SUBJECT:

Barbara Hart,

Petitioner,

The Inspector General

I. Procedural History

By letter dated August 31, 1999, the I.G. notified Petitioner that she was being excluded for a minimum period of ten years from participating in the Medicare, Medicaid, and all other federally financed health care programs, as defined in section 1128B(f) of the Social Security Act (the Act). Hereafter, I refer to these programs generally as "Medicare and Medicaid." The I.G. explained that Petitioner's exclusion, under section 1128(a)(1) of the Act (42 U.S.C. 1320a-7(a)), was due to her conviction of a criminal offense related to the delivery of an item or service under the Medicaid program. The I.G. explained further that five years of exclusion were mandatory under section 1128(c)(3)(B) of the Act. The I.G. notified Petitioner that, based upon the evidence of four aggravating factors, the I.G. extended the period of exclusion to 10 years. By letter dated October 7, 1999, Petitioner timely requested a hearing, and the case was assigned to me for decision.

During a prehearing conference, the parties agreed that an in-person (oral) hearing was not necessary, and the case could be decided upon written submissions of documentary evidence (exhibits) and written argument (briefs), as provided in 42 C.F.R. § 1005.6(b)(5). Petitioner filed her brief in opposition to exclusion (P. Br.), accompanied by one exhibit, which I refer to as Petitioner Exhibit (P. Ex.) 1. The I.G. did not object to P. Ex. 1 (P. Ex. 1 is the same as I.G. Ex. 4.), and I admit into evidence P. Ex. 1. The I.G. filed her response brief in support of exclusion (I.G. Br.), accompanied by I.G. Exhibits (Exs.) 1 - 7. Petitioner did not object to I.G. Exs. 1 - 7, and I admit into evidence I.G. Exs. 1 - 7. Petitioner filed her reply brief (P. R. Br.). Petitioner thereafter filed a letter dated August 31, 2000 which included additional argument as to Petitioner's position.

At my request, Petitioner obtained and filed a previously recorded video tape of Petitioner's appearance in the Baltimore City Circuit Court (the Court) on May 21, 1999. I refer to the video tape as ALJ Ex. 1 and hereby admit it into evidence. The video tape is continuously annotated with the date of 5-21-99. Also annotated is the time during Petitioner's hearing, in a hh:mm:ss (hours:minutes:seconds) format. The video tape begins at 10:32:25 and ends at 11:04:02.

I decide the case based on the written record plus the video tape.

II. Applicable Law

Under section 1128(a)(1) of the Act (42 U.S.C. 1320a-7(a)(1)), the Secretary of DHHS shall exclude from participation in Medicare and Medicaid any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under Medicare or Medicaid. The Secretary of DHHS has delegated to the I.G. the authority to exclude individuals from participation in Medicare and Medicaid. 53 Fed. Reg. 12,993 (1988). Section 1128(c)(3)(B) of the Act (42 U.S.C. 1320a-7(c)(3)(B)), provides that an exclusion imposed under Section 1128(a)(1) of the Act shall be for a period of at least five years. Under the regulations, if certain aggravating factors are present, the length of the exclusion may be extended beyond the minimum five-year period. 42 C.F.R. § 1001.102(b). If aggravating factors are present, the ALJ may consider certain mitigating factors, specified at 42 C.F.R. § 1001.102(c).

Section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)) specifically defines conviction for purposes of the Act and states:

CONVICTED DEFINED.-- For purposes of subsections (a) and (b), an individual or entity is considered 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.

III. Issues

The issues are whether there is a basis for the exclusion, and whether the ten-year exclusion imposed by the I.G. fell within a reasonable range. Joann Fletcher Cash, DAB No. 1725 at 17 - 18 (2000) (citing C.F.R. § 1001.2007(a)(1) and the preamble to the regulations, found at 57 Fed. Reg. 3298, 3321 (1992)). As to the general issue of whether there is a basis for the exclusion, the specific underlying issue is whether it is mandatory that Petitioner be excluded, pursuant to sections 1128 (a)(1) and (c)(3)(B) of the Act. To determine whether Petitioner's exclusion is mandatory, I must resolve whether Petitioner was "convicted" of a criminal offense in accordance with the definition of "conviction" found in section 1128(i) of the Act, more specifically:

Whether there was a finding of guilt entered against Petitioner by the State court, or

Whether there was a plea of guilty or nolo contendere by Petitioner that was accepted by the State court, or

Whether Petitioner entered into participation in a first offender, deferred adjudication or other arrangement where judgment of conviction has been withheld.

If the Petitioner was so "convicted," a further issue is whether the conviction is related to the delivery of an item or service under Medicaid, as provided in section 1128(a)(1) of the Act.

If I find that Petitioner was "convicted," of a program-related offense, the final issue is whether the I.G.'s decision to extend Petitioner's exclusion to a 10-year period is unreasonable. Germane to that issue is whether "aggravating factors" are present, and, if so, whether the 10-year period of exclusion is within a reasonable range based on those aggravating factors, found at 42 C.F.R. § 1001.102(b).

IV. Findings of Fact and Conclusions of Law

1. Petitioner, a respiratory therapist licensed in Maryland, established and operated a durable medical equipment business known as Hart Home Care Associates. I.G. Ex. 3 at 2.

2. Petitioner's business was, for the most part, limited to renting apnea monitors, and providing monitoring services and related apnea supplies. I.G. Ex. 3 at 2.

3. Petitioner's business was enrolled as a Maryland Medicaid provider on September 15, 1992. I.G. Ex. 3 at 2.

4. In March 1999, Petitioner signed and entered into a Plea Agreement (Agreement), in which she agreed to be charged by a Criminal Information, agreed to enter an Alford plea to felony Medicaid fraud and a guilty plea to a misdemeanor income tax count, and agreed to be bound to a disposition the judge would be requested to impose. P. Ex. 1; I.G. Ex. 4.

5. Pursuant to the Agreement, Criminal Information # 299109030 was filed in the Circuit Court for Baltimore City, State of Maryland (the Court), charging Petitioner with felony Medicaid fraud (Count One) and misdemeanor willful failure to file a 1996 Maryland income tax return (Count Two). I.G. Ex. 2.


6. The Medicaid fraud count alleged that, from on or about November 11, 1994, through on or about December 29, 1996, Petitioner had intentionally made false statements and claims regarding apnea monitor rental and related respiratory therapy goods and services that Petitioner had provided to Medicaid recipients. I.G. Ex. 2; I.G. 3 at 9.


7. On May 21, 1999, Petitioner appeared in Court and, pursuant to the Agreement, entered her Alford plea to Medicaid fraud and her guilty plea to the income tax count. I.G. Exs. 4 - 6.

8. Petitioner's Alford plea to Medicaid fraud, rather than admitting her guilt, signified her acknowledgment that she had given up all factual and legal defenses to the Medicaid fraud charge. ALJ Ex. 1 at 10:50:35 - 10:50:56.

9. The Statement of Facts (SOF) accompanying the Agreement detailed facts that established Petitioner's guilt of Medicaid fraud. I.G. Ex. 3.

10. As the judge advised Petitioner's counsel in a recorded bench conference, "A guilty plea pursuant to Alford is a guilty plea . . ." ALJ Ex. 1 at 10:35:28.

11. "An Alford plea is a specialized type of guilty plea whereby Petitioner, although pleading guilty, continued to deny her guilt, but entered the plea to avoid the threat of greater punishment, pursuant to Maryland Rule 4-242(c). This plea is the functional equivalent of a guilty plea . . ." Md. Ann. Code, Cts. & Jud. Proc. § 12-302.

12. Petitioner's Alford plea, coupled with her Agreement, through which Petitioner knowingly consented to having the SOF containing the elements of intentional Medicaid fraud read into and made part of the record, is the functional equivalent of a guilty plea, within the meaning of section 1128(i) of the Act.

13. On May 21, 1999, after considering the oral presentations of counsel and Petitioner, and after considering the Agreement and the agreed SOF, the judge accepted Petitioner's Alford plea of guilty to Medicaid fraud and her plea of guilty to the income tax count. ALJ Ex. 1 at 10:34:48, 10:50:28, and 10:51:56.

14. The SOF showed that Petitioner had billed Medicaid fraudulently for at least five different Medicaid beneficiaries. I.G. Ex. 3 at 5 - 7.


15. The acts of Medicaid fraud occurred over a period of more than two years. I.G. Ex. 2 at 2.

16. On May 21, 1999, the judge found Petitioner guilty of Medicaid fraud and guilty of failure to file an income tax return. ALJ Ex. 1 at 10:57:18 - 26.

17. As to the Medicaid fraud count, the judge then struck the finding of Petitioner's guilt and granted Petitioner probation before judgment, pursuant to the Agreement, under Md. Ann. Code art. 27, § 641 (1957). ALJ Ex. 1 at 11:01:15; P. Ex. 1 at 1; I.G. Exs. 5 - 7.

18. As to the income tax count, the judge entered judgment of conviction and sentenced Petitioner to 18 months' imprisonment, suspended that sentence, and granted Petitioner probation. ALJ Ex. 1 at 11:01:15; I.G. Ex. 5 at 2.

19. On each count, the judge placed Petitioner on 5 years' supervised probation, requiring as conditions of probation that Petitioner: serve 90 days of home detention with an electronic monitor; reimburse Maryland Department of Health & Mental Hygiene $23,008.15; perform 300 hours of community service; file federal and State income tax returns for the tax years of 1993 through 1997; and pay $170.00 in costs. ALJ Ex. 1 at 11:01:14 - 11:02:08; I.G. Exs. 5 - 7.
20. Md. Ann. Code art. 27, § 641 (1957) provides in part:

Whenever a person accused of a crime pleads guilty or nolo contendere or is found guilty of an offense, a court exercising criminal jurisdiction, if satisfied that the best interests of the person and the welfare of the people of the State would be served thereby, and with the written consent of the person after determination of guilt or acceptance of a nolo contendere plea, may stay the entering of judgment, defer further proceedings, and place the person on probation . . . . Upon fulfillment of the terms and conditions of probation, the court shall discharge the person from probation. The discharge is a final disposition of the matter. Discharge of a person under this section shall be without judgment of conviction and is not a conviction for purposes of any disqualification or disability imposed by law because of conviction of crime.

21.For the purpose of exclusion, Petitioner was convicted of Medicaid fraud, under section 1128(i)(2) of the Act, because the judge made a finding of guilt against Petitioner. ALJ Ex. 1. 10:57:18 - 26; 42 U.S.C. § 1320a-7(i)(2).

22. For the purpose of exclusion, Petitioner was convicted of Medicaid fraud, under section 1128(i)(3) of the Act, because the judge accepted Petitioner's Alford plea of guilty. 42 U.S.C. § 1320a-7(i)(3).

23. For the purpose of exclusion, Petitioner was convicted of Medicaid fraud, under section 1128(i)(4) of the Act, because Petitioner entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld. 42 U.S.C. § 1320a-7(i)(4).

24. Petitioner's Medicaid fraud conviction was supported by evidence that she continued to bill the Medicaid program for apnea monitors, services, and supplies which had been discontinued or were otherwise not provided to Medicaid recipients, and is thus related to the delivery of health care items or services under Medicaid, pursuant to section 1128(a)(1) of the Act. I.G. Ex. 3.

25. Upon conviction of a criminal offense related to the delivery of health care items or services under Medicaid, it is mandatory that Petitioner be excluded from Medicare and Medicaid for a minimum of five years, pursuant to sections 1128(a)(1) and (c)(3)(B) of the Act.

26. Section 1128 of the Act seeks to protect federal health care program beneficiaries and recipients from untrustworthy providers. "If a provider has been convicted of a criminal offense related to the delivery of an item or service under Medicare or Medicaid, that provider is presumed by Congress to be untrustworthy and a threat to federal health programs and their beneficiaries and recipients." Cash, DAB No. 1725 at 10.

27. The I.G. has the authority to impose exclusions from Medicare and Medicaid. Section 1128(a) of the Act. 53 Fed. Reg. 12,993 (1988).

28. The I.G. proved the existence of the following four aggravating factors: Petitioner's Medicaid fraud caused financial loss to the Medicaid program in the amount of $23,008.15 [$1,500.00 or more is an aggravating factor]; Petitioner's Medicaid fraud occurred over a period longer than two years, from on or about November 11, 1994, through on or about December 29, 1996 [a year or more is an aggravating factor]; Petitioner's sentence included 90 days' home detention with an electronic monitor [incarceration is an aggravating factor]; and Petitioner was convicted of willful failure to file an income tax return [being convicted of another offense and/or being the subject of other adverse action is an aggravating factor]. 42 C.F.R. § 1001.102(b)(1), (b)(2), (b)(5) and (b)(9). I.G. Exs. 1, 3.

29. Petitioner did not prove the presence of any mitigating factors allowed under the regulations. 42 C.F.R. § 1001.102(c); P. R. Br. at 4; P. Br. at 15-16.

30. The additional five years of exclusion, imposed by the I.G. in her discretion, are warranted by the four aggravating factors, particularly the financial loss to the Medicaid program in an amount 15 times the aggravating factor threshold; the repetitive acts of Medicaid fraud during a period longer than two years involving five or more different beneficiaries; the incarceration; and Petitioner's conviction of willful failure to file a 1996 income tax return, which led to a probation requirement to file federal and State income tax returns for the tax years 1993 through 1997.

31. The 10-year period of exclusion imposed against Petitioner is within a reasonable range.

V. Discussion

A. Petitioner was convicted of a criminal offense within the meaning of section 1128(i) of the Social Security Act.

The first statutory requirement for the imposition of mandatory exclusion pursuant to section 1128(a)(1) of the Act is that the individual be convicted of a criminal offense. I find that this requirement is met in Petitioner's case. The term "convicted" is defined in section 1128(i) of the Act. This section provides that under four alternative definitions of the term "convicted," an individual will be deemed 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 first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.

The disposition of an individual's criminal case need meet only one of the statutory definitions for that person to be deemed "convicted" within the meaning of section 1128(i) of the Act.

Petitioner contends that because the Court vacated its previous guilty verdict when it changed its disposition of Petitioner's case to probation before judgment, pursuant to Md. Ann. Code art. 27, § 641, that none of the definitions of "convicted" found in section 1128(i) of the Act may be applied to her. Petitioner argues that an adjudication of probation before judgment in Maryland is not considered a "conviction" under Maryland law. Petitioner contends that probation before judgment does not provide legal justification for the I.G. to exclude her from Medicare and Medicaid. Petitioner argues that to base exclusion upon a finding of probation before judgment is opposite of the legislative intent and the case law in Maryland. P. R. Br. at 4. Petitioner attempts to draw distinctions between her case and that of the case relied upon by the I.G., Michael P. Hiotis, DAB CR316 (1994). In particular, Petitioner argues that unlike Hiotis, Petitioner offered an Alford plea to a written statement of facts, but did not plead guilty. Petitioner further states that ". . . unlike Mr. Hiotis, [she] was never subject to a finding of guilt. Ms. Hart was granted probation before judgment under Md. Ann. Code art. 27, § 641 (1957), and was not the subject of an entered guilty finding." P. R. Br. at 3. Petitioner does agree that ". . . in Hiotis [sic], exclusion is proper." P. R. Br. at 3. In her letter of August 31, 2000, Petitioner argues that ". . . the State of Maryland cannot exclude [Petitioner] from its program on a finding of probation before judgment."

The I.G. contends that Petitioner was convicted within the meaning of section 1128(i)(3) and (4). I agree with the I.G.'s position. In addition, I conclude that Petitioner was also convicted within the meaning of section 1128(i)(2).

Petitioner was convicted of a criminal offense within the meaning of section 1128(i)(2) of the Act.

An individual will be deemed convicted:

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

Section 1128(i)(2) of the Act.

During Petitioner's plea allocution, the State's attorney read portions of the agreed SOF into the record, and by agreement, made the whole SOF part of the record. It is clearly understood from a fair review of the video tape record of the court proceedings that the Court entered a guilty verdict. ALJ Ex. 1. at 10:57:18 - 26. Petitioner was convicted of count one, a criminal offense within the meaning of section 1128(i)(2) of the Act and count two, a misdemeanor income tax offense. Thereafter, the Court imposed a penalty upon her. ALJ Ex. 1 at 10:57:18 - 26.

The guilty verdict is also indicated by the letter "G" entered in the court docket sheet in the space labeled "VER." I.G. Ex. 5 at 2.

Citing Hiotis, Petitioner argues that "Petitioner, unlike Hiotis, was never subject to a finding of guilt." Petitioner does not directly challenge the legal principal set out in Hiotis, but seeks to persuade this court that the legal principal in Hiotis does not apply because there was no finding of "guilt." P. R. Br. at 2. I do not agree. Petitioner's argument flies in the face of the literal words clearly recorded and heard on the video tape. ALJ Ex. 1 at 10:57:18 - 26. The only convictions which cannot serve as the basis for an exclusion are those which have been reversed or vacated. Douglas L. Reece, D.O., DAB CR305 (1994).

In the present case, the Court's action in striking the guilty verdict it had entered against Petitioner did not amount to a finding that she was not guilty of the offenses to which she had pled. Indeed, by the terms of Md. Ann. Code art. 27, § 641, a plea of guilty or a finding of guilt is required before a court may place a person on probation before judgment. Thus, the Court's original acceptance of Petitioner's Alford plea and the entering of a guilty verdict were not deprived of their force and effect as a "conviction" within the meaning of section 1128(i)(2) by the Court's later action in striking the verdict. I conclude that the court's entry of a guilty verdict against Petitioner represents a finding of guilt against Petitioner, within the meaning of section 1128(i)(2).

However, even were I to find that Petitioner had not been convicted within the meaning of section 1128(i)(2), I would nevertheless find that Petitioner has been convicted within the meaning of sections 1128(i)(3) and (i)(4) of the Act.

Petitioner was convicted of a criminal offense within the meaning of section 1128(i)(3) of the Act.

An individual will be deemed convicted:

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

Section 1128(i)(3) of the Act.

In the present case, it is undisputed that, pursuant to the Agreement, Petitioner offered an Alford Plea in the Court to one count of felony Medicaid fraud and guilty to one count of willfully and intentionally failing to file a income tax return (a misdemeanor) for the year 1996.

During a lengthy qualification recital⁽¹⁾ by her counsel:

(a) Petitioner agreed she was proceeding under a guilty plea. ALJ Ex. 1. at 10:44:58, 10:45:17.

(b) Petitioner agreed that the plea was given freely and voluntarily. ALJ Ex. 1. at 10:46:33, 10:49:18.

(c) Petitioner agreed that she understood the nature of this guilty plea. ALJ Ex. 1. at 10:49:07.

Petitioner contends that the offering of an Alford Plea along with reading the agreed SOF into the record and the Court's guilty verdict may not be the basis for a finding that she was "convicted" within the meaning of section 1128(i) and may not provide a basis for exclusion. P. Br. at 7.

Petitioner appears to argue that because she couched her plea as an Alford plea, the Judge's finding of guilt upon hearing the SOF was different in quality or character than if the guilty verdict was declared under any other traditional means. That is not so.

After calling Petitioner's case for hearing, the judge advised Petitioner's counsel in a recorded bench conference that "A guilty plea pursuant to Alford is a guilty plea . . ." ALJ Ex. 1 at 10:35:28.

Petitioner's Alford plea, coupled with her Agreement, through which Petitioner knowingly consented to having the SOF containing the elements of Medicaid fraud read into and made part of the record, is a guilty plea, within the meaning of section 1128(i) of the Act. Maryland's Court of Appeals states that "An Alford plea [is] a specialized type of guilty plea, where the defendant, although pleading guilty, continues to deny his or her guilt, but enters the plea to avoid the threat of greater punishment. . . . an Alford plea is the functional equivalent of a guilty plea . . ." Ward v. State, 83 Md. App. 474, 575 A.2d 771 (1990) at 773.

Here, the Court consented to receive Petitioner's plea, however couched, as an element of an arrangement to dispose of the criminal charges against her. The signed Agreement between Petitioner and the State of Maryland Attorney General's Office states that the parties will present the Agreement to the Court for approval. I.G. Ex. 4 at 3. The Agreement states that, if the Court rejects the Agreement, the parties will have the right to withdraw from the Agreement. Here, the Court did not reject the Agreement. Instead, the Court received the plea from Petitioner pursuant to and as provided in the Agreement. The Court accepted Petitioner's plea within the meaning of section 1128(i) of the Act.

Because I have found a basis for exclusion above, I do not need to draw distinctions between an Alford plea and a "nolo contendere" as set out in section 1128(i)(3) of the Act. In both of these forms of defense pleading, the criminal defendant offers no defense to factual allegations and leaves the determination of guilt solely to the Court to determine if the facts presented constitute a "crime" under the state law.

Petitioner was convicted of a criminal offense within the meaning of section 1128(i)(4) of the Act.

An individual will be deemed convicted:

(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.

Section 1128(i)(4) of the Act.

Subsequent to entering the guilty verdict, the Court granted Petitioner's motion and imposed probation before judgment pursuant to Md. Ann. Code, art. 27, § 641. As quoted above, that statutory provision permits a court, after a plea or finding of guilt, to stay the entering of judgment, defer further proceedings, and place the offender on probation. If the offender successfully completes probation, the court will dispose of the matter by discharging the offender from probation, without judgment of conviction (as defined under Maryland Law). Petitioner argues in her letter of August 31, 2000, that she would not lose the opportunity to do business with Medicaid in Maryland as a direct result of the Court proceedings, because probation before judgment does not constitute a conviction under State law. Under the Medicaid funding scheme, however, States administer grants from the federal government in accordance with federal statutes and regulations. Thus, what constitutes a conviction under the Medicaid Act is determined by federal law, not state law. Travers v. Shalala, 20 F.3d 993 (9^th Cir. 1994). See also Yavacone v. Bolger, 645 F. 2d 1028, 1034 (D.C. Cir. 1981). This disposition falls squarely within the definition of conviction at section 1128(i)(4), which includes all dispositions involving deferred adjudications and arrangements where a judgment of conviction is withheld. Moreover, if there were any doubt that the language of section 1128(i)(4) encompasses the disposition of Petitioner's case pursuant to Md. Ann. Code, art. 27, § 641, examination of the legislative history of section 1128(i) shows that Congress intended to cover situations like the present case. The congressional committee charged with drafting the 1986 amendments to the Act stated:

The principal criminal dispositions to which the exclusion remedy [currently] does not apply are the "first offender" or "deferred adjudication" dispositions. It is the Committee's understanding that States are increasingly opting to dispose of criminal cases through such programs, where judgment of conviction is withheld. The Committee is informed that State first offender or deferred adjudication programs typically consist of a procedure whereby an individual pleads guilty or nolo contendere to criminal charges, but the court withholds the actual entry of a judgment of conviction against them and instead imposes certain conditions of probation, such as community service or a given number of months of good behavior. If the individual successfully complies with these terms, the case is dismissed entirely without a judgment of conviction ever being entered.

These criminal dispositions may well represent rational criminal justice policy. The Committee is concerned, however, that individuals who have entered guilty or nolo [contendere] pleas to criminal charges of defrauding the Medicaid program are not subject to exclusion from either Medicare or Medicaid. These individuals have admitted that they engaged in criminal abuse against a Federal health program and, in the view of the Committee, they should be subject to exclusion. If the financial integrity of Medicare and Medicaid is to be protected, the programs must have the prerogative not to do business with those who have pleaded to charges of criminal abuse against them.

H.R. Rep. No. 727, 99th Cong., 2d Sess. 75 (1986), reprinted in 1986 U.S.C.C.A.N. 3607, 3665.

I find that disposition of Petitioner's criminal case pursuant to Md. Ann. Code art. 27, § 641 constitutes a conviction under the definition of the first offender and deferred adjudication provisions mentioned in the committee report. Petitioner offered an Alford plea accompanied by the agreed SOF related to Medicaid fraud and was found guilty of a felony. Even if she ultimately is discharged by the Court without a judgment of conviction under Maryland State law, Congress has made clear that it does not intend for Medicare and Medicaid to do business with her. Therefore, Petitioner was convicted within the meaning of section 1128(i)(4).

B. Petitioner's conviction is related to the delivery of a health care item or service.

Under section 1128(a)(1) of the Act, Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under Medicaid.

The record establishes that, in agreeing to the SOF for Count 1 of the Criminal Information, Petitioner admitted that the facts would prove that she intentionally filed, or caused to be filed, claims against Medicaid that charged for items or services which were never provided. Petitioner's conviction is related to the delivery of items or services under the Medicaid program, within the meaning of section 1128(a)(1) of the Act, because the SOF clearly states that Petitioner intentionally billed the Medicaid program for the delivery of an [health care] item or service which was not delivered to Medicaid recipients. I.G. Ex. 3 at 7. Pursuant to her Agreement with the State, Petitioner offered an Alford plea to Count 1 of the State's Criminal Information (charging her with Medicaid fraud) followed by a reading of an agreed SOF. Specifically, Count 1 alleged that Petitioner:

. . . did fraudulently and willfully make and cause to be made false statements and misrepresentations of material fact in applications for benefits and payments submitted to the Maryland Medical Assistance Program . . . established pursuant to Title XIX of the Social Security Act . . . in that [Petitioner] did fraudulently and willfully make . . . false statements . . . in claims submitted to the Maryland Medical Assistance program, a program established pursuant to . . . the [Act] . . . involving goods and services totaling more that $500 . . . in violation of Article 27, Section 230B(b)(1) of the . . . Maryland [code].

I.G. Ex. 2 at 2.

This language plainly establishes a direct connection between the criminal offense for which Petitioner was convicted and the Medicaid program. Petitioner's fraudulent claims for Medicaid reimbursement related to the furnishing of apnea monitors and related supplies and services to Medicaid recipients. I find that there exists the requisite nexus and common sense connection between the criminal offense for which Petitioner was convicted and the delivery of an item or service under Medicaid.

It is well established that financial misconduct directed at the Medicare and Medicaid programs, connected with the delivery of items or services under a covered program, constitutes a program-related offense invoking mandatory exclusion. Id. at 5-6. In particular, filing fraudulent Medicare or Medicaid claims has been held to constitute program-related misconduct. Jack W. Greene, DAB No. 1078 (1989), aff'd sub nom; Greene v. Sullivan, 731 F. Supp. 835, 838 (E.D. Tenn. 1990). Further, as an appellate panel of the Departmental Appeals Board pointed out in Niranjana B. Parikh, M.D., DAB No. 1334 (1992), the Board "has consistently recognized common sense connections between an offense and the delivery of an item or service, even if the individual at issue did not physically deliver the item or service." Id. at 5.

The filing of fraudulent Medicare and Medicaid claims consistently has been held to constitute clear program-related misconduct. Alan J. Chernick, D.D.S., DAB CR434 (1996) (I.G.'s five-year mandatory exclusion of dentist who was convicted in state court of filing false claims upheld); see also Barbara Johnson, D.D.S., DAB CR78 (1990) (I.G.'s five-year mandatory exclusion of dentist convicted of filing false claims upheld).

To determine if an offense is program-related, the Administrative Law Judge (ALJ) must analyze the facts and circumstances underlying the conviction to determine whether a nexus or common sense connection links the offense for which a petitioner has been convicted and the delivery of a health care item or service under a covered program. Berton Siegel, D.O., DAB No.1467 (1994). The falsified claims leading to Petitioner's conviction resulted in her receipt of fraudulent Medicare reimbursement. In Rosaly Saba Khalil, M.D., DAB CR353 (1995), the ALJ found that a criminal offense stemming from the fraudulent receipt of reimbursement checks from Medicaid provided a sufficient nexus between the offense and the delivery of health care items or services under Medicaid. Additionally, the ALJ in Khalil held that a nexus may exist "despite the fact that Petitioner may not have provided items or services to Medicaid recipients personally or made reimbursement claims for those items or services." Id.

In the present case, the nexus between Petitioner's offense and the delivery of health care items or services under Medicaid is firmly established by Petitioner's having been found guilty of Medicaid fraud, based on the facts contained in the agreed SOF. The Conclusion portion of the SOF states: "Had this case gone to trial, the State would have proven beyond a reasonable doubt that Barbara Hart deliberately submitted claims to the Medicaid program for services that she knew had not been provided as billed, for a total loss to the State of at least $23,008.15." Thus, I find that the criminal offense which provided the basis for Petitioner's conviction constitutes a criminal offense related to the delivery of an item or service under Medicaid, within the meaning of section 1128(a)(1) of the Act [42 U.S.C. § 1320a-7(a)(1)]. Accordingly, Petitioner is subject to a mandatory exclusion of at least five years. Section 1128 (c)(3)(B) of the Act [42 U.S.C. § 1320a-7(c)(3)(B)].

C. The I.G. is authorized to impose an exclusion longer that five years because of the aggravating factors.

The Secretary has promulgated regulations concerning the factors which should be used in establishing the length of an exclusion. These factors go to the seriousness of the offenses and the cooperation of the offending party. They are reasonably related to the goal of determining the degree of untrustworthiness of an individual and the future threat posed by that person to the integrity of Federal health care programs. Cash, DAB No. 1725 at 14.

The regulations referred to in Cash and found at 42 C.F.R. § 1001.102(b), provide that factors to be considered aggravating may be used as a basis for lengthening a period of exclusion. I find that aggravating factors exist in Petitioner's case. In Petitioner's case, four of nine possible aggravating factors are present and should be considered in determining the length of exclusion. The following factors apply in Petitioner's case:

(1) The acts resulting in the conviction, or similar acts, resulted in financial loss to the Medicare and the State health care programs of $1,500 or more;

(2) The acts that resulted in the conviction, or similar acts, were committed over a period of one year or more;

(5) The sentence imposed by the court included incarceration;

(9) The individual was convicted of other offenses besides those that formed the basis for the exclusion.

In addition, the exhibits provided by the I.G. establish that there is a fifth aggravating factor under 42 C.F.R. § 1001.102(b)(7). It provides that an aggravating factor exists if the individual has at any time been overpaid a total of $1,500 or more as a result of intentional improper billings. The exhibits contain multiple examples of intentional overbilling by Petitioner each in amounts greater than $1,500. I.G. Ex. 3. at 4 - 9. The I.G. did not give notice of the fifth aggravating factor in its Notice letter of August 31, 1999. Accordingly, I have not considered it in my decision.

Petitioner's fraud resulted in more than $1,500 damage to the Maryland Medicaid program.

Petitioner's conviction for Medicaid fraud resulted in the financial loss to the Maryland Medicaid program of more than $1,500. In Petitioner's Order for Probation, dated May 21, 1999, the Circuit Court Judge ordered Petitioner to pay $23,008.00 in restitution. I.G. Ex. 6.

Therefore, the $1,500 threshold in the above-listed aggravating factor is satisfied in Petitioner's case. In fact, the loss to the Maryland Medicaid program equaled more than 15 times the threshold amount. Petitioner's agreement to pay restitution of $23,008 is a tacit admission that she engaged in unlawful conduct that damaged the Medicaid program in at least the amount of the restitution payment.

I find that the aggravating factor under 42 C.F.R. § 1001.102(b)(1) has been established.

Petitioner's fraudulent acts, or similar acts, were committed over a period of one year or more.

The second factor used by the I.G. in determining the length of exclusion is that Petitioner's acts that resulted in the conviction, or similar acts, were committed over a period of one year or more. In this case, the Criminal Information indicates the time period for Petitioner's fraudulent conduct was from on or about November 11, 1994 to on or about December 29, 1996. I.G. Ex. 2.

I find that the aggravating factor under 42 C.F.R. § 1001.102(b)(2) has been established.

Petitioner's sentence included a period of incarceration.

The third factor the I.G. considered in determining Petitioner's length of exclusion was that Petitioner's court sentence for Medicaid fraud included a period of incarceration. The sentencing document demonstrates that Petitioner was sentenced to ninety (90) days of home detention. I.G. Ex. 7. Incarceration includes "home detention." 42 C.F.R. 1001.2(d).

I find that the aggravating factor under 42 C.F.R. § 1001.102(b)(5) has been established.

Petitioner was convicted of other offenses besides those that formed that basis for the exclusion.

The fourth aggravating factor established by the I.G. was that Petitioner was convicted of other offenses besides the one that formed the basis for the exclusion. On May 21, 1999, Petitioner entered an Alford plea to a felony count of Medicaid Fraud (Count 1) and pled guilty to one misdemeanor count of willful failure to file an income tax return for calendar year 1996 (Count 2). I.G. Ex. 2 at 3; Ex. 4. The SOF shows that the Petitioner had failed to file Maryland State income tax returns for calendar years 1993 through 1997. The SOF further shows that she had undisclosed gross income (not reported on Maryland State income tax returns) from billing health insurers of at least $63,792 in 1993; $100,244 in 1994; $117,744 in 1995; $139,417 in 1996; and $28,183 in 1997. I.G. Ex. 3 at 8. Thus, Petitioner was convicted of another crime, besides the one of which formed the basis for the exclusion (Felony Medicaid Fraud). Id. Therefore, Petitioner was convicted of other offenses besides those that formed the basis for the exclusion.

I find that the aggravating factor under 42 C.F.R. § 1001.102(b)(9) has been established.

D. A 10-year exclusion is not unreasonable.

Sections 1128(a)(1) and (c)(3)(B) of the Act mandate that Petitioner be excluded from Medicare and Medicaid for at least five years because of her criminal conviction for filing false Medicaid claims, which conviction is related to the delivery of items or services under Medicaid. Neither the I.G. nor the ALJ is authorized to reduce the five-year mandatory minimum exclusion. Greene, DAB CR19, at 12-14; Stanley H. Guberman, D.C., DAB CR111, at 9 (1990) (citing Samuel W. Chang, M.D., DAB No. 1198 (1990)).

Additionally, the I.G. has demonstrated the presence of four aggravating factors defined by the regulations. Petitioner has not proved the existence of any mitigating factors allowed by the regulations. Petitioner's exclusion may be lengthened by any or all of the four aggravating factors discussed above. The presence of these aggravating factors is a measure of the Petitioner's untrustworthiness. A 10-year exclusion is within a reasonable range and is consistent with the remedial purpose of the Act. Khalil, supra, DAB CR353 at 9.

VI. Conclusion

I conclude that the I.G. was required to exclude Petitioner from participating in Medicare and Medicaid pursuant to section 1128(a)(1) of the Act. I conclude that exclusion for at least five years was mandated by section 1128(c)(3)(B) of the Act, and that the 10-year period of exclusion is within a reasonable range.

Jill S. Clifton

Administrative Law Judge

1. A qualifying statement (or recital) is often employed in a criminal case when the court requires the record of the case to reflect that the defendant is mentally competent to accept a plea agreement and to affirm the defendant is aware of the consequences of his/her actions in agreeing to a SOF as well as a recital of age, education, and presence of mind.