B-152676, AUG. 26, 1968

B-152676, AUG. 26, 1968

TO MR. MYRON L. GARON:

REFERENCE IS MADE TO YOUR LETTER OF JULY 26, 1968, ADVISING THAT YOU AND ATTORNEY LAWRENCE A. WEINREB HAVE BEEN RETAINED BY DR. JEROME REHMAN TO RECOVER MONIES DUE HIM AND THE BIXBY KNOLLS COMMUNITY HOSPITAL, LONG BEACH, CALIFORNIA, FOR MEDICAL SERVICES FURNISHED TO DEPENDENTS OF MEMBERS OR FORMER MEMBERS OF THE UNIFORMED SERVICES UNDER THE PROVISIONS OF THE DEPENDENTS' MEDICAL CARE ACT, PUBLIC LAW 84-569, AS AMENDED AND RE- ENACTED, 10 U.S.C. 1071-1085.

YOU RECOGNIZE THE POSSIBILITY THAT THE GOVERNMENT MAY HAVE DEFENSES TO SOME OF THE CLAIMS. HOWEVER, YOU EXPRESS THE OPINION THAT YOUR CLIENT IS ENTITLED TO PAYMENT OF THOSE CHARGES THAT ARE PROPER, CORRECT AND LEGITIMATE, AND YOU REQUEST AN ACCOUNTING WITH RESPECT TO THE TRANSACTIONS INVOLVED.

OUR RECORDS SHOW THAT, IN ACCORDANCE WITH THE PROVISIONS OF 10 U.S.C. 1079, THE GOVERNMENT ENTERED INTO CONTRACTS WITH THE BLUE CROSS ASSOCIATION AND THE CALIFORNIA MEDICAL ASSOCIATION FOR THE ADMINISTRATION OF CERTAIN FEATURES OF THE ARMED SERVICES DEPENDENTS' MEDICAL CARE PROGRAM IN THE STATE OF CALIFORNIA. A NUMBER OF OSTENSIBLY ELIGIBLE PATIENTS WERE HOSPITALIZED AT THE BIXBY KNOLLS COMMUNITY HOSPITAL DURING THE PERIOD JANUARY 1, 1961, THROUGH JUNE 1962. IN SEPTEMBER 1963, WE RECEIVED FROM THE DEPARTMENT OF THE ARMY INFORMATION CONCERNING THE TREATMENT OF DEPENDENTS OF MEMBERS OR FORMER MEMBERS OF THE UNIFORMED SERVICES AT THE BIXBY KNOLLS COMMUNITY HOSPITAL, AND THERE WERE ENCLOSED WITH THE DEPARTMENTAL REPORT COPIES OF TWO VOUCHERS IN THE AMOUNTS OF $71,878.02 AND $48,957.90, STATED IN FAVOR OF THE BLUE CROSS ASSOCIATION AND THE CALIFORNIA PHYSICIANS' SERVICE, A MEDICAL CARE PROGRAM SUBCONTRACTOR. THE VOUCHERS COVERED ,DISPUTED CLAIMS" WITH REFERENCE TO CLAIMS WHICH HAD BEEN SUBMITTED TO THOSE ORGANIZATIONS BY THE BIXBY KNOLLS COMMUNITY HOSPITAL AND BY PHYSICIANS WHOSE PATIENTS WERE TREATED AT THE HOSPITAL.

WE WERE ADVISED THAT PAYMENTS UNDER THE GOVERNMENT CONTRACTS FOR THE TREATMENT OF ELIGIBLE PATIENTS UNDER THE MEDICAL CARE PROGRAM, IN THE CASE OF PATIENTS HOSPITALIZED AT THE BIXBY KNOLLS COMMUNITY HOSPITAL, WERE ORDERED TO BE SUSPENDED AS THE RESULT OF AN INVESTIGATION BY THE DEPARTMENT OF THE ARMY WHICH DISCLOSED CERTAIN IRREGULARITIES AND POSSIBLE FRAUD WITH RESPECT TO CLAIMS OF THE HOSPITAL AND THE PHYSICIANS WHOSE PATIENTS WERE TREATED AT THE HOSPITAL. WE WERE ALSO ADVISED THAT AN INVESTIGATION BY STATE AUTHORITIES, CONCERNING THE OPERATION OF THE HOSPITAL, RESULTED IN AN INDICTMENT OF DR. REHMAN, THE APPARENT PRINCIPAL OWNER OF THE HOSPITAL, AND SIX OTHER INDIVIDUALS ASSOCIATED WITH THE HOSPITAL.

BY LETTER DATED NOVEMBER 18, 1963, DR. REHMAN WAS ADVISED THAT THE MATTER APPEARED TO BE ENTIRELY TOO DOUBTFUL TO WARRANT ALLOWANCE BY OUR OFFICE OF ANY PORTIONS OF THE AMOUNTS SUSPENDED FROM PAYMENT TO THE BIXBY KNOLLS COMMUNITY HOSPITAL AND TO PHYSICIANS ASSOCIATED WITH THE HOSPITAL FOR SERVICES RENDERED IN CONNECTION WITH THE ADMINISTRATION OF THE PROGRAM AUTHORIZED BY THE DEPENDENTS' MEDICAL CARE ACT. THE CASES OF LONGWILL V UNITED STATES, 17 CT. CL. 288, AND CHARLES V UNITED STATES, 19 CT. CL. 316, WERE CITED IN THE LETTER AS AN INDICATION THAT IT IS THE DUTY OF THE ACCOUNTING AND AUDITING OFFICERS OF THE GOVERNMENT TO REJECT ANY CLAIM AGAINST THE UNITED STATES AS TO WHICH THERE IS A REASONABLE SUSPICION OF IRREGULARITY, COLLUSION, OR FRAUD, THUS RESERVING THE MATTER FOR SCRUTINY IN THE COURTS WHEN THE FACTS MAY BE JUDICIALLY DETERMINED ON THE BASIS OF SWORN TESTIMONY AND OTHER COMPETENT EVIDENCE, AND A FORFEITURE DECLARED OR OTHER APPROPRIATE ACTION TAKEN.

SUBSEQUENTLY, WE WERE ADVISED BY THE OFFICE FOR DEPENDENTS' MEDICAL CARE, OFFICE OF THE SURGEON GENERAL, UNITED STATES ARMY, DENVER, COLORADO, THAT APPROXIMATELY 19 PHYSICIANS WHOSE PATIENTS WERE TREATED AT THE BIXBY KNOLLS COMMUNITY HOSPITAL FROM ABOUT JANUARY 1, 1961, THROUGH JUNE 1962, APPEARED TO HAVE JUSTIFIABLE CLAIMS, AND WE WERE REQUESTED TO APPROVE A NEGOTIATED SETTLEMENT WITH ONE OF THOSE PHYSICIANS. BY LETTER DATED MAY 12, 1964, WE APPROVED THE PROPOSED SETTLEMENT OF THAT PHYSICIAN'S CLAIM AND ADVISED THE OFFICE FOR DEPENDENTS' MEDICAL CARE THAT THE CLAIMS OF THE OTHER PHYSICIANS WHO APPARENTLY HAD JUSTIFIABLE CLAIMS COULD BE SETTLED WITHOUT REFERRING EACH CASE TO OUR OFFICE FOR AN ADVANCE DECISION. HOWEVER, IT WAS NOT INTENDED EITHER BY OUR OFFICE OR THE OFFICE FOR DEPENDENTS' MEDICAL CARE THAT ANY ATTEMPT SHOULD BE MADE TO SETTLE THE CLAIMS OF THE BIXBY KNOLLS COMMUNITY HOSPITAL OR THOSE OF DR. REHMAN AND CERTAIN OTHER PHYSICIANS, SINCE THE VALIDITY OF SUCH CLAIMS STILL APPEARED TO BE A MATTER OF CONSIDERABLE DOUBT.

ALTHOUGH IT IS POSSIBLE THAT SOME OF THE CLAIMS OF THE HOSPITAL AND DR. REHMAN MAY BE PROPER, CORRECT AND LEGITIMATE, IT REMAINS OUR OPINION THAT, IN VIEW OF THE EVIDENCE OF IRREGULARITIES AND POSSIBLE FRAUD IN THE MATTER, WE WOULD NOT BE WARRANTED IN APPROVING THE ALLOWANCE OF ANY PORTIONS OF THE AMOUNTS WITHHELD FROM PAYMENT TO DR. REHMAN AND THE HOSPITAL. IT IS NOT WITHIN OUR JURISDICTION TO DETERMINE LIABILITY OF PERSONS OR FIRMS UNDER THE FALSE CLAIMS STATUTES. HOWEVER, IF YOUR CLIENT HAD FILED A PETITION IN THE COURT OF CLAIMS BEFORE THE EXPIRATION OF THE SIX-YEAR PERIOD OF THE STATUTE OF LIMITATIONS APPLICABLE TO THAT COURT'S JURISDICTION, IT IS APPARENT THAT THE GOVERNMENT WOULD HAVE REQUESTED THE COURT TO DECLARE FORFEITURES UNDER THE PROVISIONS OF 28 U.S.C. 2514, WITH RESPECT TO SOME OR ALL OF THE UNPAID CLAIMS OF DR. REHMAN AND THE HOSPITAL, AND THAT THE GOVERNMENT MIGHT ALSO HAVE FILED CLAIMS UNDER 31 U.S.C. 231, WHICH PROVIDES THAT EVERY PERSON KNOWLINGLY MAKING A FALSE CLAIM AGAINST THE UNITED STATES SHALL FORFEIT $2,000 AND PAY DOUBLE THE DAMAGES SUSTAINED. SEE WAGNER IRON WORKS V UNITED STATES, 146 CT. CL. 334, 339.

EVEN IF IT WERE TO BE ASSUMED THAT NO FRAUD WAS INVOLVED IN THE CLAIMS OF DR. REHMAN AND THE HOSPITAL, THE RECORD BEFORE US AFFORDS NO REASONABLE BASIS ON WHICH A DETERMINATION COULD BE MADE WITH RESPECT TO THE QUESTION WHETHER ANY AMOUNTS ARE ACTUALLY DUE ON THE CLAIMS. A RECAPITULATION OF THE HOSPITAL'S CLAIMS, WHICH WAS FURNISHED BY THE DEPARTMENT OF THE ARMY, LISTS THE SUM OF $180,807.43 AS THE TOTAL AMOUNT OF THE HOSPITAL'S CLAIMS; THE SUM OF $74,187.57 AS DISALLOWANCES ON SUCH CLAIMS; THE SUM OF $106,619.86 AS THE ESTIMATED AMOUNT PROPERLY RECOVERABLE ON THE CLAIMS; THE SUM OF $108,929.41 AS THE AMOUNT PAID TO THE HOSPITAL; AND THE SUM OF $2,309.55 AS THE AMOUNT APPARENTLY DUE THE GOVERNMENT AS OVERPAYMENTS MADE ON THE VARIOUS CLAIMS. THUS, ON THE BASIS OF THE ADMINISTRATIVE AUDIT, THE HOSPITAL APPEARS TO BE INDEBTED TO THE UNITED STATES RATHER THAN BEING ENTITLED TO ANY AMOUNT FROM THE GOVERNMENT. WE DID NOT PERFORM AN AUDIT OF THE CLAIMS OF DR. REHMAN AND THE HOSPITAL IN VIEW OF THE REPORTED IRREGULARITIES AND POSSIBLE FRAUD IN THE MATTER, AND IT IS OUR OPINION THAT WE ARE NOT REQUIRED TO DO SO IN THE PARTICULAR CIRCUMSTANCES.

ACCORDINGLY, OUR PREVIOUS ACTION IN THE CASE IS HEREBY SUSTAINED AND YOU ARE ADVISED THAT WE FIND NO BASIS FOR CONSIDERING AT THIS TIME THAT ANY USEFUL PURPOSE WOULD BE SERVED IN AN ATTEMPT TO FURNISH YOU A COMPLETE ACCOUNTING WITH RESPECT TO THE NUMEROUS TRANSACTIONS INVOLVED IN BOTH THE PAID AND THE UNPAID CLAIMS OF DR. REHMAN AND THE BIXBY KNOLLS COMMUNITY HOSPITAL.