Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | |
Donald R. Kirks, M.D., |
DATE: April 26, 2001 |
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The
Inspector General
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Docket No.C-00-658
Decision No. CR765 |
DECISION | |
DECISION I conclude that Petitioner, Donald R. Kirks, M.D., is
subject to a five-year minimum mandatory period of exclusion from participation
in Medicare, Medicaid, and all other federally funded health care programs.
Therefore, I affirm the Inspector General's (I.G.'s) determination. BACKGROUND By letter dated April 28, 2000, Donald R. Kirks, M.D.,
(Petitioner) was notified by the I.G., United States Department of Health
and Human Services (HHS) that the I.G. had decided to exclude Petitioner
for a period of five years from participation in Medicare, Medicaid, and
all federally funded health care programs. The I.G. imposed this exclusion
pursuant to section 1128(a)(3) of the Social Security Act (Act), 42 U.S.C.
� 1320a-7(a)(3), based on Petitioner's conviction of a criminal offense
or other financial misconduct in connection with the delivery of a health
care item or service or any act or omission in a health care program operated
or financed in whole or in part by any federal, State, or local government
agency. Petitioner filed a timely request for review of the I.G.'s
action. The Petitioner initially requested an in-person hearing, but later
both parties agreed that the case could be decided based on written arguments
and documentary evidence, and that an in-person evidentiary hearing was
unnecessary. Because I have determined that there are no facts of significance
genuinely in dispute, and that the only matters to be decided are the
legal implications of the undisputed facts, I have decided the case on
the basis of the parties ' written submissions. The parties submitted written briefs and proposed exhibits.
The I.G. filed five proposed exhibits. I have identified these exhibits
as I.G. Exhibits (I.G. Exs.) 1-5. Petitioner filed 45 proposed exhibits
(32 exhibits numbered 1-32 and 13 exhibits lettered A-M). I have identified
these exhibits as Petitioner Exhibits (P. Exs.) 1-32 and P. Exs. A-M.
The parties did not object to each other's proposed exhibits. I am admitting
into evidence I.G. Exs. 1-5, P. Exs. 1-32, and P. Exs. A-M. APPLICABLE LAW
Section 1128(c)(3)(B) of the Act provides that an exclusion
imposed under section 1128(a)(3) of the Act shall be for a minimum period
of not less than five years. PETITIONER'S ARGUMENTS Petitioner argues that the offense itself was not related
to the delivery of a health care item or service and that the offense
did not constitute an act or omission in a program operated by or financed
in whole or in part by any federal, State, or local government. Further,
Petitioner contends that his exclusion is not mandatory under the regulations.
Finally, Petitioner argues that the judge in his criminal case concluded
that his conviction was not related to the delivery of medical services,
and that the judge's determination in that case is binding on the I.G.
here. FINDINGS OF FACT AND CONCLUSIONS
OF LAW I make findings of fact and conclusions of law to support
my decision in this case. I set forth each finding below as a separate
numbered paragraph. I discuss my findings in the discussion section below. 1. Petitioner is a doctor and during the period of time
relevant to this case was president of the Children's Hospital Radiology
Foundation (Foundation). The Foundation, which is affiliated with Children's
Hospital (Hospital) and Harvard Medical School, is a not-for-profit organization
specializing in radiology treatment and care of children. I.G. Ex 2. 2. As an employee of the Foundation, Petitioner was authorized
to use a charge card for the payment of travel expenses when traveling
on business for the Foundation or when traveling on behalf of the Foundation
at the invitation of a professional organization. I.G. Ex. 2. 3. Petitioner used the Foundation's charge card to charge
travel and lodging expenses when traveling at the request of other organizations,
and he would later submit vouchers for charged expenses to those organizations
and keep the reimbursements that he received without reimbursing the Foundation.
I.G. Ex. 2. 4. Petitioner used the Foundation's credit card for personal
travel and expenses, and then directed Foundation employees to use Foundation
monies to pay for those charged expenses. I.G. Ex. 2. 5. Petitioner purchased professional hockey tickets with
Foundation funds, sold the tickets, and kept the proceeds for himself.
I.G. Ex. 2. 6. On June 7, 1999, pursuant to a guilty plea, Petitioner
was convicted in U.S. District Court for Massachusetts of one count of
Embezzlement from Medical Practice, in violation of Title 18 U.S.C. �
669. I.G. Ex. 3. 7. Petitioner defrauded the Foundation of more than $72,000.
I.G. Exs. 2, 5. (In a separate settlement agreement Petitioner was required
to repay the Foundation in excess of $500,000 for improper payments he
received.) I.G. Ex. 5; P. Ex. 29. 8. As a result of his conviction, Petitioner was sentenced
to two years of probation and fined $10, 000. I.G. Exs. 4, 5. 9. On April 28, 2000, Petitioner was notified by the I.G.
that he was being excluded from participation in the Medicare and Medicaid
programs for a period of five years, pursuant to sections 1128(a)(3) and
1128(c)(3)(B) of the Act. 10. Under section 1128(a)(3) of the Act, the I.G. is authorized
to exclude any individual or entity that has been convicted of a criminal
offense occurring after August 21, 1996, consisting of a felony relating
to fraud, theft, embezzlement, breach of fiduciary responsibility, or
other financial misconduct in connection with the delivery of a health
care item or service or with respect to any act or omission in a health
care program operated by or financed in whole or in part by any Federal,
State or local government agency. 11. Section 1128(c)(3)(B) of the Act provides that an
exclusion imposed under section 1128(a)(3) of the Act shall be for a minimum
period of not less than five years. 12. Petitioner's criminal conviction constitutes a conviction
within the scope of section 1128(i)(3) of the Act. 13. Petitioner's conviction for Embezzlement from Medical
Practice is related to fraud, theft, embezzlement, breach of fiduciary
responsibility or other financial misconduct within the scope of section
1128(a)(3) of the Act. 14. Petitioner's criminal conviction is connected to the
delivery of a health care item or service within the meaning of section
1128(a)(3) of the Act. 15. Petitioner's offense was an act or omission in a health
care program operated by or financed in whole or in part by a federal,
State, or local government agency within the meaning of section 1128(a)(3)
of the Act. 16. The I.G. is authorized to exclude Petitioner pursuant
to section 1128(a)(3) of the Act. 17. A finding in a criminal case is not binding on the
I.G. when that finding is contrary to the applicable statute that the
I.G. is authorized to enforce. DISCUSSION Portions of section 1128 of the Act were amended by the
enactment of the Health Insurance Portability and Accountability Act (HIPAA)
of 1996, Public Law No. 104-131. One of those changes was the addition
of section 1128(a)(3). Section 1128(a)(3) was essentially recodified from
the old section 1128(b)(1), which existed prior to the passing of HIPAA,
and the section was moved from the permissive exclusions to the mandatory
exclusions. So that, currently, section 1128(a)(1) and section 1128(a)(3)
are parallel provisions in that they use the same "related to the delivery
of an item or service" language. However, section 1128(a)(3) goes beyond
section 1128(a)(1) in that section 1128(a)(3) requires an exclusion when
misconduct involves the delivery of a health care item or service or any
act or omission in any health care program, not only when the item or
service or act or omission is within the Medicare or Medicaid program.
Thus, consideration of prior section 1128(b)(1) and section 1128(a)(1)
cases are instructive when a section 1128(a)(3) exclusion is at issue. Petitioner does not dispute that he was "convicted" of
a criminal offense within the meaning of sections 1128(i) (1) and (2)
of the Act. Petitioner's conviction was for one of the enumerated criminal
offenses, i.e., embezzlement, and thus expressly covered by section 1128(a)
(3). However, Petitioner argues that his conviction does not fall within
section 1128(a)(3) of the Act because it is too attenuated and remote
from actual health care delivery and that his financial wrongdoing was
completely unrelated to the clinical care he provided. The determination of whether Petitioner's conviction fits
within section 1128(a) (3) requires an examination of: (1) the criminal
offense for which Petitioner was convicted; and (2) the actions which
formed the basis for the conviction. See Charles W. Wheeler
and Joan K. Todd, DAB No.1123 (1990); Francis Craven, DAB CR143
(1991). The regulations and case law indicate that there is no
requirement that Petitioner's crime involve the direct or immediate manipulation
of items or services. The regulations clearly contemplate that offenses
involving administrative and management services may satisfy the statutory
requirement. See 42 C.F.R. � 1001.201(a)(1). See also
Sabina E. Acquah, DAB CR480 (1997). Indeed, in Frank Haney,
DAB CR181 (1990), the administrative law judge found that even false entries
in a hospital's accounting records are deemed to be "in connection with
the delivery of a health care item or service." Here, Petitioner stole money from a Foundation that provides
treatment and care to patients. The Foundation is an organization in the
business of providing health care items and services, and Petitioner embezzled
money from the Foundation. These facts alone are sufficient to establish
the necessary connection between Petitioner's criminal offense and the
delivery of health care items or services. Further, Petitioner argues that he did not defraud the
federal government or any other state or local program. Petitioner contends
that he did not take money that was intended for health care, and that
the money came from departmental academic funds. Petitioner's arguments
are unpersuasive for two reasons. First, it is not necessary for the I.G. to prove that
Petitioner's criminal offense is connected to the Medicare and Medicaid
programs for an exclusion to be proper pursuant to section 1128(a)(3)
of the Act because fraud of any type is sufficient to satisfy the statute.
Indeed, Congress believed that the Medicaid and Medicare programs could
best be protected by excluding those convicted of financial misconduct
in delivering health care to patients not covered by government programs.
See S. Rep. No. 109, 100th Cong., 1st Sess. 7. Congress believed
that those who cheat private health care payors cannot be trusted to deal
honestly with public health care payors. Therefore, it is irrelevant under
section 1128(a)(3) whether or not a federal or state program suffered
any pecuniary loss. Next, Petitioner's criminal conduct affected the Foundation's
ability to deliver health services by depriving the Foundation of funds.
Criminal acts directed at a health care provider's administration or financial
management will necessarily be indirect but, nevertheless, have an effect
on the provision of care, thus meeting the requirements of the Act. Moreover,
while I do not necessarily accept Petitioner's characterization of the
origin of the embezzled funds, it is disingenuous of Petitioner to argue
that it would not make a difference, since it is undisputed that the embezzled
monies were Foundation funds and would, by the very nature of reducing
available funds for the Foundation's use, affect the Foundation's overall
operation. Further, Petitioner argues that the Foundation does not
receive federal or state funds, and that the Foundation is operated independently
of the Hospital. Petitioner maintains that the Foundation and the Hospital
are completely distinct corporations, with distinct programs and funding
systems and, therefore, the Foundation is not financed in whole or in
part by any federal, state, or local government agency. I disagree. A review of the operating procedures and transactions
between the Foundation and the Hospital reveal that the Foundation does
in fact receive federal funds. The Foundation's Financial Statements and
Independent Auditors' Report (audit report) for the year ended June 30,
1996, provides, in relevant part:
P. Ex. 26 at 12; see also P. Ex. 23 at 2. Not only is the Hospital a billing service for the Foundation,
but it is clear from the audit report submitted by Petitioner that the
Foundation is an integral component of the Hospital's infrastructure.(1)
All members of the Foundation staff must have medical staff appointments
at the Hospital and the Hospital bills, in the Hospital's name, for all
professional services rendered by the Foundation based on the Hospital's
fee schedule. Thereafter, when the Hospital receives the payments for
the rendered services, the Hospital pays the Foundation a percentage of
the collected fees. Petitioner has never argued that the Hospital does
not bill for and receive Medicare and Medicaid payments.(2)
Consequently, I find that an interrelated relationship exists between
the Hospital and the Foundation so that federal and state funds received
by the Hospital are also tantamount to being received by the Foundation.
Therefore, I find that the Foundation is financed in whole or in part
by a federal, state, or local government agency. Additionally, Petitioner argues that exclusion is not
mandatory because: (1) the I.G. should have used its discretionary authority
to reduce the period of the exclusion; (2) section 1128(a)(3), closely
mirrors the former section 1128(b)(1), therefore the discretionary exclusion
authority is applicable; (3) the I.G. should have considered numerous
mitigating factors in deciding to exclude petitioner. Prior to the enactment of HIPAA on August 21, 1996, section 1320a-7(b)(1) (section 1128(b)(1)) provided for permissive exclusion for those convicted of nonprogram related crimes. However, when Congress enacted HIPAA it made the provisions governing nonprogram related criminal offenses more stringent by moving such offenses to the mandatory exclusion subsection of 1128(a). Thus, under section 1128(a)(3) the exclusion must be mandatory. Moreover, section 1128(c)(3)(B) provides that:
Neither the I.G. nor an administrative law judge has the
authority to reduce the five-year minimum exclusion mandated by sections
1128(a)(3) and 1128(c)(3) of the Act.(3) Finally, Petitioner argues that the judge in his criminal
case determined that his conviction was not related to the delivery of
medical services. The presiding United States District Judge in the criminal
case stated on the record that, "[t]he conduct for which the defendant
stands convicted is not related to the delivery of medical services."
P. Ex. F. Petitioner argues that this statement on the record by the judge
in the criminal case amounts to a finding of fact and is therefore binding
on an administrative law judge. I disagree. The Act requires a de novo review of the appeal. Section
205(b) of the Act. I am required to make findings of fact and conclusions
of law based on the record before me. In addition, I am bound by all applicable
statutory and regulatory authority. Thus, I am not obligated to accept
as fact the criminal court judge's statement.(4)
Similarly, the assigned Assistant United States Attorney's stipulation
that Petitioner's conduct was not related to the delivery of a health
care item or service, is also not binding for the same reasons as stated
above.(5)
Sections 1128(a)(3) and 1128(c)(3)(B) mandate that Petitioner be excluded from Medicare and Medicaid for a period of at least five years because he has been convicted of a criminal offense in connection with the delivery of a health care item or service with or respect to an act or omission in a health care program operated by or financed in whole or in part by any federal, state, or local government agency. Therefore, the five-year exclusion is sustained. |
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JUDGE | |
Marion T. Silva Chief Administrative Law Judge
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FOOTNOTES | |
1. While it is not necessary to determine the exact relationship between the Hospital and the Foundation, except to determine that one exists, it would be reasonable to conclude that an employer/employee relationship exists between them and that what is attributable to the Hospital as the employer is therefore attributable to the Foundation as an employee. 2. Since the evidence shows that the Hospital is a tax-exempt, publicly supported charitable and educational institution, Petitioner could not make such an argument. See P. Ex. 23 at 1. 3. Petitioner asserts, among other things, an extraordinary lifetime record of service, commitment to pediatric radiology, and expressed genuine remorse as mitigating factors. Regardless of any of the factors cited by Petitioner, I am without authority to reduce the mandatory minimum exclusion. 4. Since this decision is adverse to Petitioner, if he decides to ultimately appeal the case to the federal courts, I would of course be bound by the federal judicial review authority. 5. Moreover, I note that these statements were made at the request of Petitioner's attorney in that case. P. Ex. F. Such request by Petitioner's attorney suggests to me, at the very least, that he was aware of the statutory consequences of a health care related offense and was attempting to avoid them for his client. | |