Decision No. CR655 Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | |
Dale F. Lower, |
DATE: Mar. 22, 2000 |
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The
Inspector General
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Docket No.C-99-794 |
DECISION | |
By letter dated March 21, 1994,(1) the
Inspector General (I.G.), United States Department of Health and Human
Services, notified Dale F. Lowe (Petitioner), that he would be excluded
for a period of 15 years from participation in Medicare, Medicaid, Maternal
and Child Health Services Block Grant and Block Grants to States for Social
Services programs.(2) The I.G. imposed
this exclusion pursuant to section 1128(a)(1) of the Social Security Act
(Act), based on Petitioner's conviction in the United States District
Court for the District of Maine of a criminal offense related to the delivery
of an item or service under the Medicaid program. Petitioner filed a request for review of the I.G.'s action. The I.G.
moved for summary disposition. Because I have determined that there are
no material and relevant factual issues in dispute (the only matter to
be decided is the legal significance of the undisputed facts), I have
decided the case on the basis of the parties' written submissions in lieu
of an in-person hearing. The I.G. submitted a brief accompanied by eight
proposed exhibits (I.G. Exs. 1 - 8). Petitioner submitted a response and
one proposed exhibit (P. Ex. 1). The I.G. submitted a reply brief. Petitioner
did not object to my receiving into evidence the I.G.'s proposed exhibits,
and I receive into evidence I.G. Exs.1 - 8. The I.G. objected to my receiving
Petitioner's proposed exhibit into evidence. I find such exhibit relevant
and I receive into evidence P. Ex. 1. I affirm the I.G.'s determination to exclude Petitioner from participating
in the Medicare and Medicaid programs for a period of 15 years. Applicable Law Under section 1128(a)(1) of the Act, the Secretary may exclude from participation
in the Medicare and Medicaid programs any individual or entity that has
been convicted of a criminal offense related to the delivery of an item
or service under Title XVIII or under any State health care program. Section
1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a)(1) of the Act shall be for a period of five years, unless specified
aggravating or mitigating factors are present which form the basis for
lengthening or shortening the period of exclusion. See also
42 C.F.R. � 1001.102(a) and (b)(1992).(3)
The regulation at 42 C.F.R. � 1001.102(b) provides that the following
factors may be considered to be aggravating and a basis for lengthening
the period of exclusion: "(1) [t]he acts resulting in the conviction,
or similar acts, resulted in financial loss to Medicare and the State
health care programs of $1,500 or more. (The entire amount of financial
loss to such programs will be considered, including any amounts resulting
from similar acts not adjudicated, regardless of whether full or partial
restitution has been made to the programs); (2) [t]he acts that resulted
in the conviction, or similar acts, were committed over a period of one
year or more; (3) [t]he acts that resulted in the conviction, or similar
acts, had a significant adverse physical, mental or financial impact on
one or more program beneficiaries or other individuals; (4) [t]he sentence
imposed by the court included incarceration; (5) [t]he convicted individual
or entity has a prior criminal, civil or administrative sanction record;
or (6) [t]he individual or entity has at any time been overpaid a total
of $1,500 or more by Medicare or State health care programs as a result
of improper billings." The regulation at 42 C.F.R. � 1001.102(c) provides that only if aggravating
factors have increased the period of exclusion beyond the minimum period
of five years, can offsetting mitigating factors be considered. The following
factors may be considered as mitigating and a basis for reducing the period
of exclusion to no less than five years: "(1) [t]he individual or entity
was convicted of 3 or fewer misdemeanor offenses, and the entire amount
of financial loss to Medicare and the State health care programs due to
the acts that resulted in the conviction, and similar acts, is less than
$1,500; (2) [t]he record in the criminal proceedings, 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; or (3) [t]he
individual's or entity's cooperation with Federal or State officials resulted
in --(i) [o]thers being convicted or excluded from Medicare or any of
the State health care programs, or (ii) [t]he imposition against anyone
of a civil money penalty or assessment under part 1003 of this chapter." Petitioner's Contentions Petitioner contends that the I.G. has not demonstrated that Petitioner's
offense relates to the delivery of an item or service under Medicaid.
Specifically, he maintains that the record does not establish that the
embezzlement for which he was convicted involved Medicaid funds. He notes
in support of this claim that the restitution in the criminal matter was
paid to a private insurer and to Green Valley Association (which operates
residential facilities and day care programs for the mentally retarded)
and that the judgment did not provide for restitution to the Medicaid
program. In support of his claim, Petitioner also notes that the acts
specified in the Indictment did not involve Medicaid. Rather, such acts
involved improper claims for travel reimbursement, conversion of checks
made payable to Green Valley Association, improper use of Green Valley
Association credit cards for Petitioner's personal use, and Petitioner's
false entries in Green Valley Association records to conceal these fraudulent
acts. Petitioner also maintains that the length of his exclusion is not reasonable.
He asserts that the I.G. misconstrued facts relating to aggravating circumstances
in his case. He asserts that the I.G. has not proved that the acts for
which he was convicted resulted in any loss to the Medicaid program. In
this regard he notes that restitution was to be made to a private insurer
and to Green Valley Association and that Medicaid was not mentioned in
the judgment involving restitution. He also asserts that it was improper
for the I.G. to cite as an aggravating factor his exclusion from the State
Medicaid program, which was effective on March 25, 1994, 16 days prior
to the effective date of the exclusion imposed by the I.G. Petitioner
maintains that, as his State exclusion arose from the same acts as his
Federal exclusion, the State exclusion should not be construed as an aggravating
factor. Petitioner also cites factors in his case which he maintains warrant mitigation of the exclusion period. He maintains that he has successfully completed a nursing program and that he has engaged in many community service activities. In support of these contentions Petitioner has provided letters from others who attest to his good character, his community involvement, and professional competence. Petitioner contends that, based on this evidence and on the time that has elapsed since his criminal conviction, he has been adequately rehabilitated and that he now poses no threat to the integrity of the Medicaid program or to its recipients.
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FINDINGS OF FACT AND CONCLUSIONS OF LAW | |
1. During the period of time relevant to this case, Petitioner was employed
as the Executive Director of Green Valley Association, a non-profit association
which provides residential and day care services to mentally retarded
individuals. I.G. Exs. 4 and 5. 2. Green Valley Association received the majority of its funding from
Medicaid (which included approximately 65% funding from the federal government
and 35percent funding from the State of Maine) pursuant to annual Provider
Agreements between the State of Maine and Green Valley Association. I.G.
Ex. 5. 3. On March 17, 1993, an Indictment was filed in the United States District
Court for the District of Maine charging Petitioner with one count of
Embezzlement from a Program Receiving More Than $10,000 in Federal Funds
in violation of 18 U.S.C. � 666(a)(1)(A). I.G. Ex. 5. 4. According to the Indictment, Petitioner, from on or about July 1,
1985 until on or about June 30, 1991, embezzled funds in the amount of
$210,804.93 from Green Valley Association by applying for and converting
reimbursement for travel that was either not taken or was in excess of
the actual cost of the travel; by converting checks to his own personal
use that were made payable to Green Valley Association from a fuel company,
insurance companies, and contributors; by using Green Valley Association
credit cards to buy items for his own personal use; and by making false
entries and causing false entries to be made in Green Valley Association's
records to conceal the illegal conversions. I.G. Ex. 5. 5. On December 23, 1993, Petitioner pled guilty to the Indictment and
a Judgment was entered in Petitioner's case in accord with his plea. 6. As a result of his conviction, Petitioner was sentenced to 19 months
in prison; three years' probation; and payment of restitution in the amounts
of $100,000 to Chubb Group of Insurance Companies and $175,000 to Green
Valley Association. I.G. Ex. 6 7. On March 21, 1994, Petitioner was notified by the I.G. that he was
being excluded from participation in the Medicare and Medicaid programs
for a 15-year period pursuant to sections 1128(a)(1) and 1128(c)(3)(B)
of the Act. 8. Under section 1128(a)(1) of the Act, the I.G. is authorized to exclude
any individual or entity that has been convicted of a criminal offense
related to the delivery of an item or service under Medicare or Medicaid.
9. Where the I.G. determines to exclude an individual pursuant to section
1128(a)(1) of the Act, the term of exclusion will be for a period of five
years, in the absence of aggravating factors that would support an exclusion
in excess of than five years. 10. Petitioner's criminal conviction constitutes a conviction within
the scope of section 1128(i)(3) of the Act. 11. Petitioner's conviction for Embezzlement from a Program Receiving
More Than $10,000 in Federal Funds is related to the delivery of an item
or service under the Medicare and/or Medicaid programs within the meaning
of section 1128(a)(1) of the Act. 12. The I.G. is authorized to exclude Petitioner pursuant to section
1128(a)(1) of the Act. 13. Petitioner did not prove the presence of any mitigating factors.
14. The aggravating factors established by the I.G. prove Petitioner
to be untrustworthy. 15. A 15-year exclusion of Petitioner is reasonable and appropriate. Discussion During the period of time relevant to this case, Petitioner was employed as the Executive Director of Green Valley Association, a non-profit association which provides residential and day care services to mentally retarded individuals. I.G. Exs. 4 and 5. On March 17, 1993, an Indictment was filed in the United States District
Court for the District of Maine charging Petitioner with one count of
Embezzlement from a Program Receiving More Than $10,000 in Federal Funds
in violation of 18 U.S.C. � 666(a)(1)(A). I.G. Ex. 5. On December 23,
1993, Petitioner pled guilty to the Indictment and a Judgment was entered
in Petitioner's case in accord with his plea. I.G. Ex. 6. As a result
of his conviction, Petitioner was sentenced to 19 months in prison; three
years' probation; and payment of restitution in the amounts of $100,000
to the Chubb Group of Insurance Companies and $175,000 to Green Valley
Association. I.G. Ex. 6. On March 21, 1994, Petitioner was notified by
the I.G. that he was being excluded from participation in the Medicare
and Medicaid programs for a 15-year period pursuant to sections 1128(a)(1)
and section 1128(c)(3)(B) of the Act. Petitioner challenges that he is subject to exclusion under section 1128(a)(1)
of the Act, but I find no merit in his claim. His conviction, which was
based on the court's acceptance of his guilty plea, constitutes a conviction
under section 1128(i)(3) of the Act. Next, it is required under section
1128(a)(1) of the Act that the crime at issue be related to the delivery
of an item or service under the Medicare and/or Medicaid program. Petitioner
asserts that the record does not establish that funds from Medicaid were
embezzled in his scheme. In this regard, he notes that no restitution
was made in the judgment to any public program and that the Indictment
does not reflect that he took funds from such program. In determining
whether an offense is program-related, the Administrative Law Judge (ALJ)
must analyze all the facts and circumstances surrounding a conviction
to determine whether a nexus or common sense connection links Petitioner's
crime with the delivery of an item or service under a covered program.
Krishan Kumar Batra, M.D., DAB CR537 (1998); Berton Siegel,
D.O., DAB No. 1467 (1994). Previous decisions of the Departmental
Appeals Board (DAB) have found that "[f]raud directed against a federally-funded
health care program is a criminal offense related to the delivery of an
item or service under that program." Tito B. Trinidad, M.D., DAB
CR468 (1997), at 6; Rosaly Saba Khalil, M.D., DAB CR353 (1995).
This nexus can exist despite the fact that Petitioner, as Executive Director
of Green Valley Association, a Medicaid provider, was not himself a designated
Medicaid provider. Id. I find that Petitioner's conviction for Embezzlement from a Program Receiving
More Than $10,000 in Federal Funds was program related. The criminal Indictment
in Petitioner's case shows that Green Valley Association received the
majority of its funding from Medicaid (which included approximately 65
percent funding from the federal government and 35 percent funding from
the State of Maine) pursuant to annual Provider Agreements between the
State of Maine and Green Valley Association. I.G. Ex. 5 at 2. The Indictment
also shows that the annual cost reports for the Green Valley Association
provided the basis for payment of Medicaid funds to Green Valley Association.
I.G. Ex. 5 at 4. The Indictment reflects that from on or about July 1,
1985 to on or about June 30, 1991, Petitioner embezzled funds in the amount
of $210,804.93 from Green Valley Association by applying for and converting
reimbursement for travel that was either not taken or was in excess of
the actual cost of the travel; by converting checks to his own personal
use that were made payable to Green Valley Association from a fuel company,
insurance companies and contributors; by using Green Valley Association
credit cards to buy items for his own personal use; and by making false
entries and causing false entries to be made in Green Valley Association's
records to conceal the illegal conversions. I. G. Ex. 5. Because Petitioner
had authority over Green Valley Association check writing and credit cards,
he would then pay off the credit cards using Green Valley Association
funds. Petitioner then adjusted the figures and made false entries in
order to conceal all of his illegal activity. These financial records
were incorporated into annual cost reports which were then used to calculate
the basis for payment with Medicaid funds. I.G. Ex. 5 at 4. It is therefore
evident that Petitioner's false entries contributed to false cost reports,
which resulted in improper Medicaid payments for Green Valley Association.
On such record, I find that the nexus between Petitioner's offense and
the delivery of an item or service under Medicaid is established. Petitioner has argued in his brief that his 15-year exclusion should
be reduced due to the presence of mitigating factors. In his favor, he
maintains that he has successfully completed a nursing program and has
received academic awards and scholarships in this endeavor; has engaged
in community service; and has submitted character references to show his
rehabilitation. It is Petitioner's burden to prove the existence of mitigating
factors. James H. Holmes, DAB CR270 (1993). Petitioner, however,
has not established any of the mitigating factors listed at 42 C.F.R �
1001.102(c). His claims on the issues of his recent conduct and character
are not enumerated factors and therefore are not within the scope of the
regulation. As Petitioner has the burden concerning mitigating factors,
I find that he has not met such burden and conclude that Petitioner has
not proved the existence of any mitigating factors. In determining whether the length of an exclusion is reasonable, it is
the responsibility of the administrative law judge to consider and evaluate
all of the relevant evidence brought to bear in this case. The regulation
at 42 C.F.R. � 1001.102(b) sets forth the aggravating factors which may
be considered in determining the length of an exclusion. I find that the
I.G. proved the presence of four aggravating factors. The four aggravating
factors consist of the following:
Considering Petitioner's lack of evidence of mitigation and the I.G.'s
evidence of aggravating factors, I find that the aggravating factors in
Petitioner's case make the imposition of a 15-year exclusion reasonable.
I note that in evaluating these factors, it is not the mere presence of
a large number of aggravating factors which forms the basis for my decision
here. As an appellate panel has previously held in Barry D. Garfinkel,
M.D., DAB No. 1572 (1996), it is the quality of the circumstances,
whether aggravating or mitigating, which is to be dispositive in analyzing
the weight to be assigned to these factors. Garfinkel, DAB No.
1572, at 31. In this case, the aggravating factors established by the I.G. prove Petitioner to be an untrustworthy individual. Petitioner's lack of trustworthiness is established by his almost six-year involvement in a scheme to defraud Medicaid. His fraud was persistent and deliberate, not random or impulsive. The extent to which Petitioner persisted in defrauding Medicaid is established by the large losses he caused Green Valley Association and through its funding of that entity, the Medicaid program. His high level of culpability is reflected in the lengthy prison sentence he received. I therefore find that his 15-year exclusion is reasonable and appropriate.
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CONCLUSION | |
I conclude that the I.G. was authorized to exclude Petitioner pursuant to section 1128(a)(1) of the Act. I find that his 15-year exclusion is reasonable and I sustain it.
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JUDGE | |
Joseph K. Riotto
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FOOTNOTES | |
1. Petitioner asserts that he did not receive the I.G.'s exclusion letter issued on March 21, 1994, because he was incarcerated and no longer residing at the location to which the letter was sent. He asserts that he only recently became aware of the exclusion. The I.G. waived any timeliness issues with respect to Petitioner's appeal. 2. In this decision, I use the term "Medicaid" to refer to all enumerated State health care programs. 3. Because Petitioner's exclusion was imposed in 1994, I use, throughout this decision, the regulations which were then governing the exclusion process.
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