Elsbeth Barnes, CR No. 340 (1994)

$05:Exclusion Case

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: Elsbeth Barnes, Petitioner,
- v. -
The Inspector General.

DATE: November 1, 1994

Docket No. C-94-329
Decision No. CR340

DECISION

By letter dated February 8, 1994, Elsbeth Barnes, the Petitioner
herein, was notified by the Inspector General (I.G.), U.S.
Department of Health & Human Services (HHS), that it had been
decided to exclude her for a period of five years from
participation in the Medicare, Medicaid, Maternal and Child Health
Services Block Grant and Block Grants to States for Social Services
programs. 1/ The I.G.'s rationale was that exclusion, for at least
five years, is mandated by sections 1128(a)(1) and 1128(c)(3)(B) of
the Social Security Act (Act) because Petitioner had been convicted
of a criminal offense related to the delivery of an item or service
under Medicare.

Petitioner filed a timely request for review of the I.G.'s action.
The I.G. moved for summary disposition.

I have determined that there is no dispute as to any material fact.
For the reasons explained below, I have concluded that, even if the
facts alleged by Petitioner are accepted as true, the I.G. would
nevertheless be entitled to judgment as a matter of law.
Therefore, I have decided the case on the basis of the parties'
written submissions in lieu of an in-person hearing.

I affirm the I.G.'s determination to exclude Petitioner from
participation in Medicare and Medicaid for a period of five years.


APPLICABLE LAW

Sections 1128(a)(1) and 1128(c)(3)(B) of the Act make it mandatory
for any individual who has been convicted of a criminal offense
related to the delivery of an item or service under Medicare or
Medicaid to be excluded from participation in such programs, for a
period of at least five years.


FINDINGS OF FACT AND CONCLUSIONS OF LAW (FFCL) 2/

1. During the period relevant to this case, Petitioner was a
licensed practical nurse.

2. Petitioner contracted with Metro Home Health Agency to perform
health care services for home-bound individuals who were qualified
to receive benefits under Medicare. I.G. Br. at 2; I.G. Ex. 3 at
3.

3. On June 25, 1992, Petitioner was indicted by a grand jury of
the United States District Court for the Eastern District of
Louisiana. I.G. Ex. 1.

4. The indictment charged Petitioner with seven counts of making
false and fictitious statements in violation of 18 U.S.C. 1001
by "knowingly and willfully mak[ing] false, fraudulent, and
fictitious material statements and representations . . . so as to
fraudulently obtain Medicare payments . . . . " I.G. Br. at 1;
I.G. Ex. 1; I.G. Ex. 5 at 2.

5. Petitioner signed a Judgment and Probation/Commitment Order
pleading guilty to count one of the indictment "knowingly and
willfully . . . forg[ing] the signature of Dr. Joseph Allain on
Health and Human Services form HCFA 485, and falsif[ying] medical
information regarding [a particular patient], so as to fraudulently
obtain Medicare payments." I.G. Br. at 3; I.G. Ex 4.

6. In consideration of Petitioner's plea, the Office of the United
States Attorney for the Eastern District of Louisiana dismissed the
remaining counts of the indictment. I.G. Ex. 4 at 1.

7. Petitioner was sentenced to three years of probation and was
ordered to make restitution to the Department of Health and Human
Services in the amount of $1100. I.G. Br. at 3; I.G. Ex 2.

8. A plea is accepted within the meaning of section 1128(i)(3) of
the Act whenever a party offers a plea and a court consents to
receive it as an element of an arrangement to dispose of a pending
criminal matter. Section 1128(i)(3) of the Act.

9. Petitioner was convicted of a criminal offense within the
meaning of section 1128(i)(3) of the Act. FFCL 5-8.

10. The offense of which Petitioner was convicted -- forging the
signature of a medical doctor on a HCFA form 485 and falsifying
medical information regarding a particular patient -- is related to
the delivery of items or services under Medicare within the meaning
of section 1128(a)(1) of the Act. FFCL 1-9.

11. The Secretary delegated to the I.G. the authority to
determine, impose, and direct exclusions pursuant to section 1128
of the Act. 48 Fed. Reg. 21662 (May 13, 1983).

12. The. I.G. properly excluded Petitioner, pursuant to section
1128(a)(1) of the Act, for a period of five years as required by
the minimum mandatory exclusion provision of section 1128(c)(3)(B)
of the Act. FFCL 1-11.

13. Petitioner alleges in an affidavit that, as part of her plea
agreement, I.G. Special Agent William W. Root and Assistant U.S.
Attorney (AUSA) Mary Jude Darrow, who participated in negotiating
her plea agreement, promised not to refer her name to the I.G. for
exclusion. P. Ex. 1. Petitioner interpreted the statements of
Special Agent Root and AUSA Darrow to mean that she would not be
excluded from the Medicare program if she pled guilty. P. Ex. 1.
Even if Special Agent Root and AUSA Darrow made the statements
alleged by Petitioner, the I.G. would not be estopped from
excluding Petitioner.

14. Even if Petitioner believed that her plea agreement included
a promise by the I.G. not to exclude her, that belief would not
have been reasonable. Section 1128(a)(1) on its face makes a
five-year exclusion mandatory after conviction of a crime related
to the delivery of an item or service under Medicare or Medicaid.

17. For the purposes of this decision and to resolve the summary
disposition issue, I accept as proven that Special Agent Root and
AUSA Darrow promised Petitioner that she would not be excluded from
Medicare and Medicaid. Even so, Petitioner's affidavit does not
create a dispute on an issue of material fact because the I.G. was
required by law to exclude her for at least five years.

18. The I.G. is entitled to summary disposition.


PETITIONER'S ARGUMENT

Petitioner does not deny that she was convicted on the basis of her
guilty plea, within the meaning of section 1128(i) of the Act, to
knowingly and willfully forging the signature of a medical doctor
and falsifying medical information pertaining to a certain patient.
Petitioner does not deny either that, due to her criminal offense,
the home health care agency that Petitioner worked for received
unallowable reimbursements from Medicare.

Petitioner argues that her conviction for violating 18 U.S.C.
1001 does not relate to the "delivery of an item or service" under
Medicare, Medicaid, or any other State health care program, within
the meaning of section 1128(a)(1). Request for Hearing, dated
April 6, 1994. Petitioner contends also that she should not be
excluded from Medicare since she pled guilty based on a "different
set of circumstances than those for which she was indicted." I.G.
Ex. 3 at 1.

Further, Petitioner argues, in essence, that the I.G. should be
estopped from excluding her because she alleges that the plea
agreement which she entered into with the U.S. Attorney's Office
"barred the Department of Health and Human Services from proceeding
with exclusion" under section 1128(a)(1). P. Br. at 3. Petitioner
alleges that during plea negotiations both a representative from
the Inspector General's office, Special Agent William R. Root, and
AUSA Mary Jude Darrow made statements which led her to believe that
she would not be excluded from Medicare if she pled guilty to
count one of the indictment. Petitioner contends also that since
the I.G. contests her assertion that Special Agent Root and AUSA
Darrow agreed not to forward her name to the I.G. for purposes of
exclusion, there is a material fact in dispute and a hearing is,
therefore, necessary.


DISCUSSION

I. Petitioner was properly excluded under section 1128(a)(1) of
the Act.

An individual or entity must be excluded from participation in
Medicare and Medicaid pursuant to section 1128(a)(1) where two
elements are present:
(1) the individual or entity has been "convicted" of a criminal
offense, within the meaning of section 1128(i); and (2) the
conviction is related to the delivery of an item or service under
Medicare or Medicaid. In the present case, Petitioner admits that
she was convicted within the meaning of section 1128(i)(3) of the
Act. She disputes, however, that her conviction was related to the
delivery of an item or service under Medicare. I find that
Petitioner's conviction was related to the delivery of an item or
service under Medicare, within the meaning of section 1128(a)(1) of
the Act.

The Act does not define what constitutes a conviction related to
the delivery of an item or service under Medicare or Medicaid.
However, administrative law judges and appellate panels of the
Departmental Appeals Board have held that a conviction meets the
statutory requirement if there is some nexus or common sense
connection between the criminal offense for which the individual or
entity has been convicted and the delivery of an item or service
under Medicare or Medicaid. Carolyn Nagy, DAB CR182 (1992); Berton
Siegel, D.O., DAB 1467 (1994). Here, Petitioner was convicted of
"knowingly and willfully mak(ing) false, fraudulent, and fictitious
materials statements and representations . . . so as to
fraudulently obtain Medicare payments . . . ." I.G. Ex. 1.
Petitioner's conviction arose from her forgery of a medical
doctor's signature on a Health Care Financing Administration form
(HCFA form 485) which certified that a particular patient was
eligible for Medicare-funded home health care services. As a
result of this certification, Petitioner and the home health care
agency for which she worked received Medicare reimbursement, even
though the medical doctor whose name was on the certification form
did not certify the patient for home health care services and did
not authorize anyone to sign his name to the form.

Since the purpose and result of Petitioner's action was to defraud
the Medicare program, I find that there exists a nexus or common
sense connection between the criminal offense for which Petitioner
was convicted and the delivery of an item or service under
Medicare. The Medicare program would not have paid for the home
health care services Petitioner provided if she had not forged the
doctor's signature on the HCFA form 485. The facts in this case
are similar to those in the case of Ricardo Santos, DAB CR165
(1991). In Santos, the petitioner was convicted of forging a
doctor's name on prescriptions that were given to undercover agents
from the California Bureau of Medi-Cal Fraud posing as Medi-Cal
(Medicaid) recipients. The cost of their medical treatment, as
well as their prescriptions, would have been billed to the Medicaid
program had the Medi-Cal agents not seized the subsequent billing
for evidentiary purposes. Here, as in Santos, Petitioner's forgery
was necessary for the receipt of Medicare reimbursement, since
neither Petitioner nor the home health care agency for which she
worked would have received reimbursement for her services without
a doctor's signature. Petitioner's criminal offense, therefore,
was directly linked to the delivery of a service under Medicare.

It is irrelevant that the criminal statute pursuant to which
Petitioner was convicted made no reference to Medicare fraud, since
the mandatory exclusion provisions of section 1128 are not limited
to situations where a medical provider or other entity is convicted
under a statute expressly criminalizing fraud against a federal or
State health care program. H. Gene Blankenship, DAB CR42 (1989).
It is well-established that financial misconduct directed at
Medicare and Medicaid, in connection with the delivery of items or
services under the programs, constitutes a program-related offense
invoking mandatory exclusion. Jack W. Greene, DAB CR19 (1989),
aff'd DAB 1078 (1989), aff'd sub nom. Greene v. Sullivan, 731 F.
Supp. 835, 838 (E.D. Tenn. 1990). Petitioner's offense involved
financial misconduct and is similar to the offense of filing false
Medicare claims, because, in each instance, the program is asked to
make improper payments. Moreover, Petitioner's offense was
program-related because Medicare was the victim of the offense.
Ian Klein, DAB CR177 (1992). For these reasons, Petitioner's
conviction was related to the delivery of an item or service under
Medicare.

Petitioner's argument that she pled guilty based on a different set
of circumstances than those for which she was indicted is also
without any merit. Petitioner signed the Judgment and
Probation/Commitment Order which stated that "the court adjudged
the defendant guilty as charged. . . " (I.G. Ex. 3). Thus,
Petitioner cannot reasonably argue that the facts to which she pled
guilty were different than those for which she was charged.

On the basis of the above analysis, pursuant to sections 1128(a)(1)
and 1128(c)(3)(B), the I.G. was required to exclude Petitioner for
a period of not less than five years.


II. The I.G. was required to exclude Petitioner notwithstanding
any oral promise to the contrary Petitioner may have received.

As I have stated already, exclusion is mandated by section
1128(a)(1) of the Act for any individual convicted of an offense
described in that section. The I.G. has no discretion to decline
to exclude an individual convicted of such an offense. Prabha
Prakash, M.D., DAB CR265 (1993); Arthur B. Stone, D.P.M., DAB CR26
(1989). For this reason, even if government representatives had
promised Petitioner she would not be excluded, the I.G. would not
be bound by such a promise.

Petitioner argues, in essence, that the I.G. is estopped from
excluding her because of promises allegedly made to her during her
plea negotiations. To make out a claim of estoppel, Petitioner
must prove that she reasonably relied on promises made to her
detriment by government representatives. Petitioner's reliance on
the promises allegedly made by Special Agent Root and AUSA Darrow
is misplaced, because: (1) Petitioner has not alleged that these
individuals promised her she would not be excluded; and (2) even if
they had, such a promise would be contrary to law.

First, it is not at all clear that either Special Agent Root or
AUSA Darrow promised Petitioner that she would not be excluded.
Petitioner alleges that these individuals promised her they "would
[not] forward her name to DHHS for purposes of exclusion from the
medicare program." P. Ex. 1. Both Special Agent Root and AUSA
Darrow deny having made such promises. I.G. Reply Br.; I.G. Exs.
5, 6. However, even if they had done so, a promise not to refer
Petitioner's name for exclusion is not equivalent to a promise that
Petitioner would not be excluded. Thus, Petitioner's
interpretation of these statements as a promise not to exclude her
is unreasonable.

Second, even if Special Agent Root or AUSA Darrow had explicitly
promised Petitioner that she would not be excluded as a result of
her guilty plea, her reliance on such a promise is immaterial.
This is so because those who deal with the government are expected
to know the law and cannot be found reasonably to have relied on
advice of a government agent that is contrary to federal law or
regulation. Heckler v. Community Health Services, 467 U.S. 51,
60-63 (1984). Because exclusion is mandatory after a conviction of
a criminal offense related to the delivery of an item or service
under Medicare, any advice to the contrary from government agents
would be contrary to law. Therefore, Petitioner's reliance on any
such representation would be unreasonable.

Petitioner relies on Stern v. Shalala, 14 F.3d 148 (2d Cir. 1994)
for the proposition that a plea agreement may preclude HHS from
seeking to impose an administrative sanction. In Stern, the HHS
sought a civil money penalty against Dr. Stern after his
conviction, pursuant to a plea agreement, for submitting fraudulent
Medicare claims. The plea agreement specified also that "Claims of
the Medicare program will be detrimental in a separate civil
proceeding and will not be part of the restitution ordered by the
Court." Stern at 149. Dr. Stern argued that he reasonably
understood such claims to be actual losses alleged by Medicare,
totalling no more than $190,000. The court found that Dr. Stern's
interpretation of this agreement, together with statements made by
the AUSA involved in the case, established that the collection of
a civil money penalty was barred by the plea agreement.


Stern, however, is inapplicable for two reasons. First, as
previously stated, Dr. Stern argued that, by the terms of his
written plea agreement, the government had agreed not to seek the
sanctions at issue. By contrast, Petitioner here relies on oral
promises allegedly made to her, but not included in her written
plea agreement. Second, Dr. Stern challenged HHS' imposition of a
civil monetary penalty against him pursuant to section 1128A of the
Act. Such penalties, unlike exclusions pursuant to section
1128(a)(1), are not mandatory under the statute. Thus, an
agreement not to seek civil money penalties would not, on its face,
be contrary to federal law.

Petitioner's estoppel argument must fail, because she could not
reasonably have relied on any promise that she would not be
excluded from participation in the Medicare and Medicaid programs
if she pled guilty to a criminal offense related to the delivery of
an item or service under Medicare. Petitioner's reliance could not
have been reasonable, since any such promise would have been
contrary to law. This of course does not preclude Petitioner's
right to seek relief in another forum, where perhaps she may seek
leave to withdraw her guilty plea.


III. The I.G. is entitled to prevail as a matter of law.

Petitioner has opposed the I.G.'s motion for summary disposition
and requests an in-person hearing to present evidence to
substantiate her claim that government agents promised her that
she would not be excluded from the Medicare and Medicaid programs
as a result of her guilty plea. However, I need not proceed to an
in-person hearing. For the reasons stated above, the I.G. would be
entitled to prevail as a matter of law regardless of any promises
made by Special Agent Root and AUSA Darrow. Thus, for the purposes
of this Decision and to resolve this summary disposition issue, I
accept as proven that Special Agent Root and AUSA Darrow promised
Petitioner that she would not be excluded from the Medicare and
Medicaid programs. Accordingly, I find that there is no material
fact in dispute, and the I.G. is entitled to summary disposition.

CONCLUSION

Because Petitioner was convicted of a criminal offense related to
the delivery of an item or service under Medicare, the I.G. was
required to exclude Petitioner from participation in the Medicare
and Medicaid programs for no less than five years, pursuant to
sections 1128(a)(1) and 1128(c)(3)(B). Therefore, I uphold the
five-year exclusion.

___________________________
Joseph K. Riotto
Administrative Law Judge

1. I use the term "Medicaid" hereafter to represent all programs
other than Medicare from which Petitioner was excluded.

2. The I.G. submitted four exhibits and an attachment which I
have marked as a fifth exhibit. I cite the I.G.'s exhibits as
"I.G. Ex(s). (number) at (page)." I admit into evidence I.G. Exs.
1 - 5. Petitioner offered one exhibit which I cite as P. Ex. 1.
I admit P. Ex. 1 into evidence. I cite the I.G.'s brief for
summary disposition as "I.G. Br. at (page)." I cite Petitioner's
response as "P. Br. at (page)." I cite the I.G.'s Reply as "I.G.
R. Br. at (page)."