Judge: Iowa-licensed surgeon can’t bill Medicare due to tax evasion

By: - June 28, 2021 11:07 am

The secrecy surrounding a state licensing board’s investigation of a Waterloo surgeon twice accused of incompetence is now the subject of litigation headed for the Iowa Supreme Court. (Photo via Nevada State Board of Medical Examiners)

A surgeon who was granted a license to practice in Iowa last year has been denied the opportunity to bill Medicare for his services due to multiple felony convictions tied to tax evasion.

Federal records show that last year, Dr. Edward Joseph Silvio Picardi applied to the Centers for Medicare & Medicaid Services for re-enrollment as a licensed care provider in the Medicare system. A CMS hearing officer denied that application, which led to an appeal to an administrative law judge.

In his ruling on the matter, Administrative Law Judge Keith W. Sickendick noted that in 2012, Picardi was convicted by a South Dakota jury of 13 felony counts of income tax evasion, preparing false tax returns, and failing to keep or disclose records related to foreign financial transactions.

Picardi’s conviction was based on allegations that he had concealed his earnings from his South Dakota surgical practice. Prosecutors alleged Picardi had routed his income through an elaborate web of corporate entities organized under the laws of Ireland, Hungary, Cyprus, Guernsey and the Isle of Man, with the cash ultimately deposited into accounts he controlled through a New Zealand trust and a corporation set up for him in Nevis, a Caribbean island.

Through those offshore transactions, Picardi allegedly avoided paying at least $1,150,920 in taxes.

Court records indicate that in an email to a lawyer who was facilitating the transactions, Picardi wrote, “I think we need to go back to the beginning and remember why we set all this up. My main interest is to minimize my tax payments … Please don’t forget that my intermediate-term plans are to build my house which may be around $500,000 and my long-term plans are to spend all my money and die comfortably but poor.” Picardi allegedly added a postscript to the email that said, “There will be no record of this letter in my computer nor files.”

Picardi was sentenced to 60 months in prison and paid roughly $2 million in back taxes, penalties, interest, court costs and civil fines.

At the time, U.S. Attorney Brendan V. Johnson said, “The lesson should be very clear: No matter how elaborate your strategy, and no matter what you do for a living, if you evade paying your fair share of taxes, you’ll land in federal prison.”

As part of his appeal of his conviction, Picardi alleged the trial judge was prejudiced against him and had referred to him as “Mr. Picardi” rather than “Dr. Picardi.” His appeal was denied.

Picardi served 38 months in prison before his release, and subsequently regained his licenses to practice medicine in South Dakota, Nebraska and Ohio. Last June, the Iowa Board of Medicine approved his application to practice in Iowa.

However, Picardi told CMS last year that while multiple insurers had approved him as an in-network provider, those approvals would be withdrawn should he be denied enrollment in Medicare.

In ruling against Picardi, Sickendick wrote, “I have no authority to substitute my judgment for that of the CMS hearing officer if the undisputed facts constitute a basis for denial of enrollment in Medicare, which they do.”

Sickendick upheld the hearing officer’s decision, citing federal regulations that allow for denial when a medical provider has, within the previous 10 years, been convicted of a felony. He noted that tax evasion is specifically listed as one of the offenses that can lead to denial or enrollment in Medicare, a taxpayer-funded program.

The ruling was issued late last year but was only recently published by the U.S. Department of Health and Human Services.

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Clark Kauffman
Clark Kauffman

Deputy Editor Clark Kauffman has worked during the past 30 years as both an investigative reporter and editorial writer at two of Iowa’s largest newspapers, the Des Moines Register and the Quad-City Times. He has won numerous state and national awards for reporting and editorial writing. His 2004 series on prosecutorial misconduct in Iowa was named a finalist for the Pulitzer Prize for Investigative Reporting. From October 2018 through November 2019, Kauffman was an assistant ombudsman for the Iowa Office of Ombudsman, an agency that investigates citizens’ complaints of wrongdoing within state and local government agencies.