New Jersey’s Expungement Laws: Rescinding Orders of Debarment for Health Care Fraud

New Jersey has some of the most comprehensive expungement laws in the country, allowing people convicted of certain crimes to have their records erased after a period of time. One lesser-known provision of the expungement statute is Section 2C:52-27.1, which allows people who have been debarred from working in the healthcare industry due to a conviction for health care claims fraud to petition to have that debarment rescinded.

This statute provides an important avenue for rehabilitation for individuals who have made past mistakes. Health care fraud convictions can carry heavy penalties, including fines, incarceration, and debarment from working in the health care sector. For those whose livelihood depends on being able to work in health care, having a debarment lifted can be absolutely vital.

What is Debarment in Health Care?

Debarment refers to an order that prohibits an individual or entity from participating in any government healthcare programs. This includes Medicare, Medicaid, and other federal and state programs.

Debarment is typically imposed as an administrative sanction when an individual or entity is convicted of fraud against government health care programs. The purpose is to protect these programs from further losses due to fraud.

Debarment orders are issued by federal or state agencies that oversee healthcare programs. For example, the U.S. Department of Health and Human Services’ Office of Inspector General has authority to impose debarment for federal health care programs. In New Jersey, the State Medicaid Fraud Division can issue debarment orders.When Can a Debarment Order Be Rescinded Under 2C:52-27.1?

Section 2C:52-27.1 of the New Jersey code provides a mechanism for individuals who have been debarred from participating in government healthcare programs to petition to have that debarment rescinded. There are several requirements that must be met:

• The petitioner must have been convicted of health care claims fraud under N.J.S. 2C:21-4.2 or 4.3. These statutes prohibit false claims, statements, omissions, or concealment of material facts to obtain government health care payments.
• The petitioner must have been debarred from the Medicaid program as a result of that conviction.
• At least 5 years must have passed since the date of conviction or release from incarceration, whichever is later.
• The petitioner must present clear and convincing evidence of rehabilitation showing they are not likely to re-offend.

If these conditions are satisfied, the court has discretion to evaluate whether rescinding the debarment order is in the public interest.

The Process for Petitioning to Lift a Debarment

The process for seeking to have a debarment order rescinded under 2C:52-27.1 involves filing a petition in Superior Court in the county where the conviction occurred.

The petition must provide details on the original conviction, including the date and the specific criminal statute violated. It must also provide proof of the date of conviction or release from incarceration, whichever came later, showing the 5 year waiting period has lapsed.

The bulk of the petition should focus on demonstrating rehabilitation. This can include evidence like:

• Letters of reference from employers, instructors, counselors, community members, etc. attesting to good character
• Proof of further education or training
• Documentation of community service or volunteer work
• Evidence of steady employment and financial stability
• Statement of remorse and explanation of rehabilitation

Letters from victims, if applicable, may be particularly persuasive. Submitting a thorough petition with ample evidence of rehabilitation is key.

Factors Courts Consider in Evaluating Petitions

The court has significant discretion in deciding whether rescinding a debarment is appropriate. According to the statute, the court must determine whether doing so is “consistent with the public interest.”

Some factors courts may consider include:

• Nature and severity of the underlying offense – More severe or extensive fraud is less likely to warrant rescinding debarment.
• Time elapsed – Courts look more favorably on petitions after longer periods of time have passed.
• Extent of rehabilitation – Strong, unambiguous evidence of rehabilitation is required. Simply staying out of trouble is not enough.
• Risk of re-offending – Courts weigh whether the petitioner is likely to commit fraud again if allowed back into the healthcare industry.
• Remorse and acceptance of responsibility – Admitting wrongdoing and expressing genuine remorse improves chances for rescission.
• Public policy interests – Courts weigh society’s dual interests in rehabilitation and protecting healthcare programs from further fraud.
• Input from victims – Views of victims and agencies that were defrauded may impact the public interest analysis.

Overall, meeting the burden of proof to show clear rehabilitation and low risk for re-offense is key. The strength of the petition itself is often the deciding factor.

Impact of Rescinding the Debarment Order

If a petition under 2C:52-27.1 is successful, the court will issue an order rescinding the debarment. This restores the individual’s eligibility to work in any capacity for healthcare entities that receive government program funding.

It opens up opportunities to resume their career that were closed due to being blacklisted from the industry. Maintaining employment is critical for rehabilitation, so this can be an enormous relief.

That said, rescinding the debarment does not completely erase the conviction from the person’s record. They must still disclose it on background checks. Healthcare employers may still have concerns about past fraudulent acts. But rescission at least gives them a chance to explain the situation and their rehabilitation efforts.

Policy Implications and Arguments For/Against Expungement

Allowing expungement of debarment orders for health care fraud raises some difficult policy issues. There are good arguments on both sides:

In Favor of Expungement

• Second chances – Expungement recognizes rehabilitation and gives reformed individuals a chance to resume their life.
• Incentivizes rehabilitation – Providing an avenue for expungement incentivizes avoiding further criminal acts.
• Employment and productivity – Allowing people to work in their prior field fosters employment and contribution to society.
• Reduces recidivism – Making productive employment possible reduces likelihood of re-offense.
• Proportionality – Permanent debarment is disproportionate for some less severe crimes.

Against Expungement

• Recidivism risk – Those who defraud healthcare programs may have high risk of doing so again if allowed back in the industry.
• Fairness to victims – Rescinding debarment may seem unfair to victims of original fraud.
• Deterrence – Potential expungement reduces deterrent effect on other would-be fraudsters.
• Public trust – Allowing those convicted back into the healthcare industry can undermine public confidence.
• Slippery slope – Leniency for health care fraud may encourage more expansive expungement laws.

Given these competing interests, reasonable minds can disagree on where the proper balance lies. The rehabilitation and proportionality concerns that support allowing expungement in some cases seem to outweigh the risks in situations with clear proof of rehabilitation. But it is certainly an issue requiring careful case-by-case weighing by courts.