Lili Eileen Mahan, DAB CR6833 (2026)

DECISION

Respondent, the Acting Inspector General for the United States Department of Health and Human Services (the IG), excluded Petitioner, Lili Eileen Mahan, from participation in Medicare, Medicaid, and all other federal health care programs for five years.  Petitioner challenges the IG’s exclusion action.  For the reasons stated below, I affirm the IG’s exclusion determination.

I.  Procedural History

On February 28, 2025, the IG notified Petitioner of her exclusion from participation in Medicare, Medicaid, and all federal health programs under sections 1128(a)(1) and (a)(3) of the Social Security Act (42 U.S.C. §§ 1320a-7(a)(1), (a)(3)) for at least five years.  IG Ex. 1 at 1.  The IG explained she took this action based on Petitioner’s conviction in a Kansas state court (state court) for a criminal offense that:  (1) related to the delivery of an item or service under the Medicare or a state health care program, including the performance of management or administrative services relating to the delivery of items or services under any such program; and (2) 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, or with respect to any act or omission in a health care

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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.  Id. at 1.

Petitioner timely sought review by an administrative law judge (ALJ) in the Civil Remedies Division, resulting in my designation to hear and decide this case.  I held a pre-hearing conference by telephone with the parties on July 23, 2025, the substance of which is summarized in my July 24, 2025 Order Summarizing Pre-hearing Conference and Setting Briefing Schedule (Summary Order).  See 42 C.F.R. § 1005.6.  I directed the parties to file pre-hearing briefs and identify witnesses and exhibits in support of their arguments.  Summary Order at 5-6.

The IG filed a brief (IG Br.) and five proposed exhibits (IG Exs. 1-5).  Petitioner filed a short-form brief (P. Br.) with six proposed exhibits (P. Exs. 1-6).1  Petitioner identified herself as a witness and provided her written direct testimony at Petitioner Exhibit 6.  She also identified her father, Gene Frost, as a witness, but did not provide his written direct testimony.  P. Br. at 3.  The IG filed a reply brief (IG Reply) and objections to Petitioner’s exhibits (IG Objections).

II.  Admission of Exhibits and Decision on the Record

Petitioner did not object to the IG’s proposed exhibits.  The IG objects to all of Petitioner’s exhibits except Petitioner Exhibit 2.  She observes Petitioner Exhibits 1 and 3 are duplicative of IG Exhibits 2 and 3.  IG Objections at 1-2.  I sustain this objection.  The IG objects to Petitioner Exhibits 4 and 5 as irrelevant.  Id. at 2.  I overrule these objections to address the IG’s arguments concerning their relevance in the body of this decision.

The IG also objects to Petitioner’s written testimony at Petitioner Exhibit 6 and her proffer of her father as a witness.  She objects to the form of Petitioner’s written testimony, noting it is not offered as a declaration.  Id. at 2-3.  The IG otherwise argues Petitioner’s testimony and her father’s proposed testimony are irrelevant.  Id. at 2-4.  I overrule the IG’s objection to form; Petitioner’s failure to declare her statement to be true under penalty of perjury would only matter if I were to rely on her statement to establish facts germane to the outcome of this case.  Instead, I take Petitioner’s statement as argument concerning the propriety of her exclusion.

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I otherwise overrule the IG’s objections to address her arguments concerning relevance in the body of this decision.  Accordingly, IG Exhibits 1 through 5 and Petitioner Exhibits 2, 4, 5, and 6 are entered into the record.

Neither party has requested cross-examination of a witness identified by the opposing party.  Accordingly, I decide this case on the briefs submitted and the exhibits of record.  Civ. Remedies Div. P. § 19(d); Summary Order at 10.

III.  Issue

Whether the IG had a basis to exclude Petitioner from participating in Medicare, Medicaid, and all other federal health care programs for five years under 42 U.S.C. § 1320a-7(a)(1) or 42 U.S.C. § 1320a-7(a)(3).  See 42 C.F.R. § 1001.2007(a)(1).

IV.  Jurisdiction

I have jurisdiction to hear and decide this case.  42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a).

V.  Applicable Law

The Secretary of Health and Human Services must exclude2 from participation in Medicare, Medicaid, and all federal health care programs “[a]ny 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.”  Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)); 42 C.F.R. § 1001.101(a).

The Act similarly requires to Secretary to exclude “[a]ny 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 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); 42 C.F.R. § 1001.101(c)(1).

An individual has been “convicted” of a criminal offense within the meaning of the Act when:  (1) a judgment of conviction has been entered against him or her in a federal, state, or local court whether an appeal is pending or the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no contest is

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accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.  42 U.S.C. § 1320a-7(i).  The Act does not distinguish between misdemeanor and felony convictions.  There may be no collateral attack of the conviction that provides the basis of the exclusion.  42 C.F.R. § 1001.2007(d).

The Act requires a minimum exclusion period of five years for exclusions imposed under section 1128(a) of the Act (42 U.S.C. § 1320a-7(a)).  42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. § 1001.102(a).  Exclusion is effective 20 days from the date of the notice of exclusion.  42 C.F.R. § 1001.2002(b).  The IG may extend the period of exclusion based on the presence of specified aggravating factors.  42 C.F.R. § 1001.102(b).  If the IG applies aggravating factors to extend an exclusion period beyond five years, the regulations identify specific mitigating factors she must consider to reduce the period of exclusion.  42 C.F.R. § 1001.102(c).

Section 1128(f) of the Act provides Petitioner with rights to an administrative hearing and judicial review of the final action of the Secretary.  42 U.S.C. § 1320a-7(f).  The Secretary’s regulations implement the right to a hearing before an ALJ at 42 C.F.R. §§ 1001.2007(a) and 1005.2.  The rights of both the sanctioned party and the IG to participate in a hearing are set forth at 42 C.F.R. § 1005.3.  The standard of proof is a preponderance of the evidence.  42 C.F.R. § 1001.2007(c).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors, while the IG bears the burden on all other issues.  42 C.F.R. §§ 1001.2007(c), 1005.15(b), (c).

The standard of proof is a preponderance of the evidence.  42 C.F.R. § 1001.2007(c).  Petitioner bears the burden of proof and the burden of persuasion on any affirmative defenses or mitigating factors, while the IG bears the burden on all other issues.  42 C.F.R. § 1005.15(b).

VI.  Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold and followed by pertinent findings of fact and analysis.

1. Relevant Facts

On April 16, 2024, the Kansas Attorney General filed an amended complaint charging Petitioner with one felony count of Possession of Oxycodone and one misdemeanor count of Medicaid Fraud.  IG Ex. 3.  The Attorney General accused Petitioner of knowingly possessing an opiate or narcotic drug, or analog thereof, in violation of state law.  Id. at 1.  He also charged Petitioner with one count of executing or attempting to execute “a

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scheme or artifice to defraud the Medicaid program” by means of false claim, statement, or representation.  Id. at 2.

On April 19, 2024, Petitioner executed a written agreement with the state to plead guilty to both counts.  IG Ex. 4.  Petitioner made certain stipulations to effectuate her plea.  She admitted to stealing narcotic drugs – specifically, 113 schedule-controlled pills – from Medicaid beneficiaries who resided at the adult care home where she worked as a registered nurse in October 2022.  Id. at 8-9.  She further admitted she knew the narcotics she stole were paid for by the Medicaid program.  Id. at 8.  Petitioner admitted her actions from approximately October 17 through October 24, 2022 constituted an intentional “scheme or artifice to defraud the Medicaid program or any contractor or subcontractor thereof[.]”  Id. at 9.

The state court accepted Petitioner’s guilty plea on April 23, 2024 and entered judgment against her on August 9, 2024.  IG Ex. 5 at 1-2.  The state court imposed a sentence of 18 months’ probation to include drug treatment.  Id. at 4.  It also ordered Petitioner to pay $893 in court fees but did not impose an order of restitution.  Id. 

2. The IG has established a basis to exclude Petitioner pursuant to section 1128(a)(1) of the Act.

Section 1128(a)(1) of the Act mandates exclusion from participation in Medicare, Medicaid, and all federal health care programs where an individual has been convicted, under federal or state law, of a criminal offense related to the delivery of an item or service under Medicare or any state health care program.  42 U.S.C. § 1320a-7(a)(1); 42 C.F.R. § 1001.101(a).  The IG has established these elements by a preponderance of the evidence.

1. Petitioner was convicted of a criminal offense within the meaning of the Act.

Petitioner concedes her conviction of a criminal offense.  P. Br. at 1.  The evidence of record confirms the state court accepted Petitioner’s guilty plea and entered judgment against her.  IG Exs. 4, 5. The IG has established Petitioner was convicted of a criminal offense within the meaning of the Act.  Act § 1128(i)(1),(2) (42 U.S.C. § 1320a-7(i)(1),(2)).

2. Petitioner’s criminal offense is related to the delivery of an item or service under Medicare or a state health care program within the meaning of section 1128(a)(1) of the Act.

The Act requires exclusion from participation in federal programs for convictions related to the delivery of an item or service under Medicare or a state health care program.  See

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42 U.S.C. § 1320a-7(a)(1).  The term “related to” means there must be a nexus or common-sense connection.  See Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase “related 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); see also Quayum v. U.S. Dep’t of Health and Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y. 1998).

Petitioner does not explicitly contest the relation of her offenses of conviction to the delivery of an item or service in healthcare.  P. Br. at 1.  She does point out she pleaded only to “simple drug possession” for having “prescription medication in [her] purse without being in the bottle.”  Id. at 3.  Presumably, Petitioner believes her conviction for possession does not relate to the delivery of an item or service in healthcare.

The notion that a conviction for mere possession of a controlled substance cannot demonstrate relatedness to the delivery of a healthcare item or service appears reasonable but is ultimately unsound.  In determining relatedness, I am not limited to the offense of conviction.  Summit S. Shah, M.D., DAB No. 2836 at 7 (2017) (observing the Board “has long held, however, that an ALJ is free to look beyond the narrow constructs of a state’s criminal statutes.”); Berton Siegel, D.O., DAB No. 1467 at 4 (1994) (“[i]t is not the labeling of the offense under the state statute which determines whether the offense is program-related”).

Here, the admissions Petitioner made as part of her plea agreement demonstrate her offenses of conviction related to the delivery of a health care item or service under the Medicaid program.  She admitted to stealing narcotic drugs paid for by the Medicaid program and intended for Medicaid beneficiaries.  IG Ex. 4 at 8-9.  She also admitted she did so while working as a nurse in an adult care home that she knew received Medicaid funding.  Id. at 8.  While Petitioner may have been charged with and convicted of possession of a controlled substance, her actual offense conduct plainly related to the delivery of a health care item – 113 oxycodone pills – purchased by the Medicaid program and intended to be delivered to Medicaid beneficiaries.  She used her position as a nurse working in an adult care facility to steal these medications, which prevented their delivery to their intended patients.

However charged, this conduct has consistently been found to be related to the delivery of a healthcare item or service.  See Kevin J. Bowers, DAB No. 2143 at 3-4 (2008) (holding a pharmacist’s theft of drugs for personal use occurred in connection to the delivery of a health care item or service because the drugs were health care items intended for delivery to individuals for health care purposes, the theft interfered with that delivery, and because the pharmacist was only able to do so by virtue of his professional duties delivering health care items) (citing Erik D. DeSimone, R.Ph., DAB No. 1932

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(2004); Andrew D. Goddard, DAB No. 2032 (2006)).3  Petitioner’s admissions to resolve the criminal actions against her establish beyond a preponderance of the evidence that she was convicted of a criminal offense related to the delivery of an item or service in healthcare to the Kansas Medicaid program.

3. The IG has established a basis to exclude Petitioner pursuant to section 1128(a)(3) of the Act.

My finding that the IG has established a basis to exclude Petitioner under section 1128(a)(1) of the Act is sufficient to justify the minimum mandatory exclusion period in this case.  I nevertheless reach this issue because Petitioner’s arguments focus primarily on the fact that she was not subject to a felony fraud conviction and therefore does not believe her exclusion under section 1128(a)(3) of the Act is appropriate.  P. Br. at 2.

1. Petitioner was convicted under federal or state law of a felony criminal offense that occurred after August 21, 1996.

Petitioner does not dispute her conviction of an offense committed after August 21, 1996.  P. Br. at 1.  The record shows beyond dispute that her offenses of conviction included a one felony count of Possession of Oxycodone for conduct occurring after August 21, 1996.  IG Ex. 3 at 1; IG Ex. 5 at 2.  The IG has established this element by a preponderance of the evidence.

2. Petitioner’s criminal offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct within the meaning of section 1128(a)(3) of the Act.

The Act requires Petitioner to be excluded from participation in federal health care programs if she was convicted of a felony offense related to “fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.”  42

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U.S.C. § 1320a-7(a)(3).  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 “related 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 correctly asserts she could not be excluded for a misdemeanor fraud offense under this provision of the Act.  P. Br. at 3.  She nevertheless cannot prevail.  Her confusion is understandable given the unusual circumstances of her plea and conviction.  Here, the state of Kansas charged her with a felony possession offense and a misdemeanor Medicaid fraud offense.  IG Ex. 3 at 1-2.  It would be reasonable to assume pleading to the fraud offense as a misdemeanor would preclude exclusion under section 1128(a)(3) of the Act, which requires a conviction for a felony offense.  However, Petitioner pleaded to both offenses of conviction in one plea agreement containing one set of stipulations.  IG Ex. 4 at 7-9.  Her admissions in that document apply to both charges.  Petitioner’s conviction for felony possession of Oxycodone resulted from her admissions that she stole the drugs she possessed and did so while working as a nurse in a health care facility.  Id.  She cannot detach these admissions and ascribe them to only one offense of conviction.  Because her admissions establish Petitioner stole the drugs she possessed, they also establish Petitioner’s felony possession offense related to theft within the meaning of section 1128(a)(3) of the Act.

3. Petitioner’s criminal offense was committed in connection with the delivery of a health care item or service.

To establish a basis for Petitioner’s exclusion the IG must establish she committed a felony offense “in connection with the delivery of a health care item or service[.]”  42 U.S.C. § 1320a-7(a)(3).  The phrase “in connection with” requires only a “common sense connection” between the circumstances of the offense and the delivery of a health care item or service.  Harkonen, DAB No. 2485 at 7.  The evidence of record establishes Petitioner’s felony possession offense occurred in connection with the delivery of a health care item or service.  To resolve the felony possession charge against her, Petitioner admitted she stole the drugs she possessed while on duty as a nurse in an adult care facility.  IG Ex. 4 at 8-9.  She also admitted she knew the narcotic drugs she stole were paid for by the Medicaid program and intended for Medicaid beneficiaries.  Id.  Petitioner could not have stolen the drugs for which she received a felony offense conviction but for her occupation as a nurse and her employment in a health care facility.  Her admissions establish a clear and common-sense connection between Petitioner’s criminal conduct and the delivery of a health care item or service.

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4. Petitioner must be excluded for a minimum of five years; the period of exclusion is therefore reasonable as a matter of law.

For the foregoing reasons, I conclude a basis exists to exclude Petitioner under 42 U.S.C. §§ 1320a-7(a)(1) and (a)(3).  Under either provision, the Act requires Petitioner’s exclusion for a minimum period of five years.  42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).  Neither I nor the IG have the discretion to impose a lesser period of exclusion.

5. The IG was required to exclude Petitioner under the Act’s mandatory exclusion authority.

Petitioner contends the IG should have considered alternatives to her exclusion, citing guidance from the IG governing the use of alternative remedies to exclusion.  P. Ex. 6 at 4-8.  Petitioner’s claim is without merit because the IG can only opt to use such remedies in lieu of permissive exclusions arising under section 1128(b) of the Act.  See 42 U.S.C. § 1320a-7(b).  But in this case, Petitioner’s exclusion arose under section 1128(a) of the Act.  In these cases, the IG has no authority to consider alternative remedies but is instead required by Congress to exclude any individual with a qualifying conviction for at least five years.  See Gregory J. Salko, M.D., DAB No. 2437 at 4 (2012), quoting Timothy Wayne Hensley, DAB No. 2044 (2006) (“[I]f an offense falls under the mandatory exclusion statute, ‘courts have repeatedly held that the I.G. is then required to impose a mandatory exclusion even if an individual’s conduct also falls within the scope of a permissive exclusion provision.’”).  As I have explained, the IG has established Petitioner’s offenses of conviction require her exclusion under both sections 1128(a)(1) and (a)(3) of the Act.  The IG could not consider alternative remedies available to her for offenses that fall within her permissive exclusion authority.

6. Petitioner’s remaining arguments seek equitable relief I cannot provide.

Petitioner sets forth several equitable arguments with supporting documents to seek overturning her exclusion.  She points out she successfully completed the terms of her sentence, including the completion of drug rehabilitation treatment and the payment of all costs and fines.  P. Br. at 2.  She contends her exclusion is a second punishment for the same offense that amounts to a violation of the Double Jeopardy clause of the Fifth Amendment to the U.S. Constitution.  P. Br. at 2; P. Ex. 6 at 2.  She cites profound and severe personal circumstances that render her exclusion a disproportionate punishment.  P. Ex. 6 at 2-3.  She also relies on her father’s testimony to confirm her successful rehabilitation and current financial hardship.  P. Br. at 3.

I am deeply sympathetic to Petitioner’s plight, particularly as it concerns her child’s health issues.  I also recognize the offenses to which she pleaded seem outsized in comparison to her actual conduct, which the state court realized warranted treatment and

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rehabilitation, and which did not even result in the imposition of restitution, despite the state’s somewhat absurd characterization of her offense as a fraud scheme.  Given her successful efforts to rehabilitate and provide for her family, I also do not believe Petitioner poses a risk to the integrity of the Medicare or Medicaid programs such that her exclusion for five years is necessary.  Unfortunately, whatever my views, I have no authority to overturn Petitioner’s exclusion based upon equitable considerations, no matter how compelling.  Matthew J. Girardy, DMD, DAB No. 2987 at 7 (2020) (citation omitted).

VII.  Conclusion

For the foregoing reasons, I conclude the IG had a basis to exclude Petitioner from participation in Medicare, Medicaid, and all federal health care programs for five years pursuant to sections 1128(a)(1) and (a)(3) of the Act.