Doctors get millions from Medicare even after losing their licenses

NEW YORK — The first time cardiologist Robert Graor lost his Ohio license to practice medicine was in 1995, after he was convicted of 10 felony theft counts for embezzling more than $1 million from the Cleveland Clinic and sentenced to three years in jail.

The second time was in 2003, after he’d won back the license following his release from prison. This time, the Ohio Board of Medicine found he repeatedly misrepresented his credentials over a two-decade period and permanently barred him from practicing medicine.

That didn’t stop Graor from participating in Medicare, the government’s health insurance program for the elderly and disabled. In 2012, Medicare paid $660,005 for him to treat patients in New Mexico, which gave him a license to practice in 1998. Graor declined to comment.

At least seven doctors who’d lost a medical license because of misconduct collected a total of $6.5 million from Medicare in 2012, according to federal data. The list includes doctors accused of gross malpractice, a brutal sexual assault and violating prescription drug laws. Their continued participation in the $604 billion program reflects what some members of Congress and others call a permissive approach that lets providers with questionable backgrounds keep billing taxpayers. All the doctors notified Medicare of the loss of their licenses, records show.

“That’s ridiculous,” says Sidney Wolfe, a physician who founded Public Citizen, a Washington consumer-advocacy group. “If a doctor is thrown out of one state, that should be enough to exclude them from Medicare.”

The federal Centers for Medicare and Medicaid Services, which administers Medicare, released details of its payments to doctors earlier this month for the first time in more than 30 years. So far, only 2012 payment data has been released. Officials said they hope that making the information available will enable private researchers and the public to help ferret out fraud in the system.

The system needs such help, according to a 2012 report by the U.S. Government Accountability Office. In it, CMS reported improper payments of at least $44 billion, an estimate that may include both fraud and simple billing errors. Medicare has been on GAO’s “high risk list” since 1990, when the list was created to identify serious weaknesses in federal agencies.

“Part of it is the sheer size of the program and its complexity,” said Kathleen King, GAO director of health care, in a telephone interview. The program needs lots of providers to make sure patients have adequate access to health care, she said. “They can’t be like a private insurance company and exclude people because they don’t like their practices.”

CMS has “discretionary authority” to ban a doctor from the Medicare provider list if his license to practice has been revoked by a state, spokesman Aaron Albright said in an e-mail. The agency would not reveal if it has taken any action against the providers identified by Bloomberg as having lost their licenses to practice, saying such a disclosure would be a violation of the doctors’ privacy.

The Department of Health and Human Services Inspector General also can ban a doctor from Medicare if a state has revoked a medical license. Like CMS, it isn’t required to do so. Donald White, an agency spokesman, says the revocation of a license falls into a “permissive area where they will not necessarily be excluded” from Medicare. He said doctors are “generally not excluded” in cases where one state has pulled a license but another allows that doctor to continue practicing, with the knowledge of the first state’s action.

In all seven cases identified by Bloomberg, the doctors stripped of a license in one state were allowed to practice in another state and continued to bill Medicare.

The state of California revoked the license of internist Sean Steele in February 2012 following his guilty plea to misdemeanor battery against a woman who accused him of a sexual assault in the back seat of his chauffeured car in Las Vegas. He was ordered to pay a $1,000 fine and complete impulse-control counseling, according to records from the Medical Board of California.

The administrative law judge who heard the board’s case against Steele in California said the doctor “savagely” attacked the woman and called his actions “extremely egregious.” The judge said Steele lied throughout the case.

The woman, an attorney who met Steele through an online dating service, suffered severe injury to her genitals, according to the California board decision.

Kristopher Rath, a Las Vegas attorney representing Steele, said the doctor denies assaulting the woman. He said the California medical board hearing was conducted even though Steele’s attorney was sick and unable to attend. Medicare hasn’t taken any action against Steele, Rath said.

In Nevada, where Steele is also licensed, his ability to practice has been uninterrupted by his guilty plea in the assault case. In 2012, Medicare paid $394,660 for his services. Douglas Cooper, the director of the Nevada State Board of Medical Examiners, said the state took a “nonpublic action” against Steele that he was not allowed to disclose. He said his office reviewed the allegations of sexual assault and determined “the evidence boiled down more in favor of Dr. Steele than the alleged victim.”

Surgeon Swaroop Nyshadham lost his license in Alabama and surrendered his New York license following charges of shoddy patient care in a case in which a woman died. He continues to practice in Georgia, and Medicare paid $22,134 for his work in 2012.

In the order stripping him of his Alabama license, the state medical licensure commission found Nyshadham guilty of “gross malpractice or gross negligence.” He performed an operation in 2004 on a 36-year-old patient with acid reflux and an inflamed esophagus that was “not an accepted anti-reflux operation,” according to the state medical board’s complaint. The surgeon was “struggling during the surgery, which was reportedly accompanied by copious bleeding,” the complaint said.

The day after the operation, the patient’s temperature increased to 101.4, and days later, her white blood-cell count had risen to a level that indicated a possible infection.

Nyshadham was notified by telephone and “dismissed the high white blood count as a ‘lab error,’ and did not request further tests,” according to the commission. The patient chart also showed an above-normal heart rate, but Nyshadham ordered her release anyway. The next morning, the patient was found dead at home.

The autopsy report showed toxic levels of Demerol, a narcotic pain reliever, which the board’s complaint said was “within the parameters of Dr. Nyshadham’s orders.”

After the patient died, Nyshadham wrote in her chart, “Her post-operative course was unremarkable” and she didn’t require much pain medicine, according to the complaint. “On the second day when she recovered from her surgery, she was sent home on [sic] satisfactory condition for a follow-up in my office,” he wrote, according to the complaint.

The Alabama commission found that Nyshadham failed to meet the standard of care and added that “perhaps of greater concern” than his treatment “is the fact that Dr. Nyshadham does not appear to understand or comprehend his mistakes.” Based on his responses to questioning, the commission concluded that “there is a strong possibility that the same mistakes may be repeated in the future.”

Nyshadham said in a telephone interview that the commission’s case against him “was a conspiracy” aimed at getting him out of Alabama and that he was “a victim of a bad deal.”

“The patient died of a drug overdose of pills she took after she went home, and they disregarded the evidence,” he said.

The panel’s list of violations included “conduct which is dishonorable and which shows a disposition to lie, cheat and fraud.” In June 2008, four years after his patient died, Nyshadham’s license was revoked. He has been excluded from the state’s Medicaid program.

Based on Alabama’s decision, New York’s Department of Health also charged Nyshadham with professional misconduct. Nyshadham surrendered his New York license in February 2009. In an interview, he called New York’s action “a knee-jerk response” to Alabama’s.

Today, Nyshadham still accepts Medicare patients in Georgia, he said. After Alabama revoked his license, the Georgia Composite Medical Board required Nyshadham to get 20 hours of continuing education and pay a $5,000 fine, according to a public consent order. It didn’t revoke his license.

General practitioner Alexander Kalk surrendered his Missouri license in 2009 “in lieu of discipline,” according to a settlement agreement between the doctor and the state Board of Registration for the Healing Arts. He now practices in neighboring Illinois. Medicare paid about $3.5 million for his services in 2012.

The settlement agreement says Kalk violated several drug laws, including failing to keep adequate records of how he handled controlled substances. He obtained his Illinois license in 2007, which was after Missouri officials began investigating him but before he surrendered his license in that state.

While the Illinois board allowed him to continue to practice after Missouri revoked his license, it did take some action, board records show: In a March 2011 consent order, Kalk agreed to indefinite probation of at least five years with his practice monitored by another physician. He was also suspended from practicing for 30 days and required to continue psychiatric therapy, according to the order.

Kalk said in an interview that he was forced to suddenly close his practice in Missouri because of financial pressures from a divorce. He said that led to inquiries by the Missouri board and the surrendering of his license. He said he has not had any problems in Illinois.

He also said the $3.5 million billed under his name for Medicare went into a general fund at the group practice he works for and that he receives a modest salary for his work.

In the Graor case in Ohio, state officials gave the doctor a second chance after he was convicted of stealing just over $1 million in research funds from the Cleveland Clinic, where he was chairman of vascular medicine. His wife testified the money was used primarily to restore an old home the couple purchased, as well as pay other bills and expenses.

The Ohio medical board took his license in 1995 based on his criminal conviction. The inspector general for the federal Health and Human Services department also took away his eligibility to participate in Medicare in 1996. In 2000, the state board voted to let him start practicing again subject to a five-year probationary period, and the inspector general reinstated his eligibility to be a Medicare provider.

In 2002, the board determined that Graor had repeatedly misrepresented to employers and associates from 1983 through 2000 that he was board certified in internal medicine. It found that Graor took the exam administered by the American Board of Internal Medicine in 1981, but failed.

In 2003, his Ohio license was permanently revoked. Two courts upheld the decision after Graor appealed.

“Dr. Graor obviously did not learn his lesson, as he continued to engage in lies and deceit,” wrote Ohio Common Pleas Court Judge David Cain in upholding the board action. “This time around, the Board had no reasonable choice but to permanently revoke his certification.”

Graor obtained his New Mexico license in 1998, after his release from jail but before Ohio officials gave him his license back in that state. When notified Ohio had permanently revoked his license in 2003, New Mexico officials placed Graor on probation, according to state records. In 2008, the New Mexico medical board ended his probationary period and he has no restrictions on his license there today.

— With assistance from Phil Kuntz in New York.