Timothy L. Stern, M.D., DAB No. 1396 (1993)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Appellate Division

In the Case of:    
The Inspector General     
- v. -       
Timothy L. Stern, M.D.,   
Respondent.        

DATE: March 16, 1993
Docket No. C-92-081
Decision No. 1396

               FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE
       DECISION ON REMAND

Timothy L. Stern, M.D. (Respondent) appealed the August 21, 1992
Decision by Administrative Law Judge (ALJ) Charles E. Stratton on remand
from the Departmental Appeals Board's decision in Timothy L. Stern,
M.D., DAB 1314 (1992).  See Timothy L. Stern, M.D., DAB CR228 (1992)
(Remand Decision).

In DAB 1314, the Board upheld the ALJ's multiple findings of liability
against Respondent under section 1128A of the Social Security Act (Act)
but directed the ALJ on remand to reconsider the level of sanctions to
be imposed.  In his original decision, the ALJ determined that
Respondent had presented 688 claims to Medicare for services which he
knew, had reason to know, and should have known were not provided as
claimed.  See Timothy L. Stern, M.D., DAB CR154 (1991) (ALJ Decision).
Respondent had described his services on the claims as either a local
nerve block or an office visit when in fact he had provided
electro-acupuncture, a procedure that is not covered under the Medicare
program.  The Board in DAB 1314 upheld all of the ALJ's findings of
liability concerning the questioned claims (subject to a possible
adjustment for 14 claims).  The Board, however, concluded that in
determining the appropriate level of sanctions, the ALJ had erroneously
relied upon several mitigating factors.  We also concluded that the ALJ
had not properly substantiated the level of sanctions he imposed in
light of applicable statutory factors and regulatory guidelines.
Consequently, we remanded the appeal to the ALJ so that he could
reconsider the level of the sanctions, after first clarifying the status
of the 14 claims, in which the ALJ had found that some reimbursable
service had been provided.

In his Remand Decision, the ALJ made 27 new findings of fact and
conclusions of law (FFCLs) in addition to the 191 FFCLs in the ALJ
Decision. 1/  Of the 14 claims whose status was unclear, the ALJ found
that for one such claim a fully reimbursable service (aside from
electro-acupuncture) had been provided as claimed.  The ALJ therefore
reduced the number of claims subject to sanctions to 687.  The ALJ also
concluded that of the 13 remaining claims where reimbursable services
had been provided, six of the claims were not even at issue in these
proceedings and seven claims concerned services that were reimbursable
at a level lower than the service actually claimed.  The ALJ
nevertheless concluded that the seven claims involving a lower level
service could be viewed as a mitigating factor in this case.  The ALJ
also concluded, after reopening the record and considering new evidence
presented by Respondent, that Respondent's financial resources were
substantial and did not require a reduction in the sanctions but that
justice required the ALJ to consider Respondent's rehabilitation from
drug abuse as mitigating.

After weighing all of the relevant statutory factors and regulatory
guidelines (including those previously identified in the ALJ Decision),
the ALJ then determined on remand that Respondent should receive an
assessment of $70,648, penalties of $345,000, and an exclusion from
participation in the Medicare and State health care programs of 10
years. The combined assessment and penalties were substantially higher
than the assessment and penalties the ALJ had imposed in his Decision
but were less than the approximately $500,000 in combined assessment and
penalties originally proposed by the I.G.  The ALJ specifically pointed
to the Board's conclusion in DAB 1314 relating to the absence of proven
mitigating factors as a major cause for his substantial increase in the
sanctions.

On appeal of the Remand Decision, the parties' arguments raise four
broad issues:

o  whether the sanctions computed on remand bear a reasonable
relationship to the government's damages;

o  whether the ALJ gave sufficient weight to alleged mitigating factors
in computing the sanctions;

o  whether the Board need consider further exceptions which were
considered in DAB 1314 (and which were not considered further on remand)
and whether the Board need consider further any exception over which the
Board had previously declined review;

o  whether the ALJ exceeded the scope of the remand by reopening the
record and admitting new evidence on Respondent's financial condition
and other alleged mitigating factors.

After first summarizing our decision, we address in detail each of the
parties' arguments relating to these broad issues.

                 SUMMARY OF OUR DECISION

We here affirm in full the amount of assessment, penalties, and
exclusion imposed by the ALJ on remand.  We conclude that the sanctions
were fully consistent with the applicable statutory factors and
regulatory guidelines.  Contrary to what Respondent argued, there was a
reasonable, indeed direct, relationship between the amount of the
assessment and penalties imposed and the damages incurred by the
government.  The combined amount of assessment and penalties (equalling
$415,648) was only slightly higher than the regulatory guidelines'
minimum of twice the approximate damages suffered by the government.
Moreover, even though there were substantial and several aggravating
circumstances, the combined amount of assessment and penalties was
substantially less than the statutory maximum of $1,374,000 in penalties
for 687 claims. Also, in applying the guidelines, the ALJ specifically
compared this case to other section 1128A cases and verified that the
sanctions imposed by him were  within the range of sanctions imposed in
those cases.

We further conclude that Respondent's exceptions relating to mitigating
factors lack merit, and that the absence of any mitigating factor would
indeed support the higher level of sanctions imposed in the Remand
Decision.  While we agree with the I.G. that the ALJ exceeded the scope
of our remand (and we modify the FFCLs on remand accordingly), the I.G.
did not propose that we augment the sanctions further and we do not do
so.

In sum, notwithstanding the fact that the ALJ departed substantially
from our remand instructions in DAB 1314, his overall determination as
to the level of sanctions that are appropriate here was sound.  We
conclude the record fully supports an assessment, penalties and an
exclusion at the levels determined in the Remand Decision.

                        ANALYSIS

The "Civil Monetary Penalties Law" (CMPL) is contained in section 1128A
of the Act. Section 1128A(a) provides for a civil money "penalty" of not
more than $2,000 for each item or service that a "person" "knows" or
"should know" was not provided as claimed. 2/ It further provides for an
assessment of not more than twice the amount claimed for each item or
service and authorizes the person's exclusion from participation in the
Medicare and State health care programs. 3/

Section 1128A(d) directs the Secretary to take the following into
account in determining the appropriate sanctions:

     1)   the nature of the claims and the circumstances under which
     they were presented, 2)   the degree of culpability, history of
     prior offenses, and financial condition of person presenting the
claims, and 3)   such other matters as justice may require.

The regulations at 42 C.F.R. . 1003.106(b) provide guidelines for taking
into account the statutory factors. 4/  These guidelines describe
circumstances in connection with these factors which may be mitigating
or aggravating.  The regulations provide that if there are "substantial
or several" aggravating circumstances, the aggregate amount of the
assessment and penalties should be set at an amount sufficiently close
to or at the maximum permitted.  42 C.F.R. . 1003.106(c)(2).  The
regulations further provide that the assessment and penalties should
never be less than double the approximate amount of the damages
sustained by the government, unless there are extraordinary mitigating
circumstances.  42 C.F.R. . 1003.106(c)(3).

A.  The assessment and penalties imposed in the Remand Decision bore a
reasonable relationship to the damages incurred by the government.

In his appeal of the Remand Decision, Respondent's central argument was
that there was no reasonable relationship between the assessment and
penalties imposed by the ALJ and the damages incurred by the government.
5/  Respondent insisted that the government had incurred actual damages
of only $9,000 -- the approximate value of payments that had actually
been made by the Medicare program on the 687 claims that he submitted.
Respondent argued that the imposition of $70,648 in assessment and
$345,000 in penalties was grossly disproportionate to the damages
suffered by the government.  Respondent contended that the ALJ's
conclusion that the actual amount of damages incurred by the government
should be augmented by doubling the costs of the investigation and
prosecution of Respondent was irrational and unsupported by the CMPL.
Respondent argued that the I.G.'s statements about the amount of damages
the government incurred were unreliable and should be stricken from the
record because they were unsworn.

Before we address Respondent's specific arguments concerning the
relationship of the government's damages to the assessment and
penalties, we emphasize that in setting the assessment and penalties,
the ALJ properly examined each of the statutory factors and the
corresponding regulatory guidelines in arriving at his determination of
the amount of assessment and penalties.   Thus, while the ALJ expressly
stated that the damages to the government were a significant factor, he
found from his assessment of all of the factors that there were several
aggravating circumstances, some of which should be given "great" weight.
6/  Moreover, section 1128A(d) provides for a penalty of up to $2,000
for each of the 687 claims at issue.  The regulation at 42 C.F.R. .
1003.106(c)(2) provides that if there are substantial or several
aggravating circumstances, the aggregate amount of the assessment and
penalties should be set at an amount sufficiently close to or at the
maximum permitted.  Here, that maximum would have been $1,374,000, so
that the combined amount imposed of $415,648 is considerably lower than
the maximum, even though there were substantial and several aggravating
circumstances.

Moreover, as the ALJ stated, the damages to the government here were
significant and clearly should have a bearing on the level of the
assessment and penalties.  Section 1003.106(c)(3) provides that unless
there are "extraordinary mitigating circumstances," the aggregate amount
of the assessment and penalties should never be less than double the
"approximate" amount of the damages sustained by the United States. 7/
Here the ALJ found that the United States had $9,000 in damages based on
what it paid out on the claims at issue and $165,000 in costs for
investigating and prosecuting Respondent. Early in the initial
proceedings before the ALJ, the ALJ had ordered the I.G. to provide a
statement of its costs.  In a submission dated July 17, 1990, the I.G.
stated that his office had incurred 2,000 hours of investigative work
and 670 hours of legal work in developing the case against Respondent,
representing a cost to the government of approximately $165,000.  July
17, 1990 I.G.'s Statement of Costs.  Thus, the I.G.'s statement of costs
of investigating and prosecuting Respondent was placed in the record of
this appeal at the ALJ's direction, without any objection by Respondent.
8/

Respondent challenged this statement for the first time on appeal from
the Remand Decision, arguing that it was not based on sworn affidavits
or testimony and therefore was not evidence.  However, Respondent never
raised the issue of the reliability and accuracy of the I.G.'s statement
of costs when the statement was submitted, when it was discussed at the
hearing, when it was discussed in subsequent written submissions, or
indeed during the proceedings on remand.

We conclude that Respondent's objection should have been raised during
proceedings before the ALJ and that his objection now is untimely.  The
ALJ needs to resolve all issues relating to the evidentiary record
before proceeding to decision.  Our guidelines provide that we will not
consider exceptions which could have been presented to the ALJ but were
not.  See Guidelines, App. A, Section 4, at 26.  This limitation on the
scope of our review is now incorporated in the regulations at 42 C.F.R.
. 1005.21(e). The limitation is particularly important for evidentiary
issues, which potentially would require the Board to remand the appeal
to the ALJ or at the very least to reopen the record and make new
factual findings based on a consideration of additional evidence. We
therefore conclude that Respondent is precluded from raising here the
issue of the reliability of the I.G.'s statement of costs. 9/

In any event, we consider the I.G.'s statement to be a reliable
demonstration of the government's "approximate" damages. 10/  Although
Respondent challenged the accuracy of the statement generally, he
proffered no specific reason why he believed the damages would have been
overstated.  Nothing on the face of the statement suggests that the
damages were in fact overstated.  These calculations, which appear to be
reasonable on their face, were exclusive of indirect costs such as
travel expenses and clerical support. Thus, we conclude that the
$165,000 figure, which represents only $240 for each of the 687 claims
at issue, reliably presents a conservative estimate of the government's
damages.

We further conclude that there was a reasonable, indeed direct,
relationship between the assessment and penalties imposed here and the
damages to the government.  The guidelines explicitly state that the
assessment and penalties should never be less than double the
approximate amount of damages sustained by the government.  The total
damages to the government were at a minimum:  $9,000 in payments on 687
separate claims totaling $42,875, and $165,000 in costs for
investigation and initial prosecution of these claims for a total of
$174,000.  Thus, the ALJ's determination of assessment of $70,648 and
penalties of $345,000 is quite reasonable in that it exceeds by only
$68,000 the guideline's minimum of double the government's approximate
damages.

Respondent is clearly incorrect in arguing that the government's damages
must be limited to the $9,000 that the government actually paid out on
the $42,875 in claims at issue.  The case law fully supports an
interpretation of "damages" that includes all reasonable proximate
damages.  "It is well settled that the Congress need not limit itself to
the amount of actual damages in calculating a civil penalty or
assessment."  Chapman v. U.S. Dept. of Health and Human Services, 821
F.2d 523, 529 (10th Cir. 1987).  "The purpose behind the CMPL is to make
the government whole for monies paid on fraudulent submissions and the
cost of investigating such fraudulent submissions." Bernstein v.
Sullivan, 914 F.2d 1395, 1397 (10th Cir. 1990).

Indeed, it would be unreasonable to limit the damages of the government
to the amount of the claims actually honored ($9,000) when the claims
put the Medicare program directly at risk of losing approximately
$42,875 and when the government had to expend $165,000 in identifiable
costs in the investigation and initial prosecution of an extensive
number of questioned claims.  The ALJ also found indirect damages
related to the claims in that Respondent's illegal and improper
activities damaged the integrity and reputation of the Medicare program
and caused harm to Medicare beneficiaries by misleading them.  The ALJ
labelled these indirect damages "significant."   Remand Decision at 18.
Even though the ALJ did not assign a monetary value to these indirect
damages, they further justified assessment and penalties in excess of
the approximate amount of the government's damages.

Finally, we find that the amounts of the assessment and penalties
imposed by the ALJ on Respondent were reasonable in light of the
sanctions imposed in other cases.  See, e.g., Mayers (receipt of $24,698
from Medicare for false claims warranted penalties of $1,791,000);
Chapman (receipt of $21,115 in overpayments warranted assessment and
penalties of $156,318).

Accordingly, we conclude that the assessment and penalties as determined
in the Remand Decision bore a reasonable relationship to the damages
incurred by the government.  Although the ALJ concluded on remand that
the government's damages should be given great weight in computing the
assessment and penalties, he failed to include any FFCL concerning the
amount of damages here and their overall weight in the computation.  We
have therefore added the following new FFCL 197:

     The statute, regulations, and case law indicate that the
     approximate amount of damages to the government should be given
great weight in determining the appropriate amount of assessment and
penalties.  The government's approximate damages in this case total
$174,000, including $165,000 in costs of investigating and initially
prosecuting Respondent.  July 17, 1990 I.G.'s Statement of Costs.

B.  Respondent's arguments on his financial condition and other alleged
mitigating circumstances lack merit.

Respondent also raised numerous arguments concerning the weight to be
given his financial condition and other alleged mitigating factors in
computing the sanctions.  We address his arguments concerning each
mitigating factor separately below.

1.  Respondent's financial condition

Respondent argued that his financial condition should have been
considered a mitigating factor and that the ALJ did not give proper
weight to his financial condition in determining the amount of the
sanctions.  As we conclude in section D below, the ALJ exceeded the
scope of our remand when he reopened the record and permitted new
evidence on Respondent's financial condition.  We have therefore
modified (and consolidated) the FFCLs on financial condition to reflect
the evidence in the record prior to our remand order.  The substance of
our new FFCL (FFCL 189), however, remains generally the same as the
FFCLs in the Remand Decision except that we delete any reference to the
amount of Respondent's net worth because the record does not permit a
conclusive finding in that respect.  Thus, we conclude, consistent with
the ALJ's remand findings, that Respondent's financial resources were
substantial and do not provide a basis to reduce the assessment and
penalties imposed.

In arguing that his financial condition requires a substantial reduction
in the assessment and penalties, Respondent overlooked the effect of the
other statutory factors and corresponding regulatory guidelines that
must be considered jointly along with his financial condition.  We have
considered these factors in detail above and they clearly support
setting the assessment and penalties at the level imposed by the ALJ on
remand. Moreover, there is no basis in the regulations or the case law
to conclude that the assessment and penalties must be limited by the
individual's net worth at any given point in time.  As the I.G. argued,
the sanctions here serve multiple purposes, including deterrent
purposes, and Respondent might reasonably be expected to pay the
sanction based on future earnings if his net worth did not permit
immediate payment in full. 11/ Even after the ALJ erred by reopening the
record and permitting Respondent to submit additional evidence to show
that his financial resources were not substantial, the ALJ nevertheless
found that Respondent's resources were substantial. 12/  The ALJ also
concluded that the assessment and penalties he imposed on remand were
not "punitive or counterproductive to Respondent's rehabilitation."
Remand Decision at 22-23.

Moreover, because of Respondent's own failure to cooperate fully in the
discovery request on his financial condition during the initial
proceedings before the ALJ, it is not possible to make a definitive
finding on his net worth (other than that his net worth was
"substantial").  The evidence of record on his exact financial condition
is inconclusive and conflicting.  Thus, even if we had been inclined to
limit the sanction based on Respondent's specific net worth, we would be
unable to do so.  Ultimately, in determining the appropriate sanctions,
the ALJ did not have to rely on Respondent's financial condition very
heavily because, as we discussed previously, there were other factors
which justified the amount of assessment and penalties imposed.  2.
Respondent's drug addiction

Respondent also argued that the ALJ on remand improperly ignored his
drug addiction as a mitigating circumstance.  The ALJ, however, properly
ignored this factor on remand because we had expressly concluded in DAB
1314 that there was insufficient evidentiary and legal basis on which to
view drug addiction as a mitigating circumstance in this case. DAB 1314,
at 23-25.  We concluded specifically that there was absolutely no
evidence in the record that would demonstrate that when Respondent filed
the claims at issue, his drug addiction actually clouded his judgment
and somehow diminished his culpability for filing the claims.  Moreover,
the ALJ had specifically found in his Decision that Respondent had the
requisite mental state required by statute when he filed the 687 claims
at issue.  We affirmed those findings, concluding that the very nature
of the timing of his claims and the terms used in his claims showed a
"clear, purposeful judgment" on his part.  Id. at 24.  The claims were
687 in number, were submitted over a period of several years and were
submitted as part of a specific pattern, all aggravating circumstances
which undercut the possibility Respondent operated with diminished
mental judgment because of drug addiction.  The ALJ also found that
Respondent had assured his patients that his services would be
reimbursed by Medicare, thereby inducing them to undergo treatments when
he knew, should have known, and had reason to know that the services
were not reimbursable.  FFCL 178 (Remand FFCL 13).

Thus, we reiterate here that the record lacked substantial evidence in
support of a finding that Respondent's judgment was clouded by drug
addiction when he submitted any of the claims at issue.

We also conclude that there is no legal authority for relying on drug
addiction as a mitigating factor in these circumstances and that such
reliance could frustrate the general deterrent goals of the CMPL.  As we
previously stated:

     An unsubstantiated finding that drug addiction is a mitigating
     factor (with no specific showing on how it affected culpability)
would send the wrong message to the provider community.  Providers of
Medicare services should not be permitted to explain away fraudulent
billings with generalized excuses of drug addition or other substance
abuse.

DAB 1314, at 25.

We again reject Respondent's position that he should have further
opportunity for additional testimony on this issue since he clearly had
an adequate opportunity to develop this issue during the initial
proceedings before the ALJ.  Id.

Accordingly, we reaffirm our prior conclusion that Respondent's drug
addiction was not properly considered to be mitigating.

3.  Respondent's provision of reimbursable services

On appeal, Respondent argued that his provision of services other than
electro-acupuncture should serve as a total defense to the charge that
his services were not provided as claimed or should at least have a
broader effect as a mitigating factor. We conclude that there is
insufficient evidentiary basis in the record to support a finding that
the provision of other services may be a total defense for any of the
remaining 687 questioned claims.  We also conclude that the provision in
seven claims of services that were reimbursable at a lower level than
the service claimed may not serve as a mitigating factor.

In spite of numerous references to other services in Respondent's
witnesses' testimony and in medical records kept by Respondent, the ALJ
initially concluded that a documented and medically necessary
reimbursable service (aside from electro-acupuncture) had been provided
in only 14 of 688 questioned claims. 13/  In DAB 1314, the Board
directed the ALJ to determine whether in any instance the reimbursable
service in these 14 claims might serve as a total defense to the charge
that a service was not provided as claimed.  On remand, the ALJ found
that for one claim of the 14, Respondent had provided a service as
claimed.  The ALJ accordingly reduced the number of claims at issue from
688 to 687.

This single claim therefore is the only claim from among all the
remaining questioned claims (now numbering 687) where the provision of a
reimbursable service may serve as a total defense.  Respondent is
clearly mistaken that evidence in the record might support any further
reductions in the number of questioned claims.  It is irrelevant that
some evidence in the record may suggest that Respondent provided other
services if these services cannot first be associated with a specific
questioned claim and then documented to be medically necessary and to be
reimbursable at least at the level of the service claimed.  The passing
references to other services in the record are insufficient to document
that Respondent provided medically necessary and reimbursable services
at the level of service actually claimed in any other case. 14/

In clarifying the status of the remaining 13 of the 14 "other services"
claims, the ALJ revisited the issue of whether Respondent's provision of
a reimbursable service at a level lower than the service claimed may
serve as a mitigating factor.

In his Remand Decision the ALJ made the following FFCL:

     22.  Justice requires consideration, as a mitigating factor, that
     the I.G.'s expert concluded that a reimbursable service was
performed in seven of the 687 services remaining in issue, albeit at a
lower level than claimed.

The ALJ thus considered these seven claims a mitigating factor,
requiring a slight reduction (approximately one percent) in the
assessment and penalties determined by the I.G.  Remand Decision at
20-21. 15/  In making his finding, the ALJ noted that the Board had
found in DAB 1314 that a limited number of cases involving reimbursable
services (then thought to be 14) provided an insufficient legal and
evidentiary basis for mitigating the sanctions here.  DAB 1314, at 27.
To this the ALJ responded:

     I find it illogical to ignore the two percent [14 of the 688 claims
     at issue in DAB 1314].  Instead, fairness dictates that the
sanctions be mitigated by two percent, or whatever percentage is
appropriate by reason of the facts (in this case, seven services out of
687, or a little over one percent).

Remand Decision at 21, n. 17.

Thus, despite the Board's explicit holding that the provision of lower
level reimbursable services by Respondent was not a mitigating factor,
the ALJ persisted in finding that Respondent's provision of reimbursable
services in just seven cases, or in one percent of the claims he
submitted, was a mitigating factor.

We again conclude that these claims (now reduced to seven) may not serve
as a mitigating factor in this case.  The issue of liability posed by
section 1128A is whether the person provided a medical service as
claimed.  If the person provides a medical service that is reimbursable
at a lower level than the service claimed, that person has not provided
a service as claimed.  Thus, the basis for liability under the statute
does not lessen for these seven cases.  They still represent claims for
services that were not provided as claimed.  Presenting an "inflated"
claim can be potentially just as damaging to the Medicare program as
presenting a claim where no reimbursable service was provided at all.
Both instances equally involve program deception and both instances
place program funds at risk.  Indeed, the only basis for viewing these
particular inflated claims as mitigating here is by comparing them to
the more egregious 680 cases where this Respondent provided no
documented reimbursable service.  This is truly a backhanded way of
finding a mitigating factor.  We could just as easily conclude that the
circumstances surrounding the 680 cases (where claims were presented
without the provision of any documented reimbursable service) were
aggravating.  Finally, as we stated in DAB 1314, the record does not
demonstrate that the level of culpability on Respondent's part was any
less for these seven claims or even that he was aware of the "other"
services when he presented the claims. 16/

Accordingly, we delete Remand FFCL 22 (and modify FFCL 187, formerly
Remand FFCL 6, which referenced the seven claims).  The ALJ's one
percent reduction in the assessment and penalties on remand for the
seven "lower level" claims had the effect of eliminating any assessment
or penalty for those claims even though they were fully covered by
section 1128A of the Act.  We also modify as appropriate the FFCLs in
the ALJ Decision (FFCLs 19 and 98) that make reference to the provision
of "other" services to clarify that these services are not relevant to
the computation of the sanctions here since they were not documented to
be medically necessary and reimbursable under the program at the level
of service claimed.  See also FFCLs 77, 78, 80, 93, 94, 97, 112, 130,
132, 133, 134, and 136. 17/

C.  Respondent's other arguments lack merit.

Respondent repeated exceptions that he had previously made to the Board
in his appeal of the ALJ Decision and which were not considered further
on remand.  In DAB 1314, the Board considered all of those arguments and
rejected them.  These exceptions are not properly before us now and will
not be considered further.  Our review here is limited to those issues
actually considered by the ALJ in the Remand Decision.

Additionally, Respondent contended that the Board had failed to consider
in DAB 1314 various other exceptions  concerning constitutional and
other issues considered in motions he had made before the ALJ which the
ALJ had denied.  In its January 10, 1992 Acceptance of Review of the ALJ
Decision, the Board declined review of these exceptions (as well as of
exceptions raised by the I.G).  We informed the parties at that time
that we would not entertain further briefing on any exception over which
we had declined review.  Under our Guidelines, we have the discretion to
limit our review to particular exceptions raised by the parties.  See
Guidelines, App. A, Section 2(d) at 25. Our action declining review of
particular issues leaves as final the ALJ's treatment of those issues.
Therefore, we do not need to consider any such issue further here.

D.  The I.G.'s arguments on the limited scope of our remand order have
merit but do not require us to increase the sanctions imposed.

Having addressed all of Respondent's arguments above, we now address
arguments raised by the I.G. concerning the proper scope of the remand
proceedings.  As we explain below, we conclude that the ALJ did exceed
the scope of our remand order by reopening the record and by further
considering issues of alleged mitigating factors. Accordingly, we strike
the additional evidence from the record and make appropriate
modifications and deletions in the relevant FFCLs on remand (identified
below). However, the I.G. did not argue that we should increase the
sanctions further, and we do not do so.

In DAB 1314 the Board remanded the case to the ALJ "for the sole purpose
of reconsidering the sanctions to be imposed."  At 31 (emphasis in
original).  We did so because the ALJ had not substantiated how he had
determined the amount or scope of the sanctions he imposed in light of
express statutory factors and regulatory guidelines. Moreover, the Board
deleted all FFCLs on mitigating circumstances and directed the ALJ to
reflect the absence of any mitigating factors in his new determination
of sanctions.  We also directed the ALJ to clarify whether any of 14
claims where the record indicated "other services" had been provided
should be deleted from the number of claims that would justify
sanctions.  The ALJ necessarily would have had to make appropriate
adjustments in determining the sanctions if he in fact deleted any such
claims.  Summarizing its position, the Board stated:

     [I]n the context of this particular case, the ALJ would still have
     considerable discretion in determining the amount or scope of any
penalty, assessment or exclusion. For example, although the ALJ found
that the extensive number of false or improper claims filed by
Respondent over a lengthy period of time was an aggravating factor, he
might also consider whether the penalty amount should be substantially
lower than the maximum since these claims affected only 31 patients.
Likewise, the ALJ might consider whether Respondent's financial
condition would still have some bearing on the penalty amount even
though the ALJ had concluded that his financial condition was not proven
as a mitigating factor.

DAB 1314, at 30-31.

On remand, the ALJ decided, over the objection of the I.G., to reopen
the record and permit additional evidence on Respondent's financial
condition and on Respondent's rehabilitation from drug abuse.  The ALJ
accepted into the record an exhibit proffered sua sponte by Respondent
that included further evidence concerning Respondent's financial
condition.  R. Ex. 92-1.  The ALJ then conducted a telephone conference
with the parties and permitted evidentiary presentations from
Respondent's brother during that call concerning Respondent's financial
condition and his rehabilitation from drug abuse.  The ALJ then relied
upon the exhibit and evidentiary presentations as support for FFCLs in
his Remand Decision. 18/

The I.G. argued that the ALJ had exceeded the scope of the remand order
by reopening the record and considering these issues as mitigating.  The
I.G. specifically objected to four Remand FFCLs (19, 20, 21, and 23).
The I.G. argued that these FFCLs were unsupported by evidence in the
record that had closed prior to the remand. Additionally, the I.G.'s
objections logically covered Remand FFCLs 18 and 22.  FFCL 18 referenced
Respondent's Financial Statement, which was part of R. Ex. 92-1, and
thus necessarily becomes irrelevant if we strike R. Ex. 92-1.  FFCL 22
concerned Respondent's provision of other services that were
reimbursable at a level lower than the claimed service.  This issue had
been expressly resolved by DAB 1314, at 27-28, and from that perspective
was clearly outside the scope of the remand. 19/

We conclude that the ALJ's actions in reopening the record and in
revisiting the question of mitigating factors were outside the scope of
the remand order. 20/

The initial proceedings before the ALJ had been prolonged and extensive,
and the record had been specifically closed by the ALJ on June 27, 1991
before he proceeded to decision.  None of the reasons we gave for
remanding the decision required the ALJ to reopen the record or to
revisit any mitigating issues, and we did not direct the ALJ to do so in
our decision.  Indeed, we specifically modified an FFCL to say that
Respondent did not prove any mitigating factors he alleged.  This
modification provided a clear indication that all issues regarding
mitigating factors had been resolved.

Moreover, the issue of financial condition as a mitigating factor and
Respondent's rehabilitation from drug abuse were obvious factors for
Respondent to develop during the initial proceedings.  Respondent had
had extensive opportunities -- during the hearing and during the
briefing process -- to raise and substantiate his positions on those
issues.  Respondent has always had the burden of raising and
substantiating mitigating factors.  In fact, Respondent had not fully
cooperated during the initial proceedings in developing the evidence
concerning his financial condition.  The ALJ Decision stated:

     While Respondent produced some credible testimonial evidence
     pertaining to his current financial condition, the I.G. elicited
testimony from Respondent which casts doubt on his assertions.  Also,
Respondent declined to participate in the I.G.'s requests for discovery
of documentation concerning his finances.  Accordingly, there is no
basis in the record upon which to limit the sanctions proposed on
grounds of financial condition.

At 57.

Moreover, in his appeal of the ALJ Decision, Respondent did not take
exception to the ALJ's failure to address and rely on his rehabilitation
from drug abuse as mitigating. 21/ Finally, the issue of Respondent's
provision of other services was discussed at length and expressly
resolved in DAB 1314 (at 27-28).

Accordingly, we conclude that the ALJ exceeded the scope of the remand
by reopening the record and revisiting issues on mitigating factors.  We
strike any new evidence presented during the proceedings on remand.  We
modify or delete six FFCLs to reflect the issues and evidence on
mitigating factors in the record prior to our remand and the conclusions
in DAB 1314.  Specifically we make the following changes:

     o  We combine Remand FFCLs 18, 19, 20, and 21 into FFCL 189 which
     states: "Although Respondent did not participate in discovery
concerning his financial condition, the evidence he submitted into the
record indicates he possessed substantial financial resources.  I.G. Ex.
106, Tr. II/1603.  Consequently, his financial resources do not provide
a basis to reduce the assessment and penalties imposed."

     o  We delete Remand FFCL 22.  Although Respondent provided services
reimbursable at a lower level than claimed in seven instances, he is
still fully liable for those claims under section 1128A and the fact
that he provided those services is not properly relied on as a
mitigating factor in this case.  We discussed this issue at some length
above in response to Respondent's substantive arguments on mitigating
factors.

     o  We delete Remand FFCL 23 on Respondent's rehabilitation from
     drug abuse because this issue had not been previously raised or
substantiated prior to the Remand proceedings.

     o  We also delete Remand FFCL 16 (which concerned Respondent's
     failure to substantiate his financial condition as a mitigating
factor) and state in new FFCL 182 that Respondent did not demonstrate
any mitigating factors he alleged.

Ultimately these changes in the FFCLs have little impact on the primary
factors relied on by the ALJ in determining the sanctions here.  The
I.G. did not request that we augment the sanctions because of any of his
objections concerning Remand FFCLs, and we do not do so.

                       CONCLUSION

Based on the analysis above, we affirm the determination of sanctions
for this Respondent in the ALJ Remand Decision.  We conclude that an
assessment of $70,648 and penalties of $345,000, and an exclusion from
participation in Medicare and Medicaid for ten years are appropriate
under section 1128A of the Act.  In an appendix to this decision, we
provide a comprehensive list of the ALJ's findings of fact and
conclusions of law (from both the ALJ Decision and the Remand Decision)
in support of these sanctions, which we adopt in full as here modified.

                             __________________________ Judith A.
                             Ballard

                             __________________________ Cecilia Sparks
                             Ford

                             __________________________ Donald F.
                             Garrett Presiding Panel Member

                        APPENDIX

        FINDINGS OF FACT AND CONCLUSIONS OF LAW

1.  For the purposes of these proceedings, I have taken judicial notice
of the statutes of the United States and the State of New York, and the
regulations of DHHS.

2.  This proceeding is governed by section 1128A of the Act (42 U.S.C.
1320a-7a), and regulations promulgated thereunder at 42 C.F.R. .
1003.100 et seq.

3.  Section 1128A of the Act authorizes the Secretary to impose a civil
monetary penalty, an assessment and an exclusion from program
participation upon a person who presents or causes to be presented to an
officer, employee or agent of the United States a claim for items or
services under Medicare (Title XVIII of the Act) which the person knew,
had reason to know, or should have known were not provided as claimed.
42 U.S.C.  . 1320a-7a(a)(1).

4.  The Secretary of DHHS has delegated to the I.G. the authority to
take action under section 1128A of the Act.  49 Fed. Reg. 35,247, 35,250
(September 6, 1984).

5.  By letter dated January 18, 1989, the I.G. notified Timothy L.
Stern, M.D., Respondent, of the I.G.'s proposal to impose against
Respondent civil monetary penalties totaling $425,250; an assessment of
$70,648; and exclusion from participation in all federally financed
State health care programs for a 20-year period.

6.  The I.G. based its proposal on his determination that Respondent
presented or caused to be presented to an agent of the United States
claims for items or services which Respondent knew, had reason to know,
or should have known were not provided as claimed.

7.  Specifically, the I.G. determined that Respondent had presented or
caused to be presented claims requesting Medicare reimbursement for
nerve blocks, office visits, or consultations, which are covered in
certain circumstances by Medicare, when acupuncture, a non-covered
service, was provided.

8.  By letter dated March 15, 1989, Respondent, through counsel Charles
E. Crimi, requested a hearing before an ALJ.

9.  The I.G.'s January 18, 1989, Notice was subsequently modified by a
supplemental Notice dated November 9, 1989.  Tr. I/21.

10.  The I.G. appended an attachment to the November 9, 1989 Notice
which indexed the claims at issue in this case as claims 1-707; there
were in fact only 706 claims listed (the number 199 was omitted);
subsequently, at the hearing on July 30, 1990, the I.G.  dropped claims
315-320, 475-477, and 641-642, leaving 695 claims at issue.  Tr. I/21.

11.  Seven of the 695 claims (528, 529, and 533-537) are identical to
counts encompassed by Respondent's criminal conviction and have been
eliminated by my Ruling on the applicability of U.S. v. Halper, 490 U.S.
435 (1989).

12.  There are 687 claims remaining at issue in this case.  FFCL 10/11.

13.  The claims at issue represent $42,875 in items or services
Respondent claimed to have provided at Rochester Pain Medicine during
the years 1983 through 1986.  I.G.'s "schedule of false claims,"
attached to the I.G.'s amended Notice, dated November 9, 1989.

14.  Although Respondent represented himself in this case, he was
assisted at times by his brother Arthur Stern, an attorney.

15.  During the period in which the claims at issue were presented,
Respondent was licensed to practice medicine in the State of New York.
Tr. II/188, 190; I.G. Ex. 84-2 /9, 10.

  During the period in which the claims at issue were presented,
  Respondent was the sole practitioner at his clinic, Rochester Pain
Medicine.  Tr. II/52, 1324, 1584; I.G. Ex.  84-2/10.

17.  In each patient encounter that resulted in a claim, Respondent
performed either electro-acupuncture or a procedure he called
"electrical stimulation," which consisted of inserting 4-16 acupuncture
needles into the skin at various areas of the body, attaching the
needles to an electric current source using electrodes and wires, and
applying electric current to the needles for 10-20 minutes.  I.G. Ex.
1-19, 2-7, 3-4, 4-8, 5-6, 6-5, 6-6, 7-5, 7-6, 8-39, 8-40, 8-41, 10-22,
10-23, 10-24, 11-10, 11-11, 12-25, 12-26, 12-27, 13-9, 14-7, 15-11,
15-12, 15-13, 16-4, 16-5, 17-6, 17-7, 18-11, 19-4, 19-5, 19-6, 20-4,
21-7, 21-8, 22-4, 22-5, 23-7, 23-8, 24-3, 25-8, 25-9, 26-3, 27-5, 28-8,
28-9, 29-5, 31-3 59, 59-1.  See Tr. I/ 150, 838, 920; Tr. II/58, 63,
315; I.G. Ex. 1-16, 1-17, 1-18, 1-20, 4-6, 4-7, 8-38, 12-23, 12-24,
13-7, 15-9, 15-10, 18-10, 20-3, 22-4, 22-5, 23-5, 23-6, 40; I.G. Ex.
9-63, 22-3, 22-4, 22-5, 30-10; Tr.II/1558, 1546, 1562; Tr. II/92-98;
I.G. Ex. 78-2, 78-3, 81-1, 81-3; I.G. Ex.  61-1/5,7; 64-1/6,11; 68/5,6;
69/7; 66-1/4,7; I.G. Ex. 65-1.

18.  During some of the patient encounters resulting in  the claims at
issue, Respondent injected the electrically stimulated area with a small
amount of an anesthetic agent called "marcaine," just prior to the
electro-acupuncture treatments.  Tr. II/1116, 1120; Tr.  II/1341; see
I.G. Ex. 95/2.

19.  During many patient encounters, Respondent provided additional
medical services, including discussions with the patients,
prescriptions, minor surgery, blood pressure checks, myelograms, and
referrals for lab tests and procedures.  Tr. II/1434-1440.  See I.G. Ex.
1-15, 1-18/2, 2-6, 3-3, 4-5, 5-5, 8-36, 8-37, 9-61, 9-62, 9-63, 10-20,
10-21, 11-9, 12-22, 12-24, 13-6, 14-5, 15-8, 16-3, 17-4, 18-9, 19-3,
20-2, 21-6, 22-3, 23-4, 25-7, 26-2, 27-4, 28-6, 29-3, 30-9, 31-2; R. Ex.
101 A-L, N-CC; R. Ex. 63.  These services, however, are not relevant to
the computation of the sanctions here since they were not documented to
be medically necessary and reimbursable under the program at the level
of the service claimed.

20.  During the relevant time period, BSWNY was located in Binghamton,
New York, and was the designated Medicare Part B carrier for the region
in which the services at issue in this proceeding were provided.  Tr.
I/116-117.

21.  BSWNY began investigating Respondent in 1983, after a review of his
payment records indicated that he was billing an unusually large number
of nerve blocks.  Tr.  I/150; I.G. Ex. 40.  See Tr. I/919, 1011-1012;
I.G. Ex. 73/4.

22.  BSWNY's initial telephone contacts with beneficiaries indicated
that Respondent was performing acupuncture, although he was claiming his
services as nerve blocks.  I.G.  Ex. 40.  See Tr. I/150.

23.  Thereafter, BSWNY and the I.G. had a series of in- person,
telephone, and written contacts with Respondent to determine what
services were being claimed as nerve blocks and to educate Respondent on
Medicare policies and rules for filing claims properly. I.G. Ex. 42.1;
I.G. Ex. 42-2; Tr. II/920; I.G. Ex. 73/7,9; I.G. Ex. 44; Tr. I/153-154;
I.G. Ex.  74/20; I.G. Ex. 47/1; I.G. Ex. 48.

24.  During the course of their contacts with Respondent, BSWNY and I.G.
representatives specifically informed Respondent that his patients had
indicated he was performing acupuncture and that acupuncture is not a
covered service.  I.G. Ex. 42-2; Tr.  II/920; I.G. Ex. 73/7,9.

25.  During the course of their contacts with Respondent, BSWNY and I.G.
representatives specifically informed Respondent that acupuncture was
not the same thing as a nerve block and that Medicare covers only two
nerve blocks per year, but only if nerve blocks are for diagnostic
purposes, rather than for the treatment of pain.  I.G.  Ex. 42-2; I.G.
Ex. 44; I.G. Ex 47/1; I.G. Ex. 48; I.G. Ex. 73/7,9; I.G. Ex. 74/20; Tr.
I/153; Tr. II/920.

26.  During the course of their contacts with Respondent, BSWNY and I.G.
representatives specifically informed Respondent that claims for office
visits should not be based merely on time spent with the patient, but
rather on some medically necessary service being performed and
documented.  I.G. Ex. 44; Tr.I/153-154; I.G. Ex. 74/20; I.G.  Ex. 48;
I.G. Ex. 47/1,2; Tr. I/939; see I.G. Ex. 37/ 15 and 20.

27.  During the course of their contacts with Respondent, BSWNY and I.G.
representatives specifically informed Respondent that only six local
infiltrations of anesthetic agent are reimbursable in a calendar year
and only if medically necessary. I.G. Ex. 47/1; I.G. Ex. 48.

28.  During the course of their contacts with Respondent, BSWNY and I.G.
representatives specifically informed Respondent that (1) he should not
resubmit claims and list the services as an "office visit" if the
services listed on the claims had already been turned down as "nerve
blocks" and (2) that he should not add documentation to his records, as
either action could be construed as fraud.  I.G. Ex. 47/2; I.G. Ex. 44;
Tr.  I/153; I.G. Ex. 74/20-22.

29.  It was standard practice for Respondent to collect payment at the
time of service, and then for Rochester Pain Medicine (RPM) staff to
submit claims on behalf of patients, who had been led to believe that
they would be reimbursed for Respondent's services.  I.G. Ex. 61; I.G.
Ex. 64/2; I.G. Ex. 66-1/4; I.G. Ex. 10-23/2; I.G. Ex. 10-24; Tr.  I/429,
466, 942, 943; Tr. II/67.  See I.G. Ex. 1-1 through 32-2; I.G. Ex. 82A
and B.

30.  BSWNY notified physicians in its region, including Respondent,
about Medicare reimbursement policies by a Claims Manual issued in 1979,
a Doctor's Manual released in late 1983, effective January 1984, (1984
Doctor's Manual) (which replaced the Claims Manual), and periodic policy
updates.  Tr. I/116, 118, 123-127, 666; See I.G. Ex. 34, 35, 36, 37.

31.  All but approximately 66 of the 687 claims at issue were submitted
on HCFA 1500 claim forms.  I.G. Ex. 1-1 through 1-31.

32.  By signing box 25 of the Medicare HCFA 1500 claim form, Respondent
certified as follows: "... the services shown on this form were
medically indicated and necessary for the health of the patient and were
personally rendered by me or were rendered incident to my professional
service by an employee under my immediate personal supervision ...."
I.G. Ex. 12-15; I.G. Ex. 37/6,7; Tr. I/129, 554.

33.  Claims for services should describe the procedure performed by
means of a five character procedure code (e.g., "52980") corresponding
to the services listed in the applicable Claims or Doctor's Manual and,
if further clarification of the service is necessary, a verbal
description of the service provided (e.g., "nerve block").  I.G. Ex.
34/8; I.G. Ex. 37/6,9.

34.  Respondent had complete control over policies and procedures
regarding how claims would be submitted from Rochester Pain Medicine.
I.G. Ex 64; see I.G. Ex. 61; 64-1, 65-1, 66, 67-1, 68, 69.

35.  Of the claims at issue in this proceeding, 343 show the verbal
description "local nerve block," 339 show "office visit," four show
"consultation,"  one shows "consultation/office visit", and one shows
"flu shot/local nerve block."  I.G. Ex. 1-1 through 1-31.

36.  Of the 339 claims described as "office visit," 288 show the
procedure code 90060 ("intermediate" office service for an established
patient), 16 show code 90050 ("limited" established patient office
service) seven show code 90040 ("brief" established patient office
service), eight show code 90020 ("comprehensive" new patient office
service), and 20 show no procedure code.  I.G. Ex. 37/25; see I.G. Ex.
1-1 through 1-31.

37.  Of the four claims described as consultation, three show no code,
and one shows code 90610 ("extensive consultation").  I.G. Ex. 37/26;
see I.G. Ex. 3-3, 5-5, 6-4, 14-5.

38.  Of the 343 claims for "local nerve block," three show no code, and
the rest show different codes for different time periods, breaking out
generally as follows:

     123 showing 52980 for the period 1/83 to 2/84;

     24 showing 62274 for the period 1/84 - 1/85;

     20 showing 64450 for the period 2/84 - 1/85

     9 showing 64415 for the period 3/84 - 1/85

     24 showing 64441 for the period 6/84 - 11/84;

     3 showing 64405 (two in 4/84, and one in 1/85); and

     137 showing W3600 for the period 1/85 - 6/86.

I.G. Ex. 1-1 through 1-31.

39.  Medicare procedure code 52980 is listed under the term "Nerve
Block" and next to the term "Paravertebral Block (Lumbar)" in the 1979
Medicare Part B Claims Manual. I.G. Ex. 34/31; Tr. I/270.

40.  Medicare procedure code 64441 is listed under the term
"Introduction/Injection of Anesthetic Agent (Nerve Block) ..." and next
to the term "paravertebral nerves, multiple, regional" in the 1984
Doctor's Manual.  I.G. Ex. 37/30.

41.  Medicare procedure code 64450 is listed under the term
"Introduction/Injection of Anesthetic Agent (Nerve Block) ..." and next
to the term "other peripheral nerve or branch" in the 1984 Doctor's
Manual.  I.G. Ex. 37/30.

42.  Medicare procedure code 64415 is listed under the term
"Introduction/Injection of Anesthetic Agent (Nerve Block) ..." and next
to the term "brachial plexus" in the 1984 Doctor's Manual.  I.G. Ex.
37/29.

43.  Medicare procedure code 64405 is listed under the term
"Introduction/Injection of Anesthetic Agent (Nerve Block) ..." and next
to the term "greater occipital nerve" in the 1984 Doctor's Manual.  I.G.
Ex. 37/29.

44.  Medicare procedure code 62274 is listed under the term "Puncture
for Injection, Drainage, or Aspiration"  and next to the term "injection
of anesthetic substance diagnostic or therapeutic subarachnoid or
subdura" in the 1984 Doctor's Manual.  I.G.  Ex. 37/28.

45.  BSWNY local procedure code W3600 was listed under the term
"Introduction or Removal" and next to the term "Localized infiltration
of anesthesia" in the 1984 Doctor's Manual.  I.G. Ex. 37/27; Tr.
I/272-273; Tr.I/1494.

46.  Traditional or classical acupuncture is an ancient form of
treatment originating in China and involving placement and manipulation
of one or more thin metal needles beneath the skin at particular points.
I.G. Ex. 76/5,6; Tr. I/763, 1224, 1472.

47.  It is possible to use electrical current to create the effect of
manual manipulation of the acupuncture needles.  I.G. 76/7-8; Tr.
I/1474.  See Tr. II/708-709, 724, 763.

48.  When electrical current is introduced to the acupuncture needles,
the procedure is commonly referred to as electronic acupuncture,
electro-acupuncture, or electrical stimulation.  Tr. II/708, 724; I.G.
Ex. 82A/1,4.

49.  In an electro-acupuncture treatment, 4-16 acupuncture needles
inserted beneath the skin are attached by clips and wires to an electric
current source which is activated for ten to twenty minutes.  Tr.
II/708-711; I.G. Ex. 76/21-22.

50.  Percutaneous electrical stimulation (PENS) involves the
introduction of the electric current by way of an electrode which is
surgically implanted in the area of a major nerve in the central nervous
system.  Tr. I/1237, 1242, 1485; 1594-1597.  See I.G. Ex. 35/4, I.G.
Ex. 37/32; I.G. Ex. 105/3; Tr. II/1659.

51.  Transcutaneous electrical stimulation (TENS) involves the
introduction of the electric current by way of pads placed on the skin.
Tr. I/1482, 1484.

52.  Faradic electrical stimulation (FES) is used in the treatment of
Bell's Palsy to accelerate regeneration of facial nerves.  Tr. II/1591.

53.  Other types of electrical stimulation are used in diagnostic
studies for purposes of measuring nerve conductivity.  Tr. II/1591.

54.  Acupuncture, electro-acupuncture, PENS, and TENS are all used in
the treatment of pain.

55.  Respondent's electrical treatments invariably consisted of
inserting 4-16 acupuncture needles through the skin and attaching them
by clips and wires to a generator which was turned on for ten to twenty
minutes. FFCL 17.

56.  Respondent used the term acupuncture and electrical stimulation
synonymously when explaining his practice before a television audience
in 1981. I.G. Ex. 82A/1-4, 9-10.

57.  In 1982, Respondent advertised his practice as an "acupuncture and
pain clinic." I.G. Ex. 80-3; Tr. II/164.

58.  In 1989, Respondent applied to the State Department of Education to
become licensed as an acupuncturist and  stated that he had practiced
acupuncture 100 percent of the time for the last ten years.  I.G. Ex.
100, 100-1; Tr. II/208-209.

59.  In 1989, Respondent publicized the opening of his acupuncture
clinic as the "reopening of his acupuncture practice of ten years."
I.G. Ex. 62.

60.  Electro-acupuncture is not traditional acupuncture and it is
arguable that electro-acupuncture is not technically acupuncture if the
needles are not placed at traditional acupuncture points.  Tr.
I/742-747.

61.  The electrical stimulation procedure practiced by Respondent was
electro-acupuncture; nevertheless, for purposes of this case, it is
irrelevant whether the acupuncture needles were placed at traditional
acupuncture points (when electrically stimulated) since neither
electro-acupuncture nor electrical stimulation of acupuncture needles
(which are not placed at traditional acupuncture points) is covered by
Medicare. Tr. I/1244, 1481-1487; Tr. II/1515, 1527; FFCL 46-60.

62.  The electrical stimulation procedure practiced by Respondent was
not TENS, PENS, FES, or diagnostic electrical stimulation.  FFCL 49-52,
54.

63.  For the sake of convenience, references to electro-acupuncture in
this decision include the term electrical stimulation, as practiced by
Respondent.

64.  At various times, Respondent practiced both traditional and
electro-acupuncture. I.G. 83-3/24; Tr. I/769-770.

65.  During the period involved in this case, Respondent practiced,
almost exclusively, electro-acupuncture.  Tr. II/1443.

66.  Patients came to Respondent's office primarily for
electro-acupuncture treatments. Tr. II/1440.

67.  Electro-acupuncture treatments do not constitute nerve blocks.  Tr.
I/784-785; Tr.  II/1483.

68.  A nerve block is the application of a chemical substance into or
around a nerve trunk so as to interrupt the transmission of impulses
over that nerve trunk to or from the area of the body supplied by that
nerve trunk.   I.G. Ex. 77/10,13; Tr. I/1201, 1467; see I.G. Ex. 49-1,
49-2, 49-3, 49-4.

69.  Administering a nerve block requires significant technical support
facilities, such as oxygen, breathing mask, breathing bag, endotracheal
tubes, and a laryngoscope.  Tr.  I/1216.

70.  Nerve blocks are ordinarily administered with hollow stainless
steel needles of varying diameter and length, not solid acupuncture
needles.  Tr. I/1217.

71.  During a nerve block procedure, a patient would experience pain
followed by numbness which would last from one to twelve hours.  Tr.
I/606-607, 1220-21.

72.  A physician's record of a nerve block should include diagnosis,
caliber and length of needle used, region of the body where the needle
was placed; drug used and its amount and concentration, sensations
experienced during the block, what happened after the block, if
anything, and an individualized operative report.  Tr. I/976, 1221-24,
1471; see Tr. I/1333.

73.  A nerve block differs from local or superficial infiltration or
injection of anesthesia, in that nerve block is a direct injection into
the area of the nerve trunk, whereas local or superficial infiltration
or injections involve the injection of anesthetic agent into the skin
and subcutaneous tissue around specific areas of pain to block the nerve
endings rather than the nerve trunk.  I.G. Ex. 49-4/2; Tr. I/1211-1212,
1469, 1497.  See I.G. Ex. 49-1/2; I.G. Ex. 34/15; I.G. Ex. 55-2/7.

74.  While it might be arguable that a local or superficial infiltration
or injection of an anesthetic agent might be called a nerve block, in a
generic sense, since the pain pathway is blocked, what Respondent did
was not a nerve block because the amount of anesthetic agent he used was
too small.  Tr. I/1241, 1297, 1249-1250; Tr. II/1513; Tr.  I/785-787.

75.  A diagnostic nerve block is used to determine the etiology of the
patient's pain and the appropriate course for treating the pain, whereas
a therapeutic nerve block is for the relief of the pain itself.  Tr.
I/1212-1213.

76.  A local or superficial infiltration or injection of an anesthetic
agent is not a diagnostic nerve block.  FFCL 64-66.

77.  Medicare provides reimbursement for services which are reasonable
and necessary for the diagnosis or treatment of illness or injury.  See
section 1862 of the Act; Tr. I/550.

78.  To be considered medically necessary under Medicare, services must
be consistent with the diagnosis and treatment, appropriate with regard
to standards of good medical practice, not solely for the convenience of
the patient or the doctor, appropriate with regard to the level of
service, adequately documented, and identifiable in the patients
records.  I.G. Ex. 37/20; see I.G. Ex. 34/12.

79.  It is a basic requirement of good medical practice to keep accurate
records of provided services.  Tr. I/797-798, 1224.

80.  To establish that a service was medically necessary under Medicare,
documentation should include some statement of the symptoms or diagnosis
and a treatment which is consistent with that diagnosis.  I.G. Ex.
37/20; FFCL 77-79.

81.  Under Medicare, acupuncture is not considered to be reasonable and
necessary and is not a covered service.  I.G. Ex. 33-3, 33-5; see I.G.
Ex. 33-1, 33-2, 33-5, 33-6, 33-7, 33-8.

82.  Acupuncture is listed as a non-covered service in both the 1979
Medicare Part B Claims Manual and the 1984 Doctor's Manual.  I.G. Ex.
34/18; I.G. Ex. 37/12; see  Tr.  I/131; Tr. II/41; I.G. Ex. 74/18.

83.  Office visits, like all services, must be medically necessary in
order to be reimbursed by Medicare.  See I.G. Ex. 74/20, 21.

84.  Under Medicare, office visits are subject to qualification and
subject to reimbursement according to various levels of service,
reflecting various levels of skill, effort, time, responsibility and
knowledge.  I.G. Ex. 37/14, I.G. Ex. 74/22, 23; see I.G.  34/14.

85.  Under Medicare, a doctor is not entitled to reimbursement for an
office visit simply based on the amount of time he spent with the
patient; there must be some medically necessary service provided,
including documentation of that service.  Tr. I/135-139; see I.G. Ex.
37/20.

86.  As a general rule, Medicare regulations would not provide
reimbursement for an office visit if the only purpose of the visit were
a non-covered service such as acupuncture; an office visit would be
allowed and reimbursed for other medically necessary services rendered
in addition to a non-covered service.  I.G. Ex. 74/23,24, 28; Tr. I/138,
139, 212; see I.G. Ex. 37/20; I.G. Ex. 39-1; FFCL 69.

87.  Under Medicare, a physician may be reimbursed for a "consultation"
where he renders services pursuant to a request from the attending
physician for an opinion and advice; the consultation must include a
medical history, physical exam, and written report of findings filed
with the patient's permanent record.  I.G. Ex. 34/29; I.G. Ex.  35/2;
I.G. Ex. 37/26.

88.  Under Medicare, nerve blocks are reimbursable if used
diagnostically rather than therapeutically.  I.G. Ex. 34/15; see I.G.
Ex. 35/3; FFCL 66.

89.  Medicare policy provides for reimbursement of up to two diagnostic
nerve blocks in a calendar year.  I.G. Ex. 34/15; I.G. Ex. 35/3; I.G.
Ex. 74/17, 30.

90.   Medicare policy provides for reimbursement of up to six local
infiltrations of anesthesia in a calendar year.  Tr. I/1496; I.G. Ex 47;
I.G. Ex 48.

91.  Medicare policy provides for reimbursement of only discrete types
of electrical stimulation for the treatment of pain:  PENS and TENS.
Tr. II/1481-1487, 1591.

92.  Section 1320a-7(a)(1)(A) of the Act, the CMPL, prohibits the
submission of claims which were not provided as described in the
Medicare claim submitted; this is an exacting standard of care and an
"unartful" description of medical services in a Medicare claim is a
description of services that were not provided as claimed.
Anesthesiologists Affiliated et al. v. Sullivan,  941 F.2d 678 (8th Cir.
1991).

93.  Respondent's medical records for the claims at issue in this
proceeding do not reflect that nerve blocks were provided.  Tr. I/1244,
1245, 1282; 1514, 1515, 1519-1521, 1527.

94.  Respondent's medical records for the claims at issue in this
proceeding do not reflect that office visits and consultations were
provided.  Tr. I/1514, 1515, 1519-1521, 1527.

95.  Documentation in the pertinent medical records corresponding to
Respondent's nerve block claims is indistinguishable from documentation
corresponding to office visit claims.  Tr. I/1515.

96.  Notations in Respondent's medical records and operative reports
attached the claims forms indicate that  marcaine was injected during
many electro-acupuncture treatments.  See I.G. 1-11, 1-12, 2-1, 4-1,
4-2, 5-1, 5-4, 6-2, 6-3, 8-18, 8-25, 8-32, 9-19, 11-8, 12-8, 12-9,
12-10, 12-14, 12-15, 14-2, 14-3, 15-1, 15-2, 15-3, 16-1, 16-2, 18-1,
18-2, 20-1, 22-1, 22-2, 23-1, 23-2, 25-1, 25-2, 25-3, 25-4, 25-5, 27-1,
27-2, 27-3, 28-1, 28-2, 28-3, 28-4, 29-1, 29-2; Tr. I/1251; R. Ex. 94/3;
R 14A, 14B.

97.  Respondent's records reflect that he was providing
electro-acupuncture treatments to his patients rather than the services
claimed.  Tr. I/1244, 1515, 1526-1527.

98.  Although Respondent's medical records are extremely sketchy and, at
times, illegible, there are a number of indications that he provided
other services in addition to electro-acupuncture (i.e., prescribed
drugs, ordered lab work, administered flu shots, performed minor
surgery, or took blood pressure readings).  Tr. I/1515;  I.G. Ex. 1-15,
2-6, 3-3, 4-5, 5-5, 6-4, 7-4, 8-37, 9-36, 10-21, 11-9, 13-6, 14-5, 15-8,
16-3, 18-9, 20-2, 21-6, 22-3, 23-4, 25-7, 26-2, 27-4, 28-6, 29-3, 30-9,
31-2.  These services, however, are not relevant to the computation of
the sanctions here since they were not documented to be medically
necessary and reimbursable under the program at the level of the service
claimed.

99.  These notations of additional services in Respondent's records
sometimes occurred in conjunction with claims for office visits and
sometimes in conjunction with claims for nerve blocks, but consistently
in conjunction with documentation of electro-acupuncture treatments.
See I.G. Ex. 1-15, 2-6, 3-3, 4-5, 5-5, 6-4, 7-4, 8-37, 9-36, 10-21,
11-9, 13-6, 14-5, 15-8, 16-3, 18-9, 20-2, 21-6, 22-3, 23-4, 25-7, 26-2,
27-4, 28-6, 29-3, 30-9, 31-2.

100.  The most frequent diagnosis found for the claims at issue is
arthritis.  Tr. I/1247, 1254, 1259, 1261, 1268, 1271, 1274, 1275, 1280,
1289, 1296, 1297, 1299, 1300, 1303, 1306, 1307; Tr. II/1515.

101.  Many of the notations of "marcaine" in Respondent's medical
records were added to the records after the original notations that
electro-acupuncture had been performed. Tr. I/1244, 1293.

102.   Beneficiary Charlotte Gans made a written sworn statement to I.G.
agent Joseph Neigsch that the only treatment she had received from
Respondent was electro-acupuncture.  I.G. Ex. 8-40.

103.  In subsequent written statements and at the hearing, Ms. Gans
recanted the sworn statement, saying that it had not been read back to
her before she signed it, that it had been obtained in a misleading
manner, and that she had received other treatments from Respondent, in
addition to electro-acupuncture.  R. Ex. 96-2, 96-3; Tr. II/1281-1284,
1300-1306.

104.  I.G. investigator Richard Chorman signed a sworn statement that he
had accompanied investigator Neigsch to the interview with Ms. Gans,
that Mr. Neigsch had read Ms. Gans' sworn statement back to her before
she had signed it and that investigator Neigsch had not misled Ms. Gans.
I.G. Ex. 8-41/2,3.

105.  Ms. Gans is elderly, infirm, and at the hearing appeared at times
to have been confused about the timing of certain events; Ms. Gans
remains under the care of Respondent, likes the Respondent, receives
treatment from Respondent at a reduced fee or no fee, and her subsequent
written statements were prepared by Respondent and signed by Ms. Gans at
Respondent's office.  Tr. II/1300;  see Tr. II/1154, 1288-1292, 1306,
1344.

106.  I did not find Ms. Gans' testimony at the hearing to be credible.

107.  Ms. Gans' testimony does not override her initial sworn statement;
while she at times received additional services from Respondent, the
purpose of her visits to Respondent was to receive electro-acupuncture.
See Tr. II/1291, 1294-1295, 1308.

108.  Investigator Neigsch did not mislead Ms. Gans.  FFCL 106, 107.

109.  Sworn statements of five other beneficiaries (or in one instance a
relative who had accompanied a now deceased beneficiary to Respondent's
office) were  contradicted at the hearing by their own testimony or that
of relatives who had accompanied them to Respondent's office; the sworn
statements indicated that Respondent had provided only
electro-acupuncture (with specific stated exceptions), but the testimony
indicated that on occasion Respondent had provided other services as
well.  Tr. I/415, 482, 484-490, 532, 613-616, 621-625, 627.

110.  Sworn statements of other beneficiaries were similarly
contradicted by excerpts from testimony provided to a grand jury in
1986.  Tr. II/835-842, 852-858, 869, 878.

111.  The testimony elicited at this hearing and the excerpts from the
1986 grand jury investigation do not override the sworn statements
presented by the I.G.; while the beneficiaries received additional
services from Respondent, the primary purpose of their visits to
Respondent was to receive electro-acupuncture.

112.  The additional services Ms. Gans and others received during their
visits for electro-acupuncture therapy are not reimbursable under
Medicare since the treatments were not medically necessary under
Medicare standards (i.e., not sufficiently documented or inconsistent
with the stated diagnoses).  See FFCL 78, 80, 86.

113.  Respondent presented the testimony and sworn affidavit of his
employee Charlene Cook as the best factual account of events in question
in this case.  R. Br. 46.5; R. Ex.  94; Tr. II/1094.

114.  Respondent presented Ms. Cook's testimony to establish and
corroborate his version of events.  See Tr. II/1099-1158.

115.  Charlene Cook was Respondent's full-time office manager from 1980
through 1985, took a year off to have a child, went back to work for
Respondent part-time thereafter, and at the time of this hearing was
employed by Respondent.  Tr. II/1091.

116.  Charlene Cook's testimony was not an objective, independent
version of events and was not credible; Ms. Cook has a long-standing,
close affiliation with Respondent and, at the time of the hearing, was
still employed by him.  See FFCL 115.

117.  Respondent did not prove his assertion that in 1980 Carol Durso of
Blue Shield, Rochester, told Respondent to bill his office procedures as
nerve blocks under code 52980.  See I.G. Ex. 54-1; FFCL 113-116.

118.  Respondent did not prove his assertion that in 1980
representatives of BSWNY or any Medicare carrier told Respondent to bill
his office procedures under the code 52980. See FFCL 113-116.

119.  Charlene Cook's notes of a March 19, 1985 meeting with BSWNY do
not prove Respondent's assertion that he was told at that meeting to
bill his services first for six local infiltrations of anesthesia and
then all other visits as office visits.  See FFCL 113-116.

120.  At the March 19, 1985 meeting and in a July 16, 1985 letter
confirming the results of the meeting, BSWNY specified the number of
times local infiltrations could be claimed per year and that individual
claims for the services were subject to the Medicare requirement of
medical necessity; BSWNY never stated that Respondent's services fit
into particular categories or would be reimbursed without a
determination of medical necessity.  I.G. Ex. 47; I.G. Ex. 48/2.

121.  Respondent did not prove that he was told at the March 19, 1985
meeting or thereafter to bill the services he was providing in his
office by billing first for six local infiltrations of anesthesia and
then all other visits as office visits.  See FFCL 113-116, 119-120.

122.  Respondent did not prove that he was billing for his service
according to instructions provided by BSWNY.  See FFCL 117, 118, 121.

123.  The terms local and superficial nerve block have no medical
meaning and are not terms used in Medicare reimbursement.  Tr.
I/1214-1215, 1467.

124.  Nerve blocks are not appropriate treatments for arthritis.  Tr.
I/1247.

125.  Electro-acupuncture or electrical stimulation therapeutic services
performed by Respondent do not constitute diagnostic or therapeutic
nerve blocks, PENS, or TENS, and thus are not reimbursable under
Medicare. FFCL 18, 67, 75, 88, 91.

126.  Respondent added local injections of marcaine to his
electro-acupuncture therapy only after BSWNY began to reject his nerve
block claims.  Tr. II/1341; I.G. Ex. 95/2.

127.  Respondent added local injections of marcaine to his
electro-acupuncture therapy only because he felt the injection of an
anesthetic agent would legitimize his claims as nerve blocks.  I.G. Ex.
95/2; R. Ex. 94.

128.  The injection of marcaine, when administered in conjunction with
electro-acupuncture, does not convert the electro-acupuncture treatment
into a nerve block.  Tr. I/1241, 1247, 1249-1251, 1513; see FFCL 126,
127.

129.  The injections of marcaine are not reimbursable under Medicare as
nerve blocks because Medicare only reimburses diagnostic blocks, and
injections of marcaine are not diagnostic blocks.  FFCL 75, 76, 88.

130.  The injections of marcaine are not reimbursable under Medicare as
office visits, since the purpose of the visits was to receive
electro-acupuncture and the injections were not medically necessary.
FFCL 66, 78, 86, 126, 127.

131.  The injections of marcaine are not reimbursable under Medicare as
local infiltrations of anesthesia, since they were not medically
necessary and were improperly described as "local nerve blocks" on the
claim forms.  FFCL 78, 92, 135.

132.  The additional services provided by Respondent were not
reimbursable as office visits under Medicare since the purpose of the
visits was electro-acupuncture and since the notations do not constitute
sufficient documentation to establish the medical necessity of the
services, except in the seven instances noted in FFCL 187.  The services
in these seven claims, however, were reimbursable at a lower level than
claimed.  FFCL 86.

133.  The diagnosis listed on the vast majority of the claims in
question is not consistent with the treatment documented in the
corresponding medical records.  Tr. II/1515, 1538-1541, 1545-1563.

134.  Respondent's evidence was insufficient to establish the medical
necessity of any treatment.  Tr. II/1515.

135.  The terms "local nerve block" and "superficial nerve block," were
"unartful" descriptions of the services provided and, therefore, are
descriptions of services not provided as claimed under the CMPL, section
1320a-7(a)(1)(A) of the Act.  See FFCL 92.

136.  None of the claims in question were properly described: either
because the narrative description was improper for the service provided,
the code was improper for the service provided, the narrative
description did not correspond with the code, or the service provided
was claimed at an improper level of service.  FFCL 123, 125, 128, 129.
133, 135.

137.  All of the 687 claims in question are false or improper under the
CMPL.  FFCL 123-136.

138.  Respondent submitted or caused to be submitted to BSWNY claims on
behalf of Medicare beneficiaries for 687 items or services.  Tr.
I/550-553, 555, 593-596, 641-644. See I.G. 1-1 through 31-1.  Respondent
knew, had reason to know, or should have known that these items or
services were not provided as claimed, in violation of section 1128A of
the Act.

139.  Respondent knew that electro-acupuncture was not a covered
Medicare service and, therefore, claimed his electro-acupuncture
services as "nerve blocks."

140.  Respondent knew that electro-acupuncture was not a covered service
and, therefore, claimed the electro-acupuncture services he provided as
"office visits."

141.  Respondent had reason to know that electro-acupuncture was not
reimbursable as a nerve block.  I.G. Ex. 35/3; FFCL 26, 31, 88.

142.  Respondent had reason to know that to be reimbursable as an
"office visit," any additional services provided during an
electro-acupuncture treatment would have to meet the criteria for
medical necessity, including adequate documentation.  FFCL 27, 31, 86.

143.  Respondent had reason to know that the cryptic notations of
additional services (prescription drugs, orders for lab work,
administering flu shots, doing minor surgery, or taking blood pressure
readings) would not be sufficient to convert otherwise unallowable
claims for electro-acupuncture into reimbursable claims for office
visits.  FFCL 27, 31, 86; Tr. II/151

144.  Respondent had reason to know that the additional services he was
performing, except for the seven noted below, were not sufficiently
documented so as to be considered medically necessary under Medicare.
FFCL 31, 78-80.

145.  Respondent had reason to know that neither the notations of
"marcaine," nor the notations in conjunction with occasional operative
reports, are sufficient to convert Respondent's unallowable
electro-acupuncture services into reimbursable "local infiltration of
anesthesia" services.  Tr. I/1515, 1526-1527; FFCL 31, 131.

146.  Respondent had reason to know that his local injections of
marcaine services were not reimbursable under Medicare, since they did
not meet the criteria for medical necessity.  FFCL 31, 131.

147.  Respondent acted with reckless disregard for the Medicare
regulations in order to attempt to provide reimbursement for his
Medicare patients.  FFCL 30, 141-146.

148.  Respondent submitted or caused to be submitted to BSWNY claims on
behalf of 31 beneficiaries for 687 items or services which he knew, had
reason to know, or should have known were not provided as claimed.  See
FFCL 73, 127, 128, 130, 131, 132.

149.  In assessing Respondent's credibility, I considered that when he
applied to be licensed as a acupuncturist in 1988, Respondent indicated
on his application to the New York Department of Education that he had
practiced acupuncture 100 percent of his time for the last ten years,
but when attempting to persuade this ALJ that he should not be found
liable under the CMPL, Respondent testified under oath that his was a
general medical practice specializing in the treatment of pain and that
electro-acupuncture was only one of several medical modalities which he
used in treating pain.  See FFCL 58; Tr.  II/1334-1337.

150.  In assessing Respondent's credibility, I considered that
Respondent has more than a nine year history of drug addiction, spanning
the period in question in this case and lasting at least until 1987.
Tr. II/1055-1056, 1058, 1064.

151.  In assessing Respondent's credibility, I considered that, in 1986,
Respondent lied to the New York State Board for Professional Medical
Conduct when he testified under oath that he was drug free.  Tr.
II/1076, 1086; I.G. Ex. 55-1/4,5; see Tr. II/1326.

152.  In assessing Respondent's credibility, I considered that, in
entering into a plea agreement in 1987, Respondent admitted guilt to one
count of mail fraud under Indictment 86-194T, encompassing five false
claims for seven services rendered to beneficiary Antoinette Pezzulo,
and to one count of distribution of a controlled substance under
Indictment 87-106T.  I.G. Ex. 88.4/2-3, 15.

153.  In assessing Respondent's credibility, I considered that the
claims for services to Ms. Pezzulo corresponded to counts 528, 529, 533,
534, 535, 536, and 537 of the I.G.'s case in this proceeding.  I.G. Ex.
15-1, 15-4, 15-5, 15-6.

154.  In assessing Respondent's credibility, I considered that, in
entering into the 1987 plea agreement, Respondent admitted under oath
that he had known that acupuncture was not a covered service under
Medicare and had billed Medicare for nerve block services which he had
not provided as claimed, whereas in this proceeding Respondent contended
that he was merely billing his services as he had been instructed by
BSWNY. I.G. Ex. 88-4/8,12; Tr. II/1340-1341, 1441.

155.  In assessing Respondent's credibility, I considered that, in
entering into the plea agreement, Respondent testified under oath that
he had not been forced to plead guilty under the plea agreement, whereas
in this proceeding, Respondent contended that he was forced to plead
guilty to mail fraud involving Ms. Pezzulo because the prosecutor
threatened to send him to jail on the drug charge if he did not plead
guilty to the mail fraud charge as well.  I.G. Ex. 88-4/15; Tr. II/1328,
1334-1335.

156.  In assessing Respondent's credibility, I considered that
Respondent's testimony under oath in this proceeding contradicts
previous testimony given under oath.  FFCL 154-155.

157.  In assessing Respondent's credibility, I considered that
Respondent was asked to resign from Rochester General Hospital for
improper billing practices and upon his departure wrote a letter to the
Executive Director of Rochester General Hospital admitting that he knew
that many of his charges were improper and stating that he was seeking
psychiatric care to find out why he had acted as he had, whereas in this
proceeding Respondent testified that the charges against him at
Rochester General were unfounded.  I.G. Ex. 90-2/3-4; Tr. II/1321-23.

158.  In assessing Respondent's credibility, I considered that
Respondent's testimony under oath in this proceeding is inconsistent
with the earlier admission made to the Executive Director of Rochester
General Hospital.  FFCL 157.

159.  In assessing Respondent's credibility I considered that Respondent
altered his medical records to show that he had administered marcaine to
his patients, although BSWNY and I.G. representatives advised him not to
add anything to his records.  Tr.  II/1119, FFCL 29.

160.  In assessing Respondent's credibility, I considered that
Respondent grossly misinterpreted information provided by BSWNY and Blue
Shield of Rochester, disavowing any personal responsibility for his
dilemma in this case and alleging that confusion within the Medicare
system and personal vendettas against him created the dilemma.  See FFCL
25-29, 118-122; Tr. II/1341; R. Br. at 115, 151-152; I.G. Ex. 54-1,
54-2/14-15, 17-18.

161.  In assessing Respondent's credibility, I considered that
Respondent initially told I.G. investigators that both Carol Durso (of
Blue Shield, Rochester) and representatives of BSWNY told him to bill
under code 52980, but later testified that only Carol Durso told him to
bill under code 52980, and that he thought she worked for BSWNY.  I.G.
Ex. 42-2/2; I.G. Ex. 73/8; Tr. I/92; Tr. II/1095-1097.

162.  In assessing Respondent's credibility, I considered that
Respondent distinguished acupuncture from electronic stimulation when
trying to establish that his services should be reimbursed under the
Medicare regulations, while during essentially the same time period,
Respondent used the terms synonymously in an effort to convince the
State Board of Education that he should be granted a license as an
acupuncturist.  I.G. Ex.  42-2/2; I.G. Ex. 73/6, 9; FFCL 50.

163.  In assessing Respondent's credibility, I considered that in this
proceeding Respondent represented that whenever he injected marcaine he
billed under procedure code W3600, local infiltration of anesthesia,
whereas the claims show that marcaine was billed under various codes,
including 64415, 64441, 64405, 64450, and 90610.  R. Br. at 95; R. Rep.
Br. I at 1-2; R. Rep. Br. II at 2;   Tr. II/1339.  See I.G. Ex. 1-8,
5-1, 8-18, 9-19, 11-8, 12-8, 12-9, 12-10, 16-1, 16-2, 15-1, 15-2.

164.  In assessing Respondent's credibility, I considered that
Respondent alleged having little or no financial resources, yet he
received approximately $800,000 after taxes from his mother's 1987 will,
and, at the time of the hearing, owned art, furniture, a valuable home,
retained membership in a country club ($300/mo.), and had given away
substantial amounts to Lisa Carlier, including over $50,000 in jewelry
and $160,000 to start a business in which he participated.  Tr.
II/1599-1600, 1603, 1605, 1607-1610, 1616-1618, 1620-1622, 1636;  I.G.
Ex. 104; 107/12; R. Br. 175.

165.  In assessing Respondent's credibility, I considered that
Respondent reported conflicting information about his financial
condition to the I.G., the New York State Supreme Court for the County
of Monroe, and this ALJ.   R. Br. 175; Tr. II/1603, 1605-1613, 1618,
1620-1621, 1630, 1638-1639; I.G. Ex. 106, 107.

166.  Respondent is not a credible witness.  See FFCL 149-165.

167.  Congress intended that section 1128A sanctions be primarily
remedial in nature and that there be some reasonable relationship
between the determination of the sanctions and the amount of damages to
the government.

168.  Section 1128A of the Act provides for the imposition of a penalty
of up to $2,000 for each item or service falsely or improperly claimed,
an assessment of up to twice the amount falsely or improperly claimed,
and an exclusion from Medicare and federally-financed State health care
programs.

169.  In determining the amount of penalty and assessment to be imposed,
and the length of exclusion, section 1128(a)(1) of the Act and
regulations direct the finder of fact to consider several factors which
may be of an aggravating or mitigating nature.  42 U.S.C. . 1320a-7a; 42
C.F.R . 1003.106.

170.  The I.G. has the burden of proving the existence of any
aggravating factors by a preponderance of the evidence.

171.  Respondent has the burden of proving the existence of any
mitigating circumstances by a preponderance of the evidence.

172.  The amount of penalties and assessment, and the length of
exclusion from participation in the various medical programs, is to be
determined in a CMPL case by reviewing:

     a.  the nature and circumstances under which the requests for
     payment were made;

     b.  the degree of a respondent's culpability;

     c.  the existence of prior offenses;

     d.  the financial condition of a respondent; and

     e.  any other matters that justice may require.

42 C.F.R. .. 1003.106, 1003.107.

173.  It is an aggravating factor that the claims at issue were
presented over a lengthy period of time.  FFCL 13.

174.  It is an aggravating factor that there were a substantial number
of claims involved in this case.  FFCL 10-13.

175.  It is an aggravating factor that the $42,875 claimed for the 687
services at issue was substantial.  FFCL 13.

176.  With regard to the degree of Respondent's culpability, it is an
aggravating factor that Respondent acted with knowledge and reckless
disregard for Medicare rules and regulations.  Respondent knowingly
disseminated false information about the Medicare program to Medicare
beneficiaries and the public at large.  Respondent  assured patients
that electrical stimulation treatments would be reimbursed by Medicare,
thereby inducing the patients to undergo electrical stimulation
treatments and to pay Respondent at the time of treatment (or to take a
Medicare assignment from them) when he knew or had reason to know the
services provided were not reimbursable under Medicare.  FFCL 30,
141-148; I.G. Ex. 82A, 82B.

177.  It is an aggravating factor that the Department has had to expend
considerable resources in monitoring Respondent and attempting to secure
his compliance. Tr.  I/168,586; see FFCL 22-29.

178.  It is an aggravating factor that Respondent has a history of
misrepresenting facts. See FFCL 149-165.

179.  The I.G. did not prove all of the aggravating factors which he
alleged, including that Respondent has knowingly practiced acupuncture
without appropriate authorization and has resisted paying restitution
under a previous plea agreement.

180.  The I.G. did not prove the existence of prior offenses as an
aggravating factor. I.G. Posthearing Brief at 175.

181.  Respondent did not prove any of the mitigating factors he alleged.

182.  The I.G.'s expert witness identified 14 instances in which
Respondent's medical records reflected that some reimbursable service
had been provided by Respondent.  Tr.  II/1541-1549.

183.  Only eight of the 14 services identified by the I.G.'s expert were
at issue in this proceeding; six were not.  Tr. II/1541, 1542,
1545-1549; attachment to I.G.'s Notice at 5-14.

184.  Upon re-examining the eight services at issue which were
identified by the I.G.'s expert and identified in Stern I at FFCLs 132
and 181, I find that count 291, a claim for services to Eloise Jenkins
on May 7, 1985, was provided at the level of service claimed by
Respondent.  Tr. II/1546-54; I.G. Posthearing Brief at 114, n. 27.  This
leaves seven services at issue, of the original 14.

185.  Count 291 is deleted from the number of services that justify
sanctions, leaving 687 services which were claimed by Respondent in
violation of section 1128A of the Act.

186.  Upon re-examining the remaining seven services in issue (of the 14
services identified by the I.G.'s expert), I find that these seven
services claimed (counts 208, 347, 349, 361, 372, 377, 378) would have
been reimbursable, if properly claimed, because a service was provided,
in addition to acupuncture, albeit at a lower level than claimed. The
basis for liability under the statute, however, does not lessen for
these claims, and they may not serve as a mitigating factor.

187.  The implementing regulations require that Respondent's known
financial resources must be considered in determining the amount of the
penalties and assessments.  42 C.F.R. . 1003.106(b)(4).

188.  Although Respondent did not participate in discovery concerning
his financial condition, the evidence he submitted into the record
indicates he possessed substantial financial resources.  I.G. Ex. 106,
Tr. II/1603.   Consequently, his financial resources do not provide a
basis to reduce the assessments and penalties imposed.

189.  The six-year statute of limitations provided by section
1128A(c)(1) of the Act is controlling in this case, because this case
was initiated by the I.G. after September 1, 1987.

190.  The I.G. is not barred from bringing this action by either the
doctrine of equitable estoppel or collateral estoppel.

191.  The I.G. is not barred in this case by the double jeopardy clause
of the United States Constitution.

192.  The I.G. is not equitably estopped or          otherwise barred in
this case by the Plea Agreement        between the United States and
Respondent in Respondent's criminal trial.

193.  Respondent does not have the right to trial by jury and to be
found guilty beyond a reasonable doubt.

194.  Respondent was not prejudiced or denied due process by the
admission of written statements of patients obtained by the I.G. in lieu
of live testimony.

195.  Respondent was not prejudiced or denied due process by the I.G.'s
claim of privilege.

196.  The statute, regulations, and case law indicate that the
approximate amount of damages to the government should be given great
weight in determining the appropriate amount of assessment and
penalties.  The government's approximate damages in this case total
$174,000, including $165,000 in costs of investigating and initially
prosecuting Respondent.  July 17, 1990 I.G.'s Statement of Costs.

197.  The I.G.'s proposed penalties, assessments, and exclusion were
based on his assertion that 707 services were not provided as claimed,
whereas I have concluded that 687 were not provided as claimed.

198.  Based on the government's damages in this case, Respondent's known
financial resources, and the other factors and circumstances set out in
section 1128A of the Act and the implementing regulations, the
imposition of penalties in the amount of $425,000 and an exclusion of 20
years are not reasonable.  The imposition of assessments in the amount
of $70,648 is reasonable.

199.  Penalties of $345,000, assessments of $70,648, and an exclusion of
ten years are reasonable in this case.

FOOTNOTES 1.  The ALJ stated that the 191 FFCLs from his Decision
remained unchanged unless modified by one of the new FFCLs in his Remand
Decision.  The ALJ's approach required the Board (and the parties) to
make literally hundreds of comparisons in order to determine the status
of individual FFCLs following the Decision on Remand.  Also, to the
extent that it was not always self-evident whether a later FFCL had in
fact "modified" one of the 191 earlier ones, this approach left the
status of particular FFCLs in limbo.  Accordingly, we found it necessary
to integrate both sets of FFCLs into one complete set, which we set out
in an appendix to this decision.  Our compilation of FFCLs necessarily
clarifies the current status of each FFCL and also reflects our own
modifications as discussed herein.  All citations to FFCLs in this
decision reflect both the original numbering from an ALJ decision,
wherever appropriate, and the numbering found in our appendix
compilation.

2.  Footnote 12 of the ALJ Decision explains that the standard of
knowledge in the CMPL prior to December 22, 1987 was that a person
"knows" or "has reason to know" the services claimed were not provided
as claimed.  Because Congress then retroactively substituted "should
know" for "has reason to know," and because the retroactive substitution
had not been considered by a court, the ALJ actually considered three
separate standards of knowledge:  whether Respondent "knew," "had reason
to know," and "should have known" the services claimed were not provided
as claimed.  Although FFCL 148 states Respondent knew, had reason to
know, or should have known the services were not provided as claimed,
the ALJ concluded that the I.G. proved each of these standards of
knowledge for every questioned claim (which the ALJ modified to 687 in
number on remand).

3.  "State health care program" is defined in section 1128(h) of the Act
and includes the Medicaid program under title XIX of the Act.  Unless
the context indicates otherwise, we use the term "Medicaid" to refer to
all programs listed in section 1128(h).

4.  All regulations cited and relied upon, unless otherwise indicated,
are the civil money penalty regulations in effect while these
proceedings were initially pending before the ALJ.

5.  Respondent did not raise any specific arguments concerning the ALJ's
extending the period of Respondent's exclusion from seven to ten years,
and we do not address that specific aspect of the sanctions further.

6.  Thus, the ALJ found several factors surrounding the nature of the
claims and the circumstances under which they were presented to be
aggravating.  The claims were 687 in number, were submitted over a
lengthy period of time and were submitted in a specific pattern.  Remand
Decision at 13.  The ALJ noted that he had compared this case to other
section 1128A cases and found that the sanctions proposed by the I.G.
here (which were higher than those ultimately imposed by him) were
within the same approximate range as other cases, including a case
upheld on appeal.  See  Mayers v.  U.S. Dept. of Health and Human
Services, 806 F.2d 995 (11th Cir. 1986).

The ALJ found, regarding the factor of culpability, that Respondent knew
that the services he claimed were not provided as claimed and that
Respondent had reason to know and had a reckless disregard for the
Medicare rules in that he knowingly ignored the requirements when
presenting claims to Medicare.

7.  Although the preamble to the regulations containing these guidelines
did not clarify specifically why the minimum amount of assessment and
penalties should be "double" the approximate amount of damages, this
minimum was apparently necessary because the full extent of the
government's damages are not always readily determinable and because, as
we discuss below, the government frequently also suffers significant
"indirect" damages to the integrity and reputation of its programs.
These "indirect" damages obviously would be difficult to measure.  The
regulations on civil money penalties promulgated on January 29, 1992
make the formula of double the approximate damages a "binding" standard
in computing assessment and penalties.  42 C.F.R. .. 1003.106(c)(3) and
(d)(1).  The preamble to these regulations clarified that:

     The courts have recognized that civil penalty statutes entitle the
     government to recover full compensation for its damages, and that
ordinarily, application of the statutory "fixed penalty plus double
damages" provision does no more than make the government whole. [cites
omitted]

57 Fed. Reg. 3298, 3323 (January 29, 1992).

8.  At the hearing before the ALJ, Respondent alleged that he never
received the I.G.'s statement of costs.  Transcript I at 109.  The I.G.
alleged that he had sent the statement of costs to Respondent's brother,
who assisted Respondent in his representation.  Id. Respondent was thus
aware of the I.G.'s statement of costs by the time of the hearing at the
very latest, yet he did not challenge it in that proceeding or in any of
the further proceedings before the ALJ, even though the I.G. continued
to cite and rely on that statement of costs.  I.G.'s Post-Hearing Brief
at 181-182.

9.  In response to Respondent's challenge before us to the statement of
costs, the I.G.  submitted an unsolicited "Opposition to Respondent's
Reply and Motion to Supplement the Record."  With this motion, the I.G.
supplied three declarations regarding the time devoted to this case by
investigators and attorneys, as well as the costs associated with their
activities.  Respondent objected to the I.G.'s motion, arguing that the
I.G. failed to get permission to file this motion and that the I.G. was
attempting to place evidence before the Board in a "backhanded" fashion.

Inasmuch as we have concluded that Respondent's objections to the
statement of costs were untimely, we also deny the I.G.'s motion to
supplement the record.

10.  The statement in question was provided to the ALJ in July 1990.  It
therefore did not include the costs of any subsequent activities
incurred in the prosecution of Respondent before the ALJ, including the
hearing itself.   The ALJ said he would not consider the cost of
conducting the hearing or any other proceeding in the administrative
action "because to do so would have a chilling effect on the rights of
respondents to a full and fair hearing."   Decision on Remand at 17, n.
11;  cf. 42 C.F.R. . 1003.106(d)(2), effective January 29, 1992
(requiring that the cost of the administrative proceedings be included).
Although the I.G. argued before the ALJ that the cost of the entire
administrative process should properly be included in the government's
damages under the prior regulations, the I.G. did not take exception to
the ALJ's treatment of these costs in its brief before us.

11.  We note that the regulations give the Department the flexibility to
settle any issue or case or to compromise any penalty and assessment at
any time.  See 42 C.F.R.  .. 1003.106(d), 1003.126, and 1003.128,
effective January 29, 1992.  This flexibility would appear to permit the
Department to set payment schedules for the assessment or penalties
imposed or even to compromise sanctions that become demonstrably
unpayable and counterproductive.

12.  Respondent noted that in making this finding, the ALJ considered
assets of Respondent's wife along with his own assets.  The format of
Respondent's own evidence, however, made it necessary for the ALJ to
consider combined assets in determining Respondent's net worth.
Respondent's statement of assets presented during the remand proceedings
failed to make any allocation between his own assets and his wife's.

13.  The ALJ stated that "one of the I.G.'s medical experts identified
14 services on claims which he considered to be sufficiently documented
to be reimbursable, although most of them at a lower level of service
than claimed."  ALJ Decision at 56.  The ALJ then went on to find that
these 14 claims were a mitigating factor in the appeal. (See FFCL 181 in
ALJ Decision, which was subsequently deleted by DAB 1314, at 25-28.)

14.  Moreover, we give little, if any, weight to evidence of other
services from Respondent's primary witnesses since the ALJ concluded
that their testimony was not credible and was contradicted by previous
sworn statements.  FFCLs 106, 109-111, 116, 149-165, 166.  Furthermore,
the medical records relied upon are virtually illegible in many places
and clearly lacking in sufficient information to document that
particular services were medically necessary and otherwise reimbursable.

15.  Aside from the single claim where the service provided was at the
level of the service claimed and the seven claims where the service
provided was reimbursable at a level lower than the service claimed, the
ALJ found that six other claims identified as reimbursable in the
testimony of the I.G.'s medical expert were not even at issue in these
proceedings.

16.  We did not intend to imply in DAB 1314 that a factor can never be
viewed as mitigating if it only involves one or two percent of
questioned cases (and if the ALJ gives the factor a weight commensurate
with the small number of cases).  Our primary concern is that the very
small number of cases involving other services does not demonstrate
lessened culpability on Respondent's part and does not provide a legal
basis for mitigating the sanctions.

17.  Although Respondent questioned the proper weight of mitigating
factors generally in computing the sanctions, Respondent did not
specifically take exception to our conclusion that there is an
insufficient evidentiary or legal basis for mitigating the sanctions
based on alleged patient benefit derived from treatment that did not
include a covered service.  DAB 1314, at 28-30.  If a service (here,
acupuncture) is not covered, it is irrelevant that the service may have
been beneficial to individual patients.  The purported benefit cannot be
justification for the provider first to mislead Medicare patients, many
of whom are elderly, concerning whether the service is covered and thus
affect their decision to receive the service and then mislead the
Medicare program itself as to the nature of the service claimed.  If the
provider believes in the benefits of his treatment, he properly should
notify his patients that the service is not covered and then allow his
patients to make their own decision whether to proceed or not after
receiving his schedule of fees.  In any event, his belief in the
efficacy of his treatment cannot serve to mitigate his filing of false
claims.

18.  Although the Decision on Remand referenced the telephone conference
(held on July 23, 1992), the record of this appeal as transmitted to us
failed to contain any memorialization of that conference.  Subsequently
in a "Notice of Supplement To The Record," the ALJ clarified for the
record that a tape recording and his contemporaneous notes had been made
of the conference, but that the tape was now missing.  The ALJ attached
to the Notice his handwritten notes of the telephone conference.

19.  In addition to substantive objections to the evidence, the I.G.
objected to R. Ex.  92-1 on the ground that the information contained in
the exhibit was wholly unreliable. The I.G. asserted that this exhibit
was nothing more than Respondent's own unsworn assertions and did not
reflect an independent audit of Respondent's assets.  The I.G.  also
objected to comments made by Respondent's brother during the July 23,
1992 telephone conference regarding Respondent's financial condition and
regarding his rehabilitation from drug addiction because the I.G. had
not been notified that these statements were to be relied upon as
evidence and because the statements were not the sworn testimony of a
witness subject to cross examination.

20.  The ALJ's authority to take further action in this appeal resulted
directly from the Board's remand order; the ALJ made no determination
here that he was acting under independent authority that permitted him
to reopen the proceedings under these circumstances and to consider
issues outside the scope of the Board's remand.

21.  We do not decide here whether this factor could properly be viewed
as mitigating if it had been raised and substantiated by Respondent
during the initial proceedings before the