The AMA is proud to support this historic piece of
legislation [Kassebaum-Kennedy bill]
and extends to all who joined our efforts to have it enacted a heart-felt "thank you."
Daniel Johnson, AMA President
August 2, 1996
The AMA does officially support junkyard dogs, but
as long as they are FBI agents.
Kirk B. Johnson,
General Counsel of the AMA,
testifying before the Judiciary Committee
of the U.S. Senate, May 25, 1994.
(Mr. Johnson resigned in the wake of
the Sunbeam fiasco in December 1997.)
In the Winter 1997 issue of the Medical Sentinel, I wrote, "those of you who may find false solace in blissful ignorance concerning the steps being taken by government towards the criminalization of medicine and/or find comfort in the thought the AMA may have mollified the stern wording contained in the fraud and abuse provisions of the Kassebaum-Kennedy bill (now law)...because of the addition of the words "knowingly and willfully..."(1) are in for a rude awakening with the contents of this special issue of the Medical Sentinel. The persecution and prosecution of physicians for the alleged and profitable charge of fraud and abuse, and the further steps being taken by the government with such presidential initiatives as Operation Restore Trust and HCFA's revised Documentation Guidelines for Evaluation and Management Services (E&M federal guidelines), are mounting evidence that further steps are being taken by the government for the amplification of prosecution and revenue-raising activities against physicians to fund other government health care initiatives (e.g., KidCare, Medicare expansion, etc.).
To add insult to injury, HCFA's revised Documentation Guidelines for Evaluation and Management Services was an idea which AMNews credited to organized medicine in 1992 when the AMA "developed new E&M codes to reflect the fact that Resource Based Relative Value Scale (RBRVS) bases payments on the worked performed by physicians."(2) Once again, organized medicine has circled the wagons and begun to shoot inward!
And so, the AMNews headlines clamor "AMA Acts to Quell E&M Flap," and with it, more serious concerns for practicing physicians: more documentation requirements and more risks of unjust fraud prosecution of physicians.(3) It seems like we may have another repetition of the Kassebaum-Kennedy waste, fraud, and abuse provisions' flap of 1996.
Allow me to digress for a moment to the issue of the role of the AMA and its involvement in the fraud and abuse provisions of the Kassebaum-Kennedy bill as it was proposed in 1996. Despite the AMA's statement to the contrary (and the refusal of AMNews to print several of my and other AAPS members' letters attempting to set the record straight), the AMA did not really act upon the draconian fraud and abuse provisions of the Kassebaum-Kennedy Bill until May 30, 1996, when the AMA headquarters reported receiving nearly 8000 phone calls in response to the momentous Wall Street Journal article by AAPS's Executive Director, Jane M. Orient, M.D., warning physicians and the public at large of the bleak, looming, immediate danger on the medical horizon.(4)
As AMNews reported August 19, "the 'potentially disastrous' fraud and abuse provisions had been successfully thwarted." In fact, two words "knowingly and willfully" were inserted in the criminal penalty clauses, but AAPS' serious concerns were not addressed. As both Drs. Orient and Printz note, the provisions remain draconian so that a physician who refuses to turn over patient records or a patient who fails to mention a pre-existing condition can land either one, or both, in jail.(4,5) Moreover, criminal asset forfeiture also comes into play, as stated in Section 249: "The Court, in imposing sentence on a person convicted of a Federal health care offense, shall order the person to forfeit property, real or personal, that constitutes or is derived, directly or indirectly, from gross proceeds traceable to the commission of the offense."(5)
Civil monetary penalties were upped from $2000 to $10,000 and "no proof of specific intent to defraud" is required. "There is a "reckless disregard" or "deliberate ignorance" standard, but this could be (and has been) applied to overlooking a paragraph in voluminous regulations from the carrier."(5)
These provisions, together with the False Claims Act, which has also been applied against practitioners accused of fraud and abuse, hang by an increasingly thinned legislative thread like the sword of Damocles over the heads of practicing physicians. To combat these swarms of officers harassing physicians and eating out their substance is why the AAPS continues to fight to avert the total criminalization of the practice of private medicine.
It is therefore worth repeating the statement in the Winter 1997 issue of the Medical Sentinel, thereby Dr. Don Printz, then AAPS president, correctly affirmed that the "AAPS is the association fighting to save the medical profession," and as an example, he cited our herculean efforts to educate physicians and the public as to the dangers of the Kassebaum-Kennedy Bill which President Clinton had called "the first step toward universal health care."(5)
"Under the law," Dr. Printz wrote, "both you and your office staff could be convicted of 'federal health care offenses' that could land you in federal prison. And, when you get out of prison a year or five or ten years later, you might have to sweep floors to eke out a living. You probably won't be allowed to practice your profession: convicted felons are usually delicensed. (Actually, delicensure, or failure to be credentialed after an office site inspection, could be your fate even if you don't commit an 'offense' that puts you behind bars....) After a criminal conviction, you probably won't be able to sell your house to finance a start in a new business or profession. It may be owned by the Fraud and Abuse Account in the Hospital Insurance Trust Fund, helping to finance the prosecution of more villains like you. Even if you don't take Medicare or Medicaid payments, you are still at risk. The law turns any offense against a 'health care plan,' public or private, into a federal crime. Sure, not everyone will be prosecuted. You will most likely be offered an opportunity to settle for civil monetary penalties of a mere $10,000 per offense (as for each and every instance of miscoding a claim). Impossible? It has already happened, even before Kassebaum-Kennedy."(5)
Dr. Printz then cited the case of George Krizek, M.D., a Washington D.C. psychiatrist, who initially was fined $80 million for "allegedly upcoding and providing 'medically unnecessary' services."
And so, with this and other examples which follow, it's no wonder Andrew Schlafly, Esq., AAPS Legal Counsel, at the Freedom in Medicine conference asked himself rhetorically: "Why is government increasing prosecution of physicians under fraud statutes? Because it's running out of money in Medicare. And the government has to find a way to save the system. One way is by alleging fraud, extracting large settlements from physicians to fund the system."6 Leviathan beware, as Alexandr Solzhenitsyn wrote in The First Circle (1968), "You have only power over the people so long as you don't take everything away from them. But when you've robbed a man of everything he's no longer in your power - he's free again."
I would like to briefly recapitulate for you loyal AAPS members, and introduce you new readers of the Medical Sentinel, to some of the physicians who have paid the harsh penalty of being accused by the great leviathan and prosecuted for allegedly committing the bureaucrats' dream of "waste, fraud, and abuse." Among the cases that have been discussed at some length in AAPS News include those of Jeffrey J. Rutgard, M.D., George Krizek, M.D., W. Velez-Ruiz, M.D., and Mr. Edgardo Pérez-DeLeon.
In the case of Dr. Rutgard, evidence was gathered by invading his home and office and seizing the records of some 20,000 patient visits. After 2.5 years of study, prosecutors brought charges in 218 of the cases (1%) of which one-third were ultimately dismissed. The victims were not patients (nearly all the patients had improved vision after being treated by Dr. Rutgard) but the Medicare program, which allegedly paid $65,140 for "medically unnecessary surgery between 1988 and 1992." Upon conviction in June 1995, Dr. Rutgard was sentenced to serve 135 months in prison, fined $150,000, and ordered to pay $16,206,908 in restitution - the entire gross proceeds of all insurance payments during the entire period. Bail was denied on appeal, and Dr. Rutgard was incarcerated at Fort Dicks, New Jersey, thousands of miles from his wife and five young children. He was still in prison in El Paso, Texas at the time of the writing of this report.
Dr. Rutgard was esteemed by most of his patients. Four hundred wrote letters on his behalf, and none were allowed to testify. On March 6, 1997, the Ninth Circuit Court of Appeals unanimously adopted reasoning, outlined by AAPS in its amicus brief, stating that fraud in specific cases does not prove that a doctor's whole practice is a fraud. The court reversed certain counsel convictions, set aside the order of forfeiture, vacated the sentence, and remanded the case for resentencing.
On May 2, 1997, the government filed a civil action under the False Claims Act against Dr. Rutgard using the same allegations as in its criminal case under this statute. Although the Circuit Court vacated the order of forfeiture against Dr. Rutgard, none of his confiscated earnings are yet available either to pay an attorney or to support his wife and five children. Dr. Rutgard has been incarcerated for over two and one-half years.(7) Can we take solace in Seneca's words that "injustice never rules forever"?
The ordeal of George Krizek, M.D. began on December 12, 1989, when his wife (who was home alone) reported receiving a telephone call asking if she would be there to receive a "Christmas delivery." A short time later, three people appeared at her door and flashed identification badges. They said they were from Medicaid and had some questions to ask her. When asked if they had anything in writing, they responded that they "didn't need anything." They were later identified as investigators in the office of HHS Inspector General; two were former FBI agents specialized in counterintelligence activities. For three hours, Mrs. Krizek stated, "the visitors accused her of enriching herself by filing claims for non-existent patients on behalf of her husband." Dr. Krizek produced the files on all the named patients. When Dr. Krizek arrived, they subjected him to the same treatment including mockery of the couple's foreign accent. They asked why he put "medical stuff" in his hospital charts (which they had already examined) asserting that he was a "psychologist."(8)
On January 11, 1993, before the Krizeks had even located an attorney, local radio and television stations carried stories announcing the actions that had been filed against Dr. Krizek as "part of a major health care fraud enforcement initiative." The press release claimed that Dr. Krizek submitted "fraudulent multiple billings for patients' psychoanalytic sessions."(8) After a three-week trial, Judge Stanley Sporkin ruled that the government had not proved lack of medical necessity. Further, the Court found the government's procedure to be "arbitrary" and "perverse." Nevertheless, the Court found that Dr. Krizek would be "presumed liable" under the False Claims Act for filing claims for services of more than 9 hours a day (12 or more sessions of 45 to 50 minutes) on any one day.
Because "Mrs. Krizek made no effort to establish how much time Dr. Krizek spent on a particular matter," and because Dr. Krizek failed to supervise the claims submission, the Court concluded that "the defendant acted with reckless disregard as to the truth or falsity of the submissions." According to the 1986 amendments to the False Claims Act (31 U.S.C. Sec. 3729(b)), liability may be found without proof of specific intent to defraud. In a hearing before a Special Master, Dr. and Mrs. Krizek provided rebuttal evidence in the form of 39 declarations of physician colleagues and staff at Washington Hospital Center stating that Dr. Krizek was a hard worker who often worked more than 9 hours a day, especially when covering for others. The Washington Psychiatric Society wrote a "Motion of Intervenor" protesting that hospital-based psychiatrists were often required to work more than 9 hours, even 20 hours in a 24-hour period when severely disturbed patients require admission.
Despite this rebuttal evidence, Dr. and Mrs. Krizek were found liable for millions of dollars. A freeze on the Krizek's assets has been in place since April 1995. Dr. Krizek has been unable to practice since May 1994.
On September 3, 1996, the AAPS filed an amicus curiae brief on behalf of Dr. Krizek. After failing to bully a settlement from the Krizeks, the government brought an $80 million claim against them under the False Claims Act, demanding a $10,000 penalty for each $48 psychiatric session alleged to have been fraudulent. At trial, the government lost every claim from which it attempted to offer specific evidence against the Krizeks. That ruling should have ended the case. Instead, the government pushed their case utilizing their enormous resources and ultimately prevailed on two claims that it never pleaded. That the bills for three of 180 days included charges in excess of 24 hours and that on, 264 days, Dr. Krizek had billed for more than 9 hours of patient treatment.
The District Court, presuming those charges fraudulent, invoked the maximum $10,000 penalty for each of the 11 false items and added fines resulting in a total penalty of $157,105.38.
On appeal for the D.C. Circuit, the civil suit brought against Dr. Krizek has been remanded for the recalculation of damages. The government contended that each CPT code should be treated as a separate claim, leading it to seek an "astronomical $81 million worth of damages for alleged actual damages of $245,392." Dr. Krizek's failure to review bills submitted on his behalf was ruled to be "reckless disregard." The Court observed that "an FCA violation may be established without reference to the subjective intent of the defendant."(8)
In the case of Mr. Edgardo Pérez-DeLeon, he was convicted of the "general intent" to collect Medicaid payments while acting as office manager for his wife's (Dr. Wanda Velez-Ruiz) internal medicine practice. Mr. Pérez was incarcerated for one year in the Ingham County jail and, despite the Freedom of Information Act requests, has yet to receive an authoritative answer as to the illegality of the act for which he was convicted. The Court of Appeals for the State of Michigan denied the motion for rehearing. Mr. Pérez has been in and out of court since 1992, when criminal charges were filed against him and his wife. Although employees generally are immune from criminal liability, Mr. Pérez states he was convicted "on grounds of marriage," after dismissal of charges of conspiracy against him and his wife.(9)
In addition to the cases above that have been covered at some length in AAPS News, there have been several other cases that we have mentioned or reported briefly therein, such as that of Dr. Stanislaw Burzynski, who, accused of contempt for violating a court order against shipping investigational chemotherapy drugs to his patients with cancer across state lines, was ultimately acquitted. Dr. Burzynski had been indicted in 1995 on 75 counts of mail fraud, contempt, and violating FDA rules. After his first trial ended in a hung jury, U.S. District Judge Sim Lake dismissed 34 counts, and just before trial prosecutors dropped all but one of the remaining charges. Dr. Burzynski's "antineoplastons" are now being tested under FDA guidelines. Patients, some of whom claim to be cured despite a terminal prognosis from other doctors, were overjoyed. "What [the verdict] means is medical freedom for all of us," stated one patient. "It's the end of 14 years of war," stated Dr. Burzynski.10 Moreover, preliminary reports from the FDA's own testing of the antineoplastic therapeutic effectiveness (and safety) appear promising.(11)
There was also the infamous case of Dr. William E. Hurwitz of Washington D.C. whose license to practice in Virginia was revoked, without a prior hearing, because of his effort to relieve chronic, intractable, noncancer pain using lawfully available narcotics such as morphine. Dr. Hurwitz has appealed to Virginia state courts on the ground that the Board of Medicine failed to follow Virginia's Intractable Pain Act. Dr. Hurwitz and four of his patients also filed a federal lawsuit in the Richmond Division of the Eastern District of Virginia on the grounds that summary suspension and its indefinite continuation without hearing violate the U.S. Constitution, and the state board's regulatory action violated both the Americans with Disabilities Act and the patients' constitutional right to seek medical treatment for the relief of pain. Most state medical boards think that it is not legitimate to treat chronic noncancer patients with narcotics.(12) Dr. Hurwitz believes that narcotics are a better alternative than the Kevorkian method.(13)
Another case is that of Dr. Nicholas Bartz, whose office was raided for alleged "insurance fraud." Two years later, he was cleared when a judge ruled that the "insurance fraud" case against him was so flimsy it should never have been brought to trial. He was accused of unlawfully billing for a joint "aspiration or injection," when he had only done an injection, and of not spending enough time on therapy. The alledged amount of fraud was less than $300, but the proceedings cost the accused physician hundreds of thousands of dollars in legal fees and lost work.
The investigators seized dozens of patients' records, far more than authorized by the search warrant, and have yet to return them or to release copies. Patients are concerned about loss of confidentiality as well as their ongoing care. Dr. Bartz has filed suit against Michigan Attorney General Frank J. Kelley and Blue Cross & Blue Shield of Michigan, alleging malicious prosecution.(14)
One of the most egregious act of the government leviathan perpetrated against not just a physician but his wife and children occurred on June 23, 1995 in West Virginia. In a home-medical office, armed men and women rushed in, holding everyone at gunpoint. Nothing was said for several minutes to comfort the patients and let them know that the gun-toting assailants were not robbers or murderers, but law enforcement officers. No explanation was given to a nine-year-old child who had several guns aimed at him for several minutes.
Dr. Danny R. Westmoreland of Mason, West Virginia wrote on November 6, 1996: "For several months in 1996, federal grand juries were given testimony by government-selected witnesses in an attempt to bring indictments to justify their actions. Very scary to be innocent and yet a target. Imagine the feeling when a former patient comes to apologize for being involved with *** of the DEA and *** of Medicaid of WV in providing false information to a grand jury, after being told what to say and how much to say and being offered a financial reward....Next came nearly a year and a half of constant harassment by every governmental agency available. I received lists of new patient charts, other than those taken at gunpoint earlier, and provided them...It was impossible to take care of taxes because all my records had been removed and only returned in scattered bits...I don't think my nightmare will ever be over, and my life will never be the same. Perhaps there were some gunslinging officers here that morning who felt they were doing their job and did not know the extent of their injustice. Actually, I feel that there were because of their sincere apologies that some of them gave. Them, I forgive. But those who continue to falsely represent the facts and who instruct persons to perjure themselves should have criminal charges filed against them. Their authority should be taken immediately until they are investigated fully for their intentions and actions. I believe it is now well known how power and a desire to make a name can corrupt law enforcement officials. And the media are frequently there, arm in arm, to exacerbate their reckless and damaging claims...."(15)
After hearing testimony from witnesses, U.S. District Judge Joseph R. Goodwin said, "I am appalled. I am shocked. And it is something this court will not tolerate. It is one of the most outrageous things I've ever heard. Police officers in this country are peace officers. They're not cowboys."(16)
AMNews further reported: "The agents voided their search warrants by violating the rights of both Dr. Westmoreland, 41, and the waiting room patients," said Mr. Ben Bailey, an attorney representing Dr. Westmoreland. "The state and federal agents had their guns drawn when they told 15 to 20 patients to stand against the wall," Bailey said.(16) On February 13, 1998, I attempted to talk to Dr. Westmoreland; unfortunately, I was told by his secretary that "he could not comment because of pending litigation."
There are many more horror stories of physician persecution and prosecution,
some are presented in this issue - we can not cover them all! While the
AAPS is legally going to bat for physicians entangled in this web of injustice,
representing physicians in some cases and filing amicus curiae briefs
in others and always pointing out to the courts the flaws and injustices
committed, one may wonder: Where is the AMA? Quoting AMNews, April
27, 1998, "The AMA remains unaware of any case in which a doctor has
been prosecuted for inadvertent billing errors."
1. Faria MA, Jr. No escape. News Capsules. Medical Sentinel 1997;2(1):6.
2. AMA-Federation Tackles [sic] E&M. AMNews, March 2, 1998, p.4.
3. AMA acts to quell E&M flap. AMNews, March 2, 1998, p. 1.
4. Orient JM. Health bill would shackle doctors - literally. Wall Street Journal, May 30, 1996, p.A14.
5. Printz DW. Why we need the AAPS - now more than ever. Medical Sentinel 1997;2(1):10-12.
6. Schlafly A. Freedom in Medicine Conference, New Brunswick, New Jersey, May 16, 1997.
7. AAPS News, October 1996, November 1996, May 1997, July 1997, August 1997.
8. AAPS News, December 1995, and October 1996.
9. AAPS News, February 1996, August 1997, October 1997.
10. AAPS News, July 1997. Dr. Burzynski also featured prominently in an article in The New American, July 7, 1997. See also Sue Blevin's article in this issue of the Medical Sentinel beginning on page 133.
11. National Cance Institute Report on Antineoplastons. Received from Cypress Bioscience, January 8, 1998.
12. AMNews, September 23/30, 1996.
13. AAPS News, November 1996. See also Dr. Hurwitz's article in this issue of the Medical Sentinel beginning on page 130.
14. AAPS News, August 1997.
15. AAPS News, July 1997.
16. AMNews, October 20, 1997.
Dr. Faria is a consultant neurosurgeon and author of Vandals at the Gates of Medicine (1995) and the newly released Medical Warrior: Fighting Corporate Socialized Medicine (Macon, Georgia, Hacienda Publishing, Inc., 1997). He is also the Editor-in-Chief of the Medical Sentinel.
[For much of the material on the case histories, I relied heavily on
AAPS News. I am indebted to Jane M. Orient, M.D., Executive Director
of the AAPS and editor of AAPS News, for her work of compiling much
of this material on the government assault on individual physicians over
the last several years.-MAF.]
(Illustration by Russell L. Blaylock, M.D.)