Settlement

Settlement In the Matter of Donald P. Zerendow

Date: 05/27/1988
Organization: State Ethics Commission
Docket Number: 357

Table of Contents

Disposition Agreement

This Disposition Agreement (Agreement) is entered into between the State Ethics Commission (Commission) and Donald P. Zerendow (Mr. Zerendow) pursuant to section 11 of the Commission's Enforcement Procedure's. This Agreement constitutes a consented to final Commission order enforceable in the Superior Court pursuant to G.L. c. 268B, s.4(j).

On July 27, 1987, the Commission initiated a preliminary inquiry, pursuant to G.L. c. 268B, s.4(a), into possible violations of the conflict of interest law, G.L. c. 268A, involving Mr. Zerendow, the former Chief of the Medicaid Fraud Control Unit (MFCU) in the Department of the Attorney General. The Commission concluded its inquiry on December 9, 1987, finding reasonable cause to believe that Mr. Zerendow violated G.L. c. 268A, s.5(b).

The parties now agree to the following findings of fact and conclusions of law:

1. Mr. Zerendow was an Assistant Attorney General from January, 1975 until January, 1987. Mr. Zerendow was MFCU Chief from 1978 until January 29, 1987. On November 7, 1986, Mr. Zerendow informed the Attorney General of his intent to resign on or about January 20, 1987. On January 29, 1987, Mr. Zerendow did resign. Thereafter, he practiced law privately. While MFCU Chief, he was a state employee as that term is defined in G.L. c. 268A, s.1 (q).

2. As MFCU Chief, Mr. Zerendow had direct and intermediate administrative authority to approve, disapprove or otherwise direct all MFCU activities, including decisions such as whether and how to investigate a complaint, whether formally to open a case based on the initial information received and developed, and to whom such tasks should be assigned. In practice, with respect to some of these decisions, Mr. Zerendow delegated his authority to subordinates such as his Chief of Investigations, among others.

3. In early November, 1986, an investigator at MFCU received a telephone complaint that a certain podiatrist 

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(Podiatrist) had requested an allegedly unlawful supplemental payment from one of his patients (i.e., a payment beyond what Medicaid would cover). The initial complaint was reduced to writing in a memo dated November 3, 1986, and forwarded to the Chief Investigator. In a memo dated November 10, 1986, the Chief Investigator directed a second investigator to do a preliminary screening of the complaint The Chief Investigator was concerned about the Podiatrist requesting supplemental payments from his patients as well as so-called upgrades in services (i.e., charging Medicaid for a more costly procedure than the one that was actually performed). On November 28, 1986, after the Chief Investigator and the aforementioned second investigator discussed the results of the additional investigative steps that had been taken, the Chief Investigator formally opened and signed the case to that investigator. The Commission knows of no evidence which would indicate that Mr. Zerendow was ever made aware of the Podiatrist case while he was MFCU Chief. He was not personally involved in the decision to open the case, nor did he participate in any discussions or reviews regarding the case during his remaining two months as Chief (MFCU employment records reflect that Mr. Zerendow was on vacation between November 19 and December 2, 1986). At no time did any confidential information regarding the case come into his possession.

4. Little additional investigation was done on the Podiatrist's case until in or about February-March, 1987, when allegedly substantial billing abuses were discovered. After Mr. Zerendow's departure on January 29, 1987, the Podiatrist's case was assigned to an MFCU attorney (the MFCU attorney).

5. In mid-April, 1987, the MFCU attorney notified the Podiatrist's attorney of the foregoing allegations and disclosed to him the salient facts of the MFCU investigation. On April 21, 1987, the Podiatrist's attorney contacted Mr. Zerendow requesting that Mr. Zerendow act as co-counsel regarding the MFCU investigation of the Podiatrist. Mr. Zerendow informed the Podiatrist's attorney that before agreeing to act as co-counsel, he had to inquire of MFCU regarding any potential conflict of interest problem.

6. On April 22, 1987, Mr. Zerendow contacted the Acting Chief of the MFCU. Mr. Zerendow testified: that he told the Acting Chief that he had been contacted to represent the Podiatrist and was calling to determine if the Acting Chief saw any conflict problem in such representation; that the Acting Chief told Zerendow he did not see a problem and referred Mr. Zerendow's call to the MFCU attorney. The MFCU attorney told Mr. Zerendow that if the Podiatrist matter was there while Zerendow was Chief then it took a new direction after he left state employ, that he knew nothing about the case, and that the MFCU attorney saw no conflict problem. Alter these conversations, Mr. Zerendow and the MFCU attorney discussed the salient facts of the MFCU's investigation.

7. The acting MFCU Chief testified that he could recall Mr. Zerendow checking with him on one occasion regarding whether he might have a conflict problem regarding a case where Mr. Zerendow was going to be private counsel in an MFCU matter, but the Acting Chief could not recall whether Mr. Zerendow checked regarding the Podiatrist case or another case.

8. The MFCU attorney testified that Mr. Zerendow did raise the conflict issue early in his contacts concerning the Podiatrist case but could not recall the precise date. He did recall it came up some time early in his contacts with Mr. Zerendow. When it did arise, according to the MFCU attorney, he told Mr. Zerendow that the case had been opened while Mr. Zerendow was Chief, that Mr. Zerendow had not participated in the case as Chief, and that the investigation had been relatively inactive until after Mr. Zerendow resigned. (Neither the MFCU attorney nor the Acting Chief testified that they told Mr. Zerendow that there was a conflict problem.)

9. On or about April 22, 1987, Mr. Zerendow informed the Podiatrist's attorney that he had contacted MFCU, was told he did not have a conflict problem, and then had discussed the Podiatrist's case with the MFCU attorney. Mr. Zerendow then agreed to act as co-counsel for the Podiatrist.

10. On April 29, 1987, Mr. Zerendow met with the MFCU attorney and investigator for approximately one hour. The MFCU attorney disclosed in more detail the facts, nature and scope of the investigation.

11. On May 1, Mr. Zerendow called the MFCU attorney and requested copies of all of the Podiatrist's records that the Podiatrist had submitted to MFCU investigators.

12. May 8, 1987, Mr. Zerendow and the MFCU attorney had a telephone conversation regarding the Podiatrist and other podiatry providers' billing practices.

13. On May 29, 1987, Mr. Zerendow had a telephone conversation with the MFCU attorney regarding involvement of federal investigators in the Podiatrist case. Mr. Zerendow also requested that the MFCU attorney join with him in asking the Department of Public Welfare (DPW) to clarify certain Medicaid procedures. The MFCU attorney orally declined that request. On the same day, Mr. Zerendow wrote the MFCU attorney to offer further medical records of the Podiatrist and to request a second meeting. No additional meetings occurred between Mr. Zerendow and the MFCU attorney from that day to the present.

14. On June 4, 1987, the MFCU attorney wrote Mr. Zerendow confirming that he would not join in Mr. Zerendow's request to the DPW.

15. On June 5, 1987, Mr. Zerendow voluntarily did closed his representation of the Podiatrist to the Commission and has had no further contact with MFCU personnel regarding the Podiatrist's case. Although Mr. Zerendow has to the present continued to act as counsel

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for the Podiatrist except as described above, he has never appeared before a court, grand jury or any other state or federal administrative or investigative agency with respect to the Podiatrist's case.

16. Section 5(b) of G.L. c. 268A prohibits a former state employee, within one year after his last employment has ceased, from appearing personally before any agency of the commonwealth as attorney for anyone other than the commonwealth in connection with any particular matter in which the commonwealth or a state agency is a party or has a direct and substantial interest and which was under his official responsibility as a state employee at any time within a period of two years prior to the termination of his employment.

17. Based on the evidence discussed above, as of April 22, 1987, Mr. Zerendow was a former state employee.

18. The conduct which is the subject of this Agreement occurred between April 22, 1987 and May 29, 1987, i.e., within one year after Mr. Zerendow's last employment with the commonwealth ceased.

19. The investigation of the Podiatrist which began in November of 1986 and was still continuing as of May 29, 1987, involved a controversy, proceeding and/or charge(s) and was therefore a particular matter.[1]

20. Because Mr. Zerendow's subordinates received the complaint regarding the Podiatrist, did initial screening of the complaint, and decided to open formally an investigation into the Podiatrist's billing practices and assign an investigator to the case, all in November of 1986, the investigation of the Podiatrist was a particular matter which was under Mr. Zerendow's official responsibility as a state employee within a period of two years prior to his resigning on January 29, 1987.

21. By his telephone conversations and meeting, as described above between April 22, 1987 and May 29, 1987, and by his May 29, 1987 letter, Mr. Zerendow appeared personally before the MFCU in connection with the Podiatrist's criminal investigation, thereby violating G.L. c. 268A, s.5(b).

22. The Commission acknowledges Mr. Zerendow's contention that he did not "appear personally" in the sense lawyers use that term, i.e., submitting oneself to the jurisdiction of a court or administrative tribunal. As the Commission has previously held, however, "appears personally" should not be equated with the term "appearance" as used in the law of jurisdiction, and involves more than one's physical presence before the agency. It can also involve telephone or written communications. EC-COI-87-27 (issued July 27, 1987).

23. The Commission also acknowledges Mr. Zerendow's contention that the Podiatrist matter in the spring of 1987 involved different allegations than those made while Mr. Zerendow was Chief. As indicated in s.19-20, however, the matter on which Mr. Zerendow appeared personally in the spring of 1987 arose out of and was a continuing part of the original investigation begun in November of 1986. Therefore, it did involve the same particular matter.

24. The Commission is unaware of any evidence to indicate that Mr. Zerendow knew he was violating s.5(b) when he acted as described above.[2] In addition, the Commission considers as a mitigating factor Mr. Zerendow's efforts to determine whether he had a conflict problem. Those efforts, however, do not provide a defense to this violation. The Commission will insist on careful and complete compliance with the law from former state employees. To accept anything less is to invite situations where, for example, former managers will be able to take advantage of their prior position when subsequently dealing in their private capacity with former colleagues and subordinates. Questions of preferential treatment inevitably will arise and result in a diminishing of public confidence that such matters are being handled strictly on their merits.

Mr. Zerendow should have known that since the Podiatrist case was opened within the two years preceding his resignation as chief of MFCU, he could not appear personally before any court or state agency, including MFCU, as counsel for the Podiatrist for one year after his resignation. Even if MFCU personnel told him he would have no problem, he cannot shift responsibility to others for his failure to comply with the law.[3] In order to protect himself from the risk that his own or others' analysis of the situation was incorrect, Mr. Zerendow was entitled to seek a written opinion from the Commission. Such an opinion, sought in advance and based on an accurate representation of the material facts, provides a complete defense against an alleged violation of the conflict of interest law.

In view of the foregoing course of conduct in violation of G.L. c. 268A, s.5(b), the Commission has determined that the public interest would be served by the disposition of this matter without further enforcement proceedings on the basis of the following terms and conditions agreed to by Mr. Zerendow:

(1) that he pay to the Commission the sum of one thousand dollars ($1,000.00)[4] as a civil penalty for violating G.L. c. 268A, s.5(b); and

(2) that he waive all rights to contest the findings of fact, conclusions of law and terms and conditions contained in this agreement in any related administrative or judicial proceeding to which the Commission is or may be a party.

[1] "Particular matter," any judicial or other proceeding. application, submission, request for a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, decision, determination, finding, but excluding enactment of general legislation by the general legislation by the general court and petitions of cities and towns, counties and districts for special laws related to their governmental organizations, powers. duties, finances and property G.L c. 268A, s.1(k). 

[2] Ignorance of the law is no defense to a violation of G.L c.268A In

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the Matter of Joseph Doyle, 1980 SEC 11, 13 see also, Scola v. Scola, 318 Mass. 1,7(1945). 

[3] See In the Matter of John J. Hanlon, 1986 SEC 253,255. 

[4] But for the mitigating factors described above, the Commission would have insisted upon a higher fine. The Commission may impose a fine of up to $2,000 for each violation.

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