SUBJECT:

Peggy A. Bisig a/k/a Peggy A. Fritz,

Petitioner,

The Inspector General.

DECISION

Petitioner, Peggy A. Bisig a/k/a Peggy A. Fritz, is excluded from participation in Medicare, Medicaid, and all other federal health care programs pursuant to sections 1128(a)(1) and (3) of the Social Security Act (the Act) (42 U.S.C. §§ 1320a-7(a)(1) and (3)), effective May 19, 2005. There is a proper basis for Petitioner's exclusion due to her conviction of criminal offenses related to the delivery of an item or service under the Medicare or a state health care program, and to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service in a health care program operated by, or financed, in whole or in part, by any federal, state, or local government agency. Petitioner's exclusion for five years is mandatory pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) and an additional period of exclusion of 20 years, for a total minimum period of exclusion of 25 years, is not unreasonable based upon the three aggravating factors in this case. ⁽¹⁾

I. Background

The Inspector General for the Department of Health and Human Services (the I.G.) notified Petitioner by letter, dated April 29, 2005, that she was being excluded from participation in Medicare, Medicaid, and all federal health care programs for the minimum period of 25 years, pursuant to sections 1128(a)(1) and (3) of the Act. The basis cited for Petitioner's exclusion was her conviction in the United States District Court, Southern District of Indiana, of criminal offenses related to the delivery of an item or service under the Medicare or a state health care program, and to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service in a health care program operated by, or financed, in whole or in part, by any federal, state, or local government agency. See Act, sections 1128(a)(1) and (3); 42 U.S.C. §§ 1320a-7(a)(1) and (3); and 42 C.F.R. §§ 1001.101(a) and (c).

Petitioner timely requested a hearing by letter dated June 21, 2005. The case was assigned to me for hearing and decision on July 25, 2005. On September 7, 2005, I convened a prehearing telephonic conference, the substance of which is memorialized in my Order dated September 13, 2005.

The I.G. filed a motion for summary judgment and supporting brief on October 7, 2005 (I.G. Brief), with I.G. Exhibits (I.G. Exs.) 1 through 4. On December 29, 2005, Petitioner filed a document which she titled "Support for Reconsideration of Exclusion Period," which I treat as an opposition to the motion for summary judgment (P. Opp.), with exhibits (P. Exs.) 1, 4, 6, 7, 8, 9, 10, 11, 12, and 13. ⁽²⁾ The I.G. filed a reply brief on January 20, 2006 (I.G. Reply). No objection has been made to the admissibility of any of the proposed exhibits, and I.G. Exs. 1 through 4, and P. Exs. 1, 4, and 6 through 13 are admitted.

II. Discussion

A. Findings of Fact

The following findings of fact are based upon the uncontested and undisputed assertions of fact in the pleadings and the exhibits admitted. Citations may be found in the analysis section of this decision if not included here.

1. On December 19, 2003, Petitioner was convicted, pursuant to her guilty pleas, in the United States District Court for the Southern District of Indiana of four counts of health care fraud in violation of 18 U.S.C. § 1347; one count of offering or making unlawful kickbacks in violation of 42 U.S.C. § 1320a-7b(b)(2)(A) (section 1128B(b)(2)(A) of the Act); and one count of mail fraud in violation of 18 U.S.C. § 1341. I.G. Ex. 4, at 1.

2. Petitioner was sentenced to be imprisoned for 51 months and ordered to pay restitution of $1,934,688.17. I.G. Ex. 4, at 2 and 5.

3. The restitution Petitioner was ordered to make was based upon the court's finding of a total loss due to Petitioner's misconduct of $1,934,688.17, which included a loss to the Centers for Medicare & Medicaid Services of $93,957.14 and a loss to the Indiana Medicaid program of $1,789,927.83. I.G. Ex. 4, at 5.

4. By her guilty plea to counts one through four of the superceding indictment filed March 5, 2003, Petitioner admitted that she successfully engaged in a scheme to defraud Indiana Medicaid and Medicare during the period January 1997 to March 2003. I.G. Ex. 2, at 1-18; I.G. Ex. 3, at 1-3.

5. By her guilty plea to count five of the superceding indictment filed on March 5, 2003, Petitioner admitted that from August 1997 to March 2003, she unlawfully offered kickbacks. I.G. Ex. 2, at 18; I.G. Ex. 3, at 1-3.

6. By her guilty plea to count six of the superceding indictment filed on March 5, 2003, Petitioner admitted that from April 2000 to March 2003, she unlawfully committed mail fraud. I.G. Ex. 2, at 19-21; I.G. Ex. 3, at 1-3.

7. The I.G. notified Petitioner by letter, dated April 29, 2005, that she was being excluded from participation in Medicare, Medicaid, and all federal health care programs for 25 years, pursuant to sections 1128(a)(1) and (3) of the Act. I.G. Ex. 1.

8. Petitioner timely requested a hearing by letter dated June 21, 2005.

B. Conclusions of Law

1. Petitioner's request for hearing was timely and I have jurisdiction.

2. Summary judgment is appropriate.

3. Petitioner was convicted of a criminal offense related to the delivery of an item or service under the Medicare or a state health care program. See Act, section 1128(a)(1); 42 U.S.C. § 1320a-7(a)(1); 42 C.F.R. § 1001.101(a).

4. Petitioner was convicted of a felony criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service in a health care program operated by, or financed, in whole or in part, by a federal, state, or local government agency. See Act, section 1128(a)(3); 42 U.S.C. § 1320a-7(a)(3); 42 C.F.R. § 1001.101(c).

5. Petitioner was convicted of a felony criminal offense within the meaning of section 1128(a)(3) of the Act that was committed after August 21, 1996, the effective date of the Health Insurance Portability and Accountability Act (HIPAA) of 1996.

6. There is a basis for Petitioner's exclusion pursuant to section 1128(a)(1) of the Act.

7. There is a basis for Petitioner's exclusion pursuant to section 1128(a)(3) of the Act.

8. Pursuant to section 1128(c)(3)(B) of the Act, the minimum period of exclusion under section 1128(a) is five years and that period is presumptively reasonable.

9. The I.G. has shown by a preponderance of the evidence the aggravating factor established by 42 C.F.R. § 1001.102(b)(1), that the acts for which Petitioner was convicted resulted in a loss of $5,000 or more to a government program or one or more entities.

10. The I.G. has shown by a preponderance of the evidence the aggravating factor established by 42 C.F.R. § 1001.102(b)(2), that the acts for which Petitioner was convicted were committed over a period of one year or more.

11. The I.G. has shown by a preponderance of the evidence the aggravating factor established by 42 C.F.R. § 1001.102(b)(5), that the sentence imposed included incarceration.

12. Petitioner has not established by a preponderance of the evidence any of the mitigating factors that I am authorized to consider under 42 C.F.R. § 1001.102(c).

13. Petitioner's exclusion for five years is mandatory pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).

14. Exclusion of Petitioner for an additional period of 20 years, a total minimum period of exclusion of 25 years, is not unreasonable based upon the three aggravating factors in this case.

15. Petitioner's exclusion began on May 19, 2005, the twentieth day after the April 29, 2005 I.G. notice of exclusion. 42 C.F.R. § 1001.2002.

C. Issues

The Secretary of the Department of Health and Human Services (the Secretary) has by regulation limited my scope of review to two issues:

Whether there is a basis for the imposition of the exclusion; and,

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).

D. Applicable Law

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.

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation in Medicare and Medicaid programs any individual convicted of a criminal offense related to the delivery of an item or service under the Medicare or any state health care program.

Pursuant to section 1128(a)(3) of the Act, the Secretary must exclude from participation in Medicare and Medicaid programs any individual convicted of a felony criminal offense related to health care fraud that occurred after August 21, 1996, the date of enactment of HIPAA of 1996.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act shall be for a minimum period of five years. Pursuant to 42 C.F.R. § 1001.102(b), the period of exclusion may be extended based on the presence of specified aggravating factors. Only if the aggravating factors justify an exclusion of longer than five years may mitigating factors be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).

E. Analysis

1. Summary judgment is appropriate in this case.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to reasonable notice and an opportunity for a hearing. The right to hearing before an ALJ is accorded to a sanctioned party by 42 C.F.R. § 1005.2 and the rights of both the sanctioned party and the I.G. to participate in a hearing are specified in 42 C.F.R. § 1005.3. Either or both parties may choose to waive appearance at an oral hearing and to submit only documentary evidence and written argument for my consideration. 42 C.F.R. § 1005.6(b)(5). The ALJ may also resolve a case, in whole or in part, by summary judgment. 42 C.F.R. § 1005.4(b)(12). Summary judgment is appropriate and no hearing is required where either: there are no disputed issues of material fact and the only questions that must be decided involve application of law to the undisputed facts; or, the moving party must prevail as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made. A party opposing summary judgment must allege facts which, if true, would refute the facts relied upon by the moving party. See, e.g., Fed. R. Civ. P. 56(c); Garden City Medical Clinic, DAB No. 1763 (2001); Everett Rehabilitation and Medical Center, DAB No. 1628, at 3 (1997) (in-person hearing required where non-movant shows there are material facts in dispute that require testimony); Thelma Walley, DAB No. 1367 (1992); see also, New Millennium CMHC, Inc., DAB CR672 (2000); New Life Plus Center, CMHC, DAB CR700 (2000).

There are no genuine issues of material fact in dispute in this case as all the facts material to disposition of this case were admitted to by Petitioner in connection with her plea of guilty to the offenses involved or she has not disputed the evidence offered by the I.G. The sole issue in dispute before me is whether the duration of the period of exclusion proposed is unreasonable and should be reduced based upon the information Petitioner offers. This issue must be resolved against Petitioner as a matter of law, as the Secretary's regulations prohibit collateral attack of Petitioner's underlying conviction and none of the information Petitioner offers tends to show the existence of any of the mitigating factors I am authorized to consider under 42 C.F.R. § 1001.102(c). Accordingly, summary judgment is appropriate.

2. There is a basis for Petitioner's exclusion pursuant to sections 1128(a)(1) and (3) of the Act.

The I.G. cites sections 1128(a)(1) and (3) of the Act as the basis for Petitioner's mandatory exclusion. The statute provides:

(a) MANDATORY EXCLUSION. - The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):

(1) Conviction of program-related crimes. - 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.

* * * *

(3) Felony conviction relating to health care fraud. - Any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996 [footnote omitted], under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program (other than those specifically described in paragraph(1)) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Petitioner does not dispute that she was convicted of a criminal offense within the meaning of section 1128(i) of the Act. Petitioner also does not dispute that she is subject to mandatory exclusion pursuant to sections 1128(a)(1) and (3) of the Act. I do not read Petitioner's brief to be an attempt to demonstrate that she was not properly convicted. This is not the proper forum for challenging her underlying conviction and collateral attack of her underlying conviction is specifically prohibited by 42 C.F.R. § 1001.2007(d). ⁽³⁾ Rather, I construe Petitioner's argument to be that her offenses were not as egregious as one might perceive from the charges as they appeared in the superceding indictment to which she entered guilty pleas.

3. Pursuant to section 1128(c)(3)(B) of the Act, the minimum period of exclusion under section 1128(a) is five years.

Petitioner has not disputed that the minimum period of an exclusion pursuant to section 1128(a)(1) or (3) of the Act is five years as mandated by section 1128(c)(3)(B), if I determine Petitioner is subject to mandatory exclusion. I have found there is a basis for Petitioner's exclusion pursuant to sections 1128(a)(1) and (3); thus, the minimum period of her exclusion is five years. The remaining issue is whether or not it is unreasonable to extend her period of exclusion by an additional 20 years.

4. Petitioner's exclusion for five years is mandatory pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) and an additional period of exclusion of 20 years, for a total minimum period of exclusion of 25 years, is not unreasonable based upon the three aggravating factors in this case.

Petitioner requests that her 25-year exclusion be reconsidered (Petitioner's Hearing Request, P. Opp. at 9), which I construe to be a request that I reduce the period of exclusion imposed by the I.G. Petitioner argues in her brief only facts related to her underlying conviction. I find Petitioner's arguments unpersuasive. Petitioner pled guilty to the charges of which she was convicted in order to get the benefit of the plea agreement she entered. I.G. Exs. 3, 4. Presumably the federal district judge complied with Federal Rule of Criminal Procedure 11(b) and ensured that Petitioner understood her rights, that the plea was voluntary, and that there was a factual basis for the plea before he found Petitioner guilty. This is not the proper forum for review of what occurred in the trial court and Petitioner is not permitted to collaterally attack her conviction before me. 42 C.F.R. § 1001.2007(d). Thus, I conclude that Petitioner is bound by her pleas before the trial court and the nature of those charges to which she pled guilty as recorded in the official records of that court.

Petitioner does not dispute that her misconduct continued for over six years, that she caused losses to governmental agencies in excess of $1.9 million, or that she was sentenced to 51 months of incarceration. These aggravating factors are specifically recognized by 42 C.F.R. § 1001.102 and may be considered in determining whether or not the period of exclusion imposed here is unreasonable.

Section 1001.102(c) of 42 C.F.R. provides that if any of the aggravating factors justifies a period of exclusion longer than five years, then mitigating factors may be considered as a basis for reducing the period of the exclusion to no less than five years. Under 42 C.F.R. § 1001.102(c), the following factors may be considered as mitigating and a basis for reducing the period of exclusion:

(1) the individual or entity being excluded was convicted of three or fewer misdemeanor offenses, and the entire amount of financial loss to Medicare and/or the state health care programs due to the criminal acts is less than $1500;

(2) the record of the criminal proceedings shows that the court determined that the individual to be excluded had a mental, emotional, or physical condition before or during the commission of the offense that reduced his or her culpability; or,

(3) the individual or entity to be excluded cooperated with federal or state officials with the result that:

(i) others were convicted or excluded from Medicare, Medicaid, and other federal health care programs,

(ii) additional cases were investigated or reports issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or

(iii) a civil money penalty or assessment was imposed against another individual under part 1003 of this chapter.

Evidence which does not relate to an aggravating factor or a mitigating factor is irrelevant to determining the length of an exclusion. The burden is upon Petitioner to show the presence of mitigating factors. 42 C.F.R. § 1005.15; Dr. Darren James, D.P.M., DAB No. 1828 (2002). Petitioner has presented no evidence or argument that would tend to establish any of the recognized mitigating factors. Thus, the arguments Petitioner advances in her brief are irrelevant to the issue of whether the period of exclusion imposed is unreasonable.

If it were my prerogative to simply reassess the period of exclusion, I would be inclined to permanently exclude Petitioner from participation in Medicare, Medicaid, and all federal health care programs. The evidence shows she deliberately engaged in criminal acts for her own financial gain and she appears particularly untrustworthy. However, the Departmental Appeals Board (DAB) has made clear that the role of the ALJ in cases such as this is to conduct a "de novo" review as to the facts related to the basis for the exclusion and the facts related to the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102. See Joann Fletcher Cash, DAB No. 1725 (www.hhs.gov/dab/decisions/dab1725.html), n.6 (2000) (n.9 in the original decision and Westlaw�), and cases cited therein. The regulation specifies that I must determine whether the length of exclusion imposed is "unreasonable" (42 C.F.R. § 1001.2007(a)(1)). The DAB has explained that, in determining whether a period of exclusion is "unreasonable," I am to consider whether such period falls "within a reasonable range." Cash, n.6. The DAB cautions that whether I think the period of exclusion too long or too short is not the issue. I am not to substitute my judgment for that of the I.G. and may only change the period of exclusion in limited circumstances. In John (Juan) Urquijo, DAB No. 1735 (2000), the DAB made clear that if the I.G. considers an aggravating factor to extend the period of exclusion and that factor is not later shown to exist on appeal, or if the I.G. fails to consider a mitigating factor that is shown to exist, then the ALJ may make a decision as to the appropriate extension of the period of exclusion beyond the minimum. In Gary Alan Katz, R.Ph., DAB No. 1842 (2002), the DAB suggests that, when it is found that an aggravating factor considered by the I.G. is not proved before the ALJ, then some downward adjustment of the period of exclusion should be expected absent some circumstances that indicate no such adjustment is appropriate. The Katz panel did not elaborate upon the weight to be given individual aggravating factors, or how my de novo review and assessment of the weight to be given to proven aggravating factors is related to the weight the I.G. assigned those same factors.

In this case there is no question about the existence of the three aggravating factors cited by the I.G. and Petitioner has produced no evidence or argued that there are mitigating factors that were not considered. Given the nature of the aggravating factors, I have no difficulty concluding that a minimum period of exclusion of 25 years is "not unreasonable."

III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid and all federal health care programs for a minimum period of 25 years, effective May 19, 2005.

Keith W. Sickendick

Administrative Law Judge

1. Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after the period of exclusion expires. Reinstatement is not automatic upon completion of the period of exclusion.

2. Petitioner's exhibits are not marked in accordance with the Civil Remedies Division Procedures and appear to bear exhibit numbers from another case. I have not renumbered as the exhibits are readily identifiable. Petitioner did not offer exhibits with numbers 2, 3, or 5.

3. The Secretary has specifically provided a remedy in the event that an underlying conviction is reversed or vacated on appeal by a court of proper jurisdiction. See 42 C.F.R. § 1001.3005.