Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

Date: February 19, 2009

Presbyterian Hospital of Rockwall,
(CCN: 67-0044),

Petitioner, Decision No. CR1904

)
)
)
)
)
) Docket No. C-08-558
)
)
)
)
Centers for Medicare & Medicaid Services. )

DECISION

Petitioner, Presbyterian Hospital of Rockwall, did not meet the requirements for
participation in the Medicare program before April 4, 2008, the effective date of its
provider agreement to participate in the Medicare program. Summary judgment is
entered for the Centers for Medicare & Medicaid Services (CMS) and the hearing
scheduled for March 10 through 12, 2009, in Dallas, Texas is cancelled.

I. Background

Petitioner is a hospital located in Rockwall, Texas. On September 17, 2007, Petitioner
submitted an enrollment application to participate in the Medicare program to the
Medicare contractor, Trailblazer Health Enterprises, LLC (the contractor). The contractor
acknowledged that Petitioner’s application was received on September 21, 2007. Joint
Stipulation of Undisputed Facts (Jt. Stip.) J 1-2. CMS notified Petitioner by letter dated
April 30, 2008, that Petitioner was accepted for participation in Medicare and that the
effective date of its provider agreement was April 4, 2008. Petitioner requested
reconsideration on May 9, 2008. CMS denied Petitioner’s request that the effective date
of its provider agreement be changed from April 4, 2008 to March 4, 2008. Jt. Stip. [{ 6-
7; Request for Hearing. Petitioner requested a hearing before an administrative law judge
(ALJ) by letter dated June 16, 2008. The case was assigned to me for hearing and
decision on July 14, 2008, and a Notice of Case Assignment and Prehearing Case
Development Order (Prehearing Order) was issued at my direction on that date. On
September 30, 2008, I notified the parties that a hearing was scheduled to be convened in
2

this case on March 10, 2009. CMS submitted CMS Exhibits (CMS Exs.) | through 3, and
5 through 6. Petitioner has not objected, and CMS Exs. | through 3 and 5 through 6 are
admitted. On September 26, 2008, CMS filed a motion for summary judgement (CMS
Brief). Petitioner filed a response to the CMS motion for summary judgment on October
16, 2008 (P. Brief). Petitioner submitted Petitioner’s Exhibits (P. Exs.) 1 through 39.
CMS has not objected, and P. Exs. | through 39 are admitted.

II. Discussion
A. Applicable Law

Section 1811 of the Social Security Act (the Act) (42 U.S.C. § 1395c) describes the
hospital insurance benefits program for the aged and disabled known as Medicare Part A.
Payment under the program may only be made to providers of services who are
determined eligible to participate pursuant to section 1866 of the Act. Act § 1814(a) (42
U.S.C. § 1395f(a)). Medicare Part A is administered by CMS through Medicare
contractors. Act § 1816 (42 U.S.C. § 1395(h)).

A “hospital” within the meaning of section 1861(e) of the Act (42 U.S.C. § 1395x), isa
“provider of services” pursuant to section 1861(u) of the Act. A provider of services is
qualified to participate in the Medicare program, and eligible for payment from the
program for its services to Medicare eligible beneficiaries, if it files with the Secretary of
Health and Human Services (Secretary) an agreement that meets the requirements of
section 1866(a)(1) of the Act (42 U.S.C. § 1395cc). The Secretary may refuse to enter
into a contract! with a provider of services if the Secretary determines the provider fails to
comply substantially with the provisions of the provider agreement, the Act, or the
regulations; the provider was previously excluded from participation; or the provider was
convicted of a felony offense that the Secretary determines is detrimental to the best
interests of the program or its beneficiaries. Act § 1866(b)(2). An institution or agency
dissatisfied with the Secretary’s determination not to enter into a provider agreement
pursuant to section 1866(b)(2), is entitled to a hearing and judicial review. Act

§§ 1866(h)(1) and (j)(2). The Act requires that the Secretary issue regulations that
establish a process for the enrollment of providers and suppliers, including deadlines for
actions on applications for enrollment, with monitoring of the performance of Medicare
contractors in meeting the deadlines. Act § 1866(j)(1).

' These contracts between the Secretary and providers of services are commonly
referred to as provider agreements.
3

The Secretary’s regulations for provider and supplier enrollment are found at 42 C.F.R.
Part 489; the conditions for participation of hospitals are found at 42 C.F.R. Part 482; the
basic requirements for participation as a provider are set forth at 42 C.F.R. § 489.10; and
the procedures for application to participate in Medicare as a provider or supplier are set
forth in 42 C.F.R. Part 424. The regulations require that a state survey agency determine
whether a provider meets the conditions for participation and make a recommendation to
CMS. 42 C.F.R. § 489.10(d). However, the regulation also allows a provider to be
deemed to meet participation requirements based upon accreditation by an approved
accrediting organization. 42 C.F.R. § 489.13(a)(ii). If CMS determines that a provider
meets the requirements for participation, CMS notifies the provider and includes two
copies of the provider agreement that the provider must sign and return. CMS then
returns one copy of the provider agreement with a notice to the provider of the acceptance
and effective date of the agreement. 42 C.F.R. § 489.11. The effective date of the
provider agreement and the date on which a provider is eligible to have its services to a
Medicare eligible beneficiary paid by Medicare is determined pursuant to 42 C.F.R.

§ 489.13.

The hearing to which an institution or agency that is denied a provider agreement is
entitled pursuant to section 1866(h)(1) and (j)(2) of the Act, is described in section 205(b)
of the Act and is before an ALJ. The prospective provider who is denied enrollment may
obtain review of the CMS decision in accordance with 42 C.F.R. Part 498. 42 C.F.R.

§§ 424.545(a); 498.3(b)(1) and (17); 498.5(a)(2). The hearing before an ALJ is a de novo
proceeding. Anesthesiologists Affiliated, et al, DAB CR65 (1990), aff'd, 941 F.2d 678
(8th Cir. 1991); Emerald Oaks, DAB No. 1800, at 11 (2001); Beechwood Sanitarium,
DAB No. 1906 (2004); Cal Turner Extended Care, DAB No. 2030 (2006); The Residence
at Salem Woods, DAB No. 2052 (2006). The Board has previously ruled upon the
allocation of the burden of persuasion and the burden of coming forward with the
evidence in cases subject to 42 C.F.R. Part 498. The Board has held that CMS must make
a prima facie showing of the basis for its action. “Prima facie” means that the evidence is
“(s)ufficient to establish a fact or raise a presumption unless disproved or rebutted.”
Black’s Law Dictionary 1228 (8th ed. 2004); see also Hillman Rehabilitation Center,
DAB No. 1611, at 8 (1997), aff'd Hillman Rehabilitation Center v. U.S. Dept. of Health
and Human Services, No. 98-3789 (GEB), slip op. at 25 (D.N.J. May 13, 1999). To
prevail, a petitioner must overcome CMS’s showing by a preponderance of the evidence.
Batavia Nursing and Convalescent Center, DAB No. 1904 (2004); Batavia Nursing and
Convalescent Inn, DAB No. 1911 (2004) aff'd, Batavia Nursing & Convalescent Ctr. v.
Thompson, 129 Fed. Appx. 181 (6th Cir. 2005); Emerald Oaks, DAB No. 1800 (2001);
Cross Creek Health Care Center, DAB No. 1665 (1998); Hillman Rehabilitation Center,
DAB No. 1611.
B. Issues
The issues in this case are:
Whether summary judgment is appropriate, and, if so,

Whether the effective date of Petitioner’s provider agreement and
participation in Medicare may or should be changed from April 4, 2008
to March 4, 2008.

C. Analysis
My conclusions of law are set forth in bold followed by my findings of fact and analysis.

1. Summary judgment is appropriate in this case because there are no
disputed issues of material fact.

An ALJ may decide a case on summary judgment, without an oral evidentiary hearing, if
the case presents no genuine issues of material fact. Crestview Parke Care Center v.
Thompson, 373 F.3d 743, 750 (6th Cir. 2004); Livingston Care Center v. Dept. of Health
and Human Services, 388 F.3d 168 (6th Cir. 2004). The Departmental Appeals Board
(the Board) has previously approved the use of a summary judgment procedure “akin to
the summary judgment standard contained in Federal Rule of Civil Procedure 56.”
Crestview Parke Care Center, 373 F.3d 743, 750. Under that rule, the moving party may
show the absence of a genuine factual dispute by presenting evidence so one-sided that it
must prevail as a matter of law, or by showing that the non-moving party has presented no
evidence “sufficient to establish the existence of an element essential to that party’s case,
and on which that party will bear the burden of proof at trial.” Livingston Care Center,
388 F.3d at 173, citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The non-
moving party must then act affirmatively by tendering evidence of specific facts showing
that a dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586, n.11 (1986); see also Vandalia Park, DAB No. 1939 (2004); Lebanon Nursing and
Rehabilitation Center, DAB No. 1918 (2004). A mere scintilla of supporting evidence is
not sufficient. “If the evidence is merely colorable or is not significantly probative
summary judgment may be granted.” Livingston Care Center, 388 F.3d, 173, quoting
Anderson v. Liberty Lobby, 477 U.S. 242, at 249-50 (1986). In deciding a summary
judgment motion an ALJ may not make credibility determinations or weigh conflicting
evidence but must instead view the entire record in the light most favorable to the non-
moving party, all reasonable inferences drawn from the evidence in that party’s favor.
Innsbruck HealthCare Center, DAB No. 1948 (2004); Madison Health Care, Inc., DAB
No. 1927 (2004).
5

The Prehearing Order advised the parties that the Federal Rules of Civil Procedure and
the Federal Rules of Evidence do not apply to proceedings before ALJs assigned to the
Departmental Appeals Board, Civil Remedies Division. However, the Prehearing Order
also advised the parties that both the Federal Rules of Evidence and the Federal Rules of
Civil Procedure would be consulted as guides for resolution of issues due to the fact that
further review in this case would be by the federal courts. Both parties addressed
summary judgment standards consistent with those established by Fed. R. Evid. 56 and
related cases. CMS Brief at 6-7; P. Brief at 9-10; Wade Pediatrics, DAB No. 2153, at 15-
17 (2008). This case is appropriate for summary judgment. There is no genuine dispute
as to any material fact and a decision may be made by application of law to the
undisputed facts.

2. Pursuant to 42 C.F.R. § 489.13(b), the effective date of Petitioner’s
provider agreement and participation in Medicare is the date on which
Petitioner met all federal requirements.

3. The effective date of Petitioner’s provider agreement and
participation in Medicare is April 4, 2008, the date it was determined to
meet all federal requirements.

a. Undisputed Material Facts

The parties stipulated that Petitioner sent its enrollment application to the contractor on
September 17, 2007. On October 5, 2007, the contractor acknowledged that it received
Petitioner’s application on September 21, 2007. Petitioner was licensed by the State of
Texas as a general hospital on December 6, 2007. Petitioner was surveyed by the Joint
Commission on Accreditation of Healthcare Organizations (JCAHO), using the
Comprehensive Accreditation Manual for Hospitals, and granted accreditation with an
effective date of March 4, 2008. Jt. Stip. J§ 1,2, 4,5. JCAHO granted Petitioner
accreditation for three years effective March 4, 2008, the date the survey of Petitioner was
completed. CMS Brief at 2. On March 20, 2008, March 21, 2008, and April 3, 2008, the
Medicare contractor requested that Petitioner make corrections to its application or asked
for additional information to support its application. P. Exs. 11, 13, and 20. CMS
notified Petitioner by letter dated April 30, 2008, that the Secretary accepted Petitioner’s
participation agreement effective April 4, 2008. P. Ex. 29.

b. Analysis

The Secretary has specified in 42 C.F.R. § 489.13 how the effective date of a provider’s
agreement is determined. The regulation applies to, among others, Medicare provider

agreements with providers that “[a]re deemed to meet Federal requirements on the basis
of accreditation by an accrediting organization whose program has CMS approval at the
6

time of accreditation survey and accreditation decision.” 42 C.F.R. § 489.13(a)(1)(ii).
There is no question that JCAHO was an approved accreditation organization when it
completed its survey and granted Petitioner accreditation on March 4, 2008, and CMS did
not require another survey prior to approving Petitioner’s agreement and participation in
Medicare. Thus, Petitioner may be deemed to have met the federal requirements that
were subject to or that required survey and certification on March 4, 2008, the date of its
accreditation. Section 489.13(b) of Title 42 provides that a provider agreement is
effective the date the required survey is completed, or in this case, the accreditation, if on
that date the provider or supplier meets all applicable federal requirements set forth in 42
C.F.R. Chapter IV.

CMS argues that Petitioner was not qualified to participate in Medicare until April 4,
2008, because it did not meet all federal requirements prior to that date. The CMS
argument is based upon the undisputed fact that the Medicare contractor did not approve
Petitioner’s application (Form CMS-855A) until April 4, 2008. CMS Brief at 7-8. CMS
argues that Petitioner did not meet the requirement that its application be approved by the
Medicare contractor prior to April 4, 2008. CMS cites 42 C.F.R. § 424.510(a) as the
source of the requirement that the Medicare contractor must approve the provider’s
application before the provider agreement can be effective. The regulation states:

(a) Providers and suppliers must submit enrollment information on the
applicable enrollment application. Once the provider or supplier
successfully completes the enrollment process, including, if applicable, a
State survey and certification or accreditation process, CMS enrolls the
provider or supplier into the Medicare program. To be enrolled, a provider
or supplier must meet enrollment requirements specified in paragraph (c) of
this section.

42 C.F.R. § 424.510(a). The reference to “paragraph (c)” in the subsection appears to be
in error, as the list of enrollment requirements are set forth in 42 C.F.R. § 424.510(d).

l agree with Petitioner that, contrary to the CMS argument, neither 42 C.F.R.

§ 424.510(a) nor (d) establish “Medicare contractor approval” as a federal requirement
for participation in Medicare. However, the regulation at 42 C.F.R. § 424.510(d)(1) does
clearly establish the federal requirement that:

(1) Submittal of the enrollment application. A provider or supplier must
submit a complete enrollment application and supporting documentation to
the designated Medicare fee-for-service contractor.
7

Petitioner does not dispute that on April 3, 2008, the Medicare contractor requested
additional information from Petitioner because its application (Form CMS-855A) was
missing information or supporting documentation. P. Ex. 20, at 2. According to P. Ex.
22, at 1, and Petitioner does not dispute this, Petitioner sent the missing documents to the
Medicare contractor on Friday, April 4, 2008. Accordingly, I conclude that Petitioner did
not submit a complete enrollment application and supporting documentation to the
Medicare contractor until April 4, 2008, and Petitioner did not meet all federal
requirements for participation until that date. I further conclude that CMS committed no
error by establishing April 4, 2008 as the effective date of Petitioner’s provider agreement
and participation in Medicare.

Petitioner asserts that there are material facts in dispute. P. Brief at 15. I disagree.
Petitioner argues that the date on which the Medicare contractor received Petitioner’s
application is a material fact in dispute. I accept Petitioner’s assertion that the contractor
received the application on September 21, 2007. However, in this case, the date
Petitioner’s application was received is not a material fact, as it does not affect my
decision. Petitioner asserts that whether it met all federal requirements in the Medicare
program on March 4, 2008 is a material fact in dispute. This is a mixed question of law
and fact. The federal requirements, including the requirement to submit a complete
application, are established by the regulations. Whether Petitioner met all the federal
requirements established by law is, in this case, a question of fact. Petitioner is deemed to
have met all federal requirements covered by the JCAHO survey because Petitioner was
accredited by JCAHO. However, the regulatory requirement to submit a complete
enrollment application and supporting documentation is not subject to the JCAHO survey
and Petitioner is not entitled to have its application “deemed” complete. Petitioner does
not dispute and, in fact, Petitioner submitted evidence which shows that on April 3, 2008,
the Medicare contractor requested additional information to complete Petitioner’s
application and that Petitioner submitted all required information and/or supporting
documents to complete its application on April 4, 2008. Therefore, as a matter of law,
Petitioner did not meet all federal requirements until it submitted its complete application
on April 4, 2008. Petitioner asserts that a material fact in dispute is whether CMS
appropriately applied relevant sections of the regulation; however, this is an issue of law
not fact. Similarly, whether a contractor’s approval of an application is a federal
requirement is an issue of law, and an issue that I have resolved in Petitioner’s favor.
Whether a provider may schedule its survey prior to approval of the enrollment
application is a legal issue that does not require resolution in this case.

Petitioner acknowledges that it “must submit an enrollment application including certain
information and documentation . . . and that such application ultimately must be approved
by CMS” in order for Petitioner to participate in Medicare. P. Brief at 13. Petitioner
incorrectly asserts that it submitted a complete enrollment application and all of the
8

required information and documents by March 4, 2008. P. Brief at 13. The undisputed
evidence shows that the contractor requested information to complete or correct the
application on March 20, 2008, March 21, 2008, and April 3, 2008, and Petitioner
submitted the last of the information requested on April 4, 2008. P. Exs. 11, 13, and 20.
Petitioner does not assert that the documents and information requested were not
necessary to complete its application, nor does Petitioner point to any evidence that the
information and documents requested duplicated prior submissions in support of its
application. Rather, Petitioner argues that it was the fault of CMS and its contractor for
not having more staff to process Petitioner’s application more expeditiously. While I
recognize Petitioner’s frustration that it took more than 180 days for the Medicare
contractor and CMS to act upon its application for enrollment, Petitioner cites no
authority for the proposition that it is entitled to any relief or remedy on that basis.

Ill. Conclusion

For the foregoing reasons, the CMS motion for summary judgment is granted and the
hearing scheduled for March 10 through 12, 2009, in Dallas, Texas is cancelled.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Social Security Administration, ) Date: February 18, 2009

)
Petitioner, )
)

-Vv.- ) Docket No. C-08-710

) Decision No. CR1902
Avajean B. Manche, )
)
Respondent. )
)

DECISION

This matter is before me on a motion to dismiss filed by Petitioner, the Social Security
Administration (SSA). On September 19, 2008, Petitioner filed a motion to dismiss

(P. Motion) seeking dismissal of Avajean B. Manche’s (Respondent) September 4, 2008
hearing request', which was accompanied by five attachments. To comply with the
procedures of the Civil Remedies Division, the attachments have been renamed as
exhibits and entered into the record as Petitioner’s exhibits (P.Exs.) 1-5. Respondent
filed a response (R. Response) to Petitioner’s Motion for Dismissal, received October 15,
2008. Attached to the response, Respondent included unlabeled documents. The first
document is entitled Financial Disclosure Form and has been marked as Respondent
Exhibit (R. Ex.) 1. The second document is entitled Client Progress Note from the
Horizons Mental Health Center and has been marked as R. Ex. 2. The last document is a
June 24, 2008 letter from the SSA and has been marked as R. Ex. 3. I admit P. Exs. 1-5
and R. Exs. 1-3 into evidence. On November 20, 2008, Petitioner filed a reply. For the
reasons discussed below, I dismiss Respondent’s request for hearing as untimely.

' Respondent requested a hearing by an undated letter received on September 4,
2008. Hereafter, Respondent’s hearing request will be referred to as the September 4,
2008 hearing request.
I. Background

On February 8, 2008, Petitioner notified Respondent that it was proposing imposition of a
civil money penalty (CMP) of $15,000 pursuant to section 1129 of the Social Security
Act (Act) (42 U.S.C. § 1320a-8). P. Ex. 1. Petitioner’s proposal of a CMP was based on
the determination that Respondent was making false statements or representations to the
SSA concerning her work activity and earnings in order to receive Title XVI
Supplemental Security Income (SSI) benefits. Jd. The February 8, 2008 notice letter
also informed Respondent that a SSA investigation indicated that from 2001 through
2004 Respondent provided another individual with home health care, yard work, and
other various services for which she received compensation, but failed to report it to the
SSA. Id.

The SSA notice letter further informed Respondent that if she disagreed with this
determination, she may request a hearing before an administrative law judge (ALJ) and
that the procedures governing this process are set out in 20 C.F.R. §§ 498.109 and
498.202. Id. The notice letter informed Respondent “[i]f you desire such a hearing, you
must file a written request within 60 days of the date of receipt of this letter.” [d. SSA
hand-delivered the notice on February 26, 2008. P. Ex. 2.

Respondent requested a hearing by letter received September 4, 2008 contending that she
did not intentionally defraud or abuse the Social Security System. P. Ex. 3.

After consideration of the written arguments and documentary evidence submitted by the
parties, I dismiss Respondent’s hearing request. In doing so, I find that the hearing
request was untimely filed and the time for filing a request for hearing cannot be
extended, as Respondent has not shown good cause for her failure to file a timely hearing
request.

II. Issues
A. Whether Respondent filed a timely request for hearing; and if not

B. Whether Respondent has shown good cause for extending the time to file a
request for hearing.

Ill. Applicable Law and Regulations

In cases involving SSA, a party is entitled to a hearing only if that party files its request
within the time limits established by 20 C.F.R. § 498.109, unless the period for filing is
extended. In order to be entitled to a hearing, a party must file its request within 60 days
from receipt of a notice of a determination by SSA to impose a remedy. An ALJ may
extend the time within which a hearing request may be filed based on a showing of good
3

cause to justify an extension of time. 20 C.F.R. § 498.202(c)(2). An ALJ must dismiss a
request for hearing which is not timely filed. 20 C.F.R. § 498.202(f)(1).

IV. Findings and Discussion

I make findings of fact and conclusions of law (Findings) to support my decision to
dismiss the request for hearing.

1. The SSA notice letter was received on February 26, 2008.

SSA sent Respondent the notice of proposed penalty and assessment (Notice) by hand-
delivery to the Respondent’s father, Terry Manche, on February 26, 2008. P. Ex. 2.

Mr. Russell Plumley, Respondent’s son, co-guardian and representative, admitted receipt
of SSA’s notice letter by Terry Manche on February 26, 2008. R. Response at 1. Terry
Manche notified Russell Plumley about the SSA notice letter upon receipt of the notice
letter. Jd. This notice constituted agency action from which Respondent’s right to appeal
arose. 20 C.F.R. § 498.109(b).

On February 28, 2008, the Respondent’s son, Russell Plumley, contacted Petitioner and
advised that he and Karenjean Plumley were co-guardians for the Respondent. P. Motion,
at 3. Mr. Plumley, acting on behalf of the respondent, notified the SSA that he would be
providing documentation of Ms. Manche’s physical and mental condition. Jd. Mr.
Plumley was reminded by the SSA that if a hearing is desired, a request for a hearing
must be submitted within 60 days, as was specified in the letter. Jd. On March 19, 2008,
Mr. Plumley contacted Petitioner again to say he would be sending documentation of Ms.
Manche’s condition. /d.; R. Response at 2.

2. Respondent’s hearing request was received on September 4, 2008.
Respondent’s hearing request was received by the Departmental Appeals Board (DAB),
Civil Remedies Division on September 4, 2008. P. Motion, at 6. This submission was

made 189 days after Respondent’s receipt of the penalty letter. Jd.

3. Respondent’s hearing request was filed more than 60 days after receipt of the
SSA’s notice letter, and was therefore untimely.

Section 498.202(c) of 20 C.F.R. expressly provides that:
The request for a hearing must be:

(1) In writing and signed by the respondent or by the respondent’s
attorney; and
4

(2) Filed within 60 days after the notice, provided in accordance with
§ 498.109, is received by the respondent or upon a showing of good
cause, the time permitted by an ALJ.

The latest date by which Respondent could have filed a timely hearing request consistent
with 20 C.F.R. § 498.202(c)(2) was April 28, 2008.2 Respondent’s hearing request was
received on September 4, 2008. P. Ex. 2. The filing of Respondent’s request was clearly
beyond the 60-day period stipulated in the regulations. Therefore, Respondent’s hearing
request was untimely.

4. Respondent has not shown good cause for her untimely hearing request.

The term “good cause” is not specifically defined by the regulations. The DAB has not
found it necessary to decide the exact scope of the term “good cause” under 20 C.F.R.
Part 498. See SSA v. Parham, DAB CR1600 (2007). Good cause has been interpreted by
the Board in other types of cases as circumstances beyond the ability of the party litigant
to control. Jd.

Respondent has made no such showing. Mr. Plumley, acting on behalf of the
Respondent, admits that he received notice of the penalty on or around February 26, 2008.
P. Ex. 3. He also acknowledges contacting the SSA attorney, Peter Johnson, and
inquiring about the penalty on February 28, 2008. /d.; R. Response at 1. After contacting
Mr. Johnson twice, neither Mr. Plumley, nor any individual representing Respondent in
the matter, submitted the required hearing request within the 60-day period. P. Motion, at
3. Thus, the Respondent failed to appeal the decision within the 60-day period.

Mr. Plumley argues that he thought the SSA notice letter was fraudulent and an attempt to
steal his mother’s identity because the letter was accompanied by a Financial Disclosure
Form. R. Response at 4. The SSA notice letter states:

lam affording you an opportunity to provide me with any and all information that
could potentially mitigate your liability and the penalty amount. This information
may relate to your financial condition and/or any other information that you may
feel is relevant. To assist you in this regard, I am herein providing you with a
financial disclosure form. Your completion of the financial disclosure form is
voluntary. However, if you want me to consider your financial condition, I
strongly recommend that you complete the form.

P. Ex. 1, at 2.

2

* The 60 day time period in which to respond expired on April 26, 2008, a
Saturday. Therefore, Respondent had until April 28, 2008, the Monday afterward, to file
a timely hearing request.
5

Further, Mr. Plumley claims that he talked to various individuals at his local SSA office
who told him that the SSA “does not sue citizens” and/or that any action against the
Respondent was going to be dropped. R. Response at 3. He even contacted his
Congressman about this situation. The only evidence of Mr. Plumley’s actions are Client
Progress Notes from the Horizons Mental Health Center from June 19, 2008 and July 21,
2008 about the Respondent’s case and a June 24, 2008 letter from the SSA to
Congressman Jerry Moran’s office concerning this case. All of the Respondent’s
evidence is well after the expiration of the hearing request period on April 28, 2008.
Karenjean Plumley, Respondent’s daughter and co-guardian, contacted the SSA office in
Kansas City in early March 2008. R. Response at 3. Mr. Plumley admits that the next
week, after looking into the matter, the SSA office contacted Ms. Plumley. Jd. Ms.
Plumey was informed that her “mother was being sued due to giving false information to
the SSA.” Jd. At this point, still well within the 60-day time period to request a hearing,
Mr. Plumley had independent verification that the SSA notice letter was not fraudulent.
However, Mr. Plumley did not follow the clear instructions in the SSA notice letter ina
timely manner and request a hearing.

Completion of the Financial Disclosure Form is plainly voluntary and independent of any
request for hearing. Mr. Plumley was so advised in the SSA notice letter and on the
telephone by the SSA attorney. P. Reply at 1. A hearing request would have required no
financial disclosure whatsoever but, even so, Respondent failed to timely request a
hearing

On a different page of the SSA notice letter, it states that:

If you wish to contest this proposed civil money penalty, you have a right to a
hearing before an Administrative Law Judge. 20 C.F.R. §§ 498.109 and 498.202.
If you desire such a hearing, you must file a written request within 60 days of the
date of receipt of this letter... . If you do not request a hearing within the 60-day
period, the proposed civil money penalty will be imposed on you. You will have
no right to an administrative appeal after that time.

P. Ex. 1, at3. The SSA letter clearly states that Respondent only has 60 days from the
date of receipt to file a hearing request.

I find that neither Respondent, nor any individual acting on behalf of the Respondent in
this matter, has demonstrated good cause for her untimely hearing request. Respondent
has not shown circumstances beyond her control resulting in her failure to file her hearing
request within the 60-day requirement. The ability to appeal has always been in the
control of the Respondent. The procedures for requesting a hearing are clearly given in
the notice letter and the assistance of an attorney is not required to understand these
procedures. Furthermore, Respondent never requested an extension of time for filing a
hearing request.
V. Conclusion

Based on the applicable law and undisputed facts, I dismiss this hearing request because it
was untimely filed, and good cause does not exist to extend the time for filing.

/s/
José A. Anglada
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Catherine Gaddy, ) Date: February 12, 2009

)
Petitioner, )
)

-Vv.- ) Docket No. C-09-117

) Decision No. CR1901
The Inspector General. )
)

DECISION

T uphold the exclusion of Petitioner, Catherine Gaddy, from participation in Medicare,
Medicaid, and all federal health care programs for five years. I find a basis for the
exclusion, and the five-year exclusion is the mandatory minimum period as a matter of
law.

I. Background

Petitioner was excluded by the Inspector General (I.G.) pursuant to section 1128(a)(1) of
the Social Security Act (Act) because she was convicted of misdemeanor larceny for
fraudulently obtaining payment from the Medicaid program, by means of false, or
fraudulent claims. Specifically, Petitioner knowingly submitted as a provider of medical
assistance time sheets to her employer that indicated that she had provided personal care
services to Medicaid recipients when in fact she had not provided the services and when
she knew the time sheets would be used to bill the Medicaid program. I.G. Exhibits
(Exs.) 3, 4, and 5. Section 1128(a)(1) requires the Secretary of Health and Human
Services to exclude a person convicted of a criminal offense related to the delivery of an
item or service under any State health care program.'

' "State health care program" is defined in section 1128(h) of the Act and includes
(continued...)
2

Petitioner argues that she was wrongfully accused. Nevertheless, Petitioner does not
dispute that she was convicted of a crime for which exclusion is required.

Petitioner's request for a hearing is dated November 9, 2008, and it stems from the I.G.'s
notice letter, dated September 30, 2008, which notified Petitioner that she was excluded
and informed her of her right to a hearing. In accordance with my initial order, the parties
timely submitted their informal briefs. Petitioner did not submit any exhibits. The I.G.
submitted four exhibits, I.G. Exs. 1-4. I thereafter convened a prehearing telephone
conference on January 22, 2009, at which the parties agreed that this case may be decided
based on the written record without an oral hearing. I established an additional briefing
schedule to submit written briefs and any additional documents by February 6, 2009,
although Petitioner indicated that she had submitted everything and would not be filing a
supplement. The Inspector General submitted a supplemental brief together with the
sworn declaration of the prosecutor in Petitioner’s criminal case, which is marked as I.G.
Ex. 5. Petitioner did not object to these exhibits, so I admit I.G. Exs. 1-5.

The essential facts of this case are undisputed. Petitioner was a provider of medical
assistance who provided personal care services to Medicaid recipients. The Grand Jury
ndictment dated March 9, 2006 originally charged Petitioner with one count of Medicaid
Fraud by Provider, a felony, finding that Petitioner unlawfully, willfully and feloniously
nowingly submitted false statements or representations on her time sheet which she

new would be used as the basis for billing the Medicaid program. The time sheets
indicated she provided services to Medicaid recipients when in fact she had not. I.G.
Exs. 4, 5. The North Carolina Attorney General’s Office later offered Petitioner a plea
agreement based on the same facts, but to the lesser charge of misdemeanor larceny
provided she pay restitution to her employers.” I.G. Exs. 3, 5. Petitioner accepted the
plea agreement and, on July 26, 2006, the guilty plea was accepted. I.G. Ex. 2. Petitioner
was sentenced to 45 days suspended incarceration, 18 months supervised probation and
was ordered to pay restitution plus other fees. I.G. Ex. 2.

'(...continued)
the Medicaid program (Title XIX).

> The declaration of the Assistant Attorney General indicates that the $2,240.46 in
restitution that Petitioner was ordered to pay represents a portion of the amount that was
fraudulently billed to the Medicaid Program based on Petitioner’s submission of false
time sheets. I.G. Ex. 5.
II. Issues

(1) Whether the I.G. had a basis upon which to exclude Petitioner from
participation in the Medicare, Medicaid, and all federal health care programs.

(2) Whether I have the authority to review the length of the period of exclusion.

ILL. Discussion*

(1) Petitioner’s conviction of misdemeanor larceny for making false
statements or representations on her time sheets that she provided services to
Medicaid recipients which she did not provide is an appropriate basis for her
exclusion from Medicare, Medicaid, and all other federal health care
programs.

Section 1128(a)(1) of the Act requires the Secretary of Health and Human Services to
exclude from participation in any federal health care program, as defined in section
1128B(f) of the Act, any individual convicted of a criminal offense relating to the
delivery of a health care item or service. The statute is unambiguous that this is not a
discretionary provision-- the exclusion is mandatory. Convictions, including
misdemeanors, that fall under the mandatory exclusion provision of section 1128(a)(1)
require the I.G. to enforce an exclusion.

Here the facts are undisputed that Petitioner was convicted of a crime and that the crime
was related to her delivery of services under the Medicaid program. Her crime was
knowingly making false statements on her time sheets that she provided services to
Medicaid recipients which she did not provide knowing that those time sheets would be
used to bill Medicaid for payment for those services.

Petitioner admits that she was convicted and that her conviction was for a crime for which
exclusion is required. While Petitioner contends that she was wrongfully accused, she
nevertheless plead guilty to the offense and I cannot review the basis for the underlying
conviction nor can I review Petitioner’s collateral attacks of that conviction. 42 C.F. R.
1001.2007(d). Thus, Iam bound to apply the mandatory exclusion to convictions
covered by section 1128(a)(1).

* T set forth my findings of fact and conclusions of law as separately numbered
headings.
I find, therefore, that Petitioner's conviction provides a basis for the Secretary of Health
and Human Services to exclude her pursuant to section 1128(a)(1) of the Act.

(2) Petitioners’ exclusion for a period of 5 years is the mandatory minimum
period as a matter of law.

Once a basis for a mandatory exclusion exists, I do not have the authority to determine a
lesser length of exclusion than the minimum mandatory period.

An exclusion under section 1128(a)(1) of the Act must be for a minimum mandatory
period of five years. As set forth in section 1128(c)(3)(B) of the Act:

Subject to subparagraph (G), in the case of an exclusion under subsection (a), the
minimum period of exclusion shall be not less than five years ....

Specified aggravating factors can serve as a basis for lengthening the period of exclusion.
42 C.F.R. § 1001.102(b). And, if aggravating factors justify an exclusion longer than five
years, specified mitigating factors may be considered as a basis for reducing the period of
exclusion to no less than five years. 42 C.F.R. § 1001.102(c). But, when the I.G.
imposes an exclusion for the mandatory five-year period, the reasonableness of the length
of the exclusion is not an issue. 42 C.F.R. § 1001.2007(a)(2).

IV. Conclusion

For the reasons discussed above, I conclude that the I.G. properly excluded Petitioner
from participation in Medicare, Medicaid, and all other federal health care programs, and
I uphold the five-year exclusion.

/s/
José A. Anglada
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)

Bakul Desai, M.D., ) Date: February 10, 2009
)
Petitioner, )
)

-Vv.- ) Docket No. C-09-76
) Decision No. CR1899
Centers for Medicare & Medicaid )
Services. )
)
DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to
revoke the Medicare billing privileges of Petitioner Bakul Desai, M.D. CMS was
authorized to do so by the provisions of 42 C.F.R. § 424.535(a)(3).

I. Background

Petitioner is a physician who participated in the Medicare program. On May 16, 2008,
CMS notified Petitioner that it was revoking his billing privileges in Medicare. Petitioner
requested a hearing and the case was assigned to me for a hearing and a decision.

l issued a pre-hearing order which instructed the parties to file exchanges consisting of
briefs and proposed exhibits including the written direct testimony of any proposed
witnesses. In that Order, I advised the parties that an in-person hearing would be
conducted only if a party expressed an intent to cross-examine a witness whose written
direct testimony had been submitted. The parties have submitted their exchanges.
Neither party requested such a hearing. Therefore, this case is now ready for a decision.

In its pre-hearing exchange, CMS submitted seven proposed exhibits which it designated
as CMS Exhibit (Ex.) 1- CMS Ex. 7. Petitioner filed no proposed exhibits and did not
object to my receiving any of CMS’s proposed exhibits. I receive into evidence CMS Ex.
1 - CMS Ex. 7.
2

II. Issue, findings of fact and conclusions of law
A. Issue

The issue in this case is whether CMS is authorized to revoke Petitioner’s Medicare
billing privileges.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this
case. I set forth each Finding below as a specific heading.

1. CMS has discretion to revoke the Medicare billing privileges of any
individual who has been convicted within the past 10 years of a felony
that CMS determines to be detrimental to the best interests of Medicare
and its beneficiaries.

CMS revoked Petitioner’s Medicare billing privileges based on the authority of 42 C.F.R.
§ 424.535(a)(3). That regulation authorizes CMS to revoke any participating provider’s
Medicare billing privileges where that provider, within the 10 years prior to his or her
enrollment or re-enrollment in Medicare, has been convicted of a federal or State felony
that CMS determines to be detrimental to the best interests of Medicare and its
beneficiaries.

On its face the regulation confers broad discretion on CMS to define what felonies might
constitute crimes that are detrimental to Medicare and its beneficiaries. But, the
regulation also provides that certain crimes are, as a matter of law, detrimental. Among
those are:

Financial crimes, such as extortion, embezzlement, income tax evasion,
insurance fraud and other similar crimes for which the individual was
convicted, including guilty pleas and adjudicated pretrial diversions.

42 C.E.R. § 424.535(a)(3)(B).

Any determination by CMS to revoke the billing privileges of an individual who has been
convicted of such a crime — with “convicted” being defined to include a guilty plea to
such a crime — is clearly within CMS’s discretion. | am without authority to invalidate a
determination by CMS to exclude pursuant to section 424.535(a)(3)(B) if the evidence of
the case establishes it to fall within the reach of the regulation.
3

2. The evidence establishes that Petitioner was convicted of a crime as is
defined by 42 C.F.R. § 424.535(a)(3)(B). Consequently, CMS may revoke
Petitioner’s billing privileges.

The evidence in this case, as offered by CMS, is undisputed. On January 31, 2008,
Petitioner entered into an plea agreement with the United States Attorney for the District
of New Jersey in which he pled guilty to knowingly and intentionally embezzling,
stealing, obtaining by fraud, and misapplying property under the custody and control of
the University of Medicine and Dentistry of New Jersey. CMS Ex. 1, at 1,6.' The
offense to which Petitioner pled guilty is a felony under federal law. Jd.

This evidence is, standing alone, all that is necessary to sustain CMS’s authority to
exclude Petitioner pursuant to 42 C.F.R. § 424.535(a)(3)(B). Petitioner pled guilty to a
federal felony involving embezzlement which clearly is a financial crime.

Petitioner offers several arguments to challenge CMS’s determination. I find these to be
without merit.

First, Petitioner argues that he has not yet been “convicted” of a crime because no final
judgment of conviction has been entered against him. However, the regulatory authority
to revoke billing privileges is not contingent on a final judgment of conviction being
entered against an individual who pleads guilty to a felony as is described in the
regulation. The regulation makes it plain that all that is necessary is that there be a plea of
guilty.

Second, Petitioner asserts that there has been no nexus established between his crime and
the Medicare program. He contends that there is “not a single fact in the record that
Medicare has been damaged, or potentially damaged, in any way” by his actions.
Petitioner’s brief at 3. However, there is nothing in the regulation that restricts CMS’s
authority to revoke billing privileges based on a felony conviction for a financial crime to
a conviction that involves the Medicare program.”

' The plea agreement is dated January 28, 2008. However, Petitioner signed it on
January 31. Id.

Such a relationship is necessary for an exclusion to be mandated by section
1128(a)(1) of the Social Security Act. But, that is a different authority and a different
category of remedy and it is not implicated here.
4

Third, Petitioner argues that CMS should be precluded from revoking his billing
privileges as a matter of fairness. To revoke them now, according to Petitioner, would
have a chilling effect on the ability of prosecutors to enter into plea agreements in other
cases. Finally, Petitioner argues that to revoke his billing privileges now would unfairly
prevent him from earning physicians’ fees out of which he would pay the restitution
(nearly $1.5 million) which he has agreed to pay as part of his plea agreement.

I have no authority to consider these last two arguments. CMS’s decision to revoke
Petitioner’s billing privileges is a discretionary act that is plainly authorized by regulation.
Nothing in the regulation would allow me to override CMS’s determination based on
equitable considerations such as those raised by Petitioner.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Date: February 5, 2009
CMS LCD Complaint: Patient Lifts
(LCD Database I.D. No. L5064), Docket No. C-07-569

Decision No. CR1897

Contractor: NHIC Corp., Durable Medical
Equipment Medicare Administrative
Contractor, Jurisdiction A.

DECISION
The complaint is dismissed pursuant to 42 C.F.R. § 426.444(b)(6).
I. Background.

The Aggrieved Party requested review of the TriCenturion Local Coverage Determination
(LCD) for Patient Lifts (L5060) by letter dated June 27, 2007 (Complaint). Specifically,
the Aggrieved Party challenged the provisions of LCD L5060 that provided that electric
lift mechanisms are not covered by Medicare because they are a convenience feature and
the underlying conclusion of the issuing contractor that electric lifts with fixed systems
are not covered by Medicare because they are not durable medical equipment (DME)
within the meaning of the Social Security Act. The Complaint was received at the Civil
Remedies Division (CRD) of the Departmental Appeals Board (DAB) on July 9, 2007,
and assigned to me for hearing and decision on August 9, 2007. On October 3, 2007, I
issued an Acknowledgment of Receipt of Acceptable Complaint; Order to File LCD
Record; and Schedule for Responses (Initial Order). I required Petitioner to serve copies
of the Complaint upon the Medicare contractor and the Centers for Medicare and
Medicaid Services (CMS). On October 18, 2007, the Aggrieved Party certified that
service upon the Medicare contractor and CMS was accomplished.
2

On October 31, 2007, NHIC (National Health Insurance Company), Corp., the Durable
Medical Equipment Medicare Administrative Contractor (DME MAC) for CMS
Jurisdiction A, responded to my order to the contractor to file the LCD record (NHIC
Record Production).' NHIC filed eight exhibits with its response, marked CMS exhibits
(CMS Ex.) 1 through 8. On November 30, 2007, the Aggrieved Party filed his Statement
of the Aggrieved Party (AP Statement I) with one exhibit, A. (Aggrieved Party) Ex. 14,
attached. The Aggrieved Party also submitted on November 30, 2007, a copy of his
original Complaint with its 13 exhibits correctly marked as A. Ex. 1 through 13. CMS
Exs. | through 8 and A. Exs. | through 14 were admitted as evidence.

On December 12, 2007, counsel for CMS entered an appearance. On December 20,
2007, NHIC filed its Response to Statement of Aggrieved Party (NHIC Response I). On
January 7, 2008, the Aggrieved Party requested leave to file a reply. By Order dated
January 9, 2008, I deferred ruling on the motion pending receipt of the Aggrieved Party’s
proposed submission. On January 10, 2008, counsel for CMS advised me that CMS
would rely upon the brief filed by NHIC and that CMS would not make a separate filing.
On January 23, 2008, the Aggrieved Party filed his Reply of the Aggrieved Party (AP
Reply). On February 7, 2008, NHIC filed a Response to Reply of Aggrieved Party
(NHIC Response II). The supplemental pleadings of both NHIC and the Aggrieved Party
were accepted.

On March 4, 2008, I ordered that NHIC produce documents that amounted to a
constructive LCD and related record (Order to Produce). On April 3, 2008, NHIC
responded to the Order to Produce (NHIC Response, Order to Produce). On April 25,
2008, the Aggrieved Party filed his Statement of the Aggrieved Party (AP Statement II)
addressing the NHIC Response to the Order to Produce. On June 30, 2008, NHIC filed
its response to the second statement of the Aggrieved Party (NHIC Response III).

' CMS has given DME MACs the responsibility for developing and revising
LCDs, maintaining the LCD record, and responsibility for LCD challenges. However,
CMS requires that LCDs developed and revised by the DME MACs be identical for each
jurisdiction to ensure uniformity for Durable Medical Equipment, Prosthetics, Orthotics,
and Supplies suppliers with national operations. Medicare Program Integrity Manual,
CMS Pub. 100-08, Chap. 13, § 13.1.4.
3

On October 7, 2008, I issued a ruling pursuant to 42 C.F.R. § 426.425(c) and an order for
case development (Ruling and Order). I concluded, based upon the review required by 42
C.F.R. § 426.425(c)(1), that the LCD record was not complete and adequate to support
the LCD provisions challenged by the Aggrieved Party, for the reasons discussed in the
Ruling and Order. Accordingly, pursuant to 42 C.F.R. § 426.425(c)(3), I ordered
discovery and preparation for an evidentiary hearing, if necessary.

On December 10, 2008, NHIC filed a notice pursuant to 42 C.F.R. § 426.420(c) that it
had revised the LCD under review and requested dismissal of the complaint. Specifically,
NHIC notified me that it issued a revised version of LCD Database I.D. No. L5064 and a
revised Policy Article A23657, and that the provisions of which the Aggrieved Party
complained have been completely removed from the revised LCD and Policy Article.
NHIC attached copies of the revised LCD and Policy Article to its notice. I note that the
revised LCD and Policy Article are effective January 1, 2009. I further note that the
provisions of which the Aggrieved Party complained have been completely removed.

II. Discussion

Pursuant to 42 C.F.R. § 426.444(b)(6), an administrative law judge (ALJ) must dismiss a
LCD complaint concerning LCD provisions if the contractor notifies the ALJ that the
LCD provisions are no longer in effect. Pursuant to 42 C.F.R. § 426.420(a) and (b) a
contractor may retire or revise an LCD subject to my jurisdiction at anytime before I issue
a decision. The regulation provides that revision of an LCD to remove the provision
under review has the same effect as a decision finding the LCD invalid under the
reasonableness standard as described under 42 C.F.R. § 426.460(b), i.e., an aggrieved
party’s denied claim is to be newly adjudicated by the contractor without application of
the removed LCD provision. 42 C.F.R. § 426.420(b). The regulations provide that if I
receive notice that an LCD was retired or revised to remove the provision under review
before I issue a decision, I must dismiss the complaint and inform the aggrieved party that
individual claim review will be done by the contractor without application of the retired
LCD or the removed provisions of the LCD. 42 C.F.R. § 426.420(e)(1). The regulations
grant me no discretion as to what must be done when the offending provisions of a LCD
are removed as has occurred in this case. The fact that a contractor invalidates,
withdraws, retires, or otherwise renders the offending LCD provisions ineffective,
effectively deprives me of jurisdiction to continue. See 42 C.F.R. § 426.405(d)(4).

Ill. Conclusion

Accordingly, the complaint must be dismissed. The aggrieved party is advised in
accordance with 42 C.F.R. § 426.420(e)(1), that in accordance with 42 C.F.R.

§ 426.460(b)(1) the contractor is required to comply with the requirements of that
provision with regard to claim adjudication or re-adjudication.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Alice F. Gunn, ) Date: February 4, 2009

)
Petitioner, )
)

-Vv.- ) Docket No. C-08-757

) Decision No. CR1896
The Inspector General. )
)

DECISION

T uphold the exclusion of Petitioner, Alice F. Gunn, from participation in Medicare,
Medicaid, and all federal health care programs for five years. I find a basis for the
exclusion; and that the five-year exclusion is the mandatory minimum period as a matter
of law.

I. Background

Petitioner, a clerical employee for two dentists, was excluded by the Inspector General
(1.G.) pursuant to section 1128(a)(1) of the Social Security Act (Act), because she was
convicted of fraudulently obtaining payment from the Kentucky Medical Assistance
Program (KMAP), the State of Kentucky Medicaid program, by means of false, or
fraudulent claims. Specifically, Petitioner and her co-defendants submitted duplicate
claims for services which were performed by one dentist as if the services had been
performed by both dentists and billed KMAP for services which were not supported by
documentation in the patient file. IG. Ex. 5, at 2. Section 1128(a)(1) requires the
Secretary of Health and Human Services to exclude a person convicted of a criminal
offense related to the delivery of an item or service under any State health care program.'

' "State health care program" is defined in section 1128(h) of the Act and includes
the Medicaid program (Title XIX).
2

Petitioner argues that: (1) the I.G. could have treated her conviction as the basis for a
permissive exclusion, as opposed to a mandatory exclusion, because the offense for which
she was convicted was a misdemeanor; and (2) Petitioner’s actions do not warrant
exclusion because she was “a mere pawn in the schemes” of her employers, two dentists,
for whom she prepared billing reports for the government assistance program at their
direction. As I discuss below, these arguments are unavailing.

Petitioner's request for a hearing is dated September 18, 2008, and it stems from the I.G.'s
notice letter, dated August 29, 2008, which notified Petitioner that she was excluded and
informed her of her right to a hearing. In accordance with my initial order, the parties
timely submitted their informal briefs together with their documentary exhibits.
Petitioner submitted two exhibits at that time which I mark as Petitioner’s Exhibits (P.
Exs.) | and 2. The I.G. submitted five exhibits, I1.G. Exs. 1-5. I thereafter convened a
prehearing telephone conference on November 4, 2008, at which the parties agreed that
this case may be decided based on the written record without an oral hearing. I
established an additional briefing schedule to submit written briefs and any additional
documents by December 29, 2008. Petitioner submitted its brief with P. Exs. 1 and 2.
These exhibits are identical to the exhibits submitted with the informal briefs. Neither
party has objected to the other's exhibits, so I admit I.G. Exs. 1-5 and P. Exs. 1-2.

The essential facts of this case are undisputed. Petitioner was a clerical employee for two
dentists. As a part of her duties, she billed the State of Kentucky Medicaid Program,
otherwise known as KMAP, for services provided by the dentists. The Grand Jury
Indictment originally charged Petitioner with a Class D felony. I.G. Ex. 4. The
Indictment indicated that for a period beginning November 1, 1998 through March 31,
2003, Petitioner together with her two employers devised a scheme or entered into an
agreement or conspiracy to obtain or aid another in obtaining payment from the KMAP
administered by the Cabinet for Health and Family Services by means of any fictitious,
false or fraudulent application, claim, report, or document submitted to the Cabinet with a
value of $300 dollars or more, a fraudulent act under section 205.8463(1) of the Kentucky
Revised Statutes. I.G. Ex. 4. The Commonwealth Attorney later offered Petitioner a plea
agreement to the same crime but at the lesser charge of a Class A misdemeanor in order to
obtain Petitioner’s testimony against the other co-defendents. I.G. Ex. 5. Petitioner
accepted the plea agreement and on February 8, 2008, Petitioner entered a guilty plea,
pursuant to North Carolina v. Alford, 400 U.S. 25 (1970), to the charge of Medicaid
Assistance Program Fraud, but to the lesser charge of a Class A misdemeanor, in
violation of section 205.8463(1) of the Kentucky Revised Statutes.” I.G. Exs. 2, 3 and 5;

> Section 205.8463(1) of the Kentucky Revised Statutes provides—
(continued...)
3

P. Ex. 2 (Judgment and Sentence on Plea of Guilty to Medical Assistance Program
Fraud).

II. Issues

(1) Whether the I.G. had a basis upon which to exclude Petitioner from
participation in the Medicare, Medicaid, and all federal health care programs.

(2) Whether I have the authority to review the length of the period of exclusion.

°(...continued)
No person shall knowingly or wantonly devise a scheme or
artifice, or enter into an agreement, combination or conspiracy
to obtain or aid another in obtaining payments from any
medical assistance program under this chapter [Chapter 205-
Public Assistance and Medical Assistance Control of Fraud
and Abuse] by means of any fictitious, false, or fraudulent
application, claim report, or document submitted to the
Cabinet for Health and Family Services, or intentionally
engage in conduct which advances the scheme or artifice.

Section 205.8463(5) of the Kentucky Revised Statutes provides that—

Any person who violates subsections (1) and (2) of this
section shall be guilty of a Class A misdemeanor unless the
sum total of benefits claimed in any application, claim, report
or in any combination or aggregation thereof, is valued at
three hundred dollars ($300) or more in which case it shall be
a Class D felony.

P. Ex. 1. The indictment and then the amended charge to which Petitioner ultimately
plead guilty was by its terms a fraudulent act as set forth in section 205.8463(1) of the
Kentucy Revised Statutes.
II. Discussion*

(1) Petitioner’s conviction of Medicaid assistance program fraud under
Kentucky state law is an appropriate basis for her exclusion from Medicare,
Medicaid, and all other federal health care programs.

Section 1128(a)(1) of the Act requires the Secretary of Health and Human Services to
exclude from participation in any federal health care program, as defined in section
1128B(f) of the Act, any individual convicted of a criminal offense relating to the
delivery of a health care item or service. The statute is unambiguous that this is not a
discretionary provision-- the exclusion is mandatory.

Petitioner argues, however, that her conviction could be the basis for a permissive
exclusion under section 1128(b)(1)(A)(i) of the Act, because Petitioner was convicted of
a misdemeanor offense. Petitioner's Brief at 2. Petitioner disagrees with the I.G.’s
construction of the Act that 1128(a)(1) covers both felonies and misdemeanors that relate
to program violations and that 1128(b) covers only misdemeanors which relate to non-
program offenses. Petitioner reasons that because section 1128(b) includes a specific
alternative adjudication of misdemeanors, that “infers discretion upon the part of the
Inspector General’s office to employ common sense” and that Congress intended that
there could be misdemeanor convictions relating to federal or state health care programs
which did not warrant the severe exclusionary rules under section 1128(a)(1). Petitioner’s
Brief at 2. Although it is not affirmatively stated in her brief, I construe Petitioner's
argument, that her conviction can be treated as the basis for a permissive exclusion, as an
argument that the I.G. should have considered imposing a permissive exclusion, and that,
on these grounds, I should reverse the exclusion for lacking a proper basis.

Indeed, Section 1128(b) is permissive. The section heading is "PERMISSIVE
EXCLUSION," and 1128(b)(1)(A)(i) does apply to certain misdemeanors, so Petitioner is
correct that it affords the I.G. discretion whether to enforce an exclusion in certain
circumstances. It is apt, therefore, to contrast section 1128(b)(1)(A)(1) and section
1128(a)(1) as, respectively, permissive and mandatory. But, as the I.G. discusses in his
Reply Brief, the ambiguity arising from the putative applicability of both provisions to
misdemeanor convictions for health care fraud, has been resolved. As I discuss below,
convictions, including misdemeanors, that fall under the mandatory exclusion provision

* T set forth my findings of fact and conclusions of law as separately numbered
headings.
5

of section 1128(a)(1) require the I.G. to enforce an exclusion, whether the conviction also
fits the permissive exclusion provisions or not.

The I.G. cites Lorna Fay Gardner, DAB No. 1733 (2000), wherein an Appellate Panel of
the Departmental Appeals Board (Board) explained that the mandatory exclusion
provisions (section 1128(a)(1)) apply to all convictions for defrauding programs under
title XVIII of the Act, or State health care programs such as Medicaid, including
misdemeanor convictions. The mandatory exclusion provisions apply regardless of
whether a misdemeanor conviction is accurately described also by the permissive
exclusion provisions (section 1128(b)(1)(A)(i)). The Board explained that Congress
propounded the mandatory and permissive provisions to distinguish between felony and
misdemeanor convictions, only where the fraud is in connection with some health
program other than Medicare or any State health care programs such as Medicaid. The
distinction, as explained by the Board, is not between the degree of fraud against a federal
or State health care program, but the difference between defrauding a government
program and defrauding another entity's health care program, such as a private health
insurance plan. Additionally, the Board further clarified that the I.G. is "bound" to apply
the mandatory exclusion to convictions covered by section 1128(a)(1); he cannot exercise
discretion between the mandatory and permissive exclusion provisions if a conviction
falls under 1128(a)(1).

Petitioner also contends that while the Judgment against Petitioner states that her
conviction is for Medical Assistance Program Fraud, the statute, Kentucky Revised
Statutes, section 205.8463 is entitled only “Fraudulent Acts--Penalties” and the
Judgement of conviction does not specify what subsection of the statute Petitioner was
convicted under. I find Petitioner’s arguments disingenous. First, Chapter 205 of the
Kentucky Revised Statutes pertains to Public Assistance and Medical Assistance Control
of Fraud and Abuse. Second, the original indictment specifies that Petitioner is being
charged under section 205.8463(1) and the later amended charge was to a Class A
misdemeanor for the same offense. I.G. Exs. 4, 2, and 5 (Commonwealth’s Offer on Plea
of Guilty from KRS.205.8463(1) Class D Felony to KRS 205.8463(1), Class A
Misdemeanor); P.Ex. 1.

I conclude that, for all of these reasons, Petitioner's argument that her conviction should
have been treated under section 1128(b)(1)(A)(i) as a permissive exclusion is unavailing.
I find, therefore, that Petitioner's conviction provides a basis for the Secretary of Health
and Human Services to exclude her pursuant to section 1128(a)(1) of the Act.
6

(2) Petitioners’ exclusion for a period of 5 years is the mandatory minimum
period as a matter of law.

Petitioner essentially contends that the equities of her situation argue against a mandatory
five-year exclusion. However, once a basis for a mandatory exclusion exists, I do not
have the authority to determine a lesser length of exclusion than the minimum mandatory
period.

An exclusion under section 1128(a)(1) of the Act must be for a minimum mandatory
period of five years. As set forth in section 1128(c)(3)(B) of the Act:

Subject to subparagraph (G), in the case of an exclusion under subsection (a), the
minimum period of exclusion shall be not less than five years ....

Specified aggravating factors can serve as a basis for lengthening the period of exclusion.
42 C.F.R. § 1001.102(b). And, if aggravating factors justify an exclusion longer than five
years, specified mitigating factors may be considered as a basis for reducing the period of
exclusion to no less than five years. 42 C.F.R. § 1001.102(c). But, when the I.G.
imposes an exclusion for the mandatory five-year period, the reasonableness of the length
of the exclusion is not an issue. 42 C.F.R. § 1001.2007(a)(2).

IV. Conclusion

For the reasons discussed above, I conclude that the I.G. properly excluded Petitioner
from participation in Medicare, Medicaid, and all other federal health care programs, and
I uphold the five-year exclusion.

/s/
José A. Anglada
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Dublin Methodist Hospital, )
(CCN: 36-0348), ) Date: January 30, 2009

)
Petitioner, )
)

-Vv.- ) Docket No. C-08-672

) Decision No. CR1894
Centers for Medicare & Medicaid )
Services. )
a )

DECISION

This matter is before me on the Motion for Summary Disposition filed by the Centers for
Medicare & Medicaid Services (CMS). CMS has submitted exhibits in support of its
Motion, and Petitioner Dublin Methodist Hospital (DMH) has filed its Response and
exhibits in support of its position. I have reviewed these pleadings and exhibits, and
having done so, I find that no material facts remain in dispute and conclude that CMS’s
position is correct as a matter of well-settled law. I therefore grant CMS’s Motion and
thus summarily affirm CMS’s determination to approve DMH’s participation as a hospital
under the Medicare program effective February 5, 2008, but not earlier.

I. Procedural Background

DMH is a 107-bed acute care hospital located in Dublin, Ohio. On or about August 7,
2007, DMH began the process of applying for certification to participate in the Medicare
program by submitting a CMS Form 855A to the Medicare Part A fiscal intermediary for
Ohio, National Government Services (NGS). Confusion and error marked the application
process for several months.
2

The first error was DMH’s: the hospital submitted its Form 855A earlier than the
permitted 30 days prior to anticipated certification, and in some particulars the Form
855A had been incompletely filled out. The next error was NGS’s: it returned the
application on August 13, 2007 for several reasons, some valid, one in particular quite
mistaken. NGS incorrectly treated the Form 855A as relating to a change in ownership at
DMH, whereas in fact the Form 855A was for an entirely new, initial application
enrollment.

DMH submitted its revised Form 855A on December 6, 2007, but certain required
information was still missing, and DMH was still submitting additions and amendments to
the Form 855A as late as December 20, 2007. In its December 6, 2007 submission, DMH
stated that it was seeking accreditation by the Joint Commission on Accreditation of
Healthcare Organizations (JCAHO), an alternative to direct inspection by state health
department authorities. 42 C.F.R. § 488.5. JCAHO conducted a survey of DMH’s facility
and notified DMH on January 25, 2008, that it had received JCAHO’s accreditation
effective the next day, January 26, 2008.

A certain amount of controversy surrounds the period between late December 2007 and
early February 2008. DMH contends with some correctness that NGS’s actions — or lack
of actions — delayed the final approval of its application once the JCAHO accreditation
was complete. CMS appeared at the time to concede that the delay was “unfortunate.”
DMH also argues, but with substantially less correctness, that NGS erred in returning the
incomplete Form 855A submitted by DMH in early August 2007, and that the overall time
elapsed between its August 7, 2007 submission of the incomplete Form 855A and NGS’s
final approval of the much-revised Form 855A on February 5, 2008, violated CMS
guidelines set out in the Medicare Program Integrity Manual (PIM) by three days.’ I note

' With reference to DMH’s reliance on the PIM’s 180-day goal for processing
applications, there are several points to be made, and at least two of them do little credit
to DMH’s posture in these proceedings. First, the explicit language of PIM § 10.2.1.1
directs that the fiscal intermediary “[s]hall .. . process 99 percent of paper CMS-855
initial applications within 180 calendar days of receipt.” The section makes no reference
whatsoever to an individual time limit for any individual case. DMH has scrupulously
avoided quoting the section in haec verba, but merely — and quite wrongly — asserts that it
established a firm deadline for NGS’s processing of its application. Second, DMH
departs from candor in a singularly regrettable way when it claims that NGS took 183
days to process its application. The PIM section could not be clearer in setting the
benchmark for processing time to begin at the fiscal intermediary’s receipt of the
application, which in this case is rather unmistakably shown to have been August 10,
2007. CMS. Ex. 1. By that standard, NGS’s action on February 5, 2008, was timely, if

3

these arguments by way of acknowledging them, and by observing that CMS makes no
attempt to elucidate NGS’s activities over the 10-day period between January 26, 2008 and
February 5, 2008, but I must observe that those matters require nothing further of me
because they are, under the established and widely-understood rules of this forum,
immaterial to the resolution of the legal issues before me.

What is material is the uncontested fact that, at the time of the JCAHO survey, NGS had
not yet approved DMH’s Form 855A. That review and approval of the Form 855A was
not substantially complete until February 5, 2008, when NGS wrote to DMH and
announced its approval of the Form 855A. CMS determined to make DMH’s provider
agreement effective on February 5, 2008.

This determination was conveyed to DMH by CMS on April 14, 2008. DMH objected to
February 5, 2008 as the effective date of its agreement, and in its May 22, 2008 letter to
CMS, asked that its provider agreement be made effective as of January 26, 2008, the day
its JCAHO accreditation became effective. CMS declined to alter the date, and affirmed
the February 5, 2008 date in a letter to DMH on June 19, 2008.

On August 13, 2008, DMH timely filed a request for hearing contesting CMS’s
determination to certify DMH eligible to participate in the Medicare program effective
February 5, 2008. As it has below, DMH asserts here that the effective date should be
January 26, 2008.

II. Issue

The legal issue before me is narrow. It is simply whether DMH is entitled to approval or
certification as a Medicare provider effective as of any date prior to February 5, 2008.

This legal issue has been addressed in a variety of factual settings by several other ALJs,
by appellate panels of the Departmental Appeals Board (Board), and by me, most recently
in University Behavioral Health of El Paso, LLC, DAB CR1880 (2009) and Physicians
Medical Center of Santa Fé, LLC, DAB CR1790 (2008). Although some of those cases
have differed slightly from the present one in certain factual details, none have differed in
such a way as to establish an exception to this forum’s well-settled rule that requires me to

only barely. But finally, I share the view of Administrative Law Judge (ALJ) Keith W.
Sickendick, who has observed that “[t]he PIM is not a statute or a regulation and one may
question that Complainants enjoy any enforceable rights based on that policy document.”
In re CMS LCD Complaint: Intravenous Immunoglobulin, DAB CR1426, at 15 (2006),
aff'd, DAB No. 2059 (2007).
4

find that DMH is not entitled to approval or certification as a Medicare provider on any
date prior to February 5, 2008.

Ii. Controlling Statutes and Regulations

In order to participate in the Medicare program, a prospective provider such as a hospital
must apply for and be granted an approved provider agreement with CMS. The general
framework of the application process is set out at section 1866 of the Social Security Act
(Act), 42 U.S.C. § 1395cc. Before CMS will approve a provider agreement and certify
that a prospective provider is eligible, the provider must meet all of the requirements of
participation relevant to that provider. 42 C.F.R. §§ 488.3(a)(2); 489.10(a).

One requirement hospitals wishing to participate in Medicare must meet addresses the
identity, qualifications, and character of the hospital’s operating entity. The eligibility of
the operating entity must be assessed according to the criteria established at 42 C.F.R.

§§ 489.10 and 489.12 for transparency of ownership, reliability, financial soundness, and
compliance with important civil rights standards. CMS may decline to approve a provider
agreement if the hospital’s operating entity does not meet the criteria listed at 42 C.F.R.
§§ 489.10; 489.12.

Another such requirement is that the hospital’s facility must be surveyed on-site by an
agency authorized by CMS to do so, in order that its compliance with the requirements of
the Medicare program can be assessed and certified. 42 C.F.R. §§ 489.2(b)(1); 489.10(a).
JCAHO is authorized to conduct certification surveys. 42 C.F.R. § 488.5. When the
surveying agency has completed its on-site survey, it reports the results and its
recommendations to CMS. 42 C.F.R. § 488.11(a). On the basis of the agency’s report and
recommendations, CMS will determine whether the hospital’s facility is eligible to
participate in the Medicare program. 42 C.F.R. § 488.12(a)(1).

Generally, the earliest date on which a hospital may be certified by CMS to participate in
Medicare is established by 42 C.F.R. § 489.13. Ifa hospital’s operating entity has
satisfied all other requirements and the survey of that provider’s facility is the final step in
the review sequence, then 42 C.F.R. § 489.13(b) controls:

(b) All Federal requirements are met on the date of survey. The agreement
or approval is effective on the date the survey .. . is completed, if on that
date the provider or supplier meets all applicable Federal requirements as
set forth in this chapter.
5

In practice, the survey is usually the last step in the process. But, significantly, 42 C.F.R.
§ 489.13(c) provides for situations in which the facility survey may be completed before
the operating entity has been approved:

(c) All Federal requirements are not met on the date of survey. If on the
date the survey is completed the provider or supplier fails to meet any of the
requirements specified in paragraph (b) of this section, the following rules

apply:

ek Ok Ok

(2) For an agreement with, or an approval of, any other provider...
the effective date is... :

(i) The date on which the provider or supplier meets all
requirements.

Until a hospital’s operating entity’s eligibility has been assessed and verified, and until
the hospital facility has been surveyed and certified, its agreement cannot be approved.
Until its agreement has been approved based on those assessments, its status is that of a
prospective provider. 42 C.F.R. § 498.2. With limited exceptions, none of which are
relevant in the matter presently before me, a prospective provider, such as a hospital, may
not receive reimbursement for services provided to Medicare beneficiaries prior to the
effective date of its provider agreement. Act § 1814(a) (42 U.S.C. § 1395f(a)).

IV. Findings of Fact and Conclusions of Law

I find and conclude as follows:

1. Because NGS had not yet approved its Form 855A, Petitioner DMH did not meet all
applicable federal requirements for participation in the Medicare program when it gained

JCAHO accreditation on January 26, 2008.

2. Petitioner DMH did not meet all applicable federal requirements for participation in
the Medicare program at any time between January 26, 2008 and February 5, 2008.

3. Petitioner DMH first met all applicable federal requirements for participation in the
Medicare program on February 5, 2008, when NGS approved its Form 855A.

4. Petitioner DMH is entitled to approval or certification as a Medicare provider effective
February 5, 2008, but not earlier.
6

5. There are no disputed issues of material fact and summary disposition is appropriate in
this matter. I have viewed the facts and the inferences reasonably to be drawn from the
facts in the light most favorable to the nonmoving party. See Pollock v. American Tel.

& Tel. Long Lines, 794 F.2d 860, 864 (3rd. Cir. 1986); Brightview Care Center, DAB No.
2132 (2007); Madison Health Care, Inc., DAB No. 1927, at 5-7 (2004).

V. Discussion

Although DMH argues vigorously that many of them do not apply to this controversy, the
decisions of this forum and of the Board that govern its resolution are not in doubt, either
as to their meaning or as to their application in this appeal. They may be simply
summarized: a hospital is not entitled to certification as a Medicare provider, and CMS
may not certify it as a Medicare provider, until the hospital meets all applicable federal
requirements for participation in the Medicare program.

There is no dispute as to the material facts surrounding the sequence of steps leading to
NGS’s February 5, 2008 letter to DMH. JCAHO accredited DMH effective January 26,
2008, based on its survey of DMH’s facility. Dilatory or not, NGS completed its
assessment of DMH’s Form 855A on February 5, 2008, and found the facility then in
compliance with all remaining Medicare requirements. This sequence is something of a
reversal of the usual sequence in which the facility survey is not undertaken until the
fiscal intermediary has approved the operating entity. Most, but by no means all, of the
recorded litigation in this forum has been based on an “entity-approval first, facility-
survey next” model. But two significant exceptions to that model provide clear precedent
for the result I announce here.

The first significant exception to the usual sequence appears in SRA, Inc., D/B/A St. Mary
Parish Dialysis Center, DAB CR341 (1994), a case in which an end-stage renal disease
treatment center (ESRD) sought certification of its Medicare provider agreement. The
ESRD successfully “passed” a state agency survey of its facility, but certain aspects of the
ESRD’s management, supervisory, and professional arrangements were not then in
compliance with Medicare requirements. Eventually those operating arrangements were
corrected and approved by CMS’s predecessor agency, the Health Care Financing
Administration (HCFA). The ESRD claimed that it was entitled to certification as of the
date of the successful survey, but HCFA insisted that the ESRD had not met all
requirements until its operating arrangements were finally approved. In upholding
HCFA’s position, ALJ S.T. Kessel announced the rule that controls this case:

The regulations provide plainly that, where a provider or supplier fails to
meet certification requirements at the date of the inspection, it will be found
to satisfy those requirements either on the date when it actually meets the
7

requirements or on the date that it submits a plan of correction acceptable to
HCFA, whichever comes first. 42 C.F.R. 489.13(a) and (b). Thus, a
provider or supplier cannot be certified effective the date of survey where:
(1) deficiencies are found to exist as of the survey date, and (2) the
deficiencies are not corrected (or an acceptable plan of correction is not
submitted by the provider or supplier) until a subsequent date.

SRA, DAB CR341, at 20.

In a more recent case, to which I have referred briefly above, a hospital had “passed” a
state survey, but had simply not yet met “all requirements” for certification until its
operating entity had been assessed and approved by the fiscal intermediary. On the
principles ALJ Kessel explained in SRA, I concluded that the hospital could not “be
certified effective the date of survey” as it had asked because unresolved questions about
its operating entity existed on that date. Physicians Medical Center of Santa Fé, LLC,
DAB CR1790.

There are no exceptions to these rules based on delays in the administrative process of
reviewing the hospital’s satisfaction of the participation requirements, and there are no
exceptions based on a hospital’s claimed reliance on allegedly-erroneous representations
it complains were made to it by representatives of CMS, a state agency, or a fiscal
intermediary. “The governing regulations are essentially unforgiving.” Tenet
HealthSystem Philadelphia, Inc., DAB CR663, at 7 (2000). Thus, the argument over
what DMH may have said or done in August 2007 or December 2007 is irrelevant, and, to
the extent that facts in that argument remain unresolved, those facts are immaterial to the
application of the rules that govern the disposition of this case.

Because DMH’s briefing depends so heavily on its asserted injury as the result of
incorrect actions by NGS, or by actions by NGS and by CMS that DMH characterizes as
arbitrary and capricious, it seems important to emphasize why those claims are immaterial
and require no resolution of the factual disputes behind them. DMH’s theory is
straightforward enough, even if it coyly stops just short of its ultimate statement. It is
based on the doctrine of equitable estoppel, and it implies that its right to that equitable
remedy is of constitutional dimension. Now, equitable estoppel, particularly in cases
involving the effective dates of Medicare provider agreements, is specifically beyond my
authority to consider. Oklahoma Heart Hospital, DAB CR1719, at 10-11 (2008), aff'd,
DAB No. 2183, at 16-17 (2008); Maher A. A. Azer (Florence Dialysis Center, Inc.), DAB
CR994 (2003); Danville HealthCare Surgery Center, DAB CR892 (2002); Everett
Rehabilitation and Medical Center, DAB CR455 (1997), aff'd, DAB No. 1628 (1997).
Constitutional challenges to the validity of the regulations governing these proceedings
are by settled precedent similarly beyond my jurisdiction and authority. While the issues
8

and arguments noted above may be suitable for discussion and debate in other forums,
they are not legitimate subjects for litigation in this one. Wisteria Care Center, DAB No.
1892 (2003); Hermina Traeye Memorial Nursing Home, DAB No. 1810 (2002); Sentinel
Medical Laboratories, Inc., DAB No. 1762 (2001). I need not resolve DMH’s factual
assertions because they raise questions of fact that have no bearing on the issues I may
properly consider. They are immaterial questions of fact and represent no bar to summary
disposition.

VI. Conclusion

For the reasons discussed above, I grant CMS’s Motion for Summary Disposition, and
affirm CMS’s determination to certify DMH to participate in the Medicare program as a
Medicare provider effective February 5, 2008, but not earlier.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Bernard D. Kornell, M.D., ) Date: January 30, 2009
)
Petitioner, )
)
-Vv.- ) Docket No. C-09-29
) Decision No. CR1893
The Inspector General. )
)
DECISION

Bernard D. Kornell, M.D. (Petitioner) appeals the decision of the Inspector General
(1.G.), made pursuant to section 1128(a)(4) of the Social Security Act (Act), to exclude
him from participation in Medicare, Medicaid, and all federal health care programs for a
period of five years. For the reasons discussed below, I find that the I.G. is authorized to
exclude Petitioner, and that the statute mandates a minimum five-year exclusion.

I. Background

The I.G. has excluded Petitioner from program participation for five years because
Petitioner was convicted of a felony offense relating to the unlawful manufacture,
distribution, prescription, or dispensing of a controlled substance. I.G. Exhibit (I.G. Ex.)
1. Petitioner timely requested review. The parties agree that an in-person hearing is not
required and that the matter may be resolved based on written submissions. I.G. Br. at 4;
P. Br. at 2. The I.G. has submitted his brief with three exhibits attached, I.G. Exs. | - 3.
Petitioner filed his brief (P. Br.) with no additional exhibits. In the absence of any
objections, I admit into evidence I.G. Exs. 1 - 3. I also consider here the arguments
presented in Petitioner’s hearing request, which he did not repeat in his brief.

II. Issue

The sole issue before me is whether the I.G. had a basis for excluding Petitioner from
participation in Medicare, Medicaid, and all federal health care programs. Because an
exclusion under section 1128(a)(4) must be for a minimum period of five years, the
reasonableness of the length of the exclusion is not an issue.
Il. Discussion

A, Petitioner was convicted of a felony relating to the unlawful manufacture,
distribution, prescription, or dispensing of a controlled substance, within the
meaning of section 1128(a)(4) of the Act.'

Section 1128(a)(4) of the Act requires that any individual or entity convicted of a felony
criminal offense that occurred after the date of the enactment of the Health Insurance
Portability and Accountability Act (August 21, 1996) “relating to the unlawful
manufacture, distribution, prescription, or dispensing of a controlled substance” be
excluded from all federal health care programs.

On May 4, 2007, Petitioner pled guilty in a Texas criminal court to obtaining from a
legally registered pharmacist, by the use of a false and forged prescription, a controlled
substance, Lorazepam, a third degree felony. The court accepted his plea and sentenced
him to ten years probation and a $2500 fine. I.G. Exs. 1, 3. Notwithstanding the
conviction, Petitioner asserts that his exclusion is not mandatory. He argues that his
conviction related solely to possession and obtaining a controlled substance by fraud,
which, in his view, is not related to the “unlawful manufacture, distribution, prescription,
or dispensing of a controlled substance.” In order to reject this assertion, I need look no
further than the language of Petitioner’s felony conviction: he “unlawfully” obtained the
controlled substance “by the use of a false and forged prescription.” Petitioner’s crime —
on its face — thus plainly relates to the unlawful prescription of a controlled substance, so
the LG. has a basis for imposing the exclusion.

B. The statute mandates a five-year minimum period of exclusion, and
mitigating factors may not be considered to reduce that period of
exclusion.

An exclusion under section 1128(a)(4) must be for a minimum mandatory period of five
years. As set forth in section 1128(c)(3)(B) of the Act:

Subject to subparagraph (G), in the case of an exclusion under subsection
(a), the minimum period of exclusion shall be not less than five years... .

' My findings of fact and conclusions of law are set forth, in italics and bold, in
the discussion headings of this decision.

> “Federal health care program” is defined in section 1128B(f) of the Act as any
plan or program that provides health benefits, whether directly, through insurance, or
otherwise, which is funded directly, in whole or in part, by the United States Government,
or any State health care program.
3

When the I.G. imposes an exclusion for the minimum mandatory five-year period, the
reasonableness of the length of the exclusion is not an issue. 42 C.F.R.
§ 1001.2007(a)(2).

C. Ihave no authority to order the I.G. to grant Petitioner a waiver.

Finally, in his hearing request, Petitioner asserts that his Medicare and Medicaid patients
will suffer if he is not allowed to participate in those programs, and requests a waiver
under 42 C.F.R. § 1001.1801(b). That regulation authorizes the I.G. to grant or deny a
state health care program’s request that exclusion be waived “if the individual. . . is the
sole community physician or the sole source of essential specialized services in a
community.” However, “[t]he decision to grant, deny, or rescind a request for a waiver is
not subject to administrative or judicial review.” 42 C.F.R. § 1001.1801(f); Act, section
1128(c)(3)(B).

Thus, any request for waiver must be made directly to the I.G. by a state health care
program, not by Petitioner himself, and the I.G.’s determination with respect to any
waiver request is not reviewable.

IV. Conclusion

For these reasons, I conclude that the I.G. properly excluded Petitioner from participation
in Medicare, Medicaid, and all other federal health care programs, and I sustain the five-
year exclusion.

/s/
Carolyn Cozad Hughes
Administrative Law Judge