Nanette Neu, R.N., DAB CR429 (1996)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division


In the Case of:

Nanette Neu, R.N.,

Petitioner,

- v. -

The Inspector General.

DATE: August 16, 1996
Docket No. C-96-163
Decision No. CR429


DECISION

In this case, I uphold the decision of the Inspector
General (I.G.) to exclude Petitioner from participating
in the Medicare and Medicaid 1/ programs for a period
of three years under section 1128(b)(1) of the Social
Security Act (Act).

Section 1128(b)(1) of the Act provides that the Secretary
of Health and Human Services (Secretary) may exclude any
individual who has been convicted under State or federal
law of a criminal offense relating to fraud, theft,
embezzlement, breach of fiduciary responsibility, or
other financial misconduct, in connection with the
delivery of health care items or services. On behalf of
the Secretary, the I.G. has the discretion to decide
whether to impose and direct an exclusion under section
1128(b)(1) of the Act. 42 C.F.R. § 1001.201(a); see also
42 C.F.R. § 1005.4(c)(5). 2/ The Secretary has made
the I.G.'s exercise of said discretion unreviewable. 42
C.F.R. § 1005.4(c)(5). Therefore, the only two issues in
this case are whether there exists a basis for the I.G.'s
imposition of the permissive exclusion against Petitioner
and whether the length of the exclusion is reasonable.
See 42 C.F.R. § 1001.2007(a)(1).

The Secretary's regulation implementing section
1128(b)(1) of the Act specifies also a benchmark
exclusion period of three years, subject to her
increasing or decreasing the three year exclusion period
based on the existence of various enumerated factors. 42
C.F.R. § 1001.201. All regulations contained in 42
C.F.R. Part 1001 are binding upon the I.G. and the
administrative law judge. 42 C.F.R. § 1001.1(b). Based
on the evidence and arguments of record, the
administrative law judge has the authority to affirm,
reverse, or modify the exclusions imposed by the I.G. 42
C.F.R. § 1005.20.

During the prehearing conference held on April 10, 1996,
the parties waived an in-person hearing and agreed to
submit the case to me for decision based upon a written
record. Accordingly, I set out a briefing schedule in my
prehearing order dated April 18, 1996. The parties have
submitted their motions, briefs and exhibits. 3/

For the reasons that follow, I find in favor of the I.G.
on the issues of whether a basis for the exclusion exists
under section 1128(b)(1) of the Act, and whether a three-
year exclusion is reasonable in length.


FINDINGS

1. At all times relevant to this action, Petitioner has
been a Registered Nurse. I.G. Exs. 1, 2, 8.

2. During the period relevant to this action, Petitioner
was employed as the Director of Nursing for Laabs Home
Health Care, Inc., a home health agency. I.G. Ex. 7.

3. On November 1, 1991, Petitioner signed a form for the
patient N.R. to receive home health services from Laabs
Home Health Care. I.G. Ex. 8 at 1.

4. N.R. is confined to a wheel chair, has left-sided
paralysis, and suffers from brain damage, seizures, and
memory limitations. I.G. Ex. 2 at 2; I.G. Ex. 8 at 2; P.
Ex. 1 at 30.

5. On or before November 8, 1991, N.R. was admitted by
Laabs Home Health Care for the receipt of home health
services. I.G. Ex. 8.

6. In November of 1991, N.R. acted on Petitioner's
suggestion to open a checking account with his money,
placed both Petitioner's name and his name on the
account, and gave Petitioner authorization to use the
funds from the account to buy his groceries and pay his
bills. I.G. Ex. 2; P. Ex. 1 at 8.

7. Petitioner pled guilty to the offense of "Theft by
Bailee in excess of $500," a misdemeanor offense, in
Wisconsin State Court for having stolen N.R.'s money from
the bank account between November 8, 1991 and July 8,
1992. The guilty plea was accepted by the court. I.G.
Exs. 1, 2; P. Ex. 1 at 3, 34.

8. Petitioner was convicted within the meaning of
sections 1128(b)(1) and (i)(3) of the Act. Finding 7.

9. Petitioner's conviction was for an offense related to
fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct within the
purview of section 1128(b)(1) of the Act. Finding 7.

10. During the period from November 8, 1991 to July 8,
1992, the period specified in the Criminal Complaint,
N.R. received home health care services from Laabs Home
Health Care. I.G. Ex. 8.

11. During the period from November 8, 1991 to July 8,
1992, Petitioner, in her capacity as an employee of Laabs
Home Health Care, delivered as well as supervised the
delivery of home health services to N.R. I.G. Ex. 8.

12. At various times during the period from November 8,
1991 to July 8, 1992, Petitioner delivered to N.R. also
certain basic, non-skilled, custodial or life-sustaining
types of health care services, such as buying him food to
eat and clothing to wear, doing his laundry, paying his
rent, and paying his telephone bills. P. Ex. 1 at 7, 14-
19, 26.

13. In setting up the checking account from which
Petitioner stole money as a bailee, N.R. had intended
Petitioner to use the money from the account to take care
of his basic health maintenance needs, such as buying his
groceries and paying his bills. I.G. Ex. 2 at 2, 3.

14. Petitioner agreed to provide such basic, health
maintenance types of care to N.R. by using his money from
the checking account for that purpose. See Finding 12;
P. Ex. 1 at 8, 17.

15. In explaining the use of N.R.'s money in the
checking account, Petitioner noted that she had provided
health care services to N.R. and then billed Laabs Home
Health Care for her services. P. Ex. 1 at 19.

16. It is logical to conclude that, to avoid disrupting
N.R.'s receipt of home health services, N.R.'s rental
bills would need to be paid so that he could have a home
in which to live and receive home health care services.
See Finding 10.

17. Due to his medical condition, Petitioner needed to
have his telephone bills paid so that he would have
telephone services available in case of medical
emergencies. See I.G. Ex. 8 at 5; Finding 4.

18. Petitioner placed N.R. at risk for being evicted
from his apartment due to the nonpayment of his rent. P.
Ex. 1 at 31.

19. Petitioner did not always pay N.R.'s telephone
bills. P. Ex. 1 at 31.

20. Sometimes N.R. ran out of goods at his home, and
Petitioner would tell him that there was no money left
and to wait until the beginning of the month when his
benefit checks would usually arrive. P. Ex. 1 at 31.

21. Drawing from the account N.R. had established,
Petitioner wrote checks to pay for her child care needs
and to buy things for herself such as cosmetics and
weight reduction services. P. Ex. 1 at 9.

22. Instead of depositing the full amount of the checks
sent to N.R. each month by government agencies and his
pension program, Petitioner sometimes withdrew cash and
spent the cash without obtaining receipts. I.G. Ex. 2 at
3; P. Ex. 1 at 26-27, 29-30.

23. Petitioner's commission of her crimes had placed
N.R.'s physical health at risk. See Findings 13 to 21.

24. Petitioner's commission of her crimes had a negative
impact on the state of N.R.'s mental health. P. Ex. 1 at
36-37.

25. Petitioner's conviction was in connection with the
delivery of health care items or services within the
meaning of section 1128(b)(1) of the Act. Findings 1 to
7, 10 to 24.

26. The I.G. had a basis for imposing and directing an
exclusion against Petitioner. Findings 8, 9, 25; section
1128(b)(1) of the Act.

27. When the I.G. decides in her discretion to impose an
exclusion under section 1128(b)(1) of the Act, the
regulations require her to impose an exclusion of three
years, unless certain enumerated aggravating or
mitigating factors exist to warrant increasing or
decreasing the three-year benchmark period of exclusion.
42 C.F.R. §§ 1001.201, 1005.4(c)(5).

28. The I.G. imposed and directed the benchmark
exclusion period of three years against Petitioner. I.G.
Br. at 9.

29. Petitioner has the burden of coming forward with
evidence to prove her affirmative defense that the
mitigating factor codified at 42 C.F.R. §
1001.201(b)(3)(i) is present and should have reduced the
length of the three-year benchmark exclusion period.
Order and Schedule for Filing Briefs and Documentary
Evidence at 2.

30. Petitioner has proven that she satisfies the first
element of the mitigating factor codified at 42 C.F.R. §
1001.201(b)(3)(i), in that she was convicted of only one
misdemeanor. Finding 7.

31. The remaining element Petitioner has the burden of
proving is that, due to the acts that resulted in
conviction or similar acts, the total financial losses to
one or more individuals or entities equal less than
$1500. 42 C.F.R. § 1001.201(b)(3)(i).

32. Under the elements of the misdemeanor offense to
which she pled guilty, Petitioner is deemed to have
stolen more than $500 but not more than $1000. P. Ex. 2;
I.G. Ex. 1.

33. Petitioner has not proven her allegation that she
stole only $300 from N.R. Finding 31.

34. Petitioner has failed to account for her prior
unlawful acts of writing bad or worthless checks. See P.
Ex. 1 at 32, 38.

35. Petitioner's writing bad or worthless checks,
together with her crimes against N.R., were considered by
the judge in sentencing her as evidence of a gradual
victimization of others over a significant period of
time. P. Ex. 1 at 37-39.

36. Petitioner agreed to pay restitution in the amount
of $3000 to N.R., while pleading guilty to having stolen
more than $500 but not more than $1000 from N.R. P. Ex.
1 at 30; Finding 31.

37. It is not possible to ascertain precisely how much
Petitioner stole from N.R. given his mental impairments,
her withdrawals of cash from the checking account, and
her expenditures without obtaining receipts. Findings 4,
22; P. Ex. 1 at 38.

38. Petitioner has not adequately refuted the inference
that the $3000 in restitution she agreed to pay consisted
of the money she pled guilty to having stolen (between
$500 and $1000), as well as an additional amount she was
not charged with stealing but which she actually stole
from N.R. See P. Ex. 1 at 11.

39. Petitioner has failed to prove the element of the
mitigating factor that less than $1500 in total financial
losses had been suffered by N.R. or others due to the
acts which resulted in her conviction as well as similar
acts. Findings 33-38.

40. Petitioner has failed to prove that, as applied to
the facts of this case, the mitigating factor she relies
upon, even if present, warrants reducing the benchmark
exclusion period. See Findings 1-29.

41. The three-year exclusion imposed and directed by the
I.G. is reasonable as a matter of law. Findings 27-29,
39, 40.


DISCUSSION

A. I conclude that there exists a proper basis for the
exclusion under section 1128(b)(1) of the Act.

The I.G. contends that all elements of the statute have
been met. That is, the I.G. contends that the evidence
shows: (a) Petitioner was convicted under State law; (b)
Petitioner's conviction was in connection with the
delivery of a health care item or service; and (c)
Petitioner's conviction was for an offense related to
fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct. I.G. Br.
at 6-7. The I.G.'s contention is based primarily on the
fact that Petitioner was providing health care to the
victim of her crimes, N.R., during the time she committed
the offenses which resulted in her conviction. I.G.
Reply at 1-2.

The evidence of record establishes that Petitioner, a
Registered Nurse, was convicted in the State Court of
Wisconsin after having pled guilty to one misdemeanor
count of theft by bailee in excess of $500.00 from
November 8, 1991 through July 8, 1992. 4/ I.G. Exs. 1,
9. During the period she committed her criminal
offenses, Petitioner was employed by Laabs Home Health
Care, Inc., as its Director of Nursing. I.G. Ex. 7. Her
income was approximately $52,000 a year. P. Ex. 1 at 3.
The victim of Petitioner's crimes, N.R., was a patient
of Laabs Home Health Care during the time Petitioner
committed her crimes. 5/ I.G. Ex. 6 at 1-2; I.G. Ex.
8. N.R. was receiving health care from said home health
agency as a Medicare beneficiary. I.G. Ex. 8 at 4. 6/

Seven days before Petitioner began committing the crimes
for which she was convicted, she signed a form for Laabs
Home Health Care to admit N.R. 7/ I.G. Ex. 8 at 1. On
November 8, 1991, a physician authorized N.R.'s admission
to said home health care agency, and Petitioner's
criminal activities against N.R. began. I.G. Ex. 1; I.G.
Ex. 8 at 1. Also according to the evidence submitted by
the I.G., during the period from November 8, 1991 to July
8, 1992, Petitioner, in her capacity as an employee of
Laabs Home Health Care, delivered as well as supervised
the delivery of home health services to N.R. I.G. Ex. 8.

Petitioner has stipulated to the contents of the Criminal
Complaint as the basis for her guilty plea. P. Ex. 1 at
3. According to the Criminal Complaint, Petitioner's
victim, N.R., was paralyzed on his left side and was
confined to a wheelchair. I.G. Ex. 2 at 2. 8/ N.R.
said he knew Petitioner to be a Registered Nurse employed
by Laabs Home Health Care. Id. On November 8, 1991,
N.R. acted on Petitioner's suggestion and made an initial
deposit of $150.00 to open a checking account in both
their names in order for Petitioner to pay his bills and
buy his groceries. Id. at 2, 3. N.R. gave Petitioner
his power of attorney. P. Ex. 1 at 8.

Each month, N.R. received checks by mail in the amount of
$198.00 from his pension fund, $255.23 from the Social
Security program, and $122.00 from the Supplemental
Security Income program. I.G. Ex. 2 at 2, 4-5.
Petitioner was the only person with a key to N.R.'s
mailbox. Id. at 3. The bank records showed that
Petitioner had endorsed N.R.'s benefit checks and that
sometimes she deposited portions of his checks into the
account started by N.R. and took the remaining amounts in
cash. Id. at 5. By the time of the criminal
investigation, 130 checks had been drawn from this
account, and all of them showed Petitioner's signature.
Id. at 3, 4. N.R. identified only 14 checks, which
totalled $720.42, as having been written by Petitioner
for his use. Id. at 4. The remaining checks written by
Petitioner included those made payable to Jenny Craig (a
weight loss program), to Visa credit card, and for Mary
Kay cosmetic products. Id. at 3-4. N.R. said he had no
Visa card, was not a member of the Jenny Craig program,
and did not receive any Mary Kay cosmetic products. Id.
According to Petitioner's attorney in the criminal
proceedings, the checks Petitioner wrote fell into two
categories: those for the care of her children, and
those for things to make her feel better about herself,
such as for Weight Watchers, Jenny Craig, and cosmetics.
P. Ex. 1 at 9.

At the time of the criminal investigation, the account
had been charged more than $450.00 for overdrawn checks
and had a balance of only $3.90. I.G. Ex. 2 at 6. The
amount of money Petitioner was charged with stealing
($2695.29) was calculated on the basis of the amount of
the monthly benefit checks which were payable to N.R. and
deposited into the joint bank account, less the amount of
the checks N.R. acknowledged as having been written by
Petitioner for his use. Id. at 6.

In her brief, Petitioner does not dispute that she was
convicted or that her conviction was for an offense
related to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct
within the purview of section 1128(b)(1) of the Act.
Instead, Petitioner takes issue with the I.G.'s
conclusion that her conviction was in connection with the
delivery of a health care item or service.

Petitioner argues that she was excluded without a proper
basis under section 1128(b)(1) of the Act. Petitioner
contends she had befriended N.R., who "also happened to
be a patient of the home health agency where Petitioner
was director of nursing." P. Br. at 3. In her hearing
request and prior correspondence with the I.G.'s office,
Petitioner alleged also that no nurse-patient
relationship existed when she became a friend of N.R. and
helped him move into lodgings for the handicapped (I.G.
Ex. 6 at 1), that she began her fiduciary relationship
with N.R. prior to his becoming her patient (I.G. Ex. 4
at 1), and that she continued to act as N.R.'s friend and
handle his financial affairs (but she did not render care
to him or supervise his care) after he became a patient
of the home health agency employing her (I.G. Ex. 6).

The evidence submitted by Petitioner shows, inter alia,
that Petitioner, by her attorney, had alleged at her
sentencing hearing that she had bought things for N.R.,
such as the Girl Scout cookies Petitioner purchased from
her daughter. P. Ex. 1 at 19-20. Petitioner asserted
also at the sentencing hearing that, for Christmas,
Petitioner had given N.R.'s money to employees of the
home health agency where she was Nursing Director,
allegedly because these employees were caring for N.R.
Id. at 20.

Petitioner contends that the I.G. has not alleged or
proven that Petitioner's "mismanagement" of N.R.'s funds
affected the delivery of health care. P. Br. at 3. In
Petitioner's opinion, there was no marked effect on the
provision of care or any impact on the funding or payment
of health care services. Id. I assume that in pointing
out that the Criminal Complaint alleged only that the
checking account was opened by N.R. for payment of his
bills and to buy his groceries (P. Br. at 3), Petitioner
is intimating that none of the money Petitioner stole
from the account was ever intended by N.R. for the
payment of his health care services.

Petitioner asserts also that the I.G.'s imposition of an
exclusion on her reflects an impermissibly broad
interpretation of section 1128(b)(1). Id. Apparently
still believing herself innocent of the charges which
resulted in her conviction, she asks, "[I]s Medicare
going to exclude every nursing assistant accused of
stealing from patients in nursing homes [?]" Id.

The best conclusion I can draw from Petitioner's
arguments is that they are meritless.

First of all, I cannot countenance Petitioner's assertion
that she had merely "mismanaged" N.R.'s funds, or her
suggestion that her conviction resulted from her actions
as N.R.'s friend. She was convicted of stealing from
N.R. in her capacity as the bailee of his money.
Petitioner should be aware by now that theft and breach
of a fiduciary responsibility are not acts of friendship,
especially when such criminal acts are perpetrated
against an individual such as N.R., who suffered from
paralysis and brain injury, and was confined to a
wheelchair. P. Ex. 1 at 30; I.G. Ex. 2 at 2. After the
parties presented arguments at the sentencing hearing,
the court even noted the existence of a business
contractual agreement which she breached in taking N.R.'s
money. P. Ex. 1 at 36. The crimes she committed against
N.R. would not be changed into acts of friendship even if
I accepted as true that she had his best interests at
heart at times such as when she used his money to buy
Girl Scout cookies from her daughter and she made gifts
of his money to employees she supervised and worked with.

In asking with misplaced indignation whether there will
be an exclusion of every nursing assistant accused of
stealing from nursing home patients, Petitioner has again
purposely ignored the fact that she was not only accused,
but convicted, of stealing from N.R. Neither Petitioner
nor any other Registered Nurse or health care provider
has been issued a license to steal from patients.
Therefore, I do not share Petitioner's concern that the
I.G. might endeavor to exclude all nursing assistants or
other health care providers (including directors of
nursing) who have been convicted of stealing from
patients under their personal care or the care of their
employer. Indeed, the I.G. is authorized by statute and
regulation to exclude such providers.

Nor does the evidence support Petitioner's assertions
that N.R. "happened" (P. Br. at 3) to have become a
patient of the home health agency at which Petitioner was
employed as Nursing Director after she had already formed
a fiduciary relationship with N.R. Petitioner was
responsible for Petitioner's admission as a patient.
Laabs Home Health Care's patient admission form shows
very clearly that Petitioner signed it on November 1,
1991 in order to have N.R. receive care as a patient.
I.G. Ex. 8 at 1. The evidence shows clearly also that
N.R.'s admission to said home health agency was
authorized by a physician on November 8, 1991 (id.) and
that the crimes for which Petitioner was convicted began
on November 8, 1991. I.G. Ex. 1.

Moreover, whether a fiduciary relationship had formed
prior to N.R.'s admission to Laabs Home Health Care is
immaterial. Petitioner was not convicted for stealing
from N.R. during any period prior to his having been
admitted to Laabs Home Health Care. No matter when
Petitioner and N.R. had first formed their fiduciary
relationship, Petitioner cannot seriously believe that
she was at liberty to steal from N.R. after he was
admitted to Laabs Home Health Care. I do not think it
defies common sense to conclude, as Petitioner should
have concluded, that being a nurse and having been
employed by Laabs Home Health Care as its Nursing
Director, Petitioner should have refrained from stealing
money from a patient admitted by the facility, whether
the thefts were to occur on or off company premises, and
whether the thefts were to occur during or after her work
hours for the home health agency.

I agree with the I.G. that there is no merit to
Petitioner's suggestion that the financial misconduct
must occur within an institutional setting. See P. Br.
at 3; I.G. Reply at 2. It makes no difference under
section 1128(b)(1) of the Act whether the criminal acts
took place within the confines of an institution or in a
private home. I agree also with the I.G. that "the
Petitioner's privilege to practice nursing carries with
it an ongoing basic responsibility of ethics, morality,
and integrity, regardless of whether she is performing
her duties in an institution or home health care
setting." I.G. Reply at 2.

I do not find material or factually supportable
Petitioner's argument that N.R. was a patient of Laabs
Home Health Care but not her patient. Whatever standards
Laabs Home Health Care or Petitioner might have used to
associate particular patients with particular health care
providers, the statutory criteria is "in connection with
the delivery of health care items or services." The
evidence leaves no doubt that not only was Laabs Home
Health Care providing health care services to N.R. during
Petitioner's commission of her crimes, Petitioner was
also providing health care services to N.R. during the
same period. Between November 8, 1991 and July 8, 1992,
Petitioner committed her crimes and repeatedly signed the
treatment plans for N.R. and certified N.R. for the
receipt of home health care. I.G. Ex. 1; I.G. Ex. 8 at
1-4. On at least one occasion during the period of her
criminal activity against N.R., Petitioner prepared the
clinical progress notes pursuant to visiting N.R., which
indicates that Petitioner was involved directly in N.R.'s
care. I.G. Ex. 8 at 5. In addition, Petitioner also
billed Laabs Home Health Care for her medical services to
N.R. P. Ex. 1 at 19.

"In connection with the delivery of any health care item
or service" includes the performance of management or
administrative services relating to the delivery of such
items or services. 42 C.F.R. § 1001.201(a)(1). There is
no doubt that the I.G. has proved that Petitioner managed
or oversaw her employer's delivery of health care to N.R.
on a regular basis from November 8, 1991 until July 8,
1992, while she was stealing from him. See I.G. Reply at
1-2. Therefore, it was not necessary for the I.G. to
submit more evidence to show also that Petitioner was
N.R.'s primary or frequent direct care provider from
Laabs Home Health Care during the period of November 8,
1991 to July 8, 1992.

In addition to the foregoing connections between
Petitioner's crimes and her delivery and supervision of
care to N.R. as an employee of Laabs Home Health Care,
information in Petitioner's exhibits also indicates that,
during the period she committed the crimes, she was
providing health care to Petitioner in other ways.
According to the evidence of record, the bank account
from which she stole was supposed to have been used in
her delivery of such other health care to N.R.

The transcript of the sentencing hearing submitted by
Petitioner shows that her attorney represented that she
went to the store to buy food for N.R. (P. Ex. 1 at 7,
14, 19); that the joint account was set up because N.R.
said he could not go to the grocery store himself because
he was wheelchair bound, and Petitioner had said she
would go on his behalf (id. at 8); that Petitioner used
N.R.'s money also to buy him clothing items such as
pants, shirts, underwear, and socks (id. at 16); that
Petitioner did N.R.'s laundry (id. at 19); that
Petitioner allegedly paid for N.R.'s rent (id. at 18);
that it was up to Petitioner's "discretion ... just to
take care of" N.R. (id. at 17); and that "[a]s long as
Mr. R. was having his needs taken care of, I don't think
that she thought that he would care ..." (id.). These
representations are consistent with N.R.'s statement in
the Criminal Complaint that he set up the joint checking
account in order for Petitioner to pay his bills and buy
his groceries. I.G. Ex. 2 at 2, 3.

Given that N.R. was a long-time invalid confined to a
wheelchair suffering from left-sided paralysis, seizures,
limited memory, and brain injury, the foregoing evidence
shows that what he expected of Petitioner -- and what she
claims to have done on occasions with his funds from the
checking account -- was to use his money to provide him
with very basic, non-skilled, custodial or health
maintenance types of services. These basic health care
services consisted of providing N.R. with food to eat and
clothes to wear, and making sure that he would continue
to have a place to live and receive home health care
services by paying his rent and other bills. As
specifically represented to the judge during the
sentencing hearing, Petitioner would have attempted to
prove, if her case had gone to trial, that N.R. had no
alternative source of food other than from Petitioner.
P. Ex. 1 at 26.

In addition, the sentencing hearing transcript contains
also the following statement from Petitioner's counsel
showing that Petitioner delivered health care services to
N.R. in her individual capacity and then billed Laabs
Home Health Care for her services:

Then there's verified medical bills to
Laab's. Bills incurred by Nanette Neu in
the amount of $35.58.

P. Ex. 1 at 19. Petitioner's counsel provided this
information in explaining how N.R.'s money from the
checking account was used or should have been used.

Even though there is no evidence that the performance of
the health care services noted above would require
Petitioner's expertise as a Registered Nurse, she claimed
to have actually performed them for N.R. because he was
an ailing invalid incapable of doing the things she did
for him. Petitioner knew, and N.R. intended, that his
money in the checking account should be used in caring
for his basic health care needs. Therefore, her stealing
his money from the checking account for her own uses can
only be viewed as "in connection with the delivery of
health care items or services."

I reject also Petitioner's arguments that the "in
connection with" element is absent in this case because
her crimes did not affect the delivery of health care to
N.R. and did not impact on the funding or payment of
health care services for N.R. P. Br. at 3. The
arguments are wrong as a matter of law and as a matter of
fact.

In no case decided under section 1128(b)(1) of the Act
have we ever required a showing of actual harm to the
patient's health or an actual curtailment of funding for
the patient's care. As noted in the decision cited by
both parties, section 1128(b)(1) of the Act does not
require that a petitioner's crime involve the direct or
immediate manipulation of health care items or services,
and even false entries in a hospital's accounting
records, for example, have been deemed to be "in
connection with the delivery of health care items or
services" within the meaning of the law. Joel Fass, DAB
CR349, at 6 (1994) (citations omitted).

In this case, Petitioner's own evidence shows that her
criminal acts would have harmed N.R.'s health and
disrupted his receipt of home health services if the
criminal investigations and prosecution had not
intervened. During Petitioner's sentencing hearing, the
prosecuting attorney noted that, according to the
sentencing memorandum, Petitioner had failed to pay
N.R.'s phone bills and rent, and N.R. was in serious
jeopardy of being ousted from his apartment because his
apartment manager had requested that eviction proceedings
be commenced against N.R. P. Ex. 1 at 31. Petitioner
has not disputed the truth of these statements. The rent
Petitioner failed to pay for N.R. amounted to
approximately $89 per month, and the phone bill she
failed to pay for him was for approximately $20 per
month. P. Ex. 1 at 20-21.

Nor has she disputed the prosecuting attorney's statement
during her sentencing hearing that, according to the
victim impact statement, N.R. often needed to call his
sister because he was out of things at his apartment.
When N.R. called Petitioner at her office to request
certain items, she would tell him to wait until the third
of the month when his benefit checks were due to arrive
because there was no money left. Id. at 31. However,
Petitioner admits to having written checks with N.R.'s
money in order to meet her own child care needs and to
purchase cosmetics and weight reduction services in order
to make herself feel good. P. Ex. 1 at 9.

Petitioner's failure to use N.R.'s money to pay his rent
and phone bills placed N.R.'s health at risk and
threatened to disrupt the delivery of home health care
services to him. Since N.R. was receiving home health
services, eviction from his home due to nonpayment of
rent would have necessarily impacted adversely on his
continued receipt of home health care services. Even
though it is theoretically possible for a home health
agency to deliver its services outdoors at curbside, such
circumstances are not likely to be salubrious for an
evicted wheelchair-bound, partially paralyzed patient
suffering also from brain damage. With respect to N.R.'s
need for telephone services, Petitioner recorded in the
Clinical Progress Note her personal observation that,
during her visit to N.R.'s apartment, Petitioner had a
telephone next to him and had emergency call strings in
his bedroom and bathroom. I.G. Ex. 8 at 5. It is not
difficult to ascertain from even such a brief observation
by Petitioner that N.R. had his telephone next to him
because he needed it as well as the call strings
elsewhere in his apartment for medical emergencies.
Therefore, it is reasonable to conclude that N.R. would
need to have his telephone bills paid in order to receive
telephone service.

Even the fact that his bills went unpaid had negative
effects on the state of N.R.'s mental health. As
observed by the court during the sentencing proceedings,
the harm to the victim was the anguish caused him by
Petitioner's actions. No matter how much money was
actually lost by N.R., "the real harm to the victim . . .
[is] the fright and the concern that he experienced when
bills weren't being paid." P. Ex. 1 at 36. The court
observed also,

And that if there really wasn't enough
money to pay these bills, then someone
needed to address it, not this simple
statement that an account that should
have had a lot of money in it didn't have
a lot of money in it. I'm sure there was
a lot of confusion on his part and a lot
of fright, and that's -- that's the real
harm to him.

Id. at 37. The court stated further than N.R. "had to
experience that fright to a serious degree here,
apparently almost to the point of eviction." Id. at 36.

As noted earlier, Petitioner's checking account had been
charged more than $450.00 for the overdrawn checks
written by Petitioner, and the balance was only $3.90 by
July 8, 1992. I.G. Ex. 2 at 6. N.R.'s sister reported
Petitioner to the Police Department, which, in turn,
caused the Medicaid Fraud Control Unit to investigate her
actions and the State Attorney General's Office to
prosecute her. P. Ex. 1 at 21, 22; I.G. Ex. 2 at 1-2, 6.
It was these other people's intervention which prevented
Petitioner's criminal actions from causing actual and
substantial harm to N.R.'s health. But for N.R.'s being
a beneficiary of the Medicare program (I.G. Ex. 8 at 7),
Petitioner's theft of his money would have impacted
negatively on his ability to pay for his home health care
services out of his own funds.

For the foregoing reasons, I conclude that all elements
of section 1128(b)(1) have been proven by a preponderance
of the evidence and that a basis for the exclusion
exists.

B. I conclude that Petitioner has failed to prove the
existence of the mitigating factor she cites, and,
therefore, the three-year exclusion imposed and directed
by the I.G. is of a reasonable length as a matter of law.

The period of exclusion imposed and directed against
Petitioner is three years, which became effective on
February 12, 1996. As noted above, the I.G. is
authorized to impose and direct an exclusion period of
three years under section 1128(b)(1) of the Act when none
of the aggravating factors listed by regulation exists to
cause a lengthening of the benchmark period and none of
the enumerated mitigating factors exists to cause a
decrease of the benchmark period. 42 C.F.R. § 1001.201.
Petitioner alleges that the I.G. improperly imposed and
directed the three-year benchmark exclusion period by
having failed to apply the mitigating factor codified at
42 C.F.R. § 1001.201(b)(3)(i):

The individual or entity was convicted of
3 or fewer misdemeanor offenses, and the
entire amount of financial loss to . . .
other individuals or entities due to the
acts that resulted in the conviction and
similar acts is less than $1,500.

42 C.F.R. § 1001.201(b)(3)(i); P. Br. at 4.

In my prehearing order, I placed the burden on Petitioner
to come forward with evidence in support of her
affirmative arguments.

The evidence cited by Petitioner establishes that the
offense for which she was convicted, "Theft by Bailee in
excess of $500," was a Class A Misdemeanor under
Wisconsin law. I.G. Ex. 1. There is no evidence that
she has been convicted of other offenses. Therefore, her
conviction for one misdemeanor offense satisfies the
first criterion of the above quoted mitigating factor.

Petitioner argues also that the remaining criteria of the
mitigating factor have been met as well because a Class A
misdemeanor is applicable under Wisconsin law only if
"the value of the property does not exceed $1,000." P.
Br. at 4 (citations omitted). Even though she also
agreed to pay $3000 in restitution as part of her plea
agreement, she notes that she pled guilty only to having
stolen less than $1000 under the Class A misdemeanor. P.
Br. at 4-5. Petitioner argues that under the State
statutory criteria for calculating restitution, the $3000
amount she paid in restitution "does not necessarily
represent the amount of the loss" sustained by her
victim. P. Br. at 5.

Petitioner points out also that, during the sentencing
hearing, her attorney said she had agreed to pay $3000 in
restitution as "punishment." P. Br. at 6. Her attorney
at the sentencing hearing referred to two accountants'
calculations which showed that only $300 was missing from
N.R.'s account. Id. at 5. She contends that the
prosecuting attorney did not disagree with the
calculations, and that the judge who accepted her
agreement to make restitution in the amount of $3000
believed that the loss to N.R. was actually $300 as well.
Id.

I find that Petitioner has not sustained her burden of
proving that "the entire amount of financial loss to
other individuals or entities due to the acts that
resulted in the conviction and similar acts is less than
$1,500," as specified in 42 C.F.R. § 1001.201(b)(3)(i).
What she succeeded in proving is that, given the elements
of the offense to which she pled guilty, she was not
convicted of having stolen more than $1000 from N.R.
Contrary to what is suggested by Petitioner's argument,
this proof is not enough for meeting the requirements of
the mitigating factor she relies upon.

First, there is no legal basis for adopting her argument
that she stole only $300 from N.R. when the conviction is
for theft by bailee in excess of $500 and a Class A
misdemeanor is defined as theft of property not in excess
of $1000. Under her conviction, she is deemed to have
stolen within the range of more than $500 and not more
than $1000 from N.R.

In addition, Petitioner has not argued persuasively or
proven by a preponderance of the evidence that she was
convicted for stealing $300 as opposed to, for example,
stealing $999 from N.R. As noted by the court and
attorneys during the sentencing hearing, Petitioner
received cash from the bank while depositing portions of
N.R.'s monthly checks into the account, and she kept no
receipts of everything she allegedly bought for N.R. with
the cash she took. P. Ex. 1 at 25, 26-27, 29-30. N.R.,
a patient with brain injury and limited memory, had
entrusted his money to her for his use. Id. at 30.
Given N.R.'s mental impairments and the fact that
Petitioner made various cash transactions that she could
not account for with receipts, she gave estimates of what
she had spent to accountants who then calculated that
N.R. sustained a loss of only $300. Id. at 25, 35-36.
N.R.'s food bill, for example, was calculated based on
the average weekly food cost for an individual with
"liberal spending." 9/ Id. at 19.

Under these circumstances, I am not persuaded that the
accountants' estimate of N.R.'s loss was reliable or
amounted to more than a recitation of Petitioner's self-
serving statements in the aggregate. Even the court
stated during the sentencing hearing that, if the case
had gone to trial, it is unlikely that the actual amount
of Petitioner's embezzlement could be determined with
certainty. Id. at 38. Therefore, Petitioner has not met
her burden of proving in this proceeding that N.R.'s loss
from her crimes was limited to $300 or that the
conviction was based solely on the amount of $300.

Petitioner has failed also in her proof because she has
not accounted for certain prior unlawful acts of
financial misconduct which are referenced in the exhibit
she submitted. The regulation on mitigation relied upon
by Petitioner is not limited to the amount of loss which
directly resulted in convictions. 42 C.F.R. §
1001.201(b)(3)(i). The amount of loss to other people
and in other incidents is calculated also if the loss was
"due to ... similar acts" by Petitioner. Id.; cf. 42
C.F.R. § 1005.17(g).

At the very least, Petitioner should have accounted for
the prosecuting attorney's information during sentencing
that she had "picked up a couple of ordinance violations
for worthless checks." P. Ex. 1 at 32. This information
came from the exhibit Petitioner submitted as evidence,
as did the court's explanation of its initial inclination
to impose jail time in sentencing her. The court stated,
"these prior bad checks . . . suggest in some ways that
maybe you don't deserve to be treated as a first
offender[,]" that Petitioner's offense against N.R.
"wasn't just a decision to take advantage of a moment and
steal some money[,]" and that "[t]his was a gradual
victimization over a significant period of time." Id. at
37-38. 10/ The court obviously considered the past
writing of "bad checks" to be related to her theft of
N.R.'s money. Yet, Petitioner chose not to provide any
information concerning how much, if any, financial loss
resulted from these unlawful acts which, on their face,
appear to be in the nature of financial fraud similar to
those offenses which resulted in Petitioner's conviction.

In addition, the fact that Petitioner agreed to make
restitution of $3000 raises certain inferences which she
has not successfully refuted. As I noted earlier, no one
knows exactly how much money she actually stole from N.R.
because she sometimes took cash and did not keep
receipts. She was originally charged with a Class C
felony involving theft over $2500. I.G. Ex. 2. However,
because N.R. has limited memory due to his brain injury,
the State amended the charge to a Class A Misdemeanor
pursuant to Petitioner's plea agreement. I.G. Ex. 1; P.
Ex. 1 at 30.

Under these circumstances, Petitioner's willingness to
voluntarily pay restitution to N.R. in the amount of
$3000 as part of her plea agreement is not persuasive
proof that she never stole that amount from N.R. The
amount of the restitution raises the question of whether,
in addition to the statutory amount to which she had pled
guilty to having stolen (more than $500 but not more than
$1000), Petitioner has caused N.R. considerably more in
financial losses through the commission of similar acts
for which she had not been convicted. Her arguments and
proof do not adequately resolve this question, which is
relevant to the mitigating factor she asserts.

It is true that Petitioner alleged during her sentencing
that she considered the $3000 in restitution as
punishment. However, there is nothing inherently
believable about her proposition that, even though she
never stole more than $300 from N.R., she wanted to
punish herself by agreeing to pay him $3000 as
"restitution." Moreover, there is insufficient evidence
that the Prosecuting Attorney agreed with Petitioner's
contention that $3000 in restitution exceeded the total
monetary losses N.R. had actually sustained from all of
Petitioner's actions. She noted only that the
restitution amount was resolved by agreement and that,
therefore, she would not argue at the sentencing
proceeding about how much money Petitioner had actually
stolen from N.R. P. Ex. 1 at 30. An agreement is a
meeting of the minds by at least two parties. Here,
there is no evidence that the Prosecuting Attorney
thought of the $3000 as punishment instead of as
reimbursement for N.R.'s losses, as the word
"restitution" ordinarily means.

Petitioner is correct in pointing out that Wisconsin law
gives the court latitude in considering various factors
when setting the amount of restitution. P. Br. at 5.
However, this fact is of questionable relevancy since the
court in this case did not calculate the amount of the
restitution but, instead, approved it as part of the plea
agreement after Petitioner had already paid the $3000 as
restitution. I.G. Ex. 1; P. Ex. 1 at 34. The court
accepted the agreement with the following comment:

It may well be that the restitution that
has been paid here goes well beyond the
actual figure, the actual dollars that he
was actually deprived of, but I think
it's a fair restitution.

P. Ex. 1 at 39.

This statement by the court provides some support for the
conclusion that Petitioner never stole a total of $3000
from N.R. Viewed in the context of Petitioner's having
spent much cash without obtaining receipts for a brain-
injured patient with limited memory, the court's
statement reflects the reality that the prosecution was
unlikely to prove that Petitioner stole $3000 from N.R.
if the case had gone to trial. However, the mitigating
factor Petitioner must prove as her affirmative defense
does not use $3000 as the measure. Neither this
statement by the court nor anything else offered by
Petitioner proves that the financial loss suffered by
N.R. and others totalled less than $1500 from the acts
that resulted in Petitioner's conviction as well as
similar acts.

Even if Petitioner had proved the existence of the
mitigating factor she cited, she does not become
automatically entitled to a reduction of the benchmark
period. I note that the word "may" is used in the
regulation which permits a reduction of the exclusion
period. 42 C.F.R. § 1001.201(b)(3). The fact that she
was convicted of one misdemeanor offense for stealing
between $500 to $1000 does not lessen the heinous nature
of her crimes, as shown by the manner in which she
committed her offenses, her victim's dependency on her,
the trust she breached, her victim's need for the money
she stole, and the uses to which she had put the stolen
money. Thus, Petitioner has not shown that, as applied
to the facts of this case, the mitigating factor she
cited, if present, warrants a reduction of the exclusion
period.

Therefore, Petitioner has failed to prove that a
benchmark exclusion period of three years is
unreasonable. The facts introduced by both parties
indicate that Petitioner lacks trustworthiness. A three-
year exclusion under the regulations is reasonable to
safeguard the health and financial interests of Medicare
and Medicaid patients.


CONCLUSION

I uphold the three-year exclusion the I.G. imposed and
directed under section 1128(b)(1) of the Act.



Mimi Hwang Leahy
Administrative Law Judge


* * * Footnotes * * *

1. In this decision, I use "Medicaid" as an
abbreviation for all the health care programs listed in
section 1128(h) of the Act.
2. Section 1128(b)(1) and its implementing
regulations stand in contrast to the mandatory provisions
of the Act which would require an exclusion of at least
five years if the individual's conviction meets the
specified criteria, such as being a conviction for a
criminal offense related to the delivery of an item or
service under title XVIII (Medicare) or under any State
health care program. Sections 1128(a)(1) and (c)(3)(B)
of the Act.
3. In addition to filing a Motion for
Disposition Based on the Written Record, the I.G. has
submitted a brief in chief (I.G. Br.) and a reply brief
(I.G. Reply), along with 11 exhibits (I.G. Exs. 1 through
11). Petitioner has submitted a Motion for Appropriate
Relief and In Opposition to the Inspector General's
Motion, a brief in chief (P. Br.), and three exhibits (P.
Exs. 1 through 3). I have admitted all of the exhibits
into evidence.
4. The court's acceptance of a plea of guilty
constitutes a conviction within the meaning of the Act.
Section 1128(i)(3) of the Act. Petitioner does not
dispute that she was convicted. I.G. Exs. 4, 6.
5. I use the term "crimes" instead of "crime"
because, as noted by the court during sentencing, "[I]t's
more accurate I think to talk about crimes. This was a
repeated pattern of behavior over a significant period of
time." P. Ex. 1 at 34.
6. However, at Petitioner's sentencing
hearing, her attorney represented that the crimes were
investigated by the Medicaid fraud unit. P. Ex. 1 at 22.
7. Employees of a home health agency provide
care or services at the patients' homes or other
designated locations. Therefore, I use the word "admit"
or "admission" to mean that the patient is placed under
the care of the home health agency for the receipt of
care or services at the patient's home or other
locations.
8. Laabs Home Health Care's records show
that since March of 1974, N.R. has suffered from
traumatic brain injury, left hemiplegia, and seizures.
I.G. Ex. 8 at 3.
9. I assume the characterization of "liberal
spending" refers to Petitioner because she was charged
with buying N.R.'s food for him, she had no receipts for
food purchases, and N.R. had no particular eating habit
of record other than his eating lasagna from a place
called "Moyers" a couple of times a week. P. Ex. 1 at
14, 15, 26. I do not think his eating lasagna from
Moyers a couple of times a week should be construed as
"liberal spending," especially since there is evidence
also that he would run out of things at his apartment at
times and Petitioner would tell him to wait until his
next check came. Id. at 31.
10. The court made these statements in
explaining why it had initially considered imposing jail
time against Petitioner. The court decided not to impose
any jail time only because the exact amount of her theft
could not be ascertained even if the case had gone to
trial. P. Ex. 1 at 38. However, the court stated later
that it was imposing a fine for the same reasons that it
had initially considered jail time. P. Ex. 1 at 39.