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Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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Timothy Wayne Hensley, |
DATE: February 24, 2006 |
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The Inspector General. |
Docket No.C-05-310
Decision No. CR1415 |
| DECISION | |
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DECISION
This case is before me pursuant to a request for hearing filed on April 29, 2005, by Timothy Wayne Hensley (Petitioner). I. BACKGROUND By letter dated February 28, 2005, the Inspector General (I.G.) notified Petitioner that he was being excluded from participation in the Medicare, Medicaid, and all other federal health care programs as defined in section 1128B(f) of the Social Security Act (Act) for a period of five years. The I.G. informed Petitioner that his exclusion was imposed pursuant to section 1128(a)(1) of the Act, due to his conviction (as defined in section 1128(i) of the Act), in the United States District Court, District of Minnesota, of a criminal offense related to the delivery of an item or service under the Medicare or a State health care program, including the performance of management or administrative services relating to the delivery of items or services, under any such program. I conducted a telephone conference on August 16, 2005. The I.G. is represented in this case by Susan P. Elter, Counsel to the Inspector General. Petitioner is represented by Steven McSween, Esq. During the prehearing conference, I reserved judgment on whether the case could be decided based on written submissions without the need for an in-person hearing, even though it appeared that only legal issues were presented. On September 13, 2005, the I.G. submitted his initial brief (I.G. Br.) and four proposed exhibits. These have been identified as I.G. Exhibits (I.G. Exs.) 1-4. On October 18, 2005, Petitioner filed his brief (P. Br.). With his brief, Petitioner filed his affidavit (Hensley Aff.) and three proposed exhibits. Petitioner's exhibits have been identified as Petitioner Exhibits (P. Exs.) A-C. On December 1, 2005, the I.G. filed a reply brief to Petitioner's brief. (I.G. Reply Br.). Petitioner filed a sur-reply brief on December 16, 2005 (P. Reply Br.). There being no objection to the proposed exhibits, I admitted into evidence I.G. Exs. 1-4, the Hensley Aff., and P. Exs. A-C. Based on my review of the record, I find that an in-person hearing is not necessary in this case. It is also my decision to sustain the determination of the I.G. to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for a period of five years. I base my decision on the documentary evidence, the applicable law and regulations, and the arguments of the parties. It is my finding that the mandatory exclusion provisions of section 1128 (a)(1) of the Act do apply in this case because the Petitioner was convicted of a program-related crime. II. ISSUE The issue in this case is whether the I.G. had a basis upon which to exclude Petitioner from participation in the Medicare, Medicaid, and all other health care programs. Since the period of exclusion in this case is five years, the minimum mandatory period, there is no issue of reasonableness of the length of the exclusion before me. III. APPLICABLE LAW AND REGULATIONS Petitioner's right to a hearing by an administrative law judge (ALJ) and judicial review of the final action of the Secretary is provided by section 1128(f) of the Act (42 U.S.C. � 1320a-7(f)). Petitioner's request for a hearing was timely filed and I do have jurisdiction. However, the Secretary of the United States Department of Health and Human Services (Secretary) has by regulation limited my scope of review to two issues: (1) whether there is a basis for the imposition of the sanction; and, (2) whether the length of the exclusion is unreasonable. 42 C.F.R. � 1001.2007(a)(1). The standard of proof is a preponderance of the evidence and there may be no collateral attack of the conviction that is the basis for the exclusion. 42 C.F.R. � 1001.2007(c) and (d). Petitioner bears the burden of proof and persuasion on any affirmative defenses or mitigating factors and the I.G. bears the burden on all other issues. 42 C.F.R. � 1005.15(b) and (c). Section 1128(a)(1) of the Act (42 U.S.C. � 1320a-7(a)(1)) requires the Secretary to exclude from participation in any federal health care program (as defined in section 1128B(f) of the Act), any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under a federal or state health care program. An exclusion under section 1128(a) of the Act must be for a minimum period of five years. Act, section 1128(c)(3)(B). Section 1128(i) of the Act (42 U.S.C. � 1320a-7(i)) defines the term "convicted" as used in section 1128(a) as follows:
Pursuant to 42 C.F.R. � 1001.2007, a person excluded under section 1128(a)(1) of the Act may file a request for hearing before an administrative law judge (ALJ). IV. THE PARTIES' ARGUMENTS
The I.G. argues that Petitioner was convicted of a criminal offense related to the delivery of an item or service under a federal or state health care program. Therefore, Petitioner is subject to the statutory minimum mandatory period of exclusion of five years. Act, section 1128(c)(B).
Petitioner does not dispute that he was convicted of a criminal offense but, instead, argues that his conviction is not related to the delivery of an item or service under a federal or state health care plan. In addition, in part because he was convicted of a misdemeanor, Petitioner argues that, at most, he should be excluded under the permissive exclusion provisions under Section 1128(b) of the Act. V. FINDINGS OF FACT AND CONCLUSIONS OF LAW There are no material facts at issue. For that reason, decision on the parties' cross motions for summary judgment is appropriate. Based on the case record and the parties' briefs, I find that the background facts contained in findings 1-12 are not in dispute. Only the conclusions to be drawn from the facts are at issue. 1. At all times relevant in this case, Petitioner was the National Sales Manager for Augustine Medical, Inc. (AMI), a Minnesota corporation that manufactured and sold Warm-Up Active Wound Therapy (Warm-Up). I.G. Ex. 2. 2. Petitioner knew that claims for Warm-Up were periodically submitted by others for reimbursement to the Medicare program, a federal health care program. I.G. Ex. 2. 3. On June 27, 2000, Scott Augustine, the owner of AMI, received a letter from TriSpan Health Services (TriSpan), a Medicare fiscal intermediary, stating that it had determined that Warm-Up was investigational. I.G. Ex. 2. 4. Petitioner understood that TriSpan's determination that Warm-Up was investigational was material to a purchaser's ability to claim Medicare reimbursement for Warm-Up. I.G. Ex. 2. 5. On August 16, 2000, Petitioner attended a meeting in Atlanta, Georgia, with representatives of Southern Medical Distributors (SMD). I.G. Ex. 2. 6. At the August 16, 2000, meeting, Petitioner did not disclose to the representatives of SMD about TriSpan's June 27th letter advising of its determination that Warm-Up was investigational. I.G. Ex. 2, at 2. 7. SMD was at all times relevant an entity created for a wide-ranging undercover investigation by the Federal Bureau of Investigation, the U.S. Postal Inspection Service, and the Office of the Inspector General for the Department of Health and Human Services. P. Ex. B. 8. Because SMD was created for the sole purpose of investigation, SMD did not and would not submit nor file claims for reimbursement to any federal or state medical program. 9. On September 8, 2004, Petitioner pleaded guilty to knowingly and willfully withholding from SMD a material fact for use in determining rights to benefits and payments under a federal health care program, in violation of 42 U.S.C. � 1320a-7b(a)(2). I.G. Exs. 3, 4. 10. The District Court sentenced Petitioner to three years of probation and imposed a $100,000 fine. I.G. Ex. 4. 11. Petitioner's accepted guilty plea in the United States District Court, District of Minnesota, constitutes a conviction of a criminal offense under section 1128(i)(3) of the Act. 12. Section 1128(a)(1) of the Act requires the exclusion of any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under Medicare or any state health care program. Section 1128(a)(1) of the Act; 42 U.S.C. � 1320a-7(a)(1). 13. As discussed below, Petitioner was convicted of a criminal offense relating to the delivery of an item or service, under the Medicare or a State health care program. 14. Petitioner was properly excluded for the mandatory minimum period of five years. VI. ANALYSIS I discuss specific Findings in detail below.
Petitioner does not contest that he was convicted of a criminal offense within the meaning of section 1128 of the Act. Petitioner entered into a plea agreement. He offered his guilty plea and the Court accepted it. I.G. Exs. 3, 4. The Act defines a conviction to include those circumstances "when a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court." 42 U.S.C. � 1320a-7(i)(3); 42 C.F.R. � 1001.2. Therefore, Petitioner was convicted as conviction is defined in section 1128 of the Act.
The primary issue in this case is whether Petitioner's criminal offense is related to the delivery of an item or service under the Medicare program. Section 1128(a)(1) of the Act (42 U.S.C. � 1320a-7(a)(1)) requires the Secretary to exclude from participation in any federal health care program (as defined in section 1128B(f) of the Act), any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under a federal or state health care program. Petitioner argues that, because SMD was a fake corporation established only to investigate and prosecute health care fraud, and, accordingly, no claims for reimbursement were or could have been made resulting from the criminal offense for which Petitioner was convicted, Petitioner's crime was not related to the delivery of an item or service under a federal or state health care program. Petitioner argues that an essential element of a section 1128(a)(1) exclusion is the filing of a reimbursement claim with a federal or state health care program. P. Br. at 2,10. In support of his argument, Petitioner (P. Br. at 6) refers to a quotation from Jack W. Greene, DAB No. 1078 (1989), aff'd sub nom, Greene v. Sullivan, 731 F. Supp. 835 (E.D. Tenn. 1990); i.e.,
The I.G. responds that Petitioner's withholding of information material to the determination of Medicare coverage is related to the delivery of an item under Medicare even though no one submitted a claim to Medicare and the program did not suffer financial loss. I.G. Reply Br. at 1-2. As Petitioner concedes, the I.G.'s view represents the prior holdings of the Departmental Appeals Board (DAB) but he contends the prior holdings are incorrect. P. Br. at 12. As part of his plea agreement, Petitioner stipulated that he "knowingly and willfully withheld from Southern Medical Distributors a material fact for use in determining rights to benefits and payments under a Federal health program, that being the Medicare program, in violation of 42 U.S.C. Section 1320a-7(a)(2) as set forth in an Information filed herewith and is in fact guilty of that offense." (1) I.G. Ex. 2. The section of the Act to which Petitioner pled guilty is captioned "Criminal Penalties for Acts Involving Federal Health Care Programs." One would assume that this title would alone end the discussion with regard to whether Petitioner was convicted of a criminal offense related to the delivery of an item or service under a federal health care program. While one could dispute whether Petitioner's criminal acts fit within the meaning of Section 1320a-7b(a)(2), when an exclusion is based on the existence of a conviction, the basis for the underlying conviction is not reviewable, and a petitioner may not collaterally attack the underlying determination, either on substantive or procedural grounds, in an exclusion appeal. 42 C.F.R. � 1001.2007(d). The I.G. and the ALJ are not permitted to look beyond the fact of conviction. Mark Zweig. M.D., DAB CR563 (1999); Paul R. Scollo, D.P.M., DAB No. 1498 (1994); Ernest Valle, DAB CR309 (1994); Peter Edmondson, DAB No. 1330 (1992). It seems to me that, because Petitioner was convicted of a violation of the Act itself, the Petitioner's conviction is inextricably related to Medicare whether or not a health care item or service was actually delivered. Many cases requiring an analysis of whether a conviction is related to the delivery of an item or service under Medicare are situations where the conviction is for a crime the title of which has nothing to do with Medicare. See, e.g., DeWayne Franzen, DAB No. 1165 (1990). The DAB has said, however, that there is no "general rule" that all crimes involving financial misconduct directed at Medicare or Medicaid are, by their very nature, related to the delivery of items or services under such programs within the meaning of section 1128(a)(1) of the Act. Berton Siegal, D.O., DAB No. 1467 (1994). Rather, the phrase "related to the delivery of an item or service under Medicare requires a common sense nexus between the conviction and the delivery of items under Medicare." Following the DAB, an ALJ in Tanya A. Chuoke, R.N., DAB CR633 (1999) states:
Tanya A. Chuoke, R.N., supra, at 4. It is now well settled that an ALJ must examine the entire record, reviewing all facts and circumstances that illuminate the chain of events giving rise to the offense, and then determine whether a common sense connection exists between the offense and the delivery of an item or service under a covered program. Brenda J. Motley, DAB CR414 (1996); Roberta E. Miller, DAB CR367 (1995); Jerry L. Edmonson, DAB CR59 (1989); Andrew Anello, DAB No. 1803 (2001); Salvacion Lee, M.D., DAB CR920 (2002). The difficult question in this case is whether one can say that "the delivery of a [Medicare] item or service is an element in the chain of events giving rise to the offense" since it is clear that no Medicare item or service could have been delivered nor any claims filed. To support his position that Petitioner's criminal offense was program related, the I.G. relies on Nostratolah Yadegari, DAB CR1042 (2003). In Yadegari, the petitioner pled guilty to making false statements on a form submitted to HCFA without which he would not have been able to claim payment from Medicare for his services. (2) The ALJ held that the crime was related to the delivery of an item or service under Medicare even though no claims had been submitted and no items delivered as part of the petitioner's crime. Id. In the Yadegari case, however, as opposed to the instant case, the false statements were made directly to HCFA and, had someone not discovered the crime, claims would have been filed and wrongly paid. See Andrew Anello, DAB No. 1803 (2001). I understand Petitioner's argument (P. Br. at 8-9) that the instant case is different because there is no evidence that SMD, which Petitioner believed to be a private entity, would buy or sell Warm-Up without inquiring whether it was a covered item. Nothing in Petitioner's statement or lack thereof would have necessarily resulted in Medicare's payment for filed claims for Warm-Up. The worst that can be said is that Petitioner's failure to disclose would have caused SMD to buy products for distribution when Petitioner knew TriSpan, the intermediary, would deny Medicare payment. The potential harm to Medicare, attenuated at best since SMD could not actually file a claim, was entirely within Medicare's control. Petitioner had no ability, regardless of his false inference to a private entity, to fool Medicare into paying claims for Warm-Up. Nevertheless, in the instant case, Petitioner attempted to sell products without advising the potential buyer the products would not be reimbursed by Medicare. This is the essence of why Petitioner was convicted. Section 1128(a)(1) of the Act does not require that the individual must intend to commit a criminal offense, or indeed fraud, for an exclusion to be proper. It merely requires that the individual's acts cause the individual to be convicted of an offense and that the offense be related to the delivery of an item or service under the Medicare program. DeWayne Franzen, DAB No. 1165 (1990). In the Webster's New World, College Dictionary, (fourth edition), the word, relate, is defined as to "show as having to do with." The I.G. submitted Petitioner's stipulation that he knowingly and willfully withheld from SMD a material fact for use in determining rights to benefits and payments under Medicare. I.G. Ex. 2. (3) I find that the I.G. has shown that Petitioner's conviction "had to do with" the delivery of an item or service under Medicare. Accordingly, I find that Petitioner was convicted of a criminal offense related to the delivery of an item or service under a federal health care program. There is at least one prior case in which an ALJ found a basis for excluding a petitioner whose conviction involved undercover agents. In Ricardo Santos, DAB CR165 (1991), a doctor licensed only in Mexico provided medical care and treatment to two patients who were undercover agents from the California Medicaid program. The petitioner, on prescriptions given to the undercover agents, forged the name of his supervising physician who was licensed in California. The ALJ reasoned that the cost of the medical treatment, including the prescriptions, provided to the agents would have been billed to the state program had the agents not seized the billing for evidentiary purposes. Further, the ALJ found that the prescriptions were an element in the chain of events giving rise to Petitioner's conviction for forgery. As the DAB said in Kenneth M. Behr, DAB No. 1997 (2005) ". . . the mere fact that a criminal endeavor (which if successful would have resulted in actual delivery of a health care item or service) was unsuccessful does not mean there is no connection to the delivery of an item or service."
Petitioner correctly points out that section 1128 (b) of the Act provides for permissive exclusions and that the distinction between a mandatory exclusion under section 1128 (a)(1) and a permissive exclusion is that even if an offense is a misdemeanor, if it is program related, it will come within the mandatory exclusion of section 1128(a)(1). See P. Br. at 5. On the other hand, if the criminal offense relates to fraud, theft, embezzlement, breach of financial responsibility or other financial misconduct that is not program related; e.g. fraud on an insurance company, it will fit within the mandatory exclusion provision of section 1128(a)(3) only if it is a felony offense; if an individual is convicted of a misdemeanor, the offense will fit within the permissive exclusion provisions of section 1128(b) of the Act. Lorna Fay Gardner, DAB No. 1733 (2000). According to Petitioner, the I.G.'s interpretation that a mandatory exclusion would apply even when a party's conduct did not result in a bill or claim being made to a federal or state health care program would eviscerate the permissive exclusion provisions in section 1128 (b). P. Br. at 10. I disagree. The determination between mandatory versus permissive exclusion depends not on whether a claim was made but whether the criminal offense related to the delivery of an item or service under the Medicare or Medicaid program; i.e., whether the offense was program related. A knowing and willful withholding of a material fact for use in determining rights to benefits and payments under a federal health care program, an act to which Petitioner stipulated, is program related. Based on his stipulation, Petitioner intended that his products would be purchased and claims would be filed to Medicare by persons purchasing Warm-Up. (4)
Petitioner notes in his affidavit that he and his attorney were advised by the Assistant United States Attorney who signed the Stipulation with him that Petitioner's plea agreement would not result in him being excluded from the Medicare program. Hensley Aff., at � 9. I have previously mentioned in another case that the criminal bar unfortunately may be unaware of the consequences of a plea agreement with respect to exclusions under section 1128 of the Act. Steven Caplan, R. Ph., DAB CR1112 (2003), aff'd Steven Caplan v. Tommy G. Thompson, CIV No. 04-00251 (D. Hawaii, Dec. 17, 2004). By regulation, I cannot in this proceeding consider the inducements for a petitioner's plea agreement. 42 C.F.R. � 1001.2007(d). Moreover, as ALJ Richard J. Smith noted in Stella Remedies Lively, DAB CR1369 (2005), the Assistant United States Attorney does not have the authority to bargain away the Secretary's mandate to exclude.
An exclusion under section 1128(a)(1) of the Act must be for a minimum mandatory period of five years. Section 1128(c)(3)(B) of the Act. When the I.G. imposes an exclusion for the mandatory five-year period, the reasonableness of the length of the exclusion cannot be contested. 42 C.F.R. � 1001.2007(a)(2). VII. CONCLUSION Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate that Petitioner be excluded from Medicare, Medicaid, and all other federal health care programs for a period of at least five years because of his conviction of a criminal offense related to the delivery of an item or service under a federal or state health care program. The five-year exclusion is therefore sustained. |
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| JUDGE | |
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Anne E. Blair Administrative Law Judge |
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| FOOTNOTES | |
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1. In the Stipulation, the citation to the statute to which Petitioner pled guilty is in error. He actually pled guilty to violating 42 U.S.C. � 1320a-7b(a)(2). 2. The Health Care Financing Administration (HCFA) is the former name of the Centers for Medicare and Medicaid Services. 3. Petitioner's argument that at the time he made the stipulation he knew SMD was a fictitious company is irrelevant to his actual stipulation that he knowingly and willfully withheld a material fact from SMD for use in determining rights to benefits and payments under Medicare because at the time he withheld the material fact he did not know that SMD was fictitious. See Hensley Aff., � 3. 4. Petitioner also refers to section 1128 (b)(7) as being a permissive exclusion applicable to his case. P. Br. at 12. Section 1128(b)(7) refers to those situations when there has been no conviction for a criminal offense but the Secretary has determined that a person has committed an act described in section 1128A, 1128B, or 1129. In cases involving a permissive exclusion under section 1128 (b)(7), the I.G. must prove that a petitioner actually committed the acts which the Secretary alleges. On the other hand, sections 1128 (a) and 1128 (b)(1)(2) and (3) are derivative actions based on a criminal conviction. Section 1128(b)(7) is not applicable herein. |
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