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

)
In the Case of: )
) Date: February 6, 2008
Vladimir Kirkorov, M.D., )
)
Petitioner, _ ) Docket No. C-07-664
) Decision No. CR1732
-v.- )
)
The Inspector General. )
)

DECISION

Petitioner, Vladimir Kirkorov, M.D., is excluded from participation in Medicare,
Medicaid, and all other federal health care programs pursuant to section | 128(a)(3) of the
Social Security Act (the Act) (42 U.S.C. § 1320a-7(a)(3)), effective July 19, 2007, based
upon his conviction in a state court of felony criminal offenses committed after August
21, 1996 (the date on which the Health Insurance Portability and Accountability Act of
1996 (HIPAA) was enacted); his offenses were related to the delivery of a health care
item or service; and the offenses of which he was convicted included fraud and theft.
There is a proper basis for exclusion. Petitioner's exclusion for five years is mandatory
pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) and an
additional period of exclusion of five years, for a total minimum period of exclusion of
ten years, is not unreasonable based upon four aggravating factors in this case.'

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only
after the period of exclusion expires. Reinstatement is not automatic upon the expiration
of the period of exclusion.
to

I]. Background

The Inspector General for the Department of Health and Human Services (the [.G.)
notified Petitioner by letter dated June 29, 2007, that he was being excluded from
participation in Medicare, Medicaid, and all federal health care programs for ten years,
pursuant to section | 128(a)(3) of the Act. The basis cited for Petitioner’s exclusion was
his conviction, in the Supreme Court of the State of New York, Queens County, of
criminal offenses related to fraud, theft, embezzlement, breach of fiduciary responsibility,
or other financial misconduct in connection with the delivery of a health care item or
service. See Act, section |128(a)(3) (42 U.S.C. § 1320a-7(a)(3)); 42 C.F.R.

§ LOO1.101(c).

Petitioner timely requested a hearing by letter dated August 14, 2007. The case was
assigned to me for hearing and decision on September 6, 2007. On September 20, 2007, I
convened a prehearing telephonic conference, the substance of which is memorialized in
my Order dated September 24, 2007. Petitioner agreed that it was not necessary for him
to present evidence at an oral hearing and that this case may be decided upon the briefs
and documentary evidence. Petitioner knowingly waived his right to an oral hearing in
this case.

The IG. filed its brief in support of Petitioner’s exclusion on October 19, 2007 (I.G.
Brief), with I.G. Exhibits (1.G. Exs.) | through 12. Petitioner filed his brief in response
on November 13, 2007, with Exhibits (P. Exs.) | through 13. The I.G. filed a reply brief
on December 6, 2007 (I.G. Reply). No objection has been made to the admissibility of
any of the proposed exhibits. 1.G. Exs. | through 12, and P. Exs. | through 13 are
admitted. Petitioner requested leave to file a sur-reply by letter dated December 17, 2007,
and I granted Petitioner until January 12, 2008, to do so. Petitioner filed his sur-reply
dated January 10, 2008, with a document comprised of multiple pages from various
documents preceded by a cover sheet marked Exhibit A (P. Ex. A), which is admitted and
which I have reviewed and considered.”

> Many of the documents Petitioner has marked as exhibits are related to his
criminal convictions and challenges thereto, For reasons discussed hereafter, the pages
related only to Petitioner’s criminal convictions and challenges are not relevant.
Nevertheless, because Petitioner is pro se | carefully reviewed all the pages he submitted
for any evidence that might aid my decision-making. Rather than excluding individual
pages which Petitioner did not mark as exhibits and because | have reviewed all pages, I
have placed all pages in evidence.
Il. Discussion

A. Findings of Fact

The following findings of fact are based upon the uncontested and undisputed assertions
of fact in the pleadings and the exhibits admitted. Citations may be found in the analysis
section of this decision if not included here.

w

On June 29, 2006, Petitioner was convicted in the Supreme Court of the State of
New York, Queens County, Case Number 00808-2005, of 7 counts of insurance
fraud in the 3% degree, a class D felony pursuant to N.Y. Penal Law § 176.20; 17
counts of insurance fraud in the 4" degree, a class E felony pursuant to N.Y. Penal
Law § 176.15; one count of 3" degree grand larceny, a class D felony pursuant to
N.Y. Penal Law § 155.35; 7 counts of 4" degree grand larceny, a class E felony
pursuant to N.Y. Penal Law § 155.30; 24 counts of I“ degree falsifying business
records, a class E felony pursuant to N.Y. Penal Law § 175.10; and one count of 1*
degree scheme to defraud, a class E felony pursuant to N.Y. Penal Law § 190.65.
LG. Ex. 7.

On July 25, 2006, in the Supreme Court of the State of New York, Queens County,
Case Number 02674-2003, Petitioner was convicted pursuant to his plea of guilty
of one count of insurance fraud in the 3“ degree, a class D felony pursuant to N.Y.
Penal Law § 176.20. I.G. Ex. 8.

On July 25, 2006, Petitioner was sentenced to confinement for two to six years and
to pay restitution of $21,468. I.G. Ex. 7, at 2-5; LG. Ex. 8.

The offenses of which Petitioner was convicted involved submitting claims to
various automobile insurance companies for medical treatment or services that
were not actually delivered or performed. P. Ex. | (pages 12 and 13).

The offenses of which Petitioner was convicted were committed between February
1, 2001 and March 16, 2005, after August 21, 1996. LG. Exs. 5, 6, 7, and 8.

The amount of restitution ordered, $21,468, is good and convincing evidence of
the amount of the financial loss determined by the trial court and establishes that
the financial loss in this case was $5000 or more.
Ww

4

The New York State Department of Health, State Board for Professional Medical
Conduct, took adverse action against Petitioner and the New York State Office of
Medicaid Inspector General excluded him from participation in the New York
Medicaid program, and both actions were based upon Petitioner’s criminal
conviction.

The 1.G. notified Petitioner by letter dated June 29, 2007, that he was being
excluded from participation in Medicare, Medicaid, and all federal health care
programs for ten years, pursuant to section | 128(a)(3) of the Act.

Petitioner timely requested a hearing by letter dated August 14, 2007.

B. Conclusions of Law

Petitioner’s request for hearing was timely and [ have jurisdiction.

Petitioner was convicted of felony criminal offenses of fraud and theft in a state
court within the meaning of section 1128(a)(3) of the Act.

Petitioner does not dispute that he was convicted of a criminal offense within the
meaning of section |128(i) of the Act.

There is a “nexus” or “common sense connection” between the crimes of which
Petitioner was convicted and the delivery of a health care item or service, i-e.,
Petitioner used his status as a licensed physician to perpetrate crimes that involved
false representation that he had delivered medical treatment or services.

The crimes of which Petitioner was convicted were committed after the effective
date of HIPAA, August 21, 1996.

The Secretary has provided by regulation that when an exclusion is based upon a
criminal conviction where the facts were adjudicated and a final decision was
made, the criminal conviction is not subject to review in this forum and
Petitioner’s collateral attacks, whether substantive or procedural, may not be
considered. 42 C.F.R. § 1001.2007.

There is a basis for Petitioner’s exclusion pursuant to section 1128(a)(3) of the
Act.
5

8. Pursuant to section 1128(c)(3)(B) of the Act, the minimum period of exclusion
under section | 128(a) is five years and that period is presumptively reasonable.

9. There are four aggravating factors present in this case that justify an exclusion of
more than five years: (1) Petitioner's criminal acts resulted in financial loss to one
or more entities and the loss was $5000 or more; (2) that Petitioner's criminal
conduct occurred over a period of one year or more; (3) that Petitioner was
sentenced to incarceration; and (4) that Petitioner was subject to adverse action by
the state licensing board based upon the same conduct for which he was convicted.

10. Aggravating factors justify extending the period of exclusion to ten years.

11. Petitioner has presented no evidence or argument that would tend to establish any
of the permitted mitigating factors.

12. A period of exclusion of ten years is in a reasonable range.
13. Exclusion for ten years is not unreasonable in this case.
C. Issues

The Secretary of the Department of Health and Human Services (the Secretary) has by
regulation limited my scope of review to two issues:

Whether there is a basis for the imposition of the exclusion; and,
Whether the length of the exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).
D. Applicable Law

Petitioner’s right to a hearing by an administrative law judge (ALJ) and judicial review of
the final action of the Secretary is provided by section | 128(f) of the Act (42 U.S.C.

§ 1320a-7(f)). Petitioner’s request for a hearing was timely filed and I do have
jurisdiction.

Pursuant to section | 128(a)(3) of the Act, the Secretary must exclude from participation
in the Medicare and Medicaid programs any individual convicted in any federal or state
court of a felony criminal offense that was committed after August 21, 1996 (the date
HIPAA was enacted); where the offense is related to the delivery of a health care item or
service or any act or omission in a health care program, other than Medicare or Medicaid,
6

financed in whole or part by a federal, state, or local government; and the offense of
which Petitioner is convicted is related to fraud, theft, embezzlement, breach of fiduciary
responsibility or other financial misconduct.

Section | 128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act shall be for a minimum period of five years. Pursuant to 42 C.F.R.

§ 1001.102(b), the period of exclusion may be extended based on the presence of
specified aggravating factors. Only if the aggravating factors justify exclusion for a
period longer than five years may mitigating factors be considered as a basis for reducing
the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).

The standard of proof is a preponderance of the evidence and there may be no collateral
attack of the conviction that is the basis for the exclusion. 42 C.F.R. § 1001.2007(c) and
(d). Petitioner bears the burden of proof and persuasion on any affirmative defenses or
mitigating factors. The I.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(b)
and (c).

E. Analysis

1. There is a basis for Petitioner’s exclusion pursuant to section
1128(a)(3) of the Act.

The I.G. cites section 1128(a)(3) of the Act as the basis for Petitioner’s mandatory
exclusion. The statute provides:

(a) MANDATORY EXCLUSION. ~ The Secretary shall exclude the
following individuals and entities from participation in any Federal health
care program (as defined in section | 128B(f)):

Ok ROR

(3) FELONY CONVICTION RELATING TO
HEALTH CARE FRAUD. - Any individual or entity
that has been convicted for an offense which occurred
after the date of the Health Insurance Portability and
Accountability Act of 1996 [footnote omitted], under
Federal or State law, in connection with the delivery of
a health care item or service or with respect to any act
or omission in a health care program (other than those
specifically described in paragraph (1)) operated by or
7

financed in whole or part by any Federal, State, or local
government agency, of a criminal offense consisting of a
felony relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct.

The statute requires the Secretary to exclude from participation in Medicare or Medicaid
any individual or entity: (1) convicted in any federal or state court of a felony criminal
offense that was committed after August 21, 1996 (the date HIPAA was enacted); (2)
where the offense is related to the delivery of a health care item or service or any act or
omission in a health care program, other than Medicare or Medicaid, financed in whole or
part by a federal, state, or local government; and (3) the offense of which Petitioner is
convicted is related to fraud, theft, embezzlement, breach of fiduciary responsibility or
other financial misconduct.

The I.G. presented evidence that on June 29, 2006, Petitioner was convicted in the
Supreme Court of the State of New York, Queens County, Case Number 00808-2005, of
7 counts of insurance fraud in the 3" degree, a class D felony pursuant to N.Y. Penal Law
§ 176.20; 17 counts of insurance fraud in the 4" degree, a class E felony pursuant to N.Y.
Penal Law § 176.15; one count of 3" degree grand larceny, a class D felony pursuant to
N.Y. Penal Law § 155.35; 7 counts of 4" degree grand larceny, a class E felony pursuant
to N.Y. Penal Law § 155.30; 24 counts of 1“ degree falsifying business records, a class E
felony pursuant to N.Y. Penal Law § 175.10; and one count of I" degree scheme to
defraud, a class E felony pursuant to N.Y. Penal Law § 190.65. I.G. Ex. 7. The I.G. also
presented evidence that on July 25, 2006, in the Supreme Court of the State of New York,
Queens County, Case Number 02674-2003, Petitioner was convicted pursuant to his plea
of guilty of one count of insurance fraud in the 3" degree, a class D felony pursuant to
N.Y. Penal Law § 176.20. I.G. Ex. 8. Petitioner was sentenced to confinement for two to
six years and to pay restitution of $21,468. I.G. Ex. 7, at 5; LG. Ex. 8.

The evidence of conviction presented by the 1.G. does not provide detail regarding the
facts alleged in the charges of which Petitioner was convicted. However, the IG.
presented as evidence and without objection, the indictments related to case 02674-2003
(1G. Ex. 5) and 00808-2005 (1.G. Ex. 6). The indictment related to case 02674-2003
includes the count of insurance fraud in the 3“ degree to which Petitioner pled guilty and
was convicted pursuant to his plea. The count alleging insurance fraud does not allege
facts that show that the crime charged was “in connection with the delivery of a health
care item or service or with respect to any act or omission in a health care program” as
required by section 1128(a)(3). LG. Ex. 5, at 2-3. Similarly, the indictment related to
case 00808-2005 does not reflect on its face that any of the charges allege a criminal
offense “in connection with the delivery of a health care item or service or with respect to
any act or omission in a health care program” as required by section 1128(a)(3). LG. Ex.
6.
8

The I.G. submitted for my consideration the statement of Detective Ronald Georg signed
on March 16, 2005. 1.G. Ex. 4. Although the text of the statement indicates that it is
sworn, the attestation that it was sworn is unsigned and undated. The document does
include a certification that it is a correct transcript of a document from the file of the
Supreme Court of the State of New York, Queens County, but that does not indicate that
the deponent was sworn or understood his obligation to tell the truth. If Detective Georg
was called as a witness at an oral hearing, his testimony would be permitted only under
oath or affirmation. 42 C.F.R. § 1005.16(a). Although the regulation gives me discretion
to permit “testimony” in the form of a written statement and the regulation does not
specify that such a written statement must be under oath or affirmation, I find that the
protection of an oath or affirmation is necessary and required within the meaning of the
regulation. Accordingly, I give no weight to the unsworn statement of Detective Georg.

The I.G. also provided me a “Commisioner’s (sic) Order and Notice of Referral
Proceeding” from the New York State Department of Health, State Board for Professional
Medical Conduct, dated December 21, 2006. I.G. Ex. 9. The Order and Notice is
addressed to Petitioner and advises he was to cease practicing medicine under his New
York license immediately due to his conviction of a felony under New York law, and that
a hearing would be conducted upon a statement of charges to determine whether or not
Petitioner's licence to practice medicine should be revoked, suspended, and/or whether
other sanctions should be imposed. I.G. Ex. 9. The Order and Notice does not show that
Petitioner’s conviction in state court was for offenses committed “in connection with the
delivery of a health care item or service or with respect to any act or omission in a health
care program” as required by section | 128(a)(3).

The L.G. provided me the “Statement of Charges” from the New York State Department
of Health, State Board for Professional Medical Conduct. LG. Ex. 10. The Statement of
Charges alleges that Petitioner was convicted and lists various offenses and the sentence.
However, the statement of charges does not allege or show that the offenses were
committed “in connection with the delivery of a health care item or service or with
respect to any act or omission in a health care program” as required by section 1128(a)(3).

The I.G. presented a letter from the State of New York, Office of the Medicaid Inspector
General, dated January 8, 2007, that advised Petitioner he was excluded from
participation in the New York Medicaid program, effective December 21, 2006. I.G. Ex.
1. The letter states that the exclusion is based upon the suspension of Petitioner’s

icense to practice medicine by the New York State Department of Health. The letter tells
me nothing about Petitioner’s criminal conviction.

etitioner presented many documents, all of which have been admitted to ensure the
record is complete, but many contain irrelevant information and arguments that could not
e readily segregated trom the relevant. P. Ex. | includes letters dated March 7, 2007 and

9

May 29, 2007, from Gary Tsirelman, who represents he was counsel to Petitioner during
Petitioner's criminal trial. Attorney Tsirelman reveals that the charges of which
Petitioner was convicted involved medical services that were not performed, but that were
billed to various automobile insurance companies. P. Ex. | (pages 12 and 13). P. Ex. 5
includes the affidavit of Frances Impellizzeri, sworn on June 15, 2006. Mr. Impellizzeri
was an Assistant District Attorney for Queens County, New York. He states that the
charges against Petitioner involved the submission of bills to various car insurance
companies for medical treatment or services purportedly delivered to, or performed for,
several individuals, but that such treatment or services were never performed or delivered.
P. Ex. 5 (pages 6 and 7).

In his response brief, Petitioner primarily focuses upon issues concerning his convictions
in the Supreme Court of the State of New York, Queens County. In his sur-reply, he
encourages me to consider issues related to the underlying convictions in the interest of
justice. Petitioner does not deny that he was convicted of offenses as alleged by the I.G.
Petitioner does not dispute that he was convicted of a criminal offense within the meaning
of section |128(i) of the Act. Petitioner also does not deny the [.G.’s allegations that the
offenses of which he was convicted involved submitting claims to various automobile
insurance companies for medical treatment or services that were not actually delivered or
performed. 1.G. Brief at 2-3.

Considering all the evidence, I conclude that Petitioner was convicted in the Supreme
Court of the State of New York, Queens County, of felony offenses that occurred after
1996. Many of the charges of which Petitioner was convicted were for insurance fraud or
theft, or closely related thereto considering the elements specified in the New York Penal
Code sections cited above. The evidence does not show that any of Petitioner’s offenses
were related to any act or omission in a health care program, other than Medicare or
Medicaid, financed in whole or part by a federal, state, or local government. The IG.
argues that Petitioner’s offenses were related to the delivery of a health care item or
service. [.G. Brief at 9-10.

In determining whether an offense is related to the delivery of an item or service,
appellate panels of the Departmental Appeals Board (the Board) have been consistent in
their approach, considering whether there is a “common sense connection” or “nexus”
between the offense of which a petitioner was convicted and the delivery of a health care
item or service. Andrew D. Goddard, DAB No, 2032 (2006); Kenneth M. Behr, DAB No.
1997 (2005); Erik D. DeSimone, R.Ph., DAB No. 1932 (2004); see also Berton Siegel,
D.O., DAB No. 1467 (1994); Thelma Walley, DAB No. 1367 (1992); Niranjana B.

‘ The same affidavit appears in P. Ex. A, which was submitted with Petitioner’s
sur-reply.
10

Parikh, M.D., et al., DAB No. 1334 (1992). Petitioner’s crimes are based on conduct that
involved billing for medical services or treatments that were not delivered. The I.G.
simply asserts there is a nexus without explaining the nexus. Petitioner does not address
the issue. After careful consideration of the facts, I conclude that there is a “nexus” or
“common sense connection” between Petitioner’s misconduct and the delivery of a health
care item or service. The connection in this case is that Petitioner’s status as a licensed
physician was used to perpetrate crimes that involved the false representation that he had
delivered medical treatment or services. Because Petitioner was convicted of felony
offenses that occurred after 1996; the offenses were related to the delivery of health care
items or services; and the offenses involved fraud and theft, section 1128(a)(3) of the Act
requires his exclusion from participation in Medicare, Medicaid, and all other federal
health care programs.

Petitioner urges me to consider errors that he alleges occurred prior to and during his
criminal trial. The I.G. is correct that the Secretary has provided by regulation that when
an exclusion is based upon a criminal conviction and where the facts were adjudicated
and a final decision was made, the criminal conviction is not subject to review in this
forum and Petitioner’s collateral attacks, whether substantive or procedural, may not be
considered. 42 C.F.R. § 1001.2007. Petitioner does not deny that he was convicted after
trial upon the counts in one indictment and pursuant to his guilty plea to the count in the
other indictment. Thus, | may not consider his procedural and substantive challenges to
the underlying criminal convictions. Even absent the regulatory prohibition, this is not an
appropriate forum for challenging convictions in a state court.*

2. Pursuant to section 1128(c)(3)(B) of the Act, the minimum period of
exclusion under section 1128(a) is five years.

3. Aggravating factors exist which justify extending the period of
exclusion to ten years.

4. Exclusion for ten years is not unreasonable in this case.

Congress has specified that the minimum period of an exclusion pursuant to section
1128(a)(3) is five years as mandated by section |128(c)(3)(B). I have found there is a
basis for Petitioner’s exclusion pursuant to section 1128(a)(3) and he must be excluded
for at least five years.

* The regulation does specify a procedure to be followed if Petitioner is successful
in having his criminal conviction reversed or vacated on appeal. 42 C.F.R. § 1001.3005.
int

Phe Secretary has provided: by regulation that the period of exclusion may be extended
based on the presence of specified aggravating factors. 42 C.F.R. § 1001.102(b). The
-G. found, and urges me to find, that there are four aggravating factors present in this
case that justify exclusion for more than five years: (1) Petitioner’s criminal acts resulted
in financial loss to one or more entities and the loss was $5000 or more; (2) that
>etitioner’s criminal conduct occurred over a period of one year or more; (3) that
Petitioner was sentenced to incarceration; and (4) that Petitioner was subject to adverse
action by the state licensing board based upon the same conduct for which he was
convicted.

find that the evidence shows there are four aggravating factors in this case. Petitioner
does not deny that he was sentenced to be incarcerated for two to six years. 1.G. Exs. 7,
8, and 12. Petitioner does not deny that his sentence also included a requirement to pay
restitution of $21,468. 1.G. Ex. 7, at 5. Absent evidence to the contrary, the amount of
restitution is good and convincing evidence of the amount of the financial loss determined
by the trial court and establishes that the financial loss in this case was $5000 or more.
etitioner suggests in his brief that the conduct for which he was convicted did not occur
over a period of one year or more, but that the conduct consisted of discrete incidents of
ess than one year in duration. This argument is without merit. Considering all the
evidence, it is clear that Petitioner was convicted for multiple incidents of misconduct that
were part of a larger pattern of misconduct that lasted for more than a year. I.G. Ex. 6. I
also note that the one count of grand larceny in the 3 degree (Count 14), for which
Petitioner was charged and convicted, specifically alleged that it occurred between April
18, 2002 and June 12, 2003, which was a period in excess of one year. 1.G. Ex. 6, at 16;
.G. Ex. 7, at 1. Petitioner was also charged with, and convicted of, 1" degree scheme to
defraud (Count 77) between March |, 2001 and March 16, 2005, which also was a period
in excess of one year. I.G. Ex. 6, at 57; LG. Ex. 7, at 2, The fourth aggravating factor is
that the New York State Department of Health, State Board for Professional Medical
Conduct, took adverse action against Petitioner and the New York State Office of
Medicaid Inspector General excluded him from participation in the New York Medicaid
program. Both actions were based upon Petitioner's criminal conviction. Petitioner's
argument is that the underlying conviction is invalid and, therefore, this should not be
considered an aggravating factor. P. Brief. Petitioner’s argument is not persuasive before
me as I have no ability to review his underlying criminal conviction, but must accept it as
valid.

If any of the aggravating factors listed at 42 C.F.R. § 1001.102(b) are argued to justify
exclusion for more than five years, then mitigating factors may be considered as a basis
for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).
Pursuant to 42 C.F.R. § 1001.102(c), the following factors may be considered as
mitigating and a basis for reducing the period of exclusion:
12

(1) the individual or entity being excluded was convicted of three or fewer
misdemeanor offenses, and the entire amount of financial loss to Medicare
and/or the state health care programs due to the criminal acts is less than
$1500;

(2) the record of the criminal proceedings shows that the court determined
that the individual to be excluded had a mental, emotional, or physical
condition before or during the commission of the offense that reduced his or
her culpability; or,

(3) the individual or entity to be excluded cooperated with federal or state
officials with the result that:

(i) others were convicted or excluded from Medicare, Medicaid, and
other federal health care programs,

(ii) additional cases were investigated or reports issued by the
appropriate law enforcement agency identifying program
vulnerabilities or weaknesses, or

(ili) a civil money penalty or assessment was imposed against
another individual under part 1003 of this chapter.

These are the only mitigating factors that may be considered. Evidence that does not
relate to an aggravating factor or a mitigating factor is irrelevant to determining the length
of an exclusion. The burden is upon Petitioner to show the presence of mitigating factors.
42 C.F.R. § 1005.15; Dr. Darren James, D.P.M., DAB No. 1828 (2002). Petitioner has
presented no evidence or argument that would tend to establish any of the permitted
mitigating factors.

Appellate panels of the Board have made clear that the role of the ALJ in cases such as
this is to conduct a “de novo” review as to the facts related to the basis for the exclusion
and the facts related to the existence of aggravating and mitigating factors identified at 42
C.F.R. § 1001.102. See Joann Fletcher Cash, DAB No. 1725, n.6 (2000), available at
dab1725.htm}), (n.9 in the original decision and
Westlaw™), and cases cited therein. The regulation specifies that | must determine
whether the length of exclusion imposed is “unreasonable” (42 C.F.R.

§ 1001.2007(a)(1)(ii)). The DAB has explained that, in determining whether a period of
exclusion is “unreasonable,” [ am to consider whether such a period falls “within a
reasonable range.” Cash, n.6. The DAB cautions that whether I think the period of
exclusion too long or too short is not the issue. | am not to substitute my judgment for
that of the I.G. and may only change the period of exclusion in limited circumstances. In

13

John (Juan) Urquijo, DAB No. 1735 (2000), the Board made clear that if the 1.G.
considers an aggravating factor to extend the period of exclusion and that factor is not
later shown to exist on appeal, or if the I.G. fails to consider a mitigating factor that is
shown to exist, then the ALJ may make a decision as to the appropriate extension of the
period of exclusion beyond the minimum. In Gary Alan Katz, R.Ph., DAB No. 1842
(2002), the DAB suggests that, when it is found that an aggravating factor considered by
the 1.G. is not proved before the ALJ, then some downward adjustment of the period of
exclusion should be expected absent some circumstances that indicate no such adjustment
is appropriate.

In this case, upon de novo review, I have found that a basis for exclusion exists and that
the evidence shows four aggravating factors as found by the I.G. when determining
whether to impose a ten-year exclusion. Petitioner has not established that there are
mitigating factors not considered by the I.G. Further, based upon all the evidence, a
period of exclusion of ten years is in a reasonable range and is not unreasonable.
Accordingly, there is no basis upon which I might reassess the period of exclusion.

Il. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs for a period of ten years, effective July 19,
2007, 20 days after the June 29,-2007, I.G. notice of exclusion.

/s/ Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Green Hills Enterprises, LLC d/b/a )
Green Hills Hospital Program, ) Date: February 6, 2008
(CCN: 26-4623, Termed 4/13/94), )
)
Petitioner, ) Docket No. C-05-279
) Decision No.CR1731
-V.- )
)
Centers for Medicare & Medicaid )
Services. )
)
DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) that
Petitioner, Green Hills Enterprises, LLC d/b/a Green Hills Hospital Program, Kirksville,
Missouri, did not meet the requirements for certification to participate in the Medicare
program as a community mental health center (CMHC) providing partial hospitalization
services.

I. BACKGROUND

On September 24, 2004, Petitioner submitted an application to enroll in the Medicare
program as a CMHC providing partial hospitalization services.' CMS exhibit (Ex.) 1, at
5-39. On January 31, 2005, the Missouri Department of Health and Senior Services
informed Petitioner that it was ineligible to become a CMHC, based on a determination
made by the Missouri Department of Mental Health (DMH), Division of Comprehensive
Psychiatric Services. On February 25, 2005, the Medicare Part B carrier recommended

' Petitioner’s owner initially applied to reinstate the provider number of another
entity he owned. Petitioner’s owner has since abandoned his attempt to reinstate that
provider number and is appealing only the denial of Petitioner’s enrollment.
2

denial of Petitioner’s enrollment application based on the fact that Petitioner did not have
a license or was not authorized by federal, state, or local government to perform the
services for which it intended to submit claims for Medicare reimbursement. The denial
was upheld by CMS. CMS Ex. 1, at 41-42, 61. Petitioner appealed the denial of its
enrollment application by letter dated March 13, 2005.

The case was assigned to me for hearing and decision on November 9, 2005. After
staying the case for a lengthy period to allow the parties to attempt settlement, I set a
riefing schedule. The parties were to advise me if factual issues in the case would
require an in-person hearing. | advised the parties that if, after reviewing their
submissions, I found an in-person hearing was not required, I would determine whether
any additional briefing was necessary. The parties have not requested an in-person
earing, and I find that a hearing is not required and that no further briefing is necessary
for me to decide the case.

CMS submitted a brief (CMS Br.), accompanied by CMS Exs. 1 and 2, and a reply brief
(CMS Reply), accompanied by CMS Ex. 3. Petitioner submitted a brief in response (P.
Br.), accompanied by Petitioner’s exhibits (P. Ex.) 1 through 19, and a sur-reply letter (P.
Reply), accompanied by an attachment consisting of copies of Missouri statutes. Iam
marking this attachment as P. Ex. 20.

Il. ISSUE

Whether CMS had a basis to deny Petitioner enrollment in the Medicare program as a
CMHC providing partial hospitalization services.

Il. APPLICABLE LAW

Section 1861ff(3)(A) of the Social Security Act (Act), as codified through January 1,
2005, defines partial hospitalization services as a program furnished either by a hospital
to its outpatients, or by a CMHC, which is a distinct and organized intensive ambulatory
treatment service offering less than 24-hour care. A CMHC, as described at section
1861ff(3)(B), means an entity that,

(i)(1) provides the mental health services described in section 1913(c)(1) of the
Public Health Service Act; or

(ID in the case of an entity operating in a State that by law precludes the
entity from providing itself the service described in subparagraph (E) of such
section, provides for such services by contract with an approved organization or
entity (as determined by the Secretary):
(ii) meets applicable licensing or certification requirements for community mental
health centers in the State in which it is located; and
3

(iii) meets such additional conditions as the Secretary shall specify to ensure (I) the
health and safety of individuals being furnished such services, (II) the effective
and efficient furnishing of such services, and (III) the compliance of such entity
with the criteria described in section 1931(c)(1) of the Public Health Service Act.

Section 1913(c)(1) of the Public Health Service Act (PHSA) requires a CMHC to provide
services including specialized outpatient services for children, the elderly, individuals
with a serious mental illness, and residents of the service areas of the centers who have
been discharged from inpatient treatment at a mental health facility; 24-hour emergency
care services; day treatment or other partial hospitalization services or psychosocial
rehabilitation services; and screening for patients being considered for admission to state
mental health facilities to determine the appropriateness of such admission.

Regulations at 42 C.F.R. § 410.2 define a CMHC as:
(1) Provid[ing] outpatient services, including specialized outpatient services for
children, the elderly, individuals who are chronically mentally ill, and residents of
its mental health service area who have been discharged from inpatient treatment
at a mental health facility;

(2) Provid[ing] 24-hour-a day emergency care services;

(3) Provid[ing] day treatment or other partial hospitalization services, or
psychosocial rehabilitation services;

(4) Provid[ing] screening for patients being considered for admission to State
mental health facilities to determine the appropriateness of this admission; and

(5) Meet[ing] applicable licensing or certification requirements for CMHCs in the
State in which it is located.

The regulation at 42 C.F.R. § 410.2 defines partial hospitalization services as “a distinct
and organized intensive ambulatory treatment program that offers less than 24-hour daily
care and furnishes the services described in § 410.43.” Those services include services
that are reasonable and necessary to an individual’s diagnosis and active treatment; are
reasonably expected to improve or maintain an individual’s condition and functional level
and to prevent relapse or hospitalization; and include such services as individual and
group therapy (with physicians, psychologists, or other mental health professionals as
authorized by state law), occupational therapy by a qualified therapist, services of social
4

workers, psychiatric nurses and other staff trained to work with psychiatric patients,
therapeutic drugs and biologicals, individual activity therapies not primarily recreational
or diversionary, family counseling (whose primary purpose is to treat the individual),
patient training and education related to the individual’s care and treatment, and
diagnostic services.

The regulations also authorize a CMHC to provide partial hospitalization services “under
arrangements” with another entity. 42 C.F.R. § 410.110. In the preamble to the
regulations, CMS defined an “arrangement” as a situation in which a CMHC makes
contractual arrangements with another entity or practitioner to come into the CMHC and
furnish partial hospitalization services, and under which payment for such services is
made to the CMHC. 59 Fed. Reg. 6570, at 6573 (1994). In section 3007 of the Medicare
Intermediary Manual, CMS explained that a provider furnishing services “under
arrangements” must supervise and maintain professional responsibility over the services
arranged. CMS Ex. 2.

The version of the Medicare Program Integrity Manual in effect at the time Petitioner’s
application was denied, lists as a reason for denial that an “applicant does not have
license(s) or is not authorized by the Federal/State/local government to perform the
services for which it intends to render. (In the denial letter or recommendation to deny,
list appropriate citations, e.g., § 1861(r) or § 1861(s) of the Act).” CMS Ex. 3, at 2
(Program Integrity Manual, Chapter 10, 14.3 - Denials - (Rev. 41, 05-23-03)).

IV. Findings of Fact, Conclusions of Law, and Discussion

I make findings of fact and conclusions of law to support my decision in this case. I set
forth each finding below, in italics, as a separate heading. I discuss each finding in detail.

A. In the absence of objection, I adopt the material facts set forth in Petitioner’s
brief.

Petitioner’s brief recites a series of facts it asserts are apparently not disputed by CMS.
P. Br. at 1-7. Further, Petitioner agrees to waive a hearing and accept a decision on the
record if these facts are adopted. P. Br. at 18. I find CMS has not materially objected to
the facts asserted by Petitioner in its brief, and I thus accept and adopt the facts set forth
by Petitioner. These facts, taken from Petitioner’s brief, are set forth below.

> CMS states that in the current version of the Program Integrity Manual, this
section has been re-codified at Chapter 10, 6.2, Reason 5, and a citation to 42 C.F.R.
§ 424.530(a)(5) has been added. CMS Reply, at 2.
5

Petitioner’s owner, Dr. Wisdom, a licensed psychiatrist, was the Medical Director of a
hospital community psychiatric rehabilitation program, which included a partial hospital
program that was to be closed. In response to the closure, in 1992, Dr. Wisdom
established a CMHC called Solutions Mental Health Center (Solutions) which, in 1993,
was granted the Medicare provider number 26-4623 to participate in Medicare as a
CMHC providing partial hospitalization services. Solutions Medicare agreement was
terminated in 1994 when the DMH determined that it did not meet all requirements of a
CMHC because it could not screen patients being considered for admission to State
mental health facilities to determine the appropriateness of such admission. Solutions did
not appeal this decision.

Missouri law (sections 630.705 through 630.793 Mo. Rev. Stat. (1999)) gives the DMH
the authority to establish minimum requirements for CMHCs. Prior to 1994, the DMH
established a system of 25 CMHCs, as designated agents by contract with the DMH,
which CMHCs were responsible for screening patients within their geographic areas for
entry into Missouri’s system of psychiatric services. In 1994, Solutions entered into a
contract with North Central Community Mental Health Center (North Central) to provide
screening services as required by the DMH. North Central was the administrative agent
for a certain area and responsible for screening patients within that area. Petitioner notes
that, in northern Missouri, inpatient psychiatric services are available in only three
counties, and no counties have partial hospitalization services. Petitioner asserts at least
18 northern Missouri counties lack inpatient and partial hospitalization psychiatric
services. If enrolled, Petitioner intends to provide partial hospitalization services in
northern Missouri.

Since 1994, the DMH has refused to approve the applications of Solutions, or Petitioner,
Green Hills, to operate a CMHC, on the grounds that they did not meet the minimum
requirements of a CMHC because they were not one of the 25 agents authorized to screen
patients for admission into the state mental health system. Specifically, in 2004, Dr.
Wisdom, the sole owner of Solutions and of Petitioner, applied to reinstate Solutions’s
original provider number or, in the alternative, to establish a new provider number under
Petitioner’s name.

By letter dated January 31, 2005 (CMS Ex. 1, at 61-62) and by letter dated February 25,
2005 (CMS Ex. 1, at 41-42) Petitioner was notified that its enrollment application had
been denied. By letter dated March 23, 2005, Mary Tansey, General Counsel for the
DMH, explained the basis for the denial. She stated that the DMH was exercising its
authority to designate its administrative agents as the entry and exit points for the service
delivery system and, since Petitioner was not a designated agent, Petitioner was not
eligible to operate a CMHC. CMS Ex. 15. Petitioner requested an explanation for what it
needed to do to operate asa CMHC. P. Ex. 16. Attorney General Tansey responded by
6

offering an outline of the applicable law applying to a CMHC interested in operating a
partial hospitalization program and concluded that a CMHC had already been designated
for the geographic area that Petitioner intended to operate in. Therefore, Petitioner was
not eligible to be a CMHC. P. Br. at 1-7.

B. CMS is authorized to deny Petitioner enrollment in Medicare as a CMHC.

CMS argues that to be a provider a CMHC must meet the requisite licensing or
certification requirements in the state in which it is located. It must provide certain
services, which can be provided under arrangement with another entity. CMS asserts that
in Missouri the State identifies and designates CMHCs. Missouri has specifically
declined to designate Petitioner as a CMHC and Petitioner is thus not licensed, certified,
or otherwise authorized to operate a CMHC.’

In its brief, Petitioner argues that it has been denied due process because it did not receive
adequate notice of why CMS was denying enrollment to Petitioner; that its application
cannot be denied because the DMH has not designated it as an administrative agent for
screening patients for entry into the mental health system; and that its application to enroll
in Medicare cannot be denied because it is not licensed or certified to operate as a
CMHC.

1. Petitioner received adequate notice.

Petitioner asserts first that CMS did not give it adequate notice of why it was denying
enrollment. Petitioner refers to a February 25, 2005 letter which recommended that
Petitioner’s application to enroll in the Medicare program be denied because: 1)
“Medicare Program Integrity Manual, Chapter 10 - Healthcare/Provider/Supplier
Enrollment Section 14.3 - Denials - (Rev. 41, 05-23-03)”;* and 2) “The applicant does not

* CMS also states that even if Petitioner had a valid license it would have to have
undergone a site visit before it could be certified as a CMHC. Petitioner has argued that
its due process rights were violated because it was not given notice that it had to have a
site survey and that CMS is relying on this as a revised reason to deny its application.
CMS Reply at 3; P. Br. at 12-13. I agree with CMS that the requirement for the survey is
not a revised reason to deny Petitioner enrollment, but instead is another regulatory
requirement that Petitioner must meet to be eligible for enrollment. However, in this case
I do not need to reach that issue, as I find Petitioner did not meet the requirements for
licensure or certification.

* In footnote 4 of its brief, on page 11, Petitioner assumes a typographical citation
error in the Medicare Program Integrity Manual. CMS clarifies in its reply brief that
there was no typographical error. Specifically, CMS clarifies that the Medicare Program
7

have license(s) or is not authorized by the Federal/State/local government to perform the
services for which it intends to render.” CMS Ex. 1, at 41-42. Petitioner argues that the
first reason cited does not convey any information regarding a specific reason for denying
the application, but merely refers to the denial section of the Manual. As to the second
reason cited, Petitioner argues that it does not provide sufficient notice to satisfy
procedural due process or the Manual requirement that all denial (or recommendation for
denial) letters contain sufficient factual and background information so that the reader
understands exactly why the denial occurred. Petitioner argues it is not enough to simply
list one of the eight denial reasons. Further, Petitioner asserts that the letters it received
from the DMH, signed by Ms. Tansey (P. Exs. 15 and 17), do not clarify why the DMH
recommended to CMS that Petitioner’s application be denied.

Petitioner’s argument that it was denied due process because the denial letter did not
provide sufficient notice for it to respond to the allegations is not convincing. The reason
for the denial is clear. Petitioner had to meet the applicable licensing or certification
requirements for the State in which it is located. Here, the State of Missouri, through the
DMH, did not authorize Petitioner to act as a CMHC. The State specifically refused to
support Petitioner’s application for a CMHC partial hospitalization program because the
DMH had already designated other entities to act as its administrative agents in the
geographic area Petitioner was seeking to provide services in. CMS Ex. 1, at 41-42, 61;
P. Exs. 15, 17. Moreover, while Petitioner may not like the reasons the State of Missouri
was not supporting its application, the State’s reasons for doing so are clear.

2. The State of Missouri has not licensed, certified or authorized
Petitioner to act as a CMHC providing partial hospitalization services.

Petitioner argues that the Missouri decision to designate only 25 administrative agents as
CMHCs was arbitrary and capricious and serves no legitimate purpose. Petitioner asserts
that the law allows it to qualify for enrollment if it has a contract to provide screening
services with an agency authorized by the state to provide screening services. Petitioner
is under contract with North Central, and it asserts it is thus qualified and does not need to
be one of the 25 agents designated by the DMH. P. Br. at 13-16. Although Petitioner
may have an arrangement to provide such screening services (and thus may meet the first
requirement under section 1861(ff)(3)(B) of the Act and section 1913(c)(1) of the PHSA
that it provide screening services), Petitioner has not been licensed or certified or

Integrity Manual, Chapter 10 - Healthcare Provider/Supplier Enrollment Section 14.3 -
Denials - (Rev. 41, 05-23-03) was replaced by the current Revision 175 on November 24,
2006, in which section 14.3 has been re-codified at section 6.2 and a citation to 42 C.F.R.
§ 424.530(a)(5) added. The part of the section in effect at the time of the issuance of the
denial letter is in the record as CMS Ex. 3. CMS Br. at 1-2.
otherwise authorized to act as a CMHC by the State of Missouri, which is the reason
Petitioner’s application for enrollment was denied. While Petitioner may have an
argument with the State of Missouri on this issue, I have no authority to decide Missouri
law or how Missouri decides matters regarding its licensing, certification or authorization
of CMHCs.

Petitioner argues further that it cannot be denied enrollment solely for the reason that it is
not licensed or certified to operate as a CMHC by the State of Missouri. Petitioner asserts
that Missouri law does not require Petitioner to be licensed, citing to section 630.705 Mo.
Rev. Stat. (2000), which specifically defines the circumstances under which a CMHC be
licensed. Petitioner asserts that the statute states that any facility caring for less than four
persons whose care is not funded by the department does not have to be licensed.
Petitioner asserts it fits within this exception. Furthermore, Petitioner asserts there is no
requirement that an organization be certified to receive Medicare reimbursement. P. Br.
at 16-18. Again, Petitioner’s argument is with the State of Missouri. While Missouri law
may allow Petitioner to so operate, federal law requires that to receive Medicare
reimbursement Petitioner must be licensed or certified by the state. Moreover, as CMS
points out, Missouri law also provides at section 630.735 Mo. Rev. Stat. (2006), that
“fa]fter October 1, 1983, no person or governmental unit, acting separately or jointly with
any other person or governmental unit, shall establish, conduct or maintain any residential
facility or day program in this state for care, treatment, habilitation or rehabilitation of
persons diagnosed as mentally disordered or mentally ill or day program for mentally
retarded or developmentally disabled persons unless the facilities or programs are
licensed by the department.”” (Emphasis added). Thus, it is not clear that Petitioner could
operate in the State of Missouri. However that issue is not relevant to my decision in the
matter before me.

Lalso disagree with the argument Petitioner makes in its January 19, 2007 reply brief.
Petitioner responds to a CMS argument (in the CMS Reply at 6) that section 630.620 of
Mo. Rev. Stat. (2006) requires that facilities in which patients are placed must be licensed
or certified. Petitioner asserts that the statute is directed at the DMH, not to independent,
freestanding CMHCs seeking reimbursement for services. However, a reading of the
statute indicates that a facility receiving a referral of a patient by the DMH must be
licensed or certified. That would apply toa CMHC. Once again, Petitioner’s argument
would be with the State of Missouri. Federal law requires a CMHC to be licensed or
certified by the state. Here, the State of Missouri has specifically determined not to
license, certify, or otherwise authorize Petitioner to act as a CMHC.
Vv. CONCLUSION

Federal law requires that an entity applying for provider status as a CMHC providing
partial hospitalization services must meet applicable licensing and certification
requirements in the state in which it is located, and meet “such additional conditions” as
specified by the Secretary. Act, section 1861(ff)(3)(B). Here the State of Missouri has
specifically declined to recognize Petitioner as a CMHC and it was neither licensed or
certified, or otherwise so authorized, by the State of Missouri. Thus, CMS was
authorized to deny enrollment to Petitioner to participate in the Medicare program as a
CMHC providing partial hospitalization services.

/s/
Alfonso J. Montano
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
Adams County Manor (CCN: 36-6143), Date: January 30, 2008
)
Petitioner, )
)
-Vv.- ) Docket No. C-07-331
) Decision No. CR1730
Centers for Medicare & Medicaid )
Services. )
)
DECISION

Petitioner, Adams County Manor (Petitioner or facility), is a long-term care facility in
West Union, Ohio, certified to participate in the Medicare program as a provider of
services. Petitioner challenges the Centers for Medicare & Medicaid Services’ (CMS’s)
determination that, from August 23, 2006 through January 3, 2006, it was not in
substantial compliance with program participation requirements because its fire alarm
system did not work reliably. Petitioner also challenges the penalty CMS imposed — a
Denial of Payment for New Admissions (DPNA), effective November 25, 2006 through
January 3, 2007.

CMS asks for summary affirmance. For the reasons discussed below, I grant CMS’s
motion. I conclude that the facility’s admissions as to its deficiencies provide a sufficient
basis for imposing a DPNA.

I. Background

To participate in the Medicare program, facilities periodically undergo surveys to
determine whether they comply with applicable statutory and regulatory requirements.
The Secretary of Health and Human Services contracts with state survey agencies to
conduct those surveys. Social Security Act (Act) § 1864(a); 42 C.F.R. § 488.20. The
regulations require that each facility be surveyed at least once every 12 months, and more
often, if necessary, to ensure that identified deficiencies are corrected. 42 C.F.R.
2

§ 488.20(a). Ifa facility is not in substantial compliance with program requirements,
CMS may impose a remedy, including a DPNA. 42 C.F.R. § 488.406. The facility may
not then appeal CMS’s choice of remedy. 42 C.F.R. § 488.408(g)(2).

When a facility is found to be out of substantial compliance for three months or longer,
CMS must impose a DPNA. 42 C.F.R. § 488.417. Ifa facility is subject to a DPNA, its
Nurse Aide Training and/or Competency Evaluation Program (NATCEP) may not be
approved. Act, § 1819(f)(2)(B).

In this case, the Ohio Department of Health (state agency) conducted a Life Safety Code
(LSC) survey of the Petitioner on August 23, 2006, and an annual health survey on
August 25, 2006, to determine whether Petitioner was in substantial compliance with
Medicare participation requirements. Both surveys found that the facility was not in
substantial compliance with program requirements. On October 12, 2006 and November
14, 2006, LSC revisit surveys found that the facility remained out of substantial
compliance with federal requirements.' An LSC revisit survey on January 4, 2007, found
that the facility achieved substantial compliance as of January 4, 2007.

As a result of these findings, CMS imposed a DPNA from November 25, 2006 through
January 3, 2007, which also precluded Petitioner from conducting NATCEP for two years
beginning on November 25, 2006. CMS Ex. 6, at 2; see Act, § 1819(f)(2)(B); 42 C.F.R.

§ 488.417.

Petitioner requested a hearing (P. Hearing Request) and the case was assigned to me. I
issued an initial pre-hearing order which directed the parties to file pre-hearing exchanges
including briefs and proposed exhibits that included the written direct testimony of all
proposed witnesses. The parties complied with the exchange requirements. With its pre-
hearing brief (CMS Op. Br.) CMS moved for summary judgment. Petitioner opposed
CMS’s motion in its pre-hearing brief (P. Br.). In its opposition Petitioner raised new
issues (the building’s classification by the Ohio Department of Commerce), so, by order
dated October 12, 2007, I gave CMS the opportunity to reply. Responding to my order,
Petitioner asked to file a sur-reply, but, inasmuch as CMS had not yet filed a reply, I
denied the request as premature. CMS then filed its reply in support of its motion for
summary affirmance (CMS Reply). Petitioner did not renew its request for a sur-reply
after CMS’s reply was filed.

' In order to sustain the penalty imposed here, I need not consider the deficiencies
cited during the August 25, 2006 health survey. On October 12, 2006, a revisit health
survey found that the facility had no health deficiencies that would cause it to be out of
substantial compliance.
3

With its pre-hearing exchange CMS filed 59 proposed exhibits which it identified as
CMS Ex. 1 — CMS Ex. 59. With its exchange Petitioner filed two proposed exhibits
which it identified as P. Ex. | — P. Ex. 2.

II. Issues

I consider first whether summary judgment is appropriate. On the merits, the sole issue
before me is whether, at the time of the August 23, October 12, and November 14, 2006
surveys, the facility was in substantial compliance with the requirements of the LSC.

III. Discussion

A, Summary judgment is appropriate because Petitioner has not brought
forth evidence sufficient to establish a genuine factual dispute.

“To defeat an adequately supported summary judgment motion, the non-moving party
may not rely on the denials in its pleadings or briefs, but must furnish evidence of a
dispute concerning a material fact... .” Livingston Care Center, DAB No. 1871 (2003).
The moving party may show the absence of a genuine factual dispute by showing that the
non-moving party has presented no evidence “sufficient to establish the existence of an
element essential to [that party’s] case, and on which [that party] will bear the burden of
proof at trial.” Livingston Care Center v. Dep’t of Health and Human Services, 388 F.3d
168, 173 (6" Cir. 2004) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). To
avoid summary judgment, the non-moving party must then act affirmatively by tendering
evidence of specific facts showing that a dispute exists. Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986); see also Vandalia Park, DAB No.
1939 (2004); Lebanon Nursing and Rehabilitation Center, DAB No 1918 (2004).

Here, CMS has come forward with evidence that, at the time of the surveys, the facility
did not comply with LSC requirements with respect to its fire warning system and its
sprinkler system. In response, Petitioner argues that the facility building in question is
not subject to the LSC requirements, which is a legal argument. Petitioner also argues
that the state agency should have accepted an earlier date of correction. However, as the
following discussion establishes, Petitioner presents no evidence sufficient to establish
that 1) at the time of the surveys, it maintained an effective fire warning system, and 2) at
the time of the August survey, its automatic sprinkler system was maintained in reliable
operating condition, with periodic inspections and tests.

Because the undisputed facts establish deficiencies that are sufficient to sustain the
penalties imposed, CMS is entitled to summary judgment.
4

B. The facility was not in substantial compliance with LSC sections 19.3.4 and
9.6 (K051) because its fire alarm system did not work properly.

The facility here consists of two buildings. Building | was built in 1859 and is located
between two new wings termed Building 2. CMS Ex. 10, at 1; CMS Ex. 54, at 2 (Borell
Decl.); CMS Ex. 56, at 2 (Washburn Decl.).’ Building 1 is currently used for physical
and occupational therapy, activities, dining, and the kitchen is located there. P. Ex. 2, at4
(Houser Decl.); CMS Ex. 54, at 2 (Borell Decl.); CMS Ex. 56, at 2 (Washburn Decl.).
Building 2 was built from 2005 to 2006 and is used primarily for resident rooms. P. Ex.
2, at 2 (Houser Decl.); CMS Ex. 54, at 2 (Borell Decl.).

A facility must be designed, constructed, equipped, and maintained to protect the health
and safety of its residents, personnel, and the public. 42 C.F.R. § 483.70. With respect to
fire safety, facilities “must meet the applicable provisions of the 2000 edition of the
[LSC] of the National Fire Protection Association [(NFPA)].” 42 C.F.R. § 483.70(a)(1).

The LSC requires that facilities install and maintain adequate fire detection and
communications systems. The purpose of these systems is to

provide the indication and warning of abnormal conditions,
the summoning of appropriate aid, and the control of
occupancy facilities to enhance protection of life.

LSC § 9.6.1.3.

Initiation of the required fire alarm systems shall be by
manual means in accordance with 9.6.2 and by means of any
required sprinkler system waterflow alarms, detection
devices, or detection systems.

LSC § 19.3.4.2. See also LSC § 19.3.4.1 ( “[h]ealth care occupancies shall be provided
with a fire alarm system in accordance with Section 9.6”).

> Petitioner points out that the facility actually consists of five buildings: Building
1 (1859), the two new wings, and two stair towers. P. Ex. 2, at 2 (Houser Decl.). The
surveyors explain that Building 2 is comprised of the two new wings. CMS Ex. 54, at 2
(Borell Decl.); CMS Ex. 56, at 2 (Washburn Decl.). It makes no difference whether the
two new wings and stair towers are considered together or separately, so, to avoid
confusion, I will refer to all of the new constructions as Building 2.
5

Fire detection, alarm, and communications systems installed
to make use of an alternative allowed by this Code shall be
considered required systems and shall meet the provisions of
this Code applicable to required systems.

LSC § 9.6.1.2.

The LSC also requires an approved maintenance and testing program for the fire alarm
system, with the facility maintaining records of that maintenance and testing, as well as
maintaining a copy of the certificate of compliance. LSC § 9.6.1.7; LSC § A.9.6.1.7.

The fire alert system in Building | did not work properly during any of the LSC surveys.
P. Ex. 2, at 4 (Houser Decl.); CMS Ex. 10, at 11-13; CMS Ex. 49, at 3-4; CMS Ex. 51, at
2-3; CMS Ex. 56, at 5 (Washburn Decl.). On August 23, 2006, two pull stations of the
fire alarm system in that building did not activate the fire alarm system. CMS Ex. 10, at
1-13; CMS Ex. 11, at 16; CMS Ex. 14, at 6; CMS Ex. 54, at 11-12. The facility’s
maintenance director admitted that the alarm did not sound after either pull station was
activated and even told the surveyor that the pull stations on the second floor were not
working either. CMS Ex. 10, at 11-13; CMS Ex. 54, at 11-12. In its hearing request,
Petitioner acknowledges that the pull stations were in need of repair, but claims that they
were repaired that day. P. Hearing Request at 4.

But when the surveyors returned to the facility on October 12, 2006, the fire alarm pull
station on the second floor still did not work properly. The alarm sounded on the first
floor, but it did not sound on the second floor. CMS Ex. 49, at 4; CMS Ex. 50, at 1; CMS
Ex 56, at 5 (Washburn Decl.). A staff member asked to retest the alarm using a different
pull station. Again, the alarm did not sound on the second floor, and the strobe light
associated with the alarm did not illuminate. CMS Ex. 49, at 4; CMS Ex. 50, at 1; CMS
Ex 56, at 5 (Washburn Decl.).

Petitioner subsequently claimed that the fire alarm on the second floor “was operational

ry November 10, 2006.” P. Hearing Request at 2. However, at the time of the November
4, 2006 LSC revisit survey, the fire alarm pull station on the first floor did not work
properly. The alarm did not sound and the strobe light did not flash. When the alarm was
pulled on the second floor, only a faint sound could be heard on the first floor. The
facility maintenance director indicated in an interview with the surveyor that the facility
ad used a light without a horn at one time, but that the light had been disconnected
during recent construction and no longer worked. The maintenance director did not
mention any alternative means of fire alert either during or after completion of the
construction. CMS Ex. 51, at 2-3; CMS Ex. 52, at 1; CMS Ex. 54, at 18-19.

6

In his declaration, John B. Houser, one of the facility’s owners (who was not at the
facility during any of the surveys) admits that the fire system did not function properly.
According to Mr. Houser, “one part would be working one time and another part would
be working another.” P. Ex. 2, at 1, 3-4 (Houser Decl.).

The LSC specifically requires that facilities maintain records of maintenance and testing
and a copy of the certificate of compliance. LSC § 9.6.1.7; LSC § A.9.6.1.7. During the
August survey, the facility could not provide documentation as to the date and time of the
last fire alarm inspection for Building 1. P. Hearing Request at 4 (“[m]Jaintenance
personnel will also keep a record of fire alarm inspections.”). The facility’s maintenance
director admitted that the facility had no records of the last fire alarm inspection for
Building 1. P. Hearing Request at 4. Petitioner’s hearing request also states that it had to
instruct personnel to keep records of fire alarm inspections. CMS Ex. 7, at 4. To be in
compliance with testing requirements, a facility must document that it inspected and
tested a system as required. Crestview Parke Care Center v. Thompson, 373 F.3d 743,
751 (6th Cir. 2004);° Price Hill Nursing Home, DAB No. 1781, at 18-19 (2001).

Thus, there is no dispute that the facility’s fire alarm system did not function reliably.
During each of the surveys, the alarm system failed. Nor has Petitioner demonstrated that
it maintained and tested the system as required. CMS is therefore entitled to summary
judgment on these issue. See Crestview Parke Care Center v. Thompson, 373 F.3d 743,
751 (6" Cir. 2004) (court affirmed agency finding of LSC violation where no dispute that
at the time of the survey staff were unable to start the emergency generator, and where
facility produced no evidence that the generator had been tested as required).

C. At the time of the August 23, 2006 survey, the facility was not in
substantial compliance with LSC sections 19.7.6, 4.6.12, and 9.7.5 (K062).

Obviously, a sprinkler system that does not operate properly is useless. LSC sections
19.7.6, 4.6.12, and 9.7.5 provide that automatic sprinkler systems must be continuously
maintained in reliable operating condition and must be inspected and tested periodically.
There is no dispute that the LSC (NFPA 13 section 4.9.12) requires that sprinkler heads
used for kitchen hood suppression be replaced annually.

* For a more comprehensive discussion of the documentation requirement, see the
full text of the DAB decision in Crestview. Crestview Parke Care Center, DAB No. 1836
(2002).
7

Here, as staff admitted, Petitioner’s kitchen sprinkler heads were dirty and greasy.
Moreover, Petitioner could not produce documentation that the kitchen hood sprinkler
had been replaced as required. CMS Ex. 10, at 15-16; CMS Ex. 11, at 19; CMS Ex. 14, at
6; CMS Ex 54, at 14-15; see discussion supra p. 6, Part IIIB.

Petitioner has not denied these allegations, but asserts in its hearing request that the
sprinkler heads were scheduled to be cleaned. P. Hearing Request at 5. A scheduled
cleaning is not sufficient to satisfy the LSC requirements. Had the sprinkler heads been
maintained as required, they would not have been in the sorry state the surveyors found.
See LSC §19.7.6 (referring to LSC § 4.6.12, which requires the maintenance of “any
device, equipment, system, condition, arrangement, level of protection, or any other
feature” required for compliance with the LSC); LSC § 9.7.5 (“All automatic sprinkler
and standpipe systems required by this Code shall be inspected, tested, and maintained in
accordance with NFPA 25, Standard for the Inspection, Testing, and Maintenance of
Water-Based Fire Protection Systems.”)

I therefore find that Petitioner was not in substantial compliance with LSC sections
19.7.6, 4.6.12, and 9.7.5.

D. Building 1 is subject to the requirements of the LSC.

Petitioner does not argue that Building 1 was in compliance with the LSC provisions that
apply to nursing facilities. Instead, Petitioner asserts that the Ohio Department of
Commerce classified Building 1 as a Group B (business) building,’ and argues that, as
such, it is not subject to the LSC provisions upon which CMS relies. P. Br. at 1. In
support of this claim, Petitioner offers the declaration of an engineer, Mr. J.D. Stine, and
a copy of the Ohio Department of Commerce Plan Approval. P. Ex. 1.

Neither the Ohio Building Code nor the state classification system exempts Petitioner
from compliance with federal requirements for Medicare participation. Facilities “must
meet the applicable provisions of the 2000 edition of the [LSC] of the [NFPA].” 42
C.F.R. § 483.70(a)(1). Moreover, for the initiation of required fire alarm systems, both
the LSC provisions for business (LSC section 39) and health care (LSC section 19)
incorporate LSC section 9.6.2. Therefore, whether termed a business or a healthcare
occupancy, the LSC requires Petitioner to have an operating fire detection, alarm, and
communications system with activation by manual means throughout the facility.

* “Business Group B occupancy includes, among others, the use of a building or
structure, or a portion thereof, for office, professional or service-type transactions,
including storage of records and accounts.” Ohio Admin. Code Chapter 4 § 304.1.
8

In any event, Mr. Houser’s declaration confirms that Building 1 was regularly used for
resident services, including physical therapy, dining, and activities. P. Ex. 2, at 4 (Houser
Decl.). Because residents routinely access the building, Building 1 must be subject to
those provisions of the LSC that apply to nursing facilities.*

E. The duration of the penalty is consistent with statutory and regulatory
requirements.

Petitioner complains that it corrected its deficiencies earlier than January 4, 2007.
Substantial compliance means not only that the specific cited instances of substandard
care were corrected, and that no other instances have occurred, but also that the facility
has implemented a plan of correction designed to assure that no such incidents occur in
the future. The burden is on the facility to prove that it has resumed complying with
program requirements, not on CMS to prove that deficiencies continued to exist after they
were discovered. Asbury Center at Johnson City, DAB No. 1815, at 19-20 (2002). A
facility’s return to substantial compliance usually must be established through a resurvey.
Cross Creek Care Center, DAB No. 1665 (1998); Hermina Traeye Memorial Nursing
Home, DAB No. 1810, at 12 (2002) (citing 42 C.F.R. § 488.454(a) and (e)).

Requiring a showing of correction through a resurvey makes eminently good sense in this
case, where the facility’s fire alarm system was unreliable without being wholly
dysfunctional. This is not a situation in which the system was broken, and then repaired
and worked reliably thereafter. This is a situation in which repeated efforts did not
resolve the system’s underlying problems, so it could not be relied upon. It appears that
repairing the pull station on one floor disrupted the system on the other floor. A
temporary repair endangers residents and staff, and is not sufficient to establish that the
facility achieved substantial compliance. The mere existence of an alarm “creates a
reasonable expectation by the public that these safety features are functional. When
systems are inoperable or taken out of service but the devices remain, they present a false
sense of safety.” LSC § A.4.6.12.2. CMS therefore reasonably required the facility to
establish through resurvey that the problem had been corrected.

> At best, the building might fall into the category of “mixed occupancies.” See
LSC § 6.1.14. A mixed occupancy building is one “in which two or more classes of
occupancy exist in the same building or structure and where such classes are intermingled
so that separate safeguards are impracticable.” LSC § 3.3.134.10. As such, it would still
be subject to the nursing facility provisions.
IV. Conclusion

For all of the reasons discussed above, I uphold CMS’s determination that Petitioner was
not in substantial compliance with program participation requirements from August 23,
2006 through January 3, 2007. CMS therefore had a basis for imposing a remedy. I have
no authority to review CMS’s choice of remedy, and must uphold the imposition of a
DPNA.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


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

)
In the Case of: )
) Date: January 23, 2008
Paul Ojewoye, )
)
Petitioner, ) Docket No. C-07-640
) Decision No. CR1I729
“Vi )
)
The Inspector General. )
)
DECISION

Petitioner is excluded from participation in Medicare, Medicaid, and all other federal
health care programs pursuant to section 1128(a)(1) of the Social Security Act (Act) (42
U.S.C. § 1320a-7(a)(1)), effective June 20, 2007, based upon his conviction for a criminal
offense related to the delivery of an item or service under Medicare or a state health care
program. There is.a proper basis for exclusion. Petitioner’s exclusion for five years is
mandatory pursuant to section |128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).

I. Background

The Inspector General for the Department of Health and Human Services (I.G.) notified
Petitioner by letter, dated May 31, 2007, that he was being excluded from participation in
Medicare, Medicaid, and all federal health care programs pursuant to section | 128(a)(1)
of the Act based upon his conviction in the Circuit Court for Baltimore City, Maryland, of
a criminal offense related to the delivery of an item or service under Medicare or a state
health care program. The [.G. advised him that the exclusion was for the minimum
statutory period of five years and was effective 20 days from the date of the letter.
7

Petitioner timely requested a hearing before an administrative law judge (ALJ) by letter
dated August 1, 2007. The case was assigned to me for hearing and decision on August
21, 2007. On September 18, 2007, | convened a prehearing telephonic conference, the
substance of which is memorialized in my order dated September 20, 2007. During the
prehearing conference the parties agreed that this case may be resolved upon the
documents and briefs and [ accepted Petitioner's waiver of an oral hearing.

On October 12, 2007, the I.G. filed its brief (I.G. Brief), with exhibits (I.G. Exs.) |
through 6. On December I 1, 2007, Petitioner filed his response ¢P. Brief), with one
exhibit, marked exhibit | (P. Ex. 1).' On December 21, 2007, the I.G. filed its reply (LLG.
Reply) to Petitioner's response with I.G. Ex. 7. I admit as evidence P. Ex. | and IG. Exs.
1, 2,3, 5, and 6. Petitioner objects to the admission of I.G. Ex. 4 on grounds that it is
inadmissible hearsay and because it includes many facts never proven at trial. P. Brief at
5. The 1.G. responded to Petitioner’s objection, arguing that hearsay is admissible in this
proceeding and that [.C .4 is reliable even though it is hearsay. [.G. Reply at 1-2.
The I.G. submitted I.G. Ex. 7, a declaration of Jason Weinstock, the former Assistant
Attorney General for the State of Maryland that was involved in Petitioner’s criminal
prosecution. Mr. Weinstock explains in this declaration that IG. Ex. 4 is a copy of the
statement of facts that he prepared and read into the record in Petitioner’s criminal
proceedings to induce the judge to accept Petitioner's plea.

' My September 20, 2007 Order directed Petitioner to file his response to the
1.G.’s brief by November 19, 2007. On November 26, 2007, I directed Petitioner to show
cause why his case should not be dismissed because no brief was filed by Petitioner on
November 19. Petitioner personally responded to the order to show cause on December
7, 2007, explaining that he did not intend to abandon his case and that he assumed his
attorney had filed a response to the I.G.’s brief. On December | 1, 2007, Petitioner’s
attorney filed a response to the I.G.’s brief bearing a date of November 19, 2007, with a
cover letter explaining that Petitioner's response brief had not been timely transmitted to
me due to clerical error. | conclude that dismissal for abandonment or as a sanction is not
appropriate, but proceed to a decision on the merits.

? LG. Ex. 7 filed with the I.G. Reply appears to have been a copy received by the
1G. by facsimile. On January 7, 2008, counsel for the I.G. filed the original declaration
marked as 1.G. Ex. 7. Both the facsimile and original are identical in content except for
the facsimile header and footer information that appears on the copy filed with the I.G.
Reply. Both versions of the declaration will remain in the record and shall be treated as
LG. Exs. 4 and 7.
3

The I.G. is correct that hearsay is admissible in proceedings pursuant to the
Administrative Procedures Act (5 U.S.C. Subchapter IT), so long as it is authentic and

relevant. Although I.G. Ex. 4 is unsigned and undated, the declaration of Mr. Weinstock
at LG. Ex. 7 provides sufficient authentication. Both I.G. Exs. 4 and 7 provide
information regarding Petitioner's underlying criminal conviction and they have at least
minimal relevance. Accordingly, 1.G. Exs. 4 and 7 are admitted. | note, however, that
neither exhibit has any real impact upon my decision, because the underlying criminal
conviction is not subject to challenge before me. 42 C.F.R. § 1001.2007(d).

II. Discussion
A. Findings of Fact

The following findings of fact are based upon the undisputed assertions of fact in the
pleadings and the exhibits admitted:

I. Petitioner, the President of Calvary Healthcare, Inc., was indicted by a grand jury
in Maryland of one count of felony Medicaid fraud and one count of felony theft.
P. Briefat 2; LG. Ex, 2.

2. On February 23, 2007, Petitioner agreed to a plea bargain pursuant to which he
agreed to plead guilty and to pay a fine without going to trial or risking
imprisonment. P. Brief at 3.

3. On February 23, 2007, Petitioner pled guilty in the Circuit Court for Baltimore
City, Maryland, to the count of Medicaid fraud, which alleged that from about
December 10, 2002 through September 28, 2003, Petitioner knowingly defrauded
the Maryland Medical Assistance Program (Medicaid) by submitting for payment
claims totaling more than $500, falsely representing that Calvary Healthcare, Inc.
had provided services to Medicaid recipients when he knew that such services
were not provided. [.G. Ex. 2, at 2; 1.G. Ex. 3, at 1.

4. Petitioner was convicted pursuant to his plea and he was given one year of
unsupervised probation before judgment pursuant to Md. Code Ann., Crim. Pro.
§ 6-220, and he was ordered to pay restitution of $6000. 1.G. Ex. 3; I.G. Ex. 5, at
2.

5. A docket entry dated February 23, 2007, shows that the guilty verdict was stricken
and entry of judgment stayed pursuant to Md. Code Ann., Crim. Pro. § 6-220. LG.
Ex. 5; 1.G. Ex. 6, at 5-6.
4

6. The I.G. notified Petitioner by letter dated May 31, 2007, that he was being
excluded from participation in Medicare, Medicaid, and all federal health care
programs for the minimum statutory period of five years, pursuant to section
1128(a)(1) of the Act.

7. Petitioner timely requested a hearing by letter dated August 1, 2007.

B. Conclusions of Law

I. Petitioner’s request for hearing was timely and I have jurisdiction.

2. Petitioner was convicted of a criminal offense within the meaning of section
1128(i) of the Act (42 U.S.C. §1320a-7(i)).

3. Petitioner was convicted of an offense related to the delivery of an item or service
under Medicare or a state health care program.

4. There is a basis to exclude Petitioner pursuant to section 1128(a)(1) of the Act.

5. Pursuant to section | 128(c)(3)(B) of the Act, the minimum period of exclusion

under section 1 128(a) is five years and that period is presumptively reasonable.
C. Issue

Whether there is a basis for Petitioner’s exclusion under section 1 128(a)(1) of the Act.
D. Applicable Law

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation
in the Medicare and Medicaid programs any individual convicted of a criminal offense
related to the delivery of an item or service under Medicare or under any state health care
program. Section |128(c)(3)(B) of the Act provides that an exclusion imposed under
section 1128(a) of the Act shall be for a minimum period of five years. Pursuant to 42
C.F.R. § 1001.102(b), the period of exclusion may be extended based on the presence of
specified aggravating factors. Only if aggravating factors justify an exclusion period
longer than five years may mitigating factors be considered as a basis for reducing the
exclusion period to no less than five years. 42 C.F.R. § 1001.102(c).

The standard of proof is a preponderance of the evidence. 42 C.F.R. § 1001.2007(c).
Petitioner bears the burden of proof and persuasion on affirmative defenses or mitigating
factors. I.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(b) and (c).
E. Analysis

1. There is a basis to exclude Petitioner pursuant to section 1128(a)(1)
of the Act.

Petitioner was the President of Calvary Healthcare, Inc. P. Brief at 2. Petitioner was
indicted by a grand jury in Maryland of one count of felony Medicaid fraud and one count
of felony theft. IG. Ex. 2, On February 23, 2007, Petitioner agreed to a plea bargain
pursuant to which he agreed to plead guilty and to pay a fine without going to trial or
risking imprisonment. P. Brief at 3. On February 23, 2007, Petitioner pled guilty in the
Circuit Court for Baltimore City, Maryland, to the count of Medicaid fraud. The count of
Medicaid fraud to which Petitioner pled guilty alleged that from about December 10,
2002 through September 28, 2003, Petitioner knowingly defrauded the Maryland Medical
Assistance Program (Medicaid) by submitting for payment claims totaling more than
$500, falsely representing that Calvary Healthcare, Inc. had provided services to
Medicaid recipients when he knew that such services were not provided. I.G. Ex. 2, at 2;
I.G. Ex, 3, at 1. Petitioner was convicted pursuant to his plea and he was given one year
of unsupervised probation before judgment pursuant to Md. Code Ann., Crim. Pro. § 6-
220, and he was ordered to pay restitution of $6000. I.G. Ex. 3; LG. Ex. 5, at 2. A docket
entry dated February 23, 2007, shows that the guilty verdict was stricken and entry of
judgment stayed pursuant to Md. Code Ann., Crim. Pro. § 6-220. I.G. Ex. 5; I.G. Ex. 6,
at 5-6.

The LG. cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory
exclusion. The statute provides:

(a) MANDATORY EXCLUSION. ~ The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined in
section | 128B(f)):

(1) Conviction of program-related crimes. — Any
individual or entity that has been convicted of a
criminal offense related to the delivery of an item or
service under title XVII or under any State health care
program.

Clearly the statute requires exclusion from participation any individual or entity: (1)
convicted of a criminal offense; (2) where the offense is related to the delivery of an item
or service; and (3) the item or service is or was to be delivered pursuant to title XVIII of
the Act (Medicare) or under any state health care program.
6

Petitioner argues that he was not convicted within the meaning of section [128(i) of the
Act (P. Brief at 4) and that the 1.G. has not shown that Petitioner knowingly or willfully
committed Medicaid fraud (P. Brief at 5).

Petitioner's argument that he was not convicted within the meaning of the Act is without
merit. Pursuant to section 1128(i) of the Act, an individual is “convicted” of a criminal
offense when a judgment of conviction has been entered by a federal, state, or local court
whether or not an appeal is pending or the record has been expunged; or when there has
been a finding of guilt in a federal, state, or local court; or when a plea of guilty or no
contest has been accepted ina federal, state, or local court; or when an accused individual
enters a first offender program, deferred adjudication program, or other arrangement
where a judgment of conviction has been withheld. The decision of the United States
Court of Appeals for the Ninth Circuit in Travers v. Shalala, 20 F.3d 993, 996-99 (9° Cir.
1994) is instructive. The court in 7ravers recognized the important points that it is the
Social Security Act, and not the state law, that provides the definition of the term
“conviction,” and that it is necessary to look at the substance of the proceedings in the
criminal court rather than rely upon labels or characterizations used by the state or the
parties in those proceedings. The court in 7ravers also defined a “deferred prosecution”
as an agreement between the prosecutor and the defendant pursuant to which prosecution
of the charges is delayed. The court recognized that a “deferred adjudication” does not
involve a deferral of prosecution by the prosecutor. 20 F.3d at 996-97. According to the
court, a deferred prosecution would not amount to a conviction under the Act while a
deferred adjudication clearly does.

Looking at the substance of what occurred in the instant case, Petitioner clearly received a
deferred adjudication rather than a deferred prosecution. The evidence shows that
Petitioner entered a plea bargain. The effect of the plea bargain was that the judge in the
criminal court applied the Maryland “probation before judgment” statute (Md. Code
Ann., Crim. Pro. § 6-220), the guilty verdict against Petitioner was stricken, entry of
judgment was stayed pending Petitioner’s completion of probation, and Petitioner paid his
$6000 fine. IG. Exs. 3, 5 at 2, and 6 at 5-6. Petitioner himself conceded, in his August |,
2007 request for hearing, that he had agreed to a plea bargain to avoid psychological and
emotional stress attendant to defending the criminal charge. He made essentially the
same admission in his brief. P. Brief at 2-3. Based on the foregoing facts, | have no
trouble concluding that a “conviction” has occurred within the meaning of section
1128(1)(3) of the Act.

Petitioner's second theory that the I.G. has failed to prove that he intended to or that he
knowingly and willfully defrauded Medicaid (P. Brief at 5) is also without merit. Section
1128(a)(1) requires exclusion of one convicted of a criminal offense related to the
delivery of an item or service under Medicare or a state Medicaid program. The I.G. need
only show that a conviction occurred, that the conviction was related to the delivery of an
7

item or service. and that the item or service was being delivered pursuant to Medicare or
Medicaid. There is no element of intent and the LG. is not required to establish that the
underlying offense was committed knowingly and willfully. Indeed, the Secretary has
specifically provided by regulation that the underlying conviction is not reviewable or
subject to collateral attack, whether on substantive or procedural grounds. 42 C.F.R.

§ 1001.2007(d).

Based on the foregoing, [ conclude that there is a basis for Petitioner's exclusion under
section 1128(a)(1) of the Act.

2. Pursuant to section 1128(c)(3)(B) of the Act, the minimum period of
exclusion under section 1128(a) is five years.

Petitioner has not disputed that the minimum period of exclusion pursuant to section
1128(a) is five years as mandated by section | 128(c)(3)(B) if | determine he is subject to
mandatory exclusion, [have found there is a basis for his exclusion pursuant to section
1128(a) and the minimum period of exclusion is thus five years.

II. Conclusion
For the foregoing reasons, Petitioner is excluded from participation in Medicare,

Medicaid, and all federal health care programs for the minimum statutory period of five
years effective June 20, 2007.

/s/ Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: )
) Date: January 22, 2008
Nick Lee Soto, )
)
Petitioner, ) Docket No. C-07-744
) Decision No. CR1728
-v.- )
)
The Inspector General. )
oo )
DECISION

Petitioner’s request for a hearing is dismissed because it was untimely filed.
I. Background

The Inspector General (I.G.) notified Petitioner by letter dated April 30, 2007, that he was
being excluded from participating in Medicare, Medicaid, and all federal health care
programs pursuant to section 1128(b)(4) of the Social Security Act (the Act). The I.G.
cited as a basis for the exclusion that Petitioner’s registered nurse license had been
revoked, suspended, or otherwise lost or was surrendered while a formal disciplinary
proceeding was pending before the Board of Nurse Examiners for the State of Texas for
reasons bearing upon Petitioner’s professional competence, professional performance, or
financial integrity. Petitioner requested a hearing by a letter dated September 10, 2007.

The case was assigned to me for hearing and decision on October 5, 2007. On October
25, 2007, I convened a prehearing conference by telephone, the substance of which is set
forth in my order dated October 29, 2007. During the prehearing conference, counsel for
the L.G. asserted that Petitioner’s request for hearing was not timely filed and that it must
be dismissed. The I.G. requested an opportunity to file a motion to dismiss before any
further case development. I established the briefing schedule set forth in my order dated
October 29, 2007.
2

The LG. filed its motion to dismiss with supporting brief and I.G. exhibits (1.G. Ex.) 1
through 6. Petitioner was to file any response to the motion to dismiss on or before
January 4, 2008, with any supporting evidence. Petitioner filed no response and the LG.
motion is uncontested and I.G. Exs. 1 through 6 are admitted.
II. Discussion
A. Findings of Fact
1. The L.G. notified Petitioner by letter dated April 30, 2007, that he was being
excluded from Medicare, Medicaid, and all federal health care programs pursuant
to section 1128(b)(4) of the Act. I.G. Ex. 1.
2. Petitioner received the I.G. notice of exclusion on May 9, 2007. LG. Ex. 5.
3. Petitioner’s request for hearing is dated September 10, 2007. I.G. Ex. 2.

B. Conclusions of Law

1. Petitioner’s request for hearing was not filed within 60 days of his receipt of the
.G. notice of exclusion and it is, therefore, untimely.

2. An untimely request for hearing must be dismissed. 42 C.F.R. § 1005.2(e)(1).

3. Dismissal of Petitioner’s request for hearing is required.
C. Issues

Whether Petitioner’s request for hearing must be dismissed because it was
not filed timely.

D. Analysis

The L.G. notified Petitioner by letter dated April 30, 2007, that he was being excluded
from Medicare, Medicaid, and all federal health care programs pursuant to section
1128(b)(4) of the Act. Petitioner is incarcerated in the State of Texas penal system. The
notice was mailed to Petitioner at a Texas Department of Corrections address in
Tennessee Colony, Texas. I.G. Ex. 1. The I.G. has presented an affidavit from a Mail
Room Supervisor in the Texas Department of Corrections who attests that the LG. notice
was received and logged in at the prison mail-room on May 8, 2007, and that it was
delivered to Petitioner on May 9, 2007. LG. Ex. 5. Petitioner’s request for hearing is
dated September 10, 2007. I.G. Ex. 2.
3

The regulations are clear that a request for hearing must be filed in writing within 60 days
after the notice of exclusion is provided. The date of receipt of the notice is presumed to
e five days after the date of the notice, unless there is a reasonable showing to the
contrary. 42 C.F.R. § 1005.2(c). In this case, the I.G. has presented evidence which
shows delivery actually occurred on May 9, 2007, and that date controls the running of
the 60-day period in which Petitioner could request a hearing. There is no dispute that the
.G. notice letter included an attachment that advised Petitioner of his right to file a
request for hearing within 60 days and the regulatory requirements to accomplish the
filing. Because the I.G. notice was actually delivered to Petitioner on May 9, 2007,
Petitioner had until July 9, 2007’ to file his request for hearing.

The regulations are clear that I “will dismiss” a hearing request where a petitioner’s
earing request is not timely filed. 42 C.F.R. § 1005.2(e)(1). The I.G. asserts, and I
agree, that 42 C.F.R. § 1005.2(e)(1) gives me no discretion to waive a late filing or to
grant an extension of time in which to file a request for hearing.

Accordingly, Petitioner’s request for hearing must be dismissed.
Ill. Conclusion
For the foregoing reasons, Petitioner’s request for hearing dated September 10, 2007, is

dismissed.

/s/
Keith W. Sickendick
Administrative Law Judge

* The 60" day was actually July 8, 2007, but that was a Sunday. Thus, Petitioner
had until the next business day to timely file his request for hearing. 42 C.F.R.
§ 1005.12(a).