CSA
Summary
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REPORT BY THE STATE AUDITOR
OF CALIFORNIA
THE MEDICAL BOARD NEEDS TO MAXIMIZE ITS
RECOVERY OF COSTS
93032 MARCH 1995
The Medical Board Needs To
Maximize Its Recovery of Costs
93032, March 1995
California State Auditor
Bureau of State Audits
Table of Contents
Page
Summary S-1
Introduction 1
Chapter
1 The Medical Board Is Not Maximizing
Recovery of Its Costs of Disciplining
Medical Doctors Convicted of Violations 9
Recommendations 18
2 The Attorney General’s Billing System
Lacks Sufficient Detail To Analyze
Charges to the Medical Board 19
Recommendations 23
3 The Office of Administrative Hearings
Overcharged the Medical Board for
Some of the Services That It Provided 25
Recommendations 29
Appendices
A Number of Individuals Investigated by the
Medical Board of California by Category
Fiscal Years 1992-93 and 1993-94 31
B Summary of Disciplinary Actions Taken
by the Medical Board of California
Fiscal Years 1992-93 and 1993-94 33
C Medical Board of California
Expenditures for the Enforcement
and Disciplinary System
Fiscal Years 1992-93 and 1993-94 35
Responses to
the Audit State and Consumer Services Agency 37
Medical Board of California 39
California State Auditor’s Comments
on the Response From the
Medical Board of California 65
Office of the Attorney General 67
Department of General Services’
Office of Administrative Hearings 71
Summary
Results In Brief The Division of Medical Quality within the Medical Board of
California (medical board) is responsible for enforcing the disciplinary
and criminal provisions of the Medical Practice Act. To carry out its
responsibility, the Division of Medical Quality uses its enforcement
program to conduct activities such as processing complaints against
physicians and surgeons, investigating the complaints to see if they
warrant disciplinary action, and referring such cases to the Health
Quality Enforcement Section (HQES) of the Attorney General’s Office.
The division also refers cases involving criminal complaints to the
District Attorney’s Office. The Office of Administrative Hearings
(OAH) within the Department of General Services is responsible for
adjudicating all administrative actions taken against physicians and
surgeons and for proposing disciplinary decisions for consideration by
the medical board.
Chapter 1267, Statutes of 1993, required the Bureau of State Audits to
conduct an audit of the disciplinary system administered by the medical
board and established to enforce the provisions of the Medical Practice
Act. Our review focused on the enforcement and disciplinary
activities that occurred during fiscal years 1992-93 and 1993-94.
During our review we noted the following:
During fiscal year 1993-94, the medical board spent more than $25
million on enforcement and disciplinary efforts. Of those costs, we
determined that under current law, the medical board could have
attempted to recover more than $6.3 million. Furthermore, if the
medical board had sought to change the Business and Professions
Code to allow it to recover costs incurred during administrative
hearings, the medical board could have attempted to recover an
additional $3.1 million. However, the medical board reported that
it recovered only $94,053 of its costs for the same period.
Before January 1, 1995, the HQES of the Attorney General’s Office
did not have a system to identify the types of activities the HQES
performed for the medical board. In addition, the medical board
does not have a process to ensure the invoices it pays are only for
active medical board cases. As a result, the HQES cannot assure
S-1
the medical board that the charges it billed for HQES services were
reasonable or necessary, and the medical board cannot ensure that it
is only paying for services it receives.
The OAH overcharged the medical board for court reporter services
and also failed to reimburse the medical board for the costs of some
transcripts. As a result, the OAH may owe the medical board a
total of $283,000. In addition, the OAH owes the medical board
an undetermined amount for the cost of transcripts and copies of
transcripts ordered by third parties for appealed cases from
January 1, 1991, through June 30, 1994.
Corrective The medical board has begun to track its investigative costs and some
Actions of the of the costs charged by its expert medical consultants to seek recovery
Medical Board, of those costs. In addition, the HQES of the Attorney General’s Office
enhanced its Legal Time Reporting System in January 1995 to enable
HQES, and OAH
its attorneys and legal assistants to record their activities into 13
different categories. Finally, in July 1994, the OAH of the Department
of General Services began charging third parties the correct rates for
transcripts and copies of transcripts for appealed cases.
Recommendations To maximize its recovery of costs, the Medical Board of California
should take the following actions:
Be more aggressive in recovering disciplinary costs through
stipulated settlements and as part of the proposed disciplinary
decisions rendered by administrative law judges;
Include in its recovery of costs the costs for prosecuting cases, costs
of administering psychiatric competency examinations by expert
consultants, and a portion of the costs to administer the diversion
program that represents the number of participants ordered to
participate in the program as an alternative to other disciplinary
action; and
Seek a change in the Business and Professions Code to allow
recovery of disciplinary costs incurred once the administrative
hearing process begins.
S-2
To assure the medical board that the hours charged are reasonable and
necessary, the Attorney General should require supervisors in each of
the HQES offices to review the number of hours and types of tasks that
attorneys and legal assistants are charging for their cases.
To ensure that the tasks for which it is billed are appropriate and
necessary, the medical board should develop a process to review all
invoices that it receives from the Attorney General’s Office.
To avoid overcharging the medical board in the future and compensate
it for past overcharges, the OAH should take the following actions:
Change the method used to calculate the hours worked by court
reporters from private firms so that computations are carried out to
tenths of hours;
Using the above methodology, recompute all hours worked by
private court reporters since January 1993 and reimburse the
medical board the amount of the overcharge;
Reinitiate the practice of quarterly reimbursing the medical board
the amounts collected for transcripts ordered by third parties;
Review invoices received for transcripts ordered by third parties not
involving appealed cases that were received from January 1, 1993,
through January 31, 1995, and reimburse the medical board for the
total amount collected on its behalf; and
Review the invoices received from January 1, 1991, through
June 30, 1994, for transcripts of appealed cases ordered by third
parties and reimburse the medical board the amount the OAH failed
to collect from third parties as required by law.
Agency Comments With one exception, the Medical Board of California, the Attorney
General’s Office, and the Office of Administrative Hearings concur
with the conclusions and recommendations contained in our report.
The medical board disagreed with one of our recommendations.
S-3
Blank page inserted for reproduction purposes only.
S-4
Introduction
The goal of the Medical Board of California (medical board) is to
protect the public by ensuring the initial and continued competence of
the health care professions and occupations under its jurisdiction. The
medical board licenses physicians and surgeons and certain allied
health professions, investigates complaints against its licensees, and
disciplines those found guilty of violating the law or regulations. The
medical board is comprised of two essentially autonomous divisions:
the Division of Licensing and the Division of Medical Quality.
The Division of Licensing is responsible for issuing regular and
probationary licenses and certificates under the medical board’s
jurisdiction, administering the medical board’s continuing education
program, and administering physician and surgeon examinations for
some license applicants.
Through its enforcement program within the Division of Medical
Quality, the medical board is responsible for promptly responding to
complaints against licensees of the medical board and investigating
those complaints within the medical board’s jurisdiction. Furthermore,
the Division of Medical Quality is responsible for disciplining licensees
found guilty of violating the Medical Practice Act. The type of
discipline the medical board administers depends on the nature of the
violation. Examples of disciplinary action include restriction of
medical duties, license suspension, license revocation, and probation.
The most severe discipline that the medical board administers is license
revocation.
Recent Legislation Chapter 1267, Statutes of 1993, enacted on January 1, 1994, changed
Affecting the several aspects of the disciplinary process. For example, the
legislation strengthened the medical board’s ability to inspect and copy
Medical Board
records relevant to investigations, with certain limitations, and provided
for the imposition of a civil penalty of $1,000 per day if such records
are not produced within 15 days of the request or the subpoena request
date. In addition, the legislation gave the medical board the authority,
after it has conducted an investigation, to issue a public letter of
reprimand to physicians and surgeons for minor violations of the
Medical Practice Act in lieu of filing or prosecuting a formal
accusation. The chapter also simplified the process for obtaining an
order for an interim suspension of a practitioner’s license in situations
where serious injury to the public would result before the matter was
1
heard during a regularly scheduled administrative hearing. Finally, to
enhance the staffing of the Health Quality Enforcement
Section (HQES) of the Attorney General’s Office, the legislation
provided a mechanism to increase the initial and biennial license fees
paid by physicians and surgeons. As a result, these fees were
increased from $500 to $600.
Enforcement Through its enforcement program, the medical board administers all
Program phases of the enforcement process for physicians and surgeons, from
receiving the initial complaint to overseeing the surveillance of
physicians and surgeons on probation. The enforcement program also
handles and investigates complaints on a reimbursement basis for
certain of the allied health boards and committees. Currently, the
medical board employs 80 investigators in its 13 district field offices
located throughout the State. During fiscal year 1993-94, the medical
board incurred costs of $21 million to conduct enforcement activities.
Enforcement Process
The medical board receives many types of health-related complaints
against its licensees from a variety of sources, including the public,
other medical professionals, and various government agencies.
Complaints also are generated internally by the medical board. In
addition, the law requires hospitals, insurers, the courts, attorneys, and
coroners to report information that may initiate an investigation. The
enforcement process begins with a complaint or report to the medical
board. Consumer services representatives and consumer assistant
technicians review complaints to determine whether there is a probable
violation of the Medical Practice Act. In addition, a medical
consultant under contract with the medical board reviews complaints at
the initial processing stage whenever a quality-of-care issue is
involved. If a complaint seems to identify a probable violation of the
Medical Practice Act and the violation is serious enough to require an
investigation, the complaint is referred to an investigator in the
appropriate field office.
The medical board usually resolves its investigations in one of three
ways: it will close a case without merit, close a case with merit, or
pursue discipline. The medical board may close a case without merit
for several reasons. The complaint may prove to be untrue. Evidence
may be lacking to support the allegation, or the complaint may be
outside the medical board’s jurisdiction.
The medical board also may close a case with merit without pursuing
discipline. One reason for that decision is that the practitioner may
2
enter the medical board’s diversion program, which has the goal of
rehabilitating physicians impaired by alcohol abuse, drug abuse, mental
illness, or physical disorders but have violated no other provisions of
the Medical Practice Act. Alternatively, a practitioner may be required
to take a competency examination, after which the case may be closed
with merit. The medical board also may require a third-level review
before closing a case with merit. For these cases, the medical board’s
medical consultant and investigator educate the practitioners about the
errors identified in their care and treatment of a patient.
Finally, the medical board may close an investigation with merit
without having taken any action against the subject. In such instances,
the medical board determines that, although the practitioner departed
from standard medical practice, the departure was not serious enough to
warrant disciplinary action. However, for these cases, the medical
board has the additional option to either cite and fine physicians for
certain minor violations or issue public letters of reprimand rather than
prosecute such cases.
The medical board retains cases that it closed without merit for one
year and cases that it closed with merit for five years. To ensure that
the medical board’s decision to close these cases is appropriate,
attorneys from the various Health Quality Enforcement Section
(HQES) locations of the Attorney General’s Office visit the medical
board’s field offices and review closed investigation cases. If an
attorney determines that the medical board should not have closed a
particular case, the decision can be reversed and the case can be
reopened. In addition, a supervisor from the central complaints unit
reviews those complaints closed with and without merit.
Disciplinary Process
When the medical board determines that a practitioner may have
violated the Medical Practice Act and the violation warrants
disciplinary action, it refers the case to the HQES of the Attorney
General’s Office to pursue discipline. The HQES files an accusation
against the practitioner’s license; however, not all accusations reach the
stage of an administrative hearing. Instead, the licensee and the HQES
may propose a stipulated agreement, called a settlement, to the medical
board, which the Division of Medical Quality must then approve before
final resolution of the case is reached.
Cases that go to hearing may be heard before an administrative law
judge or the Division of Medical Quality, depending on whether the
division wants to hear the case. At the completion of an administrative
hearing, the administrative law judge will write a proposed decision
3
that the Division of Medical Quality adopts or alters. However, if the
division does not act within 90 days of receiving the decision from the
administrative law judge, the decision is adopted automatically. In
contrast, there is no time frame for the adoption of stipulated
settlements. A licensee dissatisfied with the final decision has the
right to petition for reconsideration or to petition the court system.
Workload According to the medical board’s annual reports, the number of
Indicators for the complaints that the board received about physicians and surgeons
Enforcement increased 17 percent, from 6,749 in fiscal year 1992-93 to 7,902 in
fiscal year 1993-94. However, during the same period, the number of
and Disciplinary
investigations opened for physicians and surgeons declined 7 percent,
Process
from 2,208 to 2,046. One reason why the number of investigations
declined is that the central complaint unit within the medical board
closed more complaints during fiscal year 1993-94. Specifically, this
unit closed 3,878, or 57 percent of the complaints received in fiscal
year 1992-93, whereas in fiscal year 1993-94, it closed 5,614, or
71 percent of the complaints received. Many of the complaints closed
during these respective fiscal years originated in an earlier year. When
this unit closes these complaints, they are not forwarded to a field
office for investigation.
Although the number of investigations of physicians decreased from
2,208 to 2,046, the number of cases referred to the HQES for the filing
of accusations rose from 433 in fiscal year 1992-93 to 601 in fiscal year
1993-94, an increase of nearly 39 percent. Furthermore, the number of
disciplinary actions taken against physicians also increased in fiscal
year 1993-94. As shown in Figure 1, disciplinary actions rose from
149 to 224, an increase of 50 percent, with the largest increase
occurring in the number of physicians placed on probation.
4
Figure 1 Disciplinary Actions Taken
by the Medical Board for
Fiscal Years 1992-93 and 1993-94
* Legislation authorizing issuance of public letters of reprimand became effective
January 1, 1994.
Source: Annual Reports of the Medical Board
The statewide total caseload per attorney for the HQES for cases
against physicians and allied health professions increased from 29 per
attorney in fiscal year 1992-93 to 30 per attorney for fiscal year
1993-94. To assess the workload per HQES attorney for those cases
where an accusation has not been filed, commonly known as unfiled
cases, we obtained quarterly caseload reports from the HQES covering
November 1, 1993, through April 30, 1994. Using the amounts shown
in these reports, we calculated the average caseload per attorney for
both total cases and unfiled cases for each of the HQES locations for
the six months the reports represent. As shown in Table 1, the average
caseload per attorney for total cases varied from a low of 25.6 in the
San Diego HQES to a high of 61.2 in the Sacramento HQES.
Similarly, the average caseload per attorney for unfiled cases ranged
from a low of 3.9 for the San Diego HQES to a high of 11.5 cases in
the San Francisco HQES. These results indicate that unless caseloads
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Fiscal Year 1992-93
fluctuate by geographic location from one year to the next, the
San Diego HQES appears to be overstaffed, whereas the San Francisco
and Sacramento HQES locations appear to be understaffed.
Table 1 Average Caseload of Attorneys at Each
Health Quality Enforcement Section for
November 1, 1993, Through April 30, 1994
Average Average
HQES Total Unfiled Unfiled Total
Location Cases Cases Attorneys Caseload Caseload
Los Angeles 466 85 13 6.5 35.8
Sacramento 306 46 5 9.2 61.2
San Diego 312 47 *12.2 3.9 25.6
San Francisco 413 127 11 11.5 37.5
* This location has two attorneys who work less than full time.
Source: Health Quality Enforcement Section’s Quarterly Caseload Reports
Additionally, during the same six-month period, the HQES had an
average of 305 unfiled cases. Of these 305 cases, 88 remained unfiled
an average of three to six months, 101 remained unfiled an average of
six months to one year, and 16 cases remained unfiled for more than
one year. The residual 99 cases remained unfiled an average of less
than three months.
In its budget change proposal for fiscal year 1994-95, the HQES
justified a request for more staff by citing an average of 108 hours to
prosecute an administrative case and an average of 46 additional hours
required to provide other legal services related to administrative cases.
These other services included appeals, client services, and
administration, for an overall average of 154 hours per case.
We estimated the number of cases the HQES offices could have
completed for the two fiscal years we reviewed by determining the total
number of billable hours for HQES attorneys, plus the proportionate
amount of time supervisors charged to administrative cases and other
legal services each year. We divided this number by the average
number of hours to complete a case. Based on our calculations, we
estimate 462 cases could have been completed in fiscal year 1992-93
and 517 cases could have been completed in fiscal year 1993-94.
6
However, only 261 and 397 cases were completed during the two years,
respectively. According to the senior assistant attorney general of the
HQES, the differences between our completed case estimates for fiscal
years 1992-93 and 1993-94 and the number of cases the HQES actually
completed were caused by such procedural factors as increases in the
time it takes the Office of Administrative Hearings (OAH) to schedule
case hearing dates and the increasing complexity of the cases. We
define a complete case as a case resolved through a stipulated
settlement or a decision proposed by an administrative law judge and
adopted by the medical board following a hearing.
Scope and
Chapter 1267, Statutes of 1993 (Senate Bill 916), required the Bureau
Methodology
of State Audits to conduct an audit of the disciplinary system
administered by the Medical Board of California established to enforce
the provisions of the Medical Practice Act. In conducting this audit,
we reviewed all pertinent laws, regulations, and policies. We also
interviewed staff members of the medical board, the HQES, and the
OAH to determine each entity’s role and responsibility within the
disciplinary system. As part of our legal review, we summarized the
major changes made to the disciplinary system as a result of the
passage of Senate Bill 916.
To determine the number of individuals investigated or disciplined by
the medical board by category of investigation and enforcement action,
we determined the reporting processes used by the medical board to
track investigations and disciplinary actions, obtained the annual
reports for fiscal years 1992-93 and 1993-94, and vouched the data
supporting these reports. We used this information to create the
tables in Appendix A and Appendix B.
To determine the amount spent on the disciplinary system, we reviewed
the budget reports of the medical board for fiscal years 1992-93 and
1993-94, and we identified each item of expense relating to
enforcement and discipline. We also interviewed the budget analyst to
determine which shared and indirect costs benefited the disciplinary
system. Based on this information, we prepared a two-year
comparative table, which is presented in Appendix C.
To determine whether the amounts billed to the medical board by the
HQES were accurate and appropriate, we selected a sample of 120 line
items from the monthly invoices the HQES sent to the medical board to
bill its services. Our sample was drawn from the invoices received
during fiscal years 1992-93 and 1993-94. For each item sampled, we
recomputed the amount billed by using the supporting documentation,
and then we compared our computations with those included on the
7
invoice. In addition, we performed analytic procedures to project the
maximum amounts that HQES staff could have billed to the medical
board and compared the result with the amounts actually billed.
To determine if the amounts billed to the medical board by the OAH
for its services were accurate and appropriate, we selected all invoices
for two months, one from fiscal year 1992-93 and one from fiscal year
1993-94, and using supporting documentation, we recomputed the total
costs for all invoices. We also used analytic procedures to determine
if the amounts billed to the medical board for the two years were
reasonable in proportion to the services billed to other agencies by the
OAH.
To assess the efforts made by the medical board to recover the costs of
investigating and disciplining physicians and surgeons found guilty of
the charges filed against them, we identified all the cost elements of the
system that are susceptible to cost recovery and obtained information
regarding the amount of such costs actually recovered during fiscal
years 1992-93 and 1993-94.
To determine if the hours charged to medical board cases by the HQES
were reasonable, we attempted to use a case study approach to compare
actual hours charged for a sample of completed cases with profile cases
developed through interviews with the HQES supervisors. The profile
case for each HQES location represented typical tasks associated with
physician and surgeon cases and the amount of time associated with
those tasks, as well as any lag time that occurs between tasks. We
asked the supervisors to develop the profile case so that it would
represent typical cases resolved from July 1, 1992, through June 30,
1994.
Finally, to determine if the medical board had implemented the
recommendations contained in an audit that the Office of the Auditor
General issued in April 1991, we interviewed staff of the medical board
and reviewed documentation specific to those recommendations and
found that all had been implemented.
8
Chapter 1 The Medical Board Is Not Maximizing
Recovery of Its Costs of Disciplining
Medical Doctors Convicted of Violations
Chapter Effective January 1, 1993, Section 125.3 of the Business and
Summary Professions Code gave the Medical Board of California (medical board)
the authority to request administrative law judges to direct physicians
and surgeons convicted of violating the Medical Practice Act to pay
sums not to exceed the reasonable costs of the investigation and
enforcement of their respective cases up to the dates of the hearings.
In addition, nothing in this section of the code precludes the medical
board from recovering costs incurred for investigation and enforcement
of cases resolved through stipulated settlements.
Although the medical board has the authority to recover costs that it
incurs as part of the enforcement and disciplinary process, it is not
maximizing its efforts to recover such costs. For example, during
fiscal year 1993-94, the medical board spent more than $25 million on
enforcement and disciplinary efforts, including the costs of
investigations, services provided by the Attorney General’s Office, and
administrative hearings. Of those costs, we determined that under
current law the medical board could have attempted to recover more
than $6.3 million. Furthermore, if the medical board had sought to
change the Business and Professions Code to allow it to recover costs
incurred during administrative hearings, the medical board could have
attempted to recover an additional $3.1 million. However, the medical
board reported that it recovered only $94,053 of its costs for the same
period.
To the extent possible, physicians and surgeons found guilty of the
charges brought against them, either through stipulated settlements or
judgments reached through administrative hearings, should bear the
costs of the enforcement and disciplinary actions associated with their
cases. The medical board can use these funds to further enhance its
enforcement activities. According to the chief of enforcement, the
reason the medical board has not been more aggressive in trying to
recover its disciplinary costs is that, up until recently, some board
members were more concerned with protecting the public and less
concerned that violators pay the cost of investigating and adjudicating
their unlawful activities.
9
Although we agree that public safety should always be the most
important goal in any disciplinary outcome, by not vigorously pursuing
cost recovery, the medical board is limiting its ability to police the
medical profession more effectively. The ability of the medical board
is limited because the source of funding for enforcement and
disciplinary activities has remained constant while the workload has
increased. Specifically, because the enforcement and disciplinary
activities funded by licensing fees have increased and the number of
physicians and surgeons paying such fees has declined in each of the
last three years, the only way the medical board could ensure that the
funding kept pace with the increasing workload was to increase the
licensing fees. As a result, in each of the last four years, the fee to
obtain or renew a license has increased.
In response to complaints from the public and reports from health care
facilities, the Division of Medical Quality within the medical board
reviews the quality of medical practice carried out by physicians and
surgeons. This responsibility includes enforcing the disciplinary and
criminal provisions of the Medical Practice Act. It also includes
suspending, revoking, or limiting a medical license at the conclusion of
disciplinary actions. To carry out its responsibilities, the Division of
Medical Quality uses its enforcement program to conduct activities
such as processing complaints against physicians and surgeons,
investigating the complaints to see if they warrant disciplinary action,
and referring such cases to the Health Quality Enforcement Section
(HQES) of the Attorney General’s Office and, for cases involving
criminal complaints, to the District Attorney’s Office. The HQES is
responsible for filing accusations based on the charges included in the
cases referred to it, preparing for administrative hearings of the cases,
and negotiating the settlement or prosecution of cases on behalf of the
medical board. The Office of Administrative Hearings (OAH) within
the Department of General Services is responsible for adjudicating all
administrative actions taken against physicians and surgeons and for
proposing disciplinary decisions for consideration by the medical
board. The medical board pays the costs of all the enforcement
activities out of its contingency fund—a special revenue fund
consisting primarily of the licensing fees paid by physicians and
surgeons.
10
The Medical Beginning on January 1, 1994, the enforcement program started
Board Is Not requiring its investigators to formally track the time they spent
investigating complaints against physicians and surgeons by using an
Aggressively
investigation activity report. Before January 1994, investigators
Seeking Recovery
tracked their time using daily journals; however, because investigators
of Its Disciplinary
did not use a standardized format to track their time, the enforcement
Costs program did not consider the journals to be a reliable source from
which to extract the number of investigative hours spent on a given
case. As a result, serious efforts to recover disciplinary costs did not
begin until the middle of fiscal year 1993-94.
Although the medical board has recently taken more action to recover
its costs for conducting investigations, its efforts have been modest.
For example, we estimate that the costs to conduct investigations
referred to the HQES during fiscal year 1993-94 totaled approximately
$2 million. According to the chief of enforcement for the medical
board and the senior assistant attorney general of the HQES,
approximately 90 percent of the cases referred to the HQES result in
disciplinary action through either stipulated settlements or disciplinary
decisions rendered by administrative law judges. Using this estimate,
we determined that, of the $2 million in investigative costs associated
with the 601 cases referred to the HQES during fiscal year 1993-94,
nearly $1.8 million were susceptible to cost recovery. However, the
medical board only recovered approximately $94,053 in investigative
costs that year, or 5.28 percent. Furthermore, the costs recovered
represent collections for only 16 of the 373 cases that the medical board
resolved through disciplinary actions during fiscal years 1992-93 and
1993-94.
All the investigative costs that the medical board recovered during
fiscal year 1993-94 resulted from eight stipulated settlements
negotiated between the physician and surgeon and the medical
board, two decisions proposed by administrative law judges and
subsequently adopted by the medical board, five cases in which the
costs were recovered through criminal proceedings, and one case in
which the costs were recovered through a civil action. According to
the chief of enforcement, in some cases, the physician or surgeon
agreed to pay the entire amount of the investigative costs. However, in
other cases, the chief said investigative costs associated with the cases
were negotiated down to ensure that the most important public
protection terms and conditions were included in the disciplinary
orders. Moreover, in some cases, the medical board receives a lump
sum payment; however, in most cases, the physician or surgeon pays
the investigative costs through installments.
11
Although the medical board recently began seeking recovery of its
investigative costs, we noted that it has not made any attempt to recover
the costs of prosecuting the cases that it refers to the HQES as provided
by law. During fiscal year 1992-93, the medical board paid the HQES
nearly $5 million to prosecute cases on its behalf, and in fiscal year
1993-94, the medical board paid nearly $5.8 million to the HQES for
its services. As stated earlier, the Business and Professions Code
allows the medical board to recover costs of the investigation and
enforcement of cases up to the date of an administrative hearing.
Although some of the costs that the medical board pays to the HQES
cover time that the attorneys spend prosecuting cases during
administrative hearings, the proportion of time that attorneys typically
spend in hearings is small in relation to the time they spend on
prehearing activities. Therefore, most of the costs that the medical
board pays to the HQES are recoverable. According to the chief of
enforcement, the reason the medical board has not been more
aggressive in recovering its disciplinary costs is that, until recently,
some board members were more concerned with public protection and
less concerned that violators pay the costs of investigating and
adjudicating their unlawful activities.
Recovery Efforts The medical board has not included certain costs of disciplining
Do Not Include physicians and surgeons in its recovery efforts. Before October 1994,
the medical board did not pursue recovery of the costs it incurred to
All Costs
have medical consultants review cases of alleged medical wrongdoing.
Specifically, the medical board did not pursue recovery of the costs it
incurred to obtain the expert opinions of medical consultants in cases
where physicians and surgeons were ultimately found guilty of the
charges filed against them. Furthermore, the medical board is not
attempting to recover the costs that the medical consultants charge to
conduct psychiatric competency examinations in connection with these
cases. In addition, the medical board is not attempting to recover its
costs for administering the diversion program from those physicians
and surgeons either directed to enter the program as an alternative to
the medical board’s pursuing disciplinary actions against them or
required to participate in the program as part of the conditions
contained in their stipulated settlements. Finally, unlike other public
entities, such as the Department of Conservation, the medical board has
not sought to change the Business and Professions Code to allow it to
recover the costs associated with administrative hearings that result in
disciplinary decisions rendered by administrative law judges.
Expert Medical Consultant Costs
12
The Division of Medical Quality of the medical board often retains the
services of expert medical consultants in its investigation of complaints
against physicians and surgeons. The medical board retains experts
from a variety of different medical specialties to identify whether
deviations from the standard practice of medicine or acts of
unprofessional conduct have occurred. The medical board also retains
these consultants to serve as expert witnesses at any hearings that may
arise as a result of their assessments.
These consultants receive medical records, investigative interviews
with patients, interviews with subsequent treating physicians and other
witnesses, and any statements of the physicians who are the subjects of
the investigations. After receiving this information, the medical
consultant must review all the documentation and render a professional
assessment of the care provided by the physician to the patient involved
in the investigation. In some cases, the medical consultants will
provide testimony concerning their opinions in administrative hearings
held either before an administrative law judge or before the Division of
Medical Quality. On these occasions, the medical consultants act as
expert witnesses and must meet with the deputy attorney general
assigned to prosecute the case before the hearing, prepare for the
hearing, and attend the hearing to testify if necessary. Additionally,
for cases in which the physician’s medical or mental competency is
being investigated, medical consultants sometimes are retained to
administer oral clinical examinations to determine medical competency
and psychiatric examinations to determine mental competency.
The medical board compensates expert medical consultants at a rate of
$75 per hour for evaluating case documentation and writing expert
assessments of their findings. For consultations with the assigned
deputy attorney general before accusations are filed, while disciplinary
actions are pending, or while the consultants prepare for hearings, the
medical board pays medical consultants $100 per hour. If expert
testimony is required, medical consultants receive $100 per hour up to
a maximum of $800 per day. In addition, if medical consultants
administer competency examinations, the medical board pays them
$100 an hour, up to a maximum of $400 for oral clinical examinations,
and the amount they would normally bill in the course of their practice
for psychiatric examinations. Finally, the medical board reimburses
medical consultants for miscellaneous expenses, such as parking and
mileage. During fiscal years 1992-93 and 1993-94, the medical board
paid approximately $1.1 million and $1.2 million, respectively, for
expert medical consultant services. Beginning in October 1994, the
medical board requested investigators to include the costs of case
reviews and assessments by medical consultants in connection with
13
cases that the investigators referred to the HQES, so these costs could
be recovered through stipulated settlement or hearing.
Costs of the Diversion Program
The medical board established the diversion program to identify and
rehabilitate physicians and surgeons experiencing impairment because
of the abuse of drugs or alcohol or mental or physical illness affecting
their competency. The program is intended to treat the participating
physicians and surgeons so that they can return to their practices
without endangering public health and safety. Physicians and
surgeons either can enter the diversion program voluntarily or can be
ordered to participate as a condition of a stipulated settlement. In
addition, if during the course of an investigation against a physician or
surgeon, the facts indicate that the subject of the investigation is
abusing drugs or alcohol or is mentally or physically incompetent to
practice medicine but has violated no other provisions of the Medical
Practice Act, the medical board can direct the physician or surgeon to
enter the diversion program. After an evaluation by a diversion
evaluation committee, the physician signs a formal agreement to
participate in the program. After the agreement is signed, any
investigation or disciplinary action is suspended pending successful
completion of the program. The program is considered a success when
participants demonstrate to the diversion evaluation committee that
they have remained clean and sober for two years and have changed
their lifestyle and internalized values that will support sobriety for the
rest of their lives. If participants violate the terms of the treatment
program, the medical board reinstitutes the investigation or disciplinary
action that was suspended. If the diversion evaluation committee
believes that it is appropriate, physicians or surgeons can resume their
practice while participating in the diversion program, and participation
is kept confidential.
The medical board’s cost to administer the diversion program totaled
nearly $723,000 for fiscal year 1992-93 and exceeded $739,000 for
fiscal year 1993-94. However, the medical board has not made any
efforts to recover these costs. According to diversion program records,
as of June 25, 1992, 118 (46 percent) of the 256 participants were
ordered to participate in the program as an alternative to other
disciplinary action. Similarly, as of July 31, 1993, 82 (38 percent) of
the 213 active participants in the diversion program were ordered to
participate. The law does not prohibit the medical board from seeking
recovery of the proportion of the diversion program’s administrative
costs relating to those individuals ordered to participate in the program
as an alternative to facing other disciplinary action. Using the
14
numbers of participants ordered into the program for the two years we
reviewed, we determined that the medical board could have sought
recovery of approximately $332,500 for fiscal year 1992-93 and
$284,600 for fiscal year 1993-94.
Costs of Administrative Hearings
Current law precludes the medical board from seeking recovery of the
disciplinary costs incurred after cases go to a hearing before an
administrative law judge. Such costs include all attorney time spent
litigating cases during administrative hearings, the cost of witness fees
paid to expert medical consultants, and the time spent by administrative
law judges and court reporters adjudicating the hearings. However,
unlike the medical board, other public entities recoup these types of
costs. For example, according to Section 14591.3 of the Public
Resources Code, the Department of Conservation has the right, in any
civil or administrative action in which it prevails, to assess against the
respondent any costs and fees, including attorneys’ and experts’ fees,
along with the cost of the hearing, that it incurred as a result of bringing
the civil or administrative action. We determined that the medical
board incurs significant costs for disciplinary activities that occur after
an administrative hearing commences. For example, the medical
board spent $743,000 for services that the OAH provided during fiscal
year 1992-93 and more than $1.1 million for the same services during
fiscal year 1993-94.
The Medical Board Although we agree that the health and safety of the public should be the
Could Have primary concern of the medical board, we believe that the medical
board, by not pursuing recovery of costs as authorized by law, is
Recovered
limiting its ability to effectively enforce the Medical Practice Act. For
$9.4 Million
example, during our review of enforcement activities for fiscal year
1993-94, we identified more than $6.3 million that, under current law,
the medical board could have attempted to recover. In addition, if the
medical board successfully sought to change the law to recover the
costs of administrative hearings, it could recover more funds.
Specifically, for fiscal year 1993-94, the medical board could have
attempted to recover approximately $2.1 million for costs related to
legal services that the HQES provided during administrative hearings.
Further, the medical board could have also attempted to recover more
than $1 million for services provided by the OAH during those same
hearings. However, we determined that during the same fiscal year,
the medical board reported cost recoveries of only $94,053.
15
As shown in Figure 2.1, the number of complaints received and
accusations filed has increased over the last four years. In addition,
while disciplinary actions showed slight decreases over the first three
years, there was a sharp 50 percent increase from fiscal year 1992-93 to
fiscal year 1993-94. In contrast, Figure 2.2 shows that the number of
physicians and surgeons paying new and renewal licensing fees has
decreased in the last three years. Because of these trends, the medical
board has had to increase the amount charged for licensing fees during
each of the last three years.
Figure 2.1 Complaints Received, Accusations Filed,
and Disciplinary Actions Taken
by the Medical Board
Fiscal Year 1990-91 Through 1993-94
450 8,000
400 7,000
350
6,000
300
5,000
250
4,000
200
3,000
150
2,000 Accusations
100
Disciplinary actions
50 1,000 Complaints
0 0
1990-91 1991-92 1992-93 1993-94
Fiscal Year
Source: Annual Reports of the Medical Board
16
stnialpmoC
Figure 2.2 Number of New and Renewal Licensees
and Average Fees Paid by Licensees
Fiscal Year 1990-91 Through 1993-94
58,000 $600
57,000
$500
56,000
55,000
$400
54,000
53,000 $300 Licensees (new and renewals)
Average fees paid by licensees
52,000
$200
51,000
50,000
$100
49,000
48,000 $0
1990-91 1991-92 1992-93 1993-94
Fiscal Year
Source: Medical Board of California
If this trend continues, the gap between the amount of funds available
to support the medical board’s enforcement activities and the workload
will increase; therefore, the ability of the medical board to properly
enforce the Medical Practice Act will diminish. In light of these facts,
the medical board has only two alternatives to properly carry out its
mission to protect the public through the vigorous, objective
enforcement of the Medical Practice Act: either keep increasing the
fees paid by physicians and surgeons to keep pace with the increasing
workload or become more aggressive in recovering all the costs
associated with disciplining those physicians and surgeons found guilty
of the charges filed against them.
Conclusion The medical board has not been aggressive enough in its efforts to
recover the costs it incurs as part of its enforcement and disciplinary
process. Specifically, the medical board has not consistently sought
recovery of costs from those physicians and surgeons found guilty of
wrongdoing through stipulated settlements or through the
administrative hearing process. In addition, the medical board has
only recently begun trying to recover its costs for investigations and for
some of the services of expert medical consultants. Furthermore, the
17
medical board has not attempted to recover the costs associated with
the prosecution of cases that result in a successful disciplinary outcome
or the administrative cost of the diversion program devoted to those
participants ordered into the program as an alternative to other
disciplinary action. Finally, unlike other public entities, the medical
board has not sought to change the law that would allow it to recover
the costs that accrue after the administrative hearing process begins.
Recommendation To maximize its cost recovery efforts, the medical board should take
s the following actions:
Be more aggressive in recovering disciplinary costs through
stipulated settlements and as part of the proposed disciplinary
decisions rendered by administrative law judges;
Include in its cost recovery efforts the costs for prosecuting cases,
the costs of administering psychiatric competency examinations by
expert consultants, and a portion of the cost to administer the
diversion program that represents the number of participants
ordered to participate in the program as an alternative to other
disciplinary action; and
Seek a change in the Business and Professions Code to allow
recovery of disciplinary costs incurred after the administrative
hearing process begins.
18
Chapter 2 The Attorney General’s Billing System
Lacks Sufficient Detail To Analyze
Charges to the Medical Board
Chapter Before January 1, 1995, the Health Quality Enforcement Section
Summary (HQES) of the Attorney General’s Office did not have a system to
identify the types of activities that the HQES performed for the Medical
Board of California (medical board). Specifically, the invoices that the
HQES submitted to the medical board for payment identified only the
total number of hours attorneys and legal assistants charged during the
month and other services the HQES provided. These services included
periodic reviews of investigations closed by staff in the medical board
field offices and consultations with investigators at the medical board
field offices. In addition, the medical board does not have a process to
ensure that the invoices it pays are only for active medical board cases.
As a result, the HQES cannot assure the medical board that the charges
it billed for HQES services were appropriate or necessary, and the
medical board cannot ensure that it is only paying for services that it
receives.
HQES System One of the objectives of this audit is to assess the effectiveness and
Weakness efficiency of the services provided by the HQES on behalf of the
medical board. The Attorney General’s Office has HQES offices in
Los Angeles, Sacramento, San Diego, and San Francisco. Attorneys in
each of the HQES offices provide a variety of services to the medical
board that include preparing for and conducting prosecution
proceedings against physicians and surgeons based on the investigation
cases referred to them by the medical board. In support of those
prosecutions, the attorneys also provide ongoing reviews of the
investigative activities conducted by staff in the medical board’s field
offices. Finally, attorneys in each of the HQES offices periodically
visit the 13 medical board district field offices that conduct
investigations to confer with investigators and expert medical
consultants. The attorneys also visit the field offices to review cases
that the medical board has closed to ensure that the medical board’s
actions were appropriate.
Each month, the HQES bills the medical board for HQES services
rendered on the medical board’s behalf. However, before January 1,
1995, the HQES did not have a billing process that linked specific tasks
to the amounts on its invoices. Rather, the monthly invoices it sent to
19
the medical board for payment were supported by lists showing the
cases worked on by the staff in each HQES office and the total number
of hours the attorneys and legal assistants worked on each case for the
month and for the fiscal year to date.
To determine the amount to bill the medical board, the HQES
multiplies hours recorded for a given month by an hourly rate for an
attorney or legal assistant, whichever is applicable. During both fiscal
years 1992-93 and 1993-94, the hourly rate for attorneys was $90 per
hour; the hourly rate for legal assistants was $46.90 per hour. The
HQES also billed the medical board for other services that were not
case specific. These services included periodic visits to medical board
field offices to review cases that investigators in the medical board field
offices closed, consultations with investigators, and consultations with
medical consultants. The HQES listed these charges on the monthly
invoice under “client services,” “medical board regional office,”
“medical board training,” and “medical board complaints” categories,
along with the monthly hours charged for each category.
Because the HQES did not have a task-based system to document the
services it performed on behalf of the medical board, we could not
assess the effectiveness or efficiency of the services. For example,
HQES attorneys could charge eight hours a day for several months to
cases without identifying any of the specific tasks that they performed.
Without such information, it is impossible to determine if the hours the
HQES attorneys charged were excessive, unnecessary, or both. As a
result, the HQES cannot assure the medical board that its billings for
services are appropriate or necessary.
Furthermore, the lack of such a system also inhibits the ability of the
supervisors in each of the HQES offices to efficiently and effectively
manage their respective office caseloads. Using the system that was in
place during our review, supervisors in the HQES offices had
information only on the number of cases they had assigned to the
attorneys working for them; they had no information concerning the
types of tasks the attorneys were performing on those cases. To
determine the status of a specific assigned case, the supervisors had to
confer with the attorney assigned to the case and ask for an update.
Without the ability to assess the number of hours that attorneys are
working on specific tasks, the HQES supervisors do not have the
information necessary to ensure that all the hours the attorneys are
charging are appropriate and productive. Further, the HQES offices
cannot ensure that the amounts billed to the medical board are
reasonable or necessary.
20
Our Case Study We attempted to determine whether the number of hours that the HQES
Approach Not charged to medical board cases was reasonable using a case study
approach. We developed profile cases for each of the four HQES
Successful
offices and attempted to compare the hours estimated for each stage of
the profile case to hours charged for a sample of actual cases. To
develop the profile case, we interviewed supervisors from each HQES
office, asking them to describe the tasks their respective legal staffs
typically would perform for cases involving physicians and surgeons
for July 1, 1992, through June 30, 1994. The resulting profile case
covered the period from when the medical board referred the case to
the HQES through either a stipulated settlement or the administrative
hearing. After identifying the typical tasks, we asked each supervisor
to estimate the time it took to complete each of the tasks and any lag
time between one task and the next.
We selected a sample of 20 cases involving physicians and surgeons;
each of the cases were processed during fiscal years 1992-93 and
1993-94. Ten of these cases were resolved through stipulated
settlements that occurred before a hearing, and the remaining ten were
resolved when the medical board adopted the proposed decision of an
administrative law judge following a hearing. We then recorded all
the hours that the HQES attorneys and legal assistants charged to each
case in our sample. Depending on which HQES processed the case,
we obtained key activity dates from each case file. We attempted to
compare the pattern of when hours actually were charged for some
cases in our sample with the respective profile case that we had
developed for each HQES location. However, because of the wide
ranges in the time estimates provided by the HQES supervisors for both
the tasks and also the lag times between those tasks, the results of this
approach did not yield useful information.
Total Hours Although our case study approach was not successful in evaluating
Charged the effectiveness or efficiency of the services that the HQES performed
on behalf of the medical board, we were able to review a sample of
Matched Billings
invoices to ensure that the amounts that the HQES billed the medical
board agreed with the supporting documentation. We selected a
sample of monthly invoices that the medical board received from the
HQES during fiscal years 1992-93 and 1993-94. Using these invoices,
we selected a sample of 120 line items. The HQES bills the medical
board for legal services and for miscellaneous services, such as
transcript costs, consultation costs, and cost of airfare for expert
witnesses.
21
The Legal Time Reporting System (LTRS) weekly time sheets provide
the supporting documentation for the attorney and legal assistant fees
charged to the medical board. For invoice line items representing legal
services, we used the weekly time sheets to compute the monthly hours
that the attorneys and legal assistants charged for each respective case.
For each item in our sample, we recomputed the amount billed by
multiplying the total attorney and legal assistant hours recorded on the
time sheets by the respective hourly rate in effect during the year. For
invoice line items representing miscellaneous services, the HQES first
pays the vendor and then bills the medical board for the services. To
determine if the HQES billed the medical board for the correct amount,
we compared the amount billed to the medical board with the amount
on the vendor’s invoice.
Of the 120 items tested, we noted four errors that resulted in an
aggregate overcharge to the medical board of $121. Each of the four
errors resulted from mistakes made in adding up the daily hours
recorded on four separate time sheets. All the charges for
miscellaneous services that we reviewed agreed with the vendors’
invoices and were appropriate according to the types of services
performed by the HQES.
Beginning January 1, 1995, the HQES enhanced its LTRS to enable
attorneys and legal assistants to record their activities in one of 13
different discrete categories. For example, attorneys can now record
the time they spend on activities such as evaluating cases, conducting
legal research, preparing an accusation, providing for discovery,
preparing witnesses, preparing documents, conducting prehearing and
settlement conferences, litigating during hearings, pursuing cost
recovery, and conducting posthearing activities. Based on our
understanding of the activities most commonly associated with
prosecuting disciplinary cases that the medical board refers to the
HQES, this enhancement should provide both the HQES supervisors
and the medical board with the information necessary to make
informed decisions regarding the productivity and the appropriateness
of the services.
Medical Board Using its current system for paying invoices, the medical board does
System Weakness not have a process to ensure that the invoices it pays are only for active
medical board cases. Each month, the medical board receives a report
from the HQES that lists all the cases that the medical board referred to
it during the previous month. As of January 1994, a staff person from
the enforcement program began comparing this report to the cases
shown on the medical board’s computer system to verify that all the
cases are medical board cases. However, the medical board does not
22
have a process to verify that the monthly invoices it receives from the
HQES offices include only charges for services related to active
medical board cases.
Conclusion Before January 1, 1995, when it enhanced its legal time reporting
system, the HQES did not have a system that would allow the
supervisors in each of its four field offices to monitor the amount of
time that attorneys and legal assistants spent on particular tasks relating
to the medical board cases assigned to them. Further, the medical
board currently does not have a system to ensure that the invoices it
pays for HQES services are only for active medical board cases. As a
result, the HQES supervisors are unable to determine whether the hours
the legal staff charged to a particular case were necessary, and the
medical board cannot ensure that it is only paying for services that it
receives.
Recommendation To assure the medical board that all billings for services are correct, the
s HQES supervisors should frequently review the number of hours and
types of tasks the attorneys and legal assistants are charging for their
cases and determine whether the hours charged are reasonable and
necessary.
The medical board should develop a process to review all HQES
invoices to verify that all services billed are for active medical board
cases, and that all tasks billed are appropriate and necessary.
23
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24
Chapter 3 The Office of Administrative Hearings
Overcharged the Medical Board for
Some of the Services That It Provided
Chapter The Office of Administrative Hearings (OAH) charges the Medical
Summary Board of California (medical board) for the services that administrative
law judges (ALJ) and court reporters provide to the medical board.
Court reporter services include courtroom duties and transcripts of
courtroom proceedings. In addition to the amounts it charges for ALJ
and court reporter services, the OAH charges the medical board a filing
fee for every case it schedules for a hearing. In total, the OAH billed
the medical board $839,000 and $1,145,000, respectively, for fiscal
years 1992-93 and 1993-94.
We reviewed a sample of the charges that the OAH billed to the
medical board for fiscal years 1992-93 and 1993-94 and found that the
OAH charged the correct amount for ALJ and the court reporter service
provided by its own employees. In addition, the OAH charged the
medical board the correct amount of fees to file cases. However, the
OAH overcharged the medical board approximately $29,000 for the
services provided by court reporters hired from private firms. We also
found that since June 1993, the OAH has failed to reimburse the
medical board approximately $254,000 for transcripts that were ordered
and paid for by third parties.
Finally, we determined that the OAH did not charge third parties the
proper amount for transcripts and copies of transcripts ordered for cases
that had been appealed. Therefore, when the OAH reimbursed the
medical board for the costs of these transcripts and copies, it
reimbursed the medical board only the amount it collected from the
third parties. In total, we estimate that the OAH may owe the medical
board $283,000 in overcharges and reimbursements. In addition, the
OAH also owes the medical board an undetermined amount for the cost
of transcripts and copies of transcripts ordered by third parties for
appealed cases from January 1, 1991, through June 30, 1994.
25
Overcharges for To determine the amount that it should charge the medical board for
Private Court court reporter services provided by private firms, the OAH takes the
amount shown on the firm’s invoice and converts this dollar value to
Reporter Services
hours worked. The OAH then combines these hours with those
charged by its own court reporters and calculates the total amount to
bill for court reporter services. For example, during fiscal year
1992-93, the OAH charged the medical board $57 per hour for court
reporters; therefore, when it received an invoice from a private firm for
court reporter services, it divided the total amount of the invoice by $57
to determine the total number of hours to charge. The OAH then
added these hours to the hours charged by court reporters who are
employees of the OAH to determine the total number of hours to bill
the medical board for court reporter services.
To determine whether the OAH properly calculated the number of
hours charged to the medical board for services provided by court
reporters hired from private firms, we reviewed all 115 invoice charges
from the billings that the medical board received for the months of
March 1993 and May 1994. We found that the OAH overcharged the
medical board for these services because of rounding errors in the
calculations. For example, in 20 of the 115 invoice charges, we noted
that the OAH rounded up the total by more than 0.5 hours. To
determine the impact that the rounding errors may have on the amounts
billed to the medical board, we calculated the total hours billed for the
months of March 1993 and May 1994. Our calculations differed from
the OAH’s calculations by 21.9 hours and 18.7 hours for the two
months and equates to overcharges of $1,248 for March and $1,085 for
May. We estimate that from January 1, 1993, through January 31,
1995, the 25 months that the OAH has used this methodology to
calculate the amount it bills the medical board for services provided by
private court reporters, the OAH overcharged the medical board by
more than $29,000. As of February 8, 1995, the OAH had not
changed the methodology.
Reimbursements The OAH charges the medical board for all transcript services provided
Due From by its own employees or by private court reporter firms regardless of
whether the medical board or a third party orders the transcript.
Amounts Received
However, the OAH also requires third parties other than the medical
From
board to remit a deposit for the estimated cost of the transcript before
Third Parties
the OAH places an order and to pay the difference, if any, when third
parties receive the transcript. Because it also charged the medical
board for these transcripts in the past, the OAH would, each quarter,
reimburse the medical board for the amount that it charged third parties
for transcripts. However, during our review, we noted that the OAH
has not issued a quarterly reimbursement to the medical board since
26
June 1993, when it made a reimbursement for October, November, and
December 1992.
We attempted to determine the amount of transcript charges that the
OAH should reimburse the medical board for the period since the last
reimbursement; however, the OAH maintains this information in the
individual case files at four regional offices located throughout the
State. As a result, we reviewed the invoices that private court reporter
firms submitted to the OAH for two months—March 1993 and
May 1994. Using these invoices, we calculated the amount that the
OAH charged the medical board for transcripts. We determined that
the average monthly cost of transcripts for these two months was
approximately $17,000. To estimate the cost that the medical board
paid for transcripts from January 1, 1993, through January 31, 1995, the
period for which the OAH did not reimburse the medical board, we
multiplied the average cost by 25 to arrive at the total estimated cost of
$425,000.
However, the OAH may not be required to reimburse the entire amount
of $425,000 to the medical board because a portion of the total may
represent transcripts required for appealed cases, and current state law
limits the amount the OAH can charge for transcripts required for
appeals. In addition, some of these costs may be for transcripts that
the medical board ordered for its own use. Because the OAH could
not tell us what proportion of the costs are for appealed cases or for
transcripts ordered by the medical board, we estimated the proportion
using data from the first two quarters of fiscal year 1992-93. We used
these data because they represent the most recent six months for which
the OAH reimbursed the medical board for costs it paid for transcripts
ordered by third parties. Specifically, we determined that from July
through December 1992, the OAH charged the medical board $34,770
for transcripts and reimbursed the medical board $20,805
(59.84 percent) of the total charged. Using this percentage, we
determined that for January 1, 1993, through January 31, 1995, the
OAH may owe the medical board more than $254,000. In comparison,
during fiscal year 1992-93, the OAH billed the medical board
$839,000, and in fiscal year 1993-94, it billed the medical board
$1,145,000.
Mischarges for Section 69950 of the Government Code limits the amount that the
Transcripts OAH can charge customers who request transcripts for cases that they
are appealing. Specifically, the section states that beginning on
January 1, 1991, the OAH should charge third parties 85 cents per 100
words for transcripts and an additional 15 cents per 100 words for any
copies ordered at the same time. However, from January 1, 1991,
27
through June 30, 1994, the OAH was charging third parties the former
rate of 70 cents per 100 words for transcripts and 10 cents per 100
words for any copies ordered at the same time. As stated earlier, the
OAH charged the medical board the full amount that the private court
reporting firms billed the OAH even though third parties paid the OAH
a reduced rate for the transcripts. As a result, when the OAH
reimbursed the medical board for the costs of these transcripts, it
reimbursed the medical board only the amount it collected from the
third parties.
However, if the OAH had charged the third parties the correct amount
of 85 cents per 100 words for transcripts and an additional 15 cents per
100 words for any copies, it could have reimbursed the medical board
at the higher rate. For example, a private court reporting firm may
have charged the OAH $100 for preparing a transcript for a third party
and the OAH may have billed this amount to the medical board. If the
transcript totaled 10,000 words, the OAH would charge the third party
only $70 (10,000/100 x 70 cents) when it should have charged $85.
Similarly, if the third party ordered a copy at the same time it ordered
the transcript, the OAH would charge the third party $10, when it
should have charged $15. As a result, the OAH would reimburse the
medical board only the $70 for the transcript and $10 for the copy that
it charged the third party rather than the $85 for the transcript and $15
for the copy that it should have charged. We could not estimate the
total amount that the OAH undercharged third parties because the
records necessary to determine the amount are contained in individual
case files that are located in the field offices. According to the director
of the OAH, before July 1, 1994, the OAH was unaware of the change
in the law increasing these rates.
Conclusion During our review of the charges that the OAH billed to the medical
board for services rendered, we determined that the OAH overcharged
the medical board for services provided by court reporters and that the
OAH failed to reimburse the medical board for the costs of some
transcripts. As a result, the OAH may owe the medical board
approximately $283,000. In addition, the OAH also owes the medical
board an undetermined amount for the cost of transcripts and copies
ordered by third parties for appealed cases from January 1, 1991,
through June 30, 1994.
28
Recommendation To avoid overcharging the medical board in the future and compensate
s it for past overcharges, the OAH should take the following actions:
Change the method used to calculate the hours worked by court
reporters from private firms so that computations are carried out to
tenths of hours;
Using the above methodology, recompute all hours worked by
private court reporters since January 1993 and reimburse the
medical board the amount of the overcharge;
Reinitiate the practice of quarterly reimbursing the medical board
the amounts collected for transcripts ordered by third parties;
Review invoices received for transcripts ordered by third parties not
involving appealed cases that were received from January 1, 1993,
through January 31, 1995, and reimburse the medical board for the
total amount collected on its behalf; and
Review the invoices received from January 1, 1991, through
June 30, 1994, for transcripts of appealed cases ordered by third
parties and reimburse the medical board the amount the OAH failed
to collect from third parties as required by law.
29
We conducted this review under the authority vested in the state auditor
by Section 8543 et seq. of the California Government Code and
according to generally accepted governmental auditing standards. We
limited our review to those areas specified in the audit scope of this
report.
Respectfully submitted,
KURT R. SJOBERG
State Auditor
Date: March 1, 1995
Staff: Elaine Howle, CPA, Audit Principal
Doug Cordiner
Bill Anderson
Marianne Marler
30
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31
Appendix A
Number of Individuals Investigated by the
Medical Board of California by Category
Fiscal Years 1992-93 and 1993-94
Healt Incompeten
h and Non-Jurisdi ce Persona Unprofession Unlicensed
Contrac Frau Safety ctional or Othe l al Unregistere Total
t d Negligence r Conduc Conduct d
t
Fiscal Year 1992-93
Physicians and Surgeons:
Carried forward from prior
fiscal year 2 167 200 0 776 25 133 344 149 1,796
Received during current
fiscal year 0 213 158 1 672 5 147 734 152 2,082
Total Investigations 2 380 358 1 1,448 30 280 1,078 301 3,878
Closed during current fiscal 1 214 165 1 717 25 156 465 163 1,907
year
Remaining at end of current
fiscal year 1 166 193 0 731 5 124 613 138 1,971
Fiscal Year 1993-94
Physicians and Surgeons:
Carried forward from prior
fiscal year 1 159 191 0 729 5 124 612 137 1,958
Received during current
32
fiscal year 0 157 143 1 699 0 163 727 157 2,047
Total Investigations 1 316 334 1 1,428 5 287 1,339 294 4,005
Closed during current fiscal 0 160 166 0 719 2 164 852 186 2,249
year
Remaining at end of current
fiscal year 1 156 168 1 709 3 123 487 108 1,756
Source: The Medical Board of California
33
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32
Appendix B
Summary of Disciplinary Actions Taken
by the Medical Board of California
Fiscal Years 1992-93 and 1993-94
Probation
Number and Type of Action Voluntar With Probationary Public Other
Taken by Disciplinary Case Revocation y Suspension Probation License Issued Letter of Action Total
Type Surrende Reprimand
r
Fiscal Year 1992-93
Negligence 8 5 7 10 0 ** 7 37
Inappropriate prescribing 5 2 2 0 0 ** 0 9
Unlicensed practice 0 0 0 0 0 ** 0 0
Sexual misconduct 7 5 1 1 0 ** 0 14
Mental illness 1 2 0 0 0 ** 1 4
Self-use of drugs or alcohol 3 1 3 4 3 ** 1 15
Fraud 0 0 1 3 0 ** 0 4
Conviction of a crime 1 2 6 4 0 ** 0 13
Unprofessional conduct 4 2 1 7 1 ** 1 16
Miscellaneous violations* 11 11 4 7 0 ** 4 37
Total Actions by Discipline 40 30 25 36 4 ** 14 149
Type
Fiscal Year 1993-94
Negligence 7 7 9 26 0 0 4 53
Inappropriate prescribing 5 3 12 15 0 0 1 36
Unlicensed practice 0 0 0 0 0 0 0 0
Sexual misconduct 4 3 5 1 0 0 0 13
Mental illness 0 0 0 2 0 0 0 2
Self-use of drugs or alcohol 3 5 3 1 2 0 0 14
Fraud 5 0 1 1 0 1 0 8
Conviction of a crime 4 1 5 7 0 1 0 18
Unprofessional conduct 1 2 1 7 0 0 1 12
Miscellaneous violations* 33 7 3 15 0 7 3 68
Total Actions by Discipline 62 28 39 75 2 9 9 224
Type
* Most of the Miscellaneous Violations are reciprocal actions based upon discipline taken by another state.
** Public letter of reprimand effective January 1, 1994.
Source: The Medical Board of California
APPENDIX C
Medical Board of California
Expenditures for the Enforcement
and Disciplinary System
Fiscal Years 1992-93 and 1993-94
Percent of Total
Enforcement and
Expenditures Disciplinary
Expenditures
Fiscal Fiscal Percent Fiscal Fiscal
Year Year Change Year Year
1992-93 1993-94 1992-93 1993-94
Enforcement—other $11,270,8 $12,557,2 11.41% 51.07% 49.40%
40 38
Enforcement—attorney
general’s office 4,978,518 5,840,681 17.32 22.56 22.98
Enforcement—office of
administration hearings 743,511 1,144,537 53.94 3.37 4.50
Enforcement—consumer affairs 1,204,176 1,453,391 20.70 5.46 5.72
Allocated executive* 681,148 906,202 33.04 3.09 3.56
Allocated support services* 983,612 966,842 (1.70) 4.46 3.80
Allocated data processing* 784,750 1,006,316 28.23 3.55 3.96
Diversion program 722,805 739,431 2.30 3.27 2.91
Probation monitoring 342,344 670,997 96.00 1.55 2.64
Medical quality review 356,660 134,647 (62.25) 1.62 0.53
committees**
Total $22,068,3 $25,420,2 100.00% 100.00%
64 82 15.19%
* We allocated expenditures to these categories based on the ratio of Enforcement/Disciplinary expenditures to total Medical Board expenditures for this program.
** Legislation that became effective January 1, 1994 abolished these committees.
Source: Budget Reports for the Medical Board of California.