HLD, v. 32, n. 5 (May 2004)
U.S. Court In Kansas Affirms Former Hospital Executive's Fifteen-Year
Exclusion From Federal Healthcare Programs
A federal district court March 10 upheld the Department of Health
and Human Services Secretary's decision to exclude former President and Chief
Executive Officer of Baptist Medical Center Dan Anderson (plaintiff) from all
federal healthcare programs for fifteen years after he was convicted of violating
the Anti-Kickback Statute. The court concluded that the length of the exclusion
period over the five-year minimum was reasonable given certain aggravating factors.
"Fifteen years is a reasonable period of exclusion, based on the nature, length
and effect of Plaintiff's acts," the court concluded.
Plaintiff requested an administrative review after being notified
of the fifteen-year exclusion. Plaintiff had been convicted of conspiracy to
commit kickback violations and offering and paying bribes in exchange for referrals
of Medicare patients to the hospital. An administrative law judge (ALJ) affirmed
the exclusion, finding plaintiff was properly excluded under the mandatory exclusion
provision and that the period was not unreasonable given certain aggravating
factors. After further review was denied, the ALJ's ruling became the Secretary's
final decision. Plaintiff sought review in federal district court.
The U.S. District Court for the District of Kansas affirmed the
exclusion. The court held that the ALJ did not err in applying the mandatory
exclusion provision, 42 U.S.C. � 1320a-7(a)(1), instead of the permissive exclusion
provision, 42 U.S.C. � 1320a-7(b)(7). The mandatory exclusion provision applies
to individuals "convicted of program-related crimes," whereas the permissive
exclusion provision applies to an individual "the Secretary determines has committed
an act" described in certain statutes, including the Anti-Kickback Statute.
The court found congressional intent was clear based on the plain
language of the statute--namely, that mandatory exclusion applies to those convicted
of program-related crimes, while permissive exclusion applies to those the Secretary
has determined have committed certain acts described in certain statutes. Moreover,
the legislative history indicates that the permissive exclusion provision "was
enacted as an alternative to criminal prosecution or where a program-related
conviction does not exist."
The court also found no basis for distinguishing plaintiff's conduct
as the hospital's CEO from other categories of healthcare providers. The court
Congress intended to criminalize this type of abuse and intended
to prevent further abuse by excluding those convicted of conduct. This Court
is not persuaded that this practice of paying remuneration in exchange for doctor's
referral of patients was not abusive, even if Plaintiff demonstrated patients
were provided with quality care at competitive or reasonable prices.
Plaintiff's focus was on maximizing the number of patients referred
to his hospital. His conduct was abusive to the extent it impeded market competition,
the court noted.
The court also concluded the length of the exclusion was justified.
The court found substantial evidence that three aggravating factors existed
to warrant lengthening the minimum five-year exclusion period to fifteen years.
Specifically, the court noted that: (1) plaintiff was sentenced to fifty-one
months in prison; (2) the abusive acts occurred over a ten-year period; and
(3) the financial loss to Medicare exceeded $65,000. The court rejected plaintiff's
contention that the ALJ failed to consider that Medicare realized savings as
a result of improved quality of care that resulted from the hospital's consulting
agreements with certain physicians. No mitigating factors specified in the regulations
were present here, the court observed. Regardless of whether patients received
quality care, plaintiff and other co-conspirators still abused the Medicare
program, said the court.
Anderson v. Thompson, No. 02-2312-JAR (D. Kan. Mar. 10,
Health Lawyers thanks Edgar D. Bueno, of Broad and Cassel, in
Fort Lauderdale, Florida, for sending us a copy of this decision.