Jean Reeder, CR No. 376 (1995)

$05:Exclusion Case

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division


In the Case of:

Jean Reeder,

Petitioner,

- v. -

The Inspector General

DATE: May 12, 1995
Docket No. C-95-002
Decision No. CR376


DECISION

By letter dated September 20, 1994, Jean Reeder, the Petitioner
herein, was notified by the Inspector General (I.G.), of the U.S.
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 program and from participation in the
State health care programs described in section 1128(h) of the
Social Security Act (Act), which are referred to herein as
"Medicaid." The I.G.'s rationale was that exclusion, for at least
five years, is mandated by sections 1128(a)(2) and 1128(c)(3)(B) of
the Act because Petitioner had been convicted of a criminal offense
related to the neglect or abuse of patients in connection with the
delivery of a health care item or service.

Petitioner filed a request for review of the I.G.'s action by an an
administrative law judge of the Departmental Appeals Board.

The I.G. moved for summary disposition. For the reasons discussed
below, I conclude that the I.G. has failed to prove that Petitioner
was convicted of a criminal offense, within the meaning of section
1128(i) of the Act. Therefore, the I.G. was without authority to
exclude Petitioner.


APPLICABLE LAW

Section 1128(a)(2) requires the Secretary of HHS to exclude from
participation in the Medicare and Medicaid programs any individual
or entity that has been convicted of a criminal offense relating to
the neglect or abuse of patients in connection with the delivery of
a health care item or service.


FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. During the period of time relevant to the case, Petitioner was
administrator of the Guest House of Nashville, a nursing facility.
I.G. Ex. 1.

2. On or about September 23, 1992, Kay Aist, an investigator for
the Arkansas Office of Attorney General, Medicaid Fraud Control
Unit, executed an affidavit for a warrant for Petitioner's arrest.
I.G. Ex. 1.

3. In the affidavit, Ms. Aist stated that she had reason to
believe Petitioner had committed the offense of failing to report
abuse -- in that Petitioner allegedly had slapped an 84-year-old
resident of the Guesthouse of Nashville, Arkansas, during a
disaster drill at the facility on May 26, 1992 -- but that
Petitioner had not immediately reported this incident to the Office
of Long Term Care, instead reporting the incident on June 2, 1992,
after other employees of the facility had reported the incident.
I.G. Ex. 1.

4. Based on the affidavit, a warrant was issued for Petitioner's
arrest. I.G. Ex. 2.

5. On or about October 19, 1992, Petitioner was arrested and given
a citation which directed her to appear in Howard County Municipal
Court (Municipal Court) on October 22, 1992. I.G. Ex. 8 at 5.

6. Petitioner posted a cash bond of $92.25 to guarantee her
appearance, but did not appear to stand trial. I.G. Ex. 8 at 5.

7. On October 22, 1992, the Municipal Court forfeited the cash
bond. I.G. Ex. 3.

8. On January 8, 1993, Petitioner filed a petition asking the
Municipal Court to set aside her bond forfeiture and to grant her
a trial on the merits. I.G. Ex. 4.

9. On February 8, 1993, the Municipal Court entered an order
holding "the conviction and/or bond forfeiture
. . . is hereby set aside, canceled, nullified, and expunged and
shall forever hereafter have no force and effect whatsoever at law
or in equity." I.G. Ex. 5.

10. The Municipal Court also returned Petitioner's case to the
docket to be set for a trial at a later date. I.G. Ex. 5.

11. In a response filed February 19, 1993, the State requested
that the Municipal Court vacate its order granting Petitioner a new
trial. I.G. Ex. 6.

12. On or about March 4, 1993, the Municipal Court denied the
State's request on the grounds that the State's response was filed
out of time. I.G. Ex. 7.

13. On or about May 5, 1993, the State filed with the Arkansas
Supreme Court a motion and brief requesting a writ of prohibition
to the Municipal Court. I.G. Ex. 8 at 3.

14. In its motion, the State requested that the Arkansas Supreme
Court overturn the Municipal Court's order vacating Petitioner's
bond forfeiture and prohibit the Municipal Court from convening a
new trial in Petitioner's case. I.G. Ex. 8 at 2.

15. On May 24, 1993, the Arkansas Supreme Court granted the
State's motion for a writ of prohibition in a one-sentence order.
I.G. Ex. 10.

16. The I.G. has the burden of proving that there is a basis for
Petitioner's exclusion.

17. The I.G. failed to prove by a preponderance of the evidence
that the Municipal Court entered a judgment of conviction against
Petitioner.

18. The I.G. failed to prove by a preponderance of the evidence
that a State or local court made a finding of guilt against
Petitioner.

19. The I.G. failed to prove by a preponderance of the evidence
that Petitioner entered a plea of guilty or nolo contendere to the
charge of failing to report abuse or that the Municipal Court
accepted such a plea.

20. The I.G. failed to prove by a preponderance of the evidence
that Petitioner entered into participation in a first offender,
deferred adjudication, or other arrangement where judgment of
conviction was withheld.

21. The I.G. failed to prove that Petitioner was convicted of a
criminal offense within the meaning of section 1128(i) of the Act.

22. The I.G. is without authority to impose and direct an
exclusion against Petitioner. Findings 16-21.


THE I.G.'s POSITION

The I.G. contends that the Municipal Court treated Petitioner's
failure to appear as a plea of guilty and that the court "accepted"
such plea. I.G. Br. at 6. The I.G. suggests also that Petitioner
herself regarded her nonappearance as a guilty plea inasmuch as she
declared that it was cheaper than defending herself in court.
I.G.'s Resp. at 2.

The I.G. further maintains that issuance of a writ of prohibition
necessarily means that the Municipal Court wholly lacked
jurisdiction to set aside the conviction or forfeiture or to set a
new trial. I.G. Br. at 9.


PETITIONER'S POSITION

Petitioner insists that her case was never heard or tried and that
she never pled guilty in any court. She argues that a bond
forfeiture is not a guilty plea and not a conviction. She states
that she disregarded her court date (even though this allowed the
bond to be forfeited) because she thought that it would be cheaper
and easier that way.

Lastly, Petitioner notes that the Arkansas Supreme Court has never
decided the question of whether a bond forfeiture constitutes a
conviction.


DISCUSSION

The I.G. argues that she was authorized to exclude Petitioner from
the Medicare program and to direct Petitioner's exclusion from the
Medicaid program pursuant to section 1128(a)(2) of the Act. To
establish a basis for Petitioner's exclusion, the I.G. must prove
that Petitioner was (1) convicted of a criminal offense and (2)
that the criminal offense was related to the neglect or abuse of
patients in connection with the delivery of a health care item or
service. I conclude that the I.G. has failed to prove that
Petitioner was convicted of a criminal offense. Therefore, I do
not need to reach the question of whether the offense with which
Petitioner was charged was related to patient neglect or abuse
within the meaning of the statute.

The parties have devoted a great deal of their argument to the
question of whether the writ of prohibition issued by the Arkansas
Supreme Court served to reinstate Petitioner's bond forfeiture or
only to prevent a new trial from taking place. I do not need
decide which interpretation is correct, however. This is because
I have determined that, even if Petitioner's bond forfeiture had
been reinstated by the Arkansas Supreme Court, the bond forfeiture
would not represent a conviction within the meaning of section
1128(i) of the Act.

Whether or not an individual is subject to exclusion from federally
funded health care programs because he or she has been "convicted"
is a question of federal law. "What constitutes a 'conviction'
under the Medicaid Act . . . is determined by federal law, not
state law." Travers v. Shalala, 20 F.3d 993, 996 (9th Cir. 1994).
Federal law defines the term in section 1128(i) of the Act. That
section provides that an individual will be deemed to have been
"convicted" if any of the following circumstances are applicable to
his or her case:

(1) 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; or

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

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

(4) 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.


As this language demonstrates, Congress intended the term
"conviction" to apply to a broad range of dispositions. Yet, the
language of section 1128(i) is also quite specific: nowhere does it
provide that bond forfeitures are to be treated as convictions.

Each of the definitions of conviction found in section 1128(i)
involve some determination of guilt on the record before a State or
federal court. The statutory definition of conviction strikes a
balance between the due process rights of excluded individuals and
HHS' interest in expeditiously ceasing its relationship with
individuals who are untrustworthy. In enacting section 1128,
Congress made the determination that a formal finding of guilt
against an individual conclusively demonstrates that the individual
is not trustworthy to participate in the Medicare and Medicaid
programs. The Act imposes a mandatory five-year period of
exclusion on individuals who have been convicted of offenses
related to the delivery of services under Medicare or Medicaid or
related to neglect or abuse of patients. Such exclusions have
significant consequences for excluded individuals' reputations and
livelihoods. The Act's definition protects excluded individuals by
ensuring that the individuals are not deemed to have been convicted
unless they have appeared before a court for a determination on the
merits regarding the offenses with which they have been charged.

In the present case, the I.G. does not dispute that Petitioner
never appeared before the Municipal Court for a determination on
the merits of the charge of failure to report abuse. Therefore,
the I.G. has failed to prove that Petitioner was convicted within
the meaning of any of the alternative definitions of section
21128(i) of the Act.

The I.G. has not offered in evidence any document purporting to be
a judgment of conviction against Petitioner. At most, the I.G. has
pointed out that Petitioner's motion for a new trial and the
Municipal Court's order granting Petitioner's motion refer to
Petitioner's "conviction and/or bond forfeiture." However, there
is nothing in the record that explains which of these words applied
to Petitioner. Moreover, the I.G. acknowledges that the Municipal
Court apparently "did not enter a specific judgment of conviction
or make a specific finding of guilt against petitioner." I.G.
Resp. to ALJ's Inquiry at 1. Thus, the documentary evidence is
insufficient to prove, by a preponderance of the evidence, that the
Municipal Court entered a judgment of conviction against
Petitioner.

Nor has the I.G. pointed to any provision of Arkansas law that
would operate to transform a bond forfeiture into a conviction. By
contrast, Petitioner cites Almond v. Countryside Casualty Co., 329
F. Supp. 137 (W.D. Ark. 1971), aff'd, 455 F.2d 503 (8th Cir. 1972),
which holds that a bond forfeiture is not a conviction under
Arkansas law. 1/ Therefore, I conclude that the I.G. has failed to
prove that a judgment of conviction has been entered against
Petitioner, within the meaning of section 1128(i)(1).

There is no evidence that the Municipal Court, or any other court,
made any finding of guilt against Petitioner. Thus, the definition
of "convicted" found at section 1128(i)(2) is inapplicable to
Petitioner's case.

The I.G. argues that Petitioner's failure to appear for trial and
her willingness to surrender her bond are the equivalent of a
guilty plea. Accordingly, the I.G. argues that she was convicted
within the meaning of section 1128(i)(3). However, the I.G. has
failed to offer any evidence that this position reflects settled
State law. Petitioner avers that she did not enter a plea of
guilty or nolo contendere--and there is nothing in the record to
contradict her. I therefore conclude that the I.G. failed to prove
that Petitioner was convicted within the meaning of section
1128(i)(3).

As to section 1128(i)(4), there is no evidence to suggest that
Petitioner's case was treated as part of any deferred adjudication
program. As discussed above, it does not appear that Petitioner
ever entered a plea, nor that the Municipal Court ever held any
proceedings on the merits of her case. Thus, there is no basis to
conclude that any judgment of conviction was withheld, nor was
there any record of conviction to be expunged. Accordingly, I
conclude that Petitioner was not convicted within the meaning of
section 1128(i)(4).

Based on the above facts and reasoning, I conclude that the I.G.
has failed to show that Petitioner was convicted as that term is
defined in the Act. Because federal law is controlling, as noted
above, the numerous State law issues discussed by the parties
herein are not determinative of the outcome.


CONCLUSION

Inasmuch as it was not proven that Petitioner was convicted of a
criminal offense relating to the neglect or abuse of patients in
connection with the delivery of a health care item or service, her
exclusion from the Medicare and Medicaid programs under the
authority of section 1128(a)(2) is not justified.


___________________________
Joseph K. Riotto
Administrative Law Judge

1. The I.G. points out that the Arkansas Supreme Court has not
ruled explicitly on the question of whether a bond forfeiture is
the equivalent of a guilty plea. I.G. Resp. to Petitioner's Brief
at 2. This merely reinforces my conclusion that the evidence is
insufficient to establish that Petitioner's bond forfeiture amounts
to a conviction.