Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Susanna West, CRNA,

(NPI: 17503687718),

Petitioner
Vv.

Centers for Medicare & Medicaid Services.
Docket No. C-10-399
Decision No. CR2170

Date: June 30, 2010

DECISION

I deny the motion of the Centers for Medicare and Medicaid Services (CMS) to dismiss
the hearing request of Petitioner, Susanna West. I also deny CMS’s motion for summary
judgment. I resolve the appeal based on the written record at the request of Petitioner.
Based on the record before me, I conclude that the effective date of Petitioner’s
enrollment remains August 25, 2009. Thus, pursuant to 42 C.F.R. § 424.521(a),
Petitioner may retrospectively bill for services rendered as of July 27, 2009.

I. Background

On January 12, 2010, Petitioner filed a hearing request (HR) accompanied by several
documents. I have marked the accompanying attachments as Petitioner’s Exhibits 1-5 for
reference in this decision.

Petitioner challenges the effective date of her enrollment as a certified registered nurse
anesthetist (CRNA) in the Medicare program that TrailBlazer Health Enterprises, LLC
(TrailBlazer), a Medicare contractor, assigned. By letter dated September 8, 2009,
TrailBlazer notified Petitioner that her Medicare enrollment application 855R was
approved, effective July 27, 2009.' CMS Exhibit (Ex.) 2. Petitioner filed a request for
reconsideration by letter, stating that an earlier enrollment application first submitted in
May of 2009 was “misplaced according to Medicare customer service” and requesting the
effective date originally sought in the lost application, which was April 6, 2009. P. Ex. 1,
at 3. This reconsideration request was stamped as received by TrailBlazer on October 23,
2009.

No reconsideration decision was issued based on the October reconsideration request.
Petitioner asserts that a follow-up call a “couple of weeks later” to TrailBlazer resulted in
the information that the reconsideration request was returned, because the request itself
was not on letterhead (although a cover letter was on Petitioner’s letterhead). HR at 2.
Petitioner further asserts that the returned request was not actually received from
TrailBlazer until January 14, 2010. Jd., P. Ex. 1, at 1-2, 8. Meanwhile, Petitioner sent a
second request for reconsideration, on letterhead, which was stamped as received by
TrailBlazer on December 22, 2009. P. Ex. 3. TrailBlazer then denied reconsideration on
the ground that it was untimely, since it was more than 60 days after the action appealed.
This appeal followed.”

This case was assigned to Administrative Law Judge (ALJ) Richard J. Smith for hearing
and decision on February 26, 2010, and an Acknowledgement and Initial Docketing
Order (Order) was issued at his direction. On or about April 5, 2010, CMS filed a motion
to dismiss Petitioner’s request for hearing, or, in the alternative, a motion for summary
disposition, with CMS Exhibits | and 2. This case was transferred to me for hearing and
decision on or about April 7, 2010, pursuant to 42 C.F.R. § 498.44. Petitioner filed a
letter of rebuttal on May 5, 2010, and requested that I decide the case based upon the
written record (P. Rebuttal). Neither party objected to any exhibits, so I admit both
parties’ exhibits as evidence.

IL. Issues, Findings of Fact, Conclusions of Law
A. Issues

The issues in this case are:

' In fact, Petitioner’s enrollment application was received on August 25, 2009, which is
therefore the actual effective date. Pursuant to 42 C.F.R. § 424.520(d), the date that
TrailBlazer identified as the “effective” date (July 27, 2009) is actually the date from
which Petitioner may retroactively bill for services.

> On appeal, CMS did not pursue the question of whether the reconsideration was timely
sought, relying instead on its position that “‘Petitioner has no right to appeal the effective
date of enrollment or, in the alternative, there is insufficient evidence to warrant a change
of the effective date.” CMS Motion at 2-3 n.2.
1. Whether I should dismiss Petitioner’s hearing request on the ground that
she has no right to appeal;

2. Whether CMS is entitled to summary judgment; and

3. Whether CMS’s contractor and CMS properly determined Petitioner’s
effective date of enrollment to be August 25, 2009.

B. Findings of Fact and Conclusions of Law
My findings of fact and conclusions of law are set forth in bold and italics below.

1. The effective date of a Medicare provider agreement or supplier
approval is an appealable initial determination; thus, Petitioner has a
right to a hearing.

a. Standard of review

Pursuant to 42 C.F.R. § 498.70(b), I may dismiss a hearing request in the circumstance
where a party requesting a hearing “does not otherwise have a right to a hearing.”

b. Analysis
CMS argues:

CMS’ decision with respect to enrollment may be appealed only

in two situations: where a prospective provider or supplier is denied
enrollment in the Medicare program, or where a provider’s or supplier’s
Medicare enrollment has been revoked.

CMS Br. at 5.

Specifically, CMS argues that part 424, subpart P, grants appeal rights only from denials
and revocations of enrollment. 42 C.F.R. § 424.545(a). Since an effective date appeal
arises after an approval, rather than a denial or revocation, CMS reasons that the
regulations do not permit appeals of effective date determinations. CMS Br. at 7-9.
CMS thus argues that Petitioner does not have a right to a hearing to appeal the effective
date of her enrollment, and this request for review must be dismissed. Jd. at 9.

In several prior decisions, I have explained why I do not agree with CMS. See Michael
Majette, D.C., DAB CR 2142 (2010); see also Eugene Rubach, M.D., DAB CR2125
(2010); Mobile Vision, Inc., DAB CR2124 (2010). I adopt the reasoning explained in my
prior decisions, which I summarize briefly here.

The wording of section 498.3(b)(15) appears straightforward in providing that the
“effective date of a Medicare provider agreement or supplier approval” is an appealable
initial determination and includes no qualifying or limiting language. None of the
administrative actions identified in section 498.3 as not subject to appeal under Part 498
include the determination of an effective date for a provider or supplier to participate in
Medicare.

While subpart P of part 424 unquestionably does grant appeal rights from denials and
revocations, as CMS notes, it does so by reference to the provisions of subpart A of Part
498, stating that a prospective provider or supplier whose enrollment is denied or revoked
“may appeal CMS’ decision in accordance with part 498, subpart A of this chapter.” 42
C.F.R. § 424.545(a). Subpart A of Part 498 includes section 498.3(b)(15), yet CMS did
not exclude section 498.3(b)(15) or otherwise indicate that effective date determinations
would not be proper subjects for these Medicare hearings. When CMS published subpart
P of Part 424 in 2006 (71 Fed. Reg. 20,753, 20,776 (Apr. 21, 2006)), it was well-aware of
the longstanding provision in section 498.3(b)(15), which it had described in 1997 as
granting “appeal rights and procedures for entities that are dissatisfied with effective date
determinations.” 62 Fed. Reg. at 43,931-32 (Aug. 18, 1997). Yet, section 424.545(a)
incorporated section 498.3 without limitation. Hence, the plain language of section
424.545(a) reinforces the plain language of section 498.3(b)(15).

Moreover, the history of section 498.3(b)(15) shows CMS’s recognition that: (1)
approving participation at a date later than that sought amounts to a denial of
participation during the intervening time; (2) effective date appeals generally involve the
same kind of compliance issues that arise from initial denials; and (3) the right to appeal
an effective date determination, while not previously codified, had already been
confirmed by court decisions. 62 Fed. Reg. at 43,933-34 (final rule); 57 Fed. Reg.
46,362, 46,363 (Oct. 8, 1992) (proposed rule). While criteria for determining effective
dates adopted at the same time as section 498.3(b)(15) applied only to providers and
suppliers subject to certification or accreditation, the rulemaking addressing section
498.3(b)(15) contains no parallel language limiting appeals of effective date
determinations to only providers and suppliers that are subject to survey and certification
or accreditation. 62 Fed. Reg. at 43,934; 57 Fed. Reg. at 46,363. The rulemakings do not
indicate any intent to restrict the scope of appeals by others who might later be granted
the right to Medicare hearings.

CMS contends that the reconsideration decision was “misleading” in suggesting that
Petitioner could appeal the adverse decision to an ALJ. CMS Motion at 8. CMS states
that neither the contractor nor CMS “can confer a right to a hearing on a provider where
the provider has no right to a hearing under the applicable regulations,” citing two earlier
ALJ decisions. /d. Ineed not decide whether or under what circumstances CMS may
provide a hearing when not compelled to do so by regulation, because, as I have
concluded, here the regulations do provide appeal rights.

c. Conclusion
Based on the foregoing, I deny CMS’s motion to dismiss.

I note, however, that a right to challenge the effective date is not a license to seek an
effective date other than that prescribed by law. I turn next, therefore, to what the
applicable law provides as to the proper effective date in Petitioner’s circumstances.

2. Summary judgment is not appropriate here, because CMS failed to
show that no dispute of material fact exists.

a. Applicable standard

CMS’s motion makes clear that the summary disposition sought is in the nature of
summary judgment. CMS Motion at 6-7. The Departmental Appeals Board (Board)
stated the standard for summary judgment as follows:

Summary judgment is appropriate when the record shows that there

is no genuine issue as to any material fact, and the moving party is entitled

to judgment as a matter of law.... The party moving for summary judgment
bears the initial burden of showing that there are no genuine issues of

material fact for trial and that it is entitled to judgment as a matter of law. . . .
To defeat an adequately supported summary judgment motion, the non-moving
party may not rely on the denials in its pleadings or briefs, but must furnish
evidence of a dispute concerning a material fact — a fact that, if proven, would
affect the outcome of the case under governing 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.

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).
The role of an ALJ in deciding a summary judgment motion differs from the ALJ’s role
in resolving a case after a hearing. The ALJ should not assess credibility or evaluate the
weight of conflicting evidence. Holy Cross Vill. at Notre Dame, DAB No. 2291, at 4-5
(2009).
b. Analysis

Petitioner asserts that an enrollment application was mailed on May 12, 2009 to
TrailBlazer, the Medicare contractor. HR at 1-2. Petitioner claims that “weeks later, a
call was placed to Trailblazer . . . as follow up on the progress of the application. The
Trailblazer . . . representative relayed to us that there was not an application on file for
CRNA Susanna West...we were then advised to give it a few more weeks in order for it
to be scanned and assigned a tracking number.” /d. at 1. Petitioner then states:

some weeks later, a call was placed to Trailblazer . . . and we were told

again that there was not an application on file for CRNA Susanna West.
When Trailblazer was asked to look for the application, the representative
stated that without certified or UPS (etc) tracking number, they would not

be able to locate the application. The advice from Trailblazer was to submit a
second CMS 855R.

Id. According to Petitioner, a second form 855R was submitted to Trailblazer “with a
cover letter attached explaining that we had already submitted an 855R in May of 2009
and we would like the effective date requested on the original 855R application honored.”
Id. Petitioner also states that “we sent the applications via UPS Overnight this time
around.” Jd. Petitioner asserts that “within 14 days from the second submittal, we
received a letter from Trailblazer stating CRNA West’s enrollment had been

completed. ..but to our disappointment, the effective date given was 07/27/2009 instead
of 04/06/2009, as requested.” Id.

CMS does not dispute that the contractor’s receipt of an earlier approvable application,
which was lost without processing, would be a material fact relevant to the correct
effective date; however, CMS argues that Petitioner presented “no substantial credible
evidence that it submitted” an earlier application. CMS Motion at 9. Specifically, CMS
notes that Petitioner did not submit a copy of the May application, a confirmation or
tracking number to prove mailing, an affidavit from the person responsible for mailing
the application, or any evidence of the calls allegedly made to TrailBlazer to inquire
about the status of that application. Jd. at 9-10.

Petitioner insists that it did submit the May application and that TrailBlazer simply
refused to look for the evidence that would have shown its receipt. P. Rebuttal.
Petitioner also suggests that TrailBlazer initially denied having received the initial
reconsideration request, until Petitioner provided the information that UPS documented
delivery on 8:42 AM on October 23, 2009 to a specific individual. P. Ex. 3, at 1. Then,
Petitioner reports that TrailBlazer indicated that an acknowledgement should have been
sent, but none was received. /d. Petitioner points to these events as evidence of
TrailBlazer’s repeated “misplacement of information.” Jd. The only response to that
reconsideration request appears to be a rejection, dated October 29, 2009, but not
received until after the HR was made. P. Ex. 1.

CMS concludes that Petitioner had the burden of proving that it submitted an earlier
application and that Petitioner has failed to carry that burden on this record.

On summary judgment, my role is not to weigh conflicting evidence and determine where
the preponderance of the evidence lies. My role, instead, is to consider whether any
material fact is in genuine dispute. Such a dispute exists where, viewing the evidence in
the light most favorable to the non-movant and drawing all reasonable inferences from
that evidence in that party’s favor, I am not compelled by law to find that the movant
prevails.

Here, Petitioner essentially asks that I draw several favorable inferences from the
(admittedly skimpy) evidence in the record.’ Petitioner’s claim, if believed, is that an
application was mailed in May and that its receipt by TrailBlazer should be inferred from:
(1) TrailBlazer’s refusal to even attempt to locate or track whether it was received; and
(2) TrailBlazer’s track record of inefficiency in keeping track of materials, which it can
be proven to have received. I would also have to infer that, since the resubmitted
application was approved without difficulty, the May application would also be processed
to approval, but for Trailblazer’s misplacing it through no fault of Petitioner.

I find Petitioner’s case weak, but I do not find the inferences, especially those unflattering
to TrailBlazer, entirely unreasonable based on this record. I therefore decline to resolve
the matter on summary disposition.

c. Conclusion

I therefore deny CMS’s motion for summary disposition.

> The Order in this case cites Federal Rule of Civil Procedure 56 in notifying the parties
that, in opposing a summary judgment motion, the nonmovant should show material facts
in dispute and not rely on “mere allegations or denials.” Order at 2. The Order did not
require a report of readiness, including identifying any need for testimonial evidence, to
be filed until after any dispositive motion was resolved. /d. at 3. Given that the
Petitioner proceeded through a non-attorney representative, I treat the factual assertions
in the HR and Rebuttal with more leeway for purposes of summary judgment than I
might otherwise given that they are signed but unsworn.
3. Based on the written record, I conclude that CMS and contractor
properly determined the effective date of Petitioner’s enrollment.

a. Applicable regulations

The determination of the effective date of Medicare billing privileges is governed by 42
C.F.R. §§ 424.520 and 424.521. Section 424.520(d) provides that the effective date for
billing privileges for physician, nonphysician practitioners, and physician and
nonphysician practitioner organizations is “the later of the date of filing of a Medicare
enrollment application that was subsequently approved by a Medicare contractor or the
date an enrolled physician or nonphysician practitioner first began furnishing services at a
new practice location.” (Emphasis added). The “date of filing” is the date that the
Medicare contractor receives a signed provider enrollment application that the Medicare
contractor is able to process to approval. 73 Fed. Reg. 69,769 (Nov. 19, 2008)
(emphasis added). Certain suppliers, including nonphysician practitioners such as
Petitioner, may be permitted to bill retrospectively for certain services provided before
approval, if they have met all program requirements. Current regulations limit
retrospective billing to 30 days prior to the effective date, “if circumstances precluded
enrollment in advance of providing services to Medicare beneficiaries,” or 90 days in
certain disaster situations. 42 C.F.R. § 424.521(a).

b. Analysis

It is undisputed that TrailBlazer received an enrollment application from Petitioner on
August 25, 2009. CMS Ex. 1, at 1. Petitioner was given an effective date of enrollment
in the Medicare program of August 25, 2009, the date on which TrailBlazer received
Petitioner’s enrollment forms that were processed to approval. CMS Ex. 2. This
evidence is sufficient to set out a prima facie case that the effective date is proper under
the applicable regulations.

In resolving the appeal on the written record, I may properly consider whether the
evidence that Petitioner presented in requesting an earlier effective date persuasively
rebuts this prima facie case. I find that it does not.

As noted above, Petitioner claims an initial application was sent by regular mail service
on May 12, 2009. HR at 1. Petitioner further argues:

Trailblazer . . . has no record of receiving the application and would not look for
the application even after repeated calls requesting that they look for the
application. We would have immediately sent a new application to Trailblazer if

the representative had not advised us to wait a few more weeks and call back to
see if the application had been screened and given a tracking number.

P. Rebuttal.

In accordance with the above regulations, for me to disturb the effective date
determination, Petitioner would at a minimum have to prove that TrailBlazer received an
enrollment application prior to August 25, 2009, that was approvable as submitted.*
Petitioner has not proffered further testimonial evidence beyond the bare assertions in the
HR and rebuttal to demonstrate that an application was submitted in May 2009. For
example, Petitioner offers no explanation of how it determined that the application was
mailed on May 12, specifically. As CMS pointed out, the record does not contain a copy
of the first application, or any record of its mailing. Certainly, Petitioner could have sent
so important a document by certified mail or other trackable system, or at least could
have maintained an internal record of the mailing. Petitioner alleges that follow-up calls
were made to TrailBlazer, but, as CMS points out, Petitioner offers no evidence of these
calls, such as contemporary notes, the names of representatives, or call reference
numbers, even though Petitioner did provide a call reference number for its follow-up
calls on the status of its reconsideration request. CMS Motion at 10 n.10. These
shortcomings properly detract from the weight of the assertions that Petitioner made.

While the inferences I discussed above favorable to Petitioner were not outside the
bounds of reason in the context of summary judgment based on viewing the evidence
entirely in Petitioner’s favor, I do not find them to be the most reasonable or likely
inferences that the evidence supported in the whole record before me. While I find it
likely that Petitioner did mail an application prior to August 25, 2009, in light of its
contemporary representation to that effect in the second application, I do not find enough
evidence to conclude that TrailBlazer actually received it. Even if I accept that
TrailBlazer’s systems for tracking receipt of mail are unreliable (for which Petitioner has
provided some support, and CMS has offered no contrary evidence), I do not find that
negative conclusion adequate to support an affirmative finding that this particular item of
mail was received but misplaced, rather than, for example, being lost in the regular mail.
Furthermore, absent any copy of the May application, or testimony about its contents, I
am not willing to simply assume that it was identical to the August application and would
therefore have been processed to approval in the same way.

* CMS correctly notes that, even if Petitioner substantiated that Trailblazer received its
May application (presumably some time after the date it was allegedly submitted on May
12), that could not support the effective date of April 6, 2009 Petitioner requests. CMS
Motion, at 8 n.9. As I conclude above, Petitioner has not proven an approvable
application was received at any time prior to August 25, 2009.
10

Without proof of an earlier date of receipt of an approvable application, I must conclude
that the effective date determination is correct pursuant to 42 C.F.R. § 424.520(d).

I therefore sustain CMS’s determination as to the effective date of Petitioners’ Medicare
enrollment.

Two other points are worthy of mention. The first is that Petitioner comments that a new
application would have been sent to the contractor immediately upon learning that the
contractor had no record of receiving the first, “if the representative had not advised us to
wait a few more weeks and call back to see if the application had been screened and
given a tracking number.” P. Rebuttal. Petitioner does not articulate any intended legal
effect of this comment, but, to the extent the intent is to argue that the government should
be required to pay claims from an earlier date because the government’s contractor gave
advice that turned out badly for Petitioner, the claim amounts to equitable estoppel. It is
well-established by federal case law, and in Board precedent, that: (1) estoppel cannot be
the basis to require payment of funds from the federal fisc; (2) estoppel cannot lie against
the government, if at all, absent a showing of affirmative misconduct; and (3) I am not
authorized to order payment contrary to law based on equitable grounds. See, e.g., Office
of Personnel Mgmt. v. Richmond, 496 U.S. 414 (1990); Heckler v. Cmty. Health Servs. of
Crawford County, Inc., 467 U.S. 51 (1984); Oklahoma Heart Hosp., DAB No. 2183, at

6 (2008); Wade Pediatrics, DAB No. 2153, at 22 n.9 (2008), aff'd, 567 F.3d 1202 (10th
Cir. 2009).

The second point is that Petitioner’s unfortunate situation is partly a result of unlucky
timing. When Petitioner submitted the second application in August 2009, the cover
letter expressed awareness of “new CMS guidelines” regarding assigning effective dates
when the application is received. For many years, the question as to the proper effective
date was unlikely to arise, because physicians and non-physician practitioners were
permitted to bill for services provided up to 27 months retroactively. See 73 Fed. Reg. at
69,766. Contractors were likely, therefore, not to place great weight on the date on which
an application was initially received but rather to focus on when services were first
provided. Presumably, that explains why Petitioner submitted bills on appeal showing
when services were provided even though the applicable rule quoted above sets the
effective date based on the later of the date of receipt or the date services are first
provided at a new location. See P. Ex. 5.

CMS became concerned that Medicare not pay for items or services when it could not be
certain that the supplier met Medicare eligibility standards at the time those items or
services were provided. See 73 Fed. Reg. at 69,766. To avoid this problem, CMS
considered requiring that billing privileges begin only on the date when the contractor
approved the supplier as eligible to receive reimbursement from Medicare, and no
retroactive billing be permitted. Jd. Commenters pointed out that this policy would
penalize suppliers who demonstrated their eligibility in their enrollment applications but
who were not approved for some time thereafter as a result of processing time by their
11

contractors. Id. at 69,767. CMS addressed the public concern about contractor
processing timeliness by adopting the approach of setting the effective date for approval
of eligibility to the date of filing of the enrollment application that was ultimately
processed to approval (or the date that the applicant is open for business at the new
location, if later). /d. For those situations where a supplier can not file an application
prior to providing some services, CMS explained that it was - -

finalizing a provision that allows physicians, NPPs (including CRNAs),
and physician or NPP organizations to retrospectively bill for services up
to 30 days prior to their effective date of billing when the physician or
nonphysician organization has met all program requirements, including
State licensure requirements, where services were provided at the enrolled
practice location prior to the date of filing and circumstances, such as,
when a physician is called to work in a hospital emergency department
which precluded enrollment in advance of providing services to Medicare
beneficiaries in § 424.521(a)(1).

Id. at 69,678 (emphasis added). A careful reading of the regulations and preamble
discussions makes clear that the grant of a retroactive billing period of up to 30 days does
not constitute a change in the effective date of the supplier’s approval of eligibility to
participate in Medicare and is based on a showing of circumstances precluding timely
enrollment, not a determination of an earlier date of eligibility.

Despite the clarity of this rule, confusion has been introduced by a muddling of the
effective date for which a supplier is approved as eligible to bill Medicare, governed by
42 C.F.R. § 424.520(d), with the earliest date for which an approved supplier may be
permitted to bill retroactively for services provided prior to the effective date, if the
contractor finds that certain prerequisites are met, governed by 42 C.F.R. § 424.521 (a).
The contractor in this matter contributed to this confusion by conflating the two date
determinations and setting out as the “effective dates” the earliest date for which it would
permit Petitioner to bill retroactively for services provided. CMS Ex. 2, at 1 (letter
granting Petitioner’s approval to participate in the Medicare program).

Petitioner does not identify any authority for a right to appeal the grant of, or length of, a
retroactive billing period. The billing period under section 424.521 (a) is retroactive from
the effective date of approval. It follows that section 498.3(b)(15) does not provide for
challenges to the period for retroactive billing beyond an appeal that the effective date of
approval itself was wrongly determined. Furthermore, the regulation at section
424.521(a) binds me. I can neither alter nor deviate from its explicit limitation on
retroactive billing to the 30 days already granted to Petitioners. Thus, I have no authority
to extend the retroactive billing period for Petitioners earlier than July 27, 2009.
12

d. Conclusion

For the reasons explained above, Petitioner’s request for an earlier effective date or for
earlier billing privileges must be denied.

/s/
Leslie A. Sussan
Board Member


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

James A. Holland, M.D.,
(OI File No. 2-07-40490-9),

Petitioner
Vv.
The Inspector General.
Docket No. C-10-445
Decision No. CR2169

Date: June 29, 2010

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, James A.
Holland, M.D., from participating in Medicare and other federally funded health care
programs for a period of 15 years.

I. Background

Petitioner is a physician. The I.G. informed Petitioner that he had determined to exclude
him from participating in Medicare and other federally funded health care programs for
15 years. The I.G. advised Petitioner that his exclusion was mandatory because
Petitioner had been convicted of a criminal offense that falls within the reach of section
1128(a)(2) of the Social Security Act (Act). Additionally, the I.G. asserted aggravating
factors exist, which justified imposing an exclusion of 15 years, 10 years longer than the
minimum mandatory five-year exclusion period for exclusions imposed for convictions
that fall within any of the subparts of section 1128(a).

Petitioner requested a hearing to challenge the I.G.’s determination, and the case was
assigned to me for a hearing and a decision. At my direction, each party submitted a
brief. The I.G. also submitted five proposed exhibits, which he designated as I.G. Ex. 1 —
1.G. Ex. 5, and he filed a reply brief as well. Petitioner submitted a single proposed
exhibit, which he designated as P. Ex. A. I re-identify P. Ex. A as P. Ex. 1, and I receive
into the record I.G. Ex. 1 — LG. Ex. 5 and P. Ex. 1. Neither party offered proposed
testimony nor did a party request an in-person hearing.

IL. Issues, Findings of Fact and Conclusions of Law
A. Issues
The issues in this case are whether:

1. Petitioner was convicted of a crime for which exclusion is mandated by
section 1128(a)(2) of the Act; and

2. The LG.’s determination to exclude Petitioner for 15 years is
reasonable.

B. Findings of Fact and Conclusions of Law
I make the following findings of fact and conclusions of law (Findings).

1. Petitioner was convicted of a crime as is defined by section 1128(a)(2)
of the Act.

Section 1128(a)(2) of the Act mandates the exclusion of any individual:

that has been convicted, under Federal or State law, of a criminal offense
relating to neglect or abuse of patients in connection with the delivery of a
health care item or service.

The facts of this case unequivocally establish that Petitioner was convicted of such an
offense. On April 24, 2007, a one count criminal information was issued against
Petitioner in the United States District Court for the Northern District of New York. LG.
Ex. 3. Petitioner was charged with the crime of failing to maintain accurate records in
violation of 21 U.S.C. §§ 331(e) and 333(a)(1). Jd.; LG. Ex. 5 at 1.

The information alleged that Petitioner was in charge of leading, supervising, managing,
conducting, and coordinating clinical trials and studies at the Stratton VA Medical Center
in New York. I.G. Ex. 3 at 9. It alleged that he wrongfully and unlawfully failed to
establish and maintain adequate and accurate case histories of some patients who were
being administered investigational drugs in the studies that Petitioner led. Jd. at 9-10.
The investigational drugs were certain medications that were being administered as

treatments for cancer. Specifically, the information asserted that case histories generated
under Petitioner’s control included materially false documentation and information that a
subordinate employee provided that enabled persons who did not qualify under the study
protocol to be enrolled as study subjects. /d. at 10. It alleged further that Petitioner:

had the responsibility, authority, and duty to ensure that adequate and
accurate case histories were maintained and [to] promptly detect and
correct inadequate and inaccurate case histories, but wrongfully and
unlawfully failed to do so, including by failing to review or check the
accuracy of . . . case histories and reports of laboratory analysis,
electrocardiograms, ejections fraction testing, radiology reports, surgical
reports, and operative and progress notes.

Id. The information cited as an example an individual who Petitioner caused to be
administered certain anti-cancer drugs based on documents and records that the
subordinate employee made. These documents, according to the information, falsely
stated and represented the results of blood chemistry analysis and, on the basis of these
false results, purported that the patient met the criteria for inclusion in the study
conducted under Petitioner’s authority. /d. at 10-11. In fact, the results did not meet
these criteria and showed impaired kidney and liver function. According to the
information, Petitioner did not review the actual report of laboratory analysis or check the
accuracy of documents that his subordinate prepared and thus administered the anti-
cancer drugs to an individual who was not qualified to receive them. The information
recited that the patient died after administration of the anti-cancer drugs. Jd. at 11.

On April 24, 2007, Petitioner entered a plea agreement, agreeing to plead guilty to the
information. As part of the plea agreement, Petitioner specifically admitted to all of the
facts contained in the information, which I have recited. LG. Ex. 4. A judgment of
conviction was entered against Petitioner on March 27, 2009. I.G. Ex. 5 at 1.

The elements of a crime that falls within the meaning of section 1128(a)(2) are as
follows. An individual must be: convicted of a criminal offense; relating to neglect or
abuse of a patient; and in connection with the delivery of a health care item or service.

Petitioner was “convicted,” because he pled guilty to the criminal information. A guilty
plea is defined as a conviction by section 1128(i)(3) of the Act. The conviction related to
neglect or abuse of a patient. While Petitioner was convicted of improper medical
records maintenance, there can be no doubt that it related to patient neglect. The term
“neglect” includes any act by a health care provider that criminally violates applicable
standards of professional care. Here, Petitioner caused, or allowed, false patient records
to be created in a setting in which patients’ safety and welfare depended on the
maintenance of accurate records. That is neglect of patients under any definition, and it
certainly comprises a violation of a professional standard requiring that a physician
ensure that his or her patients’ records are maintained accurately and honestly. Finally,
the neglect was committed in connection with the delivery of a health care item or
service, because the patients whose records were falsified were sick individuals who were
enrolled in a study of drugs that were being used to treat their illnesses.

Petitioner’s sole defense is to dispute the accuracy of the criminal information
“notwithstanding the fact that . . . [he] concedes that he did enter a misdemeanor plea on
April 24, 2007 before the United States District Court for the Northern District of New
York to violating Title 21, United States Code, Sections 331(e) and 333(a)(1).”
Petitioner’s Brief at 2. In other words, Petitioner’s defense is that he is not actually guilty
of the crime to which he pled guilty.

I have no authority to consider that defense. The exclusion requirement of section
1128(a)(2) of the Act derives from a conviction of the type of crime described in the
section and not, strictly speaking, from the underlying facts. Consequently, I am not
permitted to reopen a conviction and to decide independently whether an excluded
individual is actually guilty of the crime of which he or she was convicted.

2. An exclusion of 15 years is reasonable.

The Act mandates an exclusion for at least five years of any individual who is convicted
of an offense as section 1128(a)(2) defines. Act § 1128(c)(3)(B). In this case, the I.G.
determined to exclude Petitioner for 15 years. That raises the issue of whether the length
of the exclusion is reasonable.

Regulatory criteria exist, which must be used for determining the reasonableness of any
non-mandatory exclusion. For exclusions that are imposed pursuant to section
1128(a)(2), those criteria are stated at 42 C.F.R. § 1001.102(b) and (c). They are
described as potentially aggravating and mitigating factors. Evidence that relates to an
aggravating factor may be considered as a basis for lengthening an exclusion beyond the
five-year minimum period. Evidence that relates to a mitigating factor may be
considered as a basis for reducing the length of an exclusion, but not below the statutory
minimum five-year period.

The aggravating and mitigating factors function very much like rules of evidence.
Evidence that relates to one of these factors may be considered in deciding whether an
exclusion is reasonable. However, nothing in the regulations assigns weight to evidence
that relates to an aggravating or mitigating factor. It is left to the trier of fact to decide
the weight that ought to be given to relevant evidence. Nor does the regulation prescribe
a formula for deciding the reasonableness of an exclusion. Thus, the presence of x
number of aggravating factors does not result, automatically, in an exclusion of y
duration.
What must be decided in any case where the reasonableness of an exclusion is at issue is
the trustworthiness of an excluded provider to provide care to program beneficiaries and
recipients of program funds. Evidence that relates to an aggravating or mitigating factor
is relevant to deciding that issue. Evidence that does not relate to an aggravating or
mitigating factor is irrelevant and may not be considered in deciding trustworthiness.
The ultimate question that must be decided is: what does evidence relating to an
aggravating or mitigating factor say about the trustworthiness of the excluded provider?

The I.G. contends that evidence exists in this case that is relevant to three of the
regulatory aggravating factors. I find that there is evidence that is relevant to two, but not
all three, of the aggravating factors that the I.G. cites.

First, the I.G. asserts that the acts that resulted in Petitioner’s conviction caused a
financial loss to one or more entities of $5,000 or more. 42 C.F.R. § 1001.102(b)(1).
The evidence unequivocally sustains this allegation. Petitioner’s sentence included the
requirement that he pay restitution of $502,925.05 for the damages that his criminal
neglect caused. I.G. Ex. 5 at 4.

Second, the I.G. argues that the acts that resulted in Petitioner’s conviction, or similar
acts, were committed over a period of one year or more. 42 C.F.R. § 1001.102(b)(2).
The evidence also unequivocally supports this allegation. Petitioner pled guilty to
criminal negligence that began on or about May 14, 1999 and which continued to on or
about July 10, 2002. I.G. Ex. 4 at 12.

Third, the I.G. contends that the acts that resulted in Petitioner’s conviction, or similar
acts, had a significant adverse physical, mental, or financial impact on one or more
program beneficiaries or other individuals. 42 C.F.R. § 1001.102(b)(3). The LG. asserts
that Petitioner caused an individual to be given an experimental anti-cancer medication
that was contraindicated in light of that individual’s medical condition. I.G. Ex. 3 at 11;
1G. Ex. 4 at 13. This criminal neglect, according to the L.G., caused the death of the
patient. See Id.

However, neither the criminal information, Petitioner’s plea agreement, nor any other
exhibit establishes that Petitioner actually caused the death of a patient. The information
and the plea agreement recite only that the patient who received contraindicated
medication subsequently died. LLG. Ex. 3 at 11; 1.G. Ex. 4 at 13. Both documents avoid
drawing the conclusion that the contraindicated medication actually caused the patient’s
death. I am not persuaded, therefore, that the evidence establishes that Petitioner’s
criminal neglect caused actual harm to an individual.

However, the evidence relating to the two aggravating factors that the I.G. established
provides ample support for the 15-year exclusion that the I.G. determined to impose. The
extraordinarily large restitution that Petitioner was ordered to pay in this case is a
measure of the damage that Petitioner’s criminal neglect caused. Clinical trials of anti-

6

cancer medication were rendered worthless as a consequence of that neglect, establishing
Petitioner to be highly untrustworthy to deal with program funds and the beneficiaries
and recipients of those funds. The fact that the trials were rendered worthless meant,
potentially, that valuable time was lost in developing drugs that might treat cancer more
effectively. The fact that Petitioner’s criminal neglect extended over a period of more
than three years is further proof of his untrustworthiness, because it shows Petitioner’s
sustained and criminal failure to comply with professionally recognized standards of care.

/s/
Steven T. Kessel
Administrative Law Judge


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

Eastern Plumas District Hospital d/b/a Eastern Plumas Health Care
(PTAN: 036649002),

Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-10-345
Decision No. CR2168

Date: June 28, 2010

DECISION

I grant the motion of the Centers for Medicare and Medicaid Services (CMS) for
summary disposition and sustain the revocation of the Medicare billing privileges of
Eastern Plumas District Hospital d/b/a Eastern Plumas Health Care, based on its failure to
comply with two specific standards applicable to suppliers of durable medical equipment.

I. Applicable Law and Regulations

CMS revoked Petitioner’s billing privileges for failure to have complied with
requirements that a CMS-approved accrediting organization accredit a supplier and
provide a surety bond. Those requirements are as follows.

Section 1834(a)(16)(B) of the Social Security Act (Act), 42 U.S.C. § 1395m(a)(16)(B),
states that the Secretary of Health and Human Services “shall not provide for the issuance
(or renewal) of a provider number for a supplier of durable medical equipment for
purposes of payment . . . for durable medical equipment furnished by the supplier unless
the supplier provides the Secretary on a continuing basis . . . with a surety bond in a form
specified by the Secretary and in an amount that is not less than $50,000.” Section
1834(a)(20)(F)(i) of the Act states that the Secretary “shall require suppliers . . . on or
after October 1, 2009 . . . to have submitted to the Secretary evidence of accreditation by
an accreditation organization designated . . . as meeting applicable quality standards . . ..”
2

CMS’s regulations implement these requirements among the “supplier standards” at 42
C.F.R. § 424.57(c) that suppliers of “durable medical equipment, prosthetics, orthotics
and supplies” (DMEPOS) (42 C.F.R. § 424.57(a)) must meet to maintain Medicare
billing privileges. As relevant here, section 424.57(c) provides:

(c) Application certification standards. The supplier must meet and must
certify in its application for billing privileges that it meets and will continue
to meet the following standards. The supplier:

* OR Ok Ok

(22) All suppliers of DMEPOS and other items and services must be
accredited by a CMS-approved accreditation organization in order to
receive and retain a supplier billing number. The accreditation must
indicate the specific products and services, for which the supplier is
accredited in order for the supplier to receive payment for those specific
products and services. [supplier standard 22]

* OR Rk

(26) Must meet the surety bond requirements specified in paragraph (d) of
this section. [supplier standard 26]

The surety bond requirements at 42 C.F.R. § 424.57(d) referenced in supplier standard 26
state, as relevant here, that “beginning October 2, 2009, each Medicare-enrolled
DMEPOS supplier . .. must submit a bond that is continuous,” which “must meet the
minimum requirements of liability coverage ($50,000)” and which provides that “[t]he
surety is liable for unpaid claims, CMPs [civil money penalties], or assessments that
occur during the term of the bond.” 42 C.F.R. § 424.57(d)(1)(ii), (4), (5). “The term of
the initial surety bond must be effective on the date that the application is submitted to
the NSC.” 42 C.F.R. § 424.57(d)(2). The regulations provide that failure to submit a
surety bond as required is grounds for revocation of a supplier’s billing privileges:

CMS requires a supplier to submit a bond that on its face reflects the
requirements of this section. CMS revokes or denies a DMEPOS supplier’s
billing privileges based upon the submission of a bond that does not reflect
the requirements of paragraph (d) of this section [42 C.F.R. § 424.57].

See 42 C.F.R. § 424.57(d)(4)(ii)(B); see also 42 C.F.R. § 424.57(d)(11) (“CMS revokes
the DMEPOS supplier’s billing privileges if an enrolled supplier fails to obtain, file
timely, or maintain a surety bond as specified in this subpart and CMS instructions.”).
3

The regulations also provide more generally that CMS “will revoke a supplier’s billing
privileges if it is found not to meet” the supplier standards or other requirements in
section 424.57(c). 42 C.F.R. § 424.57(e) (formerly § 424.57(d)).!

A supplier that has had its billing privileges revoked is “barred from participating in the
Medicare program from the effective date of the revocation until the end of the re-
enrollment bar. The re-enrollment bar is a minimum of | year, but not greater than 3
years depending on the severity of the basis for revocation.” 42 C.F.R. § 424.535(d).

II. Background - Undisputed Facts and Procedural History

The CMS contractor, Palmetto GBA National Supplier Clearinghouse (Palmetto, NSC),
revoked Petitioner’s Medicare supplier number by notice dated October 9, 2009. The
letter provided the following “Reasons for Revocation of Your Supplier Number:”

In accordance with 42 C.F.R. §§ 424.57(c)(22) and 424.57(d), the NSC has
not received proof of accreditation as required by October 1, 2009. In
addition, in accordance with 42 C.F.R. § 424.57(c)(26) and 424.57(d), “All
existing DMEPOS suppliers subject to the bonding requirement shall
submit a copy of the required surety bond to the NSC no later than October
2, 2009.” You failed to submit the surety bond to the NSC as required.

CMS Ex. 1, at 1 (emphasis in original).? The letter stated that the revocation was
effective 30 days from the date of postmark and that Petitioner was barred from re-
enrolling in the Medicare program for one year from the effective date of the revocation.
CMS Ex. 1, at 1; see 42 C.F.R. § 405.874(b)(2) (revocation effective 30 days after CMS
or the CMS contractor mails the notice of its determination). The letter informed
Petitioner that he could appeal the decision by requesting reconsideration within 60 days
of the date of postmark, and/or submit a corrective action plan within 30 days. CMS Ex.
1, at 2.

Petitioner submitted to Palmetto both a corrective action plan and a request for
reconsideration and enclosed what it identified as its surety bond.? CMS Ex. 2.

' Paragraph (e) of section 424.57 was previously designated paragraph (d) and was
redesignated by the rulemaking that imposed the surety bond requirements at paragraph
(d); however, the redesignations have not yet been incorporated in the Code of Federal
Regulations. See 42 C.F.R. Ch. IV (Oct. 1, 2009) § 424.57, Editorial Note.

> The language in quotations is from CMS’s Medicare Program Integrity Manual
(MPIM), chapter 10, § 21.7.

> The disposition of the corrective action plan is not before me. The Departmental
Appeals Board has held that a contractor has discretion as to whether to accept such later
(continued...)
4

Petitioner subsequently submitted to Palmetto a letter from the “Board of Certification/
Accreditation, International,” dated November 19, 2009, stating that “[y]ou have
completed part one of your two-part accreditation process.” CMS Ex. 3, at 1. The letter
urther explained that the second part would involve an on-site survey to validate the
attestations in Petitioner’s application for accreditation. Id.

A Medicare hearing officer denied the request for reconsideration in a decision dated
December 30, 2009, on the ground that Petitioner “has not shown compliance [with]
supplier standards #22 and 26.” CMS Ex. 4, at 3. The hearing officer found that the
surety bond Petitioner submitted “was not signed by the authorized official on file with
the NSC as it did not contain a signature for the principal (supplier)” and that the bond
“was also submitted after the October 2, 2009 deadline for submission.” Jd. Thus, the
earing officer concluded that, “[a]s of the date of the revocation, the surety bond
information was not properly submitted.” Jd. The hearing officer also found that
Petitioner “failed to obtain their accreditation in the time frame allotted,” because
Petitioner’s letter from the accrediting organization, dated November 19, 2009, “was sent
after the October 1, 2009 deadline.” Jd. The decision relied on the following language
from CMS’s MPIM:

In reviewing an initial enrollment decision or a revocation, the HO [hearing
officer] should limit the scope of its review to the Medicare contractor’s
reason for imposing a denial or revocation at the time it issued the action
and whether the Medicare contractor made the correct decision (i.e.,
denial/revocation). . . . If a provider or supplier provides evidence that
demonstrates or proves that they met or maintained compliance after the
date of denial or revocation, the HO shall exclude this information from the
scope of its review.

Id.; MPIM, ch. 10, § 19.A (emphasis added).

Petitioner timely requested a hearing before an Administrative Law Judge (ALJ). The
case was originally assigned to ALJ Alfonso J. Montafio and was reassigned to me for
hearing and decision pursuant to 42 C.F.R. § 498.44, which permits designation of a
Member of the Departmental Appeals Board (Board) to hear appeals taken under Part
498.

3(.. continued)

correction and reverse a revocation. DMS Imaging, Inc., DAB No. 2313 (2010). During
the reconsideration and appeal process, the issue is whether a basis for revocation legally
sufficient to support CMS’s action existed at the time of the revocation notice, not
whether that basis was later eliminated pursuant to a corrective action plan.
5

ALJ Montafio convened a prehearing conference by telephone on February 19, 2010,
which he summarized in a Pre-Hearing Conference Summary and Order (Pre-Hearing
Order) issued that day. The parties agreed during the conference that the matter could be
decided on their written submissions, and CMS indicated that it intended to file a motion
for summary judgment. Pre-Hearing Order at 2 (Feb. 19, 2010). The ALJ set a schedule
for submission of CMS’s motion and supporting documentation, for Petitioner’s response
and supporting documentation, and for reply briefs. Jd.

Pursuant to the briefing schedule, CMS submitted a brief and a motion for summary
disposition (CMS Br.) and its exhibits 1 - 4. Petitioner subsequently informed the staff
attorney that it would not file a response to CMS’s motion for summary disposition
unless the ALJ requested additional information. On May 24, 2010, I issued an order
closing the record.

With its hearing request (HR), Petitioner submitted the reconsideration decision, a copy
of a certificate of accreditation for 2010 from the Board of Certification/Accreditation,
and a copy of the surety bond that Petitioner’s Chief Financial Officer (CFO) had signed
as “Principal.” I designate these documents as Petitioner’s exhibits 1, 2, and 3
respectively. In the absence of any objection, I admit them to the record for purposes of
resolving the summary disposition motion.*

IIL. Issues, Findings of Fact, Conclusions of Law
A. Issues
The issue in this case is whether CMS is entitled to summary disposition on the ground

that the undisputed facts demonstrate that the revocation of Petitioner’s Medicare billing
privileges was legally authorized.

* The regulations governing provider and supplier enrollment appeals require “good
cause” for a petitioner to submit “new documentary evidence . . . for the first time at the
ALJ level.” 42 C.F.R. § 498.56(e). CMS did not challenge Petitioner’s documentary
evidence, and Petitioner did not explain whether the new documents had been submitted
at the reconsideration level or whether good cause justified their late submission. The
reconsideration decision does not mention either document and instead cites a surety
bond that had not been signed by a principal for Petitioner (CMS Ex. 2, at 2-3), and a
November 19, 2009 letter from the accrediting organization (CMS Ex. 3). The certificate
of accreditation is for 2010 and contains no date of issuance, so it may not have been
available at the time of the reconsideration. I do not further explore whether the
documentary evidence is new or its submission justified, however, since CMS did not
object and since the documents do not demonstrate any dispute over facts material to the
outcome of this appeal.
B. Applicable Standard

CMS’s motion made clear that the disposition, which it sought, was in the nature of
summary judgment. CMS Br. at 5-6. The Board stated the standard for summary
judgment as follows.

Summary judgment is appropriate when the record shows that there is no
genuine issue as to any material fact, and the moving party is entitled to
judgment as a matter of law. . .. The party moving for summary judgment
bears the initial burden of showing that there are no genuine issues of
material fact for trial and that it is entitled to judgment as a matter of

law. ... To defeat an adequately supported summary judgment motion, the
non-moving party may not rely on the denials in its pleadings or briefs, but
must furnish evidence of a dispute concerning a material fact — a fact that, if
proven, would affect the outcome of the case under governing 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.

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations

omitted). The role of an ALJ in deciding a summary judgment motion differs from the
ALJ’s role in resolving a case after a hearing. The ALJ should not assess credibility or
evaluate the weight of conflicting evidence. Holy Cross Vill. at Notre Dame, Inc, DAB
No. 2291, at 5 (2009).

C. Analysis

My findings and conclusions are in the italicized headings supported by the subsequent
discussions below.

1. CMS was authorized to revoke Petitioner’s billing privileges based on
undisputed evidence that Petitioner was not accredited as required by 42
C.F.R. § 424.57(c)(22).

As noted, one of the bases relied on in the revocation notice and on reconsideration was
that Petitioner failed to meet the accreditation requirement on time. Petitioner agreed
during the pre-hearing conference that, at the time of the revocation of its billing
privileges, it was not in compliance with supplier standard 22, the accreditation
requirement. Pre-Hearing Order at 2 (Feb. 19, 2010). Petitioner’s concession, like
Palmetto’s findings upon revocation and reconsideration, is consistent with the
November 19, 2009 letter from the accrediting organization that Petitioner submitted to
Palmetto, which indicated that, as of the date of the letter, Petitioner had only completed
“one part of your two-part accreditation process.” CMS Ex. 3, at 1. The letter goes on to
state that the accrediting organization still needed to conduct an unannounced inspection
of Petitioner’s facility, interview personnel, and perform a home visit with a patient. Jd.
7

Thus, no dispute exists that Petitioner was not accredited when Palmetto revoked its
billing privileges.

Petitioner alleges that it was accredited after the revocation. In the hearing request and
during the pre-hearing conference, Petitioner asserted only that “we are accredited by a
CMS-approved accrediting organization” (HR, emphasis added) and that it was currently
in compliance with the required supplier standards (Pre-Hearing Order at 2, emphasis
added). The use of the present tense in these statements is consistent with the fact that
the certificate of accreditation submitted with the hearing request is for the year 2010,
and nowhere states that it was effective as of the date of revocation.

A showing of compliance subsequent to the revocation is not a ground to reverse the
revocation. The regulations require that a supplier “must meet and must certify in its
application for billing privileges that it meets and will continue to meet” the supplier
standards. 42 C.F.R. § 424.57(c) (emphasis added). The preamble to the regulations
implementing the reconsideration and appeals process for suppliers whose billing
privileges are revoked explained:

When a Medicare contractor makes an adverse enrollment determination
(for example, enrollment denial or revocation of billing privileges) . . .
appeal rights are limited to provider or supplier eligibility at the time the
Medicare contractor made the adverse determination. . . . Accordingly, a
provider or supplier is required to furnish the evidence that demonstrates
that the Medicare contractor made an error at the time an adverse
determination was made, not that the provider or supplier is now in
compliance.

73 Fed. Reg. 36,448, 36,452 (June 27, 2008). This rulemaking also amended the
enrollment regulations to provide that “suppliers have the opportunity to submit evidence
related to the enrollment action” and “must, at the time of their request [for
reconsideration], submit all evidence that they want to be considered.” 42 C.F.R.

§ 405.874(c)(3); 18661CPayday.com, L.L.C., DAB No. 2289, at 8-9 (2009). The MPIM
language that the hearing officer cited, stating that “evidence that demonstrates or proves
hat [the supplier or provider] met or maintained compliance after the date of denial or
revocation” must be excluded from the hearing officer’s review, is consistent with the
preamble language. CMS Ex. 4, at 3 (HO decision); MPIM, ch. 10, § 19.A.

es

Thus, Petitioner’s allegation in its January 13, 2010 hearing request that it was accredited
shows no error in the revocation on October 9, 2009, or in the reconsideration decision on
December 30, 2009. The certificate of accreditation that Petitioner submitted on appeal,
which does not show accreditation at the time of revocation, is not material. Given
Petitioner’s concession that it was not accredited at the time of revocation and the
absence of any contrary evidence, CMS is entitled to summary disposition sustaining the
revocation on the basis of failure to comply with supplier standard 22.

8

2. CMS was authorized to revoke Petitioner’s billing privileges based on
undisputed evidence that Petitioner had not submitted a surety bond as
required by 42 C.F.R. §§ 424.57(c)(26) and 424.57(d).

As far as its compliance with supplier standard 26, the surety bond requirement,
Petitioner similarly takes the position that it is presently in compliance. HR. In support
of that assertion, Petitioner submitted a copy of a surety bond. P. Ex. 3.

The hearing officer noted that the contractor case file included a surety bond that
Petitioner submitted. However, the hearing officer found that the bond did not contain
any signature by a principal of Petitioner, where required on the bond form, and that the
bond was submitted after the October 2, 2009 deadline. CMS Ex. 4, at 3. The hearing
officer concluded that no surety bond was submitted as of the date of revocation. Id.

The surety bond submitted with the HR differs from the one submitted to Palmetto on
reconsideration in that it bears the signature of Petitioner’s CFO. P. Ex. 3, at 2. CMS did
not rely separately on the absence of the principal’s signature as a basis for revocation
and did not discuss in its motion for summary judgment what significance, if any, should
be attributed to the addition of that signature in the copy submitted as Petitioner’s

Exhibit 3. Petitioner did not deny that the surety bond it submitted at the reconsideration
level was not signed by the CFO and proffered no explanation of when the CFO’s
signature was added.

I need not decide whether a surety bond must always be signed by a supplier’s authorized
representative to constitute a bond “that on its face reflects the requirements” of the
supplier standard. 42 C.F.R. § 424.57(d)(4)(ii)(B). Even the version of the surety bond
submitted to me on appeal fails to demonstrate compliance. As with the unsigned version
submitted on reconsideration, this version states on its face that it is effective October 27,
2009. Compare CMS Ex. 2, at 3 with P. Ex. 3, at 2. That date is beyond the October 2,
2009 date upon which each Medicare-enrolled DMEPOS supplier was required to submit
a compliant bond, and is also after the date Palmetto revoked Petitioner’s Medicare
enrollment. 42 C.F.R. § 424.57(d)(1)(ii); see 73 Fed. Reg. 36,448, 36,452; MPIM, ch.
10, § 19.A. The undisputed facts thus demonstrate that Petitioner was not in compliance
with supplier standard 26 at the time of the revocation.

IV. Conclusion

The undisputed facts entitle CMS to summary disposition as a matter of law. I therefore
grant summary judgment in favor of CMS and sustain the revocation of Petitioner’s
enrollment.

/s/
Leslie A. Sussan
Board Member


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Somerset Nursing & Rehabilitation Facility
(CCN: 18-5218),

Petitioner
Vv.

Centers for Medicare and Medicaid Services.
Docket No. C-09-313
Decision No. 2166

Date: June 24, 2010

DECISION
I sustain the determination of the Centers for Medicare and Medicaid Services (CMS) to

impose remedies against Petitioner, Somerset Nursing & Rehabilitation Facility,
consisting of civil money penalties of:

¢ $3,050 per day for each day of a period that began on May 10, 2008, and which
ran through January 14, 2009;

¢ $150 per day for each day of a period that began on January 15, 2009, and which
ran through January 29, 2009; and

e A denial of payment for new admissions for each day of a period that began on
January 18, 2009, and which ran through January 29, 2009.

I. Background

Petitioner is a skilled nursing facility in Somerset, Kentucky. It participates in the
Medicare program. Sections 1819 and 1866 of the Social Security Act, and its
implementing regulations at 42 C.F.R. Parts 483 and 488, govern Petitioner’s
participation in Medicare. 42 C.F.R. Part 498 governs Petitioner’s hearing rights in this
case.

Petitioner was surveyed for compliance with Medicare participation requirements in a
survey ending on January 9, 2009 (January 9 Survey), and in a subsequent survey on
January 26, 2009 (January 26 Survey). Eleven (11) deficiencies were identified at the
January 9 Survey. Eight of the deficiencies were determined to be so egregious as to put
residents of Petitioner’s facility in immediate jeopardy. An “immediate jeopardy” level
deficiency is one that causes, or is likely to cause, serious injury, harm, impairment, or
death to a resident or residents. 42 C.F.R. § 488.301. Three deficiencies were identified
at the January 26 Survey, and none of these were determined to be at the immediate
jeopardy level. CMS concurred with the surveyors’ findings and determined to impose
the remedies that I recite in the opening paragraph of this decision.

Petitioner requested a hearing, and the case was assigned to me for a hearing and a
decision. I directed the parties to file pre-hearing exchanges, which included all of their
proposed evidence and briefs that addressed all of the issues in the case. The parties
completed their exchanges and complied with my order. It is apparent from Petitioner’s
exchange that Petitioner is not challenging the non-immediate jeopardy level findings of
noncompliance that were made at the January 26 Survey. Consequently, these findings,
and the determination to impose civil money penalties of $150 per day for the period that
ran from January 15 through January 29, 2009, are administratively final and raise no
issues that I may hear and decide. All that is left for me to decide is whether Petitioner
manifested immediate jeopardy level noncompliance during the period that ran from May
15, 2008 through January 14, 2009 and, if so, whether the remedies that CMS determined
to impose are reasonable in duration and amount.

I held a hearing by telephone on March 22, 2010, at which several witnesses were cross
examined. I received all witnesses’ direct testimony as affidavits or declarations. I
received into evidence forty-five (45) exhibits from CMS, which I identified as CMS Ex.
1—CMS Ex. 45. I also received nine exhibits from Petitioner, which I identified as P.
Ex. 1—P. Ex. 9.

II. Issues, Findings of Fact, and Conclusions of Law
A. Issues
The issues in this case are whether:

1. Petitioner failed to comply substantially with Medicare participation
requirements;
2. CMS’s determination of immediate jeopardy level noncompliance is
clearly erroneous; and

3. The remedies that CMS imposed are reasonable in duration and amount.
B. Findings of Fact and Conclusions of Law
I make the following findings of fact and conclusions of law (Findings).

1. Petitioner failed to comply substantially with Medicare participation
requirements.

As I discuss above, CMS determined that Petitioner manifested 11 deficiencies as of the
January 9 Survey. In this decision, I address two of them, Petitioner’s noncompliance
with the requirements of 42 C.F.R. §§ 483.13(b) and 483.13(c). It is unnecessary that I
address additional alleged deficiencies for reasons that I explain at Finding 3 of this
decision.

a. Petitioner failed to comply substantially with the requirements
of 42 C.F.R. § 483.13(b).

The regulation that is at issue here provides that a resident of a skilled nursing facility has
the right to be free from sexual, physical, and mental abuse, among other things.

“Abuse” is defined to mean the: “willful infliction of injury, unreasonable confinement,
intimidation, or punishment with resulting physical harm, pain, or mental anguish.” 42
CFR. § 488.301.

The regulation requires a facility to ensure that its residents are not abused. It requires a
facility to be vigilant in determining when possibly abusive conduct might occur and to
take every reasonable step to assure that it does not occur. Put simply, a facility does not
comply with the regulation’s requirements simply by reacting to abuse with ad hoc
interventions. Ifa facility knows that a possibility exists that abuse may occur, it must
develop preventive measures to assure that it does not occur. It also must implement
those measures.

The gravamen of CMS’s allegations against Petitioner is that Petitioner failed to take
meaningful actions to protect its residents from the abusive behavior of one of its
residents who is identified in the January 9 Survey report as Resident #9. That abuse
consisted of numerous instances of verbal and physical violence, including several
instances of sexual abuse that Resident # 9 perpetrated against other residents. CMS
contends that Petitioner’s efforts to protect its residents from Resident # 9 were
ineffective.
The weight of the evidence supports CMS’s assertions. For a period of several months,
Petitioner failed to prevent Resident # 9 from engaging in verbal and physical violence
against other residents and from perpetrating sexual abuse against some female residents.
The interventions that Petitioner used when Resident # 9 engaged in abusive conduct
were woefully ineffective in protecting other residents from Resident # 9. Petitioner’s
failure to protect its residents from Resident # 9 reveals a fundamental misunderstanding
on the part of Petitioner and its staff of the need to take every reasonable measure to
protect its residents from abuse. Petitioner’s noncompliance, therefore, was not limited
just to the way in which its staff dealt with Resident # 9 but was a systemic failure by
Petitioner and its staff to develop an effective system for dealing with abusive residents.

Resident # 9 was an alert and oriented resident. CMS Ex. 39 at 2. He was a relatively
large and robust individual, five feet 11 inches tall, who weighed about 200 pounds.
CMS Ex. 7 at 19; CMS Ex. 39 at 2. He was capable of moving around Petitioner’s
facility in a wheelchair without the assistance of Petitioner’s staff. CMS Ex. | at 15;
CMS Ex. 7 at 5, 12, 31; CMS Ex. 39 at 2. He could walk occasionally. CMS Ex. 6 at 73,
77; CMS Ex. 8 at 37; CMS Ex. 39 at 2.

Petitioner knew, or should have known, at the time of Resident # 9’s admission to the
facility that the resident posed a threat to the safety and well-being of other residents.
The resident had a life long history of sexually aggressive behavior. CMS Ex. 39 at 4.
He had been in, and had been discharged from, several other facilities prior to his
residing at Petitioner’s facility. Id.

Resident # 9 engaged in conduct very shortly after his admission to Petitioner’s facility
that confirmed all that was or should have been known about his proclivities. He
displayed a constellation of aggressive and violent behavior. Petitioner’s administrator
described him as aggressive, grouchy, and volatile. CMS Ex. 41 at 3. On numerous
occasions, Resident # 9 was combative — and at times violent — in his interactions with
Petitioner’s staff. CMS Ex. 9 at 2, 9, 13-15, 21, 24-25, 28; CMS Ex. 6 at 62, 66, 67. The
resident’s combativeness included his repeated noncompliance with medical instructions
and attempts to provide care to him. He ignored, or refused to comply with, restrictions
on consuming fluids, and he repeatedly refused to take medication that was prescribed to
him. CMS Ex. 9 at 2-4, 8-9, 13-15, 17-18, 20-22, 24-25, 27-28, 33; CMS Ex. 6 at 48, 52,
66-72, 79, 99, 106.

Resident # 9 displayed aggressive, threatening, and, at times, violent behavior towards
other residents. CMS Ex. 9 at 14, 18, 20-21; CMS Ex. 6 at 104. He threatened to kill his
roommate by smothering him with a pillow. CMS Ex. 9 at 9. He kicked and shoved
other residents. Jd. at 14, 18, 20-21; CMS Ex. 6 at 104. In June 2008, he shoved another
resident’s wheelchair causing the chair to come off the floor. CMS Ex. 9 at 18.
Resident # 9 continually sought to engage in uninvited sexual activity with Petitioner’s
female residents during his stay at Petitioner’s facility. This activity included the
following instances:

April 2008: Resident # 9 put his hand into the shirt of a female resident and
attempted to fondle her breast. When the resident rebuffed Resident # 9’s
advances, he attempted to persuade her to come to his room. CMS Ex. 34 at 16.

April 10, 2008: Resident # 9 brushed up against another resident — a severely
cognitively impaired individual — in the hallway of Petitioner’s facility. CMS Ex.
27 at 1.

May 10, 2008: Resident # 9 was discovered in a female resident’s room, Resident
# 25, touching that resident’s body (‘feeling of her”). CMS Ex. 9 at 14;
Petitioner’s Pre-Hearing Brief at 3.

May 18, 2008: Resident #9 was observed touching another resident, Resident #
21, at several places on her body. CMS Ex. 6 at 67; CMS Ex. 27 at 1; CMS Ex. |
at 16.

May 22, 2008: Resident # 9 was observed in a hallway making inappropriate
sexual advances towards Resident #21. The resident failed to cease making
advances when Resident # 21 asked him to stop. CMS Ex. 6 at 69; CMS Ex. 27 at
1.

May 28, 2008: Resident # 9 was observed in a hallway making sexual advances
towards an unidentified female resident. He continued making advances despite
several efforts by Petitioner’s staff to redirect him. CMS Ex. 6 at 69.

May 28, 2008: After the first reported incident on May 28, 2008, and despite
redirection, Resident # 9 made two attempts to go into a female resident’s room, or
to get that resident to go to Petitioner’s break room with him. CMS Ex. 6 at 102.

May 29, 2008: Resident #9 was found in the room of a female resident, Resident
#26. Resident # 26 complained that Resident # 9 had attempted to touch her
inappropriately. CMS Ex. 6 at 102; CMS Ex. 27 at 1; CMS Ex. | at 16.

May 30, 2008: Resident # 9 was observed in a hallway making sexual advances
towards an unidentified female resident. CMS Ex. 6 at 69.

June 18, 2008: Resident #9 was overheard making sexually suggestive comments
to an unidentified female resident. CMS Ex. 9 at 17.
6

July 8, 2008: Resident # 9 was seen in a hallway kissing and fondling the breasts
of Resident # 21. CMS Ex. 1 at 16-17; CMS Ex. 9 at 21.

July 12, 2008: Resident # 9 was observed making sexual comments to another
unidentified resident. CMS Ex. 9 at 21.

August 21, 2008: Resident #9 forcefully pinched or grabbed the right breast of
Resident # 15 after Resident # 9 stopped her in the hallway. CMS Ex. 1 at 6, 17.

August 22, 2008: Resident #9 was found in an unidentified female resident’s
room sitting beside her bed. CMS Ex. 9 at 24.

August 22, 2008: Resident #9 was found holding on to the shirt of an
unidentified female resident. The shirt had become partially undone. Jd.

August 23, 2008: At 9:30 A.M., Resident #9 was found reaching for an
unidentified female resident’s breast. Jd.

August 23, 2008: At 2:45 P.M., Resident # 9 was found in the doorway of an
unidentified female resident’s room. Jd.

October 16, 2008: Resident #9 grabbed the breasts of a female resident, Resident
#10. CMS Ex. 6 at 108; CMS Ex. 9 at 29; CMS Ex. 27 at 2; CMS Ex. 34 at 17.

December 10, 2008: Resident # 9 invited an unidentified female resident who was
passing by his room to come in and visit him. The female resident declined. CMS
Ex. 9 at 33.

Resident # 9’s conduct was flagrant and outrageous. It is not an exaggeration to say that,
for a period of several months, this resident terrorized other residents and, in particular,
some of Petitioner’s female residents, such as Resident # 15 and Resident #21. The
situation called for Petitioner to take drastic measures to protect other residents from
Resident # 9’s predatory conduct. However, interventions that Petitioner implemented
had a half-hearted and tepid quality to them that was totally inappropriate to the situation
that Petitioner, its staff, and the residents confronted. Petitioner contends that it:

did take reasonable efforts to protect female residents and to prevent
Resident 9 from further instances of inappropriate sexual behaviors. . . .
Many of these interventions worked for a significant period of time. When
Resident 9 exhibited new episodes of inappropriate behavior, the facility
took additional measures to address those behaviors and protect other
residents.

Petitioner’s Pre-Hearing Brief at 10. According to Petitioner, these interventions
included: ongoing discussions with Resident # 9; involvement of the resident’s family;
diversionary activities; increased monitoring and supervision; educating staff on dealing
with inappropriate sexual behaviors in general, and the resident’s behaviors in particular;
checking the resident at 15-minute intervals; and involvement of the resident’s
physicians. Id.

But, what is apparent — and what ought to have been apparent to Petitioner and its staff —
is that these interventions, individually and in combination, were singularly ineffective in
protecting other residents from Resident #9. The persistence of the resident’s abusive
conduct, despite the interventions that Petitioner described, makes this conclusion
evident. For example, Resident # 9 was observed to be engaging in sexually predatory
behavior on five occasions within three days in August 2008, notwithstanding
Petitioner’s claims of effective intervention.

It does not appear that Petitioner even considered the possibility that the resident needed
to be kept under continuous observation while he was in the presence of female residents.
Nor did Petitioner’s staff ever consider the possibility that the resident needed to be
segregated from the facility’s female population. Petitioner did not finally decide to
transfer Resident # 9 out of its facility until November 2008. CMS Ex. 6 at 6, 8.

The interventions that Petitioner claimed appear to be particularly tepid and half-hearted
when they are scrutinized closely. Resident # 9 was not placed on 15-minute checks until
July 7, 2008, many months after he began to engage in sexually abusive behavior. P. Ex.
1 at 160. Moreover, these checks were not begun in response to the resident’s abusive
behavior but were begun due to the fact that resident had attempted to elope Petitioner’s
premises. /d.; Petitioner’s Pre-Hearing Brief at 6 n.1. In the weeks after the checks were
implemented, the resident perpetrated multiple episodes of sexual abuse. Petitioner never
considered intensifying the resident’s supervision or restricting his movement, however.
Resident # 9 continued to enjoy freedom of movement throughout Petitioner’s facility
during his stay there, and he took advantage of that freedom of movement to perpetrate
abuse.

Petitioner has not presented any detailed explanation of when its staff’s asserted ongoing
discussions with Resident #9 occurred and what was said to the resident. Petitioner has
not pointed to any evidence showing that the resident responded to what was said to him,
or how these discussions modified his behavior. What is obvious, however, is that direct
communications between Petitioner’s staff and Resident #9 were singularly ineffective.
Petitioner knew, or should have known, that involvement of Resident # 9’s family in
attempts to curb the resident’s aggression would be an exercise in futility. No evidence
exists that family involvement helped to curb the resident’s conduct. Indeed, family
involvement could only have served to put Petitioner on notice that it had an extremely
dangerous situation on its hands. The resident’s family placed Resident # 9 in skilled
nursing care because of his history of sexually abusive behavior at home, which he
directed against his demented wife. CMS Ex. 39 at 4.

Petitioner’s care plan was amended on September 1, 2008 to say that the resident should
be monitored frequently for inappropriate sexual behavior. CMS Ex. 8 at 30. However,
Petitioner has offered no evidence to show how it and its staff implemented this
amendment. In fact, Petitioner did not make any concerted effort to implement the
amendment. Several of Petitioner’s staff told surveyors that they were not aware that
Resident # 9 would be subjected to increased monitoring and supervision. CMS Ex. 39 at
2-3; CMS Ex. 17 at 6-8.

Petitioner has not offered persuasive evidence that it involved Resident # 9’s physicians
in a comprehensive effort to eliminate the resident’s abusive behavior. As of the January
9 Survey, Petitioner’s medical director was unaware of the resident’s abusive behavior.
CMS Ex. 41 at 3-4. The resident’s primary physician made no entries in his progress
notes between March and December 2008, concerning the resident’s sexually abusive
behavior. CMS Ex. 6 at 9-14. The resident was seen on May 16, August 22, and
November 22, by a psychiatric physician’s assistant, but that provider did not evaluate
the resident’s sexually abusive conduct. CMS Ex. 1 at 31; CMS Ex. 6 at 25-27; CMS Ex.
38 at 5-6. No record exists of anyone ordering medication for Resident # 9 that was
intended to curb his abusive behavior.

b. Petitioner failed to comply substantially with the requirements
of 42 C.F.R. § 483.13(c).

In relevant part, the applicable regulation states that a facility must develop and
implement written policies and procedures that prohibit mistreatment, neglect, and abuse
of residents. CMS alleges that Petitioner contravened this regulation’s requirements,
because it failed to implement its written abuse policy in dealing with the repeated
episodes of sexual abuse that Resident # 9 perpetrated. The evidence strongly supports
CMS’s assertion.

Petitioner’s policy governing sexual abuse defines “sexual abuse” as including sexual
harassment, sexual coercion, or sexual assault. CMS Ex. 24 at 9. The policy draws no
distinction between abuse involving physical contact and abuse that is verbal. It lays out
a protocol for staff to report and investigate alleged or observed abuse. /d. at 9-10. Any
member of Petitioner’s staff who observes an incident of actual or suspected resident
abuse must immediately report what he or she observes to a charge nurse and Petitioner’s
director of nursing and administrator. /d. at 10. The report must contain the names of the
perpetrator and the victim. Upon receiving the report of abuse, the charge nurse must
immediately examine and interview the possible victim and record the findings of the
examination and interview in the possible victim’s medical record. Jd. The staff is
obligated to notify the physician and family of any possible victim and to refer the
possible victim to social services in any case of suspected abuse. Jd. at 8, 11.

CMS offered evidence that proved that Petitioner’s staff failed to follow this protocol in
several instances in which Resident # 9 was observed to be engaging in sexually abusive
behavior. There were, as I have discussed, several instances in which Petitioner’s staff
failed even to identify the victim of Resident # 9’s aggression. In other instances, the
staff did not examine and interview the victim nor did it notify the victim’s family or the
victim’s treating physician. That was the case with instances of abuse involving
Residents #s 10, 15, 25, and 26. None of these residents’ treatment records contain any
documentation showing that Petitioner’s staff followed the requisite protocol. None of
the incidents at issue were investigated by Petitioner nor were they reported to the
relevant Kentucky State agency with the exception of the incident occurring on August
21, 2008, in which Resident # 9 pinched Resident # 15’s breast. CMS Ex. 39 at 5.

Petitioner denies that it contravened the requirements of 42 C.F.R. § 483.13(c), arguing
primarily that the behaviors by Resident # 9 that Petitioner’s staff documented were
“questionably inappropriate but did not constitute sexual harassment, sexual coercion, or
sexual assault and therefore did not require implementation of . . . [Petitioner’s abuse
investigation and reporting policy].” Petitioner’s Pre-Hearing Brief at 11. I do not agree
with Petitioner’s characterization of Resident # 9’s behavior. Some of his acts may have
been on the borderline between what was merely offensive and what was abusive. But,
many of the acts that Resident # 9 perpetrated clearly were abusive. On multiple
occasions, the resident fondled, or attempted to fondle, female residents. He made
sexually suggestive comments to many of them. His behavior was persistent and
repetitive. Petitioner has not argued that any of this conduct was consensual, and, in fact,
no evidence exists that would support a finding of consensual sexual conduct between
Resident # 9 and other residents. To the contrary, the victims of Resident # 9’s
aggression tended to be debilitated and sometimes demented individuals. Individuals
who reside in nursing facilities are individuals who are generally helpless to deal with
life’s problems, including uninvited sexual advances. Petitioner should have recognized
the helplessness of Resident # 9’s victims and acted accordingly.

2. CMS’s findings of immediate jeopardy level noncompliance were not
clearly erroneous.

The evidence that CMS offered establishes that Petitioner’s failure to protect residents
against abuse, and its failure to carry out its own policies concerning abuse, created a
likelihood of serious injury, harm, impairment, or death to residents of Petitioner’s
facility. Petitioner did not prove CMS’s determination to be clearly erroneous.

The probability of serious psychological or physical injury resulting from Resident # 9’s
unchecked sexual aggression was very high. As I have discussed, the resident’s victims
were frail, elderly individuals, and some of them suffered from dementia. They were
helpless to defend themselves from Resident # 9, a physically large and relatively robust
individual. Moreover, at least one of Resident # 9’s victims, Resident # 15, suffered from
a medical condition that made her vulnerable to severe injury if Resident # 9 succeeded
in groping her breast again, as he did on August 21, 2008. Resident # 15 had a history of
cancer therapy for her right breast, including a lumpectomy and radiation treatments, and
she was at risk of developing lymphedema. CMS Ex. 13 at 5, 134-35; CMS Ex. 41 at 2.
The right side of this resident’s body needed to be protected against injury. Pinching her
breast, as Resident # 9 had done, posed a grave threat for Resident # 15.

Petitioner’s failure to investigate and to report allegations of abuse also put residents at
immediate jeopardy. There is a reason why any allegation of abuse must be reported
immediately by a facility to responsible State authorities, even if it is ultimately
established that no abuse occurred. A conflict of interest exists between a facility and its
residents any time that abuse is alleged. It is in the facility’s interest that no abuse be
ound, because a finding of abuse could, at the least, damage the facility’s reputation and,
more than that, subject the facility to remedies. For that reason, it is absolutely necessary
that every possibility of abuse be reported and thoroughly investigated. Failure to comply
with this requirement puts residents at jeopardy, because it leaves them unprotected from
possibly serious or even lethal abuse.

Petitioner argues that no one actually was seriously injured as a result of Resident # 9’s
actions. But, the absence of serious harm does not serve as a defense to a finding of
immediate jeopardy level noncompliance. In this case, a likelihood of serious harm
existed even if no serious harm actually occurred. That Resident # 9 did not seriously
injure one or more of his victims, either physically or psychologically, may have been
ortuitous, but there was a high probability that he would inevitably do so given his
proclivities.

There is evidence at least one of Petitioner’s residents, Resident # 15, did suffer serious
harm as a result of Resident # 9’s predatory activity. This resident clearly manifested
signs of psychological harm. At the time of the January 9 Survey, more than four and
one-half months after Resident # 9 sexually assaulted her, Resident # 15 continued to
express fear of Resident #9. The resident told surveyors that she remained in her room
with the door closed most of the time due to her fear. CMS Ex. 41 at 2; CMS Ex. 1 at 6.

Furthermore, the likelihood of actual harm to specific residents does not define the limit
of the risk to residents that Petitioner’s noncompliance posed. Petitioner’s lack of
recognition of its obligations to protect its residents, coupled with the manifest
ineffectiveness of the interventions it developed to protect residents from Resident # 9,
convinces me that Petitioner, at bottom, lacked any comprehension of the ambit of its
responsibility to protect its residents. That put all of Petitioner’s residents in jeopardy
from future instances of abuse, whether or not Resident # 9, or someone else, perpetrated
them.

3. CMS’s remedy determinations are reasonable.

This case involves two civil money penalty determinations and a denial of payment for
new admissions. I have held that, as a matter of law, CMS’s determination to impose
penalties of $150 per day against Petitioner for the period running from January 15
through January 29, 2009 is reasonable. That leaves only the issue of whether immediate
jeopardy level penalties of $3,050 per day for the period running from May 10, 2008
through January 14, 2009 are reasonable.

The immediate jeopardy penalty amounts are reasonable as a matter of law. The
minimum immediate jeopardy level civil money penalty that CMS may impose is $3,050
per day. 42 C.F.R. § 488.438(a)(1)(i). Even one instance of immediate jeopardy level
noncompliance justifies the minimum amount as a matter of law. In this case, I have
found the presence of two immediate jeopardy level deficiencies. It is unnecessary that I
find the presence of others, because CMS determined to impose the minimum penalty
amount.

What remains to be determined is the issue of duration. CMS determined that the
beginning date for imposition of immediate jeopardy level penalties is May 10, 2008.
That date is amply justified by the evidence showing that Resident # 9 began his sexually
abusive activity at Petitioner’s facility in April 2008. Indeed, I likely would have
sustained an earlier starting date for immediate jeopardy level noncompliance had CMS
made such a determination.
The duration of Petitioner’s immediate jeopardy level noncompliance, through January
14, 2009, is also amply supported by the evidence. Resident # 9 continued to perpetrate
abusive acts through December 10, 2008. However, there is no evidence that Petitioner
corrected its deficiencies — its failure to develop and implement policies to protect
residents against abuse — prior to January 14, 2009 and after completion of the January 9
survey. That Resident # 9 did not engage in abusive behavior after December 10, 2008,
may have been fortuitous. But, the likelihood of immediate jeopardy level
noncompliance persisted so long as Petitioner and its staff failed to implement actions
that protected residents against abuse, either abuse that Resident # 9 or other residents
perpetrated. Resident # 9 remained in the facility until January 9, 2009. Petitioner did
not implement corrective actions designed to assure enforcement of its abuse policy prior
to January 14, 2009.

Finally, CMS’s determination to impose a denial of payment for new admissions is
reasonable as a matter of law. CMS has discretionary authority to impose a denial of
payment for new admissions for each day that a facility is noncompliant with Medicare
participation requirements. 42 C.F.R. § 488.417(a)(1). Consequently, I sustain denial of
payment for new admissions for each day of a period that began on January 18, 2009, and
which ran through January 29, 2009.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
CSC Enterprises Inc. DBA Branford Hills Health Care Center
(PTAN: 0282630001),
Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-10-336
Decision No. CR2161

Date: June 18, 2010

DECISION

In this case, Petitioner, CSC Enterprises Inc. DBA Branford Hills Health Care Center, did
not meet accreditation and surety bond requirements for continuing its participation in the
Medicare program as a supplier of durable medical equipment, prosthetics, orthotics and
supplies (DMEPOS). The Centers for Medicare and Medicaid Services (CMS) therefore
revoked its Medicare billing privileges. Petitioner now appeals the revocation, arguing
that CMS should instead have allowed it to terminate voluntarily its Medicare
participation. CMS moves for summary judgment, which Petitioner opposes.

Because the parties agree that Petitioner did not meet supplier standards, CMS properly
revoked its supplier number and is entitled to summary judgment. I have no authority to
review CMS’s denial of Petitioner’s subsequent application for voluntary termination.’

' The parties have filed briefs and exhibits. With its brief (CMS Br.), CMS submits four
exhibits (CMS Exs. 1-4). Petitioner has filed its response (P. Br.) with an additional four
exhibits (P. Exs. 1-4).
Because Petitioner did not comply with regulatory standards
for accreditation and submission of a surety bond, CMS
properly revoked its supplier number, and I have no
authority to review CMS’s denial of Petitioner’s application
for voluntary termination.”

Summary judgment is appropriate here because this case presents no genuine issue of
material fact, and CMS is entitled to judgment as a matter of law. 1866[CPayday.com,
L.L.C., DAB No. 2289 at 2 (2009); Jil. Knights Templar Home, DAB No. 2274 at 3-4
(2009), and cases cited therein.

To receive Medicare payments for items furnished to a Medicare-eligible beneficiary, a
supplier of medical equipment and supplies must have a supplier number issued by the
Secretary of Health and Human Services. Social Security Act (Act) § 1834(j)(1)(A). To
obtain and retain its supplier number, a Medicare supplier must meet the standards set
forth in 42 C.F.R. § 424.57(c), and CMS may revoke its billing privileges if it fails to do
so. 42 C.F.R. §§ 424.57(c)(1),(d); 424.535(a)(1). Among other requirements, the
supplier must be accredited by a CMS-approved accreditation organization. 42 C.F.R.

§ 424.57(c)(22). With limited exceptions not applicable here, as of October 2, 2009,
currently-enrolled DMEPOS suppliers also had to submit a $50,000 surety bond. 42
C.F.R. § 424.57(c)(22), (26).° Ifa DMEPOS suppler fails to obtain, maintain, and timely
file its surety bond, CMS must revoke that supplier’s billing privileges. 42 C.F.R. §
424.57(d); see 74 Fed. Reg. at 200-01.

Here, in a notice letter dated August 21, 2009, the Medicare contractor, Palmetto GBA
National Supplier Clearinghouse, reminded its suppliers, including Petitioner, of the
accreditation and surety bond deadline. CMS Ex. 1. Petitioner concedes that it did not
obtain a surety bond, nor did it demonstrate that it was accredited by a CMS-approved
organization. In a letter dated October 9, 2009, Palmetto advised Petitioner that, because
it had neither supplied proof of its accreditation nor obtained a surety bond, its Medicare
supplier number would be revoked effective November 8, 2009. CMS Ex. 2.

Based on these undisputed facts, I find that CMS properly revoked Petitioner’s supplier
number.

Petitioner admits that it did not meet the standards, but complains that CMS did not
accept what it characterizes as its “corrective action plan” (CAP). Petitioner’s CAP is a
request for voluntary termination (CMS Form 8558S), which Petitioner apparently filed on
October 15, 2009, after receiving the revocation notice. CMS Ex. 3; P. Ex. 2. I have no

? [make this one finding of fact/conclusion of law.

* The effective date for suppliers seeking enrollment was May 4, 2009. 42 C.F.R.
§ 424.57(d)(1)(i).
authority to review this determination. The regulations governing supplier enrollment
specifically allow for review of an involuntary revocation but say nothing about review
of CMS’s determination to reject a supplier’s CAP or to deny a supplier’s request for
voluntary termination. 42 C.F.R. § 424.545(a) (A supplier whose Medicare enrollment
has been revoked may appeal CMS’s decision in accordance with 42 C.F.R. Part 498,
subpart A.).

According to the regulations governing supplier appeals, only initial determinations,
which are listed at 42 C.F.R. § 498.3(b), may be appealed in this forum, and I have no
authority to review actions that are not initial determinations. 42 C.F.R. § 498.3(d).
Since neither CMS’s rejection of a CAP nor CMS’s denial of a request for voluntary
termination are listed among the initial determinations, I have no authority to review
those determinations.

L also find without merit Petitioner’s complaints regarding the contractor’s August 21,
2009 notice. Petitioner admits that the notice came to its business office but complains
that staff overlooked it, because it unacceptably “came addressed only to the facility as a
folded over and taped flyer.” P. Br. at 2-3; CMS Ex. 1. Petitioner cites no authority
suggesting that the contractor was required to send out any individualized notices, much
less that such notices had to be sent certified mail or addressed to the attention of each
supplier’s administrator. A notice in the Federal Register had already informed suppliers
of the regulatory changes and deadlines, and Petitioner concedes that it “became aware of
the new requirements for accreditation and provision of a surety bond” at that time. 74
Fed. Reg. at 166, 198; CMS Ex. 3, at 1. Petitioner nevertheless complains that it was
“unaware of information regarding any requirements to voluntarily surrender our
provider number.” CMS Ex. 3, at 1. But the means by which a non-compliant supplier
can avoid an involuntary termination have not changed, and the instructions that
accompany every DMEPOS enrollment application tell suppliers to complete the
application if “[vJoluntarily terminating your Medicare DMEPOS supplier billing
number.” P. Ex. 2, at 2. Thus, from the time it began its program participation,
Petitioner should have known how to avoid an involuntary revocation. See Heckler v.
Cmty. Health Servs. of Crawford County, Inc., 467 U.S. 51, 63 (1984) (Those who
participate in the Medicare program are supposed to understand program rules.).

Because the undisputed evidence establishes that Petitioner did not comply with
regulatory standards for accreditation and surety bond, CMS properly revoked its supplier
number.

/s/
Carolyn Cozad Hughes
Administrative Law Judge