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CASE | DECISION | JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
IN THE CASE OF  


SUBJECT:

Charles Kaiser, a/k/a Charles Benjamin Kaiser, III,

Petitioner,

DATE: September 7, 2004
                                          
             - v -

 

The Inspector General

 

Docket No. C-04-225
Decision No. CR1209
DECISION
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DECISION

Charles Kaiser, a/k/a Charles Benjamin Kaiser, III, (Petitioner), is excluded from participation in Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(a)(2) of the Social Security Act (the Act) (42 U.S.C. 1320a-7(a)(2)), effective January 20, 2004, based upon his conviction of an offense related to the neglect or abuse of a patient in connection with the delivery of a health care item or service. There is a proper basis for exclusion. Petitioner's exclusion for five years is mandatory pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. 1320a-7(c)(3)(B)).

I. PROCEDURAL HISTORY

The Inspector General (I.G.) notified Petitioner by letter dated December 31, 2003, that he was being excluded from participation in Medicare, Medicaid and all federal health care programs for five years pursuant to section 1128(a)(2) of the Act. The I.G. cites as the basis for Petitioner's exclusion his conviction by a Missouri court of a "criminal offense related to neglect or abuse of patients in connection with the delivery of a health care item or service." I.G. Exhibit (I.G. Ex.) 1.

Petitioner requested a hearing by letter dated February 26, 2004. I.G. Ex. 2. The request for hearing was assigned to me for hearing and decision on March 22, 2004. On April 28, 2004, I convened a telephonic prehearing conference, the substance of which is recorded in my Order of April 30, 2004. Petitioner, an attorney, was advised during the conference of his right to representation but he elected to proceed pro se. The parties agreed during the conference that there are no material facts in dispute and that the matter could be submitted on motion for summary judgment. Pursuant to the briefing schedule established during the prehearing conference, the I.G. filed a motion for summary affirmance (1) and supporting brief (I.G. Brief) on May 28, 2004, with I.G. exhibits 1 through 6. Petitioner filed his response (P. Brief) on June 22, 2004, with a copy of jury instruction number 10 from his criminal trial. (2) P. Brief at 5. Petitioner also filed on June 22, 2004, objections to I.G. Exs. 3 and 5 and various factual statements in the I.G. brief. The I.G. filed a reply brief on July 13, 2004.

Petitioner's objections to I.G. Exs. 3 and 5 go to the weight or probative value of those documents, the documents are relevant, and there is no dispute they are authentic. Accordingly, Petitioner's objections to I.G. Exs. 3 and 5 are overruled and those exhibits are admitted as evidence. No objection was made to the admissibility of I.G. Exs. 1, 2, 4, and 6 and those exhibits are also admitted. The I.G. did not object to my consideration of jury instruction number 10 attached to Petitioner's brief and I admit it as Petitioner's exhibit (P. Ex.) 1. The I.G. also cites to the April 6, 2004 decision of the Missouri Court of Appeals in State of Missouri v. Charles B. Kaiser, III, American Healthcare Management, Inc., and Claywest House Health Care, LLC, 2004 WL 727030 (Mo. App. E.D., Apr. 6, 2004) (Kaiser). I.G. Brief at 5. The cited decision is on Petitioner's and his co-defendants' appeal from their criminal conviction. Petitioner does not object to my consideration of the appellate court's statements of fact which are presumably based upon its review of the trial record. Further, Petitioner cannot collaterally attack in this forum the basis for his criminal conviction. Accordingly, I accept the Missouri appellate court's decision as accurately establishing the facts related to Petitioner's conviction.

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

A. FINDINGS OF FACT

The following findings of fact are based upon the uncontested and undisputed assertions of fact in the parties' pleadings, the exhibits admitted, and the decision of the Missouri Court of Appeals:

1. Claywest House Healthcare, LLC (Claywest) operated a nursing home. I.G. Ex. 3.

2. Claywest had a contract with American Healthcare Management, Inc. (AHM) to provide management services for its nursing home operation, which included the hiring and supervision of the nursing home administrator. Id.

    3. Petitioner was the president and in-house counsel of AHM. Id.

    4. AHM's employee handbook that was applicable to the Claywest administrator, provided that suspected abuse must be investigated by the administrator and then reported to Petitioner or one of two other specified people at AHM who would decide whether the incident would be reported to the State under State reporting requirements. Kaiser, at 1.

    5. Employees of Claywest were told that they could not report to the State before reporting to Petitioner or one of the other designated people at AHM. Id.

    6. M. R., a resident or patient in Claywest, was beaten by a Claywest employee who subsequently pled guilty to the crime of elder abuse and was sentenced to 15 years in prison for the offense. Id.

    7. M. R. was beaten on about July 28, 1999 and again on August 3, 1999, after which he was taken to the hospital for treatment but then returned to Claywest. Id. at 1 - 2.

    8. On August 4, 1999, the Claywest administrator was advised by staff that they suspected M. R. had been abused by a Claywest employee. Id. at 2.

    9. On August 5, 1999, M. R. was hospitalized with signs of traumatic brain injury and he died on August 7, 1999 due to a subdural hematoma. Id.

    10. On August 9, 1999, the Claywest administrator advised Petitioner of the suspected abuse of M. R. but neither the administrator nor Petitioner reported the suspected abuse of M. R. to the State agency responsible for receiving such reports. Id. at 3.

    11. The administrator of Claywest was found guilty by a jury of failure to immediately report elder abuse. Id.

    12. Petitioner was found guilty by a jury of being an accessory to the administrator's failure to immediately report elder abuse. Id. at 6.

    13. The Missouri Court of Appeals affirmed Petitioner's conviction of failure to immediately report elder abuse in violation of Missouri law. Id. at 1.

B. CONCLUSIONS OF LAW

1. Petitioner's request for hearing was timely and I have jurisdiction.

2. Summary judgment is appropriate.

3. Petitioner was convicted within the meaning of section 1128(i)(1) of the Act (42 U.S.C. 1320a-7(i)(1).

4. Conviction of failure to report the neglect or abuse of a nursing home resident is a criminal offense relating to neglect or abuse of a patient.

5. A resident of a nursing home is receiving delivery of a health care item or service within the meaning of the Act.

6. There is a nexus between Petitioner's criminal offense and the delivery of a health care item or service in this case.

7. Pursuant to 1128(a)(2) of the Act, the I.G. must exclude "(a)ny individual or entity that has been convicted under Federal or State law, of a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service."

8. If there is a basis for a mandatory exclusion under section 1128(a) of the Act, the convicted individual must be excluded from participation in Medicare, Medicaid and all federal health care programs for a period of not less than five years. Act, section 1128(c)(3)(B); 42 C.F.R. 1001.102(a).

9. The Secretary of the Department of Health and Human Services (Secretary), the I.G., and I have no authority to reduce the period of exclusion below the minimum five years specified by law if the exclusion is mandatory under section 1128(a) of the Act.

10. Petitioner's period of exclusion begins to run January 20, 2004, 20 days after the date of the I.G.'s December 31, 2003 notice of exclusion.

III. ANALYSIS

A. LAW APPLICABLE

Petitioner's right to a hearing by an administrative law judge (ALJ) and judicial review of the final action of the Secretary is provided by section 1128(f) of the Act (42 U.S.C. 1230a-7(f)). Petitioner's request for a hearing was timely filed and I do have jurisdiction.

Pursuant to section 1128(a)(2) of the Act, the Secretary must exclude from participation in the Medicare and Medicaid programs "(a)ny individual or entity that has been convicted under Federal or State law, of a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service."

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section 1128(a) of the Act shall be for a minimum period of five years. Pursuant to 42 C.F.R. 1001.102(b), the period of exclusion may be extended based on the presence of specified aggravating factors. Only if the aggravating factors justify an exclusion of longer than five years may mitigating factors be considered as a basis for reducing the period of exclusion to no less than five years. 42 C.F.R. 1001.102(c).

B. ISSUES

The Secretary has by regulation limited my scope of review to two issues:

1. Whether there is a basis for the imposition of the exclusion; and,

2. Whether the length of the exclusion is unreasonable.

42 C.F.R. 1001.2007(a)(1).

In this case there is no issue of whether the length of the proposed exclusion is unreasonable because the Act provides that the minimum period of exclusion is five years. Act, section 1128(c)(3)(B).

The standard of proof is a preponderance of the evidence and there may be no collateral attack of the conviction that is the basis for the exclusion. 42 C.F.R. 1001.2007(c) and (d). Petitioner bears the burden of proof and persuasion on any affirmative defenses or mitigating factors and the I.G. bears the burden on all other issues. 42 C.F.R. 1005.15(b) and (c).

C. DISCUSSION

No hearing is necessary where all issues may be resolved on a motion for summary judgment as authorized by 42 C.F.R. 1005.4(b)(12). Summary judgment is appropriate and no hearing is required where either: there are no disputed issues of material fact and the only questions that must be decided involve application of law to the undisputed facts; or, the moving party must prevail as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made. A party opposing summary judgment must allege facts which, if true, would refute the facts relied upon by the moving party. See, e.g., Fed. R. Civ. P. 56(c); Garden City Medical Clinic, DAB No. 1763 (2001); Everett Rehabilitation and Medical Center, DAB No. 1628, at 2 (1997) (in-person hearing required where non-movant shows there are material facts in dispute that require testimony); see also, New Millennium CMHC, Inc., DAB CR672 (2000); New Life Plus Center, DAB CR700 (2000). In this case, the parties agreed during the April 28, 2004 prehearing conference that there were no issues of material fact in dispute and that only issues of law were presented by this case. To the extent that Petitioner's brief or separately filed objection to the I.G.'s factual allegations might be viewed to raise a dispute as to the facts, I nevertheless conclude that there are no issues of material fact for resolution. The facts necessary to my decision are either admitted, not disputed, or have been settled by the Missouri appellate court and are not subject to challenge or collateral attack before me. 42 C.F.R. 1001.2007(d).

The general issue I must resolve is whether there is a basis for Petitioner's exclusion from participation in Medicare, Medicaid and all federal health care programs. The I.G. has the burden of persuasion and the quantum of evidence required is a preponderance of the evidence. The I.G. premises its exclusion action upon section 1128(a)(2) of the Act which requires that the I.G. exclude from participation "(a)ny individual or entity that has been convicted under Federal or State law, of a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service." The elements that the I.G. must prove are clearly stated by section 1128(a)(2) of the Act:

a. The individual or entity was convicted of a criminal offense;

b. The criminal offense was related to the neglect or abuse of patients; and,

c. There is a connection or nexus between the criminal offense and the delivery of a health care item or service.

The Secretary's regulations expand upon or clarify the statute to the extent that 42 C.F.R. 1001.101(b) provides that the criminal offense may be one that the I.G. concludes "entailed, or resulted in, neglect or abuse of patients . . . ." Thus, the criminal offense need not be specifically characterized as "neglect or abuse of patients" in order to be considered in the scope of the statute and implementing regulations. Subsection 1001.101(b) also provides definition to the statutory language "the delivery of a health care item or service" by providing that that phrase includes the "provision of any item or service to an individual to meet his or her physical, mental or emotional needs or well-being" whether or not funded by Medicare, Medicaid, or other federal programs.

There is no dispute in this case that Petitioner was convicted of a criminal offense. Congress specifically defined the term "convicted" in the Act to include a "judgment of conviction" whether or not an appeal is still pending or the record of conviction has been expunged; or when there is a finding of guilt. The I.G. has presented as evidence, the record of sentence and judgment related to Petitioner's conviction filed in the Circuit Court of St. Charles County, Missouri. I.G. Ex. 4. There is also the decision of the Missouri Court of Appeals on the appeal Petitioner pursued challenging his criminal conviction. Moreover, Petitioner admits in his briefing that he was convicted by the Missouri court, albeit on an accessory theory. P. Brief at 2 and 4. Petitioner argues, however, that the I.G. has not established that the criminal offense of which he was convicted was "related to neglect or abuse of patients." Id. at 4. Petitioner also argues that his crime was not "in connection with the delivery of a health care item or service." Id. at 6 - 7. The facts, however, belie Petitioner's contentions.

The Missouri Court of Appeals decision on Petitioner's appeal of his criminal conviction contains a detailed summary of the facts in this case. A condensed version of the facts is sufficient for this decision. Claywest operated a nursing home. I.G. Ex. 3. Claywest had a contract with AHM to provide management services for its nursing home operation, which included the hiring and supervision of the nursing home administrator. Id. Petitioner was the President and in-house counsel of AHM. Id. Claywest had a history of "numerous life-threatening violations" discovered by the Missouri Division of Aging during inspections in 1998 and 1999. Kaiser, at 1. AHM's employee handbook that was applicable to the Claywest administrator, provided that suspected abuse must be investigated by the administrator and then reported to Petitioner or one of two other specified people at AHM who would decide whether the incident would be reported to the State under State reporting requirements. Id. Employees were told that they could not report to the State before reporting to Petitioner or one of the other designated people at AHM. Id. Petitioner had a history of punishing anyone who gave the State any evidence of substandard care at an AHM managed facility. Id.

The evidence reviewed by the Missouri court shows that M. R., a resident or patient at Claywest, was beaten by a Claywest employee who subsequently pled guilty to the crime of elder abuse and was sentenced to 15 years in prison for the offense. Id. M. R. was beaten on about July 28, 1999, and again on August 3, 1999. Id. at 2. After the second incident, M. R. was taken to the hospital for treatment but then returned to Claywest. Id. On August 4, 1999, the Claywest administrator was advised by staff that they suspected M. R. had been abused by a Claywest employee. Id. On August 5, 1999, M.R. was hospitalized with signs of traumatic brain injury and he died on August 7, 1999, due to a subdural hematoma. Id. (3) On August 9, 1999, the Claywest administrator advised Petitioner of the suspected abuse of M. R. Id. at 3. Neither the administrator nor Petitioner reported the suspected abuse of M. R. to the State agency responsible for receiving such reports. Id. The administrator of Claywest was found guilty by a jury of failure to immediately report elder abuse. Petitioner was found guilty by a jury of being an accessory to the administrator's failure to immediately report elder abuse. Id. at 3. The Missouri Court of Appeals affirmed Petitioner's conviction of failure to immediately report elder abuse in violation of Missouri law. Id. The Missouri court noted that the Missouri statute under which Petitioner was convicted, criminalized "the failure to report elder abuse by certain persons commonly entrusted with the care of senior citizens." Id. at 4. The court commented that the purpose of the statute was "to protect . . . senior citizens from abuse and to punish those that would do them harm." Id. The court rejected Petitioner's argument that he was not responsible for providing care to M. R. The court reasoned that AHM and Petitioner, as President of AHM, supervised Claywest operations and its administrator. Therefore, the court concluded that under Missouri law, Petitioner was a mandated reporter because he was "responsible for the care of a person sixty years of age or older." Id. at 6. The court also rejected Petitioner's argument that he was not legally responsible because he did not have any reason to suspect abuse until after M. R. was dead. The court reasoned that even if that was true, Petitioner and AHM were still responsible for its employee handbook and orders to managers not to immediately report abuse - the court referred to this as "institutionalizing delayed reports of abuse." Id. at 7 - 8. The court further noted that Petitioner's was a crime of omission, a continuing crime that was not complete upon the initial failure of the administrator to report, but continued so long as the duty to report existed and under Missouri law that duty continues "so long as the report of abuse may operate to ameliorate the circumstances of either the victim or another similarly-situated senior citizen, or to bring the abuser to justice." Id. (4)

Petitioner's first contention before me is that his crime was not related to the neglect or abuse of patients, in this case M. R. The Act, as clarified by the regulation, does not require that an individual be convicted of abuse or neglect to be subject to exclusion under section 1128(a)(2). Rather, it is sufficient for the crime to be related to neglect or abuse. Petitioner cannot overcome the facts established by the Missouri court that M. R. was abused by a Claywest employee; that Petitioner had reason to suspect that M. R. was abused (even though that suspicion arose after M. R.'s death); that Petitioner failed to report the suspected abuse of M. R. to the appropriate State agency; that Petitioner by his action as President of AHM deterred the administrator and employees of Claywest from reporting the abuse of M. R. to the appropriate State agency; and that Petitioner's actions and omissions constituted a violation of the Missouri law that criminalized the failure to immediately report elder abuse. While Petitioner was not convicted by the Missouri court of neglecting or abusing M. R., it is disingenuous for Petitioner to argue that his offense was not "related" to the abuse of M. R. (5)

Petitioner's second argument, i.e., that there is no nexus between his criminal offense and the delivery of a health care item or service is also without merit. The pertinent facts are undisputed. Claywest was a licensed nursing home and M. R. was a resident or patient of Claywest when he was beaten by a Claywest employee. P. Brief at 2. Petitioner does not argue that M. R. was not receiving a health care item or service at Claywest within the meaning of section 1128(a)(2) and 42 C.F.R. 1001.101(b). Petitioner argues that he does not deliver a health care item or service and the I.G. mischaracterizes him as the administrator of the facility in order to subject him to the Act. P. Brief at 7. I am clear that Petitioner was not the administrator of Claywest, but I am also clear that Petitioner was responsible for implementing the policies and giving the directions that the administrator of Claywest was obliged to following, including the direction that she could not directly and immediately report abuse to the State but had to go to Petitioner. The Missouri appellate court concluded that, under Missouri law, Petitioner was a mandatory reporter just like a direct health care provider. While the Missouri law and the appellate court's opinion on this point is not controlling in this proceeding, the fact that Petitioner had control over the administrator to the extent he did is persuasive that Petitioner should be treated as responsible to the same extent as the administrator. Again it is disingenuous for Petitioner to argue that his crime was not related to the delivery of a health care item or service. It is undisputed that AHM, the company of which Petitioner was President, was in the business of managing long-term care facilities like Claywest and, as Petitioner notes, AHM was managing 11 other facilities (P. Brief at 6). Claywest was in the business of providing long-term nursing care to patients or residents. M. R. was a patient or resident of Claywest and receiving day-to-day nursing care there when he was abused.

Accordingly, I conclude that Petitioner was convicted of a crime related to the neglect or abuse of a patient in connection with the delivery of a health care item or service within the meaning of the Act, and his exclusion from participation in Medicare, Medicaid and all federal health care programs is mandated by section 1128(a)(2) of the Act. Furthermore, the minimum period of exclusion is five years which commenced January 20, 2004, 20 days after the date of the December 31, 2003 I.G. notice of exclusion. 42 C.F.R. 1001.2002.

IV. CONCLUSION

For the foregoing reasons, Petitioner is excluded from participation in Medicare, Medicaid and all federal health care programs for the minimum period of five years effective January 20, 2004.

JUDGE
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Keith W. Sickendick

Administrative Law Judge

FOOTNOTES
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1. I construe the motion for summary affirmance to be a motion for summary judgment as there has been no waiver of oral hearing and the regulations recognize no action other than decision after oral hearing, decision on pleadings after waiver of oral hearing, or summary judgment. See 42 C.F.R. 1005.2, 1005.3, 1005.4, 1005.6(b)(5).

2. Petitioner refers to transcript pages in his brief, I presume the reference to be to the transcript of his criminal court proceedings. P. Brief at 2- 3. However, Petitioner has not offered the transcript as evidence and it is not available for my consideration.

3. The appellate court decision indicates that the subdural hematoma was a delayed manifestation of the August 3 beating rather than the result of a third beating.

4. I do not set forth the other findings and conclusions of the Missouri court as they are not important to resolution of the issues before me.

5. Other ALJs have reached the conclusion that conviction under State law for failure to report abuse is "related to neglect or abuse" within the meaning of section 1128(a)(2). See e.g., Aida Cantu, DAB CR462 (1997); Selma Zimmerman, DAB CR364 (1995); Ernest Valle, DAB CR309 (1994); Glen E. Bandel, DAB CR261 (1993); cf., Joseph Nyagah, DAB CR1007 (2003) (under 1128(a)(2), only necessary to conclude criminal offense relates to neglect or abuse).

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