Roberta E. Miller, CR No. 367 (1995)

$05:Exclusion Case

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division


In the Case of:

Roberta E. Miller,

Petitioner,

- v. -

The Inspector General.

DATE: April 4, 1995
Docket No. C-95-006
Decision No. CR367

DECISION

By letter dated September 18, 1994, Roberta E. Miller, the
Petitioner herein, was notified by the Inspector General (I.G.) of
the United States Department of Health & Human Services (HHS), that
it had been decided to exclude Petitioner 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. asserted that an exclusion
of at least five years was 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 Medicaid.

Petitioner filed a timely request for review of the I.G.'s action.
The parties moved for disposition on the written record.
Because I have determined that there are no facts of decisional
significance that are genuinely in dispute, and because I have
determined that the only matters to be decided are the legal
implications of the undisputed facts, I have decided the case on
the basis of the parties' written submissions.

I find no reason to disturb 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

1. During the period relevant to this case, Petitioner was
administrator of the Alvin Convalescent Center, a Medicaid
certified nursing facility. I.G. Ex. 4, 5. 2/

2. Petitioner's responsibilities as administrator of the Alvin
Convalescent Center included maintaining trust fund accounts on
behalf of Medicaid patients. I.G. Ex. 4, 5.

3. On November 22, 1991, Petitioner was charged, in a Texas county
court, with the criminal offense of altering patient trust fund
records with intent to defraud. I.G. Ex. 1, 4, 5.

4. Specifically, Petitioner was alleged to have made false entries
on patients' records to make it appear that some patients,
including at least several Medicaid patients, had received funds
when they had not, or that funds had been spent on a patient's
behalf when, in fact, those funds had not been so spent. I.G. Ex.
1, 4 - 10.

5. Petitioner entered a plea of nolo contendere to the charge of
altering patient trust fund records with intent to defraud. I.G.
Ex. 1 - 3.

6. The court accepted Petitioner's plea of nolo contendere, but
withheld making a finding of guilt against Petitioner pursuant to
a deferred adjudication program. Instead, the court placed
Petitioner on probation for six months and fined her $200. I.G.
Ex. 2, 3.

7. Petitioner was convicted of a criminal offense within the
meaning of section 1128(i)(3) of the Act. Findings 1 - 6. 3/

8. Petitioner was convicted of a criminal offense within the
meaning of section 1128(i)(4) of the Act. Findings 1 - 6.

9. A nursing facility administrator's protection of funds held in
trust for Medicaid recipients who are patients at that facility is
an integral element of the administrator's delivery of health care
services to those patients under Medicaid.

10. Petitioner's conviction of a criminal offense was based upon
her alteration, with the intent to defraud, of the records of
patients in the Alvin Convalescent Center, including several
Medicaid patients. I.G. Ex. 1 - 13; Findings 1 - 9.

11. Petitioner's conviction of a criminal offense is related to
the delivery of items or services under Medicaid, within the
meaning of section 1128(a)(1) of the Act. I.G. Ex. 1 - 13;
Findings 1 - 10.

12. Neither the I.G. nor an administrative law judge has the
authority to reduce a five-year minimum exclusion mandated by
sections 1128(a)(1) and 1128(c)(3)(B) of the Act. Act, sections
1128(a)(1), 1128(c)(3)(B); 42 C.F.R. 1001.101, 1001.102.

13. Petitioner was properly excluded from participation in
Medicare and Medicaid for a period of five years pursuant to
sections 1128(a)(1) and 1128(c)(3)(B) of the Act. Findings 1 -
12.


PETITIONER'S POSITION

Petitioner maintains that, under Texas law, she was not found
guilty nor convicted of any criminal offense. Also, she denies any
connection between her actions and the delivery of items or
services under Medicare or Medicaid.

Moreover, Petitioner asserts that I should treat neither her plea
of nolo contendere or the court's deferral of adjudication in her
criminal case as a conviction under the Act. Section
1128(i)(3),(4). Petitioner asserts that if I were to find either
her plea of nolo contendere or the deferred adjudication to be a
conviction within the meaning of section 1128(i) of the Act, such
finding would circumvent the State's reasons for enacting laws
permitting nolo contendere pleas and deferred adjudications.

Petitioner contends that the State's reason for permitting nolo
contendere pleas is to promote the disposition of criminal cases by
compromise. Petitioner contends further that nolo contendere pleas
create a significant incentive for a defendant to terminate
litigation. This is because, by pleading nolo contendere, a
defendant does not have to admit guilt, which admission might
compromise a defendant's position in other legal proceedings.

Additionally, Petitioner contends that section 1128(i) of the Act
is unconstitutional as applied to her case under the Fifth and
Fourteenth Amendments to the United States Constitution.
Specifically, Petitioner contends that section 1128(i) is
unconstitutional based on the disparate impact the exclusion
proceeding will have upon her, as opposed to other persons who
plead nolo contendere.


DISCUSSION

Section 1128(a)(1) of the Act, under which the I.G. seeks
Petitioner's exclusion, contains two requirements. It requires
that an individual: (1) be convicted of a criminal offense, and
(2) that the conviction be related to the delivery of an item or
service under Medicare or Medicaid.

Section 1128(i) of the Act provides that, for purposes of sections
1128(a) and 1128(b) of the Act, an individual will be deemed to
have been "convicted" of a criminal offense --

(1) when a judgment of conviction has been entered against the
individual or entity by a Federal, State, or local court,
regardless of whether there is an appeal pending or whether the
judgment of conviction or other record relating to criminal conduct
has been expunged;

(2) when there has been a finding of guilt against the
individual or entity by a Federal, State, or local court;

(3) when a plea of guilty or nolo contendere by the individual
or entity has been accepted by a Federal, State, or local court; or

(4) when the individual or entity has entered into
participation in a first offender, deferred adjudication, or other
arrangement or program where judgment of conviction has been
withheld.

In the case at hand, I have found that Petitioner has been
convicted of a criminal offense under both sections 1128(i)(3) and
1128(i)(4) of the Act. Regarding section 1128(i)(3), the evidence
demonstrates that Petitioner entered a nolo contendere plea and the
court expressly accepted it. A plea of nolo contendere falls
within the meaning of section 1128(i)(3) whenever a party offers
such a plea and a court agrees to accept it as an element of an
arrangement to dispose of a pending criminal matter. Douglas L.
Reece, D.O., DAB CR305 (1994).

Regarding section 1128(i)(4), the language of the statute is plain
and encompasses situations where an individual or entity has
entered into a first offender, deferred adjudication, or other
arrangement where judgment of conviction has been withheld. The
fact that, in this case, the court withheld making a finding of
guilt against Petitioner and instead imposed a period of probation
- rather than immediately declaring her to be guilty - is precisely
the situation contemplated by this section of the Act. By the very
terms of Petitioner's plea of nolo contendere, the court withheld
making a final finding of guilt against Petitioner. Instead, the
court placed Petitioner on probation and reserved the right to
reinstate the conviction in the event Petitioner failed to fulfill
the terms of her probation. Prior decisions of administrative law
judges at the Departmental Appeals Board have held that such a
deferred adjudication does not bar mandatory exclusion under
section 1128(a)(1) of the Act. Douglas L. Reece, D.O., DAB CR305
(1994); James F. Allen, M.D.F.P., DAB CR71 (1990). Thus, I have
found that, under the plain meaning of section 1128(i)(4) of the
Act, Petitioner has been convicted of a criminal offense.

Petitioner argues, however, that I should disregard section 1128(i)
of the Act and not consider her to have been convicted of a
criminal offense within the meaning of the Act. Petitioner
supports her argument by asserting that once her probationary
period has elapsed, Texas law would regard her as having committed
no offense, implying that she should not be considered to have been
convicted of a criminal offense. While I do not question the
validity of Petitioner's interpretation of Texas law, such
interpretation is irrelevant here, because "what constitutes a
conviction under the Medicaid Act . . . is determined by federal
law, not State law." Travers v. Shalala, 20 F.3d 993, 996 (1994);
see United States v. Brebner, 951 F.2d 1017, 1021 (1991).


Turning to the second requirement of section 1128(a)(1) of the Act,
I have found that Petitioner's conviction of the alteration of
patient trust fund records with intent to defraud relates to the
delivery of items or services under Medicaid. In this regard, it
has been held that the protection of funds held in trust for
Medicaid recipients is an integral element of the services
delivered to Medicaid recipients by nursing facilities. Jerry
Edmonson, DAB CR59 (1989); Gary Gregory, DAB CR274 (1993). The
petitioner in Edmonson was a nursing home administrator who had
been convicted of misapplying funds that he held in a fiduciary
capacity for a Medicaid recipient. The administrative law judge in
Edmonson found that the protection of Medicaid recipients' funds is
an integral element of the Medicaid services delivered by nursing
facilities. Since the petitioner in Edmonson had been convicted of
a criminal offense affecting an integral element of the delivery of
Medicaid services, the administrative law judge reasoned that the
petitioner's offense was related to the delivery of Medicaid
services within the meaning of section 1128(a)(1) of the Act.

In the case at hand, the facts which led to Petitioner's plea of
nolo contendere involved her alteration of patients' trust fund
records with the intent to defraud. By altering these trust fund
records, Petitioner misappropriated the funds of Medicaid
recipients. Findings 1 - 10. As was stated in Edmonson, the
protection of such funds is an integral element of the Medicaid
services delivered by a nursing facility such as Alvin Convalescent
Center. As administrator of the Alvin Convalescent Center,
Petitioner had a duty, as part of the services she provided as
administrator, to protect those funds. Accordingly, I found above
that Petitioner's conviction for this criminal offense was
program-related within the meaning of section 1128(a)(1) of the
Act.

Petitioner contends that the I.G.'s attempt to classify her nolo
contendere plea or deferred adjudication as a conviction mandating
a five-year exclusion under section 1128(a)(1) violates her
Constitutional rights. I construe one of Petitioner's contentions
regarding the Constitutionality of her exclusion to be that her
exclusion violates the Constitutional prohibition against double
jeopardy. However, my delegation of authority to hear and decide
exclusion cases brought pursuant to section 1128 does not include
the authority to rule on the Constitutionality of either federal
statutes or the I.G.'s actions. Thus, I have no authority to rule
on the Constitutionality of any action the I.G. has taken against
Petitioner. 42 C.F.R. 1005.4(c)(1), (4). However, when an
exclusion is imposed pursuant to section 1128 of the Act, the
primary purpose of that exclusion is to protect Medicare and
Medicaid from future misconduct by a provider who has been shown to
be untrustworthy. Francis Shaenboen, R.Ph., DAB CR97 (1990), aff'd
DAB 1249 (1991). District courts have specifically found that
exclusions imposed under section 1128 of the Act are remedial in
nature, rather than punitive, and do not violate the double
jeopardy provisions of the Constitution. Manocchio v. Sullivan,
768 F. Supp. 814 (S.D. Fla. 1991). Additionally, it has been held
that double jeopardy does not apply to a subsequent federal
prosecution based on facts which led to a State conviction. Abbate
v. United States, 359 U.S. 187 (1959).

Additionally, Petitioner argues that her exclusion circumvents
Texas' reasons for allowing defendants to plead nolo contendere,
and, thus, violates her right to due process and equal protection
under the Constitution. Again, I note that I do not have the
authority to rule on the Constitutionality of federal statutes or
any action the I.G. might take against Petitioner. Furthermore,
the exclusion imposed and directed against Petitioner by the I.G.
was done under the authority of federal law. What constitutes a
conviction under Texas law or what Texas' motivations were in
enacting a law allowing nolo contendere pleas is irrelevant to my
determination here, because federal law is controlling. Travers v.
Shalala, 20 F.3d 993, 996 (1994) (citations omitted); Larry M.
Edwards, M.D., DAB CR278 (1993); Carlos Zamora, M.D., DAB 1104
(1990); Douglas L. Reece, D.O., DAB CR305 (1994).

Petitioner argues also that the I.G. may not exclude her because
Petitioner was not aware that her nolo contendere plea could serve
as a basis for the I.G. to exclude her. This argument is without
merit. A similar argument was made by the petitioner in the case
of Douglas Schram, R.Ph., DAB CR215 (1992), aff'd DAB 1372 (1992)
and rejected by me. In rejecting petitioner's argument, I cited
U.S. v. Suter, 755 F.2d 523, 525 (7th Cir. 1985), and noted that
the court had held that a defendant in a criminal proceeding does
not have to be advised of all possible consequences which may flow
from his plea, which consequences may include, as is the case here,
temporarily being barred from receipt of government reimbursement
for professional services.

Lastly, neither the evidence submitted by Petitioner regarding her
completion of probation without further incident or the statements
regarding Petitioner's good character prepared by persons
acquainted with her are relevant to any of the issues before me. 4/
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate a
five-year exclusion for the conviction of a program-related
offense. Therefore, although Petitioner's successful completion of
probation and the statements attesting to her good character may be
factors that reflect positively upon her, I have no authority to
consider them as bases for reducing the five-year exclusion imposed
and directed against her by the I.G.


CONCLUSION

Petitioner's conviction of a program-related offense mandates that
she be excluded from Medicare and Medicaid for the mandatory
minimum five-year period.


___________________________
Joseph K. Riotto
Administrative Law Judge

1. I refer to all programs from which Petitioner has been
excluded, other than Medicare, as "Medicaid."

2. Petitioner submitted four exhibits (labelled A through D) in
conjunction with her brief. I have re-marked these exhibits as
Petitioner's exhibits (P. Ex.) 1 through 4 and I have admitted
them. The I.G. submitted 14 exhibits in conjunction with her
brief. I have admitted I.G. exhibits (I.G. Ex.) 1 through 13 into
evidence. I reject I.G. Ex. 14 as duplicative. I.G. Ex. 14 is
Petitioner's September 18, 1994 notice of exclusion, which document
is present already in the record of this case. The I.G. submitted
also an exhibit (I.G. Ex. 15) with her reply brief. In my Order of
December 7, 1994, I established a schedule for the parties to
submit briefs and exhibits by December 16, 1994. However, counsel
for the I.G. did not submit I.G. Ex. 15 until sometime in March
1995, and it was not received by this office until March 16, 1995.
As counsel for the I.G. did not request permission to file this
exhibit late (by almost three months), I reject I.G. Ex. 15 as
untimely.

3. I cite to my Findings of Fact and Conclusions of Law as
"Finding(s) (number)."

4. These statements can be found at P. Ex. 1 - 4.