The U.S. Court of Appeals for the District of Columbia recently held in Friedman v. Sebelius that the Department of Health and Human Services (HHS) was acting within its power when the agency excluded three former Purdue Pharma LP executives from doing business with federal health care programs. The three executives pleaded guilty in 2007 along with a Purdue affiliate, which admitted misleading the public about the painkiller OxyContin's safety.
HHS, through its Office of the Inspector General (OIG), has the authority to exclude individuals and entities from doing business with federal health care programs (e.g. Medicare and Medicaid), when such individuals or entities commit certain offenses or violations. The Court upheld the exclusions because the conduct underlying the executives’ misdemeanor convictions was factually related to fraud under a “circumstance-specific approach: Their convictions for misdemeanor misbranding were predicated upon the company they led having pleaded guilty to fraudulently misbranding a drug and they admitted having ‘responsibility and authority either to prevent in the first instance or to promptly correct that fraud; they did neither.”
The Court, however, held that HHS’ decision to exclude the executives for 12 years was arbitrary and capricious “for want of a reasoned explanation for the length of their exclusions.” As a result, the Court remanded the case back to the U.S. District Court for the District of Columbia (“District Court”) to reconsider how long the executives should be excluded. As reported by the Wall Street Journal, Carter Phillips, a lawyer for the three executives, said his clients were “gratified” that the court questioned the 12-year period. He said his side continued to believe that the law didn’t permit exclusion and was “considering next steps.”
This case will have a significant impact on the life sciences industry as well as other healthcare executives. As WSJ noted, “Since drug companies rely on revenue from Medicare, Medicaid and other programs, it is difficult if not impossible for any excluded executive to get a job in the industry.”
As more and more companies settle their off-label promotion cases with OIG and the corporate integrity agreements (CIAs) that result become more complex, federal health care law enforcement may begin to use the threat of excluding executives to deter future off-label promotion and to encourage greater compliance with federal health care laws. In addition, this case will have a significant impact on whether company executives will accept criminal misdemeanor pleas moving forward, given that the D.C. Circuit has now recognized the Responsible Corporate Officer doctrine as a mechanism that OIG may use to exclude executives.
“This case takes on added significance in light of recent efforts by prosecutors across the country to force senior pharmaceutical executives to plead guilty to RCO misdemeanors, and in light of statements by FDA officials that they intend to ‘get tough’ with companies alleged to have engaged in improper promotional practices,” said Washington Legal Foundation Chief Counsel Richard Samp. “The case cries out for further review. Officials at HHS’s Office of Inspector General have given every indication that they view the penalties imposed in this case as a model for other cases involving allegedly improper promotion.”
Michael Friedman, Paul Goldenheim, and Howard Udell (“the executives” or “Appellants”) were senior corporate officers at the Purdue Frederick Company (“Purdue”) when it was involved misbranding the painkiller OxyContin, a schedule II controlled substance. According to the Information initiating the criminal cases against the Appellants and the Company, the “misbranding” occurred when unnamed employees at Purdue, “with the intent to defraud or mislead, marketed and promoted OxyContin as less addictive, less subject to abuse and diversion, and less likely to cause tolerance and withdrawal than other pain medications."
Purdue pleaded guilty to felony misbranding, in violation of 21 U.S.C. § 331(a) and § 333(a)(2). Pursuant to the plea agreement, the district court put the Company on probation for five years, fined it $500,000, and imposed other monetary sanctions totaling approximately $600 million, of which approximately $160 million was earmarked for restitution to Federal and State health care agencies, which had been large buyers of the misbranded drug.
At the same time, the Appellants pleaded guilty to misdemeanor misbranding, in violation of 21 U.S.C. § 331(a) and § 333(a)(1), for their admitted failure to prevent Purdue’s fraudulent marketing of OxyContin; each was sentenced to do 400 hours of community service, fined $5,000, and put on probation for three years. The sentencing court also ordered the Appellants to disgorge compensation they had received from Purdue totaling approximately $34.5 million.
Several months after the executives were convicted, OIG excluded from participation in Federal health care programs the executives for 20 years, pursuant to 42 U.S.C. § 1320a-7(b)(1) and (3). OIG based the length of their exclusion upon three aggravating factors listed in the Department’s published regulations —(1) the conduct underlying the convictions lasting more than one year, (2) the amount of the financial loss, and (3) the significant adverse physical or mental impact upon program beneficiaries.
The executives appealed the OIG’s determination to an Administrative Law Judge (ALJ) and ultimately to the Departmental Appeals Board (DAB), to which the Secretary had delegated authority to review decisions to exclude an individual. During the pendency of the appeal to the ALJ, OIG reduced the length of the exclusion to 15 years because the Appellants had assisted law enforcement authorities to combat abuse of OxyContin, a mitigating factor. The ALJ affirmed the 15-year exclusion as being within a “reasonable range.” The DAB affirmed that decision, interpreting the statute to authorize the exclusion of an individual convicted of a misdemeanor when the facts underlying that conviction have a “nexus or common sense connection” either to fraud or to the distribution of a controlled substance.
The DAB found the Appellants’ “misdemeanor misbranding offense” had the requisite connection to fraud because “[t]he actual misbranding that resulted in [their] conviction was the [Company’s] fraudulent misbranding of OxyContin.” The DAB further reduced the length of the exclusion to 12 years on the ground the “ALJ’s finding that [the Appellants’] crimes had an adverse impact on program beneficiaries and others is not supported by substantial evidence” because there is no evidence the misbranded Oxycontin had any adverse effect. The U.S. District Court upheld the length of the exclusion because it concluded the DAB’s application of the aggravating and mitigating factors was supported by substantial evidence.
The D.C. Circuit Court reviewed the judgment of the District Court “de novo” or “anew.”
The Circuit Court said it would uphold the Secretary’s decision to exclude the executives only if it was “based on substantial evidence in the record and correctly applie[d] the relevant legal standards.”
The executives first argued that misdemeanor misbranding is not a “criminal offense consisting in a misdemeanor relating to fraud” because it lacks the allegedly requisite “‘generic’ relationship to fraud.” It was not enough for the conduct underlying a particular conviction to be factually related to fraud; the generic misdemeanor must comprise the “core elements” of fraud, one of which is scienter. The Court, however, noted that “Misdemeanor misbranding does not necessarily require a culpable mental state because a conviction for the offense may be, and in this case was, predicated upon the responsible corporate officer doctrine, which entails strict liability.”
Under the “responsible corporate officer” (RCO) doctrine, a “corporate agent, through whose act, default, or omission the corporation committed a crime” in violation of the Food, Drug, and Cosmetic Act (FDCA) may be held criminally liable for the wrongdoing of the corporation “whether or not the crime required ‘consciousness of wrongdoing’” by the agent. United States v. Park, 421 U.S. 658, 670 (1975). Criminal liability under the RCO doctrine extends “not only to those corporate agents who themselves committed the criminal act, but also to those who by virtue of their managerial positions or other similar relation to the actor could be deemed responsible for its commission.” Id. A corporate officer may therefore be guilty of misdemeanor misbranding without “knowledge of, or personal participation in,” the underlying fraudulent conduct. Id.
The Court noted that as part of their plea agreements, the executives admitted having “responsibility and authority either to prevent in the first instance or to promptly correct” the misrepresentations certain unnamed Purdue employees made regarding OxyContin and thereby, under the RCO doctrine, admitted being guilty of misdemeanor misbranding.
HHS argued that under the DAB’s “‘intuitive, ordinary reading’ of the statute, [the Appellants’] convictions ... ‘relate to’ fraud or unlawful distribution of a controlled substance [because] there is a ‘nexus’ or ‘common sense connection’ between their convictions and those statutory bases for exclusion.” As a result, the Court reasoned that the case “presents the question whether the phrase “misdemeanor relating to fraud” in section 1320a-7(b)(1)(A) refers to a (1) generic criminal offense or (2) to the facts underlying the particular defendant’s conviction.
In ordinary speech, “words such as ‘crime,’ ‘felony,’ ‘offense,’ and the like sometimes refer to a generic crime, say, the crime of fraud or theft in general, and sometimes refer to the specific acts in which an offender engaged on a specific occasion, say, the fraud that the defendant planned and executed last month.” Nijhawan v. Holder, 557 U.S. 29, 33–34 (2009). The “categorical approach,” according to which the statutory term refers to the generic criminal offense, “prohibits the later court from delving into particular facts disclosed by the record of conviction” and directs that court to “look only to the fact of conviction and the statutory definition of the prior offense,” including the elements of that offense. Shepard v. United States, 544 U.S. 13, 17 (2005).
Under the “circumstance-specific” approach, by contrast, the statutory term refers to the particular conduct giving rise to the conviction and so the court “must look to the facts and circumstances underlying an offender’s conviction” to determine whether that conviction is covered by the statute. Nijhawan, 557 U.S. at 34. Whether Congress intended the categorical or the circumstance-specific approach is to be discerned from the text, structure, and purpose of the particular statute at issue.
The Executives argued that the Secretary’s interpretation of section 1320a-7(b)(1)(A) did not warrant deference: “Nothing in the exclusion statute evinces Congress’ intent to empower the agency to ‘speak with the force of law’ ... when addressing ambiguities in the phrase ‘misdemeanor relating to fraud.’” They contended that Congress did not delegate authority to interpret the phrase “misdemeanor relating to fraud” because that phrase is a term of art in criminal law and therefore outside the scope of the Secretary’s subject-matter expertise and more suited to judicial interpretation.
Courts defer to an agency’s interpretation of a law it administers only to the extent the Congress has delegated interpretive authority to the agency. The D.C. Circuit, however, noted a “split in authority on the question whether to defer to an agency’s interpretation of a term drawn from criminal law but used in a statute the agency administers.” The split is between the U.S. Third Circuit Court of Appeals (Wong Park v. Att’y Gen., 472 F.3d 66, 70 (3d Cir. 2006)) and the Second Circuit (James v. Mukasey, 522 F.3d 250, 254 (2d Cir. 2008) and Mugalli v. Ashcroft, 258 F.3d 52, 56 (2d Cir. 2001)). This split represents a main reason why the U.S. Supreme Court may likely grant certiorari to hear this case on appeal.
The D.C. Circuit did not decide whether the Congress authorized the Secretary “to speak with the force of law when [she] addresses ambiguity in the statute,” because the “statute unambiguously authorizes her to exclude the Appellants.” The Circuit noted that the text, structure, and purpose of the exclusion statute, viz., to protect Federal health care programs from financial harm wrought by untrustworthy providers, “all indicate the Secretary’s circumstance-specific approach is proper; i.e., the statute authorizes exclusion of an individual whose conviction was for conduct factually related to fraud.”
The Court maintained that the key phrase in the exclusion statute is “relating to,” the “ordinary meaning of [which] is a broad one — ‘to stand in some relation; to have bearing or concern; to pertain; refer; to bring into association with or connection with.’” Morales, 504 U.S. at 383 (quoting BLACK’S LAW DICTIONARY 1158 (5th ed. 1979)); see also Metropolitan Life Ins. Co. v. Mass., 471 U.S. 724, 739 (1985) (“The phrase ‘relate to’ [has a] broad common-sense meaning” and a statutory provision containing the phrase therefore has “broad scope”).
Using this definition, the Court reasoned that the Secretary was correct in her contention that a misdemeanor “relat[es] to” fraud “in the normal sense of the phrase, if it has a connection with, or reference to” fraud. The Court asserted that ‘relating to’ “includes any criminal conduct that has a factual “connection with” fraud, disagreeing with the executives’ argument that the exclusion provision refers only to generic misdemeanor offenses that share all the “core elements” of fraud.
“The rest of section 1320a-7(b)(1)(A) confirms its broad scope.” Specifically, the Court noted how the Secretary is authorized to exclude persons for a criminal offense consisting of a misdemeanor relating to … “other financial misconduct,” which “expressly refers to a type of ‘conduct,’ not to a genus of criminal offense.” The Court thus reasoned that the relationship of a “misdemeanor” to “other financial misconduct” “must therefore be a factual one.” The term “misdemeanor” accordingly refers to the particular circumstances of an individual’s conviction, and “relating to” must denote a factual relationship between the conduct underlying the misdemeanor and the conduct underlying a “fraud.”
The Court also reasoned that the heading of section 1320a-7(b)(1) (“Conviction relating to fraud”) further supports this reading of the provision, and noted case law to support this reasoning. “Although the title of a statute and the heading of a section cannot limit the plain meaning of the text, they remain tools available for the resolution of a doubt about statutory meaning.”
In the provision itself, “relating to fraud” modifies “misdemeanor.” Accordingly, the Court reasoned that Congress used “conviction” and “misdemeanor” interchangeably, and a “conviction,” meant a particular event on a particular occasion and “so refers to a set of facts, and not to a generic crime.” Hence, the parallel between the heading of section 1320a-7(b)(1) and the text of section 1320a-7(b)(1)(A) implies the word “misdemeanor” also refers to the facts underlying a particular conviction.
The Court also noted that the text and structure of the provisions adjoining section 1320a-7(b)(1)(A) further confirm this interpretation. In both section (b)(1)(B) and section (b)(2), the phrase “relating to” denotes a factual relationship. The former provision authorizes the Secretary to exclude a person convicted of “a criminal offense relating to fraud ... with respect to any act or omission in a program (other than a health care program) operated by or financed in whole or in part by any Federal, State, or local government agency.” The phrase “fraud ... with respect to any act or omission in a program” does not refer to a generic offense but rather to criminal conduct that, as a matter of fact, relates to a program financed by a government agency.
The Court noted that the limiting clause in section (b)(1)(B) does not pick out a generic class of offenses because there is no generic crime of defrauding a program other than a health care program financed in whole or in part by a government agency. The limiting clause in section (b)(1)(B), therefore, restricts the scope of the named offense – fraud – to frauds committed in certain factual circumstances. It follows that the “criminal offense” listed in section (b)(1)(B) must “relat[e] to fraud” because it has a factual relationship to conduct committed on a particular occasion.
Another example the Court referenced was section 1320a-7(b)(2)(ii), which authorizes exclusion for any individual “convicted ... in connection with the interference with or obstruction of any investigation or audit related to ... the use of funds received ... from any Federal health care program.” The phrase “the use of funds” does not refer to a generic offense and therefore must refer to specific facts on a particular occasion. As a result, “related to” in this provision denotes a factual connection between an “investigation or audit” and “the use of funds.”
Accordingly, the Court said it was “simply implausible that the Congress used ‘relating to’ in section 1320a-7(b)(1)(B) and the functionally identical phrase ‘related to’ in section 1320a-7(b)(2) to denote a relationship between factual situations but used the same phrase in section 1320a-7(b)(1) to denote a relationship between generic offenses.
“The only reasonable interpretation is that in all three provisions the phrases refer to a factual relationship,” the Court said. See Mohamad v. Rajoub, 634 F.3d 604, 608 (D.C. Cir. 2011) (“the same word[s] appearing in different portions of a single provision or act [are] taken to have the same meaning in each appearance” (internal quotation marks and citation omitted)).
The Executives first argued that applying the circumstance-specific approach gives no separate meaning to the phrase “relating to” in section (b)(1)(A) and the phrase “in connection with” in sections (b)(1)(A)(i) and (b)(2). They argued that because “in connection with” denotes a factual relationship between the conviction and “the delivery of a health care item or service” in section (b)(1)(A)(i) and between the conviction and “the interference with or obstruction of any investigation or audit” in section (b)(2), “relating to” in section (b)(1)(A) must denote a generic, not a factual relationship.
The Court rejected this argument as “implausible,” noting that, “An interpretation that requires a single instance of a single word to carry two different meanings in two consecutive clauses of a single sentence simply cannot stand.” Instead, the Court found “plausible” the Secretary’s reading that Congress used “relating to” and “in connection with” each to denote a factual relationship – respectively, the relationship between the facts underlying a person’s conviction and conduct that would qualify as “fraud”; and the relationship between that conduct and the delivery of health care. Thus, the Court reasoned that “the use of the phrases ‘relating to’ and ‘in connection with,’ therefore does not imply ‘relating to’ must denote a non-factual, generic relationship.”
Next, the Executives analogized the text of section (b)(1)(A) to a provision of the Immigration and Naturalization Act (INA) which authorized the deportation of an alien “convicted of a violation of ... any law or regulation relating to the possession of or traffic in narcotic drugs.” The Appellants, citing Castaneda de Esper v. INS, 557 F.2d 79 (6th Cir. 1977), contended the Congress “used a verbal formulation – ‘relating to [specified offenses]’ – that had long been used in the INA, and already had a settled meaning” denoting a generic, non-factual relationship.
The Court, however, agreed with the Secretary that “relating to” in the INA has no such settled meaning, contrasting Castaneda with Urena-Ramirez v. Ashcroft, 341 F.3d 51 (1st Cir. 2003). In addition, the Court noted that “the wording of the INA supports the application of the categorical approach much more readily than does the text of section (b)(1)(A),” because “relating to” in the INA is connected to “law or regulation” and “the possession of or traffic in narcotic drugs.” The Court reasoned that, a “law or regulation,” unlike a “misdemeanor,” cannot refer to the facts of a particular incident.
Third, the Executives argued that the circumstance-specific approach leads to an “absurd result,” to wit: “Individuals who negligently submit false or fraudulent claims ... are not subject to exclusion under [42 U.S.C. § 1320a-7a(a)]” whereas, under the Secretary’s approach to section 1320a-7(b), one “who pleads guilty of a strict liability misdemeanor offense that requires no proof of conscious wrongdoing, fraud, or falsehoods is excludable based on misconduct by others that he had no knowledge of.”
Disagreeing once again, the Court said that “the statute at issue here similarly authorizes exclusion but neither requires nor authorizes a fine; for a lesser penalty, a lesser mens rea requirement, or indeed no mens rea requirement at all, is not illogical.”
Finally, the Executives argued that because the Secretary’s interpretation permits her to impose “careerending disabilities” upon someone whose criminal conviction required no mens rea, it raises a serious question of validity under the Due Process Clause of the Fifth Amendment to the Constitution of the United States. The Supreme Court has upheld the constitutionality of strict liability crimes “in part, because their associated penalties ‘commonly are relatively small, and conviction does no grave damage to an offender’s reputation.’” The Court clarified, however, that section 1320a-7(b)(1) is not a criminal statute and, although exclusion may indeed have serious consequences, the Court did “not think excluding an individual under 42 U.S.C. § 1320a-7(b) on the basis of his conviction for a strict liability offense raises any significant concern with due process.”
“Exclusion effectively prohibits one from working for a government contractor or supplier. Surely the Government constitutionally may refuse to deal further with senior corporate officers who could have but failed to prevent a fraud against the Government on their watch,” the Court said. This is another area where appeal will be timely because it appears that the Court may have understated the effect exclusion has on individuals—essentially a death sentence from working in the healthcare industry.
12 Years of Exclusion
The Executives also challenged the Secretary’s decision to exclude them for fully 12 years, four times as long as the presumptive baseline in the statute: “the period of exclusion shall be 3 years” unless the Secretary adjusts the length of exclusion on the basis of aggravating or mitigating factors “in accordance with published regulations.” They argued that the Secretary took into account two aggravating factors for which there was not substantial evidence, failed to take into account one mitigating factor without substantial evidence for so doing, and gave them too little credit with respect to a second mitigating factor. They also argued the Secretary erred by failing to reconcile the length of their exclusion with the agency’s prior decisions.
First, the Court rejected the argument that there was no financial loss, given that the Executives admitted responsibility for misdemeanor misbranding, which caused, at least in part, financial losses for which Purdue paid $160 million in “restitution.” Moreover, the Court noted how Purdue had “almost $3 billion in revenues from OxyContin during the time it misbranded the drug, much of it from Federal and state health care programs which paid for prescriptions for OxyContin, some of which would not have been written but for the misbranding.”
Second, the Executives argued that an aggravating factor was misapplied because it referred only to “acts” whereas their violations consisted solely of omissions. The Court rejected this argument and noted that nothing turned “upon the distinction where it is made, and in light of the deference due the Secretary’s interpretation of her own regulation,” the Court concluded HHS’ interpretation equating the two terms when only “acts” are proscribed was a permissible one.
Third, the Executives argued the Secretary erred in failing to take into account their lack of “conscious wrongdoing.” The pertinent regulation establishes as a mitigating factor “that the individual has a mental, physical, or emotional condition ... that reduced the individual’s culpability.” 42 C.F.R. § 1001.201(b)(3)(ii). The Appellants argued that their “lack of any awareness of wrongdoing” is one such “mental condition,” and the Secretary therefore erred in failing to give them credit for this mitigating factor. The Court agreed with the Executives, and noted substantial evidence that HHS did not apply this mitigating factor.
Fourth, the Court rejected the Executives argument that HHS gave insufficient weight to their cooperation with law enforcement agencies because the Executives did not show that the Secretary had abused her discretion.
Finally, the Executives argued that the Secretary failed to justify the length of their exclusion in light of the agency’s prior decisions, as required by the Administrative Procedure Act (APA). The Court agreed with the Executives that the APA authorizes review under the arbitrary and capricious standard, which requires that the Secretary provide a reasoned explanation for departing from agency precedent.
In agreeing with the Executives, the Court noted that although the DAB had a number of prior decisions which excluded individuals for more than 10 years, those cases were “materially different.” “Every one of the cases cited by the DAB involved a mandatory exclusion with a presumptive baseline of five years, not a discretionary exclusion with a presumptive baseline of three years; in addition, every cited case involved either a felony conviction or a conviction for Medicare fraud for which the defendant was incarcerated, none of which factors is present in this case.”
“In fact, none of the cases cited by the DAB even concerned an exclusion under section 1320a-7(b)(1); it appears the Secretary has never excluded anyone for more than ten years under that provision of the statute,” the Court noted. The longest period of exclusion the DAB had ever approved under section 1320a-7(b)(1) was four years. The Court recognized that “when the DAB affirmed the Appellants’ 12-year exclusion the agency had never excluded anyone for more than ten years based upon a misdemeanor — a departure the agency does not even acknowledge, much less explain.”
The Court explained that “simply pointing to prior cases with the same bottom line but arising under a different law and involving materially different facts does not provide a reasoned explanation for the agency’s apparent departure from precedent.” Therefore “the decision of the DAB was arbitrary and capricious with respect to the length of the Appellants’ exclusion.”
Judge Williams disagreed with the majority’s finding that the exclusion should be upheld. He took issue with how the court gave an extraordinarily broad definition of ‘relating to’ in which a “relationship” can be one of hostility or enmity, or can be orthogonal, so that for a literalist the statute is virtually meaningless. Taken literally, the provision does not even ask for a “substantial relationship” or a “close relationship”; it calls only for a “relationship,” however attenuated. Williams notes, however, that the parties appear to agree on narrowing the field a little, both assuming that the relationship must be one of overlap between the crime of fraud and the facts shown (or necessary to be shown) in appellants’ conviction of misdemeanor misbranding.
The Executives viewed the required overlap fairly clearly: just as common law fraud requires a showing of scienter, the crime of conviction must have required proof of such an element. The Secretary’s idea of the necessary overlap was more free floating—some sort of “nexus” between the convictions and fraud (or the other bases for exclusion). But even this free-floating overlap (if it is to have any boundaries at all) requires some concept of “fraud, theft, embezzlement . . . or other financial misconduct,” Williams reasoned.
Williams maintained that while “One can talk of ‘circumstance-specific’ relationships till one is blue in the face … in the end deciding whether the necessary overlap exists requires a definition (or at least an idea) of the types of conviction triggering § 1320a-7(b)(1)(A). The conceptual battle cannot be avoided.”
The parties’ somewhat synthetic battle between “generic fraud” and the “circumstance-specific” approach lead “the court into an extensive showing that the statute is laced with requirements that in the end will require burrowing into facts.” The majority argued that a statute rife with such intellectual exercises is not very likely to have clearly limited the Secretary to “generic fraud” for the fraud aspect of § 1320-7(b)(1)(A). But the sense of all those “factual relationships” depends on conceptual relationships. If the Secretary’s view is correct, “virtually any overlap between the facts required for fraud and those involved in (or required for) the offense of conviction is enough.”
The meaning of a statute must not be confused with its simple linguistic potential. Williams noted that “the linguistic potential of crime or ‘misdemeanor relating to fraud’ is almost infinite.” The Secretary, though on common ground with appellants in understanding that the relation must be one of overlap, purports to see no other limit. The correct way, however, to read a statute is to “put it into context.” Here the context suggests a requirement of at least some approximation of the moral turpitude associated with “fraud” itself. Williams reasoned:
Very troublingly, without such an effort at seeking the legal meaning of the disputed clause, we have a reading by the Secretary that offers none of the “precision and guidance [that] are necessary so that those enforcing the law do not act in an arbitrary or discriminatory way.” FCC v. Fox Television Stations, Inc., 132 S. Ct. 2307, 2317 (2012). That failing is especially acute for an action that excludes appellants from pursuing careers in the pharmaceutical industry—where they’ve spent their lifetimes accumulating industry-specific human capital.”
“Misdemeanor” and “fraud” have well-established meanings. The Secretary need only prescribe some specific meaning for the word “related.” It might require that an excluded individual’s conviction rest on findings of all the elements of fraud, as the appellants argue; or it might require only that it rest on findings of the person’s culpable responsibility for a material misrepresentation. It is for the Secretary to say, subject of course to judicial review. But an invocation of “nexus,” though it fits linguistically, is simply not a legal interpretation as that process is normally understood. It’s more accurately seen as a refusal to interpret.