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                              Preserve Independence, DAB CR6096 (2022)
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Preserve Independence, DAB CR6096 (2022)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Civil Remedies Division





Preserve Independence
(NPI: 1831658541; PTAN: MI12559)
Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-22-332Decision No. CR6096June 8, 2022

        
              
    

      DECISION

The Centers for Medicare & Medicaid Services (CMS) upheld a determination by Wisconsin Physicians Service Insurance Corporation (WPS), a Medicare administrative contractor, revoking the Medicare enrollment and billing privileges of Petitioner, Preserve Independence, pursuant to 42 C.F.R. § 424.535(a)(4) because Petitioner reported misleading or false information on an August 2, 2021 enrollment application.  Additionally, CMS upheld Petitioner’s placement on its Preclusion List and WPS’s imposition of a five-year bar to re-enrollment.  I affirm the revocation of Petitioner’s Medicare enrollment and billing privileges and placement on CMS’s Preclusion List.  Although Petitioner challenges the five-year bar to re-enrollment, it is not a reviewable initial determination.

I.     Background and Procedural History

On May 29, 2018, Jerome Jones (Mr. Jones), as the sole incorporator, filed “ARTICLES OF INCORPORATION For use by DOMESTIC NONPROFIT CORPORATION” to form a non-stock corporation that would be governed on a directorship basis.  CMS Ex. 1 (capitalization in original).  The articles of incorporation state Petitioner “is organized

**Page 2**

exclusively for charitable, religious, educational, and scientific purposes, including for such purposes, the making of distributions to organizations that qualify as exempt organizations under section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code.”  CMS Ex. 1 at 1.  Petitioner reported that “the purpose of Preserve Independence is to assist and provide an adult day program, and housing to impaired and mentally disabled citizens.”  CMS Ex. 1 at 1.  The articles of incorporation listed Mr. Jones as the corporate resident agent.  CMS Ex. 1 at 1.

On March 14, 2019, Nicole Jones (Ms. Jones) certified and signed a Form CMS-855B application to enroll Petitioner as a clinic/group practice in the Medicare program.  CMS Ex. 3.  The Form CMS-855B application instructed that certain individuals “must be reported” in the section of the application pertaining to ownership interest and/or managing control, to include “all officers and directors of the supplier.”  CMS Ex. 3 at 25.  The enrollment application lists only Ms. Jones as an individual who has ownership and/or managing control of Petitioner, identifying her as an authorized official and “Managing Employee (W-2).”  CMS Ex. 3 at 26.  The application reported that Ms. Jones acquired both ownership and managing control of Petitioner on June 4, 2018.  CMS Ex. 3 at 26.

On April 20, 2020, Ms. Jones, in the capacity of “Authorized Agent,” filed Petitioner’s annual corporate report for the year 2019 with the Michigan Department of Licensing and Regulatory Affairs (LARA), as required by “Section 911, Act 162, Public Act of 1982.”1
  CMS Ex. 4; *see*Mich. Comp. Laws § 450.2911 (Annual report to administrator; filing; contents).  Ms. Jones reported that Mr. Jones served as Petitioner’s corporate president and registered agent, and that she served as a director.  CMS Ex. 4 at 1.  Ms. Jones also reported that Ladonna Jackson served as treasurer and Lavar Green-Jackson served as secretary.  CMS Ex. 4 at 1.

On July 12, 2021, in her capacity as “Director,” Ms. Jones filed Petitioner’s annual corporate report for the year 2020 as required by the Michigan Nonprofit Corporation Act.  CMS Ex. 5.  Ms. Jones reported that Mr. Jones continued to serve as the corporate president and resident agent.  CMS Ex. 5 at 1.  Ms. Jones reported that William Tully served as treasurer and Ladonna Jackson served as secretary, and that she served as a director with Latasha Purry and Lavar Green-Jackson.  CMS Ex. 5 at 1.

Three weeks later, on August 2, 2021, Ms. Jones electronically certified and signed a Medicare enrollment application that updated Petitioner’s enrollment record.  CMS Ex. 6.  Ms. Jones reported that she held the title of “CEO” and was an owner, managing

**Page 3**

employee, and authorized official, effective February 16, 2019.2
  CMS Ex. 6 at 4.  The application did not report any other individuals with ownership or managing control of Petitioner, to include any of the individuals listed in the annual report to LARA filed three weeks earlier.  CMS Ex. 6; *see*CMS Ex. 5.

On August 25, 2021, WPS notified Petitioner that it had revoked its Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(4) because it had reported misleading or false information on the August 2, 2021 enrollment application.  CMS Ex. 8 at 1.  WPS explained that it “found information on the Michigan Secretary of State which reveals that Jerome Jones is listed as the President on [sic] Preserve Independence, effective April 20, 2020.”  CMS Ex. 8 at 1.  WPS also informed Petitioner that it would be added to CMS’s Preclusion List and that it would be barred from re-enrollment for a period of five years.  CMS Ex. 8 at 1, 3.

In a letter dated September 14, 2021, Petitioner requested reconsideration of WPS’s revocation determination.  CMS Ex. 9.  Petitioner explained the following, in pertinent part:

Mr. [Jones] is a hired employee who has the designation of president in Preserve Independence.  Mr. [Jones] has been with Preserve Independence from the start.  Jerome Jones was merely the president via the Secretary of State but had no managing control or interest or no part of day to day operations.

CMS Ex. 9 at 1.  Petitioner further requested that WPS “[p]lease take in consideration this was not misleading information, it was more like a clerical error that could have been corrected when the application was first submitted and approved.”  CMS Ex. 9 at 2.  Petitioner explained that Mr. Jones “had been removed from LARA effective immediately.”3
  CMS Ex. 9 at 1.

CMS, through its Provider Enrollment and Oversight Group, issued a reconsidered determination on December 21, 2021.  CMS Ex. 10.  CMS upheld the revocation of Petitioner’s Medicare enrollment, explaining:

**Page 4**

Under § 424.535(a)(4), CMS may revoke a currently enrolled supplier’s Medicare enrollment and any corresponding supplier agreement if the supplier certifies as “true” misleading or false information on an enrollment application to be enrolled or maintain enrollment in the Medicare program.  This revocation reason looks to the instructions included within the applicable Medicare enrollment application.  The CMS-855B PECOS Medicare web enrollment application instructions in Section Six inform applicants that they must include the names of “all” individuals who have 5% or greater direct and indirect ownership interest in the supplier and managing employees in the enrollment application.  Section 424.502 defines a managing employee and states that managing employee means a general manager, business manager, administrator, director, or other individual that exercises operational or managerial control over, or who directly or indirectly conducts, the day-to-day operation of the provider or supplier, either under contract or through some other arrangement, whether or not the individual is a W-2 employee of the provider or supplier . . .  Here, [Petitioner’s] LARA annual report listed Mr. Jones as the president on April 20, 2020 . . .  However, [Petitioner] did not include Mr. Jones as a managing employee in its August 2, 2021 Medicare enrollment application submission which was subsequently approved . . .  Additionally, the CMS-855B PECOS Medicare enrollment application instructions in Section Six inform applicants that, if they are a corporation (whether for-profit or non-profit), they must report the names of “all” officers and directors . . .  Here, [Petitioner] is undoubtedly a corporation, as demonstrated by its Articles of Incorporation . . .  Additionally, Mr. Jones was listed as the president for [Petitioner] in the LARA annual report . . .  However, [Petitioner] did not report Mr. Jones as an officer or director in its August 2, 2021 Medicare enrollment application submission which was subsequently approved . . .  As a result, WPS notified [Petitioner] of the revocation of its Medicare enrollment pursuant to § 424.535(a)(4).

On April 20, 2020, [Petitioner] signed and submitted the information in its LARA annual report, listing Mr. Jones as the president . . .  Subsequently, on August 2, 2021, [Petitioner] submitted a CMS-855B PECOS Medicare web

**Page 5**

enrollment application to change information in its Medicare enrollment . . .  Section Six of the CMS-855B PECOS web application requires that [Petitioner] disclose all of its owners and managing employees and that [Petitioner] disclose all of its officers and directors, and provides instructions to accurately complete the section.  In the CMS-855B application, [Petitioner] listed Ms. Jones as its owner, authorized official, and managing employee . . .  However, [Petitioner] did not list Mr. Jones as its managing employee or officer, although he was listed as the president in the LARA annual report.  It also did not list [Petitioner’s] Treasurer and Secretary who are also named in the LARA annual report.  The instructions plainly establish that [Petitioner] was required to report Mr. Jones as a managing employee and officer.  The information provided by [Petitioner] in its CMS-855B Medicare enrollment application on August 2, 2021 was false and/or misleading because, as discussed above, Mr. Jones is a managing employee and officer and [Petitioner] failed to disclose this information.

CMS Ex. 10 at 3-4 (internal citations and footnotes omitted).  CMS upheld the five-year bar to re-enrollment, stating that the “submission of false information or the withholding of information relevant to the provider’s or supplier’s enrollment eligibility represents a significant program integrity risk.”  CMS Ex. 10 at 5, citing 84 Fed. Reg. 47,826 (Sept. 10, 2019).

CMS also upheld Petitioner’s placement on its Preclusion List, explaining that Petitioner’s lack of forthcomingness with “accurate information regarding Mr. Jones’ role . . . calls into question [Petitioner’s] capacity and willingness to be a trustworthy partner in the Medicare program . . . [and] demonstrates its propensity to be negligent in its dealings with the federal government.”  CMS Ex. 10 at 6.  CMS also determined that the submission of false information or withholding of relevant information is a significant program integrity risk, and that the “underlying conduct of providing false and misleading information regarding the managerial control information of [Petitioner] negatively impacts the integrity of the Medicare program.”  CMS Ex. 10 at 6.

Petitioner filed a request for an administrative law judge (ALJ) hearing on February 18, 2022.  CMS filed a combined brief and memorandum of law in support of summary judgment (CMS Br.), along with 11 proposed exhibits (CMS Exs. 1-11).  Petitioner, through counsel, submitted a brief and opposition to CMS’s motion for summary judgment (P. Br.), and three proposed exhibits (P. Exs. 1‐3).  CMS filed a reply brief

**Page 6**

(CMS Reply).  In the absence of objections by Petitioner, I admit CMS Exs. 1-11 into the evidentiary record.  As discussed below, CMS filed objections to P. Exs. 1-3.

CMS objects to P. Exs. 1 and 2, which are signed statements by Mr. Jones and Ms. Jones, on the bases that the statements were not given under oath under penalty of perjury, are irrelevant and immaterial, and were submitted for the first time at the hearing level.  *See*42 C.F.R. § 498.56(e) (requiring that an ALJ determine whether new documentary evidence is admissible); *Care Pro Home Health, Inc.*, DAB No. 2723 at 11 (2016) (“In enrollment revocation cases, an ALJ must exclude ‘new documentary evidence’ – that is, documentary evidence that a provider did not previously submit to CMS at the reconsideration stage (or earlier) – unless the ALJ determines that ‘the provider or supplier has good cause for submitting the evidence for the first time at the ALJ level.’  42 C.F.R. § 498.56(e)(1).”).

P. Exs. 1 and 2 are not new documentary evidence.  Rather, P. Exs. 1 and 2 are noncompliant written direct testimony.  *See*Standing Pre-Hearing Order §§ 8, 12 (requiring that a party offering direct testimony submit, as a proposed exhibit, a sworn written statement given under penalty of perjury, along with a list of witnesses).  Although P. Exs. 1 and 2 lack probative value, I nonetheless overrule CMS’s objections and admit P. Exs. 1 and 2 into the evidentiary record.4
  *See*42 C.F.R. § 498.61.

P. Ex. 3 is a copy of a September 21, 2021 LARA filing by Petitioner, and it appears that this document is referenced by Petitioner in its reconsideration request.  *See*CMS Ex. 9 at 1.  I cite to P. Ex. 3 herein, and I overrule CMS’s objection and admit P. Ex. 3 into the evidentiary record.  *See*42 C.F.R. § 498.61.

A hearing is unnecessary for the purpose of cross-examination of any witnesses.  Pre-Hearing Order §§ 12-14.  The record is closed, and I issue this decision on the merits.5

II.    Issues

Whether CMS had a legitimate basis to uphold the revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(4) based on its report of misleading or false information in an enrollment application;**Page 7**

Whether CMS had a legitimate basis to uphold Petitioner’s placement on its Preclusion List pursuant to 42 C.F.R. §§ 422.2, 422.222; and,
	Whether the length of a re-enrollment bar is reviewable.III.   Jurisdiction

I have jurisdiction to decide this case.  42 C.F.R. §§ 498.1(g), 498.3(b)(17) and (20), 498.5(*l*)(2); *see*42 U.S.C. § 1395cc(j)(8).

IV.    Findings of Fact, Conclusions of Law, and Analysis6

As a clinic/group practice, Petitioner is a supplier of health care services for purposes of the Medicare program.  *See* 42 U.S.C. § 1395x(d); 42 C.F.R. § 400.202.  In order to participate in the Medicare program, a supplier must meet certain criteria to enroll and receive billing privileges.  42 C.F.R. §§ 424.505, 424.510.  CMS may revoke a supplier’s enrollment and billing privileges for any reason stated in 42 C.F.R. § 424.535(a).

CMS may revoke a supplier’s Medicare enrollment when the supplier “certifie[s] 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).  CMS is authorized to impose a bar to re‐enrollment for a minimum of one year, but no more than ten years.  42 C.F.R. § 424.535(c)(1)(i).

Additionally, CMS has established a single list of providers and prescribers who are precluded from being reimbursed for Medicare Advantage items or services or Part D drugs they furnish or prescribe to Medicare beneficiaries.7
  42 C.F.R. §§ 422.222, 423.120(c)(6).  As relevant here, CMS may place an individual or entity on its Preclusion List when the following requirements are met:

(i) The individual or entity is currently revoked from Medicare for a reason other than that stated in [42 C.F.R.] § 424.535(a)(3).
(ii) The individual or entity is currently under a reenrollment bar under [42 C.F.R.] § 424.535(c).
(iii) CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program.  In making this

**Page 8**

determination under this paragraph . . . , CMS considers the following factors:

(A) The seriousness of the conduct underlying the . . . revocation. 
(B) The degree to which the . . . conduct could affect the integrity of the Medicare program. 
(C) Any other evidence that CMS deems relevant to its determination . . .

42 C.F.R. § 422.2(1).

***1.   On May 29, 2018, Mr. Jones, as the sole incorporator, filed articles of incorporation to incorporate Petitioner in the State of Michigan as a domestic non-profit corporation on a non-stock and directorship basis.***

***2.   Pursuant to the Michigan Nonprofit Corporation Act, a Michigan non-profit corporation shall consist of three or more directors, so long as it was not formed as a private foundation or to provide care to a dentally underserved population pursuant to section 16625 of the state’s public health code.***

***3.   In a 2019 annual report required by the Michigan Nonprofit Corporation Act, and in response to a request that it identify its corporate board of directors and president, treasurer, and secretary, Petitioner reported the following directors:  Mr. Jones, president; Ladonna Jackson, treasurer; Lavar Green-Jackson, secretary; and Ms. Jones, director.***

***4.   In a 2020 annual report required by the Michigan Nonprofit Corporation Act, and in response to a request that it identify its corporate board of directors and president, treasurer, and secretary, Petitioner reported the following directors:  Mr. Jones, president; William Tully, treasurer; Ladonna Jackson, secretary; Ms. Jones, Latasha Purry, and Lavar Green-Jackson, directors.***

***5.   Even though Petitioner reported to the State of Michigan that it operated in 2019 as a non-profit corporation with a president, treasurer, secretary, and director, it certified in a March 14, 2019 Medicare enrollment application that it was owned and solely managed by Ms. Jones.***

***6.   Even though Petitioner reported on July 12, 2021, that it operated in 2020 as a non-profit corporation with a president, treasurer, secretary, and three directors, it certified, in an August 2, 2021 update to its Medicare enrollment record, that it was solely owned and managed by Ms. Jones.***

**Page 9**

***7.   CMS properly upheld the revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(4) because Petitioner certified false information in its August 2, 2021 update to its Medicare enrollment record, namely, that it was solely owned and operated by Ms. Jones.***

***8.   Because the practice’s enrollment had been revoked pursuant to 42 C.F.R. § 424.535(a)(4) and the factors enumerated at 42 C.F.R. § 422.2 were met, CMS had a legitimate basis to uphold the practice’s placement on the Preclusion List.***

***9.   WPS imposed a five-year bar to re-enrollment.***

***10.  CMS is authorized to impose up to a 10-year bar to re-enrollment pursuant to 42 C.F.R. § 424.535(c), and Petitioner cannot challenge the length of a re-enrollment bar because it is not a reviewable initial determination.***

Petitioner is incorporated in the State of Michigan as a domestic non-profit corporation.  CMS Ex. 1 at 1 (“ARTICLES OF INCORPORATION For use by DOMESTIC NONPROFIT CORPORATION”).  Michigan’s Nonprofit Corporation Act requires that a board of a nonprofit corporation “shall consist of 3 or more directors.”8
  Mich. Comp. Laws § 450.2505(1)(b).  Thus, in order to operate as a nonprofit corporation, Petitioner was required to be governed by a board of directors.  Further, Mich. Comp. Laws § 450.2911(1)(c) requires that a nonprofit corporation file an annual report listing “[t]he names and business or residence addresses of its president, secretary, treasurer, and directors.”  In compliance with the state non-profit corporation requirements that it be managed by three or more directors and annually report its president, secretary, treasurer,

**Page 10**

and directors, Petitioner filed annual reports on April 20, 2020, and July 12, 2021, certifying that it had a corporate board of directors, to include a president, treasurer, and secretary.  CMS Exs. 4, 5.

Despite its directorship-basis structure as a non-profit corporation requiring that it be governed by at least three directors, Petitioner reported to the Medicare program on August 2, 2021, that it was solely owned and controlled by Ms. Jones.  Mich. Comp. Laws § 450.2505(1)(b); CMS Ex. 6.  Petitioner argued, in seeking reconsideration of the revocation of its enrollment, that “Jerome Jones was merely the president via the Secretary of State but he had no managing control or interest or no part of day to day operations.”  CMS Ex. 9 at 1.  Likewise, Petitioner argued in connection with the instant proceedings that it was not under the governance of a corporate board, but rather, was solely controlled by Ms. Jones.  P. Br. at 6 (“Petitioner disputes that Jerome Jones acted as a managing employee of Preserve, because factually, he did not operate in a managerial capacity and did not retain any control over Preserve’s daily operations despite, being [sic] designated Preserve’s ‘President’ in Michigan’s state filings.”); 7 (“Despite having this figurehead designation in Preserve’s LARA filings, Jerome Jones did not function as Preserve’s President—he did not retain managerial control of Preserve, was not a paid employee of Preserve, and was not involved, even indirectly, in Preserve’s daily operations.”).  Thus, Petitioner’s argument against revocation essentially distills to a claim that it has a sham board of directors for purposes of compliance with state corporation requirements, and that in actuality it operates under the sole ownership and control of Ms. Jones without the governance of a corporate board of directors.

Petitioner’s claim that Mr. Jones and the other corporate officers and directors were figureheads who lacked any control over Petitioner, if accepted as true, amounts to a troubling claim that it falsely reported a slate of directors to LARA to feign compliance with the governance requirements of the Michigan Nonprofit Corporation Act.9
  *See*Mich. Comp. Laws § 450.2505(1)(b).  But even accepting such a preposterous defense with potentially collateral consequences as true,10
 Petitioner cannot escape the fact that,

**Page 11**

by reporting to LARA that Mr. Jones served as its president, it conveyed to the State of Michigan and the general public that it had empowered him managing control, regardless of whether he actually exercised that control.11
  *See*CMS Ex. 5 at 3 (certification by the Director, Corporations, Securities, & Commercial Licensing Bureau, of the annual report filed on July 12, 2021).  Even if Petitioner installed Mr. Jones with the intent that he would be a “figurehead” who was “not involved, directly or indirectly, in any of [Petitioner’s] daily operations,” he was nonetheless *authorized* by Petitioner to exercise managing control as president of the board of directors.  CMS Exs. 4, 5; *see*P. Br. at 4.

Pursuant to 42 C.F.R. § 424.502, a “director” is considered to be a managing employee of an enrolled supplier.  Section 424.502 also instructs that, for purposes of applying 42 C.F.R. § 424.519, an officer or director of a corporation is deemed to have an affiliation.  *See*42 C.F.R. § 424.519(b) (“Upon a CMS request, an initially enrolling or revalidating provider or supplier must disclose any and all affiliations that it or any of its owning or managing employees or organizations (consistent with the terms “owner” and “managing employee” as defined in § 424.502) has, or within the previous 5 years, had with a currently or formerly enrolled Medicare, Medicaid, or CHIP provider or supplier that has a disclosable event (as defined in § 424.502).”).  Petitioner’s dubious claim that it was “not informed” that it was required to list its president, Mr. Jones, on its enrollment record is contradicted by the record.  CMS Ex. 9 at 1 (reconsideration request); *see*CMS Exs. 3 at 25 (hard copy Form CMS-855B, stating:  “The following individuals must be reported in Section 6A . . . If (and only if) the supplier is a corporation (whether for-profit or non-profit), all officers and directors of the supplier.”); 6 at 3-4 (requiring similar information).  Aside from the clear instructions on the enrollment application, it is self-evident that the president of a corporate board of directors is authorized a degree of managing control over the entity.

Petitioner has not offered any evidence to refute that it provided misleading or false information to the Medicare program when it reported that Ms. Jones served as its sole owner and manager.  CMS had a legitimate basis to uphold WPS’s revocation of the practice’s enrollment pursuant to 42 C.F.R. § 424.535(a)(4) because it provided misleading or false enrollment information when it did not report on its enrollment

**Page 12**

application that the president of its board of directors was an individual with managing control.12

With respect to its placement on CMS’s Preclusion List, Petitioner has not offered any evidence, much less argument, to rebut CMS’s determination that the criteria set forth in 42 C.F.R. § 422.2 are satisfied.  Because I have upheld Petitioner’s revocation, and Petitioner is under a re-enrollment bar, placement on the Preclusion List is appropriate if the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program.  42 C.F.R. § 422.2.  Petitioner has not offered any meaningful argument that CMS improperly determined, pursuant to the factors set forth at 42 C.F.R. § 422.2, that its underlying conduct was detrimental to the Medicare program.

Petitioner does not dispute that it failed to report its president, Mr. Jones, on the August 2021 enrollment application, and its failure to report this information was the basis for its enrollment revocation pursuant to 42 C.F.R. § 424.535(a)(4).  Petitioner argues that the revocation is based on “a clerical error in the CMS enrollment paperwork, [and] when the non-disclosed individuals are not involved in Preserve’s business, and are not on Preserve’s payroll, [this] is not a serious offense which affects the integrity of the Medicare program.”  P. Br. at 9.  I disagree; Petitioner’s failure to report the president of its board of directors on its enrollment application is not merely an oversight, but rather, constitutes the type of conduct that is detrimental to the interests of the Medicare program.  CMS Exs. 3-6.  Notably, Petitioner reported completely different information to two separate regulatory agencies within the span of just a few weeks.  *Compare*CMS Ex. 5 (July 12, 2021 annual report for use by domestic nonprofit corporation listing six directors, to include a president, treasurer, and secretary) *with*CMS Ex. 6 (August 2, 2021 Medicare enrollment application listing a single owner and manager).  There is no evidence, such as meeting minutes, that Petitioner transformed from a non-profit corporation with a board of directors, as reported to LARA, to a solely owned and managed corporation, as reported to the Medicare program on August 2, 2021, presumably because such a transformation would jeopardize its status as a non-profit corporation.

Petitioner argues that it should not be placed on CMS’s Preclusion List because its conduct is not detrimental to the best interests of the Medicare program and it committed a mere clerical error when it did not list individuals who “are not involved in [its] business” on its Medicare application.  P. Br. at 9-10.  Petitioner does not otherwise argue that CMS incorrectly applied the regulatory factors.  *See*42 C.F.R. §§ 422.2, 422.222.  CMS correctly determined, consistent with 42 C.F.R. § 422.2, that Petitioner’s failure to

**Page 13**

report its corporate officers and directors, particularly Mr. Jones, was “very serious,” and posed a “significant program integrity risk” such that those factors, alone, justified inclusion on CMS’s Preclusion List.  CMS Ex. 10 at 6.  CMS also appropriately determined that Petitioner’s “underlying conduct of providing false and misleading information regarding the managerial control information . . . negatively impacts the integrity of the Medicare program.”  CMS Ex. 10 at 6.  In determining that placement on its Preclusion List was appropriate, CMS found that Petitioner’s “conduct is detrimental to the best interests of the Medicare program.”  CMS Ex. 10 at 6.  CMS had a legitimate basis to uphold the practice’s placement on the Preclusion List.

Finally, Petitioner argues that “CMS has stated that reenrollment bars of over 3 years are only warranted in those cases involving unscrupulous suppliers exhibiting behaviors ‘so harmful’ to Medicare as to warrant such a lengthened bar,” and that the purported “clerical error” committed by Petitioner does not warrant a five-year re-enrollment bar.  P. Br. at 8.  The Departmental Appeals Board (DAB) has unambiguously explained that the length of a re-enrollment bar is a matter outside the scope of an ALJ’s review, stating:

A decision by CMS or its contractor about how long to bar a revoked supplier from re-enrolling in Medicare, unlike the determination to revoke the supplier’s billing privileges, is not an appealable “initial determination” under 42 C.F.R. Part 498.  *Blossomwood Medical, P.C., et al.*, DAB No. 2914, at 11 (2018); *Vijendra Dave, M.D.*[DAB No. 2672] at 8-11 (stating that the authority of an ALJ or the Board in a revocation appeal “does not extend to reviewing the length of the reenrollment bar imposed by CMS”).  We therefore cannot consider or act upon Petitioner’s contention that the three-year re-enrollment bar was excessive in her circumstances.

*Linda Silva, P.A.*, DAB No. 2966 at 11 (2019).  Pursuant to 42 C.F.R. § 424.535(c)(1)(i), CMS may impose a re-enrollment bar for a minimum of one year and a maximum of ten years.  Petitioner has not identified any legal error in CMS’s imposition of the re-enrollment bar, and “CMS’s determination regarding the duration of the re‐enrollment bar is not reviewable.”  *Vijendra Dave, M.D.*, DAB No. 2672 at 11 (2016).  The DAB explained that “the only CMS actions subject to appeal under Part 498 are the types of initial determinations specified in section 498.3(b).”  *Id.*Additionally, the DAB stated that “[t]he determinations specified in section 498.3(b) do not, under any reasonable interpretation of that regulation’s text, include CMS decisions regarding the severity of the basis for revocation or the duration of a revoked supplier’s re-enrollment bar.”  *Id.*Based on the DAB’s review of the rulemaking history, it determined that CMS did not intend to “permit administrative appeals of the length of a re-enrollment bar.”  *Id.*  I have no authority to review this issue, and I do not disturb the re-enrollment bar.

**Page 14**

To the extent that Petitioner requests an equitable reduction in the length of the re-enrollment bar, I cannot grant relief in equity.  *US Ultrasound*, DAB No. 2302 at 8 (2010) (“Neither the ALJ nor the [DAB] is authorized to provide equitable relief by reimbursing or enrolling a supplier who does not meet statutory or regulatory requirements.”).  Petitioner points to no authority by which I may grant relief from the applicable regulatory requirements, and I have no authority to declare statutes or regulations invalid or ultra vires.  *1866ICPayday.com, L.L.C.*, DAB No. 2289 at 14 (2009) (“An ALJ is bound by applicable laws and regulations and may not invalidate either a law or regulation on any ground . . .”).

V.     Conclusion

I affirm the revocation of Petitioner’s Medicare enrollment and billing privileges and its placement on CMS’s Preclusion List.


          /s/
        Leslie C. Rogall

                      Administrative Law Judge
      1. Act 162 of 1982 is also known as the Nonprofit Corporation Act.  See https://www.legislature.mi.gov/documents/mcl/pdf/mcl-Act-162-of-1982.pdf (last visited May 25, 2022). back to note 1
                      2. Pursuant to Mich. Comp. Laws § 450.2108, a “nonprofit corporation” is “a corporation incorporated to carry out any lawful purpose or purposes that does not involve pecuniary profit or gain for its directors, officers, shareholders, or members.” back to note 2
                      3. The evidence indicates that Petitioner updated LARA to remove Mr. Jones as its resident agent.  See P. Ex. 3. back to note 3
                      4. The statements are not only unsworn, but address the present post-revocation timeframe rather than the relevant timeframe preceding Petitioner’s revocation.  CMS has not alleged that it would be prejudiced by the admission of this testimony. back to note 4
                      5. As an in-person hearing to cross-examine witnesses is not necessary, it is unnecessary to further address CMS’s motion for summary judgment. back to note 5
                      6. My findings of fact and conclusions of law are in bold and italics. back to note 6
                      7. CMS upheld Petitioner’s placement on the Preclusion List pursuant to 42 C.F.R.
§§ 422.2 and 422.222 (addressing Medicare Advantage plans).  CMS Ex. 10 at 1, 5. back to note 7
                      8. “The board of a private foundation and board of a corporation formed to provide care to a dentally underserved population under section 16625 of the public health code . . . shall consist of 1 or more directors.”  Mich. Comp. Laws § 450.2505(1)(a).  Petitioner has not claimed that it operates as a private foundation or was formed with the purpose of providing care to a dentally underserved population pursuant to section 16625 of the public health code.  See Mich. Comp. Laws §§ 333.16625 (dental hygiene services as part of program for the dentally underserved), 450.2108 (defining that a private foundation “means a tax exempt corporation described in section 501(c)(3) of the internal revenue code of 1986, 26 USC 501, that is classified as a private foundation under section 509(a) of the internal revenue code of 1986, 26 USC 509.”); see also CMS Ex. 5 (Petitioner’s annual domestic nonprofit corporation report listing, by name, three officers and three directors in response to a request it list the names of the corporation’s “board of directors and its president, treasurer, and secretary”). back to note 8
                      9. Petitioner has not submitted any governing documents, such as bylaws, or minutes from director meetings.  Nor has Petitioner submitted any evidence that it did not appoint the directors, to include the president, listed in its annual corporate filings.  Petitioner also has not submitted any evidence that, prior to its revocation, it had removed its board of directors, to include the president, or changed its governing structure to reflect that Ms. Jones is the sole owner and director. back to note 9
                      10. Ms. Jones, by electronically signing the corporate annual report on July 12, 2021, accepted the following terms:  “By selecting ACCEPT, I hereby acknowledge that this electronic document is being signed in accordance with the [Nonprofit Corporation] Act.  I further certify that to the best of my knowledge the information provided is true, accurate, and in compliance with the [Nonprofit Corporation] Act.”  CMS Ex. 5 at 2. back to note 10
                      11. For example, an individual or entity filing a civil action against Petitioner likely would have served Mr. Jones, who was listed as both the corporate president and registered agent.  See CMS Exs. 5 (July 2021 annual report); 8 (August 25, 2021 initial determination); P. Ex. 3 (September 2, 2021 update of resident agent). back to note 11
                      12. Because WPS limited the factual basis underlying the revocation determination to Petitioner’s failure to disclose Mr. Jones as the corporate president, I do not address Petitioner’s failure to list any other directors.  See CMS Ex. 8. back to note 12 Back to top
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