Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Shirley Ann Douglas,
(OI File No. 5-11-40876-9),
The Inspector General, Respondent.
Docket No. C-20-696
Decision No. CR5841
Respondent, the Inspector General of the United States Department of Health and Human Services (the IG) excluded Petitioner, Shirley Ann Douglas, from participation in Medicare, Medicaid, and all other federal health care programs for 25 years based on a criminal conviction for an offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. Petitioner sought review of the exclusion. For the reasons stated below, I affirm the IG's exclusion determination.
I. Background and Procedural History
The IG notified Petitioner by letter dated June 30, 2020 of her exclusion from participation in Medicare, Medicaid, and all federal health care programs under section 1128(a)(4) of the Social Security Act (Act) for a period of 25 years due to her conviction for a criminal offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. IG Exhibit (Ex.) 1. The IG relied on two aggravating factors to extend the term of Petitioner's exclusion to 25 years. Id.
Petitioner timely sought hearing before an administrative law judge (ALJ) and I was designated to hear and decide this case.
On October 28, 2020, I held a pre-hearing telephone conference, the substance of which is summarized in my October 30, 2020 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order). I directed the parties to file pre‑hearing briefs articulating their respective arguments as well as identifying witnesses and exhibits in support thereof. Summary Order at 5.
The IG filed a brief (IG Br.) and four exhibits (IG Exs. 1-4), while Petitioner filed a brief (P. Br.), one exhibit (P. Ex. 1), and one copy of the brief she submitted to the U.S. Court of Appeals for the Sixth Circuit appealing the criminal conviction at issue here (P. App. Br.). The IG then submitted a reply brief (IG Reply). Without seeking leave to do so, Petitioner filed a sur-reply, which she styled as a reply brief (P. Sur-reply).
II. Admission of Exhibits and Decision on the Record
In the absence of any objections, I admit into evidence IG Exs. 1-4 and P. Ex. 1. I do not admit P. App. Br. into evidence as Petitioner did not proffer it as a proposed exhibit. However, I have considered the substance of the arguments made therein, as Petitioner indicated she wished to use her appellate brief in the underlying criminal matter as her "Exhibit Response." P. App. Br. at 1. I do not accept Petitioner's Sur-reply for filing as she did not seek leave to file it, and because its substance is entirely irrelevant to these proceedings. 42 C.F.R. § 1005.17(c) ("The ALJ must exclude irrelevant or immaterial evidence.").
Neither party believes an in-person hearing to be necessary. IG Br. at 8; P. Br. at 4. Nor has either party requested cross-examination of the opposing party's witnesses. Accordingly, an in-person hearing would serve no purpose, and I will decide this matter on the written record. Civ. Remedies Div. P. § 19(d).
Whether the IG has a basis to exclude Petitioner from participation in federal health care programs under section 1128(a)(4) of the Social Security Act, and if so, whether a 25-year period of exclusion is not unreasonable. 42 C.F.R. § 1001.2007.
IV. Applicable Law
Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to a hearing before an ALJ and judicial review of the final action of the Secretary of Health and Human Services (Secretary). The right to a hearing before an ALJ is set forth in
42 C.F.R. §§ 1001.2007(a) and 1005.2, while the rights of both the sanctioned party and the IG to participate in a hearing are specified by 42 C.F.R. § 1005.3.
The Secretary must exclude from participation in federal health care programs any individual that has been convicted for an offense related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance as defined under Federal or State law, if that individual: is or was a health care practitioner, provider, or supplier; holds a direct or indirect ownership or control interest in an entity that is a health care provider or supplier; or is or was an officer, director, agent or managing employee in any capacity in the health care industry. 42 U.S.C. § 1320a-7(a)(4); 42 C.F.R. § 1001.101(d).
Pursuant to section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)), an individual is convicted of a criminal offense when: (1) a judgment of conviction has been entered against him or her in a federal, state, or local court, whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no contest is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld. The statute does not distinguish between misdemeanor and felony convictions. There may be no collateral attack of the conviction that provides the basis of the exclusion. 42 C.F.R. § 1001.2007(d).
Section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)) provides that an exclusion imposed under section 1128(a) of the Act (42 U.S.C. § 1320a-7(a)) shall be for a minimum period of five years. The exclusion is effective twenty days from the date of the notice of exclusion. 42 C.F.R. § 1001.2002(b). The period of exclusion may be extended based on the presence of specified aggravating factors. 42 C.F.R. § 1001.102(b). Mitigating factors are considered as a basis for reducing the period of exclusion only if aggravating factors justify an exclusion of longer than five years. 42 C.F.R. § 1001.102(c).
The standard of proof is a preponderance of the evidence. 42 C.F.R. § 1001.2007(c). Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors; the IG bears the burden on all other issues. 42 C.F.R. § 1005.15(b).
V. Findings of Fact, Conclusions of Law, and Analysis
My conclusions of law are set forth in bold and followed by pertinent findings of fact and analysis.
A. Petitioner's request for hearing was timely, and I have jurisdiction.
Petitioner timely requested a hearing. I therefore have jurisdiction to hear and decide this case. See 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also 42 U.S.C. § 1320a-7(f)(1).
B. There is a basis for Petitioner's exclusion pursuant to section 1128(a)(4) of the Act.
Section 1128(a)(4) requires the Secretary to exclude from program participation any individual or entity convicted of a felony criminal offense "relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance." See 42 C.F.R. § 1001.101(d). As discussed below, the IG has established, by a preponderance of the evidence, the elements necessary to exclude Petitioner.
1. Petitioner was convicted under federal or state law of a criminal offense that occurred after August 21, 1996, within the meaning of section 1128(a)(4).
Petitioner appears to dispute she was convicted of a felony occurring after August 21, 1996. P. Br. at 3. However, documentary evidence submitted by the IG shows that on September 18, 2019, Petitioner pleaded guilty to one count of conspiracy to distribute controlled substances, in violation of 21 U.S.C. § 846. IG Ex. 3 at 1. The U.S. District Court for the Eastern District of Michigan (District Court) accepted Petitioner's guilty plea and entered judgment against her on December 30, 2019. IG Ex. 4 at 1. The record before me amply demonstrates Petitioner was convicted of a felony occurring after August 21, 1996. Act § 1128(i) (42 U.S.C. § 1320a-7(i)).
Petitioner argues that her conviction was not related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance because the physicians employed by her were licensed to write prescriptions for "legal controlled substances," while the statute under which she was convicted, 21 U.S.C. § 846, applies only to "illegal controlled substances" distributed by "unlicensed" distributors. P. Br. at 3-4; P. Ex. 1 at 8. Petitioner therefore appears to believe she did not actually commit a crime, as described under that criminal statute.
Petitioner otherwise claims she pleaded guilty "under duress and encouragement of ineffective assistance of counsel while taking medication;" that she had been the victim of selective prosecution; that her sentence was unfair in comparison to the physicians who actually wrote prescriptions, who were not indicted; and that she did not in fact conspire with anyone. P. Br. at 1; P. Ex. at 1; see also P. App. Br.
Petitioner's claims amount to a collateral attack on her conviction. I need not entertain her attempts to re-characterize the nature of her criminal conduct or attack the integrity of her conviction or plea. 42 C.F.R. § 1001.2007(d); Rosa Velia Serrano, DAB No. 2923 at 7 (2019).
Ultimately, to require exclusion under section 1128(a)(4) of the Act, Petitioner's conviction need only be related to the manufacture, distribution, prescription, or dispensing of a controlled substance. The term "related to" simply means that there must be a nexus or common sense connection. See Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase "related to" in another part of section 1320a‑7 as "deliberately expansive words," "the ordinary meaning of [which] is a broad one," and one that is not subject to "crabbed and formalistic interpretation.") (internal quotation marks and citations omitted); see also Quayum v. U.S. Dep't of Health & Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998).
Here, it is plainly evident that Petitioner's offense of conviction meets that broad, common sense standard. She pleaded guilty to conspiring to distribute controlled substances. IG Ex. 3 at 1. On its face, this charge describes conduct falling within the meaning of section 1128(a)(4) of the Act. Dr. Frank R. Pennington, M.D., DAB No. 1786 at 2 (2001), aff'd, Pennington v. Thompson, 249 F. Supp. 2d 931 (W.D. Tenn. 2003) (concluding that a guilty plea to felony possession of crack cocaine with intent to distribute met the requirements for exclusion under section 1128(a)(4)). Accordingly, I have no difficulty concluding that Petitioner was convicted of a criminal offense that occurred after August 21, 1996, which related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, as contemplated by section 1128(a)(4) of the Act (42 U.S.C. § 1320a-7(a)(4)).
2. Petitioner must be excluded for a minimum of five years.
Because I have concluded that a basis exists to exclude Petitioner under 42 U.S.C. § 1320a-7(a)(4), Petitioner must be excluded for a minimum period of five years. 42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2). The IG has no discretion to impose a lesser period of exclusion, and I may not reduce the period of exclusion below five years.
3. The IG has proven two aggravating factors exist to support an exclusion period beyond the five-year statutory minimum.
The regulations establish aggravating factors that the IG may consider to lengthen the period of exclusion beyond the five-year minimum for a mandatory exclusion. 42 C.F.R. § 1001.102(b). In this case, the IG applied two aggravating factors to impose a 25-year term of exclusion: (1) the sentence imposed included incarceration; and (2) the acts that resulted in the conviction were committed over a period of one year or more. IG Ex. 1 at
2; 42 C.F.R. § 1001.102(b)(2), (5). I must uphold the IG's determination as to the length of exclusion so long as it is not unreasonable. 42 C.F.R. § 1001.2007(a)(1)(ii). Here, as outlined below, I cannot say the IG's decision to impose a 25-year period of exclusion is unreasonable.
a. The IG established the sentence imposed against Petitioner included a period of incarceration.
The IG determined the aggravating factor found at 42 C.F.R. § 1001.102(b)(5) is applicable because Petitioner's criminal conviction resulted in a sentence of incarceration. IG Ex. 1 at 2. The record demonstrates that the District Court sentenced Petitioner to a 132-month term of imprisonment for the conviction upon which the IG based her exclusion. IG Ex. 4 at 2. Petitioner does not dispute the application of this aggravating factor. P. Br. at 3. The IG correctly applied this aggravating factor to increase Petitioner's period of exclusion.
b. The IG established the criminal acts resulting in Petitioner's conviction lasted a period of one year or more.
The IG determined application of the aggravating factor found at 42 C.F.R. § 1001.102(b)(2), that the acts that resulted in the conviction, or similar acts, were committed over a period of one year or more, to be appropriate. Petitioner does not dispute this application. P. Br. at 3. In her guilty plea, Petitioner admitted that she conspired with others to unlawfully distribute controlled substances from approximately August 2009 to June 2016. IG Ex. 3 at 2. Conspiracies are continuing offenses, where a defendant who joins such a conspiracy is responsible for the acts of his co-conspirators, and continuously violates the law so long as the conspiracy is in existence. See Smith v. U.S., 568 U.S. 106, 111, 133 S. Ct. 714, 719 (2013) (citations omitted). Petitioner's criminal acts thus lasted much longer than one year. I conclude the IG reasonably applied this aggravating factor to increase Petitioner's period of exclusion.
4. Petitioner has not established any mitigating factors exist in this case upon which I may rely to reduce the exclusion period.
Petitioner claims mitigating factors exist to reduce the period of her exclusion, but does not identify them. P. Br. at 4. She instead cites her own testimony, contained in P. Ex. 1. Id. However, the applicable regulations identify only three mitigating factors I may consider to reduce a period of exclusion: (1) a petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to the program was less than $5,000; (2) the record in the criminal proceedings demonstrates that a petitioner had a mental, physical, or emotional condition that reduced his culpability; or (3) a 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).
Nothing in P. Ex. 1 persuasively demonstrates any of these three factors. As such, Petitioner has failed to establish the presence of factors I could consider in mitigation.
5. A 25-year exclusion period is not unreasonable.
I must uphold the IG's determination as to the length of exclusion unless it is unreasonable. 42 C.F.R. § 1001.2007(a)(1)(ii). It is important to note that it is the quality of the aggravating (or mitigating) factors that is most important when considering the length of exclusion, and not the sheer number of aggravating factors that are present in a given case. As the Secretary stated in the preamble to the final rule establishing the exclusion regulations:
We do not intend for the aggravating and mitigating factors to have specific values; rather, these factors must be evaluated based on the circumstances of a particular case. For example, in one case many aggravating factors may exist, but the subject's cooperation with the OIG may be so significant that it is appropriate to give that one mitigating factor more weight than all of the aggravating. Similarly, many mitigating factors may exist in a case, but the acts could have had such a significant physical impact on program beneficiaries that the existence of that one aggravating factor must be given more weight than all of the mitigating. The weight accorded to each mitigating and aggravating factor cannot be established according to a rigid formula, but must be determined in the context of the particular case at issue.
57 Fed. Reg. 3271, 3314-15 (Jan. 29, 1992).
I cannot say the IG's decision to impose a 25-year period of exclusion is unreasonable. Petitioner knowingly participated in a criminal conspiracy that lasted for nearly seven years. During this time, she purportedly operated a pain management and physical therapy clinic where she facilitated patient visits to obtain medically unnecessary controlled substances, and required patients to sign documentation for physical therapy visits to obtain controlled substances, regardless of whether such therapy was medically necessary. IG Ex. 3 at 3. Petitioner admitted that while she had certified to the Medicare program that she would comply with its rules and regulations, she in fact paid kickbacks and bribes to induce patients to provide their Medicare information to support false claims to be submitted to the Medicare program. Id. at 3-4. As a result of her participation in this criminal conspiracy, Petitioner caused 506,580 oxycodone pills to be
dispensed. Id. at 3. The duration of Petitioner's criminal conduct reflects a sustained lack of integrity, rather than a momentary lapse of judgment. Donald A. Burstein, Ph.D., DAB No. 1865 at 8 (2003) (observing that "the purpose of this aggravating factor 'is to distinguish . . . petitioners whose lapse in integrity is short-lived from those who evidence a lack of such integrity over a longer period . . . .'")
The sustained and severe nature of Petitioner's offense resulted in the imposition of an extraordinary 132-month sentence of incarceration by the District Court, despite Petitioner's advanced age. The fact that the District Court thought it appropriate to impose such a lengthy sentence of incarceration reflects the serious nature of Petitioner's criminal offense, and reinforces the reasonableness of the period of exclusion selected by the IG. Pennington, DAB No. 1786 at 8 ("The ALJ did not err in considering the fact and length of the incarceration as an appropriate measure of the relative severity of the offense.").
Both the severity and duration of Petitioner's offense lend credence to the IG's judgment that Petitioner lacks the trustworthiness necessary to participate in federal health care programs and should therefore be excluded from doing so for a significant period of time. The period of exclusion imposed by the IG is not unreasonable.
For the foregoing reasons, I conclude the IG properly excluded Petitioner from participating in Medicare, Medicaid, and other federal health care programs, and find the 25-year period of exclusion selected by the IG is not unreasonable.
Bill Thomas Administrative Law Judge