
benefit and advice of counsel, entered into a plea agreement in which he pleaded guilty to
the sole count listed in the Information. IG Ex. 2 at 2, 12-13. In the plea agreement,
Petitioner acknowledged that he was “pleading guilty because he is guilty.” IG Ex. 2 at
3. The plea agreement specifically incorporated a separately filed Factual Resume, which
was submitted to the District Court as evidence at the guilty plea hearing. IG Ex. 2 at 16.
The Factual Resume set forth the four elements of the offense, along with the details of
the offense conduct. IG Ex. 2 at 3. Petitioner and his counsel signed the Factual
Resume, and both agreed that the contents of the Factual Resume were “true and correct.
IG Ex. 2 at 3.

> The parties do not dispute that misprision of a felony is itself a “Class E” felony,

publishable by up to three years of incarceration. See 18 U.S.C. §§ 4, 3559(a)(5).

The Factual Resume addressed the underlying facts supporting Petitioner’s guilty plea to

misprision of a felony. In relevant part, the Factual Resume states:

Throughout the time period alleged in the Information, [Petitioner] was a
physician, board certified in obstetrics and gynecology. In addition to his
OB/GYN practice, [Petitioner] was the majority owner of a dermatology
clinic, the Laser Skin Care Center of Mobile (“LSCC”). [Petitioner] owned
60% of LSCC while Certified Registered Nurse Practitioner Diantha Miller
owned the remaining 40%.

During the time period alleged in the Information, [Petitioner] had actual
knowledge that Diantha Miller was committing healthcare fraud.
Specifically, [Petitioner] had actual knowledge that Miller, and others at
Miller’s direction, were falsifying billing records to make it appear as if
[Petitioner] treated certain patients, when in fact, he had not done so.
[Petitioner] discovered these fraudulent bills were being submitted to the
patient’s insurance company with the expectation that the insurance
company would reimburse at the higher physicians rate. [Petitioner] failed
to notify authorities once he had actual knowledge of this felony offense.
Rather, [Petitioner] actively concealed the felony offense in order to avoid

an investigation.

IG Ex. 2 at 15.

Petitioner points out that his conviction for misprision of a felony was not based on his
own fraudulent conduct, but instead was based only on his failure to report the fraudulent

conduct o
fraudulent
service “o
overlooks

his partner. P. Br. at 3. Petitioner also argues that his failure to report the
activity that he knew about did not involve his delivery of a health care item or
any kind.” P. Br. at 3. These arguments are unpersuasive. Petitioner

the plain language of the statute, which clearly states that an exclusion is

mandated when the underlying conviction is for a felony “relating to” fraud, meaning that
the conviction need not have been based on the actual commission of fraud, but rather,

have only

been related to fraud. Likewise, Petitioner overlooks the statutory language

stating an exclusion is warranted when the conviction is for an offense “in connection
with” the delivery of a health care item or service, meaning that a criminal offense
warranting exclusion is not limited only to the actual delivery or provision of such an
item or service. 42 U.S.C. § 1320a-7(a)(3); see Charice D. Curtis, DAB No. 2430 at 4

(2011) (“[T]he plain language of section 1128(a)(3) encompasses felonies ‘relating to’
fraud . . . not just to felonies that constitute fraud or one of the other listed offenses.”).
The Departmental Appeals Board (Board) has also explained that an ALJ does not need
to limit review to the elements of an offense, but may consider the extrinsic evidence
surrounding the conviction to determine whether it is “relating to” fraud and done “in

connection with” the delivery of a health care item or service. Narendra M. Patel, M.D.,
DAB No. 1736 at 6 (2000), aff'd, Patel v. Thompson, 319 F.3d 1317 (11th Cir. 2003).

Petitioner admitted “in open court and under oath” that he committed the offense conduct
isted in the Factual Resume that was incorporated into his May 6, 2014 plea agreement.
IG Ex. 2 at 14. In that document, Petitioner admitted that he “had actual knowledge” that
is partner was committing health care fraud. IG Ex. 2 at 15. Petitioner further admitted
e “had actual knowledge” that his partner and others at her direction had falsified billing
records to show that he had treated certain patients when he had not treated those
patients. IG Ex. 2 at 15. Despite having actual knowledge that his name was being
fraudulently listed as the treating doctor for patients he did not treat, Petitioner “actively
concealed” the felonious criminal activity rather than reporting it. IG Ex. 2 at 15.
Petitioner’s knowledge of the commission of health care fraud by another, coupled with
both his failure to report the fraud and his “active concealment” of the fraud, allowed his
partner to continue to falsify billing records with his own name on them so that the bills
would be reimbursed at a higher rate. IG Ex. 2 at 15. Petitioner’s concealment and
failure to report these crimes unquestionably establishes a plain nexus between his
criminal conduct and his partner’s fraudulent activity. While Petitioner did not actively
commit the crime, his failure to report the crime and the active concealment of such
allowed the health care fraud to continue. There can be no doubt that Petitioner’s felony
conviction is for a crime that relates to health care fraud.

In addition, the offense conduct in the Factual Resume to which Petitioner admitted
supports that his crime was in connection with the delivery of a health care item or
service. The underlying health care fraud that Petitioner failed to report and concealed
involved the submission of false claims to a health insurance provider. The submission
of claims for payment for health care services is done “in connection with,” and
necessarily follows, the delivery of those services. The Board has long held this to be
true. See Jack W. Greene, DAB No. 1078 at 7-8 (1989). The Board has also explained
that there should be a “common sense connection” between the underlying crime and the
delivery of a health care item or service in order to meet the statutory basis for exclusion.
Eric D. DeSimone, R.Ph., DAB No. 1932 at 5 (2004). When applying a common sense
analysis to the underlying facts of this case, I find that Petitioner’s failure to report and
his concealment of the submission of false claims for payment of services was “in
connection with” the delivery of such health care services.

Based on the foregoing analysis, I conclude that Petitioner’s criminal conviction for
misprision of a felony, which consisted of both his failure to report health care fraud and
his active concealment of ongoing health care fraud, mandates his exclusion from all
federal health care programs. 42 U.S.C. § 1320a-7(a)(3).
2. A 10-year minimum exclusion is not unreasonable based on the presence of
three aggravating factors and one mitigating factor.

The Act requires a minimum exclusion period of five years when the exclusion is
mandated under section 1320a-7(a). 42 U.S.C. § 1320a-7(c)(3)(B). In this case,
exclusion is required under section 1320a-7(a)(3), therefore Petitioner must be excluded
for a minimum of five years. The IG increased the minimum exclusion period from five
years to 10 years based on his consideration of three aggravating factors, along with one
mitigating factor. IG Ex. | at 2. The IG has the discretion to impose an exclusion longer
than the minimum period when there are aggravating factors present. See 42 C.F.R.

§ 1001.102.

The IG asserts that the presence of three aggravating factors, even with the presence of
one mitigating factor, warrants an exclusion for 10 years. The first aggravating factor is
that the loss to a Government program or other entity as a result of Petitioner’s criminal
conduct was greater than $5,000. Jd. § 1001.102(b)(1). Second, the duration of
Petitioner’s failure to report and the active concealment of his partner’s health care fraud
was for a period longer than one year. Jd. § 1001.102(b)(2). Third, Petitioner was
subject to another adverse action based on the same facts that support the exclusion. Jd.
§ 1001.102(b)(9). Petitioner does not dispute that the loss to Blue Cross/Blue Shield o:
Alabama, a health insurer, as a result of his criminal conduct was $208,000, or that the
Alabama Medicaid Agency excluded him from participation in that program as a result of
is criminal conviction. IG Ex. 4 at 3; I1.G. Ex. 5 at 1; P. Br. at 6. The IG properly
considered these two factors as aggravating factors in this case. Jeremy Robinson, DAB
No. 1905 at 12 (2004) (determining that loss of 41 times the minimum amount required
for aggravating factor supported a 15-year exclusion); Brij Mittal, M.D., DAB No. 1894
at 5 (2003) (determining that exclusion from New York State Medicaid program based on
same conviction that was basis for exclusion was an aggravating factor that supporting
increase to exclusion period).

However, Petitioner disputes that the length of his criminal conduct was longer than one
year. P. Br. at 6. He argues that misprision of a felony “requires the failure to act or
active concealment as one of its elements.” P. Br. at 6. He then explains that the “actual
ultimate failure to act and concealment of his partner’s fraud was confined to the
discovery of fraudulent billing and submissions from his partner after that partner had
been terminated and excluded from his practice.” P. Br. at 6-7. Petitioner argues that the
period of time related to that discovery and the ultimate concealment of that fraud was
“substantially less than” one year. P. Br. at 6-7. Petitioner’s arguments are unpersuasive.

A federal felony conviction for misprision of a felony requires the following elements to
be proven: (1) the commission and completion of a felony offense by a principal; (2)

actual knowledge by the defendant of the commission of such a felony; (3) failure by the
defendant to notify authorities; and (4) an affirmative act by the defendant to conceal the

crime. 18 U.S.C. § 4; IG Ex. 2 at 14. Petitioner willingly, and with the advice of
counsel, entered a plea agreement in which he admitted “in open court and under oath”
that he was “pleading guilty because he was guilty,” and that the length of his criminal
conduct was for a period of approximately four years.* See IG Ex. 3 at 1 (Count One of
the Information charging that Petitioner committed the offense of misprision of a felony
“(beginning in or about January 2008 and continuing in or about December 2011”); IG
Ex. 2 at 3 (guilty plea to Count One of the Information). In pleading guilty to Count One
of the Information, Petitioner admitted that his felonious conduct satisfied a// elements of
the charge of misprision of a felony, including the active concealment of the crime. IG
Ex. 2 at 2, 14. Therefore, by admitting that his criminal conduct took place from
approximately January 2008 through December 2011, Petitioner necessarily admitted that
he committed all elements of the offense, to include actively concealing his partner’s
health care fraud, during that entire time period. Petitioner’s current argument, that he
only committed all elements of misprision of a felony for less than a year, is disingenuous
and contradicts his guilty plea to Count One of the Information, which unambiguously
states that the duration of Petitioner’s offense conduct was for a period of approximately
four years in length. Finally, I point out that Petitioner cannot attack the factual
underpinnings of his guilty plea. See 42 C.F.R. § 1001.2007(d). The IG properly
considered the length of Petitioner’s crime from “in or about January 2008 and
continuing through in or about December 2011” as an aggravating factor in this case. See
Vinod Chandrashekhar Patwardhan, M.D., DAB No. 2454 at 7 (2012) (determining that
three-year duration of criminal conduct was an aggravating factor).

The IG also considered one mitigating factor in this case: Petitioner cooperated with
Federal or State officials. LG. Ex. 1 at 2; see 42 C.F.R. § 1001.102(c)(3)(). There is no
dispute that this mitigating factor is present and that the IG evaluated this factor prior to
determining the length of Petitioner’s exclusion. IG Br. at 9; P. Br. at 9; IG Ex. 1 at 2;
Craig Richard Wilder, DAB No. 2416 (2011) (reducing exclusion period based on

* Petitioner cited an excerpt from the Factual Resume in his brief, arguing that the
Factual Resume only supports that he had knowledge of his partner’s health care fraud
but was not concealing that fraud. P. Br. at 5. However, the Petitioner fails to
acknowledge that the final sentence of the same document, which the plea agreement
recognized was “submitted to the Court as evidence at the guilty plea hearing,” states that
Petitioner “actively concealed the felony offense in order to avoid an investigation.” IG
Ex. 2 at 15; see IG Ex. 2 at 2. Petitioner did not plead guilty to concealing a felony for
only a portion of the period stated in Count One of the Information; rather, he pleaded
guilty to Count One, without any exception, to the offense of misprision of a felony for
the entire period alleged in the Information, which was specified as “[b]eginning in or
about January 2008 and continuing through in or about December 2011.” IG Ex. 3 at 1;
see IG Ex. 2 at 14-15. I reiterate that Petitioner clearly stated that he pleaded guilty
“because he was guilty.” IG Ex. 3 at 1.
mitigating factor of significant cooperation). Petitioner has not argued that any additional
mitigating factors are present in this case.° P. Br. at 9.

The 10-year period of Petitioner’s exclusion is not unreasonable based on the three
aggravating factors and one mitigating factor present in this case. The amount of loss
caused by Petitioner’s criminal conduct is very substantial, and is more than 40 times
igher than the threshold $5,000 amount of loss necessary to trigger consideration of this
aggravating factor. In addition, Petitioner was not simply an unwitting observer of his
partner’s health care fraud; rather, he appears to have been a financial beneficiary of the
fraud, based on the District Court’s order that Petitioner pay $208,000 in restitution to a
single insurance company, Blue Cross/Blue Shield of Alabama.° IG Ex. 4 at 3.

Petitioner owned 60 percent of the practice that received the fraudulent payments his
partner had devised, so it is hardly conceivable that he realized no financial gain from his
partner’s fraudulent billing entries that listed his name as the treating physician for
patients he did not treat.’ Therefore, this aggravating factor amply supports an increase
to the length of Petitioner’s exclusion. In addition, Petitioner’s criminal activity lasted
for approximately four years, as evidenced by his guilty plea to Count One of the
Information. IG Exs. 2, 3. Petitioner’s failure to report, and to even conceal, his
partner’s scheme to defraud a health insurance program for nearly four years underscores
a level of untrustworthiness in his dealing with health care programs. The length of his

> Petitioner points out that his license to practice medicine has not been revoked or
suspended as a result of his criminal conduct. P. Br. at 8. He argues that the medical
board’s decision not to restrict his medical license serves to reduce the significance of the
aggravating factors. However, a medical board’s decision not to take an adverse action is
not a recognized mitigating factor and does not reflect any evaluation of the aggravating
factors present in this case. 42 C.F.R. § 1001.102(c).

° The Amended Judgment in a Criminal Case directed restitution pursuant to 18 U.S.C.

§ 3664. Section 3664 addresses the procedure for issuing an order of restitution. It
directs a sentencing court to “consider the amount of the loss sustained by any victim as a
result of the offense, the financial resources of the defendant, the financial needs and
earning ability of the defendant and the defendant’s dependents, and such other factors as
the court deems appropriate.”

7 Petitioner’s financial gain is not a basis for the aggravating factor. Barry D. Garfinkel,
M.D., DAB No. 1572 at 36 (1996). However, I find that Petitioner’s financial gain is
relevant because it demonstrates that the financial loss incurred as a result of Petitioner’s
conduct actually benefited Petitioner, and not just the partner who actively committed
health care fraud. Thus, while Petitioner’s financial gain is not the basis for the
aggravating factor related to an entity’s financial loss, I find that it serves to increase the
severity of that aggravating factor.
10

criminal conduct also amply supports a significant increase to Petitioner’s exclusion
period. The fact that the Alabama Medicaid Agency also excluded Petitioner from that
program is further evidence of his risk to health care programs and lends further support
to an increase of the exclusion period.

The single mitigating factor in this case supports some tempering of any increase to
Petitioner’s exclusion period, in that Petitioner cooperated with Federal or State officials.
1.G. Ex. 1 at 2; see IG Ex. 2 at 6-10 (discussing that the United States agreed to move for
a downward departure of his sentence so long as he provided, inter alia, substantial
assistance to law enforcement authorities). I acknowledge that Petitioner faced a
maximum of three years of incarceration and that the loss to Blue Cross/Blue Shield
exceeded $200,000, meaning that he faced the likelihood of incarceration but for a
request by the United States for sentencing leniency due to substantial assistance. See,
e.g., United States Sentencing Guidelines (U.S.S.G) § 2B1.1 (noting a significantly
increased offense level for sentencing purposes based on a monetary loss in excess of
$150,000); U.S.S.G., Ch. 5 (Sentencing Table); U.S.S.G. § 5K1.1 (motion by the United
States for sentencing judge to depart downward from the U.S.S.G. sentencing range).
Thus, I conclude that Petitioner’s cooperation was substantial and undoubtedly was a
significant factor in the imposition of a period of probation by the sentencing judge,
rather than incarceration. See I.G. Ex. 2 at 6 (stating that the United States would
recommend that Petitioner be sentenced at the low end of the sentencing guidelines range
and that the United States would move for a downward departure based on additional
cooperation and substantial assistance). However, even assuming a level of
extraordinary cooperation that enabled the United States to prosecute another individual
or individuals successfully, such cooperation followed a lengthy felonious offense and
does not entirely negate the three aggravating factors present in this case. While
Petitioner’s cooperation with law enforcement authorities is laudable and likely enabled
him to avoid incarceration, such cooperation is one mitigating factor in the face of a
serious offense with three aggravating factors. Petitioner provided cooperation to law
enforcement authorities after approximately four years of concealing his partner’s fraud.
IG Exs. 2, 3. The IG appropriately considered Petitioner’s cooperation to be a mitigating
factor and determined that a 10-year exclusion period, and not longer, was appropriate.
IG Ex. | at 2. In light of three aggravating factors, it appears that the IG gave a
significant weight to this mitigating factor, in that the IG imposed only a 10-year
exclusion period. I find there is no basis to modify the IG’s determination to impose a
10-year exclusion period against Petitioner, and a 10-year period of exclusion is
reasonable.

Petitioner argues that imposition of a 10-year exclusion would be contrary to
congressional intent, in that federal funds and programs were not involved in the fraud.
He also argues that the potential deterrent effect of the exclusion “does not exist given
that Petitioner himself did not engage in the conduct,” and that he has not demonstrated
“untrustworthiness” with regard to the delivery of health care services. P. Br. at 7-8.
11

While Petitioner cites to the discussion of congressional intent as the Board described it
in Robinson, DAB No. 1905, he fails to allege that there is any ambiguity in the plain
language of the statute in question. Absent any allegation or showing of ambiguity in the
statute, or demonstration that the plain meaning of Congress’s language is unclear, it is
unnecessary for me to delve into the congressional intent of section 1128(a)(3). See, e.g.,
Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 475 (“In a statutory construction
case, the beginning point must be the language of the statute, and when a statute speaks
with clarity to an issue judicial inquiry into the statute’s meaning, in all but the most
extraordinary circumstance, is finished.”).

I wholeheartedly disagree with Petitioner’s assertions that section 1128(a)(3) does not
mandate exclusion because federal funds were not involved in the fraud, there is no need
for deterrence in his case, and that his conduct does not show he was untrustworthy. P.
Br. at 6-7. First, while Petitioner was afforded substantial leniency by the criminal
justice system, his receipt of a sentence sparing him incarceration does not render him a
trustworthy individual for purposes of having access to the public fisc and treating health
care program beneficiaries. See Henry L. Gupton, DAB No. 2058 at 7 (2007) (explaining
that while an IG exclusion aims to protect beneficiaries of health care programs and the
federal fisc, a criminal law proceeding involves “punishment, rehabilitation, and the
deterrence of future misconduct”). Petitioner’s failure to report, along with his
concealment of, his partner’s scheme to defraud a health insurance program of hundreds
of thousands of dollars underscores his untrustworthiness in dealing with health care
programs. While Petitioner may not have actively committed the health care fraud
imself, he certainly demonstrated a lack of integrity when he allowed the fraud, which
included the use of his own name, to continue and even concealed the fraud. Congress,
in the plain language of the statute, made it clear that it sought to exclude untrustworthy
individuals such as Petitioner from participating in federal health care programs.
Likewise, Congress did not limit exclusions to only those individuals who committed
fraud themselves. Similarly, the plain language of the statute indicates that Congress
intended to exclude such untrustworthy individuals from participation in federal health
care programs in order to deter health care fraud. Congress sought to exclude individuals
who were convicted of felony offenses and whose crimes were “connected to” the
delivery of any health care item or service and were “relating to” fraud. Nothing in
Congress’s language limited such an exclusion to offenses that involved federal funds.

Finally, the 10-year exclusion period appears to be of shorter duration than the exclusion
periods sustained by the Board in other cases in which it affirmed an increased exclusion
period based on three aggravating and one mitigating factor. See Juan De Leon, DAB
No. 2533 (2013) (sustaining 20-year exclusion based on three aggravating factors
including financial loss of $750,000, criminal conduct over 20 months, and sentence
including incarceration, as well as one mitigating factor of government cooperation);
Wilder, DAB No. 2416 (establishing an 18-year exclusion based on three aggravating
factors including financial loss of over $4,000,000, criminal conduct over two years, and
12

other convictions, as well as one mitigating factor of government cooperation). While
the loss that Petitioner’s criminal conduct caused is substantially less than in De Leon and
Wilder, the length of Petitioner’s criminal conduct was longer than in either of those
cases. The significantly shorter exclusion period that the IG imposed against Petitioner
adequately weighed the severity of the three aggravating factors and one mitigating factor
based on prior Board decisions. Therefore, the 10-year exclusion period is not
unreasonable.

V. Effective Date of Exclusion

The effective date of the exclusion, September 20, 2015, is established by regulation, and
Iam bound by that provision. 42 C.F.R. §§ 1001.2002(b), 1005.4(c)(1)

VI. Conclusion

For the foregoing reasons, I affirm the IG’s decision to exclude Petitioner from
participation in Medicare, Medicaid, and all federal health care programs for a minimum
period of 10 years.

/s/
Leslie C. Rogall
Administrative Law Judge