Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Lynn Chertkov, Petitioner,
- v. -
The Inspector General.
DATE: November 15, 1993
Docket No. C-92-148
Decision No. CR294
DECISION
The Inspector General (I.G.) of the United States Department of Health and
Human Services (DHHS)
notified Lynn Chertkov (Petitioner) by letter dated August 14, 1992 (Notice)
that she was being excluded
for a period of 10 years from participation in the Medicare program and three
federally funded State health
care programs which are identified in section 1128(h) of the Social Security
Act (Act). 1/
The I.G. informed Petitioner in the Notice that her 10-year exclusion from
the Medicare and Medicaid
programs was authorized by section 1128 of the Act and resulted from her conviction
of a criminal offense
related to the delivery of an item or service under the Maryland Medicaid program.
The I.G. informed
Petitioner that sections 1128(a)(1) and (c)(3)(B) of the Act require a minimum
five-year exclusion because
her conviction was program related. The I.G. alleged that certain aggravating
circumstances were
identified, which justified increasing her exclusion from the mandatory minimum
period of five years to a
period of 10 years.
By letter dated August 27, 1992, Petitioner timely requested a hearing before
an ALJ and the case was
assigned to ALJ Joseph K. Riotto for a hearing and a decision. The case subsequently
was reassigned to
me for a hearing and a decision. I conducted an in-person hearing in Washington,
D.C., on June 24, 1993
and the parties then submitted posthearing briefs.
I have considered the evidence of record, the parties' arguments, and the applicable
law in this case. I find
and conclude that Petitioner's exclusion for 10 years is reasonable.
ADMISSIONS
Petitioner admitted at the hearing that she was "convicted" and that
her conviction was for an offense
related to the delivery of an item or service under the Medicaid program, within
the meaning of section
1128(a)(1) of the Act. Transcript (Tr.) at 4 - 7. Although Petitioner admitted
at the prehearing conference
that she was subject to a minimum mandatory five-year exclusion, at the hearing
she withdrew that
admission. Id.
ISSUES
1. Whether Petitioner is subject to a five-year minimum mandatory exclusion
under section 1128 of the
Act.
2. Whether the regulations published on January 29, 1992 govern the disposition of this case.
3. Whether the ALJ can consider evidence about Petitioner's character and trustworthiness
in order to
determine if the length of exclusion imposed by the I.G. is remedial and not
punitive.
4. Whether the 10-year exclusion imposed by the I.G is reasonable and appropriate.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Having considered the entire record, the arguments, and the submissions of
the parties, and being advised
fully, I make the following Findings of Fact and Conclusions of Law (FFCL):
1. Petitioner is a social worker licensed to practice in the State of Maryland. Tr. at 135 - 136.
2. Petitioner and her ex-husband, Keith Wagner, owned and operated Montgomery
County Family
Life Center, Inc. (Life Center), and its subsidiary, which traded under the
name of Oak Leaf Center, Inc.
(Oak Leaf). I.G. Exhibit (Ex.) 2, 13.
3. Oak Leaf, a licensed day care center, applied for and received provider
status in the Maryland
Medical Assistance program, which is a State health care program established
pursuant to Title XIX of the
Act (Medicaid), 42 U.S.C. 1396a - 1396u. I.G. Ex. 2 at 1 - 2; I.G. Ex. 13 at
1 - 2.
4. Oak Leaf, through its provider application and numerous invoices, represented
that it provided
group and individual psychiatric therapy to Medicaid recipients by or under
the direct supervision of a
licensed psychiatrist. I.G. Ex. 13 at 2.
5. Medicaid pays for group and individual psychiatric therapy if it is medically
necessary and is
provided by or under the direct supervision of a licensed psychiatrist. The
provider is required to keep
contemporaneous notes of the therapy services and to make them available to
Medicaid upon request.
Medicaid does not pay for day care. I.G. Ex. 13 at 2.
6. Oak Leaf submitted bills to the Maryland Department of Health and Mental
Hygiene (DHMH) for
psychiatric therapy provided to Medicaid recipients during the period from January
1, 1986 through May
24, 1990. I.G. Ex. 1 at 2; I.G. Ex. 2 at 2; Tr. at 16 - 17.
7. DHMH paid Oak Leaf approximately $1.6 million for psychiatric therapy services
provided
during the period from January 1, 1986 through May 24, 1990. Id.
8. At all times relevant, Petitioner made significant financial decisions and
made or supervised all
decisions and operations regarding the appropriate charges for Oak Leaf's services
and the billing of third-
party insurers, including Medicaid. I.G. Ex. 2 at 3; I.G. Ex. 13.
9. In February 1989, DHMH requested that Oak Leaf submit copies of its notes
substantiating the
therapy sessions Oak Leaf represented that it had provided to 26 Medicaid recipients
and for which Oak
Leaf had claimed reimbursement for services purportedly provided during the
period starting January 1,
1986. Oak Leaf submitted the requested records. I.G. Ex. 13 at 3; I.G. Ex. 2.
10. Beginning in 1989, Petitioner directed and participated in a treatment
note reconstruction scheme
in response to DHMH's investigation into Oak Leaf's Medicaid billing practices
during the period starting
January 1, 1986. I.G. Ex. 2.
11. Petitioner was charged by the State of Maryland with Medicaid fraud, and
on March 21, 1991,
Petitioner agreed to plead guilty to one count of Medicaid fraud, under Maryland
Annotated Code article
27, 230B(b)(1), 230(C), 230(D)(b) (1988 and Supp.) and to enter an Alford plea
to one count of common
law conspiracy to commit Medicaid fraud, with each count charged by criminal
information. I.G. Ex. 1, 3,
4.
12. As a condition to Petitioner's agreement to plead guilty, she entered guilty
pleas also on behalf of
the Life Center. I.G. Ex. 7 at 3.
13. On April 25, 1991, Petitioner entered guilty pleas in the Circuit Court
of Montgomery County for
the State of Maryland and a judgment of conviction was entered. I.G. Ex. 4.
14. Petitioner was sentenced to incarceration of three years on each count,
with all time suspended
except for 179 days, which would be served through home detention. Petitioner
was sentenced also to five
years' probation and ordered to perform 1500 hours of community service. I.G.
Ex. 4.
15. Petitioner was convicted of a criminal offense related to the delivery
of an item or service under
Medicaid, within the meaning of section 1128(a)(1) of the Act. FFCL 11, 13 -
14; Act, section 1128(a)(1).
16. The Secretary of DHHS (Secretary) has delegated to the I.G. the authority
to determine, impose,
and direct exclusions pursuant to section 1128 of the Act. 48 Fed. Reg. 21,662
(1983).
17. The I.G. had authority to impose and direct an exclusion against Petitioner
pursuant to section
1128(a)(1) of the Act.
18. The regulations published on January 29, 1992 establish criteria to be
used by the I.G. in
determining to impose and direct exclusions pursuant to sections 1128(a) and
(b) of the Act. 42 C.F.R.
Part 1001 (1992).
19. On January 22, 1993, the Secretary published a regulation (1993 Amendment)
which directs that
the criteria to be used by the I.G. in determining to impose and direct exclusions
pursuant to sections
1128(a) and (b) of the Act are binding also upon administrative law judges,
appellate panels of the
Departmental Appeals Board (DAB), and federal courts in reviewing the imposition
of exclusions by the
I.G. 42 C.F.R. 1001.1(b); 58 Fed. Reg. 5617, 5618 (1993).
20. By letter dated August 14, 1992, the I.G. notified Petitioner that she
was being excluded from
participation in the Medicare and any State health care programs for a period
of 10 years.
21. My adjudication of the length of the exclusion in this case is governed
by the criteria contained in
42 C.F.R. 1001.102.
22. I do not have authority to change the effective date of the exclusion. Act, section 1128.
23. An exclusion imposed pursuant to section 1128(a)(1) of the Act must be
for a period of at least
five years. Act, sections 1128(a)(1), 1128(c)(3)(B); 42 C.F.R. 1001.102.
24. An exclusion imposed pursuant to section 1128(a)(1) of the Act may be for
a period in excess of
five years if there exist aggravating factors which are not offset by mitigating
factors. 42 C.F.R.
1001.102.
25. Aggravating factors which may form a basis for imposing an exclusion in
excess of five years
against a party pursuant to section 1128(a)(1) of the Act may consist of any
of the following:
a. The acts resulting in a party's conviction, or similar acts, resulted in
financial loss to Medicare
or Medicaid of $1500 or more.
b. The acts that resulted in a party's conviction, or similar acts, were committed
over a period of
one year or more.
c. The acts that resulted in a party's conviction, or similar acts, had a
significant adverse physical,
mental, or financial impact on one of more program beneficiaries or other individuals.
d. The sentence which a court imposed on a party for the above-mentioned conviction
included a
period of incarceration.
e. The convicted party has a prior criminal, civil, or administrative sanction record.
f. The convicted party was overpaid a total of $1500 or more by Medicare or
Medicaid as a result
of improper billings.
42 C.F.R. 1001.102(b)(1) - (6) (paraphrase).
26. Mitigating factors which may offset the presence of aggravating factors
may consist of only the
following:
a. A party has been convicted of three or fewer misdemeanor offenses, and
the entire amount of
financial loss to Medicare and Medicaid due to the acts which resulted in the
party's conviction and similar
acts, is less than $1500.
b. The record in the criminal proceedings, including sentencing documents,
demonstrates that the
court determined that, before or during the commission of the offense, the party
had a mental, emotional,
or physical condition that reduced that party's culpability.
c. The party's cooperation with federal or State officials resulted in others
being convicted of
crimes, or in others being excluded from Medicare or Medicaid, or in others
having imposed against them
a civil money penalty or assessment.
42 C.F.R. 1001.102(c)(1) - (3) (paraphrase).
27. Petitioner was convicted of fraudulently submitting false Medicaid bills
of at least $337,000 for
services not provided or not provided as claimed, of which amount $76,000 was
due to improper Medicaid
billings for Petitioner's two adopted children. I.G. Ex. 13.
28. The acts which resulted in Petitioner's conviction resulted in overpayments
by Medicaid and
financial loss to Medicaid of $1500 or more, which is an aggravating factor
that justifies excluding
Petitioner for more than five years. 42 C.F.R. 1001.102(b)(1), (6).
29. The acts which resulted in Petitioner's conviction occurred during the
period from January 1986 to
May 1990, which is an aggravating factor that justifies excluding Petitioner
for more than five years. 42
C.F.R. 1001.102(b)(2).
30. The acts which resulted in Petitioner's conviction had a significant adverse
financial impact on the
Maryland taxpayers, which is an aggravating factor that justifies excluding
Petitioner for more than five
years. 42 C.F.R. 1001.101(b)(3).
31. Petitioner's sentence to a period of incarceration of two concurrent three-year
terms -- even though
all was suspended except for 179 days which was to be served through home detention
-- is an aggravating
factor that justifies excluding Petitioner for more than five years. 42 C.F.R.
1001.102(b)(4).
32. The aggravating factors present in this case establish that Petitioner
engaged in conduct which
jeopardized the integrity of federally financed health care programs and which
jeopardized the well-being
and safety of program beneficiaries and recipients. FFCL 28 - 31.
33. Petitioner has not shown by a preponderance of the evidence that her cooperation
resulted in
others being convicted or excluded, within the meaning of section 1001.102(c)(3).
34. Petitioner did not prove the presence of any mitigating factors under 42 C.F.R. 1001.102.
35. In the absence of any offsetting mitigating factor, the aggravating factors
present in this case
establish Petitioner as a threat to the integrity of federally financed health
care programs and to the well-
being and safety of program beneficiaries and recipients.
36. In the absence of any offsetting mitigating factor, the significant aggravating
factors present in
this case justify excluding Petitioner for 10 years. 42 C.F.R. 1001.102(b)(1)
- (6).
37. Petitioner is an unfit health care provider.
38. A lengthy exclusion is needed in this case to satisfy the remedial purposes
of the Act and to
protect the Medicare and Medicaid programs from an unfit medical provider.
39. The 10-year exclusion imposed and directed against Petitioner by the I.G.
is reasonable. FFCL 1 -
38.
DISCUSSION
Petitioner admitted that she was convicted of a crime related to the Medicaid
program, within the meaning
of section 1128(a)(1) of the Act. However, she argues that she is not subject
to a five-year minimum
mandatory exclusion under sections 1128(a)(1) and (c)(3)(B) of the Act. Tr.
at 4 - 7. She argues also that
the I.G. did not prove the aggravating circumstances alleged and that she proved
the presence of mitigating
circumstances that require a reduction of the 10-year exclusion imposed by the
I.G. Finally, she argues
that the January 1992 regulations do not apply to her case. Petitioner's Posthearing
Brief (P. Br.) at 1 n.1, 1
- 2, 5.
I. By reason of federal law and regulations, Petitioner must be excluded for
a minimum period of five
years.
Sections 1128(a)(1) and (c)(3)(B) of the Act mandate that a petitioner be excluded
from the Medicare and
Medicaid programs for a minimum period of five years if the I.G. proves that
such petitioner was (1)
"convicted" of a criminal offense which was (2) "related to the
delivery of an item or service" under
Medicare or Medicaid.
Petitioner admitted at the in-person hearing that she was convicted of Medicaid
fraud. Tr. at 4 - 7. Also,
the I.G. proved the material facts required by section 1128(a)(1) of the Act
through the documentary
evidence submitted in support of her case and the testimony of Steven Capobianco
and Carolyn McElroy,
the State officials who investigated and prosecuted Petitioner. Tr. at 15 -
87, 143 - 164. Petitioner pled
guilty in the Circuit Court for Montgomery County for the State of Maryland
of one count of Medicaid
fraud and one count of common law conspiracy to commit Medicaid fraud. I.G.
Ex. 1 - 4. The pleas were
accepted and judgment was entered on April 25, 1991. I.G. Ex. 4. This is a conviction
as defined by
section 1128(i) of the Act and the conviction was program related. Jack W. Greene,
DAB 1078, at 7
(1989), aff'd sub. nom. Greene v. Sullivan, 731 F. Supp. 835, 838 (E.D. Tenn.
1990); Charles W. Wheeler,
DAB 1123 (1990).
Petitioner argues erroneously that since her conviction predates the issuance
of the January 1992
regulations on January 29, 1992, there can be no minimum mandatory five-year
exclusion. P. Br. 1 n.1.
Section 1128 of the Act required a five-year minimum mandatory period of exclusion
long before
Petitioner's exclusion. Wheeler. Accordingly, section 1128 requires at least
a five-year exclusion in this
case. DeWayne Franzen, DAB 1165 (1990). 2/ 3/
II. The regulations published on January 29, 1992 do govern the disposition
of this case.
On January 29, 1992, the Secretary published regulations which effect both
procedural and substantive
changes with respect to section 1128(a)(1) exclusion cases. 42 C.F.R. Parts
1001 - 1007; 57 Fed. Reg.
3298 - 3358. Petitioner argues that the regulations do not apply to this case.
P. Br. 1 n.1.
An appellate panel of the DAB has held that the regulations issued by the Secretary
of DHHS do not apply
to cases where the I.G.'s Notice was issued prior to January 29, 1992. Behrooz
Bassim, M.D., DAB 1333,
at 5 - 9 (1992). However, the regulations do apply in this case because the
I.G.'s exclusion Notice was
issued after the effective date of the regulations.
III. Several factors are relevant in determining whether the 10-year exclusion
imposed by the I.G. is
reasonable.
In order to determine the reasonableness of an exclusion imposed under the
authority of section 1128 of the
Act, I must look at the purpose of section 1128, its language, the purpose and
language of the regulations,
and applicable case law.
Section 1128 of the Act is a civil statute designed to protect government financed
health care programs
from fraud and abuse by providers and to protect the beneficiaries and recipients
of these programs from
incompetence and dishonesty. 4/ An exclusion is also a deterrent to future misdeeds.
However, Congress
did not intend that exclusions from the Medicare and Medicaid programs be permanent;
transgressors are
meant to have an opportunity to rehabilitate themselves. Michelle Donaldson,
D.P.M., DAB CR234, at 5
(1992).
The stated purpose of the regulations is "to protect program beneficiaries
from unfit health care
practitioners, and otherwise to improve the anti-fraud provisions of the Department's
health care programs
. . . ." 57 Fed. Reg. 3298. Section 1128 hearings are de novo and not appellate
hearings. Bernardo G.
Bilang, M.D., DAB 1295 (1992); Eric Kranz, M.D., DAB 1286 (1991). Both the I.G.
and Petitioner agree
with this proposition. I.G. Br. at 3; P. Br. at 2 - 3.
The I.G. has the burden of proof and must establish the reasonableness of the
length of the exclusion
imposed by a preponderance of the evidence. A petitioner has the right to present
rebuttal evidence and the
burden of proving his or her allegations of why an exclusion should be reduced
by a preponderance of the
evidence.
A. The standard used by ALJs and appellate panels of the DAB to determine the
length of section
1128 exclusions in cases where the I.G.'s exclusion notice was issued prior
to January 29, 1992.
In 1992, a DAB appellate panel upheld an ALJ's finding that several factors
relating to a petitioner's
trustworthiness and character were relevant to the remedial purpose of section
1128 of the Act and that a
petitioner could present evidence supporting his or her trustworthiness in order
to reduce the length of
exclusion imposed by the I.G. Robert Matesic, R.Ph., d/b/a Northway Pharmacy,
DAB CR158 (1991),
aff'd, DAB 1327, at 7 - 8, 12 (1992).
This affirmance was consistent with other ALJs' decisions on the question of
relevant evidence that would
be considered and the way that evidence would be used as a standard to measure
the reasonableness of the
length of an exclusion imposed by the I.G. See Donaldson at 5 - 6, citing Bhupandra
Patel, M.D., DAB
CR227 (1992), aff'd, DAB 1370 (1992); Charles J. Burks, M.D., DAB CR54, at 8
- 9 (1989); Arthur V.
Brown, M.D., DAB CR226, at 9 (1992). All decisions issued by DAB ALJs had been
consistent with the
ruling in Matesic until recently.
B. The impact of the 1993 Amendment to the regulations is to cause a departure
from Matesic.
Decisions issued by ALJs in section 1128 cases have recently departed from
the appellate panel's decision
in Matesic because on January 22, 1993, the Secretary published an amendment
to the January 29, 1992
regulations. 58 Fed. Reg. 5617, 5618 (42 C.F.R. 1001.1(b)). The 1993 Amendment
provides that ALJs
are bound by the exclusion provisions in 42 C.F.R. Part 1001 of the regulations
in reviewing all exclusions
imposed by the I.G. For example, section 1001.102(c) of the regulations departs
from Matesic
dramatically because it prohibits an ALJ from considering any mitigating factors,
except those enumerated
in the regulations.
Thus, the 1993 Amendment appears to: (1) change case law concerning the issue
of what evidence is
relevant in determining the reasonableness of the length of an exclusion imposed
by the I.G. and (2)
prevent ALJs from considering the full range of evidence concerning character
and trustworthiness of a
petitioner.
C. The evidence that can be considered relevant in this case and the standard
that can be used to
determine the reasonableness of the length of the exclusion imposed by the I.G.
is now different.
Section 1001.102 of the regulations provides that the only relevant evidence
to determine the
reasonableness of Petitioner's 10-year exclusion is evidence of those aggravating
or mitigating
circumstances enumerated in section 1001.102 of the regulations. See John M.
Thomas, Jr., M.D. et al.,
DAB CR281 (1993). Petitioner argues that I should consider evidence of her character
and trustworthiness
in order to reduce the length of her exclusion. P. Br. at 2. The I.G. argues
that I must consider evidence
only of the aggravating and mitigating circumstances enumerated in section 1001.102
of the regulations.
I.G. Br. at 5 and n.6. The I.G. is correct and I stated so in my May 14, 1993
Prehearing Order.
Petitioner argues that once the parties have proved the aggravating or mitigating
circumstances alleged, the
ALJ is given absolutely no standards or criteria by which to measure the appropriate
length of an exclusion
by the statute or the regulations. P. Br. at 3. Petitioner argues that the regulations
do not require the ALJ
to increase her exclusion beyond five years, but state that the ALJ "may"
consider the aggravating factors
as a basis to increase the exclusion beyond five years. Id. Petitioner argues
that common sense dictates
that I should consider other evidence after I have looked at the aggravating
and mitigating circumstances;
she argues that a narrow review "would result in merely rubber stamping"
the I.G.'s determinations. Id.
I agree with Petitioner only partially. I agree that section 1001.102 of the
regulations gives an ALJ a great
deal of discretion. For example, assume a case under section 1128(a)(1) of the
Act in which the I.G.
proves the aggravating circumstances alleged; petitioner proves one mitigating
factor that the I.G. failed to
consider; and the ALJ finds the exclusion imposed by the I.G. to be unreasonable.
There is nothing in the
regulations specifically indicating how the ALJ is to arrive at an appropriate
length of exclusion beyond the
five-year minimum mandatory term. In this instance, the ALJ is given discretion
under section 1001.102
of the regulations, but arguably no authority to consider any evidence of character
or trustworthiness
outside of the aggravating and mitigating factors listed. I do not agree with
Petitioner that my authority to
review the I.G.'s administrative action and my authority to impose a proper
exclusion in this case is
"worthless" as argued (P. Br. at 2) because there is considerable
evidence of character and trustworthiness
that I may consider solely by reason of the listed aggravating and mitigating
factors that section 1001.102
allows me to analyze.
In another example, assume that the I.G. proves all the aggravating circumstances
alleged and petitioner
fails to prove any mitigating circumstances; the regulations are silent as to
whether the ALJ must uphold
the length of the exclusion imposed by the I.G. or whether the ALJ has unbridled
discretion and authority
to reduce the length of the exclusion down to the minimum period of five years.
In the Thomas case, Judge Kessel recently reduced a section 1128(a)(1) 10-year
exclusion down to five
years. In doing so, he held that, while the regulations restrict his review
to those specific factors listed in
section 1001.102 and while these factors may not be as complete as those factors
enumerated in Matesic,
he must still assign specific weight to those factors and must still decide
whether an exclusion is
reasonable. He concluded, in effect, that his de novo consideration of the I.G.'s
action, while not nearly as
complete as a review using the Matesic factors, did continue to include his
analysis of evidence which was
relevant under the regulations, in accord with the Act's remedial purpose. He
held that the regulations read
together with section 1128 of the Act provide ascertainable standards for adjudicating
the length of
exclusions. I agree with Judge Kessel that the parties may present evidence
to explain the aggravating and
mitigating factors listed in the regulations and that the Act and regulations
provide ascertainable standards
for adjudicating the length of exclusions.
In sum, in applying the present standard for adjudicating a reasonable length
of exclusion, an ALJ must
assign specific weight to the evidence concerning aggravating and mitigating
factors listed in section
1001.102 of the regulations, keeping in mind that the purpose of section 1128
is remedial and that the
purpose of the regulations is to protect program beneficiaries from unfit or
fraudulent medical providers.
IV. The remedial purpose of the Act is satisfied in this case by a 10-year exclusion.
There should be an exclusion of greater than five years in this case because
the I.G. proved five out of the
six aggravating circumstances listed in section 1001.102 of the regulations.
The record demonstrates that
these aggravating factors had a substantial deleterious effect on the Maryland
Medicaid program.
Furthermore, there were no mitigating circumstances proven by Petitioner that
warrant a reduction in her
exclusion of 10 years.
A. There are significant aggravating factors.
The five aggravating factors proven by the I.G. are serious and establish that
Petitioner seriously harmed
the Maryland Medicaid program and is unfit as a health care provider. While
the I.G. noted only three of
these factors in the exclusion Notice, I permitted the I.G. to submit evidence
concerning the additional two
factors (section 1001.102(b)(3) and (6)) because this is a de novo proceeding
and Petitioner was not
prejudiced; as early as March 2, 1993 she had notice of the I.G.'s intent to
prove these additional
aggravating factors. See I.G. supplemental brief on the effect of the regulations
published on January 22,
1993; 42 C.F.R. 1005.15(f).
The first aggravating factor proven by the I. G. is that Petitioner was convicted
of fraudulently submitting
false Medicaid bills of at least $337,000, of which $76,000 was due to improper
Medicaid billings for
Petitioner's two adopted children. 42 C.F.R. 1001.101(1); FFCL 25 - 27. This
was one of the worst
losses to the Maryland Medicaid program. I.G. Ex. 5. Petitioner was president,
owner, administrator,
manager, and member of the board of Oak Leaf and its parent corporation. I.G.
Ex. 2, 3; Tr. at 114 - 115.
The second aggravating factor is that the acts which resulted in Petitioner's
conviction occurred during the
period from January 1986 to May 1990, over four years, a very long time. 42
C.F.R. 1001.102(b)(2);
FFCL 25 - 28.
Third, Petitioner's acts were not just some simple oversights; they were acts
of serious fraud. The State
court judge thought so too. Petitioner was sentenced to a period of incarceration
of two concurrent three-
year terms -- even though all was suspended except for 179 days which was to
be served through home
detention. 42 C.F.R. 1001.102(b)(4); FFCL 25 - 28.
Fourth, Petitioner was overpaid more than $1500 as a result of the improper
billings. 42 C.F.R.
1001.102(b)(6).
Finally, Petitioner's actions had a significant adverse financial impact on
the taxpayers of Maryland
because those taxpayers paid at least $337,000 to Petitioner for fraudulent
services. 42 C.F.R.
1001.102(b)(3).
The evidence in the record overwhelmingly demonstrates the existence of the
serious aggravating factors
described above. Petitioner attempted to rebut this evidence by testifying that
she had very little
involvement in the fraudulent billing scheme for which she was convicted. Petitioner
admitted to a "record
recreation," but argues that this wasn't wrongdoing. P. Br. at 8 n.5. She
admitted, also, the improper
billing with regard to the "Yost account". P. Br. at 8. However, she
argues that, even though she
participated in billing Medicaid for at least $1.6 million, she never benefitted
from any of the monies
received. Id. She argues also that the I.G. did not prove that the financial
loss to Medicaid was over
$1,500. Id. at 9. She testified that she was to date unaware of the law regarding
what services Medicaid
reimburses. Tr. at 126 - 127.
When Petitioner pled guilty, she agreed to the amounts stated in the plea agreement.
The documentary
evidence, such as the State court findings and the testimony of the State officials
who investigated and
prosecuted Petitioner (Mr. Capobianco and Ms. McElroy) establish Petitioner's
involvement in the
fraudulent billing scheme and reconstruction of the treatment record, even had
she not admitted to that
wrongful act. P. Br. at 8; see also, I.G. Br. at 7 n.10.
The testimony of the I.G.'s witnesses, corroborated by the documentary evidence
of record in this case, is
more credible than Petitioner's testimony, which was no more than a series of
self-serving statements. Tr.
at 126 - 129, 144 - 146. Despite able counsel on her behalf, Petitioner was
unsuccessful in her attempt to
establish that others were really to blame for what happened and that she was
a minor player in a game of
defrauding the Medicaid program. I did not find Petitioner's claims of reduced
culpability credible. I
found Petitioner's testimony hard to believe and inconsistent with the documentary
evidence, such as the
criminal information, the agreed statement of facts in the criminal case, the
March 21, 1991 plea
agreement, the plea acceptance, and related docket entries in the criminal case
against Petitioner. I.G. Ex. 1
- 4 and 12 - 15.
Petitioner argues that there was nothing about her testimony or demeanor that
should lead me to conclude
that she was less than candid. P. Br. at 8. I disagree. When Ms. McElroy was
recalled as a witness, she
testified that three individuals (Keith Wagner (Petitioner's ex-husband), Jane
Margolious, and Margaret
Riggs) would have been witnesses in the criminal proceeding against Petitioner
if she had not pled guilty.
Tr. at 157-165. These three individuals stated that Petitioner knew everything
about the billing and that if
there was a question about anything, they went to Petitioner. Id. Ms. McElroy
testified also that Keith
Wagner and Petitioner were both the "master minds" of the fraudulent
billing scheme "together". Tr. at
159. Petitioner pled guilty to this fraudulent billing scheme which was one
of the largest losses to the
Maryland Medicaid program. I.G. Ex. 5. Her attempt to distance herself from
that plea and all of the facts
that she agreed to in the criminal proceedings which evidence the fraud is not
convincing. The record
establishes firmly Petitioner's guilt in this grand scheme of fraud and deception.
FFCL 1 - 39; Tr. at 16 -
28, 76 - 77, 110, 157 - 159.
The five aggravating factors, which are established by a preponderance of the
evidence, justify excluding
Petitioner for at least 10 years. Moreover, the three aggravating factors identified
in the I.G.'s Notice are
sufficiently serious enough to warrant a 10-year exclusion in this case, without
the presence of the two
additional aggravating factors proven. However, the I.G. proved two additional
aggravating factors which
firmly establish that the I.G.'s exclusion is reasonable. Thus, the aggravating
factors present in this case
establish that Petitioner engaged in conduct which significantly injured the
integrity of the Maryland
Medicaid program, a federally financed health care program.
B. There are no mitigating factors.
Petitioner argues that she cooperated with State officials and that her cooperation
led to the conviction of
her corporation, Life Center, and of her ex-husband, Keith Wagner. Tr. at 113
- 115; P. Ex. 3 at 9. She
argues that her cooperation is a mitigating factor as described in 42 C.F.R.
1001.102(c)(3). Petitioner
testified that the State would not have allowed Mr. Wagner to plead guilty unless
both she and the
corporation pled guilty. Rather, the evidence in the record indicates that Mr.
Wagner's cooperation formed
the basis for Petitioner's conviction. Tr. at 28 - 30, 143 - 149. Petitioner's
actions were not really
cooperation within the meaning of section 1001.102(c)(3).
At the hearing, Petitioner testified that Mr. Wagner had communicated to her
that he was fearful of going
to jail and that in order for his plea to be accepted, Petitioner had to plead
guilty. Tr. at 114. Petitioner
stated also that she was told that, in order for her to enter a plea of guilty,
she had to allow the corporation
to plead guilty and agree not to contest the restitution figure that the State
alleged was owed by Life
Center. Tr. at 115.
Mr. Capobianco testified that Petitioner's plea of guilty was due to Mr. Wagner's
agreement to plead guilty
and to testify against Petitioner. Tr. at 30. The witness testified also that
Petitioner authorized the
corporation (Life Center) to plead guilty. Id. However, Mr. Capobianco stated
that Petitioner did not
provide the I.G.'s office with any evidence that was needed to convict Mr. Wagner,
the Life Center, or any
other offender. Id.
Carolyn McElroy, Deputy Director of the Maryland Medicaid Fraud Unit, testified
that Petitioner's plea of
guilty did not facilitate the subsequent conviction or Mr. Wagner and the Life
Center. Tr. at 144. Ms.
McElroy stated that her office attempted to negotiate pleas with Petitioner,
Mr. Wagner, and the Life
Center at the same time in early 1990. Since Petitioner and Wagner were married
at the time, under
Maryland law, neither spouse could have been required to testify against the
other. Id. Both Petitioner and
Wagner were offered the opportunity to waive their spousal privileges and testify
against the other. If their
spousal privilege was not waived, then Ms. McElroy's office would have required
that all of the plea
agreements come in at the same time. Id. In March, Mr. Wagner agreed to testify
against Petitioner, and
on March 4, 1991, he executed his plea agreement. Tr. at 145. Petitioner's plea
agreement was executed
three weeks later. Id. Ms. McElroy testified further that Petitioner did not
speak to her office before she
signed the plea agreement, so no evidence or testimony from Petitioner assisted
the investigation. Tr. at
146. Ms. McElroy did indicate that both Life Center's and Petitioner's plea
were required at the same time,
and that if Petitioner did not authorize the corporate plea, Petitioner's plea
would not have been accepted.
Id.
I find the testimony of the I.G.'s witnesses to be credible. Petitioner's actions
were not really cooperation
within the meaning of section 1001.102(c)(3). Accordingly, Petitioner did not
prove the presence of any
mitigating factors under section 1001.102(c) of the regulations. Even if Petitioner
did prove cooperation as
she alleged, it was not significant enough to reduce the 10 year exclusion imposed
by the I. G. in this case.
5/
Accordingly, in the absence of any offsetting mitigating factors, the aggravating
factors present in this case
establish that Petitioner's 10 year exclusion is reasonable because she is a
threat to the integrity of federally
financed health care programs. This makes her an unfit health care provider.
A lengthy exclusion is
needed in this case to satisfy the remedial purposes of the Act. The 10-year
exclusion imposed and
directed against Petitioner by the I.G. must stand. FFCL 1 - 39.
CONCLUSION
Based on the law and the evidence, I conclude that Petitioner's 10-year exclusion
is reasonable and must
stand.
It is so Ordered.
____________________________
Charles E. Stratton
Administrative Law Judge
1. Section 1128(h) of the Act enumerates three State health care programs that
receive federal funds,
such as the Medicaid program. Unless indicated otherwise, I use the term "Medicaid"
to represent all three
of the State health care programs from which Petitioner was excluded.
2. Section 1128(c)(3)(B) of the Act provides for a waiver, upon the request
of a State, where a petitioner
is the "sole community physician" or "sole source of specialized
services in a community." I am not aware
of any request for a waiver by a State in this case.
3. I noted at the hearing that the I.G. has taken the position in other cases
that while a federal exclusion
prevents a petitioner from submitting claims for reimbursement to Medicare and
Medicaid, a petitioner
may continue to treat Medicare and Medicaid patients free of charge (so long
as the conviction did not
relate to patient abuse or neglect). The I.G. agreed. Tr. 155 - 156.
4. Congress enacted the exclusion law to protect the integrity of federally
funded health care
programs. Among other things, the law is designed to protect program beneficiaries
and recipients from
individuals who have demonstrated by their behavior that they threaten the integrity
of the programs or that
they can not be entrusted with the well-being and safety of beneficiaries and
recipients. See S. Rep. No.
109, 100th Cong., 1st Sess. 1 (1987), reprinted in 1987 U.S.C.C.A.N. 682.
5. This result is unfortunate because it appears that Petitioner is considered
to be a talented social worker
and that her work with children and families will be missed by some. See P.
Ex. 2-14. However, it is the
I.G.'s position that Petitioner can work as a volunteer providing health care
as long as Medicare or
Medicaid is not billed for her services. Tr. at 155-156.