SUBJECT:

Connie Lynn Neal, a/k/a Connie L. Diehl,

Petitioner,

The Inspector General

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Connie Lynn Neal, a/k/a Connie L. Diehl, from participating in Medicare and other federally funded programs for a period of 20 years.

I. Background

On August 31, 2001, the I.G. notified Petitioner that she was excluding Petitioner from participating in Medicare and other federally funded programs for a period of 20 years. The I.G. advised Petitioner that the exclusion was based on Petitioner's conviction of a criminal offense related to the delivery of an item or service under the Minnesota State Medicaid program (Minnesota Medicaid). The I.G. advised Petitioner additionally that the exclusion was authorized by section 1128(a)(1) of the Social Security Act (Act). The I.G. also told Petitioner that the length of the exclusion in this case was based on the presence of factors consisting of the following:

• The acts resulting in Petitioner's conviction, or similar acts, resulted in a financial loss to a government program or one or more entities of $1,500 or more;

• The sentence that was imposed against Petitioner for her conviction included a term of incarceration; and,

• Petitioner had a prior criminal, civil, or administrative sanction record.

Petitioner requested a hearing to contest the exclusion and the case was assigned to me for a hearing and a decision. The I.G. filed a motion for disposition based on written submissions (the I.G. characterized her motion as a motion "for summary affirmance"). Petitioner filed a brief in opposition. Neither Petitioner nor the I.G. proposed to offer testimony or other evidence in person.

The I.G. offered six proposed exhibits in support of her motion (I.G. Exs. 1 - 6). Petitioner, who is appearing pro se in this case, offered several lengthy documents to support her arguments. These documents consist of: a loose leaf folder containing documents under the heading of "Pro Se Supplemental Brief of Appellant Connie Neal and Exhibits," which Petitioner designated as "Petitioner Exhibit 1;" a bound folder containing 28 pages of records which Petitioner designated as "Petitioner Exhibit 2;" and, another bound folder containing five tabbed appendices (numbered 1 - 5) which Petitioner designated as "Responsive Brief of Petitioner Connie Lynn Neal Appendix One - Five." For record-keeping purposes, I am redesignating this last document as Petitioner Exhibit 3. Neither party objected to my receiving into evidence any of the foregoing exhibits. Therefore, I receive I.G. Exs. 1 - 6 and Petitioner's Exhibits (P. Exs.) 1 - 3 into evidence.

II. Issues, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

1. The I.G. is mandated to exclude Petitioner pursuant to section 1128(a)(1) of the Act;

2. The I.G. proved the presence of aggravating factors which might justify excluding Petitioner for more than five years;

3. Petitioner proved the presence of any mitigating factor or factors which might offset evidence relating to an aggravating factor or factors; and,

4. The 20-year exclusion that the I.G. imposed against Petitioner is unreasonable in light of evidence relating to aggravation and mitigation.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below as a separately numbered heading. I discuss each Finding in detail.

1. The I.G. is mandated to exclude Petitioner pursuant to section 1128(a)(1) of the Act.

Section 1128(a)(1) of the Act mandates the exclusion of any individual who is convicted of a criminal offense related to the delivery of an item or service under the Medicare program or a State health care program such as a State Medicaid program. The filing of false or fraudulent claims against a State Medicaid program has long been held to be a program-related crime within the meaning of section 1128(a)(1) of the Act. Eloise Vergeire Darnell, DAB CR789 (2001); Alan J. Chernick, D.D.S., DAB CR434 (1996). The facts of this case establish that Petitioner was convicted of filing false and fraudulent claims against Minnesota Medicaid. Consequently, the I.G. was mandated to exclude Petitioner pursuant to section 1128(a)(1) of the Act.

On June 10, 1997, a criminal complaint was filed against Petitioner in a Minnesota State court. I.G. Ex. 3. The complaint charged that Petitioner was the owner and operator of Special Care Transportation, Inc., an entity which held itself out as providing transportation services ("special transportation services") to Medicaid recipients who are unable to use public or private transport. Id. at 1. It alleged that Petitioner used Special Care Transportation, Inc. to swindle the Minnesota Department of Human Services (Minnesota DHS) of public funds from Minnesota Medicaid that were dedicated for special transportation services. Id. It alleged additionally that Petitioner swindled the Minnesota DHS of Medicaid funds through fraudulent claims for psychotherapy and psychological testing. Id.

Specifically, the complaint charged Petitioner with the following scheme to defraud (swindle funds from) Minnesota Medicaid:

• Petitioner was convicted of a felony theft of Medicaid funds in 1986 and, as a result, was excluded for a five-year period from participating in both Medicare and Minnesota Medicaid. I.G. Ex. 3, at 3. Petitioner signed a stipulation with the Minnesota DHS which provided that she could not reapply to the Minnesota DHS as a provider of services in Minnesota Medicaid until she had been reinstated as a provider in Medicare. Petitioner also agreed that her reinstatement in Minnesota Medicaid would require her to accept more stringent review by the Minnesota DHS of her claim submissions than would otherwise be the norm. Id.

• As of January 31, 1996, Petitioner had not been reinstated in the Medicare program, had not applied for reinstatement to Minnesota Medicaid, and had not been reinstated as a provider in that program. See I.G. Ex. 3, at 3. Notwithstanding, Petitioner enrolled Special Care Transportation, Inc. as a service provider in Minnesota Medicaid on January 31, 1996. Petitioner at no time disclosed that she was the owner of Special Care Transportation even though the Medicaid enrollment application specifically requested such information. Instead, Petitioner directed another individual to sign the application and the resulting provider agreement. Id.

• Minnesota Medicaid compensates a transportation service for transporting a Medicaid recipient where special transportation service is medically necessary, where it is ordered by a physician, and where it is utilized to transport a recipient to receive a Medicaid-covered service. I.G. Ex 3, at 2. Petitioner, along with her husband, Robert Neal, a psychologist, falsely represented that transportation of Minnesota Medicaid recipients was medically necessary in order to swindle the Minnesota DHS into reimbursing Special Care Transportation, Inc. for the transportation that it provided. Id. at 3.

• Minnesota Medicaid will only pay a portion of the full transportation rate for a second individual when that individual is being transported along with another individual for whom the full transportation rate is being paid. I.G. Ex. 3, at 4. However, Petitioner claimed reimbursement for special transportation of Medicaid recipients as if each had been transported individually when, in fact, Specialty Care Transportation, Inc. was transporting more than one Medicaid recipient at a time. Id.

• Petitioner, in concert with her husband, Robert Neal, made false and fraudulent claims for Medicaid services that were allegedly provided by Robert Neal. I.G. Ex. 3, at 5 - 6.

The complaint charged Petitioner with eight specific counts of theft by swindle under Minnesota law and two additional counts of aiding and abetting Robert Neal in the crimes of theft by swindle under Minnesota law. I.G. Ex. 3, at 7 - 10. These ten counts charged Petitioner with theft of funds in excess of $53,000 from Minnesota Medicaid. Id.

The overall complaint and the ten specific counts plainly describe a scheme to commit program-related crimes that fall within the ambit of section 1128(a)(1) of the Act. They allege that Petitioner directly and consciously plotted, and engaged in, criminal acts designed to defraud Minnesota Medicaid. On February 13, 1998, Petitioner was found guilty of all ten counts of the complaint. I.G. Ex. 2, at 2 - 3.

Petitioner has not denied that she was convicted of an offense as is described in section 1128(a)(1) of the Act. However, she asserts that her conviction was wrongful. She asserts that:

[T]his case actually constitutes a "whistleblower" matter, which resulted in unlawful retaliation against Petitioner for the improper purpose of preventing the Petitioner from disclosing information to the United States Department of Health and Human Services and the Health Care Financing Administration [now the Centers for Medicare & Medicaid Services] about poor health care access for special needs population groups, disabled with chronic mental illness, and Petitioner's concerns regarding a mandatory managed care program for the disabled that . . . [Minnesota DHS] was attempting to implement in the State of Minnesota.

Petitioner's brief at 4.

She contends that she became aware of sham investigations orchestrated by a conspiracy of State and federal agencies and intended to drive out of the health care market "independent" providers of health care such as herself who were not associated with the health care system that is owned and operated by Hennepin County, Minnesota. Id. at 5. According to Petitioner, the investigation which led to the criminal charges against her and her ultimate conviction was launched only after the Minnesota DHS learned of her intention to contact federal authorities about these alleged sham investigations. Id. at 6 - 7. Thus, she contends that the investigation that resulted in the complaint against her and her conviction was:

instituted in "bad faith" and utilized for the improper purpose of retaliation against Petitioner with the corrupt motive of sabotaging any possible effort on the part of Petitioner to contact federal agencies regarding . . . [alleged violations of law].

Id. at 8.

Petitioner makes additional allegations that she was victimized by prosecutorial fraud. Among other things, she asserts that the Assistant Attorney General who prosecuted her fraudulently represented that her technical violations of federal civil Medicare regulations were criminal violations of State Medicaid law. Petitioner's brief at 13. She contends that her failure to apply for reinstatement from her previous exclusion was due to ignorance of the law on her part. Id. at 14. She asserts that prosecuting authorities wrongfully conflated this innocent error on her part into a criminal act. Id.

Petitioner asserts that she committed no fraud in filing the provider agreement for Specialty Care Transportation, Inc., and that the prosecuting attorney falsely misrepresented the Medicaid enrollment procedure so as to make the filing appear to be fraudulent. Petitioner's brief at 18. She contends that the prosecutor made fraudulent misrepresentations about her submission of transportation reimbursement claims so as to make it appear - falsely - that she had billed for transportation of individuals singly when they were, in fact, transported in the company of others. Id. at 19 - 20.

Petitioner claims that the conspiracy to convict her falsely of crimes that she did not commit included not only government agencies and officials, but members of the private bar, as well. Petitioner's brief at 20. Petitioner contends that:

[c]ertain criminal defense attorneys apparently knew of the illegitimate investigations improperly conducted by the Medicaid Fraud Control Unit and unlawfully colluded with the Assistant Attorney General in a well-organized conspiracy that wrongfully utilized the civil court system to set up innocent victims for criminal charges and bilk the assets of their clients.

Id.

Petitioner asserts that she and her husband were victims of this alleged scheme. Petitioner's brief at 20 - 21.

Petitioner also denies the specific allegations of the complaint of which she was convicted. For example, she contends that facts relating to her company's transport of Medicaid recipients were misrepresented in order to make it appear that these individuals did not qualify for transportation services. Petitioner's brief at 47 - 48. Petitioner characterizes these alleged distortions as "blatantly lying" by prosecuting authorities. Id. at 48.

Petitioner asserts that facts pertaining to the services which are the basis for the counts alleging that she participated in, or abetted, theft by swindle, were distorted or fabricated by prosecutors. Petitioner's brief at 50 - 69. She contends that the allegations of fraud all were grounded on the alleged use by her and Robert Neal of a non-certified individual to provide psychotherapy services and the alleged submission of claims for that individual's services as if they had been provided by Robert Neal. Id. at 50 - 64. In fact, according to Petitioner, the individual who provided the services was qualified to provide them and, at most, the billing for that person's services was a technical and non-criminal violation of reimbursement regulations.

Finally, Petitioner takes issues with statements in the I.G.'s brief, asserting that these statements mischaracterize the proceedings that led to her conviction. She asserts, for example, that the I.G.'s statement that an affidavit which accompanied that criminal complaint alleged that Petitioner falsely represented that transportations provided by Special Care Transportation, Inc. to Medicaid recipients were medically necessary and were for individual transportation when, in fact, they were not, is untrue. Petitioner's brief at 69 - 70. But, she acknowledges that the affidavit's contents were contained in the criminal complaint filed against her. She contends, however, that the I.G. misrepresents the truth of the affidavit's contents. Id.

All of the foregoing arguments by Petitioner - and the fact allegations on which she bases her arguments - are irrelevant to the issue of whether the I.G. was mandated to exclude Petitioner pursuant to section 1128(a)(1) of the Act. Petitioner's arguments reduce to the assertion that she is not guilty of the crimes of which she was convicted. However, the inquiry as to whether the I.G. must exclude an individual pursuant to section 1128(a)(1) of the Act begins and ends with the question of whether the excluded individual was convicted of a criminal offense as defined by that section. If the answer to that question is "yes," then the individual's assertions that he or she was not guilty of the underlying offense are irrelevant. The I.G.'s duty to exclude an individual who is convicted of a program-related crime pursuant to section 1128(a)(1) of the Act derives directly from the individual's conviction of that crime and not from the underlying conduct which is the basis for the conviction.

Petitioner may have rights to challenge her conviction in the jurisdiction in which she was convicted. If she prevails there and her conviction is reversed, then there would no longer be a basis to exclude her under section 1128(a)(1) of the Act. But, there is no legal basis for her to challenge the I.G.'s authority to exclude her by collaterally attacking her conviction in this proceeding.

In this case, Petitioner has produced nothing to show that she was not convicted of the offenses described in the criminal complaint. Indeed, she concedes that she was convicted of these offenses. Therefore, Petitioner has not made any argument that would derogate from the I.G.'s proof that she was convicted of an offense within the meaning of section 1128(a)(1) of the Act.

2. The I.G. proved the presence of aggravating factors which justify excluding Petitioner for more than five years.

The Act mandates that an individual who is excluded pursuant to section 1128(a) of the Act be excluded for a minimum period of five years. Act, section 1128(c)(3)(B). In this case, the I.G. excluded Petitioner for a period of 20 years. The question remains, therefore, whether an exclusion of this length is unreasonable.

Section 1128 is a remedial statute. The purpose of the Act is not to punish but to protect the integrity of federally funded health care programs and the beneficiaries and recipients of these programs from individuals who have been established to be untrustworthy. The Secretary of Health and Human Services has published regulations at 42 C.F.R. Part 1001 which establish the criteria to be used in determining an excluded individual's trustworthiness. The regulation which establishes such criteria for an individual who is excluded pursuant to section 1128(a)(1) of the Act is at 42 C.F.R. § 1001.102. The regulation identifies both aggravating factors and mitigating factors which may be the basis for increasing or shortening the length of an exclusion. The presence of one or more aggravating factors may justify increasing an exclusion under section 1128(a)(1) of the Act beyond the five-year minimum period. The presence of one or more mitigating factors may offset an aggravating factor and may justify limiting the exclusion length to as few as five years. In no case, however, may a mitigating factor be used as a basis to reduce an exclusion to less than the five-year minimum period.

The I.G. alleged and proved the presence of three aggravating factors in this case consisting of the following:

• The acts resulting in Petitioner's conviction caused Minnesota Medicaid to sustain losses of $1,500 or more. 42 C.F.R. § 1001.102(b)(1). Indeed, the actual amount of loss caused by Petitioner's crimes greatly exceeded $1,500. The ten counts of the criminal complaint against Petitioner asserted aggregate losses of more than $53,000. I.G. Ex. 3, at 7 - 10. Petitioner was convicted of all ten of these counts. Moreover, Petitioner was sentenced to pay restitution of $53,091.85. I.G. Ex. 4, at 4 - 5; I.G. Ex. 5.

• The sentence imposed against Petitioner included a period of incarceration. 42 C.F.R. § 1001.102(b)(5). Petitioner was sentenced to a term of 41 months imprisonment. I.G. Ex. 4, at 16, 20; I.G. Ex. 6, at 3.

• Petitioner has a prior criminal and administrative sanction record. 42 C.F.R. § 1001.102(b)(6). Petitioner admits that, on April 23, 1986, she was convicted of felony theft in Minnesota State Court. P. Ex. 1, at 24 (Pro Se Supplemental Brief of Appellant Connie Neal). The crime consisted of a single count of "theft involving the billing of false claims in 1985 to . . . [Minnesota Medicaid] by Dahl Pharmacy of Meadowbrook, a pharmacy [Petitioner] owned and operated at the time." Id. As a consequence of this conviction, Petitioner was excluded from participating in Medicare and State health care programs, including Medicaid, for a period of five years. I.G. Ex. 3, at 3.

3. Petitioner did not prove the presence of any mitigating factor or factors which would offset evidence relating to an aggravating factor or factors.

Petitioner did not establish the presence of any mitigating factors. None of the facts or arguments asserted by Petitioner - including the alleged facts and arguments which I discuss above at Finding 1 - relates to any of the mitigating factors that are identified at 42 C.F.R. § 1001.102(c). The regulation makes it clear that only evidence that relates to one of the specific factors that are identified in the regulation may be considered as mitigating evidence.

4. The 20-year exclusion imposed against Petitioner by the I.G. is not unreasonable in light of evidence relating to aggravating factors.

Although 42 C.F.R. § 1001.102 specifies what may constitute aggravating or mitigating factors, it does not assign weight to any evidence which may relate to an aggravating or mitigating factor. The regulation serves as rules of evidence which identify the evidence relevant to the issues of trustworthiness and the length of an exclusion but which leave it to the finder of fact to decide how much weight to assign to that evidence.

Nothing in the regulation suggests that the length of an exclusion should be based on the number of aggravating or mitigating factors that are present in a case. The fact that there may be three or more, or less than three, aggravating factors says very little about the trustworthiness of the excluded individual. What is significant is what the evidence that relates to an aggravating factor or factors says about the excluded individual's trustworthiness. A very lengthy exclusion may be justified based on the presence of only a single aggravating factor if the evidence which relates to that factor establishes the excluded individual to be highly untrustworthy.

Here, the evidence establishes Petitioner to be an extraordinarily untrustworthy individual. It shows Petitioner to be a two-time offender, an individual who committed program-related crimes while she was excluded for previously having committed a program-related crime. I find that the evidence which establishes Petitioner's history of crimes against Minnesota Medicaid to be sufficient in and of itself to prove that a 20-year exclusion is not unreasonable. Other evidence of aggravation, including evidence which proves the financial impact of Petitioner's crimes and which shows that she was incarcerated for a lengthy period of time, supports my conclusion that Petitioner is highly untrustworthy. But, I emphasize that I would find the exclusion in this case to be reasonable if the only evidence as to aggravation consisted of proof that Petitioner had been convicted more than once of program-related offenses.

Such evidence establishes Petitioner to have a propensity for engaging in predatory behavior directed against publicly-funded programs. And, it shows her motivation to engage in such behavior to be undiminished by her previous apprehension and punishment for similar conduct. Given that, an exclusion of 20 years is necessary to protect federally funded programs and their beneficiaries and recipients from the likelihood that Petitioner would commit additional program-related crimes if given the opportunity.

Steven T. Kessel

Administrative Law Judge