Maryland State Board of Social Work Examiners v. Chertkov

⁵⁷⁷ THIEME, Judge. Appellee Lynn S. Chertkov filed on 8 February 1995 a petition for review of an order of the State Board of Social Work Examiners (the Board) imposing sanctions on her for multiple violations of the Health Occupations Article. The Circuit Court for Montgomery County adopted every one of the Board’s findings of fact, but it determined that the six-month suspension of appellee’s license to practice social work was arbitrary and capricious. The court modified the Board’s sanction by reducing the suspension period to one month and subsequently denied the Board’s motion to alter or amend judgment.

The Board noted this appeal in a timely fashion and presents the following questions, which we have recast as bifurcated: 1. Did the circuit court err in its determination that the suspension portion of appellee’s sanction was arbitrary and capricious? 2. Did the circuit court err in its reduction of the suspension period to one month? The answer to the first question is affirmative, and we reverse without addressing the second.

FACTS Appellee is a social worker licensed by the Board of Social Work Examiners. In 1981, she and her then-husband, Keith Wagner, who is also a licensed social worker, formed an organization called the Montgomery County Family Life Center (the Center) to provide therapeutic counseling for severely disturbed children and their families. Appellee was President and Executive Director of the Family Life Center and was responsible for clinic supervision, while Wagner served as Vice President and Clinical Director and was responsible for billing. The Center applied for and received in October 1982 status as a provider in the Maryland Medical Assistance Program, commonly referred to as “Medicaid.” Medicaid regulations require that any service billed to the Medicaid program must be provided to the person whose name appears on the Medicaid card, on the stated date, and in the manner ⁵⁷⁸ prescribed.

These regulations also require the provider to make and keep contemporaneous notes of all individual and group therapy sessions. The Center utilized several irregular billing practices, most of which were masterminded and carried out not by appellee but only by Wagner and Ms. Jane Margolius, the Center’s billing clerk. For example, the Center had a policy to bill Medicaid for a scheduled therapy session if notice of cancellation was not received forty-eight hours prior. In light of other billing practices, however, such a policy seems hardly necessary.

Services were regularly billed to Medicaid in conformity with each patient’s treatment plan but regardless of whether the specific service billed was actually performed. Group therapy was billed for each patient assigned to the group but without consulting attendance records and regardless of whether the patient actually attended. Some group therapy sessions were billed for patients who the Center knew were no longer attending at all. Some individual therapy sessions occurring at a time when the patients’ Medicaid numbers were invalid were billed as occurring months earlier.

Under a concept called “intensity of service,” individual therapy sessions were billed for individual attention during group sessions or for school visits, telephone visits, and even discussions in staff meetings. Medicaid was often billed in advance of service even if the service was never provided, and billings were submitted for days on which the entire Center was closed. Individual therapy sessions were once billed for those patients whose parents attended a Center party. In 1984, at a time before the institution of many of the above billing practices, the State Medicaid program conducted a limited inquiry into the Center’s practices.

The State requested that the Center provide treatment records for ten Medicaid patients. The Center, however, did not have a policy of making treatment records for every individual visit and instead supplied the patients’ treatment plans. The State informed the Center that such documents were not sufficient and that it needed to provide the contemporaneous notes regarding treatment. The Center staff thereupon recreated ⁵⁷⁹ the notes for the required patients and dates and sent the information to the State.

The State closed its inquiry with no further action. In 1989, the State began a separate audit and requested treatment records for twenty-six patients. For a variety of reasons, these records were not complete. Appellee directed the staff to reconstruct the requested notes as best they could remember, but she never specifically instructed anyone to create phony notes.

One therapist informed appellee that he would not create notes concerning some non-existing treatment sessions with appellee’s daughter, who was a regular patient at the Center. Appellee herself created the fraudulent notes concerning her daughter’s non-existent sessions. There is no evidence she participated in any other aspect of the record reconstruction. After the notes were sent to the State, appellee circulated a memorandum to the staff outlining the manner in which therapy notes were to be made in the future.

The memo instructed them never to indicate an absence in their notes but instead either to leave a blank space at the date of the absence or to write in some information about the child. On the basis of the documents provided, the State suspected fraud and executed a search warrant, seizing documents, clinical files, and computers from the Center. Among the documents were several incriminating communications between Wagner and Margolius detailing their fraudulent billing practices. Criminal charges were filed against Wagner, Margolius, and appellee.

Margolius pled guilty to felony Medicaid fraud in December of 1990. Wagner followed suit in June of 1991, agreeing to plead guilty to Medicaid fraud and conspiracy to commit Medicaid fraud. Both agreed to testify against appellee as part of their plea agreements. Appellee pled guilty to one count of misdemeanor Medicaid fraud for collateral billing 1 and entered an Alford plea to one misdemeanor count of conspiracy to commit Medicaid fraud. ⁵⁸⁰ The Board then filed disciplinary charges against appellee, alleging four violations of the Health Occupations Article.

The specific charges were that she “Violate[d] the code of ethics adopted and published by the Board,” Md.Code Ann., Health Occ. § 19-311(7); “[Wa]s convicted of or pleaded guilty or nolo contendere to a felony or to a crime involving moral turpitude, whether or not any appeal or other proceeding is pending to have the conviction or plea set aside,” id § 19-311(8); “Willfully ma[de] or file[d] a false report or record in the practice of social work,” id. § 19-311(12); “Submitted] a false statement to collect a fee,” id. § 19-311(14). Administrative Law Judge (ALJ) Merry C. Hudson made over two hundred findings of fact in the course of determining that appellee had violated subsections (7), (8), and (13), but that insufficient evidence existed to find a violation of subsection (12). At that time, the Board’s prosecutor did not request any specific sanction. The ALJ noted that appellee’s violations “must be considered serious” and that her behavior “adversely affects the public interest and reflects poorly on the profession.” On the other hand, the ALJ noted that except for the instant case appellee had “an exemplary record,” and commented on “the innovative treatment programs [appellee] established at the Center, as well as her personal commitment and dedication to the service of her clients.” After considering the nature and severity of the violations and weighing them against the mitigating evidence, the ALJ recommended that appellee’s license be suspended for one year and that she be placed on probation for two years.

Appellee filed exceptions to the ALJ’s recommendation with the full Board, and although she argued that there was no basis for such “a significant sanction,” she did not make a specific exception to the length of the sanction. After a ⁵⁸¹ hearing, the Board adopted all of the ALJ’s findings of fact and analysis except with respect to the sanction. Without expressing any specific disagreement with the ALJ regarding the sanction and, in fact, after repeating substantially all of the ALJ’s analysis thereon, the Board stayed six months of the one-year suspension and retained the two year probationary period. Appellee filed a petition for review in the circuit court, challenging each finding of a violation and also arguing that the sanction was arbitrary and capricious for being disproportionate to the sanction imposed on Wagner.

Appellee claimed Wagner had received only a thirty-day suspension, and characterized her own suspension as “twelve times” as severe. Her argument was that the Board had punished her for refusing to bargain for a sanction, in contrast to Wagner, who apparently had bargained for a reduced sanction. She further alleged that the Board improperly adopted the rationale set forth in a single sentence of the Board prosecutor’s responsive brief before the Board: The fact that other participants in the Medicaid scam admitted liability and entered into an agreement, whereby they received less punishment tha[n] [appellee], who is either in denial or has deluded herself and chose not to negotiate an agreement with the Board, should have no bearing on the ALJ’s and, subsequently, the Board’s sanctioning the misconduct committed. The Board responded to this argument by asserting that the circuit court did not have any factual basis on which it could find appellee’s sanction to be disproportionate to the one imposed on Wagner, because the record contained “no indication of the terms of any sanction given to Mr. Wagner.” The circuit court upheld every aspect of the Board’s decision except the sanction.

In that regard, the court stated, “[I]t strains belief that the Board would mete out a suspension six times longer to [appellee] than to the perpetrator of the actual frauds [Wagner], who displayed flagrant disregard for Medicaid regulations, the Board’s Code of Ethics, and the law.” ⁵⁸² The court found both sufficient evidence of Wagner’s sanction and sufficient preservation of the issue in a single transcript reference to Wagner’s 30-day suspension made by counsel for appellee during opening arguments at the exceptions hearing before the Board. As for the prosecutor’s statement in his responsive brief to the Board, the court wrote, “This statement raises the troubling possibility that the Board might have thought it permissible to sanction Petitioner more severely because she exercised her statutory rights and did not admit responsibility.” The court claimed that the Board had determined that appellee’s sanctionable conduct was not as extensive as that of either Wagner or Margolius. Considering this in light of appellee’s good reputation and dedication to her clients, the court found, “[T]he imposition of a one year suspension, with six months stayed, was arbitrary and capricious.” Thereupon, the court modified the suspension such that all but thirty days of the one year period was stayed. The sanction was upheld in all other respects.

DISCUSSION The Board alleges that the sanction it imposed is neither arbitrary nor capricious and that the lower court erred in comparing it to a separate sanction concerning separate facts, the terms of which were not factually supported in the record. Appellee responds that the circuit court properly evaluated the relative severity of the two sanctions and that its finding of arbitrariness and capriciousness is adequately supported by the record. 2 Judicial review of the Board’s final decision is authorized by Md.Code Ann., Health Occ. § 19 — 313(b), and is to be governed by the Administrative Procedures Act, Md.Code ⁵⁸³ Ann., State Gov’t § 10-222. According to subsection (h) of the latter statute, a reviewing court may: (1) remand the case for further proceedings; (2) affirm the final decision; or (3) reverse or modify the decision if any substantial right of the petitioner may have been prejudiced because a finding, conclusion, or decision: (i) is unconstitutional; (ii) exceeds the statutory authority or jurisdiction of he final decision maker; (iii) results from an unlawful procedure; (iv) is affected by any other error or law; (v) is unsupported by competent, material, and substantial evidence in light of the entire record as submitted; or (vi) is arbitrary or capricious. Our role in reviewing an administrative agency decision is precisely the same as that of the circuit court, and we apply the same standards of review as those applied below.

Department of Health and Mental Hygiene v. Shrieves, 100 Md.App. 283, 303-04 , 641 A.2d 899 (1994). Judicial review of agency action has been described as “narrow.” United Parcel Serv. v. People’s Counsel for Baltimore County, 336 Md. 569, 576 , 650 A.2d 226 (1994). Review is generally restricted to the evidence developed before the agency, although in some circumstances the circuit court may receive additional evidence of arbitrary or capricious action. Ad+Soil, Inc. v. County Comm’rs of Queen Anne’s County, 307 Md. 307, 321-22 , 513 A.2d 893 (1986).

Final agency decisions are presumptively correct, and a court must show deference both to findings of fact and drawings of inferences by an agency. Liberty Nursing Ctr., Inc. v. Department of Health and Mental Hygiene, 330 Md. 433, 442-43 , 624 A.2d 941 (1993). A court should never substitute its own judgment for that of the agency. Bernstein v. Real Estate Comm’n, 221 Md. 221, 230-32 , 156 A.2d 657 (1959).

We