Tammie Lynn Illg, DAB CR6561 (2024)

DECISION

The Inspector General (IG) of the United States Department of Health and Human Services excluded Petitioner, Tammie Lynn Illg, a nurse, from participation in Medicare, Medicaid, and all other federal health care programs based on her conviction of a felony offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service.  For the reasons discussed below, I conclude that the IG has a basis for excluding Petitioner, and an exclusion for the minimum period of five years is mandatory pursuant to section 1128(c)(3)(B) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(c)(3)(B)).

I.    Background

In a letter dated June 28, 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 five years, effective 20 days from the date of the letter.  IG Ex. 1 at 1.  The IG explained that Petitioner’s exclusion was based on her “felony conviction . . . related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct, in connection with the delivery of a health

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care item or service, or with respect to any act or omission in a health care program (other than Medicare and a State health care program) operated by, or financed in whole or in part, by any Federal, State or local government agency.”  IG Ex. 1 at 1; see 42 U.S.C. § 1320a-7(a)(3).  The IG explained that she had excluded Petitioner pursuant to section 1128(a)(3) of the Act, which mandates the exclusion of an individual who is convicted of a criminal offense relating to, inter alia, fraud or theft in connection with the delivery of a health care item or service.  IG Ex. 1 at 1; see 42 U.S.C. § 1320a-7(a)(3).  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).

Petitioner, who is pro se, filed a request for an administrative law judge (ALJ) hearing on July 8, 2024.  Thereafter, the Civil Remedies Division issued my standing pre-hearing order (Pre-Hearing Order), and on July 30, 2024, pursuant to 42 C.F.R. § 1005.6, I presided over a telephonic pre-hearing conference.  That same day, I issued an order in which I established a schedule for the filing of briefs and documentary evidence.

Pursuant to these orders, the IG filed a brief (IG Br.) and four proposed exhibits (IG Exs. 1-4).  Petitioner filed a short-form brief along with an unsworn personal statement.  Petitioner also submitted proposed exhibits that were duplicative of the IG’s proposed exhibits.  Compare IG Exs. 1 (Notice of Exclusion); 2 (Trial Information); 3 (Waiver of Rights and Written Plea of Guilty); 4 (Judgment and Sentence) with DAB E-File Docket Entry Nos. 10, 11, 12, 14.  Additionally, Petitioner submitted a copy of her probation agreement.  DAB E-File Docket Entry No. 13.  However, the terms of Petitioner’s probation are irrelevant to the question of whether she has been convicted of a felony offense that mandates exclusion.  See 42 C.F.R. § 1005.17(c) (“The ALJ must exclude irrelevant or immaterial evidence.”).  Petitioner also submitted character statements from a former nurse colleague and a childhood friend with whom she continues to maintain a friendship.  DAB Docket Entry Nos. 16 and 17.  I note that character evidence is irrelevant and immaterial to the basis for the exclusion and the length of the exclusion.  See 42 U.S.C. § 1320a-7(a)(3) (mandating exclusion when an individual has a conviction for a felony offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service); 42 C.F.R. § 1005.17(c) (requiring the exclusion of irrelevant or immaterial evidence).  Because Petitioner’s proposed exhibits are redundant of the IG’s proposed exhibits and/or are irrelevant and immaterial to the issue before me, I do not admit Petitioner’s proposed exhibits into the evidentiary record.  Although Petitioner’s unsworn personal statement submitted as DAB E-File Docket Entry No. 18 lacks any evidentiary value, I consider it to be an extension of her informal brief and have considered that submission.  I admit IG Exhibits 1-4 into the evidentiary record.

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Neither party offered witnesses, and the parties agree that an in-person hearing is unnecessary.  IG Br.; P. Br.1  I will decide this case on the written submissions and documentary evidence.  See Pre‑Hearing Order § 15; Lena Lasher, DAB No. 2800 at 4 (2017) (discussing that when neither party submits written direct testimony as directed, “no purpose would be served by holding an in-person hearing . . . .”), aff’d, Lasher v. Dep’t of Health & Human Servs., 369 F. Supp. 3d 243 (D.D.C. 2019).

II.    Issue

Whether there is a basis for exclusion pursuant to 42 U.S.C. § 1320a-7(a)(3).  See 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 Analysis2

1. Petitioner was convicted of the felony offense of “Prohibited Act – Prescription Drug Diversion Violation (Schedule I, II, III) Obtained by Deceit” in violation of Iowa Code §§ 155A.23(1)(a), 155A.24.
2. Petitioner pleaded guilty to obtaining an oxycodone tablet that had been prescribed to a skilled nursing facility resident by substituting a Tylenol tablet for the oxycodone tablet when she administered the medication to the resident.
3. Petitioner did not dispense the controlled substance to the resident for whom the prescription had been ordered, but rather, converted the controlled substance for her personal use.
4. Petitioner admitted that she obtained a prescription drug or obtained the administration of a prescription drug by fraud, deceit, misrepresentation or subterfuge.

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5. Petitioner’s offense of “Prohibited Act – Prescription Drug Diversion Violation (Schedule I, II, III) Obtained by Deceit” related to fraud or theft.
6. Petitioner’s offense of “Prohibited Act – Prescription Drug Diversion Violation (Schedule I, II, III) Obtained by Deceit” was committed in connection with the delivery of a health care item or service, namely, her administration of medication as the nurse of a facility resident.
7. Pursuant to section 1128(a)(3) of the Act, 42 U.S.C. § 1320a-7(a)(3), Petitioner’s felony conviction mandates exclusion from all federal health care programs for a minimum of five years.

The Act requires the exclusion of any individual or entity from participation in Medicare, Medicaid, and all federal health programs based on four types of criminal convictions.3  42 U.S.C. § 1320a-7(a).  In this case, the IG relied on section 1320a-7(a)(3) as the legal basis to exclude Petitioner, which states: 

(a) Mandatory exclusion

The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1320a–7b(f) of this title): 

*        *        *

(3) Felony conviction relating to health care fraud

Any individual or entity that 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 (other than those specifically described in paragraph (1)) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense

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consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct. 

42 U.S.C. § 1320a-7(a)(3). 

The IG argues that she properly excluded Petitioner from all federal health care programs based on her conviction for an offense “related to fraud or theft for purposes of section 1128(a)(3) of the Act because Petitioner essentially stole Oxycodone that was intended for a patient.”  IG Br. at 3-4.  As discussed below, the evidence demonstrates that Petitioner was convicted of a felony offense that mandates exclusion from all federal health care programs. 

Petitioner was employed as a nurse at a skilled nursing facility.  IG Ex. 3 at 3-4.  On March 21, 2023, Petitioner, with the assistance of counsel, agreed to enter a plea of guilty to Count One of an information charging that she had committed the Class C felony offense of “Prohibited Act- Prescription Drug Diversion Violation (Schedule I, II, III) Obtained by Deceit,” in violation of Iowa Code sections 155A.23(1)(a)(1), 155A.24(1)(a), and 124.401(1)(c)(9).  IG Ex. 3 at 3; see IG Ex. 2.  Petitioner agreed to the following description of her offense conduct: 

This crime was committed by me on or about . . . October 3[rd] or 4[th] , 2022, by doing the following:  That in Palo Alto County, at the West Bend Care and Rehabilitation Center on or about October 3[rd] and or October 4th, 2022, I obtained a prescription drug or obtained the administration of a prescription drug by fraud, deceit, misrepresentation or subterfuge and said drug being a controlled substance as defined by Iowa Code Section 124.401(1)(c), to wit:  an Oxycodone tablet prescribed for M.N., a resident at the West Bend Care and Rehabilitation Center.  I substituted a Tylenol tablet for the Oxycodone prescription drug and delivered it to West Bend Care and Rehabilitation Center resident, M.N. 

The first time I obtained controlled substances by fraud, deceit, misrepresentation or subterfuge was July 28[th], 2012 when I diverted 14 Hydrocodone pills and my nursing license was suspended until I completed substance abuse treatment. 

IG Ex. 3 at 3-4.  Petitioner acknowledged that she was pleading guilty to a Class C felony offense that was punishable by up to 10 years of imprisonment.  IG Ex. 3 at 3; see, e.g., 18 U.S.C. § 3559 (addressing that a felony offense is a crime that is punishable by more than one-year of imprisonment). 

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Petitioner entered a guilty plea to the aforementioned offense on June 16, 2023, and a state judge accepted the guilty plea and imposed judgment that same day.   IG Ex. 4.  

Petitioner does not dispute that she has a felony conviction relating to fraud or theft that was committed in connection with the delivery of a health care item or service, and I conclude that the evidence supports that Petitioner has a felony conviction that, at a minimum, relates to fraud or theft in connection with her delivery of nursing services to a facility resident, as contemplated by section 1128(a)(3).  See P. Br. (“The Petitioner acknowledges that her conviction . . . meets the definition of a felony offense under section 1128(i) of the Act . . . [and] does not dispute that this conviction falls within the scope of section 1128(a)(3), as it involved deceit in obtaining a controlled substance.”); see also IG Exs. 3 at 3-4 (acknowledgment that she obtained a controlled substance by fraud, deceit, misrepresentation, or subterfuge); 4 at 1-2 (state judge’s acceptance of guilty plea and imposition of judgment for the felony offense of “Prohibited Act – Prescription Drug Diversion Violation (Schedule I, II, III) Obtained by Deceit”). 

Petitioner’s felony offense, which involved substituting a Tylenol pill for a controlled substance that had been prescribed to a resident under her care, was committed in connection with the delivery of a health care item or service.  An exclusion is mandated when the conviction is for an offense “in connection with the delivery of a health care item or service,” meaning that a criminal offense warranting exclusion is not limited only to the actual delivery or provision of such an item or service.  42 U.S.C. § 1320a-7(a)(3).  The Departmental Appeals Board (DAB) has explained that an ALJ does not need to limit review to the elements of an offense, but may consider the extrinsic evidence surrounding the conviction to determine whether it is “relating to” fraud and done “in connection with” the delivery of a health care item or service.  See Narendra M. Patel, M.D., DAB No. 1736 at 6 (2000), aff’d, Patel v. Thompson, 319 F.3d 1317 (11th Cir. 2003).  The DAB has also explained that there should be a “common sense connection” between the underlying crime and the delivery of a health care item or service in order to meet the statutory basis for exclusion.  Erik D. DeSimone, R.Ph., DAB No. 1932 at 5 (2004).  

As captured by the self-explanatory caption of Petitioner’s offense, “Prohibited Act – Prescription Drug Diversion Violation (Schedule I, II, II) Obtained by Deceit,” Petitioner fraudulently obtained a controlled substance by abusing her position as a nurse when she misappropriated Oxycodone for herself by administering Tylenol, instead of Oxycodone, to a facility resident.  IG Ex. 3 at 3-4.  Petitioner’s offense was undoubtedly “related to” fraud or theft and was committed “in connection with” the delivery of health care items or services to patients.  See 42 U.S.C. § 1320a-7(a)(3). 

Although Petitioner concedes that “her offense occurred within the context of her employment as a nurse and involved a controlled substance prescribed for a patient,” she argues that her “improper” actions “were not directly connected to the broader delivery of

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health care services in a manner that would typically trigger the harshest penalties under section 1128(a)(3).”  P. Br. at 4.  Petitioner is mistaken.  As I explained at the July 30, 2024 pre-hearing conference, the only question before me is whether exclusion pursuant to 1128(a)(3) is mandated.  See July 30, 2024 Order at 1.  At that time, “I explained that when the evidence supports an exclusion under section 1128(a)(3), then the mandatory minimum length of the exclusion is five years and I have no authority to reduce the length of the exclusion.”  July 30, 2024 Order at 1 (citing 42 U.S.C. § 1320a-7(c)(3)(B)).  Although Petitioner argues that mitigating factors warrant a shorter period of exclusion, mitigating factors are not for application when the exclusion is for the mandatory minimum length; pursuant to 42 C.F.R. § 1001.102(c), I may not consider evidence of mitigation unless one or more of the enumerated aggravating factors listed in 42 C.F.R. § 1001.102(b) justifies an exclusion of longer than five years.  Because the IG did not lengthen the exclusion beyond the minimum period of five years, I am not empowered to consider any evidence in mitigation. 

Congress has determined that an individual who is subject to a mandatory exclusion must be excluded from federal health care programs for no less than five years.  42 U.S.C. § 1320a-7(c)(3)(B).  Congress did not afford either the IG or an ALJ the discretion to impose an exclusion of a shorter duration.  42 U.S.C. § 1320a‑7(c)(3)(B).  Because I uphold the IG’s imposition of an exclusion, I cannot shorten the length of the exclusion to a period of less than five years.  Simply stated, I lack the authority to “[f]ind invalid or ---refuse to follow Federal statutes or regulations.”  42 C.F.R. § 1005.4(c)(1).  The IG had a legitimate basis to impose an exclusion pursuant to 42 U.S.C. § 1320a-7(a)(3), and therefore, exclusion for a minimum period of five years is mandated pursuant to 42 U.S.C. § 1320a-7(c)(3)(B).  

Congress has determined that a health care provider who commits felony fraud or theft in connection with providing health care services must be excluded from federal health care programs.  42 U.S.C. § 1320a-7(a)(3).  Petitioner has not identified any legal error in the IG’s determination, and I affirm Petitioner’s exclusion for a minimum period of five years. 

8. The effective date of Petitioner’s exclusion is July 18, 2024.

The effective date of the exclusion, July 18, 2024, is 20 days after the date of the IG’s June 28, 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). 

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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 July 18, 2024.