CASE | DECISION | JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
IN THE CASE OF  


SUBJECT:

Katherine Marie Nielsen,

Petitioner,

DATE: May 18, 2004
                                          
             - v -

 

The Inspector General

 

Docket No.C-04-03
Decision No. CR1181
DECISION
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DECISION

This case is before me pursuant to a request for hearing filed on September 30, 2003, by Katherine Marie Nielsen (Petitioner).

I. Background

By letter dated July 31, 2003, the Inspector General (I.G.) notified Petitioner that she was being excluded from participation in the Medicare, Medicaid, and all other federal health care programs as defined in section 1128B(f) of the Social Security Act (Act) for a period of five years. The I.G. informed Petitioner that her exclusion was imposed pursuant to section 1128(a)(3) of the Act, due to her conviction (as defined in section 1128(i) of the Act), in the District Court for the County of Denver, State of Colorado, of a 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 or any act or omission in a health care program operated or financed, in whole or in part, by any federal, State, or local government agency.

I conducted a prehearing telephone conference on November 17, 2003. The summary of the conference is memorialized in my order of November 19, 2003. During the conference, the parties agreed that the case could be decided based on written arguments and documentary evidence, and that an in-person evidentiary hearing was unnecessary. (1) Thereafter, on December 29, 2003, the I.G. submitted The Inspector General's Motion for Summary Affirmance (I.G. Br.) and thirty-one proposed exhibits. (I.G. Exs. 1-31). On January 29, 2004, Petitioner filed Petitioner's Response to the Inspector General's Motion for Summary Affirmance (P. Br.). With her brief, Petitioner also filed Petitioner's Objections to the Inspector General's Exhibits. In particular, Petitioner objected to the admission of proposed I.G. Exs. 6 - 19 and I.G. Exs. 25 - 31. Petitioner also submitted four proposed exhibits (P. Exs. 1 - 4). On March 3, 2004, the I.G. submitted The Inspector General's Response to Petitioner's Objections and The Inspector General's Reply Brief in Support of Exclusion. The I.G. included two additional proposed exhibits (I.G. Exs. 32 - 33). On March 19, 2004, Petitioner filed an objection to the I.G.'s latest two proposed exhibits and also Petitioner's Response to the Inspector General's Reply for Summary Affirmance.

I admit into the record I.G. Exs. 1 - 5, I.G. Exs. 20 - 24, and P. Exs. 1 - 4 without objection. As noted above, Petitioner objected to I.G. Exs. 6 - 19, and I.G. Exs. 25 - 33. Petitioner objected to the proposed exhibits on the general bases of relevance, undue prejudice due to confusion, hearsay, and the requirements of original documents. Petitioner cited applicable rules from the Federal Rules of Evidence to support her objections. The I.G. replied correctly that, by regulation, an administrative law judge (ALJ) is not bound by the Federal Rules of Evidence. 42 C.F.R. § 1005.17(b). Nonetheless, the Federal Rules of Evidence have been developed over many years to reflect the standards for reviewing the admissibility of evidence and are a valuable guide to ALJs.

Based on my review of the proposed exhibits and the generally accepted rules of evidence, I grant Petitioner's motion to exclude I.G. Exs. 10 - 18, 25, and 27 - 29. These exhibits are either only tangentially related to this case (refer to another arrest) or are investigative police reports that do not have the reliability of court records. What little probative value the proposed exhibits have is substantially outweighed by the danger of undue prejudice. 42 C.F.R. § 1005.17(d).

Petitioner also objected to I.G. Exs. 9, 19, 26, and 32. These documents appear to be data compilations from the Clerk of the Court regarding Petitioner's cases. As noted by Petitioner, these documents administratively track events and settings. They are not formal judicial orders. Data compilations are generally admissible, but I agree with Petitioner with respect to I.G. Exs. 9, 19, and 26. There is no imprimatur of authenticity on these documents and I will, therefore, exclude I.G. Exs. 9, 19, and 26. For reference see Fed. R. Evid. 901, 902 (2) and (4), 908(8), and Fed. R. Civ. P. 44(a)(11) regarding authentication of public record documents. On the other hand, proposed I.G. Ex. 32 is stamped with the seal, and signed by the Deputy Clerk of the District Court of Denver, Colorado. I find this data compilation, in I.G. Ex. 32, sufficiently self-authenticating that I will admit it into the record.

Petitioner also objected to the admission of proposed I.G. Exs. 6 and 7, contending that the documents were generated by the probation department prior to Petitioner's plea negotiations and sentencing, and were not signed by the judge, the district attorney or Petitioner. Thus, the documents do not have indicia of reliability and would foster undue confusion. I agree with Petitioner and will exclude I.G. Exs. 6 and 7.

I will overrule Petitioner's objections to I.G. Exs. 8, 30 - 31, 33. First, I.G. Ex. 8 is signed by Petitioner and a judge in Petitioner's case and is, therefore, reliable. Second, I.G. Exs. 30 and 31 are documents from the Colorado Board of Nursing and are signed by Petitioner. Moreover, the applicable portions of the documents are not hearsay according to the Federal Rules of Evidence because they are admissions of a party-opponent. Fed. R. Evid. 801(d)(2). Finally, with respect to I.G. Ex. 33, an affidavit of an I.G. employee regarding a conversation with a court employee, the document is reliable but has little evidentiary value and I give it little weight. Nonetheless, I will include I.G. Ex. 33 in the record. (2)

For clarity, I reiterate my rulings. I have admitted the following proposed exhibits into the record: I. G. Exs. 1 - 5, 8, 20 - 24, and 30 - 33; and P. Exs. 1 - 4.

It is my decision to sustain the determination of the I.G. to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs, for the minimum mandatory period of five years. I base my decision on the documentary evidence in the record, the applicable law and regulations, and the arguments of the parties. It is my finding that Petitioner was convicted of a 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.

II. Issues

There is only one basic issue in this case and that is, whether the I.G. has a basis to exclude Petitioner under section 1128(a)(3) of the Act from participation in any federal health care program. The specific issue is whether Petitioner was convicted of a felony that fits within section 1128(a)(3) of the Act. Petitioner does not dispute she was convicted of a felony after August 21, 1996. Petitioner's primary argument with respect to her conviction and exclusion is that she was not convicted of theft of controlled substances but of possession of controlled substances and, thus, does not fit within the exclusion set forth in section 1128 (a)(3) of the Act.

III. Applicable Law and Regulations

Section 1128(a)(3) of the Act authorizes the Secretary of the U.S. Department of Health and Human Services (Secretary) to exclude from participation in any federal health care program (as defined in section 1128B(f) of the Act), any individual convicted of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with either (i) the delivery of a health care item or service or (ii) with respect to any act or omission in 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(a)(3).

An exclusion under section 1128(a) of the Act must be for a minimum period of five years. Act, section 1128(c)(3)(B). Aggravating factors can serve as a basis for lengthening the period of exclusion. 42 C.F.R. § 1001.102(b). If aggravating factors justify an exclusion longer than five years, mitigating factors may be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).Pursuant to 42 C.F.R. § 1001.2007, a person excluded under section 1128(a)(3) of the Act may file a request for hearing before an ALJ.

For purposes of an ALJ appeal, the regulations provide that:

When the exclusion is based on the existence of a criminal conviction . . . , a determination by another Government agency, or any other prior determination where the facts were adjudicated and a final decision was made, the basis for the underlying conviction, civil judgment or determination is not reviewable and the individual or entity may not collaterally attack it either on substantive or procedural grounds in this appeal.

42 C.F.R. § 1001.2007(d).

IV. Findings of Fact and Conclusions of Law

I make the following findings of fact and conclusions of law.

1. At all times relevant to this case, Petitioner was a registered nurse licensed to practice in Colorado. I.G. Ex. 31.

2. In August of 2000, Petitioner was employed as a professional nurse at Children's Hospital, Denver, Colorado, in the Pediatric Intensive Care Unit. While working, Petitioner diverted and self-administered Fentanyl from Children's Hospital and her employment was terminated. I.G. Ex. 31.

3. In October of 2000, Petitioner was employed as a professional nurse at Presbyterian St. Luke's Medical Center, Denver, Colorado, in the Pediatric Intensive Care Unit. While working, Petitioner diverted from the hospital and self-administered Ketamine and was terminated. I.G. Ex. 31.

4. As a result of these incidents, Petitioner, in late 2000, was twice arrested and later pleaded guilty to violations of Colorado state law regarding controlled substances. I.G. Exs. 30, 31.

5. With respect to the earlier incident (Finding 2, above), on October 10, 2000, the Deputy District Attorney for the Second Judicial District of the State of Colorado filed an Information against Petitioner. I.G. Ex. 1.

6. The Information is stamped "00CR4024" (hereafter Case 4024). The three-count Information charges in the first count that Petitioner, on or about July 17, 2000, "did unlawfully, feloniously and knowingly obtain a Controlled Substance, to-wit: Fentanyl, by fraud, deceit, misrepresentation and subterfuge . . . ." The Information charges in the second count that Petitioner, on or about July 24, 2000, did "unlawfully, feloniously and knowingly obtain a Controlled Substance, to-wit: Fentanyl, by fraud, deceit, misrepresentation and subterfuge . . . ." The third count charges that Petitioner, on or about August 15, 2000, "did unlawfully, feloniously and knowingly obtain a Controlled Substance, to-wit: Fentanyl, by fraud, deceit, misrepresentation and subterfuge . . . ." I.G. Ex. 1.

7. Fentanyl is normally classified as a Schedule II controlled substance. Colorado Revised Statutes (Colo. Rev. Stat.) § 18-18-204. (3)

8. Regarding the second incident (Finding 3, above), on December 20, 2000, a one-count Complaint and Information stamped "01CR0086" (hereafter Case 86) was filed against Petitioner charging that between November 20, 2000 and November 21, 2000, Petitioner "did unlawfully, feloniously and knowingly possess a Schedule III Controlled Substance, to-wit: Ketamine . . . ." in violation of Colo. Rev. Stat. § 18-18-405(1)(a) and (2)(b)(I)(F-4). I.G. Ex. 20.

9. Ketamine is classified as a Schedule III controlled substance. Colo. Rev. Stat. § 18 -18 -205.

10. Petitioner's guilty pleas for Case 4024 and Case 86 were taken at the same time, in January of 2001, and the cases were confused in the court records. See Findings 11 - 14, below.

11. On January 25, 2001, Petitioner initialed and signed a statement regarding her desire to plead guilty to Case 4024. I.G. Ex. 2; P. Ex. 1. She initialed that she understood the charges against her. I.G. Ex. 2, at 1; P. Ex. 1, at 1. The charge was described as a class 5 felony. Id. at 4. 12. Also on January 25, 2001, a Motion and Stipulation for Supervised Deferred Judgment and Sentence was filed in Case 4024. This Motion contains the following numbered paragraph:

1. Under authority of § 16-7-301, 8A C.R.S. (1986), the District Attorney and the defendant have engaged in plea discussions. As the result of such discussions the defendant hereby tenders a plea of guilty to "possession schedule IV."

I.G. Ex. 4; P. Ex. 3. Petitioner signed this document, indicating that she wished to plead guilty to possession schedule IV. Ids. at 3.

13. Also on January 25, 2001, a plea agreement was filed with the court for Case 4024. Pertinent parts of the plea agreement are handwritten and not entirely legible. In the document, there is a handwritten notation that the defendant was pleading guilty to "possession - ketamine." This was described as a class 5 felony. The agreement notes that the parties stipulated to the following sentence concessions, which are handwritten as follows:

"deferred judgment 3 yrs"

"100 UPS concurrent 01CR86"

"& additional 100 UPS"

I.G. Ex. 3; P. Ex. 2. I read the cryptic notes to indicate that the parties stipulated that Petitioner would receive a judgment that was deferred for three years, that she was to be sentenced to 100 hours of community service, and that her sentence for Case 4024 was to run concurrently with that for Case 86. Ids.; See I.G. Ex. 24.

14. On the same date, January 25, 2001, a Motion and Stipulation for Supervised Deferred Judgment and Sentence was filed in Case 86. The Motion contains the following numbered paragraph:

1. Under authority of § 16-7-301, 8A C.R.S. (1986), the District Attorney and the defendant have engaged in plea discussions. As the result of such discussions the defendant hereby tenders a plea of guilty to "possession schedule IV."

I.G. Ex. 21. Just as in the papers for Case 4024, Petitioner initialed and signed a Request to Plead Guilty in Case 86. I.G. Ex. 22. She, however, in Case 86, initialed that she wished to plead guilty to "possession sched. III" rather than to plead guilty to "possession sched. IV," as she had written in the Motion and Stipulation for Case 4024. Id. at 2; I.G. Ex. 4, at 1.

Petitioner contends that, because the documents in Case 4024 indicate in handwriting that Petitioner was pleading guilty to "possession," that the I.G. cannot claim she was convicted of theft. My findings with respect to this issue are as follows:

15. A Denver District Court judge accepted Petitioner's plea and signed an Order approving the Motion and Stipulation for Supervised Deferred Judgment and Sentence in Petitioner's Case 4024 on January 25, 2001. I.G. Ex. 5; P. Ex. 4. The judge filed a similar Order in Petitioner's Case 86. I.G. Ex. 23.

16. The terms and conditions of a "Deferred Judgment and Sentence" in Petitioner's Case 86 is dated March 2, 2001 and was signed by Petitioner on March 29, 2001. This document states that Petitioner was sentenced to 100 hours of community service, Level 4 treatment and [her sentence] was to "run concurrent w/00CR4024." I.G. Ex. 24. The court records for Petitioner's Case 4024 include a notation dated March 2, 2001, stating that the mistake that was made on the paperwork for Petitioner's sentencing was corrected on that date. I.G. Ex. 32, at 4. The notation goes on to state that Petitioner "pleg to cnt 1(F5) 18-18-415 (1)(A) cont sub obtain fraud/deciet[sic] - ketamine Ord: DMDA cnts 2 and 3 - Plea Accepted - Deft grntd 3 yr DJ (runs to 1/30/04), Prob Supv (Charles Clark), standard fees/costs, 100 hrs cmsv, Level 4 TX - This case to run concurrent w/01CR86 . . . ." Id. I read this cryptic note to indicate that Petitioner was pleading to Count 1 of the Information in her Case 4024, a class 5 felony that is a violation of Colo. Rev. Stat. § 18-18-415 (1)(A), obtaining controlled substances by fraud and deceit. The District Attorney dismissed Counts 2 and 3 of the Information. Further, Petitioner was granted a three-year deferred judgment and was required to pay standard costs and fees, do 100 hours of community service, and the case was to run concurrently with her Case 86. I find that the fact Petitioner herself signed a statement in March 2001, after the confusion of the court papers from January 25, 2001, along with the court's minute order compilation stating that the records were corrected on March 2, 2001, to read that Petitioner was pleading guilty to obtaining controlled substances by fraud and deceit, to be persuasive evidence that Petitioner did, indeed, plead guilty to obtaining controlled substances by fraud and deceit.

17. Further evidence that Petitioner had previously pleaded guilty to obtaining controlled substances by fraud and deceit is contained in a later advisement given to Petitioner. Unfortunately for Petitioner, a few months after March 2001, she apparently was involved in another incident involving controlled substances. I.G. Ex. 31. She was advised on October 25, 2001, that her probationary status could be revoked. The notice given Petitioner with respect to the revocation complaint was that the Court could consider the following penalties: "Obtain Controlled Substance by Fraud/Deceit, a class Five Felony, is punishable by one to three years Department of Corrections, and two years mandatory parole." I.G. Ex. 8.

18. Petitioner also admitted in February 2002 in the stipulation she signed with the Colorado Board of Nursing for relinquishment of her nursing license that she had "pled guilty to one count of Obtaining Controlled Substances by Fraud &/or Deceit and Possession of a Schedule 3 Controlled Substance, a class 4 felony, and received a deferred sentence." I.G. Ex. 31, at 2.

19. Although the stipulations presented to the Court in Petitioner's Cases 4024 and 86 are confusing and suggest Petitioner pleaded to possession and not to obtaining controlled substances by fraud and deceit, the greater weight of the evidence is that Petitioner pleaded to obtaining controlled substances by fraud and deceit in Case 4024 and to possession of controlled substances in Case 86. I.G. Exs. 8, 30 - 32.

20. Judgment was entered against Petitioner in a state court, that of Colorado. I.G. Ex. 5.

21. Petitioner was convicted as conviction is defined in the regulations even though she pleaded guilty and she received a deferred judgment. 42 C.F.R. § 1001.2(c) and (d).

22. Petitioner was convicted of a felony under State law, a felony relating to theft; to wit, a violation of Colo. Rev. Stat. § 18-8-415(1)(a), a class 5 felony. Findings 16, 19, above.

23. Petitioner's felony was in connection with the delivery of a health care item or service in that she was working in a hospital at the time of the theft and had appropriated controlled substances from the hospital - substances available for dispensing to patients - for her own use. I.G. Ex. 31.

24. Petitioner's felony occurred after August 21, 1996, in that the acts resulting in her conviction took place no earlier than July 2000, and she was convicted in January 2001. Findings 2-3, 6, 8, and 15.

25. The I.G. has proved all of the elements required for a mandatory exclusion of Petitioner under section 1128(a)(3) of the Act.

26. Petitioner must be excluded for the minimum mandatory period of five years. 42 C.F.R § 1001.102.

V. Discussion

Petitioner was convicted of a felony 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 order to sustain a mandatory exclusion under section 1128 (a)(3) of the Act, the I.G. must prove four elements: (1) that Petitioner was convicted of a felony offense; (2) the offense took place after August 21, 1996; (3) the offense was related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct; and (4) the offense was in the connection with the delivery of a health care item or service.

With respect to the first element, by the express terms of section 1128(a)(3) of the Act, a felony offense can be a felony as specified under either federal or State law. Petitioner pleaded guilty to a class 5 felony under Colorado statutes - specifically, Colo. Rev. Stat. § 18-18-415(1)(A). Also, Petitioner was convicted of the felony as "conviction" is defined in the Act. A conviction for purposes of section 1128(a)(3) of the Act does not require a judge or jury verdict of guilt. A conviction occurs when, inter alia, "a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court." Act, section 1128(i)(3). In Petitioner's case, her guilty plea was accepted by the court. Also, a conviction for purposes of the Act includes those situations when the individual has entered into participation in a deferred adjudication or other arrangement where judgment of conviction has been withheld. Act, section 1128(i)(4). The fact that Petitioner's judgment was deferred does not affect the fact that she was convicted as defined by the Act. The I.G. has shown that Petitioner was convicted of a felony offense.

Because the acts for which Petitioner was arrested and the acceptance of her guilty plea took place after August 21,1996, the I.G. proved the second required element. I.G. Exs. 1, 3, 5, 31, 32; P. Exs. 2, 4.

Petitioner's felony offense was in connection with the delivery of a health care item or service. She was on duty, at a hospital, in the pediatric intensive care unit when she took Fentanyl and Ketamine from the hospital and administered the drugs to herself. At the time, in her capacity as a nurse, she was delivering a health care service; that is, nursing services. Clearly, her offense was "in connection with the delivery of a health care item or service." Even a minimal nexus between the offense and the delivery of a health care item or service satisfies the statutory test that a criminal offense be "in connection" with the delivery of a health care service. Anthony Underhill, DAB CR231 (1992).

With respect to the last element, the gravamen of Petitioner's case herein is that Petitioner did not plead guilty and was not convicted of theft of a controlled substance, but rather of possession of a controlled substance. According to Petitioner, because her conviction was for possession, section 1128(a)(3) of the Act cannot be used by the I.G. as a basis to exclude her because the section requires a theft or other financial misconduct. P. Br. at 11. As noted above, I find Petitioner was convicted of theft and/or fraud.

Petitioner relies on the accepted rule that a conviction cannot be relitigated by either a petitioner or the I.G. P. Br. at 15; 42 C.F.R. § 1001.2007(d). It would indeed be inappropriate to delve into whether or not Petitioner actually stole Fentanyl and Ketamine. The question presented by Petitioner is not whether Petitioner actually purloined Fentanyl and Ketamine but what occurred after her arrest. Was she convicted of theft and/or fraud of controlled substances or was she only convicted of possession? The use of evidence to determine what statute Petitioner was convicted of is not a collateral attack on her conviction.

For my conclusion that Petitioner was convicted of a felony that fits within section 1128(a)(3) of the Act, I refer to the evidence that (1) Petitioner clearly stipulated in her dealings with the Colorado Board of Nursing that she was convicted of obtaining controlled substances by fraud or deceit; and (2) the authenticated and corrected court documents indicate she was convicted in Case 4024 of obtaining a controlled substance by fraud or deceit. I do not consider the use of this evidence to be a collateral attack on her conviction, as Petitioner suggests.

Petitioner is trying to use the technicality of initially confused court records to escape the exclusion set forth in the Act at section 1128(a)(3). As I pointed out in footnote two, above, this case could have been much cleaner had the I.G. obtained a more self-authenticating statement of Petitioner's conviction. Nonetheless, the preponderance of the evidence is that Petitioner was indeed convicted of fraud/deceit. The I.G. proved this element required by a section 1128(a)(3) exclusion. I additionally note that Petitioner might have been excluded on other grounds as well. For example, exclusion can also be applied to those who are convicted of a felony relating to the unlawful dispensing of a controlled substance. 42 C.F.R. § 1001.101(d). Moreover, the I.G. may exclude a person who has had his/her license to provide health care revoked for reasons bearing on the individual's professional competence, professional performance, or financial integrity. 42 C.F.R. § 1001.501(a)(1); Act, section 1128(b)(4)(A).

I find that Petitioner's conviction met the definition of a section 1128(a)(3) conviction in that: (1) she was convicted of a felony offense; (2) she was convicted of an offense which occurred after August 21, 1996; (3) her felony offense related to theft; that is, obtaining controlled substances by fraud and deceit; and (4) her felony offense was in connection with the delivery of a health care item; that is, nursing services. The I.G. was required to exclude her, pursuant to section 1128(a)(3) of the Act, for at least five years.

VI. Conclusion

I affirm the decision of the I.G. to exclude Petitioner pursuant to section 1128(a)(3) of the Act for the minimum mandatory period of five years.

JUDGE
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Anne E. Blair

Administrative Law Judge

FOOTNOTES
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1. In their briefing, both parties imply this Decision is made pursuant to a summary judgment motion. I.G. Br. at 3; P. Br. at 9. Petitioner also states that, at the November 17, 2003 telephone conference, the parties and I agreed that there were no material facts in issue. This is inaccurate. My Order of November 19, 2003, states that the "parties agreed that an in-person hearing was not necessary and that this case could be decided on the briefs." The parties' incorrect statements suggest a confusion between summary judgment and judgment on the record. There is indeed a genuine issue of material fact in this case; that is, of what crime Petitioner was convicted. I am resolving this issue, herein, based on the documentary evidence and find the evidence fully sufficient to do so. As in this case, the presence of material facts at issue does not necessarily warrant an in-person hearing with testimony.

2. If the I.G. had obtained an authenticated, under seal, statement regarding Petitioner's conviction, most of Petitioner's arguments would have disappeared.

3. In the range of controlled substances from Schedule I - V, the most dangerous and habit- forming drugs are included in Schedule I . The scheduled drugs are considered less dangerous as the schedule number increases. Colo. Rev. Stat. §§ 18-18-203 - 207.

CASE | DECISION | JUDGE | FOOTNOTES