Janae Lynne Furr, DAB CR6526 (2024)

DECISION

The Inspector General (IG) of the United States Department of Health and Human Services excluded Petitioner, Janae Lynne Furr, from participation in Medicare, Medicaid, and all other federal health care programs based on Petitioner’s conviction of a criminal offense related to the delivery of a health care item or service under Medicare or a state health care program.  For the reasons discussed below, I conclude that the IG has a basis for excluding Petitioner based on her criminal conviction, as defined by 42 U.S.C. § 1320a-7(i), for compounding, with a victim of the scheme underlying her conviction being the Medicare program.  An exclusion for the minimum period of five years is mandatory pursuant to section 1128(c)(3)(B), 42 U.S.C. § 1320a-7(c)(3)(B), of the Social Security Act (Act).

I. Background

In a letter dated February 29, 2024, the IG excluded Petitioner from participation in Medicare, Medicaid, and all federal health care programs as defined in section 1128B(f) of the Act, 42 U.S.C. § 1320a-7b(f), for a minimum period of 5 years, effective 20 days from the date of the letter.  IG Ex. 1 at 1.  The IG explained that Petitioner’s exclusion

Page 2

under section 1128(a)(1) of the Act was based on her “conviction (as defined in section 1128(i) of the Act), in the Superior Court of Arizona, Yavapai County, of a criminal offense related to the delivery of an item or service under Medicare or a State health care program, including the performance of management or administrative services relating to the delivery of items of services under any such program.”  IG Ex. 1 at 1; see 42 U.S.C. § 1320a-7(a)(1).  The IG informed Petitioner that the exclusion was for “the minimum statutory period of 5 years.”  IG Ex. 1 at 1; see 42 U.S.C. § 1320a-7(c)(3)(B).

On March 20, 2024, the Civil Remedies Division acknowledged receipt of Petitioner’s request for an administrative law judge (ALJ) hearing, at which time it issued my standing pre-hearing order.  On April 5, 2024, pursuant to 42 C.F.R. § 1005.6, I presided over a telephonic pre-hearing conference, and that same day I issued an order summarizing the pre-hearing conference and setting the schedule for pre-hearing submissions.

Pursuant to my orders, the IG filed a brief (IG Br.) and eight exhibits (IG Exs. 1-8).  Petitioner filed a brief (P. Br.) and one exhibit (P. Ex. 1).  Thereafter, the IG filed a reply brief and one additional exhibit (IG Ex. 9).

Petitioner filed a motion to exclude IG Exs. 3 (June 2020 plea agreement) and 4 (August 2023 plea agreement).  Addressing the objection to IG Ex. 3, I note that the Departmental Appeals Board (DAB) has stated that “evidence that is extrinsic to the criminal court process (regardless of whether or not the evidence or its content were presented at the grand jury, trial, plea or sentencing phases) is admissible to show that the conduct underlying the offense met the elements of the exclusion law.”  Narendra M. Patel, M.D., DAB No. 1736 at 14 (2000), aff’d sub nom., Patel v. Thompson, 319 F.3d 1317 (11th Cir. 2003), cert. denied, 539 U.S. 959 (2003).  The factual basis supporting the June 2020 plea agreement consists of a statement by Petitioner outlining the criminal conduct for which she had agreed to provide information and testimony.  See IG Ex. 3 at 4 (“The goal of the scheme was to avoid consequences associated with billing third-party private insurers and/or publicly funded (VA, Medicare, Medicaid, AHCCCS) insurers for patient cataract and/or laser surgeries which may not have ordinarily been covered had true patient vision exam results been disclosed.”).  Inasmuch as IG Ex. 3 addresses the nature and circumstances of the underlying criminal conduct, it is admissible because it is relevant and material evidence.  See 42 C.F.R. § 1005.17(b)-(g) (stating that an ALJ is not bound by the Federal Rules of Evidence, and addressing the admissibility and inadmissibility of certain evidence).

Petitioner also seeks the exclusion of IG Ex. 4, which is a copy of the August 2023 plea agreement that was the basis for her guilty plea.  IG Ex. 4; see IG Ex. 5; P. Ex. 1.  Petitioner argues that IG Ex. 4 is inadmissible because, after she fulfilled the terms of her probation, an Arizona judge vacated the judgment of guilt and granted an Arizona Certificate of Second Chance, which she argues is akin to a federal Certificate of

Page 3

Rehabilitation.  P. Br. at 6-7; see IG Ex. 7 at 1.  Inasmuch as I lack authority to apply an equitable remedy, my review of the exclusion is based solely on whether the IG had a legitimate basis to impose an exclusion pursuant to section 1128(a)(1) of the Act.  Petitioner’s objection offers no basis why IG Ex. 4, a copy of the plea agreement that was the basis for her guilty plea, is inadmissible evidence.  See 42 C.F.R. § 1005.17(a) (“The ALJ will determine the admissibility of evidence.”).

I admit IG Exs. 1-9 and P. Ex. 1 into the evidentiary record.

The IG filed the written direct testimony of one witness, and Petitioner has not requested an opportunity to cross-examine that witness.  IG Exs. 8-9.  See Pre-Hearing Order §§ 12, 14.  Consequently, it is unnecessary to convene a hearing for the purpose of cross-examination of any witnesses.  See Pre-Hearing Order §§ 15, 16.  The record is closed, and the case is ready for a decision on the merits.

II. Issues

Whether there is a basis for exclusion, and, if so, whether the five-year period of the exclusion that the IG has imposed is mandated by law.  42 C.F.R. § 1001.2007(a)(1)-(2).

III. Jurisdiction

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

IV. Findings of Fact, Conclusions of Law, and Analysis¹

1. Petitioner has a conviction, as contemplated by section 1128(i) of the Act, for an offense that is related to the delivery of a health care item or service under a federal or state health care program, which is an offense, pursuant to section 1128(a)(1) of the Act, that subjects her to a mandatory exclusion from all federal health care programs for a minimum of five years.

Section 1128(a)(1) requires a mandatory exclusion from all federal health care programs under certain conditions.²  Section 1128(a)(1) states:

Page 4

(a) Mandatory exclusion.—

The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):

(1) Conviction of program-related crimes.—

Any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under title XVIII or under any State health care program.

See 42 U.S.C. § 1320a-7(a)(1).  Further, section 1128(i) of the Act states that an individual is “convicted” of a criminal offense for the purpose of an exclusion when, as relevant here, “a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court.”  42 U.S.C. § 1320a-7(i)(3).

The IG argues that she properly excluded Petitioner from all federal health care programs based on Petitioner’s conviction for an offense that was related to the delivery of a health care item or service under Medicare or a state health care program.  IG Br. at 5-11.  I find that Petitioner was convicted of a criminal offense that, for purposes of the Act, mandates exclusion from all federal health care programs.

On December 23, 2019, a grand jury returned a true bill of indictment charging that Petitioner, among dozens of co-defendants who were also affiliated with the Kokopelli Eye Institute, engaged in a conspiracy to illegally control an enterprise and participated in a criminal syndicate, and also committed theft and engaged in money laundering.  IG Ex. 2 (Counts 1, 3, 5, 6, 8, 14, 16, 48, 50, 52, 54).

Petitioner and the Arizona Attorney General’s Office executed a plea agreement in June 2020, at which time Petitioner provided a two-page factual basis for her plea that she asserted was “true and correct.”  IG Ex. 3 at 4-5.  Petitioner admitted that she “conspired to commit fraudulent schemes, committed overt acts in furtherance of the conspiracy and was complicit in effecting the receipt of illegal proceeds resulting from the scheme.”  IG Ex. 3 at 4 (capitalization omitted).  Petitioner explained that the “fraud scheme was collectively executed, institution-wide, via the Electronic Medical Record system Medinformatix” and involved “forged reports.”  IG Ex. 3 at 4-5.  Petitioner acknowledged that “the goal of the scheme was to avoid consequences associated with billing third-party private insurers and/or publicly funded . . . insurers,” to include

Page 5

Medicare and Medicaid.  IG Ex. 3 at 4; see IG Exs. 8 (testimony reporting that, as a result of the scheme, “Medicare incurred a financial loss of $72,698.52 as a result of false and fraudulent claims submitted by Kokopelli Eye Institute as part of the conspiracy charged in Count 1 of the indictment”), 9 (additional testimony that the order of restitution for Dr. Michael Ham, a member of the conspiracy, included $72,698.52 payable to the Medicare program); see also IG Ex. 3 at 4 (Petitioner’s explanation in her plea agreement that Dr. Ham “directed [her] . . . to fraudulently complete, create, modify and/or falsify patient vision exam results”).  Petitioner also waived her Fifth Amendment rights and entered into a testimony agreement in which she agreed to provide information and testimony in dozens of other criminal cases, to include Dr. Ham’s case.  IG Ex. 3 at 6-7.

Several years later, in August 2023, Petitioner entered into a new plea agreement in which she agreed to plead guilty to the amended counts of compounding (Counts 1 and 6).³  IG Ex. 4 at 1.  The government agreed to dismiss the remaining counts and to not bring any other charges.  IG Ex. 4 at 1-2.

On August 31, 2023, Petitioner entered a plea of guilty to the offenses of compounding “after a knowing, voluntary and intelligent waiver of all pertinent rights.”  IG Ex. 5 at 1.  At the time of her guilty plea and sentencing, Petitioner, through counsel, proffered that she “received a pecuniary benefit of a salary with the understanding that she was not to report any suspected illegal activity to law enforcement.”  P. Ex. 1 at 14.  The court imposed “judgment of guilt and sentence” based on Petitioner’s guilty plea.  IG Ex. 5 at 1.

In November 2023, Petitioner filed a motion requesting that the conviction be set aside, and that she be issued a Certificate of Second Chance and have her civil rights be restored.  IG Ex. 6.  In support, Petitioner explained that pursuant to A.R.S. § 13‑905(A)(1), a convicted person, upon fulfilling the conditions of probation or sentence and discharge by the court, could apply to have the judgment of guilt set aside.  IG Ex. 6 at 2.  The state Superior Court granted the motion on January 5, 2024.  IG Ex. 7.

Petitioner essentially argues that the guilty plea to the two compounding offenses should be considered in a vacuum without any consideration of the underlying criminal conduct that was the basis for the convictions for compounding.  P. Br. at 3.  Petitioner is mistaken.  As previously discussed, an ALJ may consider extrinsic evidence and is not

Page 6

limited to the four corners of the judgment of conviction, and may rely on evidence showing that the conduct underlying the offense satisfies section 1128(a)(1) of the Act.  Narendra M. Patel, DAB No. 1736.  Likewise, the DAB “has repeatedly held that the phrase ‘related to’ within the context of section 1128(a)(1) requires only that a common-sense nexus exists between the offense and the delivery of a health care item or service under the state healthcare program.”  Summit S. Shah, M.D., DAB No. 2836 at 6 (2017) (citing James O. Boothe, DAB No. 2530 at 3 (2013); James Randall Benham, DAB No. 2042 at 5 (2006)).

A determination of whether an individual is subject to a mandatory exclusion pursuant to section 1128(a)(1) of the Act is a straightforward matter:  If an individual has been convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program, then that individual is subject to a mandatory exclusion.  Petitioner undoubtedly has a conviction for purposes of an exclusion.  See IG Ex. 5 (judgment of conviction and acceptance of Petitioner’s guilty plea); 42 U.S.C. § 1320a-7(i)(1), (3) (defining “conviction” to include when “judgment of conviction has been entered against the individual” and when a “plea of guilty . . . has been accepted by a Federal, State, or local court”).  Further, Petitioner’s conviction undoubtedly related to the delivery of an item or service under the Medicare program.  IG Ex. 3 at 4 (admitting that “[t]he goal of the scheme was to avoid consequences associated with billing third-party private insurers and/or publicly funded (VA, Medicare, Medicaid, AHCCCS) insurers for patient cataract and/or laser surgeries”); IG Exs. 8, 9 (witness testimony that a co-defendant was ordered to pay restitution to the Medicare program based on the scheme underlying the criminal conviction).  Based on a straightforward review of whether a criminal offense is “program-related” and mandates exclusion, the evidence demonstrates that Petitioner was convicted of a criminal offense that related to the delivery of an item or service under the Medicare program.  42 U.S.C. § 1320a-7(a)(1).  Exclusion is therefore mandated pursuant to section 1128(a)(1) of the Act.

The criminal justice system may seek to further rehabilitative goals, but the IG seeks to protect federal funds and Medicare beneficiaries.  See Henry L. Gupton, DAB No. 2058 at 7 (2007) (explaining that the goals of criminal law “generally involve punishment and rehabilitation of the offender, possibly deterrence of future misconduct . . . and various public policy goals,” whereas exclusions “are civil sanctions, designed to protect the beneficiaries of health care programs and the federal fisc”), aff’d, Gupton v. Leavitt, 575 F. Supp. 2d 874 (E.D. Tenn. 2008).  Petitioner admitted that she received a pecuniary benefit (e.g., a salary) “with the understanding that she was not to report any suspected illegal activity to law enforcement.”  P. Ex. 1 at 14.  Thus, for a span of nearly eight years, Petitioner criminally failed to reveal a known scheme that caused fraudulent losses to the Medicare program and other entities.  IG Ex. 5 at 1 (reporting the duration of the offense conduct was from May 2009 through February 2017).  Congress, through enactment of the Act, determined that an individual who has been convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care

Page 7

program must be excluded from federal health care programs for no less than five years.  While it appears that Petitioner provided significant cooperation to law enforcement, the simple fact is that the IG must exclude an individual whose criminal conviction is related to the delivery of an item or service under the Medicare program.  Congress determined that such an exclusion is “mandatory,” and that neither the IG nor an ALJ has the discretion to impose an exclusion of a shorter duration.  42 U.S.C. § 1320a‑7(c)(3)(B).  I cannot shorten the length of the exclusion to a period of less than five years because I do not have authority to “[f]ind invalid or refuse to follow Federal statutes or regulations.”  42 C.F.R. § 1005.4(c)(1).  An exclusion for a minimum period of five years is mandated pursuant to 42 U.S.C. §§ 1320a-7(a)(1), 7(c)(3)(B).

2. The effective date of Petitioner’s exclusion is March 20, 2024.

The effective date of the exclusion, March 20, 2024, is 20 days after the date of the IG’s February 29, 2024 letter and is established by regulation (42 C.F.R. § 1001.2002(b)); I am bound by that regulation.  42 C.F.R. § 1005.4(c)(1).

V. Conclusion

For the foregoing reasons, I affirm the IG’s decision to exclude Petitioner from participation in Medicare, Medicaid, and all other federal health care programs for a minimum period of five years, effective March 20, 2024.

Endnotes

¹  My findings of fact and conclusions of law are set forth in italics and bold font.

²  While there are slight differences in the wording of section 1128 of the Act and its codification at 42 U.S.C. § 1320a-7, the two authorities are substantively identical and I refer to them interchangeably.  I further note that the Secretary of the Department of Health and Human Services (Secretary) has delegated to the IG the authority “to suspend or exclude certain health care practitioners and providers of health care services from participation in these programs.”  48 Fed. Reg. 21,662 (May 13, 1983); see also 42 C.F.R. § 1005.1.

³  “A person commits compounding if such person knowingly accepts or agrees to accept any pecuniary benefit as consideration for . . . [r]efraining from seeking prosecution of an offense; or . . . [r]efraining from reporting to law enforcement authorities the commission or suspected commission of any offense or information relating to the offense.”  A.R.S. § 13-2405(A).  The determination of whether compounding is a felony or misdemeanor is based on whether the “crime compounded” is a felony or misdemeanor offense.  A.R.S. § 13-2405(C).