Mikki Noel Rochelle, DAB CR6545 (2024)

DECISION

I affirm the determination of the Inspector General (IG) of the United States Department of Health and Human Services to exclude Petitioner from participation in all federal health care programs for seven years.

I. Background

In a March 29, 2024 notice, the IG excluded Petitioner from participating in all federal health care programs under section 1128(a)(4) of the Social Security Act (42 U.S.C. § 1320a-7(a)(4)) for a period of seven years due to Petitioner’s felony conviction in the 114th District Court, Smith County, Texas, related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  The notice stated that the exclusion would be effective 20 days from the date of the notice.  IG Ex. 1.

The notice identified the following aggravating factors as the bases for extending the length of exclusion from the statutory minimum of five years to seven years:

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• Petitioner had been convicted of other offenses besides those that formed the basis for the exclusion, specifically:  Tampering or Fabricating Physical Evidence with intent to Impair.
• Petitioner was excluded from the Texas Medicaid Program by the Texas Health and Human Services Commission, Office of the Inspector General.

IG Ex. 1 at 1.

On May 27, 2024, Petitioner requested a hearing to dispute the seven-year length of exclusion.  Petitioner disputed the existence of the two aggravating factors that the IG cited.  Petitioner also requested a retroactive effective date for the exclusion, stating that the underlying criminal case had been subject to a deferred adjudication since June 2023.

On May 28, 2024, the Civil Remedies Division acknowledged Petitioner’s hearing request, informed the parties that I would hold a prehearing conference on June 20, 2024, and issued my Standing Order.

On June 20, 2024, I held a telephonic prehearing conference, the substance of which I summarized in my June 20, 2024 Order Following Prehearing Conference and Setting Schedule for Prehearing Submissions.  I advised Petitioner of her right to be represented by counsel, but Petitioner elected to proceed pro se.  In addition, Petitioner confirmed that she was only disputing the increased length of exclusion from the minimum five years to seven years.  She also confirmed that she was not disputing the imposition of the exclusion.  Further, I established the prehearing submission schedule.

At the conference, I also advised Petitioner that I do not have the authority to change the effective date of the exclusion because the regulations require the exclusion to take effect 20 days after the date on the exclusion notice.  42 C.F.R. § 1001.2002(b); see also 42 U.S.C. § 1320a-7(c)(1) (the 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 cannot disregard a regulation.  42 C.F.R. § 1005.4(c)(1).  I stated that the only issues I could decide in this case are whether the IG had a legitimate basis to impose an exclusion on Petitioner under section 1128(a)(4) of the Social Security Act and whether the increase in the length of the exclusion from five years to seven years is unreasonable.  42 C.F.R. § 1001.2007(a)(1)-(2).  However, because Petitioner already conceded that there is a legitimate basis for exclusion, the only question is whether the two-year increase in the exclusion’s length is unreasonable.

On July 17, 2024, the IG filed a prehearing brief (IG Br.) and ten proposed exhibits.  On August 28, 2024, Petitioner filed a brief (P. Br.).  On September 4, 2024, the IG filed a reply brief (IG Reply).

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II. Admission of Evidence

I admit all of the IG’s proposed exhibits because Petitioner did not object to any of them.  Standing Order ¶ 13; see 42 C.F.R. § 1005.8(c).

III. Decision on the Written Record

Neither party has witness testimony to present, and both parties indicated that an in-person hearing is unnecessary.  IG Br. at 6; P. Br. at 3.  Therefore, I issue this decision based on the written record.  Standing Order ¶ 16; see also 42 C.F.R. § 1005.6(b)(5).

IV. Issue

Whether the seven-year length of the exclusion imposed on Petitioner is unreasonable.  42 C.F.R. § 1001.2007(a)(1)(ii).

V. Jurisdiction

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

VI. Findings of Fact

1. Petitioner is a registered nurse.  IG Ex. 2 at 1; IG Ex. 3 at 1; IG Ex. 4 at 1.
2. On March 2, 2023, a grand jury empaneled by the 7th District Court (District Court), Smith County, Texas, returned three indictments charging Petitioner with diverting a controlled substance for personal use under Tex. Health & Safety Code § 481.1285(c).  The grand jury alleged that, on or about July 29, 2021, April 21, 2022, and July 20, 2022, Petitioner “did then and there knowingly convert to the defendant’s use or benefit a controlled substance, namely hydrocodone, to which the defendant had access by virtue of her profession as a registered nurse, and her employment at” three different health care facilities.  IG Ex. 2 at 1; IG Ex. 3 at; IG Ex. 4 at 1.
3. On March 2, 2023, the grand jury returned a fourth indictment charging Petitioner with tampering/fabricating physical evidence with the intent to impair under Tex. Penal Code § 37.09(c).  The grand jury alleged that, on or about July 20 2022, Petitioner “did then and there, knowing that an investigation was pending, namely drug diversion investigation or medication distribution and management related investigation, intentionally and knowingly alter or destroy or conceal a document or record, namely a medication count sheet with intent to impair its verity and legibility and availability as evidence in the investigation. . . . [a]nd . . . as

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3. evidence in any subsequent investigation or official proceeding related to the offense.”  IG Ex. 5 at 1.
4. On March 2, 2023, the grand jury returned a fifth indictment charging Petitioner with tampering/fabricating physical evidence with the intent to impair under Tex. Penal Code § 37.09(c).  The grand jury alleged that, on or about July 29 2021, Petitioner “did then and there, knowing that an investigation was pending, namely drug diversion investigation or medication distribution and management related investigation, intentionally and knowingly make and present and use a document or record, namely a medical order with knowledge of its falsity and with intent [to] affect the course and outcome of the investigation. . . . [a]nd . . . with intent to impair its verity and legibility and availability as evidence in any subsequent investigation or official proceeding related to the offense.”  IG Ex. 6 at 1.
5. On June 16, 2023, the District Court entered three orders of deferred adjudication.  IG Exs. 7-9.
   1. The first Order of Deferred Adjudication indicated that Petitioner had pleaded guilty to a felony offense under Tex. Health & Safety Code § 481.1285(c) for diverting a controlled substance for personal use, which took place on July 29, 2021.  The District Court ordered Petitioner to be placed on Community Supervision and to serve five years of deferred probation.  IG Ex. 7 at 1.
   2. The second Order of Deferred Adjudication indicated that Petitioner had pleaded guilty to a felony offense under Tex. Health & Safety Code § 481.1285(c) for diverting a controlled substance for personal use, which took place on April 21, 2022.  The District Court ordered Petitioner to be placed on Community Supervision and to serve five years of deferred probation.  IG Ex. 8 at 1.
   3. The third Order of Deferred Adjudication indicated that Petitioner had pleaded guilty to a felony offense under Tex. Penal Code § 37.09(c) for tampering/fabricating physical evidence with intent to impair an investigation, which took place on July 20, 2022.  The District Court ordered Petitioner to be placed on Community Supervision and to serve five years of deferred probation.  IG Ex. 9 at 1.
6. In a September 20, 2023 Final Notice of Exclusion, the Office of the Inspector General for the Texas Health and Human Services Commission (Texas OIG) excluded Petitioner from participating in the Texas Medicaid program and other federally funded health care programs.  IG Ex. 10 at 1-2.  The Final Notice of

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6. Exclusion cited both Texas and federal regulations as the legal basis for the exclusion.  IG Ex. 10 at 1.
7. The Texas OIG made June 16, 2023, the effective date for the exclusion because that “is the date of [Petitioner’s] conviction.”  IG Ex. 10 at 2.  Further, the Texas OIG imposed a six-year length of exclusion.  IG Ex. 10 at 2.

VII. Conclusions of Law and Analysis

1. Petitioner is subject to a mandatory exclusion for at least five years under 42 U.S.C. § 1320a-7(a)(4).

The Secretary of Health and Human Services (Secretary) must exclude an individual from participation in any federal health care program if that individual:

[H]as been convicted for an offense which occurred after August 21, 1996, under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

42 U.S.C. § 1320a-7(a)(4).  The regulations implementing this statute limit its application to health care practitioners and other individuals and entities in the health care field.   42 C.F.R. § 1001.101(d).

Relevant to this case:

[A]n individual or entity is considered to have been “convicted” of a criminal offense . . . 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)(4).

In the present case, the IG asserts, and Petitioner concedes, that Petitioner was convicted of a felony offense that requires exclusion under 42 U.S.C. § 1320a-7(a)(4).  IG Br. at 1-3; P. Br. at 1-2; see also Hearing Req. at 1 (Petitioner appealing the length of exclusion and the effective date of exclusion only); June 20, 2024 Order Following Prehearing Conference and Setting Schedule for Prehearing Submissions at 2 (Petitioner confirming that she is not appealing the imposition of an exclusion but only its length).  As stated in the factual findings above, my review of the record confirms that Petitioner, who is a registered nurse, received deferred adjudication after a guilty plea of a felony offense

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involving the unlawful distribution or dispensing of a controlled substance.  42 U.S.C. §§ 1320a-7(a)(4), (i)(4).  Therefore, Petitioner is subject to a mandatory exclusion for a minimum of five years.  42 U.S.C. § 1320a‑7(c)(3)(B).

2. The IG has proven that two aggravating factors exist in this case that support an increased length of exclusion beyond the five-year minimum.

The regulations state that anyone subject to a mandatory exclusion must be excluded for no less than five years.  42 C.F.R. § 1001.102(a).  The regulations provide a list of aggravating factors that may serve as the basis for lengthening the exclusion.  42 C.F.R. § 1001.102(a).

The IG asserts that two aggravating factors exist in this case to support the decision to lengthen Petitioner’s exclusion by two years.  As explained below, I conclude that the IG has proven the existence of these two aggravating factors.

a. The IG proved the existence of an aggravating factor under 42 C.F.R. § 1001.102(b)(8).

The IG asserts that Petitioner was convicted of another criminal offense in addition to the criminal offense that serves as the basis for exclusion.  IG Br. at 5.  The regulations provide the following as an aggravating factor:

The individual or entity has been convicted of other criminal offenses besides those that formed the basis for the exclusion.

42 C.F.R. § 1001.102(b)(8).

The record shows that Petitioner was convicted, as that term is defined in 42 U.S.C. §§ 1320a-7(i)(4), of a felony offense under Tex. Penal Code § 37.09(c) for tampering/fabricating physical evidence with intent to impair.  IG Ex. 9 at 1.  Therefore, the IG has met its burden of showing that this aggravating factor applies.

While not disputing the conviction for the evidence-tempering offense, Petitioner asserts that this conviction arose from the same incident that resulted in the conviction that serves as the basis for the exclusion.  P. Br. at 3; Hearing Req. at 1.  Because of this, Petitioner requested that her “exclusion time not be increased due to there being two charges.”  Hearing Req. at 1.

I conclude that the IG properly applied 42 C.F.R. § 1001.102(b)(8) to this case because this aggravating factor is intended to allow the IG to lengthen an exclusion when a second contemporaneous conviction occurs along with the conviction that is the basis for

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the exclusion.  When responding to public comments during the promulgation process for 42 C.F.R. § 1001.102(b)(8), the Secretary stated:

While the language set forth in these sections is permissive, it is specifically designed to address the issue of an individual’s or entity’s trustworthiness.  Thus, we are revising the language throughout part 1001 so that the factor will be relevant to the same conduct and circumstances that serves as the basis for the imposition of the OIG exclusion.  We believe that the revised language is fairer, while allowing the OIG to attain the intended goal of allowing an increased sanction only if the adverse action was related in some way to the original basis for the exclusion.  The intent of the revised language is to allow the OIG to increase the length of exclusion if an individual or entity was convicted of other offenses at the same time as he or she was convicted of the offense that served as the basis for the exclusion.  Inclusion of this aggravating factor will permit the OIG to increase a length of exclusion when an individual is convicted of Medicare fraud and any other offense, such as drug distribution or income tax evasion.  The aggravating factor will take into consideration separate and different types of convictions that occurred concurrently; we do not intend to use the basis of the OIG exclusion more than once as a factor in lengthening an exclusion.

63 Fed. Reg. 46676, 46680-81 (Sept. 2, 1998) (emphasis added).  This explanation is consistent with a plain reading of the text of the regulation.

Further, this explanation is consistent with the entire provision on aggravating factors.  There are already two other aggravating factors that include “a prior criminal . . . record,” and “ha[ving] previously been convicted of a criminal offense involving the same or similar circumstances.”  42 C.F.R. § 1001.102(b)(6), (7).  Therefore, the only criminal convictions left for 42 C.F.R. § 1001.102(b)(8) to cover are those that occur contemporaneously with the conviction that serves as the basis for the exclusion.  As a result, I reject Petitioner’s argument.

b. The IG proved the existence of an aggravating factor under 42 C.F.R. § 1001.102(b)(9).

The IG asserts that a state agency excluded Petitioner from the Medicaid program based on the same conviction that serves as the IG’s basis to exclude Petitioner from all federal healthcare programs.  IG Br. at 6.  The regulations provide that the following is an

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aggravating factor that may be considered as a basis for lengthening the period of exclusion:

The individual or entity has been the subject of any other adverse action by any Federal, State or local government agency or board if the adverse action is based on the same set of circumstances that serves as the basis for the imposition of the exclusion.

42 C.F.R. § 1001.102(b)(9).

The record shows that the Texas OIG excluded Petitioner from the Texas Medicaid program based on the same criminal conviction that serves as the basis for the IG’s exclusion.  IG Ex. 10.  Therefore, the IG has met its burden of showing that this aggravating factor applies.

Although Petitioner does not dispute that the Texas OIG excluded her from the Texas Medicaid program, Petitioner asserts that the Texas OIG exclusion is based on the IG’s exclusion.  Therefore, 42 C.F.R. § 1001.102(b)(9) does not apply.  P. Br. at 3; Hearing Req. at 1.

The IG replied to Petitioner’s argument as follows:

Petitioner’s Texas Medicaid exclusion notice clearly states that the exclusion was based on her conviction for Diverting Controlled Substances for Personal Use, the same conviction forming the basis for her exclusion pursuant to section 1128(a)(4) of the Act.  See I.G. Br. at 6 (citing I.G. Ex. 10 at 1, 4).  Moreover, as the I.G. previously noted, Petitioner’s Texas Medicaid exclusion, effective June 16, 2023, predates the I.G.’s exclusion, effective April 18, 2024. I.G. Exs. 1 at 1; 10 at 2.  Therefore, Petitioner’s Medicaid exclusion could not have been based on the I.G.’s exclusion.

IG Reply at 2-3; see also IG Br. at 6.

The IG is correct that the Texas OIG’s exclusion notice is dated September 20, 2023, but the IG’s exclusion notice is dated March 29, 2024.  IG Ex. 1 at 1; IG Ex. 10 at 1.  Therefore, there is no evidence to conclude that the Texas OIG exclusion was based on the IG’s exclusion.

However, it is fair to conclude that the Texas OIG excluded Petitioner based on the same federal law that mandates Petitioner’s exclusion from all federal healthcare programs.

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The Texas OIG stated in the exclusion notice that it was required to exclude Petitioner because “this conviction meets the criteria set forth in [Tex. Admin. Code § 371.1705(a)(3)-(5)] and [42 C.F.R. § 1001.101].”  IG Ex. 10 at 1.  A comparison of Tex. Admin. Code § 371.1705(a)(5) and 42 C.F.R. § 1001.101(d) shows that they are nearly identical, and, in turn, both closely track the text of 42 U.S.C. § 1320a-7(a)(4).  Despite this, the IG still proved that the basic elements for an aggravating factor under 42 C.F.R. § 1001.102(b)(9) exist.  See Roji Esha, DAB No. 3076 at 15-16 (2022).

3. Petitioner failed to prove that there are any mitigating factors present in this case.

If there are aggravating factors that justify increasing the length of exclusion to exceed five years, then the length of exclusion can be reduced if certain mitigating factors are present in a case.  42 C.F.R. § 1001.102(c).

Petitioner asserts the following in mitigation:

Although an emotional condition was not discussed at my criminal trial, I was under an abnormal amount of stress at the time of my infraction.  In 2020, my [young twin children] were diagnosed [with a significant health condition].  A few months later, they were diagnosed with [another significant health condition related to the first].  The stress was unbearable at times.  I am now under my doctor’s care for dealing with my stress and anxiety and feel better emotionally than I have since their diagnosis.

P. Br. at 4.  Unfortunately, Petitioner’s explanation above cannot serve as a mitigating factor.  The closest mitigating factor states:

The 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.

42 C.F.R. § 1001.102(c)(2).

Petitioner made clear that her emotional state, which was caused by the significant health challenges of her children, “was not discussed at my criminal trial.”  P. Br. at 4.  The record supports this assertion because there is no evidence that Petitioner’s deferred adjudication was based on a District Court finding that her emotional condition during the commission of her criminal offense reduced her culpability.

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For 42 C.F.R. § 1001.102(c)(2), the relevant inquiry is whether Petitioner has proven that the District Court determined that Petitioner’s condition reduced Petitioner’s criminal culpability.  Patel v. Shalala, 17 F. Supp. 2d 662, 667 (W.D. Ky. 1998) (“Plaintiff has not provided any citation to the record in the criminal proceeding where the court made any finding that plaintiff was less culpable for his crimes due to a dependence on alcohol or drugs.”).  Because Petitioner has not shown that the District Court made the relevant inquiry and decided Petitioner’s emotional condition reduced her culpability, I cannot consider Petitioner’s emotional state as a mitigating factor in this case.

4. The seven-year length of exclusion is not unreasonable based on the aggravating factors in this case.

When considering the length of exclusion, “[t]he evaluation does not rest on the specific number of aggravating or mitigating factors or any rigid formula for weighing those factors, but rather on a case-specific determination of the weight to be accorded each factor based on a qualitative assessment of the circumstances surrounding the factors in that case.”  Farzana Begum, M.D., DAB No. 2726 at 2 (2016).  Ultimately, I must decide whether the seven-year exclusion is unreasonable (i.e., is it within a reasonable range for the length of exclusion based on the relevant factors) based on my assessment of aggravating and mitigating factors.  42 C.F.R. § 1001.2007(a)(1)(ii); 57 Fed. Reg. 3298, 3321 (Jan. 29, 1992).

There is no doubt that the IG was justified in providing a significant increase in the length of exclusion based on 42 C.F.R. § 1001.102(b)(8).  In addition to diverting a controlled substance (an opioid) for her own use, Petitioner admitted to destroying a medication count sheet to cover up her actions and obstruct any investigation.  IG Ex. 5 at 1; IG Ex. 9 at 1.  This action goes directly to Petitioner’s trustworthiness because she not only attempted to obstruct an investigation, but she destroyed medical documentation.  The destruction of medical documentation hampers the proper functioning of the health care system and may harm patients.  The destruction of evidence indicates a dishonest act.

Petitioner asserts that she only diverted hydrocodone pills on two occasions and, in both instances, took the pills “from the destruction bin.”  P. Br. at 4.  Petitioner also states that she merely “threw away the identifying paper that was attached to” the hydrocodone pill bottle in the destruction bin.  P. Br. at 3.  Given the limited scope of Petitioner’s actions, the IG appears to have only increased the length of the exclusion in a modest way.  I conclude, accepting Petitioner’s position as true, that this aggravating factor supports the two additional years of exclusion.

I conclude also that the aggravating factor at 42 C.F.R. § 1001.102(b)(9) supports the extension of the length of exclusion beyond five years.  Esha, DAB No. 3076 at 16, 23-24 (2022) (reaffirming that a Medicaid exclusion, based on the same criminal conviction

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that serves as the basis for an IG exclusion, is additional evidence of untrustworthiness).  However, as explained above, the Texas OIG’s exclusion was mandatory in nature and involved the Texas OIG applying the same law and facts as the IG did to exclude Petitioner.  Given this scenario, I conclude that this aggravating factor is weak and only provides some support for the additional two years of exclusion.

VIII. Conclusion

I affirm the IG’s determination to exclude Petitioner for seven years from participating in all federal health care programs.