Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Gary Gregory, Petitioner,
- v. -
The Inspector General.
DATE: June 25, 1993
Docket No. C-92-139
Decision No. CR274
DECISION
By letter dated July 13, 1992, Gary Gregory, Petitioner herein, was notified
by the Inspector General (I.G.),
U.S. Department of Health & Human Services (HHS), that it had been decided
to exclude him for a period
of five years from participation in the Medicare program and from participation
in the the State health care
programs mentioned in section 1128(h) of the Social Security Act (Act). (I use
the term "Medicaid" in this
Decision when referring to the State programs.) The I.G. explained that an exclusion
for at least five years
was mandatory under sections 1128(a)(1) and 1128(c)(3)(B) of the Act because
Petitioner had been
convicted of a criminal offense related to the delivery of an item or service
under Medicaid.
Petitioner filed a timely request for review of the I.G.'s action, and the
I.G. moved for summary
disposition. I denied the motion because the I.G. had not shown that any of
the patients whose funds were
misapplied by Petitioner (the offense of which Petitioner was convicted) were
Medicaid recipients at the
time, or that the funds were supplied by Medicaid. I gave the I.G. the opportunity
to correct this
deficiency, and the I.G. filed another motion for summary disposition, accompanied
by a supporting brief
and exhibits.
Because I have determined that there are no material and relevant factual issues
in dispute (i.e., the only
matter to be decided is the legal significance of the undisputed facts), I have
granted the I.G.'s motion and
decide the case on the basis of written submissions in lieu of an in-person
hearing.
I affirm the I.G.'s determination to exclude Petitioner from participation
in the Medicare and Medicaid
programs for a period of five years.
Petitioner submitted one exhibit, accompanying his letter of August 31, 1992.
I have marked and
identified it as Petitioner's exhibit (P.Ex.) 1. The I.G. submitted three sets
of exhibits -- one numbered 1
through 6, one numbered 1 through 12, and one numbered 1 through 5 -- plus two
affidavits by I.G.
Program Analyst William J. Hughes and a "declaration" by Sharon E.
Thompson, a supervisor with the
Texas Department of Human Services. Also, the I.G. had marked the first two
sets incorrectly with the
docket number of another unrelated case. Consistent with my prehearing order
dated October 8, 1992, and
to dispel the confusion caused by the I.G.'s carelessness, I have corrected
the docket number markings,
renumbered some of the exhibits, and given numbers to the affidavits and the
declaration. The exhibits in
the first set, filed with the I.G.'s motion for summary disposition on November
3, 1992, are still identified
as I.G. exhibits (Ex.) 1 through 6; the Hughes affidavit of that date is identified
as I.G. Ex. 7. The exhibits
in the second set, filed with the I.G.'s motion for summary disposition on March
29, 1993, are identified as
I.G. Ex. 8 through 19; the Thompson declaration of March 27, 1993 is identified
as I.G. Ex. 20. The
exhibits in the third set, filed with the I.G.'s reply brief on May 24, 1993,
are identified as I.G. Ex. 21
through 25; the Hughes affidavit of that date is identified as I.G. Ex. 26.
I admit into evidence P. Ex. 1 and
I.G. Ex. 1 through 4, 7 through 20, and 23 through 26. In doing so, I note that
although the I.G. identified
I.G. Ex. 3 as a three-page document, the I.G. submitted only the first and third
pages. I reject I.G. Ex. 5
and 6 because they are the I.G.'s Notice letter and Petitioner's request for
hearing and are already in the
record. In my prehearing order, I directed the parties not to file such duplicative
material as exhibits. I
reject I.G. Ex. 21 and 22 because they duplicate I.G. Ex. 1 and 2.
APPLICABLE LAW
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act make it mandatory for any
individual who has been
convicted of a criminal offense related to the delivery of an item or service
under Medicare or Medicaid to
be excluded from participation in such programs, for a period of at least five
years.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. From August 21, 1989 until November 28, 1989, Petitioner was under contract
to provide
administrative (business management) services to the West Texas Care Center
(Center), Midland, Texas, a
nursing facility participating in the Medicaid program. Petitioner's brief of
April 13, 1993 at page 2; I.G.
Ex. 8 and 20.
2. In a criminal information filed October 17, 1990 in the District Court of
Midland County, Texas,
Petitioner was charged with violating his duties as a fiduciary while he was
administering the Center, by
transferring property he had a duty to protect -- the patient funds -- thereby
putting patient monies at risk.
The date of the alleged offense was November 16, 1989. I.G. Ex. 1.
3. Also on October 17, 1990, Petitioner pled nolo contendere to the charge
of Misapplication Of Fiduciary
Property. The date of the offense to which he pled was November 16, 1989. I.G.
Ex. 2.
4. In an order dated October 17, 1990, the court accepted the plea, noting
that Petitioner had stipulated to
"facts constituting a judicial confession." Pursuant to a deferred
adjudication program, the court placed
Petitioner on probation, fined him, and required him to make restitution to
Medicaid. I.G. Ex. 2 and 7.
5. When Petitioner satisfied the court that he had substantially complied with
his probation, the court
released him from all penalties and disabilities. Petitioner's letter dated
March 31, 1992, at page 2.
6. Based on Petitioner's conviction for misapplication or misuse of Medicaid-patient
trust property, the
State of Texas barred Petitioner from participation in Medicaid. I.G. Ex. 4.
7. Medicaid was paying for the care and treatment of seven of the Center's
residents whose funds
Petitioner was convicted of unlawfully misapplying. I.G. Ex. 10 - 20.
8. The funds in question were amounts which Medicaid allowed each such recipient
to retain out of their
personal income, to be used for personal needs. Id.
9. Medicaid rules required the Center to establish and maintain a system that
assures a full and complete
accounting of each resident's personal funds entrusted to the facility on the
resident's behalf, which system
must preclude any commingling of resident funds with facility funds. 42 C.F.R.
483.10(c)(4).
10. A Texas Medicaid audit revealed that, on November 16 and 24, 1989, Petitioner
wrote checks
totalling more than $17,000, drawn on residents' trust funds, and that these
checks were deposited in the
Center's own bank account. I.G. Ex. 23.
11. Petitioner was never the Center's administrator of record. I.G. Ex. 3, 23.
12. The Secretary of HHS delegated to the I.G. the authority to impose exclusions
pursuant to section 1128
of the Act. 48 Fed. Reg. 21662 (1983).
13. The court's acceptance of Petitioner's plea of nolo contendere and of the
deferred adjudication plan
satisfy the requirement that Petitioner had to have been convicted of a criminal
offense.
14. The protection by a nursing facility of funds held in trust for Medicaid
recipients who are residents of
the facility is an integral element of the delivery of health care services
under Medicaid.
15. Petitioner's conviction for criminal subversion of the Center's fiduciary
responsibilities relates to the
delivery of items or services under Medicaid, within the meaning of section
1128(a)(1) of the Act.
16. HHS is not authorized to look beyond the fact of conviction and Petitioner
may not use its
administrative proceedings to collaterally attack the criminal conviction by
seeking to show that he did not
do the act charged or that there was no criminal intent.
17. The I.G. is required to initiate an exclusion whenever the I.G. has conclusive
information that a person
has been convicted of a program-related crime; however, no deadline is imposed
on the I.G. for such
action.
18. An administrative law judge has no authority to alter the effective date
of exclusion designated by the
I.G. where the I.G. acted within the discretion afforded by statute and regulation
in setting the effective
date.
19. Neither the I.G. nor the judge is authorized to reduce the five-year minimum
mandatory period of
exclusion.
PETITIONER'S ARGUMENT
Petitioner asserts (1) that he had never pled guilty or been found guilty by
a court; (2) that the government
had no right to treat his plea of nolo contendere as a guilty plea; (3) that
the HHS I.G. did not become
involved in this process until nearly two years after the events at issue, thereby
denying him prompt justice,
and that the I.G.'s attorney improperly delayed the instant case; (4) that he
had no power of control of the
Center, but merely provided business management services for a fee; (5) that
the I.G.'s contentions that
patient and institutional funds were commingled, and that the patient funds
were personal in nature, are
untrue and inflammatory; and (6) that the patient funds were transferred solely
for the legitimate purpose of
applying them to patient obligations.
DISCUSSION
The provision of the Act under which the I.G. imposed and directed the imposition
of Petitioner's exclusion
-- section 1128(a)(1) -- contains two requirements. It requires that an individual
(1) be convicted of a
criminal offense, and (2) that such conviction be related to the delivery of
items or services under Medicare
or Medicaid.
As to the requirement that Petitioner had to have been convicted, section 1128(i)
of the Act indicates that a
person will be considered to have been "convicted" of a criminal offense
if a court enters a judgment of
conviction, or makes a formal finding of guilt, or accepts a guilty plea or
a plea of nolo contendere, or
approves a deferred adjudication plan to allow a guilty defendant who complies
with certain conditions to
preserve a clean record. In the present case, the court's acceptance of Petitioner's
nolo contendere plea and
the deferred adjudication plan satisfy the requirement of section 1128(i) of
the Act.
I next conclude that Petitioner's conviction for criminal subversion of the
Center's fiduciary responsibilities
relates to the delivery of items or services under Medicaid, within the meaning
of section 1128(a)(1) of the
Act. In Jerry L. Edmonson, DAB CR59 (1989), it was determined that the excluded
party in that case, a
nursing home administrator, also had been convicted of misapplying funds held
in a fiduciary capacity for
a Medicaid recipient who was a patient in the nursing home. The decision held
that section 1128(a)(1)
encompasses far more than just the theft of Medicaid or Medicare funds, or frauds
directed against these
programs, and that the protection of patients' funds is an integral element
of Medicaid services delivered by
nursing facilities. In the present case, as in Edmonson, unrebutted evidence
establishes that a substantial
number of patients whose funds Petitioner was convicted of misapplying were
Medicaid recipients.
Finding 7; I.G. Ex. 10 - 20.
Petitioner's arguments that he was never formally designated administrator
of record, that he did not have
the power to control the Center, that he was merely an employee, and that the
funds in question were
transferred for legitimate and proper reasons are, essentially, an attempt to
dispute the holding of the Texas
court that he was guilty of the crime of misapplication of fiduciary property.
However, it is well
established that HHS is not authorized to look beyond the fact of conviction
and Petitioner may not use its
administrative proceedings to collaterally attack his criminal conviction. Petitioner
has recourse to the
court system to rectify errors; they will not be considered here. Richard G.
Philips, D.P.M., DAB CR133
(1991); Peter J. Edmonson, DAB 1330 (1992).
Petitioner's contentions that the I.G. did not act within a reasonable time
to effect his exclusion, and that the
I.G. is delaying the instant proceeding, are without legal or factual support.
The regulations require the
I.G. to initiate an exclusion if the I.G. has conclusive information that a
person has been convicted of a
program-related crime, but no deadline is imposed for such action. 42 C.F.R.
1001.123; and see, Douglas
Schram, R.Ph., DAB 1372 (1992). Furthermore, an administrative law judge has
no authority to alter the
effective date of exclusion designated by the I.G. where the I.G. acted within
the discretion afforded by
statute and regulation in setting the effective date. Shanti Jain, M.D., DAB
1398 (1993). I find nothing in
the conduct of the I.G.'s counsel which suggests that dilatory or otherwise
improper tactics were employed.
CONCLUSION
Section 1128(a)(1) of the Act requires that Petitioner be excluded from the
Medicare and Medicaid
programs for a period of at least five years because of his conviction of a
program-related criminal offense.
Neither the I.G. nor the judge is authorized to reduce the five-year minimum
mandatory period of
exclusion. Jack W. Greene, DAB CR19 (1989). The five-year exclusion is, therefore,
sustained.
______________________________
Joseph K. Riotto
Administrative Law Judge