The opinion of the court was delivered by: STANLEY SPORKIN
On January 11, 1993, the United States filed this civil suit against George O. Krizek, M.D. and Blanka H. Krizek under the False Claims Act, 31 U.S.C. §§ 3729-3731, and at common law. The government brought the action against the Krizeks' alleging false billing for Medicare and Medicaid patients. The five counts include claims for (1) "Knowingly Presenting a False or Fraudulent Claim", 31 U.S.C. § 3729(a)(1); (2) "Knowingly Presenting a False or Fraudulent Record", 31 U.S.C. § 3729(a)(2); (3) "Conspiracy to Defraud the Government"; (4) "Payment under Mistake of Fact"; and (5) "Unjust Enrichment". In its claim for relief, the government asks for triple the alleged actual damages of $ 245,392 and civil penalties of $ 10,000 for each of the 8,002 allegedly false reimbursement claims pursuant to 31 U.S.C. § 3729.
The government alleges two types of misconduct related to the submission of bills to Medicare and Medicaid. The first category of misconduct relates to the use of billing codes found in the American Medical Association's "Current Procedural Terminology" ("CPT"), a manual that lists terms and codes for reporting procedures performed by physicians. The government alleges that Dr. Krizek "up-coded" the bills for a large percentage of his patients by submitting bills coded for a service with a higher level of reimbursement than that which Dr. Krizek provided. As a second type of misconduct, the government alleges Dr. Krizek "performed services that should not have been performed at all in that they were not medically necessary." Original Complaint P 24.
Given the large number of claims, and the acknowledged difficulty of determining the "medical necessity" of 8,002 reimbursement claims, it was decided that this case should initially be tried on the basis of seven patients and two hundred claims that the government believed to be representative of the Dr. Krizek's improper coding and treatment practices. See Order of March 9, 1994. It was agreed by the parties that a determination of liability on Dr. Krizek's coding practices would be equally applicable to all 8,002 claims in the complaint. A three week bench trial ensued.
Dr. Krizek is a psychiatrist. Dr. Krizek's wife, Blanka Krizek was responsible for overseeing Dr. Krizek's billing operation for a part of the period in question. Dr. Krizek's Washington, D.C. psychiatric practice consists in large part in the treatment of Medicare and Medicaid patients. Much of Doctor Krizek's work involves the provision of psychotherapy and other psychiatric care to patients at the Washington Hospital Center.
Under the Medicare and Medicaid systems, claims for reimbursement are submitted on documents known as Health Care Financing Administration ("HCFA") 1500 Forms. These forms are supposed to contain the patient's identifying information, the provider's Medicaid or Medicare identification number, and a description of the provided procedures for which reimbursement is sought. These procedures are identified by a standard, uniform code number as set out in the American Medical Association's "Current Procedural Terminology" ("CPT") manual, a book that lists the terms and codes for reporting procedures performed by physicians.
Dr. Krizek was a voluntary "participating provider" in the Medicare and Medicaid programs. As a participating provider, Dr. Krizek was required to follow the billings and documentation requirements of Medicare/Medicaid and Pennsylvania Blue Shield ("PBS"), the Medicare carrier for the greater Washington, D.C. area. Providers were informed of Medicare/Medicaid rules and directions through the CPT manual and the Medicare Reports and Medicare Bulletins.
The Medicare reports that Dr. Krizek received indicated that he was to maintain documentation for each claim he submitted to Medicare. These reports noted that hospital progress notes and patient office records must verify that a service 1) actually was provided, 2) was performed at the level reported, and 3) was medically necessary. The Medicare Reports stated that refunds would be requested for any payments made by Blue Shield not supported by hospital records. See Gov. Exh. 6 & 7.
The government in its complaint alleges both improper billing for services provided and the provision of medically unnecessary services. The latter of these two claims will be addressed first.
The record discloses that Dr. Krizek is a capable and competent physician. Dr. Krizek was originally trained in Prague, in what was then Czechoslovakia, at the Charles University School of Medicine. Dr. Krizek also received a medical degree from Rudolf's University, in Vienna, Austria. Dr. Krizek came to the United States in 1968, where he did a residency at Beth Israel Hospital in New York City. He arrived in the Washington, D.C. area in the early 1970's where he has been engaged in the practice of psychiatry for approximately 21 years. The trial testimony of Dr. Krizek, his colleagues at the Washington Hospital Center, as well as the testimony of a former patient, established that Dr. Krizek was providing valuable medical and psychiatric care during the period covered by the complaint. The testimony was undisputed that Dr. Krizek worked long hours on behalf of his patients, most of whom were elderly and poor.
Many of Dr. Krizek's patients were afflicted with horribly severe psychiatric disorders and often suffered simultaneously from other serious medical conditions. For example, one of the seven representative patients had paranoid psychosis and organic brain dementia, coupled with a series of other medical problems including colon cancer, diabetes, herpes, and viral encephalitis. Another patient suffered from chronic depression and had accompanying delusions. A third had a history of repeated psychiatric hospitalizations, was in an acute schizophrenic state, and also suffered from epilepsy. A fourth patient ...