Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Mark B. Newland, R.N.,
(O.L. File No. H-12-42947-9),

Petitioner,
v.
The Inspector General.
Docket No. C-13-1009
ALJ Ruling No. 2014-28

Date: March 25, 2014

ORDER OF DISMISSAL

Petitioner, Mark B. Newland, R.N., requested a hearing before an administrative law
judge to challenge a determination by the Inspector General (I.G.) of the Department of
Health and Human Services that excludes Petitioner from participating in Medicare,
Medicaid, and all other federal health care programs for five years pursuant to 42 U.S.C.
§ 1320a-7(a)(1). After consideration of the arguments raised in Petitioner’s hearing
request and in his prehearing submissions, I conclude that Petitioner failed to raise an
issue which may properly be addressed in a hearing. Therefore, I dismiss Petitioner’s
hearing request pursuant to 42 C.F.R. § 1005.2(e)(4).

I. Background

By letter dated April 30, 2013, the I.G. notified Petitioner that he was being excluded
from Medicare, Medicaid, and all other federal health care programs for the minimum
statutory period of five years pursuant to 42 U.S.C. § 1320a-7(a)(1), effective May 20,
2013. I.G. Exhibit (Ex.) 1; see 42 C.F.R. § 1001.101(a). The I.G. advised Petitioner that
the exclusion was based on his conviction in the Court of Common Pleas, Franklin
County, Ohio, of a criminal offense related to the delivery of an item or service under
Medicare or a state health care program, including the performance of management or
administrative services relating to the delivery of items or services under any such
program. I.G. Ex. 1, at 1.

Petitioner subsequently filed a request for hearing. In his request, Petitioner stated that
the basis for his request was that the I.G. “reviewing official” did not consider all of the
facts relevant to Petitioner’s case and that the exclusion period was too lengthy.
Petitioner also requested that the exclusion be stayed.

I was assigned to hear and decide the case. I initially set a pre-hearing conference for
July 31, 2013, but was forced to reschedule it after Petitioner failed to provide his contact
information upon request. During the rescheduled conference on November 13, 2013,
Petitioner was represented by an attorney. I explained that I did not have authority to
enjoin or stay the exclusion and denied Petitioner’s request that I do so. I also explained
that the only issue I may hear and decide in Petitioner’s case is whether the I.G. had a
basis for excluding Petitioner from participation in Medicare, Medicaid, and other federal
ealth care programs. | stated that an exclusion authorized under 42 U.S.C. § 1320a-
7(a)(1) must be for a minimum of five years and an administrative law judge does not
ave the authority to consider whether or not the five-year length of the exclusion is
reasonable. 42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. § 1001.2007(a)(2); see Order and
Schedule for Filing Briefs and Documentary Evidence, November 13, 2013, at 2-3 § 3.

On December 23, 2013, the LG. filed his Informal Brief and eight proposed exhibits (1.G.
Exs. 1-8). Petitioner, through counsel, filed his Informal Brief on February 3, 2014.
Petitioner acknowledged that he was convicted of a criminal offense. P. Br. at 1. It is
unclear whether Petitioner’s “yes” response to the question posed in section II of the
Informal Brief challenges whether his conviction (for theft from Ohio’s Medicaid
program) required his exclusion from Medicare, Medicaid, and all other federal health
care programs, but he failed to provide any explanation as to why his conviction would
not require exclusion. See P. Br. at 2. Petitioner’s only argument was that he stopped
participating in federal health care programs on January 9, 2013, and requested that the
five-year exclusion “be retroactive to January 10, 2013.” P. Br. at 3.

On February 18, 2014, the LG. filed a reply brief in which the LG. argued that an
administrative law judge is without authority to amend the effective date of an exclusion.

IL. Discussion

Petitioner has not disputed in either his hearing request or his informal brief that he was
convicted of a criminal offense. Petitioner offered no explanation as to why his
conviction does not require his exclusion under 42 U.S.C. § 1320a-7(a)(1) as the I.G.
alleges in his April 30, 2013 exclusion notice. However, the regulations require
Petitioner to state which of the I.G’s findings of fact and conclusions of law he disputes
and the basis for the contention that they are incorrect. 42 C.F.R. § 1005.2(d).
Therefore, I find that Petitioner has not sufficiently raised the issue of whether the I.G.
had a basis to exclude Petitioner pursuant to 42 U.S.C. § 1320a-7(a)(1) due to his
conviction. Because the I.G. has imposed the statutory minimum five-year exclusion, a
dispute as to the basis for the exclusion is the only issue I can entertain. I cannot review
the reasonableness of an exclusion of five years. 42 C.F.R. § 1001.2007(a)(1)-(2).

Further, I have no jurisdiction to change the effective date of the exclusion. Kailash C.
Singhvi, M.D., DAB No. 2138, at 4 (2007). The notice of exclusion “shall be effective at
such time and upon such reasonable notice to the public and the individual . . . excluded
as may be specified in the regulations ....” 42 U.S.C. § 1320a-7(c)(1). The regulations
state that an exclusion is effective 20 days from the date of the exclusion notice,

42 C.F.R. § 1001.2002(b); however, the regulations do not specify when the I.G. must
issue an exclusion notice. Seide v. Shalala, 31 F. Supp. 2d 466, 469 (E.D. Pa. 1998). It
is well-settled that neither administrative law judges nor the Departmental Appeals Board
has “the authority to review the timing of the I.G.’s decision to impose an exclusion
where the I.G. has a legal basis to exclude.” Kris Durschmidt, DAB No. 2345, at 3
(2010) (citing Singhvi, DAB No. 2138). Administrative law judges also do not have the
authority to alter the effective date of an exclusion by retroactively changing the
beginning date of the exclusion. Lisa Alice Gantt, DAB No. 2065, at 2-3 (2007); see also
57 Fed. Reg. 3,298, 3,325 (Jan. 29, 1992) (stating that an administrative law judge is not
authorized to modify the date of the commencement of the exclusion identified in the
notice of exclusion). The regulations are binding on me and I must follow them.

42 CFR. §§ 1001.1(b), 1005.4(c)(1).

II. Conclusion

Because Petitioner does not dispute that there is a basis for the imposition of an
exclusion, is unable to dispute the length of the exclusion, and has objected only to the
effective date of the exclusion (an issue over which I have no jurisdiction), I must dismiss
Petitioner’s hearing request because “‘it fails to raise any issue which may properly be
addressed in a hearing.” 42 C.F.R. § 1005.2(e)(4).

This dismissal is final and not subject to further administrative appeal. See Ivette
Hernandez-Ramirez, M.D., ALJ Ruling 2013-8, at 3 n.1 (HHS CRD April 25, 2013).

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

The Inspector General of the Social Security Administration,
v.
Dionta Hall,
Respondent.
Docket No. C-14-282
ALJ Ruling No. 2014-27

Date: March 19, 2014

ORDER OF DISMISSAL

The Inspector General (I.G.) of the Social Security Administration determined that
Respondent, Dionta Hall, violated 42 U.S.C. § 1320a-8, and proposed to impose a civil
monetary penalty on Respondent. Respondent filed a request for hearing (RFH) before
an administrative law judge. Because Respondent failed to timely respond to the I.G.’s
January 7, 2014 discovery request and February 21, 2014 Motion for Dismissal, I dismiss
Respondent’s RFH for abandonment.

I. Background

By letter dated August 29, 2013, the I.G. stated that he proposed to impose a total civil
monetary penalty of $10,000 on Respondent pursuant to 42 U.S.C. § 1320a-8.
Respondent timely filed a RFH with the Departmental Appeals Board, Civil Remedies
Division. In a November 25, 2013 letter, the Director of the Civil Remedies Division
informed the parties that I had scheduled a telephonic prehearing conference for
December 18, 2013. Respondent appeared pro se at the December 18, 2013 prehearing
conference, but indicated that Respondent had hired an attorney. However, neither the
Civil Remedies Division nor the I.G.’s counsel had received notification that an attorney
was entering an appearance to represent Respondent in this matter. Therefore, I informed
2

Respondent that any counsel representing her must file a Notice of Entry of Appearance
with the Civil Remedies Division and provide a copy to counsel for the LG. During the
course of the prehearing conference, the telephone connection with Respondent was lost.
My office attempted to reestablish the conference call with Respondent several times, but
could not reach Respondent again. Thus, in an Order Scheduling Submission of Briefs
and Documents dated December 18, 2013 (December 18 Order), I provided Respondent
and the I.G. with all the information regarding the submission of briefs and deadlines that
I could not finish explaining to Respondent during the prehearing conference.

In the December 18 Order, I provided Respondent with information concerning the
proceedings in this case, and established a schedule for discovery and the submission of
briefs, proposed exhibits, and witness lists. In regard to discovery, the parties had unti
January 7, 2014, to request any documents from the other party and until February 6,
2014, to respond to the request or file a motion for a protective order. December 18
Order §j 7.

The LG. asserts that on January 7, 2014, the I.G. served on Respondent a Request for the
Production of Documents; however, as of February 21, 2014, Respondent had not
responded to the request, contacted counsel for the I.G. to request clarification or explain
when Respondent could provide the requested documents, or filed a motion for a
protective order. On February 21, 2014, the I.G. filed a Motion for Dismissal and sought
dismissal of Respondent’s RFH due to abandonment. See 20 C.F.R. § 498.202(f)(2). In
the alternative, the I.G. requested that I impose “any and all other relief that the Court
deems appropriate.” See id. § 498.214. The Civil Remedies Division has not received
any response from Respondent to the I.G.’s Motion for Dismissal.

IL. Issue
Whether Respondent’s RFH should be dismissed for abandonment.
III. Discussion

Unlike most of the Social Security Administration’s proceedings, which are informal and
nonadversarial, proceedings under 42 U.S.C. § 1320a-8 are adversarial. Compare

20 C.F.R. §§ 404.900(b), 405.1(c), 408.1000(b), 416.1400(b) with 20 C.F.R. §§ 498.203,
498.205, 498.208, 498.215. Discovery is often permitted in adversarial proceedings and
the parties to cases arising under 42 U.S.C. § 1320a-8 may “[c]onduct discovery of
documents” by making “‘a request to another party for production of documents which are
relevant and material to the issues before the [administrative law judge].” Id.

§§ 498.203(a)(3), 498.207(a). Further, a party receiving a discovery request may seek a
protective order from the administrative law judge. Id. § 498.207(d). The administrative
3

law judge may impose sanctions on a party who refuses to provide or permit discovery.
42 U.S.C. § 1320a-8(b)(4)(A); 20 C.F.R. § 498.214.

In the present case, I established February 6, 2014, as the date by which the parties were
to have completed discovery. December 18 Order § 7. However, it is uncontested that
Respondent did not respond to the I.G.’s discovery request and Respondent has not filed
any documents in this case since submitting a RFH.

A ruling on the I.G.’s February 21, 2014 Motion for Dismissal is now ripe. 20 C.F.R.

§ 498.213(c), (d). Respondent has failed to comply with a discovery request made
pursuant to the regulations and my December 18 Order. By itself, this is probably
insufficient to dismiss an RFH. See 42 U.S.C. § 1320a-8(b)(4)(A); 20 C.F.R.

§ 498.214(b)(1). However, Respondent has also failed to respond to the I.G.’s Motion
for Dismissal. An administrative law judge “shall dismiss a hearing request where . . .
[t]he respondent withdraws or abandons respondent’s request for a hearing.” 20 C.F.R.

§ 498.202(f)(2). Because it appears that Respondent has decided to abandon the RFH, I
must dismiss Respondent’s RFH. See Autimece Rhone, ALJ Ruling 2013-20 (HHS CRD
August 27, 2013).

IV. Conclusion
The I.G.’s Motion for Dismissal is granted and Respondent’s RFH is dismissed.

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division

Peter Victor Ayika
Docket No. A-14-34
March 28, 2014

DISMISSAL OF APPEAL

Peter Victor Ayika, Petitioner, appealed the decision of an Administrative Law Judge
sustaining the determination of the Inspector General (I.G.) to exclude Petitioner from
participation in Medicare, Medicaid, and all other federal health care programs for a
period of 30 years. Peter Victor Ayika, DAB CR3031 (2013). The I.G. excluded
Petitioner under sections 1128(a)(1) and (3) of the Social Security Act based on his
conviction in a United States district court for health care fraud.

On February 12, 2014, the United States Court of Appeals for the Fifth Circuit vacated
Petitioner’s conviction for health care fraud. By order dated March 5, 2014, I directed
the parties to comment in writing on how the court’s decision affects Petitioner’s appeal
before the Board.

Petitioner, by motion dated March 11, 2014, moved that his exclusion be dismissed. The
1.G., by letter dated March 18, 2014, notified Petitioner that his exclusion was withdrawn
retroactive to March 20, 2013, the effective date of the exclusion. The I.G., by motion
dated March 20, 2014, moved that the Board dismiss Petitioner’s appeal, and provided a
copy of the March 18, 2014 letter withdrawing the exclusion. In an accompanying
memorandum of law, the LG. stated that because Petitioner’s underlying conviction was
vacated on appeal, the I.G. is required to retroactively reinstate Petitioner, and that his
appeal was thus moot. The I.G. cited 42 C.F.R. § 1001.3005(a)(1), which states that
“Ta]n individual or entity will be reinstated into Medicare, Medicaid and other Federal
health care programs retroactive to the effective date of the exclusion when such
exclusion is based on— ... [a] conviction that is reversed or vacated on appeal[.]”

The regulations authorizing the exclusion of individuals based on convictions including
convictions for health care fraud provide appeal rights to “an individual or entity
excluded” thereunder. 42 C.F.R. § 1001.2007(a); see also 42 C.F.R. §§ 1005.2(a)
(providing the right to a hearing before an ALJ to “a party sanctioned” under part 1001 of
42 C.F.R. (implementing the statutory exclusion authority)), 1005.21 (providing for
review of the ALJ’s decision to the Board). As the I.G. has withdrawn Petitioner’s
exclusion, there is no basis for Petitioner’s appeal, and the appeal is moot.
Accordingly, Petitioner’s appeal is dismissed.

/s/

Sheila Ann Hegy
Presiding Board Member

*This document has been reformatted for publication.
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Peter Victor Ayika,
(O.I. No. 6-07-40257-9),

Petitioner,
v.
The Inspector General.
Docket No. C-13-722
Decision No. CR3031
Date: December 12, 2013
DECISION

This matter is before me on the Inspector General’s (1.G.’s) Motion for Summary
Disposition affirming the I.G.’s determination to exclude Petitioner pro se Peter Victor
Ayika from participation in Medicare, Medicaid, and all other federal health care
programs for a period of 30 years. The I.G.’s Motion and determination to exclude
Petitioner are based on sections 1128(a)(1) and (a)(3) of the Social Security Act (Act), 42
U.S.C. § 1320a-7(a)(1) and (a)(3). The undisputed material facts of this case demonstrate
that the minimum five-year exclusion must be imposed, and that the I.G.’s determination
to enhance that period to 30 years based on proof of the aggravating factors found at 42
C.F.R. § 1001.102(b)(1), (2), (5), (6) and (9) is supported in fact and law. Accordingly, I
grant the I.G.’s Motion for Summary Disposition.

I. Procedural Background

Petitioner was a pharmacist licensed in the State of Texas who owned and operated a
pharmacy called Najerausa International, Inc. d/b/a Continental Pharmacy of El Paso
located in El Paso, Texas. I.G. Ex. 2 at 4. On March 11, 2009, the Texas State Board of
Pharmacy revoked Petitioner’s pharmacist license. I.G. Ex. 8 at 1-2.
On December 1, 2009, the Texas Health and Human Services Commission, Office of the
Inspector General, excluded Petitioner from participation in the Texas Medicaid and
other federally funded health care programs due to the revocation of Petitioner’s
pharmacist license. I.G. Ex. 9 at 1.

On August 24, 2011, the Federal Grand Jury sitting for the United States District Court
for the Western District of Texas, El Paso Division, handed up a three-count Indictment
charging that between October 1, 2004, and March 11, 2009, Petitioner Peter Victor
Ayika did knowingly and willfully execute a scheme to defraud a health care benefit
program by submitting false and fraudulent claims to the Medicaid program, the Federal
Employees Health Benefits program and various other health care insurers. The
Indictment charged Petitioner with Health Care Fraud, in violation of 18 U.S.C. § 1347,
Mail Fraud, in violation of 18 U.S.C. § 1341 and Wire Fraud, in violation of 18 U.S.C.
§ 1343, for submitting false and fraudulent claims to the aforementioned health care
programs and insurers for medications and other pharmaceuticals that were never
distributed or dispensed to the insured. LG. Ex. 4.

On October 19, 2011, in a separate proceeding, Petitioner was found guilty by jury
verdict of one count of processing with intent to distribute hydrocodone by a practitioner
and one count of distributing a listed chemical with knowledge, or reason to know, of its
wrongful use, both counts in violation of 21 U.S.C. § 841. LG. Ex. 10 at 1. On June 12,
2012, the United States District Court for the Western District of Texas, El Paso
Division, sentenced Petitioner to 60 months of incarceration for Count One to be served
concurrently with 170 months of incarceration for Count Two, followed by three years of
supervised release. 1.G. Ex. 10 at 2-3.

Petitioner and his counsel negotiated a Plea Agreement with prosecutors in the health
care fraud case. By the terms of that Agreement, signed by Petitioner on March 13, 2012,
Petitioner agreed to plead guilty to the August 24, 2011 Indictment’s first count, Health
Care Fraud, in violation of 18 U.S.C. § 1347. Included with the Plea Agreement,
incorporated by reference, was Petitioner’s factual recitation of his scheme to commit
health care fraud. Petitioner specifically acknowledged that his criminal activity began
on or about August 1, 2006, and continued until March 11, 2009. I.G. Ex. 5.

On May 2, 2012, in the United States District Court for the Western District of Texas, El
Paso Division, Petitioner pleaded guilty to Count One of the Indictment, Health Care
Fraud, in violation of 18 U.S.C. § 1347. The Court dismissed the other two counts listed
in the Indictment on motion by the prosecutor. I.G. Ex. 7 at 1. On September 11, 2012,
Petitioner was sentenced to 63 months of incarceration followed by 24 months of
supervised release. Petitioner was also ordered to pay $2,498,586.86 in restitution. I.G.
Ex. 7 at 2-3, 7.
On February 28, 2013, the LG. wrote to Petitioner giving notice of his exclusion for a
period of 30 years pursuant to the terms of sections 1128(a)(1) and (a)(3) of the Act. The
1.G.’s letter told Petitioner that the mandatory minimum five-year period of exclusion
was to be enhanced by an additional 25 years based on the presence of five aggravating
factors. I.G. Ex. 1.

Acting pro se, Petitioner timely requested a hearing by letter (Req. for Hr’g.) dated April
8, 2013, seeking review of the I.G.’s determination. This letter was received by the Civil
Remedies Division on April 24, 2013. In order to discuss the issues presented by this
case and procedures for addressing those issues, I convened a telephonic prehearing
conference on June 6, 2013, pursuant to 42 C.F.R. § 1005.6. By Order of June 6, 2013, I
established those procedures and a schedule for the submission of documents and briefs.

On July 30, 2013, the Civil Remedies Division received Petitioner’s motion for extension
of time to serve and file his brief dated July 19, 2013. By Order of August 1, 2013, I
granted that motion and amended the schedule for submission of documents and briefs.

On August 27, 2013, the Civil Remedies Division received Petitioner’s August 19, 2013
pleading entitled “Motion to Dismiss Imposed Exclusion on Jurisdictional Grounds.” I
denied Petitioner’s motion (P. Mot. to Dismiss) by Order dated August 27, 2013.

By Order dated October 29, 2013, I closed the record in this case for purposes of 42
CFR. § 1005.20(c) effective October 25, 2013.

The evidentiary record on which I decide the issues before me contains 13 exhibits, all
proffered by the I.G. and marked I.G. Exs. 1-13. In the absence of objection, I have
admitted all proffered exhibits as marked.

II. Issues

The legal issues before me are limited to those set out at 42 C.F.R. § 1001.2007(a)(1). In
the context of this record, they are:

a. Whether the LG. has a basis for excluding Petitioner from participating
in Medicare, Medicaid, and all other federal health care programs pursuant
to sections 1128(a)(1) and (a)(3) of the Act; and

b. Whether the 30-year length of the proposed period of exclusion is
unreasonable.

For all of the reason set out below, the first issue is resolved in favor of the I.G.’s
position. Petitioner’s predicate conviction is established in the record before me and both
section 1128(a)(1) and (a)(3) of the Act mandate Petitioner’s exclusion. A five-year
period of exclusion is the minimum period established by section 1128(c)(3)(B) of the
Act, 42 U.S.C. § 1320a-7(c)(3)(B). The enhancement of that period to 30 years is
authorized and supported because the five aggravating factors relied on by the I.G. and
found at 42 C.F.R. § 1001.102(b)(1), (2), (5), (6) and (9) are established in the record and
the 30-year period is within a reasonable range. Petitioner has demonstrated no
mitigating factors that would reduce the proposed period of his exclusion.

Ill. Controlling Statutes and Regulations

Section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1), requires the exclusion from
participation in Medicare, Medicaid, and all other federal health care programs of any
individual or entity convicted of a criminal offense related to the delivery of an item or
service under Title XVIII of the Act (the Medicare program) or any state health care
program (the Medicaid program). The terms of section 1128(a)(1) of the Act are restated
in similar language at 42 C.F.R. § 1001.101(a).

Section 1128(a)(3) of the Act, 42 U.S.C. § 1320a-7(a)(3), requires the exclusion from
participation in Medicare, Medicaid, and all other federal health care programs of any
individual or entity convicted, under federal or state law, of a felony offense relating to
fraud, theft, embezzlement, breach of fiduciary responsibility , or other financial
misconduct which occurred after August 21, 1996, in connection with the delivery of a
ealth care item or service. The terms of section 1128(a)(3) of the Act are restated in
similar language at 42 C.F.R. § 1001.101(c).

The Act defines “conviction” as including those circumstances “when a judgment of
conviction has been entered against the individual . . . by a Federal . . . court, regardless
of... whether the judgment of conviction or other record relating to criminal conduct has
been expunged,” section 1128(i)(1) of the Act; “when there has been a finding of guilt
against the individual . . . by a Federal . . . court,” section 1128(i)(2) of the Act; “when a
plea of guilty or nolo contendere by the individual . . . has been accepted by a Federal .. .
court,” section 1128(i)(3) of the Act; or “when the individual . . . has entered into
participation ina... deferred adjudication ... program where judgment of conviction
has been withheld,” section 1128(i)(4) of the Act. 42 U.S.C. §§ 1320a-7(i)(1)-(4). These
definitions are repeated at 42 C.F.R. § 1001.2.

An exclusion based on section 1128(a)(1) or (a)(3) of the Act is mandatory and the LG.
must impose it for a minimum period of five years. Act § 1128(c)(3)(B), 42 U.S.C.

§ 1320a-7(c)(3)(B). The regulatory language of 42 C.F.R. § 1001.102(a) affirms the
statutory provision.

The mandatory minimum period of exclusion may be enhanced in some limited
circumstances, but only on the L.G.’s proof of certain narrowly-defined aggravating
factors listed at 42 C.F.R. § 1001.102(b). In this case, the I.G. relies on five aggravating
factors set out at 42 C.F.R. § 1001.102(b)(1), (2), (5), (6) and (9) to enhance the period of
Petitioner’s exclusion to 30 years. The aggravating factor set out at 42 C.F.R.

§ 1001.102(b)(1) is present when “[t]he acts resulting in conviction, or similar acts, that
caused or were intended to cause, a financial loss to a [g]overnment program or to one or
more entities of $5,000 or more.” The aggravating factor set out at 42 C.F.R.

§ 1001.102(b)(2) is present when “acts that resulted in the conviction, or similar acts,
were committed over a period of one year or more.” The aggravating factor set out at 42
C.F.R. § 1001.102(b)(5) is present when the “sentence imposed by the court included
incarceration.” The aggravating factor set out at 42 C.F.R. § 1001.102(b)(6) is present
when “[t]he convicted individual or entity has a prior criminal, civil or administrative
sanction record.” The aggravating factor set out at 42 C.F.R. § 1001.102(b)(9) is present
when “the individual or entity was convicted of other offenses besides those which
formed the basis for the exclusion, or has been the subject of any other adverse action by
any Federal, State or local government agency or board, if the adverse action is based on
the same set of circumstances that serves as the basis for imposition of the exclusion.”

In cases when the I.G. proposes to enhance the period of exclusion by relying on one or
more aggravating factors, a petitioner may attempt to limit or nullify the proposed
enhancement through proof of certain mitigating factors, carefully defined at 42 C.F.R.

§ 1001.102(c)(1)-(3). The petitioner who claims the mitigating factor or factors bears the
burden of proving any mitigating factors claimed. 42 C.F.R. § 1005.15(b)(1).

IV. Findings and Conclusions

Based on the undisputed material facts in the record before me, I find and conclude as
follows:

1. On May 2, 2012, as noted in the September 11, 2012 Judgment in a Criminal Case, in
the United States District Court for the Western District of Texas, El Paso Division,
Petitioner Peter Victor Ayika pleaded guilty to one count of Health Care Fraud, in
violation of 18 U.S.C. § 1347. I.G. Ex. 7.

2. On September 11, 2012, a finding of guilt and a judgment of conviction based on that
plea were entered against Petitioner. The District Court sentenced Petitioner to serve 63
months of imprisonment; to pay restitution in the amount of $2,498,586.86; and after his
release from imprisonment, to serve two years of supervised release. I.G. Ex. 7.

3. The finding of guilt and judgment of conviction based on Petitioner’s accepted guilty
plea described above in Findings 1 and 2 constitute a “conviction” within the meaning of
sections 1128(a)(1) and 1128(i)(1), (2) and (3) of the Act, and 42 C.F.R. § 1001.2.

4. A nexus and a common-sense connection exist between the criminal offenses of which
Petitioner was convicted, as noted above in Findings 1, 2 and 3, and the delivery of an

item or service under the Medicare and Medicaid programs. I.G. Exs. 5, 7; Berton Siegel,
D.O., DAB No. 1467 (1994).

5. By reason of Petitioner’s conviction, a basis exists for the 1.G.’s exercise of authority,
pursuant to section 1128(a)(1) and (a)(3) of the Act, 42 U.S.C. § 1320a-7(a)(1) and
(a)(3), to exclude him from participation in Medicare, Medicaid, and all other federal
health care programs.

6. Because the acts resulting in Petitioner’s conviction caused a financial loss to a
government program and other entities of over $5,000, the aggravating factor set out at
42 C.F.R. § 1001.102(b)(1) is present.

7. Because the acts resulting in Petitioner’s conviction were committed over a period of
one year or more, the aggravating factor set out at 42 C.F.R. § 1001.102(b)(2) is present.

8. Because Petitioner was sentenced to a term of incarceration, the aggravating factor set
out at 42 C.F.R. § 1001.102(b)(5) is present.

9. Because Petitioner has a prior administrative sanction record, the aggravating factor
set out at 42 C.F.R. § 1001.102(b)(6) is present.

10. Because Petitioner was convicted of other offenses besides those which formed the
basis for his exclusion, the aggravating factor set out at 42 C.F.R. § 1001.102(b)(9) is
present.

11. None of the mitigating factors set out at 42 C.F.R. § 1001.102(c)(1)-(3) is present.

12. The I.G.’s exclusion of Petitioner for an enhanced period of 30 years is supported by
fact and law and is within a reasonable range. See Findings 1-11 above.

13. There are no disputed issues of material fact and summary disposition is appropriate
in this matter. Michael J. Rosen, M.D., DAB No. 2096 (2007); Thelma Walley, DAB No.
1367 (1992); 42 C.F.R. § 1005.4(b)(12).

V. Discussion

The parties do not debate the Secretary’s authority to exclude Petitioner from
participation in Medicare, Medicaid, and all other federal health care programs pursuant
to section 1128 of the Act. However, Petitioner repeatedly challenges the I.G.’s authority
— as distinct from that of the Secretary herself — to impose such an exclusion on him.
Petitioner argues that “[t]he Secretary has no power to confer power to the Inspector
General in undertaking statutory exclusion proceeding or judicial proceeding. The power
to award process is conferred by Congress. Rice v. Ames, 180 U.S. 371 (1905).” P. Br.
at 8; P. Mot. to Dismiss at 2; P. Rep. Br. at 7. As I noted in my August 27, 2013 Order
denying Petitioner’s motion, and notwithstanding Petitioner’s repeated insistence to the
contrary, that proposition is directly refuted by the well-settled and longstanding
principles announced by the Departmental Appeals Board (Board) in, inter alia, Jack W.
Greene, DAB No. 1078 (1989); Vincent Baratta, M.D., DAB No. 1172 (1990); Joyce
Faye Hughey, DAB No. 1221 (1991); and Michael Travers, M.D., DAB No. 1237
(1991). The latter three decisions are based in turn on 48 Fed. Reg. 21,662 (May 13,
1983). As I wrote in my August 27, 2013 Order, Petitioner’s argument on this point is
frivolous and warrants no further discussion here. In addition, under 42 C.F.R.

§ 1001.2007(a)(1), an excluded individual or entity may file a request for a hearing
before an Administrative Law Judge only on the issues of whether the basis for the
exclusion exists and whether the length of the exclusion is unreasonable. Accordingly,
these issues are addressed below.

1. Petitioner’s exclusion is mandated by section 1128(a)(1) of the Act because
Petitioner was convicted of a criminal offense related to the delivery of an item
or service under a state health care program (the Medicaid program).

The two essential elements necessary to support an exclusion based on section 1128(a)(1)
of the Acts are: (1) the individual to be excluded must have been convicted of a criminal
offense; and (2) the criminal offense must have been related to the delivery of an item or
service under Title XVIII of the Act (the Medicare program) or any state health care
program (the Medicaid program). Tamara Brown, DAB No. 2195 (2008); Thelma
Walley, DAB No. 1367; Boris Lipovsky, M.D., DAB No. 1363 (1992); Lyle Kai, R.Ph.,
DAB CR1262 (2004), rev'd on other grounds, DAB No. 1979 (2005). See Russell Mark
Posner, DAB No. 2033, at 5-6 (2006).

The United States District Court’s records clearly show that the first issue before me is
resolved in the I.G.’s favor. As noted in the September 11, 2012 Judgment in a Criminal
Case, I.G. Ex. 7, Petitioner pleaded guilty to the criminal offense of Health Care Fraud, in
violation of 18 U.S.C. § 1347, on May 2, 2012. Petitioner’s guilty plea and the District
Court’s subsequent actions constitute a conviction within the meaning of sections
1128(a)(1) and 1128(4)(1), (2)and (3) of the Act. Thus, the first essential element is
established by the record.

The evidence also establishes that Petitioner’s conviction satisfies the second essential
element since it is related to the delivery of an item or service under the Medicaid
program. In his Plea Agreement, Petitioner admitted that he electronically submitted
materially false claims for reimbursement from Medicaid and various other insurance
providers between August 1, 2006, and March 11, 2009. Petitioner admits to using
patient insurance information to bill Medicaid and other insurance providers for
reimbursement for prescription drugs and other pharmaceuticals that were never provided
to, or on behalf of, patients or customers. I.G. Ex. 5 at 11-17. The submission of false

claims to the Medicaid or Medicare programs has consistently been held to be a program-
related crime within the reach of section 1128(a)(1). Douglas Schram, R.Ph., DAB No.
1372 (1992); Dewayne Franzen, DAB No. 1165 (1990); Jack W. Greene, DAB No. 1078
(1989), aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835 (E.D. Tenn. 1990). Thus, the
second essential element is also established by the record.

In his submissions in this case, Petitioner does not challenge these assertions and, in fact,
concedes that there is a factual basis for his exclusion under the Act. Petitioner admits
that the Secretary has “the factual basis to exclude Petitioner from participation in any
Federal health care programs because of his conviction.” P. Br. at 6. Petitioner also
begins his arguments by stating “[a]lthough the Secretary has a basis for the imposition of
the exclusion sanction....” P. Br. at 7. In the absence of a challenge from Petitioner
and based on the record before me, I find that the facts fully establish the evidentiary
foundation necessary for Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act.

The LG. also cites a separate and independent legal basis for Petitioner’s exclusion,
section 1128(a)(3) of the Act. The four essential elements necessary to support an
exclusion based on section 1128(a)(3) of the Act are: (1) the individual to be excluded
must have been convicted of a felony offense; (2) the felony offense must have been
based on conduct relating to fraud, theft, embezzlement, breach of fiduciary
responsibility, or financial misconduct; (3) the felony offense must have been for conduct
in connection with the delivery of a health care item or service or the felony offense must
have been with respect to any act or omission in a health care program operated by or
financed in whole or in part by any federal, state, or local government agency; and (4) the
felonious conduct must have occurred after August 21, 1996. Andrew D. Goddard, DAB
No. 2032 (2006); Kenneth M. Behr, DAB No. 1997 (2005); Erik D. DeSimone, R.Ph.,
DAB No. 1932 (2004); Jeremy Robinson, DAB No. 1905 (2004); Breton Lee Morgan,
M.D., DAB CR1913 (2009); Morganna Elizabeth Allen, DAB CR1479 (2006); Theresa
A. Bass, DAB CR1397 (2006); Michael Patrick Fryman, DAB CR1261 (2004); Golden
G. Higgwe, D.P.M., DAB CR1229 (2004); Thomas A. Oswald, R.Ph., DAB CR1216
(2004); Katherine Marie Nielson, DAB CR1181 (2004).

While the record before me also supports an exclusion based on section 1128(a)(3) of the
Act, no extended discussion of this legal basis is necessary since the basis for Petitioner’s
exclusion has already been established pursuant to section 1128(a)(1) of the Act.

2. Based on the aggravating factors in this case and the absence of any mitigating
factors, the 30-year exclusion falls within a reasonable range.

The LG. relies on five aggravating factors to support Petitioner’s proposed 30-year
exclusion period. The aggravating factor set out at 42 C.F.R. § 1001.102(b)(1) is present
when there is a showing of financial loss to a government program or certain other
entities of more than $5,000. This factor has been proven here. The District Court
records show that Petitioner was ordered to pay restitution in the amount of
$2,498,586.86 to the Texas Medicaid program and various other entities. I.G. Ex. 7 at 7.
The actual amount of restitution ordered is considered a reasonable measure of program
losses. See Jason Holladay, M.D., DAB No. 1855 (2002). Petitioner’s crimes caused the
Texas Medicaid program and other insurance entities financial losses almost 500 times
the $5,000 threshold required for aggravation. The Board has characterized amounts
substantially greater than the statutory standard as “an exceptionally aggravating factor”
entitled to significant weight. Jeremy Robinson, DAB No. 1905 (2004); Donald A.
Burstein, Ph.D., DAB No. 1865 (2003). The extensive loss to the programs targeted by
Petitioner’s crimes justifies a significant increase in the period of exclusion.

The aggravating factor set out at 42 C.F.R. § 1001.102(b)(2) is present when “[t]he acts
that resulted in the conviction, or similar acts, were committed over a period of one year
or more.” Count One of the Indictment, to which Petitioner pleaded guilty, describes the
time span of Petitioner’s crimes from October 1, 2004, through March 11, 2009. LG. Ex.
4 at 1. The written factual basis, incorporated by reference into the Plea Agreement and
signed by Petitioner, sets the time span of Petitioner’s crimes from August 1, 2006,
through March 11, 2009. LG. Ex. 5 at 16-17. Regardless of this discrepancy, Petitioner’s
factual basis admits that his crimes spanned much more than the threshold one year
period required under this aggravating factor and much more than just a “short-lived
lapse of integrity” to which the Board alluded in Burstein, DAB No. 1865, at 8. The
duration of Petitioner’s illegal conduct shows the need to protect federally-funded
programs from Petitioner for a substantial period of time and supports the enhancement
of the period of exclusion.

The aggravating factor set out at 42 C.F.R. § 1001.102(b)(5) is present when “[t]he
sentence imposed by the court included incarceration.” In this case, Petitioner was
sentenced to prison for 63 months. I.G. Ex. 7 at 2. Thus, this aggravating factor is
present. It is significant to note that Petitioner is serving his lengthy sentence in a federal
correctional institution and not in some less-severe setting; that fact, alone, is evidence of
the District Court’s serious view of Petitioner’s crimes. As I recently wrote in Raymond
Lamont Shoemaker, DAB CR2993, at 16-19 (2013), the length of Petitioner’s prison term
has intrinsic importance to my evaluation of the weight to be given this factor, and I have
no difficulty in concluding that the length of Petitioner’s incarceration is sufficient to
justify an increase in the period of exclusion.

The aggravating factor set out at 42 C.F.R. § 1001.102(b)(6) is present when “[t]he
convicted individual or entity has a prior criminal, civil or administrative sanction
record.” Here, the Texas State Board of Pharmacy revoked Petitioner’s pharmacist
license on March 11, 2009. I.G. Ex. 8. Petitioner was indicted by the Federal Grand Jury
sitting for the United States District Court for the Western District of Texas on August
24, 2011, 1.G. Ex. 4, and the District Court accepted Petitioner’s guilty plea on May 2,
2012. LG. Ex. 7 at 1. It is this conviction that serves as the basis for this exclusion
10

action. I.G. Ex. | at 1. Therefore, the decision of the Texas State Board of Pharmacy to
revoke Petitioner’s pharmacist license is an administrative sanction that occurred prior to
Petitioner’s conviction. Additionally, on December 1, 2009, in response to Petitioner’s
loss of his pharmacist license, the Texas Health and Human Services Commission Office
of the Inspector General excluded Petitioner from the Texas Medicaid and other federally
funded health care programs. I.G. Ex. 9 at 1. This administrative sanction also occurred
prior to Petitioner’s conviction. Thus, this aggravating factor is present and justifies an
increase in the exclusion period.

The aggravating factor set out in 42 C.F.R. § 1001.102(b)(9) is present when an
“individual or entity was convicted of other offenses besides those which formed the
basis for the exclusion... .” On October 19, 2011, Petitioner was found guilty by jury
verdict of one count of processing with intent to distribute hydrocodone by a practitioner,
in violation of 21 U.S.C. § 841, and one count of distributing a listed chemical with
nowledge, or reason to know of its wrongful intended use, also in violation of 21 U.S.C.
§ 841. 1G. Ex. 10 at 1. Neither of these criminal offenses formed the basis for
Petitioner’s exclusion. Petitioner’s exclusion action is based on his conviction for Health
Care Fraud, in violation of 18 U.S.C. § 1347. I.G. Ex. 1. Transcripts from Petitioner’s
jury trial document witness testimony describing how Petitioner provided the witness and
others hydrocodone without a valid prescription. IG. Ex. 11 at 22-31. The transcripts
also document a Drug Enforcement Agency agent’s testimony that Petitioner provided
im with large quantities of pseudoephedrine, and that Petitioner knew of the agent’s
purported intent to use the pseudoephedrine in the manufacture of methamphetamine.
1.G. Ex. 12 at 37, 60-68. The facts clearly show that Petitioner used his pharmacist
license in an egregious manner to perpetrate criminal acts for his own personal financial
gain. This aggravating factor is not only present, but Petitioner’s conviction for these
criminal offenses demonstrates a persistence in criminal conduct exploiting his
ealthcare-related professional position that further supports the I.G.’s decision to
increase Petitioner’s exclusion well beyond the five-year minimum.

Petitioner does not deny the existence of these aggravating factors. In fact, Petitioner
explicitly concedes the existence of the five aggravating factors. P. Br. at 6, 17. Instead,
Petitioner claims that his ““63-month prison sentence and $2,529,945.81 in restitution are
mitigating circumstances requiring a shorter period of exclusion.” P. Br. at 16; P. Rep.
Br. at 14. The regulations consider only three factors to be mitigating: (1) that a
petitioner was convicted of three or fewer misdemeanor offenses and the resulting
financial loss to the program was less than $1, 500; (2) that the record in the criminal
proceedings demonstrates that a petitioner had a mental, physical, or emotional condition
that reduced his culpability; and (3) that a petitioner’s cooperation with federal or state
officials resulted in others being convicted or excluded, or additional cases being
investigated, or a civil money penalty being imposed. 42 C.F.R. § 1001.102(c). The
Board has characterized a mitigating factor as being “in the nature of an affirmative
defense” and has ruled that Petitioner has the burden of proving any mitigating factor by

11

a preponderance of the evidence. Barry D. Garfinkel, M.D., DAB No. 1572, at 8 (1996).
In the present case, Petitioner failed to allege the elements of any of the three mitigating
factors that may be considered when the I.G. sets forth aggravating factors to justify an
exclusion period longer than five years.

Petitioner argues there is a “lack of mathematical objectivity method in the calculation”
of his exclusion period and that while “there are five aggravating factors that govern how
the exclusion period shall be determined[,] [t]he calculation showing how these five
factors, when computed, sum up to equate 30 years is not clear to any reasonable person.”
P Br. at 17. Petitioner goes on to argue that since the “aggravating factors are not
assigned numerical weight or numbers . . . the weight of the aggravating factors [is]
arbitrarily assigned.” P. Br. at 17. However, the Board has held that “the assessment of
aggravating and mitigating factors is qualitative, focusing on the circumstances of the
case at hand, rather than quantitative or a matter of mathematical formulas ....” Sushil
Aniruddh Sheth, M.D., DAB No. 2491 at 8 (2012). In addition, the Secretary has stated
that “[t]he weight accorded to each mitigating and aggravating factor cannot be
established according to a rigid formula, but must be determined in the context of the
particular case at issue.” 57 Fed. Reg. 3315 (January 29, 1992). The Board has
previously declared that “‘a holding that the exclusion period chosen by the I.G. was
unreasonable must be based on an analysis of those [aggravating] factors, considering the
particular circumstances and according them appropriate weight.” Robinson, DAB No.
1905 at 7 (2004)(emphasis added).

Additionally, Petitioner argues that “[t]he statutory sanction of the exclusion as applied to
Petitioner, is punitive and not remedial” and that if the purpose of his exclusion is
punitive then it violates the “Double Jeopardy Clause.” P. Br. at 12. However, the Board
as held that “[i]t is well-established that section 1128 exclusions are remedial in nature,
rather than punitive, and are intended to protect federally-funded health care programs
from untrustworthy individuals.” Burstein, DAB No. 1865 at 12 (2003), citing Patel v.
Thompson, 319 F.3d 1317 (11th Cir. 2003), cert denied, 123 S.Ct. 2652 (2005);
Mannocchio v. Kusserow, 961 F.2d 1539, 1543 (11th Cir. 1992). In the present case, I
find that Petitioner’s crimes have shown him to be particularly untrustworthy, and that
the I.G.’s assessment that federally-funded health care programs should be protected

from Petitioner for a period of 30 years is completely reasonable.

Petitioner also appears to argue that the period of exclusion in his case should be
governed by “[s]ection 1320a-7(c)(3)(D)” which mandates a three-year exclusion for
offenses “under paragraph (1), (2) or (3) of subsection (b).” P. Br. at 16. When this
statement is cross-referenced with Petitioner’s April 8, 2013 Request for Hearing, it
appears that Petitioner is arguing that his exclusion should fall under section
1128(b)(1)(B) of the Act. Req. for Hr’g. at 4. Section 1128(b) of the Act states the
following:
12

Permissive Exclusion.—The Secretary may exclude the following individuals and

entities from participation in any Federal health care program . . .

(1) Conviction relating to fraud.—Any individual or entity that has been convicted
for an offense . . . under Federal or State law—

(B) of a criminal offense relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct with respect to any act
or omission in a program (other than a health care program) operated or
financed in whole or in part by any Federal, State or local government agency.
(emphasis added)

This provision of the Act governs permissive exclusions for convictions related to fraud
for criminal offenses relating to government programs other than health care programs.
Petitioner’s exclusion is based on his conviction for health care fraud where Petitioner
fraudulently billed the Texas Medicaid program, a government health care program, and
other health care insurance programs. As detailed above, the I.G. has proven that a legal
basis exists to exclude Petitioner under section 1128(a)(1) of the Act. And once a
conviction is shown to be within the ambit of section 1128(a), the mandatory operation of
that section bars any petitioner, including this one, from demanding that other more
lenient, more discretionary, or more favorable exclusionary provisions of sections
1128(b) should be applied instead. Even in situations where the underlying conviction
could plausibly be argued to fall within section 1128(a) and one or more of the
permissive exclusions or three-year mandatory minimum periods of sections 1128(b)(1)-
(15), the rule is clear: if section 1128(a) fits, then the mandatory exclusion and at least the
mandatory minimum period prescribed by section 1128(a) must be imposed. Neither the
1.G. nor the Administrative Law Judge may choose to proceed otherwise. Stacy Ann
Battle, D.D.S., DAB No. 1843 (2002); Tarvinder Singh, D.D.S., DAB No. 1752 (2000);
Lorna Fay Gardner, DAB No. 1733; Douglas Schram, R.Ph., DAB No. 1372 (1992);
Niranjana B. Parikh, M.D., DAB No. 1334 (1992); David S. Muransky, D.C., DAB No.
1227 (1991); Leon Brown, M.D., DAB No. 1208 (1990); Napoleon S. Maminta, M.D.,
DAB No. 1135 (1990); Charles W. Wheeler, DAB No. 1123 (1990); Jack W. Greene,
DAB No. 1078 , aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835.

I note that Petitioner appears here pro se. Because of that, I have been guided by the
Board’s reminders that pro se litigants should be offered “‘some extra measure of
consideration” in developing their records and their cases. Louis Mathews, DAB No.
1574 (1996); Edward J. Petrus, Jr., M.D., et al., DAB No. 1264 (1991). I have searched
all of Petitioner’s pleadings for any arguments or contentions that might raise a valid,
relevant defense to the I.G.’s Motion, but have found nothing that could be so construed.

Resolution of a case by summary disposition is fitting when settled law can be applied to
undisputed material facts. Michael J. Rosen, M.D., DAB No. 2096; Thelma Walley,
13

DAB No. 1367. Summary disposition is authorized by the terms of 42 C.F.R.

§ 1005.4(b)(12). This forum looks to FED. R. CIV. P. 56 for guidance in applying that
regulation. Robert C. Greenwood, DAB No. 1423 (1993). The material facts in this case
are undisputed and unambiguous. They support summary disposition as a matter of
settled law. This Decision issues accordingly.

VI. Conclusion

For the reasons set forth above, the I.G.’s Motion for Summary Disposition should be,
and it is, GRANTED. The I.G.’s exclusion of Petitioner Peter Victor Ayika from
participation in Medicare, Medicaid, and all other federal health care programs pursuant
to the terms of section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1) is SUSTAINED.
Based on the provisions of 42 C.F.R. § 1001.102(b)(1), (2), (5), (6) and (9), the period of
Petitioner’s exclusion is 30 years.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Texas Outpatient Services, P.A.,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-1353
Decision No. CR3200

Date: April 11, 2014

DECISION

Petitioner, Texas Outpatient Services, P.A. (TOS), appealed the effective date
determination that it was not eligible for enrollment in the Medicare program as a
supplier earlier than February 22, 2013 and could not submit retrospective claims for
payment earlier than January 23, 2013. The Centers for Medicare & Medicaid Services
(CMS) moved for summary judgment. It is undisputed that the earliest enrollment
application, which was subsequently approved, was received by CMS’s contractor on
February 22, 2013, so I find that Petitioner’s effective date of enrollment was February
22, 2013, with a retrospective billing period starting January 23, 2013. I do not have
jurisdiction to consider the rejection of Petitioner’s December 2012 enrollment
application. I therefore grant summary judgment in favor of CMS.

Background and Procedural History

The material facts in this case are undisputed. On August 31, 2012, a newly formed
entity, Evolution Health, bought the assets of the recently bankrupt American Physician
HouseCalls (APH). Evolution Health owns and manages TOS, a group practice. TOS
legally formed on September 6, 2012 and continued to provide services to Medicare
beneficiaries previously served by APH. TOS created a Medicare National Provider
Identifier (NPI) number on October 5, 2012. In December 2012, TOS submitted a CMS-
855B enrollment application to enroll the group practice into Medicare. On January 14,
2013, Novitas Solutions (Novitas), a Medicare contractor, requested that TOS provide
additional information within 30 days consisting of the reassignment applications for all
group members reassigning themselves to TOS and account information not previously
attached to the Electronic Funds Transfer Authorization Agreement form. CMS Ex. 2.
The January 14, 2013 letter stated that “Failure to provide all requested information will
cause the application to be rejected.” CMS Ex. 2. Petitioner did not timely submit the
requested additional information, and on February 13, 2013, Novitas rejected Petitioner’s
December 2012 Medicare enrollment application. CMS Ex. 5.

Petitioner electronically submitted a second CMS-855B enrollment application on
February 22, 2013 for the group practice. CMS Ex. 4. On May 28, 2013, Novitas
approved Petitioner’s group practice application with an effective date of February 22,
2013 and a retrospective billing date of January 23, 2013. CMS Ex. 5. Petitioner
requested reconsideration of this determination. CMS Ex. 6. Novitas issued an
unfavorable reconsideration decision on July 31, 2013. CMS Ex. 7.

Petitioner filed a request for hearing (RFH) on September 13, 2013. Following the
issuance of my Acknowledgement and Pre-Hearing Order dated September 25, 2013,
CMS moved for summary judgment and filed a supporting brief (CMS Br.) with seven
proposed exhibits (CMS Exs. 1-7). Petitioner submitted a pre-hearing brief (P. Br.) with
five proposed exhibits (P. Exs. 1-5) and three unmarked affidavits that appear in the
electronic case file as document numbers 15, 16, and 16a. In the absence of any
objections, I admit CMS Exs. 1-7, P. Exs. 1-5, and Petitioner’s affidavits into the record.

Applicable Law

Suppliers, such as a group practice like Petitioner, must enroll in the Medicare program to
“receive payment for covered Medicare items or services from either Medicare (in the
case of an assigned claim) or a Medicare beneficiary (in the case of an unassigned claim).
...” 42 C.E.R. § 424.505. The regulations at 42 C.F.R. Part 424, subpart P, establish
requirements for a supplier to enroll in the Medicare program. 42 C.F.R. § 424.510 et
seq.; see also Social Security Act (Act) § 1866(j)(1)(A) (authorizing the Secretary of the
U.S. Department of Health and Human Services to establish by regulation the process for
enrolling providers and suppliers in the Medicare program). The effective date of
enrollment for physicians, 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.” 42 C.F.R. § 424.520(d).
The effective date of enrollment is an “initial determination” that a supplier may appeal
by requesting reconsideration from the contractor within 60 days of receipt of the initial
determination notice. 42 C.F.R. §§ 498.5(J)(1), 498.3(b)(15), 498.22(a). Any supplier
dissatisfied with a reconsidered determination may file a request for hearing within 60
days of receipt of the reconsidered determination notice. 42 C.F.R. §§ 498.5(/)(2);
498.40(a)(2).

Issues
This case presents the following issues:
1. Whether summary judgment is appropriate; and

2. Whether CMS or its contractor correctly established the effective date for
Petitioner’s group practice enrollment in the Medicare program.

Findings of Fact and Conclusions of Law
I. Summary judgment is appropriate.

Summary judgment is appropriate if “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.”
Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).
The moving party must show that there are no genuine issues of material fact requiring an
evidentiary hearing and that it is entitled to judgment as a matter of law. Jd. If the
moving party meets its initial burden, the non-moving party must “come forward with
“specific facts showing that there is a genuine issue for trial... .”” Matsushita Elec.
Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986). “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.”
Senior Rehab., DAB No. 2300, at 3. To determine whether there are genuine issues of
material fact for hearing, an ALJ must view the evidence in the light most favorable to
the non-moving party, drawing all reasonable inferences in that party’s favor. Jd. As
discussed more specifically below, this case presents no genuine disputes of material fact
and therefore may be decided as a matter of law.

2. Novitas rejected Petitioner’s December 2012 enrollment application because
Petitioner did not respond to Novitas’s request for additional information
within 30 days.

CMS may reject a provider’s or supplier’s enrollment application if a prospective
provider or supplier fails to furnish complete information on its enrollment application
within 30 calendar days from the date that the contractor requests the missing
information. 42 C.F.R. § 424.525(a). An applicant does not have appeal rights to
challenge a rejected application. 42 C.F.R. § 424.525(d). Rather, the applicant must
resubmit a new enrollment application. 42 C.F.R. § 424.525(c). CMS may extend the
30-day period provided for the applicant to comply before rejecting an application if
CMS determines that the applicant is actively working with CMS to resolve any
outstanding issues. 42 C.F.R. § 424.525(b). But this determination is purely a
discretionary matter and also is not subject to appeal.

It is undisputed that TOS filed its first CMS-855B enrollment application in December
2012. CMS Ex. 1. On January 14, 2013, Novitas requested that TOS provide additional
information within 30 days. The additional information requested was the reassignment
applications for all group members reassigning benefits to TOS and account information
not previously attached to the Electronic Funds Transfer Authorization Agreement form.
CMS Ex. 2. The January 14, 2013 letter stated that “Failure to provide all requested
information will cause the application to be rejected.” CMS Ex. 2. After failing to
receive a response to its request, Novitas left a message with Petitioner regarding the
requested information on February 4, 2013. CMS Ex. 7, at 2. Despite this, Petitioner did
not timely submit the requested additional information, and on February 13, 2013, 30
days after the January 14" letter, Novitas rejected Petitioner’s December 2012 Medicare
enrollment application. CMS Ex. 5.

Petitioner relies on 42 C.F.R. § 424.525(b) to argue that it should have been allowed
more than 30 days to supply the additional information requested due to the complexities
of the former group’s bankruptcy proceedings. P. Br. at 3. Petitioner’s argument is
unavailing. Extending the 30-day period is discretionary. It is up to CMS or its
contractor to determine when “the prospective provider or supplier is actively working
with CMS to resolve any outstanding issues.” I have no authority to review CMS’s
discretion. Even if I did, there is no evidence that Petitioner was actively working with
Novitas. Petitioner provides a timeline of steps it took to obtain Medicare billing
privileges after its formation. P. Ex. 2. The timeline starts with steps Petitioner took in
September 2012 and ends with Petitioner’s last step taken on December 20, 2012. P. Ex.
2. Novitas’s request for additional information was dated January 14, 2013, and
Petitioner’s timeline lists no action after that date.

3. Based upon the receipt of its application that Novitas subsequently approved,
Petitioner’s effective date of enrollment in Medicare is February 22, 2013,
with retrospective billing privileges starting January 23, 2013.

It is undisputed that Novitas received Petitioner’s second enrollment application on
February 22, 2013. Novitas ultimately approved that application and notified Petitioner
of its decision in a letter dated May 28, 2013. CMS Ex. 5.
The effective date of enrollment for physicians, nonphysician practitioners, and physician
and nonphysician practitioner organizations is “the /ater 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.” 42 C.F.R. § 424.520(d) (emphasis
added). Here, Novitas received two enrollment applications from Petitioner. It rejected
Petitioner’s first enrollment application. It approved Petitioner’s second enrollment
application, which Novitas received on February 22, 2013. CMS Ex. 5. Therefore, the
effective date of Petitioner’s group practice enrollment must be February 22, 2013, the
date Novitas received the enrollment application it subsequently approved.

The regulations permit retrospective billing for up to 30 days prior to the effective date of
enrollment. 42 C.F.R. § 424.521(a). Here, 30 days prior to the effective date of February
22, 2013 is January 23, 2013. Accordingly, Petitioner’s group practice may bill Medicare
retrospectively for reimbursement of covered services starting no earlier than January 23,
2013. Novitas erroneously characterized January 23, 2013 as Petitioner’s “effective
late,” rather than Petitioner’s retrospective billing date. CMS Ex. 5. Thus, I am treating
Novitas’s action as if it intended to set January 23, 2013 as the earliest date for which
Petitioner may submit retrospective claims, with the effective date of Petitioner’s

enrollment as February 22, 2013.

It is undisputed that TOS was not previously enrolled to participate in Medicare.
Petitioner urges, however, that the date its NPI was created should create a right to bill
Medicare for covered services. P. Br. at 5. However, the regulation at 42 C.F.R.

§ 424.520 does not authorize determining a supplier’s effective date based on the creation
of an NPI.

4. Iam not authorized to grant Petitioner's requests for equitable relief.

Petitioner asserts that it should be afforded an enrollment date of September 6, 2012, the
date TOS was legally formed, because of unique circumstances in its case.' Petitioner
also states that it provided almost $700,000 worth of medical services to Medicare
beneficiaries, starting September 6, 2012, for which it will not be reimbursed. Petitioner
claims that if it cannot get reimbursement from Medicare for services provided the
financial burden will fall unfairly on the shoulders of Medicare beneficiaries. Petitioner’s
arguments are equitable in nature, and regardless of the accuracy of these statements, I
simply do not have the authority to grant equitable relief. US Ultrasound, DAB No.
2302, at 8 (2010). I cannot grant an exemption to Petitioner under the regulation set forth
at 42 C.F.R. § 424.520(d), which is binding on me. See 1866/CPayday.com, L.L.C.,

' Even Petitioner’s first application, which Novitas rejected, would not support a
September 6, 2012 effective date because it is undisputed that Novitas received that
application in December 2012.
DAB No. 2289, at 14 (2009) (“[a]n ALJ is bound by applicable laws and regulations and
may not invalidate either a law or regulation on any ground. . .”).

Further Petitioner asserts that Novitas provided misinformation to TOS as the company
was attempting to navigate the Medicare enrollment process. Petitioner specifically
asserts that Novitas incorrectly advised TOS that all of its subsequent physician
reassignment requests would assume the effective date assigned to the first reassignment
request Novitas approved and TOS would be able to bill one year prior to the enrollment
date. P. Br. at 4. Petitioner’s argument amounts to a claim of equitable estoppel. I am
unable to grant the relief that Petitioner requests. 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, such as fraud; and (3) I am not authorized to
order payment contrary to law based on equitable grounds. It is well settled that those
who deal with the government are expected to know the law and may not rely on the
conduct of government agents contrary to law. 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 16 (2008); Wade
Pediatrics, DAB No. 2153, at 22 n.9 (2008), aff'd, 567 F.3d 1202 (10th Cir. 2009). Here,
Petitioner does not allege any affirmative misconduct, and I am unable to grant the relief
that Petitioner requests.

5. Iam unable to change the effective dates that Novitas provided to individual
physicians reassigned to Petitioner’s group practice.

Petitioner also appealed the part of the reconsideration decision that upheld the
reassignment effective dates for ten of its physicians that appear in the table on page two
of CMS Exhibit 7. The reconsideration decision did not disturb the effective dates
Novitas assigned the individual physicians because the hearing officer concluded
Petitioner did not come forward with any evidence supporting earlier effective dates. The
reconsideration decision concluded:

According to the date of filing of each reassignment request, the correct
date of billing for those individuals was February 10, 2013 in accordance
with the regulations cited above. Those individuals with an approved
effective date of billing were provided a date in coordination with the
effective date provided to the group practice. Although the reassignment
requests were initiated via the internet-based PECOS on February 7,

8, or 11, 2013, the certification statements were not filed with the
contractor until March 12, 2013.

CMS Ex. 7, at 3. Petitioner now still contests these effective dates and argues they
should be earlier for the same reasons it argues for an earlier group practice date and
because these physicians were in good standing when they previously worked for APH.
Petitioner also now argues that Novitas lost some of the physicians’ enrollment
applications, which allegedly caused later effective dates. P. Br. at 4. However,
Petitioner still does not come forward with any specific evidence relating to the
transmission or receipt of any individual reassignment applications. Even if Petitioner
did come forward with new evidence, I am precluded from considering it without good
cause because Petitioner did not present this evidence at the reconsideration level of
review. 42 C.F.R. § 498.56(e). I am also not able to overlook regulatory requirements to
consider the facts that these physicians may have been in good standing and that they
previously worked for APH. Therefore, I am unable to disturb the Medicare effective
dates of reassignment for these ten physicians.

Conclusion

Petitioner’s earliest group enrollment application, which Novitas was able to
subsequently approve, was received by Novitas on February 22, 2013. I therefore grant
summary judgment in favor of CMS and affirm the CMS contractor’s determination that
Petitioner’s group practice enrollment in the Medicare program is effective February 22,
2013, with retrospective billing privileges starting January 23, 2013.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Renaissance Hospital Terrell,
(CCN: 450683),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-614
Decision No. CR3198

Date: April 10, 2014

DECISION

Petitioner, Renaissance Hospital Terrell, was a hospital, located in Terrell, Texas, that
participated in the Medicare program until February 2013. Effective February 12, 2013,
the Centers for Medicare & Medicaid Services (CMS) terminated its Medicare
participation, based on a survey completed January 10, 2013. CMS subsequently learned
that Kaufman County officials had seized the hospital building and property for back
taxes and that the hospital was no longer operational. Based on this information, CMS
added those factors as bases for the termination and asked that I add these new issues to
Petitioner’s pending appeal. CMS moved for summary judgment based on the new
issues. Petitioner does not claim to be operational, but opposes summary judgment
nevertheless and has filed a cross-motion for summary judgment.

After working my way through the procedural morass that this case has become, I grant
CMS’s motion. As discussed below, the undisputed evidence establishes that, since prior
to the date of its termination, Renaissance Hospital did not meet the statutory definition
of “hospital” and was not in substantial compliance with Medicare conditions of
participation. CMS is therefore authorized to terminate its Medicare provider agreement.
Background

A hospital is an institution that, among other requirements, primarily engages in
providing to inpatients, “by or under the supervision of physicians,” (A) diagnostic
and therapeutic services for medical diagnosis, treatment, and care of injured,
disabled or sick persons, or (B) rehabilitation services for injured, disabled, or sick
persons. Social Security Act (Act) § 1861(e). It may participate in the Medicare
program as a provider of services, if it meets the statutory definition and complies
with regulatory requirements, called conditions of participation. Act § 1861(e);
42 C.F.R. Part 482; 42 C.F.R. § 488.3. Ifa provider fails to comply substantially
with the provisions of section 1861 of the Act or the regulations governing its
program participation, CMS, acting on behalf of the Secretary of Health and
Human Services (Secretary), may terminate its provider agreement. Act

§ 1866(b)(2); 42 C.F.R. § 489.53(a)(1).

The Secretary contracts with state survey agencies to survey providers “as
frequently as necessary” to ascertain compliance with program requirements and
to confirm the correction of deficiencies. 42 C.F.R. § 488.20(b).

Here, on January 10, 2013, the Texas Department of State Health Services (state agency)
completed an onsite survey and determined that Renaissance Hospital was not in
substantial compliance with an astonishing number of Medicare conditions of
participation — fifteen — as well as with the medical screening examination requirements
of the Emergency Medical Treatment and Labor Act (EMTALA). Ina letter dated
January 28, 2013, CMS advised Renaissance Hospital that, because it did not meet the
requirements for program participation, its Medicare provider agreement would terminate
on February 12, 2013. The letter also advised Petitioner of its hearing rights. Petitioner
timely requested a hearing. Hearing Request (March 29, 2013) and attachments. The
case was assigned to me, and | issued an acknowledgment and pre-hearing order on April
4, 2013.

While this matter was pending, CMS purportedly reopened and revised its initial
determination, as authorized by 42 C.F.R. §§ 498.30 and 498.32. See also 42 C.F.R.

§ 498.56(a) (authorizing the administrative law judge (ALJ), at the request of either party
or on her own motion, to consider new issues). In a second notice letter, dated May 8,
2013, CMS explained that it was adding additional bases for terminating the hospital’s
program participation: Kaufman County officials had served a tax warrant on the
hospital management and seized its property; the hospital had no patients, no employees,
and was not operational, which put it out of substantial compliance with the statute and
eleven conditions of participation. This notice letter, which was electronically delivered
to Petitioner’s counsel on May 8, advised Petitioner of its appeal rights.’

In filings dated June 7, 2013, CMS, citing 42 C.F.R. § 498.56(a), asked that I consider as
a new issue the facts related to the hospital’s closure. CMS then moved for summary
judgment. (CMS MSJ). With its motion, CMS submitted two exhibits (CMS Exs. 1-2).
Petitioner opposes and filed a cross-motion for summary judgment, but no additional
exhibits. (P. Resp. to CMS MSJ).

In a letter dated July 11, 2013, Petitioner responded to the May 8 notice and requested an
ALJ hearing to contest its termination. By letter dated July 17, 2013, administrative staff
for the Civil Remedies Division acknowledged receiving the request and advised
Petitioner that, because it requested review of a determination that had already been
appealed, we would not open a new case, but would add the submission to the pending
appeal.

CMS then moved to dismiss the July hearing request as untimely, pointing out that
Petitioner filed its appeal more than 60 days after CMS served counsel with its notice of
revised determination. With that motion, CMS filed one additional exhibit, CMS Ex. 3.
Petitioner asks me to strike CMS’s motion; to set aside the termination; and to sanction
the agency and its counsel for purportedly violating my orders; for adopting illegal
positions; and for generally demonstrating bias against Renaissance Hospital. 7

Discussion

1. Petitioner preserved its right to appeal its termination by timely appealing
CMS’s January 28 initial determination.?

As the above-discussion shows, this case presents some complicated procedural issues.
Among them:

' Because the hospital no longer existed, CMS could not serve that entity. In an email
accompanying the notice, CMS asked counsel to provide the hospital owner’s contact
information.

? Although this case presents some thorny procedural issues, not all of the issues raised
are difficult to decide. Petitioner’s motions to strike CMS’s motion to dismiss; to
sanction the agency; to remove CMS counsel; and to set aside the termination proceeding
are wholly without merit, in fact, frivolous. Accordingly, I deny Petitioner’s motions.

> My findings of fact/conclusions of law are set forth, in italics and bold, in the discussion
captions of this decision.
e Did CMS, in fact, revise its initial determination?
e What impact did its May 8 action have on Petitioner’s pending appeal?

e Did Petitioner’s March 2013 hearing request preserve its right to challenge the
termination, or was it obligated (as CMS suggests) to file an additional hearing
request in response to the May 8 notice letter? If so, did CMS adequately serve
that notice, and was Petitioner’s July 11 hearing request timely?*

CMS’s January 28, 2013 determination to terminate Petitioner’s Medicare participation
was an initial determination, and Petitioner preserved its appeal rights, at least
temporarily, when it timely requested review. 42 C.F.R. §§ 498.3(b)(8), 498.5(b).

CMS may reopen an initial determination within twelve months after the date of the
notice of the initial determination. 42 C.F.R. § 498.30. CMS must give the affected
party notice of the reopening and of any revision of the reopened determination. It must
state the basis or reason for the revised determination. 42 C.F.R. § 498.32. The affected
party may request a hearing within 60 days from its receipt of the notice of the revised
determination. 42 C.F.R. § 498.40(a). The regulations, however, do not address the
status of pending appeals when a determination is reopened. 42 C.F.R. §§ 498.30,
498.32.

Here, although CMS characterizes its May 8 action as “reopening and revising” the
January 28 determination, the initial determination itself remained the same. CMS Ex. 1
at 1-3. CMS simply added some additional facts to the pending appeal. Further, CMS
did not move to vacate the January 28 determination nor to dismiss the pending appeal.*
It asked to add additional (underlying factual) issues pursuant to 42 C.F.R. § 498.56(a).
CMS MSJ at 2. Because the January 28 determination was neither revoked nor revised, I
find that Petitioner’s appeal rights were preserved without regard to the timeliness of its
July 11 hearing request. ° See Britthaven of Goldsboro, DAB No. 1960, at 6 (2005)

* Curiously, Petitioner has not asked that I find good cause to extend the time for filing.
42 CFR. § 498.40(c)(2).

° CMS moved to dismiss the subsequent appeal, which, in its view, was not timely filed.

° Because I find that CMS did not revise its initial determination and Petitioner preserved
its appeal rights, I need not address the parties’ arguments as to whether CMS properly
served its May 8 notice; whether Petitioner’s July 11 hearing request was timely; and
whether CMS was obligated to comply a second time with the notice requirements of

42 C.F.R. § 489.53(d) and give the already-terminated hospital an additional 15-days
advance notice of termination (which, in any event, seems completely unworkable).
(noting that CMS’s changing its choice of remedy “cannot be within the scope of a
revision to an initial determination.”).

2. CMS properly raised new issues for my consideration — facts establishing that
the hospital stopped operating prior to the date of its termination — and provided
Petitioner with adequate notice of those issues.

With its motion for summary judgment, CMS asked that I consider, as new issues under
section 498.56(a), facts related to the hospital’s non-operational status, noting that these
facts “arose before the termination and affected the party’s rights.” CMS MSJ at 2.

The regulations governing these appeals allow me to consider new issues, even if they
arose after the hearing request was filed, so long as they arose before the effective date of
the termination of the hospital’s provider agreement. 42 C.F.R. §§ 498.56(a),
498.56(b)(1). Here, the hospital’s closure occurred before the termination date, so the
issues can be added, so long as the affected party is afforded adequate notice and an
opportunity to respond. 42 C.F.R. § 498.56(c).

CMS provided Petitioner with adequate notice of the new factual issues. Petitioner had
ample opportunity to respond to them, and, in fact, addressed them when it responded to
CMS’s motion for summary judgment.

3. CMS is entitled to summary judgment, because the undisputed evidence
establishes that Renaissance Hospital stopped operating prior to its date of
termination; it therefore did not meet the statutory definition of “hospital” and
did not comply with Medicare conditions of participation.

CMS is entitled to summary judgment if it has: 1) made a prima facie showing that
Petitioner was not in substantial compliance with one or more program requirements; and
2) demonstrated that there is no dispute about any material fact supporting its prima facie
case and that it is otherwise entitled to summary judgment as a matter of law. Jewish
Home of Eastern Pennsylvania, DAB No. 2451, at 5 (2012) (citing Windsor Health
Center v. Leavitt, 127 F. App’x 843, at 846 (6th Cir. 2005). To avoid summary
judgment, the non-moving party must then act affirmatively by tendering evidence of
specific facts showing that a dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 n.11 (1986); Jewish Home, DAB No. 2451, at 5-6.

[I]f CMS in its summary judgment motion has asserted facts
that would establish a prima facie case that the facility was
not in substantial compliance, the first question is whether the
facility has in effect conceded those facts.
Jewish Home, DAB No. 2451, at 6, quoting Lebanon Nursing and Rehabilitation Center,
DAB No. 1918, at 5 (2004).

CMS has come forward with evidence that a Texas State Court issued a tax warrant
against Renaissance Hospital on February 7, 2013. CMS Ex. | at 5-9. Kaufman County
officials seized the hospital property on February 11, at which time the hospital’s patient
census was zero. CMS Ex. | at 1, 10, 14. At the same time, the hospital’s landlord, the
City of Terrell, terminated the hospital’s lease effective February 11 (ten days from the
February | notice). CMS Ex. 1 at 11-13.

Petitioner objects to the quality of CMS’s evidence, claiming “lack of proper
authentication as required by Fed. R. Civ. P. 901.” P. Resp. to CMS MSJ at 5. CMS’s
evidence includes: photocopies of the state court’s order for tax warrant and the tax
warrant itself, a court registry listing those actions, a photograph of the “notice of
seizure” posted at the hospital premises, correspondence from counsel for the landlord
terminating the hospital’s lease, and a press account of the tax seizure/license revocation/
Medicare termination.

First, the federal rules of evidence do not apply to these proceedings, and I am authorized
to admit evidence that might be inadmissible under those rules. 42 C.F.R. § 498.61.

Moreover, Petitioner has not come forward with any evidence suggesting that this
evidence is unreliable, and does not even allege that it disputes any of the underlying
facts established by these documents. Indeed, its July 11 hearing request acknowledges
that the hospital closed prior to February 12, 2013. Hrg. Request at 2 (July 11, 2013).
“Under [such] circumstances, . .. CMS [is not obligated] to submit additional
corroborative proof . . . to carry its initial burden as the party moving for summary
judgment.” Guardian Health Care Center, DAB No. 1943, at 15 (2004), citing Florence
Park Care Center, DAB No. 1931 (2004) (holding that CMS is required to submit
evidence only with respect to facts that are in dispute) and Celotex Corp. v. Catrett, 477
USS. 317, at 325 (1986).

Because Renaissance Hospital had no patients or staff, it could not be engaged
(“primarily” or otherwise) in providing diagnostic and therapeutic services to inpatients,
as required by section 1861(e)(1) of the Act. It did not provide 24-hour nursing services,
as required by section 1861(e)(5). These undisputed facts justify the entry of summary
judgment here, because they show that, as of February 11, 2013 — the day before its
scheduled termination — Renaissance Hospital did not meet the statutory definition of
hospital. Arizona Surgical Hospital, LLC, DAB No. 1890, at 4 (2003) (“Given
Petitioner’s inability to comply with the statutory definition, the ALJ was not required to
take additional evidence.”).
Moreover, these undisputed facts also mean that Renaissance Hospital is not in
substantial compliance with essentially all of the conditions of participation. Because it
had no staff, it could not meet the staffing requirements of 42 C.F.R. §§ 482.22 (medical
staff), 482.23 (nursing services), or 482.25 (pharmaceutical services). Nor was it capable
of providing other required services, such as laboratory services (42 C.F.R. § 482.27),
food services (§ 482.28), surgical services (§ 482.51), anesthesia services (§ 482.52),
outpatient services (§ 482.54), and emergency services (§ 482.55).

Thus, the undisputed evidence establishes that, prior to the date of its termination,
Petitioner no longer met the statutory definition of hospital, because it no longer existed
as a hospital. Nor did it meet any of the conditions of participation cited by CMS in its
notice letters. CMS therefore justifiably terminated the hospital’s program participation.
Act § 1866(b)(2); 42 C.F.R. § 489.53(a)(1).

Conclusion

Because the undisputed evidence establishes that Renaissance Hospital did not meet the
statutory definition of “hospital” and did not comply with Medicare conditions of
participation, CMS properly terminated its program participation. | therefore grant
CMS’s motion for summary judgment and deny Petitioner’s.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Ortho Rehab Designs
Prosthetics and Orthotics, Inc.
(Supplier No. 0377170001),
Petitioner,

v.

Centers for Medicare & Medicaid Services
Docket No. C-14-410
Decision No. CR3193

Date: April 8, 2014

DECISION

The National Supplier Clearinghouse (NSC), a contractor for the Centers for Medicare &
Medicaid Services (CMS), revoked the Medicare enrollment of Petitioner, Ortho Rehab
Designs Prosthetics and Orthotics, Inc. NSC cited two attempted on-site inspections that
found Petitioner’s location locked, unstaffed, and not operational. NSC upheld its
determination on reconsideration. Petitioner requested a hearing and CMS now moves
for summary judgment.

For the reasons explained below, I grant summary judgment in favor of CMS affirming
the revocation of Petitioner’s Medicare enrollment effective July 18, 2013.

I. Case Background

Petitioner is located in Las Vegas, Nevada, and until recently had been enrolled in the
Medicare program as a supplier of durable medical equipment, prosthetics, orthotics, and
supplies (DMEPOS) subject to the participation requirements at 42 C.F.R. § 424.57 and
42 C.F.R. Part 424, Subpart P. It is undisputed that on July 17, 2013, at 3:01 p.m., an
NSC site inspector attempted to conduct an unannounced site inspection of Petitioner’s
facility. CMS Exhibit (Ex.) 1. The inspector found Petitioner’s location locked and no
one answered when the inspector knocked on the front door. The hours posted on the
front door stated that Petitioner was open during the week (Monday through Friday) from
9:00 a.m. to 5:00 p.m. The following day, July 18, 2013, at 2:07 p.m., the inspector again
attempted a site inspection of Petitioner’s facility. Again, the inspector found Petitioner’s
location locked. CMS Ex. 1, Attachments A-C.

By letter dated August 5, 2013, NSC notified Petitioner that it was revoking Petitioner’s
Medicare enrollment pursuant to 42 C.F.R. §§ 424.57(e), 424.535(a)(1), 424.535(a)(5),
and 424.535(g), based on its two attempted site inspections. NSC also imposed a two-
year bar on Petitioner’s re-enrollment. CMS Ex. 2. On October 3, 2013, Petitioner
requested reconsideration and acknowledged that its facility was closed on July 17 and
18, 2013, because its owner and staff were on vacation. Petitioner requested that NSC
conduct another site inspection now that it had reopened. CMS Ex. 3. On November 24,
2013, NSC issued a reconsidered determination that upheld the revocation of Petitioner’s
Medicare enrollment and billing privileges. The hearing officer determined that her
review was limited to whether Petitioner was compliant with the enrollment requirements
at the time of the site inspection and thus rejected Petitioner’s suggestion for another
inspection. CMS Ex. 4.

On December 3, 2013, Petitioner requested a hearing before an administrative law judge.
CMS subsequently filed a motion for summary judgment and supporting brief (CMS Br.)
and five proposed exhibits marked as CMS Exs. 1-5. Petitioner filed a brief opposing
summary judgment (P. Br.) and nine proposed exhibits marked as P. Exs. 1-9. Petitioner
did not object to CMS’s proposed exhibits, so I admit CMS Exs. 1-5.

CMS did not object to Petitioner’s proposed exhibits, but the admission of a supplier’s
evidence that was not previously submitted at the reconsideration level is governed by 42
C.F.R. § 424.56(e) and requires a showing of good cause. It is not clear from the record
whether Petitioner’s proposed exhibits had been submitted at the reconsideration level,
though Petitioner acknowledges that P. Exs. 4 and 9 are being admitted at this level of
appeal for the first time. P. Br. at 6,9. As a showing of good cause, Petitioner states that
it “did not understand that [the evidence] would be an important factor in this case.”

P. Br. at 6, 9. While Petitioner’s assertion represents a strategic error that is ordinarily
not sufficient for a showing of good cause, I will accept Petitioner’s exhibits because
CMS has not objected to their admission and NSC did not notify Petitioner that it had to
submit all of its evidence at the reconsideration level or run the risk of having it
permanently excluded. See CMS Ex. 2, at 2 (“You may submit additional information
with the reconsideration that you believe may have a bearing on the decision.”).
Therefore, I admit P. Exs. 1-9.
II. Issue

The issue here is whether the applicable regulations authorize NSC, acting for CMS, to
revoke Petitioner’s Medicare billing privileges based on two attempted site inspections
on July 17-18, 2013.

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

1. Petitioner was not operational on July 17 and July 18, 2013, and did not
comply with the enrollment requirements for suppliers of DMEPOS because
it was not open to the public during its posted hours.

The enrollment regulations for which Petitioner agreed to be bound provide that CMS
reserves the right “to perform onsite review of a provider or supplier to verify that the
enrollment information submitted to CMS or its agents is accurate and to determine
compliance with Medicare enrollment requirements.” 42 C.F.R. § 424.517(a). The
regulations authorize CMS to revoke a supplier’s Medicare enrollment and billing
privileges when:

CMS determines, upon on-site review, that the provider or supplier is no
longer operational to furnish Medicare covered items or services, or is not
meeting Medicare enrollment requirements under statute or regulation to
supervise treatment of, or to provide Medicare covered items or services
for, Medicare patients. Upon on-site review, CMS determines that —

* * *

(ii) A Medicare Part B supplier is no longer operational to furnish
Medicare covered items or services, or the supplier has failed to
satisfy any or all of the Medicare enrollment requirements, or has
failed to furnish Medicare covered items or services as required by
the statute or regulations.

42 C.F.R. § 424.535(a)(5)(1i). “Operational” means that the supplier “has a qualified
physical practice location, is open to the public for the purpose of providing health care
related services, is prepared to submit valid Medicare claims, and is properly staffed,
equipped, and stocked . . . to furnish these items or services.” 42 C.F.R. § 424.502.

Suppliers of DMEPOS must also comply with all enrollment requirements set forth in 42
C.F.R. 424.57(c). These requirements include, among other things, that the supplier:

Maintains a physical facility on an appropriate site. An appropriate site
must meet all of the following:
(i) Must meet the following criteria:

* * *

(C) Is accessible and staffed during posted hours of operation.

* * *

42 CFR. § 424.57(c)\(7)(i(C).

In this case, the site inspector documented two attempted site inspections, on July 17 and
July 18, 2013, and each time found the facility closed and unstaffed. CMS Ex. 1. The
inspector noted that Petitioner’s posted hours of operation were Monday through Friday
from 9:00 a.m. to 5:00 p.m., and also that he found delivery attempt notice slips dated
July 15 and July 16, 2013 from United Parcel Service (UPS) attached to Petitioner’s front
door. See CMS Ex. 1, Attachment A-B.

Petitioner does not dispute the site inspector’s findings. Petitioner has explained that its
location was closed for one week between July 15 and July 19, 2013 because its owner
and staff were on vacation. CMS Ex. 3; P. Br. at 5. Apparently such week-long closures
were a yearly ritual for Petitioner and its staff. CMS Ex. 3. Petitioner asserts that its
owner posted a sign on July 12, 2013, that indicated the location would be closed the
following week. P. Br. at 5; P. Ex. 4. When staff reopened Petitioner’s facility on July
22, 2013, the sign indicating the office was closed “had fallen onto the floor under the
window coverings ....” P. Br. at 6. Petitioner’s staff also found “two UPS notices” on
the front door. P. Br. at 6.

The undisputed facts demonstrate that Petitioner was not “operational” on July 17 or July
18, 2013, because its locked doors and unstaffed status meant it was not open to the
public to provide health care related services and was not properly staffed to furnish these
items or services. See 42 C.F.R. 424.502. Petitioner could not have been “accessible and
staffed” during its posted business hours when its doors were closed and no one was
inside. See 42 C.F.R. § 424.57(c)(7)(i(C). The record is therefore clear that at the time
of the attempted on-site inspections, Petitioner was not operational to furnish Medicare
covered items or services and had failed to satisfy all of the enrollment requirements
specific for suppliers of DMEPOS. See 42 C.F.R. § 424.535(a)(5)(ii).

Petitioner’s justification for its week-long closure provides it no relief from revocation.
The regulations — which I am bound to follow — do not permit such week-long closures
to accommodate a supplier’s staff taking a simultaneous vacation. See 42 C.F.R.

§§ 424.57(c), 424.502, 424.535(a)(5)(ii). Even if Petitioner’s closure notice had stayed
adhered to its front door (P. Ex. 4), that fact would not have made it compliant with the
enrollment requirements. Closure during posted business hours, even if only temporary,
violates the regulations. See Complete Home Care, Inc., DAB No. 2525, at 5 (2013).

Petitioner argues that unlike other cases involving site inspections, the inspector here
attempted two inspections on two consecutive days. P. Br. at 4-5. Petitioner cites several
other cases decided in this forum where an NSC inspector attempted two site inspections
weeks apart. P. Br. at 4-5. Petitioner argues that if that same pattern had been followed
in this case the second attempted inspection should have been after it had reopened on
July 22, 2013. However, the regulations do not require CMS to perform (or attempt) a
second site inspection before a determination to revoke may be properly made pursuant
to 42 C.F.R. § 424.535(a)(5). Also, the Medicare Program Integrity Manual (MPIM),
which is not a legally binding publication but provides guidance for CMS contractors,
states:

Site verifications should be done Monday through Friday (excluding
holidays) during their posted business hours. If there are no hours posted,
the site verification should occur between 9 a.m. and 5 p.m. If, during the
first attempt, there are obvious signs that facility is no longer operational no
second attempt is required. If, on the first attempt the facility is closed but
there are no obvious indications the facility is non-operational, a second
attempt on a different day during posted hours of operation should be made.

MPIM, CMS Pub. 100-08, § 15.20.1.B (Site Verifications, Timing) (2013). CMS directs
the contractor to visit “on a different day” if there are no obvious signs of being non-
operational, but does not require a second attempted inspection be done during a separate
week or month. Therefore, by attempting two site inspections on two consecutive days,
NSC did not apply an “unfair standard” as Petitioner claims.

Petitioner also refutes the NSC hearing officer’s assertion that she attempted to call
Petitioner’s owner but could not reach the owner or a voicemail system. P. Br. at 9; CMS
Ex. 4, at 3. Petitioner produced a copy of its owner’s cellphone records to demonstrate
that the hearing officer did not attempt to call Petitioner’s owner. P. Ex. 9. But the
dispute about whether the hearing officer called Petitioner’s owner is not material to
whether Petitioner was open and properly staffed at the time of inspection. Therefore,
even accepting as true that the hearing officer did not call Petitioner’s owner during the
reconsideration level of appeal, that fact does not open Petitioner’s doors or staff its
location on July 17 and July 18, 2013.

Finally, Petitioner claims that it was not required to be open more than 30 hours per week
pursuant to 42 C.F.R. § 424.57(c)(30), and implies that it was therefore permitted to close
during the week of July 15 to July 19, 2013. P. Br. at 10-11. Petitioner overlooks that its
posted hours of operation were Monday through Friday, 9:00 a.m. to 5:00 p.m., and it
was required to be “accessible and staffed” during those posted hours. 42 C.F.R.
§ 424.57(c)(7)(i)(C).

2. The regulations authorize CMS to revoke Petitioner’s Medicare enrollment
and billing privileges retroactive to July 18, 2013.

CMS revoked Petitioner’s enrollment retroactively to July 18, 2013, the date of the
second attempted inspection when the NSC investigator determined Petitioner was non-
operational. By regulation, the effective date of revocation is:

30 days after CMS or the CMS contractor mails notice of its determination
to the provider or supplier, except if... the practice location is determined
by CMS or its contractor not to be operational. When ... the practice
location is determined by CMS or its contractor not to be operational, the
revocation is effective with the date ... that CMS or its contractor
determined that the provider or supplier was no longer operational.

42 C.F.R. § 424.535(g). Here, the contractor cited various regulatory provisions as a
basis for revoking Petitioner’s enrollment (CMS Ex. 2, at 1), but only 42 C.F.R.

§ 424.535(a)(5)(ii) supports a retroactive revocation. I have found that Petitioner was not
operational on the dates of the attempted site visits and was not compliant with the
enrollment requirements for suppliers of DMEPOS. Revocation is therefore authorized
pursuant to 424.535(a)(5)(ii), meaning retroactive revocation to July 18, 2013, the date
Petitioner was determined to be non-operational, is authorized by 42 C.F.R. § 424.535(g).

IV. Conclusion

For the reasons explained above, the undisputed facts demonstrate that Petitioner was not
operational at the time of two attempted site inspections. The regulations authorize CMS
to revoke Petitioner’s Medicare enrollment. In the absence of any genuine dispute of
material fact, I grant summary judgment in favor of CMS and affirm the revocation of
Petitioner’s Medicare enrollment effective July 18, 2013.

/s/
Steven T. Kessel
Administrative Law Judge