Timothy L. Stern, M.D., DAB No. 1396 (1993)
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
In the Case of:
The Inspector General
- v. -
Timothy L. Stern, M.D.,
Respondent.
DATE: March 16, 1993
Docket No. C-92-081
Decision No. 1396
FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW
JUDGE
DECISION ON REMAND
Timothy L. Stern, M.D. (Respondent) appealed the August 21, 1992
Decision
by Administrative Law Judge (ALJ) Charles E. Stratton on remand
from the
Departmental Appeals Board's decision in Timothy L. Stern,
M.D., DAB 1314
(1992). See Timothy L. Stern, M.D., DAB CR228 (1992)
(Remand
Decision).
In DAB 1314, the Board upheld the ALJ's multiple findings of
liability
against Respondent under section 1128A of the Social Security Act
(Act)
but directed the ALJ on remand to reconsider the level of sanctions
to
be imposed. In his original decision, the ALJ determined
that
Respondent had presented 688 claims to Medicare for services which
he
knew, had reason to know, and should have known were not provided
as
claimed. See Timothy L. Stern, M.D., DAB CR154 (1991) (ALJ
Decision).
Respondent had described his services on the claims as either a
local
nerve block or an office visit when in fact he had
provided
electro-acupuncture, a procedure that is not covered under the
Medicare
program. The Board in DAB 1314 upheld all of the ALJ's
findings of
liability concerning the questioned claims (subject to a
possible
adjustment for 14 claims). The Board, however, concluded that
in
determining the appropriate level of sanctions, the ALJ had
erroneously
relied upon several mitigating factors. We also concluded
that the ALJ
had not properly substantiated the level of sanctions he imposed
in
light of applicable statutory factors and regulatory
guidelines.
Consequently, we remanded the appeal to the ALJ so that he
could
reconsider the level of the sanctions, after first clarifying the
status
of the 14 claims, in which the ALJ had found that some
reimbursable
service had been provided.
In his Remand Decision, the ALJ made 27 new findings of fact
and
conclusions of law (FFCLs) in addition to the 191 FFCLs in the
ALJ
Decision. 1/ Of the 14 claims whose status was unclear, the ALJ
found
that for one such claim a fully reimbursable service (aside
from
electro-acupuncture) had been provided as claimed. The ALJ
therefore
reduced the number of claims subject to sanctions to 687. The
ALJ also
concluded that of the 13 remaining claims where reimbursable
services
had been provided, six of the claims were not even at issue in
these
proceedings and seven claims concerned services that were
reimbursable
at a level lower than the service actually claimed. The
ALJ
nevertheless concluded that the seven claims involving a lower
level
service could be viewed as a mitigating factor in this case. The
ALJ
also concluded, after reopening the record and considering new
evidence
presented by Respondent, that Respondent's financial resources
were
substantial and did not require a reduction in the sanctions but
that
justice required the ALJ to consider Respondent's rehabilitation
from
drug abuse as mitigating.
After weighing all of the relevant statutory factors and
regulatory
guidelines (including those previously identified in the ALJ
Decision),
the ALJ then determined on remand that Respondent should receive
an
assessment of $70,648, penalties of $345,000, and an exclusion
from
participation in the Medicare and State health care programs of
10
years. The combined assessment and penalties were substantially
higher
than the assessment and penalties the ALJ had imposed in his
Decision
but were less than the approximately $500,000 in combined assessment
and
penalties originally proposed by the I.G. The ALJ specifically
pointed
to the Board's conclusion in DAB 1314 relating to the absence of
proven
mitigating factors as a major cause for his substantial increase in
the
sanctions.
On appeal of the Remand Decision, the parties' arguments raise four
broad
issues:
o whether the sanctions computed on remand bear a
reasonable
relationship to the government's damages;
o whether the ALJ gave sufficient weight to alleged mitigating
factors
in computing the sanctions;
o whether the Board need consider further exceptions which
were
considered in DAB 1314 (and which were not considered further on
remand)
and whether the Board need consider further any exception over which
the
Board had previously declined review;
o whether the ALJ exceeded the scope of the remand by reopening
the
record and admitting new evidence on Respondent's financial
condition
and other alleged mitigating factors.
After first summarizing our decision, we address in detail each of
the
parties' arguments relating to these broad issues.
SUMMARY OF OUR DECISION
We here affirm in full the amount of assessment, penalties, and
exclusion
imposed by the ALJ on remand. We conclude that the sanctions
were fully
consistent with the applicable statutory factors and
regulatory
guidelines. Contrary to what Respondent argued, there was a
reasonable,
indeed direct, relationship between the amount of the
assessment and
penalties imposed and the damages incurred by the
government. The
combined amount of assessment and penalties (equalling
$415,648) was only
slightly higher than the regulatory guidelines'
minimum of twice the
approximate damages suffered by the government.
Moreover, even though there
were substantial and several aggravating
circumstances, the combined amount
of assessment and penalties was
substantially less than the statutory maximum
of $1,374,000 in penalties
for 687 claims. Also, in applying the guidelines,
the ALJ specifically
compared this case to other section 1128A cases and
verified that the
sanctions imposed by him were within the range of
sanctions imposed in
those cases.
We further conclude that Respondent's exceptions relating to
mitigating
factors lack merit, and that the absence of any mitigating factor
would
indeed support the higher level of sanctions imposed in the
Remand
Decision. While we agree with the I.G. that the ALJ exceeded the
scope
of our remand (and we modify the FFCLs on remand accordingly), the
I.G.
did not propose that we augment the sanctions further and we do not
do
so.
In sum, notwithstanding the fact that the ALJ departed substantially
from
our remand instructions in DAB 1314, his overall determination as
to the
level of sanctions that are appropriate here was sound. We
conclude the
record fully supports an assessment, penalties and an
exclusion at the levels
determined in the Remand Decision.
ANALYSIS
The "Civil Monetary Penalties Law" (CMPL) is contained in section 1128A
of
the Act. Section 1128A(a) provides for a civil money "penalty" of not
more
than $2,000 for each item or service that a "person" "knows" or
"should know"
was not provided as claimed. 2/ It further provides for an
assessment of not
more than twice the amount claimed for each item or
service and authorizes
the person's exclusion from participation in the
Medicare and State health
care programs. 3/
Section 1128A(d) directs the Secretary to take the following into
account
in determining the appropriate sanctions:
1) the nature of the claims and the
circumstances under which
they were presented,
2) the degree of culpability, history of
prior offenses, and financial condition of person presenting the
claims, and
3) such other matters as justice may require.
The regulations at 42 C.F.R. . 1003.106(b) provide guidelines for
taking
into account the statutory factors. 4/ These guidelines
describe
circumstances in connection with these factors which may be
mitigating
or aggravating. The regulations provide that if there are
"substantial
or several" aggravating circumstances, the aggregate amount of
the
assessment and penalties should be set at an amount sufficiently
close
to or at the maximum permitted. 42 C.F.R. . 1003.106(c)(2).
The
regulations further provide that the assessment and penalties
should
never be less than double the approximate amount of the
damages
sustained by the government, unless there are extraordinary
mitigating
circumstances. 42 C.F.R. . 1003.106(c)(3).
A. The assessment and penalties imposed in the Remand Decision bore
a
reasonable relationship to the damages incurred by the government.
In his appeal of the Remand Decision, Respondent's central argument
was
that there was no reasonable relationship between the assessment
and
penalties imposed by the ALJ and the damages incurred by the
government.
5/ Respondent insisted that the government had incurred
actual damages
of only $9,000 -- the approximate value of payments that had
actually
been made by the Medicare program on the 687 claims that he
submitted.
Respondent argued that the imposition of $70,648 in assessment
and
$345,000 in penalties was grossly disproportionate to the
damages
suffered by the government. Respondent contended that the
ALJ's
conclusion that the actual amount of damages incurred by the
government
should be augmented by doubling the costs of the investigation
and
prosecution of Respondent was irrational and unsupported by the
CMPL.
Respondent argued that the I.G.'s statements about the amount of
damages
the government incurred were unreliable and should be stricken from
the
record because they were unsworn.
Before we address Respondent's specific arguments concerning
the
relationship of the government's damages to the assessment
and
penalties, we emphasize that in setting the assessment and
penalties,
the ALJ properly examined each of the statutory factors and
the
corresponding regulatory guidelines in arriving at his determination
of
the amount of assessment and penalties. Thus, while the ALJ
expressly
stated that the damages to the government were a significant
factor, he
found from his assessment of all of the factors that there were
several
aggravating circumstances, some of which should be given "great"
weight.
6/ Moreover, section 1128A(d) provides for a penalty of up to
$2,000
for each of the 687 claims at issue. The regulation at 42 C.F.R.
.
1003.106(c)(2) provides that if there are substantial or
several
aggravating circumstances, the aggregate amount of the assessment
and
penalties should be set at an amount sufficiently close to or at
the
maximum permitted. Here, that maximum would have been $1,374,000,
so
that the combined amount imposed of $415,648 is considerably lower
than
the maximum, even though there were substantial and several
aggravating
circumstances.
Moreover, as the ALJ stated, the damages to the government here
were
significant and clearly should have a bearing on the level of
the
assessment and penalties. Section 1003.106(c)(3) provides that
unless
there are "extraordinary mitigating circumstances," the aggregate
amount
of the assessment and penalties should never be less than double
the
"approximate" amount of the damages sustained by the United States.
7/
Here the ALJ found that the United States had $9,000 in damages based
on
what it paid out on the claims at issue and $165,000 in costs
for
investigating and prosecuting Respondent. Early in the
initial
proceedings before the ALJ, the ALJ had ordered the I.G. to provide
a
statement of its costs. In a submission dated July 17, 1990, the
I.G.
stated that his office had incurred 2,000 hours of investigative
work
and 670 hours of legal work in developing the case against
Respondent,
representing a cost to the government of approximately
$165,000. July
17, 1990 I.G.'s Statement of Costs. Thus, the
I.G.'s statement of costs
of investigating and prosecuting Respondent was
placed in the record of
this appeal at the ALJ's direction, without any
objection by Respondent.
8/
Respondent challenged this statement for the first time on appeal from
the
Remand Decision, arguing that it was not based on sworn affidavits
or
testimony and therefore was not evidence. However, Respondent
never
raised the issue of the reliability and accuracy of the I.G.'s
statement
of costs when the statement was submitted, when it was discussed at
the
hearing, when it was discussed in subsequent written submissions,
or
indeed during the proceedings on remand.
We conclude that Respondent's objection should have been raised
during
proceedings before the ALJ and that his objection now is
untimely. The
ALJ needs to resolve all issues relating to the
evidentiary record
before proceeding to decision. Our guidelines
provide that we will not
consider exceptions which could have been presented
to the ALJ but were
not. See Guidelines, App. A, Section 4, at
26. This limitation on the
scope of our review is now incorporated in
the regulations at 42 C.F.R.
. 1005.21(e). The limitation is particularly
important for evidentiary
issues, which potentially would require the Board
to remand the appeal
to the ALJ or at the very least to reopen the record and
make new
factual findings based on a consideration of additional evidence.
We
therefore conclude that Respondent is precluded from raising here
the
issue of the reliability of the I.G.'s statement of costs. 9/
In any event, we consider the I.G.'s statement to be a
reliable
demonstration of the government's "approximate" damages. 10/
Although
Respondent challenged the accuracy of the statement generally,
he
proffered no specific reason why he believed the damages would have
been
overstated. Nothing on the face of the statement suggests that
the
damages were in fact overstated. These calculations, which appear
to be
reasonable on their face, were exclusive of indirect costs such
as
travel expenses and clerical support. Thus, we conclude that
the
$165,000 figure, which represents only $240 for each of the 687
claims
at issue, reliably presents a conservative estimate of the
government's
damages.
We further conclude that there was a reasonable, indeed
direct,
relationship between the assessment and penalties imposed here and
the
damages to the government. The guidelines explicitly state that
the
assessment and penalties should never be less than double
the
approximate amount of damages sustained by the government. The
total
damages to the government were at a minimum: $9,000 in payments
on 687
separate claims totaling $42,875, and $165,000 in costs
for
investigation and initial prosecution of these claims for a total
of
$174,000. Thus, the ALJ's determination of assessment of $70,648
and
penalties of $345,000 is quite reasonable in that it exceeds by
only
$68,000 the guideline's minimum of double the government's
approximate
damages.
Respondent is clearly incorrect in arguing that the government's
damages
must be limited to the $9,000 that the government actually paid out
on
the $42,875 in claims at issue. The case law fully supports
an
interpretation of "damages" that includes all reasonable
proximate
damages. "It is well settled that the Congress need not limit
itself to
the amount of actual damages in calculating a civil penalty
or
assessment." Chapman v. U.S. Dept. of Health and Human Services,
821
F.2d 523, 529 (10th Cir. 1987). "The purpose behind the CMPL is to
make
the government whole for monies paid on fraudulent submissions and
the
cost of investigating such fraudulent submissions." Bernstein
v.
Sullivan, 914 F.2d 1395, 1397 (10th Cir. 1990).
Indeed, it would be unreasonable to limit the damages of the government
to
the amount of the claims actually honored ($9,000) when the claims
put the
Medicare program directly at risk of losing approximately
$42,875 and when
the government had to expend $165,000 in identifiable
costs in the
investigation and initial prosecution of an extensive
number of questioned
claims. The ALJ also found indirect damages
related to the claims in
that Respondent's illegal and improper
activities damaged the integrity and
reputation of the Medicare program
and caused harm to Medicare beneficiaries
by misleading them. The ALJ
labelled these indirect damages
"significant." Remand Decision at 18.
Even though the ALJ did not
assign a monetary value to these indirect
damages, they further justified
assessment and penalties in excess of
the approximate amount of the
government's damages.
Finally, we find that the amounts of the assessment and penalties
imposed
by the ALJ on Respondent were reasonable in light of the
sanctions imposed in
other cases. See, e.g., Mayers (receipt of $24,698
from Medicare for
false claims warranted penalties of $1,791,000);
Chapman (receipt of $21,115
in overpayments warranted assessment and
penalties of $156,318).
Accordingly, we conclude that the assessment and penalties as
determined
in the Remand Decision bore a reasonable relationship to the
damages
incurred by the government. Although the ALJ concluded on
remand that
the government's damages should be given great weight in
computing the
assessment and penalties, he failed to include any FFCL
concerning the
amount of damages here and their overall weight in the
computation. We
have therefore added the following new FFCL 197:
The statute, regulations, and case law indicate that
the
approximate amount of damages to the government
should be given
great weight in determining the appropriate amount of
assessment and
penalties. The government's approximate damages in this
case total
$174,000, including $165,000 in costs of investigating and
initially
prosecuting Respondent. July 17, 1990 I.G.'s Statement of
Costs.
B. Respondent's arguments on his financial condition and other
alleged
mitigating circumstances lack merit.
Respondent also raised numerous arguments concerning the weight to
be
given his financial condition and other alleged mitigating factors
in
computing the sanctions. We address his arguments concerning
each
mitigating factor separately below.
1. Respondent's financial condition
Respondent argued that his financial condition should have been
considered
a mitigating factor and that the ALJ did not give proper
weight to his
financial condition in determining the amount of the
sanctions. As we
conclude in section D below, the ALJ exceeded the
scope of our remand when he
reopened the record and permitted new
evidence on Respondent's financial
condition. We have therefore
modified (and consolidated) the FFCLs on
financial condition to reflect
the evidence in the record prior to our remand
order. The substance of
our new FFCL (FFCL 189), however, remains
generally the same as the
FFCLs in the Remand Decision except that we delete
any reference to the
amount of Respondent's net worth because the record does
not permit a
conclusive finding in that respect. Thus, we conclude,
consistent with
the ALJ's remand findings, that Respondent's financial
resources were
substantial and do not provide a basis to reduce the
assessment and
penalties imposed.
In arguing that his financial condition requires a substantial
reduction
in the assessment and penalties, Respondent overlooked the effect
of the
other statutory factors and corresponding regulatory guidelines
that
must be considered jointly along with his financial condition. We
have
considered these factors in detail above and they clearly
support
setting the assessment and penalties at the level imposed by the ALJ
on
remand. Moreover, there is no basis in the regulations or the case
law
to conclude that the assessment and penalties must be limited by
the
individual's net worth at any given point in time. As the I.G.
argued,
the sanctions here serve multiple purposes, including
deterrent
purposes, and Respondent might reasonably be expected to pay
the
sanction based on future earnings if his net worth did not
permit
immediate payment in full. 11/ Even after the ALJ erred by reopening
the
record and permitting Respondent to submit additional evidence to
show
that his financial resources were not substantial, the ALJ
nevertheless
found that Respondent's resources were substantial. 12/
The ALJ also
concluded that the assessment and penalties he imposed on remand
were
not "punitive or counterproductive to Respondent's
rehabilitation."
Remand Decision at 22-23.
Moreover, because of Respondent's own failure to cooperate fully in
the
discovery request on his financial condition during the
initial
proceedings before the ALJ, it is not possible to make a
definitive
finding on his net worth (other than that his net worth
was
"substantial"). The evidence of record on his exact financial
condition
is inconclusive and conflicting. Thus, even if we had been
inclined to
limit the sanction based on Respondent's specific net worth, we
would be
unable to do so. Ultimately, in determining the appropriate
sanctions,
the ALJ did not have to rely on Respondent's financial condition
very
heavily because, as we discussed previously, there were other
factors
which justified the amount of assessment and penalties imposed.
2.
Respondent's drug addiction
Respondent also argued that the ALJ on remand improperly ignored his
drug
addiction as a mitigating circumstance. The ALJ, however,
properly
ignored this factor on remand because we had expressly concluded in
DAB
1314 that there was insufficient evidentiary and legal basis on which
to
view drug addiction as a mitigating circumstance in this case. DAB
1314,
at 23-25. We concluded specifically that there was absolutely
no
evidence in the record that would demonstrate that when Respondent
filed
the claims at issue, his drug addiction actually clouded his
judgment
and somehow diminished his culpability for filing the claims.
Moreover,
the ALJ had specifically found in his Decision that Respondent had
the
requisite mental state required by statute when he filed the 687
claims
at issue. We affirmed those findings, concluding that the very
nature
of the timing of his claims and the terms used in his claims showed
a
"clear, purposeful judgment" on his part. Id. at 24. The claims
were
687 in number, were submitted over a period of several years and
were
submitted as part of a specific pattern, all aggravating
circumstances
which undercut the possibility Respondent operated with
diminished
mental judgment because of drug addiction. The ALJ also
found that
Respondent had assured his patients that his services would
be
reimbursed by Medicare, thereby inducing them to undergo treatments
when
he knew, should have known, and had reason to know that the
services
were not reimbursable. FFCL 178 (Remand FFCL 13).
Thus, we reiterate here that the record lacked substantial evidence
in
support of a finding that Respondent's judgment was clouded by
drug
addiction when he submitted any of the claims at issue.
We also conclude that there is no legal authority for relying on
drug
addiction as a mitigating factor in these circumstances and that
such
reliance could frustrate the general deterrent goals of the CMPL.
As we
previously stated:
An unsubstantiated finding that drug addiction is a
mitigating
factor (with no specific showing on how
it affected culpability)
would send the wrong message to the provider
community. Providers of
Medicare services should not be permitted to
explain away fraudulent
billings with generalized excuses of drug addition or
other substance
abuse.
DAB 1314, at 25.
We again reject Respondent's position that he should have
further
opportunity for additional testimony on this issue since he clearly
had
an adequate opportunity to develop this issue during the
initial
proceedings before the ALJ. Id.
Accordingly, we reaffirm our prior conclusion that Respondent's
drug
addiction was not properly considered to be mitigating.
3. Respondent's provision of reimbursable services
On appeal, Respondent argued that his provision of services other
than
electro-acupuncture should serve as a total defense to the charge
that
his services were not provided as claimed or should at least have
a
broader effect as a mitigating factor. We conclude that there
is
insufficient evidentiary basis in the record to support a finding
that
the provision of other services may be a total defense for any of
the
remaining 687 questioned claims. We also conclude that the
provision in
seven claims of services that were reimbursable at a lower level
than
the service claimed may not serve as a mitigating factor.
In spite of numerous references to other services in
Respondent's
witnesses' testimony and in medical records kept by Respondent,
the ALJ
initially concluded that a documented and medically
necessary
reimbursable service (aside from electro-acupuncture) had been
provided
in only 14 of 688 questioned claims. 13/ In DAB 1314, the
Board
directed the ALJ to determine whether in any instance the
reimbursable
service in these 14 claims might serve as a total defense to the
charge
that a service was not provided as claimed. On remand, the ALJ
found
that for one claim of the 14, Respondent had provided a service
as
claimed. The ALJ accordingly reduced the number of claims at issue
from
688 to 687.
This single claim therefore is the only claim from among all the
remaining
questioned claims (now numbering 687) where the provision of a
reimbursable
service may serve as a total defense. Respondent is
clearly mistaken
that evidence in the record might support any further
reductions in the
number of questioned claims. It is irrelevant that
some evidence in the
record may suggest that Respondent provided other
services if these services
cannot first be associated with a specific
questioned claim and then
documented to be medically necessary and to be
reimbursable at least at the
level of the service claimed. The passing
references to other services
in the record are insufficient to document
that Respondent provided medically
necessary and reimbursable services
at the level of service actually claimed
in any other case. 14/
In clarifying the status of the remaining 13 of the 14 "other
services"
claims, the ALJ revisited the issue of whether Respondent's
provision of
a reimbursable service at a level lower than the service claimed
may
serve as a mitigating factor.
In his Remand Decision the ALJ made the following FFCL:
22. Justice requires consideration, as a
mitigating factor, that
the I.G.'s expert concluded
that a reimbursable service was
performed in seven of the 687 services
remaining in issue, albeit at a
lower level than claimed.
The ALJ thus considered these seven claims a mitigating factor,
requiring
a slight reduction (approximately one percent) in the
assessment and
penalties determined by the I.G. Remand Decision at
20-21. 15/ In
making his finding, the ALJ noted that the Board had
found in DAB 1314 that a
limited number of cases involving reimbursable
services (then thought to be
14) provided an insufficient legal and
evidentiary basis for mitigating the
sanctions here. DAB 1314, at 27.
To this the ALJ responded:
I find it illogical to ignore the two percent [14 of
the 688 claims
at issue in DAB 1314]. Instead,
fairness dictates that the
sanctions be mitigated by two percent, or whatever
percentage is
appropriate by reason of the facts (in this case, seven
services out of
687, or a little over one percent).
Remand Decision at 21, n. 17.
Thus, despite the Board's explicit holding that the provision of
lower
level reimbursable services by Respondent was not a mitigating
factor,
the ALJ persisted in finding that Respondent's provision of
reimbursable
services in just seven cases, or in one percent of the claims
he
submitted, was a mitigating factor.
We again conclude that these claims (now reduced to seven) may not
serve
as a mitigating factor in this case. The issue of liability posed
by
section 1128A is whether the person provided a medical service
as
claimed. If the person provides a medical service that is
reimbursable
at a lower level than the service claimed, that person has not
provided
a service as claimed. Thus, the basis for liability under the
statute
does not lessen for these seven cases. They still represent
claims for
services that were not provided as claimed. Presenting an
"inflated"
claim can be potentially just as damaging to the Medicare program
as
presenting a claim where no reimbursable service was provided at
all.
Both instances equally involve program deception and both
instances
place program funds at risk. Indeed, the only basis for
viewing these
particular inflated claims as mitigating here is by comparing
them to
the more egregious 680 cases where this Respondent provided
no
documented reimbursable service. This is truly a backhanded way
of
finding a mitigating factor. We could just as easily conclude that
the
circumstances surrounding the 680 cases (where claims were
presented
without the provision of any documented reimbursable service)
were
aggravating. Finally, as we stated in DAB 1314, the record does
not
demonstrate that the level of culpability on Respondent's part was
any
less for these seven claims or even that he was aware of the
"other"
services when he presented the claims. 16/
Accordingly, we delete Remand FFCL 22 (and modify FFCL 187,
formerly
Remand FFCL 6, which referenced the seven claims). The ALJ's
one
percent reduction in the assessment and penalties on remand for
the
seven "lower level" claims had the effect of eliminating any
assessment
or penalty for those claims even though they were fully covered
by
section 1128A of the Act. We also modify as appropriate the FFCLs
in
the ALJ Decision (FFCLs 19 and 98) that make reference to the
provision
of "other" services to clarify that these services are not relevant
to
the computation of the sanctions here since they were not documented
to
be medically necessary and reimbursable under the program at the
level
of service claimed. See also FFCLs 77, 78, 80, 93, 94, 97, 112,
130,
132, 133, 134, and 136. 17/
C. Respondent's other arguments lack merit.
Respondent repeated exceptions that he had previously made to the Board
in
his appeal of the ALJ Decision and which were not considered further
on
remand. In DAB 1314, the Board considered all of those arguments
and
rejected them. These exceptions are not properly before us now and
will
not be considered further. Our review here is limited to those
issues
actually considered by the ALJ in the Remand Decision.
Additionally, Respondent contended that the Board had failed to
consider
in DAB 1314 various other exceptions concerning constitutional
and
other issues considered in motions he had made before the ALJ which
the
ALJ had denied. In its January 10, 1992 Acceptance of Review of the
ALJ
Decision, the Board declined review of these exceptions (as well as
of
exceptions raised by the I.G). We informed the parties at that
time
that we would not entertain further briefing on any exception over
which
we had declined review. Under our Guidelines, we have the
discretion to
limit our review to particular exceptions raised by the
parties. See
Guidelines, App. A, Section 2(d) at 25. Our action
declining review of
particular issues leaves as final the ALJ's treatment of
those issues.
Therefore, we do not need to consider any such issue further
here.
D. The I.G.'s arguments on the limited scope of our remand order
have
merit but do not require us to increase the sanctions imposed.
Having addressed all of Respondent's arguments above, we now
address
arguments raised by the I.G. concerning the proper scope of the
remand
proceedings. As we explain below, we conclude that the ALJ did
exceed
the scope of our remand order by reopening the record and by
further
considering issues of alleged mitigating factors. Accordingly, we
strike
the additional evidence from the record and make
appropriate
modifications and deletions in the relevant FFCLs on remand
(identified
below). However, the I.G. did not argue that we should increase
the
sanctions further, and we do not do so.
In DAB 1314 the Board remanded the case to the ALJ "for the sole
purpose
of reconsidering the sanctions to be imposed." At 31 (emphasis
in
original). We did so because the ALJ had not substantiated how he
had
determined the amount or scope of the sanctions he imposed in light
of
express statutory factors and regulatory guidelines. Moreover, the
Board
deleted all FFCLs on mitigating circumstances and directed the ALJ
to
reflect the absence of any mitigating factors in his new
determination
of sanctions. We also directed the ALJ to clarify whether
any of 14
claims where the record indicated "other services" had been
provided
should be deleted from the number of claims that would
justify
sanctions. The ALJ necessarily would have had to make
appropriate
adjustments in determining the sanctions if he in fact deleted
any such
claims. Summarizing its position, the Board stated:
[I]n the context of this particular case, the ALJ
would still have
considerable discretion in
determining the amount or scope of any
penalty, assessment or exclusion. For
example, although the ALJ found
that the extensive number of false or
improper claims filed by
Respondent over a lengthy period of time was an
aggravating factor, he
might also consider whether the penalty amount should
be substantially
lower than the maximum since these claims affected only 31
patients.
Likewise, the ALJ might consider whether Respondent's
financial
condition would still have some bearing on the penalty amount
even
though the ALJ had concluded that his financial condition was not
proven
as a mitigating factor.
DAB 1314, at 30-31.
On remand, the ALJ decided, over the objection of the I.G., to reopen
the
record and permit additional evidence on Respondent's financial
condition and
on Respondent's rehabilitation from drug abuse. The ALJ
accepted into
the record an exhibit proffered sua sponte by Respondent
that included
further evidence concerning Respondent's financial
condition. R. Ex.
92-1. The ALJ then conducted a telephone conference
with the parties
and permitted evidentiary presentations from
Respondent's brother during that
call concerning Respondent's financial
condition and his rehabilitation from
drug abuse. The ALJ then relied
upon the exhibit and evidentiary
presentations as support for FFCLs in
his Remand Decision. 18/
The I.G. argued that the ALJ had exceeded the scope of the remand order
by
reopening the record and considering these issues as mitigating.
The
I.G. specifically objected to four Remand FFCLs (19, 20, 21, and
23).
The I.G. argued that these FFCLs were unsupported by evidence in
the
record that had closed prior to the remand. Additionally, the
I.G.'s
objections logically covered Remand FFCLs 18 and 22. FFCL 18
referenced
Respondent's Financial Statement, which was part of R. Ex. 92-1,
and
thus necessarily becomes irrelevant if we strike R. Ex. 92-1. FFCL
22
concerned Respondent's provision of other services that
were
reimbursable at a level lower than the claimed service. This issue
had
been expressly resolved by DAB 1314, at 27-28, and from that
perspective
was clearly outside the scope of the remand. 19/
We conclude that the ALJ's actions in reopening the record and
in
revisiting the question of mitigating factors were outside the scope
of
the remand order. 20/
The initial proceedings before the ALJ had been prolonged and
extensive,
and the record had been specifically closed by the ALJ on June 27,
1991
before he proceeded to decision. None of the reasons we gave
for
remanding the decision required the ALJ to reopen the record or
to
revisit any mitigating issues, and we did not direct the ALJ to do so
in
our decision. Indeed, we specifically modified an FFCL to say
that
Respondent did not prove any mitigating factors he alleged.
This
modification provided a clear indication that all issues
regarding
mitigating factors had been resolved.
Moreover, the issue of financial condition as a mitigating factor
and
Respondent's rehabilitation from drug abuse were obvious factors
for
Respondent to develop during the initial proceedings. Respondent
had
had extensive opportunities -- during the hearing and during
the
briefing process -- to raise and substantiate his positions on
those
issues. Respondent has always had the burden of raising
and
substantiating mitigating factors. In fact, Respondent had not
fully
cooperated during the initial proceedings in developing the
evidence
concerning his financial condition. The ALJ Decision
stated:
While Respondent produced some credible testimonial
evidence
pertaining to his current financial
condition, the I.G. elicited
testimony from Respondent which casts doubt on
his assertions. Also,
Respondent declined to participate in the I.G.'s
requests for discovery
of documentation concerning his finances.
Accordingly, there is no
basis in the record upon which to limit the
sanctions proposed on
grounds of financial condition.
At 57.
Moreover, in his appeal of the ALJ Decision, Respondent did not
take
exception to the ALJ's failure to address and rely on his
rehabilitation
from drug abuse as mitigating. 21/ Finally, the issue of
Respondent's
provision of other services was discussed at length and
expressly
resolved in DAB 1314 (at 27-28).
Accordingly, we conclude that the ALJ exceeded the scope of the remand
by
reopening the record and revisiting issues on mitigating factors.
We
strike any new evidence presented during the proceedings on remand.
We
modify or delete six FFCLs to reflect the issues and evidence
on
mitigating factors in the record prior to our remand and the
conclusions
in DAB 1314. Specifically we make the following
changes:
o We combine Remand FFCLs 18, 19, 20, and 21
into FFCL 189 which
states: "Although Respondent did
not participate in discovery
concerning his financial condition, the evidence
he submitted into the
record indicates he possessed substantial financial
resources. I.G. Ex.
106, Tr. II/1603. Consequently, his financial
resources do not provide
a basis to reduce the assessment and penalties
imposed."
o We delete Remand FFCL 22. Although
Respondent provided services
reimbursable at a lower level than claimed in
seven instances, he is
still fully liable for those claims under section
1128A and the fact
that he provided those services is not properly relied on
as a
mitigating factor in this case. We discussed this issue at some
length
above in response to Respondent's substantive arguments on
mitigating
factors.
o We delete Remand FFCL 23 on Respondent's
rehabilitation from
drug abuse because this issue
had not been previously raised or
substantiated prior to the Remand
proceedings.
o We also delete Remand FFCL 16 (which
concerned Respondent's
failure to substantiate his
financial condition as a mitigating
factor) and state in new FFCL 182 that
Respondent did not demonstrate
any mitigating factors he alleged.
Ultimately these changes in the FFCLs have little impact on the
primary
factors relied on by the ALJ in determining the sanctions here.
The
I.G. did not request that we augment the sanctions because of any of
his
objections concerning Remand FFCLs, and we do not do so.
CONCLUSION
Based on the analysis above, we affirm the determination of sanctions
for
this Respondent in the ALJ Remand Decision. We conclude that
an
assessment of $70,648 and penalties of $345,000, and an exclusion
from
participation in Medicare and Medicaid for ten years are
appropriate
under section 1128A of the Act. In an appendix to this
decision, we
provide a comprehensive list of the ALJ's findings of fact
and
conclusions of law (from both the ALJ Decision and the Remand
Decision)
in support of these sanctions, which we adopt in full as here
modified.
__________________________ Judith
A.
Ballard
__________________________ Cecilia
Sparks
Ford
__________________________ Donald
F.
Garrett Presiding Panel Member
APPENDIX
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. For the purposes of these proceedings, I have taken judicial
notice
of the statutes of the United States and the State of New York, and
the
regulations of DHHS.
2. This proceeding is governed by section 1128A of the Act (42
U.S.C.
1320a-7a), and regulations promulgated thereunder at 42 C.F.R.
.
1003.100 et seq.
3. Section 1128A of the Act authorizes the Secretary to impose a
civil
monetary penalty, an assessment and an exclusion from
program
participation upon a person who presents or causes to be presented to
an
officer, employee or agent of the United States a claim for items
or
services under Medicare (Title XVIII of the Act) which the person
knew,
had reason to know, or should have known were not provided as
claimed.
42 U.S.C. . 1320a-7a(a)(1).
4. The Secretary of DHHS has delegated to the I.G. the authority
to
take action under section 1128A of the Act. 49 Fed. Reg. 35,247,
35,250
(September 6, 1984).
5. By letter dated January 18, 1989, the I.G. notified Timothy
L.
Stern, M.D., Respondent, of the I.G.'s proposal to impose
against
Respondent civil monetary penalties totaling $425,250; an assessment
of
$70,648; and exclusion from participation in all federally
financed
State health care programs for a 20-year period.
6. The I.G. based its proposal on his determination that
Respondent
presented or caused to be presented to an agent of the United
States
claims for items or services which Respondent knew, had reason to
know,
or should have known were not provided as claimed.
7. Specifically, the I.G. determined that Respondent had presented
or
caused to be presented claims requesting Medicare reimbursement
for
nerve blocks, office visits, or consultations, which are covered
in
certain circumstances by Medicare, when acupuncture, a
non-covered
service, was provided.
8. By letter dated March 15, 1989, Respondent, through counsel
Charles
E. Crimi, requested a hearing before an ALJ.
9. The I.G.'s January 18, 1989, Notice was subsequently modified by
a
supplemental Notice dated November 9, 1989. Tr. I/21.
10. The I.G. appended an attachment to the November 9, 1989
Notice
which indexed the claims at issue in this case as claims 1-707;
there
were in fact only 706 claims listed (the number 199 was
omitted);
subsequently, at the hearing on July 30, 1990, the I.G.
dropped claims
315-320, 475-477, and 641-642, leaving 695 claims at
issue. Tr. I/21.
11. Seven of the 695 claims (528, 529, and 533-537) are identical
to
counts encompassed by Respondent's criminal conviction and have
been
eliminated by my Ruling on the applicability of U.S. v. Halper, 490
U.S.
435 (1989).
12. There are 687 claims remaining at issue in this case. FFCL 10/11.
13. The claims at issue represent $42,875 in items or
services
Respondent claimed to have provided at Rochester Pain Medicine
during
the years 1983 through 1986. I.G.'s "schedule of false
claims,"
attached to the I.G.'s amended Notice, dated November 9, 1989.
14. Although Respondent represented himself in this case, he
was
assisted at times by his brother Arthur Stern, an attorney.
15. During the period in which the claims at issue were
presented,
Respondent was licensed to practice medicine in the State of New
York.
Tr. II/188, 190; I.G. Ex. 84-2 /9, 10.
During the period in which the claims at issue were
presented,
Respondent was the sole practitioner at his clinic,
Rochester Pain
Medicine. Tr. II/52, 1324, 1584; I.G. Ex.
84-2/10.
17. In each patient encounter that resulted in a claim,
Respondent
performed either electro-acupuncture or a procedure he
called
"electrical stimulation," which consisted of inserting 4-16
acupuncture
needles into the skin at various areas of the body, attaching
the
needles to an electric current source using electrodes and wires,
and
applying electric current to the needles for 10-20 minutes. I.G.
Ex.
1-19, 2-7, 3-4, 4-8, 5-6, 6-5, 6-6, 7-5, 7-6, 8-39, 8-40, 8-41,
10-22,
10-23, 10-24, 11-10, 11-11, 12-25, 12-26, 12-27, 13-9, 14-7,
15-11,
15-12, 15-13, 16-4, 16-5, 17-6, 17-7, 18-11, 19-4, 19-5, 19-6,
20-4,
21-7, 21-8, 22-4, 22-5, 23-7, 23-8, 24-3, 25-8, 25-9, 26-3, 27-5,
28-8,
28-9, 29-5, 31-3 59, 59-1. See Tr. I/ 150, 838, 920; Tr. II/58,
63,
315; I.G. Ex. 1-16, 1-17, 1-18, 1-20, 4-6, 4-7, 8-38, 12-23,
12-24,
13-7, 15-9, 15-10, 18-10, 20-3, 22-4, 22-5, 23-5, 23-6, 40; I.G.
Ex.
9-63, 22-3, 22-4, 22-5, 30-10; Tr.II/1558, 1546, 1562; Tr.
II/92-98;
I.G. Ex. 78-2, 78-3, 81-1, 81-3; I.G. Ex. 61-1/5,7;
64-1/6,11; 68/5,6;
69/7; 66-1/4,7; I.G. Ex. 65-1.
18. During some of the patient encounters resulting in the claims
at
issue, Respondent injected the electrically stimulated area with a
small
amount of an anesthetic agent called "marcaine," just prior to
the
electro-acupuncture treatments. Tr. II/1116, 1120; Tr.
II/1341; see
I.G. Ex. 95/2.
19. During many patient encounters, Respondent provided
additional
medical services, including discussions with the
patients,
prescriptions, minor surgery, blood pressure checks, myelograms,
and
referrals for lab tests and procedures. Tr. II/1434-1440. See
I.G. Ex.
1-15, 1-18/2, 2-6, 3-3, 4-5, 5-5, 8-36, 8-37, 9-61, 9-62, 9-63,
10-20,
10-21, 11-9, 12-22, 12-24, 13-6, 14-5, 15-8, 16-3, 17-4, 18-9,
19-3,
20-2, 21-6, 22-3, 23-4, 25-7, 26-2, 27-4, 28-6, 29-3, 30-9, 31-2; R.
Ex.
101 A-L, N-CC; R. Ex. 63. These services, however, are not relevant
to
the computation of the sanctions here since they were not documented
to
be medically necessary and reimbursable under the program at the
level
of the service claimed.
20. During the relevant time period, BSWNY was located in
Binghamton,
New York, and was the designated Medicare Part B carrier for the
region
in which the services at issue in this proceeding were provided.
Tr.
I/116-117.
21. BSWNY began investigating Respondent in 1983, after a review of
his
payment records indicated that he was billing an unusually large
number
of nerve blocks. Tr. I/150; I.G. Ex. 40. See Tr.
I/919, 1011-1012;
I.G. Ex. 73/4.
22. BSWNY's initial telephone contacts with beneficiaries
indicated
that Respondent was performing acupuncture, although he was
claiming his
services as nerve blocks. I.G. Ex. 40. See Tr.
I/150.
23. Thereafter, BSWNY and the I.G. had a series of in-
person,
telephone, and written contacts with Respondent to determine
what
services were being claimed as nerve blocks and to educate Respondent
on
Medicare policies and rules for filing claims properly. I.G. Ex.
42.1;
I.G. Ex. 42-2; Tr. II/920; I.G. Ex. 73/7,9; I.G. Ex. 44; Tr.
I/153-154;
I.G. Ex. 74/20; I.G. Ex. 47/1; I.G. Ex. 48.
24. During the course of their contacts with Respondent, BSWNY and
I.G.
representatives specifically informed Respondent that his patients
had
indicated he was performing acupuncture and that acupuncture is not
a
covered service. I.G. Ex. 42-2; Tr. II/920; I.G. Ex.
73/7,9.
25. During the course of their contacts with Respondent, BSWNY and
I.G.
representatives specifically informed Respondent that acupuncture
was
not the same thing as a nerve block and that Medicare covers only
two
nerve blocks per year, but only if nerve blocks are for
diagnostic
purposes, rather than for the treatment of pain. I.G.
Ex. 42-2; I.G.
Ex. 44; I.G. Ex 47/1; I.G. Ex. 48; I.G. Ex. 73/7,9; I.G. Ex.
74/20; Tr.
I/153; Tr. II/920.
26. During the course of their contacts with Respondent, BSWNY and
I.G.
representatives specifically informed Respondent that claims for
office
visits should not be based merely on time spent with the patient,
but
rather on some medically necessary service being performed
and
documented. I.G. Ex. 44; Tr.I/153-154; I.G. Ex. 74/20; I.G.
Ex. 48;
I.G. Ex. 47/1,2; Tr. I/939; see I.G. Ex. 37/ 15 and 20.
27. During the course of their contacts with Respondent, BSWNY and
I.G.
representatives specifically informed Respondent that only six
local
infiltrations of anesthetic agent are reimbursable in a calendar
year
and only if medically necessary. I.G. Ex. 47/1; I.G. Ex. 48.
28. During the course of their contacts with Respondent, BSWNY and
I.G.
representatives specifically informed Respondent that (1) he should
not
resubmit claims and list the services as an "office visit" if
the
services listed on the claims had already been turned down as
"nerve
blocks" and (2) that he should not add documentation to his records,
as
either action could be construed as fraud. I.G. Ex. 47/2; I.G. Ex.
44;
Tr. I/153; I.G. Ex. 74/20-22.
29. It was standard practice for Respondent to collect payment at
the
time of service, and then for Rochester Pain Medicine (RPM) staff
to
submit claims on behalf of patients, who had been led to believe
that
they would be reimbursed for Respondent's services. I.G. Ex. 61;
I.G.
Ex. 64/2; I.G. Ex. 66-1/4; I.G. Ex. 10-23/2; I.G. Ex. 10-24; Tr.
I/429,
466, 942, 943; Tr. II/67. See I.G. Ex. 1-1 through 32-2; I.G.
Ex. 82A
and B.
30. BSWNY notified physicians in its region, including
Respondent,
about Medicare reimbursement policies by a Claims Manual issued
in 1979,
a Doctor's Manual released in late 1983, effective January 1984,
(1984
Doctor's Manual) (which replaced the Claims Manual), and periodic
policy
updates. Tr. I/116, 118, 123-127, 666; See I.G. Ex. 34, 35, 36,
37.
31. All but approximately 66 of the 687 claims at issue were
submitted
on HCFA 1500 claim forms. I.G. Ex. 1-1 through 1-31.
32. By signing box 25 of the Medicare HCFA 1500 claim form,
Respondent
certified as follows: "... the services shown on this form
were
medically indicated and necessary for the health of the patient and
were
personally rendered by me or were rendered incident to my
professional
service by an employee under my immediate personal supervision
...."
I.G. Ex. 12-15; I.G. Ex. 37/6,7; Tr. I/129, 554.
33. Claims for services should describe the procedure performed
by
means of a five character procedure code (e.g., "52980")
corresponding
to the services listed in the applicable Claims or Doctor's
Manual and,
if further clarification of the service is necessary, a
verbal
description of the service provided (e.g., "nerve block"). I.G.
Ex.
34/8; I.G. Ex. 37/6,9.
34. Respondent had complete control over policies and
procedures
regarding how claims would be submitted from Rochester Pain
Medicine.
I.G. Ex 64; see I.G. Ex. 61; 64-1, 65-1, 66, 67-1, 68, 69.
35. Of the claims at issue in this proceeding, 343 show the
verbal
description "local nerve block," 339 show "office visit," four
show
"consultation," one shows "consultation/office visit", and one
shows
"flu shot/local nerve block." I.G. Ex. 1-1 through 1-31.
36. Of the 339 claims described as "office visit," 288 show
the
procedure code 90060 ("intermediate" office service for an
established
patient), 16 show code 90050 ("limited" established patient
office
service) seven show code 90040 ("brief" established patient
office
service), eight show code 90020 ("comprehensive" new patient
office
service), and 20 show no procedure code. I.G. Ex. 37/25; see
I.G. Ex.
1-1 through 1-31.
37. Of the four claims described as consultation, three show no
code,
and one shows code 90610 ("extensive consultation"). I.G. Ex.
37/26;
see I.G. Ex. 3-3, 5-5, 6-4, 14-5.
38. Of the 343 claims for "local nerve block," three show no code,
and
the rest show different codes for different time periods, breaking
out
generally as follows:
123 showing 52980 for the period 1/83 to 2/84;
24 showing 62274 for the period 1/84 - 1/85;
20 showing 64450 for the period 2/84 - 1/85
9 showing 64415 for the period 3/84 - 1/85
24 showing 64441 for the period 6/84 - 11/84;
3 showing 64405 (two in 4/84, and one in 1/85); and
137 showing W3600 for the period 1/85 - 6/86.
I.G. Ex. 1-1 through 1-31.
39. Medicare procedure code 52980 is listed under the term
"Nerve
Block" and next to the term "Paravertebral Block (Lumbar)" in the
1979
Medicare Part B Claims Manual. I.G. Ex. 34/31; Tr. I/270.
40. Medicare procedure code 64441 is listed under the
term
"Introduction/Injection of Anesthetic Agent (Nerve Block) ..." and
next
to the term "paravertebral nerves, multiple, regional" in the
1984
Doctor's Manual. I.G. Ex. 37/30.
41. Medicare procedure code 64450 is listed under the
term
"Introduction/Injection of Anesthetic Agent (Nerve Block) ..." and
next
to the term "other peripheral nerve or branch" in the 1984
Doctor's
Manual. I.G. Ex. 37/30.
42. Medicare procedure code 64415 is listed under the
term
"Introduction/Injection of Anesthetic Agent (Nerve Block) ..." and
next
to the term "brachial plexus" in the 1984 Doctor's Manual. I.G.
Ex.
37/29.
43. Medicare procedure code 64405 is listed under the
term
"Introduction/Injection of Anesthetic Agent (Nerve Block) ..." and
next
to the term "greater occipital nerve" in the 1984 Doctor's Manual.
I.G.
Ex. 37/29.
44. Medicare procedure code 62274 is listed under the term
"Puncture
for Injection, Drainage, or Aspiration" and next to the term
"injection
of anesthetic substance diagnostic or therapeutic subarachnoid
or
subdura" in the 1984 Doctor's Manual. I.G. Ex. 37/28.
45. BSWNY local procedure code W3600 was listed under the
term
"Introduction or Removal" and next to the term "Localized
infiltration
of anesthesia" in the 1984 Doctor's Manual. I.G. Ex.
37/27; Tr.
I/272-273; Tr.I/1494.
46. Traditional or classical acupuncture is an ancient form
of
treatment originating in China and involving placement and
manipulation
of one or more thin metal needles beneath the skin at particular
points.
I.G. Ex. 76/5,6; Tr. I/763, 1224, 1472.
47. It is possible to use electrical current to create the effect
of
manual manipulation of the acupuncture needles. I.G. 76/7-8;
Tr.
I/1474. See Tr. II/708-709, 724, 763.
48. When electrical current is introduced to the acupuncture
needles,
the procedure is commonly referred to as electronic
acupuncture,
electro-acupuncture, or electrical stimulation. Tr.
II/708, 724; I.G.
Ex. 82A/1,4.
49. In an electro-acupuncture treatment, 4-16 acupuncture
needles
inserted beneath the skin are attached by clips and wires to an
electric
current source which is activated for ten to twenty minutes.
Tr.
II/708-711; I.G. Ex. 76/21-22.
50. Percutaneous electrical stimulation (PENS) involves
the
introduction of the electric current by way of an electrode which
is
surgically implanted in the area of a major nerve in the central
nervous
system. Tr. I/1237, 1242, 1485; 1594-1597. See I.G. Ex.
35/4, I.G.
Ex. 37/32; I.G. Ex. 105/3; Tr. II/1659.
51. Transcutaneous electrical stimulation (TENS) involves
the
introduction of the electric current by way of pads placed on the
skin.
Tr. I/1482, 1484.
52. Faradic electrical stimulation (FES) is used in the treatment
of
Bell's Palsy to accelerate regeneration of facial nerves. Tr.
II/1591.
53. Other types of electrical stimulation are used in
diagnostic
studies for purposes of measuring nerve conductivity. Tr.
II/1591.
54. Acupuncture, electro-acupuncture, PENS, and TENS are all used
in
the treatment of pain.
55. Respondent's electrical treatments invariably consisted
of
inserting 4-16 acupuncture needles through the skin and attaching
them
by clips and wires to a generator which was turned on for ten to
twenty
minutes. FFCL 17.
56. Respondent used the term acupuncture and electrical
stimulation
synonymously when explaining his practice before a television
audience
in 1981. I.G. Ex. 82A/1-4, 9-10.
57. In 1982, Respondent advertised his practice as an "acupuncture
and
pain clinic." I.G. Ex. 80-3; Tr. II/164.
58. In 1989, Respondent applied to the State Department of Education
to
become licensed as an acupuncturist and stated that he had
practiced
acupuncture 100 percent of the time for the last ten years.
I.G. Ex.
100, 100-1; Tr. II/208-209.
59. In 1989, Respondent publicized the opening of his
acupuncture
clinic as the "reopening of his acupuncture practice of ten
years."
I.G. Ex. 62.
60. Electro-acupuncture is not traditional acupuncture and it
is
arguable that electro-acupuncture is not technically acupuncture if
the
needles are not placed at traditional acupuncture points.
Tr.
I/742-747.
61. The electrical stimulation procedure practiced by Respondent
was
electro-acupuncture; nevertheless, for purposes of this case, it
is
irrelevant whether the acupuncture needles were placed at
traditional
acupuncture points (when electrically stimulated) since
neither
electro-acupuncture nor electrical stimulation of acupuncture
needles
(which are not placed at traditional acupuncture points) is covered
by
Medicare. Tr. I/1244, 1481-1487; Tr. II/1515, 1527; FFCL 46-60.
62. The electrical stimulation procedure practiced by Respondent
was
not TENS, PENS, FES, or diagnostic electrical stimulation. FFCL
49-52,
54.
63. For the sake of convenience, references to electro-acupuncture
in
this decision include the term electrical stimulation, as practiced
by
Respondent.
64. At various times, Respondent practiced both traditional
and
electro-acupuncture. I.G. 83-3/24; Tr. I/769-770.
65. During the period involved in this case, Respondent
practiced,
almost exclusively, electro-acupuncture. Tr. II/1443.
66. Patients came to Respondent's office primarily
for
electro-acupuncture treatments. Tr. II/1440.
67. Electro-acupuncture treatments do not constitute nerve
blocks. Tr.
I/784-785; Tr. II/1483.
68. A nerve block is the application of a chemical substance into
or
around a nerve trunk so as to interrupt the transmission of
impulses
over that nerve trunk to or from the area of the body supplied by
that
nerve trunk. I.G. Ex. 77/10,13; Tr. I/1201, 1467; see I.G.
Ex. 49-1,
49-2, 49-3, 49-4.
69. Administering a nerve block requires significant technical
support
facilities, such as oxygen, breathing mask, breathing bag,
endotracheal
tubes, and a laryngoscope. Tr. I/1216.
70. Nerve blocks are ordinarily administered with hollow
stainless
steel needles of varying diameter and length, not solid
acupuncture
needles. Tr. I/1217.
71. During a nerve block procedure, a patient would experience
pain
followed by numbness which would last from one to twelve hours.
Tr.
I/606-607, 1220-21.
72. A physician's record of a nerve block should include
diagnosis,
caliber and length of needle used, region of the body where the
needle
was placed; drug used and its amount and concentration,
sensations
experienced during the block, what happened after the block,
if
anything, and an individualized operative report. Tr. I/976,
1221-24,
1471; see Tr. I/1333.
73. A nerve block differs from local or superficial infiltration
or
injection of anesthesia, in that nerve block is a direct injection
into
the area of the nerve trunk, whereas local or superficial
infiltration
or injections involve the injection of anesthetic agent into the
skin
and subcutaneous tissue around specific areas of pain to block the
nerve
endings rather than the nerve trunk. I.G. Ex. 49-4/2; Tr.
I/1211-1212,
1469, 1497. See I.G. Ex. 49-1/2; I.G. Ex. 34/15; I.G. Ex.
55-2/7.
74. While it might be arguable that a local or superficial
infiltration
or injection of an anesthetic agent might be called a nerve
block, in a
generic sense, since the pain pathway is blocked, what Respondent
did
was not a nerve block because the amount of anesthetic agent he used
was
too small. Tr. I/1241, 1297, 1249-1250; Tr. II/1513; Tr.
I/785-787.
75. A diagnostic nerve block is used to determine the etiology of
the
patient's pain and the appropriate course for treating the pain,
whereas
a therapeutic nerve block is for the relief of the pain itself.
Tr.
I/1212-1213.
76. A local or superficial infiltration or injection of an
anesthetic
agent is not a diagnostic nerve block. FFCL 64-66.
77. Medicare provides reimbursement for services which are
reasonable
and necessary for the diagnosis or treatment of illness or
injury. See
section 1862 of the Act; Tr. I/550.
78. To be considered medically necessary under Medicare, services
must
be consistent with the diagnosis and treatment, appropriate with
regard
to standards of good medical practice, not solely for the convenience
of
the patient or the doctor, appropriate with regard to the level
of
service, adequately documented, and identifiable in the
patients
records. I.G. Ex. 37/20; see I.G. Ex. 34/12.
79. It is a basic requirement of good medical practice to keep
accurate
records of provided services. Tr. I/797-798, 1224.
80. To establish that a service was medically necessary under
Medicare,
documentation should include some statement of the symptoms or
diagnosis
and a treatment which is consistent with that diagnosis. I.G.
Ex.
37/20; FFCL 77-79.
81. Under Medicare, acupuncture is not considered to be reasonable
and
necessary and is not a covered service. I.G. Ex. 33-3, 33-5; see
I.G.
Ex. 33-1, 33-2, 33-5, 33-6, 33-7, 33-8.
82. Acupuncture is listed as a non-covered service in both the
1979
Medicare Part B Claims Manual and the 1984 Doctor's Manual. I.G.
Ex.
34/18; I.G. Ex. 37/12; see Tr. I/131; Tr. II/41; I.G. Ex.
74/18.
83. Office visits, like all services, must be medically necessary
in
order to be reimbursed by Medicare. See I.G. Ex. 74/20, 21.
84. Under Medicare, office visits are subject to qualification
and
subject to reimbursement according to various levels of
service,
reflecting various levels of skill, effort, time, responsibility
and
knowledge. I.G. Ex. 37/14, I.G. Ex. 74/22, 23; see I.G.
34/14.
85. Under Medicare, a doctor is not entitled to reimbursement for
an
office visit simply based on the amount of time he spent with
the
patient; there must be some medically necessary service
provided,
including documentation of that service. Tr. I/135-139; see
I.G. Ex.
37/20.
86. As a general rule, Medicare regulations would not
provide
reimbursement for an office visit if the only purpose of the visit
were
a non-covered service such as acupuncture; an office visit would
be
allowed and reimbursed for other medically necessary services
rendered
in addition to a non-covered service. I.G. Ex. 74/23,24, 28;
Tr. I/138,
139, 212; see I.G. Ex. 37/20; I.G. Ex. 39-1; FFCL 69.
87. Under Medicare, a physician may be reimbursed for a
"consultation"
where he renders services pursuant to a request from the
attending
physician for an opinion and advice; the consultation must include
a
medical history, physical exam, and written report of findings
filed
with the patient's permanent record. I.G. Ex. 34/29; I.G.
Ex. 35/2;
I.G. Ex. 37/26.
88. Under Medicare, nerve blocks are reimbursable if
used
diagnostically rather than therapeutically. I.G. Ex. 34/15; see
I.G.
Ex. 35/3; FFCL 66.
89. Medicare policy provides for reimbursement of up to two
diagnostic
nerve blocks in a calendar year. I.G. Ex. 34/15; I.G. Ex.
35/3; I.G.
Ex. 74/17, 30.
90. Medicare policy provides for reimbursement of up to six
local
infiltrations of anesthesia in a calendar year. Tr. I/1496; I.G.
Ex 47;
I.G. Ex 48.
91. Medicare policy provides for reimbursement of only discrete
types
of electrical stimulation for the treatment of pain: PENS and
TENS.
Tr. II/1481-1487, 1591.
92. Section 1320a-7(a)(1)(A) of the Act, the CMPL, prohibits
the
submission of claims which were not provided as described in
the
Medicare claim submitted; this is an exacting standard of care and
an
"unartful" description of medical services in a Medicare claim is
a
description of services that were not provided as
claimed.
Anesthesiologists Affiliated et al. v. Sullivan, 941 F.2d 678
(8th Cir.
1991).
93. Respondent's medical records for the claims at issue in
this
proceeding do not reflect that nerve blocks were provided. Tr.
I/1244,
1245, 1282; 1514, 1515, 1519-1521, 1527.
94. Respondent's medical records for the claims at issue in
this
proceeding do not reflect that office visits and consultations
were
provided. Tr. I/1514, 1515, 1519-1521, 1527.
95. Documentation in the pertinent medical records corresponding
to
Respondent's nerve block claims is indistinguishable from
documentation
corresponding to office visit claims. Tr. I/1515.
96. Notations in Respondent's medical records and operative
reports
attached the claims forms indicate that marcaine was injected
during
many electro-acupuncture treatments. See I.G. 1-11, 1-12, 2-1,
4-1,
4-2, 5-1, 5-4, 6-2, 6-3, 8-18, 8-25, 8-32, 9-19, 11-8, 12-8,
12-9,
12-10, 12-14, 12-15, 14-2, 14-3, 15-1, 15-2, 15-3, 16-1, 16-2,
18-1,
18-2, 20-1, 22-1, 22-2, 23-1, 23-2, 25-1, 25-2, 25-3, 25-4, 25-5,
27-1,
27-2, 27-3, 28-1, 28-2, 28-3, 28-4, 29-1, 29-2; Tr. I/1251; R. Ex.
94/3;
R 14A, 14B.
97. Respondent's records reflect that he was
providing
electro-acupuncture treatments to his patients rather than the
services
claimed. Tr. I/1244, 1515, 1526-1527.
98. Although Respondent's medical records are extremely sketchy and,
at
times, illegible, there are a number of indications that he
provided
other services in addition to electro-acupuncture (i.e.,
prescribed
drugs, ordered lab work, administered flu shots, performed
minor
surgery, or took blood pressure readings). Tr. I/1515; I.G.
Ex. 1-15,
2-6, 3-3, 4-5, 5-5, 6-4, 7-4, 8-37, 9-36, 10-21, 11-9, 13-6, 14-5,
15-8,
16-3, 18-9, 20-2, 21-6, 22-3, 23-4, 25-7, 26-2, 27-4, 28-6, 29-3,
30-9,
31-2. These services, however, are not relevant to the
computation of
the sanctions here since they were not documented to be
medically
necessary and reimbursable under the program at the level of the
service
claimed.
99. These notations of additional services in Respondent's
records
sometimes occurred in conjunction with claims for office visits
and
sometimes in conjunction with claims for nerve blocks, but
consistently
in conjunction with documentation of electro-acupuncture
treatments.
See I.G. Ex. 1-15, 2-6, 3-3, 4-5, 5-5, 6-4, 7-4, 8-37, 9-36,
10-21,
11-9, 13-6, 14-5, 15-8, 16-3, 18-9, 20-2, 21-6, 22-3, 23-4, 25-7,
26-2,
27-4, 28-6, 29-3, 30-9, 31-2.
100. The most frequent diagnosis found for the claims at issue
is
arthritis. Tr. I/1247, 1254, 1259, 1261, 1268, 1271, 1274, 1275,
1280,
1289, 1296, 1297, 1299, 1300, 1303, 1306, 1307; Tr. II/1515.
101. Many of the notations of "marcaine" in Respondent's
medical
records were added to the records after the original notations
that
electro-acupuncture had been performed. Tr. I/1244, 1293.
102. Beneficiary Charlotte Gans made a written sworn statement to
I.G.
agent Joseph Neigsch that the only treatment she had received
from
Respondent was electro-acupuncture. I.G. Ex. 8-40.
103. In subsequent written statements and at the hearing, Ms.
Gans
recanted the sworn statement, saying that it had not been read back
to
her before she signed it, that it had been obtained in a
misleading
manner, and that she had received other treatments from
Respondent, in
addition to electro-acupuncture. R. Ex. 96-2, 96-3; Tr.
II/1281-1284,
1300-1306.
104. I.G. investigator Richard Chorman signed a sworn statement that
he
had accompanied investigator Neigsch to the interview with Ms.
Gans,
that Mr. Neigsch had read Ms. Gans' sworn statement back to her
before
she had signed it and that investigator Neigsch had not misled Ms.
Gans.
I.G. Ex. 8-41/2,3.
105. Ms. Gans is elderly, infirm, and at the hearing appeared at
times
to have been confused about the timing of certain events; Ms.
Gans
remains under the care of Respondent, likes the Respondent,
receives
treatment from Respondent at a reduced fee or no fee, and her
subsequent
written statements were prepared by Respondent and signed by Ms.
Gans at
Respondent's office. Tr. II/1300; see Tr. II/1154,
1288-1292, 1306,
1344.
106. I did not find Ms. Gans' testimony at the hearing to be credible.
107. Ms. Gans' testimony does not override her initial sworn
statement;
while she at times received additional services from Respondent,
the
purpose of her visits to Respondent was to receive
electro-acupuncture.
See Tr. II/1291, 1294-1295, 1308.
108. Investigator Neigsch did not mislead Ms. Gans. FFCL 106, 107.
109. Sworn statements of five other beneficiaries (or in one instance
a
relative who had accompanied a now deceased beneficiary to
Respondent's
office) were contradicted at the hearing by their own
testimony or that
of relatives who had accompanied them to Respondent's
office; the sworn
statements indicated that Respondent had provided
only
electro-acupuncture (with specific stated exceptions), but the
testimony
indicated that on occasion Respondent had provided other services
as
well. Tr. I/415, 482, 484-490, 532, 613-616, 621-625, 627.
110. Sworn statements of other beneficiaries were
similarly
contradicted by excerpts from testimony provided to a grand jury
in
1986. Tr. II/835-842, 852-858, 869, 878.
111. The testimony elicited at this hearing and the excerpts from
the
1986 grand jury investigation do not override the sworn
statements
presented by the I.G.; while the beneficiaries received
additional
services from Respondent, the primary purpose of their visits
to
Respondent was to receive electro-acupuncture.
112. The additional services Ms. Gans and others received during
their
visits for electro-acupuncture therapy are not reimbursable
under
Medicare since the treatments were not medically necessary
under
Medicare standards (i.e., not sufficiently documented or
inconsistent
with the stated diagnoses). See FFCL 78, 80, 86.
113. Respondent presented the testimony and sworn affidavit of
his
employee Charlene Cook as the best factual account of events in
question
in this case. R. Br. 46.5; R. Ex. 94; Tr. II/1094.
114. Respondent presented Ms. Cook's testimony to establish
and
corroborate his version of events. See Tr. II/1099-1158.
115. Charlene Cook was Respondent's full-time office manager from
1980
through 1985, took a year off to have a child, went back to work
for
Respondent part-time thereafter, and at the time of this hearing
was
employed by Respondent. Tr. II/1091.
116. Charlene Cook's testimony was not an objective,
independent
version of events and was not credible; Ms. Cook has a
long-standing,
close affiliation with Respondent and, at the time of the
hearing, was
still employed by him. See FFCL 115.
117. Respondent did not prove his assertion that in 1980 Carol Durso
of
Blue Shield, Rochester, told Respondent to bill his office procedures
as
nerve blocks under code 52980. See I.G. Ex. 54-1; FFCL 113-116.
118. Respondent did not prove his assertion that in
1980
representatives of BSWNY or any Medicare carrier told Respondent to
bill
his office procedures under the code 52980. See FFCL 113-116.
119. Charlene Cook's notes of a March 19, 1985 meeting with BSWNY
do
not prove Respondent's assertion that he was told at that meeting
to
bill his services first for six local infiltrations of anesthesia
and
then all other visits as office visits. See FFCL 113-116.
120. At the March 19, 1985 meeting and in a July 16, 1985
letter
confirming the results of the meeting, BSWNY specified the number
of
times local infiltrations could be claimed per year and that
individual
claims for the services were subject to the Medicare requirement
of
medical necessity; BSWNY never stated that Respondent's services
fit
into particular categories or would be reimbursed without
a
determination of medical necessity. I.G. Ex. 47; I.G. Ex. 48/2.
121. Respondent did not prove that he was told at the March 19,
1985
meeting or thereafter to bill the services he was providing in
his
office by billing first for six local infiltrations of anesthesia
and
then all other visits as office visits. See FFCL 113-116,
119-120.
122. Respondent did not prove that he was billing for his
service
according to instructions provided by BSWNY. See FFCL 117, 118,
121.
123. The terms local and superficial nerve block have no
medical
meaning and are not terms used in Medicare reimbursement.
Tr.
I/1214-1215, 1467.
124. Nerve blocks are not appropriate treatments for arthritis.
Tr.
I/1247.
125. Electro-acupuncture or electrical stimulation therapeutic
services
performed by Respondent do not constitute diagnostic or
therapeutic
nerve blocks, PENS, or TENS, and thus are not reimbursable
under
Medicare. FFCL 18, 67, 75, 88, 91.
126. Respondent added local injections of marcaine to
his
electro-acupuncture therapy only after BSWNY began to reject his
nerve
block claims. Tr. II/1341; I.G. Ex. 95/2.
127. Respondent added local injections of marcaine to
his
electro-acupuncture therapy only because he felt the injection of
an
anesthetic agent would legitimize his claims as nerve blocks. I.G.
Ex.
95/2; R. Ex. 94.
128. The injection of marcaine, when administered in conjunction
with
electro-acupuncture, does not convert the electro-acupuncture
treatment
into a nerve block. Tr. I/1241, 1247, 1249-1251, 1513; see
FFCL 126,
127.
129. The injections of marcaine are not reimbursable under Medicare
as
nerve blocks because Medicare only reimburses diagnostic blocks,
and
injections of marcaine are not diagnostic blocks. FFCL 75, 76,
88.
130. The injections of marcaine are not reimbursable under Medicare
as
office visits, since the purpose of the visits was to
receive
electro-acupuncture and the injections were not medically
necessary.
FFCL 66, 78, 86, 126, 127.
131. The injections of marcaine are not reimbursable under Medicare
as
local infiltrations of anesthesia, since they were not
medically
necessary and were improperly described as "local nerve blocks" on
the
claim forms. FFCL 78, 92, 135.
132. The additional services provided by Respondent were
not
reimbursable as office visits under Medicare since the purpose of
the
visits was electro-acupuncture and since the notations do not
constitute
sufficient documentation to establish the medical necessity of
the
services, except in the seven instances noted in FFCL 187. The
services
in these seven claims, however, were reimbursable at a lower level
than
claimed. FFCL 86.
133. The diagnosis listed on the vast majority of the claims
in
question is not consistent with the treatment documented in
the
corresponding medical records. Tr. II/1515, 1538-1541,
1545-1563.
134. Respondent's evidence was insufficient to establish the
medical
necessity of any treatment. Tr. II/1515.
135. The terms "local nerve block" and "superficial nerve block,"
were
"unartful" descriptions of the services provided and, therefore,
are
descriptions of services not provided as claimed under the CMPL,
section
1320a-7(a)(1)(A) of the Act. See FFCL 92.
136. None of the claims in question were properly described:
either
because the narrative description was improper for the service
provided,
the code was improper for the service provided, the
narrative
description did not correspond with the code, or the service
provided
was claimed at an improper level of service. FFCL 123, 125,
128, 129.
133, 135.
137. All of the 687 claims in question are false or improper under
the
CMPL. FFCL 123-136.
138. Respondent submitted or caused to be submitted to BSWNY claims
on
behalf of Medicare beneficiaries for 687 items or services.
Tr.
I/550-553, 555, 593-596, 641-644. See I.G. 1-1 through 31-1.
Respondent
knew, had reason to know, or should have known that these items
or
services were not provided as claimed, in violation of section 1128A
of
the Act.
139. Respondent knew that electro-acupuncture was not a
covered
Medicare service and, therefore, claimed his
electro-acupuncture
services as "nerve blocks."
140. Respondent knew that electro-acupuncture was not a covered
service
and, therefore, claimed the electro-acupuncture services he provided
as
"office visits."
141. Respondent had reason to know that electro-acupuncture was
not
reimbursable as a nerve block. I.G. Ex. 35/3; FFCL 26, 31, 88.
142. Respondent had reason to know that to be reimbursable as
an
"office visit," any additional services provided during
an
electro-acupuncture treatment would have to meet the criteria
for
medical necessity, including adequate documentation. FFCL 27, 31,
86.
143. Respondent had reason to know that the cryptic notations
of
additional services (prescription drugs, orders for lab
work,
administering flu shots, doing minor surgery, or taking blood
pressure
readings) would not be sufficient to convert otherwise
unallowable
claims for electro-acupuncture into reimbursable claims for
office
visits. FFCL 27, 31, 86; Tr. II/151
144. Respondent had reason to know that the additional services he
was
performing, except for the seven noted below, were not
sufficiently
documented so as to be considered medically necessary under
Medicare.
FFCL 31, 78-80.
145. Respondent had reason to know that neither the notations
of
"marcaine," nor the notations in conjunction with occasional
operative
reports, are sufficient to convert Respondent's
unallowable
electro-acupuncture services into reimbursable "local
infiltration of
anesthesia" services. Tr. I/1515, 1526-1527; FFCL 31,
131.
146. Respondent had reason to know that his local injections
of
marcaine services were not reimbursable under Medicare, since they
did
not meet the criteria for medical necessity. FFCL 31, 131.
147. Respondent acted with reckless disregard for the
Medicare
regulations in order to attempt to provide reimbursement for
his
Medicare patients. FFCL 30, 141-146.
148. Respondent submitted or caused to be submitted to BSWNY claims
on
behalf of 31 beneficiaries for 687 items or services which he knew,
had
reason to know, or should have known were not provided as claimed.
See
FFCL 73, 127, 128, 130, 131, 132.
149. In assessing Respondent's credibility, I considered that when
he
applied to be licensed as a acupuncturist in 1988, Respondent
indicated
on his application to the New York Department of Education that he
had
practiced acupuncture 100 percent of his time for the last ten
years,
but when attempting to persuade this ALJ that he should not be
found
liable under the CMPL, Respondent testified under oath that his was
a
general medical practice specializing in the treatment of pain and
that
electro-acupuncture was only one of several medical modalities which
he
used in treating pain. See FFCL 58; Tr. II/1334-1337.
150. In assessing Respondent's credibility, I considered
that
Respondent has more than a nine year history of drug addiction,
spanning
the period in question in this case and lasting at least until
1987.
Tr. II/1055-1056, 1058, 1064.
151. In assessing Respondent's credibility, I considered that, in
1986,
Respondent lied to the New York State Board for Professional
Medical
Conduct when he testified under oath that he was drug free.
Tr.
II/1076, 1086; I.G. Ex. 55-1/4,5; see Tr. II/1326.
152. In assessing Respondent's credibility, I considered that,
in
entering into a plea agreement in 1987, Respondent admitted guilt to
one
count of mail fraud under Indictment 86-194T, encompassing five
false
claims for seven services rendered to beneficiary Antoinette
Pezzulo,
and to one count of distribution of a controlled substance
under
Indictment 87-106T. I.G. Ex. 88.4/2-3, 15.
153. In assessing Respondent's credibility, I considered that
the
claims for services to Ms. Pezzulo corresponded to counts 528, 529,
533,
534, 535, 536, and 537 of the I.G.'s case in this proceeding. I.G.
Ex.
15-1, 15-4, 15-5, 15-6.
154. In assessing Respondent's credibility, I considered that,
in
entering into the 1987 plea agreement, Respondent admitted under
oath
that he had known that acupuncture was not a covered service
under
Medicare and had billed Medicare for nerve block services which he
had
not provided as claimed, whereas in this proceeding Respondent
contended
that he was merely billing his services as he had been instructed
by
BSWNY. I.G. Ex. 88-4/8,12; Tr. II/1340-1341, 1441.
155. In assessing Respondent's credibility, I considered that,
in
entering into the plea agreement, Respondent testified under oath
that
he had not been forced to plead guilty under the plea agreement,
whereas
in this proceeding, Respondent contended that he was forced to
plead
guilty to mail fraud involving Ms. Pezzulo because the
prosecutor
threatened to send him to jail on the drug charge if he did not
plead
guilty to the mail fraud charge as well. I.G. Ex. 88-4/15; Tr.
II/1328,
1334-1335.
156. In assessing Respondent's credibility, I considered
that
Respondent's testimony under oath in this proceeding
contradicts
previous testimony given under oath. FFCL 154-155.
157. In assessing Respondent's credibility, I considered
that
Respondent was asked to resign from Rochester General Hospital
for
improper billing practices and upon his departure wrote a letter to
the
Executive Director of Rochester General Hospital admitting that he
knew
that many of his charges were improper and stating that he was
seeking
psychiatric care to find out why he had acted as he had, whereas in
this
proceeding Respondent testified that the charges against him
at
Rochester General were unfounded. I.G. Ex. 90-2/3-4; Tr.
II/1321-23.
158. In assessing Respondent's credibility, I considered
that
Respondent's testimony under oath in this proceeding is
inconsistent
with the earlier admission made to the Executive Director of
Rochester
General Hospital. FFCL 157.
159. In assessing Respondent's credibility I considered that
Respondent
altered his medical records to show that he had administered
marcaine to
his patients, although BSWNY and I.G. representatives advised him
not to
add anything to his records. Tr. II/1119, FFCL 29.
160. In assessing Respondent's credibility, I considered
that
Respondent grossly misinterpreted information provided by BSWNY and
Blue
Shield of Rochester, disavowing any personal responsibility for
his
dilemma in this case and alleging that confusion within the
Medicare
system and personal vendettas against him created the dilemma.
See FFCL
25-29, 118-122; Tr. II/1341; R. Br. at 115, 151-152; I.G. Ex.
54-1,
54-2/14-15, 17-18.
161. In assessing Respondent's credibility, I considered
that
Respondent initially told I.G. investigators that both Carol Durso
(of
Blue Shield, Rochester) and representatives of BSWNY told him to
bill
under code 52980, but later testified that only Carol Durso told him
to
bill under code 52980, and that he thought she worked for BSWNY.
I.G.
Ex. 42-2/2; I.G. Ex. 73/8; Tr. I/92; Tr. II/1095-1097.
162. In assessing Respondent's credibility, I considered
that
Respondent distinguished acupuncture from electronic stimulation
when
trying to establish that his services should be reimbursed under
the
Medicare regulations, while during essentially the same time
period,
Respondent used the terms synonymously in an effort to convince
the
State Board of Education that he should be granted a license as
an
acupuncturist. I.G. Ex. 42-2/2; I.G. Ex. 73/6, 9; FFCL 50.
163. In assessing Respondent's credibility, I considered that in
this
proceeding Respondent represented that whenever he injected marcaine
he
billed under procedure code W3600, local infiltration of
anesthesia,
whereas the claims show that marcaine was billed under various
codes,
including 64415, 64441, 64405, 64450, and 90610. R. Br. at 95;
R. Rep.
Br. I at 1-2; R. Rep. Br. II at 2; Tr. II/1339. See
I.G. Ex. 1-8,
5-1, 8-18, 9-19, 11-8, 12-8, 12-9, 12-10, 16-1, 16-2, 15-1,
15-2.
164. In assessing Respondent's credibility, I considered
that
Respondent alleged having little or no financial resources, yet
he
received approximately $800,000 after taxes from his mother's 1987
will,
and, at the time of the hearing, owned art, furniture, a valuable
home,
retained membership in a country club ($300/mo.), and had given
away
substantial amounts to Lisa Carlier, including over $50,000 in
jewelry
and $160,000 to start a business in which he participated.
Tr.
II/1599-1600, 1603, 1605, 1607-1610, 1616-1618, 1620-1622, 1636;
I.G.
Ex. 104; 107/12; R. Br. 175.
165. In assessing Respondent's credibility, I considered
that
Respondent reported conflicting information about his
financial
condition to the I.G., the New York State Supreme Court for the
County
of Monroe, and this ALJ. R. Br. 175; Tr. II/1603,
1605-1613, 1618,
1620-1621, 1630, 1638-1639; I.G. Ex. 106, 107.
166. Respondent is not a credible witness. See FFCL 149-165.
167. Congress intended that section 1128A sanctions be
primarily
remedial in nature and that there be some reasonable
relationship
between the determination of the sanctions and the amount of
damages to
the government.
168. Section 1128A of the Act provides for the imposition of a
penalty
of up to $2,000 for each item or service falsely or improperly
claimed,
an assessment of up to twice the amount falsely or improperly
claimed,
and an exclusion from Medicare and federally-financed State health
care
programs.
169. In determining the amount of penalty and assessment to be
imposed,
and the length of exclusion, section 1128(a)(1) of the Act
and
regulations direct the finder of fact to consider several factors
which
may be of an aggravating or mitigating nature. 42 U.S.C. .
1320a-7a; 42
C.F.R . 1003.106.
170. The I.G. has the burden of proving the existence of
any
aggravating factors by a preponderance of the evidence.
171. Respondent has the burden of proving the existence of
any
mitigating circumstances by a preponderance of the evidence.
172. The amount of penalties and assessment, and the length
of
exclusion from participation in the various medical programs, is to
be
determined in a CMPL case by reviewing:
a. the nature and circumstances under which
the requests for
payment were made;
b. the degree of a respondent's culpability;
c. the existence of prior offenses;
d. the financial condition of a respondent; and
e. any other matters that justice may require.
42 C.F.R. .. 1003.106, 1003.107.
173. It is an aggravating factor that the claims at issue
were
presented over a lengthy period of time. FFCL 13.
174. It is an aggravating factor that there were a substantial
number
of claims involved in this case. FFCL 10-13.
175. It is an aggravating factor that the $42,875 claimed for the
687
services at issue was substantial. FFCL 13.
176. With regard to the degree of Respondent's culpability, it is
an
aggravating factor that Respondent acted with knowledge and
reckless
disregard for Medicare rules and regulations. Respondent
knowingly
disseminated false information about the Medicare program to
Medicare
beneficiaries and the public at large. Respondent
assured patients
that electrical stimulation treatments would be reimbursed
by Medicare,
thereby inducing the patients to undergo electrical
stimulation
treatments and to pay Respondent at the time of treatment (or to
take a
Medicare assignment from them) when he knew or had reason to know
the
services provided were not reimbursable under Medicare. FFCL
30,
141-148; I.G. Ex. 82A, 82B.
177. It is an aggravating factor that the Department has had to
expend
considerable resources in monitoring Respondent and attempting to
secure
his compliance. Tr. I/168,586; see FFCL 22-29.
178. It is an aggravating factor that Respondent has a history
of
misrepresenting facts. See FFCL 149-165.
179. The I.G. did not prove all of the aggravating factors which
he
alleged, including that Respondent has knowingly practiced
acupuncture
without appropriate authorization and has resisted paying
restitution
under a previous plea agreement.
180. The I.G. did not prove the existence of prior offenses as
an
aggravating factor. I.G. Posthearing Brief at 175.
181. Respondent did not prove any of the mitigating factors he alleged.
182. The I.G.'s expert witness identified 14 instances in
which
Respondent's medical records reflected that some reimbursable
service
had been provided by Respondent. Tr. II/1541-1549.
183. Only eight of the 14 services identified by the I.G.'s expert
were
at issue in this proceeding; six were not. Tr. II/1541,
1542,
1545-1549; attachment to I.G.'s Notice at 5-14.
184. Upon re-examining the eight services at issue which
were
identified by the I.G.'s expert and identified in Stern I at FFCLs
132
and 181, I find that count 291, a claim for services to Eloise
Jenkins
on May 7, 1985, was provided at the level of service claimed
by
Respondent. Tr. II/1546-54; I.G. Posthearing Brief at 114, n.
27. This
leaves seven services at issue, of the original 14.
185. Count 291 is deleted from the number of services that
justify
sanctions, leaving 687 services which were claimed by Respondent
in
violation of section 1128A of the Act.
186. Upon re-examining the remaining seven services in issue (of the
14
services identified by the I.G.'s expert), I find that these
seven
services claimed (counts 208, 347, 349, 361, 372, 377, 378) would
have
been reimbursable, if properly claimed, because a service was
provided,
in addition to acupuncture, albeit at a lower level than claimed.
The
basis for liability under the statute, however, does not lessen
for
these claims, and they may not serve as a mitigating factor.
187. The implementing regulations require that Respondent's
known
financial resources must be considered in determining the amount of
the
penalties and assessments. 42 C.F.R. . 1003.106(b)(4).
188. Although Respondent did not participate in discovery
concerning
his financial condition, the evidence he submitted into the
record
indicates he possessed substantial financial resources. I.G. Ex.
106,
Tr. II/1603. Consequently, his financial resources do not
provide a
basis to reduce the assessments and penalties imposed.
189. The six-year statute of limitations provided by
section
1128A(c)(1) of the Act is controlling in this case, because this
case
was initiated by the I.G. after September 1, 1987.
190. The I.G. is not barred from bringing this action by either
the
doctrine of equitable estoppel or collateral estoppel.
191. The I.G. is not barred in this case by the double jeopardy
clause
of the United States Constitution.
192. The I.G. is not equitably estopped
or otherwise barred
in
this case by the Plea Agreement
between the United States and
Respondent in Respondent's criminal trial.
193. Respondent does not have the right to trial by jury and to
be
found guilty beyond a reasonable doubt.
194. Respondent was not prejudiced or denied due process by
the
admission of written statements of patients obtained by the I.G. in
lieu
of live testimony.
195. Respondent was not prejudiced or denied due process by the
I.G.'s
claim of privilege.
196. The statute, regulations, and case law indicate that
the
approximate amount of damages to the government should be given
great
weight in determining the appropriate amount of assessment
and
penalties. The government's approximate damages in this case
total
$174,000, including $165,000 in costs of investigating and
initially
prosecuting Respondent. July 17, 1990 I.G.'s Statement of
Costs.
197. The I.G.'s proposed penalties, assessments, and exclusion
were
based on his assertion that 707 services were not provided as
claimed,
whereas I have concluded that 687 were not provided as claimed.
198. Based on the government's damages in this case, Respondent's
known
financial resources, and the other factors and circumstances set out
in
section 1128A of the Act and the implementing regulations,
the
imposition of penalties in the amount of $425,000 and an exclusion of
20
years are not reasonable. The imposition of assessments in the
amount
of $70,648 is reasonable.
199. Penalties of $345,000, assessments of $70,648, and an exclusion
of
ten years are reasonable in this case.
FOOTNOTES 1. The ALJ stated that the 191 FFCLs from his
Decision
remained unchanged unless modified by one of the new FFCLs in his
Remand
Decision. The ALJ's approach required the Board (and the
parties) to
make literally hundreds of comparisons in order to determine the
status
of individual FFCLs following the Decision on Remand. Also, to
the
extent that it was not always self-evident whether a later FFCL had
in
fact "modified" one of the 191 earlier ones, this approach left
the
status of particular FFCLs in limbo. Accordingly, we found it
necessary
to integrate both sets of FFCLs into one complete set, which we set
out
in an appendix to this decision. Our compilation of FFCLs
necessarily
clarifies the current status of each FFCL and also reflects our
own
modifications as discussed herein. All citations to FFCLs in
this
decision reflect both the original numbering from an ALJ
decision,
wherever appropriate, and the numbering found in our
appendix
compilation.
2. Footnote 12 of the ALJ Decision explains that the standard
of
knowledge in the CMPL prior to December 22, 1987 was that a
person
"knows" or "has reason to know" the services claimed were not
provided
as claimed. Because Congress then retroactively substituted
"should
know" for "has reason to know," and because the retroactive
substitution
had not been considered by a court, the ALJ actually considered
three
separate standards of knowledge: whether Respondent "knew," "had
reason
to know," and "should have known" the services claimed were not
provided
as claimed. Although FFCL 148 states Respondent knew, had
reason to
know, or should have known the services were not provided as
claimed,
the ALJ concluded that the I.G. proved each of these standards
of
knowledge for every questioned claim (which the ALJ modified to 687
in
number on remand).
3. "State health care program" is defined in section 1128(h) of the
Act
and includes the Medicaid program under title XIX of the Act.
Unless
the context indicates otherwise, we use the term "Medicaid" to refer
to
all programs listed in section 1128(h).
4. All regulations cited and relied upon, unless otherwise
indicated,
are the civil money penalty regulations in effect while
these
proceedings were initially pending before the ALJ.
5. Respondent did not raise any specific arguments concerning the
ALJ's
extending the period of Respondent's exclusion from seven to ten
years,
and we do not address that specific aspect of the sanctions
further.
6. Thus, the ALJ found several factors surrounding the nature of
the
claims and the circumstances under which they were presented to
be
aggravating. The claims were 687 in number, were submitted over
a
lengthy period of time and were submitted in a specific pattern.
Remand
Decision at 13. The ALJ noted that he had compared this case to
other
section 1128A cases and found that the sanctions proposed by the
I.G.
here (which were higher than those ultimately imposed by him)
were
within the same approximate range as other cases, including a
case
upheld on appeal. See Mayers v. U.S. Dept. of Health
and Human
Services, 806 F.2d 995 (11th Cir. 1986).
The ALJ found, regarding the factor of culpability, that Respondent
knew
that the services he claimed were not provided as claimed and
that
Respondent had reason to know and had a reckless disregard for
the
Medicare rules in that he knowingly ignored the requirements
when
presenting claims to Medicare.
7. Although the preamble to the regulations containing these
guidelines
did not clarify specifically why the minimum amount of assessment
and
penalties should be "double" the approximate amount of damages,
this
minimum was apparently necessary because the full extent of
the
government's damages are not always readily determinable and because,
as
we discuss below, the government frequently also suffers
significant
"indirect" damages to the integrity and reputation of its
programs.
These "indirect" damages obviously would be difficult to
measure. The
regulations on civil money penalties promulgated on
January 29, 1992
make the formula of double the approximate damages a
"binding" standard
in computing assessment and penalties. 42 C.F.R. ..
1003.106(c)(3) and
(d)(1). The preamble to these regulations clarified
that:
The courts have recognized that civil penalty
statutes entitle the
government to recover full
compensation for its damages, and that
ordinarily, application of the
statutory "fixed penalty plus double
damages" provision does no more than
make the government whole. [cites
omitted]
57 Fed. Reg. 3298, 3323 (January 29, 1992).
8. At the hearing before the ALJ, Respondent alleged that he
never
received the I.G.'s statement of costs. Transcript I at
109. The I.G.
alleged that he had sent the statement of costs to
Respondent's brother,
who assisted Respondent in his representation.
Id. Respondent was thus
aware of the I.G.'s statement of costs by the time of
the hearing at the
very latest, yet he did not challenge it in that
proceeding or in any of
the further proceedings before the ALJ, even though
the I.G. continued
to cite and rely on that statement of costs. I.G.'s
Post-Hearing Brief
at 181-182.
9. In response to Respondent's challenge before us to the statement
of
costs, the I.G. submitted an unsolicited "Opposition to
Respondent's
Reply and Motion to Supplement the Record." With this
motion, the I.G.
supplied three declarations regarding the time devoted to
this case by
investigators and attorneys, as well as the costs associated
with their
activities. Respondent objected to the I.G.'s motion,
arguing that the
I.G. failed to get permission to file this motion and that
the I.G. was
attempting to place evidence before the Board in a "backhanded"
fashion.
Inasmuch as we have concluded that Respondent's objections to
the
statement of costs were untimely, we also deny the I.G.'s motion
to
supplement the record.
10. The statement in question was provided to the ALJ in July
1990. It
therefore did not include the costs of any subsequent
activities
incurred in the prosecution of Respondent before the ALJ,
including the
hearing itself. The ALJ said he would not consider
the cost of
conducting the hearing or any other proceeding in the
administrative
action "because to do so would have a chilling effect on the
rights of
respondents to a full and fair hearing." Decision on
Remand at 17, n.
11; cf. 42 C.F.R. . 1003.106(d)(2), effective January
29, 1992
(requiring that the cost of the administrative proceedings be
included).
Although the I.G. argued before the ALJ that the cost of the
entire
administrative process should properly be included in the
government's
damages under the prior regulations, the I.G. did not take
exception to
the ALJ's treatment of these costs in its brief before us.
11. We note that the regulations give the Department the flexibility
to
settle any issue or case or to compromise any penalty and assessment
at
any time. See 42 C.F.R. .. 1003.106(d), 1003.126, and
1003.128,
effective January 29, 1992. This flexibility would appear to
permit the
Department to set payment schedules for the assessment or
penalties
imposed or even to compromise sanctions that become
demonstrably
unpayable and counterproductive.
12. Respondent noted that in making this finding, the ALJ
considered
assets of Respondent's wife along with his own assets. The
format of
Respondent's own evidence, however, made it necessary for the ALJ
to
consider combined assets in determining Respondent's net
worth.
Respondent's statement of assets presented during the remand
proceedings
failed to make any allocation between his own assets and his
wife's.
13. The ALJ stated that "one of the I.G.'s medical experts
identified
14 services on claims which he considered to be sufficiently
documented
to be reimbursable, although most of them at a lower level of
service
than claimed." ALJ Decision at 56. The ALJ then went on
to find that
these 14 claims were a mitigating factor in the appeal. (See
FFCL 181 in
ALJ Decision, which was subsequently deleted by DAB 1314, at
25-28.)
14. Moreover, we give little, if any, weight to evidence of
other
services from Respondent's primary witnesses since the ALJ
concluded
that their testimony was not credible and was contradicted by
previous
sworn statements. FFCLs 106, 109-111, 116, 149-165, 166.
Furthermore,
the medical records relied upon are virtually illegible in many
places
and clearly lacking in sufficient information to document
that
particular services were medically necessary and otherwise
reimbursable.
15. Aside from the single claim where the service provided was at
the
level of the service claimed and the seven claims where the
service
provided was reimbursable at a level lower than the service claimed,
the
ALJ found that six other claims identified as reimbursable in
the
testimony of the I.G.'s medical expert were not even at issue in
these
proceedings.
16. We did not intend to imply in DAB 1314 that a factor can never
be
viewed as mitigating if it only involves one or two percent
of
questioned cases (and if the ALJ gives the factor a weight
commensurate
with the small number of cases). Our primary concern is
that the very
small number of cases involving other services does not
demonstrate
lessened culpability on Respondent's part and does not provide a
legal
basis for mitigating the sanctions.
17. Although Respondent questioned the proper weight of
mitigating
factors generally in computing the sanctions, Respondent did
not
specifically take exception to our conclusion that there is
an
insufficient evidentiary or legal basis for mitigating the
sanctions
based on alleged patient benefit derived from treatment that did
not
include a covered service. DAB 1314, at 28-30. If a service
(here,
acupuncture) is not covered, it is irrelevant that the service may
have
been beneficial to individual patients. The purported benefit
cannot be
justification for the provider first to mislead Medicare patients,
many
of whom are elderly, concerning whether the service is covered and
thus
affect their decision to receive the service and then mislead
the
Medicare program itself as to the nature of the service claimed. If
the
provider believes in the benefits of his treatment, he properly
should
notify his patients that the service is not covered and then allow
his
patients to make their own decision whether to proceed or not
after
receiving his schedule of fees. In any event, his belief in
the
efficacy of his treatment cannot serve to mitigate his filing of
false
claims.
18. Although the Decision on Remand referenced the telephone
conference
(held on July 23, 1992), the record of this appeal as transmitted
to us
failed to contain any memorialization of that conference.
Subsequently
in a "Notice of Supplement To The Record," the ALJ clarified for
the
record that a tape recording and his contemporaneous notes had been
made
of the conference, but that the tape was now missing. The ALJ
attached
to the Notice his handwritten notes of the telephone conference.
19. In addition to substantive objections to the evidence, the
I.G.
objected to R. Ex. 92-1 on the ground that the information
contained in
the exhibit was wholly unreliable. The I.G. asserted that this
exhibit
was nothing more than Respondent's own unsworn assertions and did
not
reflect an independent audit of Respondent's assets. The I.G.
also
objected to comments made by Respondent's brother during the July
23,
1992 telephone conference regarding Respondent's financial condition
and
regarding his rehabilitation from drug addiction because the I.G.
had
not been notified that these statements were to be relied upon
as
evidence and because the statements were not the sworn testimony of
a
witness subject to cross examination.
20. The ALJ's authority to take further action in this appeal
resulted
directly from the Board's remand order; the ALJ made no
determination
here that he was acting under independent authority that
permitted him
to reopen the proceedings under these circumstances and to
consider
issues outside the scope of the Board's remand.
21. We do not decide here whether this factor could properly be
viewed
as mitigating if it had been raised and substantiated by
Respondent
during the initial proceedings before the