Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
The Inspector General,
- v. -
Edward J. Petrus, Jr., M.D.,
and The Eye Center of Austin,
Respondents.
DATE: October 10, 1990
Docket No. C-147
DECISION
Respondents requested a hearing to contest the Inspector General's (I.G.) proposed
imposition against
them, jointly and severally, of civil monetary penalties and assessments. The
I.G. alleged that Respondents
violated section 1128A of the Social Security Act (the Act), as implemented
by 42 C.F.R. 1003.100 et seq.
I held a hearing in Austin, Texas, on March 19-24, 1990. Based on the law,
regulations, and evidence
adduced at the hearing of this case, I conclude that Respondents unlawfully
presented or caused to be
presented 271 claims for items or services that they knew, had reason to know,
or should have known were
not provided as claimed. I impose penalties of $100,000.00 and assessments of
$80,000.00 against
Respondents, jointly and severally.
ISSUES
The issues in this case are whether:
1. The six-year statute of limitations provided in section 1128A(c)(1) of
the Act applies to the
claims for items or services at issue.
2. Assuming the six-year statute of limitations applies, the I.G. initiated
a proceeding against
Respondents not later than six years after the claims at issue were presented.
3. Rulings on the admissibility of evidence in this case violated Respondents'
due process rights.
4. Denial of Respondents' motion to postpone the hearing was unfair to Respondents.
5. Respondents presented or caused to be presented claims for items or services
in violation of
section 1128A of the Act.
6. Assessments and penalties should be imposed against Respondents and, if so, in what amounts.
7. The penalties and assessment imposed in this case violate Respondents'
rights not to be placed
in double jeopardy.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Respondent Petrus is an opthalmologist who has practiced in Austin, Texas. I.G. Ex. 173 /5-6.
2. Respondent Eye Center is a professional corporation. I.G. Ex. 112 /2; Tr. at 453.
3. From May 12, 1983 through January 21, 1984, Respondent Petrus was the sole
owner and operator of
Respondent Eye Center. Tr. at 453.
4. Respondent Petrus had sole authority for hiring and promoting employees
at Respondent Eye Center,
and personally wrote all paychecks on behalf of Respondent Eye Center. Tr. at
192-195, 476-478, 1150-
1151, 1152, 1162, 1267-1268.
5. Respondent Petrus directed Respondent Eye Center's employees to prepare
and submit claims for
Medicare and Medicaid reimbursement. Tr. at 1152, 1158-1159, 1164-1165, 1168,
1169, 1201, 1240,
1253, 1261.
6. Respondents Petrus and Eye Center had identification or provider numbers
for both the Medicare and
Medicaid programs. Tr. at 1035, 1103, 1138.
7. On June 10, 1982, Respondent Petrus was sent a notice of suspension from
participation in Medicare
and Medicaid, pursuant to section 1128(a) of the Social Security Act. I.G. Ex.
100; Tr. at 91.
8. The suspension was based on Respondent Petrus' December 21, 1979 conviction
of a criminal offense
related to his participation in the Texas Medicaid program. I.G. Ex. 100; Tr.
at 91.
9. The suspension notice informed Respondent Petrus that no payments would
be made for items or
services he furnished either directly or as an employee of a provider of services
after the effective date of
the suspension. I.G. Ex. 100/2.
10. Respondent Petrus obtained a temporary restraining order and a preliminary
injunction prohibiting the
suspension from going into effect. I.G. Ex. 102/2-3; Tr. at 94.
11. Subsequently, Respondent Petrus entered into a settlement agreement with
the Department of Health
and Human Services. I.G. Ex. 102/1-6; Tr. at 94.
12. The settlement agreement provided that Respondent Petrus would be suspended
from participating in
Medicare and Medicaid for six months. I.G. Ex. 102/3; Tr. at 98.
13. The settlement agreement provided that the suspension would automatically
become effective seven
days after the date a court order was signed and entered dissolving the preliminary
injunction. I.G. Ex.
102/5; Tr. at 98, 101.
14. A court order dissolving the preliminary injunction was signed and entered
on May 5, 1983. I.G. Ex.
104; Tr. at 107.
15. Respondent Petrus' suspension from participating in Medicare and Medicaid
became effective
beginning May 12, 1983. Respondent Petrus was barred from receiving payment
for any Medicare or
Medicaid item or service furnished by him during the period of his suspension.
I.G. Ex. 102/5; 105/2;
Social Security Act, section 1862(e).
16. A party who is suspended or excluded from participating in Medicare and
Medicaid pursuant to
section 1128(a) of the Social Security Act is not automatically entitled to
reinstatement. Tr. at 1270; See
42 C.F.R. 1001.130, 1001.132.
17. A suspended or excluded party must request that he or she be reinstated
in order to be reinstated. See
42 C.F.R. 1001.130.
18. A party's reinstatement request will not be approved unless it is reasonably
certain that that party will
not repeat the violations that led to his or her suspension or exclusion. See
42 C.F.R. 1001.132.
19. On August 12, 1983, Respondent Petrus requested reinstatement. I.G. Ex. 120.
20. On November 3, 1983, the I.G. sent Respondent Petrus a questionnaire in
order to ascertain whether
Respondent Petrus satisfied the criteria by which reinstatement could be granted.
I.G. Ex. 120; Tr. at 1270-
1271.
21. Respondent Petrus was advised that a determination regarding his reinstatement
request would be
based on information that he was requested to supply, as well as on consultations
with various agencies.
I.G. Ex. 120.
22. On November 9, 1983, Respondent Petrus submitted a statement in response
to the questionnaire. I.G
Ex. 121/1-2.
23. Later in November, 1983, the I.G. notified Respondent Petrus' attorney
that Respondent Petrus'
reinstatement request was being reviewed. I.G. Ex. 119.
24. The I.G. did not reinstate Respondent Petrus at the end of the six month
suspension period, and the
suspension continued in effect. Tr. at 1477.
25. On June 7, 1989, the I.G. sent a notice to Respondents alleging that they
had presented or caused to be
presented claims for 275 items or services in violation of the Civil Monetary
Penalties Law, section 1128A
of the Social Security Act. I.G. Ex. 97.
26. The allegedly false claims are listed in Attachment A, attached to the
notice, and are enumerated as
separate counts at attachment 1 of the I.G.'s Posthearing Brief. I.G. Ex. 97.
27. The I.G. withdrew its allegations with respect to counts 20, 21, 48, and 49.
28. The 271 remaining counts represent items or services which Respondent Eye
Center claimed were
provided between May 12, 1983, and January 21, 1984. I.G. Ex. 1, 2, 2b, 3-6,
7.1, 7.2, 7.3, 8-11, 13, 14.1,
14.2, 15.2, 16, 17.1, 17.2, 18.2, 18.5, 18.4, 18.6, 18.7, 19, 19b, 20.1, 20.2,
20.4, 20.5, 20.6, 21, 22-32, 33.1,
34-36, 37.1, 37.2, 38, 39.1, 39.2, 39b.3, 40, 41-45, 46.1, 46.2, 46.4, 47-61,
62.1, 62.2, 63, 64, 65.1, 65.2,
66-68, 69.1, 69.2, 70, 71, 72.1, 73, 74.1, 74.2, 75.1, 75.2, 76, 77.1, 78-83,
84.1, 84.2, 85, 86.1, 87.1, 87.2,
88, 89.1, 89.2, 90.1, 91-96.
29. Respondent Eye Center presented all 271 of the claims at issue. Finding
28; Social Security Act,
section 1128A.
30. Respondent Petrus caused all 271 of the claims at issue to be presented.
Findings 3-5; Social Security
Act, section 1128A.
31. Blue Cross and Blue Shield of Texas ("Blue Cross") has a contract
with the Department to process
Medicare claims in Texas. Tr. at 1022.
32. The National Heritage Insurance Company ("NHIC") has a contract
with the State of Texas to process
Medicaid claims in Texas. Tr. at 1095.
33. All of the claims for items or services at issue in this case were received
for processing as Medicare
claims by Blue Cross or as Medicaid claims by NHIC. I.G. Ex. 1, 2, 2b, 3-6,
7.1, 7.2, 7.3, 8-11, 13, 14.1,
14.2, 15.2, 16, 17.1, 17.2, 18.2, 18.5, 18.4, 18.6, 18.7, 19, 19b, 20.1, 20.2,
20.4, 20.5, 20.6, 21, 22-32, 33.1,
34-36, 37.1, 37.2, 38, 39.1, 39.2, 39b.3, 40, 41-45, 46.1, 46.2, 46.4, 47-61,
62.1, 62.2, 63, 64, 65.1, 65.2,
66-68, 69.1, 69.2, 70, 71, 72.1, 73, 74.1, 74.2, 75.1, 75.2, 76, 77.1, 78-83,
84.1, 84.2, 85, 86.1, 87.1, 87.2,
88, 89.1, 89.2, 90.1, 91-96.
34. The earliest date when any of the items or services at issue were received
for processing by Blue Cross
or by NHIC was June 8, 1983. I.G. Ex. 5, 16, 17.1, 18.5, 20.1, 25, 26, 41, 43,
50, 52, 58, 65.1; See Finding
33. Tr. at 1038-1041, 1105-1106, 1110.
35. The I.G. may initiate an action under section 1128A of the Social Security
Act within six years of the
date that a claim at issue was presented. Social Security Act, section 1128A(c).
36. For purposes of determining whether an action was initiated within the
six-year statute of limitations,
the term "presented" refers to the date on which a claim was received
by an agent acting on behalf of the
United States or a state. Social Security Act, section 1128A(c).
37. All of the 271 claims at issue were presented within six years of the date
of the notice letter. Findings
25, 33.
38. For each of the 271 claims at issue, the I.G. initiated his action against
Respondents within the six-year
statute of limitations. Finding 37; Social Security Act, section 1128A(c).
39. Dr. Paul Malsky was hired by Respondent Petrus pursuant to an oral contract
to examine and treat
patients at Respondent Eye Center, and was assigned Medicare and Medicaid provider
numbers. I.G. Ex.
168 at 13, 22; Tr. at 477-478, 600, 1035-1036, 1103, 1138.
40. During the term of his contract, Dr. Malsky was the only physician who
worked for Respondent
Petrus. Findings 41-43; Tr. at 476, 1153.
41. Pursuant to his agreement with Respondent Petrus, Dr. Malsky worked at
Respondent Eye Center on
Wednesdays and Fridays. Tr. at 477.
42. Dr. Malsky was never at Respondent Eye Center on a day other than a Wednesday
or a Friday. Tr. at
478.
43. Dr. Malsky worked at Respondent Eye Center on the following Wednesdays
and Fridays in 1983:
June 15, 17, 22, 24, and 29, July 1, 6, 8, 13, 15, 20, 22, 27, and 29, August
3, 5, 10, 12, 17, 19, 24, 26, and
31, September 2, 7, 9, 14, 16, 21, 23, 28, and 30, and October 5, 7, and 12.
Tr. at 481-483.
44. Dr. Malsky routinely made treatment notes of the patients he treated. I.G.
168/17, 18; Tr. at 486, 487,
522, 645.
45. Dr. Gregory Baer was hired by Respondent Petrus pursuant to an oral contract
to examine and treat
patients at Respondent Eye Center, and was assigned Medicare and Medicaid provider
and identification
numbers. Tr. at 194, 195, 1035-1036, 1103, 1138.
46. During the term of his contract, Dr. Baer was the only physician who worked
for Respondent Petrus.
Findings 47-50, 52, 54; Tr. at 192, 1153.
47. Dr. Baer worked at Respondent Eye Center on specified dates. Tr. at 194.
48. Usually, Dr. Baer would be notified a day or two in advance of a date when
he was requested to work
at Respondent Eye Center. Tr. at 194.
49. Dr. Baer worked at Respondent Eye Center on the following dates in 1983:
November 8, 11, and 22,
and December 6 and 20. Tr. at 195.
50. Dr. Baer worked at Respondent Eye Center on the following dates in 1984:
January 10 and 21. Tr. at
195.
51. Dr. Baer always recorded the procedures he performed at Respondent Eye
Center. I.G. Ex. 135/6,
170/25, 171/11-12, 14, 16, 18, 19; Tr. at 215, 216, 271, 249, 350-351.
52. In addition to his work at Respondent Eye Center, Dr. Baer also worked
for Respondent Petrus in
performing outpatient surgery at Bailey Square, an outpatient surgical facility.
Tr. at 218-219.
53. Dr. Baer's services at Bailey Square were provided on dates when he was
also present at Respondent
Eye Center, except on December 27, 1983, when Dr. Baer provided services at
Bailey Square but not at
Respondent Eye Center. Tr. at 224.
54. Of the 271 items or services at issue, 97 items or services, enumerated
at counts 4, 5, 11-13, 16, 17, 29,
36-41, 51-57, 59-61, 65-72, 87-90, 93, 94, 97-102, 104, 107, 117, 133-138, 144,
145, 148, 151, 154, 155,
157, 158, 161, 162, 171, 177, 184, 188-191, 196, 205, 213-216, 221, 223-228,
235, 246, 247, 249, 258-
263, 268, 269, 271, and 272, are for items or services claimed as having been
provided by Respondent
Petrus. I.G. Ex. 2, 5, 7.1, 7.2, 11, 14.1, 16, 17.1, 18.2, 18.4, 18.5, 20.1,
20.2, 22-26, 28, 30, 34, 38, 39.1,
41, 43, 47, 49, 50, 52, 55, 58, 62.1, 64, 65.1, 67, 70, 73, 74.1, 74.2, 76,
78, 79, 80, 83, 87.1, 88, 91, 93, 94,
95; Tr. at 1035, 1103.
55. With the exception of the items or services stated in the claims enumerated
at counts 87-90, all of the
97 items or services claimed as having been provided by Respondent Petrus were
claimed to have been
provided on dates when Respondent Petrus was the only physician working at Respondent
Eye Center.
I.G. Ex. 2, 5, 7.1, 7.2, 11, 14.1, 16, 17.1, 18.2, 18.4, 18.5, 20.1, 20.2, 22-26,
28, 30, 34, 38, 39.1, 41, 43,
47, 49, 50, 52, 55, 58, 62.1, 64, 65.1, 67, 70, 73, 74.1, 74.2, 76, 78, 79,
80, 83, 87.1, 88, 91, 93, 94, 95;
Findings 41-43, 47-50, 52, 54.
56. With respect to the items or services stated in the claims enumerated at
counts 87-90, Dr. Baer was the
only physician working for Respondent Petrus on the date when these items or
services were provided.
Findings 47-50, 52, 54.
57. Dr. Baer did not provide the items or services stated in the claims enumerated
at counts 87-90. Tr. at
313.
58. To the extent that items or services were provided in the claims enumerated
in counts 4, 5, 11-13, 16,
17, 29, 36-41, 51-57, 59-61, 65-72, 87-90, 93, 94, 97-102, 104, 107, 117, 133-138,
144, 145, 148, 151,
154, 155, 157, 158, 161, 162, 171, 177, 184, 188-191, 196, 205, 213-216, 221,
223-228, 235, 246, 247,
249, 258-263, 268, 269, 271, and 272, Respondent Petrus provided them, or they
were provided incident to
his services. Findings 54-57.
59. Of the 271 items or services at issue, 174 items or services, enumerated
at counts 1-3, 6-10, 14, 15, 18,
19, 22-28, 30-35, 42-47, 50, 58, 62-64, 73-86, 91, 92, 95, 96, 103, 105, 106,
108-116, 118-132, 139-143,
146, 147, 149, 150, 152, 153, 156, 159, 160, 163-170, 172-176, 178-183, 185-187,
192-195, 197-204, 206-
212, 217-220, 222, 229-234, 236-245, 248, 250-257, 264-267, 270, and 273-275,
are for items or services
claimed to have been provided either by Dr. Malsky or by Dr. Baer. I.G. Ex.
1, 2b, 3, 4, 6, 7.3, 8-11, 13,
14.2, 15.2, 17.2, 18.4, 18.7, 19, 20.4, 20.5, 20.6, 21, 23, 24, 27, 29, 30,
31, 32, 33.1, 35, 36, 37.1, 37.2,
39.2, 39b.3, 40, 42, 44, 45, 46.1, 46.4, 48, 51, 53, 54, 56, 57, 59-61, 62.2,
63, 65.2, 66, 68, 69.1, 69.2, 71,
72.1, 75.1, 75.2, 77.1, 80-82, 84.1, 84.2, 85, 86.1, 87.2, 89.1, 89.2, 90.1,
92, 93, 96; Tr. at 1035-1036,
1102, 1103.
60. The items or services stated in the claims enumerated at counts 1-3, 6,
7, 26-28, 30, 31, 32-35, 36-47,
51-56, 58, 62-64, 73-82, 91-96, 113-115, 119-124, 139-143, 146, 147, 152, 153,
156, 159, 160, 165-170,
175, 176, 178-180, 182, 186, 187, 192, 193-195, 203, 210-212, 229-234, 239-243,
250-253, 256, 257, 264-
267, 270, and 273-275, were claimed as having been provided by Dr. Malsky. I.G.
Ex. 1, 2b, 10, 11, 13,
14.1, 14.2, 16, 17.2, 18.4, 18.7, 19, 20.4, 20.5, 20.6, 23, 24, 31, 32, 33.1,
36, 39.2, 39b.3, 40, 42, 46.1,
46.4, 48, 51, 54, 57, 59-61, 63, 65.2, 66, 69.2, 72.1, 80-82, 85, 86.1, 89.1,
90.1, 92, 93, 96; Tr. at 1035-
1036, 1102, 1103.
61. To the extent that they were provided, the items or services stated in
the claims enumerated at counts
1-3, 6, 7, 26-28, 30, 31, 32-35, 36-47, 51-56, 58, 62-64, 73-82, 91-96, 113-115,
119-124, 139-143, 146,
147, 152, 153, 156, 159, 160, 165-170, 175, 176, 178-180, 182, 186, 187, 192,
193-195, 203, 210-212,
229-234, 239-243, 250-253, 256, 257, 264-267, 270, and 273-275, were provided
on dates when Dr.
Malsky did not work for Respondent Petrus, either at Respondent Eye Center,
or elsewhere. Findings 41-
43.
62. Dr. Malsky did not provide the items or services stated in the claims enumerated
at counts 1-3, 6, 7,
26-28, 30, 31, 32-35, 36-47, 51-56, 58, 62-64, 73-82, 91-96, 113-115, 119-124,
139-143, 146, 147, 152,
153, 156, 159, 160, 165-170, 175, 176, 178-180, 182, 186, 187, 192, 193-195,
203, 210-212, 229-234,
239-243, 250-253, 256, 257, 264-267, 270, and 273-275. Findings 60-61.
63. Dr. Malsky was the only physician working for Respondent Petrus on the
dates when the items or
services stated in the claims enumerated at counts 1-3, 6, 7, 26-28, 30, 31,
32-35, 36-47, 51-56, 58, 62-64,
73-82, 91-96, 113-115, 119-124, 139-143, 146, 147, 152, 153, 156, 159, 160,
165-170, 175, 176, 178-180,
182, 186, 187, 192, 193-195, 203, 210-212, 229-234, 239-243, 250-253, 256, 257,
264-267, 270, and 273-
275, were claimed to have been provided. Findings 40-43.
64. To the extent that items or services were provided in the claims enumerated
at counts 1-3, 6, 7, 26-28,
30, 31, 32-35, 36-47, 51-56, 58, 62-64, 73-82, 91-96, 113-115, 119-124, 139-143,
146, 147, 152, 153, 156,
159, 160, 165-170, 175, 176, 178-180, 182, 186, 187, 192, 193-195, 203, 210-212,
229-234, 239-243, 250-
253, 256, 257, 264-267, 270, and 273-275, Respondent Petrus provided them, or
they were provided
incident to his services. Findings 62-63.
65. The items or services stated in the claims enumerated at counts 111 and
236-238 were claimed to have
been provided by Dr. Baer. I.G. Ex. 30, 84.1, 84.2; Tr. at 1035-1036, 1102,
1103.
66. The items or services stated in the claims enumerated as counts 111 and
236-238 were provided on
dates when Dr. Baer did not work for Respondent Petrus. Findings 47-50, 52,
54.
67. Dr. Baer did not provide the items or services stated in the claims enumerated
as counts 111 and 236-
238. Findings 65, 66.
68. Dr. Baer was the only physician working for Respondent Petrus on the dates
when the items or
services stated in the claims enumerated as counts 111 and 236-238 were provided.
Findings 46-50.
69. To the extent that items or services were provided in the claims enumerated
in counts 111 and 236-
238, Respondent Petrus provided them, or they were provided incident to his
services. Findings 65-68.
70. The items or services stated in the claims enumerated at counts 22-25,
50, 81, 82, 116, 181, 217-220,
222, 244, 245, and 248, were claimed to have been provided by Dr. Malsky. I.G.
Ex. 9, 15.2, 20.6, 33.1,
61, 75.1, 75.2, 77.1, 86.1, 87.2.
71. Dr. Malsky did not order or provide the items or services stated in the
claims enumerated at counts 22-
25. Tr. at 524-525.
72. Dr. Malsky was the only physician working for Respondent Petrus on the
date when the items or
services stated in the claims enumerated at counts 22-25 were claimed to have
been provided. Findings 40-
43.
73. To the extent that items or services stated in the claims enumerated at
counts 22-25 were provided,
they were provided by Respondent Petrus. Findings 71, 72.
74. Dr. Malsky did not provide the items or services stated in the claim enumerated
at count 50. I.G. Ex.
15e/14; Tr. at 127-129, 130, 135-136.
75. Dr. Malsky was the only physician working for Respondent Petrus on the
date when the items or
services stated in the claims enumerated at count 50 were claimed to have been
provided. Findings 40-43.
76. To the extent that items or services stated in the claim enumerated at
count 50 were provided, they
were provided by Respondent Petrus. Findings 74, 75; I.G. Ex. 15e/14; Tr. at
127-129, 130, 135-136.
77. The items or services stated in the claims enumerated at counts 81 and
82 were not provided by Dr.
Malsky or incident to his services. I.G. Ex. 20d/16; Tr. at 359-360, 478, 847,
850, 1580-1582.
78. Dr. Malsky was the only physician working for Respondent Petrus on the
date when the items or
services stated in the claims enumerated at counts 81 and 82 were claimed to
have been provided. Findings
40-43.
79. To the extent items or services stated in the claims enumerated at counts
81 and 82 were provided,
they were provided incident to the services of Respondent Petrus. Findings 77,
78.
80. Dr. Malsky did not provide the items or services stated in the claim enumerated
at count 116. I.G. Ex.
33d/1, /13, /15, /18; Tr. at 972, 975-976, 982-983.
81. Dr. Malsky was the only physician working for Respondent Petrus on the
date when the items or
services stated in the claims enumerated at counts 116 were claimed to have
been provided. Findings 40-
43.
82. To the extent items or services stated in the claim enumerated at count
116 were provided, they were
provided by Respondent Petrus. Findings 80, 81.
83. Dr. Malsky did not provide the items or services stated in the claim enumerated
at count 181. Tr. at
972, 978-979.
84. Dr. Malsky was the only physician working for Respondent Petrus on the
date when the items or
services stated in the claims enumerated at count 181 were claimed to have been
provided. Findings 40-43.
85. To the extent items or services stated in the claim enumerated at count
181 were provided, they were
provided by Respondent Petrus. Findings 83, 84.
86. Dr. Malsky did not order or provide the items or services stated in the
claims enumerated at counts 217
and 218. Tr. at 567, 674.
87. Dr. Malsky was the only physician working for Respondent Petrus on the
date when the items or
services stated in the claims enumerated at counts 217 and 218 were claimed
to have been provided.
Findings 40-43.
88. To the extent items or services stated in the claims enumerated at counts
217 and 218 were provided,
they were provided incident to the services of Respondent Petrus. Findings 86,
87; I.G. Ex. 75d/2.
89. Dr. Malsky did not provide the items or services stated in the claims enumerated
at counts 219 and
220. I.G. Ex. 75f/23, /26, /28, /31, 157.
90. Dr. Malsky was the only physician working for Respondent Petrus on the
date when the items or
services stated in the claims enumerated at counts 219 and 220 were claimed
to have been provided.
Findings 40-43.
91. To the extent items or services stated in the claims enumerated at counts
219 and 220 were provided,
they were provided by Respondent Petrus. Findings 89, 90.
92. Dr. Malsky did not provide the items or services stated in the claim enumerated
at count 222. I.G.
Ex. 164/134.
93. Dr. Malsky was the only physician working for Respondent Petrus on the
date when the items or
services stated in the claims enumerated at count 222 were claimed to have been
provided. Findings 40-43.
94. To the extent items or services stated in the claim enumerated at count
222 were provided, they
were provided by Respondent Petrus, or incident to his services. Findings 92,
93.
95. Dr. Malsky did not provide the items or services stated in the claims enumerated
at counts 244 and
245. Tr. at 145-146; See I.G. Ex. 86d/1, 86e/22.
96. Dr. Malsky was the only physician working for Respondent Petrus on the
date when the items or
services stated in the claims enumerated at counts 244 and 245 were claimed
to have been provided.
Findings 40-43.
97. To the extent items or services stated in the claims enumerated at counts
244 and 245 were provided,
they were provided by Respondent Petrus. Findings 92, 93.
98. Dr. Malsky did not provide the items or services stated in the claim enumerated
at count 248. I.G. Ex.
87d/13, /15, /17; Tr. at 972, 989-990.
99. Dr. Malsky was the only physician working for Respondent Petrus on the
date when the items or
services stated in the claims enumerated at count 248 were claimed to have been
provided. Findings 40-43.
100. To the extent items or services stated in the claims enumerated at counts
248 were provided, they
were provided by Respondent Petrus. Findings 95, 96.
101. The items or services stated in the claims contained at counts 8-10, 14,
15, 18, 19, 83-86, 103, 105,
106, 108, 109, 112, 125-132, 149, 150, 163, 164, 172-174, 185, 197-202, 254,
and 255, were claimed as
having been provided by Dr. Baer. I.G. Ex. 3, 4, 6, 7.3, 8, 21, 27, 29, 30,
37.1, 37.2, 44, 45, 53, 56, 62.2,
68, 69.1, 89.2.
102. Dr. Baer did not provide the items or services stated in the claims enumerated
at counts 8 and 9. Tr.
at 209-210, 301.
103. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claims enumerated at counts 8 and 9 were claimed to have
been provided. Findings
46-50, 52, 54.
104. To the extent items or services stated in the claims enumerated at counts
8 and 9 were provided, they
were provided by Respondent Petrus. Findings 99, 100; Tr. at 209-210; 301.
105. Dr. Baer did not provide the items or services stated in the claim enumerated at count 10. Tr. at 269.
106. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claim enumerated at count 10 were claimed to have been
provided. Findings 46-50,
52, 54.
107. To the extent items or services stated in the claim enumerated at count
10 were provided, they were
provided by Respondent Petrus. Findings 102, 103; Tr. at 269.
108. Dr. Baer did not provide the items or services stated in the claim enumerated
at counts 14 and 15. Tr.
at 270-271; See I.G. Ex. 6d/7.
109. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claim enumerated at counts 14 and 15 were claimed to
have been provided. Findings
46-50, 52, 54.
110. To the extent items or services stated in the claim enumerated at counts
14 and 15 were provided,
they were provided by Respondent Petrus. Finding 106; Tr. at 270-271; See I.G.
Ex. 6d/7.
111. Dr. Baer did not provide the items or services stated in the claim enumerated
at count 18. See I.G.
Ex. 7b/1; I.G. Ex. 7b/5, /8, /11, /14.
112. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claim enumerated at count 18 were claimed to have been
provided. Findings 46-50,
52, 54.
113. To the extent items or services stated in the claim enumerated at count
18 were provided, they were
provided by Respondent Petrus. Findings 108, 109; See I.G. Ex. 7b/1; I.G. Ex.
7b/5, /8, /11, /14.
114. Dr. Baer did not order or provide the items or services enumerated at
count 19. Tr. at 272-273; See
I.G. Ex. 8d/4.
115. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claim enumerated at count 19 were claimed to have been
provided. Findings 46-50,
52, 54.
116. To the extent items or services stated in the claim enumerated at count
19 were provided, they were
provided incident to the services of Respondent Petrus. Findings 111, 112; Tr.
at 272-273; See I.G. Ex.
8d/4.
117. Dr. Baer did not provide the items or services stated in the claims enumerated
at counts 83-86. Tr. at
302-303.
118. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claim enumerated at counts 83-86 were claimed to have
been provided. Findings 46-
50, 52, 54.
119. To the extent items or services stated in the claims enumerated at counts
83-86 were provided, they
were provided by Respondent Petrus. Findings 114, 115; I.G. Ex. 132/15-16, 137/3-4,
139/6; Tr. at 245,
302-303.
120. Dr. Baer did not provide the items or services stated in the claim enumerated
at count 103. Tr. at
275.
121. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claim enumerated at count 103 were claimed to have been
provided. Findings 46-50,
52, 54.
122. To the extent items or services stated in the claim enumerated at count
103 were provided, they were
provided by Respondent Petrus. Findings 117, 118.
123. Dr. Baer did not provide the items or services stated in the claims enumerated at counts 105 and 106.
124. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claims enumerated at counts 105 and 106 were claimed
to have been provided.
Findings 46-50, 52, 54.
125. To the extent items or services stated in the claims enumerated at counts
105 and 106 were provided,
they were provided by Respondent Petrus, or were provided incident to his services.
Findings 120, 121;
Tr. at 219, 847, 850.
126. Dr. Baer did not provide the items or services stated in the claims enumerated
at counts 108, 109, and
112. Tr. at 278-279; See I.G. Ex. 164/182.
127. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claims enumerated at counts 108, 109, and 112 were claimed
to have been provided.
Findings 46-50, 52, 54.
128. To the extent items or services stated in the claims enumerated at counts
108, 109, and 112 were
provided, they were provided by Respondent Petrus. Findings 123, 124.
129. Dr. Baer did not provide the items or services stated in the claims enumerated
at counts 125-132. Tr.
at 305.
130. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claims enumerated at counts 125-132 were claimed to have
been provided. Findings
46-50, 52, 54.
131. To the extent items or services stated in the claims enumerated at counts
125-132 were provided, they
were provided by Respondent Petrus. Findings 126, 127.
132. Dr. Baer did not provide the items or services stated in the claim enumerated
at count 149. Tr. at
280.
133. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claim enumerated at count 149 were claimed to have been
provided. Findings 46-50,
52, 54.
134. To the extent items or services stated in the claim enumerated at count
149 were provided, they were
provided by Respondent Petrus. Findings 129, 130.
135. Dr. Baer did not provide the items or services stated in the claim enumerated
at count 150. Tr. at
281.
136. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claim enumerated at count 150 were claimed to have been
provided. Findings 46-50,
52, 54.
137. To the extent items or services stated in the claim enumerated at count
150 were provided, they were
provided by Respondent Petrus. Findings 132, 133.
138. Dr. Baer did not provide the items or services stated in the claims enumerated
at counts 163 and 164.
Tr. at 284.
139. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claims enumerated at counts 163 and 164 were claimed
to have been provided.
Findings 46-50, 52, 54.
140. To the extent items or services stated in the claims enumerated at counts
163 and 164 were provided,
they were provided by Respondent Petrus. Findings 135, 136.
141. Dr. Baer did not provide the items or services stated in the claims enumerated
at counts 172-174. Tr.
at 288.
142. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claims enumerated at counts 172-174 were claimed to have
been provided. Findings
46-50, 52, 54.
143. To the extent items or services stated in the claims enumerated at counts
172-174 were provided, they
were provided by Respondent Petrus. Findings 138, 139.
144. Dr. Baer did not provide the items or services stated in the claim enumerated
at count 185. Tr. at
291.
145. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claim enumerated at count 185 were claimed to have been
provided. Findings 46-50,
52, 54.
146. To the extent items or services stated in the claim enumerated at count
185 were provided, they were
provided by Respondent Petrus. Findings 141, 142.
147. Dr. Baer did not provide the items or services stated in the claims enumerated
at counts 197-199. Tr.
at 212, 213, 308.
148. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claims enumerated at counts 197-199 were claimed to have
been provided. Findings
46-50, 52, 54.
149. To the extent items or services stated in the claim enumerated at counts
197-199 were provided, they
were provided by Respondent Petrus. Findings 144, 145.
150. Dr. Baer did not provide the items or services stated in the claims enumerated
at counts 200-202. Tr.
at 308, 309.
151. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claims enumerated at counts 200-202 were claimed to have
been provided. Findings
46-50, 52, 54.
152. To the extent items or services stated in the claims enumerated at counts
200-202 were provided, they
were provided by Respondent Petrus. Findings 148, 149.
153. Dr. Baer did not provide the items or services stated in the claims enumerated
at counts 254 and 255.
Tr. at 298, 299.
154. Dr. Baer was the only physician working for Respondent Petrus on the date
when the items or
services stated in the claims enumerated at counts 254 and 255 were claimed
to have been provided.
Findings 46-50, 52, 54.
155. To the extent items or services stated in the claims enumerated at counts
254 and 255 were provided,
they were provided by Respondent Petrus. Findings 150, 151.
156. All 271 claims at issue in this case are Medicare or Medicaid claims for
items or services which, to
the extent they were provided, were provided by or incident to the services
of Respondent Petrus during a
period when he was suspended from participation in Medicare and Medicaid. Findings
15, 24, 54-152.
157. All 271 claims at issue in this case are Medicare or Medicaid claims for
which payment may not be
made, because they were claims for items or services which, to the extent they
were provided, were
provided by or incident to the services of Respondent Petrus during a period
when he was suspended from
participation in Medicare and Medicaid. Finding 153; Social Security Act, Section
1128(A)(1)(a)(d).
158. The items or services stated in the claims enumerated in counts 1-3, 6-10,
14, 15, 18, 19, 22-28, 30-
35, 42-47, 50, 58, 62-64, 73-86, 91, 92, 95, 96, 103, 105, 106, 108-116, 118-132,
139-143, 146, 147, 149,
150, 152, 153, 156, 159, 160, 163-170, 172-176, 178-183, 185-187, 192-195, 197-204,
206-212, 217-220,
222, 229-234, 236-245, 248, 250-257, 264-267, 270, and 273-275, were not provided
as claimed because
the claims falsely represented the identity of the physician who was claimed
to have provided the items or
services. Findings 59-152.
159. Respondent Petrus told neither Dr. Malsky nor Dr. Baer at the inception
of their relationship with him
and Respondent Eye Center that he was suspended from participation in Medicare
and Medicaid. Tr. at
225-226, 501.
160. In May, 1983, Respondent Petrus instructed his office staff to refrain
from filing Medicare and
Medicaid reimbursement claims for his services until a new physician was hired
to work at Respondent
Eye Center. Tr. at 791-793.
161. Respondent Petrus instructed his office staff that, once a new physician
was hired, the retained claims
were to then be filed, using the new physician's provider number to identify
the provider of items or
services. I.G. Ex. 141/1; 167/12-13; Tr. at 792-793.
162. The claims which were subject to these instructions by Respondent Petrus
included claims for
Medicare and Medicaid items or services provided by him in May and June, 1983.
Tr. at 793.
163. Around the time that Dr. Malsky began working for Respondent Petrus, a
large number of Medicare
and Medicaid reimbursement claims which had identified Respondent Petrus as
the provider of services
were rejected by the Medicare carrier or the Medicaid intermediary and were
returned unpaid to
Respondent Eye Center. Tr. at 1162-1163.
164. Respondent Petrus instructed his office staff to change the provider identification
number on the
claims from his own number to Dr. Malsky's number and to resubmit the claims.
Tr. at 1163, 1165.
165. Pursuant to Respondent Petrus' instructions, his office staff changed
the provider identification
number from Respondent Petrus' number to Dr. Malsky's number and resubmitted
the claims. Tr. at 1164-
1165.
166. The effect of these resubmissions was to claim reimbursement for items
or services as if they had
been provided by Dr. Malsky, even though, to the extent they had been provided,
they were provided by
Respondent Petrus. Findings 160, 161.
167. Respondent Petrus advised his office staff that all Medicare and Medicaid
patients would be
examined and treated by Dr. Malsky. Tr. at 1158.
168. Respondent Petrus instructed his office staff to identify Dr. Malsky as
the provider of services on all
Medicare and Medicaid reimbursement claims. Tr. at 1158-1159.
169. Pursuant to Respondent Petrus' instructions, and during the time that
Dr. Malsky worked for
Respondent Petrus, Respondent Petrus' office staff identified Dr. Malsky as
the provider of services on
Respondent Eye Center's Medicare and Medicaid reimbursement claims, regardless
of whether Dr. Malsky
actually provided the items or services which were claimed. Tr. at 1168-1169.
170. In late July or August, 1983, Dr. Malsky learned from Respondent Petrus'
office staff that
Respondent Petrus had been suspended from participating in Medicare and Medicaid,
and that, pursuant to
Respondent Petrus' instructions, Dr. Malsky was being identified as the provider
of services on Respondent
Eye Center's Medicare and Medicaid reimbursement claims, regardless of whether
he actually provided the
items or services. Tr. at 500.
171. Dr. Malsky confronted Respondent Petrus with this information, and Respondent
Petrus advised
Dr. Malsky that it was irrelevant who was identified as the provider of services
on Medicare and Medicaid
claims, inasmuch as all payments were being made to Respondent Eye Center. Tr.
at 500.
172. On August 10, 1983, Dr. Malsky, through his attorney, advised Respondent
Petrus that it was illegal
to identify Dr. Malsky as the provider of items or services in Medicare and
Medicaid reimbursement claims
when Dr. Malsky had not provided the items or services. I.G. Ex. 123.
173. Dr. Malsky requested that Respondent Petrus submit corrected reimbursement
claims for those claims
where reimbursement had been claimed under Dr. Malsky's provider number and
either: the item or
service claimed had not been provided by Dr. Malsky, or, the nature of the item
or service provided by Dr.
Malsky had been misstated. I.G. Ex. 123.
174. On September 28, 1983, Respondent Petrus replied to Dr. Malsky. I.G. Ex. 124.
175. Respondent Petrus asserted that it was his understanding that he had filed
claims for Dr. Malsky's
services only for days when Dr. Malsky worked at Respondent Eye Center and only
when the patients had
been seen either by Dr. Malsky alone, or by Dr. Malsky along with Respondent
Petrus. I.G. Ex. 124.
176. Respondent Petrus asserted that any false claims were due to clerical
errors and that claims were
never intentionally falsified. I.G. Ex. 124.
177. Notwithstanding his discussions with Dr. Malsky and Dr. Malsky's attorney,
Respondent Petrus did
not instruct his staff to stop identifying Dr. Malsky as the provider of services
on Respondent Eye Center's
Medicare and Medicaid claims or correct the claims, as requested by Dr. Malsky.
Tr. at 1169-1170.
178. Respondent Eye Center continued to file Medicare and Medicaid reimbursement
claims which
misrepresented Dr. Malsky as the provider of services, even after Dr. Malsky
had requested Respondent
Petrus to cease doing so. Findings 61-64, 86-88; I.G. Ex. 1, 10, 42, 46.1, 75.1,
96.
179. On October 12, 1983, Dr. Malsky terminated his relationship with Respondents. Tr. at 514.
180. Dr. Malsky terminated his relationship with Respondents because he concluded
that claims continued
to be filed which represented that he had provided items or services which,
in fact, he had not provided.
Tr. at 515.
181. Pursuant to Respondent Petrus' instructions, and during the time that
Dr. Baer worked for Respondent
Petrus, Respondent Petrus' office staff identified Dr. Baer as the provider
of services on Respondent Eye
Center's Medicare and Medicaid reimbursement claims, regardless of whether Dr.
Baer actually provided
the items or services which were claimed. Tr. at 1171-1172.
182. On January 21, 1984, Dr. Baer was told by an employee of Respondent Eye
Center that Respondent
Petrus had been suspended from participation in Medicare and Medicaid. Tr. at
225.
183. Dr. Baer was also told that he had been identified as the provider of
items or services on Medicare
and Medicaid reimbursement claims for items or services which he had not provided.
Tr. at 225.
184. Dr. Baer terminated his relationship with Respondent Eye Center and Respondent
Petrus on January
21, 1984. Tr. at 225.
185. In early 1984, a federal grand jury began an investigation into the Medicare
billing practices of
Respondent Petrus. Tr. at 244.
186. Dr. Baer was one of the witnesses subpoenaed to testify before the grand jury. Tr. at 244.
187. Between March 7, 1984, and July 19, 1984, Dr. Baer and Respondent Petrus
had several telephone
conversations. I.G. Ex. 132, 133, 134, 136, 137, 138, 139.
188. At numerous instances during these conversations, Respondent Petrus requested
that Dr. Baer lie to
the grand jury concerning his relationship with Respondents Petrus and Eye Center.
I.G. Ex. 132/5-6, /7-8,
/9, /10, /11, /15, /16, /18, 133/14-15, 137/3-4,/9, 138/7.
189. Respondent Petrus asked Dr. Baer to lie to the grand jury by stating that
Respondent Petrus had
provided items or services under Dr. Baer's supervision. I.G. Ex. 132/14.
190. Respondent Petrus asked Dr. Baer to lie to the grand jury by stating that
he did not remember specific
events when, in fact, Dr. Baer remembered those events. I.G. Ex. 132/9.
191. Respondent Petrus asked Dr. Baer to lie to Respondent Petrus' attorney,
in order for Dr. Baer to keep
his statements to the attorney consistent with his grand jury testimony. I.G.
Ex. 134/9-10.
192. During his conversations with Dr. Baer, Respondent Petrus falsely asserted
that the grand jury
investigation into his Medicare billing practices was the consequence of improper
or unlawful conduct by
Dr. Malsky. I.G. Ex. 137/7, 138/7; Tr. at 248.
193. Respondent Petrus altered records of surgeries that had been created by
employees at Bailey Square
in order to make it appear that Dr. Malsky had performed surgical procedures
which, in fact, he had not
performed. I.G. Ex. 145, 146; Tr. at 495, 739-740.
194. Respondent Petrus knew that he would be suspended effective seven days
from the date that a court
order was entered dissolving the preliminary injunction which Respondent Petrus
had obtained. I.G. Ex.
102/5, /6.
195. Respondent Petrus knew that a court order was entered on May 5, 1983,
dissolving the preliminary
injunction. I.G. Ex. 104.
196. Respondent Petrus knew that the suspension became effective May 12, 1983. I.G. Ex. 105/1, /4.
197. Respondent Petrus knew that he could apply for reinstatement upon completion
of his suspension but
that he would not automatically be reinstated. I.G. Ex. 102/4.
198. Respondent Petrus knew that he had not been reinstated at any time prior
to January 21, 1984.
Findings 19-24.
199. On October 19, 1984, Respondent Petrus was indicted in federal court for
submitting false Medicare
claims, submitting false Medicaid claims, and obstruction of justice. I.G. Ex.
106.
200. On May 2, 1985, Respondent Petrus pleaded guilty to one count of submitting
false Medicare claims,
one count of submitting false Medicaid claims, and one count of obstruction
of justice. I.G. Ex. 107, 108,
109.
201. Respondent Petrus admitted that he had willfully and knowingly made false
statements in
representation of material facts for use in determining his rights to Medicare
and Medicaid benefits. I.G.
Ex. 109/25-27.
202. Respondent Petrus directed Respondent Eye Center and its employees to
falsely claim reimbursement
for items or services stated in the claims enumerated in counts 1-3, 6-10, 14,
15, 18, 19, 22-28, 30-35, 42-
47, 50, 58, 62-64, 73-86, 91, 92, 95, 96, 103, 105, 106, 108-116, 118-132, 139-143,
146, 147, 149, 150,
152, 153, 156, 159, 160, 163-170, 172-176, 178-183, 185-187, 192-195, 197-204,
206-212, 217-220, 222,
229-234, 236-245, 248, 250-257, 264-267, 270, and 273-275. Findings 161-169,
181.
203. Respondent Petrus knew that Respondent Eye Center and its employees were
executing his
instructions to falsify claims. Findings 171-177.
204. Respondents knew that the items or services stated in the claims enumerated
in counts 1-3, 6-10, 14,
15, 18, 19, 22-28, 30-35, 42-47, 50, 58, 62-64, 73-86, 91, 92, 95, 96, 103,
105, 106, 108-116, 118-132,
139-143, 146, 147, 149, 150, 152, 153, 156, 159, 160, 163-170, 172-176, 178-183,
185-187, 192-195,
197-204, 206-212, 217-220, 222, 229-234, 236-245, 248, 250-257, 264-267, 270,
and 273-275, were not
provided as claimed. Findings 194, 195.
205. Respondents had sufficient information to place them on notice, as reasonable
health care providers,
that the claims enumerated in counts 1-3, 6-10, 14, 15, 18, 19, 22-28, 30-35,
42-47, 50, 58, 62-64, 73-86,
91, 92, 95, 96, 103, 105, 106, 108-116, 118-132, 139-143, 146, 147, 149, 150,
152, 153, 156, 159, 160,
163-170, 172-176, 178-183, 185-187, 192-195, 197-204, 206-212, 217-220, 222,
229-234, 236-245, 248,
250-257, 264-267, 270, and 273-275, contained false statements. Findings 160-178.
206. Because Respondents had sufficient information to place them on notice
that the claims enumerated
in counts 1-3, 6-10, 14, 15, 18, 19, 22-28, 30-35, 42-47, 50, 58, 62-64, 73-86,
91, 92, 95, 96, 103, 105,
106, 108-116, 118-132, 139-143, 146, 147, 149, 150, 152, 153, 156, 159, 160,
163-170, 172-176, 178-
183, 185-187, 192-195, 197-204, 206-212, 217-220, 222, 229-234, 236-245, 248,
250-257, 264-267, 270,
and 273-275, contained false statements, Respondents were under a duty to assure
that these claims were
corrected.
207. Respondents failed to take any steps to correct the false statements in
the claims enumerated in counts
1-3, 6-10, 14, 15, 18, 19, 22-28, 30-35, 42-47, 50, 58, 62-64, 73-86, 91, 92,
95, 96, 103, 105, 106, 108-
116, 118-132, 139-143, 146, 147, 149, 150, 152, 153, 156, 159, 160, 163-170,
172-176, 178-183, 185-
187, 192-195, 197-204, 206-212, 217-220, 222, 229-234, 236-245, 248, 250-257,
264-267, 270, and 273-
275. Findings 165, 169, 181.
208. Respondents had reason to know that the items or services stated in the
claims enumerated in counts
1-3, 6-10, 14, 15, 18, 19, 22-28, 30-35, 42-47, 50, 58, 62-64, 73-86, 91, 92,
95, 96, 103, 105, 106, 108-
116, 118-132, 139-143, 146, 147, 149, 150, 152, 153, 156, 159, 160, 163-170,
172-176, 178-183, 185-
187, 192-195, 197-204, 206-212, 217-220, 222, 229-234, 236-245, 248, 250-257,
264-267, 270, and 273-
275, were not provided as claimed. Findings 205-207.
209. Respondents were indifferent to whether the items or services stated in
the claims enumerated in
counts 1-3, 6-10, 14, 15, 18, 19, 22-28, 30-35, 42-47, 50, 58, 62-64, 73-86,
91, 92, 95, 96, 103, 105, 106,
108-116, 118-132, 139-143, 146, 147, 149, 150, 152, 153, 156, 159, 160, 163-170,
172-176, 178-183,
185-187, 192-195, 197-204, 206-212, 217-220, 222, 229-234, 236-245, 248, 250-257,
264-267, 270, and
273-275, were provided as claimed. Findings 160-181.
210. Respondents were at least negligent in representing that the items or
services stated in the claims
enumerated in counts 1-3, 6-10, 14, 15, 18, 19, 22-28, 30-35, 42-47, 50, 58,
62-64, 73-86, 91, 92, 95, 96,
103, 105, 106, 108-116, 118-132, 139-143, 146, 147, 149, 150, 152, 153, 156,
159, 160, 163-170, 172-
176, 178-183, 185-187, 192-195, 197-204, 206-212, 217-220, 222, 229-234, 236-245,
248, 250-257, 264-
267, 270, and 273-275, were provided as claimed. Finding 209.
211. Respondents should have known that the items or services stated in the
claims enumerated in counts
1-3, 6-10, 14, 15, 18, 19, 22-28, 30-35, 42-47, 50, 58, 62-64, 73-86, 91, 92,
95, 96, 103, 105, 106, 108-
116, 118-132, 139-143, 146, 147, 149, 150, 152, 153, 156, 159, 160, 163-170,
172-176, 178-183, 185-
187, 192-195, 197-204, 206-212, 217-220, 222, 229-234, 236-245, 248, 250-257,
264-267, 270, and 273-
275, were not provided as claimed. Finding 210.
212. Respondents presented or caused to be presented all 271 claims at issue
in this case in violation of the
Act. Findings 156, 157, 204, 208, 211.
213. The amount claimed by Respondents in the 271 claims at issue exceeded
$40,000.00. I.G. Ex. 1, 2,
2b, 3-6, 7.1, 7.2, 7.3, 8-11, 13, 14.1, 14.2, 15.2, 16, 17.1, 17.2, 18.2, 18.5,
18.4, 18.6, 18.7, 19, 19b, 20.1,
20.2, 20.4, 20.5, 20.6, 21, 22-32, 33.1, 34-36, 37.1, 37.2, 38, 39.1, 39.2,
39b.3, 40, 41-45, 46.1, 46.2, 46.4,
47-61, 62.1, 62.2, 63, 64, 65.1, 65.2, 66-68, 69.1, 69.2, 70, 71, 72.1, 73,
74.1, 74.2, 75.1, 75.2, 76, 77.1,
78-83, 84.1, 84.2, 85, 86.1, 87.1, 87.2, 88, 89.1, 89.2, 90.1, 91-96.
214. The Act provides for the imposition of an assessment in lieu of damages
of not more than twice the
amount of each item or service which is falsely claimed. Social Security Act,
section 1128A(a).
215. The Act provides for the imposition of a penalty of up to $2,000.00 for
each item or service which is
falsely claimed. Social Security Act, section 1128A(a).
216. In determining the appropriate amount of assessment and penalties to be
imposed against
Respondents, the Act and regulations direct that both aggravating and mitigating
factors be considered.
Social Security Act, section 1128A; 42 C.F.R. 1003.106.
217. The factors which may be considered as aggravating or mitigating include:
(1) the nature of the
claim or request for repayment; (2) respondent's degree of culpability; (3)
respondent's history of prior
offenses; (4) respondent's financial condition; and (5) such other matters as
justice may require. 42 C.F.R.
1003.106.
218. If there are substantial or several aggravating circumstances, the aggregate
amount of penalties and
the assessments should be set at an amount sufficiently close to, or at, the
maximum permitted by law. 42
C.F.R. 1003.106(c)
219. In proceedings brought pursuant to the Act, a respondent has the burden
of proving the existence of
any mitigating factors. 42 C.F.R. 1003.114(d).
220. The claims at issue were part of a scheme by Respondents to defraud Medicare
and Medicaid.
Findings 202-204; 42 C.F.R. 1003.106(b)(1).
221. The dollar amount of the false claims in this case is substantial. Finding
213; 42 C.F.R.
1003.106(b)(1).
221. Respondents' fraudulent conduct demonstrates contempt for the Medicare
and Medicaid programs
and for the beneficiaries and recipients of these programs.
222. Respondents' fraudulent conduct establishes a high level of culpability. 42 C.F.R. 1003.106(b)(2).
223. Respondent Petrus was convicted in 1979 of the criminal offense of tampering
with a government
record in connection with the Medicaid program. I.G. Ex. 99; See I.G. Ex. 100.
224. The false claims in this case constitute Respondents' second documented
episode of fraudulent
conduct with respect to a federally funded health care program. Finding 223;
42 C.F.R. 1003.106(b)(3).
225. The government incurred substantial costs in investigating the false claims
at issue in this case. Tr. at
1065-1066, 1399-1400, 1402, 1403-1404, 1512; 42 C.F.R. 1003.106(b)(5).
226. Respondents unlawfully obtained substantial monies from Medicare and Medicaid
as a consequence
of their fraud. 42 C.F.R. 1003.106(b)(5).
227. Respondents attempted to cover up their unlawful conduct from investigating
authorities. Findings
181-191, 193; 42 C.F.R. 1003.106(b)(5).
228. It is not a mitigating factor that the false claims in this case were
filed over a relatively short period of
time. See 42 C.F.R. 1003.106(b)(1).
229. Respondents have not established that imposition against them, jointly
and severally, of assessments
of $80,000.00 and penalties of $100,000.00, will jeopardize their ability to
continue as health care
providers. 42 C.F.R. 1003.106(b)(4).
230. Assessments of $80,000.00 and penalties of $100,000.00 imposed against
Respondents, jointly and
severally, are appropriate in this case.
ANALYSIS
1. The six-year statute of limitations provided in section 1128A(c)(1) of
the Act applies to the
claims for items or services at issue.
Respondents contend that this case is governed by a five-year statute of limitations.
They assert that
presentation of the case is barred, inasmuch as all claims at issue were presented
more than five years
previous to initiation of this case. Respondents' argument is essentially the
same argument that they
asserted in a prehearing motion concerning the statute of limitations. I issued
a Ruling on February 6,
1990, which held that the six-year statute of limitations in section 1128A(c)(1)
applied to the claims at
issue. I have reconsidered the parties' arguments, and I reiterate my previous
conclusion.
Prior to August 18, 1987, the Act did not contain a statute of limitations.
Regulations provided, at 42
C.F.R. 1003.132, that a five-year period of limitations applied to cases brought
pursuant to the Act. On
August 18, 1987, the Act was amended to include a six-year statute of limitations,
pursuant to section 3(b)
of the Medicare and Medicaid Patient and Program Protection Act (MMPPPA). Pub.
L. 100-93, 101 Stat.
680 (1987). The new statute of limitations became effective 14 days after enactment
of the MMPPPA, and
applied to all administrative proceedings initiated on or after September 1,
1987. The statute of limitations
did not apply to administrative proceedings commenced prior to that date. This
statute of limitations was
subsequently incorporated into a revised 42 C.F.R. 1003.132. 52 Fed. Reg. 49,412
(Dec. 31, 1987); 42
C.F.R. 1003.132 (1987).
The six-year statute of limitations applies to all actions which are initiated
after September 1, 1987. The
I.G. initiates an action under the Act by serving notice in any manner authorized
by Rule 4 of the Federal
Rules of Civil Procedure. Social Security Act, section 1128A(c)(1).
This action was initiated by the I.G.'s notice to Respondents dated June 7,
1989. I.G. Ex. 97. The action
was therefore initiated after the effective date of the six-year statute of
limitations enacted at section
1128A(c)(1), and is governed by that statute of limitations.
Respondents also argue that, in any event, they should not be subject to the
six-year statute of limitations
because, as applied to them, the six-year statute is an unlawful retroactive
amendment of a statute of
limitations. However, the MMPPPA did not amend a statute of limitations. Congress
superseded a
regulatory period of limitations with a statute. Rather than amending a statute
of limitations, as
Respondents contend, Congress enacted a statute of limitations to fill a legislative
void.
2. The I.G. initiated a proceeding against Respondents not later than six years
after the claims at
issue were presented.
Respondents contend that the statute of limitations was "tolled"
in this case on August 17, 1989. They
argue that the date when this case was initiated should be determined by reference
to the Federal Rules of
Civil Procedure, Rule 3. This rule provides that a civil action is commenced
by the filing of a complaint
with a court. Respondents reason by analogy that this case was commenced on
the date that it was
assigned to an administrative law judge for a hearing and decision. That date,
according to Respondents,
was August 17, 1989. If this contention is accepted, then any of the claims
at issue which were presented
previous to August 17, 1983, would be presented beyond the six-year statute
of limitations, and the I.G.
would be precluded from pursuing an action with respect to those claims.
At issue here is the question of when the I.G. initiated this case within the
meaning of section 1128A(c)(1).
I conclude that this action was initiated on June 7, 1989, the date of the I.G.'s
notice letter to Respondents.
Therefore, any claims presented by Respondents after June 7, 1983, would be
within the six-year statute of
limitations.
Respondents' analysis ignores the plain language of section 1128A(c)(1). That
section specifically defines
initiation of an administrative proceeding by reference to Rule 4 of the Federal
Rules of Civil Procedure
and no
Rule 3, as is asserted by Respondents. Section 1128A(c)(1) provides that the
Secretary (or his delegate, the
I.G.):
(M)ay initiate an action under this section by serving notice of the action
in any manner authorized by
Rule 4 of the Federal Rules of Civil Procedure.
The action in this case was initiated on the date that the I.G. served notice
of the action on Respondents, as
authorized by Rule 4.
Rule 4 of the Federal Rules of Civil Procedure provides that a defendant may
be served by mail. The
notice letter in this case was dated June 7, 1989, and was mailed to Respondents
certified mail, return
receipt requested. Respondent Petrus signed the return receipt on June 10, 1989.
I.G. Ex. 98.
Rule 4 is a rule governing the manner in which a summons and complaint may
be served in civil actions
commenced in federal courts. It is a rule which governs service of documents,
not the initiation of actions.
Under Rule 4, the date of service of a document would normally be the date that
a party received that
document, whether as a consequence of personal service or by mail.
However, Congress did not intend that Rule 4 be read literally into section
1128A(c)(1). When read in the
context of section 1128A(c)(1), "service" must be read consistently
with the word "initiate." These words
have consistent meaning if "service" is read to mean mailing, rather
than receipt, of an administrative
complaint.
Statutes of limitations, including section 1128A(c)(1), are intended to prevent
parties from sleeping on
their rights beyond a point in time which the legislature has determined to
be the reasonable limit for
initiation of a proceeding. Once a party has acted to protect a right, that
party has discharged the statutory
obligation to timely bring an action. From that point, there is no statutory
purpose served by penalizing a
party for another's actions or inactions. It would be inconsistent with statutory
purpose to apply a statute of
limitations based on the date of a respondent's receipt of the I.G.'s notice.
The act of receipt is an act which
is beyond the ability of the I.G. to control. Furthermore, if the date of receipt
of a notice were the trigger
date for the statute of limitations, the clever respondent could cause the statute
to run simply by avoiding
receipt of the notice.
This interpretation of section 1128A(c)(1) is consistent with legislative history.
The congressional
committee responsible for the legislation which enacted the statute of limitations
stated:
In addition, the section clarifies that actions may be initiated either by
serving notice by any means
authorized by Rule 4, Federal Rules of Civil Procedure, including mailing notices
by registered or certified
mail, or by delivery to Respondent.
H.R. Rep. No. 100-85, Part 2, 100th Cong., 1st Sess. 16 (emphasis added). The
date that the I.G. served
notice on Respondents, thereby initiating this case, was June 7, 1989. All claims
presented by Respondents
after June 7, 1983 are within the statute of limitations.
The term "presented" as used in section 1128A(c)(1), means the date
that claims for items or services are
received by the recipient of the claims. Tommy G. Frazier and Prater Drugs,
Inc., DAB Civ. Rem. C-127
(1990). The statute begins to run on the date when a party who is the addressee
of a reimbursement claim
under Medicare or Medicaid, receives that claim. The I.G. proved in this case
that none of the claims at
issue was received by the addressee of the claim earlier than June 8, 1983.
Findings 31-34. The earliest
date that any of the claims at issue was "presented" was June 8, 1983.
All of the claims at issue in this case
thus fall within the six year statute of limitations.
3. Rulings on the admissibility of evidence in this case did not violate Respondents'
due process
rights.
Respondents argue that two rulings that I made in this case concerning the
admissibility of evidence
violated their right to a fair hearing and deprived them of due process of law.
At issue are rulings which I
made excluding exhibits which Respondents offered as evidence and admitting
into evidence copies of
documents which the I.G. obtained from a federal grand jury, pursuant to a federal
court order.
My exclusion of Respondents' exhibits was specifically authorized by section
1128A(c)(4)(B) of the Act. I
excluded Respondents' exhibits because Respondents had willfully violated my
Prehearing Order of
November 1, 1989, which established a deadline in advance of the hearing for
the parties to exchange
proposed exhibits. The purpose of the deadline was to give each party adequate
notice of his adversary's
proposed evidence and sufficient time to prepare for the hearing. Not only did
Respondents fail to comply
with that deadline, but Respondent Petrus asserted that he had no intention
of complying with the deadline.
Tr. at 1232-1234, 1236-1237. No excuse was offered by Respondents for their
failure. It would have been
unfair to the I.G. to have permitted the introduction of these exhibits in the
circumstances under which they
were offered.
Throughout this case, Respondents repeatedly and vociferously objected to the
I.G.'s use of documents
which the I.G. obtained pursuant to a court order from a federal grand jury.
These documents include
documents which the grand jury subpoenaed from Respondent Petrus as part of
the investigation which
resulted in his 1985 conviction of several criminal offenses related to some
of the claims at issue in this
case. The other documents obtained from the grand jury are the transcripts of
testimony of several
witnesses who appeared before that grand jury.
Respondents contend that Federal Rules of Criminal Procedure, Rule 6(e), bar
the disclosure of documents
subpoenaed by a grand jury. They assert that the I.G's obtaining of subpoenaed
documents violated this
rule, and any use of them by the I.G. ought to have been precluded. At various
times, Respondents have
moved that the I.G.'s complaint against Respondents be dismissed due to alleged
misconduct related to
obtaining the subpoenaed documents, that sanctions be imposed against the I.G.
for his alleged misconduct,
and that all exhibits which consist of documents released to the I.G. be excluded
from the record of this
case. I have consistently ruled against Respondents on these motions, most recently
on August 15, 1990.
Ruling Denying Respondents' Motion to Suppress Grand Jury Materials, August
15, 1990. I reiterate these
rulings as part of this Decision.
As I observed in my August 15 Ruling, the documents in issue were released
to the I.G. based on an
application filed in United States District Court and an order signed by the
court. The application for the
release of the documents stated that the purpose of obtaining them would be
their use by the I.G. in this
case. See Respondents' Motion to Suppress Grand Jury Materials, August 7, 1990,
Attachment A. There is
nothing in the record of this case to suggest that the I.G. acted improperly
with respect to the release of
grand jury records. Respondents have not shown that the I.G.'s presentation
of this case was tainted by
misconduct. There exists no basis for me to impose sanctions against the I.G.
or to dismiss this case based
on misconduct. And, to the extent that Respondents have any objection to the
District Court's decision to
release documents to the I.G., their right of recourse (if any) plainly lies
with that court, and not in this
proceeding.
There is also no basis for me to conclude that admission into evidence of documents
released to the I.G.
from the grand jury was unfair to Respondents. All of the documents subpoenaed
from Respondents by
the grand jury and obtained by the I.G. consisted of photocopies of records
created and maintained by
Respondents. Essentially, they were Respondents' office and patient treatment
records. Respondents had
intimate knowledge of these documents inasmuch as they were created and maintained
by Respondents.
The I.G. supplied copies of these documents to Respondents, as proposed exhibits,
well in advance of the
date of the hearing. Respondents were on notice that the documents would be
offered, were familiar with
their contents, and had ample time to prepare to defend against their use.
No unfairness resulted from admission of the transcripts of grand jury testimony.
The transcripts of grand
jury testimony released to the I.G. and offered as evidence in this case were
provided, well in advance of
the hearing, by the I.G. to Respondents as prior statements of witnesses. Respondents
had time to review
these transcripts prior to the hearing. Respondents were able to confront and
cross examine each witness,
inasmuch as the deponents were called by the I.G. as witnesses.
4. Denial of Respondents' motion to postpone the hearing was not unfair to Respondents.
Shortly before the scheduled date of the hearing, Respondents moved to indefinitely
postpone the hearing.
I denied that motion. Respondents continue to assert that my denial of that
motion was unfair.
The asserted basis for Respondents' motion was that Respondent Petrus' poor
health interfered with his
ability to properly present his case. Respondents produced an exhibit, consisting
of a report from
Respondent Petrus' physician, which asserted that Respondent Petrus was unable
to participate in the
hearing due to a health problem.
I ruled that I would not base a decision to postpone the hearing on a physician's
report. I afforded
Respondents the opportunity to renew their motion at the hearing, provided that
they produced the live
testimony of a physician whom the I.G. could cross examine. I also afforded
the I.G. the opportunity to
have Respondent Petrus examined by a physician of the I.G.'s choice and to present
the testimony of a
physician as rebuttal to evidence offered by Respondents.
Respondents sought to renew their motion on the first day of the hearing. They
did not produce a
physician to testify on their behalf; rather, Respondents averred that a physician
would be produced on the
morning of the second day of the hearing. I recessed the hearing, based on this
representation, and the I.G.
had Respondent Petrus examined by a physician.
On the morning of the second day of the hearing, Respondent Petrus announced
that a physician would not
be appearing to testify as promised. At that point, I denied Respondents' renewed
motion and ordered the
hearing to continue as scheduled.
Respondents continue to assert that it was unfair for me to hold the hearing
as scheduled. They argue that:
Respondent Petrus' health precluded holding "marathon" sessions, that
I should have granted Respondents
access to the report of the physician who examined Respondent Petrus at the
I.G.'s behest, and that I should
have, at least, accommodated Respondent Petrus' poor health by calling recesses
more frequently.
However, there is no probative evidence of record in this case to show that
Respondent Petrus was
incapable of meeting the demands of the hearing schedule which I maintained.
I afforded Respondents the
opportunity to prove that Respondent Petrus was incapable of participating in
the hearing. They failed to
avail themselves of that opportunity. I premised my refusal to grant Respondents
access to any report
obtained by the I.G. concerning Respondent Petrus' medical status on the fact
that that report (assuming
one was created) would have been prepared solely to rebut live testimony offered
by Respondents.
Inasmuch as Respondents failed to offer live testimony, there was nothing for
the I.G. to rebut, and
Respondents had no need to see the report.
5. Respondents presented or caused to be presented claims for items or services
in violation of
section 1128A of the Act.
This case involves 271 Medicare or Medicaid reimbursement claims presented
between May 12, 1983 and
January 21, 1984. All 271 of these claims unlawfully sought reimbursement for
items or services provided
by Respondent Petrus or at his direction during a period of time when Respondent
Petrus was suspended
from participating in Medicare and Medicaid. In addition, 174 of the 271 claims
falsely represent the name
of the physician who provided or directed the items or services claimed. All
of the claims were presented
as part of a scheme by Respondents to defraud the Medicare and Medicaid programs.
Beginning May 12, 1983, Respondent Petrus was suspended from participating
in Medicare and Medicaid.
The consequence of that suspension was that Respondent Petrus was barred from
receiving reimbursement
for any Medicare or Medicaid item or service that he provided, until such time
as he was reinstated as a
provider in Medicare and Medicaid. Respondent Petrus knew the effective date
of the suspension and was
aware of the terms and effect of his suspension. The suspension was the product
of negotiations in which
Respondent Petrus participated, and he signed the settlement agreement. Respondent
Petrus knew that
reinstatement would not be automatic, but would be conditioned on his proving
that he was complying
with the terms and conditions for participation established by Medicare and
Medicaid. Respondent Petrus
was never reinstated, and he knew that he had not been reinstated. Findings
7-24.
No sooner had the settlement been agreed to, and the suspension imposed, than
Respondents set about to
circumvent it. Respondents simply continued to submit reimbursement claims for
items or services which
identified Respondent Petrus as the provider of services even though Respondent
Petrus was suspended at
the time. However, the essence of Respondents' scheme was to claim reimbursement
from Medicare and
Medicaid, for items or services provided by Respondent Petrus, by disguising
these items or services as
having been provided by physicians who were participants in good standing with
Medicare and Medicaid.
The claims were made by, and payments were made to, Respondent Eye Center, an
entity wholly
controlled by Respondent Petrus. Respondent Petrus thereby attempted to pocket
the proceeds of the
claims without creating a paper trail which revealed him as unlawfully claiming
reimbursement for items
or services which he had provided.
Respondent Petrus contracted with other opthalmologists to assist him in providing
services at Respondent
Eye Center and at Bailey Square, an outpatient surgical facility. Respondent
Petrus entered into two
contracts. The first was with Dr. Paul Malsky, who began work with Respondent
Petrus in June, 1983, and
who terminated his relationship in October, 1983. Shortly thereafter, Respondent
Petrus contracted with
Dr. Gregory Baer, who worked with Respondent Petrus from November 8, 1983, until
January 1984.
Findings 39-51.
Respondent Petrus obtained the services and cooperation of these physicians
by withholding the fact that
he was suspended. He also did not tell these physicians that items or services
that he was providing or
directing would be claimed as if they had provided them. Both Drs. Malsky and
Baer learned of
Respondent Petrus' suspension, and the manner in which items or services were
being claimed, from
conversations with Respondent Eye Center's employees. Both physicians terminated
their relationship with
Respondent Petrus immediately upon learning the facts
Respondent Petrus furthered the scheme by directing the Eye Center's staff
not to present Medicare and
Medicaid reimbursement claims for services he had provided in May and June,
1983, until a new physician
was retained. He directed his staff to present these claims and all future Medicare
and Medicaid
reimbursement claims, regardless who actually provided or directed the items
or services, as if the items or
services had been provided or directed by Dr. Malsky. Findings 160-169. After
Dr. Malsky left,
Respondent Petrus directed his staff to attribute all Medicare or Medicaid items
or services to Dr. Baer.
Finding 181. Respondent Petrus also directed his staff to resubmit a large number
of Medicare and
Medicaid claims that had been returned unpaid to Respondent Eye Center and to
change the identity of the
provider to whom the items or services were attributed from Respondent Petrus
to Dr. Malsky.
The scheme began to unravel early in 1984. Respondent Petrus sought to cover
up his actions by
attempting to persuade Dr. Baer to deliver perjured testimony to a federal grand
jury. Finding 187-192.
He also altered surgical records at Bailey Square, to make it look as if Dr.
Malsky had provided items or
services which, in fact, he had not provided. Finding 193.
As a consequence of their scheme, Respondents claimed reimbursement for more
than $40,000.00 from
Medicare and Medicaid. Respondent Petrus was eventually prosecuted on federal
charges of Medicare and
Medicaid fraud and obstruction of justice. In May, 1985, he pleaded guilty to
two counts of fraud and one
count of obstruction of justice. Respondent Petrus was sentenced to nine years'
imprisonment, and fined
$55,000.00. I.G. Ex. 108.
Respondents contend that the evidence does not prove a scheme to defraud Medicare.
At most, according
to Respondents, the evidence proves that employees at the Eye Center misunderstood
Respondent Petrus'
instructions to them or were negligent in their presentation of reimbursement
claims. Respondents assert
that Respondent Petrus' instructions to his staff were to not claim reimbursement
from Medicare or
Medicaid for services provided or directed by him. Thus, to the extent that
claims for such services were
filed, they were filed in error.
Respondents offered no evidence to directly refute the I.G.'s proof as to the
purpose and sweep of
Respondents' fraudulent scheme. Respondents' case mainly consists of attacks
on the credibility and
probative value of evidence offered by the I.G.
The record overwhelmingly supports the I.G.'s contentions. The record does
show that, at times,
Respondent Petrus would direct that Medicare or Medicaid services be provided
free of charge. However,
two former employees testified that Respondent Petrus instructed his staff to
attribute Medicare and
Medicaid claims to providers other than Respondent Petrus, even if Dr. Petrus
provided the items or
services. I find this testimony to be credible and essentially uncontradicted
by any evidence offered by
Respondents.
The evidence belies Respondents' assertions that claims were submitted negligently
or that Respondent
Petrus' instructions were misunderstood by his staff. The evidence establishes
that between May 1983 and
January 1984, certain individuals confronted Respondent Petrus with the fact
that Medicare and Medicaid
claims were being falsely attributed to physicians other than Respondent Petrus.
Respondent Petrus'
response to this information confirms that he ordered his staff to present false
claims, and that he was
comfortable with the results of his directives.
On two occasions, Dr. Malsky told Respondent Petrus that claims were being
presented which falsely
represented Dr. Malsky as the provider of items or services. Dr. Malsky personally
confronted Respondent
Petrus with this evidence and, subsequently, had his attorney complain to Respondent
Petrus in writing.
The attorney explicitly told Respondent Petrus that claims which falsely represented
Dr. Malsky as the
provider of items or services were being unlawfully presented.
In his conversation with Dr. Malsky, Respondent Petrus stated that it was irrelevant
which physician was
claimed as the provider, because all claims were being billed to Respondent
Eye Center. Finding 171.
This statement by Respondent Petrus amounted to admission of the scheme. Respondent
Petrus also
responded to the letter from Dr. Malsky's attorney by attempting to shift responsibility
for identifying false
claims to Dr. Malsky, and by blaming the staff at Respondent Eye Center for
any false claims. He made no
effort to correct his staff. Indeed, Respondents continued to file claims which
falsely attributed Dr. Malsky
as the provider of items or services.
Respondent Petrus would have had no reason to alter records and suborn perjury
if, as Respondents now
aver, the claims were submitted in error. Respondents' present arguments also
ignore the fact that
Respondent Petrus admitted the scheme to defraud Medicare and Medicaid in pleading
guilty to fraud and
obstruction of justice. Findings 200-201.
Finally, I consider it significant that Respondent Petrus elected not to testify
in this case to deny the
massive evidence of his fraud and dishonesty which was presented by the I.G.
Under the circumstances, it
is reasonable for me to infer that he did not testify, because he could not
credibly deny the evidence.
Respondents also argue that the I.G. failed to prove that the items or services
at issue were provided by, or
at the direction of, Respondent Petrus. Respondents' assert that the I.G.'s
case was, in large measure, based
on the I.G.'s argument that individual physicians only provided that which they
recorded in treatment
records. According to Respondents, Drs. Malsky and Baer were poor record keepers
who frequently did
not record services which they actually rendered. Respondents assert that these
services were never
recorded or recorded after the fact by Respondent Petrus or by an employee.
Therefore, according to
Respondents, no credible case can be made as to which physician provided which
item or service.
I disagree with Respondents' assertions. First, many of the claims at issue
attribute the items or services to
Respondent Petrus. Findings 54-55. These claims are admissions by Respondents
that Respondent Petrus
was the provider, and there is no evidence of record which contradicts these
admissions. Second, a great
number of claims are for items or services which were provided on dates when
neither Drs. Malsky nor
Baer worked at Respondent Eye Center or for Respondent Petrus at Bailey Square.
Findings 60-62, 65-67.
Respondent Petrus was the only other physician who could have provided these
items or services on the
dates in question.
The rest of the claims were individually testified to by Drs. Malsky and Baer.
They credibly testified, both
from their own memories and from the documentation of the treatments upon which
the claims were based,
that they did not provide the items or services which were attributed to them
in the claims. Dr. Malsky
credibly testified that he routinely recorded his treatments and the items and
services he provided. Dr. Baer
credibly testified that he meticulously recorded all of his participation with
patients, except in the case of a
few surgeries which he performed at Bailey Square . No witness or document refuted
Dr. Malsky's or Dr.
Baer's testimony that specific items or services were not provided by them.
As with the other claims at issue, the only other physician who could have
provided the items or services
falsely attributed to Drs. Malsky and Baer was Respondent Petrus. It is reasonable
to conclude that, to the
extent that these items or services were provided, Dr. Petrus provided them.
a. Violation of section 1128A(a)(1)(D).
Section 1128A(a)(1)(D) of the Act makes it unlawful for a party to present
or cause to be presented claims
for items or services that are furnished during a period when a person was excluded
(or, under previous
versions of section 1128, suspended) from participation in Medicare or Medicaid.
This section does not
require proof of a party's culpability as an element of liability. On its face,
the section embodies a strict
liability standard of violation.
Respondents presented or caused to be presented all 271 claims in violation
of section 1128A(a)(1)(D) and
its predecessor. The evidence establishes that Respondent Eye Center actually
presented the claims.
Findings 28-29. Respondent Petrus, by directing Respondent Eye Center to present
the claims, caused the
claims to be presented. Finding 31. All 271 claims are for items or services
which were provided by
Respondent Petrus. Findings 54-152. All of the items or services for which reimbursement
was claimed in
the 271 claims were claimed to be provided during a period when Respondent Petrus
was suspended.
b. Violation of section 1128A(a)(1)(A).
Section 1128A(a)(1)(A) of the Act makes it unlawful for a party to present
or cause to be presented claims
for items or services where that party knows or should know that the items or
services were not provided as
claimed. The 174 claims which falsely represented that either Dr. Malsky or
Baer provided the items or
services for which reimbursement was claimed were presented or caused to be
presented in violation of this
section.
As is noted above, Respondents either presented these claims or caused them
to be presented. They were
all materially false, in that they claimed that a physician other than Respondent
Petrus provided the items
or services for which reimbursement was claimed. Therefore, the only remaining
question is whether
Respondents manifest culpability necessary to establish a violation.
The evidence establishes that Respondents knew that the items or services represented
by these 174 claims
were not provided as claimed. A party "knows" that an item or service
is not provided as claimed when he
or she knows that the information that he or she is placing or causing to be
placed on a claim is untrue.
Tommy G. Frazier and Prater Drugs, DAB Civ. Rem. C-127 (1990); Anesthesiologists
Affiliated et al. and
James E. Sykes, D.O. et al., DAB Civ. Rem. C-99, C-100 (1990); Thuong Vo, M.D.
and Nga Thieu Du,
DAB Civ. Rem. C-45 (1989). It is not necessary for a respondent to personally
make a false claim in order
to satisfy the "knows" test. All that is necessary to satisfy the
test is that a respondent issue instructions
concerning the preparation of claims which he or she knows will result in the
inclusion of false information
in the claims.
Here, the evidence establishes that Respondent Petrus instructed staff at Respondent
Eye Center to attribute
items or services to Drs. Malsky and Baer in circumstances where Respondent
Petrus knew that those
physicians could not possibly have provided the items or services. The evidence
also establishes that
Respondent Petrus instructed his staff to alter claims to falsely show that
physicians other than him had
provided the claimed items or services. Finally, the evidence establishes that
Respondent Petrus told his
staff to withhold filing claims for items or services provided by him until
they could be falsely attributed to
Dr. Malsky. These directives by Respondent Petrus account for all 174 of the
false claims.
Respondent Eye Center is as culpable as Respondent Petrus. The evidence establishes
that Respondent
Petrus was the alter ego of Respondent Eye Center. It was an entity entirely
owned and directed by him.
For all practical purposes, its actions were Respondent Petrus' actions. The
Eye Center's role in the scheme
was to function as the executor of Respondent Petrus' designs. It also served,
when convenient, as a shield
to deflect responsibility from Respondent Petrus.
Although I have concluded that Respondents knew that the items or services
in the 174 claims were not
provided as claimed, the evidence also establishes, alternatively, that Respondents
had reason to know that
the items or services were not provided as claimed. The "reason to know"
standard contained in the Act
prior to December 22, 1987, created a duty on the part of a provider to prevent
the submission of false
claims where: (1) the provider had sufficient information to place him, as a
reasonable medical provider,
on notice that the claims presented were for items or services not provided
as claimed, or (2) there were
pre-existing duties which would require a provider to verify the truth, accuracy,
and completeness of
claims. Frazier and Prater Drugs, supra; Anesthesiologists Affiliated, supra;
Vo, supra; George A. Kern,
M.D., DAB Civ. Rem. C-25 (1987).
Respondents knew that instructions Respondent Petrus had given to employees
at Respondent Eye Center
concerning the manner in which claims were to be filed would inevitably result
in the presentation of false
claims. Therefore, Respondents had information to place them, as medical providers,
on notice that the
174 claims were for items or services not provided as claimed.
Finally, the evidence establishes that Respondents should have known that the
174 items or services were
not provided as claimed. The broadest standard of liability under the Act is
"should know." This standard
subsumes reckless disregard for the consequences of a person's acts. It subsumes
those situations where a
respondent has reason to know that items or services were not provided as claimed.
"Should know" also
subsumes negligence in preparing and submitting or in directing the preparing
and submitting of claims.
Mayers v. U.S. Dept. of Health and Human Services, 806 F.2d 995 (11th Cir. 1986),
cert. denied, 484 U.S.
822 (1987); Frazier and Prater Drugs, supra; Anesthesiologists Affiliated, supra;
Vo, supra.
Inasmuch as Respondents had reason to know that the 174 claims were false,
they also should have known
that they were false. Even if the evidence were considered in a light most favorable
to Respondents, it
would establish a cavalier indifference to the truthfulness of their claims
which exceeds ordinary
negligence.
Although the Act makes an employer liable for the negligence of his employee,
I am not finding that
Respondents' employees were negligent. Responsibility for these claims lies
solely with Respondents.
6. Assessments and penalties are appropriate in this case.
The remedial purpose of the Act is to protect government financed health care
programs from fraud and
abuse by providers. Mayers, supra, 806 F.2d at 997; Frazier and Prater Drugs,
supra, at 23;
Anesthesiologists Affiliated, supra, at 58; Vo, supra, at 22. The assessments
and penalties provisions of the
Act are designed to implement this remedial purpose in two ways. One is to enable
the government to
recoup the cost of bringing a respondent to justice and the financial loss to
the government resulting from
the false claims presented by the respondent. The other is to deter other providers
from engaging in the
false claims practices engaged in by a particular respondent. Mayers, supra,
at 999; Frazier and Prater
Drugs, supra, at 23; Anesthesiologists Affiliated, supra, at 58; Vo, supra,
at 22.
The Act and implementing regulations provide that a penalty of up to $2,000.00
and an assessment of not
more than twice the amount claimed may be imposed on a respondent for each item
or service which is
presented in violation of the Act. Social Security Act, section 1128A(a); 42
C.F.R. 1003.103, 1003.104.
The maximum penalties which I may impose against Respondents are $542,000.00,
based on the 271
claims they presented for payment in violation of the Act. The maximum assessments
which I may impose
exceed $80,000.00, based on the dollar amount claimed in the 271 claims.
Regulations prescribe that, in determining the amount of penalties and assessments,
I may consider, as
nonbinding guidelines, factors which may be either mitigating or aggravating.
These include: (1) the
nature of the claim or request for payment and the circumstances under which
it was presented, (2) the
degree of culpability of the person submitting the claim or request for payment,
(3) the history of prior
offenses of the person submitting the claim or request for payment, (4) the
financial condition of the person
presenting the claim or request for payment, and (5) such other matters as justice
may require. 42 C.F.R.
1003.106(a).
A respondent has the burden of proving the presence of mitigating factors,
including financial hardship. 42
C.F.R. 1003.114(c). The regulations provide that, in cases where mitigating
factors preponderate, the
penalties and assessments should be set correspondingly below the maximum permitted
by law. 42 C.F.R.
1003.106(c)(1). The regulations also provide that, in cases where aggravating
factors preponderate, the
penalties and assessments should be set close to the maximum permitted by law.
42 C.F.R.
1003.106(c)(2).
The Act has been interpreted to permit imposition of penalties and assessments
which exceed the amount
actually reimbursed to a respondent for items or services which were unlawfully
claimed. Chapman v.
U.S. Dept. of Health & Human Services, 821 F.2d 523 (10th Cir. 1987); Mayers,
supra, 806 F.2d at 99.
This reflects the legislative conclusion that activities in violation of the
Act "result in damages in excess of
the actual amount disbursed by the government to the fraudulent claimant."
Mayers, supra, 806 F.2d at
999.
I impose assessments of $80,000.00 and penalties of $100,000.00 against Respondents,
jointly and
severally. These remedies will adequately compensate the government for the
damages caused by
Respondents. The penalties, will, in combination with other factors which I
shall discuss, provide a
reasonable deterrent.
a. Assessments.
The damages caused by Respondents are measurable in several ways. Respondents
unlawfully claimed
more than $40,000.00 from Medicare and Medicaid. Although the I.G. did not prove
the precise amount
which Respondents obtained from these unlawful claims, Respondents received
substantial reimbursement
to which they were not entitled.
The government devoted substantial efforts to bringing Respondents to justice.
Evidence adduced at the
hearing established that an I.G. employee spent many days developing evidence
of Respondents' violations.
Finding 225. There were many other federal employees whose time and resources
were consumed by the
investigation which led to the bringing of this case.
Perhaps most significant is the inchoate damage which Respondents' misconduct
caused to the integrity of
the Medicare and Medicaid programs. Respondents' scheme was designed to neutralize
those mechanisms
established by Congress to protect the integrity of the Medicare and Medicaid.
Respondents manifested
utter contempt for these mechanisms and for the individuals charged with administration
and enforcement
of them. This contempt is graphically demonstrated by the evidence in this case.
Almost simultaneous
with his entering into a settlement of the I.G.'s original suspension case against
him, Respondent Petrus
was implementing a scheme to thwart the suspension.
Respondents argue that no actual damage was suffered as a consequence of their
fraud. They premise this
argument on their claim that the I.G. failed to prove that any of the items
or services for which
Respondents claimed reimbursement were not provided to patients. However, Medicare
and Medicaid
were not required to pay for these items or services, regardless whether they
were provided by
Respondents. The consequence of Respondent Petrus' suspension was that no Medicare
or Medicaid items
or services provided by him would be reimbursed. The government was damaged
to the extent it paid for
items or services for which it was not required to pay.
My decision as to the assessments I am imposing takes into account the presence
of numerous aggravating
factors. These factors include: the deliberate fraud committed by Respondents,
their contempt for
federally funded health care programs and the personnel charged with administering
these programs, the
fact that Respondent Petrus' fraudulent scheme was his second episode of fraud
against a government
health care program, the substantial dollar value of the unlawful claims presented
by Respondents, and
Respondent Petrus' attempts to cover up his fraud.
My decision also takes into account that Respondents failed to prove the presence
of any mitigating factors.
Respondents offered no evidence as to their financial condition, nor did they
offer any exculpatory
evidence to explain their conduct.
b. Penalties.
In his notice letter to Respondents, the I.G. requested that I impose penalties
totalling $293,500.00. The
I.G. now requests that I impose penalties of $500,000.00. The I.G. argues that
the penalties he now
requests are justified by the many serious aggravating factors proven in this
case. He asserts that, given the
flagrant nature of Respondents' unlawful conduct and their contempt for the
Medicare and Medicaid
programs, penalties which approach the maximum permitted by the Act are justified.
I agree with the I.G.'s characterization of Respondents' conduct. These Respondents
displayed contempt
for the Medicare and Medicaid programs. Respondent Petrus' behavior during the
hearing and the content
of Respondents' posthearing submissions makes it plain that Respondents continue
to manifest this
contempt. I could easily justify imposition of the maximum penalties permitted
by the Act were I to
simply to exact retribution for Respondents' misconduct.
However, the Act is remedial. Its purpose is not to punish, but to protect
the integrity of federally funded
health care programs. The determination of appropriate penalties in particular
cases must be based on
these remedial considerations, and not on criteria which would normally be used
to determine punishment.
As is noted above, one statutory purpose of penalties is to establish a deterrent
against future misconduct
by respondents or by other health care providers. Penalties in a given case
may not be set so high as to
exceed that which is reasonably necessary to satisfy the statutory purpose.
Nor may penalties be imposed
without due consideration to the assessments which are imposed simultaneously.
The total amount of
penalties and assessments in a given case should not be so high as to be grossly
disproportionate to the
costs incurred by the government as the consequence of unlawful conduct. Otherwise,
the penalties and
assessments are no longer remedial.
I do not conclude that regulations would direct a different result. The regulations
provide nonbinding
guidelines to assist the trier of fact in deciding the case. They do not suggest
that the remedy in any case
brought pursuant to the Act should exceed that which is reasonably necessary
to achieve the statutory
purpose.
Prior to the inception of this case, Respondent Petrus was convicted of criminal
offenses related to some of
the claims for items or services at issue here. He was sentenced to nine years
imprisonment and fined
$55,000.00. Respondent Petrus was subsequently excluded from participating in
Medicare and Medicaid
for 25 years. Penalties totalling $100,000.00 are reasonable in this case because,
when considered in light
of sanctions previously taken against Respondent Petrus, the penalties which
I am imposing are sufficient
to satisfy the remedial objectives of the Act.
The I.G. argues that I should impose penalties without reference to sanctions
imposed against Respondents
in other forums. He relies on section 1128A(a), which provides that parties
who violate the act shall be
subject to penalties "in addition to other penalties that may be prescribed
by law."
This section does not state that penalties shall be determined without reference
to other penalties that may
be prescribed by law. It provides the Secretary with independent authority to
determine and impose
penalties. But that authority is subject to the Act's remedial considerations.
I am not suggesting that there exist mitigating factors here which justify
lower penalties than those
requested by the I.G. Plainly, none exist. My decision is based on the need
to fashion a deterrent which
comports with the law's remedial purposes and which, in conjunction with other
sanctions, reasonably
relates to the costs sustained by the government. Here, penalties totalling
$100,000.00 are adequate when
other sanctions and the assessments are considered. Had other sanctions not
been imposed, then
significantly higher penalties would have been warranted.
7. The penalties and assessments imposed in this case do not violate Respondents'
rights not to be
placed in double jeopardy.
Respondents argue that the imposition against them of penalties and assessments
violates their rights not to
be placed in double jeopardy. They premise their argument on Respondent Petrus'
1985 conviction for
Medicare and Medicaid fraud and obstruction of justice, and the Supreme Court's
decision in United States
v. Halper, 109 S. Ct. 1892 (1989).
Respondents contend that the Act is unconstitutional as applied to them. I
am without authority to decide
the validity of federal statutes or regulations in cases brought pursuant to
the Act. 42 C.F.R. 1003.105(c).
I make no ruling concerning the constitutionality of the Act as it is being
applied to Respondents.
However, I do have authority to rule on the factual premises and contentions
of the parties as well as to
interpret laws, regulations, and court decisions. I conclude that Respondents'
arguments as to the
applicability of the Halper decision to the facts of this case are fundamentally
incorrect.
The defendant in Halper was convicted in federal court of filing 65 false Medicare
claims resulting in an
overpayment of $585.00. Defendant was sentenced to two years' imprisonment and
fined $5,000.00.
Subsequently, the United States Government brought a civil action against defendant
under the False
Claims Act, a statute which provides for civil remedies of twice the dollar
amount of that which is
established as falsely claimed, plus penalties of $2,000.00 for each false claim.
The government's suit was
premised on defendant's conviction for all 65 claims. The district court entered
summary judgment in
favor of the government on the issue of liability. However, it held that the
remedy sought by the
government -- penalties totalling $130,000.00 -- would violate the defendant's
right against being placed in
double jeopardy. The court based its conclusion on its determination that there
was a "tremendous
disparity" between the civil penalty requested and the actual damages sustained
by the government. It
concluded that the disparity was so great as to render the penalty punitive.
The Supreme Court sustained the district court's conclusion that imposition
of a $130,000.00 penalty would
be punitive in the context of the particular facts of the case. The Supreme
Court held that a civil sanction
constitutes punishment in those circumstances where the civil sanction serves
only the traditional aims of
punishment, retribution and deterrence. 109 S.Ct. at 1902. It stated that a
civil penalty could operate as an
unconstitutional second punishment in:
the rare case, the case such as the one before us, where a fixed-penalty provision
subjects a prolific but
small-guage offender to a sanction overwhelmingly disproportionate to the damages
he has caused. The
rule is one of reason: Where a defendant previously has sustained a criminal
penalty and the civil penalty
sought in the subsequent proceeding bears no rational relation to the goal of
compensating the Government
for its loss, but rather appears to qualify as "punishment" in the
plain meaning of the word, then the
defendant is entitled to an accounting of the Government's damages and costs
to determine if the penalty
sought in fact constitutes a second punishment.
109 S.Ct. at 1902. The Supreme Court remanded the case to the district court
for further proceedings to
determine the amount of damages sustained by the government. It also held that,
in determining damages,
the district court would be permitted to impose a penalty which approximated
the damages sustained by the
government. The issue was not whether damages were precisely proven, but whether
there existed a
rational relationship between what was incurred and what was imposed.
The Supreme Court held that its decision was inapplicable to defendants who
had not previously been
convicted on the same offenses for which civil penalties are sought:
Nothing in today's ruling precludes the Government from seeking the full civil
penalty against a
defendant who previously has not been
punished for the same conduct, even if the civil sanction imposed is punitive.
In such a case, the
Double Jeopardy Clause simply is not implicated.
109 S.Ct. at 1903 (emphasis added).
The Halper decision is inapplicable to this case for several reasons. First,
only Respondent Petrus
sustained a prior criminal conviction. Respondent Eye Center was not charged
with, nor convicted of, any
criminal offenses. Thus, the Double Jeopardy Clause is not implicated with respect
to Respondent Eye
Center.
Second, Respondent Petrus was convicted on only six of the 271 claims which
comprise this case. The
Double Jeopardy Clause is not implicated with respect to the remaining 265 claims.
Respondents assert that Respondent Petrus' guilty plea to the six claims amounted
to jeopardy on all 271
claims. That is manifestly untrue. The charges to which Respondent Petrus pleaded
specifically involved
only the six claims. There was no adjudication and no jeopardy concerning anything
other than the six
claims and a related obstruction of justice charge. Respondent Petrus was sentenced
based on his plea and
not on unadjudicated charges. I.G. Ex. 108, 109.
As to the six claims, the assessments and penalties which I have imposed are
rationally related to the
damages sustained by the government. The total amount unlawfully claimed by
Respondents for these six
claims was $1425.00. I.G. Ex. 21, 69.2. The proportionate share of the total
penalties and assessments
(6/271 of $180,000.00) attributable to these claims is less than $4,000.00.
Finally, the total penalties and assessments which I impose in this case are
remedial and not punitive.
There exists a reasonable relationship between the total penalties and assessments
and the costs sustained
by the government as a consequence of Respondents' misconduct. Therefore, no
issue of a second
punishment results from the remedies which I have imposed.
CONCLUSION
For the reasons set forth in this Decision, I impose assessments of $80,000.00,
and penalties of
$100,000.00 against Respondents, jointly and severally.
____________________________
Steven T. Kessel
Administrative Law Judge