SUBJECT:

Sheila E. Novin,

Petitioner,

The Inspector General

DECISION

In this case, the petitioner, Sheila E. Novin (Petitioner), continued to participate in and defraud Medicare and Medicaid while she was supposedly excluded from participation in those programs because of an earlier conviction for Medicaid fraud. I now sustain the Inspector General's (I.G.) determination to exclude her from participation in Medicare, Medicaid, and all other federal health care programs for a period of 22 years. I find that the I.G. is authorized to exclude Petitioner under section 1128(a)(1) of the Social Security Act (Act), and that the 22-year exclusion falls within a reasonable range.

I. BACKGROUND

Following a 1996 conviction for Medicaid fraud, Petitioner was excluded from program participation. She nevertheless set up and operated a series of businesses that provided temporary nurses to, among others, Medicare and Medicaid beneficiaries residing in nursing homes and other health care facilities. The healthcare programs were then billed for these services. I.G. Ex. 3. Her scheme was eventually discovered, and she was charged in a fourteen count indictment. On December 9, 2002, she pled guilty in Federal District Court for the Eastern District of Wisconsin to one count of health care fraud (in violation of 18 U.S.C. � 1347) and one count of paying illegal remuneration (in violation of the Federal Anti-Kickback Statute, 42 U.S.C. � 1320(a)-7b(b)(2)(B)). I.G. Exs. 3, 4.

By letter dated April 30, 2004, the I.G. notified Petitioner that, based on this conviction, she was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of 22 years. I.G. Ex. 1. The letter explains that section 1128(a) of the Act authorizes such exclusion for criminal convictions related to the delivery of an item or service under the Medicaid and Medicare programs.

Petitioner thereafter requested a hearing, and the case was assigned to me. I held a prehearing conference on May 11, 2005. I advised Petitioner of her right to counsel, and set an extended briefing period to allow her to obtain an attorney. Ultimately, she decided to proceed without representation. The parties agreed that this matter could be decided based on written submissions, without the need for an in-person hearing. Pre-Hearing Conference Order (May 17, 2005). Both parties have submitted written arguments, and the I.G. filed four exhibits (I.G. Exs. 1 - 4) as part of his submission. Petitioner did not submit any exhibits. In the absence of objection, I receive into evidence I.G. Exs. 1 - 4. The I.G. also submitted a reply brief.

II. ISSUE

Petitioner concedes that she was convicted of a criminal offense related to the delivery of an item or service under the Medicare/Medicaid programs. She admits an earlier conviction "for an offense for which an exclusion could be effected," and acknowledges that she must be excluded for at least ten years. Act, section 1128(c)(3)(G); 42 C.F.R. � 1001.102(d)(1); P. Brief at 1.

Therefore, the sole issue before me is whether the length of the exclusion in excess of the ten year mandatory minimum is reasonable. 42 C.F.R. � 1001.2007.

III. DISCUSSION

Section 1128(a)(1) requires that the Secretary of Health and Human Services (Secretary) exclude an individual who has been convicted under federal or state law of a criminal offense related to the delivery of an item or service under Medicare or a state health care program. ⁽¹⁾ 42 C.F.R. � 1001.101. Individuals excluded under section 1128(a)(1) of the Act must be excluded for a period of not less than five years. Act, section 1128(c)(3)(B). Individuals who have previously been convicted of an offense that could result in exclusion must be excluded for at least ten years. Act, section 1128(c)(3)(G).

The Secretary has delegated to the I.G. the authority to impose exclusions. 42 C.F.R. � 1001.401(a). So long as the period of exclusion is within a reasonable range, based on demonstrated criteria, I have no authority to change it. Joann Fletcher Cash, DAB No. 1725 at 7 (2000), citing 57 Fed. Reg. 3298, 3321 (1992).

The basic facts of this case are not in dispute. P. Brief at 1. Following a 1996 criminal conviction, Petitioner was excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of five years, effective March 16, 1997. She was therefore prohibited from seeking payment from these programs for any services she may have provided, including administrative and management services. I.G. Ex. 3, at 3. However, in about September 1997, she set up some businesses, including Precise Professional Staffing, LLC, and Accustaff Medical Staffing, which provided temporary nursing services to patients residing in nursing homes and other health care facilities. She then billed the facilities, which, in turn, billed the Medicare and Medicaid programs for the services provided. I.G. Ex. 3, at 4-5. On December 9, 2002, she pled guilty to one count (Count Nine) of Medicare/Medicaid fraud, admitting that, as part of her scheme, her company, Precise Professional Staffing, LLC, d/b/a Accustaff Medical Staffing, billed Sunny Ridge Nursing Home $3,588 for services she and her employees provided. I.G. Ex. 3, at 6-7; I.G. Ex. 4, at 2, 3.

At the same time, Petitioner contrived to pay kickbacks to the facility employees responsible for scheduling temporary nursing services. Petitioner paid these employees $10 each time the employee scheduled through Petitioner's businesses. On December 9, 2002, Petitioner pled guilty to paying remuneration to a third party to induce that person to order services paid for, in part, by federal health care programs (Count Thirteen). I.G. Ex. 3, at 4 - 5, 8; I.G. Ex. 4, at 2, 3.

She was sentenced to thirty-three months in prison, followed by three years of probation, and ordered to pay $351,000 in restitution to the Department of Health and Human services. I.G. Ex. 2.

A. The 22-year exclusion falls within a reasonable range. 42 C.F.R. � 1001.102(b)(2). ⁽²⁾

1. Aggravating factors justify lengthening the period of exclusion beyond the ten year mandatory minimum.

Federal regulations set forth criteria for determining the length of exclusions imposed pursuant to section 1128 of the Act. 42 C.F.R. � 1001.102. Evidence that does not pertain to one of the aggravating or mitigating factors specified in the regulation is not relevant and may not be used to decide whether an exclusion of a particular length is reasonable.

The following factors may serve as bases for lengthening the period of exclusion: (1) the acts resulting in the conviction, or similar acts, resulted in a financial loss to Medicare and the state health care programs of $5,000 or more; (2) the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; (3) the sentence imposed by the court included incarceration; and 4) the convicted individual or entity has been the subject of any other adverse action by any federal, state or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for imposition of the exclusion. 42 C.F.R. �1001.102(b). The presence of an aggravating factor or factors not offset by any mitigating factor or factors justifies lengthening the mandatory period of exclusion.

Here, the I.G. cited three factors as bases for extending the period of Petitioner's exclusion beyond the mandatory ten year minimum: (1) Petitioner's actions resulted in a program financial loss in excess of $5,000; (2) her actions were committed over a period of more than one year; and (3) the sentence imposed by the court included incarceration. Petitioner admits that the court sentenced her to incarceration and that she spent 33 months in prison, but argues that the I.G. erroneously applied the other two factors. I reject her contentions.

a) Petitioner's actions resulted in a program financial loss well in excess of $5,000.

In her plea agreement, Petitioner admitted that her "gain" from the fraud alleged in Count Nine was more than $200,000, but less than $400,000. I.G. Ex. 4, at 6. The Court ordered her to pay restitution of $351,600, which the court's judgment characterized as "total amount of loss." I.G. Ex. 2, at 5. ⁽³⁾ She now challenges the presumption that an order of restitution "equates automatically with or even should be held to approximate the amount of damages sustained by the victim of the crime," and argues that, notwithstanding the admissions contained in her plea agreement, her criminal conduct caused the programs no financial loss since she and her companies provided required services for which the programs were bound to have paid someone.

In this case, however, the court's restitution order does not merely create a presumption as to the amount of the program loss. The final court judgment explicitly decrees that the "total amount of loss" suffered by the Department of Health and Human Services (which administers the Medicare program and participates in the Medicaid program) was $351,600. I.G. Ex. 2, at 5. Petitioner may not collaterally attack that judgment in this forum. See 42 C.F.R. � 1001.2007(d); Cash, DAB No. 1725. Moreover, by Petitioner's own admission, health care programs unwittingly paid out money to someone who was not authorized to receive it. As a matter of law, when a healthcare program pays money to an entity not entitled to receive it, that payment represents a financial loss to the program, within the meaning of 42 C.F.R. � 1001.102(b).

b) Petitioner's actions were committed over a period of more than one year.

Petitioner also challenges the assertion that her actions were committed over a period of more than one year. She acknowledges that she pled guilty to two crimes, one (illegal remuneration) occurring on November 29, 2000, and the other (health care fraud) occurring on March 1, 2002. She argues, however, that these were different charges and occurred "independently" of each other, so her illegal actions should not be considered as having been committed over a period of more than one year.

Petitioner pled guilty to counts that explicitly incorporated by reference the first six paragraphs of the indictment. Those first paragraphs describe a scheme "beginning in approximately March 1997, and continuing thereafter until March 2002 . . . ." I.G. Ex. 3, at 2. ⁽⁴⁾ The scheme included her setting up and operating businesses to provide temporary nursing services to facilities, her personally providing the services using the name "Smith," and paying a facility employee "in excess of $7,000" for ordering and arranging her services. I.G. Ex. 3, at 3-5.

Thus, Petitioner's guilty plea shows that her actions took place over a period of nearly five years. ⁽⁵⁾

2. No mitigating factors offset the aggravating factors.

The regulations consider mitigating just three factors: (1) a petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to the program was less than $1,500; (2) the record demonstrates that a petitioner had a mental, physical, or emotional condition that reduced her culpability; and (3) a petitioner's cooperation with federal or state officials resulted in others being convicted or excluded, or additional cases being investigated, or a civil money penalty being imposed. 42 C.F.R. � 1001.102(c). Characterizing the mitigating factor as "in the nature of an affirmative defense," the Departmental Appeals Board has ruled that Petitioner has the burden of proving any mitigating factor by a preponderance of the evidence. Barry D. Garfinkel, M.D., DAB No. 1572 at 8 (1996).

Because I have concluded that Petitioner's felony conviction involved financial losses to the program significantly greater than $1,500, the first factor does not apply here. Nor does Petitioner claim that a medical condition reduced her culpability. Petitioner argues that her level of cooperation with authorities should be considered a mitigating factor. She claims that she met with numerous state and federal officials. On one occasion a postal inspector questioned her about a Milwaukee home health agency. On another occasion, she spoke to a state investigator who was conducting an investigation. However, answering questions posed in the course of ongoing investigations does not satisfy the regulatory requirement for mitigation. Petitioner does not claim that the information she provided led to any cases being investigated in the first place, nor that her cooperation led to any conviction, exclusion, or the imposition of additional penalties. She admits that she "is unaware" that additional convictions resulted from her cooperation. P. Brief at 11. She has therefore not even alleged, much less met her burden, of establishing a mitigating factor based on her cooperation with authorities. Petitioner also claims that this exclusion causes her undue hardship, and makes it difficult for her to pay restitution. She argues that she has been sufficiently punished, and "now has a full understanding" and "fully intends to never commit any conduct which may even seem questionable again." P. Brief, at 7. These are not mitigating factors.

Petitioner thus presents no mitigating factors.

Petitioner points out, correctly, that, while the regulations describe aggravating and mitigating factors, they do not prescribe the weight to be given any particular factor, and may not be used arbitrarily to lengthen an exclusion. She urges me to consider what these factors show as to her trustworthiness. I find no fault with this position. However, the aggravating factors here (there are no mitigating factors) show that Petitioner is a singularly untrustworthy individual. She was excluded from participation beginning March 16, 1997, and within six months had devised and instituted a scheme to continue her participation in these programs. I.G. Ex. 3, at 3. Her illegal participation lasted almost five years and caused these programs to pay her large sums of money she was not entitled to receive. Nor did she content herself with simple illegal participation. She compounded her transgression by simultaneously engaging in an illegal kickback scheme in order to obtain even more program money. The sentencing judge rightly found Petitioner's conduct serious enough to require a significant term of incarceration. Based on all of these factors, I find a 22-year exclusion well within a reasonable range. If anything, the length of this exclusion period is relatively short considering that Petitioner has shown herself to be manifestly untrustworthy.

IV. CONCLUSION

I conclude that the I.G. was authorized, under section 1128(a)(1) of the Act, to exclude Petitioner from participation in Medicare, Medicaid, and all other federal health care programs. The length of time over which Petitioner's criminal conduct occurred, the cost to healthcare programs, and her lengthy incarceration show that she presents a significant risk to program integrity. Based on these aggravating factors, and in the absence of any mitigating factors, I find reasonable a 22-year exclusion.

Carolyn Cozad Hughes

Administrative Law Judge

1. The term "state health care program" includes a state's Medicaid program. Section 1128(h)(1) of the Act; 42 U.S.C. � 1320a- 7(h)(1).

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

3. The plea agreement did not address, and the Court apparently did not base any part of its restitution order on Petitioner's conviction under the anti-kickback statute. Petitioner paid out more than $7,000 in illegal kickbacks. P. Ex. 3, at 4.

4. Petitioner apparently began actual operation of her illicit businesses in September 1997. I.G. Ex. 3, at 3.

5. Petitioner's crimes were not independent of each other. She could hardly have paid kickbacks to facility employees so they would hire her to provide Medicare/Medicaid-covered services were she not, at the same time, continuing her illegal participation in these programs. I note also that the regulation does not limit its definition of "aggravating factors" to the counts on which the individual is actually convicted, but includes "similar acts."