Health Law Daily Wrap Up, ADMINISTRATION OF MEDICARE/MEDICAID PROGRAMS—DAB DECISIONS: Nurse’s exclusion after felony convictions over controlled substances affirmed, (Jan 24, 2022)

By Brian Craig, J.D.

Subsequent reduction of felony convictions to misdemeanors for improperly dispensing controlled substances has no impact on exclusion of Medicare and Medicaid participation.

Concluding that an Indiana registered nurse’s subsequent reduction of felony convictions to misdemeanors for improperly dispensing controlled substances had no impact on exclusion from participation in federal health care programs, an administrative law judge (ALJ) has affirmed the nurse’s exclusion for five years. The ALJ concluded that the nurse’s felony convictions from a plea agreement over controlled substances for improperly taking fentanyl, hydromorphone, and morphine from a hospital triggered the nurse’s exclusion from federal health care programs. While the convictions were later reduced to misdemeanors, the felony convictions were not reversed or vacated. Additionally, the ALJ rejected the nurse’s argument that the Inspector General’s representations were based on allegations of fraud contained in an affidavit and not facts (Oliphant v. Inspector General, Docket No. C-21-415, Decision No. CR5891, June 28, 2021).

A registered nurse in Indiana plead guilty to three felonies in Indiana state court for obtaining a controlled substance by fraud, subterfuge or deceit for hydromorphone, fentanyl, and morphine.

The nurse worked at a hospital in Indiana and had access to a machine used to dispense controlled substances, including hydromorphone, fentanyl, and morphine. After an investigation, the nurse entered into a plea agreement where she plead guilty to three felonies, which was accepted by the Indiana state court. The nurse was placed on probation, ordered to complete community service, and ordered to pay restitution to the hospital, in addition to other fines.

In a modified order on September 8, 2020, the Indiana state court converted the felonies into misdemeanors. On November 30, 2020, the HSS Inspector General notified the nurse of a five-year exclusion from participating in Medicare, Medicaid, and all federal health care programs based on the nurse’s criminal convictions.

Felony convictions. The ALJ concluded that the nurse’s felony convictions supported the nurse’s exclusion from participation in Medicaid, Medicare, and other federal health care programs. A person is “convicted” when: (1) a judgment of conviction has been entered regardless of whether that judgment has been (or could be) expunged; (2) there has been a finding of guilt; (3) a plea of guilty or nolo contendere has been accepted by the court; or (4) the individual has entered into participation in a first offender, deferred adjudication, or other arrangement or program where the judgment of conviction has been withheld. Here, the nurse had three felony convictions which triggered the exclusion. The ALJ found the subsequent reduction of the felonies to misdemeanors has no impact on the exclusion. The regulations allow for the withdrawal of an exclusion and reinstatement if there is a reversal or vacation of the felony conviction on appeal. In this case, the nurse’s felony convictions were not reversed or vacated. Therefore, ALJ affirmed the exclusion based on the felony convictions.

Allegations of fraud. Furthermore, the ALJ rejected the nurse’s argument that the Inspector General’s representations are based on allegations of fraud contained in an affidavit and not facts. In exclusion cases, the Inspector General has the burden of proving the basis for the exclusion and the existence of any aggravating factors. The Inspector General submitted an affidavit of probable cause from an investigator with the Indiana Attorney General’s Office, Medicaid Fraud Control Unit which detailed the investigation in this case. In addition, the Inspector General submitted a plea agreement. The ALJ found nothing prohibits the Inspector General from using affidavits. Furthermore, the nurse admitted to obtaining a controlled substance by fraud, subterfuge, or deceit for taking fentanyl, hydromorphone, and morphine from the hospital when she pleaded guilty to the three felony offenses. Lastly, the ALJ found the argument constitutes a collateral attack on the underlying convictions, which is prohibited by the regulations. Accordingly, the ALJ affirmed the five-year exclusion.

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