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U.S. Court In Kansas Affirms Former Hospital Executive's Fifteen-Year Exclusion From Federal Healthcare Programs


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 wrote,

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, 2004).

Health Lawyers thanks Edgar D. Bueno, of Broad and Cassel, in Fort Lauderdale, Florida, for sending us a copy of this decision.


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