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As a handful of unfortunate lawyers have discovered, attorneys can be disbarred for deceit and fraud in their personal and professional lives, even if no client was harmed. Who could trust such a person to be a lawyer? The principle applies to doctors, too. The New Jersey Supreme Court ruled last week, in the case of a physician who manufactured false records and finagled money from insurers, that license revocation can be warranted for a physician whose doctoring may be swell but his honesty isn’t. The Board of Medical Examiners had the authority to oust Morris Township anesthesiologist Kenneth Zahl because of his “panoply of dishonest acts,” Justice James Zazzali wrote for the unanimous Court in IMO Suspension or Revocation of the License Issued to Kenneth Zahl, M.D. (A-54-05) [see digest on page 47]. The board had found Zahl to be a “fundamentally corrupt licensee.” But an appeals court agreed with Zahl that there are punishments short of de-licensing for doctors who err financially but aren’t accused of harming patients. New Jersey’s high court agreed with state counsel Douglas Harper and reinstated the revocation, saying doctors’ work requires them to deal with colleagues, governments and insurers, not just patients. Dishonest behavior with nonpatients has ramifications for the public at large, the Court said. And it added: “Patients rightfully may fear entrusting a deceitful physician with their lives and lives of their loved ones for it is difficult to compartmentalize dishonesty in such a way that a person who is willing to cheat his government . . . may yet be considered honest in his dealings with patients.” The decision also reminds appeals courts to defer to the board in such matters if the hearings below are fair. In Zahl’s case, Administrative Law Judge Edith Klinger recommended revocation after hearing all the evidence, but also after observing the doctor’s behavior over seven days of hearings. She found he lacked remorse and continued to exhibit an entitlement to the funds he fraudulently obtained, the Court said. “As an appellate tribunal, we too defer to those credibility and character judgments,” the Court said. Zahl, a Columbia University Medical School graduate, class of 1981, ran a multidoctor anesthesiology practice with offices in Morris, Union and Bergen counties, and his troubles began over Medicare billing. In 1998, Medicare auditors began an investigation that led to a Board of Examiners complaint that he submitted 88 claims with overlapping time periods that suggested he furnished services to two patients at the same time, according to Wednesday’s opinion. The complaint also said he created false patient records by adding a second doctor’s name to records of treatment performed by a first doctor. A state expert theorized that this would make it difficult for auditors to scrutinize records and would serve as a defense to liability claims. If anything went wrong, the practice could say there were two anesthesiologists with the patient, and therefore the patient hadn’t been abandoned, the state expert said. Zahl also was accused of collecting $118,000 in unwarranted disability claims from an insurer. He told the carrier he had cut his thumb so badly slicing cheese he couldn’t perform anesthesia, when he actually could. He also was accused of billing two insurers for the same service. Some counts were dismissed, but Klinger found him guilty of enough to warrant $35,000 in civil penalties and revocation of his license. The board cut the penalty to $30,000 but adopted substantially all the findings. ‘A fundamental disregard for truth’ The issue wasn’t how good a doctor he was, the board said in its April 2003 decision. It was his panoply of dishonest acts. “The acts bespeak a fundamental disregard for truth which is ultimately inimical to the practice of medicine,” the board said. Attorney General Zulima Farber praised the decision for making clear that licensing boards can consider dishonesty as being a sufficient basis to justify license revocation. “The ruling supports the principle that appellate courts should give deference to professional licensing boards when they make well-reasoned decisions based on all the evidence,” she added in a statement. And that’s the trouble with the Zahl decision, counter Zahl’s lawyer, John Zen Jackson, and a lawyer for the Medical Society of New Jersey, Robert Conroy. They say the board misinterpreted federal Medicare law and ratcheted a federal finding that Zahl was “not without fault” up to a finding that he committed fraud, two different standards. “There was never a finding that he committed Medicare fraud or insurance fraud by anyone who could make such a decision,” says Jackson of Warren’s Kalison, McBride, Jackson & Murphy. Federal authorities investigated Zahl but never prosecuted him and he was never suspended from the right to payments under Medicare, Jackson says. For what Zahl did, “the penalty of revocation is harsh, and unlike how the board dealt with other practitioners,” Jackson says. “Nowhere in the opinion does it cite any other instance where it happened.” Conroy, of Bridgewater’s Kern Augustine Conroy & Schoppmann, says that besides misapplying the law, the board disregarded crucial evidence in Zahl’s favor and gave credence to a witness who lied. That’s why a policy of less appellate deference and more scrutiny of board decisions would be better, Conroy says. “They have really made the practice of medicine very dangerous in this state,” Conroy says. If the board is saying that what Zahl did with Medicare payments requires revocation, it “would probably have to revoke several hundred licenses, maybe a thousand licenses.” “The rubric is real simple: New Jersey physicians should realize that they are at risk every time they treat a Medicare patient and perhaps they should refuse to do so,” he says. “If they are going to say we are going to hold you strictly liable in terms of your livelihood and your license for any mistakes in these technical areas, be forewarned.” “I tell my clients, every time you are contacted by Medicare you must take it seriously,” he says. “You can’t think it is only a ministerial thing.” In the end, though, the regulators saw more than technical violations. “The Board of Medical Examiners’ decision was based on a mountain of evidence that showed Dr. Zahl to be a corrupt and dishonest licensee,” says Kimberly Ricketts, director of the state Division of Consumer Affairs.

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