Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

SBX TX OTB, PLLC,
(NPIs: 1053699272, 1225356363; PTAN: K055280),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-795
Decision No. CR3379
Date: September 22, 2014
DECISION

The Medicare enrollment and billing privileges of Petitioner, SBX TX OTB, PLLC, are
revoked pursuant to 42 C.F.R. § 424.535(a)(1),' effective October 24, 2013.

I. Background

CGS Administrators, LLC (CGS), the Centers for Medicare & Medicaid Services (CMS)
Medicare contractor, notified Petitioner by letter dated September 24, 2013, that its
Medicare billing number and billing privileges were revoked effective October 24, 2013.
CGS cited 42 C.F.R. §§ 424.535(a)(1) and (a)(8) as the bases for revocation. CMS
Exhibit (CMS Ex.) 1 at 6-8. CGS also notified Petitioner that it was subject to a three-
year bar to re-enrollment pursuant to 42 C.F.R. § 424.535(c). CMS Ex. 1 at 7.

' Citations to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
On November 22, 2013, Petitioner submitted a request for reconsideration. CMS Ex. | at
14-92. On February 11, 2014, a contractor hearing officer issued a reconsidered
determination in which she upheld the revocation pursuant to 42 C.F.R. §§ 424.535(a)(1)
and (a)(8). CMS Ex. | at 10-13.

Petitioner filed a request for hearing (RFH) before an administrative law judge (ALJ) on
March 16, 2014. On March 27, 2014, the case was assigned to me for hearing and
decision and an Acknowledgement and Prehearing Order (Prehearing Order) was issued
at my direction.

On April 28, 2014, CMS filed a motion for summary judgment (CMS Br.), with CMS
Exs. | through 4. On May 26, 2014, Petitioner filed its opposition to CMS’s motion for
summary judgment (P. Br.) with no exhibits. On June 10, 2014, CMS filed a reply brief.
On July 8, 2014, Petitioner moved to supplement the record with additional argument (P.
Supp. Br.). CMS filed a response to Petitioner’s supplemental filing on July 17, 2014.
Petitioner filed a reply on July 18, 2014. With its reply, Petitioner submitted as an
exhibit “Medicare Learning Network, MLN Matters®” Article SE1305 (rev. Feb. 6,
2014) published by CMS. Petitioner failed to mark its exhibit in the manner required by
the Prehearing Order § II.D.2 and the Civil Remedies Division Procedures § 9. I treat the
document as if it were marked as P. Ex. 1. The parties’ supplemental briefings are
accepted. No objections have been made to my consideration of CMS Exs. | through 4
and P. Ex. 1, and they are admitted as evidence.

II. Discussion
A. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Administration of the Part B program is through contractors, such as
CGS. Act § 1842(a) (42 U.S.C. § 1395u(a)). Payment under the program for services
rendered to Medicare-eligible beneficiaries may only be made to eligible providers of
services and suppliers.” Act $§ 1835(a) (42 U.S.C. § 1395n(a)), 1842(h)(1) (42 U.S.C.
§ 1395u(h)(1)). Petitioner, a clinical laboratory, is a supplier.

> A “supplier” furnishes services under Medicare and includes physicians or other
practitioners and facilities that are not included within the definition of the phrase
“provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,”
commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled
nursing facilities, comprehensive outpatient rehabilitation facilities, home health
agencies, hospice programs, and a fund as described in sections 1814(g) (42 U.S.C.

(Footnote continued next page.)
The Act requires the Secretary of Health and Human Services (Secretary) to issue
regulations that establish a process for the enrollment in Medicare of providers and
suppliers, including the right to a hearing and judicial review of certain enrollment
determinations, such as revocation of enrollment and billing privileges. Act § 1866(j)
(42 U.S.C. § 1395cc(j)). Pursuant to 42 C.F.R. § 424.505, a supplier such as Petitioner
must be enrolled in the Medicare program and be issued a billing number to have billing
privileges and to be eligible to receive payment for services rendered to a Medicare-
eligible beneficiary.

Suppliers must submit complete, accurate, and truthful responses to all information
requested in the enrollment application. 42 C.F.R. § 424.510(d)(2). Pursuant to

42 C.F.R. §§ 424.502 and 424.510(d)(3), a supplier’s application to enroll in Medicare
must be signed by an authorized official, i.e., one with authority to bind the provider or
supplier both legally and financially. The regulation provides that the signature attests to
the accuracy of information provided in the application. The signature also attests to the
fact that the provider or supplier is aware of and abides by all applicable statutes,
regulations, and program instructions. 42 C.F.R. § 424.510(d)(3). Suppliers must meet
basic requirements depending on their type of service. 42 C.F.R. §§ 424.505, 424.516,
424.517. Suppliers are also subject to additional screening requirements depending upon
the type of service they provide. 42 C.F.R. § 424.518.

The Secretary has delegated the authority to revoke enrollment and billing privileges to
CMS. 42 C.F.R. § 424.535. CMS or its Medicare contractor may revoke an enrolled
supplier’s Medicare enrollment and billing privileges and supplier agreement for any of
the reasons listed in 42 C.F.R. § 424.535. Pursuant to 42 C.F.R. § 424.535(a)(1), CMS
may revoke a supplier’s enrollment and billing privileges if the supplier is determined not
to be in compliance with enrollment requirements. If CMS revokes a supplier’s Medicare
billing privileges, the revocation becomes effective 30 days after CMS or one of its
contractors mails the revocation notice to the supplier, subject to some exceptions not
applicable in this case. After a supplier’s Medicare enrollment and billing privileges are
revoked, the supplier is barred from reenrolling in the Medicare program for one to three
years. 42 C.F.R. § 424.535(c).

A supplier whose enrollment and billing privileges have been revoked may request
reconsideration and review as provided by 42 C.F.R. pt. 498. 42 C.F.R. § 424.545(a). A
supplier submits a written request for reconsideration to CMS or its contractor. 42 C.F.R.

(Footnote continued.)

§ 1395f(g)) and 1835(e) (42 U.S.C. § 1395n(e)) of the Act. Act § 1861(u) (42 U.S.C.

§ 1395x(u)). The distinction between providers and suppliers is important because they
are treated differently under the Act for some purposes.
§ 498.22(a). CMS or its contractor must give notice of its reconsidered determination to
the supplier, giving the reasons for its determination and specifying the conditions or
requirements the supplier failed to meet, and the right to an ALJ hearing. 42 C.F.R.

§ 498.25. If the decision on reconsideration is unfavorable to the supplier, the supplier
has the right to request a hearing by an ALJ and further review by the Departmental
Appeals Board (the Board). Act § 1866(j)(8) (42 U.S.C. § 1395ce(j)(8)); 42 C.F.R.

§§ 424.545, 498.3(b)(17), 498.5. A hearing on the record, also known as an oral hearing,
is required under the Act. Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51
(6th Cir. 2004). The supplier bears the burden to demonstrate that it meets enrollment
requirements with documents and records. 42 C.F.R. § 424.545(c).

B. Issues
Whether summary judgment is appropriate; and

Whether there was a basis for the revocation of Petitioner’s billing
privileges and enrollment in Medicare.

C. Findings of Fact, Conclusions of Law, and Analysis

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

1. Summary judgment is appropriate.

CMS has requested summary judgment. A provider or supplier denied enrollment in
Medicare or whose enrollment has been revoked has a right to a hearing and judicial
review pursuant to section 1866(h)(1) and (j) of the Act and 42 C.F.R. §§ 498.3(b)(1),
(5), (6), (8), (15), (17), 498.5. A hearing on the record, also known as an oral hearing, is
required under the Act. Act §§ 205(b), 1866 (h)(1) and (j)(8); Crestview, 373 F.3d at
748-51. A party may waive appearance at an oral hearing, but must do so affirmatively
in writing. 42 C.F.R. § 498.66. In this case, Petitioner has not waived the right to oral
hearing or otherwise consented to decision based only upon the documentary evidence or
pleadings. Accordingly, disposition on the written record alone is not permissible, unless
the CMS motion for summary judgment has merit.

Summary judgment is not automatic upon request but is limited to certain specific
conditions. The Secretary’s regulations that establish the procedure to be followed in
adjudicating Petitioner’s case are at 42 C.F.R. pt. 498. 42 C.F.R. §§ 424.545(a),
498.3(b)(5), (6), (15), (17). The regulations do not establish a summary judgment
procedure or recognize such a procedure. However, the Board has long accepted that
summary judgment is an acceptable procedural device in cases adjudicated pursuant to 42
C.F.R. pt. 498. See, e.g., Ill. Knights Templar Home, DAB No. 2274, at 3-4 (2009);
Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No.
1628, at 3 (1997). The Board also has recognized that the Federal Rules of Civil
Procedure do not apply in administrative adjudications such as this, but the Board has
accepted that Federal Rule of Civil Procedure 56 and related cases provide useful
guidance for determining whether summary judgment is appropriate. Furthermore, a
summary judgment procedure was adopted as a matter of judicial economy within my
authority to regulate the course of proceedings and made available to the parties in the
litigation of this case by my Prehearing Order. The parties were given notice by the
Prehearing Order that summary judgment is an available procedural device and that the
law as it has developed related to Fed. R. Civ. Pro. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any issue of
material fact for adjudication and/or the moving party is entitled to judgment as a matter
of law. In determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor. The party requesting summary
judgment bears the burden of showing that there are no genuine issues of material fact for
trial and/or that it is entitled to judgment as a matter of law. Generally, the non-movant
may not defeat an adequately supported summary judgment motion by relying upon the
denials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Mission
Hosp. Reg’! Med. Ctr., DAB No. 2459, at 4 (2012) (and cases cited therein); Experts Are
Us, Inc., DAB No. 2452, at 4 (2012) (and cases cited therein); Senior Rehab. & Skilled
Nursing Ctr., DAB No. 2300, at 3 (2010) (and cases cited therein); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The standard for deciding a case on summary judgment and an ALJ’s decision-making in
deciding a summary judgment motion differs from that used in resolving a case after a
hearing. On summary judgment, the ALJ does not make credibility determinations,
weigh the evidence, or decide which inferences to draw from the evidence, as would be
done when finding facts after a hearing on the record. Rather, on summary judgment, the
ALJ construes the evidence in a light most favorable to the non-movant and avoids
deciding which version of the facts is more likely true. Holy Cross Vill. at Notre Dame,
Inc., DAB No. 2291, at 5 (2009). The Board also has recognized that on summary
judgment it is appropriate for the ALJ to consider whether a rational trier of fact could
find that the party’s evidence would be sufficient to meet that party’s evidentiary burden.
Dumas Nursing & Rehab., L.P., DAB No. 2347, at 5 (2010). The Secretary has not
provided in 42 C.F.R. pt. 498, for the allocation of the burden of persuasion or the
quantum of evidence required to satisfy the burden. However, the Board has provided
some persuasive analysis regarding the allocation of the burden of persuasion in cases
subject to 42 C.F.R. pt. 498. Batavia Nursing & Convalescent Ctr., DAB No. 1904
(2004), aff'd, Batavia Nursing & Convalescent Ctr. v. Thompson, 129 Fed. App’x 181
(6th Cir. 2005).
There is no genuine dispute as to any material fact pertinent to revocation under 42
C.F.R. § 424.535(a)(1) that requires a trial. The issues in this case raised by Petitioner
related to revocation under 42 C.F.R. § 424.535(a)(1) are issues of law. The issues in this
case must be resolved against Petitioner as a matter of law. The undisputed evidence
shows that there is a basis for revocation of Petitioner’s Medicare enrollment and billing
privileges. Accordingly, summary judgment is appropriate.

Summary judgment is not appropriate for revocation pursuant to 42 C.F.R.
§ 424.535(a)(8), because revocation on that basis involves genuine disputes as to material
fact that would require a trial.

2. There is a basis for revocation of Petitioner’s Medicare enrollment
and billing privileges pursuant to 42 C.F.R. § 424.535(a)(1).

3. Petitioner’s enrollment in Medicare and its billing privileges are
revoked effective October 24, 2013.

a. Facts
The facts are not disputed and any inferences are drawn in favor of Petitioner.

Petitioner operated a clinical laboratory in Danville, Kentucky under the name Therapy
Outside the Box.* CMS Ex. 2 at 11, 33. Petitioner submitted a Medicare enrollment
application (Form CMS-855B) to the Medicare contractor, CGS, signed and dated by
Jamie Durham, Chief Executive Officer, on June 28, 2012 and July 23, 2012. CMS Ex. 2
at 24-25, 39. Petitioner indicated in the application that it would be submitting claims for
Medicare payment through a billing agency, Liberty Billing 2.0, LLC (Liberty).* CMS
Ex. 2 at 19. The NPIs for Petitioner listed in the application were 1053699272 and
1225356363 (operating as Therapy Outside the Box). CMS Ex. 2 at 10, 11.

> Petitioner’s application to enroll in Medicare lists Jamie Durham and Robert Durham
as owners. CMS Ex. 2 at 13-18, 37-38. Petitioner is a Kentucky limited liability
company (LLC) formed in April 2010, by Bryan Wood, Robin Peavler, and Rob Durham.
CMS Exs. 4; 1 at 114.

* Liberty is a Kentucky LLC organized in August 2011. Members of Liberty were Bryan
Wood, Robin Peavler, Brian Walters, James Bottom, and Robert Bertram. CMS Ex. 3 at
1,5.
CMS and CGS allege that between July 1, 2012 and August 15, 2013, 193 unique
Medicare claims for clinical laboratory services provided by Petitioner for Medicare-
eligible beneficiaries were submitted by Liberty without the NPI of the physician who
ordered the services. CMS and CGS allege that the claims were submitted with
Petitioner’s own NPI listed as both the “rendering” and the “referring” NPI. CMS Ex. 1
at 1,4, 6. CMS submitted a list of 725 claims from June 6, 2012 through August 2, 2013,
that list Petitioner’s NPI 1053699272 as both the rendering and referring NPI. I note that
the list reflects multiple claims for individual beneficiaries. CMS Ex. | at 95-111.

Petitioner does not dispute that Medicare claims were filed by Liberty on Petitioner’s
behalf without the referring physician or eligible professional’s NPI and with Petitioner’s
NPI listed as both the rendering and referring NPI. It is not necessary to resolve the exact
number of such claims that were filed by Liberty with this error. Petitioner alleges no
nowledge of the errors of Liberty until it was notified of the revocation of its billing
privileges and Medicare enrollment. RFH at 2, 6-8; P. Br. at 2-6, 9-10, 13-15; CMS Ex.

1 at 15-16, 19-21. Petitioner submitted a Corrective Action Plan (CAP) that was not
accepted by CMS. RFH at 2, 5, 7; P. Br. at 6, 15-16, 19-20; CMS Ex. 1 at 16, 22, 27-28.

b. Analysis

The requirements for establishing and maintaining Medicare billing privileges are found
in 42 C.F.R. pt. 424, subpt. P. Pursuant to 42 C.F.R. § 424.535(a)(1), CMS may revoke
an enrolled supplier’s Medicare billing privileges and supplier agreement if:

(1) Noncompliance. The provider or supplier is determined
not to be in compliance with the enrollment requirements
described in this section, or in the enrollment application
applicable for its provider or supplier type... .

42 C.F.R. § 424.535(a)(1). Petitioner is entitled to receive payment for clinical
laboratory services it provided to Medicare-eligible beneficiaries if the services were
ordered by a physician or another eligible professional. 42 C.F.R. § 424.507(a)(1)(i).
The claim for payment for clinical laboratory services must include the legal name and
the NPI of the physician or eligible professional who ordered the services. 42 C.F.R.

§ 424.507(a)(1)(ii). To enroll and maintain enrollment in Medicare, Petitioner had to
comply with all regulatory requirements applicable to a supplier that is a clinical
laboratory. 42 C.F.R. § 424.516(a)(2). Asa clinical laboratory, Petitioner was required
to maintain documents related to services provided to Medicare-eligible beneficiaries for
seven years, including written and electronic documents showing the NPI of the ordering
physician or other eligible professional relating to orders and certifications and requests
for payments. 42 C.F.R. § 424.516(f)(1).
Section 8 of Petitioner’s Medicare enrollment application (Form CMS-855B) clearly
informed Petitioner that, if it used a billing agency, it was responsible for claims
submitted on Petitioner’s behalf. CMS Ex. 2 at 19. Petitioner also agreed in the
application to abide by Medicare laws, regulations, and program instructions. CMS Ex. 2
at 22-25, 39.

It is undisputed that Liberty submitted claims to Medicare on Petitioner’s behalf and
those claims violated the regulatory requirement to list the ordering physician’s or
eligible professional’s NPI on the claim. Therefore, the claims violated Medicare
regulations which govern Medicare enrollment and requirements for Medicare payment,
requirements with which Petitioner agreed to comply upon enrollment.

Section 424.535(a)(1) of Title 42 C.F.R. requires that Petitioner be permitted to submit a
plan of corrective action. The regulation provides that “[a]ll providers and suppliers are
granted an opportunity to correct the deficient compliance requirement before a final
determination to revoke billing privileges” except for certain bases for revocation not
implicated in this case. 42 C.F.R. § 424.535(a)(1). The September 24, 2013 notice of
initial determination advised Petitioner of the right to submit a CAP and to request
reconsideration. CMS Ex. | at 7. Petitioner submitted a CAP and request for
reconsideration. CMS Ex. | at 14-92. Revocation was upheld on reconsideration and the
CAP was apparently found not acceptable inasmuch as CMS persists with the revocation
action before me. CMS Ex. | at 10-13.

Petitioner argues that the failure of CGS and CMS to accept Petitioner’s CAP was in
error. RFH at 5; P. Br. at 6-8. However, the refusal of CMS or its contractor to accept
Petitioner’s CAP is not an initial determination subject to my review. 42 C.F.R.

§§ 405.809, 424.545(a), 498.3(b); Conchita Jackson, M.D., DAB No. 2495 at 5-7 (2013);
Pepper Hill Nursing & Rehab. Ctr., LLC, DAB No. 2395 at 9 (2011); DMS Imaging,
Inc., DAB No. 2313 at 5-8 (2010). Petitioner cites no authority to the contrary.

Petitioner argues that the billing errors involved were solely the fault of Liberty, and
should not be attributed to Petitioner, who was unaware of the company’s misconduct.
Petitioner contends that issues of material fact exist. P. Br. at 20-21. I accept as true for
purposes of summary judgment that Petitioner had no actual knowledge of Liberty’s
erroneous listing of Petitioner’s NPI as the referring NPI. However, Petitioner is
nevertheless ultimately responsible, both as a matter of law and under the terms of its
participation agreement, for ensuring that its claims for Medicare reimbursement were
accurate and for any errors in those claims. Louis J. Gaefke, D.P.M., DAB No. 2554, at
5-6 (2013). Petitioner cannot avoid responsibility for its claims by the simple expedient
of shifting responsibility and liability by contracting with a billing agent. I also accept as
true for purpose of summary judgment Petitioner’s assertion that there was no evidence
of fraud. CMS Ex. | at 15; P. Br. at 1,5. But Petitioner cites no authority for the
proposition that the absence of fraud or fraudulent intent relieves Petitioner of its
responsibility for its Medicare claims. Petitioner also argues that it was in substantial
compliance citing 42 C.F.R. § 488.301. RFH at 3; P. Br. at 13. Petitioner has not shown
that the concept of “substantial compliance” as defined in 42 C.F.R. § 488.301, has any
application in this case. The cited regulation is found in 42 C.F.R. pt. 488, subpt. E,
which sets forth the procedures for the survey and certification of long-term care
facilities. Petitioner is a clinical laboratory not a long-term care facility. Furthermore,
the revocation in this case is not based on survey and certification, which for clinical
laboratories is governed by 42 C.F.R. pt. 493.

Petitioner argues that it should be treated the same as PremierTox 2.0, which was
permitted to enter a Corporate Integrity Agreement with the Inspector General (IG) for
the Department of Health and Human Services (HHS) and continues to operate as a
laboratory. P. Supp. Br. My authority is limited to determining whether there is a basis
for revocation of Petitioner’s Medicare enrollment and billing privileges. I have no
authority to review the exercise of discretion by CMS to revoke where there is a basis for
revocation. Abdul Razzaque Ahmed, M.D., DAB No. 2261, at 19 (2009). To the extent
Petitioner’s arguments are construed as a request for equitable relief, I have no authority
to grant equitable relief. US Ultrasound, DAB No. 2302, at 8 (2010) (“[n]either the ALJ
nor the Board is authorized to provide equitable relief by reimbursing or enrolling a
supplier who does not meet statutory or regulatory requirements.”). I am also required to
follow the Act and regulations and have no authority to declare statutes or regulations
invalid. 1866[CPayday.com, L.L.C., DAB No. 22839, at 14 (2009) (“[a]n ALJ is bound by
applicable laws and regulations and may not invalidate either a law or regulation on any
ground.”).

Petitioner does not deny the material facts and any favorable inferences are drawn for
Petitioner in this decision. Applying the law to the undisputed facts, I conclude that there
was a basis for revocation of Petitioner’s billing privileges and enrollment pursuant to 42
CFR. § 424.535(a)(1), effective October 24, 2013.

CGS notified Petitioner and CMS argues that a basis for revocation of Petitioner’s
enrollment and billing privileges also exists under 42 C.F.R. § 424.535(a)(8) for abuse of
billing privileges. CMS Ex. | at 6, 10; CMS Br. at 1. It is not necessary for me to
consider the additional alleged basis for revocation because I conclude that there is a
basis for revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to
42 C.F.R. § 424.535(a)(1). CMS only needs a single basis under 42 C.F.R. § 424.535(a)
to revoke Medicare billing privileges and enrollment. Furthermore, the evidence before
me on this alternate ground is insufficient for summary judgment and a hearing on the
merits would be required prior to a determination of whether or not there is a basis for
revocation under 42 C.F.R. § 424.535(a)(8).
10

III. Conclusion

For the foregoing reasons, I conclude that Petitioner’s Medicare enrollment and billing
privileges are properly revoked effective October 24, 2013.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

RX Drug Monitoring Laboratories, LLC,
(NPI: 1639404593; PTAN: 01263),

Petitioner,
v.
Centers for Medicare & Medicaid Services.

Docket No. C-14-789

Decision No. CR3378

Date: September 23, 2014

DECISION

The Medicare enrollment and billing privileges of Petitioner, RX Drug Monitoring
Laboratories, LLC, are revoked pursuant to 42 C.F.R. § 424.535(a)(1),' effective October
24, 2013.
I. Background
CGS Administrators, LLC (CGS), the Centers for Medicare & Medicaid Services (CMS)
Medicare contractor, notified Petitioner by letter dated September 24, 2013, that its
Medicare billing number and billing privileges were revoked effective October 24, 2013.
CGS cited 42 C.F.R. § 424.535(a)(1) and (a)(8) as the bases for revocation. CMS Exhibit

(Ex.) 1 at 25-30, 70-72. CGS also notified Petitioner that it was subject to a three-year
bar to re-enrollment pursuant to 42 C.F.R. § 424.535(c). CMS Ex. | at 26, 29, 71.

' Citations to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
On November 22, 2013, Petitioner submitted a request for reconsideration. CMS Ex. | at
5, 9-24, 28-933. On February 11, 2014, a contractor hearing officer issued a reconsidered
determination in which she upheld the revocation pursuant to 42 C.F.R. § 424.535(a)(1)
and (8). CMS Ex. | at 1-4.

Petitioner filed a request for hearing (RFH) before an administrative law judge (ALJ) on
March 12, 2014. On March 27, 2014, the case was assigned to me for hearing and
decision and an Acknowledgement and Prehearing Order (Prehearing Order) was issued
at my direction.

On April 28, 2014, CMS filed a motion for summary judgment (CMS Br.), with CMS
Exs. | through 4. On May 26, 2014, Petitioner filed its opposition to CMS’s motion for
summary judgment (P. Br.). On June 10, 2014, CMS filed a reply. On July 8, 2014,
Petitioner moved to supplement the record with additional argument (P. Supp. Br.). CMS
filed a response to Petitioner’s supplemental filing on July 17, 2014 . Petitioner filed a
reply on July 18, 2014. With its reply, Petitioner submitted as an exhibit “Medicare
Learning Network, MLN Matters®” Article SE1305 (rev. Feb. 6, 2014) published by
CMS. Petitioner failed to mark this document in accordance with Prehearing Order 4
IL.D.2 and the Civil Remedies Division Procedures § 9. I treat the document as if it were
marked as Petitioner’s Exhibit (P. Ex.) 1. The parties’ supplemental briefings are
accepted. No objections have been made to any of the offered exhibits and CMS Exs. 1
through 4 and P. Ex. | are admitted as evidence.

II. Discussion
A. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Administration of the Part B program is through contractors, such as
CGS. Act § 1842(a) (42 U.S.C. § 1395u(a)). Payment under the program for services
rendered to Medicare-eligible beneficiaries may only be made to eligible providers of
services and suppliers.” Act $§ 1835(a) (42 U.S.C. § 1395n(a)), 1842(h)(1) (42 U.S.C.
§ 1395u(h)(1)). Petitioner, a clinical laboratory, is a supplier.

> A “supplier” furnishes services under Medicare and includes physicians or other
practitioners and facilities that are not included within the definition of the phrase
“provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,”
commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled
nursing facilities, comprehensive outpatient rehabilitation facilities, home health
agencies, hospice programs, and a fund as described in sections 1814(g) (42 U.S.C.

(Footnote continued next page.)
The Act requires the Secretary of Health and Human Services (Secretary) to issue
regulations that establish a process for the enrollment in Medicare of providers and
suppliers, including the right to a hearing and judicial review of certain enrollment
determinations, such as revocation of enrollment and billing privileges. Act § 1866(j)
(42 U.S.C. § 1395cc(j)). Pursuant to 42 C.F.R. § 424.505, a supplier such as Petitioner
must be enrolled in the Medicare program and be issued a billing number to have billing
privileges and to be eligible to receive payment for services rendered to a Medicare-
eligible beneficiary.

Suppliers must submit complete, accurate, and truthful responses to all information
requested in the enrollment application. 42 C.F.R. § 424.510(d)(2). Pursuant to

42 C.F.R. §§ 424.502 and 424.510(d)(3), a supplier’s application to enroll in Medicare
must be signed by an authorized official, i.e., one with authority to bind the provider or
supplier both legally and financially. The regulation provides that the signature attests to
the accuracy of information provided in the application. The signature also attests to the
fact that the provider or supplier is aware of and abides by all applicable statutes,
regulations, and program instructions. 42 C.F.R. § 424.510(d)(3). Suppliers must meet
basic requirements depending on their type of service. 42 C.F.R. §§ 424.505, 424.516,
424.517. Suppliers are also subject to additional screening requirements depending upon
the type of service they provide. 42 C.F.R. § 424.518.

The Secretary has delegated the authority to revoke enrollment and billing privileges to
CMS. 42 C.F.R. § 424.535. CMS or its Medicare contractor may revoke an enrolled
supplier’s Medicare enrollment and billing privileges and supplier agreement for any of
the reasons listed in 42 C.F.R. § 424.535. Pursuant to 42 C.F.R. § 424.535(a)(1), CMS
may revoke a supplier’s enrollment and billing privileges if the supplier is determined not
to be in compliance with enrollment requirements. If CMS revokes a supplier’s Medicare
billing privileges, the revocation becomes effective 30 days after CMS or one of its
contractors mails the revocation notice to the supplier, subject to some exceptions not
applicable in this case. After a supplier’s Medicare enrollment and billing privileges are
revoked, the supplier is barred from reenrolling in the Medicare program for one to three
years. 42 C.F.R. § 424.535(c).

A supplier whose enrollment and billing privileges have been revoked may request
reconsideration and review as provided by 42 C.F.R. pt. 498. 42 C.F.R. § 424.545(a). A

(Footnote continued.)

§ 1395f(g)) and 1835(e) (42 U.S.C. § 1395n(e)) of the Act. Act § 1861(u) (42 U.S.C.

§ 1395x(u)). The distinction between providers and suppliers is important because they
are treated differently under the Act for some purposes.
supplier submits a written request for reconsideration to CMS or its contractor. 42 C.F.R.
§ 498.22(a). CMS or its contractor must give notice of its reconsidered determination to
the supplier, giving the reasons for its determination and specifying the conditions or
requirements the supplier failed to meet, and the right to an ALJ hearing. 42 C.F.R.

§ 498.25. If the decision on reconsideration is unfavorable to the supplier, the supplier
has the right to request a hearing by an ALJ and further review by the Departmental
Appeals Board (the Board). Act § 1866(j)(8) (42 U.S.C. § 1395ce(j)(8)); 42 C.F.R.

§§ 424.545, 498.3(b)(17), 498.5. A hearing on the record, also known as an oral hearing,
is required under the Act. Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51
(6th Cir. 2004). The supplier bears the burden to demonstrate that it meets enrollment
requirements with documents and records. 42 C.F.R. § 424.545(c).

B. Issues
Whether summary judgment is appropriate; and

Whether there was a basis for the revocation of Petitioner’s billing
privileges and enrollment in Medicare.

C. Findings of Fact, Conclusions of Law, and Analysis

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

1. Summary judgment is appropriate.

CMS has requested summary judgment. A provider or supplier denied enrollment in
Medicare or whose enrollment has been revoked has a right to a hearing and judicial
review pursuant to section 1866(h)(1) and (j) of the Act and 42 C.F.R. §§ 498.3(b)(1),
(5), (6), (8), (15), (17), 498.5. A hearing on the record, also known as an oral hearing, is
required under the Act. Act §§ 205(b), 1866 (h)(1) and (j)(8); Crestview, 373 F.3d at
748-51. A party may waive appearance at an oral hearing, but must do so affirmatively
in writing. 42 C.F.R. § 498.66. In this case, Petitioner has not waived the right to oral
hearing or otherwise consented to decision based only upon the documentary evidence or
pleadings. Accordingly, disposition on the written record alone is not permissible, unless
the CMS motion for summary judgment has merit.

Summary judgment is not automatic upon request but is limited to certain specific
conditions. The Secretary’s regulations that establish the procedure to be followed in
adjudicating Petitioner’s case are at 42 C.F.R. pt. 498. 42 C.F.R. §§ 424.545(a),
498.3(b)(5), (6), (15), (17). The regulations do not establish a summary judgment
procedure or recognize such a procedure. However, the Board has long accepted that
summary judgment is an acceptable procedural device in cases adjudicated pursuant to 42
C.F.R. pt. 498. See, e.g., Ill. Knights Templar Home, DAB No. 2274, at 3-4 (2009);
Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No.
1628, at 3 (1997). The Board also has recognized that the Federal Rules of Civil
Procedure (Fed. R. Civ. Pro.) do not apply in administrative adjudications such as this,
but the Board has accepted that Fed. R.Civ. Pro. 56 and related cases provide useful
guidance for determining whether summary judgment is appropriate. Furthermore, a
summary judgment procedure was adopted as a matter of judicial economy within my
authority to regulate the course of proceedings and made available to the parties in the
litigation of this case by my Prehearing Order. The parties were given notice by the
Prehearing Order that summary judgment is an available procedural device and that the
law as it has developed related to Fed. R. Civ. Pro. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any issue of
material fact for adjudication and/or the moving party is entitled to judgment as a matter
of law. In determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor. The party requesting summary
judgment bears the burden of showing that there are no genuine issues of material fact for
trial and/or that it is entitled to judgment as a matter of law. Generally, the non-movant
may not defeat an adequately supported summary judgment motion by relying upon the
denials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Mission
Hosp. Reg’! Med. Ctr., DAB No. 2459, at 4 (2012) (and cases cited therein); Experts Are
Us, Inc., DAB No. 2452, at 4 (2012) (and cases cited therein); Senior Rehab. & Skilled
Nursing Ctr., DAB No. 2300, at 3 (2010) (and cases cited therein); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The standard for deciding a case on summary judgment and an ALJ’s decision-making in
deciding a summary judgment motion differs from that used in resolving a case after a
hearing. On summary judgment, the ALJ does not make credibility determinations,
weigh the evidence, or decide which inferences to draw from the evidence, as would be
done when finding facts after a hearing on the record. Rather, on summary judgment, the
ALJ construes the evidence in a light most favorable to the non-movant and avoids
deciding which version of the facts is more likely true. Holy Cross Vill. at Notre Dame,
Inc., DAB No. 2291, at 5 (2009). The Board also has recognized that on summary
judgment it is appropriate for the ALJ to consider whether a rational trier of fact could
find that the party’s evidence would be sufficient to meet that party’s evidentiary burden.
Dumas Nursing & Rehab., L.P., DAB No. 2347, at 5 (2010). The Secretary has not
provided in 42 C.F.R. pt. 498, for the allocation of the burden of persuasion or the
quantum of evidence required to satisfy the burden. However, the Board has provided
some persuasive analysis regarding the allocation of the burden of persuasion in cases
subject to 42 C.F.R. pt. 498. Batavia Nursing & Convalescent Ctr., DAB No. 1904
6

(2004), aff'd, Batavia Nursing & Convalescent Ctr. v. Thompson, 129 Fed. App’x 181
(6th Cir. 2005).

There is no genuine dispute as to any material fact pertinent to revocation under 42
C.F.R. § 424.535(a)(1) that requires a trial. The issues in this case raised by Petitioner
related to revocation under 42 C.F.R. § 424.535(a)(1) are issues of law. The issues in this
case must be resolved against Petitioner as a matter of law. The undisputed evidence
shows that there is a basis for revocation of Petitioner’s Medicare enrollment and billing
privileges. Accordingly, summary judgment is appropriate.

Summary judgment is not appropriate for revocation pursuant to 42 C.F.R.
§ 424.535(a)(8), because there are genuine disputes of material fact that would require a
trial related to that basis for revocation.

2. There is a basis for revocation of Petitioner’s Medicare enrollment
and billing privileges pursuant to 42 C.F.R. § 424.535(a)(1).

3. Petitioner’s enrollment in Medicare and billing privileges are
revoked effective October 24, 2013.

a. Facts
The facts are not disputed and any inferences are drawn in favor of Petitioner.

Petitioner operated a clinical laboratory in Kentucky.’ CMS Ex. | at 77; CMS Ex. 2 at 3,
8. Petitioner submitted a Medicare enrollment application (Form CMS-855B) to the
Medicare contractor, CGS, dated January 6, 2010, that was received by CGS on January
11, 2010. CMS Ex. 2. The application’s Certification Statement was signed by James
W. Bottom, Petitioner’s President, on January 6, 2010. CMS Ex. 2 at 21-23. On the
application, Petitioner indicated that it would be submitting its claims for Medicare
payment through a billing agency, Liberty Billing, LLC. CMS Ex. 2 at 17. Petitioner
was assigned National Provider Identifier (NPI) 1639404593, which is also listed on the
application. CMS Ex. 1 at 74; CMS Ex. 2 at 8.

> Petitioner was organized as a Kentucky limited liability company in September 2009,
by Brian Walters. As of April 25, 2014, James W. Bottom, Brian C. Walters, and Dwight
Bastin were members of the corporation. CMS Ex. 4. The application lists the following
owners: Paul Davidson, Dwight Bastin, James Bottom, Bill Ramage, Brian Walters, and
Laura Cantrell. CMS Ex. 2 at 11-16.
CMS and CGS alleged that between January 1, 2012 and August 15, 2013, 666 unique
Medicare claims for clinical laboratory services provided by Petitioner for Medicare-
eligible beneficiaries were submitted by Liberty without the NPI of the physician who
ordered the services. CMS and CGS allege that the claims were submitted with
Petitioner’s own NPI listed as both the “rendering” and the “referring” NPI. CMS Ex. 1
at 7, 25, 28, 70; CMS Br. at 7-8. CMS submitted a list of 3,667 claims from January
2012 through June 2013, that list Petitioner’s NPI 1639404593 as both the rendering and
referring NPI. I note that the list reflects multiple claims for individual beneficiaries.
CMS Ex. | at 934-1013.

Petitioner does not dispute that Medicare claims were filed by Liberty on Petitioner’s
behalf without the referring physician or eligible professional’s NPI and with Petitioner
listed as both rendering and referring NPI. It is not necessary to resolve the exact number
of such claims that were filed by Liberty with this error. Petitioner alleges no knowledge
of the errors of Liberty until it was notified of the revocation of its billing privileges and
Medicare enrollment. RFH at 1, 5-7; P. Br. at 1, 4-5, 7, 11-13; CMS Ex. 1 at 10-11, 13-
14, 16. Petitioner submitted a Corrective Action Plan (CAP) that was not accepted by
CMS. RFH at 5, 7; P. Br. at 6, 7-8, 9, 10; CMS Ex. 1 at 17, 21-23; CMS Br. at 8 n.5.

b. Analysis

The requirements for establishing and maintaining Medicare billing privileges are found
in 42 C.F.R. pt. 424, subpt. P. Pursuant to 42 C.F.R. § 424.535(a)(1), CMS may revoke
an enrolled supplier’s Medicare billing privileges and supplier agreement if:

(1) Noncompliance. The provider or supplier is determined
not to be in compliance with the enrollment requirements
described in this section, or in the enrollment application
applicable for its provider or supplier type .. . .

42 C.F.R. § 424.535(a)(1). Petitioner is entitled to receive payment for clinical
laboratory services it provided to Medicare-eligible beneficiaries if the services were
ordered by a physician or another eligible provider. 42 C.F.R. § 424.507(a)(1)(i). The
claim for payment for clinical laboratory services must include the legal name and the
NPI of the physician or eligible professional who ordered the services. 42 C.F.R.

§ 424.507(a)(1)(ii). To enroll and maintain enrollment in Medicare, Petitioner had to
comply with all regulatory requirements applicable to a supplier that is a clinical
laboratory. 42 C.F.R. § 424.516(a)(2). As a clinical laboratory, Petitioner was required
to maintain documents related to services provided to Medicare-eligible beneficiaries for
seven years, including written and electronic documents showing the NPI of the ordering
physician or other eligible professional relating to orders and certifications and requests
for payments. 42 C.F.R. § 424.516(f)(1).
Section 8 of Petitioner’s Medicare enrollment application (Form CMS-855B) clearly
informed Petitioner that, if it used a billing agency, it was responsible for claims
submitted on Petitioner’s behalf. CMS Ex. 2 at 17. Petitioner has acknowledged that it is
ultimately responsible for claims filed on its behalf. CMS Ex. | at 10; P. Br. at 4.
Petitioner also agreed in the application to abide by Medicare laws, regulations, and
program instructions. Petitioner also acknowledged in the application that the payment
of a claim was conditioned upon the underlying transaction being compliant with
Medicare law and regulations. CMS Ex. 2 at 22.

It is undisputed that Liberty submitted claims to Medicare on Petitioner’s behalf and
those claims violated the regulatory requirement to list the ordering physician’s or
eligible professional’s NPI on the claim. Therefore, the claims violated Medicare
regulations which govern Medicare enrollment and requirements for Medicare payment,
requirements with which Petitioner agreed to comply upon enrollment.

Section 424.535(a)(1) of Title 42 C.F.R. requires that Petitioner be permitted to submit a
plan of corrective action. The regulation provides that “[a]ll providers and suppliers are
granted an opportunity to correct the deficient compliance requirement before a final
determination to revoke billing privileges” except for certain bases for revocation not
implicated in this case. 42 C.F.R. § 424.535(a)(1). The September 24, 2013 notice of
initial determination advised Petitioner of the right to submit a CAP and to request
reconsideration. CMS Ex. 1 at 26, 29, 71. Petitioner submitted a CAP and request for
reconsideration. CMS Ex. | at 5, 9-24, 28-933. Revocation was upheld on
reconsideration and the CAP was apparently found not acceptable inasmuch as CMS
persists with the revocation action before me. CMS Ex. | at 1-4; CMS Br. at 8 n.5.

Petitioner argues that the failure of CGS and CMS to accept Petitioner’s CAP was in
error. RFH at 5, 7; P. Br. at 7-8. However, the refusal of CMS or its contractor to accept
Petitioner’s CAP is not an initial determination subject to my review. 42 C.F.R.

§§ 405.809, 424.545(a), 498.3(b); Conchita Jackson, M.D., DAB No. 2495 at 5-7 (2013);
Pepper Hill Nursing & Rehab. Ctr., LLC, DAB No. 2395 at 9 (2011); DMS Imaging,
Inc., DAB No. 2313 at 5-8 (2010). Petitioner cites no authority to the contrary.

Petitioner argues that the billing errors involved were solely the fault of Liberty, and
should not be attributed to Petitioner, who was unaware of the company’s misconduct. P.
Br. at 4-8, 9, 11-13. Petitioner contends that issues of material fact exist with regard to
the “provider’s knowledge, ability to address prior to revocation, and actions in
accordance with ordinary, usual and required industry practices.” P. Br. at 17, 18. I
accept as true for purposes of summary judgment that Petitioner had no actual knowledge
of Liberty’s erroneous listing of Petitioner’s NPI as the referring NPI. However,
Petitioner is nevertheless ultimately responsible, both as a matter of law and under the
terms of its participation agreement, for ensuring that its claims for Medicare
reimbursement were accurate and for any errors in those claims. Louis J. Gaefke,
D.P.M., DAB No. 2554 at 5-6 (2013). Petitioner acknowledges that it is ultimately
responsible for claims filed on its behalf. CMS Ex. | at 10; P. Br. at 4. Petitioner cannot
avoid responsibility for its claims by the simple expedient of shifting responsibility and
liability by contracting with a billing agent. I also accept as true for purpose of summary
judgment Petitioner’s assertion that there was no evidence of fraud. P. Br. at 5-6. But
Petitioner cites no authority for the proposition that the absence of fraud or fraudulent
intent relieves Petitioner of its responsibility for its Medicare claims. Petitioner also
argues that it was in substantial compliance citing 42 C.F.R. § 488.301. Petitioner has
not shown that the concept of “substantial compliance” as defined in 42 C.F.R.

§ 488.301, has any application in this case. The cited regulation is found in 42 C.F.R. pt.
488, subpt. E, which sets forth the procedures for the survey and certification of long-
term care facilities. Petitioner is a clinical laboratory not a long-term care facility.
Furthermore, the revocation in this case is not based on survey and certification, which
for clinical laboratories is governed by 42 C.F.R. pt. 493.

Petitioner argues that it should be treated the same as PremierTox 2.0, which was
permitted to enter a Corporate Integrity Agreement with the Inspector General (IG) for
the Department of Health and Human Services (HHS) and continues to operate as a
laboratory. P. Supp. Br. My authority is limited to determining whether there is a basis
for revocation of Petitioner’s Medicare enrollment and billing privileges. I have no
authority to review the exercise of discretion by CMS to revoke where there is a basis for
revocation. Abdul Razzaque Ahmed, M.D., DAB No. 2261, at 19 (2009). To the extent
Petitioner’s arguments are construed as a request for equitable relief, I have no authority
to grant equitable relief. US Ultrasound, DAB No. 2302, at 8 (2010) (“[n]either the ALJ
nor the Board is authorized to provide equitable relief by reimbursing or enrolling a
supplier who does not meet statutory or regulatory requirements.”). I am also required to
follow the Act and regulations and have no authority to declare statutes or regulations
invalid. 1866[CPayday.com, L.L.C., DAB No. 22839, at 14 (2009) (“[a]n ALJ is bound by
applicable laws and regulations and may not invalidate either a law or regulation on any
ground.”).

Petitioner does not deny the material facts and any favorable inferences are drawn for
Petitioner in this decision. Applying the law to the undisputed facts, I conclude that there
was a basis for revocation of Petitioner’s billing privileges and enrollment pursuant to 42
C.F.R. § 424.535(a)(1), effective October 24, 2013.

CGS notified Petitioner that its billing privileges were also revoked pursuant to 42
C.F.R. § 424.535(a)(8). It is not necessary for me to consider this additional alleged basis
for revocation because I conclude that there is a basis for revocation of Petitioner’s
Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(1). CMS
only needs a single basis under 42 C.F.R. § 424.535(a) to revoke Medicare billing
privileges and enrollment. Furthermore, the evidence before me on this alternate ground
is insufficient for summary judgment and a hearing on the merits would be required prior
to a determination on the alternate ground.

II. Conclusion

For the foregoing reasons, I conclude that Petitioner’s Medicare enrollment and billing
privileges are properly revoked effective October 24, 2013.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-0989)

Complainant
v.

Joo and Peang Corp / Bong Soo Joo
d/b/a Arnold’s Carry Out,

Respondent.
Docket No. C-14-1476
Decision No. CR3374

Date: September 19, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Joo and Peang Corp / Bong Soo Joo d/b/a Arnold’s Carry Out,
at 2719 East Monument Street, Baltimore, Maryland 21205, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Arnold’s Carry Out impermissibly sold
cigarettes to minors and failed to verify, by means of photo identification containing a
date of birth, that the purchasers were 18 years of age or older, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose a $500 civil money
penalty against Respondent Arnold’s Carry Out.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on July 22, 2014, CTP served the
complaint on Respondent Arnold’s Carry Out by United Parcel Service. In the complaint
and accompanying cover letter, CTP explained that, within 30 days, Respondent should
pay the penalty, file an answer, or request an extension of time in which to file an answer.
CTP warned Respondent that, if it failed to take one of these actions within 30 days, the
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering it to pay the full amount of the proposed penalty.

Respondent Arnold’s Carry Out has neither filed an answer within the time prescribed,
nor requested an extension of time within which to file an answer. Pursuant to 21 C.F.R.
§ 17.11, Lassume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e At approximately 12:08 p.m. on July 23, 2013, at Respondent’s business
establishment, 2719 East Monument Street, Baltimore, Maryland 21205, an FDA-
commissioned inspector observed Respondent’s staff selling a package of
Newport Box 100s cigarettes to a person younger than 18 years of age. The
inspector also observed that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older;

e Ina warning letter dated September 5, 2013, CTP informed Respondent of the
inspector’s July 23, 2013 observations, and that such actions violate federal law,
21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that Respondent’s
failure to correct its violations could result in a civil money penalty or other
regulatory action;

e At approximately 12:51 p.m. on January 9, 2014, at Respondent’s business
establishment, 2719 East Monument Street, Baltimore, Maryland 21205, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport 100s cigarettes to a person younger than 18 years of age. The inspectors
also documented that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older.

These facts establish Respondent Arnold’s Carry Out’s liability under the Act. The Act
prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1;
see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18 years
of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of
photographic identification containing a purchaser’s date of birth, that no cigarette
purchasers are younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against Respondent Joo
and Peang Corp / Bong Soo Joo d/b/a Arold’s Carry Out. Pursuant to 21 C.F.R. § 17.11

(b), this order becomes final and binding upon both parties after 30 days of the date of its
issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Premier Integrity Solutions, Inc.,
(NPIs: 1982047700, 1992047179; PTANS: K081860, K081861),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-788
Decision No. CR3373
Date: September 19, 2014
DECISION

The Medicare enrollment and billing privileges of Petitioner, Premier Integrity Solutions,
Inc., are revoked pursuant to 42 C.F.R. § 424.535(a)(1),' effective October 24, 2013.

I. Background

CGS Administrators, LLC (CGS), the Centers for Medicare & Medicaid Services’ (CMS)
Medicare contractor, notified Petitioner by letter dated September 24, 2013, that its
Medicare billing number and billing privileges were revoked effective October 24, 2013.
CGS cited 42 C.F.R. § 424.535(a)(1) as the basis for revocation. CMS Exhibits (CMS
Exs.) 1 at 20-21; 5. CGS also notified Petitioner that it was subject to a three-year bar to
re-enrollment pursuant to 42 C.F.R. § 424.535(c). CMS Exs. | at 21; 5 at 2.

On November 22, 2013, Petitioner submitted a request for reconsideration. CMS Ex. | at
5-19, 22-92. On February 11, 2014, a contractor hearing officer issued a reconsidered

' Citations to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
determination in which she upheld the revocation pursuant to 42 C.F.R. § 424.535(a)(1).
CMS Ex. | at 1-4.

Petitioner filed a request for hearing (RFH) before an administrative law judge (ALJ) on
March 12, 2014. On March 27, 2014, the case was assigned to me for hearing and
decision and an Acknowledgement and Prehearing Order (Prehearing Order) was issued
at my direction.

On April 28, 2014, CMS filed a motion for summary judgment (CMS Br.), with CMS
Exs. | through 5. On May 27, 2014, Petitioner filed its opposition to CMS’s motion for
summary judgment (P. Br.). On June 10, 2014, CMS filed a reply. On July 8, 2014,
Petitioner moved to supplement the record with additional argument (P. Supp. Br.). CMS
filed a response to Petitioner’s supplemental filing on July 16, 2014. Petitioner filed a
reply on July 18, 2014. With its reply, Petitioner submitted as an exhibit “Medicare
Learning Network, MLN Matters®” Article SE1305 (rev. Feb. 6, 2014) published by
CMS. Petitioner failed to mark this document in accordance with Prehearing Order

4 IL.D.2 and the Civil Remedies Division Procedures § 9. | treat the document as if it was
marked as Petitioner’s Exhibit (P. Ex.) 1. The parties’ supplemental briefings are
accepted. No objections have been made to any of the offered exhibits and CMS Exs. 1
through 5 and P. Ex. | are admitted as evidence.

II. Discussion
A. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Administration of the Part B program is through contractors, such as
CGS. Act § 1842(a) (42 U.S.C. § 1395u(a)). Payment under the program for services
rendered to Medicare-eligible beneficiaries may only be made to eligible providers of
services and suppliers.” Act §§ 1835(a) (42 U.S.C. § 1395n(a)), 1842(h)(1) (42 U.S.C.
§ 1395u(h)(1)). Petitioner, a clinical laboratory, is a supplier.

> A “supplier” furnishes services under Medicare and includes physicians or other
practitioners and facilities that are not included within the definition of the phrase
“provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,”
commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled
nursing facilities, comprehensive outpatient rehabilitation facilities, home health
agencies, hospice programs, and a fund as described in sections 1814(g) (42 U.S.C.

§ 1395f(g)) and 1835(e) (42 U.S.C. § 1395n(e)) of the Act. Act § 1861(u) (42 U.S.C.

(Footnote continued next page.)
The Act requires the Secretary of Health and Human Services (Secretary) to issue
regulations that establish a process for the enrollment in Medicare of providers and
suppliers, including the right to a hearing and judicial review of certain enrollment
determinations, such as revocation of enrollment and billing privileges. Act § 1866(j)
(42 U.S.C. § 1395cc(j)). Pursuant to 42 C.F.R. § 424.505, a supplier such as Petitioner
must be enrolled in the Medicare program and be issued a billing number to have billing
privileges and to be eligible to receive payment for services rendered to a Medicare-
eligible beneficiary.

Suppliers must submit complete, accurate, and truthful responses to all information
requested in the enrollment application. 42 C.F.R. § 424.510(d)(2). Pursuant to

42 C.F.R. §§ 424.502 and 424.510(d)(3), a supplier’s application to enroll in Medicare
must be signed by an authorized official, i.e., one with authority to bind the provider or
supplier both legally and financially. The regulation provides that the signature attests to
the accuracy of information provided in the application. The signature also attests to the
fact that the provider or supplier is aware of and abides by all applicable statutes,
regulations, and program instructions. 42 C.F.R. § 424.510(d)(3). Suppliers must meet
basic requirements depending on their type of service. 42 C.F.R. §§ 424.505, 424.516,
424.517. Suppliers are also subject to additional screening requirements depending upon
the type of service they provide. 42 C.F.R. § 424.518.

The Secretary has delegated the authority to revoke enrollment and billing privileges to
CMS. 42 C.F.R. § 424.535. CMS or its Medicare contractor may revoke an enrolled
supplier’s Medicare enrollment and billing privileges and supplier agreement for any of
the reasons listed in 42 C.F.R. § 424.535. Pursuant to 42 C.F.R. § 424.535(a)(1), CMS
may revoke a supplier’s enrollment and billing privileges if the supplier is determined not
to be in compliance with enrollment requirements. If CMS revokes a supplier’s Medicare
billing privileges, the revocation becomes effective 30 days after CMS or one of its
contractors mails the revocation notice to the supplier, subject to some exceptions not
applicable in this case. After a supplier’s Medicare enrollment and billing privileges are
revoked, the supplier is barred from reenrolling in the Medicare program for one to three
years. 42 C.F.R. § 424.535(c).

A supplier whose enrollment and billing privileges have been revoked may request
reconsideration and review as provided by 42 C.F.R. pt. 498. 42 C.F.R. § 424.545(a). A
supplier submits a written request for reconsideration to CMS or its contractor. 42 C.F.R.
§ 498.22(a). CMS or its contractor must give notice of its reconsidered determination to

(Footnote continued.)
§ 1395x(u)). The distinction between providers and suppliers is important because they
are treated differently under the Act for some purposes.
the supplier, giving the reasons for its determination and specifying the conditions or
requirements the supplier failed to meet, and the right to an ALJ hearing. 42 C.F.R.

§ 498.25. If the decision on reconsideration is unfavorable to the supplier, the supplier
has the right to request a hearing by an ALJ and further review by the Departmental
Appeals Board (the Board). Act § 1866(j)(8) (42 U.S.C. § 1395ce(j)(8)); 42 C.F.R.

§§ 424.545, 498.3(b)(17), 498.5. A hearing on the record, also known as an oral hearing,
is required under the Act. Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51
(6th Cir. 2004). The supplier bears the burden to demonstrate that it meets enrollment
requirements with documents and records. 42 C.F.R. § 424.545(c).

B. Issues
Whether summary judgment is appropriate; and

Whether there was a basis for the revocation of Petitioner’s billing
privileges and enrollment in Medicare.

C. Findings of Fact, Conclusions of Law, and Analysis

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

1. Summary judgment is appropriate.

CMS has requested summary judgment. A provider or supplier denied enrollment in
Medicare or whose enrollment has been revoked has a right to a hearing and judicial
review pursuant to section 1866(h)(1) and (j) of the Act and 42 C.F.R. §§ 498.3(b)(1),
(5), (6), (8), (15), (17), 498.5. A hearing on the record, also known as an oral hearing, is
required under the Act. Act §§ 205(b), 1866 (h)(1) and (j)(8); Crestview, 373 F.3d at
748-51. A party may waive appearance at an oral hearing, but must do so affirmatively
in writing. 42 C.F.R. § 498.66. In this case, Petitioner has not waived the right to oral
hearing or otherwise consented to decision based only upon the documentary evidence or
pleadings. Accordingly, disposition on the written record alone is not permissible, unless
the CMS motion for summary judgment has merit.

Summary judgment is not automatic upon request but is limited to certain specific
conditions. The Secretary’s regulations that establish the procedure to be followed in
adjudicating Petitioner’s case are at 42 C.F.R. pt. 498. 42 C.F.R. §§ 424.545(a),
498.3(b)(5), (6), (15), (17). The regulations do not establish a summary judgment
procedure or recognize such a procedure. However, the Board has long accepted that
summary judgment is an acceptable procedural device in cases adjudicated pursuant to 42
C.F.R. pt. 498. See, e.g., Ill. Knights Templar Home, DAB No. 2274, at 3-4 (2009);
Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No.
1628, at 3 (1997). The Board also has recognized that the Federal Rules of Civil
Procedure do not apply in administrative adjudications such as this, but the Board has
accepted that Federal Rule of Civil Procedure 56 and related cases provide useful
guidance for determining whether summary judgment is appropriate. Furthermore, a
summary judgment procedure was adopted as a matter of judicial economy within my
authority to regulate the course of proceedings and made available to the parties in the
litigation of this case by my Prehearing Order. The parties were given notice by the
Prehearing Order that summary judgment is an available procedural device and that the
law as it has developed related to Fed. R. Civ. Pro. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any issue of
material fact for adjudication and/or the moving party is entitled to judgment as a matter
of law. In determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor. The party requesting summary
judgment bears the burden of showing that there are no genuine issues of material fact for
trial and/or that it is entitled to judgment as a matter of law. Generally, the non-movant
may not defeat an adequately supported summary judgment motion by relying upon the
denials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Mission
Hosp. Reg’! Med. Ctr., DAB No. 2459, at 4 (2012) (and cases cited therein); Experts Are
Us, Inc., DAB No. 2452, at 4 (2012) (and cases cited therein); Senior Rehab. & Skilled
Nursing Ctr., DAB No. 2300, at 3 (2010) (and cases cited therein); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The standard for deciding a case on summary judgment and an ALJ’s decision-making in
deciding a summary judgment motion differs from that used in resolving a case after a
hearing. On summary judgment, the ALJ does not make credibility determinations,
weigh the evidence, or decide which inferences to draw from the evidence, as would be
done when finding facts after a hearing on the record. Rather, on summary judgment, the
ALJ construes the evidence in a light most favorable to the non-movant and avoids
deciding which version of the facts is more likely true. Holy Cross Vill. at Notre Dame,
Inc., DAB No. 2291, at 5 (2009). The Board also has recognized that on summary
judgment it is appropriate for the ALJ to consider whether a rational trier of fact could
find that the party’s evidence would be sufficient to meet that party’s evidentiary burden.
Dumas Nursing & Rehab., L.P., DAB No. 2347, at 5 (2010). The Secretary has not
provided in 42 C.F.R. pt. 498, for the allocation of the burden of persuasion or the
quantum of evidence required to satisfy the burden. However, the Board has provided
some persuasive analysis regarding the allocation of the burden of persuasion in cases
subject to 42 C.F.R. pt. 498. Batavia Nursing & Convalescent Ctr., DAB No. 1904
(2004), aff'd, Batavia Nursing & Convalescent Ctr. v. Thompson, 129 Fed. App’x 181
(6th Cir. 2005).
There is no genuine dispute as to any material fact pertinent to revocation under 42
C.F.R. § 424.535(a)(1) that requires a trial. The issues in this case raised by Petitioner
related to revocation under 42 C.F.R. § 424.535(a)(1) are issues of law. The issues in this
case must be resolved against Petitioner as a matter of law. The undisputed evidence
shows that there is a basis for revocation of Petitioner’s Medicare enrollment and billing
privileges. Accordingly, summary judgment is appropriate.

2. There is a basis for revocation of Petitioner’s Medicare enrollment
and billing privileges pursuant to 42 C.F.R. § 424.535(a)(1).

3. Petitioner’s enrollment in Medicare and its billing privileges are
revoked effective October 24, 2013.

a. Facts
The facts are not disputed and any inferences are drawn in favor of Petitioner.

Petitioner operates clinical laboratories in Kentucky.> CMS Ex. 2 at 55, 75. Petitioner
submitted Medicare enrollment applications (Form CMS-855B) to the Medicare
contractor, CGS, signed and dated by Angela S. Ragle, Chief Financial Officer, on April
2, 2013, May 1, 2013, and May 28, 2013. Petitioner indicated in the applications that it
would be submitting claims for Medicare payment through a billing agency, Liberty
Billing 2.0, LLC. CMS Ex. 2, at 64, 83. The following NPIs were assigned to Petitioner:
1982047700 (Bowling Green, KY location) and 1992047179 (Campbellsville, KY
location). CMS Ex. 2 at 55, 75.

CMS and CGS alleged that between April 30, 2013 and August 15, 2013, 153 unique
Medicare claims for clinical laboratory services provided by Petitioner for Medicare
eligible beneficiaries were submitted by Liberty without the NPI of the physician who
ordered the services. CMS and CGS allege that the claims were submitted with
Petitioner’s own NPI listed as both the “rendering” and the “referring” NPI. CMS Ex. |
at 2, 20, 94; CMS Ex. 5 at 1. CMS submitted a list of 762 claims from April 30, 2013
through August 15, 2013, that list Petitioner’s NPI 1992047179 as both the rendering and
referring NPI. I note that the list reflects multiple claims for individual beneficiaries.
CMS Ex. | at 96-110.

> Petitioner was organized as a Kentucky corporation in October 1999, by James Bottom,
Brian Walters, Dwight Bastin, and Don Adams. As of April 18, 2014, Brian Walters was
President, James Wesley Bottom was Vice President and Angel Ragle was Secretary and
Treasurer. CMS Ex. 4.
Petitioner does not dispute that Medicare claims were filed by Liberty on Petitioner’s
behalf without the referring physician or eligible professional’s NPI and with Petitioner
listed as both rendering and referring NPI. It is not necessary to resolve the exact number
of such claims that were filed by Liberty with this error. Petitioner alleges no knowledge
of the errors of Liberty until it was notified of the revocation of its billing privileges and
Medicare enrollment. RFH at 1, 5-7; P. Br. at 1-2, 5-7, 10-12; CMS Ex. 1 at 6-7, 9-10,
12. Petitioner submitted a Corrective Action Plan (CAP) that was not accepted by CMS.
RFH at 5, 7-8; P. Br. at 3, 9, 13, 16-18; CMS Ex. | at 13-14, 16-19.

b. Analysis

The requirements for establishing and maintaining Medicare billing privileges are found
in 42 C.F.R. pt. 424, subpt. P. Pursuant to 42 C.F.R. § 424.535(a)(1), CMS may revoke
an enrolled supplier’s Medicare billing privileges and supplier agreement if:

(1) Noncompliance. The provider or supplier is determined
not to be in compliance with the enrollment requirements
described in this section, or in the enrollment application
applicable for its provider or supplier type... .

42 C.F.R. § 424.535(a)(1). Petitioner is entitled to receive payment for clinical
laboratory services it provided to Medicare-eligible beneficiaries if the services were
ordered by a physician or another eligible provider. 42 C.F.R. § 424.507(a)(1)(i). The
claim for payment for clinical laboratory services must include the legal name and the
NPI of the physician or eligible professional who ordered the services. 42 C.F.R.

§ 424.507(a)(1)(ii). To enroll and maintain enrollment in Medicare, Petitioner had to
comply with all regulatory requirements applicable to a supplier that is a clinical
laboratory. 42 C.F.R. § 424.516(a)(2). Asa clinical laboratory, Petitioner was required
to maintain documents related to services provided to Medicare-eligible beneficiaries for
seven years, including written and electronic documents showing the NPI of the ordering
physician or other eligible professional relating to orders and certifications and requests
for payments. 42 C.F.R. § 424.516(f)(1).

Section 8 of Petitioner’s Medicare enrollment application (Form CMS-855B) clearly
informed Petitioner that, if it used a billing agency, it was responsible for claims
submitted on Petitioner’s behalf. CMS Ex. 2 at 64, 83. Petitioner also agreed in the
application to abide by Medicare laws, regulations, and program instructions. Petitioner
also acknowledged in the application that the payment of a claim was conditioned upon
the underlying transaction being compliant with Medicare law and regulations. CMS Ex.
2 at 68-69, 86.

It is undisputed that Liberty Billing submitted claims to Medicare on Petitioner’s behalf
and those claims violated the regulatory requirement to list the ordering physician’s or
eligible professional’s NPI on the claim. Therefore, the claims violated Medicare
regulations which govern Medicare enrollment and requirements for Medicare payment,
requirements with which Petitioner agreed to comply upon enrollment.

Section 424.535(a)(1) of Title 42 C.F.R. requires that Petitioner be permitted to submit a
plan of corrective action. The regulation provides that “[a]ll providers and suppliers are
granted an opportunity to correct the deficient compliance requirement before a final
determination to revoke billing privileges” except for certain bases for revocation not
implicated in this case. 42 C.F.R. § 424.535(a)(1). The September 24, 2013 notice of
initial determination advised Petitioner of the right to submit a CAP and to request
reconsideration. CMS Ex. | at 20; CMS Ex. 5 at 1. Petitioner submitted a CAP and
request for reconsideration. CMS Ex. 1 at 5-19, 22-92. Revocation was upheld on
reconsideration and the CAP was apparently found not acceptable inasmuch as CMS
persists with the revocation action before me. CMS Ex. | at 1-4.

Petitioner argues that the failure of CGS and CMS to accept Petitioner’s CAP was in
error. RFH at 5, 7; P. Br. at 7-8, 17-18. However, the refusal of CMS or its contractor to
accept Petitioner’s CAP is not an initial determination subject to my review. 42 C.F.R.
§§ 405.809, 424.545(a), 498.3(b); Conchita Jackson, M.D., DAB No. 2495 at 5-7 (2013);
Pepper Hill Nursing & Rehab. Ctr., LLC, DAB No. 2395 at 9 (2011); DMS Imaging,
Inc., DAB No. 2313 at 5-8 (2010). Petitioner cites no authority to the contrary.

Petitioner argues that the billing errors involved were solely the fault of Liberty, and
should not be attributed to Petitioner, who was unaware of the company’s misconduct. P.
Br. at 5-7, 9-19. Petitioner contends that “issues of material fact exist with regard to
provider control over the billing company and knowledge of any billing company
wrongdoing.” P. Br. at 3-5. I accept as true for purposes of summary judgment that
Petitioner had no actual knowledge of Liberty’s erroneous listing of Petitioner’s NPI as
the referring NPI. However, Petitioner is nevertheless ultimately responsible both as a
matter of law and under the terms of its participation agreement for ensuring that its
claims for Medicare reimbursement were accurate and for any errors in those claims.
Louis J. Gaefke, D.P.M., DAB No. 2554 at 5-6 (2013). Petitioner cannot avoid
responsibility for its claims by the simple expedient of shifting responsibility and liability
by contracting with a billing agent. I also accept as true for purpose of summary
judgment Petitioner’s assertion that there was no evidence of fraud. P. Br. at 6. But
Petitioner cites no authority for the proposition that the absence of fraud or fraudulent
intent relieves Petitioner of its responsibility for its Medicare claims. Petitioner also
argues that it was in substantial compliance citing 42 C.F.R. § 488.301. Petitioner has
not shown that the concept of “substantial compliance” as defined in 42 C.F.R.

§ 488.301, has any application in this case. The cited regulation is found in 42 C.F.R. pt.
488, subpt. E, which sets forth the procedures for the survey and certification of long-
term care facilities. Petitioner is a clinical laboratory not a long-term care facility.
Furthermore, the revocation in this case is not based on survey and certification, which
for clinical laboratories is governed by 42 C.F.R. pt. 493.

Petitioner argues that it should be treated the same as PremierTox 2.0, which was
permitted to enter a Corporate Integrity Agreement with the Inspector General (IG) for
the Department of Health and Human Services (HHS) and continues to operate as a
laboratory. P. Supp. Br. My authority is limited to determining whether there is a basis
for revocation of Petitioner’s Medicare enrollment and billing privileges. I have no
authority to review the exercise of discretion by CMS to revoke where there is a basis for
revocation. Abdul Razzaque Ahmed, M.D., DAB No. 2261, at 19 (2009). To the extent
Petitioner’s arguments are construed as a request for equitable relief, I have no authority
to grant equitable relief. US Ultrasound, DAB No. 2302, at 8 (2010) (“[n]either the ALJ
nor the Board is authorized to provide equitable relief by reimbursing or enrolling a
supplier who does not meet statutory or regulatory requirements.”). I am also required to
follow the Act and regulations and have no authority to declare statutes or regulations
invalid. 1866[CPayday.com, L.L.C., DAB No. 22839, at 14 (“[aJn ALJ is bound by
applicable laws and regulations and may not invalidate either a law or regulation on any
ground.”).

Petitioner does not deny the material facts and any favorable inferences are drawn for
Petitioner in this decision. Applying the law to the undisputed facts, I conclude that there
was a basis for revocation of Petitioner’s billing privileges and enrollment pursuant to 42
CFR. § 424.535(a)(1), effective October 24, 2013.

III. Conclusion

For the foregoing reasons, I conclude that Petitioner’s Medicare enrollment and billing
privileges are properly revoked effective October 24, 2013.

/s/
Keith W. Sickendick
Administrative Law Judge


DEPARTMENT OF HEALTH AND HUMAN SERVICES
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

Kelvin Washington a/k/a/ Kelvin Jerome Washington,
(OI File No.: 6-08-40491-9),

Petitioner,
v.
The Inspector General.
Docket No. C-13-1323
Decision No. CR3372
Date: September 19, 2014
DECISION

Petitioner, Kelvin Washington, a/k/a Kelvin Jerome Washington, appeals the
determination of the Inspector General (I.G.) for the U.S. Department of Health &
Human Services to exclude him from participating in Medicare, Medicaid, and other
federal health care programs pursuant to section 1128(a)(1) of the Social Security Act
(Act) (42 U.S.C. § 1320a-7(a)(1)) for a period of 10 years. For the reasons explained
below, I find that there is a legitimate basis for the I.G. to exclude Petitioner and that an
exclusion period of 10 years is reasonable based on three aggravating factors and no
mitigating factors.

I. Background and Procedural History

On February 28, 2013, the LG. notified Petitioner that he was being excluded from
participating in Medicare, Medicaid, and other federal health care programs pursuant to
section 1128(a)(1) of the Act. The I.G. cited as the basis for the exclusion Petitioner’s
conviction in the United States District Court, Southern District of Texas, of a criminal
offense related to the delivery of an item or service under Medicare or a state health care
program. The I.G. based the length of Petitioner’s exclusion (five years above the
statutory five-year minimum exclusion period for mandatory exclusion) on three
aggravating factors: (1) the acts resulting in his conviction caused, or were intended to
cause, a financial loss to a government program of $5,000 or more; (2) the acts resulting
in his conviction were committed over a period of one year or more, from about 2003 to
about 2007; and (3) the court’s sentence included incarceration. I.G. Exhibit (Ex.) 1.

On August 12, 2013, Petitioner, appearing pro se, requested a hearing before an
administrative law judge (ALJ). The case was assigned to me for hearing and decision on
September 20, 2013. Due to Petitioner’s incarceration and illness, I was not able to
convene a prehearing conference in this case until March 5, 2014, at which time I found
Petitioner’s original hearing request noncompliant with the regulations and gave
Petitioner a chance to file a hearing request compliant with the regulations. March 6,
2014 Summary of Pre-hearing Conference and Order; 42 C.F.R. § 1005.2(d).

Petitioner filed an amended hearing request on April 10, 2014. In it he admits that he
“was convicted of [M]edicare fraud and related charges on or about December 8, 2011 in
the United States District Court of the Southern District of Texas, Houston Division.” In
my Order scheduling briefing in the case, which I issued on June 3, 2014, I found that
while Petitioner maintains in his hearing request that he is actually innocent of the
criminal offense for which he was convicted, I do not have the authority to consider his
claim because it is a collateral attack on his conviction.’ 42 C.F.R. § 1001.2007(d). In
addition, as Petitioner did not dispute that he was convicted of a criminal offense under
section 1128(a)(1) of the Act, I found that I must sustain at least a five-year exclusion.
However, because the I.G. excluded Petitioner for 10 years, I informed the parties that I
may consider whether or not the length of Petitioner’s exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1), (2). I then set a briefing schedule for the parties to brief
that issue.

The LG. filed a brief (I.G. Br.) and three exhibits (I.G. Exs. 1-3) on June 24, 2014.
Petitioner filed a brief (P. Br.) on July 29, 2014. Petitioner did not attach any exhibits.
The LG. filed a reply (I.G. Reply) on August 14, 2014. Absent any objection I admit I.G.
Exs. 1-3 into the record.

In my June 3, 2014 Order, I directed the parties to indicate in their briefs whether a video
hearing would be necessary and, if so, to describe the testimony the party wishes to
present, the names of the witnesses it would call, and a summary of each witness’
proposed testimony. Neither party indicated an in-person hearing is necessary, and
neither party offered any witness testimony. I.G. Br.; P. Br.; LG. Reply. I therefore
decide this case based on the written record.

‘In his subsequent brief, Petitioner continues to “maintain [his] innocence” of the crime
for which he was convicted. At no time, however, has Petitioner denied the conviction.
IL. Discussion

A. Applicable Law

Section 1128(a)(1) of the Act requires the Secretary of the U.S. Department of Health &
Human Services (Secretary) to exclude from participation in federal health care
programs “[a]ny individual or entity that has been convicted of a criminal offense related
to the delivery of an item or service under [Medicare] or under any State health care
program.” See also 42 C.F.R. § 1001.101(a). The Secretary delegated this authority to
the I.G. 48 Fed. Reg. 21662 (May 13, 1983).

Exclusion pursuant to section 1128(a)(1) of the Act is mandatory and the LG. must
impose the exclusion for a minimum period of five years. Act § 1128(c)(3)(B)

(42 U.S.C. § 1320a-7(c)(3)(B)); see 42 C.F.R. § 1001.102(a). The I.G. may increase the
period of exclusion based on the presence of certain aggravating factors that the
Secretary has established by regulation. 42 C.F.R. § 1001.102(b). Here, the I.G. relies
on three aggravating factors to enhance the period of Petitioner’s exclusion beyond the
minimum mandatory period:

(1) The acts resulting in the conviction, or similar acts, that caused, or were
intended to cause, a financial loss to a Government program or to one or more
entities of $5,000 or more. (The entire amount of financial loss to such programs
or entities, including any amounts resulting from similar acts not adjudicated, will
be considered regardless of whether full or partial restitution has been made);

(2) The acts that resulted in the conviction, or similar acts, were committed over a
period of one year or more;

oR KK

(5) The sentence imposed by the court included incarceration|[.]
42 CFR. § 1001.102(b)(1), (2), (5).

Where, as here, the I.G. determines that one or more aggravating factors may support
increasing an exclusion period beyond the five-year minimum, the I.G. may only then
consider certain specified mitigating factors “as a basis for reducing the period of
exclusion to no less than 5 years.” 42 C.F.R. § 1001.102(c).

The right to an ALJ hearing and judicial review of the final action of the Secretary are
provided by section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)). The standard of proof is
a preponderance of the evidence, and there may be no collateral attack of the conviction
that is the basis for the exclusion. 42 C.F.R. § 1001.2007(c), (d). Petitioner bears the
burden of proof, and the burden of persuasion, on any affirmative defenses or mitigating
factor, and the I.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(c). An ALJ
reviews the length of an exclusion de novo to determine whether it falls within a
reasonable range considering any aggravating and mitigating factors. Sushil Aniruddh
Sheth, M.D., DAB No. 2491, at 5 (2012) (citing Joseph M. Rukse, Jr., R.Ph., DAB No.
1851, at 10-11 (2002)).

B. Issues

Under 42 C.F.R. § 1001.2007(a)(1), the scope of my review is limited to two
issues:

Whether there is a basis for the I.G. to exclude Petitioner from participation in
Medicare, Medicaid, and other federal health care programs; and

Whether the length of the exclusion is unreasonable.

Here I have found that there is an undisputed and legitimate basis to exclude Petitioner,
and I thus decide only whether the length of the exclusion is unreasonable.

C. Findings of Fact and Conclusions of Law

I. The I.G. proved that three aggravating factors exist in this case that justify
lengthening the period of exclusion beyond the five-year statutory minimum.

The record reflects that Petitioner was employed as an administrator at a nursing home in
Sugar Land, Texas, which participated in the Medicare and Medicaid programs. On July
14, 2011, a 10-count Indictment was filed in the United States District Court, Southern
District of Texas, accusing Petitioner of violating the anti-kickback and health care
statutes. I.G. Ex. 3. The Indictment alleged that Petitioner solicited and accepted
kickbacks from an ambulance company in exchange for fraudulently securing ambulance
transport prescriptions for dialysis patients. 1.G. Ex. 3, at 1, 6. The Indictment alleged
specifically that: Petitioner’s criminal conduct began in 2003 and continued through
2007 (LG. Ex. 3, at 6); the ambulance transport prescriptions secured by Petitioner
resulted in false billings to Medicare of approximately $1,231,148 and payment to the
ambulance company by Medicare and Medicaid of $438, 665.65 (I.G. Ex. 3, at 6, 17);
and Petitioner received, for his part in the criminal scheme, 23 checks from the
ambulance company totaling approximately $22,200, as well as approximately $1,500 in
cash. I.G. Ex. 3, at 7. Based on this Indictment, Petitioner was found guilty after a jury
trial of violating 18 U.S.C. §§ 2 and 1347 (six counts, health care fraud, aiding and
abetting); 18 U.S.C. § 371 (one count, conspiracy to defraud the United States and to
receive and pay health care kickbacks and to commit health care fraud); and 42 U.S.C. §
1320a-7b(b)(1)(A) (three counts, payment and receipt of health care kickbacks). I.G. Ex.
2. Restitution was determined to be in the amount of $480,564.75 ($400,152.64 to
Medicare and $80,412.11 to Medicaid). I.G. Ex. 2, at 6. Petitioner was also sentenced to
24 months of imprisonment. I.G. Ex. 2, at 3.

These facts establish the presence of three aggravating factors by a preponderance of
the evidence. I address these three aggravating factors below.

a. The acts resulting in Petitioner’s conviction caused a loss to
Medicare and Medicaid of $480,564.75.

The I.G. may increase the length of exclusion if the acts resulting in the underlying
conviction caused, or were intended to cause, a loss to a government program or to one or
more entities of $5,000 or more. 42 C.F.R. § 1001.102(b)(1). The court documents show
that the District Court ordered restitution of $480,564.75 to Medicare and Medicaid as a
result of Petitioner’s criminal conduct. I.G. Ex. 2, at 6. It is well established that
restitution is a recognized measure of program loss. See, e.g., Craig Richard Wilder,
DAB No. 2416, at 9 (2011). Petitioner’s crimes caused Medicare and Medicaid financial
losses much greater than the $5,000 threshold required to trigger this particular
aggravating factor. Thus, the I.G. has established the presence of this aggravating factor.

b. The acts resulting in Petitioner’s conviction occurred over a
period of one year or more.

The I.G. may increase the length of exclusion if the acts resulting in the underlying
conviction occurred over a period of one year or more. 42 C.F.R. § 1001.102(b)(2). The
acts that formed the basis of Petitioner’s conviction began in 2003 and continued through
2007, a period significantly exceeding the minimum one year period required to trigger
this particular aggravating factor. 1.G. Ex. 3, at 4, 6; LG. Ex. 2. Thus, the I.G. has
established the presence of this aggravating factor.

c. The District Court’s sentence included incarceration.

The I.G. may increase the length of exclusion if the court’s sentence includes a period of
incarceration. 42 C.F.R. § 1001.102(b)(5). Here, the District Court sentenced Petitioner
to 24 months in prison based on his convictions in violation of 18 U.S.C. § 371, 42
U.S.C. § 1320(a)-7b(b)(1)(A), and 18 U.S.C. §§ 1347 and 2. LG. Ex. 2, at 1-3.
Petitioner is currently incarcerated under the District Court’s sentence. Thus, the I.G. has
established the presence of this aggravating factor.

d. No mitigating factors justify reducing the period of exclusion.

Because I find that aggravating factors are present in this case that justify an exclusion
of longer than five years, I next consider whether any mitigating factors authorized in
the regulations are present to reduce the exclusion period to no less than the minimum
five years. 42 C.F.R. § 1001.102(c). Petitioner asserts no mitigating factors authorized
to be mitigating factors by the regulations in this case. P. Br. Accordingly, I find that
no mitigating factors exist which would justify reducing the period of exclusion.

2. Based on the three aggravating factors, and the absence of any mitigating
factors, an exclusion period of 10 years is within a reasonable range.

As noted by the Departmental Appeals Board (Board) in Sheth,

The protective purpose of the exclusion statutes is an overarching
consideration when assessing the factors: “It is well-established that
section 1128 exclusions are remedial in nature, rather than punitive,
and are intended to protect federally-funded health care programs
from untrustworthy individuals.” Donald A. Burstein, Ph.D., DAB
No. 1865, at 12 (2003), citing Patel v. Thompson, 319 F.3d 1317
(11" Cir. 2003), cert. denied, 123 S. Ct. 2652 (2005); Mannochio v.
Kusserow, 961 F.2d 1539, 1543 qai® Cir. 1992).

Sheth, DAB No. 2491, at 5. An ALJ reviews the length of an exclusion de novo in order
to determine whether the exclusion falls within a reasonable range given the aggravating
and mitigating factors and the circumstances underlying them. Sheth, DAB No. 2491, at
5 (and cases cited therein). The Board in Sheth cited to the ALJ decision when
describing what constituted a reasonable range, stating that, “[a] ‘reasonable range’ refers
to a range of exclusion periods that is more limited than the full range authorized by the
statute [i.e., from a minimum of five years to a maximum of permanent] and that is tied to
the circumstances of the individual case.” Sushil Aniruddh Sheth, DAB CR2540, at 6
(2012) (and cases cited therein). Thus, to determine whether an exclusion period is
within a reasonable range, an ALJ must weigh any aggravating and mitigating factors by
evaluating the aggravating factors and mitigating factors and making a case-specific
determination of the weight to be accorded each factor based on a “qualitative
assessment” of the factors in the case. Sheth, DAB No. 2491, at 5 (and cases cited
therein).

A reasonable range of exclusion periods should reflect when there is substantial
government loss in order to protect government programs from untrustworthy
individuals. See Burstein, DAB No. 1865, at 12 (2003). Here, Petitioner’s crimes
resulted in significant financial losses to Medicare and Medicaid. As I discussed above,
the District Court ordered restitution in the total amount of $480,564.75. I.G. Ex. 2, at 6.
The Board has characterized program loss amounts substantially greater than the $5,000
statutory threshold “as an ‘exceptional aggravating factor’ entitled to significant weight.”
Sheth, DAB No. 2491, at 7, citing Jeremy Robinson, DAB No. 1905, at 12 (2004);
Burstein, DAB No. 1865, at 12. The financial loss in this case to the government health
care programs Medicare and Medicaid is far above the $5,000 threshold and supports a
significant increase in the reasonable range of exclusion period that the I.G. may impose.

The record shows that Petitioner’s criminal conduct took place from 2003 through 2007.
As the Board has explained, the purpose of the aggravating factor addressing the length
of criminal conduct “‘is to distinguish between petitioners whose lapse in integrity is
short-lived from those who evidence a lack of such integrity over a longer period of
time.” Burstein, DAB No. 1865, at 8. Previously, the Board has accorded enough weight
to sustain an exclusion of more than five years to the fact that underlying criminal
conduct was committed for “slightly more” than one year. Burstein, DAB No. 1865, at
12. Here, as in Burstein, the length of Petitioner’s criminal conduct shows a prolonged
lack of integrity that was more than just “short-lived” and supports an increase from the
five-year minimum exclusion period to 10 years.

The other proven aggravating factor relates to Petitioner’s prison sentence of 24 months
for his crimes. Petitioner’s sentence represents substantial jail time which indicates the
severity of the scheme in which Petitioner was involved. The Board once determined
that a nine-month period of incarceration was “relatively substantial,” and supported an
eight-year exclusion period. Jason Hollady, M.D., DAB No. 1855, at 12 (2002). Here,
the length of Petitioner’s incarceration was almost three times greater than that imposed
in Hollady. Accordingly, this aggravating factor reasonably supports an increase to the
10-year exclusionary period.

Petitioner has not asserted that any of the authorized mitigating factors under 42 C.F.R.
§ 1001.102(c) is present in his case. P. Br. Nevertheless, he argues that excluding him
for 10 years instead of five years is unreasonable and urges me to consider that “any
exclusion period would place a tremendous hardship on my financial ability to sustain a
decent quality of life for my family.” P. Br. at 2. Petitioner also asserts “there is a great
need for caring for the elderly which I love so deeply.” P. Br. at 2.

The regulations specifically outline what factors may be considered mitigating and none
of Petitioner’s arguments relate to any of the mitigating factors. See 42 C.F.R. §
1001.102(c). Moreover, “the practical effect of a finite exclusion period on the
individual’s ability to participate in the Medicare program in the future is irrelevant to
letermining a reasonable exclusion period.” Sheth, DAB No. 2491, at 18 (explaining that
the Board “has repeatedly declined to consider an individual’s age or financial or
employment prospects in determining whether an exclusion period is reasonable,” citing
Robinson, DAB No. 1905, at 7; see also Burstein, DAB No. 1865, at 13.

In sum, the severity of the three aggravating factors and the absence of any mitigating
factors support an increase in the length of Petitioner’s exclusion period beyond the
five-year minimum. A 10-year exclusion period is within a reasonable range based upon
the aggravating factors. Therefore, I sustain the I.G.’s exclusion of Petitioner for 10
years, effective March 20, 2013.

/s/
Joseph Grow
Administrative Law Judge