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GOLDSTAR MEDICAL SERVICES, INC., ET AL. v. DEPARTMENT OF SOCIAL SERVICES (SC 18111)
Rogers, C. J., and Katz, Palmer, Vertefeuille and Zarella, Js. Argued April 23--officially released September 23, 2008

Jeffrey J. Mirman, with whom, on the brief, was Lisa A. Zaccardelli, for the appellants (plaintiffs). Robert B. Teitelman, assistant attorney general, with whom were Linda A. Russo, assistant attorney general, and, on the brief, Richard Blumenthal, attorney general, and Theodore M. Doolittle, assistant attorney general, for the appellee (defendant).

Opinion

VERTEFEUILLE, J. The plaintiffs, Goldstar Medical Services, Inc. (Goldstar), and its owner and president, Donald F. Bouchard,1 appeal from the judgment of the trial court dismissing their administrative appeal from a five year suspension from the state medicaid program and an order of restitution issued by the defendant, the department of social services (department), for the plaintiffs' fraud and regulatory violations. We affirm the judgment of the trial court. The record reveals the following facts, as found by the commissioner of social services, Patricia WilsonCoker (commissioner), and procedural history. Goldstar was a Farmington based vendor and provider of oxygen and oxygen related services and supplies for the Connecticut medicaid2 program from January 3, 1992, through October 15, 1999. Goldstar and the department were parties to a provider agreement that the parties first signed in 1992, and later renewed in 1996. Bouchard acted on behalf of Goldstar during this time. Goldstar provided oxygen therapy services to medicaid recipients who were residents in nursing homes. Bouchard and Goldstar were responsible for providing patients with oxygen devices and services, such as, for example, oxygen concentrators, portable oxygen systems and durable humidifiers, pursuant to their physicians' prescriptions. In order to receive oxygen therapy services, medicaid providers such as Goldstar were required to obtain and keep on file physician certifications (certifications) verifying that oxygen therapy was medically necessary for each respective patient. As parties to the provider agreement with the department, Bouchard and Goldstar were required to ``follow the laws, rules, regulations, policies, and amendments that govern the medicaid program,'' as well as to exhaust all proper and appropriate avenues for reimbursement before submitting claims to medicaid for payment. Upon Goldstar's enrollment in the medicaid program in January, 1992, it was issued a provider enrollment approval notice from the department, along with a manual specifying the policies to which Goldstar was required to adhere as a medicaid provider. As the president and owner of Goldstar, Bouchard was charged with ensuring that Goldstar adhered to the terms and conditions of the provider contract with the department, which included the training and supervision of Goldstar's staff in medicaid policy and ensuring compliance with all relevant laws and regulations. One of the department's responsibilities in administering the medicaid program was to conduct audits of medicaid providers in the state, including oxygen therapy service providers like Goldstar. A full-scale audit includes a review by the department of ``a sample of the universe of paid claims that are selected by com-

puter using a random sampling method.'' In July, 1997, the department conducted an audit of Goldstar for the period from January 1, 1995, to June 30, 1997. Gloria D'Anzi, an associate accounts examiner with the department, was assigned to conduct the Goldstar audit. D'Anzi conducted the audit utilizing the department's standard method, which was to select for review a sample from previously paid claims. Using standard audit sampling computer software, the department selected a sample of ninety-three paid claims out of a universe of 3496 paid claims during the January, 1995, through June, 1997, period. To complete the audit, D'Anzi reviewed department files, computerized databases and medical records from the nursing home facilities where medicaid recipients who received Goldstar's services resided. Additionally, D'Anzi visited a number of those nursing home facilities, and reviewed copies of various medical records, including physicians' orders, from certain facilities where medicaid recipients resided at the time Goldstar claimed to have furnished services for them. A final report was issued at the completion of the audit, stating that sixty-nine out of ninety-three sample claims, constituting 74 percent of the claims, contained errors resulting in Goldstar's having received medicaid reimbursement in excess of that to which it was entitled. The audit report, as summarized by the commissioner, listed the following sixteen findings, or classes of violations of department regulations and policies pertaining to the billing for oxygen therapy services and equipment: ``(1) original [certifications] were not on file; (2) third-party payment resources were not exhausted; (3) there were billings for non-covered oxygen usage; (4) [subsequent certifications] were not on file; (5) the [certifications] were not complete; (6) claims were submitted for the rental of portable oxygen systems without a physician's order on file; (7) claims were billed for portable oxygen systems for recipients who were not utilizing oxygen concentrators; (8) there was inappropriate billing of humidifiers; (9) claims were submitted for services involving portable oxygen equipment but nursing narratives indicated [that] the recipient's oxygen needs were met by stationary systems; (10) claims were made for overlapping dates of service; (11) claims were submitted using procedure codes for oxygen therapy services that conflicted with services documented in the recipient's record; (12) Goldstar was paid by the nursing facility for oxygen used in portable oxygen units and Goldstar also billed the [department] for portable oxygen add-on units; (13) Goldstar billed [m]edicare and [m]edicaid for the same service; (14) there was no documentation supporting specific claims for portable oxygen services; (15) there was altered documentation; and (16) claims were submitted for services relating to portable oxygen equipment and humidifiers but there was no documentation that they were delivered.'' The

report concluded that Goldstar received excess and unauthorized payments in the amount of $261,303.45 as a result of the violations. The department therefore withheld $83,250.17 in payments owed to Goldstar from the department and applied that amount to offset the overpayment to Goldstar, resulting in a net audit overpayment of $178,053.28. Thereafter, in September, 1999, David Parrella, the department's director of medical care and administration, sent a letter to Goldstar giving notice that the department intended to revoke Goldstar's medicaid provider number, thus precluding Goldstar from providing services to medicaid recipients in the future. Bouchard responded to that letter and made a number of admissions relating to the final audit report. In particular, Bouchard admitted that Goldstar's record keeping was ``inadequate,'' ``incomplete'' and ``sloppy''; that Goldstar had submitted reimbursement claims to the department for portable oxygen systems that had not been certified by prescribing physicians; and that Goldstar incorrectly and inappropriately had submitted claims to the department for various oxygen therapy services. Bouchard denied, however, having knowledge of any alterations in documents necessary to request reimbursement for services. The department thereafter terminated Goldstar's provider agreement. In October, 2000, the department issued the plaintiffs a notice of regulatory violations and proposed sanctions, which was subsequently amended. A department hearing officer thereafter held an evidentiary hearing on the violations and proposed sanctions pursuant to

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