Austin Court Affirms WC Doc’s Fraud Conviction
The Third Court of Appeals, sitting in Austin, has affirmed the criminal conviction of Dr. Howard Douglas for the offense of securing execution of a document by deception, a felony of the third degree. In Douglas v. State (No. 03-13-00092-CR) the Court wrote that the evidence was legally sufficient to support the conviction and that Dr. Douglas had not shown that his attorney’s representation was ineffective.
According to the court’s opinion:
In about 2004, Douglas, a medical doctor, and his 23-year-old daughter, Barbara Douglas, established a business called Western Medical Evaluators, Inc. (WME). Douglas was the medical director and Barbara was named president of the company. WME provided medical services in the workers’ compensation sector to entities insured by Texas Mutual Insurance Company. WME contracted with designated doctors to perform designated doctor examinations (DDE) on patients claiming workers’ compensation benefits. Designated doctors travel all over the state performing their examinations. The purpose of a DDE is to obtain an independent assessment of the injured employee’s condition at the request of the Texas Department of Insurance (the Department). Douglas also performed examinations himself.
During the course of performing a DDE, the designated doctor may request a functional capacity evaluation (FCE) of the employee to determine the employee’s ability to return to work or perform certain jobs. An FCE is administered by a technician. WME employed several technicians who accompanied doctors to patient examinations. Upon the doctor’s order, a technician performed the FCE while still with the patient. After performing an examination, WME billed Texas Mutual by means of a form entitled HCFA 1500. The form is completed by employing codes, known as CPT codes, to inform the insurance company what test or exam was performed in the examination and the amount of time it took. The form reflects the time the doctor or technician spent on the matter in increments of quarter hours.
When WME was first formed, it only performed DDE exams and Douglas was the only doctor. Later, the company added other doctors and staff and began administering FCE exams. The designated doctors receive about 60% of the charges for a DDE; WME received almost all of the compensation for an FCE.
The evidence was undisputed that, under the medical guidelines, the maximum amount of time that can be billed for an FCE is 16 quarter-hour increments, or 4 hours. Based upon the HCFA 1500 form submitted, Texas Mutual would issue a check to WME. Texas Mutual issued checks to WME totaling $103,821.99 during the time period at issue.
William Muhr, an investigator for Texas Mutual, became suspicious when he recognized that every bill received from WME requested the maximum compensation of 4 hours for every FCE. Muhr spoke to 146 patients examined by WME and determined that the average time the WME technician actually spent with patients was only 39 minutes. Muhr filed a complaint with the Travis County District Attorney’s Office. The underlying prosecution ensued.
Dr. Douglas challenged the legal sufficiency of the evidence to support his conviction and requested a new trial on the basis that he was denied effective assistance of counsel.
The State presented testimony from numerous witnesses that a health care provider is not entitled to bill for time in which the physician or other health care provider was not in the presence of the patient. The State also presented evidence that WME had, in fact, billed Texas Mutual for time that was not spent in face-to-face meetings or consultations with each patient. In his testimony, Dr. Douglas acknowledged that WME billed for time not spent with the patient and that it was his decision to bill the maximum time for each FCE, but he insisted that the practice was justified.
Three patients and several WME technicians were among the witnesses who testified at trial. The patients testified that the FCE took only 15 to 30 minutes. One patient stated that she did not undergo a second FCE, although WME billed for a second one. Three technicians testified that “face to face” time with a patient for an FCE took between 15 to 40 minutes, 45 minutes to an hour, and 25 to 35 minutes, respectively. The reports took 10 to 15 minutes to complete. No one spent four hours on an FCE, although WME billed the maximum for each one. One technician testified that technicians were paid an extra $25 as an incentive to do more FCEs.
Dr. Douglas disputed the amount his business should be entitled to legally bill for an FCE. He insisted that, despite the State’s construction of the rules, WME could bill for all the time a doctor or agent spent on a patient’s matter, in addition to time with the patient, including arranging for the appointment and travel, preparing for the exam, obtaining records, reviewing records in advance, working on the patient’s file, and preparing a report after the exam. He personally did a time study to determine how long these matters required and concluded that, on average, the whole process took 4.5 to 5.5 hours, sometimes over a 2-week period or so. Based on his own conclusion about the average time required, he made the decision to bill the maximum 4 hours on every FCE without regard to actual time each required; the billing form reflected that the 4 hours was on 1 day. He confirmed that it was his decision for WME to bill 4 hours on every FCE.
Dr. Douglas offered the testimony of Konrad Kuenstler, an attorney and physical therapist who has performed over 1,000 FCEs. Kuenstler testified that doctors can bill for the time spent on medical review and written reports. Kuenstler worked in Texas until about 2009 but practiced law in California at the time of trial.
The court rejected Dr. Douglas’ arguments:
Our review of the evidence reveals that Douglas, as the owner and medical director of the company, acting alone or in concert with Barbara, established WME’s policy for submitting its bills to Texas Mutual, that he determined that it should submit four hours on every FCE, regardless of the actual time required, that he knew that WME was submitting bills for time not spent with the patient, and that he knew this was done for the purpose of causing Texas Mutual to pay fees based upon the forms submitted.
The court also disagreed with Dr. Douglas that his trial counsel rendered him ineffective assistance of counsel.
The trial court assessed Dr. Douglas’ sentence at eight years’ confinement in the Institutional Division of the Texas Department of Criminal Justice but suspended the sentence and placed him on community supervision for ten years. In addition, Douglas was ordered to pay a fine of $5,000 and restitution of $98,411.03. This judgment was affirmed.
FOLIO
