George A. Kern, M.D., DAB CR12 (1987)

Department of Health and Human Services (H.H.S.)
Departmental Appeals Board

Civil Money Penalty

THE INSPECTOR GENERAL
v.
GEORGE A. KERN, M.D., RESPONDENT
Docket No. C-25
Decision No. CR12
August 26, 1987

DECISION

In this case, the Inspector General (I.G.) of the United States Department
of Health and Human Services (DHHS) issued a Notice of Determination (Notice)
informing George A. Kern, M.D. (the Respondent). that the I.G. sought a
penalty of $215.000. an assessment of $15,510, and a ten year suspension of
the Respondent from participating as a medical provider in the Medicare and
Medicaid programs. In the Notice, the I.G. alleged that the Respondent had
violated the Civil Monetary penalties Law (CMPL) and its implementing
regulations (Regulations) by presenting false or improper claims for Medicare
payment. [FN1] [FN2] The I.G. alleged that the medical services listed by the
Respondent as having been performed at the Iowa Methodist Medical Center
(IMMC), during the period from September 15, 1981 through December 16, 1983,
were not provided to the Medicare beneficiaries as claimed.
The Respondent filed a timely answer denying the I.G.'s allegations,
challenging the proposed sanctions, and requesting a hearing before an
Administrative Law Judge (ALJ).

JURISDICTIONAL AND PROCEDURAL BACKGROUND

The Respondent, Dr. Kern, practiced general medicine in Des Moines, Iowa,
from 1954 until he surrendered his license on December 24, 1985. TR IV/1019 to
1022. Dr. Kern participated as a medical provider in the Medicare program from
its inception in 1966 to 1985. Stip/8, 9. During the period at issue, the
Respondent had medical staff privileges as a general practitioner (GP) at IMMC
and admitted patients there. Stip/11.
The I.G.'s Notice in this case was issued on March 27, 1986. In the Notice,
the I.G. alleged that 330 line items for medical services claimed by the
Respondent in 69 Medicare claims were false or improper because the respondent
"knew" or "had reason to know" that these services were "not provided as
claimed." Specifically. the I.G. alleged that the Respondent presented or
caused to be presented claims and received Medicare payments for (1) hospital
admissions (admits) to the IMMC which he did not provide "as claimed," and (2)
hospital visits (visits) to Medicare beneficiaries at the IMMC which he did
not provide "as claimed." The Respondent's answer and request for a hearing,
received June 9, 1986, refuted the I.G.'s allegations and asserted that the
Respondent did provide the Medicare services as claimed.
At the prehearing conference on August 6, 1986 in Washington. D.C., the I.G.
withdrew 10 of the 330 services at issue, reducing the services at issue to
320. The services which were withdrawn (listed in the schedule attached to the
I.G.'s Notice) are Nos. 50, 51, 52, 102, 113, 114, 115, 116, 117, and 321.
A formal evidentiary trial-type hearing was held in Des Moines, Iowa, from
October 27 through October 31, 1986 and from November 5 through November 6,
1986. Twelve witnesses testified on behalf of the I.G., and eight witnesses
testified on behalf of the Respondent. Subsequent to the hearing, the I.G.
withdrew six more services at issue (Nos. 137, 138, 184, 186. 187, 188) and at
the hearing the I.G. withdrew one more service at issue (No. 214), reducing
the total number of services at issue to 313. See, TR III/737. The I.G.
modified the proposed penalty to $203,925.00 and the proposed assessment to
$14,870.00.
The I.G. and the Respondent presented post-hearing briefs, findings of fact
and conclusions of law, and reply briefs. Also, in light of the Deputy Under
Secretary's April 27, 1987 opinion in the case of The Inspector General v.
Frank P. Silver, M.D., Docket No. C-19, OHCMP/DGAB (Opinion), I requested that
the parties file an additional brief. The I.G. filed a brief, as requested.
but the Respondent's attorney, after being granted a requested extension of
time, failed to do so.
In both the Notice and in the heading of the attached schedule to the Notice
(schedule), the I.G. identified the period during which the claims were
submitted as ending on December 16, 1983. Nevertheless, two of the claims,
listing three services at issue in the schedule, are dated January 6, 1984
(schedule Nos. 70, 71, 72; See I.G. Ex 10A, 11A). Another claim in the
schedule showed the amount billed by Respondent as $20. In fact, the amount
actually billed was $45. See, I.G. 4A (schedule No. 5). Accordingly, these
claims, listing four (4) services, are stricken for lack of notice. Thus, 53
claims and 309 services remain at issue.

THE GOVERNING LAW AND REGULATIONS

I. General Provisions of the Civil Monetary Penalties Law and Regulations
Section 1320a-7a of the CMPL (section 1128A of the Act) grants authority for
the I.G. to issue a Notice to impose civil money penalties and assessments
against a medical provider who the I.G. determines: (1) has presented or
caused to be presented false or improper claims for payment under the
Medicare, Medicaid, or the Maternal and Child Health Services Block Grant
programs; or (2) has presented or caused to be presented a request for payment
to a Medicaid recipient or Medicare beneficiary in violation of the terms of a
respondent's Medicaid or Medicare provider agreement. See, Regulations section
1003.102. [FN3] Once a respondent is subject to a penalty or an assessment,
section 1320a-7(c) of the CMPL (section 1128(c) of the Act) grants authority
for the I.G. to include a proposal to suspend the medical provider from
participation in the above named public assistance programs. See, Regulations
sections 1003.105, 1003.107.
The intended purpose of imposing a civil money penalty is to deter persons
from presenting false or improper Medicare or Medicaid claims (or from making
requests for payments to Medicaid recipients in violation of a provider
agreement); the purpose of imposing an assessment is to make the government
whole for its costs and any damages resulting from such improper acts; the
purpose of a suspension is to protect program integrity. See, H.R. Rep. No.
97- 158. 97th Cong., 1st Sess. Vol III, 329; 344 (1981); S. Rep. No. 139, 97th
Cong., 1st Sess. 461-62 (1981), 1981 U.S. Code Cong. Ad. News 727-28; Preamble
to the Regulations (48 Fed. Reg. 38 827 to 38836, August 26, 1983).
The Regulations implement the provisions of the CMPL, delegate authority
from the Secretary to the I.G. to make determinations regarding civil monetary
penalties, and provide a respondent the right to a hearing before an ALJ.
The I.G. has the burden of producing and proving by a preponderance of the
evidence (1) liability under the CMPL and Regulations, and (2) aggravating
circumstances. A respondent has the burden of producing and proving by a
preponderance of the evidence any mitigating circumstances that would justify
reducing the amount of the penalty, assessment, and suspension. Regulations
section 1003.114.
The CMPL and Regulations provide for a civil money penalty of "not more than
$2,000" for each improper item or service listed on each improper claim. The
amount of the assessment is not to be more than twice the amount claimed.
Regulations section 1003.103. There is no much limit on the length of a
suspension.
The Regulations require that a full and fair trial-type hearing be conducted
by an ALJ. Regulations section 1003.115. Within 60 days of an ALJ's decision
and order, either party may seek review by the Secretary of DHHS. Judicial
review may also be sought. Regulations sections 1003.125, 1003.127. Judicial
review of penalties and assessments is in the appropriate United States Court
of Appeals, and judicial review of a suspension is in the appropriate United
States District Court.

II. Liability Under the CMPL and Regulations

To establish liability by a preponderance of the evidence adduced during the
proceedings in a case, the I.G. must prove each of the requisite elements of
liability set forth in the CMPL and Regulations for each "item or service"
listed on each "claim" that the I.G. alleges to be improper. See, CMPL section
1320a-7a; Regulations sections 1003.102, 1003.114( a). [FN4] [FN5]
To establish liability in this type of case, the CMPL and Regulations
require the I.G. to prove that: (1) the Respondent (a "person") (2) "presented
or caused to be presented" (3) the "claims" at issue (4) to the Medicare or
Medicaid programs ("agency") (5) for medical "items or services" when, in
fact, (6) reimbursable medical services were "not provided as claimed," and
(7) the Respondent "knew or had reason to know" that the services were not
provided as claimed. CMPL section 1320 a-7a(1) (A); Regulations section
1003.102 (a) (1). See, Scott, at pages 26 to 28.

III. Application of the "Knew or Had Reason to Know" Standard of Liability
Under the CMPL and Regulations

The elements of liability set forth in the CMPL and Regulations are
straightforward and need little interpretation, with the exception of the
element of scienter -- the most difficult element to apply. I have held in
prior decisions that the element of scienter, which requires a medical
provider to "know" or have "reason to know" that claims presented were not
provided as claimed, is not the same as "intent to defraud." See, The
Inspector General v. Jimmy Paul Scott, OHCMP/DGAB, at p. 26. [FN6] Proof of
actual knowledge or proof that a respondent had "reason to know" is all that
the CMPL and Regulations require for liability to attach. In the Scott
Decision, I found that Congress in using the term "knows" and the drafters of
the Regulations in using the term "knew" were referring to conscious knowledge
of a fact (or subjective knowledge). [FN7] As I also stated in Scott, in
analyzing the term "reason to know," the Restatement of Torts (2d) (at section
12) (1965) states:
"Reason to know" means that the actor has knowledge of facts from which a
reasonable man of ordinary intelligence or one of the superior intelligence of
the actor would either infer the existence of the fact in question or would
regard its existence as so highly probable that his conduct would be
predicated upon the assumption that the fact did exist.
Thus, the "reason to know" standard employs the "reasonable person"
(objective knowledge) concept. See also, Restatement of Agency (2d), section
9, comments (d) and (e) (1957). In discussing objective knowledge, Professor
Keeton, in Keeton and Prosser on Torts, (Fifth Ed. 1984), states at page 182
that one of the most difficult questions (in connection with negligence) "is
that of what the actor may be required to know." [FN8]
In Fidler v. Eastman Kodak Co., 555 F. Sup,,p. 87, 92 (D. Mass. 1982), the
term "reason to know" was analyzed. The Court cited the Restatement of Torts
(2d) and stated that:
Alternatively, the actor would regard the existence of the particular fact
in question as so legally probable that he would base his conduct upon the
assumption that the fact existed.

The Court then concluded:

Mrs. Fidler was in possession of information from which a reasonable person
would have inferred the fact of causation. Accordingly, her conduct should
have been governed by the assumption that such fact of causation existed.
Therefore, she had reason to know the cause of her physical damage, and cannot
be excused for her failure to file suit in a timely fashion.
The "reason to know" standard attaches where: (1) a respondent has
sufficient information to place him, as a reasonable medical provider, on
notice that the claims presented were for services not provided as claimed; or
(2) a respondent has an obligation to investigate and find out whether certain
services are billable under the Medicare or Medicaid programs (such as a duty
which would require a respondent to verify the truth, accuracy, and
completeness of claims presented). See, Scott, pp. 25 to 30. Thus, where the
Respondent in this case acted negligently in light of information that came to
his attention, or purposely ignored Medicare rules and regulations of which he
had notice, or ignored pre-existing requirements or duties (such as a Medicare
requirement to examine the claims at issue before they were presented to
Medicare), he is liable under the CMPL for the false or improper claims filed.
In analyzing the breadth and scope of the phrase "knows or has reason to
know," I am guided by the preamble to the Regulations, which declares: "The
statute sweeps within its ambit not only the knowing, but the negligent. . .
." 48 Fed. Reg. 38827, 38831 (Aug. 26, 1983). From this, and from analyzing
the CMPL and Regulations, I have concluded that the phrase "knows or has
reason to know" encompasses a spectrum where liability attaches on one end
when a respondent files false claims with actual knowledge and on the other
end where a respondent files false or improper claims in a negligent manner.
See, Scott, supra.
To determine whether a respondent acted negligently for purposes of
liability under the CMPL and Regulations, the reasonable person standard is
used. In applying the reasonable person standard, a respondent's actions
should be considered in relation to a person of "ordinary" intelligence,
taking into account "the superior intelligence" of a particular respondent.
See, Restatement of Torts (2d), section 12. In other words, a respondent
should be judged in terms of his degree of education, skill, and experience. A
respondent should also be judged in terms of his relation to others, such as
his Medicare patients and the Medicare program itself; he should be judged as
a reasonable medical provider.
Under the "reason to know" standard of liability, there are at least two
situations where a negligent medical provider would be found liable for
submitting false or improper claims. The first is where sufficient information
came to a medical provider's attention to spring into existence a duty to
investigate the accuracy of the claims. See, Silver Opinion, p. 2. The second
situation is where "pre-existing duties" are ignored by a medical provider.
Pre-existing duties vitiate the need for "independent proof" in causing the
duty to investigate "to spring into existence." See, Opinion, p. 39, n. 15.
[FN9] On this point, Keeton and Prosser on Torts, supra, at p. 185, states:
"he may, furthermore, be engaged in an activity, or stand in relation to
others, which imposes upon him an obligation to investigate and find out so
that the person becomes liable not so much for being ignorant as for remaining
ignorant; and this obligation may require a person to know at least enough to
conduct an intelligent inquiry as to what he does not know." (Emphasis added.)
In other words, voluntary ignorance is equivalent to negligence. Gobrecht v.
Beckweth, 82 N.H. 415, 420, 135 A 20, 22 (1926). A medical provider cannot be
allowed to reap the benefits of the Medicare program while purposely remaining
ignorant of its rules and requirements.
Once it has been determined that a medical provider did not act as a
reasonable medical provider, a judgment must be made as to what the results
would have been if he had investigated, had not ignored pre-existing duties,
or had conducted an intelligent inquiry as to what he did not know.

THE MEDICARE PROGRAM IN IOWA

I. Background

Medicare is a federally administered program of Health Insurance for
individuals who are age 65 or older or disabled. See, Title XVIII of the Act
(42 U.S.C., section 1395, et seq.). Part B, which is involved in this case,
provides a voluntary subscription program of supplementary medical insurance
generally covering 80% of the reasonable charges for physician services, x-
rays, laboratory tests, and medical supplies. 42 U.S.C. sections 1395k, 1395r,
and 1395x(s). [FN10] Benefits under Part B are financed from the Federal
Supplementary Medical Insurance Trust Fund (funded by appropriations from the
Treasury and by premiums paid by individuals who choose to enroll in the Part
B program). 42 U.S.C. sections 1395j, 1395r, 1395s, 1395t(a), 1395t(g), and
1395w. See, generally, Schweiker v. McClure, 456 U.S. 188, 189-190 (1982).

II. The Medicare Carrier in Iowa

To assist in the administration of the Part B program, Congress authorized
the Secretary of DHHS to contract with entities known as carriers. 42 U.S.C.
section 1395u(f); 42 C.F.R. section 400.202. Carriers perform a variety of
functions for the Secretary, such as establishing rules and regulations for
the submission of Medicare claims, determining the rates and amounts of
payment for covered services, disseminating information regarding Medicare
rules and regulations, and processing and paying claims. 42 U.S.C. section
1395u. Blue Shield of Iowa (BSI) was the Medicare carrier for DHHS in Iowa at
all times relevant to this action. Stip/7. [FN11] In that capacity, BSI
disseminated information about how to properly file claims and processed and
paid claims submitted by Iowa medical providers for items or services that the
providers stated were rendered to Medicare beneficiaries.

III. Dissemination of Medicare Notices and Information to Providers

The carrier, BSI, provided physicians and others who filed Medicare claims
with a variety of informational sources concerning Medicare requirements for
the submission of proper claims. These BSI requirements implemented rules,
policies, regulations, and statutory provisions. The Medical Assistant's
Manual (Medicare Manual) was made available to all physicians who had
"provider numbers;" during the period in question, the Medicare Manuals were
BSI's method of informing providers about the legal and correct way to bill.
TR I/143. Also, changes and new developments in the use of procedure codes for
billing purposes and any other Medicare policy modifications were distributed
by BSI to all providers by way of updates to the Medicare Manual and by way of
newsletters. TR I/172. Everyone who had a provider number received a copy.
See, I.G. Ex 64A, B, and C; TR I/137 to 138, 155. BSI's newsletter was called
the "Medicare Bulletin" in 1980 and "Medicare B On Record" in 1981. I.G. Ex
64A; TR I/138. To supplement the written information, in-service training was
available for billing clerks and providers. TR I/159-160. Also, telephone
lines were available for billing questions and problems. TR I/176.

IV. The Medicare Claim Forms and Procedure Codes

A. The Medicare Claim Forms

The claim forms that BSI has used since 1980 are known as the "HCFA 1490"
and the "HCFA 1500". See, I.G. Ex 86A, 86B. All but one of the claims at issue
in this case were submitted on one of these two types of forms. By signing the
HCFA 1490 or 1500 form, the medical provider certifies that the services for
which reimbursement was sought were medically necessary for the patient's
health and were personally rendered either by the medical provider or under
the provider's personal direction. I.G. Ex 86A and 86B; TR I/132, 169. The
HCFA 1500 form also contains a notice regarding the truth, accuracy, and
completeness of the claim. The Respondent provided a HCFA 1500 certification
on fifty of the claims at issue involving 295 of the 309 services at issue.
See, FFCL. [FN12] Both claim forms state that anyone who misrepresents or
falsifies essential information to receive payment from Federal funds claimed
may be subject to sanctions under applicable Federal laws.

B. The Relevant Procedure Codes

In order to identify the services claimed, Medicare providers were required
to define the services through the use of procedure codes designated by BSI.
Until mid-1983, BSI used the Iowa Relative Value Index Codes (IRVIC). BSI then
began using the current procedural terminology (CPT) codes, found in the
American Medical Association's CPT-4 book, in conjunction with the Health Care
Financing Administration (HCFA) Codes. (HCFA is the administration in DHHS
which administers the Medicare program. TR I/135-136.)
During the period at issue, physicians received instructions from BSI
regarding procedure coding. The instructions included specific descriptions of
what codes to use for what services and the requirements to be followed to
document the services performed. TR I/ 136; I.G. Ex 64A, 64B/46. The procedure
code for an admit was 9020 (until mid-1983, when CPT code 90220 was adopted).
TR I/142. The procedure code for a routine visit was 9024 (until mid-1983 when
CPT code 90250 was adopted). TR I/142.

V. The Pertinent Medicare Rules and Requirements

A. Medical Necessity

The Medicare rules and requirements authorize reimbursement of federal funds
to medical providers for "medical and other health services" rendered to
eligible Medicare beneficiaries. 42 U.S.C. section 13 95k (a) (1). A
physician's services are not reimbursable unless they are "reasonable and
necessary for the diagnosis or treatment of illness or injury. . . ." 42
U.S.C. section 1395y (a)(1)(A). BSI set forth these and other Medicare rules
and requirements in the Medicare Manual. The July, 1981 version of page 44 of
the Medicare Manual noted that: "Based upon medical necessity, Medicare Part B
will cover inpatient care." I.G. Ex 64B/4.

B. The Requirement that Medical Services Must Be Documented

In July, 1981, the carrier disseminated pages 28 and 29 of the Medicare
Manual. Those pages emphasized the need "for all physicians to have a good
medical record documentation . . . to show evidence that billed services were
in fact provided." I.G. Ex 64B/1. In May, 1982, page 28 was revised. The
revised version of page 28 read: "the burden of proof lies with the physician
that a service was provided as billed." In May, 1982, page 21 was also
revised. The revision read:
Example: if the physician billed for 7 days of hospital care, Medicare
would expect to see 7 days of physician orders or progress notes in the
hospital chart. Phone orders do not constitute documentation of physician
visits.
I.G. Ex 64C/1. There is credible testimony that it is a good medical
practice for a physician to document hospital records at least every third
day. TR I/68, 140, 198, 29; TR II/368 to 371, 390 to 391, 508 to 509. There is
also testimony from an I.G. investigator that a medical provider is sometimes
given the benefit of the doubt if there is not a progress note in a patient's
chart every day. TR III/719.

C. Substitute Physicians

As of July, 1981, page 44 of the Medicare Manual contained the following
provision:
If one physician "covers" for another physician (i.e., on a week-end or
vacation), the substitute doctor should bill Medicare for the services
provided. Do not include any visits of a substitute physician on your claim
for inpatient care.
This policy was restated in the Medicare Manual in May 1982. I.G. Ex 64C/7.

D. Concurrent Care

The Medicare policy on reimbursement for concurrent care (i.e., professional
services provided to a hospital patient by two or more physicians at the same
time ) was also described in May of 1982. Moreover, the 1982 manual noted that
coverage for "related concurrent care" (i.e., two or more physicians treating
a patient for the same condition) is very limited, and the requirements for
reimbursement are quite strict. I.G. Ex 64C/5.

E. Admits and Visits

Thirty-Eight (38) of the 309 services at issue in this case were submitted
by the Respondent as a "first hospital visit", using the procedure code for a
hospital admission (admit). Two hundred sixty-two (262) of the 309 services at
issue were submitted by the Respondent as a "hospital visit," using the
procedure code for a hospital visit (visit). [FN13]
The physician charge for an admit was $45 and the charge for a visit was
$20. TR I/140. To legitimately bill for an admit, the physician was required
to do a history and physical, initiate a diagnostic and treatment program, and
prepare the patient's hospital records. TR I/ 138; I.G. Ex 64A. To
legitimately. bill for a visit, the physician was required to see the patient,
perform a necessary medical service, and document the medical record with a
progress note or order. TR I/ 140; I.G. Ex 86A, 86B.

F. Warnings to Medicare providers

The May, 1982, the Medicare Manual specifically warned medical providers
that a post-payment utilization review would be performed concerning whether
services were actually performed and whether they were medically necessary.
I.G. Ex 64C/2. The providers were also warned about sanctions for improper
practices. I.G. Ex 64C/3.

ISSUES

The principal issues are:

A. Liability:
1. Whether the I.G. proved by a preponderance of the evidence that the
Respondent "knew" or "had reason to know" that the Medicare services at issue
were "not provided as claimed."
B. The Amount of the Penalty, Assessment, and the period of Suspension (if
Liability is Proven):
1. Whether the I.G. proved by a preponderance of the evidence the
aggravating circumstances alleged.
2. Whether the Respondent proved by a preponderance of the evidence any
circumstances that would justify reducing the amount of the penalty, the
assessment, or the period of suspension proposed by the I. G.
3. Whether the amount of the proposed penalty, the assessment, and the
suspension are appropriate under the circumstances of this case.

FINDINGS OF FACT AND CONCLUSIONS OF LAW [FN14]
[FN15]
Having considered the entire record, the arguments and submissions of the
parties, and being advised fully herein, I make the following Findings of Fact
and Conclusion of Law:
(1). For the purposes of this case, I have taken judicial notice of the
statutes of the United States, the regulations of the Secretary of DHHS, all
other pertinent regulations of the United States, the statutes of the State of
Iowa, the regulations of the Iowa Medicare Program, and all other pertinent
regulations of the State of Iowa as they existed at the time of the cause of
action.
(2). This case is governed by the CMPL and the Regulations. The Secretary
has delegated his authority to take action under the CMPL and the Regulations
to the I.G., and this authority has been redelegated to the Deputy Assistant
Inspector General for Civil Fraud. Stip/3-6.
(3). On March 27, 1986, Eileen Boyd. the Deputy Assistant I.G. for Civil
Fraud, issued a Notice of Determination (Notice) informing the Respondent that
the I.G. had determined that the Respondent should be subject to a penalty of
$215,000 and an assessment of $15,510. The Notice alleged that during the
period October 5, 1981 through December 16, 1983, the Respondent presented or
caused to be presented false or improperly filed claims for Medicare payment
for 330 medical services listed as being performed at the Iowa Methodist
Medical Center (IMMC), when, in fact, the Respondent "knew" or "had reason to
know" that these medical services "had not been provided as claimed," in
violation of the CMPL and Regulations. A true and correct copy of this Notice
and its attachment (Schedule) listing the 330 items or services is a part of
the record in this case.
(4). The I.G. subsequently modified the number of items or services at
issue from 330 to 313 and correspondingly reduced the proposed penalty to
$203,925 and the proposed assessment to $14,870. The I.G. dropped Schedule
Nos. 50-52, 102, 113-117, 137, 138, 184, 186-188, 214, and 321.
(5). In the Notice, the I.G. identified the covered period as ending
December 16, 1983. Two of the claims set out in the attachment, listing three
medical services, are dated January 6, 1984 (I.G. Ex 10A, 11A; Schedule Nos.
70-72). Also, in the attachment to the Notice, the I.G. listed the amount
billed as $20 for a claim by the Respondent for a service rendered to Donald
Atchison on August 23, 1982. Schedule No. 5. The Respondent actually billed
$45, for an admit. I.G. Ex 4A. In all other instances in this case, the
Respondent billed $20 only when he claimed for a routine hospital visit. These
four services are stricken for lack of notice and are not part of this case.
Accordingly, the number of claims at issue is reduced to 53 and the number of
services to 309.
(6). On June 20, 1986, the Respondent filed an answer to the Notice and a
request for a hearing before an ALJ, pursuant to section 1003.109(b) (2) of
the Regulations. A true and correct copy of this answer and the defenses
listed therein is a part of the record in this case.
(7). The Respondent was a practicing physician in Des Moines, Iowa, from
1954 until he turned in his license to the Iowa Board of Medical Examiners in
December, 1985. TR IV/1019. 1022. He testified that he turned in his license
to avoid a hearing by the Board on the issue of whether to suspend or revoke
his license. TR VI/1566-1567.
(8). The Respondent had medical staff privileges as a general practitioner
(GP) at the Iowa Methodist Medical Center (IMMC) in 1981, 1982, and 1983 and
admitted patients to the IMMC. Stip/11.
(9). For the period at issue, Blue Shield of Iowa (BSI) was the designated
Medicare fiscal agent, or carrier, for the State of Iowa. Stip/7. As such, BSI
was authorized to process claims filed by physicians and other medical
providers.
(10). The Respondent was enrolled as a medical provider in the Medicare
program on June 30, 1966 and participated from that time through January 6,
1984 using provider number 04071. Stip/8.
(11). The Respondent participated in the Medicaid program, administered by
the Iowa Department of Human Services (IDHS), in 1980, 1981, 1982 and 1983.
Stip/9. The Respondent was paid co-insurance and deductibles by IDHS. Stip/16.
(12). Since 1971, BSI has sent every Medicare provider a copy of the
manual (Medicare Manual) which included information on Medicare policy and on
how to submit claims. This Medicare Manual is in looseleaf form, for ease of
inserting material updating the Medicare policy, rules and regulations, and
billing information. TR I/156, 157, 161, 165, 170, 172, 175.
(13). The Respondent denied receiving the Medicare Manual. TR IV/1024,
1571.
(14). From time to time during the period at issue, BSI also sent
providers Medicare policy and billing information in looseleaf form, for
immediate insertion into the Medicare Manual, and in non-looseleaf bulletins
(Medicare Bulletins). TR I/165, 175; see, e.g., I.G. Ex 64A, 64B, 64C.
(15). BSI sent all physicians enrolled in the Medicare program the
Medicare Bulletins to inform them of Medicare policy. Two or three times a
year BSI also duplicated the Medicare Bulletins and sent them again to
providers to update the Medicare Manual. TR I/172, 175.
(16). The Respondent received the Medicare billing and policy information
in both the looseleaf and non-looseleaf updates. TR IV/ 1026; TR VI/1571;
Stip/14. The Respondent testified that he never read them and that either he
or his office staff threw away the updates, including those pertaining to
billing, procedure codes, and fees. TR IV/1028-1029, TR VII/1740-1741.
(17). The Respondent testified that his office staff kept the procedure
codes in a "teeny spiral-bound book" which they updated by "telephone contact
with Blue (Shield)." TR VII/1741.
(18). The Respondent also had a "Physician Manual" from BSI, but he
"didn't see anything of any real value...so it just didn't get used," even
though the Physician Manual had a section on submission of Medicare forms. TR
VII/1734, 1735; TR IV/1024; Stip/13.
(19). From 1981 to mid-1983, BSI used the Iowa Relative Value Index Codes
(IRVIC). TR I/ 136. In order to identify medical services claimed, Medicare
providers are required to use procedure codes to define the services they
performed.
(20). The American Medical Association provides physicians with a book of
Current Procedural Terminology/(CPT) which contains codes for identifying
various medical procedures. BSI has used the CPT codes since 1983, in addition
to Health Care Financing codes (HCFC). TR I/ 135-136.
(21). Respondent had a "CPT Manual"' which he said contained "a large
number of codes for Medicare procedures." TR VI/1569, 1570.
(22). In claiming reimbursement for services to Medicare beneficiaries in
Iowa during the period at issue, a physician was supposed to identify the
service performed by use of a procedure code from the Iowa Relative Value
Index Codes, the Health Care Financing Codes, or the CPT book. TR I/135, 136.
(23). Thirty-eight (38) of the services listed in the claims at issue were
coded 9020 or 90220, which is a hospital admission (admit). TR I/ 142. The
Respondent designated an admit as a "first hospital visit" on the claims at
issue.
(24). BSI defined a reimbursable admit to include a brief history and
physical examination, initiation of diagnostic and treatment program, and
preparation of hospital records. TR I/138; I.G. Ex 64 A/2.
(25). The Respondent testified that these elements constituted an admit:
a. Pre-hospital assessment to establish medical necessity. b. Physically
getting a patient to the IMMC, along with records, transfer information, and
medications. c. Making arrangements at IMMC to determine that a bed is
available and to ascertain where the hospital will locate the patient. d.
Performing a physical examination of the patient and executing a written
record of the patient's medical history and the results of the physical
examination. e. Setting up a written plan of, and schedule for, treatment of
the patient. f. Sometimes arranging for a consultant to see the patient,
giving the consultant information on the patient's illness, past medical
history, and physical condition. g. Passing information to the patient, the
patient's family, and the nursing home, and conferring with the patient's
family regarding the hospital stay. h. Making arrangements to discharge a
patient and to transfer a nursing home patient back at the end of a hospital
stay.
TR IV/1065-1066; TR V/1228-1229.
(26). The Respondent estimated that the history and physical (H&P) part of
an admit took only 10 to 20 percent of the total time that he spent on an
admit. TR V/1230; see, also, TR IV/1065.
(27). The Respondent said that he performed an H&P "to know what's going
on," but whether or not he wrote it "on a piece of paper didn't make "any
difference." TR IV/1599. He said that it was his practice to examine a patient
on the day of admission "or right in that area," but he might not do the
actual writing or dictating of the H&P until later, sometimes a month later,
because he "forgot to write it down or more likely the dictating machine was
busy." He said that the IMMC had only one dictating machine per floor (40
patients). TR I/ 1229-1230. The Respondent acknowledged that not only was it
"standard procedure" and a "hospital requirement," but also "good medicine" to
do an H&P. TR VI/1611.
(28). The Respondent testified: "I actually write down the assessment of
the patient and the plan of treatment myself, or tell somebody else this is
what I'm going to do, and the somebody-else writes it down." TR VI/1599.
(29). The IMMC requires that an H&P state the chief complaint, or reason
why the patient is in the hospital, the review of the patient's body systems;
and the record of the physical examination of the patient. TR I/187, 210. This
information is usually recorded on a form (MR 12), but the IMMC also accepts
it in the form of a progress note (PN) or an emergency room assessment or
report, as long as all of the elements stated above are set out in the PN or
the assessment/ report. Id.
(30). IMMC requires that a history and physical be on record within 48
hours of the time of the admission of a patient. If the patient is to undergo
surgery, the history and physical must be on record prior to the surgery. TR
I/185- 186; I.G. Ex 65/46.
(31). BSI requires that physicians document their Medicare billing for an
admit with a plan of treatment or admit order, and an H&P. TR I/68, 69, 80. An
H&P may be in the form of an admit order, but must include a written report
and explanation of the patient's condition. TR I/62, 70. The H&P must be done
by the physician submitting the claim; an H& P done by another physician and
co-signed by the claiming physician is not sufficient. TR I/79. BSI also does
not consider an emergency room assessment sufficient to document an H&P, even
though IMMC does accept an emergency room assessment in lieu of an H&P for its
purposes. TR I/ 60-62.
(32). BSI will reimburse a physician for a Medicare admit if the physician
performs an H&P and issues an admit order on the day after an emergency
admission, even though the emergency room physician also issued an admit order
at the time of admission. TR I/80-81.
(33). Dr. John Hostetter, an associate of the Respondent who has had a
family practice in Des Moines since 1949, and practices at IMMC, testified
that he bills Medicare for an admit if he performs an H&P before the resident
or surgeon does. Under such circumstances, Dr. Hostetter writes up the H&P and
puts the write-up in the patient's file. TR IV/974. 975. Dr. Hostetter does
not do another H&P if another doctor has already done one. TR IV/965. He does
not bill Medicare for an admit if he performs the H&P in anticipation of
imminent surgery. TR IV/967. He does not bill Medicare for an admit if he
merely provides background information for an H&P recorded by another doctor.
TR IV/976. Dr. Hostetter and the Respondent took care of each other's patients
(covered) when the other was out of town or unavailable. TR IV/930. Dr.
Hostetter did not bill Medicare when he covered for the Respondent, but was
paid by the Respondent directly. TR IV/931. 933.
(34). Dr. Homer Wichern, a retired surgeon who has been on the Board of
Directors of IMMC since 1972 and was chief of staff at IMMC from 1972-1974,
testified that he did an H&P as soon as he saw the patient on admission; he
always saw his patients right away and never waited until the next day to do
an H&P. TR IV/922, 923. He said he usually did not write his H&P on the chart,
because "it was (the resident's) responsibility and his job to . . . get it in
the chart." TR IV/919, 920. If it was an emergency, such as the patient going
right to the operating room, Dr. Wichern would write down any H&P which he had
done. TR IV/920.
(35). Dr. Lester Beachy, a general practitioner (GP) and associate of the
Respondent's since 1971, testified that he and the Respondent had covered for
each other ("traded calls") since 1971. TR IV/981, 984. He said they had a
flexible arrangement, sometimes swapping services and sometimes paying each
other. TR IV/985, 986. He noted that an emergency room assessment might be
adequate for the H&P required for an admit, but said he would not bill
Medicare for an admit of one of his nursing home patients if the emergency
room doctor performed and billed for the admit. TR IV/994, 995, 998.
(36). Fifty of the claims, listing 295 services at issue, were submitted
on a HCFA 1500. I.G. Ex 1A-5A. 7A-9A, 12A-18A, 19A2, 20A-38A, 40A-44A, 45A1,
45A2, 46A-48A, 50A, 51A1, 51A2, 52A. By signing the HCFA 1500, the Respondent
certified that: (1) the services listed . . . were medically indicated and
necessary to the health of this patient and were personally rendered by me or
under my personal direction; (2) the charges for such services are just,
unpaid, actually due according to law and program policy and not in excess of
regular fees; (3) the information provided on . . . this claim is true,
accurate and complete . . . .
I.G. Ex 86B; TR I/132-133. By using Form 1500, the Respondent also
specifically agreed to "keep such records as are necessary to disclose fully
the extent of services provided . . . and to furnish information regarding any
payments claimed for providing such services as the State Agency, its
designee, or Health and Human Services may request...." Id.
(37). Two of the claims, listing seven services at issue, were filed on a
HCFA 1490. I.G. Ex 6A, 49A. By signing the HCFA 1490, the Respondent certified
"that the services shown on the . . . form were medically indicated and
necessary for the health of the patient" and "further . . . that these
services were personally rendered by (him) or were rendered incident to (his)
professional service by his employee under immediate personal supervision,
i.e., none of the services listed on (the) form were performed by another
person not in (his) employ or by an organization except as noted in item 13"
(a block near the signature block, item 8). I.G. Ex 86A; TR I/134-135.
(38). One claim, listing seven services at issue, was signed by the
Respondent and submitted on a Deere & Company Medical Claim form attached to
an unsigned HCFA 1490U. I.G. Ex 39A. The record does not show that there was a
certification on the HCFA 1490U or the Deere & Company form.
(39). Patients admitted to an internal medicine teaching area at the IMMC
can only be admitted by physicians on the internal medicine faculty. The
faculty directly supervises the residents who provide care to those patients,
writing orders and managing the patients. TR II/374, 376; I.G. Ex 68.
(40). The Respondent never was a member of the internal medicine faculty
at the IMMC. TR II/375.
(41). If a GP chooses to have a patient admitted to the care of the
internal medicine teaching service at the IMMC, the GP relinquishes the
hospital care of the patient to a resident, under the supervision of a member
of the internal medicine facu1ty. TR II/376, 377, 378, 400; I. G. Ex 68. If
the GP does visit the patient, it is in the nature of a social call, to show
the patient that the GP is interested in how he or she is doing. TR II/378.
(42). If a GP has a patient admitted to the care of the internal medicine
teaching service, the resident writes the orders for the care of the patient,
and the GP does not write orders or supervise the resident. TR II/377, 412.
(43). A GP may resume care of a patient at will. When the GP resumes the
care of the patient, the teaching service is no longer responsible for the
care of the patient and orders are then written by the GP and not the
resident. TR II/400, 412.
(44). If a patient is admitted at the IMMC through the emergency room
(ER), the emergency room physician will try to contact the GP before arranging
for the patient to be placed in the care of the teaching service. TR II/409.
(45). Most GP's who have patients at the IMMC do not request that the
patients be placed in the care of the teaching service, or allow those in the
care of the teaching service to remain there, but the internal medicine
teaching service faculty serves as consultants in most of the non-teaching
service cases. TR II/408, 413. In the non-teaching service cases, the GP
writes the H&P. TR II/416.
(46). In the opinion and experience of the physician in charge of the
teaching service at the IMMC, the Respondent typically did not get directly
involved in the care of an acutely ill nursing home patient of his who was
received at the IMMC through the ER. TR II/415. The teaching service would
provide care to those patients. Id.
(47). A group of physicians incorporated as Central Iowa Medical, P.C.
(CIM), contracted with the IMMC to provide medical care and staff the ER. The
group consisted of Dr. Gustofson, its chief; and Drs. Bratkiewicz, Lung,
Tvedte, and Wall. TR II/330-331.
(48). When a patient who had been under the care of the Respondent or
another GP was admitted to the IMMC through the ER, the CIM physician
typically would write an evaluation of the patient's condition and the order
to start treatment, after discussing the patient with the Respondent or other
GP on the telephone. TR II/333-334.
(49). The Respondent's standing order to CIM physicians in the ER was for
them to examine and treat his patients and call him only if necessary. TR
II/335-336.
(50). A GP who had a patient admitted to the IMMC through the ER was
expected to write an H&P and enter it in the patient's file in addition to the
assessment written by the emergency room physician. TR II/341.
(51). The CIM physicians typically billed Medicare for writing the
emergency room assessment of the patient at the time of admission and any
other medical services provided by the CIM physicians. TR II/348.
(52). A GP who had a patient that needed surgery might refer that patient
to a surgeon on the staff at IMMC; IMMC has had a surgical teaching service
since 1946. TR II/445. If the surgeon concurs with the family practitioner,
the surgeon has the patient admitted to IMMC and does the H&P, the surgical
orders, the surgery, and the follow-up care. TR II/447, 448. The surgical
resident usually does the initial H&P, and participates in the care of the
patient; the surgeon approves and signs the H&P and supervises the resident.
TR II/448, I.G. Ex 67 B.
(53). The GP may also perform an H&P and write orders on a surgical
patient, but this is rarely done. TR II/449. The GP may also participate in
the care of a surgical patient. I.G. Ex 67 B, TR II/ 448. The GP never
supervises a surgical resident, except through the surgeon. TR II/449.
(54). Medicare allows a surgeon a single "global" fee which covers the
surgery, post surgical hospital care, and, in some instances, the admitting
H&P. TR 2/151. 166-167; TR II/458-459, 925.
(55). As the carrier for the Medicare program in Iowa, BSI acts as the
agent of the Secretary, determining the rates and amounts of payment for
covered services and processing and paying claims. 42 U.S.C. Section 1395u.
(56). The cost of services rendered to Medicare recipients by physicians
is reimbursable only if "reasonable and necessary for the diagnosis or
treatment of illness or injury." 42 U.S.C. Section 1395y( a)(1)(A).
(57). It has been a Medicare requirement, since July 1981, that a
physician have good medical record documentation to substantiate that services
billed to the Medicare program were provided. I.G. Ex 64 B/1. It has been a
Medicare requirement, since May 1982, that a physician document that the
services are medically necessary. I.G. Ex 64C/1,2.
(58). It has been a Medicare requirement, since July 1981, that in a
situation in which one physician provides medical services to the patients of
another physician because the latter physician is on vacation or otherwise
unavailable (ie., one covers for the other) the substitute, or covering,
physician should bill Medicare for the services provided. The absent, or
covered, physician is not allowed to bill for medical care visits by the
covering physician. I.G. Ex 64 B/ 4.
(59). Two Hundred Sixty-Two (262) of the services listed on the claims at
issue are coded 9024, which designates a routine hospital visit (visit). BSI
defines a code 9024 service as "(e)ach day, hospital subsequent care requiring
brief service." I.G. Ex 64 A/2.
(60). A claim for a code 9024 service meant that the physician had seen
the patient and documented the visit by an annotation in the record as to what
medications should be given or medical procedures employed, or by a progress
note. TR I/140, 146-147. From at least May 1982 forward, a telephone order did
not constitute documentation for a visit. TR I/147; I.G. Ex 64 C/1.
(61). If a physician claimed a code 9024 visit for each day of a multi-day
hospital stay, he was expected to document his claims by a progress note each
day. It is good medical practice for a physician providing medical services to
document hospital records at least every third day, depending on the severity
of the patient's condition. TR I/ 68, 140, 198, 229; TR II/368-371, 390, 391,
508, 509.
(62). Seven of the services in the claims at issue are coded 9072, which
is an intensive care or cardiac care visit. I.G. Ex 64 A/2.
(63). Two of the services in the claims at issue are coded 0610, which is
a limited emergency service. BSI defines a code 0610 service as "(a) level of
service requiring the evaluation and treatment of an accidental injury or
medical emergency (life-threatening illness) without the need for a complete
examination or evaluation, and usually provided in 15 minutes or less." I.G.
Ex 64 A/3; TR I/141.
(64). With regard to all the hospital admits at issue (38 admit services
listed on 37 claims), the Respondent "knew" or "had reason to know" that the
hospital admit services "were not provided as claimed." The Respondent "knew"
or "had reason to know" that there was no proper documentation as required by
Medicare to evidence the 38 admit services at issue. These admits "were not
provided as claimed" because:
A. In 18 instances there was no H&P. I.G. Ex 2B1, 2B2, 6B, 13B, 14B, 26B,
29B, 30B, 37B, 38B, 40B, 41B, 42B, 46B, 47B, 48B, 49B, 50B. B. In 19 instances
the H&P, if adequate for Medicare purposes, was not done by the Respondent.
I.G. Ex 1B, 3B, 5B, 12B, 16B, 17B1, 20B, 21B, 22B, 23B, 25B, 27B, 28B, 32B,
33B, 34B, 35B, 36B, 39B. C. In the remaining instance, the H&P was not
adequate for Medicare purposes. I.G. Ex 31B. The Respondent testified that a
document labelled "discharge summary" dictated by the Respondent on August 9,
1983 for a July 3, 1983 admit was an H&P. TR V/ 1347; TR II/362; I.G. Ex 31B.
IMMC would have accepted it as an H&P. TR I/193. However, it lacked an initial
treatment order. An emergency room report by a Dr. Lund contained an initial
treatment order, indicating Dr. Lund admitted the patient. TR II/348; I.G. Ex
31B. The Respondent counter-signed a second July 3, 1983 "Physician Order" by
another doctor. I.G. Ex 31B. None of these adequately document a Medicare
admit billed July 4, 1983 by the Respondent, but his involvement is sufficient
to constitute a mitigating circumstance.
(65). The following are additional mitigating circumstances with regard to
the 38 admits at issue:
A. In 12 admits the Respondent provided information to, or discussed his
patient with, the admitting physician. TR V/ 1232-1233, 1259, 1289, 1293-1294,
1297-1299; TR VI/1472, 1476, 1482-1484, 1488, 1490, 1511, 1516-1517; I.G. Ex
2B1, 14B, 38B, 39B, 41B, 42B, 47B; R Ex 79C. B. In one admit, Dr. Beachy,
while covering for the Respondent when he was out of town, provided
information to the emergency room physician for the emergency room assessment.
TR VI/1503; I.G. Ex 46B.
(66). It is an aggravating circumstance that the Respondent billed for an
admit when he was out of town and Dr. Beachy, who was covering for him, wrote
in the patient's chart that Dr. Beachy did not see the patient. I.G. Ex 30B;
TR II/460; TR IV/1001; TR V/1346.
(67). It is an aggravating circumstance that the Respondent altered the
medical records of Loren Cochran, Delores Davis, and Florence Jackson after
learning that these files were being investigated by the I.G. TR V/1312, 1313;
I.G. Ex 17B1, 17D; TR V/1331, 1332; I.G. Ex 22B, 22D; TR VI/1456; I.G. Ex 33B,
33D.
(68). Beginning May 1982 and at least through the end of the period in
this case, BSI instructed providers that it would reimburse for related
concurrent care only under certain conditions. BSI defined related concurrent
care as "two or more physicians treat(ing) a patient for the same or simi1ar
condition which requires the skill of multiple physicians." I.G. Ex 64C/5. BSI
advised providers that it would reimburse for related concurrent care:
only when it can be determined that: 1. the patient's condition requires the
services of more than one physician on an attending rather than a consultative
basis, and 2. the individual services provided by each physician are
reasonable and medically necessary for the patient's condition.
Id. Unrelated concurrent care for separate and distinct conditions "would
normally be payable by Medicare." Id.
(69). As of October 4, 1982, the medical record of Donald Atchison's
hospitalization from August 25 through 30 and September 1 through 3, 1982 did
not contain acceptable documentation of any medical services provided by the
Respondent. There were no Progress Notes by the Respondent, and the nurses'
Structured Flow Sheets did not reflect any visits by the Respondent. The only
Physician's Order by the Respondent was a telephone order on September 3,
1982. I.G. Ex 4B1. A telephone order does not constitute adequate
documentation of a billable visit. I.G. Ex 64C/1.
(70). The Respondent certified on October 4, 1982 that he had provided
nine procedure code 9024 hospital visit services (visits) to Donald Atchison,
from August 25 through 30 and September 1 through 3, 1982. I. G. Ex 4A.
(71). The Respondent "knew" or "had reason to know" that he "had not
provided" these nine visits to Donald Atchison "as claimed."
(72). On an unspecified date, probably in 1984, the Respondent altered the
medical record of Donald Atchison's August 23 through September 5, 1982
hospital stay to reflect the entry of Progress Notes by the Respondent on
August 25 and 27, 1982. I.G. Ex 4D1/16, 17. Mr. Atchison's medical record also
was altered to reflect the entry of the Respondent's name in the Structured
Flow Sheets as having visited Mr. Atchison on August 26, 27, 29, 30, and
September 1, 1982. I.G. Ex 4D1/ 11, 12; TR III/642-646.
(73). It is an aggravating circumstance that the Respondent altered the
medical record of Donald Atchison after learning that it was one of the files
being investigated by the I.G. TR V/1245.
(74). It is a mitigating circumstance that the Respondent testified
credibly, convincingly, and in detail that he did make routine hospital visits
to Donald Atchison on August 25 and 27, 1982. TR V/1246-1252.
(75). The medical record of Donald Atchison's hospitalization from
November 17 through December 15, 1982 does not contain documentation of any
medical services provided by the Respondent. There are no Progress Notes or
Physician's Orders by the Respondent, and the Structured Flow Sheets do not
reflect any visits by the Respondent. I.G. Ex 5B.
f(76). The Respondent certified on January 7, 1983 that he provided 29
procedure code 9024 hospital visit services (visits) to Donald Atchison from
November 17 through December 15, 1982. I.G. Ex 5A.
f(77). The Respondent "knew" or "had reason to know" that he "had not
provided" these 29 visits to Donald Atchison "as claimed;" the Respondent was
reimbursed by Medicare for these claimed services. I.G. Ex 5C.
(78). The medical record of Filomena Baratta's hospitalization on October
3, 4, 5, 7, 11, and 12, 1982 does not contain documentation of any medical
services provided by the Respondent. There are no Progress Notes or
Physician's Orders by the Respondent, and the Structured Flow Sheets do not
reflect any visits by the Respondent. I.G. Ex 7B.
(79). The Respondent certified on October 21, 1982 that he provided six
procedure code 9024 hospital visit services (visits) to Filomena Baratta, on
October 3, 4, 5, 7, 11, and 12, 1982. I.G. Ex 7A.
(80). The Respondent "knew" or "had reason to know" that he "had not
provided" these six visits to Filomena Baratta "as claimed."
(81). It is a mitigating circumstance that the Respondent testified
credibly and convincingly that he did make routine hospital visits to Filomena
Baratta on October 3, 4, 5, 7, 11, and 12, 1982. TR V/1265.
(82). The medical record of Gladys Beattie's hospitalization from August
22 through 24, 1982 does not contain documentation of any medical services
provided by the Respondent. There are no Progress Notes or Physician's Orders
by the Respondent, and the Structured Flow Sheets do not reflect any visits by
the Respondent. I.G. Ex 8B.
(83). The Respondent certified on September 2, 1982, that he provided one
procedure code 0610 emergency evaluation and treatment service to Gladys
Beattie on August 22, 1982; one procedure code 9072 intensive care unit
service (ICU visit) to Gladys Beattie on August 23, 1982; and one procedure
code 9024 hospital visit service (visit) to Gladys Beattie on August 24, 1982.
I.G. Ex 8A.
(84). The Respondent "knew" or "had reason to know" that he "had not
provided" these three services to Gladys Beattie "as claimed."
(85). It is a mitigating circumstance that the Respondent testified
credibly, convincingly, and in detail that he provided the services at issue
to Gladys Beattie on August 22, 23, and 24, 1982. TR III/76-773; TR V/1265-
1268; TR VI/1612.
(86). The medical record of Mary Bunte's hospitalization on January 14,
16, 17, 18, 19, 20, 22, 23, 24, 25, 26, and 27 does not contain documentation
of any services provided by the Respondent. There are no Progress Notes or
Physician's Orders by the Respondent, and the Structured Flow Sheets do not
reflect any visits by the Respondent. I. G. Ex 9B.
(87). The Respondent certified on February 1, 1982 that he provided 12
procedure code 9024 hospital visit services (visits) to Mary Bunte, on January
14, 16, 17, 18, 19, 20, 22, 23, 24, 25, 26, and 27, 1982. I.G. Ex 9A.
(88). The IG did not prove by a preponderance of the evidence that the
Respondent "knew" or "had reason to know" that he "had not provided" these 12
visits to Mary Bunte "as claimed." The Respondent testified credibly and
convincingly that he visited Mary Bunte on the dates at issue. TR V/1276. Ms.
Bunte's medical record contains documentation that the Respondent visited her
on January 15, 21, and 28, 1982. I.G. Ex 9B. The evidence in this case is that
the Medicare requirement that a physician document each visit during a
multi-day hospital stay was promulgated in May 1982, subsequent to the
February 1, 1982 claim at issue. I.G. Ex 64C.
(89.) The medical record of William Bystrom's hospitalization from July 18
through 30 and on August 1, 1982 does not contain acceptable documentation of
any medical services provided by the Respondent. There are no Progress Notes
or Physician's Orders, and the Structured Flow Sheets do not reflect any
visits by the Respondent. I.G. Ex 12B. The Respondent was out of town from
July 20 through 25, 1982 and the physician covering for him did not visit Mr.
Bystrom. I.G. Ex 76; TR IV/1012.
(90). The Respondent certified on August 27, 1982 that he provided 14
procedure code 9024 hospital visit services (visits) to William Bystrom, from
July 18 through 30 and on August 1, 1982. I.G. Ex 12A.
(91). The Respondent "knew" or "had reason to know" that he "had not
provided" these 14 visits to William Bystrom "as claimed."
(92). The medical record of Wilma Cartwright's hospitalization on November
27, 28, 29, 30, and December 1, 2, and 4, 1981 does not contain documentation
of any medical services provided by the Respondent. There are no Progress
Notes or Physician's Orders, and the Structured Flow Sheets do not reflect any
visits by the Respondent. I. G. Ex 15B.
(93). The Respondent certified on an undated HCFA 1500 that he provided
seven procedure code 9024 hospital visit services (visits) to Wilma
Cartwright, November 27, 28, 29, 30, and December 1, 2, and 4, 1981. I. G. Ex
15A.
(94). The Respondent "knew" or "had reason to know" that he "had not
provided" these seven visits to Wilma Cartwright "as claimed."
(95). The medical record of Loren Cochran's hospitalization on November 6,
7, 8, 10 through 19, 25 through 30, and on December 1 and 2, 1982 does not
contain documentation of any medical services provided by the Respondent.
There are no Progress Notes or Physician's Orders, and the Structured Flow
Sheets do not reflect any visits by the Respondent. I. G. Ex 17B1, 17B2. The
Respondent was out of town on November 13, 14, and 15, 1982, and the physician
covering for him did not provide any services. I.G. Ex 74/6; TR IV/1009.
(96). The Respondent certified on January 10, 1983 that he provided 21
procedure code 9024 hospital visit services (visits) to Loren Cochran, on
November 6, 7, 8, 10 through 19, 25 through 30, and on December 1 and 2, 1982.
I.G. 17A.
(97). The Respondent "knew" or "had reason to know" that he "had not
provided" these 21 visits to Loren Cochran "as claimed."
(98). It is a mitigating circumstance that the Respondent testified
credibly and convincingly that he did make routine hospital visits to Loren
Cochran on November 25 through 30 and December 1 and 2, 1982. TR V/1317.
f(99). The medical record of George Cook's hospitalization on January 21,
22, 23, 25 through 31, and on February 1, 1983 does not contain documentation
of any medical services provided by the Respondent. There are no Progress
Notes or Physician's Orders, and the Structured Flow Sheets do not reflect any
visits by the Respondent. I.G. Ex 18B.
(100). The Respondent certified on February 7, 1983, that he provided one
procedure code 0610 emergency evaluation and treatment service on January 21,
1983, and ten procedure code 9024 hospital visit services (visits) to George
Cook, on January 22, 23, 25 through 31, and February 1, 1983. I.G. Ex 18A.
(101). The Respondent "knew" or "had reason to know" that he "had not
provided" these eleven services to George Cook "as claimed."
(102). It is a mitigating circumstance that the Respondent testified
credibly, convincingly, and in detail that he did provide emergency evaluation
and treatment services to George Cook on January 21, 1983, and did make
routine hospital visits to Mr. Cook on the other dates at issue. TR
V/1318-1322.
(103). The medical record of Ronald Core's hospitalization from September
29 through October 7, 1982 does not contain documentation of any medical
services provided by the Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do not reflect any visits
by the Respondent I.G. Ex. 19B.
(104). The Respondent certified on October 6, 1982 that he provided three
procedure code 9024 hospital visit services (visits) to Ronald Core, from
September 29 through October 1, 1982. I.G. Ex 19A2.
(105). The Respondent certified on January 10, 1983 that he provided six
procedure code 9024 hospital visit services (visits) to Ronald Core, from
October 2 through 7, 1982. I.G. Ex 19A1.
(106). The Respondent "knew" or "had reason to know" that he "had not
provided" these nine visits to Ronald Core "as claimed."
(107). It is a mitigating circumstance that the Respondent testified
credibly and convincingly that he did make routine hospital visits to Ronald
Core on the dates at issue. TR V/1324.
(108). The medical record of Delores Davis' hospitalization from October
19 through 29, 1982 does not contain documentation of any medical services
provided by the Respondent. There are no Progress Notes or Physician's Orders,
and the Structured Flow Sheets do not reflect any visits by the Respondent.
I.G. Ex 21B.
(109). The Respondent certified on January 13, 1983 that he provided 11
procedure code 9024 hospital visit services (visits) to Delores Davis, from
October 19 through 29, 1982. I.G. Ex 21A.
(110). The Respondent "knew" or "had reason to know" that he "had not
provided" these 11 visits to Delores Davis "as claimed."
(111). The medical record of Maxine Davis' hospitalization on March 5, 6,
7, 8, and 13, 1982 does not contain documentation of any medical services
provided by the Respondent. There are no Progress Notes or Physician's Orders,
and the Structured Flow Sheets do not reflect any visits by the Respondent.
I.G. Ex 24B.
(112). The Respondent certified on March 17, 1982 that he provided five
procedure code 9024 hospital visit services (visits) to Maxine Davis, on March
5, 6, 7, 8, and 13, 1982. I.G. Ex 24A.
(113). The Respondent "knew" or "had reason to know" that he "had not
provided" these five visits to Maxine Davis "as claimed."
(114). It is a mitigating circumstance that Ms. Davis' daughter testified
credibly and convincingly that Ms. Davis told her Ms. Davis had been visited
by the Respondent on the days at issue. TR III/ 794-802.
(115). The medical record of William Denson's hospitalization from August
15 through 22, 1982 does not contain documentation of any medical services
provided by the Respondent. There are no Progress Notes or Physician's Orders,
and the Structured Flow Sheets do not reflect any visits by the Respondent.
I.G. Ex 26B.
(116). The Respondent certified on October 6, 1982 that he provided eight
procedure code 9024 hospital visit services (visits) to William Denson, from
August 15 through 22, 1982. I.G. Ex 26A.
(117). The Respondent "knew" or "had reason to know" that he "had not
provided" these eight visits to William Denson "as claimed."
(118). The medical record of Elias Halseide's hospitalization on January
29, 1982 does not contain documentation of any medical services provided by
the Respondent. There are no Progress Notes or Physician's Orders, and the
Structured Flow Sheet does not ref1ect a visit by the Respondent. I.G. Ex 29B.
The Respondent testified that he had not gone to the hospital on January 29
until after Mr. Halseide had died. TR V/1343.
(119). The Respondent certified on July 15, 1982 that he provided one
procedure code 9024 hospital visit service (visit) to Elias Halseide on
January 29, 1982. I.G. Ex 29A.
(120). The Respondent "knew" or "had reason to know" that he "had not
provided" a visit to Elias Halseide "as claimed."
(121). It is an aggravating circumstance the Respondent billed Medicare
for a medically necessary hospital visit service when the Respondent knew that
he had only "seen" Mr. Halseide's corpse.
(122). The medical record of Florence Jackson's hospitalization from June
20 through 23, 1982 does not contain documentation of any medical services
provided by the Respondent. There are no Progress Notes or Physician's Orders,
and the Structured Flow Sheets do not reflect any visits by the Respondent.
I.G. Ex 32B.
(123). The Respondent certified on July 9, 1982 that he provided four
procedure code 9024 hospital visit services (visits) to Florence Jackson, from
June 20 through 23, 1982. I.G. Ex 32A.
(124). The Respondent "knew" or "had reason to know" that he "had not
provided" these four visits to Florence Jackson "as claimed."
(125). The medical record of Margaret Johnson's hospitalization from
October 29 through November 3, 1981 does not contain documentation of any
medical services provided by the Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do not reflect any visits
by the Respondent. I.G. Ex 34B. The Respondent was out of town from October 29
through November 1, 1981, and the physician covering for the Respondent
testified that he did not visit Ms. Johnson. I.G. Ex 74/6; TR IV/1011.
(126). The Respondent certified on January 2, 1982 that he provided six
procedure code 9024 hospital visit services (visits) to Margaret Johnson, from
October 29 through November 3, 1981. I.G. Ex 34A.
(127). The Respondent "knew" or "had reason to know" that he "had not
provided" these six visits to Margaret Johnson "as claimed."
(128). It is a mitigating circumstance that the Respondent testified
credibly and convincingly that he did make routine hospital visits to Margaret
Johnson on November 2 and 3, 1981. TR VI/1464.
(129). The medical record of Anna Jones' hospitalization from April 30
through May 10, 1982 does not contain documentation of any medical services
provided by the Respondent. There are no Progress Notes or Physician's Orders,
and the Structured Flow Sheets do not reflect any visits by the Respondent.
I.G. Ex 35B.
(130). The Respondent certified on July 9, 1982 that he provided 11
procedure code 9024 hospital visit services (visits) to Anna Jones, from April
30 through May 10, 1982. I.G. Ex 35A.
(131). The Respondent "knew" or "had reason to know" that he "had not
provided" these 11 visits to Anna Jones "as claimed." (132). The medical
record of Anna Jones' from October 20 through 28, 1982, does not contain
documentation of any medical services provided by the Respondent. There are no
Progress Notes or Physician's Orders, and the Structured Flow Sheets do not
reflect any visits by the Respondent. I.G. Ex 36B.
(133). The Respondent certified on January 11, 1983 that he provided nine
procedure code 9024 hospital visit services (visits) to Anna Jones, from
October 20 through 28, 1982. I.G. Ex 36A.
(134). The Respondent "knew" or "had reason to know" that he "had not
provided" these nine visits to Anna Jones "as claimed."
(135). The medical record of Laura Murphy's hospitalization from November
19 through 25, 1982 does not contain documentation of any medical services
provided by the Respondent. There are no Progress Notes or Physician's Orders,
and the Structured Flow Sheets do not reflect any visits by the Respondent.
I.G. Ex 39B.
(136). The Respondent signed a Deere & Company Medical Claim on January
12, 1983, stating that he provided six procedure code 9024 hospital visit
services (visits) to Laura Murphy, from November 20 through 25, 1982. I.G. Ex
39A.
(137). The Respondent "knew" or "had reason to know" that he "had not
provided" these six visits to Laura Murphy "as claimed."
(138). It is a mitigating circumstance that the Respondent testified
credibly and convincingly that he did make routine hospital visits to Laura
Murphy on the dates at issue. TR VI/1479.
(139). The medical record of John Parker's hospitalization on March 17,
20, 21, 22, 23 and 24, 1983 does not contain documentation of any medical
services provided by the Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do not reflect any visits
by the Respondent. I.G. Ex 43B. The Respondent was out of town from March 9
through 27, 1983. I.G. Ex 76.
(140). The Respondent certified on April 19, 1983 that he provided six
procedure code 9024 hospital visit services (visits) to John Parker, on March
17, 20, 21, 22, 23, and 24, 1983. I.G. Ex 43A.
(141). The Respondent "knew" or "had reason to know" that he "had not
provided" these six visits to John Parker "as claimed."
(142). The medical record of Myrtle Pross' hospitalization from January 27
through 30, February 1 through 21, and February 23 through March 2, 1983 does
not contain documentation of any medical services provided by the Respondent.
There are no Progress Notes or Physician's Orders, and the Structured Flow
Sheets do not reflect any visits by the Respondent. I.G. Ex 44B.
(143). The Respondent certified on March 29, 1983 that he provided 33
procedure code 9024 hospital visit services (visits) to Myrtle Pross, from
January 27 through 30, February 1 through 21, and February 23 through March 2,
1983. I.G. Ex 44A.
(144). The Respondent "knew" or "had reason to know" that he "had not
provided" these 33 visits to Myrtle Pross "as claimed."
(145). It is an aggravating circumstance that the Respondent altered the
medical record of Myrtle Pross after learning that it was one of the files
being investigated by the IG. I.G. Ex 44D; TR I/207; TR III/713; TR V/1245.
(146). The medical record of Nellie Reeser's hospitalization from Apri1 12
through 22, 1983 does not contain documentation of any medical services
provided by the Respondent. There are no Progress Notes or Physician's Orders,
and the Structured Flow Sheets do not reflect any visits by the Respondent.
I.G. Ex 45B.
(147). The Respondent certified on April 14, 1983 that he provided one
procedure code 9024 hospital visit service (visit) to Nellie Reeser on Apri1
12, 1983. I.G. Ex 45A1.
(148). The Respondent certified on July 8, 1983 that he provided ten
procedure code 9024 hospital visit services (visits) to Nellie Reeser, from
Apri1 13 through 22, 1983. I.G. Ex 45A2.
(149). The Respondent "knew" or "had reason to know" that he "had not
provided" these 11 visits to Nellie Reeser "as claimed."
(150). The medical record of Marie Siedelman's hospitalization from
September 10 through 14, 1981 does not contain documentation of any medical
services provided by the Respondent. There are no Progress Notes or
Physician's Orders, and the structured Flow Sheets do not reflect any visits
by the Respondent. I.G. Ex 49B.
(151). The Respondent certified on October 16, 1981 that he provided five
procedure code 9024 hospital visit services (visits) to Marie Siedelman, from
September 10 through 14, 1981. I.G. Ex 49A.
(152). The I.G. did not prove by a preponderance of the evidence that the
Respondent "knew" or "had reason to know" that he "had not provided" these
five visits to Marie Siedelman "as claimed." The Respondent testified credibly
and convincingly that he visited Marie Siedelman on the dates at issue. TR
VI/1518. Ms. Siedelman's medical record contains documentation that the
Respondent visited her on September 9, 1981. I.G. Ex 49B. The evidence in this
case is that the Medicare requirement that a physician document each visit
during a multi-day hospital stay was promulgated in May 1982, subsequent to
the October 16, 1981 claim at issue. I.G. Ex 64C.
(153). The medical record of Margaret Singmaster's hospitalization on
September 22, 23, 24, 26 through October 1, October 3 and 4, 1982 does not
contain documentation of any medical services provided by the Respondent.
There are no Progress Notes or Physician's Orders, and the Structured Flow
Sheets do not reflect any visits by the Respondent. I. G. Ex 51B. The
Respondent was out of town on September 22, 23 and 24, 1982, and the physician
who covered for the Respondent testified that he did not visit Ms. Singmaster.
I.G. Ex 74/6; TR IV/1011.
(154). The Respondent certified on October 11, 1982 that he provided six
procedure code 9072 hospital visit services (visits) to Margaret Singmaster,
on September 22, 23, 24, 26, 27, and 28, 1982. I.G. Ex 51A1.
(155). The Respondent certified on October 11, 1982 that he provided three
procedure code 9024 hospital visit services (visits) to Margaret Singmaster,
on September 29, 30 and October 1, 1982. I.G. Ex 51A1.
(156). The Respondent certified on January 17, 1983 that he provided two
procedure code 9024 hospital visit services (visits) to Margaret Singmaster,
on October 3 and 4, 1982. I.G. Ex 51A2.
(157). The Respondent "knew" or "had reason to know" that he "had not
provided" these six I.C.U. visits and five routine hospital visits to Margaret
Singmaster "as claimed."
(158). It is a mitigating circumstance that the Respondent testified
credibly and convincingly that he did make three I.C.U. visits and five
routine hospital visits to Margaret Singmaster. TR VI/1523, 1526, 1529.
(159). The medical record of Lucille Smothers' hospitalization from June
13 through 22, June 24 through 27, and June 29 through July 7, 1983 does not
contain documentation of any medical services provided by the Respondent.
There are no Progress Notes or Physician's Orders, and the Structured Flow
Sheets do not reflect any visits by the Respondent. I.G. Ex 52B; cf. TR
VI/1531. 1669.
(160). The Respondent certified on August 2, 1983 that he provided 23
procedure code 9024 hospital visit services (visits) to Lucille Smothers, from
June 13 through 22, June 24 through 27, and June 29 through July 7, 1983. I.G.
Ex 52A.
(161). The Respondent "knew" or "had reason to know" that he "had not
provided" these 23 visits to Lucille Smothers "as claimed."
(162). The Respondent did not prove by a preponderance of the evidence
that his financial condition is a mitigating circumstance in this case.
(163). It is an aggravating circumstance that the Respondent is liable
under the CMPL for services claimed over a period of two years.
(164). It is an aggravating circumstance that the Respondent is liable
under the CMPL for claims totalling a substantial amount.
(165). It is an aggravating circumstance that the claims for which the
Respondent is liable under the CMPL evidence billing practices which
constitute a pattern of billing Medicare and Medicaid.
(166). It is an aggravating circumstance that the Respondent is liable
under the CMPL for claims which he submitted with a reckless disregard for
their truth or falsity.
(167). It is an aggravating circumstance that it was determined in a
previous administrative proceeding that the Respondent must refund $28,619.44
in nursing home service claims, submitted during the period September 1980
through September 27, 1982, which he could not document.
(168). It is an aggravating circumstance that the Respondent had a
reckless disregard of Medicare billing requirements.
(169). It is an aggravating circumstance that the Respondent, so as to
mislead BSI, sometimes purposely put the wrong dates on his Medicare claims.
(170). It is an aggravating circumstance that the Respondent testified
about his retirement from the practice of medicine in such a way as to
initially conceal the adverse circumstances surrounding the surrender to the
Iowa Board of Medical Examiners of his license to practice medicine.
(171). It is an aggravating circumstance that the Respondent billed for
visits to Myrtle Pross which were neither documented nor medically necessary.
(172). After weighing the aggravating and mitigating circumstances, it is
appropriate, based on the evidence in this case, to impose a penalty of
$67,500, an assessment of $13,000, and a suspension for three years.

DISCUSSION

Remaining at issue are fifty-three (53) claims for Medicare reimbursement
listing three hundred nine (309) medical services that the Respondent declared
he had provided to Medicare beneficiaries at the IMMC. All but 9 of these
services are listed as an admit or a visit. See footnote 13. The Respondent
does not dispute that the claims at issue were submitted between September 5,
1981 and December 16, 1983, that he presented the claims or caused them to be
presented, that he signed the claims, and that he was paid by the Medicare
program as a result of these claims. Stip/15.
There are only two elements of liability at issue in contention in this
case. They are: (1) whether the medical services listed by the Respondent on
the claims at issue were "not provided as claimed"; and (2) if "not provided
as claimed," whether the Respondent "knew" or had reason to know."
The Respondent argues that, while the medical services at issue may not have
been properly documented, the services listed were, in fact, provided by him
personally, provided by another physician covering for him when he was out of
town, or provided pursuant to his direction and consultation. See, R Br/2. In
the alternative, the Respondent argues that the proposed penalty, assessment,
and suspension should be reduced. R Br/2, 3.
As outlined in detail in the Findings of Fact and Conclusions of Law and in
this Discussion, I find that the I.G. proved by a preponderance of the
evidence that the medical services at issue were "not provided as claimed,"
and, with respect to most of them, the Respondent "knew" or had "reason to
know." With respect to the few remaining (i.e., seventeen (17) visits), the
I.G. did not prove the above two elements of liability by a preponderance of
the evidence.
Liability attaches in this case with regard to all thirty-eight (38)
hospital admits at issue because the Respondent "knew" or had reason to know"
that the admits for which he billed Medicare were "not provided as claimed,"
in that the Medicare patients in question were, in fact, admitted to the IMMC
by other physicians, and because the Respondent's input did not constitute a
billable admit under the Medicare rules and requirements. The record indicates
that, contrary to Medicare rules and requirements, the Respondent billed for
the admits at issue when, in fact, he had not performed the essential elements
of an admit (especially the crucial element of performing a history and
physical (H&P)); also, the medical records in each of these 38 admits were not
properly documented by the Respondent.
Liability attaches in this case with regard to all but seventeen (17) of the
two hundred sixty-two (262) hospital visits at issue because the Respondent
"knew" or had "reason to know that the visits for which he billed Medicare
were "not provided as claimed," in that none of these visits were documented
as required by the Medicare rules and requirements. More importantly, the
preponderance of the evidence shows that most of these hospital visits were
(1) not performed at all, or (2) were incomplete or insufficient under the
Medicare rules and requirements. In some instances, the Respondent billed for
visits when, in fact, he was out of town and the physician covering for him
had not provided any billable services.
There were also two (2) emergency medical services and seven (7) ICU visits
that the Respondent "knew" or had "reason to know" were "not provided as
claimed." See footnote 13.
I also find that the Respondent had a reckless disregard for the Medicare
rules and requirements, as well as some IMMC rules and regulations.
On the other hand, as outlined below, I find that the Respondent proved by a
preponderance of the evidence some mitigating circumstances which justify
reducing the amount of the proposed penalty, assessment, and suspension. The
Respondent's testimony was credible and convincing at times when he recalled
in specific detail that he provided some medical services to certain of the
Medicare beneficiaries at issue.
For example, with regard to hospital admits, even though the Respondent did
not perform the crucial element of an H&P for any of the 38 admits at issue
(and, thus, these were not billable admits under the Medicare rules and
requirements), the Respondent proved that he did provide some input or service
in fourteen (14) of these admits.
With regard to hospital visits, even though the visits were not properly
documented (and, thus, these were not billable visits), the Respondent proved
that he did provide some input or service in fifty-four (54) of these visits.
In other words, although the record demonstrates that none of the visits at
issue was properly documented and that the Respondent "knew" or had "reason to
know" that the vast majority of the visits at issue were "not provided as
claimed," I find that in fifty-four (54) instances, the Respondent provided a
medical service (even though it may not have been a billable service).
Finally, it is a mitigating factor that the Respondent also provided some
input or service with regard to the two (2) emergency medical services at
issue and four (4) of the seven ICU visits at issue.
I. The Respondent's Billing Practices and Record Keeping, the Absence of
Required Documentation, and the Respondent's Reckless Disregard for the
Medicare Rules and Requirements
The Respondent, a GP, saw both private and Medicare patients. Most of the
Medicare patients listed on the Medicare claims at issue in this case were
institutionalized in nursing homes under the care of the Respondent, and all
but one patient was hospitalized during the period at issue at the IMMC.
[FN16]
There are three types of hospital admits and two types of hospital visits at
issue. The three types of hospital admits are: emergency room (ER), surgical,
and internal medicine. The two types of hospital visits are: (1) routine
hospital visits when the Medicare patient was under the primary care of a
surgeon or internist; and, (2) visits to patients in the intensive care unit.
In some instances, contrary to the Medicare rules and requirements, the
Respondent billed for both admits and visits when he was out of town and
another physician was covering for him.
Each Medicare beneficiary listed on the claims at issue, with the exception
of one, was admitted to a hospital and wads cared for at the hospital by
physicians other than the Respondent. The beneficiaries were cared for by
appropriate specialists, visited at times by the Respondent, and then either
discharged to the Respondent's care or returned to the nursing homes from
which they had come. Although they were admitted and cared for by other
physicians, the IMMC also considered them to be the Respondent's patients
since he was their GP. His name was usually listed in the IMMC medical record
as the admitting or referring physician. The Respondent made sure that all of
his patients were listed on the IMMC "computer list," which was updated daily
by the IMMC and made available to all physicians daily so as to assist them in
keeping track of their hospitalized patients. TR I/199. [FN17]
A. The Respondent's Billing Practices
The Respondent's standard practice was to bill the Medicare program for an
admit every time one of his Medicare patients was admitted to the hospital,
whether or not the Respondent personally admitted the patient. The Respondent
argues that he provided the essential elements of an admit because he
consulted with and directed whatever physician might be personally present
when the patient arrived at the hospital and that he performed the essential
elements of an admit himself a day or two later. R Br/2.
The Respondent's standard practice was also to bill Medicare for a hospital
visit for each day of hospitalization subsequent to the initial admit, until
the Medicare patient was discharged. Pursuant to the Respondent's
instructions, his billing clerks billed for each day that a Medicare patient
was hospitalized, until the Respondent told them that the patient had been
discharged. TR VI/1583. The Respondent testified that:
Once somebody was admitted it (the billing) was an ongoing thing until they
went home. And I could just say (to my office staff) so-and-so's still there,
. . . so-and-so went home today . . . this is her last day. TR VI/1583.
During the period at issue, in order for a medical provider to claim
Medicare reimbursement, a physician was required to document in the medical
record any services rendered and (after May 1982) to state the medical
necessity of such services. I.G. Ex 64B/1; I.G. Ex 64C/1; see, e.g., TR I/140.
The Respondent billed Medicare for the hospital admits and the daily visits at
issue here absent the required documentation in the patient's medical record.
At the IMMC, standard documentation in the hospital medical record consists
of several components, including: a written H&P (IMMC requires this to be in
the medical record within 48 hours after admission); physician orders;
physician progress notes; and a structured flow sheet, kept by the nurses,
which was supposed to record physician visits to patients. TR I/179-184. The
medical record documents the progress of the patient, serves as a
communication tool among doctors and nurses, and serves as the basis for
planning the treatment of the patient. See, TR I/184; I.G. Ex 65.
B. The Absence of Documentation of the Medical Services at Issue Contrasted
with the Respondent's Documentation of Other Medical Services
There is credible evidence that the Respondent ordinarily was conscientious
about documenting services that he rendered to hospitalized patients. In
contrast, the Respondent did not document the services for which he is liable
in this case. For example, on 38 occasions he submitted claims for an admit,
but he did not document the necessary H&P. In many instances involving the
claims at issue, he billed for periods of from one to four weeks of
consecutive daily visits without documenting that he had provided any
services. See, e. g., I.G. Ex 5B, 12B, 17B, 21B, 35B, 44B, 45B, 52B. In one
instance, he billed Medicare for 34 consecutive daily hospital visits, but
documented only one visit with a progress note. I.G. Ex 44B.
The Respondent argues that the reason for this was that he wad careful to
document medical services rendered when the patient was under his sole care,
and when other physicians (surgeons, internists and residents) were involved
in the care of the Respondent's patients, he saw no need for duplicating other
physicians 'documentation. R Rep Br/ 4. This argument is not convincing; it
contradicts credible testimony that such a practice is either a bad medical
practice or an indication that no medically necessary service was performed.

C. The Respondent's Record Keeping

The Respondent supplied all the information that generated the Medicare
claims at issue. The Respondent testified that he kept a ledger (which he
called his "Day Book") in which he recorded services he had provided. TR
IV/1030. The Respondent's office staff used the Day Book when billing
Medicare. The Respondent had no explanation for the fact that there were
claims submitted to Medicare for visits that were not noted in the Day Book.
TR VI/1579-1580, 1589-1592, 1614-1616, 1646-1647, 1651, 1653.
The Respondent testified that he based his Day Book entries on the IMMC
"computer list" (showing his hospitalized patients). TR IV/1030; TR VI/1578.
He stated that a mistake on the computer list might have been reflected as a
billing mistake. TR VI/1616, 1647.
This testimony is not convincing. It does not explain why claims were
submitted for visits not listed in the Day Book; the Respondent's billing
clerks had no records other than the Day Book when preparing the Medicare
claims at issue. The Respondent said he "didn't know" where his staff would
have gotten billing information other than from the Day Book. TR VI/1036,
1580.

D. The Respondent's Reckless Disregard for the Medicare Rules and Requirements

The evidence in the record establishes that the Respondent recklessly and
flagrantly disregarded Medicare rules and requirements. The Respondent billed
for all visits that he made to Medicare beneficiaries, whether or not he
documented any medical service. He billed for visits when the patient was
asleep or dead. TR VI/ 1666-1667, TR V/1343. He billed when all of the
patient's medical care was being managed by surgeons, internists,
cardiologists. and residents. He billed for the kinds of visits that his
colleagues considered "social calls." TR IV/963, 1000.
The Respondent argues that he provided medical care to patients suffering
from multiple medical conditions and that he made visits to treat them for one
condition while they were being treated for another condition by a specialist
in the hospital. R Rep Br/4. The evidence supports this argument only in some
instances.
The Respondent frequently billed Medicare for incorrect dates of services.
He routinely represented on his claim forms that he had done an admit on the
day the person was admitted, even if he did not actually do "a complete
work-up" until one or two days later. TR VI/ 1602. He rearranged dates of
service to avoid getting "flak" from BSI. TR VI/1602. The Respondent said that
he considered billing for the wrong day to be "just one of those paper
technicalities." TR VI/1484.
The Respondent's disregard for billing accuracy is most clearly illustrated
by the Respondent's claims for hospital visits when he was out of town. The
Respondent's practice was to bill Medicare on the assumption that when one of
his patients was admitted to IMMC while he was away, the doctor covering for
him would have done an H&P, admitted the patient, and made routine hospital
visits each day after the initial admission. The Respondent was extremely
negligent in that he did not even ask his colleague for the details of the
services provided. TR IV/1076. In one instance where Dr. Beachy, a physician
who frequently covered for the Respondent, specifically wrote in the chart
that he did not admit the patient, the Respondent nevertheless "assumed" that
Dr. Beachy did admit the patient and billed Medicare for an admit. TR
V/1345-1347; I.G. Ex 30B/2. The Respondent agreed that errors were made. He
stated that: "there were some mistakes, because this was kind of a loose
arrangement," and that "it may not have been 100 percent accurate, but this is
the way we did it." TR IV/1077; TR VI/1649.
II. The State and Federal Investigations of the Respondent
A. The State Medicaid Investigation
In the spring of 1982, the Office of Investigations of the Iowa Department
of Human Services (IDHS) audited the Respondent's medical records at six
nursing homes. TR II/420-421. This audit concluded that the Respondent was
submitting claims for substantial numbers of services which were not
documented, that he was billing for medical orders given over the telephone
(not reimbursable by Medicaid), and that he was billing for single visits to
nursing home patients when he was actually making congregate visits. See, I.G.
Ex 78A/3-4. 78B/3-6; TR I/136-137, II/422. BSI was notified because the
patients were also covered under Medicare. TR II/423; I.G. Ex 78D; I.G. Ex
78A/1. The county attorney declined to prosecute. See, R Rep Br/50. The case
was settled and the Respondent repaid $10,794.90 which he had claimed from
Medicaid. The Respondent did not admit any guilt by this settlement. Stip/10;
TR II/427-429; IG Ex 78C/4. 5.
The State Medicaid investigation is irrelevant to the specific claims at
issue; it is relevant only to illustrate the evolution of this case, the
Respondent's general disregard for program rules and requirements, and the
Respondent's poor practices regarding documentation.
B. The Investigations by BSI and the I.G.
In 1982, BSI concluded that approximately two-thirds of the hospital
services and two-thirds of the nursing home services billed by the Respondent
were non- reimbursable. I.G. Ex 78A; TR I/38 to 42. At the end of 1983, BSI
referred the matter to Frank Kram, an investigator for the I.G. See, I.G. Ex
79B; TR I/44- 45.
In 1984, Mr. Kram asked BSI to expand the audit of hospital services; BSI
found that about 3/4 of the hospital admits did not have an H&P or admission
orders by the Respondent, and that about half of the visits billed by the
Respondent were not documented. I.G. Ex 79C. Later, Mr. Kram found that the
Respondent billed for visits when the Respondent was out of town. TR III/702,
717-718; TR I/50. Mr. Kram instructed the Health Care Financing Administration
(HCFA) to suspend future Medicaid payments to the Respondent (TR I/51; TR
III/703; I.G. Ex 80) and instructed BSI to proceed with the recovery of the
nursing home services overpayment. [FN18]
Based upon the BSI audit findings. as well as his own investigation and
analysis, Mr. Kram concluded that the Respondent provided little or no medical
care to most Medicare patients when the Respondent was not the primary care or
solo care physician. Mr. Kram also concluded that the Respondent rarely wrote
progress notes or orders, did not do H&P's, and was rarely listed on the
nurses' Structured Flow Sheet. In contrast, when the Respondent actually
admitted a patient himself and was the primary care or solo care physician. he
did do an H&P, wrote progress notes and orders on a regular basis, was
regularly listed on the nurses' Structured Flow Sheet, and legitimately billed
for the services. TR III/713-716. Mr. Kram concluded that the Respondent's
pattern of billing Medicare without any documentation and billing for admits
when another physician did the H&P was fraudulent billing. TR III/718-722.
[FN19] Based on these findings and conclusions, the I.G. issued its Notice in
this case.
III. The Hospital Admits at Issue Were Not Provided by the Respondent as
Claimed
A service is not provided as claimed unless all of the essential elements of
that service are provided in accordance with the Medicare rules and
requirements. For example, the procedure code for an admit (9020 or 90220)
requires the physician to (1) perform an H&P, (2) initiate a diagnostic and
treatment program, and (3) prepare hospital records. If all of those elements
are not performed personally by the physician claiming Medicare reimbursement,
the service is considered "not provided as claimed" within the meaning of the
CMPL and regulations.
Thirty-eight (38) of the 309 medical services at issue (involving 37 of the
53 claims) are hospital admits. With regard to each of the 38 hospital admits
at issue, the Respondent billed for an admit (Procedure Code 9020 or 90220)
even though he did not personally perform an H&P in the hospital. This was in
violation of Medicare requirements outlined in the Medicare Manual; as stated
earlier, a physician must perform an H&P in order to legitimately bill for an
admit. I.G. Ex 64A; TR I/ 138-140. The Respondent billed for an admit when the
H&P had been done by an ER physician, a surgeon, an internist, or a resident.
TR IV/ 1071. The Respondent argues that he performed the admits as claimed
because he performed H&P's in the nursing home the day before many of the
admits at issue, he participated in some of the admits by giving instructions
or pertinent information to the admitting physician over the telephone, or he
did a separate H&P a day or so after his Medicare patient was admitted to the
IMMC.
Dr. Hostettler, one of the GP's who covered for the Respondent, testified
that he always documented H&P's which he performed, and that he would not bill
for an admit unless he had done his own H&P before the specialist did one. TR
IV/964-965, 970, 974-975. Dr. Beachy, the GP who most often covered for the
Respondent, stated that he would not bill for an admit if an ER physician had
done the H&P, or if he had seen the patient at the nursing home; and had not
personally admitted the patient to the hospital. TR IV/994-995, 998.
The Respondent testified that he took advice on billing for admits from his
friend Dr. Wichern, a surgeon to whom he often referred patients. The
Respondent said that Dr. Wichern told him to bill Medicare for H& P's done by
surgical residents. TR VI/1640. [FN20] Dr. Wichern, however, denied getting
involved the Respondent's decisions about proper billing. TR IV/889-890.
A. Emergency Room Admits
The Respondent billed Medicare for 13 ER admits which were actually
performed by an ER physician. I.G. Ex 2A.1, 14A, 26A, 29A, 31A, 37A, 38A, 40A,
41A, 42A, 46A, 47A, and 48A. During the period at issue, the Respondent rarely
went to the ER to treat his patients who had been brought there. TR II/331.
The Respondent instructed the physicians who staffed the ER at the IMMC to
treat the patients and call him if necessary. TR II/336. Many of the Medicare
beneficiaries involved in this case were brought to the ER by ambulance from
nursing homes. TR II/331-332. The ER physicians admitted those patients
requiring hospitalization and then contacted the Respondent by phone to let
him know that the patients had been admitted, discussed an initial course of
treatment, and wrote the admitting orders to cover the initial care. TR
II/332- 333.
In the admits at issue, the ER physicians did not usually do an H&P, but
instead did either an ER "assessment" or an ER "report"' (a record of care
provided up to that point in time). TR II/332, 334. The ER physicians then
billed Medicare for physician services provided in the ER, including the ER
report. TR II/348-349. It was standard practice for the medical records staff
at the IMMC to accept the ER report in lieu of a separate H&P. TR I/188.
The Respondent often visited his patients the day after the patient was
admitted and sometimes wrote a progress note in the chart at that time. TR
II/340-348. The progress notes he wrote are not acceptable substitutes because
they do not contain the elements essential for an admit. TR I/188-191.
The Respondent did not do H&P's or admitting orders for any of the 13
emergency room admits at issue for which he billed Medicare. TR II/ 339-348.
The Respondent acceded that he did not do written H&P's. TR VI/1650. He stated
that he thought it was proper to bill for an admit without an H&P because he
did an assessment of need for hospitalization, made logistical arrangements to
get the patient to the hospital, called the hospital, gave verbal information
to the ER staff, planned treatment, conferred with the family, referred
patients to specialists, and did the discharge summary. TR IV/1065-1071. In
his view, those services could be provided by telephone rather than in person,
and some of the services could be performed in the nursing home rather than in
the hospital. TR IV/1071.
I find that the evidence in this case establishes that under Medicare
requirements a physician could not legitimately bill for an initial hospital
visit unless he personally performed an H&P.
Dr. Richard Bratkiewicz, an emergency physician at the IMMC, testified that
he or other members of his group of ER physicians admitted twelve of the
thirteen patients in question. TR II/339-348. In each case, the Respondent did
not write an acceptable H&P, nor did he perform the other elements essential
for an admit.
In some cases, the Respondent billed for a nursing home visit dated the same
day or the day before a hospital admit for which he also billed. I.G. Ex 14A,
40A. He sometimes saw the patient at the nursing home, determined a need for
hospitalization, and had the patient admitted through the ER without seeing
the patient in the hospital on the day of admission. TR III/750.
In five of the instances in question, the Respondent billed for an admit
dated the day after the patient was actually admitted. I.G. Ex 31A, 40A, 41A,
47A, and 48A. He often saw the patient the following day, but he did not
document an H&P during this visit, he did not change the admitting orders, and
he did not even write a comprehensive progress note.
In one instance, the Respondent billed for both an admit and a hospital
visit -- two separate charges, two distinct procedure codes -- when the
patient (Elias Halseide) had died the day following (some six hours after)
admission to the ER. The Respondent had never come to the hospital while Mr.
Halseide was alive. I.G. Ex 29B; TR II/343-344.
The Respondent argues that he came to the hospital after the patient's death
to see the body and prepare a death certificate and that this justifies the
claim for services. TR V/1343-1344. Neither procedure code 9020 nor procedure
code 9024 apply to visits to a dead body, or to the preparation of a death
certificate. By submitting claims under those two procedure codes, the
Respondent represented that he had provided medically necessary medical
services to a beneficiary, when in fact no medical services were provided as
claimed. TR III/753.
The Respondent also billed for an admit when he was out of town and Dr.
Beachy was covering for him. I.G. Ex 46A. In that instance, a patient (Lillian
Roth) was admitted by an ER physician. Dr. Beachy did not do an H&P. TR
II/346; TR IV/1002-1003.

B. The Surgical and Internal Medicine Admits

The Respondent claimed reimbursement from Medicare for 25 admits that were
actually performed by a surgeon or internist, or a resident under the
supervision of a surgeon or internist. In most of these cases, an H&P by the
specialist or his resident appears in the chart. When an H& P was done by the
resident, it was co-signed by the supervising specialist. I.G. Ex 67A, 68/1;
TR II/449. No other cosignatures were required. TR I/204; TR IV/900-901,
995-996.
Dr. Nathan Josephson, Director of the Internal Medicine Residency program at
the IMMC, reviewed all of the records for the three internal medicine admits
at issue in this case, provided an affidavit describing his findings. and
testified at the hearing. I.G. Ex 68. In each case, Dr. Josephson concluded
that the admit was performed by an internist or resident, not by the
Respondent. One of the three patients, Danny Adams, was admitted to the
teaching service; such an admission could be done only by a member of the
internal medicine faculty. I.G. Ex 2B2; TR II/380-382; I.G. Ex 68/2. Another,
Margaret Johnson, was seen initially in the ER, and from there was admitted to
the ICU where the admitting H&P was written by a resident and co-signed by a
pulmonologist who was, on the hospital's teaching staff. I.G. Ex 34B; TR
II/384; I.G. Ex 68/3.
The third, Marie Siedelman, was seen first in the ER and later by a
gastroenterologist who admitted her to a general medical floor; the
gastroenterologist's resident performed the admit. I.G. Ex 49B; TR II/385-386;
I.G. Ex 68/3-4.
Dr. James A. Coil, Director of Surgical Education and head of the surgical
residency program at IMMC, reviewed all of the medical records for the
surgical patients at issue. He provided an affidavit describing his findings
and testified at the hearing. I.G. Ex 67A. Dr. Coil concluded that none of the
23 surgical admits was performed by the Respondent as claimed.
In a number of cases, the Respondent billed for nursing home visits dated
the same day or the day before the admits for which he also billed. See, I.G.
Ex 1A, 4A1, 13A, 21A, 25A, 27A, 36A. The services provided by the Respondent
and billed as admits were (at most) pre-admission services provided in the
nursing home and not billable under procedure codes 9020 and 90220. I.G. Ex
64A/2.
The Respondent also billed for admits that he claimed were performed by Dr.
Beachy when the Respondent was out of town. I.G. Ex 25A, 30A, 32A, 46A; TR
V/1334-1335, 1345-1347; TR VI/1452, 1503-1504. I find Dr. Beachy's testimony
that he did not do the admitting H&P in any of those instances to be credible
and convincing. TR IV/1000-1005; I.G. Ex 30B/2.
IV. The Hospital Visits at Issue were not provided by the Respondent as
Claimed
Approximately two-thirds of the hospital visits at issue in this case are to
Medicare beneficiaries under the care of a surgeon, and most of the other
visits are to patients under the care of the Internal Medicine Teaching Staff
at the IMMC. The Respondent billed for visits which did not meet the Medicare
requirements.
As stated earlier, the Medicare rules and requirements in evidence in this
case provide (as of May 1982) that every hospital visit must be supported by
documentation. Documentation of a visit may include physician's orders,
physician's progress notes, or nurse's notes. TR I/66. If a visit is not
documented, it is "not provided as claimed" within the meaning of the CMPL and
requirements. Furthermore, the Medicare rules and requirements also provide:
(1) that a visit must be a "medically necessary" service (I.G. Ex 86A, 86B);
(2) that a GP cannot bill for a visit if his patient is being treated by a
specialist in a hospital, unless the GP's services are required to treat a
separate and distinct medical condition; and (3) that a GP cannot bill for a
visit performed by a covering physician.
The Director of Medical Records at the IMMC considers the standards of
practice in the medical profession to require that a progress note be made in
the hospital chart at least every three days. TR I/198, 229. Dr. Bratkiewicz,
a GP, testified that he would expect progress notes to be made at least every
other day, and that he would expect to bill only for visits where medical care
was provided and documented. TR II/ 368-371. Dr. Nathan Josephson, an
internist, testified that daily progress notes are standard practice for a
primary or covering physician. TR II/390-391. Dr. Coil, the director of
surgical education at the IMMC, testified that while he had been known to make
"social visits" without writing a progress note, you are hard-pressed to bill
for it." TR II/509. Two of the Respondent's witnesses, Dr. Beachy and Dr.
Hostettler, both GP's, also testified that they make many "social calls" which
are not documented by progress notes, and that they do not bill for such
visits. TR IV/963, 1000-1007. Dr. Hostettler stated that he ordinarily makes
entries in the medical records every couple of days. TR IV/955.
In contrast, the Respondent testified that he rendered medical care to
patients and billed Medicare without writing progress notes or physician
orders because he did not want to duplicate what a specialist had already
written, because he kept poor records when he was treating a patient who was
not under his sole care, and because he disliked paperwork. In one record
there was not a single progress note to document c1aims presented for 29
consecutive days of alleged medical services. I.G. Ex 5B; TR V/1252, 1253.
On the other hand, the Respondent wrote many progress notes documenting the
medical care he provided in medical records not at issue in this case. I.G. Ex
60B, 61B, 62B, 63B; TR III/633-636, 714-716. Also, the Respondent wrote
progress notes regularly in one medical record (the chart of George Hess) in
which the admit billed by the Respondent is at issue here. I.G. Ex 31A, 31B.
These numerous notations by the Respondent contradict his assertions as to why
he kept poor records when he was treating a patient not under his sole care.
A. Medicare Patients Under the Care of Surgeons
Many of the Respondent's Medicare patients whose names are listed on the
claims at issue were hospitalized under the care of surgeons. The surgeons at
IMMC usually had one or two residents on their service who were responsible,
in conjunction with the surgeon, for the patient's care. TR II/447-448;
IV/917- 918. The residents normally performed and recorded the H&P under the
supervision of the surgeon. TR II/448. The role of a GP in providing care to
surgical patients at the IMMC was usually quite limited. GP's rarely wrote
progress notes or orders or performed H&P's for patients in the surgical
service. TR II/448-449. Surgical residents were never assigned to GP's and
could not take direction from them. TR II/449. Surgical patients were admitted
and cared for by the surgeons and their residents. While GP's could visit
surgical patients, they would not normally be expected to provide any medical
care to the patients. TR II/450-451.
With respect to the surgical patients whose admits and hospital visits are
at issue in this case, the Respondent did not admit any of the patients. and
there were few documented hospital visits. See, I.G. Ex 67A.
B. Medicare Patients Under the Care of the Internal Medicine Teaching
Staff
Some of the Respondent's Medicare patients whose names are listed on the
claims at issue were referred to internists for specialized care. At the IMMC,
there are two ways in which a GP's patient can be seen by an internist. One is
for the GP to admit the patient under his direct care and then to ask an
internist to consult on the care of that patient. Most GP's at the IMMC admit
patients under that arrangement and provide medical services to the patients
themselves. TR II/ 376-377, 408. The other option is for the GP to have his
patient admitted to the Internal Medicine Teaching Service. If the GP elects
this option, he turns his patient over to the teaching faculty and residents.
In that case, only a resident, under the supervision of an internal medicine
faculty member, is to write orders for the patient and there is no medical
reason for a GP to follow that patient. I.G. Ex 68. For the period of time
during which the patient is on the teaching service, the GP relinquishes care
of the patient to the teaching service faculty and staff. TR II/377-378. A GP
is free to visit such a patient, but the visits are in the nature of social
calls, not medical care. TR II/378. If at any time the GP wants to regain
control over the patient's medical care, he can have the patient removed from
the teaching service, and can begin writing orders and progress notes. TR
II/400.
Five of the patients whose names are listed on the claims at issue in this
case were under the care of faculty internists and their residents while
hospitalized at the IMMC. The Respondent did not admit any of these patients
to the hospital, nor did he seek to have the patients who were placed on the
teaching service removed to his care. There were few documented hospital
visits by the Respondent. The visits at issue were not documented. Since these
patients were under the care of the teaching service, any such visits were in
the nature of social calls and not medically necessary visits, unless it was
documented that the Respondent was treating these patients for a separate
condition or that it was documented that it was necessary for the Respondent
to assist the teaching staff. See, I.G. Ex 64C/5, I.G. Ex 68; TR II/379-390.
[FN21]
C. Visits Performed by Another Physician When the Respondent was Out of
Town
The Respondent billed Medicare for services purportedly rendered on days
when, by his own admission, he was out of town. See, I.G. Ex 74/ 6; I.G. Ex
76; 12B, 17B1, 25B, 30B, 32B, 34B, 43B, 46B, 50B, 51B. His practice was to ask
another GP to cover for him when he was away, to subsequently bill Medicare
for services provided by the covering physician, and to pay the covering
physician for his services by check or by reciprocating with in-kind services.
TR IV/1050-1065. This practice violates Medicare requirements, which prohibit
a physician from including services provided by a "covering" or substitute
physician on a claim for inpatient services. I.G. Ex 64B/4.
The pertinent medical records are devoid of any documentation that services
were rendered by a substitute physician on the days in question. Dr. Beachy,
the physician who usually covered for the Respondent when he was out of town,
testified that he did not provide most of the services at issue in this case
which were billed for days when the Respondent was out of town. TR IV/1000-
1012.
D. Visits For Which the I.G. Failed to Prove that the Respondent Did not
Provide the Services as Claimed
The I.G. failed to prove liability with regard to 17 hospital visits at
issue because the Respondent's testimony was credible and convincing that he
provided the visits as claimed, despite the lack of documentation.
V. The Respondent "Knew" or Had "Reason To Know" that the Services at
Issue Were Not Provided as Claimed
I held in Scott, supra, that a respondent was liable for false or improper
claims of which he had "subjective" knowledge ("conscious knowledge of a
fact") or "objective" knowledge (what a "reasonable man" or reasonable medical
provider had "reason to know"). Scott, supra, at 27-28. The Scott Decision
defines the reasonable medical provider as follows:
Moreover, a Respondent, who is a reasonable medical provider submitting
claims and exercising ordinary care, at the very least would have made himself
familiar with the rules and regulations for presenting Medi-Cal claims. He
would have determined whether the claims he submitted to Medi-Cal were for
reimbursable services and whether the services claimed were actually provided.
He would have checked the claims presented against his own ledger cards to
ensure that the services for which he billed Medi-Cal were actually provided
on those dates. Ignorance is no defense; a respondent becomes liable for
remaining ignorant, especially, as here, when he, as a reasonable medical
provider, has an obligation to conduct an intelligent inquiry concerning his
submission of Medicaid claims.
Dr. Kern did not act as a reasonable medical provider vis-a-vis the Medicare
program. He purposely did not make himself familiar with the relevant Medicare
rules and requirements and yet caused the claims at issue to be presented. He
did not pay attention to the accuracy of his claims. In fact, he acted in
reckless disregard of their accuracy. Dr. Kern, like the Respondent in the
Scott case, had "reason to know" that the claims he submitted to Medicare were
"not provided as claimed."
As a participant in the Medicare program since 1966, the Respondent
submitted numerous claims for reimbursement to BSI. The Respondent was
informed about the operation of the Medicare program and was put on notice of
its rules and requirements. I find the Respondent's assertion that he never
received a binder entitled the "Medical Assistant's Manual" implausible. He
admitted to periodically receiving bulletins called "Medicare On Record," as
well as updates to the "Medical Assistant's Manual." TR IV/1026-1027; TR
VII/1740. Physicians are expected to read this information so as to keep
abreast of changes in Medicare rules and requirements. TR I/162-172. The
updates were periodically incorporated into the manual. TR I/165-166, 171-172.
The Respondent had a duty to investigate by reason of this Medicare
information which put him on notice. See, pp. 7-8, Ante.
Although the Respondent, with his large Medicare practice. received billing
information and instructions from BSI, he and his staff threw them away. TR
VII/1740. Even bulletins pertaining to billing, procedure codes, and
reimbursable services were thrown away by the Respondent's office personnel.
TR VII/1741. The Respondent testified that he rarely read one of these
bulletins. TR IV/1027.
Despite the Respondent's professed ignorance of the Medicare program's
reimbursement rules and requirements, at the hearing he appeared to be well-
informed. He understood the difference between an "assigned" and a "non-
assigned" claim. TR VI/1610. He could define "congregate" and "single" nursing
home visits, and the basis for billing one or the other. Id. He also
understood that it was "standard procedure" to do an H&P as part of admitting
a patient and billing for an admission, although he testified that he knew
this because it was just "good medicine," not because it was a Medicare
requirement. TR VI/1611. The Respondent was also aware of the use of different
procedure codes and the charges associated with them.
Nevertheless, the Respondent chose to ignore Medicare reimbursement
requirements and disregard written instructions; he chose to bill his way, not
Medicare's way. He said, "I was treating the patient not the insurance
company." TR VI/1604, 1605.
The Respondent clearly had access to the information he needed to file true
and accurate claims. He chose to ignore the information and remain ignorant of
the Medicare rules and requirements. He was unconcerned with the accuracy of
his claims. He requested few, if any, details about what services were
actually provided by other physicians when he was out of town. At times, he
purposely billed for the wrong day so as to make the claim look more plausible
to the carrier. TR VI/1602. He clearly did not "give to his surroundings the
attention which a standard reasonable man would consider necessary under the
circumstances" and did not use his senses "to discover what (was) readily
apparent." Scott, supra, at 27, citing Restatement of Torts (2d). section 290,
Comment b.
The Respondent also "knew" that some of the services were not billable and
purposely submitted false claims. For example, when a patient was admitted
through the ER and died six hours later without having been seen by the
Respondent, the Respondent nonetheless billed for an admit and a hospital
visit, he knew that he could not possibly be entitled to be paid by Medicare
for either. He testified that he was billing for viewing the body and
completing a death certificate, but he was indifferent to whether the Medicare
rules and requirements allowed payment for that service (TR IV/1343):
Q.: Did you know that was not a proper billing? A.: No. Actually, I'm
treating patients, not Medicare. . . .
To the extent that the Respondent was disdainful and ignorant of the
Medicare rules and requirements, the evidence in this record demonstrates that
his ignorance was self-imposed and self-serving. He simply did not care about
the consequences of his disregard for the truth and accuracy of the claims he
submitted. Under federal law, intent can be imputed to one who files false
claims "with reckless disregard of whether the statements were true and with a
conscious purpose to avoid learning the truth." U.S. v. Sarantos, 455 F.2d
877, 880 (2d Cir. 1972). Accord: U.S. v. Lange, 528 F.2d 1280 (5th Cir. 1976);
U.S. v. Abrams, 427 F.2d at 86 (2d Cir. 1970); U.S. v. Jewell, 532 F.2d 697
(9th Cir. 1976). cert. denied, 96 S.Ct. 3173.
This case is unlike the Silver case, supra, in that here the Respondent had
actual knowledge of the contents of the claims he submitted; he had firsthand
knowledge of whether the claims he submitted reflected the services he
actually provided.
There was no third-party independently responsible for the filing of the
claims. There was never any allegation or evidence that the Respondent had
delegated the billing process to anyone else. The Respondent's billing staff
performed only the ministerial function of preparing the claim forms. They did
so only based on information directly provided by the Respondent. He testified
that he told them how to bill and wrote the billing information in the Day
Book; the Respondent's staff obtained all hospital billing information from
the Day Book or from other entries made by Respondent; the staff filled out
the claim forms in accordance with the Respondent's instructions. TR
VI/1576-1583.
The Respondent had actual knowledge of the content of each claim and of
whether his bills reflected services which he had provided. The Respondent
also had actual knowledge that he had not personally provided services when he
was out of town and had actual knowledge that he had not provided a written
history and physical in those instances in which he billed for a hospital
admission.
Moreover, the lack of documentation in the vast majority of the medical
charts at issue demonstrates that either the services billed for were not
medically necessary and the Respondent had "reason to know" it, or the
Respondent was negligent to the patients involved for not documenting his
input with regard to their care. In the latter situation, the Respondent had a
preexisting duty to provide quality care as a physician and his lack of
quality care in those instances vitiates the need for independent proof to
cause the duty to investigate to spring into existence. See the discussion of
the "knew or had reason to know" standard of liability. pp. 5-8, Ante.
VI. The Respondent "Knew" or Had "Reason To Know" That the Services at Issue
Were Not Provided as Claimed Because the Respondent Was Under a Duty to
Investigate the Truth, Accuracy and Completeness of the Claims at Issue Before
They Were Submitted, by Virtue of the Certification Statements on Those Claims
The Deputy Under Secretary's Opinion in Silver states that the duty to
investigate the propriety of claims being submitted to Medicare or Medicaid
may be triggered by pre-existing duties on the part of medical providers. A
pre- existing duty is created by the certification of the claims at issue.
This pre- existing duty is similar to the duty of quality care. Even if it
were not a pre-existing duty, it does, at the very least, cause a duty to
investigate to spring into existence under the "reason to know" standard of
liability. See, Silver Opinion, p. 26. The certification on the HCFA 1500
claim form reads: "NOTICE: This is to certify that the foregoing information
is true, accurate and complete." This certification statement is present on
all but four of the claims at issue in this case. All but one of the claims at
issue contained the following identical certification language:
I certify that the services shown on this form were medically 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.. . .
The HCFA 1490 form contained substantially similar language having a similar
meaning.
The certification statement is a representation that the person signing the
claim has acquired sufficient information and made the requisite documentation
to prove to the Medicare program that the services were provided as claimed.
The Respondent was required to sign (or at least initial) the claims. In fact,
he signed all of the claims at issue here. The certification statement created
a duty on the Respondent to investigate the truth, accuracy, and completeness
of the claims and the supporting documentation.
Certifications similar to the claims at issue are familiar to many
government claim forms. In complex systems like Medicare or Medicaid, it is
quite common for persons to attempt to shift responsibility for false claims
to others. Those administering the program seek to affix personal
responsibility for claim information on the medical provider. The
certification of truth, accuracy, and completeness is a common means of
gaining some reasonable assurance that the provider has attested that the
claims are true, accurate, and complete.
The use of certification statements to create a certain representation by a
medical provider was discussed in U.S. ex rel. Fahner v. Alaska, 591 F. Supp.
794 (N.D. Ill., 1984). In that case, claims by an optometrist to the Medicaid
program of Illinois contained certification language virtually identical to
the case at bar: "This is to certify that the information above is true,
accurate and complete. . . ." 591 F. Supp. at 796.
In Peterson v. Weinberger, 508 F.2d 45, 52 (5th Cir.), cert. denied, 423
U.S. 830 (1975), Medicare claims for nursing home services stated: "A
physician's signature certifies that physician services were personally
rendered by him or under his personal direction." The Court commented:
It was entirely reasonable and necessary for the Government to require such
a certification on the claim forms to implement the Act, and at the same time
protect public funds. Obviously, a false certification on the claim form
frustrated the Government's attempt to process only valid claims and led to
the payment for services which were not covered or payable under the Act.
Here, the Respondent, by signing the claims forms containing certification
statements, was duty bound to investigate the truth, accuracy, and
completeness of the claims and its underlying documentation. [FN22]
VII. The Appropriate Amount of the Penalty, Assessment, and Suspension
To decide the appropriate amount of the sanctions that should be imposed in
any case where the I.G. has established liability, the CMPL and Regulations
require the ALJ to consider aggravating and mitigating circumstances.
Specifically, section 1003.106(a) and (b) of the Regulations and section
1320a- 7(c) of the CMPL require the ALJ to examine the following
circumstances: (1) the nature of the claims or requests for payment and the
circumstances under which they were presented, (2) the degree of culpability
of the Respondent, (3) the history of prior offenses of the Respondent, (4)
the financial condition of the Respondent, and (5) such other matters as
justice may require. Section 1003.106(b) of the Regulations contains some
general guidelines for the interpretation and application of these aggravating
and mitigating factors.
While the CMPL and Regulations require consideration of aggravating and
mitigating factors to determine the appropriate amount of the penalty,
assessment, and suspension to be imposed in a given case, there is no formula
set forth for computing them, and there is little guidance to be found in the
CMPL and its legislative history (except with regard to assessments, see, 48
Fed. Reg. 38827 (Aug. 26, 1983)). The preamble to the Regulations states that
"fixed numbers" have been "eliminated" as "triggering devices"; this
emphasizes that discretion is preferable to a mechanical formula. 48 Fed. Reg.
38827 (Aug. 26, 1983). The preamble further states: "as we gain more
experience in imposing sanctions under the statute, we may further refine the
guidelines, but at this early stage we believe that increased flexibility is
preferable."
The purpose of a penalty in a CMPL case is deterrence, rather than
retribution or punishment. See, Mayers v. U.S. Department of Health and Human
Services, 806 F.2d (11th Cir. 1986); see also, Chapman v. United States of
America, Department of Health and Human Services, --- F.2d --- (10th Cir.,
June 15, 1987). A deterrent is meant both to encourage others to comply with
the law and to discourage a respondent from committing the wrong again. To
arrive at an appropriate penalty that would be a deterrent, rather than
retribution, the ALJ must consider the factors outlined in the regulations,
weigh the gravity of the wrong done by a respondent, and consider what would
prevent the wrong from being committed again by a given respondent and others.
The purpose of an assessment in a CMPL case is to enable the United States
to recover the damages resulting from false or improper claims. This includes
amounts paid to a respondent by the Medicare and Medicaid programs and the
costs of investigating and prosecuting unlawful conduct. See 48 Fed. Reg.
38831 (Aug. 26, 1983).
The purpose of the suspension is both deterrence and the protection of the
Medicare and Medicaid programs by removing errant providers. 48 Fed. Reg.
38832 (Aug. 26, 1983). Section 1003.107 of the Regulations requires that the
same criteria used in determining the penalty and assessments be used in
determining the length of any suspension.
A. The Degree of Culpability of the Respondent
One of the most complex of the factors to be considered by the ALJ in
determining the amount of the penalty is the "degree of culpability." The
guidelines in the Regulations indicate that this factor relates to the degree
of a respondent's knowledge and intent. Knowledge is an aggravating factor,
and "unintentional or unrecognized error" is a mitigating factor if a
respondent "took corrective steps promptly after the error was discovered."
Regulations, section 1003.106(b) (2). The determination of the degree of
culpability involves an inquiry into the degree of a respondent's knowledge.
See, 48 Fed. Reg. 38831 (Aug. 26, 1983).
In this case, the degree of Respondent's culpability ranges from one end of
the spectrum of liability to the other. At one extreme, Respondent billed for
services that were "not provided as claimed" and the Respondent actually
"knew" that he was submitting a false claim. At the other extreme, the
Respondent had "reason to know" that billed services were "not provided as
claimed" because he did not provide the essential elements of a billable
service. The vast majority of the services at issue here fall in between these
two extremes. It is considered an aggravating factor that the Respondent
"knew" or had "reason to know" that the requisite elements of most of the
service at issue were "not provided as claimed" and the Respondent "knew" or
"had reason to know." It is also an aggravating factor that in some instances
the I.G. proved that the Respondent "knew" that some services were not
provided at all. It is a mitigating factor that in some other cases the
Respondent proved that even though he had "reason to know" that the admits and
visits were "not provided as claimed," he did provide some services.
There is one example worth noting. It is an aggravating circumstance that
the Respondent billed for 33 visits to Myrtle Pross although he "knew" the
evidence is that he never performed any medically necessary services.
Myrtle Pross was in the hospital for 52 days; she was admitted on January
26, 1983 and discharged on March 18, 1983. The Respondent did not perform or
bill for an admit. He entered only one progress note, on February 22, 1983:
"K+ normal. Condition essentially unchanged." He entered no physician's order.
He billed Medicare for a hospital visit for each of 34 days from January 27
through March 2, 1983, except for January 31. The I.G. alleged that 33 visits
were falsely claimed.
The Respondent testified that he saw Ms. Pross every day through March 2. On
direct, he said that he stopped seeing her on March 2 because he "probably
went out of town," but did not have Dr. Beachy or anyone else cover for him.
TR VI/1497. On cross, he said that he had not seen Ms. Pross for a period of a
year or a year-and-a-half, between the time she left the nursing home and her
admission to the hospital for treatment, by a surgeon, for broken bones. TR
VI/1662. He noted that, while hospitalized, Ms. Pross had a number of other
medical conditions which required treatment and that he treated her for all of
them "as the need arose. TR VI/1664. He identified only a urinary tract
infection as a condition for which he provided treatment, and he also
monitored her high blood pressure and electrolyte imbalance. TR VI/1665.
Ms. Pross' son testified that he was with his mother at the hospital every
day except Tuesdays from 8:30 a.m. to 8:30 p.m. and never saw the Respondent.
TR II/519. The Respondent explained that he made his rounds at the hospital
between 7:00 a.m. and 8:30 a.m. and always saw Myrtle Pross as one of his
first patients. TR VI/1498. Geraldine Kassar, Director of Surgical Nursing at
IMMC, noted that there was no entry in the nurses' notes to reflect that the
Respondent had visited Ms. Pross on any of the days in question. She further
stated that it "would not be probable or possible" that he could have made
visits for that many days consecutively and never have been observed by the
nurses on duty. TR III/641.
The evidence strongly supports a conclusion that the Respondent not only did
not document visits to Ms. Pross, but that he did not even visit her on any of
the days in question. Moreover, the evidence even more strongly supports the
conclusion that, if he did visit, he did not provide a medically necessary
service. The progress notes by the surgeon and the other physicians treating
Ms. Pross indicate that she was moved to a rehabilitation unit a few days
after entering the hospital and remained in the unit for the remainder of her
stay. She was treated by the other physicians, including an internal medicine
specialist, for the urinary tract infection and there is no indication that
the Respondent was involved in treating her for this or any other condition.
The other physicians continued to monitor Ms. Pross for the infection long
after the Respondent, by his own admission, had stopped visiting her.
Moreover, Dr. Kelley, the surgeon who operated on Ms. Pross for her broken
bones, testified that medical treatment by Dr. Kern was not necessary. TR
V/1218. [FN23]
Also, it is an aggravating circumstance that: (1) the despondent had a
reckless disregard for the Medicare program requirements, in that he knowingly
ignored the requirements and submitted bills to Medicare for whatever he
pleased; and (2) purposely indicated the wrong dates of service on claim forms
to avoid getting "flak" from the carrier.
B. The Nature and Circumstances of the Claims and Services at Issue
The guidelines. at section 1003.106(b) of the Regulations, state that it is
a mitigating circumstance if the nature and circumstances of the requests for
payment were all of the same type, occurred within a short period of time,
were few in number, and the total amount requested from Medicaid recipients
was under $1,000. But, the regulations do not specify what constitutes a
"short period of time" or how to evaluate the number of claims.
The guidelines at section 1003.106(b) (1) of the Regulations also state that
an aggravating circumstance exists where the requests for payment were of
several types, occurred over a lengthy period of time, were large in number,
indicated a pattern of making such requests for payment, or the amount was
substantial. Again, however, the guidelines do not indicate what period
constitutes a "lengthy" period, what number of requests is a "large" number,
or what amount is a "substantial" amount. See, 48 Fed. Reg. 38827 (Aug. 26,
1983). These judgments are left to the discretion of the ALJ.
Since examples of mitigating circumstances in the guideline are couched in
the conjunctive, all must be proven by the Respondent in order for the nature
and circumstances of the claims at issue to be considered mitigating. Here,
the Respondent did not prove all of them. On the other hand, since examples of
aggravating circumstances in the guidelines are couched in the disjunctive,
only one need be proven by the I.G. to establish the nature and circumstances
of the claims at issue to be considered aggravating. Here, the I.G. has
established more than one.
The I.G. proved by a preponderance of the evidence that the Respondent
billed for substantial sums ($7,400) and that the period was lengthy (over 2
years). The I.G. proved by a preponderance of the evidence that the Respondent
engaged in a pattern, in this case, of making such requests for payment. The
Respondent regularly and consistently billed Medicare for medical services
that were not documented.
The Respondent's pattern was much broader in scope than the claims at issue.
See, I.G. Ex 78B, 82B. Both the federal and state investigations of the
Respondent's billing of nursing home services revealed problems. Services
claimed were not documented and many visits were improperly billed as single
visits when they were actually congregate visits. Other services were non-
reimbursab1e because they were not medically necessary or were non-covered
services. BSI assessed an overpayment of approximately $63,000, which the
Respondent appealed. The hearing officer sustained BSI in part, finding that
the Respondent had claimed $28,619.44 to which he was not entitled. I.G. Ex
77. This lack of documentation and misrepresentation of services are similar
in nature to the circumstances under which the c1aims for hospital services at
issue were presented.
C. History of Prior Offenses
The next factor discussed in the Regulations is "prior offenses" of a
respondent. The guidelines at section 1003.106(b) state that an aggravating
circumstance exists if, prior to the presentation of the improper claims at
issue, a respondent had been held liable for criminal, civil or administrative
sanctions in connection with one of the programs covered by the CMPL or any
other medical services program. This guideline would clearly prevent
consideration of mere allegations of past wrongdoing. A respondent must have
been held liable, subjected to actual sanctions, and the claims must not have
been the subject of the instant proceeding. The preamble makes clear that
prior offenses are not an aggravating circumstance, unless there has been a
final agency determination or a final court adjudication. 48 Fed. Reg. 38832
(Aug. 26, 1983).
There are no "prior offenses" which could be construed as an aggravating
factor in this case. While there was a prior administrative proceeding in
which the Respondent was found to have been overpaid on nursing home visits,
there was no finding of liability and no imposition of sanctions. See, I.G. Ex
77. It should be noted that absence of a prior offense is not a mitigating
factor under the Regulations.
D. Other Matters to be Considered as Justice Requires
The CMPL and the Regulations also contain an umbrella factor: "other matters
as justice may require." The Regulations do not provide further detail, except
to indicate that consideration of other matters should be limited to those
relating to the purposes of civil money penalties and assessments. Regulations
section 1003.106(b)(5).
There is only one mitigating factor: the Respondent did perform medical
services in some instances.
There are two aggravating factors:
(1) The Respondent altered medical records during the course of the
federal investigation. (The Respondent admits that he altered the hospital
records and his explanation for doing so was that he had earlier forgotten to
include the documentation of his services in those records. This is an
aggravating circumstance because he made the changes knowing that there was a
current investigation concerning those records, he did not inform the
investigators of his changes, and he did not include the date on which he in
fact made the entry.)
(2) The Respondent lacked candor at the hearing concerning the fact that
the Respondent voluntarily withdrew his license to practice medicine in Iowa.
(In his direct testimony, the Respondent asserted that he had surrendered his
license of his own volition implying that he had decided to retire. TR
IV/1022, 1564-1565. See, I.G. Br/ 109-110. Under intense cross- examination,
however, the Respondent admitted that he turned in his license because his
attorney advised him that it might be revoked if he did not, "on the basis of
another situation." Id. When pressed further, he admitted that the real reason
that he had surrendered his license and "retired" was that he was likely to
lose his license if he did not. TR VI/1567.)

E. Financial Condition

The Regulations state that the financial condition of a respondent should
constitute a mitigating circumstance if the penalty or assessment, without
reduction, would jeopardize the ability of a respondent to continue as a
health care provider. Thus, it is clear that the ALJ may consider a
respondent's financial condition. Furthermore, the guidelines at section
1003.106(b) (4) note that the ALJ must consider the resources availab1e to a
respondent. This indicates that financial disclosure by a respondent is a key
requirement in evaluating a respondent's financial condition.
Based on the Respondent's testimony in November 1986, the Respondent has a
net worth of approximately $200,000, including a Keogh plan with a net value
of $107,000 after taxes; cash in his checking account, estimated at $64,000,
from the sale of his house; a cash value of $14,000 in a life insurance
policy; 334 shares of AT&T stock worth $8,000; a $6,500 one-third interest in
an airplane; a $6,000 IRA; and two automobiles of unspecified value. The total
of these amounts, not counting the automobiles, is $205,500. TR VI/1553-1562.
A June 1986 financial statement, filed with the Respondent's request for
hearing, listed assets total1ing $246,410 (not including his IRA and his Keogh
plan) and liabilities totalling $115,039.
Income tax returns for 1984 and 1985, filed along with his request for
hearing, corroborate the Respondent's testimony that he pays $1,800 monthly in
alimony, his principal expense. TR VI/1552. The other expenses that he
testified to were not verified by any documentation and were not consistent
with his financial statement. Also, his financial statement valued his
automobiles at $6,000, his AT&T stock at $11,000, and listed other stocks and
bonds (not mentioned in his testimony) at $88,410.
The Respondent testified that he was unemployed and likely to remain so. TR
VI/1549-1550. He said that he had a monthly income of $450 plus an unspecified
additional amount, from various investments (TR VI/ 1553); his financial
statement reported a monthly income of $642. Neither figure appeared to
include what income he might derive if he invested the $64,000 in his checking
account, the cash value of his insurance, or the amount in his Keogh plan.
The Respondent had the burden of proving by a preponderance of the evidence
that his financial condition would prevent him from being able to pay the
penalty and, assessment imposed in this case. Based on the above, I find that
he has not met this burden.
VIII. The Amount of the Penalty, Assessment, and Suspension, as Modified
Here, is Supported by the Record
The I.G. proposed a penalty of $203,925, an assessment of $14,870, and a
ten- year suspension. [FN24] After weighing all of the evidence in this case
(including the fact that the I.G. failed to prove liability with regard to 17
services at issue and that I dismissed four services at issue for lack of
notice), and after reevaluating the penalty in light of the implications of
the Respondent's culpability under the "reason to know" standard of liability,
and considering all of the aggravating and mitigating circumstances, I find
the proposed penalty, assessment, and suspension to be too high.
I conclude that a penalty of $67,500 is a sufficient deterrent under the
circumstances of this case, that $13,000 is sufficient to compensate the
Government, and a three-year suspension is sufficient for ensuring program
integrity.
It should be noted that in imposing the three-year suspension. I have taken
as a guideline the standard period imposed in debarments to protect the
integrity of government programs. See 47 Fed. Reg. 28854 (June 24, 1982).
Also, it should be noted that the Respondent was given the benefit of the
doubt in many situations where he testified that he provided some service to
the Medicare beneficiaries involved in this case, even though he did not prove
that the services provided were medically necessary, much less documented and
billable.

ORDER

Based on the evidence in the record and the CMPL and Regulations, it is
hereby Ordered that the Respondent:
(1) Pay a penalty of $67,500.
(2) Pay an assessment of $13,000.
(3) Be suspended from Medicare and Medicaid programs for a period of three
(3) years.

Charles E. Stratton

FN1. The CMPL, consisting of sections 1128A and 1128(c) of the Social Security
Act (Act), is codified in Title 42 U.S.C., at sections 1320a-7a and 1320a-
7(c) (1983) (1986 Supp). The Regulations are codified in 42 C.F.R., at
sections 1003.100 through 1003.133 (1986). See, 48 Fed. Reg. 38827 (Aug. 26,
1983); 51 Fed. Reg. 34764 et seq. (Sept. 30, 1986); and 51 Fed. Reg. 37577 and
39528 (Oct. 23 and 29, 1986).

FN2. The terms "civil monetary penalties" and "civil money penalties" are used
interchangeably in the CMPL, the Regulations, and in this Decision and Order.

FN3. A person eligible for Medicaid benefits is defined at 42 C.F.R. section
400.203 as a "recipient" and a person eligible for Medicare benefits is
defined at section 400.202 as a "beneficiary."

FN4. Section 1320a7a(h) (2) of the CMPL and section 1003.101 of the
Regulations define a "claim" as an application for payment submitted for one
or more items or services for which payment may be made under the Medicare
(Title XVIII), Medicaid (Title XIX), or Maternal and Child Health Services
Block Grant (Title V) programs.

FN5. Section 1320a-7a(h) (3) of the CMPL and section 1003.101 of the
Regulations define an "item or service" to include any item, device, medical
supply or service claimed to have been provided to a patient and listed in an
itemized claim for payment.

FN6. The CMPL and Regulations contain slightly different language with
identical meaning. Under section 1320 a-7a(1)(a) of the CMPL, liability
attaches when the person "knows or has reason to know." Under section 1003.102
(a) (1) of the Regulations, liability attaches when the person "knew or had
reason to know."
FN7. It should be noted that proof of actual knowledge is considered to be an
aggravating factor. Regulations section 1003.106(b)(2).

FN8. For a discussion of subjective knowledge and objective knowledge, see
Seavy, "Negligence-Subjective or Objective," 41 Harv. L. Rev. 1, 17; see,
also, Restatement of Torts (2d), sections 289, 290.

FN9. One such pre-existing duty is the duty of quality medical care owed by a
physician to a patient.

FN10. There are also Parts A and C. Neither are involved here. Part A provides
insurance for certain types of hospital and post-hospital services. Part C
contains miscellaneous provisions applicable to the programs under both Parts
A and B.

FN11. Reference to the briefs, the transcript, the stipulations, hearing
exhibits, and to the Findings of Fact and Conclusion of Law contained herein
are as follows:

FN12. The HCFA 1490 and HCFA 1500 also serve as Medicaid claim forms in those
instances where the Medicare beneficiary is a Medicaid recipient as well.
After the Medicare claims are processed by BSI they are cross-matched with a
Medicaid history tape to identify whether the Medicare beneficiary is also a
Medicaid recipient. An electronic tape is then generated by the Medicare
carrier and forwarded on a weekly basis to the Medicaid carrier, which
processes the information and pays the providers for the coinsurance and
deductible. The Respondent received payment from Medicaid in this manner.
Stip/16; TR I/129- 135; TR II/424-425.

FN13. The other two procedure codes applicable to the remaining 9 (of the 309)
services at issue are 0610 and 9072. procedure code 0610 is a code used to
designate a medical emergency treated in the emergency room. TR I/141. It is
billed at $25. Procedure code 0072 is an intensive care unit (ICU) visit,
which is billed at $45, instead of the $20 for a routine hospital visit. TR
I/141.

FN14. Some of the proposed findings and conclusions offered were rejected
because they were not supported by the evidence in the record, needed to be
modified, or were not material. Also, I have incorporated some findings and
conclusions elsewhere in this Decision.

FN15. Any part of this Decision and Order preceding the Findings of Fact and
Conclusions of Law which is obviously a finding of fact or conclusion of law
is hereby incorporated herein as a finding of fact or conclusion of law; I
refer primarily to the facts and conclusions that were not disputed or which
are clear and do not need to be repeated here.

FN16. Alice Hanlon was a patient at Northwest Community Hospital. See, I.G. Ex
30B. The I.G. alleged that the Respondent "knew" or "had reason to know" that
this admit for which the Respondent billed Medicare, "was not provided as
claimed" because Dr. Beachy, who was covering for the Respondent while he was
out of town, did not admit the patient and wrote in the patient's chart that
Dr. Beachy did not see the patient. I.G. Ex 30B.

FN17. The "computer list" is a 3 x 5 card printed and distributed to
physicians dai1y by the IMMC. The card lists, by doctor, the name and location
in the hospital of each patient. TR I/199.

FN18. BSI assessed Dr. Kern an overpayment of $63,213.75. After a hearing, it
was determined that the total overpayment assessed should be $28,619.44, plus
interest. I.G. Ex 77.

FN19. Mr. Kram also concluded that the Respondent had falsified medical
records after the I.G. had begun its investigation. Mr. Kram discovered that
BSI had reviewed the same medical record during two audits at least 1-1/2
years apart (I.G. 4B.1 and 4D.1) and had prepared a summary sheet of the
records each time. Mr. Kram noticed discrepancies between the two summary
sheets. See, I.G. Ex 4B.2 and 4D.2; TR I/84; TR III/708. He found one altered
record, and then went back to IMMC in July, 1986, to review additional records
and found four additional altered records. I.G. Ex 17D, 22D, 33D, 44D.

FN20. Usually, that service is included in Medicare's reimbursement to a
surgeon for his surgical fee (global fee) which includes the initial hospital
exam, the surgery, and post-operative hospital visits. TR I/166-167.

FN21. It was the opinion of the Director of the Internal Medicine Residency
Program and his colleagues that the Respondent did not want to be directly
involved with the care of his acutely ill nursing home patients. TR II/415.

FN22. The unqualified certification statement on the claims at issue is
contrasted with certifications with qualifiers (i.e., "to the best of any
knowledge and belief"). This latter type was found to impose no duty on to
check the facts on a V.A. loan application in U.S. v. Ekelman & Associates,
Inc., 532 F.2d 545, 549 (6th Cir. 1976). The court indicated it would have
reached a different result (imposing a duty to obtain personal knowledge) if
the qualifier had not been present.

FN23. Dr. Kelley was a witness for the Respondent.

FN24. The maximum penalty that could have been imposed under the CMPL and
Regulations -- $616,000 -- is much greater than the amount proposed by the
I.G. As stated earlier, the penalty is intended to serve as a deterrent to
future unlawful conduct in the Medicare and Medicaid programs; the assessment
is meant to make the Government whole; the suspension is meant to protect
program integrity. In its report on the CMPL, the House Ways and Means
Committee found that "civil money penalty proceedings are necessary for the
effective prevention of abuses in the Medicare and Medicaid program. . . ."
H.R. Rep. No. 97-158, 97th Cong., 1st Sess. Vol. III, 329 (1981).
END OF DOCUMENT