Lavapies v. Bowen

Decision Date24 May 1988
Docket NumberNo. C-2-88-0090.,C-2-88-0090.
Citation687 F. Supp. 1193
PartiesNermin D. LAVAPIES, M.D., Plaintiff, v. Otis R. BOWEN, M.D., Secretary of Health and Human Services, et al., Defendants.
CourtU.S. District Court — Southern District of Ohio

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COPYRIGHT MATERIAL OMITTED

Robert M. Gippin, Akron, Ohio, for plaintiff.

Robert E. Hanson, Chicago, Ill., Joe Kane, U.S. Atty., Columbus, Ohio, for defendants.

MEMORANDUM, OPINION AND ORDER

GRAHAM, District Judge.

This matter is before the Court on the plaintiff's application for a preliminary injunction and defendants' motion to dismiss. An evidentiary hearing was held on plaintiff's application for a preliminary injunction and the parties have extensively briefed the issues now before the Court.

Plaintiff, Nermin D. Lavapies, is a physician practicing in Belmont County, Ohio and engaged in family practice. On January 11, 1988, Dr. Lavapies was notified that she would be excluded from participation in the Title XVIII (Medicare) Program for a period of one year. In this action, she seeks a preliminary and permanent injunction enjoining the defendants from excluding her from the medicare program, denying her medicare payments and from giving notice of her exclusion. Defendants move to dismiss on the grounds that the Court lacks subject matter jurisdiction for the reason that the plaintiff has failed to exhaust her administrative remedies under the Social Security Act.

A. Administrative Procedures

Under the Social Security Act, health care practitioners have an obligation to assure that services provided to beneficiaries (1) will be provided economically and only when and, to the extent, medically necessary; (2) will be of a quality which meets professionally recognized standards of health care; and (3) will be supported by evidence of medical necessity and quality. 42 U.S.C. § 1320c-5(a).

In order to ensure that health care practitioners meet the obligations of 42 U.S.C. § 1320c-5(a), Congress has enacted a system of medical peer review. Peer review is conducted by utilization and quality control peer review organizations (PRO) which contract with the Secretary of Health and Human Services to service a particular geographic area. 42 U.S.C. § 1320c-2. A PRO is an entity which is either "composed of a substantial number of the licensed doctors of medicine and osteopathy engaged in the practice of medicine or surgery in the area" or "has available to it ... the services of a sufficient number of licensed doctors of medicine or surgery in such area ..." 42 U.S.C. § 1320c-1(1)(A). Each contract with a PRO is for an initial term of two years and is renewable on a biennial basis thereafter. 42 U.S.C. § 1320c-2(c)(3).

The PRO for a particular area has responsibility for reviewing the professional activities of physicians and other health care practitioners relating to their provision of services to Medicare beneficiaries. 42 U.S.C. § 1320c-3(a)(1). The PRO determines whether items and services rendered were reasonably and medically necessary; whether the quality of such services meets professionally recognized standards of health care; and, where such services and items were to be provided in a hospital on an inpatient basis, whether the services and items could be effectively provided more economically on an out-patient basis or in an inpatient health care facility of a different type. 42 U.S.C. § 1320c-3(a)(1).

If the PRO determines that a health care practitioner has violated his or her statutory obligations, the PRO must determine whether the violation was a gross and flagrant violation. 42 C.F.R. § 1004.40. If the PRO determines that the violation is a gross and flagrant one, the PRO must give the practitioner written notice setting out this determination, the basis for it, and the sanction that will be recommended. 42 C.F.R. §§ 1004.40 and 1004.50. The notice must also provide that the practitioner has a right to submit additional information or a request for a meeting with the PRO within thirty days. A copy of the material used by the PRO in the preliminary determination is to be provided to the practitioner. 42 C.F.R. § 1004.50.

Following review of the information provided by the practitioner in writing or at the meeting, the PRO makes a determination whether the practitioner has violated his or her obligation. 42 C.F.R. § 1004.50. If the PRO determines that there has been a gross and flagrant violation, the PRO must submit a report and recommendation of sanction to the Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS). 42 C.F.R. § 1004.70. In recommending a sanction, the PRO should consider the type of offense, its severity, the deterrent value of the sanction, and the availability of alternative health care services in the community. 42 C.F.R. § 1004.80. A copy of the PRO report sent to the OIG must also be sent to the affected practitioner along with a notice informing him or her that the recommendation has been submitted and that he or she has 30 days to submit any additional material to the OIG. 42 C.F.R. § 1004.60(b)(1), (2).

Once the OIG receives the PRO's report and recommendation, the OIG must review the report and recommendation to determine whether (1) the PRO is following its procedure; (2) a violation has occurred; and (3) the practitioner has demonstrated an unwillingness or lack of ability to substantially comply with his or her obligation. 42 C.F.R. § 1004.90. If the OIG agrees that a practitioner has violated his or her obligations, the OIG must decide upon an appropriate sanction. In deciding upon a sanction, the OIG considers (1) the PRO's recommendation; (2) the type of offense; (3) the severity of the offense; (4) the previous sanction record of the practitioner, (5) the availability of alternative health care sources in the community; (6) any prior problems Medicare has had with the practitioner; (7) whether the practitioner is unable or unwilling to comply substantially with the obligations; and (8) any other relevant matters. 42 C.F.R. § 1004.90(d).

Once the OIG decides on a sanction, the OIG must give notice to the practitioner of the type of sanction to be imposed. 42 C.F.R. § 1004.100. The sanction is effective 15 days from receipt of the notice. 42 C.F.R. § 1004.100(b). The OIG notifies the public of the sanction by a notice in a newspaper of general circulation. 42 C.F. R. § 1004.100(d).

If a practitioner is dissatisfied with the OIG's determination and sanction, the practitioner may request an evidentiary hearing before an administrative law judge (ALJ). 42 C.F.R. § 1004.130(a)(1). At this hearing, the practitioner is entitled to call witnesses under oath, to cross-examine witnesses, and to submit documents, briefs and oral argument. 42 C.F.R. §§ 498.61-498.63. The ALJ's decision after this hearing is appealable to the Appeals Council. 42 C.F. R. § 498.80. The Appeals Council's decision is the final agency action. If the practitioner is dissatisfied with the Secretary's final decision, the practitioner may appeal the decision to the district court. 42 U.S.C. §§ 1320c-5(b)(4), 405(g).

B. Statement of Facts

The PRO for Ohio is Peer Review Systems, Inc. ("PRS"). On March 18, 1987, Dr. Lavapies received notice from PRS that in five cases, she had violated her obligation under § 1156 of the Social Security Act to provide medical services which meets professionally recognized standards. Two of the cases were alleged to be gross and flagrant violations, the remainder were alleged to be substantial. The letter enclosed copies of the medical records used by PRS in arriving at its determination and also enclosed a case synopsis identifying each case reviewed and the issues raised by PRS. Dr. Lavapies was invited to submit, within thirty days, additional information which she felt would modify PRS's position. On April 8, 1987, counsel for Dr. Lavapies responded to this letter and requested a meeting with PRS's physicians. Such a meeting was held on June 4, 1987. At that time, Dr. Lavapies, accompanied by counsel, met with six of PRS's physicians. She was questioned by the PRS physicians and was given the opportunity to present information and argument on her own behalf.

Following the June 4, 1987 meeting, the Board of Trustees of PRS determined that Dr. Lavapies had grossly and flagrantly violated her statutory obligations by providing substandard management of a newly admitted, deteriorating patient, and by failing to appropriately assess and address this patient's critical and life-threatening symptoms reported to her by the hospital nursing staff. The patient died.

By letter dated September 11, 1987, PRS notified Dr. Lavapies that it had determined that she had failed to comply substantially with her § 1156 obligations, that one violation was gross and flagrant, and two were substantial. She was notified that PRS had submitted a recommendation to the Department of Health and Human Services to exclude her from the Medicare program for a period of two years. She was informed that she could submit to the OIG, within thirty days, any additional material which might affect the exclusion recommendation. Defendant asserts that Dr. Lavapies availed herself of this opportunity on October 6, 1987, when her counsel submitted a lengthy letter with attachments to the OIG, however, the Court is unable to find such a letter in the record of this case.

By letter dated January 11, 1988, the OIG informed Dr. Lavapies that she was excluded from the program for a period of one year. In this notification, the OIG recited the following findings:

After a careful review of all the evidence of record and acting on the authority delegated to me by the Inspector General of the Department of Health and Human Services, I have determined I agree with the PRO that in case number 105-296 you grossly and flagrantly violated your obligation to provide care that meets professionally recognized standards of quality.
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