SUBJECT:

Nina Joanne Gram, a/k/a Nina Regan,

Petitioner,

The Inspector General

DECISION

I sustain the Inspector General's (I.G.'s) decision to exclude Petitioner, Nina Joanne Gram (a/k/a Nina Regan), from participating in Medicare, Medicaid, and all other federal health care programs, as defined in section 1128B(f) of the Social Security Act (Act). Petitioner must be excluded for the mandatory minimum period of five years, due to her conviction of a criminal offense related to the delivery of an item or service under the Medicare program, within the meaning of section 1128(a)(1) of the Act.

I. Background

On April 19, 2002, in federal district court for the District of Colorado, Petitioner pled guilty to one count of theft of United States property, in violation of 18 U.S.C. �� 641 and 642. I.G. Ex. 4.

By letter dated August 30, 2003, the I.G. notified her that, "based on her conviction of a criminal offense related to the delivery of a healthcare item or service under the Medicare program," she was being excluded from participation in Medicare, Medicaid, and all federal health care programs for the minimum mandatory period of five years pursuant to section 1128(a)(1) of the Act, 42 U.S.C. � 1320a-7(a)(1). By letter dated October 14, 2003, Petitioner requested review of her exclusion. I convened a telephone conference on November 18, 2003. During the telephone conference, the parties agreed that an in-person hearing would be unnecessary and that the case could proceed based on briefs and documentary evidence. I established a briefing schedule.

Thereafter, on December 18, 2003, the I.G. filed The Inspector General's Brief in Support of Summary Judgment (I.G. Br.). With its brief, the I.G. submitted five proposed exhibits, I.G. Exhibits (Ex.) 1-5. On January 29, 2004, Petitioner filed Petitioner's Response Brief and Cross-Motion for Summary Judgment (P. Br.). With her brief, Petitioner submitted one proposed exhibit, Petitioner's Exhibit (P. Ex.) 1. On February 23, 2004, the I.G. filed The Inspector General's Reply to Petitioner's Brief (I.G. Reply). On March 4, 2004, Petitioner filed Petitioner's Surreply to Inspector General's Reply (P. Surreply). Petitioner objected to the admission of I.G. Ex. 2, Declaration of Daniel H. Coney, and moved to strike. As discussed more fully below, I overrule Petitioner's objection and admit I.G. Ex. 2. By letter dated March 26, 2004, Petitioner proffered another document, an undated, unsigned letter on the letterhead of Mark C. Johnson, Attorney at Law, to Kurt A. Thoene, Senior U.S. Probation Officer. I have marked that document as P. Ex. 2. The I.G. moved to exclude the document. For the reasons discussed below, I deny the I.G.'s motion to exclude, and admit P. Ex. 2. In addition, I admit the remaining proposed exhibits into the record.

II. Issue

The issue in this case is whether Petitioner was convicted of a criminal offense related to the delivery of an item or service under the Medicare program, within the meaning of section 1128(a)(1) of the Act.

III. Discussion

Section 1128(a)(1) of the Act 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).

I make findings of fact and conclusions of law to support my decision in this case. I set forth each finding below, in bold italic type, as a separate heading.

1. Petitioner was convicted of a criminal offense, within the meaning of section 1128(i) of the Act.

Section 1128(i) of the Act provides, in part, that an individual or entity is considered to have been convicted of a criminal offense under the following circumstances:

(1) when a judgment of conviction has been entered against the individual or entity by a Federal, State, or local court . . .;

(2) when there has been a finding of guilt against the individual or entity by a Federal, State, or local court; [or]

(3) when a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court . . . .

Petitioner does not dispute that she was convicted of a criminal offense (see P. Br. at 3), and the district court's judgment plainly satisfies the statutory requirements for conviction. It shows that Petitioner "pleaded guilty," that "the Court has adjudicated that [she] is guilty," and that a judgment of conviction was entered against her. I.G. Ex. 3.

2. The criminal offense of which Petitioner was convicted was related to the delivery of an item or service under the Medicare program, within the meaning of section 1128(a)(1) of the Act.

Petitioner accurately points out that, on its face, the offense to which she pled guilty, "Theft of Public Money or Property, Aiding and Abetting," bears no relationship to the Medicare program. However, in making my determination, I am not limited to a "narrow examination of the language within the four corners of the final judgment." H. Gene Blankenship, DAB CR42, at 11 (1989). Rather, I may examine extrinsic evidence to determine whether an offense is program-related. Dewayne Franzen, DAB No. 1165 (1990). An offense is related to the delivery of an item or service under the Medicare program within the meaning of the statute if there is a common-sense connection between the conduct giving rise to the offense and the delivery of a Medicare item or service. Berton Siegel, D.O., DAB No. 1467 (1994).

To establish the connection between Petitioner's conviction and the delivery of Medicare items or services, the I.G. has offered the affidavit of Special Agent Daniel H. Coney as I.G. Ex. 2. Petitioner objects to the admission of I.G. Ex. 2 on the ground that it contains hearsay. P. Br. at 2. Proceedings before administrative law judges of the Departmental Appeals Board are not strictly bound by the Federal Rules of Evidence, and hearsay is admissible, although I may consider the fact that an exhibit is or contains hearsay in determining what weight to give such evidence. Accordingly, I find that I.G. Ex. 2 is admissible, and I admit it into evidence.

Similarly, Petitioner offers P. Ex. 2 as evidence tending to prove that her conviction was not related to the delivery of an item or service under Medicare. The I.G. has moved to exclude P. Ex. 2 on the grounds that 1) it was not timely filed, as it was submitted after the record had closed, and 2) it is not signed. Counsel for Petitioner represents that the document was not offered earlier because he was not aware of its existence. I take him at his word. In any event, I have inherent authority to reopen the record to admit additional evidence. I take the I.G.'s second objection - that P. Ex. 2 is not signed - to mean that the I.G. considers the document to be unreliable. In the interest of making a complete record, I am admitting P. Ex. 2 in evidence. As discussed below, I consider the fact that the document is unsigned in evaluating the weight to be given it.

As to I.G. Ex. 2, I accord it no weight in my decision, because sufficient evidence establishes that Petitioner's conviction is program-related without regard to Mr. Coney's affidavit. I.G. Ex. 1 consists of an indictment of Petitioner and two other individuals who operated a home health agency in Colorado. The indictment describes a scheme to defraud the Medicare program by, among other things, submitting home health agency cost reports which claimed as legitimate expenses items that were, in fact, personal in nature and, thus, were not reimbursable by Medicare. Count 19(F) of the indictment charges that the following conduct constituted an overt act in furtherance of the alleged scheme:

On or about December 17, 1997, . . . [Petitioner's business partner] deposited refunds from American United Life Insurance Company into her personal bank account, knowing that the costs for funding the 401(k) retirement plan for which [sic] the refund related to was funded by [the home health agency] and claimed as an expense on Medicare cost reports.

I.G. Ex. 1, at 10. Count 33 of the indictment charges that the amount of the refund from the American United Life Insurance Company which Petitioner's business partner deposited on December 17, 1997, was $855.24. Id. at 15. The information to which Petitioner pled guilty charges that, on or about December 17, 1997, she "did wilfully and knowingly steal, purloin, and convert to her use and the use of [her business partner] money in the amount and of the value of $855.24, of the property of the United States." I.G. Ex. 4, at 1.

Given that the date of the act and the monetary value of the property stolen are identical in the indictment and the information, I infer that the theft which Petitioner was convicted of aiding and abetting consists of the conduct described in counts 19(F) and 33 of the indictment. Petitioner argues that, because the United States Attorney made a decision to drop the indictment against Petitioner and, instead, charged her pursuant to the information, the allegations in the indictment should carry no weight in this proceeding. P. Br. at 3, 7. I agree that Petitioner was not convicted of the charges contained in the indictment. It does not follow, however, that I may not infer from the indictment the nature of the conduct described in the information. Therefore, I conclude that the $855.24, the theft of which Petitioner pled guilty to aiding and abetting, represented the proceeds of a refund check relating to a 401(k) account, the funding for which had been claimed as an expense on the Medicare cost report of the home health agency operated by Petitioner and her partner. ⁽²⁾

Petitioner argues that P. Ex. 2 "conclusively refutes" any claim by the I.G. that Petitioner's conviction was for a program-related offense. I note that the fact that P. Ex. 2 is unsigned would make it inherently less reliable than a signed document to establish the existence of disputed facts. P. Ex. 2, however, does not establish facts. Rather, it consists of legal argument, by a gentleman I take to be Petitioner's former counsel, as to how Petitioner's conduct should be viewed by the probation officer preparing sentencing recommendations. Moreover, even if I were to assume that counsel's arguments contained in P. Ex. 2 represented established facts, I would still conclude that Petitioner was convicted of a program-related offense. That is because, far from refuting the conclusion that Petitioner's conviction was program-related, P. Ex. 2 reinforces the idea that Petitioner's conviction had a connection to the Medicare program.

The letter identified as P. Ex. 2 characterizes the conduct of Petitioner's partner as a "multi-year accounting fraud against Medicare involving hundreds of thousands of dollars." P. Ex. 2, at 3. The letter argues that Petitioner's "single act of theft from a 401(k) fund," as contrasted with her partner's conduct, demonstrates that Petitioner's culpability is in no way comparable to that of her partner. Id. The letter asserts that Petitioner was unaware of the cost-reporting misrepresentations perpetrated by her partner. Id. Petitioner need not have intended to defraud Medicare for her conviction to be program-related, however. Further, even if the fraudulent scheme perpetrated by Petitioner's partner was not a basis for recommending an enhancement to Petitioner's sentence, that fact has no bearing on whether her conviction was program-related within the meaning of section 1128(a)(1). In summary, P. Ex. 2 confirms that Petitioner pled guilty in connection with an overall scheme involving Medicare cost-reporting fraud. Nothing in P. Ex. 2 in any way detracts from my analysis above, concluding that the money Petitioner admitted stealing had been falsely claimed on a Medicare cost report.

Moreover, the judgment entered by the U.S. District Court in Petitioner's criminal case required Petitioner to pay restitution in the amount of $7,418.32 to the Health Care Financing Administration (HCFA, now known as the Centers for Medicare & Medicaid Services or CMS). I.G. Ex. 3, at 6. CMS is the agency within the Department of Health and Human Services that administers the Medicare program. The fact that Petitioner was sentenced to pay restitution to CMS is evidence that the Medicare program was the victim of the theft of public money which Petitioner was convicted of aiding and abetting. It is well-established that an offense is program-related where a covered program is the victim of the criminal conduct. See, e.g., Napoleon S. Maminta, DAB No. 1135, at 15 (1990). ⁽³⁾ Petitioner's argument that the public money at issue is more likely the property of the Internal Revenue Service (P. Br. at 9) than that of the Medicare program is thus belied by the court's restitution order. ⁽⁴⁾

Given that Petitioner was convicted of a criminal offense related to the delivery of an item or service under the Medicare program, the I.G. was required to exclude her pursuant to section 1128(a)(1) of the Act.

3. Because the I.G. has imposed the five-year minimum mandatory period of exclusion, the length of the exclusion must be upheld.

An individual or entity convicted of a criminal offense related to the delivery of an item or service under the Medicare program must be excluded for not less than five years. Act, section 1128(c)(3)(B); 42 C.F.R. � 1001.102(a). In this case, since the I.G. has imposed a five-year exclusion, the length of the exclusion is per se reasonable.

4. No material facts are in dispute, and the I.G. is entitled to judgment as a matter of law.

Petitioner has not alleged any material facts in dispute. Petitioner has argued, instead, that the I.G. failed to carry her burden of proof. P. Br. at 10-11. For the reasons discussed above, I find that the I.G. has satisfied her burden of proof and is entitled to judgment as a matter of law.

IV. Conclusion

Petitioner was convicted of a criminal offense related to the delivery of an item or service under the Medicare program, within the meaning of section 1128(a)(1) of the Act. Individuals convicted of such offenses must be excluded from participation in Medicare, Medicaid, and all federal health care programs for not less than five years. Therefore, the I.G. properly excluded Petitioner for five years.

Carolyn Cozad Hughes

Administrative Law Judge

1. The term "State health care program" includes a State's Medicaid program. Act, section 1128(h)(1); 42 U.S.C. � 1320a-7(h)(1).

2. The Departmental Appeals Board has held that submitting false cost reports to a covered health care program is related to the delivery of an item or service within the meaning of section 1128(a)(1) of the Act. Charles W. Wheeler and Joan K. Todd, DAB No. 1123, at 13-14 (1990).

3. In fact, at least one Administrative Law Judge has held that the fact that a petitioner is required to pay restitution to the Medicare and Medicaid program is sufficient, in and of itself, to support a finding that the conviction is program-related. Donald J. Purcell, II, M.D., DAB CR572, at 8 (1999).

4. Further, since the IRS generally has priority over all others in recovering judgments, I would find it highly unusual for CMS to recover money that arguably was taken from the IRS.