SUBJECT:

Paulette White Jackson,

Petitioner,

The Inspector General

DECISION

I sustain the Inspector General's (I.G.) decision to exclude Paulette White Jackson (Petitioner) from participating in Medicare, Medicaid, and all other federal health care programs, as defined in section 1128B(f) of the Social Security Act (Act). I decide, however, that the six-year exclusion imposed by the I.G. is not reasonable. I decide that a four-year exclusion is reasonable.

I. Background

By letter dated September 30, 2002, the I.G. notified Petitioner that she was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a minimum period of six years pursuant to section 1128(b)(1) of the Act, 42 U.S.C. § 1320a-7(b)(1). By letter dated October 14, 2002, Petitioner requested review of her six-year exclusion. I convened a telephone conference on January 31, 2003. Present during the conference were Sean R. McKenna, Esq., representing the I.G., and Rena L. Hester, Esq., representing Petitioner. During the telephone conference, the parties agreed that an in-person hearing would be unnecessary and that the case could proceed based on briefs and documentary evidence. I established a briefing schedule.

Thereafter, on March 31, 2003, the I.G. filed The Inspector General's Motion for Summary Disposition and Brief in Support (I.G. Br.). With its brief, the I.G. submitted eight proposed exhibits, I.G. Exhibits (Ex.) 1-8. On May 30, 2003, Petitioner filed Petitioner's Brief in Opposition to the Inspector General's Motion for Summary Disposition (P. Br.). With its brief, Petitioner submitted six proposed exhibits, Petitioner's Exhibits (P. Ex.) 1-6. On June 27, 2003, the I.G. filed The Inspector General's Reply to Petitioner's Response. Although given an opportunity to file a surreply, Petitioner did not. Neither party objected to the admission of the party-opponent's proposed exhibits. Therefore, I have admitted all proposed exhibits into the record.

After I reviewed the briefs and exhibits, I determined to reopen the record to obtain a copy of the presentence report in Petitioner's criminal case. ⁽¹⁾ See letter of July 31, 2003, sent at my direction to Ms. Hester. The requested report was submitted on August 9, 2003. Neither party objected to its admission, and I have marked it as Administrative Law Judge (ALJ) Ex. 1 and admitted it into the record. The record was then closed on September 15, 2003.

II. Legal Authority

Section 1128(b) of the Act authorizes the Secretary of Heath and Human Services to exclude certain individuals and entities from participating in Medicare, Medicaid, and all other federal health care programs, as defined in section 1128B(f) of the Act. 42 U.S.C. § 1320a-7(b). Specifically, section 1128(b)(1)(B) of the Act authorizes the exclusion of any individual or entity that has been convicted of an offense that occurred after August 21, 1996, under federal or State law relating to:

. . . fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct with respect to any act or omission in a program (other than a health care program) operated by or financed in whole or in part by any federal, State, or local government agency.

42 U.S.C. § 1320a-7(b)(1)(B).

An exclusion imposed under this section of the permissive exclusion provisions (section 1128(b)(1) of the Act) will be for a period of three years unless specified aggravating or mitigating factors are present which could be used to lengthen or shorten the three-year period. Act, section 1128(c)(3)(D); 42 C.F.R. § 1001.201(b)(1).

Aggravating factors are limited to situations where: (1) the acts resulting in the conviction resulted in a financial loss of $5,000 or more to a government program or other entity; (2) the acts resulting in the conviction were committed over a period of one year or more; (3) the acts resulting in the conviction had a significant adverse physical or mental impact on one or more individuals; (4) the sentence imposed included incarceration; (5) the individual or entity has a documented history of criminal, civil or administrative wrongdoing; or (6) the excluded individual or entity was convicted of other offenses or was the subject of other adverse action by a government agency or board based on the same set of circumstances that served as the basis for the exclusion. 42 C.F.R. § 1001.201(b)(2)(i)-(vi).

Only the following factors may be considered as mitigating and a basis for reducing the period of exclusion: (1) the individual was convicted of three or fewer offenses and the entire amount of the financial loss was less than $1,500; (2) the record in the criminal proceedings demonstrates that the court determined the individual had a mental, emotional or physical condition, before or during the commission of the offense, that reduced the individual's culpability; (3) the excluded individual's cooperation with federal or State authorities resulted in others being convicted or excluded from federal health care programs or additional cases being investigated or reports issued or civil money penalties against others; and (4) alternative sources of health care items or services furnished by the individual or entity are not available. 42 C.F.R. § 1001.201(b)(3)(i)-(iv).

Whether an individual has been "convicted" for purposes of exclusion under section 1128(b)(1) of the Act is answered by the Act and the regulations. A conviction occurs when, inter alia, an individual's or entity's plea of guilty or nolo contendere has been accepted by a federal, State, or local court. Act, section 1128(i)(3); 42 U.S.C. § 1320a-7(i)(3).

III. The Parties' Arguments

A. The I.G.'s Initial Arguments.

In her brief, the I.G. made the following arguments:

•Petitioner was convicted as conviction is defined in the Act.

•The applicable regulation calls for a three-year exclusion absent aggravating and mitigating factors.

•There are two applicable aggravating factors and no mitigating factors present in this case.

•Given these circumstances, the proposed six-year exclusion is within a reasonable range.

B. Petitioner's Arguments.

In her brief, Petitioner made the following arguments:

•The I.G. excluded Petitioner on the erroneous assumption that she was convicted of a felony, not a misdemeanor.

•Petitioner's conviction was not related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

•Petitioner's decision to plead guilty was predicated on her attorney's advice that her nursing license and Medicare/Medicaid eligibility would not be adversely affected by the plea.

C. The I.G.'s Reply Arguments.

After Petitioner filed her responsive brief, the I.G. made the following arguments in reply.

•Petitioner is attempting impermissibly to attack collaterally the substantive and procedural bases for her underlying criminal conviction. The inaccurate report to the National Practitioner Data Bank that Petitioner had been convicted of a felony is irrelevant to this case.

•Contrary to her assertion, Petitioner's conviction was for an offense relating to a breach of a fiduciary duty or financial misconduct.

I reviewed the exhibits, the parties' arguments, and the applicable law to make the decision as described below.

IV. Findings of Fact and Conclusions of Law

1. On September 15, 1983, Faith Home Health Services, Inc. (Faith Home Health) was certified in Louisiana as a home health agency (HHA) and was assigned Medicare provider No. 19-7106. I.G. Ex. 3.

2. During all relevant times, Petitioner, a registered nurse, was the President of Faith Home Health and maintained an 85% controlling interest in the company. I.G. Ex. 3. Petitioner's daughter and co-defendant in her criminal case, Detra Fairley, and two sons were also co-owners of Faith Home Health. Id.

3. Medicare pays participating HHAs for skilled and ancillary health services furnished to beneficiaries who are homebound, in medical need of skilled care on an intermittent basis, and who are under the care of a physician who has established a plan of care. I.G. Ex. 3.

4. Providers are reimbursed by Medicare on a cost-based system. 42 C.F.R. § 413.9(c)(3). Included in the computations for amounts paid to HHAs are overhead, such as rent, utilities, maintenance, consulting fees, and supplies. I.G. Ex. 3. Allowable costs are salaries, bonuses, and benefits, including paid days off, major medical, short term and long term disability for the employer and employees, along with related employer/employee non-qualified deferred compensation trust plan benefits. Id.

5. Medicare paid HHAs their costs periodically in the form of Periodic Interim Payments (PIP). See, e.g., 42 C.F.R. § 413.64(h). ⁽²⁾ Faith Home Health was placed on the PIP methodology of payment by Medicare during the fourth quarter of 1994. I.G. Ex. 3. Prior to the fourth quarter of 1994, Faith Home Health was reimbursed on a fee for services basis. In a fee for services plan, medically necessary services were administered according to the plan of care established by the patient's physician. If the claims were processed, the payment would be made to the provider within a few weeks, but the claim itself could linger between 12 to 18 months before being processed and, thus, paid. I.G. Ex. 3.

6. Once on PIP, Faith Home Health received payments biweekly, from its fiscal intermediary, based on Faith Home Health's reported expenses. ⁽³⁾ I.G. Ex. 3. Faith Home Health was required to submit a quarterly cost interim report to the Medicare fiscal intermediary. Id. A year-end summary called a Cost Report was also required to be submitted annually to the Medicare fiscal intermediary. The intermediary conducted a quarterly rate review and a year-end audit to reconcile allowable costs and set the reimbursement rates. Id.

7. Since October 1995, Palmetto GBA had conducted quarterly rate reviews and year-end audits to reconcile Faith Home Health's allowable cost and set its rate of reimbursement. I.G. Ex. 3.

8. The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum funding standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans. 29 U.S.C. § 1082.

9. ERISA requires plans to provide participants with plan information including important information about plan features and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans; and gives participants the right to sue for benefits and breaches of fiduciary duty. 29 U.S.C. §§ 1001-1461.

10. Faith Home Health's first initial employer/employee non-qualified deferred compensation plan and trust (Plan) was established by Pension Administrators and Consultants, Inc. of Jacksonville, Florida. I.G. Ex. 3. Pension Administrators and Consultants, Inc. closed down and a second Faith Home Health Plan was subsequently established by Royal Benefits, Inc. and Dwight S. Cenac, who had owned Pension Administrators and Consultants, Inc. Royal Benefits, Inc. became the sponsor/owner of the Plan. Id.

11. Faith Home Health's Plan was regulated by federal law under ERISA. I.G. Ex. 3.

12. In or around November 1996, the fact that the Plan was subject to regulation under ERISA was disclosed to Petitioner and the other owners of Faith Home Health. I.G. Ex. 3.

13. Funds from a plan such as Petitioner's Plan could not be withdrawn for any purpose other than pension payments. Further, the regulations provide that "[a]ccrued liability related to contributions to a funded deferred compensation plan must be liquidated within one year after the end of the cost reporting period in which the liability is incurred. An extension, not to exceed three years beyond the end of the cost reporting year in which the liability was incurred, may be granted by the intermediary for good cause if the provider, within the one-year time limit, furnishes to the intermediary sufficient written justification for non-payment of the liability." 42 C.F.R. § 413.100(c)(2)(vii)(B).

14. About May 1995, Faith Home Health submitted a Medicare cost report for the year ending December 1994, claiming accrued liabilities to its Plan of approximately $67,472 for 1994 and part of 1995. See ALJ Ex. 1, at 6. Faith Home Health was reimbursed this expense in 1995. However, the Plan was not funded as Faith Home Health had indicated in the Medicare cost report. Instead, Faith Home Health requested an extension to fund the Plan and the Medicare fiscal intermediary, Palmetto GBA, approved the extension until December 1997. On July 21, 1996, Faith Home Health funded the Plan with $67,472 for 1994 and part of 1995. I.G. Ex. 3; ALJ Ex. 1, at 6.

15. For the Medicare cost years ending December 1995 and December 1996, Faith Home Health claimed on its respective Medicare cost reports to have incurred a liability in funding its Plan. Faith Home Health had already been reimbursed for funding the Plan in the form of its PIP payments. I.G. Ex. 3. However, Faith Home Health's PIP payment rate during the period from December 1995 through March 3, 1997, had been re-calculated several times and varied from an initial rate of $86,700 biweekly to amounts much lower than the initial biweekly amount. I.G. Ex. 3; ALJ Ex. 1. During this period, a portion of Medicare's periodic payments included reimbursement for Faith Home Health's Plan. The Medicare fiscal intermediary denied Faith Home Health's requests for extensions to liquidate liabilities for Plan years 1995 and 1996. I.G. Ex. 3.

16. From 1994 to 1997, Faith Home Health was paid cost reimbursements which, under federal regulations, could only be used to fund its Plan. See Finding 13, above. During this period, only $67,472, representing the 1994 expense, along with $5,529, representing a portion of the 1995 Plan expense, was ever deposited into the Plan account. This resulted in the Plan being underfunded as set forth under the minimum funding standards established by Title 29, United States Code, Section 1082. I.G. Ex. 3; ALJ Ex. 1.

17. Individual employee participants in the Plan were not notified of the underfunding of the Plan, as required by Title 29, United States Code, Section 1021(d)(1). I.G. Ex. 3.

18. In July 1999, a two-count indictment alleging pension plan violations was filed against Petitioner as a principal in Faith Home Health in the United States District Court, Middle District of Louisiana. ALJ Ex. 1, at 2.

19. After negotiation, the U.S. Attorney proposed that Petitioner plead to a misdemeanor violation of 29 U.S.C. § 1021(d)(1). See I.G. Exs. 6, 8; I.G. Ex. 7, at 22. Section 1021(d)(1) of 29 U.S.C. states the following:

If an employer maintaining a plan other than a multi employer plan fails to make a required installment or other payment required to meet the minimum funding standard under section 1082 of this title to a plan before the 60^th day following the due date for such installment or other payment, the employer shall notify each participant and beneficiary . . . of such plan of such failure.

20. In August of 2000, Petitioner's counsel wrote to Petitioner about the U.S. Attorney's proposed plea agreement. Counsel told Petitioner, ". . . the plea would result in no jail time and you would keep your nursing license as well as Medicare/Medicaid eligibility." I.G. Ex. 8.

21. Petitioner in December of 2000 signed a plea agreement that stated the following:

The defendant acknowledges that the terms herein constitute the entire agreement and that no other promises or inducements have been made. The defendant acknowledges she has not been threatened, intimidated or coerced in any manner.

The defendant acknowledges that this Plea Agreement has been entered into knowingly, voluntarily, and with the advice of counsel and that she fully understands the agreement.

I.G. Ex. 6, at 4-5.

22. As part of the plea agreement, a Bill of Information was filed and the pending indictment was dismissed. The Bill of Information charged that from July 1996 until March 1998, the defendants, Petitioner and her daughter, violated the provisions of ERISA by failing to make a required installment or other payment and failing to meet the minimum required funding standard under 29 U.S.C. § 1082, on or before the 60^th day following the due date for the payment, and further failing to notify each beneficiary or participant of such failure. I.G. Ex. 4. Petitioner was rearraigned on January 24, 2001, and the offense of failing to make a required payment to a pension plan, and failing to notify the beneficiaries of the failure, was explained to her in court. I.G. Ex. 7, at 20.

23. The court accepted Petitioner's plea. Judgment was entered against Petitioner by the United States District Court for the Middle District of Louisiana on June 14, 2001. Petitioner was sentenced to one year of probation. She was fined $300 and assessed $25. I.G. Ex. 2.

V. Analysis

A. Petitioner was convicted of a criminal offense occurring after August 21, 1996, relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct with respect to any act or omission in a program (other than a health care program) operated by or financed in whole or in part by any federal, State, or local government agency.

The I.G. must prove four elements in order to show a basis for excluding Petitioner pursuant to section 1128(b)(1)(B) of the Act. The I.G. must show that: (1) Petitioner was convicted of a criminal offense; (2) the criminal offense occurred after August 21, 1996; (3) the criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct; and (4) the financial misconduct must be an act or omission in a program (other than a health care program) operated by or financed in whole or in part by any federal, State, or local government agency.

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

The term "conviction" is defined in the Act and its implementing regulations. A conviction is defined to include those circumstances "when a judgment of conviction has been entered against the individual or entity by a Federal, State, or local court" and "when a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State or local court." Act, sections 1128(i)(1) and (3); 42 C.F.R. § 1001.2. Petitioner's plea of guilty to a criminal offense was accepted by the United States District Court, Middle District of Louisiana, on June 14, 2001. I.G. Ex. 2. I find, therefore, that Petitioner was convicted of a criminal offense as conviction is defined in the Act.

2. The criminal activity to which Petitioner pleaded guilty occurred after August 21, 1996.

The Bill of Information, to which Petitioner pleaded guilty, states that "[f]rom in or about July 1996, up to and including March 1998, in the Middle District of Louisiana, the defendants, . . . , did willfully violate the provisions of [ERISA] and the regulations governing it by failing to make a required installment or other payment and failing to meet the minimum required funding standard under Title 29, United States Code, Section 1082, to the Plan on or before the 60^th day following the due date for such installment or payment, and further failing to notify each beneficiary or participant of such failure as required by law." I.G. Ex. 4; I.G. Ex. 7, at 9.

Petitioner has not denied the acts to which she pleaded guilty occurred after August 1996. The underfunding of the Plan occurred for the years 1995, 1996, and 1997. Moreover, the Departmental Appeals Board (Board) has previously found that the time periods listed in the information portion of a criminal information or indictment is satisfactory evidence for when criminal activity occurred. Donald A. Burstein, Ph.D., DAB No. 1865 (2003). I, therefore, find that Petitioner's criminal act or omission included the time period from July 1996 to March 1998. Therefore, part of Petitioner's criminal activity occurred after August 21, 1996, and the I.G. has shown the second element of the basis of its exclusion of Petitioner.

3. Petitioner's criminal offense was related to financial misconduct.

Petitioner did not plead guilty to fraud, theft, embezzlement, or breach of fiduciary responsibility. The I.G. argues, nonetheless, that Petitioner, as the President of Faith Home Health, had a fiduciary relationship with the company's pension plan. I.G. Br. at 15-16. The I.G. provided no case law, however, to support its position. Rather, the information in the "Factual Basis" underlying the Bill of Information is that Royal Benefits, Inc., and Dwight S. Cenac, established the Plan. I.G. Ex. 3, at 4. Moreover, Petitioner was not a trustee of the Plan. P. Ex. 5.

The statute, however, also refers to criminal offenses that relate to "other financial misconduct." Failure to fund an ERISA pension plan as required and failure to notify the plan members of such underfunding can be described as "financial misconduct." Pension plan members need to be aware of a plan's underfunding so that they can start making alternative retirement arrangements and not be surprised by the lack of retirement funds when it is too late. By pleading guilty to that financial misconduct, Petitioner accepted that she had responsibility for and did what was charged in the Bill of Information; i.e., failed to fund the Plan as required and failed to notify all Plan members of the Plan's lack of funding. No further evidence is necessary. The regulations and Board decisions are clear. I must look only at the conviction itself and not consider what may have led to the conviction.

The crime of not funding the Plan, as required, and not notifying the Plan members that there was underfunding of their ERISA pension plan is related to financial misconduct. The I.G. has proven the third element needed to show a basis for Petitioner's exclusion.

4. Petitioner's financial misconduct was with respect to an act or omission in a program (other than a health care program) financed in part by a federal government agency.

Faith Home Health's Plan was part of its cost structure submitted to Medicare, a government agency, to form the payments made by Medicare to Faith Home Health. The I.G. contends that, because most of Faith Home Health's clients were insured by Medicare, and Medicare paid Faith Home Health for its services, Medicare, at least partially, funded the Plan. A counter argument could be posed that, in fact, the PIPs were only interim payments and, after the appropriate audits and reconciliation of a HHA's cost reports, Medicare was actually paying for services rendered by the HHA on a cost basis. ⁽⁴⁾ Therefore, the HHA, and not Medicare, was funding its own pension plan. Given that a HHA was required to contribute to its pension plan any funds that Medicare provided based on the costs of funding a pension plan, I find more merit in the I.G.'s argument. Faith Home Health's Plan was financed in part by a federal government agency; that is, Medicare.

Because the I.G. has shown that Petitioner was convicted of a misdemeanor offense related to financial misconduct with respect to an act or omission in a program financed in part by a federal government agency, the I.G. has proven the fourth element required for an exclusion under 42 C.F.R. § 1001.201(a)(2).

B. An ALJ is limited to determining whether the length of the proposed exclusion is reasonable; an ALJ cannot determine that the I.G. must eliminate the exclusion altogether.

Section 1128(b) of the Act includes the provisions for what has been termed "permissive" exclusions. The regulations, in setting forth the authority of the ALJ in appeals of exclusions, states the following:

The ALJ does not have the authority to . . . [s]et a period of exclusion at zero, or reduce a period of exclusion to zero, in any case where the ALJ finds that an individual or entity committed an act described in section 1128(b) of the Act, . . . .

42 C.F.R. § 1005.4(c)(6).

I conclude from the regulations, therefore, that since I have found Petitioner was convicted of an act described in section 1128(b) of the Act, I cannot decide that Petitioner is to have no period of exclusion. See also, 42 C.F.R. § 1001.2007(a)(1) (An excluded person may file a request for hearing before an ALJ only on the issues of whether "[t]he basis for the imposition of the sanction exists, and [t]he length of exclusion is unreasonable." (Emphasis added)). I simply cannot determine that no period of exclusion should be imposed once the I.G. has proven that Petitioner has committed an act described in section 1128(b) of the Act and the I.G. has decided to impose a permissive exclusion.

C. An exclusion of six years is not reasonable in this case.

The implementing regulations for section 1128(b)(1) of the Act contain a benchmark period of exclusion of three years for a permissive exclusion and specify aggravating and mitigating factors which are the exclusive factors that must be applied in lengthening or shortening the exclusion. To determine the reasonableness of Petitioner's exclusion, I begin with three years, as set forth in the regulations, and use the aggravating factors and mitigating factors also set forth to lengthen or shorten the period. 42 C.F.R. § 1001.201.

1. The I.G. proved the alleged aggravating factor that Petitioner's omissions and acts occurred over a one-year period.

One of the aggravating factors set forth in the regulations that can be a basis for lengthening the period of exclusion is if "[t]he acts that resulted in the conviction, or similar acts, were committed over a period of one year or more . . . ." 42 C.F.R.§ 1001.201(b)(2)(ii).

As noted above, Petitioner did not dispute the statement in the "Bill of Information" to which she pleaded guilty that the acts and omissions at issue occurred from "in or about July 1996, up to and including March 1998." I.G. Ex. 4. Moreover, since the underfunding of the Plan included several Plan years, Petitioner's acts and omissions occurred over a one-year period.

The I.G. proved this aggravating factor.

2. The I.G. proved the aggravating factor listed at 42 C.F.R. § 1001.201(b)(2)(i) of a financial loss to a government program or another entity of $5,000 or more.

Section 1001.201(b)(2)(i) of 42 C.F.R. provides that if "[t]he acts resulting in the conviction, or similar acts, caused, or reasonably could have been expected to cause, a financial loss of $5,000 or more to a Government program or to one or more other entities . . . ," this aggravating factor can be used to lengthen the exclusion period beyond the benchmark of three years.

This regulatory section also provides that the total amount of financial loss will be considered, including any amounts resulting from similar acts not adjudicated, regardless of whether full or partial restitution has been made. 42 C.F.R. § 1001.201(b)(2)(i).

The I.G. submitted a statement from James Coyle at Palmetto GBA to the effect that Palmetto GBA has determined that Medicare paid Faith Home Health $117,338 as costs for Faith's Plan for the pension years of July 1, 1996 through December 31, 1997. I.G. Ex. 5. ⁽⁵⁾ The I.G. contends this proves a loss to Medicare of $117,338, well over the $5,000 threshold. On the other hand, Medicare owed that amount to Faith Home Health, as a legitimate cost reimbursement even if Petitioner did not use the Medicare payments to fund its Plan. ⁽⁶⁾ Faith Home Health, and thus Petitioner as the major owner, continued to be obligated to the Plan for the amount of its pension costs that had been reimbursed by Medicare. I cannot, therefore, conclude that Medicare suffered a financial loss at all. Nothing in the current record indicates that the claimed Plan costs included in Faith's cost reports were unreasonable. After the PIPs were made to Faith Home Health, Petitioner owed money to the Plan, not to Medicare.

I do find, however, that the Plan, as "one or more other entities," experienced a financial loss of $5,000 or more. If the Plan required funding of approximately $67,000 for one and a half years (1994 and part of 1995), I can only assume the remaining funding requirements for the years of 1995, 1996, and 1997 were well over $5,000. Petitioner claims that funds in excess of $117,338 are presently on deposit in the name of the Plan in Bank One, NA, Baton Rouge, Louisiana. P. Br. at 3. By my calculation, to be fully funded, the Plan bank account should include both the amount of $67,472 that Petitioner actually paid into the fund in July of 1996 and the $117,338 the I.G. considers Medicare to have lost. Petitioner did not provide the total amount in the Plan's bank account and did not indicate whether the Plan account contains the full amount of funding required during the period Faith Home Health was receiving PIPs. Further, Petitioner provided no documents to confirm the amounts in the Plan bank account. Petitioner only asserted that the account contains in excess of $117,338, the amount of loss alleged by the I.G.

Of course, the regulations require that the total amount of financial loss will be considered whether or not restitution or repayment has been made. Moreover, one can argue that whether or not the Plan was eventually fully funded, the loss during the years when the Plan should have been funded is the relevant amount, and that amount is greater than $5,000. Thus, I find that the I.G. presented evidence that the Plan's loss was greater than $5,000 and Petitioner failed to rebut that evidence.

3. Petitioner has not shown the presence of any mitigating factors.

The only mitigating factors that can be used to shorten a period of exclusion are listed in 42 C.F.R. § 1001.201(b)(3) and include: (1) if the individual was convicted of three or fewer offenses, and the amount of the financial loss was less than $1,500; (2) if the record in the criminal proceeding shows that the court determined that the individual had a mental, emotional or physical condition during the offense that reduced his or her culpability; (3) if the individual cooperated with federal or State officials and that cooperation resulted in others being convicted or excluded, additional cases being investigated, or the imposition of a civil money penalty; and (4) the unavailability of alternative sources of the type of health care services provided by the individual.

Petitioner provided no evidence that would establish any of the aforementioned mitigating factors. Petitioner contended that the I.G. mistakenly reported that Petitioner was convicted of a felony, not a misdemeanor, to the National Practitioner Data Bank. P. Br. at 2; P. Ex. 1. Whether or not the I.G. mistakenly reported information to the data bank is not relevant to this case. Only the elements of the statutory basis for exclusion, the aggravating and mitigating factors, and the circumstances of those factors are relevant.

Petitioner also argued that her decision to plead guilty to the misdemeanor was predicated on her attorney's assurance that her nursing license and Medicare/Medicaid eligibility would not be affected. P. Br. at 4-5. I find this to be a compelling argument as I discuss below, but it is not a mitigating factor described in the regulations.

D. A six-year exclusion of Petitioner is not reasonable. The circumstances of the proven aggravating factors suggest a lesser exclusion length of four years is reasonable.

While the regulations direct what factors can be used in lengthening or shortening the period of exclusion, the regulations do not set forth the evidentiary value of the factors. The decision-maker is free to consider the circumstances of each factor and weigh the value of each. It is the quality of the circumstances - whether aggravating or mitigating - that should be dispositive in analyzing these factors. Barry D. Garfinkel, M. D., DAB1572 (1996).

Program exclusion is designed to protect health care programs and their beneficiaries. While the exclusions do carry the "sting of punishment," the exclusion provisions are not intended to be punitive. The questions are whether the excluded individual is untrustworthy and whether the exclusion length suits the purpose of protecting program beneficiaries.

When I looked at the aggravating factors, I considered that Faith Home Health was in a financial quagmire during the time it was receiving PIPs. ALJ Ex. 1. The fiscal intermediary, Palmetto GBA, according to Petitioner, was constantly re-evaluating the PIP biweekly amount, and disallowing expenses. Id. Petitioner had costs such as employee wages and taxes that had to be paid. I found no evidence in the actual papers surrounding the conviction (the Bill of Information or sentencing documents) or the conviction itself that provided a reliable reconciliation of Faith Home Health's costs and Medicare payments to Faith Home Health. Petitioner was not convicted of submitting false costs or billings to Medicare. Petitioner was convicted of not funding an ERISA pension plan.

While Petitioner admitted that the underfunding at issue took place over a one-year period, Petitioner attempted to get extensions from the fiscal intermediary to allow her to make the required payments to the Plan. Her requests for extensions were denied. In this situation, I find this particular aggravating factor to carry less weight in determining a person's trustworthiness than a situation wherein an excluded individual has been sending in false billings or using illegal substances over a one-year period.

Similarly, with respect to the second aggravating factor, I find that although during the period for which Petitioner was convicted, the loss to an entity, the Plan, was over $5,000, Petitioner did not attempt to avoid her obligation to make the payments into the Plan. In attempting to get extensions for funding the Plan, she accepted she had a responsibility to provide the funding. When the extensions were denied, Petitioner's HHA business faltered and she was unable to immediately fund the Plan. ALJ Ex. 1. Moreover, the court made no additional sentencing requirement that Petitioner provide restitution to the Plan. This suggests to me that the court did not find Petitioner so untrustworthy that it needed to include restitution in its sentencing to assure that the Plan would be funded.

I find the aggravating factors in this case, while present, suggest a lesser quality of untrustworthiness and warrant a correspondingly less lengthy exclusion beyond the benchmark of three years.

While Petitioner proved no mitigating factors, I will comment, nonetheless, on the argument Petitioner made with respect to her counsel's statement to the effect that she would keep her Medicare/Medicaid eligibility even though she pleaded guilty to the misdemeanor charge. I have decided other cases where an excluded individual argued that he would not have pleaded guilty if he had known he would be excluded from Medicare. I have, in the past, discounted that argument, because the petitioner signed a plea agreement indicating that the signer understood there were no other agreements or inducements outside the face of the document. Jeffrey P. Yanello, R.Ph., DAB CR908 (2002). In this case, however, Petitioner was expressly provided with written legal counsel that her Medicare eligibility would not be affected by her plea. I note also that the probation official who wrote her presentence report assumed that Petitioner would be able to return to her nursing profession. ALJ Ex. 1. Both professional opinions were incorrect.

ALJs cannot do equity. I cannot consider this situation as a mitigating factor. I do express, however, my hope that to foster fundamental fairness, the I.G. considered in its decision to exclude Petitioner that a lay person considering whether to accept a plea or go through the substantially riskier, but constitutionally protected, trial must depend on the advice of counsel or other professionals. Some persons may consider their inability to continue in their profession a risk equal to a risk of jail time and would, therefore, not plead to a lesser offense if it were more widely known that any conviction can likely result in the loss of a career.

VI. Conclusion

For all the foregoing reasons, and after consideration of both parties' submitted evidence and arguments, I find that the I.G. has a basis to impose an exclusion against Petitioner and that a four-year exclusion is reasonable.

Anne E. Blair

Administrative Law Judge

1. During her guilty plea in court, Petitioner objected to the stipulated "Factual Basis," which has been marked I.G. Ex. 3, as being incomplete. I.G. Ex. 7, at 25. The court gave Petitioner the opportunity to provide additional information in her presentence report. Id. I, therefore, asked the parties to provide the report. The presentence report is missing a page but the missing page does not appear to be material to this decision.

2. Congress amended the law such that HHAs, after October 1, 2000, would no longer be paid on a PIP basis. HHAs are now paid using a nationally determined 60-day prospective payment system. 42 U.S.C. § 1395fff; Act, section 1895; 42 C.F.R., Section 484, Subpart E.

3. From October 1995 to the present, Blue Cross/Blue Shield of South Carolina (Palmetto GBA), was the fiscal intermediary for Faith Home Health. I.G. Ex. 3.

4. While Petitioner pleaded guilty to underfunding an ERISA pension plan and not notifying the Plan's members of that fact, Petitioner continues to dispute Palmetto GBA's reconciliation of the covered services rendered by Faith Home Health to its clients and the payments it received from Medicare for those services. ALJ Ex. 1.

5. I note that Mr. Coyle's statement is not a sworn affidavit. Nor does the statement indicate or explain Mr. Coyle's position or responsibilities with Palmetto GBA. The statement's failings, thus, render Mr. Coyle's statement less reliable as evidence of the amount of loss. As noted below, however, Petitioner submitted no evidence to directly contradict Mr. Coyle.

6. The reasonable cost basis of reimbursement contemplates that providers of services would be reimbursed the actual costs of providing quality care, however widely the actual costs may vary from provider to provider and from time to time for the same provider. 42 C.F.R. § 413.9(c)(3).