Bernstein v. Sullivan

• Decision Date: 18 September 1990
• Docket Number: No. 89-9528,89-9528
• Citation: 914 F.2d 1395
• Parties: , Medicare&Medicaid Gu 38,889 Donald O. BERNSTEIN, Petitioner, v. Louis W. SULLIVAN, Secretary, Department of Health and Human Services, Respondent.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1395

914 F.2d 1395

31 Soc.Sec.Rep.Ser. 195, Medicare&Medicaid Gu 38,889

Donald O. BERNSTEIN, Petitioner, v. Louis W. SULLIVAN, Secretary, Department of Health and Human Services, Respondent.

No. 89-9528.

United States Court of Appeals Tenth Circuit.

Sept. 18, 1990.

Rodney W. Snow of Dixon & Snow, P.C., Denver, Colo. (Lee D. Foreman and Saskia A. Jordan of Haddon, Morgan & Foreman, P.C., Denver, Colo., with him on the brief), for petitioner-appellant.

Katherine S. Gruenheck (Stuart M. Gerson, Asst. Atty. Gen., Washington, D.C., and Anthony J. Steinmeyer, Appellate Staff, Civ. Div., U.S. Dept. of Justice, Washington, D.C., with her on the brief), for respondent-appellee.

Before MOORE and McWILLIAMS, Circuit Judges, and BRATTON, Senior District Judge. ^*

McWILLIAMS, Circuit Judge.

This is a petition for review of a final decision of the Secretary of Health and Human Services holding Dr. Donald O. Bernstein, a chiropractor, liable under the Civil Monetary Penalties Law (CMPL) for submitting false claims for Medicare reimbursement. 42 U.S.C. Sec. 1320a-7a. Jurisdiction is based on 42 U.S.C. Sec. 1320a-7a(e).

The Secretary's decision imposed a civil monetary penalty on Dr. Bernstein in the sum of $49,200.00 and an additional assessment of $2,742.40. The principal issue in this proceeding is whether a six-year statute of limitations set forth in 42 U.S.C. Sec. 1320a-7a(c)(1) applies to the Secretary's proceeding against Dr. Bernstein. A review of the statutory scheme of the CMPL and the facts of Dr. Bernstein's case will place that issue in focus.

On August 13, 1981, Congress enacted the CMPL, a statute providing for civil monetary penalties and assessments for individuals who file false Medicare or Medicaid claims. 42 U.S.C. Sec. 1320a-7a(a)(1)(A). Such were "in addition to any other penalties that may be prescribed by law...." 42 U.S.C. Sec. 1320a-7a(a). The CMPL also provided that upon conviction a false claimant would be excluded from continued participation in the Medicare and Medicaid programs. 42 U.S.C. Sec. 1320a-7a(a).

The CMPL, as enacted in 1981, was intended to promote an administrative adjunct to criminal proceedings as an additional means of sanctioning persons who submit false claims for payment under the Medicare and Medicaid programs. A proceeding under the CMPL to impose penalties and assessments for fraudulent submission of claims against Medicare is a civil proceeding, not a criminal or quasi-criminal proceeding. Chapman v. United States Dep't of Health & Human Services, 821 F.2d 523 (10th Cir.1987); in accord, Scott v. Bowen, 845 F.2d 856 (9th Cir.1988). 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. The purpose of the 1987 amendments to the CMPL, about which more will be said later, was "to improve the ability of the Secretary and the Inspector General of the Department of Health and Human Services to protect Medicare, Medicaid, Maternal and Child Health Services Block Grant, and Title XX Social Services Block Grant Programs from fraud and abuse...." S.Rep. No. 100-109, 100th Cong., 1st Sess., 1-2 (1987), U.S.Code Cong. & Admin.News 1987, pp. 682, 683.

Under the CMPL, the Secretary may impose a civil penalty of "not more than $2,000 for each item or service" falsely claimed, and "an assessment of not more than twice the amount claimed for each such item or service in lieu of damages sustained by the United States or a State agency because of such claim." 42 U.S.C. Sec. 1320a-7a(a), as amended. The CMPL and regulations issued by the Secretary identify the factors to be considered by the Secretary in any imposition of penalties and assessments. As indicated, persons subject to civil monetary penalties and assessments may also be excluded from further participation in federal and state health care programs. 42 U.S.C. Sec. 1320a-7a(a).

Prior to the 1987 amendments to the CMPL, Congress did not set forth a statute of limitations prescribing the time within which the Secretary could initiate an action for civil monetary penalties and assessments against a claimant who made false claims. However, 28 U.S.C. Sec. 2462 provided that, except as otherwise provided by an Act of Congress, a proceeding for enforcement of any civil fine, penalty, or forfeiture be commenced within five years from the date the claim first accrued and the Secretary, by regulation, also imposed a five-year period within which he had to initiate such an action against a false claimant. 42 C.F.R. Sec. 1003.132. ¹

The 1987 amendments to the CMPL contained an express statute of limitations which provides as follows:

"The Secretary may not initiate an action under this section with respect to any claim, request for payment, or other occurrence described in this section later than six years after the date the claim was presented, the request for payment was made, or the occurrence took place." 42 U.S.C. Sec. 1320a-7a(c)(1).

The background facts concerning Dr. Bernstein are not in dispute and were in fact stipulated to and adopted by the Administrative Law Judge. While practicing chiropractic medicine in Coral Springs, Florida, Dr. Bernstein participated in the Medicare program as a provider of medical services. From March through May, 1982, Dr. Bernstein submitted 210 claims for Medicare reimbursement to Blue Cross and Blue Shield of Florida, the designated Medicare carrier for Florida, claiming that he had performed 210 "manipulations of the spine" on ten different Medicare beneficiaries. At least 164 of these claims were false because Dr. Bernstein had not, in fact, performed the services of which he made claims. With respect to those 164 claims, Dr. Bernstein sought, and obtained, $2,460 as reimbursement from Blue Cross and Blue Shield.

On August 15, 1984, Dr. Bernstein was charged in a 20-count criminal indictment under 18 U.S.C. Secs. 1001, 1341 and 1342 with the submission of false claims for Medicare reimbursement. He later entered into a plea agreement wherein on May 10, 1985, he pled guilty to one count in the indictment and was sentenced by the United States District Court for the District of Colorado to three years probation, fined $1,000 and ordered to serve 30 days in a jail-type institution on weekends. ² Three months later, in September of 1985, Dr. Bernstein was suspended from participation in the Medicare and Medicaid programs for ten years pursuant to 42 U.S.C. Sec. 1320a-7a(a). Dr. Bernstein initially appealed his ten-year suspension, but later withdrew his request for a hearing and the appeal was dismissed by an Administrative Law Judge. The parties now agree that, upon Dr. Bernstein's criminal conviction, suspension was mandated by the statute then in effect.

In the Spring of 1987, shortly before the five-year limitation period prescribed by regulation was about to expire, the Inspector General advised Dr. Bernstein that he was considering the imposition of a civil monetary penalty and assessment against him. Because the five-year period was about to expire, the Inspector sought, and secured, from Dr. Bernstein an agreement dated March 31, 1987, which tolled the running of the five-year statute of limitations. By its terms, however, the agreement expired on May 1, 1987. The agreement stated that the intent of the parties was "to allow settlement negotiations to proceed during a period in which a limitations defense with respect to certain claims would otherwise be established." In this regard, it would appear that certain claims against Dr. Bernstein were already beyond the five-year period. As to all claims that were not already beyond the five-year period, it was apparently agreed that the statute would expire on June 28, 1987. However, no action was brought by the Inspector on or before that date.

On August 18, 1987, Congress enacted the six-year statute of limitations on actions by the Secretary to recover civil penalties and assessments against false claimants of Medicare and Medicaid. 42 U.S.C. Sec. 1320a-7a(c)(1). The effective date of the statute was September 1, 1987. On February 24, 1988, the Inspector notified Dr. Bernstein by letter of his intent to impose a civil monetary penalty and assessment against Dr. Bernstein based on the false claims submitted by Dr. Bernstein for reimbursement by Medicare in Florida from March through May, 1982. More specifically, the Inspector informed Dr. Bernstein of the determination that in 1982 he had presented 210 false claims worth $3,150 for Medicare reimbursement, and that the maximum civil penalty under the CMPL was $420,000, and the maximum assessment was $6,300. However, after considering all of the circumstances, the Inspector proposed a civil penalty of $63,000 and an assessment of $3,488. ³ After receiving this notice, Dr. Bernstein requested a hearing before an Administrative Law Judge as provided in 42 C.F.R. Sec. 1003.109(b).

Dr. Bernstein subsequently filed a motion to dismiss the action instituted by the Inspector. It was Dr. Bernstein's position that the five-year period prescribed in 28 U.S.C. Sec. 2462 and 42 C.F.R. Sec. 1003.132 expired no later than June 28, 1987, and that the newly enacted six-year statute did not apply to him. The Administrative Law Judge denied the motion to dismiss, holding that Congress intended that the new six-year statute would apply to any action brought pursuant to the CMPL which was initiated after September 1, 1987.

Thereafter, the parties agreed to stipulated facts and waived a hearing. Both parties agreed that the Administrative Law Judge could enter judgment against Dr. Bernstein in the form of a civil penalty in the sum of $49,200 and an assessment in the sum of $2,722.40, as authorized by 42 U.S.C. Sec. 1320a-7a(a). However, both parties specifically recognized Dr. Bernstein's right to appeal the Administrative Law Judge's denial of the motion to dismiss.

On February 9, 1989,...