Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Date: November 14, 2008
Abdul Razzaque Ahmed, M.D.
(PTANS: J08437, SX0554, M20993),
Petitioner, Docket No. C-08-452

Decision No. CR1864

Centers for Medicare & Medicaid Services.

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DECISION

The Medicare supplier numbers and billing privileges of Petitioner, Abdul Razzaque
Ahmed, M.D., were properly revoked, effective November 5, 2007.

I. Background

The Medicare contractor for the Centers for Medicare & Medicaid Services (CMS),
National Heritage Insurance Company (NHIC), notified Petitioner by letter dated
November 8, 2007, that his Medicare Provider Transaction Access Numbers (PTANs)'
were being revoked on December 9, 2007, with an effective date of November 5, 2007.
The regulatory authority cited for the revocation was 42 C.F.R. § 424.535(a)(3)(i)(B)
based upon Petitioner’s felony conviction of “a single count of obstruction.” CMS
Exhibit (CMS Ex.) 2; Petitioner’s Exhibit (P. Ex.) 9. Petitioner requested reconsideration
by a contractor hearing officer who issued a decision on March 12, 2008. The hearing
officer sustained the revocation pursuant to 42 C.F.R. § 424.535(a)(3)(i)(B) based upon
Petitioner’s felony conviction. CMS Ex. 1.

Petitioner requested a hearing before an administrative law judge (ALJ) by letter dated
May 9, 2008. The case was assigned to me for hearing and decision on May 15, 2008.
On June 3, 2008, I convened a prehearing conference by telephone, the substance of

' At the time, a PTAN represented the billing privileges of the supplier and
revocation of the PTAN was revocation of billing privileges.
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which is memorialized in my Order and Schedule for Filing Briefs and Documentary
Evidence dated June 4, 2008. During the prehearing conference, CMS agreed that
proceedings in this case are subject to 42 C.F.R. Part 498.’ Petitioner did not waive his
right to a hearing but CMS requested the opportunity to file a motion for summary
judgment before further case development. With the agreement of the parties, I
established a briefing schedule. CMS filed its opening brief (CMS Brief) and exhibits |
through 8 on July 3, 2008. Petitioner filed an opposing brief and a cross-motion for
summary judgment (P. Brief) with exhibits 1 through 15 on August 1, 2008. CMS filed
its reply on August 29, 2008. The parties have not objected to my consideration of the
offered exhibits. Therefore, CMS Exs. | through 8 and P. Exs. 1 through 15 are admitted.

II. Discussion
A. Findings of Fact

These findings are based upon the undisputed statements of fact in the parties’ pleadings
and the documentary evidence admitted.

1. Petitioner admitted to creating false documents, letters and immunopathology

reports, and adding them to patient records in order to obstruct the government’s
investigation into his prior billings for possible Medicare fraud. P. Brief at 5; P.
Ex. 8.

2. On November 5, 2007, Petitioner pled guilty to and was convicted of one felony
count of obstruction of a criminal investigation of health care offenses, in violation
of 18 U.S.C. § 1518, in the United States District Court, District of Massachusetts.
P. Brief at 6; P. Ex. 8; CMS Ex. 5.

3. Petitioner’s conviction occurred within the 10 years preceding revalidation of his
enrollment in Medicare.

> CMS proposed regulatory changes on October 25, 1999 (64 Fed. Reg. 57,431)
and again on March 2, 2007 (72 Fed. Reg. 9,479) to extend appeal rights to suppliers like
Petitioner, including the right to hearing by an ALJ, review by the Departmental Appeals
Board (the Board), and judicial review. The final rule amending 42 C.F.R. Parts 405,
424, and 498 was not issued until June 27, 2008, and the changes were not effective until
August 26, 2008. 73 Fed. Reg. 36,448. Prior to issuance of the final rule and its effective
date, CMS consented to hearing by ALJ and review by the Board in supplier cases
involving denial of enrollment or revocation of billing privileges.
B. Conclusions of Law
1. I have jurisdiction.

2. The Secretary of Health and Human Services (Secretary) has determined and
provided by regulation that financial crimes or similar crimes are detrimental to the
Medicare program or its beneficiaries. 42 C.F.R. § 424.535(a)(3)(i)(B).

3. Petitioner was convicted of obstruction of a criminal investigation of health care
fraud offenses which, on the facts of this case, is a financial crime similar to the
financial crimes that the Secretary has found are detrimental to the Medicare
program or its beneficiaries.

4. Petitioner pled guilty to and was convicted of a financial crime within the meaning
of 42 C.F.R. § 424.535(a)(3)(i)(B).

5. There is a basis for revocation of Petitioner’s enrollment in Medicare and his
illing privileges.

6. CMS or its contractor is not required to conduct a revalidation of enrollment

efore revoking a provider’s or supplier’s billing privileges pursuant to 42 C.F.R.
§ 424.535(a)(3).

7. The issue for hearing and decision is whether there is a basis for revocation of
Petitioner’s billing privileges and jurisdiction does not extend to review of whether
CMS properly exercised its discretion to revoke Petitioner’s Medicare enrollment
and billing privileges.

8. Petitioner’s enrollment in Medicare and his billing privileges were properly
revoked, effective November 5, 2007.

C. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Payment under the program for services rendered to Medicare-eligible
beneficiaries may only be made to eligible providers of services and suppliers.’ Act

> A “supplier” furnishes services under Medicare and includes physicians or other
practitioners and facilities that are not included within the definition of the phrase
“provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,”
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§§ 1835(a) (42 U.S.C. § 1395n(a)); 1842(h)(1) (42 U.S.C. § 1395(u)(h)(1)).
Administration of the Part B program is through contractors. Act § 1842(a) (42 U.S.C.

§ 1395u(a)). The Act requires the Secretary to issue regulations that establish a process
for the enrollment of providers and suppliers, including the right to a hearing and judicial
review in the event of denial or non-renewal. Act § 1866(j) (42 U.S.C. § 1395cc(j)).
Pursuant to 42 C.F.R. § 424.505, a provider or supplier must be enrolled in the Medicare
program and be issued a billing number to have billing privileges and to be eligible to
receive payment for services rendered to a Medicare eligible beneficiary. If enrollment is
approved, a supplier is issued a National Provider Identifier (NPI) to use for billing
Medicare and a PTAN, an identifier for the supplier for inquiries. Medicare Program
Integrity Manual (MPIM), Chapter 10, Healthcare Provider/Supplier Enrollment, § 6.1.1.

Qualified physician services are covered by the program for those enrolled, subject to
some limitations. Act §§ 1832(a) (42 U.S.C. § 1395k(a)); 1861(s)(1) (42 U.S.C.

§ 1395x(s)(1)). “Physician’s Services” means professional services performed by
physicians, including surgery, consultation, and home, office, and institutional calls (with
certain exceptions). Act § 1861(q) (42 U.S.C. § 1395x(q)). The term “physician,” when
used in connection with the performance of any function or action, means, in part, a
doctor of medicine or osteopathy legally authorized to practice medicine and surgery by
the state in which he or she performs such function or action. Act § 1861(r) (42 U.S.C.

§ 1395x(r)); 42 C.F.R. § 410.20(b). The Medicare program authorizes Medicare Part B
payments for services provided by physicians. 42 C.F.R. § 410.20. A physician who
wants to bill Medicare or its beneficiaries for Medicare-covered services or supplies must
enroll in the Medicare program. 42 C.F.R. § 424.505. Medicare pays a supplier directly
for covered services if the beneficiary assigns the claim to the supplier and the supplier
accepts it. Medicare may pay a supplier’s employer if the supplier is required, as a
condition of employment, to turn over the fees for the supplier’s services. Medicare will
also pay an entity billing for a supplier’s services if the entity is enrolled in Medicare and
there is a contractual arrangement between the entity and the supplier. Act § 1842(b)(6);
42 C.F.R. §§ 424.55(a), 424.80(a) and (b).

commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled
nursing facilities, comprehensive outpatient rehabilitation facilities, home health
agencies, hospice programs, and a fund as described in sections 1814(g) and 1835(e) of
the Act. Act § 1861(u) (42 U.S.C. § 1395x(u)). The distinction between providers and
suppliers is important because they are treated differently under the Act for some
purposes.
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CMS may deny a supplier’s enrollment application if a supplier is not in compliance with
Medicare enrollment requirements. 42 C.F.R. § 424.530(a)(1). A supplier enrollment is
considered denied when a supplier is determined to be “ineligible to receive Medicare
billing privileges for Medicare covered items or services provided to Medicare
beneficiaries” for one or more of the reasons listed in 42 C.F.R. § 424.530. 42 C.F.R.

§ 424.502. CMS’s contractor notifies a supplier in writing when it denies enrollment and
explains the reasons for the determination and information regarding the supplier’s right
to appeal. 42 C.F.R. § 498.20(a); MPIM Ch. 10, §§ 6.2, 13.2. The supplier may submit a
written request for reconsideration to CMS. 42 C.F.R. § 498.22(a). CMS must give
notice of its reconsidered determination to the supplier, giving the reasons for its
determination and specifying the conditions or requirements the supplier failed to meet.
42 C.F.R. § 498.25. If the CMS decision on reconsideration is unfavorable to the
supplier, the Act provides for a hearing by an ALJ and judicial review. Act § 1866(j)(2).

If a provider or supplier is accepted for enrollment and granted billing privileges, the
enrollee is subject to revalidation every five years. Every five years, the enrollee is
required to resubmit and recertify the accuracy of its enrollment information and the
information is reverified by the CMS contractor. CMS is also permitted to conduct “off-
cycle” revalidation that may be conducted at any time and which may be triggered by
random checks, adverse information, national initiatives, complaints, or other reasons that
cause CMS to question whether the provider or supplier continues to meet enrollment
requirements. 42 C.F.R. § 424.515.

CMS may revoke an enrolled provider’s or supplier’s Medicare billing privileges and any
provider or supplier agreement for any of the reasons listed in 42 C.F.R. § 424.535.
Pursuant to 42 C.F.R. § 424.535(a)(3), if a provider or supplier or the owner of a provider
or supplier is convicted of a federal or state felony that CMS has determined is
detrimental to the program or its beneficiaries, CMS may revoke billing privileges. See
Act § 1866(b)(2)(D) (42 U.S.C. § 1395cc(b)(2)(D)). The regulation specifies that the
conviction must have occurred within the 10 years preceding enrollment or revalidation
of enrollment in Medicare. Offenses that CMS has found detrimental to the program or
its beneficiaries include financial crimes such as income tax evasion, insurance fraud, and
similar crimes. 42 C.F.R. § 424.535(a)(3)(i)(B). The Act provides for a hearing by an
ALJ and judicial review of the determination to deny enrollment or re-enrollment. Act

§ 1866(j)(2).
D. Issue

Whether there was a basis for revocation of Petitioner’s supplier numbers
and his billing privileges.
E. Analysis
1. Summary judgment is appropriate.

CMS moved for summary judgment and Petitioner filed a cross-motion for summary
judgment. There are no genuine issues of material fact in dispute in this case and
summary judgment is appropriate. Petitioner does not deny that on November 5, 2007, he
pled guilty in the United States District Court, District of Massachusetts, to one count of
obstruction of criminal investigations of health care offenses in violation of 18 U.S.C.

§ 1518, a felony. P. Brief at 1; P. Ex. 8.

Summary judgment is appropriate and no hearing is required where either: there are no
disputed issues of material fact and the only questions that must be decided involve
application of law to the undisputed facts; or, the moving party must prevail as a matter of
law even if all disputed facts are resolved in favor of the party against whom the motion
is made. See White Lake Family Medicine, P.C., DAB No. 1951 (2004); Lebanon
Nursing and Rehabilitation Center, DAB No. 1918 (2004). A party opposing summary
judgment must allege facts which, if true, would refute the facts relied upon by the
moving party. See, e.g., Fed. R. Civ. P. 56(c); Garden City Medical Clinic, DAB No.
1763 (2001); Everett Rehabilitation and Medical Center, DAB No. 1628, at 3 (1997) (in-
person hearing required where non-movant shows there are material facts in dispute that
require testimony); Thelma Walley, DAB No. 1367 (1992); see also New Millennium
CMHC, Inc., DAB CR672 (2000); New Life Plus Center, CMHC, DAB CR700 (2000).

This case requires an application of the law to the undisputed facts. The issues in this
case turn on the legal interpretation of the regulation 42 C.F.R. § 424.535 and other
regulatory provisions that govern revocation of billing privileges as discussed hereafter.
Petitioner does not dispute that he was convicted ofa felony. Petitioner opposes
summary judgment and asserts that judgment should be entered for him as a matter of law
on three theories:

The CMS contractor had no legal authority to revoke Petitioner’s billing
privileges because it did not first conduct an enrollment or revalidation
process as required by the regulation, resulting in deprivation of Petitioner’s
right to be heard;

The crime of which Petitioner was convicted was not a financial crime and
not a proper basis for exclusion pursuant to 42 C.F.R. § 424.535(a)(3)(i)(B);
and
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The CMS contractor abused its discretion by failing to consider mitigating
factors prior to revocation of Petitioner’s billing privileges.

P. Brief at 1-2.

Neither party asserts that there is a genuine dispute as to a material fact and the evidence
does not show such a dispute. Interpretation of the regulations and application of the
regulations to the undisputed facts are required to resolve this case. Accordingly,
summary judgment is appropriate.

2. CMS or its contractor is not required to conduct a revalidation of
enrollment before revoking a provider’s or supplier’s billing privileges
pursuant to 42 C.F.R. § 424.535(a)(3).

Revocation of enrollment and billing privileges is governed by 42 C.F.R. § 424.535. In
this case, Petitioner’s enrollment and billing privileges were revoked pursuant to 42
C.F.R. § 424.535(a)(3)(i)(B). There is no dispute that Petitioner was enrolled in Medicare
and had billing privileges on November 5, 2007, when he was convicted, and on
November 8, 2007, when NHIC gave notice that it was revoking his billing privileges on
December 9, 2007, with an effective date of November 5, 2007. There is no dispute that
NHIC did not give Petitioner notice that it was doing a revalidation of his enrollment
eligibility or request any input from him prior to issuing the November 8, 2007 notice.

The authorized reasons or bases for revocation of enrollment and billing privileges are
listed in 42 C.F.R. § 424.535(a) and include: (1) noncompliance with enrollment
requirements; (2) provider or supplier conduct resulting in exclusion or debarment or
suspension; (3) conviction of a felony detrimental to the best interests of the program or
beneficiaries or that would result in mandatory exclusion pursuant to section 1128(a) of
the Act; (4) certification of false or misleading information as true on the enrollment
application; (5) determination that the provider or supplier is not operational or not
meeting program enrollment requirements based on on-site review; (6) failure to furnish
complete and accurate information on reverification; and (7) misuse of a billing number.
The revocation in this case was based upon 42 C.F.R. § 424.535(a)(3)(i)(B), which
provides:

(3) Felonies. The provider, supplier, or any owner of the
provider or supplier, within the 10 years preceding enrollment
or revalidation of enrollment, was convicted of a Federal or
State felony offense that CMS has determined to be
detrimental to the best interests of the program and its
beneficiaries.
(i) Offenses include —

HR KR

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

Petitioner argues, based upon the foregoing language of the regulation, that CMS had no
authority to revoke Petitioner’s billing privileges without first giving Petitioner notice and
conducting a revalidation of his enrollment. Petitioner misconstrues the regulation and
his argument is without merit.

In Robert F. Tzeng, M.D., DAB No. 2169 (2008), an appellate panel of the Board took the
approach that, even if one read the regulation as does Petitioner in the case before me, the
regulation does not require a specific revalidation procedure and a revalidation may occur
when CMS obtains information related to a conviction and then considers whether a
provider or supplier continues to meet enrollment criteria. /d. at 11-12. Applying the
rationale in Tzeng to the case before me, a revalidation of enrollment occurred when the
CMS contractor obtained information that Petitioner was convicted and then determined
that revocation of enrollment and billing privileges was required, negating Petitioner’s
complaint that no revalidation occurred.*

However, application of the regulation does not require definition of the term
revalidation. The regulation plainly provides that a felony conviction within the 10 years
preceding enrollment or revalidation of enrollment is a basis for revocation if the
conviction is for an offense that CMS finds detrimental. Pursuant to 42 C.F.R. § 424.515,
a provider or supplier must resubmit and recertify the accuracy of its enrollment
information every five years in order to maintain its billing privileges. CMS reserved the
right to do off-cycle revalidations in addition to the regular five-year revalidations, for
any reason that causes CMS to question the compliance of the provider or supplier with
enrollment requirements. 42 C.F.R. § 424.515(d)(1). Due to the five-year revalidation
requirement, the conviction of a provider, supplier, or an owner of a provider or supplier
of a felony offense after initial enrollment in Medicare, will necessarily have occurred

* The Board’s characterization of revalidation appears to be at odds with
revalidation procedures established by CMS in its MPIM, Ch. 10, § 9.
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less than ten years prior to the next revalidation.’ Thus, even if I accept Petitioner’s
assertion that no revalidation occurred in November 2007, Petitioner cannot deny that a
revalidation would have occurred in five years or less and his conviction would not have
occurred more than ten years prior to the revalidation.

Furthermore, the plain language of 42 C.F.R. § 424.535(a) is inconsistent with
Petitioner’s theory that CMS or its contractor must engage in a revalidation procedure
that permits Petitioner’s participation prior to revocation. P. Brief at 11. The regulation
lists the reasons for revocation and it does not purport to establish the procedure for
revocation. Read in its correct context, 42 C.F.R. § 424.535(a)(3) does not establish a
procedure for revocation, but rather describes or lists the criteria for a conviction that may
be the basis for revocation, i.e., the conviction may be no more than ten years old, the
conviction must have been in a state or federal court, the conviction must be ofa felony
offense, and the offense must be one that CMS determines detrimental to the program or
its beneficiaries. The list of specific offenses that CMS has found detrimental is at 42
C.F.R. § 424.535(a)(3)(i), and the list includes financial crimes with examples (42 C.F.R.
§ 424.535(a)(3)(i)(B)). The language of 42 C.F.R. § 424.535(a)(3) that Petitioner asserts
requires CMS to initiate a revalidation process prior to revocation, i.e., “within the 10
years preceding enrollment or revalidation of enrollment,” simply provides the method
for calculating the age of the conviction rather than triggering a procedure.

The only process due Petitioner prior to revocation of enrollment and billing privileges is
that required by the Act and provided by the regulations. The regulations in effect at the
time Petitioner was notified of the revocation, when the reconsideration determination
was issued, and when Petitioner requested a hearing, required notice of the revocation of
supplier billing privileges and reconsideration by a fair hearing officer. 42 C.F.R.

§§ 405.874, 424.535(f).° In this case, Petitioner was given notice on November 8, 2007
that his billing privileges would be revoked on December 9, 2007, with an effective date
of November 5, 2007. The November 8, 2007 notice advised Petitioner of the right to
request reconsideration within 60 days. CMS Ex. 2. Petitioner exercised his right to
request reconsideration on December 13, 2007 (CMS Ex. 1, at 2; P. Ex. 10), after the
revocation occurred. Reconsideration occurred as evidenced by the hearing officer
decision dated March 12, 2008, which advised Petitioner of the right to request a hearing

* CMS also reserved the right to shorten or extend the normal five-year
revalidation requirement. 42 C.F.R. § 424.515(d)(2). There is no evidence and no
assertion by Petitioner that CMS extended the revalidation period for Petitioner beyond
five years.

® The new regulations effective August 26, 2008, include more detailed provisions
regarding notice and appeals in supplier enrollment and billing privilege revocations. 42
C.F.R. §§ 405.874(b)-(g), 424.545. 73 Fed. Reg. 36,448, 36,460-61 (June 27, 2008).
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by an ALJ. CMS Ex. 1; P. Ex. 13. Petitioner has now had the opportunity to present his
case to me and receive my decision, which is also subject to review by the Board and then
the appropriate court. Petitioner has received all the process due him under the Act and
regulations.

3. Petitioner pled guilty to and was convicted of a financial crime
within the meaning of 42 C.F.R. § 424.535(a)(3)(i)(B).

Petitioner argues that CMS erred when it determined that Petitioner was convicted ofa
financial crime. P. Brief at 6, 12-15. The list of financial crimes under 42 C.F.R.

§ 424.535(a)(3)(i)(B) is not exhaustive as is clearly indicated by the language at the end
of that subsection, “and other similar crimes.” 42 C.F.R. § 424.535(a)(3)(i)(B). Based on
the facts of this case, I have no difficulty finding that Petitioner’s crime was similar to the
crime of insurance fraud listed in the regulation.

The transcript of the plea colloquy is in evidence without objection as CMS Ex. 5.
Petitioner agreed that the government’s evidence would have shown that he was a
licensed physician authorized to participate in Medicare. During the pertinent period
from 1997 through 2001, his practice focused on the treatment of autoimmune blistering
skin diseases, including two different diseases, one known as pemphigus and another
nown as pemphigoid. Petitioner used intravenous immunoglobulin (IVIg) to treat
patients suffering from both pemphigus and pemphigoid. During the period from 1997
through 2001, Medicare reimbursed physicians for IVIg treatment for pemphigus in
qualified beneficiaries. However, Medicare coverage did not extend to IVIg treatments of
qualified beneficiaries for other autoimmune blistering skin diseases such as pemphigoid.
n early 2000, Medicare focused on Petitioner because it was observed that he was being
reimbursed millions of dollars for [VIg treatment of beneficiaries diagnosed with both
pemphigus and pemphigoid. A fraud investigation was initiated and Petitioner’s records
for patients treated with IVIg were subpoenaed. In October 2000, Petitioner produced
records for patients he treated with IVIg, many of whom were Medicare beneficiaries.
Petitioner admitted that he placed backdated documents, including letters and false
immunopathology reports, in the files of the Medicare beneficiaries indicating that they
ad been diagnosed with pemphigus in order to qualify them for Medicare coverage for
their IVIg treatments. CMS Ex. 5, at 20-26. Although Petitioner was also charged with
fraud, those charges were dismissed pursuant to his plea agreement. CMS Ex. 4; P. Brief
at 6. Petitioner nevertheless admits before me that he “placed false letters and
immunopathology reports into his patients’ files to bolster the reimbursements he
received from Medicare.” P. Brief at 14. Thus, Petitioner admits that he knew that he
was not entitled to reimbursement from Medicare unless he provided IVIg treatment
based on a diagnosis of pemphigus. Petitioner nevertheless claimed reimbursement for
IVIg treatment for patients as if they had a diagnosis of pemphigus, even though he did
not have a documented diagnosis of pemphigus when the claims were made to Medicare.

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When investigators subpoenaed his records, he created documents to show a diagnosis of
pemphigus and, thus, obstructed the investigation and covered or bolstered his prior false
claims. Given these facts I have no trouble concluding that Petitioner’s offense was a
financial crime within the meaning of 42 C.F.R. § 424.535(a)(3)(i)(B), even though the
offense of which he was convicted included no specific financial element. Falsifying
records as Petitioner did to support his billing for treatments that were not subject to
reimbursement by Medicare is significantly similar to insurance fraud, even though that
was not the specific charge of which Petitioner was convicted. Further, Petitioner’s
undisputed conduct is exactly the sort of behavior that must be detected and prevented to
protect the program and its beneficiaries, even though the crime of which he was
convicted was obstruction of a fraud investigation rather than the offense of fraud.

4. The issue for hearing and decision is whether there is a basis for
revocation of Petitioner’s billing privileges and my jurisdiction does not
extend to review of whether CMS properly exercised its discretion to
revoke Petitioner’s Medicare enrollment and billing privileges.

Petitioner argues that the CMS contractor abused its discretion and acted without a
rational basis when it revoked Petitioner’s billing privileges without considering
mitigating factors and the impact of its decision, including the effect of the revocation
upon Petitioner’s patients, and the impact upon Petitioner’s practice. P. Brief at 16-18.
Petitioner cites no provision of the Act or the regulations that requires CMS or its
contractors to consider mitigating or other factors when deciding to revoke billing
privileges.’ In his brief, at 16, Petitioner quotes language from the preamble for the final

7 Petitioner refers to 42 C.F.R. § 1001.301, which applies to exclusions of entities
and individuals from participation in Medicare, Medicaid, and all federal healthcare
programs by the Inspector General. P. Brief at 16. Part 1001 of 42 C.F.R. has no
application to enrollment and billing privilege revocations by CMS or its contractors.
However, 42 C.F.R. § 1001.301 does provide an example of the type of specific
regulatory authority that is absent in revocation cases. I note that, unlike the regulations
applicable in revocation cases, the exclusion regulations specifically provide for ALJ and
Board review of the mitigating and aggravating factors that might be applicable in a given
case. See, e.g.,42 C.F.R. §§ 1001.2007 and 1005.15. However, even in exclusion cases,
review of mitigating factors is limited to only those cases where the I.G. considered
aggravating factors. See 42 C.F.R. §§ 1001.102; 1001.2007. Furthermore, in permissive
exclusion cases to which Petitioner refers, the regulations specifically prohibit the ALJ
from reviewing the I.G. exercise of discretion to exclude if there exists a basis for
exclusion. 42 C.F.R. § 1005.4(c)(5).
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rule amending 42 C.F.R. Parts 420, 424, 489, and 498, promulgating requirements for
providers and suppliers to establish and maintain Medicare enrollment, effective June 20,
2006. 71 Fed. Reg. 20,753 (April 21, 2006). CMS said in the preamble:

In considering whether to revoke enrollment and billing
privileges in the Medicare program, we would consider the
severity of the offenses, mitigating circumstances, program
and beneficiary risk if enrollment was to continue, possibility
of corrective action plans, beneficiary access to care, and any
other pertinent factors.

Id. at 20,761. CMS has not, however, promulgated regulations that require consideration
of such factors before revocation or permitted my review of the CMS exercise of
discretion to revoke if a basis for revocation exists.

There is a basis for revocation of Petitioner’s billing privileges and my jurisdiction does
not extend to review of whether CMS or its contractor properly exercised its discretion
when deciding to proceed with revocation.

Ill. Conclusion

Petitioner’s supplier numbers and his billing privileges were properly revoked.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Decision No. CR1862
Centers for Medicare & Medicaid
Services.

In the Case of: )
)

Family Health Services of Darke ) Date: November 14, 2008
County, Inc., )
)
Petitioner, )
)

-V.- ) Docket No. C-08-366

)
)
)
)

DECISION GRANTING SUMMARY JUDGMENT TO
THE CENTERS FOR MEDICARE & MEDICAID SERVICES

I grant summary judgment to the Centers for Medicare & Medicaid Services (CMS). I
sustain its determination to certify for Medicare participation as Federally Qualified
Health Centers (FQHC) two locations belonging to Petitioner, Family Health Services of
Darke County, effective September 8, 2005.' I deny Petitioner’s motion for summary
judgment in which it contends that these two locations ought to be certified to receive
earlier effective participation dates.

I. Background
This is the second time that I have heard this case. On October 12, 2006, I issued a

decision granting summary judgment to CMS and affirming CMS’s determination to
certify the two locations as FQHCs effective September 8, 2005. Family Health Services

' The two locations are at 828 Central Avenue, Greenville, Ohio, and 702 North
Main Street, Arcanum, Ohio. | refer to them in this decision collectively as “the two
locations” or individually as the “Central Avenue location” and the “North Main Street
location.”
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of Darke County, Inc., DAB CR1518 (2006). Petitioner appealed my decision to the
Departmental Appeals Board and on June 12, 2007, a Board appellate panel issued a
decision which affirmed in part and reversed in part my original decision. Family Health
Services of Darke County, Inc., DAB No. 2092 (2007). In its order of remand the Board
gave me the option of remanding the case back to CMS so that CMS might make a new
determination consistent with the Board’s decision. I issued a remand order on June 15,
2007. On January 17, 2008, CMS issued a reconsideration determination in which it
affirmed its initial finding that the effective certification date for the two locations is
September 8, 2005. Petitioner appealed, and the case was assigned to me for a hearing
and a decision.

Neither party has requested that I hear testimony in person.” Rather, each party moved
for summary judgment. CMS filed 30 proposed exhibits which it designated as CMS Ex.
1-CMS Ex. 30. Petitioner filed 35 proposed exhibits which it designated as FH Ex. 1 -
FH Ex. 35. I am receiving all of these exhibits into the record of this case. For purpose
of deciding the parties’ motions, I assume to be true all of the facts stated in their
respective exhibits including the written direct testimony of the parties’ witnesses.

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

The issue in this case is whether Petitioner established that CMS ought to have certified
the two locations as Medicare-participating FQHCs on dates that are earlier than
September 8, 2005.

I addressed this same issue in my original decision. In its first hearing request, Petitioner
contended that the two locations should not be obligated to seek certification from CMS
as FQHCs because they were not free-standing entities but, rather, were satellites of
Petitioner’s certified facility. Thus, according to Petitioner, Medicare items or services
provided by the two locations should be treated by CMS as fungible with those provided
by Petitioner at its central location. I rejected this argument, holding that each of the two

> Each side filed the written direct testimony of witnesses but neither has
expressed a desire to conduct cross-examination of the other party’s witnesses. In its
motion for summary judgment Petitioner asks that I set this case for an in-person hearing
“in the alternative” to granting its motion. Petitioner’s motion at 27. However, it has not
stated what it would offer at an in-person hearing in addition to that which is contained in
its proposed exhibits, including the written declarations of its witnesses. Nor has
Petitioner contended that there are any disputed issues of material fact in this case.
3

locations was a free-standing entity which necessitated separate FQHC certification in
order to be eligible for Medicare reimbursement. The Board affirmed my holding as to
this issue. I do not revisit it here.

What remains to be decided is the question of whether each of the two locations qualified
individually for participation on a date that is earlier than September 8, 2005. In my
original decision I held that the effective date ofa facility’s participation as an FQHC is
the date when CMS determines to accept a signed agreement which assures that the
facility meets all federal participation requirements. I premised this holding on the plain
language of 42 C.F.R. § 489.13(a)(2)(i), which states that the effective date of
certification of an FQHC is the date when CMS “accepts a signed agreement.” I held that
the regulation’s language vested non-reviewable discretion in CMS to decide on which
date to accept an agreement. I held that CMS’s determination to accept the two locations’
agreements effective September 8, 2005 was non-reviewable. I declined to look behind
CMS’s determination so as to make an independent decision whether the two locations
may have qualified at an earlier date than September 8.

The Board reversed this part of my decision and held, effectively, that I (and it) had
authority to review for reasonableness CMS’s determination that the two locations first
qualified for certification on September 8, 2005. It directed CMS to determine whether
documents that Petitioner had filed on behalf of the two locations prior to September 8,
2005, and communications between Petitioner and CMS or its representatives prior to that
date, might substitute for the documentation that CMS had found to be an acceptable
signed agreement from Petitioner. The Board ordered that CMS and I look at the totality
of the relationship between Petitioner and CMS in order to decide whether the parties’
interactions might substitute constructively for the documentation that CMS determined
to constitute an acceptable agreement.*

> In its decision the Board found that I should consider whether the following
actions suffice to serve as proof that the two locations qualified for FQHC certification
prior to September 8, 2005:

obtaining a change of scope for . . . [Petitioner’s] PHS Act grant to include
. .. [the two locations]; consulting with CMS and its intermediaries about
how to qualify additional locations for Medicare FQHC reimbursement;
pursuant to that consultation, filing of CMS-855B applications (“Medicare
Enrollment Application - Clinics/Group Practices and Certain Other
Suppliers”) and CMS-855Rs (Medicare Federal Health Care Benefits
Enrollment Application - the Reassignment of Medicare Benefits”) for the
doctors practicing at the location[s]; and CMS’s subsequent payment of
4

B. Findings of fact and conclusions of law

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

1. In order to qualify as an FOHC an entity must satisfy all federal
enrollment requirements including those which specifically apply to
FQHCs and it must provide CMS with assurance, in the form of an
attestation, that it is complying with these requirements.

The prerequisites for qualification as an FQHC are that an entity must: satisfy all federal
enrollment requirements; and, provide CMS with proof that it has done so. 42 C.F.R.

§ 405.2430(a). There is nothing in the regulations governing FQHCs that suggests that an
entity may qualify for FQHC status without first having satisfied these two essential
prerequisites. Nor do the regulations allow for a waiver of these prerequisites.

There are participation requirements that apply specifically to FQHCs as distinguished
from Medicare providers and suppliers in general. An entity applying for FQHC status
must complete an application form (known as “form 855A”) which addresses those
specific participation requirements. In addition, it must complete an attestation statement
in which it certifies that: it has reviewed each federal requirement for FQHCs at section
1861(aa)(4) of the Social Security Act (Act) and all regulatory requirements that are
specified in 42 C.F.R. Part 405 Subpart X, and Part 491; and that it is currently in
compliance with all of these requirements and regulations. CMS Ex. 3; CMS Ex. 7. The
attestation, which is made subject to both civil and criminal penalties for false statements,
is a certification by the applicant that it will comply with the specific requirements
governing FQHCs in the Act and implementing regulations.’

reimbursement to . . . [Petitioner] for FQHC services at these locations.
DAB No. 2092 at 14.

+ An applicant for FQHC participation must attest as follows:

I certify that I have reviewed each Federal requirement in § 1861(aa)(4) of
the Social Security Act and the federally qualified health center
requirements specified in 42 CFR Part 405 Subpart X, and Part 491, as
described in § 405.2434(a) andthat (name of facility) is
currently in compliance with these requirements and regulations. I agree to
inform CMS of any changes that result in noncompliance.
5

There is nothing in the Act or in the regulations that provides that an FQHC may satisfy
the attestation requirement by providing something to CMS that is less specific than that
which is demanded from it by CMS. The requirement of a specific attestation of
compliance with FQHC requirements is premised on the fact that FQHCs comprise
Medicare suppliers, which provide services, and which are subject to participation
requirements, that differ from those that apply to providers and suppliers generally.

CMS’s requirement of a specific attestation from an applicant for FQHC participation is
not a mere technicality that can be overlooked. CMS insists on an attestation specifically
related to FQHC participation requirements precisely because FQHCs have attributes and
functions that are different from those of other providers and suppliers. Therefore, it is
entirely consistent with the Act’s very specific requirements for FQHC participation and
CMS’s role to assure that participating FQHCs comply with those requirements that CMS
demand from an applicant a specific attestation of compliance. And, for that reason, a
more generalized assurance of compliance with Medicare laws, regulations, and policies
will not suffice as an acceptable substitute for the specific attestation that is demanded by
CMS.

2. Petitioner did not provide CMS, prior to September 8, 2005, with an
attestation that it was complying with all FOHC requirements. CMS
therefore correctly determined to certify the two locations effective
September 8, 2005.

Each of the two locations filed a statement attesting compliance with FQHC
requirements on September 8, 2005. CMS Ex. 3; CMS Ex. 7. Petitioner has not asserted
that either of the two locations filed this document prior to September 8.

One reasonably could conclude that Petitioner’s failure to file attestation statements for
the two locations prior to September 8, 2005 is, as a matter of law, enough to support a
finding that the two locations did not qualify for certification as FQHCs at any time prior
to that date. In Schweiker v. Hansen, 450 U.S. 785 (1981), the United States Supreme
Court found that an agency of this Department’s requirement that an application be in
writing had the force of law and that estoppel did not lie against the Department for the
failure of one of its employees to inform an applicant of the requirement that she
complete an application in writing.’ The clear meaning of Schweiker v. Hansen is that

CMS Ex. 3; CMS Ex. 7.

* The agency involved in Schweiker was the Social Security Administration
which, at the time, was a part of this Department. The application was for Supplemental
6

agencies of this Department have the right under the law to insist that applicants for
benefits — or for participation in Medicare — comply precisely with specific agency
requirements as a prerequisite for approval. Under Schweiker v. Hansen an agency is not
required to accept a functional equivalent of an application which is not of the precise
form and conduct that the agency requires.

And, for good reason. Each year CMS processes many thousands of applications for
certification of providers and suppliers to participate in the Medicare program. Its
requirement that an applicant fill out a precise form or series of forms as a prerequisite for
certification is necessitated, in part, by efficiency considerations. If CMS were required
to accept functional equivalents for applications that have not been perfected, that would
open the door to numerous claims that certifications should have been made based on the
supply of equivalent information. That, conceivably, could bog CMS down in endless
debates as to whether applicants for participation should have been certified at dates
earlier than the dates when they completed their applications for participation.

However, the Board has ordered that I decide whether Petitioner, in effect, constructively

completed an attestation of compliance prior to September 8, 2005 and has directed that I

consider other documents that Petitioner filed with CMS or with its intermediary or with a
Medicare carrier prior to that date. I have done so and I find nothing in the record of this

case, whether considered individually or in combination with other documents, that is the

functional equivalent of the attestation statements that Petitioner filed on September 8.

The undisputed material facts establish that Petitioner was incorporated in 1973 for the
purpose of providing comprehensive health care services to poor, underprivileged and
indigent persons. It was certified as an FQHC effective October 1, 1991. It currently
serves patients from its principal offices at 5735 Meeker Road, Greenville, Ohio. In
applying for certification Petitioner executed the attestation statement that I describe at
Finding 1 of this decision. FH Ex. 5, at 6.

Subsequent to its being certified as an FQHC, Petitioner determined to open the Central
Avenue location and the North Main Street location in order to incorporate the practices
of several local family practice physicians who wished to affiliate with Petitioner. On

Security Income (SSI). The respondent in Schweiker had been misled by a field
representative of the Social Security Administration into believing that she was not
eligible for SSI benefits. As a consequence, she failed to file an application for SSI even
though she was eligible. The Social Security Administration subsequently denied the
respondent’s claim to retroactive SSI on the ground that she had failed to comply with the
agency’s requirement that she complete a written application.
7

October 9, 2002, Petitioner submitted a change of scope request with the Health
Resources and Services Administration of the United States Department of Health and
Human Services (HRSA) in order to include the Central Avenue location within
Petitioner’s Public Health Services Act (PHS) grant. FH Ex. 7.° On March 1, 2004,
Petitioner filed with HRSA a change of scope request to include the North Main Street
location within Petitioner’s PHS grant. FH Ex. 14.

Each of the two change of scope requests states unambiguously Petitioner’s intent to
conduct operations at the location described in the request in addition to Petitioner’s main
office. FH Ex. 7, at 13; FH Ex. 14, at 2. Neither of the documents, however, contains an
attestation as is required by CMS for FQHC certification. Indeed, neither of the change
of scope requests refer directly or indirectly to FQHC participation requirements. Rather,
these documents are created for an altogether different purpose, that being to justify the
inclusion of each of the two locations within a PHS grant.

Subsequently, Petitioner filed forms known as “855R” and “855B” applications relating
to the two locations. An 855R form is an application for reassignment of Medicare
benefits. FH Ex. 8. Its purpose is to document the reassignment of Medicare benefits
from an individual practitioner (physicians in this case) to a supplier receiving the
individual practitioner’s reassigned benefits. /d. at 1. It is not an application for
participation of an FQHC and makes no reference to laws or regulations governing FQHC
participation. The form contains an attestation statement. This statement requires the
provider who completes the form to attest that the contents of the form are true, accurate,
and complete, and subjects the provider to civil and criminal penalties for deliberate false
statements. But, it does not refer to specific Medicare requirements governing FQHCs.’

° HRSA has authority to administer PHS grants. It does not certify providers,
including FQHCs, to participate in Medicare.

’ The attestation statement is:

I certify that I have examined the above information [the information in the
855R form] and that it is true, accurate and complete to the best of my
knowledge. I understand that any deliberate misrepresentation or
concealment of any information requested in this application may subject
me to liability under civil and criminal laws. I certify that the
provider/supplier requesting to receive payments is legally eligible to
receive reassigned benefits per CMS regulations.

FH Ex. 8, at 3.
8

An 855B form is an application for enrollment in the Medicare program for a health care
supplier that will bill a Medicare carrier. FH Ex. 6. As with the 855R form, it is a
generic form which does not specifically identify the applicant as an applicant for FQHC
participation. Although it might be possible to infer from the 855B forms and related
documents that Petitioner filed on behalf of the two locations that Petitioner envisioned
these locations as functioning as FQHCs, there is nothing in the forms themselves that
specifically states that intent. The 855B form contains a certification statement in which
the applicant attests that it:

agree[s] to abide by the Medicare laws, regulations and program
instructions that apply to this supplier. The Medicare laws, regulations, and
program instructions are available through the Medicare contractor. I
understand that payment of a claim by Medicare is conditioned upon the
claim and the underlying transaction complying with such laws, regulations,
and program instructions . .., and on the supplier’s compliance with all
applicable conditions of participation in Medicare.

FH Ex. 6, at 5.

This certification, although clearly obligating a supplier to comply with governing laws,
regulations, and program instructions, is a general attestation of compliance. It does not
provide CMS with the assurance that is contained in the FQHC attestation of knowledge
of, and compliance with, the very specific laws, regulations, and policies that govern
FQHCs.

Thus, there is nothing in the record of this case which suffices to provide CMS with all of
the information that was required of Petitioner as a pre-condition for participation as an
FQHC. The earliest date — as determined by CMS - that Petitioner provided such
information was September 8, 2005.

As per the Board’s decision I have also considered the fact that CMS evidently made
some payments to Petitioner for items or services that were provided by the two locations
prior to September 8, 2005. That CMS did so does not change my analysis or my
decision. The fact that CMS may have made payments in error to Petitioner does not vest
rights in Petitioner to a participation date for the two locations that is earlier than the date
when these locations met all of CMS’s requirements for FQHC certification. I do not find
that such payments signify that CMS had, in fact, reviewed the qualifications of the two
locations and found that they met participation requirements prior to September 8, 2005.
9

Petitioner’s principal argument is that there was a course of conduct between it and CMS
prior to September 8, 2005 that constituted a constructive acceptance by CMS of the two
locations as participating FQHCs. In support of this argument, Petitioner points to the
following communications:

+ Notices of grant approvals from HRSA approving Petitioner’s requests to add the
two locations to its PHS grant.

+ Letters from CMS to Petitioner, dated September 23, 2003 and November 3,
2002 which: accepted a cost report from Petitioner that included the Central
Avenue location; and giving a $13,000 settlement to Petitioner covering claims for
costs that included the Central Avenue location.

But, these facts do not document a de facto acceptance by CMS of the two locations as
FQHCs. The PHS grant approval process is not certification. The fact that PHS
approved grants or expanded grants to Petitioner may have been a prerequisite to
approval to operate the two locations as FQHCs. But, it does not in any respect substitute
for the review and approval process that CMS engages in to determine whether an FQHC
applicant satisfies all federal requirements. The fact that CMS may have made erroneous
or incorrect payments to Petitioner is not, as I have explained, on its face tantamount to
certification of the two locations.

Petitioner argues also that, in fact, the two locations satisfied all federal participation
requirements on dates prior to September 8, 2005. However, and as I discuss in detail
above, Petitioner did not provide CMS with the requisite attestation of compliance with
federal laws, regulations, and policies governing FQHCs at any time prior to September
8. I do not question Petitioner’s assertion that the two locations may have functioned as
FQHCs on dates prior to September 8. But, the federal requirements that are at issue here
include not only performance as an FQHC but they include the requirement of an
attestation of compliance with governing laws, regulations, and policies.

Petitioner argues that equitable considerations weigh in favor of certification of the two
locations at dates earlier than September 8, 2005. But, I have no authority to compel
CMS to certify the two locations based on equitable considerations. Principles of equity
are inapplicable here. Schweiker v. Hansen, supra; Heckler v. Community Health
Services, 467 U.S. 51 (1984).

Finally, Petitioner asserts that CMS’s determination to certify the two locations effective
September 8, 2005 is an abuse of its discretion and is contrary to governing law.
Petitioner’s premise for this argument is that applicable regulations governing FQHCs do
not specify precisely the form of the application that a facility must complete in order to
10

qualify for FQHC participation. But, the fact that CMS has chosen to implement the
regulations by requiring a particular form (in this case an 855A form plus an attestation
statement) as a prerequisite for processing an application is hardly an abuse of discretion.
CMS clearly has the obligation to implement regulatory mandates in a logical and
efficient way and developing and implementing an appropriate application form is
entirely consistent with this duty.

Moreover, it is not correct to infer that CMS failed to provide applicants for FQHC
participation with notice of the forms it required that they complete. The preamble to
regulations governing FQHCs states explicitly that “each site [applying for certification]
must indepenently attest to meeting the conditions in Part 491 Subpart A.” 61 Fed. Reg.
14640, 14641 (April 3, 1996). CMS’s State Operations Manual in effect on relevant
dates states that, as a prerequisite to FQHC participation, the applicant is required to
submit a signed and dated attestation statement to CMS. CMS Ex. 21, at 2.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
Steven Lee Ives, Date: November 4, 2008
)
Petitioner, )
)
-Vv.- ) Docket No. C-08-466
) Decision No. CR1861
The Inspector General. )
)
DECISION

This case is before me pursuant to a request for hearing filed by Steven Lee Ives,
Petitioner, dated May 16, 2008, and received in the Civil Remedies Division on May 19,
2008. It is my decision to sustain the determination of the Inspector General (I.G.) to
exclude Petitioner from participating in Medicare, Medicaid, and all federal health care
programs, for a period of five years. Additionally, I find that the five-year exclusion
imposed on Petitioner as a matter of law is not unreasonable.

I. Background

By letter dated April 30, 2008, the Inspector General (1.G.) notified Petitioner, Steven Lee
Ives, that he was being excluded from participation in the Medicare, Medicaid, and all
federal health care programs as defined in section 1128B(f) of the Social Security Act
(Act) for the minimum period of five years. I.G. Exhibit (Ex.) 1, at 1. The I.G. informed
Petitioner that his exclusion was imposed under section 1128(a)(3) of the Act, due to his
conviction of a criminal offense (as defined in section 1128(i) of the Act) related to fraud,
theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in
connection with the delivery of a health care item or service or any act or omission in a
health care program operated or financed by any Federal, State, or local agency. I.G. Ex.
1, atl.

On July 1, 2008, I convened a telephone prehearing conference during which all parties
agreed that there were no factual issues in dispute and the only remaining issue is whether
Petitioner’s conviction falls within the exclusion provisions of the Act. The parties,
2

therefore, agreed on a briefing schedule to address the sole issue of whether the I.G. is
authorized to exclude Petitioner from participating in Medicare and other federally
funded health care programs pursuant to 1128(a)(3) of the Act. Thus, I issued an order
establishing briefing deadlines. Pursuant to that order, Petitioner filed a brief on July 1,
2008, but proffered no exhibits. The I.G. filed a brief on August 1, 2008, accompanied by
ten proposed exhibits. These have been entered into the record as I.G. Exs. 1-10, with
objection by the Petitioner to Ex. 4 and Ex.7. These objections are without merit and
consequently denied. On September 15, 2008, the L.G. filed a reply brief.

It is my decision to sustain the determination of the I.G. to exclude Petitioner from
participating in the Medicare, Medicaid, and all federal health care programs, for a period
of five years. I base my decision on the documentary evidence, the applicable law and
regulations, and the arguments of the parties. It is my finding that Petitioner was
convicted of a criminal offense related to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct in connection with the delivery of a health
care item or service. Additionally, I find that where the exclusion is for the five-year
minimum period, no question of reasonableness as to the length of such exclusion exists.

II. Issues

The issues in this case are (1) whether the I.G. had a basis upon which to exclude
Petitioner from participation in the Medicare, Medicaid, and all federal health care
programs as defined in section 1128B(f) of the Act; and if so, (2) whether the length of
the exclusion imposed by the I.G. upon Petitioner is unreasonable.

Ill. Applicable Law

Section 1128(a)(3) of the Act authorizes the Secretary of Health and Human Services to
exclude from participation in any federal health care program (as defined in section
1128B(f) of the Act), any individual convicted of a criminal offense relating to fraud,
theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in
connection with the delivery of a health care item or service. 42 U.S.C. § 1320a-7(a)(3).

An exclusion under section 1128(a)(3) of the Act must be for a minimum period of five
years. Section 1128(c)(3)(B) of the Act. Aggravating factors can serve as a basis for
lengthening the period of exclusion. 42 C.F.R. § 1001.102(b). If aggravating factors
justify an exclusion longer than five years, mitigating factors may be considered as a
basis for reducing the period of exclusion to no less than five years. 42 C.F.R.

§ 1001.102(c).
3

Pursuant to 42 C.F.R. § 1001.2007, an individual or entity excluded under section
1128(a)(3) of the Act may file a request for a hearing before an administrative law judge.

IV. Findings and Discussion

The findings of fact and conclusions of law noted below, in bold face, are followed by a
discussion of each finding.

1. Petitioner’s conviction of a criminal offense related to fraud, theft,
embezzlement, breach of fiduciary responsibility, or other financial
misconduct in connection with the delivery of a health care item or
service justifies his exclusion by the I.G. from participation in the
Medicare, Medicaid, and all other federal health care programs.

Petitioner was a laboratory manager employed by the Buchanan County Health Center, a
nursing home facility in Buchanan County, Iowa. I.G. Ex. 4, at 1. On August 10, 2005,
the Petitioner was videotaped entering the health center’s office and taking funds from a
safe where cash was kept on-hand for the residents. The Petitioner was charged with
second-degree theft and third-degree burglary. I.G. Ex. 3, at 1. On October 20, 2006,
Petitioner entered an Alford plea to the charge of third-degree burglary, and the theft
charge was dismissed.' I.G. Ex. 3, at 1. Petitioner was sentenced to 36 months of
probation and required to pay restitution in the amount of $1,725.00 and fines in the
amount of $875.00. IG. Ex. 3, at 2.

In view of the above events, the I.G. informed the Petitioner on April 30, 2008, that he
was being excluded for the mandatory period of five years under section 1128(a)(3) of the
Act, due to his conviction of a criminal offense (as defined in section 1228(i) (42 U.S.C.
1320a-7(i)) of the Act) related to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct in connection with the delivery of a health
care item or service or any act or omission in the health care program operated or
financed by any federal, state, or local government agency.

‘Although the Petitioner entered an Alford Plea to the charge of burglary and the
theft charge was dismissed, this conviction is sufficiently related to a criminal offense of
theft. Burglary is the unlawful entry with the intent to commit theft. Additionally, the
underlying conduct of the crime for which the Petitioner was convicted involved the
inappropriate taking of money that belonged to nursing home residents. As part of the
criminal proceedings, the court ordered the Petitioner to pay restitution in the amount of
$1725 for the funds he took belonging to those residents.
4

Petitioner contends that he was not convicted of an offense that “was in connection with
the delivery of a healthcare item or services.” Petitioner’s Brief (P. Br.) at 5. Petitioner
also argues that the money at issue lacks a “common sense connection” to a “healthcare
item or service.” P. Br. at6. This argument is without merit.

The Departmental Appeals Board (Board) has previously interpreted Section 1128(a)(3)
as covering two categories of felonies. That includes those “in connection with the
delivery of a health care item or service” and those “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.” Eric D. DeSimone, R.Ph., DAB No. 1932, at 4 (2004).

The relevant category of felonies at issue here is the first category; those “in connection
with the delivery of a health care item or service.”

The statute does not require a direct connection to exist between the offense and the
delivery of a health care item or service, but only requires a “common sense analysis”
between the offense and the delivery of a healthcare care item or service. DeSimone,
R.Ph., DAB No. 1932, at 4. The Board held that the “connection” requisite is established
when the Petitioner commits a felony through access “under the guise of performing his
[or her] professional responsibilities.” DeSimone, R.Ph., DAB No. 1932, at 5.
Furthermore, I have previously held that untrustworthy conduct relating to health care
programs is sufficient in justifying an exclusion pursuant to 1128(a)(3). William J.
Arnold, M.D., DAB CR1058, at 3(2003) (holding the Petitioner’s fraudulent submission
of disability reports was the “type of untrustworthy conduct that Congress sought to
prevent” by enacting the exclusionary rules, and thus, there was a basis for excluding the
Petitioner).

The Petitioner had access to the office space because of his position as laboratory
manager, and he would not have known about the funds but for his employment at the
nursing home. LG. Brief (Br.) at 6. He used his position of employment to gain
unauthorized access to the residents’ funds entrusted to the nursing home facility for
protection. The Petitioner’s unauthorized access to these funds was an adverse action
against the residents and a violation of the duty and trust confided to the Petitioner as an
agent for the facility.

The Nursing Home Reform Amendments of OBRA 1987 require that nursing facilities
which participate in the Medicare and or Medicaid programs "promote and protect the
rights of each resident.". This includes safeguarding property and funds entrusted to the
facility by its residents. See 42 C.F.R.§ 483.10 (c). Consistent with this requirement, the
applicable regulations mandate that a nursing facility must “develop and implement
written policies and procedures that prohibit mistreatment, neglect, and abuse of residents
5

and misappropriation of resident property.”(emphasis added). 42 C.F.R. § 483.13 (c). In
view of the statutory and regulatory provisions that set forth rigorous requirements for the
protection of every aspect of a nursing home resident’s quality of life, Petitioner’s
argument that his offense, theft of petty cash belonging to residents kept in a private
office, had nothing to do with any health care item or service (emphasis supplied), is
misplaced. It is thus undeniable, that the duty of a nursing facility to protect funds that it
holds in trust for the benefit of its residents, is a required service of every Medicare
certified facility, and therefore, Petitioner’s conviction falls squarely within the exclusion
provisions of Section 1128(a)(3) of the Act. Consequently, the Secretary is authorized to
exclude Petitioner from participation in any federal health care program (as defined in
section 1128B(f) of the Act), due to his conviction of a criminal offense relating to fraud,
theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in
connection with the delivery of a health care item or service. 42 U.S.C. § 1320a-7(a)(3).

2. Petitioner’s exclusion for a period of five years is not unreasonable.

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

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

When the IG. imposes an exclusion for the mandatory five-year period, the reasonableness of the
length of exclusion is not an issue. 42 C.F.R. § 1001.2007(a)(2). Aggravating factors that justify
lengthening the exclusion period may be taken into account, but the five-year term may not be
shortened. Thus, as a result of Petitioner’s conviction the I.G. is required to exclude him
pursuant to section 1128(a)(3) of the Act, for at least five years. I.G. Br. at 8.

V. Conclusion

Petitioner’s conviction pursuant to sections 1128(a)(3) and 1128(c)(3)(B) of the Act mandate that
he be excluded from Medicare, Medicaid, and all other federal health care programs, for a period
of at least five years.

/s/
José A. Anglada
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)

Elizabeth M. Prokay, ) Date: October 31, 2008
)
Petitioner, )
)

-Vv.- ) Docket No. C-08-555
) Decision No. CR1860
Centers for Medicare and )
Medicaid Services. )
)
DECISION

I grant summary judgment in favor of the Centers for Medicare & Medicaid Services
(CMS) sustaining its determination to deny Petitioner, Elizabeth Prokay, enrollment in
the Medicare program.

I. Background

Petitioner applied to participate in the Medicare program to provide mental health care
services to Medicare beneficiaries as a non-physician practitioner. Specifically, Petitioner
seeks to participate in Medicare as a licensed professional counselor of mental health
services.

CMS denied Petitioner’s application on the ground that Petitioner does not possess the
necessary professional qualifications to participate in Medicare. Petitioner requested a
hearing and the case was assigned to me for a hearing and a decision.

CMS moved for summary judgment. In support of its motion CMS provided five
proposed exhibits which it designated as CMS Ex. 1 - CMS Ex. 5. Petitioner opposed the

motion.

For purposes of the record I am receiving CMS Ex. 1 - CMS Ex. 5.
2

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

The issue in this case is whether CMS is authorized to deny Petitioner enrollment in the
Medicare program.

B. Findings of fact and conclusions of law

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

1. The Medicare program does not accept as participating providers
and/or suppliers individuals whose professional qualifications do not
satisfy specific participation requirements.

The qualifications of those who may participate in Medicare are established by relevant
sections of the Social Security Act (Act) and by implementing regulations. Neither the
Act nor the regulations define a “licensed professional counselor” as a provider who
qualifies to participate in Medicare. Recognizing that there is no specific statutory
recognition of her profession, Petitioner argues that she should nonetheless be certified to
participate in Medicare as a provider of clinical social worker services. She asserts that
the professional services provided of a licensed professional counselor are
indistinguishable from those provided by a clinical social worker. She argues that she
should qualify to participate as a clinical social worker based on the functional identity of
the services performed by the two classes of professionals.

The Act defines “clinical social worker services” at section 1861(hh)(2). In order to
qualify as a participating provider of such services one must qualify as a “clinical social
worker”. Act, section 1861(hh)(1). This section of the Act defines a clinical social
worker as an individual who:

(A) possesses a master’s or doctor’s degree in social work;
(B) after obtaining such degree has performed at least 2 years of supervised
clinical social work; and
(C)(i) is licensed or certified as a clinical social worker by the State in
which the services are performed, or
(ii) in the case of an individual in a State which does not provide for
licensure or certification —
3

(I) has competed at least 2 years or 3,000 hours of post-
master’s degree supervised clinical social work practice under
the supervision of a master’s level social worker in an
appropriate setting (as determined by the Secretary), and

(ID meets such other criteria as the Secretary establishes.

There is nothing in either the Act or in implementing regulations which provides that an
individual may qualify to provide clinical social worker services — or counseling services
— with education or experience that does not satisfy precisely the statutory criteria for
participation as a clinical social worker. Nor is there anything in either the Act or in
implementing regulations that would require or permit the Secretary of this Department to
waive the statutory qualifying criteria in order to allow an individual to participate as a
clinical social worker. Therefore, in order to sustain Petitioner’s argument that she
qualifies for participation I must find that Petitioner satisfies exactly the statutory criteria
for a participating clinical social worker.

2. The undisputed material facts of this case establish that Petitioner fails
to satisfy the statutory requirements for participation as a clinical social
worker.

The undisputed material facts of this case establish that Petitioner fails to satisfy the
statutory participation requirements for a provider of social worker services.
Consequently, she does not qualify to participate and CMS correctly determined to deny
her enrollment application.

Petitioner asserts that she meets all requirements for a “licensed professional counselor”
in the State of Ohio. She contends that, under Ohio law, she is qualified to provide any
and all of the services that a provider of social worker services provides. Consequently,
according to Petitioner, she possesses equivalent professional qualifications to those
required by the Act of a provider of social worker services and, therefore, should be
certified to participate in Medicare.

However, Petitioner has not provided evidence to show that she has a Master’s or
Doctor’s degree in social work, she has not established that she has provided at least two
years of supervised clinical social work, and she has not shown that she is licensed or
certified as a clinical social worker by the State of Ohio. Act, section 1861hh(1)(A), (B),
(C)(@). Nor has Petitioner proven that Ohio does not provide for licensure or certification
of clinical social workers and that she meets the criteria which pertain in that case. Act,
section 1861(hh)(1)(C)(ii).
4

Petitioner argues that a legal distinction between a clinical social worker and a licensed
professional counselor is unfair because, in fact, the work performed by these two classes
of health care professionals is essentially identical as are their qualifications. I make no
findings in this decision whether the education, training, and experience possessed by
Petitioner are functionally equivalent to those that are possessed by a clinical social
worker as that term is defined by section 1861(hh)(1) because, even if that were so, it
would have no impact on my decision. In this case the Act simply does not allow for a
“functional equivalent” exception to its precise criteria for participation. I am without
authority to direct CMS to make such an exception.”

/s/
Steven T. Kessel
Administrative Law Judge

* The issue of equivalency has been addressed by administrative law judges in at
least two other cases. In each of them the judge held that failure by an applicant for
provider status to prove that he or she met precisely the criteria established by section
1861(hh) of the Act supported CMS’s determination not to certify the applicant. In each
case the judge rejected an “equivalency” argument. Dorothy Rose Hrynyk, DAB CR1444
(2006); Rosalyn L. Olian, DAB CR1472 (2006).


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: )
) Date: October 31, 2008
Jennifer P. Kuehn, )
)
Petitioner, ) Docket No. C-08-546
) Decision No. CR1859
-v.- )
)
The Inspector General. )
oo )
DECISION

Petitioner, Jennifer P. Kuehn, is excluded from participation in Medicare, Medicaid, and
all other federal health care programs pursuant to section 1128(a)(1) of the Social
Security Act (the Act) (42 U.S.C. § 1320a-7(a)(1)), effective May 20, 2008, based upon
her conviction of a criminal offense related to delivery of an item or service under
Medicare or a state health care program. There is a proper basis for exclusion.
Petitioner’s exclusion for the minium period’ of five years is mandatory pursuant to
section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).

I. Background

The Inspector General for the Department of Health and Human Services (the I.G.)
notified Petitioner by letter dated April 30, 2008, that she was being excluded from
participation in Medicare, Medicaid, and all federal health care programs for the
minimum statutory period of five years, pursuant to section 1128(a)(1) of the Act. The

“Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only
after the period of exclusion expires. Reinstatement is not automatic upon completion of
the period of exclusion.
2

basis cited for Petitioner’s exclusion was her conviction in the Superior Court of
Washington, King County, of a criminal offense related to the delivery of an item or
service under Medicare or a state health care program. See Act § 1128(a)(1); 42 U.S.C.
§ 1320a-7(a)(1); 42 C.F.R. § 1001.101(a).

Petitioner timely requested a hearing by letter dated June 10, 2008. The case was
assigned to me for hearing and decision on June 25, 2008. On July 14, 2008, I convened
a prehearing telephonic conference, the substance of which is memorialized in my Order
dated July 14, 2008. During the prehearing conference, Petitioner did not waive her right
to an oral hearing, and the I.G. requested that a schedule be set for briefing its anticipated
motion for summary judgment.

The L.G. filed a motion for summary judgment and supporting brief on August 5, 2008
(1.G. Brief), with .G. Exhibits (I.G. Exs.) 1 through 6. Petitioner filed her response to the
motion for summary judgment on September 8, 2008 (P. Brief), with exhibits (P. Ex.) 1
through 5. The I.G. waived filing a reply brief by letter dated September 16, 2008. No
objection has been made to the admissibility of any of the proposed exhibits and I.G. Exs.
1 through 6 and P. Exs. | through 5 are admitted.

II. Discussion
A. Findings of Fact

The following findings of fact are based upon the uncontested and undisputed assertions
of fact in the pleadings, and the exhibits admitted. Citations may be found in the analysis
section of this decision if not included here.

1. On October 22, 2007, Petitioner was convicted, pursuant to her plea of one count
of theft in the first degree and two counts of Medicaid false statements in violation
of the Revised Code of Washington, by the Superior Court of Washington, County
of King. 1G. Ex. 2.

2. By pleading guilty to the count of theft in the first degree, Petitioner admitted that
she wrongfully obtained or exerted unauthorized control over the property or
services of another of a value in excess of $1500. IG. Ex. 5, at 1.

3. By pleading guilty to the two counts of Medicaid false statements, Petitioner
admitted that on two occasions she knowingly made or caused to be made a false
statement or representation of a material fact in an application for payment to a
Washington State health-care program. I.G. Ex. 5, at 2-3.

3

On October 22, 2007, Petitioner was sentenced to be confined for 30 days which
was converted to 240 hours of community service, to make restitution of $5,935.96
to the state Medicaid program, to pay $500 to the victim assistance fund, and to 12
months of community supervision. I.G. Ex. 2.

Petitioner does not deny that the charges to which she pled guilty arose from her
work as a home health aide and her filing of claims for reimbursement to a state
health care program for work that she did not perform. P. Brief at 2; I.G. Brief at
2-4; 1.G. Ex. 4.

The L.G. notified Petitioner by letter dated April 30, 2008, that she was being
excluded from participation in Medicare, Medicaid, and all federal health care
programs for the minimum statutory period of five years pursuant to section
128(a)(1) of the Act.

Petitioner timely requested a hearing by letter dated June 10, 2008.

B. Conclusions of Law

Petitioner’s request for hearing was timely and I have jurisdiction.

Summary judgment is appropriate.

Petitioner was convicted of a criminal offense related to the delivery of an item or
service under Medicare or a state health care program within the meaning of
section 1128(a)(1) of the Act.

There is a basis for Petitioner’s exclusion pursuant to section 1128(a)(1) of the
Act.

Pursuant to section 1128(c)(3)(B) of the Act, the minimum period of exclusion
under section 1128(a) is five years, and that period is presumptively reasonable.

C. Issues

The Secretary of the Department of Health and Human Services (the Secretary) has by
regulation limited my scope of review to two issues:

Whether there is a basis for the imposition of the exclusion; and,
4

Whether the length of the exclusion is unreasonable.
42 C.F.R. § 1001.2007(a)(1).

n this case, there is no issue as to the reasonableness of the proposed period of exclusion
as it is the minimum period of five years mandated by the Act. The standard of proof is a
preponderance of the evidence and there may be no collateral attack of the conviction that
is the basis for the exclusion. 42 C.F.R. § 1001.2007(c) and (d). Petitioner bears the
urden of proof and persuasion on any affirmative defenses or mitigating factors, and the
.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(b) and (c).

D. Applicable Law

Petitioner’s right to a hearing by an administrative law judge (ALJ) and judicial review of
the final action of the Secretary is provided by section 1128(f) of the Act (42 U.S.C.

§ 1320a-7(f)). Petitioner’s request for a hearing was timely filed and I do have
jurisdiction.

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation
in the Medicare and Medicaid programs any individual convicted of a criminal offense
related to the delivery of an item or service under Medicare or a state health care
program. Pursuant to section 1128(i) of the Act, an individual is convicted of a criminal
offense when: (1) a judgement of conviction has been entered against him or her ina
federal, state, or local court whether an appeal is pending or the record of the conviction
is expunged; (2) when there is a finding of guilt by a court; (3) when a plea of guilty or no
contest is accepted by a court; or (4) when the individual has entered into any
arrangement or program where judgment of conviction is withheld.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act shall be for a minimum period of five years. Pursuant to 42 C.F.R.

§ 1001.102(b), the period of exclusion may be extended based on the presence of
specified aggravating factors. Only if the aggravating factors justify an exclusion of
longer than five years may mitigating factors be considered as a basis for reducing the
period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c). No aggravating
factors are cited by the LG. in this case, and the I.G. does not propose to exclude
Petitioner for more than the minimum period of five years.
E. Analysis
1. Summary judgment is appropriate in this case.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The right to hearing before an ALJ is
accorded to a sanctioned party by 42 C.F.R. § 1005.2, and the rights of both the
sanctioned party and the L.G. to participate in a hearing are specified in 42 C.F.R.

§ 1005.3. Either or both parties may choose to waive appearance at an oral hearing and to
submit only documentary evidence and written argument for my consideration. 42 C.F.R.
§ 1005.6(b)(5). An ALJ may also resolve a case, in whole or in part, by summary
judgment. 42 C.F.R. § 1005.4(b)(12). Summary judgment is appropriate and no hearing
is required where either: there are no disputed issues of material fact and the only
questions that must be decided involve application of law to the undisputed facts; or, the
moving party prevails as a matter of law even if all disputed facts are resolved in favor of
the party against whom the motion is made. A party opposing summary judgment must
allege facts which, if true, would refute the facts relied upon by the moving party. See,
e.g., Fed. R. Civ. P. 56(c); Garden City Medical Clinic, DAB No. 1763 (2001); Everett
Rehabilitation and Medical Center, DAB No. 1628, at 3 (1997) (in-person hearing
required where non-movant shows there are material facts in dispute that require
testimony); Thelma Walley, DAB No. 1367 (1992); see also New Millennium CMHC,
DAB CR672 (2000); New Life Plus Center, DAB CR700 (2000).

There are no genuine issues of material fact in dispute in this case. Petitioner does not
dispute that she was convicted of a criminal offense related to the delivery of an item or
service under Medicare or a state health care program; that there is a basis for her
exclusion; or that the minimum period of exclusion is five years. She requests only that I
consider the hardship her exclusion will cause. The issue before me for resolution is an
issue of law, no material facts are in dispute, and summary judgment is appropriate.

2. There is a basis for Petitioner’s exclusion pursuant to section
1128(a)(1) of the Act.

The I.G. cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory
exclusion. The statute provides:

(a) MANDATORY EXCLUSION. — The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined in
section 1128B(f)):
6

(1) Conviction of program-related crimes. — Any individual or
entity that has been convicted of a criminal offense related to the
delivery of an item or service under title XVIII or under any State
health care program.

The statute requires the Secretary to exclude from participation any individual or entity:
(1) convicted of a criminal offense; (2) where the offense is related to the delivery of an
item or service; and (3) the delivery of the item or service was under Medicare or a state
health care program. Petitioner does not dispute that she was convicted of a criminal
offense within the meaning of section 1128(i) of the Act. Petitioner also does not dispute
that the conviction was related to the delivery of an item or service under Medicare ora
state health care program. Accordingly, I conclude that there is a basis for Petitioner’s
exclusion, and the exclusion is required by section 1128(a)(1).

3. Pursuant to section 1128(c)(3)(B) of the Act, the minimum period of
exclusion under section 1128(a) is five years.

Petitioner has not disputed that the minimum period of an exclusion pursuant to section
128(a)(1) is five years as mandated by section 1128(c)(3)(B). I have found there is a

asis for Petitioner’s exclusion pursuant to section 1128(a)(1), and the minimum period of
exclusion is thus five years. The I.G. and I do not have authority under the Act to impose
a period of less than five years. Thus, Petitioner’s requests and arguments for a lesser
period of exclusion cannot be considered to reduce the period of exclusion.

Petitioner indicates in her brief that she has questions regarding the meaning of various
terms and phrases contained in the notice of exclusion and the attachment to that notice.
Petitioner should request clarification from the office that issued the notice of exclusion
referenced in the second to last paragraph of the document at P. Ex. 5.

Ill. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs for a period of five years, effective May
20, 2008, 20 days after the I.G.’s April 30, 2008 notice of exclusion.

/s/
Keith W. Sickendick
Administrative Law Judge