SUBJECT:

Wendy Calderon,

Petitioner,

The Inspector General.

DECISION

Wendy Calderon (Petitioner) appeals the decision of the Inspector General (I.G.), made pursuant to section 1128(b)(1) of the Social Security Act (Act), to exclude her from participation in Medicare, Medicaid, and all federal health care programs for a period of two years. For the reasons discussed below, I find that the I.G. is authorized to exclude Petitioner, and find reasonable the two-year exclusion imposed.

I. Background

No facts are in dispute here. On April 22, 2004, Petitioner was charged in a five-count indictment with felony unlawful practice of medicine, grand theft, presenting false Medi-Cal claims, and attempted grand theft. I.G. Ex. 1. On August 30, 2004, she pled nolo contendere in Los Angeles County Superior Court to one misdemeanor count of practicing medicine without a license. I.G. Ex. 2, at 2. Subsequently, the Court sentenced her to three years probation, 100 hours of community service, and ordered her to pay $100 in restitution. Id. at 3.

In a notice dated April 28, 2006, the I.G. advised Petitioner that she would be excluded from program participation for two years. The letter explained that the exclusion action was taken pursuant to section 1128(b)(1) of the Act because Petitioner had been convicted of a misdemeanor offense relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service. In a letter dated May 26, 2006, Petitioner timely requested review, and the matter has been assigned to me for resolution. I held a telephone prehearing conference on July 7, 2006, at which Petitioner appeared pro se. She did not dispute that she had been convicted, but pointed out that her record had been expunged. Because the only issues before me were legal issues for which an in-person hearing is not required, we then set a briefing schedule. Order (July 14, 2006).

Pursuant to my scheduling order, the I.G. submitted a brief with two exhibits attached, I.G. Exhibits (I.G. Exs.) 1 - 2. Petitioner obtained counsel who filed her response (P. Br.), with one unmarked document attached. To conform to Civil Remedies Division procedures, we have marked that document Petitioner's Exhibit (P. Ex.) 1. The I.G. submitted a reply brief. There being no objections, I.G. Exs. 1 - 2 and P. Ex. 1 are admitted into evidence.

II. Issues

The issues before me are whether the I.G. had a basis upon which to exclude Petitioner from participation in the Medicare, Medicaid, and all federal health care programs, and whether the two-year exclusion is reasonable.

III. Discussion

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

A. Petitioner was convicted of a misdemeanor offense relating to fraud in connection with the delivery of a health care item or service within the meaning of section 1128(b)(1) of the Act.

Section 1128(b)(1)(A) of the Act allows the Secretary to exclude from participation in all federal health care programs ⁽¹⁾ any individual who has been convicted of a misdemeanor criminal offense that occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996 (August 21, 1996) and is related "to fraud . . . (i) in connection with the delivery of a health care item or service." See 42 C.F.R. � 1001.201(a). An individual whose plea of "nolo contendere" has been accepted by the court is considered "convicted" within the meaning of the statute. Act, section 1128(i)(3); 42 C.F.R. � 1001.2.

Here, practicing medicine without a license plainly relates to fraud "in connection with the delivery of a health care item or service," and Petitioner has not suggested otherwise. Instead, she submits a state court order setting aside her conviction (for most, but not all, purposes) following her successful discharge from probation. P. Ex. 1. ⁽²⁾ She does not specifically argue that the court's action means that she was not "convicted" within the meaning of section 1128, and such an argument could not prevail. Under the statute, an individual has been "convicted" when a judgment of conviction has been entered, "regardless of . . . whether the judgment of conviction or other record relating to criminal conduct has been expunged." Act, section 1128(i)(1); 42 C.F.R. � 1001.2. Congress thus broadly defined the term "conviction" in order "to ensure that exclusions from federally funded health programs would not hinge on state criminal justice policies," so the fact that a court's adjudication is not a "conviction" under state law is not controlling. Carolyn Westin, DAB No. 1381, at 6 (1993). In Westin, the petitioner participated in a deferred adjudication program, and her plea of nolo contendere was subsequently dismissed. She argued, accurately, that she had not been convicted under state law. Nevertheless, the Departmental Appeals Board recognized that the federal statute controls, and concluded that the court's acceptance of her nolo contendere plea and her participation in the deferred adjudication program fell within the statutory definition of a conviction. See Travers v. Shalala, 20 F.3d 993, 996 (9^th Cir. 1994).

B. The two-year exclusion falls within a reasonable range.

Having found a basis for the exclusion, I now consider whether the two-year exclusion falls within a reasonable range. The statute provides that the period of exclusion under section 1128(b)(1) "shall be 3 years, unless the Secretary determines in accordance with published regulations that a shorter period is appropriate because of mitigating circumstances or that a longer period is appropriate because of aggravating circumstances." Act, section 1128(c)(3)(D); 42 C.F.R. � 1001.201(b)(1).

Petitioner suggests that the State Court's action in "setting aside" her conviction "might further mitigate the sanctions imposed . . . ." P. Br. at 1. But, by regulation, only four factors are considered mitigating, and a basis for reducing the period of exclusion: 1) the individual was convicted of three or fewer offenses, and the resulting amount of financial loss is less than $1,500; 2) the court determined that the individual had a mental, emotional, or physical condition that reduced her culpability; 3) the individual's cooperation with federal or state officials resulted in others being convicted or excluded, additional cases being investigated, reports issued identifying program vulnerabilities, or the imposition of civil money penalties against others; and 4) alternative sources of the type of health care items or services furnished by the individual are not available. 42 C.F.R. � 1001.201(b)(3). Here, one mitigating factor justifies reducing the period of exclusion below the statutory three years. Petitioner was convicted of only one offense, and ordered to pay $100 in restitution. The I.G. therefore reduced the exclusion period by one year. I find that the resulting two-year exclusion falls within a reasonable range.

IV. Conclusion

For these reasons, I conclude that the I.G. properly excluded Petitioner from participation in the Medicare, Medicaid, and other federal health care programs, and I sustain the two-year exclusion.

Carolyn Cozad Hughes

Administrative Law Judge

1. "Federal health care program" is defined in section 1128B(f) of the Act as any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government, or any State health care program.

2. Under California law, her conviction is set aside for all purposes except state licensure, applying or running for public office, and contracting with the California State Lottery. P. Ex. 1.