Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Shahid M. Siddiqui, M.D., DATE: May 26, 1995
Petitioner,

Docket No. C-94-310
Decision No. CR377

-v oe

The Inspector General.

DECISION

By letter (Notice) dated December 13, 1993, the Inspector
General (I.G.) notified Petitioner that he was being
excluded from participation in the Medicare, Medicaid,
Maternal and Child Health Services Block Grant and Block
Grants to States for Social Services programs for a
period of 15 years.' The I.G. informed Petitioner that
he was being excluded due to his conviction in the New
York State Supreme Court of a criminal offense related to
the delivery of an item or service under the Medicaid
program. The I.G. further advised Petitioner that an
exclusion after such a conviction is mandated by section
1128(a)(1) of the Social Security Act (Act), and that
section 1128(c) (3)(B) of the Act provides that the
minimum period of exclusion for such an offense is five
years.

In support of the 15-year exclusion, the Notice indicated
that the I.G. was relying on the following aggravating
factors: (1) the acts giving rise to Petitioner's
conviction resulted in a financial loss to the Medicaid
program of more than $1500; (2) the acts that resulted in

' The State health care programs from which
Petitioner was excluded are defined in section 1128(h) of
the Social Security Act and include the Medicaid program
under Title XIX of the Act. Unless the context indicates
otherwise, I use the term "Medicaid" hereafter to refer
to all State health care programs listed in section
1128(h).
2

Petitioner's conviction were committed over a two-year
period; and (3) Petitioner was sentenced to
incarceration. Prior to the hearing, the I.G. alleged
additionally that Petitioner had been excluded from the
New York Medicaid program since December 1984. Ina
letter dated March 14, 1994, Petitioner challenged his
exclusion and requested a hearing.

The I.G. moved to dismiss Petitioner's hearing request on
the grounds that it was untimely. In a ruling dated
September 16, 1994, I denied the I.G.'s motion to dismiss
and scheduled a prehearing conference. At Petitioner's
request, I continued the prehearing conference until
November 21, 1994. At the prehearing conference I
scheduled an in-person hearing and set a schedule for the
parties to exchange lists of witnesses and proposed
exhibits prior to the hearing.

I conducted an in-person hearing in this case on February
17, 1995, in New York. At the beginning of the hearing,
Petitioner was represented by an attorney. However,
during the initial course of the proceeding, Petitioner
dismissed his attorney, the attorney withdrew, and
Petitioner stated that he desired to proceed pro se.

Both parties presented documentary evidence and testimony
of witnesses. At the close of the hearing, I set a
schedule for the parties to file posthearing briefs and
replies. The parties filed their briefs in accordance
with the schedule I established at the hearing.

Tr. 237-40.?

I have considered the evidence of record, the parties’
arguments, and the applicable law and regulations. I
find that, pursuant to sections 1128(a)(1) and

2 The parties' exhibits and posthearing briefs,
the transcript of the hearing, and my findings of fact
and conclusions of law will be cited as follows:

Petitioner's Brief P. Br. at (page)

I.G.'s Brief I.G. Br. at (page)
Petitioner's Exhibit P. Ex. (number at page)
I.G.'s Exhibit I.G. Ex. (number at page)
Transcript of Hearing Tr. (page)

My Findings of Fact and
Conclusions of Law Findings (number)
3

1128(c) (3)(B) of the Act, the I.G. has the authority to
exclude Petitioner and that the 15-year exclusion is
reasonable. Therefore, I sustain the 15-year exclusion
imposed and directed against Petitioner.

ISSUES
The issues in this case are:

1. Whether Petitioner was convicted of a criminal
offense related to the delivery of an item or service
under Medicaid, within the meaning of section 1128(a) (1)
of the Act.

2. Whether the 15-year exclusion imposed and directed
against Petitioner by the I.G. is reasonable.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. During the period of time relevant to this case,
Petitioner was a cardiologist practicing in Brooklyn, New
York. Tr. 185, 190.

2. Petitioner was president and secretary of M.M.
Management Services, Inc. (M.M. Management) as of
November 22, 1988. I.G. Ex. 30.

3. M.M. Management operated a group medical practice,
consisting of two medical clinics in Brooklyn, New York.
Tr. 185, 191.

4. M.M. Management had its own Medicaid provider number
from sometime in 1988. Tr. 233.

5. On September 27, 1991, Petitioner and M.M. Management
were indicted in the Supreme Court of the State of New
York, County of Kings, on the following charges:

a. one count of grand larceny in the first degree,
in that, individually and as a high managerial agent
of M.M. Management, from about October 1988 to about
November 1990, Petitioner wrongfully took, obtained,
and withheld property valued in excess of one
million dollars by submitting or causing to be
submitted numerous claims to the New York Medicaid
Fiscal Agent for services that were not provided at
all or were not provided by the physicians
designated on the claim forms; and
4

b. twenty-seven counts of offering a false
instrument for filing in the first degree, in that,
individually and as a high managerial agent of M.M.
Management, Petitioner submitted or caused to be
submitted false claims for services supposedly
rendered to Medicaid recipients on specified dates
from February 6, 1989 through August 10, 1990.

I.G. Ex. 15 at 2-28.

6. The same indictment also charged Petitioner,
individually, with the following:

a. three counts of unlawful sale of a prescription
for a controlled substance;

b. three counts of unauthorized practice of
medicine; and

c. one count of falsifying business records.
I.G. Ex. 15 at 29-33.

7. On or about February 1, 1993, Petitioner entered into
a plea agreement with the New York State Attorney
General's office, in which Petitioner agreed to plead
guilty to one count of grand larceny in the second
degree. I.G. Ex. 1.

8. In signing the plea agreement, Petitioner admitted
that he shared responsibility for wrongfully taking
property from the New York Medicaid program between
October 1988 and November 1990. I.G. Ex. 1 at 18-21.

9. On August 9, 1993, Petitioner was sentenced to a
prison term of 15 to 45 months. I.G. Ex. 16 at 8.

10. Petitioner admitted, and I find, that his guilty
plea, and the actions taken by the court indicating
acceptance of his plea, constitute a "conviction" of a
criminal offense, within the meaning of section
1128(i) (3) of the Act. Tr. 12.

11. Petitioner stipulated during the November 21, 1994,
prehearing conference that his conviction was related to
his delivery of services under the New York Medicaid
program, thereby subjecting him to the mandatory minimum
exclusion of five years under section 1128(a)(1) and
section 1128(c) (3)(B) of the Act; Petitioner withdrew
that stipulation at the hearing. Order and Notice of
Hearing, dated December 14, 1994; Tr. 11-12.
5

12. Petitioner was convicted of a criminal offense
related to the delivery of an item or service under the
Medicaid program, within the meaning of section
1128(a)(1) of the Act. Findings 6-11.

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

14. The I.G. had authority to impose and direct an
exclusion pursuant to section 1128(a)(1) of the Act based
upon Petitioner's conviction of an offense related to his
delivery of services under the Medicaid program.

15. The I.G. was required to impose and direct an
exclusion for at least five years, pursuant to section
1128(c) (3) (B) of the Act.

16. Regulations published on January 29, 1992 establish
criteria to be employed by the I.G. in determining to
impose and direct exclusions pursuant to sections 1128 (a)
and (b) of the Act. 42 C.F.R. Part 1001 (1992).

17. The regulations published on January 29, 1992
include criteria to be employed by the I.G. in
determining to impose and direct exclusions pursuant to
section 1128(a)(1) of the Act. 42 C.F.R. §§ 1001.101 and
1001.102.

18. On January 22, 1993, the Secretary published a
regulation which directs that the criteria to be employed
by the I.G. in determining to impose and direct
exclusions pursuant to sections 1128(a) and (b) of the
Act are binding also upon Administrative Law Judges,
appellate panels of the Departmental Appeals Board, and
federal courts in reviewing the imposition of exclusions
by the I.G. 42 .C.F.R. § 1001.1(b); 58 Fed. Reg. 5617-18
(1993).

19. The Administrative Law Judge's adjudication of the
length of exclusion in this case is governed by the
criteria set out in section 1128(a)(1) of the Act,
section 1128(c) (3)(B) of the Act, and 42 C.F.R. §
1001.102. Findings 14-18.

20. By letter dated December 8, 1993, the I.G. excluded
Petitioner pursuant to section 1128(a)(1) of the Act for
a period of 15 years. I.G. Ex. 4.
6

21. An exclusion imposed pursuant to section 1128(a) (1)
of the Act may be in excess of the five-year mandatory
minimum period if any of the six aggravating factors set
out in 42 C.F.R. § 1001.102(b) are found to be present.

22. Aggravating factors which may form a basis for
imposing an exclusion in excess of five years against a
party pursuant to section 1128(a)(1) of the Act may
consist of any of the following:

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

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

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

dad. The sentence which a court imposed on a party
for the above-mentioned conviction included a period
of incarceration.

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

f. The convicted party was overpaid a total of
$1500 or more by Medicare or Medicaid as a result of
improper billings.

42 C.F.R. § 1001.102(b)(1)-(6) (paraphrase).

23. The I.G. has the burden of proving that aggravating
factors specified in the regulations are present in this
case. 42 C.F.R. § 1005.15(c).

24. If any of the six factors in 42 C.F.R. § 1001.102(b)
are found to be present, thereby justifying an exclusion
longer than five years, the three factors (and only those
three factors) specified in 42 C.F.R. § 1001.102(c) may
be considered mitigating, and a basis for reducing the
portion of the exclusion that is in excess of the
mandatory five years.
7

25. Mitigating factors which may offset the presence of
aggravating factors may consist of only the following:

a. A party has been convicted of three or fewer
misdemeanor offenses, and the entire amount of
financial loss to Medicare and Medicaid due to the
acts which resulted in the party's conviction and
similar acts, is less than $1500.

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

c. The party's cooperation with federal or State
officials resulted in others being convicted of
crimes, or in others being excluded from Medicare or
Medicaid, or in others having imposed against them a
civil money penalty or assessment.

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

26. Petitioner has the burden of proving that mitigating
factors exist which justify reducing his exclusion. 42
C.F.R. § 1001.102(c) (1)-(3); 42 C.F.R. § 1005.15(c).

27. Petitioner admitted that the acts for which he was
convicted resulted in losses to the Medicaid program of
at least $200,000, and that he himself had received about
$68,000 from the scheme. I.G. Ex. 1 at 32-33.

28. The I.G. proved that the acts for which Petitioner
was convicted caused losses to the Medicaid program in
the amount of $1.4 million. Tr. 116, 163-66; see also
I.G. Ex. 25; P. Ex. 8.

29. The I.G. proved that an aggravating factor is
present in that the acts that resulted in Petitioner's
conviction resulted in losses to the New York Medicaid
program in excess of $1500. Finding 28.

30. The I.G. proved that an aggravating factor is
present in that the acts resulting in Petitioner's
conviction were committed over a period in excess of one
year. Finding 8.

31. The I.G. proved that an aggravating factor is
present in that Petitioner was sentenced to
incarceration. Finding 9.
8

32. Petitioner has been excluded from the New York State
Medicaid program continuously since December 5, 1984.
I.G. Ex. 29.

33. The I.G. proved that an aggravating factor is
present in that Petitioner has a prior administrative
sanction record. Finding 32.

34. The aggravating factors specified at 42 C.F.R. §§
1001.102(b) (1), 1001.102(b) (2), 1001.102(b) (4), and
1001.102(b) (5) are present in Petitioner's case, and
warrant imposition of a period of exclusion of 15 years.

35. Petitioner acknowledges that, during the period of
time relevant to this case, October 1988 to November
1990, he was not permitted to bill Medicaid for services
using his own provider number. Tr. 190.

36. Petitioner was the President and Secretary of M.M.
Management, and after March 1989, the sole shareholder.
I.G. Ex. 30; Tr. 196.

37. Petitioner owned the buildings and equipment in
which the medical clinics were located. Tr. 216.

38. Petitioner controlled the money paid to’ M.M.
Management by the Medicaid program. Tr. 216.

39. Petitioner paid the physicians employed by M.M.
Management 30 percent of the reimbursements generated by
their billings; the corporation, which he controlled,
retained 70 percent. Tr. 234-35.

40. An auditor employed by the New York Medicaid Special
Prosecutor's office traced Medicaid reimbursements from
M.M. Management to Petitioner's personal bank accounts.
I.G. Ex. 25 at 4.

41. The auditor traced transfers amounting to $950,000
from Petitioner's personal bank accounts to Swiss bank
accounts. I.G. Ex. 25 at 4-5.

42. Petitioner appears to have used M.M. Management as
an instrumentality to obtain funds from the Medicaid
program at a time when he was not personally permitted to
participate in the program. Findings 35-41.

43. As part of his plea bargain, Petitioner agreed to a
$1.3 million civil settlement with the State. I.G. Ex. 1
at 4-10.
9

44, Petitioner repudiated the monetary settlement he had
agreed to with the State and filed for bankruptcy
protection. I.G. Ex. 28 at 3.

45. At his plea allocution, Petitioner sought to
minimize his responsibility for the criminal conduct to
which he pled guilty, admitting only that he knew of the
improper billing and shared responsibility for it. I.G.
Ex. 1 at 20, 22.

46. While testifying under oath before me, Petitioner
stated that there were no improper billings and that
those who had testified against him had fabricated
evidence or offered perjured testimony. Tr. 184, 197,
202-05, 209, 211; P. Br. at 12-13.

47. Petitioner has never fully acknowledged his
responsibility for the criminal conduct for which he was
convicted. Tr. 184-236; Findings 45-46.

48. Rather than accepting responsibility for his own
unlawful conduct or showing any remorse, Petitioner has
repeatedly attempted to blame others for such conduct and
minimize the extent of his personal monetary gain from
the fraudulent Medicaid billing practices. Findings 45-
47.

49, The apparent purpose of the unlawful billing
practices to which Petitioner pled guilty, was to enable
Petitioner to receive reimbursement from Medicaid while
evading his prior exclusion from Medicaid. Findings 35-
42.

50. Petitioner has failed to show any remorse for his
conduct and is an untrustworthy provider who may, if
given another opportunity, attempt to defraud Medicaid
again for his own personal gain. Findings 35-49.

51. Petitioner has offered nothing sufficient to rebut
the overwhelming and persuasive evidence in this case
which demonstrates that Petitioner remains a threat to
the Medicare and State health care programs. Findings
35-50.

52. Petitioner has not proved the presence of any
mitigating factors which may be used as a basis for
offsetting any aggravating factors. 42 C.F.R. §
1001.102(c) (1)-(3).

53. The remedial purpose of section 1128 of the Act is
to protect federally funded health care programs and
their beneficiaries and recipients from providers who
10

have demonstrated by their conduct that they cannot be
trusted to handle program funds or to treat beneficiaries
and recipients.

54. A lengthy exclusion is needed in this case to
satisfy the remedial purposes of the Act and to protect
the Medicare and Medicaid programs and their
beneficiaries and recipients from future misconduct by
Petitioner.

55. The multiple and significant aggravating factors
present in this case, with no offsetting mitigating
factors present, justify excluding Petitioner for 15
years. 42 C.F.R. § 1001.102(b).

56. The 15-year exclusion imposed and directed against
Petitioner by the I.G. is not extreme or excessive.
Findings 1-55.

57. The 15-year exclusion imposed and directed against
Petitioner by the I.G. is reasonable. Findings 1 - 56.

RATIONALE
I. Petitioner was "convicted" within the meaning of
. = a
section 1128(i) of the Act of a criminal offense
Medicaid and _ is subject to a minimum mandatory
usi v ears t i
1128(a) (1) and 1128(c)(3)(B) of the Act.

Petitioner admits that he was convicted of a criminal
offense, in that he pled guilty to one count of grand
larceny in the second degree. Petitioner argues that his
conviction was not related to the delivery of an item or
service under Medicaid. P. Br. at 7, 11-12. Instead,
Petitioner contends he was convicted of an offense
related to fraud within the meaning of section
1128(b)(1). I reject Petitioner's argument.

In pleading guilty under the indictment, Petitioner
admitted that he obtained reimbursement from the New York
Medicaid program by submitting claims for services that
either were not provided, or were not provided by the
physician identified in the claim. The indictment on its
face establishes that Petitioner's conviction was related
to the Medicaid program. The federal courts, as well as
appellate panels and administrative law judges of the
Departmental Appeals Board (DAB) have repeatedly held
that financial crimes which deprive the Medicaid program
of funds are related to the delivery of items or services
11

under Medicaid. Jack W. Greene, DAB 1078 (1989), aff'd

sub nom. Greene v. Sullivan, 731 F. Supp. 835 and 838
(E.D. Tenn. 1990); Napoleon S. Maminta, DAB 1135, at 14
(1990).

Moreover, it is well settled that the I.G. has no
discretion to impose a permissive exclusion for conduct
that is program-related and falls within the ambit of the
mandatory exclusion provision of section 1128(a), even if
the conduct also can be fairly characterized under either
the permissive or mandatory exclusion provisions.

Greene, DAB 1078, at 9-11 (1989); Maminta at 14; Charles

K. Wheeler and Joan K. Todd, DAB 1123, at 6-7 (1990);
Domingos R. Freitas, DAB CR272, at 33-34 (1993).

Consequently, there is no basis for Petitioner's argument
(P. Br. at 7, 11-12) that a "permissive" rather than
"mandatory" exclusion is appropriate in this case.

II. The aggravating factors present in this case are a
basi rs ori =
the minimum period of five years.

The I.G. excluded Petitioner from participating in the
Medicare and Medicaid programs for 15 years. Petitioner
argues that "(t]he reasonable length of exclusion should
be five years." P. Br. at 2, 3. The issue in this case
is whether the I.G. is justified in excluding Petitioner
for 15 years.

Regulations published on January 29, 1992 establish
criteria to be employed by the I.G. in determining to
impose and direct exclusions pursuant to sections 1128(a)
and (b) of the Act. 42 C.F.R. Part 1001 (1992). Finding
16. These regulations include criteria to be employed by
the I.G. in determining to impose and direct exclusions
pursuant to section 1128(a)(1) of the Act. 42 C.F.R. §§
1001.101 and 1001.102; Finding 17.

On January 22, 1993, the Secretary published a regulation
which directs that the criteria to be employed by the
I.G. in determining to impose and direct exclusions
pursuant to sections 1128(a) and (b) of the Act are
binding also upon Administrative Law Judges, appellate
panels of the DAB, and federal courts in reviewing the
imposition of exclusions by the I.G. 42 C.F.R. §
1001.1(b); 58 Fed. Reg. 5617-18 (1993); Finding 18. This
regulation was made applicable to cases which were
pending on or after January 22, 1993, the clarification's
publication date. It is undisputed that the present case
was pending after January 22, 1993 because the I.G.'s
notice to Peititioner informing him that he had been
excluded for fifteen years is dated December 14, 1993. I
12

must now apply to this case the criteria for determining
the length of exclusions set forth in sections 1128(a) (1)
and 1128(c)(3)(B) of the Act and 42 C.F.R. § 1001.102.
Finding 19.

The standard for adjudication contained in 42 C.F.R. §
1001.102 provides that, in appropriate cases, an
exclusion imposed pursuant to section 1128(a)(1) of the
Act may be in excess of the five-year mandatory minimum
period if any of the six aggravating factors set out in
42 C.F.R. § 1001.102(b) are found to be present. Finding
21.

The six factors mentioned at 42 C.F.R. § 1001.102(b) (1)
-(6) are the only ones classified by the regulations as
aggravating factors.’ The I.G. has the burden of proving
that aggravating factors exist which justify increasing
an exclusion imposed pursuant to section 1128(a) (1)
beyond the minimum mandatory five-year period. Finding

3 In the Notice sent to Petitioner informing him
of his exclusion, the I.G. stated that the following
circumstances were taken into consideration in arriving
at Petitioner's period of exclusion: (1) the statutory
fines and penalties imposed by the court amounted to more
than $500,000; (2) the commission of the crime evinced
planning and premeditation; and (3) Petitioner agreed to
be excluded from the Medicaid program for 10 years.
Subsequent to the Notice, but prior to the hearing, the
I.G., in her exchange of proposed exhibits dated January
19, 1995, provided notice to Petitioner that he was
previously administratively sanctioned by New York State
Medicaid. See, I.G. Ex. 29. Despite this disclosure,
Petitioner argues that he had no advance knowledge that
the I.G. would be recommending a 15-year exclusion
against him in these proceedings based in part on
Petitioner's prior administrative sanction. Petitioner
contends that his due process rights were abridged when
the I.G. failed to specifically inform him in the Notice
that his prior administrative sanction would be used as
an aggravating factor in these proceedings. P. Br. at
14. I disagree. Approximately one month prior to the
hearing, in the exchange of exhibits, the I.G. provided a
copy of I.G. Ex. 29 to Petitioner. This exhibit clearly
raised the issue of the presence of a prior
administrative sanction and the potentiality that it
would be relied upon by the I.G. in establishing the
presence of the aggravating factor at § 1001.102(b) (5).
I.G. Ex. 29. Furthermore, the factual circumstances of
this prior administrative sanction were addressed by the
parties at the hearing.
13

23. In this case, the I.G. contends that the aggravating
factors identified at 42 C.F.R. §§ 1001.102(b) (1),
1001.102(b) (2), 1001.102(b) (4), and 1001.102(b) (6) are
present.

A. The evidence establishes that the aggravating
factor identified at 42 C.F.R. § 1001.102(b) (1)
is_present.

Under the regulations, it is an aggravating factor if an
excluded individual's acts caused the loss of more than
$1500 to the Medicare or Medicaid programs. The I.G. has
alleged that Petitioner's acts resulted in losses of $1.4
million to the New York Medicaid program. Petitioner
argues that the Medicaid program lost far less than that
amount. P. Br. at 12-13. However, even accepting
Petitioner's version of the amounts in question, there is
no dispute that the losses exceeded $1500. Findings 27-
29. Thus, the aggravating factor is present.

At his plea allocution, Petitioner admitted that M.M.
Management received between $200,000 and $300,000 from
the New York Medicaid program as a result of submitting
claims for services that were not provided as claimed.
I.G. Ex. 1 at 20. He admitted that he, personally,
received approximately $68,000 of the proceeds. I1.G. Ex.
1 at 32-33; Tr. 8-9; P. Br. at 13. These admissions by
Petitioner establish that his acts resulted in financial
losses to Medicaid far in excess of the regulatory
threshold, even without the additional amounts alleged by
the I.G.

However, the I.G. has offered evidence which demonstrates
that Petitioner and M.M. Management caused the Medicaid
program to lose over $1 million. Cecilia Leong, an
auditor employed by the New York Special Prosecutor for
Medicaid Fraud Control, testified that from February 1988
to November 1990, the Medicaid program paid M.M.
Management over $2.5 million, of which at least $1.4
million was paid based on improper billings. Tr. 116-17,
163-66; see also I.G. Ex. 25; P. Ex. 8.

Petitioner argues that Ms. Leong's calculation of the
amount of loss to the Medicaid program was fabricated.
P. Br. at 13. He argues also that the assumptions on
which she based her calculations were unfounded. For
example, Petitioner alleges that a physician perjured
herself when she testified before the grand jury that
M.M. Management billed Medicaid improperly for her
services because she was not qualified to perform or
interpret certain tests. Jd. Petitioner's attempts to
discredit Ms. Leong's testimony are unavailing, however.
14

Petitioner's suggestion that Ms. Leong "concocted" the
figures is completely unsupported by the record and is
not credible. Additionally, Petitioner's suggestion that
certain incriminating testimony against him was perjured
amounts to a collateral attack on his conviction -- that
is, an attempt to argue that he was not guilty of the
offense to which he pled guilty. Petitioner is not
permitted to collaterally attack his conviction in these
proceedings.

I find credible the I.G.'s allegation that Petitioner's
conduct caused losses of approximately $1.4 million. In
addition to Ms. Leong's testimony, the $1.4 million
figure is further corroborated by the fact that, as part
of his plea agreement, Petitioner negotiated a civil
settlement with the State of New York in which he agreed
to pay approximately $1.3 million. I.G. Ex. 1 at 4-11.‘

I therefore conclude that the acts which resulted in
Petitioner's conviction caused losses of approximately
$1.4 million to the New York Medicaid program. The
aggravating factor identified at 42 C.F.R. §
1001.102(b)(1) is thus present in Petitioner's case.

Section 1001.102(b)(2) of the regulations provides that
it is an aggravating factor if the acts that resulted in
an individual's conviction, or similar acts, were
committed over a period of one year or more. In the
present case, Petitioner pled guilty to count one of the
indictment, which charged that Petitioner and M.M.
Management had obtained money based on false claims
submitted to the Medicaid program between October 1988
and November 1990. By pleading guilty, Petitioner
admitted that he had engaged in the conduct charged. [In
his brief, however, Petitioner asserts that he only
admitted to engaging in criminal acts during a period of
a few months in 1989. P. Br. at 14. The minutes of
Petitioner's plea allocution show that Petitioner at
first tried to minimize his involvement with M.M.
Management, but after an off-the-record discussion with

‘ Petitioner agreed to surrender over $800,000 in
cash and property and additionally to execute a
confession of judgment in the amount of $500,000.
Petitioner later repudiated this agreement and filed for
bankruptcy protection. I.G. Ex. 28 at 2-3; Tr. 9.
15

his attorney, Petitioner admitted his responsibility in
the scheme, as charged in the indictment. I.G. Ex. 1 at
20. Thus, the aggravating factor identified in 42 C.F.R.
§ 1001.102(b)(2) is present in this case.

Cc. e evid tablis! at ea avatin
factor identified at 42 C.F.R. § 1001.102(b) (4)
is present.

It is an aggravating factor under the regulations if the
sentence imposed on an excluded individual as a result of
a program-related conviction included incarceration. 42
C.F.R. § 1001.102(b) (4). In the present case, Petitioner
was sentenced to State prison for an indeterminate period
of between 15 and 45 months. I.G. Ex. 16 at 8. While
Petitioner asserts that the court treated him unfairly in
imposing a jail sentence, he does not deny that he was
sentenced to incarceration. P. Br. at 14. Thus, the
aggravating factor is present in this case.

D. The evidence establishes that the aggravating

factor identified at 42 C.F.R. § 1001.102(b) (5)
is present.

The regulations provide that it is an aggravating factor
if the excluded individual has a prior civil, criminal,
or administrative sanction record. 42 C.F.R. §
1001.102(b) (5). The I.G. proved that Petitioner was
excluded from the New York Medicaid program in December
1984 and has remained excluded since that time. I.G. Ex.
29. Petitioner admits that he was subject to a Medicaid
“suspencion [(sic]" in August 1984 and permanent
disqualification in November 1989. P. Br. at 14. Thus,
the aggravating factor is present in this case.

III. e e! is
case.

Petitioner has not offered any credible evidence to rebut
the I.G.'s showing as to the presence of aggravating
factors. Nor has Petitioner offered evidence to prove
that any of the mitigating factors enumerated in the
regulations are present in this case.

Petitioner offered P. Ex. 3 in an attempt to show that
the length of his exclusion should be decreased. The
exhibit is a certificate of relief from civil
disabilities issued by the justice who sentenced
Petitioner. Administrative Law Judges of the DAB have
16

held that such certificates apply only to State
forfeitures and cannot bind federal officials who seek to
impose federal remedies. Janet Wallace, L.P.N., DAB
CR155 (1991), aff'd DAB 1326 (1992). Thus, the
certificate of relief from civil disabilities cannot be
considered to be a mitigating factor regarding
Petitioner's exclusion under federal law.

Additionally, Petitioner argues that his exclusion should
be for a period less than 15 years because he was
entrapped to commit the acts for which he was convicted.
P. Br. at 15. As was the case with his unsupported
assertion that incriminating testimony was perjured,
Petitioner's entrapment argument is no more than a thinly
disguised attempt to argue that he is not in fact guilty
of the crime to which he pled guilty.

Iv. “yea. clus. asona. .

The multiple aggravating factors present in Petitioner's
case lead to the conclusion that Petitioner has been and
remains a highly untrustworthy individual. Petitioner
has offered nothing to rebut the aggravating factors. He
has not proved the existence of even one mitigating
factor under the regulations. Petitioner has engaged in
conduct which caused such immense financial harm to the
Medicaid program in the past. Therefore, the risk that
he might again engage in such conduct warrants a lengthy
exclusion to protect the programs. Moreover, the conduct
which led to Petitioner's conviction demonstrates a high
degree of culpability on Petitioner's part, and his
continuing failure to accept responsibility for that
conduct indicates that he is likely to continue to pose a
threat to federally funded programs in the future.

I have already concluded, above, that an aggravating
factor is present in this case because Petitioner,
through his corporation, M.M. Management, defrauded the
New York Medicaid program of approximately $1.4 million.
This factor alone warrants an exclusion well beyond the
mandatory minimum of five years. This amount is
indicative of the enormous harm caused to the Medicaid
program by Petitioner. Petitioner's conviction
demonstrates that he is an individual who is capable of
engaging in fraud on a grand scale.

Additional evidence of Petitioner's propensity to cause
harm to the Medicaid program is found in his actions with
respect to his restitution agreement with New York State.
As I noted above, as part of his plea agreement,
Petitioner stipulated to a civil settlement with New York
17

State in the amount of approximately $1.3 million.
Petitioner agreed to that settlement on the record before
a judge and then repudiated the agreement and filed for
bankruptcy protection. The State then sued him for over
$5 million in restitution and civil penalties. Before
the bankruptcy judge, the State successfully argued that
the amounts it sought were nondischargeable. I find that
Petitioner's repudiation of his agreement to repay $1.3
million of the money he fraudulently obtained from the
Medicaid program indicates that he continues to pose a
threat to federally funded health care programs.

In addition to the harm caused to Medicaid, another
aggravating factor under the regulations is that the
conduct to which Petitioner pled guilty did not involve
an isolated incident, but a continuous and intentional
course of conduct over a two-year period. The duration
of the conduct is relevant to the length of an exclusion
because, it may be indicative of increased culpability.
I conclude that, in this case, the duration of
Petitioner's unlawful conduct is indicative of increased
culpability. Moreover, Petitioner had controlling
authority in M.M. Management and received a substantial
portion of the fruits of that illegal conduct. Findings
35-43. Therefore, Petitioner's culpability in M.M.
Management's improper billing scheme was substantial.

Throughout his testimony before me, Petitioner sought to
minimize his responsibility for and involvement with M.M.
Management and the false billings to which he pled
guilty. Petitioner repeatedly testified that he had no
management or ownership interest in M.M. Management prior
to March 1989. E.g., Tr. 195, 215. However, on cross=-
examination, Petitioner retreated from that position,
initially stating that he became the treasurer of M.M.
Management prior to March. Petitioner asserted that his
role was merely to act as the corporation's bank, simply
holding funds, but not exercising any policy role. fr.
215. The I.G. then introduced I.G. Ex. 30, a corporate
resolution of M.M. Management, dated October 22, 1988,
signed by Petitioner as President and Secretary of the
corporation. Petitioner acknowledged that the signatures
on I.G. Ex. 30 were his. Tr. 222. I conclude that
Petitioner's testimony about his responsibilities in M.M.
Management was contradictory, evasive, and contrary to
the wealth of evidence demonstrating that he was the
principal individual who devised, implemented, and
benefited from unlawful conduct.

Further, Petitioner acknowledged that, after March 10,
1989, he was the sole shareholder, President, and
Secretary of M.M. Management. Tr. 196. But, even as to
18

the period of time when he admitted he controlled the
corporation, he stated that no improper billings occurred
(Tr. 202-03, 209), or attempted to place the blame for
the improper billing practices on other physicians (Tr.
197, 205-06). Obviously, to contend that no improper
billing occurred flies in the face of Petitioner's guilty
plea, in which he admitted engaging in the conduct
charged in the indictment. Nor do I find credible
Petitioner's assertion that, in essence, he fell victim
to the illegal practices of others.

Instead, the evidence suggests to me that Petitioner may
have created M.M. Management specifically to permit him
to continue to benefit from Medicaid billings at a time
when he was excluded from the New York Medicaid program.
Petitioner acknowledged that, as of August 1984, he was
not permitted personally to bill the Medicaid program for
his services. Tr. 190. Yet, as the President and
Secretary of M.M. Management, at least since November 22,
1988, Petitioner benefitted financially from the Medicaid
billings submitted by M.M. Management. Petitioner
admitted that he personally received at least $68,000 as
a result of the scheme. It is more likely, however, that
the amount of money Petitioner received was much greater.
Petitioner admitted, in response to my question, that he
retained 70 percent of the money Medicaid paid to M.M.
Management. Tr. 235. Ms. Leong, the Medicaid auditor,
traced Medicaid payments to Petitioner's personal bank
accounts, and then traced transfers of $950,000 from
those accounts to Swiss bank accounts. I.G. Ex. 25 at 4-
5. This evidence demonstrates a high degree of
culpability on Petitioner's part, both as to the large
amount of Medicaid funds he diverted and as to his
attempts to place the proceeds of his scheme out of the
reach of enforcement authorities.

The high degree of Petitioner's culpability in the scheme
involving M.M. Management is further evidenced by the
fact that the New York State Supreme Court sentenced him
to a significant period of incarceration. As discussed
above, a sentence including incarceration is an
aggravating factor under the regulations.

The final aggravating factor which I have found to be
present in this case is that Petitioner was subject toa
prior administrative sanction, specifically, exclusion
from the New York Medicaid program. This factor may
indicate an individual's untrustworthiness by showing
that an individual has engaged in some improper conduct
in the past. The basis for Petitioner's prior Medicaid
exclusion is not disclosed in the record. However, I
find evidence of Petitioner's untrustworthiness, not only
19

in the fact of his prior exclusion, but in his testimony
about that exclusion before me. Petitioner first
testified that he was audited by Medicaid in 1984, but
was not excluded until November 1989. Tr. 185-86.
Petitioner later testified that after August 1984 he was
appealing his exclusion and a final decision was issued
in October 1989. Tr. 229-30. The I.G. introduced a
document which indicates that Petitioner has been
continuously excluded from Medicaid since 1984.
Petitioner's contradictory statements regarding his
previous sanction record are further evidence that he is
not trustworthy to be a provider of services under
Medicare or Medicaid.

The multiple aggravating factors present in this case
demonstrate that Petitioner has, in the past, engaged in
conduct which has caused serious harm to the Medicaid
program. Moreover, the evidence before me convinces me
that Petitioner continues to be a threat to the Medicare
and State health care programs and that he is likely to
remain so for a lengthy period of time. Petitioner has
attempted to minimize the overall impact of his conduct
and has failed to accept any more than the most ephemeral
of responsibility for his actions. Therefore, I cannot
be assured that the conduct for which Petitioner was
convicted will not recur in the future.

In view of the foregoing, I conclude that, absent any
mitigating evidence, the minimum five-year exclusion is
not sufficient to protect the federally financed health
care programs in this case.

I find that the presence in this case of the aggravating
factors specified at 42 C.F.R. §§ 1001.102(b) (1),
1001.102(b) (2), 1001.102(b) (4), and 1001.102(b) (5)
warrant imposition of a 15-year exclusion of Petitioner
from Medicare and State health care programs.’ The

5 Petitioner argues that imposition of the 15-year
exclusion violates his constitutional rights. P. Br. at
15. My delegation of authority to hear and decide
exclusion cases brought pursuant to section 1128 does not
include the authority to rule on the constitutionality of
either federal statutes or the I.G.'s actions. 42 C.F.R
§ 1005.4(c)(1), (4). Hawever, there are several
compelling reasons why Petitioner's argument is without
merit. The double jeopardy protection of the Fifth
Amendment of the Constitution does not apply here because
the civil sanctions imposed by the I.G. can be lawfully
imposed against Petitioner despite his criminal

(continued...)
20

Medicare and Medicaid programs are vulnerable to
unscrupulous providers. The remedial purpose of section
1128 of the Act is to protect the integrity of federally
funded health care programs and their beneficiaries and
recipients from providers who have demonstrated by their
conduct that they cannot be trusted to handle program
funds or to treat beneficiaries and recipients.
Petitioner's unlawful conduct is the type of misconduct
Congress sought to prevent when it enacted section 1128
of the Act. There is nothing in the record to suggest
that Petitioner has recognized the nature of the harm he
caused the Medicaid program. He has demonstrated a lack
of understanding of the significance of the unlawfulness
of his conduct. I find that a lengthy exclusion is
needed in this case to satisfy the remedial purposes of
the Act and to protect the Medicare and Medicaid programs
and its beneficiaries and recipients from future
misconduct by Petitioner.

By any standard, the criminal conduct for which
Petitioner was convicted is serious. That conduct
demonstrates that Petitioner bore a high degree of

5 (...continued)

conviction and the application of collateral: civil
remedies for Medicaid fraud. United States vy. Halper,
490 U.S. 435 (1989); Abbate v. United States, 359 U.S.
187 (1959). Under Halper, in order for the remedy to be
punitive, it must bear no reasonable relationship to
either the costs sustained by the Department or to the
remedial purpose of the Act. W

al, DAB CR240, at 67-68, (1992). Halper specifically
related to the punitive nature of a civil monetary
penalty. However, the Supreme Court's admonition as to
determining when a remedy is punitive could arguably
apply where the exclusion is not reasonably related to
the remedial purposes of the Act.

et al, DAB CR240, at 67-68, (1992). My Decision makes
clear that the remedial purposes of the Act require that
Petitioner be excluded for 15 years.

Petitioner's due process rights have been protected
throughout this hearing. This hearing was granted over
the objections of the I.G. who had sought a dismissal.
Rather than being cruel and unusual punishment, the
exclusion has been found to be reasonable and necessary
to protect future program participants from Petitioner's
threat of repeated unlawful conduct. Accordingly, there
is no basis for Petitioner's assertions that the 15-year
exclusion violates the Fifth, Eighth, and Fourteenth
Amendments of the Constitution.
21

culpability for acts which caused immense harm to the
Medicaid program over a lengthy period of time. The
multiple and significant aggravating factors present in
this case, with no offsetting mitigating factors present,
justify excluding Petitioner for 15 years. I conclude
that the 15-year exclusion imposed and directed against
Petitioner by the I.G. is not extreme or excessive, and
therefore, must stand.

CONCLUSION
Based on the law and the evidence, I conclude that the

15-year exclusion imposed and directed against Petitioner
by the I.G. is reasonable and must stand.

/s/

Edward D. Steinman
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Jean Reeder, DATE: May 12, 1995
Petitioner,

Docket No, C-95-002
Decision No. CR376

-wo-

The Inspector General

DECISION

By letter dated September 20, 1994, Jean Reeder, the
Petitioner herein, was notified by the Inspector General
(I.G.), of the U.S. Department of Health & Human Services
(HHS), that it had been decided to exclude Petitioner for
a period of five years from participation in the Medicare
program and from participation in the State health care
programs described in section 1128(h) of the Social
Security Act (Act), which are referred to herein as
"Medicaid." The I.G.'s rationale was that exclusion, for
at least five years, is mandated by sections 1128 (a) (2)
and 1128(c)(3)(B) of the Act because Petitioner had been
convicted of a criminal offense related to the neglect or
abuse of patients in connection with the delivery of a
health care item or service.

Petitioner filed a request for review of the I.G.'s
action by an an administrative law judge of the
Departmental Appeals Board.

The I.G. moved for summary disposition. For the reasons
discussed below, I conclude that the I.G. has failed to
prove that Petitioner was convicted of a criminal
offense, within the meaning of section 1128(i) of the
Act. Therefore, the I.G. was without authority to
exclude Petitioner.
2
APPLICABLE LAW

Section 1128(a)(2) requires the Secretary of HHS to
exclude from participation in the Medicare and Medicaid
programs any individual or entity that has been convicted
of a criminal offense relating to the neglect or abuse of
patients in connection with the delivery of a health care
item or service.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. During the period of time relevant to the case,
Petitioner was administrator of the Guest House of
Nashville, a nursing facility. I.G. Ex. 1.

2. On or about September 23, 1992, Kay Aist, an
investigator for the Arkansas Office of Attorney General,
Medicaid Fraud Control Unit, executed an affidavit for a
warrant for Petitioner's arrest. I.G. Ex. 1.

3. In the affidavit, Ms. Aist stated that she had reason
to believe Petitioner had committed the offense of
failing to report abuse -- in that Petitioner allegedly
had slapped an 84-year-old resident of the Guesthouse of
Nashville, Arkansas, during a disaster drill at the
facility on May 26, 1992 -- but that Petitioner had not
immediately reported this incident to the Office of Long
Term Care, instead reporting the incident on June 2,
1992, after other employees of the facility had reported
the incident. I.G. Ex. 1.

4, Based on the affidavit, a warrant was issued for
Petitioner's arrest. I.G. Ex. 2.

5. On or about October 19, 1992, Petitioner was arrested
and given a citation which directed her to appear in
Howard County Municipal Court (Municipal Court) on
October 22, 1992. I.G. Ex. 8 at 5.

6. Petitioner posted a cash bond of $92.25 to guarantee
her appearance, but did not appear to stand trial. I.G.
Ex. 8 at 5.

7. On October 22, 1992, the Municipal Court forfeited
the cash bond. I.G. Ex. 3.

8. On January 8, 1993, Petitioner filed a petition
asking the Municipal Court to set aside her bond
forfeiture and to grant her a trial on the merits. I.G.
Ex. 4.
3

9. On February 8, 1993, the Municipal Court entered an
order holding "the conviction and/or bond forfeiture

. . . is hereby set aside, canceled, nullified, and
expunged and shall forever hereafter have no force and
effect whatsoever at law or in equity." I.G. Ex. 5.

10. The Municipal Court also returned Petitioner's case
to the docket to be set for a trial at a later date.
I.G. Ex. 5.

11. In a response filed February 19, 1993, the State
requested that the Municipal Court vacate its order
granting Petitioner a new trial. I.G. Ex. 6.

12. On or about March 4, 1993, the Municipal Court
denied the State's request on the grounds that the
State's response was filed out of time. I.G. Ex. 7.

13. On or about May 5, 1993, the State filed with the
Arkansas Supreme Court a motion and brief requesting a
writ of prohibition to the Municipal Court. I.G. Ex. 8
at 3.

14. In its motion, the State requested that the Arkansas
Supreme Court overturn the Municipal Court's order
vacating Petitioner's bond forfeiture and prohibit the
Municipal Court from convening a new trial in
Petitioner's case. I.G. Ex. 8 at 2.

15. On May 24, 1993, the Arkansas Supreme Court granted
the State's motion for a writ of prohibition in a one-
sentence order. I.G. Ex. 10.

16. The I.G. has the burden of proving that there is a
basis for Petitioner's exclusion.

17. The I.G. failed to prove by a preponderance of the
evidence that the Municipal Court entered a judgment of
conviction against Petitioner.

18. The I.G. failed to prove by a preponderance of the
evidence that a State or local court made a finding of
guilt against Petitioner.

19. The I.G. failed to prove by a preponderance of the
evidence that Petitioner entered a plea of guilty or nolo
contendere to the charge of failing to report abuse or
that the Municipal Court accepted such a plea.

20. The I.G. failed to prove by a preponderance of the
evidence that Petitioner entered into participation ina
4

first offender, deferred adjudication, or other
arrangement where judgment of conviction was withheld.

21. The I.G. failed to prove that Petitioner was
convicted of a criminal offense within the meaning of
section 1128(i) of the Act.

22. The I.G. is without authority to impose and direct
an exclusion against Petitioner. Findings 16-21.

THE I.G.'s POSITION

The I.G. contends that the Municipal Court treated
Petitioner's failure to appear as a plea of guilty and
that the court "accepted" such plea. I.G. Br. at 6. The
I.G. suggests also that Petitioner herself regarded her
nonappearance as a guilty plea inasmuch as she declared
that it was cheaper than defending herself in court.
I.G.'s Resp. at 2.

The I.G. further maintains that issuance of a writ of
prohibition necessarily means that the Municipal Court
wholly lacked jurisdiction to set aside the conviction or
forfeiture or to set a new trial. I.G. Br. at 9.

PETITIONER'S POSITION

Petitioner insists that her case was never heard or tried
and that she never pled guilty in any court. She argues
that a bond forfeiture is not a guilty plea and not a
conviction. She states that she disregarded her court
date (even though this allowed the bond to be forfeited)
because she thought that it would be cheaper and easier
that way.

Lastly, Petitioner notes that the Arkansas Supreme Court
has never decided the question of whether a bond
forfeiture constitutes a conviction.

DISCUSSION

The I.G. argues that she was authorized to exclude
Petitioner from the Medicare program and to direct
Petitioner's exclusion from the Medicaid program pursuant
to section 1128(a)(2) of the Act. To establish a basis
for Petitioner's exclusion, the I.G. must prove that
Petitioner was (1) convicted of a criminal offense and
(2) that the criminal offense was related to the neglect
or abuse of patients in connection with the delivery of a
health care item or service. I conclude that the I.G.
has failed to prove that Petitioner was convicted of a
criminal offense. Therefore, I do not need to reach the
question of whether the offense with which Petitioner was
charged was related to patient neglect or abuse within
the meaning of the statute.

The parties have devoted a great deal of their argument
to the question of whether the writ of prohibition issued
by the Arkansas Supreme Court served to reinstate
Petitioner's bond forfeiture or only to prevent a new
trial from taking place. I do not need decide which
interpretation is correct, however. This is because I
have determined that, even if Petitioner's bond
forfeiture had been reinstated by the Arkansas Supreme
Court, the bond forfeiture would not represent a
conviction within the meaning of section 1128(i) of the
Act.

Whether or not an individual is subject to exclusion from
federally funded health care programs because he or she
has been "convicted" is a question of federal law. "What
constitutes a 'conviction' under the Medicaid Act. . .
is determined by federal law, not state law." Travers v.
Shalala, 20 F.3d 993, 996 (9th Cir. 1994). Federal law
defines the term in section 1128(i) of the Act. That
section provides that an individual will be deemed to
have been "convicted" if any of the following
circumstances are applicable to his or her case:

(1) a judgment of conviction has been entered
against the individual or entity by a federal,
State, or local court, regardless of whether there
is an appeal pending or whether the judgment of
conviction or other record relating to criminal
conduct has been expunged; or

(2) there has been a finding of guilt against the
individual or entity by a federal, State, or local
court; or

(3) a plea of guilty or nolo contendere by the
individual or entity has been accepted by a Federal,
State, or local court; or

(4) the individual or entity has entered into
participation in a first offender, deferred
adjudication, or other arrangement or program where
judgment of conviction has been withheld.
6

As this language demonstrates, Congress intended the term
"conviction" to apply to a broad range of dispositions.
Yet, the language of section 1128(i) is also quite
specific: nowhere does it provide that bond forfeitures
are to be treated as convictions.

Each of the definitions of conviction found in section
1128(i) involve some determination of guilt on the record
before a State or federal court. The statutory
definition of conviction strikes a balance between the
due process rights of excluded individuals and HHS'
interest in expeditiously ceasing its relationship with
individuals who are untrustworthy. In enacting section
1128, Congress made the determination that a formal
finding of guilt against an individual conclusively
demonstrates that the individual is not trustworthy to
participate in the Medicare and Medicaid programs. The
Act imposes a mandatory five-year period of exclusion on
individuals who have been convicted of offenses related
to the delivery of services under Medicare or Medicaid or
related to neglect or abuse of patients. Such exclusions
have significant consequences for excluded individuals’
reputations and livelihoods. The Act's definition
protects excluded individuals by ensuring that the
individuals are not deemed to have been convicted unless
they have appeared before a court for a determination on
the merits regarding the offenses with which they have
been charged.

In the present case, the I.G. does not dispute that
Petitioner never appeared before the Municipal court for
a determination on the merits of the charge of failure to
report abuse. Therefore, the I.G. has failed to prove
that Petitioner was convicted within the meaning of any
of the alternative definitions of section 21128(i) of the
Act.

The I.G. has not offered in evidence any document
purporting to be a judgment of conviction against
Petitioner. At most, the I.G. has pointed out that
Petitioner's motion for a new trial and the Municipal
Court's order granting Petitioner's motion refer to
Petitioner's "conviction and/or bond forfeiture."
However, there is nothing in the record that explains
which of these words applied to Petitioner. Moreover,
the I.G. acknowledges that the Municipal Court apparently
“did not enter a specific judgment of conviction or make
a specific finding of guilt against petitioner." I.G.
Resp. to ALJ's Inquiry at 1. Thus, the documentary
evidence is insufficient to prove, by a preponderance of
the evidence, that the Municipal Court entered a judgment
of conviction against Petitioner.
7

Nor has the I.G. pointed to any provision of Arkansas law
that would operate to transform a bond forfeiture into a
conviction. By contrast, Petitioner cites Almond v.
Countryside Casualty Co., 329 F. Supp. 137 (W.D. Ark.
1971), aff'd, 455 F.2d 503 (8th Cir. 1972), which holds
that a bond forfeiture is not a conviction under Arkansas
law.! Therefore, I conclude that the I.G. has failed to
prove that a judgment of conviction has been entered
against Petitioner, within the meaning of section

1128(i) (1).

There is no evidence that the Municipal Court, or any
other court, made any finding of guilt against
Petitioner. Thus, the definition of "convicted" found at
section 1128(i)(2) is inapplicable to Petitioner's case.

The I.G. argues that Petitioner's failure to appear for
trial and her willingness to surrender her bond are the
equivalent of a guilty plea. Accordingly, the I.G.
argues that she was convicted within the meaning of
section 1128(i)(3). However, the I.G. has failed to
offer any evidence that this position reflects settled
State law. Petitioner avers that she did not enter a
plea of guilty or nolo contendere--and there is nothing
in the record to contradict her. I therefore conclude
that the I.G. failed to prove that Petitioner was
convicted within the meaning of section 1128(i) (3).

As to section 1128(i) (4), there is no evidence to suggest
that Petitioner's case was treated as part of any
deferred adjudication program. As discussed above, it
does not appear that Petitioner ever entered a plea, nor
that the Municipal Court ever held any proceedings on the
merits of her case. Thus, there is no basis to conclude
that any judgment of conviction was withheld, nor was
there any record of conviction to be expunged.
Accordingly, I conclude that Petitioner was not convicted
within the meaning of section 1128(i) (4).

Based on the above facts and reasoning, I conclude that
the I.G. has failed to show that Petitioner was convicted
as that term is defined in the Act. Because federal law
is controlling, as noted above, the numerous State law

' fhe I.G. points out that the Arkansas Supreme
Court has not ruled explicitly on the question of whether
a bond forfeiture is the equivalent of a guilty plea.
1I.G. Resp. to Petitioner's Brief at 2. This merely
reinforces my conclusion that the evidence is
insufficient to establish that Petitioner's bond
forfeiture amounts to a conviction.
8

issues discussed by the parties herein are not
determinative of the outcome.

CONCLUSION

Inasmuch as it was not proven that Petitioner was
convicted of a criminal offense relating to the neglect
or abuse of patients in connection with the delivery of a
health care item or service, her exclusion from the
Medicare and Medicaid programs under the authority of
section 1128(a)(2) is not justified.

/s/

———
Joseph K. Riotto
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
In the Case of:

Professional Nurses Home
Health Services, DATE: May 12, 1995
Petitioner,

Docket No. C-94-421
Decision No. CR375

-v-

Health Care Financing
Administration.

DECISION

Petitioner requested a hearing to oppose a determination
by the Health Care Financing Administration (HCFA) to
terminate Petitioner's participation in Medicare. The
case was assigned to me for a hearing and a decision. I
held a prehearing conference by telephone on September 9,
1994. During this conference, the parties agreed that
there was no need for an in-person hearing. The parties
agreed further that I should hear the case based on an
exchange of briefs and exhibits. The parties
subsequently filed exhibits, briefs, and reply briefs.

After considering the briefs and exhibits submitted by
the parties, I held another telephone prehearing
conference on March 9, 1995. During the conference, I
advised the parties that they each may have failed to
address pertinent issues. In their briefs, the parties
treated the case as if it were an appellate review of
findings made by the individuals who had surveyed
Petitioner on behalf of HCFA. I observed that the
parties' arguments seemed to ignore the fact that the
hearing, rather than being an appellate review, was a de
novo review of HCFA's determination, subject to the
requirements of section 205(b) of the Social Security Act
(Act).

I advised each party that I would afford it the

opportunity to reconsider its submissions to me and to
supplement them, either at an in-person hearing or with
additional briefs and exhibits. The parties advised me
2

subsequently that neither of them desired an in-person
hearing. HCFA then submitted an additional brief and two
additional exhibits. Petitioner submitted an additional
brief and no additional exhibits.!

I have considered the applicable law and regulations, the
exhibits, and the parties’ arguments. I conclude that
HCFA proved, by a preponderance of the evidence, that
Petitioner failed to comply with a condition of
participation in Medicare. Therefore, HCFA was
authorized to terminate Petitioner’s participation in
Medicare.

I. Issue, findings of fact, and conclusions of law

The issue in this case is whether HCFA was authorized to
terminate Petitioner’s participation in Medicare. In
deciding that HCFA was authorized to terminate
Petitioner’s participation, I make specific findings of
fact and conclusions of law. After each finding or
conclusion, I cite to the page or pages of the decision
at which I discuss the finding or conclusion.

1. HCFA has the burden of proving, by the
preponderance of the evidence, that it was
authorized to terminate Petitioner’s
participation in Medicare. Pages 5 - 8.

2. For HCFA to meet its burden of persuasion, it
had to prove that Petitioner failed to comply
with a condition of participation in Medicare.
Pages 6 - 8.

3. HCFA proved, by the preponderance of the
evidence, that Petitioner failed to comply with
the condition of participation in Medicare
governing acceptance of patients, plan of care,
and medical supervision, set forth in 42 C.F.R.
§ 484.18. Pages 8 - 12.

4. HCFA was authorized to terminate Petitioner’s
participation in Medicare. Pages 3 - 14.

' HCFA submitted a total of ten exhibits (HCFA
Ex. 1 - 10). HCFA Ex. 1 - 8 were submitted initially,
and HCFA Ex. 9 and 10 were submitted with HCFA’s
supplemental brief. Petitioner submitted a total of 15
exhibits (P. Ex. 1 - 15). I have admitted into evidence
HCFA Ex. 1 - 10 and P. Ex. 1 - 15.
II. Discussion

A. Background

Petitioner is a home health agency, located in Baton
Rouge, Louisiana. Under the Medicare program, a home
health agency is a public agency or private organization
which provides health care services to a patient ona
visiting basis in a place of residence used by the
patient as his or her home. Act, sections 1861(m), (0).
A home health agency is primarily engaged in providing
skilled nursing services and other therapeutic services.
Act, section 1861(0). The services provided by a home
health agency include nursing care, physical,
occupational, or speech therapy, medical social services
under the direction of a physician, medical supplies, and
other services. Act, section 1861(m).

A home health agency that participates in Medicare is
obligated to comply with the requirements of
participation stated in the Act, and with the conditions
of participation stated in applicable regulations.
Regulations establishing the conditions of participation
in Medicare for home health agencies are contained in 42
C.F.R. Part 484.

From January 10, 1994 through January 13, 1994, surveyors
employed by the Louisiana Department of Health and
Hospitals (Louisiana State agency) conducted an annual
compliance survey of Petitioner on behalf of HCFA. The
surveyors concluded that Petitioner was not complying
with the condition of participation governing clinical
records, contained in 42 C.F.R. § 484.48. HCFA Ex. 2.
Petitioner submitted a plan of correction.’

On February 25, 1994, the Louisiana State agency
resurveyed Petitioner. The surveyors found that
Petitioner continued not to be in compliance with
conditions of participation. The surveyors found that
Petitioner was still not complying with the condition of
participation governing clinical records. HCFA Ex. 3 at
6 - 8. They found also that Petitioner was not complying
with the condition of participation governing home health
aide services, contained in 42 C.F.R. § 484.36. Id. at 3
- 5.

2? It is unclear whether either the Louisiana
State agency or HCFA found this plan of correction to be
acceptable. In any event, neither Petitioner nor HCFA
argues that Petitioner’s relationship with HCFA is
governed by the plan of correction.
4

On April 13, 1994, HCFA notified Petitioner that HCFA
agreed with the findings made by the Louisiana State
agency surveyors at the February 25, 1994 resurvey of
Petitioner. HCFA Ex. 1. HCFA told Petitioner that it
would terminate Petitioner’s participation in Medicare,
effective May 2, 1994. Id. HCFA told Petitioner that,
if it was dissatisfied with the determination, it could
request a hearing before an administrative law judge.
Id. HCFA advised Petitioner that Petitioner might be
able to avoid termination by correcting the deficiencies
that the Louisiana State agency surveyors found at the
February 25, 1994 resurvey. HCFA told Petitioner to
notify HCFA immediately if Petitioner was able to attain
compliance with all conditions of participation. Id.

On April 15, 1994, Petitioner notified HCFA that it had
attained compliance with conditions of participation in
Medicare.’ HCFA Ex. 4. On April 22, 1994, Louisiana
State agency surveyors conducted a second follow-up
survey of Petitioner. HCFA Ex. 5. The purpose of this
survey was to ascertain whether Petitioner had, in fact,
attained compliance with conditions of participation.

The surveyors concluded that, notwithstanding
Petitioner’s assertion of compliance, Petitioner remained
out of compliance with Medicare conditions of
participation. The surveyors found that Petitioner still
was not complying with the condition of participation
governing clinical records stated in 42 C.F.R. § 484.48.
HCFA Ex. 5 at 6 - 9. The surveyors found also that
Petitioner was not complying with the condition of
participation governing acceptance of patients, plan of
care, and medical supervision stated in 42 C.F.R. §
484.18. Id. at 1- 4. The surveyors did not find that
Petitioner continued to fail to comply with the condition
of participation governing home health aide services
stated in 42 C.F.R. § 484.36.

B. Analysis of the law and the evidence

In question here is whether, as of April 22, 1994,
Petitioner remained noncompliant with conditions of
participation in Medicare. HCFA asserts that, as of that
date, Petitioner was not complying with two conditions of
participation, consisting of the condition of
participation governing acceptance of patients, plan of
care, and medical supervision stated in 42 C.F.R. §
484.18, and the condition governing clinical records
stated in 42 C.F.R. § 484.48. I conclude that HCFA

3 Also, Petitioner requested a hearing.
5

proved, by a preponderance of the evidence, that
Petitioner was not complying with the condition of
participation governing acceptance of patients, plan of
care, and medical supervision. I do not conclude that
HCFA proved that Petitioner was not complying with the
condition of participation governing clinical records.

I make no findings in this decision as to whether, as of
the January 1994 survey, or as of the February 1994
resurvey, Petitioner failed to comply with conditions of
participation in Medicare. It is not necessary for me to
make findings as to Petitioner’s compliance as of the
dates of these surveys in order for me to decide this
case. It is sufficient here for me to find that, as of
April 22, 1994, Petitioner was not complying with a
condition of participation in Medicare.

1. HCFA’s burden of persuasion

The Secretary of the Department of Health and Human
Services (Secretary) is authorized to terminate the
participation of any provider, including a home health
agency, where that provider has failed to comply
substantially with the provisions of its provider
agreement, with the provisions of the Act and applicable
regulations, or with a mandated plan of corrective
action. Act, section 1866(b)(2)(A). The Secretary has
delegated to HCFA the authority to terminate a
noncompliant provider’s participation in Medicare.

A provider that is dissatisfied with a determination to
terminate its participation in Medicare is entitled to a
hearing. Act, section 1866(h)(1). A provider that
requests a hearing is afforded the same hearing rights as
are afforded to parties who are entitled to hearings
under section 205(b) of the Act. Id.; see Act, section
205(b). Section 205(b) has been interpreted uniformly
and often to confer a right to a de novo hearing on any
party that is entitled to a hearing under that section.

In a hearing under section 205(b) of the Act as to the
propriety of a determination to terminate a provider's
participation in Medicare, HCFA has the burdens of coming
forward with evidence to justify its determination to
terminate, and of proving, by a preponderance of the
evidence, that its determination is justified.‘ This
conclusion is in accord with my decisions in Hospicio en
el Hogar de Utuado, DAB CR371 at 6 - 14 (1995), in

4 I refer to the burdens of coming forward with
evidence and of proof as the burden of persuasion.
6

Hospicio en el Hogar de Lajas, DAB CR366 (1995), and in
Arecibo Medical Hospice Care, DAB CR363 (1995).

HCFA has not asserted in this case that Petitioner has
the burden of persuasion. Therefore, it is not necessary
for me to reiterate in detail here the analysis I made in
Utuado, Lajas, and Arecibo, which supports my conclusion
that HCFA has the burden of persuasion. It is sufficient
for me to state that both due process requirements and
efficiency considerations support the conclusion that
HCFA bears the burden of persuasion. Utuado, DAB CR371
at 6-7.

2. The elements of HCFA’s burden of persuasion

In Utuado, I discussed in detail the elements of HCFA’s
burden of persuasion. Utuado, DAB CR371 at 10 - 14. In
general, HCFA’s burden of persuasion consists of three
elements. First, HCFA must prove the existence of
participation requirements with which a provider whose
participation HCFA has terminated allegedly has not
complied. Second, HCFA must establish facts showing that
the provider has failed to comply with Medicare
participation requirements. Finally, HCFA must prove
that the provider’s failure to comply with participation
requirements is so substantial as to justify terminating
that provider’s participation in Medicare.

HCFA meets the first element of its burden of persuasion
by identifying the specific language in the Act or in the
regulations with which it alleges the provider is not in
compliance. Where HCFA is relying on the plain meaning
of language in the Act or a regulation, it only need
identify that language. However, where HCFA is relying
on an interpretation of language in the Act or a
regulation which is not apparent from the face of the
enactment, HCFA assumes two additional responsibilities.
It must prove that its interpretation is reasonable, and
that the provider is aware of its obligation to comply
with this interpretation. Utuado, DAB CR371 at 10 - 11.

HCFA meets the second element of its burden of persuasion
by establishing by a preponderance of the evidence the
facts which HCFA alleges prove a provider’s failure to
comply with a participation requirement. That evidence
may consist of the testimony of surveyors as to the
findings that they made when they surveyed the provider.
It may consist also of supporting materials, such as
patients’ records, obtained by the surveyors from the
provider. Utuado, DAB CR371 at 12.
7

HCFA meets the final element of its burden of persuasion
by proving, also by a preponderance of the evidence, that
a provider’s failure to comply with participation
requirements is so substantial as to justify terminating
the provider’s participation in Medicare. The test for
substantial noncompliance is established in 42 C.F.R. §
488.24(a). Under that regulation, a provider will be
found to have failed to comply with conditions of
participation in Medicare where its deficiencies are of
such character as to substantially limit its capacity to
render adequate care or where they adversely affect the
health and safety of patients.

There are circumstances where a substantial failure to
comply with participation requirements may be established
conclusively by the facts proving noncompliance. Many
regulations state explicitly the conditions of
participation which govern a provider’s participation in
Medicare. A regulation’s statement of a condition of
participation is a finding by the Secretary that a
failure by a provider to comply with that condition
constitutes substantial noncompliance with Medicare
participation requirements.

Where a regulation describes explicitly a condition of
participation, it is reasonable to conclude that facts
establishing a failure to comply with that condition may
be deemed to prove substantial noncompliance within the
meaning of 42 C.F.R. § 488.24(a). If HCFA proves that a
provider has not complied with an explicitly stated
condition of participation, HCFA is not required to offer
additional proof of the substantiality of that
noncompliance, because the noncompliance is deemed to be
substantial.

However, there also may be circumstances where the impact
of a deficiency on a provider’s ability to provide care
or on the health and safety of patients is not evident
from the facts establishing the existence of the
deficiency. A finding that a provider has not complied
with a condition of participation does not always flow
automatically from a finding that a provider has not
complied with a Medicare participation requirement. For
example, a finding of substantial noncompliance is not an
automatic consequence of proof that a provider has not
complied with a standard of participation set forth ina
regulation as a lesser included element of a condition of
participation.

In that circumstance, HCFA may have to prove not only the
existence of a deficiency, but may have to offer
additional evidence to prove that the deficiency is
8

substantial within the meaning of 42 C.F.R. § 488.24(a)
and the Act. Such evidence may consist of evidence which
establishes the impact of the deficiency on the
provider’s ability to provide care or on the health and
safety of patients. In proving impact, expert opinion as
to the likely impact of the deficiency on the capacity of
the provider to provide care may be important. Utuado,
DAB CR371 at 13 - 14.

3. Analysis of the parties’ contentions,
rguments, a t ne.

HCFA asserts that, as of April 22, 1994, Petitioner was
not complying with two conditions of participation in
Medicare as stated in 42 C.F.R. §§ 484.18 and 484.48. I
analyze HCFA’s and Petitioner’s arguments and the
evidence offered by the parties relevant to these two
conditions of participation pursuant to the elements of
HCFA’s burden of persuasion which I described at Part
II.B.2. of this decision.

a. Petitioner’s alleged failure to
comply with the condition of
participation governing acceptance of
patients, plan of care, and medical

supervision stated in
42 C.F.R. 484.18

The condition of participation contained in
42 C.F.R. § 484.18 includes the requirement that care
provided to each patient by a home health agency:

follows a written plan of care established and
periodically reviewed by a doctor of medicine,
osteopathy, or podiatric medicine.

The plain requirement of the condition of participation

stated in 42 C.F.R § 484.18 is that a home health agency
must provide care to each of its patients in accord with
the directions established by the plan of care that has

been created for that patient.

The preponderance of the evidence in this case is that,
as of the April 22, 1994 resurvey, Petitioner was not
providing care to patients consistent with this
condition. HCFA proved that, in two instances,
Petitioner failed to assure that tests and treatments
were provided to patients in accord with explicit
instructions contained in plans of care which had been
created to direct the care to be provided to those
patients.
9

The evidence which HCFA offered to prove that Petitioner
failed to comply with the condition consists of the
report of the surveyors which was generated at the April
22, 1994 resurvey, along with the affidavit of Erin
Rabalais, one of the two surveyors who participated in
the resurvey. HCFA Ex. 5, 9.

This evidence establishes that two of the patients whose
records the surveyors examined were not receiving
treatment according to the plans of care that had been
created for those patients. In the case of one patient,
designated as patient # 8 in the survey report, the plan
of care directed that a SMAC blood test be performed
monthly. HCFA Ex. 5 at 1. However, treatment records of
patient # 8 contained no documentation that SMAC tests
had been administered to that patient. Id. at 1 - 2.

In the case of patient # 4, the plan of care directed
that the patient’s blood pressure be measured in both
arms at each visit by a skilled nurse. HCFA Ex. 5 at 2.
The plan of care directed further that the patient’s
weight be monitored. Id. However, treatment records for
patient # 4 contained no documentation that the patient’s
blood pressure and weight had been recorded. Id.

Petitioner did not rebut this evidence. Petitioner
observes that HCFA has not produced supporting
documentation from Ms. Rabalais that could be used to
test the veracity of her findings. Petitioner argues
that, in the absence of such documentation, there remains
a serious question as to the truthfulness of the
surveyors’ findings.’ However, Petitioner has not denied
directly the findings made by the surveyors at the April
22, 1994 resurvey. Furthermore, Petitioner has not
offered any evidence that would refute those findings.
For example, Petitioner has not offered as evidence any
of the treatment records of patients # 4 or # 8, from
which Petitioner might have argued that either of the
patients had received treatments in accord with his or
her plan of care.

5’ Much of Petitioner’s evidence is offered to
show that the findings made by the Louisiana State agency
surveyors at the first compliance survey of Petitioner,
conducted in January 1994, were inconsistent with or not
supported by documentation made by the surveyors in
conjunction with that survey. See P. Ex. 1-15. It is
unnecessary for me to address the purportedly unsupported
findings or the allegedly inconsistent documentation
here, because I make no findings in this decision based
on that January 1994 survey.
10

Petitioner’s failure to provide care in accord with the
directions contained in patients’ plans of care is deemed
to be a substantial failure to comply with participation
requirements. The conclusion that Petitioner’s
deficiency is substantial is evident in this case because
Petitioner’s failure to provide care as directed by its
patients’ plans of care constitutes a failure to comply
with the explicit requirements of the condition of
participation stated in 42 C.F.R. § 484.18. It is not
necessary for HCFA to offer additional evidence to prove
that Petitioner’s failure to provide care to its patients
in accord with the directions contained in these
patients’ plans of care substantially limits Petitioner’s
capacity to render adequate care or adversely affects the
health and safety of patients.

HCFA argues also that the facts discovered by the
surveyors at the April 22, 1994 resurvey of Petitioner
establish a failure to comply with a standard of
participation contained in 42 C.F.R. § 484.18(a). This
standard requires, among other things, that each
patient’s plan of care state the frequency of visits that
a patient will be receiving by skilled nurses or other
personnel. HCFA asserts that the evidence proves that
two patients, patient # 8 and patient # 1, received
skilled nursing visits more frequently than prescribed by
their plans of care. HCFA Ex. 5 at 2 - 3. According to
HCFA, one patient, patient # 5, received skilled nursing
visits less frequently than prescribed by that patient’s
plan of care. Id. at 3.

This evidence has not been rebutted by Petitioner.
However, I do not find that it establishes a failure by
Petitioner to comply with the standard contained in 42
C.F.R. § 484.18(a). That standard addresses only what
must be contained within a patient’s plan of care. It
does not address the issue of compliance by a home health
agency with the terms of a plan of care. Thus,
Petitioner’s failure to provide visits to patients by
skilled nurses in accordance with the schedule of visits
established by the patients’ plans of care is not a
failure to comply with the requirement that the plans of
care state the frequency of nurses’ visits. On the other
hand, the evidence does comprise additional evidence of
Petitioner’s failure to comply with the overall condition
stated in 42 C.F.R. § 484.18, inasmuch as it proves
additional failures by Petitioner to provide care to
patients in accord with the directions contained in these
patients’ plans of care.
11

HCFA argues also that Petitioner failed to comply with
the standard contained in 42 C.F.R. § 484.18(c). That
standard requires, among other things, that a nurse or
therapist who provides care on behalf of a home health
agency immediately record and sign oral treatment orders
that the nurse or therapist receives from a physician and
obtain the physician’s countersignature. HCFA asserts
that the evidence proves that Petitioner’s staff failed
to obtain a countersignature from a physician for an oral
treatment order prescribing that insulin be administered
to patient # 2. HCFA Ex. 5 at 3 - 4. HCFA asserts
additionally that Petitioner’s staff failed to obtain a
countersignature from a physician for an oral treatment
order from a physician for removal of a catheter from
patient #10. Id. at 4.

This evidence has not been rebutted by Petitioner, and I
find that it substantiates HCFA’s argument that
Petitioner failed to comply with the standard contained
in 42 C.F.R. § 484.18(c). However, I do not conclude
that this evidence comprises additional proof that
Petitioner failed to comply with the condition stated in
42 C.F.R. § 484.18. In this instance, proof that
Petitioner failed to comply with a standard contained in
a regulation does not lead automatically to a conclusion
that Petitioner failed to comply with a condition of
participation. In order to prove that Petitioner’s
failure to comply with the standard comprises also a
failure to comply with the overall condition stated in 42
C.F.R. § 484.18, HCFA must prove that the failure to
comply is substantial within the meaning of

42 C.F.R. § 488.24(a).

I am not persuaded from the evidence offered by HCFA that
it met its burden of persuasion in this instance. To
support its assertion that deficiencies manifested by
Petitioner, including the failure to comply with the
requirements of 42 C.F.R § 484.18(c), were substantial,
HCFA offered the affidavit of Andrew Roger Perez. HCFA
Ex. 10. Mr. Perez is the Associate Regional
Administrator for the Division of Health Standards and
Quality in the Dallas Regional Office of HCFA. Id. at 1.
I do not find Mr. Perez to be qualified to render expert
opinion as to whether Petitioner failed substantially to
comply with Medicare participation requirements. Mr.
Perez has not been shown by HCFA to possess any training
or skills that would qualify him to provide expert
opinion as to the impact of deficiencies in Petitioner’s
operations on its ability to provide care. Indeed, Mr.
Perez admits that he formed his opinion from the advice
provided to him by unnamed health care professionals.

Id. at 1 - 2.
12

HCFA offers additionally the opinion of Ms. Rabalais that
the deficiencies manifested by Petitioner are
substantial. HCFA Ex. 9 at 8. Ms. Rabalais is a
registered nurse, and she might possess the professional
training and expertise to testify authoritatively
concerning whether some of the deficiencies manifested by
Petitioner are substantial. Id. at 1. However, I am not
persuaded by Ms. Rabalais’ affidavit that the
deficiencies manifested by Petitioner are substantial.
Her opinion is stated as a bare conclusion, without
foundation. It is unclear from her affidavit how she
formed her opinion. Moreover, Ms. Rabalais states her
conclusion in such a sweeping fashion that it may
encompass areas beyond her professional expertise,
including judgments that could be made reasonably only by
a physician.

b. Petitioner’s alleged failure to
comply with the condition of
participation governing clinical
records stated in 42 C.F.R. § 484.48

The condition of participation which governs the duty of
home health agencies to maintain clinical records for
their patients states:

A clinical record containing pertinent past and
current findings in accordance with accepted
professional standards is maintained for every
patient receiving home health services. In
addition to the plan of care, the record
contains appropriate identifying information;
name of physician; drug, dietary, treatment,
and activity orders; signed and dated clinical
and progress notes; copies of summary reports
sent to the attending physician; and a
discharge summary.

42 C.F.R. § 484.48.

Central to application of this section is the language in
the first sentence which requires that a home health
agency maintain its clinical records in accordance with
“accepted professional standards." The term "accepted
professional standards" is not defined. However,
interpretation of this term is critical because the
condition of participation governing clinical records in
effect states that, in order to evaluate a home health
agency’s compliance with the condition, that provider’s
recordkeeping must be measured against “accepted
professional standards."
13

It is evident from the face of the regulation that the
Secretary has determined that there exist accepted
professional standards which govern recordkeeping by home
health agencies. HCFA, as the Secretary's delegate, has
the authority to identify those standards and to hold
home health agencies accountable to them.

There may be recordkeeping standards that are
professionally recognized by home health agencies that
are so widely known that HCFA need not publish them in
order to put home health agencies on notice that they are
required to comply with them. If so, then HCFA's burden
of persuasion in a case involving an alleged failure by a
home health agency to comply with these standards is to
identify them, and to prove, by a preponderance of the
evidence, that they are in fact widely known and
accepted.

HCFA asserts that Petitioner failed to comply with the
condition governing clinical records in several respects.
In the case of patient # 1, HCFA contends that Petitioner
failed to maintain records which documented the
administration of insulin to the patient as prescribed by
the patient's physician. HCFA Ex. 5 at 7. In the case
of patient # 2, HCFA contends that the patient's records
contain an inappropriate diagnosis of "heart trouble."
Furthermore, according to HCFA, the medications listed
for this patient include a medication whose name does not
appear in the standard texts describing medications, nor
do the patient's records describe the dosage, frequency,
or route of administration of the medication. Id. at 7 -
8.

HCFA asserts that the records of patient # 4 contain
reference to a medication whose name cannot be found in
standard texts describing medications. HCFA Ex. 5 at 8.
With respect to patient # 9, HCFA contends that the
patient's record contains erasures and alterations. Id.
HCFA asserts that the records of patient # 10 contain an
inappropriate diagnosis of "bladder problems." Id. HCFA
contends that, as with other records, the record of this
patient contains a reference to a medication whose name
does not appear in standard texts describing medications.
Id. at 8 - 9.

Petitioner has not rebutted the facts alleged by HCFA. I
conclude that HCFA proved its fact assertions by the
preponderance of the evidence. However, I do not find
that these facts prove that Petitioner failed to comply
with the condition stated in 42 C.F.R. § 484.48.
14

HCFA has offered no evidence to establish the accepted
professional standards which govern recordkeeping by home
health agencies. HCFA assumes the conclusion that the
facts identified by the surveyors prove that Petitioner
failed to keep records in accord with accepted
professional standards without ever identifying those
standards. There is, thus, a critical gap in the
evidence offered by HCFA concerning Petitioner’s alleged
failure to comply with 42 C.F.R. § 484.48.

I am not suggesting that the recordkeeping practices
manifested by Petitioner may not have constituted a
failure to comply with the condition governing clinical
records. However, it is HCFA’s burden to establish the
criteria with which Petitioner is obligated to comply.
HCFA has not met that burden here.

4. ‘sa it minate Petitio 7

HCFA proved by a preponderance of the evidence that, as
of April 22, 1994, Petitioner was not complying with the
condition of participation in Medicare stated in 42
C.F.R. § 484.18. That noncompliance is sufficient basis
for HCFA to terminate Petitioner’s participation in
Medicare.

The Act provides that HCFA may terminate a provider’s
participation in Medicare where that provider is not
complying substantially with Medicare participation
requirements. Act, section 1866(b)(2)(A). As I hold
above, failure by a provider to comply with a condition
of participation is substantial noncompliance within the
meaning of the Act. Furthermore, regulations provide
explicitly that HCFA may terminate a provider’s
participation in Medicare where the provider is not
complying with a condition of participation. 42 C.F.R. §
489.53(a) (3).

III. Conclusion

HCFA proved that, as of April 22, 1994, Petitioner was
not complying with the condition of participation stated
in 42 C.F.R. § 484.18. HCFA was authorized to terminate
Petitioner’s participation in Medicare. I therefore
sustain HCFA’s determination to terminate Petitioner’s
participation in Medicare.

/s/

Steven T. Kessel
Administrative Law Judge