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                              Union Pharmacy and Medical Supplies, Inc., DAB No. 3062 (2022)
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Union Pharmacy and Medical Supplies, Inc., DAB No. 3062 (2022)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Appellate Division





Union Pharmacy and Medical Supplies, Inc.
Docket No. A-22-23Decision No. 3062May 3, 2022

        
              
    

      FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DISMISSAL

Union Pharmacy and Medical Supplies, Inc. (Petitioner), a company that was enrolled in the Medicare program as a supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), requests review of the November 5, 2021 dismissal of the Administrative Law Judge (ALJ).  *Union Pharmacy and Medical Supplies, Inc.*, Docket No. C-21-985 (ALJ Dismissal).  The ALJ concluded that, by not responding to the ALJ’s Order to Show Cause to explain why Petitioner failed to file its prehearing exchange in compliance with the ALJ’s earlier instructions, Petitioner abandoned its request for hearing and, accordingly, dismissed Petitioner’s request for hearing.  Petitioner requests review of the ALJ Dismissal by the Board.  For the reasons explained below, we affirm the ALJ’s dismissal of Petitioner’s hearing request.

Background1

DMEPOS suppliers that enroll in Medicare and receive billing privileges must comply with the payment conditions in 42 C.F.R. Part 424.  Within Part 424 is section 424.57, captioned “Special payment rules for items furnished by DMEPOS suppliers and issuance of DMEPOS supplier billing privileges.”  Section 424.57(c) sets out “certification standards.”  As relevant here, Standard 21 requires DMEPOS suppliers to “[p]rovide[ ] to CMS, upon request, any information required by the Medicare statute [Social Security Act (Act)] and implementing regulations.”  42 C.F.R. § 424.57(c)(21).  Standard 22 requires DMEPOS suppliers to “be accredited by a CMS-approved accreditation organization in order to receive and retain a supplier billing number.  The accreditation must indicate the specific products and services, for which the supplier is accredited . . . .”  *Id*. § 424.57(c)(22).

**Page 2**

The Centers for Medicare and Medicaid Services (CMS) regulates the Medicare program, including the enrollment of DMEPOS suppliers, and delegates certain program functions to private contractors that function as CMS’s agents in administering the program.  *See*Act §§ 1816, 1842, 1866(j)(1)(A), 1874A; 42 C.F.R. Part 421, subpart E.  CMS, through its contractors, may revoke a DMEPOS supplier’s billing privileges for the failure to meet the certification standards.  42 C.F.R. § 424.57(e)(1).

By initial determination dated May 19, 2021, a CMS contractor revoked Petitioner’s billing privileges on the grounds that Petitioner was not compliant with three section 424.57(c) standards, two of which were the standards in sections 424.57(c)(21) and 424.57(c)(22).  CMS Ex. 2, at 1-2.  The contractor did so after Petitioner failed to furnish, on request, documentation proving compliance with the standards.  *See id.*  Petitioner submitted a reconsideration request (CMS Ex. 2) in accordance with 42 C.F.R. §§ 498.5(l)(1) and 498.22(a).  By reconsidered determination dated July 9, 2021, the contractor upheld the revocation of Petitioner’s billing privileges for failure to comply with sections 424.57(c)(21) and 424.57(c)(22).  CMS Ex. 3, at 2, 5-6.

ALJ Proceedings and Dismissal

On July 30, 2021, Petitioner requested a hearing before an ALJ to contest the reconsidered determination in accordance with 42 C.F.R. §§ 498.5(l)(2) and 498.40.

On August 4, 2021, the ALJ issued an Acknowledgment and Pre-Hearing Order that, among other things, sets out the dates by which each party must file its prehearing exchange (prehearing brief, list of proposed exhibits, list of witnesses (if any), and copies of the proposed exhibits).  Pre-Hearing Order at 3-4.  The ALJ notified the parties that she may impose a sanction against a party for failure to comply with the instructions in her order.  *Id*. at 6.

On October 21, 2021, the ALJ issued an Order to Show Cause2
 stating that, to date, the ALJ had not received Petitioner’s prehearing exchange.3
  Order to Show Cause at 1.  The ALJ stated that, “Petitioner’s apparent failure to comply with the [Pre-Hearing] Order indicates that it may have abandoned its hearing request.”  *Id*.  The ALJ informed Petitioner that she “may dismiss [its] request for hearing where [it] abandons the request and fails to respond to an order to show cause why its request for hearing should not be dismissed.”  *Id*. (citing 42 C.F.R. § 498.69(a) (“The ALJ may dismiss a request for hearing if it is abandoned by the party that requested it.”) and 498.69(b)(2) (stating that

**Page 3**

the ALJ “may” consider the request for hearing to be abandoned if the appealing party or its representative “[f]ails to respond, within 10 days after the ALJ sends a ‘show cause’ notice, with a showing of good cause”)).  The ALJ ordered Petitioner to submit a written response, by November 4, 2021, stating whether it intends to pursue its appeal and, if so, explaining why it failed to comply with her Pre-Hearing Order, and including its prehearing exchange with its response.  *Id*.  “If Petitioner does not intend to pursue [its] appeal further,” the ALJ wrote, “Petitioner must file written notice withdrawing the request for hearing.”  *Id*.  The ALJ notified Petitioner that she “will” dismiss the request for hearing if Petitioner does not timely respond to her Order to Show Cause.  *Id*. at 2.

Having received no response to her Order to Show Cause, on November 5, 2021, the ALJ dismissed Petitioner’s request for hearing.  The ALJ wrote, “Petitioner has not responded to my order to show cause, and I conclude that it has abandoned the hearing request.”  ALJ Dismissal at 1 (citing 42 C.F.R. § 498.69(a), (b)(2)).

Board Proceedings

Petitioner (which is not represented by an attorney) timely requested Board review of the ALJ Dismissal4
 pursuant to 42 C.F.R. §§ 498.80 and 498.82(a) by submitting to the Board copies of its one-page request for a hearing before an ALJ and the ALJ Dismissal.5
  In the request for hearing, Petitioner’s President indicated that she misunderstood the “legal wording” of the “requisites” (apparently referring to the certification standards) and referred to “the lack of office personnel due to the COVID-19 [pandemic].”  Petitioner’s submission to the Board of the two items communicates Petitioner’s desire for Board review of the ALJ Dismissal; however, Petitioner’s submission of a copy of the request for ALJ hearing to the Board does not tell the Board what about the *ALJ Dismissal* Petitioner disagrees with and why.  Accordingly, the Presiding Board Member gave Petitioner an opportunity to supplement its initial submission.  The Board’s December 21, 2021 letter acknowledging the appeal (sent to both parties by DAB E-File) stated in part:

**Page 4**

The only issue before the Board in this appeal is whether the ALJ’s November 5, 2021 dismissal of Petitioner’s request for hearing should be upheld. . . .  In accordance with 42 C.F.R. § 498.82(b), “[a] request for review of an ALJ decision or dismissal must specify the issues, the findings of fact or conclusions of law with which the party disagrees, and the basis for contending that the findings and conclusions are incorrect.”  This means that an appellant . . . must specify what in an ALJ’s dismissal appellant disagrees with and explain why appellant believes the ALJ erred or abused her discretion in dismissing a request for hearing.  We note that Petitioner filed its request for review on December 13, 2021, before the appeal deadline, which is January 4, 2022.  Accordingly, we will allow Petitioner an opportunity to supplement its December 13, 2021 submission with a brief or statement that is responsive to the question of whether the ALJ’s dismissal should be upheld and comports with the content requirements of section 498.82(b).  Any such submission must be uploaded to DAB E-File on or before January 4, 2022.

Acknowledgment Letter at 1-2 (emphases removed).

Petitioner timely filed a brief statement (P. Supp.) in which its President wrote:

The ALJ should have given more consideration to the letter I previously wrote stating my lack of office person[ne]l . . . [d]ue to the pandemic.[6
]  We have faced serious issues of lack of employees some being infected with Covid 19 and some working on other areas of customer assistance w[h]ere it was most important.  We have been Medicare providers since April 20, 2009 serving our elderly community with pride and integrity.  I also would like you to take into consideration that this DAB E-File has been a little difficult to comprehend. . . .

CMS timely filed a response brief.  CMS urges the Board to affirm the ALJ Dismissal because the ALJ “properly exercised her discretion in dismissing [Petitioner’s] hearing request as abandoned.”  CMS Response Br. at 3 (emphasis removed) (citing 42 C.F.R. § 498.69 and other authorities).

**Page 5**

Standard of Review

The standard of review for disputed issues of law is whether the ALJ decision is erroneous.  The standard of review for disputed issues of fact is whether the ALJ decision is supported by substantial evidence on the record as a whole.  *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.

“The standard of review for an ALJ’s exercise of discretion to dismiss a hearing request where such dismissal is committed by regulation to the discretion of the ALJ is whether the discretion has been abused.”  *High Tech Home Health, Inc.*, DAB No. 2105, at 8 (2007), *aff’d*, *High Tech Home Health, Inc. v. Leavitt*, Civ. No. 07-80940 (S.D. Fla. Aug. 15, 2008).  “The Board has long recognized that where the regulation states that an ALJ ‘may’ dismiss, dismissal is an exercise of discretion and reviewable as such.”  *Meridian Nursing & Rehab at Shrewsbury*, DAB No. 2504, at 7 (2013), *aff’d*, *Meridian Nursing & Rehab at Shrewsbury v. Ctrs. for Medicare & Medicaid Servs*., 555 F. App’x 177 (3d Cir. 2014).

Analysis

Petitioner does not explain specifically why it asserts the ALJ erred or abused her discretion.  Petitioner does not dispute that it failed to file its prehearing exchange and to respond to the ALJ’s Order to Show Cause.7
  Petitioner does not express disagreement with the ALJ’s construing its failure to respond to her Order to Show Cause as abandonment of its appeal.

Petitioner’s statements about misunderstanding the DMEPOS supplier certification standards, staffing shortage attributed to the pandemic, and difficulty using DAB E-File, collectively, imply, at best, that Petitioner was laboring under constraints and did not intend to abandon its appeal.  However, “[t]he relevant standard is not whether [petitioner’s] inaction resulted from intentional disregard but whether the ALJ abused [his or her] discretion in dismissing the case based on that inaction.”  *Consol. Comm’ty Res., Inc.*, DAB No. 2676, at 4 (2016).

**Page 6**

With respect to Petitioner’s statement in its supplemental submission (P. Supp.) that “[t]he ALJ should have given more consideration” to Petitioner’s staffing issues, if by this statement Petitioner is asserting that the ALJ erred or abused her discretion in dismissing its request for hearing given Petitioner’s circumstances, we note that the ALJ issued her dismissal consistent with sections 498.69(a) and (b)(2) (cited in the Order to Show Cause and ALJ Dismissal), which authorize the ALJ to dismiss a request for hearing as abandoned if, as here, a party fails to respond to an order to show cause within 10 days.  To the extent the statements in the supplemental submission, read together, could be understood as a (belated) explanation that Petitioner was unable to comply with the ALJ’s Pre-Hearing Order due to, among other things, staffing issues, we note that Petitioner could have given that explanation to the ALJ and asked the ALJ to extend the due date for submitting its prehearing exchange to avoid the sanctions the ALJ stated could be imposed on a party that fails to comply with her instructions.8
  *See Consol. Comm’ty Res.*, DAB No. 2676, at 5 (“a good cause statement should first be made before the ALJ for his or her discretionary determination as to any merit”).9
  Petitioner, moreover, did not use its opportunity to respond to the Order to Show Cause by the date the ALJ had set to explain why it had good cause for not submitting a prehearing exchange.  If Petitioner had any problems, including staffing issues, that impeded its ability to respond to the Order to Show Cause by the due date, it could have offered that explanation to the ALJ after the ALJ issued her dismissal in accordance with section 498.72 so that the ALJ could determine whether the explanation established sufficient grounds for vacating the dismissal.

As for Petitioner’s statement that “DAB E-File has been a little difficult to comprehend” (P. Supp.), Petitioner does not specify what was “a little difficult to comprehend” or what if any problems Petitioner had encountered in using DAB E-File.  Importantly, Petitioner does not state that difficulty using DAB E-File impeded its ability to follow the ALJ’s instructions while the appeal was pending before the ALJ.  Petitioner, moreover, does not assert, and the record does not reflect, that Petitioner sought help in using DAB E-File

**Page 7**

from the ALJ’s office while its appeal was pending before the ALJ in furtherance of timely complying with the ALJ’s orders.10

Petitioner also states that it has been a Medicare provider since 2009.  The Board is “mindful of the fact that, in affirming the ALJ’s exercise of discretion to dismiss [the request for hearing], we are foreclosing [petitioner’s] right to [ALJ] review of” the revocation of billing privileges.  *Axion Healthcare Services, LLC*, DAB No. 2783, at 5 (2017).11
  However, “[a]s the Board stated in *Guardian Care Nursing & Rehab. Ctr.*, DAB No. 2260, at 21 (2009), we have [an] ‘overarching responsibility to ensure the efficiency and integrity of proceedings before the Departmental Appeals Board as a whole, which encompasses a concern that the orders of ALJs not be disregarded . . . without consequence.”  *Meridian*, DAB No. 2504, at 12.  Thus, we cannot simply ignore an appellant’s inattention to following the ALJ’s orders because the appellant has long participated in the Medicare program.  We have no authority to vacate an ALJ’s dismissal based on a supplier’s history of participation in the program or on concerns about the possible effect(s) revocation could have on the beneficiaries or the program.  Furthermore, to the extent that Petitioner seeks equitable relief from the ALJ’s dismissal, the Board has consistently held that the Board and the ALJ are not empowered to grant equitable relief.  *See, e.g., Parvin Shafa, M.D., Inc.*, DAB No. 2846, at 8 (2018); *Sunview Care & Rehab Ctr., LLC*, DAB No. 2713, at 12 (2016).

As noted in our Acknowledgment Letter, the only issue before us is whether the ALJ Dismissal should be upheld.  An ALJ is authorized to dismiss a request for hearing for abandonment.  An ALJ “may” determine that the request was abandoned if, as here, the appealing party fails to respond within 10 days of issuance of an order to show cause.  42 C.F.R. § 498.69(a), (b)(2).  The Board has ruled that an ALJ may reasonably construe an appellant’s failure to file a prehearing document as tantamount to failure to appear for a prehearing conference or hearing as specified in 42 C.F.R. § 498.69(b)(1) (stating that the ALJ may consider a request for hearing to be abandoned if the appealing party “[f]ails to appear at the prehearing conference or hearing without having previously shown good cause for not appearing”).  *See Osceola Nursing & Rehab. Ctr.*, DAB No. 1708, at 7 (1999) (stating that 42 C.F.R. § 498.69(b) contemplates a “failure to appear in written

**Page 8**

form by failing to file prehearing documents clearly ordered by an ALJ”).  Accordingly, the ALJ had authority to dismiss Petitioner’s request for hearing for abandonment in accordance with section 498.69 if, as here, Petitioner failed to file its prehearing exchange and did not respond to the ALJ’s Order to Show Cause within 10 days.  The ALJ did not err or abuse her discretion in this case.

Conclusion

We affirm the ALJ Dismissal.  The ALJ Dismissal is binding.  42 C.F.R. § 498.71(b) (“The dismissal of a request for hearing is binding unless it is vacated by the ALJ or the [Board].”).


          /s/
        Christopher S. Randolph

                      Board Member
          /s/
        Constance B. Tobias

                      Board Member
          /s/
        Susan S. Yim

                      Presiding Board Member
      1. This section is provided for context for the discussion to follow.  The Board is not making factual findings. back to note 1
                      2. The ALJ’s Order to Show Cause was served on the parties on October 22, 2021, via DAB E-File (electronic filing system). back to note 2
                      3. As the ALJ noted, CMS timely submitted its prehearing exchange.  Order to Show Cause at 1. back to note 3
                      4. The ALJ informed Petitioner that it may ask the ALJ to vacate her dismissal pursuant to 42 C.F.R. § 498.72.  ALJ Dismissal at 2.  There is no indication that Petitioner asked the ALJ to do so.  Petitioner appealed the ALJ Dismissal to the Board pursuant to 42 C.F.R. §§ 498.80 and 498.82(a), which were cited in the section headed “FURTHER APPEAL RIGHTS” in page 3 of the ALJ Dismissal. back to note 4
                      5. Petitioner also submitted to the Board a one-page document (“Certificate of Liability Insurance”). This document apparently is a copy of a document Petitioner submitted to the contractor in support of its request for reconsideration of the contractor’s initial determination. The exhibits CMS submitted to the ALJ as part of its prehearing exchange included Petitioner’s reconsideration request, marked as CMS exhibit 2. The “Certificate of Liability Insurance” is page 8 of CMS exhibit 2. We discuss the document only to acknowledge Petitioner’s submission of a copy of it to the Board and to make clear that we do not examine it or any other previously submitted document pertaining to the underlying contractor action because the issue before the Board is whether the ALJ Dismissal should be upheld, not the legality of revocation of Petitioner’s billing privileges. back to note 5
                      6. We assume Petitioner is referring to the request for hearing filed with the ALJ. back to note 6
                      7. All filings in the ALJ and Board proceedings were made by DAB E-File.  There is no indication, or assertion, that Petitioner did not receive the ALJ’s Pre-Hearing Order or Order to Show Cause, which were served on the parties through DAB E-File. back to note 7
                      8. On page 6 of her Pre-Hearing Order, the ALJ stated, “I will ordinarily not grant an extension of time to either party to file an exchange or other submissions.”  However, in page 2 of the same order, the ALJ informed the parties that if either party wants an extension of time, that party must consult with the opposing party and file a written motion, stating in the motion whether the requested action is opposed or unopposed.  Thus, Petitioner was notified that, if it needed more time to prepare and file its prehearing exchange, it could request an extension by following these instructions. back to note 8
                      9. The regulations in 42 C.F.R. Part 498 do not define the term “good cause.”  The Board has stated that it reviews ALJ determinations concerning good cause, a matter within an ALJ’s discretion, to determine whether the ALJ abused his or her discretion.  Consol. Comm’ty Res., DAB No. 2676, at 5 n.5 (citing Kids Med (Delta Medical Branch), DAB No. 2471, at 4 (2012)). back to note 9
                      10. Petitioner’s President does state that she “made several calls,” but refers only to the Director of the Appellate Division of the Departmental Appeals Board by name and does not elaborate on the calls she says she made.  P. Supp.  She says the Director “forwarded [her] instructions” (presumably referring to instructions on how to use DAB E-File).  Id.  We note that the ALJ’s Pre-Hearing Order, page 1, identified the Civil Remedies Division staff attorney assigned to assist the ALJ and provided the attorney’s email address, telephone number, and fax number. back to note 10
                      11. Axion came before the Board following an ALJ’s denial of a motion, filed pursuant to 42 C.F.R. § 498.72, to vacate the dismissal of a request for hearing for abandonment. The Board upheld the ALJ’s dismissal, the effect of which was to deny Axion, a home health agency, the opportunity to challenge the revocation of its Medicare billing privileges. back to note 11 Back to top
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