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In re Zahl

October 29, 2009


On appeal from the State Board of Medical Examiners.

Per curiam.


Argued: September 23, 2009

Before Judges Cuff, Payne and C.L. Miniman.

In April 2006, the Supreme Court held that the Board of Medical Examiners (Board) acted within its statutory authority and discretion to revoke the license of Kenneth Zahl to practice medicine in this State. In re Suspension or Revocation of the License Issued to Kenneth Zahl, M.D., License No. MA56413 to Practice Medicine & Surgery in N.J., 186 N.J. 341 (2006). In doing so, the Court stated that the "panoply of dishonest acts committed by" Zahl warranted the sanction. Id. at 354. Zahl appeals from the denial of his October 31, 2007 petition to the Board to reconsider its earlier action or to vacate its earlier order based on a newly acquired letter of interpretation from a federal official of a critical finding. We affirm.

This matter has had a protracted history fully recited in our unreported opinion, In re Zahl, A-4177-02 (App. Div. June 9, 2005) (slip op. at 3-8), and the Supreme Court opinion, Zahl, supra, 186 N.J. at 344-51. It is sufficient for the purposes of this opinion to note that the Attorney General filed a complaint on behalf of the Board to revoke Zahl's license in Summer 1999. The complaint was founded in part on an investigation commenced in 1998 regarding Zahl's Medicare billing practices. Following the investigation, a federal hearing officer found that the Medicare program had made overpayments and that Zahl could not be found "without fault." Id. at 345. These findings were upheld by a federal administrative judge. Id. at 345-46.

The complaint also alleged that Zahl had created false patient records by inserting overlapping time entries into the records of 102 patients and by inserting the name of a doctor into records other than the doctor who performed the service or procedure. Id. at 346. The complaint also alleged that Zahl misrepresented his disability status to his disability insurer thereby collecting in excess of $100,000 in disability payments over a nine-month period, id. at 347, and that he retained duplicate payments from different insurance companies for the same medical services, id. at 348.

As a contested matter, Zahl requested and received a hearing before an Administrative Law Judge (ALJ), who adopted the findings of the federal hearing officer regarding the Medicare overpayments and concluded that Zahl breached his professional obligations. Id. at 346. The Board adopted virtually all of the findings and conclusions of the ALJ, id. at 349, except for her conclusions concerning Zahl's misrepresentations to his disability insurer, id. at 349-50 n.1. The ALJ found that Zahl committed acts of fraud, false promise, and false pretense. Id. at 349-50 n.1. The Board concluded that this behavior represented dishonesty, deception, misrepresentation, and professional misconduct. Ibid. The Board concluded that the record revealed a "picture of a fundamentally corrupt and dishonest licensee" whose "panoply of dishonest acts . . . support, if not dictate, imposition of the severe penalty of license revocation." Id. at 350.

The Board's action had been stayed pending appeal. The stay was conditioned on satisfaction of any reporting and monitoring requirements imposed by the Board. While the matter was pending before the Supreme Court, the Board applied for a temporary suspension of Zahl's medical license due to violations of the monitoring requirements established in May 2003. On March 3, 2006, the Board temporarily suspended Zahl's license; the Supreme Court issued its opinion on April 26, 2006; and Zahl's license was revoked effective May 10, 2006.

On October 31, 2007, Zahl sought reconsideration of the May 2006 revocation. He supported his application with a letter issued by a Medicare official, who explained that a finding of "not without fault" is not synonymous with fraudulent conduct. The relevant language from the letter is as follows: a finding that an individual is at fault does not, in and of itself, constitute a specific finding of fraud. Whether fraud exists in the context of a "not without fault" determination is dependent on the facts and circumstances of any individual case.

Arguing that the ALJ in the proceeding initiated by the Board "took the leap from the Fair Hearing Officer's determination that he was not without fault to the determination that he had engaged in dishonesty, deception and misrepresentation," Zahl asserted that a fundamental underpinning of the analysis by the ALJ and the Board was flawed as a matter of law and undermined the discipline imposed.

At its December 12, 2007 meeting, the Board voted to deny the request to vacate its earlier decision or to reinstate Zahl's license. The minutes of this meeting state as follows:

The application to vacate the decision of Zahl I.*fn1 The Board's final order was upheld by the Supreme Court of the State of New Jersey. In addition, no valid rationale has been given to reconsider the decision given the wealth of findings of dishonesty and lack of moral character. The Board finds it inappropriate to consider the vacation of Zahl I or the reinstatement of Dr. Zahl's license.

On February 11, 2008, a copy of the minutes from the December 12, 2007 meeting was forwarded to Zahl's counsel. On May 13, 2008, the Executive Director of the Board sent a second copy of the December 2007 minutes to Zahl's attorney. He stated that Zahl's counsel was unsure whether he had been informed of the Board's disposition of his request to vacate the revocation or reinstate Zahl's license. ...

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