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                              Sonjay Fonn, D.O. and Midwest Neurosurgeons, LLC, DAB No. 3086 (2023)
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Sonjay Fonn, D.O. and Midwest Neurosurgeons, LLC, DAB No. 3086 (2023)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Appellate Division





Sonjay Fonn, D.O. and Midwest Neurosurgeons
Docket No. A-22-36Decision No. 3086February 6, 2023

        
              
    

      FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Sonjay Fonn, D.O. (Dr. Fonn) and Midwest Neurosurgeons, LLC (MWN) (collectively, Petitioners) appeal the decision of an administrative law judge (ALJ) in *Sonjay Fonn, D.O. and Midwest Neurosurgeons, LLC*, DAB CR5996 (2021) (ALJ Decision).  The ALJ upheld the determination of the Centers for Medicare & Medicaid Services (CMS) to revoke Petitioners’ Medicare billing privileges under 42 C.F.R. § 424.535(a)(4) for certifying as “true” misleading or false information on Petitioners’ Medicare enrollment applications.  The ALJ concluded that CMS had a legal basis for the revocations because Petitioners failed to disclose a “final adverse legal action” relating to Dr. Fonn’s Illinois medical license while certifying that the information on the applications was true, correct, and complete.  We affirm the ALJ Decision because it is supported by substantial evidence and free of legal error.

Legal Background

“Suppliers” of Medicare services – which includes physicians and their medical practices – must be enrolled in and maintain enrollment in Medicare to receive payment for items and services covered by Medicare.  42 C.F.R. §§ 424.500, 400.202 (defining “Supplier”), 424.502 (defining “Enroll/Enrollment”).1  To enroll in Medicare, a supplier must submit an “enrollment application” to CMS.  *See*42 C.F.R. § 424.510(a), (d)(1).2  The term “enrollment application” is defined to mean the “CMS-approved paper enrollment application” – various CMS-855 forms – or the internet-based electronic application, which is submitted through the Medicare Provider Enrollment, Chain, and Ownership System (PECOS).  *Id.*§ 424.502 (defining “enrollment application” and “PECOS”).  A submitted enrollment application must include “[c]omplete, accurate, and truthful

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responses to all information requested within each section as applicable to the provider or supplier type.”  *Id.*§ 424.510(d)(2)(i).

To maintain Medicare billing privileges, a supplier must “revalidate” their enrollment every five years, or at other times as CMS requires, by resubmitting and recertifying their Medicare enrollment information.  *See*42 C.F.R. § 424.515 (describing five-year revalidation schedule and “off-cycle” revalidations); *id.*§ 424.516.  The supplier “must submit to CMS the applicable enrollment application with complete and accurate information and applicable supporting documentation[,]” and certify the information’s accuracy.  *Id*. § 424.515(a)(2).

CMS may revoke a supplier’s Medicare billing privileges and any corresponding supplier agreement for any of the “reasons” specified in paragraphs (a)(1) through (a)(21) of section 424.535 of Medicare’s enrollment regulations.  Section 424.535(a)(4) provides in pertinent part:

*False or misleading information*.  The provider or supplier certified as “true” misleading or false information on the enrollment application to be enrolled or maintain enrollment in the Medicare program.

If CMS revokes a supplier’s billing privileges, the supplier is “barred from participating in the Medicare program from the effective date of the revocation until the end of the re-enrollment bar.”  42 C.F.R. § 424.535(b), (c).  At the time of the revocations here, CMS regulations set the re-enrollment bar for a period between one and three years, depending on the severity of the basis for the revocation.  *Id.*§ 424.535(c).

Revocation of Medicare billing privileges is one of a limited number of “initial determinations” from which a supplier may request a “reconsidered determination” from CMS or its contractor.  42 C.F.R. §§ 498.3(b)(17), 424.545(a), 498.5(*l*)(1), 498.22(a).  A reconsidered determination “affirm[s] or modif[ies] the initial determination and the findings on which it was based.”  *Id.* § 498.24(c).  If dissatisfied with the “reconsidered determination,” the supplier may request a hearing before an ALJ.  *Id.*§ 498.40.  A party dissatisfied with an ALJ’s decision may seek review by the Departmental Appeals Board (Board).  *Id.*§ 498.80.

Case Background3

Dr. Fonn is a physician and the owner of MWN.  ALJ Decision at 2.  Dr. Fonn is licensed to practice medicine in Missouri, where Dr. Fonn treats patients for neurological issues.  Declaration of Dr. Sonjay Joseph Fonn (Fonn Decl.) at 1-2 (¶¶ 1, 3).

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On July 23, 2018, the Illinois Department of Financial and Professional Regulation (IDFPR) filed a complaint against Dr. Fonn’s Illinois Physician and Surgeon License (medical license) alleging multiple violations of the Illinois Medical Practice Act.  ALJ Decision at 2; CMS Ex. 2, at 1 (Consent Order).4  At that time, Dr. Fonn had an active license to practice medicine in Illinois but had not practiced there for almost three years.  CMS Ex. 2, at 1.  On August 8, 2018, Dr. Fonn filed an answer denying the allegations in the complaint.  *Id*. at 1-2.

On September 25, 2018, while the Illinois licensing complaint was pending, Dr. Fonn and MWN were found liable in the United States District Court, Eastern District of Missouri for submitting false claims to Medicare and Medicaid in violation of the federal anti-kickback statute (42 U.S.C. § 1320a-7b(g)).  CMS Ex. 2, at 2.  *See also United States v. D.S. Medical, L.L.C.*, Civil Dkt. No. 1:12-cv-00004 AGF, 2018 WL 4607839 (E.D. Mo. Sept. 25, 2018).5

One month later, Dr. Fonn and the IDFPR entered into a consent order, which resolved the pending Illinois disciplinary action.  CMS Ex. 2.  In the consent order, Dr. Fonn acknowledged that should the pending disciplinary matter “proceed to a contested hearing, the Illinois Medical Disciplinary Board . . . could find a violation of the Medical Practice Act.”  *Id*. at 2.  Dr. Fonn acknowledged having “the right to a hearing on the pending Complaint and the right to administrative review of any Order resulting from a hearing,” but “knowingly waive[d] each of these rights, as well as any right to administrative review of [the] Consent Order.”  *Id*.  Dr. Fonn and the IDFPR agreed that “in order to resolve this matter, [Dr. Fonn] would be permitted to enter into a Consent Order . . . providing for the imposition of disciplinary measures which are fair and equitable in the circumstances and which are consistent with the best interest of the people of the State of Illinois.”  *Id*.  Accordingly, Dr. Fonn and the IDFPR agreed that as of October 25, 2018, Dr. Fonn’s medical license would be “placed on permanent inactive status.”  *Id*. at 2-4.  Dr. Fonn further acknowledged and agreed that “this Order is [a] formal disciplinary action reportable to all relevant authorities and entities responsible for licensing and regulation of healthcare providers.”  *Id*. at 3.

According to the Illinois licensing information Petitioners submitted to the ALJ, Dr. Fonn was subject to a disciplinary action in Illinois; Dr. Fonn’s medical license was placed in

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“permanent inactive” status effective October 25, 2018; and the reason for the action was “multiple violations of Illinois Medical Practice Act arising out of submission of false claims to Medicare/Medicaid.”  P. Ex. 1, at 157-58.6  Similarly, a report from the National Practitioner Data Bank, which Petitioners also submitted to the ALJ, indicates the IDFPR reported that Dr. Fonn’s Illinois medical license was subject to an adverse action effective October 25, 2018; the basis for the adverse action was insurance fraud (Medicare, Medicaid, or other insurance); the action taken was “permanent inactive status”; and the length of the action was “permanent.”  *Id*. at 164-65.  The report further indicates that Dr. Fonn’s medical license was “placed on permanent inactive status for multiple violations of [the] Illinois Medical Practice Act arising out of submission of false claims to Medicare/Medicaid.”  *Id*. at 165.

In December 2018, in response to a revalidation request from WPS, a Medicare contractor (CMS. Ex. 1), Dr. Fonn submitted a CMS-855I enrollment application and MWN submitted a CMS-855B enrollment application.  CMS Exs. 3, 4.  Section 3 of each application inquired about the applicant’s history of “final adverse legal actions” and convictions.  CMS Ex. 3, at 13-14; CMS Ex. 4, at 13-14.  Page 12 of each application explained what information was being requested:  “This section captures information on final adverse legal actions, such as convictions, exclusions, revocations, and suspensions.  All applicable final adverse actions must be reported, regardless of whether any records were expunged or any appeals are pending.”  CMS Ex. 3, at 13; CMS Ex. 4, at 13.  Under the subheading “Exclusions, Revocations, or Suspensions,” the applications stated that “final adverse legal actions” included, among other things:

Any revocation or suspension of a license to provide health care by any State licensing authority.  *This includes the surrender of such a license**while a formal disciplinary proceeding was pending before a State licensing authority*.

CMS Ex. 3, at 13; CMS Ex. 4, at 13 (emphasis added).

On page 13, Dr. Fonn’s application asked:  “Have you, under any current or former name or business entity, ever had a *final adverse legal action listed on page 12* of this application imposed against you?”  CMS Ex. 3, at 14 (emphasis added).  In response to this question, Dr. Fonn checked the box for “YES.”  *Id*.  In response to the second part of the question, which required Dr. Fonn to “report each final adverse legal action,” and attach documentation, Dr. Fonn wrote “See attached sheet.”  *Id*.  In response to the same questions on MWN’s application, Dr. Fonn indicated that there were final adverse legal actions, and again provided certain attachments without specifying on the application any

Page 5

particular action.  CMS Ex. 4, at 27.7  Attached to both applications were three letters from a CMS contractor to Dr. Fonn:  a November 23, 2015 notice of suspension of Medicare payments to Petitioners; a December 23, 2015 notice of termination of the above suspension of payments; and a second notice of suspension of Medicare payments, dated December 6, 2017.  CMS Ex. 3, at 29-36; CMS Ex. 4, at 38-45.  The Illinois consent order was not attached to either application.

Each application also included a certification statement that applicants were required to sign.  CMS Ex. 3, at 26-27; CMS Ex. 4, at 28.  The certification statement on Dr. Fonn’s application provided:  “You MUST sign and date the certification statement below in order to be enrolled in the Medicare program.  In doing so, you are attesting to meeting and maintaining the Medicare requirements stated below.”  CMS Ex. 3, at 26.  Those requirements included a certification that the application was true, correct, and complete.  *Id*.  Dr. Fonn signed and dated the application on December 19, 2018, thus certifying, among other things:  “I have read the contents of this application, and the information contained herein is true, correct, and complete.”  *Id*. at 26-27.  Dr. Fonn similarly signed and dated MWN’s application on December 19, 2018, certifying that:  “I have read the contents of this application.  . . .  By my signature, I certify that the information contained herein is true, correct, and complete . . . .”  CMS Ex. 4, at 28.

By separate initial determination letters dated January 22, 2019, WPS notified Petitioners it was revoking their Medicare billing privileges under 42 C.F.R. § 424.535(a)(4).  CMS Ex. 5, at 1, 3.  WPS explained that Petitioners had certified as “true” false or misleading information on their respective revalidation applications, when they failed to disclose the voluntary surrender of Dr. Fonn’s Illinois medical license in lieu of formal discipline effective October 25, 2018.  *Id*.

By letter dated March 15, 2019, Petitioners sought reconsideration of the revocations.  CMS Ex. 12.  Petitioners admitted to not disclosing the Illinois consent order on their respective applications but argued that Dr. Fonn had not certified as “true” false or misleading information because “Dr. Fonn did not surrender his license; instead, given that he was neither practicing nor intending to practice in Illinois, he simply agreed to allow his Illinois license to be placed upon permanent inactive status.”  *Id*. at 2.  According to Petitioners, “Dr. Fonn’s agreement to place his Illinois license into permanent inactive status, while disciplinary action was pending is not the same as the voluntary surrender of a license during the pendency of a disciplinary proceeding.”  *Id*.  Petitioners further argued, among other things, that the regulations defining “final adverse action,” 42 C.F.R. § 424.502, do not require the disclosure of either permanent inactive status or voluntary surrender.  *Id*. at 7.

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CMS considered Petitioners’ arguments and, on June 28, 2019, issued reconsidered determinations affirming both revocations.  CMS Ex. 7.  CMS found “Dr. Fonn’s voluntary agreement to have his Illinois medical license placed in a permanent inactive status while an official complaint was pending before the IDFPR to be substantially the same as surrendering his license to provide health care while a formal disciplinary proceeding was pending before a State licensing authority.”  *Id*. at 4, 12-13.  CMS further rejected Petitioners’ argument that the definition of “final adverse action” under 42 C.F.R. § 424.502 limited what Petitioners were required to report on their applications.  CMS noted that its revocation authority under 42 C.F.R. § 424.535(a)(4) is based on misleading or false information in an enrollment application being certified as “true” and that the disclosure was required by the applications.  *Id*. at 5, 13.  CMS concluded that by signing and certifying the applications yet failing to disclose the consent order, Petitioners certified as “true” misleading or false information on their respective revalidation applications.  *Id*. at 5, 13-14.

The ALJ Proceedings and Decision

Petitioners requested a hearing before an ALJ to challenge the reconsidered determinations.  CMS filed a prehearing brief (CMS Br.), moved for summary judgment, and filed 12 exhibits (CMS Exs. 1-12).  Petitioners filed a prehearing brief (P. Br.), moved for summary judgment, and submitted one exhibit (P. Ex. 1) consisting of their request for hearing and twenty-one accompanying exhibits.  Petitioners also identified Dr. Fonn as their only witness and submitted Dr. Fonn’s written direct testimony in the form of a declaration.  The ALJ admitted all the exhibits into evidence, including Dr. Fonn’s written direct testimony, without objection.  ALJ Decision at 2.  The ALJ decided the case based on the written record because CMS had not sought to cross-examine Dr. Fonn, the only witness proffered by either party.  *Id*.  Because the case was resolved on the written record, the ALJ ruled the summary judgment motions were moot.  *Id*.

The ALJ found CMS had a legal basis for both revocations under section 424.535(a)(4) because Petitioners certified as true misleading and false information on their respective enrollment applications regarding Dr. Fonn’s Illinois medical license, which had been placed in permanent inactive status due to the Illinois licensing disciplinary proceeding.  ALJ Decision at 1, 5.  The ALJ found Dr. Fonn certified the contents of Dr. Fonn’s CMS-855I application and MWN’s CMS-855B application as true, accurate, and complete, *id.* at 5-6, yet Dr. Fonn failed to disclose on either application Dr. Fonn’s Illinois licensing disciplinary proceedings or that Dr. Fonn’s Illinois medical license was placed in permanent inactive status to resolve those proceedings.  *Id*. at 6.  The ALJ found that the placement of Dr. Fonn’s Illinois medical license into permanent inactive status as a condition of the consent order constitutes a “surrender” of Dr. Fonn’s medical license that Petitioners should have reported on their respective enrollment applications.  *Id*. at 6, 9 (“I find that Dr. Fonn placing his license in permanent inactive status, as part of a consent

Page 7

order to avoid disciplinary action, constituted a surrender of his Illinois medical license.”).

The ALJ explained that Section 3 of the applications required suppliers and providers to report all “final adverse legal actions,” which the applications described as “[a]ny revocation or suspension of a license to provide health care by any State licensing authority[,]” and “[t]his includes the surrender of such a license while a formal disciplinary proceeding [is] pending before a State licensing authority.”  ALJ Decision at 6 (quoting CMS Ex. 3, at 13; CMS Ex. 4, at 13).  In reaching this conclusion, the ALJ relied on the “common and ordinary meaning” of the word “surrender,” which means “to yield to the power, control, or possession of another upon compulsion or demand” and “to give up completely or agree to forgo especially in favor of another.”  *Id*. at 8 (quoting http://www.merriam-webster.com/dictionary/surrender).  The ALJ found that “Dr. Fonn yielded his medical license to [the IDFPR] in order to avoid further disciplinary action,” and whether labeled “surrendered” or “permanent inactive status” the effect is the same, “particularly because the action was taken as a direct result of a disciplinary matter.”  *Id*. at 9.  The ALJ concluded that because Dr. Fonn’s medical license was surrendered as part of a consent order to avoid disciplinary action, that information should have been reported on the enrollment applications.  *Id*.

In making this determination, the ALJ also considered “the purpose of the enrollment applications,” which are “an important tool for verifying the professional integrity and qualifications of physicians and other suppliers seeking to participate in Medicare.”  *Id*. at 7.  The ALJ explained that a supplier’s obligation to provide “[c]omplete, accurate and truthful responses” on enrollment applications “is no mere formality, but a substantive legal obligation intended to strengthen CMS’s ability to protect Medicare and its beneficiaries.”  *Id*. (citations omitted).  The ALJ noted that the Illinois consent order and placement of Dr. Fonn’s medical license in permanent inactive status to avoid further disciplinary proceedings “is precisely the type of information that CMS seeks for applicants to report on enrollment applications.”  *Id*.

Moreover, in rejecting the argument that Dr. Fonn could not have known that the action taken against his license needed to be reported because CMS did not define the term “surrender” in the regulations, the ALJ noted that the consent order itself provided that “‘this Order is a formal disciplinary action reportable to all relevant authorities and entities responsible for licensing and regulation[] of healthcare providers.’”  *Id*. at 8 (quoting CMS Ex. 2, at 3).  The ALJ further rejected Petitioners’ argument that the revocations had no legal basis because Dr. Fonn did not intend to provide false or misleading information to CMS.  *Id*. at 9 (“Dr. Fonn’s intent, or lack thereof, is not relevant in determining whether CMS rightfully revoked Petitioners’ program participation.”) (citing *Sandra E. Johnson, CRNA*, DAB No. 2708, at 15 (2016) and *Mark Koch, D.O.*, DAB No. 2610, at 4-5 (2014)).

Page 8

Board Proceedings

In their amended request for review (RR), Petitioners concede that Dr. Fonn’s Illinois medical license was placed in “permanent inactive status,” and that this fact was not reported on their enrollment applications.  RR at 4.  Petitioners argue, however, that the ALJ erred in concluding that they submitted false or misleading information “by not reporting the voluntary change in the status of Dr. Fonn’s Illinois medical license . . . .”  *Id.* at 2.  According to Petitioners, the ALJ Decision “was wrong” because:

Dr. Fonn’s agreement to place his Illinois medical license in a permanent inactive status in the state of Illinois was not a surrender of his license or a final adverse action under 42 C.F.R. § 424.502;
	CMS failed to provide Dr. Fonn with notice that CMS would interpret a change in his license status to be substantially the same as a surrender; and
	Dr. Fonn provided what appeared to be a complete and accurate disclosure of all final adverse actions; therefore, Petitioners did not submit false and misleading information.*Id*.

In its response, CMS asserts that based on the plain meaning of “surrender,” the ALJ correctly concluded that Dr. Fonn surrendered his license in the Illinois disciplinary action and, regardless of the label used in Illinois, it was necessary for Petitioners to report this fact on their respective enrollment applications.  CMS Br. at 6-8.  CMS also addressed Petitioners’ reliance on the definition of “final adverse action” in 42 C.F.R. § 424.502 as irrelevant to the analysis.  *Id*. at 9.  CMS points out that the information sought in Medicare enrollment applications (*i.e.*, all final adverse legal actions) is not limited to the definition of “final adverse action” in 42 C.F.R. § 424.502.  *Id*.  Moreover, CMS argues that the regulations do not limit CMS to seek only the information in the regulatory definition of “final adverse action”; rather, under the regulations CMS is entitled to “‘[c]omplete, accurate, and truthful responses to *all information requested within each section [of the application] applicable to the provider or supplier* *type*.’”  *Id.* (quoting 42 C.F.R. § 424.510(d)(2)(i)) (emphasis by CMS).

Petitioners filed a reply brief (P. Reply) accompanied by three new exhibits:  (1) a letter from the Missouri Department of Social Services, dated September 16, 2022, rescinding the payment suspension and termination of Dr. Fonn under Medicaid (P. Reply Ex. 1); (2) a letter from the Office of Inspector General (I.G.), dated September 19, 2022, withdrawing the exclusion of Dr. Fonn from all federal health care programs (P. Reply Ex. 2); and (3) a heavily redacted email exchange between counsel for CMS and

Page 9

Petitioners, dated October 3, 2022, referring to unspecified “rescissions” (P. Reply Ex. 3).  In their reply, Petitioners argue that the ALJ Decision should be reversed based on the “very recent” decision of the Eighth Circuit Court of Appeals, *see* *supra* n.5, which reversed a civil judgment against Petitioners and remanded that case for a new trial.  P. Reply at 1.  Petitioners assert that “Dr. Fonn entered the Consent Order in light of the Civil Judgment,” which has now been reversed.  *Id*. at 2.  Petitioners point out that the reversal of the civil judgment has since resulted in the termination or rescission of other legal actions involving Dr. Fonn.  *Id*. (citing P. Reply Exs. 1-3).  Accordingly, Petitioners request that the Board either reverse the ALJ Decision or remand this matter to the ALJ to consider the fact that the civil judgment has been reversed.  *Id*. at 6.

The Board issued an order requesting that CMS file a sur-reply responding to Petitioners’ newly raised issues and arguments, including CMS’s position on whether the newly submitted evidence is admissible.  Request for Suppl. Briefing (10/7/22) at 2.  Before CMS filed its sur-reply, Petitioners filed, without leave, a supplemental reply brief (P. Suppl. Reply) accompanied by three more new exhibits (Suppl. Reply Exs. 4, 5, 6).  Petitioners proffered the supplemental reply and additional exhibits based on a “significant development” and in further “support of their request for a remand.”  P. Suppl. Reply at 1.  The new exhibits consist of three ALJ rulings involving MWN and two other entities; these rulings remanded to CMS revocation determinations that were based on exclusions which were later withdrawn by the I.G.  P. Suppl. Reply Exs. 4, 5, 6.

CMS subsequently filed a sur-reply arguing that the Board may not admit evidence into the record that was not introduced at the ALJ hearing and, in any event, the new evidence is irrelevant.  CMS Sur-Reply at 1 (citing 42 C.F.R. § 498.86).  CMS argues that none of the new exhibits or events referenced therein – including the Eighth Circuit’s decision – has any relevance because the revocations in this case were based on false certifications Dr. Fonn made at the time Petitioners submitted their revalidation applications and the subsequent decision of the Eighth Circuit does not change the fact that the applications were false when they were submitted.  *Id*. at 1-2, 4.

Standard of Review

The standard of review on a disputed factual issue is whether the ALJ’s decision is supported by substantial evidence in the record as a whole.  The standard of review on a disputed issue of law is whether the ALJ’s decision is erroneous.  *See* *Guidelines – Appellate Review of Decisions of Administrative Law Judges Affecting a Provider’s or Supplier’s Enrollment in the Medicare Program* (“*Guidelines*”), available at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/enrollment/index.html?language=en.

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Analysis

On review of a determination to revoke a Medicare supplier’s billing privileges, an ALJ and the Board “decide only whether CMS has established a lawful basis for the revocation.”  *Cornelius M. Donohue, DPM*, DAB No. 2888, at 4 (2018).  Although the regulation affords CMS discretion to revoke or not revoke in a particular case, the role of the ALJ and the Board “is limited to determining whether CMS’s action is legally authorized and does not extend to second-guessing whether CMS properly exercised its discretion . . . .”  *Acute Care Homenursing Servs., Inc.*, DAB No. 2837, at 9 (2017).  Thus, if the regulatory elements for revocation are satisfied, “then the revocation must be sustained.”  *Douglas Bradley, M.D.*, DAB No. 2663, at 13 (2015).  Here, the ALJ upheld the revocation of Petitioners’ billing privileges under section 424.535(a)(4) because Petitioners failed to disclose a “final adverse legal action” relating to Dr. Fonn’s Illinois medical license while certifying that the information on their enrollment applications was true, correct, and complete.

****The new evidence Petitioners submitted to the Board is inadmissible.****As noted above, Petitioners submitted to the Board six new exhibits that they did not introduce before the ALJ.  The regulations governing supplier revocation appeals such as this preclude the Board from admitting evidence into the record that was not introduced at the ALJ hearing.  *See* 42 C.F.R. § 498.86(a) (“*Except for provider or supplier enrollment appeals*, the Board may admit evidence into the record in addition to the evidence introduced at the ALJ hearing . . . if the Board considers that the additional evidence is relevant and material to an issue before it.”) (emphasis added); *Michael Scott Edwards, OD*, *et al.*, DAB No. 2975, at 8 n.10 (2019) (“By regulation, the Board decides appeals involving enrollment (and revocation) on the evidentiary record on which the ALJ decided the case.”); *Chaplin Liu, M.D.*, DAB No. 2976, at 9 n.4 (2019) (excluding evidence not proffered to the ALJ).  Accordingly, we do not consider this new evidence in rendering this decision.8

Even if we could consider admitting the evidence, we would exclude it as irrelevant and immaterial.  The Eighth Circuit decision reversing the civil judgment against Petitioners has no bearing on the validity of the revocations in this case.  Petitioners’ revocations were triggered not by the civil judgment against Petitioners or the Illinois consent order that followed, but by the *failure to report* the Illinois consent order and placement of Dr. Fonn’s Illinois medical license into permanent inactive status.  The merits of the civil judgment and the reasons why Dr. Fonn entered into the consent order are irrelevant.  None of the new exhibits submitted by Petitioners with their reply and supplemental reply change the uncontroverted fact that Petitioners failed to disclose the Illinois consent

Page 11

order and placement of Dr. Fonn’s Illinois medical license into permanent inactive status on their respective enrollment applications.  Accordingly, we find no reason to remand this matter to the ALJ to consider that the civil judgment has been reversed.

**The ALJ’s determination that CMS had a lawful basis to revoke Petitioners’ billing privileges under 42 C.F.R. § 424.535(a)(4) is supported by substantial evidence and free of legal error.**Revocation of a supplier’s billing privileges is authorized if the supplier “certified as ‘true’ misleading or false information on the enrollment application to be enrolled or maintain enrollment in the Medicare program.”  42 C.F.R. § 424.535(a)(4).  To ensure that Medicare enrolls only qualified and trustworthy suppliers, the program’s regulations require suppliers:  to provide “[c]omplete, accurate, and truthful responses to all information requested within each section” of the application (*id*. § 424.510(d)(2)(i)); to provide the responses “on the applicable enrollment application” (*id.*§ 424.510(a)(1)); and to certify, by a signature on the application, that the information provided therein is “accurate” (*id.*§ 424.510(d)(3)).  Moreover, the information submitted on the enrollment application “must be such that CMS can validate it for accuracy at the time of submission.”  *Id*. § 424.510(d)(4).

“[I]f a supplier submits a signed application and fails to list a final adverse legal action on the application, then the supplier will have certified as true information concerning their adverse legal history that is manifestly *not* ‘complete, accurate, and truthful,’ but rather false or misleading.”  *William* *Garner, M.D.*, DAB No. 3026, at 9 (2020) (emphasis in original).  “An incomplete response certified to be ‘true, correct, and complete’ is, by definition, ‘false’ because it is incomplete[;]” and “an incomplete response may be ‘misleading’ because it has a tendency to ‘create a false impression.’”  *Id*. at 13 (citations omitted).  In such circumstances, CMS is authorized to revoke a supplier’s Medicare billing privileges under 42 C.F.R. § 424.535(a)(4).  *See, e.g., Dennis McGinty, PT*, DAB No. 2838, at 6, 8 (2017) (upholding revocation where supplier certified enrollment application to be true and complete yet failed to report a final adverse legal action), *aff’d*, No. 3:18-CV-359, 2019 WL 3034596 (N.D. Tex. July 11, 2019); *Garner* at 9 (upholding revocation where supplier certified that revalidation application was true and complete but “omitted the fact that his California medical license had been revoked”).

Petitioners do not challenge the ALJ’s first two findings of fact and conclusions of law:  that Dr. Fonn “certified the contents of the forms CMS-855I and CMS-855B as true, accurate, and complete[;]” and that “[t]he forms CMS-855I and CMS-855B do not disclose Dr. Fonn’s Illinois state licensing proceedings or that his medical license was placed into permanent inactive status to resolve that disciplinary proceeding.”  *See* ALJ Decision at 5-6.  Petitioners, however, argue that the ALJ Decision was erroneous because they neither provided nor certified as “true” false or misleading information.  RR at 1-2.  According to Petitioners, “Dr. Fonn’s agreement to place his Illinois medical

Page 12

license in a permanent inactive status in the state of Illinois was not a surrender of his license or a final adverse action under 42 C.F.R. § 424.502.”  *Id*. at 2.  Petitioners further argue that CMS failed to provide notice that it would “interpret” a change in license status “to be substantially the same as a surrender.”  *Id*.  We reject each of these arguments for the reasons explained below.

**The placement of Dr. Fonn’s Illinois medical license in permanent inactive status pursuant to the consent order was a “final adverse legal action” that Petitioners were required to disclose on their Medicare enrollment applications.**Section 3 of Petitioners’ revalidation applications required the disclosure of all “final adverse legal actions, such as convictions, exclusions, revocations, and suspensions.”  CMS Ex. 3, at 13; CMS Ex. 4, at 13.  Under the subheading “Exclusions, Revocations, or Suspensions,” Section 3 further specified that “final adverse legal actions” included:  “Any revocation or suspension of a license to provide health care by any State licensing authority.  This includes the surrender of such a license while a formal disciplinary proceeding was pending before a State licensing authority.”  CMS Ex. 3, at 13; CMS Ex. 4, at 13.

We find no error in the ALJ’s finding that the placement of Dr. Fonn’s medical license into permanent inactive status, as part of a consent order to avoid further disciplinary action, constituted a surrender of Dr. Fonn’s Illinois medical license that should have been reported on the enrollment applications.  ALJ Decision at 6, 9.  Although the term “surrender” is undefined in the regulations, we find no error in the ALJ giving this unambiguous word its “common and ordinary meaning.”  *Id*. at 7 (quoting *Robert C. Hartnett*, DAB No. 2740, at 9 n.7 (2016)); *see also* *Akram A. Ismail, M.D.*, DAB No. 2429, at 10-11 (2011) (interpreting the phrase “any adverse legal action” according to its plain language and consistent with the goals of the relevant revocation provision).  As the ALJ found, “surrender” means “to yield to the power, control, or possession of another upon compulsion or demand” and “to give up completely or agree to forgo especially in favor of another.”  ALJ Decision at 8 (citation omitted).9  Applying the common and ordinary meaning of “surrender,” the ALJ found “Dr. Fonn yielded his medical license to [the IDFPR] to avoid further disciplinary action.”  *Id*. at 9.  Regardless of the label used in Illinois, Dr. Fonn relinquished the right to practice medicine in Illinois as a direct result of the disciplinary action brought against him.  Given the plain and ordinary meaning of “surrender,” we find no error in the ALJ’s determination that Dr. Fonn’s medical license was surrendered to avoid further disciplinary action and that this information should have been reported on the enrollment applications, which

Page 13

expressly define “revocation or suspension” of a state medical license to include “the surrender of such a license while a formal disciplinary proceeding was pending before a State licensing authority.”  *Id*. at 6, 9; *see also* CMS Ex. 3, at 13; CMS Ex. 4, at 13.

Petitioners argue that the Illinois consent order “should not be seen as a surrender of [Dr. Fonn’s] license or as an adverse proceeding” because Dr. Fonn “had not practiced in Illinois for over three years” and “believed he could reapply to the state.”  RR at 6.    Petitioners further assert that Dr. Fonn’s medical license was not “surrendered” because Dr. Fonn entered into the consent order voluntarily, not by “compulsion or demand.”  *Id*. at 7.  The record evidence, however, plainly contradicts Petitioners’ characterization of the Illinois disciplinary proceedings and resulting consent order.  Dr. Fonn was the subject of a licensing complaint “alleging multiple violations of the Illinois Medical Practice Act” and had that matter proceeded to a contested hearing, the Illinois Medical Disciplinary Board could have found a violation of the Medical Practice Act.  CMS Ex. 2, at 1.  “[I]n order to resolve that matter,” Dr. Fonn agreed to “the imposition of disciplinary measures,” which included placing Dr. Fonn’s active Illinois medical license into “permanent inactive status.”  *Id*. at 2-3.  Thus, regardless of when Dr. Fonn last practiced medicine in Illinois, there is no serious question that Dr. Fonn was the subject of a formal disciplinary proceeding and was compelled to give up an active Illinois medical license to resolve that proceeding.

Petitioners further contend that there could be no surrender because Dr. Fonn did not “give up completely” in that Dr. Fonn did not concede to the allegations in the Illinois licensing complaint.  RR at 7.  This too is belied by the record evidence.  While Dr. Fonn initially filed an answer denying the allegations in the complaint, after the federal court entered a civil judgment against Petitioners, Dr. Fonn agreed to the terms of the consent order and, by doing so, waived any right to contest the allegations of the licensing complaint at a formal hearing.  CMS Ex. 2, at 2.  Moreover, whether Dr. Fonn conceded the allegations in the licensing complaint is beside the point; the point is that Dr. Fonn gave up an active license to practice medicine in Illinois to avoid further disciplinary action.  ALJ Decision at 6, 9.

We further reject Petitioners’ assertion that the consent order was a mere “settlement agreement” where Dr. Fonn had the “ability to apply for readmission.”  RR at 6.  The consent order was a “formal disciplinary action” reportable to all authorities “responsible for the licensing and regulation of healthcare providers.”  CMS Ex. 2, at 3.  Nothing in the consent order provided a right to “apply for readmission.”  Still further, Petitioners presented no legal authority to support their assertion that Dr. Fonn could regain the right to practice medicine in Illinois by simply applying for “readmission.”  In fact, contrary to

Page 14

Petitioners’ assertion, the IDFPR reported that the adverse action taken against Dr. Fonn’s medical license was “permanent.”  P. Ex. 1, at 165.10

Petitioners came forward with no legal authority demonstrating any material difference between surrendering an active medical license and placing an active medical license in permanent inactive status.  The ALJ could discern no difference and concluded that Dr. Fonn surrendered (*i.e.*, yielded) his Illinois medical license as part of the consent order to avoid further disciplinary action.  ALJ Decision at 9.  Still further, in terms of potential disciplinary actions, the IDFPR groups “Relinquished, Surrendered, or Permanent Inactive” together, providing the same definition for all three actions.  *See* CMS Ex. 8 (“Definitions of Disciplinary Actions”), at 2 (“These terms may or may not be considered discipline; however, a licensee in one of these statuses is not currently authorized to practice in Illinois.  License lookup will indicate whether or not the status is disciplinary.”).11  Here, Dr. Fonn’s status is “disciplinary” based on the terms of the consent order.  CMS Ex. 2, at 3 (“[T]his Order is formal disciplinary action . . . .”).  Thus, regardless of the label, Dr. Fonn gave up an active medical license under the express terms of the consent order such that he is no longer authorized to practice medicine in Illinois.  *Id*.  This was done while formal disciplinary proceedings were pending against Dr. Fonn before a State licensing authority and for the express purpose of resolving that proceeding.  *Id*. at 1-2.  Under these circumstances, we find no error in the ALJ’s conclusion that the placement of Dr. Fonn’s Illinois medical license into “permanent inactive status” pursuant to the consent order was a “final adverse legal action” that Petitioners should have reported on their Medicare enrollment applications.

**Petitioners were on notice regarding the meaning of “final adverse legal action” based on the plain language of the enrollment applications.**Petitioners further contend that the ALJ ignored their argument that “CMS’s regulations did not provide Dr. Fonn with fair notice that CMS would consider a license in inactive status the same as a surrendered license.”  RR at 7.  Focusing on the definition of “final adverse action” under 42 C.F.R. § 424.502, Petitioners argue that the regulatory definition includes the suspension or revocation of a state medical license, but not “a physician’s decision to place his license into an inactive status nor the voluntary surrender of a license.”  RR at 9-10.  The issue in this case does not turn on any

Page 15

regulatory definition and, in any event, CMS did not decide that an “inactive” license is the same as a surrendered license.  Petitioners’ argument misconstrues both the ALJ Decision and the context in which Dr. Fonn entered into the consent order.

First, Dr. Fonn did not decide to merely change the status of his Illinois medical license because it was not being used.  Rather, Dr. Fonn was compelled to give up an active Illinois medical license to resolve a disciplinary proceeding alleging multiple violations of the Illinois Medical Practice Act.  *See supra* II.A at 14-15.  This was not a mere change in status, but a formal and “permanent” disciplinary action taken as a direct result of a disciplinary proceeding pending before a State licensing authority.  *Id*.  Thus, neither CMS nor the ALJ determined that an inactive medical license, devoid of any disciplinary proceedings, is the same as a surrendered license.

Second, Petitioners’ focus on the definition of “final adverse action” in section 424.502 misses the mark.  “Final adverse action” is not the phrase used in Section 3 of the applications; rather, the applications use the term “final adverse legal action” and describe in detail what is meant by that phrase and what information Medicare applicants are expected to report.  CMS Ex. 3, at 13-14; CMS Ex. 4, at 13, 27.  Neither application asked whether Petitioners had a “final adverse action” as defined in section 424.502.12   Rather, the applications specifically asked whether Petitioners ever had a “final adverse legal action” as defined in the applications themselves.  CMS Ex. 3, at 13-14; CMS Ex. 4, at 13, 27.  Moreover, nothing in the regulations or applications limited CMS to only ask about “final adverse actions” as defined in section 424.502.  Rather, the applications expressly inquired about any revocation or suspension of a state license to provide health care, and “[t]his includes the surrender of such license while a formal disciplinary proceeding was pending before a State licensing authority.”  CMS Ex. 3, at 13; CMS Ex. 4, at 13.

Petitioners quote from several federal court decisions that articulate the limits due process places on an agency’s ability to interpret its own regulations.  RR at 8.  Petitioners state that while an agency’s interpretation of its own regulations is entitled to deference, “‘when regulations can reasonably be interpreted in a way other than the agency does, the agency must give regulated entities notice before enforcing requirements based on that interpretation.’”  *Id.* at 8 (quoting *Hosp. of Univ. of Penn. v. Sebelius*, 847 F. Supp. 2d 125, 135-37 (D.D.C. 2012)).  Petitioners assert that when the meaning of a regulation “is

Page 16

not clear on a reasonably objective basis, then the regulations should be changed so that no ambiguity remains.”  *Id*. (citing *Dir., Office of Workers’ Comp. Programs, U.S. Dep’t of Labor v. Mangifest*, 826 F.2d 1318, 1334 (3d Cir. 1987) (Weis, J., concurring)).  This case, however, does not involve any question of an agency’s interpretation of its own regulations.  Nor have Petitioners identified any ambiguity in any regulation that would be material to this case.

Absent any ambiguity in the meaning of the term “surrender,” the ALJ gave the word its common and ordinary meaning.  ALJ Decision at 7.  To the extent Petitioners contend that the word “surrender” is ambiguous, Petitioners have not proffered an alternative definition of the term that would alter the ALJ’s analysis or conclusion.  Nor is the term “surrender” ambiguous merely because CMS has not developed a regulatory definition for the term.  *Cf*. *Ismail*, DAB No. 2429, at 10 (upholding ALJ’s interpretation of the phrase “any adverse legal action” according to the ordinary and usual meaning of the individual words where the regulations did not provide a definition).  We find no basis for Petitioners’ assertion that the absence of a federal regulation defining the word “surrender,” as used in Section 3 of the enrollment applications, somehow deprived Petitioners of “fair notice” that the ALJ (or CMS) would interpret the term according to its plain and ordinary meaning.

Lastly, Petitioners argue that Dr. Fonn provided “what appeared to be” a complete and accurate disclosure and “did not ‘deliberate[ly]’ omit or falsify information.”  RR at 2, 6 (citing Fonn Decl. at ¶¶ 10-13).  Petitioners contend that because Dr. Fonn did not read the applications as requiring the disclosure of the consent order and the formal disciplinary action imposed therein, he did not certify as “true” false or misleading information.  *Id*. at 6-7.  “A supplier’s subjective intentions in failing to report adverse legal history, or a supplier’s good-faith but erroneous belief that it was compliant with its reporting obligations, is immaterial in evaluating whether CMS had a legal basis to revoke billing privileges under section 424.535(a)(4).”  *Garner* at 14.  As the ALJ found, Dr. Fonn’s subjective intent is not relevant to determining whether CMS had the authority to revoke Petitioners’ billing privileges.  ALJ Decision at 9 (“[Section] 424.535(a)(4) ‘does not require proof that [the applicant] subjectively intended to provide false information, only proof that he *in fact provided*misleading or false information that he certified as true.”) (quoting *Sandra E. Johnson, CRNA*, DAB No. 2708, at 15 (2016) (quoting *Mark Koch, D.O.*, DAB No. 2610, at 4-5 (2014)) (emphasis in *Koch*).  We find no error in the ALJ’s determination.

Page 17

Conclusion

For the reasons stated above, we affirm the ALJ Decision.

Endnotes

1 We apply the regulations in 42 C.F.R. Part 424 in effect at the time of the revocations.  *See* *John P. McDonough III, Ph.D.*, DAB No. 2728, at 2 n.1 (2016).

2 CMS administers the Medicare program in part through private contractors who perform certain program functions on CMS’s behalf, including the enrollment of providers and suppliers in Medicare.  Social Security Act §§ 1816, 1842, 1874A; 42 C.F.R. §§ 421.5(b), 421.404(c).

3 The factual information in this section is drawn from the ALJ Decision and the record before the ALJ and is not intended to add to or modify the ALJ’s findings.

4 Neither party submitted a copy of the complaint.  Although the consent order refers to the complaint as an exhibit (CMS Ex. 2, at 1), the copies of the consent order in the record include no attachments.

5 On July 26, 2022, after this appeal was docketed with the Board, the United States Court of Appeals for the Eighth Circuit reversed the civil judgment against Dr. Fonn, MWN, and other defendants, and remanded the case to the district court for a new trial.  *See United States v. D.S. Medical LLC*, 42 F.4th 828, 837 (8th Cir. 2022) (reversing and remanding for a new trial on the ground that the district court provided an incorrect jury instruction).  As discussed below, the Eighth Circuit’s reversal and remand, whatever its relevance to other matters, has no bearing on this matter.

6 Before the ALJ, Petitioners submitted a single “exhibit” (P. Ex. 1) consisting of their request for hearing and twenty-one individual exhibits.  Petitioners did not separate the twenty-one exhibits and, therefore, we cite to P. Ex. 1 by its PDF page numbers.

7 This application asked whether Dr. Fonn “ever had a final adverse legal action listed on page 13” of the application.  CMS Ex. 4, at 27.  The reference to page 13 is a typographical error because the listing of final adverse legal actions appears on page 12 of the application.  *Id*. at 13.

8 The new exhibits are retained in the administrative record but are not admitted to the record for decision.

9 The dictionary definition relied on by the ALJ is consistent with definitions appearing in multiple sources.  *See, e.g.*, American Heritage Dictionary of the English Language, Fifth Edition:  “surrender,” (1) “To relinquish possession or control of (something) to another because of demand or compulsion;” (2) “To give up in favor of another, especially voluntarily.”  https://www.thefreedictionary.com/surrender.

10 Even if Dr. Fonn could apply for reinstatement in the future, this would not change the fact that Dr. Fonn retained no license to practice medicine in Illinois under the terms of the consent order.  CMS Ex. 2.  In other words, Dr. Fonn gave up completely the right to practice medicine in Illinois effective October 25, 2018.  *Id*.

11 While these definitions provide some evidence that surrender and permanent inactive status fall within the same category of disciplinary action according to the IDFPR, we recognize that the definitions are not dispositive or legally binding in Illinois.  CMS Ex. 8, at 2 (“These definitions are provided for general information only and may not be completely accurate in every circumstance, do not purport to be legal advice, and are not intended to be legally binding on the [IDFPR] in a particular case.”).

12 Petitioners assert that the Board “routinely looks” to the definition of “final adverse action” under 42 C.F.R. § 424.502 when “interpreting” whether a Medicare applicant has made adequate disclosures under Form 855.  RR at 10, n.5 (citing *Breton L. Morgan, M.D., Inc. and Breton L. Morgan, M.D.*, DAB No. 2933 (2019)).  *Morgan*involved no such interpretation.  Rather, the Board held there was no dispute that the supplier’s felony conviction was a final adverse legal action as stated in Section 3 of the CMS-855I enrollment application, and the “plain terms of the application” required the petitioners to report it.  *Morgan* at 8.  The Board did not suggest in *Morgan* (or any other decision) that the definition of “final adverse action” under 42 C.F.R. § 424.502 may be employed to limit the meaning of “final adverse legal action” as stated in Section 3 of the Form 855 application.
  
          /s/
        Christopher S. Randolph

                      Board Member
          /s/
        Jeffrey Sacks

                      Board Member
          /s/
        Michael Cunningham

                      Presiding Board Member Back to top
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