ALJDEC

00F-200405-DEN · Board of Dental Examiners · 2001-06-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

On April 18, 2001, a hearing was held to determine if disciplinary action should be taken against the license of John W. Melde, D.D.S. (“Respondent”). Assistant Attorney General Mary DeLaat Williams represented the Arizona State Board of Dental Examiners. Attorney Jeffrey J. Tonner represented the Respondent. Evidence and testimony were presented. The parties also submitted post-hearing legal memoranda, including Stipulated Findings of Fact regarding Count I. Based upon a review of the entire record, the undersigned Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Decision.

FINDINGS OF FACT 1. The Respondent is the holder of License Number D4235 for the practice of dentistry in the State of Arizona.

2. The Arizona State Board of Dental Examiners (“Board”) is the State agency charged with regulating and controlling the practice of dentistry in Arizona.

COUNT I 3. On August 22, 1997, the Board issued an Order (“1997 Board Order”) in Case Number 96282 against the Respondent. See State’s Exhibit 6. Case Number 96282 pertained to the Respondent’s billing practices for 18 patients. Id.

4. On January 9, 21, 22, 1997, and February 26-28, 1997, a six day administrative hearing was held before Administrative Law Judge Kip Micuda. See John W. Melde, DDS, Holder of License #D4235 for the Practice of Dentistry in the State of Arizona, 96F-282-DEN. Following the administrative hearing, the Board found that the Respondent had engaged in unprofessional practice as defined in A.R.S. § 32-1201(18)(k), (n) and (u)(ii). See State’s Exhibit 6. The Board ordered that the Respondent’s dental license be suspended for one year (with credit for time served). Id. The Board also placed the Respondent’s dental license on probation for three years. Id. The Board also ordered the Respondent to pay restitution to First Health, the third party administrator for the Fort McDowell Indian Community Dental Plan. Id. Finally, the Board ordered the Respondent to complete a continuing education course, undergo random audits and retake the jurisprudence exam. Id.

5. On or about September 22, 1998, the Respondent was indicted in United States of America v. John W. Melde, United States District Court, District Court of Arizona, CR98-626-PHX-SMM. See State’s Exhibit 1. On May 5, 2000, the Respondent pled guilty to three Class E felony counts of mail fraud, in violation of 18 U.S.C. § 1341, resulting from the Respondent’s false and fraudulent billings submitted to First Health. See State’s Exhibit 2. The three felony counts pertained to two patients, S.C. and W.S. Id.

6. On August 29, 2000, the Respondent was convicted and sentenced to 60 months probation on each of the three felony counts. See State’s Exhibit 3. The Court ordered the probationary terms to be served concurrently. Id. The Respondent was also ordered to pay restitution to First Health in the amount of $188,354.99. Id.

7. Following the Respondent’s felony convictions, the Board initiated Case Number 200405 against the Respondent. Count One of the Complaint in Case Number 200405 charged the Respondent with a violation of A.R.S. §32-1263(2) (i.e., conviction of a felony). See Board’s Complaint and Notice of Hearing, dated March 15, 2001.

COUNT 2 8. At the administrative hearing before Administrative Law Judge Kip Micuda in 1997, the Respondent testified that he had returned $10,974.28 to First Health, the third party administrator for the Fort McDowell Indian Community Dental Plan. See State’s Exhibit 4. The Respondent further testified that the $10,974.28 amount represented the total amount of money which he had improperly received because the patients did not follow through with their treatment. Id. The Respondent testified that there may have been one more patient that he could not name. Id.

9. At the hearing in this matter, the Respondent testified that the $10,974.28 amount was incorrect. The Respondent testified that he subsequently found several billing errors performed by his office manager. The Respondent testified that whenever he found a mistake by his office manager, he tried to refund the money owed to First Health to correct the officer manager’s billing error.

10. In the 1997 Board Order, the Board ordered that the Respondent pay full restitution to the patients specifically identified in the Complaint and Notice of Hearing in Case Number 96282. See State’s Exhibit 6. The Board ordered the following:

RESTITUTION: Within thirty (30) days from the date of this order the Respondent shall document and verify to the Board, under oath by affidavit, that he has made full restitution on all fees for work prebilled or postdated but not completed for the patients who were identified in the Complaint and Notice of Hearing in the matter dated November 25, 1996. The documentation and verification shall include the patient’s name, the amount paid by the patient, the amount of restitution, and the date of restitution.

Id. (emphasis added).

11. The 1997 Board Order defined “postdating” or “backdating” as “performing dental work on individuals under the [Fort McDowell Indian Community Dental] Plan in 1996, and then billing the work as though the work was performed in 1995.” See State’s Exhibit 6, para. 33, pp. 5-6.

12. The 1997 Board Order defined “pre-billing” as “the billing practice of billing work to be performed in the future.” See State’s Exhibit 6, para. 34, p. 6.

13. On October 7, 1997, the Respondent submitted an “Affidavit of Dr. Melde re: Restitution” to the Board. See State’s Exhibit 7 (“Affidavit”). The Respondent attested that he had made full restitution in the amount of $10,352.00 to the patients identified in the Affidavit. Id. The Respondent’s Affidavit listed 18 patients. Id. The following six patients (listed in the Affidavit) are at issue in this matter: Patient Restitution Paid - Affidavit L.Ch. $ 0 D.S $ 195.00 T.J. $ 0 B.C. $ 575.00 L.C. $ 556.00 I.B.H. $1,520.00 Total: $2,846.00 Id.

14. Dr. Lawrence Pozil is the Board’s Investigator. Dr. Pozil prepared a document entitled “Melde Restitution Analysis of Affidavit List Versus Plea Agreement List” (hereinafter “Analysis Document”). See State’s Exhibit 12. Dr. Pozil testified that his Analysis Document shows what the Respondent should have paid in restitution to First Health regarding the above referenced six patients. Id. Dr. Pozil testified that he reviewed the Respondent’s Affidavit, the Respondent’s records and the Respondent’s plea agreement (in the federal case) in preparing the Analysis Document.

15. Dr. Pozil’s Analysis Document shows the following numbers: Patient Paid Restitution Dr. Pozil - Calculated Restitution L.Ch. $ 0 $ 189.00 D.S $ 195.00 $ 704.00 T.J. $ 0 $ 469.40 B.C. $ 575.00 $1,362.50 L.C. $ 556.00 $1,106.00 I.B.H. $1,520.00 $1,645.00 Total: $2,846.00 $5,475.90

Id. Dr. Pozil calculated that the Respondent failed to pay $2,629.90 (i.e., $5,475.90 - $2,846.00) in restitution to First Health for the aforementioned 6 patients. The Respondent paid the proper restitution regarding the other 12 patients in the Affidavit.

16. Dr. Pozil testified that the 1997 Board Order required the Respondent to pay “restitution for all fees prebilled or postdated but not completed” for the aforementioned six patients. See State’s Exhibit 6. Dr. Pozil testified that the Respondent failed to comply with the 1997 Board Order because he failed to pay the proper restitution for the aforementioned six patients.

17. The Respondent disagreed with the calculations in Dr. Pozil’s Analysis Document regarding the aforementioned six patients. The Respondent testified that he diligently reviewed hundreds of records regarding the 18 patients listed in his Affidavit. The Respondent testified that he meticulously applied the Board’s criteria for calculating restitution to each treatment for each of the 18 patients. The Respondent testified that Dr. Pozil’s Analysis Document was incorrect regarding the 6 aforementioned patients because the treatment at issue for each patient was either (1) not pre-billed, (2) not postdated, (3) was completed; or (4) the corresponding check from First Health was never cashed.

18. The Respondent further testified that Dr. Pozil considered some pre- billings that were actually billing errors. The Respondent explained that dental work was performed on the patient but his office manager billed the treatment under the wrong billing code. The Respondent testified that he believed that such billing errors did not fall within the Board’s criteria for calculating restitution.

19. The Respondent agreed to pay restitution to First Health in the amount of $188,354.99 in his federal criminal case. See State’s Exhibit 3. Dr. Pozil assisted the FBI in compiling the data that formed the basis for this restitution amount. See State’s Exhibit 13 (“Plea Agreement Document”). The Plea Agreement Document shows that the Respondent agreed to pay restitution in an amount greater than he had verified in his Affidavit for the aforementioned six patients. However, it is not entirely clear to the undersigned Administrative Law Judge if the Board’s criteria for calculating restitution were applied in preparing the Plea Agreement Document. Furthermore, in reviewing the Plea Agreement Document, it is not even clear how the parties settled on the $188,354.99 restitution amount. Dr. Pozil speculated that the attorneys negotiated this amount.

20. The Respondent testified that he does not know if the $188,354.99 restitution amount is an accurate figure. The Respondent testified that Dr. Pozil and FBI Agent Kuchar came up with the restitution amount. The Respondent testified that he agreed to pay the $188,354.99 restitution amount to resolve a very complex case. The Respondent further testified that he agreed to pay the $188,354.99 amount to stay out of prison. CONCLUSIONS OF LAW 1. The Board has the burden of proof, and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (App. 1996). A "preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not." Morris K. Udall, Arizona Law of Evidence, §5 (1960). It "is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not." Black's Law Dictionary, 1182 (6th ed. 1990).

2. The Board has the authority to invoke disciplinary action against a dentist licensed with the Board. A.R.S. §32-1263. Grounds for disciplinary action include unprofessional conduct by a dentist. A.R.S. §32-1201; A.R.S. §32-1263(1). The Board may also invoke disciplinary action if a dentist is convicted of a felony. A.R.S. §32-1263(2). Count I 3. The Board has the authority to invoke disciplinary action against a licensed dentist if the dentist has committed a felony. A.R.S. §32- 1263(2). The undersigned Administrative Law Judge concludes that the Board has sustained its burden of proving by a preponderance of the evidence that the Respondent has violated A.R.S. § 32-1263(2). The Respondent was convicted of three Class E felony counts for mail fraud, in violation of 18 U.S.C. § 1341, resulting from the Respondent’s false and fraudulent billings submitted to First Health. Count II 4. The Board has the authority to invoke disciplinary action against a licensed dentist for unprofessional conduct. A.R.S. §32-1263(1). The Board has charged that the Respondent’s failure to comply with the 1997 Board Order constitutes unprofessional conduct pursuant to A.R.S. §32- 1201(18)(w). The undersigned Administrative Law Judge concludes that the Board has not sustained its burden of proving by a preponderance of the evidence that the Respondent engaged in unprofessional conduct as defined in A.R.S. § 32-1201(18)(w).

5. Pursuant to the 1997 Board Order, the Respondent was required to prepare an affidavit showing that he had “made full restitution on all fees for work prebilled or postdated but not completed for the patients who were identified in the Complaint and Notice of Hearing . . .” See State’s Exhibit 6. The Board’s criteria for calculating restitution are not crystal clear. As demonstrated in this case, intelligent individuals may interpret and apply the Board’s criteria in different ways. The Board clearly had the means to calculate the restitution that the Respondent owed to First Health. See State’s Exhibit 12. However, the Board decided to order the Respondent to calculate the restitution based upon his interpretation of the Board’s criteria for calculating restitution. In doing so, the Board opened the door to subjective calculations and results. The Board should have calculated the restitution and then ordered the Respondent to pay a sum certain. In the alternative, the Board should have provided detailed instructions for calculating the restitution.

6. The Board ordered the Respondent to calculate and pay the restitution owed to First Health for the 18 patients listed in the Respondent’s Affidavit. The undersigned Administrative Law Judge concludes that the Respondent substantially complied with the 1997 Board Order. The Respondent diligently reviewed the records for the 18 patients in the Affidavit. The Respondent diligently applied the Board’s criteria for calculating restitution to each treatment for each of the 18 patients. The Respondent may have incorrectly interpreted or applied the Board’s criteria for calculating restitution. However, the undersigned Administrative Law Judge concludes that the Respondent never intentionally tried to deceive the Board. It is simply inconceivable that the Respondent would risk the revocation of his dental license over $2,629.90.

7. The Board has the authority to take disciplinary action against a dentist licensed by the Board. A.R.S. §32-1263.01. The Board may take (but is not limited to) the following disciplinary action: A. Revocation of the license; B. Suspension of the license; C. Probation; D. Imposition of an administrative penalty; E. Requiring that restitution be paid to the aggrieved party; and F. Imposition of peer review and professional education requirements.

See A.R.S. §32-1263.01.

8. The undersigned Administrative Law Judge cannot ignore the fact that the Respondent has committed a serious crime. The Respondent is a convicted felon. Accordingly, the undersigned Administrative Law Judge concludes that the Respondent’s dental license should be suspended for a period of 30 days followed by one year of probation. See A.R.S. §32- 1263.01.

RECOMMENDED DECISION Based upon the foregoing, the undersigned Administrative Law Judge recommends that the Board take the following disciplinary action (commencing on the effective date of this Order) against the Respondent: a. The Respondent’s License Number D4235 shall be suspended for a period of 30 days; and b. The Respondent’s License Number D4235 shall be placed on probation for a period of one year following the aforementioned 30 day suspension. Done this day, July 12, 2001.

______________________________________ Casey J. Newcomb Administrative Law Judge

Original transmitted by mail this ____ day of July, 2001, to:

Julie Chapko Board of Dental Examiners ATTN: Kim Stern 5060 North 19th Avenue, Suite 406 Phoenix, AZ 85015

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826