SUBJECT:

Lucy Young Johnson,

Petitioner,

The Inspector General

DECISION

The Inspector General (I.G.) notified Lucy Young Johnson (Petitioner) that she was being excluded from participation in Medicare, Medicaid, and all other federal health care programs for a period of 15 years pursuant to section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)). Petitioner's section 1128(a)(1) exclusion was based upon her conviction of a criminal offense related to the delivery of an item or service under the Medicare or Medicaid programs. Section 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)) of the Act provides that the minimum period of exclusion for such offenses is five years. However, the I.G. excluded Petitioner for 15 years, asserting that two aggravating circumstances existed in the case justifying a longer period of exclusion. Petitioner timely requested review. I find that the I.G. has proved that only one aggravating circumstance exists in the case. Therefore, I modify the exclusion to a term of seven years, six months.

The I.G. notified Petitioner of her exclusion by letter dated September 28, 2001. By letter dated October 17, 2001, Petitioner filed her appeal. This case was assigned to me for a hearing and a decision. I conducted a telephonic prehearing conference on March 4, 2002. During the conference, the I.G. stated that the case could be decided based on an exchange of briefs. Petitioner asserted that in-person testimonial evidence might be necessary. I concluded that the parties should brief the case in order to better define the issues and to help me decide whether an in-person hearing was necessary. I also deferred consideration regarding Petitioner's request for discovery until after my consideration of the parties' briefs. The I.G. submitted a motion for summary disposition accompanied by four proposed exhibits (I.G. Ex. 1 - I.G. Ex. 4). Petitioner filed a brief and one proposed exhibit, consisting of the affidavit of Lucy Young Johnson and a copy of the amended judgment in Ms. Johnson's case (which the I.G. has submitted as I.G. Ex. 3). I am marking this submission as P. Ex. 1. Neither party objected to my admitting any of the proposed exhibits into evidence. Therefore, the offered exhibits are admitted.

After considering the arguments and evidence submitted by the parties, I find that summary judgment is appropriate and no hearing is necessary in this case for a full and fair disposition. This is because there are no relevant material facts in dispute.

The following findings of fact are based upon the uncontested and undisputed assertions of fact in the parties pleadings and the exhibits admitted:

1. Petitioner was the sole shareholder, director, officer and administrator of LJ Home Health Services, Inc. (LJ Home Health), a home health agency operating in the State of Minnesota which provided home health services to Medicare beneficiaries. I.G. Ex. 2.

2. A six-count Superceding Indictment (Indictment) was filed against Petitioner. The Indictment contained allegations that Petitioner made false statements to auditors of a Medicare fiscal intermediary regarding cost reports submitted on behalf of LJ Home Health in order to claim Medicare reimbursement. Id.

3. On April 17, 2001, the United States District Court, District of Minnesota, entered judgment against Petitioner, pursuant to Petitioner's guilty plea, to one count (Count Six) of the Indictment -- Making a False Statement to a Government Agency. I.G. Ex. 3.

4. Count Six of the Indictment specifically charged Petitioner with fabricating conference agendas on one day only, August 11, 1998, to support claims for travel expenses submitted to the fiscal intermediary for Medicare reimbursement. I.G. Exs. 2, 3.

5. Petitioner was sentenced to three years probation and ordered to pay restitution of $114,421 to United Government Services, a Medicare fiscal intermediary. I.G. Exs. 2 at 2; 3.

6. By letter dated September 28, 2001, the I.G. notified Petitioner that she was excluded for a period of 15 years from Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(1) of the Act.

7. The I.G. found two aggravating factors justified an extended period of exclusion in this case: (a) the acts for which Petitioner was convicted resulted in financial loss to a government program of $1,500 or more; and (b) the acts for which Petitioner was convicted occurred over a period of one year or more, from June 26, 1997 to August 11, 1998.

1. Summary judgment is appropriate in this case because there are no material facts in dispute.

2. Petitioner was convicted, within the meaning of the Act, of a criminal offense related to the delivery of an item or service under the Medicare program. Act, section 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)).

3. Due to her conviction, Petitioner must be excluded from participation in any federal health care program for a minimum period of five years, pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).

4. The I.G. may increase the term of exclusion based on a finding of any of the aggravating factors specified at 42 C.F.R. § 1001.102(b).

5. If the I.G. finds that any of the aggravating factors specified at 42 C.F.R. § 1001.102(b) justify a term of exclusion greater than the statutory minimum exclusion of five years, then the I.G. may consider the mitigating factors specified at 42 C.F.R. § 1001.102(c) to reduce the period of exclusion to no less than five years.

6. The range of exclusionary periods contemplated by the Act and the Secretary's regulations extend from a minimum of five years to permanent exclusion in the case of a mandatory exclusion under section 1128(a). See Act, sections 1128(c)(3)(B) and (G) (42 U.S.C. § 1230a-7(c)(3)(B) and (G)); 42 C.F.R. § 1001.102(a) and (d).

7. One aggravating factor has been established by the I.G. by a preponderance of the evidence: the acts for which Petitioner was convicted resulted in financial loss to a government program of $1,500.

8. The I.G. did not establish the other aggravating factor that the I.G. alleged: that the offense for which Petitioner pled guilty occurred over a period of more than one year.

9. Petitioner did not establish by a preponderance of the evidence the mitigating factor it alleged to exist under 42 C.F.R. § 1001.103(c)(3).

10. A seven years, six months exclusion (five years mandatory and a two years, six months extension) is within a reasonable range and is not unreasonable.

A. APPLICABLE LAW

Petitioner's right to a hearing by an administrative law judge (ALJ) and judicial review of the final action of the Secretary is provided by section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)). Petitioner's request for a hearing was timely filed and I do have jurisdiction. However, the Secretary has by regulation limited my scope of review to two issues: (1) whether there is a basis for the imposition of the exclusion; and, (2) whether the length of the exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(1). The standard of proof is a preponderance of the evidence and there may be no collateral attack of the conviction that is the basis for the exclusion. 42 C.F.R. § 1001.2007(c) and (d). Petitioner bears the burden of proof and persuasion on any affirmative defenses or mitigating factors and the I.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(b) and (c).

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation in the Medicare and Medicaid programs 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. Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act shall be for a minimum period of five years, unless specified aggravating or mitigating factors are present which form the basis for lengthening or shortening the period of exclusion. See also 42 C.F.R. § 1001.102(a), (b), and (c). Only if the aggravating factors justify an exclusion of longer than five years, may mitigating factors be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).

Section 1001.102(b) of 42 C.F.R. provides, in relevant part, that the following factors may be considered to be aggravating and a basis for lengthening the period of exclusion:

(1) The acts resulting in the conviction, or similar acts, resulted in financial loss to a government program . . . of $1,500 or more. . . . ; (2) [t]he acts that resulted in the conviction, or similar acts, were committed over a period of one year or more; . . .

Section 1001.102(c) of 42 C.F.R. provides that only if any of the aggravating factors justify a period of exclusion longer than five years may mitigating factors be considered as a basis for reducing the period of the exclusion to no less than five years. The following factors may be considered as mitigating and a basis for reducing the period of exclusion:

(1) [t]he individual or entity was convicted of 3 or fewer misdemeanor offenses, and the entire amount of financial loss to Medicare and the State health care programs due to the acts that resulted in the conviction, and similar acts, is less than $1500; (2) [t]he record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional, or physical condition before or during the commission of the offense that reduced the individual's culpability; or (3) [t]he individual's or entity's cooperation with Federal or State officials resulted in - (i) [o]thers being convicted or excluded from Medicare, Medicaid, or all other Federal health care programs, (ii) [a]dditional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or (iii) [t]he imposition against anyone of a civil money penalty or assessment under part 1003 of this chapter.

Evidence which does not relate to an aggravating factor or a mitigating factor is irrelevant to determining the length of an exclusion. The burden is upon petitioners to show the presence of mitigating factors. The I.G. bears the burden of proving the existence of aggravating factors. 42 C.F.R. § 1005.15; John (Juan) Urquijo, DAB No. 1735 (2000).

B. ISSUES

Whether the length of the exclusion imposed by the I.G. is unreasonable.

C. ANALYSIS

1. Summary judgment is appropriate.

Summary disposition is appropriate where either: there are no disputed issues of material fact and the only questions that must be decided involve application of law to the undisputed facts; or, the moving party must prevail as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made. A party opposing summary disposition must allege facts which, if true, would refute the facts relied upon by the moving party. See, e.g., Fed.R.Civ.P. 56(c). There are no issues of material fact in dispute in this case. The only issue is whether certain facts alleged by Petitioner establish the existence of a mitigating factor within the meaning of 42 C.F.R. § 1001.102(c)(3). However, even if I resolve all facts in favor of Petitioner, application of the law to the facts does not establish a mitigating factor within the meaning of the regulation.

2. A 15-year exclusion of Petitioner is not within a reasonable range and is unreasonable.

I note that the regulations strictly limit my jurisdiction in cases such as this. I may decide whether or not the I.G. had a proper basis for the exclusion of Petitioner ⁽¹⁾ and whether the period of exclusion for Petitioner was "unreasonable." The Departmental Appeals Board (DAB) has made clear that the role of the ALJ in cases such as this is to conduct a "de novo" review as to the facts related to the basis for the exclusion and the facts related to the existence of aggravating and mitigating factors identified at 42 C.F.R. § 1001.102. See Joann Fletcher Cash, DAB No. 1725 (2000), n.6, and cases cited therein. The regulation specifies that I must determine whether the length of exclusion imposed is "unreasonable" (42 C.F.R. § 1001.2007(a)(1)). The DAB has explained that in determining whether a period of exclusion is "unreasonable," I am to consider whether such period falls "within a reasonable range." Id. The DAB cautions that whether I think the period of exclusion too long or too short is not the issue. I am not to substitute my judgment for that of the I.G. and may only change the period of exclusion in limited circumstances.

Despite a thorough search of prior DAB decisions and federal precedent, I have found no clear statement of what constitutes the "reasonable range" referred to by the DAB. My review of the statute and regulations shows that the range of possible exclusions provided for in the case of mandatory exclusions range from the minimum of five years to a maximum of permanent exclusion. 42 U.S.C. § 1320a-7(c)(3)(B) and (G); 42 C.F.R. § 1001.102(a) and (d). This is the only range I have found specified in the law and it seems to be "reasonable."

My reading of 42 C.F.R. § 1001.102 is that with a mandatory exclusion under section 1128(a) of the Act, there is an automatic exclusion of five years. Pursuant to 42 C.F.R. § 1001.102(d), one prior conviction for conduct that would cause mandatory exclusion under section 1128(a) of the Act, increases the minimum period of exclusion to 10 years and two prior convictions automatically causes permanent exclusion.

The five-year and 10-year minimum exclusions may only be extended if the I.G. can point to evidence that one or more of the aggravating factors specified at 42 C.F.R. § 1001.102(b) are present. The regulations do not limit the additional period of exclusion the I.G. may impose based upon the presence of aggravating factors. The regulations also do not specify how much of an extension is warranted by the existence of an aggravating factor. The DAB has indicated that it is not the number of aggravating factors that is determinative, rather, it is the quality of the circumstances, whether aggravating or mitigating, which is controlling in analyzing these factors. Barry D. Garfinkel, M.D., DAB No. 1572 (1996).

Section 1001.102 of 42 C.F.R. provides that when aggravating factors justify an exclusion of more than the mandatory minimum period, then the I.G. may consider any of the three specified mitigating factors if they are shown to exist. In Urquijo, the DAB suggested that the I.G.'s failure to consider a mitigating factor amounts to an abuse of discretion. The DAB also made clear in Urquijo that: if the I.G. considers an aggravating factor to extend the period of exclusion and that factor is not later shown to exist on appeal, or if the I.G. fails to consider a mitigating factor that is shown to exist, then the ALJ may make a decision as to the appropriate extension of the period of exclusion beyond the minimum.

Thus, my determination of whether or not the exclusionary period in this case is unreasonable hinges on three-points: (1) whether the period of exclusion is within the reasonable range; (2) whether the I.G. has shown the existence of aggravating factors; and, (3) whether the Petitioner has shown that there is a mitigating factor that the I.G. failed to consider.

With regard to whether aggravating factors exist in this case, the I.G. argues that two aggravating factors exist which justify an extended period of exclusion: (1) the acts for which Petitioner was convicted resulted in financial loss to a government program of $1,500 or more; and (2) the acts for which Petitioner was convicted occurred over a period of one year. I find, however, that only one aggravating factor has been proved by the I.G. Specifically, with regard to whether the acts for which Petitioner was convicted resulted in financial loss to a government program of $1,500 or more, I find that the restitution ordered by the court to be made to the Medicare fiscal intermediary, $114,421, establishes that the loss to Medicare was over $1,500. However, I find also that the I.G. has not proved the second aggravating factor alleged, that the acts for which Petitioner was convicted occurred over a period of one year. Count Six of the Indictment states that Petitioner was charged with fabricating conference agendas on one day only. I.G. Ex. 2, at 8. While the I.G. is correct in its assertion that in general I can consider "acts resulting in conviction" or "similar" acts to support the presence of the aggravating factor of acts committed over a period of one year (42 C.F.R. § 1001.102(b)(2)), the only evidence supporting the assertions in the Indictment is the unsigned affidavit of the special agent of the Federal Bureau of Investigation. I will not accept this affidavit as substantive evidence in this case because it is unsigned. Thus, the only probative evidence I have regarding the duration of Petitioner's misconduct is her guilty plea, which reflects a judicial finding that Petitioner's offense was complete in one day.

With regard to whether a mitigating factor exists in this case, Petitioner argues that a mitigating factor is present, as identified at 42 C.F.R. § 1001.102(c)(3). Petitioner asserts that she fully cooperated with investigating authorities in the investigation of her son-in-law. She asserts that when she entered her guilty plea the charges against him were dropped. P. Br. at 11, 12. Furthermore, she asserts that she paid restitution to the government to be "cooperative and fully compliant with the government's investigation." P. Ex. 1, at 5.

I do not accept Petitioner's argument that the cooperation she alleges constitutes a mitigating factor under the regulations. It is clear that Petitioner has misinterpreted the regulatory provision. Section 1001.102(c)(3) of 42 C.F.R. provides that a factor may be considered mitigating if the individual's cooperation resulted in "[o]thers being convicted or excluded," which is not the situation in this case. Given the plain language of the regulatory provision, I need not discuss Petitioner's argument further.

Having found that one of the aggravating factors alleged by the I.G. has not been proved, I must reassess the appropriate period of exclusion in this case. I consider the existence of the one aggravating factor, and the lack of any mitigating factors, and conclude that a two years, six months extension of the mandatory minimum exclusion of five years is warranted. Accordingly, Petitioner should be excluded for a total period of seven years, six months.

For the foregoing reasons, I find that the I.G. failed to prove an aggravating factor when she imposed Petitioner's exclusion. Therefore, I modify Petitioner's exclusion to a term of seven years, six months.

Keith W. Sickendick

Administrative Law Judge

1. In this case, Petitioner concedes the basis for the exclusion and the mandatory minimum five-year exclusion period. P. Br. at 1, 4.