Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Thomas Malik, DATE: February 10, 1995
Petitioner,

Docket No. C-94-415
Decision No. CR357

-v.-

The Inspector General.

DECISION

By letter dated July 21, 1994, Thomas Malik, the
Petitioner herein, was notified by the Inspector General
(I.G.) of the United States Department of Health & Human
Services (HHS), that it had been decided to exclude him
for a period of five years from participation in the
Medicare, Medicaid, Maternal and Child Health Services
Block Grant and Block Grants to States for Social
Services programs.' The I.G. asserted that an exclusion
of at least five years is mandatory under sections
1128(a) (1) and 1128(c)(3)(B) of the Social Security Act
(Act) because Petitioner had been convicted of a criminal
offense related to the delivery of an item or service
under Medicaid.

Petitioner filed a timely request for review of the
I.G.'s action. On September 7, 1994, I held a prehearing
conference in this case. During that conference, the
parties agreed to proceed by filing briefs supported by
documentary evidence.

Thereafter, the I.G. filed a brief and two exhibits. I
identify these exhibits as I.G. Ex. 1 and I.G. Ex. 2.

By telephone on November 21, 1994, counsel for Petitioner
indicated that Petitioner did not wish to file a
responsive brief in this case. However, he stated that
Petitioner would like to offer the three documents
attached to his hearing request as evidence in this case.

1 In this decision, I refer to all programs from
which Petitioner has been excluded, other than Medicare,
as "Medicaid."
By letter dated November 28, 1994, I identified these
three documents as P. Ex. 1 through 3. In addition, I
allowed the I.G. additional time to file a submission
indicating whether the I.G. objected to admitting these
dccuments into the record, and to comment on the contents
of the proposed exhibits.

The I.G. submitted a letter stating that she did not
object to admitting P. Ex. 1 through 3 into evidence.

Since neither party has objected to the exhibits offered
by the other party, I admit I.G. Ex. 1 and 2 and P. Ex. 1
through 3.

I have considered the parties’ arguments, supporting
exhibits, and the applicable law. I conclude that there
are no material factual issues in dispute (i.e., the only
matter to be decided is the legal significance of the
undisputed facts). I conclude also that Petitioner is
subject to the minimum mandatory exclusion provisions of
sections 1128(a)(1) and 1128(c)(3)(B) of the Act, and I
affirm the I.G.'s determination to exclude Petitioner
from participation in Medicare and Medicaid for a period
of five years.

APPLICABLE LAW

Sections 1128(a) (1) and 1128(c)(3)(B) of the Act make it
mandatory for any individual who has been convicted’ of a
criminal offense related to the delivery of an item or
service under Medicare or Medicaid to be excluded from
participation in such programs for a period of at least
five years.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. During the period relevant herein, Petitioner was a
licensed nursing home administrator. Petitioner was
employed as the Administrator of the Arcadia Nursing
Center, a nursing facility located in Gargatha, Virginia.
I.G. EX. 1.

2. Medicaid recipients residing at the Arcadia Nursing
Center entrusted Petitioner with safeguarding their
personal funds in accordance with Medicaid regulations.
I.G. Ex. 1.

3. Medicaid regulations required the Arcadia Nursing
Center to establish and maintain a system which assures a
full and complete and separate accounting of each
resident's personal funds entrusted to the facility on
the resident's behalf. 42 C.F.R. § 483.10(c) (4).
3

4, From January 26 through 28, 1993, Medicaid auditors
conducted a surprise on-site audit of Arcadia Nursing
Center's financial data. The audit revealed that
Petitioner received and deposited $14,919.49 of
residents' personal funds into the facility's operating
account and used the residents' personal funds to pay the
facility's operating expenses. I.G. Ex. 1.

5, Petitioner admitted to Medicaid auditors that his
actions violated Medicaid regulations. Petitioner
admitted that he was aware that residents of Arcadia
Nursing Center were being denied access to their personal
funds and were not earning interest on their personal
funds. 1.G. Ex. 1.

6. Based on information obtained as a result of the
Medicaid audit, the Virginia Accomack County General
District Court issued two warrants. One warrant (Case
No. C93-1275) charged Petitioner with the offense of
knowing failure to deposit, transfer, or maintain
residents' trust funds in a separate account as required
by 42 C.F.R. § 483.10(c)(3 - 8). The other warrant (Case
No. C93-1274) charged Petitioner with the offense of
embezzlement deemed larceny. I.G. Ex. 1, I.G. Ex. 2.

7. Petitioner entered into a plea agreement in which he
agreed to plead guilty to the offense of knowing failure
to deposit, transfer, or maintain residents' trust funds
in a separate account. The Commonwealth of Virginia
agreed to recommend that a fine and suspended jail
sentence be imposed on Petitioner for this offense. I.G.
Ex. 1.

8. Petitioner agreed to plead no contest to the offense
of embezzlement deemed larceny. The Commonwealth of
Virginia agreed to recommend that this warrant be
continued for six months, with the understanding that
this charge would be dismissed if Petitioner engaged in
good behavior during that period of time. I.G. Ex. 1.

9. Pursuant to the plea agreement, on August 30, 1993
Petitioner pled guilty to the offense of knowing failure
to deposit, transfer, or maintain residents' trust funds
in a separate account and the court found Petitioner to
be guilty as charged. Based on its acceptance of
Petitioner's guilty plea, the court imposed a fine of
$1000 and a 30-day suspended jail sentence. I.G. Ex. 2.

10. The Secretary of HHS has delegated to the I.G. the
authority to determine and impose exclusions pursuant to
section 1128 of the Act. 48 Fed. Reg. 21662 (1983).

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

12. A nursing facility's protection of funds held in
trust for Medicaid recipients who are residents of the
facility is an integral element of the delivery of health
care services under Medicaid.

13. 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.

14. A defendant in a criminal proceeding does not have
to be advised of all the possible consequences which may
flow from his guilty plea, such as temporarily being
barred from government reimbursement for his professional
services.

15. The I.G.'s determination to impose and direct a
five-year exclusion in this case does not violate the
United States Constitution's prohibition against double
jeopardy.

16. The I.G. properly excluded Petitioner from
participation in Medicare and Medicaid for a period of
five years pursuant to sections 1128(a)(1) and
1128(c)(3)(B) of the Act. Findings 1 - 15.

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

PETITIONER'S ARGUMENT

Petitioner claims that he entered into a plea agreement
with State officials in order to save the Arcadia Nursing
Center from total financial disaster. He contends that
since he "made the sacrifice of accepting the error alone
to save the [nursing] home", it is "not equitable" to
prevent him from earning a living.

Petitioner contends further that he has received "dual
punishment" for a single offense. Lastly, Petitioner
objects to the fact that he was not informed about the
collateral consequences of pleading guilty.

DISCUSSION

The evidence adduced by the I.G., and not disputed by
Petitioner, demonstrates that Petitioner was convicted of
a criminal offense related to the delivery of an item or
service under Medicaid, within the meaning of section
5

1128(a) (1) of the Act. For this reason, Petitioner's
five-year exclusion is required as a matter of law.’

The first requirement that must be satisfied in order to
establish that the I.G. had the authority to exclude
Petitioner under section 1128(a)(1) of the Act is that
Petitioner must have been convicted of a criminal
offense. Petitioner does not dispute that he was
convicted of a criminal offense within the meaning of the
Act. The undisputed facts establish that Petitioner
entered a guilty plea to the offense of knowing failure
to deposit, transfer, or maintain residents' trust funds
in a separate account, and that the Virginia Accomack
County General District Court accepted Petitioner's
guilty plea. The Act defines the term "convicted of a
criminal offense" to include those circumstances in which
a plea of guilty by an individual has been accepted by a
federal, State, or local court. Act, section 1128(i) (3).
Therefore, I conclude that Petitioner was convicted of a
criminal offense within the meaning of sections
1128(a) (1) and 1128(i) of the Act.

2 In a letter to the Commonwealth Attorney dated
May 12, 1994, Petitioner urges the Commonwealth of
Virginia to dismiss his case based on his good behavior
pursuant to the terms of the plea agreement. Petitioner
appears to take the position in that letter that a
dismissal of his case would undermine the I.G.'s
authority to exclude him under the Act. P. Ex. 3. I
disagree. The record shows that two warrants were issued
charging Petitioner with two separate offenses. Pursuant
to the terms of the plea agreement, Petitioner pled
guilty to the warrant charging him with knowing failure
to deposit, transfer, or maintain residents' trust funds
in a separate account and the court accepted Petitioner's
guilty plea. The I.G. stated in her brief that she
excluded Petitioner based on the court's disposition of
this warrant. The plea agreement provided also that the
disposition of the other warrant charging Petitioner with
embezzlement deemed larceny would be continued, with a
recommendation that the charge would be dismissed in six
months in return for good behavior. Since the I.G. does
not argue that the court's disposition of the warrant
charging Petitioner with the offense of embezzlement
deemed larceny is a basis for the exclusion in this case,
the disposition of that warrant is irrelevant to this
proceeding.
6

I further find that the second requirement of section
1128(a)(1) -- that the criminal offense leading to the
conviction must be related to the delivery of an item or
service under Medicare or Medicaid -- has also been met.
Section 1128(a)(1) encompasses far more than just the
theft of Medicare and Medicaid funds or frauds directed
against the programs. For example, in Jerry L. Edmonson,
DAB CR59 (1989), the petitioner, who was a nursing home
administrator, was convicted of the offense of
misapplying funds that he had held in a fiduciary
capacity for a Medicaid recipient. The administrative
law judge in Edmonson found that the protection of
Medicaid recipients’ funds is an integral element of the
Medicaid services delivered by nursing facilities. Since
the petitioner in Edmonson had been convicted of a
criminal offense affecting an integral element of
Medicaid services, the administrative law judge reasoned
that the petitioner's offense was related to the delivery
of Medicaid services within the meaning of section
1128(a)(1) of the Act. I find that in this case, as in
Edmonson, Petitioner's breach of his fiduciary duty had a
direct impact on the Medicaid's integrity and that it
justifies an exclusion under section 1128(a)(1) of the
Act. See also Gary Gregory, DAB CR274 (1993).

Petitioner claims that he entered into a plea agreement
in order to save the Arcadia Nursing Center from total
financial disaster. He argues that under the
circumstances of this case, it is "not equitable" to
prevent him from earning a living. I conclude that,
based on the undisputed material facts in the record of
this case, the I.G. properly excluded Petitioner from
Medicare and Medicaid pursuant to section 1128(a)(1) of
the Act and that the length of the exclusion is
controlled by section 1128(c)(3)(B), which mandates a
minimum period of exclusion of five years. Since I do
not have the authority to reduce the five-year minimum
exclusion mandated by section 1128(c)(3)(B) of the Act,
the mitigating circumstances which Petitioner alleges
exist in this case could not affect the outcome of this
case.

Petitioner contends that he is receiving "dual
punishment." I take this to mean that Petitioner
contends that his exclusion violates the prohibition
against double jeopardy under the United States
Constitution. Petitioner's argument is without merit.
When an exclusion is imposed pursuant to section 1128 of
the Act, its primary purpose is to protect Medicare and
Medicaid from future misconduct by a provider who has
shown himself to be untrustworthy. Francis Shaenboen
R.Ph., DAB CR97 (1990), aff'd DAB 1249 (1991). Federal
district courts have specifically found that exclusions
under section 1128 are remedial in nature, rather than
punitive, and do not violate the double jeopardy
provisions of the United States Constitution. Manocchio
7

vy. Sullivan, 768 F. Supp. 814 (S.D. Fla. 1991).
Additionally, Petitioner was initially convicted in a
State court, and it has been held that double jeopardy
does not apply to a subsequent federal prosecution based
on facts which led to a State conviction. Abbate v.
United States, 359 U.S. 187 (1959).

In addition, Petitioner's argument that the I.G. is
precluded form imposing an exclusion in this case because
Petitioner did not know that his conviction would result
in an exclusion is without merit. This argument is
essentially the same as an argument made by a petitioner
in the case of Douglas Schram, R.Ph., DAB CR215 (1992),
aff'd DAB 1372 (1992). In rejecting this argument, I
cited U.S. V. Suter, 755 F.2d 523, 525 (7th Cir. 1985)
for the proposition that a defendant in a criminal
proceeding does not have to be advised of all the
possible consequences which may flow from his plea of
guilty, including temporarily being barred from
government reimbursement for his professional services.

CONCLUSION

Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate
that the Petitioner herein be excluded from Medicare and
Medicaid for’a period of at least five years because of
his conviction of a criminal offense related to the
delivery of items or services under these programs.
Neither the I.G. nor an administrative law judge is
authorized to reduce a five-year mandatory minimum
exclusion.

The five-year exclusion is, therefore, sustained.

/s/

Joseph K. Riotto
Administrative Law Judge


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

In the Case of:
Piedmont Family Clinic, DATE: January 30, 1995
Petitioner,

Docket No. C-94-418
Decision No. CR355

-v-

Health Care Financing
Administration.

weer ee

DECISION

In the case before me, the Piedmont Family Clinic
(Petitioner) challenges the determination made by the
Health Care Financing Administration (HCFA) to terminate
Petitioner's Medicare provider agreement effective June
1, 1994. As a rural health clinic, Petitioner had
obtained a waiver from HCFA in May of 1993 exempting
Petitioner from meeting the staffing requirements
specified by section 1861(aa)(2)(J) of the Social
Security Act (Act). HCFA considers the waiver to have
expire@ on April 7, 1994. It terminated Petitioner's
provider agreement because it concluded, based on surveys
conducted in late March and late May of 1994, that
Petitioner was out of compliance with the staffing
requirements of the Act. Petitioner contends that HCFA's
termination action was improper because HCFA had affixed
an incorrect expiration date to the waiver. Petitioner
contends also that HCFA's termination action was barred
because Petitioner was entitled to request or receive
another waiver.
2

Having reviewed the parties' evidence and arguments,! I
find in favor of HCFA for the reasons set forth below.

FINDINGS OF FACT AND CONCLUSIONS OF LAW
I. jac! a

1. Petitioner is a medical clinic located in Piedmont,
Missouri. E.g., P. Ex. 1.

2. The Lucy Lee Hospital operates Petitioner and other
medical clinics, including the Van Buren Medical Clinic.
HCFA Ex. 2 at 2; P. Ex. 2, 3, 5, 6, 8, 9.

3. Except during the period from June 2 to August 9,
1994, Petitioner was participating in the Medicare
program as a rural health clinic. See, e.g., P. Ex. 4;
Section 1866(a) of the Act.

4. To meet the definition of a rural health clinic for
participation in the Medicare program, a clinic must
satisfy two staffing requirements:

a) the clinic must employ a nurse
practitioner, a physician assistant, or a
certified nurse-midwife, and

b) the employed nurse practitioner, physician
assistant, or certified nurse-midwife must be
available to furnish patient care services not
less than 50 percent of the time the clinic
operates.

Section 1861(aa)(2)(J) of the Act.

' As discussed below, the parties agreed to
submit this case for decision on a written record. I
have admitted into evidence all exhibits submitted by the
parties, consisting of HCFA's Exhibits 1 to 15 (HCFA Ex.
1 to 15) and Petitioner's Exhibits 1 to 10 (P. Ex. 1 to
10). In the analysis section of this decision, I explain
why I have overruled Petitioner's objections to HCFA's
evidence. I note that there is some duplication among
the parties' exhibits. However, because each party has
referred to its own exhibits by number, I am admitting
all the exhibits.

Each party has filed a brief in chief (P. Br. and HCFA
Br.), as well as a response brief ({P. Resp. and HCFA
Resp.).
3

5. A facility which otherwise meets the definition of a
rural health clinic may request that the Secretary of
Health and Human Services (Secretary) waive one or both
of the staffing requirements specified by the Act's
section 1861(aa)(2)(J). Section 1861(aa)(7) of the Act.

6. If a rural health clinic demonstrates to the
Secretary's satisfaction that it has been unable, despite
reasonable efforts, to meet the requirements of section
1861(aa)(2)(J) of the Act during the previous 90-day
period, the Secretary shall grant a waiver for a period
Of one year. Section 1861(aa)(7)(A) of the Act.

7. The Act states also: "The Secretary may not grant
such a waiver under subparagraph (A) to a facility if the
request for the waiver is made less than 6 months after
the date of the expiration of any previous such waiver
for the facility." Section 1861(aa) (7) (B).

8. The Secretary has delegated to HCFA her
responsibilities for administering the Medicare program,
including making determinations on whether to grant
staffing waivers and whether to terminate provider
agreements. HCFA Ex. 14 at 2 (49 Fed. Reg. 35247, 35248
(1984)); 42 C.F.R. § 498.1(f).

9. HCFA has authority to terminate a Medicare provider
agreement with a rural health clinic if the clinic: a)
no longer meets conditions for certification under 42
C.F.R. § 491; or b) is not in substantial compliance with
the provisions of the agreement, other applicable
regulations of 42 C.F.R. § 405, subpart X, or any
applicable provisions of Title XVIII of the Act
(Medicare). 42 C.F.R. § 405.2404(b); sections
1861(aa) (2) (K) and 1866(b)(2)(B) of the Act.

10. HCFA's Kansas City Regional Office (Region VII) has
jurisdiction over Medicare providers located in the State
of Missouri. HCFA Ex. 1, 2, 12; P. Ex. 4.

11. HCFA has contracted with the Missouri Department of

Health to conduct surveys and assist HCFA in determining

whether providers in Missouri are in compliance with the

conditions of participation in the Medicare program. See
Section 1864 of the Act; e.g,, HCFA Ex. 6; P. Ex. 1, 7.
II. ele it
A. Events between April, 1993 and April 7, 1994

12. By letter dated April 9, 1993, HCFA's Region VII
Office notified Petitioner: a) that Petitioner's request
for a staffing waiver had been approved; b) that the
waiver would expire on April 7, 1994; and c) that no
subsequent request for waiver by Petitioner would be
approved within six months of April 7, 1994. HCFA Ex. 1.

13. Barbara Goodrick, of HCFA's Region VII Division of
Health Standards and Quality, who reviewed Petitioner's
request for a staffing waiver, discussed HCFA's waiver
approval letter with Warren N. Kerber, Lucy Lee
Hospital's Director of Outreach Services. Ms. Goodrick
informed Mr. Kerber that, absent a waiver, a nurse
practitioner or physician assistant would be required to
work in the rural health clinic for at least 50 percent
of the clinic's operating hours. HCFA Ex. 2 at 2.

14. Mr. Kerber was a duly designated representative and
spokesperson for Petitioner. [£.g., HCFA Ex. 2, 3, 5, 7-

15. On or about January 3, 1994, a nurse practitioner
named Barbara Collrin began working for Petitioner and
the Van Buren Medical Clinic. P. Ex. 2; HCFA Ex. 5 at 4
- 6.

16. By letter dated February 3, 1994 to the Missouri
Department of Health, Mr. Kerber represented that Ms.
Collrin was scheduled to work alternate weeks at
Petitioner's facility (i.e., 40 hours at Petitioner's
facility and then 40 hours at the Van Buren Medical
Clinic). P. Ex. 2.

17. On February 24, 1994, HCFA received a complaint from
an individual purporting to be Barbara Collrin, who
alleged, inter alia, that Petitioner and Van Buren
Medical Clinic were engaged in unfair practices against
her by restricting her scope of practice, by not
permitting her to care for patients, and by improperly
utilizing her to do clerical work at times. HCFA Ex. 4,
6 at 2.

18. Effective March 3, 1994, Ms. Collrin resigned from
her position with Petitioner and the Van Buren Medical
Clinic. HCFA Ex. 5 at 1.

19. Petitioner did not immediately report Ms. Collrin's
resignation to HCFA or to the Missouri Department of
Health. See HCFA Ex. 7.
5

20. While conducting an investigation of the above
described complaints (see Finding 17) at the Van Buren
Medical Clinic on March 23, 1994, the Missouri Department
of Health learned of Ms. Collrin's resignation. HCFA Ex.
5 at 1 - 2; HCFA Ex. 6 at 2; see also Finding 11.

21. While investigating the allegations against
Petitioner and the Van Buren Medical Clinic, the Missouri
Department of Health surveyor obtained information from
Mr. Kerber and also reviewed patient records at the Van
Buren Medical Clinic. HCFA Ex. 5 at 1.

22. On March 31, 1994, the Missouri Department of Health
adopted the surveyor's conclusions that there was
corroboration for the allegations that Petitioner had
engaged in “unfair practices" with respect to Ms. Collrin
and her scope of practice by not having properly utilized
her as a nurse practitioner in a rural health setting
under the Medicare program. HCFA Ex. 5 at 1 - 2; HCFA
Ex. 6 at 2; see also Finding 55, infra.

23. Ina letter dated April 1, 1994, Mr. Kerber
confirmed to the Missouri Department of Health that Ms.
Collrin had resigned effective March 3, 1994 and that
Petitioner was operating without a nurse practitioner.
HCFA Ex. 7.

24. On April 7, 1994, Petitioner's staffing waiver
expired under its own terms. P. Ex. 1.

B. Events after April 7, 1994 and until June 2, 1994

25. On April 15, 1994, Ms. Goodrick noted that Ms.
Collrin's working every other week at Petitioner's
facility was not the equivalent of working 50 percent of
Petitioner's operational hours as required by law. HCFA
Ex. 5 at 3.

26. On April 29, 1994, the Missouri Department of Health
recommended that HCFA terminate Petitioner's Medicare
provider contract, based on the results of the March 23,
1994 survey. HCFA Ex. 6.

27. Ina letter dated May 4, 1994, HCFA's Region VII
Office notified Petitioner of its determination to
terminate Petitioner's provider contract "at the close
of" June 1, 1994, due to Petitioner's noncompliance with
the conditions of coverage, staffing, and staff
responsibility requirements set forth in 42 C.F.R. §
491.8. BP. Ex. 4.
6

28. Also in its May 4, 1994 letter to Petitioner, HCFA's
Region VII Office reiterated its belief that Petitioner
was not eligible for another waiver within six months of
the date the previous waiver expired, April 7, 1994. P.
Ex. 4.

29. Ina letter dated May 18, 1994, Petitioner requested
a hearing by asserting that:

a) Petitioner's employment of the certified nurse
practitioner (Ms. Collrin) on January 3, 1994
“interrupted the staffing waiver that was in
effect until April 7, 1994;"

b) Petitioner hired the certified nurse
practitioner on January 3, 1994 with the intent to
"immediately expire the waiver that was in effect
until April 7, 1994;" and

c) Petitioner was eligible to apply for a staffing
waiver from 42 C.F.R. § 491.8 "if unable to locate
a nurse practitioner after ninety (90) days" of
Ms. Collrin's resignation.

Pp. Ex. 5.

30. Ninety days after Ms. Collrin's resignation date
(March 3, 1994) would have been June 1, 1994. See
Findings 23, 29.

31. Ina letter dated May 19, 1994, Mr. Kerber asserted
to HCFA that, as of May 18, 1994, Petitioner had come
into compliance with the conditions for coverage,
staffing, and staff responsibilities set forth in 42
C.F.R. § 491.8. P. Ex. 6.

32. On May 27, 1994, the Missouri Department of Health,
at HCFA's request, surveyed Petitioner and found that:

a) Sondra Reese, who graduated from a nurse
practitioner program on May 14, 1994, was working
for Petitioner;

b) Petitioner's facility was open for a total of
49 hours each week; and

c) Ms. Reese worked at Petitioner's facility for a
total of 18.5 hours each week.

See HCFA Ex. 10 at 1.
7

33. Ms. Reese's hours of work equalled less than the
required 50 percent of the hours that Petitioner was in
operation. See Section 1861(aa) (2) (J) of the Act;
Finding 32.

34. Ina letter dated June 2, 1994, HCFA's Region VII
Office notified Petitioner of HCFA's determination that
Petitioner remained out of compliance with the law
because the nurse practitioner (Ms. Reese) was not
available to provide services for at least 50 percent of
the time Petitioner's facility was in operation, and,
therefore, Petitioner's participation in the Medicare
program had been terminated at the close of June 1, 1994.
P. EX. 7.

Cc. Events after June 2, 1994 and until August 10, 1994

35. HCFA's termination notice dated June 2, 1994 also
informed Petitioner that it could reapply for
participation in the Medicare program and that it would
have to demonstrate compliance for a period of 60 days
before HCFA would readmit it into the program. P. Ex. 4
at 2; P. Ex. 7.

36. Ina letter dated June 14, 1994, Mr. Kerber informed
HCFA that Petitioner was meeting the staffing
requirements by using two nurse practitioners to provide
patient care services. P. Ex. &.

37. By June 28, 1994, HCFA had determined to its
satisfaction that Petitioner had reduced its operation to
35.5 hours per week and, therefore, Petitioner's
employing two nurse practitioners to work a total of 18.5
hours per week satisfied the staffing requirements. HCFA
Ex. 11 at 2.

38. HCFA issued Petitioner a new provider agreement
effective August 10, 1994. HCFA Br. at 4 (Proposed
Finding #15); P. Resp. at 3.

III. Expiration Date of the Staffing Waiver
A. HCFA's Policy Statements

39. Under the Act, the latest date on which Petitioner's
staffing waiver could have expired was on April 7, 1994.
Findings 6, 12.

40. Since at least November 8, 1991, HCFA's policy has
been to grant waivers to requesting rural health clinics
that do not employ a nurse practitioner, physician
8

assistant, or nurse-midwife, or because such individuals
do not furnish services during at least 50 percent of the
time the clinic is in operation. HCFA Ex. 13.

41. Instructions implementing HCFA's policy, dated
November 8, 1991, refer to a "1 - YEAR WAIVER" but do not
address the situation where a rural health clinic that
has received a one year waiver comes into compliance with
the law during the waived period. HCFA Ex. 13.

42. In a memorandum dated July 14, 1994, HCFA advised
all Associate Regional Administrators:

If an RHC [rural health clinic] which has been
granted a waiver employs the required staff
member subsequent to the effective date of the
waiver, the expiration date of the waiver is
the effective date of employment of the staff
member.

HCFA Ex. 12 at 2.

43. Nothing in the Act or the Secretary's regulations
prevents HCFA from ending a staffing waiver before one
calendar year has elapsed from the date the waiver was
approved. See section 1861(aa)(7)(A) of the Act.

44. As long as the term "required staff member" refers
to both of the staffing requirements found in section
1861(aa) (2) (J) of the Act, HCFA's policy of using the
hiring of the "required staff member" to end an
outstanding one year waiver does not contravene section
1861(aa)(7) of the Act. HCFA Ex. 12, 13. See Findings
47, 48.

45. Using the hiring of the "required staff member" to
end an outstanding one year waiver is not inconsistent
with or precluded by the instructions contained in HCFA's
implementing instructions dated November 8, 1991. See
HCFA Ex. 12, 13.

46. The evidence is insufficient to prove that, prior to
July 14, 1994, HCFA's policy directed its Regional
Office(s) to set the expiration dates of all waivers at
one full year after the waivers were granted.

B.. HCFA's Policy on Expiration Dates as applied to this
case

47. HCFA's policy statement concerning the hiring of a
" staff member" (HCFA Ex. 12 at 2 (emphasis
added)) means that a waiver will expire during the 12-
9

month period with the employment of a nurse practitioner,
nurse~midwife, or physician assistant who is available to
provide patient care services at least 50 percent of the
time the rural health clinic operates. See section
1861(aa) (2) (J) of the Act.

48. HCFA's policy cannot be interpreted as meaning that
a staffing waiver will expire automatically whenever a
clinic hires a nurse practitioner, nurse-midwife, or
physician assistant. See section 1861(aa) (2) (J) of the
Act; HCFA Ex. 12, 13.

49. During the Missouri Department of Health's
investigation of March 23, 1994, Mr. Kerber stated that
Ms. Collrin resigned because the physician(s) working for
Petitioner refused to sign a collaborative work agreement
with her, and others heard Ms. Collrin say that she was
unwilling to work under and in the presence of a
physician 100 percent of the time. HCFA Ex. 5 at 1 - 2;
HCFA Ex. 6 at 2.

50. Mr. Kerber's admission for Petitioner is consistent
with the complaint that HCFA received against Petitioner
and Van Buren Medical Clinic. Findings 14, 17, 22, 49.

51. As defined by statute, "collaboration" means:

a process in which a nurse practitioner works
with a physician to deliver health care
services within the scope of the
practitioner's professional expertise, with
medical direction and appropriate supervision
as provided for in jointly developed
guidelines or other mechanisms as defined by
the law of the State in which the services are
performed.

Section 1861(aa) (6) of the Act.

52. In order for Petitioner to qualify for the receipt
of Medicare reimbursement as a rural health clinic, the
nurse practitioner's responsibilities must include: a)
participation with a physician in a periodic review of
the patients' health records; b) to the extent they are
not being performed by a physician, arranging or
referring patients for services that cannot be provided
at the facility; and c) assuring that adequate patient
health records are maintained and transferred as required
when patients are referred. 42 C.F.R. §§ 491.1,
491.8(c)..
10

53. Ms. Collrin's alternating her presence for one week
at a time between Petitioner's clinic and the Van Buren
Medical Clinic did not satisfy Petitioner's obligation
under the Medicare program to staff its facility with a
nurse practitioner, nurse-midwife, or physician assistant
who is available to provide services during at least 50
percent of the time that Petitioner was in operation.

See section 1861(aa) (2) (J); P. Ex. 2.

54. The evidence of record supports HCFA's contention
that Ms. Collrin's employment by Petitioner did not
substantially satisfy the staffing requirements for a
rural health clinic. See HCFA Resp. at 1 n.1; Findings
49 - 53.

55. The evidence is insufficient to show that, if the
Missouri Department of Health had conducted its March 47,
1994 investigation at Petitioner's facility instead of at
the Van Buren Medical Clinic, the surveyor would have
concluded that Petitioner was utilizing Ms. Collrin as a
nurse practitioner in a manner required for Medicare
participation. See, e.g,, Findings 21, 22, 49 - 53.

56. Petitioner has not introduced sufficient evidence to
support its affirmative argument that Petitioner was in
compliance with the staffing requirements of section
1861(aa) (2) (J) during Ms. Collrin's employment from
January 3 to March 3, 1994. See P. Br. at 10 - 11.

57. There is no statutory or regulatory basis for
tolling the time period covered by a staffing waiver
granted by HCFA.

58. Even if legal authority existed for tolling the time
period covered by a staffing waiver, Petitioner has
introduced no evidence to rebut HCFA's evidence that
Petitioner improperly utilized or under-utilized Ms.
Collrin as a nurse practitioner. See, e.g., Findings 54
- 56.

59. On the facts of this case, the staffing waiver
granted by HCFA to Petitioner expired on April 7, 1994.
Findings 47 - 58.

60. A rural health clinic seeking a staffing waiver must
apply for it. See Section 1861(aa)(7) of the Act.
11

61. HCFA will not approve a request for waiver unless
the applicant attaches its request to a HCFA-29 form and
supplies documentation showing that, during the preceding
90 day period and despite reasonable efforts, it has been
unable to hire the staff required by law, or that the
individual hired is unavailable to work the quantity of
time specified by law. HCFA Ex. 13 at 2 - 3.

62. Petitioner's hearing request does not suffice as an
application for waiver. See P. Ex. 5; Finding 61.

63. A waiver request is deemed granted only if the
Secretary, by HCFA, has received the request and has
failed to deny the request within 60 days of the date it
was received. Section 1861(aa)(7)(C) of the Act.

64. Under HCFA's longstanding policy, a waiver request
that is not specifically disapproved by HCFA is deemed
approved (and becomes effective) on the 61st day after
the date HCFA received the application. HCFA Ex. 13 at
2; see section 1861(aa) (7) (C).

65. Under HCFA's longstanding policy, the effective date
of a waiver specifically approved by HCFA may not be any
earlier than the date HCFA's regional office approves it.
HCFA Ex. 12 at 2.

66. HCFA's policies do not contravene any statute or
regulation. See Findings 60 - 65.

67. Petitioner has not submitted a waiver request to
HCFA for consideration at any time since HCFA granted
Petitioner a staffing waiver in April of 1993.

68. Petitioner's contention that it "was entitled to a
new waiver effective on or before" June 1, 1994 (P. Resp.
at 7) is wrong as a matter of law. Findings 60 - 65, 67.

69. While Petitioner was operating under an unexpired
staffing waiver from April of 1993 until April 7, 1994,
Petitioner was not entitled to receive another staffing
waiver even if Petitioner had requested it. See, e.g.,
Section 1861(aa)(7) of the Act.

70. There is no support for Petitioner's affirmative
argument that HCFA was required to consider a request for
a subsequent waiver from Petitioner pursuant to section
1861(aa) (7) (A) of the Act "because there had been no
‘expiration of any previous such waiver for the
facility'" within the meaning of section 1861(aa) (7) (B).
P. Br. at 11; Finding 69.
12

71. Petitioner did not reapply for a waiver prior to
June 1, 1994 pursuant to Petitioner's own interpretation
of its legal rights. P. Ex. 4, 5; Finding 29.

72. Before and after June 1, 1994, Petitioner
consistently sought to demonstrate to HCFA that it had
come into compliance with Medicare's staffing
requirements as of May 18, 1994. P. Ex. 6 - 8; Findings
31, 36, 37.

73. From at least May 18, 1994 until October 9, 1994,
Petitioner could not have alleged in good faith to HCFA
that Petitioner needed a waiver because, despite
reasonable efforts to do so during the preceding 90 days,
it had not been able to hire the necessary staff member
to work the hours required by law. See Finding 72.

74. HCFA's decision to recertify Petitioner for
participation in the Medicare program effective August
10, 1994 means that HCFA found Petitioner in compliance
with the staffing requirements during the 60 days
preceding August 10, 1994 (i.e., from June 10 to August
9, 1994). E.g., P. Ex. 7.

75. The facts of this case do not support Petitioner's
alternative affirmative argument that it was eligible to
apply for a subsequent waiver pursuant to section
1861(aa)(7)(b) of the Act by July 3, 1994 (i.e., six
months after Petitioner hired Ms. Collrin). See P. Br.
at 11; Findings 62, 73, 74.

76. From June 10 until August 9, 1994, Petitioner was
not in need of, nor was it entitled to receive, any
staffing waiver from HCFA even if Petitioner had applied
for one to cover that period. Findings 73, 74.

77. ‘The evidence does not show that Petitioner's failure
to seek a second waiver from HCFA was due to the
information from HCFA's Region VII Office that no
subsequent waiver request would be approved if it was
submitted before October 7, 1994 (i.e., within six months
of the date the prior waiver expired). See HCFA Ex. 1;
P. Ex. 7; Findings 28, 71, 72.

78. Petitioner has not proven its contention that,
"{a]bsent HCFA's arbitrary, capricious and unreasonable
determination" that no waiver request would be granted if
it was submitted before October 7, 1994, "Petitioner
would have had a waiver in effect as of June 1, 1994, and
the termination [of the provider agreement] would not
have occurred." P. Resp. at 8; sea Findings 60 - 77.
13

79. The Secretary has not delegated to administrative
law judges the authority to grant or deny requests for
staffing waivers. See Finding 8.

80. It is not appropriate for me to grant Petitioner's
requested relief by remanding this case to HCFA for the
purpose of permitting Petitioner to file with HCFA, or
for HCFA to consider, a new request to waive Petitioner's
staffing requirements during any period from June 2 to
August 9, 1994. See 42 C.F.R. §§ 498.56(d), 498.78;
Findings 64, 65, 71 - 78.

Vv. H ' i i i itioner' vi
Agreement

81. Petitioner did not have a nurse practitioner,
physician assistant, or nurse-midwife on staff between
March 3 and May 18, 1994. HCFA Ex. 7; P. Ex. 6.

82. Beginning on April 7, 1994, Petitioner was no longer
exempt from complying with the staffing requirements for
a rural health clinic. E.g., Finding 59.

83. Petitioner was out of compliance with the staffing
requirements when the Missouri Department of Health
conducted its survey on May 27, 1994. Section

1861(aa) (2)(J) of the Act; HCFA Ex. 10; see Findings 32,
33.

84. Petitioner did not hire additional staff, shorten
its hours of operation, or otherwise comply with the
requirement that a nurse practitioner be available during
50 percent of its hours of operation until some time
after June 1, 1994. P. Ex. 8; HCFA Ex. 11.

85. Petitioner has introduced no evidence to support its
statement, "Petitioner disputes ... that it was not in
compliance with RHC [Rural Health Clinic) staffing
requirements as of May 27, 1994." P. Resp. at 3.

86. In the face of HCFA's evidence that Petitioner was
out of compliance with the staffing requirements from
April 7, 1994 until some time after June 1, 1994 (e.q.,
Findings 81 - 84), Petitioner's allegations or denials do
not suffice to create any genuine issues of fact
requiring an in-person hearing. See generally Fed. R.
Civ. P. 56(e).
14

87. There exists no genuine issue of fact concerning

Petitioner's non-compliance with the Medicare staffing
requirements at the time HCFA terminated Petitioner's

provider agreement. Findings 81 - 86.

88. On May 4 and June 2, 1994, HCFA correctly determined
that Petitioner's provider agreement should be terminated
due to Petitioner's failure substantially to meet the
applicable provisions of section 1861 and 42 C.F.R. §
405, subpart X, and § 491, subpart A. See, e.g., Section
1866(b) (2) (B) of the Act; 42 C.F.R. § 405.2404(b); P. Ex.
4, 7; Findings 27, 34, 81 - 87.

89. HCFA properly set the effective date for terminating
the provider agreement at June 1, 1994 (27 days after the
date of its May 4, 1994 notice letter to Petitioner) .

See 42 C.F.R. § 405.2404(b) (2); Finding 27.

VI. HCFA's Recertification of Petitioner as a Medicare
Provider, effective August 10, 1994

90. The Act and regulations do not specify hearing
rights for providers dissatisfied with HCFA's decision to
recertify them following the termination of their
provider agreements. See Section 1866(h); 42 C.F.R. §§
498, subpart A, 405, subpart X.

91. Even if Petitioner could be considered a
“prospective provider" for purposes of seeking its
recertification after termination, Petitioner is not
entitled to a hearing unless it has requested a
reconsideration from HCFA and obtained an adverse
reconsideration determination from HCFA. 42 C.F.R. §§
405.2402(f), 498.2, 498.5(a).

92. Assuming that Petitioner had the status of a
prospective provider after June 1, 1994, there is no
evidence of any reconsideration determination by HCFA on
the issue of whether Petitioner should have been
recertified as a provider prior to August 10, 1994.

93. I am without authority to grant the relief
Petitioner requested, i.e., placing into effect a
provider agreement earlier than the date of Petitioner's
recertification by HCFA (August 10, 1994). Findings 88 -
92.
15
ANALYSIS

Many of my findings of fact and conclusions of law are
self-explanatory and therefore require no discussion.
However, I will use this part of my decision to analyze
the parties' arguments on various issues that they
consider to be controlling, as well as the facts on which
their contentions are based. I do so for the purpose of
providing a context for the findings and conclusions I
have reached.

In order to emphasize the parties' respective burdens of
proof, I will begin with the evidentiary principles I
applied in this case. Then I will discuss the prima
facie case established by HCFA. Finally, I will discuss
the affirmative arguments and requests for relief
advanced by Petitioner.

I. a iti the Writte:
Record

In analyzing the merits of the case, I have been mindful
of the parties' request that I apply the principles of
summary judgment to the extent possible, and, if there
remain any disputed issues of fact to which neither side
is entitled to prevail on summary judgment, I am to
resolve such factual disputes on the basis of the written
record before me. See Confirming Letter for December 1,
1994 prehearing conference. Both parties have repeatedly
stated to me at the prehearing conferences I held in this
case that they did not wish to present evidence at an in-
person hearing. Petitioner confirmed at the last
prehearing conference that it did not have any additional
evidence to present on the issues before ne.

Rule 56 of the Federal Rules of Civil Procedure contains
the principles for adjudicating summary judgment motions.
To prevail on a summary judgment motion in federal
district court, a moving party must establish, by use of
affidavits or other filings of record, that there is no
genuine issue as to any material fact and that the movant
is entitled to judgment as a matter of law. Fed. R. Civ.
P. 56(c). When the motion for summary judgment is
properly supported, the adverse party may not rest upon
mere allegations or denials. Fed. R. Civ. P. 56(e). The
very function of the summary judgment procedure is to
pierce the pleadings and to a es the parties' proof to
determine whether there is a g ine need for further
proceedings. Therefore, summary judgment may be entered
if the adverse party does not respond to a properly
supported summary judgment motion or does not set forth

16

specific facts showing that there is a genuine issue that
should be reserved for trial or other disposition. Fed.
R. Civ. BP. 56(e) and advisory committee's note.

Even though the Federal Rules of Civil Procedure have no
binding force in administrative proceedings, the legal
principles they embody have often been used for guidance.
I agree with the parties that summary judgment is an
appropriate and useful method for promptly disposing of
disputes in which there exists no genuine issue as to any
material fact. Therefore, I have used the above-
discussed contents of Rule 56 to resolve many of the
arguments before me. Where application of the standards
and principles inherent in Rule 56 does not entitle
either party to judgment as a matter of law on a given
issue, I have (as requested by the parties) proceeded to
evaluate and weigh the documentary evidence of record to
reach my conclusions.

As noted in my prehearing order dated August 25, 1994,
the standard of proof required to prevail on any genuine
issues of material fact is a preponderance of the
evidence. HCFA must prove, by use of a summary judgment
motion or otherwise, that there is a basis for
terminating Petitioner's provider agreement. Prehearing
Order dated August 25, 1994. Petitioner has the burden
of proving the affirmative defenses it has advanced. Id.

II. HCFA's Prima Facie Case

The ultimate issue before me is whether Petitioner's
provider agreement was properly terminated by HCFA
effective “at the close of" June 1, 1994. See P. Ex. 4,
7.7 ‘The law is clear that HCFA is authorized to
terminate a provider agreement when the provider fails
substantially to meet the applicable provisions of
section 1861 of the Act. Section 1866(b) (2) (B) of the
Act. Section 1861 of the Act is equally clear that, for
a facility to participate as a rural health clinic in the
Medicare program, it must employ a nurse practitioner, a
physician assistant, or a certified nurse-midwife who is
available to furnish patient care services not less than
50 percent of the time it operates. Section
1861(aa) (2) (J) of the Act. Under the regulations
applicable to rural health clinics, HCFA is authorized to
terminate a provider agreement if the clinic fails to
meet the conditions of participation specified by the

2 For the sake of convenience, I will refer to
the termination date as June 1, 1994.
17

regulations or is not in substantial compliance with
provisions of the provider agreement, other relevant
regulations, or any applicable provisions of the Medicare
laws. 42 C.F.R. § 405.2404(b). In its effort to meet
its burden of proof under this issue, HCFA has sought to
establish that its termination action resulted from
Petitioner's failure substantially to meet the staffing
requirements set forth at section 1861(aa) (2)(J) of the
Act through Petitioner's use of a nurse practitioner.
HCFA Br. at 5 - 6.°

Until June 2, 1994, Petitioner was participating in the
Medicare program as a rural health clinic. There is no
material dispute concerning the central events that took
place in this case between April of 1993, when HCFA
granted Petitioner a staffing waiver, and May 4, 1994,
when HCFA notified Petitioner that its provider agreement
would end at the close of June 1, 1994. Findings 12 -
34.

The evidence submitted by both parties establishes that,
during the period between March 1993 and January 3, 1994,
Petitioner did not employ the staff required by law
(i.e., a nurse practitioner, certified nurse-midwife, or
physician assistant). See section 1861(aa)(2)(J) of the
Act. After Petitioner obtained a one year staffing
waiver in April of 1993, Petitioner employed a nurse
practitioner from January 3 until March 3, 1994 to work
alternate weeks at Petitioner's facility. After March 3,
1994, Petitioner continued to participate in the Medicare
program without the staff specified by law. Petitioner
had no nurse practitioner on staff between March 3, 1994
and May 18, 1994.‘ HCFA took no action against

3 There is no evidence that, during any relevant
period, Petitioner utilized a nurse-midwife or physician
assistant in an effort to satisfy the staffing
requirements of section 1861(aa) (2) (J) of the Act.

4 In its notice of termination dated May 4, 1994,
HCFA stated that there was a telephone call on April 28,
1994, between the Missouri Department of Health and
Petitioner, which confirmed that Petitioner had not yet
hired a nurse practitioner or equivalent personnel since
the survey of March 23, 1994. P. Ex. 4. HCFA has
submitted no other evidence of this April 28th telephone
call. However, the facts allegedly confirmed by the
telephone call are not in dispute. After Ms. Collrin's
resignation, effective March 3, 1994, Petitioner said it
next hired a nurse practitioner on May 18, 1994. See P.
Ex. 6.
18

Petitioner until after April 7, 1994, when HCFA
considered the waiver to have expired.

After Petitioner was notified by HCFA on May 4, 1994,
that its provider agreement would terminate at the close
of June 1, 1994, due to Petitioner's failure to meet the
staffing requirements mandated by law, Petitioner hired a
nurse practitioner on May 18, 1994, and argued that it
had come into compliance as of that date. P. Ex. 4.
However, a survey conducted on May 27, 1994, disclosed
that the newly hired nurse practitioner was working fewer
than 50 percent of the hours that Petitioner was in
operation. Therefore, on June 2, 1994, HCFA reaffirmed
its earlier determination to end Petitioner's provider
agreement effective "at the close of" June 1, 1994,
because HCFA concluded that Petitioner was not in
compliance with the staffing requirements of section
1861(aa)(2)(J) of the Act.

Petitioner objects to HCFA's evidence concerning the May
27, 1994 survey by claiming that the findings and
conclusions of the surveyor are vague and ambiguous. P.
Resp. at 3 (referring to HCFA Ex. 10). I disagree. The
findings and conclusions of the surveyor are clear in the
context of the laws and regulations applicable to a rural
health clinic and the purpose for which the survey was
being conducted. Even though the surveyor did not
specifically articulate a conclusion as to the 50 percent
requirement, the surveyor listed Petitioner's hours of
operation and the hours worked by the nurse practitioner.
HCFA Ex. 10. Application of simple arithmetic to the two
categories of hours listed by the surveyor compels the
conclusion that HCFA correctly determined that
Petitioner's nurse practitioner was not available 50
percent of Petitioner's hours of operation. See HCFA Ex.
10, 11.

Petitioner has offered no proof in support of its
statement that it "disputes ... it was not in compliance
with the RHC requirements as of May 27, 1994." P. Resp.
at 3. Am already discussed above, an adverse party
cannot defeat a properly supported summary judgment
motion with bald denials or pleadings. Petitioner has
created no genuine issue as to any material fact
concerning whether it was in compliance with the staffing
requirements of law when HCFA decided to terminate its
provider agreement.

For the foregoing reasons, I have concluded that HCFA has
satisfactorily established that Petitioner was
substantially out of compliance with the staffing
requirements for a rural health clinic between April 8
19

and June 1, 1994. On the basis of the uncontroverted
facts identified above, HCFA has proven that its
termination action was valid prima facie. The burden of
moving forward therefore shifts to Petitioner to
demonstrate why I should not enter judgment in HCFA's
favor.

IIt. etitioner's Af ativ ent.

Petitioner has advanced several interrelated affirmative
arguments to show that HCFA's termination of the provider
agreement at the close of June 1, 1994 was improper or
barred. Such affirmative arguments relate to the
expiration date of the staffing waiver granted by HCFA in
April of 19935 and the date on which Petitioner would
have become eligible to apply for or obtain another
waiver. As already noted, Petitioner bears the burden of
proof on these affirmative arguments.

In reviewing the merits of the arguments on waivers, I do
not imply that I have authority to grant or deny waiver
requests from rural health clinics. I have made clear in
my findings that I do not have such authority. Finding
79. I analyze the waiver issues presented by Petitioner
for the limited purpose of deciding whether HCFA was
prohibited from terminating Petitioner's provider
agreement as of June 1, 1994 due to Petitioner's legal
status or rights (if any) under the laws governing
waivers for rural health clinics. According to
Petitioner, "(t]he salient issue ... is not one of
compliance, but whether Petitioner's original waiver was
still in effect when the agreement was terminated, and if
it was not, whether Petitioner was entitled to seek and
obtain a new waiver." P. Resp. at 7.

Under the Act, HCFA cannot grant a waiver for more than
one year. Finding 6. In granting a waiver to Petitioner
during April of 1993, HCFA specified an expiration date
of April 7, 1994. Findings 12, 39. The undisputed facts

5 As discussed herein, Petitioner seeks to draw a

distinction between a waiver's “expiration” and
"termination." I use the term "expiration" throughout
the decision because it is the only one used in the Act
and neither the regulations or HCFA's policy statements
refer to the "termination" of the staffing waiver.
However it was caused, the expiration date of a waiver
still denotes the point in time at which the waiver
changed from being in effect to being no longer in
effect.
20

noted above show that Petitioner enjoyed the benefits of
the waiver until after April 7, 1994: Petitioner had
remained in the Medicare program until June 1, 1994, even
though, by Petitioner's own admission and under its own
theories, it did not satisfy the staffing requirements of
the law from March 3 until May 18, 1994. Nevertheless,
Petitioner argues that HCFA's setting the expiration date
of the waiver in this case at April 7, 1994, is arbitrary
and capricious, inconsistent with the statutory mandate,
and frustrates the congressional purpose underlying the
Act. P. Resp. at 4.

A. Petitioner's Tolling Theory

Under one of Petitioner's alternative theories,
Petitioner asks me to construe the waiver granted by HCFA
in April of 1993 as having been tolled for the two months
(January 3, 1994 to March 3, 1994) that Petitioner
employed Ms. Collrin, a nurse practitioner. E.g., P. Br.
at 10, 14. Thus, the waiver originally scheduled to
expire on April 7, 1994, would have remained in effect
until June 7, 1994, and precluded HCFA from terminating
the provider agreement on June 1, 1994. P. Br. at 14.

In support of its tolling theory, Petitioner contends
that it was in compliance with the staffing requirements
during the two months that it employed Ms. Collrin, a
nurse practitioner. P. Br. at 11.

I reject Petitioner's tolling theory. Neither the Act
nor the regulations authorize the tolling of a staffing
waiver. Moreover, HCFA has offered a substantial amount
of evidence that Petitioner was not properly utilizing
Ms. Collrin as a nurse practitioner and that Ms. Collrin
was not available to provide patient care services for
the amount of time specified by law. E.g., Findings 50 -
55.

A rural clinic does not satisfy the staffing requirements
of the law merely by hiring someone with the credentials
of a wmurse practitioner. Such an individual also must
provide services appropriate to a nurse practitioner and
be available to render patient care services at least 50
percent of the time that the clinic is in operation.
Sections 1861(aa) (2) (J), 1861(aa)(6) of the Act; 42
C.F.R. § 491.8(c). Therefore, the fact that Ms. Collrin
was licensed as a nurse practitioner and employed by
Petitioner from January 3 to March 3, 1994 is not
sufficient for proving Petitioner's allegation that it
was in compliance with the law.
21

I have considered the evidence concerning the number of
hours Ms. Collrin worked at Petitioner's facility.

During the relevant period, Ms. Collrin worked at
Petitioner's facility every other week. During the
alternate weeks, she worked at the Van Buren Medical
Clinic. I infer from the available evidence that
Petitioner was open for business every week. Petitioner
has not introduced any evidence to the contrary.
Therefore, even assuming that Ms. Collrin was being
properly utilized as a nurse practitioner by Petitioner
during the alternate weeks she worked at Petitioner's
clinic, I would agree with HCFA that Petitioner was not
in substantial compliance with the requirements of the
Act. This is because I conclude that a rural health
clinic is not in compliance with the Act when it has no
nurse practitioner or similar personnel providing patient
care services during every second week that its clinic is
open. Findings 53, 54. Similarly, the 50 percent
requirement would not be satisfied if a clinic employed a
nurse practitioner only during the first six months of
every year that it was open for business, or if the nurse
practitioner worked only during every other month that
the clinic was open for business.

I have reviewed also the evidence concerning whether Ms.
Collrin was being utilized appropriately. HCFA offered a
memorandum dated March 28, 1994 in which the Missouri
Department of Health opined that Petitioner had not
properly utilized the nurse practitioner. HCFA Ex. 5.
Given that Petitioner has the burden to prove its
affirmative defenses, Petitioner cannot succeed in
establishing compliance during Ms. Collrin's employment
by objecting to HCFA's evidence and conclusion.

Petitioner objects to HCFA Ex. 5 and the conclusion it
contains as irrelevant. According to Petitioner, the
evidence is irrelevant because the Missouri Department of
Health visited only the Van Buren Medical Clinic and
concluded that the Van Buren Medical Clinic was not
properly utilizing the services of the nurse
practitioner. P. Resp. at 2.

I find no merit in the objection or the arguments. The
survey was triggered by a complaint involving the under-
utilization and improper utilization of a nurse
practitioner (Barbara Collrin) filed against Petitioner
as well as the Van Buren Medical Clinic by an individual
claiming to be Barbara Collrin. HCFA Ex. 4, 5. The
charges were identical against both facilities. J[Iq. The
investigative report at issue is clearly denoted with
“Subject: Piedmont and Van Buren RHC -~- Unfair Practice."
HCFA Ex. 5 at 1.
22

At the Van Buren Medical Clinic, the surveyor spoke to
Warren N. Kerber, who represented Petitioner, the Van
Buren Medical Clinic, and their parent entity, Lucy Lee
Hospital. E.g., Finding 14; HCFA Ex. 5 at 1-2. Mr.
Kerber told the surveyor that Petitioner's doctor(s)}
refused to sign a collaboration practice agreement with
Ms. Collrin, and Ms. Collrin was heard to say that she
did not wish to work in the presence of a physician 100
percent of the time. HCFA Ex. 5 at 1.

The surveyor identified various problems after she
reviewed patient records at the Van Buren Medical Clinic.
Id. However, the evidence of record does not suggest
that Ms. Collrin performed her work differently at the
Van Buren Medical Clinic and Petitioner's clinic.
Petitioner has introduced no evidence to show that, after
hiring Ms. Collrin because she was a nurse practitioner,
Petitioner properly utilized her services as a nurse
practitioner. I therefore conclude that Petitioner has
failed to meet its burden of proving its affirmative
argument that it was in compliance with the staffing
requirements during Ms. Collrin's employment. No tolling
of the expiration date is appropriate even if tolling
were permitted by the Act or the regulations. Finding
58.

B. Petitioner's Using January 3, 1994 as an Expiration
Date and its Related Alternative Interpretations of
Section 1861(aa) (7) (B)

1. Petitioner's theories and arguments

Petitioner asked me also to construe the waiver as having
expired on January 3, 1994, the date on which it hired
Ms. Collrin. Petitioner makes this request for several
reasons having to do with its asserted eligibility to
seek a subsequent waiver from HCFA. As I have noted
earlier, section 1861(aa)(7)(B) of the Act states, "The
Secretary may not grant such a waiver under subparagraph
(A) to a facility if the request for the waiver is made
less than 6 months after the date of the expiration of
any previous such waiver for the facility."

By contending that its waiver expired on January 3, 1994,
Petitioner argues that, under section 1861(aa) (7) (B) of
the Act, it became eligible to apply for a subsequent
waiver on July 3, 1994. P. Br. at 11.

Under its alternative reading of section 1861(aa) (7) (B),
Petitioner argues that the clause "(t]he Secretary may

not grant such a waiver" means that HCFA has discretion
either to grant or deny a waiver request filed less than
23

six months after the date the original waiver expired.
Pursuant to its interpretation of the Secretary's
discretion under the "may not grant such a waiver"
provision of section 1861(aa)(7)(B), Petitioner alleges
that HCFA improperly terminated the provider agreement
without providing Petitioner any opportunity to
demonstrate its continuous reasonable efforts to comply
with the staffing requirements. P. Br. at 7 - 9.
Petitioner alleges also that it "made good faith efforts
to, and in fact did, achieve compliance with the RHC
staffing requirements notwithstanding the initial waiver
it received." P. Br. at 9. Under this line of
reasoning, Petitioner's conclusion is that HCFA acted
arbitrarily, capriciously, contrary to the language and
intent of the Act, and without authority "in terminating
Petitioner's provider agreement and predetermining that
Petitioner could not seek a subsequent waiver before
October 7, 1994 [i.e., six months after the waiver's
expiration date as set by HCFA]." P. Br. at 9.

Another of Petitioner's alternative readings of section
1861(aa) (7) (B) is that the provisions contained therein
are inapplicable to this case. P. Br. at 10 = 11.
Petitioner theorizes that the waiver granted by HCFA in
April of 1993 did not "expire"; it "terminated" or
“ended" on January 3, 1994. P. Br. at 10. Petitioner
defines "expiration" as "termination which occurs merely
due to the lapse of time," while it contends its waiver
“terminated" or "ended" when Petitioner "hired a nurse
practitioner on January 3, 1994." P. Br. at 10. Because
Petitioner alleges that the waiver granted in April of
1993 never "expired," Petitioner concludes that it was
also free of the six month waiting period referenced by
section 1861(aa)(7)(B) of the Act. P. Br. at 10 - 11.

On the basis of its argument that the waiver granted in
April of 1993 had never "expired" within the meaning of
section 1861(aa) (7) (B) of the Act, Petitioner concludes
further that HCFA was required to accept a request for
waiver from Petitioner under section 1861(aa) (7) (A),
which directs the Secretary to grant a waiver for a
period of one year when a rural health clinic
demonstrates that it has been unable to satisfy the
staffing requirements during the preceding 90 days. P.
Br. at 11. According to Petitioner, HCFA's improper
refusal to accept a waiver request from Petitioner under
section 1861(aa)(7)(A) of the Act resulted in HCFA's
improperly terminating Petitioner's provider agreement.
P. Br. at 11.
24

In a related theory advanced by Petitioner before the
termination of its provider agreement took effect,
Petitioner contended that it was entitled to apply for
another waiver on June 1, 1994, 90 days after Ms.
Collrin's resignation. See P. Ex. 5. Petitioner appears
to have been relying on section 1861(aa) (7) (A) of the Act
and its requirement that the applicant demonstrate
inability to hire the requisite staff member after due
diligence exercised during the preceding 90 days.

2. Ss etiti u i

I find no merit in any of Petitioner's arguments for
construing the waiver as having expired on January 3,
1994. Petitioner chose the January 3, 1994 date only
because it contends that it came into compliance with the
law on that date by hiring Ms. Collrin. I have already
discussed my conclusion that Petitioner failed to prove
its affirmative argument that it was in compliance with
the staffing requirements between January 3 and March 3,
1994. For the same reasons, I reject as factually
untenable the use of January 3, 1994 as the expiration
date of the waiver under any of Petitioner's alternate
theories of law.

Nor do HCFA's interpretations of its policy on the
expiration date issue validate Petitioner's use of the
January 3, 1994 date. As indicated in my Findings 41 -
46, the evidence of record does not establish that HCFA
had a substantively different policy on the matter prior
to July 14, 1994. Neither the Act nor HCFA's policy
statements of record (dated November 8, 1991 and July 14,
1994) countenance automatically ending a waiver whenever
the provider succeeds in hiring a nurse practitioner,
nurse-midwife, or physician assistant. Id. On the facts
of this case, the waiver granted to Petitioner during
April of 1993 did not end and could not have ended until
April 7, 1994. At most, HCFA's Region VII Office
committed harmless error in failing to inform Petitioner
that, under a different set of facts, the waiver could
have expired before April 7, 1994.

As for Petitioner's legal arguments concerning the
alleged January 3, 1994 expiration date and its
relationship to section 1861(aa)(7)(B) of the Act, I find
them strained and unpersuasive. For example, I am not
persuaded by Petitioner's arguments that, when an entity
of greater authority (Congress) instructs its delegate
(the Secretary) that she “may not grant" a waiver of the
type described in section 1861(aa) (7) (B), what Congress
meant was that the Secretary may grant such waivers.
Nothing in section 1861(aa) implies that rural health
25

Clinica have a legitimate right to expect approval of
those requests the Secretary "may not approve" under
subsection (7)(B). Nor is there merit to Petitioner's
argument that section 1861(aa)(7)(B) is inapplicable
because the waiver granted in April of 1993 "ended"
instead of "expired." Under Petitioner's legal
interpretations, there would be no incentive for any
rural health clinic to achieve and maintain compliance
with the staffing requirements of the law.

HCFA is authorized to terminate provider agreements when
the provider fails substantially to meet the applicable
provisions of section 1861. Section 1861(b)(2)(B) of the
Act; 42 C.F.R. § 405.2404(b). The staffing requirements
discussed herein are contained in section 1861 and help
define what is a rural health clinic for purposes of
participation in the Medicare program. Finding 4. The
evidence establishes that, from at least April of 1993
until at least May 27, 1994, Petitioner did not meet the
staffing requirements for participation in the Medicare
program. E.g., Findings 12, 23, 32, 54, 58. Such
prolonged noncompliance with critical requirements of
participation is evidence that Petitioner failed
substantially to meet an applicable provision of section
1861. The waiver in effect until April 7, 1994,
precluded HCFA from attaching legal consequences to
Petitioner's noncompliance until after its expiration.
However, the pendency of the waiver did not negate the
requirement that Petitioner come into substantial
compliance with this critical element of program
participation after April 7, 1994. Petitioner's failure
to do so provided the basis for HCFA's termination
action. Findings 82 - 89.

Without doubt, Petitioner made attempts to come into
compliance during the waived period. However,
Petitioner's attempts at compliance during the 12 months
do not negate or excuse its noncompliance after April 7,
1994. Petitioner was given the 12-month waiver to bring
itself into compliance. Petitioner's lack of success in
its endeavors before and after April.7, 1994 does not
render invalid HCFA's termination action.

Nor do Petitioner's attempts at compliance mitigate the
seriousness of its noncompliance after April 7, 1994. I
note as an example that, by May 14, 1994, Petitioner had
hired a nurse practitioner named Sondra Reese. However,
Petitioner remained out of compliance with the
requirement that the nurse practitioner be available to
render patient care services for at least 50 percent of
the time that Petitioner was in operation. Petitioner
failed to satisfy this requirement even after HCFA
26

specifically explained it to Petitioner. E.g., HCFA Ex.
2 at 2; HCFA Ex. 10; P. Ex. 7. Before HCFA terminated
the provider agreement, Petitioner had the means for
complying with the 50 percent requirement. When
Petitioner hired Ms. Reese on May 14, 1994, to work 18.5
hours a week, Petitioner could have reduced its hours of
operation correspondingly (i.e., from its 49 hours a week
to, for example, 37 hours a week). See HCFA Ex. 10;
Findings 32, 37. However, it was not until after its
provider agreement was terminated on June 1, 1994, that
Petitioner reduced its hours of operation to 35.5 hours a
week and thereby came into compliance. HCFA Ex. 11.°
Especially in the context of these facts, Petitioner's
arguments do not prove that HCFA acted contrary to law.

c. The Absence of any Subsequent Request for Waiver and
HCFA's Representations to Petitioner concerning any
Waiver Request filed before October 7, 1994

I have issued no formal finding on the meaning of section
1861(aa) (7) (B) because I do not find it necessary to do
so. Petitioner's failure to apply for another waiver,
Petitioner's efforts to prove its compliance with
Medicare's staffing requirements since May 18, 1994, and
its success at proving compliance since at least June 10,
1994, have rendered moot the legal question of whether,
under section 1861(aa) (7) (B), HCFA may grant a waiver if
it is requested less than six months after the expiration
of a previous waiver. Findings 60 - 76. For the same
reasons, I have not issued any formal finding on whether
Petitioner was eligible to request a second waiver under
section 1861(aa) (7) (A) between January 3 and August 9,
1994.

Because Petitioner appears to argue that it filed no
request for a subsequent waiver due to HCFA's notice that
such a request would be rejected if filed before October
7, 1994, I issued formal findings on the merits of such
arguments by Petitioner. I reached those findings after
having considered Petitioner's burden of proof. If
Petitioner wishes to avail itself of an affirmative
argument based on a reliance theory, Petitioner bears the
burden of proving the truth of all facts necessary for
supporting the theory. Petitioner has merely pointed to
HCFA's letters stating that no subsequent waiver would be
granted until six months after April 7, 1994.

6 Some time after June 1, 1994, Petitioner also
hired a second nurse practitioner to share the 18.5 hours
previously worked by Ms. Reese.
27

The contents of HCFA's letters provide very little
support for a reliance theory, especially viewed in light
of other evidence of record. At least by May 18, 1994,
Petitioner had formulated its own legal theory under
which it would not be eligible to seek another waiver
until June 1, 1994. However, by May 19, Petitioner had
represented to HCFA that it had come into compliance with
the law and would not need a waiver. Findings 29, 31.
Good faith allegations are required for waiver requests
and assertions of compliance. As a matter of law, a
facility cannot assert in good faith that it believes
itself in compliance while it simultaneously asserts,
also in good faith, that it does not believe itself in
compliance and therefore needs a waiver. There is no
evidence contradicting the inference that, in making the
assertions of its compliance to HCFA on May 19, 1994,
Petitioner believed in the truth of its statements.
Moreover, the evidence shows that, after May 19, 1994,
Petitioner again represented to HCFA that it was in
compliance. P. Ex. 8. At no time on or after June 1,
1994, did Petitioner request a waiver from HCFA by
stating that Petitioner believed itself out of compliance
with the staffing requirements.

Petitioner requested no waiver from HCFA on or after June
1, 1994, even after having asserted a right to do so in
its request for hearing. Finding 29. After Petitioner
took the initiative to challenge HCFA's position on the
six month waiting period, I do not find it credible that
HCFA's advance warning of denial would have caused
Petitioner to forebear preserving its rights by filing
such a waiver request with HCFA. It is not possible that
Petitioner thought it should send its waiver request to
me after filing its request for hearing. I have received
no such request, and Petitioner has not asked me to
approve any waiver request. Petitioner knew and should
have known that HCFA is the only entity authorized to
approve or disapprove a waiver request.

Iv. Petitioner's Requested Relief

The relief sought by Petitioner is for me to reinstate
its provider agreement retroactively to June 1, 1994 and
to permit Petitioner to request a waiver for any period
since June 1, 1994 during which it has been unable to
meet the staffing requirements despite reasonable efforts
to do so. P. Br. at 14. As discussed above, the relief
sought by Petitioner is based on its contention that it
was entitled to submit a subsequent request for waiver to
HCFA, even though it has submitted no such request to
date. I have stated in my formal findings that HCFA
28

properly terminated Petitioner's provider agreement
effective at the close of June 1, 1994. Findings 88, 89.

The limitations on Petitioner's hearing rights, the
correctness of HCFA's termination action, Petitioner's
failure to file a waiver request before the close of June
1, 1994, as well as the authority vested in HCFA for
approving (or disapproving) all requests for waivers,
preclude my altering the June 1, 1994 termination date.
In this case, Petitioner was a provider at the time it
requested a hearing. Therefore, my jurisdiction is
limited to the question of whether the provider agreement
was properly terminated.

Because both parties made allegations concerning events
that occurred after the close of June 1, 1994, I analyzed
them to the extent they were relevant to the termination
issue before me. I examined them also for the purpose of
determining whether Petitioner should have the
opportunity to seek relief from HCFA at this juncture.

In my formal findings, I rejected the possibility of
remanding the case to HCFA and denied Petitioner's
request that I allow it to seek a waiver from HCFA “for
any period since June 1, 1994 ...." P. Br. at 14;
Finding 80.

Under 42 C.F.R. § 498.78, if no new issues are present, I
May remand a case to HCFA only if HCFA requests a remand,
the affected party concurs in writing or on the record,
and the remand is for a determination by HCFA
“satisfactory to the affected party." In these
proceedings, HCFA has not requested a remand of the
pending case, and HCFA has expressed no agreement with
Petitioner's arguments for a waiver after June 1, 1994.
Even if HCFA were willing to grant Petitioner the
opportunity to submit a new waiver request, HCFA's
longstanding policies would preclude HCFA from assigning
a retroactive approval date to the waiver, as requested
by Petitioner. See Findings 64, 65. Therefore, a remand
is not appropriate under 42 C.F.R. § 498.78.

I have decided also against remanding the case to HCFA
for consideration of Petitioner's new arguments on the
waiver issue. Under 42 C.P.R. § 498.56(d), I have the
discretion to remand a new issue for consideration and
determination by HCFA at the request of either party or
on my own motion. However, the parties have had long and
detailed dealings with one another on the staffing
issues. If Petitioner had truly believed itself in need
of a waiver and entitled to HCFA's approval of it after
April 7, 1994, Petitioner had the opportunity to file
such a request with HCFA long before now.
29

More importantly, there is no legal merit to Petitioner's
arguments concerning its right to receive a waiver to
cover “any period since June 1, 1994." Findings 60 - 78.
HCFA has considered these arguments in the course of the
proceedings before me and has refused to accept then.

For all these reasons, I have concluded that there is no
legitimate interest to be served by remanding the case to
HCFA under 42 C.F.R. § 498.56(d).

Finally, I make clear that I have not adjudicated the
merits of HCFA's decision to recertify Petitioner as a
Medicare provider effective August 10, 1994. I have
looked at the events after June 1, 1994 in the context of
evaluating Petitioner's waiver theories. However, as
noted in my formal findings, Petitioner cannot dispute in
this proceeding the correctness of HCFA's recertification
determination or HCFA's setting the effective date of
recertification at August 10, 1994. Findings 90 - 93.

CONCLUSION

For the foregoing reasons, I uphold HCFA's determination
to terminate the provider agreement with Petitioner,
effective June 1, 1994.

/s/

Wimi Hwang Leahy
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

William D. Miles, M.D., DATE: January 30, 1995
Petitioner,
Docket No. C-94-348
- Ver Decision No. CR354

The Inspector General.

DECISION

On March 14, 1994, the Inspector General (I.G.) notified
Petitioner that he was being excluded for five years from
participating in the following programs: Medicare,
Medicaid, Maternal and Child Health Services Block Grant
and Block Grants to States for Social Services. The I.G.
advised Petitioner that he was being excluded because he
had been convicted of a criminal offense related to
fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct, in
connection with the delivery of a health care item or
service, within the meaning of section 1128(b)(1) of the
Social Security Act (Act).

The I.G. stated that the length of Petitioner's exclusion
was based in part on the I.G.'s determination that
Petitioner was convicted of a criminal offense related to
fraud and/or other financial misconduct resulting in
financial loss to Medicaid and two other entities in
excess of $1500. The I.G. stated further that the
determination to exclude Petitioner for five years was
based in part also on evidence that the criminal acts
which resulted in Petitioner's conviction, or similar
acts, were committed over a period of one year or more.

Petitioner requested a hearing. The case was assigned to
me for a hearing and a decision. I conducted a
prehearing conference by telephone, at which the parties
agreed that there was no need for an in-person hearing.
The parties agreed that the case could be heard and
2

decided based on their submissions of exhibits and
briefs.

The I.G. submitted five exhibits (I.G. Exs. 1-5).
Petitioner did not object to their admission into
evidence. Petitioner submitted four exhibits (P. Exs. 1-
4). The I.G. did not object to their admission into
evidence. I admit into evidence I.G. Exs. 1-5 and P.
Exs. 1-4.

I have considered the evidence, the applicable law and
regulations, and the parties' arguments. I conclude that
the I.G. had authority to exclude Petitioner pursuant to
section 1128(b)(1) of the Act. I conclude also that the
five-year exclusion which the I.G. imposed is reasonable,
and I sustain it.

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

Petitioner has not disputed that he was convicted of a
criminal offense within the meaning of section 1128(a) (1)
of the Act. He does not dispute that the I.G. is
authorized to exclude him. He asserts that the five-year
exclusion which the I.G. imposed is unreasonable, arguing
that in light of the evidence, the exclusion ought to be
reduced to a term of one year. Therefore, the issue in
this case is whether the five-year exclusion which the
I.G. imposed is reasonable, and if it is not reasonable,
the extent to which it ought to be modified. In finding
the exclusion to be reasonable, I make the following
findings of fact and conclusions of law. In setting
forth these findings and conclusions, I cite to relevant
portions of my decision, at which I discuss my findings
and conclusions in detail.

1. Under applicable regulations, an individual who
is excluded pursuant to section 1128(b)(1) of the Act
must be excluded for three years, unless aggravating or
mitigating factors exist which provide a basis for
lengthening or shortening the exclusion. Page 3.

2. The I.G. proved the presence of an aggravating
factor, in that Petitioner was convicted of having
obtained unlawfully more than $1,500 from Medicaid and
two other entities. Pages 5-6.

3. The I.G. proved the presence of an additional
aggravating factor, in that the crimes that Petitioner
committed were committed over a period of more than one
year. Pages 6-7.
3

4. There are no mitigating factors present in this
case. Pages 7-8.

5. The evidence relating to the aggravating factors
proven by the I.G. establishes Petitioner is
untrustworthy, justifying an exclusion of five years.
Pages 8-9.

Congress enacted section 1128 of the Act to protect the
integrity of federally-funded health care programs.

Among other things, the law was designed to protect
program beneficiaries and recipients from individuals who
have demonstrated by their behavior that they threaten
the integrity of federally-funded health care programs or
that they could not be entrusted with the well-being and
safety of beneficiaries and recipients. Syed Hussani,
DAB CR193 (1992) (citing S. Rep. No. 109, 100th Cong.,
1st Sess., reprinted in 1987 U.S.C.C.A.N. 682). Congress
included non-governmental health care programs within the
purview of section 1128(b)(1) as an additional means of
protecting program beneficiaries and recipients. H.R.
Rep. No. 393, Part II, 95th Cong., 1st Sess., reprinted
in 1977 U.S.C.C.A.N. 3072. Congress reasoned that those
who cheat private health care payers cannot be trusted to
deal honestly with program beneficiaries and recipients.

Regulations establish a framework for deciding whether a
party is trustworthy in a particular case, and if not,
the length of the exclusion which is reasonable in that
case. These regulations are contained in 42 C.F.R. Part
1001. The regulation which governs the length of
exclusions imposed under section 1128(b)(1) of the Act is
42 C.F.R. § 1001.201(b). This regulation establishes a
baseline exclusion of three years for individuals who are
convicted of criminal offenses within the meaning of
section 1128(b)(1) of the Act. It provides that an
exclusion may be imposed for a period of more than three
years in a particular case if any of certain specified
aggravating factors are present in that case. Those
factors are stated in 42 C.F.R. § 1001.201(b) (2) (i) -
(v).

The regulation provides also that certain enumerated
mitigating factors may be a basis for reducing an
exclusion imposed pursuant to section 1128(b) (1) of the
Act. The factors which may be mitigating are stated in
4

42 C.F.R. § 1001.201(b) (3) (i)-(iv). A mitigating factor
or factors may offset an aggravating factor or factors.
The presence of a mitigating factor may also constitute a
basis for reducing an exclusion below the three-year
benchmark, either where no aggravating factors exist, or
where the presence of a mitigating factor offsets the
presence of an aggravating factor or factors.

Although the regulation requires consideration of only
enumerated aggravating factors and mitigating factors in
deciding whether to lengthen or shorten an exclusion, the
regulation is not intended to serve as a mechanical basis
for determining the length of an exclusion. In any case,
the ultimate question remains whether the petitioner is
not trustworthy to provide care to program beneficiaries
and recipients. The factors enumerated in the regulation
are indicia of trustworthiness or a lack of
trustworthiness. Thus, where aggravating factors or
mitigating factors exist in a particular case, they, and
the evidence which explains the petitioner's conduct
which resulted in the presence of aggravating factors or
mitigating factors must be weighed carefully in order to
determine whether the exclusion comports with the Act's
remedial purpose. William F. Middleton, DAB CR297 at
10-11 (1993).

B. val a

Petitioner is a licensed psychiatrist, who established a
professional corporation, known as Psychiatric Medicine
of Virginia, P.c. I.G. Ex. 2, page 1. Petitioner was
charged by a 13-count federal indictment with the
criminal offense of mail fraud related to his delivery of
health care services in violation of 18 U.S.C. § 1341.
I.G. Ex 2.

Count One of the indictment charged Petitioner with a
scheme to defraud Medicaid, the Civilian Health and
Medical Program of the Uniformed Services (CHAMPUS), and
Blue Cross/Blue Shield of virginia (BC/BS/VA) (the health
care plans). It asserted that Petitioner submitted
reimbursement claims to these health care plans which
falsely represented that certain procedures or services
had been rendered. I.G. Ex. 2, page 7. It charged also
that Petitioner presented reimbursement claims which
asserted that he had performed certain procedures when,
in fact, other members of his staff had performed then.
Id. It charged additionally that Petitioner claimed
reimbursement for his services under incorrect procedure
codes. Id. at 6-7.
5

The indictment alleged at Count One that Petitioner
presented claims to the health care plans which falsely
represented the services he performed in an attempt to
defraud these health care plans. I.G. Ex. 2, pages 6-7.
By representing falsely that: 1) he had provided
services that he had not, in fact, provided; 2) he had
provided services that were, in fact, provided by others;
and, 3) he had performed more complicated or lengthy
services than he had in fact performed, Petitioner was
able to submit claims for reimbursement which he was not
entitled to receive. Count One charged that Petitioner
had perpetrated his fraudulent scheme during a period
beginning in or about January 1987 and ending in or about
October 1991. Id. at 6. It charged that, during this
period, Petitioner submitted false and fraudulent claims
for services totalling in excess of $38,000. Id. at 7.

Petitioner pled guilty to Count Ten of the indictment,
which charged him with using the United States Postal
Service to fraudulently obtain funds from BC/BS/VA,
through the submission of a claim form for a patient with
the initials C.M. I.G. Ex. 2, page 17; I.G. Ex. 3, page
1. Although Count Ten alleges a single charge of mail
fraud, that Count incorporates by reference all of the
allegations contained in paragraphs one through 15 of
Count One of the indictment. Jd. Thus, Count Ten
describes a fraud which was committed by Petitioner in
furtherance of a much broader scheme to defraud various
health care plans.

In agreeing to plead guilty to Count Ten, Petitioner
agreed also to pay restitution in the amount of
$38,500.00. I.G. Ex. 5, page 2. He stipulated that this
sum constituted: "the ‘loss' in this case for purposes
of readily provable relevant conduct." Id.

Petitioner was sentenced to serve five years of probation
and to pay restitution in the amount of $38,500. I.G.
Ex. 3, pages 2-4. Petitioner was sentenced also to
receive mental health counseling at the direction of the
probation office. Id. at 8.

Cc. The presence of aggravating factors

The I.G. argues that there are two aggravating factors
present here. First, she asserts that the conduct
resulting in Petitioner's conviction, or similar acts,
resulted in a loss to health care plans of more than
$1500. 42 C.F.R. § 1001.201(b) (2) (i). Second, she
contends that the I.G. has proved that the conduct
resulting in Petitioner's conviction, or similar acts,
6

transpired over a period exceeding one years's duration.
42 C.F.R. § 1001.201(b) (2) (ii).

Petitioner disputes that either of the aggravating
factors alleged by the I.G are applicable to his case.
Regarding the first aggravating factor asserted by the
I.G., Petitioner argues that the amount of loss caused by
his criminal conduct is only $931.75, and therefore, less
than the $1500 amount specified as an aggravating factor
in the regulations. Petitioner asserts that he was found
guilty of committing only one incident of fraud,
involving a fraudulent payment for C.M.'s treatment, as
described in Count Ten of the indictment. He contends
that Count Ten cannot be read reasonably to include
paragraphs one through 15 of Count One, because to do so
would contravene the principles of federal criminal
jurisprudence and the federal sentencing guidelines.
Thus, he maintains that findings as to the financial loss
he engendered should be limited to the payment he
received from BC/BS/VA as a result of his request for
payment in the case of C.M.

Petitioner argues also that the acts that resulted in his
conviction were not committed over a period of one year
or more, and therefore, the second aggravating factor
alleged by the I.G. is also not present here. Petitioner
contends that the length of time during which the
criminal conduct occurred must be limited to a three and
a half month period, which began with C.M.'s treatment
and ended when payment was received from BC/BS/VA for
this treatment. Again Petitioner relies on principles of
federal criminal jurisprudence and the federal sentencing
guidelines as support for this argument.

I conclude that the record in this case establishes the
presence of the two aggravating factors asserted by the
I.G. First, I find that the amount of loss caused by
Petitioner's crime and by similar acts was greater than
$1500. The charge to which Petitioner pleaded guilty
incorporates by reference a scheme which involved
$38,500.00 in fraud. Petitioner has acknowledged
defrauding health care financing plans of this amount,
and his sentence to pay restitution of $38,500.00
reflects Petitioner's admission.

Second, I find that the acts that resulted in
Petitioner's conviction and similar acts were committed
over a period exceeding one year. Count One of the
indictment, incorporated by reference in Count Ten,
alleges a scheme which transpired over a greater than one
year period. Furthermore, by acknowledging that he
defrauded health care plans of the amount alleged in
7

Count One of the indictment, Petitioner tacitly admitted
that he committed fraudulent acts over a more than one-
year period.

As I find above, the allegations of the first 15
paragraphs of Count One of Petitioner's indictment were
incorporated by reference into Count Ten. A fair reading
of Count Ten is that it incorporated the scheme described
in the first 15 paragraphs of Count One and asserted a
specific unlawful act as an act in furtherance of that
scheme. I conclude that, by pleading guilty to Count
Ten, Petitioner admitted not only to committing the
specific crime charged in that Count, but to committing
the scheme which that crime furthered.

This is evident, not only from a reasonable reading of
Count Ten, but from the plea agreement entered into by
Petitioner and by the sentence which was imposed against
Petitioner. In pleading guilty, Petitioner acknowledged
that he had defrauded health care plans of $38,500.00,
the total fraud which was charged in Count One of the
indictment. He was sentenced to pay restitution in that
amount, which surely reflected his admission of
culpability.

I am not persuaded by Petitioner's characterization of
federal criminal practice and sentencing guidelines that,
for purposes of this case, I may not read his plea to
Count Ten as constituting an admission by Petitioner of
the underlying scheme and its impact on health care
financing programs. This case does not involve the
question of the reasonableness of Petitioner's sentence
for his crime, but involves the reasonableness of a
remedial exclusion imposed under section 1128 of the Act.
I see nothing in section 1128 of the Act which suggests
that federal criminal practice or sentencing guidelines
impose strictures on the way in which I am to read and
interpret a criminal charge or a plea to that charge for
purposes of determining whether an exclusion is
reasonable.

Moreover, the aggravating factors which the I.G. asserts
exist in this case are not based solely on the crime to
which Petitioner pleaded guilty. In deciding whether
these two aggravating factors are present, I may look not
only at the specific crime to which Petitioner pled, but
at evidence relating to similar acts committed by
Petitioner. Thus, 42 C.F.R. § 1001.201(b)(2)(i) states
that an aggravating factor shall exist if the acts
resulting in the conviction, or similar acts, resulted in
a financial loss of $1,500 or more to a government
program or to other entities. Additionally, 42 C.F.R. §
8

1001.201(b) (2) (ii) states that an aggravating factor
shall exist if the acts that resulted in the conviction,
or similar acts, were committed over a period of one year
or more.

Here, Petitioner has acknowledged committing acts similar
to the count of mail fraud to which he pleaded guilty.

He has admitted defrauding the health care plans of
$38,500.00. Although he did not admit specifically to
committing that fraud over a one year period, Petitioner
did plead guilty to Count Ten of the indictment. Count
Ten of the indictment incorporates by reference Count One
of the indictment. Count One of the indictment alleges
that Petitioner's scheme to defraud the health care plans
occurred over more than a one-year period. Moreover, the
$38,500 that Petitioner admitted defrauding from the
health care plans is identical to the amount ($38,500)
that Count One of the indictment charged that Petitioner
wrongfully obtained from approximately October 1987
through January 1991. Thus, Petitioner admitted to
defrauding the health care plans by means of a scheme
which lasted almost four years.

D. The absence o: iti actor:

Petitioner argues that a mitigating factor exists in this
case. Petitioner cites to the court's note in the
sentencing document that Petitioner undergo mental health
counseling, “at direction of probation office," as
support for his argument that the court found Petitioner
to have a mental or emotional condition. I.G. Ex. 3 at
8. Petitioner contends, in essence, that this note
proves the presence of a mitigating factor pursuant to 42
C.F.R. § 1001.201(b) (3) (ii).

42 C.F.R. § 1001.201(b) (3) (ii) states that the following
factor may be considered as a basis for reducing an
individual's period of exclusion:

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

The court's suggestion that Petitioner undergo mental
health counseling at the direction of the probation
office does not prove that the judge who sentenced
Petitioner found that he had a mental condition that
reduced his culpability. That Petitioner's sentence
included giving the probation office the option of
ordering Petitioner to receive mental health counseling
9

certainly suggests that the judge who sentenced
Petitioner concluded that such counseling might be an
appropriate element of Petitioner's probation or
rehabilitation. That, in turn, creates an inference that
the sentencing judge found that Petitioner might be
suffering from a mental or emotional problem. However,
there is nothing in any of the exhibits that are in
evidence to suggest that the judge found that these
possible problems reduced Petitioner's culpability for
his crime. Indeed, it is not clear from these exhibits
at what point these problems may have developed, or that
they had any bearing on the crime to which Petitioner
pleaded guilty to.

This case is distinguishable fron John M. Thomas, Jr.,

D. Texoma Ortho} edic
ahd Sports Medicine Center of North Texas, DAB CR281

(1993). In that case, the I.G. conceded in her notice
letter and posthearing brief that the judge who sentenced
the petitioner found that he had a mental illness, during
the commission of his offense, that diminished his
culpability. Thus, unlike the present case, a mitigating
factor was proven in Thomas.

Thus, I find no evidence in this case that the court
found Petitioner's culpability to be reduced due to the
presence of a mental or emotional condition. Petitioner
has not established the presence of any mitigating
factor.

E. The basis for th =) sion

The record demonstrates the presence of two aggravating
factors in this case. There is no evidence which
establishes the presence of any mitigating factors. The
presence of aggravating factors is not offset by
mitigating factors and is a basis for imposing an
exclusion of more than three years' duration. However,
as I hold at Part A of this section, that does not mean
that an exclusion of any particular duration is
necessarily justified. I must still consider the
evidence relating to the aggravating factors as evidence
of Petitioner's lack of trustworthiness and decide from
this evidence whether or not an exclusion of more than
three years is justified, and if so, for what duration.

In this case, the evidence establishing the existence of
aggravating factors establishes also that Petitioner is a
highly untrustworthy individual. Petitioner has admitted
to an extensive scheme, carried out over a period of
nearly four years, to defraud several health care plans.
The duration of the fraud suggests that Petitioner
10

engaged in a pattern of criminal activity which required
planning and persistence to execute. The financial
impact of Petitioner's crimes on the health care plans
was substantial. He has admitted to having received
wrongfully $38,500.00. Damages in that amount could not
have been caused by simple inadvertence. It is
reasonable to infer from the amount of damages caused by
Petitioner, and the period of time during which he
perpetrated his fraud, that he is capable of causing
significant and extensive harm to both private and
federally-financed health care programs.

Furthermore, the unrebutted evidence which describes the
manner in which Petitioner perpetrated his fraud
reinforces the inference of culpability and
untrustworthiness that arises from the amount of fraud
and the period of time during which Petitioner committed
that fraud. The allegations to which Petitioner pleaded
guilty establish a conscious and willful plan on ,
Petitioner's part to systematically misrepresent his
services to not one, but several, health care plans.

I conclude from the evidence that relates to the
aggravating factors proven by the I.G. that Petitioner is
a highly untrustworthy individual. Thus, a five year
exclusion is reasonably necessary to protect federally-
financed health care programs and their beneficiaries and
recipients from the possibility that Petitioner may
engage in conduct that is harmful to then.

CONCLUSION

Based on applicable regulations and the evidence, I find
the five-year exclusion which the I.G. imposed against
Petitioner to be reasonable and I sustain it.

/s/

Steven T. Kessel
Administrative Law Judge