Farid A. Zurmati, D.D.S. v. Virginia Board of Dentistry ( 2008 )

COURT OF APPEALS OF VIRGINIA
Present: Judges McClanahan, Petty and Senior Judge Annunziata
Argued at Alexandria, Virginia
FARID A. ZURMATI, D.D.S.
MEMORANDUM OPINION ∗ BY
v. Record No. 1250-07-4 JUDGE ELIZABETH A. McCLANAHAN
JUNE 17, 2008
VIRGINIA BOARD OF DENTISTRY
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
David T. Stitt, Judge
August McCarthy for appellant.
Howard M. Casway, Senior Assistant Attorney General
(Robert F. McDonnell, Attorney General; David E. Johnson,
Deputy Attorney General; Jane D. Hickey, Senior Assistant
Attorney General, on brief), for appellee.
Farid A. Zurmati, D.D.S., appeals from an order of the circuit court affirming those
portions of an order of the Virginia Board of Dentistry (Board): (a) setting forth the Board’s
determination that Zurmati engaged in unprofessional conduct in the form of a deceptive billing
practice, in violation of Code § 54.1-2706(4); and (b) imposing various sanctions against him
based, in part, on this alleged violation. 1 Zurmati contends on appeal the circuit court erred
because: (1) the Board’s finding of fact, upon which it based his alleged violation of Code
§ 54.1-2706(4), was not supported by substantial evidence; (2) the Board’s same finding of fact
∗
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
1
The sanctions were also purportedly based on the Board’s determination that Zurmati
committed two minor recordkeeping violations. The circuit court reversed the Board as to one of
the alleged violations and affirmed the Board’s finding as to the other. Neither of those rulings is
on appeal to this Court. However, the recordkeeping violation affirmed by the circuit court is
relevant to our remand of this case, in terms of the Board’s sanctions against Zurmati.
did not constitute a violation of Code § 54.1-2706(4) as a matter of law; and (3) the Board
violated his due process rights because of both inadequate notice of the Board’s claim that he
engaged in deceptive billing and the Board’s failure to call as witnesses any of his patients whom
he allegedly deceived. Concluding the Board’s disputed finding of fact was not supported by
substantial evidence in the record, we reverse the judgment of the circuit court affirming that
portion of the Board’s order and its sanctions, and remand the case.2
I. BACKGROUND
Zurmati appeared before the Board at a formal administrative hearing on the Board’s
eight allegations (including subparts) against Zurmati regarding his billing practice,
recordkeeping, and treatment of certain patients. Following the two-day hearing, the Board
entered an order containing numerous findings of fact and conclusions of law relative to the
allegations. The Board exonerated Zurmati on five of the allegations of wrongdoing. The Board
also concluded in its order, however, that Zurmati had committed three violations in the areas of
billing and recordkeeping.
More specifically, regarding Zurmati’s billing practice, the Board stated in its finding of
fact number 2:
During Dr. Zurmati’s treatment of the following patients,
he submitted a proposed treatment plan to each patient that
included a total cost for each proposed procedure, based on the
amount to be paid by the patient and their insurance carrier. Each
treatment plan was signed by the respective patients. [Listing of
nine patients with dates of treatment plans and dates of services
rendered.] Following the procedures, Dr. Zurmati charged the
insurance companies amounts higher than the corresponding
amounts stated on the patients’ respective primary treatment
plans.
2
Because of our holding on the substantiality of evidence issue, we need not address
Zurmati’s other two issues presented on appeal also challenging the Board’s conclusion that he
engaged in deceptive billing in violation of Code § 54.1-2706(4).
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(Emphasis added.) The Board then concluded that this finding constituted a violation of Code
§ 54.1-2706(4) (Board’s conclusion of law number 1). Code § 54.1-2706(4) provides, in
relevant part, that the Board may “censure or reprimand any licensee or place on probation for
such time as it may designate for . . . [a]ny unprofessional conduct likely . . . to deceive the
public or patients.”
With regard to Zurmati’s recordkeeping, the Board stated in finding of fact number 4(a)
that his records for eleven patients “failed to include the patients’ names on each page of the
patients’ records, notwithstanding his claim that there was no need to do so as the patient records
always remain in their respective files.” The Board concluded that this finding constituted a
second violation (citing Code § 54.1-2706(9) and 18 VAC 60-20-15(1) of the Board’s
regulations) (Board’s conclusion of law number 2).
Further, in finding of fact number 4(b), the Board stated, “Dr. Zurmati’s duplicate work
orders that he submitted for [ten patients] failed to include his address,” and concluded that this
constituted a third violation (citing Code §§ 54.1-2706(9) and 54.1-2719(B), and 18 VAC
60-20-15(8) of the Board’s regulations) (Board’s conclusion of law number 3).
Upon these conclusions, the Board imposed in its order sanctions against Zurmati
consisting of a reprimand, an unannounced inspection of Zurmati’s dental practice, random
sampling of his patient records by the Department of Health Professions, and the requirement
that Zurmati complete four hours of continuing education in recordkeeping.
In a petition for appeal to the circuit court, Zurmati challenged each of the alleged
violations on various grounds. Specifically as to the Board’s conclusion that he violated Code
§ 54.1-2706(4) by his billing practice, Zurmati asserted, inter alia, that the Board’s order “makes
a factual finding [i.e., finding of fact number 2] that was never before alleged, namely, that [he]
charged insurance companies amounts higher than the corresponding amounts stated on the
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patients’ primary treatment plans.” “This finding,” he contended, “was concocted during the
formal hearing; it was not alleged during the many months leading up to the hearing.”
Nevertheless, Zurmati further asserted, “[w]hat the Board ignores is that insurance companies
require that [he] submit his ‘usual and customary fee’ to the insurance company . . . . What the
patients saw was the insurance fee, which is the fee the insurance company would eventually
give the patient credit for. There is no inconsistency in this practice; indeed, it is standard in the
industry,” he explained. “Yet this is the entire basis for the Board’s [conclusion of law number
1].” Finally, Zurmati stated that the Board’s finding regarding his subject billing practice
consisted of “vague references to conduct that allegedly could deceive but which has never been
shown to have actually deceived anyone” and that “[t]he Board has made no attempt to
demonstrate how the alleged conduct—e.g., submitting a fee to an insurance company that is
different from an amount shown to a patient, which is standard in the industry and required by
the insurance companies—violates any provision of law.”
After hearing argument on Zurmati’s petition, the circuit court entered an order reversing
the Board’s order as to finding of fact 4(a) (upon which the Board based its conclusion of law
number 2), concluding that the applicable regulations did not require the patient’s name to
appear on each page of the patient’s records. The court further ordered that the remainder of the
Board’s order “shall remain in effect,” thus affirming Zurmati’s alleged billing violation and
other recordkeeping violation, and each of the sanctions against him. In rejecting Zurmati’s
various challenges to his alleged billing practice violation under Code § 54.1-2706(4) (Board’s
conclusion of law number 1), the court found, inter alia, that the Board’s finding of fact number
2, upon which the Board based this violation, was supported by substantial evidence in the
record.
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II. ANALYSIS
Substantiality of the Evidence 3
Under the VAPA, “the duty of the court with respect to issues of fact shall be limited to
ascertaining whether there was substantial evidence in the agency record upon which the agency
as the trier of the facts could reasonably find them to be as it did.” Code § 2.2-4027; see
Campbell v. Virginia Dep’t of Forestry, 46 Va. App. 91, 98, 616 S.E.2d 33, 36 (2005). “We thus
have authority to reject agency factfinding only if, considering the record as a whole, a
reasonable mind would necessarily come to a different conclusion.” Id. (citations and internal
quotation marks omitted).
3
The Commonwealth contends that Zurmati, in his appeal to the circuit court, failed to
preserve his challenge to the substantiality of evidentiary support for the Board’s finding of fact
regarding his alleged deceptive billing practice.
The Virginia Administrative Process Act (VAPA) governs disciplinary hearings before
the Board. See generally Code § 2.2-4001; Goad v. Virginia Bd. of Med., 40 Va. App. 621, 633,
580 S.E.2d 494, 500 (2003). Under the VAPA, the circuit court reviews the Board’s action in a
manner “equivalent to an appellate court’s role in an appeal from a trial court.” J.P. v. Carter, 24
Va. App. 707, 721, 485 S.E.2d 162, 169 (1997) (quoting School Board v. Nicely, 12 Va. App.
1051, 1061-62, 408 S.E.2d 545, 551 (1991)) (internal quotation marks omitted). “In this sense,
the General Assembly has provided that a circuit court acts as an appellate tribunal.” Gordon v.
Allen, 24 Va. App. 272, 277, 482 S.E.2d 66, 68 (1997) (citation omitted). Relating to issues on
appeal, Code § 2.2-4001 of the VAPA provides, in relevant part, that the party complaining of
agency action has the burden to “designate and demonstrate an error of law subject to review by
the court. Such issues of law include: . . . (iv) the substantiality of the evidentiary support for
findings of fact.” (Emphasis added.) In perfecting its appeal from the agency to the circuit
court, the complaining party must therefore “designate” each such issue in its petition for appeal
filed with the circuit court. See Pence Holdings, Inc. v. Auto Ctr., Inc., 19 Va. App. 703, 707,
454 S.E.2d 732, 734 (1995).
Based on Zurmati’s above-stated assertions in his petition for appeal to the circuit court,
we conclude Zurmati preserved for appeal the issue of whether the Board’s finding of fact
regarding his alleged deceptive billing practice was supported by substantial evidence. What the
evidence showed, Zurmati asserted, was not that he “charged the insurance companies amounts
higher than the corresponding amounts stated on [his] patients’ respective primary treatment
plans,” as the Board found, but rather that he simply submitted to the insurance companies his
“usual and customary fee,” as they required. (Emphasis added.) However, it was, in fact, the
“insurance fee,” he further indicated, which the patients saw on their treatment plans, and upon
which he was actually paid for his services. The substantiality of the evidentiary support for the
Board’s disputed finding of fact is thus before this Court for review.
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From our review of the record in this case, we conclude that no trier of fact could
reasonably find Zurmati “charged” the insurance companies more for his dental services than
was indicated to his patients on their primary treatment plans. The Commonwealth argues that
evidence of such an alleged deceptive billing practice was established by the fact that Zurmati
“charged” the insurance companies his “usual and customary fee,” whereas he showed the
patients only the lesser “insurance fee,” including the portion of that fee which they would be
responsible to pay (based on a deductible and/or a co-payment) under their respective dental
insurance plans. The undisputed facts negate that assertion.
As the evidence showed, Zurmati’s “usual and customary fee” (UCF) was the fee his
office established for particular dental procedures and charged to patients who had no dental
insurance. The “insurance fee,” on the other hand, was the fee applied to insured patients. That
fee was pre-determined by the patient’s insurance company, as listed on the company’s fee
schedule setting forth a fee for each particular procedure, along with a corresponding code
number (as established by the American Dental Association (ADA)). Such fee is referred to in
the industry as the insurance company’s “usual and customary rate” (UCR). For the patients and
procedures at issue in this case, Zurmati’s UCF was higher than the respective insurance
company’s UCR. Under Zurmati’s contract with each insurance company, Zurmati agreed to
accept the lesser UCR as the fee for his services rendered to each insured patient. Accordingly,
Zurmati provided a written office policy to the insured patients explaining “the amount to be
paid by your policy is pre-determined and agreed to by your employer and the insurance
company. Most policies cover what they consider [the UCR]. However, the insurance company
sets those fees, and they are not the same as the fees that are charged in this office.” Zurmati
also provided the insured patients with a written “primary treatment plan” in advance of
treatment. The plan identified the dental procedure(s) expected to be performed based on an
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initial examination, the fee for the procedure(s) in the amount of the UCR, the portion of the fee
to be paid by the insurance company, the portion of the fee to be paid by the patient, and the
ADA code number for each procedure.
The Commonwealth is correct in asserting that Zurmati did, in fact, submit his UCF to
the respective insurance companies in the process of billing the companies for the procedures he
performed for the subject insured patients. However, the Commonwealth’s expert witness,
Denise Fortner, admitted that each of those nine patients paid what he or she was supposed to
pay, and the insurance company paid what it was supposed to pay, according to Zurmati’s
contract with the insurance company, the patient’s insurance policy, and the applicable UCR.
Fortner also explained that the insurance companies made their payments to Zurmati according
to the ADA codes he submitted to the companies, which “equated” to the procedures he
performed. Moreover, Fortner conceded that Zurmati collected his fee from the insurance
companies and the patients consistent with the explanation on the patients’ primary treatment
plans regarding fees, with one exception. In that instance, after the primary treatment plan was
presented to the patient, there was a change in the patient’s insurance provider, resulting in a
change in benefits under the patient’s superseding dental insurance plan. Fortner nevertheless
testified that she did not know “why you would need to have two different dollar amounts for the
same date of service for the same ADA code,” referring to what she described as “the
disconnect” between the listing of the UCR on the patients’ primary treatment plans and
Zurmati’s submission of his UCF to the insurance companies. Zurmati’s unrefuted explanation
was simple: the insurance companies required him to provide his UCF for the procedures on
which he was seeking payment. His office manager also explained that the software being used
for billing purposes during the relevant time period only produced Zurmati’s UCF. As a result,
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the information on the insured patients’ primary treatment plans regarding the UCR was
produced by hand.
Thus, the fact Zurmati provided the insurance companies his UCF did not mean that he
was charging the companies for the subject procedures based on that fee schedule. A “charge” in
this context means to “demand (an amount) as a price from someone for a service rendered or
goods supplied.” New Oxford American Dictionary 286 (2d ed. 2005); see also Random House
Webster’s Unabridged Dictionary 342 (2d ed. 2001) (defining “charge” as “to impose on or ask
of (someone) a price or fee”). The evidence of record belies any contention that Zurmati was
asking, much less demanding, that the insurance companies pay him based on his UCF. In sum,
Zurmati was contractually bound to accept payment from the insurance companies based on their
UCR, and in each instance that was the basis for each company’s payment to him. The insurance
companies made such payments to Zurmati according to the ADA codes he submitted to the
companies in seeking payment, not his UCF. The patients’ primary treatment plans prepared by
Zurmati’s office indicated that payment would be based on the insurance companies’ UCR. And
there is no indication in the record that, once Zurmati received the payments from the insurance
companies based on their UCR, he sought to collect the difference between their UCR and his
UCF.
There was no substantial evidence to support the Board’s finding that Zurmati was
charging the insurance companies his UCF when he provided that fee information to the
insurance companies with his requests for payment. Consequently, there was no finding of fact
upon which to base the Board’s conclusion that Zurmati was engaged in deceptive billing in
violation of Code § 54.1-2706(4). See Campbell, 46 Va. App. at 98-102, 616 S.E.2d at 36-38.
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III. CONCLUSION
For these reasons, we reverse those portions of the circuit court’s order affirming the
Board’s conclusion that Zurmati violated Code § 54.1-2706(4), and the sanctions imposed by the
Board based, in part, on this alleged violation. Furthermore, in light of this holding, the Board
must reconsider which, if any, of its sanctions against Zurmati should be imposed based solely
on the existence of the recordkeeping violation that was affirmed by the circuit court (Board’s
finding of fact 4(b) and conclusion of law 3). 4 “Where a case decision is found ‘not to be in
accordance with law under [Code] § 2.2-4027, the court shall suspend or set it aside and remand
the matter to the agency for further proceedings, if any, as the court may permit or direct in
accordance with law.’” Harrison v. Ocean View Fishing Pier, LLC, 50 Va. App. 556, 575-76,
651 S.E.2d 421, 431 (2007) (quoting Code § 2.2-4029). Accordingly, we remand the case to the
circuit court with instructions to further remand it to the Board for reconsideration of the
sanctions imposed against Zurmati in a manner consistent with this opinion.
Reversed and remanded with instructions.
4
See, infra, footnote 1.
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