Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Tinley Park Mental Health Center,
(Provider No.: ILH0497),

Petitioner
Vv.
Centers for Medicare & Medicaid Services.
Docket No. C-10-557
Decision No. CR2149

Date: June 9, 2010

DECISION AND ORDER DISMISSING CASE

THIS MATTER IS BEFORE ME on the Motion to Dismiss filed by the Centers for
Medicare & Medicaid Services (CMS) on April 13, 2010. By its Motion CMS seeks the
dismissal of the Request for Hearing filed by Petitioner Tinley Park Mental Health Center
(TPMHC), which Request for Hearing is the basis of this appeal. The parties have
briefed the issue raised in the Motion, and have proffered exhibits in documentary form
to support their briefing.

Having considered the parties’ briefs and having admitted and reviewed their exhibits, I
GRANT the Motion to Dismiss. My reasons for doing so, and my findings and
conclusions, are set out below.

I. Procedural Background

TPMHC is a psychiatric hospital located in Tinley Park, Illinois, a community near
Chicago. Until February 2007 TPMHC participated in the Medicare program in that
capacity. However, compliance surveys of TPMHC were conducted in August and
October 2006 and in January 2007, and the results of those surveys led CMS to terminate
TPMHC’s Medicare participation agreement effective February 23, 2007. TPMHC did
not appeal CMS’s 2007 termination action.
In time TPMHC sought to regain its Medicare certification, and on March 16, 2009 the
facility requested a “reasonable assurance” survey (RAS) in the expectation that it could
demonstrate substantial compliance with conditions of participation in the Medicare
program. The RAS was completed on September 16, 2009.

The RAS did not find TPMHC in substantial compliance with all participation
requirements. The facility was found to be not in substantial compliance with two
conditions of participation related to its special status as a psychiatric hospital: the
conditions set out at 42 C.F.R. § 482.61, relating to special medical record-keeping
requirements for psychiatric hospitals, and at 42 C.F.R. § 482.62, relating to special staff
requirements for psychiatric hospitals. TPMHC’s substantial non-compliance with

42 C.F.R. § 482.61 had been the basis of CMS’s termination action in 2007.

CMS wrote to TPMHC on October 21, 2009 and informed the facility that it had been
found to be not in substantial compliance with those two conditions. CMS informed
TPMHC that it might within 60 days request that CMS reconsider its decision. Although
its request that CMS reconsider does not appear in the record before me, TPMHC
apparently did so, but without success. On January 21, 2010, CMS wrote to TPMHC and
announced that it was affirming its decision of October 21, 2009 and denying TPMHC’s
certification to participate in Medicare.

TPMHC filed its Request for Hearing on March 17, 2010, making reference to the CMS
letter of January 21, 2010. My Acknowledgment and Initial Docketing Order followed
on March 25, 2010.

The CMS letter of January 21, 2010 is the source of some procedural confusion, for it
contained language purporting to explain that TPMHS had the right to appeal CMS’s
action. CMS now asserts that the language was included erroneously, and claims to have
corrected its error and cancelled any effect it might have had by writing to TPMHC on
April 7, 2010, “re-opening” its January 21, 2010 letter, restating and amplifying its
reasons for denying the facility’s Medicare certification, and asserting that “[T]he action
we are taking in this letter is an administrative action that is not an initial determination,
and it is therefore not subject to appeal pursuant to 42 C.F.R. 498.3(d)(4).” Obviously,
the CMS letter of April 7, 2010 was written after my Acknowledgment and Initial
Docketing Order had been issued.!

' In its opening pleading, CMS suggests that its “April 7 reopening of this matter renders
Petitioner’s appeal in this case moot, since the April 7 re-opening letter supercedes CMS’
January 21, 2010 reconsidered determination, and no appeal rights were accorded by
CMS in its April 7 letter.’ CMS Motion at 2. This interesting argument was neither
answered by TPMHC nor pursued further by CMS, and I do not consider it further in this
Decision.
The CMS Motion now before me adopts the position CMS took in its April 7, 2010 letter
to TPMHC. CMS now argues that its decision to deny the facility certification is an
“administrative action” as contemplated by 42 C.F.R. § 489.57 and 42 C.F.R.

§ 498.3(d)(4), not an “initial determination” as contemplated by 42 C.F.R. § 498.3(b),
and therefore not subject to appeal pursuant to 42 C.F.R. § 498.5.

II. Issue

The sole issue before me is whether TPMHC has a right to a hearing in order to challenge
CMS’s January 21, 2010 decision to deny TPMHC certification in the Medicare program.
The resolution of this issue depends on whether the CMS decision is an administrative
action as defined in 42 C.F.R. § 498.3(d)(4) — in which case it is not appealable — or
whether it is an initial determination, subject to appeal under the terms of 42 C.F.R. §
498.5.

III. Controlling Statutes and Regulations

In order to participate as a provider in the Medicare program, a psychiatric hospital must,
among other things, comply with the requirements set out at length in 42 C.F.R.

§§ 482.60, 482.61, and 482.62. Many of the general requirements applicable to all
hospitals are made applicable to psychiatric hospitals by 42 C.F.R. § 482.60(b). A
special condition of participation concerning clinical records is imposed by 42 C.F.R.

§ 482.60(c) and its component standards are detailed in 42 C.F.R. § 482.61. A special
condition of participation concerning staffing requirements is imposed by 42 C.F.R.

§ 482.60(d) and its component standards are detailed in 42 C.F.R. § 482.62.

The special condition concerning clinical records has five component standards. They
are set out at 42 C.F.R. § 482.61(a), development of assessment and diagnostic data;

42 C.F.R. § 482.61(b), psychiatric evaluation; 42 C.F.R. § 482.61(c), treatment plan;

42 C.F.R. § 482.61(d), recording progress; and 42 C.F.R. § 482.61(e), discharge planning
and discharge summary. The first three standards are subdivided into additional specific
requirements, and all five standards contain detailed descriptions of what the required
records must reflect.

In similar manner, the special condition concerning staffing requirements has seven
component standards set out at 42 C.F.R. § 482.62(a), personnel; 42 C.F.R. § 482.62(b),
director of inpatient psychiatric services and medical staff; 42 C.F.R. § 482.62(c),
availability of medical personnel; 42 C.F.R. § 482.62(d), nursing services; 42 C.F.R.

§ 482.61(e), psychological services; 42 C.F.R. § 482.62(f), social services; and 42 C.F.R.
§ 482.62(g), therapeutic activities. All but the standards for availability of medical
personnel and psychological services are subdivided into additional specific
requirements, and all seven standards include detailed descriptions of what is required by
each.
In relevant part, 42 C.F.R. § 489.57 provides:

When a provider agreement has been terminated by CMS . . . anew
agreement with that provider will not be accepted unless CMS . . . finds —

(a) That the reason for termination of the previous agreement has
been removed and there is reasonable assurance that it will not recur; and

(b) That the provider has fulfilled, or has made satisfactory
arrangement to fulfill, all of the statutory and regulatory responsibilities of
its previous agreement.

The appeal provisions relevant to this case are set out in 42 C.F.R. Part 498, and 42
C.F.R. § 498.5(b) establishes the appeal rights of providers such as psychiatric hospitals.
The regulation requires that the action the provider seeks to appeal must be an “initial
determination.”

The term “initial determinations” is defined at 42 C.F.R. § 498.3(b) in a lengthy
catalogue of potential actions by CMS. The regulation goes on, however, to identify a
number of actions, presumably by CMS, that are “administrative actions,” and explicitly
are not initial determinations. In relevant part, 42 C.F.R. § 498.3(d) reads:

(d) Administrative actions that are not initial determinations.
Administrative actions that are not initial determinations (and therefore not
subject to appeal under this part) include but are not limited to the
following:

(4) The finding that an entity that had its provider agreement terminated
may not file another agreement because the reasons for terminating the
previous agreement have not been removed or there is insufficient
assurance that the reasons for the exclusion will not recur.

The terms of 42 C.F.R. § 498.70(b) authorize the dismissal of a hearing request in
situations where:

(b) No right to a hearing. The party requesting a hearing is not a proper
party or does not otherwise have a right to a hearing.
IV. Findings and Conclusions
I find and conclude as follows:

1. The CMS decision announced in its letter of January 21, 2010 is not an initial
determination within the meaning of 42 C.F.R. § 498.3(b).

2. The CMS decision announced in its letter of January 21, 2010 is an
administrative action within the meaning of 42 C.F.R. § 489.57 and 42 C.F.R. §
498.3(d)(4).

3. Because the CMS decision announced in its letter of January 21, 2010 is an
administrative action within the meaning of 42 C.F.R. § 489.57 and 42 C.F.R. §
498.3(d)(4), it is not subject to appeal pursuant to 42 C.F.R. § 498.5.

4. TPMHC has no right to right to a hearing in order to challenge CMS’s January
21, 2010 decision.

5. TPMHC’s Request for Hearing must be dismissed pursuant to the terms of 42
C.F.R. § 498.70(b).

V. Discussion

Although they differ sharply on the interpretation it should be given, both TPMHC and
CMS agree that the language of 42 C.F.R. § 498.3(d)(4) is central to the resolution of the
CMS Motion. The parties’ briefing does not argue whether TPMHC’s effort to regain
certification is subject to 42 C.F.R. § 489.57; both sides accept that the regulation applies
to TPMHC because its agreement had been terminated in 2007. Instead, the debate has
concentrated on the fact that the regulation identifies a precisely-described CMS action as
not subject to appeal, and more particularly on whether the facts of the instant CMS
action place it within that precise description. In essence, the parties have agreed on the
narrow and tightly-focused point of debate I have noted above: whether the CMS
decision is an administrative action as defined in 42 C.F.R. § 498.3(d)(4) — in which case
it is not appealable — or whether it is an initial determination, subject to appeal under the
terms of 42 C.F.R. § 498.57.

CMS urges that 42 C.F.R. § 498.3(d)(4) applies to its January 21, 2010 decision, and
maintains that the RAS cycle completed in September 2009 revealed TPMHC to be non-
compliant with requirements that formed the reasons for CMS’s termination of the
facility’s agreement in 2007. It will be recalled that the 2007 action was based on
TPMHC’s non-compliance with the condition relating to special medical record-keeping
requirements established at 42 C.F.R. § 482.61. The RAS cycle found TPMHC non-
complaint with that condition and the additional condition established at 42 C.F.R. §
482.62 relating to special staff requirements.

6

It is CMS’s position here that because the deficiencies noted in the RAS cycle fall within
the broad reach of the record-keeping condition, they are for regulatory purposes the
same as the noncompliance that was the basis of the termination of TPMHC’s agreement
in 2007. Put broadly, CMS appears to argue that, within the meaning of 42 C.F.R. §
498.3(d)(4), any deficiency in the RAS appropriate for citation under 42 C.F.R. § 482.61
is to be understood as equivalent to the “reasons for terminating” TPMHC’s agreement in
2007: “The repeat occurrence of this particular problem even under different factual
contexts suggests that CMS’ interpretation of its responsibility to obtain ‘reasonable
assurance’ of continued compliance . . . is sound.” CMS Reply Br. at 5.

TPMHC takes a much more restrictive view of the operation of 42 C.F.R. § 498.3(d)(4).
While appearing to concede that some of the alleged deficiencies observed in the RAS
were appropriately cited as non-compliance with 42 C.F.R. § 482.61 rather than some
other regulation, the facility quite correctly points out that the specific facts of those
alleged deficiencies are different from the specific facts that led to its 2007 termination.
P. Exs.1, 2. TPMHC argues that there is no real equivalence between CMS’s “reasons
for terminating” the facility’s agreement in 2007 and the deficiencies revealed by the
RAS.

TPMHC attempts to bolster its argument by suggesting that because of its status as a
psychiatric hospital, the RAS was obliged to classify any observed deficiencies into one
or the other of the two special conditions applicable to such facilities: “Not surprisingly,
when a Psychiatric Hospital is surveyed, the surveyors must relate any number of specific
deficiencies to one of these two broad conditions of participation. Otherwise, the alleged
deficiency is not relevant to Medicare provider status.” P. Br. at 2. That suggestion is
incorrect: the terms of 42 C.F.R. § 482.60(b) impose an array of other standards “relevant
to Medicare provider status.” But this suggestion fails to acknowledge that some of the
RAS citations were cited as failures to comply with the specific standards set out as
subsections of 42 C.F.R. § 482.61, and that one of the implicated standards — 42 C.F.R. §
482.61(c)(2), requiring that the treatment received by a patient be documented in such a
way as to assure that all active therapeutic efforts are included — was the same as one
relied on in the 2007 CMS termination. Moreover, the suggestion also fails to
acknowledge that the primary purpose of the RAS was to assess TPMHC’s correction of
the non-compliance on which its 2007 termination was predicated, which of course was
non-compliance with 42 C.F.R. § 482.61. If CMS’s assertion (CMS Reply Brief at 4,
n.1) is correct, a much broader survey inquiry would have followed the RAS, had the
RAS shown TPMHC substantially compliant with 42 C.F.R. § 482.61.

There is another difficulty with TPMHC’s “non-equivalence” argument, however, and
although it borders on the abstract, it is real enough to demonstrate the argument’s
fundamental weakness. That weakness lies in TPMHC’s insistence that because the
deficiencies noted in the RAS are “factually distinct and qualitatively distinct” (P. Br. at
4) from those noted in the 2006-2007 surveys, they cannot be treated as “the reasons for
terminating” its agreement in 2007.

7

Quite apart from the staffing, management, and population changes that the chronological
gap of thirty-three months between the last survey in 2007 and the September 2009 RAS
would invariably generate, there are countless other variables that would make an
absolute factual correlation between the deficiencies found in the two surveys impossible.
On the continuum from an absolute factual correlation to a much broader one — as in this
case, where the correlation CMS identifies is at the level of a specific standard — it is very
difficult to see how a reasonable observer would choose a point to say “close enough.”
The regulations provide no metric for choosing such a point, and TPMHC has been
careful in its brief to avoid proposing one.

Another proposal TPMHC has avoided is any specification of exactly where in 42 C.F.R.
§ 498.3(b) it finds support for its claimed right to appeal this CMS action. The catalogue
of initial determinations set out in that regulation includes seventeen categories of
appealable CMS actions, but nowhere in its briefing or its Request for Hearing has
TPMHC pointed out a provision in that lengthy array on which it relies. While arguing
that 42 C.F.R. § 498.3(d)(4) does not apply, TPMHC fails to propose any regulation that
does apply and confer its claimed right to appeal.

Thus, TPMHC has not explained why it has the right to appeal in these circumstances,
and seeks to avoid the explicit bar to its appeal presented in 42 C.F.R. § 498.3(d)(4) by
challenging CMS’s authority to apply that regulation on these facts. But that challenge is
based on questioning the factual sufficiency of the link between the 2007 termination and
the RAS, and it is at exactly that point that CMS’s unreviewable discretion comes into
play. The nature of that discretion, and the reasons why the Departmental Appeals Board
(Board) has endorsed an expansive reading of the regulation, are discussed at length in
Heartland Manor at Carriage House, DAB No. 1664 (1998).

Heartland Manor arose from somewhat different facts: one of the threshold questions
was whether that facility sought certification as a prospective provider that not been
terminated before, or as a once-terminated provider seeking recertification. But the way
in which the Board framed that issue reflected its overall view that once the facility’s
status as a once-terminated provider was established, CMS’s discretion to rely on 42
C.F.R. § 489.57 was plenary:

The central question presented in this case is whether, for purposes of
applying the appeals provisions of section 1866 of the Act and 42 C.F.R.
Part 498, [CMS’s] May 21, 1997 action was a determination concerning
Petitioner as to: 1) "whether a prospective provider qualifies as a provider,"
under section 498.3(b)(1) of the regulations; or 2) a "finding that an entity
that had its provider agreement terminated may not file another agreement
because the reasons for terminating the previous agreement have not been
removed or there is insufficient assurance that the reasons for the exclusion
will not recur," under section 498.3(d)(4) of the regulations. A conclusion
that Petitioner was a prospective provider that did not qualify as a provider
would render [CMS’s] May 21, 1997 action an initial determination subject
to reconsideration and an ALJ hearing under the appeals provisions of
8

section 1866 of the Act and 42 C.F.R. .. 498.3(b)(1) and 498.5. A
conclusion that Petitioner is an entity that had its provider agreement
terminated, appealing a finding under 42 C.F.R. . 498.3(d)(4), would render
[CMS’s] May 21, 1997 decision an administrative action not subject to
appeal.

Heartland Manor, DAB No. 1664, at 9.

It seems reasonable to read the Heartland Manor decision as driven by the Board’s desire
to give effect to the legislative history behind the present statutory scheme and to advance
the expressed goals of the regulations’ drafters. It also seems reasonable to point out that,
as here, the facility in Heartland Manor was not barred from appealing the first
termination of its agreement, which first termination was, as here, the predicate for the
operation of 42 C.F.R. § 498.3(d)(4). The Board made its appreciation of those issues,
and of their implications, very clear:

Finally, and of particular significance, Petitioner has emphasized that the
critical issue in this case is not whether Heartland has in fact met the
applicable certification criteria, but whether Petitioner will be afforded the
opportunity to contest the May 2, 1997 survey findings. We are mindful of
the stakes involved in questions concerning the availability of appeals in
Departmental programs. For the reasons detailed above, however, we
conclude that Congress and the Secretary specifically exempted the type of
determination at issue in this case from appeal. Further, the policy
considerations reflected in the legislative history of the nursing home
reform legislation, together with [CMS’s] expertise in administering the
certification and participation requirements, lead us to conclude that it is
appropriate to vest in the agency the discretion to make independent
decisions with respect to whether, in the case of a previously terminated
provider, the reasons for the termination have been removed and there is
reasonable assurance that they will not recur.

Moreover, we note that the facility did have an opportunity to appeal the
survey findings on which the 1989 termination was based. Thus, it did not
become a terminated entity without first having been provided an appeal
right. Having been subjected to the most serious remedy for noncompliant
providers and given an opportunity to appeal the termination findings, the
facility was then accorded a status which Congress and the Secretary
determined should be accompanied by different procedural protections than
those accorded to prospective providers. For the reasons detailed above, we
conclude that the rationale for subjecting terminated providers to more
exacting scrutiny to reenter the Medicare program and diminished
procedural protections is not diminished by a change of ownership
following termination.

Heartland Manor, DAB No. 1664, at 23.
Like the Board in Heartland Manor, | do not lightly conclude that TPMHC has no right toa
hearing. But concern for a provider does not justify a ruling inconsistent with the statutory and
regulatory scheme as a whole, for such a ruling could undermine Congress’ intent in committing
to agency discretion the evaluation of whether there is reasonable assurance that Medicare
beneficiaries will be protected if placed in a facility where noncompliance problems have
previously arisen. To adopt TPMHC’s contention that providers in its position should have an
opportunity for appeal would seriously undermine the effectiveness of the termination remedy
and its consequences. Under the circumstances before me in this case, it is clear that the terms
of 42 C.F.R. § 498.3(d)(4) apply: CMS’s January 21, 2010 action is an administrative action,
and from it TPMHC has no right to appeal.

VI. Conclusion

For all of the reasons set forth above, CMS’s Motion to Dismiss is GRANTED. Petitioner
Tinley Park Mental Health Center’s Request for Hearing must be, and it is, DISMISSED
pursuant to the terms of 42 C.F.R. § 498.70(b).

/s/
Richard J. Smith
Administrative Law Judge


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

Allen Peters, M.D. (Nourishing Wellness Medical Center),
(NPI: 1881608909)

Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-10-511
Decision No. CR2148

Date: June 9, 2010

DECISION

I deny the motion of the Centers for Medicare and Medicaid Services (CMS) to dismiss
the hearing request of Petitioner, Allen Peters, M.D., and his practice, Nourishing
Wellness Medical Center. I grant CMS’s motion for summary disposition. Accordingly,
the effective date of Petitioner’s enrollment remains July 8, 2009, with billing privileges
retroactive for 30 days to June 9, 2009, as CMS granted consistent with applicable
regulations.

I. Background

Petitioner appeals the October 1, 2009 determination of Palmetto GBA, a CMS
contractor, granting Medicare enrollment to Petitioner and his practice and permitting
billing effective June 11, 2009, which, during this proceeding, CMS revised to June 9,
2009.° Petitioner Hearing Request (PHR); CMS Ex. 6, at 4. Petitioner seeks

' CMS reports that Palmetto received the enrollment application on July 8, 2009, and
that “Palmetto will correct its records to indicate a June 9, 2009 effective date” for
Petitioner, 30 days prior to the receipt of the application, as 42 C.F.R. § 424.521(a)

(continued...)
reimbursement for services rendered back to December 20, 2005, which represents the
undisputed effective date of the initial Medicare enrollment of both Petitioner and his
practice. PHR at 2; CMS Exs. 13, 14. Palmetto affirmed its determination in a
reconsideration decision on January 4, 2010, on the grounds that no right exists to appeal
an effective date determination and that Palmetto had determined the effective date in
accordance with applicable regulations. CMS Ex. 9.

Petitioner asserts that Medicare has paid none of the claims he submitted since his
enrollment, which he attributes to a variety of reasons, including:

¢ Medicare would not process his claims, because he submitted them on paper
instead of electronically, despite his having requested permission to do so;

e His provider number was wrongly deactivated for inactivity, because Medicare
would not process the paper claims or because the claims used the provider
number of his practice, rather than his individual provider number;

e Medicare misplaced his paperwork seeking reactivation or new enrollment during
CMS’s change of Medicare contractors, from NHIC, Inc. to Palmetto GBA, Inc. in
October 2008; and

e The contractors were confused, because his practice location moved twice since
the initial enrollment.

PHR at 1-3; P. Request for Reconsideration (Oct. 6, 2009) at 1-2 (P. Ex. 1; CMS Ex. 7).
Petitioner recounts communications in 2009 with a Palmetto employee who agreed that
his case had not been handled correctly; however, she left Palmetto’s employ before she
could expedite the processing of his application, as she had assured would occur. PHR at
2-3. He alleges a “tsunami of carrier/contractor deficiencies involving multiple occasions
where the personal or group provider numbers were deactivated and the reactivated and
then deactivated, etc.” P. Response to CMS Motion at 2.

CMS does not address all of Petitioner’s allegations in detail. CMS agrees that NHIC
originally enrolled Dr. Peters and Nourishing Wellness in Medicare on November 13,
2006, effective December 20, 2005. CMS Motion at 2; CMS Exs. 13 and 14. CMS also
notes that Petitioner wrote to NHIC on April 15, 2008 that, although the group practice
number was active, Dr. Peters’ individual number had “for some reason” been “rendered
inactive” and requested that the number be made active retroactive to the business start

 (.. continued)

authorizes. CMS Motion to Dismiss Petitioner’s Request for Hearing and/or for
Summary Disposition (CMS Motion) at 3 n.4, 4 (citing CMS Exhibit (Ex.) 11, at 1; CMS
Ex. 6, at 1).
date. CMS Ex. 15; CMS Motion at 2. NHIC enrolled Petitioner again on July 25, 2008
with the same number effective to December 20, 2005. CMS Ex. 16. On October 14,
2008, Petitioner was notified that Palmetto had replaced NHIC as Medicare contractor.
CMS Ex. 17.

Neither party has submitted evidence of direct notice to Petitioner of deactivation of his
individual enrollment. However, CMS points to a letter sent by Palmetto on January 27,
2009 to Congresswoman Jane Harmon in response to her inquiry on behalf of Dr. Peters
who had complained that he was not receiving payment from Medicare. CMS Motion at
3 (citing CMS Ex. 18). Palmetto explained that it had “terminated” Dr. Peters’ Medicare
eligibility “due to infrequent billing,” because it found “no claims on file under his
individual PTAN” notwithstanding his having been “enrolled into the Medicare program
since December 20, 2005.” CMS Ex. 18, at 1. The letter also stated that to “reenroll as
becoming a Medicare provider,” Dr. Peters would need to submit an application to the
Medicare contractor. CMS Ex. 18, at 2.

Dr. Peters did submit the new application, which Palmetto received on July 8, 2009.
CMS Ex. 1. The contractor required additional information, which Dr. Peters submitted
timely, and ultimately approved the application and assigned a new individual number
permitting retroactive billing for 30 days prior to the date of submission of the
application. CMS Exs. 2-6. Petitioner sought reconsideration of the effective date on the
grounds that: (1) Palmetto “inadvertently inactivated” his individual billing number, in
one of a series of errors, despite diligent and good faith efforts to work with the prior
contractor; (2) a pending application “mysteriously disappeared” during the transition to
Palmetto; and (3) failing to provide an effective date that allowed billing for services
provided for at least the prior two or more years was “unfair.” CMS Ex. 7, at 1-2. The
earing officer issued an unfavorable decision on reconsideration. CMS Ex. 9.

Petitioner timely requested a hearing on Palmetto’s reconsideration decision. PHR. This
case was assigned for hearing and decision to Administrative Law Judge (ALJ) Richard J.
Smith. The case was transferred to me for hearing and decision on March 23, 2010,
pursuant to 42 C.F.R. § 498.44, which permits a Member of the Departmental Appeals
Board (Board) to be designated to hear appeals taken under Part 498.

In a submission dated April 12, 2010, CMS filed its motion to dismiss Petitioner’s
request for hearing and/or for summary disposition. CMS argues that the effective date
of a non-physician practitioner’s Medicare enrollment is not an initial determination
subject to an appeal and, alternatively, that it properly determined Petitioner’s effective
date. Petitioner submitted a response to CMS’s motion dated April 30, 2010.

CMS submitted with its motion its exhibits 1 through 18. Petitioner submitted, with its
request for a hearing and its response to CMS’s motion, copies of correspondence with
the CMS contractors and other materials, some of which Petitioner reports were
submitted to Palmetto with the request for reconsideration. In the absence of any

objection to the admission of CMS’s exhibits or Petitioner’s materials, or any
representation from CMS that Petitioner’s submissions constitute new documentary
evidence, the admission of which is limited by 42 C.F.R. § 498.56(e), I admit both
parties’ submissions as evidence. Petitioner’s exhibits were not numbered or designated
as exhibits, and I have marked them as Petitioner’s exhibits 1 — 33.

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

1. Whether Petitioner has a right to a hearing on the effective date of his Medicare
participation, and

2. Ifso, what is the legally correct date on which Petitioners’ approval is effective.
B. Findings of fact and conclusions of law

1. Ihave authority to hear Petitioner's challenge to the determination of
the effective date of his approved Medicare enrollment.

a. Applicable standard

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

b. Analysis

CMS argues that the Medicare regulations “do not allow a physician supplier whose
Medicare enrollment has been approved to appeal the effective date of billing privileges”
and that I must therefore dismiss the appeal. CMS Motion at 1-2. As support, CMS cites
ALJ decisions adopting CMS’s position, principally Mikhail Paikin, DO, DAB CR2064
(2010). The ALJ there agreed with CMS that the regulation at 42 C.F.R. § 498.3(b)(15),
which permits appeals of “[t]he effective date of a Medicare provider agreement or
supplier approval,” applies only to providers and suppliers that are enrolled in Medicare
on the basis of survey and certification, or accreditation by a CMS-approved accrediting
organization (under 42 C.F.R. Part 489), and not to suppliers such as physicians enrolled
on the basis of applications submitted under 42 C.F.R. Part 424. CMS Motion at 6-10
(citing Peter Manis, M.D., DAB CR2036 (2009) and Rachel Ruotolo, M.D., DAB
CR2029 (2009)).? Paikin also held that 42 C.F.R. § 424.545 provides for appeals only of
denials of enrollment applications or revocations of billing privileges and thus does not,
CMS argues, permit an appeal by Petitioner whose application was approved.

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

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

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

The history of section 498.13(b)(15) shows CMS’s recognition that: (1) approving
participation at a date later than that sought amounts to a denial of participation during
the intervening time, (2) effective date appeals generally involves the same kind of
compliance issues that arise from initial denials, and (3) the right to appeal an effective

> [note that, in Ruotolo, the petitioner did not argue that she was entitled to an earlier
effective date but challenged the lawfulness of the regulation, thus seeking relief that I
agree I am not authorized to grant. Ruotolo, DAB CR2029, at 3. Additionally, as CMS
acknowledges, other ALJs in a number of recent cases have concluded that the plain
language of section 498.3(b)(15) creates a right for any provider or supplier to challenge
the effective date of enrollment, that is, of a provider agreement or of supplier approval.
CMS Motion at 9 n.9 (citing cf:, Jason Wardell, P.A., DAB No. CR2095 (2010) and
Jorge M. Ballesteros, CVRA, DAB CR2067 (2010)).
date determination, while not previously codified, had already been confirmed by court
decisions. 62 Fed. Reg. 43,931, 43,933-34 (1997) (final rule); 57 Fed. Reg. 46,362,
46,363 (Oct. 8, 1992) (proposed rule). While rules for determining effective dates
adopted at the same time as section 498.3(b)(15) applied only to providers and suppliers
subject to certification or accreditation, the rulemaking addressing section 498.3(b)(15)
contains no language parallel to that addressing determining effective dates, limiting its
application to only providers and suppliers that are subject to survey and certification or
accreditation. 62 Fed. Reg. at 43,934; 57 Fed. Reg. at 46,363. The rulemakings do not
indicate any intent to restrict the scope of appeals by others who might later be granted
the right to Medicare hearings.

That the regulations do not provide for appeals of deactivations® is not relevant here. If
anything, this limitation, as with the bar on appealing rejections as opposed to denials of
enrollment at section 424.525, illustrates that when CMS wishes to restrict or preclude
appeal rights, it is capable of doing so expressly. CMS does not identify any analogous
provision limiting challenges to adverse effective date determinations.

The ALJ in Paikin, despite accepting CMS’s contention that the plain language of section
498.3(b)(15) could be interpreted to preclude effective date appeals in the case of
approval of enrollment, reached the underlying facts and determined that the effective
date and retrospective billing date had been established consistent with 42 C.F.R.

§§ 424.520(d) and 424.521(a). Paikin, DAB CR2064, at 6. I find no room for such an
interpretation where the regulatory language is plain on its face. A legislative rule is
generally binding on the agency that issues it, and the agency is legally bound to follow
its own regulations as long as they are in force. California Dep't of Soc. Servs., DAB No.
1959 (2005); Hermina Traeye Mem'l Nursing Home, DAB No. 1810 (2002) (citing
Kenneth Culp Davis and Richard J. Pierce, Jr., Administrative Law Treatise § 6.5 (3rd ed.
1994)), aff'd Sea Island Comprehensive Healthcare Corp. v. U.S. Dep't of Health and
Human Servs, 79 F. App'x 563 (4th Cir. 2003); 2 Am. Jur. 2d Administrative Law § 236.
Absent further rulemaking, CMS and I are bound to follow the plain meaning of the
regulation permitting an appeal by any provider or supplier dissatisfied with a
determination as to the effective date of its provider agreement or supplier approval.

c. Conclusion

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

3 CMS points out that the ALJs in Paikin and Bradley D. Anawalt, M.D., et al., DAB
CR2021 (2009), held that no right exists to a hearing on a deactivation. CMS Motion at
9-10. Indeed, section 424.545(b) permits only the opportunity to submit “a rebuttal.” I
agree that deactivation is not identified as an appealable initial determination, and no
process beyond submission of rebuttal is identified in the regulations in the case of a
deactivation.
I note, however, that a right to challenge the effective date is not a license to seek an
effective date other than that prescribed by law. I turn next, therefore, to what the
applicable law provides as to the proper effective date in Petitioner’s circumstances.

2. I grant CMS summary disposition on the ground that it properly
determined the effective date of Petitioner’s participation in Medicare.

a. Applicable standard
The Board stated the standard for summary judgment as follows.

Summary judgment is appropriate when the record shows that there is no genuine
issue as to any material fact, and the moving party is entitled to judgment as a
matter of law .... The party moving for summary judgment bears the initial
burden of showing that there are no genuine issues of material fact for trial and
that it is entitled to judgment as a matter of law... . To defeat an adequately
supported summary judgment motion, the non-moving party may not rely on the
denials in its pleadings or briefs, but must furnish evidence of a dispute concerning
a material fact — a fact that, if proven, would affect the outcome of the case under
governing law .... In determining whether there are genuine issues of material
fact for trial, the reviewer must view the evidence in the light most favorable to the
non-moving party, drawing all reasonable inferences in that party’s favor.

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

b. Applicable regulations

The determination of the effective date of Medicare billing privileges is governed by 42
C.F.R. §§ 424.520 and 424.521. Section 424.520(d) provides that the effective date for
billing privileges for physician, nonphysician practitioners, and physician and
nonphysician practitioner organizations is “the later of the date of filing of a Medicare
enrollment application that was subsequently approved by a Medicare contractor or the
date an enrolled physician or nonphysician practitioner first began furnishing services at a
new practice location.” (Emphasis added). The “date of filing” is the date that the
Medicare contractor receives a signed provider enrollment application that the Medicare
contractor is able to process to approval. 73 Fed. Reg. 69,769 (Nov. 19, 2008)
(emphasis added). Certain suppliers, including physicians, may be permitted to bill
retrospectively for certain services provided before approval, if they have met all
program requirements. Current regulations limit retrospective billing to 30 days prior to
the effective date, “if circumstances precluded enrollment in advance of providing
services to Medicare beneficiaries,” or 90 days in certain disaster situations. 42 C.F.R.
§ 424.52 1(a).

c. Analysis
Petitioner asserts that he is “not contesting the ‘effective date’” for his practice but
seeking to appeal claims he says were wrongly denied or not paid since his initial
enrollment in Medicare in December 2005. P. Response at 2. This request is beyond the
scope of my review authority. I do not find, and Petitioner does not identify, any
authority for me to review denials of claims for payment. Medicare beneficiaries, and in
some cases providers and suppliers, may appeal denials of individual claims for Medicare
coverage or benefits through the Medicare carrier or fiscal intermediary and then through
the Office of Medicare Hearings and Appeals and the Medicare Appeals Council. See 42
C.F.R. Part 405, Subparts G, H, I; 74 Fed. Reg. 65,295 (Dec. 9, 2009). Denials of claims
are not among the initial determinations in Part 498 that I may review in this forum.
Additionally, Petitioner has provided no documentation of any individual Medicare
claims that he submitted for reimbursement.

Furthermore, the relief Petitioner seeks would necessarily entail reversal of CMS’s

ective date determination, since Petitioner cannot receive payment for services
provided during a period for which he was not enrolled in Medicare and not eligible for
any retroactive billing privileges. Petitioner’s appeal rights in this forum are limited to
the “initial determinations” specified at 42 C.F.R. § 498.3. Of those initial
determinations, the only one relevant here is CMS’s determination of “[t]he effective date
of a Medicare provider agreement or supplier approval,” that is, CMS’s decision granting
Petitioner’s application for enrollment and setting the effective date for billing Medicare.
42 C.F.R. § 498.3(b)(15). Petitioner essentially seeks the ability to receive Medicare
reimbursement for periods prior to that date.

fo}

[he date of receipt of an application, which the contractor could process to approval, is
not in dispute. The record indicates no legal error by CMS in applying the regulation to
the undisputed facts. CMS’s determination that Petitioner may bill Medicare effective
June 9, 2010, 30 days prior to the date on which Palmetto received Petitioner’s
enrollment application, is consistent with the applicable regulations quoted above. 42
C.F.R. §§ 424.520(d), 424.521(a). Petitioner does not, in fact, dispute that CMS correctly
applied the regulation here.

The facts that Petitioner does allege relate to matters apart from that effective date
determination and the approved application that I have no authority to review.
Petitioner’s reports that the two successive contractors were negligent in handling his
case and that an individual formerly employed by Palmetto made commitments that were
not honored, provide no basis for me to set an effective date earlier than specified in the
regulations or authorize payment for individual claims. Such arguments seek estoppel
against the federal government, which, if available at all, is presumably unavailable
absent “affirmative misconduct,” such as fraud. See, e.g., Pacific Islander Council of
Leaders, DAB No. 2091 (2007); Office of Personnel Management v. Richmond, 496 U.S.
414, 421 (1990). Petitioner’s frustration over the events he describes is understandable,
and there appears to have been no shortage of confusion over the enrollment status of
Petitioner and his practice. However, this does not permit me to ignore the unmistakable
Tequirements of the regulations governing his enrollment in Medicare, by which I am
bound.

It appears that one source of confusion is the fact that Medicare regulations changed
effective January 1, 2009 to eliminate the prior practice of granting physician suppliers
up to 27 months of retroactive billing privileges and substitute the current rule that
retroactive billing privileges may be granted only for 30 days from the effective date of
approval of enrollment (or 90 days in certain disasters). 73 Fed. Reg. at 69, 726, 69,940.
Contractor employees may thus have correctly indicated at some point in the
communications with Petitioner that his “retroactivity date would go back, at minimum,
2+ years.” However, by the time that the contractor received the approvable application,
that option was no longer legally available. PHR at 2.

I accept as true for purposes of summary judgment Petitioner’s contentions that: (1) on
several occasions his personal and group billing privileges were deactivated improperly;
(2) he submitted at various times claims which were denied or not processed; and (3) he
acted in good faith and followed instructions in his efforts to establish billing privileges,
to provide care, and to seek payment. It is also not clear to me that the Medicare
contractor correctly advised Petitioner to reapply for enrollment. Petitioner has not,
however, identified, and I do not find, any authority for me to alter the effect of the
governing regulations on the effective date resulting from the application that Petitioner
filed on July 9, 2009. As far as Petitioner’s concerns about the deactivations, as noted
above, the regulations provide only for a deactivated supplier to submit a rebuttal to the
contractor under 42 CFR § 424.545(b), in accordance with 42 CFR § 405.374.° A denial
of reactivation after rebuttal is not appealable to an ALJ. Palmetto’s reconsideration

* CMS characterizes Petitioner’s arguments as “implicit challenges to the lawfulness of
the regulations” at 42 C.F.R.§§ 424.520(d) and 424.521(a). CMS Motion at 8-9. While
Petitioner has not directly argued that these regulations are unlawful, I agree with CMS
that I have no authority to find them invalid. Jd.

° CMS may deactivate a supplier’s Medicare billing privileges if the supplier “does not
submit any Medicare claims for 12 consecutive calendar months.” 42 C.F.R.

§ 424.540(a)(1). The regulations do not provide for notifying suppliers regarding the
deactivation under those circumstances.
10

decision also discloses no indication that Petitioner’s submission of paper, instead of
electronic claims, was the basis for the adverse determination, as Petitioner suggests, and
Petitioner in any event states that he does not have documentation of communications
concerning his desire to submit paper claims. P. Response at 1.

Petitioner has thus alleged no dispute of fact material to this appeal, and summary
disposition is appropriate here.

d. Conclusion

The earliest effective date for the approval of Petitioner’s enrollment in Medicare was
July 8, 2009, the date of the filing of his enrollment application, with retrospective billing
privileges permitted back 30 days to June 9, 2009. Thus, Petitioner’s request for an
earlier effective date or for earlier billing privileges must be denied.

Because there is no genuine issue to any material fact, and for the foregoing reasons, I
grant CMS’s motion for summary disposition.

/s/
Leslie A. Sussan
Board Member


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Paul C. Osuji,
Petitioner
Vv.
The Inspector General.
Docket No. C-09-693
Decision No. CR2146

Date: June 09, 2010

DECISION

Petitioner, Paul C. Osuji, 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 (Act), effective August 20, 2009. A separate basis also exists for the Inspector
General for the Department of Health and Human Services (1.G.) to exclude Petitioner
under section 1128(a)(3) of the Act. Petitioner’s exclusion for five years is mandatory
pursuant to section 1128(c)(3)(B) of the Act. An additional period of exclusion of 25
years, for a total minimum period of exclusion for 30 years, is not unreasonable based
upon the two aggravating factors established in this case and the absence of any
mitigating factors.

I. Background

The I.G. notified Petitioner by letter dated July 31, 2009, that he was being excluded
from participation in Medicare, Medicaid, and all federal health care programs! for a

' Section 1128B(f) of the Act defines “federal health care program” as any plan or
program that provides health benefits, whether directly, through insurance, or otherwise,
which the United States Government, or any State health care program funds directly, in
whole or in part.
period of 30 years pursuant to sections 1128(a)(1) and 1128(a)(3) of the Act. I.G. Ex. 1
at 1. The notice letter explained to Petitioner that section 1128(a)(1) authorizes exclusion
or criminal convictions related to the delivery of an item or service under the Medicare
and Medicaid programs, while section 1128(a)(3) authorizes exclusion for felony
convictions related to fraud in connection with the delivery of a health care item or
service. The I.G. further notified Petitioner that his 30-year exclusion was based on the
presence of two aggravating factors: (1) the loss to a government program of $5,000 or
more; and (2) the court imposed sentence included incarceration for 211 months.

Petitioner timely requested a hearing by letter dated August 25, 2009. The case was
assigned to me on September 8, 2009 for hearing, related proceedings, and a decision. A
telephone prehearing conference with the parties was held on November 25, 2009. At
that time, I informed Petitioner that he had a right to be represented by legal counsel in
these proceedings. While Petitioner acknowledged that he understood this right,
Petitioner indicated that he would represent himself in this matter. The parties agreed
that no factual issues were in dispute and that the case could be resolved based on written
submissions without an in-person hearing. Summary of Prehearing Conference and
Order (December 1, 2009). Both parties submitted written arguments,” and the I.G. filed
three exhibits (I.G. Exs. 1-3). Petitioner has filed five exhibits (P. Exs. 1-5)*. In the
absence of any objections, I receive into evidence I.G. Exs. 1-3 and P. Exs. 1-5.

II. Issues:
a. Whether the L.G. has a basis, pursuant to section 1128(a)(1) or section 1128
(a)(3) of the Act, to exclude Petitioner from participation in Medicare, Medicaid
and all other federal health care programs, and, if so,

b. Whether a 30-year exclusion is unreasonable.

> The LG. filed its brief on January 21, 2010 (1.G. Brief), and Petitioner filed his
response brief on March 11, 2010 (P. Brief). Both parties filed reply briefs. The I.G.
filed its Reply (1.G. Reply) on March 26, 2010, while the Petitioner filed its Reply (P.
Reply) on April 4, 2010.

* Petitioner attached five documents to his reply brief, which he did not mark or paginate
in accordance with Civil Remedies Division (CRD) Procedures. A copy of the CRD
Procedures was provided when his request for hearing was acknowledged. Because
Petitioner apparently intended for me to consider the documents as evidence, I have
marked (as P Exs. 1-5) and paginated the exhibits.
Ill. Applicable Law

Section 1128(a)(1) of the Act requires that the Secretary of Health and Human Services
(Secretary) exclude an individual who has been convicted under federal or state law of a
criminal offense relating to the delivery of an item or service under Medicare or a state
health care program. Section 1128(a)(3) of the Act directs the Secretary to exclude an
individual convicted of a felony “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. See 42 C.F.R. § 1001.101. Federal regulations set forth
criteria for determining the length of exclusions imposed pursuant to section 1128 of the
Act. 42 C.F.R. § 1001.102. Individuals excluded under either section 1128(a)(1) or
section 1128(a)(3) must be excluded for a period of not less than five years. Act

§ 1128(c)(3)(B). Factors set out at 42 C.F.R. § 1001.102(b) serve as a basis for
lengthening the mandatory period of exclusion, and mitigating factors that serve to
decrease the period of exclusion are found at 42 C.F.R. § 1001.102(c). Mitigating factors
may be considered as a basis for reducing the period of exclusion to no less than five
years only if aggravating factors justify an extension of the exclusion.

Section 1128(i) of the Act defines a “conviction” to include instances when: (1) a
judgment of conviction has been entered against an individual by a federal, state, or local
court, regardless of whether there is an appeal pending or whether the judgment of
conviction or other record relating to criminal conduct has been expunged; (2) there has
been a finding of guilt against the individual by a federal, state or local court; (3) a
federal, state, or local court accepts a plea of guilty or nolo contendere; or (4) the
individual has entered into participation in a first offender, deferred adjudication, or other
arrangement or program where judgment of conviction has been withheld. 42 C.F.R. §
1001.2 repeats these definitions. The Secretary has delegated authority to impose
exclusions to the I.G. 42 C.F.R. § 1001.401(a). As long as the period of exclusion is
within a reasonable range and based on demonstrated criteria, an ALJ does not have
authority to change it. Joann Fletcher Cash, DAB No. 1725 at 7 (2000) (citing 57 Fed.
Reg. 3298, 3321 (1992)).

The Act provides that an exclusion pursuant to section 1128(a) “shall be effective at such
time and upon such reasonable notice to the public and to the individual or entity
excluded as may be specified by regulations ... .” Act § 1128(c)(1). Congress granted
the Secretary essentially unfettered discretion though section 1128(c)(1) to establish the
effective date of exclusion by regulation. The regulation provides that an exclusion is
effective 20 days from the date of the notice of exclusion. 42 C.F.R. § 1001.2002(b).

The standard of proof is a preponderance of the evidence, and there may be no collateral
attack of the conviction that is the basis of the exclusion. 42 C.F.R. § 1001.2007(c), (d).
Petitioner bears the burden of proof on any affirmative defenses or mitigating factors, and
the I.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(b).
IV. Findings and Discussion

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

1. The IG. has a basis to exclude Petitioner pursuant to section 1128(a)(1) of the
Act.

Petitioner owned and operated Chimatex Imports, Inc. (Chimatex), a Medicare-
authorized durable medical equipment (DME) supply company incorporated in North
Carolina. Chimatex supplied and sold motorized wheelchairs and scooters to Medicare
beneficiaries and individuals with private health insurance. In 2007, Petitioner was
indicted for submitting false claims to Medicare and the private pay insurers (Aetna, Blue
Cross and Blue Shield of Alabama, and Blue Cross and Blue Shield of Texas).

Specifically, it was alleged that Petitioner engaged in a scheme to defraud Medicare and
private pay insurance companies by: (1) providing scooters, but up-coding claims to seek
reimbursement for more expensive power wheelchairs; (2) obtaining prescriptions and
Certificates of Medical Necessity from a physician not properly licensed and who did not
examine the beneficiaries; and (3) submitting claims for items not rendered, or not
medically necessary. I.G. Ex. 2 at 2-8.

Petitioner’s scheme also included backdating of claims. Although Medicare revoked its
supplier number in November 2003, Petitioner continued to submit false and fraudulent
claims to Medicare through Chimatex for services allegedly provided after that date.
Petitioner backdated claim forms, indicating that the service was provided prior to the
date of revocation. I.G. Ex. 2 at 8. Petitioner sought reimbursement in excess of $2
million from Medicare and the private pay insurers, and Petitioner actually received over
$1.2 million as reimbursement for claims filed. I.G. Ex. 2 at 1.

In May of 2007, Petitioner was charged with: one count of conspiracy to commit health
care fraud in violation of 18 U.S.C. § 1349; nine counts of health care fraud in violation
of 18 U.S.C. § 1347; one count of conspiracy to commit money laundering in violation of
18 U.S.C. § 1956(h); and seven counts of money laundering in violation of 18 U.S.C.

§ 1956(a). I.G. Ex. 2 at 9-14. Petitioner was found guilty of all eighteen counts. LLG. Ex.
3 at 1-2. He was sentenced to 211 months incarceration and ordered to pay
$1,208,256.53 in restitution. I.G. Ex. 3 at 4-6.

The essential elements necessary to support an exclusion based on section 1128(a)(1) of
the Act 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 (Medicare) or any state health care program. Tamara
Brown, DAB No. 2195 (2008); Thelma Walley, DAB No. 1367 (1992).
These two essential elements are conclusively established by the court records the I.G.
has submitted as exhibits. Petitioner was convicted of: one count of “Conspiracy to
Execute a Scheme or Artifice to Defraud U.S. Health Care Benefit Programs;” nine
counts of “Aid and Abet to Defraud and Obtain Money under Custody and Control of
Health Care Benefit Programs;” one count of “Conspiracy to Conduct Financial
Transactions of Unlawful Activity Health Care Fraud;” and seven counts of “Aid and
Abet to Conduct Financial Transactions Involving Proceeds of Health Care Fraud.” I.G.
Ex. 2 at 9-13; I.G. Ex. 3 at 1. The record also includes the District Court’s judgment of
Petitioner’s guilt on all 18 counts and conviction of the criminal offenses outlined in the
Indictment. I.G. Ex. 3.

2. There is a separate basis for Petitioner’s exclusion pursuant to 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 other financial
misconduct; (3) the felony offense must have been for conduct in connection with the
delivery of a health care program operated by or financed in whole or in part by any
federal, state, or local government agency; and (4) the offense must have occurred after
August 21, 1996. Andrew D. Goddard, DAB No. 2032 (2006).

The evidence of Petitioner’s conviction of 18 felony charges is clear and undisputed. I.G.
Ex. 3 demonstrates that on May 4, 2009, Petitioner was found guilty and convicted in the
U.S. District Court for the Western District of North Carolina, and sentenced to 211
months of incarceration. Those events satisfy the definitions of “conviction” set out at
sections 1128(i)(1), (i)(2), and (i)(3) of the Act. The first essential element is therefore
met in this case.

Element two is established with Petitioner’s conviction for an offense involving fraud and
other financial misconduct. Petitioner was found guilty of: one count of conspiracy to
commit health care fraud; nine counts of health care fraud; one count of conspiracy to
commit money laundering in relation to health care fraud; and seven counts of money
laundering related to health care fraud. 1.G. Ex. 2 at 9-14; LG. Ex. 3 at 1-2. As the
Indictment states and the criminal judgment establishes, Petitioner acted fraudulently
when submitting false and fraudulent claims to Medicare. Therefore, the second essential
element is met in this case.

The facts also establish the third essential element. In determining whether an offense is
related to the delivery of a health care item or service, the Departmental Appeals Board
(Board) has been consistent in its approach in considering whether a “common sense
connection” or “nexus” exists between the offense for which a petitioner is convicted and
the delivery of a health care item or service. Andrew D. Goddard, DAB No. 2032;
Kenneth M. Behr, DAB No. 1997 (2005); Erik D. DeSimone, R.Ph., DAB No. 1932
(2004). Here, Petitioner was found guilty and convicted of submitting false and
fraudulent claims to Medicare and to multiple private pay insurers. The offenses that
Petitioner was convicted of were on their face health care fraud. I.G. Ex. 2 at 9-14; I.G.
Ex. 3 at 1-2; see 18 U.S.C. §§ 1347, 1349, 1956(a), and 1956(h). Therefore, the third
essential element has been established as Petitioner’s offenses were in connection with
the delivery of an item or service under Medicare or other health care programs financed
in whole or part by a federal, state, or local health care program.

The fourth essential element has likewise been established by the facts of this case.
Through his conviction, Petitioner’s offenses occurred as charged, between April 2003 to
February 2004, thus after August 21, 1996. I.G. Ex.2 at 1; I.G. Ex. 3 at 1.

Section 1128(a)(3) applies to felony convictions related to health care fraud “other than
those specified in section 1128(a)(1).” Although the 18 felony offenses Petitioner was
convicted of may be accurately described under either section 1128(a)(1) or section
1128(a)(3), the plain language of the Act clearly gives preference to section 1128(a)(1).
Because the Act gives preference to section 1128(a)(1) and it is clear Petitioner’s
offenses were related to the delivery of an item or service under Medicare, I find that
section 1128(a)(1) directs Petitioner’s mandatory exclusion. However, as noted above,
section 1128(a)(3) provides a separate basis for the IG. to exclude Petitioner.

3. The minimum period of exclusion under section 1128(a) is five years, and an
additional period of exclusion of 25 years, for a total period of exclusion of 30
years, is not unreasonable in this case based on the presence of two aggravating
factors and no mitigating factors.

My determination of whether the exclusionary period in this case is unreasonable
depends on whether: (1) the I.G. has shown the existence of aggravating factors; (2)
Petitioner has shown there is a mitigating factor the I.G. failed to consider; and (3) the
period of exclusion is within a reasonable range.

The L.G. relies on two aggravating factors set out at 42 C.F.R. § 1001.102(b)(1) and
(b)(5) in seeking to increase the period of Petitioner’s exclusion beyond the mandatory
minimum of five years to that of 30 years.

a. Petitioner’s criminal conduct resulted in a financial loss to a
government program of $5,000 or more.

The court records show that Petitioner’s misconduct, beginning approximately April
2003 through February 2004, resulted in his receiving reimbursement from both the
Medicare program and private pay insurers in excess of $1.2 million that he was not
entitled to.

Petitioner’s actions resulted in a program financial loss well in excess of $5,000. The
court determined that Petitioner participated in a scheme to defraud Medicare and private
pay insurers for over $2 million and was required to pay restitution in the amount of
$1,208,256.53. Although Petitioner suggests otherwise,’ I am bound to accept the
court’s findings. See 42 C.F.R. § 1001.2007(d); Joann Fletcher Cash, DAB No. 1725;
Chander Kachoria, R.Ph., DAB No. 1380 at 8 (1993). Here, the sentencing court made
specific findings as to the dollar amount of losses sustained as a result of Petitioner’s
offenses, based on his conviction, and ordered Petitioner to make restitution accordingly.
IG. Ex. 3 at 6.

Petitioner presents several arguments that include the fact that: (1) the items and services
billed to Medicare were rendered to Medicare beneficiaries; (2) he had ineffective
counsel at trial, and the District Court failed to grant him new counsel; (3) he did not
have the requisite intent to defraud; and (4) he did not engage in money laundering nor
conspire to do so. See generally P. Brief and P. Reply. Unfortunately, however real
Petitioner’s problems were relative to his legal representation during the criminal
proceedings, he does not raise any relevant arguments over which I have jurisdiction or
authority. The regulations explicitly preclude my review of the facts underlying
Petitioner’s conviction. Further, the regulations prohibit Petitioner from collaterally
attacking his criminal conviction in this proceeding. When the exclusion is based on the
existence of a criminal conviction where the facts were adjudicated and a final decision
was made, the basis for the underlying conviction is not reviewable in this forum.
Therefore, Petitioner may not collaterally attack his conviction either on substantive or
procedural grounds before me. 42 C.F.R. § 1001.2007(d); Joann Fletcher Cash, DAB
No. 1725; Paul R. Scollo, D.P.M., DAB No. 1498 (1994).

b. Petitioner was sentenced to incarceration for a period of 211 months.

The I.G. argues that an aggravating factor exists in this case, because the sentence that the
District Court judge imposed included incarceration. The evidence establishes that
Petitioner was sentenced to 211 months, over 17 years, of incarceration. I.G. Ex. 3 at 2.
An aggravating factor exists if a court imposes incarceration. Petitioner does not address
or dispute this aggravating factor.

+ Petitioner argues that the investigation report outlining the restitution amount is “Third
Party” and “unacceptable.” P. Brief at 6.
c. Petitioner has failed to prove any mitigating factors.

The period of exclusion can be reduced if mitigating factors are proven. The Petitioner
bears the burden of proving any mitigating factor by a preponderance of the evidence.
Dr. Darren James, D.P.M., DAB No. 1828 (2002); Barry D. Garfinkel, M.D., DAB No.
1572 at 8 (1996).

42 C.F.R. § 1001.102(c) outlines three mitigating factors, which are: (1) a petitioner was
convicted of three or fewer misdemeanor offenses and the resulting financial loss to the
program was less than $1500; (2) the record demonstrates that a petitioner had a mental,
physical, or emotional condition that reduced his culpability; and (3) 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.

Here, the first mitigating factor is not applicable, since Petitioner’s felony convictions
involved program financial losses in excess of $1,500. Further, Petitioner neither claims
that any medical condition reduced his culpability nor argues that he cooperated with
government officials, which resulted in others being convicted, excluded, or led to the
investigation of other cases. Thus, this case presents no mitigating factors that I can
consider that would reduce the period of exclusion.

It must be noted that Petitioner makes additional legal arguments, which must be
addressed. Petitioner argues that the I.G. abused her power and violated his
constitutional rights in excluding him for a 30-year period by imposing the exclusion
“before judicial review, hearing and determination of the outcome.” P. Brief at 3; P.
Reply at 4, 5, 14. Petitioner therefore asks that I vacate the exclusion and reinstate his
constitutional rights. P. Reply at 5. Petitioner raises constitutional arguments I am
without authority to hear or decide. Applicable law and regulations limit my authority to
decide exclusion and other cases involving the L.G..

Petitioner also advised me that his criminal conviction is under appeal. However, the
Secretary has specifically provided a remedy in the event an underlying conviction is
reversed or vacated on appeal by a court of proper jurisdiction. See 42 C.F.R.

§ 1001.3005.

Because Petitioner appears here pro se, I have taken care in reading the two briefs he
filed, his exhibits, and his request for hearing. 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);
Timothy L. Stern, M.D., DAB No. 1314 (1992); Edward J. Petrus, Jr., M.D., DAB No.
264 (1991). However, I have been unable to find any argument or contention in
Petitioner’s submissions that might raise a valid defense to the proposed exclusion.

d. The 30-year period of exclusion is not unreasonable.

The regulations do not limit the additional period of exclusion the I.G. may impose based
upon the presence of aggravating factors. The regulations also do not specify how much
of an extension is warranted by the existence of an aggravating factor. The Board has
indicated that it is not the number of aggravating factors that is determinative, but, rather,
it is the quality of the circumstances, whether aggravating or mitigating, which controls
in analyzing these factors. Barry D. Garfinkel, M.D., DAB No. 1572.

I have found that the aggravating factors the I.G. considered are present in this case. The
evidence establishes that Petitioner knowingly engaged in a scheme that involved
submitting false and fraudulent claims for reimbursement for services that were not
covered items or were reimbursable at a lower rate per claim. These claims involved a
Petitioner’s receipt of over $1.2 million from the Medicare program and from private pay
insurers. Based on this illegal conduct, Petitioner was convicted and sentenced to
incarceration of 211 months. Considering these facts and the magnitude of Petitioner’s
abuse of the Medicare program and private pay insurers, a significant period of exclusion
is justified. Further, and as noted above, no mitigating factors offset these aggravating
factors. The evidence establishes that Petitioner deliberately engaged in criminal acts for
his own financial gain. I find that Petitioner presents a significant risk to program
integrity and the 30-year exclusion falls within a reasonable range.

VI. Conclusion

Based on my review of all of the evidence in this case, I find that the I.G. was authorized
under section 1128(a)(1) and section 1128(a)(3) of the Act to exclude Petitioner from
participation in Medicare, Medicaid, and all other federal health care programs.
Moreover, Petitioner’s 30-year exclusion from program participation is not unreasonable.
The effective date of Petitioner’s exclusion is August 20, 2009, 20 days after the July 31,
2009 L.G. notice of exclusion.

/s/
Alfonso J. Montafio
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Emmanuel Brown, M.D., (NPI: 1841397601)
and Simeon K. Obeng, M.D., (NPI: 1780775346),
Petitioners
Vv.
Centers for Medicare and Medicaid Services.
Docket Nos. C-10-443 and C-10-481
Decision No. CR2145
Date: June 9, 2010
DECISION
I grant the motions of the Centers for Medicare and Medicaid Services (CMS) for
summary judgment, because I conclude that CMS had the authority to revoke each
Petitioner’s enrollment and billing privileges in the Medicare program for failing to
report an adverse legal action under 42 C.F.R. § 424.535(a)(9), effective April 17, 2009.
I also agree with CMS that Petitioners may not challenge on equitable grounds CMS’s
exercise of discretion to revoke enrollment where CMS shows it had authority to revoke
and that Petitioners have no right to appeal the duration of a re-enrollment bar resulting
from their revocation.
I. Background
Petitioners, Emmanuel Brown, M.D., and Simeon K. Obeng, M.D, are physicians that the

District of Columbia (DC) Department of Health licensed. On April 17, 2009, the DC
Department of Health summarily suspended Petitioners’ licenses to practice medicine.'

' Petitioners’ licenses were suspended for failing to conform to standards of acceptable
conduct and prevailing practice within the field of medicine and demonstrating willful or
careless disregard for the health, welfare, or safety of a patient. Brown CMS Ex. 1;
Obeng CMS Ex. 1. Specifically, Petitioners shared the ultimate responsibility for
ordering the administration of a general anesthesia drug to a patient for whom it was not
medically indicated. The patient died shortly after administration. Jd.
2
Brown CMS Ex. 1; Obeng CMS Ex. 1. Petitioners entered into a settlement (Consent
Order) with the DC Board of Medicine, and the license suspensions were lifted on May 6,
2009.* Brown CMS Ex. 2; Obeng CMS Ex. 2.

By letters dated June 15, 2009, the Medicare contractor, Highmark Medicare Services
(Highmark), revoked Petitioners’ enrollment and billing privileges in the Medicare
program effective April 17, 2009,° for failure to comply with Medicare enrollment
criteria, namely that Petitioners did not possess valid state medical licenses. P. Exs. 1, 5
(citing 42 C.F.R. § 424.535(a)(1)). These notices explained that Petitioners could pursue
two routes of appeal. First, if Petitioners believed that they were able to correct the
deficiencies, Petitioners could submit a corrective action plan (CAP) within 30 days.
Also, if Petitioners believed that the determination was not correct, they could request
reconsideration before a hearing officer. P. Exs. 1, 5.

Petitioners pursued both avenues. They submitted the Consent Order settlement
agreements as their CAPs. P. Exs. 3, 8. Highmark determined that the CAPs were
insufficient to establish compliance and affirmed the determination to revoke enrollment.
Id. Additionally, the contractor established a bar on Petitioners’ re-enrollment in the
program for a period of one year. Jd. Petitioners also requested reconsideration. On
reconsideration, the contractor determined that Petitioners’ enrollment was properly
revoked. However, the contractor based the revocation on Petitioners’ failure to report
the suspension of their medical licenses to the Medicare contractor under 42 C.F.R.

§ 424.535(a)(9).* P. Ex. 4, at 2. The contractor also affirmed the imposition of a one-
year bar on re-enrollment in the Medicare program. P. Exs. 4, 9.

Petitioners submitted individual requests for a hearing before an Administrative Law
Judge (ALJ). Petitioners’ Hearing Requests (HRs). Petitioner Brown’s appeal was

> The Maryland Board of Physicians, which likewise suspended Dr. Obeng’s license on
August 17, 2009 based on the same disciplinary action, also licensed Dr. Obeng. Obeng
CMS Ex. 2. This suspension was immediately stayed, and Dr. Obeng was placed on
probation subject to the terms of the Consent Order, which he had previously entered into
with the DC Board of Medicine. Id.

> Revocation usually takes effect 30 days after issuance of the revocation notice but, in
the case of license suspension, revocation is effective on the date of the suspension. 42
C.F.R. § 424.535(g).

+ The reconsiderations outlined that, under 42 C.F.R. § 424.535(a)(9), CMS may revoke
a supplier’s enrollment in the Medicare program for failing to comply with the reporting
requirements specified in 42 C.F.R. § 424.516(d)(1)(ii) (requiring the supplier to report
any adverse legal action within 30 days), and 42 C.F.R. § 424.502 (defining an adverse
legal action as including a “[s]uspension . . . of a license to provide health care by any
State licensing authority”). See P. Ex. 4, at 2.
3

initially assigned to Judge Smith, who conducted a Prehearing Conference on March 23,
2010. Petitioner Obeng’s appeal was initially assigned to Judge Montafio. Both cases
were transferred to me for hearing and decision pursuant to 42 C.F.R. § 498.44, which
permits a Board Member to be designated to hear appeals taken under Part 498. I
conducted a Prehearing Conference on March 29, 2010, as previously scheduled for
Petitioner Obeng. Counsel for Petitioners moved for consolidation of these cases during
the Prehearing Conference and then subsequently filed a Consent Motion to Consolidate
Appeals. On April 1, 2010, I issued the Order of Consolidation and a revised Prehearing
Order governing both appeals.

CMS filed nearly identical Motions for Summary Judgment and Partial Dismissal for
Petitioner Brown (Brown CMS Br.) and Petitioner Obeng (Obeng CMS Br.). Eight
proposed exhibits accompanied both filings, which in each case, CMS identified as CMS
Ex. 1 ~ CMS Ex. 8.° I admit CMS’s exhibits without objection.

In my April 1, 2010 revised Prehearing Order, I required Petitioners to label proposed
exhibits in a specific manner and submit an exhibit list and witness list with proposed
testimony by April 13, 2010. On April 12, 2010, Petitioners submitted a joint response
brief (P. Br.), along with nine proposed exhibits. The exhibits were not properly
identified, and no exhibit or witness list with proposed testimony was included. After
CMS filed its Reply Brief (CMS Reply), Petitioners resubmitted their exhibits,
renumbered as P. Ex. | — P. Ex. 9, along with a list of witnesses and statements of their
proposed testimony (Proposed Testimony). CMS objected to Petitioners’ late filing as
incomplete (missing a page of P. Ex. 8), untimely, and irrelevant. Petitioners responded
to the CMS objection and completed P. Ex. 8 (which, as CMS acknowledged, CMS
previously submitted as Brown CMS Ex. 6).

I conclude that Petitioners’ late submissions do not prejudice CMS. CMS had an
opportunity to reply to Petitioners’ late filings and did so. CMS had already received
copies of all the exhibits. While the proposed witnesses and their testimony were not
previously identified, they were hardly surprising, and I determine below that, in any
case, none of the facts as to which Petitioners seek to testify is material to the outcome of
these cases. I therefore admit Petitioners’ completed exhibits and proposed testimony.

II. Issues
The issues in these cases are:
1. Whether summary judgment is appropriate;

2. Whether, as a matter of law, CMS properly revoked Petitioners’ Medicare
enrollment and billing privileges on one or both of the asserted bases; and

> To distinguish CMS’s identically marked exhibits, I refer to these exhibits as either
Brown CMS Ex. or Obeng CMS Ex.
3. Whether I have authority to review a one-year bar on re-enrollment in the
Medicare program.

II. Discussion and conclusions of law

I make conclusions of law to support my decision in these cases. I set forth each
conclusion below as a separate heading.

1. The case can be decided on CMS’s motion for summary judgment.

The Departmental Appeals Board (Board) recently reiterated the standards for summary

judgment in Senior Rehabilitation and Skilled Nursing Center, DAB No. 2300 (2010), as

follows:

Summary judgment is appropriate when the record shows that there is no genuine

issue as to any material fact, and the moving party is entitled to judgment as a

matter of law. Kingsville Nursing and Rehabilitation Center, DAB No. 2234, at 3

(2009), citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986). While the
Federal Rules of Civil Procedure (FRCP) are not binding in this administrative
appeal, we are guided by those rules and by judicial decisions on summary
judgment in determining whether the ALJ properly granted summary judgment.
See Thelma Walley, DAB No. 1367 (1992) .... The party moving for summary
judgment bears the initial burden of showing that there are no genuine issues of
material fact for trial and that it is entitled to judgment as a matter of law.
Kingsville at 3, citing Celotex, 477 U.S. at 323. If the moving party carries its
initial burden, the non-moving party must “come forward with ‘specific facts

showing that there is a genuine issue for trial.” Matsushita Elec. Industrial Co. v.

Zenith Radio, 475 U.S. 574, 587 (1986) (quoting FRCP 56(e)). 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. /d. at 586 n.11; Celotex, 477 U.S. at 322. In

determining whether there are genuine issues of material fact for trial, the reviewer

must view the evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor. U.S. v. Diebold, Inc., 369
U.S. 654, 655 (1962).

Senior Rehab., DAB No. 2300, at 3. The Board has also noted that the role of an ALJ in
deciding a summary judgment motion differs from the ALJ’s role in resolving a case after

a hearing. The ALJ should not assess credibility or evaluate the weight of conflicting

evidence when resolving a summary judgment motion. Holy Cross Vill. at Notre Dame,

DAB No. 2291, at 4-5 (2009).

The issues in these cases turn on the interpretation and application of the regulations that

govern revocation of enrollment in the Medicare program. The material facts are not
5

disputed. Petitioners do not deny that the DC Department of Health suspended their

licenses to practice medicine from April 17,

2009, through May 6, 2009. P. Br. at 2-3; P.

Exs. 2, 7. Petitioners do not dispute that they failed to notify CMS or its contractor that

their licenses to practice medicine were susp

ended. Their main arguments are that they

were reinstated before the revocation was issued and that the suspensions did not have to

Br. at 6.

several factual allegations. However, for the

them, I could reach no different result under
and does not seek to cross-examine either Pe

2. CMS had the authority to revoke P

be reported, because their licenses were reinstated within the 30-day reporting period. P.

Petitioners do proffer evidence, largely in the form of their own testimony, in support of

reasons explained below, I do not find that

the alleged facts are material to any issue before me. In other words, even accepting all
acts asserted by Petitioners as true, and drawing all reasonable favorable inferences from

the law. CMS has proffered no witnesses
titioner.

Therefore, I conclude that summary judgment is appropriate.

etitioners’ enrollment and billing

privileges in the Medicare program for failure to report their license
suspensions within thirty days in accordance with 42 C.F.R. § 424.535(a)(9).

A. The revocations were authorized by law.

As previously noted, it is undisputed that the

DC Department of Health suspended

Petitioners’ licenses to practice medicine beginning April 17, 2009, and that their licenses

were reinstated on May 6, 2009. P. Exs. 2,7

report the suspension of their licenses. P. Br.

. Petitioners do not dispute that they did not
at 6.

Instead, Petitioners suggest that, because their licenses were only suspended for 20 days,

they were not required to report. P. Br. at 6;
“Tt]heir licenses . . . were reinstated before th

Proposed Testimony. They argue that
e 30 day reporting period under 42 C.F.R.

§ 516(d) had expired,” and, therefore, “they were no longer required to report any

adverse legal action to Highmark.” P. Br. at
was no change in their status [at] the end of t
requirement to report the suspensions; “[i]n e
Petitioners thus interpret the regulation as req

adverse legal event continues, or will continu

testify that it was their good faith belief that t
suspensions. Proposed Testimony.

I find no support in the plain language of the
interpretation. Section 424.516(d) states that
Medicare contractor . . . [w]ithin 30 days...
action” is defined to include “[s]uspension . .
State licensing authority.” 42 C.F.R. § 424.5

6. Or, in other words, they assert that “there
e 30 day reporting period,” so there was no
ffect, there was nothing to report.” Jd.
uiring reporting within 30 days, only if the
ie, beyond 30 days. They both offer to

hey were not required to report their

regulation for Petitioners’ purported
“[p]hysicians ... must report. . . to their
a]ny adverse legal action.” “Final adverse
. of a license to provide health care by any
02. No suggestion exists that the adverse

6
legal action, in these cases the suspension, must persist for longer than 30 days. I see no
reason that even one day of suspension would not suffice to invoke the reporting
requirement.

Thus, under 42 C.F.R. § 424.535(a)(9), CMS had the authority to revoke Petitioners’
enrollment and billing privileges in the Medicare program for failure to report their
license suspensions within thirty days.

B. [have no authority to review CMS’s discretion to revoke enrollment on
the basis of equitable arguments, where it is justified by law.

Petitioners, however, ask me to consider a number of facts and circumstances as
undercutting the basis for their revocation for failure to report. They offer to testify that
they, in good faith, did not believe that they needed to report the suspension. Proposed
Testimony. Petitioners assert that at no time during the period of their license
suspensions did they practice medicine or bill Medicare for services. P. Br. at 3-4. They
provide details of the events that led to the license suspensions and various laudable
actions they undertook after their licenses were suspended. Jd.; see P. Exs. 2,7. On
these grounds, Petitioners argue that CMS should have exercised its discretion to not
revoke Petitioners’ enrollment in the Medicare program.

As a matter of law, Petitioners’ misunderstanding of the regulation is not a defense. They
were obligated to notify Medicare that their licenses to practice medicine were
suspended, and their failure to do so, in and of itself, justifies revocation of enrollment. I
have no general authority to consider equitable arguments in favor of Petitioners where
the law authorizes CMS to revoke their billing privileges.

CMS argues that once it has shown that it has legal authority to revoke, its exercise of
discretion to invoke that authority in an individual case is not reviewable. See, e.g.,
Brown CMS Br. at 4 (citing 42 C.F.R § 498.3(b)); see generally 42 C.F.R. Part 424,
Subpart P. A revocation determination by CMS or its contractor is an “initial
determination” that may be appealed. See 42 C.F.R. §§ 498.3(b)(17), 424.545(a).
Nothing in the regulations, however, suggests that I may look behind CMS’s exercise of
discretion and substitute my judgment for that of CMS in deciding whether to revoke
billing privileges in an individual case where the authority to revoke is present. Letantia
Bussell, M.D., DAB No. 2196, at 12-13 (2008).

C. Lreject Petitioners’ claim that failure to report cannot properly justify
revocation, because there is no meaningful opportunity to correct.

Petitioners contend that failure to report should not form a basis for revocation, because
no meaningful opportunity exists to correct. P. Br. at 8. They argue that if a violation of
the 30-day reporting requirement was a basis for the revocation, then there would not
have been a need for an opportunity to submit a CAP, request reconsideration, or seek an
7

administrative appeal. Petitioners argue that submitting CAPs, which showed that their
medical licenses were current, should have precluded revocation of their enrollment.

The Board recently addressed the issue of an opportunity to correct through a CAP and
explained how it is distinct from the contractor reconsideration process:

After the initial notice of revocation, the supplier has two tracks to seek to
avoid revocation and may elect to pursue either or both concurrently.
[Medicare Program Integrity Manual (MPIM)], Ch. 10, § 19.4. The
supplier, within 60 days, may request “reconsideration” of whether the
basis for revocation is erroneous or, within 30 days, it may submit a CAP to
demonstrate that it has corrected that basis. If the contractor accepts the
CAP, it notifies the supplier, and any reconsideration request is withdrawn.
If the contractor denies the CAP, the reconsideration process may proceed
to a hearing before a hearing officer, who reviews “the Medicare
contractor’s reason for imposing a. . . revocation at the time it issued the
action....” Jd. An unfavorable hearing officer decision is appealable to
an ALJ, who reviews the basis for the revocation. Jd. No provision is
made for an appeal of the contractor’s decision not to reinstate based on the
CAP. Id. The hearing officer conducting the reconsideration (and the ALJ
on appeal of the hearing officer decision) are limited to reviewing the basis
for revocation set out in the initial notice, not the merits of any contractor
decision that corrective action under a CAP was unacceptable.

DMS Imaging, Inc., DAB No. 2313, at 7-8 (2010) (footnote omitted).

Thus, the contractor’s CAP evaluation is: (1) a review of whether the supplier is in
current compliance; (2) not an initial determination; and (3) not appealable. On the other
hand, the contractor’s reconsideration is a determination of whether the contractor was in
error at the time the supplier was found deficient. The reconsideration arises from the
contractor’s initial determination to revoke and is appealable through the administrative
process, including the present review.

Nothing in the regulations guarantees to suppliers that the noncompliance will be
correctible or ensures an absolute right to correct a deficiency in such a way that would
result in overturning the revocation. I note that Petitioners’ licenses were initially
revoked under section 424.535(a)(1), which provides that “CMS will, when revoking
billing privileges on the grounds stated in that regulation, offer a supplier an opportunity
to take corrective action in an effort to avoid a final CMS determination of revocation.”
In this instance, CMS’s contractor notified Petitioners that they could submit CAPs to
show their corrective action. As explained, however, in reviewing a CAP, the contractor
has discretion to decide whether to accept the CAP as sufficient to establish compliance.
That Petitioners’ CAPs were not accepted does not establish that they were not provided
a meaningful opportunity to correct.

8

As discussed, I grant summary judgment on different grounds than the initial revocation,
i.e., the grounds on which the reconsideration was based, Petitioners’ failure to report
under section 424.535(a)(9). The requirement to report derives from the suspension
iowever temporary) of Petitioners’ licenses. I explain in the next section why I do not
ccept the claim that Petitioners lacked adequate notice that they were subject to
evocation for the failure to report the suspensions, besides the fact of the suspensions
hemselves. Petitioners do not present a persuasive basis for me to find that they were
ntitled to a second opportunity to show compliance through another CAP, nor do they
how that, even with a second opportunity, they would have been able to demonstrate that
they could correct their failure to timely report.

mea

Ze

The reconsideration process does not allow for consideration of actions that occurred
after the revocation, only whether, at the time of the revocation, there was ground for
such revocation. For example, Petitioners could have presented any proof that they
reported the suspensions within the required 30 day period but could not cure the failure
to report after the 30 days had expired. I do not agree with Petitioners that CMS could
only base a revocation on a deficiency that was susceptible to retroactive cure nor do I
agree that the review process was somehow rendered meaningless or futile simply,
because the basis for Petitioners’ revocation is one that is not belatedly correctible.

D. Petitioners received adequate notice that failure to report under 42
CF.R. § 424.535(a)(9) was a ground for revocation.

Petitioners also appear to argue that they were not provided adequate notice that the
revocation was based on their failure to report under section 424.535(a)(9). P. Br. at 9.
In these cases, the contractor’s initial revocation letter did not indicate that the revocation
was issued as a result of Petitioners’ failure to report. P. Exs. 1, 5. However, the
contractor’s reconsideration decisions clearly specified that Petitioners’ failure to report
under section 424.535(a)(9), was the basis for revocation. P. Exs. 4,9. Board precedent
generally allows CMS to amend its grounds for adverse action as long as the affected
party is provided ample opportunity to address and respond to the amended basis. See,
e.g., Kingsville Nursing and Rehabilitation Center, DAB No. 2234, at 11-12 (2009), and
cases cited therein. I have provided Petitioners with a full opportunity to address and
respond to the allegations that they failed to report as required.

Petitioners were thus provided ample opportunity to respond to this basis and, indeed,
responded through their multiple submissions in this appeal. I therefore find no merit to
Petitioners’ claims of lack of notice.

For the reasons explained above, I thus grant summary judgment to CMS on the grounds
that revocation was authorized based on Petitioners’ failure to report their suspensions.
9

3. Ido not rely on CMS’s alternative basis for revocation under 42 C.F.R.
§ 424.535(a)()), for failing to meet Medicare enrollment requirements under
sections 410.20(b) and 424.516.

CMS argues it also had authority to revoke Petitioners’ enrollment pursuant to 42 C.F.R.
§ 424.535(a)(1), because Petitioners no longer met all state licensing requirements, as
required of physicians under 42 C.F.R. § 410.20(b), to be eligible to bill Medicare for
services. Thus, CMS reasons, by having their medical licenses suspended, Petitioners
failed to comply with the applicable enrollment requirements and were subject to
revocation. Brown CMS Br. at 3, 7; Obeng CMS Br. at 3, 7; CMS Reply at 2-3.

Petitioners respond that, although their licenses were suspended at one point, the
suspension was lifted on May 6, 2009, and they were once again licensed to practice
medicine by the time the revocation was imposed on June 15, 2009. P. Br. at 3-4, 6-8.
Since they were thus compliant with Medicare requirements that they be licensed and
authorized to practice medicine, they argue that revocation was not authorized on this
basis.”

Section 424.535(a)(1) provides that CMS may revoke a currently enrolled provider or
supplier’s Medicare billing privileges for noncompliance when “[t]he provider or supplier
is determined not to be in compliance with the enrollment requirements described in
this section, or in the enrollment application applicable for its provider or supplier type,
and has not submitted a plan of corrective action as outlined in part 488 of this chapter.”
(Emphasis added). Among the applicable requirements for a supplier to maintain
enrollment is compliance with state licensure needed to provide the relevant type of
services. 42 C.F.R. §§ 410.20(b), 424.516.

CMS does not dispute that Petitioners’ licenses were reinstated or deny that they were in
good standing at the time of revocation. The language of section 424.535(a)(1) uses the
present tense in describing a supplier “determined not to be in compliance,” rather than a
supplier determined not to have been in compliance at some prior point. The MPIM
provisions on reconsideration instruct hearing officers to limit the scope of their review to
the reason for imposing a revocation “at the time [the contractor] issued the action” and
whether the decision was correctly made at that time. MPIM, Ch. 19 (eff. Jan. 4, 2010).
It is not clear whether this language implies that the noncompliance status on which a
revocation is based must also be one that exists at the time the action is issued.

CMS points to an ALJ decision, which held that a suspension provided a basis for
revocation under 424.535(a)(1) even though the petitioner’s license in that case was also
reinstated by the time that the revocation was issued. CMS Reply Br. at 3 (citing George
E. Smith, M.D., DAB CR2074, at 6-8 (2010)). The ALJ in Smith treated the petitioner’s
argument that he was in compliance at the time of the revocation as a claim that he had

° Petitioners also assert, and CMS does not dispute, that they neither practiced medicine
nor billed Medicare for services rendered during the suspension period.
10

cured his noncompliance and should not have been revoked. Hence, the ALJ concluded
that he had no authority to review CMS’s discretionary decision to revoke given that
petitioner did not deny noncompliance. Jd. at 7-8.

I need not resolve whether section 424.535(a)(1) provides a legal basis for revocation
here based on a lapse in licensing, while enrolled in the Medicare program, where the
lapse was cured before revocation proceeds. Since the failure to report the adverse legal
events provides an independent and sufficient basis to support the revocations here, I
need not develop the record further to determine whether a suspension that has been lifted
prior to revocation may ever be a basis for revocation.

I therefore decline to rely on 42 C.F.R § 424.535(a)(1) as an additional basis for
revocation.

4. Petitioners do not have the right to challenge the duration of the re-
enrollment bar.

Whenever CMS has properly imposed revocation, it has the authority to determine a
length of time between one and three years during which that provider or supplier is
barred from re-enrolling under 42 C.F.R. § 424.535(c), which provides:

After a provider, supplier . . . has had their billing privileges revoked, they
are barred from participating in the Medicare program from the effective
date of the revocation until the end of the re-enrollment bar. The re-
enrollment bar is a minimum of | year but not greater than 3 years
depending on the severity of the basis for revocation.

Here, CMS imposed a one-year bar on Petitioners. P. Exs. 3, 8. Petitioners assert that
the duration of the re-enrollment bar is “excessive, arbitrary and capricious.” HRs. In its
submissions, CMS moved for dismissal on this issue, arguing that “the regulations do not
permit providers or suppliers to challenge either the establishment of or duration of a re-
enrollment bar.” See, e.g., Brown CMS Br. at 4. Petitioners did not respond to this
motion.

In any case, I could not address this issue, because, as CMS correctly notes, no authority
exists to appeal the length of the re-enrollment bar. As I previously discussed,
Petitioners’ right to a hearing in these cases is limited to challenging whether CMS had
authority to revoke Petitioners’ enrollment as suppliers in the Medicare program. The
right to a hearing is not extended to challenging CMS’s judgment as to the duration of
this revocation, where it falls clearly within the regulation. 42 C.F.R. §§ 424.535(c),
498.3(b)(17).
11
Furthermore, CMS imposed the minimum one-year bar on re-enrollment, which the
applicable regulation mandates. Therefore, even if I were reviewing the length of the re-
enrollment bar, I would have to conclude, as a matter of law, that it was not excessive,
arbitrary, or capricious.

For the reasons explained, I have no authority to alter the one-year re-enrollment bar.
IV. Conclusion

Because the undisputed facts establish that each Petitioner violated 42 C.F.R.

§ 424.535(a)(9), I grant CMS’s motion for summary judgment and sustain the revocation
of Petitioners’ enrollment and billing privileges in the Medicare program. Petitioners
remain barred from re-enrollment as suppliers in the Medicare program for a period of
one-year.

/s/
Leslie A. Sussan
Board Member