Gralewski v. Bur. of Workers' Comp.

• Decision Date: 30 March 2006
• Docket Number: No. 05AP-604.,05AP-604.
• Citation: 2006 Ohio 1529,167 Ohio App.3d 468,855 N.E.2d 879
• Parties: GRALEWSKI, Appellee and Cross-Appellant, v. OHIO BUREAU OF WORKERS' COMPENSATION, Appellant and Cross-Appellee.
• Court: Ohio Court of Appeals

855 N.E.2d 879

167 Ohio App.3d 468

2006-Ohio-1529

GRALEWSKI, Appellee and Cross-Appellant, v. OHIO BUREAU OF WORKERS' COMPENSATION, Appellant and Cross-Appellee.

No. 05AP-604.

Court of Appeals of Ohio, Tenth District, Franklin County.

Decided March 30, 2006.

Michael R. Moran Co., L.P.A., and Michael R. Moran, Gahanna, for appellee and cross-appellant.

Jim Petro, Attorney General, and Charissa D. Payer and Kelley R. Haddox, Assistant Attorneys General, for appellant and cross-appellee.

SADLER, Judge.

{¶ 1} Appellant and cross-appellee, Ohio Bureau of Workers' Compensation, appeals from the May 12, 2005 judgment of the Franklin County Court of Common Pleas, in which that court reversed the bureau's order denying the application of appellee and cross-appellant, Dr. Lawrence A. Gralewski, for recertification as a provider in the bureau's Health Care Partnership Program ("HPP"). Dr. Gralewski has filed a cross-appeal.

{¶ 2} The record reveals the following undisputed facts. Dr. Gralewski is licensed to practice chiropractic medicine in Ohio, Michigan, and Florida. In 1992, he was charged in a Michigan state court with 13 felony counts of various offenses, including false pretenses, conspiracy, and health-care fraud. Eventually, he pleaded no contest to one felony count of false pretenses involving more than $100, was found guilty, and was sentenced to eight months in prison. In 1993, he pleaded guilty in a Michigan federal court to one felony count of mail fraud. That conviction related to Dr. Gralewski's participation in an unlawful referral scheme with other chiropractors, which involved fraudulent billing of Blue Cross/Blue Shield.

{¶ 3} Dr. Gralewski served one year in a federal community correctional center while his eight-month state-court sentence ran concurrently to his federal sentence. Following the expiration of his prison sentence, he successfully completed two years of supervised release. He also paid restitution to Blue Cross/Blue Shield in the amount of $200,000. As a result of his convictions, the Michigan Chiropractic Board suspended his Michigan license for one year, and the Ohio Board suspended his Ohio license for five years, with four years and nine months stayed on conditions. He completed his probation with the Ohio Board in 1999.

{¶ 4} The bureau's HPP is a managed-care system through which the bureau sets and enforces standards for the provision of medical, surgical, nursing, drug, hospital, and rehabilitation services and supplies to employees suffering from compensable work-related injuries and occupational diseases. R.C. 4121.441. By legislative mandate, the bureau must adopt rules setting forth standards and criteria for use in certifying or recertifying, and for use in penalizing or decertifying, a health-care provider or a vendor for participation in the HPP. See R.C. 4121.441(A)(11) and (12).

{¶ 5} Pursuant to this legislative command, the bureau promulgated Ohio Adm. Code 4123-6-022, which became effective on February 6, 1996. This rule provides:

(A) * * * Providers must meet all licensing, certification, or accreditation requirements necessary to provide services in Ohio. * * *

(B) The minimum credentials for a provider, where applicable based upon the type of provider, are as follows. The provider shall:

* * *

(5) Not have a history of a felony conviction in any jurisdiction, a conviction under a federal controlled substance act, a conviction for an act involving dishonesty, fraud, or misrepresentation, a conviction for a misdemeanor committed in the course of practice, or court supervised intervention or treatment in lieu of conviction pursuant to section 2951.041 of the Revised Code.

{¶ 6} On January 31, 1996, Dr. Gralewski applied for certification in the HPP. He disclosed his felony convictions in his application but was nonetheless certified as a provider. In January 2000, Dr. Gralewski applied for recertification and again disclosed his felony convictions. The bureau renewed his certification. In December 2002, he again applied for recertification, and once again disclosed his felony convictions. This time, however, on January 17, 2002, the bureau notified Dr. Gralewski that it intended to revoke his certification due to his felony convictions. He requested a hearing, pursuant to R.C. Chapter 119. On May 8, 2003, the bureau held a hearing, at which both the bureau and Dr. Gralewski submitted testimony and other evidence.

{¶ 7} Dr. Gralewski's evidence included the testimony of two fellow chiropractors, a physical-therapy assistant, a pharmacist, and one of the FBI special agents (now retired) who had investigated his conduct underlying his federal conviction. The former FBI agent testified that Dr. Gralewski was cooperative throughout her investigation and promptly made restitution to Blue Cross/Blue Shield. The remaining witnesses testified to Dr. Gralewski's good moral character, excellent reputation, and skill in the practice of chiropractic medicine. Dr. Gralewski himself testified that he had made full restitution to Blue Cross/ Blue Shield, that he had never been sued for malpractice, and that Blue Cross/Blue Shield had reinstated him as one of its authorized providers.

{¶ 8} On September 3, 2003, the referee issued a report and recommendation, including findings of fact and conclusions of law. Therein, she recommended that Dr. Gralewski be recertified. She explained:

In the case at hand, OAC 4123-6-022(B)(5) is specific in that it states that a provider "shall not have a history of a felony conviction* * * [or] a conviction for an act involving dishonesty, fraud, or misrepresentation* * *." Because the administrative agency took a contrary view to the law and its rules, it is not precluded from rectifying its mistake. The referee agrees that BWC had knowledge, or should have known, of the conviction at the time it initially certified Dr. Gralewski in 1996; however, the certification was in direct contradiction to the express rule. Therefore, BWC has the authority to rectify its oversight and deny Dr. Gralewski recertification in the HPP program.

However, the inquiry does not stop there. Chapter 119 hearings are provided so that a doctor may present any mitigating evidence or testimony. I do find that Dr. Gralewski has shown that he has redeemed himself and has provided satisfactory care to injured workers in Ohio.

{¶ 9} The bureau filed objections to the referee's report and recommendation. Upon consideration of the objections, the bureau's administrator, James Conrad ("the administrator"), rejected the referee's recommendation. Specifically, he stated:

Finally, I find that I cannot agree with or adopt the finding and recommendation of the referee that Dr. Gralewski has presented mitigating circumstances sufficient to allow him to remain a BWC certified provider. While Dr. Gralewski may indeed have "cooperated with the FBI and [taken] accountability for his actions," "made full restitution," and "showed remorse not only in his testimony at hearing, but by his actions" as the referee stated, the fact remains that that [sic] Dr. Gralewski pled guilty to one count of mail fraud in the U.S. District Court, Eastern District of Michigan and pled guilty to False Pretenses over $100 in a Michigan State Court. Dr. Gralewski cannot demonstrate, nor did he attempt to, that his actions were not wrong, that the charges to which he pled guilty were unjustified, or that he acted as a reasonably prudent person would have under the circumstances. Therefore, I do not find that Dr. Gralewski has presented mitigating circumstances sufficient to allow him to remain a BWC certified provider.

Because I have concluded that Dr. Gralewski has failed to comply with the workers' compensation statutes and rules governing providers in that Dr. Gralewski has convictions for mail fraud and false pretenses contrary to Ohio Administrative Code Rule 4123-6-022(B)(5), and because I have further concluded that Dr. Gralewski has presented no mitigating circumstances, I hereby reject the recommendation of the referee and order that the application of Dr. Gralewski for recertification to participate in the HPP be DENIED.

{¶ 10} Dr. Gralewski appealed the bureau's order to the Franklin County Court of Common Pleas and requested a stay of the order pending the outcome of the appeal. He argued that a stay was appropriate for a number of reasons, the chief reason being that the overwhelming amount of mitigating evidence supported a strong likelihood that his appeal would succeed on its merits. The bureau urged the court to deny the request, arguing that regardless of the mitigating evidence Dr. Gralewski might present, the administrative code simply does not allow convicted felons to participate in the HPP. Interestingly, the trial court rejected Dr. Gralewski's argument and found the bureau's argument to be well taken. Citing Ohio Adm.Code 4123-6-022(B)(5), the court found, "Appellant has not [met] the minimum requirements for HPP certification." It was on that basis that the court denied the motion for a stay of the bureau's order.

{¶ 11} After full briefing, however, the court ultimately reversed the bureau's order. The court agreed with Dr. Gralewski's argument that in determining that the doctor had not presented "mitigating circumstances sufficient to allow him to remain a BWC certified provider," the bureau's administrator had engaged in unlawful rulemaking by adjudication and had thereby placed an unlawful burden of proof upon Dr. Gralewski.

{¶ 12} The court determined that because neither the Ohio Revised Code nor the applicable portions of the Ohio Administrative Code set forth any standard for "mitigating circumstances" sufficient to allow a convicted felon to keep HPP certification, it was unlawful for the bureau to have imposed upon Dr. Gralewski the burden to demonstrate, in the administrator's words, "that his actions were not wrong, that the charges to which he...