DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Civil Remedies Division
In the Case of:
The Inspector General,
- v. -
Donald O. Bernstein,
D.C.,
Respondent.
DATE: January 12, 1988
Docket No. C-40
DECISION AND ORDER
The Respondent waived his right to a formal evidentiary hearing in this civil
money penalty and
assessment case and the parties jointly requested that I issue a decision and
order on the basis of their
stipulation of facts dated January 4, 1989.
APPLICABLE FEDERAL STATUTES AND REGULATIONS
A. Statutes
This case is governed by the Civil Monetary Penalties Law (CMPL), Section 1128A
of the Social Security
Act, 42 U.S.C. 1320a-7a (West U.S.C.A., 1988 Supp). The CMPL provides that any
person submitting a
claim for Medicare or Medicaid reimbursement for an item or service that the
person knows or should
know was not provided as claimed shall be subject to a civil money penalty of
not more than $2,000 for
each item or service, an assessment of not more than twice the amount claimed
for each item or service,
and exclusion from participating in Medicare and Medicaid programs. These penalties
are in addition to
any other penalties that may be prescribed by law.
B. The Regulations
The governing federal regulations (Regulations) are codified in 42 C.F.R. sections
1003.100 through
1003.133 (1987) and 52 Fed. Reg. 49412 (December 31, 1987). These Regulations
provide for a full and
fair trial-type hearing before an Administrative Law Judge (ALJ).
BACKGROUND STATEMENT
On February 24, 1988, the Inspector General (I.G.) issued a notice of proposed
determination (Notice),
through the Deputy Assistant I.G. for the Civil Fraud Division, informing Donald
O. Bernstein, D.C.
(Respondent), that the I.G. had determined that the Respondent is subject to
a penalty of $63,000 and an
assessment of $3,488. The Notice alleged that the Respondent had presented or
caused to be presented to
Blue Shield of Florida, the designated Medicare carrier, false claims for Medicare
reimbursement for 210
spinal manipulations that the Respondent knew, had reason to know, or should
have known were not
provided as claimed during the period January 1982 through May 28, 1982, a time
when the Respondent
was a practicing chiropractor in Coral Springs, Florida.
On April 26, 1988, the Respondent timely disputed the I.G.'s allegations concerning
liability, argued that
the penalty and assessment proposed by the I.G. are inappropriate, and raised
several legal defenses.
A prehearing conference was held in Denver, Colorado on October 24, 1988, and
a Prehearing Order and
Notice of Hearing was issued on October 27, 1988 summarizing all matters discussed
at the conference.
PREHEARING RULINGS
A. Ruling On The Respondent's Motion For Competency And Mental Status Examination
At the prehearing conference, the Respondent presented a motion to have each
of the eight patients whose
care and treatment are at issue in this case examined for competency and mental
status. The I.G. opposed
the Motion, and I denied it during the conference. The reasons I denied the
Motion are: (1) the
Regulations at section 10003.117(a) state that depositions are not authorized,
and I determined that such
examination would be in the nature of an unauthorized deposition, (2) the Respondent
would be given the
opportunity to cross-examine each of these witnesses at a hearing, and (3) the
competency of the witnesses
is something that would become apparent to me as the trier of fact at the formal
hearing. Since the
Respondent waived his right to a formal evidentiary hearing, the issue is moot.
B. Ruling On The Respondent's Motion To Dismiss
In his request for a hearing, the Respondent moved to dismiss this action,
arguing that the applicable statute
of limitations was five years, that the subject claims for Medicare reimbursement
were submitted by the
Respondent more than five years preceding the date of the I.G.'s Notice, and
that, in effect, the application
of the new six year statute of limitations would be unconstitutional in that
it would revive claims barred by
the five year period of limitations. The Respondent also argued that the I.G.
was allowed to bring only one
civil action on the same set of facts and that since the Respondent was suspended
from participation in the
Medicare and Medicaid programs pursuant to another provision of the Act in 1985,
the I.G. was estopped
from initiating this action for a civil penalty and assessment. Finally, the
Respondent argued that a 1987
agreement between him and the I.G. precluded the I.G. from bringing this action.
In response, the I.G. argued that (1) the six year statute of limitations applied
in this action; (2) the claims
at issue were within the applicable six year period; (3) there was no constitutional
prohibition to applying
the six year statute of limitations to this action; and (4) the I.G. was not
estopped or precluded from
proposing a civil money penalty and assessment pursuant to the CMPL merely because
the Respondent
was suspended under a separate provision of the Act over three years ago (section
1128 of the Act) or
because of a 1987 agreement which was no longer in effect.
On September 23, 1988, I issued a ruling denying the Respondent's motion to
dismiss, and concluding that
the six year statute of limitations (rather than the five year period of limitations
provided for in the
Regulations) applied in this case. Specifically, I ruled that: (1) Congress
intended that the six year statute
of limitations would apply to all CMPL actions initiated after September 1,
1987; (2) this CMPL action
was not precluded by the Respondent's prior suspension or by the 1987 agreement
between the parties; and
(3) section 1003.115(c) of the Regulations denied me the authority to determine
whether the retroactive
application of the six year statute of limitations to this action is a violation
of the Constitution of the United
States.
ISSUES
The remaining issues are:
1. Whether the I.G. proved by a preponderance of the evidence that the Respondent
knew, had reason to
know, or should have known that each of the Medicare services at issue was not
provided as claimed by the
Respondent.
2. Whether the amount of the penalty and assessment proposed by the I.G. is
appropriate under the
circumstances of this case.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Having considered the entire record, the arguments and the submissions of the
parties and being advised
fully herein, I make the following Findings of Fact and Conclusions 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, and all other pertinent regulations of
the United States. Stip. A. 1.
2. This case is governed by the CMPL and the Regulations. Stip. A. 2.
3. The Secretary had delegated to the I.G. the authority to take action under
the CMPL and the
Regulations, and this authority has been redelegated to the Deputy Assistant
Inspector General for Civil
Fraud. Stip A. 3. to 5.
4. The I.G. issued his Notice to the Respondent on February 24, 1988. Stip. B. 1.
5. The Respondent filed a timely response to the I.G.'s Notice on April 2, 1988.
6. The Respondent presented, or caused to be presented, to Blue Shield of Florida
each of the claims
for Medicare reimbursement listed in the Appendix to the I.G.'s February 24,
1988 Notice. Stip. B. 4.
7. The amounts claimed from the Medicare program and the amounts paid in Medicare
reimbursement with respect to the claims at issue are correctly reflected in
the Appendix to the February
24, 1988 Notice; as the designated Medicare carrier in Florida, Blue Shield
of Florida was authorized to
process and pay these claims filed by the Respondent for Medicare reimbursement.
Stip. B. 2 to 5.
8. The 210 services at issue were described as "manipulations of the spine,"
on the HCFA 1490
claim forms presented or caused to be presented by the Respondent. On each claim
form, the signed or
stamped signature of 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 . . . ." Additionally, on each claim form it was certified
that "x-rays proximate to
course of therapy are available for review." Stip. B. 6.
9. The Respondent is in possession of no medical records, x-rays, financial
information, or any other
documentation pertaining to any of the 210 services at issue. Stip. B. 7.
10. On or about April 28, 1982, the Respondent presented or caused to be presented
to Blue Shield of
Florida a Medicare claim form seeking payment for 22 spinal manipulations rendered
to Medicare
beneficiary Miriam Silverstein (Medicare # 101109408B) during the period January-April
1982. If called
as a witness, Mrs. Silverstein would testify, without contradiction, that she
saw the Respondent on only one
occasion, and that the balance of the visits and procedures specified on the
claim form did not occur.
Furthermore, Mrs. Silverstein would testify that at the time of her only visit
to the Respondent, she was
asked to sign several blank Medicare claim forms. The Respondent knew, had reason
to know, or should
have known that 21 of the 22 services specified on the claim form requesting
Medicare reimbursement
(counts 113-133) were not provided. Stip. B. 8.
11. On or about April 28, 1982, the Respondent presented or caused to be presented
to Blue Shield of
Florida a Medicare claim form seeking payment for 26 spinal manipulations rendered
to Medicare
beneficiary Fay Schwartz (Medicare # 088260190A) during the period January-April
1982. If called as a
witness, Mrs. Schwartz would testify, without contradiction, that she saw the
Respondent on only one
occasion, May 3, 1982, and that all services for which reimbursement was sought
prior to that date were
not rendered. Furthermore, Mrs. Schwartz would testify that, at the time of
her only visit to the
Respondent, he requested that she sign a blank Medicare claim form. The Respondent
knew, had reason to
know, or should have known that the 26 services specified on the claim form
requesting Medicare
reimbursement (counts 86-111) were not provided. Stip. B. 9.
12. On or about May 27, 1982, the Respondent presented or caused to be presented
to Blue Shield of
Florida a Medicare claim form seeking payment for 27 spinal manipulations rendered
to Medicare
beneficiary Bertha Snyder (Medicare # 569091417A) during the period January-May
1982. If called upon
as a witness, Mrs. Snyder would testify, without contradiction, that she did
not visit the Respondent for
treatment in 1982, and that all the specified services for which Medicare reimbursement
was sought were
not rendered. The Respondent knew, had reason to know, or should have known
that the 27 services
specified on the claim form requesting Medicare reimbursement (counts 162-188)
were not provided. Stip.
B. 10.
13. On or about May 28, 1982, the Respondent presented or caused to be presented
to Blue Shield of
Florida a Medicare claim form seeking payment for 22 spinal manipulations rendered
to Medicare
beneficiary Leonard Snyder (Medicare # 549100591A) during the period January-May
1982. On July 20,
1982, Mr. Snyder sent a letter to Blue Shield of Florida stating that "my
wife and I were never in Dr.
Bernstein's office . . . or did we receive any treatment from him at any time
during 1982." This
information would be corroborated by Mrs. Bertha Snyder who, if called upon
as a witness, would testify,
without contradiction, that neither she or her husband visited the Respondent
for treatment in 1982, and
that all the specified services for which Medicare reimbursement was sought
were not rendered. The
Respondent knew, had reason to know, or should have known, that eight of the
services specified on the
claim form requesting Medicare reimbursement (counts 189-196) were not provided.
Stip. B. 11.
14. On or about March 31, 1982, the Respondent presented or caused to be presented
to Blue Shield
of Florida a Medicare claim form seeking payment for 24 spinal manipulations
rendered to Medicare
beneficiary Nicholas St. Angelo (Medicare # 134127523A) during the period January-March
1982. If
called upon as a witness, Mr. St. Angelo would testify, without contradiction,
that he saw the Respondent
on only three or four occasions, and that the balance of the visits and procedures
specified on the claim
form did not occur. Furthermore, Mr. St. Angelo would testify that, during one
of his visits, he was asked
to sign a blank claim form. The Respondent knew, had reason to know or should
have known that 20 of
the 24 services specified on the claim form requesting Medicare reimbursement
(counts 5-24) were not
provided. Stip. B. 12.
15. On or about April 16, 1982, the Respondent presented or caused to be presented
to Blue Shield of
Florida a Medicare claim form seeking payment for 14 spinal manipulations rendered
to Medicare
beneficiary Thomas Barber (Medicare # 111246759A) during the period January-April
1982. If called
upon as a witness, Mr. Barber would testify, without contradiction, that he
did not visit the Respondent for
treatment in 1982 and that the specified visits and procedures did not occur.
Furthermore, Mr. Barber
would testify that, upon first visiting the Respondent's office in 1981, he
was asked by the Respondent to
sign a blank claim form. The Respondent knew, had reason to know, or should
have known that the 14
services specified on the claim form submitted by the Respondent requesting
Medicare reimbursement
(counts 25-38) were not provided. Stip. B. 13.
16. On or about May 12, 1982, the Respondent presented or caused to be presented
to Blue Shield of
Florida a Medicare claim form seeking payment for 28 spinal manipulations rendered
to Medicare
beneficiary Carmen Murphy (Medicare # 133012456D) during the period January-May
1982. If called
upon as a witness, Mrs. Murphy would testify, without contradiction, that she
did not visit the Respondent
for treatment in 1982 and that the specified visits and procedures did not occur.
The Respondent knew,
had reason to know, or should have known that the 28 services specified on the
claim form submitted by
the Respondent requesting Medicare reimbursement (counts 134-161) were not provided.
Stip. B. 14.
17. On or about May 26, 1982, the Respondent presented or caused to be presented
to Blue Shield of
Florida a Medicare claim form seeking payment for 20 spinal manipulations rendered
to Medicare
beneficiary Lottie Gerstel (Medicare # 334166693) during the period April-May
1982. Two other claim
forms had also been previously presented by the Respondent seeking Medicare
payment for services
rendered on 12 prior occasions to beneficiary Lottie Gerstel in March-April
1982. If called upon as a
witness, Mr. Gerstel would testify, without contradiction, that she visited
the Respondent's office for
treatment in 1982 no more than ten times and that she did not receive treatment
from the Respondent on
the 32 occasions for which reimbursement was requested. Furthermore, she would
testify that she was
hospitalized in May 1982 for the condition for which she initially went to the
Respondent for treatment,
and accordingly she could not have received services from the Respondent on
the dates specified on his
claim form. Medical record documentation from University Hospital in Plantation,
Florida would indicate
that Mrs. Gerstel was admitted to the hospital on May 18, 1982 and discharged
on May 21, 1982. The
Respondent knew, had reason to know, or should have known that 20 of the services
specified on claim
forms submitted by Respondent requesting Medicare reimbursement (counts 39-58)
were not provided.
Stip. B. 15.
18. Blue Shield of Florida and the Department of Health and Human Services
received complaints
from other Medicare beneficiaries stating that spinal manipulations as specified
on the Respondent's claims
for Medicare reimbursement were never rendered to them. Stip. B. 16.
19. On August 15, 1984, the Respondent was charged in an indictment handed
down by a federal
grand jury with violations of 18 U.S.C. 1001, 1341 and 2, involving the submission
of false claims for
Medicare reimbursement. He subsequently entered into a Plea Agreement wherein
he agreed to plead
guilty to count two of the indictment pertaining to the submission of a false
Medicare claim for services
allegedly rendered to beneficiary Thomas Barber. The services specified in count
two correspond to
counts 25-38 listed in the Appendix to the February 24, 1988 Notice. In the
Plea Agreement, the
Respondent also stipulated to "mail[ing] a claim form (claim # 111246759A)
to Blue Shield in
Jacksonville, Florida seeking payment in the amount of $210 for visits and spinal
manipulations with
regard to Thomas Barber, which visits and manipulations did not occur."
Stip. B. 17.
20. On May 10, 1983, the Respondent was convicted on count two of the aforementioned
indictment,
for violating 18 U.S.C. 1001 and 2. He was sentenced on May 10, 1985 in the
U.S. District Court for the
District of Colorado to three years probation, was fined $1,000, and "ordered
to serve 30 days in a jail-type
institution on weekends." On January 10, 1986, an Order was issued modifying
the sentence to discharge
"ten days of the 30 day jail sentence." The Respondent served his
period of incarceration, paid his fine,
and fully and completely abided by every term and condition of probation. The
Respondent's probation
was terminated upon successful completion in 1988. Stip. B. 17.
21. On September 30, 1985, based on the aforementioned conviction, the Respondent
was suspended
from participation in the Titles XVIII (Medicare) and XIX (Medicaid) programs
for a period of ten years,
pursuant to section 1128(a) of the Social Security Acct, 42 U.S.C. 1320a-7(a).
Stip. B. 17.
22. In 1983, the Respondent relocated to Colorado, where he currently practices
his profession. In
1987, as a result of the aforementioned felony plea, the Colorado State Board
of Chiropractic Examiners
issued to the Respondent a Letter of Admonition for his misconduct in connection
with this matter. Since
that date, the Respondent has conducted his practice in accordance with the
rules and regulations of said
Board and is in good standing in Colorado. Stip. B. 18.
23. The stipulated facts and evidence support a finding of liability with respect
to 164 out of the 210
services at issue and specified in the Appendix to the I.G.'s February 24, 1988
Notice. Accordingly, the
penalty and assessment in this case should be predicated only on these 164 counts.
Stip. B. 19.
24. Further, the parties stipulated to the entry of judgment against the Respondent
in the form of a
civil money penalty of $49,200.00 and an assessment of $2,722.40. 42 U.S.C.
section 1320a-7a(a); Stip.
B. 19.
25. The entry of this Decision and Order, which is based upon stipulated facts
and evidence, in no
way precludes the parties of their appeal rights, as provided for in 42 U.S.C.
1320a-7a(e) and 42 C.F.R.
1003.125, 1003.127. Stip. B. 20.
26. The parties expressly reserved the right, upon the rendering of this Decision
and Order, to
preserve and pursue any appeals, and the stipulation of facts in no way limits
a legal challenge to the
initiation of this action by the I.G. and a legal challenge to the imposition
of a civil money penalty and
assessment on the Respondent. Stip. B. 20.
27. After weighing all circumstances and examining the record in this case,
it is appropriate to impose
a penalty of $49,200.00 and an assessment of $2,722.40 on the Respondent.
DISCUSSION
Based on the stipulation of facts executed and filed by the parties, the I.G.
has proven by a preponderance
of the evidence that the Respondent did know, had reason to know, or should
have known that 164
Medicare claims submitted in 1982 by the Respondent were false claims for services
that were not
provided by the Respondent as claimed and that a penalty of $49,200.00 and an
assessment of $2,722.40 is
appropriate under the circumstances of this case.
While the Respondent has conceded most of the facts alleged by the I.G. in
the I.G.'s February 24, 1988
Notice and has waived his right to a formal hearing, the Respondent reserved
the right to appeal the legal
and constitutional issues raised.
Accordingly, it is appropriate for me to enter an Order for the amount of penalty
and assessment stipulated
to by the parties.
ORDER
Based on the entire record, the CMPL, and the Regulations, it is hereby Ordered that the Respondent:
(1) Pay a penalty of $49,200,00; and
(2) Pay an assessment of $2,722.40
________________________
Charles E. Stratton
Administrative Law Judge
Addressees:
RETURN RECEIPT REQUESTED
Lee D. Foreman, Esq.
Haddon, Morgan & Foreman, P.C.
1034 Logan Street
Denver, Colorado 80203
and
HANDCARRIED
Thomas E. Herrmann, Esq.
Inspector General Division, O.G.C.
Cohen Building, R. 5541
330 Independence Avenue, S.W.
Washington, D.C. 20201