SUBJECT:

Susan Malady, R.N.,

Petitioner,

The Inspector General

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Susan Malady, R.N., from participating in Medicare, Medicaid, and other federally funded health care programs for a period of 10 years. I find that the I.G. is authorized to exclude Petitioner pursuant to section 1128(a)(3) of the Social Security Act (Act), and that the 10-year exclusion imposed by the I.G. against Petitioner falls within a reasonable range.

I. Background

By letter dated May 31, 2001, the I.G. notified Petitioner that she was being excluded from participation in Medicare, Medicaid, and all federal health care programs for a period of 10 years. The I.G. advised Petitioner that she was being excluded pursuant to section 1128(a)(3) of the Act as a result of Petitioner's conviction in the Superior Court of New Jersey of a criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service. By letter dated June 5, 2001, Petitioner requested a hearing and the case was assigned to me.

On July 2, 2001, I held a prehearing conference by telephone at which Petitioner stated that she was not challenging any of the facts in this case and the parties agreed that the case could be heard and decided based on written submissions. The I. G. filed six exhibits (I.G. Exs. 1 - 6) as part of her submission, and Petitioner filed four unlabeled attachments which I have numbered as Petitioner's exhibits 1 - 4 (P. Exs. 1 - 4) to conform to Civil Remedies Division procedures. In the absence of objection, I receive into evidence I.G. Exs. 1 - 6 and P. Exs. 1 - 4.

During the time period relevant to this case, Petitioner was a registered nurse practicing in New Jersey. I.G. Ex. 6. On May 24, 1999, Petitioner pled guilty, in the Superior Court of New Jersey, to one count of Theft By Deception in the Second Degree,⁽¹⁾ a felony offense under New Jersey law. I.G. Ex. 4. Petitioner's conviction, based on her guilty plea, and the Superior Court of New Jersey's acceptance of that plea constitutes a conviction under section 1128(i)(3) of the Act. Petitioner was sentenced to five years of incarceration, ordered to pay restitution in the amount of $97,400, and ordered to pay a $5,000 fine. I.G. Ex. 4.

II. Issue

The issues in this case are:

1. Whether the I.G. appropriately excluded Petitioner from participation in Medicare, Medicaid, and all federal health care programs; and,

2. Whether the length of the exclusion was within a reasonable range.

III. Discussion

Section 1128(a)(3) of the Act authorizes the Secretary of the HHS (Secretary) to exclude from participation in any federal health care program (as defined in section 1128B(f) of the Act):

[a]ny individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996⁽²⁾, under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a)(3) of the Act shall be for a minimum period of not less than five years.

The mandatory minimum period of exclusion may be increased with the existence of certain aggravating factors that are not offset by certain mitigating factors. 42 C.F.R. § 1001.102. The following four factors may serve as a basis for lengthening the period of exclusion: (1) the acts resulting in the conviction, or similar acts, resulted in a financial loss to one or more entities of $1,500 or more (42 C.F.R. § 1001.102(b)(1)); (2) the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more (42 C.F.R. § 1001.102(b)(2)); (3) the sentence imposed by the court included incarceration (42 C.F.R. § 1001.102(b)(5)); and (4) the individual has been the subject of any other adverse action by any federal, State, or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for imposition of the exclusion (42 C.F.R. § 1001.102(b)(9)).

The Secretary has delegated to the Inspector General (I.G.) the authority to impose exclusions. 42 C.F.R. § 1001.401(a). So long as the amount of time chosen for the exclusion imposed on Petitioner by the I.G. is within a reasonable range, based on demonstrated criteria, I have no authority to change it. Joann Fletcher Cash, DAB No. 1725 at 7 (2000), citing 57 Fed. Reg. 3298, 3321 (1992).

A. Petitioner was convicted of a felony relating to theft in connection with the delivery of a health care item or service, within the meaning of section 1128(a)(3) of the Act.

Petitioner does not challenge any of the facts stated by the I.G. in its notice letter of May 31, 2001. See Order dated July 2, 2001. Neither did Petitioner challenge that she was convicted of theft nor that her conviction fell within the meaning of section 1128(a)(3) of the Act in either her hearing request, her brief, or during the prehearing telephone conference.

The record reflects that Petitioner was the Director of Nursing at the Northwest Covenant Medical Center (Northwest) and that from on or about December 20, 1994 until on or about September 3, 1996, Petitioner submitted false expense reports to Northwest for reimbursement which Petitioner knew were not expenses which had been incurred by her, were not business-related, and were not approved by Petitioner's supervisor. As a result of this conduct, Petitioner received checks in excess of $97,000 from Northwest. I.G. Exs. 3, 4. On May 24, 1999, Petitioner pled guilty, in the Superior Court of the State of New Jersey, to one count of Theft By Deception in the Second Degree, a felony offense under New Jersey law. I.G. Ex. 4.

Petitioner's conviction was for one of the enumerated criminal offenses, i.e., theft, and thus is expressly covered by section 1128(a)(3). In addition, Petitioner's false reimbursement claims were filed in her capacity as the Director of Nursing and were filed against Northwest, an organization in the business of providing health care items or services. Thus, Petitioner's misconduct was related to the delivery of a health care item or service. See Donald R. Kirks, M.D., DAB CR765 (2001); Frank J. Haney, DAB CR81 (1990); Francis Craven, DAB CR143 (1991). Further, Petitioner's conduct occurred, in part, after August 21, 1996, as required under section 1128(a)(3).

B. The I.G. is required to exclude Petitioner from participation in Medicare, Medicaid, and all federal health care programs.

Section 1128(a)(3) of the Act mandates that the I.G. exclude any individual or entity convicted of a felony criminal offense in connection with the delivery of a health care item or service relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct, which occurred after August 21, 1996, and involved a health care program. Therefore, the I.G. must exclude Petitioner under section 1128(a)(3). The minimum period of exclusion under section 1128(a)(3) is for a period of five years. Section 1128(c)(B)(3) of the Act.

C. A 10-year exclusion falls within a reasonable range.

By regulation, the Secretary has established the criteria for determining the length of exclusions imposed pursuant to section 1128 of the Act. The aggravating and mitigating factors applicable to a section 1128(a) exclusion are listed at 42 C.F.R. § 1001.102. The presence of an aggravating factor or factors not offset by any mitigating factor or factors justifies lengthening the mandatory five-year period of exclusion. Evidence that does not pertain to one of the specific aggravating or mitigating factors is not relevant and may not be used to decide whether an exclusion of a particular length is reasonable.

1. Petitioner's crimes resulted in a loss to one or more entities of more than $1,500. 42 C.F.R. § 1001.102(b)(1).

Petitioner does not challenge the existence of this aggravating factor. As established by the court order requiring her to pay $97,400 in restitution, Petitioner's criminal acts resulted in a financial loss to Northwest of significantly more than $1,500. I.G. Exs. 3, 4.

2. Petitioner's crime that resulted in her conviction occurred over a period of more than one year. 42 C.F.R. § 1001.102(b)(2).

The record reflects that Petitioner pled guilty to criminal acts covering a time period from on or about December 20, 1994, to on or about September 3, 1996, a time period of more than one year. I.G. Ex. 3. Petitioner does not dispute that the acts occurred over more than one year.

3. Petitioner received a sentence which included incarceration. 42 C.F.R. § 1001.102(b)(5).

As a result of her criminal activity, Petitioner was convicted and sentenced by the Superior Court of New Jersey to five years of incarceration, among other things. I.G. Ex. 4.

4. Petitioner has been the subject of other adverse action by a State agency or board, and the adverse action is based on the same set of circumstances that serves as a basis for imposition of the exclusion. 42 C.F.R. § 1001.102(b)(9).

On April 10, 2000, Petitioner's license to practice nursing in New Jersey was revoked by the State of New Jersey Division of Consumer Affairs Board of Nursing based on Petitioner's conviction. I.G. Ex. 6. This constitutes adverse action against Petitioner by a State board based on the same set of circumstances that served as a basis for her exclusion.

I find that a 10-year exclusion in this case is justified. The financial impact of a theft of $97,400 was substantial. Petitioner engaged in deliberate massive theft from Northwest over a period of almost two years. Petitioner's conduct warranted a five-year sentence of incarceration. In addition, Petitioner's conviction was so egregious as to cause her nursing license to be revoked.

5. This case does not present any mitigating factors.

Petitioner suggests that additional factors should be considered in mitigation. She argues that she has been punished enough. She states that: (1) she has made full restitution and paid all fines; (2) she will have to carry the stigma of a criminal record for the rest of her life; (3) following an incarceration of six months she satisfactorily participated in an Intensive Supervision Program; (4) the New Jersey Board of Nursing reissued her license on January 5, 2001; (5) the State that originally issued her nursing license renewed the license after full disclosure; and that, (6) she has been an effective role model since her conviction in that she has been functioning as a Chief Nursing Officer and she has submitted a petition signed by her colleagues to that effect (P. Ex. 4). None of these are mitigating factors.

The only factors which can be considered mitigating are: (1) Petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to Medicare and the State health care program was less than $1,500; (2) the record demonstrates that Petitioner had a mental, physical, or emotional condition that reduced his culpability; or (3) Petitioner's cooperation with federal or state officials resulted in others being convicted or excluded, or additional cases being investigated, or a civil money penalty being imposed. 42 C.F.R. 1001.102(c). This case presents none of the regulatory mitigating factors. Petitioner was convicted of a felony; losses were to an entity, Northwest, and those losses substantially exceeded $1,500; no evidence suggests any physical, mental, or emotional conditions; nor did Petitioner's cooperation result in any investigations or convictions.

I therefore find that no mitigating factors justify reducing the period of exclusion.

D. The imposition of an exclusion does not violate the United States Constitution.

Petitioner argues that the statute is unconstitutional in that the statute violates Articles V, VI, and VIII of the United States Constitution. She states that not only has she been punished as sentenced, but she will be stigmatized and possibly lose employment opportunities and social supports and suffer emotionally. In essence, she feels she has been punished enough and that punishments should not "accrue over years of time after the conviction." P. Br. at 2.

I have no authority to declare a federal statute unconstitutional. John A. Crawford, DAB CR160 (1991); Roberta E. Miller, DAB CR367 (1995), Richard A. Fishman, DAB CR100 (1990). Even if I could consider these issues, it has been repeatedly held that exclusions imposed by the I.G. are civil sanctions and are remedial in nature and not punitive and criminal. Manocchio v. Kusserow, 961 F.2d 1539 (11^th Cir. 1992); Greene v. Sullivan, 731 F.Supp. 838 (E.D. Tenn. 1990); Joann Fletcher Cash, DAB No. 1725 (2000); Douglas Schram, R. Ph., DAB No. 1382 (1992); and Janet Wallace, L.P.N., DAB No. 1126 (1992).

The statute's purpose is to protect federal health care programs and the programs' beneficiaries and recipients from untrustworthy providers. A provider that has been convicted of a crime described in section 1128(a) is presumed by Congress to be untrustworthy and a threat to federal health care programs and their beneficiaries and recipients. The record shows that Petitioner has proven herself to be an untrustworthy individual and therefore Petitioner's exclusion comports with the remedial purpose of the Act.

E. The exclusion becomes effective 20 days from the date of the I.G.'s notice.

Petitioner requests that the effective date of the exclusion be backdated to May 24, 1999, the date of her conviction. It is well-settled that an administrative law judge is without authority to change the effective date of an exclusion. As a matter of law, an exclusion must become effective 20 days from the date of the I.G.'s notice of exclusion. 42 C.F.R. § 1001.2002. An administrative law judge has no authority to review the timing of the I.G.'s determination to impose an exclusion or to retroactively alter the date of the imposition of the exclusion. Samuel W. Chang, M.D., DAB No. 1198 (1990); Kathleen E. Talbot, DAB CR772 (2001); Tanya A. Chuoke, DAB No. 1721 (2000).

IV. Conclusion

I find that the I.G. was authorized to exclude Petitioner pursuant to section 1128(a)(3) of the Act. The 10-year exclusion imposed by the I.G. is within a reasonable range.

Carolyn Cozad Hughes

Administrative Law Judge

1. Petitioner was convicted of two other counts in the indictment for similar conduct which occurred prior to August 21, 1996. See I.G. Exs. 3, 4.

2. The Health Insurance Portability and Accountability Act of 1996 was enacted on August 21, 1996.