Performance audit, Board of Osteopathic Examiners in Medicine and Surgery

              State of Arizona
Office
of the
Auditor General
PERFORMANCE AUDIT
Report to the Arizona Legislature
By Debra K. Davenport
Auditor General
BOARD OF
OSTEOPATHIC
EXAMINERS
IN
MEDICINE AND
SURGERY
April 2001
Report No. 01-06
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee
composed of five senators and five representatives. Her mission is to provide independent and impar-tial
information and specific recommendations to improve the operations of state and local government
entities. To this end, she provides financial audits and accounting services to the state and political
subdivisions and performance audits of state agencies and the programs they administer.
The Joint Legislative Audit Committee
Senator Ken Bennett, Chairman
Representative Roberta L. Voss, Vice-Chairman
Senator Herb Guenther Representative Robert Blendu
Senator Dean Martin Representative Gabrielle Giffords
Senator Andy Nichols Representative Barbara Leff
Senator Tom Smith Representative James Sedillo
Senator Randall Gnant (ex-officio) Representative James Weiers (ex-officio)
Audit Staff
Melanie Chesney—Manager
and Contact Person (602) 553-0333
Suzanne Marette—Team Leader
Bill Parker—Team Member
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410
Phoenix, AZ 85018
(602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.auditorgen.state.az.us
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
April 23, 2001
Members of the Arizona Legislature
The Honorable Jane Dee Hull, Governor
Ms. Ann Marie Berger, Executive Director
Board of Osteopathic Examiners in
Medicine and Surgery
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Board of
Osteopathic Examiners in Medicine and Surgery. This report is in response to a June 16, 1999,
resolution of the Joint Legislative Audit Committee. The performance audit was conducted as
part of the Sunset review set forth in A.R.S. §41-2951 et seq. I am also transmitting with this
report a copy of the Report Highlights for this audit to provide a quick summary for your
convenience.
As outlined in its response, the Board of Osteopathic Examiners in Medicine and Surgery
agrees with all of the findings and recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on April 24, 2001.
Sincerely,
Debbie Davenport
Auditor General
Enclosure
OFFICE OF THE AUDITOR GENERAL
Program Fact Sheet
Board of Osteopathic Examiners in
Medicine and Surgery
Services: The Board of Osteopathic Examiners in Medicine and Surgery (Board) is respon-sible
for regulating osteopathic physicians through licensure. The Board performs the fol-lowing
services: 1) Assuring applicant and licensee qualifications through its application
and license renewal process; 2) Investigating and adjudicating complaints concerning alle-gations
of unprofessional conduct or other statutory violations; and 3) Providing consumer
information to the public.
Revenue: $394,200
(fiscal year 2001, estimated)
$200,000
$225,000
$250,000
$275,000
$300,000
$325,000
$350,000
$375,000
$400,000
$425,000
1999 2000 2001
Fines and Forfeits
Physician Reimbursements
Sales and Charges for Services
License and Fees
Facilities: The Board does not own any
facilities. The Board’s office is located at
9525 East Doubletree Ranch Road in Scotts-dale,
Arizona. Board meetings are held at
this location.
Equipment: The Board owns only stan-dard
office equipment.
Personnel: Currently, the Board is author-ized
8 full-time staff. However, recent fiscal
problems have reduced filled positions to
5.5 full-time staff.
The Board consists of seven
members who serve five-year
terms:
??Five members who are
osteopathic physicians,
who have engaged in the
practice of medicine for at
least five years in Arizona
and have licenses in good
standing.
??Two public members.
Agency Mission:
“To protect the public health
and safety of both citizens and
visitors to the state of Arizona
through the efficient and
effective regulation of the
practitioners and practice of
osteopathic medicine and
surgery in the state.”
OFFICE OF THE AUDITOR GENERAL
Program Goals (Fiscal Years 2001-
2003):
1. To issue and renew licenses promptly to
those applicants determined to be eligi-ble
based on their accurate and com-plete
application and demonstration of
the required standards of education,
knowledge, and competency while en-suring
that the health, welfare, and
safety of the public is protected.
2. To timely investigate and adjudicate
complaints to protect the public from
incompetent, unprofessional, and/or
unethical conduct.
3. To provide information and verifica-tions
on licensees, upon request, in a
timely and accurate manner.
Adequacy of Performance Measures:
Although the Board’s three goals are aligned
with its mission, auditors identified some
problems with the Board’s performance
measures:
??In general, the Board lacks some recom-mended
measures including outcome
measures and customer satisfaction. For
example, the Board does not have a per-formance
measure to report the percent-age
of applicants or license holders re-porting
very good or excellent service.
However, the Board does have a survey
that obtains such feedback that generally
includes favorable comments.
??Time frames for complaint resolutions are
underreported because the Board uses
the date it opens a complaint as the be-ginning
date rather than the date it re-ceives
the complaint.
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OFFICE OF THE AUDITOR GENERAL
SUMMARY
The Office of the Auditor General has conducted a performance
audit and Sunset review of the Board of Osteopathic Examiners
in Medicine and Surgery (Board) pursuant to a June 16, 1999,
resolution of the Joint Legislative Audit Committee. This audit
was conducted under the authority vested in the Auditor Gen-eral
by Arizona Revised Statutes (A.R.S.) §41-2951 et seq.
The Board is responsible for regulating osteopathic physicians.
Osteopathic physicians receive similar training to allopathic phy-sicians
(M.D.’s), as well as training in the musculoskeletal system
and manipulation, and are qualified for unlimited medical prac-tice
in all 50 states. The Board’s duties include issuing and
renewing licenses, conducting investigations and hearings con-cerning
unprofessional conduct, disciplining violators, and pro-viding
consumer information to the public. Currently the Board
licenses approximately 1,700 osteopathic physicians and receives
approximately 200 complaints a year.
The Board Should Take DisciplinaryAction
When Physicians Violate Statutes
(See pages 9 through 16)
The Board has not taken disciplinary action in several instances
when physicians violated its unprofessional conduct statutes.
One of the Board’s main responsibilities in protecting the public
is investigating and adjudicating complaints. According to the
Board’s statutes, it should impose some form of discipline when
its investigations show that a physician is guilty of unprofes-sional
conduct. In addition to helping protect the public, impos-ing
discipline allows the Board to set the standard for appropri-ate
behavior and can ensure that physicians receive remedial
education. However, in 18 instances in fiscal years 1998-2000, the
Board issued nondisciplinary Letters of Concern to physicians
rather than taking disciplinary action, although all 18 showed
evidence of statutory violations. One Letter of Concern was is-sued
for a complaint against a physician, who admitted he had
not adequately evaluated and followed up on a patient who died
of toxic shock. The Board issued another Letter of Concern to a
Summary
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OFFICE OF THE AUDITOR GENERAL
physician for a violation which had resulted in discipline by two
other states and the voluntary surrender of his license in a third
state. Auditors also identified four instances in which complaints
were dismissed entirely despite evidence of statutory violations.
To better adjudicate complaints, the Board needs to take action in
two main areas:
  Improve investigations—The Board does not address some
complaint allegations, and its investigators do not clearly in-dicate
whether those allegations they investigate are substan-tiated.
Similarly, a medical consultant who reviews com-plaints
does not provide a clear opinion as to whether the
named physician met the standard of care. Finally, contrary
to its policy, the Board does not interview all complainants.
  Strengthen adjudication procedures—The current process
lacks thoroughness and consistency. For example, before it
makes its decision, the Board does not review each allegation
to determine whether or not a statute was violated. The
Board also lacks guidelines for considering the severity of the
violation or mitigating factors. Finally, the Board had not
been routinely reviewing the history of disciplinary actions
and letters of concern against a named physician until audit
work was completed.
The Board Can Improve
Complaint Processing
(See pages 17 through 22)
Besides strengthening its disciplinary actions, the Board also
needs to improve the way it processes complaints. First, the
Board is no longer complying with a statutory requirement to
open a complaint when it is notified of a malpractice settlement
or judgment. Instead, the Board only maintains a list of these
complaints. To fulfill the Board’s responsibility to protect the
public and comply with statutory requirements, these cases
should be opened and investigated. In addition, the Board needs
to act on complaints on a more timely basis, particularly those
complaints involving malpractice. Fourteen of the Board’s open
malpractice complaint investigations auditors reviewed are at a
standstill, even though the Board has all the necessary docu-
Summary
iii
OFFICE OF THE AUDITOR GENERAL
ments to complete its investigation. Ten of the 14 complaints
have been open more than 600 days. To make progress on this
backlog, the Board needs to prioritize open malpractice com-plaints.
Resolution time frames for non-malpractice complaints
are better, but can also be improved. To improve time frames for
all complaints, the Board needs to meet those deadlines it has
already established in its complaint investigation policies; estab-lish
deadlines for investigation processes that do not already
have them, including medical consultants’ reviews; and set pri-orities
and associated deadlines for all complaints according to
the severity of the complaint.
Poor Complaint Recordkeeping
Negatively Impacts Complaint
Process and Public Information
(See pages 23 through 28)
The Board needs to improve its complaint recordkeeping to bet-ter
manage the complaint process and provide the public with
accurate information. Its complaint database is inaccurate and
incomplete. The Board also maintains a separate complaint log
that is redundant and has limited usefulness as a complaint-tracking
tool. The Board also lacks controls over open complaint
files to ensure they are not misplaced.
The Legislature may wish to revise the language of a recent
change to the Board’s statutes calling for the deletion of records
involving complaints that are dismissed or resolved through Let-ters
of Concern. This language is more sweeping than recent
statutory changes affecting the records of complaints against
M.D.’s. Further, five other comparable health regulatory boards
have no statutory time limits on the information they provide.
Deleting records will result in the Board losing access to physi-cians’
histories and investigation evidence.
Other Pertinent Information
(See pages 29 through 33)
This report includes information regarding the Board’s recent
financial crisis. In late June 2000, the Board discovered that it had
insufficient monies to fund its operations and would not receive
Summary
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OFFICE OF THE AUDITOR GENERAL
further revenues for several months when calendar year licenses
are renewed. As a result, the Board was forced to reduce staff
and budgeted expenditures. This problem resulted from the
Board’s overly optimistic revenue projections; overspending
revenues for the last three fiscal years; inappropriately account-ing
for reimbursements; and a general lack of internal financial
controls. To continue operating, the Board received a $125,000
loan from the Governor’s emergency funds. The loan’s terms re-quire
the Board to reduce its fiscal year 2001 expenditures from
the budgeted amount; require an increase in revenues; and
mandate additional oversight.
Sunset Factors
(See pages 35 through 42)
As part of the Sunset Review process, this audit makes the fol-lowing
recommendations:
  Board members should receive additional training on the
need to recuse themselves in instances where there is bias or
the potential for bias;
  The Board should maintain Board meeting minutes in com-pliance
with Open Meeting Law; and
  The Board should work with the Governor’s Regulatory Re-view
Council to develop needed administrative rules.
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OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS
Page
Introduction and Background........................... 1
Finding I: The Board Should Take
DisciplinaryAction When
Physicians Violate Statutes.......................... 9
Discipline Has Essential Role
in Public Protection ................................................................ 9
Board Does Not Take Disciplinary
Action When Warranted....................................................... 10
Several Changes Would Enhance
the Board’s Ability to Impose
Disciplinary Action ................................................................ 12
Recommendations.................................................................. 16
Finding II: The Board Can Improve
Complaint Processing................................... 17
Board Investigates Malpractice
and Nonmalpractice Complaints ....................................... 17
Board Has Not Investigated
Malpractice Cases with
Settlements and Judgments.................................................. 17
Complaint-Processing
Time Frames Can Be Improved.......................................... 18
Recommendations.................................................................. 22
Table of Contents
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OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS (Cont’d)
Page
Finding III: Poor Complaint
Recordkeeping Negatively
Impacts Complaint Process
and Public Information.................................. 23
Recordkeeping Problems
Impact Complaint Process
and Public Information ......................................................... 23
Wording of Statutory Mandate
to Delete Records Could
Have Negative Consequences............................................. 25
Recommendations.................................................................. 28
Other Pertinent Information............................... 29
Board’s Financial Crisis
Has Significant Impact .......................................................... 29
Fiscal Mismanagement
Caused Funding Shortage.................................................... 30
Increased Oversight Should
Prevent Future Problems...................................................... 32
Sunset Factors.................................................... 35
Agency Response
Table of Contents
vii
OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS (Concl’d)
Page
Table
Table 1 Board of Osteopathic Examiners in
Medicine and Surgery Statement of
Revenues, Expenditures, and Changes
in Fund Balance Years Ended
or Ending June 30, 1999, 2000, and 2001
(Unaudited) ................................................................ 5
viii
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
1
OFFICE OF THE AUDITOR GENERAL
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance
audit and Sunset review of the Board of Osteopathic Examiners
in Medicine and Surgery (Board) pursuant to a June 16, 1999,
resolution of the Joint Legislative Audit Committee. This audit
was conducted under the authority vested in the Auditor Gen-eral
by Arizona Revised Statutes (A.R.S.) §41-2951 et seq.
Board Responsibilities
Laws 1949, Chapter 121 established what is now the Arizona
Board of Osteopathic Examiners in Medicine and Surgery, which
is responsible for regulating osteopathic physicians through li-censure.
Osteopathic physicians are one of the two types of phy-sicians
who are qualified for unlimited medical practice in all 50
states.1
The Board’s mission is:
To protect the public health and safety of both citizens
and visitors to the state of Arizona through the efficient
and effective regulation of the practitioners and practice
of osteopathic medicine and surgery in the state.
The Board accomplishes this mission by performing a variety of
functions including:
  Ensuring that persons practicing osteopathic medicine pos-sess
the required qualifications by issuing and renewing li-censes;
  Conducting investigations and hearings concerning unpro-fessional
conduct or other statutory violations;
  Disciplining violators; and
  Providing consumer information to the public.
1 The other type is allopathic physicians, or M.D.’s.
Introduction and Background
2
OFFICE OF THE AUDITOR GENERAL
Currently, the Board licenses approximately 1,700 osteopathic
physicians and receives approximately 200 complaints each year.
Statutory Licensure
Requirements
The Board’s statutes (A.R.S. §§32-1821 through 32-1831) and
rules contain the following general education, experience, and
examination requirements for licensure as an osteopathic physi-cian:
  Graduating from an approved school of osteopathic medi-cine.
These are schools or colleges that award a degree in os-teopathic
medicine with an American Osteopathic Associa-tion
approved or accredited course of study. One of these
schools is located in Arizona.
  Completing an approved internship, residency, or equivalent
experience;
  Passing an approved examination or possession of an unre-stricted
license from another state, district, or territory with
similar standards; and
  Passing the Board’s Arizona jurisprudence exam, which tests
an applicant’s knowledge of the Board’s statutes, with a score
of 75 percent or higher.
Complaint Resolution
The Board investigates and adjudicates complaints involving po-tential
unprofessional conduct by osteopathic physicians as au-thorized
by statute. A.R.S. §32-1854 provides 53 specific actions
that constitute unprofessional conduct for osteopathic physi-cians.
When Board staff receive a complaint alleging that a phy-sician
violated this statute, they open an investigation. An inves-tigation
includes obtaining a response to the complaint and per-tinent
medical records from the accused physician; subpoenaing
any other relevant records; and in most cases, a medical consult-ant
review of the case. After the investigation is completed, the
Board reviews the complaint and adjudicates it. At this time, the
Investigating and adjudi-cating
complaints is a
major Board responsibil-ity.
Introduction and Background
3
OFFICE OF THE AUDITOR GENERAL
complainant(s) and named physician have the opportunity to
address the Board. The Board votes to resolve each complaint
using one of its statutory nondisciplinary or disciplinary options.
The Board’s nondisciplinary options are:
  Dismissing the complaint; or
  Issuing a Letter of Concern.
If the Board votes to impose discipline, its options are:
  Issuing a Decree of Censure1;
  Imposing a term of probation, which can include educational
requirements;
  Imposing civil penalties; and
  Suspending or revoking the physician’s license.
Organization and Staffing
The Board consists of seven governor-appointed members, who
serve five-year terms. Five of the members must be osteopathic
physicians licensed in good standing, who have practiced osteo-pathic
medicine in the State for at least five years preceding ap-pointment.
The remaining two board members are public mem-bers
who do not have any connection to medical schools or
practitioners.
Currently, the Board is authorized 8 full-time equivalent (FTE)
positions, but recent financial problems have reduced staff levels
to 5.5 FTEs (see Other Pertinent Information, pages 29 through
34). Currently, Board staff includes an executive director; a dep-uty
director, who is responsible for complaint investigations; a
1 A Decree of Censure is a formal written reprimand the Board may issue to
a physician for violating Board statutes and constitutes an official action
against the physician’s license.
Board has recently re-duced
staffing levels.
Introduction and Background
4
OFFICE OF THE AUDITOR GENERAL
part-time medical consultant; a licensing manager; an adminis-trative
secretary; and a receptionist. Staff’s responsibilities in-clude:
  Collecting application, renewal, and other fees;
  Issuing licenses after reviewing application files;
  Investigating allegations of unprofessional conduct and
medical incompetence; and
  Providing information to the public.
Budget
The Legislature establishes an expenditure limit on monies the
Board collects and deposits in the Board’s fund. This fund con-tains
revenues derived principally from the collection of licen-sure
application and renewal fees, and reimbursements of regu-latory
costs. The Board deposits 90 percent of its revenues into its
fund and the remaining 10 percent into the State’s General Fund.
In June 2000, the Board discovered it lacked sufficient monies to
fund its operations. The Board received a loan from the Gover-nor’s
emergency funds to continue operating until license re-newal
revenues became available. The Board has reduced budg-eted
expenditures and plans to seek legislation to increase its fees
(see Other Pertinent Information, pages 29 through 34). Table 1
(see page 5) illustrates the Board’s actual and estimated revenues
and expenditures for fiscal years 1999 through 2001.
Audit Scope and Methodology
Audit work focused on the Board’s complaint investigation and
adjudication processes, recordkeeping, and fiscal management.
This performance audit and Sunset review includes findings and
recommendations as follows:
Introduction and Background
5
OFFICE OF THE AUDITOR GENERAL
Table 1
Board of Osteopathic Examiners in Medicine and Surgery
Statement of Revenues, Expenditures, and Changes in Fund Balance
Years Ended or Ending June 30, 1999, 2000, and 2001
(Unaudited)
1999 2000 20011
(Actual) (Actual) (Estimated)
Revenues:
Licenses and fees $280,325 $326,861 $357,800
Sales and charges for services 35,700 33,500 27,800
Physician reimbursements 2 67,304 49,098 8,600
Fines and forfeits 6,450 5,100
Total revenues 389,779 414,559 394,200
Expenditures:
Personal services 241,937 326,069 258,600
Employee related 44,495 60,975 61,900
Professional and outside services 52,711 42,932 8,800
Travel, in-state 4,001 2,117
Travel, out-of-state 13,813 8,975
Other operating 85,510 89,774 53,700
Equipment 404 10,744
Total expenditures 442,871 541,586 383,000
Excess of revenues over (under) expenditures (53,092) (127,027) 11,200
Other financing sources (uses):
Operating transfers in (out) 2,454 (100)
Remittances to the State General Fund 3 (40,667) (44,196) (38,500)
Total other financing uses (38,213) (44,296) (38,500)
Excess of revenues under expenditures and other
financing uses (91,305) (171,323) (27,300)
Fund balance, beginning of year 298,782 207,477 36,154
Fund balance, end of year $207,477 $ 36,154 $ 8,854
1 The Board was unable to estimate 2001 physician reimbursements and fines and forfeits because the amounts fluctuate
significantly from year to year. The amount presented for physician reimbursements represents the actual amounts col-lected
through February 14, 2001. No fines and forfeits have been collected to date. Also, in response to a projected reve-nue
shortfall, the Governor’s Office required the Board to reduce its total expenditures to $383,000. See Other Pertinent In-formation
on pages 29 to 33 for further information.
2 The Board is authorized to collect reimbursements from physicians for such costs as monitoring physicians on probation.
3 As a 90/10 agency, the Board remits all of its revenue from fines and forfeits and 10 percent of its revenue from licenses
and fees, sales, and charges for services to the State General Fund.
Source: Auditor General staff analysis of the Arizona Financial Information System (AFIS) Accounting Event Transaction
File for the years ended June 30, 1999 and 2000; Revenues and Expenditures by Fund, Program, Organization, and Object
and Trial Balance by Fund reports for the years ended June 30, 1999 and 2000; the Board’s Budget Request for fiscal
years 2002 and 2003, and the Board’s listing of expected 2001 expenditures.
Introduction and Background
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OFFICE OF THE AUDITOR GENERAL
  The Board needs to impose disciplinary action when physi-cians
violate statutes and improve its complaint investigation
process (see Finding I, pages 9 through 16);
  The Board needs to properly investigate malpractice com-plaints
and improve the timeliness of complaint resolutions
(see Finding II, pages 17 through 22);
  The Board needs to improve complaint recordkeeping (see
Finding III, pages 23 through 28); and
  The Board needs to adopt some administrative rules; receive
training regarding hearing officer bias; and ensure compli-ance
with Open Meeting Law requirements. (See Sunset Fac-tors,
pages 35 through 42.)
In addition, this report contains an Other Pertinent Information
section that provides information regarding the Board’s recent
financial crisis that may impact licensees through service reduc-tions
and fee increases (see pages 29 through 33).
This audit used a variety of methods to study the issues ad-dressed
in this report. These methods included surveying Board
members; interviewing the Board’s Executive Director, Board
staff, osteopathic medical association representatives, and the
Board’s Attorney General representative; attending Board meet-ings;
and reviewing statutes, rules, Board meeting minutes, and
Board policies and procedures. In addition, the following specific
methods were used:
  To assess whether the Board’s adjudication decisions were
adequately supported and to assess the quality of investiga-tions,
auditors reviewed a random sample of 30 complaints
closed in the past three fiscal years, all 28 Letters of Concern
issued in the past three fiscal years, and the complaint records
of the physicians who have received the most complaints, and
conducted an analysis of the Board’s complaint log.
  To assess the timeliness and appropriateness of the Board’s
non-malpractice and malpractice complaint processes, audi-tors
reviewed 34 open malpractice complaints, and compared
the Board’s malpractice lawsuit tracking database with its
complaint database and complaint files. Auditors reviewed the
closed complaint sample previously discussed, a random
Introduction and Background
7
OFFICE OF THE AUDITOR GENERAL
sample of 30 open complaints that were opened in the past
three fiscal years, and a random sample of 34 open malprac-tice
complaints, and compared the Board’s malpractice law-suit
database with its complaint database and complaint files.
  To assess the quality of the Board’s complaint recordkeeping,
auditors compared 50 complaint files from the random sam-ples
of closed and open complaints previously discussed with
the Board’s complaint database and computerized complaint
log, compared the complaint database and complaint log to de-termine
completeness, and observed the Board’s procedures
for handling complaint files.
  To provide information regarding the Board’s financial prob-lems,
auditors reviewed correspondence between the Board
and the Governor’s Office of Strategic Planning and Budgeting,
an October 2000 financial review conducted by the Arizona
Department of Administration General Accounting Office, and
documentation of Board reimbursement charges, and analyzed
revenues and expenditures for the past three fiscal years.
  To assess the timeliness of issuing licenses and the accuracy of
the licensure database, auditors reviewed a random sample of
50 licensing files for physicians who renewed their licenses for
1999.
  To determine whether the Board provides consumers with
accurate and complete information about licensed osteopaths,
including complaint histories, auditors posing as members of
the public made three calls to the Board requesting informa-tion
and compared the information provided to the Board’s
complaint records.
  To determine whether the Board complies with state pro-curement
regulations, auditors reviewed documentation for
four service contracts.
This audit was conducted in accordance with government audit-ing
standards.
The Auditor General and staff express appreciation to the mem-bers
of the Board of Osteopathic Examiners in Medicine and Sur-gery,
the Executive Director, and staff for their assistance
throughout the audit.
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OFFICE OF THE AUDITOR GENERAL
FINDING I THE BOARD SHOULD TAKE
DISCIPLINARY ACTION WHEN
PHYSICIANS VIOLATE STATUTES
The Board needs to consistently discipline physicians when they
violate its statute defining unprofessional conduct. The Board
can protect the public by investigating complaints against physi-cians
and taking appropriate action to reprimand or rehabilitate
them. However, the Board is not consistent in ensuring that dis-ciplinary
action is taken when physicians violate its statutes. To
enhance its ability to discipline, the Board should make a num-ber
of improvements to its investigation and adjudicatory deci-sion-
making processes.
Discipline Has Essential
Role in Public Protection
One of the Board’s main responsibilities is to investigate and ad-judicate
instances where doctors
may have violated the Board’s stat-ute
governing unprofessional con-duct.
A.R.S. §32-1854 provides 53
actions that constitute unprofes-sional
conduct including abuse of
alcohol or drugs, committing a fel-ony,
or failing to maintain patient
medical records. Most complaints
the Board receives involve quality-of-
care issues, such as misdiagnoses
or failure to render treatment, that can result in patient harm or
death. The Board’s statutes clearly define the appropriate adjudi-catory
action the Board should take in response to complaints.
Specifically, the Board should:
  Dismiss a complaint only if its investigation found the com-plaint
without merit;
One of the most common po-tential
violations cited in com-plaints
is A.R.S. §32-1854(6),
“Engaging in the practice of
medicine in a manner that
harms or may harm a patient
or that the Board determines
falls below the community
standard.”
Finding I
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OFFICE OF THE AUDITOR GENERAL
Letter of Concern
A.R.S. §32-1800 defines a letter
of concern as “an advisory
letter to notify a physican that
while there is insufficient evi-dence
to support direct action
against the physician’s license
there is sufficient evidence for
the Board to notify the physi-cian
of its concern.
  Issue a Letter of Concern if the Board is concerned about a
physician’s actions, but lacks sufficient evidence to prove a
statutory violation;
  Impose one of its disciplinary options, which range from a
Decree of Censure to Revocation, when the Board finds a
physician guilty of unprofessional conduct.
The Board can use its disciplinary options to fulfill its public pro-tection
mandate. By imposing discipline, the Board can discour-age
future substandard care or other violations by both the phy-sician
found guilty of unprofessional conduct as well as the pro-fession
as a whole. Further, it allows the Board to communicate
the expected standard of care. In addition, imposing discipline is
the only means the Board has to ensure that physicians who lack
needed skills receive additional education or training.
Board Does Not Take Disciplinary
Action When Warranted
The Board does not take disciplinary action against physicians in
all cases where it is warranted. The Board has issued non-disciplinary
Letters of Concern to physicians who violated stat-utes.
Additionally, the Board has dismissed complaints when
physicians may have violated statutes.
Letters of Concern issued when disciplinary action warranted—
The Board has issued nondisci-plinary
Letters of Concern when
disciplinary action should have
been taken. Letters of Concern
should be used in instances
where there is insufficient
evidence of a violation of the
Board’s unprofessional conduct
statute, but the Board wants to
communicate and record its
concern about the physician’s
actions. Auditors reviewed all 25 complaints the Board resolved
with a nondisciplinary Letter of Concern during the last three
Letters of Concern issued
rather than discipline.
Finding I
11
OFFICE OF THE AUDITOR GENERAL
fiscal years.1 Auditors found that the Board issued Letters of
Concern when there was evidence of statutory violations in 18 of
the 25 complaints. Consequently, discipline would have been
appropriate in these instances. These complaints involved viola-tions
such as failure to diagnose life-threatening illnesses and us-ing
potentially addictive drugs prescribed for a patient. Follow-ing
are two specific examples:
  The Board issued a Letter of Concern to a physician for “lack
of appropriate evaluation and follow-up on a patient who
was significantly ill” after investigating a malpractice settle-ment
involving a patient’s death due to toxic shock. During
the investigative hearing the Board questioned the physi-cian’s
judgment regarding his failure to follow-up with the
patient or order blood tests. The physician admitted there
were problems with the care he provided but informed the
Board that he had changed his procedures for dealing with
acutely ill patients.
  In another instance, the Board issued a Letter of Concern to a
physician after the Board investigated the disciplinary action
taken against him in another state where he was also li-censed.
The physician was disciplined in Florida for failing to
diagnose a patient’s lung cancer after reviewing four differ-ent
chest X-rays. Florida issued a reprimand, a $3,750 fine,
and required additional medical education. The physician
also held licenses in Ohio and Pennsylvania. For this same
violation, he was issued an $800 penalty by Pennsylvania,
and surrendered his Ohio license in lieu of formal proceed-ings.
In response to auditors’ questions, Board members acknowl-edged
using Letters of Concern for statutory violations. One
Board member noted that Letters of Concern are used “as a
‘wakeup call’ to a physician we do not expect to see before the
Board again.” However, 18 of 28 physicians who received Letters
of Concern in the past three years had a prior history of multiple
complaints and 11 received subsequent complaints. Transcripts
of investigative hearings also indicate a reluctance to take disci-
1 The Board issued 28 Letters of Concern in the past three fiscal years; how-ever,
three were inappropriately issued in conjunction with probation,
which is a disciplinary action.
Finding I
12
OFFICE OF THE AUDITOR GENERAL
plinary action. For example, one Board member who agreed that
a physician had violated a Board order argued against disciplin-ing
the physician by stating, “I don’t see the point in giving him a
penalty.” Consequently, the Board issued a Letter of Concern.
Complaints dismissed when evidence of statutory violations
exists—While the Board receives many meritless complaints that
it appropriately dismisses, it has dismissed some complaints de-spite
evidence of statutory violations. Although auditors identi-fied
a small number of inappropriate dismissals, this is a signifi-cant
concern because dismissing a complaint communicates to
the public that the allegations against the physician were without
merit. Further the Board cannot use a prior dismissed complaint
to impose progressive discipline if a doctor repeats a violation.
Auditor observation of Board meetings and review of 30 closed
complaint files identified 4 instances in which the Board dis-missed
complaints despite evidence of statutory violations that
would warrant disciplinary action.
Several Changes Would Enhance
the Board’s Ability to Impose
Disciplinary Action
The Board should implement changes to improve its existing in-vestigative
and decision-making processes. Improving these
processes should ensure that its investigations are complete and
establish sufficient evidence of statutory violations, and therefore
enhance its ability to impose discipline. Additionally, the Board
should ensure consistent and appropriate decisions by imple-menting
additional decision-making processes.
Investigations should be improved—The Board should
strengthen its complaint investigations in a number of ways.
Specifically:
  The Board’s investigative staff should address all of the com-plainant’s
allegations. It is essential to address each allegation
individually because there may be instances where only one
of many allegations constitutes a violation. Auditor review of
30 closed complaint files noted 8 instances in which it was
clear that the Board’s investigations addressed some, but not
Some complaints were
inappropriately dismissed.
Board investigations should
address all allegations.
Finding I
13
OFFICE OF THE AUDITOR GENERAL
all, of the complainant’s allegations. Since audit work was
completed, the Board’s investigative staff have revised their
report to the Board so that it more clearly states the allega-tions
and potential statutory violations. However, the report
does not specifically associate a potential violation with each
allegation.
  Further, Board staff should clearly communicate whether its
investigation verified the complaint allegations. A review of
closed complaint files noted that the Board’s staff does not
clearly communicate whether the investigation evidence sub-stantiated
the complainant’s allegations. Instead, its staff pre-pare
a report summarizing the complainant’s concerns and
the named physician’s response.
  Similarly, the Board’s medical consultant, who is a licensed
physician, should clearly state whether her review found that
the named physician did or did not meet the standard of
care. According to the job description, the medical consultant
is supposed to make a recommendation regarding the rea-sonableness
and appropriateness of the medical treatment
and is authorized to make decisions regarding appropriate
medical practice. However, the medical consultant currently
only summarizes the medical records and describes what
happened to the patient, but does not state whether the phy-sician
met the standard of care.
There are at least two reasons why the medical consultant’s
report should state whether the standard of care was met.
First, she is the State’s only expert witness and represents the
State’s position on whether the physician met the standard of
care. In the absence of such evidence, the only expert testi-mony
before the Board, regarding the standard of care, is
from the named physician. Second, the Board’s professional
members should not be in the position of providing the
State’s expert evidence regarding the standard of care. Their
duty, while applying their expertise, is to determine whether
the physician met the standard of care based on the evidence.
  Finally, Board investigative staff should interview all com-plainants.
Board investigation guidelines require that com-plainants
are interviewed. However, a review of 30 closed
complaint files found that complainants were interviewed in
Finding I
14
OFFICE OF THE AUDITOR GENERAL
only 14 complaints, including some instances in which the
complainant initiated contact with the Board or Board staff
called complainants to ask if they still wanted to pursue the
complaint. Since audit work was completed, the Board’s in-vestigative
staff have developed a form to record complain-ant
interviews.
The Board needs to take action to resolve these concerns with its
investigations. In order to address similar problems, the Board of
Medical Examiners (BOMEX) has implemented a procedure that
identifies each specific allegation and associated statutory viola-tion.
The investigators use this to confirm the allegations with the
complainant and require the accused doctor to respond to each
individual allegation. Further, the BOMEX medical consultant
determines whether the doctor met the standard of care for each
allegation involving quality of care, and staff prepares a report
for the Board indicating whether a statutory violation was or was
not substantiated for each allegation.
Board should implement additional decision-making proc-esses—
In addition to enhancing its investigations, the Board
should improve its decision-making process by implementing
procedures and guidelines for producing consistent and appro-priate
decisions. Specifically:
  Prior to adjudicating complaints, the Board should determine
if statutory violations have occurred for each allegation. After
attending Board meetings and reviewing closed complaint
files in which transcripts were available, auditors noted that
the Board does not formally determine whether a violation
occurred prior to deciding whether or not to impose disci-pline.
Further, auditors found that the Board does not sys-tematically
address each allegation when making decisions.
The Attorney General’s Handbook recommendations for ad-judicatory
proceedings state that the purpose of an adjudica-tory
proceeding is to determine whether alleged acts violate
statutes or rules. Consequently, the Board should first deter-mine
whether each allegation constitutes a violation, and
then take appropriate adjudicative action.
  Further, the Board should develop and implement discipli-nary
guidelines to assist it in making consistent and appro-priate
decisions. Other regulatory boards have established
Finding I
15
OFFICE OF THE AUDITOR GENERAL
disciplinary guidelines. These guideline include such things
as the range of appropriate disciplinary actions for different
types of violations. Further, they consider violation severity
and disciplinary history as well as mitigating factors, such as
absence of patient harm. The Board should establish similar
disciplinary guidelines.
  Finally, the Board should consistently review a named physi-cian’s
disciplinary and letter of concern history when adjudi-cating
complaints. Currently, the Board receives a physician’s
history only when it requests a copy. Without reviewing a
physician’s disciplinary and letter of concern record the
Board could fail to impose progressive discipline when phy-sicians
repeat violations. Other regulatory boards, such as the
Board of Dental Examiners, always receive a named physi-cian’s
complaint history to use when adjudicating com-plaints.
Since audit work was completed, the Board has begun to re-ceive
the disciplinary and letter of concern history of each
named physician prior to adjudicating the complaints.
The Board needs discipli-nary
guidelines.
Finding I
16
OFFICE OF THE AUDITOR GENERAL
Recommendations
1. The Board should take disciplinary action, rather than issue
letters of concern or dismiss complaints, when it determines
that a statutory violation has occurred.
2. Board staff should ensure complete investigations are per-formed
by including at least the following procedures:
a. Identifying each allegation and potential associated statu-tory
violation;
b. Requiring the named physician to address each potential
violation;
c. Interviewing all complainants to confirm the allegations;
and
d. Providing the Board with reports indicating whether the
evidence collected verifies each allegation of statutory
violation.
3. The Board’s medical consultant should be required to pro-vide
an opinion on whether the named physician’s actions
met the standard of care for each allegation involving quality
of care.
4. As part of its adjudication process and prior to taking appro-priate
action, the Board should determine and include
documentation of whether a violation occurred for each al-leged
statutory violation.
5. The Board should establish and use disciplinary guidelines
that include consideration of violation severity, the need to
take progressive action, and mitigating factors.
6. The Board should consistently receive and review the named
physician’s disciplinary and letter of concern history as part
of the adjudication process.
17
OFFICE OF THE AUDITOR GENERAL
FINDING II THE BOARD CAN IMPROVE
COMPLAINT PROCESSING
The Board needs to improve its complaint processing. First, the
Board has not investigated all malpractice lawsuit settlements
and judgments as statutorily required. In addition, the Board
should immediately address extremely slow malpractice com-plaint
investigations as well as make some general enhance-ments
to improve timeliness for the processing of all complaints.
Board Investigates Malpractice
and Nonmalpractice Complaints
The Board investigates complaints from two main sources: 1) the
public, who themselves and their families are generally patients;
and 2) attorneys, and others who are statutorily mandated to re-port
complaints to the Board. The majority of the complaints
opened as a result of mandatory reports involve malpractice
lawsuits. In malpractice lawsuits, the plaintiff’s attorney must
provide the Board with case documentation 30 days following a
settlement or judgment. Although the Board investigates all
complaints in a similar manner, nonmalpractice and malpractice
complaints have significant differences. Nonmalpractice com-plaints
generally involve recent incidents and an actively partici-pating
complainant. In contrast, for malpractice complaints the
Board must rely on the evidence presented in the malpractice
lawsuit as its main source of information.
Board Has Not Investigated
Malpractice Cases with
Settlements and Judgments
The Board has not opened investigations for malpractice settle-ments
and judgments as mandated by statute. A.R.S. §32-3203
requires all health profession regulatory boards to investigate
malpractice cases when the plaintiff’s attorney provides notifica-tion
of a malpractice lawsuit’s settlement or judgment.
Finding II
18
OFFICE OF THE AUDITOR GENERAL
This requirement helps ensure that malpractice cases are re-viewed
by the regulatory board, which can take action beyond
the civil court to protect the public from further possible harm.
However, the Board is not complying with the statutory re-quirement
to investigate malpractice cases that have settlements
or judgments. Beginning in fiscal year 2000, rather than opening
investigations, the Board began recording on a list the notices of
the malpractice complaint settlements and judgments it received.
As of August 2000, the list included at least 45 settlements and
judgments for which the Board had not opened investigations.
Settlements in these cases ranged from $450 to $3 million, and
concerned issues such as failing to diagnose life-threatening ill-nesses
and surgical errors. Further, one physician on the list had
three uninvestigated malpractice settlements. The Board needs to
comply with statute and protect the public by investigating all
malpractice settlements and judgments. Beginning in March
2001, a physician is volunteering his services to review and pre-pare
the medical malpractice cases for Board review.
Complaint-Processing
Time Frames Can Be Improved
In addition to opening malpractice complaint investigations as
required, the Board should work to reduce the time it takes to
resolve complaints. The Board’s processing of malpractice com-plaints
is extremely slow and fails to protect the public. The reso-lution
time of non-malpractice complaints is better, but still could
be improved. Improved management will enable the Board to
resolve all complaints in a more timely manner.
Malpractice complaint investigations are extremely slow—The
Board’s malpractice investigations are excessively slow. Auditor
review of 14 open malpractice complaints found most malprac-tice
investigations completely stalled, even though the lawsuits
had been settled and the Board had the necessary documents to
complete its investigation. Ten of the 14 complaints had been
open for more than 600 days. Further, the Board has not taken
any action on six of these complaints for over one year. Accord-ing
to the Board’s complaint log, the majority of these complaints
have been assigned to the Board’s medical consultant. The Board
needs to make resolving these complaints a priority, because in-
The Board needs to inves-tigate
all malpractice cases
with settlements and
judgments.
Some malpractice com-plaints
open more than
600 days.
Finding II
19
OFFICE OF THE AUDITOR GENERAL
action could lead to potentially dangerous physicians continuing
to practice unchecked. For example, one physician has been
named in two unresolved malpractice complaints and had a
third malpractice complaint, which resulted in a Letter of Con-cern:
  The first malpractice complaint was opened more than five
years ago, in August 1995. It was filed after a settlement
agreement in the sum of $233,000 was reached for a surgical
error that resulted in complications and the need for addi-tional
surgery. Three months after the complaint was
opened, the Board’s medical consultant concluded that the
physician had committed a breech of practice standards. In
June 1996, the Board voted to determine whether the physi-cian
had any other similar incidents, but took no action re-garding
the findings. There was no evidence in the Board’s
records that any further action was taken until June 2000,
when several subpoenas were sent to hospitals requesting in-formation
about the physician’s history. The Board dismissed
this complaint in February 2001 after the physician stated he
had changed his procedures.
  A second malpractice complaint was opened in August 1996,
two months after the Board voted to investigate the physi-cian’s
record. This complaint pertained to a settlement
against the physician for failing to notify a patient about a
pap smear that tested positive for cancer. The patient subse-quently
died of the disease. Three years later, in August 1999,
the Board issued a Letter of Concern to the physician about
this complaint after he stated he had changed his procedures.
  A third malpractice complaint was opened in December 1998
after a summary judgment in the physician’s favor, which
also involved a patient who had not been notified about a
pap smear that tested positive for cancer. The Board dis-missed
the complaint in December 2000.
In addition, auditors reviewed 18 malpractice complaints that
were opened when the malpractice lawsuit was still pending.
Some of these complaints could remain open for years until the
lawsuits are resolved because the Board lacks sufficient informa-tion
to complete its investigation. For example, in August 1998,
the Board opened complaints against five physicians named in a
Finding II
20
OFFICE OF THE AUDITOR GENERAL
lawsuit that did not specify the nature of the alleged malpractice.
In response to the complaints, all five physicians indicated they
were unaware of the reason for the lawsuit. These complaints
will likely remain open on these physicians’ records until the
lawsuit is resolved. In contrast, there may be instances where the
Board believes issues involved in a pending malpractice lawsuit
constitute an immediate threat to the public. In these instances,
the Board should conduct an independent investigation to en-sure
prompt public protection.
Non-malpractice complaint resolution time frames exceed stan-dard—
Although more timely than malpractice complaints, non-malpractice
complaint resolution time frames are slower than the
Board reports and exceed the recommended 180-day time frame.
The Board reported that it resolved complaints in an average of
187 days for the past three fiscal years.1 However, the Board uses
the date it opens complaints to calculate its timeliness, instead of
the date the Board receives the complaint. As a result, the Board
underreports its complaint resolution time frames. A review of a
sample of 30 closed non-malpractice complaints found that the
Board took an average of 291 days to resolve complaints from
the date of receipt.
Management could make changes to improve timeliness—
Improvements are needed to ensure that all complaints are re-solved
in a timely manner and that the Board’s small backlog of
open complaints does not increase. Complaint resolution delays
have resulted in a small backlog of open complaints. According
to the Board’s complaint log, it had approximately 223 pending
complaints as of August 15, 2000, which is approximately the
average number of complaints the Board receives per year. As a
result, the Board’s effectiveness may be impacted. For example,
the Board’s ability to appropriately protect the public is limited
because of slow investigations and a complaint backlog which
delays its action on quality-of-care complaints. Further, informa-tion
to support allegations may become harder to obtain as time
passes.
1 Average of fiscal years 1998, 1999, and 2000 “average number of days to
resolution” as reported in the 2001-2003 Arizona Master List of State Gov-ernment
Programs.
The Board underreports
complaint resolution time
frames.
Finding II
21
OFFICE OF THE AUDITOR GENERAL
Better management of the complaint process could improve
timeliness. Specifically:
  The Board has not met its process deadlines. For example, the
Board has set a 7-day deadline to open complaints after re-ceipt.
However, Board staff took more than 9 days to open
the majority of complaints reviewed, with the slowest taking
75 days.
  In addition, the Board lacks deadlines for some complaint
processes. For example, the Board has no deadline policy for
subpoenaing medical records. Auditors found instances
where records were subpoenaed months after complaints
were opened, delaying the investigations until the records
were received for review.
  Further, the Board lacks time standards for medical consult-ant
review. The majority of the Board’s complaints involve
quality-of-care or malpractice issues that most likely require
medical consultant review. However, the Board does not
track when complaints are assigned to the medical consultant
and has not developed performance standards for that posi-tion.
  Finally, the Board lacks policies and procedures to prioritize
investigations based on the severity of the complaint. Other
medical regulatory boards, such as the Board of Medical Ex-aminers,
prioritize complaints in an effort to ensure that the
more serious complaints are resolved in a timely manner.
The Board needs perform-ance
standards for its
medical consultant.
Finding II
22
OFFICE OF THE AUDITOR GENERAL
Recommendations
1. The Board should ensure it fulfills its responsibility to protect
the public in regard to malpractice complaints by:
a. Immediately opening complaint investigations on the
approximately 45 malpractice settlements and judgments
for which it received notice, but has not yet initiated an
investigation;
b. Prioritizing the resolution of open malpractice complaints
based on the severity of the complaints; and
c. Not opening malpractice investigations until it receives
notice of a settlement or judgment unless the Board be-lieves
a physician involved in a pending malpractice law-suit
may be an immediate threat to the public.
2. The Board should amend its current complaint policy to add
process deadlines for each step of the complaint process.
3. The Board should generate monthly management reports
that track all steps in the complaint process to ensure process
deadlines are met.
4. The Board should develop performance standards for medi-cal
consultant reviews, including the number of reviews to be
completed and the amount of time it should take to complete
the reviews.
5. The Board should develop and implement policies and pro-cedures
to prioritize all complaints based on severity.
23
OFFICE OF THE AUDITOR GENERAL
FINDING III POOR COMPLAINT
RECORDKEEPING NEGATIVELY
IMPACTS COMPLAINT PROCESS
AND PUBLIC INFORMATION
Accurate and complete complaint records are necessary for the
Board to operate effectively and efficiently. However, the Board’s
complaint recordkeeping is inaccurate and insufficient, limiting
the Board’s ability to protect the public. In addition, a recent
statutory mandate to delete Board complaint records will restrict
both the Board’s and the public’s access to physicians’ complaint
histories.
Recordkeeping Problems
Impact Complaint Process
and Public Information
Flaws in the Board’s complaint recordkeeping limit its ability to
manage the complaint process and provide public information.
Problems with the complaint database, complaint log, and files
impact the efficiency and effectiveness of the Board’s complaint
process. In addition, these problems can result in the Board pro-viding
inaccurate or incomplete information to the public.
Poor recordkeeping problematic—The Board’s complaint re-cordkeeping
is inaccurate, insufficient, and redundant, and nega-tively
impacts the Board’s management of the complaint process.
Specifically:
  The complaint database is inaccurate and incomplete—
The Board uses a database as its main method of recording
complaint information. However, the database contains du-plicate
complaints and inaccurate information in important
fields, such as those that record the Board’s actions. Of equal
concern is the information that the database does not contain.
Although the database has fields to capture important dates,
such as when a complaint is assigned to the various steps in
the process, these fields are typically not used and therefore
the database cannot be used to track where complaints are in
Finding III
24
OFFICE OF THE AUDITOR GENERAL
the process. Finally, auditors found that the database did not
include at least 17 complaints listed on the Board’s complaint
log.
These database problems result from a general lack of
management controls. First, Board management has chosen
not to use the database to track complaints; therefore, the
database cannot provide useful information regarding
complaint-processing steps. Further, the Board lacks edit
controls and policies to ensure staff enter accurate informa-tion.
The Board also lacks a method to routinely check the
database for accuracy and completeness. As a result, the
Board’s database cannot be used to its full potential as a
complaint-tracking tool. The Board needs to correct the data-base
errors and use it to track where complaints are in the
process. In addition, the Board needs to establish a method to
routinely check the database for accuracy and completeness.
  Complaint log duplicative and insufficient—In addition to
the database, the Board also maintains a computerized com-plaint
log. However the log is redundant and is insufficient
as a complaint-tracking tool. The complaint log includes only
basic information, most of which is already in the complaint
database. It differs from the database only in that it records
the status of pending complaints; i.e., where they are in the
complaint process. However, because the complaint log is a
word processing document, the Board cannot use it to create
management reports that include overall time frames or ag-gregate
status information, such as how many complaints
have been assigned to the medical consultant. As a result,
Board staff is doing duplicative work by updating the log
and not obtaining sufficient benefits. The Board should stop
using this complaint log.
  Complaint files not controlled—Further, the Board lacks
controls over the location of its pending complaint files. Al-though
closed complaints are filed by complaint number, the
Board lacks procedures to control the location of pending
complaint files. According to the Board’s complaint log, it
appears that three complaint files have been lost prior to ad-judication,
essentially making further action on those com-plaints
impossible.
The complaint database
not used to full potential.
Finding III
25
OFFICE OF THE AUDITOR GENERAL
Public information is potentially inaccurate and incomplete—
Because the Board uses its inaccurate and incomplete database to
provide public information, there is no assurance that the infor-mation
the Board gives to consumers is correct. This may not
only prevent consumers from receiving complete information
about a physician’s complaint history, but can also unfairly im-pact
physicians. For example:
  One physician’s cover sheet, which contains the information
that the Board provides in response to a public information
request, did not include the Decree of Censure or the proba-tion
terms the Board imposed for a malpractice complaint.
  In contrast, another physician’s cover sheet includes informa-tion
on two complaints; however, one complaint is the dupli-cate
of the other. The physician actually has only one com-plaint.
Providing accurate and complete information is essential. Con-sumers
need accurate information to make informed decisions.
Further, physicians should be able to expect the Board to present
correct information.
Wording of Statutory Mandate
to Delete Records Could
Have Negative Consequences
The Board’s ability to protect the public will also be impacted by
a recent statutory change that requires the Board to delete certain
complaint records. Recent statutory amendments have limited
public information on physicians’ complaint histories for both
the osteopathic and allopathic medical boards. However, the
wording now included in the Board’s statutes is more far-reaching
than the changes in the BOMEX statutes and may limit
the Board in using past complaint records in its investigations
and adjudications, and will also result in the public receiving
incomplete complaint histories.
Statute requires deleting complaint records—In the past two
years, the Legislature has amended statutes to limit public access
to physicians’ complaint histories. Specifically, Laws 2000, Chap-
The public could receive
inaccurate physician
complaint histories.
Finding III
26
OFFICE OF THE AUDITOR GENERAL
ter 176 states that the Board must delete records of complaints
resolved without discipline:
  Three years after the receipt date, if dismissed with prejudice
because the Board determined the complaint did not fall
within the Board’s jurisdiction;
  Five years after the receipt date, if dismissed without preju-dice
after a settlement conference; and
  Five years after the receipt date if the Board issues a Letter of
Concern.1
In contrast, the Legislature amended BOMEX’s statutes in 1999
to limit public information on complaints, but did not require
record deletion. Specifically, BOMEX’s statutes mandate the
provision of public information regarding complaints resolved in
the past five years and BOMEX provides all disciplinary actions.
That amendment did not include any reference to permanently
deleting records, and BOMEX staff and the Board have the abil-ity
to use the complete complaint histories in investigations and
adjudications. Further, five comparable Arizona health profes-sion
regulatory boards have no statutory time limit on providing
public information about a licensee’s complaint history.
Deleting records will hamper the Board’s ability to protect the
public—The Board’s requirement to delete nondisciplinary com-plaint
records poses a number of other challenges:
  First, by basing the time frame for complaint record retention
on the receipt date, untimely complaint investigations could
result in complaint records being deleted soon after adjudica-tion.
  Second, the Board does not specify whether it dismisses
complaints with or without prejudice.
1 Dismissal “with or without prejudice” is a legal term that relates to the
Board’s ability to later pursue compliant allegations that were dismissed.
Complaints dismissed without prejudice can be revisited by the Board be-cause
all facts in the case were not considered. In contrast, complaints dis-missed
with prejudice cannot be reconsidered.
BOMEX’s statutes do not
require deleting complaint
records.
Finding III
27
OFFICE OF THE AUDITOR GENERAL
  Third, the Board’s Attorney General representative has ad-vised
the Board to provide public information on dismissed
complaints for the past three years rather than five years.
  Finally, despite the requirement to delete records of Letters of
Concern, the Board’s statutes also state that Letters of Con-cern
may be used in future adjudicative decisions. This may
prove impossible if the records are deleted.
The requirement to delete complaint records could also have a
negative impact on the Board’s ability to protect the public for
two reasons:
  First, deleting complaint records (database and file documen-tation)
would eliminate information that illustrates a pattern
of behavior and would also result in investigation evidence
being destroyed. For example, a physician was given a Letter
of Concern for a complaint received in 1996 for failure to pro-vide
medical records. This physician’s complaint record in-cludes
five dismissed complaints and one prior Letter of Con-cern
for failure to provide medical records. Further, in 1994, a
Board staff review of the physician’s files sustained the allega-tions
of improper recordkeeping for one of these dismissed
complaints. Soon this prior history will not be available to the
Board or its investigative staff.
  Second, deleting complaint records will result in the public
receiving incomplete complaint histories. An auditor, posing
as a member of the public, requested information from the
Board about another physician recently featured in a news-paper
article that noted the physician had 51 complaints. This
physician has not been disciplined for any of these 51 com-plaints,
which cover a 24-year period. Due to the new statute,
the Board only provided information about the five dismissed
complaints from the past three years, a pending complaint,
and a Letter of Concern from 2000.
In order to prevent these problems, the Legislature should amend
A.R.S. §32-1803(A) to eliminate the requirement to delete com-plaint
records. The Legislature could amend the Board’s statutes
to mirror BOMEX’s statute to provide consistency between the
boards for patients who may receive treatment from both allo-pathic
and osteopathic physicians.
Deleting complaint re-cords
will limit public
information.
Finding III
28
OFFICE OF THE AUDITOR GENERAL
Recommendations
1. The Legislature should consider amending A.R.S. §32-
1803(A) to eliminate the requirement to delete complaint re-cords.
The Legislature could consider amending the Board’s
statutes to be consistent with BOMEX’s statutes.
2. The Board should ensure the accuracy and completeness of
its complaints database by:
a. Developing a procedure and time frame to identify and
correct errors;
b. Developing and implementing a policy to routinely
monitor the databases’s accuracy and completeness;
c. Working with its computer consultant to revise the data-base
to include edit controls and receipt date, and ensure
the database captures other needed management infor-mation
such as the final adjudication of complaints; and
d. Developing a policy for data entry to help ensure infor-mation
is entered in the correct fields.
3. The Board should discontinue using its word processing
complaint log. For future complaints, the Board should en-sure
staff complete the data fields in the complaint database
and use it to track the complaint process.
4. Board management should use the complaint database to
generate on at least a monthly basis routine reports that indi-cate
complaint timeliness and status.
5. The Board should develop a procedure to specifically ac-count
for the location of open complaint files.
29
OFFICE OF THE AUDITOR GENERAL
OTHER PERTINENT INFORMATION
During this audit, other pertinent information was obtained
about the Board’s current financial crisis and how it was re-solved.
The Board has had to address its lack of funds to support
operations by obtaining a loan from the Governor and reducing
staff and budgeted expenditures. This financial crisis resulted
from several fiscal management problems. In response, the Gov-ernor,
Department of Administration (DOA), and Board mem-bers
have increased oversight over the Board’s finances to pre-vent
future problems.
Board’s Financial Crisis
Has Significant Impact
The Board has experienced a financial crisis that will impact its
operations and service levels significantly. In June 2000, the
Board realized that it lacked sufficient monies to continue opera-tions
and had to obtain a loan from the Governor’s emergency
funds. As a result, the Board had to reduce its budgeted expendi-tures,
which will negatively impact the Board’s operations and
services.
Board experienced financial crisis—In late June 2000, the Board
faced a financial emergency that required a loan from the Gov-ernor’s
emergency funds to resolve. As of June 30, 2000, the
Board had approximately $35,000 in resources, which at the time
was not sufficient to fund the Board for one month. Further, the
majority of the Board’s fiscal year 2001 revenues would not be
available for months because license renewal fees are typically
received at the end of the calendar year.
In response to this severe condition, the Governor provided a
loan to the Board from the Health Crisis Fund (Fund). The Fund
was established in 1997 with monies from the Medically Needy
Account of the Tobacco Tax and Health Care Fund. In order to
appropriately use the Fund, the Governor must declare a health
crisis or the potential for a health crisis. On July 21, 2000, the
Governor signed Executive Order 2000-15, declaring a significant
potential for a health crisis because osteopathic physicians would
The Board lacked monies
to fund its operations.
The Board received a loan
from the Governor.
Other Pertinent Information
30
OFFICE OF THE AUDITOR GENERAL
no longer be regulated if the Board ceased to operate. As part of
that order, the Governor loaned $125,000 to the Board.
Financial crisis will significantly impact the Board—The
Board’s financial crisis will have a considerable impact, resulting
in increased fees, reduced fiscal year 2001 budgeted expendi-tures,
and reduced services.
  First, the Board will have to increase fees to repay the loan it
received from the Governor’s Office. As a condition of the
loan, the Board agreed to seek statutory fee increases for all
fees including license applications and renewals. On January
2, 2001, the Board voted to increase several of its fees, which
included raising the license renewal fee from $200 to $300.
  Second, the Board has reduced staffing levels. Although the
Board is authorized 8 FTE employees, it can pay only 5.5
FTEs.
  Third, the Board has had to delay payments and reduce ser-vices.
The Board has delayed payment of its rent and risk
management costs, which should have been paid at the be-ginning
of fiscal year 2001 for the entire fiscal year. In addi-tion,
the Board has made other changes to reduce expendi-tures
for other services, such as no longer returning all long-distance
telephone calls. The Board states that it still returns
appropriate long-distance calls.
  Finally, the Board has had to cancel one of its three service
contracts. In fiscal year 2000, the Board held contracts for rule
writing, the development of an on-line licensure application
system, and database development and support. The Board
canceled its rule-writing contract. As a result, the Board will
have difficulty developing needed rules (see Sunset Factors,
pages 35 through 42).
Fiscal Mismanagement
Caused Funding Shortage
The Board’s financial crisis resulted from a number of fiscal
management problems. First, the Board’s revenue projections
were overly optimistic, resulting in it receiving appropriation
The Board has reduced
staffing levels.
Other Pertinent Information
31
OFFICE OF THE AUDITOR GENERAL
authorizations that were not matched by revenues. Second, the
Board’s expenditures consistently exceeded revenues; conse-quently
the Board used its fund balance to pay for expenditures.
Third, the Board’s inaccurate accounting caused it to overspend
its expenditure limit. Finally, because the Board’s financial con-trols
are inadequate, it failed to prevent and identify the crisis in
a timely manner.
Board made inaccurate revenue projections—The Board’s overly
optimistic revenue projections resulted in the Legislature giving
the Board spending authority that greatly exceeded its revenues.
The Board’s actual revenues are relatively stable because they are
primarily based on license renewals and new license applica-tions,
both of which remain relatively constant each year. Since
1998, annual revenues have averaged $360,000. However, Board
projections for revenue growth far exceeded the level of reve-nues
the Board could logically expect. Additionally, for the fiscal
year 2000 budget the Board projected revenues of approximately
$500,000, because it anticipated increased licensure growth due
to the location of an osteopathic medical school in Arizona. The
Legislature increased the Board’s spending authority based on
the Board’s projected revenues. Although the projected revenues
did not materialize, the Board proceeded to spend as though it
had received the projected revenues.
The Board has overspent revenues—In addition, in the past three
fiscal years, the Board has spent more than it collects in revenues,
mostly for personnel-related expenditures. For example, in fiscal
year 2000, Board expenditures were approximately $541,600,
while revenues were $360,000. As a result, the Board’s cash bal-ance
has declined from approximately $568,000 in July 1997 to
approximately $36,000 in June 2000 (see Table 1, page 5).
Much of this overspending related to an increase in personal ser-vices
and employee-related expenditures over the past few
years. For example, the Board’s Executive Director’s salary in-creased
25 percent from fiscal year 1999 to fiscal year 2000. In ad-dition,
the Board added 2.5 FTE positions as part of its fiscal year
2000 budget.
Accounting error compounded problem—Further compounding
the problem, the Board incorrectly accounted for revenues as re-funded
expenditures. This resulted in the Board technically ex-
The Board spent more
than its actual revenues.
Other Pertinent Information
32
OFFICE OF THE AUDITOR GENERAL
ceeding its spending authority. The Board receives reimburse-ments
from doctors for some of its costs to monitor their compli-ance
with probationary requirements. In addition, $20 from
every Board license renewal payment is supposed to fund the
Board’s Impaired Physician Program. However, the Board incor-rectly
accounted for these monies as negative expenditures,
which would act as a reduction in expenditures. As a result, it
appeared that the Board’s expenditures were within its fiscal
year spending limit of approximately $492,000. Instead, the
Board’s actual expenditures were approximately $523,000.
Internal financial controls inadequate—Finally, further compli-cating
the situation, the Board lacked appropriate internal finan-cial
controls to prevent the Board from exceeding its spending
authority. This lack of internal financial controls was identified
by a fiscal year 2000 internal control and financial compliance
review conducted by the Arizona Department of Administration
General Accounting Office (GAO). The October 25, 2000, GAO
review included 13 findings and related recommendations.
Some of these findings directly concerned problems associated
with the Board’s financial crisis. For example, the Board did not
reconcile its revenues and expenditures. Each month the Board
receives a statement from the Department of Administration list-ing
the deposit and expenditure activity for the preceding
month. All state agencies are expected to reconcile this statement
with their own records, similar to balancing a personal check-book,
to prevent problems such as overspending. However, the
Board failed to conduct these reconciliations and, as a result, was
unaware of its significant financial problem until it became an
emergency.
Increased Oversight Should
Prevent Future Problems
Increased oversight by the Governor’s Office, DOA, and Board
members should prevent future fiscal mismanagement. Specifi-cally:
  As part of its loan to the Board, the Governor’s Office of Stra-tegic
Planning and Budgeting (OSPB) made several condi-tions
to reduce expenditures and increase oversight. The
conditions included the following:
The Board exceeded its
expenditure limit.
Other Pertinent Information
33
OFFICE OF THE AUDITOR GENERAL
  Repayment of the $125,000 loan by June 30, 2002;
  Submission of a revised budget reducing projected
expenditures;
  Preparation of monthly financial statements including
revenues, expenditures, and the cash balance that should
be compared with the revised budget; and
  Reduction in the Executive Director’s salary to the fiscal
year 1999 level and freezing of other staff salary increases
unless approved by OSPB.
  In addition, increased GAO oversight will strengthen internal
financial controls over Board monies. At the Board’s request,
GAO conducted its October 2000 review and made several
recommendations to improve internal financial controls. The
Board, in its response to the review, stated that it has cor-rected
or plans to correct many of the problems identified.
Further, when the Board has sufficient revenues, it plans to
contract with GAO to provide its accounting services.
  Finally, it appears Board members will increase their over-sight
of the Board’s financial situation. Board members have
requested more detailed monthly statements of revenues and
expenditures than they received previously.
OSPB has increased over-sight
of the Board’s fi-nances.
34
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
35
OFFICE OF THE AUDITOR GENERAL
SUNSET FACTORS
In accordance with A.R.S. §41-2954, the Legislature should con-sider
the following 12 factors in determining whether the Board
of Osteopathic Examiners in Medicine and Surgery (Board)
should be continued or terminated.
1. The objective and purpose in establishing the Board.
The Board was established in 1949 to license osteopathic
physicians in Arizona. Osteopathic physicians are one of
two types of physicians who are qualified for unlimited
medical practice in all 50 states. Allopathic physicians, or
M.D.’s, are the other. Osteopathic physicians receive simi-lar
education and training to allopathic physicians and
also receive training in the musculoskeletal system and
manipulation.
The Board’s mission is “To protect the public health and
safety of both citizens and visitors to the State of Arizona
through the efficient and effective regulation of the practi-tioners
and practice of osteopathic medicine and surgery
in the State.”
The Board has established three goals to meet its mission.
These goals are: 1) ensuring licensees are competent; 2)
completing timely investigation and adjudication of
complaints; and 3) providing timely and accurate infor-mation
to the public.
2. The effectiveness with which the Board has met its
objective and purpose and the efficiency with which
it has operated.
The Board performs some responsibilities efficiently and
effectively, but can improve its performance in others.
Audit research found that the Board processes licensure
applications and renewals in a timely manner. Further,
Sunset Factors
36
OFFICE OF THE AUDITOR GENERAL
according to the Board, it created the first on-line renewal
system in the country. In 2000, the Board was recognized
by the association of state medical board executive direc-tors
for its on-line license renewal system. In addition, the
Board appropriately monitors physicians placed on pro-bation.
However, the Board needs to improve its efficiency and
effectiveness in other areas:
  The Board needs to impose disciplinary action when
warranted. Auditor review of Board complaint files
and observation of Board meetings found instances
when the Board did not discipline physicians who
violated statute. Specifically, the Board has issued Let-ters
of Concern when statutory violations have oc-curred
and has dismissed complaints when violations
appear to have occurred or when a Letter of Concern
would have been more appropriate. The Board needs
to improve investigations and develop its decision-making
process to address this problem (see Finding
I, pages 9 through 16).
  In addition, the Board needs to improve its complaint
processing. To better protect the public, the Board
should comply with statute and investigate instances
where a malpractice lawsuit was resolved by settle-ment
or judgment. In addition, some malpractice
complaints have been open a significant amount of
time and should be prioritized for resolution. Al-though
its resolution of non-malpractice complaints is
more timely, the Board should improve the manage-ment
of its investigation process to further reduce the
time it takes to resolve all complaints. (see Finding II,
pages 17 through 22).
  Further, the Board needs to improve its recordkeep-ing.
The Board’s complaint database is inaccurate and
incomplete and therefore cannot be used to help
manage the complaint process. Auditors found prob-lems
with the other methods the Board employs to
track complaints as well. Poor recordkeeping can re-
Sunset Factors
37
OFFICE OF THE AUDITOR GENERAL
sult in the Board providing inaccurate information to
the public (see Finding III, pages 23 through 28).
  Finally, the Board has experienced a significant short-fall
of monies which impacts its ability to provide ser-vices.
In late June 2000, the Board discovered that it
had nearly expended all of its fund balance and
would not receive revenues until later in fiscal year
2001. Without a loan from the Governor’s emergency
funds, it would have been forced to cease operating.
A subsequent Arizona Department of Administration
General Accounting Office review found that the
Board’s expenditures exceeded revenues and the
Board lacked internal financial controls to identify the
problem. The $125,000 loan from the Governor’s
emergency funds included a number of requirements
that reduced budgeted expenditures, required an in-crease
in revenues, and mandated additional over-sight.
The Board has had to reduce staff and cancel a
contract to reduce fiscal year 2001 budgeted expendi-tures
(see Other Pertinent Information, pages 29
through 33).
3. The extent to which the Board has operated within
the public interest.
The Board has effectively acted in the public interest in
some areas, but can improve in others. The Board appro-priately
allows complainants to participate in all aspects
of the complaint adjudication process. In addition, the
Board provides the public with information about a phy-sician’s
license and complaint history, including pending
complaints. However, recent statutory changes will limit
the amount of complaint information the public can re-ceive
(see Finding III, pages 23 through 28). Finally, based
on the Board’s advice, one of Arizona’s osteopathic medi-cal
schools requires its students to attend a board meeting
as a means of providing jurisprudence education.
Audit work identified some instances in which Board
members appeared to have bias, or the potential for bias,
and did not appropriately recuse themselves from adju-dicating
complaints. The Attorney General’s Office
Sunset Factors
38
OFFICE OF THE AUDITOR GENERAL
Agency Handbook states that hearing officers should
recuse themselves in instances where they have bias or
the potential for bias. Although this usually concerns in-stances
where a hearing officer would be biased against
the accused, it is equally important for hearing officers to
show no bias in favor of the accused. However, auditors
found at least five instances in which Board members had
a potential bias and did not recuse themselves or refute
the bias. For example, one Board member recused himself
from adjudicating a complaint due to his “intense dislike
for the accused doctor.” However, that Board member
then inappropriately participated in the Board’s discus-sion
regarding proposed sanctions. The Board should re-ceive
additional training from its Attorney General repre-sentative
on instances where recusal is necessary.
4. The extent to which rules adopted by the Board are
consistent with the legislative mandate.
According to the Governor’s Regulatory Review Council
(GRRC), the Board has not adopted a substantial number
of rules necessary to fulfill its statutory mandates and re-sponsibilities.
The list of needed rules is over five pages
long (a full list of needed rules was provided to the
Board). The needed rules include provisions for things
such as teaching license and training permit fees, which
the Board has charged without the necessary rules; pre-scribing
its jurisprudence exam; and approving schools of
osteopathic medicine. Further, a recently completed five-year
rule review report indicates that two of the Board’s
rules are inconsistent with statute and that all of the
Board’s rules, since most of them were adopted between
1987 and 1993, need to be updated to improve their clar-ity,
conciseness, and understandability. Unfortunately,
the Board’s recent financial crisis resulted in the cancella-tion
of the Board’s rule-writing contract. The Board needs
to work closely with GRRC to promulgate necessary
rules.
In addition, as of December 2000, the Board has not
adopted licensure time frame rules that it was required
by law to have in place by December 1998. A.R.S. §41-
1073 required the Board to adopt time frames in rule for
Sunset Factors
39
OFFICE OF THE AUDITOR GENERAL
issuing licenses by December 1998. Although the Board
submitted proposed time frame rules in 1998, they were
not accepted by GRRC. The Board submitted new pro-posed
time frame rules to GRRC in September 2000.
5. The extent to which the Board has encouraged input
from the public before adopting its rules, and the ex-tent
to which it has informed the public as to its ac-tions
and their expected impact on the public.
According to the Board it has encouraged public input in
drafting its proposed rules. The Board created task forces
to encourage input in developing its proposed rules and
regulations. The Board also sought input from stake-holder
groups such as the Arizona Osteopathic Medical
Association.
However, the Board does not comply with all Open
Meeting Law requirements. The Board complies with
Open Meeting Laws regarding notifying the Secretary of
State where agendas will be posted and appears to ap-propriately
use executive sessions. However, the Board’s
failure to maintain complete Board meeting minutes vio-lates
Open Meeting Law requirements. Auditors re-viewed
Board and executive session meeting minutes for
the past three fiscal years. Minutes for ten Board meetings
and six executive sessions were not available. Although
auditors gave the Board the opportunity to find or repro-duce
the missing Board meeting minutes, none were pro-vided.
The Board needs to comply with Open Meeting
Law requirements by making meeting minutes available
to the public within three days of a Board meeting.
6. The extent to which the agency has been able to in-vestigate
and resolve complaints that are within its
jurisdiction.
The Board has sufficient statutory authority and discipli-nary
options to investigate and adjudicate complaints.
However, this audit found that the Board has not im-posed
discipline when warranted, needs to improve its
investigations, and need to develop its decision-making
Sunset Factors
40
OFFICE OF THE AUDITOR GENERAL
process (see Finding I, pages 9 through 16). Further, the
Board has failed to investigate some malpractice com-plaints
as statutorily mandated. Finally, malpractice
complaint investigations are extremely slow and the
Board did not resolve non-malpractice complaints within
recommended time frames (see Finding II, pages 17
through 22).
7. The extent to which the attorney general or any other
applicable agency of state government has the au-thority
to prosecute actions under the enabling legis-lation.
A.R.S. §41-192 authorizes the Attorney General’s Office to
prosecute actions and represent the Board. The Board is
currently represented by one part-time assistant attorney
general.
8. The extent to which the Board has addressed defi-ciencies
in its enabling statutes which prevent it from
fulfilling its statutory mandate.
Numerous changes have been made to the Board’s stat-utes
over the years, some of which have enhanced the
Board’s ability to fulfill its statutory mandate. For exam-ple:
  The Board has successfully requested that additional
categories of unprofessional conduct be added to its
statutes, including failure to conduct a physical ex-amination
prior to prescribing medication; and
  The Board requires interns and residents to register
with the Board to ensure their competency and su-pervision
and allow the Board disciplinary authority.
Sunset Factors
41
OFFICE OF THE AUDITOR GENERAL
9. The extent to which changes are necessary in the
laws of the Board to adequately comply with the fac-tors
listed in the Sunset Law.
As discussed in Finding III (see pages 23 through 28),
Laws 2000, Chapter 176 amended the Board’s statutes,
requiring the Board to delete records of complaints re-solved
by dismissal or Letter of Concern. The wording of
this amendment went beyond a similar 1999 amendment
to the Board of Medical Examiners’ statutes, which only
limited public information about complaints. Deleting re-cords
could result in the Board losing access to complaint
histories and investigation evidence. The Legislature
could amend the Board’s statutes, removing the require-ment
to delete.
In addition, the Board is pursuing legislation to increase
its fees. A fee increase was a required condition of the
loan the Board received from the Governor’s Emergency
funds and is needed to repay the loan.
10. The extent to which termination of the Board would
significantly harm the public health, safety, or wel-fare.
Terminating the Board would harm the public health,
safety, and welfare because osteopathic physicians would
no longer be regulated in Arizona. In fact, the Governor
declared a health emergency when faced with the pros-pect
of the Board closing due to lack of funds. Currently,
all 50 states license osteopathic physicians, and 14 states
have independent osteopathic boards to regulate osteo-pathic
physicians.
11. The extent to which the level of regulation exercised
by the Board is appropriate and whether less or more
stringent levels of regulation would be appropriate.
Licensure is the appropriate level of regulation for osteo-pathic
physicians. It helps ensure that applicants meet re-quired
education and training requirements and prevents
unqualified or unprofessional physicians from practicing.
Sunset Factors
42
OFFICE OF THE AUDITOR GENERAL
12. The extent to which the agency has used private con-tractors
in the performance of its duties and how ef-fective
use of private contractors could be accom-plished.
The Board has relied on private contractors to perform ac-tivities
beyond its staff resources. For example, the Board
currently contracts for the development and support of its
databases, its on-line license renewal system, and partici-pates
in a state contract for its Impaired Physicians Pro-gram’s
laboratory testing. Further, the Board has held a
contract for rule writing. The Board complied with pro-curement
requirements in contracting for these services.
However, the Board’s recent financial crisis has resulted
in the cancellation of its rule-writing contract. In response
to its recent financial problems, the Board is considering
contracting with the Department of Administration to
perform the Board’s accounting services.
OFFICE OF THE AUDITOR GENERAL
Agency Response
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
1
April 2, 2001
Debbie Davenport
Auditor General
2910 N. 44th Street, Suite 410
Phoenix AZ 85018
RE: Performance Audit
Dear Ms. Davenport:
Enclosed please find the Arizona Board of Osteopathic Examiners in Medicine and Surgery’s response
to the Performance Audit recently conducted by your Staff. The Board has addressed the findings as
required by law. The Board has concerns regarding the performance audit but will be addressing those
issues in a different format in the near future.
Even though the report is lengthy, the report only indicates three findings, which state the following:
1) The board should take disciplinary action when physicians violate the statutes;
2) The board can improve complaint processing; and
3) Poor complaint record keeping negatively impacts complaint process and public
information.
The Board agrees with these findings and has already instituted numerous steps to implement the
recommendations.
I would like to draw your attention to Chapter 7 of the Reporting Standards for Performance Audits
issued by the United States General Accounting Office in setting the Government Auditing. The
standards states:
7.39. One of the most effective ways to ensure that a report is fair, complete, and objective is
to obtain advance review and comments by responsible audit officials and others, as
may be appropriate.
7.41 Advance comments should be objectively evaluated and recognized, as appropriate, in
the report. Advance comments, such as a promise or plan for corrective action, should
be noted but should not be accepted as justification for dropping a significant finding or
a related recommendation.
7.42 When the comments oppose the report’s findings, conclusions, or recommendations,
and are not, in the auditors’ opinion, valid, the auditors may choose to state their
2
reasons for rejecting them. Conversely, the auditors should modify their report if they
find the comments valid.
7.43 Auditors should report noteworthy accomplishments, particularly when management
improvements in one area may be applicable elsewhere.
7.44 Noteworthy management accomplishments identified during the audit, which were
within the scope of the audit, should be included in the audit report along with
deficiencies. Such information provides a more fair presentation of the situation by
providing appropriate balance to the report.
The reason for reviewing these standards with you is the Board’s request that upon reviewing the
attached Response by the Board, that your office consider these standards in preparing the final report.
The Board has confidence that the Governor, Legislature and the public will be provided an accurate
and fair report.
Thank you for your assistance in this matter.
Sincerely,
Ann Marie Berger
Executive Director
CC: Board Members
3
ARIZONA BOARD OF OSTEOPATHIC EXAMINERS
IN MEDICINE AND SURGERY’S
RESPONSE TO AUDITOR GENERAL’S PERFORMANCE AUDIT
The Arizona Board of Osteopathic Examiners in Medicine and Surgery (hereinafter “Board”) has
issued the following response to the recent Performance Audit conducted by the Auditor General’s
Office as part of the Sunset Review set forth in A.R.S. § 41-2951 et seq. The Board has attached as
part of its response an action plan to implement recommendations of the Auditor General’s office as
well as to enhance the management and investigative processes of the Board.
The Board agrees with the conclusion of the Performance Audit that the agency should be continued
and believes it does a good job in fulfilling its legislative mandate to protect the public from
unqualified and unfit physicians. The Board believes the audit report does not adequately show the
innovations or accomplishments of the Board. Below is a partial listing of some of the Board’s recent
accomplishments:
Disciplinary Action Ranking. The Board has been recognized by the Federation of State
Medical Boards in their listing of all medical boards as being in the top five out of sixty-eight
medical boards in the United States for actions taken per thousand physicians for the past six
years. The Board’s composite action index rating, an average of a several kinds of disciplinary
actions, was 18.6 in 1999, which ranked the Board first in disciplinary actions taken per
thousand physicians by the Federation. That index rating has only changed slightly since 1993.
The Board requested this outstanding accomplishment be recognized in the Auditor General’s
report but it was not mentioned and the Federation of State Medical Boards was never
contacted for verification. As the Auditor General’s plan consistently compares the Board to
the Arizona Board of Medical Examiners (“BOMEX”), BOMEX’s composite action index
rating for 1999 was 6.5.
On-line Renewal System. The Board is the first regulatory board in Arizona and the first
medical board in the United States to implement on-line renewal of licensure. This system has
allowed physicians throughout the country to renew their Arizona licenses in a timely and
efficient manner. The report states that “according to the Board”; the Board was first with this
accomplishment. This is an accurate statement. Had the Staff of the Auditor General’s office
taken the time to verify this information, they would have seen that it was an accurate
statement. In the year 2000, the Board was recognized by both the Council on Licensure,
Enforcement and Regulation and the Administrators in Medicine for this innovative on-line
renewal system..
Education of Medical Students. In 1999 the Board, in conjunction with the Arizona
Osteopathic Medical School/Midwestern University, instituted a requirement that all students
would be required, during their third year of medical school, to attend a full Board Meeting.
This requirement must be met before the student has begun his final year of medical school.
The Federation of State Medical Board’s adopted a resolution in 2000 to request that all 68
medical boards in the country have a system in place to educate medical students on the laws
and regulations of licensure prior to graduation based on the Arizona Osteopathic Medical
Board’s implementation of this program.
4
Impaired Physician Program. The Board is being recognized by the Administrators in
Medicine in 2001 for its Impaired Physician Program. The Program not only appropriately
monitors physicians under probationary or suspension orders for various type of impairment,
but also includes Education, Mentoring and Volunteer Programs to assist these physicians in
their recovery. Unlike other medical boards, the Arizona Osteopathic Medical Board’s
Impaired Physician Program allows full public access to information about these physicians.
Public Participation. All Complainants are invited to participate at all levels of the Board ‘s
evaluation of an allegation of unprofessional conduct. The Board has found that having the
patient and/or complainant present during the adjudication of a complaint, assures a fair,
balanced and unbiased proceeding. It assures the Board has accurate and complete information
in order to make an informed decision.
Prior to the issuance of this response, the Board had taken action to resolve its financial situation.
Despite the financial limitations faced by the Board, the Board continued to meet its statutory
requirements and the finances did not adversely impact the Board’s ability to meet its statutory
responsibilities. Legislation has been passed and is currently in effect allowing the Board to raise its
fees. The Board has completed all functions in relationship to a financial action plan submitted to the
Governor’s office resolving all financial problems.
While the Board is concerned with the many inaccuracies contained in the audit report, it believes this
response should be limited Findings and Recommendations by the Auditor General’s Office.
I. FINDING I: THE BOARD SHOULD TAKE DISCIPLINARY ACTION WHEN PHYSICIANS
VIOLATE STATUTES
The Board is in agreement with Finding I. The Board regularly disciplines physicians for violation of
the Statutes. As evidence, The Board took more actions per 1000 physicians in 1999 and 2000 than
any other medical board in the United States.
Recommendations:
1. The Board should take disciplinary action when it determines that a statutory violation has
occurred.
The Board agrees with this recommendation. The Board weighs the evidence and determines if there
are any mitigating factors or circumstances before determining discipline.
2. Board staff should ensure complete investigations are performed by including at least the
following procedures:
a. Identifying each allegation and potential associated statutory violation;
b. Requiring the named physician to address each potential violation;
c. Interviewing all complainants to confirm the allegations; and
d. Providing the Board with reports indicating whether the evidence collected verifies
each allegation of statutory violation.
The Board agrees with this recommendation and has already implemented the above procedures.
5
3. The Board’s medical consultant should be required to provide an opinion on whether the
named physician’s actions met the standard of care for each allegation involving quality of
care
The Board agrees with this Recommendation and has implemented this recommendation. The Board
requests that the Board’s medical consultant and/or outside medical consultants provide the Board with
all factual information related to the care provided by the physician as well as what defines the
applicable standard of care. The medical consultant informs the Board as to whether or not the
standard of care has been met and the Deputy Director provides information to the Board as to which
statutory violations may have occurred.
The report suggests that staff should make a finding of a violation. The Board has been delegated the
authority by A.R.S. § 32-1803 to determine whether or not the physician has met the standard of care
and violated the statutes. The Board takes this responsibility extremely serious and fulfills its duty of
protecting the public from unlawful, incompetent, unqualified, impaired and unprofessional
practitioners of osteopathic medicine in the State of Arizona. It would be inappropriate and illegal for
a medical consultant or any staff member to make decisions or act as the Board.
.
4. As part of its adjudication process and prior to taking appropriate action, the Board should
determine and include documentation of whether a violation occurred for each alleged
statutory violation.
The Board agrees with this recommendation and believes it has implemented this process.
5. The Board should establish and use disciplinary guidelines that include consideration of
violation severity, the need to take progressive action and mitigating factors
The Board agrees with this recommendation and is in the process of developing disciplinary
guidelines. (See Action Plan).
.
6. The Board should consistently receive and review the named physician’s disciplinary and letter
of concern history as part of the adjudication process.
The Board agrees with this Recommendation and has implemented this recommendation. The Board
has been provided legal advice by its Assistant Attorney General that it cannot review a physician’s
complaint history if a matter has been dismissed because it would violate the physician’s due process
rights as it relates to the Board’s determination of a violation of its statutes. The Board does review
prior violations, discipline and Letters of Concerns in determining appropriate sanctions after it has
determined that the physician has violated its statutes.
II. FINDING II: THE BOARD CAN IMPROVE COMPLAINT PROCESSING
The Board agrees with Finding II and continually strives to improve the complaint process, reports and
data management. The Board, as recognized by the Auditor General, currently is experiencing a lack
of funds due to a lack of revenue. The Board agrees with many of the recommendations related to this
finding but may not be able to implement them immediately due to a lack of funding and personnel.
(See Action Plan)
6
Recommendations:
1. The Board should ensure it fulfills its responsibility to protect the public in regard to
malpractice complaints by;
a. Immediately opening complaint investigations on the approximately 45 malpractice
settlements and judgments for which it received notice, but has not yet initiated an
investigation.
b. Prioritizing the resolution of open malpractice complaints based on the severity of the
complaints; and
c. Not opening malpractice investigations until it receives notice of a settlement or
judgment unless the Board believes a physician involved in a pending malpractice
lawsuit may be an immediate threat to the public.
The Board currently prioritizes complaints. In March, 1999 the Board established criteria for
investigating medical malpractice cases which prioritizes those types of investigations. The Board also
prioritizes investigations that concern an “immediate threat to the public” as required in its statutes.
The Board believes that all cases should be considered by the Board in a timely manner. While all
complaints are important, the Board recognizes that there are cases that have a larger impact on the
public welfare and safety. In addition to the eleven regularly scheduled Board Meetings, the Board
held nine telephone conference call Board Meetings since January 2000 in order to deal with urgent
matters before the Board. During these telephone conference call Board Meetings, the Board
summarily suspended the licenses of three physicians, suspended the license of two physicians,
accepted the surrender of two physicians’ licenses, restricted the practice of four physicians, sent at
least three cases immediately to a hearing, and placed two physicians on probation.
The Board agrees with this Recommendation and has implemented the Recommendation.
2. The Board should amend its current complaint policy to address process deadlines for each
step of the complaint process.
The Board agrees with this recommendation and revised its Investigative Guidelines.
3. The Board should generate monthly management reports that track all steps in the complaint
process to ensure process deadlines are met.
The Board agrees with this recommendation and will implement this request. (See Action Plan)
4. The board should develop performance standards for medical consultant reviews, including the
number of reviews to be completed and the amount of time it should take to complete the
reviews.
The Board agrees with this Recommendation and will implement the Recommendation.
5. The Board should develop and implement policies and procedures to prioritize all complaints
based on severity.
The Board believes it does prioritize complaints. The Board also prioritizes investigations that concern
an “immediate threat to the public” as required in its statutes. The Board feels that all cases should be
considered by the Board in a timely manner and none should be considered “less” important but
7
recognizes that there are cases that have a larger impact and possess a threat to the public. The Board
held nine telephone conference call meetings since January, 2000 in order to deal with urgent matters
before the Board. During these unscheduled telephone conference call Board Meetings, the Board
summarily suspended the licenses of three physicians, accepted the surrender of two physicians’
licenses, restricted the practice of four physicians, sent at least three cases immediately to a hearing,
and placed two physicians on probation.
The Board agrees with this Recommendation and has implemented the Recommendation. The Board
is revising its Policies and Procedures and developing Disciplinary Guidelines. (See Action Plan).
III. FINDING III: POOR COMPLAINT RECORDKEEPING NEGATIVELY IMPACTS
COMPLAINT PROCESS AND PUBLIC INFORMATION
Recommendations:
1. The Legislature should consider amending A.R.S. § 32-1803(A) to eliminate the requirement to
delete complaint records. The Legislature could consider amending the Board’s statutes to be
consistent with BOMEX’s statutes.
The Board agrees with the Recommendation to remove the word “delete” from the Board’s Statutes.
Legislation has been passed and A.R.S. § 32-1803(A) has corrected the Board’s statutes as to the
terminology.
2. The Board should ensure the accuracy and completeness of its complaints database by:
a. Developing a procedure and time frame to identify and correct errors;
b. Developing and implementing a policy to routinely monitor the databases’ accuracy and
completeness;
c. Working with its computer consultant to revise the database to include edit controls and
receipt date, and ensure the database captures other needed management information such
as the final adjudication of complaints; and
d. Developing a policy for data entry to help ensure information is entered in the correct
fields.
The Board agrees with this Recommendation, as it has already been addressed in Finding II. The
Board will implement this Recommendation. (See Action Plan)
3. The Board should discontinue using its word processing complaint log. For future complaints,
the Board should ensure staff completes the data fields in the complaint database and use it to
track the complaint process.
The Board agrees with this recommendation and believes it is redundant and has already been
addressed. The Board will implement the recommendation. (See Action Plan)
4. Board management should use the complaint database to generate on at least a monthly basis
routine reports that indicate complaint timeliness and status.
The Board agrees with this recommendation and believes it is redundant and has already been
addressed. The Board will implement the recommendation. (See Action Plan)
8
5. The Board should develop a procedure to specifically account for the location of open
complaint files.
The Board agrees with this Recommendation and will implement the Recommendation.
ARIZONA BOARD OF OSTEOPATHIC EXAMIENRS IN MEDICINE AND SURGERY
ACTION PLAN
OBEX
March 31, 2001
GOAL: To improve the functions and processes of the Board and ensure the public health, welfare and safety through the
licensing and regulation of osteopathic physician.
OBJECTIVE: By July 1, 2002 Board improve all areas as recommended by the Arizona Auditor General in their April, 2001
Performance Audit
STRATEGY: Implement improvements based on the recommendations of the Auditor General’s office in their April 2001 Report.
Action Steps Persons Responsible Due Dates Resources Needed
1. Develop Disciplinary Guidelines Board Members/Staff July 1, 2001 Statutes/Rules
2. Develop Policies and Procedures Manual Board Members/Staff July 1, 2001 Statutes/Rules
3. Revise Investigative Guidelines Board Members/Staff March 31, 2001 Statutes/Rules
4. Board Training by the Attorney General’s office Assistant Attorney General July 1, 2001 Statutes/Rules
5. Review and Consideration of Medical Board Members/Staff September 1, 2001 Investigative
Malpractice Investigations Materials
6. Reformat Board Investigation Reports Staff March 31, 2001 Investigative
Materials
7. Implement Database Improvements Staff/Computer Consultant July 1, 2002 Computer
8. Completion of Financial Responsibilities Executive Director July 1, 2002 Revenue
9. Fill vacant positions Executive Director July 1, 2002 Revenue
Other Performance Audit Reports Issued Within
the Last 12 Months
00-7 Department of Public Safety—
Aviation Section
00-8 Arizona Department of Agriculture—
Animal Disease, Ownership and
Welfare Protection Program
00-9 Arizona Naturopathic Physicians
Board of Medical Examiners
00-10 Arizona Department of Agriculture—
Food Safety and Quality Assurance
Program and Non-Food Product
Quality Assurance Program
00-11 Arizona Office of Tourism
00-12 Department of Public Safety—
Scientific Analysis Bureau
00-13 Arizona Department of Agriculture
Pest Exclusion and Management
Program
00-14 Arizona Department of Agriculture
State Agricultural Laboratory
00-15 Arizona Department of Agriculture—
Commodity Development
00-16 Arizona Department of Agriculture—
Pesticide Compliance and Worker
Safety Program
00-17 Arizona Department of Agriculture—
Sunset Factors
00-18 Arizona State Boxing Commission
00-19 Department of Economic Security—
Division of Developmental
Disabilities
00-20 Department of Corrections—
Security Operations
00-21 Universities—Funding Study
00-22 Annual Evaluation—Arizona’s Family
Literacy Program
01-01 Department of Economic Security—
Child Support Enforcement
01-02 Department of Economic Security—
Healthy Families Program
01-03 Arizona Department of Public Safety—
Drug Abuse resistance Education
(D.A.R.E.) Program
01-04 Department of Corrections—Human
Resources Management
01-05 Arizona Department of Public Safety—
Telecommunications Bureau
Future Performance Audit Reports
Arizona Game and Fish Department—Wildlife Management
Arizona Game and Fish Department—Heritage Fund
Department of Public Safety’s Licensing Bureau