Sarah Marie Duncanson, DAB CR6519 (2024)

DECISION

The Inspector General (IG) of the Department of Health and Human Services excluded Sarah Marie Duncanson (Petitioner) from participating in all federal health care programs for five years under 42 U.S.C. § 1320a‑7(a)(1).  Petitioner requested a hearing before an administrative law judge to dispute the exclusion.  As explained below, I conclude that the IG had a legitimate basis for excluding Petitioner and that the five-year exclusion period is the minimum length of exclusion required by law.

I. Case Background and Procedural History

In a February 29, 2024 notice, the IG excluded Petitioner from participation in all federal health care programs under section 1128(a)(1) of the Social Security Act (42 U.S.C. § 1320a-7(a)(1)) “for the minimum statutory period of 5 years” due to Petitioner’s conviction in the Superior Court of Arizona, Yavapai County (Superior Court) of a criminal offense related to the delivery of an item or service under Medicare or a state health care program.  The notice stated that the exclusion was effective 20 days from the date on the notice.  IG Ex. 1.

On March 25, 2024, Petitioner requested a hearing.  In the hearing request, Petitioner asserted that there was a four-year delay in commencing the five-year exclusion and that this was unreasonable and unfair.  Petitioner stated that she was simply an employee who

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followed her employer’s directions and that her employer was the person who perpetrated Medicaid fraud.  Petitioner asserted that she quickly pleaded guilty on April 6, 2020, and agreed to testify against her former employer.  However, her former employer delayed his criminal case and, as a result, Petitioner was not sentenced in May 2020, but much later.  Petitioner sought a retroactive effective date for the exclusion of April 6, 2020.  Electronic Filing System (E-File) Doc. No. 1 at 1.

On March 28, 2024, the Civil Remedies Division (CRD) acknowledged the hearing request, notified the parties of the date for a prehearing conference, and issued my Standing Order.

On April 17, 2024, I held a prehearing conference by telephone, the substance of which is summarized in my April 17, 2024 Order Following Prehearing Conference and Setting Schedule for Prehearing Submissions.  E-File Doc. No. 5.  As summarized in that order, I denied Petitioner’s request for a retroactive effective date for the exclusion.

I advised Petitioner that the regulations require the exclusion to take effect 20 days after the date the exclusion notice was issued and that there is no exception to this rule.  42 C.F.R. § 1001.2002(b); see also 42 U.S.C. § 1320a-7(c)(1) (effective date of exclusion will be specified in the regulations); Seide v. Shalala, 31 F. Supp. 2d 466, 469 (E.D. Pa. 1998).  I advised Petitioner that I have no authority to change the effective date of the exclusion.  See 42 C.F.R. § 1005.4(c) (Administrative law judges does not have the authority to refuse to follow federal statutes and regulations); see also Ali v. U.S. Dep’t of Health and Human Services, No. 21-CV-12365, 2022 WL 3130227, at *4 (E.D. Mich. Aug. 4, 2022).

E-File Doc No. 5 at 2.  At the conference I explained that, because the IG had imposed the mandatory minimum length of exclusion, I only had the authority to determine whether the IG had a legitimate basis to impose the exclusion.  Petitioner confirmed that she wished to dispute the basis for the exclusion.  E-File Doc No. 5 at 2.

Consistent with the prehearing submission schedule agreed at the prehearing conference, the IG filed a brief (IG Br.) and four exhibits, Petitioner filed a brief (P. Br.) and three exhibits, and the IG filed a reply brief.

II. Issue

Whether the IG has a legitimate basis for excluding Petitioner from participating in all federal health care programs for five years under 42 U.S.C. § 1320a-7(a)(1).

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III. Admission of Evidence and Decision on the Written Record

I admit IG Exhibits 1 through 4 into the record because Petitioner did not object to any of them.  Standing Order ¶ 13; see also 42 C.F.R. § 1005.8(c).

I exclude Petitioner Exhibits 1 through 3 because all of those documents are duplicates of documents contained in IG Exhibits 1 through 3.  42 C.F.R. § 1005.17(d) (exclusion of cumulative evidence); see also Civil Remedies Division Procedures (CRDP) § 14(a).

I directed the parties to submit written direct testimony for any witnesses that they wanted to present in this case, except for expert witnesses.  42 C.F.R. § 1005.16(b); Standing Order ¶ 11; CRDP § 16(b).  I also stated that I would issue a decision based on the written record unless a party filed admissible written direct testimony and the opposing party requested to cross-examine that witness or witnesses.  Standing Order ¶ 12; CRDP § 19(b).

In the present case, the IG has no witnesses to present and indicated that a hearing is unnecessary.  IG Br. at 4.  Petitioner has no witnesses to present but indicated that Petitioner wants an in-person hearing.  However, Petitioner has not explained why a hearing is needed.  P. Br. at 2.  When there are no witnesses to be examined or cross-examined, I may issue a decision on the written record.  Vandalia Park, DAB No. 1940 (2004).  As stated in the CRDP:

Decision on written submissions.  The ALJ may determine that an oral hearing is unnecessary and not in the overall interest of judicial economy if the parties do not identify any proposed witnesses, do not offer the written direct testimony of any witnesses when ordered to do so, or do not request an opportunity to cross-examine a witness whose written direct testimony has been offered. Under these circumstances, the ALJ may decide the case based on the written record.

CRDP § 19(d).  Because Petitioner has not provided a reason for me to convene an in-person hearing, I decide this case based on the written record.

IV. Jurisdiction

I have jurisdiction to adjudicate this case.  42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. §§ 1001.2007, 1005.2.

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V. Findings of Fact

1. On December 23, 2019, a grand jury empaneled by the Superior Court issued a 150-count Indictment charging numerous people with various crimes related to a conspiracy. The Indictment charged Petitioner with conspiracy (Count 1) and Fraudulent Schemes and Artifices (Count 5).  IG Ex. 4 at 1, 3., 5-7, 10-11.
2. On March 27, 2020, Petitioner signed a Plea Agreement in which Petitioner agreed to plead guilty to the following amended charge under Count 1: “Facilitation of Fraudulent Scheme and Artifice, a Class 6 undesignated felony, in violation of A.R.S. § §§ 13-1004, 13-2301, 13-2310, 13-301, 13-302, 13-303, 13-304, 13-701, 13-702, 13-707, 13-801, and 13-802 committed on or between January 1, 2012, and October 10, 2018.”  IG Ex. 2 at 1-3.
3. As part of the Plea Agreement, Petitioner agreed to certain facts as the basis for the guilty plea. IG Ex. 2 at 1, 4-6.  The agreed facts included: 
   1. Petitioner was employed by Kokopelli Eye Institute from 2012 through October 10, 2018.  IG Ex. 2 at 4.
   2. Petitioner and numerous other individuals collectively engaged in conduct which constituted the offenses of Fraudulent Schemes and Artifices, Theft, Forgery, Money Laundering . . ., and Computer Tampering.”  IG Ex. 2 at 4.
   3. “The goal of the scheme was to avoid consequences associated with billing third-party private insurers and/or publicly funded (VA, Medicare, Medicaid . . .) insurers for patient cataract and/or laser surgeries which may not have ordinarily been covered had true patient vision exam results been disclosed.  Specifically, patient vision exam results were fraudulently worsened to satisfy the threshold requirements maintained by third-party insurers to approve the financing of patient/client cataract or laser surgeries.”  IG Ex. 2 at 4 (emphasis added).
   4. Dr. Michael Ham directed [Petitioner], as well as all other co-conspirator employees, to fraudulently complete, create, modify and/or falsify patient vision exam results, specific patient complaints, and/or heart and lung examinations for the purpose of deceiving his patients’ third-party medical insurers into disbursing funds for cataract surgery services.  Additionally, Dr. Michael Ham directed [Petitioner], as well as other co-conspirators, to maintain the false documents, in the event of an audit on Kokopelli Eye Institute by those same third-party entities.  IG Ex. 2 at 4.

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3.  
   5. “[T]he scheme was perpetrated throughout [Petitioner’s] time as an employee at Kokopelli Eye Institute.” IG Ex. 2 at 4.
   6. Petitioner “forged a document which contained the untrue assertion that Dr. Michael Hamm had conducted a heart and lung exam on patient [S.E.] within 30 days of her prospective cataract surgery and the exam revealed [S.E.’s] heart and lungs were of sufficient health to endure cataract surgery.” IG Ex. 2 at 5.
   7. Petitioner “routinely falsely included patient heart and lung examinations in Kokopelli Visual Examination Reports which had never occurred.” IG Ex. 2 at 5.
   8. Petitioner “created numerous patient visits which never occurred by drafting a document within the Medinformatix Electronic medical record that reflected a pre-surgery visit by a given patient, whereby their heart and lung health was verified prior to surgery. These patient visits never occurred.  The patient was never at the office, and there was never a scheduled visit/consultation.”  IG Ex. 2 at 5.
4. As part of the Plea Agreement, Petitioner agreed to testify for the prosecution in the criminal proceedings for numerous individuals, including Michael Lee Ham. IG Ex. 2 at 7-9.
5. On May 31, 2023, the Superior Court issued a Judgment of Guilt and Sentence in which the Superior Court accepted Petitioner’s guilty plea and adjudged Petitioner guilty of a class 1 misdemeanor of facilitation of fraudulent schemes and artifices that occurred from January 2012 to November 2018. IG Ex. 3 at 1.

VI. Conclusions of Law and Analysis

1. Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under the Medicare program and the Medicaid program; therefore, exclusion is required under 42 U.S.C. § 1320a‑7(a)(1).

The IG must exclude an individual from participation in any federal health care program if that individual was convicted under federal or state law of a criminal offense related to the delivery of an item or service under Medicare or a state health care program. 42 U.S.C. § 1320a‑7(a)(1).  A “State health care program” means “a State plan approved under title XIX” of the Social Security Act.  42 U.S.C. § 1320a-7(h)(1).  Medicaid is a state plan approved under Title XIX of the Social Security Act.  42 C.F.R. § 1000.10 (definition of Medicaid).

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The facts in this case show that Petitioner meets the standard for exclusion.

Petitioner was convicted of a criminal offense.  For purposes of exclusion, individuals are deemed “convicted” of an offense if any of the following are met:

(1) when a judgment of conviction has been entered against the individual or entity by a Federal, State, or local court, regardless of whether there is an appeal pending or whether the judgment of conviction or other record relating to criminal conduct has been expunged;

(2) when there has been a finding of guilt against the individual or entity by a Federal, State, or local court;

(3) when a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court; or

(4) when the individual or entity has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.

42 U.S.C. § 1320a‑7(i)(1)-(4).  In the present case, Petitioner meets the first three definitions for the term “convicted.”  Petitioner pleaded guilty to a state law criminal offense and the Superior Court accepted that plea.  IG Ex. 2; IG Ex. 3 at 1.  The Superior Court also made a finding Petitioner was guilty based on Petitioner’s guilty plea.  IG Ex. 3 at 1.  Finally, the Superior Court issued a Judgment of Guilt and Sentence showing that the court entered a judgment of conviction.  IG Ex. 3 at 1.  Significantly, Petitioner does not dispute that she was convicted of a criminal offense.  P. Br. at 1.

Further, Petitioner’s criminal offense was “related to” the delivery of a health care item or service under the Medicare program and a state health care program.  For purposes of exclusion, the term “related to” simply means that there must be a nexus or common-sense connection.  See Quayum v. U.S. Dep’t of Health & Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998); see also Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase “relating 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 omitted).

Petitioner pleaded guilty to facilitation of fraudulent schemes and artifices, and provided significant details as to her role in a large conspiracy that involved many patients over

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more than six years.  Petitioner admitted that this scheme included both private insurance companies and government programs and, in particular, the Medicare and Medicaid programs.  IG Ex. 2 at 4.  Further, as the IG pointed out (IG Br. at 3), Petitioner specifically admitted to criminal conduct in relation to patient S.E.  IG Ex. 2 at 5.  Dr. Ham received payment from the Medicare program based on the cataract surgery provided to S.E.  IG Ex. 4 at 31-33.

I conclude that there is a clear nexus between Petitioner’s conviction and the delivery of an item or service under the Medicare and Medicaid programs.  False claims submitted to the Medicaid program are “related to” the delivery of an item or service under a state health care program.  See Travers v. Shalala, 20 F.3d 993, 998 (9th Cir. 1994) (conviction for filing claims with the Medicaid program is “a program‑related offense” and “such financial misconduct is exactly what Congress sought to discourage” through imposing exclusions.); Kahn v. Inspector Gen. of the U.S. Dep’t of Health & Human Servs., 848 F. Supp. 432, 434, 436 (S.D.N.Y. 1994) (concluding that a podiatrist’s conviction for attempted grand larceny was program related for purposes of an exclusion because it was related to the filing of false Medicaid claims); Greene v. Sullivan, 731 F. Supp. 835, 838 (E.D. Tenn. 1990) (“There is no question that Mr. Greene’s crime [of filing false claims] resulted in a Medicaid overpayment and was a program-related crime triggering the mandatory exclusion under Section 1320a‑7(a).”).  The reasoning of these cases applies to Petitioner’s criminal conduct, which assisted and facilitated the filing of false claims to the Medicare and Medicaid programs.

Accordingly, I conclude that the criminal conduct for which Petitioner was convicted was related to the delivery of a health care item or service under Medicare and a state health care program.  See 42 U.S.C. § 1320a‑7(a)(1).  Therefore, Petitioner is subject to a mandatory exclusion.

2. Petitioner must be excluded for a minimum of five years.

Petitioner argues that the IG does not have to exclude her for a minimum of five years.  Specifically, Petitioner asserts that an exclusion was not part of her plea agreement, that Petitioner was not informed that the plea could result in exclusion, that Petitioner’s desire to become an optometrist is now in jeopardy, and that this was Petitioner’s first offense.  P. Br. at 2, 4.

Because I have concluded that a basis exists to exclude Petitioner under 42 U.S.C. § 1320a‑7(a)(1), Petitioner must be excluded for a minimum of five years.  42 U.S.C. § 1320a‑7(c)(3)(B).  As the Ninth Circuit held:

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Once [the IG] found that the Utah state court’s disposition of the charge amounted to a conviction of a program-related offense, the Inspector General had no choice but to impose the mandatory 5-year exclusion under §1320a-7(a)(1).

Travers, 20 F.3d 998.  Even though Petitioner argues that there are other reasons for leniency, none of those reasons serve as a legal basis for me to reverse the exclusion imposed on Petitioner.

VII. Conclusion

For the foregoing reasons, I affirm the IG’s determination to exclude Petitioner for five years from participating in Medicare, Medicaid, and all federal health care programs pursuant to 42 U.S.C. § 1320a‑7(a)(1).