Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Michelle Donaldson, D.P.M., Petitioner,
- v. -
The Inspector General.
DATE: October 9, 1992
Docket No. C-92-015
Decision No. CR234
DECISION
By letter dated November 4, 1991, Michelle Donaldson, D.P.M., the Petitioner
herein, was notified by the
Inspector General (I.G.), U.S. Department of Health & Human Services (HHS),
that it had been decided to
exclude her for a period of 15 years from participation in the Medicare and
Medicaid programs (in this
decision, "Medicaid" means those State health care programs mentioned
in section 1128(h) of the Social
Security Act (the Act)). The I.G. explained that exclusion for a minimum period
of five years is mandatory
under sections 1128(a)(1) and 1128(c)(3)(B) of the Act because Petitioner had
been convicted of a criminal
offense related to the delivery of items or services under Medicare or Medicaid.
The I.G. concluded that
Petitioner should be excluded for more than the mandatory minimum period due
to the nature and severity
of her offenses. 1/
Petitioner filed this timely request for review of the I.G.'s action.
Petitioner acknowledges that, since she "was convicted of a criminal offense
in connection with her
provision of Medicaid services, she must be excluded ... under the applicable
statutory sections for a
minimum of five years." Petitioner's April 20, 1992 Letter at 1. She further
states "I do not suggest an
exclusion ... of less than five years .... [h]owever in light of the mitigating
factors in this case, I request that
the exclusionary period be reduced from fifteen years to five years." Petitioner's
April 20, 1992 Letter at 2.
See Petitioner's July 8, 1992 Brief at 1 - 2.
Petitioner declined an in-person oral hearing. May 6, 1992 Prehearing Order at 2.
I conclude that Petitioner's exclusion is required by law and that a period
of exclusion of ten years is
appropriate.
APPLICABLE LAW
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act make it mandatory for any
individual who has been
convicted of a criminal offense related to the delivery of an item or service
under Medicare or Medicaid to
be excluded from participation in such programs, for a period of at least five
years.
ARGUMENT
In her defense, Petitioner asserts that the Medicaid billing codes for the
podiatric services relevant to this
case are unclear and that this may have caused her to make errors, but she never
intended to defraud
anyone. She declares that, erroneous billing notwithstanding, she always provided
her patients with
medical care and enjoyed a very positive reputation in the community. Lastly,
she emphasizes that she
cooperated with the New York authorities during the course of their investigation
and is currently making
restitution.
The I.G. explained that the proposed duration of Petitioner's exclusion was
determined in accordance with
the factors set forth at 42 C.F.R. Part 1001.125 and that it also reflects Departmental
Appeals Board (DAB)
case precedent. 2/ The I.G. argues that Petitioner has not demonstrated the
presence of mitigating factors
that warrant altering the 15-year exclusion. Her arguments in the present appeal,
the I.G. asserts, are no
more than a recapitulation of allegations that were rejected by the State courts.
The I.G. notes that, in
providing records to State investigators and in paying restitution, Petitioner
did no more than the law
requires.
FINDINGS OF FACT AND CONCLUSIONS OF LAW 3/
1. During the period relevant to this proceeding, Petitioner was a licensed
podiatrist and a Medicaid
provider in the State of New York. I.G.'s proposed findings of fact 1; Petitioner's
statement regarding I.G.'s
proposed findings of fact 1.
2. On or about July 26, 1989, an indictment was filed against Petitioner charging
her with grand larceny
and offering a false instrument for filing. The indictment alleged that she
had billed the New York
Medicaid program for foot molds (orthotics) fabricated from casts that she purportedly
furnished her
patients. P. Ex. 1; I.G. Ex. 3.
3. Petitioner furnished her patients orthotics made from two-dimensional tracings.
Petitioner's July 8,
1992 Brief at 3, 5.
4. Petitioner was tried before a jury in the County Court, Albany, New York,
and was convicted of one
count of grand larceny and ten counts of offering a false instrument for filing.
She was sentenced on
December 14, 1990 to imprisonment for one and one third to six years and also
required to make restitution
of $59,984. I.G. Ex. 7.
5. The State's intermediate appellate court (New York Supreme Court, Appellate
Division, Third
Department) upheld Petitioner's conviction, but reduced her term of imprisonment
to one to three years.
I.G. Ex. 8.
6. The New York Supreme Court found that Petitioner submitted claims for orthotics
pursuant to Medicaid
procedure code 90473 which were not equivalent to what Petitioner was required
to supply to patients
under that procedure code. I.G. Ex. 8.
7. On September 19, 1991, the Board of Regents of the State of New York suspended
Petitioner's license
to practice podiatry for a period of one year and stayed execution of the last
six months of the suspension.
P. Ex. 7.
8. The Secretary of HHS has delegated to the I.G. the authority to determine
and impose exclusions
pursuant to section 1128 of the Act. 48 Fed. Reg. 21662 (May 13, 1983).
9. By letter dated November 4, 1991, Petitioner was notified by the I.G. that
it had been decided to
exclude her for a period of 15 years from participation in the Medicare and
Medicaid programs because she
had been convicted of a criminal offense related to the delivery of items or
services under Medicare or
Medicaid.
10. It is undisputed that Petitioner was convicted of criminal offenses related
to the delivery of items or
services under the Medicare or Medicaid programs, and, consequently, that her
exclusion from such
programs for a minimum period of five years is mandated pursuant to sections
1128(a)(1) and
1128(c)(3)(B). Petitioner's April 20, 1992 Letter at 1 - 2; Petitioner's July
8, 1992 Brief at 1 - 2.
11. The fact that Petitioner committed multiple offenses which were directly
program related is an
aggravating factor to be considered when determining the appropriate exclusion.
12. The fact that Petitioner did substantial financial and other damage to
the Medicaid program is an
aggravating factor to be considered when determining the appropriate exclusion.
13. The fact that Petitioner was sentenced to an atypical and relatively long
period of imprisonment is an
aggravating factor to be considered when determining the appropriate exclusion.
14. Inasmuch as the I.G. has not proved all the aggravating considerations
he alleged (and no others have
emerged), he has not shown the 15-year exclusion to be reasonable.
15. The aggravating considerations that are undisputedly present, as well as
the minimal to nonexistent
evidence of trustworthiness and/or rehabilitation, show that an exclusion of
ten years is reasonable.
DISCUSSION
A. The fact finder must evaluate the evidence in light of the remedial purpose
of the exclusion law in order
to determine the appropriate length of the exclusion.
Inasmuch as the parties to this proceeding acknowledge that Petitioner was
convicted of criminal offenses
related to the delivery of items or services under the Medicare or Medicaid
programs, and, consequently,
that her exclusion from such programs for a minimum period of five years is
mandated by sections
1128(a)(1) and 1128(c)(3)(B), the only issue to be resolved herein is whether
the 15-year exclusion
imposed and directed by the I.G. is reasonable.
Congress enacted section 1128 of the Act to protect the Medicare and Medicaid
programs from fraud and
abuse and to protect the beneficiaries and recipients of such programs from
incompetence and dishonesty.
As one means of protecting these programs and their beneficiaries and recipients,
Congress provided for
the exclusion of individuals who threaten them. Exclusion is also intended to
serve as a deterrent to future
misdeeds. Congress did not, however, intend that exclusions from the Medicare
and Medicaid programs be
permanent; i.e., transgressors were to have an opportunity to rehabilitate themselves.
It is, therefore,
necessary, in each case, to ascertain what period of exclusion is appropriate
to effectuate the purposes of
the law. Charles J. Burks, M.D., DAB CR54 (1989).
In determining an exclusion, the totality of circumstances of the case must
be considered. In general,
though, the following criteria have been found suitable for evaluating trustworthiness
and the length of
exclusion: (1) the circumstances of the misconduct and the seriousness of the
offense, particularly whether
there was program-related crime; (2) whether Petitioner exhibited a willingness
to place the programs in
jeopardy (even if no actual harm resulted); (3) failure to admit misconduct,
or express remorse, or
demonstrate rehabilitation; and (5) the likelihood of future abuse. Bhupandra
Patel, M.D., DAB CR227
(1992).
In addition to the abovementioned indicia of trustworthiness, the appropriateness
of an exclusion may be
determined by assessing the following criteria, which are incorporated in the
regulations (42 C.F.R. Part
1001.125): (1) the number and nature of the offenses; 2) adverse impact upon
beneficiaries; (3) damages
incurred by the Medicare, Medicaid, and social services programs; (4) the existence
of mitigating
circumstances [facts suggestive of trustworthiness]; (5) the length of sentence
imposed by the court; (6)
any other facts bearing on the nature and seriousness of the violations; and
(7) previous sanctions against
the excluded person. Charles J. Burks, M.D., DAB CR54 (1989).
This proceeding is de novo. All evidence relevant to Petitioner's trustworthiness
or the remedial objectives
of the law is admissible, even if such evidence does not pertain to the legal
basis for exclusion, and even if
the I.G. did not consider it. Christino Enriquez, M.D., DAB CR119 (1991).
As to Petitioner's principal defense -- that the billing codes for the podiatric
services applicable here are
unclear and that this caused her to make errors, but she never intended to defraud
anyone -- these
contentions have, indeed, been litigated and rejected in the State criminal
proceedings. By continuing to
insist that she acted out of ignorance or inadvertence, and that she had no
criminal intent, Petitioner is
attempting to deny and re-litigate the conclusions of the New York trial and
appellate courts which found
that she was guilty of offenses in which criminal intent was an essential element
and that her claim that the
billing rules confused her was not convincing. As the trial judge expressed
it, Petitioner was found guilty
of intentional theft from the people of the State of New York. I.G. Ex. 7 at
33; I.G. Ex. 8 at 3. It is well
established that a Petitioner will not be allowed to collaterally attack a prior
criminal conviction in order to
dispute the applicability of a mandatory (five year) exclusion.
Peter J. Edmonson, DAB 1330 (1992).
However, in this case, we must also be concerned with the ten year exclusion
that the I.G. added to the
mandatory minimum period. In Bernardo G. Bilang, M.D., DAB 1295 (1992), an appellate
panel of the
DAB held that, in cases involving discretionary periods of exclusion, a Petitioner
is entitled to introduce
evidence concerning culpability, even if this amounts to challenging findings
reached in the State action
underlying the exclusion. The panel explained that, although the excluded provider
could not thereby deny
the fact of conviction, he could contest other matters relevant to culpability
or trustworthiness since these
directly affect the length of the additional exclusion.
B. The remedial purpose of the Act is satisfied in this case by a ten year exclusion.
Bilang, though, makes it clear that Petitioner bears the burden of discrediting
the prior State proceedings or
individual items of evidence relied upon therein. Bilang at page 12. In the
case at hand, Petitioner has
argued extensively, but has not produced evidence which, when considered in
context of the record as a
whole, casts any doubt upon the findings and conclusions of the New York courts.
In support of her contention that she was unaware that billing code 90473 required
that an orthotic be
fabricated from a three dimensional cast, Petitioner submitted a letter sent
by Laurin Laboratory, Inc., one
of the laboratories from which she ordered orthotics supplied to her patients.
P. Ex. 6. Petitioner contends
that this letter "demonstrates that, prior to February of 1988, the two-dimensional
technique was believed
to be a proper procedure for billing under code 90473." Petitioner's July
8, 1992 Brief at 8. I disagree.
This letter merely states that there was a revision "on page 4-17 of the
procedure manual" which requires
foot molds be made using casts. The letter also states that "in the past,
the impression sheets or
prescription forms have been accepted." This letter does not specifically
refer to procedure code 90473
and it contains insufficient information for me to conclude that the medical
community believed the two
dimensional technique to be a proper procedure for billing under that code.
In addition, even if there were
those in the medical community who did not use the proper billing code prior
to 1988, this does not
absolve Petitioner of the responsibility of filing claims under the proper procedure
code.
Petitioner also submitted an excerpt of the testimony of an expert witness
she called at her criminal trial. P.
Ex. 2. Petitioner argued that this testimony establishes that a reasonable person
could interpret billing code
90473 as she did. Petitioner's July 8, 1992 Brief at 7.
In upholding Petitioner's conviction, the Appellate Division of the New York
Supreme Court concluded
that the requirements of billing code 90473 were clear on its face. I.G. Ex.
8. I find that there is nothing in
the expert testimony submitted by Petitioner which derogates from the conclusion
of the Appellate
Division of the New York Supreme Court. In addition, even if I were to accept
that procedure code 90473
contained some ambiguities, Petitioner still had an affirmative responsibility
as a Medicaid provider to
clarify those ambiguities and to submit proper bills.
Petitioner's remaining assertions -- that, erroneous billing notwithstanding,
she always provided her
patients with medical care; that she enjoyed a very positive reputation in the
community; that she
cooperated with the New York authorities during the course of their investigation;
and that she is making
restitution -- I find to be unproven or without legal merit. That a Medicaid
patient has received genuine
medical care does not excuse the provider's program-related financial misconduct
in the same transaction.
Zenaida Macapagal, DAB CR179 (1992). Petitioner's claims of outstanding reputation
and cooperation
with the government are not substantiated in the record before me. Finally,
I agree with the I.G. that no
special merit attaches to Petitioner's paying restitution where a court has
ordered it. Continuing to other
aggravating and mitigating factors, I conclude that the considerations which
tend to exacerbate the gravity
of Petitioner's misconduct are: the number of violations and the fact that they
were directly program
related; financial and other damage to the Medicaid program; and the court-imposed
sentence.
Specifically, Petitioner defrauded the program on multiple occasions and received
very substantial
proceeds from such false claims. (The exact sum is in dispute, but its magnitude
is suggested by the
$60,000 restitution required of Petitioner). The direct losses occasioned by
Petitioner's criminal acts, plus
the costs of investigating and prosecuting them, deprived the federal-state
health care system of scarce
resources and, inevitably, tended to undermine public confidence.
The egregiousness of Petitioner's conduct is underscored by the atypical sentence
of incarceration that the
court imposed upon her. Additionally, it must be emphasized that she has neither
expressed remorse nor
demonstrated any changes in behavior which would suggest that her character
or conduct have evolved or
that her degree of trustworthiness has improved. To Petitioner's credit is her
clean prior record.
There is ample evidence that the orthotics fabricated in accordance with Petitioner's
directions are inferior
to those which could be made from three-dimensional castings. I.G. Ex. 2/13-25.
However, the record is
devoid of proof that even one specific patient was actually harmed by the orthotics
supplied by Petitioner.
The I.G. argues that a 15-year exclusion is justified in this case because
the intended orthotics supplied by
Petitioner may have caused harm to patients. The I.G. reasons that the two dimensional
tracing technique
used by Petitioner conveys only a limited amount of information about a patient's
foot. It does not, for
example, give any information about the patient's arch or the angle at which
the patient's foot meets the
ground. The I.G. contends that the medical conditions of at least some of Petitioner's
patients may have
necessitated that they receive custom orthotics made from three dimensional
casts which conveyed
information about their arches or other biomechanics of their feet. I.G. June
15, 1992 Brief at 16.
I accept that it is possible that the inferior orthotic devices supplied by
Petitioner may have harmed at least
some of Petitioner's patients. Based on this, I find that a lengthy exclusion
is needed to protect program
beneficiaries.
Although the record establishes that Petitioner's patients may have been harmed
by Petitioner's conduct, the
I.G. has not developed the record on the nature and severity of that harm. In
Bernard Lerner, M.D., DAB
CR60 (1989) the Administrative Law Judge (ALJ) sustained a 15-year exclusion
because the record
established that the dangers to the health care provider's future patients were
"enormous" should the
provider engage in the same wrongdoing in the future. The ALJ in Lerner found
that the danger of harm to
patients was so great in that case that "a substantial margin of safety
must be built into any exclusion
imposed against [p]etitioner." Lerner at 11. In this case, the evidence
adduced by the I.G. is insufficient to
convince me that the potential harm to beneficiaries and recipients is serious
enough to justify a 15-year
exclusion.
Additionally, at the time the I.G. issued his Notice of exclusion, he did not
know that Petitioner's jail term
would be reduced by the appellate court. However, this directly impacts upon
one of the aggravating
factors cited and suggests a corresponding reduction of the HHS exclusion. Inasmuch
as the I.G. has not
proved all the aggravating considerations alleged in his letter (and no others
have emerged), I find he has
not shown the 15-year exclusion to be reasonable. Olian Small, DAB CR136 (1991);
S. Khalid Hussain,
M.D., DAB CR204 (1992). Nevertheless, the aggravating considerations that are
undisputedly present, as
well as the minimal to nonexistent evidence of improved trustworthiness and/or
rehabilitation, convince me
that an exclusion longer than the five years mandated by statute is called for.
CONCLUSION
It is appropriate to exclude Petitioner for a period of ten years, pursuant to section 1128(a)(1) of the Act.
____________________________
Joseph K. Riotto
Administrative Law Judge
1. The I.G. cited, as aggravating considerations, the facts that Petitioner's
criminal activities defrauded
Medicaid of approximately $60,000; that Medicaid patients may have been harmed
by being given cheap
orthotic devices; and that she was sentenced to jail for up to six years by
a State court.
2. For cases in which the I.G. gave notice of the exclusion after January 29,
1992, these regulations
have been superseded by the present 42 C.F.R. 1001.102. The I.G. noted that
"[a]t the time that Petitioner's
case was reviewed by the OIG [Office of Inspector General], it applied the text
of 42 C.F.R. Part 1001 as it
read before January 29, 1992." I.G. Brief dated June 15, 1992 at 12. The
I.G. does not contend, and I do
not find, that the regulations promulgated on January 29, 1992 at 42 C.F.R.
1001.102 apply retroactively
to this case. See Behrooz Bassim, M.D., DAB 1333 (1992).
3. Petitioner and the I.G. submitted briefs and documentary exhibits. I admitted
all of the exhibits into
evidence and refer to them herein as "P. Ex. (number)" or "I.G.
Ex. (number)."