CASE | DECISION | JUDGE

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
IN THE CASE OF  


SUBJECT:

Salvacion Lee, M.D.,

Petitioner,

DATE: June 24, 2002
                                          
             - v -

 

The Inspector General

 

Docket No.C-02-054
Decision No. CR920
DECISION
...TO TOP

DECISION

I affirm the Inspector General's (I.G.'s) determination to exclude Salvacion Lee, M.D. (Petitioner) under section 1128(a)(1) of the Social Security Act (Act) for a five-year minimum mandatory period from participation in Medicare, Medicaid, and all other federally funded health care programs.

BACKGROUND

By letter dated September 28, 2001, the I.G. notified the Petitioner that she was to be excluded, for a period of five years, from participation in the Medicare, Medicaid, and all other federal health care programs as defined in section 1128B(f) of the Act. In that letter, the I.G. explained that Petitioner was being excluded, pursuant to section 1128(a)(1) of the Act, based on her conviction in United States District Court for the Central District of California of violating 18 U.S.C. § 371 by conspiring to commit bribery. The I.G. relied on section 1128(a)(1) of the Act, which provides for mandatory exclusion from participation in federal health programs of "[a]ny individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under title XVIII (Medicare) or a State health care program."

By letter dated October 11, 2001, Petitioner timely sought review of the I.G.'s action. The sufficiency of Petitioner's hearing request has not been challenged, and no other jurisdictional issues have been raised or become apparent to me.

On November 27, 2001, I held a telephone conference with the parties to discuss the issues presented by this case and the procedures best suited for addressing them. The parties agreed to have the case decided on written submissions in lieu of an in-person hearing. The I.G. submitted a motion for summary judgment and brief in support (I.G. Br.). Petitioner submitted a brief in response (P. Br.) to the I.G.'s motion. The I.G. submitted a reply (I.G. Reply Br.) to Petitioner's response, and Petitioner submitted a sur-reply (P. Reply Br.) to the I.G.'s reply. The I.G. filed six exhibits (I.G. Exs. 1-6) as part of her submission; Petitioner filed one exhibit (P. Ex. 1). In the absence of objection by either side, I admit I.G. Exs. 1-6 and P. Ex. 1.

Based on the documentary evidence, the applicable law, and the arguments of the parties, I enter summary judgment in favor of the I.G. and thereby affirm her determination to exclude Petitioner from participation in Medicare, Medicaid, and all federal health care programs for a period of five years.

ISSUES

The legal issues before me in this case are:

1. Whether Petitioner's conviction authorizes the I.G. to exclude Petitioner from Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(a)(1) of the Act; and

2. Whether the I.G. correctly invoked the terms of section 1128(c)(3)(B) of the Act, thereby imposing the mandatory five-year term of exclusion.

CONTROLLING STATUTES AND REGULATIONS

Section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1), requires the exclusion from participation in Medicare, Medicaid, and all other federal health care programs of any individual or entity convicted of a criminal offense related to the delivery of an item or service under Title XVIII of the Act (the Medicare program) or under any State health care program. This exclusion is mandatory and must be imposed for a minimum of five years. Section 1128(c)(3)(B) of the Act. The Act defines "conviction" as including those circumstances "when a judgment of conviction has been entered against the individual or entity by a Federal, State, or local court." Section 1128(i)(1) of the Act. This definition is repeated at 42 C.F.R. § 1001.2. Petitioner does not contest that her conviction falls within the statutory and regulatory definition.

The minimum mandatory five-year exclusion is subject to enlargement: 42 C.F.R. § 1001.102 allows the I.G. to extend the five-year period if certain aggravating factors are demonstrated. If the I.G. proposes to rely on any of the specified aggravating factors to seek an enlargement of the exclusionary period, then the subject of the proposed exclusion is permitted to assert the existence of certain mitigating factors and thereby seek to limit the exclusion to the five-year mandatory minimum. Those aggravating and mitigating factors are set out in detail at 42 C.F.R. §§ 1001.102(b)(1)-(9) and (c)(1)-(3). However, the I.G. has not sought to enhance the five-year mandatory minimum exclusion in this case, and for that reason the existence of aggravating or mitigating factors is of no direct importance in the record before me.

Title 18 of the United States Code, entitled "Crimes and Criminal Procedure," establishes, defines, and classifies most activity proscribed as criminal under federal law. 18 U.S.C. § 371 addresses the crime of conspiracy, and provides:

Conspiracy to commit offense or to defraud the United States.

If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined not more than $10,000 or imprisoned not more than five years, or both.

If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor.

18 U.S.C. § 201 addresses the crime of bribery of public officials. In relevant part, it provides:

Bribery of public officials and witnesses.

(a) For the purposes of this section:

"public official" means . . . an . . . employee or person acting for or on behalf of the United States, or any department, agency, or branch of Government thereof . . ."official act" means any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which by law may be brought before any public official, in his official capacity, or in his place of trust or profit.

(b) Whosoever, directly or indirectly, corruptly gives, offers or promises anything of value to any public official…or offers or promises any public official…to give anything of value to any other person or entity, with intent

(1) to influence any official act . . .

Shall be fined not more than $20,000 or three times the monetary value of the thing of value, whichever is greater, or imprisoned for not more than fifteen years, or both, and may be disqualified from holding any office of honor, trust, or profit under the United States.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

I find and conclude as follows:

1. At all material times, Petitioner Salvacion Lee was a physician licensed to practice medicine in the State of California. I.G. Ex. 4; P. Ex. 1.

2. At all material times, Petitioner was a Medicare participating physician, and was authorized to submit claims for services provided and delivered to Medicare beneficiaries. I.G. Ex. 4; P. Ex. 1.

3. At all material times, the Health Care Financing Administration (HCFA) was responsible for administering the Medicare program, and had designated Transamerica Occidental Life Insurance Company (Transamerica) to act as its fiscal agent in processing and paying Medicare claims on HCFA's behalf in southern California. I.G. Ex. 4.

4. At all material times, Reggie Sells was an auditor in Transamerica's Medicare Fraud Investigations Unit. I.G. Ex 4.

5. Beginning in approximately August 1996, Petitioner devised and executed a scheme whereby she submitted claims to Medicare via Transamerica for respiratory therapy services provided to Medicare beneficiaries allegedly performed in compliance with Medicare program requirements, but in fact not performed in compliance with such requirements. Those claims were false and were known by Petitioner to be false when she submitted them for payment. P. Ex.1.

6. On August 5, 1997, Transamerica determined that Petitioner had been overpaid for her claims for Medicare services provided pursuant to the scheme described above in Finding 5, in the approximate amount of $173,103.98. P. Ex. 1.

7. Beginning on or about September 1997 and continuing until approximately November 1997, Petitioner combined, conspired, confederated, and agreed with Bernie Ramos to pay a bribe to Reggie Sells, with the intent to influence Sells substantially to understate the amount of Medicare overpayments which Petitioner would be required to repay. The conspiracy embodied the underlying facts, objects, means, and overt acts set out in Count I of the Superseding Indictment described below in Finding 8. I.G. Ex. 4; P. Ex. 1.

8. Petitioner was named as a defendant in a Superseding Indictment handed up on January 29, 1999, in United States District Court for the Central District of California. That Superseding Indictment was filed as United States v. Salvacion Lee, CR 98-518(A), and charged Petitioner in two counts: Count I charged the crime of Conspiracy, in violation of 18 U.S.C. § 371; Count II charged the crime of Bribery of a Public Official, in violation of 18 U.S.C. § 201(b)(1). I.G. Ex. 4.

9. Petitioner pleaded guilty to Count I of the Superseding Indictment in CR 98-518(A), and her guilty plea was accepted by the court, on August 12, 1999. I.G. Ex. 6.

10. Judgment of conviction was entered against Petitioner, and she was sentenced on her plea of guilty, on Count I of the Superseding Indictment in CR 98-518(A) on September 1, 2000. I.G. Exs. 5, 6.

11. Petitioner's plea of guilty, as described above in Finding 9, and the entry of judgment of conviction and sentence as described above in Finding 10, constitute a "conviction" within the terms of section 1128(i)(1), (2), and (3) of the Act, 42 U.S.C. § 1320a-7(i)(1), (2), and (3). 42 C.F.R. § 1001.2.

12. By letter dated September 28, 2001, the I.G. notified Petitioner that she would be excluded for a term of five years from participation in Medicare, Medicaid, and all federal health care programs, pursuant to the authority set out in section 1128(a)(1) of the Act. I.G. Ex. 1.

13. On October 11, 2001,Petitioner perfected her appeal from the I.G.'s action by filing a timely hearing request. I.G. Ex. 2; 42 C.F.R. § 1005.2(c).

14. Section 1128(a)(1) of the Act authorizes the exclusion of any individual or entity convicted of a criminal offense related to the delivery of an item or service under the Medicare program from participation in Medicare, Medicaid, and all federal health care programs. 42 U.S.C. § 1320a-7(a)(1).

15. A conviction of a criminal offense is related to the delivery of an item or service under Medicare if there is a nexus or common-sense connection between the criminal offense on which the conviction is based and the delivery of an item or service under the Medicare program. Berton Siegel, D.O., DAB No. 1467, at 5 (1994).

16. A nexus and a common-sense connection exists between the criminal offense to which Petitioner pleaded guilty, as noted above in Finding 9, and on which plea she was convicted and sentenced, as noted above in Finding 10, and the delivery of an item or service under the Medicare program.

17. Because of the nexus and common-sense connection noted above in Finding 16, Petitioner's conviction for violation of 18 U.S.C. § 371 relates to the delivery of an item or service under the Medicare program within the meaning of section 1128(a)(1) of the Act.

18. Once an individual has been convicted of a program-related criminal offense within the meaning of section 1128(a)(1) of the Act, exclusion for a minimum term of five years is mandatory. Section 1128(c)(3)(B) of the Act; 42 U.S.C. § 1320a-7(c)(3)(B).

19. The I.G. properly excluded Petitioner from participation in Medicare, Medicaid, and all other federal health care programs for five years.

20. There are no remaining disputed issues of material fact and summary judgment is therefore appropriate in this matter.

DISCUSSION

As I have noted above, there are two issues before me in this case: first, whether Petitioner's conviction authorizes the I.G. to exclude Petitioner from Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(a)(1) of the Act; and second, whether the I.G. correctly invoked the terms of section 1128(c)(3)(B) of the Act, thereby imposing the mandatory five-year term of exclusion. Although I have formulated them as distinct propositions for purposes of this discussion, they are in truth both to be resolved by deciding this fundamental question: is the criminal act to which Petitioner pleaded guilty and of which she was convicted a criminal offense related to the delivery of an item or service under Title XVIII (Medicare) or a State health care program? If it is such an offense, as the I.G. asserts, then the terms of section 1128(a)(1) of the Act apply, and certain well-settled consequences follow that application. If Petitioner's conviction and guilty plea cannot be characterized as such an offense, as Petitioner vigorously maintains, then the terms of section 1128(a)(1) do not apply, and the I.G.'s proposed exclusion of her cannot be supported by the authority of that section and section 1128(c)(3)(B) of the Act. Petitioner believes that her conviction exposes her only to the permissive exclusion permitted by section 1128(b) of the Act.

Petitioner does not deny here that she was convicted of a criminal offense. P. Br. at 3-4. She admits the fact of her guilty plea, but insists that the conviction is unrelated to the delivery of an item or service under the Medicare program. Petitioner relies on the fact that the specific crime of which she was convicted was the crime of conspiracy, as that crime is defined at 18 U.S.C. § 371, and not one of the several specific prohibitions against the submission of false or fraudulent claims in federally-protected health programs, such as those enumerated in 42 U.S.C. § 1320a-7(b), et seq. She characterizes her criminal conduct as directed "against the administrative and/or judicial system, not against [the] Medicare program." P. Br. at 4; P. Reply Br. at 4. On that theory she argues that the mandatory exclusion proposed by the I.G. is without legal foundation:

The mandatory exclusions apply to the cases where the health care provider submitted false claims; falsified Medicare or Medicaid cost reports; submitted false Medicare or Medicaid billing records tied to delivery of drugs or medical services to Medicare or Medicaid patients, [or] fabricated medical charts. They do not apply to any wrongful conduct directed at the auditors or the hearing officers. Accordingly, a mandatory exclusion is inapplicable.

P. Br. at 4.

Petitioner is correct in her assertion that the examples of criminal conduct she cites lie well within the ambit of section 1128(a)(1), and she is just as correct in maintaining that unless a conviction falls within the reach of section 1128(a)(1), one or more of the permissive exclusion mechanisms of section 1128(b) may apply and may operate to ameliorate or completely eliminate her actual exclusion from participation in the Medicare and Medicaid programs. She is mistaken, however, in every other element of her position.

Her first error is her assumption, implicit in the language noted above, that section 1128(a)(1) is applicable only to cases of expressly charged Medicare and Medicaid fraud, and only in situations of direct abuse of the victim program by the convicted individual. Section 1128(a)(1) authorizes mandatory exclusion for a "criminal offense related to the delivery of an item or service under Title XVIII (Medicare) or a State health care program." Petitioner reads the limits of this language as precisely coterminous with the crimes identified in 42 U.S.C. §§ 1320a-7(b) et seq. Her position is altered somewhat in her reply brief, where she concedes that section 1128(a)(1) would reach the conduct of care givers who misappropriated the medications of Medicaid patients (P. Reply Br. at 3-4), but the fundamental tenet of her position is this:

Dr. Lee's conviction is not related to the delivery of an item or service under the Medicare program. First, Petitioner was not convicted for false claims submitted to Medicare, false billings related to delivery of an item or service, falsifying Medicare cost reports related to delivery of services, [or] falsifying Medicare beneficiary records or similar offenses.

P. Br. at 3.

This first error in Petitioner's reading of section 1128(a)(1) is the result of her failure to appreciate the effect of a long series of decisions that addresses the question directly. Contrary to the position taken here by Petitioner, it is a settled point that she " . . . need not be convicted of Medicaid fraud to be subject to exclusion under section 1128(a)(1). Instead, it is sufficient if the delivery of a Medicaid service is an element in the chain of events giving rise to the offense." Donald J. Purcell, II, M.D. DAB CR572 (1999); see also Tanya A. Chouke, R.N., DAB CR865 (2002); Dan Anderson, DAB CR855 (2002); Larry W. Dabbs, R.Ph., et al., DAB CR151 (1991). I will discuss the method by which an Administrative Law Judge (ALJ) must review and assess that chain of events presently, but for now it will suffice to note that both ALJs and appellate panels of the Departmental Appeals Board (DAB) have held that a conviction may be related to the delivery of an item or service under Medicaid or Medicare where financial misconduct against the program had or could have had an impact on the delivery of health care items or services. Purcell, supra, at 5; see also Berton Siegel, D.O., DAB No.1467 (1994); Dabbs, supra; Napoleon S. Maminta, M.D., DAB No. 1135 (1990). It is not required that the misconduct involve a direct interaction between the criminal and program-funded patient care; the critical link in the chain of events can be present "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." Rosaly Saba Khalil, M.D., DAB CR353 (1995).

The second error in Petitioner's understanding of section 1128(a)(1) is her failure to realize that its operation is mandatory. She earnestly advances her argument: "Exclusions under section 1128(a)(1) of the Act for a minimum of five years is [sic] unreasonable, harsh and unjust." P. Br. at 8. Petitioner goes on to assert that the "Permissive standard must be applied in this case. First, the Department may apply criminal sanctions, civil monetary penalties, and exclusion. The Department has applied all three. It should carefully consider the third method and only apply the permissive exclusion, because there is no evidence that Dr. Lee poses a risk to the Medicare or Medicaid program or its beneficiaries." P. Br. at 9. In pressing this argument, she simply fails to acknowledge the settled law of this forum.

It is a firmly-established principle that once an individual's conviction is found to have been "related to the delivery of an item or service under title XVIII or a State health care program," and thus to lie within the terms of section 1128(a)(1), the imposition of the five-year minimum exclusion dictated by section 1128(c)(3)(B) of the Act is mandatory, and is beyond the authority of the I.G. or an ALJ to reduce, modify, or suspend. The clearest possible language has been used to make this point: "[w]e therefore affirm the ALJ conclusion . . . that once an individual has been found to have been convicted of a program-related criminal offense under section 1128(A)(1) of the Act, exclusion is mandatory." Lorna Fay Gardner, DAB No. 1733 (2000); see also, Tanya A. Chuoke, R.N., supra; Douglas Schram, R.Ph., DAB No. 1372 (1992); Napoleon S. Maminta, supra; Dan Anderson, supra; Jitrenda C. Shah, M.D., DAB CR720 (2000). Even in situations where the underlying conviction could be plausibly argued to fall within both section 1128(a)(1) and one or more of the permissive-exclusion provisions of section 1128(b)(1)-(14), the rule is clear: the mandatory exclusion for a minimum of five years is required and must be imposed. Jack W. Greene, DAB No. 1078 (1989), aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835 (E.D. Tenn. 1990); Douglas Schram, R.Ph., supra; Brenda J. Motley, DAB CR414 (1996).

Her failure to understand the mandatory operation of sections 1128(a)(1) and 1128(c)(3)(B) leads directly to Petitioner's third error. Because she considers the I.G. and the ALJ to have a choice between the mandatory exclusion mechanism and the permissive exclusion remedy, she urges that the latter's application, and presumably its less-stringent sanctions, should be invoked as a matter of lenity, equity, and constitutional protection. P. Br. at 9, 11; P. Reply Br. at 5. As a matter of law, none of those considerations afford her position support in this forum.

The application in exclusion proceedings of the principle of lenity - the notion that a statute ought to be read as narrowly as possible in order to give its effect the least-severe results - has been explicitly considered and rejected by an appellate panel of the DAB. Writing in Douglas Schram, R.Ph., supra, the DAB rejected the application of the principle of lenity in exclusion proceedings for two reasons entirely independent of the mandatory-rule concept. First, the DAB noted that the principle itself is a creature of criminal law, and reiterated the point that I will repeat: exclusion proceedings are civil in nature and remedial in goal, not criminal and punitive. The panel also observed that even in the context of criminal law, the principle of lenity is to be applied only in situations where the statute at issue is ambiguous and susceptible of more than one meaning. The statutory framework providing for exclusion under section 1128(a)(1), wrote the DAB, is not ambiguous.

Nor do these proceedings allow the principles of equity a forum or a pulpit. In spite of Petitioner's assertions that "Equity is a court of conscience. It is unconscionable to prevent Dr. Lee from using her Medicare Provider Number in order to serve the local community . . . . Equity abhors forfeiture," (P. Br., at 11), those arguments simply do not raise an issue that I may consider. Tanya A. Chouke, R.N., supra; Mark Zweig, M.D., DAB CR563 (1999); Joshua Yaw Boateng, D.P.M., DAB CR365 (1995); Mark Gventer, D.P.M., DAB CR173 (1992); Mark E. Silver, D.P.M., DAB CR139 (1991).

Constitutional challenges to exclusions are well-understood to be beyond an ALJ's jurisdiction, and the regulatory basis for this proceeding makes that understanding explicit. 42 C.F.R. § 1005.4(c)(1). That rule appears frequently in the case law, e. g., Mark Zweig, M.D., supra, and Roberta E. Miller, DAB CR367 (1995), in answering the assertion that a petitioner's exclusion amounted to double jeopardy. Petitioner makes that argument in all but name (P. Br., at 9-10), but even in that form it cannot avoid the effect of a remarkably-clear line of authority, beginning with Douglas Schram, supra, and continuing through Joann Fletcher Cash, DAB No. 1725 (2000) and Dr. Darren J. James, D.P.M., DAB CR860 (2002). That authority rejects the proposition that a constitutional issue is raised in this context, because the exclusion remedy is civil and remedial, not criminal and punitive like Petitioner's underlying conviction. As purely remedial sanctions, exclusions such as this one violate none of the Constitution's protections against abuse of the government's power to punish, such as its protection against double-jeopardy prosecutions.

That is the also the lesson to be drawn from Hanlester Network v. Sullivan, 51 F.3d 1390 (9th Cir., 1995) and Manocchio v. Kusserow, 961 F.2d 1539 (11th Cir. 1992). Petitioner's reliance on those cases (P. Br., at 9-10; P. Reply Br., at 5) is misplaced, and the correct principle was elucidated by the DAB in Schram: "In Manocchio the court looked to the purposes served by the exclusion sanction. It concluded that the legislative history demonstrated that the primary goal of the legislation was to protect present and future Medicare beneficiaries from abusers of these programs." The DAB relied on Greene v. Sullivan, supra, to reach its conclusion. But the inquiry need not end there; if one harbored any remaining doubt that a double-jeopardy claim is inapposite in exclusion proceedings, one need only study ALJ C. C. Hughes' searching and thoughtful discussion of the topic in Rosemary Oteri, DAB CR775 (2001), and her review there of Joann Fletcher Cash, supra, and Hudson v. United States, 522 U.S. 93 (1997).

Petitioner urges that the "Department [of Health and Human Services] must consider mitigating factors in deciding the length of the exclusion." P. Br. at 10. Whether in the context of a mandatory or a permissive exclusion, her effort to establish "mitigating factors" is her fourth error. At its first level, it is simply outside the legal framework of this case. As I noted earlier, the I.G. has not attempted to enlarge or enhance the term of exclusion beyond the minimum by asserting the existence of any of the aggravating factors listed at 42 C.F.R. § 1001.102(b)(1)-(9). Unless the I.G. does successfully invoke one or more of those factors, an ALJ may not consider factors in mitigation. 42 C.F.R. § 1001.102(c). " . . . [O]nly when aggravating factors justify an exclusion for a period of longer than five years, may any mitigating factors be considered as a basis for reducing the period of exclusion . . . ." Dr. Darren J. James, D.P.M., supra. But at its deeper level, Petitioner's suggestion of mitigating factors misses the point that the only factors that an ALJ may ever consider are very specifically defined in 42 C.F.R. § 1001.102(c)(1)-(3). Evidence or the suggestion of factors not specifically enumerated by regulation cannot be considered in mitigation of exclusion. Valerie Baker, DAB CR882 (2002); Narendra M. Patel, M.D., DAB CR631 (1999).

Petitioner's fifth error appears to be more artful; she repeatedly offers an extremely nearsighted - or disingenuous - view of the aim of the conspiracy she admitted in her guilty plea. Twice she describes it in identical language: "[t]he conspiracy had one aim - to avoid the administrative process, rather than bribe a beneficiary. The conviction related, to the scheme of solving disputes through an administrative procedure. The crime was related to the improper method of dispute resolution." P. Br. at 4; P. Reply Br. at 4. Avoiding an administrative hearing may very well have been part of Petitioner's overall strategy, but that is hardly the ultimate desideratum she had in mind, and certainly not the goal set out in the charge to which she pleaded guilty. To put the point another way: avoidance of the administrative review of her false Medicare claims may have been an incidental part of what she hoped to accomplish, but her real goal in conspiring with Ramos was to bribe Sells, who was auditing those false claims, and to suborn Sells' approval of those false claims in order that she might keep Medicare funds paid to her improperly on the basis of those false claims. By conspiring to bribe Sells, Petitioner sought to end abruptly and with finality the inquiry into those claims, and thus to obviate the need for any administrative hearing whatsoever.

At this point, the discussion must return to and consider in detail the touchstone in this case: whether " . . . the delivery of a Medicaid service is an element in the chain of events giving rise to the offense." Donald J. Purcell, II, M.D., supra. The cases provide a lucid expression of the test, and the first expression of the test's specific language is found in a decision that narrowed, rather than expanded, the reach of section 1128(a)(1). In Berton Siegel, D.O., supra, the DAB was asked to affirm a rule that financial misconduct in connection with a protected health program was, in itself, sufficient to invoke section 1128(a)(1). The DAB declined to let the broad reading stand, and wrote: " . . . finding that an offense is program-related financial misconduct is insufficient without also finding a nexus to the delivery of items or services under one or more covered programs." Instead, the DAB carefully set out the test it insisted be applied:

[t]he precedent instead has recognized that the plain wording of the statute requires some "nexus" or "common-sense connection" between the offense of which a petitioner was convicted and the delivery of an item or service under a protected program.

Berton Siegel, D.O., supra. See, e. g., Thelma Walley, DAB No. 1367 (1992); Niranjana B. Parikh, M.D., et al. DAB No. 1334 (1992).

It is of no small import that the petitioner Dr. Siegel was convicted in State court, for a State offense defined as "facilitation of theft," and was based on his complicity in a scheme to divert Medicaid funds to pay for non-Medicaid-eligible equipment. The specific acts committed by Dr. Siegel were countersigning, or causing others to countersign, checks drawn on his Medicaid-funded organization to pay for ineligible equipment. The DAB saw no material attenuation between Dr. Siegel's crime and the delivery of items or services under Medicaid:

Petitioner's actions . . . resulted in less funds being available to pay for covered services delivered to (Medicaid) patients. Essentially, the theft which Petitioner facilitated was a misappropriation of funds which should have been used to pay for items or services delivered to recipients under Arizona's Medicaid program, but instead were used for non-Medicaid purposes. This nexus is sufficient to establish that Petitioner's offenses were related to the delivery of items or services under Medicaid, within the meaning of section 1128(a)(1).

Berton Siegel, supra.

That expression of the test has been applied with approval in the following form, set out in the ALJ's still-undisturbed language in Tanya A. Chuoke, R.N., supra:

[t]o determine if an offense is program-related, the ALJ must analyze the facts and circumstances underlying the conviction to determine whether a nexus or common sense connection links the offense for which the petitioner has been convicted with the delivery of an item or service under a covered program. Berton Siegel, D.O., DAB No. 1467 (1994); Krishna Kumar Batra, M.D., DAB CR537 (1998). Petitioner need not be convicted of Medicaid fraud to be subject to exclusion under section 1128(a)(1) of the Act; it is sufficient if the delivery of a Medicaid item or service is an element in the chain of events giving rise to the offense.

Tanya A. Chuoke, R.N., supra.

Section 1128(a)(1) can be invoked in situations well beyond the immediate boundaries of 42 U.S.C. § 1320a-7(b). The statute's reach is demonstrated by its application to petitioners convicted under State criminal statutes for misapplying Medicaid patients' private funds and property, Brenda J. Motley, supra; Roberta E. Miller, supra; Jerry L. Edmonson, DAB CR59; by its application to a petitioner convicted of not reporting a co-defendant's fraudulent dealings with the Medicaid program, in violation of the federal prohibition against misprision of a felony, 18 U.S.C. § 4, Andrew Anello, DAB No. 1803 (2001); by its application to a petitioner convicted in State court of a State crime relating to improper access to State Medicaid records, Sabina E. Acquah, DAB CR480 (1997); and by its application to a petitioner who, finding himself confronted with inquiries into his billing Medicaid for services provided by unauthorized contractors, falsified State records in an effort to conceal his billing activities and was convicted for that crime in State court, Donald J. Purcell, II, M.D., supra. Each of these cases illustrates the correct application of the principle articulated in Siegel; the ALJ must examine the entire record, reviewing all facts and circumstances that illuminate the chain of events giving rise to the offense, and then determine whether a common-sense connection exists between the offense and the delivery of an item or service under a covered program.

Petitioner's Ex. 1 is the text of the January 20, 2000 Decision of ALJ A. Weir, III. It reflects the administrative proceedings that grew out of the overpayments to Petitioner, and I emphasize here that this exhibit was tendered by Petitioner, and was relied on extensively by her in setting forth her position. P. Br. at 3, 4, 6, 9, 11; P. Reply Br. at 2, 5. To the extent that this exhibit is extrinsic to the actual United States District Court documents, I believe that it is both reliable and credible to show the underlying facts of Petitioner's specific conduct which formed the basis of her conviction, and that its reliability and credibility form an entirely independent basis for its admission here. Narendra M. Patel, supra; Tanya A. Chuoke, R.N., supra ; Donald J. Purcell, II, M.D., supra.

There is no dispute that Petitioner pleaded guilty to the offense set out in I.G. Ex. 4, but in any case, the dates, docket numbers, district judge's initials, attorneys' names, and internal references in I.G. Ex. 5 and I.G. Ex. 6 fully and conclusively establish that the crime to which Petitioner pleaded guilty, of which she was found guilty, and for which she was sentenced is set out in I.G. Ex. 4, at 1-7. Those pages comprise the "Introductory Allegations," " Object of the Conspiracy," "Means of the Conspiracy," and "Overt Acts" charged by the grand jury and admitted by Petitioner in Count I of the Superseding Indictment. As the statutory language found in 18 U.S.C. § 371 makes perfectly clear, the essential elements of the federal crime of conspiracy include an agreement, an illegal object or goal, and at least one overt act. In admitting her violation of 18 U.S.C. § 371, Petitioner admitted all of the charge's allegations concerning each of those elements.

The admitted allegations establish the role of Transamerica as HCFA's fiscal agent in processing and paying Medicare claims, and Petitioner's authorization to submit claims to Transamerica for services provided to Medicare beneficiaries. The admitted allegations establish that Transamerica was authorized to audit Medicare claims submitted by Medicare providers, with particular reference to determining whether providers' fraud or billing errors had caused them to receive payments to which they were not entitled. The admitted allegations place the co-conspirator Bernie Ramos in the position of an "insider," a go-between who could and did represent the recipients of challenged Medicare payments before his former employer, Transamerica; and those admitted allegations establish Reggie Sells as an auditor in the Medicare Fraud Investigations Unit at Transamerica. I.G. Ex. 4, at 2-3.

The importance of the relationships set out in the Superseding Indictment can be appreciated on its face, but a good deal of flavor is added to that appreciation if P. Ex 1 is examined. What emerges from ALJ Weir's decision is that Petitioner reached an agreement with a non-eligible health care provider to bill Medicare improperly for services. The non-eligible provider and its employees would perform services, and Petitioner would bill Medicare for them as if she had performed them herself; a fee-splitting arrangement allowed both parties to profit illegally. P. Ex.1, at 7. Transamerica's audit staff eventually became suspicious, and concluded that Petitioner had been overpaid for Medicare services. I.G. Ex. 1, at 8. Petitioner, learning that Transamerica believed that she had been improperly paid, took two steps: first, she requested a hearing with Transamerica to contest the overpayment (P. Ex.1, at 1-2), and she arranged for Ramos to approach Sells, whom Ramos apparently assumed was assigned to Petitioner's audit. P. Ex. 1, at 2, 8, 9. Sells told his supervisors of the bribe offer, and later cooperated with the FBI in recording most of the contacts among Petitioner, Ramos, and himself. P. Ex. 1, at 8-9.

The Superseding Indictment's language makes the rest of the case supporting Petitioner's exclusion plain. Petitioner and Ramos agreed to "corruptly pay a bribe to a person acting for or on behalf of an agency of the United States, with the intent to influence that person to do an act in violation of his lawful duty, namely, to substantially understate the amount of Medicare overpayments which defendant SALVACION LEE had to repay Transamerica . . . ." I.G. Ex 4, at 4. The plan called for Ramos, acting on Petitioner's behalf, to offer a bribe to Sells, the auditor. According to the conspiracy's modus operandi, Sells would then use his role as auditor to manipulate - or "substantially understate," in the Indictment's specific language - the amount of Medicare overpayments that Petitioner would have to repay. I.G. Ex. 4, at 4. The Indictment recites how a series of meetings began in mid-September, 1997, in which Ramos discussed the details of the bribe's amount with Sells, asserting that the amount Sells could expect was related directly and proportionally to the amount by which Sells could reduce the Medicare overpayment. I.G. Ex. 4, at 4. Over the course of the meetings, Ramos explained to Sells that the Medicare overpayment was approximately $173,000 (I.G. Ex. 4, at 4), and cautioned Sells that Petitioner, although able to provide some limited documentation, could support only between 25 and 40 percent of her claims for Medicare services. I.G. Ex. 4, at 4, 5.

Ramos named the sum Petitioner was willing to pay on November 4, 1997, and three days later Petitioner met Ramos and Sells at her medical office, where she demanded that Sells "just lower…a little bit" the amount of Medicare funds she would have to repay, and promised Sells that the payoff was near. I.G. Ex. 4, at 6. Three more days after that, Ramos and Sells met Petitioner at her medical office again. This time, Petitioner paid Sells the agreed-upon sum of $10,000 cash and received from him two letters: the first was ostensibly from Transamerica's Medicare Fraud Investigations Unit, and it stated that the suspension of her Medicare payments had been lifted; the second was purportedly from Transamerica's Overpayment Collections Team, and it represented that the $8,360.57 overpayment calculated by the Medicare Fraud Investigations Unit had been recovered and that the investigation was complete. I.G. Ex. 4, at 6-7.

Petitioner relied exclusively on the conspiracy to defeat Transamerica's effort to recover Medicare overpayments and to retain the Medicare funds gained by her fraudulent billings for Medicare services: although she had filed a request for an administrative hearing with Transamerica on September 3, 1997, she withdrew that request on October 17, 1997. P. Ex. 1, at 2. The admitted date of Ramos' first contact with Sells was September 11, 1997. I.G. Ex. 4, at 4. The sequence is significant because it establishes that the conspiracy was well underway by mid-October, which explains why Petitioner withdrew her request for the administrative hearing with Transamerica: Sells told her to do so in order to allow him to "resolve" the audit in his own fashion. P. Ex. 1, at 9.

The chain of events giving rise to the offense of which Petitioner stands convicted is easily appreciated. Petitioner systematically submitted fraudulent claims for services to Medicare beneficiaries. She received payment of Medicare funds for those fraudulent claims and retained some of those proceeds for herself. The Medicare program's fiscal agent became suspicious of those false claims and determined to recover the Medicare funds fraudulently obtained by Petitioner. When Petitioner learned that she might have to repay those Medicare funds, she first requested an administrative hearing with the fiscal agent to contest the overpayment, but then resolved to bribe the fiscal agent's auditor Sells, whom she believed to be assigned to her case. Her purpose in bribing Sells was to induce him unlawfully to reduce or eliminate the amount of Medicare funds she would be required to repay. She agreed with the go-between Ramos to effect the bribe, and met with Ramos and Sells to settle the amount of the bribe and the quid pro quo. At some point, with the aim of aiding what she thought was Sells' scheme to manipulate the audit, she withdrew her request for an administrative hearing with the fiscal agent. Finally, in return for a cash payment tendered directly from Petitioner to Sells, Petitioner received from him documents purporting to relieve her of any obligation to repay the Medicare funds she had obtained by fraud.

The nexus between Petitioner's offense and the delivery of an item or service is far stronger than a simple common-sense connection: the facts set out above describe a situation in which the delivery of services, the false billings for those services, and Petitioner's scheme to retain the proceeds of those false billings are the essential - and necessary - components of the offense. Petitioner abused the Medicare program and its plan for the delivery of services by falsely claiming payment for services delivered by ineligible providers. She received payment for those ineligible services. When faced with an official investigation, she determined to retain those fraudulently-obtained Medicare funds through illegal means, and directed her efforts at subverting the investigation of her fraudulent claims by the Medicare program's fiscal agent. Petitioner's hoped-for result in the conspiracy was concealment from the Medicare fiscal agent the fact that her claims to Medicare were fraudulent, which result would allow her to retain Medicare funds she had received for services not delivered as required by the program. The nexus links improper delivery of services, illegal billing for those services, a desire to retain the illegal proceeds of those illegal billings for improper services, and the conspiratorial effort to conceal the improper delivery of the services as a means to retaining Medicare funds paid for them. The facts recall the DAB's analysis in Siegel, D.O., supra:

Petitioner's actions . . . resulted in less funds being available to pay for covered services delivered to (Medicaid) patients. Essentially, the theft which Petitioner facilitated was a misappropriation of funds which should have been used to pay for items or services delivered to recipients under Arizona's Medicaid program, but instead were used for non-Medicaid purposes . . . . Indeed, these offenses are parallel to the offense of falsely billing a covered program.

Siegel, D.O., supra.

There exists a patent nexus between the criminal conspiracy that Petitioner admitted and the delivery of services under the Medicare program. The chain of events disclosed in this record establishes a remarkably strong common sense connection between her abuse of the Medicare program, her improper receipt of Medicare funds, and her efforts to conceal her misconduct and retain those Medicare funds as detailed in Count I of the Superseding Indictment to which she pleaded guilty. Petitioner's conviction is therefore correctly understood to be related to the delivery of an item or service under Medicare, and for that reason subject to the terms of section 1128(a)(1) of the Act. Because the terms of section 1128(a)(1) govern this situation, the I.G. correctly invoked the mandatory five-year term of exclusion required by section 1128(c)(3)(B) of the Act.

CONCLUSION

For the reasons set forth above, I grant summary judgment in favor of the I.G., and thereby sustain the I.G.'s exclusion of Petitioner from participation in Medicare, Medicaid, and all other federal health care programs for a term of five years, pursuant to the terms of section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1).

JUDGE
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Richard J. Smith

Administrative Law Judge

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