Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Carolann M. Oliphant
(O.I. File No. B-20-40219-9)
The Inspector General,
Department of Health and Human Services
Docket No. C-21-415
Decision No. CR5891
The Inspector General (IG) of the U.S. Department of Health and Human Services excluded Petitioner Carolann M. Oliphant from participation in Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(a)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)). Petitioner challenges the exclusion. For the reasons stated below, it is concluded that the IG had a basis for excluding Petitioner from program participation, and that the five-year mandatory exclusion period must be imposed. The IG’s exclusion determination is affirmed.
I. Background and Procedural History
On November 30, 2020, the IG notified Petitioner Carolann M. Oliphant of a five-year exclusion from participating in Medicare, Medicaid, and all federal health care programs under section 1128(a)(3) of the Act. The exclusion was imposed due to Petitioner’s criminal convictions in the State of Indiana, Shelby County Circuit Court (State Court)
for three counts of Obtaining a Controlled Substance by Fraud, Subterfuge or Deceit for hydromorphone, fentanyl, and morphine. IG Exhibit (Ex.) 6.
On January 28, 2021, Petitioner timely sought a hearing before an administrative law judge (ALJ). On the same date, at Judge Anderson’s direction, the Civil Remedies Division (CRD) issued an acknowledgment letter and Judge Anderson’s Standing Prehearing Order, along with the CRD Procedures and a non-discrimination notice. A pre-hearing conference was held on February 18, 2021. The conference was attended by Judge Anderson; Matthew Westbrook, on behalf of the IG; Cynthia Marcus, counsel for Petitioner; and Tony Tran, Attorney-Advisor for CRD.
On March 22, 2021, the IG filed a brief along with six exhibits. On April 13, 2021, the case was transferred from Judge Anderson to Judge Tannisha D. Bell. Petitioner filed a brief and one exhibit on April 28, 2021. The IG’s reply brief was submitted on May 5, 2021.
II. Admission of Exhibits and Decision on the Record
The parties agree that an in-person hearing is not necessary to resolve this matter. IG Br. at 11; P. Br. at 4. Therefore, this matter will be decided on the written record.
Petitioner submitted a brief with one exhibit, and the IG submitted a brief with six exhibits. Neither party raised objections to the admission of the exhibits. Therefore, all exhibits submitted by both parties will be admitted into evidence.
The issue to be decided is whether the IG had a basis to exclude Petitioner from participation in Medicaid, Medicare, and other federal health care programs under section 1128(a)(3) of the Act.
Jurisdiction is proper under 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a); see also 42 U.S.C. § 1320a-7(f)(1).
V. Findings of Fact
Petitioner was a registered nurse (RN) at Major Hospital in Shelbyville, Indiana from November 13, 2011 to July 1, 2017. IG Ex. 2 at 2. As a part of her duties, Petitioner had access to a Pyxis machine which is used to dispense controlled substances. Medication dispensed from the Pyxis machine must be accounted for and the user must document whether the medication is given to a patient, returned to the Pyxis machine, or wasted. IG Ex. 2. A RN is only permitted to administer controlled substances when there is an order from a prescribing practitioner. IG Ex. 2.
On June 22, 2017, the Director of Pharmacy at Major Hospital conducted an audit of Petitioner’s Pyxis activity with the drug Dilaudid (hydromorphone) from April 1 - June 22, 2017. IG Ex. 2. The audit showed six instances where Petitioner pulled Dilaudid and half of the vial was given to patients, but the other half was not documented as wasted or returned. IG Ex. 2. In addition, Petitioner pulled 14 vials of Dilaudid without a doctor’s order and did not record use of the medication per protocol. IG Ex. 2. Petitioner was subsequently terminated. An expanded audit was conducted, and additional discrepancies were found in Petitioner’s use of the Pyxis machine for fentanyl and morphine. IG Ex. 2. Major Hospital suffered a loss of $3,170.98 due to Petitioner’s actions. IG Ex. 2.
In 2017, the Medicaid Fraud Control Unit (MFCU) of the Indiana Attorney General’s office investigated the incident and determined that there was probable cause to establish that Petitioner committed several crimes. On November 4, 2019, Petitioner was charged with seven felonies: one count of Theft, one count of Failure to Make, Keep or Furnish Records, and five counts of Obtaining a Controlled Substance by Fraud, Subterfuge or Deceit for fentanyl, hydromorphone, and morphine. IG Ex. 3.
On January 10, 2020, Petitioner entered into a Guilty Plea Agreement with the Indiana Attorney General’s Office. IG Ex. 4. Petitioner agreed to plead guilty to three felony counts of Obtaining a Controlled Substance by Fraud, Subterfuge, or Deceit for hydromorphone, fentanyl, and morphine. The Indiana Attorney General’s Office agreed to dismiss the remaining charges. IG Ex. 4 at 1. The agreement also indicated that all counts may be reduced to Class A Misdemeanors once Petitioner paid restitution in full and completed community service. IG. Ex. 4 at 2.
The plea agreement was accepted by the State Court on February 6, 2020. IG Ex. 5 at 3. Petitioner was placed on probation for 1,093 days, ordered to complete 48 hours of community service, and ordered to pay $3,170.98 in restitution to Major Hospital in addition to other fines and costs. IG Ex. 5. The State Court noted that Petitioner could petition the Court for Alternative Misdemeanor Sentencing upon successful completion of community service and the payment of restitution. IG Ex. 5 at 2.
On September 8, 2020, the State Court ordered that Petitioner’s felony convictions be converted to misdemeanors based on a joint petition filed by Petitioner and the State of Indiana. P. Ex. 1. Petitioner has since received treatment for her addiction and successfully completed a monitoring program. P. Ex. 1; P. Br. at 4.
VI. Analysis and Conclusions of Law
The Secretary of Health and Human Services (Secretary) shall exclude an individual from participation in Medicare, Medicaid, and all other federally funded health care programs if that individual:
has been convicted for an offense which occurred after [August 21, 1996], under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program . . . operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.
Act § 1128(a)(3); 42 U.S.C. § 1320a-7(a)(3). Five years is the mandatory minimum length of an exclusion under sections 1128(a)(1)-(a)(4). Act § 1128(c)(3)(B); 42 U.S.C. § 1320a-7(c)(3)(B). The IG has the burden of proving all elements listed above by a preponderance of the evidence.
Petitioner challenges whether she was convicted of felony offenses and whether the IG has proven the element of fraud.
A. Felony convictions
Petitioner argues that she was not convicted of felony offenses because the State Court issued a modified order on September 8, 2020, which converted the felonies into misdemeanors. Petitioner asserts that the IG erroneously relied on the February 6, 2020 State Court order to support the exclusion instead of the modified order, issued on September 8, 2020, which reduced her felony convictions to misdemeanors. P. Br. at 2-3.
Under the Act, a person is “convicted” when: 1) “a judgment of conviction has been entered” regardless of whether that judgment has been (or could be) expunged; 2) there has been a finding of guilt; 3) a plea of guilty or nolo contendere has been accepted by the court; or 4) the individual has entered into participation in a first offender, deferred adjudication, or other arrangement or program where the judgment of conviction has been withheld. Act § 1128(i); 42 C.F.R. § 1001.2(a). Contrary to Petitioner’s assertion,
she was convicted of three felonies when the State Court accepted her guilty plea and conducted a sentencing hearing on February 6, 2020. IG Ex. 5. The February 6, 2020 order, signed by Shelby Circuit Court Judge Trent Meltzer, states that the court “accepts the plea agreement and the plea of guilty,” and “enters [a] judgment of conviction.” IG Ex. 5.
There is no dispute that Petitioner’s felony convictions were converted to misdemeanors under Indiana Code § 35-38-1-1.5, which is titled “Converting Level 6 felony to Class A misdemeanor.” The code provides for the conversion of certain felony convictions to misdemeanors as the title implies. The statute is clear in granting the court the ability to convert Level 6 felony convictions to misdemeanors when certain conditions are met. Ind. Code § 35‑38‑1‑1.5. However, the conversion is made possible due to the existence of a felony conviction. Petitioner had three felony convictions which triggered the exclusion by the IG. The subsequent reduction of the felonies to misdemeanors has no impact on the exclusion. The regulations allow for the withdrawal of an exclusion and reinstatement if there is a reversal or vacation of the felony conviction on appeal. 42 C.F.R § 1001.3005(a). In this case, Petitioner’s felony convictions were not reversed or vacated. Therefore, the exclusion must stand.
B. Allegations of Fraud
Petitioner argues that the IG’s representations are based on allegations of fraud contained in an affidavit and not facts. P. Br. at 3. In exclusion cases, the IG has the burden of proving the basis for the exclusion and the existence of any aggravating factors. 42 C.F.R. § 1001.102(b). The standard of proof is a preponderance of the evidence, which means a fact is proven if the evidence shows that it is more likely true than not true. 42 C.F.R. §§ 1001.2007(c), 1005.15(d). In support of her case, the IG submitted an affidavit of probable cause from Investigator Sherri Taylor with the Indiana Attorney General’s Office, Medicaid Fraud Control Unit which detailed the investigation into Petitioner’s case. IG Ex. 2. In addition, the IG submitted a plea agreement that included Petitioner agreeing to plead guilty to several charges related to the investigation discussed in Investigator Taylor’s affidavit. IG Ex. 4. Petitioner’s argument regarding the IG’s use of a probable cause affidavit to support the exclusion is without merit. Nothing in the Act prohibits the IG from using affidavits to support her case.
Petitioner also states that there is no evidence of fraud, though she admits to not properly disposing of and documenting controlled substances from the Pyxis machine at Major Hospital. P. Br. at 3. The IG has the burden of proving that Petitioner was convicted of an offense in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program. 42 C.F.R. § 1001.2007(c). The evidence shows that Petitioner had access to the Pyxis machine and the controlled substances due to her position as a RN at Major Hospital. IG Ex. 2. Therefore, the IG has met her
burden in proving that Petitioner’s offense was in connection with the delivery of a health care item or service. Additionally, Petitioner admitted to Obtaining a Controlled Substance by Fraud, Subterfuge or Deceit for taking fentanyl, hydromorphone, and morphine from Major Hospital, when she pleaded guilty to the three felony offenses on February 6, 2020. IG Ex. 5 at 1.
Lastly, Petitioner’s argument constitutes a collateral attack on the underlying convictions, which is prohibited by the regulations:
When the exclusion is based on the existence of a criminal conviction . . . or any other prior determination where the facts were adjudicated and a final decision was made, the basis for the underlying conviction . . . is not reviewable and the individual or entity may not collaterally attack it[,] either on substantive or procedural grounds[,] in this appeal.
42 C.F.R. § 1001.2007(d).
The IG has proven by a preponderance of the evidence that Petitioner was 1) convicted of felony offenses that occurred after August 21, 1996; 2) under the State of Indiana law; 3) in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program operated by or financed in whole or in part by any Federal, State, or local government agency; 4) of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct. Therefore, Petitioner shall be excluded from participating in Medicare, Medicaid, and other federal health care programs for the mandatory five-year period. The five-year exclusion imposed by the IG is AFFIRMED.
Tannisha D. Bell Administrative Law Judge