SUBJECT: Judy Pederson Rogers and William
Ernest Rogers,

Petitioner,

Inspector General

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Judy Pederson Rogers and William Ernest Rogers (Petitioners) appealed the August 19, 2005 decisions of Administrative Law Judge Anne E. Blair (ALJ) sustaining the exclusion imposed by the Inspector General (I.G.) on each of them under section 1128(b)(5) of the Social Security Act (Act). Judy Pederson Rogers, DAB CR1338 (2005); William Ernest Rogers, DAB CR1339 (2005) (ALJ Decision). ⁽¹⁾ The exclusions were to remain in effect until Petitioners are reinstated as Medicaid providers by the Connecticut Department of Social Services (State agency). Petitioners took the position that section 1128(b)(5) did not authorize their exclusions because they were not "otherwise sanctioned" and because any such action was not "for reasons [Page 2] bearing on [their] professional competence, professional performance, or financial integrity" within the meaning of section 1128(b)(5) and the implementing regulations. For the reasons explained below, we affirm and adopt the ALJ's Findings of Fact and Conclusions of Law (FFCLs). We therefore uphold the ALJ Decision to sustain the exclusions imposed by the I.G.

Factual and Legal Background ⁽²⁾

Petitioners were co-owners of a home health agency and a medical equipment, devices and supplies company, both of which were enrolled as providers in the Connecticut Medicaid program. Following a state audit and investigation, the State agency issued a Notice of Regulatory Violations and Proposed Sanctions (Notice) against Petitioners and their companies alleging that for a period of approximately two years ending March 31, 2000, Petitioners violated State law by, among other things, knowingly and willfully making false statements for the purpose of claiming payment for services provided by their companies to Medicaid recipients and accepting payment for goods and services in excess of those actually provided to Medicaid recipients. The proposed sanctions included suspension of Petitioners from providing goods or services under the Medicaid program for 10 years and entry of an order for restitution of over $871,000 to the State agency. The Notice stated that Petitioners had the right to a hearing to contest the State agency's proposed actions. Petitioners denied the violations and an administrative hearing was scheduled. However, on May 5, 2003, before the hearing was held, Petitioners signed a "Settlement Agreement and Consent Order" (settlement agreement) stating that Petitioners "voluntarily agree to permanently refrain from engaging in any health care services or related administration of such services within the State of Connecticut." I.G. Ex. 2, at 4.

The I.G. notified Petitioners on June 26, 2003 that they were being excluded pursuant to section 1128(b)(5) of the Act. As relevant here, that section authorizes the I.G. to exclude "any individual or entity which has been suspended or excluded from participation, or otherwise sanctioned, under . . . (B) a State health care program, for reasons bearing on the individual's or entity's professional competence, professional performance, or [Page 3] financial integrity." Section 1001.601(a)(2) of 42 C.F.R. provides that the term "or otherwise sanctioned"--

is intended to cover all actions that limit the ability of a person to participate in the program at issue regardless of what such an action is called, and includes situations where an individual or entity voluntarily withdraws from a program to avoid a formal sanction.

In briefing before the ALJ, the I.G. specifically relied on "Petitioners' voluntary exclusions from the Connecticut Medicaid program" as the basis for their exclusion under section 1128(b)(5) of the Act. Br. in Support of Motion for Summary Affirmance at 9.

The ALJ sustained the I.G.'s determination to exclude Petitioners, making two findings specifically identified as FFCLs. FFCL A states, "Petitioners' Settlement Agreement with Connecticut DSS, a state Medicaid program, to be permanently excluded from engaging in any health care services in Connecticut, provides a basis for their exclusion under section 1128(b)(5)(B)." FFCL B states, "The length of Petitioners' exclusion is reasonable as a matter of law." ALJ Decision at 3, 7. Although Petitioners had requested a hearing, the ALJ decided the case on the written record, finding that "there are no material facts raised by Petitioners that I can consider which would necessitate an in-person hearing." Id. at 7.

Petitioners' Exceptions

Petitioners do not identify the FFCLs to which they except; however, based on their arguments, we conclude that Petitioners except to both FFCLs A and B. In excepting to FFCL A, Petitioners argue that there are material facts in dispute relating to the execution of the settlement agreement. According to Petitioners, the facts they alleged before the ALJ show that they were not "otherwise sanctioned." Specifically, Petitioners maintain that the alleged facts show that they were coerced into signing the settlement agreement and thus did not voluntarily withdraw from the Medicaid program. Petitioners also maintain that the same facts show that if they were otherwise sanctioned, it was not "for reasons bearing on their professional competence, professional performance or financial integrity." ⁽³⁾ The facts [Page 4] alleged by Petitioners include that Petitioners had filed lawsuits against the State agency in response to the audits; ⁽⁴⁾ the State agency retaliated by issuing the Notice and by drastically cutting Medicaid payments to Petitioners in violation of a "stay recoupments order" issued to the State agency in the audit litigation; and the reduced payments forced Petitioners to shut down their home health agency, which in turn deprived them of the financial means to defend against the Notice. Petitioners also alleged that the State agency threatened to send a referral to the State Prosecutors Office relating to Medicaid fraud if Petitioners received an adverse finding at the administrative hearing and that the Hearing Officer was to be an attorney employed by the State agency, whom they did not regard as an independent third party. The ALJ determined that Petitioners' arguments constituted an impermissible collateral attack on the state proceedings that resulted in the settlement agreement since an exclusion under section 1128(b)(5) "is wholly derivative of state proceedings." ALJ Decision at 6; see also ALJ Decision at 4, citing Olufemi Okonuren, DAB No. 1319 (1992).

In excepting to FFCL B, Petitioners argue that "a lifetime exclusion" deprives them of their constitutional right of due process and is not "reasonable." P. Br. at 1 (unnumbered). ⁽⁵⁾

[Page 5] Standard of Review

The Board's standard of review on disputed issues of fact is whether the ALJ Decision is supported by substantial evidence on the record as a whole. 42 C.F.R. � 1005.21(h). The Board's standard of review as to disputed issues of law is whether the ALJ Decision is erroneous. Id.

We conclude that the ALJ did not err in finding that there were no issues of material fact in dispute. First, there is no dispute that, under the terms of the settlement agreement, Petitioners withdrew from the Connecticut Medicaid program.

Second, the admitted context of the signing of the agreement and the terms of the agreement indicate that at least one purpose was to avoid sanctions. While Petitioners argue that they had reasons for entering into the agreement other than to avoid sanctions (for example, they allege that they could not afford to pursue their administrative remedies because of the State agency's actions and that they considered the offered administrative process to be biased), nothing in the federal regulations requires that the avoidance of sanctions be the only reason for voluntary withdrawal.

Third, while Petitioners are correct that whether a withdrawal was done "voluntarily" within the meaning of section 1001.601(a)(2) is a question of federal law, the evidence they proffer does not raise a genuine dispute about whether their withdrawal was voluntary. As indicated above, the settlement agreement, which Petitioners do not deny that they signed, states that they "voluntarily agree to permanently refrain from engaging in any health care services or related administration of such services within the State of Connecticut." I.G. Ex. 2, at 4 (emphasis added). The agreement also states that "[e]ach party further acknowledges by the signature below that it has read this Settlement Agreement, understands it, and agrees to be bound by it." Id. at 9. The ALJ could reasonably treat these statements as an admission regarding the voluntary nature of Petitioners' actions and treat Petitioners' attempt now to disavow the voluntary nature of their act as an impermissible collateral attack on the agreement. Moreover, much of the evidence Petitioners proffer goes to whether they voluntarily abandoned [Page 6] their business, not whether they voluntarily signed the agreement. With respect to their signing the agreement, Petitioners do not assert they did not in fact read or understand the agreement or that they did not intend to sign, or were physically coerced to sign, the agreement; instead, they assert that they signed under threat of criminal prosecution. ⁽⁶⁾ Although in some circumstances threat of criminal prosecution might constitute coercion, Petitioners provide no support for interpreting the term "voluntarily" in the federal regulation to preclude the I.G. from excluding an individual who has signed an agreement in circumstances where the individual was under threat of criminal prosecution. To interpret the regulation this way would frustrate the intent of the statute and regulation, moreover, since often there is an overlap between civil and criminal laws (intended to protect the federally funded health programs) that might lead to such a withdrawal. Even if we considered a threat of criminal prosecution to be a material fact, Petitioners do not specify who made the alleged threat or when, or point to any evidence or proffer of evidence of such a threat.

Moreover, the ALJ properly denied Petitioners' request for an in-person hearing on whether the alleged facts show that they were not otherwise sanctioned "for reasons bearing on [their] professional competence, professional performance, or financial integrity." The ALJ looked at whether the violations alleged in the Notice concerned Petitioners' professional competence, professional performance, or financial integrity. ALJ Decision at 7. Petitioners do not dispute the ALJ's conclusion that the alleged violations had a "common sense connection" with all three of these elements (id.). Petitioners also admit to circumstances from which the ALJ reasonably concluded that at least one of the reasons they entered into the settlement agreement providing for their withdrawal from the Connecticut Medicaid program was the allegations made in the Notice. Those allegations were the basis of the proposed sanctions Petitioners avoided by withdrawing from the program. It is this withdrawal which made Petitioners [Page 7] "otherwise sanctioned" under the statute and regulations. Thus, Petitioners were "otherwise sanctioned" for reasons bearing on their professional competence, professional performance, or financial integrity, even if there were other reasons as well. While Petitioners dispute that the violations alleged in the Notice in fact occurred, that dispute is immaterial. Under the statute, the ALJ need only find that Petitioners were "otherwise sanctioned for reasons bearing on" one of the three elements. Even if Petitioners could prove that such violations did not in fact occur, that would not undercut the finding that they were otherwise sanctioned for reasons bearing on their professional competence, professional performance, or financial integrity.

Petitioners further argue that the facts they alleged before the ALJ show that their "lifetime" exclusion from the Medicaid and Medicare programs without a hearing on the state audits is unreasonable and violates their constitutional due process rights. With respect to the length of the exclusion, however, the ALJ properly found that as a matter of law, the exclusion imposed pursuant to section 1128(b)(5) was required to be coextensive with Petitioners' exclusion from the Connecticut Medicaid program. See ALJ Decision at 7, citing section 1128(c)(3)(E) of the Act and 42 C.F.R. � 1001.601(b)(1). In response to Petitioners' argument below that they were deprived of due process, the ALJ stated that the settlement agreement provided that "the proper venue for a dispute under the Agreement is the Superior Court for the Judicial District of Hartford." ALJ Decision at 3, n.3. While Petitioners are not claiming that they have a dispute under the settlement agreement, they are raising due process issues that arise because they agreed to a permanent withdrawal, and the ALJ properly found that any dispute regarding the agreement, or the process leading up to it, is properly made in state court. ⁽⁷⁾

The Board previously examined the issue of collateral attacks on state proceedings where no hearing was held by a state on the merits of the charges. In Okonuren, the petitioner was suspended from Medicaid participation for allegedly performing and billing for unnecessary laboratory tests and was then excluded by the I.G. under section 1128(b)(5). The petitioner appealed, asserting that the Mississippi Medicaid program had not suspended [Page 8] him for reasons bearing on his professional performance, professional competence, or financial integrity because his untimely appeal before the state had been rejected and there were never specific findings on the merits of the charges. Okonuren at 6. After stating the principles that a petitioner may not collaterally attack the state proceedings before the ALJ and that the fairness of the state process is irrelevant, the Board stated that:

precluding collateral attacks on the actions of state licensing authorities did not infringe on constitutional rights, as state proceedings are subject to the due process and equal protection clauses of the Fourteenth Amendment (citation omitted). The Petitioner here did not allege that he was unable to attack his suspension from Mississippi Medicaid on due process grounds at the State level. Where practitioners can directly attack state proceedings at the state level, constitutional rights are adequately and more appropriately protected by direct appeal from state decisions. Allowing collateral attacks would unnecessarily encumber the exclusion process by granting practitioners a remedy that duplicates a pre-existing remedy.

Okonuren at 7. Similarly, here, had Petitioners not entered into the settlement agreement, they could have directly challenged at the state level the basis on which the State agency proposed to impose formal sanctions against them. Even if Petitioners felt that the Hearing Officer was biased in favor of the State agency, ⁽⁸⁾ Petitioners could have appealed any adverse determination to court. Thus, Petitioners cannot reasonably argue that excluding them pursuant to section 1128(b)(5) deprives them of their due process rights.

[Page 9] Conclusion

Based on the foregoing analysis, we affirm the ALJ's determination to uphold the exclusion under section 1128(b)(5) of the Act based on the written record before her.

Cecilia Sparks Ford

Sheila Ann Hegy

Judith A. Ballard
Presiding Board Member

1. The ALJ heard the cases together and stated that she was not consolidating the cases but was "issuing a joint decision as the facts and analysis in the cases are identical." ALJ Decision at 2, n.2.

2. The following background information is drawn from the ALJ Decision and the record before the ALJ and summarized here for the convenience of the reader, but should not be treated as new findings.

3. Petitioners also assert that "the facts indicate all allegations of fraud were withdrawn and do not have a negative bearing on, 'the professional competence, professional performance or financial integrity' of the Petitioners." P. Br., 4 (unnumbered); see also P. Reply Br. at 2 (unnumbered) (all proposed sanctions "related to alleged 'violations' that were never proven and were withdrawn" by the State agency). Petitioners' assertion appears to be based solely on the provision in the settlement agreement that "neither the execution or performance of this Settlement agreement . . . shall constitute an admission or finding for the purpose of allegations in the Notice of Violations . . . ." See P. Br. at 3 (unnumbered), quoting settlement agreement at 3 (I.G. Ex. 2). Nothing in this language suggests that the State agency was withdrawing its allegations, however.

4. These lawsuits were settled by the Consent Order issued with the settlement agreement.

5. Petitioners characterize the federal exclusion as a lifetime exclusion which is not accurate since they could submit a request for reinstatement to the I.G. if the State agency were to reinstate them. See 42 C.F.R. � 1001.3001.

6. In an affidavit, Petitioners allege that the witnesses to the execution of the settlement agreement "were brought into the room to sign as witnesses after the Settlement Agreement had been notarized, and said witnesses did not actually witness any signatures applied to the Settlement Agreement." P. Ex. 6. Petitioners do not allege that they did not in fact sign the settlement agreement or that anything improper occurred in the room in which the signing took place before the witnesses were brought in.

7. The ALJ also stated that ALJs "do not have the authority to rule on the constitutionality or validity of the exclusion provisions of the Act." Id. Petitioners are not claiming that section 1128(b)(5) itself is unconstitutional, however.

8. We do not agree with Petitioners that the mere fact that the Hearing Officer was an employee of the State agency would preclude an independent review of the agency's action.