Department of Health and Human Services (H.H.S.)
Departmental Appeals Board
Civil Money Penalty
WILLIAM J. MAYERS, D.C., AND PATRICIA M. MAYERS, RESPONDENTS
Docket No. C-4
Decision No. CR2
May 14, 1985
DECISION AND ORDER
This is a civil money penalties, assessments and suspension case arising
from a determination by the Inspector General of the Department of Health and
Human Services that the Respondents knowingly submitted false Medicare claims
for reimbursement.
By letter dated May 3, 1984, the Deputy Inspector General for Civil Fraud
notified the Respondents of the Inspector General's intent to impose civil
money penalties and assessments against them in the amount of $2,900,000. The
Deputy Inspector General also advised Respondents that she proposed to suspend
each of them from participation in the Title XVIII (Medicare) and Title XIX
(Medicaid) programs for a period of twenty-five years. She further advised
Respondents that these actions were authorized by Sections 1128A and (b) of
the Social Security Act (42 U.S.C. secs. 1320a-7a and 1320a-7(b)) as
implemented by 45 C.F.R. sec. 101.100 et seq.
Respondent Dr. William J. Mayers is a chiropractor. Respondent Patricia
Mayers is his wife. They have operated clinics in the vicinity of Fort Myers,
Florida. They are charged with submitting claims in violation of Section 1128A
of the Social Security Act. The alleged violations generally involve claims
for Medicare reimbursement submitted by Respondents for services ostensibly
rendered by medical doctors who were employed by them.
The Inspector General specifically charged that from June 1982, through
January 1984, Respondents submitted and/or caused to be submitted for Medicare
reimbursement 307 claims, containing 2,729 items or services, which
represented that such items or services were performed or ordered by medical
doctors employed by clinics owned and operated by Respondents. She further
charged that Respondents claimed reimbursement of $147,406 for these items or
services. The Inspector General has amended these allegations to assert that
the claims in question involve 2,702 items or services, with the amount
claimed being $145,550.
The Inspector General charged that at the time these claims were submitted,
Respondents had reason to know, and, indeed, knew that the items or services
for which reimbursement was sought were not provided as claimed since they
were neither rendered by nor ordered by physicians employed by them. The
Inspector General further asserted that in reliance upon Respondents' false
representations, Blue Cross and Blue Shield of Florida, the Medicare Part B
Carrier for the State of Florida, reimbursed Respondents for many of these
allegedly false claims. The Inspector General also asserted that substantial
aggravating factors existed which justified the proposed penalties,
assessments, and suspensions. These alleged factors included: the large volume
of items or services rendered over an extended period of time, a pattern of
false claims of which the items specifically charged were but a small part,
and submission of false claims by Respondents after they had specifically been
warned against such submissions by an agent of the Department of Health and
Human Services. The Inspector General also asserted that the vast majority of
the claims at issue were represented by Respondents to have been rendered by
their physician employees on dates which either preceded or followed their
employment by Respondents.
On May 31, 1984, counsel for Respondents replied, denying the allegations
made by the Inspector General. Counsel also requested a hearing before an
Administrative Law Judge. The matter was assigned to me for hearing and
decision. A hearing was held in Fort Myers, Florida, from October 29 to
November 8, 1984. Nineteen witnesses testified on behalf of the Inspector
General, and seventeen testified on behalf of Respondents. Four hundred and
eight written exhibits were offered as evidence by the Inspector General and
were made part of the record of this proceeding. Thirty written exhibits were
offered as evidence by the Respondents and were made part of the record. Two
joint exhibits were also received into evidence. As a consequence of a post-
hearing motion by the Inspector General, I permitted the record to be reopened
for the limited purposes of receiving testimony from one of Respondent's
witnesses, who offered to substantially recant her previous testimony, and for
receiving relevant rebuttal evidence. Pursuant to my Order reopening the
record, a day of additional testimony occurred in Tampa, Florida, on January
29, 1985, at which time the witness in question testified on behalf of the
Inspector General. Two rebuttal witnesses testified on Respondents' behalf.
Subsequent to the hearing, both parties filed briefs and reply briefs, and
proposed findings of fact, and oral argument was held on April 9, 1985.
ISSUES
The principal issues are:
1) Whether Respondents submitted claims for items or services that they
knew or should have known were not provided as claimed, as defined by the
Social Security Act and implementing regulations.
2) If Respondents submitted claims for items or services in violation of
the law, whether the amount of the proposed penalty, assessment and suspension
is reasonable and appropriate under the circumstances of this case and within
the intent and meaning of the Act and regulations.
SUMMARY OF THE ARGUMENTS
These principal issues subsume numerous affirmative allegations and
defenses. The Inspector General asserts that the items or services at issue
are a minor part of a scheme by Respondents to unlawfully obtain Medicare
reimbursement. Respondents are alleged to have employed physicians primarily
for the purpose of affixing their signatures and Medicare reimbursement
numbers to claims for services rendered at Respondents' clinics. The Inspector
General asserts that these physicians' involvement with patients at
Respondents' clinics was tangential; consisting primarily of performing brief
physical examinations, without rendering subsequent treatment or supervising
treatment by clinic staff. The Inspector General also asserts that the items
or services at issue were attributed to specific medical doctors when
Respondents knew that these physicians could not have rendered or supervised
provision of the items or services, inasmuch as these physicians were not
employed by Respondents' clinics when these items or services were allegedly
rendered. Moreover, many of the items or services in question allegedly
consist of items or services that were never actually rendered--office visits
with physicians which were routinely billed every time a patient visited one
of Respondents' clinics, regardless whether that patient actually consulted
with or was examined by a medical doctor. Respondents are charged with
continuing to bill Medicare for such visits even after they were expressly
warned to cease doing so by a representative of the Part B Carrier. Finally,
the Inspector General charges that Respondents engaged in an orchestrated
coverup of their unlawful activities when it became apparent that they were
under investigation. Respondents allegedly manufactured documents which
purport to show that physician employees ordered and supervised tests and
therapies which they never actually ordered or supervised.
Respondents concede that the physician employees on whose accounts
reimbursement for the 2,702 items or services was claimed were not employed
by
Respondents on the dates when these items or services were allegedly rendered.
But they argue that this concession does not establish the claims to be false.
They assert that all services and tests in question were actually provided by
a "physician"--either a medical doctor or a chiropractor. They argue
that
relevant law, regulations, and policy statements do not distinguish between
chiropractors and medical doctors for supervisory or rendering services
ordered by a medical doctor. And, since chiropractors and medical doctors are
asserted to be equally "physicians" for Medicare reimbursement purposes,
Respondents claim that there is neither a statutory nor regulatory prohibition
against a chiropractor receiving reimbursement for rendering or supervising
a
service or test previously ordered by a medical doctor. This is ostensibly the
case even where the medical doctor has left Respondents' employ and the tests
and treatment ordered by him continued under the auspices of a chiropractor.
Thus, according to Respondents, the claims for reimbursement for the 2,702
items or services at issue constitute lawful claims. Respondents argue further
that even if their interpretation of applicable law and regulations is
incorrect, it is nonetheless plausible, given allegedly confusing regulations
and guidelines and the novel situation of a chiropractor employing medical
doctors--a business relationship which, according to Respondents, was simply
not anticipated by the agencies who administer the Medicare laws. From this
they assert that any incorrect interpretation which Respondents may have made
was made in good faith, and therefore, the claims they submitted were not
false pursuant to Section 1128A of the Social Security Act.
Respondents make other arguments to explain their actions or as proof in
mitigation. They argue that they diligently sought to ascertain their
obligations, but were impeded by the Carrier's failure to adequately advise
them of their responsibilities or to promulgate a clear statement of
Respondents' duties. They assert that the Carrier deliberately withheld
critical information from them, causing them to submit arguably false claims
for items or services which they otherwise would never have submitted. They
deny that the items or services in question were part of a pattern of unlawful
conduct. Respondents argue that their physician employees had a much closer
relationship with patients and clinic activities than is alleged by the
Inspector General. They assert that medical doctors actively supervised the
tests and treatments rendered at Respondents' clinics. They assert that
evidence to the contrary is inaccurate or untrue. Respondents suggest that
adverse testimony by witnesses who were called by the Inspector General was
either motivated by these witnesses' animosity toward Respondents, or was
coerced by agents of the Inspector General. Respondents also assert that in
any event, no damages were occasioned by the claims they submitted because the
items or services in question constituted legitimate chiropractic treatments
under applicable State law and did not harm patients. They argue that the
items or services at issue represent only a tiny fraction of Respondents'
business activities. They argue that given all of this, coupled with their
view of statutory and regulatory intent and meaning, the penalties,
assessments and suspensions proposed by the Inspector General are
inappropriate. Finally, Respondents aver that I did not afford them a fair and
impartial hearing--that I deprived them of the opportunity to present relevant
evidence and displayed bias through overly zealous questioning of certain
witnesses. [FN1]
FINDINGS OF FACT AND CONCLUSIONS OF FACT AND LAW
Based on my review of the applicable laws and regulations and the relevant
evidence, I conclude that the Inspector General has established that claims
for reimbursement for the 2,702 charged items or services constitute
violations of Section 1128A of the Social Security Act. I conclude further
that these false claims were but a small element of a pattern of unlawful
behavior by Respondents. I find that substantial additional aggravating
factors exist, including the patent falseness of the claims at issue in this
case, and Respondents' efforts to conceal from investigating agents the nature
and scope of their unlawful activities. I conclude that no mitigating factors
exist. Therefore, I find that the Inspector General has established grounds
for imposition of substantial penalties, assessments, and suspensions. I have
determined that an assessment of $291,100 and a penalty of $1,500,000 coupled
with a 25 year suspension from the Medicare and Medicaid programs are
appropriate in this case. These conclusions are premised on the following
findings of fact and conclusions of fact and law.
1) Respondent Dr. William J. Mayers is a chiropractor. Respondent Patricia
Mayers is his wife. Tr. 11/5 at 4-5. [FN2] Together they have owned and
operated several chiropractic clinics in the vicinity of Fort Myers, Florida.
These include the Del Prado Chiropractic Center, the Lee County Medical and
Professional Center, and the Lee County Chiropractic and Medical Center. Tr.
11/8 at 97-100. At these clinics, Respondents have treated patients who are
entitled to Medicare Part B health insurance benefits, and have submitted
claims for reimbursement to Blue Cross and Blue Shield of Florida, the
Medicare Part B Carrier for the State of Florida. These claims have included
both claims for reimbursement for chiropractic services and for services
allegedly rendered by medical doctors. See IG Ex. 1, 3, 5.
2) The statutes which govern Part B Medicare reimbursement provide that
certain "medical and other health services" rendered to eligible beneficiaries
are reimbursable 42 U.S.C. sec. 1395K(a)(1). The term "medical and other
health services" includes certain "physicians services." 42 U.S.C.
sec.
1395x(S). The statutory term "physician" is defined to mean a doctor
of
medicine or osteopathy legally authorized to practice medicine or surgery
under relevant state licensure laws, and a chiropractor similarly licensed but
"only with respect to treatment by means of manual manipulation of the
spine
(to correct a subluxation demonstrated by x-ray to exist)." 42 U.S.C sec.
1395x(r). A chiropractor is therefore not a "physician" for Medicare
reimbursement purposes except in those circumstances narrowly defined by law.
Furthermore, "physicians" services are not reimbursable under Part
B except
where they are actually furnished by a physician or where they are furnished
as an "incident to" a physician's professional service, 42 U.S.C.
sec.
1395x(S); 42 C.F.R. sec. 405.321(a) and (b). The plain meaning of the term
"incident to" is that physicians' services not personally rendered
by a
physician must at least have been ordered and personally supervised by a
physician. This statutory meaning is restated by the Secretary of Health and
Human Services at secs. 2050.1 and 2050.2 of the Medicare Part B Carriers
Manual. It is also incorporated as part of the certification language
contained in standard Medicare claims forms utilized by physicians for billing
for Medicare reimbursement. Copies of such claims forms were present at
Respondents' clinics, and Respondents executed many claims forms. IG Ex. 196,
243; Tr. 11/1 at 26, 78, 108-109; 11/5 at 192.
3) Thus, services rendered at Respondents' clinics to Medicare
beneficiaries are reimbursable under Part B of Medicare only if they
constitute the very limited category of chiropractic physicians' services
defined in 42 U.S.C. sec. 1395x(r), or if they constitute services actually
rendered by or ordered and supervised by an appropriately licensed doctor of
medicine or osteopathy. The mere employment of medical doctors by Respondents
or these medical doctors' signatures or signature facsimiles on claims forms
does not establish a lawful basis for reimbursement of Respondents' clinics
services pursuant to Part B of Medicare. Services rendered at Respondents'
clinics are not reimbursable under Part B simply because a medical doctor may
have at some point in the course of treatment examined the patient on whose
account reimbursement for services is claimed. Such services are not
reimbursable because they are legitimate under State laws, or because they are
not harmful to patients.
4) Prior to approximately July 1982, the Respondents' clinics rendered
only chiropractic services, and Respondents were neither affiliated with nor
employed medical doctors. Beginning in about July 1982, Respondents became
affiliated with a naturopathic physician and an osteopathic physician. Tr.
10/30 at 102B. This relationship lasted a few months. Tr. 10/30 at 113; 11/5
at 24.
5) In October 1982, Respondents hired Dr. Romulo Bernal, a licensed
medical doctor, to serve as staff physician. Tr. 10/30 at 154-157. Dr. Bernal
began working for Respondents on October 11, 1982. His employment ended on the
morning of January 25, 1983. Tr. 10/30 at 178, IG Ex. 194.
6) On January 31, 1983, Respondents hired Dr. Mario Russo, a licensed
medical doctor, as Dr. Bernal's successor. Tr. 10/31 at 17, 23-24. Dr. Russo
commenced working for Respondents on February 1, 1983, and his employment
ended on April 22, 1983. Tr. 10/31 at 24, 52.
7) Respondents then employed Dr. Marta Mendez-Blanco, a licensed medical
doctor, beginning August 1, 1983. Tr. 10/31 at 117A-118, 122. Dr. Mendez
ceased working at Respondents' clinics on December 5, 1983. Tr. 10/31 at 149.
8) During the period from June 1982, through December 1983, other
individuals were employed by Respondents at their clinics in the capacity of
staff medical doctors. Dr. Lopez, an unlicensed physician, worked at
Respondents' clinics from late April through June 20, 1983. Tr. 10/31 at 231-
232; 11/5 at 97; IG Ex. 194. Respondents were unable to obtain a Medicare
billing number for Dr. Lopez, and were therefore unable to bill Medicare under
Dr. Lopez' name for services rendered at their clinics. Tr. 11/1 at 49, 73.
Respondents also employed an unlicensed physician, a Dr. Franzone, while Dr.
Russo was employed by them, and another unlicensed physician, a Dr. Arguello,
whose employment in part coincided with Dr. Mendez' employment. Tr. 10/31 at
42; Tr. 11/5 at 87.
9) The purpose of employing medical doctors was to enable Respondents to
obtain Medicare reimbursement for services rendered at their clinics.
Respondent Dr. Mayers advised his employees that it was necessary for a
patient to be seen by a medical doctor in order to obtain Medicare
reimbursement for services. Tr. 10/30 at 104. He also stated to clinic
employees that he desired to obtain a foreign-born physician who neither spoke
nor understood English too well, but who could sign documents. Drs. Bernal,
Russo and Mendez are all of foreign extraction. Tr. 10/30 at 115.
10) The conditions of employment of Drs. Bernal, Russo and Mendez were
essentially identical. All three medical doctors were ignorant at the time of
their employment of the treatment modalities employed by chiropractic
physicians. Tr. 10/30 at 156-157; 10/31 at 91, 129. Dr. Bernal was advised
that he would be a medical consultant and that he would treat patients'
medical problems. Tr. 10/30 at 157-158, 231. Dr. Russo was told that his
function would be to examine patients and to advise whether they could be
provided chiropractic treatments. Tr. 10/ 30 at 236; 10/31 at 20. Dr. Russo
understood that chiropractic treatments were outside of his area of practice
and that he was not to interfere in the rendering of chiropractic services.
Tr. 10/31 at 73-74, 107-108. Dr. Mendez was instructed not to interfere in the
provision of chiropractic treatments. Tr. 10/31 at 205.
11) As a prerequisite to employment, each medical doctor permitted rubber
stamps to be made bearing a likeness of his or her signature. Tr. 10/30 at
170; 10/31 at 24; 10/31 at 122. Custody of these stamps was retained by the
clinics' clerical personnel who routinely used them to complete Medicare
claims forms. Tr. 11/1 at 35, 46. The medical doctors rarely, if ever, used
these stamps. See Tr. 10/30 at 170; 10/ 31 at 24; 123, 158. Despite efforts
by
the medical doctors to obtain custody of their stamps from Respondents upon
their departure from Respondents' employment, Respondents retained at least
one copy of each doctor's stamp. Tr. 10/30 at 130-131, 183, 240; 10/31 at 53,
143; 11/ 2 at 48.
12) Drs. Bernal, Russo and Mendez had essentially identical duties while
employed by Respondents. Each physician performed routine physical
examinations of the clinics' new patients and prepared patient history forms.
Tr. 10/30 at 158; 10/31 at 25, 128, 202. If patients presented particular
medical problems, the medical doctors would order tests, treatment, and
followup examinations. See Tr. 10/30 at 166-167; 10/31 at 125. However, such
was rarely the case. The doctors normally did not order tests or therapy for
the patients they examined. See Tr. 10/30 at 164-166; 10/31 at 40-41, 128.
13) After the initial examinations, the medical doctors generally had
little formal contact with patients. Tr. 10/31 at 48-49, 128-129, 279-280.
They might occasionally pause to speak to patients while those patients were
undergoing tests or therapies at the clinics, but there was no specific
pattern or purpose to such contacts. Tr. 11/7 at 108-115, 117-123, 128-129.
14) All of the clinics' Medicare patients received essentially the same
tests and therapies unless the medical doctors specifically identified a
problem which would contraindicate such treatments. Tr. 10/31 at 248-249; 11/5
at 64-65, 69-70. All Medicare patients received standardized x-rays at uniform
predetermined intervals. Tr. 10/31 at 213-216; 11/1 at 165; 11/2 at 36. All
Medicare patients received tests, including electrocardiograms (EKGs),
plethysmographies, spirometries and vascular analyses at uniform predetermined
intervals. Tr. 10/31 at 212-214; 11/1 at 6-7. The treatments generally
received by all Medicare patients included chiropractic adjustment, stabilizer
(intersegmental traction), diathermy, and extensilizer (inertial extensilizer
or longitudinal traction). These treatments are referred to in Respondents'
documents by the nomenclature "ADSE". Tr. 10/31 at 248; 11/5 at 9-13,
64-65,
70.
15) The standard tests or treatments rendered to Medicare patients at
Respondents' clinics were neither rendered nor supervised by the clinics
medical doctors. Although there were rare exceptions, medical doctors
generally did not read x-rays nor did they order other tests or interpret
their results. Tr. 10/31 at 40-41; 128-129, 182. Medical doctors did not
supervise the day-to-day administration of treatments. Tr. 10/31 at 48-49,
129. The regimen of tests and treatments was established by Dr. Mayers; he
also was responsible for modifications in the selection of tests and
treatments. Tr. 10/31 at 216, 237, 256; 11/1 at 7-8.
16) Respondents submitted reimbursement claims for Medicare patients to
Blue Cross and Blue Shield of Florida, the Medicare Part B Carrier in Florida.
See IG Ex. 1, 3, 5. Prior to February 1983, claims for reimbursement were
manually generated by Respondents' clerical staff; however, beginning in that
month Respondents had installed a computer terminal which enabled them to
electronically file reimbursement claims. Tr. 10/30 at 12.
17) Policy concerning the billing of claims was made by both Respondents.
Tr. 11/1 at 58, 92, 122; 11/5 at 212. Respondent Patricia Mayers supervised
billing personnel. Tr. 10/31 at 232; 11/1 at 27, 41, 65 and 109. Respondents
instructed their employees not to discuss billing matters with staff
physicians. Tr. 11/1 at 88, 125, 147. The billing personnel did not consult
with physicians or other clinic staff in order to determine which services to
bill to Medicare. Tr. 11/1 at 62, 98, 103. Nor were physicians' treatment
records consulted. Id. The billing staff was instructed to obtain information
from clinic records generated by the clinics' clerical staff. See IG Ex. 17A,
20A. These records consisted primarily of a document entitled a "Daily
Analysis Sheet" which was prepared at the end of each day's business. Tr.
11/1
at 30, 110-112. Before April 1983, this document was prepared based on
appointment records and reflected all of the tests and treatments that the
following day's patients were scheduled to receive. The clinics' treatments
were so standardized that clerical personnel knew that nearly all patients
would be routinely scheduled for the "ADSE" course of treatments,
and they
neither consulted with staff nor checked clinic treatment records before
entering this information on the Daily Analysis Sheet. Tr. 10/31 at 253. Thus,
claims information was obtained essentially based on the standardized course
of treatments and tests which was the norm for most patients of Respondents'
clinics.
18) Beginning in April 1983, information to be placed on the Daily
Analysis Sheet was obtained from documents known as "trip tickets".
Tr. 10/31
at 222; IG Ex. 195. These were forms supplied to patients when they arrived
at
the clinics for tests or treatments and were signed by providers of therapies
or tests as these services were provided. Tr. 10/31 at 221-222. However, the
implementation of trip tickets as records of services rendered did not alter
the manner in which services were prescribed or rendered.
19) The clinics' billing personnel billed the "DSE" portion of the
treatments recorded on the Daily Analysis Sheets for individual patients on
the accounts of the medical doctors who initially examined these patients. Tr.
11/1 at 31, 67-68, 71, 113. Adjustments were billed as chiropractic services.
Id. In addition, clinic staff billed every patient for an "office visit"
to a
physician (Medicare procedure code 90040) every time a patient visited the
clinics--whether or not the patient actually was examined by a physician. Tr.
11/1 at 31, 36, 39, 71, 113, 142. If a patient actually was examined by a
physician, then the clinic staff would bill Medicare for two office visits by
that patient. Tr. 11/1 at 32-33. Dr. Mayers indicated to clinic employees that
in his opinion, charging for a 90040 office visit each time a patient visited
his clinics reimbursed him for his overhead. Tr. 11/1 at 72; 11/5 at 208. Dr.
Mayers stated that a patient should be billed for such service every time that
patient breathed his air conditioning and walked on his carpet. Id.
20) In order to attract patients to their clinics, Respondents placed
advertisements in local media. Respondents advertised that Medicare
beneficiaries would receive essentially free medical care at their clinics,
by
not being charged the standard Medicare copayment. IG Exs. 227, 228. This
policy of Respondents may have attracted patients, but it also violated
Medicare guidelines. Tr. 10/30 at 36. Respondents were quite successful in
attracting patients to their clinics. Respondents treated from 60 to 170
patients per day at their Cape Coral clinic and between 200 to 250 patients
per day at their North Fort Myers clinic. Tr. 10/31 at 219; 11/5 at 268. Each
patient, after his initial examination, generally visited Respondents' clinics
several times per week, and at each visit the patient received the
standardized therapies and tests described supra. As a consequence of the
large volume of business they generated, Respondents billed the Medicare Part
B Carrier for fees in excess of $1.8 million, attributed as services rendered
by or "incident to" the services of Drs. Bernal, Russo and Mendez.
Of this
amount, $212,817 was attributed to services rendered by Dr. Bernal in 1982,
and $174,665 in 1983; $653,324 was attributed to services rendered by Dr.
Russo in 1983; and $791,835 was attributed to services rendered by Dr. Mendez
in 1983. Respondents were reimbursed in excess of $500,000 by the Part B
Carrier for these alleged services. See IG Exs. 221-225.
21) The vast majority of items or services billed by Respondents on the
accounts of Drs. Bernal, Russo and Mendez were not rendered by these medical
doctors. Nor were these services ordered by or supervised by Drs. Bernal,
Russo, or Mendez. Consequently, these services were not rendered "incident
to"
these physicians' professional services. See Findings 9-20.
22) Each of the 2,702 items or services charged by the Inspector General
as constituting a false claim in this case is an item or service subject to
determination under 45 C.F.R sec. 101.102. They are as follows:
a) 168 claims for items or services attributed to Dr. Bernal in the amount
of $12,240. IG Ex. 6, 9. b) 1,776 claims for items or services attributed to
Dr. Russo in the amount of $99,766. IG Ex. 7, 10. c) 758 claims for items or
services attributed to Dr. Mendez in the amount of $33,544. IG Ex. 8, 11
The total amount claimed by Respondents for these items or services was
$145,550 and Respondents received reimbursement from the Medicare Part B
Carrier for these items or services in the amount of $24,697.73. IG Ex. 9, 10,
11.
23) The physician employees on whose accounts reimbursement for these
2,702 items or services were claimed were either not present at the clinics
or
not employed by Respondents on the dates when these items or services were
allegedly rendered. Tr. 10/29 at 60/62, 67/69; IG Exs. 6-11. No licensed
medical doctors were present or employed by Respondents on these dates.
Respondents' attribution of these items or services to Drs. Bernal, Russo or
Mendez reflected Respondents' policy to bill their clinics' services to the
medical doctor most recently employed by them if no medical doctor was
employed at the time the services were rendered. Tr. 11/1 at 74, 118, 147;
11/5 at 187, 195-196, 203-204.
24) Neither Drs. Bernal, Russo, Mendez or any other licensed medical
doctor ordered, rendered, or supervised the performance of the 2,702 charged
items or services. None of these items or services were actually furnished by
a physician or furnished incident to a physician's professional services
within the meaning of 42 U.S.C. sec. 1395x(S) and 42 C.F.R. sec. 405.321(a)
and (b). See Finding 22.
25) At the time Respondents claimed reimbursement for the 2,702 charged
items or services, they either knew that they were not entitled to
reimbursement for these items or services, or made these claims in reckless
disregard of whether or not they were entitled to reimbursement for the items
or services. See Finding 30(d).
26) The 2,702 items or services charged by the Inspector General were not
provided as claimed by Respondents within the meaning of Section 1128A of the
Social Security Act (43 U.S.C. sec. 1320a-7a). See Findings 23-25.
27) Sec. 1128A(a)(2) of the Social Security Act (42 U.S.C. sec 1320a-
7a(A)), provides that an individual who claims reimbursement for items or
services not provided as claimed shall be subject, in addition to any other
penalties that may be prescribed by law, to a civil money penalty of not more
than $2,000 for each item or service. It further provides that in addition,
such person shall be subject to an assessment of not more than twice the
amount claimed for each unlawfully claimed item or service, in lieu of damages
sustained by the United States. Section 1128(b) of the Act (42 U.S.C. sec.
1320a-7(b)) provides that individuals against whom such penalties or
assessments are imposed are subject to suspension from participation in the
Medicare and Medicaid programs. Thus, Respondents are subject to a maximum
penalty of $5,404,000 (2,702 x $2,000) and a maximum assessment of $291,100
(2
x $145;550). See Finding 22.
28) Section 1128A(c) of the Act provides that in determining the amount or
scope of any penalty or assessment, the Secretary shall take into account (1)
the nature of the claims and the circumstances under which false claims 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.
29) Regulations implementing the aforesaid statutory sections are
contained in 45 C.F.R. sec. 101.100 et seq. 45 C.F.R. sec. 101.106(b)
establishes guidelines for determining the amount of the penalty or assessment
in those cases where an individual has been established to have submitted
false reimbursement claims. These generally consist of aggravating and
mitigating circumstances. A penalty or assessment should be set at an amount
which reflects the presence or absence of aggravating or mitigating
circumstances. 45 C.F.R. sec. 101.114(d) provides that Respondents have the
burden of establishing, by a preponderance of the evidence, the presence of
mitigating circumstances. 45 C.F.R. sec. 101.107 provides that the same
guidelines shall be used in determining whether a suspension is appropriate,
and the duration of that suspension, as are used in determining the amount of
the penalty or assessment. It specifically provides that a person found to
have submitted false claims should be suspended where aggravating
circumstances are established to exist.
30) Substantial aggravating circumstances exist which conform to examples
specifically enumerated as aggravating factors in 45 C.F.R. sec. 101.106.
a) The items or services not provided as claimed were of several types,
occurred over a lengthy period of time, and there were many such items or
services (45 C.F.R. sec. 101.106(b)(1)). The items or services established not
to have been provided as claimed in this case included claims for a wide
variety of tests and treatments. These included x-rays, plethysmographies,
spirometries, vascular analyses, diathermy and stabilizer and extensilizer
treatments, as well as office visits to medical doctors. The claimed items or
services were assertedly provided over a period of about twenty months,
beginning June 1982 and extending through early January 1984, and many items
or services (2,702) were claimed. IG Exs. 6-11.
b) The nature and circumstances of the claims for reimbursement indicate
a pattern of claims for such items or services which reflects Respondents'
standard practices (45 C.F.R. sec. 101.106(b)(1)) The 2,702 items or services
established to have not been provided as claimed were routinely attributed to
medical doctors who were either not present at Respondents' clinics or not
employed by Respondents on the dates when such items or services were supposed
to have been provided. See Finding 23. Respondents routinely submitted
numerous claims for reimbursement for office visits to medical doctors in
circumstances where patients were not treated by medical doctors. See Finding
19. Moreover, the 2,702 items or services established not to have been
provided as claimed are but a small percentage of a much larger pattern of
claims for items or services which were made by Respondents and which were not
furnished by a physician or furnished incident to a physician's professional
service. This larger pattern reflects an intent by Respondents to obtain
reimbursement for items or services in circumstances where they were Dot
entitled to such reimbursement. See Findings 4-21.
c) The amount claimed for the 2,702 items or services established to
have not been provided as claimed was substantial (45 C.F.R. sec.
101.106(b)(1)). In this case the total amount claimed was $145,550. See
Finding 22.
d) Respondents knew that the 2,702 items or services were not provided
as claimed (45 C.F.R. sec. 101.106(b)(2)). Respondents made each of the claims
in question with knowledge that it was false, or with reckless disregard for
the truthfulness or falseness of the claim, which is tantamount to having
knowledge that the claim was false. Respondents had in their possession and
routinely used Medicare documents which expressly stated that items or
services could not be attributed to medical doctors unless those items were
either rendered by or ordered and personally supervised by those medical
doctors. These documents included Medicare claims forms. See Finding 2. The
claims forms contained certifications that the items or services claimed were
rendered by or ordered and personally supervised by physicians, and
Respondents executed these certifications, or ordered that they be executed.
Id. Respondents also knew that the medical doctors to whom the 2,702 items or
services are attributed neither rendered nor ordered and supervised the
rendering of these items or services. This knowledge resulted from
Respondents' familiarity with the terms and conditions of the medical doctors'
employment and their understanding of these doctors' actual duties and
activities. See Findings 9, 12, 13. Respondents knew, moreover, that the
medical doctors to whom these items or services are attributed were either not
present at their clinics or not employed by them on the dates when the items
or services were ostensibly rendered. They also knew that these items or
services included many claims for fictitious office visits with physicians--
claims which were deliberately made by Respondents to compensate them for
their "overhead", rather than for items or services actually rendered.
See
Finding 19.
31) There exist other aggravating factors which must be taken into
consideration pursuant to 45 C.F.R. sec. 101.106(b)(5). These are as follows:
a) Respondents have submitted claims for reimbursement for items or
services which were not provided as claimed despite explicit advice from the
Part B Carrier that their claims were not reimbursable. In August 1983, the
Medicare Part B Carrier conducted a routine audit of Respondents'
reimbursement claims. Tr. 10/30 at 24. This audit uncovered improprieties in
Respondents' claims documentation. Tr. 10/ 30 at 42. These included
Respondents': use of physicians' stamped signatures to execute claims; use of
financial data, rather than treatment records, to document claims; and failure
to provide documentation of claims for reimbursement of office visits (billed
under procedure code 90040). Tr. 10/30 at 27-28, 31-32, 77. The Carrier's
representative specifically advised Respondents during the course of this
audit that rubber stamps could not be used to endorse claims or treatment
records, that financial records did not constitute acceptable claims
documentation, and that claims for office visits were not reimbursable unless
medical doctors actually rendered and correctly documented the services
claimed. Id.
However, Respondents continued to use physicians' signature stamps to
document claims. Moreover, Respondents continued to submit claims for
reimbursement for office visits in instances where medical doctors had not
examined or treated patients. Tr. 10/30 at 88-89.
b) Respondents have attempted to deceive investigating authorities. In
late February or early March 1984, aware that agents of the Inspector General
were investigating their activities for evidence of unlawful conduct,
Respondents directed several of their clerical employees to prepare or alter
documents so as to show that physician employees had ordered or supervised the
rendering of items or services. Tr. 10/31 at 226- 30; 11/1 at 11-15, 19,
21-22. Documents so prepared or altered included trip tickets, test reports,
and daily analysis sheets. Id. They also included "doctor's orders"
which
contained checklists of Respondents' clinics' standard tests and treatments.
Clerical employees were instructed to complete such forms and insert them in
patients' files. Id. These forms were in many cases backdated to make it
appear as if they had been prepared contemporaneously with patients' initial
examinations by examining physicians. Id. They were stamped with medical
doctors' signatures, weeks or months after the doctors in question had left
Respondents' employment. Id. These forms made it appear as if medical doctors
had, at the time of their initial examination of patients, ordered tests and
treatments which they in fact did not order. Respondents' attempts to mislead
investigators establishes both a design to interfere with investigation of
their activities and knowledge that their efforts to obtain reimbursement for
the 2,702 charged items or services were unlawful.
ondents have made assertions which they contend must be considered as
mitigating factors pursuant to 45 C.F.R. sec 101.106. The evidence fails to
establish the existence of such factors.
a) Respondents assert that they acted on a good faith, albeit mistaken,
understanding that their claims for reimbursement were properly made. There
is
no credible evidence to show that Respondents relied on misleading or vague
Medicare reimbursement guidelines. Rather, as noted supra, Medicare guidelines
are explicit and comport with relevant statutory language. These guidelines
are contained in documents which Respondents utilized in their daily business
activities. IG. Ex. 196, 243.
b) Respondents assert that they relied on misleading statements by
representatives of the part B Carrier, and that any false claims they may have
made resulted from good faith reliance on these allegedly misleading
statements. However, there is no evidence that the Carrier's representatives
made misleading statements.
c) Respondents contend that any false claims they made were but an
insignificant part of a large number of legitimate claims. Respondents'
unlawful claims were not insignificant. As noted supra, there were many
falsely claimed items or services which constituted a small part of a much
larger pattern of unlawful activities.
33) The evidence of record justifies imposition of an assessment of
$291,100 and a penalty of $1,500,000, as well as a suspension of each
Respondent from participating in the Medicare and Medicaid programs for 25
years beginning May 3, 1984.
DISCUSSION
1) Respondents knew that the 2,702 charged items or services were not
provided as claimed, in violation of Section 1128A of the Social Security Act.
Section 1128A of the Social Security Act effectively provides that it
shall be a violation for any person to submit a claim for reimbursement for
an
item or service that that person knew or should have known was not provided
as
claimed. The evidence in this case clearly establishes that Respondents knew
that the 2,702 charged items or services were not provided as claimed.
a) The 2,702 charged items or services were not provided by or incident
to the professional services of licensed medical doctors, and were therefore
not provided as claimed.
Each of the items or services at issue in this case consists of an item or
service submitted by Respondents on the account of one of three medical
doctors who were employed by Respondents between October 1982 and December 5,
1983. Respondents submitted either written or electronic claims or
documentation, which made it appear that the items or services in question
were reimbursable physicians' services pursuant to the Medicare laws. In fact,
these items or services were not physicians' services and therefore, the
charged items or services were not provided as claimed.
In order for items or services to constitute reimbursable "physicians
services" under the Medicare law, the items or services must be rendered
by or
"incident to" the professional services of "physicians".
42 U.S.C. sec.
1395x(S); (1); 42 C.F.R. sec. 405.321(a) and (b). The Medicare law generally
defines a "physician" as a licensed doctor of medicine or osteopathy.
42
U.S.C. sec. 1395x (r). The law clearly distinguishes between chiropractors and
medical doctors. A chiropractor is not a "physician" for purposes
of Medicare
reimbursement except in the very limited circumstance where he renders
treatment consisting of "manual manipulation of the spine (to correct a
subluxation demonstrated by x-ray to exist)." Id. Plainly, Congress intended
to deny reimbursement to chiropractors (and also to unlicensed medical
doctors) for many items or services which would be reimbursable when rendered
by licensed medical doctors. This statutory distinction does not turn on the
issues of whether the services were actually rendered or whether they are
beneficial. The distinction is premised on the type of provider who renders
the services.
Neither the Act nor the regulations specifically define the term "incident
to," but the plain meaning of the term is that in order for services to
be
rendered "incident to" a physician's professional services, they must
at the
least have been ordered and supervised by that physician. The Secretary of
Health and Human Services has promulgated interpretive statements in the
Medicare Part B Carriers Manual which comport with statutory language. The
Carriers Manual provides at section 2050.1 that the term "incident to a
physician's professional service" means that services of non-physician
employees "must be rendered under the physician's direct supervision by
employees of the physician." Section 2050.2 of the same Manual provides
that
"direct supervision" means that the physician "must be present
in the office
with and immediately available to provide assistance and direction throughout
the time the aide is providing services." Therefore, in order to be
reimbursable, an item or service must be provided by a licensed medical doctor
or doctor of osteopathy, or pursuant to his close personal supervision.
Services provided by or supervised by unlicensed doctors or chiropractors are
not generally reimbursable.
The evidence establishes that none of the medical doctors to whom the items
or services are attributed rendered or ordered and supervised the provision
of
such items or services. The evidence shows, and Respondents concede, that the
medical doctors were either not employed by Respondents or not present at the
clinics when the items or services were ostensibly rendered. It would have
been impossible for these medical doctors to have provided or ordered and
supervised the rendering of items or services on the dates when such items or
services were ostensibly provided. The charged items or services, to the
extent they were provided, were rendered by chiropractors or by unlicensed
medical doctors or others.
For example, the evidence establishes that Dr. Mendez was employed by
Respondents beginning August 1, 1983 and ending December 5, 1983. Yet the
items or services claimed by Respondents as having been rendered by Dr. Mendez
or incident to her professional services consist of 758 separate items or
services, all allegedly rendered by her after December 5, 1983. IG Ex. 8.
These items or services were billed to the Carrier by Respondents, who used
standard Blue Cross and Blue Shield procedure codes to describe the particular
item or service claimed. These codes were obtained from manuals which
Respondents had in their possession and which they used in the regular course
of their business. Tr. 10/30 at 120; 11/1 at 37, 42, 83; 11/6 at 285, 290,
306; 11/7 at 8. These manuals included the Blue Cross and Blue Shield Manual
for Physicians. IG. Ex. 218a, 218 b. The 758 items or services claimed by
Respondents include over 350 "brief office medical services" claimed
pursuant
to Procedure Code 90040, defined as brief services "performed by a physician
in his own office...." IG Ex. 218a at M2 (emphasis added). They also include
95 "intermediate office medical services" claimed pursuant to Procedure
Code
90015, defined as "a level of service such as a complete history and
examination of one or more organ systems...." Id. at 48. Thus, Respondents
attributed hundreds of items or services to Dr. Mendez, including examinations
allegedly performed by her, which Dr. Mendez could not possibly have rendered
or supervised.
Indeed, many of the charged items or services consist of items or services
which were not provided by any clinician. As noted above, many of the charged
items or services consist of "office visits" to physicians. The evidence
establishes that Respondents made a practice of billing for an "office
visit"
to a physician pursuant to Medicare procedure code 90040 (which essentially
defines such service to include a brief examination of a patient by a
physician) every time a patient visited one of their clinics. Such charges
were made routinely even though patients neither were examined by nor
consulted with physicians. The alleged purpose of claiming such charges was
to
compensate Respondents for their "overhead". In those rare instances
when a
patient actually consulted with a medical doctor, Respondents would submit
claims to the Part B Carrier for two office visits. See Finding 19. Not only
were the office visits attributed by Respondents to Dr. Mendez not provided
by
her, they were not provided by anyone. The record also establishes that,
although Respondents routinely x-rayed all their patients, many of these
x-rays were never read, either by medical doctors or by chiropractors. See
Finding 15. Also see Tr. 10/ 31 at 39-40, 137; 11/1 at 168-169; 11/2 at 43-44.
And, although Respondents' clinics routinely administered tests and therapies
to patients, most of these were not actually ordered by licensed medical
doctors. See Findings 14-15.
Therefore, although the claims rendered by Respondents make it appear as
though the charged items or services were submitted by or "incident to"
the
professional services of "physicians," they were not provided as claimed.
According to Respondents, even though they represented to the Part B Carrier
that the items or services had been provided by or incident to the
professional services of licensed medical doctors, and, in fact, they were
not, the items or services were nonetheless "provided as claimed"
because they
were arguably supervised by chiropractors. Respondents argue that because the
term "physician" is not defined in the Carriers Manual sections 2050.1
and
2050.2, which discuss services provided "incident to" a physician's
professional services and "supervision," a "supervising physician"
can be a
chiropractor. Respondents, therefore, assert that based on a literal reading
of these sections of the Carriers Manual, without any reference to relevant
statutes or regulations, or to other sections of the Carriers Manual, the
services in question were provided as claimed.
This argument is without merit. In the first place, Respondents represented
that the items or services in question had been provided by licensed medical
doctors when in fact they had not been so provided. Many of these items or
services were not provided at all. Many of the items or services may have been
provided by chiropractors or by the clinics' lay employees, but were never
ordered by licensed medical doctors. Furthermore, the statutory distinction
between medical doctors and chiropractors is clear and is in fact restated at
sections 2020.1 and 2020.2 of the Carriers Manual. Sections 2050.1 and 2050.2
incorporate this statutory distinction. Therefore, the Carriers Manual is not
in any sense ambiguous and it cannot be read to permit Respondents to obtain
reimbursement for items or services which Congress clearly did not intend to
reimburse. Finally, Respondents' argument avoids the fact that the Carriers
Manual is merely an interpretive document which is not intended to alter
statutory meaning. See Snider v. Blue Cross and Blue Shield of Michigan,
1979-2 Transfer Binder MEDICARE REP (CCH) Paragraph 29.905.
b) Respondents knew that the 2,702 charged items or services were not
provided as claimed.
The evidence establishes efforts by the Respondents to obtain reimbursement
from Medicare for items or services which they knew were not provided as
claimed. Respondents knew that the items or services at issue were not
reimbursable unless they could be represented as having been provided by or
supervised by a licensed medical doctor. They knew that none of the charged
items or services was provided by or supervised by a licensed medical doctor.
They deliberately presented claims to Medicare for the charged items or
services in a manner designed to deceive the Carrier into believing that the
claims were reimbursable.
Respondents had operated chiropractic clinics for several years. In
mid-1982, Respondents became aware that Medicare would reimburse them for
services rendered at their clinics if Respondents could represent that these
services had been rendered by or incident to the professional services of
licensed medical doctors. This knowledge is established not only by
Respondents' association with and subsequent employment of medical doctors
beginning in 1982 and consequent billing of clinic services to the accounts
of
those doctors, but by statements made by respondent Dr. Mayers to his
employees. See Finding 9.
In order to obtain reimbursement for services rendered at their clinics,
Respondents not only had to employ licensed medical doctors, but had to
certify that these medical doctors had either provided or supervised the
rendering of items or services. Respondents made such certifications either
by
stamping physicians' signatures on Medicare claims forms or by transmitting
physicians' Medicare provider numbers as part of computer generated claims.
Every time Respondents made such claims, they expressly represented to the
Carrier that the items or services had been provided by or supervised by their
medical doctor employees.
Respondents routinely used standard Medicare claim forms. IG Ex. 196 and
243; see Finding 2. These forms contain the following certification:
I (the physician signing the form) certify that the services shown on this
form were medically indicated and necessary for the health of the patient and
were personally rendered by me or were rendered incident to my professional
service by my employee under immediate personal supervision...
Many of the items or services were billed electronically by Respondents
through the use of a computer terminal located in Respondents' clinics. When
claims were filed on the computer system, the following statement appeared on
the terminal screen:
I (the physician providing the services) certify that the services submitted
and referenced by this transmission were rendered by me....
See IG Ex. 230. Inasmuch as Respondents knew that their medical doctor
employees had neither provided nor supervised the rendering of the items or
services, they knew that the representations made on the claims forms and on
the computer were false. Respondents were, after all, Drs. Bernal, Russo, and
Mendez' employers. They had to know that these physicians were not employed
by
them or not present at their clinics on the dates when the charged items or
services were ostensibly rendered, and they therefore could not possibly have
rendered or supervised the rendering of the charged items or services. In
fact, Respondents were aware that there were no licensed medical doctors
present at their clinics on the relevant dates. Yet, despite this knowledge,
Respondents submitted claims in a manner designed to make it appear as if
these physicians had rendered or supervised the rendering of the charged items
or services. I conclude that this false characterization is exactly what
Respondents intended.
My conclusion that Respondents knew that the 2,702 charged items or services
were not provided as claimed is in part based on Respondents' conduct once it
became apparent to them that they were being investigated by agents of the
Inspector General. Nothing in the record of this proceeding could more clearly
establish Respondents' culpability than their attempts to cover up their
unlawful activities. The record establishes that months after the dates of
patients' initial visits to the clinics, and after Drs. Bernal, Russo, and
Mendez had ceased their employment with Respondents, Respondents instructed
several of their employees to generate or alter documents to make it appear
as
if these medical doctors had actually ordered or rendered the items or
services at issue. The inference which I draw from such actions is that
Respondents intended to deceive the Inspector General's investigators.
Patients' files were systematically culled by Respondents' employees. "Doctors
Orders" were created for patients, listing the clinics' standard treatments.
These fictitious "orders" were backdated to the dates of the patients'
initial
examinations and were stamped with the appropriate medical doctor's signature.
See Finding 31(b). To the casual or uninformed observer, these altered or
fabricated documents made it appear as if, on the dates of patients' initial
examinations by a medical doctor, that doctor had ordered and signed for
treatments.
Nor does the record support Respondents' contention that they believed that
their claims for reimbursement were proper, or that the Medicare Carrier or
its representatives misled them into believing that their billing practices
were proper. There is nothing in this record to suggest that Respondents were
confused about or misunderstood their responsibilities. And, although
Respondents' counsel now asserts that allegedly ambiguous statements in the
Carriers Manual would lead a person reading that Manual to believe that the
items or services in question were reimbursable, the record is devoid of
evidence to show that Respondents premised their claims on this
"interpretation." Indeed, there is no evidence to suggest that Respondents
actually consulted the Carriers Manual or reviewed the law in order to
determine the propriety of their actions. The record is also devoid of
evidence of any serious attempts by Respondents to obtain clarification from
the Part B Carrier as to what kinds of services were reimbursable. However,
there is credible evidence that Respondents were told in August 1983 by Ms.
Morgan- Lucidi, the Carrier's representative, that their actions were
improper, and Respondents nonetheless continued for several months thereafter
to unlawfully claim reimbursement, notwithstanding this explicit warning.
Respondents have suggested that the "unique" circumstance of a chiropractor
employing medical doctors is not addressed in applicable law, regulations, and
interpretive statements. From this they seem to argue that Medicare's failure
to address this allegedly novel relationship creates uncertainty as to the
applicability of reimbursement criteria to Respondents and their clinics'
operations. To the contrary, the Act and regulations explicitly describe the
circumstances under which medical doctors' and chiropractors' items or
services will be reimbursed. There is nothing about the work relationships in
Respondents' clinics which would call into question the applicability of
relevant law and regulations. Nor does the record suggest that Respondents'
employment of medical doctors ever raised questions in Respondents' minds as
to what items or services would be reimbursed.
Respondents were aware of the criteria for reimbursement and knowingly
submitted false claims. But had the record established that Respondents were
ignorant of Medicare reimbursement criteria, such ignorance would not have
excused their conduct. Respondents could not possibly have been ignorant of
Medicare reimbursement criteria unless they failed to read the claims forms
they utilized on a regular basis, or disregarded the language which appeared
on the terminal screen every time they electronically transmitted a
reimbursement claim to the Part B Carrier. Such failure to read prominently
displayed criteria would amount to reckless disregard of Medicare
reimbursement criteria, and recklessness is tantamount to an intentional
violation of the law. [FN3] United States v. Sarantos, 455 F.2d 877, 880 (2d
Cir. 1972). Even if Respondents simply negligently disregarded reimbursement
criteria, their negligence would not constitute a defense to the charges in
this case. Respondents were under a duty to learn and understand Medicare
reimbursement criteria before they submitted reimbursement claims. As is
pointed out in the Comments to 45 C.F.R. Part 101, contained in 48 Fed. Reg.
38831 (August 26, 1983): "The statute sweeps within its ambit not only
the
knowing, but the negligent...."
2) There exist substantial aggravating factors.
Having established that Respondents violated section 1128A of the Social
Security Act, the question then becomes what penalty, assessment, and/or
suspension should be ordered. The statutory provisions governing assessments,
penalties and suspensions are contained in 42 U.S.C. secs. 1320a-7a(A) and
7(c). The law provides that a person found to have submitted a false claim
shall be subject, in addition to any other shall be subject, in addition to
any other penalties that may be prescribed by law, to a civil money penalty
of
not more than $2,000 for each falsely claimed item or service, and an
assessment of not more than twice the amount claimed for each such item or
service. Inasmuch as I have found that Respondents falsely claimed 2,702 items
or services totalling $145,550, Respondents are subject to a maximum
assessment of $291,100 and a maximum penalty of $5,404,000. The law further
provides that persons against whom penalties and assessments are imposed are
subject to suspension from participation in the Medicare and Medicaid
programs.
The statute provides that in determining the amount or scope of any penalty
or assessment, the Secretary shall take into account: (1) the nature of the
claims and the circumstances under which false claims 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. 45 C.F.R. sec. 101.106 establishes guidelines for determining
appropriate assessments and penalties. The regulation requires the
administrative law judge to balance aggravating against mitigating factors.
It
provides that in cases in which there are substantial or several aggravating
circumstances the aggregate amount of the assessment and penalty should be set
at an amount sufficiently close to or at the maximum permitted penalty, to
reflect that fact. It further provides that the regulatory guidelines are not
binding. 45 C.F.R. sec. 101.107 provides that in determining a suspension, the
administrative law judge should consider the same guidelines outlined in 45
C.F.R. sec. 101.106. It also provides that these guidelines are not binding.
Finally, 45 C.F.R. sec. 101.106(b)(4) provides that in all cases, the
resources available to respondent will be considered when determining the
amount of the penalty and assessment.
I have concluded that there exist many aggravating factors in this case.
These are discussed at Findings 29 and 30. As noted therein, the charged items
or services were of many different types, were made over an extended period
of
time, and involved substantial sums. Furthermore, the record establishes a
high degree of culpability. It also establishes that the charged items or
services constitute merely an aspect of a broad pattern of unlawful conduct
by
Respondents.
As noted supra, Respondents' claims concerning the charged items or services
were made despite their knowledge that these items or services were not
provided as claimed. There is no evidence that these claims were the
consequence of an innocent mistake. Therefore, any determination of penalty,
assessment, and suspension must be premised on my conclusion that the unlawful
conduct in this case was deliberate. It must also be premised on my conclusion
that Respondents attempted to deceive government investigators. By falsifying
treatment records, the Respondents engaged in a double deception concerning
the charged items or services: first, in representing that the claims were for
physicians' services or services rendered incident to physicians' services;
and, second, in attempting to convince investigators with false documentation
that these services had been provided as claimed.
The most significant aggravating circumstance in this case is the fact that
the 2,702 charged items or services represent only a small portion of a
pattern of claims for items or services by Respondents that Respondents knew
were not provided as claimed. Respondents hired medical doctors so that they
could falsely represent to the Medicare Carrier that their clinics' services
were being rendered by or incident to the professional services of these
doctors. Their scheme enabled them to mulct Medicare of hundreds of thousands
of dollars. [FN4]
Beginning in mid-1982, Respondents determined that they could obtain
Medicare reimbursement for their clinics' services to eligible beneficiaries
if they could satisfy the Part B Carrier that these items or services were
rendered by or incident to the professional services of licensed medical
doctors. In order to accomplish this objective, they hired medical doctors and
began submitting claims for items or services over these doctors' signature
facsimiles and Medicare provider numbers. From the outset Respondents' intent
in employing these medical doctors was to obtain their names and provider
numbers for claims purposes. Respondents never intended that these medical
doctors play an active role in rendering or supervising the providing of items
or services at their clinics. Their mere presence at the clinics was all that
was ever required. The evidence establishes that none of the medical doctors
employed by Respondents prior to January 1984, ever had more than tangential
involvement in the day-to- day provision of items or services at Respondents'
clinics.
The medical doctors employed by Respondents had in common the fact that they
were foreign-born physicians with little or no knowledge of the "chiropractic
medicine" provided by Respondents. There is more than coincidence in this
fact, for Dr. Mayers stated to his employees that it would be advantageous to
obtain foreign-born physicians who did not speak English well, but who could
sign documents. Drs. Bernal, Russo, and Mendez all understood that the purpose
of their employment was to perform physical examinations of new patients. None
of these doctors understood their roles to include providing or supervising
the therapies and tests rendered by the Mayers' clinics. Indeed, Drs. Russo
and Mendez were told by Dr. Mayers not to involve themselves with or interfere
with the clinics' rendering of chiropractic services. See Findings 9 and 10.
The record establishes that rather than receiving individualized treatment
pursuant to medical doctors' orders, all of the clinics' patients received a
standardized regimen of tests and therapies devised by Dr. Mayers. The medical
doctors played no role in either the development or administration of these
tests and therapies. See Finding 14. The medical doctors' activities were
essentially limited to performing brief, routine physical examinations of new
patients. Generally, the medical doctors did not order treatments and tests,
nor did they review test results and therapy progress reports. They did not
involve themselves in the day-to-day supervision of therapies and treatments.
Their post-examination contacts with patients usually consisted of chance
encounters. See Findings 12, 13, and 15. [FN5]
But, notwithstanding the minimal contact these medical doctors had with the
clinics' patients, Respondents submitted claims for reimbursement on the false
premise that these doctors were intimately involved in the ordering,
rendering, and supervision of treatments. All of the clinics' services except
for chiropractic adjustments were attributed by Respondents to their medical
doctor employees. Respondents billed the Medicare Part B Carrier for fees in
excess of $1.8 million, attributed as items or services rendered by or
"incident to the professional services of Drs. Bernal, Russo, and Mendez.
A
substantial portion of these claims was paid by the Carrier. See Finding 20.
The nature of Respondents' scheme is established as much by Respondents'
billing methods as it is by the evidence establishing the roles and activities
of the medical doctor employees. The record establishes that Respondents
jointly developed billing procedures, and that Respondent Patricia Mayers
supervised the activities of the clinics' billing department. Analysis of
Respondents' billing procedures reinforces the conclusion that the prime
purpose for employing medical doctors was to obtain names and provider numbers
to which items or services could be attributed. Testimony and documentary
evidence proves that clinic employees were instructed to routinely attribute
the clinics' services to medical doctors without determining whether these
doctors actually ordered, rendered, or supervised the performance of items or
services. These employees were instructed not to discuss billing matters with
staff physicians. See Finding 17. Billing information was obtained from
records generated by the clinics' clerical employees. The items or services
rendered by the clinics were so standardized that these clerical records were
for a time generated in advance of patients' actual visits. Clinic employees
neither consulted with medical doctors nor examined their treatment records
in
constructing billing documents. Claims forms were "signed" by clerical
employees, using physicians' signature stamps. And, as noted supra, if no
licensed medical doctor was present at Respondents' clinics on dates when
items or services were rendered, Respondents' policy was simply to attribute
those items or services to the licensed medical doctor most recently employed
by them. See Findings 11, 17, and 23.
Therefore, the evidence in this case establishes that Respondents' medical
doctor employees were hired in order to provide Respondents with names and
Medicare provider numbers to affix to reimbursement claims. These medical
doctors had minimal actual involvement in Respondents' clinics' activities.
The services attributed to these doctors by Respondents were by and large
never provided by the doctors, and Respondents' reimbursement claims for these
services were mostly false.
Much of Respondents' case was devoted to either attacking the credibility of
the Inspector General's witnesses who testified as to the purpose for hiring
medical doctors and the medical doctors' actual activities, or to presenting
evidence for the purpose of showing that medical doctors were actually
intimately involved with the rendering of items or services at Respondents'
clinics. I conclude that these efforts notwithstanding, the testimony of the
Inspector General's witnesses was generally truthful and consistent. By
contrast, evidence offered by Respondents was generally not credible.
The Inspector General's witnesses included Drs. Bernal, Russo, and Mendez,
and several of the clinics' former clerical employees. Respondents have
suggested that these witnesses were "coached" to give testimony damaging
to
the Respondents' case. I find nothing in the record of this proceeding which
would support this allegation. Respondents have also suggested that several
of
these witnesses, particularly Dr. Mendez, colored their testimony in a manner
favorable to the Inspector General as a consequence of threatening statements
made to them by the Inspector General's agents. Again, there is no evidence
of
record that supports this allegation. The Inspector General's witnesses,
including Dr. Mendez, forcefully denied that their testimony was made under
threat or duress. I was especially impressed with Dr. Mendez' credibility. She
delivered her testimony with great clarity, and I note that the evidenced she
gave included revelations about the activities at the Respondents' clinics
which might be professionally embarrassing to her. Such admissions make her
testimony more credible.
Respondents have also asserted that several of the Inspector General's
witnesses, especially the three medical doctors, were biased against them. I
recognize that these doctors may bear some personal animosity towards
Respondents. But this animosity is understandable in light of the manner in
which Respondents misused these doctors' names and licensure for personal
gain. Given the events that occurred at Respondents' clinics it would be
incongruous for these doctors not to feel some ill-will toward Respondents.
I
conclude that these doctors' reactions to their employment by Respondents does
not detract from their credibility.
The evidence offered by the Inspector General as to the medical doctors'
activities was to a large extent buttressed by the testimony given by two of
Respondents' own witnesses, Herman Colby and Ralph James. Each of these
witnesses had been patients at Respondents' clinics. They both asserted that
their treatments had been rendered by chiropractors or by the clinics' lay
employees. Neither of these witnesses' treatments was rendered or supervised
by a medical doctor. They only saw or spoke with medical doctors if these
physicians happened to be passing through the treatment rooms. See Tr. 11/7,
at 105-129.
Other evidence offered by Respondents concerning medical doctors' activities
was simply not credible. They introduced the testimony of several witnesses
including Dr. Mayers and several employees concerning the extent of the
medical doctors' involvement in the treatment of patients. The gist of this
testimony was that the medical doctors made "rounds" of the therapy
areas
several times daily during which they observed and supervised clinic
activities. [FN6] According to Dr. Mayers it was his policy that a medical
doctor at least "see" each patient each time that patient visited
the clinics.
[FN7] The implausibility of this testimony is obvious. Each of Respondents'
clinics treated as many as 200 patients per day. Given the level of activity
at these clinics, the medical doctors could not have given more than cursory
attention to any of the patients even if they did make "rounds". Moreover,
the
testimony is squarely contradicted by the testimony of Respondents' patient-
witnesses.
Dr. Mayers made other assertions which I conclude are not credible. For
example, Dr. Mayers testified that all of the tests performed at his clinics
were ordered by medical doctors. Tr. 11/5 at 177, 181. This statement is
contrary to the great weight of the evidence, including the testimony of Drs.
Bernal, Russo and Mendez, that such tests were not ordered by medical doctors,
but were routinely made of every patient as part of the standardized tests and
therapies developed by Dr. Mayers. [FN8] It is, furthermore, contradicted by
Dr. Mayers' admission that the medical doctors' employment had minimal effect
on the daily operations of the clinics. Tr. 11/5 at 65. Dr. Mayers also
asserted that the medical doctors ordered x-rays using standard nomenclature
for these tests ("Series I, Series II and Series III"). Tr. 11/5 at
34-35.
According to Dr. Mayers, one of the medical doctors, Dr. Bernal, actually
assisted him in determining what x-ray views would comprise "Series I"
x-rays.
Id. These statements are contradicted by the testimony of the medical doctors,
including Dr. Bernal, who stated unequivocally that they had never used the
"Series" terminology to order x-rays and did not know what the "Series"
terminology meant. Tr. 10/30 at 165; 10/31 at 40, 139. Dr. Mayers' testimony
is also contradicted by evidence showing that the "Series" terminology
and in
particular, the term "Series I" was invented after Dr. Bernal had
left
Respondents' employment. Tr. 11/2 at 26.
3) There exist no mitigating factors.
Respondents have argued that I should conclude that there exist mitigating
factors in this case. They assert that the charged items or services
constitute only a tiny portion of Respondents' otherwise legitimate business
activities. They assert that no harm resulted from the false claims inasmuch
as the items or services were actually "provided," were provided in
conformity
with State laws concerning the provision of chiropractic services, and were
not harmful to the patients. They assert that to the extent they made false
claims it was in large measure due to their reliance on misleading information
provided by Medicare or the Part B Carrier.
The requirement that mitigating factors be considered in determining an
appropriate penalty, assessment and suspension is enumerated in 45 C.F. R.
sec. 101.106. Respondents bear the burden of establishing by a preponderance
of the evidence that substantial mitigating factors exist. 45 C.F.R. sec.
101.114(d). The mitigating factors argued by Respondents essentially fall into
the categories of potentially mitigating factors listed in 45 C.F.R. secs.
101.106(b)(1), (2), (4) and (5). I have considered each of them carefully, and
I conclude that Respondents have failed to establish by a preponderance of the
evidence that any substantial mitigating factors exist in this case.
Respondents' argument that the charged items or services constitute but a
small portion of their overall business would not be a mitigating factor, even
if correct. As noted supra, there were a great many false claims filed by
Respondents requesting a substantial sum, over an extended period of time.
Moreover, I am satisfied that a high percentage of claims Respondents filed
with the Part B Carrier between mid-1982 and early 1984 were not legitimate.
Indeed, it is the overall pattern of false Medicare claims filed by
Respondents which comprises a major aggravating factor in this case.
Respondents' "absence of harm" assertion is irrelevant, and also largely
untrue. The test for violation of Section 1128A of the Act is whether items
or
services were falsely claimed. An item or service can be "provided"
in
conformity with State laws and be beneficial to patients, and can still be
falsely claimed because it is nevertheless not properly reimbursable by
Medicare. Of course, if an item or service is not "provided" and a
claim is
made for reimbursement, that claim is also a false claim. The Act does not
distinguish between the former type of false claim and the latter. Therefore,
Respondents' argument fails. It should also be noted that I have found that
many of the items or services at issue were in fact never provided by
Respondents.
Respondents' assertion that they were misled into believing that their
billing practices were proper has been previously dealt with in this decision.
I have found this assertion to be without merit. The record establishes that
Respondents had in their possession materials which explicitly stated Medicare
reimbursement requirements. There exists no evidence that Respondents were
misled into believing that their claims were proper. To the contrary,
Respondents chose to disregard an explicit warning from the Part B Carrier to
cease engaging in improper billing practices. See Finding 30(a).
4) The assessment, penalty and suspension are supported by the record of
this proceeding.
The Inspector General has requested that I order a combined assessment and
penalty against Respondents in the amount of $2,900,000. The Inspector General
has also requested that I order that Respondents be suspended from the
Medicare and Medicaid programs for 25 years. I conclude that, based on
applicable law and the evidence of record, Respondents shall be assessed
$291,100, the maximum assessment permitted by law. Respondents shall be
penalized $1,500,000. They are each ordered suspended from participation in
the Medicare and Medicaid programs for 25 years.
The purpose of the statutory assessment provision contained in 42 U.S. C.
1320a-7a is established both by the language of the statute and regulations
and by Comments to the regulations. Essentially, the assessment provisions are
intended to enable the United States to recover the damages resulting from
false claims, including the reimbursement actually paid and the costs of
investigating and prosecuting the unlawful conduct. The statute provides at
42
U.S.C. sec. 1320a-7a(a), that the assessment is "in lieu of damages sustained
by the United States...because of such (false) claims." The Comments reiterate
that the assessment provision enables the United States to recoup damages
without having to assume the difficult burden of establishing actual damages.
48 Fed. Reg. 38 831 (Aug. 26, 1983).
The penalty provision is intended to serve as a deterrent to future unlawful
conduct by a particular respondent or by other participants in the Medicare
or
Medicaid programs. In its report on the bill which was eventually passed and
codified as 42 U.S.C. sec. 1320a-7a, the House Ways and Means Committee noted
that criminal penalties had not effectively deterred fraudulent practices
under the Medicare and Medicaid programs. It found that "civil money penalty
proceedings are necessary for the effective prevention of abuses in the
medicare and medicaid programs...." H.R. Rep. No. 97-158, 97th Cong., 1st
Sess. Vol. III, 327, 329.
45 C.F.R sec. 101.107 requires the same criteria used in determining the
assessment and penalty be considered in determining the length of any
suspension imposed. The Comments to the regulations provide that the factors
used in establishing the assessment and penalty, including the presence of
aggravating and mitigating factors, apply to the question of suspension. As
with the penalty, the purpose of the suspension is to deter would-be
violators. 48 Fed. Reg. 38832 (Aug. 26, 1983).
This is a case in which there exist many aggravating factors. The charged
items or services are the product of a scheme by Respondents to unlawfully
obtain Medicare reimbursement. They represented only the tip of the iceberg;
many of the claims for items or services filed by Respondents between mid-1982
and early 1984, were false. Moreover, Respondents, by their efforts to deceive
the Inspector General's investigators have demonstrated not only a high degree
of culpability, but contempt for the law and those who would enforce it.
The evidence in this case establishes that there exists a need to assure
that others who might be encouraged by Respondents' success in extracting
monies from the Part B Carrier be forcefully warned against such activities.
The record demonstrates just how vulnerable the Carrier is to unscrupulous or
larcenous providers. As was attested to by Ms. Morgan-Lucidi, the Carrier's
representative, the Carrier is responsible for processing and paying a huge
volume of claims. It is not practicable to audit every claim as it is filed;
rather, the Carrier must depend on spot checks and random audits to police its
claims. Above all, it depends on the good faith and honesty of providers of
services who submit claims. [FN9] The Carrier, and hence, the Medicare
program, is easy prey for persons who use fraud and chicanery to unlawfully
extort funds from the Medicare program. Consequently, a strong deterrent is
required.
A maximum assessment is easily justified, both by the presence of
substantial aggravating factors and by the obvious substantial expense to the
Government of investigating and prosecuting this case. Hearing alone required
approximately ten days in two locations (Tampa and Fort Myers, Florida) sited
far from the Inspector General's offices in Washington, D.C. Hearing costs
included the costs of transporting and lodging government personnel and
witnesses, and the costs of providing a transcript exceeding 2,000 pages.
Costs also included the salaries of the many Federal employees who were
involved with the case for the time required for its completion.
Given the presence of the many aggravating factors, the absence of
mitigating factors, and the guidelines set forth in 45 C.F.R. sec. 101.106,
a
penalty approaching the maximum allowed by law ($5,404,000) is arguably in
order. However, I have determined that a penalty of $1,500,000 is appropriate,
because a penalty in that amount, when coupled with the assessment, is
sufficient to strongly deter both Respondents and other would-be wrongdoers
from committing the kinds of unlawful practices that the Respondents engaged
in. The aggregate penalty and assessment, $1,791,100, is a very large sum.
Adding additional penalties to this amount would not necessarily cause these
Respondents or other persons to think any harder about the consequences of
their actions than would the amounts imposed. [FN10] The penalty, assessment
and suspension imposed in this case should send a message to all persons who
participate in the Medicare and Medicaid programs not to engage in the conduct
engaged in by Respondents.
I have considered evidence concerning Respondents' financial condition in
determining the amount of the assessment and penalty. As noted supra, the
statute, as well as 45 C.F.R. sec. 101.106(b)(4), require that I consider
Respondents' financial condition as an aspect of determining the assessment
and penalty. 45 C.F.R. sec. 101.106(b)(4) further provides that it should be
a
mitigating circumstance if "imposition of the penalty or assessment without
reduction will jeopardize the ability of the respondent to continue as a
health care provider." The burden of proof of financial hardship, as with
other mitigating factors, is on Respondents. See 45 C.F.R. sec. 101.114(d).
Respondents did introduce evidence, in the form of financial statements and
the testimony of respondent Patricia Mayers, which was intended to show that
Respondents were unable to pay a substantial assessment and penalty. Having
reviewed this evidence carefully, I conclude that it is of little probative
value. The evidence consists largely of financial statements which were
neither certified as being accurate nor complete. Moreover, the record shows
that on the eve of the commencement of this proceeding, in an apparent effort
to shield their assets from attack by creditors, Respondents attempted to
transfer many of their possessions to third parties or place them into a
trust. Respondents have simply failed to draw an accurate picture of their
present financial status. Certainly, they have not established that their
financial condition constitutes a basis for reducing the penalty and
assessment beyond that which I have determined to be appropriate.
The regulatory language concerning the effect of the penalty and assessment
on the ability of a respondent to continue as a health care provider must be
construed in the context of the suspension that is imposed. In cases such as
this one, where a lengthy suspension is ordered, Respondents' financial
capacity to continue as a provider of services is of little or no consequence.
In this case, a 25 year suspension is appropriate. I have found that
Respondents have engaged in blatantly unlawful conduct. Their activities
constitute systematic looting of the Medicare trust fund. It must be made
clear to these Respondents as well as to other health care providers that
persons who engage in such activities will forfeit the privilege of
participating in the Medicare and Medicaid programs.
Respondents have made three arguments against imposition of a lengthy
suspension. First, they assert the same allegedly mitigating factors which
have been considered and rejected elsewhere in this decision. Second, they
argue that the regulations sections which establish suspension criteria give
the Secretary "unbridled discretion" to impose suspensions in contrast
to
other regulations which enumerate specific suspension criteria for persons
found to violate provisions of the Medicare law other than section 1128A. From
this assumption, they seem to argue that the criteria contained in 45 C.F.R.
secs. 101.106 and 101.107 are either too vague, or should in any case not
permit lengthier suspensions than those provided pursuant to other statutes
and regulations. This argument is without merit. The regulatory criteria
promulgated in 45 C.F.R. secs. 101. 106 and 101.107 do not provide specific
suspensions for specific acts, but they do set forth adequate guidelines. The
regulatory language comports with statutory language which does not establish
specific suspensions. Congress clearly intended that the length of any
suspension be governed by the presence of mitigating and aggravating factors.
It also conferred on the Secretary the authority to impose suspensions
commensurate with the need to deter future unlawful conduct.
Finally, Respondents note that in the one other case decided to date
pursuant to section 1128A, In the Matter of Harold Chapman and Autumn Manor,
Inc., GAB Docket C-5, March 8, 1985, no suspension was imposed. While this may
be true, the Chapman decision does not derogate from my duty to decide this
case based on the evidence and the appropriate statutory and regulatory
criteria. In this case, the evidence demands that a lengthy suspension be
imposed. [FN11]
5) Respondents received a fair hearing.
Respondents have charged that they were not afforded due process in the
conduct of the hearing of this case. Their assertions are that: (1) I
improperly excluded evidence from the record, or unfairly restricted
Respondents from attacking evidence offered by the Inspector General; and (2)
that I exceeded the ambit of my authority as trier of fact by extensively
questioning certain witnesses. These allegations are baseless. Both sides were
afforded substantial leeway, both with respect to offering evidence and
attacking the probative value of evidence offered by their opponents. I
frequently allowed the parties to introduce testimony and documents despite
my
stated reservations concerning the relevance of these items. Respondents were
afforded greater freedom to present their case than they would have had had
the proceeding been conducted pursuant to the Federal Rules of Evidence. Any
questioning of witnesses by me was intended to clarify the record and was
conducted pursuant to the authority granted the administrative law judge by
45
C.F.R. sec 115(b)(8).
ORDER
Based on the evidence of record and the appropriate law and regulations, I
order that an assessment of $291,100 and a penalty of $1,500,000 be imposed.
The Respondents are hereby ordered to pay this amount. Each of the Respondents
is liable for the entire amount or such part of it as is directed by the
Inspector General; except that the Inspector General may not collect more than
$1,791,100.
It is further ordered that each of the Respondents be suspended from
participating in the Medicare and Medicaid programs for a period of 25 years.
Steven T. Kessel
FN1. In their response to the Deputy Inspector General's May 3, 1984 letter
and in a motion seeking partial summary judgment, dismissal of administrative
penalties and other appropriate relief dated April 9, 1985, Respondents assert
that Section 1128A is a "penal statute" and that they are therefore
entitled
to a trial in United States District Court. This argument effectively
challenges the validity of the statute and regulations providing for a hearing
before an administrative law judge. I do not have authority to decide this
issue. 45 CFR sec. 101.115(c). Respondents have also moved that this
proceeding should be dismissed because the Inspector General has not
established that the proceeding is authorized pursuant to 42 U.S.C. sec. 1320a
7A(b)(1). The Inspector General has supplied proof of authorization.
Consequently, Respondents' motion is denied in its entirety.
FN2. Citations to the transcript and exhibits are in the following form:
Transcript Tr (date) at (page) Respondent's Exhibit R Ex. (exhibit number)
Inspector General Exhibit IG Ex. (exhibit number) Joint Exhibit J Ex. (exhibit
number)
FN3. Dr. Mayers testified that he first learned of Medicare's reimbursement
requirements in February 1984. Tr. 11/5 at 192. He admitted, however, that he
had personally signed "many, many, many" Medicare claims forms between
1980
and February 1984. Id. He testified that he had "never bothered to read"
the
certification language contained on the back of the form. Id. He explained
this lapse by stating: "I didn't scrutinize every part of the claim form.
The
claim form was put in front of me and I signed it. I didn't turn it over and
read all of the ramifications of it." Tr. 11/5 at 1984.
FN4. This pattern of unlawful conduct has not been charged by the Inspector
General as violations of sec. 1128A, although clearly it could have been. It
is relevant as an aggravating factor, and my decision to impose an assessment,
penalty and suspension is in part based on this and other aggravating factors
which I have identified.
FN5. Dr. Mayers conceded that the employment of medical doctors had very
little impact on the day-to-day operations of his clinics. He testified that:
"When we brought medical physicians on the staff very little changed in
the
way we would take care of the patients other than the additions that the
medical doctors wanted." Tr. 11/5 at 65. Dr. Mayers acknowledged that such
additional services were very rare. Id.
FN6. This testimony included that of Elizabeth Meyerrose, who was an employee
of Respondents on the dates the hearing was held in October-November 1984. Ms.
Meyerrose' subsequently offered to recant her testimony, and did so at a
supplemental hearing held on January 29, 1985. Due to the obviously
conflicting evidence given by this witness, I have elected not to base any of
my findings or conclusions on Ms. Meyerrose' testimony. However, I would note
that Ms. Meyerrose' original testimony on Respondents' behalf was not credible
and even had she not subsequently recanted this testimony I would have
concluded that it did not support Respondents' assertions concerning the
medical doctors' roles at the clinics.
FN7. Dr. Mayers' explanation of what was meant by medical doctors "seeing"
patients was "that the medical doctor would come by and say a few words
to
them and observe them, ask them whatever questions they wanted to ask or let
the patients ask the doctor whatever questions they wanted to ask." Tr.
11/5
at 247. The record does not establish that doctor-patient communications
regularly occurred even on this level, but had such meetings taken place, they
would not have constituted either rendering or supervising of performance of
items or services.
FN8. Dr. Mayers admitted that he knew that Medicare would not reimburse for
a
test read by an unlicensed medical doctor or a chiropractor. He admitted
billing for such tests under the names of licensed medical doctors. Tr. 11/5
at 187.
FN9. The need for provider honesty is made even more acute by the Carrier's
use of electronic data processing equipment and computers to transmit and
process reimbursement claims. Under these circumstances the Carrier functions
almost like an electronic bank teller, and it is utterly dependent on
providers to honestly represent their services. When a provider of services
files a reimbursement claim with the Carrier via a computer terminal, the
claim is not normally reviewed by any individual. Rather, it is automatically
processed and the provider is reimbursed based on the representations he has
made. Tr. 10/30 at 8-9.
FN10. At oral argument, the Inspector General stated that the proposed penalty
and assessment was calculated based on internal guidelines which directed an
aggregate penalty and assessment of $20 for each dollar falsely claimed. Thus,
the Inspector General's proposed penalty and assessment of $2,900,000 is
approximately the product of $145,550 x 20. These guidelines are not
regulatory guidelines and are not binding on me. By imposing a penalty of
$1,500,000 in this case I am not suggesting that penalties based on the
Inspector General's formula are inappropriate in every case; rather I am
concluding that the penalty I have elected to impose is an effective
deterrent.
FN11. One fact which distinguishes Chapman from this case is that Respondent
in Chapman voluntarily divested himself of ownership or operation of the
nursing homes from which false claims emanated. Divestiture was a condition
of
sentencing in a criminal case which was based on essentially the same facts
as
the false claims administrative proceeding.
END OF DOCUMENT