DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Grant Appeals Board

Office of Hearings for Civil Money Penalties

In the Case of:

Aug 26 1987

The Inspector General, DATE:

)

)

)

)

“ve . )

) Docket No. C=25

George A. Kern, M.D., )
) DECISION CR 12
)

Respondent

DECISION AND ORDER

In this case, the Inspector General (1.G.) of the United
States Department of Health and Human Services (DHHS)
issued a Notice of Determination (Notice) informing
George A. Kern, M.D. (the Respondent), that the I.G.
sought a penalty of $215,000, an assessment of $15,510,
and a ten year suspension of the Respondent from
participating as a medical provider in the Medicare and
Medicaid programs. In the Notice, the I.G. alleged that
the Respondent had violated the Civil Monetary Penalties
Law (CMPL) and its implementing regulations (Regulations)
by presenting false or improper claims for Medicare
payment. 1/ 2/ The I.G. alleged that the medical services
listed by the Respondent as having been performed at the
Iowa Methodist Medical Center (IMMC), during the period
from September 15, 1981 through December 16, 1983, were
not provided to the Medicare beneficiaries as claimed.

The Respondent filed a timely answer denying the I.G.'s
allegations, challenging the proposed sanctions, and

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

2/ The terms "civil monetary penalties" and “civil money
penalties" are used interchangeably in the CMPL, the
Regulations, and in this Decision and Order.
-2-

requesting a hearing before an Administrative Law Judge
(ALJ).

JURISDICTIONAL AND PROCEDURAL BACKGROUND

The Respondent, Dr. Kern, practiced general medicine in
Des Moines, Iowa, from 1954 until he surrendered his
license on December 24, 1985. TR IV/1019 to 1022.

Dr. Kern participated as a medical provider in the
Medicare program from its inception in 1966 to 1985.
Stip/8, 9. During the period at issue, the Respondent had
medical staff privileges as a general practitioner (GP) at
IMMC and admitted patients there. Stip/1l.

The 1.G.'s Notice in this case was issued on March 27,
1986. In the Notice, the I.G. alleged that 330 line items
for medical services claimed by the Respondent in 69
Medicare claims were false or improper because the
respondent "knew" or "had reason to know" that these
services were "not provided as claimed." Specifically,
the I.G. alleged that the Respondent presented or caused
to be presented claims and received Medicare payments for
(1) hospital admissions (admits) to the IMMC which he did
not provide “as claimed," and (2) hospital visits (visits)
to Medicare beneficiaries at the IMMC which he did not
provide "as claimed." The Respondent's answer and request
for a hearing, received June 9, 1986, refuted the I.G.'s
allegations and asserted that the Respondent did provide
the Medicare services as claimed.

At the prehearing conference on August 6, 1986 in
Washington, D.C., the I.G. withdrew 10 of the 330 services
at issue, reducing the services at issue to 320. The
services which were withdrawn (listed in the schedule
attached to the I.G.'s Notice) are Nos. 50, 51, 52, 102,
113, 114, 115, 116, 117, and 321.

A formal evidentiary trial-type hearing was held in Des
Moines, Iowa, from October 27 through October 31, 1986 and
from November 5 through November 6, 1986. Twelve
witnesses testified on behalf of the I.G., and eight
witnesses testified on behalf of the Respondent.
Subsequent to the hearing, the I.G. withdrew six more
services at issue (Nos. 137, 138, 184, 186, 187, 188) and
at the hearing the I.G. withdrew one more service at issue
(No. 214), reducing the total number of services at issue
to 313. See, TR III/737. The I.G. modified the proposed
penalty to $203,925.00 and the proposed assessment to
$14,870.00.
-3-

The I.G. and the Respondent presented post-hearing briefs,
findings of fact and conclusions of law, and reply briefs.
Also, in light of the Deputy Under Secretary's April 27,
1987 opinion in the case of The Inspector General v. Frank
P. Silver, M.D., Docket No. C-19, OHCMP/DGAB (Opinion), I
requested that the parties file an additional brief. The
I.G. filed a brief, as requested, but the Respondent's

attorney, after being granted a requested extension of
time, failed to do so.

In both the Notice and in the heading of the attached
schedule to the Notice (schedule), the I1.G. identified the
period during which the claims were submitted as ending on
December 16, 1983. Nevertheless, two of the claims,
listing three services at issue in the schedule, are dated
January 6, 1984 (schedule Nos. 70, 71, 72; See I.G. Ex
10A, 11A). Another claim in the schedule showed the
amount billed by Respondent as $20. In fact, the amount
actually billed was $45. See, I.G. 4A (schedule No. 5).
Accordingly, these claims, listing four (4) services, are
stricken for lack of notice. Thus, 53 claims and 309
services remain at issue. —_

THE GOVERNING LAW AND REGULATIONS

I. General Provisions of the Civil Monetary Penalties Law
and Regulations

Section 1320a-7a of the CMPL (section 1128A of the Act)
grants authority for the I.G. to issue a Notice to impose
civil money penalties and assessments against a medical
provider who the I.G. determines: (1) has presented or
caused to be presented false or improper claims for
payment under the Medicare, Medicaid, or the Maternal and
Child Health Services Block Grant programs; or (2) has
presented or caused to be presented a request for payment
to a Medicaid recipient or Medicare beneficiary in
violation of the terms of a respondent's Medicaid or
Medicare provider agreement. See, Regulations section
1003.102. 3/ Once a respondent is subject to a penalty or
an assessment, section 1320a-7(c) of the CMPL (section
1128(c) of the Act) grants authority for the I.G. to
include a proposal to suspend the medical provider from
participation in the above named public assistance
programs. See, Regulations sections 1003.105, 1003.107.

3/ A person eligible for Medicaid benefits is defined at
42 C.F.R. section 400.203 as a "recipient" and a person
eligible for Medicare benefits is defined at section
400.202 as a “beneficiary."
-4-

The intended purpose of imposing a civil money penalty is
to deter persons from presenting false or improper
Medicare or Medicaid claims (or from making requests for
payments to Medicaid recipients in violation of a provider
agreement); the purpose of imposing an assessment is to
make the government whole for its costs and any damages
resulting from such improper acts; the purpose of a
suspension is to protect program integrity. See, H.-R.
Rep. No. 97-158, 97th Cong., lst Sess. Vol III, 329; 344
(1981); S. Rep. No. 139, 97th Cong., lst Sess. 461-62
(1981), 1981 U.S. Code Cong. & Ad. News 727-28; Preamble
to the Regulations (48 Fed. Reg. 38827 to 38836, August
26, 1983).

The Regulations implement the provisions of the CMPL,
delegate authority from the Secretary to the I.G. to make
determinations regarding civil monetary penalties, and
provide a respondent the right to a hearing before an ALJ.

The I.G. has the burden of producing and proving by a
preponderance of the evidence (1) liability under the CMPL
and Regulations, and (2) aggravating circumstances. A
respondent has the burden of producing and proving by a
preponderance of the evidence any mitigating circumstances
that would justify reducing the amount of the penalty,
assessment, and suspension. Regulations section 1003.114.

The CMPL and Regulations provide for a civil money penalty
of "not more than $2,000" for each improper item or
service listed on each improper claim. The amount of the
assessment is not to be more than twice the amount
claimed. Regulations section 1003.103. There is no such
limit on the length of a suspension.

The Regulations require that a full and fair trial-type
hearing be conducted by an ALJ. Regulations section
1003.115. Within 60 days of an ALJ's decision and order,
either party may seek review by the Secretary of DHHS.
Judicial review may also be sought. Regulations sections
1003.125, 1003.127. Judicial review of penalties and
-assessments is in the appropriate United States Court of
Appeals, and judicial review of a suspension is in the
appropriate United States District Court.

II. Liability Under the CMPL_ and Regulations

To establish liability by a preponderance of the evidence
adduced during the proceedings in a case, the I.G. must
prove each of the requisite elements of liability set
forth in the CMPL and Regulations for each "item or
service" listed on each “claim" that the I.G. alleges to
be improper. See, CMPL section 1320a-7a; Regulations
sections 1003.102, 1003.114(a). 4/ 5/

To establish liability in this type of case, the CMPL and
Regulations require the I.G. to prove that: (1) the
Respondent (a “person") (2) "presented or caused to be
presented" (3) the "claims" at issue (4) to the Medicare
or Medicaid programs ("agency") (5) for medical “items or
services" when, in fact, (6) reimbursable medical services
were "not provided as claimed," and (7) the Respondent
“knew or had reason to know" that the services were not
provided as claimed. CMPL section 1320 a-7a(1) (A);
Regulations section 1003.102 (a) (1). See, Scott, at
pages 26 to 28.

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

The elements of liability set forth in the CMPL and
Regulations are straightforward and need little
interpretation, with the exception of the element of
scienter -- the most difficult element to apply. I have
held in prior decisions that the element of scienter,
which requires a medical provider to "know" or have
“reason to know" that claims presented were not provided
as claimed, is not the same as “intent to defraud." See,
The Inspector General v. Jimmy Paul Scott, OHCMP/DGAB, at.
p- 26. 6/7 Proof of actual knowledge or proof that a
respondent had "reason to know" is all that the CMPL and

4/ Section 1320a7a(h) (2) of the CMPL and section
T003.101 of the Regulations define a "claim" as an
application for payment submitted for one or more items or
services for which payment may be made under the Medicare
(Title XVIII), Medicaid (Title XIX), or Maternal and Child
Health Services Block Grant (Title V) programs.

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

6/ The CMPL and Regulations contain slightly different
Tanguage with identical meaning. Under section 1320 a-
7a(1)(a) of the CMPL, liability attaches when the person
“knows or has reason to know." Under section 1003.102
(a)(1) of the Regulations, liability attaches when the

person “knew or had reason to know."
Regulations require for liability to attach. In the Scott
Decision, I found that Congress in using the term "“knows™
and the drafters of the Regulations in using the term

“knew" were referring to conscious knowledge of a fact (or
subjective knowledge). 7/" As I also stated in Scott, in

analyzing the term “reason to know," the Restatement of
Torts (2d) (at section 12) (1965) states:

“Reason to know" means that the actor has
knowledge of facts from which a reasonable man
of ordinary intelligence or one of the superior
intelligence of the actor would either infer the
existence of the fact in question or would
regard its existence as so highly probable that
his conduct would be predicated upon the
assumption that the fact did exist.

Thus, the “reason to know" standard employs the
“reasonable person" (objective knowledge) concept. See
also, Restatement of Agency (2d), Section 9, comments
(d) and Ce) (1957). In discussing objective knowledge,
Professor Keeton, in Keeton and Prosser on Torts, (Fifth
Ed. 1984), states at page 182 that one of the most

difficult questions (in connection with negligence) "is
that of what the actor may be required to know." 8/

In Fidler v. Eastman Kodak Co., 555 F. Supp. 87, 92

» Mass. 19: » the term "reason to know" was analyzed.
The Court cited the Restatement of Torts (2d) and stated
that:

Alternatively, the actor would regard the
existence of the particular fact in question as
s0 legally probable that he would base his
conduct upon the assumption that the fact
existed.

The Court then concluded:

Mrs. Fidler was in possession of information from
which a reasonable person would have inferred the fact

7/ It should be noted that proof of actual knowledge is
considered to be an aggravating factor. Regulations
section 1003.106(b)(2).

8/ For a discussion of subjective knowledge and objective
Knowledge, see Seavy, "Negligence-Subjective or
Objective," 41 Harv. L. Rev. 1, 17; see, also, Restatement
of Torts (2d), sections 289, 290.
-7-

of causation. Accordingly, her conduct should have
been governed by the assumption that such fact of
causation existed. Therefore, she had reason to know
the cause of her physical damage, and cannot be
excused for her failure to file suit in a timely
fashion.

The "reason to know" standard attaches where: (1) a
respondent has sufficient information to place him, as a
reasonable medical provider, on notice that the claims
presented were for services not provided as claimed; or
(2) a respondent has an obligation to investigate and find
out whether certain services are billable under the
Medicare or Medicaid programs (such as a duty which would
require a respondent to verify the truth, accuracy, and
completeness of claims presented). See, Scott, pp. 25 to
30. Thus, where the Respondent in this case acted
negligently in light of information that came to his
attention, or purposely ignored Medicare rules and
regulations of which he had notice, or ignored
pre-existing requirements or duties (such as a Medicare
requirement to examine the claims at issue before they
were presented to Medicare), he is liable under the CMPL
for the false or improper claims filed.

In analyzing the breadth and scope of the phrase “knows or
has reason to know," I am guided by the preamble to the
Regulations, which declares: "The statute sweeps within
its ambit not only the knowing, but the negligent. .. ."
48 Fed. Reg. 38827, 38831 (Aug. 26, 1983). From this, and
from analyzing the CMPL and Regulations, I have concluded
that the phrase "knows or has reason to know" encompasses
a spectrum where liability attaches on one end when a
respondent files false claims with actual knowledge and on
the other end where a respondent files false or improper
claims in a negligent manner. See, Scott, supra.

To determine whether a respondent acted negligently for
purposes of liability under the CMPL and Regulations, the
reasonable person standard is used. In applying the
reasonable person standard, a respondent's actions should
-be considered in relation to a person of "ordinary"
intelligence, taking into account "the superior
intelligence" of a particular respondent. See,
Restatement of Torts (2d), section 12. In other words, a
respondent should be judged in terms of his degree of
education, skill, and experience. A respondent should
also be judged in terms of his relation to others, such as
his Medicare patients and the Medicare program itself; he
should be judged as a reasonable medical provider.
-8s8-

Under the "reason to know" standard of liability, there
are at least two situations where a negligent medical
provider would be found liable for submitting false or
improper claims. The first is where sufficient
information came to a medical provider's attention to
spring into existence a duty to investigate the accuracy
of the claims. See, Silver Opinion, p. 2. The second
situation is where "pre-existing duties" are ignored by a
medical provider. Pre-existing duties vitiate the need
for "independent proof" in causing the duty to investigate

"to spring into existence." See, Opinion, p. 39, n.
15. 9/ On this point, Keeton and Prosser on Torts, supra,
at p. 185, states: "he may, furthermore, be engaged in an

activity, or stand in relation to others, which imposes
upon him an obligation to investigate and find out so that
the person becomes liable not so much for being ignorant
as for remaining ignorant; and this obligation may require
a_person to know at least enough to conduct an intelligent
inguiry as to what he does not know. Emphasis added.

In other words, voluntary ignorance is equivalent to
negligence. Gobrecht v. Beckweth, 82 N.H. 415, 420, 135 A
20, 22 (1926). A medical provider cannot be allowed to

reap the benefits of the Medicare program while purposely
remaining ignorant of its rules and requirements.

Once it has been determined that a medical provider did
not act as a reasonable medical provider, a judgment must
be made as to what the results would have been if he had
investigated, had not ignored pre-existing duties, or had
conducted an intelligent inquiry as to what he did not
know.

THE MEDICARE PROGRAM IN IOWA

I. Background

Medicare is a federally administered program of Health
Insurance for individuals who are age 65 or older or
disabled. See, Title XVIII of the Act (42 U.S.C., section
1395, et seq-)- Part B, which is involved in this case,

. provides a voluntary subscription program of supplementary
medical insurance generally covering 80% of the reasonable

9/ One such pre-existing duty is the duty of quality
medical care owed by a physician to a patient.
-9-

charges for physician services, x-rays, laboratory tests,
and medical supplies. 42 U.S.C. sections 1395k, 1395r,
and 1395x(s). 10/ Benefits under Part B are financed from
the Federal Supplementary Medical Insurance Trust Fund
(funded by appropriations from the Treasury and by
premiums paid by individuals who choose to enroll in the
Part B program). 42 U.S.C. sections 1395j, 1395r, 1395s,
1395t(a), 1395t(g), and 1395w. See, generally, Schweiker
v. McClure, 456 U.S. 188, 189-190 (1982).

II. The Medicare Carrier in Iowa

To assist in the administration of the Part B program,
Congress authorized the Secretary of DHHS to contract with
entities known as carriers. 42 U.S.C. section 1395u(f);
42 C.F.R. section 400.202. Carriers perform a variety of
functions for the Secretary, such as establishing rules
and regulations for the submission of Medicare claims,
determining the rates and amounts of payment for covered
services, disseminating information regarding Medicare
rules and regulations, and processing and paying claims.
42 U.S.C. section 1395u. Blue Shield of Iowa (BSI) was
the Medicare carrier for DHHS in Iowa at all times
relevant to this action. Stip/7. 11/ In that capacity,
BSI disseminated information about how to properly file
claims and processed and paid claims submitted by Iowa

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

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

I.G.'s Brief
I.G.'s Reply Brief

I.G. Br/[page]
I.G. Rep Br/[page]

I.G.'s Supplemental Brief I.G. Supp Br/[page]
“Respondent's Brief R Br/Cpage]

Respondent's Reply Brief R Rep Br/[page]
Transcript TR [volume number]/[page]
Stipulations Stip/[number]

I1.G. Exhibit
Respondent's Exhibit
ALJ Findings of Fact
and Conclusions of Law

oonnt own

I.G. Ex [number]/[page]
R Ex [number]/[page]

FFCL/[number]
-10-

medical providers for items or services that the providers
stated were rendered to Medicare beneficiaries.

III. Dissemination of Medicare Notices and Information to
Providers

The carrier, BSI, provided physicians and others who filed
Medicare claims with a variety of informational sources
concerning Medicare requirements for the submission of
proper claims. These BSI requirements implemented rules,
policies, regulations, and statutory provisions. The
Medical Assistant's Manual (Medicare Manual) was made
available to all physicians who had "provider numbers;"
during the period in question, the Medicare Manuals were
BSI's method of informing providers about the legal and
correct way to bill. TR 1/143. Also, changes and new
developments in the use of procedure codes for billing
purposes and any other Medicare policy modifications were
distributed by BSI to all providers by way of updates to
the Medicare Manual and by way of newsletters. TR 1/172.
Everyone who had a provider number received a copy. See,
I.G. Ex 64A, B, and C; TR I/137 to 138, 155. BSI's
newsletter was called the "Medicare Bulletin" in 1980 and
“Medicare B On Record" in 1981. I1.G. Ex 64A; TR 1/138.

To supplement the written information, in-service training
was available for billing clerks and providers. TR 1/159-
160. Also, telephone lines were available for billing
questions and problems. TR 1/176.

IV. The Medicare Claim Forms and Procedure Codes
A. The Medicare Claim Forms

The claim forms that BSI has used since 1980 are known as
the "HCFA 1490" and the "HCFA 1500". See, 1.G. Ex 86A,
86B. All but one of the claims at issue in this case were
submitted on one of these two types of forms. By signing
the HCFA 1490 or 1500 form, the medical provider certifies
that the services for which reimbursement was sought were
medically necessary for the patient's health and were
“personally rendered either by the medical provider or
under the provider's personal direction. I1.G. Ex 86A and
86B; TR 1/132, 169. The HCFA 1500 form also contains a
notice regarding the truth, accuracy, and completeness of
the claim. The Respondent provided a HCFA 1500

certification on fifty of the claims at issue involving
-ll-

295 of the 309 services at issue. See, FFCL. 12/ Both
claim forms state that anyone who misrepresents or
falsifies essential information to receive payment from
Federal funds claimed may be subject to sanctions under
applicable Federal laws.

B. The Relevant Procedure Codes

In order to identify the services claimed, Medicare
providers were required to define the services through the
use of procedure codes designated by BSI. Until mid-1983,
BSI used the Iowa Relative Value Index Codes (IRVIC). BSI
then began using the current procedural terminology (CPT)
codes, found in the American Medical Association's CPT-4
book, in conjunction with the Health Care Financing
Administration (HCFA) Codes. (HCFA is the administration
in DHHS which administers the Medicare program.

TR I/135-136.)

During the period at issue, physicians received
instructions from BSI regarding procedure coding. The
instructions included specific descriptions of what codes

to use for what services and the requirements to be
followed to document the services performed. TR 1/136;
I-G. Ex 644, 648/746. The procedure code for an admit was
9020 (until mid-1983, when CPT code 90220 was adopted).

TR 1/142. The procedure code for a routine visit was 9024
(until mid-1983 when CPT code 90250 was adopted).

TR 1/142.

V. The Pertinent Medicare Rules and Requirements
A. Medical Necessity

The Medicare rules and requirements authorize
reimbursement of federal funds to medical providers for
“medical and other health services" rendered to eligible

12/ The HCFA 1490 and HCFA 1500 also serve as Medicaid claim

. Forms in those instances where the Medicare beneficiary is a
Medicaid recipient as well. After the Medicare claims are
processed by BSI they are cross-matched with a Medicaid history
tape to identify whether the Medicare beneficiary is also a
Medicaid recipient. An electronic tape is then generated by the
Medicare carrier and forwarded on a weekly basis to the
Medicaid carrier, which processes the information and pays the
providers for the coinsurance and deductible. The Respondent
received payment from Medicaid in this manner. Stip/16;
TR I/129-135; TR 11/424-425.
-~12-

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

B. The Requirement that Medical Services Must Be

Documented

In July, 1981, the carrier disseminated pages 28 and 29 of
the Medicare Manual. Those pages emphasized the need “for
all physicians to have a good medical record documentation
+ + + to show evidence that billed services were in fact
provided." I.G. Ex 64B/1. In May, 1982, page 28 was
revised. The revised version of page 28 read: "the burden
of proof lies with the physician that a service was
provided as billed." In May, 1982, page 21 was also
revised. The revision read:

Example: if the physician billed for 7 days of
hospital care, Medicare would expect to see 7 days of
physician orders or progress notes in the hospital
chart. Phone orders do not constitute documentation
of physician visits.

I.G. Ex 64C/1. There is credible testimony that it is a
good medical practice for a physician to document hospital
records at least every third day. TR 1/68, 140, 198, 29;
TR 11/368 to 371, 390 to 391, 508 to 509. There is also
testimony from an I.G. investigator that a medical
provider is sometimes given the benefit of the doubt if
there is not a progress note in a patient's chart every
day. TR III/719.

Cc. Substitute Physicians

As of July, 1981, page 44 of the Medicare Manual contained
the following provision:

If one physician “covers" for another physician
(i.e., on a week-end or vacation), the substitute
doctor should bill Medicare for the services
provided. Do not include any visits of a substitute
physician on your claim for inpatient care.

This policy was restated in the Medicare Manual in May
1982. 1.G. Ex 64C/7.
-13-

D. Concurrent Care

The Medicare policy on reimbursement for concurrent care
(i.e., professional services provided to a hospital
patient by two or more physicians at the same time ) was
also described in May of 1982. Moreover, the 1982 manual
noted that coverage for "related concurrent care" (i.e.,
two or more physicians treating a patient for the same
condition) is very limited, and the requirements for
reimbursement are quite strict. I1.G. Ex 64C/5.

E. Admits and Visits

Thirty-Eight (38) of the 309 services at issue in this
case were submitted by the Respondent as a "first hospital
visit", using the procedure code for a hospital admission
(admit). Two hundred sixty-two (262) of the 309 services
at issue were submitted by the Respondent as a "hospital
visit," using the procedure code for a hospital visit
(visit). 13/

The physician charge for an admit was $45 and the charge
for a visit was $20. TR 1/140. To legitimately bill for
an admit, the physician was required to do a history and
physical, initiate a diagnostic and treatment program, and
prepare the patient's hospital records. TR 1/138; 1.G. Ex
64A. To legitimately bill for a visit, the physician was
required to see the patient, perform a necessary medical
service, and document the medical record with a progress
note or order. TR I/140; I.G. Ex 86A, 86B.

F. Warnings to Medicare Providers

The May, 1982, the Medicare Manual specifically warned
medical providers that a post-payment utilization review
would be performed concerning whether services were
actually performed and whether they were medically

necessary. I1.G. Ex 64C/2. The providers were also warned
about sanctions for improper practices. I.G. Ex 64C73.

13/ The other two procedure codes applicable to the
remaining 9 (of the 309) services at issue are 0610 and
9072. Procedure code 0610 is a code used to designate a
medical emergency treated in the emergency room.

TR I/141. It is billed at $25. Procedure code 9072 is an
intensive care unit (ICU) visit, which is billed at $45,
instead of the $20 for a routine hospital visit.

TR 1/141.
- 14 -

ISSUES

The principal issues are:

A.

Liability:

1. Whether the I.G. proved by a preponderance of the
evidence that the Respondent "knew" or "had reason
to know" that the Medicare services at issue were
"not provided as claimed."

The Amount of the Penalty, Assessment, and the Period
of Suspension Git Liability is Proven):

1. Whether the I.G. proved by a preponderance of the
evidence the aggravating circumstances alleged.

2. Whether the Respondent proved by a preponderance
of the evidence any circumstances that would
justify reducing the amount of the penalty, the
assessment, or the period of suspension proposed
by the I.G.

3. Whether the amount of the proposed penalty, the
assessment, and the suspension are appropriate
under the circumstances of this case.
-15-

FINDINGS OF FACT AND CONCLUSIONS OF LAW 14/15/

Having considered the entire record, the arguments and
submissions of the parties, and being advised fully
herein, I make the following Findings of Fact and
Conclusion of Law:

1. For the purposes of this case, I have taken judicial
notice of the statutes of the United States, the
regulations of the Secretary of DHHS, all other
pertinent regulations of the United States, the
statutes of the State of Iowa, the regulations of the
Iowa Medicare Program, and all other pertinent
regulations of the State of Iowa as they existed at
the time of the cause of action.

2. This case is governed by the CMPL and the
Regulations. The Secretary has delegated his
authority to take action under the CMPL and the
Regulations to the I.G., and this authority has been
redelegated to the Deputy Assistant Inspector General
for Civil Fraud. Stip/3-6.

3. On March 27,1986, Eileen Boyd, the Deputy Assistant
I.G. for Civil Fraud, issued a Notice of
Determination (Notice) informing the Respondent that
the 1.G. had determined that the Respondent should be
subject to a penalty of $215,000 and an assessment of
$15,510. The Notice alleged that during the period
October 5, 1981 through December 16, 1983, the
Respondent presented or caused to be presented false
or improperly filed claims for Medicare payment for
330 medical services listed as being performed at the
Towa Methodist Medical Center (IMMC), when, in fact,

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

15/ Any part of this Decision and Order preceding the
Findings of Fact and Conclusions of Law which is obviously
a finding of fact or conclusion of law is hereby
incorporated herein as a finding of fact or conclusion of
law; I refer primarily to the facts and conclusions that
were not disputed or which are clear and do not need to be
repeated here.
-16-

the Respondent "knew" or "had reason to know" that
these medical services "had not been provided as
claimed," in violation of the CMPL and Regulations.
A true and correct copy of this Notice and its
attachment (Schedule) listing the 330 items or
services is a part of the record in this case.

The I.G. subsequently modified the number of items or
services at issue from 330 to 313 and correspondingly
reduced the proposed penalty to $203,925 and the
proposed assessment to $14,870. The 1I.G. dropped
Schedule Nos. 50-52, 102, 113-117, 137, 138, 184,
186-188, 214, and 321.

In the Notice, the I.G. identified the covered period
as ending December 16, 1983. Two of the claims set
out in the attachment, listing three medical
services, are dated January 6, 1984 (1.G. Ex 10A,
11A; Schedule Nos. 70-72). Also, in the attachment
to the Notice, the I.G. listed the amount billed as
$20 for a claim by the Respondent for a service
rendered to Donald Atchison on August 23, 1982.
Schedule No. 5. The Respondent actually billed $45,
for an admit. I.G. Ex 4A. In all other instances in
this case, the Respondent billed $20 only when he
claimed for a routine hospital visit. These four
services are stricken for lack of notice and are not
part of this case. Accordingly, the number of claims
at issue is reduced to 53 and the number of services
to 309.

On June 20, 1986, the Respondent filed an answer to
the Notice and a request for a hearing before an ALJ,
pursuant to section 1003.109(b)(2) of the
Regulations. A true and correct copy of this answer
and the defenses listed therein is a part of the
record in this case.

The Respondent was a practicing physician in Des
Moines, Iowa, from 1954 until he turned in his
license to the Iowa Board of Medical Examiners in
December, 1985. TR IV/1019, 1022. He testified that
he turned in his license to avoid a hearing by the
Board on the issue of whether to suspend or revoke
his license. TR VI/1566-1567.

The Respondent had medical staff privileges as a
general practitioner (GP) at the Iowa Methodist
Medical Center (IMMC) in 1981, 1982, and 1983 and
admitted patients to the IMMC. Stip/ll.
10.

ll.

12.

13.

14.

15.

16.

-17-

For the period at issue, Blue Shield of Iowa (BSI)
was the designated Medicare fiscal agent, or carrier,
for the State of Iowa. Stip/7. As such, BSI was
authorized to process claims filed by physicians and
other medical providers.

The Respondent was enrolled as a medical provider in
the Medicare program on June 30, 1966 and
participated from that time through January 6, 1984
using provider number 04071. Stip/8.

The Respondent participated in the Medicaid program,
administered by the Iowa Department of Human Services
(IDHS), in 1980, 1981, 1982 and 1983. Stip/9. The
Respondent was paid co-insurance and deductibles by
IDHS. Stip/16.

Since 1971, BSI has sent every Medicare provider a
copy of the manual (Medicare Manual) which included
information on Medicare policy and on how to submit
claims. This Medicare Manual is in looseleaf form,
for ease of inserting material updating the Medicare
policy, rules and regulations, and billing
information. TR 1/156, 157, 161, 165, 170, 172, 175.

The Respondent denied receiving the Medicare Manual.
TR IV/1024, 1571.

From time to time during the period at issue, BSI
also sent providers Medicare policy and billing
information in looseleaf form, for immediate
insertion into the Medicare Manual, and in non-
looseleaf bulletins (Medicare Bulletins). TR 1/165,
175; see, e.g., I.G. Ex 64A, 64B, 64C.

BSI sent all physicians enrolled in the Medicare
program the Medicare Bulletins to inform them of
Medicare policy. Two or three times a year BSI also
duplicated the Medicare Bulletins and sent them again
to providers to update the Medicare Manual. TR
1/172, 175.

The Respondent received the Medicare billing and
policy information in both the looseleaf and non-
looseleaf updates. TR IV/1026; TR VI/1571: Stip/14.
The Respondent testified that he never read them and
that either he or his office staff threw away the
updates, including those pertaining to billing,
procedure codes, and fees. TR IV/1028-1029, TR
VII/1740-1741.
17.

18.

19.

20.

21.

22.

23.

24.

- 18-

The Respondent testified that his office staff kept
the procedure codes in a "teeny spiral-bound book"

which they updated by “telephone contact with Blue

{Shield]." TR VII/1741.

The Respondent also had a "Physician Manual" from
BSI, but he "didn't see anything of any real
value...so it just didn't get used," even though the
Physician Manual had a section on submission of
Medicare forms. TR VII/1734, 1735; TR IV/1024;
Stip/13.

From 1981 to mid-1983, BSI used the Iowa Relative
Value Index Codes (IRVIC). TR I/ 136. In order to
identify medical services claimed, Medicare providers
are required to use procedure codes to define the
services they performed.

The American Medical Association provides physicians
with a book of Current Procedural Terminology/ (CPT)
which contains codes for identifying various medical
procedures. BSI has used the CPT codes since 1983,
in addition to Health Care Financing codes (HCFC).
TR I/135-136.

Respondent had a "CPT Manual" which he said contained
"a large number of codes for Medicare procedures."
TR VI/1569, 1570.

In claiming reimbursement for services to Medicare
beneficiaries in Iowa during the period at issue, a
physician was supposed to identify the service
performed by use of a procedure code from the Iowa
Relative Value Index Codes, the Health Care Financing
Codes, or the CPT book. TR 1/135, 136.

Thirty-eight (38) of the services listed in the
claims at issue were coded 9020 or 90220, which is a
hospital admission (admit). TR I/142. The
Respondent designated an admit as a “first hospital
visit" on the claims at issue.

BSI defined a reimbursable admit to include a brief
history and physical examination, initiation of
diagnostic and treatment program, and preparation of
hospital records. TR 1/138; I.G. Ex 64 A/2.
25.

26.

27.

- 19 -

The Respondent testified that these elements
constituted an admit:

a. Pre-hospital assessment to establish medical
necessity.

b. Physically getting a patient to the IMMC, along
with records, transfer information, and
medications.

c. Making arrangements at IMMC to determine that a
bed is available and to ascertain where the
hospital will locate the patient.

dad. Performing a physical examination of the patient
and executing a written record of the patient's
medical history and the results of the physical
examination.

e. Setting up a written plan of, and schedule for,
treatment of the patient.

f. Sometimes arranging for a consultant to see the
patient, giving the consultant information on the
patient's illness, past medical history, and
physical condition.

g- Passing information to the patient, the patient's
family, and the nursing home, and conferring with
the patient's family regarding the hospital stay.

h. Making arrangements to discharge a patient and to
transfer a nursing home patient back at the end
of a hospital stay.

TR IvV/1065-1066; TR V/1228-1229.

The Respondent estimated that the history and
physical (H&P) part of an admit took only 10 to 20
percent of the total time that he spent on an admit.
TR V/1230; see, also, TR IV/1065.

The Respondent said that he performed an H&P "to know
what's going on," but whether or not he wrote it “on
a piece of paper" didn't make "any difference." TR
IV/1599. He said that it was his practice to examine
a patient on the day of admission “or right in that
area," but he might not do the actual writing or
dictating of the H&P until later, sometimes a month
later, because he “forgot to write it down or more
likely the dictating machine was busy." He said that
28.

29.

30.

31.

32.

33.

- 20 -

the IMMC had only one dictating machine per floor (40
patients). TR I/1229-1230. The Respondent
acknowledged that not only was it "standard
procedure" and a "hospital requirement," but also
“good medicine" to do an H&P. TR VI/1611.

The Respondent testified: “TI actually write down
the assessment of the patient and the plan of
treatment myself, or tell somebody else this is what
I'm going to do, and the somebody-else writes it
down." TR VI/1599.

The IMMC requires that an H&P state the chief
complaint, or reason why the patient is in the
hospital; the review of the patient's body systems;
and the record of the physical examination of the
patient. TR I/187, 210. This information is usually
recorded on a form (MR 12), but the IMMC also accepts
it in the form of a progress note (PN) or an
emergency room assessment or report, as long as all
of the elements stated above are set out in the PN or
the assessment/report. Id.

IMMC requires that a history and physical be on
record within 48 hours of the time of the admission
of a patient. If the patient is to undergo surgery,
the history and physical must be on record prior to
the surgery. TR I/185- 186; I.G. Ex 65/46.

BSI requires that physicians document their Medicare
billing for an admit with a plan of treatment or
admit order, and an H&P. TR 1/68, 69, 80. An H&P
may be in the form of an admit order, but must
include a written report and explanation of the
patient's condition. TR 1/62, 70. The H&P must be
done by the physician submitting the claim; an H&P
done by another physician and co-signed by the
claiming physician is not sufficient. TR 1/79. BSI
also does not consider an emergency room assessment
sufficient to document an H&P, even though IMMC does
accept an emergency room assessment in lieu of an H&P
for its purposes. TR I/60-62.

BSI will reimburse a physician for a Medicare admit
if the physician performs an H&P and issues an admit
order on the day after an emergency admission, even
though the emergency room physician also issued an
admit order at the time of admission. TR I/80-81.

Dr. John Hostetter, an associate of the Respondent
who has had a family practice in Des Moines since
34.

35.

36.

- 21 -

1949, and practices at IMMC, testified that he bills
Medicare for an admit if he performs an H&P before
the resident or surgeon does. Under such
circumstances, Dr. Hostetter writes up the H&P and
puts the write-up in the patient's file. TR IV/974,
975. Dr. Hostetter does not do another H&P if
another doctor has already done one. TR IV/965. He
does not bill Medicare for an admit if he performs
the H&P in anticipation of imminent surgery. TR
Iv/967. He does not bill Medicare for an admit if he
merely provides background information for an H&P
recorded by another doctor. TR IV/976. Dr.
Hostetter and the Respondent took care of each
other's patients (covered) when the other was out of
town or unavailable. TR IV/930. Dr. Hostetter did
not bill Medicare when he covered for the Respondent,
but was paid by the Respondent directly. TR IV/931,
933.

Dr. Homer Wichern, a retired surgeon who has been on
the Board of Directors of IMMC since 1972 and was
chief of staff at IMMC from 1972-1974, testified that
he did an H&P as soon as he saw the patient on
admission; he always saw his patients right away and
never waited until the next day to do an H&P. TR
IV/922, 923. He said he usually did not write his
H&P on the chart, because “it was [the resident's]
responsibility and his job to... get it in the
chart." TR IV/919, 920. If it was an emergency,
such as the patient going right to the operating
room, Dr. Wichern would write down any H&P which he
had done. TR IV/920.

Dr. Lester Beachy, a general practitioner (GP) and
associate of the Respondent's since 1971, testified
that he and the Respondent had covered for each other
("traded calls") since 1971. TR IV/981, 984. He
said they had a flexible arrangement, sometimes
swapping services and sometimes paying each other.

TR IV/985, 986. He noted that an emergency room
assessment might be adequate for the H&P required for
an admit, but said he would not bill Medicare for an
admit of one of his nursing home patients if the
emergency room doctor performed and billed for the
admit. TR 1V/994, 995, 998.

Fifty of the claims, listing 295 services at issue,
were submitted on a HCPA 1500. I.G. Ex 1A=5A, 7A-9A,
12A-18A, 19A2, 20A-38A, 40A-44A, 45Al, 45A2, 46A-48A,
50A, 51Al, 51A2, 52A. By signing the HCFA 1500, the
Respondent certified that:
37.

38.

39.

40.

= 22 -

(1) the services listed . . . were medically
indicated and necessary to the health of this
patient and were personally rendered by me or
under my personal direction; (2) the charges for
such services are just, unpaid, actually due
according to law and program policy and not in
excess of regular fees; (3) the information
provided on. . . this claim is true, accurate
and complete... .

I.G. Ex 86B; TR I/132-133. By using Form 1500, the
Respondent also specifically agreed to "keep such
records as are necessary to disclose fully the extent
of services provided .. . and to furnish information
regarding any payments claimed for providing such
services as the State Agency, its designee, or Health
and Human Services may request...." Id.

Two of the claims, listing seven services at issue,
were filed on a HCFA 1490. I1.G. Ex 6A, 49A. By
signing the HCFA 1490, the Respondent certified "that
the services shown on the . . . form were medically
indicated and necessary for the health of the
patient" and "further .. . that these services were
personally rendered by [him] or were rendered
incident to [his] professional service by his
employee under immediate personal supervision, i.e.,
none of the services listed on [the] form were
performed by another person not in [his] employ or by
an organization except as noted in item 13" (a block
near the signature block, item 8). I.G. Ex 86A; TR
1/134-135.

One claim, listing seven services at issue, was
signed by the Respondent and submitted on a Deere &
Company Medical Claim form attached to an unsigned
HCFA 1490U. I.G. Ex 39A. The record does not show
that there was a certification on the HCFA 1490U or
the Deere & Company form.

Patients admitted to an internal medicine teaching
area at the IMMC can only be admitted by physicians
on the internal medicine faculty. The faculty
directly supervises the residents who provide care to
those patients, writing orders and managing the
patients. TR 11/374, 376; 1.G. Ex 68.

The Respondent never was a member of the internal
medicine faculty at the IMMC. TR I1I/375.
41.

42.

43.

44.

45.

46.

47.

- 23 -

If a GP chooses to have a patient admitted to the
care of the internal medicine teaching service at the
IMMC, the GP relinquishes the hospital care of the
patient to a resident, under the supervision of a
member of the internal medicine faculty. TR II/376,
377, 378, 400; I.G. Ex 68. If the GP does visit the
patient, it is in the nature of a social call, to
show the patient that the GP is interested in how he
or she is doing. TR II/378.

If a GP has a patient admitted to the care of the
internal medicine teaching service, the resident
writes the orders for the care of the patient, and
the GP does not write orders or supervise the
resident. TR II/377, 412.

A GP may resume care of a patient at will. When the
GP resumes the care of the patient, the teaching
service is no longer responsible for the care of the
patient and orders are then written by the GP and not
the resident. TR II/400, 412.

If a patient is admitted at the IMMC through the
emergency room (ER), the emergency room physician
will try to contact the GP before arranging for the
patient to be placed in the care of the teaching
service. TR II/409.

Most GP's who have patients at the IMMC do not
request that the patients be placed in the care of
the teaching service, or allow those in the care of
the teaching service to remain there, but the
internal medicine teaching service faculty serves as
consultants in most of the non-teaching service
cases. TR I1/408, 413. In the non-teaching service
cases, the GP writes the H&P. TR 11/416.

In the opinion and experience of the physician in
charge of the teaching service at the IMMC, the
Respondent typically did not get directly involved in
the care of an acutely ill nursing home patient of
his who was received at the IMMC through the ER. TR
II/415. The teaching service would provide care to
those patients. Id.

A group of physicians incorporated as Central Iowa
Medical, P.C. (CIM), contracted with the IMMC to
provide medical care and staff the ER. The group
consisted of Dr. Gustofson, its chief; and Drs.
Bratkiewicz, Lung, Tvedte, and Wall. TR I1/330-331.
48.

49.

50.

51.

52.

53.

54.

55.

- 24 -

When a patient who had been under the care of the
Respondent or another GP was admitted to the IMMC
through the ER, the CIM physician typically would
write an evaluation of the patient's condition and
the order to start treatment, after discussing the
patient with the Respondent or other GP on the
telephone. TR II/333-334.

The Respondent's standing order to CIM physicians in
the ER was for them to examine and treat his patients
and call him only if necessary. TR I1/335-336.

A GP who had a patient admitted to the IMMC through
the ER was expected to write an H&P and enter it in
the patient's file in addition to the assessment

written by the emergency room physician. TR I1I/341.

The CIM physicians typically billed Medicare for
writing the emergency room assessment of the patient
at the time of admission and any other medical
services provided by the CIM physicians. TR II/348.

A GP who had a patient that needed surgery might
refer that patient to a surgeon on the staff at IMMC;
IMMC has had a surgical teaching service since 1946.
TR I1/445. If the surgeon concurs with the family
practitioner, the surgeon has the patient admitted to
IMMC and does the H&P, the surgical orders, the
surgery, and the follow-up care. TR 11/447, 448.

The surgical resident usually does the initial H&P,
and participates in the care of the patient; the
surgeon approves and signs the H&P and supervises the
resident. TR 11/448, I.G. Ex 67 B.

The GP may also perform an H&P and write orders on a
surgical patient, but this is rarely done. TR
11/449. The GP may also participate in the care of a
surgical patient. I.G. Ex 67 B, TR II/448. The GP
never supervises a surgical resident, except through
the surgeon. TR I1/449.

Medicare allows a surgeon a single "global" fee which
covers the surgery, post surgical hospital care, and,
in some instances, the admitting H&P. TR 1/151, 166-
167; TR I1/458-459, 925.

As the carrier for the Medicare program in Iowa, BSI
acts as the agent of the Secretary, determining the
rates and amounts of payment for covered services and
processing and paying claims. 42 U.S.C. Section
1395u.
56.

57.

58.

59.

60.

. 61.

- 25 -

The cost of services rendered to Medicare recipients
by physicians is reimburseable only if "reasonable
and necessary for the diagnosis or treatment of
illness or injury." 42 U.S.C. Section
1395y(a)(1)(A).

It has been a Medicare requirement, since July 1981,
that a physician have good medical record
documentation to substantiate that services billed to
the Medicare program were provided. I.G. Ex 64 B/1l.
It has been a Medicare requirement, since May 1982,
that a physician document that the services are
medically necessary. 1.G. Ex 64C/1,2.

It has been a Medicare requirement, since July 1981,
that in a situation in which one physician provides
medical services to the patients of another physician
because the latter physician is on vacation or
otherwise unavailable (i.e., one covers for the
other) the substitute, or covering, physician should
bill Medicare for the services provided. The absent,
or covered, physician is not allowed to bill for
medical care visits by the covering physician. I.G.
Ex 64 B/4.

Two Hundred Sixty-Two (262) of the services listed on
the claims at issue are coded 9024, which designates

a routine hospital visit (visit). BSI defines a code
9024 service as "[e]Jach day, hospital subsequent care
requiring brief service." I.G. Ex 64 A/2.

A claim for a code 9024 service meant that the
physician had seen the patient and documented the
visit by an annotation in the record as to what
medications should be given or medical procedures
employed, or by a progress note. TR 1/140, 146-147.
From at least May 1982 forward, a telephone order did
not constitute documentation for a visit. TR 1/147;
I.G. Ex 64 C/l.

If a physician claimed a code 9024 visit for each day
of a multi-day hospital stay, he was expected to
document his claims by a progress note each day. It
is good medical practice for a physician providing
medical services to document hospital records at
least every third day, depending on the severity of
the patient's condition. TR 1/68, 140, 198, 229; TR
11/368-371, 390, 391, 508, 509.
62.

63.

64.

- 26 -

Seven of the services in the claims at issue are
coded 9072, which is an intensive care or cardiac
care visit. I.G. Ex 64 A/2.

Two of the services in the claims at issue are coded
0610, which is a limited emergency service. BSI
defines a code 0610 service as "[a] level of service
requiring the evaluation and treatment of an
accidental injury or medical emergency (life-
threatening illness) without the need for a complete
examination or evaluation, and usually provided in 15
minutes or less." I.G. Ex 64 A/3; TR 1/141.

With regard to all the hospital admits at issue (38
admit services listed on 37 claims), the Respondent

knew" or "had reason to know" that the hospital
admit services "were not provided as claimed." The

Respondent "knew" or “had reason to know" that there
was no proper documentation as required by Medicare
to evidence the 38 admit services at issue. These
admits "were not provided as claimed" because:

A. In 18 instances there was no H&P. I.G. Ex 2Bl,
2B2, 6B, 13B, 14B, 26B,29B, 30B, 37B, 38B, 40B,
41B, 42B, 46B, 47B, 48B, 49B, 50B.

B. In 19 instances the H&P, if adequate for Medicare
purposes, was not done by the Respondent. I.G.
Ex 1B, 3B, 5B, 12B, 16B, 17Bl, 20B, 21B, 22B,
23B, 25B, 27B, 28B, 32B, 33B, 34B, 35B, 36B, 39B.

c. In the remaining instance, the H&P was not
adequate for Medicare purposes. I.G. Ex 31B.
The Respondent testified that a document labelled
“discharge summary" dictated by the Respondent on
August 9, 1983 for a July 3, 1983 admit was an
H&P. TR V/1347; TR 11/362; I.G. Ex 31B. IMMC
would have accepted it as an H&P. TR 1/193.
However, it lacked an initial treatment order. An
emergency room report by a Dr. Lund contained an
initial treatment order, indicating Dr. Lund
admitted the patient. TR 11/348; I.G. Ex 31B.
The Respondent counter-signed a second July 3,
1983 "Physician Order" by another doctor. I.G.
Ex 31B. None of these adequately document a
Medicare admit billed July 4, 1983 by the
Respondent, but his involvement is sufficient to
constitute a mitigating circumstance.
65.

66.

67.

68.

- 27 -

The following are additional mitigating circumstances
with regard to the 38 admits at issue:

A. In 12 admits the Respondent provided information
to, or discussed his patient with, the admitting
Physician. TR V/1232-1233, 1259, 1289, 1293-
1294, 1297-1299; TR VI/1472, 1476, 1482-1484,
1488, 1490, 1511, 1516-1517; I.G. Ex 2Bl, 14B,
38B, 39B, 41B, 42B, 47B; R Ex 79C.

B. In one admit, Dr. Beachy, while covering for the
Respondent when he was out of town, provided
information to the emergency room physician for
the emergency room assessment. TR VI/1503; I.G.
Ex 46B.

It is an aggravating circumstance that the Respondent
billed for an admit when he was out of town and

Dr. Beachy, who was covering for him, wrote in the
patient's chart that Dr. Beachy did not see the
patient. 1I.G. Ex 30B; TR II/460;

TR IV/1001; TR V/1346.

It is an aggravating circumstance that the Respondent
altered the medical records of Loren Cochran, Delores
Davis, and Florence Jackson after learning that these
files were being investigated by the I.G. TR V/1312,
1313; I1.G. Ex 17Bl, 17D; TR V/1331, 1332; I.G. Ex
22B, 22D; TR VI/1456; 1.G. Ex 33B, 33D.

Beginning May 1982 and at least through the end of
the period in this case, BSI instructed providers
that it would reimburse for related concurrent care
only under certain conditions. BSI defined related
concurrent care as “two or more physicians treat[ing]
a patient for the same or similar condition which
requires the skill of multiple physicians." I.G. Ex
64C/5. BSI advised providers that it would reimburse
for related concurrent care:

only when it can be determined that:

1. the patient's condition requires the services
of more than one physician on an attending
rather than a consultative basis, and

2. the individual services provided by each
physician are reasonable and medically
necessary for the patient's condition.
69.

70.

71.

72.

73.

74.

- 28 -

Id. Unrelated concurrent care for separate and
distinct conditions “would normally be payable by
Medicare." Id.

As of October 4, 1982, the medical record of Donald
Atchison's hospitalization from August 25 through 30
and September 1 through 3, 1982 did not contain
acceptable documentation of any medical services
provided by the Respondent. There were no Progress
Notes by the Respondent, and the nurses' Structured
Flow Sheets did not reflect any visits by the
Respondent. The only Physician's Order by the
Respondent was a telephone order on September 3,
1982. 1.G. Ex 4Bl. A telephone order does not
constitute adequate documentation of a billable
visit. 1I.G. Ex 64C/1.

The Respondent certified on October 4, 1982 that he
had provided nine procedure code 9024 hospital visit
services (visits) to Donald Atchison, from August 25
through 30 and September 1 through 3, 1982. I.G.

Ex 4A.

The Respondent "knew" or “had reason to know" that
he “had not provided" these nine visits to Donald
Atchison "as claimed."

On an unspecified date, probably in 1984, the
Respondent altered the medical record of Donald
Atchison's August 23 through September 5, 1982
hospital stay to reflect the entry of Progress Notes
by the Respondent on August 25 and 27, 1982. I.G.
Ex 4D1/16, 17. Mr. Atchison's medical record also
was altered to reflect the entry of the Respondent's
name in the Structured Flow Sheets as having visited
Mr. Atchison on August 26, 27, 29, 30, and

September 1, 1982. I.G. Ex 4D1/11, 12; TR I11/642-
646.

It is an aggravating circumstance that the Respondent
altered the medical record of Donald Atchison after
learning that it was one of the files being inves-
tigated by the I.G. TR V/1245.

It is a mitigating circumstance that the Respondent
testified credibly, convincingly, and in detail

that he did make routine hospital visits to Donald
Atchison on August 25 and 27, 1982. TR V/1246-1252.
75.

76.

77.

78.

79.

80.

81.

82.

83.

- 29 -

The medical record of Donald Atchison's hospitaliza-
tion from November 17 through December 15, 1982 does
not contain documentation of any medical services
provided by the Respondent. There are no Progress
Notes or Physician's Orders by the Respondent, and
the Structured Flow Sheets do not reflect any visits
by the Respondent. I.G. Ex 5B.

The Respondent certified on January 7, 1983 that he
provided 29 procedure code 9024 hospital visit
services (visits) to Donald Atchison from November 17

through December 15, 1982. 1I-G. Ex 5A.

The Respondent "knew" or “had reason to know" that he
“had not provided" these 29 visits to Donald Atchison
“as claimed;" the Respondent was reimbursed by
Medicare for these claimed services. I.G. Ex 5C.

The medical record of Filomena Baratta's
hopitalization on October 3, 4, 5, 7, 11, and 12,
1982 does not contain documentation of any medical
services provided by the Respondent. There are no
Progress Notes or Physician's Orders by the
Respondent, and the Structured Flow Sheets do not
reflect any visits by the Respondent. I.G. Ex 7B.

The Respondent certified on October 21, 1982 that he
provided six procedure code 9024 hospital visit
services (visits) to Filomena Baratta, on October 3,

4, 5, 7, 11, and 12, 1982. I.G. Ex 7A.

The Respondent “knew" or “had reason to know" that he
"had not provided" these six visits to Filomena
Baratta "as claimed."

It is a mitigating circumstance that the Respondent
testified credibly and convincingly that he did make
routine hospital visits to Filomena Baratta on
October 3, 4, 5, 7, 11, and 12, 1982. TR V/1265.

The medical record of Gladys Beattie's
hospitalization from August 22 through 24, 1982 does
not contain documentation of any medical services
provided by the Respondent. There are no Progress
Notes or Physician's Orders by the Respondent, and
the Structured Flow Sheets do not reflect any visits
by the Respondent. I.G. Ex 8B.

The Respondent certified on September 2, 1982, that
he provided one procedure code 0610 emergency
evaluation and treatment service to Gladys Beattie on
84.

85.

86.

87.

88.

89.

- 30 -

August 22, 1982; one procedure code 9072 intensive
care unit service (ICU visit) to Gladys Beattie on
August 23, 1982; and one procedure code 9024 hospital
visit service (visit) to Gladys Beattie on August 24,
1982. I.G. Ex 8A.

The Respondent "knew" or “had reason to know" that he
“had not provided" these three services to Gladys
Beattie "as claimed." ~
It is a mitigating circumstance that the Respondent
testified credibly, convincingly, and in detail that
he provided the services at issue to Gladys Beattie
on August 22, 23, and 24, 1982. TR III/76-773; TR
V/1265-1268; TR VI/1612.

The medical record of Mary Bunte's hospitalization on
January 14, 16, 17, 18, 19, 20, 22, 23, 24, 25, 26,
and 27 does not contain documentation of any services
provided by the Respondent. There are no Progress
Notes or Physician's Orders by the Respondent, and
the Structured Flow Sheets do not reflect any visits
by the Respondent. I.G. Ex 9B.

The Respondent certified on February 1, 1982 that he
provided 12 procedure code 9024 hospital visit
services (visits) to Mary Bunte, on January 14, 16,
17, 18, 19, 20, 22, 23, 24, 25, 26, and 27, 1982.
I.G. Ex 9A.

The IG did not prove by a preponderance of the
evidence that the Respondent "knew" or "had reason to
know" that he “had not provided" these 12 visits to
Mary Bunte “as claimed." The Respondent testified
orexibly and convincingly that he visited Mary Bunte
on the dates at issue. TR V/1276. Ms. Bunte's
medical record contains documentation that the
Respondent visited her on January 15, 21, and 28,
1982. 1I.G. Ex 9B. The evidence in this case is that
the Medicare requirement that a physician document
each visit during a multi-day hospital stay was
promulgated in May 1982, subsequent to the February
1, 1982 claim at issue. I.G. Ex 64C.

The medical record of William Bystrom's
hospitalization from July 18 through 30 and on August
1, 1982 does not contain acceptable documentation of
any medical services provided by the Respondent.
There are no Progress Notes or Physician's Orders,
and the Structured Flow Sheets do not reflect any
visits by the Respondent. I.G. Ex 12B. The
90.

91.

92.

93.

94.

95.

96.

- 31+

Respondent was out of town from July 20 through 25,
1982 and the physician covering for him did not visit
Mr. Bystrom. I1.G. Ex 76; TR IV/1012.

The Respondent certified on August 27, 1982 that he
provided 14 procedure code 9024 hospital visit
services (visits) to William Bystrom, from July 18
through 30 and on August 1, 1982. I.G. Ex 12A.

The Respondent "knew" or “had reason to know" that he
“had not provided" these 14 visits to William Bystrom
“as claimed."

The medical record of Wilma Cartwright's
hospitalization on November 27, 28, 29, 30, and
December 1, 2, and 4, 1981 does not contain
documentation of any medical services provided by the
Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do
not reflect any visits by the Respondent. I.G. Ex
15B.

The Respondent certified on an undated HCFA 1500 that
he provided seven procedure code 9024 hospital visit
services (visits) to Wilma Cartwright, on November
27, 28, 29, 30, and December 1, 2, and 4, 1981. I.G.
Ex 15A.

The Respondent “knew" or “had reason to know" that he
“had not provided" these seven visits to Wilma
Cartwright “as claimed."

The medical record of Loren Cochran's hospitalization
on November 6, 7, 8, 10 through 19, 25 through 30,
and on December 1 and 2, 1982 does not contain
documentation of any medical services provided by the
Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do
not relect any visits by the Respondent. I.G. Ex
17Bl, 17B2. The Respondent was out of town on
November 13, 14, and 15, 1982, and the physician
covering for him did not provide any services. I.G.
Ex 74/6; TR IV/1009.

The Respondent certified on January 10, 1983 that he
provided 21 procedure code 9024 hospital visit
services (visits) to Loren Cochran, on November 6, 7,
8, 10 through 19, 25 through 30, and on December 1
and 2, 1982. I1.G. 17A.
97.

98.

99.

100.

101.

102.

103.

104.

105.

-32-

The Respondent "knew" or "had reason to know" that he
“had not provided" these 21 visits to Loren Cochran
“as claimed."

It is a mitigating circumstance that the Respondent

testified credibly and convincingly that he did make
routine hospital visits to Loren Cochran on November
25 through 30 and December I and 2, 1982. TR V/1317.

The medical record of George Cook's hospitalization
on January 21, 22, 23, 25 through 31, and on
February 1, 1983 does not contain documentation of
any medical services provided by the Respondent.
There are no Progress Notes or Physician's Orders,
and the Structured Flow Sheets do not reflect any
visits by the Respondent. I.G. Ex 18B.

The Respondent certified on February 7, 1983, that he
provided one procedure code 0610 emergency evaluation
and treatment service on January 21, 1983, and ten
procedure code 9024 hospital visit services (visits)
to George Cook, on January 22, 23, 25 through 31, and
February 1, 1983. I.G. Ex 18A.

The Respondent "knew" or "had reason to know" that he
"had not provided" these eleven services to George
Cook "as claimed."

It is a mitigating circumstance that the Respondent
testified credibly, convincingly, and in detail that
he did provide emergency evaluation and treatment
services to George Cook on January 21, 1983, and did
make routine hospital visits to Mr. Cook on the other
dates at issue. TR V/1318-1322.

The medical record of Ronald Core's hospitalization
from September 29 through October 7, 1982 does not
contain documentation of any medical services
provided by the Respondent. There are no Progress
Notes or Physician's Orders, and the Structured Flow
Sheets do not reflect any visits by the Respondent
I.G. Ex 19B.

The Respondent certified on October 6, 1982 that he
provided three procedure code 9024 hospital visit
services (visits) to Ronald Core, from September 29
through October 1, 1982. 1I.G. Ex 19A2.

The Respondent certified on January 10, 1983 that he
provided six procedure code 9024 hospital visit
106.

107.

108.

109.

110.

111.

112.

113.

114.

- 33 +

services (visits) to Ronald Core, from October 2
through 7, 1982. I1.G. Ex 19Al.

The Respondent "knew" or “had reason to know" that he
“had not provided" these nine visits to Ronald Core
“as claimed."

It is a mitigating circumstance that the Respondent
testified credibly and convincingly that he did make
routine hospital visits to Ronald Core on the dates
at issue. TR V/1324.

The medical record of Delores Davis' hospitalization
from October 19 through 29, 1982 does not contain
documentation of any medical services provided by the
Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do’
not reflect any visits by the Respondent. I.G. Ex
21B.

The Respondent certified on January 13, 1983 that he
provided 11 procedure code 9024 hospital visit
services (visits) to Delores Davis, from October 19
through 29, 1982. I1.G. Ex 21A.

The Respondent "knew" or "had reason to know" that he
“had not provided" these 11 visits to Delores Davis
“as claimed."

The medical record of Maxine Davis' hospitalization
on March 5, 6, 7, 8, and 13, 1982 does not contain
documentation of any medical services provided by the
Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do
not reflect any visits by the Respondent. I.G. Ex
24B.

The Respondent certified on March 17, 1982 that he
provided five procedure code 9024 hospital visit
services (visits) to Maxine Davis, on March 5, 6, 7,
8, and 13, 1982. I.G. Ex 24A.

The Respondent “knew" or "had reason to know" that he
"had not provided" these five visits to Maxine Davis
“as claimed."

It is a mitigating circumstance that Ms. Davis'
daughter testified credibly and convincingly that
Ms. Davis told her Ms. Davis had been visited by the
Respondent on the days at issue. TR III/794-802.
115.

116.

117.

118.

119.

120.

121.

“122.

123.

- 34 -

The medical record of William Denson's hospitaliza-
tion from August 15 through 22, 1982 does not contain
documentation of any medical services provided by the
Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do
not reflect any visits by the Respondent. I.G. Ex
26B.

The Respondent certified on October 6, 1982 that he
provided eight procedure code 9024 hospital visit
services (visits) to William Denson, from August 15
through 22, 1982. I.G. Ex 26A.

The Respondent "knew" or “had reason to know" that he
“had not provided" these eight visits to William
Denson "as claimed."

The medical record of Elias Halseide's
hospitalization on January 29, 1982 does not

contain documentation of any medical services
provided by the Respondent. There are no Progress
Notes or Physician's Orders, and the Structured Flow
Sheet does not reflect a visit by the Respondent.
I.G. Ex 29B. The Respondent testified that he had
not gone to the hospital on January 29 until after
Mr. Halseide had died. TR V/1343.

The Respondent certified on July 15, 1982 that he
provided one procedure code 9024 hospital visit
service (visit) to Elias Halseide on January 29,
1982. I.G. Ex 29A.

The Respondent "knew" or “had reason to know" that he
“had not provided" a visit to Elias Halseide "as
claimed."

It is an aggravating circumstance the the Respondent
billed Medicare for a medically necessary hospital
visit service when the Respondent knew that he had
only "seen" Mr. Halseide's corpse.

The medical record of Florence Jackson's
hospitalization from June 20 through 23, 1982 does
not contain documentation of any medical services
provided by the Respondent. There are no Progress
Notes or Physician's Orders, and the Structured Flow
Sheets do not reflect any visits by the Respondent.
I.G. Ex 32B.

The Respondent certified on July 9, 1982 that he
provided four procedure code 9024 hospital visit
124.

125.

126.

127.

128.

129.

130.

131.

- 35 -

services (visits) to Florence Jackson, from June 20
through 23, 1982. I1.G. Ex 32A.

The Respondent "knew" or "had reason to know" that he
“had not Provided" these four visits to Florence
Jackson “as claimed."

The medical record of Margaret Johnson's
hospitalization from October 29 through November 3,
1981 does not contain documentation of any medical
services provided by the Respondent. There are no
Progress Notes or Physician's Orders, and the
Structured Flow Sheets do not reflect any visits by
the Respondent. 1.G. Ex 34B. The Respondent was out
of town from October 29 through November 1, 1981, and
the physician covering for the Respondent testified
that he did not visit Ms. Johnson. I.G. Ex 74/6; TR
Iv/1011.

The Respondent certified on January 2, 1982 that he
provided six procedure code 9024 hospital visit
services (visits) to Margaret Johnson, from October
29 through November 3, 1981. I.G. Ex 34A.

The Respondent "knew" or “had reason to know" that he
“had not provided" these six visits to Margaret
Johnson "as claimed."

It is a mitigating circumstance that the Respondent
testified credibly and convincingly that he did make

routine hospital visits to Margaret Johnson on
November 2 and 3, 1981. TR Vier:

The medical record of Anna Jones' hospitalization
from April 30 through May 10, 1982 does not contain
documentation of any medical services provided by the
Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do

not reflect any visits by the Respondent. I.G. Ex
35B.

The Respondent certified on July 9, 1982 that he
provided 11 procedure code 9024 hospital visit
services (visits) to Anna Jones, from April 30
through May 10, 1982. I.G. Ex 35A.

The Respondent "knew" or “had reason to know" that he
“had not provided" these 11 visits to Anna Jones “as
claimed."
132.

133.

134.

135.

136.

137.

138.

139.

140.

- 36-

The medical record of Anna Jones' from October 20
through 28, 1982, does not contain documentation of
any medical services provided by the Respondent.
There are no Progress Notes or Physician's Orders,
and the Structured Flow Sheets do not reflect any
visits by the Respondent. I.G. Ex 36B.

The Respondent certified on January 11, 1983 that he
provided nine procedure code 9024 hoSpital visit
services (visits) to Anna Jones, from October 20
through 28, 1982. I.G. Ex 36A.

The Respondent "knew" or “had reason to know" that he
"had not provided" these nine visits to Anna Jones
“as claimed."

The medical record of Laura Murphy's hospitalization
from November 19 through 25, 1982 does not contain
documentation of any medical services provided by the
Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do
not reflect any visits by the Respondent. I.G. Ex
39B.

The Respondent signed a Deere & Company Medical Claim
on January 12, 1983, stating that he provided six
procedure code 9024 hospital visit services (visits)
to Laura Murphy, from November 20 through 25, 1982.
I.G. Ex 39A.

The Respondent "knew" or “had reason to know" that he
“had not provided" these six visits to Laura Murphy
“as claimed."

It is a mitigating circumstance that the Respondent
testified credibly and convincingly that he did make
routine hospital visits to Laura Murphy on the dates
at issue. TR VI/1479.

The medical record of John Parker's hospitalization
on March 17, 20, 21, 22, 23 and 24, 1983 does not
contain documentation of any medical services
provided by the Respondent. There are no Progress
Notes or Physician's Orders, and the Structured Flow
Sheets do not reflect any visits by the Respondent.
I.G. Ex 43B. The Respondent was out of town from
March 9 through 27, 1983. I.G. Ex 76.

The Respondent certified on April 19, 1983 that he
provided six procedure code 9024 hospital visit
141.

142.

143.

144.

145.

146.

. 147.

148.

- 37 -

services (visits) to John Parker, on March 17, 20,
21, 22, 23, and 24, 1983. I.G. Ex 43A.

The Respondent "knew" or “had reason to know" that he
“had not provided" these six visits to John Parker
“as claimed." z

The medical record of Myrtle Pross' hospitalization
from January 27 through 30, February 1 through 21,
and February 23 through March 2, 1983 does not
contain documentation of any medical services
provided by the Respondent. There are no Progress
Notes or Physician's Orders, and the Structured Flow
Sheets do not reflect any visits by the Respondent.
I.G. Ex 44B.

The Respondent certified on March 29, 1983 that he
provided 33 procedure code 9024 hospital visit
services (visits) to Myrtle Pross, from January 27
through 30, February 1 through 21, and February 23
through March 2, 1983. I.G. Ex 44A.

The Respondent "knew" or “had reason to know" that he
“had not provided" these 33 visits to Myrtle Pross
“as claimed."

It is an aggravating circumstance that the Respondent
altered the medical record of Myrtle Pross after
learning that it was one of the files being
investigated by the IG. I1.G. Ex 44D; TR 1/207; TR
III/713; TR V/1245.

The medical record of Nellie Reeser's hospitalization
from April 12 through 22, 1983 does not contain
documentation of any medical services provided by the
Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do
not reflect any visits by the Respondent. I.G. Ex
45B.

The Respondent certified on April 14, 1983 that he
provided one procedure code 9024 hospital visit
service (visit) to Nellie Reeser on April 12, 1983.
I.G. Ex 45Al.

The Respondent certified on July 8, 1983 that he
provided ten procedure code 9024 hospital visit
services (visits) to Nellie Reeser, from April 13
through 22, 1983. I1.G. Ex 45A2.
149.

150.

151.

152.

153.

154.

155.

- 38 -

The Respondent "knew" or "had reason to know" that he
“had not provided" these 11 visits to Nellie Reeser
“as claimed."

The medical record of Marie Siedelman's
hospitalization from September 10 through 14, 1981
does not contain documentation of any medical
services provided by the Respondent. There are no
Progress Notes or Physician's Orders, and the
Structured Flow Sheets do not reflect any visits by
the Respondent. I.G. Ex 49B.

The Respondent certified on October 16, 1981 that he
provided five procedure code 9024 hospital visit
services (visits) to Marie Siedelman, from

September 10 through 14, 1981. I.G. Ex 49A.

The I.G. did not prove by a preponderance of the
evidence that the Respondent "knew" or “had reason to
know" that he "had not provided" these five visits to
Marie Siedelman “as claimed." The Respondent
testified credibly and convincingly that he visited
Marie Siedelman on the dates at issue. TR VI/1518.
Ms. Siedelman's medical record contains documentation
that the Respondent visited her on September 9, 1981.
I.G. Ex 49B. The evidence in this case is that the
Medicare requirement that a physician document each
visit during a multi-day hospital stay was
promulgated in May 1982, subsequent to the

October 16, 1981 claim at issue. I.G. Ex 64C.

The medical record of Margaret Singnaster 's
hospitalization on September 22, ' , 26 through
October 1, October 3 and 4, 1982 does not contain
documentation of any medical services provided by the
Respondent. There are no Progress Notes or
Physician's Orders, and the Structured Flow Sheets do
not reflect any visits by the Respondent. I.G. Ex
51B. The Respondent was out of town on September 22,
23 and 24, 1982, and the physician who covered for
the Respondent testified that he did not visit

Ms. Singmaster. I.G. Ex 74/6; TR IV/1011.

The Respondent certified on October 11, 1982 that he
provided six procedure code 9072 hospital visit

services (visits) to Margaret Singmaster, on
September 22, 23, 24, 26, , and 28, 1982. I1.G. Ex
51Al.

The Respondent certified on October 11, 1982 that he
provided three procedure code 9024 hospital visit
156.

157.

158.

159.

160.

161.

162.

163.

164.

165.

- 39 -

services (visits) to Margaret Singmaster, on
September 29, 30 and October 1, 1982. I.G. Ex 51Al.

The Respondent certified on January 17, 1983 that he
provided two procedure code 9024 hospital visit
services (visits) to Margaret Singmaster, on October
3 and 4, 1982. 1I1.G. Ex 51A2.

The Respondent "knew" or “had reason to know" that he
“had not provided" these six I.C.U. visits and five

routine hospital visits to Margaret Singmaster "
claimed."

It is a mitigating circumstance that the Respondent
testified credibly and convincingly that he did make
three I.C.U. visits and five routine hospital visits
to Margaret Singmaster. TR VI/1523, 1526, 1529.

The medical record of Lucille Smothers'
hospitalization from June 13 through 22, June 24
through 27, and June 29 through July 7, 1983 does not
contain documentation of any medical services
provided by the Respondent. There are no Progress
Notes or Physician's Orders, and the Structured Flow
Sheets do not reflect any visits by the Respondent.
I.G. Ex 52B; cf. TR VI/1531, 1669.

The Respondent certified on August 2, 1983 that he
provided 23 procedure code 9024 hospital visit
services (visits) to Lucille Smothers, from June 13
through 22, June 24 through 27, and June 29 through
July 7, 1983. I.G. Ex 52A.

The Respondent "knew" or “had reason to know" that he
“had not provided" these 23 visits to Lucille
Smothers "as claimed."

The Respondent did not prove by a preponderance of
the evidence that his financial condition is a
mitigating circumstance in this case.

It is an aggravating circumstance that the Respondent
is liable under the CMPL for services claimed over a
period of two years.

It is an aggravating circumstance that the Respondent
is liable under the CMPL for claims totalling a
substantial amount.

It is an aggravating circumstance that the claims for
which the Respondent is liable under the CMPL
166.

167.

168.

169.

170.

171.

172.

- 40 -

evidence billing practices which constitute a pattern
of billing Medicare and Medicaid.

It is an aggravating circumstance that the Respondent
is liable under the CMPL for claims which he
submitted with a reckless disregard for their truth
or falsity.

It is an aggravating circumstance that it was
determined in a previous administrative proceeding
that the Respondent must refund $28,619.44 in nursing
home service claims, submitted during the period
September 1980 through September 27, 1982, which he
could not document.

It is an aggravating circumstance that the Respondent:
had a reckless disregard of Medicare billing
requirements.

It is an aggravating circumstance that the
Respondent, so as to mislead BSI, sometimes purposely
put the wrong dates on his Medicare claims.

It is an aggravating circumstance that the Respondent
testified about his retirement from the practice of
medicine in such a way as to initially conceal the
adverse circumstances surrounding the surrender to
the Iowa Board of Medical Examiners of his license to
practice medicine.

It is an aggravating circumstance that the Respondent
billed for visits to Myrtle Pross which were neither
documented nor medically necessary.

After weighing the aggravating and mitigating
circumstances, it is appropriate, based on the
evidence in this case, to impose a penalty of
$67,500, an assessment of $13,000, and a suspension
for three years.
-41-

DISCUSSION

Remaining at issue are fifty-three (53) claims for
Medicare reimbursement listing three hundred nine (309)
medical services that the Respondent declared he had
provided to Medicare beneficiaries at the IMMC. All but
9 of these services are listed as an admit or a visit.
See footnote 13. The Respondent does not dispute that the
claims at issue were submitted between September 5, 1981
and December 16, 1983, that he presented the claims or
caused them to be presented, that he signed the claims,
and that he was paid by the Medicare program as a result
of these claims. Stip/15.

There are only two elements of liability at issue in
contention in this case. They are: (1) whether the
medical services listed by the Respondent on the claims

at issue were "not provided as claimed"; and (2) if "not
provided as claimed," whether the Respondent "knew" or had
“reason to know."

The Respondent argues that, while the medical services at
issue may not have been properly documented, the services
listed were, in fact, provided by him personally, provided
by another physician covering for him when he was out of
town, or provided pursuant to his direction and consulta-
tion. See, R Br/2. In the alternative, the Respondent
argues that the proposed penalty, assessment, and
suspension should be reduced. R Br/2, 3.

As outlined in detail in the Findings of Fact and
Conclusions of Law and in this Discussion, I find that the
I.G. proved by a preponderance of the evidence that the
medical services at issue were “not provided as claimed,"
and, with respect to most of them, the Respondent “knew"
or had "reason to know." With respect to the few
remaining (i-e., seventeen (17) visits), the I.G. did not
prove the above two elements of liability by a prepon-
derance of the evidence.

Liability attaches in this case with regard to all thirty-
-eight (38) hospital admits at issue because the Respondent
"knew" or had "reason to know" that the admits for which
he billed Medicare were "not provided as claimed," in that
the Medicare patients in question were, in fact, admitted
to the IMMC by other physicians, and because the Respon-
dent's input did not constitute a billable admit under the
Medicare rules and requirements. The record indicates
that, contrary to Medicare rules and requirements, the
Respondent billed for the admits at issue when, in fact,
he had not performed the essential elements of an admit
- 42 -

(especially the crucial element of performing a history
and physical (H&P)); also, the medical records in each of
these 38 admits were not properly documented by the
Respondent.

Liability attaches in this case with regard to all

but seventeen (17) of the two hundred sixty-two (262)
hospital visits at issue because the Respondent "knew" or
had “reason to know" that the visits for which he billed
Medicare were “not provided as claimed," in that none of
these visits were documented as required by the Medicare
rules and requirements. More importantly, the prepon-
derance of the evidence shows that most of these hospital
visits were (1) not performed at all, or (2) were
incomplete or insufficient under the Medicare rules and
requirements. In some instances, the Respondent billed
for visits when, in fact, he was out of town and the
physician covering for him had not provided any billable
services.

There were also two (2) emergency medical services and
seven (7) ICU visits that the Respondent "knew" or had
——S . .

“reason to Know’ were "not provided as claimed." See

footnote 13.

I also find that the Respondent had a reckless disregard
for the Medicare rules and requirements, as well as some
IMMC rules and regulations.

On the other hand, as outlined below, I find that the
Respondent proved by a preponderance of the evidence some
mitigating circumstances which justify reducing the amount
of the proposed penalty, assessment, and suspension. The
Respondent's testimony was credible and convincing at
times when he recalled in specific detail that he provided
some medical services to certain of the Medicare
beneficiaries at issue.

For example, with regard to hospital admits, even though
the Respondent did not perform the crucial element of an
H&P for any of the 38 admits at issue (and, thus, these
_were not billable admits under the Medicare rules and
requirements), the Respondent proved that he did provide
some input or service in fourteen (14) of these admits.

With regard to hospital visits, even though the visits
were not properly documented (and, thus, these were not
billable visits), the Respondent proved that he did
provide some input or service in fifty-four (54) of these
visits. In other words, although the record demonstrates

that none of the visits at issue was properly documented
- 43 -

and that the Respondent "knew" or had “reason to know"
that the vast majority of the visits at issue were "not
provided as claimed," I find that in fifty-four (54)
instances, the Respondent provided a medical service (even
though it may not have been a billable service).

Finally, it is a mitigating factor that the Respondent
also provided some input or service with regard to the two
(2) emergency medical services at issue and four (4) of
the seven ICU visits at issue.

I. The Respondent's Billing Practices and Record Keeping,

the Absence of Required Documentation, and the

Respondent's Reckless Disregard for the Medicare Rules
and Requirements

The Respondent, a GP, saw both private and Medicare
patients. Most of the Medicare patients listed on the
Medicare claims at issue in this case were institution-
alized in nursing homes under the care of the Respondent,
and all but one patient was hospitalized during the period
at issue at the IMMC. lé/

There are three types of hospital admits and two types of
hospital visits at issue. The three types of hospital
admits are: emergency room (ER), surgical, and internal
medicine. The two types of hospital visits are:

(1) routine hospital visits when the Medicare patient was
under the primary care of a surgeon or internist; and,
(2) visits to patients in the intensive care unit. In
some instances, contrary to the Medicare rules and
requirements, the Respondent billed for both admits and
visits when he was out of town and another physician was
covering for him.

Each Medicare beneficiary listed on the claims at issue,
with the exception of one, was admitted to a hospital and
was cared for at the hospital by physicians other than the
Respondent. The beneficiaries were cared for by appro-
priate specialists, visited at times by the Respondent,
and then either discharged to the Respondent's care or

16/ Alice Hanlon was a patient at Northwest Community
Hospital. See, I.G. Ex 30B. The I.G. alleged that

the Respondent "knew" or "had reason to know" that this
admit for which the Respondent billed Medicare, "was not
provided as claimed" because Dr. Beachy, who was covering
for the Respondent while he was out of town, did not
admit the patient and wrote in the patient's chart that
Dr. Beachy did not see the patient. I.G. Ex 30B.
- 44 -

returned to the nursing homes from which they had come.
Although they were admitted and cared for by other
physicians, the IMMC also considered them to be the
Respondent's patients since he was their GP. His name was
usually listed in the IMMC medical record as the admitting
or referring physician. The Respondent made sure that all
of his patients were listed on the IMMC “computer list,”
which was updated daily by the IMMC and made available to
all physicians daily so as to assist them in keeping track
of their hospitalized patients. TR 1/199. 17/

A. The Respondent's Billing Practices

The Respondent's standard practice was to bill the
Medicare program for an admit every time one of his
Medicare patients was admitted to the hospital, whether or
not the Respondent personally admitted the patient. The
Respondent argues that he provided the essential elements
of an admit because he consulted with and directed
whatever physician might be personally present when the
patient arrived at the hospital and that he performed the
ae elements of an admit himself a day or two later.
R Br/2.

The Respondent's standard practice was also to bill
Medicare for a hospital visit for each day of hospitaliza-
tion subsequent to the initial admit, until the Medicare
patient was discharged. Pursuant to the Respondent's
instructions, his billing clerks billed for each day that
a Medicare patient was hospitalized, until the Respondent
told them that the patient had been discharged. TR
VI/1583. The Respondent testified that:

Once somebody was admitted it [the billing] was
an ongoing thing until they went home. And I
could just say [to my office staff] so-and-so's
still there, . . . so-and-so went home today

+ . . this is her last day. TR VI/1583.

During the period at issue, in order for a medical
provider to claim Medicare reimbursement, a physician was
“required to document in the medical record any services
rendered and (after May 1982) to state the medical
necessity of such services. I1.G. Ex 64B/l; 1.G. Ex 64C/1;
see, e.g., TR 1/140. The Respondent billed Medicare for

17/ The “computer list" is a 3 x 5 card printed and
distributed to physicians daily by the IMMC. The card
lists, by doctor, the name and location in the hospital of
each patient. TR 1/199.
- 45 -

the hospital admits and the daily visits at issue here
absent the required documentation in the patient's medical
record.

At the IMMC, standard documentation in the hospital
medical record consists of several components, including:
a written H&P (IMMC requires this to be in the medical
record within 48 hours after admission); physician orders;
physician progress notes; and a structured flow sheet,
kept by the nurses, which was supposed to record physician
visits to patients. TR 1/179-184. The medical record
documents the progress of the patient, serves as a
communication tool among doctors and nurses, and serves as
the basis for planning the treatment of the patient. See,
TR 1/184; I.G. Ex 65.

B. The Absence of Documentation of the Medical
Services at Issue Contrasted with the Respondent's
Documentation of Other Medical Services

There is credible evidence that the Respondent ordinarily
was conscientious about documenting services that he
rendered to hospitalized patients. In contrast, the
Respondent did not document the services for which he is
liable in this case. For example, on 38 occasions he
submitted claims for an admit, but he did not document the
necessary H&P. In many instances involving the claims at
issue, he billed for periods of from one to four weeks of
consecutive daily visits without documenting that he had
provided any services. See, e.g., I.G. Ex 5B, 12B, 17B,
21B, 35B, 44B, 45B, 52B. In one instance, he billed
Medicare for 34 consecutive daily hospital visits, but
documented only one visit with a progress note. 1.G. Ex
44B.

The Respondent argues that the reason for this was that he
was careful to document medical services rendered when the
patient was under his sole care, and when other physicians
(surgeons, internists and residents) were involved in the
care of the Respondent's patients, he saw no need for
duplicating other physicians'documentation. R Rep Br/4.

- This argument is not convincing; it contradicts credible
testimony that such a practice is either a bad medical
practice or an indication that no medically necessary
service was performed.

Cc. The Respondent's Record Keeping

The Respondent supplied all the information that generated
the Medicare claims at issue. The Respondent testified
that he kept a ledger (which he called his "Day Book") in
- 46 -

which he recorded services he had provided. TR IV/1030.
The Respondent's office staff used the Day Book when
billing Medicare. The Respondent had no explanation for
the fact that there were claims submitted to Medicare for
visits that were not noted in the Day Book. TR v1/1579-
1580, 1589-1592, 1614-1616, 1646-1647, 1651, 1653.

The Respondent testified that he based his Day Book
entries on the IMMC "computer list" (showing his
hospitalized patients). TR IV/1030; TR VI/1578. He
stated that a mistake on the computer list might have been
reflected as a billing mistake. TR VI/1616, 1647.

This testimony is not convincing. It does not explain why
claims were submitted for visits not listed in the Day
Book; the Respondent's billing clerks had no records other
than the Day Book when preparing the Medicare claims at
issue. The Respondent said he "didn't know" where his
staff would have gotten billing information other than
from the Day Book. TR VI/1036, 1580.

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

The evidence in the record establishes that the Respondent
recklessly and flagrantly disregarded Medicare rules and
requirements. The Respondent billed for all visits that
he made to Medicare beneficiaries, whether or not he
documented any medical service. He billed for visits
when the patient was asleep or dead. TR VI/1666-1667, TR
V/1343. He billed when all of the patient's medical care
was being managed by surgeons, internists, cardiologists,
and residents. He billed for the kinds of visits that his
colleagues considered “social calls." TR IV/963, 1000.

The Respondent argues that he provided medical care to
patients suffering from multiple medical conditions and
that he made visits to treat them for one condition while
they were being treated for another condition by a
specialist in the hospital. R Rep Br/4. The evidence
supports this argument only in some instances.

The Respondent frequently billed Medicare for incorrect
dates of services. He routinely represented on his claim
forms that he had done an admit on the day the person

was admitted, even if he did not actually do "a complete
work-up" until one or two days later. TR VI/1602. He
rearranged dates of service to avoid getting "flak" from
BSI. TR VI/1602. The Respondent said that he considered
billing for the wrong day to be "just one of those paper
technicalities." TR VI/1484.
- 47 -

The Respondent's disregard for billing accuracy is most
clearly illustrated by the Respondent's claims for
hospital visits when he was out of town. The Respondent's
practice was to bill Medicare on the assumption that when
one of his patients was admitted to IMMC while he was
away, the doctor covering for him would have done an H&P,
admitted the patient, and made routine hospital visits
each day after the initial admission. The Respondent was
extremely negligent in that he did not even ask his
colleague for the details of the services provided. TR
Iv/1076. In one instance where Dr. Beachy, a physician
who frequently covered for the Respondent, specifically
wrote in the chart that he did not admit the patient, the
Respondent nevertheless "assumed" that Dr. Beachy did
admit the patient and billed Medicare for an admit. TR
V/1345-1347; I.G. Ex 30B/2. The Respondent agreed that
errors were made. He stated that: "there were some
mistakes, because this was kind of a loose arrangement,"
and that “it may not have been 100 percent accurate, but
this is the way we did it." TR Iv/1077; TR VI/1649.

II. The State and Federal Investigations of the
Respondent

A. The State Medicaid Investigation

In the spring of 1982, the Office of Investigations of the
Iowa Department of Human Services (IDHS) audited the
Respondent's medical records at six nursing homes. TR
II1/420-421. This audit concluded that the Respondent was
submitting claims for substantial numbers of services
which were not documented, that he was billing for medical
orders given over the telephone (not reimbursable by
Medicaid), and that he was billing for single visits to
nursing home patients when he was actually making
congregate visits. See, I.G. Ex 78A/3-4, 78B/3-6; TR
1/136-137, II1/422. BSI was notified because the patients
were also covered under Medicare. TR 11/423; I.G. Ex 78D;
I.G. Ex 78A/1. The county attorney declined to prosecute.
See, R Rep Br/50. The case was settled and the Respondent
-repaid $10,794.90 which he had claimed from Medicaid. The
Respondent did not admit any guilt by this settlement.
Stip/10; TR I1/427-429; IG Ex 78C/4, 5.

The State Medicaid investigation is irrelevant to the
specific claims at issue; it is relevant only to
illustrate the evolution of this case, the Respondent's
general disregard for program rules and requirements, and
the Respondent's poor practices regarding documentation.
- 48 -

B. The Investigations by BSI and the I.G.

In 1982, BSI concluded that approximately two-thirds of
the hospital services and two-thirds of the nursing home
services billed by the Respondent were non-reimbursable.
I.G. Ex 78A; TR 1/38 to 42. At the end of 1983, BSI
referred the matter to Frank Kram, an investigator for the
I.G. See, I1.G. Ex 79B; TR I1/44-45.

In 1984, Mr. Kram asked BSI to expand the audit of
hospital services; BSI found that about 3/4 of the
hospital admits did not have an H&P or admission orders by
the Respondent, and that about half of the visits billed
by the Respondent were not documented. I.G. Ex 79C.
Later, Mr. Kram found that the Respondent billed for
visits when the Respondent was out of town. TR III/702,
717-718; TR 1/50. Mr. Kram instructed the Health Care
Financing Administration (HCFA) to suspend future Medicaid
payments to the Respondent (TR 1/51; TR III/703; I.G. Ex
80) and instructed BSI to proceed with the recovery of the
nursing home services overpayment. 18/

Based upon the BSI audit findings, as well as his own
investigation and analysis, Mr. Kram concluded that the
Respondent provided little or no medical care to most
Medicare patients when the Respondent was not the primary
care or solo care physician. Mr. Kram also concluded that
the Respondent rarely wrote progress notes or orders, did
not do H&P's, and was rarely listed on the nurses'
Structured Flow Sheet. In contrast, when the Respondent
actually admitted a patient himself and was the primary
care or solo care physician, he did do an H&P, wrote
progress notes and orders on a regular basis, was
regularly listed on the nurses‘ Structured Flow Sheet, and
legitimately billed for the services. MTR III/713-716.

Mr. Kram concluded that the Respondent's pattern of
billing Medicare without any documentation and billing for
admits when another physician did the H&P was fraudulent

18/ BSI assessed Dr. Kern an overpayment of $63,213.75.
After a hearing, it was determined that the total
overpayment assessed should be $28,619.44, plus interest.
I.G. Ex 77.
- 49 -

billing. TR I1I1/718-722. 19/ Based on these findings and
conclusions, the I.G. issued its Notice in this case.

III. The Hospital Admits at Issue Were Not Provided
by the Respondent as Claimed

A service is not provided as claimed unless all of the
essential elements of that service are provided in
accordance with the Medicare rules and requirements. For
example, the procedure code for an admit (9020 or 90220)
requires the physician to (1) perform an H&P, (2) initiate
a diagnostic and treatment program, and (3) prepare
hospital records. If all of those elements are not
performed personally by the physician claiming Medicare
reimbursement, the service is considered "not provided as
claimed" within the meaning of the CMPL and regulations.

Thirty-eight (38) of the 309 medical services at issue
(involving 37 of the 53 claims) are hospital admits. With
regard to each of the 38 hospital admits at issue, the
Respondent billed for an admit (Procedure Code 9020 or
90220) even though he did not personally perform an H&P in
the hospital. This was in violation of Medicare
requirements outlined in the Medicare Manual; as stated
earlier, a physician must perform an H&P in order to
legitimately bill for an admit. 1.G. Ex 64A; TR 1/138-
140. The Respondent billed for an admit when the H&P had
been done by an ER physician, a surgeon, an internist, or
a resident. TR IV/1071. The Respondent argues that he
performed the admits as claimed because he performed H&P's
in the nursing home the day before many of the admits at
issue, he participated in some of the admits by giving
instructions or pertinent information to the admitting
physician over the telephone, or he did a separate H&P a
day or so after his Medicare patient was admitted to the
IMMC.

19/ Mr. Kram also concluded that the Respondent had
falsified medical records after the I.G. had begun its
investigation. Mr. Kram discovered that BSI had reviewed
the same medical record during two audits at least 1-1/2
years apart (I.G. 4B.1 and 4D.1) and had prepared a
summary sheet of the records each time. Mr. Kram noticed
discrepancies between the two summary sheets. See, I.G.
Ex 4B.2 and 4D.2; TR 1/84; TR III/708. He found one
altered record, and then went back to IMMC in July, 1986,
to review additional records and found four additional
altered records. I.G. Ex 17D, 22D, 33D, 44D.
- 50 -

Dr. Hostettler, one of the GP's who covered for the
Respondent, testified that he always documented H&P's
which he performed, and that he would not bill for an
admit unless he had done his own H&P before the specialist
did one. TR Iv/964-965, 970, 974-975. Dr. Beachy, the GP
who most often covered for the Respondent, stated that he
would not bill for an admit if an ER physician had done
the H&P, or if he had seen the patient at the nursing
home, and had not personally admitted the patient to the
hospital. TR IV/994-995, 998.

The Respondent testified that he took advice on billing
for admits from his friend Dr. Wichern, a surgeon to whom
he often referred patients. The Respondent said that

Dr. Wichern told him to bill Medicare for H&P's done by
surgical residents. TR VI/1640. 20/ Dr. Wichern,
however, denied getting involved In the Respondent's
decisions about proper billing. TR IV/889-890.

A. Emergency Room Admits

The Respondent billed Medicare for 13 ER admits which were
actually performed by an ER physician. I.G. Ex 2A.1, 14A,
26A, 29A, 31A, 37A, 38A, 40A, 41A, 42A, 46A, 47A, and 48A.
During the period at issue, the Respondent rarely went to
the ER to treat his patients who had been brought there.
TR I1/331. The Respondent instructed the physicians who
staffed the ER at the IMMC to treat the patients and call
him if necessary. TR I1/336. Many of the Medicare
beneficiaries involved in this case were brought to the ER
by ambulance from nursing homes. TR II/331-332. The ER
physicians admitted those patients requiring hospitali-
zation and then contacted the Respondent by phone to let
him know that the patients had been admitted, discussed an
initial course of treatment, and wrote the admitting
orders to cover the initial care. TR I1I/332-333.

In the admits at issue, the ER physicians did not usually
do an H&P, but instead did either an ER "assessment" or an
ER "report" (a record of care provided up to that point in
time). TR II/332, 334. The ER physicians then billed
. Medicare for physician services provided in the ER,
including the ER report. TR I1/348-349. It was standard
practice for the medical records staff at the IMMC to
accept the ER report in lieu of a separate H&P. TR 1/188.

20/ Usually, that service is included in Medicare's
reimbursement to a surgeon for his surgical fee (global
fee) which includes the initial hospital exam, the

surgery, and post-operative hospital visits. TR I/166-167.
-51-

The Respondent often visited his patients the day after
the patient was admitted and sometimes wrote a progress
note in the chart at that time. TR 11/340-348. The
progress notes he wrote are not acceptable substitutes
because they do not contain the elements essential for an
admit. TR I/188-191.

The Respondent did not do H&P's or admitting orders for
any of the 13 emergency room admits at issue for which he
billed Medicare. TR I1/339-348. The Respondent acceded
that he did not do written H&P's. TR VI/1650. He stated
that he thought it was proper to bill for an admit without
an H&P because he did an assessment of need for hospitali-
zation, made logistical arrangements to get the patient to
the hospital, called the hospital, gave verbal information
to the ER staff, planned treatment, conferred with the
family, referred patients to specialists, and did the
discharge summary. TR IV/1065-1071. In his view, those
services could be provided by telephone rather than in
person, and some of the services could be performed in the
nursing home rather than in the hospital. TR IV/1071.

I find that the evidence in this case establishes

that under Medicare requirements a physician could not
legitimately bill for an initial hospital visit unless he
personally performed an H&P.

Dr. Richard Bratkiewicz, an emergency physician at the
IMMC, testified that he or other members of his group

of ER physicians admitted twelve of the thirteen patients
in question. TR II/339-348. In each case, the Respondent
did not write an acceptable H&P, nor did he perform the
other elements essential for an admit.

In some cases, the Respondent billed for a nursing home
visit dated the same day or the day before a hospital
admit for which he also billed. I.G. Ex 14A, 40A. He
sometimes saw the patient at the nursing home, determined
a need for hospitalization, and had the patient admitted
through the ER without seeing the patient in the hospital
on the day of admission. TR III/750.

In five of the instances in question, the Respondent
billed for an admit dated the day after the patient was
actually admitted. I.G. Ex 31A, 40A, 41A, 47A, and 48A.
He often saw the patient the following day, but he did not
document an H&P during this visit, he did not change the
admitting orders, and he did not even write a
comprehensive progress note.
-52-

In one instance, the Respondent billed for both an admit
and a hospital visit -- two separate charges, two distinct
Procedure codes -- when the patient (Elias Halseide) had
died the day following (some six hours after) admission to
the ER. The Respondent had never come to the hospital
while Mr. Halseide was alive. I1.G. Ex 29B; TR 11/343-344.

The Respondent argues that he came to the hospital after
the patient's death to see the body and prepare a death
certificate and that this justifies the claim for
services. TR V/1343-1344. Neither procedure code 9020
nor procedure code 9024 apply to visits to a dead body, or
to the preparation of a death certificate. By submitting
claims under those two procedure codes, the Respondent
represented that he had provided medically necessary
medical services to a beneficiary, when in fact no medical
services were provided as claimed. TR III/753.

The Respondent also billed for an admit when he was

out of town and Dr. Beachy was covering for him. I1.G. Ex
46A. In that instance, a patient (Lillian Roth) was
admitted by an ER physician. Dr. Beachy did not do an
H&P. TR 11/346; TR IV/1002-1003.

B. The Surgical and Internal Medicine Admits

The Respondent claimed reimbursement from Medicare for

25 admits that were actually performed by a surgeon or
internist, or a resident under the supervision of a
surgeon or internist. In most of these cases, an H&P by
the specialist or his resident appears in the chart. When
an H&P was done by the resident, it was co-signed by the
supervising specialist. I.G. Ex 67A, 68/1; TR 11/449. No
other co-signatures were required. TR 1/204; TR IV/900-
901, 995-996.

Dr. Nathan Josephson, Director of the Internal Medicine
Residency Program at the IMMC, reviewed all of the records
for the three internal medicine admits at issue in this
case, provided an affidavit describing his findings, and
testified at the hearing. I.G. Ex 68. In each case,

- Dr. Josephson concluded that the admit was performed by an
internist or resident, not by the Respondent. One of the
three patients, Danny Adams, was admitted to the teaching
service; such an admission could be done only by a member
of the internal medicine faculty. I1.G. Ex 2B2; TR I1/380-
382; 1.G. Ex 68/2. Another, Margaret Johnson, was seen
initially in the ER, and from there was admitted to the
ICU where the admitting H&P was written by a resident and
co-signed by a pulmonologist who was on the hospital's
teaching staff. I1.G. Ex 34B; TR 11/384; I.G. Ex 68/3.
-~ 53 -

The third, Marie Siedelman, was seen first in the ER and
later by a gastroenterologist who admitted her to a
general medical floor; the gastroenterologist's resident
eeyaean the admit. 1.G. Ex 49B; TR II/385-386; I.G. Ex
68/3-4.

Dr. James A. Coil, Director of Surgical Education and head
of the surgical residency program at IMMC, reviewed all of
the medical records for the surgical patients at issue.

He provided an affidavit describing his findings and
testified at the hearing. I.G. Ex 67A. Dr. Coil
concluded that none of the 23 surgical admits was
performed by the Respondent as claimed.

In a number of cases, the Respondent billed for nursing
home visits dated the same day or the day before the
admits for which he also billed. See, I.G. Ex 1A, 4Al,
13A, 21A, 25A, 27A, 36A. The services provided by the
Respondent and billed as admits were (at most) pre-
admission services provided in the nursing home and not
eaayee under procedure codes 9020 and 90220. I.G. Ex
64A/2.

The Respondent also billed for admits that he claimed were
performed by Dr. Beachy when the Respondent was out of
town. I.G. Ex 25A, 30A, 32A, 46A; TR V/1334-1335, 1345-
1347; TR VI/1452, 1503-1504. I find Dr. Beachy's
testimony that he did not do the admitting H&P in any of
those instances to be credible and convincing. TR
Iv/1000-1005; 1.G. Ex 30B/2.

Iv. The Hospital Visits at Issue were not Provided by the
Respondent as Claime

Approximately two-thirds of the hospital visits at issue
in this case are to Medicare beneficiaries under the care
of a surgeon, and most of the other visits are to patients
under the care of the Internal Medicine Teaching Staff at
the IMMC. The Respondent billed for visits which did not
meet the Medicare requirements.

- As stated earlier, the Medicare rules and requirements in
evidence in this case provide (as of May 1982) that every
hospital visit must be supported by documentation.
Documentation of a visit may include physician's orders,
physician's progress notes, or nurse's notes. TR 1/66.

If a visit is not documented, it is "not provided as
claimed" within the meaning of the CMPL and requirements.
Furthermore, the Medicare rules and requirements also
provide: (1) that a visit must be a "medically necessary"
service (1.G. Ex 86A, 86B); (2) that a GP cannot bill for
- 54 -

a visit if his patient is being treated by a specialist in
a hospital, unless the GP's services are required to treat
a separate and distinct medical condition; and (3) that a
GP cannot bill for a visit performed by a covering
physician.

The Director of Medical Records at the IMMC considers the
standards of practice in the medical profession to require
that a progress note be made in the hospital chart at
least every three days. TR 1/198, 229. Dr. Bratkiewicz,
a GP, testified that he would expect progress notes to be
made at least every other day, and that he would expect to
bill only for visits where medical care was provided and
documented. TR I1/368-371. Dr. Nathan Josephson, an
internist, testified that daily progress notes are
standard practice for a primary or covering physician. TR
1I/390-391. Dr. Coil, the director of surgical education
at the IMMC, testified that while he had been known to
make "social visits" without writing a progress note, “you
are hard-pressed to bill for it." TR II/509. Two of the
Respondent's witnesses, Dr. Beachy and Dr. Hostettler,
both GP's, also testified that they make many “social
calls" which are not documented by progress notes, and
that they do not bill for such visits. TR IV/963, 1000-
1007. Dr. Hostettler stated that he ordinarily makes
entries in the medical records every couple of days. TR
Iv/955.

In contrast, the Respondent testified that he rendered
medical care to patients and billed Medicare without
writing progress notes or physician orders because he did
not want to duplicate what a specialist had already
written, because he kept poor records when he was treating
a patient who was not under his sole care, and because he
disliked paperwork. In one record there was not a single
progress note to document claims presented for 29
consecutive days of alleged medical services. I.G. Ex 5B;
TR V/1252, 1253.

.On the other hand, the Respondent wrote many progress
notes documenting the medical care he provided in medical
records not at issue in this case. I.G. Ex 60B, 61B, 62B,
63B; TR III/633-636, 714-716. Also, the Respondent wrote
progress notes regularly in one medical record (the chart
of George Hess) in which the admit billed by the
Respondent is at issue here. I.G. Ex 31A, 31B. These
numerous notations by the Respondent contradict his
assertions as to why he kept poor records when he was
treating a patient not under his sole care.
- 55 -

A. Medicare Patients Under the Care of Surgeons

Many of the Respondent's Medicare patients whose names are
listed on the claims at issue were hospitalized under the
care of surgeons. The surgeons at IMMC usually had one or
two residents on their service who were responsible, in
conjunction with the surgeon, for the patient's care. TR
1I/447-448; IV/917-918. The residents normally performed
and recorded the H&P under the supervision of the surgeon.
TR 11/448. The role of a GP in providing care to surgical
patients at the IMMC was usually quite limited. GP's
rarely wrote progress notes or orders or performed H&P's
for patients in the surgical service. TR I1/448-449.
Surgical residents were never assigned to GP's and could
not take direction from them. TR II/449. Surgical
patients were admitted and cared for by the surgeons and
their residents. While GP's could visit surgical
patients, they would not normally be expected to provide
any medical care to the patients. TR I11/450-451.

With respect to the surgical patients whose admits and
hospital visits are at issue in this case, the Respondent
did not admit any of the patients, and there were few
documented hospital visits. See, I.G. Ex 67A.

B. Medicare Patients Under the Care of the Internal
Medicine Teaching Staff

Some of the Respondent's Medicare patients whose names are
listed on the claims at issue were referred to internists
for specialized care. At the IMMC, there are two ways in
which a GP's patient can be seen by an internist. One is
for the GP to admit the patient under his direct care and
then to ask an internist to consult on the care of that
patient. Most GP's at the IMMC admit patients under that
arrangement and provide medical services to the patients
themselves. TR II/376-377, 408. The other option is for
the GP to have his patient admitted to the Internal
Medicine Teaching Service. If the GP elects this option,
he turns his patient over to the teaching faculty and
residents. In that case, only a resident, under the
“supervision of an internal medicine faculty member, is to
write orders for the patient and there is no medical
reason for a GP to follow that patient. I1.G. Ex 68. For
the period of time during which the patient is on the
teaching service, the GP relinquishes care of the patient
to the teaching service faculty and staff. TR 11/377-378.
A GP is free to visit such a patient, but the visits are
in the nature of social calls, not medical care. TR
II/378. If at any time the GP wants to regain control
over the patient's medical care, he can have the patient
- 56 -

removed from the teaching service, and can begin writing
orders and progress notes. TR I1/400.

Five of the patients whose names are listed on the claims
at issue in this case were under the care of faculty
internists and their residents while hospitalized at the
IMMC. The Respondent did not admit any of these patients
to the hospital, nor did he seek to have the patients who
were placed on the teaching service removed to his care.
There were few documented hospital visits by the
Respondent. The visits at issue were not documented.
Since these patients were under the care of the teaching
service, any such visits were in the nature of social
calls and not medically necessary visits, unless it was
documented that the Respondent was treating these patients
for a separate condition or that it was documented that it
was necessary for the Respondent to assist the teaching
staff. See, 1.G. Ex 64C/5, I.G. Ex 68; TR I1/379-390. 21/

Cc. Visits Performed by Another Physician When the
Respondent was Out of Town

The Respondent billed Medicare for services purportedly
rendered on days when, by his own admission, he was out of
town. See, 1.G. Ex 74/6; 1.G. Ex 76; 12B, 17Bl, 25B, 30B,
32B, 34B, 43B, 46B, 50B, 51B. His practice was to ask
another GP to cover for him when he was away, to
subsequently bill Medicare for services provided by the
covering physician, and to pay the covering physician for
his services by check or by reciprocating with in-kind
services. TR IV/1050-1065. This practice violates
Medicare requirements, which prohibit a physician from
including services provided by a "covering" or substitute
physician on a claim for inpatient services. I.G. Ex
64B/4.

The pertinent medical records are devoid of any documenta-—
tion that services were rendered by a substitute physician
.on the days in question. Dr. Beachy, the physician who
usually covered for the Respondent when he was out of
town, testified that he did not provide most of the
services at issue in this case which were billed for days
when the Respondent was out of town. TR IV/1000-1012.

21/ It was the opinion of the Director of the Internal
Medicine Residency Program and his colleagues that the
Respondent did not want to be directly involved with the
care of his acutely ill nursing home patients. TR II/415.
-57-

D. Visits For Which the I.G. Failed to Prove that

eee ms
the Respondent Did not Provide the Services as
Claimed

The I.G. failed to prove liability with regard to 17
hospital visits at issue because the Respondent's
testimony was credible and convincing that he provided the
visits as claimed, despite the lack of documentation.

V. The Respondent "Knew" or Had “Reason To Know" that the
Services at Issue Were Not Provided as Claime

I held in Scott, supra, that a respondent was liable for
false or improper claims of which he had "subjective"
knowledge ("conscious knowledge of a fact") or “objective"
knowledge (what a "reasonable man" or reasonable medical
provider had "reason to know"). Scott, supra, at 27-28.
The Scott Decision defines the reasonable medical provider
as follows:

Moreover, a Respondent, who is a reasonable
medical provider submitting claims and
exercising ordinary care, at the very least
would have made himself familiar with the rules
and regulations for presenting Medi-Cal claims.
He would have determined whether the claims he
submitted to Medi-Cal were for reimbursable
services and whether the services claimed were
actually provided. He would have checked the
claims presented against his own ledger cards to
ensure that the services for which he billed
Medi-Cal were actually provided on those dates.
Ignorance is no defense; a respondent becomes
liable for remaining ignorant, especially, as
here, when he, as a reasonable medical provider,
has an obligation to conduct an intelligent
inquiry concerning his submission of Medicaid
claims.

Dr. Kern did not act as a reasonable medical provider vis-
a-vis the Medicare program. He purposely did not make
“himself familiar with the relevant Medicare rules and
requirements and yet caused the claims at issue to be
presented. He did not pay attention to the accuracy of
his claims. In fact, he acted in reckless disregard of
their accuracy. Dr. Kern, like the Respondent in the
Scott case, had “reason to know" that the claims he
submitted to Medicare were "not provided as claimed."

As a participant in the Medicare program since 1966, the
Respondent submitted numerous claims for reimbursement to
- 59 -

purposely billed for the wrong day so as to make the claim
look more plausible to the carrier. TR VI/1602. He
clearly did not "give to his surroundings the attention
which a standard reasonable man would consider necessary
under the circumstances" and did not use his senses "to
discover what [was] readily apparent." Scott, supra, at
27, citing Restatement of Torts (2d), section 290,

Comment b. —

The Respondent also "knew" that some of the services were
not billable and purposely submitted false claims. For
example, when a patient was admitted through the ER and
died six hours later without having been seen by the
Respondent, the Respondent nonetheless billed for an admit
and a hospital visit, he knew that he could not possibly
be entitled to be paid by Medicare for either. He
testified that he was billing for viewing the body and
completing a death certificate, but he was indifferent to
whether the Medicare rules and requirements allowed
payment for that service (TR IV/1343):

Q.: Did you know that was not a proper billing?
A.: No. Actually, I'm treating patients, not
Medicare. ...

To the extent that the Respondent was disdainful and
ignorant of the Medicare rules and requirements, the
evidence in this record demonstrates that his ignorance
was self-imposed and self-serving. He simply did not care
about the consequences of his disregard for the truth and
accuracy of the claims he submitted. Under federal law,
intent can be imputed to one who files false claims "with
reckless disregard of whether the statements were true and
with a conscious purpose to avoid learning the truth."
U.S. v. Sarantos, 455 F.2d 877, 880 (2d Cir. 1972).
Accord: U.S. v. Lange, 528 F.2d 1280 (5th Cir. 1976);
U.S. v. Abrams, 427 F.2d at 86 (2d Cir. 1970); U.S. v.
Jewell, 532 F.2d 697 (9th Cir. 1976), cert. denied,

96 S.Ct. 3173.

‘This case is unlike the Silver case, supra, in that here
the Respondent had actual knowledge of the contents of the
claims he submitted; he had firsthand knowledge of whether
the claims he submitted reflected the services he actually
provided.

There was no third-party independently responsible for the
filing of the claims. There was never any allegation or
evidence that the Respondent had delegated the billing
process to anyone else. The Respondent's billing staff
performed only the ministerial function of preparing the
- 58 -

BSI. The Respondent was informed about the operation of
the Medicare program and was put on notice of its rules
and requirements. I find the Respondent's assertion that
he never received a binder entitled the "Medical Assis-—
tant's Manual" implausible. He admitted to periodically
receiving bulletins called "Medicare On Record," as well
as updates to the "Medical Assistant's Manual." TR
IV/1026-1027; TR VII/1740. Physicians are expected to
read this information so as to keep abreast of changes in
Medicare rules and requirements. TR I/162-172. The
updates were periodically incorporated into the manual.
TR 1/165-166, 171-172. The Respondent had a duty to
investigate by reason of this Medicare information which
put him on notice. See, pp. 7-8, Ante.

Although the Respondent, with his large Medicare practice,
received billing information and instructions from BSI, he’
and his staff threw them away. TR VII/1740. Even
bulletins pertaining to billing, procedure codes, and
reimbursable services were thrown away by the Respondent's
office personnel. TR VII/1741. The Respondent testified
that he rarely read one of these bulletins. TR IV/1027.

Despite the Respondent's professed ignorance of the
Medicare program's reimbursement rules and requirements,
at the hearing he appeared to be well-informed. He
understood the difference between an "assigned" and a
“non-assigned" claim. TR VI/1610. He could define
“congregate” and "single" nursing home visits, and the
basis for billing one or the other. Id. He also
understood that it was “standard procedure" to do an H&P
as part of admitting a patient and billing for an
admission, although he testified that he knew this because
it was just "good medicine," not because it was a Medicare
requirement. TR VI/1611. The Respondent was also aware
of the use of different procedure codes and the charges
associated with them.

Nevertheless, the Respondent chose to ignore Medicare
reimbursement requirements and disregard written
instructions; he chose to bill his way, not Medicare's
.way. He said, "I was treating the patient not the
insurance company." TR VI/1604, 1605.

The Respondent clearly had access to the information

he needed to file true and accurate claims. He chose

to ignore the information and remain ignorant of the
Medicare rules and requirements. He was unconcerned with
the accuracy of his claims. He requested few, if any,
details about what services were actually provided by
other physicians when he was out of town. At times, he
- 60 -

claim forms. They did so only based on information
directly provided by the Respondent. He testified that he
told them how to bill and wrote the billing information in
the Day Book; the Respondent's staff obtained all hospital
billing information from the Day Book or from other
entries made by Respondent; the staff filled out the claim
forms in accordance with the Respondent's instructions.

TR VI/1576-1583.

The Respondent had actual knowledge of the content of each
claim and of whether his bills reflected services which he
had provided. The Respondent also had actual knowledge
that he had not personally provided services when he was
out of town and had actual knowledge that he had not
provided a written history and physical in those instances
in which he billed for a hospital admission.

Moreover, the lack of documentation in the vast majority
of the medical charts at issue demonstrates that either
the services billed for were not medically necessary and
the Respondent had "reason to know" it, or the Respondent
was negligent to the patients involved for not documenting
his input with regard to their care. In the latter
situation, the Respondent had a pre-existing duty to
provide quality care as a physician and his lack of
quality care in those instances vitiates the need for
independent proof to cause the duty to investigate to
spring into existence. See the discussion of the "knew or
had reason to know" standard of liability, pp. 5-8, Ante.

VI. The Respondent "Knew" or Had "Reason To Know" That
the Services at Issue Were Not Provided as aime
Because the Respondent Was Under a Duty to Inves-
tigate the Troth, Accuracy and Completeness of the

Claims at Issue Before They Were Submitted, by Virtue

of the Certification Statements on Those Claims

The Deputy Under Secretary's Opinion in Silver states
that the duty to investigate the propriety of claims
being submitted to Medicare or Medicaid may be triggered
by pre-existing duties on the part of medical providers.

. A pre-existing duty is created by the certification of the
claims at issue. This pre-existing duty is similar to the
duty of quality care. Even if it were not a pre-existing
duty, it does, at the very least, cause a duty to
investigate to spring into existence under the “reason to
know" standard of liability. See, Silver Opinion, p. 26.
The certification on the HCFA 1500 claim form reads:
"NOTICE: This is to certify that the foregoing
information is true, accurate and comvlete."
-61-

This certification statement is present on all but four of
the claims at issue in this case. All but one of the
claims at issue contained the following identical
certification language:

I certify that the services shown on this form
were medically necessary for the health of the
patient and were personally rendered by me or
were rendered incident to my professional
service by my employee under immediate personal
supervision. . + -

The HCFA 1490 form contained substantially similar
language having a similar meaning.

The certification statement is a representation that the
person signing the claim has acquired sufficient informa-
tion and made the requisite documentation to prove to the
Medicare program that the services were provided as
claimed. The Respondent was required to sign (or at least
initial) the claims. In fact, he signed all of the claims
at issue here. The certification statement created a duty
on the Respondent to investigate the truth, accuracy, and
completeness of the claims and the supporting
documentation.

Certifications similar to the claims at issue are familiar
to many government claim forms. In complex systems like
Medicare or Medicaid, it is quite common for persons to
attempt to shift responsibility for false claims to
others. Those administering the program seek to affix
personal responsibility for claim information on the
medical provider. The certification of truth, accuracy,
and completeness is a common means of gaining some
reasonable assurance that the provider has attested that
the claims are true, accurate, and complete.

The use of certification statements to create a certain
representation by a medical provider was discussed in
U.S. ex rel. Fahner v. Alaska, 591 F. Supp. 794 (N.D.

. Til, 1984). In that case, claims by an optometrist to
the Medicaid program of Illinois contained certification
language virtually identical to the case at bar: "This is
to certify that the information above is true, accurate
and complete. . - -" 591 F. Supp. at 796.

In Peterson v. Weinberger, 508 F.2a 45, 52 (5th Cir.),
cert. denied, 423 U.S. 830 (1975), Medicare claims for
nursing home services stated: "A physician's signature
certifies that physician services were personally rendered
-62-

by him or under his personal direction." The Court
commented:

It was entirely reasonable and necessary for the
Government to require such a certification on
the claim forms to implement the Act, and at the
same time protect public funds. Obviously, a
false certification on the claim form frustrated
the Government's attempt to process only valid
claims and led to the payment for services which
were not covered or payable under the Act.

Here, the Respondent, by signing the claims forms
containing certification statements, was duty bound to
investigate the truth, accuracy, and completeness of the
claims and its underlying documentation. 22/

VII. The Appropriate Amount of the Penalty, Assessment,
and_ Suspension

To decide the appropriate amount of the sanctions that
should be imposed in any case where the I.G. has
established liability, the CMPL and Regulations require
the ALJ to consider aggravating and mitigating circum-
stances. Specifically, section 1003.106(a) and (b) of the
Regulations and section 1320a-7(c) of the CMPL require the
ALJ to examine the following circumstances: (1) the
nature of the claims or requests for payment and the
circumstances under which they were presented, (2) the
degree of culpability of the Respondent, (3) the history
of prior offenses of the Respondent, (4) the financial
condition of the Respondent, and (5) such other matters as
justice may require. Section 1003.106(b) of the
Regulations contains some general guidelines for the
interpretation and application of these aggravating and
mitigating factors.

While the CMPL and Regulations require consideration of
aggravating and mitigating factors to determine the
appropriate amount of the penalty, assessment, and

22/ The unqualified certification statement on the claims
at-issue is contrasted with certifications with qualifiers
(i.e., “to the best of any knowledge and belief"). This
latter type was found to impose no duty on to check the
facts on a V.A. loan application in U.S. v. Ekelman &
Associates, Inc., 532 F.2d 545, 549 (Téth Cir. 1976). The
court indicated it would have reached a different result
(imposing a duty to obtain personal knowledge) if the
qualifier had not been present.
- 63 -

suspension to be imposed in a given case, there is no
formula set forth for computing them, and there is little
guidance to be found in the CMPL and its legislative
history (except with regard to assessments, see, 48 Fed.
Reg. 38827 (Aug. 26, 1983)). The preamble to the
Regulations states that "fixed numbers" have been
"eliminated" as "triggering devices"; this emphasizes that
discretion is preferable to a mechanical formula. 48 Fed.
Reg. 38827 (Aug. 26, 1983). The preamble further states:
“as we gain more experience in imposing sanctions under
the statute, we may further refine the guidelines, but at
this early stage we believe that increased flexibility is
preferable."

The purpose of a penalty in a CMPL case is deterrence,
rather than retribution or punishment. See, Mayers v-

U.S. Department of Health and Human Services, 806 F.2d
Tith Ci 1986); see also, Chapman United States of

Meant both to encourage others to comply with the law and
to discourage a respondent from committing the wrong
again. To arrive at an appropriate penalty that would

be a deterrent, rather than retribution, the ALJ must
consider the factors outlined in the regulations, weigh
the gravity of the wrong done by a respondent, and
consider what would prevent the wrong from being committed
again by a given respondent and others.

The purpose of an assessment in a CMPL case is to enable
the United States to recover the damages resulting from
false or improper claims. This includes amounts paid to a
respondent by the Medicare and Medicaid programs and the
costs of investigating and prosecuting unlawful conduct.
See 48 Fed. Reg. 38831 (Aug. 26, 1983).

The purpose of the suspension is bath deterrence and the
protection of the Medicare and Medicaid programs by
removing errant providers. 48 Fed. Reg. 38832 (Aug. 26,
1983). Section 1003.107 of the Regulations requires that
.the same criteria used in determining the penalty and
assessments be used in determining the length of any
suspension.

A. The Degree of Culpability of the Respondent

One of the most complex of the factors to be considered by
the ALJ in determining the amount of the penalty is the
"degree of culpability." The guidelines in the Regula-
tions indicate that this factor relates to the degree of a
respondent's knowledge and intent. Knowledge is an
~ 64 -

aggravating factor, and “unintentional or unrecognized
error" is a mitigating factor if a respondent "took
corrective steps promptly after the error was discovered."
Regulations, section 1003.106(b)(2). The determination of
the degree of culpability involves an inquiry into the
degree of a respondent's knowledge. See, 48 Fed. Reg.
38831 (Aug. 26, 1983).

In this case, the degree of Respondent's culpability
ranges from one end of the spectrum of liability to the
other. At one extreme, Respondent billed for services
that were "not provided as claimed" and the Respondent
actually "knew" that he was submitting a false claim. At
the other extreme, the Respondent had "reason to know"
that billed services were "not provided as claimed"
because he did not provide the essential elements of a
billable service. The vast majority of the services at
issue here fall in between these two extremes. It is
considered an aggravating factor that the Respondent
“knew" or had “reason to know" that the requisite elements
of most of the service at issue were "not provided as
claimed" and the Respondent "knew" or “had reason to
know." It is also an aggravating factor that in some
instances the I.G. proved that the Respondent "knew" that
some services were not provided at all. It is a
mitigating factor that in some other cases the Respondent
proved that even though he had “reason to know" that the
admits and visits were “not provided as claimed," he did
provide some services.

There is one example worth noting. It is an aggravating
circumstance that the Respondent billed for 33 visits to
Myrtle Pross although he "knew" the evidence is that he
never performed any medically necessary services.

Myrtle Pross was in the hospital for 52 days; she was
admitted on January 26, 1983 and discharged on March 18,
1983. The Respondent did not perform or bill for an
admit. He entered only one progress note, on February 22,
. 1983: "K+ normal. Condition essentially unchanged." He
entered no physician's order. He billed Medicare for a
hospital visit for each of 34 days from January 27 through
March 2, 1983, except for January 31. The I.G. alleged
that 33 visits were falsely claimed.

The Respondent testified that he saw Ms. Pross every day
through March 2. On direct, he said that he stopped
seeing her on March 2 because he "probably went out of
town," but did not have Dr. Beachy or anyone else cover
for him. TR VI/1497. On cross, he said that he had not
seen Ms. Pross for a period of a year or a year-and-a-
-~ 65 -

half, between the time she left the nursing home and her
admission to the hospital for treatment, by a surgeon, for
broken bones. TR VI/1662. He noted that, while
hospitalized, Ms. Pross had a number of other medical
conditions which required treatment and that he treated
her for all of them “as the need arose." TR VI/1664. He
identified only a urinary tract infection as a condition
for which he provided treatment, and he also monitored her
high blood pressure and electrolyte imbalance. TR
VI/1665.

Ms. Pross' son testified that he was with his mother at
the hospital every day except Tuesdays from 8:30 a.m. to
8:30 p.m. and never saw the Respondent. TR II/519. The
Respondent explained that he made his rounds at the
hospital between 7:00 a.m. and 8:30 a.m. and always saw
Myrtle Pross as one of his first patients. TR VI/1498.
Geraldine Kassar, Director of Surgical Nursing at IMMC,
noted that there was no entry in the nurses' notes to
reflect that the Respondent had visited Ms. Pross on any
of the days in question. She further stated that it
“would not be probable or possible" that he could have
made visits for that many days consecutively and never
have been observed by the nurses on duty. TR III/641.

The evidence strongly supports a conclusion that the
Respondent not only did not document visits to Ms. Pross,
but that he did not even visit her on any of the days in
question. Moreover, the evidence even more strongly
supports the conclusion that, if he did visit, he did not
provide a medically necessary service. The progress notes
by the surgeon and the other physicians treating Ms. Pross
indicate that she was moved to a rehabilitation unit a few
days after entering the hospital and remained in the unit
for the remainder of her stay. She was treated by the
other physicians, including an internal medicine
specialist, for the urinary tract infection and there is
no indication that the Respondent was involved in treating
her for this or any other condition. The other physicians
continued to monitor Ms. Pross for the infection long
after the Respondent, by his own admission, had stopped
visiting her. Moreover, Dr. Kelley, the surgeon who
operated on Ms. Pross for her broken bones, testified that
medical treatment by Dr. Kern was not necessary. TR
V/1218. 23/

Also, it is an aggravating circumstance that: (1) the
Respondent had a reckless disregard for the Medicare

23/ Dr. Kelley was a witness for the Respondent.
- 66 -

program requirements, in that he knowingly ignored the
requirements and submitted bills to Medicare for whatever
he pleased; and (2) purposely indicated the wrong dates of
service on claim forms to avoid getting "flak" from the
carrier.

B. The Nature and Circumstances of the Claims and
a
Services at Issue >

The guidelines, at section 1003.106(b) of the Regulations,
state that it is a mitigating circumstance if the nature
and circumstances of the requests for payment were all of
the same type, occurred within a short period of time,
were few in number, and the total amount requested from
Medicaid recipients was under $1,000. But, the
regulations do not specify what constitutes a "short
period of time" or how to evaluate the number of claims.

The guidelines at section 1003.106(b)(1) of the
Regulations also state that an aggravating circumstance
exists where the requests for payment were of several
types, occurred over a lengthy period of time, were large
in number, indicated a pattern of making such requests for
payment, or the amount was substantial. Again, however,
the guidelines do not indicate what period constitutes a
“lengthy” period, what number of requests is a "large"
number, or what amount is a "substantial" amount. See,
48 Fed. Reg. 38827 (Aug. 26, 1983). These judgments are
left to the discretion of the ALJ.

Since examples of mitigating circumstances in the
guideline are couched in the conjunctive, all must be
proven by the Respondent in order for the nature and
circumstances of the claims at issue to be considered
mitigating. Here, the Respondent did not prove all of
them. On the other hand, since examples of aggravating
circumstances in the guidelines are couched in the
disjunctive, only one need be proven by the I.G. to
establish the nature and circumstances of the claims at
issue to be considered aggravating. Here, the I.G. has
- established more than one.

The I.G. proved by a preponderance of the evidence that
the Respondent billed for substantial sums ($7,400) and
that the period was lengthy (over 2 years). The 1.G.
proved by a preponderance of the evidence that the
Respondent engaged in a pattern, in this case, of making
such requests for payment. The Respondent regularly and
consistently billed Medicare for medical services that
were not documented.
- 67 -

The Respondent's pattern was much broader in scope than
the claims at issue. See, I.G. Ex 78B, 82B. Both the
federal and state investigations of the Respondent's
billing of nursing home services revealed problems.
Services claimed were not documented and many visits were
improperly billed as single visits when they were actually
congregate visits. Other services were non-reimbursable
because they were not medically necessary or were non-
covered services. BSI assessed an overpayment of
approximately $63,000, which the Respondent appealed. The
hearing officer sustained BSI in part, finding that the
Respondent had claimed $28,619.44 to which he was not
entitled. I.G. Ex 77. This lack of documentation and
misrepresentation of services are similar in nature to the
circumstances under which the claims for hospital services
at issue were presented.

Cc. History of Prior Offenses

The next factor discussed in the Regulations is "prior
offenses" of a respondent. The guidelines at section
1003.106(b) state that an aggravating circumstance exists
if, prior to the presentation of the improper claims at
issue, a respondent had been held liable for criminal,
civil or administrative sanctions in connection with one
of the programs covered by the CMPL or any other medical
services program. This guideline would clearly prevent
consideration of mere allegations of past wrongdoing. A
respondent must have been held liable, subjected to actual
sanctions, and the claims must not have been the subject
of the instant proceeding. The preamble makes clear that
prior offenses are not an aggravating circumstance, unless
there has been a final agency determination or a final
court adjudication. 48 Fed. Reg. 38832 (Aug. 26, 1983).

There are no "prior offenses" which could be construed as
an aggravating factor in this case. While there was a
prior administrative proceeding in which the Respondent
was found to have been overpaid on nursing home visits,
there was no finding of liability and no imposition of
sanctions. See, I.G. Ex 77. It should be noted that

- absence of a prior offense is not a mitigating factor
under the Regulations.

D. Other Matters to be Considered as Justice
Req s

The CMPL and the Regulations also contain an umbrella
factor: "other matters as justice may require." The
Regulations do not provide further detail, except to

indicate that consideration of other matters should be
- 68 -

limited to those relating to the purposes of civil money
penalties and assessments. Regulations section
1003.106(b) (5).

There is only one mitigating factor: the Respondent did
perform medical services in some instances.

There are two aggravating factors:

(1) The Respondent altered medical records during the
course of the federal investigation. (The Respondent
admits that he altered the hospital records and his
explanation for doing so was that he had earlier
forgotten to include the documentation of his
services in those records. This is an aggravating
circumstance because he made the changes knowing that
there was a current investigation concerning those
records, he did not inform the investigators of his
changes, and he did not include the date on which he
in fact made the entry.)

(2) The Respondent lacked candor at the hearing
concerning the fact that the Respondent voluntarily
withdrew his license to practice medicine in Iowa.
{In his direct testimony, the Respondent asserted
that he had surrendered his license of his own
volition implying that he had decided to retire. TR
IV/1022, 1564-1565. See, 1.G. Br/109-110. Under
intense cross-examination, however, the Respondent
admitted that he turned in his license because his
attorney advised him that it might be revoked if he
did not, “on the basis of another situation." Id.
When pressed further, he admitted that the real
reason that he had surrendered his license and
"retired" was that he was likely to lose his license
if he did not. TR VI/1567.)

E. Financial Condition

The Regulations state that the financial condition of a

‘ respondent should constitute a mitigating circumstance if
the penalty or assessment, without reduction, would
jeopardize the ability of a respondent to continue as a
health care provider. Thus, it is clear that the ALJ may
consider a respondent's financial condition. Furthermore,
the guidelines at section 1003.106(b)(4) note that the ALJ
must consider the resources available to a respondent.
This indicates that financial disclosure by a respondent
is a key requirement in evaluating a respondent's
financial condition.
- 69 -

Based on the Respondent's testimony in November 1986, the
Respondent has a net worth of approximately $200,000,
including a Keogh plan with a net value of $107,000 after
taxes; cash in his checking account, estimated at $64,000,
from the sale of his house; a cash value of $14,000 ina
life insurance policy; 334 shares of AT&T stock worth
$8,000; a $6,500 one-third interest in an airplane; a
$6,000 IRA; and two automobiles of unspecified value. The
total of these amounts, not counting the automobiles, is
$205,500. TR VI/1553-1562. A June 1986 financial
statement, filed with the Respondent's request for
hearing, listed assets totalling $246,410 (not including
his IRA and his Keogh plan) and liabilities totalling
$115,039.

Income tax returns for 1984 and 1985, filed along with
his request for hearing, corroborate the Respondent's
testimony that he pays $1,800 monthly in alimony, his
principal expense. TR VI/1552. The other expenses that
he testified to were not verified by any documentation and
were not consistent with his financial statement. Also,
his financial statement valued his automobiles at $6,000,
his AT&T stock at $11,000, and listed other stocks and
bonds (not mentioned in his testimony) at $88,410.

The Respondent testified that he was unemployed and likely
to remain so. TR VI/1549-1550. He said that he had a
monthly income of $450 plus an unspecified additional
amount, from various investments (TR VI/1553); his
financial statement reported a monthly income of $642.
Neither figure appeared to include what income he might
derive if he invested the $64,000 in his checking account,
the cash value of his insurance, or the amount in his
Keogh plan.

The Respondent had the burden of proving by a prepon-
derance of the evidence that his financial condition
would prevent him from being able to pay the penalty and
assessment imposed in this case. Based on the above, I
find that he has not met this burden.

“VIII. The Amount of the Penalty, Assessment, and
Suspension, as Modified Here, is Supported by the

Record

The I.G. proposed a penalty of $203,925, an assessment of
- 70 -

$14,870, and a ten-year suspension. 24/ After weighing
all of the evidence in this case (including the fact that
the I.G. failed to prove liability with regard to 17
services at issue and that I dismissed four services at
issue for lack of notice), and after reevaluating the
penalty in light of the implications of the Respondent's
culpability under the "reason to know" standard of
liability, and considering all of the aggravating and
mitigating circumstances, I find the proposed penalty,
assessment, and suspension to be too high.

I conclude that a penalty of $67,500 is a sufficient
deterrent under the circumstances of this case, that
$13,000 is sufficient to compensate the Government, and a
three-year suspension is sufficient for ensuring program
integrity.

It should be noted that in imposing the three-year
suspension, I have taken as a guideline the standard
period imposed in debarments to protect the integrity of
government programs. See 47 Fed. Reg. 28854 (June 24,
1982). Also, it should be noted that the Respondent was
given the benefit of the doubt in many situations where he
testified that he provided some service to the Medicare
beneficiaries involved in this case, even though he did
not prove that the services provided were medically
necessary, much less documented and billable.

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

Based on the evidence in the record and the CMPL and
Regulations, it is hereby Ordered that the Respondent:

(1) Pay a penalty of $67,500.
(2) Pay an assessment of $13,000.

(3) Be suspended from Medicare and Medicaid programs for
a period of three (3) years.

/s/

Charles E. Stratton
Administrative Law Judge