DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board
Civil Remedies Division
In the Case of:
The Inspector General,
- v. -
Thuong Vo, M.D. and Nga Thieu Du, Respondents.
DATE: August 15, 1989
Docket No. C-45
DECISION OF ADMINISTRATIVE LAW JUDGE
Respondents requested a hearing to contest the proposed imposition against
them, jointly and severally, of
civil monetary penalties and assessments. Based on the law, regulations, and
evidence adduced at the
hearing in this case, I conclude that Respondents Thuong Vo, M.D. a/k/a Thomas
Vo, M.D. (Respondent
Vo) and Nga Thieu Du (Respondent Du) presented, or caused to be presented, claims
for 64 items or
services which they knew, had reason to know, or should have known were not
provided as claimed. I
impose civil monetary penalties of $128,000.00 and assessments of $3,890.00
against them, jointly and
severally, for a total of $131,890.00.
BACKGROUND
On June 16, 1988, the Deputy Inspector General, Civil Administrative Division,
notified Respondents that
pursuant to authority delegated to her by the Secretary of Health and Human
Services (the Secretary) and
the Inspector General (the I.G.), she was proposing to impose civil monetary
penalties and assessments
against them. Specifically, she proposed that Respondents jointly and severally
be penalized $128,000.00,
and assessed $3,890.00, for a total of $131,890.00. She cited as legal authority
for the proposal section
1128A of the Social Security Act, 42 U.S.C. 1320a-7a, as implemented by 42 C.F.R.
1003.100 et seq.
The Deputy Inspector General also proposed that Respondents be excluded from
participating in the Title
XVIII (Medicare), Title XIX (Medicaid), Title V (Maternal and Child Health Block
Grant), and Title XX
(Social Services Block Grant) programs for a period of ten years. She cited
as legal authority for the
proposed exclusions section 1128A(a) of the Social Security Act, 42 U.S.C. 1320a-7a(a).
The proposed penalties, assessments, and exclusions were based on the Deputy
Inspector General's
allegations that Respondents presented, or caused to be presented, to the California
Medicaid program
(Medi-Cal), claims, containing 64 items or services, requesting $1,945.00 in
reimbursement for office
visits and laboratory tests which were not provided as claimed. She asserted
that Respondents knowingly
improperly claimed reimbursement for services allegedly rendered on behalf of
nonexistent individuals.
Each of the allegedly false items or services was itemized as a separate count
in an attachment to the
Deputy Inspector General's notice to Respondents.
The Deputy Inspector General advised Respondents that she was proposing that
the maximum penalties
and assessments permitted by law be imposed against them. She told Respondents
that her proposal was
based on factors specified by regulations. These included:
1. the presence of aggravating circumstances in Respondents' case, including
Respondents'
participation, from August 1982 until February 1984, in an elaborate scheme
to defraud government health
care programs;
2. Respondents' substantial culpability, as evidenced by Respondents' knowledge
that the
services claimed had not been provided, and Respondents' conviction by a California
court of crimes
related to the claims at issue;
3. Respondents' not previously having been convicted of similar offenses;
4. the absence of information to suggest that the imposition of the proposed
penalties and
assessments would jeopardize Respondents' ability to continue as health care
providers;
5. the presence of other aggravating factors, including Respondents' participation
in a highly
organized conspiracy to defraud Medi-Cal.
Respondent Vo timely requested a hearing. The request filed on his behalf did
not request a hearing on
behalf of Respondent Du. The case was assigned to me for a hearing and decision.
I held a prehearing
conference on November 15, 1988, at which counsel agreed that Respondent Vo's
hearing request would
be deemed to be a timely hearing request on behalf of Respondent Du.
The I.G. subsequently filed a motion for summary disposition against both Respondents
as to three items or
services itemized in the first three counts of the attachment to the Deputy
Inspector General's notice.
Respondents did not oppose this motion, and, on February 21, 1989, I issued
a ruling which granted the
I.G.'s motion.
My ruling was based on the I.G.'s undisputed assertion that Respondents pleaded
guilty to crimes involving
fraudulent presentation of Medi-Cal claims as enumerated in counts 1-3. I concluded
that Respondents'
convictions constituted "prior determinations" with respect to the
items or services enumerated in counts 1-
3. Therefore, pursuant to 42 C.F.R. 1002.114(c), the doctrine of collateral
estoppel applied to these items
or services. I made no finding in my ruling as to the appropriateness of penalties
or assessments with
respect to these false claims, and I stated that I would not preclude Respondents
from offering evidence on
the issue of the appropriateness of penalties or assessments.
I conducted a hearing in this case in Santa Ana, California on March 6, 1989.
At the hearing, the I.G.
withdrew the proposal to exclude Respondents from participating in health care
programs under Titles V,
XVIII, XIX, and XX.
At the completion of the hearing, I issued a schedule for the parties to file
posthearing briefs and reply
briefs. The I.G. timely filed a posthearing brief on April 26, 1989. Respondents
did not file a posthearing
brief. On May 19, 1989, I invited the parties to brief the possible impact on
this case of a recent United
States Supreme Court decision, United States v. Halper, No. 87-1383 (May 15,
1989). The I.G. timely
filed a brief addressing the impact of the Halper decision. Respondents did
not file a brief on Halper. On
June 27, 1989, I issued an Order closing the record in this case.
ISSUES
The issues in this case are whether:
1. either Respondent presented, or caused to be presented, claims for items
or services which he
or she knew, had reason to know, or should have known were not provided as claimed,
in violation of 42
U.S.C. 1320a-7a; and
2. penalties and assessments should be imposed against either Respondent and,
if so, in what
amount.
APPLICABLE LAW AND REGULATIONS
A. Statutes.
1. The Civil Monetary Penalties Law, 42 U.S.C. 1320a-7a.
B. Regulations.
1. 42 C.F.R. Part 1003--Civil Money Penalties and Assessments.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Respondent Vo is a physician. I.G. Ex. 6-2/315.
2. Thuong Vo and Thomas Vo are the same person. Stip 8.
3. Respondent Du is the wife of Respondent Vo. Stip. 9.
4. Respondent Vo practiced medicine in California since 1982. I.G. Ex. 6-2/308.
5. Respondent Du assisted Respondent Vo with the business aspects of his medical
practice. I.G. Ex. 5/29,
47.
6. Respondent Vo's practice included treating patients who were Medi-Cal beneficiaries.
I.G. Ex. 6-2/310-
311.
7. Medi-Cal is a program that provides needed medical care to those people
who are eligible under the
terms of California and federal laws. I.G. Ex. 6-1/9.
8. Respondent Vo sought and obtained authorization from Medi-Cal to be reimbursed
by Medi-Cal for
treating Medi-Cal beneficiaries. I.G. Ex. 6-1/10.
9. In California a provider can obtain reimbursement for treating Medi-Cal
beneficiaries if he or she has
qualified under the rules and regulations of the program and has a license in
good standing. I.G. Ex. 6-
1/11.
10. The fiscal intermediary for Medi-Cal is Computer Sciences Corporation. I.G. Ex. 6-1/11.
11. Computer Sciences Corporation processes providers' claims for Medi-Cal
reimbursement and
authorizes payment of those claims. I.G. Ex. 6-11/12.
12. When a provider signs a claim form for Medi-Cal reimbursement, he certifies
that he either personally
provided the services for which reimbursement is sought, or that the services
were provided under his
direction by another person eligible under the Medi-Cal program to provide such
services. J. Ex. 3; Tr. at
162.
13. In Respondent Vo's practice, Medi-Cal claims were prepared by office employees
based on
information supplied by Dr. Vo in patients' charts. I.G. Ex. 5/29.
14. Respondent Vo filled out the patient charts, left them in stacks for his
staff, and signed completed
claims before they were mailed. I.G. Ex. 5/29.
15. Respondent Vo signed all the Medi-Cal claims submitted by him for reimbursement. I.G. Ex. 6-2/319.
16. Respondent Du double checked claim forms before Respondent Vo signed them. I.G. Ex. 5/29.
17. Prior to March, 1983, the California Attorney General's Bureau of Medi-Cal
Fraud (Fraud Bureau)
received complaints that physicians treating members of the Vietnamese refugee
community in Orange
County, California were involved in a scheme consisting of writing prescriptions
and billing Medi-Cal for
patients they had never seen. I.G. Ex. 6-1/43.
18. In April, 1983, agents employed by the Fraud Bureau received information
suggesting that Respondent
Vo might have been part of this scheme. I.G. Ex. 6-1/42.
19. In May, 1983, the Fraud Bureau instituted an undercover operation with
respect to Respondent Vo.
I.G. Ex. 6-1/46.
20. Three such operations were eventually conducted concerning Respondent Vo. I.G. Ex. 5/1-14.
21. The first operation occurred on May 16, 1983. I.G. Ex. 5/2-5.
22. The second operation occurred on July 9,1983. I.G. Ex. 5/6-10.
23. The third operation occurred on August 30, 1983. I.G. Ex. 5/11-14.
24. In each of the three undercover operations, the Fraud Bureau created Medi-Cal
identification cards
which identified nonexistent Medi-Cal beneficiaries by name and identification
number. I.G. Ex. 5/2-3, 6-
7, 11; Tr. at 86-87.
25. During the May 16, 1983 undercover operation, operators in the service
of the Fraud Bureau brought
13 Medi-Cal cards to Respondent Vo's office. I.G. Ex. 5/3; I.G. Ex. 6-1/48-49.
26. The names and Medi-Cal identification numbers on the 13 Medi-Cal cards were:
Dung Vu 30300564120050
Thanh Nguyen 30300564071003
La Nguyen 30300564071060
Yen Nguyen 30300564071004
Hung Nguyen 30300564089060
Thu Tran 30300564109060
Minh Tran 30300564120001
Giau Tran 30300564120001
Thanh Tran 30300564120060
Tung Le 30300564071050
Tron Nguyen 30300564071001
Meo Nguyen 30300564071002
Vinh Nguyen 30300564078060
I.G. Ex. 5/2-3.
27. The names on the 13 Medi-Cal cards were of nonexistent persons, and no
individuals appeared at
Respondent Vo's office purporting to be the persons named on the cards. I.G.
6-1/51-52.
28. On May 16, 1983, the operators received from Respondent Vo's office medical
prescriptions made out
to the names identified on the 13 Medi-Cal cards. I.G. Ex. 5/3-5; I.G. Ex. 6-1/48-49;
Tr. at 81-82.
29. Subsequent to May 16, 1983, the Medi-Cal program received 13 claims for
services signed by
Respondent Vo, one for each of the nonexistent persons named on the Medi-Cal
cards. I.G. Ex. 5/17; I.G.
Ex. 6-1/50-51; I.G. Ex. 7/1 through 7/13.
30. The 13 claims represented that a total of 36 items or services were provided
to the nonexistent persons
named on the Medi-Cal cards. I.G. Ex. 7/1 through 7/13.
31. The total amount claimed for the 36 purported items or services was $1,120.00.
I.G. Ex. 7-1 through
7-13.
32. The Medi-Cal program reimbursed Respondent Vo, based on the 13 claims.
I.G. Ex. 6-1/50-51; I.G.
Ex. 7-1 through 7-13.
33. The 36 items or services charged on the 13 claims are counts 1-36 on the
attachment to the Deputy
Inspector General's June 16, 1988 notice to Respondents (attachment to the notice).
34. During the July 9, 1983 undercover operation, operators in the service
of the Fraud Bureau brought six
Medi-Cal cards to Respondent Vo's office. I.G. Ex. 6-1/52-53.
35. The names and Medi-Cal identification numbers on the six Medi-Cal cards were:
Meo Nguyen 30300564071002
Thanh Nguyen 30300564071003
Tron Nguyen 30300564071001
La Nguyen 30300564071060
Tung Le 30300564071050
Yen Nguyen 30300564081004
I.G. Ex. 5/6-7.
36. The names on the six Medi-Cal cards were of nonexistent persons. I.G. Ex. 6-1/52-53.
37. On July 9, 1983, the operators received from Respondent Vo's office five
medical prescriptions made
out to the names identified on the six Medi-Cal cards. I.G. Ex. 5/8; I.G. Ex.
6-1/52-53.
38. Subsequent to July 9, 1983, the Medi-Cal program received one claim for
services signed by
Respondent Vo for one of the nonexistent persons named on the Medi-Cal cards.
I.G. 6-1/53; Tr. at 87.
39. The nonexistent person for whom services were purportedly rendered by Respondent
Vo was
described on the Medi-Cal card as a six-year old child. I.G. 6-1/53.
40. In fact, no individual appeared at Respondent Vo's office purporting to
be the six-year old child named
on the Medi-Cal card. I.G. 6-1/53.
41. The claim represented that one item or service was provided to the nonexistent
child named on the
Medi-Cal card. I.G. Ex. 7-14.
42. The total amount claimed for the purported item or service was $30.00. I.G. Ex. 7-14.
43. The Medi-Cal program reimbursed Respondent Vo, based on this claim. I.G. Ex. 7-14.
44. The item or service charged on this claim is count 37 on the attachment to the notice.
45. During the August 30, 1983 undercover operation, nine Medi-Cal cards were
delivered to Respondent
Vo's office. I.G. Ex. 5/11-12; I.G. Ex. 6-1/53-54; Tr. at 88-89.
46. The names and Medi-Cal identification numbers on the nine Medi-Cal cards were:
Lien Doan 30300564101050
Duc Nguyen 30300564101060
Dien Nguyen 30300564101001
Lien Nguyen 30300564101002
Diep Nguyen 30300564087050
Khoa Nguyen 30300564087060
Binh Nguyen 30300564087001
Bon Nguyen 30300564087002
Hieu Nguyen 30300564087003
I.G. Ex. 5/11.
47. The names on the nine Medi-Cal cards were of nonexistent persons. I.G. Ex. 5/11.
48. The person who delivered the Medi-Cal cards received prescriptions, written
by Respondent Vo, made
out to some of the names of the nonexistent persons shown on the nine Medi-Cal
cards. I.G. Ex. 6-1/54;
Tr. at 88-89.
49. Subsequent to August 30, 1983, the Medi-Cal program received nine claims
for services signed by
Respondent Vo for each of the nonexistent persons named on the Medi-Cal cards.
I.G. Ex. 6-1/55; I.G. Ex.
7-15 through 7-23; Tr. at 88-89.
50. The nine claims represented that a total of 27 items or services were provided
to the nonexistent
persons named on the Medi-Cal cards. I.G. Ex. 7-15 through 7-23.
51. The total amount claimed for the 27 purported items or services was $795.00.
I.G. Ex. 7-15 through 7-
23.
52. The Medi-Cal program reimbursed Respondent Vo, based on the nine claims.
I.G. Ex. 7-15 through 7-
23.
53. The 27 items or services charged on the nine claims are counts 38-64 on the attachment to the notice.
54. During the course of its investigation, the Fraud Bureau contacted individuals
known as "drivers" who
were paid by Vietnamese providers to deliver Medi-Cal patients or Medi-Cal cards
to the providers. I.G.
Ex. 5/1.
55. On February 15, 1984, pursuant to search warrants, agents of the Fraud
Bureau seized 14 notebooks
from Respondent Vo's office. I.G. Ex. 6-1/154.
56. Each of the notebooks contained information concerning the dates when drivers
brought Medi-Cal
patients or Medi-Cal cards to Respondent Vo's office and whether drivers had
been paid for delivering the
patients or cards. I.G. 6-1/154-155.
57. The time period covered by the 14 notebooks was August 17, 1982, to February
13, 1984. I.G. Ex.
5/31.
58. One of the persons who worked as a driver for Respondent Vo was an individual
named Dung Vu.
I.G. Ex. 5/1; I.G. Ex. 6-1/45.
59. Dung Vu delivered Medi-Cal cards to Respondent Vo's office, without bringing
the persons identified
by the cards. I.G. Ex. 5/78; I.G. Ex. 6-1/178.
60. Dung Vu's employment as a driver was arranged by Respondent Du. I.G. Ex. 5/78.
61. One of the 14 notebooks seized pursuant to search warrant was a driver's
notebook which Respondent
Du provided to Dung Vu. I.G. Ex. 5/78.
62. One of the persons who worked as a driver for Respondent Vo was an individual
named Quoc Minh
Van. I.G. Ex. 5/46.
63. Quoc Minh Van delivered Medi-Cal cards to Respondent Vo's office, without
bringing the persons
identified by the cards. I.G. Ex. 5/48.
64. Quoc Minh Van's employment as a driver was arranged by Respondent Du. I.G. Ex. 5/46-47.
65. One of the persons who worked as a driver for Respondent Vo was an individual
named Mai Thi To
Mac. I.G. Ex. 5/87.
66. Mai Thi To Mac's employment as a driver was arranged by Respondent Du. I.G. Ex. 5/87.
67. Mai Thi To Mac delivered Medi-Cal cards to Respondent Vo's office, without
bringing the persons
identified by the cards. I.G. Ex. 5/89.
68. Dung Vu, Quoc Minh Van, and Mai Thi To Mac were compensated for their services
as drivers by
Respondent Du. Tr. at 15
69. On November 28, 1984, Respondent Vo pleaded guilty in California state
court to: one felony count
of filing false Medi-Cal claims; one felony count of grand theft in excess of
$25,000.00; and one felony
count of conspiracy to cheat and defraud the Medi-Cal program. Stip. 11, 12;
I.G. Ex. 2/7, 9, 15.
70. The felony count of filing false Medi-Cal claims to which Respondent Vo
pleaded guilty is Count 1 of
the amended felony complaint filed against him. I.G. Ex. 1/1-2.
71. The Medi-Cal claim which Respondent Vo admitted falsely filing is identified
in the amended felony
complaint as Medi-Cal claim number 31513409082. I.G. Ex. 1/2.
72. The three items or services contained in the claim referred to in Finding
71 are the three items or
services identified as counts 1-3 the attachment to the notice.
73. Respondent Vo admitted in his guilty plea that he conspired with Respondent
Du and other people,
including drivers, to cheat and defraud Medi-Cal by billing for services that
were never actually rendered.
I.G. Ex. 2/7.
74. Respondent Vo admitted in his guilty plea that he had paid drivers to bring
in Medi-Cal cards without
patients. I.G. Ex. 2/7-8.
75. Respondent Vo admitted in his guilty plea that he filed claims with Medi-Cal
which were false because
the claims asserted that he provided treatment to patients when in fact he did
not treat those patients. I.G.
Ex. 2/8.
76. Respondent Vo admitted in his guilty plea that when he filed these false
claims he knew they were
false. I.G. Ex. 2/8.
77. Respondent Vo admitted in his guilty plea that he filed false claims with
the intent of cheating and
defrauding Medi-Cal. I.G. Ex. 2/8.
78. Respondent Vo admitted in his guilty plea that the amount of his theft
from Medi-Cal exceeded
$25,000.00. I.G. Ex. 2/9.
79. Respondent Vo admitted to receiving overpayments from Medi-Cal of $85,598.00
and agreed to make
restitution of this amount. I.G. Ex. 2/9-10.
80. On November 28, 1984, Respondent Du pleaded guilty in California state
court to one count of filing
false Medi-Cal claims. Stip. 14, 15; I.G. Ex. 2 at 24.
81. Respondent Du admitted in her guilty plea that she had helped Respondent
Vo file a false Medi-Cal
claim, knowing that the representation on the claim was false. I.G. Ex. 2/21.
82. Respondent Du admitted in her guilty plea that she had helped Respondent
Vo file a false Medi-Cal
claim with the intent to steal from Medi-Cal. I.G. Ex. 2/21.
83. The felony count of filing false Medi-Cal claims, to which Respondent Du
pleaded guilty, is Count 1
of the amended felony complaint filed against her. I.G. Ex. 1/1-2.
84. The Medi-Cal claim which Respondent Du admitted falsely filing is identified
in the amended felony
complaint as Medi-Cal claim number 31513409082. I.G. Ex. 1/2.
85. The three items or services contained in the claim referred to in Finding
83 are the three items or
services identified at counts 1-3 of the attachment to the notice.
86. This proceeding is governed by the Civil Monetary Penalties Law, 42 U.S.C.
1320a-7a, (the Act) and
by enabling regulations contained in 42 C.F.R. Part 1003.
87. The Act authorizes the Secretary to impose a civil monetary penalty and
an assessment against any
person who presents or causes to be presented, to an officer, employee or agent
of any State, a claim for
items or services under Title XIX (Medicaid) which that person knew or should
have known was not
provided as claimed. 42 U.S.C. 1320a-7a(a),(i)(2).
88. Prior to December 1987, the Act provided for imposition of a penalty, assessment,
and exclusion
against a person who filed a claim for an item or service where that person
"knows or has reason to know"
that the item or service was not filed as claimed. 42 U.S.C. 1320a-7a(a). Effective
December 22, 1987,
the phrase "should know" was substituted for the phrase "has
reason to know." Pub. L. 100-203, section
4118(e) (1987). Section 4118(e)(3) of this law provided that the language substitution
was intended to
apply retroactively.
89. The Act provides for the imposition of a penalty of up to $2,000.00 for
each item or service falsely
claimed and assessments of up to twice the amount so claimed. 42 U.S.C. 1320a-7a(a).
90. The Act and regulations direct the Secretary or his or her delegate, in
determining the amount or scope
of any penalty or assessment imposed, to take into account both aggravating
and mitigating factors. 42
U.S.C. 1320a-7a(d); 42 C.F.R. 1003.106.
91. Factors which may be considered as aggravating or mitigating include: the
nature of the claims and
the circumstances under which they were presented; the degree of culpability,
history of prior offenses, and
financial condition of the person presenting the claims; and such other matters
as justice may require. 42
U.S.C. 1320a-7a(d); 42 C.F.R. 1003.106.
92. If there are substantial or several aggravating circumstances, the aggregate
amount of the penalty and
assessment should be set at an amount sufficiently close to, or at, the maximum
permitted by law, so as to
reflect that fact. 42 C.F.R. 1003.106(c)(2).
93. In proceedings brought pursuant to the Act, the I.G. has the burden of
proving, by a preponderance of
the evidence, that a respondent presented, or caused to be presented, claims
for items or services which the
respondent knew or should have known were not provided as claimed. 42 C.F.R.
1003.114(a).
94. In proceedings brought pursuant to the Act, a respondent has the burden
of proving the existence of
any mitigating factors. 42 C.F.R. 1003.114(d).
95. Respondents' guilty plea to Count 1 of the amended felony complaint filed
against them constitutes a
final determination with respect to the items or services specified in Count
1 of the amended felony
complaint and listed as counts 1-3 of the attachment to the notice.
96. Respondents are, therefore, bound by that final determination in this proceeding.
97. Respondent Vo presented, or caused to be presented, to Medi-Cal, claims
for the items or services
listed in counts 1-64 of the attachment to the notice, and he knew that they
were not provided as claimed.
Findings 12-15, 25-79, 94-95.
98. Respondent Vo had reason to know that the items or services listed in counts
1-64 of the attachment to
the notice were not provided as claimed. Findings 12-15, 25-79, 94-95.
99. Respondent Vo should have known that the items or services listed in counts
1-64 of the attachment to
the notice were not provided as claimed. Findings 12-15, 25-79, 94-95.
100. Respondent Du presented, or caused to be presented, to Medi-Cal, claims
for the items or services
listed in counts 1-3 of the attachment to the notice, and she knew that they
were not provided as claimed.
Findings 80-83, 94-95.
101. Respondent Du presented, or caused to be presented, to Medi-Cal, claims
for the items or services
listed in counts 1-64 of the attachment to the notice, and she had reason to
know that they were not
provided as claimed. Findings 16, 60, 64, 66, 68, 80-83, 94-95.
102. Respondent Du should have known that the items or services listed in counts
1-64 of the attachment
to the notice were not provided as claimed. Findings 16, 60, 64, 66, 68, 80-83,
94-95.
103. Respondent Vo presented, or caused to be presented, claims over a lengthy
period of time for items or
services that were not provided as claimed. Findings 21-23, 25-52.
104. Respondent Vo presented, or caused to be presented, claims for a substantial
number of items or
services that were not provided as claimed. Finding 97.
105. Respondent Du presented, or caused to be presented, claims for a substantial
number of items or
services that were not provided as claimed. Findings 100, 101.
106. Respondent Vo claimed substantial reimbursement for items or services
that were not provided as
claimed. Findings 31, 42, 51.
107. The items or services presented by Respondent Vo which were not provided
as claimed were part of a
pattern of false claims by Respondent Vo against the Medi-Cal program. Findings
54-79.
108. The items or services presented by Respondent Vo, which were not provided
as claimed, and the
pattern of false claims engaged in by Respondent Vo were part of a conspiracy
to defraud Medi-Cal, of
which Respondent Vo was a participant. Findings 54-79.
109. The unlawful gains obtained by way of this conspiracy greatly exceeded
the amount claimed for the
items or services listed as counts 1-64 in the attachment to the Deputy Inspector
General's June 18, 1988
notice to Respondents. Findings 78-79.
110. Respondent Du was a participant with Respondent Vo in this conspiracy
to defraud Medi-Cal.
Findings 16, 60, 64, 66, 68, 80-83.
111. Respondents have not established any of the allegations made by them which
could be construed as
mitigating factors.
112. Respondents have not established that they were entrapped into presenting
the claims for items or
services listed as counts 1-64 in the attachment to the notice.
113. Respondents have not established that they were targets of a plan to single
out Vietnamese providers
for prosecution.
114. Respondents have not established that their actions were motivated by
sympathy for the relatives in
Vietnam of Vietnamese Medi-Cal patients.
115. Respondents have not established that the imposition against them of penalties
of $128,000.00 and
assessments of a $3,890.00, for a total of $131,890.00, will jeopardize their
ability to continue as health
care providers.
116. Penalties of $128,000.00 and assessments of $3,890.00 against Respondents,
jointly and severally,
are appropriate in this case.
ANALYSIS
1. Respondents presented, or caused to be presented, claims for items or services
which they
knew, had reason to know, or should have known were not provided as claimed.
Based on the evidence of record, I conclude that Respondent Vo presented, or
caused to be presented,
claims for 64 items or services that he knew, had reason to know, or should
have known were not provided
as claimed.
I conclude further, based on the principles of collateral estoppel contained
in 42 C.F.R. 1003.114(c), that
Respondent Du presented, or caused to be presented, claims for three items or
services that she knew were
not provided as claimed. I conclude that the I.G. did not prove that Respondent
Du knew that the items or
services listed as counts 4-64 in the attachment to the notice were not provided
as claimed. However, I
conclude that Respondent Du had reason to know or should have known that these
items or services were
not provided as claimed.
a. Respondent Vo.
The first element of proof which the I.G. must establish in order to prove
liability in a case brought
pursuant to the Act is that a respondent presented, or caused to be presented,
the claims for the items or
services at issue. 42 U.S.C. 1320a-7a(a); 42 C.F.R. 1003.102. Respondent Vo
caused the items or services
at issue to be presented. He prepared the medical records on which the claims
for the items or services
were based, and he personally signed the claim forms on which the items or services
were presented to
Medi-Cal. Findings 13-15; 29, 38, 49.
The next element of proof which the I.G. must establish is that the items or
services were not provided as
claimed. 42 U.S.C. 1320a-7(a)(1); 42 C.F.R. 1003.102. In this case there can
be no doubt that the 64
items or services at issue were not provided as claimed. This is so because
the patients to whom these
alleged items or services were purportedly rendered did not exist.
The evidence establishes that, in early 1983, the Fraud Bureau received complaints
that physicians,
including Respondent Vo, were writing prescriptions and making claims to Medi-Cal
for services provided
to patients who did not exist. Findings 17-18. Agents of the Fraud Bureau created
Medi-Cal cards for
nonexistent persons and engaged in three undercover operations with respect
to Respondent Vo. Findings
20, 24. All of the 64 claims for items or services at issue in this case were
purportedly rendered to the
nonexistent persons whose names and Medi-Cal identification numbers appeared
on these cards. Findings
29-30, 33, 38-41, 44, 50-51, 53. As there were no patients to whom services
could have been rendered,
there were no services. The "services" for which Respondent Vo presented
claims described in counts 1-64
were never provided to anyone and, therefore, were not provided as claimed.
The final element of proof which the I.G. must establish in proving liability
pursuant to the Act is that a
respondent bears requisite culpability for the claims at issue. The Act presently
provides that this test is
satisfied where it is shown that a respondent either knows, or should know,
that the items or services at
issue were not provided as claimed. 42 U.S.C. 1320a-7a(a)(1)(A).
Respondent Vo knew that the items or services at issue were not provided as
claimed. He admitted
orchestrating a scheme to steal from Medi-Cal. Finding 73. He admitted paying
drivers to bring Medi-Cal
cards without patients. Finding 74. He admitted knowingly presenting false claims
for services that he
never rendered. Findings 75-76. Respondent Vo admitted that his intent was to
cheat and defraud Medi-
Cal. Finding 77. He admitted stealing more than $25,000.00 from Medi-Cal. Finding
78. He admitted
that three of the items or services at issue in this case, listed in counts
1-3 of the attachment to the notice,
were falsely claimed in furtherance of his criminal scheme. Findings 71-72.
The other items or services at
issue in this case arose from the same undercover operations and transactions
that led to these admissions.
Findings 25-53. It is reasonable to infer that they are also part of Respondent
Vo's scheme to defraud
Medi-Cal.
Respondent Vo personally created the medical records upon which his Medi-Cal
claims were based.
Findings 13-14; see I.G. Ex. 6-2/333. Inasmuch as the claims at issue relate
to patients who do not exist,
Respondent Vo had to fabricate the records upon which the claims were based.
When Respondent Vo
fabricated these records, he had to have done so intending that false claims
would be predicated upon them.
There would have been no other reason for him to create false patient records.
Respondent Vo denies that he knew that the items or services at issue were
not provided as claimed or that
he ever intended to steal money from Medi-Cal. I.G. Ex. 6-1/312. He premises
his denials on his assertion
that he signed claims "weeks, or 20 days or one month after I saw the patient,"
thereby implying that by the
time he signed the claims he no longer remembered the items or services that
the claims represented. Id.
I conclude that this assertion is largely incredible. The record establishes
that many of the claims at issue
were presented on the same day or within a few days of the "treatments"
on which they were allegedly
based. I.G. Ex. 7-1-7-17. Several of the claims arising from the May 18, 1983
undercover operation were
presented within one week of that date. All except one of the claims arising
from the August 30, 1983
undercover operation were presented on that same day. I conclude that Respondent
Vo certainly
remembered fabricating treatment records for these claims when he signed the
claims.
Assuming, for argument's sake, that Respondent Vo could not remember whether
he had fabricated the
items or services presented in a given claim at the moment he signed the claim
form, he nevertheless knew
that he was presenting claims for items or services that were not provided as
claimed, including the items
or services at issue in this case. Respondent Vo deliberately falsified the
records on which claims were
based in furtherance of his scheme to defraud Medi-Cal. When he fabricated treatment
records, he knew
that, ultimately, false claims would be presented based on those false records.
He thus knew that he was
presenting claims for items or services that were not provided as claimed, and
he had specific knowledge
that false claims would be presented based on the fabricated records he created.
I conclude that this level
of knowledge suffices to satisfy the "knows" standard of 42 U.S.C.
1320a-7a(a), even if days or weeks
after falsifying the treatment records Respondent Vo no longer remembered which
record pertained to
which claim.
Respondent Vo had reason to know that the items or services at issue were not
provided as claimed. The
"reason to know" standard contained in the Act prior to December 22,
1987 created a duty on the part of a
provider to prevent the submission of false or improper claims where: (1) the
provider had 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) there existed pre-existing duties which
would require a provider to
verify the truth, accuracy, and completeness of claims. The Inspector General
v. George A. Kern, M.D.,
Docket No. C-25, decided August 26, 1987, at pp. 5-7; see The Inspector General
v. Frank P. Silver, M.D.,
Docket No. C-19, Decision and Order on Remand, decided July 2, 1987, at p. 24.
The "reason to know" standard is a less stringent standard for liability
under the Act than the "knows"
standard. In this case, evidence concerning Respondent Vo's activities and knowledge
satisfies both the
"reason to know" and the "knows" standards.
The evidence in this case satisfies both elements of the "reason to know"
test as applied to Respondent Vo.
Because Respondent Vo was generating the fabricated patient records on which
false claims were based, he
had sufficient information to place him on notice that the claims presented
for the items or services at issue
were for services not provided as claimed. Furthermore, Respondent Vo was under
a pre-existing duty to
verify the truth, accuracy, and completeness of the claims he signed, including
the claims presented for the
items or services at issue. By his own admission, he ignored this duty. I.G.
Ex. 6-2/312.
On each claim form that Respondent Vo signed, he certified that the information
contained on the form
was true, accurate, and complete and that he agreed to be bound by, and comply
with, the statements and
conditions on the back of the form. J. Ex. 3. The back of each claim form signed
by Respondent Vo
contained a statement under the heading "IMPORTANT" which provided
in relevant part that:
The services listed on this form have been personally provided to the patient
by the provider or,
under his direction, by another person eligible under the Medi-Cal Program to
provide such services, and
such person(s) are designated on this form. The services were, to the best of
the provider's knowledge,
medically indicated and necessary to the health of the patient. The provider
understands that payment of
this claim will be from Federal and/or State funds, and that any falsification,
or concealment of a material
fact, may be prosecuted under Federal and/or State laws.
J. Ex. 3.
Respondent Vo had a duty to investigate whether the facts represented on any
claim were true before
signing the form. Every form that he signed explicitly stated that obligation.
Respondent Vo represented
that he had complied with this duty every time he signed a claim form. However,
Respondent Vo asserted
that he signed these forms without recalling the patients whose services they
recorded or the treatments
claimed for reimbursement. I.G. Ex. 6-2/312.
Respondent Vo should have known that the items or services listed in counts
1-64 of the attachment to the
notice were not provided as claimed. The "should know" test for liability
encompasses a less stringent
standard than the "reason to know" test. See In the Matter of The
Inspector General v. Frank P. Silver,
M.D., Docket No. C-19, Opinion of Deputy Under Secretary, decided April 27,
1987. "Should know"
subsumes reckless disregard for the consequences of a person's acts. The test
also subsumes negligence in
preparing and submitting, or in supervising the preparing and submitting of,
claims. Mayers v. U.S. Dept.
of Health and Human Services, 806 F.2d 995 (11th Cir. 1986), cert. denied, U.S.
(1988).
If nothing else, Respondent Vo's conduct in signing claim forms constituted
reckless disregard for the truth
of the contents of those forms. I have not accepted as credible Respondent Vo's
testimony that he was
unaware of what he was signing. But assuming he was truthful on this point,
his testimony establishes that
he was signing claim forms without any regard for what those forms contained.
That amounts to reckless
conduct, which satisfies the "should know" standard.
b. Respondent Du.
Respondent Du admitted filing false claims with Medi-Cal, and the false claims
she admitted filing include
the three items or services specified in counts 1-3 of the attachment to the
notice. I conclude, based on
these admissions, and the terms of 42 C.F.R. 1003.114(c), that she presented
or caused to be presented the
items or services enumerated at counts 1-3 and that she knew that they were
not provided as claimed.
I conclude that Respondent Du presented, or caused to be presented, the claims
containing the items or
services included in counts 4-64 of the attachment to the notice. She was employed
in Respondent Vo's
office; her duties included double-checking claims for Medi-Cal reimbursement
before they were signed
by Respondent Vo and presented. Finding 16. She, therefore, directly participated
in the chain of events
which resulted in the presenting of these items or services.
The I.G. did not establish that Respondent Du knew that the items or services
enumerated in counts 4-64
were not provided as claimed. Although there is considerable evidence in this
case to establish that
Respondent Du was a co-conspirator in the scheme to defraud Medi-Cal, the record
does not establish that
Respondent Du assisted Respondent Vo in fabricating patient treatment records.
See Findings 54-68; 80-
85. Therefore, unlike Respondent Vo, there is no evidence which establishes
that she had direct knowledge
that particular claims were based on falsified records.
However, Respondent Du had reason to know that the items or services listed
in counts 4-64 of the
attachment to the notice were not provided as claimed. Respondent Du had sufficient
information to place
her on notice that she had presented claims for items or services, including
the items or services at issue in
this case, which were not provided as claimed. She abetted Respondent Vo's actions.
She was the recruiter
and the paymaster of the drivers. Findings 56-68. She encouraged drivers to
bring Medi-Cal cards to her,
without patients, for the obvious purpose of generating false Medi-Cal claims.
Id. The claims for the items
or services at issue in this case are the end result of Respondent Du's actions.
The evidence concerning
Respondent Du therefore satisfies the first element of the "reason to know"
test described supra.
Respondent Du should have known that the items or services listed in counts
4-64 were not provided as
claimed. Even if she did not know whether any particular claim was false, she
knew that many of them
had to be false. She was directly involved in preparing claims, including double-checking
claims for
accuracy. She manifested a reckless disregard for the truthfulness of the claims
she assisted in preparing.
2. A penalty of $128,000.00 and an assessment of $3,890.00 against Respondents,
jointly and
severally, is appropriate in this case.
The remedial purpose of the Act is to protect government financed health programs
from fraud and abuse
by providers. Mayers, supra, 806 F.2d at 997. The penalty and assessment provisions
of the Act are
designed to implement this remedial purpose in two ways. One is to enable the
government to recoup the
cost of bringing a respondent to justice and the financial loss to the government
resulting from the false
claims presented by that respondent. The other is to deter other providers from
engaging in the false claims
practices engaged in by a particular respondent. Id. at 999.
The Act and implementing regulations provide that a penalty of up to $2,000
and an assessment of not
more than twice the amount claimed may be imposed on a respondent for each item
or service which is
established as not having been provided as claimed. 42 U.S.C. 1320a-7a(a); 42
C.F.R. 1003.103-104. In
this case, the maximum penalties which I may impose against each Respondent
are $128,000.00, based on
the presentation for payment of 64 items or services which were not provided
as claimed. The maximum
assessments which I may impose are $3,890.00, based on total claims for $1,945.00
for the items or
services at issue in this case.
Regulations prescribe that, in determining the amount of a penalty and assessment,
I must consider as
guidelines factors which may either be mitigating or aggravating. 42 C.F.R.
1003.106. These include: (1)
the nature of the claim or request for payment and the circumstances under which
it was presented, (2) the
degree of culpability of the person submitting the claim or request for payment,
(3) the history of prior
offenses of the person submitting the claim or request for payment, (4) the
financial condition of the person
presenting the claim or request for payment, and (5) such other matters as justice
may require. 42 C.F.R.
1003.106(a).
The I.G. has the burden of proving the presence of aggravating factors. 42
C.F.R. 1003.114(a). A
respondent has the burden of proving the presence of mitigating factors. 42
C.F.R. 1003.114(c). The
regulations provide that, in cases where mitigating factors preponderate, the
penalty and assessment should
be set sufficiently below the maximum permitted by law. 42 C.F.R. 1003.106(c)(1).
The regulations also
provide that, in cases where aggravating factors preponderate, the penalty and
assessment should be set
close to the maximum permitted by law. 42 C.F.R. 1003.106(c)(2).
The Act has been interpreted to permit the imposition of a penalty and assessment
which exceeds the
amount actually reimbursed to a respondent for items or services not provided
as claimed. Chapman v.
U.S. Dept. of Health & Human Services, 821 F.2d 523 (10th Cir. 1987); Mayers,
supra, 806 F.2d at 999.
This reflects the legislative determination that activities in violation of
the act "result in damages in excess
of the actual amount disbursed by the government to the fraudulent claimant."
Mayers, supra, 806 F.2d at
999.
I have considered Respondents' conduct in light of the evidence and the Act's
remedial purpose and
regulatory criteria, and I conclude that the maximum penalty and assessment
permitted by the Act should
be imposed against each Respondent. The I.G. established many aggravating factors
with respect to each
Respondent. Neither Respondent established any mitigating factors.
a. Respondent Vo.
Respondent Vo presented or caused to be presented the items or services at
issue over a four month period,
a lengthy period of time. Finding 103. The 64 items or services which Respondent
Vo presented or caused
to be presented for payment which were not provided as claimed constitute a
substantial number of such
items or services. Finding 104. Respondent Vo claimed $1,945.00 as reimbursement
for the items or
services at issue, and this is a substantial amount. Finding 106.
These circumstances are aggravating factors as defined by regulation. 42 C.F.R.
1003.106(b)(1). The
presence of these factors alone would, absent proof of mitigation, justify my
imposing a substantial penalty
and assessment against Respondent Vo. However, there exist other aggravating
circumstances in this case
which are far more serious than those just cited.
The evidence establishes that the items or services at issue were but a small
part of a pattern of fraudulent
conduct perpetrated by Respondent Vo. Respondent Vo conspired to defraud Medi-Cal.
In order to effect
his plan, he enlisted the services of many individuals, including those of Respondent
Du. His scheme
consisted of a concerted and, for a time, successful plan to deceive Medi-Cal's
intermediary into paying
Respondent Vo for falsified Medi-Cal services.
When considered in its entirety, the evidence in this case proves that Respondent
Vo engaged, over a long
period of time, in a well-organized, sophisticated, and massive theft from a
government-financed health
care program. Findings 73-79; 107-108. The scope and effect of this conspiracy
can, in some respects, be
measured by that to which Respondent Vo admitted. He admitted to stealing in
excess of $25,000.00 from
Medi-Cal and to being overpaid $85,598.00 by Medi-Cal. Findings 78-79. Moreover,
there is evidence
beyond Respondent Vo's admissions which suggests an even greater scope to the
conspiracy than that to
which he admitted. The drivers' notebooks, seized from Respondent Vo's office,
record transactions
spanning a 17-month period. Finding 57. Individuals identified as drivers admit
to supplying Respondents
with Medi-Cal cards during this period. Findings 59, 63, 67.
Respondent Vo, therefore, manifests a high degree of culpability, an aggravating
factor described in 42
C.F.R. 1003.106(b)(2). Furthermore, the items or services which are the subject
of this case are merely an
element in a pattern of unlawful conduct by this Respondent which comprises
his conspiracy to defraud
Medi-Cal. A similar pattern of unlawful conduct was found to be an aggravating
circumstance in the
Mayers case, and the court held that it amply justified the penalty and assessment
imposed on the
respondents in that case. 806 F.2d at 999.
Respondent Vo established no mitigating factors. He offered no evidence to
show that imposing against
him the penalties and assessments sought by the I.G. would jeopardize his ability
to continue as a health
care provider. See 42 C.F.R. 1003.106(b)(4). He did not rebut the I.G.'s case
concerning the nature of his
offense or the scope and pattern of his conduct.
Respondent Vo made several allegations concerning this case which, if proven,
might arguably constitute
mitigating factors. Respondent Vo alleged that he was singled out as part of
a campaign in California by
State government against Vietnamese providers, that he was entrapped into filing
the claims for the items
or services at issue, and that he presented, or caused to be presented, the
claims for the items or services at
issue because of his compassion for members of the Vietnamese community in California
and relatives in
Vietnam of members of this community.
Respondent Vo offered no credible evidence to substantiate these allegations.
His assertion that he was
singled out for investigation and prosecution by State authorities because of
his ethnic origin is premised
exclusively on the fact that undercover investigations were conducted at the
same time against several
Vietnamese providers. The logical explanation for this is that complaints had
been made against
Vietnamese providers, including Respondent Vo. Finding 17. It would have been
illogical for the Fraud
Bureau to target its investigation against parties other than the subjects of
the complaints.
There is no evidence that Respondent Vo was entrapped when he obtained false
Medi-Cal cards and
presented, or caused to be presented, claims for items or services that were
not provided as claimed. To the
contrary, the evidence establishes that Respondent Vo actively sought these
cards, acquired them, and
generated false claims based on them. Findings 73-79.
Respondent Vo's assertion that his claims activity was an offshoot of his compassion
for Vietnamese
refugees and their relatives in Vietnam is self-serving and not credible. Respondent
Vo's argument rests on
his uncorroborated testimony that he wrote prescriptions based on Medi-Cal cards
provided to him so that
Vietnamese patients could purchase prescription medicines to send to their relatives
in Vietnam. I.G. Ex.
6-2/313-314; see Rs.' Statement at 2, 4, 6. The argument is contradicted by
the admissions he made in
connection with his guilty plea to state criminal charges. Findings 73-79. Moreover,
there is no credible
evidence in this case to show that, even if Respondent Vo wrote the fraudulent
prescriptions out of
misguided compassion for his countrymen, he was required, as an adjunct to writing
prescriptions, to
fabricate Medi-Cal claims. This case is not about false prescriptions; it is
about false Medi-Cal claims, the
proceeds of which Respondent Vo used to his own benefit.
I conclude that the I.G. established Respondent Vo's conduct to have been costly
to the government.
Respondent Vo admitted that his unlawful conspiracy netted more than $25,000.00.
The cost to the
government of investigating the conspiracy and bringing cases against Respondent
Vo certainly greatly
exceeded the amount claimed in the items or services at issue in this case.
However, these costs are only a
pale indicator of the costs to the Medi-Cal program which resulted from the
provider fraud established in
this case. The real costs arising from this misconduct include the widespread
corruption which the
conspiracy generated, and the loss of scarce resources which otherwise might
have been used for legitimate
medical needs. Imposing the maximum penalties and assessments permitted by law
will serve to recoup
these costs. It will also send a message to other providers not to engage in
the kind of misconduct engaged
in by Respondent Vo.
b. Respondent Du
The evidence adduced by the I.G. in this case establishes Respondent Du to
be as culpable as her co-
conspirator, Respondent Vo. Respondent Du played a critical role in the conspiracy
to defraud Medi-Cal.
Without her involvement and her contribution, Respondent Vo's scheme to defraud
Medi-Cal would
certainly have been less successful.
As is noted above, Respondent Du's role in the conspiracy was to recruit drivers
and pay them for Medi-
Cal cards. Findings 54-68. Respondent Du was the drivers' primary point of contact
with the conspiracy.
She determined the fees the drivers were to receive for their services and maintained
written records of the
drivers' activities. I.G. Ex. 5/78. Respondent Du admitted her culpability as
a co-conspirator with
Respondent Vo in her guilty plea to state criminal charges. Findings 81-82.
The identical aggravating factors apply to Respondent Du as to Respondent Vo.
Respondent Du's
involvement in the conspiracy coincides with Respondent Vo's involvement. It
is reasonable to attribute to
Respondent Du, jointly with Respondent Vo, the effects of the conspiracy, including
the costs generated
thereby.
Respondent Du has not established the presence of mitigating factors in her
case. The same allegations
were filed on her behalf as were filed on behalf of Respondent Vo and, as with
Respondent Vo,
Respondent Du offered no evidence to substantiate these allegations.
I conclude that the identical considerations apply in determining appropriate
penalties and assessments
against Respondent Du as are applicable to Respondent Vo. As an integral member
of the conspiracy,
Respondent Du bears the same burden for the resulting costs to the government
as does Respondent Vo.
CONCLUSION
For the reasons set forth in this decision, I impose civil monetary penalties
of $128,000.00, and
assessments of $3,890.00, for a total of $131,890.00, against Respondents Vo
and Du, jointly and
severally.
_________________________
Steven T. Kessel
Administrative Law Judge