Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Yvon Nazon, M.D.,
Petitioner,
- v. -
The Inspector General.
DATE: December 20, 1991
Docket No. C-332
DECISION
On November 2, 1990, the Inspector General (I.G.) notified
Petitioner that he was being excluded from participation in the
Medicare and State health care programs for seven years, pursuant to
section 1128(a)(1) of the Social Security Act (Act). 1/ The I.G.
advised Petitioner that he was being excluded as a result of his
conviction of a criminal offense related to the delivery of an item
or service under the Medicaid program.
By letter dated December 11, 1990, Petitioner requested a hearing
and the case was assigned to me. On May 21, 1991, I held an in-
person hearing in Chicago, Illinois. The parties subsequently
submitted post-hearing briefs and reply briefs and they attached
several proposed exhibits to their post-hearing submissions. By
letter dated September 24, 1991, I established a schedule which
provided the parties the opportunity to object to these exhibits and
to reply to any objections. On November 5, 1991, I issued a Ruling
in which I admitted the proposed exhibits attached to the parties'
post-hearing submissions into evidence.
I also noted in my November 5, 1991 Ruling that on October 25, 1991,
the I.G. furnished me with a copy of a published opinion from the
United States Court of Appeals for the Seventh Circuit which
affirmed Petitioner's underlying conviction. U.S. v. Nazon, 940 F.
2d 255 (7th Cir. 1991). The I.G. stated in an attached cover letter
that this opinion "may be helpful" in reaching a decision in this
matter, and indicated that he had not brought this opinion to my
attention earlier because it was rendered after the parties'
submissions of post-hearing briefs and that it was only recently
published. I stated in my Ruling that Petitioner would have until
November 20, 1991 to file written comments to the I.G.'s submission.
Petitioner subsequently filed a response in which he strenuously
objected to the I.G.'s October 25, 1991 submission on the grounds
that the submission was made without leave of this tribunal and that
it "irreparably" prejudiced Petitioner. Petitioner therefore
requested that I strike this submission from the record and that I
also sanction the I.G. by dismissing these proceedings with
prejudice.
I have considered Petitioner's response to the I.G.'s October 25,
1991 submission, and I deny his motions to strike it from the record
and to dismiss these proceedings. The Seventh Circuit's opinion
regarding Petitioner's conviction which underlies his exclusion from
Medicare and Medicaid is highly relevant to the issues before me in
this proceeding. In fact, had the outcome of the appeal been to
overturn Petitioner's conviction, it would have set aside the
underlying basis for an exclusion in this case. Since this opinion
was not published until after the post-hearing briefing schedule
expired, the I.G. had good cause for not bringing it to my
attention at the time he submitted his post-hearing briefs. I am
allowing the Seventh Circuit's affirmance of the trial court's
decision to convict Petitioner to become part of this record solely
for the purpose of providing additional support for the trial
court's decision. Petitioner is not prejudiced by the use of the
Seventh Circuit's opinion for this purpose because the trial court's
decision was part of the record at the time of the May 21, 1991
hearing and Petitioner had full opportunity to rebut its findings
and conclusions at that time.
I have considered the evidence, the parties' arguments, and the
applicable laws and regulations. I conclude that the seven year
exclusion imposed and directed against Petitioner by the I.G. is
reasonable.
ADMISSIONS
Petitioner admits that he was convicted of a criminal offense
related to the delivery of an item or service under the Indiana
Medicaid program within the meaning of section 1128(a)(1) of the
Act. P. Post-hearing Rep. Br. 4. 2/
ISSUES
The remaining issues in this case are:
1. Whether I, as the Secretary's delegate to hear and decide
exclusion cases, have the authority to consider a request to waive
Petitioner's exclusion or to recommend a waiver to the Secretary on
the grounds that he is the sole source of essential specialized
services in a community within the meaning of section 1128(c)(3)(B)
of the Act.
2. Whether the seven-year exclusion imposed and directed against
Petitioner is reasonable and appropriate under the circumstances of
this case.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Petitioner is a Board-certified physician in obstetrics and
gynecology. Tr. 51.
2. Petitioner used Clinical Diagnostics, Inc., an independent
laboratory, to analyze specimens of his patients from 1985 to May
1987. During this period, Petitioner engaged in a practice in which
he improperly billed Medicaid for laboratory services which were not
performed in his office, but which were instead performed by
Clinical Diagnostics, Inc. I.G. Ex. 3/5, 13, 14, 19, 21.
3. Petitioner also engaged in a practice in which he improperly
submitted bills to Medicaid for assistant surgeon fees in instances
where either there was not an assistant surgeon or the assistant
surgeon was a resident physician paid by the hospital where the
surgery was performed. Petitioner instructed his office staff to
alter operative reports, and he submitted the altered operative
reports as documentation for his fraudulent bills for surgical
services. I.G. Ex. 3/5, 14, 17, 18, 20; Tr. 28-31, 34-35.
4. On October 13, 1989, the grand jury for the United States
District Court for the Northern District of Indiana indicted
Petitioner on 17 counts of presenting false claims to the Indiana
Department of Public Welfare in violation of 18 U.S.C. 287. Counts
one through eight of the indictment charged Petitioner with
fraudulently billing for assistant surgeon's fees during the period
from December 19, 1986 to May 15, 1987. Counts nine through 17
charged Petitioner with fraudulently billing for laboratory tests he
did not perform during the period from April 4, 1986 to September
12, 1986. I.G. Ex. 1.
5. A trial was held in March 1990 and a jury found Petitioner
guilty on all 17 counts contained in the indictment. I.G. Ex. 3/7;
I.G. Ex. 2.
6. On May 10, 1990, the United States District Court for the
Northern District of Indiana sentenced Petitioner to a period of
five years' probation with a suspended sentence, ordered him to
serve one year in a work release program, to contribute 1500 hours
community service, and to pay restitution to the Medicaid program in
the amount of $84,110.35. I.G. Ex. 2.
7. On August 15, 1991, the United States Court of Appeals for the
Seventh Circuit issued a decision affirming Petitioner's conviction.
Cited as 940 F. 2d 255 (7th Cir. 1991).
8. Petitioner was convicted of a criminal offense within the
meaning of section 1128(a)(1) and 1128(i) of the Act.
9. Petitioner was convicted of a criminal offense related to the
delivery of an item or service under the Medicaid program, within
the meaning of section 1128(a)(1) of the Act.
10. The Secretary of the United States Department of Health and
Human Services (the Secretary) delegated to the I.G. the authority
to determine, impose, and direct exclusions pursuant to section 1128
of the Act. 48 Fed. Reg. 21661 (May 13, 1983).
11. On November 2, 1990, the I.G. notified Petitioner that he was
being excluded from participation in the Medicare and Medicaid
programs for seven years, pursuant to section 1128(a)(1) of the Act.
12. The I.G. properly excluded Petitioner from participation in the
Medicare and Medicaid programs for a period of at least five years
as required by the minimum mandatory exclusion provisions of
sections 1128(a)(1) and 1128(c)(3)(B) of the Act.
13. I do not have the authority to consider a request for a waiver
of Petitioner's exclusion or to recommend a waiver to the Secretary.
14. The remedial purpose of section 1128 of the Act is to protect
federally-funded health care programs and their beneficiaries and
recipients from providers who have demonstrated by their conduct
that they cannot be trusted to handle program funds or to treat
beneficiaries and recipients.
15. Petitioner presented a substantial number of fraudulent Medicaid
claims over a period exceeding a year, a lengthy period of time.
FFCL 2-5, 7.
16. The financial loss to the Medicaid program resulting from
Petitioner's criminal misconduct amounted to at least $84,000, a
significant amount of money. I.G. Ex. 2/1; Tr. 39, 41.
17. The serious nature of Petitioner's criminal offenses is
reflected in the sentence fashioned by the court. FFCL 6.
18. The serious nature of Petitioner's offenses is reflected in the
fact that on June 28, 1990, the State of Indiana permanently
excluded Petitioner from participation in the Indiana Medicaid
program as a result of his criminal misconduct. I.G. Ex. 10.
19. The serious nature of Petitioner's offenses is reflected in the
fact that the Medical Licensing Board of Indiana issued a decision
on March 5, 1991 finding that the imposition of disciplinary
sanctions against Petitioner was appropriate based on his criminal
conviction. I.G. Ex. 13.
20. Petitioner's testimony that his improper billing practices were
the result of the poor advice of a misinformed subordinate is not
credible. Instead, the weight of the evidence establishes that
Petitioner deliberately violated Medicaid regulations, and he
directed his staff to engage in unlawful billing practices. Tr. 53,
57, 65, 91-93, 100; I.G. Ex. 3/13, 14 20-21, 31.
21. Petitioner repeatedly initiated schemes to defraud the Medicaid
program, and his unlawful acts show a high level of culpability.
FFCL 20.
22. Petitioner's misstatement of the facts is strong evidence that
he is untrustworthy. FFCL 20-21.
23. Petitioner's continued refusal to recognize the wrongfulness of
his actions and his repeated attempts to excuse and rationalize his
deceptive billing practices show that he has not fully recognized
his duty to adhere to Medicaid billing requirements. Tr. 57, 59,
97.
24. The fact that Petitioner is a competent physician who has
provided medical services to a community which has a serious need
for these services does not establish that he can be trusted to deal
with Medicare and Medicaid trust funds.
25. The fact that Petitioner provided needed medical services
without cost subsequent to his criminal conviction does not
establish that he can be trusted to be a program provider.
26. In this case, the need to protect the integrity of the Medicare
and Medicaid programs supersedes concerns that this remedy may
impair Petitioner's ability to provide needed medical services to
the indigent population of the Gary, Indiana, community.
27. A lengthy exclusion is needed in this case to satisfy the
remedial purposes of the Act.
28. The seven year exclusion imposed and directed by the I.G. Is
reasonable.
RATIONALE
1. The I.G. was required to exclude Petitioner for a minimum period
of five years in this case.
Petitioner admits that he was convicted of a criminal offense
related to the delivery of an item or service under the Indiana
Medicaid program, within the meaning of section 1128(a)(1) of the
Act. Therefore, there is no dispute as to the authority of the I.G.
to impose and direct an exclusion against Petitioner pursuant to
section 1128(a)(1) of the Act.
Sections 1128(a)(1) and 1128(c)(3)(B) of the Act clearly require the
I.G. to exclude individuals and entities from the Medicare and
Medicaid programs for a minimum period of five years, when such
individuals and entities have been "convicted" of a criminal offense
"related to the delivery of an item or service" under the Medicare
or Medicaid programs, within the meaning of section 1128(a)(1) of
the Act.
Since Petitioner was "convicted" of a criminal offense and it was
"related to the delivery of an item or service" under Medicaid
pursuant to section 1128(a)(1) of the Act, the I.G. was required by
section 1128(c)(3)(B) of the Act to exclude Petitioner for a minimum
of five years.
2. I do not have the authority to consider a request for a waiver
of the exclusion or to recommend a waiver to the Secretary.
The only exception to the requirement that the I.G. exclude
individuals and entities from the Medicare and Medicaid programs for
a minimum period of five years when such individuals and entities
have been convicted of a program-related offense within the meaning
of section 1128(a)(1) is contained in section 1128(c)(3)(B) of the
Act. That section provides that the Secretary may waive exclusions
imposed pursuant to section 1128(a)(1) of the Act, "upon the request
of a State," "in the case of an individual or entity that is the
sole community physician or sole source of essential specialized
services in a community." Section 1128(c)(3)(B) further provides
that the Secretary's decision whether to waive exclusions "shall not
be reviewable".
Petitioner was convicted of 17 counts of presenting false claims to
the Indiana Department of Public Welfare in violation of 18 U.S.C.
287. FFCL 4-5. As part of Petitioner's sentence, the United States
District Court required Petitioner to contribute 1500 hours of
community service. FFCL 6. At the time of Petitioner's sentencing,
Dr. Rebera Poston, the Health Commissioner of Gary, Indiana, was in
the process of establishing a State-financed prenatal clinic for the
indigent women of Gary, Indiana. One of the funding requirements
for the clinic was that a qualified obstetrician/gynecologist be
available for consultation. Dr. Poston was unable to find a
physician willing to offer these services without charge until
Petitioner volunteered his services, which he did in order to
fulfill his court-ordered community service requirement. As a
result of Petitioner's assistance, the prenatal clinic was able to
begin operation. Dr. Poston testified at the May 21, 1991 hearing
that Petitioner's services were "absolutely indispensable" to the
operation of the prenatal clinic and that the prospects for
replacing him were nil. According to Dr. Poston, the Board of
Health would probably have to close the prenatal clinic if
Petitioner was unavailable to provide his obstetrical services. Tr.
118-119; P. Ex. 3/61, 63, 64, 67, 72.
Dr. Poston testified Petitioner also contributed services to the
sexually transmitted disease clinic and to the chronic disease
clinic operated by the Gary Board of Health. Tr. 111. Although
Petitioner's court-ordered community service requirement does not
contemplate that Petitioner provide medical supplies, Dr. Poston
testified that Petitioner voluntarily donated supplies and
equipment, and he also treated patients in his own office so that he
could do procedures that he would not have been able to do with
clinic facilities. Tr. 117-118.
Petitioner attached to his post-hearing brief a copy of a July 19,
1991 letter addressed to Senators Richard Lugar and Dan Coats of
Indiana from the Gary Board of Health which described the services
provided by Petitioner to the Gary Board of Health clinic program.
The Gary Board of Health asked that the letter "serve as our request
that [Petitioner] be reinstated to the Medicaid/Medicare Program
under such condition(s) as those agencies deem permissible". The
letter also urges the senators from Indiana to "communicate with
those in the administration in an effort to see to it that
[Petitioner] is re-instated to the Medicare/Medicaid Programs".
Petitioner asserts that the clinic program operated by the Gary
Board of Health, to which Petitioner has contributed his services,
was established through the assistance of federal, State, and local
funding. Petitioner therefore contends that it qualifies as a
"quasi-state agency". Petitioner argues that this letter
constitutes a "direct request" by the State of Indiana to the
Department of Health an Human Services for a waiver of the exclusion
imposed upon him. P. Post-hearing Br. 5. Petitioner also argues
that this letter and Dr. Poston's testimony show that Petitioner is
the "sole source of essential specialized services" in Gary,
Indiana, within the meaning of section 1128(c)(3)(B) of the Act and
therefore a waiver of Petitioner's exclusion is justified under this
statutory standard.
The I.G. argues that the July 19, 1991 letter cannot be viewed as a
request of a State that the Secretary grant a waiver in this case
since it is not addressed to the Secretary. The I.G. also contends
that even if the letter were to be construed as a request to the
Secretary for a waiver of Petitioner's exclusion, there is nothing
in the Act or the regulations which states that the Secretary has
delegated to administrative law judges the authority to consider
waiver requests.
Petitioner urges that, as the Secretary's delegate to hear and
decide exclusion cases, I have the authority to consider a waiver
request. Petitioner contends that under 42 C.F.R. 1001.128(a),
which provides that administrative law judges have jurisdiction to
hear and decide the issue of whether the I.G.'s exclusion in a
particular case is reasonable, I have the authority to determine
whether an exclusion should be waived under section 1128(c)(3)(B) of
the Act. According to Petitioner, an administrative law judge who
makes the determination that an exclusion is warranted in a
particular case could then recommend waiver of such exclusion to the
Secretary.
In my November 5, 1991 Ruling, I stated that I disagreed with
Petitioner's position. I ruled that I do not have the authority to
hear and decide the issue of waiver, and thus it is unnecessary for
me to determine whether the July 19, 1991 letter constitutes a valid
request for a waiver by "a State" to "the Secretary". 3/
The authority of the Secretary to waive an exclusion is unrelated to
the duty of administrative law judges to decide hearing requests
pursuant to section 1128 of the Act. Stanley A. Bittman, Ph. D.,
DAB CR153 (1991). There is nothing in the law or regulations which
either states or suggests that the Secretary has delegated to
administrative law judges the authority to reduce or waive or to
recommend the reduction of or the waiver of the five year minimum
exclusion mandated by section 1128(c)(3)(B) of the Act. Michael I
Sabbagh, M.D., DAB CR20 (1989) at 18. While 42 C.F.R. 1001.128(a)
provides that administrative law judges have the authority to hear
and decide the issue of whether the length of an exclusion is
reasonable, I do not construe this to mean that the issue of waiver
can be heard by administrative law judges. Instead, the
administrative law judge's authority to determine the reasonableness
of the length of an exclusion applies in exclusions imposed pursuant
to section 1128(a)(1) only in those cases where the exclusion is
greater than the minimum mandatory period of five years. In those
cases, the administrative law judge's authority is limited to
hearing and deciding whether an exclusion greater than the minimum
mandatory five years is reasonable. 4/
3. A seven year exclusion is appropriate and reasonable in this
case.
In this case, the I.G. excluded Petitioner for a period of seven
years. The exclusion provisions of sections 1128(a)(1) and
1128(c)(3)(B) of the Act require that an individual that has been
convicted of a criminal offense related to the delivery of an item
or service under the Medicaid program be excluded for a minimum
period of five years. The issue in this case is whether the I.G. is
justified in excluding Petitioner for seven years. Resolution of
this issue depends on analysis of the evidence of record in light of
the exclusion law's remedial purpose. Lakshmi N. Murty Achalla,
M.D., DAB 1231 (1991).
Section 1128 is a civil statute and Congress intended it to be
remedial in application. The remedial purpose of the exclusion law
is to enable the Secretary to protect federally-funded health care
programs from misconduct. Such misconduct includes fraud or theft
against federally-funded health care programs. It also includes
neglectful or abusive conduct against program recipients and
beneficiaries. See, S. Rep. No. 109, 100th Cong., 1st Sess. 1,
reprinted in 1987 U.S. Code Cong. and Admin. News 682. It has been
held that the offense of intentionally submitting billings which
cause an overpayment to a provider by a federally-funded health care
program adversely impacts the fiscal integrity of the affected
program. Daniel B. Salyer, DAB CR106 (1990); Jack W. Greene, DAB
1078 (1989).
The key term to keep in mind is "protection", the prevention of
harm. See, Webster's II New Riverside University Dictionary 946
(1984). As a means of protecting the Medicare and Medicaid programs
and their beneficiaries and recipients, Congress chose to mandate,
and in other instances to permit, the exclusion of untrustworthy
providers. Through exclusion, individuals who have caused harm, or
demonstrated that they may cause harm, to the federally-funded
health care programs or their beneficiaries or recipients are no
longer permitted to receive reimbursement for items or services
which they provide to Medicare beneficiaries or Medicaid recipients.
Thus, untrustworthy providers are removed from positions which
provide a potential avenue for causing future harm to the program or
to its beneficiaries or recipients. See Vladimir Coric, M.D., DAB
CR135 (1991).
An exclusion imposed and directed pursuant to section 1128 will
likely have an adverse financial impact on the person against whom
the exclusion is imposed. However, the law places program integrity
and the well-being of beneficiaries and recipients ahead of the
pecuniary interests of providers. An exclusion is not punitive if
it reasonably serves the law's remedial objectives, even if the
exclusion has a severe adverse financial impact on the person
against whom it is imposed.
The determination of when an individual should be trusted and
allowed to reapply for reinstatement as a provider in the federal
programs is a difficult issue. It is subject to discretion. The
federal regulations at 42 C.F.R. 1001.125(b) guide me in making this
determination. The regulations require the I.G. to consider factors
related to the seriousness and program impact of the offense and to
balance those factors against any factors that demonstrate
trustworthiness. Leonard N. Schwartz, DAB CR36 (1989).
Since the exclusion remedy is not intended to be a punishment for
wrongdoing, the regulations should not be applied as sentencing
guidelines to the facts of a case to determine the punishment a
provider "deserves". Instead, the regulations provide guidance as
to the factors that should be considered in order to make inferences
about a provider's trustworthiness and the length of time a provider
should be excluded to ensure that a provider no longer poses a risk
to the covered programs and to their beneficiaries and recipients.
While I do not analyze an exclusion as redress for past harmful
conduct, evidence of past harmful acts by an excluded party may
demonstrate a propensity by that party to commit such acts or
similar misconduct in the future.
The hearing in an exclusion case is, by law, de novo. Act, section
205(b)(1). Evidence which is relevant to the reasonableness of the
length of an exclusion will be admitted in a hearing on an exclusion
whether or not that evidence was available to the I.G. at the time
the I.G. made his exclusion determination. Evidence which relates
to a provider's trustworthiness or the remedial objectives of the
exclusion law is admissible at an exclusion hearing even if that
evidence is of conduct other than that which establishes statutory
authority to exclude a provider.
A determination of the length of time necessary to establish that a
provider is no longer a threat to the covered programs and to their
beneficiaries and recipients necessitates an evaluation of the
myriad facts of each case, including the nature of the offense
committed by the provider, the circumstances surrounding the
offense, whether and when the provider sought help to correct the
behavior which led to the offense, and how far the provider has come
towards rehabilitation. Victor M. Janze, M.D., DAB CR101 (1990).
There is no precise formula which can be applied to calculate when a
provider should be trusted and allowed to reapply for participation
in the federally-funded health care programs. The totality of the
circumstances of each case must be evaluated in order to reach a
determination regarding the appropriate length of an exclusion.
The record shows that Petitioner engaged in a pattern of serious
criminal activity over a period of several years. On August 4,
1986, the Indiana Medicaid Fraud Control Unit began an investigation
of Petitioner's billing procedures. This investigation was
initiated because an audit conducted by Blue Cross/Blue Shield of
Indiana, the fiscal contractor for the Indiana Medicaid program,
revealed that Petitioner was engaging in questionable billing
practices. I.G. Ex. 3/1, 4. The Federal Bureau of Investigation
(F.B.I.) subsequently joined the investigation on October 8, 1987.
I.G. Ex. 3/6.
The investigation concentrated on two improper billing practices.
First, the investigation focused on Petitioner's practice of billing
Medicaid for laboratory services not provided by his office. The
investigation also explored irregularities in Petitioner's billing
for surgical fees. I.G. Ex. 3/4-5.
The investigation revealed that Petitioner began using Clinical
Diagnostics, Inc. as an outside laboratory to analyze patient
specimens in 1985, and that he continued to use its laboratory
services until May 1987. I.G. Ex. 3/21. Dr. R. B. Shaker,
president of Clinical Diagnostics, told investigators that he
provided requisition forms to members of Petitioner's office
staff to be used in ordering laboratory services for Petitioner's
patients. Dr. Skinner instructed Petitioner's office personnel to
complete the requisition forms by identifying the patient by name
and checking off the laboratory services needed for a specimen. Dr.
Skinner also gave instructions to put the patient's Medicaid number
on the requisition form if the patient was Medicaid eligible. In
those instances, Clinical Diagnostics would bill Medicaid directly
for those laboratory services. If there was no number on the form,
Clinical Diagnostics would assume that the patient was not covered
by Medicaid and it would bill Petitioner directly for the laboratory
services. I.G. Ex. 3/5, 21.
According to an investigative report of an interview with Ms. Mariom
Bernice Miller, who was employed by Petitioner as a Medical
Assistant from 1979 to 1987, Petitioner told his office staff that
he was not going to let Clinical Diagnostics bill Medicaid directly,
but that he would bill Medicaid himself for the laboratory services
performed by Clinical Diagnostics for Medicaid patients. I.G. Ex.
3/13-14. Ms. Miller stated that in most instances, Petitioner's
office would submit requisition forms to Clinical Diagnostics for
Medicaid patients without providing their Medicaid number. I.G. Ex.
3/13. Clinical Diagnostics would then be unable to bill Medicaid
directly for laboratory services performed for these Medicaid
patients as required by Medicaid regulations. Instead, Clinical
Diagnostics would charge Petitioner for these services.
The record shows that in order to attract Petitioner's business,
Clinical Diagnostics discounted the laboratory fees charged to him.
Petitioner paid Clinical Diagnostics between $12 and $18 for
laboratory services performed for Medicaid patients whose Medicaid
numbers did not appear on the requisition form. Petitioner then
billed Medicaid for those patients as if he had performed the
laboratory services in his office. The investigative summary
revealed that Petitioner usually charged Medicaid between $80 and
$100 for these services, and that Medicaid usually paid Petitioner
approximately $60 for each claim. 5/ In this way, Petitioner
improperly billed Medicaid at inflated rates for laboratory work
that he did not perform. I.G. Ex. 3/5, 13, 19, 21.
The record shows investigators confronted Petitioner regarding his
improper billings for laboratory services on August 18, 1987 and
October 15, 1987. Investigators informed Petitioner that these
billing practices were abusive and illegal. Petitioner attempted to
justify these practices by asserting to investigators that Clinical
Diagnostics was his employee because he hired it to perform
laboratory work for him. Petitioner reasoned that since the
laboratory is in his employ, there is nothing wrong with paying it
for its services and then billing Medicaid for these services.
Petitioner also stated that the amount he charged Medicaid for the
laboratory work compensates him for the overhead expenses of his
office, the processing of the specimen in preparation for the
laboratory work, and the interpreta-tion of the laboratory results.
I.G. Ex. 3/22, 30; Tr. 31-32.
The investigation also explored irregularities regarding
Petitioner's practice of billing for surgical fees. The
investigation revealed that from 1981 to 1987, Petitioner employed
Dr. Jacqueline Y. Gervais to assist him in his practice. As part of
her duties, Dr. Gervais performed surgeries on Petitioner's
patients. I.G. Ex. 3/17-18. Former employee Ms. Miller told
investigators that beginning in 1984 and continuing into 1987,
Petitioner instructed his office staff to alter copies of operative
reports sent to his office by the hospital. If the operative report
showed that Dr. Gervais performed surgery without an assistant,
Petitioner instructed his office staff to white out her name and
replace it with Petitioner's name as the head surgeon. Petitioner
also instructed his staff to write in Dr. Gervais' name as the
assistant surgeon in those instances. Petitioner would then use the
altered operative report as documentation to bill Medicaid for the
services of an assistant surgeon, even though the operation was
performed without an assistant surgeon. I.G. Ex. 3/5, 14.
Ms. Miller also indicated that if the operative report showed that
Dr. Gervais performed the surgery with the assistance of a resident
doctor provided by the hospital, Petitioner instructed his staff to
white out both names on the operative report and again replace it
with Petitioner's name as the head surgeon and with Dr. Gervais'
name as the assistant surgeon. The services of an assisting
resident provided by the hospital were paid for by the hospital as
part of the resident's training. Petitioner would use the altered
operative report as documentation to bill Medicaid for the services
of an assisting physician. These actions made it possible for
Medicaid to be billed twice for assistant physician's services:
once properly by the hospital as reimbursement for payment of the
resident's services and once improperly by Petitioner. I.G. Ex.
3/14.
Mr. John Peters, an investigator with the Medicaid Fraud Control
Unit, testified at the May 21, 1991 hearing that Ms. Miller's
statements were corroborated by a comparison of the original
operative reports maintained by the hospital with the altered
operative reports that Petitioner submitted to Medicaid to document
his improper charges for assistant surgeon fees. Tr. 28-31, 34-35.
In addition, investigative reports of interviews with Dr. Gervais
and Ms. Denise Kuipers, R.N., Petitioner's former office manager,
also corroborate Ms. Miller's account. Ms. Kuipers told
investigators that, in 1986, Petitioner instructed her to
retroactively bill for assistant surgeon fees for surgeries which
were performed up to three years prior to that time. I.G. Ex. 3/20.
Dr. Gervais told investigators that although she terminated her
employment with Petitioner effective July 31, 1987, Petitioner
continued to bill Medicaid for surgery performed by her after that
time. Dr. Gervais stated that when she asked Petitioner about this,
he offered to share monies illegally received from Medicaid with
her. I.G. Ex. 3/18.
Investigators presented their findings to a federal grand jury
sitting at Hammond, Indiana. I.G. Ex. 3/2. On October 13, 1989,
the grand jury for the United States District Court for the Northern
District of Indiana indicted Petitioner on 17 counts of presenting
false claims to the Indiana Department of Public Welfare in
violation of 18 U.S.C. 287. Counts one through eight of the
indictment charged Petitioner with fraudulently billing for
assistant surgeon's fees during the period from December 19, 1986 to
May 15, 1987. Counts nine through 17 charged Petitioner with
fraudulently billing for laboratory tests he did not perform during
the period from April 4, 1986 to September 12, 1986. FFCL 4. A
trial was held in March 1990 and a jury entered a guilty verdict on
all 17 counts contained in the indictment. FFCL 5. Petitioner
appealed this conviction and by decision dated August 15, 1991, the
Seventh Circuit affirmed this conviction. FFCL 7.
Prior to Petitioner's sentencing hearing, investigators calculated
the monetary damage to the Medicaid program resulting from
Petitioner's wrongdoing. Based on documents in evidence at the
trial, investigators calculated that, during the period from 1985 to
1987, Medicaid paid Petitioner $71,944.51 for improper claims for
laboratory services performed by Clinical Diagnostics. I.G. Ex.
3/7. 6/ Taking into account additional monetary damage to the
Medicaid program resulting from the improper billing for assistant
surgeon fees, investigators determined that the financial loss to
the Medicaid program resulting from Petitioner's misconduct amounted
to $84,119.35. I.G. Ex. 2/1; Tr. 39, 41.
The evidence shows that Petitioner's misconduct underlying his
conviction involved a significant number of serious criminal
offenses occurring over a lengthy period of more than a year and
that these offenses involved substantial damage to the Medicaid
program. The serious nature of Petitioner's offense is reflected in
the sentence imposed on Petitioner by the United States District
Court. On May 10, 1990, the court sentenced Petitioner to a period
of five years' probation with a suspended sentence, ordered him to
serve one year in a work release program, to contribute 1500 hours
of community service, and to pay restitution to the Medicaid program
in the amount of $84,110.35. FFCL 6, 17. The serious nature of
Petitioner's offenses is also reflected in the fact that, on June
28, 1990 the State of Indiana permanently excluded Petitioner from
participation in the Indiana Medicaid program. FFCL 18. In
addition, the serious nature of Petitioner's criminal offense is
reflected in the fact that on March 5, 1991, the Medical Licensing
Board of Indiana issued a decision finding that the imposition of
disciplinary sanctions against Petitioner was appropriate based on
his criminal conviction. FFCL 19.
Petitioner engaged in a systematic fraud of the Medicaid program
resulting in the unlawful appropriation of thousands of dollars of
trust fund monies. Petitioner's unlawful acts show that he is an
individual who is capable of engaging in flagrantly dishonest
conduct, and that he has a propensity to commit offenses harmful to
the financial integrity of federally funded health care programs.
The record is replete with evidence indicating that Petitioner was
the principal behind these fraudulent practices and actively
directed his staff in the steps necessary to carry out the illegal
billing procedures. The evidence of Petitioner's culpability
demonstrates that he is an untrustworthy provider and that a lengthy
exclusion is needed to satisfy the Act's remedial purpose.
In addition, I am particularly disturbed by Petitioner's persistent
refusal to accept responsibility for his actions and his reliance on
weak rationalizations in the face of overwhelming evidence that he
repeatedly initiated schemes to defraud the Medicaid program. This
is additional evidence of a lack of trustworthiness and it provides
additional support for a lengthy exclusion.
During the May 21, 1991 hearing, Petitioner testified that he was "a
very busy guy" with multiple responsibil-ities for running two
offices, teaching, researching, and treating patients. As a result,
Petitioner asserted that he was unable to devote adequate attention
to the billing functions of his medical practice. Tr. 57.
Petitioner repeatedly stated at the hearing that he delegated the
billing functions of his office to his office manager at the time,
Ms. Kuipers, and that he placed undue reliance on her advice
regarding Medicaid billing requirements. Petitioner did not admit
that he intended to defraud the Medicaid program, but instead he
characterized his conduct as being the result of "negligence". Tr.
91.
Petitioner's portrayal of himself as an overworked health care
provider who was the victim of poor advice provided by a misinformed
office manager is unpersuasive. During the hearing, Petitioner
testified that Ms. Kuipers told him that Dr. Shaker of Clinical
Diagnostics told her that Petitioner could pay Clinical Diagnostics
as a subcontractor and bill Medicaid for these services. Petitioner
testified that Ms. Kuipers thought that this was "a good idea", and
that he relied on her opinion that it was proper to bill Medicaid
for services performed by an independent laboratory. Tr. 53, 91-93.
This testimony is not credible because it is contradicted
by statements made to investigators by Dr. Shaker. Dr. Shaker told
investigators that he told members of Petitioner's office staff to
provide Medicaid numbers for Medicaid patients in order to make it
possible for Clinical Diagnostics to bill Medicaid for these
services. I.G. Ex. 3/21, 31. These statements were corroborated by
statements made by former employee Ms. Miller. I.G. Ex. 3/13.
Petitioner tried to explain his improper billing for patient
specimens as being the result of "confusing" and "frustrating"
Medicaid regulations and requirements. Tr. 92-95. At one point in
his testimony, Petitioner asserted that he never paid attention to
the provider manual until his federal prosecution nor was the manual
in his office during the period in issue. Tr. 93. Yet in an effort
to explain his illegal billing for patient specimens, he testified
that the 1985 Medicaid manual permitted such billing until a change
in policy in the 1987 manual made such billing unlawful. Tr. 93-95.
Petitioner cannot have it both ways -- he cannot credibly assert
that he was not aware of the regulations and at the same time argue
they were inconsistent.
With regard to the improper billing for surgical fees, Petitioner
again offered the explanation that he was the victim of poor advice
provided by his office manager. According to his explanation,
Petitioner's office manager suggested that he alter operative
reports so that he could be reimbursed for Dr. Gervais' services
during a 19 month period beginning in 1985 when he was waiting
for Medicaid to assign Dr. Gervais a provider number. Tr. 65, 100.
This explanation is inconsistent with statements made by Ms.
Kuipers to investigators indicating that Petitioner directed her to
alter operative reports dating back three years and rebill Medicaid
for each surgery to include an assistant's fee. Ms. Kuipers also
told investigators that she felt that this was "wrong". I.G. Ex.
3/20. Ms. Kuipers' account is also substantiated by statements made
to investigators by Ms. Miller and Dr. Gervais.
I recognize that the damaging statements contained in the
investigative reports are not sworn statements which have been
subjected to cross-examination. Notwithstanding this, I find that
these statements are reliable because they corroborate each other.
When read together, these statements consistently portray Petitioner
as an individual who was actively involved in the billing procedures
of his office. Moreover, such reports were designated by the I.G.
as exhibits prior to the hearing and made available to Petitioner.
Despite this, Petitioner offered no evidence other than his own
version of the events to rebut these clearly incriminating reports.
Although Petitioner attempted to disguise his involvement with the
billing activities of his office by blaming his office manager for
the billing violations, there is ample evidence that he deliberately
disregarded Medicaid requirements and that he personally directed
his staff to engage in illegal billing practices. I am troubled by
Petitioner's failure to admit his role in carrying out his fraud
against the Medicaid program, and I find that his tendencies to
mischaracterize and to misstate the facts is strong evidence that he
was and continues to be untrustworthy.
I am also disturbed by Petitioner's persistent refusal to fully
appreciate the wrongfulness of his actions. I recognize that
Petitioner has paid lip service to the claim that he now fully
understands his obligations to the Medicaid program. Tr. 78.
However, his repeated attempts to rationalize his misconduct and his
failure to show any remorse for his offenses leads me to conclude
that Petitioner has failed to provide any meaningful assurance that
he will not engage in future wrongdoing.
Petitioner's testimony at the May 21, 1991 hearing reveals that he
still does not accept that his criminal offenses constituted fraud
rather than negligence or billing oversights. Instead, Petitioner
expressed the view that his actions were not fraudulent because "the
service was always rendered". He stated that it "boggle[d] [his]
mind" that he was convicted for fraud since he filed claims for
services that were actually rendered. He further testified that his
billing of Medicaid amounted to "inflation, maybe, of the bill, but
not probably a fraud." Petitioner characterized his actions as a
misinterpretation of an array of confusing Medicaid regulations
issued by a program which is "a frustration". Tr. 57, 59, 97.
Petitioner repeatedly attempted to justify and excuse his fraudulent
activities by pointing out deficiencies in the administration of the
Medicaid program. For example, Petitioner asserted that his
practice of billing Medicaid for services performed by an
independent laboratory actually saved Medicaid money, and he made
the incredible assertion that "every little gesture I do the goal
has been to save money to the third party". Tr. 107. He also
justified billing for laboratory services he never performed on the
grounds that he had overhead office expenses to cover and that he
deserved to be compensated for his analysis of the test's results.
Tr. 55-56; I.G. Ex. 3/22, 30. In justifying his improper billing
for surgical fees, Petitioner stated that he deserved to be
compensated for Dr. Gervais' services during the lengthy period he
was waiting for Medicaid to assign her a provider number. Tr. 64 -
65, 68.
At the hearing, Petitioner explained his billing philosophy for
billing his patients and submission of bills to Medicaid, as
follows:
My philosophy has been that if a private patient is
charged one hundred and thirty-four dollars, why not
charge the Medicaid patient the same whether or not the
reimbursement is the same, never they could say -- I say
hey, the money is not enough, I always accept that as a
fact, but I want them to know this is what the current,
it is for everybody, what they are being charged, so we
call that inflation. Tr. 60.
It is apparent that Petitioner, despite a criminal conviction for
fraudulent billing of Medicaid and a hearing to determine his length
of exclusion from Medicare and Medicaid, continues to consider his
personal billing philosophy to be paramount to the requirements of
the Medicaid program.
His espoused billing philosophy and expressed rationalizations for
wrongdoing demonstrate that Petitioner possesses an arrogant
disrespect for the regulations governing his participation in
federally assisted health care programs. Rather than following
Medicaid regulations, Petitioner has repeatedly chosen to "rewrite"
Medicaid regulations in accordance with his own personal opinion of
how the program should be adminis-tered, and he has repeatedly
engaged in deceptive and illegal billing practices when he felt that
he was entitled to additional money from Medicaid. Petitioner's
repeated failure to show any respect for Medicaid billing
requirements raises serious concerns about his ability to adhere to
Medicaid regulations in the future.
I infer from this evidence a propensity on Petitioner's part to
engage in conduct which is harmful to the Medicare and Medicaid
programs in the future. I conclude that Petitioner is an
untrustworthy individual. In reaching this conclusion, I have
considered the evidence of record which shows that Petitioner is a
competent physician who provides quality care to his patients.
Dr. Poston stated that Petitioner is an excellent clinician who can
be trusted to provide skillful medical services and that she has
used Petitioner for obstetrical care for herself and has also
referred her sister to Petitioner. Tr. 115-116, 120; P. Ex. 3/66.
The record also contains statements by Dr. Bharat Barai, a colleague
of Petitioner, that Petitioner has a record of providing competent
medical care. P. Ex. 1/37, 41. I do not question Dr. Poston's and
Dr. Barai's opinions regarding Petitioner's medical skills. While
Drs. Poston's and Barai's favorable assessment of Petitioner's
ability to care for patients may be accurate, they do not derogate
the strong evidence in this case that Petitioner cannot be trusted
to file truthful bills for his services with Medicare and Medicaid.
Dr. Poston has also testified that Petitioner has provided medical
services to the Indiana Board of Health clinic program in order to
satisfy his court-mandated community service requirement. Dr.
Poston indicated that Petitioner's services are essential, and that
the very existence of the clinic program for prenatal women might be
jeopardized if Petitioner stops contributing his services.
Petitioner contends that Petitioner's service to the Board of Health
Clinic should be a basis for reducing the length of the exclusion in
this case.
Petitioner's obligatory service to the Board of Health clinic
programs can in no way be considered as evidence of his
trustworthiness and good character. I am cognizant of the evidence
showing that Petitioner voluntarily contributed medical supplies and
made his private office available to clinic patients on occasion.
While this is laudable, it has no bearing on the issue of whether
Petitioner can be trusted to handle Medicare and Medicaid monies
honestly. In addition, I note that Petitioner's exclusion does not
prevent him from continuing to provide his services to the Board of
Health clinic program because he does not bill Medicare and Medicaid
for those services. In view of the foregoing, I do not agree that
Petitioner's contributions to the Indiana Board of Health clinic
program should be a basis for shortening his seven year exclusion.
I am also cognizant of the evidence of record showing that the Gary,
Indiana metropolitan area served by Petitioner is under served by
practicing obstetricians. According to the July 19, 1991 letter
written by the Gary Board of Health, there are less than six board
certified obstetricians/gynecologists serving approximately a
quarter of a million women in this area. In addition, this
community has the second highest infant mortality rate in the United
States. P. Ex. 4. The fact that Petitioner has demonstrated a
willingness to provide services to indigent women in a community
that has a vital need for those services does not detract from the
conclusion that, in light of his offenses, Petitioner cannot be
trusted to participate in federally-funded health care programs. I
recognize that an exclusion impairs Petitioner's ability to provided
vitally needed services to the indigent population in Gary, Indiana.
However, the purpose of the exclusion sanction is to effectuate the
public policy of protecting the integrity of the Medicare and
Medicaid programs. I find that under the facts of this case, the
need for Petitioner's medical services in Gary, Indiana, must yield
to the overriding need to impose a meaningful remedy to protect the
integrity of the Medicare and Medicaid programs.
CONCLUSION
Based on the law and the evidence, I conclude that the seven-year
exclusion from participating in Medicare and Medicaid imposed and
directed against Petitioner is reasonable. I therefore sustain the
exclusion.
____________________________
Edward D. Steinman
Administrative Law Judge
* * * Footnotes * * *
1. "State health care program" is defined by section
1128(h) of the Act to cover three types of federally financed health
care programs, including Medicaid. I use the term "Medicaid"
hereafter to represent all State health care programs from which
Petitioner was excluded.
2. References to the record will be cited in this
decision as follows:
I.G.'s Exhibit I.G. Ex. (number/page)
Petitioner's Exhibit P. Ex. (number/page)
Transcript Tr. (page)
I.G.'s Post-hearing Brief I.G. Post-hearing Br. (page)
Petitioner's Post-hearing
Brief P. Post-hearing Br. (page)
I.G.'s Post-hearing Reply
Brief I.G. Post-hearing Rep. Br.
(page)
Petitioner's Post-hearing
Reply Brief P. Post-hearing Rep. Br. (page)
Findings of Fact and
Conclusions of Law FFCL
3. I did admit this letter for the purpose of providing
evidence on the issue of whether the length of the exclusion greater
than five years is reasonable.
4. I also note that even if I had the authority to
consider waiver requests or to make recommendations to the Secretary
on the issue of waiver, the record as it now stands raises serious
questions regarding whether a waiver would be appropriate in this
case. While there is evidence that Petitioner has been the sole
source of obstetrical services to the Gary Board of Health prenatal
clinic, he has provided these services free of charge. An exclusion
from the Medicare and Medicaid programs does not prohibit a provider
from providing medical services. It merely prohibits him from
billing Medicare and Medicaid for those services. Thus,
Petitioner's exclusion in no way prevents him from continuing to
provide the essential services he has been providing to the Board of
Health prenatal clinic. See Tr. 122-123. I also note that the July
19, 1991 letter by the Gary Board of Health states that Petitioner
began providing services to the prenatal clinic in the Spring of
1990 and that he continued "up until approximately two weeks ago".
This implies that Petitioner no longer provides these essential
services to the prenatal clinic. If this is true, the justification
for a waiver would no longer exist and the waiver issue would be
moot.
5. Although the investigative summary indicated that
Petitioner usually charged Medicaid between $80 and $100 for these
laboratory services, Mr. John Peters, an investigator with the
Medicaid Fraud Control Unit, testified at the May 21, 1991 hearing
that the amount Petitioner charged for these services ranged from
approximately $90 to $160. Tr. 26. Thus, there is evidence of
record that Petitioner charged from $80 to $160 for laboratory
services provided by Clinical Diagnostics.
6. This figure does not include payments for urinalysis
which were performed by Petitioner's office rather than by Clinical
Diagnostics. In addition, it does not include payments for handling
fees which are permissible under Medicaid regulations. I.G. Ex.
3/7; Tr. 39-41.