Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | |
Kathryn Clara Halladay, |
DATE: January 11, 2002 |
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The
Inspector General
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Docket No. C-01-667 Decision No. CR856 |
DECISION | |
DECISION This case is before me on the Inspector General's (I.G.'s)
motion for summary judgment. The parties have submitted briefs and exhibits
in support of their positions and I have reviewed their pleadings carefully.
Having done so, I find no material facts in dispute and conclude that
the I.G.'s position is correct as a matter of law. Accordingly, I grant
the I.G.'s motion for summary judgment and sustain the I.G.'s determination
to exclude Petitioner, Kathryn Clara Halladay, from participating in Medicare,
Medicaid, and all other federal health care programs for a period of 10
years. By letter dated February 28, 2001, the I.G. of the United
States Department of Health and Human Services notified Petitioner that
she was to be excluded, for a period of 10 years, from participation in
Medicare, Medicaid, and all other federal health programs pursuant to
section 1128(a)(1) 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 Title XVIII of the Act (the Medicare program). The
basis for the I.G.'s action was Petitioner's conviction in United States
District Court for the Eastern District of California of having violated
42 U.S.C. � 1320a-7b by making false statements involving a federal health
care program. The statute under which the I.G. proceeded, establishes
a five-year minimum mandatory exclusion of persons or entities convicted
of such violations but also provides that the I.G. may enlarge the term
of exclusion for an additional period if certain aggravating factors are
shown to be present. In this case, the I.G. asserts that the presence
of three aggravating factors warrants five additional years to the five-year
mandatory period of exclusion and thus has determined that Petitioner
should be excluded from all federal health programs for 10 years. By letter dated April 27, 2001, Petitioner timely sought review of the I.G.'s determination. The sufficiency of Petitioner's hearing request has not been challenged and no other jurisdictional issues have been raised or become apparent to me. I held a prehearing conference in this case on June 19,
2001. After discussing the case with counsel, I determined that it might
be subject to disposition in the context of summary judgment. Accordingly,
I established a schedule by which the parties might submit motions, briefs,
and documentary evidence in support of their positions. Although that
original schedule has been modified somewhat since the conference, the
period for filing pleadings has now closed. I admit I.G. Exhibits (Exs.)
1-5 into evidence, noting that I.G. Exs. 1 and 4 are identical to the
documents included in Petitioner's hearing request as Attachments 1 and
2, respectively. Petitioner has tendered no additional proposed exhibits. Because I believe that the I.G.'s Motion for Summary Judgment
is supported by the settled facts and by well-established law, I grant
the Motion, and thereby sustain the I.G.'s determination to exclude Petitioner
from participation in all Medicare, Medicaid, and other federal health
care programs for a period of 10 years. ISSUES The legal issues before me in this case are:
CONTROLLING STATUTES AND REGULATIONS Section 1128(a)(1) of the Act requires the exclusion from
participation in Medicare, Medicaid, and all other federal health care
programs of any individual or entity convicted of a criminal offense related
to the delivery of an item or service under Title XVIII of the Act or
under any State health care program. This exclusion is mandatory and must
be imposed for a minimum of five years. Section 1128(c)(3)(B) of the Act.
The Act defines "conviction" as including those circumstances "when a
judgment of conviction has been entered against the individual or entity
by a Federal, State, or local court." Section 1128(i)(1) of the Act. This
definition is repeated at 42 C.F.R. � 1001.2. The minimum mandatory five-year exclusion period is subject to enlargement: 42 C.F.R. � 1001.102 allows the I.G. to extend the five-year period if certain aggravating factors are demonstrated. If the I.G. proposes to rely on any of the specified aggravating factors to seek an enlargement of the exclusionary period, then the subject of the proposed exclusion is permitted to assert the presence of certain mitigating factors and thereby to seek to limit the exclusion to the five-year mandatory minimum. Those aggravating and mitigating factors are set out in detail at 42 C.F.R. � 1001.102(b)(1)-(9) and (c)(1)-(3). The aggravating factors relied on by the I.G. in this case are:
42 C.F.R. � 1001.102(b)(1), (5), and (7). The I.G.'s reliance on these aggravating factors allows
Petitioner to assert, if she chooses to do so, certain factors that might
support mitigation of the extended exclusion. As I have noted above, those
potentially mitigating factors are set out in detail at 42 C.F.R. � 1001.102(c)(1)-(3),
but none of them have been asserted specifically by Petitioner in these
proceedings. Instead, Petitioner takes the position that material factual
questions surrounding the three cited aggravating factors remain unresolved
and somewhat obliquely suggests that her mental health at the time of
the offense may have been entitled to consideration as a mitigating factor
pursuant to 42 C.F.R. � 1001.102(c)(2). FINDINGS OF FACT AND CONCLUSIONS
OF LAW I find and conclude as follows:
As I have noted above, there are two issues before me
in this case: first, whether the I.G. is authorized to exclude Petitioner
from Medicare, Medicaid, and all other federal health care programs because
of her conviction; and second, whether the aggravating factors defined
by regulation are present and support the I.G.'s enlargement of the period
of Petitioner's exclusion. As to the first issue, there is no serious
debate. The I.G.'s exhibits demonstrate that Petitioner, acting
with the advice of counsel, executed a Memorandum of Plea Agreement on
or about August 16, 1999. By that Memorandum, Petitioner agreed to plead
guilty to a single-count Information charging her with violation of 42
U.S.C. � 1320a-7b and specifically acknowledged that "she caused bills
to be submitted to Golden Cross (Health Care of California) for occupational
therapy services not rendered, and she fabricated documents to support
the false billings. The false billings for services not rendered in September
1995 resulted in a loss to Medicare for the month of December 1995 in
the amount of $29,495.42." I.G. Ex. 2 at 4. She further acknowledged that
an essential element of the offense to which she agreed to plead guilty
was that "the false statements and representations were of a material
fact for use in determining rights to a benefit or payment under the federal
Medicare program." I.G. Ex. 2 at 3. The Memorandum was filed on or about
August 18, 1999, in United States v. Halladay, CRF 99-5239 REC
(E.D. Cal. 1999). Although the record before me does not establish the date
on which the Information was filed or the date of Petitioner's guilty
plea, it does show that she appeared for sentencing on June 19, 2000.
An extended colloquy developed at the hearing among the Assistant United
States Attorney, Petitioner's two attorneys, a probation officer, and
the sentencing United States District Judge, over sentencing alternatives
and the amount of actual loss to the federal program. I.G. Ex. 5. The
amount-of-loss questions were directly tied to the application of federal
sentencing guidelines. The higher figure, set at over $232,000 by one
estimate, would have invoked a higher potential for imprisonment; the
lower figure of $29,495.42 was the specific amount admitted by Petitioner
and insisted upon by her attorneys both before and at the sentencing hearing.
I.G. Exs. 3, 5. The sentence announced orally at the end of this colloquy
was set out in a standard-form Judgment in a Criminal Case filed June
22, 1999. In that Judgment, Kathryn Clara Halladay was sentenced to a
36-month term of probation and was ordered to pay restitution to the Medicare
program in the agreed-upon sum of $29,495.42. She was required to pay
a $25.00 Special Assessment. As a special condition of supervision while
on probation, she was required to "reside and participate in a residential
community corrections center . . . for a period
of six months." I.G. Ex. 4 at 3; I.G. Ex. 5 at 22. Petitioner has not challenged the sufficiency of her conviction
to support the minimum mandatory five-year exclusion required by section
1128(a)(1) of the Act. The record establishes, in any case and without
contradiction, that Petitioner was convicted of Medicare-related fraud
in relation to the delivery of an item or service under the Medicare program.
Thus, implicitly at least, there is no challenge to the I.G.'s imposition
of a five-year period of exclusion under the authority conveyed in section
1128(c)(3)(B) of the Act and 42 C.F.R. � 1001.102(a). It is the second issue that requires detailed examination
because Petitioner asserts that there remain unresolved and material
issues of fact surrounding the allegedly aggravating factors relied
on by the I.G. for the enlargement of the period of exclusion to 10 years.
The facts that Petitioner characterizes as unresolved and material
are: (1) the amount of monetary loss to the Medicare program; (2) the
nature of that part of her sentence which required Petitioner to reside
for six months in a community corrections center; (3) whether Petitioner
actually realized a profit from her fraudulent activities; and (4) whether
Petitioner's culpability in the scheme was reduced by a "mental, emotional,
or physical condition" of which the I.G. should have been aware and to
which the I.G. should have given explicit and favorable consideration. It will be recalled that the language of the regulation
that defines the first aggravating factor is neither subtle nor complex:
42 C.F.R. � 1001.102(b)(1) allows the I.G. to rely on "loss to a government
program or to one or more entities of $1,500 or more. (The entire amount
of financial loss to such programs or entities, including any amounts
resulting from similar acts not adjudicated, will be considered regardless
of whether full or partial restitution has been made)." Petitioner's argument
over the amount of loss proven here by the I.G. seems to ignore the proposition
to which all parties agreed in the criminal proceedings, and that is that
her fraudulent billings resulted in a loss to the program of at least
$29,495.42. Although losses in excess of $232,000 were mentioned
as the global scope of the Petitioner's scheme as it operated over approximately
eight months, and although this point generated some confusion at the
sentencing hearing because of its potential for invoking more severe sentencing
guidelines, losses in that amount were never proven, nor were they reflected
in the court-ordered restitution. The larger sum is simply not before
me, and it has no reason to be. The sum of $29,495.42 was acknowledged
by the parties as the amount of loss during one month of the scheme's
operation, was insisted upon by Petitioner as the correct amount at her
sentencing and was accepted by the sentencing United States District Judge
as the correct amount. The I.G.'s proof on this point goes well beyond
the prima facie reliance on the amount of restitution as a measure
of loss to a program approved in Thomas P. Whitfield, DAB CR539
(1998). It establishes the amount at $29,495.42 without contradiction
of any sort whatsoever, and establishes it at a level well in excess of
the $1,500 threshold of material dispute. The possibility that Petitioner's
scheme may have involved false claims totaling much more may be interesting,
and may remain unresolved on the record before me, but it is not material
to my determination that a definite loss amount has been established,
and that the amount established supports the I.G.'s invoking it as an
aggravating factor. Nor is there merit in Petitioner's assertion that there
remains a disputed issue of material fact in connection with the nature
of her sentence to "reside and participate in a community corrections
center." The terms of her sentence requiring that she do so are explicit
and unchallenged. I.G. Ex. 4 at 3; I.G. Ex. 5 at 22. Such a sentence is
defined as "incarceration" by the terms of 42 C.F.R. � 1001.2. There is
no suggestion in this regulation that it contemplates a distinction between
confinement imposed directly in the absence of probation and confinement
imposed as a condition to a term of probation, and I am unaware of any
authority to support the drawing of such a distinction. Petitioner has
offered no support for her position beyond the mere assertion of it, and
in any case the question is a legal one, not one arising from a disputed
issue of material fact. Here, it is quite undisputed that Petitioner was
sentenced to a six-months' term of confinement in a community corrections
center. That undisputed factual nexus raises the purely legal question
of whether such a sentence is the legal equivalent of "incarceration"
and 42 C.F.R. � 1001.2 resolves that legal question in the affirmative. The precise language of Petitioner's next assertion deserves
examination because it relies on a term neither recognized nor contemplated
by the controlling regulation, in this instance 42 C.F.R. � 1001.102(b)(7).
At page 3 of Petitioner's Opposition to I.G.'s Brief in Support of Motion
for Summary Disposition, Petitioner argues: "[u]nfortunately for the I.G.
not even the United States District Court judge found that Petitioner
has profited even a penny. The I.G. offers nothing to substantiate its
claim and has failed to prove that it properly weighed the aggravating
factors set forth at 42 C.F.R. � 1001.102(b)(7) against Petitioner. Therefore,
the I.G. has failed to clearly (italics in original) establish
that there is no genuine issue as to any material fact, and its Motion
must be denied." In sum, Petitioner asserts that the I.G. has failed to
show that she " profited even a penny," and implicitly argues that such
a showing is material to my decision. Significantly, she does not deny,
and did not deny in United States District Court, being paid
the amount of $29,495.42. The regulation concerning aggravating factors
makes no reference to "profit," gross or net, and does not insist that
illegal receipts from intentional and improper billings to Medicare exceed
the costs of such fraudulent conduct. The regulation requires only a showing
that a total overpayment of $1,500 or more has been
paid at any time to an individual or entity as the result of
intentional improper billings. Not all criminal enterprises
are as profitable or successful as their perpetrators may have intended,
and the regulation does not require that they should be before they can
support an extended exclusion. Receipt of payment for intentionally false
billings is the gravamen of the Regulation, and it has been demonstrated
here beyond the point of serious or material dispute. Although it is not directly in point, the Departmental
Appeals Board's decision in Paul W. Williams, Jr., DAB 1785 (2001)
is helpful here: the Board had little difficulty in turning back the suggestion
that a Petitioner who repaid Medicare a greater sum than he had been proven
to have fraudulently obtained from it was not, therefore, subject to the
"$1,500.00 program-loss" provisions of 42 C.F.R. � 1001.102(b)(1). The
Board remarked that it could find "no merit to (the) suggestion that .
. . the magnitude of the theft becomes irrelevant if the government succeeds
in obtaining recovery after discovering its loss," and expressed its understanding
of the regulation's philosophy thus: "[t]he aggravating factor presupposes
that a person who has stolen a significant amount is likely to be less
trustworthy than a person who has stolen a small amount." In order to
accept Petitioner's argument here, I would necessarily have to believe
that a person who fails to turn a profit at crime is more trustworthy
than a person who succeeds in such a criminal enterprise. I am simply
not prepared to read the regulation in that fashion. Just as in Williams,
the regulation is intended as a guide to assessing truthfulness in billing
matters and criminal willingness to abuse the billing system and it measures
those characteristics by the amount of money wrongfully obtained through
a scheme of intentionally false billings, not by a wrongdoer's skill in
managing such a scheme. Petitioner's scheme may not have been profitable,
but whether it was or not is immaterial. Petitioner's final point is raised in the context of one
of the mitigating factors recognized by the regulations but it is advanced
indirectly and in a misapprehension of her own obligation to proffer evidence.
She argues that the I.G. was obliged to consider her mental, emotional,
or physical state during the scheme and to treat that state as a mitigating
factor pursuant to 42 C.F.R. � 1001.102(c)(2). Again, the specific language
in which Petitioner couches her position is revealing: " . . . based on
the Judgment (I.G. Ex. 4), the I.G., at a minimum, (italics in
original) should have conducted an investigation as to the importance
of . . . Petitioner's mental health treatment and whether the Court was
of the opinion that Petitioner's culpability was reduced based on her
emotional condition . . . ." That is, Petitioner asserts that it was the
I.G.'s obligation to develop evidence of the sentencing District Judge's
assessment of Petitioner's mental health at relevant times. The first flaw in this position is that the I.G. is under
no obligation to present evidence suggesting the presence of any mitigating
factors recognized by the regulations. The Board's view on that point
is well-known, having been most clearly articulated in Barry D. Garfinkel,
DAB No. 1572 (1996): "[t]he ALJ properly stated that the Petitioner had
the burden of proving any mitigating factor by a preponderance of the
evidence, since the mitigating factor is in the nature of an affirmative
defense." See also Andrew H. Lewis, DAB CR625 (1999);
James H. Holmes, DAB CR270 (1993). Simply put, the Board's settled
rule means that if "the court determined" that Petitioner's culpability
had been reduced by reason of mental, emotional, or physical conditions,
then it was up to the Petitioner, and to no other party, to produce evidence
here that such a determination had been made. Insofar as Petitioner argues
that the obligation lay elsewhere, I must reject that argument. But Petitioner's oblique approach to the mitigation issue
attempts to do more than simply shift the burden of proof, because she
argues that there is, in fact, evidence of a judicial finding sufficient
to invoke 42 C.F.R. � 1001.102(c)(2). This evidence consists exclusively
of the District Judge's inclusion in both his oral pronouncement of sentence
(I.G. Ex. 5 at 22) and the Judgment filed three
days later (I.G. Ex. 4 at 3) of a special condition of
probation requiring that "[a]s directed by the probation officer, the
defendant shall participate in a program of mental
health treatment, which may include the taking of prescribed psychotropic
medication." It will be observed that this language is conditional
on the direction of the probation officer, and contains no direct mandatory
provision requiring that Petitioner receive any therapy or treatment of
any kind. It will also be noted that the proviso contains no reference,
explicit or implicit, to the actual existence of an observed or claimed
"mental, emotional, or physical condition," much less one existing "before
or during"execution of Petitioner's scheme to defraud. There is no effort
whatsoever in the proviso to link any such condition, at any relevant
time, to a reduction in Petitioner's culpability. And most significantly,
the remarks of the sentencing District Judge as the sentencing hearing
came to its close belie any possible suggestion that he might believe
the Petitioner to have been in a state of diminished responsibility at
the time of her crime. I.G. Ex. 5 at 23, 24. The state of the record is simply not sufficient to support
the inference Petitioner would have me draw, even if I were free to draw
inferences in the absence of an explicit finding in the criminal proceedings,
a proposition very much in doubt. There was no finding of reduced culpability,
and no judicial determination that any "mental, emotional, or physical
condition" existed at all. The mitigation permitted by 42 C.F.R. � 1001.102(c)(2)
requires far more than Petitioner has been able to hint at. It requires
an explicit determination that one or more of the enumerated conditions
actually existed at a relevant time, and actually operated to diminish
Petitioner's culpability. Under 42 C.F.R. � 1001.102(c)(2),
the criminal proceedings must show that the criminal court determined
that a mental, emotional or physical condition reduced culpability for
the crime before mitigation is found." Frank R. Pennington, DAB
No. 1786 (2001). Since there is no such explicit determination in the
criminal record, Petitioner's argument in favor of mitigation fails. CONCLUSION For the reasons set forth above, I grant the I.G.'s motion for summary judgment and sustain the I.G.'s exclusion of Petitioner from participation in Medicare, Medicaid, and all other federal health care programs for a period of 10 years, pursuant to section 1128(a)(1) of the Act. |
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JUDGE | |
Richard J. Smith Administrative Law Judge |
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