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                              Global MD Systems, Inc., DAB No. 3103 (2023)
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Global MD Systems, Inc., DAB No. 3103 (2023)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Appellate Division





Global MD Systems, Inc.
Docket No. A-23-20Decision No. 3103August 1, 2023

        
              
    

      ADMINISTRATIVE LAW JUDGE DECISION

Global MD Systems, Inc. (Petitioner) appeals the decision of an administrative law judge (ALJ) in *Global MD Systems, Inc.*, DAB CR6178 (2022) (ALJ Decision).  The ALJ upheld a determination by the Centers for Medicare & Medicaid Services (CMS) to revoke Petitioner’s enrollment and billing privileges as a supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).  The ALJ concluded that CMS had a lawful basis for the revocation because Petitioner failed to respond to requests for information and failed to meet surety bond requirements in accordance with supplier standards under 42 C.F.R. §§ 424.57(c)(21) and 424.57(c)(26).  We affirm the ALJ Decision because it is supported by substantial evidence and free of legal error.

Legal Background

A provider or supplier of Medicare services must be enrolled in the Medicare program to receive payment for items and services covered by Medicare.  42 C.F.R. § 424.505.  A DMEPOS supplier, such as Petitioner, is “an entity or individual . . . which sells or rents Part B covered items to Medicare beneficiaries . . . .”  *Id*. § 424.57(a).  To maintain Medicare enrollment and associated “billing privileges,” a DMEPOS supplier must comply with the certification standards under 42 C.F.R. § 424.57(c).1  Relevant to this case, DMEPOS suppliers must provide CMS “upon request, any information required by the Medicare statute and implementing regulations.”  42 C.F.R. § 424.57(c)(21).  DMEPOS suppliers must also “meet the surety bond requirements specified in paragraph (d) of this section.”  *Id*. § 424.57(c)(26).  Section 424.57(d) requires, among other things, that each DMEPOS supplier “submit a bond that is continuous,” meets the minimum requirements of liability coverage ($50,000), guarantees that the surety will pay CMS “up to the full penal amount of the bond” within 30 days of receiving written notice, and provides that “[t]he surety is liable for unpaid claims, [civil money penalties (CMPs)], or assessments that occur during the term of the bond.”  *Id*. § 424.57(d)(4), (5).

**Page 2**

“CMS revokes the DMEPOS supplier’s billing privileges if an enrolled DMEPOS supplier fails to obtain, file timely, *or maintain* a surety bond as specified in [section 424.57(d)] and CMS instructions.”  42 C.F.R. § 424.57(d)(11)(i) (emphasis added).  More generally, section 424.57 provides that “CMS revokes a supplier’s billing privileges if it is found not to meet” any of the supplier standards in section 424.57(c).  *Id*. § 424.57(e)(1).  Additionally, CMS may revoke a supplier’s enrollment in the Medicare program if the supplier is determined to not be in compliance with the enrollment requirements for its supplier type.  *See id*. § 424.535(a)(1).  “[F]ailure to comply with even one supplier standard is a sufficient basis for revoking a supplier’s billing privileges.”  *1866ICPayday.com, L.L.C.*, DAB No. 2289, at 13 (2009).

If CMS revokes a supplier’s Medicare enrollment, the supplier is “barred from participating in the Medicare program from the effective date of the revocation until the end of the reenrollment bar.”  42 C.F.R. § 424.535(c)(1).  At the time of the revocation here, CMS regulations set the reenrollment bar for a period between one and ten years, depending on the severity of the basis for the revocation.  *Id*. § 424.535(c)(1)(i).

A supplier may request reconsideration of the revocation by a contractor hearing officer and may then request a hearing on the reconsidered determination before an ALJ.  *Id*. §§ 424.545(a), 498.5(*l*), 498.22, 498.40.  A supplier that seeks to submit evidence at the ALJ level that it did not previously submit at the reconsideration level must show good cause for doing so.  *Id*. § 498.56(e)(1).  If the ALJ “determines that there was not good cause for submitting the evidence for the first time at the ALJ level, the ALJ must exclude the evidence from the proceeding and may not consider it in reaching a decision.”  *Id*. § 498.56(e)(2)(ii).  A party dissatisfied with an ALJ’s decision may seek review by the Board.  *Id*. § 498.80.

Case Background2

Petitioner was enrolled in the Medicare program as a supplier of DMEPOS.  ALJ Decision at 1; CMS Ex. 1, at 35.  Beginning January 1, 2019, Petitioner had a surety bond through Lexon Insurance Company (Lexon Insurance) with coverage in the amount of $50,000.  CMS Ex. 1, at 47.  On April 26, 2021, Lexon Insurance made payments to CMS on Petitioner’s behalf in the amount of $12,278.77, $12,206.12, and $63.27 ($24,548.16 total).  ALJ Decision at 6-7; CMS Ex. 1, at 50, 52, 54.  By notices issued on April 30, May 4, and May 5, 2021, a CMS contractor acknowledged receipt of each payment under the bond.  ALJ Decision at 6-7; CMS Ex. 1, at 50, 52, 54.  Each notice directed Petitioner to secure additional surety bond coverage due to the payments made under the bond, requested information regarding Petitioner’s surety bond coverage, and contained the following warning:

**Page 3**

You *must*, within 30 calendar days of the date of this letter, obtain and submit to the National Supplier Clearinghouse (NSC) additional surety bond coverage in the amount of [the payment made] to ensure that your total coverage equals or exceeds the required $50,000 amount.  ***Failure to timely do so will result in the revocation of your Medicare enrollment.***

CMS Ex. 1, at 50, 52, 54 (underlining replaced by italics).3  Each notice further explained:

Additional surety bond coverage may be obtained by (1) adding to the amount of your existing surety bond so as to equal or exceed $50,000, or (2) cancelling your current surety bond and securing a new $50,000 surety bond. . . .  In either case, the effective date of the additional coverage must be on or before the date that you submit the additional coverage to the NSC.

*Id*. at 50, 52, 54.

On May 5, 2021, Lexon Insurance notified Petitioner that it was cancelling Petitioner’s surety bond effective June 5, 2021, due to Petitioner’s “[f]ailure to resolve Medicare/ Medicaid claims in a timely manner.”  ALJ Decision at 7; CMS Ex. 1, at 47.

By letter dated March 15, 2022, Palmetto GBA, the NSC’s administrative contractor, notified Petitioner that its Medicare billing privileges were being revoked effective April 26, 2021.  CMS Ex. 1, at 35-36.  The stated reasons for revocation were Petitioner’s failure to maintain a general liability insurance policy, failure to provide requested information regarding surety bond coverage, and failure to meet surety bond requirements, as required by 42 C.F.R. §§ 424.57(c)(10), 424.57(c)(21), and 424.57(c)(26).  *Id.*  Palmetto GBA imposed a two-year reenrollment bar.  *Id*. at 35, 38.  The letter advised Petitioner of the right to request reconsideration and warned that the reconsideration request was Petitioner’s “only opportunity to submit information during the administrative appeals process,” unless an ALJ allowed additional information to be submitted.  *Id*. at 37-38.

On March 21, 2022, Petitioner submitted a request for reconsideration arguing only that its general liability insurance policy remained in effect and had not been cancelled.  CMS Ex. 1, at 7-34.  With its request for reconsideration, Petitioner submitted proof of

**Page 4**

coverage regarding its general liability insurance policy but provided no information or documentation regarding its surety bond coverage.  *See id*. at 13, 16, 21, 27, 33.

On April 21, 2022, an NSC hearing officer (on behalf of CMS) issued a reconsidered determination upholding the revocation.  CMS Ex. 1, at 1-6.  The NSC found Petitioner demonstrated compliance with section 424.57(c)(10), having submitted proof of coverage under its general liability insurance policy.  *Id*. at 3.  The NSC determined, however, that Petitioner failed to demonstrate compliance with the supplier standards under sections 424.57(c)(21) and 424.57(c)(26) because it did not submit documentation that it either replenished its surety bond to the required amount or obtained a new surety bond.  *Id*. at 3-4.  The NSC noted that Petitioner failed to respond to the previous requests by the Medicare administrative contractor.  *Id*. at 4.  Thus, the NSC upheld the revocation, concluding that Petitioner “failed to replenish the bond to the required amount and failed to maintain a valid surety bond as required by law.”  *Id*.

Petitioner requested a hearing before an ALJ.  In its request for hearing (RFH), Petitioner asserted for the first time that there was no lapse of surety bond coverage because it “had a surety bond of $50,000 effective as of 06/05/2021.”  RFH at 1.  Petitioner acknowledged, through its president, that it had not provided information regarding its surety bond coverage when it requested reconsideration because it “had believed that the lapsed liability insurance policy was the only concern.”  *Id*.

Before the ALJ, CMS filed a pre-hearing brief and motion for summary judgment, along with two proposed exhibits (CMS Exs. 1-2).  ALJ Decision at 2.  In response, Petitioner filed a pre-hearing brief and opposition to CMS’s motion for summary judgment.  *Id*.  Along with its brief, Petitioner submitted three new exhibits showing that it obtained a replacement surety bond with an effective date of June 5, 2021.  P. Exs. 1-3.  CMS submitted a reply brief and objected to Petitioner’s new evidence.  ALJ Decision at 2.  The ALJ excluded Petitioner’s three proposed exhibits (P. Exs. 1-3) because Petitioner failed to show good cause for submitting the evidence for the first time at the ALJ level.  ALJ Decision at 2-4 (citing 42 C.F.R. § 498.56(e)(2)(ii)).  The ALJ admitted CMS’s exhibits without objection.  *Id*. at 4.  The ALJ determined that an in-person hearing was unnecessary because neither party submitted proposed witness testimony.  *Id*.  The ALJ declined to grant CMS’s motion for summary judgment but issued a decision on the merits based on the written record.  *Id*. at 4 & n.2.

The ALJ concluded that CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. §§ 424.535(a)(1), 424.57(d)(11), and 424.57(e)(1) because Petitioner did not meet the surety bond requirements specified in section 424.57(d), as required by the supplier standard at 42 C.F.R. § 424.57(c)(26).  ALJ Decision at 5-7.  The ALJ found that even with a replacement surety bond effective June 5, 2021, Petitioner was not in compliance with “the requirement to *maintain continuous* surety bond coverage at a value of $50,000 or greater” because Petitioner’s

**Page 5**

bond did not have a value of $50,000 on April 26, 2021, and was never replenished as CMS’s contractor had instructed.  *Id*. at 7.  The ALJ further found that Petitioner was not in compliance with the supplier standard at 42 C.F.R. § 424.57(c)(21) because “Petitioner did not provide to CMS, upon request, information required by the Medicare statute and implementing regulations.”  *Id*. at 8.  Specifically, Petitioner failed to submit documentation regarding its surety bond coverage as requested in the notices dated April 30, May 4, and May 5, 2021.  *Id*. (citing CMS Ex. 1, at 50, 52, 54).  Finally, the ALJ noted that an ALJ’s review authority is limited to determining whether CMS had a legal basis for the revocation and ALJs may not substitute their discretion for that of CMS in determining whether revocation is appropriate under all the circumstances.  *Id*.

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*, at https://www.hhs.gov/about/agencies
/dab/different-appeals-at-dab/appeals-to-board/guidelines/enrollment/index.html.

Analysis

Petitioner filed a Request for Review (RR)4 challenging the ALJ’s findings of fact and conclusions of law.  Before the Board, Petitioner argues that the ALJ erred by:  (i) concluding that Petitioner did not show good cause to admit new evidence submitted for the first time at the ALJ level (RR at 4‐5); (ii) finding that Petitioner was not in compliance with surety bond coverage requirements (RR at 2-4); and (iii) not applying CMS “guidance” in the preamble of a final rule concerning consideration of various factors to justify CMS’s revocation decision (RR at 5-7).  Petitioner asks that the Board overturn CMS’s revocation determination and reinstate Petitioner’s billing privileges retroactively.  RR at 7.  For the reasons explained below, we reject each of Petitioner’s arguments and affirm the ALJ Decision because it is supported by substantial evidence and free of legal error.

***I.        The ALJ did not err by excluding Petitioner’s new documentary evidence.***

The regulations applicable to Medicare enrollment appeals, including revocation appeals, impose special evidentiary rules that require providers and suppliers to submit any evidence they want considered at the time of their request for reconsideration.  *See* 42 C.F.R. § 405.803(c).  “If the provider or supplier fails to submit the evidence before the

**Page 6**

contractor issues its [reconsidered determination], the provider or supplier is precluded from introducing new evidence at higher levels of the appeals process.”  *Id*. § 405.803(e).  The purpose of this requirement is to “expedite the provider enrollment appeals process” by, among other things, enabling contractors or CMS Regional Office personnel to make determinations at the reconsideration level based on all available facts and by using the first level of appeal “to build the administrative record and help facilitate timely decisions at higher levels of appeals.”  *See* 73 Fed. Reg. 36,448-01, 36,452 (June 27, 2008).  This evidentiary exclusion rule is subject to a “good cause” exception at the ALJ level.  *See* 42 C.F.R. § 498.56(e)(1) (“[T]he ALJ will examine any new documentary evidence submitted to the ALJ by a provider or supplier to determine whether the provider or supplier has good cause for submitting the evidence for the first time at the ALJ level.”).  “If the ALJ determines that there was not good cause for submitting the evidence for the first time at the ALJ level, the ALJ must exclude the evidence from the proceeding and may not consider it in reaching a decision.”  *Id*. § 498.56(e)(2)(ii).

Here, the ALJ excluded Petitioner’s proposed exhibits (P. Exs. 1-3) on the ground that Petitioner had not shown good cause for submitting the evidence for the first time at the ALJ level.  ALJ Decision at 2-4.  The ALJ rejected Petitioner’s argument that it had shown good cause because its president, who was unrepresented by counsel, had “overlooked” CMS’s finding concerning Petitioner’s lack of surety bond coverage when Petitioner requested reconsideration.  *Id*. at 3 (“[T]he suggestion that this was a minor lapse by an unsophisticated, unrepresented individual is at odds with the facts and the law.”).  The ALJ noted that when a supplier fails to submit all of its evidence at the reconsideration level, the fact that it was unrepresented by counsel is “insufficient by itself to show good cause.”  *Id*. (citing *A To Z DME, LLC*, DAB No. 2303, at 11 (2010)).  The ALJ found that the revocation notice clearly and unambiguously identified three separate bases for the revocation and further notified Petitioner of the need to submit any additional information with its request for reconsideration.  *Id*. (quoting CMS Ex. 1, at 35-36, 37-38)).  The ALJ further explained that Medicare providers and suppliers have a duty to familiarize themselves with Medicare requirements, that the three proposed exhibits existed at the time of the reconsideration request, and that there is “no apparent reason why they could not have been provided at that time.”  *Id*. at 3-4.  The ALJ, therefore, excluded Petitioner’s proposed exhibits and did not consider them in reaching a decision.  *Id*. at 4.

“In general, the Board does not disturb the ALJ’s evidentiary determinations unless there is compelling reason to do so.”  *HeartFlow, Inc.*, DAB No. 2781, at 19 (2017).  “A determination of whether good cause has been established under [section 498.56(e)] is a matter for the ALJ’s discretion, to which we would defer in the absence of a compelling reason to do otherwise.”  *Id*.  Thus, the Board reviews an ALJ’s “good cause” determination under section 498.56(e) for abuse of discretion and does not substitute its judgment for that of the ALJ.  *Id*. at 19 n.12.  Petitioner has not identified any compelling reason to disturb the ALJ’s decision to exclude Petitioner’s proposed exhibits.

**Page 7**

Petitioner asserts that the ALJ erred by concluding that being unrepresented by counsel was “insufficient” to show good cause to admit new evidence.  RR at 4.  Petitioner’s argument ignores Board precedent and has no merit.  Relying on three ALJ decisions, Petitioner states that “the Board” has acknowledged that “good cause to admit new evidence can be found where an unrepresented party unintentionally omitted it during the [reconsideration] process.”  RR at 4 (citing *Caring Nurses, Inc.*, DAB CR5413 (2019), *George P. Roussis*, DAB CR5242 (2019), and *Alden Nursing Ctr.—Morrow*, DAB CR784 (2001)).  Petitioner’s reliance on these three ALJ decisions is misplaced.  As an initial matter, ALJ decisions are not precedential and do not bind other ALJs or the Board.  *See Cornelius M. Donohue, DPM*, DAB No. 2888, at 7 (2018).  Moreover, Petitioner quotes only dicta from each of the three decisions.  None of the cases involved the question of what constitutes good cause to admit new evidence under 42 C.F.R. § 498.56(e) and none found good cause for admitting new evidence based on a supplier’s or provider’s lack of legal representation.

As the ALJ recognized, the Board considered this precise issue and concluded that a Medicare supplier’s lack of representation by counsel is insufficient by itself to show good cause for not submitting all of its documentary evidence at the reconsideration stage.  *See A TO Z DME* at 10-11 (affirming ALJ’s exclusion of new evidence in connection with revocation appeal).  The Board noted that “the regulations do not contain any exception for the ALJ to consider evidence for the first time simply because a party chose not to be represented by counsel during the reconsideration process.”  *Id*. at 11.  Apart from its prior lack of legal representation, Petitioner presented no other reason for its failure to submit all of its evidence with its request for reconsideration.  We find no error or abuse of discretion in the ALJ’s decision to exclude Petitioner’s proposed exhibits (P. Exs. 1-3) under section 498.56(e)(2)(ii) because Petitioner failed to show good cause for submitting the evidence for the first time at the ALJ level.

***The ALJ’s determination that CMS had a lawful basis to revoke Petitioner’s Medicare enrollment and billing privileges based on its noncompliance with supplier standards under sections 424.57(c)(21) and 424.57(c)(26) is supported by substantial evidence and free of legal error.***On review of a determination to revoke a supplier’s Medicare enrollment and billing privileges, an ALJ and the Board “decide only whether CMS has established a lawful basis for the revocation.”  *Donohue* at 4.  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); *see also* *Blair Allen Nelson, M.D.*, DAB No. 3024, at 7 (2020) (collecting cases).  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).

**Page 8**

DMEPOS suppliers are not only required to have a compliant surety bond, but also must “maintain continuous surety coverage” that meets the minimum coverage requirements.  *See* *Pepper Hill Nursing & Rehab. Ctr*., DAB No. 2395, at 6 (2011).  As the Board explained in *Pepper Hill*, section 424.57(c) specifies that a supplier “must meet and must certify in its application for billing privileges that it meets *and will continue to meet*” the supplier standards in section 424.57(c).  *Id*. (quoting 42 C.F.R. § 424.57(c)).  Those supplier standards require that the supplier “meet the surety bond requirements specified” in section 424.57(d), including the requirement that the surety bond provide the minimum liability coverage of $50,000.  42 C.F.R. §§ 424.57(c)(26), 425.57(d)(2), (4).  Still further, “CMS may at any time require a DMEPOS supplier to show compliance with the requirements of [section 424.57(d)].”  *Id*. § 424.57(d)(12).  CMS will revoke billing privileges of a supplier that “fails to obtain, file timely, or maintain a surety bond as specified in this subpart and CMS instructions.”  *Id*. § 424.57(d)(11)(i).  Additionally, CMS is authorized to revoke a supplier’s billing privileges if it is found not to meet any of the supplier standards in section 424.57(c).  *Id*. § 424.57(e)(1).  Finally, CMS may revoke a supplier’s Medicare enrollment if the supplier is determined to not be in compliance with the enrollment requirements for its supplier type.  *See id*. § 424.535(a)(1).

Here, the ALJ concluded that CMS had a lawful basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. §§ 424.535(a)(1), 424.57(d)(11), and 424.57(e)(1) because Petitioner failed to meet the surety bond requirements specified in section 424.57(d) as required by the supplier standard at section 424.57(c)(26).  ALJ Decision at 5-7.  Specifically, the ALJ found that Petitioner was not in compliance with “the requirement to *maintain continuous* surety bond coverage at a value of $50,000 or greater.”  *Id*. at 7.  The ALJ found that the surety bond issued by Lexon Insurance was never timely replenished after the payment of claims totaling $24,548.16 on April 26, 2021.  *Id*. at 6-7 (citing CMS Ex. 1, at 50, 52, 54).

Before the Board, Petitioner acknowledges that the notification letters issued by CMS’s contractor required Petitioner to secure additional surety bond coverage within 30 days of the date of each letter.  RR at 3 (citing CMS Ex. 1, at 49-54).  Relying on excluded evidence, Petitioner contends that it secured the additional coverage within the 30-day period when it purchased a replacement surety bond on May 14, 2021.  *Id*. at 3-4 (citing P. Exs. 1-3).  There is, however, no record evidence supporting Petitioner’s argument.  “The Board decides appeals of ALJ decisions on CMS enrollment determinations (which includes revocation of enrollment) based on the evidentiary record developed below during the ALJ proceedings.”  *Michael Turano, M.D.*, DAB No. 2922, at 16 (2019) (explaining that the Board is barred from admitting new evidence in provider/supplier enrollment appeals) (citing 42 C.F.R. § 498.86(a)).  As discussed above, the ALJ did not err in excluding Petitioner’s three proposed exhibits (P. Exs. 1-3).  *See supra*at 5-7.  Thus, Petitioner’s argument that it timely secured additional surety bond coverage is entirely unsupported by the record evidence.

**Page 9**

Moreover, even if the ALJ had found good cause to admit Petitioner’s exhibits into evidence, it would not change the outcome of this appeal because those exhibits demonstrate only that Petitioner obtained a replacement surety bond with coverage effective June 5, 2021.  P. Exs. 1-3.  The deadlines to replenish coverage in accordance with the April 30, May 4, and May 5 notification letters were, respectively, **May 30,** **June 3, and June 4, 2021**.  CMS Ex. 1, at 50, 52, 54.  Petitioner presented no evidence that it secured a $50,000 replacement surety bond with an effective date of coverage on or before any of these dates.

As the ALJ found, even with a replacement surety bond effective June 5, 2021, Petitioner was still out of compliance with the surety bond requirements because Petitioner did not replenish its Lexon Insurance bond within 30 days of the notification letters.  ALJ Decision at 8; *see also* CMS Ex. 1, at 50, 52, 54.  Suppliers are “required to maintain continuous surety coverage” that meets the minimum requirements specified in section 424.57(d).  *See* *Pepper Hill* at 6.  Petitioner presented no evidence that its Lexon Insurance coverage did not fall below $50,000 after the payment of multiple claims on April 26, 2021, or that coverage under that bond was ever replenished after the surety’s payments to CMS.  The mere purchase of a replacement bond on May 14, 2021, did nothing to cure the insufficient coverage under the Lexon Insurance bond because the replacement bond provided no liability coverage until June 5, 2021—more than 30 days after each notification letter.  In other words, a temporal gap existed from April 26, 2021, through June 4, 2021, during which Petitioner’s surety bond coverage remained below the minimum $50,000 coverage amount.  No evidence (either admitted or proposed) shows that Petitioner had the coverage of either a replenished $50,000 surety bond with Lexon Insurance or a replacement $50,000 surety bond with another carrier during that time.

Petitioner further argues that it complied with the surety bond requirements under section 424.57(d) because it had a “continuous bond,” that is, one “that renews automatically until it is cancelled.”  RR at 3 (citing investopedia.com article regarding bonds commonly used in international trade that automatically renew until cancelled).  Petitioner’s argument misses the point.  Petitioner’s billing privileges were not revoked because the Lexon Insurance bond did not renew automatically, but because Petitioner did not timely replenish the bond’s coverage amount after it fell below $50,000.  Still further, Petitioner presented no evidence that its Lexon Insurance bond was a “continuous bond” even under Petitioner’s definition.  The Lexon Insurance bond was cancelled effective June 5, 2021.  CMS Ex. 1, at 47.  We find no error in the ALJ’s conclusion that Petitioner was not in compliance with the supplier standard under section 424.57(c)(26) because Petitioner failed to timely replenish its bond coverage to the required level after the surety made payments to CMS.

The ALJ further concluded that CMS had an additional legal basis for revoking Petitioner’s billing privileges because it “did not provide to CMS, upon request,

**Page 10**

information required by the Medicare statute and implementing regulations, as required by 42 C.F.R. § 424.57(c)(21).”  ALJ Decision at 8.  The ALJ found that Petitioner failed to submit documentation to the NSC regarding its surety bond coverage as requested in the letters dated April 30, May 4, and May 5, 2021.  *Id*. (citing CMS Ex. 1, at 50, 52, 54).  The ALJ noted that Petitioner made no specific argument that it submitted the documentation as requested.  *Id*.  In its Request for Review, Petitioner does not mention, much less dispute, the ALJ’s conclusion regarding its noncompliance with section 424.57(c)(21).  Accordingly, we summarily affirm this conclusion of the ALJ because Petitioner failed to articulate any legal or factual basis for challenging it.  *See Arthur L. Jenkins III, M.D., et al.*, DAB No. 3070, at 7 (2022).  We further note that Petitioner’s noncompliance with section 424.57(c)(21) is, by itself, a sufficient legal basis for CMS’s revocation decision.  *See* *1866ICPayday.com* at 13 (“[F]ailure to comply with even one supplier standard is a sufficient basis for revoking a supplier’s billing privileges.”).

Accordingly, we find that the ALJ’s determination that CMS had a lawful basis to revoke Petitioner’s Medicare enrollment and billing privileges based on Petitioner’s failure to submit requested documentation in accordance with section 424.57(c)(21) and failure to maintain the required surety bond coverage in accordance with section 424.57(c)(26) is supported by substantial evidence and free of legal error.

***III.     ALJs and the Board may not substitute their discretion for that of CMS in determining whether revocation is appropriate under all the circumstances******.***

Relying on preamble language in an April 2006 final rule, Petitioner argues that the ALJ erred by not applying “CMS guidance stating that revocation decisions must account for the severity of the offenses, mitigating circumstances, program and beneficiary risk if enrollment was to continue, beneficiary access to care, and other pertinent facts.”  RR at 5 (citing Final Rule, *Medicare Program; Requirements for Providers and Suppliers to Establish and Maintain Medicare Enrollment*, 71 Fed. Reg. 20,754-01, 20,761 (Apr. 21, 2006)).  Petitioner contends that an examination of each of the factors in the preamble shows that its revocation is unwarranted and unfair.  *Id*. at 5-6.  We reject Petitioner’s argument because it reflects a fundamental misunderstanding of the scope of an ALJ’s (and the Board’s) review of a CMS decision to revoke a supplier’s Medicare enrollment and billing privileges and is contrary to Board precedent.

“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.”  *Lilia Gorovits, M.D., P.C.*, DAB No. 2985, at 10 (2020).  The Board has previously rejected the contention that ALJs should weigh the factors in the Final Rule’s preamble in deciding whether to sustain a revocation.  *See Abdul Razzaque Ahmed, M.D.*, DAB No. 2261 at 16-17, 19 (2009) (rejecting argument that revocation is unwarranted because CMS and ALJ failed to give adequate consideration to factors specified in the preamble).  “[W]hile CMS may have discretion to consider unique or mitigating

**Page 11**

circumstances in deciding whether, or how, to exercise its revocation authority, ALJs and the Board may not substitute their discretion for that of CMS in determining whether revocation is appropriate under all the circumstances.”  *Meadowmere Emergency Physicians, PLLC*, DAB No. 2881, at 8-9 (2018) (internal quotation marks and brackets omitted); *see also Saeed A. Bajwa, M.D.*, DAB No. 2799, at 15 (2017) (“[W]hile the regulation affords CMS discretion to revoke or not to revoke in a particular case, neither an ALJ nor the Board may review how CMS exercises that discretion or substitute its own discretion.”).

Here, the ALJ properly limited the scope of review to the issue of whether CMS had a valid legal basis for the revocation and declined to substitute the ALJ’s discretion for that of CMS.  ALJ Decision at 8.  When, as here, CMS has established the regulatory elements necessary for the revocation, ALJs and the Board must sustain the revocation regardless of other factors that CMS may consider.  *See* *Bradley* at 13; *see also* *Vital Care Med. Transp., LLC*, DAB No. 2930, at 8 (2019) (“[T]he Board has no authority to modify, rescind, or direct CMS to reconsider a revocation based on mitigating circumstances or claims that the revocation has caused financial or other hardship.”).

Because we conclude that the regulatory elements necessary for the revocation were established based on Petitioner’s noncompliance with supplier standards under sections 424.57(c)(21) and 424.57(c)(26), we must sustain the revocation.  That is the legally required result regardless of the corrective measures Petitioner undertook to maintain regulatory compliance following its revocation, the impact revocation may have on beneficiary access to care, or Petitioner’s contention that its continued enrollment would not present a beneficiary or program risk.  *See*RR at 6-7.  There is no regulatory or statutory authority authorizing the Board or ALJs to weigh such factors in determining whether there is a valid basis for CMS’s revocation decision.  *See Nelson* at 11 (“While CMS has discretion to consider mitigating circumstances and other factors in exercising its revocation authority, neither the ALJ nor the Board may substitute their discretion for that of CMS.”).  Indeed, none of these “factors” are relevant to the Board’s review because they fail to show that CMS lacked a lawful basis for the revocation.  *See* *Marcus Singel, D.P.M.*, DAB No. 2609, at 7 (2014) (“[C]orrections made after revocation are immaterial to whether the revocation was authorized in the first place.”);**Daniel Wiltz, M.D., et al.,** DAB No. 2864, at 12 (2018) (“If, as here, CMS has a basis for revocation, the Board must uphold the determination to revoke without regard to, *e.g.*, . . . the potential impact of revocation on the supplier’s patients, that CMS might reasonably have weighed to determine whether to proceed with revocation.”);*Pepper Hill*at 7 (“[T]he issue before the ALJ and the Board is not whether Pepper Hill is a ‘legitimate supplier’ or the degree to which the revocation advances the purposes of the surety bond requirement, but simply whether CMS was authorized under the regulations to revoke Pepper Hill’s billing privileges.”).

**Page 12**

We further reject Petitioner’s contention that its revocation is unwarranted because it was the result of “procedural oversight by an unrepresented supplier.”  RR at 5-6.  “Medicare suppliers are presumed to have constructive notice of the statutes and regulations that govern their participation [in the Medicare program] as a matter of law.”  *Pepper Hill* at 8.  Thus, Petitioner’s suggestion that without legal counsel it was unaware of the laws and regulations governing its participation in the Medicare program “provides no basis to excuse its failure to comply with the requirements in the current regulations for maintaining Medicare billing privileges.”  *Id*. at 9.  Moreover, as discussed above, Petitioner’s revocation was not based on mere “procedural oversight,” but was the result of substantive violations of two supplier standards either of which provides a sufficient legal basis for CMS’s revocation decision.

Finally, to the extent Petitioner contends its revocation should be set aside because it is “unfair” (RR at 6), the Board has long held that it has no authority to restore a supplier’s billing privileges on equitable grounds.  *See Vital Care* at 8; *Turano* at 12 (“Neither the ALJ nor the Board may order reinstatement of billing privileges based on equity principles.”); *Neb Grp. of Arizona LLC*, DAB No. 2573, at 6 (2014) (“The Board has consistently held that it (and the ALJs) lack the authority to restore a supplier’s billing privileges on equitable grounds.”).  We adhere to that principle in this case as well.   ****

Conclusion

The Board affirms the ALJ Decision upholding the revocation of Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. §§ 424.535(a)(1), 424.57(d)(11), and 424.57(e)(1) because Petitioner did not comply with the enrollment requirements for its supplier type at 42 C.F.R. §§ 424.57(c)(21) and 424.57(c)(26).

Endnotes

1  We cite to and apply the regulations in effect on March 15, 2022, the date of the initial revocation determination (CMS Ex. 1, at 35).  *See Meadowmere Emergency Physicians, PLLC*, DAB No. 2881, at 2 n.2 (2018).

2  Background information is drawn from the ALJ Decision and the record before the ALJ and is not intended to substitute for the ALJ’s findings.

3  At the time of the revocation decision, the National Supplier Clearinghouse (NSC) was the organizational entity responsible for issuing or revoking Medicare supplier billing privileges for DMEPOS suppliers.  ALJ Decision at 7 n.4.  Palmetto GBA was the administrative contractor for the NSC.  *Id*.

4  Petitioner’s “Request for Review” consists of a cover letter accompanied by a separate supporting brief.  References to “RR” in this decision refer to the page numbers of the accompanying brief.
  
          /s/
        Constance B. Tobias

                      Board Member
          /s/
        Kathleen E. Wherthey

                      Board Member
          /s/
        Michael Cunningham

                      Presiding Board Member Back to top
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