Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Selma Zimmerman, DATE: March 16, 1995
Petitioner,

Docket No. C-94-414
Decision No. CR364

-v-

The Inspector General.

DECISION

By letter dated June 10, 1994, the Inspector General
(I.G.) notified Petitioner that she was being excluded
for five years from participation in the Medicare,
Medicaid, Maternal and Child Health Services Block Grant
and Block Grants to States for Social Services programs
specified in sections 1128(a) and 1128(h) of the Social
Security Act (Act). The I.G. cited section 1128(a) (2) of
the Act as the basis for imposing and directing this
exclusion. Petitioner requested a hearing to contest her
exclusion. With her hearing request, she filed also a
Brief in Support of Request for Hearing (P. Hrg. Req. Br.
at (page)).

I held a prehearing conference in this case on September
1, 1994. The parties filed the following documents
pursuant to the schedule established at this conference:
I.G.'s Motion for Summary Disposition; I.G.'s Proposed
Findings of Fact and Conclusions of Law; I.G.'s Brief in
Support of Motion for Summary Disposition (I.G. Br. at
(page)); I.G.'s exhibits numbered 1 to 4 (I.G. Ex. 1 to
4)'; Petitioner's Response to Motion for Summary

1 I have re-numbered the I.G.'s exhibits to
include the affidavit which the I.G. submitted as an
attachment to her brief. Accordingly, I refer to the
affidavit of Johanna G. Evans, Investigative Assistant
for the Office of the Inspector General, as I.G. Ex. 1;
the warrant of arrest and accompanying affidavit as I.G.
Ex. 2; the court's entry of Petitioner's conviction as
I.G. Ex. 3; and the court's entry of Petitioner's
2

Disposition (P. Resp. to Motion for Summ. Disp. at
(page)); Petitioner's Brief in Support of Response to
Motion for Summary Disposition (P. Br. at (page));
Petitioner's Proposed Findings of Fact and Conclusions of
Law (P. Prop. FFCLs. at (page) ) ; Petitioner's exhibits
numbered 1 to 3 (P. Ex. 1 to 3)*; I.G.'s Brief in Reply
to Petitioner's Brief (I.G. Reply at (page)).

Neither party has objected to the admissibility of the
other's exhibits. Therefore, I have admitted into
evidence all exhibits offered by the parties.

Having considered the arguments and submissions of the
parties, I grant the I.G.'s summary disposition motion
(summary judgment motion) for the reasons stated below.

I. ISSUES NDINGS F, Cc. bie) OF. W

I identified the following issues in my October 5, 1994
Order and Schedule for Filing Briefs and Documentary
Evidence:

A. Whether the I.G. had a basis upon
which to exclude Petitioner; and

B. Whether the length of the exclusion
imposed and directed against Petitioner
is reasonable.

However, because the I.G. imposed and directed an
exclusion of only five years against Petitioner, the
reasonableness of the exclusion period is wholly
controlled by whether the I.G. had a basis for excluding
Petitioner under section 1128(a)(2) of the Act. See 42
C.F.R. § 1001.2007(a) (2). As further explained below,
section 1001.2007(a)(2) specifies that the reasonableness
of the exclusion period is not an issue for hearing
where, as here, the I.G. has imposed an exclusion of five
years under section 1128(a) of the Act. Id.

acquittal as I.G. Ex. 4.

2 Petitioner's exhibits were not numbered. I
have numbered Petitioner's exhibits to conform with my
Order of October 5, 1994. Thus, the court's entry of
Petitioner's conviction is P. Ex. 1; the court's entry of
Petitioner's acquittal is P. Ex. 2; and the affidavit of
Selma Zimmerman is P. Ex. 3.
3

To resolve the controversies before me, I issue the
following findings and conclusions, with citation to the
parts of my decision at which I discuss each finding or
conclusion in greater detail:

1. There are no material facts in
dispute in this case. Thus, the case can
be decided on the parties' summary
judgment motions.’ Pages 3-5.

2. Petitioner was convicted of a
criminal offense. Pages 5-6.

3. Petitioner was convicted of a criminal
offense which related to a "patient" and was "in
connection with delivery of a health care item or
service." Pages 6-7.

4. The criminal offense which Petitioner was
convicted of is "related to neglect" of a
patient. Pages 8-12.

5. Petitioner's five-year exclusion is
reasonable as a matter of law. Page 12.

6. Petitioner is not entitled to an award of the
costs she incurred in opposing the I.G.'s summary
judgment motion. Page 12.

7. %I grant the I.G.'s summary judgment
motion in full. Page 13.

II. DISCUSSION

A. The case can be decided on the basis of the I.G.'s
ary judgment motion a etitioner's response to
that motion.

As the Secretary's delegate, the I. G. has the authority
to impose and direct an exclusion pursuant to section
1128(a) (2) of the Act where an individual has been
"convicted, under Federal or State law, of a criminal
offense relating to neglect or abuse of patients in
connection with the delivery of a health care item or
service." Act, section 1128(a)(2). In cases where the

3 Even though Petitioner has not styled her
filings as a cross-motion for summary judgment, I have
construed them as such.
4

foregoing statutory criteria are met, the I.G. must
exclude the convicted individual or entity for a period
of not less than five years. Act, section 1128(c) (3) (B).
Therefore, in cases such as this one, where the I.G. has
imposed an exclusion of only five years pursuant to what
the Secretary's regulations term a "mandatory exclusion"
under section 1128(a) of the Act, the excluded individual
does not have a right to a hearing on whether that five-
year period of exclusion is reasonable. 42 C.F.R. §
1001.2007(a) (2); 42 C.F.R. Part 1001, Subpart B.
Accordingly, an exclusion of five years is mandatory and
reasonable as a matter of law where the I.G. had the
basis for imposing and directing an exclusion under
section 1128(a)(2) of the Act. However, if the facts
fail to establish the requisite basis for an exclusion
under section 1128(a)(2) of the Act, then the five-year
exclusion is per se invalid, and, therefore,
unreasonable.

The I.G. has chosen to file a summary judgment motion in
this case. The regulations authorize me to decide a case
by summary judgment where there is no material fact in
dispute. 42 C.F.R. § 1005.4(b) (12). In adjudicating the
I.G.'s summary judgment motion, I have followed the
principles contained in Rule 56 of the Federal Rules of
Civil Procedure and the interpretations of administrative
law judges and appellate panels of the Departmental
Appeals Board (the Board).‘ See, e.g., Thelma Walley,
DAB 1367 (1992).

To prevail on a summary judgment motion, a moving party
must establish, by use of affidavits or other filings of
record, that there is no genuine issue as to any material
fact and that the movant is entitled to judgment as a
matter of law. Fed. R. Civ. P. 56(c). That is to say,
the party moving for summary judgment

has the initial burden of showing the
absence of any genuine issue as to all
the material facts which, under
applicable principles of substantive law,
entitle that party to judgment as a
matter of law. If the documents before

4 Even though the Federal Rules of Civil
Procedure have no binding force in administrative
proceedings, administrative law judges have often used
them for guidance. In addition, the summary judgment
criterion stated in the Secretary's regulation is the
same as that contained in the Federal Rules. 42 C.F.R. §
1005.4(b) (12); Fed. R. Civ. P. 56.
5

the court fail to establish clearly that
there is no genuine issue as to any
material fact, the motion must be denied.

Walley DAB 1367 at 6 (emphasis in original) (citations
omitted). When the summary judgment motion is properly
supported, the adverse party may not rest upon mere
allegations or denials. Fed. R. Civ. P. 56(e). The
function of summary judgment is to pierce the pleadings
and to assess the parties' proof to determine whether
there is a genuine need for further proceedings.
Therefore, summary judgment may be entered if the adverse
party does not respond to a properly supported summary
judgment motion or does not set forth specific facts
showing that there is a genuine issue that should be
reserved for trial or other disposition. Fed. R. Civ. P.
56(e).

Petitioner argues that the I.G. is not entitled to
summary judgment as a matter of law. As discussed below,
in her opposition to the I.G.'s summary judgment motion,
Petitioner has not demonstrated any genuine issue as to
any material fact. Indeed, Petitioner describes her
arguments as "legal rather than factual." P. Resp. to
Motion for Summ. Disp. at 1. According to Petitioner,
her conviction was, "as a matter of law, unrelated to
abuse or neglect." Id.

Having considered the facts and arguments of record in
this case, I conclude that the I.G. is entitled to
prevail as a matter of law. I have therefore resolved
this case in full by entering summary judgment for the
I.G.

B. Petitioner wa: onvict. crimina f .

Under Section 1128(i)(1) of the Act, an individual is
considered to have been "convicted" when a judgment of
conviction has been entered against the individual or
entity. In this case, Petitioner has admitted that she
was convicted of failing to report abuse. According to
court documents supplied by both parties, Petitioner was
found guilty on December 30, 1992, of failing to "report
a case of suspected abuse, neglect, or exploitation . .
." in violation of ARK. CODE ANN. § 5-28-202 (1987), and
a judgement of conviction was entered against her by the
Municipal Court of Lonoke, Arkansas. P. Br. at 2, I.G.
Br. at 1; I.G. Ex. 3. Based on these undisputed facts, I
conclude that Petitioner was "convicted" of a criminal
6

offense within the meaning of section 1128(i) of the Act.
I.G. Ex. 2, 3.

c. etitioner wa victed al_ offense ch
was _ related to a "patient" and was "in connection with
t i ry it. vice."

Petitioner was Assistant Administrator of the Zimmerman
Nursing Home in Carlisle, Arkansas. P. Hrg. Req. Br. at
1. Based on the parties submissions, I have no doubt
that the Zimmerman Nursing Home was in the business of
providing health care to its residents during the entire
period Petitioner was its Assistant Administrator.
Therefore, I find that the residents of the Zimmerman
Nursing Home are its "patients," within the ordinary
definition of that word.

Petitioner acknowledges that her conviction arose out of
an incident involving a resident of the Zimmerman Nursing
Home named "Jane Doe." P. Br. at 1; P. Prop. FFCLs. at
1. According to Petitioner, Jane Doe was a schizophrenic
with delusional tendencies and a history of mental
problems. Id. On the day of the incident which led to
Petitioner's conviction, Jane Doe accused Petitioner of
beating her. Id. Petitioner was subsequently tried and
convicted of failing to report Ms. Doe's allegations of
abuse. P. Br. at 2. These undisputed facts of record
leave no doubt that Jane Doe was living in Zimmerman
Nursing Home in order to receive health care items or
services.

Even if the record before me were less clear as to the
status of the individual who claimed to have been beaten
by Petitioner, I could conclude from the elements of the
Arkansas Code under which Petitioner was convicted that
the alleged victim of suspected abuse was in the
Zimmerman Nursing Home for the receipt of health care
items or services. Arkansas law provides for a penalty
which must be invoked against any individual “required by
this chapter to report a case of suspected abuse," when
such individual fails to do so. ARK. CODE. ANN. § 5-28-
202 (1987) (emphasis added). Section 5-28-203,
incorporated by section 5-28-202, describes the
individuals who are "required by this chapter" to make a
report of suspected abuse.

Section 5-28-203 describes the individuals who are under
a duty to report suspected abuse. Under part (a)(1) of
section 5-28-203, any "physician, surgeon, .. . resident
intern, registered nurse, hospital personnel who are
engaged in the administration, examination, care, or
7

treatment of persons," must report any "reasonable"
suspicions of abuse. Part (a) (2) of section 5-28-203
provides that "{w]henever a person is required to report
under this chapter in his capacity as a member of the
staff [or] an employee ina facility, .. . he shall
immediately notify the person in charge of the
institution [or] facility, - »- +» or his designated agent

. . ." This person in charge of the institution or
facility "shall then become responsible for making a
report or cause a report to be made." Id. Thus, the
Arkansas Code, by its clear terms, regulates the actions
of those who deliver health care services.

Section 5-28-203 imposes this duty to report whenever
there is reasonable cause to suspect that an "endangered
adult" may be subject to abuse. As defined by the
Arkansas Code, "Endangered adults" are adults living
inside or outside of a long-term care facility who are
“found to be in a situation or condition which poses an
imminent risk of death or serious bodily harm to that
person" and who lack the ability "to comprehend the
nature and consequence of remaining in that situation or
condition." ARK. CODE ANN. § 5-28-101(1)(A). In this
case, Petitioner could not have been convicted absent a
complaint by an endangered individual whose survival
necessitated the delivery of health care services for her
care and maintenance. Furthermore, Petitioner's failure
to report could not have resulted in her conviction had
the Zimmerman Nursing Home not been a health care
facility, had Jane Doe not been an "endangered adult"
patient residing there at the time of the alleged abuse,
and had Petitioner not been the Assistant Administrator
of the Zimmerman Nursing Home and the individual to whom
Jane Doe alleged the abuse.

I find, therefore, that Petitioner's conviction related
to a "patient" and was "in connection with the delivery
of a health care item or service" within the meaning of
section 1128(a)(2) of the Act.

5 This section of the statute also imposes a
reporting duty on employees of the Department of Human
Services and the head of the agency. However, there is
no evidence that Petitioner was an employee of the
Department of Human Services; nor was she the head of any
agency at the time of the incident involving "Jane Doe."
8

D. ner's ense is rela o the "ne ct" of a

The I.G. does not contend that Petitioner's conviction is
related to the abuse of any patient. I.G. Br. at 11.

The I.G. contends only that Petitioner's conviction is
for a criminal offense related to the neglect of a
patient. Id. Having considered Petitioner's submissions
to the contrary, I find that Petitioner's conviction for
failure to report abuse, pursuant to section 5-28-202 of
the Arkansas Code, is "related to neglect" of a patient,
within the meaning of section 1128(a)(2) of the Act.

1. Petitioner's conviction establishes
that Petitioner had an affirmative duty
to report the abuse alleged by Jane Doe.

In an earlier decision, I analyzed the relationship
between section 1128(a)(2)'s reference to patient neglect
and a conviction for failure to report an incident of
suspected patient abuse. Glen E. Bandel, DAB CR261
(1993). In Bandel, the petitioner was in’ charge of the
health care facility where he worked, and, in that
capacity, he had a duty under an Iowa statute to report
any incident of suspected dependent adult abuse. I found
that the State law under which Mr. Bandel was convicted
created a duty of care to protect the health, safety, and
well-being of the dependent adult patients in his charge.
In failing to comply with the mandatory reporting
requirements of the State statute involved, Mr. Bandel
neglected a dependent adult patient's right to an aspect
of care especially recognized and required by the State
reporting law. Therefore, the resultant conviction in
Iowa State court was related to patient neglect within
the meaning of section 1128(a)(2) of the Act.

In this case, Petitioner asserts that she did not have a
duty to report suspected abuse under Arkansas law because
she was the one falsely accused of having abused the
patient and, therefore, she did not have any "reasonable
cause" to suspect abuse, as required under section 5-28-
203. P. Br. at 6.. Petitioner contends also that she was
not "the person in charge" of the Zimmerman Nursing Home,
and therefore, it was not her responsibility to report
the incident pursuant to section 5-28-203(a)(2). P. Hrg.
Req. Br. at 2. Petitioner alleges that "by unwritten
policy," the Director of Nursing was the official
responsible for reporting any incidents of suspected
abuse at the Zimmerman Nursing home. Id. Moreover,
Petitioner argues that since the Director of Nursing
reported the incident the day after it occurred, there
9

was no need for Petitioner to "make a redundant reporting
call." Id.

Both arguments, however, are collateral attacks on
Petitioner's conviction, and I am not authorized to
consider them. 42 C.F.R. § 1001.2007(d). As discussed
earlier, Petitioner's conviction was for failure to
report suspected abuse under section 5-28-202, which
cross-references section 5-28-203. These State statutes
contain the elements that must be proven for a
conviction. Therefore, Petitioner's conviction means
that Petitioner was found to have had a duty to report
Jane Doe's allegation of abuse, and that Petitioner
wilfully failed to make this report. See, e.g., I.G. Ex.
3 and State statutes cited therein.

I must accept as valid the findings of fact inherent in
the conviction itself. See, 42 C.F.R. § 1001.2007(d).
Petitioner's arguments to the contrary are of no legal
weight. I cannot allow Petitioner to use federal
exclusion hearing procedures to challenge her State
conviction. :

2. Even though Petitioner was
not convicted of actual
neglect, her conviction was for
a criminal offense "relat{ed]
to neglect," within the meaning
of section 1128(a) (2).

Petitioner cites legislative history, the absence of a
conviction for neglect under State law, and certain
language from my decision in Bande] to support her
contention that she was not convicted of a criminal
offense "related to neglect." P. Br. at 3-6. For
example, Petitioner argues that, because the Arkansas
Code does not specifically include the offense of failure
to report abuse in its definition of "neglect,"
Petitioner's conviction is not "related to neglect" under
Arkansas law. Moreover, Petitioner contends that the
Arkansas Code differs from the Iowa reporting statute I
considered in Bandel; and that therefore, I may not rely
on Bandel for the proposition that failure to report
suspected abuse is a form of neglect. According to
Petitioner, her position is supported by my observation
in Bandel that "Petitioner's [i.e., Mr. Bandel's]
omission might not relate to patient neglect in
jurisdictions without laws similar to Iowa's [statute
imposing a reporting duty}]." P. Br. at 4.

I reject Petitioner's arguments.
10

I note first by way of background that Congress did not
intend for section 1128(a) (2) of the Act to reach only
those persons who have directly abused or neglected
patients. Section 1128(a)(2) of the Act does not require
a conviction for actual patient abuse or neglect; rather,
it requires a conviction for an offense that related to,
entailed, or resulted in, the abuse or neglect of a
patient. Section 1128(a)(2) of the Act; 42 C.F.R. §
1001.101(b) (1992). In promulgating regulations to
implement the Act, the Secretary has noted especially
that, "the offense {which] is the basis for the exclusion
need not be couched in terms of patient abuse or
neglect." 57 Fed. Reg. 3303 (1992). The illustrative
example which is given in the Federal Register to prove
this point is a conviction for embezzlement of nursing
home funds that resulted in the neglect of patients. Id.

In addition, Petitioner has misinterpreted a statement I
made in Bandel. P. Br. at 5. My observation that Mr.
Bandel's omission might not relate to patient neglect in
jurisdictions without laws similar to Iowa's section
135B.1(7) does not mean that, for me to find Petitioner's
conviction to be related to patient neglect in this case,
the Arkansas reporting statute must be the same as Iowa's
reporting statute. Nor did my statement mean that the
omission committed by Mr. Bandel is the only type of
offense I would consider to be related to patient neglect
in Iowa or elsewhere. I made the statement quoted by
Petitioner in the course of noting that I was deciding
the issues in Bande] based on the facts and laws relevant
to that case. In short, I was pointing out that I decide
the "related to patient neglect" issue on a case by case
basis.

It is true that this case differs from Bande] in that
Petitioner herein was convicted of failing to report an
incident in which she was the alleged abuser, whereas Mr.
Bandel was convicted for failing to report an incident in
which another employee was the alleged abuser. However,
such a distinction is without any legal significance
regarding the issue as to whether each conviction was
related to the neglect of patients. Both the petitioner
in Bandel and Petitioner in this case were convicted of
violating a state reporting statute, and of breaching
their duty to report suspected incidents of patient
abuse.

In several decisions involving fact patterns and state
reporting laws similar to those before me here, the Board
has affirmed the I.G.'s determination that a conviction
for failure to report suspected or alleged abuse is
“related to neglect" of patients, within the meaning of
11

section 1128(a)(2) of the Act. E.g., Dawn Potts, DAB
CR120 (1991); Vicky L. Tennant, R.N., DAB CR134 (1991);
Carolyn Westin, DAB CR229 (1992), aff'd DAB 1381 (1993),

aff'd sub nom., Westin v. Shalala, 845 F. Supp. 1446 (D.
Kan. 1994). In Westin, the petitioner was convicted for

failing to file an incident report regarding a resident
of the nursing home where she was an administrator. An
appellate panel of the Board found that because the Act
explicitly provides for exclusion when a party is
convicted of a crime "related to" patient neglect or
abuse, "it does not matter that the term ‘neglect' was
not specifically mentioned during the criminal process."
Westin, DAB 1381 at 12. On judicial review, the U.S.
District Court agreed and held as follows:

{T]here is no requirement that the
Secretary demonstrate that actual neglect
or abuse of patients occurred, nor is
there a requirement that the individual
or entity be convicted of an actual
offense of patient neglect or abuse. The
phrase "relating to" clearly encompasses
a broader range of conduct than actual
neglect or abuse.

Westin, 845 F. Supp. at 1450. The court affirmed the
imposition of the five-year exclusion under section
1128(a)(2) of the Act. Id. at 1449, 1454.

For the foregoing reasons, I conclude that Petitioner was
convicted of an offense related to patient neglect even
though the State of Arkansas did not charge her with
actually neglecting Jane Doe. Petitioner was convicted
under section 5-28-202 of the Arkansas Code, which
incorporates section 5-28-203 by reference. Since
neither of these sections uses the term "neglect," I do
not find it necessary to interpret the definition of
"neglect" contained in section 5-28-101, as urged by
Petitioner. P. Br. at 5-6.

3. Petitioner's conviction is

“relat[ed] to neglect," within

the meaning of section

1128(a) (2), even though she was
acquitted of an assault charge.

Petitioner contends that her actions did not result in
the neglect of a patient. Petitioner reasons that
because the Municipal Court of Lonoke, Arkansas found her
to be not guilty of abuse, her failure to report an
incident of abuse was not an act of neglect within the
meaning of section 1128(a)(2) of the Act. P. Br. at 4.
12

However, while Petitioner's evidence establishes that she
was found not guilty of assault under Arkansas law,

(P. Ex. 2.), I find that Petitioner's conviction "relates
to neglect," even though she has not been found guilty of
patient abuse. The I.G. has not contended that
Petitioner's conviction for failure to report suspected
abuse is related to patient abuse under section
1128(a)(2) of the Act. The I.G. argues only that
Petitioner's conviction is related to patient neglect.
I.G. Reply at 7.

Petitioner's acquittal of an assault charge does not
negate the fact that her conviction relates to the
neglect of a patient. As I explained in the preceding
section, in determining whether a criminal offense is
"relat[ed] to neglect" under section 1128(a)(2) of the
Act, there is no requirement for proof that a patient was
actually neglected or abused. E.g., Westin, 845 F. Supp.
at 1450.

E. T ngth of Ss ected
agains: titioner i sonable a: law.

Under the facts of this case, I cannot consider
Petitioner's argument that the length of her exclusion is
unconscionable. P. Br. at 7; 42 C.F.R. §
1001.2007(a) (2). Section 1128(a)(2) mandates that
parties who are convicted of offenses described in that
section must be excluded from Medicare and Medicaid for
five years. Congress gave the Secretary no discretion to
impose an exclusion of less than five years in such
cases. Therefore, I must affirm the five-year exclusion
imposed and directed against Petitioner by the I.G.

oner_is n t Wi of co

Petitioner requests an award of the costs she has
incurred in her opposition to the I.G.'s summary judgment
motion. P. Resp. to Motion for Summ. Disp. at 1.
Petitioner's request is premised on her contention that
she is entitled to prevail as a matter of law. Id.
Therefore, my conclusion that the I.G. (and not
Petitioner) is entitled to judgment as a matter of law is
dispositive of Petitioner's request for costs. I do not
fina it necessary to consider whether Petitioner had a
proper regulatory or statutory basis for having filed
such a request in the first instance.
13
CONCLUSION

For the foregoing reasons, I have concluded that there
exists no genuine issue of fact concerning the I.G.'s
basis for imposing and directing an exclusion against
Petitioner pursuant to section 1128(a)(2) of the Act.
The I.G. is entitled to judgment on this issue as a
matter of law. Also as a matter of law, the length of
the exclusion in this case (five years) is proper. I
therefore grant the I.G.'s summary judgment motion in
full and sustain the exclusion imposed and directed
against Petitioner.

/s/

Mimi Hwang Leahy
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

Villa Northwest
Restorative Care Center,

DATE: February 17, 1995

Petitioner,
Docket No. C-94-372
-Vve - Decision No. CR362
Health Care Financing
Administration.

DECISION

Petitioner requested a hearing to contest the termination
of Petitioner's Medicare provider agreement (subsequently
rescinded) by the Health Care Financing Administration
(HCFA). HCFA rescinded its termination of Petitioner's
agreement prior to the date on which it was to take
effect. Petitioner contends that 1) it was harmed by the
proposed termination, 2) such harm was not cured by the
recession of the termination action prior to its
effective date, and 3) it is entitled to a hearing to
address the issues raised by HCFA's actions and to
exonerate itself. I do not agree that Petitioner is
entitled in this forum to address either HCFA's rescinded
termination or the collateral State effects arising from
such termination. For the following reasons, I DISMISS
Petitioner's request for hearing.

BACKGROUND

In response to a complaint, the Texas Department of Human
Services (State survey agency) conducted an
investigational survey of Petitioner (a skilled nursing
facility participating in the Medicare program). The
State survey agency found Petitioner to be out of
compliance with two Level A requirements and identified
four Level B deficiencies. Based upon the violations
found to exist, the State survey agency recommended that
HCFA terminate Petitioner's participation in the Medicare
program. HCFA adopted the recommendation of the State
survey agency and notified Petitioner that its Medicare
provider agreement would be terminated.
2

In an undated letter received by HCFA on June 13, 1994,
Petitioner alleged correction of the deficiencies that
had been identified by the State survey agency. HCFA Ex.
3. Prior to the termination of Petitioner's provider
agreement, HCFA determined that Petitioner had either
corrected or ameliorated the deficiencies. Based on
Petitioner's actions to correct or ameliorate the
deficiencies, HCFA rescinded the termination action prior
to its effective date.' In a letter dated June 15, 1994,
Petitioner requested a hearing to contest HCFA's proposed
termination and the case was assigned to me.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. The State survey agency conducted an investigational
survey of Petitioner from May 24, 1994 through June 6,
1994. HCFA Ex. 3.

2. The State survey agency found Petitioner to be out of
compliance with Level A requirements for quality of care
(42 C.F.R. § 483.25) and for administration (42 C.F.R. §
483.75). HCFA Ex. 2.

3. The State survey agency found Petitioner to be out of
compliance with the following four Level B requirements:
resident rights (42 C.F.R. § 483.10), quality of care (42
C.F.R. § 483.25), pharmacy services (42 C.F.R. § 483.60)
and administration (42 C.F.R. § 483.75). HCFA Ex. 2, 5.

4. On June 8, 1994, the State survey agency recommended
that HCFA terminate Petitioner's provider agreement.
HCFA Ex. 2.

5. In a letter dated June 13, 1994, HCFA informed
Petitioner that it agreed with the recommendation of the
State survey agency and that Petitioner's Medicare
provider agreement would be terminated effective June 29,
1994. HCFA Ex. 1, 2.

' HCPA submitted six exhibits in conjunction with
its October 5, 1994 motion to dismiss. Petitioner did
not object to any of these exmibits. Accordingly, I
admit HCFA exhibits 1 - 6. Petitioner submitted three
exhibits, marked as P. Ex. 1, P. Ex. A, and P. Ex. B. I
have remarked these exhibits es P. Ex. 1, P. Ex. 2, and
P. Ex. 3. BP. Ex. 1 is a four page exhibit, that
duplicates HCFA Ex. 1. I reject P. Ex. 1 because it is
duplicative. One exhibit will suffice. I admit P. Ex. 2
and P. Ex. 3 into evidence.
3

6. HCPA's June 13, 1994 notice of termination informed
Petitioner that it was not in compliance with two Level A
requirements and further informed Petitioner that its
noncompliance with these two Level A requirements posed
an immediate threat to patient health and safety. HCFA
Ex. 1.

7. HCFA is required to terminate a skilled nursing
facility which no longer meets a Level A requirement and
such deficiency poses immediate jeopardy to patient's
health and safety. 42 C.F.R. § 489.53(b),

8. HCFA's June 13, 1994 notice of termination to
Petitioner was accompanied by a detailed listing of each
deficiency that had been identified by the State survey
agency and specifically identified each Level A
requirement that Petitioner was allegedly not in
compliance with, and identified tne standards and
elements within the requirement and the basis for
Petitioner's alleged noncompliance with each Level A
requirement. HCFA Ex. 1, 2. °

9. On June 13, 1994, HCFA received an undated letter from
Petitioner alleging correction of each of the
deficiencies that had been identified by the State survey
agency. HCFA Ex. 3, 4.

10. HCFA determined Petitioner's allegations of
correction to be credible and authorized the State survey
agency to conduct a follow-up survey. HCFA Ex. 4, 5.

11. On June 21, 1994, the State survey agency conducted a
follow-up survey and found Petitioner had corrected or
ameliorated its deficiencies such that they no longer
posed an immediate threat to patients' health and safety.
HCFA Ex. 5.

12. HCFA rescinded its termination of Petitioner's
provider agreement on June 24, 1994, five days prior to
the date the termination was to become effective (June
29, 1994). HCFA Ex. 1 - 5.

13. Petitioner's provider agreement was never terminated.
Finding 12.

14. HCFA's June 13, 1994 determination that Petitioner
would be terminated as of June 29, 1994, subsequently
rescinded by HCFA's June 24 letter is not an “initial
determination." 42 C.F.R. § 4689.53, 42 C.F.R. §
498.3(b) (1) - (11), 42 C.F.R. § 498.5; Pages 4 - 5.
4

15. Petitioner has no right to appeal HCFA's June 13,
1994 determination to terminate Petitioner's Medicare
provider agreement effective June 29, 1994. Pages 4 - 6.

16. HCFA's determination that patients' health and safety
were at risk based on Level A violations is not
appealable in any event. Finding 6; Pages 7 - 8.

17. All but two of the collateral harms alleged by
Petitioner are prospective, and not ripe for
determination in any event. Pages 8 - 12.

18. In this forum, I do not have the authority to address
or provide Petitioner relief from the collateral harms,
including those collateral harms that subsequently may
become ripe, Petitioner alleges resulted from HCFA's
rescinded termination. Pages 8 - 12.

19. Petitioner's request for hearing has been rendered
moot by HCFA's rescission of Petitioner's termination
prior to the date such termination was to have gone into
effect. Pages 8 - 12; Findings 12 - 18.

20. Petitioner has not offered any persuasive evidence or
argument from which I can conclude that I have the
authority to hear and decide any of the issues related to
HCFA's rescinded termination of Petitioner. Pages @ -
12; Findings 12 - 19.

21. I do not have the authority to near and decide any of
the issues presented by Petitioner in this case. Pages
4 - 12; Findings 12 - 20.

22. Petitioner's request for nearing in this matter must
be dismissed. Findings 1 - 21.

DISCUSSION

Although HCFA rescinded its terwination of Petitioner's
Medicare provider agreement prior to the date it was to
become effective, Petitioner seeks an opportunity to
challenge HCFA's determination in an effort to repair the
damage Petitioner alleges wae caused by HCFA's actions.
HCFA contends that Petitioner 18 not entitled to a
hearing in this matter because NCFA's determination was
not an "initial determination® witmin the meaning of 42
C.F.R. § 498.5(b), which statee tnat a provider
5

dissatisfied with an initial determination to terminate
its provider agreement is entitled to a hearing before an
administrative law judge (ALJ). Moreover, HCFA contends
that, because the termination was merely proposed and
never finalized, it does not confer upon Petitioner the
right to have a hearing to contest the determination.

HCFA argues that the term "initial determination” as
defined by the regulations does not encompass the
situation at issue in this case, where HCFA's termination
was rescinded prior to the date on which it was to take
effect. HCFA contends that since the rescinded
termination is not an "initial determination" within the
meaning of the regulations, Petitioner has no right to a
hearing.

Petitioner does not dispute that HCFA rescinded its
termination prior to the date on which it was to take
effect. Nonetheless, Petitioner contends that HCFA's
rescinded termination is an initial determination, within
the meaning of 42 C.F.R. § 498.5(b), from which
Petitioner has a right to appeal.

The regulations contain no definition of the term
“initial determination". However, the regulations at 42
C.F.R. § 498.3(b) (1) - (11) specify a list of
determinations by HCFA that are considered to be initial
determinations. This list includes "the termination of a
provider agreement in accordance with § 489.53 of this
chapter... ." 42 C.F.R. § 498.3(b)(7).?

Petitioner's position is that HCPA made an “initial
determination" when it informed Petitioner that it would
be terminated as of June 29, 1994. According to
Petitioner, the fact that HCFA acted to terminate
Petitioner in accordance with 42 C.F.R. § 489.53 is
dispositive of HCFA making an “initial determination"
pursuant to 42 C.F.R. § 498.3(b)(7). Petitioner contends
this is true even though the tersgination was rescinded
prior te the date it was to become effective.

Becau@e Petitioner interprets HCFA's actions in this case
as an initial determination, Petitioner contends that it

is entitled to a hearing to contest such determination in
accordance with 42 C.F.R. § 498.5(b).

2? pursuant to 42 C.F.R. § 489.53(a)(1), HCPA may
terminate an agreement with any provider who is not
complying with the provisions and regulations of the
Medicare program.
6

The regulations at 42 C.F.R. § 489.53(b) provide that
"HCFA will terminate a SNF's provider agreement if it
determines that -- (1) The SNF no longer meets a level A
requirement specified in part 483, subpart B of this
chapter; and (2) The SNF's deficiencies pose immediate
jeopardy to patients’ health and safety."

HCFA's position is that its action against Petitioner is
a "proposed termination" that is not an "initial
determination" within the meaning of 42 C.F.R. §
498.3(b)(7). HCFA's argument is that, because a
"proposed termination” is not specifically listed in the
regulations as an "initial determination" which gives
Petitioner appeal rights, such proposed termination gives
Petitioner no right to appeal. Moreover, HCFA argues
that, because the termination was rescinded prior to the
date it was to go into effect, even if it could be
construed as an initial determination, it was never
finalized, nor has there been any final agency action
from which Petitioner has the right to appeal.

CF 4 final d . w
Petitioner to appeal under 42 ¢.F.R, § 498,.3(b) (7).

Although I do not find support for HCFA's
characterization of its actions in this case as a
"proposed termination", I do agree that HCFA never
terminated Petitioner's provider agreement. The
regulation at 42 C.F.R. § 498.3(b)(7) does specify that
HCFA's termination of a provider agreement is an action
which gives rise to a right to appeal. However, in this
case, the termination was never effectuated. My
conclusion is that 42 C.F.R. § 498.3(b)(7) mandates that
the agency action to terminate Petitioner's provider
agreement must go into effect vefore Petitioner has the
right to appeal in this forus.

The State survey agency found Petitioner to be out of
compliance with several important requirements. By
letter dated June 13, 1994, HCFA sent written notice to
Petitioner of the alleged deficiencies found by the State
survey agency and informed Petitioner that its Medicare
provider agreement would be terwinated on June 29, 1994.
However, prior to the date tne termination was to have
taken place, Petitioner claised to nave corrected the
alleged deficiencies and requested tnat HCFA conduct
another survey. The regulations do not require that HCFA
resurvey an entity prior to tne date of termination of
its provider agreement. However, HCFA provided
Petitioner the opportunity to be cesurveyed prior to June
29, 1994, the date of termination. HCFA resurveyed
Petitioner on June 21, 1994 ard found that Petitioner had
7

either corrected all alleged deficiencies or that the
deficiencies no longer posed a threat to resident health
or safety. HCFA Ex. 5. Based on the results of the re-
survey, in a letter dated June 24, 1994, HCFA rescinded
its termination before it was to take effect (June 29,
1994).

Accordingly, because HCFA rescinded its termination of
Petitioner before it ever took effect, such rescinded
termination does not qualify as an initial determination
within the meaning of 42 C.F.R. § 498.3. Simply, HCFA
took no final action against Petitioner. By the very
words of the regulation, it is tne actual termination
that gives a provider the right to appeal, not the
decision to terminate. However, in this case,
Petitioner's provider agreement was never terminated
because HCFA's determination to terminate as reflected in
its letter of June 13, 1994 was rescinded on June 24,
1994, five days prior to the date it was to take effect.
Because Petitioner's right to a nearing is based on the
presence of an actual termination, not merely a proposed
termination that is never effectuated, Petitioner has no
right to a hearing in this case.

The regulations at 42 C.F.R. § 489.53 provide bases for
HCFA to terminate a provider.’ The regulation at 42
C.F.R. § 489.53(b) mandates that HCFA will terminate the
provider agreement of any SNF that HCFA determines no
longer meets a level A requirement and whose deficiencies
pose an immediate risk to patients' health and safety.

} The regulations at 42 C.F.R. § 489.53(a) provide:

HCFA may terminate the agreement with any
provider if HCFA finds that any of the
following failings 1s attributable to that
provider:

(1) It is not complying with the provisions of
title XVIII and tne applicable regulations of
this chapter or witm tne provisions of the
agreement. .

(3) It no longer seets the appropriate
conditions of participation or requirements
(for SNFs and NFs) see forth elsewhere in this
chapter.
3

The wording of this regulation indicates that HCFA must
act to terminate a facility found to meet the enumerated
regulatory requirements.

The regulation at 42 C.F.R. § 498.5(b) gives providers
who are dissatisfied with initial determinations the
right to appeal. However, the regulation at 42 C.F.R. §
498.3(a) (1) explicitly provides that any administrative
action other than specifically enumerated at 42 C.F.R. §
498.3(b) is not an initial determination. This
regulation further provides a list of determinations that
are not to be construed as initial determinations.‘
Specifically, 42 C.F.R. § 498.3(d)(10) provides that witn
respect to an SNF that is not in compliance with a
condition of participation or a level A requirement,
HCFA's finding that an SNF's deficiencies pose immediate
jeopardy to patients‘ health and safety is not an initial
determination. Accordingly, in this forum, Petitioner
has no right to contest HCFA's finding that Petitioner's
level A violations posed immediate jeopardy to patients’
health and safety. Nor does tnis finding, which is the
basis for HCFA's mandatory determination to terminate
Petitioner, provide an additional basis for my affording
Petitioner a hearing.

* Among these is 42 C.F.R. § 498.3(d) (10), which
provides as follows:

Administrative actions that are not initial
determinations. Administrative actions other than
those specified in paragraphs (b) and (c) of this
section are not initial determinations and thus are
not subject to this part. Administrative actions
that are not initial deterainations include, but are
not limited to, the following:

« « « (10) With respect to a SNF that is not in
compliance with a condition of participation or a
level A requirement (for SNFs and NFs) -

(i) The finding that tne SNF's deficiencies
pose immediate jeopardy to patients’ health and
safety; and

(ii) When the SNF's Jeficiencies do not pose
immediate jeopardy ne decision to deny
payment for new adm@issions.

Petitioner contends that it is entitled to challenge the
validity of HCFA's decision to terminate because,
although HCFA's decision to terminate was rescinded, it
nonetheless set in motion a chain of events which caused
real and potential harm to Petitioner's business.

Petitioner contends that, even though it was rescinded,
HCFA's determination caused a series of actions that
either were or will be detrimental to Petitioner. These
adverse consequences include the publication by HCFA of
allegedly erroneous State survey agency findings to
physicians and the general public. Petitioner contends
that it has been harmed because, in order to obtain
renewal of its license, it is required to disclose that
it was subject to a termination. Petitioner avers that,
even though the termination was scinded, once it has
been disclosed to State offici it can potentially
result in the State denying a license to Petitioner or
result in the State refusing to renew Petitioner's
license.

Petitioner asserts that it has a stake in the ownership
of nine other facilities in Texas and alleges that this
proposed termination is a “black mark" against this
facility which will apply also to each of the other nine
facilities. In support of tnis argument, Petitioner
cites Texas regulations which specify that “failure to
maintain compliance on a continuous basis" is a criterion
for denying a license renewal. Sag Texas Administrative
Code § 90.17(a)(1)(B). According to Petitioner, failure
to maintain continuous compliance could serve as a ground
for the State denying Petitioner a license should it seek
to operate additional facilities in the future.

Petitfemer alleges also that HCFA's rescinded termination
has @ negative effect on tne day to day business
activities of financing, sortgeging, and structuring

5 petitioner points to tne publication by HCFA in
the Houston Chronicle of its determination to terminate
Petitioner's provider agreement. According to
Petitioner, the Houston Chrepacle is one of two major
newspapers published in Houston. Petitioner further
states that these notices resuited in further
dissemination by television end otner media, which, in
turn, repeated the allegatione.
10

ownership as all of these matters require a provider to
disclose proposed terminations of Medicare agreements
even if the termination is subsequently rescinded.
Petitioner asserts that it is currently in the process of
attempting to obtain approval from the Texas Department
of Human Services for a restructuring of its ownership
and alleges that it has had difficulty in doing so in
large part because of HCFA's rescinded determination.

Finally, Petitioner alleges that its participation in the
Nurse Aide Training and Competency Evaluation Program
(NATCEP) will be terminated by HCFA's determination.
According to Petitioner, this program is critical to
Petitioner's ability to have adequately trained staff at
its facility. Citing 42 C.F.R. § 483.151, Petitioner
contends that it will be terminated from participation in
the NATCEP program if it has been terminated as a
Medicare provider. Petitioner contends that this
termination is compelled by the regulations even though
HCFA rescinded its termination prior to the date upon
which it was to become effective.

I am delegated by the Secretary to hear and decide
appeals of HCFA provider terminations. 58 Fed. Reg.
58,170 (1993). The remedy which I am able to provide
within this framework is relief from an improper,
irregular or otherwise deficient termination of a
facility's provider agreement. $8 Fed. Reg. 58,170
(1993). The Secretary has not delegated to me the
authority to hear, decide, or provide redress for any of
the collateral harms that Petitioner has alleged.
Furthermore, the authority delegated to me by the
Secretary is not so broad as to encompass having a
hearing on a sanction that HCPA never put into effect.
58 Fed. Reg. 58,170 (1993).

HCFA has argued that Petitioner's request for hearing

should be denied as moot. I[ agree. A tribunal has no
jurisdiction over matters which are moot. Tennessee Gas
, 606 F. 2d 1373

eising from of HCFA
terminations, the fact t HCPA rescinded its
termination of Petitioner prior to the imposition of the
sanction is a serious jurisdictional defect which
Petitioner has failed to overcose. The relief that I can
provide Petitioner is no more than it has already
received from HCFA when it rescinded the determination to
terminate Petitioner's provider agreement. Since
Petitioner has already been granted all the relief that {
have the authority to grant, tne request for hearing is
moot.

iL

Even assuming I had the authority to examine each
specific harm that Petitioner alleges resulted from
HCFA's determination to terminate prior to the recession
of that decision, most of the harms which Petitioner has
alleged are prospective. Petitioner has contended that
only two are occurring at the present time. These are
Petitioner's loss of part or all of its NATCEP funding
and Petitioner's difficulty in obtaining business
financing and in restructuring its business ownership.

With regard to Petitioner's loss of NATCEP funding, I
have no authority to hear and decide that issue. As I
have stated above, my authority is limited to deciding
whether a HCFA termination is appropriate. Moreover,
HCFA's assertion that there is an avenue of appeal at the
State level from which Petitioner could have challenged
the NATCEP reduction is unchallenged by Petitioner, as is
HCFA's assertion that it informed Petitioner of this
appeal right.® HCFA Reply at 6.

With regard to the alleged adverse impact HCFA's actions
have had upon Petitioner's ability to obtain financing
and restructure its ownership, I find that, again, there
is no remedy before me. The harw Petitioner alleges
stems from the actions of a State agency fulfilling its
statutory role. Petitioner does not dispute that these
notices were required by regulation. P. Br. at 3.
Moreover, Petitioner has failed to state with any
specificity what these adverse consequences are and how
they are related to HCFA's rescinded termination. Most
importantly, Petitioner concedes that HCFA was required
by regulation to make the State survey agency's findings
of immediate jeopardy and Petitioner's alleged
noncompliance public. 42 C.F.R. § 489.53(c)(4). To the
extent that Petitioner is arguably adversely affected by
such notice, Petitioner has tne ability to remedy such
ill effects by simply advising any interested party that
HCFA rescinded the termination prior to its effective
date.

PetitZomer has failed to present to me any issue which
either the Secretary's delegation or the regulations
gives me the authority to hear. [n any event,

* Indeed, HCFA's counsel hee been informed that
Petitioner has appealed the State survey agency's finding
of immediate jeopardy and its effect on the Medicaid
program and NATCEP. Petitioner is scheduled to go to
hearing on these issues before a State administrative law
judge in vi
on May 9, 1995.
12

Petitioner's concerns are moot since HCFA rescinded its
termination prior to the effective date. Additionally,
in all but two instances, Petitioner has failed to allege
anything but prospective harm, making all but two of the
issues raised by Petitioner not ripe for my
consideration.

In one of the instances where Petitioner has alleged he
has been harmed, he has a remedy in a hearing before a
State administrative law judge. Moreover, in addition to
being mooted by HCFA's rescission, Petitioner has failed
to show any authority for me to hear and decide issues
related to his loss of NATCEP funding. With regard to
Petitioner's contention that HCFA's rescinded termination
has harmed Petitioner's business, again, I find no basis
on which I have the authority to hear and decide these
issues.

CONCLUSION

Petitioner has placed no issue before me which I have the
authority to hear and decide, or which has not been
mooted by HCFA's rescission. Accordingly, I DISMISS
Petitioner's request for hearing.

/s/
fdvard 0. Steinman

Adwjinistrative Law Judge
CERTIFIED MAIL -- RETURN RECEIPT REQUESTED

Kevin A. Reed, Esq.
Davis & Wilkerson, P.Cc.
Attorneys at Law

200 One American Center
600 Congress Avenue
Austin, Texas 78701

and

Mark S. Kennedy, Esq.
Assistant Regional Counsel
DHHS - Region VI

1200 Main Tower, Room 1330
Dallas, Texas 75202


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Charles Addo Yobo, M.D., DATE: March 9, 1995
Petitioner,

Docket No. C-94~-423
Decision No. CR361

-v-

The Inspector General.

DECISION

By letter dated June 27, 1994, Charles Addo Yobo, M.D.,
Petitioner herein, was notified by the Inspector General
(I.G.), United States Department of Health & Human
Services (HHS), that it had been decided to exclude him
for a period of five years from participation in the
Medicare, Medicaid, Maternal and Child Health Services
Block Grant and Block Grants to States for Social
Services programs for a period of five years.' The I.G.
asserted that an exclusion of at least five years is
mandated by sections 1128(a)(1) and 1128(c)(3)(B) of the
Social Security Act (the Act) because Petitioner had been
convicted of a criminal offense related to the delivery
of an item or service under Medicaid.

Petitioner filed a timely request for review of the
I.G.'s action. The I.G. moved for summary disposition.

Because I have determined that there are no material
factual issues in dispute, and that the only matters to
be decided are the legal significance of the undisputed
facts, I have decided the case on the basis of the
parties' written submissions.’

!' In this decision, unless the context indicates
otherwise, I refer to all programs from which Petitioner
has been excluded, other than Medicare, as "Medicaid."

2 The I.G. submitted a brief which I cite as

"I.G. Br. at (page)," and five exhibits which I cite as
"I.G. Ex. (number) at (page)." Petitioner did not file a
response to the I.G.'s brief. Since Petitioner did not
(continued...)
2

I conclude that Petitioner is subject to the minimum
mandatory exclusion provisions of sections 1128(a)(1) and
1128(c)(3)(B) of the Act, and affirm the I.G.'s
determination to exclude Petitioner from participation in
Medicare and Medicaid for a period of five years.

APPLICABLE LAW

Sections 1128(a) (1) and 1128(c) (3) (B) of the Act make it
mandatory for any individual who has been convicted of a
criminal offense related to the delivery of an item or
service under Medicare or Medicaid to be excluded from
participation in such programs, for a period of at least
five years. The I.G. has the authority to extend the
length of a mandatory exclusion if any of the aggravating
factors listed at 42 C.F.R. § 1001.102(b) (1992) are
present. Only if the aggravating factors are found to be
present, and an exclusion for longer than five years is
justified, may the I.G. also consider the mitigating
factors at 42 C.F.R. § 1001.102(c) to reduce the
exclusion. The mandatory exclusion may not be reduced to
less than five years. 42 C.F.R. § 1001.102(c).

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. During the period relevant to this case, Petitioner
was a physician, licensed by the State of New York. I.G.
Ex. 1 at 5.

2. Petitioner was indicted by a grand jury of the United
States District Court, Southern District of New York (the
court), for conspiracy, mail fraud, racketeering, and
money laundering. I.G. Ex. 1

3. The indictment charged that Petitioner participated
in an unlawful plan in which he billed Medicaid for
unwarranted diagnostic tests and examinations performed
on Medicaid patients. The indictment charged also that
Petitioner authorized physicians' assistants to write
prescriptions for drugs which were medically unnecessary
and billed the cost of the drugs to Medicaid. IG. Ex. 1.

4. Petitioner was charged by Superseding Information
with conspiracy to commit Medicaid fraud and mail fraud.
I.G. Ex. 3.

2(...continued)
object to the exhibits offered by the I.G., I admit into
evidence I.G. Ex. 1-5. Petitioner stated his position in
his Request for a Hearing which I cite as "P. Hear.
Req."
3

5. On May 14, 1993, pursuant to a plea agreement,
Petitioner pled guilty to the charges of mail fraud
(i.e., using the mails to receive Medicaid checks
obtained through fraud), conspiracy to commit mail fraud
and Medicaid fraud. I.G. Ex. 3 at 1; I.G. Ex. 5 at 2.

6. The court dismissed the remaining counts of the
indictment. Ex. 4.

7. The court entered judgment against Petitioner for
mail fraud and conspiracy to commit mail fraud and
Medicaid fraud. I.G. Ex. 3; Ex. 4.

8. The court sentenced Petitioner to imprisonment for a
period of one year and one day, and required him to make
restitution to New York State in the amount of
$1,500,000. I.G. Ex. 4.

9. Petitioner cooperated with the government in its
investigation into abuse of the Medicaid program. I.G.
Ex. 37 I.G. Ex. 5 at 2.

10. Petitioner's guilty plea, and the court's acceptance
of that plea, constitutes a conviction, within the
meaning of sections 1128(a)(1) and 1128(i)(3) of the Act.
FFCL 4-7.

11. Petitioner was convicted of a criminal offense
related to the delivery of a health care item or service
under Medicaid, within the meaning of section 1128(a) (1)
of the Act. FFCL 4, 6, 9.

12. Even if mitigating factors are present, the law
requires that an exclusion imposed pursuant to section
1128(a) (1) and 1128(c)(3)(B) must be for at least five
years. 42 C.F.R. § 1001.102.

13. The I.G. properly excluded Petitioner, pursuant to
section 1128(a)(1) of the Act, for a period of five years
as required by the minimum mandatory exclusion provision
of section 1128(c)(3)(B) of the Act.

14. Neither the I.G. nor an administrative law judge
(ALJ) has the authority to reduce a five-year minimum
exclusion mandated by sections 1128(a)(1) and
1128(c)(3)(B) of the Act.

PETITIONER'S ARGUMENT

Petitioner asserts that, in light of his cooperation with
the government, a five-year exclusion is excessive.
4

DISCUSSION
Petitioner's mandatory exclusion may not be reduced to

less than five years.

An individual or entity must be excluded from
participation in Medicare and Medicaid pursuant to
section 1128(a)(1) when two elements are present: (1) the
individual or entity has been "convicted" of a criminal
offense, within the meaning of section 1128(i) of the
Act; (2) the criminal offense leading to the conviction
is related to the delivery of an item or service under
Medicare or Medicaid. In the present case, Petitioner
admits that he was "convicted" of a criminal offense,
within the meaning of section 1128(i)(3) of the Act.
Section 1128(i)(3) states that "an individual is
considered to have been ‘convicted' of a criminal offense
-- when a plea of guilty or nolo contendere by the
individual or entity has been accepted by a Federal,
State or local court." Petitioner pled guilty to mail
fraud, and conspiracy to commit mail fraud and Medicaid
fraud, and the court accepted his guilty plea.’ I.G. Ex.
3; I.G. Ex. 4.

Petitioner also does not contest the I.G.'s determination
that he was convicted of a criminal offense related to
the delivery of a health care item or service. It is
well-established in Departmental Appeals Board (DAB)
decisions that filing false Medicare or Medicaid claims
relates to the delivery of items or services under such
programs and constitutes clear program-related
misconduct, sufficient to mandate exclusion.

Greene, DAB CR19 (1989), aff'd, DAB 1078 (1989), aff'd
sub nom. Greene v. Sullivan, 731 F. Supp. 835, 838 (E.D.
Tenn. 1990). Here, Petitioner conspired to commit
Medicaid fraud, and his mail fraud and conspiracy to
commit mail fraud offenses were related to the delivery
of an item or service under Medicaid, because his
conviction was for "billing the cost of ...

3 The I.G. submitted a judgment of conviction to
prove that Petitioner's guilty plea for mail fraud had
been accepted by the court. See I.G. Ex. 4. The I.G.
did not, however, submit any court documents to
demonstrate that the court accepted Petitioner's guilty
plea for conspiracy to commit mail fraud and conspiracy
to commit Medicaid fraud. In any event, since Petitioner
did not contest the I.G.'s assertion that the court
accepted Petitioner's guilty plea for the two conspiracy
charges, I accept this assertion as true. Thus, I find
on the basis of the I.G.'s uncontested assertion that
Petitioner was convicted of conspiracy to commit Medicaid
fraud and mail fraud, within the meaning of section
1128(i) (3) of the Act.
5

unnecessary drugs to the Medicaid program." I.G. Ex. 1.
I find, therefore, that the offenses underlying
Petitioner's conviction constitute criminal fraud related
to the delivery of Medicaid services.

Petitioner's only argument is that his cooperation with
the government was substantial, and, therefore, his five-
year exclusion is excessive and unjust. The I.G. does
not dispute that Petitioner cooperated with federal
officials in the prosecution of his co-defendants. Nor
does the I.G. dispute that, under applicable regulations,
such cooperation would be considered a mitigating factor,
if the exclusion was for more than five years. In fact,
the I.G. did consider Petitioner's cooperation as
mitigating, to the extent that a five-year exclusion was
imposed, even though Petitioner's offense involved
several aggravating factors. June 27, 1994 Notice of
Exclusion.

As stated above, however, mandatory exclusions may not be
for less than five years. 42 C.F.R. § 1001.102. An ALJ
may not consider mitigating factors such as cooperation
when only the mandatory minimum period of exclusion has
been imposed. Doi . , DAB CR310 (1994).
Neither the I.G. nor the ALJ is authorized to reduce the
five-year mandatory minimum exclusion. Stan .
Guberman, D.C., DAB CR111 (1990); uu WwW. ¢ ,
DAB 1198 (1990). Thus, Petitioner's exclusion may not be
reduced.

CONCLUSION

Sections 1128(a)(2) and 1128(c)(3)(B) of the Act require
that Petitioner be excluded from the Medicare and
Medicaid programs for a period of at least five years,
due to his conviction of a criminal offense related to
the delivery of an item or service under Medicaid.

Neither the I.G. nor the judge is authorized to reduce
the five-year minimum mandatory period of exclusion.
Accordingly, the five-year exclusion is sustained.

/s/

Joseph K. Riotto
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Fred R. Spierer, DATE: February 16, 1995
Petitioner,

Docket No. C-94-405
Decision No. CR359

-v-

The Inspector General.

DECISION

By letter dated July 21, 1994, the Inspector General
(I.G.) notified Petitioner that, effective August 10,
1994, he was to be excluded from participation in the
Medicare, Medicaid, Maternal and Child Health Services
Block Grant and Block Grants to States for Social
Services programs! due to his conviction of a criminal
offense related to the delivery of an item or service
under the Medicaid program. The I.G. informed Petitioner
further that, even though the relevant sections of the
Social Security Act (Act) require a minimum exclusion of
five years for this type of conviction, Petitioner was
being excluded for a period of 10 years based on his
"prior conviction of a program-related criminal offense
and previous administrative sanction record."? The I.G.
notified Petitioner also that the 10-year exclusion was
in addition to a five-year exclusion that was previously
imposed and directed against him by the I.G.

By letter dated August 1, 1994, Petitioner contested his
10-year exclusion, and the case was assigned to me for
hearing and decision.

1 The State health care programs from which
Petitioner was excluded are defined in section 1128(h) of
the Act and include the Medicaid program under Title XIX
of the Social Security Act. Unless the context indicates
otherwise, I will use the term "Medicaid" herein to refer
to all State health care programs listed in section
1128(h).

2? As discussed herein, the I.G. alleged in her
briefs additional facts and regulatory bases to justify
the 10-year exclusion at issue.
2

The parties have agreed to submit the case for decision
on a written record. Order and Schedule for Filing
Briefs and Documentary Evidence, dated September 21,
1994, Having considered the parties' evidence,
objections, and arguments,* I conclude that the 10-year
exclusion imposed and directed against Petitioner by the
I.G. is excessive. I have determined that Petitioner is
subject to an exclusion period of only five years.‘

3 The parties submitted various proposed
exhibits, all of which I have admitted into evidence for
the reasons stated herein. The exhibits submitted by
Petitioner will be referenced as "P. Ex. 1 to 8," and
those submitted by the I.G. will be referenced as "I.G.
Ex. 1 to 22." In addition, the five pages of documents
appended to the I.G.'s initial brief (consisting of the
Declaration of Larry L. Bailey, a computer printout from
the Colorado Department of Social Services, and a letter
dated October 27, 1994) have been remarked and admitted
as a group as 1.G. Ex. 23. The Declaration of Alan K.
Ballard, appended to the I.G.'s reply brief, has been
remarked and admitted as I.G. Ex. 24.

The initial briefs filed by each side will be identified
herein as "P. Br." and "I.G. Br." respectively. The
parties' reply briefs will be identified as "P. Reply"
and "I.G. Reply." (Both of Petitioner's briefs contain
his Declarations and his arguments.)

I am aware there are duplicative exhibits submitted by
both sides. However, because the parties have already
made arguments referencing the exhibits they submitted, I
thought it would be unduly complicated to delete the
duplicative exhibits and renumber others at this point.

4 on this day, I am issuing also a decision in
the case of Chris Mark Spierer, DAB CR360 (1995).
Petitioner and Chris Spierer are brothers. They were
convicted in the same two states for their involvement in
the same criminal enterprises. In 1994, the I.G. imposed
and directed a 10-year exclusion against each brother for
the same reasons. Both cases give rise to the same
issues.

I am issuing separate decisions in the two cases because
the cases have never been consolidated. Only Chris
Spierer has retained a legal representative, and this
representative and Petitioner live in different states.
Petitioner and Chris Spierer's representative were not
available at the same time to participate in a prehearing
conference to discuss the feasibility of consolidating
the cases. For these reasons, the cases have proceeded
(continued...)
3
ISSUES

The issues in this case are:

(a) Whether Petitioner was convicted of a criminal
offense within the meaning of section 1128(i)
of the Act, and

(b) If so,

(i) whether Petitioner's conviction is related to
the delivery of an item or service under
Medicaid, within the meaning of section
1128(a) (1) of the Act;

(ii) whether those affirmative defenses
asserted by Petitioner bar the I.G. from
imposing and directing an exclusion against
Petitioner; and

(iii) whether the exclusion of 10 years is a
reasonable length (or if the length is
unreasonable, then the extent to which the
exclusion should be lengthened or shortened).

FINDINGS OF FACT AND CONCLUSIONS OF LA FFC.
I. The I.G.'s Authority to Exclude Petitioner

1. Petitioner arrived in Colorado during January 1990.
I.G. Ex. 5 at 3; I.G. Ex. 6 at 2.

2. During or about January 1990, Petitioner and others
started a medical supply company called Solid Care
Medical Supplies, Inc. (Solid Care), in Colorado. P. Br.
at 4.

3. Petitioner was the Vice-President of Solid Care. P.
Br. at 4, 12.

4. During an investigation of Solid Care by the Colorado
Medicaid Fraud Control Unit, Petitioner admitted to an
investigator that the plan articulated to him was for him
and others to open a business in Colorado and illegally
bill Colorado Medicaid by submitting fraudulent claims
(e.g., "bill and bill and bill some more"). I.G. Ex. 6
at 2, 4.

4(...continued)
separately despite the fact that, on final analysis, they
are very similar.
4

5. From January 1990 to June 1990, Petitioner was
engaged in a scheme to defraud the Colorado Medicaid
program by billing for items which were not needed by
program recipients, which had not been ordered for
program recipients, or which had not been delivered to
program recipients. I.G. Ex. 6 at 3-4; I.G. Ex. 5 at 6-
7; 1.G. Ex. 23; FFCL 1-4.

6. The scheme involved also a plan to illegally obtain
Medicaid "leads", i.e., names of Medicaid recipients, in
Colorado. I.G. Ex. 5 at 5, 7; I.G. Ex. 6 at 5-6.

7. Petitioner admitted to an investigator that he was
aware that a Solid Care employee was attempting to obtain
Medicaid "leads" that were illegal to possess.

Petitioner wished to obtain these leads so that Solid
Care sales representatives would not have to make sales
by going door to door. I.G. Ex. 5 at 5; I.G. Ex. 6 at 5.

8. Petitioner was aware also that the Solid Care
employee was negotiating to pay $1 for each name
obtained. I.G. Ex. 5 at 5.

9. In 1990, the Colorado Medicaid program paid Solid
Care $65,497.53 in Medicaid reimbursement. I.G. Ex. 23.

10. Some time after June 1990, criminal complaints were
filed against Petitioner and others in the County Court,
Jefferson County, Colorado, charging Petitioner with,
among other things, two counts of bribing a public
servant and one count of conspiracy to commit bribery.
I.G. Ex. 7, 8.

11. On or about November 5, 1990, Petitioner pled no
contest to the count of conspiracy to commit bribery,
which charged:

On and before June 18, 1990, in the County of
Jefferson, State of Colorado, [Petitioner],
with the intent to promote and facilitate the
commission of the crime of bribery, .. ., did
unlawfully and feloniously agree with each
other, and with a person or persons . . ., that
one or more of them would engage in conduct"
which constitutes said crime and an attempt to
commit said crime, and did agree to aid each
other and such other person or persons in the
planning and commission and attempted
commission of said crime, and an overt act in
pursuance of such conspiracy was committed by
one or more of the conspirators ....

I.G. Ex. 7, 15.
5

12. On March 11, 1991, pursuant to his pleading no
contest to the count of criminal conspiracy to commit
bribery, Petitioner was convicted. The court suspended
imposition of Petitioner's sentence on the condition that
Petitioner perform 1000 hours of community service at the
rate of 16 hours per month. I.G. Ex. 9.

13. I do not find credible Petitioner's denials of any
involvement in a scheme to defraud the Colorado Medicaid
program. FFCL 1-12.

14. Petitioner was convicted of a criminal offense
within the meaning of section 1128(i) of the Act. FFCL
10-12.

15. Petitioner was convicted of a criminal offense
related to the delivery of an item or service under the
Medicaid program, within the meaning of section
1128(a)(1) of the Act. FFCL 14; See FFCL 1-13.

16. The Secretary of DHHS (Secretary) has delegated to
the I.G. the authority to determine, impose, and direct
exclusions pursuant to section 1128 of the Act. 48 Fed.
Reg. 21,662 (1983).

17. Based on Petitioner's conviction in Colorado, the
I.G. had authority to impose and direct an exclusion
against Petitioner pursuant to section 1128(a)(1) of the
Act. FFCL 14-16.

18. The I.G. notified Petitioner of the exclusion at
issue by letter dated July 21, 1994.

19. Based on the date of the I.G.'s notice to Petitioner
(July 21, 1994), the exclusion necessarily took effect 20
days thereafter. 42 C.F.R. § 1001.2002(b); section
1128(c)(1) of the Act.

20. I cannot grant Petitioner's request to change the
effective date of the exclusion at issue to November 5,
1990. 42 C.F.R. § 1001.2002(b); But see P. Br. at 15,
23.

II. Petitioner's Arguments to Bar Imposition of the
Exclusion at Issue

21. Petitioner did not prove that he was granted
immunity from the imposition of criminal or civil
sanctions against him. I.G. Ex. 19; But see P. Br. at 6-
7, 12, 14, 22.

22. In this administrative proceeding, Petitioner is not
permitted to plead his innocence, challenge the law under
which he was convicted, or otherwise collaterally attack
6

the merits of his conviction. 42 C.F.R. § 1001.2007(da);
But see P. Br. at 7-8, 22.

23. I cannot give effect to Petitioner's contention
that, during plea negotiations, State prosecutors
violated his rights under the U.S. Constitution by
failing to warn him that he might be excluded from the
Medicare and Medicaid programs. FFCL 22; But see P. Br.
at 7-9, 22.

24. Petitioner did not prove that the I.G.'s
determination to exclude him under section 1128(a)(1) of
the Act is time-barred or violative of his procedural due
process rights. But see P. Br. at 14-15.

III. Framework for Determining the Length of an
Exclusion

25. An exclusion imposed and directed pursuant to
section 1128(a)(1) of the Act must be for a period of at
least five years. Act, sections 1128(a)(1),
1128(c) (3) (B); 42 C.F.R. § 1001.102(a).

26. The regulations issued by the Secretary list the

only factors that may be considered in determining the
length of an exclusion under section 1128(a)(1) of the
Act. 42 C.F.R. § 1001.102.

27. The following aggravating factors, if present, may
justify lengthening an exclusion for a program-related
conviction to a period in excess of five years:

a. The acts resulting in a party's conviction,
or similar acts, resulted in financial loss to
Medicare and Medicaid of $1500 or more;

b. The acts that resulted in a party's
conviction, or similar acts, were committed
over a period of one year or more;

c. The acts that resulted in a party's
conviction, or similar acts, had a significant
adverse physical, mental, or financial impact
on one or more program beneficiaries or other
individuals;

da. The sentence imposed by the court on a party
included incarceration;

e. The convicted party has a prior criminal,
civil, or administrative sanction record;

f. The convicted party has been overpaid at
any time a total of $1500 or more by Medicare
or Medicaid as a result of improper billings.
7
42 C.F.R. § 1001.102(b)(1)-(6) (paraphrase).

28. If any of the aggravating factors listed at 42
C.F.R. § 1001.102(b) is present and supports an exclusion
of longer than five years, the following three mitigating
factors may be considered for reducing or offsetting the
effects of the aggravating factors:

a. A party has been convicted of three or fewer
misdemeanor offenses, and the entire amount of
financial loss to Medicare and Medicaid due to
the acts which resulted in the party's
conviction and similar acts, is less than

$1500;

b. The record in the criminal proceedings,
including sentencing documents, demonstrates
that the court determined that, before or
during the commission of the offense, the party
had a mental, emotional, or physical condition
that reduced that party's culpability;

c. The party's cooperation with federal or State
officials resulted in others being convicted of
crimes, or in others being excluded from
Medicare or Medicaid, or in others having

imposed against them a civil money penalty or
assessment.

42 C.F.R. § 1001.102(c)(1)-(3) (paraphrase).

29. The aggravating and mitigating factors listed in the
regulations must be evaluated in a manner consistent with
the remedial purposes of the Act. See Act, section
1102(a).

30. Section 1128 of the Act is intended to protect the
integrity of federally-funded health care programs and
the welfare of program beneficiaries and recipients from
individuals and entities who have been shown to be
untrustworthy. See S. Rep. No. 109, 100th Cong., 1st
Sess. 1 (1987), reprinted in 1987 U.S.C.C.A.N. 682.

31. The I.G. has the burden of proving that aggravating
factors specified in the regulations are present in this
case and support excluding Petitioner for a total of 10
years. See 42 C.F.R. § 1005.15(c).

32. Petitioner has the burden of proving that mitigating
factors exist and support reducing the portion of the
exclusion that exceeds five years. 42 C.F.R. §
1001.102(c) (1)-(3); See 42 C.F.R. § 1005.15(c).
8
IV. Aggravating Facts Asserted by the I.G.

33. Prior to working for Solid Care in Colorado,
Petitioner had worked for or with several other suppliers
of medical equipment in the State of California,
including Systematic Health Services (SHS) and Emooko
Medical Supplies. I.G. Ex. 5; P. Br. at 1-2.

34. On July 6, 1992, Petitioner was convicted in the
Superior Court of the State of California, Orange County,
pursuant to his having pled guilty to the following
felony count:

On or about September 8, 1989, in the County of
Orange, State of California, [Petitioner]
unlawfully solicited and received remuneration
from Systematic Health Services Company in
return for referring Medi-Cal beneficiaries to
Emooko Medical Supply Company so that Emooko
Medical Supply Company could furnish and
arrange to furnish merchandise ...and...
for ordering and arranging to order merchandise
for which payment may be made under the Medi-
Cal Act, in violation of section 14107.2,
subdivision (a) of the Welfare and Institutions
Code, a felony.

I.G. Ex. 12, 13; P. Ex. 5.

35. By letter dated March 23, 1993, the I.G. notified
Petitioner that he was being excluded from the Medicare
and Medicaid programs pursuant to sections 1128(a)(1) and
1128(c) (3) (B) of the Act for a period of five years,
based on his conviction in Orange County, California.
I.G. Ex. 14.

36. There is no regulation or statute which requires the
I.G. to impose and direct exclusions based on the timing
of convictions.

37. At the time Petitioner was convicted in Colorado,
Petitioner had no prior criminal or civil sanctions
record within the meaning of 42 C.F.R. § 1001.102(b) (5).
FFCL 10-12.

38. Based only on the timing of the exclusions she
imposed and directed against Petitioner, the I.G. has
proven the existence of a prior administrative sanction
record, namely the exclusion imposed in 1993. 42 C.F.R.
§ 1001.102(b) (5); FFCL 35.

39. The I.G. has not proved that Petitioner's actions
resulted in the loss of $1500 or more to any Medicaid
program or programs. See, e.g., I.G. Ex. 7-10, 12, 13,
23; P. Ex. 5; 42 C.F.R. § 1001.102(b) (1).
9

40. The I.G. alleged, but did not prove, that the acts
resulting in Petitioner's conviction in Colorado, or
similar acts, caused significant physical, mental, or
financial harm to any program beneficiary or individual.
See, e.g., I.G. Br. at 43 - 44; 42 C.F.R. §
1001.102(b) (3).

41. The I.G. has not proved that Petitioner was overpaid
$1500 or more by Medicare or Medicaid due to improper
billings, as required by 42 C.F.R. § 1001.102(b) (6).

See, e.g., I.G. Ex. 7-10, 12, 13, 23; P. Ex. 5.

42. Petitioner's conviction in Colorado did not result
in an order of incarceration. See 42 C.F.R. §
1001.102(b) (4); I.G. Ex. 9.

43. The acts that resulted in Petitioner's conviction in
Colorado were committed during a period of less than one
year. FFCL 1-5; see 42 C.F.R. § 1001.102(b) (2).

44. For the period after June 1990, there is no evidence
that Petitioner engaged in any activity similar to those
that resulted in his program-related convictions in
California or Colorado.

45. The State of Colorado has never attempted to prove
that Petitioner had engaged in any criminal activity in
Colorado prior to his arrival in Colorado in January
1990. See FFCL 10.

46. The State of California never charged Petitioner
with having engaged in any criminal activity prior to
September 8, 1989 or after November 9, 1989. I.G. Ex.
10-12.

47. The State of California had no probable cause for
believing that Petitioner had engaged in any program-
related offense during any period outside of September to
November, 1989. I.G. Ex. 3.

48. The I.G. has not proved her contention that the acts
resulting in Petitioner's Colorado conviction, or similar
acts, were committed over a period of one year or more.
See 42 C.F.R. § 1001.102(b) (2); FFCL 45-47.

49. Under section 1128(a)(1) of the Act, an exclusion of
longer than five years will be reasonable in those cases
where the evidence relevant to an individual's prior
administrative sanction record proves that a five-year
exclusion will be inadequate for satisfying the remedial
purposes of the Act. See FFCL 29-30.

50. The evidence concerning Petitioner's prior
administrative sanction record does not show that a five-
year exclusion for his Colorado conviction would be
10

inadequate for satisfying the remedial purposes of the
Act. See FFCL 17-19, 38.

VI. 1I.G.'s Use of Facts that Predate her Prior Exclusion
Determination

51. Petitioner's conviction in California occurred prior
to the I.G.'s determination to impose and direct the
exclusion at issue based on his Colorado conviction.

FFCL 34-35.

52. Petitioner did not appeal the five-year exclusion
imposed and directed against him by the I.G. in March
1993 based on his California conviction. FFCL 35.

53. Even if, prior to June 1990 (see FFCL 44-47),
Petitioner's actions that resulted in his conviction in
Colorado, or similar acts, had

a) caused at least $1500 in losses to one or
more Medicaid programs, or

b) taken place over the period of one year or
longer, or

c) caused significant adverse physical, mental,
or financial impact on any program beneficiary
or other individual,

the I.G. would have had the discretion to consider such
facts in setting the length of Petitioner's exclusion in
her 1993 determination for his conviction in California.
42 C.F.R. §§ 1001.102(b) (1)-(3).

54. The I.G. had the discretion to consider the
California court's order regarding incarceration as an
aggravating factor in determining the length of
Petitioner's exclusion in 1993. 42 C.F.R. §
1001.102(b) (4); P. Ex. 5.

55. If at any time Petitioner had been overpaid a total
of $1500 or more by a Medicaid program due to improper
billings submitted prior to June 1990 (see FFCL 1-9), the
I.G. had the discretion to consider such facts as an
aggravating factor in setting the length of Petitioner's
exclusion in 1993 for his conviction in California. 42
C.F.R. § 1001.102(b) (6).

56. The regulation at 42 C.F.R. § 1001.102 is not
intended to punish an individual repeatedly, and for
increasingly longer periods, on the basis of the same set
of facts. FFCL 29-30.
11

57. Under the facts of this case, a 10-year exclusion
would be unreasonable even if Petitioner's circumstances
could be interpreted as satisfying the literal language
of those aggravating factors listed in 42 C.F.R. §
1001.102(b). FFCL 27, 35, 55-56.

VII. Mitigating Fact Asserted by Petitioner

58. In the opinion of the Chief Special Investigator for
the Medicaid Fraud Control Unit, a division of the
Colorado Attorney General's Office, it is likely that
Petitioner's agreement to testify against co-defendants
was a factor which led two co-defendants to plead guilty.
I.G. Ex. 19.

59. The I.G. does not dispute that Petitioner cooperated
with Colorado State officials, within the meaning of 42
C.F.R. § 1001.102(c)(3)(i). I.G. Br. at 33 n.7, 34; I.G.
Reply at 28 n.3, 29.

60. The mitigating factor listed at 42 C.F.R. §
1001.102(c) (3) (i) is present in this case. I.G. Ex. 19.

61. The other mitigating factors at 42 C.F.R. §
1001.102(c) (3) are not present in this case.

62. Even if any of the aggravating factors alleged by
the I.G. supported an exclusion of more than five years,
Petitioner's cooperation with Colorado officials would
make unreasonable a term of exclusion in excess of five
years. See FFCL 58-60.

DISCUSSION

I. Rulings on Petitioner's Objections to the I.G.'s
Exhibits

As a preliminary matter, I have considered Petitioner's
objections to the I.G.'s exhibits. Many of his
objections are based on his contention that the I.G.'s
exhibits contain hearsay and unproven facts gathered for
litigation. P. Reply at 1- 6. Petitioner argues also
that certain of the I.G.'s exhibits contain inaccurate or
incomplete information, such as whether he had been
working in California as an "independent contractor" or
"employee" of SHS and Emooko. E.g., P. Reply at 2, 5.
Other aspects of Petitioner's objections are based on his
unproven contentions, such as his having been granted
immunity from liability’, and his having been prosecuted

5 petitioner alleged that the I.G. failed to
produce the "immunity agreement" in accordance with the
Best Evidence Rule. P. Reply at 5.
12

in California for having taken actions in aid of the
State's investigation of Medicaid fraud. E.g., P. Reply
at 5.

For the reasons specified in my findings (e.g., FFCL 21-
24), I have overruled Petitioner's objections based on
the alleged existence of an “immunity agreement" and
Petitioner's allegations of innocence of the crimes for
which he has been convicted.

To the extent that Petitioner's other objections relate
to the admissibility of the I.G.'s exhibits, I note first
that the Federal Rules of Evidence are not binding in
administrative proceedings. I note further that only
irrelevant, immaterial, or privileged evidence must be
excluded in the case before me. 42 C.F.R. § 1005.17.
Evidence of crimes, wrongs, or other acts is admissible
for purposes such as showing motive, opportunity, intent,
or the existence of a scheme. 42 C.F.R. § 1005.17(g).
Moreover, the regulation on the application of
aggravating and mitigating factors does not limit me to
considering only non-hearsay statements or those facts
previously proven in court. 42 C.F.R. §§ 1001.102(b) and

(c).

Whether the I.G.'s exhibits contain unreliable or
inaccurate information goes to the issue of what weight,
if any, should be given to certain portions of the I.G.'s
exhibits. For example, the statements made by co-
conspirators to describe Petitioner's involvement are
nondispositive and may even be not credible in parts.
However, such statements may be accorded weight to the
extent they are consistent with other, more reliable,
evidence of record, such as the statements Petitioner
made to investigators. Petitioner has noted his
disagreement with certain statements and conclusions of
witnesses, and he has placed before me his version of the
contested facts. The regulations provide that relevant
evidence may be excluded in the interests of fairness.

42 C.F.R. § 1005.17(d). However, I do not find the
probative value of any relevant evidence offered by the
I.G. to be substantially outweighed by the danger of
unfair prejudice to Petitioner or of confusion of the
issues before me. 42 C.F.R. § 1005.17(d).

For the foregoing reasons, I have admitted into evidence
all of the I.G.'s exhibits. However, I have also given
due consideration to Petitioner's arguments and evidence
refuting the I.G.'s exhibits.

II. Under the Facts of this Case, the I.G. is Precluded
from Imposing an Exclusion of Longer than Five Years

Section 1128 of the Act mandates an exclusion of at least
five years where an individual has been convicted of a
13

criminal offense related to the delivery of an item or
service under the Medicare or Medicaid programs. Act,
sections 1128(a)(1) and (c)(3)(B). The I.G. introduced
credible and persuasive evidence of Petitioner's
involvement in a scheme to defraud the Colorado Medicaid
program, thus establishing that Petitioner's subsequent
‘conviction in Colorado State court on one felony count of
criminal conspiracy was program-related within the
meaning of the Act. FFCL 1-15. The I.G.'s authority to
impose an exclusion of at least five years is derived
from Petitioner's criminal conviction. Act, section
1128(a) (1). Petitioner's conviction remains valid to
date. Therefore, Petitioner's assertions of innocence
and lack of criminal intent do not bar the imposition of
an exclusion. FFCL 22.

Neither can Petitioner bar the exclusion by asserting, as
he has, that the State granted him immunity from future
liabilities during plea bargaining. See FFCL 21. The
State denied the allegation (I.G. Ex. 19), and Petitioner
has produced no evidence to support his contention. In
addition, the State has no de facto or apparent authority
to speak on behalf of the I.G. If Petitioner believes
that his guilty plea was improperly secured, he must seek
his remedies in the courts of Colorado. The exclusion at
issue is barred only if the State of Colorado has
overturned or set aside his conviction, neither of which
event has occurred. See FFCL 12.

Petitioner alleges as an additional affirmative defense
that the I.G.'s exclusion determination of July 21, 1994
is time-barred under 42 C.F.R. § 1004.130(a). P. Br. at
14-15. That regulation applies only to actions involving
a Peer Review Organization's recommendations to the I.G.
under section 1156 of the Act.® The regulations specify
no time limit for the I.G. in cases involving exclusions
under section 1128(a)(1) of the Act. Thus, there is no
support for Petitioner's contention that the exclusion at
issue is time-barred. FFCL 24.

I have rejected also Petitioner's request to modify the
effective date of his exclusion. FFCL 20. Petitioner
asked that I set the effective date of his exclusion at
November 5, 1990, to coincide with his guilty plea in
Colorado. P. Br. at 15, 23. However, the Act states
that the exclusion shall go into effect in accordance
with the requirements specified in regulations
promulgated by the Secretary. Act, Section 1128(c) (1).

6 Moreover, the regulation cited by Petitioner
does not preclude the I.G. from imposing a sanction after
120 days of the Peer Review Organization's
recommendation; the recommendation takes effect
automatically if the I.G. fails to act after 120 days.

42 C.F.R. § 1004.130.
14

The Secretary's regulation states that the exclusion
shall go into effect 20 days from the date of the I.G.'s
notice letter. 42 C.F.R. § 1001.2002(b). Here, the 1.G.
issued the notice letter to Petitioner on July 21, 1994,
and the exclusion took effect 20 days thereafter by
operation of law. FFCL 18-19. I have no authority to
alter the foregoing consequence.

As for the reasonableness of the 1.G.'s determination
that Petitioner should be excluded for a total of 10
years pursuant to his conviction in Colorado, I have
found against the I.G. on that issue. FFCL 57, 62. I
have concluded that the length of the exclusion is to be
evaluated in accordance with the factors enumerated in 42
c.F.R. § 1001.102 and the remedial purposes of the Act.
FFCL 27-30. The presence of a factor deemed
"aggravating" by the regulation does not mean that the
exclusion period must be lengthened. See FFCL 29.

Even though the I.G. has alleged the presence of five
aggravating factors’ associated with Petitioner's
conviction in Colorado, she has proven only the presence
of one aggravating factor: Petitioner's prior
administrative sanction record. FFCL 38. This factor
was met only by virtue of the I.G.'s having earlier
imposed a five-year exclusion against Petitioner for
having been convicted in California of a program-related
offense. FFCL 35, 38, 52. The I1.G.'s evidence on the
other four aggravating factors she alleged was either
non-existent or inadequate. FFCL 39-41, 48.

For example, there was no evidence of record to support
the I.G.'s contention that Petitioner's actions caused a
significant adverse physical, mental, or financial impact
on program beneficiaries or other individuals. See 42
C.F.R. § 1001.102(b) (3). FFCL 40. Also, I examined the
periods of time contained in the charges filed against
Petitioner by the States of Colorado and California,
together with the reports of their investigators. Such
evidence showed that, at most, Petitioner was believed to
have engaged in wrongful program-related activities for a
period of approximately eight months (i.e., from some
time in September 1989 until June 1990). I found no
credible support for the I.G.'s contention that the
criminal acts that resulted in Petitioner's conviction in
Colorado, or like activities by Petitioner, took place
over a period of one year or more. See 42 C.F.R. §
1001.102(b) (2). FFCL 48.

7 There are six aggravating factors listed in 42
C.F.R. § 1001.102(b). The I.G. did not allege that
Petitioner's sentence in Colorado included incarceration
under 42 C.F.R. § 1001.102(b) (4).
15

Further, I found lacking the I.G.'s evidence on the
amount of financial loss to the programs and the amount
of overpayments that have resulted from improper
billings. FFCL 39, 41. The financial loss or
overpayments must be at least $1500 to be considered
aggravating. 42 C.F.R. §§ 1001.102(b)(1) and (6). To
prove the existence of these aggravating factors, the
I.G. relied upon certain post-exclusion statements from
an investigator with the Colorado Medicaid Fraud Control
Unit. See I.G. Ex. 23. The investigator examined the
State's record of Medicaid payments to Petitioner's
employer, Solid care, for the period from January 1 to
December 31, 1990 (which payments totaled $ 65,497.53),
as well as certain Patient Order forms seized from Solid
Care. Id. The investigator stated as his conclusion
that 50 percent of the Medicaid payments (i.e.,
$32,748.77) had been fraudulently obtained by Solid Care
for the year 1990. Id. However, there is no adequate
explanation of why the investigator concluded that 50
percent ($32,748.77) of the payments were fraudulently
obtained or why any or all of that amount should be
attributed to Petitioner's endeavors. I did not find
credible the investigator's conclusion, and I did not
find that the I.G. had adequately met her burden of
showing the existence of the two aggravating factors
under 42 C.F.R. §§ 1001.102(b) (1) and (6).

As for Petitioner's prior administrative sanction record,
I concluded that the presence of this aggravating factor
did not make reasonable the I.G.'s lengthening the
exclusion period. FFCL 50.8 As stated in the agency's
commentaries to the regulation at issue, the weight
accorded to each aggravating factor "cannot be
established according to a rigid formula, but must be
determined in the context of the particular case at
issue." 57 Fed. Reg. 3316 at 3325 (1992).

In this case, the existence of a prior administrative
sanction record reflects only the I.G.'s timing of her
exclusion notices to Petitioner. Petitioner was
convicted in Colorado before he was convicted in
California, even though he had engaged in criminal acts
in California before he left to work in Colorado. FFCL
12, 33-34. Only because the I.G. imposed first an
exclusion for Petitioner's later-dated California
conviction, Petitioner had a prior administrative
sanction record when the I.G. later imposed and directed
a 10-year exclusion for his Colorado conviction.

8 In earlier decisions, I have more fully
explained why the factors contained in 42 C.F.R. §§
1001.102(b) and (c) must be interpreted and applied in a
manner consistent with the purposes of the Act. Leonard
S. Dino, DAB CR260, at 16-19 and 35-36 (1993); Paul O.
Ellis, DAB CR283, at 20 (1993).
16

Also, I have made certain alternative findings related to
the I.G.'s present use of facts that pre-dated her March
1993 decision to sanction Petitioner based on his
conviction in California. See FFCL 51-57. I did so in
order to address the I.G.'s use of factors that pre-date
March of 1993 when she imposed a five-year exclusion
based on Petitioner's program-related conviction in
California. As discussed above, most of the aggravating
factors asserted by the I.G. to support the 10-year
exclusion at issue turn on facts that pre-dated the
California conviction and the I.G.'s decision to impose a
five-year exclusion for it. In addition, I have accorded
no weight to Petitioner's California conviction in this
proceeding because, in March 1993, the I.G. had already
imposed a five-year exclusion based on the California
conviction. FFCL 56-57. Petitioner never appealed the
earlier imposed five-year exclusion based on his
California conviction. FFCL 52. The weight attached by
the I.G. to Petitioner's California conviction yielded an
unreasonable result that is not consistent with the
remedial purposes of the Act.

I do not read the relevant regulation as meaning that the
I.G. may lengthen a subsequently imposed exclusion merely
because facts pre-dating the earlier imposed exclusion
permit the argument or conclusion that certain
aggravating factors were present. Nor do I believe that
the regulation on aggravating factors should be read to
mean that the I.G. is authorized to impose more than one
exclusion for the same program-related conviction. Even
though Petitioner's California conviction is a "prior"
conviction in the sense that it occurred before the I.G.
imposed and directed the 10-year exclusion at issue (42
C.F.R. § 1001.102(b) (5), FFCL 51), the linchpin of the
regulatory scheme is the Act's remedial purposes. The
exclusion authorized by section 1128(a)(1) cannot be
punitive in nature.

As a matter of law, an exclusion of five years is the
minimum period necessary for protecting the fiscal
integrity of the programs and the health of those people
the programs serve. Act, sections 1128(a)(1) and (c) (3).
FFCL 25; see also FFCL 30. In this case, the evidence
relevant to the aggravating factors does not prove that
the remedial purposes of the Act would be met by the
I.G.'s using facts that pre-date the earlier exclusion
she directed and imposed against Petitioner. Nor has the
I.G. shown by evidence relevant to those aggravating
factors she alleges that the remedial purposes of the Act
will be advanced by increasing the minimum mandatory
period of exclusion because Petitioner was convicted in
California and had received a five-year exclusion from
the I.G. as a consequence. Therefore, I do not find
reasonable the I.G.'s subsequently imposing an exclusion
of more than five years for Petitioner's Colorado
conviction.
17

Having found no basis for increasing the length of
Petitioner's exclusion to a period of more than five
years, I do not need to address Petitioner's evidence on
mitigation. 42 C.F.R. § 1001.102(c). Nevertheless, I
have made findings on Petitioner's alleged cooperation
with authorities to avoid leaving any potential issue
unresolved. I have found in favor of Petitioner under 42
C.F.R. § 1001.102(c)(3) primarily because the I1.G.
stipulated to the existence of this mitigating factor in
her briefs. FFCL 59-60. Petitioner's cooperation with
authorities is evidence that he has discontinued his
illegal activities and is willing to comply with the law
(see FFCL 58). Therefore, even if any aggravating factor
warranted adding additional time to Petitioner's
exclusion, I would reduce the period of his exclusion to
five years based on this mitigating factor. FFCL 62.

CONCLUSION

For the foregoing reasons, I reverse the I.G.'s
determination to exclude Petitioner for a period of 10
years and reduce the length of Petitioner's exclusion to
five years. This five-year exclusion took effect 20 days
after the Inspector General issued her notice letter
dated July 21, 1994.

/s/

Mimi Hwang Leahy
Administrative Law Judge