Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: The Inspector General,
- v. -
Wesley Hal Livingston and Shoals Medical Equipment and Supply Co., Inc., Respondents.
DATE: November 9, 1992
Docket No. C-92-381
Decision No. CR240
DECISION
On April 19, 1991, the Inspector General (I.G.) notified Respondents Wesley
Hal Livingston (Respondent
Livingston) and Shoals Medical Equipment and Supply Company, Inc. (Respondent
Shoals) that he
intended to impose civil monetary penalties, assessments, and exclusions against
them pursuant to section
1128A of the Social Security Act (Act). The I.G. asserted that Respondents had
presented or caused to be
presented Medicare reimbursement claims which Respondents knew, had reason to
know, or should have
known were false, fraudulent, or for items or services which were not provided
as claimed. On July 8,
1991, the I.G. sent an amended notification to Respondents, in which he asserted
that Respondents had
presented or caused to be presented additional claims that were in violation
of the Act and that were not
listed in the April 19, 1991 notice letter.
The I.G. contended that Respondents presented or caused to be presented claims
for 183 items or services
in violation of the Act. 1/ The I.G. advised Respondents that he had determined
to impose assessments
against them of $97,437.60 and penalties of $304,000.00, for a total of $401,437.60.
The I.G. also advised
Respondents that he had determined to exclude them from participating in the
Medicare, Medicaid,
Maternal and Child Services Block Grant, and Social Services Block Grant programs
(Titles XVIII, XIX,
V, and X, of the Act, respectively) for a period of five years. 2/
Respondents requested a hearing and the case was assigned to me for a hearing
and a decision. I held a
hearing in Mobile, Alabama, from April 27 - May 1, 1992, and in Florence, Alabama,
on May 8, 1992.
The parties submitted posthearing briefs and reply briefs.
I have carefully considered the evidence, the applicable law and regulations,
and the parties' arguments. I
conclude that Respondents presented or caused to be presented 173 Medicare reimbursement
claims which
were false, fraudulent, or for items or services which were not provided as
claimed. 3/ I do not find that
Respondents knowingly presented Medicare reimbursement claims which were false,
fraudulent, or for
items or services which were not provided as claimed. I conclude that Respondents
had reason to know or
should have known that the claims at issue were false, fraudulent, or for items
or services which were not
provided as claimed. Respondents therefore presented or caused to be presented
173 claims in violation of
the Act. I impose assessments against Respondents, jointly and severally
of $85,000.00. I impose penalties against Respondents, jointly and severally,
of $300,000.00. I exclude
each Respondent for five years.
ISSUES
The issues in this case are whether:
1. Either Respondent presented or caused to be presented Medicare reimbursement
claims which
that Respondent knew, had reason to know, or should have known were false, fraudulent,
or for items or
services which were not provided as claimed.
2. An assessment, penalty, or an exclusion should be imposed against either
Respondent, and, if
so, for what amounts, or for what period of time.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
As a convenience to the parties, I have organized the following Findings of
Fact and Conclusions of Law
(Findings) by subject headings. The headings are not Findings and they do not
alter the meaning of my
Findings.
A. Respondents and their home oxygen equipment rental business
1. Respondent Livingston is trained as and has worked as a respiratory therapist.
I.G. Ex. 534/2 - 3, /8 - 9,
/22; Tr. at 1407. 4/
2. A respiratory therapist is a health care provider who furnishes care to
patients who suffer from chronic
breathing problems. Tr. at 1150 - 1151.
3. In Alabama, there are neither education nor licensing requirements to qualify
individuals to work as
respiratory therapists. I.G. Ex. 534/3; Tr. at 1466.
4. The care provided by respiratory therapists includes administering tests
to patients to determine whether
patients qualify for oxygen equipment for home use. See Tr. at 1052 - 1053,
1150 - 1151.
5. Tests administered by respiratory therapists may include arterial blood
gas studies (ABGs) and ear
oximetry tests. I.G. Ex. 17/2; Tr. at 1053, 1151, 1157 - 1158, 1194.
6. An ABG involves withdrawing blood from a patient's artery and testing it
to determine the degree of
oxygen pressure (PO2) in the patient's arterial blood. I.G. Ex. 17/2; Tr. at
420 - 421, 569 - 571.
7. The PO2 level in a patient's arterial blood evidences the extent to which
that patient's breathing is
impaired. Tr. at 569 - 570.
8. Blood withdrawn from a vein (venous blood) has a lower PO2 level than arterial
blood, and cannot be
substituted legitimately for arterial blood for the purpose of conducting an
arterial blood gas study. Tr. at
1166; See Tr. at 1185, 1197.
9. An oximetry test determines the oxygen saturation of a patient's blood by
measuring the passage of light
through that patient's ear lobe. I.G. Ex. 17/2; Tr. at 1193 - 1194.
10. The care provided by respiratory therapists includes maintaining oxygen
equipment provided to
patients for use in their homes. Tr. at 1055.
11. Respondent Livingston incorporated Respondent Shoals in January, 1983. I.G. Ex. 541; Tr. at 1409.
12. Respondent Shoals maintained its principal office in Florence, Alabama.
I.G. Ex. 533/333; I.G. Ex.
534/6.
13. Respondent Shoals was organized to provide medical equipment, including
oxygen equipment, to
patients, to be used by them in their homes. I.G. Ex. 533/110; I.G. Ex. 534/4;
I.G. Ex. 541/3.
14. Respondent Shoals provided home oxygen equipment to patients residing in
several states in the
southern United States, including patients residing in the State of Alabama.
Tr. at 1409, 1453.
15. Between 1983 and 1986, Respondent Shoals rented home oxygen equipment to
between 500 and 800
patients at any one time. I.G. Ex. 534/69; Tr. at 1452 - 1453.
16. The home oxygen equipment which Respondent Shoals rented to patients included
oxygen
concentrators, portable oxygen equipment, ultrasonic nebulizers, and compressors.
See R. Ex. 1/2; R. Ex.
3/3; R. Ex. 4/2; R. Ex. 6/4; R. Ex. 7/2. 5/
17. An oxygen concentrator is a device which extracts oxygen from room air,
thereby providing oxygen to
a patient without the presence of oxygen tanks or stored oxygen. Tr. at 394,
557 - 558.
18. Portable oxygen equipment includes tanks which contain oxygen and which
can be transported by a
patient from one location to another. Tr. at 554.
19. An ultrasonic nebulizer is a device which humidifies air breathed by a patient. Tr. at 556 - 557.
20. A compressor is a device which pressurizes medications for the purpose
of aiding breathing by
opening the patient's air passages. Tr. at 557.
21. Respondent Livingston was the President of Respondent Shoals. I.G. Ex. 1/2.
22. In December 1982, Respondent Livingston obtained a Medicare provider number
for Respondent
Shoals so that Respondent Shoals could present reimbursement claims for Medicare
items or services. I.G.
Ex. 2; see I.G. Ex. 534/4 - 5.
23. Respondent Livingston managed the affairs of Respondent Shoals and supervised
Respondent Shoals'
employees closely in the performance of their duties. I.G. Ex. 534/387, /394;
Tr. at 1430, 1754, 1757,
1758 - 1759, 1760 - 1761.
24. The acts of Respondent Shoals were at the direction of, and under the close
control of, Respondent
Livingston. Findings 11, 22 - 23.
25. Respondent Shoals was the agent of Respondent Livingston. Findings 11, 22 - 24.
B. The conditions under which Medicare beneficiaries in Alabama qualified for
Medicare reimbursement
for home oxygen equipment rentals, and the manner in which providers in Alabama
received
reimbursement for Medicare claims for home oxygen equipment rentals
26. Blue Cross and Blue Shield of Alabama (BCBSA) is the agent of the United
States Government which
processes claims for Medicare reimbursement in the State of Alabama, and it
served in that capacity from
1983 through 1986. Tr. at 412 - 413.
27. Prior to October 1, 1985, there existed no national standards of eligibility
to qualify Medicare
beneficiaries for reimbursement for home oxygen equipment. Tr. at 413 - 414.
28. Prior to October 1, 1985, BCBSA established standards of eligibility to
qualify Medicare beneficiaries
in Alabama for reimbursement for home oxygen equipment. I.G. Ex. 8; I.G. Ex.
12; I.G. Ex. 13; I.G. Ex.
17; I.G. Ex. 26; Tr. at 414.
29. Beginning October 1, 1985, the Medicare program established national standards
of eligibility to
qualify Medicare beneficiaries for reimbursement for home oxygen equipment.
I.G. Ex. 21; I.G. Ex. 22;
I.G. Ex. 25; I.G. Ex. 30; Tr. at 414.
30. Prior to October 1, 1985, BCBSA required as supporting evidence for an
initial claim for Medicare
reimbursement for home oxygen equipment: (1) a Durable Medical Equipment Certification
(DME form),
signed by a physician, which certified the need for the specific equipment ordered,
and which contained
specified additional information concerning the beneficiary's medical condition
and the length of time for
which the equipment was likely to be needed; and (2) documentation of the beneficiary's
arterial blood gas,
through an ABG, demonstrating a PO2 below 55mm Hg. I.G. Ex. 8/1 - 2; Tr. at
415.
31. Prior to October 1, 1985, BCBSA required that claims for home oxygen equipment
be recertified
every six months with the submission of an updated DME form, signed by a physician.
Tr. at 417 - 18.
32. Prior to June 1984, BCBSA did not require that recertification requests
for home oxygen equipment be
accompanied by ABG or other test results. Tr. at 417.
33. Beginning in June, 1984, BCBSA continued to require that a request for
reimbursement for home
oxygen equipment be recertified once every six months with an updated DME form,
signed by a physician.
It also required that, once every twelve months, a recertification request for
reimbursement for home
oxygen equipment be submitted with an ABG documenting that the beneficiary had
a PO2 below 55mm
Hg., along with an updated DME form, signed by a physician. Tr. at 417.
34. Beginning in early 1985, BCBSA required that, once every 12 months, a recertification
request for
reimbursement for home oxygen equipment be submitted with either an ABG documenting
that the
beneficiary had a PO2 of below 55mm Hg., or an ear oximetry test result documenting
a blood oxygen
saturation level of 90 percent or less, along with an updated DME form, signed
by a physician. Tr. at 418 -
419, 423.
35. Beginning October 1, 1985, Medicare and BCBSA required that, for an initial
claim for
reimbursement for home oxygen, the claim be accompanied by a completed DME form
signed by a
physician, along with either an ABG test result documenting specified PO2 levels
or an ear oximetry test
documenting specified oxygen saturation levels. I.G. Ex. 21; I.G. Ex. 30; Tr.
at 419 - 420.
36. The PO2 or oxygen saturation levels which would qualify a beneficiary for
reimbursement under the
October 1, 1985 Medicare reimbursement criteria varied, depending on the level
of physical activity
engaged in by the beneficiary while the test was being conducted. I.G. Ex. 21;
I.G. Ex. 30; Tr. at 419 -
420.
37. Beginning October 1, 1985, Medicare and BCBSA did not require additional
ABG studies or ear
oximetry studies accompany recertification requests for reimbursement of home
oxygen equipment, so
long as the beneficiary's medical condition at the time of recertification remained
unchanged. I.G. Ex. 21;
I.G. Ex. 30; Tr. at 420.
38. Between 1983 and 1986, BCBSA sent to health care providers, including suppliers
of home oxygen
equipment, documents which announced BCBSA's and Medicare's criteria for qualifying
Medicare
beneficiaries for Medicare reimbursement for home oxygen equipment. I.G. Ex.
8; I.G. Ex. 12; I.G. Ex.
13; I.G. Ex. 17; I.G. Ex. 21; I.G. Ex. 22; I.G. Ex. 25; I.G. Ex. 26; Tr. at
409, 412 - 413.
39. Respondents received BCBSA's publications of criteria for qualifying Medicare
beneficiaries for
Medicare reimbursement for home oxygen equipment, and knew about those criteria.
I.G. Ex. 533/319;
I.G. Ex. 534/11, 14, 54, 56; R. Ex. 13; R. Ex. 19 - 26; R. Ex. 28; R. Ex. 29;
Finding 38.
40. Between September, 1980, and October, 1986, BCBSA reimbursed Medicare claims
for home oxygen
equipment under a procedure known as the "DME diary." Tr. at 430 -
431.
41. Under the DME diary procedure, a claim for home oxygen equipment, once
initially qualified for
reimbursement, would automatically be paid by BCBSA monthly, for six months.
Tr. at 430 - 431.
42. Under the DME diary procedure, a provider claiming reimbursement for home
oxygen equipment
would only need to submit one claim which qualified for reimbursement in order
to receive reimbursement
from BCBSA for a six month period. Tr. at 430 - 431.
43. Under the DME diary procedure, each time a provider submitted a recertification
to BCBSA which
qualified a beneficiary for additional reimbursement for home oxygen equipment
rental, BCBSA would
reimburse the provider for six additional months' rental of the equipment. Tr.
at 431.
44. Under the DME diary procedure, BCBSA would send a document to a provider
once a month, known
as a "turn-around document," which told the provider whether a claim
was being paid by BCBSA, and
whether a recertification was due in order for a beneficiary to continue to
qualify for reimbursement rental
of home oxygen equipment to that beneficiary. Tr. at 432 - 433.
45. Under the DME diary procedure, the provider of home oxygen equipment had
the duty to notify
BCBSA if a beneficiary stopped using home oxygen equipment in less than six
months' time. I.G. Ex. 37;
Tr. at 433 - 434.
46. Respondents were aware of the DME diary procedure and understood their
duty to notify BCBSA in
the event that a beneficiary stopped using home oxygen equipment in less than
six months' time. R. Ex.
1/26; R. Ex. 2/22; Finding 44.
47. BCBSA relied on the documents submitted by providers to determine whether
Medicare beneficiaries
qualified for reimbursement for home oxygen equipment rental. Findings 26 -
46.
48. Under the DME diary procedure, providers of home oxygen equipment in Alabama
had a duty to
determine each month whether beneficiaries were continuing to use home oxygen
equipment, and to advise
BCBSA if any beneficiaries were no longer using home oxygen equipment. Findings
40 - 47.
49. Providers who submit claims for Medicare reimbursement for home oxygen
equipment have a duty to
assure that the claims they submit accurately and honestly state the facts represented
in the claims.
Findings 26 - 48.
C. The relationship between Respondents and independent contractor respiratory therapists
50. Respondent Shoals rented home oxygen equipment to patients through respiratory
therapists who had
independent contractor relationships with Respondent Shoals. I.G. Ex. 534/7
- 8.
51. Respondent Livingston personally recruited independent contractor respiratory
therapists on behalf of
Respondent Shoals, and worked closely with the independent contractor respiratory
therapists. I.G. Ex.
533/199, /208 - 209; I.G. Ex. 534/19, /28, /30; Tr. at 1446, 1469, 1761, 1766.
52. Respondent Shoals had independent contractor relationships with as many
as 60 respiratory therapists
at any given time. I.G. Ex. 534/6; Tr. at 1452.
53. Typically, an independent contractor respiratory therapist would service
about 10 patients at a time on
behalf of Respondent Shoals. I.G. Ex. 534/7.
54. Some of Respondent Shoals' independent contractors serviced more than,
or less than, 10 patients at a
time on behalf of Respondent Shoals. I.G. Ex. 534/7.
55. Respondent Shoals' purpose in doing business with independent contractors
was to obtain access to
patients who were candidates to rent home oxygen equipment. Respondent Shoals
would rent home
oxygen equipment to patients through the independent contractors. I.G. Ex. 534/61;
see Tr. at 1426 - 1429.
56. The independent contractor respiratory therapists through whom Respondent
Shoals rented home
oxygen equipment to patients were respiratory therapists who were employed by
various hospitals. Tr. at
669 - 670, 785 - 786, 789, 1053, 1153.
57. The independent contractor respiratory therapists would obtain referrals
for home oxygen equipment
rental from physicians who were on the staffs of hospitals at which the respiratory
therapists were
employed. Tr. at 543 - 544, 669 - 670, 674 - 675.
58. Respondent Shoals agreed to pay independent contractor respiratory therapists
a commission ranging
from $25 to as much as $80 per month for each patient from whom the contractors
could obtain an
agreement to rent home oxygen equipment from Respondent Shoals, with the amount
of the commission
depending on the rental fee for the equipment rented. Tr. at 796, 798 - 799,
1259 - 1260.
59. Respondent Shoals agreed to pay independent contractor respiratory therapists
for home oxygen
equipment rental to Medicare beneficiaries on a commission basis, conditioned
on the beneficiaries
qualifying for reimbursement from Medicare for the rental of the equipment.
I.G. Ex. 534/8, Tr. at 1253 -
1254.
60. If a patient who was a Medicare beneficiary did not qualify for reimbursement
from Medicare for
rental of home oxygen equipment, Respondent Shoals would not pay the contractor
who obtained the
referral of that patient. Finding 59; See I.G. Ex. 533/259 - 260.
61. Under the terms of Respondent Shoals' agreements with independent contractors,
the independent
contractors were required to obtain the documents necessary to qualify Medicare
beneficiaries for
Medicare reimbursement for rental of home oxygen equipment, including DME forms
executed by
physicians, ABGs which met qualifying criteria, and equipment rental agreements
executed by
beneficiaries or by persons on behalf of beneficiaries. I.G. Ex. 533/189, /210
- 211; Tr. at 1228, 1426 -
1429.
62. The independent contractors through whom Respondent Shoals rented home
oxygen equipment to
patients performed ABGs on those patients to qualify them for Medicare reimbursement
for home oxygen
equipment rentals. Tr. at 1256.
63. The independent contractors through whom Respondent Shoals rented home
oxygen equipment to
patients were Respondent Shoals' agents. Findings 50 - 62.
64. The means by which Respondent Shoals, at Respondent Livingston's direction,
compensated
independent contractor respiratory therapists (commissions for equipment rentals
to patients who qualified
for reimbursement) gave respiratory therapists an incentive to falsify documents,
including DME forms,
ABGs, and home oxygen equipment rental agreements, in order to qualify patients
for initial and
continuing reimbursement for rental of the most expensive home oxygen equipment,
including oxygen
concentrators and portable oxygen. Findings 50 - 63.
D. Medicare reimbursement claims by Respondent Shoals that were false or fraudulent
or for items or
services that were not provided as claimed
65. Respondent Shoals, at Respondent Livingston's direction, presented to BCBSA
Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Morris Broughton from September 20, 1985 through June 20, 1986.
I.G. Ex. 403 - 416;
Findings 24 - 25; see I.G.'s April 19, 1991 notice letter to Respondents, Counts
1 - 16.
66. Respondent Livingston caused to be presented to BCBSA the reimbursement
claims for the items or
services which Respondent Shoals asserted to have provided to Morris Broughton
from September 20,
1985 through June 20, 1986. Findings 23 - 25, 65.
67. The reimbursement claims for the items or services which Respondent Shoals
asserted it provided to
Morris Broughton from September 20, 1985 through June 20, 1986 include 16 claims
for reimbursement
for the rental of either an oxygen concentrator or portable oxygen. I.G. Ex.
403 - 416; see I.G. Ex. 9/18.
68. Morris Broughton did not suffer from a medical condition from September
20, 1985 through June 20,
1986, which would warrant the use by him of either an oxygen concentrator or
portable oxygen. I.G. Ex.
395/2.
69. Morris Broughton's physician did not prescribe either an oxygen concentrator
or portable oxygen for
Morris Broughton from September 20, 1985 through June 20, 1986. I.G. Ex. 395/1
- 2.
70. Morris Broughton did not receive from Respondent Shoals either an oxygen
concentrator or portable
oxygen from September 20, 1985 through June 20, 1986. I.G. Ex. 396.
71. Respondent Shoals presented to BCBSA two DME forms for certification or
recertification of home
oxygen equipment that Respondent Shoals asserted it provided to Morris Broughton
from September 20,
1985 through June 20, 1986. I.G. Ex. 401 - 402.
72. Although the two DME forms bear the purported signature of Morris Broughton's
physician, that
physician neither prepared nor signed the forms, nor authorized other individuals
to prepare or sign the
forms. I.G. Ex. 395/1 - 2; See I.G. Ex. 401 - 402.
73. Respondent Shoals presented to BCBSA an ABG result purportedly ordered
by Morris Broughton's
physician, and dated September 12, 1985, to support its reimbursement claims
for an oxygen concentrator
or portable oxygen and which it asserted it provided to Morris Broughton from
September 20, 1985
through June 20, 1986. I.G. Ex. 400.
74. The ABG result is dated prior to the date that Morris Broughton's physician
first saw Morris
Broughton. I.G. Ex. 395/1.
75. Morris Broughton's physician did not order an ABG for Morris Broughton,
to be performed on
September 12, 1985. I.G. Ex. 395/1; Finding 74.
76. The ABG result which Respondent Shoals presented to BCBSA to support its
reimbursement claims
for Morris Broughton contains information concerning the PO2 levels in Morris
Broughton's blood which
is inconsistent with the clinical findings and diagnosis made by Morris Broughton's
physician. I.G. Ex.
395/1 - 2, /24 - 26; I.G. Ex. 400.
77. The DME forms and the ABG result which Respondent Shoals presented to BCBSA
to support its
reimbursement claims for an oxygen concentrator or portable oxygen which it
asserted it provided to
Morris Broughton from September 20, 1985 through June 20, 1986 contain materially
false information.
Findings 71 - 76.
78. The 16 reimbursement claims for either an oxygen concentrator or portable
oxygen which Respondent
Shoals asserted it provided to Morris Broughton from September 20, 1985 through
June 20, 1986 are false
or fraudulent. Findings 67 - 77.
79. The 16 reimbursement claims for either an oxygen concentrator or portable
oxygen which Respondent
Shoals asserted it provided to Morris Broughton from September 20, 1985 through
June 20, 1986 are for
items or services which were not provided as claimed. Findings 67 - 78.
80. Respondent Shoals, at Respondent Livingston's direction, presented to BCBSA
Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Estelle Coleman from February 20, 1985 through June 20, 1986. I.G.
Ex. 373 - 389; Findings
23 - 25; see I.G.'s April 19, 1991 and July 8, 1991 notice letters to Respondents,
Counts 17 - 30, 153 - 155.
81. Respondent Livingston caused to be presented to BCBSA the reimbursement
claims for the items or
services which Respondent Shoals asserted it provided to Estelle Coleman from
February 20, 1985 through
June 20, 1986. Findings 23 - 25, 79 - 80.
82. The reimbursement claims for the items or services which Respondent Shoals
asserted it provided to
Estelle Coleman from February 20, 1985 through June 20, 1986 include 17 claims
for reimbursement for
the rental of an oxygen concentrator. I.G. Ex. 373 - 389; see I.G. Ex. 9/18.
83. Estelle Coleman did not suffer from a medical condition from March 20,
1985 through June 20, 1986
which would warrant her using an oxygen concentrator. I.G. Ex. 354; I.G. Ex.
392.
84. Estelle Coleman's physician did not prescribe an oxygen concentrator for
Estelle Coleman from March
20, 1985 through June 20, 1986. I.G. Ex. 354.
85. Estelle Coleman did not receive an oxygen concentrator from Respondent
Shoals from March 20,
1985 through June 20, 1986. I.G. Ex. 355; I.G. Ex. 356.
86. Respondent Shoals presented to BCBSA six DME forms for certification or
recertification of home
oxygen equipment that Respondent Shoals asserted it provided to Estelle Coleman
from March 20, 1985
through June 20, 1986. I.G. Ex. 363 - 367; I.G. Ex. 369 - 370. 6/
87. Estelle Coleman's physician signed two of the six DME forms. However, Estelle
Coleman's physician
did not complete these two forms, nor did he direct other individuals to complete
these forms in a way
which would indicate that Estelle Coleman suffered from respiratory illness,
or that she needed home
oxygen equipment. I.G. Ex. 354/2; See I.G. Ex. 365; I.G. Ex. 367.
88. Although the four remaining DME forms bear the purported signature of Estelle
Coleman's physician,
he did not complete or sign the four remaining forms, nor did he direct other
individuals to complete or
sign the forms. I.G. Ex. 354/1 - 2; See I.G. Ex. 363 - 364; I.G. Ex. 366; I.G.
Ex. 369 - 370.
89. Respondent Shoals presented to BCBSA two ABG results purportedly ordered
by Estelle Coleman's
physician, to support its reimbursement claims for an oxygen concentrator which
it asserted it provided to
Estelle Coleman from March 20, 1985 through June 20, 1986. I.G. Ex. 361 - 362.
90. Estelle Coleman's physician never ordered ABGs to be performed on Estelle Coleman. I.G. Ex. 354.
91. The ABG results which Respondent Shoals presented to BCBSA to support its
reimbursement claims
for Estelle Coleman contain information concerning the PO2 levels in Estelle
Coleman's blood which is
inconsistent with the clinical findings and diagnosis made by Estelle Coleman's
physician. I.G. Ex. 361 -
362; I.G. Ex. 392.
92. The DME forms and the ABG results which Respondent Shoals presented to
BCBSA to support its
reimbursement claims for an oxygen concentrator which it asserted it provided
to Estelle Coleman from
March 20, 1985 through June 20, 1986 contain materially false information. Findings
86 - 91.
93. The 17 reimbursement claims for an oxygen concentrator which Respondent
Shoals asserted it
provided to Estelle Coleman from March 20, 1985 through June 20, 1986 are false
or fraudulent. Findings
80 - 92.
94. The 17 reimbursement claims for an oxygen concentrator which Respondent
Shoals asserted it
provided to Estelle Coleman from March 20, 1985 through June 20, 1986 are for
items or services which
were not provided as claimed. Findings 80 - 93.
95. Respondent Shoals, at Respondent Livingston's direction, presented to BCBSA
Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Antonio Elizondo from March 18, 1985 through December 18, 1985.
I.G. Ex. 154 - 161;
Findings 24 - 25; See I.G.'s April 19, 1991 and July 8, 1991 notice letters
to Respondents, Counts 31 - 37,
156 - 158.
96. Respondent Livingston caused to be presented to BCBSA the reimbursement
claims for the items or
services which Respondent Shoals asserted it provided to Antonio Elizondo from
March 18, 1985 through
December 18, 1985. Findings 23 - 25, 95.
97. The reimbursement claims for the items or services which Respondent Shoals
asserted it provided to
Antonio Elizondo from March 18, 1985 through December 18, 1985 include 10 claims
for reimbursement
for the rental of an oxygen concentrator. I.G. Ex. 154 - 161; see I.G. Ex. 9/18.
98. The physician who treated Antonio Elizondo from March 18, 1985 through
December 18, 1985 never
prescribed an oxygen concentrator for Antonio Elizondo. Tr. at 577 - 578.
99. Antonio Elizondo never received an oxygen concentrator. I.G. Ex. 138.
100. Respondent Shoals presented to BCBSA five DME forms for certification
or recertification of home
oxygen equipment that Respondent Shoals asserted it provided to Antonio Elizondo
from March 18, 1985
through December 18, 1985. I.G. Ex. 142 - 146.
101. Antonio Elizondo's physician signed one of the five DME forms. However,
Antonio Elizondo's
physician did not complete this form, nor did she direct other individuals to
complete the form in a way
which would indicate that Antonio Elizondo needed a respiratory support system
(as is indicated on the
form). I.G. Ex. 142; Tr. at 577 - 578.
102. Although the four remaining DME forms bear the purported signature of
Antonio Elizondo's
physician, she did not complete or sign the four remaining forms, nor did she
direct other individuals to
complete or sign the forms. Tr. at 579 - 582; see I.G. Ex. 143 - 146.
103. Respondent Shoals presented to BCBSA an ABG result, purportedly ordered
by Antonio Elizondo's
physician, to support its reimbursement claims for an oxygen concentrator which
it asserted it provided to
Antonio Elizondo from March 18, 1985 through December 18, 1985. I.G. Ex. 141;
Tr. at 585.
104. Antonio Elizondo's physician did not order the ABG which she purportedly
ordered, and which
Respondent Shoals presented to BCBSA to support its reimbursement claims for
an oxygen concentrator
which it asserted it supplied to Antonio Elizondo. Tr. at 584 - 586.
105. The ABG result which Respondent Shoals presented to BCBSA to support its
reimbursement claims
for Antonio Elizondo contains information concerning the PO2 levels in Antonio
Elizondo's blood which is
inconsistent with the clinical findings and diagnosis made by Antonio Elizondo's
physician. I.G. Ex. 141;
I.G. Ex. 171; Tr. at 586 - 587.
106. The DME forms and the ABG result which Respondent Shoals presented to
BCBSA to support its
reimbursement claims for an oxygen concentrator which it asserted it provided
to Antonio Elizondo from
March 18, 1985 through December 18, 1985 contain materially false information.
Findings 100 - 105.
107. The 10 reimbursement claims for an oxygen concentrator which Respondent
Shoals asserted it
provided to Antonio Elizondo from March 18, 1985 through December 18, 1985 are
false or fraudulent.
Findings 95 - 106.
108. The 10 reimbursement claims for an oxygen concentrator which Respondent
Shoals asserted it
provided to Antonio Elizondo from March 18, 1985 through December 18, 1985 are
for items or services
which were not provided as claimed. Findings 95 - 107.
109. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Ruby Ellis from May 19, 1985 through June 19, 1986. I.G. Ex. 181
- 206; Findings 24 - 25;
See I.G.'s April 19, 1991 and July 8, 1991 notice letters to Respondents, Counts
38 - 65.
110. Respondent Livingston caused to be presented to BCBSA the reimbursement
claims for the items or
services which Respondent Shoals asserted it provided to Ruby Ellis from May
19, 1985 through June 19,
1986. Findings 23 - 25, 109.
111. The reimbursement claims for the items or services which Respondent Shoals
asserted it provided to
Ruby Ellis from May 19, 1985 through June 19, 1986 include 28 claims for reimbursement
for the rental of
either an oxygen concentrator or portable oxygen. I.G. Ex. 181 - 206; see I.G.
Ex. 9/18.
112. The physician who treated Ruby Ellis during the period from May 19, 1985
through June 19, 1986,
never prescribed an oxygen concentrator or portable oxygen for Ruby Ellis. Tr.
at 577 - 578.
113. Ruby Ellis did not have or use an oxygen concentrator or portable oxygen
at her home in 1985 or
1986. I.G. Ex. 172/1.
114. Respondent Shoals presented to BCBSA four DME forms for certification
or recertification of home
oxygen equipment that Respondent Shoals asserted it provided to Ruby Ellis from
May 19, 1985 through
June 19, 1986. I.G. Ex. 176 - 179.
115. Ruby Ellis' physician did not sign, nor did she give any other individual
permission to sign, the four
DME forms. Tr. at 590 - 594; see I.G. Ex. 176 - 179.
116. Respondent Shoals presented to BCBSA an ABG result for Ruby Ellis to support
its reimbursement
for claims for an oxygen concentrator or portable oxygen which it asserted it
provided to Ruby Ellis from
May 19, 1985 through June 19, 1986. I.G. Ex. 175.
117. The PO2 level reported in the ABG result for Ruby Ellis is inconsistent
with the clinical findings
made by her physician. I.G. Ex. 209/1 - 46; Tr. at 595.
118. The DME forms and the ABG result which Respondent Shoals presented to
BCBSA to support its
reimbursement claims for an oxygen concentrator or portable oxygen which it
asserted it provided to Ruby
Ellis from May 19, 1985 through June 19, 1986, contain materially false information.
Findings 109 - 117.
119. The 28 reimbursement claims for an oxygen concentrator or portable oxygen
which Respondent
Shoals asserted it provided to Ruby Ellis from May 19, 1985 through June 19,
1986, are false or
fraudulent. Findings 109 - 118.
120. The 28 reimbursement claims for an oxygen concentrator or portable oxygen
which Respondent
Shoals asserted it provided to Ruby Ellis from May 19, 1985 through June 19,
1986 are for items or
services which were not provided as claimed. Findings 109 - 119.
121. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Jennie Mae King from March 28, 1985 through August 28, 1985. I.G.
Ex. 89 - 90; R. Ex. 10/1;
Findings 24 - 25; See I.G.'s April 19, 1991 and July 8, 1991 notice letters
to Respondents, Counts 66 - 67,
159 - 168.
122. Respondent Livingston caused to be presented to BCBSA the reimbursement
claims for the items or
services which Respondent Shoals asserted it provided to Jennie Mae King from
March 28, 1985 through
August 28, 1985. Findings 23 - 25, 121.
123. The reimbursement claims for the items or services which Respondent Shoals
asserted it provided to
Jennie Mae King from March 28, 1985 through August 28, 1985 include 12 claims
for reimbursement for
the rental of either an oxygen concentrator or portable oxygen. I.G. Ex. 89
- 90; R. Ex. 10; See I.G. Ex.
9/18.
124. The physician who treated Jennie Mae King during the period from March
28, 1985 through August
28, 1985 never prescribed an oxygen concentrator or portable oxygen for Jennie
Mae King. I.G. Ex. 74/1.
125. Jennie Mae King never received an oxygen concentrator or portable oxygen
from Respondent Shoals.
I.G. Ex. 75; Tr. at 326 - 327, 329 - 330.
126. Respondent Shoals presented to BCBSA four DME forms for certification
or recertification for
claims for home oxygen equipment that Respondent Shoals asserted it provided
to Jennie Mae King for the
period of time from March 28, 1985 through August 28, 1985. I.G. Ex. 81 - 84;
R. Ex. 10.
127. Jennie Mae King's physician signed one of the four DME forms. However,
Jennie Mae King's
physician did not complete this form, nor did he direct other individuals to
complete the form in a way
which would indicate that Jennie Mae King suffered from impaired breathing (as
is indicated on the form).
I.G. Ex. 74/1 - 2; see I.G. Ex. 81.
128. Although the three remaining DME forms bear the purported signature of
Jennie Mae King's
physician, he did not complete or sign the three remaining forms, nor did he
direct other individuals to
complete or sign the forms. I.G. Ex. 74/2 - 3; See I.G. Ex. 82 - 84.
129. Respondent Shoals presented to BCBSA an ABG result for Jennie Mae King
to support its
reimbursement claims for an oxygen concentrator or portable oxygen which it
asserted it provided to
Jennie Mae King from March 28, 1985 through August 28, 1985. I.G. Ex. 80; R.
Ex. 10/16 - 17.
130. Jennie Mae King's physician did not order the ABG which Respondent Shoals
presented to BCBSA
to support its reimbursement claims for an oxygen concentrator or portable oxygen
which it asserted it
supplied to Jennie Mae King. I.G. Ex. 74/1; see I.G. Ex. 80.
131. The PO2 level reported in the ABG result for Jennie Mae King is inconsistent
with the clinical
findings made by her physician. I.G. Ex. 74; See I.G. Ex. 80.
132. The DME forms and the ABG result which Respondent Shoals presented to
BCBSA to support its
reimbursement claims for an oxygen concentrator or portable oxygen which it
asserted it provided to
Jennie Mae King from March 28, 1985 through August 28, 1985 contain materially
false information.
Findings 121 - 131.
133. The 12 reimbursement claims for an oxygen concentrator or portable oxygen
which Respondent
Shoals asserted it provided to Jennie Mae King from March 28, 1985 through August
28, 1985 are false or
fraudulent. Findings 121 - 132.
134. The 12 reimbursement claims for an oxygen concentrator or portable oxygen
which Respondent
Shoals asserted it provided to Jennie Mae King from March 28, 1985 through August
28, 1985 are for
items or services which were not provided as claimed. Findings 121 - 133.
135. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Prentiss Lambert from April 28, 1985 through March 28, 1986. I.G.
Ex. 59 - 64; 66 - 71;
Findings 24 - 25; see I.G.'s April 19, 1991 and July 8, 1991 notice letters
to Respondents, Counts 68 - 80;
170 - 171.
136. Respondent Livingston caused to be presented to BCBSA the reimbursement
claims for the items or
services which Respondent Shoals asserted it provided to Prentiss Lambert from
April 28, 1985 through
March 28, 1986. Findings 23 - 25, 135.
137. The reimbursement claims for the items or services which Respondent Shoals
asserted it provided to
Prentiss Lambert from April 28, 1985 through March 28, 1986 include 15 claims
for reimbursement for the
rental of either an oxygen concentrator or portable oxygen. I.G Ex. 59 - 64;
66 - 71; see I.G. Ex. 9.
138. The physician who treated Prentiss Lambert during the period from April
28, 1985 through March
28, 1986 never ordered home oxygen equipment for Prentiss Lambert. I.G. Ex.
31/1.
139. Prentiss Lambert never received home oxygen equipment from Respondent
Shoals. I.G. Ex. 32; Tr.
at 287 - 288.
140. Respondent Shoals presented to BCBSA three DME forms for certification
or recertification of home
oxygen equipment that Respondent Shoals asserted it provided to Prentiss Lambert
from April 28, 1985
through March 28, 1986. I.G. Ex. 42 - 44.
141. Prentiss Lambert's physician did not sign, nor did he give any other individual
permission to sign, the
three DME forms. I.G. Ex. 31/1 - 3; see I.G. Ex. 42 - 44.
142. Respondent Shoals presented to BCBSA an ABG result for Prentiss Lambert
to support its
reimbursement claims for an oxygen concentrator or portable oxygen that it asserted
it provided to Prentiss
Lambert from April 28, 1985 through March 28, 1986. I.G. Ex. 39.
143. Prentiss Lambert's physician did not order the ABG which Respondent Shoals
presented to BCBSA
to support its reimbursement claims for an oxygen concentrator or portable oxygen
which it asserted it
provided to Prentiss Lambert from April 28, 1985 through March 28, 1986. I.G.
Ex. 31/1; See I.G. Ex. 39.
144. The PO2 level reported in the ABG result for Prentiss Lambert is inconsistent
with the clinical
findings made by his physician. I.G. Ex. 31; See I.G. Ex. 80.
145. The DME forms and the ABG result which Respondent Shoals presented to
BCBSA to support its
reimbursement claims for an oxygen concentrator or portable oxygen which it
asserted it provided to
Prentiss Lambert from April 28, 1985 through March 28, 1986 contain materially
false information.
Findings 135 - 144.
146. The 15 reimbursement claims for an oxygen concentrator or portable oxygen
which Respondent
Shoals asserted it provided to Prentiss Lambert from April 28, 1985 through
March 28, 1986 are false or
fraudulent. Findings 135 - 145.
147. The 15 reimbursement claims for an oxygen concentrator or portable oxygen
which Respondent
Shoals asserted it provided to Prentiss Lambert from March 28, 1985 through
August 28, 1986 are for
items or services which were not provided as claimed. Findings 135 - 146.
148. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Amos Odom from April 1, 1985 through February 1, 1986. I.G. Ex.
465 - 472; I.G. Ex.
477/23; R Ex. 7/1; Findings 24 - 25; See I.G.'s April 19, 1991 and July 8, 1991
notice letters to
Respondents, Counts 81 - 83; 172 - 178. 7/
149. Respondent Livingston caused to be presented to BCBSA the reimbursement
claims for the items or
services which Respondent Shoals asserted it provided to Amos Odom from April
1, 1985 through
February 1, 1986. Findings 23 - 25; 148.
150. The reimbursement claims for the items or services which Respondent Shoals
asserted it provided to
Amos Odom from April 1, 1985 through February 1, 1986, include 10 claims for
reimbursement for the
rental of an oxygen concentrator. I.G. Ex. 465 - 472; I.G. Ex. 477/23; see I.G.
Ex. 9/18.
151. Respondent Shoals presented to BCBSA two DME forms for certification or
recertification of home
oxygen equipment that Respondent Shoals asserted it provided to Amos Odom from
April 1, 1985 through
February 1, 1986. I.G. Ex. 463 - 464.
152. The physician who was treating Amos Odom on the dates when the two DME
forms referred to in
Finding 151 were completed and executed admits signing the forms and prescribing
home oxygen
equipment for Amos Odom. I.G. Ex. 453.
153. Respondent Shoals presented to BCBSA two blood oxygen saturation reports
(ear oximetry test
results) to support its claims for reimbursement for rental of home oxygen equipment
to Amos Odom from
April 1, 1985 through February 1, 1986. I.G. Ex. 459 - 460.
154. The I.G. did not prove that the information contained in the two blood
oxygen saturation reports was
false.
155. The I.G. did not prove that the 10 reimbursement claims which Respondent
Shoals presented to
BCBSA for items or services which it asserted it provided to Amos Odom from
April 1, 1985 through
February 1, 1986 were false, fraudulent, or for items or services which were
not provided as claimed. See
Findings 148 - 154.
156. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Barney Stevens from March 1, 1985 through June 1, 1985. I.G. Ex.
287 - 292; Findings 24 -
25; see I.G.'s April 19, 1991 and July 8, 1991 notice letters to Respondents,
Counts 84 - 87; 179 - 181.
157. Respondent Livingston caused to be presented to BCBSA the reimbursement
claims for the items or
services which Respondent Shoals asserted to have provided to Barney Stevens
from March 1, 1985
through June 1, 1985. Findings 23 - 25, 156.
158. The reimbursement claims for the items or services which Respondent Shoals
asserted it provided to
Barney Stevens from March 1, 1985 through June 1, 1985 include seven claims
for reimbursement for the
rental of an oxygen concentrator or portable oxygen. I.G Ex. 287 - 292; see
I.G. Ex. 9/18.
159. Barney Stevens had been supplied an oxygen concentrator but ceased using
it in January 1984. I.G.
Ex. 278/1; Tr. at 351.
160. Beginning in early 1984, Barney Stevens requested the independent contractor
who had supplied the
oxygen concentrator to him on behalf of Respondent Shoals to remove the equipment
from his home. I.G.
Ex. 278/1; Tr. at 351 - 352.
161. The oxygen concentrator was removed from Barney Stevens' home in March
1985. I.G. Ex. 278/1;
Tr. at 352.
162. Respondent Shoals presented to BCBSA a DME form for certification or recertification
of home
oxygen equipment that Respondent Shoals asserted it provided to Barney Stevens
from March 1, 1985
through June 1, 1985. I.G. Ex. 285.
163. Barney Stevens was not a patient of the physician who purportedly signed
the DME form on the date
that the form purportedly was signed. Tr. at 698 - 699; See I.G. Ex. 285.
164. The physician who purportedly signed the DME form did not sign, nor did
he give any other
individual permission to sign, the DME form. Tr. at 699; See I.G. Ex. 285.
165. On January 28, 1986, BCBSA wrote to Respondent Shoals, notifying it that
BCBSA had been
advised by Barney Stevens that he had discontinued using oxygen equipment which
he had rented from
Respondent Shoals. I.G. Ex. 272/1.
166. BCBSA requested repayment from Respondent Shoals for overpayments which
it asserted had been
made in error to Respondent Shoals. I.G. Ex. 272.
167. On February 17, 1986, Respondent Shoals sent to BCBSA a signed statement
from Barney Stevens
which recited that he had used the equipment rented from Respondent Shoals until
May 1, 1985. The
statement appears to have been notarized. I.G. Ex. 273; I.G. Ex. 280.
168. The statement which Respondent Shoals supplied to BCBSA was dictated to
Barney Stevens by a
representative of Respondent Shoals and was signed by Barney Stevens at the
request of that
representative. Tr. at 356 - 358.
169. The statement was not notarized in the presence of or at the request of
Barney Stevens. Tr. at 358 -
359.
170. The DME form and the notarized statement which Respondent Shoals presented
to BCBSA to
support its reimbursement claims for an oxygen concentrator or portable oxygen
which it asserted it
provided to Barney Stevens from March 1, 1985 through June 1, 1985 contain materially
false information.
Findings 156 - 169.
171. The seven reimbursement claims for an oxygen concentrator or portable
oxygen which Respondent
Shoals asserted it provided to Barney Stevens from March 1, 1985 through June
1, 1985 are false or
fraudulent. Findings 156 - 170.
172. The seven reimbursement claims for an oxygen concentrator or portable
oxygen which Respondent
Shoals asserted it provided to Barney Stevens from March 1, 1985 through June
1, 1985 are for items or
services which were not provided as claimed. Findings 156 - 171.
173. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Lelar Williams from January 18, 1985 through June 18, 1986. I.G.
Ex. 232 - 264; Findings 24
- 25; see I.G.'s April 19, 1991 and July 8, 1991 notice letters to Respondents,
Counts 88 - 122, 182.
174. Respondent Livingston caused to be presented to BCBSA the reimbursement
claims for the items or
services which Respondent Shoals asserted it provided to Lelar Williams from
January 18, 1985 through
June 18, 1986. Findings 23 - 25, 173.
175. The reimbursement claims for the items or services which Respondent Shoals
asserted it provided to
Lelar Williams from January 18, 1985 through June 18, 1986 include 36 claims
for reimbursement for the
rental of an oxygen concentrator or portable oxygen. I.G Ex. 232 - 264; see
I.G. Ex. 9/18.
176. The physicians who treated Lelar Williams during the period from January
18, 1985 through June 18,
1986 never ordered home oxygen equipment for Lelar Williams. Tr. at 599 - 601;
704.
177. Lelar Williams never received home oxygen equipment from Respondent Shoals.
I.G. Ex. 210/3;
I.G. Ex. 211; I.G. Ex. 212.
178. Respondent Shoals presented to BCBSA three DME forms for certification
or recertification of home
oxygen equipment that Respondent Shoals asserted it provided to Lelar Williams
from January 18, 1985
through June 18, 1986. I.G. Ex. 222 - 224.
179. The physician who purportedly signed the three DME forms did not sign,
nor did she give other
individuals permission to sign, the three DME forms. Tr. at 599 - 603; See I.G.
Ex. 222 - 224.
180. Two of the three DME forms represent that a physician other than the physician
who purportedly
signed the forms was Lelar Williams' treating physician. I.G. Ex. 222 - 223.
181. The three DME forms that Respondent Shoals presented to BSA to support
its reimbursement claims
for an oxygen concentrator or portable oxygen which it asserted it provided
to Lelar Williams from January
18, 1985 through June 18, 1986 contain materially false information. Findings
173 - 180.
182. The 36 reimbursement claims for an oxygen concentrator or portable oxygen
which Respondent
Shoals asserted it provided to Lelar Williams from January 18, 1985 through
June 18, 1986 are false or
fraudulent. Findings 173 - 181.
183. The 36 reimbursement claims for an oxygen concentrator or portable oxygen
which Respondent
Shoals asserted it provided to Lelar Williams from January 18, 1985 through
June 18, 1986 are for items or
services which were not provided as claimed. Findings 173 - 182.
184. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA Medicare
reimbursement claims for items or services which Respondent Shoals asserted
it provided to Medicare
beneficiary Robert Williams from January 13, 1985 through June 13, 1986. I.G.
Ex. 109 - 128; Findings
23 - 25; see I.G.'s April 19, 1991 and July 8, 1991 notice letters to Respondents,
Counts 123 - 152, 183 -
184.
185. Respondent Livingston caused to be presented to BCBSA the reimbursement
claims for the items or
services which Respondent Shoals asserted it provided to Robert Williams from
January 13, 1985 through
June 13, 1986. Findings 23 - 25, 184.
186. The reimbursement claims for the items or services which Respondent Shoals
asserted it provided to
Robert Williams from January 13, 1985 through June 13, 1986 include 32 claims
for reimbursement for the
rental of an oxygen concentrator or portable oxygen). I.G. Ex. 109 - 128; See
I.G. Ex. 9/18.
187. Robert Williams did not rent either an oxygen concentrator or portable
oxygen from Respondent
Shoals during the period from January 13, 1985 through June 13, 1986. I.G. Ex.
95/1 - 2; Tr. at 1015 -
1016.
188. Respondent Shoals presented to BCBSA four DME forms for certification
or recertification of home
oxygen equipment which Respondent Shoals asserted it provided to Robert Williams
from January 13,
1985 through June 13, 1986. I.G. Ex. 102 - 105.
189. The physician who purportedly signed the four DME forms did not sign,
nor did she give any other
individual permission to sign, the four DME forms. Tr. at 556 - 562, 564; See
I.G. Ex. 102 - 105.
190. Respondent Shoals presented to BCBSA an ABG result for Robert Williams
to support its
reimbursement claims for an oxygen concentrator or portable oxygen equipment
which it asserted it
provided to Robert Williams from January 13, 1985 through June 13, 1986. I.G.
Ex. 100.
191. Robert Williams' physician did not order the ABG which Respondent Shoals
presented to BCBSA to
support its reimbursement claims for an oxygen concentrator or portable oxygen
which it asserted it
provided to Robert Williams from January 13, 1985 through June 13, 1986. Tr.
at 571; see I.G. Ex. 100.
192. The PO2 level reported in the ABG result for Robert Williams is inconsistent
with the clinical
findings made by his physician. I.G. Ex. 137; Tr. at 572 - 573; see I.G. Ex.
100.
193. The DME forms and the ABG result which Respondent Shoals presented to
BCBSA to support its
reimbursement claims for an oxygen concentrator or portable oxygen which it
asserted it provided to
Robert Williams from January 13, 1985 through June 13, 1986 contain materially
false information.
Findings 184 - 192.
194. The 32 reimbursement claims for an oxygen concentrator or portable oxygen
that Respondent Shoals
asserted it provided to Robert Williams from March 13, 1985 through June 13,
1986 are false or
fraudulent. Findings 184 - 193.
195. The 32 reimbursement claims for an oxygen concentrator or portable oxygen
that Respondent Shoals
asserted it provided to Robert Williams from March 13, 1985 through June 13,
1986 are for items or
services that were not provided as claimed. Findings 184 - 194.
196. Respondent Shoals presented, and Respondent Livingston caused to be presented,
173 claims for
Medicare reimbursement which were false, fraudulent, or for items or services
which were not provided as
claimed. Findings 65 - 67, 78 - 82, 93 - 97, 107 - 111, 119 - 123, 133 - 137,
146 - 147, 156 - 158, 171 -
175, 182 - 186, 194 - 195.
197. All of the 173 claims which Respondent Shoals presented, and Respondent
Livingston caused to be
presented which were false, fraudulent, or for items or services which were
not provided as claimed, were
presented by Respondent Shoals to BCBSA on or after April 19, 1985 (or in the
case of those claims
identified in the I.G.'s July 19, 1991 letter, on or after July 19, 1985). I.G.
Ex. 72; I.G. Ex. 92; I.G. Ex.
136; I.G. Ex. 170; I.G. Ex. 208; I.G. Ex. 268; I.G. Ex. 295; I.G. Ex. 391; I.G.
Ex. 419; see Tr. at 443 - 451.
E. Medicare reimbursement claims by Respondent Shoals that were either false
or fraudulent or that were
for items or services that were not provided as claimed other than the claims
that comprise the I.G.'s case-
in-chief
198. Respondent Shoals presented, and Respondent Livingston caused to be presented,
Medicare
reimbursement claims for Medicare beneficiaries Estelle Coleman, Antonio Elizondo,
Ruby Ellis, Jennie
Mae King, Prentiss Lambert, Lelar Williams, and Robert Williams in addition
to the 173 claims for items
that comprise the I.G.'s case-in-chief and for periods of time that predate
the periods of time covered by
those claims (or in the case of those claims identified in the I.G.'s July 19,
1991 letter, on or after July 19,
1985). I.G. Ex. 45 - 58; I.G. Ex. 85 - 88; I.G. Ex. 162 - 169; I.G. Ex. 225
- 231; I.G. Ex. 371 - 372;
Findings 23 - 25. 8/
199. Respondent Shoals presented to BCBSA a DME form and an ABG report which
contain false
information in support of its additional claims for reimbursement for items
or services that it asserted it
provided to Estelle Coleman from August 20, 1984 through January 20, 1985. I.G.
Ex. 354; I.G. Ex. 361;
I.G. Ex. 363; Findings 80 - 94.
200. Respondent Shoals presented to BCBSA a DME form that contains false information
in support of its
additional claims for reimbursement for items or services that it asserted it
provided to Antonio Elizondo
from September 18, 1983 through January 18, 1985. I.G. Ex. 143; Tr. at 579;
Findings 95 - 108.
201. Respondent Shoals presented to BCBSA a DME form that contains false information
in support of its
additional claims for reimbursement for items or services that it asserted it
provided to Ruby Ellis on
December 19, 1984. I.G. Ex. 176; Tr. at 594; Findings 109 - 120.
202. Respondent Shoals presented to BCBSA two DME forms and an ABG report which
contain false
information in support of its additional claims for reimbursement for items
or services that it asserted it
provided to Jennie Mae King for the period of time from February 28, 1984 through
November 28, 1984.
I.G. Ex. 74; I.G. Ex. 80 - 82; R. Ex. 10/5 /7; Findings 121 - 134.
203. Respondent Shoals presented to BCBSA two DME forms and an ABG report which
contain false
information in support of its additional claims for reimbursement for items
or services that it asserted it
provided to Prentiss Lambert from March 30, 1984 through March 28, 1985. I.G.
Ex. 31; I.G. Ex. 38; I.G.
Ex. 40 - 41; Findings 135 - 147.
204. Respondent Shoals presented to BCBSA four DME forms and an ABG report
that contain false
information in support of its additional claims for reimbursement for items
or services that it asserted it
provided to Lelar Williams from July 18, 1983 through January 18, 1984. I.G.
Ex. 217 - 221; Tr. at 704 -
706, 710; Findings 173 - 183.
205. Respondent Shoals presented to BCBSA two DME forms and an ABG report that
contain false
information, in support of its additional claims for reimbursement for items
or services which it asserted it
provided to Robert Williams from May 13, 1984 through January 13, 1985. I.G.
Ex. 99; I.G. Ex. 101 -
102; Tr. at 549, 559, 571; Findings 184 - 195.
206. The additional Medicare reimbursement claims that Respondents presented
or caused to be presented
for items or services that Respondent Shoals asserted it provided to Estelle
Coleman, Antonio Elizondo,
Ruby Ellis, Jennie Mae King, Prentiss Lambert, Lelar Williams, and Robert Williams,
are false, fraudulent,
or for items or services that were not provided as claimed. Findings 198 - 205.
207. Respondent Shoals presented, and Respondent Livingston caused to be presented,
Medicare
reimbursement claims for Medicare beneficiary Amos Odom for the period of time
from September 1,
1984 through March 1, 1985, in addition to claims for items or services which
Respondent Shoals
presented on or after April 19, 1985. I.G. Ex. 473 - 476; Findings 23 - 25.
208. Respondent Shoals presented to BCBSA two DME forms in support of its additional
claims for
reimbursement for items or services which it asserted it provided to Amos Odom
for the period of time
from September 1, 1984 through March 1, 1985. I.G. Ex. 461 - 462.
209. The physician whose name is stamped on the two DME forms did not sign
or stamp these forms, nor
did he authorize other individuals to sign or stamp these forms on his behalf.
I.G. Ex. 452/1 - 3.
210. Respondent Shoals presented to BCBSA an ABG report dated August 16, 1984
in support of its
additional claims for reimbursement for items or services which it asserted
it provided to Amos Odom from
September 1, 1984 through March 1, 1985. I.G. Ex. 458.
211. The independent contractor respiratory therapist who completed the August
16, 1984 ABG report on
behalf of Respondent Shoals falsified the report. Tr. at 875 - 877.
212. Respondent Shoals presented two DME forms and an ABG report to BCBSA in
which Respondent
asserted it provided items or services to Amos Odom. These two DME forms and
the ABG report contain
false information. Findings 208 - 211.
213. The additional Medicare reimbursement claims that Respondents presented
or caused to be presented
for items or services that Respondent Shoals asserted it provided to Amos Odom
are false, fraudulent, or
for items or services that were not provided as claimed. Findings 207 - 212.
214. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Orville Harris from October 27, 1984 through March 27, 1985. I.G.
Ex. 491 - 492; Findings 23
- 25.
215. Orville Harris was incarcerated from June 4, 1984 until October 2, 1987. I.G. Ex. 479.
216. Orville Harris did not receive home oxygen equipment from Respondent Shoals
during the period
when he was incarcerated. Finding 215.
217. The claims that Respondents presented or caused to be presented for Medicare
items or services that
Respondent Shoals asserted it provided to Orville Harris are false, fraudulent,
or for items or services that
were not provided as claimed. Findings 214 - 216.
218. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Nash Henderson from June 30, 1983 through February 28, 1985. I.G.
Ex. 310 - 325; Findings
23 - 25.
219. Nash Henderson never received home oxygen equipment from Respondent Shoals.
I.G. Ex. 297; Tr.
at 519, 539.
220. The physician who treated Nash Henderson from June 30, 1983 through February
28, 1985 never
prescribed home oxygen equipment for Nash Henderson. Tr. at 685, 689 - 690,
692.
221. Respondent Shoals presented to BCBSA DME forms to support its reimbursement
claims for home
oxygen equipment which it asserted to have supplied to Nash Henderson from June
30, 1983 through
February 28, 1985 that were forged and that contained false information. I.G.
Ex. 303 - 306; Tr. at 686,
689 - 693.
222. The claims which Respondents presented or caused to be presented for Medicare
items or services
which Respondent Shoals asserted it provided to Nash Henderson are false, fraudulent,
or for items or
services that were not provided as claimed. Findings 23 - 25, 218 - 221.
223. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA Medicare
reimbursement claims for items or services which Respondent Shoals asserted
it provided to Medicare
beneficiary Elmore Mobley from August 6, 1984 through December 6, 1984. I.G.
Ex. 444 - 448; Findings
23 - 25.
224. The physicians who treated Elmore Mobley from August 6, 1984 through December
6, 1984 did not
prescribe or authorize the rental of home oxygen equipment for Elmore Mobley.
I.G. Ex. 437 - 438.
225. Respondent Shoals presented to BCBSA two DME forms to support its claims
for reimbursement for
home oxygen equipment it asserted it supplied to Elmore Mobley. I.G. Ex. 441
- 442.
226. The physicians who are purported to have signed or stamped the two DME
forms neither signed,
stamped, nor authorized other individuals to sign the two DME forms. I.G. Ex.
437 - 438.
227. The claims which Respondents presented or caused to be presented for Medicare
items or services
which Respondent Shoals asserted it provided to Elmore Mobley are false, fraudulent,
or for items or
services which were not provided as claimed. Findings 223 - 226.
228. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA a Medicare
reimbursement claim for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Rosa Rigsby in July 1984. I.G. Ex. 434; Findings 23 - 25.
229. Respondent Shoals presented to BCBSA three ABG reports in support of its
claim for reimbursement
for items or services which it asserted it provided to Rosa Rigsby. I.G. Ex.
423 - 424; I.G. Ex. 431.
230. The ABG reports contain information which was falsified by the independent
contractor who
performed the ABGs. Tr. at 843 - 845, 851.
231. The claim which Respondents presented or caused to be presented for Medicare
items or services
which Respondent Shoals asserted it provided to Rosa Rigsby is false, fraudulent,
or for items or services
which were not provided as claimed. Findings 228 - 231.
232. Respondent Shoals, at Respondent Livingston's direction, presented to
BCBSA Medicare
reimbursement claims for items or services that Respondent Shoals asserted it
provided to Medicare
beneficiary Ed Thomas from July 28, 1983 through December 28, 1984. I.G. Ex.
339 - 352; Findings 23 -
25.
233. Ed Thomas never received home oxygen equipment from Respondent Shoals.
I.G. Ex. 329; I.G. Ex.
332.
234. The physician who treated Ed Thomas never prescribed home oxygen equipment
for Ed Thomas. Tr.
at 700 - 703.
235. Respondent Shoals presented to BCBSA three DME forms to support its claims
for reimbursement
for home oxygen equipment it asserted it supplied to Ed Thomas. I.G. Ex. 334
- 335; I.G. Ex. 337.
236. The physician who purportedly signed the three DME forms did not sign
the DME forms, nor did he
authorize other individuals to sign the DME forms. Tr. at 701 - 703.
237. The claims which Respondents presented or caused to be presented for Medicare
items or services
which Respondent Shoals asserted it provided to Ed Thomas are false, fraudulent,
or for items or services
which were not provided as claimed. Findings 232 - 236.
F. Respondents' responsibility for presenting or causing to be presented claims
for Medicare
reimbursement which were false, fraudulent, or for items or services which were
not provided as claimed
238. Respiratory therapists who acted as agents for Respondent Shoals falsified
ABG results which
Respondent Shoals submitted to BCBSA to support claims for home oxygen equipment
rentals. I.G. Ex.
534A/14; Tr. at 813, 823, 826 - 827, 830, 840, 1059 - 1060, 1080; Findings 73
- 76, 89 - 91, 103 - 105,
116 - 118, 129 - 131, 142 - 144, 190 - 192.
239. Examples of the fraudulent conduct engaged in by respiratory therapists
are performing ABGs with
venous blood instead of arterial blood and recording fictitious ABG results.
Tr. at 813, 1059.
240. Respiratory therapists who acted as agents for Respondent Shoals forged
or falsified DME forms
which Respondent Shoals submitted to BCBSA to support claims for home oxygen
equipment rentals. I.G.
Ex. 534A/9 - 11; Tr. at 858 - 860, 870; Findings 23 - 25, 71 - 72, 86 - 88,
100 - 102, 114 - 115, 126 - 128,
140 - 141, 162 - 164, 178 - 180, 188 - 189.
241. The false and fraudulent acts committed by respiratory therapists in presenting
documentation to
support Respondent Shoals' claims for reimbursement for 173 Medicare items or
services which were false,
fraudulent, or not provided as claimed were committed by them within the scope
of their agency
relationship with Respondent Shoals. Findings 63, 196.
242. Respondent Shoals' presentation of 173 claims for reimbursement for Medicare
items or services
which were false, fraudulent, or for items or services which were not provided
as claimed was within the
scope of its agency relationship with Respondent Livingston. Findings 25, 196.
243. The I.G. did not prove that respiratory therapists who acted as agents
for Respondent Shoals falsified
ABG results and forged or falsified DME forms at the direction or request of
Respondent Shoals or
Respondent Livingston. See Findings 238 - 240; Tr. at 785 - 1012, 1049 - 1146,
1148 - 1223, 1497 - 1729;
I.G. Ex. 534A/4 - 144, /163 - 250.
244. The I.G. did not prove that Respondents Shoals and Livingston knew that
respiratory therapists
falsified ABG results and forged and falsified DME forms. See Findings 238 -
240.
245. Respondents Shoals and Livingston knew that independent contractor respiratory
therapists had the
opportunity to falsify documents related to claims for reimbursement for home
oxygen equipment. I.G.
Ex. 534/60 - 61; Findings 1, 41 - 45, 59 - 65.
246. Respondents Shoals and Livingston knew that an independent contractor
respiratory therapist had
sent Respondent Shoals DME forms which had purportedly been signed by a physician,
but which had not
been completed by the physician who had purportedly signed the forms. I.G. Ex.
534/62.
247. Respondents Shoals and Livingston knew that Respondent Shoals had received
DME forms which
were purportedly signed by a physician, but which designated a treating physician
who was not the
patient's treating physician. Finding 180.
248. Respondents Shoals and Livingston knew that, on at least one occasion,
an independent contractor
respiratory therapist had provided them with a DME form on which the physician's
signature had been
forged. Tr. at 1262 - 1263; Findings 23 - 25.
249. Respondents Shoals and Livingston knew that an employee of Respondent
Shoals had informed them
that an independent contractor may have forged a physician's signature on a
DME form. Tr. at 1440;
Findings 24 - 25.
250. Respondents Shoals and Livingston knew that an independent contractor
respiratory therapist
obstructed their efforts to determine the extent to which patients had actually
been supplied with home
oxygen equipment for which Respondent Shoals had presented Medicare reimbursement
claims. Tr. at
1340 - 1341, 1441 - 1442; Findings 24 - 25.
251. Respondents Shoals and Livingston knew that Respondent Shoals had been
provided with conflicting
statements from a Medicare beneficiary concerning whether that beneficiary continued
to use home oxygen
equipment rented to him by Respondent Shoals. Findings 165 - 167.
252. Respondents Shoals and Livingston did not make meaningful efforts to assure
that the reimbursement
claims for Medicare items or services that Respondent Shoals presented were
accurate and honest.
Findings 45 - 49; Findings 245 - 251; see Tr. at 1429 - 1430, 1437 - 1439, 1464
- 1465.
253. Respondents Shoals and Livingston had reason to know that the 173 claims
for Medicare
reimbursement that they presented or caused to be presented that were false,
fraudulent or for items or
services that were not provided as claimed were in fact false, fraudulent, or
for items or services which
were not provided as claimed. Findings 45 - 49, 196, 245 - 252; Social Security
Act, sections
1128A(a)(1)(A), (B).
254. Respondents Shoals and Livingston should have known that the 173 claims
for Medicare
reimbursement that they presented or caused to be presented that were false,
fraudulent or for items or
services that were not provided as claimed were in fact false, fraudulent, or
for items or services that were
not provided as claimed. Findings 196, 245 - 253; Social Security Act, sections
1128A(a)(1)(A), (B).
255. Respondent Shoals is liable under sections 1128A(a)(1)(A) and (B) of the
Act for the false and
fraudulent acts of its independent contractor agents. Finding 241; Social Security
Act, sections
1128A(a)(1)(A), (B), 1128A(l).
256. Respondent Livingston is liable under sections 1128A(a)(1)(A) and (B)
of the Act for the unlawful
acts of his agent, Respondent Shoals. Finding 242; Social Security Act, sections
1128A(a)(1)(A), (B),
1128A(l).
G. The need to impose remedies against Respondents
257. The substantive portions of regulations published on January 29, 1992,
governing the imposition of
penalties, assessments, and exclusions under section 1128A of the Act, are not
applicable to this case. 42
C.F.R. Parts 1001 - 1005, 57 Fed. Reg. 3298 et seq. (January 29, 1992).
258. The decision to impose assessments, penalties and exclusions in this case
is governed by regulations
that became effective on September 26, 1983. 42 C.F.R. 1003.100 through 1003.133.
259. The Act provides for the imposition against a party who unlawfully presents
or causes to be presented
a claim for an item or service which is false, fraudulent, or not provided as
claimed, of a penalty of up to
$2,000.00 for each such item or service, an assessment of up to twice the amount
claimed for each such
item or service which is false, fraudulent, or falsely claimed, and an exclusion
from participating in
Medicare or Medicaid. Social Security Act, section 1128A(a).
260. The Act and regulations direct the Secretary, or his or her delegate,
in determining the amount or
scope of any penalty, assessment, or exclusion imposed, to take into account
both aggravating and
mitigating factors. Social Security Act, section 1128A(d); 42 C.F.R. 1003.106.
9/
261. Factors which may be considered as aggravating or mitigating include:
the nature of the claims and
the circumstances under which they were presented; the degree of culpability,
history of prior offenses, and
financial condition of the person presenting the claims; and such other matters
as justice may require.
Social Security Act, section 1128A(d); 42 C.F.R. 1003.106.
262. In proceedings brought pursuant to the Act, the I.G. has the burden of
proving the existence of any
aggravating factors and the respondent has the burden of proving the existence
of any mitigating factors.
263. The 173 claims which Respondents presented or caused to be presented which
were false, fraudulent,
or for items or services which were not provided as claimed involved items or
services which Respondent
Shoals asserted it provided from January 1985 through June 1986. Findings 65,
80, 95, 109, 121, 135,
156, 173, 184.
264. The 173 claims that Respondents presented or caused to be presented that
were false, fraudulent, or
for items or services that were not provided as claimed constituted a large
number of unlawful claims for
items or services which Respondent Shoals asserted it provided over an extended
period of time. This is an
aggravating factor to be considered in deciding the remedies to be imposed in
this case. Findings 262 -
263; 42 C.F.R. 1003.106(b)(1).
265. The 173 claims that Respondents presented or caused to be presented that
were false, fraudulent, or
for items or services that were not provided as claimed, sought reimbursement
from Medicare in the
aggregate amount of $44,838.80. I.G. Ex. 59 - 64; I.G. Ex. 66 - 71; I.G. Ex.
89 - 90; I.G. Ex. 109 - 128:
I.G. Ex. 154 - 161; I.G. Ex. 181 - 206; I.G. Ex. 232 - 264; I.G. Ex. 287 - 292;
I.G. Ex. 373 - 389; I.G. Ex.
403 - 416; R. Ex. 10. 10/
266. Respondent Shoals received payments totalling $25,440.64 from BCBSA for
the 173 claims that
Respondents presented or caused to be presented that were false, fraudulent,
or for items or services that
were not provided as claimed. I.G. Ex. 71/10, 15 - 20; I.G. Ex. 93; I.G. Ex.
136/15, 18 - 25; I.G. Ex. 170/6
- 8; I.G. Ex. 208/18, /22 - 23, /25 - 33, /35 - 36; I.G. Ex. 295/12 - 14; I.G.
Ex. 268/10, /13 - 19; I.G. Ex.
391/9 - 10, /15 - 18; I.G. Ex. 419/12 - 14, /17 - 19.
267. Respondents' claiming and receiving substantial reimbursement for 173
Medicare claims that were
false, fraudulent, or for items or services that were not provided as claimed
is an aggravating factor to be
considered in deciding the remedies to be imposed in this case. Findings 265
- 266; 42 C.F.R.
1003.106(b)(1).
268. Respondents presented or caused to be presented 173 claims for Medicare
reimbursement that were
false, fraudulent, or for items or services that were not provided as claimed,
despite being aware of facts
that put them on notice that these claims might be false, fraudulent, or for
items or services that were not
provided as claimed. Findings 238 - 251.
269. Respondents engaged in a pattern of presenting or causing to be presented
claims for Medicare items
or services that were false, fraudulent, or for items or services that were
not provided as claimed, beginning
in June, 1983, and extending through June 1986. Findings 65 - 237.
270. Respondents' pattern of presenting or causing to be presented claims for
Medicare items or services
that were false, fraudulent, or for items or services that were not provided
as claimed began within six
months of the incorporation of Respondent Shoals. Findings 11, 65 - 237.
271. Respondents' pattern of presenting or causing to be presented claims for
Medicare items or services
that were false, fraudulent, or for items or services that were not provided
as claimed demonstrates that
Respondents were indifferent to their duty to assure that they comply with Medicare
and BCBSA
reimbursement requirements. Findings 268 - 270.
272. Respondents' indifference to their duty to comply with Medicare reimbursement
requirements
establishes a high level of culpability for the 173 claims for items or services
that were false, fraudulent, or
for items or services that were not provided as claimed. This is an aggravating
factor to be considered in
deciding the remedies to be imposed in this case. 42 C.F.R. 1003.106(b)(2).
273. Respondents' pattern of presenting or causing to be presented claims for
Medicare items or services
that were false, fraudulent, or for items or services that were not provided
as claimed damaged the financial
integrity and reputation of the Medicare program.
274. Respondents' unlawful conduct with respect to the 173 Medicare reimbursement
claims that were
false, fraudulent, or for items or services that were not provided as claimed
resulted in substantial costs to
the United States Department of Health and Human Services (Department) that
include the following: the
amount paid to Respondent Shoals to reimburse it for claims that were false,
fraudulent, or for items or
services that were not provided as claimed; the costs of investigating Respondents'
unlawful conduct; and
the damage to the integrity and reputation of the Medicare program. I.G. Ex.
540; Findings 266, 273.
275. Respondent Livingston knew no later than May 6, 1988 that independent
contractor respiratory
therapists had sworn that they had falsified documents on behalf of Respondents
Livingston and Shoals.
I.G. Ex. 534.
276. Respondent Livingston knew no later than May 6, 1988, that he had access
to documents which
would corroborate the admissions by independent contractor respiratory therapists
that they had falsified
documents on behalf of Respondents Livingston and Shoals and which established
that claims for items or
services by Respondent Shoals were false, fraudulent, or for items or services
which were not provided as
claimed. See I.G. Ex. 534; Findings 65 - 237.
277. Respondent Livingston offered to make "voluntary" restitution
for claims or services that the I.G.
proved were false or fraudulent, or for items or services that were not provided
as claimed. Tr. 1412 -
1414, 1419 - 1420.
278. Respondent's offer to make "voluntary" restitution for claims
that the I.G. proved were false or
fraudulent, or for items or services that were not provided as claimed is not
a mitigating factor because
since no later than 1988, he could have established on his own which claims
were false or fraudulent, or for
items or services that were not provided as claimed, and could have made restitution
for those claims or
items or services. Findings 275 - 277.
279. Respondent Livingston's expressions of remorse for his conduct are not
credible in light of his
continued business relationship with a former independent contractor of Respondent
Shoals whom
Respondent Livingston knows engaged in fraudulent and dishonest conduct. I.G.
Ex. 533/121 - 129; I.G.
Ex. 536 - 537; Tr. at 1262 - 1264, 1299.
280. In this case, there are many aggravating factors and no mitigating factors. Findings 267 - 279.
281. The maximum assessments which I may impose against Respondents are $89,677.60.
Findings 259,
265.
282. The maximum penalties which I may impose against Respondents are $346,000.00.
Findings 196,
197, 259.
283. Based on the preponderance of aggravating factors, and on the costs sustained
by the Department as a
consequence of Respondents' unlawful conduct, I impose on Respondents, jointly
and severally,
assessments of $85,000.00, and penalties of $300,000.00.
284. Respondents are not trustworthy to provide care to beneficiaries and recipients
of federally-funded
health care programs.
285. Based on Respondents' lack of trustworthiness to provide care, as evidenced
by their culpability and
by the preponderance of aggravating factors, I exclude them from participation
in Medicare and Medicaid
for five years.
286. The assessments, penalties, and exclusions that I impose against Respondents
are not prohibited by
the constitutional ban against double jeopardy.
287. The assessments and penalties that I impose against Respondents are reasonably
related to the costs
sustained by the Department as a result of Respondents' unlawful conduct, including
the costs of
investigating that conduct.
ANALYSIS
The I.G. presented overwhelming evidence of pervasive fraud by respiratory
therapists in Alabama who
worked as contractors for Respondent Shoals. These respiratory therapists systematically
falsified
documents to support Medicare reimbursement claims by Respondent Shoals for
rental of home oxygen
equipment to Medicare beneficiaries. The I.G. sought to establish that Respondents
orchestrated and
directed this fraud. I do not find that the weight of the evidence proves that
Respondents conspired with
respiratory therapists to defraud Medicare. However, Respondents not only tolerated
the fraud perpetrated
by their contractors, they profited from it. Respondents' indifference to the
blatant and large scale
dishonesty of others is virtually indistinguishable from fraud.
Respondents established an enterprise which created incentives for respiratory
therapists to commit fraud.
Respondents ignored information which would put any reasonable party on notice
that fraud was being
perpetrated. They made no meaningful efforts to curb the fraud and dishonesty
from which they profited.
They disregarded their duty to assure Medicare that the claims they were presenting
were accurate and
honest.
The I.G. proved that Respondents presented or caused to be presented 173 claims
for Medicare
reimbursement which were false, fraudulent, or for items or services which were
not provided as claimed.
The I.G. proved that Respondents had reason to know that the claims were for
items or services which
were not provided as claimed. The I.G. also proved that Respondents should have
known that the claims
were false, fraudulent, or for items or services which were not provided as
claimed. Therefore, the I.G.
established that Respondents are liable under section 1128A of the Act for the
173 claims. 11/
There are aggravating factors which justify the remedy which I impose in this
case. Respondents
demonstrate a high level of culpability for their misconduct. Respondents' misconduct
was costly to the
Department and to the health care programs which it administers. Respondents
induced the Medicare
program to make substantial payments for false and fraudulent claims, or for
items or services which were
not provided as claimed. The Department had to undertake an expensive investigation
to rectify the
misconduct. Far more costly, however, was the damage Respondents caused to the
Department's
reputation and to that of the Medicare program as well. Respondents participated
in and fostered an
environment in which fraud became a common and acceptable manner of doing business
with Medicare.
In light of these aggravating factors, and in order to compensate the Department
for the costs which it
sustained as a result of Respondents' misconduct, I impose substantial assessments
and penalties against
Respondents. I also conclude that Respondents have established by their conduct
that they are manifestly
untrustworthy providers of care, and I exclude them for a five-year period.
1. Respondents fostered an environment which encouraged fraud.
Prior to 1983, Respondent Livingston worked as a respiratory therapist, providing
care to patients who
suffered from breathing disorders. In January 1983, he incorporated Respondent
Shoals. Respondent
Shoals had its principal place of business in Florence, Alabama. Respondent
Shoals did business
throughout the southern United States, and did substantial business in Alabama,
providing durable medical
equipment to patients. A large percentage of its business consisted of the rental
of home oxygen
equipment to individuals whose rental of such equipment would be reimbursed
by Medicare, provided they
met eligibility criteria.
Respondent Livingston closely managed and controlled Respondent Shoals. Its
acts and policies were the
consequence of his management decisions. Respondent Livingston recruited respiratory
therapists, who
also were employed by hospitals, to work for Respondent Shoals as independent
contractors. These
contractors were paid commissions by Respondent Shoals for rental of home oxygen
equipment to
individuals who qualified for Medicare reimbursement for the equipment rental.
Respondent Shoals'
payment to the contractors was conditioned on Medicare agreeing to compensate
Respondent Shoals for
the rental of the equipment. To obtain a commission, a contractor had to rent
home oxygen equipment to
an individual who qualified for Medicare reimbursement for that rental. The
size of the commission that
Shoals paid to a contractor depended on the amount of reimbursement that Medicare
paid for rented
equipment. Respondent Shoals paid higher commissions for the rental of expensive
equipment than for
rental of less expensive equipment.
Respondent Shoals required its contractors to obtain the documents necessary
to qualify Medicare
beneficiaries for reimbursement for rental of home oxygen equipment. These documents
included DME
forms, which were, in effect, physicians' prescriptions for home oxygen equipment.
These documents also
included ABG results, which provided required clinical evidence as to whether
patients needed home
oxygen equipment.
The relationship which Respondents created with respiratory therapists provided
these agents with both the
inducement and the opportunity to commit fraud. The respiratory therapists received
no payment from
Respondent Shoals unless they were able to qualify patients for Medicare reimbursement
for home oxygen
equipment rentals. That created an incentive for these therapists to falsify
the documents which were
presented to BCBSA, the Alabama Medicare carrier, to qualify beneficiaries for
reimbursement.
Respondents did little or nothing to police the activities of these therapists.
Those therapists who were
disposed to falsify documents in order to qualify beneficiaries for Medicare
reimbursement thus were able
to do so without meaningful review of their actions by Respondents.
Respiratory therapists began falsifying claims information almost from the
inception of Respondent Shoals'
operations. From 1983 through 1986, respiratory therapists falsified documentation
for hundreds of
claims. Documents which were falsified included DME forms and ABG results. Therapists
falsified ABG
results in a variety of ways. In some instances they simply filled out fictitious
forms. In other cases they
used venous blood (which contains less oxygen than arterial blood) in ABGs.
The effect of the substitution
of venous blood for arterial blood was to produce test results which appeared
to establish that patients'
blood oxygen levels were low enough to qualify the patients for Medicare reimbursement
for home oxygen
equipment rentals. 12/ Therapists submitted DME forms on which the prescribing
physicians' signatures
were forged or which were altered to make it appear as if the physicians signing
the forms had prescribed
expensive home oxygen equipment (such as oxygen concentrators) to beneficiaries.
Therapists submitted
documentation for home oxygen equipment claims where the patients' treating
physicians had not
prescribed home oxygen equipment and where there was no medical need for the
equipment. Therapists
submitted documentation for home oxygen equipment claims where no such equipment
had been provided
to patients.
Respondent Shoals presented to BCBSA documents which had been falsified by
respiratory therapists to
support its claims for reimbursement of home oxygen equipment rentals to Medicare
beneficiaries. The
documents that the therapists falsified induced BCBSA to reimburse Respondent
Shoals for home oxygen
equipment rentals. Respondents profited from the respiratory therapists' fraud.
Respondent Shoals paid to
the respiratory therapists, in the form of commissions, a percentage of this
ill-gotten reimbursement. The
commissions which Respondent Shoals paid to respiratory therapists induced the
therapists to commit
additional fraud.
2. Respondents presented or caused to be presented to BCBSA 173 claims for
Medicare reimbursement
that were false, fraudulent, or for items or services that were not provided
as claimed.
The I.G. alleged that Respondents presented or caused to be presented to BCBSA
183 claims for Medicare
reimbursement which were false, fraudulent, or for items or services which were
not provided as claimed.
I conclude that the I.G. proved its allegations with respect to 173 of these
183 claims.
There is no dispute that Respondent Shoals presented the claims at issue to
BCBSA for Medicare
reimbursement or that Respondent Livingston, acting as the chief executive of
Respondent Shoals, caused
the claims to be presented. Nor is there any dispute that the claims at issue
were presented within the six-
year statute of limitations.
Respondents have conceded that there was massive fraud committed by the respiratory
therapists.
Respondents' Brief at 3. They do not contest evidence which the I.G. offered
which proves that these
therapists falsified DME forms and ABG reports, and which proves that beneficiaries
never received
oxygen equipment which Respondent Shoals claimed to have rented to them. Id.
I have analyzed each of the 183 claims at issue. The evidence shows that 173
of the 183 claims were based
on false documentation. These 173 claims were false, fraudulent, or for items
or services which were not
provided as claimed. The unifying characteristic of these claims is that the
home oxygen equipment
purportedly rented by Respondent Shoals had not been prescribed by the beneficiaries'
physicians, nor was
it medically justified. In many cases, it was not even supplied to the beneficiaries.
Findings 65 - 197. All
of these claims were supported with falsified documents, including forged or
altered DME forms and false
ABG reports.
I conclude that the I.G. failed to prove that 10 of the 183 claims were false,
fraudulent, or for items or
services that were not provided as claimed. These are claims for home oxygen
equipment rented to
Medicare beneficiary Amos Odom from April 1, 1985, through February 1, 1986.
Findings 148 - 155.
Close examination of the circumstances of these claims establishes that they
were technically not false.
The physician who treated Odom during the period at issue signed an affidavit
in which he admits
executing DME forms prescribing home oxygen equipment for Odom. He now admits
that Odom did not
have a medical need for the equipment, but nevertheless, the physician certified
at the time that he executed
the forms that there was a medical need for the equipment which he prescribed
to Odom. Thus, the
documents upon which Respondent Shoals based the 10 claims are not "false"
in the sense that they were
falsified by Respondents or their agents. Furthermore, the I.G. did not prove
that the ABG reports which
Respondent Shoals presented to BCBSA to justify the 10 claims were false. 13/
3. The 173 claims that were false, fraudulent, or for items or services that
were not provided as claimed
were part of a pattern of claims which were false, fraudulent, or for items
or services that were not
provided as claimed.
The I.G. proved that Respondents presented or caused to be presented many claims,
in addition to the
claims on which it based its case for liability, which were false, fraudulent,
or for items or services which
were not provided as claimed. These consist of claims which Respondents presented
or caused to be
presented to BCBSA on dates which fall outside of the six-year statute of limitations.
The evidence
presented by the I.G. establishes that, as with the 173 claims which comprise
the I.G.'s case-in-chief, these
claims were supported with falsified and forged documents. They establish a
pattern of false claims which
transcends the claims on which the I.G. bases its assertions of liability. Findings
198 - 237.
Respondents cannot be held liable for these additional claims under the Act,
because they fall outside the
statute of limitations. However, as I shall discuss, infra, they are indirect
evidence of Respondents'
culpability and untrustworthiness for the 173 claims for which liability may
be established.
4. The I.G. proved that Respondents are liable for the 173 claims which they
presented or caused to be
presented which were false, fraudulent, or for items or services which were
not provided as claimed.
Respondents presented or caused to be presented 173 claims for Medicare reimbursement
which were
false, fraudulent, or for items or services which were not provided as claimed.
Respondents are liable
under the Act to the extent that they, or their agents acting on their behalf,
are culpable for these claims
within the meaning of the Act. Respondents are culpable, and liable for these
claims, if they knew, had
reason to know, or should have known that the claims were false, fraudulent,
or for items or services which
were not provided as claimed. Respondents are also liable to the extent that
it is established that their
agents, acting on Respondents' behalf, presented claims or caused claims to
be presented in violation of the
Act.
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 which that party knows or should know were not provided
as claimed. 14/ Section
1128A(a)(1)(B) 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 the claim is false or fraudulent.
15/ Section 1128A(l) of
the Act provides that a principal is liable under sections 1128A(a)(1)(A) and
(B) for the actions of that
principal's agent which are within the scope of the agency relationship. 16/
The I.G. need not prove, as a
prerequisite to establishing liability, that all of these standards are met.
If any of these standards are
satisfied with respect to the claims at issue, then Respondents are liable under
the Act.
a. The I.G. did not prove that Respondents knew that the 173 claims were false,
fraudulent, or for
items or services that were not provided as claimed.
A person "knows" that an item or service is not provided as claimed
within the meaning of the Act when he
or she knows that the information that he or she is placing or causing to be
placed on a claim is untrue.
Anesthesiologists Affiliated, et al. and James E. Sykes, D.O. et al., DAB CR65
(1990) (Anesthesiologists
Affiliated); Thuong Vo, M.D. and Nga Thieu Du, DAB CR38 (1989) (Vo). The "knows"
standard is
satisfied where a party deliberately presents or causes to be presented a false
claim, or instructs another
individual to present or cause to be presented a false claim.
The I.G. contends that the "knows" standard also is met where a party
recklessly disregards the truth of the
fact assertions on which a claim is based, citing Administrative Law Judge Stratton's
decision in George A.
Kern, M.D., DAB CR12 (1987) (Kern). Although Judge Stratton did hold in Kern
that "knows" means
reckless disregard for the truth of one's statements, that is a broader interpretation
of the word "knows"
than is indicated by the plain meaning of the word. I do not agree with this
broad interpretation of the
meaning of "knows." The more reasonable interpretation of the word
"knows" is that it refers to something
within a person's actual knowledge, and not to something which a person ought
to know but which that
person ignores. Anesthesiologists Affiliated at 54. I have held previously that
reckless disregard for the
truth of one's statements falls within the ambit of the "should know"
standard of liability, and not the
"knows" standard. Anesthesiologists Affiliated at 56.
There is no question that, in this case, Respondents' agents, the respiratory
therapists, knew that the claims
information that they were causing to be presented to BCBSA was false. However,
that evidence is not
sufficient to prove that Respondents knew that the claims contained false information.
17/ In order to
prove that Respondents knew that the 173 claims were false, fraudulent, or for
items or services which
were not provided as claimed, the I.G. must show that Respondents either knew
that the claims were false
or that they directed other individuals to present claims which they knew would
be false. The I.G. argues
this standard is satisfied here, because Respondents conspired with respiratory
therapists to present false
Medicare claims. He asserts that Respondent Livingston directed respiratory
therapists who served as
Respondent Shoals' agents to falsify DME forms and ABG results in order to qualify
patients for Medicare
reimbursement.
The I.G.'s evidence for this contention consists of the testimony of respiratory
therapists who served as
independent contractors for Respondent Shoals, along with the testimony of an
individual who was
employed in Respondent Shoals' Florence, Alabama, office. The I.G. called as
witnesses three respiratory
therapists (Judith A. Madison, Steven C. Plummer, and William F. White). In
lieu of live testimony, the
I.G. introduced the sworn testimony, given in a prior proceeding, of a fourth
respiratory therapist (Timothy
D. Hayes). He also called as a witness the former employee of Respondent Shoals
(David A. Blaylock)
and also introduced the sworn testimony which this witness gave at a prior proceeding.
These witnesses, individually and collectively, accuse Respondents of orchestrating
a conspiracy to defraud
Medicare. Plummer and Madison each testified that they participated in conversations
at which
Respondent Livingston, or his office manager, Duane Traglia, asked or instructed
them to falsify
documents -- especially ABG reports -- in order to qualify patients for Medicare
reimbursement for home
oxygen equipment rentals. See Tr. at 785 - 1012, 1049 - 1146. Hayes testified
in a prior criminal trial of
Respondent Livingston (at which Respondent Livingston was acquitted of criminal
fraud against Medicare)
that Respondent Livingston instructed him to falsify documents in order to qualify
patients for Medicare
reimbursement for home oxygen equipment rental. See I.G. Ex. 534/4 - 100. Blaylock
testified before me,
and in the prior criminal trial, that Respondent Livingston instructed him to
alter or falsify documents that
were sent to BCBSA in order to justify Medicare reimbursement claims. see I.G.
Ex. 534/101 - 144, /163 -
250; Tr. at 1497 - 1729. 18/
I do not find credible these witnesses' assertions that they were instructed
by, or conspired with,
Respondent Livingston to defraud the Medicare program. The I.G. did not prove
from this testimony that
Respondents committed fraud. I stress here that I do not make an affirmative
finding that Respondents did
not commit fraud. Had I concluded that any of the witnesses called by the I.G.
on the issue of
Respondent's knowing presentation of false claims was credible, then I would
have agreed with the I.G.
that Respondents committed fraud. All that I find is that the evidence which
the I.G. offered did not
establish that Respondent Livingston, or his agent, Respondent Shoals, encouraged
and directed fraud
against Medicare.
My conclusion that these witnesses' testimony is not reliable evidence that
Respondents committed fraud is
grounded on my decision that I cannot confidently accept as truthful these witnesses'
testimony concerning
Respondents' involvement in their fraud. Each of the witnesses who accused Respondent
Livingston of
having orchestrated fraud had motivation to defraud Medicare without having
been asked to do so by
Respondent Livingston. 19/ Each of these witnesses had motivation to lie concerning
Respondents'
participation in his or her own fraud. Some of these witnesses admitted to having
lied previously to
authorities concerning aspects of their own fraudulent conduct. Several of the
witnesses (Madison, Hayes,
and Blaylock) significantly changed their recitation of events on occasion to
suit the forum in which they
were being to asked to recount the facts. One of the witnesses (Hayes) subsequently
recanted his testimony
in which he accused Respondent Livingston of having orchestrated fraud. One
of the witnesses (White)
attempted to extract money from Respondent Livingston in return for favorable
testimony.
The relationship between Respondent Shoals and its independent contractor respiratory
therapists provided
ample motivation and opportunity for these therapists to defraud Medicare. Each
of the therapists could
have engaged in fraud without any urging by Respondent Livingston. The nature
of their relationship with
Respondent Shoals provided all the inducement they needed. Respondents' participation
or encouragement
was not a necessary element of the respiratory therapists' fraud. It was in
these therapists' pecuniary
interest to generate false documents to support reimbursement claims for home
oxygen equipment,
inasmuch as Respondent Shoals compensated them for only those patients who qualified
for Medicare
reimbursement. Therefore, I am not logically obligated to conclude from the
fact that the respiratory
therapists engaged in fraud that Respondents necessarily abetted the respiratory
therapists' fraud, nor must I
necessarily find persuasive the therapists' testimony that Respondents participated
in their fraud.
Madison, Plummer, and Hayes had been charged with, and pleaded guilty to, criminal
offenses arising
from their conduct as respiratory therapists. Each of these witnesses knew that
the sentences which they
received for their crimes might be affected by the testimony they gave in Respondent
Livingston's criminal
trial. Therefore, they had a reason to accuse him of complicity in their own
fraud. 20/ These witnesses'
motivation to give testimony which might not be truthful is a reason to suspect
the veracity of their
statements concerning Respondent Livingston's complicity in their fraud. It
is not necessarily a sufficient
basis to disqualify their testimony. I am certain that there have been many
instances where co-conspirators
have testified truthfully concerning a party's complicity in a scheme where
they have also benefitted from
their testimony. But the fact that these witnesses had something to gain from
implicating Respondent
Livingston is a reason to scrutinize their testimony carefully.
What is more disturbing about these witnesses is that two of them, Madison
and Hayes, changed their
stories to accommodate the circumstances in which they found themselves to be
situated. When an
investigator initially confronted Madison with evidence that she had engaged
in fraud, she denied any
wrongful conduct. She changed her story only when it became apparent to her
that she could pay a heavy
price for her misconduct. She changed her story again on subsequent occasions.
In cross-examination
before me, she admitted to having lied previously under oath. Hayes recanted
the testimony he gave in
Respondent Livingston's criminal trial, subsequently averring in a sworn deposition
that Respondent
Livingston had not directed him to engage in illegal conduct.
Plummer's testimony was at least unchanging. However, I find the central element
of his testimony to be
less than credible. He asserted that Respondent Livingston counseled him to
falsify ABG reports at their
first meeting, in the parking lot of the hospital at which Plummer was then
employed. This assertion is
doubtful at best. Based on my assessment of the parties involved, it is highly
unlikely that Respondent
Livingston would direct or counsel a person to commit fraud who, at the time,
was a total stranger to him.
White, the third respiratory therapist who testified before me, totally discredited
himself. Under cross-
examination by Respondents' counsel, White admitted that he had offered to make
his testimony favorable
to Respondent Livingston if he paid White money which White contended that Respondent
Livingston
owed to him. Given this admission, I cannot accept as truthful anything that
this witness offered on the
question of Respondents' complicity to commit fraud against Medicare. 21/
Furthermore, I was not impressed by the demeanor and presentation of Madison,
Plummer, or White. Each
of them was evasive and less than forthcoming in answers to most questions.
The I.G. argues that similarities in these witnesses' accounts of what Livingston
allegedly told them
reinforces the weight of their individual stories and their overall credibility.
He observes that the
individual respiratory therapists were not well acquainted with each other prior
to their testifying against
Respondent Livingston at his criminal trial. He notes that each of the respiratory
therapists identified
separate meetings or conversations in which Respondent Livingston allegedly
counseled him or her to
falsify documents. According to the I.G., there is nothing to suggest that these
respiratory therapists agreed
to concoct a similar story about Respondent Livingston's involvement in their
fraud. He argues that it
would be highly unlikely for each of the respiratory therapists independently
to invent testimony with such
obviously similar features. Therefore, the credibility of each respiratory therapist's
account of
conversations with Respondent Livingston should be bolstered by the similarities
in the respiratory
therapists' testimony.
Although this argument is appealing, I am not sufficiently persuaded by it
to find credible the testimony of
these respiratory therapists. The similarities in these witnesses' testimony
is not sufficient to overcome my
conclusion that, individually, these were not credible witnesses. Furthermore,
I do not find it unlikely that
these witnesses could individually have contrived stories which coincidentally
had similar features, in order
to deflect opprobrium from themselves. It is not unreasonable to conclude that
respiratory therapists,
including these witnesses, knew how to commit fraud before they ever became
involved with Respondents.
Fraud against Medicare by respiratory therapists did not begin with these therapists'
relationship with
Respondent Shoals. Madison admitted that she had perpetrated fraud against Medicare
prior to her
involvement with Respondents. None of these witnesses necessarily needed to
be instructed by
Respondent Livingston how to commit fraud. Nor is it unreasonable to conclude
that each of these
therapists may have individually decided that his or her route to safety or
a reduced penalty lay in linking
his or her own fraud to Respondent Livingston.
The additional witness called by the I.G., Blaylock, did not directly implicate
Respondent Livingston in a
scheme to defraud Medicare. Much of his testimony focused on Respondent Shoals'
business practices
(such as its failure to meaningfully track the distribution to independent contractors
of home oxygen
equipment in its inventory). He testified also that Respondent Livingston was
indifferent to evidence that
employees of Respondent Shoals were engaging in improprieties concerning the
qualification of patients to
receive Medicare reimbursement for the rental of home oxygen equipment. His
testimony concerning
Respondent Livingston's involvement in fraud mainly related to an episode in
which Respondent
Livingston allegedly directed Blaylock to alter a document to be submitted to
BCBSA in order to qualify a
patient for Medicare reimbursement for home oxygen equipment rental. Much of
Blaylock's testimony
was directed at showing that Respondent Livingston had attempted to intimidate
him into not testifying
against Respondent Livingston in his criminal trial. Blaylock testified that
the alleged intimidation
included threatening telephone messages and written threats, theft of his automobile,
and two beatings.
Blaylock was not a credible witness. He admitted to having had animus towards
Respondent Livingston
(Respondent Livingston had fired him from his employment with Respondent Shoals).
His animus was
also reflected in his demeanor, which was at times hostile and at other times
evasive. His testimony as to
the alleged intimidation was not corroborated. He was unable to produce the
threatening note that
allegedly he had received. He could produce no evidence which linked Respondents
directly to the alleged
intimidation. And, like several of the respiratory therapists, Blaylock changed
his story to suit the
circumstances in which he found himself. Tr. at 1678 - 1679.
Moreover, his testimony was in some respects, fanciful. For example, he testified
that on one occasion he
had been home alone when persons unknown to him forced their way into his home,
beat him, and
threatened him with additional violence if he continued to cooperate with the
authorities who were
prosecuting Respondent Livingston. He asserted that, on this occasion, the persons
who broke into his
home were somehow able to find and to remove a telephone voice recording device
from a darkened room.
However, Blaylock acknowledged that, prior to the alleged break-in, beating,
and theft, the existence of the
recording device was unknown to any individual other than himself. I find this
depiction of events to be
far-fetched, because it assumes that the persons who allegedly invaded Blaylock's
home would somehow
discover the previously unknown recording device in the dark, recognize its
significance to them, and
remove it.
Blaylock also testified that, on another occasion, he returned to his home
after several days' absence. On
this occasion, according to Blaylock, persons unknown to him were waiting for
him inside his home. He
asserted that these individuals surprised him and beat him upon his entry to
his home. Yet, Blaylock was
unable to explain how these individuals knew that he would be returning to his
home on the day in
question, after a long absence. For these reasons, I do not believe this depiction
of events or Blaylock's
account of the other alleged entry into his home.
There is evidence that Respondents knew of at least one instance in which a
respiratory therapist had
presented falsified documents concerning home oxygen equipment which had ostensibly
been supplied to a
Medicare beneficiary. Tr. at 1262 - 1263, 1299. I do not find this evidence
sufficient to prove the I.G.'s
contention that Respondents knew that all 173 false claims were false. On the
other hand, this evidence is
relevant to my conclusion that Respondents had reason to know or should have
known that the 173 claims
were false.
b. Respondents had reason to know that the 173 claims were for items or services
that 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 presentation of false claims where: (1) the provider
had sufficient information
to place him or her, as a reasonable medical provider, on notice that the claims
presented were for services
not provided as claimed, or (2) there were pre-existing duties which would require
a provider to verify the
truth, the accuracy, and the completeness of the claims. Anesthesiologists Affiliated
at 54; Vo at 19; Kern
at 5 - 7.
The record in this case is replete with evidence that placed Respondents on
notice that the 173 claims could
be for items or services which were not provided as claimed. I do not find that
Respondents had facts
which specifically placed them on notice that each of the 173 claims was false.
But they had sufficient
evidence to know that there was a likelihood that any one of these claims was
false. Respondents
presented or caused these claims to be presented notwithstanding their knowledge
that these claims might
not be honest or accurate, and notwithstanding their resulting duty to prevent
the presentation of false
claims. Respondents thus had reason to know that the claims were for items or
services which were not
provided as claimed, and that establishes requisite culpability under the Act
for the 173 claims.
Respondents knew that the opportunity and incentive existed for respiratory
therapists to provide false
documentation to justify claims for Medicare reimbursement. Respondents knew
that, by virtue of their
relationship with respiratory therapists, respiratory therapists were required
to generate claims documents.
They knew that the compensation arrangement they established with respiratory
therapists rewarded the
therapists only for those claims that were paid by Medicare, and rewarded those
therapists more for
expensive equipment rentals than for inexpensive equipment rentals. Also, Respondents
knew that the
respiratory therapists could generate ABG reports without any check or balance
to assure that these ABG
reports were honest or accurate. Finding 245. They therefore knew that, not
only did respiratory therapists
have incentive to commit fraud, but that the documents which respiratory therapists
generated had at least
the potential for being false.
Thus, Respondents knew that there existed a real possibility that the claims
that they were presenting or
causing to be presented could be for items or services which were not provided
as claimed. That
knowledge was sufficient to meet the "reason to know" standard under
the Act for all of the 173 claims.
However, Respondents had additional information which strongly pointed to the
possibility that any of the
claims they were presenting or causing to be presented could be for items or
services which were not
provided as claimed. Respondents had direct evidence that fraud was being perpetrated
by respiratory
therapists in specific instances. Such evidence consisted of documents which
were generated by
respiratory therapists and sent to Respondents as support for home oxygen equipment
claims that were
patently false or, at the very least, were suspicious.
Respondents were put on notice that fraud might be being committed by Respondent
Shoals' receipt from a
respiratory therapist of blank DME forms which were purportedly executed by
a physician. In and of
itself, the receipt of those documents would have been sufficient to put Respondents
on notice of possible
dishonesty by the therapist, because Respondents knew that DME forms were in
effect, physicians'
prescriptions for home oxygen equipment. At the least, blank DME forms suggested
a total abdication of
responsibility by the physician who purportedly signed them. They suggested
also the possibility of more
sinister acts, including the falsification of claims documents.
Respondents were put on notice of possible fraud also by Respondent Shoals'
receipt from a respiratory
therapist of DME forms which bore the name of one physician as the treating
physician, but which bore the
purported signature of another physician. See, e.g., I.G. Ex. 222 - 223. That
discrepancy suggests to any
reasonable reviewer that the information contained in the forms might be false.
It also suggests the
possibility that the signatures on the forms were forged. Respondents received
even stronger evidence that
physicians' signatures were being forged. This stronger evidence consisted of
several DME forms sent to
them by a therapist, which bore the same physician's name as the purported signing
physician, but which
were signed with obviously different handwriting styles. See I.G. Ex. 101 -
105.
Also, Respondents were aware that, on at least one occasion, a respiratory
therapist had sent Respondent
Shoals a DME form on which the physician's signature had been forged. Respondents
were warned on
another occasion by one of Respondent Shoals' employees that a physician's signature
on a DME form may
have been forged. They knew that, on at least one occasion, they had been provided
with conflicting
statements from a patient concerning whether that individual had actually received
home oxygen
equipment. They knew that the DME forms which they were receiving from respiratory
therapists
contained fact discrepancies which suggested that the forms may not have been
prepared honestly.
The evidence of likely fraud which Respondents received from their respiratory
therapists included
documentation pertaining to numerous claims in addition to the 173 claims which
comprise the I.G.'s case
for liability under the Act. Indeed, the evidence in this case establishes that
Respondents began receiving
falsified or forged documents from respiratory therapists in 1983, almost at
the inception of Respondent
Shoals' commencement of business. Respondents therefore were in a position to
know, long before they
began receiving the documents relevant to the 173 claims, that documents provided
to them by respiratory
therapists were suspect and needed to be scrutinized carefully. Findings 198
-237.
Finally, Respondents knew that, when they attempted to ascertain the status
of one respiratory therapist's
(Hayes) patient accounts, that respiratory therapist obstructed their efforts.
Once they were made aware
that Hayes was obstructing their efforts, Respondents made no further effort
to investigate. Instead, they
allowed the respiratory therapist who was allegedly perpetrating the fraud to
control the investigation.
Respondents therefore had ample reason to suspect that the therapist had engaged
in dishonest conduct
with respect to a large number of claims.
c. Respondents should have known that the 173 claims were false, fraudulent,
or for items or
services that were not provided as claimed.
The "should know" standard of liability subsumes reckless disregard
for the consequence of a person's acts.
It subsumes those situations where a party has reason to know that items or
services were not provided as
claimed. "Should know" also subsumes negligence in preparing and submitting
claims, 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) (Mayers); Anesthesiologists
Affiliated at 56; Vo at 20.
Respondents were indifferent to the truth or falseness of the claims they presented
or caused to be
presented. They made no meaningful or systematic efforts to assure BCBSA that
the claims which they
were presenting or causing to be presented were honest. Their indifference was
at least negligence which
meets the "should know" liability test under the Act.
If Respondents were not willfully dishonest, they were at the least indifferent
to the honesty of individuals
who they knew had the incentive and the wherewithal to commit fraud. Respondents
knew that their
method of compensating respiratory therapists gave these individuals an incentive
to commit fraud. They
knew that the therapists were in a position to generate false documents. Given
this knowledge,
Respondents' blind reliance on the documents which the therapists submitted,
to their considerable profit,
was more than merely negligent, it was reckless.
Respondent Livingston testified that he spoke frequently with respiratory therapists
and physicians' offices
to monitor the services that Respondent Shoals was providing. Notwithstanding
this testimony, I do not
find that Respondents made meaningful efforts to assure that the claims that
they were presenting or
causing to be presented were accurate or honest. As I find above, Respondents
ignored evidence which put
them on notice that, at the least, incorrect or untruthful documents were being
provided by respiratory
therapists. Respondents failed to put into effect any meaningful mechanism to
detect fraud, in spite of their
receiving documents which strongly suggested that fraud was being committed.
Had Respondent
Livingston made any meaningful effort to check the veracity of the documents
which respiratory therapists
were submitting to him, he would immediately have detected massive and blatant
fraud.
As have found above, Respondents received DME forms purportedly signed by one
physician, where the
signatures were executed by an individual or individuals with different handwriting
styles. The evident
and obvious handwriting differences in the signatures should have put any reasonable
reviewer of the DME
forms on notice that something was amiss. However, there is no evidence that
Respondent Livingston or
any of Respondent Shoals' employees made any effort to determine why one physician
was purportedly
signing documents with different handwriting. There is no evidence that Respondents
checked documents
which were purportedly being signed by physicians against exemplars of these
physicians' signatures, in
order to assure that documents were not being forged. Nor is their any evidence
that Respondents called
physicians to inquire as to why their signatures appeared to be varying from
document to document.
There is no evidence in this case that Respondents made systematic (or even
sporadic) efforts to contact
physicians or their office staffs to check the accuracy or honesty of forms
which were being submitted by
respiratory therapists. Given the blatant and heavy-handed nature of the forgeries
that were being
committed by respiratory therapists, it is apparent that even a cursory inquiry
by Respondents of physicians
or their offices would have disclosed massive fraud.
Furthermore, there is no evidence which would establish that Respondents made
any meaningful effort to
control their inventory to assure that patients were actually being rented the
equipment which respiratory
therapists purported to have rented to them. Respondents received statements
from some patients disputing
that home oxygen equipment had been rented to them. Had Respondents maintained
a meaningful
systematic control over their equipment inventory, at the least they could have
ascertained whether
equipment had actually been rented to a particular patient. But the testimony
of Blaylock (which I find to
be credible on this limited issue) establishes that Respondents did not maintain
a meaningful record of their
rented equipment. Tr. at 1519 - 1521.
d. Respondents are liable for the acts of their agents.
The respiratory therapists were the agents of Respondent Shoals. Respondent
Shoals was the agent of
Respondent Livingston. Under section 1128A(l) of the Act, a principal is liable
for the acts of his or her
agent, where that agent operates within the scope of his or her agency. This
section was enacted by
Congress in 1988. Pub. L. 100-360, 411(k)(10)(B)(ii)(III), 102 Stat. 794-95
(1988). Respondents
presented or caused to be presented the 173 claims at issue here prior to the
enactment of this section.
However, in enacting the section, Congress added to it language which Congress
intended to apply
retroactively. See Pub. L. 100-203, 4118(e)(3), 101 Stat. 1330-155 (1987). I
interpret these enactments
as a specific directive from Congress to apply section 1128A(l) retroactively
to claims presented prior to
the section's date of enactment. 22/
There is no question here that, in providing Respondent Shoals with falsified
and forged documents to
support Medicare reimbursement claims, the respiratory therapists were acting
within the scope of their
agency relationship with Respondent Shoals. These therapists' duties included
providing Respondent
Shoals with whatever documents were necessary to qualify patients for Medicare
reimbursement for the
rental of home oxygen equipment. Nor is there any question that these therapists
engaged in fraud with
respect to the documentation for the 173 claims. Under section 1128A(l), these
therapists' fraud must be
imputed to Respondent Shoals, and Respondent Shoals is therefore liable for
the acts of its agents.
Nor is there any question that, in presenting the claims at issue, Respondent
Shoals acted as Respondent
Livingston's agent. Findings 21 - 25. Because Respondent Shoals is liable for
the 173 claims, and because
it acted within the scope of its agency relationship with Respondent Livingston
in presenting the claims,
Respondent Livingston is personally liable under section 1128A(l) of the Act.
5. There is a remedial need for assessments, penalties, and exclusions.
Section 1128A of the Act is a remedial statute. Its purpose is not to punish
wrongdoing, but to provide the
Secretary with a remedy for misconduct. Having concluded that Respondents are
liable for presenting 173
Medicare reimbursement claims that were false, fraudulent, or for items or services
that were not provided
as claimed, I must decide what remedies are reasonable.
The Act and regulations provide parameters for determining the remedies to
be imposed in a particular
case. Section 1128A(a) of the Act provides for assessments of up to twice the
amount of any item or
service which is presented in violation of the Act and for civil monetary penalties
of up to $2,000.00 for
each such item or service. This section also provides for the exclusion of any
party who is found to have
presented or caused to be presented claims in violation of the Act.
The Act provides that, in determining the amount of any penalties or assessments,
and the length of any
exclusion to be imposed, the following factors are to be considered:
(1) the nature of claims and the circumstances under which they were presented,
(2) the degree of culpability, history of prior offenses, and financial condition
of the person presenting
the claims, and
(3) such other matters as justice may require.
Social Security Act, section 1128A(d).
Regulations in effect prior to January 29, 1992, restated these statutory criteria.
42 C.F.R. 1003.106(a),
1003.107. They provided that the I.G. bore the burden of proving factors which
were "aggravating" (such
as a high level of culpability) and which merited greater remedies. 42 C.F.R.
1003.114(a). They
provided that respondents bore the burden of proving factors which were "mitigating"
(such as a low level
of culpability) and which merited reduced remedies. 42 C.F.R. 1003.114(c). These
regulations also
provided that the criteria for determining penalties, assessments, and exclusions
were to be employed as
guidelines. However, they instructed administrative law judges to set penalties,
assessments, and
exclusions close to the maximum permitted by the Act in situations where there
are substantial aggravating
factors. 42 C.F.R. 1003.106(c)(2).
The regulations published on January 29, 1992 are similar to the preexisting
regulations in most respects.
One difference between the language of new regulations and their predecessors
is that the regulations now
provide that the standards for determining penalties, assessments, and exclusions
are "binding, except to
the extent that their application would result in imposition of an amount that
would exceed limits imposed
by the United States Constitution." 57 Fed. Reg. 3348, to be codified as
42 C.F.R. 1003.106(d)(1).
a. This case is governed by regulations in effect prior to January 29, 1992.
The I.G. made his determinations to impose assessments, penalties, and exclusions
against Respondents in
April and July, 1991. The determinations were made prior to the January 29,
1992 publication date of the
new regulations. The I.G. contends, notwithstanding, that the January 29, 1992
regulations are the
regulations which govern my decision in this case as to assessments, penalties,
and exclusions. I conclude
that, to the extent that these regulations differ substantively from their predecessors,
it would be an
unlawful retroactive application of these regulations to apply them to this
case. Therefore, I adjudicate this
case pursuant to the regulations which were in effect prior to January 29, 1992.
It is not immediately clear from the new regulations the extent to which they
change substantively the
criteria to be employed in deciding the amount of assessments and penalties,
or the length of exclusions, to
be imposed in particular cases. As I note above, there is a language change
in the new regulations which
makes the criteria to be used in deciding the amount of assessments and penalties,
and the length of
exclusions, binding on the finder of fact. On the other hand, the criteria contained
in the preexisting
regulations were more than merely advisory. They were plainly intended to establish
criteria for deciding
remedies in most cases. Further-more, the new regulations contain the caveat
that they are not "binding"
where their application would be unconstitutional.
However, to the extent that the new regulations do substantively change the
criteria for deciding remedies
under section 1128A of the Act, they are not retro-actively applicable to cases
initiated prior to the
regulations' date of publication. There is no language in the regulations which
would suggest that the
Secretary intended that they be applied retroactively. Further-more, an appellate
panel of the Departmental
Appeals Board has concluded that Part 1001 of the new regulations, which governs
the I.G.'s exclusion
determinations under section 1128 of the Act, does not apply retroactively to
exclusion determinations
made prior to the regulations' publication date. Behrooz Bassim, M.D., DAB 1333
at 5 - 9 (1992)
(Bassim). Although the Part 1001 regulations apply to a different section of
the Act than to section 1128A,
which is at issue here, the same reasoning that the appellate panel used to
decide Bassim is applicable in
this case, and leads to the conclusion that the regulations may not be retroactively
applied. Therefore, I
find this case to be governed by the appellate panel's holding in Bassim and
I conclude that the governing
regulations are those which were in effect prior to January 29, 1992.
b. Assessments of $85,000.00 and a penalties of $300,000.00 are reasonable.
I conclude that assessments of $85,000.00 and penalties of $300,000.00, to
be imposed against
Respondents, jointly and severally, are reasonable in this case. I base my conclusion
on the preponderance
of aggravating factors and on the absence of mitigating factors. However, I
also conclude that the
aggregate penalties and assessments that I impose against Respondents are reasonably
related to the costs
sustained by the Department by virtue of Respondents' misconduct.
There are several serious aggravating factors present here. This is a case
involving a substantial number of
false or fraudulent claims presented over a lengthy period of time. The 173
claims at issue in this case
were presented over a 17-month period beginning in January, 1985, and ending
in June, 1986. The amount
falsely claimed by Respondents in the 173 claims is substantial, totalling $44,838.80.
The amount which
was reimbursed by Medicare for the 173 claims is also substantial, totalling
$25,440.64. All of this
evidence concerning the nature of Respondents' false and fraudulent claims is
relevant to establishing the
seriousness of Respondents' misconduct.
More important to my conclusion that substantial assessments and penalties
are merited here is evidence
which shows that Respondents demonstrate a high level of culpability for their
misconduct. Although the
evidence may not establish that Respondents orchestrated and encouraged fraud,
neither does it show them
to be passive bystanders to the fraud of others. To the contrary, Respondents
created a climate in which
fraud became an ordinary and accepted manner for doing business with Medicare.
They were utterly
indifferent to the systematic fraud committed by their independent contractors.
I am convinced from the
record of this case that Respondents were not innocently unaware of what was
being perpetrated on their
behalf. The documents which Respondents received from respiratory therapists
were, in some instances, so
obviously false that Respondents would have had to blind themselves to the likelihood
of fraud in order to
maintain ignorance of that fraud. 23/
Respondent Livingston asserted in his testimony before me that he was appalled
to learn of the fraud that
had been perpetrated on his behalf. He contended that he had not known of the
level of fraudulent conduct
until listening to the testimony and reviewing the exhibits which I admitted
into evidence at the hearing
which I conducted in this case. He asserted that he was willing to make restitution
for any fraud that was
established. In a sense, he contended that he had been victimized by his contractors'
fraud, even as the
Medicare program had been victimized. I find these assertions to be less than
credible. As I have
concluded, the evidence is overwhelming that, for over a three-year period,
Respondents were presented
with evidence of massive fraud by their contractors and did nothing to stop
that fraud.
Moreover, once Respondents were put on direct notice by investigating authorities
that fraud had been
perpetrated, they did little or nothing of substance to uncover or disclose
the fraud from which they had
benefitted. Respondent Livingston knew as early as 1987 that he and Respondent
Shoals were under
investigation for possible Medicare fraud. Respondent Livingston was a defendant
in a 1988 criminal
prosecution in which he and his manager, Traglia, were charged with fraud against
Medicare. Throughout
this period, Respondents had in their possession or had access to the same documents
now offered against
them by the I.G. Had they cared to ascertain whether fraud had been perpetrated
in their names, they could
have done so easily by reviewing the documents.
At the hearing before me, Respondent Livingston testified that he attempted
to investigate the possibility
that respiratory therapist Hayes had engaged in fraud, but that he was frustrated
by Hayes' obstructionist
tactics. I am not persuaded that Respondents made any meaningful effort to investigate
or deter Hayes'
fraud. They did not systematically review their records to determine whether
Hayes had submitted falsified
or forged documents. They did not systematically contact the patients Hayes
had allegedly serviced in
order to determine what equipment, if any, Hayes had provided to these patients.
They did not contact any
of the physicians who allegedly ordered equipment through Hayes to determine
whether the DME forms
Hayes had submitted, and that purportedly were executed by these physicians,
were honest and accurate.
The maximum assessments that I may impose in this case are $89,677.60 (which
is double the $44,838.80
claimed by Respondents in the 173 claims). The maximum penalties that I may
impose in this case are
$346,000.00 (which is $2,000.00 x 173 claims that are false, fraudulent or for
items or services which are
not provided as claimed). I conclude that assessments should be imposed against
Respondents, jointly and
severally, of $85,000.00. I conclude that penalties should be imposed against
Respondents, jointly and
severally, of $300,000.00. My conclusion as to assessments and penalties reflects
my decision that there is
strong aggravating evidence in this case, consisting of evidence both of the
magnitude of Respondents'
misconduct and their culpability. It also reflects my decision that there are
no significant mitigating factors
here. 24/ My reason for not imposing the maximum assessments and penalties is
that the I.G. did not prove
that Respondents knowingly presented or caused to be presented claims in violation
of the Act.
My decision as to penalties and assessments also reflects my conclusion that
the penalties and assessments
reasonably relate to the costs sustained by the Department and the Medicare
program by virtue of
Respondents' misconduct. Those costs comprise three elements. First, Medicare
was induced by
Respondents to pay them over $25,000.00 for the 173 claims. These payments were
made as a
consequence of Respondents' false representations, and Respondents were entitled
to none of these
payments.
Second, the Department incurred substantial costs in investigating Respondents'
wrongful conduct.
Finding 274; I.G. Ex. 540. The investigation required expendi-ture of many hours
of employees' time and
thousands of dollars in salaries, benefits, and ancillary disbursements.
I have not considered, as an element of the Department's costs in this case,
the time and efforts of I.G.'s
counsel and employees in prosecuting the case. Also, the I.G. contended that
I should consider as an
element of the Department's cost in this case the time and expenses of I.G.'s
counsel and employees in
preparing for and representing the I.G. at the hearing. The January 29, 1992
regulations provide that such
costs are to be considered as part of the Department's costs in a case brought
under section 1128A of the
Act. 57 Fed. Reg. 3348 to be codified at 42 C.F.R. 1003.106(d)(2). Inasmuch
as the new regulations
represent a substantive change from what I have previously ruled admissible
evidence as to costs, I
conclude that to apply them here would be a retroactive application not intended
by the Secretary. See Part
5a of this Analysis.
In previous hearings, I have expressed skepticism that such costs were intended
by Congress to be taxable
to respondents under section 1128A of the Act. My skepticism is grounded on
the fact that the Act
provides respondents with the right to an administrative hearing without stating
or suggesting that they are
to be taxed with the costs of the hearing, should the outcome of the hearing
be unfavorable to them.
Furthermore, I am concerned that taxing respondents with the I.G.'s prosecution
costs would have a
chilling effect on their exercise of their statutory right to a hearing. Finally,
I am troubled by the prospect
of having to consider as evidence the averments of I.G.'s counsel concerning
their efforts on the I.G.'s
behalf. If I accept such evidence, I must logically provide respondents with
the opportunity to rebut it, and
that may include the right to call employees of the I.G., or even the I.G.'s
counsel, as witnesses.
Third, Respondents' misconduct imposed an inchoate cost on the Department and
the Medicare program
consisting of damage to Medicare's reputation as a federally-funded health care
program. The damage to
the program's reputation, while not calculable in dollars, was extensive. Mayers;
Edward J. Petrus, Jr.,
M.D., and The Eye Center of Austin, DAB 1264 at 37 (1991) (Petrus). By recklessly
presenting Medicare
reimbursement claims that were false, fraudulent, or for items or services which
were not provided as
claimed, Respondents frustrated Congress' intent that the Medicare program,
with its limited funds,
effectively care for the legitimate medical needs of beneficiaries. Respondents
also fostered a climate in
which health care providers were encouraged to treat the program, and its safeguards
against fraud and
abuse, with contempt.
c. Five-year exclusions are reasonable.
As with the assessments and penalties, the purpose of an exclusion under section
1128A is remedial. An
exclusion is not intended to punish a provider for wrongdoing. Rather, its purpose
is to protect the
integrity of federally-funded health care programs and these programs' beneficiaries
and recipients from
individuals and entities who have established by their conduct that they are
not trustworthy to provide care.
The evidence in this case establishes Respondents to be highly untrustworthy
providers of care. Based on
this evidence, I impose a five year exclusion on each Respondent. There is nothing
in the record which
assures me that these Respondents can be trusted in the future to abstain from
engaging in conduct which
may be harmful to the programs and their beneficiaries and recipients. 25/ To
a great extent, I ground my
conclusions that Respondents are untrustworthy and that five-year exclusions
are a reasonable remedy on
the evidence of Respondents' indifference to their respiratory therapists' fraud.
As I conclude above,
Respondents ignored overwhelming evidence of fraud. The result of Respondents'
failure to take notice
and act upon the overwhelming evidence of fraud was that Respondents profited
from that fraud. That
strongly supports a conclusion that these Respondents are not to be trusted
with program funds or with the
welfare of beneficiaries and recipients of those funds.
However, there is additional evidence of Respondents' lack of trustworthiness.
Respondent Livingston
admitted to a continuing personal and business relationship with Hayes despite
professing to be appalled by
the fraud perpetrated by respiratory therapists, especially that of Hayes, and
despite offering evidence as to
Hayes' poor reputation for honesty. Respondent Livingston's continued relationship
with this individual
suggests either that he is less daunted by Hayes' dishonesty and poor reputation
than he professes to be, or
that he is a manifestly poor judge of the character of his business associates.
In either event, his continued
relationship with Hayes evidences a less than scrupulous concern by Respondent
Livingston for the
integrity of his business operations and is strong evidence of lack of trustworthiness.
6. The remedies imposed in this case do not violate Respondent Livingston's
right not to be placed in
double jeopardy.
Respondent Livingston argues that the imposition of remedies against him violates
his rights not to be
placed in double jeopardy. Respondent Livingston premises his argument on his
acquittal in 1988 of
criminal charges of Medicare fraud and the Supreme Court's decision in United
States v. Halper, 490 U.S.
435 (1989) (Halper). I conclude that the double jeopardy clause is not invoked
here. Unlike the facts of
Halper, the remedies which I am imposing in this case are not punitive.
The defendant in Halper was convicted in federal court of filing 65 false Medicare
claims resulting in an
overpayment of $585.00. He was sentenced to two years' imprisonment and fined
$5,000.00.
Subsequently, the United States Government brought a civil action against the
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. It held that
a civil sanction constitutes
punishment in those circumstances where the civil sanction serves only the traditional
aims of punishment:
retribution and deterrence. 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-gauge offender to a sanction overwhelmingly disproportionate to the damages
he has caused. The
rule is one of reason: Where a defendant has previously 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 second punishment.
490 U.S. at 435.
The Supreme Court held that its decision was inapplicable to defendants who
had not previously been
convicted on the same offense 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.
490 U.S. at 450.
In order for Halper to be relevant here, the remedies I impose against Respondent
Livingston must be
punitive within the meaning of the Supreme Court's decision in Halper. That
is to say, they must bear no
reasonable relationship to the costs sustained by the Department by virtue of
Respondent Livingston's
misconduct, or bear no reasonable relationship to the remedial purpose of an
exclusion. The assessments,
penalties, and exclusion which I impose here against Respondent Livingston do
not constitute a
punishment under Halper. These remedies are reasonably related to either the
costs sustained by the
Department as a result of Respondent Livingston's misconduct or to the remedial
purpose for exclusions
under the Act.
CONCLUSION
For the reasons set forth in this Decision, I impose assessments of $85,000.00,
and penalties of
$300,000.00 against Respondents, jointly and severally. I also exclude Respondents
from participating in
Medicare and Medicaid for five years.
______________________________
Steven T. Kessel
Administrative Law Judge
1. There was a numbering error in the I.G.'s July 8, 1991 letter which made
it appear as if the I.G. was
alleging that Respondents had presented or caused to be presented 184 claims
in violation of the Act. In
fact, the I.G. alleged that Respondents had presented or caused to be presented
183 claims in violation of
the Act.
2. The programs from which a party may be excluded under the Act are referred
to in the Act as
"Medicare" and "State health care" programs. "State
health care program" is defined by section 1128(h) of
the Act to include all of the above mentioned programs other than Medicare.
Unless the context indicates
otherwise, I refer hereinafter to programs, other than Medicare, from which
a party may be excluded under
the Act as "Medicaid."
3. I find that the I.G. did not prove that 10 of the 183 claims at issue were
false, fraudulent, or for items
or services that were not provided as claimed. These claims were for items or
services which Respondent
Shoals asserted it provided between April 1, 1985, and February 1, 1986, to
Medicare beneficiary Amos
Odom (Counts 81 - 83 and 172 - 178, as stated in the I.G.'s April 19, 1991,
and July 8, 1991 notice letters
to Respondents).
4. I refer to the Inspector General's exhibits as "I.G. Ex. (exhibit number)/(page)."
I refer to
Respondents' exhibits as "R. Ex. (exhibit number)/(page)." I refer
to the transcript as "Tr. at (page)."
5. Respondents' exhibits were marked in an inconsistent manner. Some of the
page numbers in
Respondents' exhibits are marked so that four zeros appear before the page number.
Other page numbers
are not marked in this way. For example, R. Ex. 6/4 is marked as Respondent
Exhibit 6 with the page
number 4. The pages in some of Respondents' exhibits, such as exhibit 3, are
marked with the page
numbers 00001, etc. Where applicable, in an effort to avoid confusion, I have
cited to Respondents'
exhibits using the page number without the zeros that precede that number.
6. I.G. Ex. 363 and 369 are the same DME form. On I.G. Ex. 369 someone has
placed the letter "F" next
to the purported signature of Estelle Coleman's physician.
7. I.G. Ex. 477 is a copy of a BCBSA-generated document of BCBSA's records
of claims and claims
dispositions from Respondent Shoals, with respect to claims made for items or
services allegedly provided
to Amos Odom. Line 1 on page 23 of the exhibit documents claims from Respondent
Shoals for the period
beginning April 1, 1985 and ending June 1, 1985.
8. The claims discussed in subpart E are claims that were presented for reimbursement
by Respondent
Shoals prior to April 19, 1985, and that are not part of the I.G.'s case-in-chief
against Respondents. These
claims are relevant to Respondents' culpability for the claims which are part
of the I.G.'s case-in-chief.
These claims are also relevant to my determinations regarding Petitioner's trustworthiness
as a Medicare
provider.
9. Inasmuch as I hold that the substantive regulations which are applicable
to this case are those in effect
prior to January 29, 1992, my citations to regulations which establish aggravating
and mitigating factors
governing penalties, assessments, and exclusions are to the pre-January 29,
1992 regulations.
10. The amounts claimed by and reimbursed to Respondents do not include the
amounts claimed by and
reimbursed to Amos Odom (Counts 81 - 83 and 172 - 178 in the I.G.'s April 19,
1991 and July 8, 1991
notice letters to Respondents). As I find above, the I.G. did not prove that
the claims for items or services
provided to Amos Odom were false, fraudulent, or for items or services which
were not provided as
claimed. However, I do find infra that Respondents did present or cause to be
presented some false claims
involving Amos Odom. These claims relate to the issue of aggravating circumstances
and not to my
findings of liability.
11. The I.G. also proved that Respondent Shoals was liable under section 1128A(l)
of the Act for the
unlawful acts of its respiratory therapist agents, and that Respondent Livingston
was liable under this same
section for the unlawful acts of Respondent Shoals.
12. ABG means arterial blood gas study, and not venous blood gas study. The
use of venous blood in an
arterial blood gas study gives a lower PO2 reading than does the use of arterial
blood because venous blood
contains less oxygen than arterial blood. It is not appropriate or accurate
to substitute venous blood for
arterial blood in an arterial blood gas study. Findings 6 - 8.
13. However, Respondents did present other claims for oxygen equipment allegedly
rented to Odom
which were false, fraudulent, or for items or services which were not provided
as claimed. These consist of
claims which Respondent Shoals presented prior to April 1985. Findings 207 -
214.
14. Prior to December 22, 1987, this section's standard of liability for a
party who filed a false claim was
couched in terms of whether the party knew or had reason to know that the item
or service was not
provided as claimed. On December 22, 1987, Congress retroactively substituted
the "should know"
standard for the "reason to know" standard. No court has decided the
validity of Congress' retroactive
application of the "should know" standard to claims for items or services
presented prior to December 22,
1987. In light of this unresolved issue, I use the "knows" and "should
know" standard of the 1987 revision,
as well as the pre-revision "has reason to know" standard, to decide
Respondents' liability under section
1128A(a)(1)(A).
15. This section was added effective December 22, 1987, and is inapplicable
to administrative actions
commenced prior to that date. The administrative action in this case commenced
after December 22, 1987.
Unlike section 1128A(a)(1)(A), there is no previous version of this section
which uses the "reason to
know" standard to measure liability requisite to establish a violation.
Therefore, under section
1128(a)(1)(B), a party is liable if he or she "knows" or "should
know" that an item or service was not
provided as claimed.
16. Section 1128A(l) was added to the Act in 1987, and Congress provided that
this section would apply
to acts occurring before, on, or after the date of enactment. Pub. L. 100-203,
4118(e)(3), 101 Stat. 1330-
155 (1987). The validity of Congress' direction that this language be applied
retroactively has not yet been
decided by a court.
17. As I discuss infra, Respondents are liable under section 1128A(l) of the
Act for their agents'
unlawful conduct.
18. White testified that he had been at a meeting at which Respondent Livingston
and Traglia discussed
ways to falsify ABG reports, but characterized these remarks as humorous and
as not intended to be taken
seriously. White's testimony was totally discredited, for reasons which I shall
discuss infra. See Tr. at
1148 - 1223.
19. Blaylock was not paid on a commission basis and did not have the motivation
to commit fraud which
was shared by the respiratory therapists. On the other hand, and as I shall
discuss, Blaylock is plainly
hostile to Respondent Livingston and that hostility damages his credibility.
20. I am not suggesting that authorities induced these witnesses to give false
testimony in return for
lenient treatment. However, it is evident that these witnesses perceived that
the authorities wanted them to
implicate Respondent Livingston in their own fraud.
21. In fact, White's testimony at the hearing which I conducted was marginally
favorable to Respondents
in that he asserted that Respondent Livingston and Traglia were joking when
they allegedly suggested that
ABG reports could be falsified in order to qualify patients for Medicare reimbursement
for home oxygen
equipment. However, given White's offer to shade his testimony in return for
money, I do not find from
White's testimony that the asserted conversation took place, much less do I
find that Respondent
Livingston made the alleged suggestion in jest. The I.G. offered no evidence
to corroborate White's
account of the alleged suggestion.
22. Although I am applying section 1128A(l) retroactively, as is directed by
Congress, I am not
premising my findings that Respondents are liable solely on the liability of
their agents. I would find
Respondents liable under the Act even if section 1128A(l) were not applicable
here, because Respondents
had reason to know and should have known that the 173 claims were false, fraudulent,
or for items or
services that were not provided as claimed.
23. The I.G. offered evidence that Respondents falsified or misrepresented
the results of pulse oximetry
tests which they presented to BCBSA in order to requalify patients who had been
qualified previously for
Medicare reimbursement for home oxygen equipment. Many of the allegations of
falsification of those
tests consist of the averments of Madison and Blaylock, witnesses whose testimony
I have found to be
unreliable. Therefore, I do not find that Respondents deliberately falsified
pulse oximetry test results. On
the other hand, the evidence is uncontested that these tests were administered
by Traglia, an individual who
had no training as a respiratory therapist. There is no evidence whatsoever
in this case to suggest that
Traglia, whose duties for Respondent Shoals consisted largely of bookkeeping,
had any qualification to
administer pulse oximetry tests. Respondents' use of Traglia for this purpose
may not have been illegal,
but, at the least, it suggests an indifference to a basic premise of the Medicare
program, which is that the
program is intended to provide reimbursement for items or services provided
by qualified health care
providers. This contempt for the program reinforces my conclusion that Respondents
were indifferent to
the fraud that was being perpetrated on their behalf.
24. Respondents did not offer evidence that the assessments and penalties proposed
by the I.G. would
affect their ability to continue to function as health care providers. Under
the regulations, Respondents
have the burden of proof on this issue, if they choose to raise it. 42 C.F.R.
1003.114(c)(3).
25. Respondent Shoals was Respondent Livingston's creation and his agent and,
therefore, to the extent
that Respondent Livingston is untrustworthy, so is Respondent Shoals.