DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Civil Remedies Division
In the Case of: Mary Katherine Lyons, Petitioner,
- v. -
The Inspector General.
DATE: October 13, 1989
Docket No. C-49
DECISION AND ORDER
In this case, governed by section 1128 of the Social Security Act (Act), Petitioner
filed a timely request for
a hearing before an Administrative Law Judge (ALJ) to contest the July 11, 1988
notice of determination
(Notice) issued by the Inspector General (I.G.) which excluded Petitioner from
participating in the
Medicare and Medicaid programs for seven years.
Based on the entire record before me, I conclude that there are no material
facts at issue, that Petitioner is
subject to the minimum mandatory exclusion provisions of sections 1128 (a) (1)
and 1128 (c) (3) (B) of the
Act, and that it is appropriate for Petitioner to be excluded for a period of
Seven years.
APPLICABLE STATUTES AND REGULATIONS
I. The Federal Statute.
Section 1128 of the Social Security Act (Act) is codified at 42 U.S.C. 1320a-7
(West U.S.C.A., 1989
Supp.). Section 1128(a) (1) of the Act provides for the exclusion from Medicare
and Medicaid of those
individuals or entities "convicted" of a criminal offense "related
to" the delivery of an item or service under
the Medicare or Medicaid programs. Section 1128(c)(3)(B) provides for a five
year minimum period of
exclusion for those excluded under section 1128 (a)(1).
While section 1128(a) of the Act provides for a minimum five-year mandatory
exclusion for (1)
convictions of program-related crimes and (2) convictions relating to patient
abuse, section 1128(b) of the
Act provides for the permissive exclusion of "individuals and entities"
for twelve types of other
convictions, infractions, or undesirable behavior, such as convictions relating
to fraud, license revocation,
or failure to supply payment information.
II. The Federal Regulations.
The governing federal regulations (Regulations) are codified in 42 C.F.R.,
Parts 498, 1001, and 1002
(1988). Part 498 governs the procedural aspects of this exclusion case; Parts
1001 and 1002 govern the
substantive aspects.
Section 1001.123 requires the I.G. to issue an exclusion notice to an individual
whenever the I.G. has
"conclusive information" that such individual has been "convicted"
of a criminal offense "related to" the
delivery of a Medicare or Medicaid item or service; such exclusion must begin
15 days from the date on
the notice.
BACKGROUND
Shortly after the I.G. issued the Notice in this case and Petitioner requested
a hearing before an ALJ, a
prehearing conference was held by telephone. After the prehearing conference,
the parties agreed that two
legal issues should be decided prior to any evidentiary hearing in this case.
The parties submitted briefs
and documentary evidence in support of their respective positions concerning
summary disposition.
Neither party objected to any of the proposed exhibits of the other.
On April 3, 1989, I issued a Ruling, wherein I concluded (1) that Petitioner
was "convicted," (2) that the
offense to which Petitioner pled guilty and was convicted was "related
to the delivery of an item or service"
under Medicare within the meaning of section 1128(a)(1) of the Act and (3) that
the I.G. was required to
exclude Petitioner from Medicare and Medicaid for at least five years under
the minimum mandatory
provisions of section 1128. I then scheduled a hearing on the issue of the appropriate
length of exclusion.
The hearing was set for July 27, 1989. However, at a prehearing telephone conference
on July 19, 1989,
Petitioner withdrew her request for an evidentiary hearing and the parties agreed
to submit the case for
decision on briefs. Thereafter, they each filed a brief, Petitioner filed additional
exhibits, and the record
was closed.
ISSUE
1. Whether it is appropriate in this case for Petitioner to be excluded from
the Medicare and Medicaid
programs for a period of seven years.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Having considered the entire record, the arguments and the submissions of the
parties, and being advised
fully herein, I make the following Findings of Fact and Conclusions of Law:
1. Petitioner was employed as a data processing person or claims examiner in
the claims department for
Nationwide Insurance Co., the Medicare carrier in the State of Ohio for the
Department of Health and
Human Services (DHHS) during the period from 1982 through 1987.
2. Nationwide processed and paid Medicare claims for DHHS during the period 1982 to 1987.
3. Petitioner used her computer to order approximately $30,568.04 in checks
for Medicare reimbursement
by billing the Medicare system for fraudulent claims. I.G. Ex. 12; P. Br. 1,2;
Tr. 30.
4. Petitioner caused Medicare checks to be issued to her father-in-law and
brother-in-law and delivered to
her sister's address. Her sister cashed the checks and split the proceeds with
Petitioner. Tr. 30; I.G. Ex.
12/2,3.
5. A field audit revealed Petitioner's wrongful actions. Investigators approached
Petitioner and she gave a
statement to the auditors and to the police. P. Br. 1,2.
6. Subsequently, Petitioner was charged by way of a bill of information with
six counts of theft and
forgery. I.G. Ex. 1; Tr. 5.
7. Petitioner pled guilty, on September 14, 1987, to two counts of theft and
four counts of forgery. I.G. Ex.
3; Tr. 1 to 37.
8. At the time of the entry of the guilty pleas, the court sentenced Petitioner
to a term of imprisonment. Tr.
36; P. Br. 1,2.
9. Petitioner was convicted of a criminal offense "related to the delivery
of an item or service" under the
Medicare program within the meaning of section 1128(a)(1) of the Act.
10. The I.G. properly excluded Petitioner from participation in Medicare, and
properly directed her
exclusion from Medicaid for a period of at least five years, pursuant to the
minimum mandatory exclusion
provisions of section 1128 of the Act..
11. Based on the facts in the record in this case, I find and conclude that
Petitioner should be excluded for a
period of seven years.
12. The material and relevant facts in this case are not contested.
13. The classification of the Petitioner's criminal offense as subject to the
authority of 1128(a)(1) is a legal
issue.
14. The I.G. is entitled to summary disposition in this proceeding.
DISCUSSION
I. Petitioner's Conviction "Related to the Delivery of an Item or Service"
Within The Meaning of Section
1128 of The Act.
Section 1128 of the Act clearly requires the I.G. to exclude from Medicare,
for a minimum of five years,
any "individual or entity" that has been "convicted of a criminal
offense related to the delivery of an item
or service" under Medicare or state health care (e.g., Medicaid) programs.
The I.G. must also direct states
to exclude such individuals from Medicaid for a period which is at least "the
same as any period" of
Medicare exclusion. 42 U.S.C. 1320a-7(a)(1), (c)(3)(B), and (d)(3)(A); 42 C.F.R.
1002.211.
Congressional intent on this matter is clear:
A minimum five-year exclusion is appropriate, given the seriousness of the
offenses at issue. . . .
Moreover, a mandatory five-year exclusion should provide a clear and strong
deterrent against the
commission of criminal acts.
S. Rep. No. 109, 100th Cong., 1st Sess. 2; 1987 U.S. Code Cong. and Admin. News 682, 686.
In this case, the I.G. properly excluded Petitioner from participation in Medicare
and Medicaid for at least
a five year period because she was "convicted" of a "criminal
offense related to the delivery of an item or
service" under the Medicare program within the meaning of section 1128(a)(1)
of the Act.
Petitioner argued that section 1128 of the Act does not apply to her because
she is not a physician or other
type of health care provider. This argument fails because the provisions of
section 1128(a)(1) of the Act
clearly apply to any "individual or entity" and are not restricted
to health care providers. Merriam
Webster's Third New International Unabridged Dictionary defines "individual"
as "a single human being."
Petitioner is unquestionably an "individual" within the meaning of
section 1128(a)(1) of the Act.
Next, Petitioner argues that her crimes of theft and forgery involved the processing
of claim forms on a
computer and that these crimes were not "related to" the "delivery
of an item or service" under the
Medicare program within the meaning of section 1128(a)(1) of the Act. Petitioner
argues that the Act
"obviously only applies to cases where a medical provider submits a claim
for some type of service or item
provided to a patient." P. Br/5. This argument fails because Petitioner
admittedly processed fraudulent
Medicare claims on her computer to obtain monies from the Medicare program.
The fraudulent Medicare
claims she processed and the monies she stole "related to" the "delivery
of" (or lack thereof) of "an item or
service" under the Medicare program. Ms. Lyons' function of processing
claims for Nationwide, the
Medicare carrier in Ohio, was an essential part of the system of Medicare reimbursement.
Section
1128(a)(1) of the Act sweeps within its ambit all crimes "related to the
delivery of an item or service", such
as the conversion of Medicare or Medicaid funds by Petitioner in this case.
II. Seven Years Is An Appropriate Length Of Exclusion For Petitioner.
Petitioner argued that the seven year period of exclusion imposed and directed
by the I.G. was
unreasonable. She contends that five years was the appropriate length of exclusion,
based on several
factors:
1. She cooperated in the investigation and provided information which could
help Medicare
carriers such as Nationwide avoid such thefts in the future.
2. She did her best to make restitution, confessing judgment in the $425,915
civil action
brought against her by Nationwide and forfeiting to Nationwide $7,763.61 which
she had in savings.
3. She felt remorse for her actions and expressed them in a letter to the
State trial judge and
in a "to whom it may concern" letter.
4. The I.G. imposed and directed an exclusion of only five years in the case
of a pharmacist
convicted of substituting generic drugs for brand name drugs in Medicaid prescriptions
and charging for
the higher priced brand name drugs. Jack W. Greene v. The Inspector General,
DAB Decision No. 1078
(1989).
The I.G. responded by noting that in arriving at the seven-year term of exclusion,
he had considered
Petitioner's cooperation and efforts to make restitution, along with the other
factors which the I.G. is
required to consider under 42 C.F.R. 1001.125(b). The I.G. argued that Petitioner's
cooperation and
restitution were so limited that a seven-year exclusion was reasonable. The
I.G. contended that at best
Petitioner made restitution of only approximately $25,000, although her total
theft was almost half a
million dollars (including $30,568.04 taken from the Medicare program). The
remainder of the stolen
money was spent on "vacations, cars, jewelry and relatives." Tr. 32;
I.G. Br. 3; I.G. Ex. 12. The I.G.
alleged that, although Petitioner cooperated with authorities once the theft
was discovered, Petitioner did
not cease her wrongful activity until it was discovered, nor did she turn herself
in prior to the discovery.
The I.G. noted that in the pharmacist's case relied on by Petitioner (See Greene,
supra.) the amount
involved totalled only several thousand dollars and the pharmacist was placed
on probation, rather than
incarcerated.
The basic facts are not in dispute in this case. The parties supported most
of their allegations with
documentation in the form of exhibits to which, in effect, they stipulated.
Petitioner does not dispute that the I.G. considered the relevant mitigating
circumstances, but disagrees
with the I.G.'s conclusion that the appropriate term of exclusion should be
seven, rather than five, years.
Petitioner declined the opportunity for an oral hearing, although we were willing
to do it at the Women's
Reformatory in Columbus, if necessary.
I accept Petitioner's written declarations of remorse (P. Ex. A. B) as sincere
and feel sympathy for her
current plight. I also applaud her cooperation with authorities and with her
former employer. Had it not
been for these mitigating factors, ten or more years might have been the appropriate
length of exclusion in
this case where the nature of the crimes committed strikes at the nerve center
of the Medicare system.
Given Congressional intent to exclude untrustworthy individuals from participation
in Medicare and State
health care programs, it is reasonable to conclude that mitigating circumstances
should constitute those
circumstances which demonstrate trustworthiness. See Leonard N. Schwartz, R.
Ph. v. The Inspector
General, Civil Remedies Docket No. C-62 (1981) at p. 13-15. None of the circumstances
asserted to be
mitigating by Petitioner in this case prove that she is an individual who should
be trusted to be near
Medicare or State health care funds. The circumstances cited by Petitioner essentially
demonstrate that she
is a relatively cooperative and remorseful individual. While these factors may
have had some bearing on
the extent to which Petitioner was punished for her crimes, they are not dispositive
of the question of
whether Petitioner can now or in the near future be trusted not to steal public
funds. Thus, given the
gravity and circumstances of the offense, the timing and quality of Petitioner's
cooperation, restitution, and
remorse, I conclude that the intent of Congress in protecting the integrity
of the Medicare program is best
served by a seven year period of exclusion.
CONCLUSION
Based on the law and undisputed material facts in the record of this case,
I conclude that Petitioner is
subject to the minimum mandatory provisions of section 1128 of the Act and that
seven years in an
appropriate period of exclusion.
IT IS SO ORDERED.
________________________
Charles E. Stratton
Administrative Law Judge