Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: George Iturralde, M.D., Petitioner,
- v -
The Inspector General.
DATE: July 30, 1992
Docket No. C-399
Decision No. CR218
DECISION
On April 18, 1991, the Inspector General (I.G.) notified Petitioner that he
was being excluded from
participation in Medicare and State health care programs. 1/ The I.G. told Petitioner
that he was being
excluded because he had been excluded or suspended by a federal or State health
care program for reasons
bearing on his professional competence, professional performance, or financial
integrity. The I.G. advised
Petitioner that the authority for the exclusion is contained in section 1128(b)(5)
of the Social Security Act
(Act). The I.G. further advised Petitioner that he would be excluded until he
was reinstated by the Kansas
Department of Social and Rehabilitation Services (Kansas Medicaid), the agency
that had suspended him.
I held a hearing in this case in Kansas City, Missouri, on February 19, 1992.
2/ I have carefully considered
the evidence adduced at the hearing in light of applicable law. I conclude that
the I.G. had the authority to
impose and direct an exclusion against Petitioner under section 1128(b)(5) of
the Act. I find that the
exclusion which the I.G. imposed and directed against Petitioner is reasonable,
and I sustain it.
ISSUES
The issues in this case are whether:
1. The I.G. had the authority to direct and impose
an exclusion against Petitioner pursuant to section1128(b)(5)(B);
2. The length of the exclusion imposed and directedagainst Petitioner by the I.G. is reasonable.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. At all times relevant to this case, Petitioner was a psychiatrist, providing
psychiatric and other medical
services to Medicaid patients. Tr. 49 - 51, I.G. Ex. 14, 15. 3/
2. Following notice to Petitioner and an administrative review, on January
30, 1990, Kansas Medicaid
suspended Petitioner's participation to provide services in the Medicaid program.
I.G. Ex. 9, 11, 12.
3. Kansas Medicaid found that Petitioner had demonstrated a pattern of submitting
billings for a higher
level of service than was actually performed and of providing services of an
inferior quality that might be
harmful to a patient. I.G. Ex. 9.
4. This Kansas Medicaid action followed an on-site review by the Surveillance
& Utilization Review
Section of Electronic Data Systems Corporation (EDSC) of Petitioner's practice
which found three areas of
concern relating to Petitioner's billing patterns and medical practice: 1) that
Petitioner consistently billed
the Medicaid/MediKan program at a higher level of service than his medical record
documentation would
support; 2) that the medical necessity and quality of psychiatric services provided
appeared questionable;
and 3) that physical examinations were documented as provided to recipients
in an office not equipped for
such services. I.G. Ex. 14.
5. Petitioner reimbursed Kansas Medicaid for a reduced amount to satisfy the
overpayment documented by
EDSC. I.G. Ex. 8, 16; I.G. Br. 9.
6. Petitioner is eligible to apply for reinstatement to the Kansas Medicaid
program as of February 19,
1993. I.G. Ex. 9, 13.
7. Kansas Medicaid suspended Petitioner as a participant in the Medicaid program
for reasons bearing on
his professional competence, professional performance, or financial integrity.
FFCL 1 - 5; Social Security
Act, 1128(b)(5).
8. The Secretary of the Department of Health and Human Services (Secretary)
delegated to the I.G. the
authority to determine, impose and direct exclusions pursuant to section 1128
of the Act. 48 Fed. Reg.
21662 (May 13, 1983).
9. The I.G. had authority to impose and direct an exclusion against Petitioner. FFCL 7.
10. On April 18, 1991, the I.G. imposed and directed the exclusion of Petitioner
from participating in
Medicare and Medicaid.
11. The exclusion imposed and directed against Petitioner by the I.G. is to
last until Petitioner is reinstated
by Kansas Medicaid. I.G. Ex. 6.
12. Regulations published on January 29, 1992, establish criteria to be employed
by the I.G. in
determining to impose and direct exclusions pursuant to sections 1128(a)(1)
and (2) and (b) of the Act. 42
C.F.R. Part 1001; 57 Fed. Reg. 3298, 3330 - 3341 (January 29, 1992).
13. The Secretary did not intend that the regulations contained in 42 C.F.R.
Part 1001, and, in particular,
42 C.F.R. 1001.601, govern my decision in this case.
14. The exclusion provisions of section 1128(b)(5) of the Act establish neither
minimum nor maximum
exclusion terms in those circumstances where the I.G. has discretion to impose
and direct exclusions.
15. Section 1128(b)(5) of the Act does not require that the I.G. examine the
fairness or propriety of the
process which led Kansas Medicaid to exclude Petitioner.
16. Petitioner repeatedly billed Medicaid for a higher level of medical service
than his medical record
documentation supported, evidencing a lack of financial integrity, within the
meaning of section
1128(b)(5)(B) of the Act. I.G. Ex. 8, 14, 15, 16.
17. The medical necessity and quality of psychiatric services provided by Petitioner
were questionable,
evidencing a lack of professional competence on Petitioner's part, within the
meaning of section
1128(b)(5)(B) of the Act. I.G. Ex. 14, 15.
18. Petitioner performed physical examinations in an office not equipped for
that purpose, evidencing a
lack of professional performance on Petitioner's part, within the meaning of
section 1128(b)(5)(B) of the
Act. I.G. Ex. 14, 15.
19. A remedial objective of section 1128(b)(5) of the Act is to protect the
integrity of federally funded
health care programs, and their recipients and beneficiaries, from individuals
who demonstrate by their
conduct that they cannot be trusted to deal with program funds or to provide
items or services to recipients
or beneficiaries.
20. The patient records introduced by Petitioner do not support Petitioner's
trustworthiness to provide
services to the Medicare and Medicaid programs. P. Ex. 1, 2; Tr. 40 - 43.
21. Excluding Petitioner until Kansas Medicaid reinstates him is neither extreme
or excessive. FFCL 1 -
20.
RATIONALE
Kansas Medicaid suspended Petitioner from participation as a provider, effective
February 19, 1990, due to
his pattern of submitting billings for a higher level of service than what was
actually performed and of
providing services of inferior quality that might cause harm to a patient. FFCL
2, 3. Petitioner is eligible
to apply for reinstatement on February 19, 1993. Pursuant to section 1128(b)(5)(B)
of the Act, the I.G. has
excluded Petitioner until such time as he is reinstated by Kansas Medicaid.
In effect, Petitioner argues that
the underlying State determination against him was false and that he was not
culpable for the actions
charged against him. 4/ Furthermore, Petitioner asserts that he is trustworthy
and that the length of the
exclusion imposed and directed against him by the I.G. is unreasonable. I do
not agree. Petitioner has not
presented credible evidence to show that he would be a trustworthy provider
of program services until he is
reinstated by Kansas Medicaid. Therefore, I find that the length of the exclusion
imposed and directed
against Petitioner in this case is reasonable.
1. The I.G. had authority to exclude Petitioner pursuant to section 1128(b)(5)(B).
Section 1128(b)(5)(B) of the Act permits the I.G. to exclude from the Medicare
and Medicaid programs
any individual or entity who has been suspended or excluded from participation,
or otherwise sanctioned,
under:
a State health care program, for reasons bearing
upon the individual's or entity's professional
competence, professional performance, or financial
integrity.
For an exclusion to be effectuated pursuant to section 1128(b)(5)(B), the Act
requires only that two
preconditions be met to establish the I.G.'s authority to exclude: 1) the individual
or entity must have been
suspended or excluded from a State health care program; and 2) the reasons for
the party's suspension or
exclusion must bear on that party's professional competence, professional performance,
or financial
integrity.
The I.G.'s authority to impose and direct exclusions pursuant to section 1128(b)(5)(B)
is derivative, i.e., it
emanates from a State's exclusion or suspension proceeding. The fairness of
a State suspension is
irrelevant in determining whether the I.G. has authority to exclude under section
1128(b)(5)(B). It is the
fact of the State suspension that provides the I.G. the authority to exclude
Petitioner.
The first criteria is that the individual or entity must have been suspended
or excluded from a State health
care program. The I.G. must establish that the prerequisite sanction has been
imposed and that the
sanctioning agency is a proper State entity. If the I.G. does this, an excluded
individual cannot collaterally
attack the process by which the State suspended him. Olufemi Okunoren, M.D.,
DAB CR150 at 7 (1991),
aff'd DAB 1319 at 6 (1992). Petitioner has argued, in effect, that the process
by which he was suspended
by the Kansas Medicaid program was unfair. Tr. 15 - 20; Petitioner's April 30,
1992 Motion. Petitioner
does not deny that Kansas Medicaid is a legitimate State entity and that it,
in fact, did suspend him.
The second criteria is that Petitioner's suspension relate to his professional
competence, professional
performance, or financial integrity. Kansas Medicaid found that Petitioner had
engaged in a consistent
practice of billing for a higher level of medical service than his medical record
documentation would
support, and Petitioner had, in fact, reimbursed Kansas Medicaid to satisfy
his overpayment. FFCL 5, 16.
This finding concerns Petitioner's financial integrity. Kansas Medicaid also
found problems with the
medical necessity and quality of the psychiatric services Petitioner provided
his patients. Petitioner
appeared to utilize only three diagnoses, his patient records lacked documentation,
and the records showed
no indication that many patients receiving psychotherapy for a number of years
had achieved any level of
improvement. FFCL 17.
These findings concern Petitioner's professional competence. Finally, Kansas
Medicaid found evidence
that Petitioner performed physical examinations in an office not equipped for
that purpose. The office did
not contain an examination table, protective paper coverings, or soap in the
bathroom. FFCL 18. These
findings concern Petitioner's professional performance.
Kansas Medicaid's reasons for suspending Petitioner convince me that Petitioner
was excluded from a State
health care program for reasons bearing on his professional competence, professional
performance, and
financial integrity. I find, therefore, that the I.G. had authority to exclude
Petitioner pursuant to section
1128(b)(5)(B) of the Act.
2. The regulations published by the Secretary on January 29, 1992 are not applicable to this case.
The I.G. sent Petitioner a letter (Notice) informing him of his exclusion on
April 18, 1991. Petitioner
appealed this exclusion on June 10, 1991, and my office received the appeal
on July 5, 1991. Six months
from the time I began to hear this case, on January 29, 1992, the Secretary
published regulations which,
among other things, established criteria to be employed by the I.G. in determining
the length of exclusions
to be imposed pursuant to sections 1128(a) and 1128(b) of the Act. 42 C.F.R.
Part 1001; 57 Fed. Reg.
3298, 3330 - 3341. These regulations include a section which establishes criteria
to be employed by the
I.G. in determining the length of exclusions to be imposed pursuant to section
1128(b)(5). 42 C.F.R.
1001.601; 57 Fed. Reg. 3333.
The I.G. argues that section 1001.601 does not apply to this case, because
his decision to exclude Petitioner
until Petitioner was reinstated by the State health care program which suspended
him predated publication
of the regulations. 5/ The I.G. contends, however, that the parts of the new
regulations which govern
hearings do apply, because the in-person hearing occurred after publication
of the regulations.
Specifically, the I.G. cites section 1001.2007, which provides in pertinent
part that the basis for the
underlying determination in a section 1128(b)(5)(B) exclusion, here Kansas Medicaid's
termination of
Petitioner, is not reviewable and that individuals or entities cannot collaterally
attack these determinations.
The I.G. also asserts that section 1005.4(c) limits an ALJ's authority, in that
the ALJ cannot: 1) review the
I.G.'s exercise of discretion to exclude an individual or entity under section
1128(b) of the Act; 2)
determine the scope or effect of the exclusion; or 3) set the period of exclusion
at zero.
An appellate panel of the DAB recently held in Behrooz Bassim, M.D., DAB 1333
at 5 - 9 (1992), that the
I.G.'s interpretation of these regulations on the scope of review and the length
of the exclusion is not
consistent with past Board decisions and would represent substantive changes
in the law. I believe that
what the appellate panel held with regard to section 1128(b)(4) in Bassim is
equally true here with regard
to section 1128(b)(5)(B). In Bassim, the appellate panel held that substantive
changes should not be
applied retroactively, and that portions of the 1992 regulations which change
substantive law may
permissibly be applied only to cases in which the I.G.'s Notice of Intent to
Exclude, Notice of Exclusion, or
Notice of Proposal to Exclude is dated on or after January 29, 1992. In this
case, the Notice letter was sent
long before the Secretary promulgated new regulations.
Furthermore, I conclude that my review of the reasonableness of the exclusion
imposed and directed
against Petitioner is not governed by the new regulations' criteria for determining
exclusions under section
1128(b)(5) of the Act. The regulations contained in Part 1001 of the new regulations,
and 42 C.F.R.
1001.601 in particular, were not intended by the Secretary to govern my determinations
in hearings held
pursuant to section 205(b)(1) of the Act in which an issue is the reasonableness
of the I.G.'s exclusion
determinations. Charles J. Barranco, M.D., DAB CR187 (1992); Syed Hussaini,
DAB CR193 (1992);
Steven Herlich, DAB CR197 (1992); Stephen J. Willig, M.D., DAB CR192 (1992);
Sukumar Roy, M.D.,
DAB CR205 (1992). I am not concluding that the regulations are invalid; only
that they apply to the
review criteria used by the I.G in determining the appropriate length of exclusion
in certain specified
circumstances. The right to a hearing for review of the I.G.'s action, which
is granted to Petitioner under
section 205(b)(1) of the Act, permits consideration of factors in addition to
those specified in the new
regulations.
3. The exclusion directed and imposed against Petitioner by the I.G. is reasonable.
I have found that the new regulations do not apply to this case. Therefore,
in deciding whether or not an
exclusion under section 1128(b)(5)(B) is reasonable, I look to DAB decisions
issued prior to the enactment
of the new regulations in reviewing evidence of Petitioner's trustworthiness.
See, e.g., Joel Davids, DAB
CR137 (1991); Roderick L. Jones, DAB CR98 (1990); and Frank J. Haney, DAB CR81
(1990).
Congress enacted the exclusion law to protect the integrity of federally funded
health care programs.
Among other things, the law was designed to protect program recipients and beneficiaries
from individuals
who have demonstrated by their behavior that they threaten the integrity of
federally funded health care
programs or that they can not be entrusted with the well-being and safety of
beneficiaries and recipients.
See S. Rep. No. 109, 100th Cong., 1st Sess., reprinted in 1987 U.S.C.C.A.N.
682.
An exclusion imposed and directed pursuant to section 1128 of the Act advances
this remedial purpose.
The principal purpose is to protect programs and their beneficiaries and recipients
from untrustworthy
providers by excluding them for a period of time, or until they meet a specific
requirement, designed to
demonstrate that they can be trusted to deal with program funds and to properly
serve beneficiaries and
recipients. As an ancillary benefit, the exclusion deters other providers of
items or services from engaging
in conduct which threatens the integrity of programs or the well-being and safety
of beneficiaries and
recipients. See H. R. Rep. No. 393, Part II, 95th Cong. 1st Sess., reprinted
in 1977 U.S.C.C.A.N. 3072.
Deterrence cannot be a primary purpose of imposing an exclusion. Where deterrence
becomes the primary
purpose, section 1128 no longer accomplishes a civil remedial purpose, but punishment
becomes the end
result. Such a result has been determined by the Supreme Court to contravene
the Constitution and to be
beyond the purpose of a civil remedy statute. United States v. Halper, 490 U.S.
448 (1989).
An exclusion imposed and directed pursuant to section 1128 will likely have
an adverse financial impact
on the person against whom the exclusion is imposed. However, the law places
program integrity and the
well-being of beneficiaries and recipients ahead of the pecuniary interests
of providers. An exclusion is not
punitive if it reasonably serves the law's remedial objectives, even if the
exclusion has a severe adverse
financial impact on the person against whom it is imposed.
No statutory minimum mandatory exclusion period exists in cases where the I.G.'s
authority arises from
section 1128(b)(5)(B), nor does the statute require that a provider be excluded
until he is reinstated by the
State health care program which excluded him. However, an exclusion until a
provider is reinstated is not
per se unreasonable.
By not mandating that exclusions from participation in the programs be permanent,
however, Congress has
allowed the I.G. the opportunity to give individuals a "second chance."
An excluded individual or entity
has the opportunity to demonstrate that he or she can and should be trusted
to participate in the Medicare
and Medicaid programs as a provider. Lakshmi N. Murty Achalla, M.D., DAB 1231
(1991).
This hearing is, by reason of section 205(b)(1) of the Act, de novo. Evidence
which is relevant to the
reasonableness of an exclusion is admissible whether or not that evidence was
available to the I.G. at the
time the I.G. made his exclusion determination. I do not, however, substitute
my judgment for that of the
I.G. An exclusion determination will be held to be reasonable where, given the
evidence in the case, it is
shown to fairly comport with legislative intent. "The word 'reasonable'
conveys the meaning that . . . [the
I.G.] is required at the hearing only to show that the length of the [exclusion]
determined . . . was not
extreme or excessive." (Emphasis added.) 48 Fed. Reg. 3744 (1983).
It is difficult to determine when an individual will regain sufficient trustworthiness
to be allowed to reapply
to the I.G. for reinstatement as a provider in the Medicare and Medicaid programs.
It involves
consideration of multiple factual circumstances. The appellate panel in Robert
Matesic, R.Ph., d/b/a
Northway Pharmacy, DAB 1327 (1992) provided a listing of some of these factors,
which include:
the nature of the offenses committed by the provider, the circumstances surrounding
the offense,
whether and when the provider sought help to correct the behavior which led
to the offense, how far the
provider has come toward rehabilitation, and any other factors relating to the
provider's character and
trustworthiness.
Matesic at 12.
It is evident that, in using these factors, I must attempt to balance the seriousness
and program impact of
Petitioner's conduct which led to his Kansas Medicaid suspension with any existing
factors which may
demonstrate his trustworthiness. In assessing the reasonableness of the I.G.'s
permissive exclusion, it is
incumbent upon me to consider all these matters in effecting the remedial purposes
of the Act.
In this case, Kansas Medicaid found serious deficiencies in Petitioner's medical
practice which bore
directly on Petitioner's financial integrity, professional performance, and
professional competence.
Specifically, Kansas Medicaid, following an investigation initiated as a result
of a complaint from a
recipient assigned to Petitioner as a patient, found three areas of concern
with respect to Petitioner's
practice. These included: 1) Petitioner consistently billed the Medicaid/MediKan
program a higher level
of service than his medical record documentation would support; 2) the medical
necessity and quality of
psychiatric services provided appeared questionable; and 3) physical examinations
were provided to
recipients in an office not equipped for such service. FFCL 4, 16 - 18. Based
on these deficiencies,
Kansas Medicaid terminated Petitioner from the Kansas Medicaid program, and,
based on the Kansas
Medicaid action, the I.G. in effect excluded Petitioner from the Medicare and
Medicaid programs.
In response, Petitioner relies on two patient records (P. Ex. 1 and 2) which
he contends demonstrate the
completeness of his examinations and support his trustworthiness to be a provider
of services to the
Medicare and Medicaid programs. Tr. 39 - 41. However, I do not find that Petitioner's
exhibits support his
contentions. These two patient records were both considered by Kansas Medicaid
during its on-site review
of Petitioner's practice, and they were among the files listed by Kansas Medicaid.
Tr. 40 - 42; I.G. Ex. 16,
17, 18. Furthermore, my review of these two files indicates that Kansas Medicaid's
findings that
Petitioner's records in general lacked treatment plans, goals, direction, assessment,
prognosis, and
psychiatric terminology, were fully justified. Petitioner's progress notes did
not reflect that his services
were effective in relieving his patients' underlying problems. In addition,
Petitioner was provided an in-
person hearing where he was given the opportunity to demonstrate his trustworthiness
to be a program
provider. 6/ Much of the evidence he adduced related to his belief that he was
treated unfairly and did not
minimize the significance of the conduct which led to his Kansas Medicaid suspension.
Petitioner's actions have had 1) a negative financial impact on the Medicare
and Medicaid programs, by his
billing for a higher level of services than he provided; and 2) a grave potential
for mental or physical harm
to beneficiaries or recipients of the programs as regards problems with his
professional performance and
professional competence. Petitioner does not seem to realize the gravity of
his actions. Petitioner has
sought to blame Kansas Medicaid or Kansas' medical licensing authority, the
Kansas Board of Healing
Arts, for his problems, and does not seem to be able to discern that there could
be problems with himself
and his practice of medicine. Petitioner has made absolutely no attempt to rehabilitate
himself, either by
taking continuing medical education courses, by asserting that he is working
to change his practice
methods, or by availing himself of psychiatric or other medical help.
The I.G. has excluded Petitioner until the Kansas Medicaid program reinstates
him. He is eligible for
reinstatement by Kansas Medicaid in less than one year. Petitioner has not asserted
a desire to practice in
any jurisdiction other than Kansas, and Kansas Medicaid is in the best position
to determine, as of that
time, whether or not Petitioner is trustworthy enough to provide services to
the Medicaid program. Given
the serious nature of the charges which led to Petitioner's exclusion from the
Medicare and Medicaid
programs, and my own examination of Petitioner's medical records, I do not find
that Petitioner's exclusion
is unreasonable.
CONCLUSION
Based on the applicable law and evidence, I find that the I.G. was authorized
to impose and direct an
exclusion against Petitioner under section 1128(b)(5) of the Act. Further, I
find that the exclusion, which is
to last until Petitioner is reinstated by Kansas Medicaid, is reasonable.
Edward D. Steinman
Administrative Law Judge
1. "State health care program" is defined by section 1128(h) of the
Social Security Act to include any
State plan approved under Title XIX of the Act (such as Medicaid). I use the
term "Medicaid" hereafter to
represent all State health care programs from which Petitioner was excluded.
2. Following this hearing, on April 30, 1992, Petitioner, who had appeared
pro se throughout this hearing,
obtained an attorney. Through his attorney, Petitioner filed a motion to reopen
the hearing in this case.
Petitioner wanted to offer evidence relating to the falsity of the State Medicaid
determination underlying
his exclusion. In a Ruling of May 21, 1992, I denied Petitioner's motion. I
held that Petitioner had had
ample opportunity to obtain counsel and to submit evidence relevant to the reasonableness
of the length of
his exclusion. Therefore, having already conducted an in-person evidentiary
hearing, I declined to reopen
the record.
3. Citations to the record in this decision are as follows:
I.G. Exhibits I.G. Ex. (number/page)
I.G. Posthearing Brief I.G. Br. (page)
Petitioner Exhibits P. Ex. (number/page)
Transcript of Hearing Tr. (page)
Findings of Fact and FFCL (number)
Conclusions of Law
4. Petitioner made his arguments in his pre-hearing submissions, at the hearing
in this case, and in his
motion of April 30, 1992. Petitioner has not filed a post-hearing brief.
5. Section 1001.601(b) of the new regulations mandates a three year exclusion
absent aggravating or
mitigating circumstances.
6. Petitioner appeared pro se at the hearing. Given that he lacked the assistance
of counsel, I gave him
wide latitude in challenging the reasonableness of the I.G.'s exclusion.